In the David and Goliath fights between large legacy government contractors with custom built systems and commercial system providers with off the shelf, or near off the shelf, solutions—the little guys have a new bit of leverage.
In Palantir USG Inc. v. U.S., the Court of Federal Claims recently issued a ruling in favor of Palantir's pre-award protest citing the need for the government to evaluate all viable commercial options under the Federal Acquisition Streamlining Act of 1994 ("FASA") when issuing solicitations. Palantir, a data-mining company, lost their initial GAO bid protest challenging the Army's bid solicitation process relating to an enhancement of the Distributed Common Ground/Surface Systems (DCGS) which allows for sharing of multi-sensor combat intelligence and weather information among the armed forces.
FASA lowered procurement barriers and opened up government contracts to bids from small businesses by promoting fixed-price contracting based on performance. Another example is the preference FASA created given to buying commercial off-the-shelf items (COTS Items), rather than purchasing through the more complex contracting process for government-unique items. FASA also defined commercial items more broadly and exempted such purchases from over thirty statutes that contain requirements unique to government procurements. The goal of these changes was to simplify the procurement process for companies who do not ordinarily sell to the government. Though this goal has been achieved in certain ways, many in Government and in industry feel that the Government continues to lose out on the faster pace of commercial sector development, especially in high-tech and information technology.
At the heart of the Palantir case were Palantir's assertions that the solicitation process for bids blocked commercial firms like Palantir from competing, in violation of FASA. The Army issued a developmental solicitation which required bids for the creation of an entirely new data integration system. Palantir argued the Government could buy the existing core functionality from the commercial market and integrate any number of additional applications at less cost than developing new systems. In choosing to issue a developmental solicitation, the Army overlooked a viable commercial market system thereby violating FASA, which requires government agencies to frame their requirements so as to accept commercial products "to the maximum extent practicable."
As with many similar solicitation protest cases, Palantir succeeded in large part because the Government so clearly failed to adequately consider commercial options and thus the court was able to find the Government's decision lacked proper basis. So, while it is true that it is unlikely for future protesters to catch the Government with such substantial evidence of the absence of adequate FASA market research and analysis; future bidders will likely have an easier time being heard when proposing their commercial solutions. As always, contractors concerned that an RFP or RFI is unduly restrictive or is excluding them improperly should seek specialized government contracts counsel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
