The Navy cannot put all of its Medium Unmanned Surface Vessel production money to work until it takes a second look at a bidder it threw out. A Court of Federal Claims judge ruled that Saildrone was unfairly excluded from the first round of the Navy's MUSV Other Transaction competition, and until the service reevaluates the company's proposal, it cannot commit more than $1.5 billion of the program's $2.1 billion to production, according to Saildrone. Judge Philip Hadji's ruling, announced by the company on Nov. 2, 2026, follows a jurisdiction decision days earlier that could open a wider path for vendors to challenge Other Transaction awards in court.
Both decisions came in a consolidated protest brought by two start-ups, Saildrone and Blue Water Autonomy. The first settled whether the court could hear the case at all. The second, as described by Saildrone, settled whether the Navy treated Saildrone fairly once it did.
How Saildrone Overturned Its MUSV Exclusion
Saildrone's account of the case is blunt. The company says its proposal met or exceeded every requirement in the solicitation, yet the Navy found it non-compliant on all three evaluation criteria. In its release, Saildrone said that “the Navy promptly abandoned two of its determinations of non-compliance, and the Court has now rejected the sole remaining determination, finding that the Navy applied arbitrary and capricious criteria to Saildrone that were not applied elsewhere in the competition.”
That characterization comes from Saildrone; GovConFeed has not reviewed the court's merits opinion. According to the company, the court ordered the Navy to “promptly reevaluate Saildrone’s proposal using the same criteria it applied to other competitors.” The Navy has not been quoted in the sources reviewed for this article, so its position on the ruling is not covered here.
Saildrone founder and CEO Richard Jenkins framed the result in broad terms. “This ruling is a win for fair competition, for taxpayers, and for national security,” he said. He also signaled the company wants out of litigation: “The future of naval warfare will be fought on the water, not in a courtroom.”
The $1.5 billion limit is the practical lever. By Saildrone's account, the Navy can keep moving on most of the program, but the rest of the production money stays out of reach until the reevaluation is done. That gives the service a direct budget reason to finish the review quickly, and it gives Saildrone a path back into a competition it had been shut out of. How fast the Navy moves, and whether Saildrone ultimately wins any production work, are separate questions the ruling does not answer.
Blue Water Autonomy's Parallel Challenge
Saildrone was not the only protester. Blue Water Autonomy, another start-up, challenged the same competition, and its protest was consolidated with Saildrone's. In Blue Water's initial complaint, it described the selection process for the first iteration of the MUSV competition as “arbitrary, capricious and not in accordance with statute or regulation.”
The sources reviewed for this article do not say how the court ruled on Blue Water's own evaluation arguments. Saildrone's release speaks only to Saildrone's claims, and the merits opinion has not been reviewed by GovConFeed. Readers tracking Blue Water's position should look to the court's docket and the company's own statements rather than the Saildrone account.
Does the Court of Federal Claims Now Hear OTA Protests?
The bigger story for the contracting community came first. On Oct. 29, 2026, days before the merits ruling, Hadji denied the government's motion to dismiss the consolidated protest on jurisdictional grounds.
“The Court finds that its broad procurement protest statute, 28 U.S.C. § 1491(b)(1), encompasses the instant protest because the OT competition at issue is in connection with the Navy’s procurement of MUSVs,” he wrote, as quoted by Inside Defense. “Accordingly, the Government’s Motion to Dismiss is DENIED.”
He also flagged the open legal question. “The Federal Circuit has not addressed whether procurement protests involving other transactions fall within 28 U.S.C. § 1491(b)(1),” Hadji wrote. “As a result, the Court is not bound by any Federal Circuit precedent addressing OTs.”
That point matters. Without an appellate ruling, the question stays open, and a trial-level court's reading of the statute does not bind other judges of the court or the Federal Circuit. But the reasoning gives future protesters a roadmap: tie the OT competition to a procurement, and argue the protest is “in connection with” that procurement under the statute.
Inside Defense reported that experts agree that if the court agrees to hear the case and assess whether the Navy unfairly evaluated competitors, this could expand the Court of Federal Claims' jurisdiction over Other Transaction protests in general. Hallie Tremaine Balkin, an adjunct professor specializing in OTA at George Washington University Law School, told Inside Defense earlier in October that a ruling in favor of Blue Water Autonomy and Saildrone would be a “landmark decision.”
Why the Jurisdiction Ruling Reaches Beyond the Navy
Bid protests in the federal system usually follow a familiar track. A losing offeror can challenge an award at the agency, at the Government Accountability Office, or at the Court of Federal Claims, and the statute Hadji cited is the broad grant of authority the court uses for the last of those. The open question has been whether a competition run under Other Transaction authority, rather than under the Federal Acquisition Regulation, counts as a procurement for that purpose.
What It Means for Contractors
Other Transaction agreements have appealed to agencies partly because they sit outside much of the Federal Acquisition Regulation. That flexibility has often been read to mean fewer avenues for challenge. This case chips at that assumption. Any company that loses an OT competition tied to a clear production path now has a written Court of Federal Claims opinion to cite when it argues the court can hear its challenge, though the opinion is not binding precedent on the Federal Circuit.
A few practical takeaways:
- Document evaluation criteria closely. Saildrone's win rested, by its own account, on the finding that the Navy applied criteria to it that were not applied elsewhere. Losing offerors in OT competitions should compare how each criterion was applied across bidders, not just to their own proposal.
- Expect the government to concede weak findings. According to Saildrone, the Navy dropped two of three non-compliance findings once challenged. Protesters should be ready to focus on whatever finding survives.
- Connect the OT to the production path. The jurisdiction holding turned on the OT competition being in connection with the Navy's procurement of MUSVs. Record how the prototype competition feeds follow-on production.
- Watch for an appeal. Until the Federal Circuit weighs in, the jurisdiction question remains unsettled, and a corrected evaluation still has to be completed and may itself be contested.
