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Agustawestland North America, Inc. v. United States

United States Court of Appeals, Federal Circuit

January 23, 2018

AGUSTAWESTLAND NORTH AMERICA, INC., Plaintiff-Appellee
v.
UNITED STATES, Defendant-Appellant AIRBUS HELICOPTERS, INC., Defendant

         Appeal from the United States Court of Federal Claims in No. 1:14-cv-00877-SGB, Chief Judge Susan G. Braden.

          Dennis J. Callahan, Rogers, Joseph, O'Donnell, San Francisco, CA, argued for plaintiff-appellee. Also represented by Neil H. O'Donnell; Jeffery M. Chiow, Lucas Taylor Hanback, Washington, DC.

          Anthony F. Schiavetti, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Franklin E. White, Jr., Robert E. Kirschman, Jr., Benjamin C. Mizer.

          Before Prost, Chief Judge, Chen and Hughes, Circuit Judges.

          Hughes, Circuit Judge.

         The United States appeals from a decision of the Court of Federal Claims enjoining the United States Army from proceeding with, or awarding, a contract to Airbus Helicopter, Inc. The Court of Federal Claims found that Army Execution Order 109-14, which implemented the Army's Aviation Restructure Initiative designating the UH-72A Lakota helicopter as the Army's "Institutional Training Helicopter, " was a procurement decision in violation of the Competition in Contracting Act and relevant provisions of the Federal Acquisition Regulation. After supplementing the administrative record, the Court of Federal Claims found that the Army's decision to purchase sixteen UH-72A Lakota helicopters from Airbus also violated the Competition in Contracting Act and the Federal Acquisition Regulation because the Sole Source Justification and Approval was arbitrary and capricious. We conclude that Execution Order 109-14 was not a procurement decision subject to review, that the Sole Source Justification and Approval was not arbitrary and capricious, and that it was an abuse of discretion to supplement the administrative record. Accordingly, we reverse the trial court's decision and vacate the preliminary injunction.

         I

         On June 22, 2005, the Army issued an Acquisition Strategy to procure 322 Light Utility Helicopters (LUH) by full and open competition. Both AgustaWestland and Airbus submitted bids. On June 30, 2006, Airbus was awarded Contract No. W58RGZ-06-C-0194 (2006 Con- tract) for $43, 090, 522.[1] AgustaWestland filed an unsuccessful bid protest of the award decision with the Government Accountability Office.

         The 2006 Contract required that Airbus provide a base quantity of eight low rate initial production UH-72A Lakota helicopters. The 2006 Contract also provided that, during each Program Year 2 through 10, the Army could exercise options to purchase up to a total of 483 UH-72A Lakota helicopters. The last date that the Army could exercise an option was on September 30, 2015. The 2006 Contract expired on June 30, 2016.

         In January 2012, the President of the United States and the Secretary of Defense announced new Strategic Guidance that reduced the Defense Budget and called for the "resizing/reshaping" of the Armed Forces. J.A. 5196- 97. To implement the Strategic Guidance, in August 2013, the Chief of Staff of the Army issued the Aviation Restructure Initiative ("restructuring initiative" or "initiative"), which was "designed to deliver the best Army Aviation force possible within resource constraints." J.A. 5197. The restructuring initiative, therefore, "di-vest[ed] legacy systems, [and] invest[ed] in modernization of Aviation best systems" by "redistributing assets" and "reducing aircraft types and standardizing Aviation brigade designs." Id. The initiative officially retired the TH-67, a single-engine aircraft used for training at Fort Rucker, Alabama, and designated the UH-72A Lakota- the helicopter procured by the Army in the 2006 Contract with Airbus-the "Institutional Training Helicopter." J.A. 5198. The initiative was formally implemented by the issuance of Army Execution Order 109-14 on April 3, 2014. J.A. 5196-98.

         To comply with the objectives of the restructuring initiative, the Army determined that it needed to increase the UH-72A Lakota helicopter program by 110 helicopters, from 317 to 427 helicopters. J.A. 2775. Initially, the Army considered a sole source acquisition for 155 UH-72A Lakota helicopters, and published a sources sought notice on September 4, 2014, to explore this option.[2] J.A. 2803.

         On September 19, 2014, AgustaWestland filed a Complaint for Declaratory and Injunctive Relief in the United States Court of Federal Claims, arguing that the Execution Order was a procurement decision. Because no final decision "with respect to the competitive process to be used" had been made, the Court of Federal Claims stayed proceedings. J.A. 7.

         Ultimately, the Army decided not to pursue the procurement of 155 UH-72A Lakota helicopters. It chose to exercise the remaining options on the 2006 Contract with Airbus permitting the procurement of 412 UH-72A Lako-ta helicopters, but leaving the Army sixteen helicopters short of its total requirement.[3] J.A. 2956. Because Airbus "has exclusive ownership of all data rights required to produce, maintain, and modify the UH-72, " the Army was faced with procuring sixteen alternate aircraft, or procuring sixteen helicopters from Airbus through a sole source follow-on contract. J.A. 2957. On December 10, 2015, the Army issued a Justification and Approval (J&A) to acquire the UH-72A Lakota helicopters from Airbus "on an other than full and open competition basis." J.A. 2965. The Army justified this decision based on the costs and delay associated with "procuring and sustaining an alternate aircraft" separate from the UH-72A Lakota. J.A. 2958.

         Subsequently, AgustaWestland filed a Supplemental Complaint, a Motion for Preliminary Injunction, and a Motion for Judgment on the Administrative Record. The Government opposed AgustaWestland's motions and filed a Cross-Motion for Judgment on the Administrative Record. Relevant to this appeal, the Court of Federal Claims found that the April 3, 2014 Execution Order was a procurement decision in violation of the Competition in Contracting Act (CICA) and the relevant Federal Acquisition Regulation (FAR) provisions. The Court of Federal Claims then determined that it could not "conduct 'effective judicial review' without supplementing the Administrative Record, " J.A. 25 n.33, and therefore considered evidence not contained in the administrative record. After supplementing the administrative record, the Court of Federal Claims found that the Army's J&A and deci- sion to purchase sixteen UH-72A Lakota helicopters without ...


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