Important Decision Issued On Challenges to Financial Assistance Awards

By | Published On: February 19, 2016

In January, the Court of Appeals for the Federal Circuit Issued an Important Decision on Jurisdiction Over Challenges to Financial Assistance Awards.

Over the past several years, there have been a number of financial assistance award “bid protest” cases brought in the Court of Federal Claims (“COFC”) under that Court’s Tucker Act (28 U.S.C. § 1491(b)) procurement contract bid protest jurisdiction.

Without delving into the legal nuances of the recent cases, they generally involved successful challenges to cooperative agreements awarded to financial assistance “intermediaries” (i.e., entities receiving assistance for the purpose of providing some service to the ultimate beneficiaries of a government program).  These cases, which seemed to be increasingly common in recent years, include Inc. v. United States, 104 Fed. Cl. 575 (2012), CMS Contract Management Services, 745 F.3d 1379 (Fed. Cir. 2014), and COFC’s trial-level decision in Hymas v. United States, 117 Fed. Cl. 466 (2014).

In January 2016, however, the Court of Appeals for Federal Circuit (“CAFC”) issued a decision that may discourage such challenges in the future.

In Hymas v. United States, __ F.3d __, Fed. Cir. No. 2014-5150 (2016 WL 158470) (Jan. 14, 2016), CAFC clarified how COFC is to analyze its potential jurisdiction over an apparent financial assistance award.  Contrary to the somewhat convoluted precedent that has developed over the past several years, CAFC’s instructions are straight-forward:

  1. COFC is to look to whether the agency making the award has specific statutory authority to make financial assistance awards.  If it does not, the award cannot be a financial assistance award.  Id. at 3.
  1. If the agency has authority to make financial assistance awards, COFC should apply the definitional standards of the Federal Grant and Cooperative Agreement Act (“FGCAA”), 31 U.S.C. § 6301 et seq., in assessing the nature of the challenged activity.  Id. at 10-13.
  1. In applying the standards of FGCAA, a reasonable agency determination that a particular instrument is appropriate to the circumstances is entitled to deference by the reviewing Court.  Id. at 14.

This clear and simple analytical approach, accompanied by deference to the awarding agency’s selection of instrument, will make it more difficult for plaintiffs to successfully argue that an instrument an agency terms a “cooperative agreement” or “grant” is, in fact, a “procurement contract.”  It will be interesting to see whether CAFC’s guidance has the effect of discouraging future challenges to financial assistance awards in COFC.

No matter the effect, disappointed applicants will not be left without recourse.  They continue to have the option of challenging agency awards in the federal District Courts under the Administrative Procedure Act, albeit with certain obstacles inherent in attempting to overcome a federal agency’s decision.

If you would like additional information regarding challenges to financial assistance awards (“grant bid protests”), or about defending your financial assistance award from challenges by others, please contact our Federal Grants practice group at Feldesman Tucker Leifer Fidell LLP, or 202-466-8960.

Learn more about the FTLF Team