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On January 12, the U.S. Supreme Court denied Percipient.ai's (Percipient) petition for certiorari, leaving in place an en banc Federal Circuit decision that restricts who qualifies as an "interested party" eligible to bring a bid protest at the U.S. Court of Federal Claims (COFC).
The decision shows that, absent unusual facts, a firm that did not submit a proposal and cannot plausibly show it was prepared to compete as a prospective bidder or offeror will have difficulty establishing standing to challenge alleged statutory or regulatory procurement violations at the COFC.
This outcome sits at the intersection of two themes that contractors are seeing more often. First, Congress and regulators have continued to emphasize that agencies should prioritize commercially available products and services when feasible. Second, many of the biggest "commercial preference" disputes happen after the contract is awarded, when the agency or prime contractor decides what tools or capabilities it will actually use to carry out the work. The Percipient standing rule limits who can challenge those decisions in court.
Background
The case grew out of how the National Geospatial-Intelligence Agency (NGA) structured a 2020 procurement for an enterprise visual-intelligence capability. As the Federal Circuit described it, the solicitation effectively paired two pieces of work. First, a backbone data repository component (the SOM Enterprise Repository, or SER). Second, a user-facing computer vision (CV) system. NGA also issued an initial task order at the same time, directing the contractor to develop and deliver the CV suite.
Percipient alleged it had a commercial CV platform, "Mirage," that could satisfy the CV needs, but it did not bid on the prime procurement because it could not meet the SER component. Instead, it challenged the award on a different theory. Percipient argued that the agency and the awardee failed to follow statutory and regulatory policies that favor commercial solutions when available. In other words, Percipient framed the dispute less as a traditional head-to-head competition for the prime contract and more as an effort to enforce a commercial preference that applies to federal procurement decisions.
That set up the core legal issue at the Federal Circuit of who counts as an "interested party" under 28 U.S.C. § 1491(b)(1) for a COFC protest alleging a statutory or regulatory violation "in connection with" a procurement.
Outcome
The Federal Circuit held that "interested party" has a consistent meaning in bid protests. It is limited to an actual or prospective bidder or offeror with a direct economic interest in the award decision. Because Percipient did not bid on the underlying procurement and was not treated as a genuine prospective bidder for it, the court concluded Percipient lacked standing and affirmed dismissal.
This dispute turns on how courts reconcile two concepts that do not always fit neatly together. On one hand, Congress has imposed statutory obligations rooted in the Federal Acquisition Streamlining Act framework that push agencies to prioritize commercially available solutions. On the other hand, bid protests at the COFC are limited by the "interested party" standing requirement. The concern is that if "interested party" is defined too narrowly, certain statutory violations can become shielded from judicial review because the parties most directly harmed may be unable to bring a claim.
A central point is that the commercial preference obligations are not limited to the moment of award. Congress has pushed agencies, to the maximum extent practicable, to implement commercial preference not only at solicitation and award but also by requiring primes and subcontractors at all levels to incorporate commercial products and services as components of items supplied to the government.
The COFC initially concluded that Percipient had standing to protest an alleged failure to accommodate commercially available solutions during performance of a large IDIQ, even though Percipient did not seek the prime award. The COFC later dismissed the case, and a Federal Circuit panel initially reversed. The Federal Circuit then vacated the panel decision, took the case en banc, and held that prospective downstream suppliers do not qualify as "interested parties." Under this view, only companies positioned to bid on the prime contract can challenge the government's procurement actions.
Percipient and critics of the outcome argue it leaves commercial suppliers without an effective way to enforce the post-award commercial preference requirements, and that the court's suggested alternatives are unrealistic in practice. They contend that prime contractors will not sponsor protests when the alleged noncompliance benefits them, and that forcing a commercial supplier to restructure itself to bid as a prime contractor or team around the issue is not a meaningful substitute for the rights Congress intended to protect. They also say the ruling could push agencies and prime contractors to choose custom-built solutions even when commercial products would work, which they believe often leads to delays, higher costs, and weaker performance. From that perspective, the most directly injured party in a post-award commercial preference violation is often the would-be subcontractor that had a commercial product ready to offer, yet that party can't bring a claim.
The government counters with a broader policy concern about administrability and procurement efficiency. It argues that recognizing standing for economically interested prospective subcontractors could invite a wide range of litigation over alleged agency supervision failures during contract performance, across many statutory and regulatory requirements that are incorporated into federal contracts. In the government's view, that expansion would shift disputes about contract administration into protest litigation, creating delay and disruption even when the government believes performance is compliant and acceptable.
Looking Ahead
The Supreme Court's decision not to take the case leaves that bright-line rule in place. In practical terms, COFC bid protest standing remains centered on whether the protester competed, or was truly positioned to compete, for the procurement at issue. That generally limits post-award litigation by companies that did not participate in the solicitation process, even if their complaint is framed as enforcing commercial preference policies.
For contractors and commercial technology companies, the key operational lesson is that commercial preference arguments, standing alone, are unlikely to create a claim at COFC if the company did not bid or cannot plausibly allege it would have bid but for the challenged conduct.
This makes positioning more important. Engage during market research, monitor draft solicitations, and consider teaming or other approaches that preserve a credible bidder or prospective-bidder posture if a protest ever becomes necessary. It also reinforces documentation. When standing is contested, the question often turns on concrete evidence that the company was ready and able to compete for the award it is challenging.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
