Claims and Contract Disputes

Under Chevron U.S.A. v. NRDC and its progeny, courts show great deference to administrative agencies’ interpretations of statutes and regulations.  However, it does not necessarily follow that courts will provide that same deference to agencies’ interpretations of government contracts.  Last week, in a statement respecting the denial of certiorari in Scenic America, Inc. v. Dept. of Transportation, Supreme Court Justice Neil Gorsuch pointed out this distinction and raised an issue that merits further judicial attention.
Continue Reading Government Contracts and Chevron Deference: Justice Gorsuch Weighs In

In recognition of the decennial anniversary of the U.S. Civilian Board of Contract Appeals (“Civilian Board”), we set out to determine notable trends in Civilian Board practice. Among other things, we identified a recent marked increase in the number of published decisions containing substantial discussions of discovery issues – more than half of the 24 decisions we identified and reviewed were issued in or after 2014. Through the publication of these decisions, the Board has provided important guidance to practitioners who may face the same (or similar) discovery issues in the future. We believe that this trend toward publication should generally result in greater predictability of outcomes in discovery disputes, and therefore should facilitate the resolution of potential discovery disputes more efficiently.

Earlier this month we published an article about this very topic in the Board of Contract Appeals Bar Journal. In our article, we focused our analysis primarily on three interesting decisions that pit statutory requirements related to the disclosure/production of information – the Privacy Act, the Inspector General Act, and the Freedom of Information Act – against the bounds of permissible discovery at the Civilian Board. These three decisions should provide a relatively high degree of outcome predictability in similar cases because of the rigid statutory requirements at issue.

In addition to the link to a PDF of the article above, the full text of the article is available below.
Continue Reading Predictability of Outcomes in Discovery Disputes at CBCA Improves During its First Ten Years

Earlier this month, the Armed Services Board of Contract Appeals held that the U.S. Army breached its contractual obligation to provide physical security to its principal logistical support contractor, KBR, during the height of the Iraq War.  As a consequence, the Board found that KBR was entitled to be reimbursed for $44 million, plus interest, in costs that the Government had withheld from KBR relating to KBR’s and its subcontractors’ use of private security.  A copy of the opinion is available here.
Continue Reading ASBCA Issues Important Ruling in “Contractor-on-the-Battlefield” Dispute

Last month, in CanPro Investments Ltd. v. United States, COFC No. 16-268C (April 2017), the Court of Federal Claims (“COFC” or “Court”) denied the Government’s motion for reconsideration and reaffirmed its prior decision that CanPro Investments Ltd. (“CanPro”) may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against the General Services Administration (“GSA”). CanPro alleged that the Government breached the implied duty by receiving an unreasonable number of visitors at the building it leased from CanPro – and despite their being no specific contractual provision regulating the number of permitted visitors. This decision is important because it reinforces the implied duty as a mechanism to protect a party’s reasonable expectations arising from a government contract.   
Continue Reading Long Live Reasonableness: Reinforcing the Implied Duty of Good Faith and Fair Dealing in Government Contracts

On the heels of our recent post offering key takeaways from recent release of claims decisions, the ASBCA and the CBCA have published another round of notable opinions regarding contract releases:  Supply & Service Team GmbH, ASBCA No. 59630 and ServiTodo, LLC, CBCA 5524.  Both decisions are important, albeit for different reasons.  The ASBCA decision demonstrates how a release provision in a contract modification providing an equitable adjustment can bar the government from processing an administrative offset against a contractor.  The CBCA decision illustrates the difficulties contractors face when attempting to minimize the impact of a broadly worded release of claims provision.
Continue Reading A Tale of Two Contract Releases: One for the Government, One for the Contractor

When must a party’s “defense” be asserted as a Contract Disputes Act (CDA) claim in order to raise that defense during a Court of Federal Claims or Board of Contract Appeals proceeding?

In Kansas City Power & Light Co. v. United States, the Court of Federal Claims moves us one step closer to solving this peculiar government contracts riddle called Maropakis.  In this decision, the court held that the government’s affirmative defense of offset was not a claim under the CDA, and therefore, did not need to be asserted through a contracting officer final decision before it could be raised before the court.  This decision is important because it further limits the applicability of the Maropakis doctrine and reinforces that Maropakis only applies to “defenses” that seek payment of money or the adjustment/interpretation of contract terms.Continue Reading The Latest Clue to Solving the Maropakis Riddle: The Affirmative Defense of Offset

Over the last few months, we’ve reported on various government contracts decisions that illustrate the impact a release of claims provision can have on contractors.  A few weeks ago, we published a Feature Comment in The Government Contractor (titled “Release Me? Five Things Every Government Contractor Needs To Know Before …
Continue Reading Key Takeaways From Recent Decisions Discussing Release Of Claims Provisions

In public comments submitted earlier this month, the defense industry and the public contract bar called upon the Department of Defense (DoD) to withdraw or significantly revise a proposed rule altering how independent research and development (IR&D) costs are treated.  These public comments reflect the defense industry’s growing concern that DoD is moving to constrain the industry’s ability to utilize IR&D projects as a tool for furthering technical innovation.

The proposed DFARS rule change would require contracting officers managing procurements for major defense acquisition programs and major automated information systems in a development phase to adjust the total evaluated cost/price of a proposal to account for the contractor’s proposed reliance on government-funded IR&D projects. The goal of the rule is to address the concern in the Better Buying Power 3.0 Implementation Directive that contractors may use IR&D such that “development price proposals are reduced by using a separate source of government funding (allowable IR&D overhead expenses spread across the total business) to gain a price advantage in a specific competitive bid.”

Public comments were submitted by the American Bar Association Section of Public Contract Law (SPCL) and the Council of Defense and Space Industry Association (CODSIA), as well as several private law firms. These comments uniformly oppose the proposed rule, raising a range of concerns, such as the following:

  • The proposed rule conflicts with the statutory framework governing IR&D, which encourages contractors to administer IR&D programs independently to encourage IR&D investment by contractors.
  • The proposed rule disadvantages contractors undertaking research that is directly relevant and applicable to current government needs, and the proposed rule instead favors contractors that have not invested in innovation.
  • The proposed rule addresses a problem that has not been clearly identified or articulated. As the SPCL comments observe, the Department of Defense has failed to articulate a basis for differentiating between IR&D and other indirect costs.
  • The propose rule ignores relevant case law that already determined that burdening a single contract with underlying R&D costs related to contract performance is unreasonable and would curtail innovation.

Continue Reading Defense Industry Calls on the Pentagon to Withdraw Proposed Changes to IR&D Rules

In TranBen, Ltd. v. Department of Transportation, CBCA 5448 (Jan. 26, 2017), the Civilian Board of Contract Appeals (“Board”) recently applied a restrictive view of the implied duty of good faith and fair dealing under an indefinite delivery/indefinite quantity (“IDIQ”) contract.  In its appeal seeking almost $14 million, TranBen, Ltd. (“TranBen”) alleged that the Department of Transportation (“DOT” or “Government”) breached the implied duty by misleading the Internal Revenue Service (“IRS”) about the availability of paper vouchers in order to receive IRS guidance allowing DOT to issue transit subsidies on debit cards, instead of vouchers, without rendering them taxable.  The Board dismissed the appeal for failure to state a claim in a troubling decision that calls into question the viability of the implied duty under an IDIQ contract where the Government satisfies its minimum ordering obligation.  At the very least, the Board’s decision indicates contractors should be even more vigilant, at the early stages of IDIQ contract formation, to ensure that their legitimate expectations are protected through express contract language. 
Continue Reading CBCA Narrows Scope of Implied Duty of Good Faith and Fair Dealing in IDIQ Contracts

The Ninth Circuit recently confirmed that predicting the future with near certainty is not required when seeking to protect information from disclosure under Exemption 4 of FOIA. In a recent unpublished decision, the Ninth Circuit concluded that Sikorsky Aircraft’s small business subcontracting plan was “confidential commercial or financial information” exempt from disclosure under Freedom of Information Act, Exemption 4. See Am. Small Business League v. Department of Defense, No. 15-15120, 2017 WL 65399 (9th Cir. Jan. 6, 2017) (ASBL II). Although the non-precedential decision merely reaffirmed the existing standard for determining competitive harm, the decision was significant because it rejected the lower court’s position that Exemption 4 required a party to show that release in effect “would” produce competitive harm rather than simply “could” lead to such harm.  In addition, the ruling confirmed that employee contact information and signatures are protected from disclosure by Exemption 6 (Personal Privacy).
Continue Reading Ninth Circuit Rejects Heightened Standard for Demonstrating Likelihood of Competitive Harm Under FOIA Exemption 4