The U.S. Court of Appeals for the Federal Circuit, in SEKRI, Inc. v. United States, recently added to the growing body of case law that has declined to extend the scope of the Blue & Gold waiver rule. Under the Blue & Gold rule, “a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action in” court. This noteworthy decision is discussed below. 

The Facts

The Javits-Wagner-O’Day Act establishes a procurement system, known as the AbilityOne Program, in which the government procures certain commodities and services from nonprofit agencies that employ persons who are blind or otherwise severely disabled.

In April 2020, the Defense Logistics Agency (DLA) issued a full-and-open competition solicitation for Advanced Tactical Assault Panels (ATAP), a military gear-carrying system for use by paratroopers. SourceAmerica, one of the central nonprofit agencies that helps administer the AbilityOne Program, then informed DLA that ATAP appeared on the AbilityOne Procurement List and that SEKRI — Southeastern Kentucky Rehabilitation Industries, Inc. — was the designated nonprofit agency authorized to supply ATAP. 

On October 7, 2020, the solicitation period ended. On January 21, 2020, before an award was made, SEKRI filed a complaint in the U.S. Court of Federal Claims challenging, as contrary to law, DLA’s procurement of ATAP via a competitive solicitation rather than through SEKRI as the mandatory source under the AbilityOne Program. 

In March 2021, the court dismissed SEKRI’s complaint because the court found that SEKRI was neither an actual nor a prospective bidder and thus did not have standing. The court also found that SEKRI failed to object to DLA’s solicitation before the close of the bidding process and thus waived its objection under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007). Thereafter, SEKRI appealed to the Federal Circuit. 

The Holding

The Federal Circuit reversed the court, finding that SEKRI had standing because it was the designated mandatory source for ATAP under the AbilityOne Program. The Federal Circuit also held that SEKRI did not waive its right to protest under Blue & Gold. Specifically, the Federal Circuit held that, per its decision in Harmonia Holdings Grp., LLC v. United States, 20 F.4th 759 (Fed. Cir. 2021) and the specific rules of the AbilityOne Program, SEKRI satisfied its obligation to submit a “timely, formal challenge” to the solicitation when SEKRI, through SourceAmerica, gave notice to DLA that SEKRI was the mandatory source of ATAP under the AbilityOne Program. 

The Takeaway

The Federal Circuit’s SEKRI decision turned on unique facts involving the AbilityOne Program and, thus, was a case of first impression regarding that program. The case, nevertheless, has broader importance in that it represents yet another judicial narrowing and modification of the Blue & Gold waiver rule. In addition to the Federal Circuit’s 2021 decision in Harmonia Holdings (mentioned above), the Court of Federal Claims in VS2 v. United States, for example, recently rejected a novel Blue & Gold waiver argument made by the government, holding that the argument in that case “threatenen[ed] to reforge Blue & Gold from a sensible shield against gamesmanship and unjustifiable delay into a broadsword capable of cutting down even meritorious arguments in a manner . . . that [the] Federal Circuit has never sanctioned.” Taken together, the cases suggest that future attempts by the government to use the Blue & Gold waiver doctrine as a sweeping tool to dispose of cases will likely be examined more closely to determine whether the specific facts limit any potential waiver.

If you have any questions about this noteworthy case or any related issues, please feel free to contact Aron Beezley or Patrick Quigley.

Construction law is NOT boring, at least that’s what I tell my daughters. In these series of posts, I will explore some of the VERY interesting historical facts about construction law that can be used at your next motion hearing, family gathering, social event or fellow lawyer meeting.  While these anecdotes may not keep your kids or significant others from rolling their eyes, hopefully they can provide a small respite from your (yes, I admit) sometimes boring life in construction law.

Fact: if there is anything state court judges hate more than discovery disputes, it’s dealing with mechanic’s liens. You see their judicial eyes roll up. How many times has an owner uttered sheer astonishment when their lawyer says that they may have to pay twice for materials or labor on a project?  How is that even possible in the good old U.S. of A? No matter what side you are on, to spice up a brief or oral argument when lien statutes are at issue, make a note to “get patriotic” by mentioning one of our founding fathers: our third president, Thomas Jefferson. Why? Because TJ, as he is affectionally called, actually is the founding father of United States lien law.

To encourage construction in the new capital city of Washington, the federal government, as well as the new state of Maryland, were trying to convince mechanics (back then that meant “laborers”) to do work and provide “credit” to get the new capital built. The history books show that TJ worked with the Maryland General Assembly to establish the United States’s (and the world’s) first set of unique construction lien laws. 

However, don’t go too far out on a lien limb because TJ, despite his many attributes, did not conceive the basic idea of a lien. There were already lien-like privileges in some civil law countries such as France (which TJ loved) and Spain, and some historians trace their roots to the mighty Roman Empire (please do not buy a lien history book for your favorite construction lawyer…if they even exist). Also, remember that despite the Louisiana purchase, since Louisiana had been controlled by both Spain and France, the French Napoleonic Code had been adopted.  With knowledge about some of these civil law concepts, what then occurred was the encouragement and colonial arm twisting of landowners (“thou must be joking…”) to pass legislation to provide to builders and suppliers rights against the land itself, along with their basic breach of contract rights against the entity that hired them to do the work. Pretty much all states eventually followed Maryland’s lead, and in Texas and California, mechanic’s liens are a constitutional right.

The result was the “builders” that built our great capital and our country know they have statutory legal rights even if the entity that hires them “takes the money and runs.” While these days debtors prisons are out, when payments for work do not properly “flow down,” like ants at a picnic, there are many claims and little opportunity to recover spent money and materials.  These rights have become even more important in these modern days when many commercial (and residential) prime contractors do not self-perform and subcontract out 100% of the actual work. As the great philosopher Tom Cruise famously said, “Show me the money!” 

Of course, since liens are against common law, most case law and judges agree that lien laws have to be strictly interpreted: 100% compliance is generally the rule versus the exception. While many states have attempted to update and modernize lien laws, the next time you pull out your state’s lien statutes, take a look at the legislative history of a few specific statutes and you will see references to the 1800s and case law from the early 1900s. It also goes without saying that lien laws differ in every state, so be very, very careful if you represent a client in a lien law issue in an unfamiliar state. Local counsel who knows the nuances and ins and outs of sometimes ambiguous lien laws is many times a must.      

So, what’s the bottom line and why refer to Thomas Jefferson in your next brief, at the dinner table or in front of a state court judge who may just want to move on and handle a discovery versus lien law dispute? You can, first of all, liven things up. When have you been able to — no matter what side of the lien table you are on — stand up and talk about the founding of our country and the laws that began in the early 1800s by one of the most revered presidents in United States history? If you represent a lien claimant, how dare the owner try to get out of paying a laborer/supplier? How unpatriotic and ashamed TJ would be. If you represent the owner, you can cite the common law and state that even TJ, also a renowned lawyer and landowner, made sure that the “t’s” and “i’s” of this purely unique statutory scheme must be enforced and followed. Either way, sometimes even judges need some entertainment in the middle of a long, tedious, and sometimes boring motion docket, and fathers need to know that sometimes their kids do not think that they are the most boring lawyers in the world.

More than seven months ago, on September 9, 2021, President Biden issued Executive Order 14042, which imposed a COVID-19 vaccine mandate on many federal contractors and subcontractors. As we have previously reported, the order intended to use the federal government’s contracting power to increase the number of vaccinated people. Since then, 26 states have filed seven federal court cases that have resulted in six injunctions, one of which was nationwide. The United States now has appealed all six injunctions. Recently, the Eleventh Circuit was the first appellate court to hear oral argument in the Georgia case, the most significant of all the cases, because that is the one with the nationwide injunction.

Background

The order was one of several attempts by the government to push vaccines out broadly to the public. It directed federal agencies to begin amending solicitations and contracts to include a COVID-19 vaccination requirement for federal contractors and subcontractors. The order applies broadly to services, construction, leasehold interest, or concessions contracts performed in the U.S. and its outlying areas, and generally valued above $250,000.

The order, however, was challenged very soon after it was issued. A variety of private individuals and organizations filed suit, but the cases that have gotten the most traction were those filed by the attorneys general of 26 states who, in different coalitions, filed suits in the Eastern District of Kentucky, the Southern District of Georgia, the Eastern District of Missouri, the Western District of Louisiana, the Middle District of Florida, the Southern District of Texas, and the District of Arizona. The states filed these cases at the end of October and at the start of November 2021.

While arguing a variety of legal theories, the one argument common to all the state cases has been that the president exceeded his authority under the Federal Property and Administrative Services Act (Procurement Act), 40 U.S.C. § 101 et seq., when he issued the order. The Procurement Act has as its purpose the provision to the federal government of an economical and efficient system for procuring and supplying property and nonpersonal services. The argument has been successful.

  • On November 30, 2021, in Kentucky v. Biden, the U.S. District Court for the Eastern District of Kentucky enjoined enforcement of the vaccine mandate in Kentucky, Ohio, and Tennessee, which are the state plaintiffs. The U.S. has appealed to the Fifth Circuit.
  • On December 7, 2021, in Georgia v. Biden, the U.S. District Court for the Southern District of Georgia enjoined enforcement of the vaccine mandate nationwide. The state plaintiffs here are Alabama, Georgia, Idaho, Kansas, South Carolina, Utah, and West Virginia. The U.S. has appealed to the Eleventh Circuit, which recently heard oral argument, the first court to do so.
  • On December 16, 2021, in Louisiana v. Biden, the U.S. District Court for the Western District of Louisiana enjoined enforcement of the order in contracts between the states of Indiana, Louisiana, or Mississippi, the state plaintiffs, or their agencies, and the federal government. The U.S. has appealed to the Fifth Circuit.
  • On December 20, 2021, in Missouri v. Biden, the U.S. District Court for the Eastern District of Missouri enjoined enforcement of the order in Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, and Wyoming, which are the state plaintiffs. The U.S. has appealed to the Eighth Circuit.
  • On December 22, 2021, in Florida v. Nelson—for some reason, Florida listed the current NASA Administrator, who is a former Florida politician, first among the named defendants—the U.S. District Court for the Middle District of Florida enjoined enforcement of the Order in Florida, the only state plaintiff. The United States has appealed to the Eleventh Circuit.
  • On January 27, 2022, in Brnovich v. Biden, the U.S. District Court for the District of Arizona enjoined enforcement of the order in Arizona, the only state plaintiff, by federal agencies. The U.S. has appealed to the Ninth Circuit.
  • The case in Texas is an exception procedurally. In Texas v. Biden, the U.S. District Court for the Southern District of Texas stayed proceedings in a status conference that took place on December 10, 2021, three days after the Georgia court issued the nationwide injunction. Texas was the only state plaintiff in that case.

The Georgia appeal is the most developed procedurally, with oral argument having taken place on April 8, 2022, before an Eleventh Circuit panel comprised of Circuit Judges R. Lanier Anderson III, J.L. Edmondson, and Britt C. Grant. The government argued that there is a close nexus between the order and the Procurement Act’s goals of economy and efficiency in federal contracting, making the order lawful. The government also challenged the nationwide scope of the injunction as overly broad. There was active questioning from the bench about the order’s permissibility, given prior Executive Orders involving non-discrimination policies. There were also the questions of whether, in a close case, the injunction constituted an abuse of discretion and whether the injunction was properly issued nationwide.

What is the takeaway?

Even if the government is successful at the Eleventh Circuit, it would then have to succeed individually on each of the other cases to reinstate its national COVID-19 vaccine policy, given the other injunctions. In light of what appears to be a decision by the Department of Justice to challenge adverse decisions across the board and the intensity of political feeling on the issue nationally, whatever the outcome at the Eleventh Circuit, it is likely that the validity of the order will finally be decided at the Supreme Court. The irony is that, whenever that happens, perhaps next year, the virus the order was meant to combat may well — and hopefully will — have disappeared as a serious national public health issue.

Bradley will continue to monitor this issue and provide further updates as appropriate. If you have any questions about this article, please feel free to contact Patrick Quigley or Aron Beezley.

Subject matter tags:

COVID-19 (Coronavirus)

Government Contracts

Federal Contractors