Army AI procurement lawsuit could test disclosure standards

TRAX International Corporation is asking the U.S. Court of Federal Claims to order the Army to reevaluate proposals for the White Sands Missile Range mission support services contract and make a new award decision. The company alleges that AI hallucinations weakened its bid before the Army awarded a $450 million contract to Southwest Range Services.

The Government Accountability Office denied TRAX’s earlier bid protest, acknowledging that the Army had wrongly assigned TRAX a weakness but finding the error did not prejudice the company’s chance of winning. TRAX argues the Army has not explained how the mistake occurred and refused to say whether the Source Selection Evaluation Board relied on AI, while the Army says the Source Selection Authority did not use AI to evaluate proposals.

Legal experts said the dispute stands out because there is no specific federal acquisition rule governing AI use in bid evaluations. Contractors may increasingly press agencies to disclose whether AI will be used in solicitations, how it will factor into reviews and what human validation steps will be taken.

If the case survives a motion to dismiss, discovery could reveal more about the Army’s use of AI in the procurement process. Experts said the administrative record, including the Source Selection Evaluation Board report, may become central to whether the evaluation appears adequately reviewed and documented.