Less Interested Parties

A little over a year ago, I wrote about a case called Percipient.ai v. United States that had some significant ramifications for bid protests. Specifically, the case involved the question about whether a company could be an "interested party" even though it was not actually a bidder or prospective bidder.

Two judges said that Percipient could be an interested party, even though it was not an "actual or prospective bidder." And one judge said that Percipient could not.

That conclusion had some potentially big implications for the number of potential protests:

[I]f the majority is right that you can be a potential subcontractor and sue the government as an interested party, I think the dissenting judge will also be right that there are going to be a lot of companies out there ready to go to court.
They say that in a gold rush, you should sell shovels. After reading Percipient’s expansion of who can be interested in procurement litigation, maybe it’s time to open a popcorn stand.

I also noted, however, that the "smart money is apparently that this will go to an en banc panel of the Federal Circuit."

Well, the smart money was right and, a few weeks ago, the en banc Federal Circuit reversed.

It was not unanimous, though! Seven judges ruled that Percipient.ai could not sue. But four judges thought that Percipient.ai should be able to sue.

The disagreement boiled down to whether the phrase "interested party" depends on what type of challenge the protestor is bringing.

The majority felt that there was "no statutory support for assigning a different meaning to this single term depending on how a claimant chooses to style or bring its claim." To the majority, an "interested party" must be an "actual or prospective" bidder, regardless of why the protestor brought the case.

The dissent, meanwhile, felt that "important contextual language should not be ignored. By not asking who qualifies as 'interested' in 'any alleged violation of statute or regulation in connection with a procurement or a proposed procurement,' the majority fails to adequately consider and give meaning to the statutory language Congress purposefully chose." To the dissent, figuring out whether a litigant is an "interested party" requires the court to first evaluate the nature of their claims.

Of course, the dissent lost. So, as it stands today, there won't be the surge in protests that might have otherwise occurred.

If you're not a prime — or even a wannabe prime — you're not an interested party and can't bring a protest. That's true even if the protest is based on the government's refusal to use commercial contracting that would benefit a potential commercial subcontractor.

But, then again, the Court did sorta kinda offer a weird third option?

We note only that there are other mechanisms for enforcing the statute as to subcontractors, such as through protests by prime contractors or joint bids with other subcontractors so that one would be the prime contractor.

I'm not going to pretend that I know how they envision that playing out. After all, we've talked before about the fact that subcontractors can't always persuade their primes to sue.

But if the outcome of all of this is that companies start joining bids just so they can protest, I guess I still will be opening up that popcorn stand.

Either way, it's oddly comforting to know that — with all of the changes in the federal procurement landscape happening — you're not alone if you don't know how things are going to shape up. After all, even a significant number of federal judges can't agree on what the law is and who might be considered "interested."