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Forcing the Agency To Buy Commercial Items: The Federal Circuit’s Protest Decision in Palantir USG, Inc. v. United States

In Palantir USG, Inc. v. United States, No. 2017-1465 (Fed. Cir. Sept. 13, 2018), the Federal Circuit recently affirmed a successful bid protest under a twenty-four-year old statute — the Federal Acquisition Streamlining Act of 1994 (FASA), codified in part at 10 U.S.C. 2377. Importantly, the decision marks a potential new route for contractors to challenge agency decisions regarding the use of commercial items. Congress enacted FASA in response to burden some regulatory requirements that precluded many companies from competing for government contracts. FASA requires agencies to purchase commercial items to the maximum extent practicable. This includes defining requirements in such a way that commercial services and supplies could be procured, surveying the market to determine whether commercial items could satisfy its requirements, and providing offerors of commercial items and non-developmental items the opportunity to compete in any procurement for such requirements. FAR Part 12 implements the statutory preference for the acquisition of commercial items. The definition of “commercial item” is contained in FAR 2.101. It includes “any item, other than real property, that is of a type customarily used by the general public or by nongovernmental 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.” It also includes “any item that would satisfy [that] criterion . . . but for — (i) Modifications of a type customarily available in the commercial marketplace; or (ii) Minor modifications of a type not customarily available in the commercial marketplace made to meet Federal Government requirements.”

Co-Authors: Robert Nichols, Andrew Victor, Rebekah Woods.

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