Agustawestland North America, Inc. v. United States

United States Court of Appeals
for the Federal Circuit
______________________
AGUSTAWESTLAND NORTH AMERICA, INC.,
Plaintiff-Appellee
v.
UNITED STATES,
Defendant-Appellant
AIRBUS HELICOPTERS, INC.,
Defendant
______________________
2017-1082
______________________
Appeal from the United States Court of Federal
Claims in No. 1:14-cv-00877-SGB, Chief Judge Susan G.
Braden.
______________________
Decided: January 23, 2018
______________________
D ENNIS J. CALLAHAN , Rogers, Joseph, O’Donnell, San
Francisco, CA, argued for plaintiff-appellee. Also repre-
sented by NEIL H. O’D ONNELL; JEFFERY M. CHIOW , LUCAS
TAYLOR H ANBACK , Washington, DC.
ANTHONY F. SCHIAVETTI, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for defendant-appellant.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 2
Also represented by FRANKLIN E. WHITE, JR., ROBERT E.
K IRSCHMAN , JR., BENJAMIN C. M IZER.
______________________
Before PROST, Chief Judge, CHEN and H UGHES , Circuit
Judges.
H UGHES , Circuit Judge.
The United States appeals from a decision of the
Court of Federal Claims enjoining the United States
Army from proceeding with, or awarding, a contract to
Airbus Helicopter, Inc. The Court of Federal Claims
found that Army Execution Order 109-14, which imple-
mented the Army’s Aviation Restructure Initiative desig-
nating the UH-72A Lakota helicopter as the Army’s
“Institutional Training Helicopter,” was a procurement
decision in violation of the Competition in Contracting Act
and relevant provisions of the Federal Acquisition Regu-
lation. After supplementing the administrative record,
the Court of Federal Claims found that the Army’s deci-
sion to purchase sixteen UH-72A Lakota helicopters from
Airbus also violated the Competition in Contracting Act
and the Federal Acquisition Regulation because the Sole
Source Justification and Approval was arbitrary and
capricious. We conclude that Execution Order 109-14 was
not a procurement decision subject to review, that the
Sole Source Justification and Approval was not arbitrary
and capricious, and that it was an abuse of discretion to
supplement the administrative record. Accordingly, we
reverse the trial court’s decision and vacate the prelimi-
nary injunction.
I
On June 22, 2005, the Army issued an Acquisition
Strategy to procure 322 Light Utility Helicopters (LUH)
by full and open competition. Both AgustaWestland and
Airbus submitted bids. On June 30, 2006, Airbus was
awarded Contract No. W58RGZ-06-C-0194 (2006 Con-

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 3
tract) for $43,090,522.1 AgustaWestland filed an unsuc-
cessful bid protest of the award decision with the Gov-
ernment Accountability Office.
The 2006 Contract required that Airbus provide a
base quantity of eight low rate initial production UH-72A
Lakota helicopters. The 2006 Contract also provided that,
during each Program Year 2 through 10, the Army could
exercise options to purchase up to a total of 483 UH-72A
Lakota helicopters. The last date that the Army could
exercise an option was on September 30, 2015. The 2006
Contract expired on June 30, 2016.
In January 2012, the President of the United States
and the Secretary of Defense announced new Strategic
Guidance that reduced the Defense Budget and called for
the “resizing/reshaping” of the Armed Forces. J.A. 5196–
97. To implement the Strategic Guidance, in August
2013, the Chief of Staff of the Army issued the Aviation
Restructure Initiative (“restructuring initiative” or “initi-
ative”), which was “designed to deliver the best Army
Aviation force possible within resource constraints.”
J.A. 5197. The restructuring initiative, therefore, “di-
vest[ed] legacy systems, [and] invest[ed] in modernization
of Aviation best systems” by “redistributing assets” and
“reducing aircraft types and standardizing Aviation
1 The 2006 Contract was awarded to European Aer-
onautics Defense and Space Company – North America
(EADS-NA). The contract integrated two major subcon-
tractors: Airbus Helicopters, Inc. (formerly known as
American Eurocopter (AE)) and Helicopter Support, Inc.
(HSI). In a company restructuring, EADS-NA became
Airbus Defense and Space, Inc. (ADSI) effective January
2014. As part of the reorganization, all new Army heli-
copter programs became the responsibility of Airbus
Helicopters, Inc.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 4
brigade designs.” Id. The initiative officially retired the
TH-67, a single-engine aircraft used for training at Fort
Rucker, Alabama, and designated the UH-72A Lakota—
the helicopter procured by the Army in the 2006 Contract
with Airbus—the “Institutional Training Helicopter.”
J.A. 5198. The initiative was formally implemented by
the issuance of Army Execution Order 109-14 on April 3,
2014. J.A. 5196–98.
To comply with the objectives of the restructuring ini-
tiative, the Army determined that it needed to increase
the UH-72A Lakota helicopter program by 110 helicop-
ters, from 317 to 427 helicopters. J.A. 2775. Initially, the
Army considered a sole source acquisition for 155 UH-72A
Lakota helicopters, and published a sources sought notice
on September 4, 2014, to explore this option.2 J.A. 2803.
On September 19, 2014, AgustaWestland filed a Com-
plaint for Declaratory and Injunctive Relief in the United
States Court of Federal Claims, arguing that the Execu-
tion Order was a procurement decision. Because no final
decision “with respect to the competitive process to be
used” had been made, the Court of Federal Claims stayed
proceedings. J.A. 7.
Ultimately, the Army decided not to pursue the pro-
curement of 155 UH-72A Lakota helicopters. It chose to
exercise the remaining options on the 2006 Contract with
Airbus permitting the procurement of 412 UH-72A Lako-
ta helicopters, but leaving the Army sixteen helicopters
2 Although the Army only needed 110 UH-72A
Lakota helicopters, it sought to procure additional UH-
72A Lakota helicopters for potential sales to foreign
militaries or to other Government agencies. J.A. 2803.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 5
short of its total requirement.3 J.A. 2956. Because Air-
bus “has exclusive ownership of all data rights required to
produce, maintain, and modify the UH-72,” the Army was
faced with procuring sixteen alternate aircraft, or procur-
ing sixteen helicopters from Airbus through a sole source
follow-on contract. J.A. 2957. On December 10, 2015, the
Army issued a Justification and Approval (J&A) to ac-
quire the UH-72A Lakota helicopters from Airbus “on an
other than full and open competition basis.” J.A. 2965.
The Army justified this decision based on the costs and
delay associated with “procuring and sustaining an alter-
nate aircraft” separate from the UH-72A Lakota. J.A.
2958.
Subsequently, AgustaWestland filed a Supplemental
Complaint, a Motion for Preliminary Injunction, and a
Motion for Judgment on the Administrative Record. The
Government opposed AgustaWestland’s motions and filed
a Cross-Motion for Judgment on the Administrative
Record. Relevant to this appeal, the Court of Federal
Claims found that the April 3, 2014 Execution Order was
a procurement decision in violation of the Competition in
Contracting Act (CICA) and the relevant Federal Acquisi-
tion Regulation (FAR) provisions. The Court of Federal
Claims then determined that it could not “conduct ‘effec-
tive judicial review’ without supplementing the Adminis-
trative Record,” J.A. 25 n.33, and therefore considered
evidence not contained in the administrative record.
After supplementing the administrative record, the Court
of Federal Claims found that the Army’s J&A and deci-
3 The Army initially determined it was fifteen UH-
72A Lakota helicopters short of its requirement, but one
UH-72A Lakota helicopter needed to be replaced after it
was destroyed during a mission, leaving the Army sixteen
short of its requirement. J.A. 2956.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 6
sion to purchase sixteen UH-72A Lakota helicopters
without full and open competition was arbitrary and
capricious, and thus in violation of CICA and the relevant
FAR provisions. Accordingly, the Court of Federal Claims
enjoined the Army from proceeding with, or awarding, the
contract to Airbus.
The United States appeals. We have jurisdiction pur-
suant to 28 U.S.C. § 1292(c)(1).
II
The Court of Federal Claims determined that it had
jurisdiction to review whether the Execution Order violat-
ed CICA and the FAR’s competitive procedures because it
was “a quintessential procurement decision.” J.A. 19.
The Tucker Act provides the Court of Federal Claims with
jurisdiction over an “alleged violation of statute or regula-
tion in connection with a procurement or a proposed
procurement.” 28 U.S.C. § 1491(b)(1). We review a
decision of the Court of Federal Claims regarding its own
jurisdiction de novo. Hymas v. United States, 810 F.3d
1312, 1317 (Fed. Cir. 2016).
The terms “procurement” and “proposed procurement”
are not defined by the Tucker Act or CICA. In Distributed
Solutions, Inc. v. United States, we held that it was ap-
propriate to use the definition of “procurement” set forth
in “41 U.S.C. § 403(2), . . . the statutory provisions related
to the establishment of the Office of Federal Procurement
Policy in the Office of Management and Budget,” to de-
termine whether a procurement has occurred pursuant to
28 U.S.C. § 1491(b). 539 F.3d 1340, 1345 (Fed. Cir. 2008).
Section 403(2) defines “procurement” as including “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

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 7
and closeout.” Id. (emphasis omitted).4 We clarified that
to “establish jurisdiction pursuant to this definition, [a
contractor] must demonstrate that the government at
least initiated a procurement, or initiated ‘the process for
determining a need’ for acquisition.” Id. at 1346.
One objective of the restructuring initiative, formal-
ized in the Execution Order, was to “[r]eplace the aging
Aviation institutional training fleet at Fort Rucker.”
J.A. 5197. To accomplish this objective, the initiative
instructed that “the Institutional Training Helicopter
fleet is converted to UH-72s and the legacy TH-67 train-
ing helicopter is divested.” J.A. 5198. The initiative did
not, however, direct or even discuss the procurement of
UH-72A Lakota helicopters. In fact, the initiative only
contemplated using existing Army assets. See J.A. 5198
(“The Aviation Restructure Initiative will be accomplished
by a variety of means; conversions, inactivations, reloca-
tions, re-flagging and activations using existing organiza-
tional structure unless otherwise directed.”); see also
J.A. 5197 (“The ARI concept will adapt a design to provide
efficient and effective support by redistributing assets in a
manner that most effectively addresses the nation’s needs
at home and abroad.”).
The Execution Order, therefore, was not a procure-
ment decision subject to Tucker Act jurisdiction because it
did not begin “the process for determining a need for
property or services.” Distributed Sols., 539 F.3d at 1345.
The Execution Order simply formalized the Army’s deci-
sion designating the UH-72A Lakota as the Army’s train-
ing helicopter. Because the Execution Order was not a
procurement or proposed procurement, the Court of
4 In 2011, § 403(2) was recodified at 41 U.S.C.
§ 111.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 8
Federal Claims lacked jurisdiction to review whether it
violated CICA and the FAR.
III
Next, we turn to the question of whether acquiring
the UH-72A Lakota helicopters from Airbus “on an other
than full and open competition basis” was arbitrary and
capricious. We review the merits of a bid protest under
the standards set forth in the Administrative Procedure
Act. 28 U.S.C. § 1491(b)(4) (“In any action under this
subsection, the courts shall review the agency’s decision
pursuant to the standards set forth in section 706 of title
5.”). A court may set aside an agency decision that was
“arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A).
A
As a preliminary matter, in reviewing whether ac-
quiring the UH-72A Lakota helicopters from Airbus “on
an other than full and open competition basis” violated
CICA and relevant FAR provisions, the Court of Federal
Claims supplemented the administrative record and
relied on this supplemental evidence to decide this issue.
“Evidentiary determinations by the Court of Federal
Claims, including motions to supplement the administra-
tive record, are reviewed for abuse of discretion.” Axiom
Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1378
(Fed. Cir. 2009).
Because we find that the administrative record was
sufficient to determine whether the Government acted in
an arbitrary or capricious manner, the Court of Federal
Claims abused its discretion by sua sponte supplementing
the administrative record.
“The task of the reviewing court is to apply the appro-
priate APA standard of review, 5 U.S.C. § 706, to the
agency decision based on the record the agency presents
to the reviewing court.” Id. at 1379 (emphasis omitted)

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 9
(citation omitted). The purpose of limiting judicial review
to the record actually before the agency is to guard
against courts using new evidence to “convert the ‘arbi-
trary and capricious’ standard into effectively de novo
review.” Id. at 1380 (quoting Murakami v. United States,
46 Fed. Cl. 731, 735 (2000), aff’d, 398 F.3d 1342 (Fed. Cir.
2005)). Therefore, “supplementation of the record should
be limited to cases in which the omission of extra-record
evidence precludes effective judicial review.” Id. (internal
quotation marks and citation omitted). Judicial review is
“effective” if it is consistent with the APA. Id. at 1381
(“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 mean-
ingful review consistent with the APA.”).
Here, the Court of Federal Claims concluded that it
could not conduct “effective judicial review” without
supplementing the administrative record. See, e.g., J.A. 6
n.6 (“Since this relevant congressional communication
was omitted from the Administrative Record, the court
has determined that it cannot conduct ‘effective judicial
review,’ without supplementing the Administrative Rec-
ord with this public document, which is otherwise subject
to Fed. R. Evid. 201(b).”), 25 n.34 (“The court has deter-
mined that it cannot conduct ‘effective judicial review,’
without supplementing the Administrative Record with
this public document, which is otherwise subject to Fed.
R. Evid. 201(b).”). The Court of Federal Claims was,
however, required to explain why the evidence omitted
from the record frustrated judicial review as to the ulti-
mate question of whether the award of a sole-source
contract to Airbus was arbitrary and capricious. Axiom,
564 F.3d at 1379–80. It did not do so here, but, rather,
provided nothing more than conclusory statements that it
could not conduct effective judicial review without the
supplemented material. Those statements are insuffi-
cient under Axiom. We have examined the administrative

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 10
record and find it sufficient to review the Army’s sole
source procurement award, as discussed below. Thus, we
conclude that the trial court abused its discretion by
supplementing the record, and relying on the supple-
mental evidence to reach its decision.
B
In the context of bid protests, 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.” Impresa
Construzioni Geom. Domenico Garufi v. United States,
238 F.3d 1324, 1332 (Fed. Cir. 2001). Here, the Court of
Federal Claims found that the justifications supporting
the sole-source procurement provided in the J&A were not
sufficient and, further, that the procurement official’s
decision was arbitrary and capricious.
Where, as here, a bid protester challenges the pro-
curement official’s decision as lacking a rational basis, we
must determine whether “the contracting agency provided
a coherent and reasonable explanation of its exercise of
discretion,” recognizing that “contracting officers are
entitled to exercise discretion upon a broad range of
issues confronting them in the procurement process.” Id.
at 1332–33 (internal quotation marks and citation omit-
ted). “[T]he disappointed bidder bears a heavy burden of
showing that the award decision had no rational basis.”
Id. at 1333 (internal quotation marks and citation omit-
ted).
CICA requires agencies to use competitive procedures
to obtain “full and open competition” in conducting “a
procurement for property or services.” 10 U.S.C.
§ 2304(a). CICA, however, exempts agencies from this
requirement when the property or services “are available
from only one responsible source . . . and no other type of
property or services will satisfy the needs of the agency.”
10 U.S.C. § 2304(c)(1). A sole-source award is permitted,

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 11
therefore, when it is “a follow-on contract for the contin-
ued development or production of a major system or
highly specialized equipment” and “it is likely that award
to any other source would result in (A) [s]ubstantial
duplication of cost to the Government that is not expected
to be recovered through competition, or (B) [u]nacceptable
delays in fulfilling the agency’s requirements.” FAR
6.302-1(a)(2)(ii) (48 C.F.R. § 6.302-1). A “major system”
includes a Department of Defense system exceeding $835
million in total expenditures. FAR 2.101.
Prior to awarding a sole-source contract, a contracting
officer must: (1) justify the sole-source award in writing;
(2) certify the “accuracy and completeness of the justifica-
tion”; and (3) obtain the approval of the senior procure-
ment executive of the agency. FAR 6.303-1(a). The FAR
sets forth the specific information required to support
each justification, including “[a] determination by the
contracting officer that the anticipated cost to the Gov-
ernment will be fair and reasonable”; “[a] description of
the market research conducted (see Part 10) and the
results”; “for follow-on acquisitions as described in 6.302-
1(a)(2)(ii), an estimate of the cost to the Government that
would be duplicated and how the estimate was derived”;
and “[a]ny other facts supporting the use of other than
full and open competition, such as . . . [an] [e]xplanation
of why technical data packages, specifications, engineer-
ing descriptions, statements of work, or purchase descrip-
tions suitable for full and open competition have not been
developed or are not available.” FAR 6.303-2(b).
It is undisputed that the J&A, setting forth the Ar-
my’s decision to acquire sixteen UH-72A Lakota helicop-
ters on an other than competitive basis, was a
procurement decision subject to review. The Court of
Federal Claims determined that the J&A, however, was
not a “follow-on contract” subject to the exception set forth
in FAR 6.302-1 because it is a “new contract.” J.A. 22.
“Follow-on contract” is not explicitly defined in the FAR,

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 12
but at the very least, it is a “contract for the continued
development or production of a major system or highly
specialized equipment.” FAR 6.302-1(a)(2)(ii). It is irrel-
evant, therefore, whether a “follow-on contract” is a new,
separate contract or a supplement to an existing contract,
as long as it is a “contract for the continued development
or production of a major system or highly specialized
equipment.” Accordingly, the J&A is a “follow-on con-
tract” for a “major system,” because it is a “contract for
the continued production” of a Department of Defense
system exceeding $835 million in total expenditures. See
J.A. 2962.
The Court of Federal Claims found that the justifica-
tions for the sole-source award to Airbus, set forth in the
J&A, were insufficient. We conclude, however, that the
agency provided a coherent and reasonable explanation of
its exercise of discretion, and therefore the justifications
for the sole-source award are not arbitrary and capricious.
The J&A contains a detailed analysis justifying the
sole-source award to Airbus. The J&A explained that
Airbus was the only responsible source for the helicopters
because it “has exclusive ownership of all data rights
required to produce, maintain, and modify the UH-72.”
J.A. 2957. The J&A relies on two justifications for why
“no other aircraft will satisfy the Army’s requirement”:
(1) “the estimated duplication of costs that would be
incurred in procuring and sustaining an alternative
aircraft is significant and is not expected to be recovered
in its entirety,” and (2) procuring sixteen helicopters from
a different source would result in an unacceptable delay
as it would take up to three years and cause “significant
gaps in the Army National Guard’s ability to meet its
assigned missions of Homeland Security, Disaster Re-
sponse, Search and Rescue, MEDEVAC, and border
patrol” that could expose the nation to security and safety
risks. J.A. 2958.

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 13
To support its first justification, the Government pre-
pared an Independent Government Estimate (IGE), “to
estimate the duplication of costs in conducting another
competitive action (for an alternative helicopter).”
J.A. 2960. The estimated total duplication costs provided
in the IGE were “derived by considering the costs of
conducting the source selection, increased procurement
costs of an alternate aircraft, [and] the impact to sustain-
ing another aircraft separate from the Lakota.” J.A. 2858.
The Court of Federal Claims found that the IGE was
insufficient because it did not consider “the potential
increased cost that Airbus can charge for its intellectual
property [the Technical Data Package],” or whether
“Airbus extracted or could extract a supra competitive
price on its UH-72A Lakota helicopters, because of the
Technical Data Package.” J.A. 23. In 2013, the Govern-
ment requested from Airbus an estimate of the cost to
acquire the Technical Data Package for the UH-72A
Lakota helicopter. Airbus “responded that the TDP is not
for sale and [Rough Order Magnitude] pricing will not be
provided.” J.A. 2963. Because Airbus was not willing to
sell the TDP, the “potential increased costs that Airbus
can charge for its intellectual property” or whether “Air-
bus extracted or could extract a supra competitive price”
is irrelevant.
Ultimately, the J&A needs to find that “the anticipat-
ed cost to the Government will be fair and reasonable.”
FAR 6.303-2(b)(7). In doing so, the government conducted
an IGE to determine “an estimate of the cost to the Gov-
ernment that would be duplicated and how the estimate
was derived.” Based on the IGE, the J&A found that “the
estimated duplication of costs that would be incurred in
procuring and sustaining an alternative aircraft is signifi-
cant and is not expected to be recovered in its entirety.”
J.A. 2958. Ultimately, the J&A concluded that “the
anticipated cost or price to the Government for this con-
tract action will be fair and reasonable” after reviewing

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 14
“cost/price analysis, audit, procurement history, commer-
cial catalogs, fact finding and negotiations.” J.A. 2694.
The evidence in the administrative record sufficiently
supports the J&A’s first justification. See FAR 6.303-
2(b)(9)(ii).
To support its second justification—procuring sixteen
helicopters from a different source would result in an
unacceptable delay—the J&A relied on the “schedule
experienced on the competition conducted for the original
LUH production contract.” J.A. 2958. Notably, it would
“take a minimum of 24 months to produce the competitive
package and prepare the solicitation, receive all proposals
and confirm the contractor’s producibility and technical
capabilities, conduct discussions and complete evalua-
tions, and ultimately select an offeror for contract award.”
Id. It would then take “no less than an additional 12
months for initial production, first article review, and
fielding of the aircraft, accumulating in a timeline of more
than 3 years.” Id. Such a delay “introduces risk to the
nation’s security and safety.” Id. The evidence in the
administrative record is sufficient to support the J&A’s
determination that an award to any other source would
result in unacceptable delays.
Lastly, the Court of Federal Claims also found that
the “Contracting Officer’s decision that ‘the justification
[is] adequate to support other than full competition,’ prior
to the review and approval of Legal Counsel and the
[Special Competitive Advocate] prima facie was arbitrary
and capricious.” J.A. 28 (alteration and emphasis in
original). The Contracting Officer is responsible for
justifying the sole-source award and certifying the accura-
cy and completeness of the justification. Further, the
justification is only required to be approved by the senior
procurement executive. Because the J&A was approved
by the senior procurement executive in compliance with
the FAR, the fact that Legal Counsel and the Special
Competition Advocate approved the J&A after the Con-

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AGUSTAWESTLAND NORTH AMERICA v. UNITED STATES 15
tracting Officer does not establish that the J&A was
prima facie arbitrary or capricious. J.A. 2965.
Because the J&A sufficiently supports the Army’s de-
cision to award a sole-source follow-on contract because it
is “likely that award to any other source would result in
(A) [s]ubstantial duplication of cost to the Government
that is not expected to be recovered through competition,
or (B) [u]nacceptable delays in fulfilling the agency’s
requirements,” FAR 6.302-1(a)(2)(ii) (48 C.F.R. § 6.302–
1), it is not arbitrary and capricious.
IV
Because we conclude that the Execution Order 109-14
was not a procurement decision subject to review, it was
an abuse of discretion to supplement the administrative
record, and the Sole Source Justification and Approval
was not arbitrary and capricious, we reverse the trial
court’s decision and vacate the preliminary injunction.
VACATED
Costs to Appellant.

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