Palantir Usg, Inc. v. United States
904 F.3d 980
| Fed. Cir. | 2018Background
- The Army solicited a single-award IDIQ contract for Distributed Common Ground System–Army Increment 2 (DCGS‑A2) to design a new data management architecture and integrate multiple intelligence capabilities.
- Palantir asserted its commercial Gotham data‑management platform could meet (or be modified to meet) DCGS‑A2 requirements and had been sold/licensed to government customers on a commercial basis.
- The Army commissioned market studies (MITRE DIVA study, Trade Space Analysis) and issued three RFIs; some analyses recommended a hybrid COTS approach, and Palantir repeatedly urged a commercial procurement.
- The Army’s July 2015 Market Research Report concluded, without detailed analysis, that significant DCGS‑A2 scope (data fusion, cyber support, DCGS backbone upgrade) was not available commercially and recommended an Engineering and Manufacturing Development (EMD) approach.
- The Court of Federal Claims held the Army violated 10 U.S.C. § 2377 by failing to use market research to determine whether commercial items could meet or be modified to meet its requirements and enjoined award under the solicitation; the Federal Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Army complied with 10 U.S.C. § 2377(c)(1)–(2) market‑research/determination duties | Palantir: Army failed to determine whether commercial items (e.g., Gotham) could meet or be modified to meet requirements | Government: Army satisfied FASA via its market research and analyses (Trade Space, RFIs) and the court imposed extra obligations | Held: Army violated § 2377(c)(2); record shows notice of commercial options but no rational determination that commercial items could not meet needs |
| Whether the trial court added extra statutory requirements beyond § 2377 | Palantir: N/A (argued failure to determine) | Government: court imposed heightened obligations such as exhaustive investigation | Held: No—district court’s language equated to required ‘‘determine’’ and did not add unlawful obligations |
| Whether the presumption of regularity warranted deference to the Army absent a detailed record | Palantir: The record rebutted presumption because agency ignored commercial alternatives | Government: Court improperly discarded presumption and substituted its judgment | Held: Presumption was rebutted by record evidence showing arbitrary, conclusory treatment of commercial options; deference insufficient |
| Remedy—whether injunction and requirement to comply with § 2377 was appropriate | Palantir: Non‑trivial competitive injury justified injunctive relief and ordering compliance with § 2377 before award | Government: Challenged the underlying findings and extent of relief | Held: Injunction affirmed; Army must satisfy § 2377 before awarding contract (court did not mandate Palantir be selected) |
Key Cases Cited
- Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402 (searching, narrow scope of APA review)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (agency must articulate rational connection between facts and decision)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009) (competitive‑injury standard for injunctive relief in bid protests)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324 (Fed. Cir. 2001) (courts may require agency explanation for meaningful review)
- Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054 (Fed. Cir. 2000) (deference to procurement discretion)
- Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d 955 (Fed. Cir. 1993) (agencies have broad discretion in determining most advantageous bid)