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In a recent case involving a jurisdictional issue of first impression, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) has ruled that the U.S. Court of Federal Claims (COFC) has jurisdiction over a claim that the government breached an implied-in-fact contract to fairly and honestly consider an offeror’s proposal in the procurement context. The court also held that such issues are reviewable under the Administrative Procedure Act (APA). Prior to this decision, different COFC judges had disagreed about whether the court could hear such claims.

Authors: Lawrence S. Sher Lawrence P. Block Elizabeth Leavy Liza V. Craig William T. Kirkwood

Introduction

On March 4, 2021, the Federal Circuit ruled that COFC does have jurisdiction under 28 U.S.C. § 1491(b)(1) over implied-in-fact contract claims raised in the procurement context.1 Safeguard Base Operations LLC v. United States, Fed. Cir., No. 2019-2261 (Mar. 4, 2021).

In a case of first impression, the Federal Circuit resolved a question that had been left unanswered since the enactment of the Administrative Dispute Resolution Act (ADRA) in 1996: Does COFC have jurisdiction over implied-in-fact contract claims arising in the procurement context? Although more than a decade ago the Federal Circuit previously had concluded that COFC possessed jurisdiction under 28 U.S.C. § 1491(a) over implied-in-fact contracts arising outside of the procurement context,2 it had never resolved whether COFC had jurisdiction over implied-in-fact contracts in the procurement context.

Background

Safeguard Base Operations LLC (Safeguard) filed a bid protest challenging the award of a multi-year contract issued by the Department of Homeland Security (DHS) for dorm management services. Safeguard, a disappointed offeror, protested unsuccessfully several times at the Government Accountability Office (GAO) and then at COFC, alleging that the government improperly disqualified Safeguard’s proposal on an arbitrary and capricious basis and thus violated an implied-in-fact contract to fairly and honestly consider Safeguard’s proposal. COFC also ruled against Safeguard, and Safeguard appealed to the Federal Circuit.

As a threshold issue, and before going to the merits of the case, the Federal Circuit determined whether COFC had jurisdiction over Safeguard’s implied-in-fact contract claim raised in the procurement context and, if so, whether such jurisdiction arose under 28 U.S.C. § 1491(a)(1) or 28 U.S.C. § 1491(b)(1).

Specifically, 28 U.S.C. § 1491(a)(1) provides jurisdiction over implied contracts generally:

The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort. For the purpose of this paragraph, an express or implied contract with the Army and Air Force Exchange Service, Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, or Exchange Councils of the National Aeronautics and Space Administration shall be considered an express or implied contract with the United States.