OT Protesters Looking for a Place to Land
The Situation: The Federal District Court for the District of Arizona recently dismissed MD Helicopters' Other Transaction ("OT") protest for lack of jurisdiction. The court reasoned that, although the OT was not a procurement contract, it was still a contract with the government and was "connected to" a procurement. Under the Administrative Dispute Resolution Act of 1996 ("ADRA") and the Tucker Act, only the Court of Federal Claims ("COFC") has jurisdiction to hear cases involving alleged violations of statute or regulation in connection with a procurement or a proposed procurement.
The Result: This has created a situation where protesters cannot easily determine what forum will have jurisdiction to hear protests of the solicitation or award of OT Agreements. In determining the proper forum, protesters will need to assess all of the facts surrounding the OT and later procurement.
Looking Ahead: Protesters face a complicated situation in which they must closely analyze the facts and posture of their particular OT to determine which forum is most likely to take jurisdiction of the protest. If a protester can show that the OT is sufficiently "related to" a later procurement, then COFC may take jurisdiction. If the OT is not sufficiently related to a later procurement contract, then federal district courts might take jurisdiction.
Contractors hoping to challenge an agency's use of its Other Transaction Authority ("OTA") face a frustrating situation: Currently there is not a single forum that clearly asserts jurisdiction. In a recent decision, the Federal District Court for the District of Arizona dismissed MD Helicopters' challenge of a prototype OTA award decision under the Administrative Procedures Act ("APA") and ADRA, finding that the court did not have jurisdiction over the protest.
The decision in MD Helicopters Inc. v. United States, No. CV-19-02236-PHX-JAT (D. Ariz. Jan. 24, 2020) ("MD Helicopters") adds yet more complexity to an already complicated jurisdictional analysis. Because OTs are not "procurement contracts" under federal procurement law and regulations, protesters have had difficulty determining the proper forum to raise challenges to the solicitation and award of these contractual instruments. The U.S. Government Accountability Office ("GAO") generally dismisses OT protests, citing a lack of jurisdiction over non-procurement contracts. Similarly, as we noted in a prior Commentary, COFC has also dismissed OT challenges for lack of jurisdiction. In dismissing SpaceX's OT protest, COFC noted that the OT award was not "in connection with a procurement or proposed procurement," as contemplated by the jurisdictional requirement of the Tucker Act. In Space Expl. Techs. Corp. v. United States, 144 Fed. Cl. 433 (2019) ("SpaceX"), COFC transferred the protest to a Federal District Court for further proceedings.
Rather than raising its claims at COFC, MD Helicopters went directly to Federal District Court to pursue its OT protest after an unsuccessful protest attempt at GAO. In filings to the court, both MD Helicopters and the government argued that the district court had jurisdiction over this OT protest. However, the court disagreed and included a detailed discussion distinguishing the case from the SpaceX protest. In addressing jurisdiction, the court noted that ADRA eliminated the district courts' jurisdiction to hear cases involving "any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." The court ultimately concluded that, unlike the OT in SpaceX, the OT here was sufficiently "related to" an eventual procurement so that ADRA bars district court jurisdiction. The court also concluded that the Tucker Act "impliedly forbids" federal district court jurisdiction over a case seeking declaratory or injunctive relief under the APA in "contractually-based" suits. Noting that MD Helicopters sought a court order requiring the government to advance the plaintiff in the OT competition, the court concluded that this was the type of contractually-based case barred by the Tucker Act.
The MD Helicopters decision further muddies the issue of jurisdiction over OT protests—GAO, COFC, and now a federal district court have all dismissed OT protests for lack of jurisdiction. As protesters search for a forum to resolve protests involving the solicitation and award of OTs, they should keep the following in mind:
- The analysis is very fact-specific. GAO took jurisdiction of an OT protest in Oracle America, Inc. because it found that, under the facts of that case, the agency had improperly exercised its authority to enter into the OT. While COFC dismissed the SpaceX protest, its dismissal relied heavily on the facts of that particular OT award—specifically the court noted that the OT and procurement competitions involved separate and distinct solicitations with different acquisition strategies, different start dates, and different goals. The court also noted that the procurement there would not be limited to the companies awarded the prototype OTs. In contrast, the MD Helicopters decision implies that COFC may have jurisdiction over that OT award because the OT is more closely connected to a later procurement. As a result, protesters and their counsel will need to closely analyze the facts to determine which court is most likely to provide the appropriate venue in each case.
- Protesters may want to consider starting at the GAO if the facts support a challenge to the use of an OT; then if unsuccessful at GAO (or alternatively), file suit at COFC. If jurisdiction is questioned at COFC, resorting to a federal district court may be the appropriate choice. By working closely with experienced counsel and paying close attention to the specific facts involved in the OT, protesters will hopefully be able to avoid a jurisdictional black hole.
TWO Key Takeaways
- The jurisdictional analysis for OT protests is very fact-specific. Protesters should work closely with experienced counsel to determine which forum is most likely to take jurisdiction based on the particular facts of the case. In predicting which forum is most likely to take jurisdiction over the OT protest, protesters will need to consider all of the facts surrounding the OT and later procurement, including: (i) whether the agency has stated that it will conduct a related procurement following the performance of the OT; (ii) whether the OT and procurement competitions will involve separate and distinct solicitations; (iii) whether the OT and procurement will follow the same (or different) acquisition strategies; (iv) whether the OT and procurement have the same (or different) goals; and (v) whether the procurement will be limited to the company(ies) awarded the OT(s).
- Protesters may want to plan for a multiphased approach in which they first attempt to gain jurisdiction at GAO, then COFC, then, as a last resort, seek transfer to a federal district court.
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