Protesters looking to challenge U.S. Government awards of “Other Transaction Agreements” (“OTAs”) face forum challenges—the Government Accountability Office (“GAO”), Court of Federal Claims (“COFC”), and federal district courts have all dismissed OTA protests for lack of subject matter jurisdiction, with GAO and the COFC concluding that OTAs are not procurement contracts. But last week, in Hydraulics International, Inc. v. United States, the COFC held it could exercise jurisdiction over a challenge to an OTA award made in connection with a potential future procurement.
In Hydraulics, the Court considered a challenge to the Army’s award of an OTA for Aviation Ground Power Unit (“AGPU”) protypes used to service military helicopters. The Army invited offerors to respond to a Request for Enhanced Whitepapers (“RWP”), which contemplated awards to two companies for the “base effort” of one prototype AGPU. The RWP instructed that the base-effort award “may result in the award of a follow-on production contract for over 150 AGPUs without the use of competitive procedures.”
The Government moved to dismiss, arguing that the OTA award itself was not a procurement contract (a fact not in dispute) and that, while the RPW contemplated a follow-on production contract, it did not guarantee one. Therefore, according to the Government, the OTA award was not “in connection with a procurement or proposed procurement,” a prerequisite for invocation of the Court’s Tucker Act jurisdiction.
The Court disagreed, relying heavily upon the Federal Circuit’s decision in Distributed Solutions, Inc. v. United States, which held that Tucker Act jurisdiction “does not require an actual procurement” because “the phrase ‘in connection with a procurement or proposed procurement,’ by definition involves a connection with any stage of the federal acquisition process, including ‘the process for determining a need for property or services.’” Here, the Court noted the AGPU OTAs would “feed decision points” informing the Army’s decision to exercise an option for an additional 10 units, and thereafter whether to award a follow-on production contract. Thus, the Court concluded, “the Army is using the whitepaper submissions and OTA prototypes to decide whether to proceed with purchasing upgraded AGPUs,” meaning the awards were “in connection with” a proposed procurement and within the Court’s jurisdiction.
The Court’s ruling adds to what sometimes feels like a game of jurisdictional ping-pong. In Space Exploration Technologies Corp. v. United States—the COFC’s first opportunity to consider a protest of an OTA award—the court ruled it lacked jurisdiction because, although the award would be followed by a related procurement, the subsequent competition would involve separate and distinct solicitations and different acquisition strategies. Following that ruling, another OTA protester, MD Helicopters, attempted to pursue an OTA protest in the U.S. District Court for the District of Arizona, only to have its protest dismissed for lack of jurisdiction because the court concluded the OTA in that case was “in connection with a procurement” and therefore subject to COFC jurisdiction. (The OTA competition in MD Helicopters, like Hydraulics, provided for the award of a follow-on production contract upon the successful conclusion of the OTA.) In 2021, the COFC exercised jurisdiction over a protest filed by Kinemetrics, Inc. In that case, the Air Force made award using OTA-like authority, called a Commercial Solutions Opening, but the Court found that the evaluation process resulted in the award of “a standard indefinite delivery, indefinite quantity contract,” and therefore fell within the Court’s Tucker Act jurisdiction.
Although the Court ultimately rejected Hydraulics’ protest on the merits, the Court’s willingness to exercise jurisdiction is a welcome development. OTA protest jurisdiction still remains somewhat unsettled, but Hydraulics provides helpful guidance to protesters on the factors that may militate in favor of a challenge to an OTA award.
For further information, please contact:
John E. McCarthy Jr., Partner, Crowell & Moring
jmccarthy@crowell.com
