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COFC Slams Army’s Market Research, But Lack of Standing Sinks Sole Source Protest

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In Hydraulics International, Inc. v. United States, U.S. Court of Federal Claims, No. 25-312 (Nov. 20, 2025), Hydraulics International, Inc. (HII) challenged the Army’s decision to award a sole-source contract for aviation ground power units (AGPU) and related services to Sun Test Systems, Inc. HII argued that the Army violated FAR Part 10 by failing to conduct meaningful market research and that HII was improperly excluded from consideration. While the Court agreed that the Army’s market research was deficient, it ultimately dismissed the protest for lack of standing, finding that HII could not deliver a compliant product in time and therefore could not have received the award. This decision is a rare one where the Court clearly disapproved of the agency’s actions, but still had to rule in the agency’s favor because the protester couldn’t get over the standing hurdle.

The Decision
The U.S. Court of Federal Claims dismissed the protest, ruling that:

  1. The Army’s Market Research Was Deeply Flawed: The Court agreed with HII that the Army’s market research efforts were “anemic.” The two key market research documents, the Justification and Approval (J&A) and Market Research Determination, lacked detail, relied heavily on outdated information, and referenced other transaction authority (OTA) despite congressional limitations on its use. The Court found the research failed to meet FAR Part 10 standards and suggested that the Army’s market research may have been pretextual.
  2. But Standing Still Comes First: Despite the Court’s strong criticism of the Army’s process, it emphasized that the identification of a flawed procurement alone is not enough. HII was required to show that it had a substantial chance of award or, at least, that it had a non-trivial competitive injury. The Court concluded HII failed on both fronts because it could not produce a compliant AGPU product in time. The declarations HII submitted to establish standing backfired, as they showed HII needed five-to-six more months of development work to meet the requirements.
  3. Declarations Hurt More Than Helped: HII submitted multiple declarations from its CEO asserting that it could meet the technical requirements with time. The Court found these declarations undermined HII’s position, confirming that it could not have delivered a compliant unit by the agency’s required timeline. Because HII was not ready or responsive at the time of the sole-source decision, the Court found it lacked the necessary “direct economic interest” to pursue the protest.
  4. Speculation About the Awardee’s Capability Doesn’t Cure the Problem: HII also suggested that Sun Test may not have been capable of meeting the AGPU requirements either. The Court dismissed this argument, stating that a protester’s failure to qualify does not get excused by questioning the awardee’s compliance. The Army had tested Sun Test’s system and found it compliant, and the Court would not second-guess that determination.
  5. Even a Bad Process Doesn’t Rescue a Protester Without Standing: The Court made clear that the quality of the Army’s conduct was not the issue once standing was found lacking. It reiterated the principle that no amount of agency missteps can confer standing where none exists, stating that “HII simply cannot surmount the insurmountable.” Because HII was not an actual or prospective bidder, the Court lacked jurisdiction and dismissed the case.

Key Takeaways for Contractors

  1. FAR Part 10 Still Matters: The Court was plainly troubled by the Army’s lack of serious market research. Agencies must document their efforts and cannot rely on outdated materials or OTA workarounds to justify sole-source awards.
  2. Declarations Can Cut Both Ways: Well-intentioned declarations meant to prove capability may do the opposite. Protesters must carefully think through this strategy and weigh the pros and cons before filing.
  3. You Can’t Rely on the Awardee’s Weaknesses Alone: Pointing fingers at the awardee’s supposed noncompliance won’t rescue a protester who can’t meet the requirement either. Standing is a threshold issue and must be satisfied before setting your sights on the awardee.
  4. Courts Will Apply Jurisdictional Rules To Dispose of a Protest, Even When They Really Don’t Want To: The Court made clear it would not create standing where none exists, even to correct what might otherwise be a flawed procurement.