In Percipient.ai, Inc. v. United States, U.S. Court of Appeals for the Federal Circuit, No. 2023-1970 (Decided Aug. 28, 2025), Percipient.ai challenged a task order award by the National Geospatial-Intelligence Agency (NGA), alleging that the government violated 10 U.S.C. § 3453—a statutory preference for commercial items—by failing to fairly consider its AI platform. But Percipient had not submitted a bid, teamed with a prime, or otherwise participated in the procurement process. The core legal question became: Can a company that never submitted a proposal still be an “interested party” with standing to protest under 28 U.S.C. § 1491(b)(1)? A Federal Circuit panel initially said yes. The government appealed, and the court took the case up en banc, ultimately reversing course.
The Decision
The U.S. Court of Appeals for the Federal Circuit affirmed the COFC dismissal of Percipient.ai’s protest, ruling that:
- Federal Circuit Reaffirms Narrow Definition of “Interested Party”: The Federal Circuit held that the term “interested party” under § 1491(b)(1) means the same thing in all contexts: “An actual or prospective bidder or offeror whose direct economic interest would be affected by the award or failure to award the contract.” That means you must have at least tried to compete in order to bring a protest, regardless of whether your legal theory is focused on the solicitation, the award or an alleged regulatory violation.
- Percipient Did Not Qualify: Percipient.ai admitted it never submitted a proposal or teamed with another contractor to bid. It waited to be contacted as part of NGA’s market research and later sought to be considered as a subcontractor or technology provider. That wasn’t enough. The Court held that subcontractors and vendors without proposals are not interested parties under the Tucker Act.
- Federal Circuit Rejects Expanded Standing Theory: The Federal Circuit declined to adopt a broader APA-style standing test for challenges under the third “prong” of § 1491(b)(1) (i.e., “any alleged violation of statute or regulation in connection with a procurement”). Instead, it emphasized textual consistency—“interested party” means the same thing for all protest theories, even if they don’t challenge an award directly.
- Dissent Argues for Broader Interpretation: Four judges dissented, arguing that this narrow definition shuts the courthouse doors to companies injured by procurement policy violations but not directly involved in a competition. They warned the ruling undercuts meaningful enforcement of procurement statutes like § 3453, which are designed to open government acquisitions to commercial vendors.
Key Takeaways for Contractors
- You Must Be in the Game to Protest: Whether you are considering bidding on your own or as part of a team, you must be a direct participant in the procurement to have standing to protest later.
- Even Strong Legal Theories Can’t Save a Protest Without Standing: Percipient.ai may have had a solid argument under § 3453, but it lacked standing because it never tried to compete. The Court therefore never reached the merits.
- This Decision Preserves Existing Protest Law: Had the panel decision stood, it could have opened the proverbial flood gates to vendors who failed to compete initially but later complained about the procurement outcome. The en banc ruling keeps the definition of “interested party” narrow and predictable.
- If You See an Opportunity, Engage Early: If you want the right to protest, you must signal your interest and prepare to bid. Sitting on the sidelines eliminates your legal options later.
- Vendors Must Understand the Limitations of § 1491(b)(1): This decision reels in any theory that protests can be used to enforce broad procurement policies unless brought by someone directly competing for the work.
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