Finding a court in which to argue the merits of an in-sourcing case is a seemingly never-ending source of hurdles for disappointed contractors. When the in-sourcing initiative began a few years ago, the legal landscape lacked clarity as to which courts possessed jurisdiction over such claims. Litigation theories were divided as to whether this was an administrative matter under the Administrative Procedures Act, to be brought in the district courts, or a procurement matter under the Tucker Act to be brought at the Court of Federal Claims. As those cases unfolded, with near uniformity, the courts have held that this is a procurement matter to be brought at the Court of Federal Claims. But the challenges facing disappointed contractors did not end at the court house doors at the National Courts Building. Standing issues at the Court of Federal Claims quickly emerged.
The first two in-sourcing cases at the Court of Federal Claims were sharply divided on this standing issue. In Hallmark-Phoenix 3, LLC, Judge Allegra dismissed the in-sourcing case finding that plaintiff lacked prudential standing because the statutes at issue envision enforcement by legislative oversight through reports and requests to Congress – not judicial review. Hallmark-Phoenix 3, LLC v. United States, 99 Fed. Cl. 65 (2011). Judge Firestone, on the other hand, concluded that prudential standing did not apply to bid protests because the Tucker Act provided its own standing requirements and, in any event, certain in-sourcing provisions were enacted, at least in part, for the benefit of the contracting community. Santa Barbara Applied Research, Inc. v. United States, 98 Fed. Cl. 536 (2011). In Triad Logistics Services Corporation, the next in-sourcing case to emerge from the Court, Judge Horn added a new twist to the standing issues, holding that Triad was not an interested party because its contract had ended and government employees had begun performing the contract functions prior to when the complaint was filed. Triad Logistics Servs. Corp. v. United States, No. 11-43C (Fed. Cl. Apr. 16, 2012). The Triad decision ultimately left observers with more questions than answers, such as what exactly is an interested party and what would happen if a contract ended by its own terms during the litigation.
Fortunately, we did not have to wait long for the answer. Readers of this blog know that we have been keeping our eyes on the case of Elmendorf Support Services. In that case, Judge Bruggink held that the Court had jurisdiction over in-sourcing matters and standing was conferred by the Tucker Act and the “rather generous” definition of procurement supplied by the Federal Circuit in Distributed Solutions. Elmendorf Support Services v. United States, No. 12-346C (Fed. Cl. Jun. 22, 2012) (citing Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed. Cir. 2008)). However, Judge Bruggink denied plaintiff’s motion for a preliminary injunction and, therefore, the contract at issue in the litigation ended by its own terms on June 29, 2012. Shortly thereafter, the Air Force in-sourced the services previously provided by the plaintiff and on July 2, 2012, the United States filed a motion to dismiss the case as moot.
Last week, Judge Bruggink granted Defendant’s motion to dismiss, finding that plaintiff no longer had standing. Elmendorf Support Services v. United States, No. 12-346C (Fed. Cl. Sep. 10, 2012) (unpublished order). The Court reasoned that although jurisdiction is normally fixed at the time of filing a suit, the litigant must maintain a posture in which the injury suffered could be redressed by a favorable judicial decision. Here, the Court concluded that there is no longer any redress for the plaintiff’s injury and therefore it lost its standing when its contractual relationship with the Air Force ended. In this regard, the Court held that even though plaintiff may be willing to quickly step in to resume performance, the Air Force, according to the Court, “no longer has the option of avoiding rules dictating competition; it would have to consider opening such an interim contract to other bidders.”
Although the Court’s decision has a sense of logic to it, the opinion still feels a bit ironic. The Court states that the plaintiff must maintain a posture in which judicial redress is possible, yet the Court denied plaintiff’s motion for a preliminary injunction. Even the Court’s assertion that there is no judicial redress seems to overlook the possibility that while continued performance under the original contract may no longer be possible, a proper competitive solicitation could, potentially, redress plaintiff’s injury. As well, the Court criticizes the plaintiff for waiting so long after the in-sourcing plan was announced to file its complaint, but fails to identify how plaintiff’s inactions affected the legal merits of the ruling other than perhaps to imply that it was plaintiff’s fault the contract expired during the pendency of the litigation.
Regardless, this is now the second case to come out the Court of Federal Claim to hold that an active contract is required to establish and maintain standing for an in-sourcing claim. The lesson is clear – if the government is in-sourcing your contract, file your protest as soon as possible.