March 1, 2010< Back to Government Contractor Insights
The Federal Circuit has resolved a quandary about the implied-in-fact contract theory of protest jurisdiction, this in Resource Conservation Group, LLC v. United States, Fed. Cir. No. 2009-5091, March 1, 2010. Resource Conservation Group arises out of a Claim for bid preparation costs and fees filed after the Navy rejected an Offer to lease the former Naval Academy dairy farm in Gambrills, Maryland.
The Navy knew that one of the Offerors was planning to mine the property for sand and gravel, but did not tell that Offeror that the Navy had concluded that such mining was tantamount to sale of the dairy farm, rather than a lease—and the authorizing statute, 10 U.S.C. § 6976(a)(2), did not allow sale of the property. The Offeror incurred substantial bid preparation costs and fees before the Navy told the Offeror that its Offer could not be considered.
The quandary results from two possible sources of protest jurisdiction for the United States Court of Federal Claims: 28 U.S.C. § 1491(a)(1), which gives the Court jurisdiction “to render judgment upon any claim against the United States . . . founded upon any express or implied contract with the United States”; and 28 U.S.C. § 1491(b)(1), which gives the Court 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(a)(1), a part of the Tucker Act, is the Court’s primary jurisdictional authority and has been held prior to 1996 to give the United States Court of Federal Claims protest jurisdiction, this from a claimed breach of the implied-in-fact contract of fair and honest consideration which arises from Federal solicitations in connection with the purchase or sale of real or personal property.
28 U.S.C. § 1491(b)(1) was enacted in 1996 and explicitly gives the Court protest jurisdiction “in connection with a procurement or proposed procurement.” The term “procurement” in 28 U.S.C. §1491(b)(1) is limited to the definition of “procurement” in 41 U.S.C. § 403(2), and thus it is limited to “all stages of the process of acquiring property or services.”
Since 1996, the United States Court of Federal Claims has in some cases decided that its protest jurisdiction lies under both 28 U.S.C. § 1491(a)(1) and 28 U.S.C. § 1491(b)(1), and in other cases the United States Court of Federal Claims has decided that any protest jurisdiction under 28 U.S.C. § 1491(a)(1) has been supplanted by the protest jurisdiction, and the limitations on that protest jurisdiction, conferred in 28 U.S.C. § 1491(b)(1).
The result is confusion about just what actions can today be challenged before the United States Court of Federal Claims—for instance, a sale of Federal personal property can be challenged under 28 U.S.C. § 1491(a)(1) but not under 28 U.S.C. § 1491(b)(1) because a Federal sale is not a Federal “procurement.”
An example is a Forest Service sale of timber from Federal lands, a sale which was properly challenged in the United States Court of Federal Claims in 1988. If 28 U.S.C. § 1491(a)(1) still has force and effect, similar Federal timber sales can be challenged today; if 28 U.S.C. § 1491(a)(1) has been supplanted by the protest jurisdiction conferred in 28 U.S.C. § 1491(b)(1), then a timber sale (or any other sale of surplus Federal property) cannot be challenged in the United States Court of Federal Claims because these actions are not “procurements” as defined by 41 U.S.C. § 403(2).
Resource Conservation Group resolves these issues, for here the Federal Circuit holds that while relief in the “procurement” context is exclusive under 28 U.S.C. § 1491(b)(1), relief under 28 U.S.C. § 1491(a)(1) is still available where a Claim arises from a Federal solicitation which is not a “procurement,” i.e. where the Federal solicitation concerns a sale, not an acquisition, or where a Federal solicitation concerns the lease of Federal real property, and not a Federal “procurement” of property or services.