Oracle America, Inc. v. United States, et al.

The Department of Defense structured its procurement for cloud-computing services, worth up to $10 billion, for award to a single bidder. Petitioner Oracle America, Inc. filed a bid protest, arguing that the single-bidder award violated federal law, which requires agencies to choose multiple bidders for contracts of this size and type. The Federal Circuit agreed with Oracle that the procurement violated federal law, yet declined to remand the issue to the agency as required by SEC v. Chenery Corp., 318 U.S. 80 (1943). Instead, the court applied its own “harmless error” exception to conclude that even if the agency were to conduct the procurement as a multiple-award solicitation, Oracle would not stand a better chance of winning the contract. During the bid protest, the Defense Department uncovered serious conflicts of interest between several of its employees and a leading bidder. The Federal Circuit acknowledged that one or more conflicts may have violated 18 U.S.C. § 208, the criminal conflict-of-interest prohibition. It nevertheless upheld the procurement, deferring to the Department’s view that the conflicts had not “tainted” the solicitation. The questions presented are:

1. Whether a bid protest that establishes a violation of federal law may be denied for “harmless error” based on a rationale not present in the administrative record.

2. Whether, in resolving a bid protest that establishes a violation of the criminal conflict-of-interest statute, 18 U.S.C. § 208, the Federal Circuit can enforce the contract based on deference to an agency’s assessment that the criminal violation did not taint the procurement.