(Percipient.ai Inc. v. United States, et al., No. 23-1970, Fed. Cir.)
(Percipient’s opposition available. Document #46-241113-002B.)
Percipient.ai Inc. filed its opposition on Sept. 26.
The National Geospatial-Intelligence Agency (NGA) analyzes images and geospatial data and provides the intelligence to the U.S. government. To enhance collection abilities, the NGA solicited offers under a contract program known as SAFFIRE. SAFFIRE sought a system for storing, managing and disseminating data in SOM Enterprise Repository (SER) and a user-friendly system with the ability of computer vision (CV), a form of artificial intelligence.
After the contract was awarded to a different vendor, Percipient.ai alerted the government that Title 10 U.S. Code Section 3453, 10 U.S.C. § 3453, requires consideration of commercial products such as Percipient’s Mirage and that commercial products would save the government millions of dollars and produce results years before unique software. Percipient conceded that Mirage could meet only the CV and not the SER conditions of the contract.
Testing
NGA told Percipient that if it wanted to participate in SAFFIRE, it could contact CACI Inc.–Federal, which handles procurement. Percipient demonstrated Mirage to CACI and was told that a deeper investigation would result. The investigation never happened. Five months later, Percipient learned that CACI intended to build its own software solution.
Percipient contacted CACI, questioning its ability to objectively evaluate Mirage and requesting the ability to demonstrate the software to NGA directly. NGA agreed to a demonstration. After the demonstration, Percipient and NGA spent months attempting to reach an agreement. However, NGA ultimately rejected Mirage and went ahead with CACI’s purpose-built software.
Percipient sued the United States in the U.S. Court of Federal Claims seeking to enjoin violation of Section 3453. CACI intervened, and both it and the government moved to dismiss. The court denied the motions but later vacated its ruling. After additional briefing, the court granted the motions for lack of subject matter jurisdiction.
Percipient appealed.
Majority Ruling
A majority of the Federal Circuit panel on June 7 concluded that the Federal Claims Court has jurisdiction over Percipient’s complaint. Percipient alleges only that the government and CACI failed to comply with Section 3453 by not properly evaluating Mirage.
The next question is whether the court has jurisdiction under the Tucker Act, 28 U.S.C. § 191(b)(1), over the alleged statutory and regulatory violations, the majority said. The majority concluded that the allegation of violation of Section 3453 provides jurisdiction.
The majority held that under Section 3453, interested parties include the offerer of a commercial product whose economic interests would be impacted by the statute’s violation and that Percipient had standing. An interested party need not have been a bidder with direct economic interest. “Percipient is an interested party because it offered a commercial product that had a substantial chance of being acquired to meet the needs of the agency had the violations not occurred,” the majority explained.
Finally, the majority turned to the timeliness of Percipient’s actions. Percipient does not challenge the terms of the solicitation or any alleged defect. Instead, the case focuses on post-award delegations. As a result, there was no obligation for Percipient to object before the close of bidding, and it did not waive its right to object by failing to do so, the majority said.
Judge Kara Farnandez Stoll wrote for the panel, joined by Judge Richard G. Taranto.
Dissent
In a dissent, Circuit Judge Raymond C. Clevenger said: “This is a very important government contract case. In conflict with binding authority, . . . and even absent that authority, the majority errs in significantly narrowing the existing scope of the task order bar in 10 U.S.C. § 3406(f)(1), by reinterpreting the statute to bar only protests focused on a task order, not protests more broadly made in connection with the issuance of a task order. It also likewise errs in significantly broadening the existing scope of ‘interested party’ statutory standing in 28 U.S.C. § 1491(b)(1) by permitting potential subcontractors for the first time to bring suit under § 1491(b)(1).”
He said that because Percipient’s Mirage software meets only one of the two conditions of the government geospatial data contract, Percipient is at best a “wishful potential subcontractor.”
Petition
In its Sept. 9 petition for panel rehearing and rehearing en banc, the government says the majority misapplied the meaning of interested party as defined by Section 1491(b)(1) and court precedent. Nothing suggests that the definition of what constitutes an interested party changes due to context. The majority never explains why the definition would change. That is especially glaring since courts generally assume phrases mean the same thing when they appear in different but related sections of a law. “Here, the majority did not just ascribe different meanings to the same words in different sections of the statute, but ascribed two different meanings to the same statutory text,” the government says.
The policy concerns that the majority cited are irrelevant to the standing inquiry in the case, the government says. The Supreme Court “has long rejected that kind of ‘if not us, who?’ argument as a basis for standing,” the government says, citing Food & Drug Admin. v. All. for Hippocratic Med., 602 U.S. 367, 396 (2024).
The majority’s ruling on the scope of Percipient’s bid protest includes scant analysis, perhaps because nothing supports the majority’s conclusion regarding the scope of the protest, the government argues. The law applies to protests by disappointed bidders, and nothing suggests it applies more broadly than that. Indeed, the law was intended to impose a comprehensive statutory scheme and remedies, the government says.
“[The] majority’s decision creates a perverse outcome. A potential bidder on a task order is barred from challenging an allegedly illegal term of the task order during evaluation and award of the task order, yet it could wait until after award to claim that performance of the task order is not in accordance with law. For example, if the task order here had included a requirement to develop new software to meet the computer vision requirements, the task order bar would have precluded Percipient from challenging the task order solicitation before contract award as a violation of 10 U.S.C. § 3453(b). But under the majority’s rationale, Percipient could have protested performance (as it in fact did) after contract award, arguing that the contractor was developing new software in violation of law,” the government tells the court.
‘No Answer’
In its opposition, Percipient calls the government’s arguments “uniformly unsound.” Rehearing en banc is appropriate only where a decision conflicts with U.S. Supreme Court or circuit court precedent or is an issue of exceptional importance. None of those factors is present in this case. The government attempts to point to two cases that conflict with the ruling, but as the panel points out in its opinion the ruling does not actually conflict with either, Percipient says.
American Federation of Government Employees, AFL-CIO v. United States, 258 F.3d 1294 (Fed. Cir. 2001), did not address the same questions because Percipient is not challenging a solicitation or award but rather statutory and regulatory violations. In its request for rehearing, the government never credibly makes the point that AFGE even addressed the question in this case, let alone that the ruling foreclosed on the panel’s conclusion, the company says.
Nothing in SRA International, Inc. v. United States, 766 F.3d 1409 (Fed. Cir. 2014), prevents challenges to work performed under a task order, Percipient says. The SRA court had no reason to address Section 3406’s impact on actions relating to work performed under a task order. Interpreting the ruling in SRA as answering questions that were not before the court would violate basic rules governing how courts handle precedent.
“The Government has no answer to the panel’s explanation for why this case does not conflict with SRA. It relies on the ‘direct and causally connected’ language, but fails to respond to the Court’s explanation for why that language does not govern,” Percipient says.
Counsel
The government is represented Principal Deputy Assistant Attorney General Brian M. Boynton, Patricia M. McCarthy, Assistant Director Corinne A. Niosi and Senior Trial Counsel Reta E. Bezak of the U.S. Department of Justice.
Percipient is represented by Hamish P.M. Hume, Samuel C. Kaplan, Eric J. Maurer and Gina A. Rossman of Boies Schiller Flexner LLP.
All are in Washington.
(Additional documents available: Government’s petition for rehearing with attachments. Document #46-241002-034B. Federal Circuit’s opinion. Document #46-240710-014Z. Percipient’s opening brief. Document #46-240710-015B. Government’s appellee brief. Document #46-240710-016B. Percipient’s reply brief. Document #46-240710-017B. Government’s supplemental brief. Document #46-240710-018B.)