Court of Federal Claims Issues Wide-Reaching Decision on Trade Agreements Act

July 25, 2018

By Julia Di Vito

On July 16, 2018, the U.S. Court of Federal Claims (“Court”) issued a decision in the bid protest of Acetris Health, LLC v. United States, Case No. 18-433C, that will likely have far-reaching implications on other procurements involving the Trade Agreements Act (“TAA”). In that case, Acetris Health, LLC (“Acetris”) challenged the terms of a solicitation issued by the U.S. Department of Veterans Affairs (“VA”) to purchase Entecavir Tablets, a medicine designed to treat hepatitis B. In the solicitation for this procurement, VA stated that it was seeking “U.S.-made” end products or “designated country end products,” as defined in Federal Acquisition Regulation (“FAR”) Part 25, but also required offerors to certify whether or not the end product they offered was TAA compliant. The Court found this requirement improper.

In its decision, the Court noted that the Trade Agreements clause in the FAR, FAR 52.225-5, was incorporated into the solicitation and required the awardee to supply a product that was either a U.S.-made end product or a designated country end product. As defined by this clause, a U.S.-made end product includes those products that are “mined, produced, or manufactured in the United States.” The Court interpreted VA’s statements in the solicitation and in the question and answer phase of the solicitation as indicating that VA was not permitting “domestic end products” that satisfied the definition of U.S.-made end products, even though a “domestic end product” was a type of U.S.-made end product. The Court also drew a distinction between a requirement under the TAA that a product be “wholly” manufactured in the United States to be TAA compliant and the requirement under the Trade Agreements clause in the FAR, which only required that products be manufactured in the United States. As a result, the Court found it improper to require offerors to certify that the products they offered were TAA compliant when they only were required by the FAR to be U.S.-made end products.

Additionally, the Court found it unreasonable that VA relied on the U.S. Customs and Border Protection’s (“CBP”) determination that the country of origin for Acetris’ product was India, rather than the United States. CBP made this determination outside of the context of the procurement, and the Court found that VA should have independently assessed whether Acetris’ products qualified as U.S.-made end products under the Trade Agreements clause instead of relying on CBP’s determination. This decision also stemmed from the Court’s distinction between the standards for U.S.-made end products under the Trade Agreements clause and the requirements to be TAA compliant, as CBP determined whether the product was TAA compliant. The Court did not render an opinion as to whether CBP’s determination about the country of origin for Acetris’ product was accurate.

The Acetris decision is particularly noteworthy because the Court did not limit its decisions to simply the procurement at issue. The Court permanently enjoined VA, in future procurements, from construing the term “U.S.-made end product” in the Trade Agreements clause as excluding products manufactured in the United States. The Court also permanently enjoined VA from relying on CBP rather than independently ascertaining whether an offered product is manufactured in the United States. This injunction is significant because most protest decisions only impact the specific procurement at issue in the protest, rather than unspecified, future procurements. It is unclear whether other agencies besides VA similarly will be prohibited from relying on CBP’s determinations in their procurements, but this decision may set a precedent for other protest decisions to have widespread impact on future procurements.

About the Author: Julia Di Vito practices in the areas of government contracts, litigation, and labor and employment. She may be reached at jdivito@pilieromazza.com.
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