Ruling on an Issue of First Impression, US COFC Finds Protest Jurisdiction Over Challenge to a Follow-On Production Other Transaction

On July 16, 2024, the Court of Federal Claims (“COFC” or “Court”) published an opinion, Independent Rough Terrain Center, LLC v. United States, exercising jurisdiction to consider a bid protest involving Other Transaction (“OT”) authority.¹ Addressing an issue of first impression, the Court held that a challenge to an OT solicitation for the follow-on production of goods and services is within the purview of the COFC’s bid protest jurisdiction.

This Legal Update summarizes the Court’s decision and highlights important takeaways for federal contractors that pursue OT opportunities.

Background

The protest involved the US Army Materiel Command’s efforts to modernize its Rough Terrain Container Handler vehicles, which the Army uses to lift and move shipping containers. In an earlier phase of the acquisition, the Army conducted an OT prototype competition.

Following the prototype phase, the Army issued the solicitation that was later protested. The solicitation, issued pursuant to the Army’s OT authority under 10 U.S.C. §§ 4021 and 4022, contemplated award of a follow-on production contract to one of the two vendors that submitted successful protypes. On September 20, 2023, the Army awarded the follow-on production contract to Taylor Defense Products, LLC.

Then, the other vendor, Independent Rough Terrain Center, LLC (“IRTC”), filed an agency-level protest contesting the Army’s award decision. On January 22, 2024, the Army announced that it would take corrective action in response to the protest. On January 31, 2024, IRTC filed a pre-award protest at the COFC in which it challenged various actions taken by the Army in connection with the OT acquisition, including the scope of the Army’s proposed corrective action.

The government moved to dismiss the IRTC’s complaint for lack of subject matter jurisdiction.² In essence, the government argued that acquisitions executed under an agency’s OT authority are not procurements and therefore fall outside the COFC’s bid protest jurisdiction under the Tucker Act.³

Analysis

The Court concluded that it possessed Tucker Act jurisdiction to hear the protest. First, citing Supreme Court precedent, the Court noted that there is a strong (but rebuttable) presumption of judicial review of agency action and that the presumption is overcome only when a statute’s language or structure demonstrates that Congress wanted to preclude judicial review.⁴ The Court rejected the government’s contention that because OTs are not procurement contracts subject to the Federal Acquisition Regulation (“FAR”), they are necessarily removed from the Court’s bid protest jurisdiction. Examining the text and legislative history of the OT statutes at issue (i.e., 10 U.S.C. §§ 4021-4022), the Court held that judicial review of OT acquisitions was not precluded by the relevant statutes.

The Court acknowledged that the OT statutes afford the military flexibility in conducting acquisitions by exempting the transactions from certain federal statutes and regulations, including the FAR. But the Court pointed out that although most government procurement contracts fall under the authority of the FAR, the Court’s bid protest jurisdiction is not limited to FAR-based contracts.⁵ On this point, the Court also noted that the Court of Appeals for the Federal Circuit has found the COFC’s protest jurisdiction to be broad.

Next, the Court addressed the government’s argument that follow-on production OTs are not procurements for purposes of Tucker Act jurisdiction. The Court explained that even though the Tucker Act itself does not define “procurement,” the Federal Circuit relies on 41 U.S.C. § 111, which broadly defines the term as including “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” Using this definition, the Court reasoned that a follow-on production OT solicitation is a procurement because it seeks to acquire property or services for the government, whether the agency accomplishes that acquisition using its OT authority or the authority under the FAR.

Ultimately, the Court denied the government’s motion to dismiss.⁶ The Court concluded that it possessed jurisdiction over the protest because the solicitation concerned the acquisition of goods and services, thus falling under the broad definition of a procurement, and because nothing in the OT statutes expressly removed OT follow-on contracts from review under the Tucker Act.

Takeaways

Federal contractors interested in OT solicitations should note these key points from the Independent Rough Terrain Center decision:

• The decision appears to resolve a previously open question about whether the COFC had protest jurisdiction over follow-on production OT acquisitions. Accordingly, contractors competing under OT solicitations (as well as government contracting personnel) should be aware of the potential for judicial review of these kinds of acquisitions.

• The Court’s reasoning in this decision is significant in that it could have a substantial effect on agencies that choose to acquire goods and services via OTs. Rather than focusing on whether the acquisition in question was conducted under OT authority or FAR authority, the Court focused on the broader question of whether the government was acquiring goods or services. Framing the issue in this way effectively dispels the commonly held notion that acquisitions conducted under OT authority are generally “non-protestable.” If this approach is accepted by other judges on the Court (or the Federal Circuit), the decision could have a serious impact on the incentives for agencies to use OT authority.

• This ruling follows the Court’s August 2022 decision in Hydraulics Int’l (discussed in a previous Legal Update) finding jurisdiction over a prototype OT competition when a follow-on production contract was contemplated. The Independent Rough Terrain Center decision provides an additional signal that members of the Court may be more inclined to review decisions made with respect to OT acquisitions.

Conclusion

As the Federal Circuit has yet to consider the issue of OT protest jurisdiction under the Tucker Act, it remains unclear whether other COFC judges will follow the reasoning of both Hydraulics Int’l and Independent Rough Terrain Center in future cases. But, for now, these recent decisions indicate that the Court will exercise broad jurisdiction over bid protests involving a government acquisition for goods or services, regardless of whether the acquisition is FAR-based.

¹ No. 24-160 (July 16, 2024).

² Importantly, when the COFC lacks bid protest jurisdiction, a disappointed vendor generally may pursue an action in federal district court pursuant to the Administrative Procedure Act (“APA”). For instance, when the COFC dismissed a protest of a prototype OT award for lack of jurisdiction, Space Expl. Techs. Corp. v. United States, 144 Fed. Cl. 433 (2019), the disappointed offeror was able to bring a suit in federal district court, which reviewed the prototype OT award under the APA as a “final agency action.” Space Exl. Techs. v. United States, 2020 WL 7344615 (C.D. Cal. Sept. 24, 2020).

³ The Tucker Act grants the COFC “jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1) (emphasis added).

⁴ No. 24-160at 9 (discussing Mach Mining, LLC v. E.E.O.C., 575 U.S. 480, 486 (2015)).

⁵ Id. at 11 (citing Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1079 n.7, 1084 (Fed. Cir. 2001), which concluded that the COFC has bid protest jurisdiction over United States Postal Service procurements despite that the Postal Service being exempt from the FAR).

⁶ This Legal Update focuses on the Court’s analysis of its jurisdiction under the Tucker Act. Of note, later in the opinion, the Court found that IRTC lacked standing because it was ineligible for award due to a lapse in its System for Award Management (“SAM”) registration.