Justia Contracts Opinion Summaries

Kingdomware is a VA-certified service-disabled veteran-owned small business. The Small Business Act, 15 U.S.C. ch. 14A, states that small businesses generally will receive “a fair proportion of the total purchases and contracts for property and services for the Government.” Veteran-Owned Small Businesses (VOSBs) and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) are expressly recognized in the Small Business Act and the Federal Acquisition Regulation (FAR), 48 C.F.R. ch. 1, which implements the Office of Federal Procurement Policy Act, 41 U.S.C. ch. 7. Agency-specific contract regulations are stated in the Veterans Affairs Acquisition Regulation (VAAR), 48 C.F.R. ch. 8. In 2012, the VA decided to implement an Emergency Notification Service in medical centers. The VA contracting officer chose to use the General Services Administration (GSA) Federal Supply Schedule (FSS) to procure the needed services, and awarded the contract to a FSS vendor which was not a VOSB. Kingdomware filed a bid protest with the Government Accountability Office (GAO), which rejected the VA’s argument, and issued a recommendation that the VA cancel the award. The VA did not acquiesce. The Claims Court upheld the VA determination, interpreting 38 U.S.C. 8127(c), concerning use of restricted competition, as not creating a mandatory set-aside. The overarching policy of the FAR generally demands ‘full and open competition,” which is deemed satisfied by FSS contracts. The FAR specifies that an agency is encouraged to obtain goods and services from FSS contractors before purchasing from commercial sources, which include privately owned VOSBs and SDVOSBs. The Federal Circuit affirmed. View "Kingdomware Techs, Inc. v. United States" on Justia Law

In 1996, the Air Force entered into a contract under which SUFI would install and operate telephone systems in guest lodgings on bases in Europe at no cost to the government; the Air Force agreed that SUFI network was to be the exclusive method available to a guest placing telephone calls at the lodging. The contract permitted SUFI to block other networks and required the Air Force to remove or disable preexisting Defense Switched Network (DSN) telephone lines in hallways and lobbies, but DSN phones remained in place. Call records showed that, with Air Force assistance, guests often placed multiple or lengthy individual calls. After the Air Force declined to implement controls to curb DSN and patched-call abuse, SUFI blocked guest-room access to the DSN operator numbers but permitted morale calls from lobby phones, monitored by sign-in logs. Air Force personnel failed to require guests to sign the logs and gave guests new DSN access numbers, to circumvent SUFI’s charges. After failed attempts to resolve the situation, including through the Armed Services Board of Contract Appeals, SUFI sold the telephone system to the Air Force for $2.275 million and submitted claims, totaling $130.3 million, to the contracting officer. The officer denied the claims, except for $132,922 on a claim involving use of calling-cards. The Board later awarded $7.4 million in damages, plus interest. In an action under the Tucker Act, 28 U.S.C. 1491, the Court of Federal Claims awarded $118.76 million in damages, plus interest. The Federal Circuit vacated in part and remanded for additional findings. View "SUFI Network Servs, Inc. v. United States" on Justia Law

Northern, operated by VanDuinen, was a general contractor on public construction projects, legally required to obtain surety bonds. Hanover was Northern’s bonding agent and required Northern to enter into an Indemnity Agreement, which VanDuinen signed in his individual capacity and as Northern’s President. The Midway Airport Project was financed by the FAA and managed by Parsons. In 2008 Northern won the bid and began subcontracting. in 2009 subcontractors complained that Northern failed to pay them in accordance with the bonds and contracts. Work was halted, resulting in a separate complaint, by Parsons, for failure to complete the Project as required. The FAA opted to retain possession of remaining contract funds, $127,086.00, pending resolution of the disputes and completion of the work. Hanover received claims from subcontractors McDaniel ($127,452.78) and Rex Electric ($78,495.00) and a claim for performance from Parsons. Hanover demanded collateral under the Agreement. Northern refused to post collateral or to indemnify Hanover. In 2009 McDaniel filed for bankruptcy; the bankruptcy trustee sued Hanover seeking payment for work performed. In 2012, Hanover paid the trustee $127,452.78 to resolve both McDaniels’s and Rex Electric’s claims. Hanover resolved Parson’s claim by stepping in as general contractor and arranging for completion of the Project. Parsons paid Hanover the $127,086.00 of contract funds the FAA had withheld. Hanover sued Northern and VanDuinen. The district court granted summary judgment in Hanover’s favor. The Seventh Circuit affirmed. The Agreement is unambiguous. Northern breached it, and Hanover is entitled to contractual damages. View "Hanover Ins. Co. v. Northern Bldg. Co." on Justia Law

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law

In 2006, the U.S. Army Contracting Agency solicited bids for repair, maintenance, and construction services at Fort Rucker, Alabama, with indefinite delivery and quantity terms. The mechanism for pricing such jobs involves identification of costs and multiplication by certain “coefficients” set in the contract. It was well known that construction costs in the region had increased after Hurricane Katrina, 15 months before the government solicited bids. The Army awarded the contract to Lakeshore in 2007. In 2008, Lakeshore began 78 construction projects at Fort Rucker. When the Army exercised its option to extend the contract, it increased payments based on the contract’s price-adjustment clause. Lakeshore began 74 more delivery orders. After two years under the contract, Lakeshore concluded that it had incurred higher costs than were covered by payments under the contract and requested an equitable adjustment. The government denied the request. Acting under the Contract Disputes Act, 41 U.S.C. 7101, the contracting officer denied a claim for recovery of $1,996,152.40. The Claims Court rejected claims of breach of contract, breach of the covenant of good faith and fair dealing, breach of implied warranty, and mistake on summary judgment, stating that the government was not obliged to provide accurate local prices or to bear “economic consequences if one or more prices in the guide proved inaccurate.” The Federal Circuit affirmed. View "Lakeshore Eng'g Servs., Inc. v. United States" on Justia Law

The issue before the Supreme Court in this case centered on whether a subcontract for the maintenance of aircraft required a contractor to turn to a subcontractor for all maintenance the contractor needs to fulfill a contract with the United States Army. The contractor, DynCorp International, LLC, contended the contract did not create an exclusive relationship between the parties and it could send aircraft to other maintenance providers. The subcontractor, Stevens Aviation, contended the contract was a requirements contract under which DynCorp had to send all aircraft requiring maintenance to Stevens. Stevens moved for a partial summary judgment on the issue, the trial court granted the motion, and the court of appeals reversed and granted partial summary judgment to DynCorp. Upon review of the matter, the Supreme Court reversed the court of appeals' decision in part and affirmed in part, holding the contract was a requirements contract for certain aircraft. View "Stevens Aviation v. DynCorp International" on Justia Law

The companies obtained an oil and gas lease from the government for a 5760-acre tract on the Outer Continental Shelf. They made an initial bonus payment of $23,236,314 and have paid additional rental payments of $54,720 per year. The lease became effective on August 1, 2008, and had an initial term running through July 31, 2016. It provided that it issued pursuant to and was subject to the Outer Continental Shelf Lands Act of August 7, 1953, (OCSLA) 43 U.S.C. 1331 and “all regulations issued pursuant to the statute in the future which provide for the prevention of waste and conservation of the natural resources of the Outer Continental Shelf and the protection of correlative rights therein; and all other applicable statutes and regulations.” In 2010, an explosion and fire on the Deepwater Horizon semi-submersible oil drilling rig in the Gulf of Mexico killed 11 workers and caused an oil spill that lasted several months. As a result, the government imposed new regulatory requirements, Oil Pollution Act (OPA), 33 U.S.C. 2701. The companies sued for breach of contract. The Claims Court and Federal Circuit ruled in favor of the government, finding that the government made the changes pursuant to OCSLA, not OPA. View "Century Exploration New Orleans, LLC v. United States" on Justia Law

Carnell, a "minority-owned" corporation, filed suit against the Housing Authority and Blaine based on claims of race discrimination, retaliation, and breach of contract. The court held that a corporation can acquire a racial identity and establish standing to seek a remedy for alleged race discrimination under Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d, but that the district court properly dismissed one of the defendants from liability on plaintiff's race discrimination claims; the district court abused its discretion in permitting the use of particular impeachment evidence, which should have been excluded as unfairly prejudicial under Federal Rule of Evidence 403; and the district court properly reduced certain damages awarded to plaintiff on its contract claims, but decided that the strict notice requirements of the Virginia Public Procurement Act, Virginia Code 2.2-4300 through 4377, required the court to narrow further the scope of recoverable contract damages. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Carnell Construction Corp. v. Danville RHA" on Justia Law

In 2002 oil companies filed breach of contract actions against the government, concerning sales of offshore oil and glass leases in the 1980s. The Claims Court held that the government had breached its contracts by preventing the companies from drilling for oil in the offshore areas covered by the leases. The Federal Circuit affirmed the judgment and restitution awards of approximately $1 billion. Nycal, which held a 4.25 percent interest in two of the leases, waived its right to restitution and pursued a claim for lost profits. The Claims Court held that it was permissible for Nycal to seek lost-profits damages even though the other owners of the leases in which Nycal held a partial share had accepted restitution, but concluded that Nycal had not proved its case for lost profits. The Federal Circuit affirmed, noting the government’s evidence that Nycal could not have made a profit on its share of the leases.View "NYCAL Offshore Dev. Corp. v. United States" on Justia Law

In 2002, the Navy awarded Metcalf a contract to design and build 212 housing units in Hawaii by October, 2006, for $50 million. Problems arose involving soil conditions. The request for proposals stated that the “soil reconnaissance report” was “for preliminary information only” and required that the contractor conduct independent soil investigation, incorporating 48 C.F.R. 52.236-2, concerning site conditions that differ materially from those disclosed. Discussions delayed construction for a year. Metcalf implemented its preferred changes by over-excavating and using non-expansive fill, without a contract modification. The Navy denied that there was any material difference between pre-bid and post-award soil assessments, but approved some modifications. Metcalf was about 200 days behind schedule and began using “post-tension” concrete, which was more expensive but avoided the additional time and cost of over-excavation. The Navy amended the contract to approve use of post-tension concrete slabs. Metcalf claims additional delays resulting from the presence of more of a chemical contaminant than was expected. With respect to contamination, the Navy granted a 286-day extension and reimbursed $1,493,103. The Navy accepted the buildings in March, 2007. Metcalf alleged that its final cost was $76 million. The government paid less than $50 million. The Claims Court ruled in favor of the government, under the Contract Disputes Act, 41 U.S.C. 7104. The Federal Circuit vacated, holding that the court misconstrued what Metcalf needed to show to prove that the government breached its duty of good faith and fair dealing and misinterpreted certain contractual provisions.View "Metcalf Const. Co., LLC v. United States" on Justia Law