In Strategi Consulting, LLC v. United States, the U.S. Court of Federal Claims recently held that a prior Small Business Innovation Research (SBIR) Phase II awardee can bring a bid protest when an agency declines to award it Phase III work and instead routes that work to other contractors through existing task orders — even without a formal solicitation. The court denied the government’s motion to dismiss, confirming that (1) informal “insourcing” and de facto follow-on work can count as a “procurement,” (2) the Federal Acquisition Streamlining Act (FASA) Task Order Bar does not block claims that are only tangentially related to task orders, and (3) SBIR’s Phase III preference statute supports injunctive and declaratory relief in a bid protest.
Background
Strategi Consulting held a Phase II SBIR contract with Space Systems Command to build Voltron, a Tactical Surveillance, Reconnaissance, and Tracking (TacSRT) platform for the Air Force and Space Force. The contract closed in November 2025 with all deliverables accepted, and Voltron earned an Authorization-to-Operate equivalent certification.
Strategi alleged that, rather than award it a Phase III contract, the Air Force Research Lab funneled continuation work to Dragon Army, a “pooled, badge-less, multi-contractor” internal organization that used existing task orders with four private contractors to build Vigil — a platform Strategi claims replicates Voltron’s architecture and backlog. Strategi also alleged the agency demanded Strategi’s codebase and that a government program lead made statements reflecting bias against the company.
The government moved to dismiss, arguing there was no “procurement” for the court to review; the claim was barred by FASA’s Task Order Bar; and Strategi’s requested relief was not redressable in a bid protest.
The Court’s Three Key Holdings
1. Insourcing and informal follow-on work can be a “procurement.”
The court reaffirmed that “procurement” under 28 U.S.C. § 1491(b)(1) is interpreted broadly — it covers the entire process of determining a need for property or services, not just formal solicitations. Citing Distributed Solutions, Diaz, and Santa Barbara Applied Research, the court held that an agency’s decision to develop functionally equivalent software through existing contractors, after declining a Phase II contractor’s Phase III proposal, is “acquisition by another name” and falls within the court’s bid protest jurisdiction. The court distinguished ASTi v. United States, where the disputed software had been developed decades earlier with no active solicitation; here, the agency had recently funded the technology, declined a live Phase III proposal, and continued near-identical development through contractors.
2. The FASA Task Order Bar does not reach claims that are only tangentially about task orders.
The FASA Task Order Bar (41 U.S.C. § 4106(f)) generally prohibits protests at the court regarding the “issuance or proposed issuance” of a task order. The court held that Strategi’s claim survives because it targets the agency’s alleged violation of the SBIR Phase III preference — the task orders are merely the vehicle, not the subject, of the protest. The court also noted FASA’s increased-scope exception would independently apply if the disputed work exceeded what the task orders actually covered.
3. Declaratory and injunctive relief satisfy redressability.
The government argued that Strategi’s claims were not redressable because courts generally cannot order an agency to buy a specific product. The court rejected that framing: Strategi sought a ruling that the agency’s conduct was arbitrary and an injunction against assigning the disputed work to other contractors — relief expressly authorized under 28 U.S.C. § 1491(b)(2).
Bottom Line
Strategi Consulting v. United States gives SBIR Phase II awardees a real avenue to challenge agencies that quietly move follow-on work to other contractors or internal teams instead of honoring the Phase III preference. Contractors facing a similar pattern — proposal submitted, no formal response, then substantially similar work appearing elsewhere — should document the timeline carefully and consult experienced protest counsel promptly.
If you have any questions about the foregoing or require assistance, please do not hesitate to contact Aron Beezley or Gabby Sprio.