Silicon Valley technology company Palantir plans to sue the Army, claiming that the military service has shown bias against off-the-shelf products in its solicitation for a $206 million intelligence IT contract.

Palantir claims the Army’s solicitation for the second incarnation of its intelligence-gathering system, the Distributed Common Ground System – Army (DCGS-A) Increment 2, was “unlawful, irrational, arbitrary, and capricious” against offerors for commercial products that met part of the requirements.

“The solicitation refuses to solicit or accept bids from any offerors who have already built a data management platform as a commercial product and could begin immediately fielding it to soldiers in harm’s way,” Hamish Hume, an attorney for Palantir, wrote in a June 16 letter to Army Contracting Command-Aberdeen Proving Ground.

Palantir’s lawsuit comes after the Government Accountability Office denied the company’s protest in May and ruled that the Army upheld the provisions in the Federal Acquisition Regulation (FAR).

“Because the agency concluded that significant portions of the anticipated DCSG-A2 scope of work were not available as a commercial product, the agency determined that the DCGS-A2 development effort could not be procured as a commercial product under FAR part 12 procedures,” GAO said. “The protester has failed to show that the agency’s determination in this regard was unreasonable.”

Palantir’s lawyers said the company plans to file its lawsuit with the U.S. Court of Federal Claims this week.

The tension between DCGS-A and Palantir garnered attention in 2013 over a confrontational exchange between former Chief of Staff of the Army Ray Odierno and Rep. Duncan Hunter (R-Calif.), a member of the House Armed Services Committee.

Hunter told Odierno that numerous soldiers preferred Palantir’s commercial data-analytics product, and that DCGS-A necessarily duplicated many of its functions. Odierno rejected Hunter’s claims.

“Instead, the Solicitation seeks to begin another costly and risk-prone major software development project while soldiers wait,” Hume said in his letter to the Army.

The lawsuit claims the Army’s rebuff of Palantir goes against Defense Secretary Ash Carter’s outreach to Silicon Valley and his commitment to build a culture of innovation at DoD.

“In effect, the solicitation prevents the Defense Department from accessing commercial products developed in Silicon Valley and other sources of global technology innovation. By adopting this closed approach, Army bureaucrats are working against Secretary of Defense Ashton Carter’s initiatives to bring in new technology to transform the Department of Defense,” Hume said.

Over the past 15 years, the Army has spent more than $3 billion on Increment 1 of DCGS-A.

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