Percipient.Ai v. United States: Fed. Circuit Tosses Protest on OCI Grounds

Percipient.ai, Inc. developed artificial intelligence software designed to analyze and interpret large quantities of visual data for national security applications. In 2020, the National Geospatial-Intelligence Agency (NGA) issued a solicitation for the GEOINT Services Operations and Integration (GSO&I) program. The solicitation sought technology and support services for integrating commercial AI and machine learning solutions into intelligence operations. The procurement was structured as a multiple-award indefinite delivery, indefinite quantity (IDIQ) contract under Federal Acquisition Regulation (FAR) Part 15.

Percipient.ai submitted a proposal, but the NGA excluded it from the competitive range. The agency found that Percipient’s proposal failed to demonstrate adequate corporate experience and technical understanding of the program’s requirements. Percipient filed a protest with the Government Accountability Office (GAO), asserting that the NGA applied unstated evaluation criteria and failed to conduct meaningful discussions. The GAO denied the protest, finding the evaluation reasonable and consistent with the solicitation.

Court of Federal Claims Proceedings

Following the GAO decision, Percipient filed a bid protest in the U.S. Court of Federal Claims (COFC). It alleged that the NGA’s evaluation was arbitrary and violated procurement regulations. Percipient argued that the agency’s decision relied on unannounced standards and improperly favored larger incumbent contractors with prior government experience. The company sought an injunction to prevent contract performance by other awardees.

The COFC denied the protest, concluding that the NGA reasonably evaluated Percipient’s proposal. The court found that Percipient’s limited record of prior federal contracts supported the agency’s concern about its ability to manage a large, complex program. The court also rejected the argument that the solicitation’s evaluation criteria were ambiguous, holding that they clearly required demonstrated experience with similar programs.

Appeal to the Federal Circuit

Percipient appealed to the United States Court of Appeals for the Federal Circuit, arguing that the COFC misapplied the arbitrary and capricious standard of review. Percipient contended that the NGA’s decision contradicted the solicitation’s stated evaluation factors, which focused on potential capability rather than prior government contracting history.

The Federal Circuit reviewed the COFC’s judgment de novo. It emphasized that under the Tucker Act, 28 U.S.C. § 1491(b)(4), courts review agency procurement decisions under the Administrative Procedure Act standard—setting aside actions that are arbitrary, capricious, or contrary to law.

Federal Circuit’s Analysis

The appellate court first determined that the NGA’s evaluation was consistent with the solicitation’s stated criteria. The court noted that the solicitation required offerors to demonstrate experience integrating commercial technology into government systems and managing projects of similar scale. Percipient’s proposal, while technically innovative, lacked specific examples of prior work demonstrating this capability.

The court rejected Percipient’s argument that the NGA’s focus on past performance created an unstated evaluation criterion. It held that assessing prior experience is an inherent part of determining capability under FAR Part 15. The court further found that the agency provided adequate rationale for excluding Percipient from the competitive range and that the record contained substantial evidence supporting its conclusions.

Percipient also argued that the agency failed to conduct meaningful discussions. The Federal Circuit disagreed, finding that the NGA was not required to open discussions after determining that Percipient’s proposal could not be improved sufficiently to become competitive. The court cited established precedent allowing agencies to exclude technically unacceptable proposals without discussions when deficiencies are material.

Court’s Ruling

The Federal Circuit affirmed the judgment of the Court of Federal Claims. It held that the NGA’s evaluation of Percipient’s proposal was reasonable and in accordance with the solicitation’s criteria. The court concluded that the exclusion of Percipient from the competitive range and the denial of its protest were lawful and supported by the administrative record.

Assistance with Bid Protest Matters

If your company has concerns about federal contract awards or proposal evaluations, Whitcomb, Selinsky PC assists with bid protests and related government contracting issues. Contact our team to learn how we can help you protect your interests in federal procurement disputes.