It’s a big deal in the government contracts community whenever the Federal Circuit weighs in on a bid protest.  And it is a particularly big deal when the Federal Circuit issues a split opinion in a bid protest.  That’s what happened last week in Inserso Corporation v. United States (No. 2019-1933), where the Federal Circuit issued a split opinion denying a protest as waived under Blue & Gold.

The procurement at issue was a multiple-award IDIQ with two tracks:  an unrestricted track and a small business track.  Offerors were permitted to compete in both tracks, but could be awarded only one contract.  Inserso, the protester, bid on the small business track only.

The awards in the unrestricted track were made months earlier than the awards in the small business track.  As a result, offerors that participated in both tracks received their debriefings for the unrestricted track well before they submitted FPRs in the small business track.  You can probably see where this is going.

After awards were made on the small business track, Inserso protested, arguing that the staggered debriefings resulted in unequal treatment and an organizational conflict of interest.  According to Inserso, offerors who participated in both tracks were able to use information that they learned during their debriefing on the unrestricted track — including awardee prices and information about the agency’s evaluation — to improve their proposals on the small business track.

The Court of Federal Claims denied the protest, finding that Inserso had failed to demonstrate prejudice.  The Federal Circuit also denied the protest, but for a different reason.  The Federal Circuit concluded that, under the court’s Blue & Gold rule, Inserso waived its protest by not filing it before award.

Under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007), a would-be protester must object to a solicitation that contains a “patent error” prior to contract award.  Failure to do so waives the would-be protester’s ability to object to the same error in any post-award bid protest filed at the Court of Federal Claims.

The majority opinion in Inserso was written by Judge Taranto and joined by Judge Mayer.  It concluded that “[b]ecause a bidder in the small-business competition exercising reasonable and customary care would have been on notice of the now-alleged defect in the solicitation long before the awards were made, Inserso forfeited its right to raise its challenge by waiting until awards were made.”  According to the court, Inserso should have known “that the bidders in the full-and-open competition had been debriefed” — and thus been aware of its protest ground — either when the awards were made in the unrestricted track or when (three months later, but still prior to the awards in the small business track) GAO denied a protest related to the unrestricted track.

Judge Reyna filed a dissenting opinion, taking the position that “the validity of” Blue & Gold has been “undermined by the reasoning” of a 2017 Supreme Court case called SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC.[1]  But Judge Reyna also went on to explain that even under the Blue & Gold rule, Inserso’s protest was not waived (or, in Judge Reyna’s view, untimely) because it arose “from latent errors not apparent from the solicitation” and thus did not need to be filed before award.

The Federal Circuit’s decision raises many fascinating — and consequential — questions.  What are offerors charged with knowing while they’re bidding on a contract?  To what extent must offerors predict the possibility of something going wrong in a procurement?  Would this type of protest be vulnerable to dismissal as unripe prior to award?  Does Blue & Gold apply beyond challenges to the terms of a solicitation?  And, considering the dissent, has the Blue & Gold rule been called into question?  It will be worth watching how Inserso gets interpreted and applied.

[1]           In that case, the Supreme Court held that the doctrine of laches could not be applied to bar a lawsuit that was filed within the time set by the statute of limitations; the Court reasoned that a judge-made timeliness rule could not “jettison” Congress’ judgment regarding the appropriate time within which to file suit.  According to Judge Reyna, the Blue & Gold waiver rule is in fact a judicially-created timeliness rule (similar to laches) and therefore runs afoul of the SCA Hygiene decision.

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Photo of Kayleigh Scalzo Kayleigh Scalzo

Kayleigh Scalzo represents government contractors in high-stakes litigation matters with the government and other private parties. She has litigated bid protests in a wide variety of forums, including the Government Accountability Office, U.S. Court of Federal Claims, U.S. Court of Appeals for the…

Kayleigh Scalzo represents government contractors in high-stakes litigation matters with the government and other private parties. She has litigated bid protests in a wide variety of forums, including the Government Accountability Office, U.S. Court of Federal Claims, U.S. Court of Appeals for the Federal Circuit, FAA Office of Dispute Resolution for Acquisition, Port Authority of New York and New Jersey, federal and state agencies, and state courts. She is also a co-head of the firm’s Claims, Disputes, and Other Litigation Affinity Group within the Government Contracts practice.

Kayleigh has particular experience navigating state and local procurement matters at both ends of the contract lifecycle, including bid protests and termination matters. In recent years, she has advised and represented clients in connection with procurements in Alaska, Arizona, California, the District of Columbia, Illinois, Indiana, Kansas, New Jersey, New York, Pennsylvania, Tennessee, Texas, and Virginia.

Kayleigh is a frequent speaker on bid protest issues, including the unique challenges of protests in state and local jurisdictions.

Photo of Peter Terenzio Peter Terenzio

Mr. Terenzio advises contractors across a broad range of different issues. His practice includes bid protests, contract claims and disputes, regulatory counseling, and internal investigations.

Before joining the firm, Mr. Terenzio clerked for Chief Judge Susan G. Braden of the Court of Federal Claims.