The Federal Acquisition Streamlining Act of 1994 (FASA) bars the majority of bid protests at the U.S. Court of Federal Claims (Claims Court) that arise "in connection with the issuance" of task or delivery orders under Federal Acquisition Regulation (FAR) Part 16 indefinite delivery, indefinite quantity (IDIQ) contracts. Whether a protest arises in connection with the issuance of a task or delivery order has long been a hot topic of litigation, as we have reported in previous alerts. Recently, the U.S. Court of Appeals for the Federal Circuit clarified that the Claims Court also lacks jurisdiction over protests of Small Business Administration (SBA) size determinations that arise in connection with a task or delivery order award.
On December 29, 2020, the Army awarded 22nd Century Technologies, Inc. a task order restricted to small businesses. Unsuccessful small business offerors in the task order competition filed size protests challenging 22nd Century's status as a small business. The SBA found that while 22nd Century may have qualified as a small business when it initially bid on the underlying IDIQ solicitation in 2015, it was "other-than-small" by the time that the Army solicited small business task order proposals in 2020. The SBA also found that the task order solicitation "effectively requested all offerors to recertify [their size status] for the Task Order." 22nd Century appealed the decision to the SBA's Office of Hearing and Appeals (OHA), which affirmed the SBA's size determination and conclusion that the task order solicitation required recertification. The Army then terminated 22nd Century's task order for failing to satisfy the required small business size requirements.
Without formally challenging the contract termination decision under the terms of the IDIQ contract, 22nd Century filed a bid protest before the Claims Court challenging the SBA's size determination and requesting that the court issue an injunction preventing the Army from terminating the task order award and preventing the Army from moving forward with another contractor's performance of the task order. 22nd Century argued that "[b]ecause the [Task Order RFP] did not contain an explicit request for recertification, SBA must measure 22nd Century's size on the date it submitted its proposal for the RS3 IDIQ, when it was unquestionably small."
Upon the motion of the Army and the task order awardee, the Claims Court dismissed the bid protest pursuant to the "task order bar" to jurisdiction under the FASA. 22nd Century appealed this dismissal to the Federal Circuit.
Task Order Bar to Bid Protest Jurisdiction
The Claims Court has jurisdiction to hear protests of "any alleged violation of statute or regulation in connection with a procurement," including SBA OHA decisions regarding size determinations that are made "in connection with a procurement." 28 U.S.C. § 1491(b)(1).
However, the FASA bars the Claims Court from hearing protests that are in connection with the issuance of task or delivery orders under FAR Part 16 IDIQ contracts, unless the order has a value of more than $25 million or the order increases the scope, period, or maximum value of the contract under which the order is issued. The purpose of this "task order bar" is to limit the disruption to performance of government contract work, as government agencies often issue bundled procurements involving a large number of task orders. The Army's task order award to 22nd Century was less than $25 million, and 22nd Century did not claim that the task order changed the scope, period, or maximum value of the underlying IDIQ contract.
22nd Century argued that FASA's task order bid protest bar did not reach OHA's size determination excluding 22nd Century, because a size protest is "something totally different" than a bid protest, citing the Federal Circuit's recent decision in Harmonia Holdings Group LLC v. U.S. et al., 999 F.3d 1397, 1402–03 (Fed. Cir. 2021). The Federal Circuit held that while the Harmonia Holdings decision recognized that there are differences between size protests at the SBA and bid protests at the Claims Court, it never suggested that size protests provided a separate basis for Claims Court jurisdiction.
The Federal Circuit clarified that "FASA's unambiguous language categorically bars jurisdiction over bid protests, even those involving a challenge to an SBA size determination, where the size determination is challenged 'in connection with the issuance of a task or delivery order.'" The court found that 22nd Century's challenge was "in connection to" the issuance of the task order because 22nd Century challenged the alleged failure of the task order to explicitly require bidders to recertify as small businesses and claimed that the only relevant size requirement for purposes of its task order proposal was in the original IDIQ contract. Accordingly, 22nd Century's protest fell squarely within FASA's jurisdictional bar.
Contract Disputes Act Jurisdiction
Even if the Claims Court lacked bid protest jurisdiction over the SBA's task order size determination, 22nd Century argued that the Claims Court could adjudicate the Army's decision to terminate the award to 22nd Century as an improper contract termination under the Contract Disputes Act (CDA).
Generally, the Claims Court can hear challenges over any claim arising under the CDA, including the termination of a contract. 41 U.S.C. §§ 7101–09. However, the CDA has its own preconditions for Claims Court jurisdiction.
Rejecting this CDA jurisdictional argument, the Federal Circuit held that the Claims Court lacked jurisdiction to issue an injunction preventing an agency from terminating a contract under the CDA, as 22nd Century requested. Further, for jurisdiction under the CDA to arise, 22nd Century must first file a certified claim with and receive a final decision from the contracting officer. 22nd Century did neither before seeking a remedy at the Claims Court. As a result, the Claims Court lacked jurisdiction over 22nd Century's contract termination claim as well.
This most recent decision confirms that even though the Claims Court has bid protest jurisdiction over challenges to SBA size determinations related to contract awards, the Claims Court will dismiss size protests when the size determination arises "in connection with" a task or delivery order, unless the order has a value of more than $25 million or the order increases the scope, period, or maximum value of the contract under which the order is issued. While this decision provides welcome clarity, the reach of FASA's jurisdictional bar remains highly fact-specific.
This precedential opinion also warns that a request to enjoin the termination of a contract under the CDA is unlikely to succeed in the Claims Court, and illustrates the often fuzzy distinction between a CDA claim and a bid protest.
Contractors should consult with counsel about the best way to challenge task or delivery order related issues.