Background
The FAA separately solicited software and hardware for its Tower Simulation System. Adacel Systems won the software contract and therefore knew that its MaxSim software would be used when it competed against Adsync Technologies for the related hardware contract. Adacel initially won the hardware award with a proposal approximately $6.4 million lower than Adsync’s.
After Adsync protested, the FAA’s Office of Dispute Resolution for Acquisition found that Adacel had enjoyed an unfair competitive advantage. The FAA Administrator adopted ODRA’s recommendation to let Adsync revise its proposal, while limiting revisions to changes attributable to the newly disclosed software selection. Adsync reduced its price by $6.5 million, but the contracting team rejected $734,697 in reductions that it found insufficiently connected to the software disclosure. That left Adsync’s evaluated price slightly above Adacel’s, and the FAA again awarded the contract to Adacel.
Adsync filed a second protest challenging the price and technical evaluations and the best-value determination. ODRA recommended denying that protest after finding a rational basis for the contracting authority’s conclusions, and the FAA Administrator adopted ODRA’s findings and recommendation in the final order. Adsync then petitioned the D.C. Circuit for review. The court decided the case on July 24, 2026, and publicly reissued the opinion on August 20, 2026.
The Court’s Holding
The D.C. Circuit denied Adsync’s petition. It held that the FAA did not violate the Acquisition Management System’s price-realism provision because the agency was not conducting a price-realism analysis. Instead, it was implementing a tailored protest remedy that required the agency to determine whether Adsync’s revisions resulted from learning which software had been selected. Applying the price-realism restriction in that setting would have prevented the FAA from policing the remedy’s limits and could have given Adsync an unfair advantage from knowing Adacel’s price.
The court also held that substantial evidence supported the finding that Adsync failed to justify $734,697 in reductions. The disputed reductions covered basic hardware that worked with any software; Adsync treated different monitor sizes inconsistently; the Bill of Materials allegedly documenting original risk premiums was absent from both proposals; and Adsync separately priced the labor needed to integrate hardware and software. Because the pricing team accepted reductions for items containing labor components, the agency could rationally reject unexplained reductions for commercially available hardware.
Finally, the court denied Adsync’s request for bid and proposal costs. ODRA’s statement after the first protest that receiving both the contract and costs would be a windfall did not establish that ODRA had assumed Adsync would ultimately receive the award or that costs otherwise were required. Adsync also failed to develop a legal argument supporting such an award after denial of its petition.
Key Takeaways
- An agency implementing a tailored bid-protest remedy may verify that proposal revisions stay within the remedy’s stated limits.
- The FAA’s price-realism guidance did not govern its review of whether Adsync’s reductions were attributable to newly disclosed software information.
- Substantial evidence supported rejecting reductions that Adsync could not connect to software-related risk, so the resulting best-value award to Adacel survived deferential review.
Why It Matters
The decision illustrates the breadth of agency discretion when fashioning and enforcing corrective action after a bid protest. An agency may seek to eliminate one bidder’s informational advantage without allowing the protesting bidder to exploit newly learned information about a competitor’s price.
For contractors, the opinion underscores the importance of documenting how each revised cost follows from the corrective action. Unsupported claims about prior risk premiums may not withstand review, particularly when contemporaneous proposal materials do not verify them.