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2009 Procurement Review--Contract Disputes



 

Boards of Contract Appeals (ASBCA, CBCA, PSBCA, and GAOCAB)

Jurisdiction/Standing/Timeliness/Contract Disputes Act (CDA) Issues    

Submission of Claim to Contracting Officer

Robinson Quality Constructors completed its construction contract (except for punch list items) by June 1, 1999 and submitted a CDA claim for various construction delays on June 2, 2005. The ASBCA dismissed the claim as barred by the six-year statute of limitations. The Board reasoned that the events that gave rise to the delay claim must have accrued sometime before June 1, 1999.

In Southern Scrap Metal, the Government tried (without success) to convince the Civilian Board of Contract Appeals that amendments to requests for equitable adjustment (which formed the basis for later claims appealed to the Board from the Contracting Officer's failure to decide them within the statutory time period) had tolled that 60-day time period. The Board reasoned that the contractor had not amended the claims, themselves, and that the amendments to the original requests for equitable adjustment were for different periods of alleged delay and were based on a different theory than that which underlay the claims being appealed.

Flexing its muscles in Libbey Physical Medicine Center and Hot Springs Health Spa, the same Board noted it wasn't bound by decisions of the D.C. Circuit and was co-equal with the Court of Federal Claims in the interpretation of the Contract Disputes Act and then held that the CDA applied to a concession contract, one component of which involved "construction, alteration, repair, and maintenance of real property, title to which vested in the Government," which gave the Board jurisdiction to determine the valuation of the leasehold surrender interest under an expired concession contract.        

In EBS/PPG Contracting, the Government kept requiring the contractor to re-submit (and provide more information for) its termination settlement proposals. Finally fed up, the contractor sent a letter stating it expected a contracting officer's decision on its prior proposals by a date certain and would treat a failure to decide by that date as a denial. The Board held this letter was sufficient to turn the prior submissions into a claim. However, the contractor subsequently acquiesced in the contracting officer's request to submit still more information in a revised format, and the Board found the latter submission was again not a CDA claim, dismissing the appeal for lack of CDA jurisdiction. The Board wrote as follows: "It is apparent that in its effort to get some sort of action from the BOP on any of its settlement proposals EBS became caught up in the nuances associated with CDA jurisdictional practice. Nevertheless, we find that by the time EBS was finished resubmitting and withdrawing its settlement proposals, it had neither a proposal nor a claim before the contracting officer."

In  Inventory Discount Printers, the GAO's Contract Appeals Board found that it lacked jurisdiction over a contractor's appeal because the contractor's vague assertion to the Contracting Officer was not sufficient to put him on notice of the claim the contractor eventually asserted on appeal.

FitNet survived a government motion to dismiss its appeal of a default termination as untimely because "the contracting officer�s [subsequent] decision on the merits of [a] claim, rather than summarily denying it on the basis of his prior termination decision, was in effect a reconsideration of the termination whether he consciously intended that effect or not." 

Gosselin World Wide Moving, used the contract's Order of Precedence clause to resolve an inconsistency between two contract provisions.

In Opportunities for the Aging Housing Corp. and Opportunities for the Aging Housing Corp. II, the CBCA dismissed an appeal for lack of jurisdiction because agreements involving the management of facilities by public housing authorities, including HAP agreements, were not covered by the CDA, even though they were funded and regulated by HUD.

The Government failed to submit several of its claims to the Contracting Officer for a decision in Unconventional Concepts and, therefore, was unable to pursue them on appeal.

Appeal to Board

In Sundt Construction, the ASBCA held it had jurisdiction to enforce a term of a settlement agreement by which a contractor dropped certain claims in return for the Government's agreement to provide it with a specified performance rating. The existence of the agreement was proved by an affidavit submitted by the former contracting officer who made the agreement. In Keller Mechanical Services, the ASBCA noted that its was a de novo review and that, therefore, an offer to settle the dispute in the Contracting Officer's decision was not evidence of liability at the Board.

In Pixl, Inc., the CBCA held that a contractor's request that the Contracting Officer reconsider his decision made more than 90 days after the contractor had received that decision did not toll or re-establish the 90-day period for appealing the original decision, and, therefore, the Board dismissed the contractor's subsequent appeal to the Board as untimely.

In Salt River Pima-Maricopa Indian Community v. DOE, the CBCA dismissed an appeal for lack of CDA jurisdiction (under the "election doctrine") because the identical case was pending in the Court of Federal Claims.

The CBCA dismissed an appeal because it had been brought by only one member of the joint venture/contractor.

In HMRTECH2, LLC., the Board held it had CDA jurisdiction over a contractor's claim that the Government's improper interpretation of a contract clause would deprive the contractor of access to future task orders (on the grounds that the contractor/joint venture had graduated from the SBA's 8(a) program).

In Sage Western Investments, the CBCA held that the contractor could maintain alternative, inconsistent theories of recovery in breach and pursuant to relief-granting clauses of the contract, e.g., the "Changes clause."

Statute of Limitations

In Parsons-UXB Joint Venture, the Board denied the Government's motion to dismiss, holding that the CDA's statute of limitations did not begin to run on the contractor's claim for back taxes until it presented the claim to the Government and the Government denied it. The Board also noted that, since the claim was in a sum certain, it satisfied the CDA, even though the contractor had not yet paid the taxes.

In McDonnell Douglas Services, the ASBCA dismissed the Government's claim for defective pricing against the contractor's sub because it was time-barred by the CDA's six-year statute of limitations.

Costs and Cost Accounting Standards (CAS)

ATK Launch Systems involved a contractor's claim that the Government breached the Allowable Cost and Payment clause by failing to adjust interim billing rates to include certain allowable costs. The Board wrote, in part, as follows: "While we agree with the government that under the ALLOWABLE COST AND PAYMENT clause the CO or authorized representative is responsible to set interim billing rates, there is nothing in the clause -- or anywhere in the contract, regulations or case law for that matter -- that would forbid a contractor from filing a claim under the CDA challenging this CO determination. The parties often use billing rates for years until final rates are agreed upon, or litigated and determined by a court or board. An erroneously low billing rate may cause loss to a contractor throughout this period. Subsection (e) of the ALLOWABLE COST AND PAYMENT clause provides that the billing rates "shall be the anticipated final rates." This means that they must include all properly allowable and allocable costs, and failing mutual agreement a contractor may claim under the CDA that the CO did not include such costs and hence violated this contract provision and the ALLOWABLE COST AND PAYMENT clause." The Board also held that the Allowable Cost and Payment clause does not prohibit the award of damages for its breach.

Changes/Constructive Changes/Contract Interpretation/Authority

In National Housing Group, the contractor complained because HUD assigned it fewer properties to manage (and withdrew certain properties from its services in a shorter time frame) than it had anticipated under an ID/IQ contract. The CBCA found for the Government because (i) the solicitation clearly called for an ID/IQ contract; (ii) the Government provided the required minimum quantities; and (iii) the solicitation clearly allowed the Government to remove properties from the contractor's management. The Board also held that a partial settlement agreement was not an accord and satisfaction because it contemplated future negotiations.

In Wesleyan Co., the ASBCA held that the procuring agency did not use a contractor's products in a manner inconsistent with proprietary rights claims on the items' tags.

Gardner Zemke was stuck with an increased tax imposed by the Navajo Nation because (i) the Government had not represented the tax would not change; (ii) the Government had not changed it; and (iii) the Government employees who allegedly promised to do something about it had no actual authority to change the contract. 

Barrios Distributing alleged that the DOJ had damaged beverage dispensers the company had leased to it. The CBCA, however, found that (i) the contract placed the risk of loss on Barrios; (ii) even assuming that were not the case, the company had not proved the equipment was damaged; (iii) even assuming it were damaged, the company had not proved who was responsible for the damage; and (iv) the company had signed for the re-delivered equipment as having arrived in "good condition."

The CBCA's decision denying the Government's motion for summary judgment in West Ridge LLC is interesting for the following tantalizing footnote: "West Ridge asserts that '[w]here the Government accepts an offer that it could have rejected as non-responsive, the award constitutes acceptance of a counter-offer and binds the Government to the terms of that counter-offer.' . . . In support of this proposition, the lessor cites Bob Vandiver Office Equipment Co., GSBCA 4138, 75-1 BCA � 11,004 (1974). While the proposition may be valid, Vandiver does not bind us. That decision was issued under the small claims procedure and therefore has no value as precedent. . . . We will appreciate further briefing as to the legal implications of the Government�s acceptance of a non-responsive offer."

In D & F Marketing, the ASBCA found that nobody in the entire Navy had the authority to enter into the type of contract the appellant claimed existed.

In General Dynamics, C4 Systems, the ASBCA (by analogy to option exercise case law) strictly construed the ordering clause under an ID/IQ contract and held that delivery orders issued by email (when the contract did not permit such means of delivery) were changes entitling the contractor to an equitable adjustment.

Dick Pacific  lost because it failed to inquire concerning a patent ambiguity. HSG Technischer Service GmbH  argued for an interpretation that conflicted with the plain meaning of the contract read as a whole. On the other hand, Computer Sciences Corp. prevailed in its interpretation because the Government's contrary interpretation relied on a strained reading of a single word ("notional") and extrinsic evidence as opposed to a fair reading of the amendment in question as a whole.

In denying DMJM H&N, Inc.'s claim, the Board wrote: "It is simply unreasonable for appellant to declare at the project halfway point, that it should be compensated for any changes not 'effortless.' "

In Sectek, the Government sought to extend the term of a services contract for a third option year when, in fact, the contract only permitted two option years. The contractor submitted proposed labor rates for the "third" option year; the Government ignored those rates, and, after the end of the actual contract term, sent a bilateral modification with the old rates, which the contractor signed, purporting to extend it for the third option year pursuant to the "Option to Extend the Term of the Contract" clause. The contractor argued that it could not be bound by that modification because there was no legal authority under the "Option to Extend the Term of the Contract" clause to enter into it. The Board got around this with some fairly lame references to the policy behind the contract's "Option to Extend Services" provision, which would have allowed the parties to extend the contract for six months, even though the Government had not complied with that clause's notice provision and had not cited it as authority for the modification at issue.  

In Trace Inc., the ASBCA sustained an appeal involving the contractor's allegations that the Government had improperly deducted amounts based on improvidently issued Contractor Deficiency Reports. Judge Van Broekhoven scolded both parties, however, for an incomplete and unclear record, quoting from a Seventh Circuit case: "Judges are not like pigs, hunting for truffles buried in briefs."

The CBCA granted Ocwen Loan Servicing's  appeal because the VA refused another opportunity to provide the appraisals the Board had ordered it to produce. Judge Daniels' opinion of the VA's actions has not improved: "Once again, the Board has thrown the [VA] a lifeline, and the agency has used that rope to hang itself." 

Sinil saw its  "Changes" claims dismissed because the COR did not have the authority to order changes and because nobody with authority ratified those alleged changes.   

In mid-October, the Postal Service Board of Contract Appeals (PSBCA) has caught itself up by issuing a bunch of decisions covering the period January through September 2009. The two most interesting decisions were: (i) Park Ridge South Holland Partnership, in which the PSBCA repeatedly chastised both parties for failing to give it enough evidence to decide the case and then went ahead and decided it anyway; and (ii) Webco Transportation, in which the Board upheld a default termination on a basis (violation of the Service Contract Act) of which the Contracting Officer was completely unaware when he terminated the contract.

In DynCorp, the ASBCA discussed the "continuing claim" doctrine in terms of an option contract: "With respect to the option years, we believe the claim is subject to the continuing claim doctrine which we have determined to have application to government contract cases. Under that doctrine, a "claim must be inherently susceptible to being broken down into a series of independent and distinct events or wrongs, each having its own associated damages." Only the base year was initially awarded. Each subsequent year was to be separately awarded at the government�s option. Thus, if the government chose not to award additional option years, there would be no claim for those years. Therefore, the portions of the claim attributable to each option year are distinct events with its own associated damages."

The ASBCA granted the Government's motion for summary judgment denying the VECP claim by WEDJ/Three C's, Inc. because the contract already required what the contractor claimed was covered by its VECP.

COSTAR lost its claims on a host of bases: the lack of authority of the government official allegedly requiring changes; extra work covered by bilateral modifications; performance of work as a volunteer; and a complete failure of proof as to alleged damages. 

Inspection

Yardney Technical Services involved the standards for rejection under the "Inspection" clause and the principle that the performance of a pre-existing duty is not sufficient consideration for a purported change.

Terminations  

The agency's "considerable ineptitude in managing" a delivery order to DLT Solutions did not rise to the level of a bad faith termination according to the ASBCA. For an appeal that involved less than $10,000 in claimed damages, this one certainly kept everybody busy. In a 26-page opinion, the Board had to decide whether the fact that payments were to be made to a financing institution under an assignment agreement precluded the claim under the Severin doctrine (it did not) and whether some of the claims involved alleged misrepresentation and fraudulent inducement by the Government as a third-party tortfeasor over which the Board lacked jurisdiction (they did).  

Speaking of hoary doctrines, the ASBCA issued a decision in which the Fulford doctrine saved the contractor (RO.VI.B. Srl) from an otherwise tardy appeal of a default termination.

In the ALKAI Consultants case, the Board converted a default termination to a termination for convenience in part because the contractor officer ordered the contractor to de-mobilize based on a mistaken understanding of what the completion date was.

The standard "Default" clause contemplates three possible bases for termination: failure to deliver by the specified delivery date; failure to make progress so as to endanger performance; and failure to comply with any other material term of the contract. In Recon Optical, the ASBCA that a default termination for failure to deliver on time, which was issued prior to the due date for delivery, could not be upheld on that basis.

Two other ASBCA decisions involve default terminations for failure to delivery military equipment to Iraq (machine guns and cargo trucks), and both  of those involve the contractor's difficulty in obtaining End User Certificates. The machine gun supplier lost its appeal; the cargo truck contractor's appeal survives after the Board denied cross motions for summary judgment.

The default termination Jurass Co. was proper because the company failed to deliver fuel that met the relevant specifications and then failed to cure that default.

There was a split decision in the American Renovation and Construction appeals. One default termination was upheld because, even though the Contracting Officer received "marching orders" from the customers to terminate, she showed great patience with the contractor and exercised careful discretion in finally doing so. A related termination was overturned because the Government waited more than a reasonable time after final acceptance to rescind that acceptance.

Purchase Orders

In Vantage Assocs., the contractor argued unsuccessfully that cancellation of its purchase order was improper because a notice it allegedly had sent stating it could not perform on time was a forgery. The ASBCA, however, found the notice was irrelevant--the company had not performed the purchase order by the revised delivery date, which justified the cancellation, even absent any notice.

Quantum 

In States Roofing, the ASBCA reminded us that profit should not be included in calculating the quantum of a deductive change on a loss contract.

Systore Companies proved the Government breached a license agreement, but it was a hollow victory because the ASBCA also found that Systore failed to prove its damage claim (for lost profits).

Cochran Lumber Co. lost its appeal at the CBCA concerning a timber sales contract because the board rejected the contractor's method of calculating the difference between the Government's estimates and the actual amounts available.

After reviewing an extensive and complex motion for reconsideration by SUFI, the Board more than doubled the quantum of its recovery in its original decision and granted its request for claim preparation costs and consulting fees, although not at the rate the contractor desired.

Procedure

The CBCA dismissed an appeal by Corners and Edges for failure to prosecute because the contractor stated it would not file its complaint unless and until the Board provided it with a free copy of the hearing transcript in another of the contractor's appeals.

In Navigant Satotravel, the CBCA found the one witness the contractor had called to try to prove a negative left much to be desired: "NST called Mr. Stec as its only witness to prove a lack of knowledge of receipt of the SF 1449 by all of NST's personnel. We find, however, that '[w]hen the persons having the greatest familiarity with events are not called, but a litigant seeks to rely on second-hand, hearsay evidence, a tribunal may draw an inference that the testimony of the persons not called would not support a litigant's position . . . .' TDC Management Corp., DOT BCA 1802, 91-2 BCA � 23,815, at 119,259. . . . Nothing in the record would suggest that Mr. Stec was the only person available who could have testified as to the circumstances surrounding receipt of the SF 1449."

In Libbey Physical Medicine Center and Hot Springs Health Spa, the CBCA denied a joint motion by both parties to vacate its prior decision.

In Montage, the Board refused to dismiss an appeal even though the contractor had not submitted a document entitled "Notice of Appeal," but rather had evidenced an intent to appeal in a document entitled "Status Report" and had attached the wrong claim to its Complaint.

Discovery

  In  Ocwen Loan Servicing, the CBCA imposed sanctions against the Department of Veterans Affairs after it repeatedly refused both the contractor's discovery requests and the Board's orders to provide certain documents critical to the Government's own claim against the contractor. The opinion is chock full of great zingers from the Board; here is just one taste to whet your appetite. The Board had issued an order requiring the Government's response  by March 10. The VA filed a "preliminary response" on March 5, noting that it would file a full response by March 11. The Board replied (with palpable sarcasm) that it "appreciates respondent's attentiveness to the order and assumes that the reference to '11 March' is a typographic error, since respondent must realize that it is not the province of a party to determine when it will respond to a Board order." The Government, nevertheless, did not file its response until March 11, which caused the Board to disregard it completely.

In Medtek, the CBCA imposed severe evidentiary sanctions for the contractor's refusal to comply with the Board's discovery orders.

Equal Access to Justice Act

In Freedon NY, Inc., the ASBCA adopted the "nuanced" approach to determining recoverable fees advocated by the Federal Circuit in 2007's Hubbard decision and refused to apportion the fees based on such mechanical measures as the percentage of hearing transcript or board decision pages devoted to the successful portions of the appeal.

In the Kostmayer Construction case, the ASBCA held that the EAJA does not require a firm to include its affiliates' assets in determining its net worth for purposes of EAJA eligibility.

        

Court of Federal Claims

Contract Disputes Act (CDA) / Tucker Act / Jurisdiction / Standing 

OK's Cascade tried to enforce relatively favorable decisions it had obtained from the Contracting Officer on uncertified claims exceeding $100,000. The court found the Contracting Officer's decisions bound neither the agency nor the court in these circumstances.

In Zoltek Corporation, the Court of Federal Claims allowed a plaintiff who had filed a patent infringement claim against the Government under 28 U.S.C. 1498 over which the court lacked jurisdiction to transfer the case to federal district court because the Court of Federal Claims believed the case could easily be re-formulated by substituting the infringing government contractor for the Government as the defendant and using 35 U.S.C. 271(g) as the jurisdictional hook instead of 28 U.S.C. 1498.

WRS Infrastructure & Environment challenged a size determination by the SBA's Office of Hearings and Appeals.

Pursuant to the devilishly arcane strictures of 28 U.S.C. 1500, the court dismissed the complaint in Lan-Dale Co. because the suit had been filed simultaneously in the CoFC and in Arizona district court. In several passages guaranteed to make attorneys cringe and vow to pay more attention in their next CLE class, the court described not only the plaintiff's mistake in the original filing but also the plaintiff's failure to avail itself of several opportunities the court gave it to find a way out of the mess.

In Texas National Bank f/k/a Mercedes National Bank, the court discussed the "accrual suspension rule" for determining whether the six-year statute of limitations has been tolled: ". . .'[a]ccording to the accrual suspension rule, the accrual of a claim against the United States is suspended, for purposes of 28 U.S.C. 2501, until the claimant knew or should have known that the claim existed.' Young v. United States, 529 F.3d 1380, 1384 (Fed. Cir. 2008) (quotation omitted). 'To achieve such suspension the plaintiff must either show that the defendant has concealed its acts with the result that plaintiff was unaware of their existence or it must show that its injury was inherently unknowable at the accrual date.' Id. (quotation omitted). The phrase 'inherently unknowable' has been construed to mean that the factual basis for the claim is 'incapable of detection by the wronged party through the exercise of reasonable diligence.' Ramirez-Carlo v. United States, 496 F.3d 41, 47 (1st Cir. 2007)." In this case, the actions were readily ascertainable rather than inherently unknowable. Thus, the rule did not apply.

Sitco evinced a fundamental misunderstanding of the CDA when it tried to file a complaint in the Court of Federal Claims without first having submitted a written, certified claim to the Contracting Officer. Needless to say, that went over like a lead balloon.

Todd Construction concerns the scope of, and limits on, (i) the Court of Federal Claims' power to remand a case to the agency with "proper and just" directions for further consideration of  the agency's faulty performance evaluation of a contractor and (ii) the types of relief a contractor may request of the court in such a situation.

In Kenney Orthopedic, the court held that the contractor's breach claim appeal was not untimely because it was based on different facts from an unappealed default termination.

In Taylor Consultants, the plaintiff had been determined to be other than small by the SBA after originally being awarded a contract and then submitted a complicated, rapid-fire salvo of letters and emails denoted as protests of the subsequent award to another firm and contract claims for possible wrongful termination of its contract. Basically, the court found the plaintiff lacked standing on its protests and stayed its contract actions alleging violations of the Trade Secrets Act, the Procurement Integrity Act, and the Contract Disputes Act in order to allow the plaintiff the opportunity to submit proper claims to the Contracting Officer.

In Martin Byrd Quillen, Sr., the Court of Federal Claims discussed the meaning and calculation of the 12-month CDA time limit for appealing Contracting officer decisions to the court.

In Digital Technologies (DTI), as a result of a complicated set of facts and a series of past protests, the Government (while originally intending to award only one ID/IQ contract) had ended up with two of them and had specifically included clauses and procedures in each that guaranteed the contractors the fair opportunity to compete for task orders to be issued under them. After having ordered (more than) the minimum required by its contract with DTI, the Government exercised the contract option only in the second contract and allowed DTI's contract to expire. DTI filed a contract claim under the CDA, alleging breach of the duty to give it a fair opportunity to compete for orders and a bad faith failure to exercise its option. The Government sought dismissal on the grounds that this was a thinly disguised bid protest subject to the statutory limitation on task order protests. The court ultimately disagreed with the Government. To reach that conclusion, the court noted that it must examine whether this was a CDA claim because the CDA does not define the term. Ultimately, the court concluded that the contractor's submission  was a CDA claim and rejected the Government's motion to dismiss.

Contract Interpretation

In Canal 66 Partnership, the Court of Federal Claims denied motions for summary judgment because it found both parties' interpretations of an ambiguous contract reasonable and concluded that extrinsic evidence will have to be examined to resolves the issue.

Changes/Defective Specifications/Breach

In Scott Timber, the court held the Government's suspensions of timber sales contracts breached them, despite the presence of a suspension of work clause in the contracts, because (i) the Government failed to disclose its superior knowledge to bidders concerning ongoing lawsuits that had a significant potential to delay the work and (ii) unreasonably continued one such suspension. 

Costs/Cost Accounting Standards

In Teknowledge Corp., the court held that a company's software development costs were not allocable to its government contracts because there was no nexus between the software and any government contract work or benefit from the software to such work.  

The court granted the motion for summary judgment by DIRECTV Group, Inc. in another CAS 413 segment closing case because "the undisputed evidence demonstrates that the government received the value of DIRECTV�s CAS 413 segment closing obligation through a cost reduction from the successor contractors. . . ." Thus, "the existence of a government agreement in which the government protected its interest in the pension asset surplus through a novation agreement or other means is not material." 

In CBS Corp., the court held that the proper date to consider a segment closed under the original version of CAS 413-50(c)(12)(1986) was the date the contractor had closed its plant and transferred all remaining work on its sole government contract to another segment rather than the date its subcontractor had finally completed all its work on the subcontract, as the Government had contended.

In a companion case, the court examined whether the segment-closing calculation must include (and whether the Government was liable for) pension assets and liabilities transferred to another company in a segment sale. Ultimately, the court concluded that "the [G]overnment is not liable to CBS for pension costs attributable to the pension deficit transferred to [segment buyer] and CBS is not entitled to payment for that transferred deficit."

Government Breach

The court awarded Keeter Trading Co. breach damages for the Postal Service's bad faith default termination of its contract. "Bad faith" by government officials is very difficult for a contractor to prove, but Keeter did it.  According to the court, the Postmaster meddled (the best way to put it) in the contract, required an improper change to it, and then essentially engineered the termination by the official who had the authority to make that decision.

In IMS Engineers-Architects, the court held that a Government's oral assurances during settlement negotiations under one contract that it would order larger quantities under two other contracts did not create rights under the latter two contracts because they were ID/IQ contracts and the Government did order the required minimums under each. The question of the Government's good faith and fair dealing under the contract on which the release was executed is still open, however.

In Distributed Postal Consultants, an individual who had properly executed the original contract on behalf of the plaintiff then secretly formed his own company and fraudulently signed an agreement with the Postal Service terminating the contract and executing a new one with his new company. The court held that the Government did not breach the original contract by relying on the individual's misrepresented status in terminating it. 

Terminations

The court held that Wonderlyn Lorraine Bell Pinckney's Postal Services contract should not have been terminated for default because the Government did not prove  that the contractor had returned from the postal route one day with deliverable but undelivered mail. Unlike Keeter Trading, however, the contractor did not establish a bad faith termination.

The court also decided that the default termination of United Partition Systems' contract was improper (because the wrong agency's contracting officer had decided the issue) and should be converted to a termination for convenience, but that the Government could reduce the contractor's termination-for-convenience claim by the amounts required to replace defective wall materials pursuant to the Government's rights under the Inspection clause.

Sureties/Subrogation

In United Surety & Indemnity Co., the court dismissed a surety's complaint for failure to state a claim upon which relief could be granted because the surety had not provided the Government with proper notice of the contractor's default or imminent default on its Miller Act bond and, therefore, the Government did not owe a surety a duty under the doctrine of equitable subrogation.

In Lumbermens Mutual Casualty, the court (i) held that the Government had impaired the surety's collateral on a bonded contract by improperly assessing delay damages against the contractor and (ii) awarded the surety damages under the theory of equitable subrogation. 

Anti-Assignment Statute

In HAM Investments, the court held that the Government had not waived the requirements of the Anti-Assignment Act and, therefore, was not deemed to have approved an assignment even though the Contracting Officer had actively assisted the contractor by providing encouragement and guidance as to the proper forms and regulations covering such transactions.

Quantum

The Tecom decision involves a slew of different categories of damage calculations for government breach, including costs of REA preparation, lost profits, prime contractor profit on a claim sponsored by the prime for the sub, and many specific labor and material cost categories.

Equal Access to Justice Act (EAJA)/Attorneys Fees/Litigation Expenses

In North Star Alaska Housing, the court interpreted the bad faith exception to the American Rule for fee apportionment narrowly and refused to award attorneys fees and litigation expenses to the plaintiff despite some fairly egregious conduct by the Government before and during litigation.

Procedure

In Multiservice Joint Venture, during a break in a deposition, a version of an exhibit containing handwritten notes mysteriously disappeared and was replaced with a "clean" version of the exhibit. After the plaintiff's deponent, its representatives, and its attorneys all failed or refused to explain the situation to defendant's counsel and (later) the judge, the court barred the deponent from testifying at trial and ordered the plaintiff's attorneys personally to pay the defendant's costs of filing the motion for sanctions.

In Zoltek Corporation, the court allowed a plaintiff who had filed a patent infringement claim against the Government under 28 U.S.C. 1498 over which the court lacked jurisdiction to transfer the case to federal district court because the Court of Federal Claims believed the case could easily be re-formulated by substituting the infringing government contractor for the Government as the defendant and using 35 U.S.C. 271(g) as the jurisdictional hook instead of 28 U.S.C. 1498. 

In Impresa Construzioni Geom. Domenico Garufi, which involved determining the size of an Italian firm for purposes of determining eligibility for an EAJA recovery, the Court of Federal Claims directed supplementation of the administrative record when faced with incomplete and, in some cases, untranslated documents in Italian.

In Wyoming Sawmills, the court stayed a case for six months to allow the contractor time to exhaust its administrative remedies (by petitioning the Secretary of Agriculture for relief).

Discovery

Although the CoFC's latest opinion in the long-running Veridyne fraud case is just a ruling on the Government's motion to amend its answer and counterclaim, the recited facts of the case continue to amaze me. Veridyne (an 8(a) small business at the time) and the Government jointly devised a way to extend its 8(a) subcontract for five additional one-year options beyond its original term without competition by stating that the estimated cost was less than $3,000,000 (the amount that would have required a new competition) even when it was apparent to both that the probable cost was much more than that. Part way through Veridyne's performance, the Government apparently had second thoughts and came at Veridyne with both guns blazing, alleging fraud and demanding all its money back, even though Veridyne was successfully performing the work. Veridyne's current suit ensued.  If this all strikes you as a bit disingenuous on the Government's part, the court apparently shares your feelings. Witness its footnote nine from the current opinion: "[D]uring oral argument the court discussed candidly with both parties the vulnerabilities in their respective cases. Each time the court has been asked to review the merits of this case, it has been evident that [the Government] may not be able to prevail at trial, and [Veridyne] may well succeed."

 

Court of Appeals for the Federal Circuit

Jurisdiction/Standing/Res Judicata 

In FloorPro, the court reversed the ASBCA and held that a subcontractor claiming to be a third party beneficiary of a bilateral modification between the Government and the prime did not have CDA jurisdiction to bring a claim directly against the Government based on an alleged breach of that mod. 

In an important decision, the court held that the CDA's six-year statute of limitations is subject to the doctrine of equitable tolling.          

Contract Interpretation/Changes/Authority/Breach

Over a strong dissent, the court reversed parts of a Court of Federal Claims decision on Bell BCI's cumulative impact delay claims because the appeals court found that the language "attributable to this modification" in a release unambiguously barred certain claims.

In LAI Services (LABAT-Anderson below), a decision involving several issues of contract interpretation, the court  reversed the ASBCA and held that a contractor performing materiel distribution services should be compensated for "minimum military packing" of off-base transshipments under CLIN 002 rather than CLIN 001 of the contract. In the interests of judicial economy, the court also determined the appropriate method of billing under CLIN 002 (per-package versus the per-item payment claimed by the contractor), an issue not addressed by the Board.

In States Roofing Corp., the court reversed part of an ASBCA decision because the contractor's interpretation of an ambiguous contract provision was within the zone of reasonableness.

Costs/Cost Accounting Standards

In Raytheon, the court reversed the ASBCA's decision on summary judgment that Raytheon's potential violation of CAS 413 had not caused the Government to pay increased costs and, therefore, that Raytheon was not liable for interest.

In Teknowledge, a nonprecedential opinion, the Court of Appeals for the Federal Circuit agreed with the Court of Federal Claims that a contractor's software amortization costs were not properly allocable to its contract and, therefore, were unallowable.

False Claims

In Daewoo Engineering, the court affirmed the CoFC's decision that a contractor's certified CDA claim, which was was baseless and intended only as a negotiating ploy, was fraudulent.

Terminations and Delays

The Court of Appeals for the Federal Circuit upheld the Court of Federal Claims' decision sustaining the default termination of McDonnell Douglas and General Dynamics on the A-12 Avenger program.

Although the Court of Appeals for the Federal Circuit's holding in Vantage Associates is nonrprecedential, the following language is interesting: "[I]f the government had not cancelled the purchase order, Vantage would not have furnished the cases in accordance with the terms of the contract. Vantage argues, nevertheless, that the government prematurely cancelled its purchase order at 3:27 a.m. on August 18, 2006�hours before the purchase order would have lapsed by its own terms. In other words, despite its inability to perform, Vantage contends it can recover all of its costs because, just before the delivery deadline that it admits it would not have met, it received notice of the purchase order�s cancellation. We do not think that, under these circumstances, Vantage is entitled to damages for the costs it incurred in preparation to deliver the cases."

Affirmative Actions Goals and Preferences

The Court of Appeals for the Federal Circuit reversed the ASBCA's summary judgment in favor of Tecom  and held that the contractor could not recover the costs of defending against, and settling, a private suit for sexual harassment unless the contractor could show the original plaintiff had very little chance of succeeding on the merits.

       

Supreme Court


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