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The 2019 NDAA prohibits contractors from using certain covered telecommunications equipment. The protester had obtained a waiver from Director of National Intelligence (DNI) to use covered equipment. But in this case, the agency said that waiver did not apply. As a result, the agency disqualified the protester from the procurement. The protester filed suit to alleging it waiver was valid. The COFC sided with the protester.
The QED Group, LLC d/b/a Q2 Impact v. United States, COFC No. 24-1961C
- Statute – Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA FY 2019) prohibits agencies from entering, extending, or renewing a contract “with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” Pub L. No. 115-232, § 889(a)(1)(B).
- Waivers: Under § 889(d)(1), the statute gives certain government officials the authority to grant waivers with certain limits. Namely, they are “on a one-time basis” and required a “phase-out plan.” Under § 889(d)(2), the statute separately gives the Director of National Intelligence (DNI) authority to “provide a waiver…if the Director determines the waiver is in the national security interest of the United States.”
- Protest – The protester had obtained a waiver from the DNI to use covered equipment. The agency, however, disqualified the protester, finding the waiver was not operative. The protest challenged its disqualification. It claimed the government misapplied to statute’s waiver provision.
- Government Interpretation – The government relied on the text of the statute, the Federal Acquisition Regulations, and some comments in the Federal Register to reject a “uniform waiver process.” A waiver, the government argued, must specifically apply to the agency awarding the contract. Furthermore, a wavier received by one agency “will not necessarily shed light on whether a waiver is warranted in a different procurement with a separate agency.” Thus, the protester’s existing waiver could not carry over to this new procurement.
- Protester Interpretation – The protester responded this was true for agency-head waivers under § 889(d)(1), but the statute applied differently to waivers issued by the DNI under § 889(d)(2).
- Decision – The Court agreed with the protester. It found it logical that agency heads would not have a “uniform waiver process” because agencies each operate differently, with different interests and tolerances for risk. The DNI, on the other hand, has to weigh only whether a given waiver is in the national security interests for that solicitation.
- Loper Bright Consideration: The Court also considered whether it needed to give GSA’s interpretation deference after Loper Bright. It stated that it GSA’s interpretation warranted significant consideration since GSA is one of the most significant players in government contracting. However, GSA and the FAR Council have only discussed the agency-head waiver process, not the DNI waiver process. Thus, no deference was necessary.
- Conclusion: The agency was not prohibited from contracting with the protester under § 889(a)(1)(B) agency-head waiver because the protester held a § 889(d)(2) DNI waiver. This DNI waiver is not statutorily time-limited nor did it have to phase out.
The protester was represented by Ryan C. Bradel of Ward & Berry, PLLC. The Government was represented by Grant D. Johnson of DOJ.
— Case summary by Joshua Lim, Assistant Editor.
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