Avkare, LLC v. United States

United States Court of Federal Claims·Decided August 10, 2026·No. 25-1608·Published

Opinion

In the United States Court of Federal Claims No. 25-1608

Filed: July 28, 2026 Reissued: August 10, 2026 † ***SEALED***

AVKARE, LLC,

Plaintiff,

v.

THE UNITED STATES,

Defendant,

and

BRYANT RANCH PREPACK PHARMACEUTICALS,

Intervenor-Defendant.

Heather B. Mims and David R. Warner, Warner PLLC, Reston, VA, for Plaintiff.

Brendan D. Jordan, Trial Attorney, William J. Grimaldi, Assistant Director, Patricia M. McCarthy, Director, Commercial Litigation Branch, Brett A. Shumate, Assistant Attorney General, Civil Division, U.S. Department of Justice, Washington, D.C., with Jason Fragoso, Trial Attorney, and Jean Athey, Staff Attorney, Procurement Law Group, U.S. Department of Veterans Affairs, Office of General Counsel, for Defendant.

Merle M. DeLancey, Jr., Michael J. Slattery, and Shane M. Hannon, BLANK ROME LLP, Washington, DC, for Intervenor-Defendant.

MEMORANDUM OPINION AND ORDER

TAPP, Judge.

† This Opinion was originally issued under seal, (ECF No. 53), and the parties were directed to file a notice of redactions consistent with the Court’s instructions. That Notice was filed on August 6, 2025. (ECF No. 55). The Court accepts all jointly proposed redactions and edits. The sealed and public versions of this Opinion differ only to the extent of those edits, the publication date, and this footnote.

Just as arthritis is driven by autoantibodies rather than joint pain, the law of substantial transformation targets the active agent, not the vessel carrying it. Plaintiff AvKare, LLC (“AvKare”), challenges the Department of Veterans Affairs’ (“VA”) award of a contract for a medication to treat rheumatoid arthritis, arguing that the agency misidentified the product’s true country of origin and unlawfully accepted the awardee’s proposal. (Compl., ECF No. 1; Am. Compl., ECF No. 38). But the Administrative Record, governing regulations, and case law collectively indicate that the VA reasonably centered its analysis on the origin of the active pharmaceutical ingredient (“API”) and permissibly concluded, based on substantial evidence, that the awardee’s tablets were compliant with international trade statutes. Because the agency’s evaluation and award decision were neither arbitrary nor contrary to the solicitation or law, AvKare’s Motion for Judgment on the Administrative Record, (Pl.’s Mot. J. Admin. R. (“Pl.’s MJAR”), ECF No. 39), is DENIED. Accordingly, the Court GRANTS the United States’ and the awardee-Intervenor’s Motions for Judgment on the Administrative Record, (Def.’s Cross- Mot. J. Admin. R. (“Def.’s xMJAR”), ECF No. 41; Int.-Def.’s Cross-Mot. J. Admin. R. (“Int.- Def.’s xMJAR”), ECF No. 40).

I. Background

The VA sought a national requirements contract for the supply of Hydroxychloroquine tablets to VA and Department of Defense facilities. (Admin. R. (“AR __”) at 33–37, 42–44, 47– 48, 69, 89–90, 101, 103–04, 112–13, ECF No. 37). Hydroxychloroquine tablets are used to treat chronic rheumatoid arthritis. (AR 17). The solicitation required offerors to provide pricing for both 100-tablet and 500-tablet bottles for the base year and four option years. (AR 12, 34). The VA would make the award to the responsible offeror submitting the lowest-priced, technically acceptable proposal. (AR 103). Among the technical requirements, offerors were required to certify that each end product was made in the United States (“U.S.‑made”) or, as relevant to this case, a designated‑country end product under the Trade Agreements Act (“TAA”). (AR 101). For offerors that were not the manufacturer (“distributor-offerors”), the solicitation also required a Letter of Commitment from the manufacturer confirming a sufficient and continuous source of supply. (AR 37). The solicitation defined “manufacturer” broadly to include entities engaged in the production, preparation, or processing of active and inactive ingredients into drug products, including the measuring, mixing, weighing, and compounding of those ingredients and the conversion of the product into various dosage forms. (Id.). Distributor‑offerors were required to submit an acceptable Letter of Commitment to be eligible for award and to maintain the same manufacturer for the duration of the contract unless the contracting officer (“CO”) approved a change. (Id.).

The Letter of Commitment requirement was not relevant to AvKare, whose products were domestically manufactured. (AR 139). Bryant Ranch Prepack (“Bryant Ranch”) submitted a proposal including a Letter of Commitment from its supplier stating that its Hydroxychloroquine tablets were TAA‑compliant because the API originated in Taiwan, a designated country, and the tableting performed in India, a non‑designated country, did not amount to substantial transformation. (AR 309).

After securing the licenses needed to manufacture Hydroxychloroquine tablets in the United States, AvKare submitted its proposal offering unit prices of $ for the 100-tablet bottle and $ for the 500-tablet bottle. (AR 122–221). On July 15, 2025, the VA notified

AvKare that it had not been selected for award. (AR 567). Instead, the VA chose Bryant Ranch, whose proposal offered lower prices—$10.17 for the 100-tablet bottle and $48.39 for the 500-tablet bottle. (AR 464). Considering the entire solicitation, this totaled a $ difference for the base year and a difference of $ over the possible life of the contract:

Product Base Year Base Year + 4 Options Offeror Origin Estimated Value Estimated Value Bryant Ranch Taiwan $2,912,753.82 $14,563,769.10 AvKare U.S.-made $ $

(See id.). The VA found Bryant Ranch’s pricing fair and reasonable under the relevant provision of the FAR. 1 (AR 465). Importantly, the VA concluded that Bryant Ranch’s proposed products met all solicitation requirements, including the requirement that the tablets be U.S. or designated- country-end-made. (AR 466–67).

AvKare immediately challenged the award at the agency level with the Executive Director of the VA’s Office of Acquisition and Logistics; therein, AvKare asserted that Bryant Ranch’s tablets were actually manufactured in India and therefore violated the TAA. (AR 564– 72). The CO denied AvKare’s protest, concluding that the tablets were “neither wholly the growth, product, or manufacture of India, nor substantially transformed in India,” and that the API originated in Taiwan—a World Trade Organization Government Procurement Agreement country. (AR 612–15). On that basis, the CO determined that the tablets complied with the TAA. (AR 614). AvKare filed this suit on September 26, 2025, alleging that the VA’s evaluation, its TAA analysis, and its award decision were arbitrary, unreasonable, and contrary to the solicitation. (See Compl.).

After AvKare filed its initial Motion for Judgment on the Administrative Record, (ECF No. 26), the United States sought an unopposed voluntary remand, explaining that the VA wished to reconsider its evaluation and award determination, (ECF No. 28). The Court granted a sixty-day remand. (ECF Nos. 30, 31). During that period, the VA reopened targeted, limited discussions with AvKare and Bryant Ranch. (AR 618, 620). It asked AvKare to confirm that its proposed products were U.S.-made and to extend its offer. (AR 618). For Bryant Ranch, the VA requested an extension and additional information supporting its TAA certification. (AR 620). The VA specifically sought evidence regarding the manufacturing of the API, the final dosage-form manufacturing process, and the locations where substantial transformation did or did not occur. (Id.).

1 In reaching that conclusion, the CO used three price-analysis techniques authorized by FAR 15.404-1(b)(2): comparing offerors’ proposed prices, reviewing published price lists and market data (including Federal Supply Schedule and open-market pricing), and evaluating Bryant Ranch’s prices against the Independent Government Cost Estimate and historical prices. (AR 465–66).

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