The United States Court of Appeals on January 25 overturned a 2016 federal claims court decision that challenged the U.S. Army's authority to expand its Airbus Helicopters UH-72A fleet without competitive bidding. The original complaint was brought by Leonardo unit AgustaWestland North America, which has repeatedly challenged the Army's decision to acquire Lakotas, dating back to 2006. The Army currently operates more than 400 twin-engine UH-72As for a variety of missions, including primary pilot training at Fort Rucker, Alabama.
The Army has exercised its option to acquire 412 UH-72As under a 2006 contract, but this number provided insufficient units to fully meet its training requirement. Following a 2014 executive order that laid the ground for rationalizing the Army's rotorcraft fleet to four principal types—the UH-72A, UH-60, AH-64, and CH-47—on Dec. 10, 2015, the Army issued a Justification and Approval (J&A) to acquire an additional 16 UH-72As from Airbus “on an other than full and open competition basis.” The Army said the decision was justified due to cost and delay concerns with “procuring and sustaining an alternate aircraft.” AgustaWestland had proposed its single-engine AW119Kx for the role.
AgustaWestland responded to the Army's decision by filing a supplemental complaint, a motion for preliminary injunction, and a motion for judgment on the administrative record with the federal claims court designed to block the acquisition, arguing that the Army's decision to acquire the additional Lakotas violated federal competitive bidding law. The U.S. government challenged these, and the claims court found for AgustaWestland and enjoined the Army from proceeding with the acquisition.
In a rebuke of the claims court, the appeals court ruled that the Army's decision to acquire the additional Lakotas spawned from 2012 Department of Defense strategic guidance and the 2014 executive order and was therefore not a procurement. As a result, the claims court lacked jurisdiction in the matter. The appeals court further ruled that the claims court “abused its discretion” by relying on “supplemental evidence” and by supplementing the administrative record. The claims court was required to consider only evidence presented by the Army to justify its acquisition decision or to explain why omitted evidence frustrated judicial review. According to the appeals court ruling, it failed to do the latter.
Finally, the appeals court noted that the Army had legal authority to eschew competitive bidding for the acquisition and had more than legally made the case to do so, specifically by noting that new Lakotas were available only from Airbus and that procuring 16 additional helicopters of a different type would impose undue and significant costs and delays—up to three years—and cause “significant gaps” in the ability of the Army National Guard to meet its missions.
In a statement issued after the decision, Airbus Helicopters praised the Court of Appeals' decision, noting that it ends “a two-year saga of one contractor attempting to wrestle business from a customer by holding Army readiness hostage. This ruling also removes the threat that Leonardo has held over the heads of our American workers in Mississippi—more than 40 percent of whom are U.S. military veterans—as it has tied up Army procurement long enough to nearly shut down our American production line.
“This wasteful lawsuit not only damaged the Army’s readiness by limiting its ability to train new pilots, but [also] threatened to cost the taxpayers countless millions by attempting to force the Army to introduce a brand-new aircraft into its inventory. Had Leonardo succeeded, it would have been a massively expensive step backward from the Army’s cost-saving aviation restructure Initiative. No one could ever argue that it was in the best interests of Army aviators or the taxpaying public to force the Army to train its pilots with a fleet made up of 90 percent Lakotas and 10 percent of something else.
“The aerospace industry exists to serve the needs of the U.S. military, not the other way around. Today’s ruling is a victory for every one of our peers and competitors that holds that view, and that prefers to win business on the strength of its products rather than the strength of its lawyers,” Airbus said in a statement.
After initially indicating that it would appeal the Appellate Court decision and contest future Army Lakota purchases, Leonardo reversed course and issued the following statement on February 12:
“In light of the Appellate Court ruling, Leonardo Helicopters has decided to discontinue any further legal action regarding the sole-source award of trainer helicopters to the U.S. Army. We nonetheless continue to believe that strong competition for government programs is in the best interests of our warfighters, American taxpayers. and the U.S. defense industrial base. Of course, we are disappointed that there was no competition in this case.”
Leonardo’s decision came two weeks after Chris Emerson, the CEO of Airbus’s North American arm—Airbus Helicopters Inc., held a conference call with journalists to discuss Leonardo’s legal tactics. Emerson said they threatened the entire Defense Department acquisition process and “constituted a credible threat to every major player in the defense industry by a company that had nothing to lose.”