Open the floodgates? COFC hints at expanded jurisdiction over live protest prototypes

The Court of Federal Claims (COFC) recently took jurisdiction over a bid challenge involving a prototype award from another transaction authority (OTA), as the Court found that the OTA could lead to a contract of follow-up supply. The decision in Hydraulics International, Inc. c. United Statesn° 22-364 (August 8, 2022) potentially opens the floodgates to protests involving any OTA prototype containing the standard “may result in a production contract” – an important development for any company competing for OTA awards.

Summary of International hydraulics Dispute decision

The OTA prototype involved in International hydraulics involved an upgrade of the Aviation Ground Power Units (AGPU) of military helicopters. The Army issued a Request for Enhanced White Papers (RWPs) under its OTA Authority, inviting submissions for various projects, including the AGPU Upgrade Prototype Project.

Like many prototype OTA solicitations, the RWP predicted that “[u]if this competitively awarded prototype project is determined to have been successfully completed, this project may result in the award of a follow-on production contract for more than 150 AGPUs without recourse to competitive procedures. “The Army received five white papers in response to the RWP, including from Hydraulics International. In the end, the Army did not select Hydraulic International for the award.

Hydraulics International filed a protest with the COFC challenging the award of the OTA prototype to a competitor and alleging that the military misjudged its proposal. The government decided to reject the demonstration for lack of competence in the matter. Resting on Space Exploration Technologies Corp. vs. United States, 144 Fed. Cl.433 (2019) (SpaceX), the government argued that the acquisition of prototype AGPUs through the use of OTA was not “in connection with any market or proposed market”, as required by the Tucker Act jurisdiction. under 28 USC § 1491(b)(1), because all OTA tracking production was conditional.

The Court disagreed with the government for three main reasons:

  • First, the Court noted that OTAs’ exemption from the Federal Acquisition Regulations (FAR), which applies to supply contracts, does not necessarily require a finding that Tucker Act jurisdiction is lacking.
  • Second, the Court found the required connection between the award of the Army OTA prototype and a potential production contract based on an analysis of recent precedents, including decisions in Kinemetrics, Inc. c. United States, 155 Fed. Cl. 777 (2021) and MD Helicopters Inc. v. United States, 435 F. Supp. 3d 1003 (D.Arizona 2020). In CinematicCOFC concluded that it had jurisdiction to protest an OTA so long as the OTA “had a direct effect on the award of a [procurement] contract. ” In MD Helicoptersthe District of Arizona found that an OTA prototype project “took place as part of the process of determining the need for [an] acquisition.” On the basis of these decisions, the Court in International hydraulics concluded that “where an OTA may result in the exclusion of a bidder from consideration for a subsequent production contract, the OTA is tied to a procurement or proposed procurement”.
  • Third, the Court distinguished the SpaceX decision because the OTA competition in this case (1) was not for goods or services and (2) the phase two procurement at issue was a separate FAR-based competition, fully open to those excluded from the competition Phase one OTA.

Ultimately, the Court ruled that the AGPU OTAs were part of the Army’s “procurement need determination process” and that they were tied to a proposed contract giving the COFC jurisdiction under Tucker’s Law.

Key points to remember

The Court’s decision in International hydraulics confirms the recent trend of finding the tucker law offer challenge jurisdiction over OTA rewards. To be successful, a protester must plausibly claim that an OTA price has a “connection to a market or proposed market”. The International hydraulics The decision suggests that this link can be made when an OTA prototype solicitation contains language suggesting the possibility of a subsequent production contract, such as the standard language that the award “may result in a production contract.”

If you have any questions about the International hydraulics decision or jurisdiction challenging the Tucker Act OTA offer, please contact one of the Miller & Chevalier attorneys listed below:

Alex L. Sarria, [email protected], 202-626-5822

Jason N. Workmaster, [email protected], 202-626-5893

Alexandra S. Prime, [email protected], 202-626-5940

Connor W. Farrell, [email protected], 202-626-5925

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