The U.S. Court of Appeals has found that it is OK for a federal agency to punish an employee for refusing to break a federal rule when ordered to do so by a superior. The finding could have enormous consequences for the role of federal rules in determining the awarding of federal contracts and has the Washington, D.C. government contracts world in a major uproar.

According to a report by Eric Katz in the Government Executive on June 10, the Court of Appeals upheld a ruling that the State Department punished an employee with a poor performance review because of his refusal to carry out a directive in violation of federal rules “because rules and regulations do not qualify as federal statute.” The employee in question, Timothy Rainey, was also stripped of his duties as a contracting officer for his failure to comply with direction,” even though the direction violated a provision of the Federal Acquisitions Regulation.

The ruling was justified by a 2015 U.S. Supreme Court decision in which Chief Justice Roberts wrote in the case of Department of Homeland Security v. MacLean that there is a distinction between the violation of a rule and violation of a law. “Interpreting the word ‘law’ to include rules and regulations” was criticized by Roberts in that ruling.

But since rules and regulations, in addition to statutes and laws, are used as the basis for the awarding of government contracts, the dubious standing they’ve been reduced to by the Court of Appeals ruling could throw the entire procurement process into chaos, critics have claimed.