BCFS HHS v. DOL: Court Dismisses Challenge to SCA Jurisdiction

BCFS Health and Human Services (BCFS HS) filed a lawsuit against the United States Department of Labor (DOL) regarding the application of the Service Contract Act (SCA) to cooperative agreements between BCFS HS and the Office of Refugee Resettlement (ORR). The core dispute centered on whether the SCA, which sets wage and labor standards for federal contracts, applied to cooperative agreements—a category of funding distinct from procurement contracts under federal law.

For years, BCFS HS had provided shelter and care services for unaccompanied migrant children through agreements with the Department of Health and Human Services. However, in late 2020, HS retroactively applied SCA clauses to certain cooperative agreements, prompting concerns over financial and legal implications for providers like BCFS HS. The organization argued that the DOL overstepped its authority by extending the SCA to cooperative agreements, which it claimed were outside the law’s scope.

Procedural History and Court Rulings

The case was heard in the United States District Court for the Western District of Texas, where the government filed a motion to dismiss, arguing that BCFS HS had not exhausted administrative remedies and that there was no final agency action warranting judicial review. The court agreed with the government and dismissed the case, citing the following reasons:

• No final agency action: The court found that the DOL had not yet made a final decision on the applicability of the SCA to BCFS HS’s cooperative agreements. Under the Administrative Procedure Act (APA), judicial review is only available for final agency actions, which had not occurred.
• Administrative review was ongoing: BCFS HS had begun the process of challenging the SCA determination within the DOL’s administrative framework, but it had not yet received a final ruling from the agency. The court emphasized that disputes over SCA coverage must be resolved through DOL’s administrative procedures before courts can intervene.
• Sovereign immunity and jurisdictional limits: The court concluded that sovereign immunity barred the lawsuit because the APA only waives sovereign immunity for final agency actions, which were absent in this case. Without jurisdiction, the court could not rule on the substantive legal dispute over whether the SCA applied to cooperative agreements.

Implications of the Decision

The court’s decision has significant implications for federal contractors and grant recipients who rely on cooperative agreements for funding. The ruling clarifies that:

• Agencies have broad discretion in determining whether the SCA applies to specific agreements.
• Administrative challenges must be exhausted before federal courts can intervene.
• The distinction between contracts and cooperative agreements remains a legally complex issue that may require further guidance from the courts or Congress.

BCFS HS filed an appeal following the dismissal, signaling that the legal debate over the SCA’s application to cooperative agreements is far from over.

Conclusion

The dismissal of BCFS HS’s lawsuit highlights the importance of administrative exhaustion when challenging federal agency decisions. While the organization raised substantial questions about the scope of the Service Contract Act, the court’s ruling underscores that judicial review is only available once an agency has reached a final decision. As BCFS HS pursues its appeal, the case may provide further clarity on how labor laws apply to cooperative agreements in federally funded programs.

Government Contracting Legal Support

For businesses navigating complex legal issues related to government contracts, our team at Whitcomb, Selinsky, PC offers experienced counsel to help protect your rights. Whether you need assistance with compliance, contract disputes, or procurement regulations, our attorneys are here to support you. Contact us to learn more about how we can help.