Qed Group LLC v. United States

• Court: United States Court of Federal Claims
• Decided: March 14, 2025
• Docket: 24-1961
• Status: Published

Opinion

In the United States Court of Federal Claims

THE QED GROUP LLC d/b/a Q2 IMPACT,

Plaintiff,

v. No. 24-1961C (Filed March 14, 2025) THE UNITED STATES,

Defendant.

Ryan C. Bradel, Ward & Berry, PLLC, Washington, DC, for plaintiff.

Grant D. Johnson, Civil Division, United States Department of Justice, Washington, DC, for de- fendant.

OPINION Interpreting the Statute and Regulations

SILFEN, Judge.

QED, doing business as Q2 Impact, protests its disqualification from a large solicitation

issued by the General Services Administration (GSA).1 Q2 Impact alleges that it was improperly

disqualified from consideration due to the government’s incorrect interpretation of a statutory pro-

vision that prohibits government agencies from contracting with entities that use certain high-risk

equipment in their work. The government responds that under its interpretation of the statute and

the regulations promulgated under the statute, Q2 Impact was properly disqualified. Both parties

1 This opinion was originally issued under seal. The parties had no proposed redactions. The court reissues the opinion publicly. 1 asked the court to interpret the relevant statute and regulations, and Q2 Impact moved for a pre-

liminary injunction.

The court held a hearing on the motions for a statutory interpretation and for a preliminary

injunction. After hearing arguments and taking a recess, the court issued a ruling from the bench,

interpreting the statute in the way that Q2 Impact, not the government, reads it. The court also

denied Q2 Impact’s motion for a preliminary injunction without prejudice on the basis that there

was no prejudice to Q2 Impact at that time in waiting for a final judgment in the case. The parties

requested a written opinion, so this opinion memorializes the court’s ruling from the bench on the

statutory interpretation. More has happened since the hearing that has changed the parties’ argu-

ments on the injunction, so this opinion will not address the request for a preliminary injunction.

To the extent that circumstances have changed, this opinion addresses the facts as they were at the

time of the hearing, on January 29, 2025.

The court interprets the statute in the way that Q2 Impact reads it. Thus, the court deter-

mines that GSA’s decision to disqualify Q2 Impact from the solicitation was based on an incorrect

interpretation of the statute.

I. Background

Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year

2019 addresses concerns about U.S. government contractors using technology built by Chinese-

government-owned companies. It prohibits any federal executive agency from entering into, ex-

tending, or renewing a contract “with an entity that uses any equipment, system, or service that

uses covered telecommunications equipment or services as a substantial or essential component of

any system, or as critical technology as part of any system.” Pub L. No. 115-232, § 889(a)(1)(B),

132 Stat. 1636, 1917-18 (2018). Section 889 defines “covered telecommunications equipment or

services” as including equipment produced by entities headquartered in China, such as Huawei 2 Technologies Company, as well as “equipment or services produced or provided by an entity that

the Secretary of Defense … reasonably believes to be an entity owned or controlled by, or other-

wise connected to, the government of [China].” Id. at § 889(f)(2)-(3). But § 889 gives certain

government officials the authority to grant waivers of that contracting prohibition, allowing the

covered equipment to be used in limited circumstances. Id. at § 889(d)(1)-(2). Under § 889(d)(1),

for two years after the effective date of the provision, until September 2022, an executive agency

head could, “on a one-time basis, waive the requirements under subsection (a)” when the agency’s

contracting office provided “a compelling justification.” Section 889(d)(2) separately gives the

Director of National Intelligence (DNI) authority, after the first two years, to “provide a waiver …

if the Director determines the waiver is in the national security interest of the United States.”

The government modified the Federal Acquisition Regulations to incorporate the § 889

prohibitions and exceptions. See 48 C.F.R. §§ 4.2102, 4.2104. Rule 4.2102 discusses the § 889(a)

prohibition on covered equipment and services; rule 4.2104(a) discusses § 889(d)(1) agency-head

waivers; and rule 4.2104(b) discusses the Director of National Intelligence’s § 889(d)(2) waiver

authority.

In 2020, USAID told its industry partners that the Director of National Intelligence had

issued USAID a DNI waiver under § 889(d)(2), to cover contracts that “advance [USAID’s] for-

eign assistance mission overseas,” which was valid until 2022. ECF No. 1-2 at 2-3. In 2021,

USAID told its partners that it received a modified DNI waiver, valid through 2028, for “situations

where [USAID] contractors and recipients aren’t able to avoid using covered technology because

there are no Section 889 compliant telecommunications service providers in the countries where

they are working.” ECF No. 1-3 at 2. In 2022, USAID awarded Q2 Impact a foreign assistance

contract in Egypt supporting a USAID learning activity. ECF No. 1 at 8 [¶29]. There are no

3 telecommunications service providers operating in Egypt that are compliant with § 889, so USAID

applied the modified DNI waiver to Q2 Impact’s contract. Id. at 8 [¶31].

In 2023, the General Services Administration solicited proposals for its One Acquisition

Solution for Integrated Services Plus (OASIS+) program. ECF No. 1 at 1 [¶1]; ECF No. 1-1 at 1.

The OASIS+ program is a government-wide, multiple award, indefinite delivery, indefinite quan-

tity acquisition program. ECF No. 1-1 at 12. The solicitation outlined several domains in which

the government could award contracts. Id. at 23; ECF No. 1 at 3 [¶11]. The solicitation anticipated

awarding multiple contracts in each of the domains, and a proposal could qualify to provide ser-

vices across “one or more Domains.” ECF No. 1-1 at 140; ECF No. 1 at 3 [¶11]. The solicitation

explained that the government would award the contract to “All Qualified Offerors with a Fair and

Reasonable Price.” ECF No. 1-1 at 194. In other words, the government would then have those

offerors on an approved list, and they would be eligible to bid for task orders in the relevant domain

or domains. To join the approved list in a particular domain, an offeror “must meet or exceed the

Domain-specific qualification threshold” and could do that using “any combination of qualifica-

tions detailed in each Domain’s Qualifications Matrix to achieve the applicable qualifying thresh-

old.” Id. An offeror needed to show that it qualified for “36 out of 50 available credits” to be

eligible for a contract in a particular domain. Id. at 202.

Q2 Impact submitted a proposal in the management and advisory domain. ECF No. 1 at 4

[¶15]. It claimed 38 credits for that domain, more than the 36-credit threshold. Id. In its proposal,

Q2 Impact stated that it “will not provide covered telecommunications equipment or services to

the Government in performance of any contract, subcontract or other contractual instrument re-

sulting from [this] solicitation.” ECF No. 1-4 at 126. However, given its active USAID Egypt

contract, Q2 Impact also disclosed that it “does use covered telecommunications equipment or

4 services.” Id. GSA requested clarification on Q2 Impact’s use of covered equipment, and Q2 Im-

pact explained that it uses covered equipment under USAID’s DNI waiver because there is no

alternative telecommunications infrastructure in Egypt. ECF No. 1 at 9 [¶ 35]. In other words, Q2

Impact connects to the Egyptian telecommunications infrastructure, which uses covered technol-

ogy, but it does not otherwise use covered technology; it does not use covered technology outside

that USAID contract. ECF No. 28 at 30:22-31:7. In 2024, Q2 Impact received a notification and

written debriefing, stating that GSA had found it ineligible for the OASIS+ contract. ECF No. 1-

6. The notice stated that Q2 Impact did not satisfy all requirements to be considered a qualifying

offeror. Id. at 2. The notice explained that “GSA is unable to enter into a contract with any entity

that represents it ‘DOES’ use covered telecommunications equipment or services … [, so] the

proposal was removed from consideration for award and was not evaluated for claimed credits.”

Id. at 2-3.

Q2 Impact first protested its disqualification at the Government Accountability Office

(GAO). GAO denied the protest, explaining that GSA would have to request or issue a new waiver

to allow Q2 Impact to join the contract, and GSA was not obligated to do that. In re QED Group

LLC d/b/a Q2 Impact, B-421775.4, 2024 WL 5245502 at *3-5 (November 12, 2024).

Q2 Impact then filed a bid protest in this court in November 2024. In January 2025, Q2

Impact and the government filed simultaneous motions asking the court to interpret § 889 and

determine whether GSA’s decision to exclude Q2 Impact from the OASIS+ competition was based

on an erroneous interpretation of § 889 and its implementing provisions in the Federal Acquisition

Regulations. ECF Nos. 17, 18-1.

II. Discussion

This court’s jurisdiction is primarily defined by the Tucker Act, which provides the court

with “jurisdiction to render judgment on an action by an interested party objecting to a solicitation 5 by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the

award of a contract or any alleged violation of statute or regulation in connection with a procure-

ment or proposed procurement.” 28 U.S.C. § 1491(b). The court can grant “any relief that the court

considers proper,” including injunctive relief. Id. Under 28 U.S.C. § 1491(b), the Court of Federal

Claims has “jurisdiction to review both pre-award and post-award bid protests.” Banknote Corp.

or America v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004). The court “review[s] the

agency’s decision pursuant to … the standards found in the Administrative Procedure Act” (APA).

Id. “Among the various APA standards of review in section 706, the proper standard to be applied

in bid protest cases is provided by 5 U.S.C. § 706(2)(A): a reviewing court shall set aside the

agency action if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

with law.’” Id. at 1350-51 (citations omitted).

Under the APA, “the reviewing court shall decide all relevant questions of law, interpret

constitutional and statutory provisions, and determine the meaning or applicability of the terms of

an agency action.” 5 U.S.C. § 706. “Section 706 makes clear that agency interpretations of stat-

utes—like agency interpretations of the Constitution—are not entitled to deference. Under the

APA, it thus remains the responsibility of the court to decide whether the law means what the

agency says.” Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 391-92 (2024) (quotation

marks omitted). In some circumstances, the “statute’s meaning may well be that the agency is

authorized to exercise a degree of discretion.” Id. at 394. “Courts interpret statutes, no matter the

context, based on the traditional tools of statutory construction, not individual policy preferences.”

Id. at 403. A court should not construe the law “with an eye to policy preferences that had not

made it into the statute.” Id. at 403-04. The court determines whether the statute has a “plain and

unambiguous meaning with regard to the particular dispute in the case.” Robinson v. Shell Oil Co.,

6 519 U.S. 337, 340 (1997). In determining a statute’s meaning, the court must look at the “specific

context in which that language is used, and the broader context of the statute as a whole.” Id. at

341.

In this case, Q2 Impact has the correct interpretation of § 889. The statute as applied to

agency-head waivers is different from the statute as applied to waivers issued by the Director of

National Intelligence. Section 889(d)(1) is exclusively about waiver authority given to executive

agency heads. It states, “The head of an executive agency may, on a one-time basis, waive the

requirements under subsection (a) with respect to an entity that requests such a waiver. The waiver

may be provided, for a period of not more than two years after the effective date[ ]” of the provi-

sion. Pub L. No. 115-232, § 889(d)(1). It requires a “compelling justification” for the waiver and

a “phase-out plan” to eliminate the future need for covered equipment or services. Id. The ability

of agency heads to provide a waiver under § 889(d)(1) expired in 2022. See id. at § 889(c).

Now, only the Director of National Intelligence may issue waivers under § 889(d)(2). DNI

waivers are available more broadly; the only requirement is that the Director of National Intelli-

gence “determine[ ] the waiver is in the national security interests of the United States.” Id. at

§ 889(d)(2). For a DNI waiver, there is no requirement of a phase-out plan or requirement that it

be issued on a one-time basis. Id.

A. The government’s interpretation largely depends on text and comments re- lated to § 889(d)(1) agency-head waivers, not § 889(d)(2) DNI waivers

The government’s argument relies on the text of the statute, the Federal Acquisition Reg-

ulations, and some comments in the Federal Register. ECF No. 17 at 7-11. That text and those

statements arguably support the interpretation that, even though a particular covered product will

not be used for the contract and is already covered by a waiver, the new contracting agency must

get a separate waiver under the new contract. Id. While those statements arguably support the

7 government’s view for an agency-head waiver, they apply almost exclusively to agency-head

waivers. They do not apply in the same way to DNI waivers.

The text of the statute provides the Director of National Intelligence with very broad au-

thority to grant a waiver. See Pub L. No. 115-232, § 889(d)(2). That contrasts with an agency

head’s authority to grant a waiver, which was limited to the first two years after the statute passed,

was only “on a one-time basis,” and required a “phase-out plan” for stopping the use of covered

equipment and services. Compare § 889(d)(2) with § 889(d)(1).

The government cites a few regulations, including 28 C.F.R. § 4.2104(a), to support its

argument that a waiver must specifically apply to the agency awarding the contract. ECF No. 17

at 10. But rule 4.2104(a), which implements § 889(d)(1), applies only to waivers issued by agency

heads. By contrast, 28 C.F.R. § 4.2104(b) applies to DNI waivers and says, in total, “[t]he Director

of National Intelligence may provide a waiver if the Director determines the waiver is in the na-

tional security interests of the United States.”

The government also points to a notice of an interim final rule in the Federal Register; in

it, the Federal Acquisition Regulation Council (FAR Council) rejected the idea of implementing a

“uniform waiver process that would apply across agencies.” ECF No. 17 at 10 (citing 85 Fed. Reg.

42672) (quotation marks omitted). The government argues that each agency thus must seek its own

waiver if it wishes to contract with an entity that uses equipment subject to the § 889(a)(1) prohi-

bition. Id. The cited sections of the Federal Register, like rule 4.2104(a), apply to agency-head

waivers, not DNI waivers. In the Federal Register, the FAR Council discussed at length the agency-

head-waiver process, including how to obtain agency-head waivers, phase-out plans for contrac-

tors to gradually stop using covered equipment, and expected costs over the 2-year period during

which agencies were allowed to issue waivers. 85 Fed. Reg. 42667-72. Meanwhile, the DNI-

8 waiver process was only briefly acknowledged as a “a separate and distinct” waiver without a

statutory “expiration date.” 85 Fed. Reg. 42668.

The FAR Council’s rejection of a “uniform waiver process” was made in the context of its

discussion of the expected costs the government would incur over the 2-year period as a result of

§ 889(a)(1), primarily due to the cost of reviewing and processing agency-head waiver requests,

not DNI waivers. 85 Fed. Reg. 42672. And it is logical that agency heads would not have a uniform

process for providing agency-head waivers because agencies each operate differently, with differ-

ent interests and different tolerances for risk. The Director of National Intelligence, on the other

hand, has to weigh only whether a given waiver is in the national security interests, given the

particular government needs for that solicitation.

There is one instance in the Federal Register outside the DNI section where the DNI waiver

is mentioned: In the “Public Costs” section, in discussing the time it will take to remove or replace

existing equipment, the Federal Register mentions DNI waivers, implying that the Director of Na-

tional Intelligence may require phasing out the use of covered equipment. 85 Fed. Reg. 42670-72.

Although the Director of National Intelligence may require a contractor to phase out its use of

covered equipment, nothing obligates him to require that, and, for the time that the equipment is

allowed, nothing says its use should prevent a contractor from receiving other government con-

tracts for which the contractor does not use covered equipment. See generally Pub L. No. 115-232,

§ 889(d)(2); 28 C.F.R. § 4.2104(b); 85 Fed. Reg. 42670-72.

The government also cites the FAR Council’s statement in the Federal Register that a

waiver one agency receives for a procurement “will not necessarily shed light on whether a waiver

is warranted in a different procurement with a separate agency,” and that each “waiver is based on

the agency’s judgment concerning particular uses of covered telecommunications.” ECF No. 17 at

9 10 (citing 85 Fed. Reg. 42667). Context reveals that that statement, like most of the others, is

exclusively about the agency-head waiver process. The next sentence refers to “[t]his agency

waiver process.” 85 Fed. Reg. 42667. The surrounding paragraphs on the same page state that

“[t]he agency may only grant the waiver request …,” referring to the agency-head waiver process,

and they discuss the “compelling justification” and “phase-out plan” that are applicable only to

agency-head waivers. Id. None of that addresses the DNI waiver process.

The government points to language in 28 C.F.R. § 52.204-25(b)(2) as well. ECF No. 17 at

10. That regulation states that one of the § 889 prohibitions “applies to the use of covered telecom-

munications equipment or services, regardless of whether that use is in performance of work under

a Federal contract.” 28 C.F.R. § 52.204-25(b)(2). The government argues that a waiver must there-

fore apply specifically to the agency awarding the contract. ECF No. 17 at 10. The same paragraph

states that the § 889 prohibition does not apply if “the covered telecommunication equipment or

services are covered by a waiver described in 28 C.F.R. § 4.2104.” Read as a whole, rule 52.204-

25(b)(2) is better interpreted as saying that agencies cannot contract with companies that use cov-

ered equipment or services for any work—most surprisingly work outside any federal contract—

absent a waiver for that equipment or those services. The government’s cited sentence is most

focused on the fact that even if an entity uses some covered equipment for non-government work,

the equipment itself is still a problem, and the only way to address that problem is through a waiver.

The regulation most likely points that out because a contractor might be surprised that its use of

covered equipment for non-government work could affect its ability to contract with the govern-

ment.

The government also cites USAID’s Frequently Asked Questions in support of its argu-

ment. ECF No. 17 at 13-14. Those FAQs indicate that some agencies, including USAID,

10 understood that an entity that has a waiver for a contract with one agency would have to apply for

a separate waiver to be eligible for a contract with a different agency, even if the covered equip-

ment or services would be used only in performing the first contract. ECF No. 17-3 at 4-6. That

guidance is from USAID is not binding on other agencies and certainly not the court.

B. Under the text of § 889(d)(2), its accompanying regulation, and GSA guidance, GSA’s view does not qualify for deference

Neither the statutory text nor the accompanying regulation at issue, Pub L. No. 115-232,

§ 889(d)(2) and 28 C.F.R. § 4.2104(b), directly addresses the interpretive issue in this case. “Stat-

utory interpretation begins with the words of the statute.” BASR Partnership v. United States, 795

F.3d 1338, 1342 (Fed. Cir. 2015). “The first step is to determine whether the language at issue has

a plain and unambiguous meaning with regard to the particular dispute in the case.” Barnhart v.

Sigmon Coal Co., Inc., 534 U.S. 438, 550 (2002) (citations and quotation marks omitted). The text

of § 889(d)(2) is brief; it states, “The Director of National Intelligence may provide a waiver … if

the Director determines the waiver is in the national security interests of the United States.” The

statute does not address whether a DNI waiver allowing an entity to use covered equipment in

performing a contract with one agency means that other agencies are prohibited from contracting

with that entity. The accompanying regulation, rule 4.2104(b), is similarly brief and does not ad-

dress the question. Unlike 28 C.F.R. § 4.2104(a), which implements § 889(d)(1) by elaborating on

the process for agency-head waivers, rule 4.2104(b) simply restates § 889(d)(2). Meanwhile, the

Federal Register and cited agency FAQs discuss the § 889(d)(1) agency-head waiver process, plan-

ning, and costs, providing little context for interpreting the DNI-waiver process.

In Loper Bright, the Supreme Court recently held that “[s]ection 706 [of the APA] makes

clear that agency interpretations of statutes … are not entitled to deference. … [I]t thus remains

the responsibility of the court to decide whether the law means what the agency says.” Loper

11 Bright, 603 U.S. at 391-92 (citations and quotation marks omitted). But the Supreme Court does

give some weight to agency “interpretations and guidance” under Skidmore, saying that “[s]uch

interpretations constitute a body of experience and informed judgment to which courts and litigants

may properly resort for guidance consistent with the APA.” Loper Bright, 603 U.S. at 394 (citing

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). Under Skidmore, the weight given to an

agency’s interpretation “depend[s] upon the thoroughness evident in its consideration, the validity

of its reasoning, its consistency with earlier and later pronouncements, and all those factors which

give it the power to persuade, if lacking power to control.” Skidmore, 323 U.S. at 140.

For interpretation of a regulation, such as the Federal Acquisition Regulations, in Kisor,

the Supreme Court held that, when applicable, an agency’s reading of its own rule or regulation

can still receive Auer deference. Kisor v. Wilkie, 588 U.S. 558, 580 (2019). The Court provided

three requirements for an interpretation to qualify for that deference: (1) “the regulatory interpre-

tation must be the agency’s authoritative or official position, rather than [an] ad hoc statement not

reflecting the agency’s views”; (2) “the agency’s interpretation must in some way implicate its

substantive expertise”; and (3) the “agency’s reading of a rule must reflect its fair and considered

judgment.” Id. at 577-79. Furthermore, a court may not “defer to a new interpretation … that cre-

ates unfair surprise to regulated parties.” Id. at 579 (citations and quotation marks omitted).

In this case, GSA’s interpretation of the Federal Acquisition Regulations warrants signifi-

cant consideration because GSA is one of the most significant players in government contracting.

But GSA and the FAR Council have discussed and addressed only the agency-head waiver process

in the Federal Register. See generally 85 Fed. Reg 42665-72; 28 C.F.R. § 4.2104-05, 52.204-24-

26; supra Part II.A.1. In other words, the government provides a reasonable interpretation that may

be persuasive under Skidmore and may meet the Kisor standard for deference for the agency-head

12 waiver process, but none of that applies to § 889(d)(2), the related 28 C.F.R. § 4.2104(b), and the

DNI waiver process. Neither the FAR Council nor GSA has released considered guidance related

to § 889(d)(2) or rule 4.2104(b). In fact, the government has stated that no DNI waivers have even

been granted other than USAID’s waiver at issue here, a DNI waiver for the Defense Department

that expired in 2022, and possibly a State Department DNI waiver. ECF No. 20 at 4 n.2; ECF No.

23 at 1 n.1, 2; ECF No. 28 at 61:14-62:24. So none of the government’s cited discussions show

that GSA has “thorough[ly] consider[ed]” § 889(d)(2)’s meaning as required by Skidmore for the

court to grant GSA’s interpretation significant weight. Skidmore, 323 U.S. at 140. Nor has GSA

released an “authoritative” or “considered” interpretation of 28 C.F.R. § 4.2104(b), which would

be required by Kisor for the court to defer to GSA’s judgment. Kisor, 588 U.S. at 577-79.

Thus, the court must determine the meaning of § 889(d)(2) and rule 4.2104(b) without

formal deference to GSA’s interpretation in the government’s briefs. Loper Bright, 603 U.S. at

391-92.

C. Q2 Impact’s DNI waiver applies to the covered technology it is using, so GSA is not prohibited from contracting with Q2 Impact under § 889(a)(1)(B)

The clearest reading of § 889(d)(2) is that a waiver from the Director of National Intelli-

gence applies to the equipment or service for which the waiver is given, for use under the agency

contract for which it is given, but does not apply to permit a contractor to use that or other equip-

ment or services for another contract or outside its government contracts. The waiver means that

the contractor is not prohibited from receiving other government contracts for which the contractor

will not use covered equipment.

Section 889(d)(2) allows the Director of National Intelligence to grant a waiver based

solely on national security interests. The Director’s authority is not statutorily time-limited like

agency heads’ authority under § 889(d)(1). The Director does not have to rely on a plan to phase

13 out the use of the covered products, and the Director’s authority is not, unlike agency-head author-

ity, limited as “on a one-time basis.” Compare § 889(d)(2) with § 889(d)(1).

As discussed, only a few DNI waivers have been granted, so there are limited real-world

examples for the court to consider. Q2 Impact points to one relevant example: in GSA’s frequently

asked questions about § 889, GSA stated that it might enter into new contracts with “offerors with

existing waivers granted by the [Office of the Director of National Intelligence], pursuant to the

terms of the applicable waiver and any relevant implementing instructions.” ECF No. 21 at 15-16

(citing ECF No. 21-1 at 18). That language implies that GSA has previously at least acknowledged

the possibility of entering into contracts with contractors who had a preexisting DNI waiver by

relying on the terms of that preexisting waiver, without seeking its own new DNI waiver.

Indeed, it would be oddly redundant to require the Director of National Intelligence to issue

a new waiver to an agency, for the same equipment and same use on the same contract, for which

the Director has already issued a waiver, restating that that use continues to be in the interest of

national security. Q2 Impact acknowledges that if it needed to use covered equipment on a contract

with another agency or for its own non-government-contract purposes, then the agency would need

to obtain a new waiver from the Director of National Intelligence. ECF No. 21 at 6. The court

agrees. The Director would in that case need to determine, for the first time, if that equipment and

its intended use is in the interest of national security and warrants a § 889(d)(2) DNI waiver.

Q2 Impact and the government both reference an Army interpretation of DNI waivers, an

interpretation that the government argues was based only on a now-expired DNI waiver that was

given to the Defense Department. ECF No. 21 at 15; ECF No. 23 at 2-4. That Defense Department

DNI waiver supports Q2 Impact’s argument. The Army Federal Acquisitions Regulation Supple-

ment provides guidance on how contracting personnel should authorize payments to merchants

14 that have a DNI Waiver. See Army Federal Acquisition Regulation Supplement, Appendix EE, 6-

3, available at https://www.acquisition.gov/afars/6-3.-national-defense-authorization-act-section-

889-representation (last visited Feb. 25, 2025). It provides contracting personnel with codes to use

when a merchant has provided an affirmative § 889 representation but is covered by a DNI waiver.

Id. Like the Defense Department contract that was granted the DNI waiver, which ended in 2022,

the USAID contract is time limited, ending in 2028. ECF No. 1-3 at 2. And like the Defense De-

partment contract, the USAID waiver applies only to certain uses—uses for the USAID contract.

Id. The Defense Department DNI waiver was still effective to allow other agencies to contract with

that Army contractor, and likewise, here, Q2 Impact’s DNI waiver is still effective to allow other

agencies to contract with Q2 Impact.

The DNI waiver at issue here applies to the equipment Q2 Impact is using for its existing

contract with USAID in Egypt. As long as Q2 Impact is continuing to use covered equipment or

services only for that existing USAID Egypt contract and is not using that equipment or other

covered equipment elsewhere, the existing DNI waiver addresses that use. Other agencies, includ-

ing GSA, are not prohibited from contracting with Q2 Impact and do not require a second waiver

for that use.

D. The government’s policy concerns can be addressed without a contorted stat- utory interpretation

The government outlines two policy arguments in favor of its interpretation: (1) not spend-

ing federal tax dollars on covered products that pose national security threats; and (2) protecting

federal agency networks from those threats. ECF No. 17 at 16-19. Under Loper Bright, the courts

cannot construe the law “with an eye to policy preferences that had not made it into the statute.”

Loper Bright, 603 U.S. at 403-04.

15 Regardless, the first policy concern is not affected by either party’s interpretation. USAID

is already using Q2 Impact’s covered equipment in Egypt; the money already has been or is being

spent, regardless of whether Q2 Impact gets any future government contracts. ECF No. 1 at 9

[¶35]. Q2 Impact is also not proposing to use any covered equipment to perform the OASIS+

contract. Id. at 8-9 [¶32]; ECF No. 1-4 at 126. And if Q2 Impact receives the OASIS+ contract and

finds that it needs to use covered equipment to perform any task order under that contract, it would

need a new waiver to apply to that covered equipment.

Applicable to both policy concerns, the government argues separately that there is a general

policy underlying § 889 to phase out the use of covered equipment. E.g., ECF No. 20 at 4. As

discussed above, that phase-out language appears in the statute itself, but only in the context of

agency-head waivers. For DNI waivers, the Director has determined that until 2028, when he can

revisit the question, Q2 Impact’s use of covered equipment for the USAID contract is affirmatively

in the interest of national security. Pub L. No. 115-232, § 889(d)(2).

As for the second policy concern—avoiding national security threats, particularly cyber-

threats—the government is understandably concerned that, for example, a contractor’s server

might be compromised by having compromised equipment connected to it, thus compromising

other, non-covered, equipment that might be used for other, more sensitive, government contracts.

Even though the Director of National Intelligence may make the decision for two different agen-

cies, those agencies might have different risk tolerances because their work might be more or less

sensitive. But an agency’s solicitation can specify that the agency will not accept a contractor that

uses covered products even if that contractor has a waiver. If a particular contract or task order is

especially sensitive, an agency can issue a solicitation that explicitly states that it will not accept

contractors that use covered equipment, even if that equipment is subject to a DNI waiver. Nothing

16 in the court’s decision prevents GSA from modifying the solicitation for OASIS+, or writing task

orders, to add that caveat. But the statute itself and 28 C.F.R. § 4.2104(b) do not do that work for

the agencies generally or for GSA specifically.

III. Conclusion

For the reasons stated above, this court has determined that GSA’s decision to exclude Q2

Impact from the OASIS+ competition was based on an erroneous interpretation of § 889.

s/ Molly R. Silfen MOLLY R. SILFEN Judge