Contingency Contracting & Stability Operations

Earlier this week, the Federal Circuit unanimously affirmed a 2017 ruling by the Armed Services Board of Contract Appeals (“ASBCA”) that held the United States Government breached its contractual obligation to provide physical security to KBR and its subcontractors during the height of the Iraq War.  The decision awards KBR $44 million, plus interest, in private security costs that the Government unilaterally recovered under the LOGCAP III contract.

The Court’s decision is significant in two respects.  First, it confirms that the affirmative defense of prior material breach is not a Contract Disputes Act (CDA) “claim” that must be presented to a contracting officer under M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1331 (Fed. Cir. 2010).  Second, the decision makes clear that a contractor is entitled to CDA interest on its claim to recover amounts taken or held by the Government to enforce a government claim.  We discuss each of these important rulings below.
Continue Reading Federal Circuit Further Clarifies Maropakis and CDA Interest Rule in Significant “Contractor-on-the-Battlefield” Decision

The Department of Defense (“DoD”) has issued two Class Deviations that provide defense agencies with greater flexibility when procuring in times of crisis. These Class Deviations allow for the use of simplified acquisition procedures and excuse certain procurement obligations when DoD is responding to a cyber-attack or providing relief in support of domestic or international

By Alex L. Sarria and Marianne F. Kies

The recent settlement of a noteworthy “contractor-on-the-battlefield” case should serve as a cautionary tale to government contractors that perform high-risk work in support of military operations. In Suleiman Abdullah Salim v. James E. Mitchell and John Jessen, No. CV-15-0286, three foreign plaintiffs filed Alien Tort Statute (“ATS”) claims against American contractors who allegedly “designed, implemented, and personally administered” the CIA’s post-9/11 “enhanced interrogation” program.

The district court recently issued an opinion denying the defendants’ motion for summary judgment on the basis of the Political Question Doctrine and Derivative Sovereign Immunity. Less than two weeks later, the contractors agreed to settle the case for an undisclosed amount. The Salim case illustrates why government contractors must proactively assess and mitigate potential tort liabilities before entering into high-risk federal contracts, such as contracts for military logistics support, private security, and intelligence-support services.


Continue Reading CIA Torture Case Is A Cautionary Tale for Contractors on The Battlefield

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

A recent decision from the Armed Services Board of Contract Appeals (ASBCA) serves as an important reminder that a contractor’s timely notification to the contracting officer (CO) of its intent to appeal a CO’s final decision will satisfy the Board’s 90-day deadline for filing appeals under the Contract Disputes Act (CDA). Although the facts of Afghan Active Group (AAG), ASBCA No. 6037, 2016 WL 1715461 (Apr. 14, 2016) are somewhat unusual, the decision illustrates the Board’s willingness to elevate substance over form when it comes to enforcing its jurisdictional timeliness requirements.

Continue Reading Contractor’s Timely Notice to the CO of an ‘Intent to Appeal’ is Good Enough for the ASBCA

On December 30, 2015, the Department of Defense (DoD) issued a Final Rule intended to clarify that U.S. defense contractors and subcontractors performing work in Afghanistan, including work on contracts below the simplified acquisition threshold and for commercial items, are not subject to Afghan taxes.[1]  The rule updates the tax provisions of the DFARS

Last week, in an important decision for contingency contractors supporting U.S. stability operations overseas, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reaffirmed that the Defense Base Act (DBA) prescribes the exclusive remedies available to employees of government contractors who are injured while working abroad. In doing so, the D.C. Circuit sent injured contractor workers, turned would-be tort plaintiffs, a clear message: federal courts will dismiss tort lawsuits alleging that a DBA-covered government contractor wrongfully−or even intentionally−interfered with an employee’s receipt of DBA benefits.

Enacted in 1941, the DBA establishes a comprehensive workers’ compensation scheme for employees of government contractors who are killed or injured while providing services to the government outside the United States. See 42 U.S.C. § 1651 et seq. The DBA, which incorporates most of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq, includes a provision that makes contractors’ liability under the statute “exclusive”−that is, putative plaintiffs are barred from suing their employers for damages beyond the statutory compensation scheme established by Congress. See id. § 1651(c) (“The liability of an employer . . . shall be exclusive and in place of all other liability . . .”) (emphasis added).

Despite the Act’s broad exclusivity provision, in Brink v. Continental Insur. Co., an estimated class of 10,000 contractor employees who were injured in Iraq and Afghanistan brought a purported class-action lawsuit for $2 billion against dozens of government contractors, alleging that the contractors conspired with their respective insurance carriers to deny the workers DBA benefits. But a three-judge panel of the D.C. Circuit unanimously rejected plaintiffs-appellants’ claims and, in a 17-page opinion, made five key findings that will help government contractors defend similar lawsuits in the future.
Continue Reading The D.C. Circuit’s Message to Injured Government Contractor Employees: ‘There’s an Exclusive Remedy For That’