Background
In 2025, Congress appropriated $2.1 billion for the development, procurement, and integration of purpose-built medium unmanned surface vessels (MUSVs). In 2026, the Department of the Navy issued Solicitation N00024-26-R-6326 seeking prototype “other transaction” (OT) proposals under 10 U.S.C. § 4022. The solicitation established a two-phase process: Phase 1 required offerors to submit proposals evaluated under four criteria, with a rating of “unacceptable” under any criterion ending participation; Phase 2 offered successful offerors the opportunity to negotiate a prototype OT agreement and participate in an on-water MUSV Test Event. The solicitation also advised that successful prototype participants could receive follow-on production contracts under 10 U.S.C. § 4022(f).
Blue Water Autonomy, Inc. and Saildrone, Inc. submitted proposals but were eliminated during Phase 1. The Navy found Blue Water unacceptable under Criterion 2 (vessel solution design) and Criterion 4 (test execution plan), concluding that Blue Water’s proposed test vessel was not representative of its production vessel because the hull forms and machinery layouts differed significantly. The Navy found Saildrone unacceptable under Criteria 2, 3, and 4, though the Government later withdrew the Criteria 3 and 4 findings. Regarding Criterion 2, the Navy determined that Saildrone’s design was infeasible because its J-8 Placemat reported loaded displacements exceeding the stated maximum displacement.
Both protesters filed complaints in the Court of Federal Claims, which consolidated the cases. After the parties cross-moved for judgment on the administrative record, the court heard oral argument on September 17, 2026.
The Court’s Holding
The court denied Blue Water’s protest and granted Saildrone’s protest. Regarding Blue Water, the court held that the Navy reasonably rated Blue Water unacceptable under Criterion 4. The court construed the solicitation’s requirement that a test asset be “representative” of the production vessel as unambiguously calling for a comparison between the two vessels, including hull form and propulsion architecture. The court deferred to the Navy’s technical judgment that the differences between Blue Water’s twin-hull catamaran test vessel and its axe-bow monohull production vessel were disqualifying. The court also held, as an alternative ground, that Blue Water waived any challenge to the meaning of “representative” by failing to seek clarification before submitting its proposal, despite having asked questions that put it on notice of the issue. Because the Criterion 4 rating alone justified Blue Water’s elimination, the court did not reach Blue Water’s arguments concerning Criterion 2.
Regarding Saildrone, the court found that the Navy engaged in disparate treatment, rendering its Criterion 2 evaluation arbitrary and capricious. The Navy eliminated Saildrone because its J-8 Placemat reported payload-condition displacements exceeding the stated maximum displacement. However, the Navy advanced Sea Machines, whose Placemat either reported similar displacements above the maximum (for the STEAMRUNNER vessel) or left the relevant fields blank (for the STEAMRACER vessel). The Government conceded that the two companies made similar errors. The court rejected the Government’s attempts to justify the unequal treatment based on distinctions not found in the contemporaneous evaluation record, characterizing those arguments as impermissible post hoc rationalizations. The court found that Saildrone was prejudiced because, absent the arbitrary Criterion 2 rating, it would have had a substantial chance of advancing to Phase 2.
The court granted Saildrone’s request for a permanent injunction, finding that all four factors favored relief. The court set aside the Navy’s Criterion 2 finding as to Saildrone and remanded for 60 days, directing the Navy to reevaluate Saildrone’s proposal under the same approach it applied to the offerors it advanced. The court enjoined the Navy from relying on the withdrawn Criteria 3 and 4 findings and, pending reevaluation, limited the Navy’s obligations for MUSV production to $1.5 billion of the $2.1 billion appropriation. The court denied Saildrone’s request for bid and proposal costs, reasoning that the remand restores Saildrone’s opportunity to compete.
Key Takeaways
- A protester challenging a solicitation term as ambiguous must raise that challenge before submitting its proposal if the ambiguity is patent; failure to do so waives the argument.
- An agency’s debriefing may be considered in reviewing the reasonableness of its evaluation if it merely explains the contemporaneous rationale rather than supplying a new, post hoc justification.
- A disparate treatment claim succeeds when the agency downgrades a proposal for deficiencies substantively indistinguishable from those in proposals it advanced, and the agency’s contemporaneous record does not explain the different treatment.
- When a protester succeeds on the merits, a permanent injunction may be appropriate to restore the protester to the position it would have occupied absent the error, tailored to the violation and limited in scope to avoid unnecessary burden on the agency.
Why It Matters
This decision illustrates the Court of Federal Claims’ application of the arbitrary and capricious standard to prototype OT procurements, which are increasingly used by the Department of Defense. The court’s willingness to find disparate treatment based on a comparison of the protesters’ and awardees’ proposals—while deferring to the agency’s technical judgment on the merits—provides a roadmap for protesters challenging evaluation disparities. The decision also underscores the importance of the contemporaneous administrative record: agencies cannot defend their evaluations based on rationales offered for the first time in litigation.
The injunction’s scope is notable for its precision. Rather than halting the procurement or canceling awards, the court crafted relief that preserves the Navy’s flexibility while protecting Saildrone’s opportunity to compete. The $1.5 billion cap on obligations pending reevaluation balances the protester’s interest in a meaningful remedy against the agency’s interest in expeditious procurement, offering a model for tailored injunctive relief in bid protest cases.