Percipient.ai, Inc. v. United States

Authored by: Jeremy J. Gustrowsky

A recent decision from the Federal Circuit could reshape who gets to challenge federal procurement decisions, especially when it comes to the use of commercial products and services in government contracts. The case centered on Percipient.ai, a company that developed a commercial artificial intelligence platform and wanted the National Geospatial-Intelligence Agency (NGA) to consider its product for a major contract. When the agency and its main contractor, CACI, declined to fully evaluate Percipient’s offering, Percipient filed a legal challenge, arguing that the government failed to follow laws requiring a preference for commercial solutions.

The key legal question was whether Percipient, which was not a direct bidder for the main contract but hoped to be a subcontractor, had the right to bring this kind of challenge. Traditionally, only companies that actually bid on or were likely to win a government contract could protest procurement decisions. However, the court recognized that federal law (specifically, 10 U.S.C. § 3453) requires agencies to give commercial products and services a fair shot, even at the subcontractor level. The court ruled that Percipient had standing to sue because it offered a commercial product that could have met the agency’s needs if the law had been followed.

Another major issue was whether the so-called “task order bar” prevented the court from hearing Percipient’s protest. This rule generally blocks challenges related to the issuance of specific task orders under broad government contracts. The court clarified that this bar only applies to protests directly tied to the issuance of a task order, not to broader complaints about how the government and its contractors are (or aren’t) considering commercial products after a contract is awarded.

This decision could have a big impact on federal contracting, making it easier for companies that offer commercial products or services to challenge agencies and prime contractors if they believe procurement laws are being ignored. It also signals that courts may take a broader view of who counts as an “interested party” in government contract disputes, especially when Congress has clearly stated a preference for commercial solutions.