Background
The Department of Veterans Affairs (VA) provides several transportation programs to help veterans get to and from medical appointments. 28 Trans, LLC, a service-disabled veteran-owned small business, holds a five-year contract to provide nonemergency “special-mode” ground transportation (e.g., for patients on gurneys or in wheelchairs) for the VA San Francisco Health Care System. After this contract was in place, the VA expanded a separate initiative, the “VHA-Uber Health Connect Initiative,” a partnership that allows VA staff to book Uber rides for veterans directly through a HIPAA-compliant dashboard.
28 Trans alleged that after the VA expanded the Uber program, its own ride bookings plummeted by 90%. It filed a lawsuit against the United States, claiming the VA was improperly diverting rides to Uber. The suit included a bid protest count, which alleged the VA’s arrangement with Uber was an illegal de facto sole-source contract awarded outside of proper procurement channels. It also included several counts for breach of contract, arguing the VA’s actions violated the terms of its agreement with 28 Trans.
The government moved to dismiss the bid protest count, arguing that the court lacked jurisdiction because the VA’s partnership with Uber was not a “procurement” subject to federal procurement laws and the court’s bid protest authority.
The Court’s Holding
The U.S. Court of Federal Claims granted the government’s motion and dismissed the bid protest count for lack of subject-matter jurisdiction. The court’s authority to hear bid protests under the Tucker Act is limited to objections related to a “procurement or a proposed procurement.” Citing statute, the court defined a procurement as the acquisition of property or services “for the direct benefit or use of the United States Government.”
The court concluded that the VA’s arrangement with Uber was not a procurement. Its principal purpose was not to benefit the government directly, but to provide a transportation service for the direct benefit of veterans. The court reasoned that even if the VA realized significant cost savings and other efficiencies from the program, these were indirect benefits. The direct beneficiary of the service is the veteran receiving the ride. The court distinguished this type of arrangement, which serves a public purpose, from a procurement contract where the government itself acquires a service for its own use. Because the partnership was not a procurement, the court had no jurisdiction to hear a bid protest challenging it. The court did not rule on the merits of the remaining breach of contract claims, which will proceed separately.
Key Takeaways
- An agency’s arrangement with a private company is not a “procurement” if its principal purpose is to provide a service directly to a third-party beneficiary (like a veteran) rather than for the government’s own use.
- Indirect benefits to the government, such as cost savings or increased efficiency, do not transform a public-benefit program into a government procurement contract.
- The Court of Federal Claims will dismiss a bid protest for lack of jurisdiction if it challenges a government action that does not qualify as a procurement, leaving contractors to pursue other legal theories like breach of contract if applicable.
Why It Matters
This ruling highlights a critical distinction between government procurements and government benefit programs, particularly as agencies increasingly form public-private partnerships with technology companies. It confirms that when an agency like the VA engages a company like Uber to deliver services directly to the public as part of a benefit program, it may not be constrained by the formal rules and protest procedures that govern traditional federal contracting. This gives agencies flexibility to innovate and partner with commercial platforms to serve constituents. For government contractors, however, it means that challenges to these types of partnerships cannot be brought as bid protests, forcing them to rely on other legal avenues, such as showing a breach of their own existing contracts.