Palantir Technologies Inc. v. United States

In the United States Court of Federal Claims
No. 16-784C
Filed: August 22, 2016
Redacted Version Issued for Publication: August 26, 2016 1
* * * * * * * * * * * * * * *
PALANTIR TECHNOLOGIES INC. *
and PALANTIR USG, INC., * Pre-Award Bid Protest; Motion to
* Dismiss; Lack of Subject Matter
Protestors, * Jurisdiction; Standing; Waiver.
v. *
*
UNITED STATES, *
*
Defendant. *
*
* * * * * * * * * * * * * * *
Hamish Hume, Boies, Schiller & Flexner LLP, Washington, D.C., for protestors.
With him were Stacey K. Grigsby, and Jon R. Knight, Boies, Schiller & Flexner LLP,
Washington, D.C.
Domenique G. Kirchner, Senior Trial Counsel, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Washington, D.C., for defendant.
With her were Scott A. MacGriff, Trial Attorney, Commercial Litigation Branch, Douglas
K. Mickle, Assistant Director, Commercial Litigation Branch, Robert E. Kirschman, Jr.,
Director, Commercial Litigation Branch, and Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Civil Division, Department of Justice. Of counsel were Scott
N. Flesch, Major Lawrence P. Gilbert, Evan C. Williams, and Frank A. March, United
States Army Legal Services Agency, and Debra J. Talley and Daniel J. Beuke, United
States Army Material Command.
OPINION
HORN, J.
In this court, protestors, Palantir Technologies Inc. (Palantir Technologies) and
Palantir USG, Inc., (Palantir USG) filed a pre-award bid protest on June 27, 2016,
challenging the Department of the Army, Army Contracting Command, Aberdeen Proving
Group’s (the agency) Request for Proposals No. W56KGY-16-R-0001 (the solicitation).
1 This opinion was issued under seal on August 22, 2016. The parties were asked to
propose redactions prior to public release of the opinion. This opinion is issued with some
of redactions that the parties proposed in response to the court’s request. Words which
are redacted are reflected with the notation: “[redacted].”
Protestor Palantir Technologies “is a corporation incorporated under the laws of the State
of Delaware, having its principal place of business in Palo Alto, California,” and “is the
holder of the Palantir GSA schedule and many of Palantir’s government contracts.”
Protestor Palantir USG “is a corporation incorporated under the laws of the State of
Delaware, having its principal place of business in Palo Alto, California.” Protestors note
that Palantir Technologies “owns one hundred percent of the stock of PUSG [Palantir
USG].” Protestors filed suit in this court after the Government Accountability Office (GAO)
denied Palantir USG’s GAO protest. See, generally, Palantir USG, Inc., B-412746, 2016
WL 3035029 (Comp. Gen. May 18, 2016).
As indicated at the GAO, “[t]he solicitation seeks a single contractor to be the
system data architect, developer, and integrator of DCGS–A2 [Army’s Distributed
Common Ground System-Army Increment 2], which is the second increment of the
DCGS–A. DCGS–A is the Army's primary system for the processing and dissemination
of multi-sensor intelligence and weather information to the warfighter.” Id. at *1.
Protestors believe the Army was arbitrary and capricious to offer the solicitation as
issued because protestors contend “Palantir[ 2] has developed a technology that solves
the needs of DCGS.” Protestors claim that the data management platform that protestors
have to offer, also called the Palantir Gotham Platform, was “initially developed between
2004 and 2009 with the help of an investment from [sic], and a partnership with, the
venture capital arm of the Central Intelligence Agency,” and since “2010, Palantir has
successfully provided the Palantir Gotham Platform to numerous customers, including
federal and local law enforcement agencies, the United States Marine Corps, the United
States Special Operations Command (‘SOCOM’), the Defense Intelligence Agency, and
numerous other government agencies (as well as numerous private sector companies).”
Protestors argue that, as written, “[t]he Solicitation for DCGS-A2 makes it impossible for
Palantir to offer its Data Management Platform as a commercial or nondevelopmental
item to satisfy the Army’s requirements.”
FINDINGS OF FACT
The Army has explained that:
DCGS-A is a program to combine all intelligence software/hardware
capabilities within the Army into one program with the ability to access and be
accessed by, not only Army intelligence and command components, but also
the other members of the DCGS enterprise. It is composed of many software
products, commercial, government, and open source, as well as software
integration that allows all the different products and components to
communicate and operate seamlessly.
2 In their filings with the court, without distinguishing, protestors use the term “Palantir” to
refer to Palantir Technologies and Palantir USG collectively. Defendant, typically, uses the
term “Palantir” to refer only to Palantir USG. In this opinion, the court refers to each entity
by name unless quoting directly from the parties.
2
The Performance Work Statement for the solicitation at issue noted that “DCGS-A is the
Army’s primary system for processing and dissemination of multi-sensor intelligence and
weather information to the Warfighter. It is deployed worldwide in support of intelligence
operations, including all Theaters of Operation. DCGS-A must remain interoperable and
compatible with the Joint Command System infrastructure and mission applications.” 3
The Performance Work Statement also noted 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/Human Intelligence (HUMINT), Signals Intelligence (SIGINT), Weather,
Geospatial Intelligence (GEOINT) and Sensor Management,” and 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.”
On August 13, 2014, the Army issued a Request for Information, which was
“conducted 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,” 4 and “request[ed] respondents’ corporate overview information and basic
qualifications in managing software development projects that are similar in scope and
process to the DCGS-A program.” The August 13, 2014 Request for Information indicated
that the “[p]roposed contract types under consideration for this effort are cost-plus-
incentive fee (CPIF) or cost-plus-fixed-fee (CPFF), with an estimated value of $80-$100M
for development efforts over three to four years.” 5 Regarding the August 13, 2014
Request for Information, the Army indicated that the “[v]ast majority of respondents
support hiring a contractor as the Lead Systems Integrator (LSI) due to efficiencies in
industry decision making and resource-marshaling processes.” Palantir USG responded 6
3 In the agency’s December 16, 2015 recommendation for issuance of the solicitation,
Ms. Heidi Shyu, the then-Assistant Secretary of Defense (Acquisition), stated that DCGS-
A Increment 1 was “fully operational,” but its “data architecture is over 10 years old and
is based upon technology that is nearing obsolescence, with no growth margin.” In the
complaint, protestors allege that “[f]or over 15 years, the Army has spent approximately
$6 billion trying to develop its own software solutions for DCGS through developmental
service contracts with myriad defense contractors.”
4 Protestors state that the August 13, 2014 Request for Information “failed to inquire about
the availability of commercial or nondevelopmental items that could meet the
requirements of DCGS-A2.”
5 Protestors believe this statement demonstrates that “[t]he Army conceded in the first
RFI [Request for Information] that it was not even contemplating the possibility of a fixed-
price contract for the procurement of commercial items.”
6 Palantir Technologies did not respond to the August 13, 2014 Request for Information.
3
to the August 13, 2014 Request for Information and stated: “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.”
(emphasis in original). Palantir USG further suggested that the Army issue a fixed-price
contract for any solicitation in the future.
On December 5, 2014, the Army issued a second Request for Information, which
“was issued to determine ability of individual companies to act as the prime contractor for
the DCGS-A development effort.” As in the first Request for Information, the second
Request for Information “request[ed] respondents’ specific answers regarding the basic
qualifications in managing software development projects that are similar in scope and
process to the DCGS-A program.” Palantir USG again responded, 7 to try to explain the
value of the commercial approach:
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, DCGS-
A_INC2_RFI2, is focused on collecting information on each respondent’s
capability to conduct a services-based, large-scale, and custom software
engineering effort. Several questions are designed to assess vendor
experience with major software development projects, rather than to assess
existing software capabilities applicable to Increment 1 capability gaps.
Palantir USG also recommended “that the Government pursue a different acquisition
strategy than the long-term development used in Increment 1. We believe the acquisition
7 Defendant argues that although “Palantir USG responded to RFI No.2,” “Palantir USG
declined to answer question 3.0(f) in RFI No.2,” and “Palantir USG declined to answer
question 3.0(h) in Request for Information No.2.” Question 3.0(f) asked: “Does your
company have an adequate DCAA accounting system? If not, can your company obtain
an adequate DCAA accounting system prior to proposal submission?” Question 3.0(h)
asked, “[w]hat is your company’s current rate of personnel retention over the last five (5)
years?” Defendant also alleges that Palantir USG did not “complete the Army's chart and
identify its specific capabilities across the various DCGS-A,” as well as claims that Palantir
USG “declined to answer question 3.0(d) in RFI No.2,” which asked: “Within the last three
(3) years, from the table below, please indicate which domains that your company has
experience developing and integrating with these types of software
applications/capabilities.” Protestors respond that:
That is not what the Army requested. Rather, it asked prospective bidders
for which “Agency or Gov’t Customer”—including procurement “contract
number”—they had certain experience within “the last three (3) years.”
Palantir had already provided the Army with information about its prior
Government contracts. There was no reason to do so again.
(emphasis in original; internal citations omitted).
4
of an open architecture, COTS-based platform at a Firm-Fixed Price (FFP) offers the most
cost-effective and lowest-risk procurement approach for Increment 2 capabilities.”
On May 6, 2015, the Army issued a third Request for Information, which “[w]as
released to determine if rule of two exists, as defined in FAR [Federal Acquisition
Register] 19.502, and if a small business set-aside is appropriate for Increment 2
development.” As with the previous Requests for Information, Palantir USG indicated that
it was not a small business and further responded:
The initial decision to embark on a significant software development effort,
rather than acquiring a COTS solution, resulted in many of the DCGS-A
Increment 1 challenges. We are concerned that several of the RFI questions
indicate that the Government is considering contract terms and vehicles that
would perpetuate risky long-term, services-based contracts that focus on
large software development activities.
Palantir USG also indicated in its response: 8
Data integration requirements are not unique to the Army. The Army can
acquire an enterprise-wide data platform now, without development risk or
cost, and focus custom development efforts on unique needs across the
Force. The 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?
In July 2015, the Army issued a Market Research Report, which determined that
“the DCGS-A Increment 2 development effort cannot be procured as a commercial
product.” 9 The Market Research Report stated that “[s]ignificant portions of the
anticipated Increment 2 scope of work such as Data Fusion, Intelligence Support to
Cyber, and DIB [Integrated Backbone] upgrade are not available as a commercial
8In responding to the question in the May 6, 2015 Request for Information, “[e]xplain how
your company would be able to operate without payment for up to 90 days if awarded a
Prime Contract for Increment Two Development,” Palantir USG indicated:
As a privately owned company, Palantir Technologies, the parent company
of Palantir USG, Inc., does not typically release financial information. We
will provide audited statements as reasonably necessary for the purposes
of determining our ability to perform our obligations under the agreement
subject to the appropriate confidentiality provisions being put in place
9 A chart included in the Market Research Report briefly summarized the role of each of
the Requests for Information. The Market Research Report indicated “RFI 1 To determine
level of competition and industry feedback of Acquisition Strategy[,] RFI 2 To determine
capability of individual businesses to perform as prime contractor[,] RFI 3 Inform
Increment 2 on the role of small business[.]” (emphasis in original).
5
product. As such, the DCGSA Increment 2 development effort cannot be procured as a
commercial product.”
After the issuance of the Requests for Information and Market Research Report,
on December 23, 2015, the Army issued Request for Proposals No. W56KGY-16-R-0001,
for engineering, manufacturing, and development services and, as noted above, required
a single contractor to be the system data architect, developer, and integrator for DCGS-
A2. The solicitation contemplated the award, on a best value basis, of a single indefinite-
delivery, indefinite-quantity contract, with the simultaneous issuance of a cost-
reimbursement type task order. The period of performance contemplated a six year term
from contract award.
The solicitation had four evaluation factors: (1) Technical; (2) Cost/Price, (3) Past
Performance, and (4) Small Business Participation Plan. The Technical factor included
the five sub-factors: (1) Data Architecture, (2) Fusion Data Analytics, (3) Interoperability,
(4) Visualization Framework/Usability, and (5) Data Rights. The solicitation also instructed
that “[t]he Offeror shall complete and submit the PWS [Performance Work Statement]
Compliance matrix located in section J of the RFP [solicitation].”
The solicitation’s evaluation approach stated that regarding the basis for award:
Initially, there will be a DCGS-A Increment 2 software capability
demonstration by the offeror evaluated on a acceptable/unacceptable
basis. Only those offerors who successfully complete the demonstration will
be further evaluated and considered for award. The award will be made
based on the best overall (i.e., best value) proposal that is determined to be
the most beneficial to the Government, with appropriate consideration given
to the evaluation factors: Technical, Past Performance, Cost/Price, and
Small Business Participation Plan. The Technical factor is significantly more
important than Cost/Price. Past Performance and the Small Business
Participation Factors will be rated on an acceptable/unacceptable basis. A
rating of acceptable or neutral must be achieved for the Past Performance
Factor. A rating of acceptable must be achieved for the Small Business
Participation Factor in order to be eligible for award. Offerors are cautioned
that the award may not necessarily be made to the highest technically rated
or lowest cost or price offer.
The closing date for the solicitation was February 16, 2016. That same day,
February 16, 2016, but prior to the closing of the solicitation, Palantir USG filed a timely
protest at the GAO. The GAO subsequently issued its decision on May 18, 2016 denying
the protest. See, generally, Palantir USG, Inc., 2016 WL 3035029. In a short decision, the
GAO indicated that “[w]hile the market research revealed that commercial items were
available to meet some of the DCGS–A2 requirements, the agency concluded that there
was no commercial solution that could meet all the requirements of DCGS–A2,” and
“[b]ecause the agency concluded that significant portions of the anticipated DCSG–A2
[sic] scope of work were not available as a commercial product, the agency determined
6
that the DCGS–A2 development effort could not be procured as a commercial product
under FAR part 12 procedures,” and, that, therefore, “[t]he protester has failed to show
that the agency's determination in this regard was unreasonable.” Id. at *3 (footnote
omitted). The GAO also determined “the record shows that the agency reasonably
decided on its approach of having a single contractor, who would be responsible for
selecting all the components of DCGS–A2, and who would bear the responsibility for
making certain that those components are integrated, in contrast to the phased approach
favored by Palantir.” Id. at *4. The GAO concluded:
[T]he agency’s approach is reasonably related to its need for a fully
integrated and interoperable system made up of a number of specific
capabilities, some of which are commercially available and some of which
are not. While the agency considered several potential approaches to this
procurement, including the phased approach favored by the protester, the
agency ultimately concluded that it would have a greater likelihood of
success (in that it could avoid certain technical risks, concerns and
significant schedule risk and cost uncertainty) by opting to have a single
contractor serve as the system integrator in charge of developing and
selecting the components and making sure that they can be successfully
integrated. As such, we have no reason to question the approach chosen
by the agency or to conclude that the solicitation is unduly restrictive of
competition.
Id. at *5 (internal citation omitted).
Forty-three days after the GAO decision was issued, on June 30, 2016, protestors
filed the current bid protest in this court. Protestors’ complaint had seven counts: In count
one, protestors allege that the Army violated 10 U.S.C. § 2377 (2012) and 48 C.F.R §§
10.002 and 11.002 (2016) by refusing to solicit the Data Management Platform as a
commercial item. Similarly, in count two, protestors state that the Army violated 10 U.S.C.
§ 2377 and 48 C.F.R §§ 10.002 and 11.002 by refusing to solicit a commercial item for
the entirety of DCGS-A2, and, in count three, that the Army violated 10 U.S.C. § 2377(c)
by failing to determine whether its needs could be met by commercial items. Count four
contends that the Army violated 48 C.F.R. § 16.301-2(a) (2016) by soliciting a cost-plus
contract instead of a fixed price contract, and posits that:
Given the Army’s experience of 15 years with DCGS-A1, and given the
existence of commercial items for which pricing information is available, the
Army cannot credibly claim that it is unable ‘to define its requirements
sufficiently to allow for a fixed-price contract’ or that it is not possible for
“costs to be estimated sufficient with accuracy to use any type of fixed-price
contract.”
Count five alleges that the Army violated 10 U.S.C. § 2304a(f) (2012) and DFARS Part
217.204 (2016) by soliciting a task order contract with a base period of six years, and
count six alleges that the Army violated 48 C.F.R. § 16.504 (2016) by soliciting an
7
impermissibly expensive task order exceeding $112.0 million. Finally, in count seven,
protestors claim that “the Army engaged in arbitrary, capricious, and unlawful conduct by
refusing to allow Palantir to bid, by resisting innovation, by insisting on the failed approach
of DCGS-A1, and by engaging in bad faith conduct.”
Protestors allege that
the Army’s conduct is fundamentally irrational, arbitrary, and capricious
because it insists upon constructing a Solicitation for DCGS-A2 that repeats
all the failures of DCGS-A1. It insists on a cost-plus development effort even
though that effort was a complete failure for DCGS-A2 [sic]. It insists on
larding up its list of requirements with meaningless or redundant work
streams that are nothing more than an incentive for the defense contractors
involved to make money, and will have little to no operational utility. It insists
on requiring DCGS-A2 to have interoperability with antiquated systems
created over a decade ago, and that are now obsolete. It is possible for
Palantir to do all these things, but it is irrational and costly for the Army to
insist upon them. Requiring the contractors to perform such useless tasks
is arbitrary and capricious.
Protestors ask this court to enter
a permanent injunction requiring the Army to rescind its Solicitation and to
take any and all necessary corrective action needed to remedy its legal
violations, including at a minimum through the issuance of a revised
solicitation that complies with the Army’s legal obligations to define its
requirements in such a manner that solicits bids from offerors who will
provide commercial items or nondevelopmental items to meet the Army’s
requirements. . . .
Initially, in response to the complaint, defendant filed a motion to dismiss protestors’
complaint. 10 Defendant argues that protestors lack standing to bring this protest and that
even if protestors have standing, they have waived any objections to the solicitation.
DISCUSSION
As a threshold matter, the court addresses defendant’s motion to dismiss pursuant
to Rule 12(b)(1) and Rule 12(b)(6) of the Rules of the United States Court of Federal
Claims (RCFC) (2016). Defendant alleges that this court does not have subject matter
10 The parties have briefed the defendant’s motion to dismiss for lack of subject matter
jurisdiction and the court held oral argument on defendant’s motion to dismiss. In addition,
after multiple hearings with the parties on issues related to supplementation of the
Administrative Record and possible discovery, the court granted, in part, protestors’
motion to supplement the Administrative Record, and permitted limited discovery. This
opinion only addresses the defendant’s motion to dismiss.
8
jurisdiction to decide protestors’ bid protest in the above-captioned case because
protestors do not have standing, because neither Palantir USG or Palantir Technologies
are interested parties, or alternatively, that protestors have waived any potential challenge
to the solicitation by not filing a protest in the United States Court of Federal Claims prior
to the close of the time to submit proposals. Although protestors argue both Palantir
Technologies and Palantir USG, together and separately, are interested parties and meet
the standing requirements for a pre-award bid protest, the court considers each entity
separately.
Regarding Palantir USG, defendant argues that the court should dismiss Palantir
USG because Palantir USG “cannot demonstrate that it is a ‘prospective bidder.’ Palantir
USG also cannot demonstrate that it possesses the requisite ‘economic interest’ to
establish standing. Palantir USG also cannot demonstrate that it comes within the limited
exception recognized in CGI Federal, Inc. v. United States, 779 F.3d 1346 (Fed. Cir.
2015).” It is well established that “‘subject-matter jurisdiction, because it involves a court’s
power to hear a case, can never be forfeited or waived.’” Arbaugh v. Y & H Corp., 546
U.S. 500, 514 (2006) (quoting United States v. Cotton, 535 U.S. 625, 630 (2002)).
“[F]ederal courts have an independent obligation to ensure that they do not exceed the
scope of their jurisdiction, and therefore they must raise and decide jurisdictional
questions that the parties either overlook or elect not to press.” Henderson ex rel.
Henderson v. Shinseki, 562 U.S. 428 (2011); see also Hertz Corp. v. Friend, 559 U.S. 77,
94 (2010) (“Courts have an independent obligation to determine whether subject-matter
jurisdiction exists, even when no party challenges it.” (citing Arbaugh v. Y & H Corp., 546
U.S. at 514)); Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1342 (Fed. Cir. 2001)
(“[A] court has a duty to inquire into its jurisdiction to hear and decide a case.” (citing
Johannsen v. Pay Less Drug Stores N.W., Inc., 918 F.2d 160, 161 (Fed. Cir. 1990)));
View Eng'g, Inc. v. Robotic Vision Sys., Inc., 115 F.3d 962, 963 (Fed. Cir. 1997) ("[C]ourts
must always look to their jurisdiction, whether the parties raise the issue or not."). “The
objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party,
or by a court on its own initiative, at any stage in the litigation, even after trial and the
entry of judgment.” Arbaugh v. Y & H Corp., 546 U.S. at 506; see also Hymas v. United
States, 810 F.3d 1312, 1317 (Fed. Cir. 2016) (explaining that a federal court must satisfy
itself of its jurisdiction over the subject matter before it considers the merits of a case);
Cent. Pines Land Co., L.L.C. v. United States, 697 F.3d 1360, 1364 n.1 (Fed. Cir. 2012)
(“An objection to a court's subject matter jurisdiction can be raised by any party or the
court at any stage of litigation, including after trial and the entry of judgment.” (citing
Arbaugh v. Y & H Corp., 546 U.S. at 506)); Rick’s Mushroom Serv., Inc. v. United States,
521 F.3d 1338, 1346 (Fed. Cir. 2008) (“[A]ny party may challenge, or the court may raise
sua sponte, subject matter jurisdiction at any time.” (citing Arbaugh v. Y & H Corp., 546
U.S. at 506; Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir.), reh’g and reh’g en
banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1127 (2005); and Fanning, Phillips
& Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998))); Pikulin v. United States, 97 Fed.
Cl. 71, 76, appeal dismissed, 425 F. App’x 902 (Fed. Cir. 2011). In fact, “[s]ubject matter
jurisdiction is an inquiry that this court must raise sua sponte, even where . . . neither
party has raised this issue.” Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370
F.3d 1354, 1369 (Fed. Cir.) (citing Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481,
9
1485 (Fed. Cir.), reh’g denied and en banc suggestion declined (Fed. Cir.), cert. denied,
525 U.S. 826 (1998)), reh’g and reh’g en banc denied (Fed. Cir. 2004), cert. granted in
part sub. nom Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 546 U.S. 975 (2005),
cert. dismissed as improvidently granted, 548 U.S. 124 (2006).
This court has jurisdiction to hear bid protests pursuant to 28 U.S.C. § 1491(b)(1)
(2012) of the Tucker Act, which provides that this court has
jurisdiction to render judgment on an action by an interested party objecting
to a solicitation by a Federal agency for bids or proposals for a proposed
contract or to a proposed award or the award of a contract or any alleged
violation of statute or regulation in connection with a procurement or a
proposed procurement.
28 U.S.C. § 1491(b)(1); see also Weeks Marine, Inc. v. United States, 575 F.3d 1352,
1359 (Fed. Cir. 2009). The Administrative Dispute Resolution Act of 1996, codified at 28
U.S.C. § 1491(b)(1)–(4), amended the Tucker Act to establish a statutory basis for bid
protests in the United States Court of Federal Claims. See Impresa Construzioni Geom.
Domenico Garufi v. United States, 238 F.3d 1324, 1330–32 (Fed. Cir. 2001).
The Tucker Act grants the United States Court of Federal Claims “jurisdiction to
render judgment on an action by an interested party objecting to a solicitation by a Federal
agency for bids or proposals for a proposed contract or to a proposed award or the award
of a contract or any alleged violation of statute or regulation in connection with a
procurement or a proposed procurement.” 28 U.S.C. § 1491(a)(1) (2012). In order to have
standing to sue as an “interested party” under this provision, a disappointed bidder must
show that it suffered competitive injury or was “prejudiced” by the alleged error in the
procurement process. See Todd Constr., L.P. v. United States, 656 F.3d 1306, 1315 (Fed.
Cir. 2011) (To prevail, a bid protester must first “‘show that it was prejudiced by a
significant error’ (i.e., ‘that but for the error, it would have had a substantial chance of
securing the contract).’” (quoting Labatt Food Serv., Inc. v. United States, 577 F.3d 1375,
1378, 1380 (Fed. Cir. 2009)); Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308,
1317 (Fed. Cir. 2007); see also Sci. Applications Int’l Corp. v. United States, 108 Fed. Cl.
235, 281 (2012); Linc Gov’t Servs., LLC v. United States, 96 Fed. Cl. 672, 693 (2010) (“In
order to establish standing to sue, the plaintiff in a bid protest has always needed to
demonstrate that it suffered competitive injury, or ‘prejudice,’ as a result of the allegedly
unlawful agency decisions.” (citing Rex Serv. Corp. v. United States, 448 F.3d 1305, 1308
(Fed. Cir. 2006); Statistica, Inc. v. Christopher, 102 F.3d 1577, 1580–81 (Fed. Cir. 1996);
Vulcan Eng’g Co. v. United States, 16 Cl. Ct. 84, 88 (1988); Morgan Bus. Assocs., Inc. v.
United States, 223 Ct. Cl. 325, 332 (1980))). In order to establish what one Judge on this
court has called “allegational prejudice” for the purposes of standing, the bidder must
show that there was a “substantial chance” it would have received the contract award, but
for the alleged procurement error. See Linc Gov’t Servs., LLC v. United States, 96 Fed.
Cl. at 675; Hyperion, Inc. v. United States, 115 Fed. Cl. 541, 550 (2014) (“The government
acknowledges that proving prejudice for purposes of standing merely requires
“allegational prejudice,” as contrasted to prejudice on the merits . . . .”); Bannum, Inc. v.
10
United States, 115 Fed. Cl. 148, 153 (2014); see also Bannum, Inc. v. United States, 404
F.3d 1346, 1358 (Fed. Cir. 2005); Galen Med. Assocs., Inc. v. United States, 369 F.3d
1324, 1331 (Fed. Cir.), reh’g denied (Fed. Cir. 2004); Info. Tech. & Applications Corp. v.
United States, 316 F.3d 1312, 1319 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.
2003); Statistica, Inc. v. Christopher, 102 F.3d at 1581; Archura LLC v. United States,
112 Fed. Cl. 487, 497 (2013); Lab. Corp. of Am. v. United States, 108 Fed. Cl. 549, 557
(2012). Because standing is a jurisdictional issue, this showing of prejudice is a threshold
issue. See Corus Grp. PLC. v. Int’l Trade Comm'n, 352 F.3d 1351, 1357 (Fed. Cir. 2003);
Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir.
2002).
In the context of a pre-award bid protest, the United States Court of Appeals for
the Federal Circuit has determined that to show the requisite “direct economic interest,”
and, therefore, to be an “interested party” under the Tucker Act, the protestor has to have
suffered a “‘non-trivial competitive injury which can be redressed by judicial relief.’” See
Orion Tech., Inc. v. United States, 704 F.3d 1344, 1348 (Fed. Cir. 2013) (quoting Weeks
Marine, Inc. v. United States, 575 F.3d at 1362–63); see also COMINT Sys. Corp. v.
United States, 700 F.3d 1377, 1383 n.7 (Fed. Cir. 2012) (“[I]n Weeks Marine this court
specifically held that the ‘non-trivial competitive injury’ standard was applicable to ‘a pre-
award protest.’” (quoting Weeks Marine, Inc. v. United States, 575 F.3d at 1362))
(emphasis in original); MVS USA, Inc. v. United States, 111 Fed. Cl. at 647; Miles Constr.,
LLC v. United States, 108 Fed. Cl. at 797. This is a lower standard than the “substantial
chance” standard used in post-award bid protests, but still requires a “showing of some
prejudice.” Orion Tech., Inc. v. United States, 704 F.3d at 1348-49 (quoting Weeks
Marine, Inc. v. United States, 575 F.3d at 1362) (emphasis in original).
As explained by the United States Court of Federal Claims in Digitalis Education
Solutions, Inc. v. United States:
Only an “interested party” has standing to challenge a contract award. Rex
Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). An
interested party is an actual or prospective bidder whose direct economic
interest would be affected by the award of the contract. Id. Thus, a party
must show that it is 1) an actual or prospective bidder and 2) that it has a
direct economic interest. “[I]n order to be eligible to protest, one who has
not actually submitted an offer must be expecting to submit an offer prior to
the closing date of the solicitation.” MCI Telecomms. Corp. v. United States,
878 F.2d 362, 365 (Fed. Cir. 1989). To prove a direct economic interest, a
party must show that it had a “substantial chance” of winning the contract.
Rex Serv., 448 F.3d at 1308.
Digitalis Educ. Solutions, Inc. v. United States, 664 F.3d 1380, 1384 (Fed. Cir. 2012)
(extending the rule requiring the submission of an offer to a sole-source procurement).
The Federal Circuit in Digitalis further explained that “in order to be an actual or
prospective bidder, a party must submit a statement of capability during the prescribed
11
period.” Id. 11 Even within this framework, the Federal Circuit has held that it is possible
to be a prospective bidder if a protestor had not submitted a proposal to the agency. See
CGI Fed. Inc. v. United States, 779 F.3d at 1348.
In CGI, the United States Department of Health and Human Service’s Centers for
Medicare and Medicaid Services issued requests for quotes in order to issue contracts
that would use the awardees to determine if Medicare claims had been correctly paid.
See id. at 1347. The Federal Circuit indicated if the contractor identified an overpayment,
the agency would send a demand letter to the provider and repayment, and then pay the
contractor a contingency fee. See id. In CGI, CGI protested the payment terms of the
requests for quotes, contending that the terms violated certain statutory and regulatory
provisions. See id. As noted by the Federal Circuit:
Five different contractors bid on the 2014 RFQs, but CGI did not. Instead,
before bidding closed, CGI filed a timely pre-award protest at the
Government Accountability Office (“GAO”) challenging the revised payment
terms. While the GAO protest was pending, the bidding period closed. The
GAO subsequently denied the protest. Three business days later, CGI filed
a protest in the United States Court of Federal Claims.
Id. at 1348. The Federal Circuit recognized that “CGI never submitted a bid in response
to the 2014 RFQs and thus is not an actual bidder. CGI must therefore show that it was
a prospective bidder at the time it filed its protest in the Court of Federal Claims. We hold
that it has made such a showing.” Id. As explained by the Federal Circuit:
CGI was a prospective bidder when it promptly initiated and diligently
pressed its protest in the GAO forum, which Congress has encouraged
protestors to use before suing in court. Unsuccessful in the GAO, it
immediately filed for relief in court. We do not think that Congress meant for
a protestor in CGI's position to lose its entitlement to sue just because
delays engendered by the GAO adjudicatory process pushed completion
past the closing date for bid submissions. Concluding, as we do, that CGI
filed a protest prior to the close of bidding and thereby established its
prospective bidder status, and that CGI thereafter diligently pursued its
rights, CGI has prospective bidder status to pursue its Court of Federal
Claims protest.
Id. at 1351. Furthermore, the Federal Circuit concluded that “CGI retained its prospective
bidder status throughout the pendency of its GAO protest because it was continuously
pursuing its challenge to the payment terms in the 2014 RFQs.” Id. at 1349-50 (footnote
omitted).
11 Stating the obvious, the Federal Circuit has indicated that in order to be an actual
bidder, a protestor needs to submit a bid. See CGI Fed. Inc. v. United States, 779 F.3d
at 1348.
12
Palantir USG’s position is best compared to that of the protestor in CGI. Like
Palantir USG in the above captioned protest, the protestor in CGI did not submit a
proposal in response to the solicitation. Likewise, the CGI protestor filed a GAO protest
prior to the close of bidding to establish prospective bidder status, even though the
timeframe for submitting a proposal lapsed after the GAO protest was filed. As in CGI,
Palantir USG subsequently filed suit in this court after receiving a negative decision at the
GAO, but before the agency had made an award pursuant to the solicitation. Therefore,
like the protestor in CGI, who “filed pre-award bid protests at the GAO, claiming that,
contrary to FAR Part 12, the payment terms were inconsistent with customary commercial
practice, unduly restrictive of competition, and violated the recovery audit program's
enabling statute as well as prompt payment requirements,” CGI Fed. Inc. v. United States,
118 Fed. Cl. 337, 346 (2014), rev’d, 779 F.3d 1346 (Fed. Cir. 2015), 12 before this court,
Palantir USG, likewise, is seeking to challenge the validity of the solicitation, not
evaluations of the offers received, charging that the agency has violated statutory
provisions, most notably 10 U.S.C. § 2377.
The court notes that defendant disagrees that CGI is the proper comparison to this
protest. Defendant notes that in the quotation above, the Federal Circuit specifically used
the phrases, “diligently and continuously” and “immediately” filing suit in the United States
Court of Federal Claims, and argues it was these facts that created an exception to the
typical rules (citing CGI Fed. Inc. v. United States, 779 F.3d at 1351). Defendant argues,
therefore, “a gap of three business days between the GAO denial and the COFC [the
United States Court of Federal Claims] complaint satisfied this exception,” but that
“Palantir USG's 43-day delay in filing suit at the COFC after its GAO protest was denied
on May 18, 2016, does not meet the stringent requirements of CGI. This delay is an order
of magnitude greater than the three business days condoned in CGI.” Defendant argues
that a longer delay is “also inconsistent with common practice, as reflected by the statutory
and regulatory time limits for filing protests at the GAO, 31 U.S.C. § 3553(d)(4) (10 days to
invoke the mandatory stay); 4 C.F.R. § 21.2(a)(2) (10 days to file after the basis of the protest
is known).” (footnote omitted). Instead, the defendant believes the standard it takes from
Rex Service Corp. v. United States, 448 F.3d 1305 (Fed. Cir. 2006), is more appropriate.
In drawing a contrast with the protestor in CGI, the Federal Circuit described the
procedural history in Rex Service as follows:
Rex initially filed a pre-award protest with the agency. The agency denied
its protest, and Rex, having not submitted a bid, did not pursue the matter
further. The agency subsequently awarded the contract to another party
and—two months after the award and three months after the agency denied
its initial protest—Rex filed a post-award protest in the Court of Federal
12Before the United States Court of Federal Claims, CGI argued that the agency “violated
the Federal Acquisition Streamlining Act and FAR 12.301, 12.302, and 10.002 by
including payment terms in the RFQs that are inconsistent with customary commercial
practice without first conducting market research or obtaining a waiver.” CGI Fed. Inc. v.
United States, 118 Fed. Cl. at 351.
13
Claims, raising issues entirely different from those raised in its agency
protest. Id. We held that Rex was not a prospective bidder because it “could
have bid, but chose not to.” We noted that in Rex's case, its pre-award
agency protest was “not relevant” to determining its prospective bidder
status. We again noted that “‘the opportunity to qualify either as an actual
or a prospective bidder ends when the proposal period ends.’” We held that
“In the end, Rex did not submit a bid; nor did it file a timely bid protest in the
Court of Federal Claims.”
CGI Fed. Inc. v. United States, 779 F.3d at 1349 (citations omitted). The Federal Circuit
continued:
In Rex, the protestor waited nearly three months after the agency denied its
initial protest before filing the protest at issue and, in the interim, the agency
awarded the contract to another bidder. Rex, 448 F.3d at 1307. Here, CGI
filed its Court of Federal Claims protest within three business days of
receiving its dismissal from the GAO and before CMS had awarded the
contract. CGI, having secured prospective bidder status by filing its timely
GAO protest did not lose it in the three business days it took to file in the
Court of Federal Claims. We acknowledge that Rex explained that the
timely filed agency protest was “not relevant to Rex's status” as a
prospective bidder at the time that it filed its Court of Federal Claims protest.
This, we conclude, is because Rex failed to continue to pursue its rights in
a diligent fashion, and thus ceased to be a prospective bidder. Rex's agency
denial was met with inaction. That inaction persisted for months, and during
that time the government awarded the contract. By the time Rex filed its
Court of Federal Claims protest, its agency protest was no longer relevant.
CGI Fed. Inc. v. United States, 779 F.3d at 1350-51 (footnotes omitted).
Rex Service, however, does not offer a parallel to the facts of the protest currently
under review by this court. First and foremost, the protestor in Rex Service delayed more
than “two months after the award and three months after the agency denied its initial
protest” before filing a protest in this court. CGI Fed. Inc. v. United States, 779 F.3d at
1349 (citing Rex Serv. Corp. v. United States, 448 F.3d at 1307). As noted by the Federal
Circuit in CGI, the protest in Rex Service raised “issues entirely different from those raised
in its agency protest.” Id. Furthermore, the protestor in Rex Service did not file a GAO
protest, and the protestor filed a protest in the Court of Federal Claims after the time when
the government awarded the contract at issue in the protest. See id. Notably, Palantir
USG filed a timely protest with GAO. In the GAO protest, and in the protest before this
court, Palantir USG alleged substantially similar issues. Moreover, the Army in the protest
currently under review has not yet made an award under the solicitation, whereas the
agency in Rex Service made an award in between the time Rex Service’s agency protest
was denied and the protest was filed at the Court of Federal Claims. A pre-award protest
is in a different posture than a post award protest, as a post award protest will have
completed evaluations of the proposals and an award will have been made by the agency.
14
The Federal Circuit in CGI indicated in a footnote that “[a] longer delay than
necessary may be a factor in the Court of Federal Claims declining to exercise jurisdiction.
For example, 28 U.S.C. § 1491(b)(3) states that ‘[i]n exercising jurisdiction under this
subsection, the courts shall give due regard to . . . the need for expeditious resolution of
the action.’” CGI Fed. Inc. v. United States, 779 F.3d at 1351 n.4 (quoting 28 U.S.C.
§ 1491(b)(3)). In CGI, the Federal Circuit, however, did not provide specific guidance as
to what would, or would not be an acceptable time period, except that the Federal Circuit
found the three business day delay in coming to this court in CGI did not cause the
protestor to lose its perspective bidder status.
Protestors argue that “CGI established no deadline for when a complaint in this
Court must be filed following a timely GAO protest and the GAO’s denial of a protest. Nor
would there have been any statutory or regulatory basis for establishing such a deadline
as the ‘cut-off’ for either being a prospective bidder or not being a prospective bidder.”
Protestors continue, “Palantir[ 13] did not wait ‘three months’ but instead notified the Court
and the Government of its intent to file suit in this Court twenty-nine days after the GAO
denied its protest; and Palantir’s protest unquestionably remains ‘relevant.’” 14
Although the government in their briefs cites to the 10 day requirement for the GAO
filings, specifically the 10 day requirement to invoke the mandatory stay at 31 U.S.C.
§ 3553(d)(4) (2012) and the 10 day requirement to file a protest at the GAO once the basis
of a protest is known at 4 C.F.R. § 21.2(a)(2)(2016), at the oral argument, defendant’s
counsel more emphatically argued, essentially, that any time more than 10 days is not
permitted and standing should not be found. 15 The court notes that the GAO deadlines
are statutory ones promulgated by Congress in the United States Code and included in
the Code of Federal Regulations regarding the proper timeframes for GAO filings. No
such rigid timeframe has been established for protests in this court to circumscribe this
13 Asnoted above, protestors use the term “Palantir” to refer to Palantir Technologies and
Palantir USG collectively and protestors typically combined their arguments in the
response to the motion to dismiss for both entities, and, therefore, mostly only referred
generally to “Palantir.” Although this portion of the opinion addresses only Palantir USG,
the court has left protestors’ quotes unchanged when the quote refers simply to “Palantir.”
14 At oral argument, protestors’ counsel noted that protestors changed counsel after the
GAO protest, which contributed to the amount of time it took to decide to file suit in this
court. At the argument, protestors’ counsel stressed that he believed protestors “should
be entitled to hire new counsel and did and we had to learn the record and refine the
theories, which we think we did in a way that was consistent, but clearer and broken out
into its discrete portions.” Although not dispositive to resolve whether Palantir USG meets
the requirements identified by the Federal Circuit in CGI, the court accepts that some of
the delay was due to protestors’ new counsel becoming familiar with the facts of the case,
and drafting a complaint appropriate for this court.
15At the oral argument, defendant’s counsel stated, “[w]e think the Court should look to
the ten business days, as I said.”
15
court’s jurisdiction. Instead, Congress has allowed the court more discretion when
considering the appropriate time frame for a protest, as 28 U.S.C. § 1491(b)(3)
contemplates that the court “give due regard” to “the need for expeditious resolution of
the action.” Id. There is no magic number of days. Bid protests should be addressed
individually, given the factual circumstances presented, recognizing, of course, the urgent
need for resolution of bid protest cases.
In the protest currently before this court, the protestors state that 29 days passed
from the GAO decision until protestors “notified the Court and the Government of its intent
to file suit in this Court,” in accordance with RCFC, Appendix C, ¶ 2 (2016). In addition,
43 days passed from the issuance of the GAO decision until protestors formally filed suit
in this court. Although the court believes the distinction between the 29 days when
protestors allege the government and the court were notified, and the 43 days after the
GAO decision, when the protest was filed, is not determinative to decide if protestors fall
within the jurisdictional framework established by CGI, the court agrees that 43 days is
the proper calculation date for the court to use. The pre-filing notice that protestors refer
to does nothing more than make the court and the United States Department of Justice
aware of a potential protest. It does not indicate with any degree of certainty that a protest
will be filed. In fact, there are a significant number of pre-filing notices submitted to the
court that do not mature into actual protests filed in the United States Court of Federal
Claims. As Appendix C to the Rules of the United States Court of Federal Claims explains:
The pre-filing notice is intended to permit the Department of Justice to
assign an attorney to the case who can address relevant issues on a timely
basis and to permit the court to ensure the availability of appropriate court
resources. Failure to provide pre-filing notification will not preclude the filing
of the case but is likely to delay the initial processing of the case, including
the scheduling of the initial status conference.
RCFC, Appendix C, ¶ 2. As indicated in Appendix C, failure to file the notice does not
materially impact the bid protest once filed at the court. Moreover, after a pre-filing notice
is filed, not only is a potential protestor not obligated to subsequently file a protest, the
notice does not impact any potential statute of limitations. Therefore, the appropriate date
to calculate is from the time protestors actually filed their pre-award bid protest in this
court, i.e., 43 days after the GAO decision was issued.
In the case of Palantir USG, and applying the specific facts and circumstances of
Palantir USG’s situation, the court concludes that the 43 days delay does not deprive
Palantir USG of its status as a perspective bidder. During the delay the Army did not issue
a contract award pursuant to the solicitation. Although the Army, as indicated by
defendant’s counsel at oral argument, may have taken steps toward award by
undertaking evaluations or conducting discussions, the posture of the protest remains a
pre-award protest. Although not dispositive, in CGI the Federal Circuit not only focused
on the delay in seeking relief in this court, but also on whether the government had issued
a contract award. As the Federal Circuit in CGI indicated when comparing the CGI
protestor to the protestor in Rex Service, “Rex failed to continue to pursue its rights in a
16
diligent fashion, and thus ceased to be a prospective bidder. Rex's agency denial was
met with inaction. That inaction persisted for months, and during that time the government
awarded the contract. By the time Rex filed its Court of Federal Claims protest, its agency
protest was no longer relevant.” CGI Fed. Inc. v. United States, 779 F.3d at 1351 (citing
Rex Serv. Corp. v. United States, 448 F.3d at 1307). Also, when citing to Digitalis
Education Solutions, Inc. v. United States, the Federal Circuit in CGI “held that a protestor
that failed to submit the required statement of capability to the agency in the allotted time
period and filed its Court of Federal Claims protest more than two months after the
contract was awarded was not a prospective bidder.” CGI Fed. Inc. v. United States, 779
F.3d at 1349 (citing Digitalis Educ. Solutions, Inc. v. United States, 664 F.3d at 1383-86).
In both Rex Service and Digitalis, delays of “months” combined with the agency awarding
a contract changed the protestor’s status as a prospective bidder. CGI Fed. Inc. v. United
States, 779 F.3d at 1349, 1351. As described above, Palantir USG’s delay was less than
two months and the protest was filed in this court before a contract was awarded. Based
on the factual circumstances presented, the court finds that Palantir USG has not lost its
status as a prospective bidder. 16
Separate from the CGI framework, defendant suggests Digitalis Education
Solutions, Inc. v. United States, is a proper comparison. In Digitalis, the Federal Circuit
found that the protestor did not have standing to file suit in this court. Defendant contends
that as in Digitalis, “Palantir USG not only failed to submit a proposal before the closing
date, i.e., February 16, 2016, Palantir USG failed to respond fully to the Government's
Request for Information No.2. Such failure further demonstrates that Palantir USG is not
a ‘prospective bidder’ and does not have the requisite economic interest to establish
standing.” The protestors respond that Palantir USG “had already provided the Army with
information about its prior Government contracts. There was no reason to do so again.”
(emphasis in original; internal citations omitted). The significant difference between
Palantir USG and the protestor in Digitalis, is that Digitalis involved a sole-source
procurement and not an open procurement like the above captioned protest. As explained
by the Federal Circuit in Digitalis:
In a sole-source award such as this one, the notice of intent issued by the
government is analogous to a request for a proposal. Interested parties are
invited to submit statements of capability in order to convince the
government that it should hold a full competition for the contract rather than
sole-source the contract to the proposed contractor. We therefore hold that
in order to be an actual or prospective bidder, a party must submit a
statement of capability during the prescribed period. Failure to do so also
means that a party does not have the requisite direct economic interest
because it cannot have a “substantial chance” of convincing the government
16 The court does not mean to suggest that there is no time limit on how much time a
protestor can extend the time between a GAO decision and filing a protest in this court.
The circumstances presented must be reasonable and the time between the GAO
decision and the filing in the United States Court of Federal Claims must not be
significantly attenuated.
17
to hold a formal competition and subsequently bid on the contract.
Digitalis Educ. Solutions, Inc. v. United States, 664 F.3d at 1385. The Federal Circuit also
indicated that “[t]he notice stated that if any party challenged the sole-source contract to
Science First, then it should file a statement no later than Wednesday, September 22,
2010, detailing its capability to fulfill the order.” Id. at 1383. The protestor in Digitalis did
not file a capability statement or otherwise protest the sole-source award, and, therefore,
the Federal Circuit determined Digitalis did not have standing to protest the sole-source
contract award at issue. See id. at 1383, 1385.
As noted by protestors, for the solicitation at issue here, “the Army set no deadline
for offerors of commercial items to submit their objections to the Army’s decision to issue
a Solicitation for a developmental project, and therefore Palantir cannot be accused of
missing such a deadline.” Moreover, as protestors note: “The RFI did not establish a
deadline for objecting to the Army’s plan to issue a solicitation for a developmental project.
Instead, the RFI was issued pursuant to FAR 15.201(e), which applies not when an
agency is seeking to award a contract but rather is seeking information ‘for planning
purposes.’” Furthermore, the August 13, 2014 Request for Information definitively stated
that “[t]his RFI is being conducted solely for information and planning purposes and does
not constitute a solicitation.”17 Protestors correctly observe that the August 13, 2014
Request for Information “further stated that ‘[p]articipation in response to this RFI will not
preclude any vendor from responding to future acquisitions, either individually or as part
of a team.’” This stands in contrast to the language of the notice in Digitalis which required
any offeror challenging the sole-source to submit a statement by a specific date.
Protestors also believe that the Army was on notice of Palantir USG’s issues with
the solicitation from Palantir USG’s response to the first Request for Information because
“Palantir’s response to the first RFI had listed its prior government contracts, and
specifically identified its contracts with the Marine Corps and other Department of
Defense agencies as part of a comprehensive and detailed demonstration that
commercial items were available on a firm-fixed-price basis to meet the Army’s needs.”18
The court finds the sole-source notice issue in Digitalis to be sufficiently different from the
above captioned protest as to not be a useful comparison. Another difference between
this protest and the one in Digitalis is the procedural history. As noted by the Federal
17 The August 13, 2014 Request for Information also stated: “This is not a request for
proposal, request for quotation, or an invitation for bid, nor does its issuance obligate or
restrict the Government to any particular acquisition approach. This RFI does not obligate
the Government to issue a solicitation.”
18 Protestors also claim it is misleading for defendant to suggest that Palantir USG’s
responses to the Requests for Information left the Army in the dark about Palantir USG’s
views of the solicitation. Protestors claim that “the RFI responses were just one small part
of Palantir’s persistent efforts throughout this process to inform the Government of the
capabilities of its commercial product, and of the inherently flawed nature of the
Government’s developmental approach.”
18
Circuit in CGI, “in Digitalis, we held that a protestor that failed to submit the required
statement of capability to the agency in the allotted time period and filed its Court of
Federal Claims protest more than two months after the contract was awarded was not a
prospective bidder.” CGI Fed. Inc. v. United States, 779 F.3d at 1349. As discussed above
regarding Rex Service, in this protest, the agency has not yet made an award. In sum,
once again, Palantir USG has not lost its prospective bidder status in this court.
The other requirement Palantir USG must demonstrate to prevail on the issue of
standing is that Palantir USG has a direct economic interest. As noted in CGI:
To have standing, CGI must also have a direct economic interest affected
by the award of the contract. Digitalis, 664 F.3d at 1384. CGI can satisfy
this requirement by showing that it suffered “a non-trivial competitive injury
which can be redressed by judicial relief.” Weeks Marine, Inc. v. United
States, 575 F.3d 1352, 1361–62 (Fed. Cir. 2009).
CGI Fed. Inc. v. United States, 779 F.3d at 1351. As explained by the Federal Circuit in
Weeks Marine:
We have not had occasion to discuss what is required to prove an economic
interest, and thus prejudice, in a case such as this, where a prospective
bidder/offeror is challenging a solicitation in the pre-award context. In such
a case, it is difficult for a prospective bidder/offeror to make the showing of
prejudice that we have required in post-award bid protest cases. See, e.g.,
Statistica, 102 F.3d at 1582 (holding that a contractor lacked standing
because it failed to show a “substantial chance it would have received the
contract award but for” agency error). The reason of course is that, in a case
such as this, there have been neither bids/offers, nor a contract award.
Hence, there is no factual foundation for a “but for” prejudice analysis.
Weeks Marine, Inc. v. United States, 575 F.3d at 1361; see also Orion Tech., Inc. v.
United States, 704 F.3d at 1348. Protestors claim that “[t]here is no question that Palantir
has demonstrated a non-trivial competitive injury, and the Government does not argue
otherwise,” and argues that “the defects in the Solicitation have deprived Palantir of the
ability to compete to supply commercial items to fulfill the requirements of the DCGS-A
program; further, if the contract is awarded, it will be permanently deprived of that
opportunity.”
At the oral argument, defendant argued that the non-trivial competitive injury
standard is not the correct one to use in this case. Although acknowledging that the
Weeks Marine standard is the standard typically applied to pre-award protests, defendant
insisted before the court that the substantial chance standard is the appropriate one. 19 In
19 At the oral argument, defendant’s counsel stated regarding application of
the substantial chance test or the nontrivial competitive interest test, what
19
its briefs defendant was more measured:
The Weeks Marine “non-trivial competitive injury” standard, however, does
not apply to every pre-award protest. In Orion, 704 F.3d at 1349, the Federal
Circuit applied the "substantial chance" prejudice standard to a protest
challenging the rejection of a proposal prior to the issuance of a contract
award. Although the protest was pre-award, the Federal Circuit explained
that, unlike in Weeks Marine, “an adequate factual predicate to ascertain
[prejudice] under the traditional ‘substantial chance’ standard [sic] existed.
Id. In other words, because the record showed that the agency had
evaluated the protester's proposal against the solicitation's evaluation
criteria, the Court was able to ascertain whether the agency's decision to
exclude the protester harmed it.
The court notes, however, there are numerous differences between the protestor in Orion
and Palantir USG. As noted by the Federal Circuit in Orion:
Orion is not challenging the terms of the solicitation, as was the case in
Weeks Marine; it is challenging the Army's application of those solicitation
criteria to Orion. The Army evaluated Orion's bid for compliance with the
terms of the solicitation and then gave detailed reasons for rejecting Orion's
proposal. In addition, Orion's bid was within the competitive range later
established by the Army after Orion's exclusion but before the Army's initial
response to Orion's first GAO protest. Given the circumstances, there is an
adequate factual predicate to ascertain under the traditional “substantial
chance” standard whether Orion was prejudiced by the Army's decision to
exclude its initial proposal.
Orion Tech., Inc. v. United States, 704 F.3d at 1349. The Army did not evaluate a proposal
from Palantir USG because one was not submitted. Therefore, unlike in Orion, the Army
could not evaluate Palantir USG's bid for compliance with the terms of the solicitation or
give detailed reasons for rejecting the proposal. Nor in this protest has the Army revealed
the competitive range for the procurement. In this protest, Palantir USG is not, as in
Orion, challenging the Army’s application of solicitation criteria to Palantir USG. The court
the Court looks to is the factual circumstances as stated by the Federal
Circuit in the Orion case,” and argued that “this is a case where it’s not just
pre-award, it’s pre-award, but it’s post bid. So, in these circumstances
where it’s post bid, other offerors have made -- other offerors have tendered
their offers. In this type of situation, the Court can look at the facts and can
come to a decision on whether there’s any substantial chance that they
would have been awarded the contract.
The court notes that even if the posture of this protest is after bids were submitted, or as
indicated by the government, even after steps towards evaluations may have taken place,
there is no evidence in the record that analysis of the proposals that were submitted has
been completed.
20
believes the current challenge is much closer to the Weeks Marine line of cases, a
challenge to the terms of the solicitation itself, and not like in Orion, the application of
solicitation criteria to Orion. Under the less stringent non-trivial competitive injury
standard, the court agrees with protestors that if there are errors in the solicitation and
solicitation development process, as protestors have argued on the merits of the case,
those defects would have the effect of depriving Palantir USG of the ability to compete to
supply commercial items to fulfill the requirements of the DCGS-A program. See BINL,
Inc. v. United States, 106 Fed. Cl. 26, 38 (2012).
Furthermore, protestors in their response to the motion to dismiss argued that
“while not required to satisfy the ‘direct economic interest’ standard, Palantir also has
amply alleged its capability to supply the Army’s requirements through the Palantir
Gotham Platform, including by pointing to the contracts that it has entered into with other
agencies within the Department of Defense.” As alleged in the complaint, and argued to
this court, “[s]ince 2010, Palantir has successfully provided the Palantir Gotham Platform
to numerous customers, including federal and local law enforcement agencies, the United
States Marine Corps, the United States Special Operations Command (‘SOCOM’), the
Defense Intelligence Agency, and numerous other government agencies (as well as
numerous private sector companies).”20 If given the opportunity to bid on a revised
solicitation for a commercial item, it appears Palantir USG would have a substantial
chance of a contract award. See Todd Constr., L.P. v. United States, 656 F.3d at 1315.
Palantir USG, therefore, has demonstrated standing to pursue the filed protest on the
merits.
20Moreover the Administrative Record contains a “DCGS-A Inc 2 Information Paper Inc
2 Key Objectives and Approach,” which encouraged the agency to “[c]ompete a Full and
Openly Competed Contract for the key objectives of DCGS-A Increment 2 (Data
Enterprise Modernization and an easier to use visualization framework)” and indicated in
part:
Industry to deliver the infrastructure for document / entity information to
ingest, process, and organize all of the textual data available to DCGS-A to
displace the Entity (TED) and Document (MSG) - infrastructure that
interoperates with the Geospatial and other Intelligence data-specific data
sources using standards such as Open Geospatial Consortium (OGC),
Motion Imagery Standards Profile (MISP), etc. This infrastructure could be
a commercial stand-alone solution (Palantir, IBM) or it could be a collection
of capabilities (RDMS + Hadoop +…) as long as the infrastructure has the
‘ilities’, an open architecture, and the ability to organize the data and mature
touch-points to the data.
This indicates, at a minimum, if the structure of the solicitation was changed to one
seeking a commercial item, Palantir USG would have a substantial chance to be
competitive and receive a contract.
21
Failing to the convince the court of its prospective bidder and economic interest
arguments regarding Palantir USG, defendant has also argued that, “[a]lternatively,
application of the waiver doctrine recognized in Blue & Gold Fleet, L.P. v. United States,
492 F.3d 1308 (Fed. Cir. 2007), warrants dismissal of plaintiffs' complaint,” because the
“alleged defects in the solicitation are patent and plaintiffs could have brought suit in the
COFC before the close of the bidding process, rather than attempting to take advantage
of the Government and other bidders by delaying the filing of their suit.” Protestors’
contend that “the Government misstates the holding of Blue & Gold. That decision
nowhere requires the filing of a lawsuit in the Court of Federal Claims to avoid a finding
of waiver.” Protestors also argue “[b]ecause Palantir objected to the Army’s decision by
filing a GAO protest prior to the close of bidding, the waiver doctrine does not apply here.
The Government cites no case holding otherwise.”
As noted above, although Palantir USG submitted responses to the Army’s
Requests for Information, and had raised the availability of a commercially available
alternative to the agency, Palantir USG did not submit a proposal in response to the
research and development solicitation. Instead, the same day that the opportunity to
submit a proposal in response to the solicitation closed, February 16, 2016, but prior to
closing, Palantir USG filed a timely protest at the GAO.
In Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, the United States Court
of Appeals for the Federal Circuit addressed if an offeror had the opportunity to object to
a patent error in the terms of a solicitation, but failed to do so, did the offeror waive the
right to challenge that same error in a subsequent bid protest. See id. at 1313. In Blue &
Gold Fleet, L.P. v. United States, the protestor challenged the National Park Service’s
award of a contract to Hornblower Yachts, Inc. (Hornblower) for ferry services to Alcatraz
Island. See Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1310-11. The protestor
argued that Hornblower’s proposal did not include employee wage and benefits
information required by the Service Contract Act, thus, making the Park Service’s
evaluation of the cost of Hornblower’s proposal flawed. See id. at 1312. The Federal
Circuit acknowledged that “[b]y statute, the Park Service must ‘evaluate . . . proposals
and make an award based solely on the factors specified in the solicitation.’” Id. at 1313
(quoting 10 U.S.C. § 2305(b)(1)). Moreover, in Blue & Gold, the Federal Circuit
acknowledged that “[i]n this case, it is true that the decision not to apply the Service
Contract Act to the contract may have influenced the evaluation of the proposals;
however, the Park Service made this decision during the solicitation, not evaluation,
phase of the bidding process.” Id. The Federal Circuit noted that the solicitation “did not
include any requirement that the bidders consider the Service Contract Act,” id., and that
the protestor had not raised any objection to the exclusion of Service Contract Act
requirements prior to the submission of proposals. Therefore, the Federal Circuit found
that the protestor was challenging the terms of the solicitation, not the agency’s evaluation
of Hornblower’s proposal. See id.
The Federal Circuit also noted that the protestor in Blue & Gold had failed to
challenge the terms of the solicitation until after the Park Service had selected Hornblower
for contract award. See id. at 1311. In considering if the protestor had waited too long to
22
challenge the solicitation, the Federal Circuit noted that decisions of the Court of Federal
Claims had concluded “that where there is a ‘deficiency or problem in a solicitation . . .
the proper procedure for the offeror to follow is not to wait to see if it is the successful
offeror before deciding whether to challenge the procurement, but rather to raise the
objection in a timely fashion.’” Id. at 1314 (quoting N.C. Div. of Servs. for the Blind v.
United States, 53 Fed. Cl. 147, 165 (2002), aff’d, 60 F. App’x 826 (Fed. Cir. 2003))
(omission in original); see also Draken Int’l, Inc. v. United States, 120 Fed. Cl. 383, 393
(2015). In Blue & Gold, the Federal Circuit held:
[A] party who has the opportunity to object to the terms of a government
solicitation containing a patent error and fails to do so prior to the close of
the bidding process waives its ability to raise the same objection
subsequently in a bid protest action in the Court of Federal Claims.
Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1313; see also Per Aarsleff A/S v.
United States, No. 2015-5111, 2016 WL 3869790, at *6 (Fed. Cir. June 23, 2016);
Phoenix Mgmt., Inc. v. United States, 125 Fed. Cl. 170, 181 (2016); Universal Marine Co.,
K.S.C. v. United States, 120 Fed. Cl. 240, 248–49 (2015); Northeast Constr., Inc. v.
United States, 119 Fed. Cl. 596, 609 (2015); Innovative Mgmt. Concepts, Inc. v. United
States, 119 Fed. Cl. 240, 245 (2014); CliniComp Int'l, Inc. v. United States, 117 Fed. Cl.
722, 737–38 (2014)) (“The rule in Blue and Gold Fleet thus bars a protester from raising
objections to patent errors or ambiguities in the terms of a solicitation after the closing of
bidding if such errors or ambiguities were apparent on the face of the solicitation,” and
“[w]hen a solicitation contains a patent ambiguity, the offeror has ‘“a duty to seek
clarification from the government, and its failure to do so precludes acceptance of its
interpretation”’ in a subsequent court action.” (quoting Blue & Gold Fleet L.P. v. United
States, 492 F.3d at 1313 (quoting Stratos Mobile Networks USA, LLC v. United States,
213 F.3d 1375, 1381 (Fed. Cir. 2000)))). The Federal Circuit in Blue & Gold reasoned that
such a waiver rule, “requir[ing] that a party object to solicitation terms during the bidding
process,” furthered the mandate in 28 U.S.C. § 1491(b) that, “‘the courts shall give due
regard to the interests of national defense and national security and the need for
expeditious resolution of the action.’” Blue & Gold Fleet, L.P. v. United States, 492 F.3d
at 1313 (quoting 28 U.S.C. § 1491(b)(3)) (emphasis in original).
The Federal Circuit also explained in Blue & Gold:
“It would be inefficient and costly to authorize this remedy after offerors and
the agency had expended considerable time and effort submitting or
evaluating proposals in response to a defective solicitation. Vendors cannot
sit on their rights to challenge what they believe is an unfair solicitation, roll
the dice and see if they receive award [sic] and then, if unsuccessful, claim
the solicitation was infirm.”
Id. at 1314 (alteration in original) (quoting Argencord Mach. & Equip., Inc. v. United States,
68 Fed. Cl. 167, 175 n.14 (2005)); see also Bannum, Inc. v. United States, 115 Fed. Cl.
257, 274 (2014).
23
In its reply brief, defendant indicates that “Plantiffs [sic] suggest that the Blue &
Gold waiver doctrine ought not apply in a pre-award bid protect [sic].” Although, not so
explicitly stated in protestors’ response to the motion to dismiss, the Federal Circuit has
repeatedly determined that waiver can apply to pre-award protests as well as post-award
protests. The Federal Circuit in COMINT Systems Corp. v. United States, 700 F.3d 1377,
extended the logic of Blue & Gold to all pre-award situations, as follows:
In Blue & Gold Fleet, L.P. v. United States, this court held that “a party who
has the opportunity to object to the terms of a government solicitation
containing a patent error and fails to do so prior to the close of the bidding
process waives its ability to raise the same objection afterwards in a §
1491(b) action in the Court of Federal Claims.” [Blue & Gold Fleet, L.P. v.
United States,] 492 F.3d 1308, 1315 (Fed. Cir. 2007). Comint points out that
Blue & Gold's holding does not explicitly apply to this case since Comint
had no opportunity to challenge the solicitation before “the close of the
bidding process,” Amendment 5 having been adopted after the bidding
process closed. Amendment 5 was, however, adopted before the award,
and we think the reasoning of Blue & Gold applies to all situations in which
the protesting party had the opportunity to challenge a solicitation before
the award and failed to do so.
There is no question that Comint could have challenged the solicitation
before the award. The Federal Acquisition Regulations require that agency
contracting officers “consider all protests . . . whether protests are submitted
before or after award.” 48 C.F.R. § 33.102(a) (emphasis added). If efforts
to obtain relief from the contracting officer fail, the Tucker Act specifically
authorizes pre-award challenges. The statute gives the Claims Court
“jurisdiction to render judgment on an action by an interested party objecting
to a solicitation by a Federal agency,” and further provides that the Claims
Court has jurisdiction “without regard to whether suit is instituted before or
after the contract is awarded.” 28 U.S.C. § 1491(b)(1).
The same policy underlying Blue & Gold supports its extension to all pre-
award situations. In Blue & Gold, we explained:
In the absence of a waiver rule, a contractor with knowledge
of a solicitation defect could choose to stay silent.... If its [ ]
proposal loses to another bidder, the contractor could then
come forward with the defect to restart the bidding process,
perhaps with increased knowledge of its competitors. A
waiver rule thus prevents contractors from taking advantage
of the government and other bidders, and avoids costly after-
the-fact litigation.
24
[Blue & Gold Fleet, L.P. v. United States,] 492 F.3d at 1314.
To be sure, where bringing the challenge prior to the award is not
practicable, it may be brought thereafter. But, assuming that there is
adequate time in which to do so, a disappointed bidder must bring a
challenge to a solicitation containing a patent error or ambiguity prior to the
award of the contract.
COMINT Sys. Corp. v. United States, 700 F.3d at 1382 (footnote omitted; alteration in
original); see also Per Aarsleff A/S v. United States, 2016 WL 3869790, at *7; Comm’n
Constr. Servs., Inc. v. United States, 116 Fed. Cl. 233, 261-62 (2014) (“[P]arties who have
the opportunity to object to the terms of a solicitation containing patent errors or
ambiguities and fail to do in a timely fashion waive their ability to subsequently raise the
same objections. . . . The Blue & Gold waiver rule as extended by COMINT is simple: if
there is a patent ambiguity or error in the solicitation, a plaintiff must seek redress in court
prior to award.”).
The Federal Circuit further explained in Bannum, Inc. v. United States:
Our waiver rule implements Congress’s directive in the Administrative
Dispute Resolution Act (ADRA) of 1996, Pub. L. No. 104-320, § 12, 110
Stat. 3870, 3874, that courts “shall give due regard to . . . the need for
expeditious resolution” of protest claims. 28 U.S.C. § 1491(b)(3); see Blue
& Gold, 492 F.3d at 1313. A waiver rule implements this statutory mandate
by reducing the need for the “inefficient and costly” process of agency
rebidding “after offerors and the agency ha[ve] expended considerable time
and effort submitting or evaluating proposals in response to a defective
solicitation.” Blue & Gold, 492 F.3d at 1314 (internal quotation marks and
citation omitted). In this context, clarity is not just readily achievable but
important. Requiring that the prescribed formal routes for protest be
followed (to avoid waiver) reduces uncertainty about whether the issue is
joined and must be resolved, and thereby helps prevent both the wasted
and duplicative expenses (of all bidders and the government) and the
delayed implementation of the contract that would likely follow from laxer
standards of timely presentation of solicitation challenges.
Bannum, Inc. v. United States, 779 F.3d 1376, 1380 (Fed. Cir. 2015). The Federal Circuit
also emphasized that:
The solicitations at issue and the governing regulations put Bannum on
notice of the formal requirements for filing a “protest” that would trigger an
agency obligation of response and prompt resolution. Bannum did not
comply with those requirements; nor did it pursue other available means of
formal protest (e.g., to the GAO or the Court of Federal Claims) until after
the awards. In these circumstances, it waived its solicitation challenges.
25
Id. Therefore, in the years since the Blue & Gold decision, the Federal Circuit has
expanded the waiver rule. Recently, in Phoenix Management, Inc. v. United States, in
finding a protestor waived its objections to the solicitation, a Judge of this court noted that
“the purported solicitation defects identified by plaintiff existed when the Air Force issued
the solicitation on February 18, 2015. As a consequence, plaintiff had ample opportunity
to challenge these purported defects prior to the April 1, 2015 proposal submission
deadline, either through an agency-level protest, by lodging a protest at the GAO, or by
filing a protest in this court.” Phoenix Mgmt, Inc. v. United States, 125 Fed. Cl. at 182.
As protestors correctly states: “Blue & Gold, COMINT, Bannum, and Per Aarsleff
A/S v. United States all involved bid protests where the offerors did not file any formal
protests during the bidding period, and instead opted to file [28 U.S.C.] § 1491(b) actions
after award of the contracts.” (emphasis in original). In CGI, discussed extensively above,
the Federal Circuit drew distinctions between protestor CGI and other, unsuccessful,
protestors who had filed suit in the United States Court of Federal Claims. The Federal
Circuit stated:
The same cannot be said of CGI, which diligently and continuously pursued
its rights in the GAO and then, immediately upon dismissal by the GAO, in
the Court of Federal Claims. Neither party disputes that CGI qualified as a
prospective bidder on the day that it filed its GAO protest. Thus, it
“achieve[d] prospective bidderhood” at that time. MCI, 878 F.2d at 365. The
fact that—as MCI, Federal Data, and Digitalis all make clear—CGI’s
opportunity to qualify as a prospective bidder ends when the solicitation
period ends does not doom CGI because it had already achieved
prospective bidder status with its timely GAO protest. It seems equally clear
that CGI retained its prospective bidder status throughout the pendency of
its GAO protest because it was continuously pursuing its challenge to the
payment terms in the 2014 RFQs.
CGI Fed. Inc. v. United States, 779 F.3d at 1349-50 (emphasis in original; footnotes
omitted). Although quoted above, this court notes that in CGI the Federal Circuit made
clear that:
CGI was a prospective bidder when it promptly initiated and diligently
pressed its protest in the GAO forum, which Congress has encouraged
protestors to use before suing in court. Unsuccessful in the GAO, it
immediately filed for relief in court. We do not think that Congress meant for
a protestor in CGI's position to lose its entitlement to sue just because
delays engendered by the GAO adjudicatory process pushed completion
past the closing date for bid submissions. Concluding, as we do, that CGI
filed a protest prior to the close of bidding and thereby established its
prospective bidder status, and that CGI thereafter diligently pursued its
rights, CGI has prospective bidder status to pursue its Court of Federal
Claims protest.
26
Id. at 1351.
As noted above, protestors took issue with defendant’s characterization of the Blue
& Gold waiver line of case that require the filing of a lawsuit specifically in the United
States Court of Federal Claims to avoid a finding of waiver, and argue “[b]ecause Palantir
objected to the Army’s decision by filing a GAO protest prior to the close of bidding, the
waiver doctrine does not apply here. The Government cites no case holding otherwise.”
Indeed, defendant simply states: “Plaintiffs, by failing to file their objections to the
solicitation in a bid protest suit in the Court of Federal Claims before the close of the
bidding process, waived their objections to the terms of the solicitation.” As indicated by
the Federal Circuit in CGI and in this court in Phoenix Management, however, the timely
filing of a GAO protest is valid way to preserve objections, and simply because Palantir
USG initially went to the GAO instead of this court, does not mean that protestor Palantir
USG has waived its objections to the solicitation. 21
As stated by the GAO, “[t]he closing date for the submission of quotations was
February 16, and this [GAO] protest was filed on that date, prior to closing.” Palantir USG,
Inc., 2016 WL 3035029, at *2. Moreover, the same is conceded in defendant’s motion to
dismiss: “The closing date for the submission of quotations was February 16, 2016, and
Palantir USG, Inc. filed its GAO protest on that date before the solicitation’s closing
time. . . .” Therefore, because Palantir USG timely filed a protest at the GAO before the
close of submissions, Palantir USG did not waive the ability to challenge the solicitation
in this court. 22 As determined above, Palantir USG also has established prospective
bidder status and a direct economic interest, Palantir USG did not lose its status as a
result of the 43 day delay in filing the protest in this court after the GAO decision was
issued, and has not waived is objections to the solicitation by filing its protest in this court
after Palantir USG filed a protest at the GAO.
Finally, regarding Palantir USG, defendant argues that “Palantir failed to make the
allegations and arguments in Count II of the complaint before the GAO. Having failed to
raise the allegations and arguments in Count II before the GAO, Palantir USG could not
possibly come within the exception recognized in the CGI decision even if it had filed suit
21Furthermore, in Bannum, the Federal Circuit noted the protestor waived any solicitation
challenges when it “did not comply with those requirements; nor did it pursue other
available means of formal protest (e.g., to the GAO or the Court of Federal Claims) until
after the awards. In these circumstances, it waived its solicitation challenges.” Bannum,
Inc. v. United States, 779 F.3d at 1380. Bannum, therefore, made it explicit that pursuing
a protest at the GAO is a legitimate way to prevent waiver in the Court of Federal Claims.
22Defendant also cites to decisions such as VION Corp. v. United States, 122 Fed. Cl.
559 (2015), which applied the Blue & Gold waiver standard to a post-award bid protest in
which the protestor challenged an agency's proof of concept plan. A case such as VION
does not address whether the protestor forestalled waiver by timely filing a GAO protest,
and, therefore, is not helpful to the court’s determination.
27
in the COFC three days after GAO's denial of its protest.” 23 Protestors respond that
“[t]here is no case law or legal principle to support that. . . .” The court agrees with
protestors’ counsel that the no case has been identified that would bar Palantir USG’s
complaint in this court because the allegations in count two were not brought before the
GAO. Protestors also argue, “moreover, the claims and factual allegations the
Government seeks to bar were in fact made before the GAO.” Furthermore, at oral
argument, counsel for the protestors stated that
there have been extensive representations to you that we did not make that
argument, that Count 2 argument, that we can do it all on a commercial item
basis. You’ve been told that we did not make that argument before the GAO.
That’s not accurate, Your Honor. It is true, perhaps, that the focus of our
argument was what our data management platform could do and they
should have defined their requirements in what could be called phases or
really just different contracts.
As noted above, count two of the complaint filed in this court alleges that the Army violated
10 U.S.C. § 2377 and 48 C.F.R §§ 10.002 and 11.002 by refusing to solicit a commercial
item for the entirety of DCGS-A2. Protestors’ counsel also pointed to the post-hearing
comments submitted by the Army during the GAO protest, in which the Army stated:
The Army raises the issue of Palantir not being an interested party at this
time because in its cross examination of [redacted], Protester counsel drew
the GAO’s attention to the RFI response given by Palantir which he
suggested by his questions meant that Palantir could not only provide all
the capabilities of the requirement, but could also do so at a much less
expensive cost than its website information had indicated. Palantir has
therefore taken the position that it could perform the entire contract using
its commercial software at a reasonable cost, and yet, it failed to submit a
proposal.
(internal citations omitted). Although not clearly identified by Palantir USG’s previous
counsel in its GAO complaint, the court agrees with protestors that the issue of whether
or not Palantir USG could perform the entirety of the DCGS-A2 project on a commercial
basis was before the GAO and the Army had the opportunity to address the issue.
The court notes that separate from the allegations regarding count two, defendant
contends, regarding allegations of bad faith:
Palantir USG stated at the most that its assertions suggest bad faith. Such
general statements, one of which is only in a footnote, were insufficient to
23 Defendant also argues, “[f]or the same reasons, all of the embellishments and new
allegations that Palantir USG seeks to raise now, but did not raise at GAO, are untimely
and beyond the Court's jurisdiction.”
28
bring the claim of bad faith to the GAO as a protest ground for decision.
Palantir USG did not raise the bad faith claims in its court complaint to any
degree that would have allowed the GAO to address them.
At oral argument, counsel for the protestors reiterated, “we don’t think there’s any legal
basis for hamstringing us to the arguments made to the GAO.” Moreover, although
defendant’s counsel pointed out that the words “bad faith” only appear in a footnote in
Palantir USG’s GAO complaint, 24 the GAO complaint does identify some of the facts that
give rise to the bad faith allegations now before this court. Palantir USG’s GAO complaint
stated:
Even more troubling was a series of events related to an ATEC [United
States Army Test and Evaluation Command] assessment of Palantir
conducted in theater in early 2012. An initial report of that assessment,
issued on April 25, 2012, was revised at the request of Army G-2 and
reissued on May 25, 2012. The revisions to the ATEC assessment
suppressed favorable comments about Palantir and minimized criticisms of
DCGS-A Increment 1. “It appears . . . that a second version of the report
was created,” which deleted both favorable comments about Palantir and
comments criticizing DCGS-A. Internal Army correspondence directed that
the original report be formally rescinded and all copies destroyed. The Army
then launched a formal investigation into the matter.
(internal citations omitted). Moreover, since the time the complaint was filed in this court,
this court has held multiple hearings with the parties on issues related to supplementation
of the Administrative Record and limited discovery, which the court has permitted,
including regarding allegations of bad faith. Therefore, the record before this court will not
be as limited as the Administrative Record before the GAO. The defendant’s concerns
about the absence of bad faith allegations at the GAO are misplaced.
In addition to challenging Palantir USG’s standing, the defendant also separately
challenges Palantir Technologies’ standing. Defendant states that “Palantir Technologies,
Inc. did not submit a proposal in response to the Army’s solicitation, did not respond to
24 The footnote in the GAO complaint stated:
Unfortunately, the Army’s failure in this regard [to not consider if commercial
items were available to meet its needs] might be explained in part by its
long-standing resistance to commercial solutions generally, and to Palantir
specifically. As described above, there are suggestions that the Army
rejected requests for Palantir from users in the field and manipulated testing
results favorable to Palantir because of a misguided, self-interested, and
inappropriate perception of Palantir as a “competitor” of DCGS-A. Such
action on the Army’s part suggests bad faith.
(internal citations omitted).
29
the Army’s requests for information, and was not a party in the GAO protest.” Defendant
argues, “Palantir Technologies failed to respond to any of the Army's requests for
information and cannot establish standing both because it is not a prospective bidder and
does not have the requisite economic interest,” Defendant, therefore, concludes,
“[a]ccordingly, the Court should summarily dismiss Palantir Technologies, because it
cannot demonstrate that it is a ‘prospective bidder’ or that it has the requisite ‘economic
interest;’ therefore, it is not an ‘interested party’ under 28 U.S.C. § 1491(b)(1).” In
response, protestors claim “PTI [Palantir Technologies] and PUSG [Palantir USG] are
both prospective bidders, and PUSG acts as PTI’s agent as well as on its own behalf.”
Protestors further claim that “PTI owns 100% of PUSG,” and, citing to Centex Corp. v.
United States, 395 F.3d 1283 (Fed. Cir.), reh’g and reh’g denied (Fed. Cir. 2005), claim
that the United States Court of Appeals for the Federal Circuit has concluded it is
unnecessary to “determine the standing of a parent corporation when the parent’s wholly
owned subsidiary has standing to bring suit.”25 Protestors argued, at oral argument, that
“Palantir Tech acted through PUSG as its agent in making the protest at the GAO,” but
without a citation to why Palantir Technologies would be exempt from waiver, and noted
that “the Government does not cite a single case supporting the proposition that both PTI
and PUSG were required to submit protests with the GAO (or both required to sign the
same protest), even though they seek to bid and perform the desired contract together
as commonly owned Palantir entities.”
It is not a point of disagreement that Palantir Technologies is the parent corporation
of Palantir USG. Nor is it challenged that Palantir USG is a wholly owned subsidiary of
Palantir Technologies. 26 As noted above, protestors believe this makes a standing inquiry
into Palantir Technologies unnecessary. In Centex, the United States Court of Appeals
for the Federal Circuit addressed whether the government had breached a contract with
plaintiffs Centex Corporation and CTX Holding Company when Congress enacted tax
legislation in 1993, referred to as the Guarini Amendment, Pub. L. No. 103-06, § 13224,
107 Stat. 312, 485-86 (1993). See Centex Corp. v. United States, 395 F.3d at 1287. The
Federal Circuit noted that the government argued on appeal that Centex Corporation
lacked standing to sue, and determined that:
It is unnecessary for us to decide whether Centex Corporation and the
government entered into either an express or implied-in-fact contract,
however, because the outcome of this case does not depend on the
resolution of that question. That is because even if Centex Corporation
25 The court notes that the issue regarding the standing of a parent of a wholly owned
subsidiary is distinct from a recent bid protest decision of the undersigned. In Universal
Protection Service, LP v. United States, 126 Fed. Cl. 173 (2016), the undersigned
determined that protestor was “not the complete successor-in-interest to ABM Security
Services’ proposal, and, therefore, the court [could not] consider the merits of the protest.”
Id. at 195.
26Defendant states in the motion to dismiss, “[a]ccording to the complaint, Palantir
Techologies, [sic] Inc. owns 100% of the stock of Palantir USG, Inc.”
30
could not sue for breach of contract with the government, Centex
Corporation’s wholly owned subsidiary, CTX [Holding Company], was a
party to the Assistance Agreement and is fully entitled to enforce its
provisions and to be awarded damages for its breach.
Id. at 1291.
Turning to the government’s specific standing arguments against CTX, the Centex
court rejected the argument that CTX retained its status as a separate taxable entity and
could not assert claims on behalf of the Centex Consolidated Group because:
While it is true that CTX retained its status as a separate taxable entity, CTX
was nonetheless a member of the Centex Consolidated Group that
consented to the filing of a consolidated tax return. As a consequence, it
enjoyed the benefits and was subject to the liabilities flowing from the
consolidation of the tax accounts of the various affiliated entities. See
Helvering v. Morgan's, Inc., 293 U.S. 121, 127, 55 S. Ct. 60, 79 L. Ed. 232
(1934). CTX was therefore in a position to benefit, through the reduction of
the Consolidated Group's tax liability, from deductions that would reduce
the Consolidated Group's taxable income. For that reason, CTX has a legal
stake in the question whether the Consolidated Group was entitled to the
tax benefits that were assertedly revoked by the Guarini amendment. We
therefore reject the government's argument that neither plaintiff has
standing to sue for breach of contract.
Centex Corp. v. United States, 395 F.3d at 1291. The Federal Circuit also rejected the
claim that CTX was not damaged by the enactment of the Guarini amendment because
it had no taxable income to shelter during the pertinent period, and because as a member
of the Centex Consolidated Group, “CTX was eligible to share its tax benefits with the
Group, and it was severally liable for the Group's tax liabilities.” Id. Therefore, finding CTX
had standing, the Federal Circuit did not further address Centex Corporation’s standing.
As noted above, this court found that Palantir USG has standing to proceed to the merits
of the protest. The court also notes that the facts and circumstances in Centex are quite
different than those in the above captioned protest, most notably, that Centex was not a
bid protest at all, but was a complicated government contract case with a tax liability issue.
Moreover, the Federal Circuit was determining the standing issue on appeal and not at
the trial court level. Therefore, it does not follow that this court should automatically apply
the logic of not determining separate standing for the parent of a wholly-owned subsidiary
in Centex to determine which entity between the parent and subsidiary has standing to
bring a bid protest in this court. 27 Even if the court were to conclude that logic of Centex
27Defendant also raised a different issue that, even if the court were to apply the Centex
rationale that it is unnecessary to decide Palantir Technologies’ standing because “each
named plaintiff must establish standing to remain in the case, and be entitled to a
judgment. If the Court determines that Palantir USG possesses standing, but does not
determine whether Palantir Technologies possesses standing, the judgment could only
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should apply to bid protest cases, which it does not reach, Palantir Technologies would
still have to demonstrate its claims are not waived. As noted by defendant, “[t]he question
of waiver is distinct from whether a protestor has standing to bring a protest,” such that
even if Palantir Technologies was found to be an interested party with standing, as a
prospective bidder with a direct economic interest, that determination is “an issue distinct
from whether a protestor waived arguments.” CGI Fed. Inc. v. United States, 779 F.3d at
1350 n.3 (citing Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1313). 28
The court notes that it is uncontested that Palantir Technologies did not submit
responses to the Army’s Requests for Information, nor did Palantir Technologies submit
a proposal in response to the Army's solicitation. Likewise, it is not contested that Palantir
Technologies was not listed as a party to the GAO protest. Palantir Technologies, like
Palantir USG, believed the solicitation was flawed, indeed, both protestors in the
complaint filed in this court allege that, as written, “[t]he Solicitation for DCGS-A2 makes
it impossible for Palantir [referring to both Palantir Technologies and Palantir USG] to
offer its Data Management Platform as a commercial or nondevelopmental item to satisfy
the Army’s requirements.” Palantir Technologies, however, unlike Palantir USG, took no
steps to place the Army on notice of the patent defects it believes are contained in the
solicitation. Pursuant to the Blue & Gold Fleet line of cases, Palantir Technologies’
arguments have been waived. Therefore, Palantir Technologies is dismissed from this
protest. See Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1313; see also Per
Aarsleff A/S v. United States, 2016 WL 3869790, at *7; COMINT Sys. Corp. v. United
States, 700 F.3d at 1382; Comm’n Constr. Servs., Inc. v. United States, 116 Fed. Cl. at
261-62.
CONCLUSION
The timely protest filed at GAO does not cause Palantir USG’s claims to become
subject to waiver in this court. Moreover, although Palantir USG did not immediately file
suit in this court after the GAO decision, as discussed above, the factual circumstances
in the case of Palantir USG nevertheless fall permissibly within the framework set out by
the Federal Circuit in the CGI case. Protestor Palantir USG, therefore, has standing to
proceed to the merits of the above captioned protest. Defendant’s motion to dismiss
Palantir USG for lack of subject matter jurisdiction is DENIED. Palantir Technologies,
however, did not file a timely protest with the GAO, and, therefore, its claims are subject
to waiver. Defendant’s motion to dismiss Palantir Technologies for lack of subject matter
be entered in favor of Palantir USG, assuming the Court concludes both that Palantir USG
has standing and prevails on the merits.”
28 Protestors also cite to Railway Labor Executives’ Association v. United States, for the
statement, “the Supreme Court has repeatedly held that if one party has standing in an
action, a court need not reach the issue of the standing of other parties when it makes no
difference to the merits of the case.” Ry. Lab. Executives’ Ass’n v. United States, 987
F.2d 806, 810 (D.C. Cir.), reh’g denied (D.C. Cir. 1993). Like the Centex decision, Railway
Labor is not a bid protest decision, and, therefore, does address waiver in the context of
a bid protest. Unlike the Federal Circuit’s decision in Centex, however, the Railway Labor
decision by the D.C. Circuit is not binding on this court.
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jurisdiction is GRANTED.
IT IS SO ORDERED.
s/Marian Blank Horn
MARIAN BLANK HORN
Judge
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