Federal Circuit Reconsiders Who Can Protest: A Potential Opening for Subcontractors in Government Procurement

In a rare and closely watched legal proceeding, the U.S. Court of Appeals for the Federal Circuit has agreed to rehear a bid protest case en banc that could reshape who qualifies as an “interested party” in federal procurement disputes. At issue is whether commercial subcontractors—entities who are not prime bidders—can bring legal protests to the U.S. Court of Federal Claims when alleging violations of procurement law.

The case involves Percipient, a commercial software company specializing in computer vision technology. Percipient was not a prime contractor nor a named subcontractor on a recent contract awarded by the National Geospatial-Intelligence Agency (NGA), yet the company claims it was unfairly excluded from consideration. The NGA issued an indefinite-delivery/indefinite-quantity (IDIQ) contract that covered both data management and computer vision components. Percipient only sought to provide the latter and pitched its solution both to NGA and the prime contractor, CACI. Ultimately, CACI used its own software, and Percipient believes that this choice violated statutory preferences favoring commercial software products.

The company’s legal theory falls under the third prong of the Court of Federal Claims’ jurisdiction—an alleged violation of law or regulation “in connection with a procurement or proposed procurement.” This is distinct from the more common first and second prongs that cover protests to solicitations or contract awards. A three-judge Federal Circuit panel initially found that Percipient did qualify as an “interested party” under this third category, arguing that the standard should be broader when no direct bid is possible and the claim concerns a statutory violation.

That decision, however, was vacated in late 2024 when the full Federal Circuit decided to rehear the case en banc. Such a move is highly unusual—no en banc procurement-related decision has been issued since 2012—and underscores the far-reaching implications of the case. During oral argument, the eleven active judges posed pointed questions to attorneys representing Percipient, the government, and CACI. Central to the debate is whether expanding the definition of “interested party” under the third jurisdictional prong would effectively nullify the traditional limitations that apply to the other two prongs.

Percipient’s legal team argued that subcontractors should be able to challenge procurement violations when they can show direct harm—not merely derivative interests—especially in cases where government policies require consideration of commercial offerings. They further contended that denying standing in such cases would render the third jurisdictional prong meaningless and undermine statutory procurement goals.

The government and CACI, by contrast, warned that expanding standing would open the floodgates to subcontractor protests, potentially disrupting federal acquisition and contract administration. They urged the court to maintain consistency with an earlier precedent, AFGE v. United States, which applied the narrower Competition in Contracting Act (CICA) standard to all three categories of protests.

With no firm deadline for a ruling, the legal community is left to wait. Until then, the prior decision recognizing broader standing has been nullified, and Percipient’s protest remains unresolved. Even if the company prevails on standing, it would still need to return to the Court of Federal Claims to prove its substantive allegations.

This case carries major implications for vendors of commercial off-the-shelf products and services, who increasingly find themselves reliant on prime contractors for access to government business. A favorable ruling for Percipient could provide these companies with new legal leverage, aligning closely with current federal acquisition policies that emphasize the use of commercial technologies.

For now, federal contractors and subcontractors alike should monitor the outcome closely. The Federal Circuit’s decision could redraw the boundaries of who has access to judicial review in procurement—and with it, the future landscape of vendor accountability in government contracting. This post is based on “New legal questions arise over ‘interested party’ status in bid protests” by Terry Gerton, published by Federal News Network on June 27, 2025. The article features expert commentary by Dan Ramish, partner at Haynes Boone, and covers a pivotal legal case currently before the U.S. Court of Appeals for the Federal Circuit. All insights, interpretations, and references are drawn from that original reporting.

Disclaimer: This blog post summarizes a legal news article for informational purposes only and does not constitute legal advice. For authoritative guidance, consult qualified legal counsel. All credit to Terry Gerton and Federal News Network for the original reporting and analysis.