          In the United States Court of Federal Claims
                                          No. 14-870C

                                    (Filed: March 18, 2015)

                                                  )   Post-award bid protest; subject matter
 HYPERION, INC.,                                  )   jurisdiction; conversion of a motion
                                                  )   to dismiss or for summary judgment
                Plaintiff,                        )   into a motion for judgment on the
                                                  )   administrative record; new transactional
        v.                                        )   facts obviating claim preclusion; the
                                                  )   “International Agreement” exception to
 UNITED STATES,                                   )   the Competition in Contracting Act; 10
                                                  )   U.S.C. § 2304(c)(4); FAR § 6.302-4;
                Defendant.                        )   DFARS § 206.302-4; Defense Security
                                                  )   Cooperation Agency Manual


       Cyrus E. Phillips IV, Albo & Oblon L.L.P., Arlington, Virginia, for plaintiff.

       Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With him on the briefs
were Joyce R. Branda, Acting Assistant Attorney General, Civil Division, Robert E.
Kirschman, Jr., Director, and Kirk T. Manhardt, Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, D.C. Of counsel
was Cameron Edlefsen, Trial Attorney, U.S. Army Legal Services Agency, Fort Belvoir,
Virginia.


                                    OPINION AND ORDER
LETTOW, Judge.

          This post-award bid protest reprises an earlier protest in which the protestor was
successful. Hyperion, Inc. v. United States, 115 Fed. Cl. 541, 557 (2014) (“Hyperion I”). In the
first action, the court awarded protestor, Hyperion, Inc., injunctive and declaratory relief and set
aside a contract awarded by the United States Army (“the Army” or “the government”) to
Technical Communications Solutions Corporation (“Technical Communications”) for
installation and infrastructure upgrades to fiber optic cable networks in the Hashemite Kingdom
of Jordan (“Kingdom of Jordan” or “Jordan”). Id. Hyperion is back before the court contesting
the Army’s renewed award of a contract to Technical Communications notwithstanding the
court’s prior decision. At this juncture, Hyperion seeks bid preparation and proposal costs
incurred in connection with the procurement. See Compl.

       Pending before the court is the government’s motion to dismiss pursuant to Rules
12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims (“RCFC”), or, in the
alternative, motion for summary judgment pursuant to RCFC 56. Mot. to Dismiss or, in the
Alternative, Mot. For Summary Judgment (“Def.’s Mot.”), ECF No. 18. The government
contends that Hyperion’s complaint is procedurally improper because plaintiff failed to seek bid
preparation costs in its initial bid protest. Def.’s Mot. at 2. Additionally, the government avers
that the Army complied with Department of Defense regulations in awarding the second contract
because the Kingdom of Jordan acted to select Technical Communications as the sole-source
awardee of a Foreign Military Sale under the Foreign Assistance Act, 22 U.S.C. § 2151-2431k,
particularly 22 U.S.C. § 2344, and the Arms Export Control Act, 22 U.S.C. §§ 2751-2799aa-2,
particularly 22 U.S.C. § 2762. See Def.’s Mot. at 14-23. Finally, the government claims that the
amount of costs requested by Hyperion is improper and not supported by the required
documentation. Id. at 3.

       As the government avers, “the circumstances of this case are unique” and do not fit easily
within an established template for analysis. Def.’s Mot. at 10.

                                              FACTS1

         As initially structured, the Army’s procurement was a small business set-aside subject to
48 C.F.R. (“FAR”) § 15.101-2, requiring that the lowest-priced-technically-acceptable proposal
would receive the award. Hyperion I, 115 Fed. Cl. at 546. After receiving four timely proposals,
i.e., from Hyperion, “Offeror A”, “Offeror B”, and Technical Communications, the Army
ultimately awarded the contract to Technical Communications. Id. at 548-49. Hyperion
subsequently filed a protest in this court, alleging that the other three offerors’ proposals facially
would be unable to comply with FAR § 52.219-14, “Limitations on Subcontracting.” Id. at 549.
Concluding that Hyperion sufficiently demonstrated prejudice in the procurement process based
on the Army’s unreasonableness in finding the other offers to be technically sufficient, the court
set aside the Army’s award to Technical Communications. Id. at 557. The judgment was
entered on April 10, 2014 and became final on June 9, 2014, when no appeal was taken to the




       1
         Although the government has considered that this case is susceptible to disposition on
either a motion to dismiss under RCFC 12(b)(6) or a motion for summary judgment under RCFC
56, it nonetheless is a post-award bid protest subject to RCFC 52.1. Thus, review on the
administrative record of the procurement is appropriate in this court. See RCFC 52.1 Rules
Committee note (2006 adoption) (“Summary judgment standards are not pertinent to judicial
review upon an administrative record. . . . This rule[, i.e., RCFC 52.1,] applies whether the
court’s decision is derived in whole or in part from the agency action reflected in the
administrative record.”).
         The court’s findings are based on the administrative record. See Bannum, Inc. v. United
States, 404 F.3d 1346, 1357 (Fed. Cir. 2005) (“[T]he [c]ourt . . . is required to make factual
findings under [what is now RCFC 52.1] from the record evidence as if it were conducting a trial
on the record.”). Although that record was not certified by the agency under RCFC 52.1(a), it
nonetheless has been put before the court by the parties in pertinent part.



                                                  2
Federal Circuit.2

        After the Army notified the Kingdom of Jordan of the court’s decision, Def.’s Mot at 23,
Jordan submitted a Letter of Request directing a sole-source procurement to Technical
Communications. A 47 (Letter from Brig. Gen. Ali Ahmad AL-Rawashdeh to Military
Assistance Program, American Embassy, Amman, Jordan (June 1, 2014)).3 The letter listed two
reasons for the Kingdom of Jordan’s decision: (1) Technical Communications has extensive
experience working in the Middle East; and (2) it is a member of the on-ground engineering and
installation team that had previously completed earlier portions of the five-part communications
project. Id. On July 24, 2014, the government’s Security Assistance Management Directorate
approved a memorandum in lieu of justification and approval announcing that “[a]ny resultant
contractual action will be awarded to T[echnical Communications]” and pricing would no longer
be on a Firm-Fixed-Price Completion Basis. A 48-49 (Mem. for Record); Pl.’s Brief in Support
of Resp. to Def.’s Mot. to Dismiss or, in the Alternative, Mot. for Summary Judgment (“Pl.’s
Opp’n”) at 13-14, ECF No. 22-1. On October 23, 2014, an official “Notice” was issued by the
government stating that a sole-source award for the contract would be awarded to Technical
Communications. Notice (Oct. 23, 2014), ECF No. 12; see Def.’s Mot. at 6-7; Pl.’s Opp’n at 14-
15; Hr’g Tr. 27:5-10 (Jan. 26, 2015).4

         On September 18, 2014, Hyperion filed suit in this court, seeking bid preparation and
proposal costs and “unreimbursed legal fees” in the amount of $402,583.22, a “[d]eclaration that
the contested [s]olicitation was a sham [c]ompetition,” and “such further and other relief as the
[c]ourt may deem just and proper.” Compl. ¶¶ 1, 3, 7; Compl. at 15. Hyperion avers that the
result of the Army’s solicitation was “pre-ordained” because “the Army had decided before the
[c]ompetition to make an [a]ward to T[echnical Communications]’s proposed [s]ubcontractor,
doing so in the guise of an [a]ward to T[echnical Communications] as the prime [c]ontractor,”
evidenced by the fact that the Army knew but did not disclose subsurface conditions for the
fiber-optic cable installation to bidders. Compl. ¶ 14. On November 24, 2014, the government
filed its motion to dismiss or, in the alternative, motion for summary judgment.

       After briefing and a hearing, the court concludes that it has jurisdiction to hear
Hyperion’s post-award protest of the second award to Technical Communications, but relief
must be denied on the merits because the government acted properly under its foreign military


       2
        After the first decision became final, on June 17, 2014, Hyperion filed an application for
attorneys’ fees and expenses and under the Equal Access to Justice Act, 28 U.S.C. § 2412. On
September 29, 2014, the court awarded Hyperion attorneys’ fees of $30,309.19, paralegal fees of
$987.00, and expenses of $441.26. Hyperion, Inc. v. United States, 118 Fed. Cl. 540, 548 (2014)
(“Hyperion II”).
       3
        The attachments to the government’s motion are sequentially paginated and are denoted
as “A __”.
       4
        Further citations to the transcript of the hearing held on January 26, 2015 will omit
reference to the date.


                                                 3
assistance and sales regulations and policies to make an award of the contract based upon the
Kingdom of Jordan’s direction.

                                            ANALYSIS

        Although the government invokes RCFC 12(b)(1) and RCFC 12(b)(6) as a basis for
dismissal of Hyperion’s protest, see Def.’s Mot. at 5-8, it does not shape its contentions around
those rules. Instead, the government urges that Hyperion’s claims should be dismissed because
they are “procedurally improper” on two grounds: (1) the claims were previously adjudicated in
the underlying bid protest and are therefore claim precluded, and (2) they are based on an
erroneous assumption that the Army engaged in a “sham competition” in which “the Army had
decided before the [c]ompetition to make an [a]ward to . . . T[echnical Communications].” Id. at
11-13.

                                          A. Jurisdiction

        Hyperion premises this court’s jurisdiction on the Tucker Act, 28 U.S.C. § 1491, as
amended by the Administrative Dispute Resolution Act, Pub. L. No. 104-320, § 12, 110 Stat.
3870, 3874-76 (Oct. 19, 1996). By statute, this court has jurisdiction “to render judgment on an
action by an interested party objecting to a solicitation by a [f]ederal agency for bids or proposals
for a proposed contract or to a proposed award or the award of a contract or any alleged violation
of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C.
§ 1491(b)(1); see Systems Application & Techs., Inc. v. United States, 691 F.3d 1374, 1380-81
(Fed. Cir. 2012) (“On its face, [28 U.S.C. § 1491(b)(1)] grants jurisdiction over objections to a
solicitation, objections to a proposed award, objections to an award, and objections related to a
statutory or regulatory violation so long as these objections are in connection with a procurement
or proposed procurement.”).

        Hyperion requests relief based on the government’s actions in connection with a
procurement, i.e., the cancellation of the Army’s solicitation and award of a sole-source contract
following the court’s judgment setting aside the government’s initial award to Technical
Communications. See Compl. “Congress has defined the term ‘procurement’ to include ‘all
stages of the process of acquiring property or services, beginning with the process for
determining a need for property or services and ending with contract completion and closeout.’”
OTI Am., Inc. v. United States, 68 Fed. Cl. 108, 114 (2005) (quoting the statute that has been
recodified as 41 U.S.C. § 111). As a general matter, the Court of Appeals for the Federal Circuit
has held “that bid protest jurisdiction arises when an agency decides to take corrective action” in
a procurement. Systems Application & Techs., 691 F.3d at 1381 (citing Turner Constr. Co. v.
United States, 645 F.3d 1377 (Fed. Cir. 2011)). The government has offered no reason
discernible to the court why the Tucker Act should not apply under these circumstances. Indeed,
the court on a number of occasions has exercised jurisdiction over corrective-action claims in
post-award bid protests. See, e.g., WHR Grp., Inc. v. United States, 115 Fed. Cl. 386 (2014)
(exercising jurisdiction over a post-award bid protest contesting the Federal Bureau of
Investigation’s decision to cancel awards and replace them through a revised solicitation); Sierra
Nevada Corp. v. United States, 107 Fed. Cl. 735, 749-50 (2012) (holding that the court has bid
protest jurisdiction when an agency takes corrective action to cancel a contract award and solicit



                                                 4
new proposals); Sheridan Corp. v. United States, 95 Fed. Cl. 141, 148 (2010) (taking pre-award
protest jurisdiction to address an initial awardee’s objections to a procuring agency’s decision to
resolicit proposals). These decisions reflect the general principle that actions by an agency to
cancel a solicitation and to initiate a new solicitation can adversely affect an awardee or offerors
under the first solicitation. Correspondingly here, a prevailing party on a post-award protest can
have its position undercut by a subsequent cancellation of the solicitation with an accompanying
decision by the agency to proceed with a sole-source award divorced from any solicitation. In
either instance, the protestor has suffered injury from the agency’s action in the procurement.
Consequently, the court has jurisdiction to consider Hyperion’s claims.

       B. Conversion of a Motion under RCFC 12(b)(6) and RCFC 56 to a Motion for
                Judgment on the Administrative Record under RCFC 52.1

        The government next contends that Hyperion has failed to state a claim upon which relief
may be granted. A motion under RCFC 12(b)(6) is addressed on the pleadings. If the parties
present matters beyond the pleadings, the court has discretion to take cognizance of those
materials. See Easter v. United States, 575 F.3d 1332, 1335 (Fed. Cir. 2009) (citing Gulf Coast
Bank & Trust Co. v. Reder, 355 F.3d 35, 38-39 (1st Cir. 2004); 5C Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 1371, at 273 (3d ed. 2004)); see also Forbes
v. United States, 84 Fed. Cl. 319, 321 (2008), aff’d, 333 Fed. Appx. 573 (Fed. Cir. 2009). When
the court considers material beyond the pleadings, RCFC 12(d) requires the motion to dismiss to
be treated as one for summary judgment under RCFC 56. See RCFC 12(d); see also Huntington
Promotional & Supply, LLC v. United States, 114 Fed. Cl. 760, 767 (2014). Correlatively, if the
materials consist of the record of administrative action by an agency, the motion must be
considered in whole or in part under RCFC 52.1. See RCFC 52.1 Rules Committee note (2006)
(“Cases filed in this court frequently turn only in part on action taken by an administrative
agency. In such cases, the administrative record may provide a factual and procedural predicate
for a portion of the court’s decision . . . . This rule applies whether the court’s decision is
derived in whole or in part from the agency action reflected in the administrative record.”).

       In this instance, the government submitted to the court as attachments to its motion
materials which give context to the allegations contained in the complaint and which were
generated by the procuring agency during the procurement. See A 01-78.5 The court has taken
these materials into account in framing the factual background and addressing the merits of this
case. At the hearing, the parties were put on notice that the court would consider the

       5
        The attached materials include the Security Assistance Management Manual
(“SAMM”), A 01-38; Letter of Offer and Acceptance, A 39-46; the Kingdom of Jordan’s Letter
of Request, A 47; Memorandum in Lieu of Justification and Approval, A 48-49; Department of
Defense Federal Acquisition Regulation Supplement (“DFARS”) excerpts, A 50-53; Army
Contracting Command Desk Book excerpts from Aug. 1, 2014, A054-055; Federal Acquisition
Regulation excerpts, A 56-59; Department of Defense Directive 5105.65 (Oct. 26, 2012), A 60-
73; Reissuance of the Security Assistance Management Manual as Defense Security Cooperation
Agency Manual 5105.38-M, DSCA Policy 12-20 (Apr. 30, 2012), A 74-76; and Joint Travel
Regulations, 48 C.F.R. § 31.205-46, A 77-78.



                                                 5
administrative materials. See, e.g., Hr’g Tr. 11:11-20, 26:2 to 27:17. In the circumstances, the
court’s consideration of these extra-pleading materials requires conversion of the government’s
motion to dismiss or for summary judgment into a motion for judgment on the administrative
record. Accordingly, the government’s motion to dismiss under RCFC 12(b)(6) or alternatively
for summary judgment under RCFC 56 is converted into a motion for judgment on the
administrative record under RCFC 52.1.

                                      C. Claim Preclusion

         On the merits, the government first argues that judgment should be issued in its favor
under the doctrine of claim preclusion. See Def.’s Mot. at 11-13. Under claim preclusion, “a
judgment on the merits in a prior suit bars a second suit involving the same parties or their
privies based on the same cause of action.” Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360,
1362 (Fed. Cir. 2000) (quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5 (1979));
see also Allen v. McCurry, 449 U.S. 90, 94 (1980); Foster v. Hallco Mfg. Co., 947 F.2d 469, 476
(Fed. Cir. 1991) (“[The] aspect of res judicata, known in modern parlance as ‘claim preclusion,’
applies whether the judgment of the court is rendered after trial and imposed by the court or the
judgment is entered upon the consent of the parties.”). Claim preclusion may be established
where (1) the identity of the parties or their privies is the same in both actions; (2) there has been
an earlier final judgment on the merits of a claim; and (3) the second claim is based on the same
set of transactional facts as the first claim. Jet, Inc., 223 F.3d at 1362; see also Foster, 947 F.2d
at 476, 478-79.

         The parties in this instance do not dispute factors (1) and (2); in both actions, the parties
are identical and the court issued a final judgment on the merits with respect to Hyperion’s first
bid protest.6 The disagreement concerns factor (3). In the government’s view, Hyperion’s
current claims “arise from the exact same solicitation, competition, and contract award to
T[echnical Communications],” and plaintiff’s “current complaint is attempting to relitigate the
same factual transactions at issue in the prior protest.” Def.’s Mot at 12. To obtain “monetary
relief following a [c]ourt decision awarding equitable relief on the same underlying facts,” the
government avers that Hyperion was required to “take the affirmative action” of filing a motion
for relief from the prior judgment under RCFC 60(b). Id. at 7; Hr’g. Tr. 4:13-20.7 Because
        6
         In its sur-reply, Hyperion suggests that the court’s judgment was not wholly “final.”
Pl.’s Sur-Reply to Def.’s Reply to Pl.’s Resp. to Def.’s Mot to Dismiss, or, in the Alternative,
Mot. for Summary Judgment at 6-7, ECF No. 26-1. It nonetheless agrees that it was final in
some respects; i.e., regarding “[the] part of this [c]ivil [a]ction . . . setting aside the [c]ontract
awarded to T[echnical Communications],” which involved the same solicitation and contract. Id.
        Additionally, and notably, the judgment had to be “final” for Hyperion to seek and
obtain an award of fees and expenses under the Equal Access to Justice Act. See Hyperion II,
118 Fed. Cl. 540.
        7
            RCFC 60(b) provides, in pertinent part:

        On motion and just terms, the court may relieve a party or its legal representative from a
        final judgment, order, or proceeding for the following reasons:



                                                      6
Hyperion requested injunctive relief in the earlier lawsuit, the government insists that it may not
now request bid preparation and proposal costs in a separate action as the matter has already
been adjudicated. Def.’s Mot. at 7-8; Hr’g Tr. 5:13-15.8

         Hyperion contests the government’s characterization, arguing that the transactional facts
are different in this action compared to the first bid protest. Pl.’s Opp’n at 10-11, 15-17. At the
time the prior action was decided the government had not rescinded the solicitation and issued a
sole-source award to Technical Communications. Hyperion contends that it is challenging those
agency decisions in this second action, not relitigating the factual elements that were at issue in
the first protest. Pl.’s Opp’n at 12.

        Somewhat similar circumstances were addressed in Insight Sys. Corp. v. United States,
115 Fed. Cl. 734 (2014). In that case, a contractor filed a motion against the government for bid
preparation and proposal costs after having been awarded injunctive relief in a bid protest against
the United States Agency for International Development (“USAID”) because USAID
subsequently canceled its solicitation and initiated a new procurement. Id. at 736-37. The court
held that it had jurisdiction to entertain the motion although a final judgment had been entered
under RCFC 58, reasoning as follows:


               (1) mistake, inadvertence, surprise, or excusable neglect;

              (2) newly discovered evidence that, with reasonable diligence, could not
       have been discovered in time to move for a new trial under RCFC 59(b);

              (3) fraud (whether previously called intrinsic or extrinsic),
       misrepresentation, or misconduct by an opposing party;

               (4) the judgment is void;

               (5) the judgment has been satisfied, released, or discharged; it is based on
       an earlier judgment that has been reversed or vacated; or applying it prospectively
       is no longer equitable; or

               (6) any other reason that justifies relief.

RCFC 60(b).
       8
         In the first action, Hyperion had requested declaratory relief, a permanent injunction
requiring the Army to terminate its contract with Technical Communications, and “such further
and other relief as the [c]ourt may deem just and proper.” Pl.’s Opp’n at 10-11 (quoting Compl.
in No. 13-1012C, at 22). The court in weighing the proper remedy reasoned that “T[echnical
Communications] would suffer an economic hardship if the contract award is rescinded, but if
Hyperion is only awarded bid preparation costs, it would suffer a corresponding hardship.”
Hyperion I, 115 Fed. Cl. at 557. Ultimately the court set aside the contract awarded to Technical
Communications, declining to provide “more specific instruction to the Army regarding its
further actions in [the] procurement.” Id.


                                                   7
       The continuing responsibility of this court over its decrees ‘is a necessary
       concomitant of the prospective operation of equitable relief,’ and has its roots in
       the power of courts to modify decrees ‘as events may shape the need.’ In the
       court’s view, nothing about the Clerk’s pro forma entry of a judgment under
       RCFC 58[] prevents this court from revisiting its decree in a bid protest case to
       address subsequent events. A contrary ruling might encourage an agency to play
       a procurement version of thimblerig—indicating that a new procurement was
       anticipated, only to proceed otherwise after the time for bid preparation and
       proposal costs has run.

Insight Sys. Corp. v. United States, 115 Fed. Cl. at 738 (internal citations omitted) (quoting 11A
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
§ 2961 (2014); and United States v. Swift & Co., 286 U.S. 106, 114 (1932); and citing CNA
Corp. v. United States, 83 Fed. Cl. 1, 5-6 (2008), aff’d, 332 Fed. Appx. 638 (Fed. Cir. 2009);
RCFC 60, 65).

        In this instance also, subsequent events that occurred following the court’s judgment have
created new transactional facts requiring reevaluation. The government itself recognizes that a
“changed circumstance” existed after the Kingdom of Jordan elected to designate a particular
contractor following the resolution of the initial bid protest. Hr’g Tr. 6:12-15. In short, the
transactional facts of this case differ from those present in the first bid protest, and the doctrine
of res judicata does not bar Hyperion’s claims.

                        D. The “International Agreement” Exception to the
                                   Competition in Contracting Act

        The court accordingly turns to the ultimate question in the case: whether Hyperion may
recover bid preparation and proposal costs under the circumstances at hand. Generally, an
unsuccessful competitor “may recover the costs of preparing its unsuccessful proposal if it can
establish that the [g]overnment’s consideration of the proposals submitted was arbitrary or
capricious.” E.W. Bliss Co. v. United States, 77 F.3d 445, 447 (1996) (quoting Lincoln Servs.,
Ltd. v. United States, 678 F.2d 157, 158 (1982)); see also CNA Corp., 83 Fed. Cl. at 4-5; PGBA,
LLC v. United States, 60 Fed. Cl. 196, 222 (2004), aff’d, 389 F.3d 1219 (Fed. Cir. 2004); Gentex
Corp. v. United States, 58 Fed. Cl. 634, 656 (2003). Three conditions must be satisfied for a
plaintiff to recover: “(i) the agency has committed a prejudicial error in conducting the
procurement; (ii) that error caused the protester to incur unnecessarily bid preparation and
proposal costs; and (iii) the costs to be recovered are both reasonable and allocable, i.e.[,]
incurred specifically for the contract in question.” Insight Sys., 115 Fed. Cl. at 738-39 (citing
Reema Consulting Servs., Inc. v. United States, 107 Fed. Cl. 519, 532 (2012)); see also Geo-Seis
Helicopters, Inc. v. United States, 77 Fed. Cl. 633, 646-50 (2007).

        The parties dispute whether the first condition has been met, i.e., whether the Army has
committed a prejudicial error in conducting its procurement. See Hr’g Tr. 18:7-11. Hyperion
avers that it is entitled to bid preparation and proposal costs because the “[c]ompetition




                                                 8
conducted under [the solicitation] was a sham,” Pl.’s Opp’n at 17, and the costs were incurred
while “chasing a [c]ontract which it was never going to receive,” id. at 19.9

        The government denies the existence of a “sham” and insists that any prejudicial error
that occurred in connection with its initial solicitation was addressed by the court’s prior decision
and judgment. Def.’s Mot. at 3. Thereafter, the government argues that the Army did not
commit any prejudicial error in cancelling the solicitation following the court’s decision because
the Kingdom of Jordan, rather than the Army, directed the contract award to Technical
Communications. Def.’s Mot. at 14-26. The government emphasizes that because the contract
involved services to be provided to a sovereign nation, the Army was bound by regulations that
prevented it from overriding the decision of a sovereign nation receiving American funds. Id. at
21-22.

        The Department of Defense’s Foreign Military Sales program provides a framework
through which the Department of Defense contracts with industry actors to provide American
supplies and services to foreign nations. Def.’s Mot. at 14.10 A Defense Security Cooperation
Agency (“DSCA”) Directive called the SAMM serves as the primary document through which
the DSCA acts for the Department of Defense in carrying out its programs in compliance with
the federal statutes and regulations. Id. at 15 (citing A 74-76 (Reissuance of the Security
Assistance Management Manual as Defense Security Cooperation Agency Manual 5105.38-M,
DSCA Policy 12-20 (Apr. 30, 2012))). The Manual, which is “mandatory for use by all the
[Department of Defense] [c]omponents,” outlines the procedure that a foreign government must
follow to be approved for funding. A 02. This procedure begins with an initial assessment of
the foreign government’s needs and progresses to include formally sending a Letter of Request to
the United States government, having the request reviewed by the appropriate United States
Implementing Agency, and receiving a Letter of Offer and Acceptance from the Implementing
Agency. A 08-22 (SAMM ¶¶ C2.1.1-C5.4.1). Once the Letter of Offer and Acceptance is
signed and submitted to and approved by the Department of State, the Defense Finance and
Accounting Office grants the Implementing Agency authority to begin allocating funds to
execute the Federal Military Sales request. Def.’s Mot. at 17 (citing A 15-23 (SAMM
¶¶ C.5.1.6-C.5.4.7)). The Implementing Agency may supply the goods and services itself or
negotiate a contract with the defense industry through designated U.S. procurement offices. Id.
       9
          Hyperion suggests that the government’s Independent Government Cost Estimate
demonstrates that the government “knew the subsurface conditions which would be
encountered” by the contractors, Pl.’s Opp’n at 18, yet did not provide that information in the
form of “detailed site maps [or] location information for trenching, installation, and testing of
long-haul and last-mile fiber-optic communications networks within [Jordan]” with the
solicitation, insisting instead that each offeror bear the risk of such conditions, id. at 6. Hyperion
contends that the government’s failure to disclose subsurface conditions substantially increased
Hyperion’s bid preparation and proposal costs. Hr’g Tr. 24:7-16. Because Technical
Communications and its proposed subcontractor had an “inside track” with Jordan, it was better
able to bear that risk. Pl.’s Opp’n at 18.
       10
          “‘Security Assistance’ is a group of programs that allows the transfer of U.S. military
articles and services to friendly governments or international organizations.” Def.’s Mot. at 16.



                                                  9
at 17-18 (citing A 12 (SAMM ¶ C4.4.1)).11 Changes may be made during the progression of a
Foreign Military Sales case at the will of either the foreign government or the U.S. government.
Id. at 18.

        In general, when an Implementing Agency procures goods and services for the benefit of
a foreign nation, the purchasers must act in accordance with Department of Defense regulations,
including the prescribed competitive procurement process. Def.’s Mot. at 18; see A 12; see also
10 U.S.C. § 2304(a) (requiring an agency to “obtain full and open competition through the use of
competitive procedures”). Nonetheless, the Competition in Contracting Act provides exceptions
in which foreign nations can direct sole-source awards outside of full and open competition. See
Def.’s Mot at 18. One such exception is the “International Agreement” exception, 10 U.S.C.
§ 2304(c)(4), which applies when a foreign government reimburses the Implementing Agency
for the cost of acquiring the goods or services or when projects are funded with nonrepayable
Foreign Military Funds. Def.’s Mot. at 18, 20; FAR § 6.302-4; A 27 (SAMM ¶ C.6.3.4.1) (“The
exception may be applied to L[etters of Offer and Acceptance] funded with nonrepayable
F[oreign Military Funds].”). Under this exception, full and open competition is not required
when “the written directions of a foreign government reimbursing the agency for the cost of the
procurement of the property or services for such government, have the effect of requiring the use
of procedures other than competitive procedures.” 10 U.S.C. § 2304(c)(4); see also FAR
§ 6.302-4; DFARS § 206.302-4. Section 6.302-4 of the FAR, which “essentially mirrors the
language from 10 U.S.C. § 2304(c)(4) concerning when ‘other than competitive procedures’ may
be used,” L-3 Commc’ns Corp. v. United States, 99 Fed. Cl. 283, 292 (2011),12 additionally
allows an agency to contract without full and open competition when a foreign government
requests a particular contractor, id.; A 26 (SAMM ¶ C.6.3.4); A 53 (DFARS § 206.302-4(c)).13

       11
         SAMM ¶ C.4.4.1 states, in relevant part “Defense articles or services may be sold from
[Department of Defense] stocks, or the [Department of Defense] may enter into contracts to
procure defense articles or services on behalf of eligible foreign countries or international
organizations. [Department of Defense] procurements for F[oreign ]M[ilitary ]S[ales] use
standard Federal Acquisition Regulation (FAR) contract clauses and contract administration
practices except where deviations . . . are authorized.” A 12.
       12
         L-3 Communications was decided before changes were adopted in 2012 to the
procedures outlined in the SAMM. See Hr’g Tr. 9:10-18; A 03-06 (Revised Guidance for
Requests for Other than Full and Open Competition, DSCA Policy 12-15); A 74-76 (Reissuance
of the SAMM, DSCA Policy 12-20 (April 30, 2012)). Even so, the decision in L-3
Communications remains helpful in construing the relevant statutory, FAR, and DFARS
provisions.
       13
            The SAMM provides, in pertinent part:

       One of [the Competition in Contracting Act]’s exceptions to full and open
       competition at 10 U.S.C. section 2304(c)(4) is implemented as the “International
       Agreement” exception in FAR 6.302-4 and [DFARS] 206.302-4. An authorized
       official of the purchasing government may submit a written request . . . that the
       Implementing Agency with procurement responsibility . . . procure a defense


                                                10
Furthermore, as of 2012, Foreign Military Sales customers are not required to provide any
rationale for a sole-source request, Def.’s Mot. at 19 (citing Revised Guidance for Requests for
Other than Full and Open Competition, DSCA Policy 12-15 [SAMM E-Change 200] (Aug. 9,
2012)); A 26 (SAMM ¶ C.6.3.4), and “may also request that a subcontract be placed with a
particular firm,” Def.’s Mot. at 22 (citing A 29 (SAMM ¶ C6.3.4.4))). Accordingly, under the
“International Agreement” exception, the Implementing Agency may employ a noncompetitive
procedure at the foreign nation’s request, and may designate a specific firm as a contract
awardee.

        In this instance, the project to be completed on behalf of the Kingdom of Jordan was
funded with nonrepayable Foreign Military Funds, Hr’g Tr. 9:20 to 10:19, 12:2-3, and therefore
the “International Agreement” exception applies.14 A sovereign nation, the Kingdom of Jordan
has discretion and autonomy to direct sole-source awards without the full and open competition
required under the federal government’s procurement system. See Def.’s Mot. at 10; Hr’g Tr.
34:9-17. While the SAMM notes that “[r]equests for other than full and open competition . . .
should be to meet the objective requirements of the purchaser and [cannot be conducted] for
improper or unethical considerations,” A029 (SAMM ¶ C6.3.4.3), in general, the Department of
Defense contracting agencies “are encouraged to defer to a foreign purchaser’s requests . . . to
the extent that they are not aware of any indication that such requests violate U.S. law or ethical
business practices.” Def.’s Mot. at 21-22.

        In cancelling the solicitation, the Army adhered to the provisions outlined in the SAMM.
The Kingdom of Jordan’s sole source request was proper under the “International Agreement”
exception of the Competition in Contracting Act and it appears that all of the requisite steps were
taken by both Jordan and the Army to ensure compliance. Notably, Hyperion has not contended
that the Kingdom of Jordan’s designation of Technical Communications as a sole-source
awardee violated any of the SAMM requirements and has raised no other objection to the
Kingdom of Jordan’s actions. Although the court invalidated the contract between the Army and
Technical Communications in the original bid protest, the invalidation was based on the Army’s
prejudicial error in assessing offers under the solicitation, and nothing in the materials presented
suggests that Technical Communications would be incapable of completing the contract; indeed,
Technical Communications previously completed the third iteration of the five-part project
successfully. See A 47 (the Kingdom of Jordan’s Letter of Request). Moreover, Hyperion has
always been aware that the requested services were to benefit a sovereign nation. As the


       article(s) and/or service(s) from a specific organization or entity, or that
       competition be limited to specific organizations or entities. . . . F[oreign
       ]M[ilitary ]S[ales] customers need not provide a rationale for the request.

SAMM ¶ C.6.3.4.
       14
         The government’s counsel acknowledged that he did not know the exact source of the
funds. Hr’g Tr. 11:21 to 12:1. Nonetheless, the parties appear to agree that the funds provided
by the United States are essentially the Kingdom of Jordan’s and within that nation’s control.
See Hr’g Tr. 12:8-10.



                                                11
government correctly observes, “[i]n submitting a bid and participating in this procurement,
Hyperion accepted the risk that Jordan could decide to conduct a sole-source procurement at any
time during the solicitation phase and irrespective of any injunctive relief awarded to Hyperion
in a bid protest.” Def.’s Mot at 9-10; see also Hr’g Tr. 5:16-21. Generally, “[p]roposal
preparation expenses are a cost of doing business that are normally ‘lost’ when the effort to
obtain the contract does not bear fruit.” E.W. Bliss Co., 77 F.3d at 447 (quoting Lincoln Servs.,
Ltd., v. United States, 678 F.2d 157, 158 (Ct. Cl. 1982)). The court’s injunction in the prior
decision and judgment restored Hyperion to the position it would have been in but for the
agency’s prejudicial errors in the solicitation, but there are no agency errors in the post-judgment
proceedings regarding the procurement.

      In sum, the Army’s approval of the Kingdom of Jordan’s selection of Technical
Communications as the sole-source awardee of the contract did not constitute a prejudicial error
and was not unlawful.

                                         CONCLUSION

        The government’s motion to dismiss under RCFC 12(b)(1) for lack of subject matter
jurisdiction is DENIED. The government’s motion to dismiss under RCFC 12(b)(6), or
alternatively for summary judgment under RCFC 56, is converted into one for judgment on the
administrative record under RCFC 52.1 and that motion is GRANTED. The clerk shall enter
judgment in accord with this disposition.

       No costs.

       It is so ORDERED.



                                              s/ Charles F. Lettow
                                              Charles F. Lettow
                                              Judge




                                                12
