In a case of first impression, the U.S. Court of Appeals for the Federal Circuit recently ruled in SEKRI, Inc. v. U.S., No. 21-1936 (May 13, 2022), that a non-profit agency that was the sole mandatory source for a specific piece of military kit had standing to file a bid protest over a solicitation even if it had never submitted a proposal to the procuring agency.

The case was filed by Southeastern Kentucky Rehabilitation Industries, Inc. (“SEKRI”) a non-profit organization whose primary purpose is to provide qualified personnel, facilities, and related services for persons with disabilities to help them obtain and maintain competitive employment. Among the products that SEKRI manufactures is an Advanced Tactical Assault Panel (“ATAP”) – “a fighting load carrier to be worn with a parachute harness” that “can be configured . . . to attach 6 or more M4 magazines, two grenades, an Individual First Aid Kit (IFAK) and canteen/general purpose pouches.”

SEKRI is a nonprofit agency qualified as a mandatory source of ATAP under the AbilityOne Program. The AbilityOne Program implements the Javits-Wagner-O’Day Act (“JWOD Act”), which mandates that federal agencies purchase certain pre-approved supplies and services from qualified non-profit agencies that employ blind or severely disabled workers. 41 U.S.C. § 8504(a).

Despite the JWOD Act’s mandatory requirements, the Defense Logistics Agency (“DLA”) issued a Solicitation in 2019 seeking full and open competition to supply ATAPs. SourceAmerica, the committee that oversees the AbilityOne Program, corresponded with DLA and asked DLA to comply with its JWOD Act obligations. DLA refused to alter its full and open competition procurement plans.  SEKRI never submitted a proposal in response to DLA’s Solicitation, but instead filed a bid protest with the U.S. Court of Federal Claims after the solicitation period ended but before DLA issued an award.

The U.S. Court of Federal Claims dismissed SEKRI’s bid protest for lack of standing. The Federal Circuit reversed holding, in relevant part, that SEKRI qualified as a prospective bidder for standing purposes given its status as a mandatory source in the AbilityOne Program:

We hold that SEKRI qualifies as a prospective bidder for standing purposes under the Tucker Act. SEKRI is the designated mandatory source of ATAP in the AbilityOne Program.  SourceAmerica notified DLA early in the solicitation period that SEKRI is the mandatory source of ATAP in the AbilityOne Program. Despite its awareness that SEKRI is the mandatory source, DLA opted to continue the competitive solicitation of bids for ATAP. DLA thus knowingly violated its statutory and regulatory obligation under the JWOD Act and its implementing regulations to procure ATAP from SEKRI using the AbilityOne Program. . . .

It is unreasonable to require mandatory sources such as SEKRI to openly compete in the competitive bidding process given Congress’s intent to take participants in the AbilityOne Program out of the competitive process. In the competitive bidding process, procuring agencies solicit bids because they do not yet know which entity or entities will best be able to supply the product. Not so under the JWOD Act. Entities like SEKRI have established economic interest bona fides because they have been qualified under the AbilityOne Program and are a mandatory source. Congress has established that such entities must be prioritized over other commercial sources, absent special circumstances.

Slip Op. at 13-16 (citations omitted).

The Federal Circuit’s decision effectively opens the courthouse doors for all AbilityOne Program nonprofit agencies to file timely bid protests when a federal agency fails to comply with its mandatory purchasing obligations under the JWOD Act. Federal agencies would be wise to carefully comply with the JWOD Act or else face a potential flood of bid protests that now cannot be easily dismissed for a lack of standing.