WASHINGTON – The US Army appealed Tuesday a US Court of Federal Claims ruling to stop the service's procurement of 16 LUH-72A Lakota helicopters arguing the court overstepped its authority, misinterpreted government procurement terms and requirements, and improperly supplemented the record with outside information not relevant to making a decision.
At issue is an Army decision, stemming from major budget cuts under sequestration, to restructure its aviation assets. In 2013 the service came up with the Aviation Restructure Initiative (ARI) that retired the OH-58 Kiowa Warrior helicopter and the Army's TH-67 single-engine basic rotary wing training helicopter. As part of ARI, the Army decided to take dual-engine Lakotas already in the inventory and repurpose them as the new designated trainer.
Several companies like Bell Helicopter and AgustaWestland were hoping at the time to sell military training helicopters to several services including the Army.
While the Army originally intended to use only what was already in the Army's inventory, part of the ARI plan was to move 100 Lakotas from the National Guard and into the training fleet. The Guard pushed back and the Army decided to let it keep its Lakotas and purchase more from Airbus – the helicopter's manufacturer – for the training fleet.
AgustaWestland sued the US Army in September 2014, filing a premature complaint over a standard sources sought notice the Army issued seeking those capable of building Lakota helicopters in preparation to buy more of the aircraft for the training fleet.
The court paused the case until after the Army filed a justification and approval (J&A) document that explained why the service must sole-source the helicopter buy to Airbus.
Once the Army submitted a J&A in February 2016 for the 16 helicopters, AgustaWestland filed a supplemental complaint that contended the new role as trainer for the Lakota exceeded the scope of the original 2006 contract with Airbus and restricted competition. The company also argued the Army failed to develop an adequate plan for acquisition of a training helicopter.
The court rendered its opinion in August issuing injunctive relief for AgustaWestland, meaning the Army could not move forward with its planned helicopter purchase.
The judge, in the ruling, said the Army has three choices: To conduct a competition, reissue a J&A addressing deficiencies identified by the court or not to proceed with procurement.
According to a few lawyers interviewed, it is fair to say the Army needs to do more work to bring its J&A to a level that is satisfactory with the court to some extend; but what is more concerning is the court’s suggestion that it can review the adequacy of an agency’s policy or operational decisions, typically viewed as outside the normal scope of a court's jurisdiction.
Alan Chvotkin, Professional Services Council executive vice president and counsel, said the Army was dinged because its market research wasn’t thorough enough. Also, the judge questioned whether the service’s independent government assessment to determine the appropriateness of a sole source procurement was actually independent.
The case could represent another example of a government agency not crossing its Ts and dotting its Is when carrying out an acquisition. The Army recently lost another case to technology company Palantir partly because the court found the service’s market research was not thorough enough.
But "this notion that the court went and questioned an operational decision to focus future training on a particular helicopter type, that is pretty much novel that they do something like that," Joseph Dyer, a partner at Seyfarth Shaw LLP, told Defense News. For one, the ARI was a policy decision that preceded a procurement decision but did not direct a procurement and, secondly, the court typically defers to the agency when it comes to operational decisions because it’s outside of the expertise and authority of the court.
And that is exactly what the Army takes issue with in its appeal.
Court Opens 'Pandora's Box'
The Army’s lawyers argue the trial court, standing in "stark contrast" to preceding case law, questioned operational policy decisions that did not directly involve the procurement of goods or services and could have greater implications for court decisions down the road.
"By enjoining an Army policy regarding the use of helicopters the Army already owns, citing impacts that policy decision may have on future procurement decisions, the trial court improperly exceeded its jurisdiction in a way that, if followed, would allow the court to review nearly any policy decision that can be connected to a later procurement decision," according to the Army’s brief.
"The trial court in this case has opened Pandora’s Box," the Army’s lawyers write.
A Matter of Interpretation
The service also contends the court’s opinion that the Army’s J&A was flawed was based on a "clear misunderstanding" of basic definitions in contracting law such as its interpretation of "follow-on contract."
The court’s definition of a "follow-on contract" is so narrow that it would limit the procurement options for government agencies on their most important systems acquisitions and is contrary to the Federal Acquisition Regulation’s long-standing regulatory framework, the Army argues.
The service also states the court found fault with a number of other aspects of the J&A that are "legally incorrect."
For instance, the court "unprompted by the parties, took issue with the Army’s conclusion that only Airbus possessed the necessary technical data to produce its own proprietary commercial helicopter," the brief states, which "betrays a fundamental misunderstanding of data rights treatment in commercial item contracting."
The court also didn’t understand the definition of an independent government estimate, which the Army relied upon to justify a sole source procurement. The judge incorrectly defined it as an estimate independent of the government, the Army argues. But, according to the service, an independent government estimate is a "government estimate intended to be independent of the prospective vendors."
Additionally, the Army argues the court overstepped its authority by questioning the service’s decision to choose a dual-engine helicopter instead of a single-engine aircraft for its training fleet.
The court also disputed the Army’s estimate that it would take three additional years to procure a training helicopter competitively by only considering the amount of time between solicitation and contract award of the Army’s 2006 procurement of Lakotas from Airbus. The analysis ignored the time it took the Army to develop and approve an acquisition plan, strategy and solicitation and also did not account for the time it took Airbus to deliver its first helicopters following the contract initiation.
Judge or Investigator?
Lastly, the trial court "repeatedly" supplemented the administrative record with materials that were not in front of Army decision makers nor necessary for review of the protest, the service argues.
"The court’s improper supplementation of the record underscores its improper expansion of its role from deciding the issues with which it was presented to actively examining the rationale for Army policy judgments," the brief reads, adding the trial court’s disagreement with Army judgement "is contrary to existing law and constitutes an unwelcome and dangerous invasion into the province of executive agency authority."
The Army’s brief paints the picture of a judge becoming an independent investigator, who demanded extra materials to support the "investigation" and then supplementing the record with the materials. The court later concluded the materials merely "relevant or helpful" and not vital for judicial review, the Army's brief notes.
For example, included in the court’s requests was all correspondence between the Army and Airbus that reference the company’s refusal to sell its proprietary technical data needed to build the Lakota. The Army argues this information should not have been admitted because it reflects the service’s predecisional deliberative process.
The Army requests the Court of Appeals for the Federal Circuit reverse the trial court’s decision and allow it to proceed with the purchase of the Lakotas it needs to round out its training fleet.