Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-18-02399/USCOURTS-ca13-18-02399-0/pdf.json

Parties Involved:
Acetris Health, LLC
Appellee
United States
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________

ACETRIS HEALTH, LLC,

Plaintiff-Appellee

v.

UNITED STATES,

Defendant-Appellant

______________________

2018-2399

______________________

Appeal from the United States Court of Federal Claims 

in No. 1:18-cv-00433-MMS, Chief Judge Margaret M. 

Sweeney.

______________________

Decided: February 10, 2020

______________________

STEPHEN E. RUSCUS, Morgan, Lewis & Bockius LLP, 

Washington, DC, argued for plaintiff-appellee. Also represented by JAMES D. NELSON, DAVID B. SALMONS, DONNA 

LEE YESNER. 

 DANIEL B. VOLK, Commercial Litigation Branch, Civil 

Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented 

by JOSEPH H. HUNT, ROBERT EDWARD KIRSCHMAN, JR.,

PATRICIA M. MCCARTHY; JENNIFER CLAYPOOL, Procurement Law Group, United States Department of Veterans 

Affairs, Hines, IL. 

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2 ACETRIS HEALTH, LLC v. UNITED STATES

 

 KYLE R. JEFCOAT, Latham & Watkins LLP, Washington, DC, for amicus curiae The Association for Accessible 

Medicines. Also represented by GENEVIEVE PATRICIA 

HOFFMAN; JEFFREY FRANCER, The Association for Accessible Medicines, Washington, DC. 

 ______________________

Before DYK, PLAGER, and STOLL, Circuit Judges.

DYK, Circuit Judge.

This case concerns restrictions on the procurement of 

foreign-origin pharmaceutical products by the Department 

of Veterans Affairs (“VA”). The Trade Agreements Act of 

1979 (“TAA”) bars the VA from purchasing “products of” 

certain foreign countries, such as India. The Federal Acquisition Regulation (“FAR”) directs agencies to purchase

“U.S.-made end products” before end products from certain 

foreign countries. 

The VA interpreted the statute and regulation to define

the country of origin of a pharmaceutical product to be the 

country in which the product’s active ingredient is manufactured, here India. Acetris Health, LLC (“Acetris”) challenged the VA’s interpretation of the TAA and the FAR in 

a bid protest action at the United States Court of Federal 

Claims (“Claims Court”). The Claims Court granted Acetris declaratory and injunctive relief, holding that the VA

misinterpreted the TAA and the FAR and enjoined the VA, 

in future procurements, from utilizing an erroneous interpretation. Acetris Health, LLC v. United States, 138 Fed. 

Cl. 579, 606–07 (2018). The government appeals. 

We hold that this suit is justiciable and agree with the

Claims Court on the result, but find the Claims Court’s 

remedy to be imprecise in certain respects. Accordingly, 

we affirm-in-part, vacate-in-part, and remand for the entry 

of a declaratory judgment and injunction consistent with 

this opinion.

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ACETRIS HEALTH, LLC v. UNITED STATES 3

BACKGROUND

I

Two statutes restrict the government’s ability to procure foreign-origin products. The first of these statutes to 

be enacted, the Buy American Act of 1933 (“BAA”), provides in relevant part that:

[O]nly manufactured articles, materials, and supplies that have been manufactured in the United 

States substantially all from articles, materials, or 

supplies mined, produced, or manufactured in the 

United States, shall be acquired for public use unless the head of the department . . . determines . . . 

their cost to be unreasonable.

41 U.S.C. § 8302(a)(1) (emphasis added). A 1954 Executive 

Order, now implemented in the FAR, specifies that the unreasonable cost exception to the BAA applies where the 

lowest domestic offer by a large business is over 6% higher 

than the lowest foreign offer, and the lowest domestic offer 

by a small business is over 12% higher than the lowest foreign offer. 48 C.F.R. (“FAR”) § 25.105. Congress has also

exempted commercial-off-the-shelf (“COTS”) products from 

the “substantially all” requirement, 41 U.S.C. § 1907, so a 

COTS product “manufactured” in the United States is 

BAA-compliant even if it is manufactured from predominantly foreign components, FAR § 25.101(a)(2). Acetris 

contends that this exception applies to its products, and the 

government does not contend otherwise. 

The second of these statutes is the TAA. The TAA was 

designed to encourage foreign countries to enter reciprocal 

government-procurement trade agreements. Those agreements prohibit foreign countries from discriminating 

against American-made products and prohibit the United 

States from discriminating against foreign-origin products. 

Under the statute, countries that have entered into such 

agreements, and that do not discriminate against 

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4 ACETRIS HEALTH, LLC v. UNITED STATES

American-made products, are allowed to compete for U.S. 

government procurements on non-discriminatory terms. 

At the same time, products from countries that have not 

entered into such trade agreements are barred from government procurements. Countries that have entered into 

such agreements are described as parties to the World 

Trade Organization (“WTO”) Agreement. Section 

2512(a)(1) of the TAA provides that:

[T]he President, in order to encourage additional 

countries to become parties to the [WTO] Agreement and to provide appropriate reciprocal competitive government procurement opportunities to 

United States products and suppliers of such products—

(A) shall, with respect to procurement covered by the Agreement, prohibit the procurement . . . of products—

(i) which are products of a foreign country 

or instrumentality which is not designated 

pursuant to section 2511(b) of this title [i.e., 

have not entered into reciprocal trade 

agreements], and

(ii) which would otherwise be eligible products [i.e., products covered by the Agreement or another reciprocal trade 

agreement]1. . . .

19 U.S.C. § 2512(a)(1) (emphasis added). The TAA defines 

“a product of a country” as follows: 

An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or 

manufacture of that country or instrumentality, or 

1 See 19 U.S.C. § 2518(4) (defining “eligible product”). 

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(ii) in the case of an article which consists in whole 

or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce 

with a name, character, or use distinct from that of 

the article or articles from which it was so transformed.

19 U.S.C. § 2518(4)(B) (emphasis added). Accordingly, for 

procurements “covered by the [WTO] Agreement,” the TAA 

generally prohibits government procurement of “products 

of a foreign country” unless the country is a party to the 

“Agreement” referenced in section 2512(a)(1). India, notably, is not a party to the Agreement. Thus, the TAA bars 

procurement of “products of” India.2 

As the government states, “[r]ulings from U.S. Customs and Border Protection (CBP) had long held that the 

source of a pharmaceutical product’s active ingredient generally dictates its country of origin.” Appellant’s Br. 6. The 

VA has adopted the CBP’s interpretation. The central merits question is whether this interpretation is correct, i.e., 

whether the products involved here are “products of a foreign country,” i.e., India, under the meaning of the TAA. 

Also pertinent here are the provisions of the FAR. The 

FAR’s Trade Agreements Clause (“TA Clause”), which harmonizes and implements the BAA and TAA in contracts 

2 The President can “designate[]” (i.e., waive the requirements of the TAA for) a country that is not a party to 

the Agreement in certain circumstances, such as if the 

country is a “least developed country,” or not a “major industrial country” and “will provide appropriate reciprocal 

competitive government procurement opportunities to 

United States products and suppliers of such products.” 

See 19 U.S.C. § 2511(b). India has not been “designated” 

by the President under section 2511(b).

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covered by the WTO Agreement, states in relevant part 

that the “Contractor shall deliver under this contract only 

U.S.-made or designated country end products.” FAR 

§ 52.225-5.

The FAR defines a “U.S.-made end product” as follows:

U.S.–made end product means an article that is 

mined, produced, or manufactured in the United 

States or that is substantially transformed in the 

United States into a new and different article of 

commerce with a name, character, or use distinct 

from that of the article or articles from which it was 

transformed.

FAR § 25.003.

II

Plaintiff-Appellee Acetris is a generic pharmaceutical 

distributor that specializes in providing pharmaceuticals 

to the federal government. Acetris obtains many of its 

pharmaceutical products from Aurolife Pharma LLC (“Aurolife”), which makes them in a facility located in Dayton, 

New Jersey using an active pharmaceutical ingredient 

(“API”) made in India. In 2017, Acetris had contracts to 

supply the VA with at least 13 pharmaceutical products, 

including Entecavir Tablets (used to treat hepatitis B).

On March 1, 2017, the VA sent a letter to Acetris requesting it to recertify its compliance with the TAA for each 

of 13 contracts Acetris then held with the VA. Acetris responded that its products were “TAA compliant.” J.A. 558. 

On March 30, 2017, the VA sent an email to Acetris stating 

that Acetris’ response was “insufficient” and “demanded” 

that Acetris provide a compliance letter “that followed the 

definition of substantial transformation under the TAA, as 

set forth in FAR 52.225-5,” which directs agencies to acquire “U.S.-made end products.” J.A. 558. In Acetris’ response to this email, it stated that its products were “‘U.S.-

made end products’ as defined in FAR 52.225-5, because 

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ACETRIS HEALTH, LLC v. UNITED STATES 7

each is ‘an article that is mined, produced, or manufactured 

in the United States or that is substantially transformed in 

the United States.’” J.A. 559.

In response, on April 17, 2017, the VA “requested” that 

Acetris obtain a country-of-origin determination from the 

CBP for each of ten Acetris products. J.A. 558. The VA

reiterated this request in a subsequent letter dated June 6, 

2017, stating that it had “probable cause” to believe that 

ten of Acetris’ products, including Acetris’ Entecavir Tablets, were made using API made in India, and so were allegedly not TAA-compliant. J.A. 559. 

Acetris sought such rulings from the CBP and, on January 30, 2018, the CBP issued its country-of-origin determinations, holding that the Acetris products were products

of India because their APIs were made in India and no substantial transformation had occurred in the United States. 

See, e.g., Notice of Issuance of Final Determinations Concerning Certain Pharmaceutical Products, 83 Fed. Reg. 

5130–33 (Feb. 5, 2018). Acetris challenged the CBP’s determinations in the Court of International Trade (“CIT”), 

contending that its products’ country-of-origin is the 

United States. Acetris’ CIT cases are stayed pending resolution of this appeal. 

On March 8, 2018, the VA sent a letter to Acetris noting 

the CBP’s determination and requesting that Acetris find 

another source for each of the Acetris products that CBP 

had determined to be products of India. The VA stated that 

it was “the VA’s intention to no longer purchase the current 

Acetis [sic] products” after March 26, 2018. J.A. 2269. On 

April 5, 2018, to avoid termination for default, Acetris 

agreed to a no-cost cancellation of its Entecavir contract. 

The record does not indicate the disposition of Acetris’ 

other contracts.

On March 14, 2018, the VA issued a new solicitation

seeking proposals for Entecavir tablets. Acetris again 

sought an award of the Entecavir contract. Before the 

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8 ACETRIS HEALTH, LLC v. UNITED STATES

submission deadline, Acetris sent the VA five questions 

concerning the solicitation. The VA’s response indicated 

that it would continue to rely on the CBP’s determination, 

stating: “[t]he substantial [transformation] determination 

is determined by [CBP]” and “[CBP’s] determination is final and cannot be overturned. The API was manufactured 

in India and India is deemed Non-[TAA] compliant.” J.A.

894. (fifth alteration added).

On March 23, 2018, Acetris filed suit in the Claims 

Court challenging the VA’s interpretation of the TAA and 

the FAR to exclude Acetris’ products. Acetris’ core contention was that its products, though manufactured using foreign-made API, are not “products of” India (under the TAA) 

and are “U.S.-made end products” (under the FAR) because 

they are manufactured into tablets in the United States. 

The complaint recounted the VA’s position—reflected in its 

March 30, 2017, April 17, 2017, June 6, 2017, February 22, 

2018, and March 8, 2018 letters—that ten of Acetris’ products were not TAA and FAR-compliant. The complaint further alleged that the VA “appl[ied] the VA’s improper 

interpretation of the clause contrary to the FAR and indicat[ed] the VA’s intent impermissibly to treat Acetris’

products as non-compliant” with the TAA and the FAR. 

J.A. 110–11. Thus, Acetris contended that the VA acted 

unlawfully in excluding Acetris’ products from consideration for VA contracts, and Acetris requested broad declaratory and injunctive relief. The complaint focused 

particularly on the VA’s actions in connection with Acetris’

Entecavir solicitation. 

After filing the Claims Court suit, on March 28, 2018, 

Acetris submitted an offer in response to the Entecavir solicitation. Two other entities also submitted offers: Golden 

State Medical Supply, Inc. (“Golden State”) and AvKare, 

Inc. Of the three bidders, Golden State offered the lowest 

per-bottle price and Acetris offered the highest. The VA 

awarded the contract to Golden State, consistent with the 

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ACETRIS HEALTH, LLC v. UNITED STATES 9

VA’s policy to award contracts to the lowest-price technically acceptable bid. 

The government moved to dismiss the Claims Court 

suit on several grounds, two of which are relevant here. 

First, the government contended that Acetris lacked an injury sufficient to confer standing because Acetris, as the 

highest-price bidder, would not have won the Entecavir 

contract even if Acetris’ position as to the interpretation of 

the FAR were meritorious. Second, the government contended that Acetris’ earlier-filed CIT suits divested the 

Claims Court of jurisdiction due to 28 U.S.C. § 1500, which 

provides that the Claims Court of “shall not have jurisdiction of any claim for or in respect to which the plaintiff . . . 

has pending in any other court.” The Claims Court denied 

the government’s motions.

The Claims Court then ruled on the parties’ cross-motions for judgment on the administrative record, rejecting 

the government’s interpretation of the TAA and FAR on 

the merits and agreeing with Acetris’ interpretation. The 

Claims Court found that Acetris’ products were “manufacture[d] . . . in a facility located in Dayton, New Jersey.” 

Acetris, 138 Fed. Cl. at 586. The Claims Court then held

that the government’s interpretation of the TAA and the 

FAR was incorrect and erroneously excluded Acetris’ products. Id. at 600–01. The Claims Court granted Acetris both 

declaratory and injunctive relief. Id. at 606–07. 

The government appeals. We have jurisdiction to review the Claims Court’s judgment under 28 U.S.C. 

§ 1295(a)(3). 

DISCUSSION

We review the Claims Court decisions regarding justiciability and its interpretation of the TAA and the FAR de 

novo. See Trusted Integration, Inc. v. United States, 659 

F.3d 1159, 1163 (Fed. Cir. 2011); Bannum, Inc. v. United 

States, 404 F.3d 1346, 1351 (Fed. Cir. 2005).

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10 ACETRIS HEALTH, LLC v. UNITED STATES

I

We first address the government’s contention that the 

case is moot because, after the filing of the complaint, Acetris bid on the Entecavir solicitation. Acetris was not the 

lowest bidder for the Entecavir solicitation, so it could not 

have secured the award even if its interpretation of the 

TAA and FAR were correct. The Claims Court denied the 

government’s motion to dismiss the case as moot, reasoning that standing was to be assessed solely on the allegations in the complaint, so later events were not properly 

considered in determining standing. Acetris, 138 Fed. Cl. 

at 595–96. That is not correct. The Supreme Court has 

“repeatedly held that an ‘actual controversy’ must exist not 

only ‘at the time the complaint is filed,’ but through ‘all 

stages’ of the litigation.” Already, LLC v. Nike, Inc., 568 

U.S. 85, 90–91 (2013). Because a lack of “controversy” is a 

jurisdictional defect, Lujan v. Defs. of Wildlife, 504 U.S. 

555, 559 (1992), the Claims Court should have considered 

the post-filing evidence. See Int’l Elec. Tech. Corp. v. 

Hughes Aircraft Co., 476 F.3d 1329, 1330 (Fed. Cir. 2007)

(“[A] court in the first instance must determine whether or 

not it has subject matter jurisdiction even sua sponte.”).

This evidence demonstrates that the case is moot insofar as Acetris challenges the Entecavir procurement. The 

VA’s Entecavir solicitation explicitly stated that the lowest-price technically acceptable offer would be awarded the 

contract. Yet Acetris submitted the highest-price offer of 

the three offers. Acetris therefore would not have been 

awarded the Entecavir contract even if it were correct on 

the merits of its challenge to the VA’s interpretation of the 

TAA and the FAR. Because Acetris cannot show prejudice 

resulting from the VA’s purportedly flawed interpretation 

of the TAA and the FAR as applied to the Entecavir solicitation, Acetris has no injury-in-fact with respect to that 

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ACETRIS HEALTH, LLC v. UNITED STATES 11

solicitation.3 See Myers Investigative & Sec. Servs., Inc. v. 

United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) 

(“[P]rejudice (or injury) is a necessary element of standing.”). Thus, Acetris does not now have standing to challenge the Entecavir solicitation.

A

Nonetheless, we conclude that this case is not moot because Acetris’ challenge is not limited to the Entecavir procurement. We first address constitutional standing. The 

government contests justiciability under Article III, arguing that Acetris’ challenge as applied to future procurements is “entirely hypothetical, . . . rather than an injury 

that actually occurred.” Appellant’s Br. 34–35 (citing 

Lujan, 504 U.S. at 560). But, as the Supreme Court has 

explained, an Article III injury-in-fact may be, as it is here, 

“the inability to compete on an equal footing in the bidding 

process,” rather than “the loss of a contract.” Ne. Fla. 

Chapter of Associated Gen. Contractors of Am. v. City of 

Jacksonville, Fla., 508 U.S. 656, 666 (1993). Indeed, the 

Court has found Article III standing where, as here, a prospective bidder alleges that it would be unlawfully disadvantaged in competing for a government contract that the 

bidder is “very likely” to bid on in the “relatively near future.” Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 

211–12 (1995). These future procurements are virtually 

certain to occur, and, absent the alleged error by the VA, 

Acetris is “very likely” to bid on those procurements. 

3 The parties disputed—both in the Claims Court 

and in this appeal—whether the “substantial chance” test 

or the “non-trivial competitive injury” test is appropriate 

here. With respect to Acetris’ challenge to the Entecavir 

solicitation as well as the other solicitation discussed below, the result is the same regardless of the test used. 

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12 ACETRIS HEALTH, LLC v. UNITED STATES

B

Acetris also has statutory standing. The statute conferring bid protest jurisdiction provides in relevant part 

that:

[T]he Unite[d] States Court of Federal Claims . . . 

shall have jurisdiction to render judgment on an 

action by an interested party objecting to a solicitation 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 procurement 

or a proposed procurement. [T]he United States 

Court of Federal Claims . . . shall have jurisdiction 

to entertain such an action without regard to 

whether suit is instituted before or after the contract is awarded.

28 U.S.C. § 1491(b)(1) (emphasis added).

As relevant here, two phrases define the boundaries of 

section 1491(b)(1) jurisdiction: (1) that the challenge be “in 

connection with a procurement or a proposed procurement”; and (2) that the challenger be an “interested party.”

Acetris broadly challenges the VA’s purportedly flawed 

interpretation of “U.S.-made end products” in connection 

with both existing and proposed procurements. Acetris has 

standing because the government has taken a definitive 

position as to the interpretation of the TAA and the FAR 

that would exclude Acetris from future procurements for 

other products on which it is a likely bidder. The CBP has 

consistently held drug products manufactured in the 

United States with API from a foreign country to be products of that foreign country. The government agreed at oral 

argument that, “as long as the CBP decision was in place,” 

there was no “reason to believe that the VA would take a 

different position about the country of origin . . . in any future contract.” Oral Argument at 18:30. Thus, there is 

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every indication that the VA will evaluate future bids using 

the interpretation of the TAA now challenged by Acetris. 

The CBP has held already at least ten of Acetris’ products 

to be “products of” India, see 83 Fed. Reg. 5118, 5118–39 

(Feb. 5, 2018), and, as noted in letters referenced in and 

attached to the complaint, the VA has indicated on the basis of these determinations that Acetris’ products are not 

TAA- and FAR-compliant. It is equally clear that the government will likely prohibit these products in the near future. And, in view of Acetris’ history of performance, there 

is every indication that Acetris would seek to supply and 

could supply these products if it were awarded contracts for 

them. See CliniComp Int’l, Inc. v. United States, 904 F.3d 

1353, 1357 (Fed. Cir. 2018). Thus, Acetris has established 

both a substantial chance of securing those contracts and a 

“non-trivial competitive injury” as to its other products sufficient to make it an “interested party.” See Weeks Marine, 

Inc. v. United States, 575 F.3d 1352, 1363 (Fed. Cir. 2009); 

Distributed Sols., Inc. v. United States, 539 F.3d 1340, 

1344–45 (Fed. Cir. 2008) (holding that protester “deprived

of the opportunity to compete” was an “interested party”).

Acetris’ challenge also fits easily within the procurement language of the statute. We have held that the word 

“procurement” in section 1491(b)(1) “includes all stages of 

the process of acquiring property.” See Res. Conservation 

Grp., LLC v. United States, 597 F.3d 1238, 1244 (Fed. Cir. 

2010) (emphasis omitted). The reference to “proposed procurements” likewise broadly encompasses all contemplated 

future procurements by the agency. This is not a situation 

where, as in Geiler/Schrudde & Zimmerman v. United 

States, 743 F. App’x 974 (Fed. Cir. 2018), the bid protester 

could not identify any future procurements on which the 

protester intended to bid. The future procurements are 

likely to occur. And “[t]he operative phrase ‘in connection 

with’ is very sweeping in scope.” RAMCOR Servs. Grp., 

Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999). 

“As long as a statute has a connection to a procurement 

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proposal, an alleged violation suffices to supply jurisdiction.” Id. (emphasis added). 

Here, since the VA’s actions under the TAA and the 

FAR “so clearly affect the award and performance” of other

VA procurements on which Acetris intends to bid in the relatively near future, the TAA and FAR have “a connection”

with “a procurement or proposed procurement.” See id. 

Acetris’ challenge to the VA’s ruling is not moot because Acetris continues to have both constitutional and 

statutory standing.

C

The government contends that Acetris’ previously filed 

pending suits in the CIT, in which Acetris challenged 

CBP’s country-of-origin determinations for Acetris’ products, divest the Claims Court of jurisdiction under 28 

U.S.C. § 1500. Section 1500 provides that the Claims 

Court “shall not have jurisdiction of any claim for or in respect to which the plaintiff . . . has pending in any other 

court.” In United States v. Tohono O’Odham Nation, 563 

U.S. 307, 317 (2011), the Supreme Court interpreted section 1500 to preclude Claims Court jurisdiction where an 

earlier-filed suit is “based on substantially the same operative facts” as the Claims Court suit, “regardless of the relief sought in each suit.” 

We have explained that “[u]nder Tohono, the question 

is whether the second Claims Court . . . suit would have 

been barred by res judicata if it had been brought in district 

court” under “res judicata principles as of 1868, when the 

predecessor to § 1500 was first enacted.” Res. Invs., Inc. v. 

United States, 785 F.3d 660, 666 (Fed. Cir. 2015) (footnote 

omitted). At that time, the two tests for res judicata were 

the “act or contract test” and the “evidence test.” Trusted 

Integration, 659 F.3d at 1169.

Under the “act or contract test,” “[t]he true distinction 

between demands or rights of action which are single and 

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entire, and those which are several and distinct, is, that the 

former immediately arise out of one and the same act or 

contract, and the latter out of different acts or contracts.”

Tohono, 563 U.S. at 316 (quoting J.C. Wells, Res Adjudicata and Stare Decisis § 241, p. 208 (1878)). Under the “evidence test,” two suits involve the same claim if “the same 

evidence support[s] and establish[es] both the present and 

the former cause of action.” Id. (quoting 2 H. Black, Law of 

Judgments § 726, p. 866 (1891)). If the suits are the “same” 

under either of these tests, the Claims Court suit will be 

barred by section 1500. Res. Invs., 785 F.3d at 666.

Acetris’ second CIT claim is that, contrary to the CBP’s 

ruling, the Acetris product is “manufactured in the [United 

States]” under the FAR because the processing steps in the 

United States are sufficiently “complex, time consuming, 

and expensive.” CIT Complaint ¶¶ 86–94. The CBP had 

no colorable authority to opine on the FAR (i.e., the second 

CIT claim), which is a matter solely of procurement law. 

The CBP’s statutory authority to provide country-of-origin 

determinations comes from 19 U.S.C. § 2515(b)(1), which 

only authorizes “determinations . . . under section 

2518(4)(B) of this title.” Section 2518(4)(B) provides the 

TAA’s statutory country-of-origin test, which is different 

from the FAR’s test. The CIT thus lacks colorable jurisdiction to review the merits of a CBP decision on Acetris’ FAR 

compliance (which the CBP did not have authority to make 

in the first instance). Accordingly, any decision by the CIT 

on this claim would not have res judicata effect, and any 

factual allegations in the CIT complaint pertaining only to 

this claim do not have preclusive effect under section 

1500.4 

4 Tohono held that, under section 1500, a claim filed 

at a first court can divest the Claims Court of a second, 

later-filed claim even where the first court would have 

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We next turn to the first CIT claim, which involves the 

TAA, at issue in both the CIT and the Claims Court cases. 

Neither the “act or contract” test nor the “evidence” test 

supports a section-1500 bar. As to the “act or contract” test, 

the CIT cases challenge the CBP’s act of issuing a TAA determination. In contrast, the Claims Court case challenges 

the actions of a different government agency—the VA—in 

adopting an interpretation of the TAA (and the FAR) that 

excludes products manufactured in the United States with 

foreign-made API (including, but not limited to, Acetris’ 

products) from government procurements. Thus, the CIT 

and Claims Court suits do not “immediately arise out of one 

and the same act.” See Tohono, 563 U.S. at 316 (citation 

omitted).

lacked subject-matter jurisdiction over the second claim. 

Tohono, 563 U.S. at 315–17. This represents a departure 

from the usual rule that res judicata cannot preclude a 

later-filed claim over which the first court lacked jurisdiction. See Res. Invs., 785 F.3d at 666. But in Tohono the 

earlier-filed claims were properly filed in the district court; 

Tohono did not consider situations where, as here, the first 

court lacks jurisdiction over the earlier-filed claim. And we 

do not read Tohono to override the principle that a court 

cannot rule on the merits of—and thus res judicata effect 

cannot arise from—a claim over which the court has no colorable jurisdiction. Restatement (Second) of Judgments 

§ 12 (1982) (no preclusion where “[t]he subject matter of 

the action was so plainly beyond the court’s jurisdiction 

that its entertaining the action was a manifest abuse of authority”); see also United States v. U. S. Fid. & Guar. Co., 

309 U.S. 506, 512 (1940) (holding that res judicata did not 

apply where district court had no statutory authority to adjudicate a claim against the United States); Christopher 

Vill., L.P. v. United States, 360 F.3d 1319, 1326–33 (Fed. 

Cir. 2004).

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ACETRIS HEALTH, LLC v. UNITED STATES 17

As to the “evidence” test, Acetris’ first CIT claim has 

some factual overlap with the Claims Court claim. But 

many of the VA actions challenged in Acetris’ Claims Court 

complaint occurred after the CIT complaints were filed and 

are not challenged in the CIT claims. And, to the extent 

that there is overlap between those claims, it largely involves the “res gestae,” not the “operative facts,” of the 

claims. See Trusted Integration, 659 F.3d at 1170; see, e.g.,

Complaint, Acetris Health LLC v. United States, No. 18-47 

(Ct. Int’l Trade Mar. 7, 2018), ECF No. 4 [hereinafter “CIT 

Complaint”], ¶¶ 79–85. 

The CIT and Claims Court claims are not the “same” 

under the evidence test. With respect to the first CIT 

claim, Acetris contends that its products are TAAcompliant because they are “products of the United States” 

having been “substantially transformed” in the United 

States under 19 U.S.C. 2518(4)(B). In contrast, at the 

Claims Court, Acetris contends that its products are TAAcompliant because they are not “products of India” since 

they are neither “wholly the . . . manufacture” of India nor 

“substantially transformed” in India. These claims are not 

based on the same evidence. The “products of the United 

States” question in the CIT turns on whether a substantial 

transformation occurred in the United States. The “product of India” question in the Claims Court turns on whether 

the product was “wholly the . . . manufacture” of or “substantially transformed” in India. Thus, an adverse decision 

on the factual assertion that forms the basis for Acetris’ 

CIT claim—that the processing steps in New Jersey cause 

a “substantial transformation” of the product from its constituent API sufficient to result in a “product of the United 

States” under the TAA—cannot preclude Acetris’ Claims 

Court claim asserting that the product is not a “product of 

India” because the product is neither “wholly the . . . manufacture” of India nor “substantially transformed” in India. 

Because the evidence at issue in the CIT cases does not 

“support and establish” the Claims Court claims, the 

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18 ACETRIS HEALTH, LLC v. UNITED STATES

evidence test does not bar jurisdiction here. See Tohono, 

563 U.S. at 316 (emphasis added); see also Trusted Integration, 659 F.3d at 1170 (noting that “under the evidence test 

. . . the overlapping evidence need[s] to be both relevant to 

and legally operative to prove the prior claim before res judicata [acts] as a bar to the subsequent claim” (emphasis 

in original)). 

Section 1500 does not preclude jurisdiction here.

II

A

Turning to the merits, the government contends that 

the CBP’s country-of-origin determinations are “binding” 

on the VA and so left no discretion to the VA to conduct an 

“independent [country-of-origin] analysis.” Appellant’s Br. 

48. We reject that argument. As the Claims Court noted, 

“the procuring agency”—here, the VA—is “responsible for 

determining whether an offered product qualifies as a U.S.-

made end product.” Acetris, 138 Fed. Cl. at 602–03. Indeed, as the government admitted at oral argument, there 

is “not a requirement” for the VA to defer to the CBP’s determination. 

B

We conclude that the VA’s interpretation of the TAA 

and the FAR was erroneous, as the Claims Court held. The 

TAA provides in relevant part that “the President . . . shall, 

with respect to procurement covered by the [WTO Agreement], prohibit the procurement . . . of products . . . which 

are products of a foreign country or instrumentality which 

is not designated pursuant to section 2511(b) of this title.” 

19 U.S.C. § 2512(a)(1). The question here is whether Acetris’ products, which are made into tablets in the United 

States using API made in India, are “products of” India for 

which procurement is prohibited by the TAA. The TAA’s 

rule-of-origin test provides that:

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ACETRIS HEALTH, LLC v. UNITED STATES 19

An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or 

manufacture of that country or instrumentality, or 

(ii) in the case of an article which consists in whole 

or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce 

with a name, character, or use distinct from that of 

the article or articles from which it was so transformed.

19 U.S.C. § 2518(4)(B) (emphasis added). 

The government argues that Acetris’ tablets are products of India because the tablets’ API was made in India. 

But the government cannot identify any Supreme Court or 

Circuit authority holding that a pharmaceutical product’s 

country-of-origin is determined by the country in which its 

API was manufactured. To the contrary, it is clear from 

the TAA that the “product” is the final product that is procured—here, the pill itself—rather than the ingredients of 

the pill. Acetris’ tablets do not meet prong (i) of the TAA’s 

country-of-origin test for India because the tablets are not 

“wholly the . . . manufacture” of India. Acetris’ tablets similarly do not meet prong (ii) because the tablets’ components are not “substantially transformed” into tablets in 

India. Because an article is a product of a country “only if” 

prongs (i) or (ii) are met, Acetris’ tablets are therefore not 

a “product of” India. Indeed, the government concedes that 

under the construction of “product” that we have adopted

(i.e., that “the pill is the product”), “the pill is not the product of India.” Oral Argument at 11:50–12:50. 

Accordingly, since the TAA only excludes products from 

government procurement if they are “products of” a foreign 

country like India, the TAA does not bar the VA from procuring Acetris’ products.

The FAR also does not bar Acetris’ products. The 

FAR’s Trade Agreements (“TA”) Clause provides in 

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20 ACETRIS HEALTH, LLC v. UNITED STATES

relevant part that “[t]he Contractor shall deliver under this 

contract only U.S.-made . . . end products.” FAR § 52.225-5. 

The FAR does not adopt the TAA’s country-of-origin test 

for determining what are “products of a foreign country or 

instrumentality.” 19 U.S.C. § 2518(4)(B). Instead, the 

FAR defines “U.S.-made end product” as “an article that is 

mined, produced, or manufactured in the United States or 

that is substantially transformed in the United States.” 

FAR § 25.003. 

The regulatory history of the term “U.S.-made end 

product” makes clear that the source of the components 

(here, the API) is irrelevant in determining where a product is “manufactured.” When the term was introduced to 

the FAR, the government explained it as follows: “[t]he proposed rule defines U.S. made end products as products that 

are manufactured or substantially transformed in the 

United States, regardless of the source of the components.” 

Federal Acquisition Regulation; Foreign Acquisition (Part 

25 Rewrite), 63 Fed. Reg. 51642 (Sept. 28, 1998) (emphasis 

added). A product need not be wholly manufactured or substantially transformed in the United States to be a “U.S.-

made end product.” Instead, such products may be—as 

Acetris’ products are—“manufactured” in the United 

States from foreign-made components. The solicitation 

here similarly provides that “the place of manufacture is 

the location ‘where ingredients are measured, weighed, 

mixed and compounded.’” J.A. 100. The government does

not dispute that Acetris’ products are measured, weighed, 

mixed and compounded in—and so, under the VA’s own 

definition, “manufactured” in—a facility in Dayton, New 

Jersey. See Acetris, 138 Fed. Cl. at 586; Oral Argument at 

4:10 (government stating that the “pill form [of an Acetris 

product] is made in New Jersey”). Therefore, on the plain

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ACETRIS HEALTH, LLC v. UNITED STATES 21

meaning of the FAR, Acetris’ products are “U .S.-made end 

products.”5

The government cites the Supreme Court’s decision in 

Anheuser–Busch Brewing Ass’n v. United States, 207 U.S. 

556 (1908), for the proposition that the terms “‘manufacture’ and ‘substantial transformation’ share a common 

meaning” (i.e., that there cannot be a “manufacture” without a “substantial transformation”). Appellant’s Reply Br. 

14–16. To the government, Acetris’ products are not “manufactured” in the United States because they are not substantially transformed in the United States. Even 

assuming (without deciding) that Acetris’ products are not

substantially transformed in the United States,6 the government’s argument fails. Under Anheuser–Busch, the 

“first sense” of the term “manufacture” is when “a new article is produced of which the imported material constitutes 

an ingredient or part.” Anheuser–Busch, 207 U.S. at 562. 

That definition is clearly satisfied here; the India-made 

5 The Claims Court concluded and Acetris argues extensively on appeal that the term “U.S.-made end products” necessarily includes “domestic end products” (i.e., 

BAA-compliant products). This is not the relevant inquiry. 

Products that, like Acetris’ products, are “manufactured in 

the United States” and so are “U.S.-made end products” 

whether or not they meet the other requirements of “domestic end products” (i.e., that they are COTS items or 

their components are at least 50% (by cost) Americanmade). See FAR § 25.003; J.A. 881 (VA solicitation stating 

that “the Government will evaluate offers of U.S.-made or 

designated country end products without regard to the restrictions of the Buy American statute”).

6 Acetris’ products may very well be substantially 

transformed in the United States, but we need not decide 

this question here.

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22 ACETRIS HEALTH, LLC v. UNITED STATES

API “constitutes an ingredient or part” of the tablets produced in New Jersey. 

To be sure, Anheuser–Busch construed the word “manufacture” to also require that “a new and different article 

must emerge, ‘having a distinctive name, character, or 

use,’” 207 U.S. at 560 (quoting Hartranft v. Wiegmann, 121 

U.S. 609, 615 (1887)), a construction that has since been 

referred to as the “substantial transformation” test. But, 

under the FAR, a “U.S.-made end product” may either be 

(i) “manufactured in the United States”; or (ii) “substantially transformed in the United States.” FAR § 25.003. 

The language of the FAR reflects an intent not to require 

“substantial transformation” for analysis under the FAR;

“manufacture” does not require substantial transformation.

If the government is dissatisfied with how the FAR defines “U.S.-made end product,” it must change the definition, not argue for an untenable construction of the existing 

definition.

III

Having concluded that Acetris is correct on the merits, 

we turn to the issue of remedy. The Claims Court granted 

Acetris the following relief:

[T]he court DECLARES that: 

The term “U.S.-made end product,” as used 

in the Trade Agreements clause, includes 

“domestic end products,” as that term is defined in the FAR. 

The VA’s failure to construe the term “U.S.-

made end product,” as used in the Trade 

Agreements clause, to include “domestic 

end products,” as that term is defined in 

the FAR, was arbitrary, capricious, and 

contrary to law. 

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ACETRIS HEALTH, LLC v. UNITED STATES 23

It was arbitrary and capricious for the VA 

to require manufacturers to certify that the 

offered products were “[Trade Agreements 

Act] compliant.” 

The VA’s failure to independently assess 

whether plaintiff’s Entecavir Tablets qualified as U.S.-made end products under the 

Trade Agreements clause was arbitrary, 

capricious, and contrary to law. 

In addition, the court ENJOINS the VA, in future 

procurements, from 

construing the term “U.S.-made end product” in the Trade Agreements clause as excluding products manufactured in the 

United States (in other words, domestic 

end products), and 

relying on CBP rather than independently 

ascertaining whether an offered product is 

manufactured in the United States (in 

other words, a domestic end product) pursuant to the definition of the term “U.S.-

made end product.”

J.A. 89 (second brackets in original).

We find that the Claims Court judgment is both imprecise and confusing. On remand, the Claims Court should 

declare that: (1) under the TAA, a pharmaceutical product 

using API made in India does not, because of that fact, 

thereby become the “product of” India; and (2) under the 

FAR, the term “U.S.-made end product” may include products manufactured in the United States using API made in 

another country. The Claims Court should also enjoin the 

VA from excluding Acetris’ products manufactured in Aurolife’s Dayton, New Jersey facility from future procurements. 

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24 ACETRIS HEALTH, LLC v. UNITED STATES

CONCLUSION

We conclude that this case is justiciable, and that the 

VA erred in interpreting the TAA and the FAR to exclude

pharmaceutical products that, like Acetris’ products, are 

manufactured in the United States using API made in a 

foreign country. Such products are not, under the TAA, the 

“product of” the country in which their API was made, and 

are “U.S.-made end products” under the FAR. We remand 

the case for the Claims Court to enter judgment consistent 

with this opinion.

AFFIRMED-IN-PART, VACATED-IN-PART, AND 

REMANDED

COSTS

No costs.

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