Although COFC Found Protested Contract Illegal, It Did Not Have Jurisdiction to Hear Challenge to Related Bridge Contract Executed After Protested Contract Expired; Electra-Med Corporation v. United States, COFC No. 18-927C

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Government’s motion to dismiss protest is granted. The protester had filed a protest with the COFC alleging agency’s contract modification was illegal. The court agreed with the protester, but it did not grant injunctive relief, finding the balance of harms favored the government. Nevertheless, the court retained jurisdiction in case the agency exercised the illegal contracts’ options. Instead of exercising options, however, the government executed bridge contracts with the same terms as the illegal contracts. The protester complained to the court. But the court found that the bridge contracts were separate from the illegal contracts at issue in the protest. Absence a separate protest challenging the bridge contracts, the court lacked jurisdiction to consider the legality of the bridge contracts.

Electra-Med Corporation filed a protest with the Court of Federal Claims alleging that the Department of Veterans Affairs had improperly modified existing contracts to avoid competition. The COFC agreed, finding that the contract modification were an illegal attempt to avoid competition and veteran preference requirements. But the COFC did not grant relief, reasoning that the balance of harms favored the VA.

Electra-Med appealed to the Federal Circuit, which affirmed the denial of the injunction. At the time of the appeal, only six months remained on the challenged contracts if the VA did not exercise any options. Because there was a possibility that the contract could be extended, the Federal Circuit remanded back to the COFC to retain jurisdiction and consider whether the harms still favored the government if the options were exercised.

Instead of exercising the options, the VA executed new bridge contracts to cover the gap until it could award new (presumably legal) contracts as part of a new procurement. The government filed a motion to dismiss the protest still pending at the COFC. Electra-Med opposed the motion, arguing that the bridge contracts were effectively an extension of the contract the court had already found illegal.

The court appreciated that execution of the bridge contract did not abate the harm the Electra-Med. Nevertheless, the court reasoned that as a result of the prior contracts’ expiration, the parties’ legal rights had changed. The previous illegal contracts had were no longer at issue. The new short-term bridge contract were separate contracts, and their legality was unrelated to the legality of the previous expired bridge contract. The court posited that it does not sit as an agency ombudsman reviewing each contracting decision as it happens. If Electra-Med wanted to challenge the legality of the bridge contract, it needed to file a separate protest.

Electra-Med is represented by Eric. S. Cousins, David S. Black, Gregory R. Hallmark, and Mary Beth Bosco. The government is represented by David N. Kerr, Ethan P. Davis, Robert E. Kirschman of the U.S. Department of Justice as well as Claudia Burke and Jason Fragoso of the Department of Veterans Affairs.

COFC - ElectraMed