Military

US Court Backs Leo’s Lakota Bid Challenge

By Pat Host | August 30, 2016


A UH-72A Lakota. Photo courtesy of the U.S. Army

A U.S. court has backed Leonardo's challenge to the U.S. Army's contract with Airbus Helicopters for 16 more UH-72A Lakota helicopters and has given the service six months to justify that contract award, re-compete it or drop the acquisition.

Leonardo has challenged the Army's modification late last year of the original 2006 Light Utility Helicopter program contract to permit the purchase of 16 more Lakotas on the grounds that Airbus was a responsible sole source of the aircraft. Judge Susan Braden of the U.S. Court of Federal Claims ruled Aug. 15 that the Army, in modifying the contract, had violated federal procurement law. The order of the court, which primarily hears money claims based on federal laws and regulations, was held for 10 days and then released in a redacted form.

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Braden's decision bars the Army from proceeding with or awarding a contract to Airbus for 16 UH-72As and puts the purchase of additional helicopters on hold for six months. She gave the Army that long to decide whether it would proceed with a competitive procurement or issue a new justification and approval (J&A) giving the work to Airbus in a full and open competition. (The latter option would require the Army to correct deficiencies in its late-2015 decisions and develop a new independent government estimate of the contract.) Braden also said the Army could choose not to proceed with the procurement.

The ruling is a victory for Leonardo, as its AgustaWestland division lost out on the original contract award to Airbus, then known as EADS. The 2006 contract was valued at $43 million for eight low-rate initial production (LRIP) Lakotas, a variant of the Eurocopter EC145, with options for as many as 483 more. 

The Army to date has received more than 350 UH-72As; an additional 58 still could be ordered under the 2006 contract.

Braden ruled Leonardo and other potential competitors, while not entitled to contracts, are entitled to demonstrate the competitive benefits of their products. This is in particular, she said, because there may have been technical advances and/or reduction in the cost of offerings in the last decade, and the lifespan of the Lakotas has been estimated to be between 21 and 25 years. Braden said it may be many years before another major purchase is made by the Army and that this justified her decision.

She also ruled a 2014 Army executive order establishing the Lakota as the “only one responsible source” for the Army’s instruction training aircraft and a December J&A violated federal procurement law. Braden said the Army could have begun the process to purchase these 16 helicopters subject to full and open competition in 2014 or earlier.

Instead, Braden said the service proceeded to “standardize” on Airbus’ Lakota helicopter as the “only one responsible source,” endorsed a flawed independent government estimate (IGE) and misrepresented the statutory and regulatory authorization for the December 10 J&A, among other deficiencies. Braden criticized the Army’s use of the “only one responsible source” exemption as Leonardo could also provide training helicopters that meet the Army’s requirements.

“If there is a genuine need for the 16 Light Utility Helicopters at issue, or perhaps a larger number, the most efficient way for the Army to proceed is to commence a competitive procurement,” Braden said in her ruling.

On Nov. 12, the Army modified its 2006 contract to order 12 Lakotas and mission equipment packages (MEP), to be delivered starting in August 2017, at a price of roughly $61 million. The Army, on Dec. 10, issued a J&A to purchase 16 Lakotas without competition on the basis of Airbus having exclusive ownership of all the technical data necessary to manufacture the aircraft and related MEPs and having declined to sell the data to the Army.

Braden also criticized this decision, saying Airbus did not have exclusive ownership of its technical data package (TDP) because it is the original equipment manufacturer (OEM) of the Lakota. But it will not license or sell its TDP to anyone, including the Army, which Braden said is Airbus’ legal right. Braden said this does not provide a justification to the Army for exempting a new procurement to full and open competition in 2016 and without considering the potential for increased cost that Airbus can charge for its intellectual property.

Braden slammed the Army’s reliance on its IGE, calling the estimates of the costs of this proposed procurement neither independent nor reliable. The Army had used the IGE as justification for procuring Lakotas without competition. Braden said instead of the scope of work being framed to determine whether there would be additional costs and the amount, the IGE simply assumed, or was instructed by the Army, to assume that there would be “additional costs,” with respect to purchasing these 16 helicopters, at issue, and having a “mixed” training fleet.

The Army also justified the award without competition on the basis of its IGE estimate that there would be a three-year delay if these 16 helicopters were competitively sourced. Braden pointed to a previous Army procurement where it took the service less than a year to issue a statement of work, a solicitation and enter into a contract to procure 45 helicopters. Braden believed the time and cost of a competitive procurement should be approximately one year as opposed to three.

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