Palantir Usg, Inc. v. United States

REDACTED OPINION

In the United States Court of Federal Claims
No. 16-784C
Filed: November 3, 2016
Redacted Version Issued for Publication: November 9, 20161

* * * * * * * * * * * * * * *
PALANTIR USG, INC., *
* Pre-Award Bid Protest; Cross-
Protestor, * Motions for Judgment on the
v. * Administrative Record;
* Commercial Availability; 10 U.S.C.
UNITED STATES, * § 2377; Bad Faith; Supplementation
* to the Administrative Record;
Defendant. * Permanent Injunction.
*
* * * * * * * * * * * * * * *

Hamish Hume, Boies, Schiller & Flexner LLP, Washington, D.C., for protestor.
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 Materiel Command.

OPINION

1 This opinion was issued under seal on November 3, 2016. The parties were asked to
propose redactions prior to public release of the opinion. This opinion is issued with some
of the redactions that the parties proposed in response to the court’s request. Words
which are redacted are reflected with the notation: “[redacted].”
HORN, J.

Palantir USG, Inc.2 (Palantir) and Palantir Technologies Inc.3 filed a pre-award bid
protest in this court on June 30, 2016, challenging the United States Department of the
Army, Army Contracting Command, Aberdeen Proving Group’s (the agency) Request for
Proposals No. W56KGY-16-R-0001 (the solicitation). Protestor Palantir USG, Inc. “is a
corporation incorporated under the laws of the State of Delaware, having its principal
place of business in Palo Alto, California.” Palantir USG, Inc. and Palantir Technologies
Inc. filed suit in the United States Court of Federal Claims after the United States
Government Accountability Office (GAO) denied Palantir USG, Inc.’s GAO protest. See
generally Palantir USG, Inc., B-412746, 2016 WL 3035029 (Comp. Gen. May 18, 2016).4

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.

Palantir asserts that the Army acted arbitrarily and capriciously when it issued the
DCGS-A Increment 2 solicitation for a developmental contract, because Palantir claims it
had identified to the Army a commercially available technology that Palantir believes can
satisfy the Army’s requirements. According to Palantir, “Palantir has developed a
technology that solves the needs of DCGS.” Palantir claims that the data management
platform that Palantir has to offer, also called the Palantir Gotham Platform, was “initially
developed between 2004 and 2009 with the help of an investment from, and a partnership
with, the venture capital arm of the Central Intelligence Agency.” According to Palantir,
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).” The parties have stipulated that “[t]he Palantir
Gotham Platform is a Data Management Platform that is licensed to customers on a
commercial item basis,” and that “[g]overnment agencies have procured the Palantir
Gotham Platform and related services on a commercial item basis.” Palantir argues that,

2 Palantir Technologies Inc. “owns one hundred percent of the stock” of Palantir USG,
Inc.
3 As discussed below, on August 22, 2016, the court granted defendant’s motion to
dismiss Palantir Technologies Inc. from the above captioned protest.
4 Although the undersigned has high regard for GAO decisions, this court is not bound by
decisions of the GAO. See CBY Design Builders v. United States, 105 Fed. Cl. 303, 341
(2012) (citing Centech Grp., Inc. v. United States, 554 F.3d 1029, 1038 n.4 (Fed. Cir.
2009) (GAO decisions are “not binding” authority, but may be “instructive in the area of
bid protests.”)).

2
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” (capitalization and emphasis removed) because the solicitation only
requested proposals for the development of the required technology.

FINDINGS OF FACT

In explaining the origin and development of the DCGS-A, the contracting officer’s
statement during the GAO protest indicated:

Combat operations in Kuwait and Iraq in the early 1990’s demonstrated the
military potential of information dominance, and sparked a transformation in
the use of information technology in intelligence operations. Subsequently,
the Department of Defense instituted an initiative to unify Intelligence,
Surveillance and Reconnaissance architectures, and enhance the
acquisition of manned and unmanned airborne sensors and associated
ground processing systems. This initiative resulted in a requirement for a
Distributed Common Ground/Surface Systems (DCGS), made up of Army,
Air Force, Navy and Marine Corps ground processing systems that can
share information across the Joint Force. The Army component of DCGS is
the Distributed Common Ground System – Army (DCGS-A). Today, DCGS-
A has become the Army’s primary system for processing and dissemination
of multi-sensor intelligence and weather information. It is deployed
worldwide in support of intelligence operations including all Theaters of
Operation.

The background section of the Performance Work Statement for the solicitation
at issue explained:

The DCGS-A program was created in response to the Department of
Defense (DoD) Distributed Common Ground/Surface System (DCG/SS)
Mission Area Initial Capabilities Document (MA ICD), which captured the
overarching requirements for an Intelligence, Surveillance, and
Reconnaissance (ISR) Family of Systems that will contribute to Joint and
combined Warfighter needs. The MA ICD has since been updated to an
Enterprise ICD. DCGS-A facilitates “Seeing and Knowing” on the
battlefield—the fundamental precursor to the understanding that underpins
the Army’s Mission Command concept. DCGS-A contributes to visualization
and situational awareness (SA), thereby enhancing tactical maneuver,
maximizing combat power and enhancing the ability to operate in an
unpredictable and changing environment throughout the operational
spectrum. It facilitates the rapid planning, execution, and synchronization of
all war fighting functions resulting in the Current and Future Force’s ability
to operate within the enemy’s decision cycle.

3
 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.

DCGS-A Increment 1 is the ISR component of the modular and future force
Mission Command System (MCS) and the Army’s primary system for ISR
tasking of sensors, processing and exploitation of data, and dissemination
of intelligence (TPED) information about the threat, weather, and terrain at
all echelons. A high percentage of Increment 2 functionality has already
been developed under the DCGS-A Increment 1 efforts. DCGS-A Increment
2 will leverage the DCGS-A hardware components fielded across the Army
under DCGS-A Increment 1.

According to the defendant, DCGS-A Increment 2, the subject of the solicitation at
issue, “will introduce a new and modernized data management architecture (DMA) using
a modular system approach to perform Army intelligence analysis capabilities.” As
reflected in the Army’s post-hearing comments submitted to the GAO, and quoted in the
GAO decision:

DCGS-A is intended 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 broader distributed common ground/surface
system. 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.

Palantir USG, Inc., B-412746, 2016 WL 3035029, at *2.

The Performance Work Statement for the solicitation at issue stated that the
requirements of DCGS-A Increment 2 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/HUMINT, Weather, GEOINT, Geospatial Engineering 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.” The draft version of the Performance Work Statement for the solicitation at issue
stated that “[t]he DCGS-A Increment approach utilizes spiral deliveries to maintain
interoperability with Army and Joint ISR [Intelligence, Surveillance and Reconnaissance]
architectures and to address capability insertion and enhancements. This system must
remain interoperable and compatible with the Joint command system infrastructure and

4
mission applications.” As indicated by the contracting officer who issued the solicitation,
“[t]he DMA [i.e., Data Management Architecture] will serve as the architecture foundation
and the heart with which the rest of the capabilities will depend on to function. The DMA
development is therefore the focus of the first task order executed under the DCGS-A
Increment 2 contract.”

The parties have stipulated that “[t]he Palantir Gotham Platform is a Data
Management Platform that is licensed to customers on a commercial item basis,” and that
other “[g]overnment agencies have procured the Palantir Gotham Platform and related
services on a commercial item basis.” As further detailed below, in responses to the
government’s Requests for Information, Palantir explained that “[i]n cooperation with the
government, Palantir fields and manages 25 Palantir deployments at every major Marine
Corps command, representing over 15,000 accounts at peak usage across the Marine
Intelligence community.” Palantir also claims that “Palantir is currently in use by tens of
thousands of users across the DOD [Department of Defense] and IC [intelligence
community].” The Administrative Record filed in the above captioned protest includes a
February 9, 2015 “Operational Needs Statement for Palantir Platform” from [redacted]
requesting the Palantir Gotham Platform. The Statement indicated: “The Palantir
Command platform is a proven capability that is currently in use to provide COP, data
integration, and staff integration capabilities across multiple commercial and government
organizations,” and concluded that “Palantir Technologies, Inc. offers a solution that
meets all of our requirements and has fielded the same platform across multiple units
[redacted], as well as various U.S. Government agencies. [redacted].”

Pre-Solicitation Activity

The parties have stipulated that in July 2014, prior to the issuance of the DCGS-A
Increment 2 solicitation, the Army Acquisition Executive, Heidi Shyu,5 chartered a Data
Integration, Visualization and Analytics (DIVA) Independent Market Study which was
completed by the MITRE Corporation, a not-for-profit research and development
organization. The joint stipulations of fact indicate:

The purpose of the DIVA study was to “provide situational awareness and
market trends to the Army leadership of the ‘state-of-the-practice’ within the
commercial DIVA software platform landscape.” As stated in the DIVA

5 Ms. Shyu is referred to by several different titles throughout the Administrative Record
and filings with the court. The joint stipulations of fact indicate that when Ms. Shyu
chartered the DIVA Market Study in July 2014 and when she signed the October 21, 2015
Determination & Finding, her title was the Army Acquisition Executive. On October 20,
2014, when Ms. Shyu issued a “Recommendation for a Change to the Distributed
Common Ground System-Army (DCGS-A) Increment 1 Acquisition Strategy,” her title was
“Assistant Secretary of the Army (Acquisition, Logistics and Technology).” The joint
stipulations of fact also indicate when she issued the December 16, 2015
recommendation for issuance of the solicitation, her title was listed as Assistant Secretary
of Defense (Acquisition).
5
 study, the DIVA study was intended to: (1) provide a high-level overview of
the ASA(ALT) Data Integration, Visualization and Analytics (DIVA)
Independent Market Study; and (2) provide recommendations for the
DCGS-A Increment 2 Acquisition effort and describe the top- level risks and
mitigation strategies associated with adopting recommendations. The DIVA
study assessed the following acquisition approaches:

a. Cloud Infrastructure Platform Provider: Provide highly-scalable and
reliable computing infrastructure services (e.g., data bases; analytic
engines; computing and storage; identity management);

b. Turn-Key: Procure a commercial product as basis of DCGS-A Increment
2 infrastructure. Integrate additional applications onto this infrastructure,

c. Hybrid approach: both an Enterprise Cloud Platform and a Turn-Key
Platform, including integration of additional applications. . . .

(all internal citations omitted). The DIVA Market Study included a “Potential Strategy:
Phased Acquisition and Integration Approach,” which recommended that the DCGS-A
Increment 2 approach

could be structured in a phased manner. Initially, the two foundation
components (e.g., COTS[6] cloud infrastructure services and COTS DIVA
“Turn Key” Platform) could be procured. Establish an integration effort to:
integrate the COTS DIVA “Turn Key” platform with the COTS cloud
infrastructure services; and integrate the DCGS-A Enterprise data
management architecture. This would establish a baseline DCGS-A
Increment #2 baseline – a core suite of applications and analytics functions;
a new Data Management Architecture.

(emphasis removed). The DIVA Market Study explained that “[a] key advantage of
leveraging COTS cloud infrastructure services and a COTS DIVA platform is that doing
so provides a significant amount of technical infrastructure and end-user capabilities.”
(emphasis in original).

On January 7, 2015, also before the solicitation was issued, the Army generated
an Information Paper, which identified key objectives and approaches to DCGS-A
Increment 2. The “Increment 2 Key Objectives” listed were: “1. Modernize the Data
Enterprise to a Data Integration Platform[,] 2. Easier to use visualization framework[,] 3.
Best Leverage industry to deliver these capabilities with a commercially supported

6 COTS, although not defined in the DIVA Market Study, appears to be an abbreviation
for “commercial off the shelf.” Palantir refers to “COTS” in the DIVA Market Study as
commercial off the shelf, without objection from defendant. Furthermore, the Trade Space
Analysis, discussed below, includes a list of acronyms and defines COTS as “Commercial
off the shelf.”

6
infrastructure[,] 4. Execute in a funding constrained environment.” The Information Paper
envisioned a “Three-Phase Approach (DIVA Competition, Domain-specific Capabilities
Updates, Integration Environment).” For the first phase, the DIVA Competition, the
Information Paper stated:

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.

(emphasis added).

Although conducted later in time, in July 2015, after the Army issued all three of
the Requests for Information, described below, and around the time the Army issued the
Market Research Report, the Army Materiel Systems Analysis Activity produced a Trade
Space Analysis, which evaluated capabilities that could be leveraged for the DCGS-A
Increment 2 procurement. Defendant explained that: “The TSA [Trade Space Analysis],
dated July 2015, identified and evaluated technical functionality, cost, ease of
use/usability, schedule risk, technical risk, and trade space for specific DCGS-A technical
and operational capabilities that are beyond DCGS-A Increment 1.” The Army Materiel
Systems Analysis Activity explained:

The U.S. Army Materiel Systems Analysis Activity (AMSAA) was directed
by Headquarters, Department of the Army Deputy Chief of Staff (HQDA
DCS) G-3/5/7 to conduct a Trade Space Analysis (TSA) of the DCGS-A
Information System Capability Development Document (IS CDD) to support
future requirements decisions. The TSA identified and evaluated technical
functionality, cost, ease of use/usability, schedule risk, technical risk, and
trade space for specific DCGS-A technical and operational capabilities that
are beyond DCGS-A Increment 1. The TSA results will inform the economic
analysis and Request for Proposal (RFP), supporting a potential Milestone
B acquisition decision for DCGS-A Increment 2. DCGS-A Increment 2 will
provide additional capabilities to enhance the Intelligence processing and
Fusion capabilities across intelligence domains to assist the operational
commander’s access to information, task organic sensors, and synchronize
non-organic sensor assets with their organic assets. The TSA focused on
targeted DCGS-A IS CDD capabilities that are beyond those provided by
DCGS-A Increment 1 for: Mission Command Support for the Processing,
Exploitation, and Dissemination (PED) of Intelligence, Surveillance, and
Reconnaissance (ISR); Standard Sharable Geospatial Framework (SSGF)-

7
 Army Geospatial Enterprise (AGE); Data Enterprise Architecture (DEA);
and Intelligence Support to Cyber Operations (CO).

The Trade Space Analysis further explained:

Representative systems were assessed to reflect capabilities that are
readily available for the following software option alternatives: Commercial
off the shelf (COTS), Government off the shelf (GOTS), and Hybrid and are
defined as follows:

• COTS - a singular software solution or compilation of commercially
available software packages that provide an integrated solution, whereby
the vendor owns the rights to the baseline software code.
• GOTS - a singular or compilation of software solutions, whereby the
baseline software code was developed by and owned by the Government.

• Hybrid - a compilation of commercially available software packages
augmented with integrated tools/widgets written by a third-party using
requirements/specifications generated by the Government (i.e.,
combination of COTS and GOTS).

The Trade Space Analysis determined that: “Overall, the Hybrid alternative was
rated Green and scored the highest of the three alternatives. Hybrid software option
alternatives are currently functioning in the DoD IC and will only require minor
development to fill capability gaps. Upper bound COTS software solutions provide similar
‘turn-key’ technical functionality as Hybrid software solutions.”7 Specifically, regarding the
Data Enterprise Architecture results, the Trade Space Analysis stated: “The COTS and
Hybrid alternatives satisfy most of the technical functionality metrics, however, the Hybrid
software solutions are currently functional in the DoD IC and provide the best ‘turn-key’
functionality. Upper bound COTS solutions provide a turn-key technical functionality
similar to that of the Hybrid solutions.” For another capability, the Standard Sharable
Geospatial Framework (SSGF)-Army Geospatial Enterprise compatibility, the Trade
Space Analysis determined:

7 The “Technical Risk Categorical Rating Criteria” in the Trade Space Analysis was:

- Green: “Low Risk of alternative experiencing significant negative
impacts to program cost, schedule, or performance”

- Yellow: “Moderate Risk of alternative experiencing significant
negative impacts to program cost, schedule, or performance”

- Red: “High Risk of alternative experiencing significant negative
impacts to program cost, schedule, or performance”

8
 Although there are some GOTS solutions that can address a few targeted
technical functionality metrics, there are no viable comprehensive GOTS
solutions that were identified by the Army/DOD geospatial community. The
COTS alternative was assessed to have greater usability, lower cost, and
lower schedule risk as compared to the Hybrid alternative. The COTS
options won’t address all Army Geospatial requirements with software “out
of the box”. However, these capability gaps are anticipated to be closed with
ongoing commercial upgrades and widgets that can be developed in the
COTS Baseline software. There were several risk driver [sic] for both the
COTS and Hybrid alternatives that were assessed to be of moderate to high
risk.

On August 13, 2014, the Army issued the first 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,” for the potential DCGS-A Increment 2 procurement 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.”8
(emphasis added). 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.”9 (emphasis added). Palantir responded to
the August 13, 2014 Request for Information and stated:

The acquisition cycle should fully leverage existing commercial solutions.
Prioritizing the rapid procurement of commercial capabilities minimizes the
anticipated scope of development needed to deliver Increment 2
capabilities. Narrowing the development scope requires expanding the use
of commercially available COTS capabilities—it does not require narrowing
the overall scope of the DCGS-A program. 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; footnote omitted). Palantir explained “we recommend the
Government pursue a different acquisition strategy than the strategy behind the
Increment 1 challenges.” In its response to the August 13, 2014 Request for Information,
Palantir argued that:

8 Palantir states 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.”
9 Palantir believes this statement demonstrates that “[t]he Army conceded in the first RFI
[the August 13, 2014 Request for Information] that it was not even contemplating the
possibility of a fixed-price contract for the procurement of commercial items.”

9
 The most cost-effective and lowest-risk procurement approach is the
acquisition of an open architecture data fusion platform through open
competition for an existing software solution at a Firm-Fixed Price (FFP).
FFP vehicles shift performance risk to the contractor, reduce the risk of cost
overruns to the Government, and shorten delivery schedules.

The parties have stipulated that “Palantir USG recommended among other things a Firm-
Fixed Price (FFP) model in conjunction with ‘an outcomes-based Performance Work
Statement based on a proven product and incorporating support services,’” and, further,
“Palantir USG stated that ‘the FFP model can be used in conjunction with a Cost-Plus
model for optional system enhancements. CPIF and CPFF contracts should total less
than 20 percent of the total contract value.’” Palantir indicated:

Examples of successful FFP contracts include our work at the U.S. Marines
Corps, where enhancements are included as part of our regular software
releases and small businesses fulfill highly custom development requests
by building the top of the foundation layer. Likewise, U.S. Immigration and
Customs Enforcement continues to expand Palantir capabilities through a
FFP contract that includes regular software updates and custom
enhancements requiring less than a set number of development hours.
More recently, following open competition, we were awarded a BPA for the
IC ITE expansion at DIA [Defense Intelligence Agency] available to all IC
agencies and affording a COTS solution at a FFP.

After receiving the responses to the first Request for Information, the Army
produced a December 2014 RFI Response Analysis which indicated that the “[v]ast
majority of respondents support hiring a contractor as the LSI [Lead Systems Integrator]
due to efficiencies in industry decision making and resource-marshaling processes.” The
2014 RFI Response Analysis summarized Palantir’s submission by noting that:

The Palantir response listed several contracts they have been awarded, but
did not include scope or description of work. However, Palantir has
developed an intelligence fusion system that has been used by various
entities within the Department of Defense. Palantir was found capable to
provide Data management and Workflow Management upgrades, and
partially capable of providing Data Fusion and Cyber capabilities to
Increment 2.

The conclusion of the 2014 RFI Response Analysis stated: “Based on the responses to
the first RFI, and analysis of the resulting information conducted by the DCGS-A
Increment 2 Contract IPT [Solicitation Integrated Product Team], the overall conclusion
of this Market Research Report is that a more capability focused RFI needs to be issued
to industry.”

10
 Prior to the issuance of the 2014 RFI Response Analysis, on October 20, 2014,
Ms. Shyu, Assistant Secretary of the Army (Acquisition, Logistics and Technology), issued
a memorandum to the Under Secretary of Defense (Acquisition, Logistics and
Technology) regarding a “Recommendation for a Change to the Distributed Common
Ground System-Army (DCGS-A) Increment 1 Acquisition Strategy.” In the memorandum
she requested approval to “[e]nd the Increment 1 program at Release 2, remove Release
3 from the program plan, and allocate the remaining Research, Development, Test and
Evaluation (RDT&E) funds to . . . Initiate Increment 2 preparatory activities.” Ms. Shyu
explained that:

I believe allocating the remaining Increment 1 RDT&E funding to support
potential required fixes from the Increment 1 Release 2 Limited User Test
results and moving forward with Increment 2 efforts as soon as possible will
provide a higher return on investment on the limited RDT&E funds currently
available. In addition, Increment 1 Release 2 will deliver approximately 90
percent of the planned Increment 1 capability.

On December 5, 2014, the Army issued a second Request for Information, which
“[w]as issued to determine ability of individual companies to act as the prime contractor
for the DCGS-A development effort.” As in the August 13, 2014 Request for Information,
“this RFI requests respondents’ specific answers regarding the basic qualifications in
managing software development projects that are similar in scope and process to the
DCGS-A program.” (emphasis added). For the December 5, 2014 Request for
Information, the Army sought “information regarding your corporate capabilities and
experience related to the delivery of capabilities.” Question 3.0(d) of the December 5,
2014 Request for Information 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.” (emphasis added). A
copy of the table referenced in Question 3.0(d) is included below:
Software Government Agency or % of Work Period of Prime Contract If you have no
Solutions or POC for this Gov’t Performed Performance or Number experience
Services work (email/ Customer Sub / Value have you
Delivered: phone No.) partnered with
anyone with
experience
(Company
Cloud Name)?
Computing
Big Data
Analytics
Data
Architecture &
Management
Data Fusion &
Pattern Analysis

11
Applications for
IC ITE Joint
Storefront
Targeting
Signals
Intelligence/NS
A-Net
Operations
Defensive Cyber
Operations
Offensive Cyber
Operations
Counter
Intelligence &
Human
Intelligence
DCGS
Integration
Backbone (DIB)
implementation
Weather
Effects/Analysis
GEOINT (Full
Motion
Video/Static
Imagery
Intelligence)
Geospatial
Intelligence
(Terrain &
Mapping)
Collection
Management
(Sensor
Management)
On-the-Move
Operations
Workflow
Management
Role/Attribute
Base Access
Control
Protection level
3 (PL 3) security
hardening
Ease of Use
Initiatives
High/Ultra
Reliability
Program

12
 Army
Interoperability
Certification
Joint
Interoperability
Certification

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?”

Palantir again responded10 to try to explain the value of a commercial, not a
developmental, 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 recommended “that the Government pursue a different acquisition strategy than
the long-term development used in Increment 1. We believe the acquisition 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.” Palantir
emphasized:

Our commercially developed data integration and analytic platform is
designed for use in a variety of use cases and domains across our
commercial and government clients. We have provided our solution in
support of many of the domains listed under “Software Solutions or Services
Delivered” for our deployments with Army, DoD and the IC. However, the

10 As discussed below, defendant argues that, although “Palantir USG responded to RFI
No.2,” Palantir did not “complete the Army’s chart and identify its specific capabilities
across the various DCGS-A.” Defendant states that Palantir “declined to answer question
3.0(d) in RFI No.2,” and “question 3.0(f) in RFI No.2,” and “question 3.0(h) in Request for
Information No.2.” Palantir responds that the Army did not in fact request that bidders
“complete the Army’s chart and identify its specific capabilities across the various DCGS-
A,” “[r]ather, 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).
13
 request for information on software series contracts performed across USG
is not relevant to an acquisition strategy targeting a COTS-based solution.
If the Government has questions on how our platform functionally fulfills the
specific domains, we would be happy to provide demonstrations or arrange
a discussion.

After the responses to the second Request for Information were received, on
January 20, 2015, the Army held an “Industry Day,” characterized by the Army as a “forum
to share emerging requirements with Industry,” which “helped to ensure the Government’s
requirements are defined adequately to promote high quality proposals and adequate
competition.” Between January 20, 2015 and May 12, 2015, the “Government conducted
a one on one engagements [sic] with 78 different organizations,”11 which the Army stated
was an opportunity to “[p]rovide a forum to answer Industry’s questions and elicit their
feedback regarding to [sic] the elements of the Increment 2 Acquisition Strategy and
Acquisition Plan such as small business involvement and Data Management
considerations.”

On May 6, 2015, the Army issued a third Request for Information, which “[w]as
released to determine if [the] 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.” Palantir indicated that it was not a small business and, as with the previous
Requests for Information, 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 also indicated in its response:12

11The joint stipulations of fact reflect that the Army conducted “[o]ver 80 one-on-one
sessions with the Program Manager and industry.” Neither the joint stipulations of fact nor
any document in the Administrative Record establish whether or not any of the more than
80 meetings included Palantir.
12In 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 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.

14
 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?[13]

As noted above, Palantir explained that “[i]n cooperation with the government, Palantir
fields and manages 25 Palantir deployments at every major Marine Corps command,
representing over 15,000 accounts at peak usage across the Marine Intelligence
community.”

After a second Industry Day, held on June 25, 2015, which the Army characterized
as “an opportunity to discuss the draft Increment 2 requirements with industry,” 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.”14 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 product. As such, the DCGS-A
Increment 2 development effort cannot be procured as a commercial product.”15
Addressing Palantir specifically, the Market Research Report16 stated in the “RFI
Respondent Capability Assessment” that “[t]he Palantir response did not provide any
examples of past experience relevant to the development of Increment 2, and was
therefore found non-responsive.” (emphasis removed). The parties have stipulated that:

A November 6, 2015 paper to the Chief of Staff of the Army stated that
“Extensive market research efforts were conducted to ensure requirements

13In 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.”
14 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).
15The Market Research Report also indicated that in September 2015, the Army would
have an “Industry Engagement,” which would be to “serve as a venue to discuss the Draft
Increment 2 Request for Proposal (RFP) with industry following its release.”
16 Of the 43 respondents to the December 5, 2014 Request for Information, the only
responder to the December 5, 2014 Request for Information the Market Research Report
labeled as “non-responsive” was Palantir.

15
 were achievable” and then listed “4-month independent DIVA study lead
[sic] by MITRE, SEI, DNI, and DAU,” “3 Requests for Information,” “2
industry days with over 500 attendees and 224 companies,” and “Over 80
one-on-one sessions with the Program Manager and industry.”

Even after responding to the three Requests for Information, Palantir continued to
try to express to the Army its views and frustration with the direction of the developmental
procurement choice by the Army and with the Army’s apparent disinterest in consideration
of commercially available alternatives. In response to the draft Performance Work
Statement, Palantir indicated:

Palantir USG, Inc. . . . has reviewed the Performance Work Statement
(PWS) for DCGS-A Increment 2 Task Order 0001. As written, Task Order
0001 prevents companies with commercially available technology from
direct participation in the program and will result in failure. Task Order 0001
will lock the Army into an irrelevant and unusable “flagship” intelligence
architecture for the next decade. Increment 1 failed because the Army
attempted to build a foundational data platform from scratch while refusing
to adopt proven commercial technology for core system components. After
spending fifteen years and billions of dollars, the Army has not delivered a
working intelligence platform to soldiers. Army ASA(ALT) acknowledged
this reality and directed DCGS-A’s leadership to halt Increment 1 and adopt
a new strategy for Increment 2. Despite this direction, and in direct violation
of Congressional intent, the Army has deliberately chosen to repeat the
same strategy that resulted in the failure of Increment 1 and is once again
ignoring commercially available technology that works for soldiers today.
Increment 2 is an opportunity to correct this failure, but only if the Army
changes its fundamental acquisition strategy. This is a consequential
moment for the DCGS-A program. There is little time remaining to change
the strategy, and current program leadership appears unwilling to take
necessary action.

(internal reference omitted).

On October 21, 2015, Ms. Shyu, as the Army Acquisition Executive, signed a
Determination & Findings for “Award of a Single Source Indefinite-Delivery Indefinite-
Quantity (IDIQ) Single Award Contract Exceeding $103M for Distributed Common Ground
System (DCGS)-Army Increment 2, Engineering Manufacturing and Development IAW
DFARS 216.504(c)(1)(ii)(D)(i).” The Determination & Findings noted that “DCGS-A
Increment 2 is heavily focused on design and development of a new data management
architecture by a contractor as the systems integrator,” and “[d]evelopment of the data
integration layer is pivotal and complicated by multiple interfaces and interoperability
requirements with external intelligence systems.” The Determination & Findings
concluded that:

16
 Based on the above analysis, issuing a single award IDIQ contract will
mitigate many of the risks identified herein and is in the best interest of the
Government. Due to the complex developmental efforts this work entails,
further competition at the task order level would interrupt development,
ultimately increase price, and cause schedule slippages.

Ms. Shyu determined:

that a single-source task or delivery order contract estimated to exceed
$103 million for Distributed Common Ground System [DCGS]-Army
Increment 2, Engineering Manufacturing and Development contract is
authorized because the task or delivery orders expected under the contract
are so integrally related that only a single source can reasonably perform
the work.

Finally, on July 1, 2016, notably one day after the above captioned protest was
filed in this court, and significantly after the issuance of the solicitation and the conclusion
of the GAO protest, Christopher Fisher, the contracting officer for the solicitation at issue
and Bryon Young, the Principal Assistant Responsible for Contracting, issued a
“DETERMINATION OF NON-COMMERCIAL ITEM.” (capitalization in original; emphasis
removed). The Determination of Non-Commercial Item stated that market research was
conducted and the three “RFIs were to canvas the market and determine the availability
of commercial/non-developmental items/services available for satisfying the DCGS-A’s
Increment 2 requirements.” The Determination of Non-Commercial Item stated:

Based upon market research conducted by the Program Manager (PM)
DCGS-A, I find that some commercial software applications exist that could
potentially satisfy portions of the DCGS-A Increment 2 requirement. The
market research showed that significant portions of the scope of work, such
as, the military unique capabilities classified up to the Top Secret level
needed to meet the requirements associated with Signals Intelligence
(SIGINT), Human Intelligence (HUMINT), Military Weather, Interoperability,
Data Fusion, Intelligence Support to Cyber, and DCGS Integrated
Backbone (DIB) upgrade are not available as commercial items.

The Determination of Non-Commercial Item concluded:

I find, based upon the requirements of this procurement and the market
research performed, that this requirement is not appropriate as a
commercial item procurement because no single commercial item of a type
customarily used by the general public or one that can meet the
Government’s requirement through minor modification is available; nor is
there a combination of commercial items that can satisfy the DCGS-A
Increment 2 requirement.

17
The Solicitation, GAO Protest, and Filing in this Court

On December 16, 2015, the Army issued a recommendation for issuance of the
solicitation, in which Ms. Shyu, as the 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.” Ms. Shyu continued: “Increment 2 will provide a new Data Management
Architecture, a new Workflow Management capability, improved fusion and pattern
analysis, cyber security upgrades, upgrades to the DCGS Integrated Backbone and
usability enhancements.” After Ms. Shyu’s recommendation for issuance of the
solicitation, on December 23, 2015, the Army issued the solicitation at issue in this protest,
Request for Proposals No. W56KGY-16-R-0001, for engineering, manufacturing, and
development services. The solicitation required a single contractor to be the system data
architect, developer, and integrator for DCGS-A Increment 2. The solicitation had four
evaluation factors: (1) Technical; (2) Cost/Price, (3) Past Performance, and (4) Small
Business Participation Plan. 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 and the period of performance
contemplated a six year term from contract award.

The closing date for the solicitation was February 16, 2016. That same day,
February 16, 2016, Palantir 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 that the DCGS–A2 development effort
could not be procured as a commercial product under FAR part 12 procedures.”
According to the GAO, “[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

18
 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).

On June 30, 2016, Palantir USG, Inc. and Palantir Technologies Inc. filed the
current pre-award bid protest in this court. The complaint has seven counts. Count one
alleges that the Army violated 10 U.S.C. § 2377 (2012) and 48 C.F.R. § 10.002 (2016)
and 48 C.F.R. § 11.002 (2016) by refusing to solicit the data management platform as a
commercial item. Similarly, count two 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-A Increment 2. Count three alleges 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 states:

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. Count
six alleges that the Army violated 48 C.F.R. § 16.504 (2016) by soliciting an impermissibly
expensive task order exceeding $112.0 million. Finally, count seven alleges 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[.]” (emphasis and capitalization removed).

The complaint alleges that:

[T]he 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

19
 insist upon them. Requiring the contractors to perform such useless tasks
is arbitrary and capricious.

The complaint asks 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 Palantir
USG, Inc. and Palantir Technologies Inc.’s complaint and argued that Palantir USG, Inc.
and Palantir Technologies Inc. lacked standing to bring this protest and that even if
Palantir USG, Inc. and Palantir Technologies Inc. had standing, they had waived any
objections to the solicitation. After the parties fully briefed the motion to dismiss, the court
determined that the timely protest filed at the GAO did not cause Palantir USG, Inc.’s
claims to become subject to waiver in this court, and, that Palantir had standing to bring
its claims in this court. See Palantir Techs., Inc., et al. v. United States, 128 Fed. Cl. 21,
46 (2016). The court determined, however, that Palantir Technologies Inc. had not filed a
timely protest with the GAO, and, therefore, its claims were subject to waiver, and granted
defendant’s motion to dismiss Palantir Technologies Inc. for lack of subject matter
jurisdiction.

In addition to defendant’s motion to dismiss, the parties now have filed cross-
motions for judgment on the Administrative Record. In response to the allegations in the
complaint, the defendant generally responds that agencies have “substantial discretion”
both to determine the requirements and how best to acquire those requirements.
Defendant also argues that the Army’s market research, and the determination based on
the market research, were appropriate and that the documents in the Administrative
Record do not support Palantir’s argument that the Army erred in not soliciting the DCGS-
A Increment 2, including the data management platform, as a commercial item. Finally,
defendant argues that there is no evidence of bias and/or bad faith by the Army towards
Palantir.

Supplementation to the Administrative Record

After Palantir filed its complaint and moved for judgment on the Administrative
Record, on July 15, 2016, Palantir moved to supplement the existing Administrative
Record in order to support Palantir’s allegations regarding bias and/or bad faith, as well
as regarding the Army’s failure to comply with 10 U.S.C. § 2377. Palantir sought to
supplement the Administrative Record with discovery, including depositions,
interrogatories, and document production requests. In its motion to supplement the
Administrative Record, Palantir argued that the Administrative Record filed by defendant
was “deficient in a number of respects.” Palantir argued that the Administrative Record
20
did “not include documents that the Army must have, or at a minimum should have,
considered when it prepared the Solicitation;” “omits documents that were ‘close at hand’
and highly relevant to the Solicitation;” “omits documents demonstrating that the Army’s
DCGS Program Owners made inaccurate assertions or assumptions about the Palantir
Gotham Platform;” and “omits documents demonstrating the bias and bad faith conduct
alleged by Palantir in its Complaint.” Palantir argued that supplementation of the
Administrative Record was necessary to conduct effective judicial review of the Army’s
decision-making process. Specifically regarding Palantir’s bias and/or bad faith
allegations, Palantir asserted that the “currently assembled Administrative Record is
inadequate to assess” bias and/or bad faith. In arguing that supplementation to the
Administrative Record was justified to effectively review Palantir’s bias and/or bad faith
allegations, Palantir pointed to past alleged efforts of “certain Army personnel to delete
and suppress favorable evaluations of the Palantir Gotham Platform, resist the
deployment of commercial items to Soldiers in the field, and disseminate inaccurate
information about Palantir’s technology.”

Palantir attached 53 exhibits with which it sought to supplement the Administrative
Record. Of the 53 exhibits, Palantir identified 43 exhibits that were relevant to Palantir’s
allegations that the Army failed to comply with 10 U.S.C. § 2377. According to Palantir,
with these 43 exhibits, Palantir was “seeking to add to the record material that should
have been of central importance to the market research § 2377 required the Army to
conduct, the process § 2377 required the Army to follow, and the determinations and
inquiries § 2377 required the Army to make.”

Palantir specifically identified 12 exhibits17 as “necessary to conduct judicial review
of Palantir’s allegations of bad faith and biased conduct.”18 Palantir moved to supplement
the Administrative Record with materials that allegedly “document the DCGS-A Program
Owners’ years-long efforts to protect their failing program, by resisting an innovative
solution and blocking the deployment of the Palantir Gotham Platform to the field.”

In addition to the exhibits with which Palantir sought to supplement the
Administrative Record, Palantir also requested leave of the court to conduct what it
described as limited discovery, including seven requests for production of documents,
seven interrogatories, and four depositions. Palantir argued that discovery was needed
to resolve the central factual predicate “to the Army’s decision to issue a developmental

17 Palantir indicated that Exhibits 2-7 related to both the allegations that the Army failed
to comply with 10 U.S.C. § 2377 and to the allegations of bias and/or bad faith.
18 Although Palantir’s motion to supplement the Administrative Record originally listed
Exhibits 2-7 and 35-39 as “necessary to conduct judicial review of Palantir’s allegations
of bad faith and biased conduct,” it appears that Palantir also intended to include Exhibit
52 as essential to the court’s consideration of Palantir’s bias and/or bad faith allegations.
Exhibit 52 was not included in Palantir’s motion to supplement the Administrative Record.
Palantir added Exhibit 52 to its reply brief in support of its motion to supplement the
Administrative Record.

21
solicitation rather than to define its requirements so they could be met by a commercial
or nondevelopmental item.” Palantir also asserted that “[t]argeted discovery is needed to
get to the bottom of the bias and bad faith that infected this solicitation process” and that
Palantir had “presented allegations of bad faith and bias that rest on ‘a strong evidentiary
footing,’ and that are more than sufficient to warrant discovery.” Additionally, Palantir
argued that in order “[t]o engage in effective judicial review of Palantir’s ability to offer a
commercial item that satisfies the Army’s requirements, the Court should permit testimony
from individuals who have the expertise needed to translate the technical information in
the Solicitation, the PWS [Performance Work Statement], and related documents into
plain English.” Palantir also sought leave of the court to depose four government
individuals: Contracting Officer Christopher Fisher, Lieutenant General Mary Legere (now
retired), the “Army’s Deputy Chief of Staff for Intelligence (G-2), the Program Owners of
DCGS-A,” Major General Laura Richardson, who “signed the April 25, 2012 ATEC [United
States Army Test and Evaluation Command] report,” and Kevin Kelly, “the author of the
MITRE study.”

Although defendant agreed initially to supplement the Administrative Record with
three of the exhibits Palantir proposed to add, defendant otherwise opposed Palantir’s
motion to supplement the Administrative Record and for discovery. Defendant argued that
Palantir sought to supplement the Administrative Record with “stale” documents and
otherwise substitute its own judgment for that of the agency’s contracting personnel.
Defendant further argued that Palantir “fail[ed] to demonstrate evidence of bias, much
less meet the standard of ‘strong evidentiary footing’ needed to give this Court a basis to
permit supplementation of the administrative record.” According to defendant, Palantir
“attempt[s] to weave a bad faith argument and bias argument into [its] disagreement with
the overall Army policy decision on the type of overarching platform and other
requirements for which it wanted to solicit offers.” Defendant also asserted that Palantir’s
“mere disagreement with the overall agency policy decision does not demonstrate an
individual, must [sic] less an institutional, bias or bad faith.” Defendant also maintained
that Palantir should not be permitted to offer testimony about its technical capabilities
because “this protest is not about the capabilities of [Palantir’s] software product,” and
those capabilities “are irrelevant to this Court’s judicial review of the administrative
record.” Defendant also opposed Palantir’s request to conduct limited discovery through
interrogatories and document requests and to conduct depositions of Contracting Officer
Fisher, Lieutenant General Legere, Major General Richardson, and Kevin Kelly.

In deciding whether or not to supplement the Administrative Record with the
exhibits and to allow any of the additional discovery proposed by the protestor, the court
considered whether the exhibits and discovery were necessary for effective judicial
review. The court recognized that “the parties’ ability to supplement the administrative
record is limited” in a bid protest. Dyncorp Int’l, LLC v. United States, 125 Fed. Cl. 1, 2
(2016). In a bid protest, the court should review the Administrative Record already in
existence to determine whether the agency procurement action at issue was “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2) (2012). In Axiom Resource Management, Inc. v. United States, 564 F.3d 1374,
1380 (Fed. Cir. 2009), the United States Court of Appeals for the Federal Circuit held that
supplementation of the Administrative Record, generally, should be limited to cases in

22
which the omission of extra-record evidence would preclude effective judicial review. See
id.; see also L-3 Commc’ns Integrated Sys., L.P. v. United States, 98 Fed. Cl. 45, 49
(2011). “[T]he administrative record in a bid protest ‘should be supplemented only if the
existing record is insufficient to permit meaningful review consistent with the APA.’” Tech
Sys., Inc. v. United States, 97 Fed. Cl. 262, 265 (2011) (citing Axiom Res. Mgmt., Inc. v.
United States, 564 F.3d at 1381). “[A]lthough the Federal Circuit's holding in Axiom makes
clear that supplementation of the administrative record should occur rarely, it is not
prohibited and may be used when it is necessary for the Court to gain a complete
understanding of the issues before it.” Dyncorp Int’l, LLC v. United States, 125 Fed. Cl.
at 2. “One of the basic reasons a record may be insufficient is when it is missing ‘relevant
information that by its very nature would not be found in an agency record—such as
evidence of bad faith, information relied upon but omitted from the paper record, or the
content of conversations.’” Tech Sys., Inc. v. United States, 97 Fed. Cl. at 265 (citing
Orion Int'l Techs. v. United States, 60 Fed. Cl. 338, 343-44 (2004)).

Specifically concerning Palantir’s motion to supplement the Administrative Record
to support its bias and/or bad faith allegations, the court considered whether Palantir’s
allegations had a sufficiently strong evidentiary foundation to justify supplementation.
“Where bias is alleged, the administrative record frequently will not be complete or suffice
to prove or disprove the allegation.” See Pitney Bowes Gov’t Sols., Inc. v. United States,
93 Fed. Cl. 327, 332 (2010). “This Court and other fora resolving bid protests have
traditionally considered extra-record evidence in assessing alleged bias or bad faith”
because allegations of bias, prejudice and bad faith may “depend upon a Government
official’s past conduct toward a bidder,” which “cannot be subsumed within the record of
a challenged award decision.” Int’l Res. Recovery, Inc. v. United States, 61 Fed. Cl. 38,
41-42 (2004); see also Starry Assocs., Inc. v. United States, 125 Fed. Cl. 613, 621 (2015)
(“Effective judicial review is not possible when the administrative record ‘is missing
“relevant information that by its very nature would not be found in an agency record—
such as evidence of bad faith. . .”’.” (quoting InfoReliance Corp. v. United States, 118 Fed.
Cl. 744, 747 (2014))). However, “allegations of bad faith must be based on hard facts in
order to justify discovery and supplementation of the administrative record.” Int’l Res.
Recovery, Inc. v. United States, 61 Fed. Cl. at 43. “[A]llegations of bad faith must rest on
a strong evidentiary footing to overcome the normal presumption of regularity and good
faith conduct by agency officials.” Orion Int’l Techs., v. United States, 60 Fed Cl. at 344.
“[T]o address bias, the court will entertain extrarecord evidence . . . when there has been
a ‘strong showing of bad faith or improper behavior,’” and the strong showing must have
an evidentiary foundation and “not rest merely on counsel’s argument, suspicion, or
conjecture.” Pitney Bowes Gov’t Sols., Inc. v. United States, 93 Fed. Cl. at 332 (quoting
Ala. Aircraft Indus., Inc. v. United States, 82 Fed. Cl. 757, 766 (2008)); see also Pitney
Bowes Gov’t Sols., Inc. v. United States, 93 Fed. Cl. at 332 (“Essentially what is required
is ‘a threshold showing of either a motivation for the [g]overnment[al] employee to have
acted in bad faith or of conduct that is hard to explain absent bad faith.’” (quoting L–3
Commc’ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. 347, 356 (2010))). “‘[T]o put
facts relating to bad faith in play’” and supplement the administrative record, allegations
of bias and/or bad faith must be based on “hard facts” and sufficiently well-grounded, and
not merely innuendo or suspicion. See Madison Servs., Inc. v. United States, 92 Fed. Cl.
120, 130 (2010) (quoting Beta Analytics Int’l, Inc. v. United States, 61 Fed. Cl. 223, 226
23
(2004)); see also Pitney Bowes Gov’t Sols., Inc. v. United States, 93 Fed. Cl. at 332; Tech
Sys., Inc. v. United States, 97 Fed. Cl. at 265-66. Additionally, in considering whether
extra-record evidence should be included in an administrative record, the court should
apply the Federal Rules of Evidence to the extra-record materials in order to ensure their
reliability. See L–3 Commc'ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. at 358
(explaining that documents which the agency omitted from the administrative record, but
should have included in the first place, or are agency-generated, should be included for
completeness).

The court held a hearing regarding Palantir’s motion to supplement the
Administrative Record. At the hearing, together with the parties, the court reviewed each
exhibit and discovery request that Palantir proposed for supplementation to the
Administrative Record to determine whether any of the exhibits or discovery requests
were necessary for effective judicial review. Of the 53 exhibits proposed for
supplementation, the parties only were able to agree that three of the exhibits (Exhibits
1, 22, 23 in the motion to supplement the Administrative Record) should be added to the
Administrative Record in this protest. Additionally, at the hearing, Palantir withdrew,
“without prejudice,” eight of the exhibits proposed for supplementation, Exhibits 29-33,
35, 37-38.

After reviewing the Administrative Record, as well as Palantir’s proposed exhibits,
and after careful consideration, the court concluded that some, but not all, of the exhibits
were necessary for effective judicial review, and, thus, supplementation to the
Administrative Record was justified for only certain exhibits. Specifically, the court denied
Palantir’s motion to supplement the Administrative Record regarding proposed Exhibits
2, 7, 8-21, 25-28, 34, 36, 39, and 50-53 because the court found that these exhibits were
not necessary for effective judicial review.19

The court found that Exhibits 3-6, 24, and 40-49 were necessary for effective
judicial review and these exhibits were added to the Administrative Record. Exhibits 3-6
pertained to Palantir’s allegations of bias and/or bad faith. As stated above, “allegations
of bad faith must be based on hard facts in order to justify discovery and supplementation
of the administrative record.” Int’l Res. Recovery, Inc. v. United States, 61 Fed. Cl. at 43.
Thus, the court considered whether Palantir’s bias and/or bad faith allegations were
based on sufficient evidentiary footing to justify discovery and supplementation to the
Administrative Record. The court also concluded that Exhibit 24 was necessary to
effectively review the reasonableness of the Army’s decision to issue a solicitation only
for a developmental contract. Exhibits 40-49 were excerpts of government contracts held
by Palantir that purportedly could demonstrate the potential capabilities of Palantir’s
commercially available product, which protestor argues the agency should have
considered when it made its determination under 10 U.S.C. § 2377. Because the parties
dispute whether or not Palantir has a commercially available product with the capabilities
to satisfy the requirements in the DCGS-A Increment 2 solicitation, and Exhibits 40-49

19In denying Palantir’s motion to supplement the Administrative Record with these
exhibits the court allowed the exhibits to be used in depositions.

24
contain contracts that could illustrate Palantir’s capabilities, the court determined that
these contracts were necessary for effective judicial review. Additionally, as discussed
further below, the court determined that limited supplementation of the Administrative
Record regarding the technical requirements of the DCGS-A Increment 2 solicitation, and
Palantir’s ability to potentially meet those requirements, was justified and the court
permitted the parties each to select one expert to submit an expert report and permitted
the parties to depose each side’s designated expert. Subsequently, defendant proffered
Shaun Cronen, a “Team Lead in the Intelligence Enterprise Branch of the Intelligence and
Systems Processing (ISP) Division of the Intelligence and Information Warfare
Directorate (I2WD) within the Communications-Electronics, Research, Development and
Engineering Center (CERDEC),” as its expert witness, and Palantir proffered Bryant
Choung, Global Defense Engineering Lead for Palantir USG, Inc. and Palantir
Technologies Inc.

Before the court, regarding bias and/or bad faith, Palantir offered a summary of
what it alleged were its “main points providing a ‘strong evidentiary footing’ for Palantir’s
allegations of bad faith,” including:

 The order from the head of the Army’s G-2 unit (the chief DCGS-A
Program Owner) for the destruction of the findings in the April 25, 2012
ATEC report that were favorable to Palantir.

 The Army’s decision to cease funding for another independent
evaluation of the Palantir Gotham Platform by the MITRE Corporation. . . .
That order came after the MITRE Corporation produced an initial slide deck
showing extremely favorable findings regarding Palantir that directly
contradict the inaccurate information the DCGS-A Program Owners were
circulating to senior DOD management and to Congress.

 The fact that, after the MITRE Corporation study with its favorable
findings on Palantir was shut down, the DCGS-A Program Owners created
slide decks and talking points about Palantir that were directly contradicted
by the MITRE Corporation study.

 An email from October 7, 2014, in which Palantir’s Doug Philippone
set forth forty-four bullet points of specific instances spanning more than
two years in which Army personnel associated with the Program Owners of
DCGS-A were engaged in “blocking” requests from the field for Palantir, and
otherwise thwarted and openly expressed their hostile bias against
Palantir.

 The fact that the Army’s supposed “market research” in 2014-15
never took cognizance of the ATEC or MITRE reports, never asked
questions about the information in those reports, never asked questions
about the existence of Palantir’s commercial products, and was all based
on the predetermination that the Solicitation would be crafted as a cost-plus

25
 developmental services contract, rather than a fixed-price acquisition of a
commercial or nondevelopmental item.

(emphasis removed). Palantir sought to use Exhibits 3-6 and Exhibit 52 included in
Palantir’s motion to supplement the Administrative Record, as well as Tabs 33, 35, 37,
and 39 of the existing Administrative Record, to demonstrate the above listed allegations.
Exhibits 3-5 contain the April 25, 2012 ATEC report on Palantir’s capabilities, the revised
May 25, 2012 ATEC report on Palantir’s capabilities, and an e-mail directing the April 25,
2012 ATEC report to be rescinded and destroyed. Exhibit 6 is an information brief
regarding Palantir’s capabilities created by the MITRE Corporation. Exhibit 52 is an e-
mail from Palantir’s Douglas Philippone to an Army official recounting numerous alleged
instances of “blocking” events by Army personnel to avoid using Palantir’s technology.

Palantir’s allegation that the Army was biased against it appears to rest, in part, on
the history between Palantir and the Army that occurred prior to the issuance of the
solicitation at issue in this bid protest, including during the time the market research was
conducted. Included in that history are the reports on Palantir’s capabilities by ATEC in
April and May 2012 and the MITRE Corporation that were allegedly shut down or
otherwise influenced by Army personnel who allegedly did not want to publicize favorable
findings regarding Palantir’s capabilities. Because these allegations of bias pertain to the
past conduct of certain Army personnel that occurred in the years before the DCGS-A
Increment 2 solicitation was issued, any evidence of this past conduct normally would not
have been included in the Administrative Record surrounding the 2015 DCGS-A
Increment 2 procurement at issue. As such, the court considered that the Administrative
Record regarding Palantir’s allegations of past biased conduct might be incomplete.
Nonetheless, the court found that the Administrative Record originally submitted to the
court by defendant included an Army investigative report regarding the April 25, 2012
ATEC report and the circumstances surrounding the rescission and modification of that
report in the revised May 25, 2012 ATEC report conducted by Lieutenant General William
Grisoli. Thus, the Administrative Record contained some information relevant to Palantir’s
allegations of past, biased conduct by Army personnel. The court reviewed the
investigative report in the Administrative Record, which indicated that “the Army G-2 team
is passionate and a little defensive about DCGS-A and its relationship with Palantir” and
that, at times, “some members of the G-2 staff lost some of their objectivity with respect
to how they presented information on Palantir and DCGS-A to Army senior leaders.” The
investigative report also indicated that the relevant G-2 staff included Lieutenant General
Legere and the Chief Information Officer of G-2, Lynn Schnurr. Although the investigative
report concluded that the April 25, 2012 ATEC report was not changed because of undue
influence from the G-2 staff, the court found that the need to conduct an investigative
report surrounding the circumstances of the April 25, 2012 ATEC report and the findings
concerning the G-2 staff in that report were a sufficient, factual predicate to justify limited

26
supplementation to the Administrative Record.20

Thus, after hearing from the parties, reviewing the Administrative Record, and
carefully considering the proposed evidence of possible bias and/or bad faith, the court
concluded that Palantir’s allegations of bias and/or bad faith surrounding the April 25,
2012 ATEC report and the 2013 MITRE Corporation information brief demonstrated
sufficient foundation to justify supplementation to the Administrative Record with Exhibits
3-6 for further effective review of the issues and for limited discovery of documents and
depositions. The court also concluded that further inquiry into Palantir’s allegations of
biased conduct by Lieutenant General Legere and Lynn Schnurr was necessary to
effectively review Palantir’s allegation that there was a long history of biased conduct
towards Palantir by Army personnel. The court, therefore, permitted Palantir to seek
limited document discovery related to “the modification or destruction” of the April 25,
2012 ATEC report, as well as the opportunity to take the depositions of Lieutenant
General Legere and Ms. Schnurr. With regard to Exhibits 2, 7, and 52, which Palantir
sought to add to the Administrative Record to support its bias and/or bad faith allegations,
the court determined that there was not a sufficient factual predicate to supplement these
exhibits into the Administrative Record.

Subsequently, on August 5, 2016, Palantir submitted to the court a declaration by
Palantir employee Douglas Philippone, the Global Defense Lead for Palantir USG, Inc.
and Palantir Technologies Inc., and an expert report written by Palantir employee Bryant
Choung, the Global Defense Engineering Lead for Palantir USG, Inc. and Palantir
Technologies Inc. Mr. Philippone’s declaration was intended to support Palantir’s bias
and/or bad faith allegations and Mr. Choung’s expert report was submitted to assist the
court with evaluating the technical issues raised in the complaint. On August 12, 2016,
defendant filed a motion to strike the declaration of Douglas Philippone and the expert
report of Bryant Choung. Although defendant moved to strike Mr. Philippone’s declaration
and the expert report of Mr. Choung, the court notes that, at the time defendant filed its
motion, neither of those documents had been included in the Administrative Record by
the court. Regardless, the issue for this court’s consideration as to whether the
declaration of Mr. Philippone and Mr. Choung’s expert report should be included in the
Administrative Record remained the same. This court reviewed the substance of the
parties’ submissions to determine whether the Administrative Record in this case should
be supplemented to include Mr. Philippone’s resubmitted declaration21 and/or Mr.
Choung’s expert report.

20Moreover, at the hearing on July 25, 2016, defendant acknowledged that Exhibits 3, 4,
and 5, which Palantir sought to add to the Administrative Record, were underlying
documents to the investigative report already contained in the Administrative Record.
21Prior to this August 5, 2016 submission, Palantir had attached two declarations, one by
Douglas Philippone and one by Bryant Choung as Exhibits 50 and 51 to its motion to
supplement the Administrative Record. At the hearing on July 25, 2016, the court denied
Palantir’s motion to supplement the Administrative Record with the two declarations
because they included legal conclusions, however, the court explained that Palantir could
re-file its declarations after removing the legal conclusions and the court would review
27
 The court considered whether the addition of Mr. Philippone’s declaration to the
Administrative Record, and the exhibits attached thereto, was necessary for the court to
effectively review the agency procurement decisions at issue and whether they
individually contained sufficient “hard facts” to support protestor’s bias and/or bad faith
allegations and justify supplementation to the Administrative Record. As noted above,
suspicion and innuendo is not sufficient to warrant supplementation to the Administrative
Record. Notwithstanding protestor’s argument that “Mr. Philippone’s declaration includes
ample evidence of bias and/or bad faith that are the factual predicate for
supplementation,” the statements in the declaration do not allege reliably supported facts
sufficient to support protestor’s bias and/or bad faith allegations. In his declaration, Mr.
Philippone also refers to hearsay evidence, continues to assert legal conclusions, and
makes other statements and opinions that do not appear to be based on his personal
knowledge or necessary for effective judicial review. Accordingly, the court finds that
supplementation to the Administrative Record with Mr. Philippone’s declaration is not
appropriate.

With regard to Mr. Choung’s expert report, defendant argues that “[t]he Court by
entertaining expert testimony on the issues in the case goes far beyond the administrative
record, all without the predicate of first determining that the agency’s market research
clearly violated any law or regulation.” Defendant also argues that “there is a serious
question of credibility regarding both Mr. Choung’s declaration and his expert report,” and
that, “[b]ecause of the credibility issues inherent in Mr. Choung’s declaration and expert
report,” the court should refuse to consider Mr. Choung’s expert report. In arguing that
this court should not consider Mr. Choung’s expert report because of credibility issues,
defendant focuses on statements made by Mr. Choung in his expert report and deposition
about testing by the Defense Integrated Backbone (DIB) Management Office (DMO) in
May 2012. According to defendant, “Mr. Choung misrepresented the conclusions of the
DMO as a result of the May 2012 testing of Palantir DIB adapter,” and, because of that
misrepresentation, the court should not consider any part of Mr. Choung’s expert report.
Defendant argues that “the Court has the discretion to disregard Mr. Choung’s entire
declaration, expert report and deposition testimony because of discrepancies between
his declaration, expert report, and deposition testimony and the reported results of the
DMO tests in May 2012.”

In response, protestor argues that Mr. Choung’s expert report should be admitted
to the Administrative Record because “[t]his Court has already noted that it would benefit
from expert testimony to assist in evaluating the technical issues raised in this bid protest.”
Protestor asserts that “Mr. Choung’s report is designed to assist the Court by explaining
technical issues relating to DCGS and the Palantir Gotham Platform.” Additionally,
protestor argues that “[t]he Government does not dispute that Mr. Choung is qualified to
offer an expert opinion,” and protestor contends that defendant’s accusations about the

and reconsider adding the declarations to the Administrative Record. Palantir did not
submit a revised declaration of Mr. Choung, thus, the court only considered whether Mr.
Choung’s expert report is admissible to the Administrative Record.

28
credibility of Mr. Choung’s expert report are baseless and have “nothing to do with
whether Mr. Choung’s report should be admitted.” According to protestor, “a careful
review of the relevant documents and testimony establishes that the Government either
misunderstands or misrepresents both Mr. Choung’s testimony and Palantir’s DIB-related
capabilities.”

As explained above, the United States Court of Appeals for the Federal Circuit has
held that the “focus of judicial review of agency action remains the Administrative Record,
which should be supplemented only if the existing record is insufficient to permit
meaningful review consistent with the APA [Administrative Procedure Act, 5 U.S.C.
§§ 701-706].” Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1381. When
necessary for meaningful judicial review, the court may supplement an administrative
record with an expert report in order to improve or clarify the court’s understanding of an
important issue in a bid protest. See Dyncorp Int’l, LLC v. United States, 125 Fed. Cl. at
3 (including expert report in the administrative record that aided “the Court in better
understanding the record”). As noted in FirstLine Transportation Security, Inc. v. United
States, “[s]everal post-Axiom decisions have allowed supplementation of the record when
necessary for the Court to have a complete understanding of the issues before it.”
FirstLine Transp. Sec., Inc. v. United States, 116 Fed. Cl. 324, 326 (2014). Other judges
of this court have held “that it is appropriate to supplement the record with expert
testimony when necessary to assist the Court in understanding technical or complex
information involved in a challenged procurement.” NCL Logistics Co. v. United States,
109 Fed Cl. 596, 613 (2013); see also Lab. Corp. of Am. Holdings v. United States, 116
Fed. Cl. 386, 390 (2014) (admitting expert declaration because the “expertise will greatly
assist the Court in understanding the evidence in the administrative record”); Guzar
Mirbachakot Transp. v. United States, 104 Fed. Cl. 53, 63 (2012) (holding that “[e]ffective
judicial review would be impeded where technical aspects of the procurement process
remain unexplained, preventing the parties from engaging in informed advocacy and the
Court from developing a full judicial record and accurate context for its decision”); East
West, Inc. v. United States, 100 Fed. Cl. 53, 57 (2011) (explaining that information
necessary for effective judicial review “might include tacit knowledge possessed by offeror
and agency personnel of a highly technical and complex nature. . .”). Expert testimony
may be offered to assist the court in understanding complex or technical information. See
NCL Logistics Co. v. United States, 109 Fed. Cl. at 613.

In this bid protest, although the court acknowledges some of defendant’s concerns
with regard to Mr. Choung’s credibility as an employee of protestor and as an expert
witness, the court finds that, given the highly technical nature of the Army’s requirements
and Palantir’s capabilities, expert reports are necessary for the court to effectively review
aspects of the challenged agency procurement action at issue in this bid protest.
Specifically, in order to determine whether Palantir may have a commercially available
product that would satisfy the Army’s requirements, such that Palantir was prejudiced by
the Army’s decision to issue a development-only solicitation, the court finds it appropriate
to consider the expert reports offered by both protestor and defendant. Defendant’s
arguments about Mr. Choung’s credibility, while noted by the court, did not eliminate the
probative value of Mr. Choung’s report, so as to warrant a decision to exclude Mr.
Choung’s expert report. The court evaluated Mr. Choung’s expert report in relation to all

29
the evidence in the Administrative Record. In this pre-award bid protest, which the agency
and protestor were eager to resolve as fast as possible, both parties were allowed to
designate one available expert witness, and then permitted to depose the opposing
party’s designated expert witness. Defendant had the opportunity to challenge Mr.
Choung’s allegedly inaccurate statements about the 2012 DMO testing results during the
deposition of Mr. Choung. The deposition transcript was available for the court’s
consideration and has been reviewed by the court. Accordingly, the Administrative
Record in this bid protest has been supplemented with the expert report of Mr. Choung,
as well as with the expert report of Mr. Shaun Cronen, the government’s designated
expert, a “Team Lead in the Intelligence Enterprise Branch of the Intelligence and
Systems Processing (ISP) Division of the Intelligence and Information Warfare
Directorate (I2WD) within the Communications-Electronics, Research, Development and
Engineering Center (CERDEC)” of the Army.

Two days before defendant filed its motion to strike Douglas Philippone’s
declaration and Bryant Choung’s expert report, defendant filed a motion for leave to file
three declarations of its own. Defendant sought to file the declarations of “Patricia L. Lee,
Lead Engineer for the DCGS Multiservice Execution Team Office”; “Michael Sherick,
contract specialist, U.S. Army Contracting Command Aberdeen Proving Ground”; and
“Jeff Stock, Chief Engineer for DCGS-A Increment 2, U.S. Army.”22 Palantir opposed
defendant’s motion unless the court afforded Palantir the opportunity to depose each of
the three declarants and defendant was required to produce any documents referred to
by one of the declarants, Mr. Sherick. The court held a status conference with the parties
to discuss defendant’s motion, and, as discussed with the parties during the status
conference, after careful review and consideration, the court issued an Order on August
24, 2016 granting defendant’s motion for leave to file the three declarations and Palantir
was permitted to take depositions of each of the three declarants. Subsequently, after
conducting the limited discovery that the court had permitted at the July 25, 2016 hearing
and the additional discovery permitted by the August 24, 2016 court Order, Palantir
moved for additional discovery on August 26, 2016 “relating to Palantir’s allegations of
bad faith and bias.” The court held another status conference on August 30, 2016 to
discuss Palantir’s subsequent motion for additional discovery. After hearing from the
parties, the court denied Palantir’s motion because Palantir’s discovery requests were too
broad and not based on sufficient evidentiary footing, but indicated it would reconsider
Palantir’s motion for additional discovery. Shortly thereafter, at a status conference on
September 6, 2016, Palantir proposed narrower discovery requests and defendant
produced nine additional documents. The parties agree that these nine documents should
be added to the Administrative Record and the nine documents are now part of the
Administrative Record. Thereafter, the parties filed supplemental briefs to include
references to the limited discovery permitted by the court, after which, the court held oral
argument on the parties’ cross-motions for judgment on the Administrative Record.

22Although defendant refers to the declaration of “Jeff Stock,” in the declaration included
with defendant’s motion for leave to file declarations, the individual’s name is “Jess
Stock.”

30
 DISCUSION

Bias and/or Bad Faith

As a threshold issue, the court considers Palantir’s argument that the solicitation
at issue in this bid protest should be set aside because, allegedly, “the Army engaged in
arbitrary, capricious, and unlawful conduct . . . by engaging in bad faith conduct.”
(emphasis and capitalization removed). Palantir argues that, pursuant to 5 U.S.C. § 706,
“this Court must set aside as unlawful any solicitation” that is “‘arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.’” Throughout this bid protest,
Palantir has alleged that a long-term pattern of bias and/or bad faith against Palantir
“infected” the agency’s decision-making process that led to the DCGS-A Increment 2
solicitation, which Palantir is challenging in this bid protest. Palantir alleges in its
complaint that the DCGS-A Increment 2 solicitation is the product of years of irrational
and bad faith conduct by program owners in certain sectors of the Army,23 and alleges
that such conduct includes “bureaucratic inertia, resistance to innovation, bias against
Palantir, the destruction of evidence, and the creation of misleading and deceptive
information.” (emphasis and capitalization removed). According to Palantir, “there is
ample evidence of malicious, bad faith conduct” that “reveals a deep-seated level of bias
against Palantir,” and that “[s]uch bias is irrational, arbitration [sic], and capricious.”
Accordingly, Palantir argues, “the Solicitation should be set aside as reflecting arbitrary
and capricious agency conduct.”

Palantir contends that the DCGS-A program owners have spent years “protecting
their own failed program,” and are resistant to any innovation from the commercial
software industry that could replace the DCGS-A, such as Palantir, and the Palantir
Gotham Platform. According to Palantir, “program owners in the Army—particularly within
the Army’s G-2 office, Intelligence and Security Command, and Intelligence and
Information Warfare Directorate of the Communications-Electronics Research and
Development Center—have resisted the Palantir Gotham Platform.” Palantir’s complaint
alleges that evidence of the Army’s bad faith conduct includes the “consistent hostility
that certain DCGS ‘program owners’ within the Army have shown to Palantir’s innovative

23 In its complaint, Palantir states:

The list of DCGS program owners involved in or associated with the DCGS-
A program include, among others, the following: Office of the U.S. Army
Intelligence Directorate (G-2, oversight and “customer” of DCGS-A);
Training and Doctrine Command; Program Executive Office Intelligence,
Electronic Warfare, and Sensors (PEO IEW&S) (parent office of PM DCGS-
A); Program Management Office, DCGS-A; U.S. Army Intelligence and
Security Command (INSCOM) (responsible for all the cloud projects, etc.);
Office of the Assistant Secretary of the Army for Acquisition, Logistics, and
Technology (ASA(ALT)); and various actors within the Defense Acquisition
System, including the Joint Requirements Oversight Council (JROC), the
Joint Capabilities Integration and Development System (JCIDS), and
others.
31
technology,” the suppression of “independent reports that were critical of DCGS-A and
complimentary of the Palantir Gotham Platform,” and the creation of “misleading
presentations for Congress and senior Department of Defense officials with inaccurate
descriptions of Palantir’s capabilities.”

In opposition to Palantir’s bias and/or bad faith allegations, defendant argues that
“Palantir’s claims are not supported by the administrative record.” Defendant also asserts
that “[t]he contracting officer and agency decision is entitled to a presumption of
regularity.” According to defendant, “[i]n order to overcome the presumption of good faith
and administrative regularity, the protestor must present ‘almost irrefragable proof’” of
bias or bad faith. (quoting Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330
(Fed. Cir.), reh’g denied (Fed. Cir. 2004)). Although defendant acknowledges that “[t]he
discovery permitted by the Court revealed a tension in the business relationship between
the Army and Palantir,” defendant asserts that “Palantir’s arguments do not meet the
stringent standard for proving bad faith.” Defendant argues that none of the limited
discovery that the court had permitted produced any evidence of bias and/or bad faith,
and Palantir’s mere disagreement with the overall agency policy decision does not
demonstrate an individual, much less institutional, bias and/or bad faith.

In order to prove that a government official’s actions were biased, a protestor must
overcome the well-established presumption that government officials act in good faith.
See Croman Corp. v. United States, 724 F.3d 1357, 1364 (Fed. Cir. 2013) (“The
presumption that government officials act in good faith is enshrined in our
jurisprudence.”); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d at 1337. A
protestor must offer “clear and convincing evidence” that the government did not act in
good faith in order to prevail. See Croman Corp. v. United States, 724 F.3d at 1364; see
also Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239 (Fed. Cir.
2002). The United States Court of Appeals for the Federal Circuit has addressed the
standard for overcoming the presumption of good faith as follows:

Government officials are presumed to “act ‘conscientiously in the discharge
of their duties.’” Kalvar Corp., Inc. v. United States, 543 F.2d 1298, 1301
(Ct. Cl. 1976) (quoting Librach v. United States, 147 Ct. Cl. 605, 612
(1959)). Courts have always been “loath to find to the contrary,” and to
induce a court to abandon the presumption of good faith dealing, “requires
‘well-nigh irrefragable proof.’” Id. at 1301-02 (quoting Knotts v. United
States, 128 Ct. Cl. 489, 492, 121 F. Supp. 630 (1954)). Thus, [a protestor]
must offer clear and convincing evidence that [the government] did not act
in good faith in order to prevail on this issue. Am-Pro Protective Agency,
281 F.3d at 1239-40.

Croman Corp. v. United States, 724 F.3d at 1364; see also Savantage Fin. Servs. v.
United States, 595 F.3d 1282, 1288 (Fed. Cir. 2010); Am-Pro Protective Agency, Inc. v.
United States, 281 F.3d at 1239 (“The presumption that government officials act in good
faith is nothing new to our jurisprudence. See, e.g., Knotts v. United States, 128 Ct. Cl.
489, 492, 121 F. Supp. 630 (1954) (stating ‘we start out with the presumption that the
official acted in good faith’).”); Square One Armoring Serv., Inc., v. United States, 123

32
Fed. Cl. 309, 329 (2015) (holding that a plaintiff alleging that the government has acted
in bad faith must offer well-nigh irrefragable proof in support of its claim); Austin v. United
States, 118 Fed. Cl. 776, 790 (2014) (“To overcome this presumption, the plaintiffs must
produce ‘well-nigh irrefragable proof’ of bad faith on the part of the government.”); Kogan
v. United States, 112 Fed. Cl. 253, 266 (2013) (“The presumption of good faith ‘is valid
and binding unless well-nigh irrefragable proof is offered to rebut or overcome it.’
McEachern v. Office of Pers. Mgmt., 776 F.2d 1539, 1545 (Fed. Cir. 1985).”).

The presumption that government officials act in good faith, however, is rebuttable
and not automatically accepted by the court. The Federal Circuit in Am-Pro Protective
Agency defined the “clear and convincing” standard of proof a protestor must meet to
prevail as:

A requirement of proof by clear and convincing evidence imposes a heavier
burden upon a litigant than that imposed by requiring proof by preponderant
evidence but a somewhat lighter burden than that imposed by requiring
proof beyond a reasonable doubt. “Clear and convincing” evidence has
been described as evidence which produces in the mind of the trier of fact
an abiding conviction that the truth of a factual contention is “highly
probable.”

Am-Pro Protective Agency, Inc. v. United States, 281 F.3d at 1240 (quoting Price v.
Symsek, 988 F.2d 1187, 1191 (Fed. Cir. 1993)) (internal citations omitted in original and
emphasis in original). Moreover, the Federal Circuit described the type of proof necessary
to establish that a government official acted in bad faith by “clear and convincing”
evidence, as

equated with evidence of some specific intent to injure the plaintiff. Thus,
in Gadsden v. United States, [111 Ct. Cl. 487, 489-90 (1948),] the court
compared bad faith to actions which are “motivated alone by malice.” In
Knotts, the court found bad faith in a civilian pay suit only in view of a proven
“conspiracy . . . to get rid of plaintiff.” Similarly, the court in Struck Constr.
Co. v. United States, [96 Ct. Cl. 186, 222 (1942),] found bad faith when
confronted by a course of Governmental conduct which was “designedly
oppressive.” But in Librach, [v. United States, 147 Ct. Cl. 605 (1959),] the
court found no bad faith because the officials involved were not “actuated
by animus toward the plaintiff.”

…

Nothing in Brown’s affidavit [whereby Am-Pro attempted to show bad faith],
moreover, suggests that the government “had a specific intent to injure” Am-
Pro. Caldwell [& Santmyer, Inc. v. Glickman,] 55 F.3d [1578,] 1581 [(Fed.
Cir. 1995)]. And Am-Pro has not alleged that these threats were “motivated
alone by malice,” Gadsden v. United States, 111 Ct. Cl. 487, 489, 78 F.
Supp. 126 (1948); as part of a proven “conspiracy . . . to get rid of [Am-Pro],”
Knotts, 128 Ct. Cl. at 500, 121 F. Supp. 630; as part of a course of

33
 governmental conduct which was “designedly oppressive,” Struck, 96 Ct.
Cl. at 222; or as “actuated by animus toward” Am-Pro, Librach, 147 Ct. Cl.
at 614.

Am-Pro Protective Agency, Inc. v. United States, 281 F.3d at 1240, 1241 (quoting in part
Kalvar Corp. v. United States, 211 Ct. Cl. 192, 543 F.2d 1298, 1302 (1976), cert. denied,
434 U.S. 830 (1977)) (citations omitted in original); see also Galen Med. Assocs., Inc. v.
United States, 369 F.3d at 1330 (“‘[A]llegations of bad faith . . . ha[ve] been equated with
evidence of some specific intent to injure the plaintiff.’” (quoting Torncello v. United States,
231 Ct. Cl. 20, 45, 681 F.2d 756, 770 (1982))); Info. Tech. & Applications Corp. [ITAC] v.
United States, 316 F.3d 1312, 1323 n.2 (Fed. Cir.) (“ITAC has pointed to no record
evidence of bias. Instead it has merely reiterated its contentions that the Air Force erred
in evaluating the proposals. This is not evidence of bias, and it is insufficient to overcome
the presumption that the contracting officer acted in good faith.”) (citations omitted), reh’g
and reh’g en banc denied (Fed. Cir. 2003); Dekatron Corp. v. United States, 128 Fed. Cl.
115, 118 (2016) (“Bad faith has been found when a contracting officer representative acts
with specific intent to injure or the contracting officer fails to exercise independent
judgment or remedy the contracting officer representative’s animus. . . .”); Madison Servs.
Inc. v. United States, 94 Fed. Cl. 501, 507 (2010) (“Because plaintiff submits as evidence
unsubstantiated innuendo and uncorroborated inferences, evidence that categorically
cannot meet a ‘clear and convincing’ standard, the court must deny plaintiff’s requests for
relief.”) (citations omitted); id. at 511 & 511 n.8 (adding unreliable hearsay and attorney
arguments to the list of what will not meet the standard for demonstrating bad faith); L-3
Commc’ns Integrated Sys., L.P. v. United States, 91 Fed. Cl. at 354 (innuendo or
suspicion is not enough to demonstrate bad faith); N. Star Alaska Hous. Corp. v. United
States, 76 Fed. Cl. 158, 187-88 (“Courts have found bad faith when confronted by a
course of government conduct that was ‘designedly oppressive,’ Struck Constr. Co. v.
United States, 96 Ct. Cl. 186, 222, 1942 WL 4411 (1942), or that ‘initiated a conspiracy’
to ‘get rid’ of a contractor, Knotts v. United States, 128 Ct. Cl. 489, 121 F. Supp. 630, 636
(1954).”), appeal dismissed, 226 F. App’x 1004 (Fed. Cir. 2007).

To support its theory that a long-term climate of bias against Palantir “infected” the
path towards the solicitation, Palantir points to specific instances of alleged bias that it
asserts occurred between 2009 and the present, and asks “the Court to give particular
consideration to” those instances. According to Palantir, those instances cannot “be
explained away, and can only mean that there was an entrenched bias against Palantir
among certain DCGS-A program owners and G-2 staff within the Army.” Palantir suggests
that “the supplemental record supports a finding that certain personnel within the Army
had a bias against Palantir.” Palantir asserts that these alleged instances include: the
Army’s efforts to “block” Palantir from participating in certain “important” evaluations
between 2009 and 2011; false statements by the DCGS Program Manager to Congress
about Palantir; an e-mail from Army Major Greg Moore stating that there is an “entrenched
animosity” towards Palantir; the creation and distribution of documents by G-2 staff that
contained inaccurate statements about Palantir’s capabilities; efforts by Army personnel
to rescind and alter a report with favorable findings and recommendations regarding
Palantir; and the Army’s failure to investigate Palantir’s specific allegations of senior Army
personnel “blocking” requests in the field for Palantir’s technology.

34
 According to Palantir, the Army’s G-2 staff and DCGS-A program owners blocked
Palantir from participating in Joint Intelligence Laboratory (JIL) and DCGS-A Systems
Integration Laboratory (SIL) evaluations between 2009 and 2011 that, according to
Palantir, would have helped to demonstrate Palantir’s ability to satisfy the requirements
set forth in the DCGS-A Increment 2 procurement, prior to the issuance of the solicitation.
Palantir alleges that, in 2009, “Palantir attempted to undertake an evaluation at the Joint
Intelligence Laboratory.” Palantir alleges, however, that “[j]ust before Palantir’s JIL
evaluation was scheduled to take place,” an Army official e-mailed a Palantir employee,
Douglas Philippone, notifying him that the evaluation was cancelled. Similarly, according
to Palantir, in November 2010, a contract was in place for Palantir to undergo testing at
the SIL. Palantir alleges that the SIL evaluation also never occurred. Palantir alleges that
it was “repeatedly blocked” from participating in testing at the SIL, which would have
demonstrated Palantir’s capabilities to the Army. Palantir alleges that “the Army has never
given a plausible explanation for why it blocked Palantir from participating” in either a JIL
or SIL evaluation.

Defendant asserts that the Army gave reasonable explanations for why the JIL and
SIL evaluations did not occur and that the deposition testimony of Ms. Schnurr and Mr.
Cronen corroborated those explanations. Defendant also argues that “the majority of
events that Palantir claims constitute ‘blocking’ are events that are 4 to 11 years prior to
the solicitation at issue, and are outside the relevant period of time to have any impact on
the current procurement.” Additionally, according to defendant, “Palantir has failed to
demonstrate what, if any, impact these events had” with respect to the choices made
regarding the DCGS-A Increment 2 solicitation.

The e-mail sent from the Army to Palantir cancelling the JIL evaluation on February
27, 2009, more than six years before the solicitation was issued, explains that:24

Lynn [Schnurr] is out of the office dealing with personal matters right now
and has authorized me to handle this matter. As of right now, the JIL
evaluation is cancelled.

...

The rationale for this decision is that the best way to focus your efforts at
this time is with the DCGS-A Mobile lead systems integrator, Northrup
Grumman. My understanding is that you have already begun discussions
with them so there should be no disconnect there. This provides the most
direct route to potential DCGS-A integration and fits cleanly into their
established business process. I understand that Palantir has a lot to offer
and ask that you concentrate your efforts on this vector and allow the PM
process to work and enable their LSI [lead systems integrator] to build the

24Although Palantir did not move to supplement the Administrative Record with this e-
mail, counsel for Palantir used this e-mail as an exhibit during the deposition of Lynn
Schnurr, which deposition the court has deemed necessary for effective judicial review.

35
 best system possible for our Soldiers.

During the deposition of Ms. Schnurr, counsel for Palantir asked Ms. Schnurr about
the cancellation of the JIL evaluation, and referenced the above e-mail as an exhibit to
the deposition. Palantir points to the deposition testimony of Lynn Schnurr as support for
its allegation that the Army blocked Palantir from undergoing the JIL evaluation. The
deposition transcript of Ms. Schnurr indicates that she had difficulty recalling the reason
that the JIL evaluation was cancelled. When Palantir’s counsel asked Ms. Schnurr the
reason for the cancellation of the 2009 JIL evaluation, Ms. Schnurr responded: “My
understanding -- and again, that’s a long time ago -- was that it was a funding issue.” After
Palantir’s counsel showed Ms. Schnurr the e-mail cancelling the JIL evaluation, however,
Ms. Schnurr stated: “Sitting here today, based on what you’ve shown me, it looks as if the
recommendation was to not move forward with a JIL evaluation but to have them work
directly with Northrup Grumman to move things forward in a direct manner to help get
Palantir capability into the program.” Ms. Schnurr also was asked:

Q. Do you have any reason to believe that a company, which is a
subcontractor, would be precluded from participating in the Joint
Intelligence Laboratory evaluations?

A. I don’t know, but I would assume it would be okay.

Q. You’d assume it would be okay?

A. Uh-huh. But I don’t know.

...

Q. Why is working with Northrop Grumman mutually exclusive from getting
an evaluation under the JIL?

A. I wouldn’t think it is mutually exclusive.

Q. Then why did you cancel the JIL evaluation?

A. I did not cancel it personally.

Palantir asserts that, by testifying that Palantir could have been evaluated at the JIL and
simultaneously have worked with Northrup Grumman, “Ms. Schnurr effectively admitted
that the rationale given” for cancelling the JIL evaluation “did not make any sense.”
Palantir, however, mischaracterizes Ms. Schnurr’s testimony. While Ms. Schnurr did, in
fact, testify that Palantir might have been able to simultaneously work with Northrup
Grumman and undergo evaluation at the JIL, she did not, either directly or indirectly,
concede that the reason for the cancellation put forth in the e-mail to Palantir “did not
make any sense.”

Palantir argues that “the Army has never given a plausible explanation for why it
‘blocked’ Palantir from participating in this evaluation” and points to Mr. Schnurr’s

36
deposition testimony to argue that the cancellation of the JIL evaluation was motivated by
bias and/or bad faith. Palantir further asserts that Ms. Schnurr’s testimony reflects
“shifting and contradictory explanations that reveal a lack of candor and credibility as to
the reasons why this evaluation was cancelled.” Without further evidence, however,
Palantir’s position remains based only on allegations and suspicions of bias. The
apparent inconsistencies with Ms. Schnurr’s testimony could be attributed to her failed
memory after the passage of approximately seven years from the events in question to
the date of the deposition. Moreover, Ms. Schnurr testified that she “did not cancel the
JIL evaluation personally.” Without more evidence of intent, the e-mail sent to Palantir
cancelling the JIL evaluation on February 27, 2009 does not offer sufficient evidence of
bias and/or bad faith on the part of the agency as it relates to the developmental
solicitation for DCGS-A Increment 2.

Palantir’s counsel also asked Ms. Schnurr about the SIL evaluation cancellation
during her deposition. Ms. Schnurr was asked: “Did Palantir ever undergo an evaluation
in the SIL?” To which she responded: “I think they did, but I don’t recall all the details of
it. It’s been so long, but I know they did.” Palantir’s counsel asked additional questions
about the SIL evaluation, but it is apparent from her deposition testimony that Ms. Schnurr
was not involved with the SIL. Ms. Schnurr stated: “I don’t recall because I didn’t work the
SIL, didn’t have any responsibility for the SIL;” “Again, that SIL work was totally separate
in my office. We had nothing to do with that;” “Again, I did not work the SIL;” and, later, “I
don’t know the details of what happened in the SIL.” Given her testimony that she was
not involved with the SIL and did not remember anything about the SIL evaluation, her
testimony as to why the SIL evaluation did or did not occur does not provide support for
protestor’s allegations. In addition, the JIL and SIL evaluations were cancelled between
2009 and 2011, years before the solicitation at issue in this bid protest was released.
Given the lapse in time, it is unclear, without further evidence, whether those cancellations
between 2009 and 2011 were directly related to the decision to issue the DCGS-A
Increment 2 procurement as a developmental one. Therefore, Palantir’s allegations of
“blocking” of the JIL and SIL evaluations do not provide sufficient evidence to demonstrate
bias or bad faith. As stated above, a protestor must show “clear and convincing evidence”
to prevail on a claim of bias and/or bad faith and Palantir has failed to do so with regards
to the JIL or SIL evaluations. See Croman Corp. v. United States, 724 F.3d at 1364.

Related to Palantir’s allegations that the Army “blocked” the JIL and SIL
evaluations, Palantir alleges that “[a]fter Palantir was blocked from conducting the SIL
evaluation, the DCGS-A Program Manager, Colonel Wells” made inaccurate statements
to Congress about the SIL evaluation. Specifically, Palantir alleges that Army Colonel
Charles Wells told Congress, not only that the SIL evaluation had occurred, but also, “that
Palantir was unwilling to fully integrate its product with DCGS-A,” and that the evaluation
revealed that Palantir’s features limited intelligence collaboration and sharing. According
to Palantir, Colonel Wells communicated this inaccurate information to Congress via
Information Papers on September 30, 2011 and October 18, 2011. Defendant argues,
however, that the statements in the Information Papers submitted to Congress do not
demonstrate bias and/or bad faith. Similar to Palantir’s allegations that the JIL and SIL
evaluations were “blocked” by the Army, Palantir’s allegation that inaccurate statements
made to Congress are evidence of the Army’s bias and/or bad faith is not supported by

37
the Administrative Record. Palantir’s assertion that the Army communicated to Congress
information that may have been inaccurate does not, without further evidence, establish
that the representations made to Congress were motivated by bias and/or bad faith on
the part of the critical decision makers regarding the DCGS-A Increment 2 solicitation. It
is not clear in the Administrative Record what was the source of the alleged incorrect
information or whether the information was utilized by the decision makers who produced
the developmental procurement at issue in this protest.

In addition to the allegedly “blocked” JIL and SIL evaluations, Palantir also alleges
that the “former Chief Information Officer for G-2,” Lynn Schnurr, and the “former Deputy
Chief of Staff of the Army for G-2 (Intelligence),” Lieutenant General Mary Legere, were
biased against Palantir and acted on that bias. To support Palantir’s allegations, Palantir
points to several instances that allegedly occurred after 2011. For example, Palantir
points to an e-mail sent on November 6, 2015, that pertained to a slide presentation on
the DCGS-A Program and Palantir’s capabilities. The author of the e-mail, Colonel Jack
Dills, stated: “Apparently LTG Legere had some issues with the brief and afterward
expressed her issues to MG [Major General] Ostrowski.” According to Palantir, in an e-
mail sent on March 10, 2012 to Douglas Philippone of Palantir, Army Major Greg Moore
admitted that G-2’s Chief Information Officer, Lynn Schnurr, had an “entrenched
animosity” toward Palantir “which has been spread and inculcated into the DA staff.”
(emphasis removed). Additionally, Palantir alleges that, at some unidentified point prior
to December 15, 2011, Ms. Schnurr gave negative feedback about Palantir that led a
defense contractor to decide against working with Palantir. To support this allegation,
Palantir relies on another e-mail from Army Major Greg Moore, dated December 15, 2011,
in which he stated that “[n]egative feedback from the DA G2 CIO [Lynn Schnurr] at the
time caused Lockheed Martin [the contractor] to wave off” and enter into discussions with
companies other than Palantir. Palantir also alleges that Lynn Schnurr and Lieutenant
General Mary Legere circulated various documents that contained “inaccurate” and
“misleading” information about Palantir, including, but not limited to, a July 2012
memorandum that discussed Palantir’s capabilities and an undated venn diagram that
was allegedly distributed among Army officials and purported to compare Palantir’s
capabilities with that of DCGS-A. (internal citations omitted). The venn diagram depiction
appeared as follows:

38
 DCGA-A Lite

DCGS-A
PALANTIR
SIGINT
HUMINT
MASINT
Ease of
CELLEX GMTI
Link Use
IMINT DOMEX
Analysis
Geospatial
Joint Interoperability
MSN CMD System Visualization
Interoperability
Open Source

Data Sharing
Mapping
Easily
Trained

Disconnected/
Low Bandwidth

Defendant argues that Palantir’s claim that the Army G-2 circulated inaccurate information
about Palantir’s capabilities lacks merit because the information was believed to be
accurate at the time it was distributed. Defendant further argues that Palantir has
misstated or mischaracterized the deposition testimony of Lieutenant General Legere in
its attempt to support its allegations of bias and bad faith. Defendant asserts that Ms.
Schnurr’s deposition testimony “demonstrates the Army [sic] intent to work with Palantir
and integrate the Palantir Platform into the DCGS.”

As indicated above, Palantir was given the opportunity to depose Lieutenant
General Legere and Ms. Schnurr. During the depositions, counsel for Palantir asked
Lieutenant General Legere and Ms. Schnurr about the allegedly inaccurate information

39
that was circulated about Palantir within the Army. Specifically, Lieutenant General
Legere was asked about a July 2012 Information Paper to Congress and slide
presentation that included the venn diagram depicting Palantir’s capabilities. Palantir’s
counsel asked Lieutenant General Legere about the accuracy of these documents and
several of the statements contained therein. In response to questions about the accuracy
of certain statements in the 2012 Information Paper, Lieutenant General Legere explained
that the statements reflected the understanding of Palantir’s capabilities in 2012.
Similarly, when questioned regarding the information about Palantir depicted in the venn
diagram, Lieutenant General Legere responded that the venn diagram reflected “our
understanding based on how we were using it [Palantir],” which was “[b]ased on the way
the soldiers were using it and the way they were describing it.” Ms. Schnurr was asked
about the accuracy of the venn diagram by Palantir’s counsel during her deposition, she
stated that “it appears to be” accurate “[b]ased on what I was told by engineers.” Similarly,
during Ms. Schnurr’s deposition, Palantir’s counsel asked her about the accuracy of
statements in the July 2012 Information Paper she had signed, and she explained that
the statements were based on “knowledge that engineers in the field had assessed”
regarding Palantir’s capabilities. Ms. Schnurr testified that as of July 2012, the July 2012
Information Paper was a fair and accurate representation of Palantir’s capabilities, and
“[a]s of February of 2012,” the venn diagram was a fair and accurate representation of
Palantir’s capabilities.

Although Lieutenant General Legere admitted during her deposition that
“everybody was sort of talking past each other,” and that, referring to Palantir and the
Army, “[b]oth sides misrepresent the capabilities of both,” her deposition testimony does
not amount to clear and convincing evidence of bias and/or bad faith.25 Instead, as even
defendant has agreed, the deposition testimony suggests lack of communication and
tension between the Army and Palantir. Lieutenant General Legere explained during her

25 During her deposition, Lieutenant General Legere was asked if she was

familiar with the fact that the solicitation that was ultimately issued in
December 2015 for the procurement of Increment 2 for DCGS sought bids
from offerors who would enter into a developmental contract on some kind
of cost-plus basis and did not seek bids from people who wanted to sell a
commercial item[.]

Lieutenant General Legere answered “no.” Although the court has serious doubts about
Lieutenant General Legere’s purported lack of knowledge regarding DCGS-A Increment
2, considering her leadership role within G-2 and her involvement with the DCGS-A
program, during her deposition, Lieutenant General Legere denied having ever said each
of the statements in the e-mail that were attributed to her, and which Palantir alleges
demonstrated the Army’s bias against Palantir. Although Lieutenant General Legere’s
credibility may be diminished in the view of the court, some of her testimony was
uncontroverted. Regarding the issues of bias and/or bad faith, her testimony, and the
testimony about her purported views, was not sufficient to carry protestor’s high burden
of proof on the issue.

40
deposition that the Army’s presentation of Palantir’s capabilities evolved and improved
over time as the Army continued to communicate with Palantir. According to Lieutenant
General Legere:

I think in our conversations in relationship with the company over time,
because really there were some serious objections to the way we were
describing this, and I absolutely understand from a stakeholder in the
company perspective why we got a little bit more -- we got much more
precise. And in turn Palantir got more precise about what DCGS is and how
what we do relates. So I think we made some progress. But in 2012, this is
kind of how we talked past each other.

Additionally, although Palantir points to the November 6, 2015 e-mail asserting that “LTG
Legere had some issues with the brief” on the DCGS-A program overview, the e-mail is
not clear as to what Lieutenant General Legere’s “issues” were with the brief. The fact
that Lieutenant General Legere may have expressed issues or concerns, in and of itself,
is insufficient to support a finding of bias and/or bad faith.

As referred to above, Palantir also relies on various e-mails written by Army Major
Greg Moore to support its allegation that Ms. Schnurr held a bias against Palantir,
specifically, Major Moore’s e-mail statements that Ms. Schnurr held an “entrenched
animosity” towards Palantir and that at some time prior to December 2011 Ms. Schnurr
gave negative feedback about Palantir to another contractor, Lockheed Martin. Major
Moore’s e-mail statements, including that Ms. Schnurr had an “entrenched animosity”
towards Palantir, is expressed as Major Moore’s impression of Ms. Schnurr’s attitude at
the time the e-mail was sent in 2012, and by itself cannot support a finding of bias or bad
faith, even animosity without further confirmation. It also is not evident from the
Administrative Record if this statement was based on any personal knowledge on the part
of Major Moore, or if he was merely repeating information obtained second-hand. The
court has not been provided any context directly from Major Moore about his statement.
Based on the limited information provided to the court regarding Major Moore’s e-mail,
the court may not depend on the accuracy or reliability of Major Moore’s statement about
Ms. Schnurr’s alleged feelings in 2012. See L–3 Commc’ns Integrated Sys., L.P. v. United
States, 91 Fed. Cl. at 358 (explaining that the court should apply the Federal Rules of
Evidence to the extra-record materials in order to ensure their reliability). Moreover, the
court permitted Palantir to depose Ms. Schnurr and the information derived from that
deposition regarding her alleged bias is more reliable and probative than what Major
Moore expressed in the 2012 e-mail. In fact, Palantir’s counsel asked Ms. Schnurr about
Major Moore’s e-mail:

Q. Is it true that you have an entrenched animosity towards Palantir?

A. No.

Q. Do you have an explanation as to why someone would say that you did?

A. That’s Major Moore.

41
 Q. Do you have any explanation as to why he would say something like
that?

A. No. This is -- this is Major Moore saying this. This is not Lieutenant
Colonel Gloor saying this.

...

Q. Do you disagree with this statement that the DA [Department of the
Army] staff -- that an entrenched animosity toward Palantir has spread and
inculcated into the DA staff? Do you agree with that statement?

A. I disagree with that.

Q. Why?

A. I just – staff -- working in the Army staff, it’s a very, very busy place, a lot
of short suspenses, high optempo. And it’s just not something that people
do, is sit around and talk like that.

As the deposition transcript reflects, Ms. Schnurr rejected the notion that she had an
“entrenched animosity” towards Palantir or that a culture of animosity had spread among
“the DA staff” towards Palantir. Without more evidence to support Major Moore’s
allegation of an “entrenched animosity,” the court cannot find evidence of bias and/or bad
faith on this basis.

Moreover, Major Moore’s e-mail statement that, at some time prior to December
15, 2011, Ms. Schnurr gave negative feedback about Palantir to Lockheed Martin,
another contractor, is not sufficient proof of bias and/or bad faith. Even if the court
assumes that Major Moore’s statement is accurate, negative feedback is not itself
indicative of bias and/or bad faith. Additionally, the court is not satisfied that this e-mail is
reliable, and Palantir was given the opportunity to question Ms. Schnurr about this alleged
negative feedback during her deposition. At her deposition, Palantir’s counsel asked Ms.
Schnurr if she gave Lockheed Martin negative feedback about Palantir. Ms. Schnurr
responded: “I do not remember that” and “I don’t think so.” Even given the tentative nature
of her answer, this is simply not enough to support a finding of bias and/or bad faith on
the part of the Army regarding the DCGS-A Increment 2 procurement.

Additionally, to further support its allegations of bias and/or bad faith, specifically
against Lieutenant General Legere and Ms. Schnurr, Palantir points to the revision of a
report on Palantir’s capabilities created and published by the Army Test and Evaluation
Command (ATEC) on April 25, 2012. ATEC is “responsible for planning and conducting
developmental, independent operational test and independent evaluations and
assessments of assigned Army material, information, and acquisition systems.” “ATEC
plans, integrates, and conducts experiments, developmental testing, independent
operational testing, and independent evaluations and assessments to provide essential
information to acquisition decision makers and commanders.” (internal quotations
omitted). From March 9, 2012 to March 21, 2012, ATEC conducted “face-to-face surveys

42
and collected data on Palantir from 57 operators and 43 intermediate supervisors. . . .”
After this data was collected, ATEC started drafting the Palantir Forward Operational
Assessment Report. “The ATEC Forward Operational Assessment Report on Palantir
was approved and signed by BG [Brigadier General] Laura Richardson, the OTC
[Operational Test Command] Commanding General, on 25 April 2012.” (emphasis in
original). The approved report was “emailed directly to key individuals within USFOR-A
for their information,” distributed on the “USFOR-A SIPR Sharepoint portal,” and sent to
two Palantir field service representatives. According to Palantir, the April 25, 2012 ATEC
report on Palantir contained highly favorable recommendations and findings about
Palantir’s capabilities and was critical of DCGS-A.

Palantir alleges, however, that “[s]hortly after the ATEC Report was published, staff
within G-2 demanded that it be rescinded, destroyed, and replaced.” Specifically, Palantir
alleges that Lieutenant General Legere “directed the deletions of information favorable to
Palantir and other changes that were made to the April 25, 2012 ATEC report.” Palantir
alleges that, because the Army’s G-2 staff insisted upon the rescission and alteration of
the favorable findings and recommendations about Palantir in the April 25, 2012 ATEC
report, the report was replaced “with a modified report that removed the most favorable
language recommending Palantir and reporting on its success.” The Administrative
Record reflects that a revised ATEC report was issued on May 25, 2012.26

Defendant, however, argues that “Palantir has not alleged or demonstrated that
the program and contracting officials for the DCGS-A Increment 2 procurement had
anything to do with either the original or the corrected ATEC 2012 report.” Moreover,
defendant relies on an investigation conducted in 2012 regarding the ATEC report, which

affirmatively found that the changes to the ATEC Report were not the result
of any improper motives, but instead, the report was edited to ensure it was
prepared in accordance with the purpose of the report and to ensure that
the warfighters received the best possible product to accomplish their
mission.

Defendant asserts that “irrespective of the spin Palantir now attempts to put on the fact
that the ATEC report was edited,” allegations that the report was changed as a result of
improper influence or interference have already been laid to rest. The Administrative
Record reflects that, between July 2012 and October 2012, the Army conducted an
investigation into the circumstances surrounding the rescission and alteration of the April
25, 2012 ATEC report. Lieutenant General William Grisoli conducted the independent
investigation and produced a report with his findings and conclusions, which is contained
in the Administrative Record. According to the investigative report, Lieutenant General
Grisoli was directed

26 As with the original April 25, 2012 ATEC report, the revised May 25, 2012 ATEC report
is included in the Administrative Record.

43
 to conduct an investigation into the facts and circumstances surrounding
the Army’s 2012 conduct of an informal battlefield assessment of
Palantir. . . [and] to examine the facts and circumstances surrounding
creation of one or more Forward Operational Assessment (FAO) reports by
the Army Test and Evaluation Command (ATEC) related to the Palantir
system, and any alleged efforts by one or more members of the Army G-2
to disrupt ATEC’s objective assessment of Palantir.

As part of his investigation, Lieutenant General Grisoli identified a list of 21 “key
individuals related to the events” under investigation, which included, among others, “LTG
Mary Legere, Army Deputy Chief of Staff, G-2” and “Ms. Lynn Schnurr, Army Intelligence
Chief Information Officer and Director, Intelligence Community Information Management,
Office of the DCS, G-2.”

As a result of his investigation, Lieutenant General Grisoli confirmed that ATEC
approved, and published, an initial report on Palantir on April 25, 2012 and that the ATEC
Commanding General, Major General Gino Dellarocco, subsequently directed that the
report be rescinded. Lieutenant General Grisoli concluded “that the 25 April 2012 Palantir
FOAR [Forward Operational Assessment Report] was retracted, revised and reissued as
a result of [a] determination that the recommendations contained in the initial report were
improper and were beyond the scope of what ATEC should recommend in a FOAR.”
Lieutenant General Grisoli found that:

[T]he changes made to the 25 April 2012 FOAR were not attributable to
anyone attempting to improperly advance the Army’s DCGS-A program of
record but, rather, to the ATEC leadership’s intent to ensure that the FOAR
properly reflected the strengths and weaknesses of Palantir and that the
recommendations in the report were in line with the report’s purpose.

Lieutenant General Grisoli concluded that, based on his investigation, “no member of
ATEC experienced undue or improper pressure to change the earlier FOAR, and that no
one within the Army G-2 requested that ATEC change the earlier FOAR.” Lieutenant
General Grisoli found “no communication between any member of the Army G-2 and
ATEC that was actually in furtherance of retracting and reissuing the Palantir FOA report.”
Lieutenant General Grisoli explained, “none of the emails I reviewed, or in any of the
phone conversations described by the participants, did any member of the Army G-2
specifically demand, suggest or even encourage ATEC to retract or destroy the April
Palantir FOAR.” Instead, according to Lieutenant General Grisoli, “[t]he decision to
retract, revise, and reissue the April FOAR was clearly made by ATEC leadership.”
Specifically, “[t]he decision to revise the 25 April 2012 FOAR was made by MG Dellarocco
on 2 May 2012 after a discussion with LTG Legere, the DCS, G-2.”

Additionally, Lieutenant General Grisoli explained that “there is no indication that
there was any undue or improper pressure from the Army G-2 to ‘destroy’ the April
Palantir FOAR.” Lieutenant General Grisoli found that the “‘destruction’ of the April

44
Palantir FOAR” was “intended only to avoid any confusion that likely would result from
having two published FOARs simultaneously available.”

Moreover, Lieutenant General Grisoli concluded that “there was no intent on the
part of any member of the Army G-2 to deceive any Army decision maker regarding the
effectiveness of the Palantir commercial system.” Lieutenant General Grisoli explained in
his report:

[I]t is my opinion that the Army G-2 team is passionate and a little defensive
about DCGS-A and its relationship with Palantir and that this attitude
resulted in their desire to ensure that any Army discussion of Palantir be
precise concerning capabilities, training and future acquisitions. At times,
some members of the G-2 staff lost some of their objectivity with respect to
how they presented information on Palantir and DCGS-A to Army senior
leaders. . . . However, it is clear that the Army G-2 team, along with other
staff leaders, wanted the Army’s senior leaders to understand the
capabilities of each system and ensure that our warfighters received the
best possible product to accomplish their mission.

Lieutenant General Grisoli ultimately concluded that “the coordination between the ATEC
leadership and the Army G-2, was professional and that there was no undue or improper
influence exerted by any member of the Army G-2 towards any member of ATEC.”

By alleging that the ATEC report was changed because of interference by
Lieutenant General Legere and/or Ms. Schnurr, both of whom Palantir alleges were
motivated by their bias against Palantir, Palantir would apparently have this court set
aside Lieutenant General Grisoli’s investigation and re-investigate the circumstances
surrounding the changes to the April 25, 2012 ATEC report. This court, however, is tasked
with reviewing the Administrative Record, with limited supplementation, if appropriate and
necessary for effective judicial review, and making findings based on that Administrative
Record. It would not be appropriate for this court to ignore Lieutenant General Grisoli’s
findings, which occurred much closer in time to the events under review, and the
depositions of Lieutenant General Legere and Ms. Schnurr despite their imperfect
memories. Thus, the court considers Palantir’s allegations in light of the entire
Administrative Record.

Lieutenant General Grisoli’s investigative report documents a thorough inquiry into
the circumstances surrounding the rescission and modification of the April 25, 2012 ATEC
report. Indeed, Lieutenant General Grisoli was specifically directed to investigate whether
there was any undue influence, pressure, or intent to deceive on the part of Army G-2
personnel to change the ATEC report that was originally distributed. Lieutenant General
Grisoli’s investigative report indicates that he spoke with multiple individuals, including
Lieutenant General Legere and Ms. Schnurr, about their roles in the rescission and/or
modification of the ATEC report. Based on the information he received, Lieutenant
General Grisoli set forth comprehensive remarks in his report that directly address the
allegations that Palantir asserts in this court. Although Palantir raised issues about the
completeness of Lieutenant General Grisoli’s rationale behind his findings in its

45
submissions to the court, Palantir did not question Lieutenant General Grisoli’s ability to
conduct an independent investigation.

To support its bias and/or bad faith allegations, Palantir further points to the
statements in Lieutenant General Grisoli’s report that certain G-2 personnel could be “a
little defensive about DCGS-A and its relationship with Palantir” and that “[a]t times, some
members of the G-2 staff lost some of their objectivity with respect to how they presented
information on Palantir and DCGS-A to Army senior leaders.” In referring to these
statements, however, Palantir omits Lieutenant General Grisoli’s conclusion that the
cause of this defensiveness and lack of objectivity was that “the Army G-2 team, along
with other staff leaders, wanted the Army’s senior leaders to understand the capabilities
of each system and ensure that our warfighters received the best possible product to
accomplish their mission.” Lieutenant General Grisoli ultimately concluded that the G-2
staff were not motivated by bias or bad faith, but, indeed, by a strong desire to provide
warfighters with the best products. Moreover, when asked during her deposition if she
was “defensive about Palantir,” Lieutenant General Legere responded “no, I’m not
defensive. . . . I’m not defensive at all. You have an opinion that I don’t share.” Ms. Schnurr
stated at her deposition that she disagreed with Lieutenant General Grisoli’s assertion
that members of the G-2 staff sometimes lost their objectivity with respect to how they
presented information on Palantir.

In arguing that the Army insisted upon the rescission and alteration of favorable
findings and recommendations about Palantir included in the original April 25, 2012 ATEC
report, Palantir points to three specific statements that were removed from the April 25,
2012 ATEC report.27 Palantir argues that this language “removed from the April 25, 2012

27 Palantir’s supplemental brief highlights the following language that was allegedly
favorable towards Palantir and removed from the April 25, 2012 ATEC report:

1. “Easy search tools within Palantir allows Soldiers to simultaneously search
CIDNE, M3, MX (British Human Intelligence (HUMINT) system), BAT, etc.”

2. “(1) (U/FOUO) Due to connectivity issues and bandwidth restrictions in
Afghanistan, some users experienced the inability to connect to servers that
are located on different Forward Operating Bases (FOB) from where the
user operates. Recommendation: Install more Palantir servers in
Afghanistan at multiple locations to mitigate issues.”

3. “As compared to other analysis tools, ‘Palantir is far superior to the DCGS
suite. DCGS is overcomplicated, requires lengthy classroom instruction and
is an easily perishable skill set if not being used constantly.’
Recommendation: Incorporate a short training class on Palantir at the 35F
(Intelligence Analyst) Military Occupational Specialty (MOS) Advanced
Individual Training (AIT) and Company Intelligence Teams (COIST)
training. Users are able to learn the system and use the analysis tools with
46
ATEC report directly contradicts what the Army is arguing in this case.” Palantir asserts
that Lieutenant General Grisoli’s “investigation into the rescission and alteration of the
April 2012 ATEC report provides no explanation for the removal of this language.”
(emphasis in original). Palantir appears to be arguing that, in 2012, the Army intentionally,
and in bad faith, removed language in the April 25, 2012 ATEC report about Palantir’s
capabilities because the Army was biased against Palantir and sought to prevent Palantir
from receiving a future award. To the extent Palantir is asserting this argument, the court
finds it to be insufficiently supported and heavily reliant on speculation and suspicion.

In considering Palantir’s bias and/or bad faith allegations, the court considered all
of the evidence in the Administrative Record pertaining to the 2012 ATEC reports. As a
result of supplementation, the Administrative Record contained Lieutenant General
Legere’s sworn statement given on August 7, 2012 as part of Lieutenant General Grisoli’s
investigation. The sworn statement was attached as Exhibit 3 to Lieutenant General
Legere’s deposition transcript. Lieutenant General Legere explained that the

25 April draft ATEC report contained one recommendation that concerned
me. . . . [T]he particular recommendation that concerned me suggested our
Intelligence Center add 40 hours of Palantir training at Fort Huachuca as
part of our DCGS core curriculum. I believed this recommendation was not
appropriate or helpful to our Intelligence Center. . . .

Lieutenant General Legere stated that she provided her recommendation because she

assumed as the Senior Intelligence Officer (SIO) for the Army I had an
obligation to read the report and bring any concerns with recommendations
to ATEC so they could review, weigh the merits, see if any/all should be
included in what I assume will stand as a document of record.

Lieutenant General Legere also explained that, prior to April 2012, she had “no previous
exposure to the way ATEC coordinate[d] its reports.” In her sworn statement, Lieutenant
General Legere stated:

At no point did I intend to do anything to hinder or influence ATEC’s critical
mission to the Army as its independent test and evaluation organization. My
suggestion was a minor one in the context of the report and I was
comfortable that it could either be accepted as a constructive suggestion or
ignored as immaterial.

Although Palantir is correct that the information contained in the first and second ATEC
reports is different, the changes in the reports and the circumstances surrounding the
changes, although perhaps unusual, are not clear and convincing evidence of bias and/or
bad faith against Palantir.

minimal training. Offer an advanced class for NCO’s with intelligence MOSs
who may be deploying to an area with Palantir use.”

47
 As evidence of bias and/or bad faith against Palantir, Palantir further alleges that
in October 2014 it notified the Army of specific alleged “‘blocking’ actions against Palantir”
by “G2 or DCGS program owners,” and that “the Army has not said whether it has
investigated any of those allegations.” Palantir’s allegation refers to an e-mail sent by
Palantir’s Douglas Philippone to an Army official in October 2014 in which he allegedly
listed “45 separate instances in which G2 or DCGS program owners engaged in specific
‘blocking’ actions against Palantir, dating back to September 2012.” Throughout this bid
protest, Palantir has attempted to admit this e-mail into the Administrative Record as
support for its bias and/or bad faith allegations. Specifically, Palantir attached the e-mail
to its July 15, 2016 motion to supplement the Administrative Record as Exhibit 52, and
also attached it to its motion for additional discovery. Defendant argues that this e-mail is
not appropriate for supplementation to the Administrative Record. Although the court did
not permit Palantir to supplement the Administrative Record with this e-mail, at the
hearing on July 25, 2016, Palantir referred to the e-mail as an exhibit when it deposed
Lieutenant General Legere.

The e-mail contains a list of alleged instances of “blocking,” however, the
information in the e-mail was communicated to the e-mail writer, Mr. Philippone, by
various individuals, and, as a result, the e-mail contains multiple levels of inadmissible
hearsay. Protestor argues that the e-mail and the statements contained therein are not
inadmissible hearsay because they are “being submitted to establish the simple fact that
Mr. Philippone sent these allegations” to the Army in October 2014, and not for the truth
of the matters asserted in the e-mail. Whether or not the e-mail was sent is not at issue.
If Palantir is not seeking to admit the allegations for the truth of the matters asserted,
including that the Army engaged in numerous efforts of “blocking” against Palantir, the
fact that the e-mail was sent does not establish that any or all of the alleged “blocking”
efforts ever occurred. Similarly, whether the Army investigated the allegations is not clear
and convincing proof of bias and/or bad faith.

In his deposition, Mr. Philippone even stated that he could not recall the
specific sources of the information contained in the e-mail:

Q. Now, these [sic] information that you’re conveying in the email dated
October 7th, 2014 to Gabe [Camarillo], did this information come to you
through other persons?

A. Yes.

Q. And who gave you this information?

A. I don’t recall specifically. But we received these reports all the time, and
so I just kept track of them. And since Gabe had requested it in very specific
form, where he literally told me, send this to me, I -- at his request, I put all
of these things -- all of the reports that I had heard in one email to send to
him.

Q. And from whom did you hear these reports?

48
 A. So I mean, from a variety of sources. From -- from either soldiers, FSRs
[Field Service Representatives], Palantir employees. Some of them came
from Congress.

When defendant’s counsel went through each allegation in the e-mail, and asked who
reported each allegation to Mr. Philippone, he responded to nearly each question: “I don’t
remember” and could not specifically identify the source of all of the allegations. Because
Palantir’s counsel referred to the e-mail during the deposition of Lieutenant General
Legere, and that deposition testimony is included in the Administrative Record, the court
reviewed the e-mail again and, once again, concludes that the e-mail is made up of a
series of uncorroborated allegations many of which are based on hearsay, is not
appropriate for supplementation to the Administrative Record and cannot support a
finding of clear and convincing evidence of bias and/or bad faith.

As discussed above, to succeed on its allegations of bias and/or bad faith, Palantir
must prove its claims of bias and/or bad faith by clear and convincing evidence. See Am-
Pro Protective Agency, Inc. v. United States, 281 F.3d at 1240. Even after permitting
limited supplementation to the Administrative Record with some of Palantir’s multiple
requests for discovery and several depositions, although it appears that the relationship
between Palantir and the Army was strained at times, as even defendant conceded there
was “a tension in the business relationship between the Army and Palantir,” and the Army
representatives struggled during the depositions to remember or explain potentially
unfavorable e-mails or statements about Palantir, Palantir has not produced clear and
convincing evidence of bias and/or bad faith against Palantir. This procurement has been
the subject of extensive discussion at the Department of Defense, particularly within the
Army, before Congress, and in the press. The court is mindful that the only relevant
information to be reviewed by the court is the record before the court, as supplemented
in accordance with the court’s rulings described above. The court, therefore, turns to
consider Palantir’s allegations regarding the Army’s failure to comply with 10 U.S.C.
§ 2377.

10 U.S.C. § 2377

The parties also have filed cross-motions for judgment on the Administrative
Record on the issue of the Army’s compliance with 10 U.S.C. § 2377. Rule 52.1(c) of the
Rules of the United States Court of Federal Claims (2016) (RCFC) governs motions for
judgment on the administrative record. The court’s inquiry is directed to “‘whether, given
all the disputed and undisputed facts, a party has met its burden of proof based on the
evidence in the record.’” Mgmt. & Training Corp. v. United States, 115 Fed. Cl. 26, 40
(2014) (quoting A & D Fire Prot., Inc. v. United States, 72 Fed. Cl. 126, 131 (2006) (citing
Bannum, Inc. v. United States, 404 F.3d 1346, 1356–57 (Fed. Cir. 2005))); see also Eco
Tour Adventures, Inc. v. United States, 114 Fed. Cl. 6, 21 (2013); DMS All-Star Joint
Venture v. United States, 90 Fed. Cl. 653, 661 (2010).

The Administrative Dispute Resolution Act of 1996 (ADRA), Pub. L. No. 104-320,
§§ 12(a), 12(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C. § 1491(b)(1)–(4)
(2012)), amended the Tucker Act to establish a statutory basis for bid protests in the

49
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 statute provides
that protests of agency procurement decisions are to be reviewed under Administrative
Procedure Act (APA) standards, making applicable the standards outlined in Scanwell
Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), and the line of cases following that
decision. See, e.g., Per Aarsleff A/S v. United States, 829 F.3d 1303, 1309 (Fed. Cir.
2016) (quoting NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004))
(“Protests of agency procurement decisions are reviewed under the standards set forth
in the Administrative Procedure Act (‘APA’), see 28 U.S.C. § 1491(b)(4) (citing 5 U.S.C.
§ 706), “by which an agency's decision is to be set aside only if it is arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance with law[.]””); Impresa Construzioni
Geom. Domenico Garufi v. United States, 238 F.3d at 1332)); Res. Conservation Grp.,
LLC v. United States, 597 F.3d 1238, 1242 (Fed. Cir. 2010) (“Following passage of the
APA in 1946, the District of Columbia Circuit in Scanwell Labs., Inc. v. Shaffer, 424 F.2d
859 (D.C. Cir. 1970), held that challenges to awards of government contracts were
reviewable in federal district courts pursuant to the judicial review provisions of the APA.”);
Galen Med. Assocs., Inc. v. United States, 369 F.3d at 1329 (citing Scanwell Labs., Inc.
v. Shaffer, 424 F.2d at 864, 868, for its “reasoning that suits challenging the award
process are in the public interest and disappointed bidders are the parties with an
incentive to enforce the law”); Banknote Corp. of Am., Inc. v. United States, 365 F.3d
1345, 1351 (Fed. Cir. 2004) (“Under the APA standard as applied in the Scanwell line of
cases, and now in ADRA cases, ‘a bid award may be set aside if either (1) the
procurement official’s decision lacked a rational basis; or (2) the procurement procedure
involved a violation of regulation or procedure.’” (quoting Impresa Construzioni Geom.
Domenico Garufi v. United States, 238 F.3d at 1332)); Info. Tech. & Applications Corp. v.
United States, 316 F.3d at 1319. The United States Court of Appeals for the Federal
Circuit has stated that the Court of Federal Claims’ jurisdiction over “any alleged violation
of statute or regulation in connection with a procurement or a proposed procurement,” 28
U.S.C. § 1491(b)(1) (2012), “provides a broad grant of jurisdiction because ‘[p]rocurement
includes all stages of the process of acquiring property or services, beginning with the
process for determining a need for property or services and ending with contract
completion and closeout.’” Sys. Application & Techs., Inc. v. United States, 691 F.3d
1374, 1381 (Fed. Cir. 2012) (emphasis in original) (quoting Res. Conservation Grp., LLC
v. United States, 597 F.3d at 1244 (quoting 41 U.S.C. § 403(2))); see also Rockies Exp.
Pipeline LLC v. Salazar, 730 F.3d 1330, 1336 (Fed. Cir. 2013), reh’g denied (Fed. Cir.
2014); Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed. Cir.) (“[T]he
phrase, ‘in connection with a procurement or proposed procurement,’ by definition
involves a connection with any stage of the federal contracting acquisition process,
including ‘the process for determining a need for property or services.’”), reh’g denied
(Fed. Cir. 2008); RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286, 1289 (Fed.
Cir. 1999) (“The operative phrase ‘in connection with’ is very sweeping in scope.”).

When discussing the appropriate standard of review for bid protest cases, the
United States Court of Appeals for the Federal Circuit addressed subsections (2)(A) and
(2)(D) of 5 U.S.C. § 706, see Impresa Construzioni Geom. Domenico Garufi v. United
States, 238 F.3d at 1332 n.5, but focused its attention primarily on subsection (2)(A). See
Croman Corp. v. United States, 724 F.3d at 1363 (“‘[T]he proper standard to be applied
50
[to the merits of] bid protest cases is provided by 5 U.S.C. § 706(2)(A) [(2006)]: a
reviewing court shall set aside the agency action if it is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.”’” (quoting Banknote Corp. of Am. v.
United States, 365 F.3d at 1350–51 (citing Advanced Data Concepts, Inc. v. United
States, 216 F.3d 1054, 1057–58 (Fed. Cir.), reh’g denied (Fed. Cir. 2000)), aff’d, 365 F.3d
1345 (Fed. Cir. 2004)))), reh’g and reh’g en banc denied (Fed. Cir. 2013) (alterations in
original). The statute says that agency procurement actions should be set aside when
they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law,” or “without observance of procedure required by law.” 5 U.S.C. § 706(2)(A), (D)
(2012);28 see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358
(Fed. Cir. 2015); Orion Tech., Inc. v. United States, 704 F.3d 1344, 1347 (Fed. Cir. 2013);

28 The language of 5 U.S.C. § 706 provides in full:

To the extent necessary to decision and when presented, the reviewing
court shall decide all relevant questions of law, interpret constitutional and
statutory provisions, and determine the meaning or applicability of the terms
of an agency action. The reviewing court shall—

(1) compel agency action unlawfully withheld or unreasonably delayed;
and

(2) hold unlawful and set aside agency action, findings, and conclusions
found to be—

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitations, or short
of statutory right;

(D) without observance of procedure required by law;

(E) unsupported by substantial evidence in a case subject to sections
556 and 557 of this title or otherwise reviewed on the record of
an agency hearing provided by statute; or

(F) unwarranted by the facts to the extent that the facts are subject
to trial de novo by the reviewing court.

In making the foregoing determinations, the court shall review the whole
record or those parts of it cited by a party, and due account shall be taken
of the rule of prejudicial error.

5 U.S.C. § 706.

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COMINT Sys. Corp. v. United States, 700 F.3d 1377, 1381 (Fed. Cir. 2012) (“We evaluate
agency actions according to the standards set forth in the Administrative Procedure Act;
namely, for whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.’” (quoting 5 U.S.C. § 706(2)(A); Bannum, Inc. v. United
States, 404 F.3d at 1351)); Savantage Fin. Servs. Inc., v. United States, 595 F.3d at
1285–86; Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009);
Axiom Res. Mgmt., Inc. v. United States, 564 F.3d at 1381 (noting arbitrary and capricious
standard set forth in 5 U.S.C. § 706(2)(A), and reaffirming the analysis of Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at 1332); Blue & Gold
Fleet, L.P. v. United States, 492 F.3d 1308, 1312 (Fed. Cir. 2007) (“‘[T]he inquiry is
whether the [government]’s procurement decision was “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.”’” (quoting Bannum, Inc. v. United
States, 404 F.3d at 1351 (quoting 5 U.S.C. § 706(2)(A) (2000)))); NVT Techs., Inc. v.
United States, 370 F.3d at 1159 (“Bid protest actions are subject to the standard of review
established under section 706 of title 5 of the Administrative Procedure Act (‘APA’), 28
U.S.C. § 1491(b)(4) (2000), by which an agency’s decision is to be set aside only if it is
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,’ 5
U.S.C. § 706(2)(A) (2000).”) (internal citations omitted); Info. Tech. & Applications Corp.
v. United States, 316 F.3d at 1319 (“Consequently, our inquiry is whether the Air Force’s
procurement decision was ‘arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.’ 5 U.S.C. § 706(2)(A) (2000).”); Eco Tour Adventures, Inc. v.
United States, 114 Fed. Cl. at 22; Contracting, Consulting, Eng’g LLC v. United States,
104 Fed. Cl. 334, 340 (2012). “In a bid protest case, the agency’s award must be upheld
unless it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.’” Turner Constr. Co. v. United States, 645 F.3d 1377, 1383 (Fed. Cir.) (quoting
PAI Corp. v. United States, 614 F.3d 1347, 1351 (Fed. Cir. 2010)), reh’g and reh’g en
banc denied (Fed. Cir. 2011); see also Tinton Falls Lodging Realty, LLC v. United States,
800 F.3d at 1358 (“In applying this [arbitrary and capricious] standard to bid protests, our
task is to determine whether the procurement official's decision lacked a rational basis or
the procurement procedure involved a violation of a regulation or procedure.”) (citing
Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1285–86); Glenn Def. Marine
(ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir.), reh’g en banc denied
(Fed. Cir. 2013); McVey Co., Inc. v. United States, 111 Fed. Cl. 387, 402 (2013) (“The
first step is to demonstrate error, that is, to show that the agency acted in an arbitrary and
capricious manner, without a rational basis or contrary to law.”); PlanetSpace, Inc. v.
United States, 92 Fed. Cl. 520, 531–32 (2010) (“Stated another way, a plaintiff must show
that the agency’s decision either lacked a rational basis or was contrary to law.” (citing
Weeks Marine, Inc. v. United States, 575 F.3d at 1358)).

The United States Supreme Court has identified sample grounds which can
constitute arbitrary or capricious agency action:

[W]e will not vacate an agency’s decision unless it “has relied on factors
which Congress has not intended it to consider, entirely failed to consider
an important aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so implausible
that it could not be ascribed to a difference in view or the product of agency

52
 expertise.”

Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007) (quoting
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see
also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d at 1358; F.C.C. v. Fox
Television Stations, Inc., 556 U.S. 502, 552 (2009); Ala. Aircraft Indus., Inc.-Birmingham
v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009), reh’g and reh’g en banc denied
(Fed. Cir. 2010); In re Sang Su Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[T]he agency
tribunal must present a full and reasoned explanation of its decision. . . . The reviewing
court is thus enabled to perform meaningful review . . . .”); Textron, Inc. v. United States,
74 Fed. Cl. 277, 285–86 (2006), appeal dismissed sub nom. Textron, Inc. v. Ocean
Technical Servs., Inc., 223 F. App’x 974 (Fed. Cir. 2007). The United States Supreme
Court also has cautioned, however, that “courts are not free to impose upon agencies
specific procedural requirements that have no basis in the APA.” Pension Benefit Guar.
Corp. v. LTV Corp., 496 U.S. 633, 654 (1990).

Under an arbitrary or capricious standard, the reviewing court should not substitute
its judgment for that of the agency, but should review the basis for the agency decision to
determine if it was legally permissible, reasonable, and supported by the facts. See Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 43 (“The scope of
review under the ‘arbitrary and capricious’ standard is narrow and a court is not to
substitute its judgment for that of the agency.”); see also Turner Constr. Co., Inc. v. United
States, 645 F.3d at 1383; R & W Flammann GmbH v. United States, 339 F.3d 1320, 1322
(Fed. Cir. 2003) (citing Ray v. Lehman, 55 F.3d 606, 608 (Fed. Cir.), cert. denied, 516
U.S. 916 (1995)). “‘“If the court finds a reasonable basis for the agency’s action, the court
should stay its hand even though it might, as an original proposition, have reached a
different conclusion as to the proper administration and application of the procurement
regulations.”’” Weeks Marine, Inc. v. United States, 575 F.3d at 1371 (quoting Honeywell,
Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal & Co. v.
Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971))); Jordan Pond Co., LLC v. United
States, 115 Fed. Cl. 623, 631 (2014); Davis Boat Works, Inc. v. United States, 111 Fed.
Cl. 342, 349 (2013); Norsat Int’l [America], Inc. v. United States, 111 Fed. Cl. 483, 493
(2013); HP Enter. Servs., LLC v. United States, 104 Fed. Cl. 230, 238 (2012); Vanguard
Recovery Assistance v. United States, 101 Fed. Cl. 765, 780 (2011).

Stated otherwise by the United States Supreme Court:

Section 706(2)(A) requires a finding that the actual choice made was not
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” To make this finding the court must consider whether the decision
was based on a consideration of the relevant factors and whether there has
been a clear error of judgment. Although this inquiry into the facts is to be
searching and careful, the ultimate standard of review is a narrow one. The
court is not empowered to substitute its judgment for that of the agency.

Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated on
other grounds by Califano v. Sanders, 430 U.S. 99 (1977) (internal citations omitted); see

53
also U.S. Postal Serv. v. Gregory, 534 U.S. 1, 6–7 (2001); Bowman Transp., Inc. v.
Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), reh’g denied, 420 U.S. 956
(1975); Co-Steel Raritan, Inc. v. Int’l Trade Comm’n, 357 F.3d 1294, 1309 (Fed. Cir. 2004)
(In discussing the “arbitrary, capricious, and abuse of discretion, or otherwise not in
accordance with the law” standard, the Federal Circuit stated: “the ultimate standard of
review is a narrow one. The court is not empowered to substitute its judgment for that of
the agency.”); In re Sang Su Lee, 277 F.3d at 1342; Advanced Data Concepts, Inc. v.
United States, 216 F.3d at 1058 (“The arbitrary and capricious standard applicable here
is highly deferential. This standard requires a reviewing court to sustain an agency action
evincing rational reasoning and consideration of relevant factors.” (citing Bowman
Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. at 285)); Lockheed Missiles &
Space Co. v. Bentsen, 4 F.3d 955, 959 (Fed. Cir. 1993); BCPeabody Constr. Servs., Inc.
v. United States, 112 Fed. Cl. 502, 508 (2013) (“The court ‘is not empowered to substitute
its judgment for that of the agency,’ and it must uphold an agency’s decision against a
challenge if the ‘contracting agency provided a coherent and reasonable explanation of
its exercise of discretion.’” (quoting Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753,
755, recons. denied, 60 Fed. Cl. 251 (2004), and Axiom Res. Mgmt., Inc. v. United States,
564 F.3d at 1381)), appeal withdrawn, 559 F. App’x 1033 (Fed. Cir. 2014) (internal
citations omitted); Supreme Foodservice GmbH v. United States, 109 Fed. Cl. 369, 382
(2013); Alamo Travel Grp., LP v. United States, 108 Fed. Cl. 224, 231 (2012); ManTech
Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 63 (2001), aff’d, 30 F.
App’x 995 (Fed. Cir. 2002); Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 392
(1999) (“Courts must give great deference to agency procurement decisions and will not
lightly overturn them.” (citing Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743–44
(1985))), appeal dismissed, 6 F. App’x 867 (Fed. Cir. 2001), and superseded by regulation
as recognized in MVS USA, Inc. v. United States, 111 Fed. Cl. 639 (2013).

According to the United States Court of Appeals for the Federal Circuit:

Effective contracting demands broad discretion. Burroughs Corp. v. United
States, 223 Ct. Cl. 53, 617 F.2d 590, 598 (1980); Sperry Flight Sys. Div. v.
United States, 548 F.2d 915, 921, 212 Ct. Cl. 329 (1977); see NKF Eng’g,
Inc. v. United States, 805 F.2d 372, 377 (Fed. Cir. 1986); Tidewater
Management Servs., Inc. v. United States, 573 F.2d 65, 73, 216 Ct. Cl. 69
(1978); RADVA Corp. v. United States, 17 Cl. Ct. 812, 819 (1989), aff’d, 914
F.2d 271 (Fed. Cir. 1990). Accordingly, agencies “are entrusted with a good
deal of discretion in determining which bid is the most advantageous to the
Government.” Tidewater Management Servs., 573 F.2d at 73, 216 Ct. Cl.
69.

Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958–59; see also Res-Care, Inc. v.
United States, 735 F.3d 1384, 1390 (Fed. Cir.) (“DOL [Department of Labor], as a federal
procurement entity, has ‘broad discretion to determine what particular method of
procurement will be in the best interests of the United States in a particular situation.’”
(quoting Tyler Const. Grp. v. United States, 570 F.3d 1329, 1334 (Fed. Cir. 2009))), reh’g
en banc denied (Fed. Cir. 2014); Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 995
(Fed. Cir. 1996); Geo-Med, LLC v. United States, 126 Fed. Cl. 440, 449 (2016); Cybertech

54
Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (“The court recognizes that the
agency possesses wide discretion in the application of procurement regulations.”);
Furthermore, according to the Federal Circuit:

Contracting officers “are entitled to exercise discretion upon a broad range
of issues confronting them in the procurement process.” Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1332 (Fed. Cir. 2001) (internal quotation marks omitted). Accordingly,
procurement decisions are subject to a “highly deferential rational basis
review.” CHE Consulting, Inc. v. United States, 552 F.3d 1351, 1354 (Fed.
Cir. 2008) (internal quotation marks omitted).

PAI Corp. v. United States, 614 F.3d at 1351; see also Weeks Marine, Inc. v. United
States, 575 F.3d at 1368–69 (“We have stated that procurement decisions ‘invoke[ ]
“highly deferential” rational basis review.’ Under that standard, we sustain an agency
action ‘evincing rational reasoning and consideration of relevant factors.’” (quoting CHE
Consulting, Inc. v. United States, 552 F.3d at 1354 (quoting Advanced Data Concepts,
Inc. v. United States, 216 F.3d at 1058))).

A disappointed bidder has the burden of demonstrating the arbitrary and capricious
nature of the agency decision by a preponderance of the evidence. See Grumman Data
Sys. Corp. v. Dalton, 88 F.3d at 995–96; Davis Boat Works, Inc. v. United States, 111
Fed. Cl. at 349; Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. at 340.
The Federal Circuit has indicated that “[t]his court will not overturn a contracting officer’s
determination unless it is arbitrary, capricious, or otherwise contrary to law. To
demonstrate that such a determination is arbitrary or capricious, a protester must identify
‘hard facts’; a mere inference or suspicion . . . is not enough.” PAI Corp. v. United States,
614 F.3d at 1352 (citing John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300
(Fed. Cir. 1999)); see also Turner Constr. Co., Inc. v. United States, 645 F.3d at 1387;
Sierra Nevada Corp. v. United States, 107 Fed. Cl. 735, 759 (2012); Filtration Dev. Co.,
LLC v. United States, 60 Fed. Cl. 371, 380 (2004).

A bid protest proceeds in two steps. First . . . the trial court determines
whether the government acted without rational basis or contrary to law when
evaluating the bids and awarding the contract. Second . . . if the trial court
finds that the government’s conduct fails the APA review under 5 U.S.C.
§ 706(2)(A), then it proceeds to determine, as a factual matter, if the bid
protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351; FirstLine Transp. Sec., Inc. v. United
States, 119 Fed. Cl. 116, 126 (2014); Eco Tour Adventures, Inc. v. United States, 114
Fed. Cl. at 22; Archura LLC v. United States, 112 Fed. Cl. 487, 496 (2013). To prevail in
a bid protest case, the protestor not only must show that the government’s actions were
arbitrary, capricious, or otherwise not in accordance with the law, but the protestor also
must show that it was prejudiced by the government’s actions. See 5 U.S.C. § 706 (“[D]ue
account shall be taken of the rule of prejudicial error.”); see also Glenn Def. Marine
(ASIA), PTE Ltd. v. United States, 720 F.3d at 907 (“In a bid protest case, the inquiry is

55
whether the agency's action was arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law and, if so, whether the error is prejudicial.”) ; Linc Gov’t Servs.,
LLC v. United States, 96 Fed. Cl. 672, 694-96 (2010). Recognizing the two-step analysis
of bid protest cases, the United States Court of Appeals for the Federal Circuit has stated:

A bid protest proceeds in two steps. First . . . the trial court determines
whether the government acted without rational basis or contrary to law when
evaluating the bids and awarding the contract. Second . . . if the trial court
finds that the government’s conduct fails the APA review under 5 U.S.C. §
706(2)(A), then it proceeds to determine, as a factual matter, if the bid
protester was prejudiced by that conduct.

Bannum, Inc. v. United States, 404 F.3d at 1351. In describing the prejudice requirement,
the Federal Circuit also has held that:

To prevail in a bid protest, a protester must show a significant, prejudicial
error in the procurement process. See Statistica, Inc. v. Christopher, 102
F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d
1556, 1562 (Fed. Cir. 1996). “To establish prejudice, a protester is not
required to show that but for the alleged error, the protester would have
been awarded the contract.” Data General, 78 F.3d at 1562 (citation
omitted). Rather, the protester must show “that there was a substantial
chance it would have received the contract award but for that error.”
Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d
1567, 1574-75 (Fed. Cir. 1983) (to establish competitive prejudice, protester
must demonstrate that but for the alleged error, “‘there was a substantial
chance that [it] would receive an award--that it was within the zone of active
consideration.’”) (citation omitted).

Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.), reh’g denied
(Fed. Cir. 1999); see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d
at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d 1320, 1326 (Fed. Cir.), reh’g en
banc denied (Fed. Cir. 2011); Info. Tech. & Applications Corp. v. United States, 316 F.3d
at 1319; Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d at
1332-33; OMV Med., Inc. v. United States, 219 F.3d 1337, 1342 (Fed. Cir. 2000);
Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057; Stratos Mobile
Networks USA, LLC v. United States, 213 F.3d 1375, 1380 (Fed. Cir. 2000).

In Data General Corp. v. Johnson, the United States Court of Appeals for the
Federal Circuit wrote:

We think that the appropriate standard is that, to establish prejudice, a
protester must show that, had it not been for the alleged error in the
procurement process, there was a reasonable likelihood that the protester
would have been awarded the contract . . . . The standard reflects a
reasonable balance between the importance of (1) averting unwarranted
56
 interruptions of and interferences with the procurement process and (2)
ensuring that protesters who have been adversely affected by allegedly
significant error in the procurement process have a forum available to vent
their grievances. This is a refinement and clarification of the “substantial
chance” language of CACI, Inc.-Fed. [v. United States], 719 F.2d at 1574.

Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.), reh’g denied, en banc
suggestion declined (Fed. Cir. 1996); see also Glenn Def. Marine (ASIA), PTE Ltd. v.
United States, 720 F.3d at 912; Bannum, Inc. v. United States, 404 F.3d at 1353, 1358
(“The trial court was required to determine whether these errors in the procurement
process significantly prejudiced Bannum . . . . To establish ‘significant prejudice’ Bannum
must show that there was a ‘substantial chance’ it would have received the contract award
but for the [government’s] errors” in the bid process. (citing Info. Tech. & Applications
Corp. v. United States, 316 F.3d at 1319; Alfa Laval Separation, Inc. v. United States,
175 F.3d at 1367; Statistica, Inc. v. Christopher, 102 F.3d at 1581; Data Gen. Corp. v.
Johnson, 78 F.3d at 1562); see also Todd Constr., L.P. v. United States, 656 F.3d 1306,
1315 (Fed. Cir. 2011); Advanced Data Concepts, Inc. v. United States, 216 F.3d at 1057
(using a “reasonable likelihood” rule); Stratos Mobile Networks USA, LLC v. United
States, 213 F.3d at 1380 (using a “substantial chance” test); Archura LLC v. United
States, 112 Fed. Cl. at 496 (using a “substantial chance” test); Info. Scis. Corp. v. United
States, 73 Fed. Cl. 70, 96 (2006) (using a “substantial chance” test), recons. in part, 75
Fed. Cl. 406 (2007).

In the context of a pre-award bid protest, however, the protestor has to
demonstrate that it has 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 at 1383 n.7 (“[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. 792, 797 (2013). 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).

Protestor Palantir argues that, by failing to properly evaluate whether the Army’s
needs could be met by procuring commercial items, including commercial items identified
to the Army by Palantir, and, thereafter, by refusing to solicit either the data management
platform, or the entirety of DCGS-A Increment 2, as a commercial item, the Army violated
10 U.S.C. § 2377. Palantir raises related questions about the Army’s approach to the
procurement, including: “Did the Army violate § 2377(c) by failing to conduct market
research that was designed to determine whether there were commercial or
nondevelopmental items that could meet the Army’s requirements, and by assuming from
the outset that the procurement would be for a developmental contract?” Palantir also
asks: “Did the Army violate § 2377(c) by failing to analyze and failing to make any

57
determination as to whether modifications to existing commercial or nondevelopmental
items could fulfill the Army’s requirements?” and “[d]id the Army violate § 2377(c) by failing
to analyze and failing to make any determination as to whether modifications to its
requirements could be made that would allow the requirements to be fulfilled by
commercial or nondevelopmental items?”

The “Preference for acquisition of commercial items” statute, 10 U.S.C. § 2377,
states:
(a) Preference.--The head of an agency shall ensure that, to the maximum
extent practicable--

(1) requirements of the agency with respect to a procurement of supplies or
services are stated in terms of--

(A) functions to be performed;

(B) performance required; or

(C) essential physical characteristics;

(2) such requirements are defined so that commercial items or, to the extent
that commercial items suitable to meet the agency’s needs are not
available, nondevelopmental items other than commercial items, may be
procured to fulfill such requirements; and

(3) offerors of commercial items and nondevelopmental items other than
commercial items are provided an opportunity to compete in any
procurement to fill such requirements.

(b) Implementation.--The head of an agency shall ensure that
procurement officials in that agency, to the maximum extent practicable--

(1) acquire commercial items or nondevelopmental items other than
commercial items to meet the needs of the agency;

(2) require prime contractors and subcontractors at all levels under the
agency contracts to incorporate commercial items or nondevelopmental
items other than commercial items as components of items supplied to the
agency;

(3) modify requirements in appropriate cases to ensure that the
requirements can be met by commercial items or, to the extent that
commercial items suitable to meet the agency’s needs are not available,
nondevelopmental items other than commercial items;

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(4) state specifications in terms that enable and encourage bidders and
offerors to supply commercial items or, to the extent that commercial items
suitable to meet the agency’s needs are not available, nondevelopmental
items other than commercial items in response to the agency solicitations;

(5) revise the agency’s procurement policies, practices, and procedures not
required by law to reduce any impediments in those policies, practices, and
procedures to the acquisition of commercial items; and

(6) require training of appropriate personnel in the acquisition of commercial
items.

(c) Preliminary market research.--(1) The head of an agency shall
conduct market research appropriate to the circumstances--

(A) before developing new specifications for a procurement by that agency;

(B) before soliciting bids or proposals for a contract in excess of the
simplified acquisition threshold; and

(C) before awarding a task order or delivery order in excess of the simplified
acquisition threshold.

(2) The head of an agency shall use the results of market research to
determine whether there are commercial items or, to the extent that
commercial items suitable to meet the agency’s needs are not available,
nondevelopmental items other than commercial items available that--

(A) meet the agency’s requirements;

(B) could be modified to meet the agency’s requirements; or

(C) could meet the agency’s requirements if those requirements were
modified to a reasonable extent.

(3) In conducting market research, the head of an agency should not require
potential sources to submit more than the minimum information that is
necessary to make the determinations required in paragraph (2).

(4) The head of an agency shall take appropriate steps to ensure that any
prime contractor of a contract (or task order or delivery order) in an amount
in excess of $5,000,000 for the procurement of items other than commercial
items engages in such market research as may be necessary to carry out
the requirements of subsection (b)(2) before making purchases for or on
behalf of the Department of Defense.

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10 U.S.C. § 2377 (emphasis in original).
The regulation implementing 10 U.S.C. § 2377, 48 C.F.R. § 10.002, states:
(a) Acquisitions begin with a description of the Government’s needs stated
in terms sufficient to allow conduct of market research.

(b) Market research is then conducted to determine if commercial items or
nondevelopmental items are available to meet the Government’s needs or
could be modified to meet the Government’s needs.

(1) The extent of market research will vary, depending on such factors as
urgency, estimated dollar value, complexity, and past experience. The
contracting officer may use market research conducted within 18 months
before the award of any task or delivery order if the information is still
current, accurate, and relevant. Market research involves obtaining
information specific to the item being acquired and should include—

(i) Whether the Government’s needs can be met by—

(A) Items of a type customarily available in the commercial marketplace;

(B) Items of a type customarily available in the commercial marketplace with
modifications; or

(C) Items used exclusively for governmental purposes;

(ii) Customary practices regarding customizing, modifying or tailoring of
items to meet customer needs and associated costs;

(iii) Customary practices, including warranty, buyer financing, discounts,
contract type considering the nature and risk associated with the
requirement, etc., under which commercial sales of the products or services
are made;

(iv) The requirements of any laws and regulations unique to the item being
acquired;

(v) The availability of items that contain recovered materials and items that
are energy efficient;

(vi) The distribution and support capabilities of potential suppliers, including
alternative arrangements and cost estimates; and

(vii) Size and status of potential sources (see part 19).

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(2) Techniques for conducting market research may include any or all of the
following:

(i) Contacting knowledgeable individuals in Government and industry
regarding market capabilities to meet requirements.

(ii) Reviewing the results of recent market research undertaken to meet
similar or identical requirements.

(iii) Publishing formal requests for information in appropriate technical or
scientific journals or business publications.

(iv) Querying the Governmentwide database of contracts and other
procurement instruments intended for use by multiple agencies available at
https://www.contractdirectory.gov/contractdirectory/ and other Government
and commercial databases that provide information relevant to agency
acquisitions.

(v) Participating in interactive, on-line communication among industry,
acquisition personnel, and customers.

(vi) Obtaining source lists of similar items from other contracting activities
or agencies, trade associations or other sources.

(vii) Reviewing catalogs and other generally available product literature
published by manufacturers, distributors, and dealers or available on-line.

(viii) Conducting interchange meetings or holding presolicitation
conferences to involve potential offerors early in the acquisition process.

(c) If market research indicates commercial or nondevelopmental items
might not be available to satisfy agency needs, agencies shall reevaluate
the need in accordance with 10.001(a)(3)(ii) and determine whether the
need can be restated to permit commercial or nondevelopmental items to
satisfy the agency’s needs.

(d)(1) If market research establishes that the Government’s need may be
met by a type of item or service customarily available in the commercial
marketplace that would meet the definition of a commercial item at subpart
2.1, the contracting officer shall solicit and award any resultant contract
using the policies and procedures in part 12.

(2) If market research establishes that the Government’s need cannot be
met by a type of item or service customarily available in the marketplace,
part 12 shall not be used. When publication of the notice at 5.201 is

61
 required, the contracting officer shall include a notice to prospective offerors
that the Government does not intend to use part 12 for the acquisition.

(e) Agencies should document the results of market research in a manner
appropriate to the size and complexity of the acquisition.

48 C.F.R. § 10.002. The FAR also provides a definition of a “commercial item”:
Commercial item means-

(1) Any 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;

(2) Any item that evolved from an item described in paragraph (1) of this
definition through advances in technology or performance and that is not
yet available in the commercial marketplace, but will be available in the
commercial marketplace in item to satisfy the delivery requirements under
a Government solicitation;

(3) Any item that would satisfy a criterion expressed in paragraphs (1) or (2)
of this definition, 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. Minor
modifications means modifications that do not significantly alter the
nongovernmental function or essential physical characteristics of an item,
or component, or change the purpose of a process.

48 C.F.R. § 2.101 (2016).29
In general, 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). As noted above, this language in 28 U.S.C.

29The court notes that the United States Code at 41 U.S.C. § 103 provides a substantially
similar definition of commercial item. See 41 U.S.C. § 103 (2012).

62
§ 1491(b)(1) provides “a broad grant of jurisdiction because ‘[p]rocurement includes all
stages of the process of acquiring property or services, beginning with the process for
determining a need for property or services and ending with contract completion and
closeout.’” Sys. Application & Techs., Inc. v. United States, 691 F.3d at 1381 (quoting
Res. Conservation Grp., LLC v. United States, 597 F.3d at 1244 (quoting 41 U.S.C.
§ 403(2))) (emphasis in original); see also Distrib. Solutions, Inc. v. United States, 539
F.3d at 1346 (“[T]he phrase, ‘in connection with a procurement or proposed procurement,’
by definition involves a connection with any stage of the federal contracting acquisition
process, including ‘the process for determining a need for property or services.’”); Nat’l
Air Cargo Grp., Inc. v. United States, 126 Fed. Cl. 281, 289 (2016) (quoting 41 U.S.C.
§ 111 (2012)) (“[T]he term ‘procurement’ is itself broad, meaning ‘all stages of the process
of acquiring property or services, beginning with the process for determining a need for
property or services and ending with contract completion and closeout.’”). Therefore, so
long as “any stage” of the procurement is at issue, this court has jurisdiction to adjudicate
the protest.
The language of 10 U.S.C. § 2377(a) instructs that “[t]he head of an agency shall
ensure that, to the maximum extent practicable” the “requirements of the agency with
respect to a procurement of supplies or services are stated in terms of” the functions, the
characteristics, and the required performance, and that “offerors of commercial items and
nondevelopmental items other than commercial items are provided an opportunity to
compete in any procurement to fill such requirements.” 10 U.S.C. § 2377(a) (emphasis
added). As the statute contemplates that offerors of commercial items30 have an
opportunity to compete in any procurement, the court interprets an issue of 10 U.S.C.
§ 2377 to fall within the court’s bid protest jurisdiction and proper for consideration.
As an initial matter, the court notes that the application of 10 U.S.C. § 2377 has
not been squarely addressed in this court in the context of a bid protest.31 Turning to the

30Throughout this opinion, the court uses the shorthand of “commercial items” to refer to
“commercial items or nondevelopmental items.”
31 The statute, 10 U.S.C. § 2377, has been cited in two prior bid protests. See Alfa Laval
Separation, Inc. v. United States, 40 Fed. Cl. 215 (1998), rev’d, 175 F.3d 1365 (Fed. Cir.),
reh’g denied (Fed. Cir. 1999); Hydro Eng’g, Inc. v. United States, 37 Fed. Cl. 448 (1997).
In Alfa Laval, the United States Court of Federal Claims only cited 10 U.S.C. § 2377 in a
footnote for defendant’s statement that “one factor militating in favor of competitive
bidding” was 10 U.S.C. § 2377. See Alfa Laval Separation, Inc. v. United States, 40 Fed.
Cl. at 217 n.2. In Hydro Engineering, a decision by the undersigned, the protestor argued
that the United States Army's Chemical and Biological Defense Command “violated the
Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103–355, 108 Stat. 3243 (1994)
(FASA), as codified at 10 U.S.C. § 2377, by giving Centech [the awardee] a technical
advantage for its heating coil, which allegedly is a sole source part.” Hydro Eng’g, Inc. v.
United States, 37 Fed. Cl. at 473. In Hydro Engineering, this court noted that “not only is
10 U.S.C. § 2377 introduced by the words ‘to the maximum extent practicable,’ but the
solicitation also contemplated that the offerors could use sole source or proprietary parts”
in the designs. Id. at 474. The court did not discuss the degree of discretion afforded by
63
language of 10 U.S.C. § 2377, Palantir first focuses on the two instances of the phrase
“to the maximum extent practicable.” In 10 U.S.C. § 2377(a), the statute instructs: “The
head of an agency shall ensure that, to the maximum extent practicable . . . such
requirements are defined so that commercial items or, to the extent that commercial items
suitable to meet the agency’s needs are not available, nondevelopmental items other than
commercial items, may be procured to fulfill such requirements,” and “offerors of
commercial items and nondevelopmental items other than commercial items are provided
an opportunity to compete in any procurement to fill such requirements.” Id. In 10 U.S.C.
§ 2377(b), the statute requires that “[t]he head of an agency shall ensure that procurement
officials in that agency, to the maximum extent practicable,” “acquire commercial items or
nondevelopmental items other than commercial items to meet the needs of the agency,”
and “modify requirements in appropriate cases to ensure that the requirements can be
met by commercial items or, to the extent that commercial items suitable to meet the
agency’s needs are not available, nondevelopmental items other than commercial items.”
10 U.S.C. § 2377(b). Palantir argues that:
[T]he Army has a requirement for a Data Management Platform; Palantir
has a Data Management Platform that is available as a commercial item;
and the law requires the Army to meet its requirements through the
procurement of commercial items “to the maximum extent practicable.” 10
U.S.C. § 2377. Yet the Army chose to issue a Solicitation that makes it
impossible for Palantir to compete through a bid that meets the Army’s
requirements by supplying its commercial item. That is a blatant violation of
§ 2377.
Palantir further argues that: “The use of the word ‘maximum’ in the phrase ‘to the
maximum extent practicable’ cannot be ignored.” (footnote omitted). Defendant, by
contrast, argues that “[t]he language, ‘to the maximum extent practicable,’ qualifies all of
the agency’s responsibilities, e.g., its responsibility to define requirements in terms of
functions, performance, or essential physical characteristics, and its responsibility to
define requirements so that commercial items may be procured to fulfill such
requirements.”32 In addition, defendant argues, citing Hydro Engineering, Inc. v. United
States, 37 Fed. Cl. at 474, that “[t]his discretionary language – ‘to the maximum extent
practicable [sic] - qualifies the agency’s obligations.”
The phrases “to the maximum extent practicable” and “appropriate to the

the phrase “to the maximum extent practicable,” or specifically analyze the phrase.
Recently, this court also referred to 10 U.S.C. § 2377 in its prior standing decision in the
above captioned protest brought by Palantir USG, Inc. and Palantir Technologies Inc.
See Palantir Techs., Inc., et al. v. United States, 128 Fed. Cl. at 27.
32 Defendant makes a related argument, arguing that “the statutory provision that
addresses defining requirements and contains language that ‘requirements are defined
so that commercial or nondevelopmental items may be procured to fulfill such
requirements’ is qualified by the language ‘to the maximum extent practicable,’ which
acknowledges agency discretion.”
64
circumstances” in 10 U.S.C. § 2377 are not further defined in the statute or the
implementing regulations. Moreover, the same phrases “to the maximum extent
practicable” and “appropriate to the circumstances” in the context of 10 U.S.C. § 2377,
have not been judicially defined to date33 and are not easily subject to bright line tests.
Turning to dictionary definitions, “maximum” is defined as “as great, high or intense as
possible as permitted” New Oxford American Dictionary 1082 (3d ed. 2010); “practicable”
is defined as “able to be done or put into practice successfully,” id. at 1372; and
“appropriate” is defined as “suitable in the circumstance.” Id. at 77. Although these
dictionary definitions provide little further clarification, the words chosen by Congress
make it clear that a factual, case-by-case, compliance approach with the statutory dictate
that an agency consider commercially available alternatives is expected.

The court also notes that the specific word “maximum” was a deliberate choice by
Congress. In the House Report for the Federal Acquisition Streamlining Act of 1994, the
House of Representatives proposed the following language regarding the acquisition of
commercial items:

SEC. 111. PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS

Section 16 of the Office of Federal Procurement Policy Act (41 U.S.C. 414)
is amended by redesignating paragraphs (2), (3), and (4) in order as
paragraphs (3), (4), and (5), respectively, and by inserting after paragraph
(1) the following new paragraph:

(2) implement a preference for the acquisition of commercial items by–

(A) whenever practicable, stating specifications in solicitation for bids and
proposals in terms such that bidders and offerors are enabled and
encouraged to offer to supply commercial items in response to agency
solicitations[.]

H. Rep. 103-545(I), at 41 (1994), 1994 WL 261997 (emphasis added). By contrast, the
Senate Report first proposed the following language:

PREFERENCE FOR ACQUISITION OF COMMERCIAL ITEMS AND
NONDEVELOPMENTAL ITEMS

SEC. 33. (a) PREFERENCE.—The head of each executive agency shall
ensure that, to the maximum extent practicable—

(1) requirements of the executive agency with respect to a procurement of
supplies are stated in terms of—

33 The court notes, as the parties describe in their respective briefs, other courts have
discussed the phrase “maximum extent practicable” in other contexts. See, e.g., SMS
Data Products Grp. v. United States, 853 F.2d 1547 (Fed. Cir. 1988).

65
 (A) functions to be performed;

(B) performance required; or

(C) essential physical characteristics;

(2) such requirements are defined so that commercial items or, to the extent
that commercial items suitable to meet the agency’s needs are not
available, other nondevelopmental items may be procured to fulfill such
requirements; and

(3) offerors of commercial items and other nondevelopmental items are
provided an opportunity to compete in any procurement to fill such
requirements.

(b) IMPLEMENTATION.—The head of each executive agency shall ensure
that procurement officials in that executive agency, to the maximum extent
practicable—

(1) acquire commercial items or other nondevelopmental items to meet the
needs of the executive agency;

(2) require prime contractors and subcontractors at all levels under the
executive agency contracts to incorporate commercial items or other
nondevelopmental items as components of items supplied to the executive
agency;

(3) modify requirements in appropriate cases to ensure that the
requirements can be met by commercial items or, to the extent that
commercial items suitable to meet the agency’s needs are not available,
other nondevelopmental items[.]

S. Rep. 1587, at 282-83 (1994) (emphasis added). The House Conference Report, from
August 21, 1994, after both the House and the Senate Reports, adopted the approach of
the Senate Report, and crucially, adopted the phrase “maximum extent practicable.” The
House Conference Report stated:

SEC. 8104. PREFERENCE FOR ACQUISITION OF COMMERCIAL
ITEMS.

(a) In General.-Chapter 140 of title 10, United States Code, as amended by
section 8103, is further amended by adding after section 2376 the following
new section:

S 2377. Preference for acquisition of commercial items

66
 (a) Preference.-The head of an agency shall ensure that, to the maximum
extent practicable-

(1) requirements of the agency with respect to a procurement of supplies or
services are stated in terms of-

(A) functions to be performed;

(B) performance required; or

(C) essential physical characteristics;

(2) such requirements are defined so that commercial items or, to the extent
that commercial items suitable to meet the agency's needs are not
available, nondevelopmental items other than commercial items, may be
procured to fulfill such requirements; and

(3) offerors of commercial items and nondevelopmental items other than
commercial items are provided an opportunity to compete in any
procurement to fill such requirements.

(b) Implementation.-The head of an agency shall ensure that procurement
officials in that agency, to the maximum extent practicable-

(1) acquire commercial items or nondevelopmental items other than
commercial items to meet the needs of the agency;

(2) require prime contractors and subcontractors at all levels under the
agency contracts to incorporate commercial items or nondevelopmental
items other than commercial items as components of items supplied to the
agency;

(3) modify requirements in appropriate cases to ensure that the
requirements can be met by commercial items or, to the extent that
commercial items suitable to meet the agency's needs are not available,
nondevelopmental items other than commercial items[.]

H.R. Conf. Rep. 103-712, at 154 (1994), reprinted in 1994 U.S.C.C.A.N. 2607 (emphasis
added). The court notes that the language of the House Conference Report closely
tracked the final language of the Federal Acquisition Streamlining Act of 1994, and tracks
the language at 10 U.S.C. § 2377. The word “maximum” in the phrase “to the maximum
extent practicable,” therefore, should not be ignored and read out of the statute. Given
the congressional choice of the word “maximum,” even when coupled with words like
“practicable” and “appropriate,” agencies cannot ignore or superficially comply with the
requirement to review the availability of commercial products to meet agency needs as

67
the statute instructs agencies to make serious and genuine efforts to review the
availability of commercial products to meet their needs. Although the statute grants
discretionary authority to the agency, and agency discretionary authority can be the most
difficult kind of action to test in the courts, government contract law is replete with
challenges to the exercises of agency discretion as alleged to be arbitrary and capricious;
the current challenge to the implementation of 10 U.S.C. § 2377 is in the same category.

Separate from the “maximum extent practicable” language, the defendant’s briefs
submitted in this protest focus on the language of 10 U.S.C. § 2377(c) regarding market
research and emphasize the phrase: “The head of an agency shall conduct market
research appropriate to the circumstances,” to argue that the undertaken “market
research was clearly ‘appropriate in the circumstances.’” Palantir argues that “[t]he
Government asks this Court to render § 2377 a nullity,” regarding the “maximum extent
practicable” language, and that “the clause ‘appropriate to the circumstances’ does not
give the agency discretion to ignore § 2377(c)’s requirements.” (capitalization and
emphasis removed). As noted above, 10 U.S.C. § 2377(c) states:
(c) Preliminary market research.--(1) The head of an agency shall
conduct market research appropriate to the circumstances--

(A) before developing new specifications for a procurement by that agency;

(B) before soliciting bids or proposals for a contract in excess of the
simplified acquisition threshold; and

(C) before awarding a task order or delivery order in excess of the simplified
acquisition threshold.

(2) The head of an agency shall use the results of market research to
determine whether there are commercial items or, to the extent that
commercial items suitable to meet the agency’s needs are not available,
nondevelopmental items other than commercial items available that--

(A) meet the agency’s requirements;

(B) could be modified to meet the agency’s requirements; or

(C) could meet the agency’s requirements if those requirements were
modified to a reasonable extent.

(3) In conducting market research, the head of an agency should not require
potential sources to submit more than the minimum information that is
necessary to make the determinations required in paragraph (2).

(4) The head of an agency shall take appropriate steps to ensure that any
prime contractor of a contract (or task order or delivery order) in an amount
in excess of $5,000,000 for the procurement of items other than commercial

68
 items engages in such market research as may be necessary to carry out
the requirements of subsection (b)(2) before making purchases for or on
behalf of the Department of Defense.

10 U.S.C. § 2377(c) (emphasis in original).
The solicitation relevant to this protest was issued on December 23, 2015. As
discussed above, the Army did conduct its version of market research before issuing the
solicitation. Prior to the issuance of the solicitation, in July 2014, the DIVA Market Study
recommended as a “Potential Strategy: Phased Acquisition and Integration Approach:”
The acquisition approach could be structured in a phased manner. Initially,
the two foundation components (e.g., COTS [commercial off the shelf] cloud
infrastructure services and COTS DIVA ‘Turn Key’ Platform) could be
procured. Establish an integration effort to: integrate the COTS DIVA ‘Turn
Key’ platform with the COTS cloud infrastructure services; and integrate the
DCGS-A Enterprise data management architecture. This would establish a
baseline DCGS-A Increment #2 baseline – a core suite of applications and
analytics functions; a new Data Management Architecture.

(emphasis and capitalization removed). The DIVA Market Study explained that “[a] key
advantage of leveraging COTS cloud infrastructure services and a COTS DIVA platform
is that doing so provides a significant amount of technical infrastructure and end-user
capabilities.” (emphasis in original). Therefore, initially on the recommendation of the
MITRE Corporation, a not-for-profit research and development organization, the Army
was aware of a possible commercial approach for at least portions of the DCGS-A
Increment 2 procurement.34
The initial Request for Information, issued August 13, 2014, 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.” The
August 13, 2014 Request for Information, however, “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.” (emphasis added).
Instead of asking about commercial items, or asking more open-ended questions about

34 Subsequently, in the Army Materiel Systems Analysis Activity’s July 2015 Trade Space
Analysis, “the Hybrid alternative was rated Green and scored the highest of the three
alternatives.” As noted above, the Green designation indicated: “Low Risk of alternative
experiencing significant negative impacts to program cost, schedule, or performance.”
“Hybrid software option alternatives are currently functioning in the DoD IC and will only
require minor development to fill capability gaps. Upper bound COTS software solutions
provide similar ‘turn-key’ technical functionality as Hybrid software solutions.” As noted
in the Trade Space Analysis, Hybrid was “a compilation of commercially available
software packages augmented with integrated tools/widgets written by a third-party using
requirements/specifications generated by the Government (i.e., combination of COTS
and GOTS).”
69
the approach to the procurement, potential respondents only were asked about
developmental projects similar to the existing DCGS-A Increment 1 program.35
After the August 13, 2014 Request for Information, the Army issued a second
Request for Information on December 5, 2014, which “[w]as issued to determine ability of
individual companies to act as the prime contractor for the DCGS-A development effort.”
(emphasis added). “In addition, this RFI requests respondents’ specific answers
regarding the basic qualifications in managing software development projects that are
similar in scope and process to the DCGS-A program.” (emphasis added). As with the
first Request for Information, the Army’s focus in the December 5, 2014 Request for
Information was on “the DCGS-A development effort” and not on the possibility of
procuring commercial items. The goal of this second Request for Information was for the
Army to understand the respondent’s “development projects that are similar in scope and
process to the DCGS-A program.” (emphasis added). The May 6, 2015 Request for
Information, the third issued by the Army, stated, “this RFI requests respondents’ specific
answers regarding the basic qualifications in managing software development projects
that are similar in scope and process to the DCGS-A program.” (emphasis added). The
May 6, 2015 Request for Information also asked respondents: “For this RFI, the
Government seeks information regarding your corporate capabilities and experience
related to the delivery of capabilities as described” earlier in the May 6, 2015 Request for
Information. Like the previous two Requests for Information, the May 6, 2015 Request for
Information did not seek information for commercial items from the respondents,
suggesting to the court that the agency likely already had decided that the DCGS-A
Increment 2 was going to be another developmental project.

After the three Requests for Information, the Army generated the July 2015 Market
Research Report, which, although it was over fifty pages long, contained only two
sentences about “Commercial Services.” Regarding “Commercial Services,” the Market
Research Report stated in its entirety: “Significant portions of the anticipated Increment 2
scope of work such as Data Fusion, Intelligence Support to Cyber, and DIB upgrade are
not available as a commercial product. As such, the DCGS-A Increment 2 development
effort cannot be procured as a commercial product.” The Market Research Report also
separately discussed each respondent, and for Palantir, only stated: “The Palantir
response did not provide any examples of past experience relevant to the development

35 The focus on development is consistent with Ms. Shyu’s October 20, 2014
“Recommendation for a Change to the Distributed Common Ground System-Army
(DCGS-A) Increment 1 Acquisition Strategy” which sought to “[e]nd the Increment 1
program at Release 2, remove Release 3 from the program plan, and allocate the
remaining Research, Development, Test and Evaluation (RDT&E) funds to . . . Initiate
Increment 2 preparatory activities.” The October 20, 2014 Recommendation also stressed
that “moving forward with Increment 2 efforts as soon as possible will provide a higher
return on investment on the limited RDT&E funds currently available.” Therefore, the
focus of the Recommendation was on development and the use of Research,
Development, Test and Evaluation funds, rather than on consideration of purchasing
commercial items to meet the agency’s needs.

70
of Increment 2, and was therefore found non-responsive.” (emphasis added). Just as the
Market Research Report dismissed a commercial product approach, the Army’s focus on
Palantir’s short comings centered on Palantir’s lack of experience related to development.
The focus on development continued as reflected in the draft Performance Work
Statement distributed by the Army in July 2015. The Scope of the Performance Work
Statement begins:
This Performance Work Statement (PWS) defines the efforts required for
the acquisition of services for the development and integration of Distributed
Common Ground System – Army (DCGS-A) Increment 2, Engineering,
Manufacturing and Development (DCGS-A INC2 EMD). The requirements
for Increment 2, EMD include, 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), Weather, Geospatial
Intelligence (GEOINT) and Sensor Management.
(emphasis added).
Furthermore, the July 1, 2016 “DETERMINATION OF NON-COMMERCIAL ITEM”
(capitalization in original; emphasis removed), authored by Contracting Officer
Christopher Fisher for the solicitation at issue, and Bryon Young, the Principal Assistant
Responsible for Contracting, stated that regarding the market research, the three “RFIs
were to canvas the market and determine the availability of commercial/non-
developmental items/services available for satisfying the DCGS-A’s Increment 2
requirements.” The Determination of Non-Commercial Item continued:
Based upon market research conducted by Program Manager (PM) DCGS-
A, I find that some commercial software applications exist that could
potentially satisfy portions of the DCGS-A Increment 2 requirement. The
market research showed that significant portions of the scope of work, such
as, the military unique capabilities classified up to the Top Secret level
needed to meet the requirements associated with Signals Intelligence
(SIGINT), Human Intelligence (HUMINT), Military Weather, Interoperability,
Data Fusion, Intelligence Support to Cyber, and DCGS Integrated
Backbone (DIB) upgrade are not available as commercial items.

The Determination of Non-Commercial Item concluded:
I find, based upon the requirements of this procurement and the market
research performed, that this requirement is not appropriate as a
commercial item procurement because no single commercial item of a type
customarily used by the general public or one that can meet the
Government’s requirement through minor modification is available; nor is
there a combination of commercial items that can satisfy the DCGS-A
Increment 2 requirement.

71
 Palantir argues that “the Army felt the need to create and execute such a document
after Palantir filed its lawsuit reveals that the Army knew it had not made the
‘determinations’ required by § 2377(c),” (first emphasis in original; second emphasis
added). The court notes that, certainly, the timing is unusual. The Determination of Non-
Commercial Item,36 was made the day after the protest was filed in this court. Defendant
attempts to argue that the Determination of Non-Commercial Item could be made any
time, and asserts that “there is no statutory language addressing the documentation of
agency determinations based on market research, and the implementing regulation, FAR
10.002(e), does not require that such determinations must be documented, or that they
must be documented before issuance of a solicitation.” The court agrees that there is not
a specific documentation requirement in 10 U.S.C. § 2377 or the implementing
regulations, but disagrees with defendant that “the July 1, 2016 D&F was not a post-hoc
document as asserted by Palantir.” (emphasis in original). The direction of a
developmental approach and conclusion that no commercial items were available to meet
the Army’s requirements was evident in the October 21, 2015 Determination & Findings
for “Award of a Single Source Indefinite-Delivery Indefinite-Quantity (IDIQ) Single Award
Contract Exceeding $103M for Distributed Common Ground System (DCGS)-Army
Increment 2, Engineering Manufacturing and Development IAW DFARS
216.504(c)(1)(ii)(D)(i),” signed by Ms. Shyu. And, clearly, when the Army issued Request
for Proposals No. W56KGY-16-R-0001 for engineering, manufacturing, and development
services, seeking a single contractor to be the system data architect, developer, and
integrator of DCGS–A Increment 2, the decision that no suitable commercial items were
available was definitively made. Furthermore, although there is a not a documentation
requirement in 10 U.S.C. § 2377, the Army cannot point to any contemporaneous
document issued before the solicitation was issued that demonstrates that, in compliance
with 10 U.S.C. § 2377, the Army had carefully considered whether commercial items were
available. The absence of any determination or indication that the Army had seriously
considered whether a commercial item was available at any point in the procurement
process, prior to the issuance of the solicitation, together with the numerous documents
in the Administrative Record documenting the choice for a developmental approach, is a
strong indication that the Army had not met the requirements of 10 U.S.C. § 2377 prior to
the July 1, 2016 Determination of Non-Commercial Item, which, as noted above, was
issued after the closing date of the solicitation.

Even if the court were to consider the July 1, Determination of Non-Commercial
Item as timely, it does not meet the requirements of compliance with 10 U.S.C. § 2377.
Palantir argues that “[t]he July 1, 2016 Declaration appears to be merely parroting what
the July 13, 2015, Summary of Market Research found. That document used exactly the
same words—with exactly the same lack of any support whatsoever – in making the
unsubstantiated assertion about the unavailability of commercial or nondevelopmental
items.” (internal citation omitted). The court agrees that the language in the determination
mirrors that of the Market Research Report, and, although slightly longer, the court agrees

36 Although defendant refers to the July 1, 2016 document as a “D&F” the July 1, 2016
document is titled: “DETERMINATION OF NON-COMMERCIAL ITEM.” (capitalization in
original; emphasis removed).

72
with Palantir that “[t]here is no evidence . . . to support this repeated assertion” of the
unavailability of a commercial item sufficient to meet the Army’s needs. Although the
Determination of Non-Commercial Item cites the Requests for Information to support the
finding that a commercial item was not available, the Administrative Record reflects that
even the first Request for Information was seeking information for “development projects,”
and, therefore, the court does not consider the Requests for Information as demonstrable
evidence that no commercial items were available. This is consistent with all the market
research, and, on balance, the court disagrees with defendant that the market research
was “clearly appropriate” to the circumstances. The focus of the market research was
only on development and did not consider the possibility of commercial or
nondevelopmental items. Although it is perhaps laudable that the Army issued three
separate Requests for Information, as well as held multiple Industry Days, all of the
market research appears to have been designed to elicit responses about the offerors
developmental capabilities and did not address commercial items or seek information
from respondents about their commercially available products even after commercially
available alternatives were suggested to the Army in responses to the Requests for
Information. The market research, therefore, was not appropriate for the circumstances
because the market research did not appear to examine what, if any, commercial items
were available.
As stated above, the standard articulated in the implementing regulations, after the
needs of the agency are identified, is “[m]arket research is then conducted to determine
if commercial items or nondevelopmental items are available to meet the Government’s
needs or could be modified to meet the Government’s needs.” 48 C.F.R. § 10.002. As
noted above, 10 U.S.C. § 2377(c)(2) provides that—
The head of an agency shall use the results of market research to determine
whether there are commercial items or, to the extent that commercial items
suitable to meet the agency’s needs are not available, nondevelopmental
items other than commercial items available that--

(A) meet the agency’s requirements;

(B) could be modified to meet the agency’s requirements;

(C) could meet the agency’s requirements if those requirements were
modified to a reasonable extent.

10 U.S.C. § 2377(c)(2) (emphasis in original).37 There does not appear to be any
contemporaneous document in the Administrative Record, nor did defendant credibly

37As discussed below, as it relates specifically to Palantir, defendant argues that even if
Palantir has a commercial item, it required too many modifications to meet the Army’s
needs. The court concludes, however, that the Army did not make even an initial
determination of what commercial items might be available, much less whether or not the
73
argue that any such document exists, which evidences that the Army used the results of
the market research to determine whether there were, in fact, commercial items available.
Even if the statute did not state to the “maximum extent practicable,” or the language to
the “maximum extent practicable,” allows for the broadest of discretion, as defendant
appears to allege, or even if the only direction to agencies was to do what was
“appropriate to the circumstances,” the Army would not have met its burden to determine
if commercial items were available to meet the Army’s needs pursuant to 10 U.S.C. §
2377.
Defendant suggests that “Palantir asserts that the statute deprives the Army of
discretion to define its requirements as it wishes.” As a defense to the approach the Army
took with the procurement at issue, defendant claims “agencies have substantial
discretion to determine how best to acquire their requirements,” and cites to Lockheed
Missiles & Space Co. for the proposition that “[e]ffective contracting demands broad
discretion.” (citing Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d at 958; emphasis
removed).38 The defendant also contends that Palantir fails to meet its heavy burden of
demonstrating that the Army’s substantial discretion was abused, or that there was any
clear and prejudicial violation of statutes or regulations.” Defendant cites to Savantage
Financial Services, Inc. v. United States, 595 F.3d 1282, for the proposition that a
protestor has the burden to show an agency decision “is so plainly unjustified as to lack
a rational basis.” Id. at 1287. Although the Army has substantial procurement discretion,
it still must act in a rational, and legally compliant way when determining its requirements,
including that the agency must comply with 10 U.S.C. § 2377.

In Savantage Financial Services, Inc. v. United States, the protestor challenged
“the terms of a request for proposals from the Department of Homeland Security. . . . The
request sought proposals to implement an agency-wide financial, acquisition, and asset
management system. The request required proposers to offer a system that is integrated
and currently fully operational within the federal government.” Savantage Fin. Servs., Inc.
v. United States, 595 F.3d at 1284 (internal reference omitted). By way of background,
the Federal Circuit noted that:

DHS was established in 2003 through the merger of 22 federal agencies.
As a result of the merger, DHS inherited five different financial management
software systems and a number of different acquisition management and
asset management systems. The use of different financial systems within
the agency has caused logistical difficulties and has been the subject of
criticism and concern from federal auditors and lawmakers. As a result,
DHS has devoted considerable effort to obtaining an integrated financial,
acquisition, and asset management system. In January 2004, DHS

existing commercial items, such as Palantir’s, could have been utilized or modified to
meet the Army’s needs.
38The proposition is a generally accepted principle for bid protests, but it does not offer
unlimited discretion, as discussed above.

74
 launched its first effort to integrate its financial systems through a project
entitled Electronically Managing Enterprise Resources for Government
Effectiveness and Efficiency (eMerge2). The plan underlying the eMerge2
project was to purchase commercial off-the-shelf software products and to
integrate them so as to facilitate communication among all the Department’s
components. That project was a complete failure; in December 2005, after
spending $52 million with no discernible results, the agency abandoned the
eMerge2 program.

Id. (footnote omitted). After the agency in Savantage attempted an improper sole source:

DHS spent 10 months conducting market research regarding the integration
and implementation of financial systems in an effort to develop a new
solicitation. The result was a new request for proposals, issued on January
9, 2009, and amended on February 14, 2009. The new request sought a
financial, acquisition, and asset management system that “will be provided
as an integrated solution that is currently fully operational in the Federal
government.”

Id. at 1285. Before the Federal Circuit, the Savantage protestor claimed that “by requiring
a system that is integrated and currently operational in the federal government, the new
solicitation unduly restricts competition. Savantage contends that DHS’s attempts to
justify those requirements are based on conclusory statements lacking factual support in
the administrative record.” Id. After noting that agencies have discretion and procurement
decisions are subject to highly deferential review, the Federal Circuit determined:

With respect to the requirement that the system be integrated, we agree
with the trial court that it is “logical that [DHS] would want to ensure its
success by seeking a fully integrated system, both on the basis of its own
experiences and those of other agencies and departments.” Savantage II,
86 Fed. Cl. at 706. As the administrative record amply shows, the failure of
DHS’s own eMerge2 project—largely due to the contractors’ inability to
provide functional integration among components—underscored the risks
of building an entirely new system using separate, unintegrated, off-the-
shelf components. Internal DHS documents indicate that the Department
responded to that failure by rejecting a piecemeal approach and electing to
acquire a core financial system pre-integrated with other key systems. As
we have held, an agency “has no obligation to point to past experiences
substantiating its concerns in order to survive rational basis review . . . [as
CICA does not require the agency] to supply a historical record of failures
to substantiate a risk.”

Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1286 (quoting CHE Consulting,
Inc. v. United States, 552 F.3d 1351, 1355 (Fed. Cir. 2008)). The Federal Circuit
continued:

75
 On a question such as whether to implement a pre-integrated system or to
build a system by beginning with a core financial system and then
integrating other systems afterwards, an agency’s preferences are entitled
to great weight. As the trial court noted, “competitors do not dictate an
agency’s minimum needs, the agency does.” Savantage II, 86 Fed. Cl. at
706. And determining an agency’s minimum needs “is a matter within the
broad discretion of agency officials . . . and is not for [the] court to second
guess.” Wit Assocs., Inc. v. United States, 62 Fed. Cl. 657, 662 (2004). We
agree with the trial court that Savantage has failed to meet its burden of
showing that the agency’s decision to require a fully integrated system is so
plainly unjustified as to lack a rational basis.

Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1286-87. Although defendant
points to Savantage for support that it does not have to substantiate “its concerns in order
to survive rational basis review,” as noted above, there is a deficit in the Administrative
Record in the above captioned protest of information to contemporaneously demonstrate
how the Army reached the decision not to pursue commercial items.39

Although, as discussed above, 10 U.S.C. § 2377 does not have an explicit
requirement to, or how to, document a decision after proper consideration of whether
there are commercially available alternatives, in order to “survive rational basis review,”
the agency must be able to demonstrate how it rationally reached its decision. The limited
information included in the Requests for Information, the Market Research Report, or
even in the July 1, 2016 Determination, does not meet the minimal requirement of
demonstrating that the defendant conducted a genuine inquiry that could enable it to
reach a rational conclusion not to consider commercial items, even after Palantir had
urged the Army to consider its product as a commercially available alternative. The statute
at 10 U.S.C. § 2377 requires “[t]he head of an agency shall use the results of market
research to determine whether there are commercial items.” As noted above, the Market
Research Report only 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 product. As such, the DCGS-A

39The court notes that the facts and history in each bid protest are unique. In Savantage,
the prior procurement involved a plan to “purchase commercial off-the-shelf software
products and to integrate them so as to facilitate communication among all the
Department’s components,” and, as the Federal Circuit noted: “That project was a
complete failure.” Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1284.
Regarding the DCGS-A Increment 2 procurement, the procurement indicated that it seeks
to build on Increment 1 which is “fully operational,” but its “data architecture is over 10
years old and is based upon technology that is nearing obsolescence, with no growth
margin.” Unlike the plan in Savantage to purchase “commercial off-the-shelf software
products,” as alleged in the complaint in this protest, “[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.”

76
Increment 2 development effort cannot be procured as a commercial product.”40 This
language in the Market Research Report is conclusory, and without any examples or
support for the conclusions. The Market Research Report does not identify which
respondents indicated commercial items were available, that Palantir had repeatedly tried
to inform the Army of its capabilities to provide a commercial item, or that Palantir did, in
fact, provide commercial items to other Department of Defense agencies.

In addition to requiring that an agency use the results of market research to
determine whether there are commercial items available, 10 U.S.C. § 2377(c)(2),
indicates that:

[T]o the extent that commercial items suitable to meet the agency’s needs
are not available, nondevelopmental items other than commercial items
available that--

(A) meet the agency’s requirements;

(B) could be modified to meet the agency’s requirements; or

(C) could meet the agency’s requirements if those requirements were
modified to a reasonable extent.

10 U.S.C. § 2377(c) (emphasis in original). Not only did the agency fail to explain or
indicate what commercial items possibly were available or had been considered, the
Market Research Report is devoid of any information regarding the possible commercial
items that could be modified to meet the Army’s requirements. As discussed below,
defendant now claims that Palantir’s data management platform would require too many
modifications to meet the agency’s needs, however, there is no evidence that the agency
made such a determination after the market research was complete or prior to issuing the
solicitation. The total absence of any discussion regarding commercial items, or possible
modifications to commercial items, reinforces the court’s understanding that the Army
was focused on a developmental approach to the DCGS-A Increment 2 at an early point
in the procurement process, to the exclusion of commercially available alternatives.
Therefore, the Army did not comply with the requirements of 10 U.S.C. § 2377.

Defendant also cites to a pre-award decision in Tyler Construction Group v. United
States, in which the United States Army Corps of Engineers used “Indefinite
Deliver/Indefinite [sic] Quantity Contracts . . . for the design and construction of military

40 Although the Market Research Report specifically mentioned Palantir, in the “RFI
Respondent Capability Assessment,” the Report only stated “[t]he Palantir response did
not provide any examples of past experience relevant to the development of Increment
2, and was therefore found non-responsive.” (emphasis added). In addition to providing
a cursory statement on the decision-making process regarding available commercial
items, the Market Research Report also was searching only for evidence of past
performance related to development.

77
buildings (barracks and related structures) in an eight-state area in the southeastern
United States.” Tyler Constr. Grp. v. United States, 570 F.3d at 1330 (internal reference
omitted). The Tyler protestor, which did not submit a proposal in response to the
solicitation, id. at 1331, contended that “the FAR does not authorize the use of IDIQ
contracts for a major construction project,” relying on “the anti-bundling provision of the
Small Business Act, 15 U.S.C. § 631(j)(3), which requires ‘each Federal agency’ to ‘avoid
unnecessary and unjustified bundling of contract requirements that precludes small
business participation in procurements as prime contractors,’ and the similar limitation on
‘consolidation’ of procurement in 10 U.S.C. § 2382(a).” Tyler Constr. Grp. v. United
States, 570 F.3d at 1332. The Federal Circuit noted:

The Corps was faced with an unusually large and novel procurement that
had to meet the Army’s unusual and demanding standards and
requirements. The Army was seeking what the Corps viewed as “a
fundamental change in military construction strategy designed” to make the
Army “a more modular expeditionary and effective fighting force.” Tyler
Constr. Group., 83 Fed. Cl. [94], 95 [(2008)]. The Army’s new approach to
housing construction required a 20% reduction in cost and a 30% reduction
in the time required until the facilities could be occupied.”

Tyler Constr. Grp. v. United States, 570 F.3d at 1333-34. In light of the unusually large
and novel procurement,

the Corps carefully studied, analyzed and evaluated the situation. It
conducted a research program which included a nationwide forum, four
regional fora, and “a specialized forum with representatives of the pre-
fabricated/pre-engineered/modular construction industry, as well as the
implementation of an internet-based research questionnaire.” Tyler Constr.
Group, 83 Fed. Cl. at 96. The Corps concluded that there was “an industry
consensus that the successful execution of its construction program would
require an emphasis on standardization and economies of scale.”

Tyler Constr. Grp. v. United States, 570 F.3d at 1334. The Federal Circuit determined:

As we have noted, the Corps conducted extensive market research before
determining that consolidation of the procurement requirements was
“necessary and justified.” We agree with the Court of Federal Claims that
the Corps has demonstrated that the consolidation of the contract
requirements was necessary and justified within the meaning of the relevant
statutes . . . the Corps’ choice of acquisition strategy was dictated by an
industry consensus that successfully meeting the Army’s goals in
construction costs and time would require a departure from the Corps’
traditional “one project at a time” approach in favor of an acquisition strategy
that maximized economies of scale. Given the Corps’ extensive market
research and its detailed analysis of the issue, we can find no fault with the
Corps’ decision to rely on the industry’s counsel.

78
Id. at 1335 (quoting Tyler Constr. Grp. v. United States, 83 Fed. Cl. at 103) (emphasis in
original). Therefore, the Federal Circuit determined:

The Corps, like other federal procurement entities, has broad discretion to
determine what particular method of procurement will be in the best
interests of the United States in a particular situation. The Corps did not
abuse that discretion in concluding that in the situation here, the use of IDIQ
contracts to obtain this large military construction was the most appropriate
method of proceeding and therefore best served the interests of the United
States. Nor did the Corps violate or ignore any statutory or regulatory
requirements, prohibitions or standards in so acting.

Id. at 1334. In the protest currently before the court, the Army did market research,
including three Requests for Information, Industry Days, and one-on-one meetings with
potential respondents and generated reports based on the information that it learned from
its market research. Unlike the Corps in Tyler, in the procurement now at issue before the
court, the Army did not comply with the requirements of 10 U.S.C. § 2377, and did not
evaluate whether a suitable commercial item could meet the agency’s needs, even after
protestor Palantir attempted to offer such an alternative.

The court notes that the facts in the above captioned bid protest are unique and
distinguishable from the facts in Savantage and Tyler Construction. While the record in
Savantage demonstrated that the agency made multiple attempts to satisfy its
requirements by using different procurement methods, including a commercial item and
an attempted sole source approach, the Administrative Record in the above captioned
protest demonstrates that the Army has been singularly focused on a developmental
procurement. As also alleged in the complaint in this protest, “[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.” Similar
to Savantage, in Tyler Construction, the agency demonstrated a genuine interest and
openness to using the procurement approach that would best meet its needs for building
and designing military buildings. The record in Tyler Construction indicated that the
agency conducted market research and pursued industry input before deciding on the
procurement method to use. Distinguishable from the agencies’ actions in Savantage and
Tyler Construction, in this bid protest, the Army conducted market research based on the
presumption that the procurement would be developmental and the procurement
decisions that followed were based on the same presumption to the exclusion of
consideration of commercially available alternatives, even when such possible
commercial items were identified to the Army.

In a supplemental brief, defendant argues that “[t]he market research
demonstrated that only one industry respondent, [redacted], other than Palantir,
supported reliance on GSA Schedule 70, applicable to commercial items, and
recommended Increment 2 be procured utilizing commercial procedures.” The number of
respondents supporting a development approach or the number trying to offer a

79
commercially available alternative is irrelevant. Regardless if only two companies
suggested commercial alternatives might be available, whether accurate or not, the Army
was obligated, pursuant to 10 U.S.C. § 2377, to investigate, determine, and conclude
whether an appropriate commercial item was available for all or part of the procurement.
In fact, defendant’s argument demonstrates that the Army was aware that commercial
items were potentially available. The statute at 10 U.S.C. § 2377 instructs that that the
Army should investigate whether commercial items to meet the agency’s needs are
available, or could be modified. This obligation is especially true if respondents such as
Palantir or [redacted] identify such a possibility during the agency’s own market research.
As demonstrated above, the Army did not determine what commercial items were
available or could be modified to meet the agency’s needs, and, therefore, did not properly
comply with 10 U.S.C. § 2377.

In this protest, the government was on notice that, at a minimum, at least two
respondents claimed to have a commercial item to meet the Army’s requirements. The
Administrative Record reflects that Palantir repeatedly tried to inform the Army of its
capabilities to provide a commercial item. In its response to the draft Performance Work
Statement, and in response to the May 6, 2015 Request for Information, Palantir
communicated to the Army that, “[i]n cooperation with the government, Palantir fields and
manages 25 Palantir deployments at every major Marine Corps command, representing
over 15,000 accounts at peak usage across the Marine Intelligence community.” Palantir
also claimed that such usage is currently employed “by tens of thousands of users across
the DOD and IC” in order to further inform the Army of a commercial option for the
procurement instead of the Army’s developmental approach. In Palantir’s response to the
August 13, 2014 Request for Information, Palantir stated:

The acquisition cycle should fully leverage existing commercial solutions.
Prioritizing the rapid procurement of commercial capabilities minimizes the
anticipated scope of development needed to deliver Increment 2
capabilities. Narrowing the development scope requires expanding the use
of commercially available COTS capabilities—it does not require narrowing
the overall scope of the DCGS-A program. 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.

(footnote omitted; emphasis in original). Palantir also emphasized, “we recommend the
Government pursue a different acquisition strategy than the strategy behind the
Increment 1 challenges.” Then, in response to the December 5, 2014 Request for
Information, Palantir reiterated its belief in its ability to offer a commercially available
alternative to the developmental approach chosen by the Army for the procurement, as
an alternative to the Army’s apparent developmental approach, explaining to the Army
that:

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

80
 and within budget. We are concerned that the present RFI, DCGS-
A_INC2_RFI2, is focused on collecting information on each respondent’s
ability 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.

Moreover in response to the question in the December 5, 2014 Request for Information:
“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,” Palantir stated:

Our commercially developed data integration and analytic platform is
designed for use in a variety of use cases and domains across our
commercial and government clients. We have provided our solution in
support of many of the domains listed under “Software Solutions or Services
Delivered” for our deployments with Army, DoD, and the IC. However, the
request for information on software services contracts performed across
USG is not relevant to an acquisition strategy targeting a COTS-based
solution. If the Government has questions on how our platform functionally
fulfills the specific domains, we would be happy to provide demonstrations
or arrange a discussion.

Palantir again encouraged the Army to consider a commercial approach in its
response to the May 6, 2015 Request for Information, stating:

We believe the Government should select a proven solution that is
measured on metrics derived from operational success. The data
integration, visualization and analytic environment required for Increment 2
should use a fielded commercial solution that is accredited to operate on all
necessary networks and is open and interoperable with the standards
relevant to the DoD, IC, and commercial industry.

In its response to the May 6, 2015 Request for Information, Palantir also stressed that the
Army might be too focused on a developmental approach at the expense of a commercial
one, observing that:

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.[41]

41 Palantir also posed a question to the Army in its response to the May 6, 2015 Request
for Information:

81
In each of the three responses to the Requests for Information, Palantir tried to convey to
the Army that it could offer a commercial solution, and, in its view, that such was a
preferable option to the developmental approach the Army was seemingly intent on
pursuing.

The court notes that defendant argues that “Palantir USG responded to RFI No.2,
but declined to answer question 3.0(d) in RFI No.2 or complete the Army’s chart and
identify its specific capabilities across the various DCGS-A domains listed.” Defendant
also points out that “Palantir USG declined to answer question 3.0(f) in RFI No.2,” and
that “Palantir USG declined to answer question 3.0(h) in Request for Information No.2.”
Palantir responded 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,” and
argues that “[t]here was no reason to do so again.” (emphasis in original; internal citations
omitted). The court agrees with Palantir that the Army’s request was more specific than
just identifying specific capabilities as Question 3.0(d) 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,” and the headings of the table were:
Software Government Agency or % of Work Period of Prime Contract If you have no
Solutions or POC for this Gov’t Performed Performance or Number experience have
Services work (email/ Customer Sub / Value you partnered
Delivered: phone No.) with anyone with
experience
(Company
Name)?

Even if the court were to agree with defendant that Palantir did not fully respond to
Question 3.0 of the December 5, 2014 Request for Information, that does not remove the
Army’s obligation to comply with 10 U.S.C. § 2377. Moreover, Palantir had already made
its views on the availability of commercial items appropriate to this procurement clear in
response to the August 13, 2014 Request for Information, and would do so again in
response to the May 6, 2015 Request for Information. Furthermore, in response to the
December 5, 2014 Request for Information, which defendant characterizes as
incomplete, as noted above, Palantir still emphasized: “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,” and, in response to Question 3.0, Palantir

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?
82
highlighted “[o]ur commercially developed data integration and analytic platform is
designed for use in a variety of use cases and domains across our commercial and
government clients.”

The defendant also points out that in the Market Research Report, the Army stated
“[t]he Palantir response did not provide any examples of past experience relevant to the
development of Increment 2, and was therefore found non-responsive.” The court first
notes that of the 43 respondents to the December 5, 2014 Request for Information, the
only one the Market Research Report labeled as “non-responsive” was Palantir.
Moreover, the language of the Market Research Report reinforces the court’s view that
the Army was focused only on a developmental approach, and not on commercially
available alternatives. Although Palantir was labeled “non-responsive” because it did not
provide past performance examples related to the development of DCGS-A Increment 2,
Palantir’s goal during the entire market research process was to try to highlight for the
Army the availably of its products on a commercial basis, not to provide examples of
development contracts. The court notes that in its October 2015 response to the draft
Performance Work Statement, Palantir was its most blunt:

The Army has had multiple opportunities to change the strategy for
Increment 2, satisfy Congressional intent, and deliver working technology
to soldiers in months, not years. The Army should alter its strategy for
Increment 2 to reflect the following realities:

1. The first priority of Increment 2 should be the rapid delivery of a
foundational data platform;

2. The Army does not need to build that platform, as it can buy it today; and

3. The Army should use FAR Part 12 commercial contract structures to buy
this platform.

Concurrently, in its response to the draft Request for Proposals in October 2015, Palantir
also bluntly informed the Army:

The Army has not corrected critical deficiencies in the overall acquisition
structure of Increment 2. As written, Increment 2 will commit the Army to an
acquisition strategy that will prevent companies with commercially available
technologies from direct participation in the program. Increment 2 will
commit the Army to the same lengthy, high-risk development effort that
failed in Increment 1. We have offered our feedback to program leadership
at every step of the Increment 2 process because we want the Army to
succeed. But ultimately it is not in our interest or in the Army’s interest for it
to commit to a program that so clearly violates fundamental principles of
successful enterprise software delivery.

83
 In addition, the Administrative Record reflects three separate Operational Needs
Statements requesting Palantir’s data management platform. Two of the Operational
Needs Statements were from 2014, and the most recent request, from the [redacted],
was from February 2015. The February 2015 request was from [redacted] requesting the
Palantir Gotham Platform, stating that “[t]he Palantir Command platform is a proven
capability that is currently in use to provide COP, data integration, and staff integration
capabilities across multiple commercial and government organizations,” and concluding
that “Palantir Technologies, Inc. offers a solution that meets all of our requirements and
has fielded the same platform across multiple units [redacted], as well as various U.S.
Government agencies.”

The Army was, or should have been, aware of Palantir’s data management
platform from the requests from other Department of Defense personnel who were
utilizing the Palantir product, or seeking permission to use Palantir’s data management
platform, as well as from Palantir’s submissions in response to the Requests for
Information. Also included in the Administrative Record before this court are numerous
contracts with the Department of Defense and other federal agencies for which Palantir’s
data management platform was utilized. Regarding the Department of Defense contracts
which utilized Palantir’s product, the contracts could have, or should have, been
identifiable by the Army, during the market research process and known, as well as
reviewed by the Army, before it made a determination that no commercial item was
available to meet the agency’s needs.42 The Administrative Record also reflects that, at
a minimum, the Army was aware of at least three such contracts, as shown in Palantir’s
response to the August 13, 2014 Request for Information, in which Palantir asserted that
“[t]he most cost-effective and lowest-risk procurement approach is the acquisition of an
open architecture data fusion platform through open competition for an existing software
solution at a Firm-Fixed Price (FFP),” and informed the Army:

Examples of FFP contracts include our work at the U.S. Marines [sic] Corps,
where enhancements are included as part of our regular software releases
and small business [sic] fulfill highly custom development requests by
building the top of the foundation layer. Likewise, U.S. Immigration and
Customs Enforcement continues to expand Palantir capabilities through a
FFP contract that includes regular software updates and custom
enhancements requiring less than a set number of development hours.
More recently, following open competition, we were awarded a BPA
[Blanket Purchase Agreement] for the IC ITE expansion at DIA [Defense
Intelligence Agency] available to all IC [intelligence community] agencies
and affording a COTS solution at a FFP.[43]

42The court notes that two of the contracts included in the Administrative Record were
executed in 2016, and, therefore, after the market research was conducted and after the
solicitation was issued.
43The court also points out that the parties in this litigation have stipulated that “[t]he
Palantir Gotham Platform is a Data Management Platform that is licensed to customers
on a commercial item basis,” and that “[g]overnment agencies have procured the Palantir
84
Also, in response to the third Request for Information, Palantir communicated to the Army
that:

In cooperation with the government, Palantir fields and manages 25 Palantir
deployments at every major Marine Corps command,[44] representing over
15,000 accounts at peak usage across the Marine Intelligence community.
Palantir helps the Marine Corps implement these deployments with the
support of only eight total contractors. The very small ratio of contractors to
military users demonstrates the sustainability of the Palantir platform across
a large enterprise.

Finally, the court notes that, in the Army’s January 7, 2015 Increment 2 Information
Paper, in considering the key objectives of Increment 2, which included “Modernize the
Data Enterprise to a Data Integration Platform,” the Army specifically identified the
possibilities of “a commercial stand-alone solution (Palantir, IBM)” for a way to “deliver
the infrastructure for document / entity information to ingest, process, and organize all of
the textual data available to DCGS-A.” (emphasis added). Therefore, almost a year prior
to the decision to issue the solicitation, the Army specifically had identified a possible
solution utilizing a commercial item, and had specifically named Palantir as offering “a
commercial stand-alone solution.” Despite this, the Administrative Record reflects an
absence of Army correspondence with Palantir regarding any follow up to review
Palantir’s capabilities or even obtain an in-depth description of Palantir’s capabilities.

Given the protestor’s multiple responses to the Requests for Information, the
multiple references to the existing government contracts for Palantir’s commercial
platform, and the Operational Needs Statements, the Army was demonstrably aware of
the possibility of a commercial option for the procurement and appears to have chosen
early on to pursue a developmental option instead. As noted above, defendant repeatedly
argues that:

There are no statutory or regulatory requirements that address that mention
[sic] which acquisition strategy is in the best public interest. Indeed,
adopting Palantir’s position, i.e., the Army must base its acquisition strategy

Gotham Platform and related services on a commercial item basis.”
44The Performance Work Statement for one of the Palantir’s United States Marine Corps
contract, Contract No. N00104-13-A-ZF34-V782, indicated that:

Palantir USG Incorporated will be providing supplies and services to the
United States Marine Corps (USMC) units. The Palantir software will be
operating on the Secret Internet Protocol Router Network (SIPRNet), the
Nonsecure Internet Protocol Router Network (NIPRNET), identified
coalition networks, and with the potentiality of Joint Worldwide Intelligence
Communication System (JWICS) installations of Palantir software post
contract award.
85
 here on speculation as to what modifications Palantir might deem
appropriate to develop for the Palantir Gotham Platform would be folly as it
would switch the roles here by making Palantir the master of determining
the Army’s acquisition needs.

The court does not agree with defendant’s characterization that fully considering the
available commercial options would make “Palantir the master of determining the Army’s
acquisition needs.” The Army had a statutory obligation to consider whether the
commercially available options could meet all or some of the Army’s requirements,
especially when the Army was explicitly informed of the possible availability of commercial
options. At no point in this opinion does the court state that the Army must accept
Palantir’s data management platform. The court only determines that the Army failed in
its obligation under 10 U.S.C. § 2377 to fully investigate if Palantir, or any other potential
offeror, could meet the requirements of the Army’s procurement needs on a commercial
basis, in part or in full. In sum, the Army had a statutory obligation to consider commercial
items before issuing the developmental solicitation and failed to do so. The Army’s failure
to conduct a proper 10 U.S.C. § 2377 evaluation was “so plainly unjustified as to lack a
rational basis.” Savantage Fin. Servs., Inc. v. United States, 595 F.3d at 1287.

Without a doubt, there are circumstances in which it is clear that a “commercial
alternative” offered by a prospective commercial bidder is not suitable for a procurement.
The overwhelming evidence in the Administrative Record in this protest, however,
demonstrates that the Army was on notice of a realistic, possible, commercially available
alternative product, placing the onus on the Army to more fully consider the potential
commercial options suggested before pursuing a developmental only approach to the
procurement. The Army did not do so, and, therefore, acted arbitrarily and capriciously,
and in violation of 10 U.S.C. § 2377, by neglecting to full investigate possible commercially
available alternatives to meet the requirements of the Army’s acquisition.

National Defense Authorization Act for Fiscal Year 2016

Palantir raises an additional issue regarding 10 U.S.C. § 2377. Palantir notes that
“Congress recently gave the Army specific instructions with respect to the application of
§ 2377(c) to DCGS.” (internal reference omitted). According to Palantir, the National
Defense Authorization Act for Fiscal Year 2016 instructs the Department of Defense to
issue guidance regarding 10 U.S.C. § 2377 to prohibit agencies from entering into
contracts for “information technology products or services that are not commercial items
unless the head of the agency determines in writing that no commercial items are suitable
to meet the agency’s needs.” National Defense Authorization Act for Fiscal Year 2016,
P.L. 114-92, § 855(a)(1), 129 Stat. 919 (2015).45 Palantir argues that “Palantir’s

45 Relatedly, Palantir points to an additional requirement in the National Defense
Authorization Act for Fiscal Year 2016 at section 222, which instructs that “[t]he Secretary
shall submit to the appropriate congressional committees a report on the review of the
distributed common ground system of the Army conducted under subsection (a)(1).”
National Defense Authorization Act for Fiscal Year 2016, P.L. 114-92, § 222(a)-(b), 129
86
understanding is that the Army issued the § 222 report only after Palantir filed its
notification of intent to file this lawsuit, and the Army has still not issued the issued the
[sic] § 855 guidance despite a January 23, 2016 deadline.” (footnote omitted). Defendant
responds that “there is substantial question whether such provisions apply to the DCGS-
A Increment 2 procurement,” arguing that the National Defense Authorization Act for
Fiscal Year 2016 “requires a determination, before contract award, that for a contract (a)
in excess of the simplified acquisition threshold and (b) for ‘information technology
products or services that are not commercial items,’ that no commercial items are suitable
to meet the agency's needs as provided in subsection (c)(2) of section 2377 of title 10.”
Defendant claims that “Palantir fails to demonstrate any clear and prejudicial violation of
the provisions of NDAA, Fiscal Year 2016,” because “the provision relied upon by Palantir
is applicable only before contract award. There has been no contract award for DCGS-A
Increment 2, and protest grounds that merely anticipate improper agency action are
speculative and premature.” (footnote omitted). Defendant also argues that “the fact that
the guidance contemplated by the act has not yet been issued by the Department of
Defense does not give Palantir any rights.” As the court has found that the agency acted
arbitrarily and capriciously in violation of 10 U.S.C. § 2377, the court does not need to
determine if Palantir can rely on the National Defense Authorization Act for Fiscal Year
2016 to support its argument that the Army violated 10 U.S.C. § 2377.

Prejudice

Having determined that the agency acted arbitrarily and capriciously, and in
violation of 10 U.S.C. § 2377, by neglecting to fully investigate the commercial availability
of products that could meet at least some of the requirements of the procurement, the
court proceeds to the next step of the bid protest analysis, “to determine, as a factual
matter, if the bid protester was prejudiced by that conduct.” Bannum, Inc. v. United States,
404 F.3d at 1351; see also Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d
at 912; Allied Tech. Grp., Inc. v. United States, 649 F.3d at 1326; Alfa Laval Separation,
Inc. v. United States, 175 F.3d at 1367. As noted in FirstLine Transportation Security,
Inc. v. United States, 107 Fed. Cl. 189 (2012):

“Prejudice is a question of fact,” which the plaintiff again bears the burden
of establishing. Id. [Bannum, Inc. v. United States, 404 F.3d] at 1353, 1358.
This prejudice determination is based on the same standard as the initial
one made at the standing stage; however, at this step, the plaintiff must
prove its allegations by a preponderance of the evidence. Jacobs Tech. Inc.
v. United States, 100 Fed. Cl. 198, 207 (2011); Sys. Application & Techs.,
Inc. v. United States, 100 Fed. Cl. 687, 707 n.15 (2011). Thus, in order to
prevail on the merits, Plaintiff must demonstrate, by a preponderance of the
evidence, that the unlawful or irrational terms in the solicitation caused it to
suffer “a non-trivial competitive injury which can be addressed by judicial
relief.” Weeks Marine, 575 F.3d at 1362.

Stat. 919.
87
FirstLine Transp. Sec., Inc. v. United States, 107 Fed. Cl. at 197; see also Gear Wizzard,
Inc. v. United States, 99 Fed. Cl. 266, 273 (2011) (“[T]o establish prejudice in the context
of a pre-award bid protest, the plaintiff must show only ‘that an unreasonable agency
decision created a non-trivial competitive injury which can be redressed by judicial
relief.’”) (quoting Weeks Marine, Inc. v. United States, 79 Fed. Cl. 22, 35 (2007), rev’d on
other grounds, Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009)).

As earlier determined by this court after the protest was filed, Palantir had standing
to proceed to the merits of the above captioned protest. See Palantir Techs., Inc., et al.
v. United States, 128 Fed. Cl. at 46. Palantir now bears the burden, by a preponderance
of the evidence, of demonstrating that it was prejudiced by the actions of the Army and
the Army’s actions caused Palantir to suffer “a non-trivial competitive injury which can be
addressed by judicial relief.” Weeks Marine, Inc. v. United States, 575 F.3d at 1362. As
indicated above, 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).

Defendant argues that Palantir did not offer a “proposed solution to the
Government’s requirements in response to the solicitation, and the Army did not preclude
Palantir from submitting a proposal.” Defendant argues that “both the Army market
research requests and the RFQ solicitation requirements were applied equally to all
parties. Palantir, by failing to respond fully to Army Request for Information No.2,[46] and
by failing to submit a proposed solution that would meet all of the Army’s requirements in
response to the RFP, ‘becomes a stranger to the process, and is disqualified from the
procurement,’” (quoting Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1381
(Fed. Cir. 2009)), and, “[a]ccordingly, Palantir fails to establish prejudice.” Defendant also
argues that “Palantir's assertion of prejudice is further attenuated by the fact that the Army
has received multiple proposals in response to the solicitation. Palantir cannot
demonstrate 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 at 1378) (internal
citations omitted). 47 In response, Palantir argues that “[t]he Government’s contentions
are uniformly wrong and they ignore Palantir’s claims. . . . [T]he Army’s Solicitation

46 Although defendant’s briefs suggests that the failure to respond to the Request for
Information might disqualify Palantir from the solicitation, at oral argument, counsel for
the defendant admitted that “I don’t think it’s a finding that they couldn’t qualify. All it is is
a statement of fact . . . that they didn’t respond. That’s all it is.” Moreover, the court agrees
with Palantir that “[b]ecause the Government itself made clear that there was no legal
significance to responding to or even failing to respond to the RFI and that it was purely
for information-gathering purposes, the Government has no basis for arguing that
Palantir’s RFI response somehow barred Palantir from the procurement.”
47 Defendant alternatively claims that “[a]pplication of the alternative ‘non-trivial
competitive injury’ test should also result in a determination that Palantir does not have
the requisite economic interest to establish prejudice.”
88
prejudiced Palantir by preventing it from offering to provide a commercial item to meet the
Government’s requirements.”

The court first notes that, as a pre-award protest of a solicitation, it considers the
proper standard for prejudice to be a “non-trivial competitive injury which can be
addressed by judicial relief” and not the “but for” standard. Moreover, the court believes
that the failure to submit a proposal is not dispositive in this case. As the court determined
in the earlier opinion, Palantir timely filed a protest in this court before the Army made an
award. See Palantir Techs., Inc., et al. v. United States, 128 Fed. Cl. at 46. Furthermore,
the Army failed to properly conduct an evaluation as to whether commercial items were
available to meet any of the requirements of the solicitation, and issued the solicitation as
a developmental requirement, with no opportunity to respond to the solicitation with an
offer of a commercial item for all, or part of, the solicitation. Palantir’s failure to submit a
proposal in response to a developmental solicitation in this protest does not preclude
Palantir from challenging the nature of the solicitation on a pre-award basis, nor does it
prevent a showing of prejudice. Palantir contends that defendant’s representation that
“the Army has received multiple proposals in response to the development solicitation,”
is not relevant. The court agrees with Palantir that “[t]he fact that Palantir did not submit
a proposal is irrelevant in this protest because the very illegalities that Palantir challenges
prevented it from doing so.” The court also agrees with Palantir’s observation that
although the Army received multiple proposals, those “proposals responded to a
solicitation that sought proposals for a development effort on a cost-plus basis, not a
solicitation for commercial items on a fixed-price basis.” Palantir did not respond to the
developmental solicitation also because the solicitation required the winning bidder to
comply with Cost Accounting Standards (CAS) and to have in place an Earned Value
Management System (EVMS). “As an offeror of commercial items on a fixed price basis,
Palantir does not have in place the cost accounting standards and procedures, including
CAS and EVMS, that are common among the typical defense contractors that engage in
extensive ‘cost-plus’ developmental work.”48 Palantir’s “failure” to submit a proposal was
because the Army only offered a developmental solicitation that contemplated award of
a cost plus contract, without consideration of a commercial item alternative on a firm-fixed
price basis.

The parties both agree that, “[w]ithout a showing of harm specific to the asserted
error, there is no injury to redress, and no standing to sue,” as explained in Labatt Food
Service, Inc. v. United States, 577 F.3d at 1381. Although defendant cites Labatt for
support that “Palantir also did not submit a proposed solution to the Government’s
requirements in response to the solicitation, and the Army did not preclude Palantir from
submitting a proposal,” Palantir cites the language of Labatt to demonstrate that “harm
specific to the asserted error” is “the loss of the ability to bid to supply commercial items
as the result of defects in the Solicitation.” The court believes the foregoing discussion

48 The solicitation at issue in this bid protest contemplates the award of a cost plus
incentive fee task order and incorporates requirements and FAR clauses, such as
compliance with Cost Accounting Standards, which are unique to cost reimbursement
contracts.

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demonstrates that Palantir lost the opportunity to offer the Army commercial items
because of the developmental approach the Army took in designing the DCGS-A
Increment 2 solicitation, to the exclusion of consideration of commercial items. As
demonstrated above, Palantir identified a possible, commercially available product and
tried to encourage the Army to consider commercial items, to no avail.

Palantir claims that “Palantir also has demonstrated the requisite economic
interest. Palantir has sustained a non-trivial competitive injury because the Government’s
illegal actions have prevented it from bidding to satisfy the requirements of the DCGS-A
program by providing commercial items.” Defendant asserts that Palantir has not
demonstrated a “non-trivial competitive injury,” as Palantir “has not demonstrated that it
could have and would have submitted a proposal with a solution that met all of the Army’s
requirements with only commercial or nondevelopmental items.” To meet the prejudice
requirement, Palantir must make a showing that its commercial capabilities could be
sufficient to allow Palantir to offer a product which could meet all or part of the DCGS-A
Increment 2 procurement. In considering if Palantir potentially could meet the
requirements of the DCGS-A Increment 2 procurement, the court looks to the information
in the Administrative Record. Most significantly, the court looks to the admitted49 expert
report of Bryant Choung, his deposition testimony, and to the expert report and deposition
testimony of defendant’s expert, Shaun Cronen. In his expert report, Mr. Choung50 stated
that “Palantir offers a data management platform that meets the Army’s needs,”
(emphasis removed), Mr. Choung specified that:

The data integration layer is both interoperable with existing intelligence
systems and capable of integrating the various types of data that the Army
has stated that it wishes to include in its system, including both the data
handled by DCGS A-Increment 1 (DCGS-A1) as well as the additional data
sources and systems contemplated by the DCGS-A2 requirements.

Regarding Palantir’s data management platform, Mr. Choung explained that:

49As explained above, defendant moved to strike Mr. Choung’s expert report, which the
court denied. Mr. Choung’s expert report is a part of the Administrative Record, and now
properly before the court and available for the court’s consideration.
50As noted above, the court acknowledges that Mr. Choung is an employee of Palantir.
As noted in his expert report:

From July 2012 to the present, I have been the Global Defense Engineering
Lead for Palantir Technologies Inc. and its domestic subsidiary
corporations, including Palantir USG, Inc. In that role, I am responsible for
the deployment and management of the Palantir Gotham Platform as a
functional Data Management Platform for clients in the Department of
Defense (DOD) and the Intelligence Community (IC), with primary
responsibility for clients in the United States Army and Special Operations
Command (SOCOM).

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 Palantir has designed the Palantir Gotham Platform to be as flexible as
possible with respect to the types and formats of data it can ingest and bring
into the Palantir Gotham Platform. As a result, the Palantir Gotham Platform
allows a user to integrate, analyze, and visualize HUMINT, SIGINT,
GEOINT, MASINT, weather, and any other type of data.

Mr. Choung also explained51 that:

[B]ecause the Palantir Gotham Platform satisfies the Army’s need for a Data
Management Platform, the Army could have contracted with Palantir (or
another commercial provider with similar open and interoperable
capabilities) to acquire a Data Management Platform and then entered into
a separate contract (or multiple contracts) to acquire any additional
enhancements, configurations, or modifications that the Army may have
wanted.

At his deposition, Mr. Choung noted that “[t]hose could be requirements that are
supported by the data management platform, but that are enhancements or would be
enhancements or additional configurations, rather, for the data management
platform.” Defendant takes issue with Mr. Choung’s claims, and specifically argues that
it is unclear whether Palantir can in fact deliver a commercial product to the Army that
meets the Army’s requirements. In arguing that Palantir cannot provide the Army with a
product on a commercial basis, defendant cites to the definition of a commercial item in
the FAR. As noted above:

Commercial item means-

(1) Any 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

51 Similarly, Mr. Choung explained that:

[T]he Army could have acquired a Data Management Platform to meet the
needs that it describes as the “architectural foundation” of DCGS-A2, by
acquiring the Palantir Gotham Platform as a commercial item on a fixed-
price basis. In addition, the Army could have acquired both the Data
Management Platform from the commercial marketplace and modifications
necessary to fulfill any other requirements by procuring a commercial item
on a fixed-price basis. Like most software, the Palantir Gotham Platform is
readily extensible and can be configured for the customer environment in
which it is operating.

(emphasis in original).
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 (ii) Has been offered for sale, lease, or license to the general public;

(2) Any item that evolved from an item described in paragraph (1) of this
definition through advances in technology or performance and that is not
yet available in the commercial marketplace, but will be available in the
commercial marketplace in item to satisfy the delivery requirements under
a Government solicitation;

(3) Any item that would satisfy a criterion expressed in paragraphs (1) or (2)
of this definition, 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
market place made to meet Federal Government requirements. Minor
modifications means modifications that do not significantly alter the
nongovernmental function or essential physical characteristics of an item,
or component, or change the purpose of a process.

48 C.F.R. § 2.101.

Before this court, the government tries to argue that the definition of a commercial
item is a narrow one, and, it appears even more narrow than the one the Army used in
the July 1, 2016 Determination of Non-Commercial Item. As noted above, the
Determination of Non-Commercial Item concluded,

based upon the requirements of this procurement and the market research
performed, that this requirement is not appropriate as a commercial item
procurement because no single commercial item of a type customarily used
by the general public or one that can meet the Government’s requirement
through minor modification is available; nor is there a combination of
commercial items that can satisfy the DCGS-A Increment 2 requirement.

At oral argument, however, defendant’s counsel suggested that the language of
“Modifications of the type customarily available in the commercial marketplace” and
“Minor modifications of a type not customarily available in the commercial market place
made to meet Federal Government requirements” in 48 C.F.R. § 2.101 must be read
together, despite the clauses being separated by an “or.” Defendant’s counsel stated that:
“I understand, it is ‘or,’ but it talks about customarily available in the commercial
marketplace,” and “the language is very similar where it talks about being customarily
available in the commercial marketplace.” Defendant’s counsel stated:

I recognize it's an ‘or.’ I am saying that you should read them together
because you see the same long, [sic] “customarily available.” What we're

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 saying is that in terms of construing customarily available in the commercial
marketplace, that's not -- that's not a government contract. That's not
making modifications in order to meet government-peculiar requirements.

Despite defendant’s counsel’s argument, the court interprets the “or” as not
requiring all subparts to be read together.52 Moreover, even considering defendant’s more
restrictive version of 48 C.F.R. § 2.101, Mr. Choung’s supplemental declaration indicates
Palantir’s products would meet the requirements with only minor modifications. Mr.
Choung identified 898 requirements in the solicitation, and stated that for 581 of them,
Palantir could meet those requirements “out-of-the-box,” without any configuration work
or enhancements or even minor modifications, “or by any other commercially available
Data Management Platform,” “on a commercial item, fixed-price basis.” Regarding an
additional 242 requirements, Mr. Choung stated Palantir could meet those requirements
“through customary configurations and installations of existing helpers,” with a process
that “typically takes at most a matter of hours, and often less, because it just requires
Palantir to plug the enhancements into the platform.” Mr. Choung explained:

Palantir customarily deploys the Palantir Gotham Platform into a customer’s
environment by installing and configuring the platform and plugging in
existing “helpers.” I explained this during my deposition when I stated:
“There is a process by which we plug in our helpers into the environment,
and the process by which we take our entire data management platform and
plug it into the customer environment. That’s called deployment, installation,
configuration.”

Therefore, Mr. Choung concluded, “through its ‘out-of-the-box’ capabilities and through
customary configurations and installations of existing helpers, Palantir would satisfy a
total of 823 of the 898 PBS [Performance Based Specifications] requirements,” and
“Palantir could meet these [additional] 75 requirements by providing ‘new helpers’ on a
commercial item basis.”53

52 If the court believed a statutory construction analysis was required, the court notes the
first step is “to determine whether the language at issue has a plain and unambiguous
meaning with regard to the particular dispute in the case,” Barnhart v. Sigmon Coal Co.,
534 U.S. 438, 450 (2002) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997)),
and “[a]s with any question of statutory interpretation, our analysis begins with the plain
language of the statute.” Jimenez v. Quarterman, 555 U.S. 113, 118 (2009). It is apparent
to the court that plain language of “or” is, as the New Oxford American Dictionary
indicates, “used to link alternatives,” “otherwise,” and “either.” See New Oxford American
Dictionary 1232.
53 In his expert report Mr. Choung also offered the following opinion referring to the
defendant’s conclusions that Palantir could not meet the Army’s requirements: “It is my
expert opinion that the conclusions in these documents are wrong; all of these capabilities
are available through the commercial marketplace—at a minimum, they are available
from Palantir, which is able to provide each of these functions through the Palantir
Gotham Platform on a fixed-price commercial item basis.”
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 Addressing the defendant’s expert witness, Shaun Cronen, Mr. Choung also stated
that defendant’s designated expert “Mr. Cronen has not offered any valid technical reason
why the Army has chosen to develop software products that are available for purchase
as commercial items in the commercial marketplace.”

Defendant’s expert witness, Shaun Cronen, stated in the defendant’s expert report:

After reviewing Palantir’s submitted documentation, Mr. Choung’s Expert
Report, listening to Mr. Choung’s Deposition on 11 AUG 2016, as well as
the documentation I reviewed on Palantir’s public website, coupled with my
previous experience with the Palantir Gotham Platform, and information
provided on Palantir’s other contracts, there is insufficient information that
demonstrates that the Palantir Gotham Platform fully meets the DCGS-A
Increment 2 Requirements as laid out within the five subfactors for technical
evaluation within the DCGS-A Increment 2 Solicitation (i.e. Data
Architecture, Fusion Data Analytics, Interoperability, Visualization
Framework and Usability, and Data Rights), nor is there information that
demonstrates that the Palantir Gotham Platform is compliant with all the
requirements within the Performance Based Specification (PBS) and can
be successfully tested as per the Formal Qualification Test (FQT) task
within the Base Performance Work Statement (PWS).
(internal reference omitted). Palantir responded that the

Army’s expert (a) makes no effort to dispute Mr. Choung’s conclusion that
there is no technical reason why the Army could not practicably have met
its core need for a Data Management Platform by acquiring the Palantir
Gotham Platform on a commercial item basis, (b) does not identify any
DCGS-A2 requirement that he has determined Palantir is incapable of
doing.

(internal citations omitted). Regarding the defendant’s expert, it does not appear that Mr.
Cronen conclusively stated that Palantir could not provide a data management platform,
or that it is not compliant with “all the requirements.” Therefore, it appears defendant has
not conclusively stated that Palantir could not meet at least some of the requirements for
DCGS-A Increment 2 through a commercial item. Moreover, it is the Army’s failure to fully
explore the commercial availability to determine if Palantir or any other entity could meet
the agency’s program requirements that is at issue here. Defendant’s actions, at a
minimum, put Palantir in a position in which it was unable to succeed regarding the
DCGS-A Increment 2 procurement the moment the Army chose a developmental only
approach without fully exploring the possibility of commercially available alternatives,

Defendant also notes that, on October 21, 2015, Ms. Shyu, signed a Determination
& Findings for “Award of a Single Source Indefinite-Delivery Indefinite-Quantity (IDIQ)
Single Award Contract Exceeding $103M for Distributed Common Ground System

94
(DCGS)-Army Increment 2, Engineering Manufacturing and Development IAW DFARS
216.504(c)(1)(ii)(D)(i),” which determined:
[T]hat a single-source task or delivery order contract estimated to exceed
$103 million for Distributed Common Ground System [DCGS]-Army
Increment 2, Engineering Manufacturing and Development contract is
authorized because the task or delivery orders expected under the contract
are so integrally related that only a single source can reasonably perform
the work.
The court first notes the Determination & Findings does not address 10 U.S.C. § 2377,
but instead, is only the justification for exceeding the DFARS stated maximum amount for
a single source contract. Further, although the Determination & Findings does state “the
task or delivery orders expected under the contract are so integrally related that only a
single source can reasonably perform the work,” the determination is premised on a
single, integrated developmental contract. The Determination & Findings stated that:
“DCGS-A Increment 2 is heavily focused on design and development of a new data
management architecture,” and “[d]evelopment of the data integration layer is pivotal and
complicated by multiple interfaces and interoperability requirements with external
intelligence systems.” (emphasis added). The Determination & Findings does not
consider utilization of a commercial item, and, therefore, is not useful to demonstrate that
modifications to Palantir’s commercial platform would be inappropriate or inapplicable to
the procurement at issue.
Finally, defendant argues that DCGS-A Increment 2 is
not only a Data Management Platform, as Palantir argues. The total
requirements for DCGS-A Increment 2 are compiled in three documents,
which should be read together: (1) the Capabilities Development Document;
(2) the Requirements Definition Package; and (3) and the Performance
Based Specification. Palantir ignores the "glue code," addressed by
Stephen Morton, Deputy Product Manager, that must be built to tie
everything together. Increment 2 includes a Data Integration Layer, without
which the whole software system, including a Data Analytics Platform, could
not function.

(internal citations omitted). Defendant emphasizes that it “is key to the development of
DCGS-A Increment 2 that all of the components and respective subcomponents be
selected or built with interoperability and usability throughout the lifecycle of the software
development process.” In his expert report, Mr. Choung took issue with this
characterization and stated that:
[I]tems in the PWS [Performance Work Statement] relate to the Army’s core
need for a Data Management Platform and could be satisfied by the
procurement of Palantir’s Data Management Platform without the need for
additional enhancements, configurations, and modifications. Other items
relate to the Army’s decision to develop a Data Management Platform rather
than acquire one in the commercial marketplace and thus would be

95
 irrelevant if the Army elected instead to procure a Data Management
Platform in the commercial marketplace. As to the remaining items, Palantir
could readily configure or enhance its platform to provide those items on a
firm fixed-price basis.

(emphasis in original). Even if defendant turns out to be correct, which remains
speculative at this point, the Army failed to explore whether commercial alternatives were
available, including the one offered by Palantir. Alternative commercial products were not
reviewed before the decision was made that a developmental solicitation would be issued.
It appears that Palantir potentially could have submitted a product that would have met
some, or all, of the agency’s needs. The loss of that opportunity resulted in a non-trivial
competitive injury.

Therefore, based on the Administrative Record, including Mr. Choung’s
representations in his expert report and deposition testimony, the court determines that
the Army’s actions caused Palantir to suffer a “non-trivial competitive injury which can be
addressed by judicial relief.” Weeks Marine, Inc. v. United States, 575 F.3d at 1362.
Despite this conclusion, the court does not reach a determination as to whether Palantir,
in fact, can offer a commercial item that can meet some, or all, of the requirements for
Army’s DCSG-A Increment 2. The Army failed to conduct a proper commercial availability
evaluation in the first instance, and this court should not make one in its place. In this
decision, not only is the court not taking a position on whether or not Palantir can offer
the Army an appropriate commercially available alternative, nor does the court instruct
the Army to accept Palantir’s data management platform. As noted by the Federal Circuit
in Savantage, determining an agency's minimum needs “‘is a matter within the broad
discretion of agency officials . . . and is not for [the] court to second guess.’” Savantage
Fin. Servs., Inc. v. United States, 595 F.3d at 1284 (quoting Wit Assocs., Inc. v. United
States, 62 Fed. Cl. at 662); see also COMINT Sys. Corp. v. United States, 700 F.3d at
1384.
Just as the court will not second guess the program requirements of the Army, the
court will not dictate to the Army the specifics of how to conduct a proper commercial
availability determination in accordance with 10 U.S.C. § 2377. Palantir, in its submissions
to the court and in the multiple conferences and arguments before the court, has
represented that if only given the opportunity to present its capabilities to the Army,
Palantir could demonstrate how it meets or exceeds the Army’s requirements for the
DCGS-A Increment 2. Given the failures to properly conduct an analysis pursuant to 10
U.S.C. § 2377, and reach a considered, commercial availability determination, as well as
the unfortunate conduct of some of the Army personnel reflected in the Administrative
Record, it would be wise for the Army to seriously consider reviewing the commercially
available products of Palantir, or any other potential offeror, before concluding that no
commercially available product can meet the Army’s requirements.54

54 Palantir also points to the deposition of defendant’s expert for support than Palantir
might have some additional capabilities to offer, if given the opportunity. Mr. Cronen had
the following exchange with Palantir’s counsel:

96
Permanent Injunction

Having found that the Army failed to properly determine, pursuant to 10 U.S.C.
§ 2377, whether there are commercially available items suitable to meet the agency’s
needs for the procurement at issue, and having found that by its failure to do so, the Army
acted in an arbitrary and capricious manner, the court turns to consider whether Palantir
is entitled to the injunctive relief that it seeks, and, if so, the scope of such relief. As noted
above, Palantir requests that this court “[e]nter 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.” Palantir asserts that, at a minimum, the Army should issue “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.”

As discussed above, this court has jurisdiction to award injunctive relief pursuant
to 28 U.S.C. § 1491(b)(2). In Centech Group, Inc. v. United States, the Federal Circuit set
out the test for a permanent injunction, stating:

To determine if a permanent injunction is warranted, the court must
consider whether (1) the plaintiff has succeeded on the merits of the
case; (2) the plaintiff will suffer irreparable harm if the court withholds
injunctive relief; (3) the balance of hardships to the respective parties
favors the grant of injunctive relief; and (4) the public interest is served
by a grant of injunctive relief.

Centech Grp., Inc. v. United States, 554 F.3d at 1037 (citing PGBA, LLC v. United States,
389 F.3d 1228–29 (Fed. Cir. 2004) (citing Amoco Prod. Co. v. Vill. of Gambell, Alaska,
480 U.S. 531, 546 n.12 (1987))); see also Nat’l Steel Car, Ltd. v. Canadian Pacific Ry.,
Ltd., 357 F.3d 1319, 1325 (Fed. Cir.) (finding that a plaintiff who cannot demonstrate
actual success on the merits cannot prevail on its motion for permanent injunctive relief),
reh’g and reh’g en banc denied (Fed. Cir. 2004); Remington Arms Co., LLC v. United
States, 126 Fed. Cl. 218, 232 (2016); MVS USA, Inc. v. United States, 111 Fed. Cl. 639,
649 (2013); CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. 462, 494 (2013);
Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. at 34 (citing Centech
Grp., Inc. v. United States, 554 F.3d at 1037) (citation omitted). Success on the merits
has been said to be “the most important factor for a court to consider when deciding
whether to issue injunctive relief.” Dellew Corp. v. United States, 108 Fed. Cl. 357, 369

Q. I’m not asking you to give an opinion about all of them. Don't you think -
- DIB upgrade, DIB interface, interoperability, those are all issues relating
to increment 2. And there is some overlap between those, isn't there, and
what would have been evaluated if this SIL [Systems Integration Laboratory]
evaluation had been done in a comprehensive fashion?

A. I think that probably would have demonstrated some of the additional
increment 2 requirements.
97
(2012) (citing Blue & Gold Fleet, L.P. v. United States, 492 F.3d at 1312). While success
on the merits is necessary, it is not sufficient for plaintiff to establish that it is entitled to
injunctive relief. See Contracting, Consulting, Eng’g LLC v. United States, 104 Fed. Cl. at
353 (“Although plaintiff’s entitlement to injunctive relief depends on its succeeding on the
merits, it is not determinative because the three equitable factors must be considered, as
well.”) (citing PGBA, LLC v. United States, 389 F.3d at 1228-29). The four factors are to
be considered collectively, rather than individually, such that

“[n]o one factor, taken individually, is necessarily dispositive. . . . [T]he
weakness of the showing regarding one factor may be overborne by the
strength of the others.” FMC Corp. [v. United States], 3 F.3d [424] at 427
[(Fed. Cir. 1993)]. Conversely, “the absence of an adequate showing with
regard to any one factor may be sufficient” to deny injunctive relief. Id.

Sheridan Corp. v. United States, 94 Fed. Cl. 663, 668 (2010); see also Wallace Asset
Mgmt., LLC v. United States, 125 Fed. Cl. 718, 727 (2016); Amidon, Inc. v. United States,
124 Fed. Cl. 517, 522 (2015).

In the above captioned pre-award bid protest, as discussed above, Palantir has
established success on the merits by demonstrating that the Army acted arbitrarily and
capriciously when the Army failed to determine, in accordance with the requirements of
10 U.S.C. § 2377, whether there were commercially available items suitable to meet the
Army’s procurement requirements prior to issuing the solicitation at issue. Having
concluded that Palantir has succeeded on the merits of its bid protest, the court considers
the additional factors to determine whether Palantir is entitled to a permanent injunction.
Palantir alleges that it will suffer irreparable harm if the court does not issue an injunction
and that the balance of the hardships and the public interest weigh in favor of granting an
injunction. Defendant argues that Palantir has not demonstrated irreparable harm, that
the balance of hardships does not weigh in Palantir’s favor, and that an injunction will not
serve the public interest.

Regarding whether or not the protestor will suffer irreparable harm if injunctive
relief is not granted, “[w]hen assessing irreparable injury, ‘[t]he relevant inquiry in
weighing this factor is whether plaintiff has an adequate remedy in the absence of an
injunction.’” Insight Sys. Corp. v. United States, 110 Fed. Cl. 564, 582 (2013) (quoting
Magellan Corp. v. United States, 27 Fed. Cl. 446, 447 (1993)); see also Rush Constr.,
Inc. v. United States, 117 Fed. Cl. 85, 101 (2014); CW Gov’t Travel, Inc. v. United States,
110 Fed. Cl. at 494; Overstreet Elec. Co. v. United States, 47 Fed. Cl. 728, 743 (2000).
“The Court of Federal Claims has repeatedly held that a protester suffers irreparable harm
if it is deprived of the opportunity to compete fairly for a contract.” CW Gov’t Travel, Inc.
v. United States, 110 Fed. Cl. at 494 (citing CRAssociates, Inc. v. United States, 95 Fed.
Cl. 357, 390–91 (2010); Serco, Inc. v. United States, 81 Fed. Cl. at 501–02; Impresa
Construzioni Geom. Domenico Garufi v. United States, 52 Fed. Cl. 826, 828 (2002)); see
also Remington Arms Co., LLC v. United States, 126 Fed. Cl. at 232 (explaining that the
loss of potential work and profits from a government contract constitutes irreparable
harm); BINL, Inc. v. United States, 106 Fed. Cl. 26, 48 (2012) (“Irreparable harm is

98
established by a lost opportunity to fairly compete.”); HP Enter. Servs., LLC v. United
States, 104 Fed. Cl. at 245 (citing several cases); Magnum Opus Techs., Inc. v. United
States, 94 Fed. Cl. 512, 544 (2010) (“‘A lost opportunity to compete in a fair competitive
bidding process for a contract is sufficient to demonstrate irreparable harm.’”), motion to
amend denied, 94 Fed. Cl. 553 (2010) (internal citations omitted). The loss of a valuable
business opportunity “deriving from a lost opportunity to compete in a fair competitive
bidding process for a contract,” can be sufficient to constitute irreparable harm. See
Overstreet Elec. Co. v. United States, 47 Fed. Cl. at 744 (citing United Int’l Investigative
Servs., Inc. v. United States, 41 Fed. Cl. 312, 323 (1998) (“[T]he opportunity to compete
for a contract and secure any resulting profits has been recognized to constitute
significant harm.”)); see also KWR Constr., Inc. v. United States, 124 Fed. Cl. 345, 363
(2015) (agreeing with protestor that the lost opportunity to compete for a future contract
will cause irreparable harm); Impresa Construzioni Geom. Domenico Garufi v. United
States, 52 Fed. Cl. at 828. According to a judge of this court, “[t]he court has repeatedly
held that ‘the loss of potential profits’ from a government contract constitutes irreparable
harm.” BINL, Inc. v. United States, 106 Fed. Cl. at 49 (quoting Furniture by Thurston v.
United States, 103 Fed. Cl. 505, 520 (2012) (citing BayFirst Sols., LLC v. United States,
102 Fed. Cl. 677, 696 (2012))); see also MORI Assocs., Inc. v. United States, 102 Fed.
Cl. 503, 552–53 (2011).

Palantir argues that it “will suffer irreparable harm if the Court does not issue an
injunction” and stop the Army from proceeding with a contract award under the current
solicitation. Palantir asserts that “[a]bsent such relief, Palantir will be deprived of an
opportunity to compete for the DCGS-A2 contract, which in and of itself constitutes
irreparable harm.” Defendant argues, however, that Palantir could have competed for the
DCGS-A Increment 2 contract by submitting a proposal in response to the solicitation, but
Palantir voluntarily chose not to do so. According to defendant, this “is not a case where
a potential offeror was prevented or precluded from submitting a proposal in a competitive
procurement because of agency action.” Defendant argues that “Palantir had an
opportunity equal to all other potential offerors to tender a technical proposal that would
meet the DCGS-A Increment 2 requirements,” but that Palantir “made their own business
choices” not to compete. According to defendant, because Palantir chose not to submit a
proposal in response to the solicitation, Palantir cannot now argue that it will be irreparably
harmed if it is not able to compete for the contract.

Although defendant is technically correct that Palantir could have submitted a
proposal in response to the solicitation in order to participate in the DCGS-A Increment 2
competition, as described above in the prejudice analysis, it is a somewhat disingenuous
argument. Because Palantir was attempting to offer the Army a commercially available
product, once the solicitation was designed only as a developmental solicitation, Palantir
was not able to meaningfully compete for the contract award. Even if Palantir had
submitted a proposal offering a commercial item, that proposal would not have complied
with all the solicitation’s material terms because the solicitation at issue in this bid protest
contemplates the award of a developmental, cost plus incentive fee task order and
incorporates requirements and FAR clauses, such as compliance with Cost Accounting
Standards, which are unique to cost reimbursement contracts. Many of these clauses,

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including a clause requiring compliance with Cost Accounting Standards, would not be
included in a firm-fixed price contract to procure a commercial item.55 As Palantir asserts,
it is only an “offeror of commercial items on a fixed price basis,” thus, “Palantir does not
have in place the cost accounting standards and procedures” that the solicitation required.
It is well-established in this court that “a procuring agency may only accept an offer that
conforms to the material terms of the solicitation.” Furniture by Thurston v. United States,
103 Fed. Cl. at 518. Defendant’s argument that Palantir simply chose not to submit a
proposal in response to the solicitation does not reflect the nature of the solicitation, the
strict requirements of the solicitation as issued, or the award process set out in the
solicitation. Moreover, as demonstrated throughout this opinion, Palantir advised the
Army on multiple occasions, in advance of the issuance of the solicitation, that it was
trying to offer a commercially available product to meet the agency’s needs.

Palantir also asserts that “[i]f the Army is permitted to proceed with an award under
the Solicitation, Palantir . . . would lose the opportunity to earn revenues and profits from
the potential sale of the Palantir Gotham Platform to the Army.” Without an injunction, the
Army likely will award, in the near future, a contract to develop the DCGS-A Increment 2
to an offeror who submitted a developmental proposal in response to the solicitation, as
represented to the court by the Army’s representatives. That pool of offerors does not
include Palantir. Thus, Palantir would have lost the opportunity to compete for the DCGS-
A Increment 2 contract for the life of DCGS-A Increment 2 developmental contract, which
could extend for five years or more.

Additionally, a contract award will diminish, if not entirely quash, the likelihood that
Palantir will have the opportunity to compete for a future commercial item contract with
the Army to satisfy the DCGS-A Increment 2 requirements. Once the Army executes a
contract to develop DCGS-A Increment 2, it would appear to be a significant period of
time before the Army would seek commercial items related to DCGS-A Increment 2. If the
agency is permitted to move forward with awarding a contract based on the solicitation
issued on December 23, 2015, Palantir will have been deprived of an opportunity to
compete for the contract award. As a result, Palantir will likely lose any potential profits it
would have earned from selling its commercial items to the Army in order to satisfy the
DCGS-A Increment 2 requirements. Moreover, the loss of the contract represents not only
irreparable injury in terms of lost potential profit, but also in terms of lost experience and

55The solicitation incorporates FAR clause 52.230-2, Cost Accounting Standards. Certain
contracts are, by regulation, exempt from FAR clause 52.230-2, Cost Accounting
Standards, including firm-fixed price contracts awarded on the basis of adequate price
competition without submission of cost or pricing data. See 48 C.F.R. § 9903.201-1
(2016). An agency issuing a firm-fixed price contract awarded on the basis of adequate
price competition cannot require an offeror to be compliant with FAR clause 52.230-2. To
that end, when purchasing commercial items, agencies are required to use firm-fixed
price contracts. See 48 C.F.R. §12.207 (2016). Put together, these rules direct that a
contract to acquire commercial items normally will be a firm-fixed price contract, which is
by regulation exempt from complying with FAR clause 52.230-2, Cost Accounting
Standards.

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opportunity to work with the Army for the DCGS-A Increment 2. See BINL, Inc. v. United
States, 106 Fed. Cl. at 48 (“Irreparable harm is established by a lost opportunity to fairly
compete.”); see also Magnum Opus Tech., Inc. v. United States, 94 Fed. Cl. at 544.
Palantir’s lost business opportunity and loss of potential profits establishes irreparable
harm.

Assessing the balance of hardships between the parties, the court recognizes the
possible negative impact on the Army if the DCGS-A Increment 2 contract award is
delayed. As indicated in the Administrative Record before this court, the Army appears to
have a functioning system, albeit defendant has indicated that the system would benefit
from an update. If no injunction is issued, however, then Palantir will be foreclosed from
the opportunity to submit a proposal for the DCGS-A Increment 2 contract likely for at
least five years. According to defendant, the “balance of hardships substantially tips in
the Army’s favor.” Defendant asserts that “[t]he harm to the Government from enjoining
award of a DCGS-A Increment 2 contract is substantial and greatly outweighs any
asserted injury to Palantir.” Defendant asserts that the “Court should defer to the military’s
professional judgment concerning both the risks and harms posed by enjoining the award
of a contract for the DCGS-A Increment 2 procurement.” Defendant submitted the
declaration of Colonel Robert Collins to address the impact of a permanent injunction on
the Army. Colonel Collins is the Project Manager for the DCGS-A programs and is “the
Army’s point of contact for the entire DCGS-A family of systems.” According to Colonel
Collins’ declaration, a delay in the procurement of DCGS-A Increment 2 will negatively
affect “the program by delaying the needed capabilities for enhanced situational
awareness for military analysts and commanders.” In his declaration, Colonel Collins
stated:

The enhanced DCGS-A, Increment 2, is needed to retain the interoperability
of existing systems and bring on emerging Intelligence data feeds, which
are expected to have significantly larger volumes of data. . . . The new
DCGS-A Increment 2 DMA is desperately needed to improve data
synchronization across all Army echelons. DCGS-A Increment 2 will
implement cyber security measures to protect and monitor data access and
activities to a significantly larger degree than the current DCGS-A Increment
1 is even capable.

Colonel Collins also stated that “[i]f the court issues an injunction enjoining the Army from
awarding the contract, then the Army will be forced to use and maintain the existing
Increment 1 systems,” which “will become increasingly difficult to keep up with as
technology becomes unsupportable over time.”

Notwithstanding Colonel Collins’ declaration, in its cross-motion for judgment on
the Administrative Record, defendant states that the Army does not intend to immediately
use or deploy DCGS-A Increment 2. Defendant explains that “it is anticipated that there
would be a lengthy developmental period for Increment 2, and also testing.” Additionally,
defendant asserts that “DCGS-A Increment 1 is fully operational” and deployed in the
field, although it is “nearing obsolescence.” Based on this information from defendant, it

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appears that, although an injunction may cause some delay in the procurement of the
capabilities that the Army seeks to acquire through the DCGS-A Increment 2
procurement, the delay, which is in defendant’s control, is manageable, assuming the
Army moves quickly to comply with the requirements of 10 U.S.C. § 2377. Moreover, the
impact of the delay on the “military analysts and commanders” appears speculative
because the Army already anticipates a “lengthy developmental period for Increment 2,
and also testing.” Indeed, given that the Army intends to award a developmental contract,
it would be difficult to know when Increment 2 capabilities will be available and deployable.
A review of the Administrative Record indicates that DCGS-A Increment 1 took several
years to develop, and DCGS-A Increment 2 is expected to be more technically advanced
than Increment 1, thus it appears likely that there could be delays due to testing or other
issues that typically arise during a complicated developmental process. Furthermore, if
Palantir actually is capable of providing a commercial item that can meet the Army’s
requirements, then, most likely, the Army could more rapidly acquire the commercial
technology to meet its needs either in whole or in part. Although an injunction may
somewhat slow the award of a contract to satisfy the Army’s requirements, “the Court of
Federal Claims has observed that ‘“only in an exceptional case would [such delay] alone
warrant a denial of injunctive relief, or the courts would never grant injunctive relief in bid
protests.”’” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 495 (quoting Reilly’s
Wholesale Produce v. United States, 73 Fed. Cl. 705, 715–16 (2006) (quoting Ellsworth
Assocs., Inc. v. United States, 45 Fed. Cl. at 399)); see also Insight Sys. Corp. v. United
States, 110 Fed. Cl. at 582. Thus, the court concludes that the balance of hardships does
not weigh in favor of the defendant in this protest.

As to the public interest factor, “‘[t]he public interest in honest, open, and fair
competition in the procurement process is compromised whenever an agency abuses its
discretion.’” CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. at 495 (quoting PGBA,
LLC v. United States, 57 Fed. Cl. 655, 663 (2003)); see also Cohen Fin. Servs., Inc. v.
United States, 110 Fed. Cl. 267, 289 (2013); United Int’l Investigative Servs., Inc. v. United
States, 41 Fed. Cl. at 323 (“[T]he public has a strong interest in preserving the integrity of
the procurement process.”) (citing Parcel 49C Ltd. P’ship v. United States, 31 F.3d 1147,
1153 (Fed. Cir. 1994)); Am. Safety Council, Inc. v. United States, 122 Fed. Cl. 426, 444
(2015) (holding that “the public interest will be served by an injunction by preserving the
integrity of the procurement process”); Applied Bus. Mgmt. Sol., Inc., LLC v. United
States, 117 Fed. Cl. 589, 608 (2014); BINL, Inc. v. United States, 106 Fed. Cl. at 49 (“With
regard to the public interest, it is well-settled that there is a public interest in remedying
violations of law.”). An important public interest is served through conducting “honest,
open, and fair competition” under the FAR, because such competition improves the
overall value delivered to the government in the long term. See CW Gov’t Travel, Inc. v.
United States, 110 Fed. Cl. at 495. “[T]he public interest is served by injunctive relief
where the court has concluded that the government violated an applicable regulation and
related provisions in the solicitation, and ‘maintenance of the integrity of the procurement
process weighs heavily in favor of granting a permanent injunction.’” Q Integrated Cos.
LLC v. United States, 126 Fed. Cl. 124, 147 (2016) (quoting Springfield Parcel C, LLC v.
United States, 124 Fed. Cl. 163, 193 (2015)).

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 As Palantir argues, there is a public interest “in preserving the integrity of the
competitive process.” Insight Sys. Corp. v. United States, 110 Fed. Cl. at 583. “A
permanent injunction is properly employed where there is an overriding public interest in
maintaining the integrity of the federal procurement process.” Applied Bus. Mgmt. Sol.,
Inc., LLC v. United States, 117 Fed. Cl. at 608 (internal quotations omitted). Palantir
argues that the public interest weighs in favor of a permanent injunction because the
public “has an interest in ensuring that the Army’s Solicitation complies with the law.”
Defendant points to national security concerns to support its position that an injunction
will not serve the public interest. Defendant asserts that the “public interest factor is of
‘paramount import’ especially regarding national defense and national security,” and that
this “paramount interest is directly implicated when a procurement action involves the
acquisition of services critical to the success of future military operations and to the health
and safety of our servicemen and women in the field.” Defendant is correct that “when
military and national security interests are implicated, the public interest factor gains
inflated importance in the court’s balancing of the equities.” Worldwide Language Res.,
LLC v. United States, 127 Fed. Cl. 125, 135 (2016) (internal citations omitted). The court
recognizes, and respects, that in exercising jurisdiction over bid protests “the courts shall
give due regard to the interests of national defense and national security. . . .” 28 U.S.C.
§ 1491(b)(3). Yet, “merely conclusory assertions of national security do not suffice to
defeat motions for injunctive relief.” Crowley Tech. Mgmt., Inc. v. United States, 123 Fed.
Cl. 253, 266 (2015); see also GTA Containers, Inc. v. United States, 103 Fed. Cl. 471,
493 (2012) (explaining that “when the Government makes a claim of national security”
the court “will not blindly accede to such claim” and must give the claim careful
consideration) (internal quotations omitted). Although in this protest the court recognizes
improvement to DCGS-A is an important part of the Army’s future performance
capabilities, and defendant discusses the intersection of national security and the public
interest generally in its briefs, defendant does not sufficiently address how an injunction
in this protest would cause a national security disruption or convince the court that
efficiently taking the time to address the requirements of 10 U.S.C. § 2377 would
negatively impact national security. As noted above, in his declaration, Colonel Collins
explained the importance of DCGS-A Increment 2 and states that it is “desperately
needed,” however, Colonel Collins does not specifically assert that a delay in making an
award pursuant to the DCGS-A Increment 2 solicitation will create national security
concerns. In fact, the solicitation explains that the expected performance period for the
DCGS-A Increment 2 development contract is six years, thus, it appears that the Army
anticipates that developing DCGS-A Increment 2 could take multiple years. Therefore,
the Army has not offered evidence of immediate tactical or strategic national security
consequences that would sway the court from entering an injunction in this bid protest so
that the Army can comply with 10 U.S.C. § 2377. As discussed above, the Army failed to
satisfy the requirements of 10 U.S.C. § 2377 before issuing the December 23, 2015
solicitation, compromising the integrity of the procurement process.

Palantir asserts that the public interest weighs in favor of an injunction because
the “Army’s Solicitation doubles down on development efforts that have taken fifteen
years and cost billions of taxpayer dollars without equipping Commanders with the
capabilities they need.” As directed by 10 U.S.C. § 2377, and as is intuitively obvious, it

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is in the public interest to investigate whether commercial items exist that can satisfy the
government’s needs, in whole or in part, so as to avoid investing time and taxpayer money
into developing a product that already exists. As such, the court finds that there is a public
interest in permanently enjoining the Army from awarding a contract under the December
23, 2015 solicitation.

CONCLUSION

Accordingly, because Palantir has demonstrated success on the merits, and
because the equitable factors weigh in Palantir’s favor, a permanent injunction is
warranted and awarded. The Army is permanently enjoined from issuing a contract award
under solicitation number W56KGY-16-R-0001, as issued on December 23, 2015. The
Army must satisfy the requirements of 10 U.S.C. § 2377, which, thus far, the Army has
failed to do. Only after the Army has properly and sincerely complied with 10 U.S.C.
§ 2377 should defendant proceed to award a contract to meet its DCGS-A Increment 2
requirements.

IT IS SO ORDERED.
s/Marian Blank Horn
MARIAN BLANK HORN
Judge

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