Since 2008, the government has been increasingly looking at insourcing in lieu of using outside contractors. The 2008 National Defense Authorization Act, at 10 U.S.C. Section 2463, required the Department of Defense to begin considering the use of its own resources to meet its needs.
Department of Defense implementation guidelines were issued on April 4, 2008, September 2, 2009, and in January 2010. These guidelines set forth cost comparison procedures comparing the cost of outsourced services versus in-house services. The cost of employee benefits are imputed to outside contractors – whether or not they pay them – in order to eliminate the cost advantage.
Where should challenges to government insourcing actions be made? It appears that the answer is the Court of Federal Claims (COFC). In Vero Technical Support, Inc. v. U.S. Dept. of Defense, 2010 WL 3269872 (S.D.Fla. Aug 18, 2010), the Court found the plaintiff’s challenge to the Defendant’s insourcing decision falls within the broad scope of the Administrative Dispute Resolution Act (ADRA) amendments to Tucker Act jursidiction of the COFC.
Prior to ADRA, federal district courts had APA jurisdiction to hear contract award challenges and violations of government contract law. This was often called Scanwell jurisdiction, which was shared jurisdiction with the COFC. ADRA ended this shared jurisdiction in 1996. The Tucker Act, 28 U.S.C. Section 1491(b)(1), as amended by ADRA, consolidated the COFC’s jurisdiction, allowing the COFC to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract, or to a proposed award, or the award of a contract. The statute continues by giving the COFC broad jurisdiction over the full range of procurement disputes — any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. Initially, both the COFC and federal district courts had shared jurisdiction over government contract and procurement disputes. As a result of a sunset provision, however, exclusive jurisdiction now rests with COFC.
Contact government contracts lawyer Karen Hindson for assistance with your government contract law questions.