On October 29, 2026, Judge Hadji of the Court of Federal Claims (COFC) issued an opinion in Blue Water Autonomy, Inc. v. United States that adopted an expansive view of COFC’s jurisdiction to adjudicate bid protests involving other transaction agreements (OTs) under the Tucker Act. Judge Hadji denied the Government’s motion to dismiss consolidated protests challenging the Navy’s elimination of two offerors from a prototype OT competition for Medium Unmanned Surface Vessels (MUSVs). The court held that its procurement protest jurisdiction under the Tucker Act encompassed the protests because the OT competition was “in connection with” the Navy’s procurement of MUSVs.
Blue Water Autonomy provides strong persuasive authority for a broad reading of COFC’s jurisdiction over OT protests. However, it is not binding on the rest of the court. And in recent years, several COFC judges have grappled with this issue and reached divergent conclusions. In June 2025, we discussed another COFC decision in Telesto Group, LLC v. United States. There, Judge Hertling adopted a narrower view of COFC’s OT protest jurisdiction, concluding that there is “an effective jurisdictional blackout” during the prototyping phase of an OT project. Judge Hadji expressly declined to follow Telesto, creating a clear split within the court. Until the Federal Circuit, which has not yet addressed whether OT protests fall within the Tucker Act, issues binding precedent on this issue, COFC judges will continue to work through these difficult jurisdictional questions.
If you are a government contractor who lost an OT competition, Blue Water Autonomy may provide a basis to protest that decision at COFC. Potential protestors should act quickly to involve counsel. Failure to move promptly to protest an OT competition will make it substantially harder to obtain meaningful relief from the court.
Case Background
The case arose from the Navy’s efforts to rapidly acquire unmanned maritime capabilities under the Golden Fleet Initiative. On March 26, 2026, the Navy issued a request for prototype proposals under its OT authority at 10 U.S.C. § 4022. The Navy described the solicitation as “a direct, competitive down-select for a potential multi-vessel production and/or service contract with delivery of a production vessel in [FY 2027].” It also explained that it was “no longer interested in paying industry to build prototypes.”
The solicitation provided for two phases. In Phase 1, the Navy evaluated proposals on a pass/fail basis. In Phase 2, the Navy planned to negotiate prototype OT agreements, with the prototype work consisting of a post-award conference and an on-water test. Citing 10 U.S.C. § 4022(f), the solicitation advised that a prototype agreement may provide for the award of a follow-on production contract or transaction to successful participants. The Navy selected seven of 25 offerors to advance to Phase 2. Blue Water Autonomy and Saildrone were not among them, and each filed a protest at COFC.
The Government moved to dismiss, arguing that COFC lacks jurisdiction to hear protests of agency actions taken under OT authority. The Government argued that the Federal Circuit’s decision in Hymas v. United States controlled, that the Navy had properly invoked a “non-procurement” authority, and that the court should follow Telesto.
Blue Water Autonomy’s Jurisdictional Analysis
Relying on prior Federal Circuit precedent, Judge Hadji concluded that COFC “has broad procurement protest jurisdiction over any objection to a solicitation, proposed award, award, or alleged violation of statute or regulation ‘in connection with a procurement or proposed procurement,’ which includes ‘all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services.’” Opinion at 8 (quoting Resource Conservation Group, LLC v. United States, 597 F.3d 1238, 1244-45 (Fed. Cir. 2010)). That jurisdictional scope is broad enough to include many OTs awarded by the Government.
The Government argued that once the Navy properly invoked its OT authority, the inquiry was over. But calling an agreement an “other transaction” does not, by itself, preclude COFC from hearing a protest. The court explained that the phrase “non-procurement OT” appears nowhere in the statute and is “just a label coined and brandished by the Government.” What matters in determining whether COFC has jurisdiction to hear a protest arising from an OT competition is what the agency is actually trying to accomplish, which is a question for the court to decide, not the agency.
Under Blue Water Autonomy, a COFC protest related to an OT competition will likely be allowed where three conditions are met. First, the agency has started a procurement by identifying a need for products or services. No signed contract or commitment to buy is required. Second, the OT competition is tied to that procurement, such as where winning the prototype competition is the path to a production award. Third, the agency’s main purpose is to acquire something for its own use, rather than to fund research or help build a commercial market.
Each condition was met here. The Navy identified a need for MUSVs, backed that need with a $2.1 billion appropriation, and set a schedule for follow-on production awards before the end of FY 2027. The competition was tied to that need because, as the court put it, “the only way an offeror may receive the ultimate MUSV contract is through successful participation in the prototype competition.” Further, the Navy’s goal was plainly to buy vessels for itself. It called the solicitation “a direct, competitive down-select” for production and said it was “no longer interested in paying industry to build prototypes.” The court also rejected Telesto’s “jurisdictional blackout,” noting that it would leave an offeror eliminated in the first phase with nowhere to turn.
That said, although COFC has broad authority, that authority is not limitless. As explained by Judge Hadji, “[a]n instrument whose principal purpose is something other than acquiring a product or service for an agency’s own use, and that is not a step in the agency’s process of doing so, is not in connection with a procurement,” and thus, COFC would not have jurisdiction to hear a protest.
Conclusion
The Blue Water Autonomy decision is the most direct rejection to date of Telesto’s jurisdictional blackout, and it offers contractors a meaningful path to challenge exclusions from OT competitions. However, until the Federal Circuit resolves the issue, the jurisdictional landscape will remain complicated and uncertain, and contractors should pay close attention to how each OT is structured and described and consult with counsel promptly when considering a potential challenge.
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