PALANTIR USG, INC., Plaintiff-Appellee v. UNITED STATES, Defendant-Appellant
2017-1465
United States Court of Appeals for the Federal Circuit
September 7, 2018
SEALED OPINION ISSUED: September 7, 2018; PUBLIC OPINION ISSUED: September 13, 2018*
Appeal from the United States Court of Federal Claims in No. 1:16-cv-00784-MBH, Judge Marian Blank Horn.
Decided: September 7, 2018
SEALED OPINION ISSUED: September 7, 2018
PUBLIC OPINION ISSUED: September 13, 2018*
THEODORE OLSON, Gibson, Dunn & Crutcher LLP, Washington, DC, argued for plaintiff-appellee. Also represented by KAREN LOUISE MANOS, AMIR C. TAYRANI; JOSH KREVITT, New York, NY; HAMISH HUME, STACEY K. GRIGSBY, JON KNIGHT, JOSHUA RILEY, Boies, Schiller & Flexner, LLP, Washington, DC; DAVID BOIES, Armonk, NY.
DOMENIQUE GRACE KIRCHNER, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by CHAD A. READLER, ROBERT EDWARD KIRSCHMAN, JR., DOUGLAS K. MICKLE.
GIDEON A. SCHOR, Wilson, Sonsini, Goodrich & Rosati, PC, New York, NY, for amicus curiae Technology Network. Also represented by ADAM WILLIAM BURROWBRIDGE, Washington, DC.
Before NEWMAN, MAYER, and STOLL, Circuit Judges.
The government appeals from a permanent injunction on its solicitation of bids for Distributed Common Ground System - Army Increment 2 (“DCGS-A2“), the Army‘s primary system for processing and disseminating multisensor intelligence and weather information. The United States Court of Federal Claims granted the injunction after concluding that the Army failed to comply with the requirements of
* This opinion was originally filed under seal and has been unsealed in full.
BACKGROUND1
Palantir USG, Inc. (“Palantir“) filed a pre-award bid protest in the Court of Federal Claims, challenging the Army‘s solicitation2 for DCGS-A2. The solicitation seeks a single contractor to be the system data architect, developer, and integrator of DCGS-A2. Palantir‘s complaint alleges that the Army violated § 2377(c) by, among other things, failing to determine whether its needs could be met by commercial items before issuing the contested solicitation. See § 2377(c)(2). To provide background, we introduce the applicable statute and regulations, the DCGS-A2 system, the relevant facts
I. The Statutory and Regulatory Preference for the Acquisition of Commercial Items
This appeal is centered on the Federal Acquisition Streamlining Act (“FASA“), which requires that federal agencies, to the maximum extent practicable, procure commercially available technology to meet their needs. Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355, § 8104, 108 Stat. 3243 (1994) (codified as amended at
FASA provides that the “Federal Acquisition Regulation [FAR] shall provide regulations to implement” FASA.
(a) Preference.—The head of an agency shall ensure that, to the maximum extent practicable—
(1) requirements of the agency with respect to a procurement of supplies or services are stated in terms of— (A) functions to be performed;
(B) performance required; or
(C) essential physical characteristics;
(2) such requirements are defined so that commercial items or, to the extent that commercial items suitable to meet the agency‘s needs are not available, nondevelopmental items other than commercial items, may be procured to fulfill such requirements; and
(3) offerors of commercial items and nondevelopmental items other than commercial items are provided an opportunity to compete in any procurement to fulfill such requirements.
FASA achieves its preference for commercial items in part through preliminary market research. Before soliciting bids or proposals, agency officials must conduct market research3 concerning the availability of commercial items pursuant to § 2377(c)(1), which states:
(1) The head of an agency shall conduct market research appropriate to the circumstances—
(A) before developing new specifications for a procurement by that agency;
(B) before soliciting bids or proposals for a contract in excess of the simplified acquisition threshold; and
(C) before awarding a task order or delivery order in excess of the simplified acquisition threshold.
§ 2377(c)(1);
(2) The head of an agency shall use the results of market research to determine whether there are commercial items or, to the extent that commercial items suitable to meet the agency‘s needs are not available, nondevelopmental items other than commercial items available that—
(A) meet the agency‘s requirements;
(B) could be modified to meet the agency‘s requirements; or
(C) could meet the agency‘s requirements if those requirements were modified to a reasonable extent.
§ 2377(c)(2) (emphasis added);
II. The Distributed Common Ground System — Army Increment 2 (DCGS-A2)
We briefly introduce the purpose and evolution of the Army system at issue here. The Distributed Common Ground System (“DCGS“) is made up of Army, Air Force, Navy, and Marine Corps ground processing systems that can share
The original DCGS-A Increment 1 (“DCGS-A1“) is operational and deployed worldwide, but its “data architecture is over 10 years old and is based upon technology that is nearing obsolescence, with no growth margin.” Id. at 233. Therefore, in 2014, the Army began investigating the best way to approach DCGS-A2, which would “introduce a new and modernized data management architecture (DMA) using a modular system approach to perform Army intelligence analysis capabilities.” Id. at 223.
The performance work statement (“PWS“) for this solicitation stated that the requirements of DCGS-A2 included the “development of new data architecture, standards based enhanced visualization and analytical tools, cloud computing and ‘big data’ analytic capabilities; cyber analytics and data integration, visualization capabilities, Cyber Operations, Interoperability, Counter Intelligence/HUMINT, Weather, GEOINT, Geospatial Engineering and Sensor Management,” and explained that “[t]hese efforts include Software Development, Capability Enhancements, Integration, Limited Fielding and Training support, Maintenance, and Support for logistics development, for a period of performance of six years from contract award.” Id. The draft version of the performance work statement for the DCGS-A2 solicitation stated that “[t]he DCGS-A Increment approach utilizes spiral deliveries to maintain interoperability with Army and Joint ISR [Intelligence, Surveillance and Reconnaissance] architectures and to address capability insertion and enhancements. This system must remain interoperable and compatible with the Joint command system infrastructure and mission applications.” Id. As indicated by the contracting officer who issued the solicitation, the data management architecture “will serve as the architecture foundation and the heart with which the rest of the capabilities will depend on to function. The [data management architecture] development is therefore the focus of the first task order executed under the DCGS-A Increment 2 contract.” Id.
III. The Palantir Gotham Platform
As noted above, Palantir argues that the Army violated § 2377(c) by failing to determine whether the Army‘s needs could be met by commercial items, and that, had the Army done so, it would have issued one or more solicitations to procure commercial or nondevelopmental items to satisfy the DCGS-A2 requirements. J.A. 194-95. Specifically, Palantir submits that its flagship software product, the Gotham Platform, could satisfy the Army‘s requirements.
Palantir‘s Gotham software product is a data-management platform that Palantir began to market to private sector and government customers in 2009. The software enables agencies to integrate, visualize, and analyze large amounts of data from different sources that reside in different databases in different formats. The
IV. Pre-Solicitation Activity
The parties do not dispute the following Court of Federal Claims’ fact findings. In 2014, the Army decided to curtail the third release of DCGS-A1 and redirect its efforts to acquiring and launching DCGS-A2. The Army chartered an independent Data Integration, Visualization and Analytics (“DIVA“) Market Study.4 This market study, dated July 2014, was completed by the MITRE Corporation, a not-for-profit research and development organization. According to the parties, the DIVA Market Study was intended to “provide situational awareness and market trends to the Army leadership of the ‘state-of-the-practice’ within the commercial DIVA software platform landscape.” Joint Stip. ¶ 11. The DIVA Market Study report summarized MITRE‘s recommendations for the DCGS-A2 acquisition effort. According to the report, the DIVA Market Study assessed three acquisition approaches:
a. Cloud Infrastructure Platform Provider: Provide highly-scalable and reliable computing infrastructure services (e.g., data bases [sic]; analytic engines; computing and storage; identity management);
b. Turn-Key: Procure a commercial product as basis of [DCGS-A2] infrastructure. Integrate additional applications onto this infrastructure[;]
c. Hybrid approach: both an Enterprise Cloud Platform and a Turn-Key Platform, including integration of additional applications . . . .
Id. ¶ 11 (citations omitted). Having considered each of these three acquisition approaches, the DIVA Market Study recommended the hybrid approach. The study‘s “Key Observation” was that the hybrid approach blends the benefits of the other two approaches, provides “the global scale of the cloud infrastructure with the ‘out-of-
the-box’ capabilities of the DIVA ‘Turn Key’ platform,” and provides “better tactical edge support.” J.A. 12234. The DIVA study outlined how to apply a hybrid approach to the DCGS-A2 capabilities. In particular, the hybrid approach would start with procurement of two Commercial-off-the-Shelf (“COTS“) foundation components: (a) cloud infrastructure services and (b) a DIVA “Turn Key” infrastructure platform. Though the DIVA Market Study did not analyze any potential vendors, it assessed overall market trends and served as an early indication that commercial items should be considered for the DCGS-A2 infrastructure platform.
Following completion of the DIVA Market Study, the Army issued three requests for information (“RFIs“). It issued its RFI #1 in August 2014, just one month after release of the DIVA Market Study. The goal of RFI #1 was to assess “the level of relevant competition and capabilities in the market place and elicit industry feedback to assist the Program Office in developing the Acquisition Plan” for the potential
The Army issued RFI #2 in December 2014. Palantir responded, expressing concern that RFI #2 was focused on collecting information on the respondents’ ability to conduct a large-scale development effort, instead of assessing existing software capabilities that would be applicable to DCGS-A1 capability gaps.
The Army issued RFI #3 in May 2015, which was meant to “[i]nform the small business role for Increment 2 [and] [d]etermine if [a Small Business Set-Aside] is appropriate.” J.A. 11803. In response, Palantir again highlighted its concerns with the Army‘s acquisition approach, asserting that “[t]he successful delivery of Increment 2 depends on the answer to a central question: will the Army acquire a data platform from the commercial market or will it attempt to build one itself?” J.A. 11918.
In July 2015, the Army Materiel Systems Analysis Activity issued a Trade Space Analysis, which identified and evaluated technical functionality, cost, usability, schedule risk, and technical risk for DCGS-A2. The report indicated that the Trade Space Analysis would inform the economic analysis and RFP for DCGS-A2 and analyzed the following options: COTS, Government-off-the-Shelf (“GOTS“), and hybrid. The report concluded that a hybrid COTS-development approach was the best of the three alternatives, noting that such an approach was currently functioning in the Department of Defense Intelligence Community and would only require minor development to fill capability gaps.
On July 13, 2015, however, the Army issued a Market Research Report that concluded the opposite—that “the [DCGS-A2] development effort cannot be procured as a commercial product.” J.A. 11840. This Market Research Report indicated that three features were not available as commercial products: Data Fusion, Intelligence Support to Cyber, and DCGS Integrated Backbone Upgrade. Id. It further addressed Palantir directly, finding Palantir‘s response to earlier RFPs non-responsive because Palantir “did not provide any examples of past experience relevant to the development of Increment 2.” J.A. 11835-36. The Market Research Report further stated that, “[b]ased on the Market Research to date, the recommended approach” for DCGS-A2 ”is a five (5) year Engineering and Manufacturing Development (EMD) effort consisting of two releases.” J.A. 11841 (emphasis added). It also stated, without any explanation, analysis, or support, that “[s]ignificant portions of the anticipated Increment 2 scope of work” are “not available as a commercial product.” J.A. 11840.
Two days later, on July 15, 2015, the Army issued its draft performance work statement, defining the efforts required to acquire services for the development and integration of DCGS-A2. J.A. 10410-594. The performance work statement defined the requirements for DCGS-A2 to include “development of new data architecture” and completion of the “design, development, integration and test.” J.A. 10418-19. Palantir filed a response to the draft performance work statement in October 2015, asserting that the “Army does not need to build that [data management] platform, as it can buy it today.” J.A. 10693. In the same month, on October 21, 2015, Ms. Heidi Shyu, as the Senior Procurement Executive, signed a Determination & Findings for “Award of a Single Source Indefinite-Delivery Indefinite-Quantity (IDIQ)
[I]ssuing a single award IDIQ contract will mitigate many of the risks identified herein and is in the best interest of the Government. Due to the complex developmental efforts this work entails, further competition at the task order level would interrupt development, ultimately increase price, and cause schedule slippages.
. . . .
[A] single-source task or delivery order contract estimated to exceed $103 million for [DCGS-A2] Engineering Manufacturing and Development contract is authorized because the task or delivery orders expected under the contract are so integral-
ly related that only a single source can reasonably perform the work.
J.A. 12302, 12304.
V. The Solicitation
On December 23, 2015, the Army issued the solicitation that is the subject of this appeal. The solicitation contemplated the award of a single indefinite-delivery, indefinite-quantity contract for DCGS-A2, with the simultaneous issuance of a cost-reimbursement type task order. It sought a single contractor to be the system data architect, developer, and integrator of DCGS-A2. The solicitation also required a software capability demonstration, which the Army contemplated “could include a Government Furnished Information (GFI), Commercial Off-[t]he-Shelf (COTS), Government Off-the-Shelf (GOTS), or Open Source product(s).” J.A. 10960. The performance work statement accompanying the solicitation explained that the successful offeror would be responsible for, among other things, the development of new data architecture; cloud computing and big data analytic capabilities; data integration; and interoperability with counter intelligence/human intelligence. The performance work statement also stated that the software design release/development should include “maximization of reuse of GOTS/COTS products.” J.A. 11101 ¶ 3.4.1.
VI. Post-Solicitation Activity
Shortly after the Army issued the solicitation, Palantir filed a pre-award bid protest, which the Government Accountability Office (“GAO“) denied in May 2016. See generally Palantir USG, Inc., No. B-412746, 2016 WL 3035029 (Comp. Gen. May 18, 2016) (“GAO Op.“). Then, on June 30, 2016, Palantir filed the current pre-award bid protest in the Court of Federal Claims. Count one of Palantir‘s complaint alleged that the Army violated § 2377 and
Not only did the agency fail to explain or indicate what commercial items possibly were available or had been considered, the Market Research Report is devoid of any information regarding the possible commercial items that could be modified to meet the Army‘s requirements. . . . [T]here is no evidence that the agency made [a determination regarding the suitability of Palantir‘s data management platform] after the market research was complete or prior to issuing the solicitation. The total absence of any discussion regarding commercial items, or possible modifications to commercial items, reinforces the court‘s understanding that the Army was focused on a developmental approach to the DCGS-A Increment 2 at an early
point in the procurement process, to the exclusion of commercially available alternatives.
Id. at 276. Further finding that the Army‘s actions caused Palantir to suffer a “non-trivial competitive injury which can be addressed by judicial relief,” the Court of Federal Claims permanently enjoined the Army from issuing a contract award under the protested solicitation. Id. at 289-95 (quoting Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1362 (Fed. Cir. 2009)). According to the injunction, the Army would have to properly and sincerely comply with FASA § 2377 before awarding a contract to meet its DCGS-A2 requirements. Id. at 295. The United States appeals. We have jurisdiction under
DISCUSSION
I. Standard of Review
We review the Court of Federal Claims’ ruling on the parties’ cross-motions for judgment on the administrative record de novo, applying the same standard of review as the trial court. Glenn Def. Marine (Asia), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013). Cross-motions for judgment on the administrative record are governed by Rule 52.1(c) of the Rules of the United States Court of Federal Claims (“RCFC“). See RCFC 52.1(c). In deciding these motions, the court considers “whether, given all the disputed and undisputed facts, a party has met its burden of proof based on the evidence in the record.” A & D Fire Prot., Inc. v. United States, 72 Fed. Cl. 126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356 (Fed. Cir. 2005)).
The Army‘s procurement decision must be set aside only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or “without observance of procedure required by law.”
[T]he court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency.
Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971),
The government raises two issues on appeal: (1) whether the trial court went beyond the statutory and regulatory language of FASA and its implementing regulations and imposed heightened obligations; and (2) whether the trial court wrongly discarded the presumption of regularity and substituted its judgment in determining that the Army acted arbitrarily and capriciously and in violation of
II. The Trial Court Properly Concluded that the Army‘s Actions Violated FASA § 2377(c)(2)
The government first argues that the trial court erroneously added requirements to § 2377, including that the Army was required to “fully investigate,” “fully explore,” “examine,” and “evaluate” whether all or part of its requirements could be satisfied by commercially available items, such as Palantir‘s product. Appellant Br. 35-36; see also CFC Op., 129 Fed. Cl. at 282. We are not persuaded that the Court of Federal Claims imposed additional requirements beyond those required by the statute. FASA requires an agency to use the results of market research to “determine” whether there are commercial items that “meet the agency‘s requirements; could be modified to meet the agency‘s requirements; or could meet the agency‘s requirements if those requirements were modified to a reasonable extent.” § 2377(c)(2). While the trial court‘s thorough opinion sometimes uses words other than “determine,” we conclude that, read in context, those words were intended to be synonymous with “determine.” In any event, we need not devote significant discussion to this argument, as we “sit to review judgments, not opinions,” Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1540 (Fed. Cir. 1983), and our de novo review leads us to the same conclusion as the one reached by the Court of Federal Claims.
As discussed above, we give deference to the Army‘s procurement decisions. Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000). Even with that deference, however, we conclude that the Army‘s procurement actions in this case were arbitrary and capricious and in violation of § 2377. First, as explained in detail below, the administrative record demonstrates that the Army, while conducting its market research, was on notice of the desirability of hybrid options that used commercial solutions and that Palantir claimed to have a commercial item that could meet or be modified to meet the Army‘s needs. Furthermore, the record shows that the Army did not use the results of that market research to determine whether there were commercial items that could meet its requirements, could be modified to meet its requirements, or could meet its requirements
The administrative record reflects that the Army was on notice of the possibility that commercial items5 could satisfy its needs for portions of DCGS-A2. Indeed, the Army was on notice as early as July 2014, when it received the DIVA Market Study it had commissioned. As discussed above, the DIVA Market Study recommended a Phased Acquisition and Integration Approach as a potential strategy. In this phased strategy, the Army would
first acquire the two foundation components: a COTS cloud infrastructure service and a COTS DIVA “Turn Key” platform. Next, integrating these two components with each other and the DCGS-A Enterprise data management architecture would establish a baseline DCGS-A2—a core suite of applications and analytics functions; a new data management architecture. Indeed, the DIVA Market Study explained that “[a] key advantage of leveraging COTS cloud infrastructure services and a COTS DIVA platform is that doing so provides a significant amount of technical infrastructure and end-user capabilities.” J.A. 12251. Thus, the Army was aware of a possible commercial approach for at least portions of the DCGS-A2 procurement.
Similarly, just six months before the solicitation, the Army Materiel Systems Analysis Activity‘s July 2015 Trade Space Analysis indicated that a hybrid approach using commercial items was the best of three alternatives considered, including COTS, GOTS, and hybrid. The Trade Space Analysis described this hybrid approach as a “compilation of commercially available software packages augmented with integrated tools/widgets written by a third-party using requirements/specifications generated by the Government (i.e., combination of COTS and GOTS).” J.A. 11954. Notably, the analysis acknowledged that “[h]ybrid software option alternatives are currently functioning in the [Department of Defense Intelligence Community]” and would “only require minor development to fill capability gaps.” J.A. 11976.
Palantir also put the Army on notice of its capabilities to provide a commercial item that could be modified/integrated to meet the Army‘s needs for DCGS-A2. Palantir responded to the Army‘s RFI #1 by explaining that the Army should consider existing commercial solutions:
The acquisition cycle should fully leverage existing commercial solutions. Prioritizing the rapid procurement of commercial capabilities minimizes the anticipated scope of development needed to deliver Increment 2 capabilities. Narrowing the development scope requires expanding the use of commercially available COTS capabilities—it does not require narrowing the overall scope of the DCGS-A program. The Government does not need to build Increment
2 functionality; the Government can buy the core functionality from the commercial market and integrate any number of additional applications.
J.A. 11885 (footnote omitted). Palantir explained that “we recommend the Government pursue a different acquisition strategy than the strategy behind the Increment 1 challenges.” Id. Palantir further informed the Army that it had successful contracts with the U.S. Marine Corps, U.S. Immigration and Customs Enforcement, and the Defense Intelligence Agency with its COTS solution. Suggesting that the COTS approach would also work for DCGS-A2, Palantir proposed using a firm-fixed-price (“FFP“) model with an “outcomes-based Performance Work Statement based on a proven product and incorporating support services.” J.A. 11889.
The Army‘s December 2014 RFI Response Analysis includes a summary of Palantir‘s response:
Palantir has developed an intelligence fusion system that has been used by various entities within the Department of Defense. Palantir was found capable to provide Data management and Workflow Management upgrades, and partially capable of providing Data Fusion and Cyber capabilities to Increment 2.
J.A. 11868. This confirms that the Army was aware of Palantir‘s commercially available intelligence fusion system, which was already in use within the Department of Defense, and considered Palantir capable of delivering some of the required functionality of DCGS-A2.
Palantir again tried to explain the value of a commercial—rather than developmental—approach in response to the Army‘s RFI #2:
We continue to believe that the success of Increment 2 requires a proven commercial solution to ensure the delivery of a working capability on time and within budget. We are concerned that the present RFI . . . is focused on collecting information on each respondent‘s ability to conduct a services-based, large-scale, and custom software engineering effort . . . rather than to assess existing software capabilities applicable to Increment 1 capability gaps.
J.A. 11910. Likewise, Palantir‘s response to RFI #3 explained that “[i]n cooperation with the government, Palantir fields and manages 25 Palantir deployments at every major Marine Corps command, representing over 15,000 accounts at peak usage across the Marine Intelligence community.” J.A. 11922. Palantir further stated that “Increment 2 should use a fielded commercial solution” and that “[d]elivering Increment 2 on a commercial platform ensures the data layer advances at the same pace as commercial technology.” J.A. 11918. Additionally, Palantir flagged that it thought the Army‘s “initial decision to embark on a significant software development effort, rather than acquiring a COTS solution,” would cause challenges like the ones that faced DCGS-A1. Id.
In addition, the Administrative Record includes three Operational Needs Statements from other Department of Defense personnel requesting Palantir‘s data management platform. One such statement, dated February 2015, explained that “[t]he Palantir Command platform is a proven capability that is currently in use to provide COP, data integration, and staff integration capabilities across multiple commercial and government organizations.” CFC Op., 129 Fed. Cl. at 224. It further stated that Palantir “offers a solution that meets all of our requirements.” Id.
Based on this record, we agree with the trial court that the Army was, or should have been, aware of Palantir‘s data management platform. Despite repeated notice
Further, on the first requirement—data fusion—record evidence shows that Palantir Gotham may provide “data fusion” capability. The Army itself described Palantir Gotham as being used as an “integrated fusion and analysis platform.” J.A. 18183-84. In addition, Palantir explained in its response to the Army‘s draft performance work statement that the commercial market offers numerous existing tools with this capability. Palantir took a step further and explained that this requirement, as written, envisioned building the capability from scratch instead of evaluating whether such functionality was commercially available.
The record evidence likewise demonstrates that the second requirement—intelligence support to cyber—may have been commercially available. Indeed, the July 2013 MITRE Palantir Platform Information Brief, which is in the administrative record, noted that “Palantir has NETOPS capability to audit/log potential cyber events and has Cyber Analysis Tools to detect/analyze suspicious Cyber events.” J.A. 17851. Furthermore, Palantir explained in its response to the draft performance work statement that having a separate requirement for cyber intelligence functionality is unnecessary because the Army could acquire such intelligence support to cyber capabilities by simply acquiring the Palantir Gotham Data Management Platform.
Finally, the record demonstrates that Palantir Gotham could be interoperable with the existing DCGS integrated backbone. For example, Palantir contracted with a U.S. military command to provide Gotham as an information bridging solution, including to satisfy the requirement that the data structure would support evolving DCGS integrated backbone standards and upgrades to new versions. Furthermore, Palantir explained in its response to the draft performance work statement that the proposed requirement to integrate the DCGS integrated backbone is unnecessary because it should be treated as an interoperability standard, not a software platform that should be integrated.
On this record, we agree with the trial court that the Army failed in its obligation under § 2377 to determine whether a commercial item could meet or be modified to meet the Army‘s procurement requirements. We acknowledge that there is no statutory or regulatory requirement
The government argues that the Trade Space Analysis demonstrates that it satisfied its obligations under § 2377. In particular, the government asserts that this document shows that a hybrid approach—using “commercially available software” and software developed by the government (GOTS)—was superior to a commercial item procurement. Appellant Reply Br. at 9. But the record undermines the government‘s position, showing that the Army‘s procurement efforts were focused on a developmental approach without determining the viability of a commercial or even a hybrid approach. Indeed, in its Determination & Findings for Award of a Single Source IDIQ Single Award Contract, the government emphasized that DCGS-A2 “is heavily focused on design and development of a new data management architecture by a contractor as the systems integrator.” J.A. 12299 ¶ 4 (emphasis added). The government further emphasized that “[d]evelopment of the data integration layer is pivotal.” Id. Nowhere in that document does the government address implementation of the Trade Space Analysis‘s recommended
III. The Trial Court Properly Accounted for the Presumption of Regularity
We now turn to the government‘s second ground for challenging the trial court‘s judgment. The government alleges that the trial court wrongly discarded the presumption of regularity in determining that the Army‘s action was arbitrary and capricious and did not comply with § 2377(c)(2). We do not agree.
Under the Administrative Procedure Act, even where an explanation or reason is not required for an agency‘s determination, a reviewing court has the power to require an explanation. Garufi, 238 F.3d at 1338. “[I]n determining whether to require an explanation, the agency decision is entitled to a presumption of regularity.” Id. (citing Bowen v. Am. Hosp. Ass‘n, 476 U.S. 610, 626-27 (1986)). “Because of that presumption of regularity, the agency should not be required to provide an explanation unless that presumption has been rebutted by record evidence suggesting that the agency decision is arbitrary and capricious.” Id.
Here, the court extensively cited record evidence showing that the Army‘s decision was arbitrary and capricious and in violation of
CONCLUSION
We do not reach the Court of Federal Claims’ finding of prejudice because the government does not contest it. Therefore, we need not reach its argument that the Court of Federal Claims erred in admitting the expert testimony of Mr. Bryant Choung, which the Court of Federal Claims relied on solely for its prejudice analysis.
We have considered the government‘s remaining arguments and find them unpersuasive. We affirm the judgment of the Court of Federal Claims that the Army must satisfy the requirements of
AFFIRMED
COSTS
Costs to Appellee.