AgustaWestland North America, Inc. v. United States
880 F.3d 1326 (Fed. Cir. Jan. 23, 2018)
Authored by Brittany Norfleet
Statement of the Facts: The Tucker Act provides the Court of Federal Claims (“CFC”) with jurisdiction over alleged violations of statutes or regulations regarding the procurement of property or services. 28 U.S.C. § 1491 (b)(1). On April 3, 2014, in response to President Obama’s 2012 plan to reduce the nation’s defense budget, the United States Army issued Army Execution Order 109-14, which formally implemented the Aviation Restructure Initiative (“Initiative”). The Initiative called for the divestment of TH-67 training helicopters and also designated the UH-72A Lakota helicopter the Army’s Institutional Training Helicopter. The Army initially considered a sole-source acquisition of these helicopters. However, on September 19, 2014, AgustaWestland North America, Inc. (“AgustaWestland”) filed a Complaint for Declaratory and Injunctive Relief in the CFC claiming that the Execution Order was a procurement decision that violated the Competition in Contracting Act (“CICA”) and provisions of the Federal Acquisition Regulation (“FAR”). While the Tucker Act and CICA do not adequately define the term procurement, the Federal Circuit has decided that Section 403(2) is the appropriate definition to be used for the CFC to establish jurisdiction. See Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed. Cir. 2008). Thus, a procurement includes “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” Id. at 1345. The Government decided to forgo its solicitation of a sole-source contract and the CFC stayed the proceedings at that time. However, the Army had previously contracted with Airbus Helicopter, Inc. (“Airbus”) in 2006 to procure UH-72A Lakota helicopters. The contract allowed for the Government to exercise an option to purchase up to 483 UH-72A helicopters until September 30, 2015. The Government ultimately exercised that option, but ended up 16 helicopters short of its need. On December 10, 2015, the Government issued a Justification and Approval (“J&A”) to acquire the extra 16 helicopters from Airbus through a sole-source contract without proceeding through a full and open competitive bidding process. The Government’s justification for the sole-source contract was the unnecessary delay if it proceeded with a competitive bidding process and the duplicative costs that would be involved. Following the issuance of the J&A, AgustaWestland filed a Supplemental Complaint and Motion for Preliminary Injunction arguing that the Government’s actions were arbitrary and capricious.
Procedural History: The CFC found for AgustaWestland, holding first that the Execution Order on April 3, 2014 was a procurement and, therefore, the court had jurisdiction to review it. The court then supplemented the administrative record and considered additional evidence to conduct a proper judicial review. Using that additional evidence, the court found that the J&A violated the CICA and FAR and the Government’s decision to proceed with a sole-source contract absent full and open competition was arbitrary and capricious. The CFC enjoined the Government from proceeding with or awarding the sole-source contract. The United States appealed to the Federal Circuit.
Questions Presented: First, whether the CFC had jurisdiction to review the Army Execution Order. Second, whether the CFC abused its discretion when supplementing the administrative record. Third, whether the Government’s acquisition of UH-72A Lakota helicopters from Airbus through a sole-source contract absent a full and open competition was arbitrary and capricious.
Holdings: (1) No. The Army Execution Order was not a procurement decision subject to review. (2) Yes. It was an abuse of discretion to consider supplemental evidence outside that of the administrative record. (3) No. The sole-source contract Justification and Approval was not arbitrary and capricious. The Federal Circuit vacated the CFC decision.
Reasoning: The Federal Circuit first found that the CFC improperly exercised Tucker Act jurisdiction when reviewing the Execution Order because under Distributed Solutions the Order did not meet the definition of a procurement. 539 F.3d 1340, 1345 (Fed. Cir. 2008). Instead, the Order merely suggested replacing the old training helicopters with new UH-72s and did not discuss the procurement of the UH-72A Lakota helicopters. The Federal Circuit next held that the CFC did abuse its discretion when it considered evidence outside of the administrative record. The Federal Circuit found the court’s explanation for why it was necessary to supplement the record too general and insufficient and, therefore, an abuse of discretion under Axiom Resource Management, Inc. v. United States, 564 F.3d 1374 (Fed. Cir. 2009). Finally, the Federal Circuit found the Government’s Justification and Approval adequate and not an arbitrary and capricious action on behalf of the agency. The Federal Circuit explained that the reasons given by the Government for the why a sole-source noncompetitive contract award was necessary were sufficient. First, the CICA provides an exemption to competitive bidding when the property or services sought are available from one particular place and there is no adequate alternative source. Second, the Federal Circuit found that the Government’s explanation for the sole-source procurement met the requirements set forth by the FAR, including providing a sufficient summary of the market research conducted prior to issuing the J&A and providing estimates of the duplicative costs that would be incurred if they proceeded with a competitive bidding process. Therefore, the Government’s sole-source contract J&A was not arbitrary and capricious.