Court Says Navy Threw Saildrone Out of the $2.1B MUSV Competition Unfairly, Capping Spending at $1.5B Until It Re-Evaluates

Five weeks after the US Navy announced the winners of its Medium Unmanned Surface Vessel (MUSV) production competition, a federal judge has reopened part of it. In an opinion dated Nov. 3, 2026, Judge Philip Hadji of the US Court of Federal Claims set aside the Navy's decision to eliminate Saildrone from the program. He found that the service "engaged in disparate treatment, and thus acted in an arbitrary and capricious manner," according to DroneXL, which cited the New York Times.

The remedy matters as much as the finding. The Navy must re-evaluate Saildrone promptly, using the same criteria it applied to the other competitors. Until it does, it cannot commit more than $1.5 billion of the $2.1 billion program to production. Blue Water Autonomy, the second company in the consolidated case, lost. The court found its elimination reasonable.

Below is what happened, what the court said, and what remains unclear.

What did the Navy buy before the ruling?

On Sept. 29, Navy officials confirmed other transaction authority (OTA) agreements with Galliano Marine Services, HII and Saronic Technologies for 10 MUSVs each, 30 vessels in total, Janes reported. The average price is about $40 million per vessel. The Navy did not give a breakdown by company.

Chris Miller, the Navy's acting direct reporting portfolio manager for Robotic and Autonomous Systems, said production would begin immediately, with deliveries as early as the fourth quarter of fiscal 2027.

Three other companies, Leidos, PacMar and Sea Machines, also met the Phase 1 requirements but did not receive production OTAs. All six companies that met Phase 1 receive $15 million each and join the Maritime Marketplace hosted on Drones.mil. The Phase 1 bar was operational rather than theoretical: roughly 26 hours at sea and more than 360 nautical miles covered on a single command-and-control input.

How did the competition get here?

MUSV is a fast program by Navy standards. It opened on March 26, 2026, after the Navy cancelled its earlier MASC effort, Defense News reported in July. The solicitation, issued under OTA authority, closed on April 17. On June 1 the Navy named seven companies for at-sea testing: Leidos, HII, Sea Machines, Saronic, Galliano, PacMar and Birdon.

Saildrone and Blue Water Autonomy were not among them. Both then filed suit in the Court of Federal Claims, alleging the Navy had not followed its own requirements. The filings were heavily redacted, and the Navy declined to comment on pending litigation. At oral argument in September, the Navy argued the court lacked jurisdiction over the dispute, according to Inside Defense as cited by DroneXL. The ruling indicates that argument did not settle the case in the Navy's favor.

What did the court actually find?

The judge's core finding, as quoted by DroneXL, is disparate treatment. In plain terms, the Navy held Saildrone to a standard it did not apply to everyone else. Under the "arbitrary and capricious" standard used in bid protests, that is enough to set aside an agency's decision.

The more detailed account of the reasoning comes from Saildrone, and it should be read as the company's description, not as the court's text. In its statement, Saildrone says the Navy initially judged it non-compliant on all three evaluation criteria. When challenged, the Navy dropped two of those findings. The court then rejected the third, which Saildrone says relied on arbitrary and capricious criteria that were not applied to other offerors. Ocean News reprinted the statement, including the $1.5 billion limit.

According to DroneXL, the court-ordered re-evaluation includes a new opportunity for Saildrone to take part in the at-sea demonstration, the same proving step that separated the six Phase 1 qualifiers from the rest of the field.

What does the $1.5 billion cap do?

The cap leaves about $600 million of the $2.1 billion program that the Navy cannot spend for now, until the re-evaluation is complete. The practical effect is that money remains available for a possible Saildrone award, though no source states the court's intent in those terms.

Simple arithmetic suggests the cap may not immediately stall existing work. Thirty vessels at an average of about $40 million each comes to roughly $1.2 billion, under the $1.5 billion ceiling. However, the published reporting does not say how the Navy counts the $15 million Phase 1 payments or any other obligations against the program total, so how much room remains is not clear from the public record.

Why did Blue Water Autonomy lose?

The same court that faulted the Navy's treatment of Saildrone upheld its treatment of Blue Water Autonomy, finding that company's elimination reasonable, DroneXL reported. The available reporting does not describe the reasoning in detail. The split outcome shows the court did not reject the Navy's evaluation process as a whole. It found a specific defect in how one competitor was handled.

What has the Navy said?

Very little. According to DroneXL, the Navy had not responded to the New York Times' request for comment. In July it declined to comment on the litigation. Saildrone CEO Richard Jenkins, in the company's statement, struck a conciliatory note: "The future of naval warfare will be fought on the water, not in a courtroom."

Why It Matters

MUSV is the Navy's clearest attempt yet to buy medium unmanned surface vessels at production scale on a commercial-style timeline. The service went from solicitation to production agreements in about six months and committed to 30 hulls. OTA authority is what makes that speed possible, and this ruling shows that OTA competitions can still be challenged in court. Evaluators have to apply the same yardstick to every competitor. When they don't, a judge can freeze a meaningful share of the program's money.

For the three production winners, the immediate risk looks limited, because the cap appears to sit above the value of their awards. For the Navy, the ruling is a schedule and credibility problem. It has to rerun part of a competition it considered finished, possibly including another at-sea demonstration, while it is also trying to start production. For the other MUSV hopefuls, including the three Phase 1 qualifiers who got $15 million and a place in the Maritime Marketplace but no production deal, the case is a reminder that the field may not be as settled as the September announcement made it look.

Whether Saildrone ends up with hulls depends on the re-evaluation, and the court has required that it be prompt.