Commercial Products and Services: Raising the Market Research Bar or Much Ado about Nothing?

Abstract

This short piece discusses the Federal Circuit's recent decision in Palantir USG, Inc. v. United States, No. 17-1465 (Fed. Cir. September, 2018), affirming that “the Army failed to determine whether commercial items meet or could be modified to meet the agency’s needs and that, by failing to do so, the Army acted in an arbitrary and capricious manner in violation of 10 U.S.C. § 2377.” The decision appears to tilt the balance towards “commercial products” and “commercial services” (recently redefined in the 2019 NDAA § 836; 41 U.S.C. §§ 103, 103a), in effect, mandating that procuring agencies use Federal Acquisition Regulation (FAR) Part 12 commercial item procedures despite the (very real) possibility that the Government’s needs might not be met by a solution from the commercial marketplace. As the essay notes, such a standard seems inordinately, arguably inappropriately, low. The most obvious takeaway from Palantir derives from one of the most basic tenets of statutory interpretation: when Congress uses the word “shall,” rather than, for example, “may” or “should,” its direction is mandatory (rather than discretionary). Less obvious, but potentially more important, is the reminder that that contracting agencies get no credit for conducting market research if they do not subsequently consider or rely upon that market research.