Earlier this summer, the U.S. Court of Appeals for the Federal Circuit issued a split decision in Inserso Corporation v. U.S. that we argued had far-reaching implications for both government contractors and the private bar, relating to timeliness and waiver issues in the bid protest context.

The Federal Circuit recently issued another decision, The Boeing Company v. U.S., discussing waiver in the claims context, but with a very different outcome than Inserso, and which arguably circumscribes the further expansion of the waiver doctrine.

As the judicial pendulum swings back and forth on the proper application of the waiver doctrine — which was first articulated by the Federal Circuit in 2007 in Blue & Gold Fleet v. U.S. — practitioners and impacted government contractors are anxious to see how the courts will draw the boundaries on this important procedural element of bid protest and claims practices.

Background

In 2017, Boeing filed an action in the U.S. Court of Federal Claims under the Contract Disputes Act, seeking recovery of amounts paid to the U.S. Department of Defense. Boeing alleged that the DOD breached the contract at issue and effected an illegal exaction by failing to negotiate an equitable adjustment in accordance with the Cost Accounting Standards statute. [1]

The Cost Accounting Standards statute which was incorporated into the contract and requires simultaneously adopted cost-increasing and cost-lowering changes in contractor accounting practices to be considered as a group, with the reductions offsetting the increases. Specifically, Boeing alleged that, by following Federal Acquisition
Regulation 30.606's command to disregard cost-lowering changes to Boeing's accounting practices, and billing Boeing only for the cost-increasing changes, the DOD unlawfully charged it too much.

The government, in turn, argued before the Federal Claims Court that Boeing had waived its breach of contract claim by failing to challenge the legality of FAR 30.606 before entering into the contract.

The Federal Claims Court agreed, characterizing the conflict between FAR 30.606 and the Cost Accounting Standards statute as a patent ambiguity in the contract.[2] The court thus ruled that, because Boeing did not seek preaward clarification of the conflict, its contract claims were foreclosed as a matter of law.[3]

The Federal Claims Court further agreed with the government that jurisdiction was lacking with respect to Boeing's illegal exaction argument because the Cost Accounting Standards statute, on which the argument rested, "is not a money-mandating statute."

Boeing then timely appealed to the Federal Circuit, contending that the Federal Claims Court incorrectly ruled that Boeing waived its challenge to the lawfulness of FAR 30.606 and that the court erroneously determined that it lacked jurisdiction to consider Boeing's illegal exaction claim.

Republished with permission. The complete article, "Fed. Circ. Inconsistent On Bid Protest Waiver Precedent," was originally published by Law 360 on August 14, 2020.