Disgruntled bidders on government contracts are at the moment in a legal limbo. Companies that lose out--or think they are about to lose out--on selling anything from vending machines to the expertise to build massive dams are not at all sure where to go with their complaints. And they don't like the answers that are beginning to emerge from the courts.
The current confusion stems from the Federal Court Improvement Act of 1982. That statute, which merged the old Court of Customs and Patent Appeals and the appellate division of the Court of Claims into a new Court of Appeals for the Federal Circuit, rewrote the rules on a wide variety of suits against the government. But it left unclear the proper forum to hear attempts by a bidder whose bid was not the lowest to argue that the company making the low bid should not in fact win the business. Those arguments may range anywhere from evidence that the low bidder will use proprietary information belonging to another company to allegations that the supposed winner just doesn't have the technical ability to do the job.
Before the new law went into effect Oct. 1, bidders could go to any federal district court in the country with such charges, although the judges there--not experts in government procurement--were supposed to defer to the General Accounting Office on close calls. Contractors had hopes that under the 1982 statute, they would have the choice of either picking a nearby district court or going to the Claims Court, a new trial-level court established by the law. The advantage of having a choice: contractors could pick local courts in minor cases in order to save the time and money involved in having executives and witnesses travel to Washington, but opt for the Claims Court here in complex cases, where the judges' greater familiarity with federal buying policies would be a major plus.
Instead, the first interpretations of the law are not only refusing to recognize such flexibility, but laying down a rule that company lawyers say is unworkable. Decisions from both the Claims Court and the U.S. district court in Washington say that the Claims Court is the place to take disputes before a contract is actually awarded, but that the district court is the place for cases involving contracts already signed.
Alternate routes for appeals "is a distinction that never existed before," says David V. Anthony, a Washington lawyer specializing in government contracting. And he insists that the differentiation "without any question cannot survive; if the statute says that, somebody's got to change the statute." He explains that companies cannot live with that kind of bifurcated routing for appeals because "it's common not to know what the status of a contract is."
That is just what happened in the case that is shaping up as the key one in the controversy. It is actually a consolidation of two separate cases, objecting to giving P. W. Parker Inc. jobs renovating federal buildings. John C. Grimberg Co. and W. M. Schlosser Inc., the second lowest bidders on the jobs, questioned the ability of the designated mechanical subcontractors on the projects--R&P Contractors, a wholly owned subsidiary of Parker--to handle the task. The challengers filed their suit in the Claims Court Oct. 4, asking an injunction against the awarding of the contracts to Parker. But Grimberg and Schlosser learned at a hearing the next day that the contracts had actually been awarded the week before.
The Claims Court decision to send the controversy on to the district court set up a quick test of the meaning of the new law. And the Court of Appeals for the Federal Circuit moved quickly to review the decision. Five appeals judges--rather than the usual panel of three--heard arguments in the case in November, and expected to hand down a ruling before Thanksgiving. But the issue seems to be more contentious than originally thought, and the cases have now been set to be argued again on Feb. 7, before all 12 judges of the court.
The provision of the law that has led to the disagreement says "to afford complete relief on any contract claim brought before the contract is awarded, the court shall have exclusive jurisdiction to grant declaratory judgments and such equitable and extraordinary relief as it deems proper." The key is the word "exclusive." Companies argue that it means that the courts, and not contract review boards within the agencies, shall have the power to hear such complaints.
The same wording led the Claims Court, in the Parker cases, to decide that it has no jurisdiction in post-award disputes. If Congress was so explicit about giving it power to step in before a contract is signed, it must have meant not to change anything in disputes coming later, or it would have said so, Judge George Willi explained. Since the lawmakers did not address the question, that leaves the power in the district courts, where it was before the 1982 measure, he reasoned.
So, at least until the appeals court rules, bidders have to be sure to get into the right court. Making a mistake can make them miss the deadline for filing anywhere.