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The solicitation required offerors to certify they were a registered Danish/Greenlandic company at least 50% owned by a Danish/Greenlandic entity. The protester did not certify it was 50% owned by a Danish/Greenlandic entity. The agency found the protester ineligible. The protester filed suit with the COFC, alleging the 50% ownership limitation was unduly restrictive. The government moved to dismiss, alleging this case required the court to second-guess diplomatic treaties between the U.S. and Denmark. The court denied the motion, finding it could interpret how those treaties applied to procurement statutes without questioning the treaties’ validity. The court, however, concluded the 50% owned limitation was not unduly restrictive. The agency had properly excluded the protester.

Vectrus Services A/S v. United States, COFC No. 22-633C

Background

The U.S. and the Kingdom of Denmark entered a Defense of Greenland Agreement in 1951. That agreement created Thule Air Base in Greenland. In 1991, the U.S. and Denmark entered a memorandum of understanding, which encouraged the U.S. to acquire goods and services for the Thule Air Base from Danish/Greenlandic sources. In 2009, the U.S. and Denmark entered another diplomatic agreement, which required the U.S to procure goods and services in Greenland from Danish/Greenlandic sources.

In 2014, the Air Force awarded a contract for maintenance at Thule Air Base to a predecessor of Vectrus Services A-S. Vectrus was registered in Denmark as required by the 1991 agreement. But Vectrus was a wholly owned subsidiary of a U.S. company.

Denmark wasn’t happy about the award to Vectrus. Denmark believed Vectrus was a Danish company in name only. To soothe tensions, the U.S. and Denmark executed diplomatic notes that clarified the meaning of a Danish/Greenlandic source. As of 2020, to qualify as Danish/Greenlandic, more than 50% of a company’s equity had to be owned by Danish or Greenlandic entities.

In 2021, the Air Force issued a new RFP for maintenance at Thule Air Base. In accordance with the U.S./Danish diplomatic notes, offerors had to certify the following: (1) the company was a registered Danish or Greenlandic company; (2) more than 50% of the company’s equity was owned by Danish or Greenlandic entitles; and (3) a non-Danish or non-Greenlandic company does not have “decisive influence” (in Danish: “bestemmende inflydelse) over the offeror.

Vectrus submitted a proposal. As to its status as a Danish company Vectrus certified as follows: (1) Vectrus is registered as a Greenlandic company; (2) Vectrus is wholly owned subsidiary of Vectrus Services, (3) Vectrus cherishes Greenland and pledges to continue to serve the community.

The Air Force determined Vectrus was ineligible. Vectrus’s certification didn’t comply with the solicitation. Among other things, Vectrus certified it was owned by a U.S. company, not a Danish or Greenlandic entity.

Vectrus filed a protest with GAO, challenging its exclusion. GAO denied the protest, finding that Vectrus did not qualify as a Danish company.

Vectrus filed suit in the Court of Federal Claims. Vectrus alleged the solication’s limitation to companies at least 50% owned by Danish or Greenlandic entities was unduly restrictive. Vectrus also claimed the agency erred in finding its proposal ineligible.

Analysis

Interpretation of Treaty or International Agreement

The government moved to dismiss Vectrus’s protest for lack of subject matter jurisdiction. The government reasoned 28 U.S.C. § 1502 bars the court from hearing cases dependent on the interpretation of a treaty or international agreement. The government reasoned this cases hinged on the interpretation of agreements between the U.S. and Denmark.

But the court noted § 1502  only prevents the court from hearing claims growing out of or dependent on an international treaty. Courts have interpreted this as requiring a direct or and proximate connection between the claim and a treaty. Section 1502 only applies if the claim derives its existence from a treaty.

Here, Vectrus’s claims had their origin in the Competition in Contracting Act and the FAR. Vectrus was merely challenging the terms of the solicitation and the rejection of its proposal. Vectrus did not claim to seek any right created by the treaties with Denmark. Section 1502 didn’t apply.

Political Question

The government contended Vectrus’s claims broached political questions and thus were non-justiciable. The government reasoned adjudication of the case would require the court to second guess U.S. diplomatic agreements.

The court rejected this argument. Reviewing U.S. Supreme Court precedent, the court opined that not every case that touches upon an international agreement lies outside the court’s jurisdiction. When a claim is based on a statutory right, a court can interpret the effect of a treaty or international agreement on that right. Determining the effect of a treaty on a right would not cause the court to question the U.S.’s negotiations with Denmark.

Merits

The merits of the case came down to what the court could consider in adjudicating the case. Vectrus argued the 2009 agreement between the U.S. and Denmark governed. That agreement required the U.S. to fulfill its needs in Greenland from Danish/Greenlandic sources. But the 2009 agreement did not contain restrictions requiring that a contractor be at least 50% owned by a Danish or Greenlandic company. Those restrictions derived from  subsequent communication that should not alter the 2009 agreement.

The government argued the court was not restricted to 2009 agreement. Rather, the court should give effect to the post-2009 diplomatic notes, which clarified the meaning of a Danish/Greenlandic company.

The court concluded the government had the better argument. After a thorough review of U.S. Supreme Court precedent, the court reasoned that diplomatic correspondence, subsequent understandings of intent, and courses of conduct may be used to determine a treaty’s meaning. Thus, while the 2009 agreement was the last official treaty, that treaty had to be interpreted in light of the parties’ subsequent communications. Those communications made it clear the U.S. and Denmark wanted to define a Danish/Greenlandic company as, among other things, a company at least 50% owned by a Danish/Greenlandic individual or entity.

Thus, the 50% ownership limitation in the solicitation was not arbitrary. Vectrus was not eligible under this limitation. The government did not err in excluding Vectrus’s proposal.

Vectrus is represented by J. Scott Hommer, III, Rebecca E. Pearson, Christopher Griesedieck, Lindsay M. Reed, and Alexander W. Koff of Venable LLP. The government is represented by Elizabeth M.D. Pullin, William J. Grimaldi, Patricia M. McCarthy, and Brian Boynton of the Department of Justice as well as Michael J. Farr and Katherine Illingworth of the Air Force.

–Case summary by Craig LaChance, Senior Editor