Recently, the Court of Federal Claims (“COFC”) ruled that it lacked jurisdiction to resolve Space Exploration Technologies Corp’s (“SpaceX”) post-award bid protest challenging the United States Air Force Space and Missile Systems Center’s (“Air Force”) award of three launch services agreements (“LSA”). This ruling answered a looming question that many protesters had regarding the COFC’s jurisdiction to hear challenges to awards of other transaction agreements and reiterated the limited options protesters have to challenge such awards.
The protest arose from the Air Force’s decision to award three LSAs to facilitate the development of launch systems in the United States. SpaceX challenged the Air Force’s evaluation and portfolio award decisions for the LSAs. The Air Force moved to dismiss for lack of subject-matter jurisdiction due to SpaceX’s challenges not being “in connection with a procurement or proposed procurement.” SpaceX argued the COFC possessed subject-matter jurisdiction because the Air Force violated 10 U.S.C. § 2371b during the LSA competition. The COFC rejected SpaceX’s argument and found the COFC lacked subject-matter jurisdiction under the Tucker Act to resolve the bid protest.
10 U.S.C. § 2371b provides authority for the Department of Defense (“DoD”) to carry out certain prototype projects in order to enhance mission effectiveness and improve platforms, systems, components, or materials used by the armed forces through the use of “other transaction agreements.” The DoD must, to the maximum extent possible, use competitive procedures when entering into agreements to carry out these prototype projects. Additionally, the DoD may only use this other transaction authority if one of four conditions are met, as provided in the statute. Other transaction authority provides the DoD with an extremely flexible acquisition tool that allows the DoD to create opportunities for companies with cutting-edge technologies who do not normally conduct business with the Government.
Other transaction agreements (“OTAs”) are not procurement contracts, grants, or cooperative agreements and they are generally not subject to federal laws and regulations applicable to procurement contracts, such as the Federal Acquisition Regulation (“FAR”) or the Defense Federal Acquisition Regulation Supplement (“DFARS”). This creates questions about how and where to protest the award of an OTA. In May 2018, the Government Accountability Office (“GAO”) decided a protest involving the award of an OTA and found that the Government had improperly used its other transaction authority. Oracle Am., Inc., B-416061, 2018 WL 2676823. However, questions remained as to COFC and Federal Circuit jurisdiction. This recent protest shows the COFC will not use Tucker Act jurisdiction to resolve a bid protest challenging the award of an “other transaction.”
The Tucker Act grants the COFC jurisdiction over bid protests. The specific language relevant to this protest was “in connection with a procurement or proposed procurement.” Tucker Act jurisdiction exclusively relates to procurement solicitations and contracts, meaning it is unavailable outside of the procurement or proposed procurement context. In this protest, the LSA RFP was issued pursuant to DoD’s authority to enter into other transactions, meaning the LSAs were not procurement contracts. Therefore, the issue was whether the LSAs were “in connection with a procurement or proposed procurement,” as contemplated by the Tucker Act.
The COFC found that there was “no genuine dispute that the LSA’s at issue in this dispute are not procurement contracts that fall within the purview of this Court’s bid protest jurisdiction” because the LSA RFP was issued pursuant to DoD’s authority to enter into other transactions. The COFC also found that SpaceX had failed to show that the Air Force’s award decisions during the LSA competition were “in connection with a procurement or proposed procurement” because the LSA competition and Phase 2 involve separate and distinct solicitations, different acquisition strategies, and the LSA competition did not involve the procurement of any goods or services by the Air Force, while Phase 2 will procure launch vehicles. The COFC also discussed how the Phase 2 procurement will be a fully open competition and SpaceX intended to compete for award under the Phase 2 procurement. Lastly, while the LSA awardees were provided funding to assist in the development of prototypes, the COFC stated LSA award will not dictate the outcome of the Phase 2 procurement.
Without the COFC, contractors are left with limited avenues for protesting the award of OTAs, such as the GAO or federal district courts. This SpaceX protest was transferred to a California federal district court, where the complaint could have originally been filed. Also, there is a narrow avenue at GAO because GAO will review an agency’s alleged improper use of other transaction authority, as shown in the Oracle decision referenced above. We will continue to monitor bid protests challenging OTAs and keep you informed of any noteworthy decisions.
Berenzweig Leonard is teaming up with Red Team Consulting for a monthly newsletter featuring reports on recent contract decisions, recent upcoming contracts, key protest decisions, events, and more. This post was published in the October 2019 newsletter. To sign up for our govcon newsletters, please email monthlyinsights@berenzweiglaw.com.
Danny Alvarado is a Senior Law Clerk in the Government Contracts practice at Berenzweig Leonard. Danny can be reached dalvarado@berenzweiglaw.com.