December 2019

The Military Housing Privatization Initiative was intended to address the availability and adequacy of housing for military service members and their families. As a result of the MHPI, approximately 99 percent of military family housing in the United States is now operated and maintained by private developers. MHPI developers have recently been the target of litigation seeking to hold them responsible for mold and other environmental contamination. Plaintiffs are not only seeking damages for personal injury. They are seeking class certification. In one case they are seeking injunctive relief that would require changes to how the MHPI project is managed.

In this post, we provide some background on the MHPI program, the environmental contamination litigation filed so far, and some perspective on the legal issues presented in these cases. We explain why MHPI developers have a basis to assert derivative sovereign immunity and why the federal enclave doctrine presents an obstacle to some state law claims. We also point out why plaintiffs may face insurmountable hurdles in achieving certification to proceed in a class action.

In order to bring a bid protest in the Court of Federal Claims, you must have standing. To win the protest, you have to show prejudice. Although distinct, these two requirements are related and often confused. The Federal Circuit’s decision in American Relocation Connections, L.L.C. v. United States, No. 2019-1245 (Fed. Cir. Oct 2019), explains the difference between the “standing” needed to bring a bid protest and the “prejudice” needed to win.

Standing involves the threshold legal question of whether the protester has alleged a sufficiently direct economic interest to bring the case. It operates as a limit on the universe of plaintiffs eligible to file a protest. A protester has standing to challenge the award of a federal contract in the Court of Federal Claims only if it was an actual bidder or offeror that had a “substantial chance” of winning the contract. For pre-award protests, only a prospective offeror that would suffer a “nontrivial competitive injury” has standing to protest.

Unlike standing, “prejudice” is the ultimate factual question of whether the protester was actually harmed by a procurement error. Establishing prejudice is an element of the protester’s burden of proof. Without it, the protest will fail.