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No District Court Jurisdiction over Insourcing Challenge

A contractor's Administrative Procedure Act challenge to the government's decision to insource work was dismissed for lack of jurisdiction by the District Court for the Western District of Texas because the claims fell within the Court of Federal Claims' exclusive Tucker Act jurisdiction. The incumbent contractor challenged the government's decision to insource operation of an airport control center and related information technology services. The government moved to dismiss, contending the contractor's claims related to a procurement and fell within the CFC's exclusive jurisdiction under 28 USC 1491(b). The contractor argued insourcing was not related to a "procurement" or "acquisition" as defined by the Office of Federal Procurement Policy Act (41 USC 403), because it did not require a solicitation or contract award process and involved a decision to meet a particular need "without 'acquiring property or services.'"

Procurement Decision

However, applicable procedures required the government to evaluate insourcing costs and benefits in relation to an identified, specific, and concrete need and determine whether an acquisition was necessary. "A decision to insource is a decision not to acquire, not to enter a procurement process, and thus is necessarily a decision made 'in connection with a procurement or proposed procurement.'" The court also rejected the contractor's attempt to evade the Tucker Act by arguing it did not meet the Act's definition of "interested party" as an "actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract." In order to have standing to bring an APA challenge, the contractor "must have been injured by the government's decision to remove the scope of work from the competitive realm." In other words, the contractor must have been a potential bidder, but it could not "rely on its potential bidder status for its theory of APA standing and simultaneously refute it in an effort to keep its lawsuit in [a federal district court]." (Rothe Development, Inc. v. Dept. of Defense, et al., DC WD Tex, 54 CCF 79,465)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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