On July 31, 2025, the Court of Federal Claims (COFC) issued its decision in The DaVinci Company v. United States. The case is noteworthy for contractors grappling with geographical supply chain concerns because it elucidates the extent to which two cornerstone country-of-origin procurement statutes—the Buy American Act (BAA) and the Trade Agreements Act (TAA)—can be misunderstood and misapplied by the government.
Background
The facts are fairly straightforward:
- On July 1, 2024, the Department of Veterans Affairs (VA) released a solicitation to purchase Tamsulosin (a prostate therapeutic) as a small-business set-aside that was subject to the BAA.
- Prior to the issuance of the solicitation, the VA determined that while 14 manufacturers and/or suppliers of Tamsulosin exist, none were domestic small-business manufacturers—only resellers. Thus, the VA requested and received a nonmanufacturer waiver from the Small Business Administration (SBA).
- The VA received eight proposals in response to the solicitation and, on July 23, 2024, issued the award to a company that offered to procure Tamsulosin from India, which is a non-TAA-compliant country. Three days later, the VA submitted a BAA nonavailability waiver—which was essentially a waiver of domestic preference—to the SBA’s Made in America Office because, according to the VA, all offers received “were for pharmaceuticals manufactured in India.” This was untrue, as the Tamsulosin proposed to be supplied by the protester was sourced in Spain, a TAA-compliant country.
- The protester filed a complaint at the COFC on August 13, 2024. The complaint alleged that the VA (i) incorrectly applied the BAA to the solicitation, (ii) ignored the TAA’s requirements, (iii) submitted false information to the Made in America Office, and (iv) failed to apply the correct evaluation criteria to the proposals.
- Two weeks later, the VA announced its intent to take corrective action and requested that the matter be stayed pending implementation.
- The following month, the VA reissued the solicitation and sought new proposals. Once again, eight proposals were received. This time, the VA issued the award to a different contractor, which, like the first awardee, also proposed to source Tamsulosin from India.
- As the litigation proceeded at the COFC, the Court indicated that it would consider only the applicability of the BAA and the TAA to the solicitation and the propriety of the VA’s actions in connection therewith.
Analysis
At the outset, the Court characterized the crux of the matter as “an order of operations dispute” that boiled down to understanding how and when the statutory regimes imposed by the BAA and the TAA apply. As a threshold matter, the Court recognized that the BAA applies to domestic procurements and the TAA governs procurements that rely on international sources. The VA had argued that after a nonmanufacturer waiver was issued under 19 USC 2511 (f), the Federal Acquisition Regulation (FAR) permitted the TAA to be disregarded because FAR 25.401(a)(1) purportedly barred application of the TAA to acquisitions set aside for small businesses. The Court disagreed and noted that FAR 25.401(a)(1) only reaffirms that the TAA cannot waive the BAA’s requirements when there is a domestic small-business producer. In this case, there was no such domestic supplier, which was precisely why the VA sought and obtained a nonavailability waiver in the first place. The Court ruled that when the VA requested its nonavailability waiver, the procurement became dependent on international rather than domestic products to fulfill the VA’s needs, even though the acquisition was initially issued as a small-business set-aside subject to the BAA. Thus, the TAA applied to the acquisition and the VA improperly ignored its requirements by sourcing from India instead of Spain. In light of these flaws, the Court permanently enjoined the award and directed the VA to redo the solicitation and to apply the TAA properly when awarding the contract.
Key Takeaways for Federal Contractors
The case underscores the importance of paying careful attention to the government’s interpretation and implementation of domestic sourcing requirements throughout the procurement process. These requirements are often counterintuitive and confusing, so mistakes are common. Never assume that the TAA can be ignored, even in the context of small-business set-asides. Contrary to the VA’s arguments, the Court made clear that once a nonavailability waiver is issued and domestic production is off the table, the procurement necessarily shifts to reliance on foreign sources, at which point the TAA governs. As a result, contractors need to understand the nuances of TAA/BAA compliance and should be prepared to demonstrate TAA compliance even when a procurement begins under the BAA framework.
Moreover, contractors have to be aware that a BAA nonavailability waiver does not—in and of itself—allow an agency to procure from any foreign source with reckless abandon. This can be tricky. The waiver eliminates only the domestic preference requirement; it does not authorize sourcing from non-TAA countries. Contractors have to continue to pay attention to whether their existing supply chains involve TAA-compliant countries, and they should be ready to challenge solicitations or awards that disregard this requirement.
In relation to this procurement, the underlying issues were compounded by patent agency error. These types of errors will likely continue. The VA’s Made in America Office submission incorrectly stated that all offers were for Indian-manufactured products, which was a misrepresentation that materially affected the procurement. This is a good reminder that contractors should carefully document product origin and, when necessary, challenge agencies that mischaracterize supply chain facts.
Finally, contractors should never underestimate the power of the protest process. Beyond the opportunity to challenge the misuse of waivers, protests can assist in clarifying underlying confusion, such as with the TAA versus the BAA regimes. Companies should never hesitate to use protests where, as here, agency misapplication of procurement rules undermines fair competition.
Agencies are now on notice that they cannot treat the BAA and the TAA as interchangeable or ignore one regime when the other proves inconvenient. Contractors should expect close scrutiny of country-of-origin certifications and will need to align supply chain compliance programs accordingly. This is true now more than ever before, as regulatory overhaul is in hyperdrive and agencies are rushing to complete acquisitions and spend appropriated dollars by the September 30 end of the fiscal year. If you believe that the government is acting or has acted improperly, don’t be afraid to ask tough questions and, if necessary, cry foul by exercising your protest rights in accordance with law and regulation.
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