Diaz v. United States
2017 U.S. App. LEXIS 6176
| Fed. Cir. | 2017Background
- Kevin Diaz submitted an unsolicited proposal to the Navy's Indian Head EOD Technology Division under FAR Subpart 15.6.
- The IHEODTD Contracting Officer performed an initial review and found the proposal invalid under FAR 15.606-1 and FAR 15.603(c); reconsideration was denied.
- Diaz sued in the Court of Federal Claims challenging the rejection; the court dismissed for lack of jurisdiction, finding he lacked standing under 28 U.S.C. § 1491(b)(1).
- On appeal to the Federal Circuit, the government conceded the facts but disputed Diaz's status as an "interested party" with a direct economic interest.
- The central legal question was whether an offeror of an unsolicited proposal has a "substantial chance" of winning a contract (the direct economic interest test) when the agency never issued a solicitation.
- The court affirmed, holding Diaz did not meet the FAR validity requirements for unsolicited proposals (notably novelty and sufficient detail), so he lacked the requisite substantial chance to have standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Court of Federal Claims has jurisdiction under § 1491(b)(1) for rejection of an unsolicited proposal | Diaz argued the Contracting Officer violated FAR 15.606-1 and thus the court has jurisdiction over a regulatory violation "in connection with" a proposed procurement | Gov argued Diaz lacked standing as an "interested party" because he had no direct economic interest in a never-solicited contract | Court: Jurisdictional "in connection with" prong satisfied, but Diaz lacks standing because he did not show a substantial chance of winning the contract |
| Whether Diaz was an "interested party" with a direct economic interest (substantial chance of winning) | Diaz contended his proposal and interactions with agency personnel gave him a substantial chance | Gov contended the proposal failed FAR 15.603(c) validity criteria (innovation and sufficient detail), so no substantial chance existed | Held: Diaz failed to meet FAR 15.603(c) requirements; therefore he did not have a substantial chance and is not an interested party |
| Whether the Contracting Officer erred at the initial review under FAR 15.606-1 | Diaz argued some FAR criteria were met (third, fifth, sixth elements) and the rejection was improper | Gov showed the CO reasonably determined the proposal failed the critical first (innovative/unique) and fourth (sufficient detail) requirements | Held: CO's determination that the proposal was invalid at initial review upheld; Diaz did not carry burden to prove otherwise |
| Whether prejudice need be addressed once interested-party requirement fails | Diaz urged merits of error and prejudice | Gov argued standing failure is dispositive so prejudice need not be reached | Held: Because Diaz lacks interested-party standing, the court did not reach prejudice requirement |
Key Cases Cited
- Res. Conservation Grp., LLC v. United States, 597 F.3d 1238 (Fed. Cir. 2010) (standard of de novo review for jurisdictional dismissals)
- Brandt v. United States, 710 F.3d 1369 (Fed. Cir. 2013) (plaintiff bears burden to establish jurisdiction by preponderance)
- RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286 (Fed. Cir. 1999) (§ 1491(b)(1) covers violations "in connection with" procurements)
- Distributed Sols., Inc. v. United States, 539 F.3d 1340 (Fed. Cir. 2008) ("in connection with" is sweeping and covers all procurement stages)
- Digitalis Educ. Sols., Inc. v. United States, 664 F.3d 1380 (Fed. Cir. 2012) (interested-party standing requires being an actual/prospective bidder and a direct economic interest)
- Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366 (Fed. Cir. 2002) (plaintiff must establish elements of standing)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (standing under § 1491(b)(1) is more stringent than Article III)
- Labatt Food Serv., Inc. v. United States, 577 F.3d 1375 (Fed. Cir. 2009) (prejudice requirement: but-for causation and substantial chance)
- Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353 (Fed. Cir. 2015) (prejudice is a factual question reviewed for clear error)
- Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374 (Fed. Cir. 2012) (different protests dictate necessary factors for direct economic interest)