In Cosette Pharmaceuticals, Inc. v. United States, U.S. Court of Federal Claims, No. 25-cv-279 (Nov. 17, 2025), Cosette Pharmaceuticals protested the Department of Veterans Affairs’ decision to award a contract for the drug prasugrel to Golden State Medical Supplies. Cosette argued that the VA violated the Trade Agreements Act (TAA) because Cosette was the only offeror to submit a TAA-compliant proposal. Cosette manufactured its version of the drug in Germany, a compliant country under the TAA. By contrast, the awardee’s version of the drug was manufactured in India, a non-compliant country under the TAA.
The VA attempted to justify its award by asserting that Cosette’s higher price rendered its proposal “insufficient to fulfill the requirements of the United States Government,” invoking an exception under the TAA. Cosette challenged this interpretation and argued that comparing its compliant offer to non-compliant ones was legally impermissible. The Court agreed and issued a decision that clarifies the limited scope of the TAA’s “insufficiency” exception and the improper use of price reasonableness comparisons to circumvent statutory compliance. In doing so, the decision is a strong reminder that the Court will check an agency’s powers and keep it within the four corners of the law, even in the face of well-found policy rationales and laudable efforts to protect the public fisc.
The Decision
The COFC sustained the protest, ruling that:
- TAA Prohibits Comparisons to Non-Compliant Offers: The Court rejected the VA’s argument that Cosette’s offer could be deemed “insufficient” under the TAA simply because it was more expensive than non-compliant alternatives. The Court emphasized that the statute’s plain language does not allow price-based comparisons between compliant and non-compliant offers to justify purchasing from non-compliant sources. Unlike the Buy American Act, which contains a specific exception when faced with unreasonable pricing, the TAA contains no such carveout, and Congress knew how to include one if it wanted to.
- The FAR Cannot Override the TAA’s Plain Text: The VA claimed that its decision was consistent with the FAR requirement to determine price reasonableness. The Court found this argument unpersuasive, holding that agencies cannot use the FAR to expand or reinterpret statutory exceptions. The VA’s approach would, in the Court’s words, allow the VA’s price reasonableness exception to the TAA to “swallow the rule,” defeating the entire purpose of the TAA’s restriction.
- “Exorbitantly” High Prices Are Not an Excuse to Deviate From the Rules: The Court rejected the government’s fallback position that only “exorbitantly high” TAA-compliant offers could be excluded. The Court noted that there is no such threshold in the statute, and reiterated that courts are not free to read new standards into clear statutory language.
- The TAA Provided a Path to the VA’s Preferred Outcome, But the VA Didn’t Use It: The Court noted that agencies are not without options when facing high-priced TAA-compliant proposals. The Court pointed out that the TAA allows agency heads to waive compliance in the national interest, but found that no such waiver occurred here.
- The Court Declined to Declare Cosette’s Price Reasonable: Although the Court agreed that Cosette was improperly excluded, it declined to hold that Cosette’s price was per se fair and reasonable. The Court rejected Cosette’s arguments that prices below a statutory cap or offered on the Federal Supply Schedule are automatically reasonable.
- Injunctive Relief Was Granted: The Court enjoined the VA from awarding the contract to a non-TAA-compliant offeror under the current solicitation. However, it did not require the VA to award to Cosette. The Court acknowledged that the VA could still cancel the solicitation or pursue other procurement avenues, including on the open market or by using its waiver authority.
Key Takeaways for Contractors
- FAR Compliance Does Not Excuse Statutory Noncompliance: Agencies cannot rely on regulatory concepts like price reasonableness to override explicit statutory restrictions like those found in the TAA.
- The TAA Is Not the BAA: Unlike the Buy American Act, which expressly permits rejection of higher-priced domestic offers, the TAA contains no price-based exception. Courts will not step into the shoes of Congress and craft exceptions that are not rooted in the plain text of the statute.
- Agencies Are Not Powerless When Faced with High-Priced TAA-Compliant Offers: If a TAA-compliant offer is truly unaffordable, agencies can seek a waiver under the TAA. What they cannot do is ignore the law and make an award to a non-TAA-compliant offer.
- Being Right Doesn’t Mean Winning Automatically: Even though Cosette prevailed on its legal argument, the Court did not declare its price fair and reasonable or mandate an award. This serves as a reminder that a protest win does not guarantee you an award.