Justia Contracts Opinion Summaries

The Department of Justice issued a request for quotations for an automated recruiting and staffing system, providing that conflicting provisions would be considered as exceptions to the terms of the RFQ, and noting that any exceptions could adversely impact the evaluation rating. Plaintiff's bid included exceptions relating to confidentiality of data and how payments would be made, among other matters. Plaintiff's program obtained a higher score on a performance test. The DOJ disqualified plaintiff's bid and accepted intervenor's bid, stating that plaintiff's slight technical advantage did not justify the higher price and that plaintiff's exceptions were unacceptable. The government accountability office, claims court, and Federal Circuit upheld the decision. The contracting officer was not required to engage in discussions about the exceptions before disqualifying the bid and acted rationally in disqualifying the bid. The officer was entitled to rely on a certification of compliance with RFQ terms for the bid that was accepted and rationally accepted that bid.

Plaintiff, who was employed as the City of McDonough's ("city") chief building inspector, brought suit against the city when the city refused to pay him severance under an employment agreement contract. At issue was whether the contract was binding to a successor municipal council in violation of OCGA 36-30-3(a). The court held that the contract was ultra vires and void because the contract was renewed automatically and the severance package required the city to pay plaintiff his salary and benefits for an entire year after the year in which the contract was terminated.

This case involves the State's "working retiree program," and the propriety of its withholding retirement contributions from eligible members who returned to work with the state prior to July, 2005. Before that time, the program allowed employees to retire, then after a break, be re-hired and receive retirement benefits and a salary of up to $50,000 per year without having to pay into the pension plan. The State was ordered to refund any contributions made since July, 2005 by program members. In 2005, the State Retirement System Preservation and Investment Reform Act amended the program to require retired members pay the employee contribution as if they were active members but without accruing additional service credit. The State appealed the circuit court's order to refund the contributions. The retirees challenged the change in the program, arguing that it was unlawful for the State to change the terms of the working retiree program after the retirees "irreversibly retired" with the understanding that contributions to the pension plan would not be required. Upon careful consideration of the arguments and legal authority, the Supreme Court reversed the circuit court's holding with respect to the State's return of contributions since 2005. The Court found that the Legislature enabled the State to take the contributions when it amended the program by Act in 2005. The Court dismissed the Retirees' challenge to the State Retirement System Preservation and Investment Reform Act, finding no merit in their argument.

The Air Force petitioned for review of the decision and order of the Federal Labor Relations Authority ("FLRA") that a union proposal for uniform cleaning was a negotiable condition of employment. Based on a recently discovered Conference Report, the Air Force contended that the expenditure under 5 U.S.C. 5901(a) of funds was not authorized for the provision of services related to uniforms and statutory silence did not leave it discretion to do so. At issue was whether the court lacked jurisdiction under 5 U.S.C. 7123(c) to entertain the Air Force's petition because the Air Force failed to present its new interpretation of the uniform statutes. The court held that the Air Force's belated discovery of a constructional appropriations bar was an extraordinary circumstance under section 7123(c) that permitted consideration of an argument not presented by the FLRA. Were the exception not to apply, the FLRA's order would, in effect, permit the Air Force, by contract with the union, to authorize the expenditure of funds beyond what Congress had approved and therefore, the court granted the petition for review. Accordingly, whether as a matter of the plain text of the two uniform statues, or the Air Force's permissible interpretation of any statutory ambiguity to which the FLRA must defer, the Air Force correctly maintained that the union's uniform cleaning proposal was non-negotiated because the statute the Department of Defense administered did not authorize such payments for appropriated funds.

The State brought a complaint against BNSF Railway Co. ("BNSF") in November 2009 seeking a declaratory judgment requiring BNSF to abide by the terms of a 1984 agreement between them and a declaration that BNSF was in violation of that agreement; specific performance by BNSF of the agreement, and damages for BNSF's alleged breach of the agreement. The State subsequently filed an application for a preliminary injunction in June 2010 to prohibit BNSF from terminating the payment to the State and its short line operator per loaded car for each car handled in interchanges as required by Section 9 of the agreement. At issue was whether the district court's order granting the preliminary injunction was an abuse of discretion. The court held that the district court manifestly abused its discretion in issuing the preliminary injunction where it went beyond the State's requested relief and effectively ordered specific performance on the agreement under new terms substantially different than the prior agreed upon terms which severely limited termination of the new interchange agreement and was never part of the 1984 or 1986 agreements. Accordingly, the court reversed the order and resolved the injunction, remanding for further proceedings.

The City of Torrington ("city") filed suit against Strong Construction, Inc. ("Strong") alleging breach of contract claims based on Strong's failure to supply and install water pump motors that conformed to contract specifications. At issue was whether the district court's judgment in favor of the city was supported by the record. The court affirmed and held that the district court's determination was not clearly erroneous where there was ample evidence to support the district court's decision that the Centripro Guidelines were provided to Baker & Associates, the city's engineer, prior to approval of the project submittals; where Strong breached the agreement with the city by failing to provide motors that conformed to the specifications in the parties' agreement; where section 13.07 of the General Conditions did not preclude the city's breach of contract claim and the repair obligation, by its terms, was not limited to one year; and where the court found no basis in common law to extend apportionment of damages to breach of contract claims and the comparative fault statute was not applicable to the breach of contract action.

After petitioners fell behind schedule in developing a stealth aircraft (A-12) for the Navy, the contracting officer terminated their $4.8 billion fixed-price contract for default and ordered petitioners to repay approximately $1.35 billion in progress payments for work the Government never accepted. Petitioners filed suit in the Court of Federal Claims ("CFC"), challenging the termination decision under the Contract Disputes Act of 1978, 41 U.S.C. 609(a)(1). The CFC held that, since invocation of the state-secrets privilege obscured too many of the facts relevant to the superior-knowledge defense, the issue of that defense was nonjusticiable, even though petitioners had brought forward enough unprivileged evidence for a prima facie showing. Accordingly, at issue was what remedy was proper when, to protect state secrets, a court dismissed a Government contractor's prima facie valid affirmative defense to the Government's allegations of contractual breach. The Court concluded that it must exercise its common-law authority in this situation to fashion contractual remedies in Government-contracting disputes and held that the proper remedy was to leave the parties where they were on the day they filed suit.

The Missoula City Counsel, the City of Missoula, and the Mayor, (collectively "City") and Muth-Hilberry, LLC ("developer") appealed a district court determination that found that the City was arbitrary and capricious in approving a zoning and preliminary plat for a subdivision known as Sonata Park located in Rattlesnake Valley, Montana. At issue was whether neighbors, several parties opposed to the subdivision, and the North Duncan Drive Neighborhood Association, Inc. ("Association") had standing. Also at issue was whether the district court erred in striking affidavits filed by the developer and the City in connection with their motions for summary judgment. Further at issue was whether the 1989 Sunshine Agreement between the City and the developer's predecessor in interest superseded the City's growth policy. Finally at issue was whether the City's decision in Sonata Park was arbitrary, capricious, or unlawful. The court held that the neighbors had standing to sue in their own right and that the Association had associational standing to proceed on behalf of its members. The court also held that any error made by the district court in granting the neighbor's motion to strike the developer's affidavit was harmless. The court further held that the Sunlight Agreement did not supersede the City's growth policy where the Sunlight Agreement could be void ab initio and did not appear to guarantee certain density. The court finally held that substantial compliance was still valid and that a government body must substantially comply with its growth policy in making zoning decisions and that the City's decision to approve Sonata Park was arbitrary, capricious, and unlawful.

Beka Industries, Inc. ("BEKA") sued the Board of Education of Worcester County ("County Board") alleging claims that arose from a written contract dispute between BEKA and the County Board when BEKA was dissatisfied with the methods and amounts of the County Board's payment for its work. The court considered several issues on appeal and held that a new trial was warranted where the County Board was precluded from presenting evidence on its recoupment claim and BEKA may have been awarded impermissible "delay damages" under the contract. The court also reversed the intermediate appellate court's holding that the County Board's governmental immunity was not waived unless and until BEKA proved that there was a funding mechanism to satisfy a judgment for money damages rendered against the County Board. Accordingly, court affirmed in part, reversed in part, and remanded the case to the intermediate appellate court with direction to remand to the circuit court for a new trial.