Analytical Graphics, Inc. v. United States

Decision Date17 November 2017
Docket NumberNo. 16-1453C,16-1453C
PartiesANALYTICAL GRAPHICS, INC., Protestor, v. UNITED STATES, Defendant, v. APPLIED DEFENSE SOLUTIONS, INC., Defendant-Intervenor.
CourtCourt of Federal Claims

ANALYTICAL GRAPHICS, INC., Protestor,
v.
UNITED STATES, Defendant,
v.
APPLIED DEFENSE SOLUTIONS, INC., Defendant-Intervenor.

No. 16-1453C

United States Court of Federal Claims

Reissued: December 12, 20171
November 17, 2017


Bid Protest; Cross-Motions for Judgment on the Administrative Record; Small Business Set-Aside; Commercial Availability; 10 U.S.C. § 2377.

Seamus Curley, Stroock & Stroock & Lavan LLP, Washington, D.C., for protestor. With him was Daniel J. Cook, DLA Piper LLP, Washington, D.C.

James W. Poirier, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him were Douglas K. Mickle, Assistant Director, Commercial Litigation Branch, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Chad A, Readler, Acting Assistant Attorney General, Civil Division, Department of Justice. Of counsel were Christopher Cole, and Jason Templin, United States Air Force.

Edward J. Tolchin, Offit Kurman, P.A., Bethesda, Md., for defendant-intervenor.

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OPINION

HORN, J.

Analytical Graphics, Inc. (Analytical Graphics) filed a post-award bid protest in this court challenging Solicitation No. FA2550-16-R-8008 (the solicitation), issued by the United States Air Force (Air Force) on behalf of the Joint Interagency Combined Space Operations Center (JICSpOC) for its Space Situational Awareness (SSA) data requirements, as well as the contract subsequently awarded to defendant-intervenor Applied Defense Solutions, Inc. (Applied Defense). Analytical Graphics filed suit in the United States Court of Federal Claims after the United States Government Accountability Office (GAO) denied protestor's GAO protest. See generally Analytical Graphics, Inc., B-413385, 2016 WL 6212299 (Comp. Gen. Oct. 17, 2016). In this court, Analytical Graphics asserts that the Air Force acted arbitrarily and capriciously when it issued the solicitation as a non-commercial item solution, because Analytical Graphics alleges that a majority of the services that the Air Force sought were available commercially, and further argues that Air Force acted arbitrarily and capriciously when it issued the solicitation as a set-aside for small businesses.

FINDINGS OF FACT

By way of background to understand the protest currently before the court, JICSpOC was established by the Department of Defense in October 2015. Even before JICSpOC was formally established, the Air Force had begun market research "for a new, firm-fixed price subscription service for commercial space observation and analysis capabilities." The Air Force sought a "solution to include hardware, software, training, and a commercial subscription service to include Space Situational Awareness Suite and Battle Management Command and Control software licenses." The parties have jointly stipulated that "the Air Force took a two-phase approach to determining and obtaining commercial capabilities that could contribute to the JICSpOC mission: (1) to test products found in the marketplace, and (2) to contract for operating capabilities." On August 24, 2015, the contracting officer issued a market research report (the JICSpOC market research report), recommending a sole source award to Analytical Graphics.2 The JICSpOC market research report indicated that:

Limited market research was conducted. Given the national security implications of the requirement, the use of various market research tools is necessarily constrained. For example, it is not practicable to engage industry with synopses for sources sought, draft request for proposals, capability statements/analysis, and other standard market research tools used for full and open competitions.

Regarding Analytical Graphics, the JICSpOC market research report stated:

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AGI's ComSpOC [Commercial Space Operations Center] is cutting edge in the industry. Research confirms potential sources are time away from providing the tools AGI has developed commercially for application-level mission needs. The Government has determined that no other commercial sources currently produce or offer comparable capabilities in terms of the space situational awareness that AGI publicly offers for sale.

Commercial item: FAR 2.101 defines commercial item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and-- (i) Has been sold, leased, or licensed to the general public; or, (ii) Has been offered for sale, lease, or license to the general public. ComSpOC is available on the Analytical Graphics, Inc website (agi.com) for sale to the general public. This subscription service new and emerging technology with limited commercial sales; however, ComSpOC has been bought by the commercial company, Boeing Inc, to launch two commercial satellites. The backbone of ComSpOC is based on commercial software known as Space Situation Awareness (SSA). SSA is available and sold to the general public via the internet and GSA schedule. Therefore, FAR Part 12, Acquisition of Commercial Items, applies to the acquisition and has been determined by the contracting officer to be a commercial item.

The JICSpOC market research report also explained the difference between a license and subscription service, indicating:

License versus Subscription Service: Market research indicates this is a commercial software subscription and not a software license or agreement. In a license, the government gets rights to copy and use a software application, while in a subscription service; the government gets a subscription to use the software via the internet. The confusion stems from the central role of "software" in software as a service. Bottom line, what the government will do with the software. If the government puts a copy of a software application on a computer--downloads it, installs it from a disk, etc.--the contract calls for a license. Copyright law gives the software's owner a monopoly over the right to copy it (to "reproduce" it), so the government needs a copyright license to make a copy and put it on a computer. In a subscription service, the government does not put software on a computer, or copy it at all. The software sits on the contractor's computer and the government merely accesses it via the Internet. With no copies, copyright plays no role in the transaction, so the government does not need a copyright license. During the term of the contract, the contractor shall provide the application to government via the internet.

Finally, the JICSpOC market research report stated that "AGI provided a capability brief to the government customer. The customer has determined AGI is capable of providing

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this capability. At this time, there are no known commercial items with the capabilities similar to ComSpOC."

In addition to the JICSpOC market research report, the contracting officer also issued a streamlined acquisition strategy summary (the JICSpOC streamlined acquisition strategy summary), again recommending a sole source award to Analytical Graphics. The JICSpOC streamlined acquisition strategy summary noted that "[t]he Government will acquire AGI's commercial products and capabilities collectively known as Commercial Space Operations Center (ComSpOC). The period of performance is 10 months from contract award." (emphasis in original). The JICSpOC streamlined acquisition strategy summary also indicated that:

A search of General Service Administration, Space Symposium, and technical publications revealed no commercial product with similar capabilities other than AGI. In Space News, Lockheed Martin Space Systems, working with Australia's Electra Optic Systems, announced August 2014, it is planning a new space object-tracking site in western Australia and hopes to sell the data commercially and to the Government in the future. No commercial products are currently available for sale other than ComSpOC.

AGI has provided a capability brief to the Government customer. At this time, there are no other known commercial items with the capabilities similar to ComSpOC.

Similar to the JICSpOC market research report, the JICSpOC streamlined acquisition strategy summary provided a rationale for proceeding under "FAR 12: Acquisition of a Commercial Item:"

Commercial Item: FAR 2.101 defines commercial item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and-- (i) Has been sold, leased, or licensed to the general public; or, (ii) Has been offered for sale, lease, or license to the general public. ComSpOC is available on the Analytical Graphics, Inc. website (agi.com) for sale to the general public. In addition, this subscription service has been bought by commercial companies such as Boeing Inc to launch two commercial satellites. The backbone of ComSpOC is based on a commercial software known as Space Situation Awareness (SSA). SSA is available and sold to the general public via the internet and GSA schedule. Therefore, FAR Part 12, Acquisition of Commercial Items, applies to the acquisition and has been determined by the contracting officer to be a commercial item.

This is a sole source requirement; therefore, FAR Part 15 applies. When contracting in a sole source environment, the request for proposal will be tailored to remove unnecessary information and requirements.

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After the JICSpOC market research report and JICSpOC streamlined acquisition strategy summary, the contracting officer issued Solicitation Number FA2550-15-R-8002 to Analytical Graphics. The solicitation included CLIN 0001, which stated: "ComSpOC Subscription Service and Technical Support, including the AGI SSA and BMC2 SW Prototype/Risk Evaluation License IAW Statement of Objectives, 1 Sep 15," and CLIN 0002,3 which stated:

Onsite Data Processing Solution to include Hardware, Operating System/Software and Installation.
...

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