Raytheon Company v. United States
2015 U.S. App. LEXIS 18458
| Fed. Cir. | 2015Background
- Air Force solicited proposals for a radar-system Engineering & Manufacturing Development contract; Raytheon, Northrop, and Lockheed advanced to final proposals.
- Bidders had to identify and substantiate cost reductions; treatment of certain costs as Independent Research & Development (IR&D) could reduce a bidder’s contract price.
- The Air Force initially told Raytheon and Northrop that costs implicitly required for contract performance could not be treated as IR&D (citing FAR 31.205‑18). Northrop did not object; Raytheon disputed that statement relying on ATK Thiokol.
- The Air Force changed its view and accepted Raytheon’s IR&D treatment, communicated that change to Raytheon (and accepted Raytheon’s pricing), but did not inform Northrop of the change. Raytheon submitted the lowest price and received the award.
- Northrop and Lockheed protested to GAO. A GAO outcome‑prediction indicated the GAO would likely sustain protests on two grounds, including that the Air Force’s communications were misleading and unequal regarding IR&D. The Air Force then reopened discussions with all offerors.
- Raytheon sued in the Court of Federal Claims challenging the reopening; the court upheld the Air Force’s corrective action. The Federal Circuit affirmed on the disparate‑information/unequal‑discussions ground and declined to decide the alternative ground.
Issues
| Issue | Raytheon’s Argument | Air Force / GAO / Court’s Argument | Held |
|---|---|---|---|
| Whether the Air Force’s decision to reopen award was rational under the APA based on GAO outcome prediction that agency gave disparate information about IR&D treatment | Reopening was arbitrary; GAO prediction insufficient; Raytheon relied on agency communications and award was proper | GAO outcome prediction reasonably found unequal, misleading discussions that favored Raytheon by informing it of a more permissive IR&D position while leaving Northrop with the contrary prior position; unequal discussions violate FAR 15.306(e)(1) and justify corrective action | Affirmed: reopening was rationally based on disparate‑information violation |
| Whether Northrop waived the disparate‑information challenge by not objecting pre‑award | Raytheon: losing bidders must object before award; waiver doctrine bars post‑award challenge | Waiver inapplicable because the disparity arose during evaluations/discussions and Northrop had no reason to know of the agency’s changed position until after award | Waiver rejected; no pre‑award objection required for this type of evaluation‑stage unequal communication |
| Whether the court must impute legal knowledge (ATK Thiokol) to all bidders so that any disparate communication is legally irrelevant | Raytheon: ATK Thiokol meant the agency’s initial statement was legally wrong and thus all bidders must be treated as if they knew the correct legal rule, so there was no material disparate information | Agency’s communications materially mattered to bidders’ pricing decisions; attribution‑of‑knowledge doctrine does not eliminate a factual disparate‑information violation here | Rejected extension of attribution‑of‑knowledge; unequal communications cannot be dismissed as a matter of law on that basis |
| Whether Northrop demonstrated prejudice (substantial chance of award absent the unequal communications) | Raytheon: Northrop wouldn’t have materially changed price or relied on IR&D even if informed; no substantial chance shown | GAO attorney and the Air Force reasonably inferred prejudice from relative technical parity, price differential, Raytheon’s IR&D reductions, and confidential record showing Northrop could have proposed IR&D reductions | Court correctly found a reasonable basis to infer competitive prejudice (substantial chance) |
Key Cases Cited
- ATK Thiokol, Inc. v. United States, 598 F.3d 1329 (Fed. Cir. 2010) (construed by Raytheon on IR&D allowability)
- Banknote Corp. of America v. United States, 365 F.3d 1345 (Fed. Cir. 2004) (APA standards applied in bid‑protest review)
- Honeywell, Inc. v. United States, 870 F.2d 644 (Fed. Cir. 1989) (upholding agency corrective action based on GAO determinations)
- Turner Construction Co. v. United States, 645 F.3d 1377 (Fed. Cir. 2011) (agency corrective action based on GAO rulings)
- Bannum, Inc. v. United States, 404 F.3d 1346 (Fed. Cir. 2005) (competitive‑prejudice/substantial chance standard)
- COMINT Systems Corp. v. United States, 700 F.3d 1377 (Fed. Cir. 2012) (waiver doctrine for solicitation terms; limits when evaluation issues arise post‑solicitation)
- Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007) (pre‑award challenge waiver principles)
- Statistica, Inc. v. Christopher, 102 F.3d 1577 (Fed. Cir. 1996) (solicitation‑challenge waiver rule)
- Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054 (Fed. Cir. 2000) (factual nature of prejudice finding)
- United States v. Chemical Foundation, Inc., 272 U.S. 1 (U.S. 1926) (presumption of regularity for official acts)
- National Archives & Records Admin. v. Favish, 541 U.S. 157 (U.S. 2004) (presumption supporting official acts)
- PowerOasis, Inc. v. T‑Mobile USA, Inc., 522 F.3d 1299 (Fed. Cir. 2008) (agency presumed to have properly done its job)