Justia Contracts Opinion Summaries

Articles Posted in Military Law
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In 1999, while working at the San Juan VA Medical Center, Dr. Sanchez, a urologist, reported to his superiors what he believed to be improper practices. In 2000, Sánchez received a proficiency report prepared by his supervisor, indicating that his performance “ha[d] shown a significant [negative] change since his last evaluation.” Sánchez was reassigned to the Ambulatory Care Service Line, where he believed that he would not perform surgery, care for patients, or supervise other staff members. He concluded that these actions were retaliation for his whistleblowing activities. Sánchez and the VA entered into a settlement agreement under which Sanchez was to be reassigned to the Ponce Outpatient Clinic with a compressed work schedule of 10 hours per day for four days per week, to include three hours of travel per day. The parties adhered to the Agreement for 16 years. In 2017, Sánchez received a letter, informing him that he was required to be at the Ponce clinic from “7:30 a.m. until 4:00 p.m. from Monday through Friday.” An AJ rejected his petition for enforcement with the Merit Systems Protection Board. The Federal Circuit affirmed. The background of the Agreement supports the conclusion that 16 years was a reasonable duration. As the party claiming a breach, Sánchez had the burden of proof but did not offer evidence that the claimed animosity persisted after that 16-year time period. View "Sanchez v. Department of Veterans Affairs" on Justia Law

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The Navy's Diego Garcia facility, a 10.5-square-acre Indian Ocean atoll, 1,800 miles east of Africa and 1,200 miles south of India, had no commercial or civilian infrastructure. In 2005, the Navy sought bids on a firm fixed-price contract for Diego Garcia support services, ranging from information technology to refuse collection. For contractor vehicles and equipment, “contractor-furnished fuel,” was to be provided by the Navy at the prevailing Department of Defense rate. DG21 submitted a bid and, for contractor-furnished fuel, arrived at “a significantly lower number of gallons than” reflected in the solicitation. DG21 indicated that if fuel rates varied from historical rates by 10% or more, it would request an equitable adjustment. The Navy clarified that the solicitation was fixed-price, “DG21 assumes the full risk of consumption and/or rate changes. Please price ... accordingly.” The Navy questioned the lack of an escalation clause. DG21 did not change its estimate or pricing, but removed the equitable adjustment reference. DG21’s $455,292,490 proposal was accepted. During the contract term, fuel prices rose dramatically, reaching a maximum of more than double the historical rate indicated in the solicitation. In 2011, DG21 requested an equitable adjustment, characterizing the fuel cost as a $1,171,475.90 contract “change” under FAR 52.243-4. The contracting officer and the Board of Contract Appeals rejected the request. The Federal Circuit affirmed. The cost increase was not a change to the contract triggering FAR 52.243-4; the contract allocated that risk to DG21. View "DG21, LLC v. Mabus" on Justia Law

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Slusher, an orthopedic surgeon and military reservist, worked at Heritage, a small hospital in Shelbyville, Tennessee, through a staffing service, on 30-day assignments beginning on July 20, 2010. Slusher was offered, but did not accept, a permanent position. He agreed to a one-year contract in January 2011, which could be terminated by either party for any reason upon 90 days’ notice or by Heritage, effective immediately, with 90 days’ pay instead of notice. It did not provide for renewal or extension. Heritage knew that he could be called up for deployment. On May 4, 2011, Slusher received orders. Before Slusher’s deployment, Heritage informed him that it had interviewed another physician for the orthopedic surgeon position. Heritage granted Slusher military leave. He reported for active duty on June 10. While he was in Iraq, Heritage informed Slusher that it was nearing a contract with Mosley. Slusher later signed a termination agreement, specifying that his employment would end on October 26. Slusher returned to Heritage, where Mosley had begun working, on October 3, and worked there until October 26, 2011. Slusher filed a complaint with the Veterans’ Employment and Training Service. After the Department of Labor closed its investigation, Slusher filed suit, claiming discrimination under and violation of the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. 4301-35 and breach of contract. The Sixth Circuit affirmed summary judgment in favor of the defendants on each claim. View "Slusher v. Shelbyville Hosp. Corp." on Justia Law

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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

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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

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This case stemmed from an employment discrimination suit filed by appellant against the Navy. The Navy subsequently offered a stipulation of Settlement (the "Agreement"). After concluding that specific performance of the Agreement was no longer practicable, appellant sought nearly a million dollars in damages and attorney's fees. The court held that a settlement agreement embodied in a consent decree was a contract under the Tucker Act, 28 U.S.C. 1346(a)(2), and transferred the case to the Court of Federal Claims. Accordingly, the court vacated the district court's order dismissing the motion to enforce and remanded with instructions to transfer to the Court of Federal Claims. View "Franklin-Mason v. Mabus, Jr." on Justia Law

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In 2001 KBR agreed to provide the Army with logistics support services during Operation Iraqi Freedom. Individual task orders required KBR to install, operate and maintain dining services near Mosul, Iraq on a cost-plus-award-fee basis. KBR selected ABC, a subcontractor, to build a prefabricated metal dining facility and to provide dining services for a camp population of 2,573. In June 2004, the Army ordered KBR to stop construction of the metal facility and begin construction of a reinforced concrete facility for an estimated 2,573 to 6,200+ persons. Instead of requesting bids for the new work, KBR kept ABC as the subcontractor due to the urgency of the request. ABC submitted a new proposal with a total monthly cost about triple the monthly cost initially quoted. ABC attributed the increased costs to additional labor and equipment to serve a larger population and to a drastic increase in the cost of labor and a severe shortage of staff willing to work in Iraq. Due to a calculation error, it was determined that ABC’s proposal was reasonable. KBR’s management reviewed and approved a change order, embodying ABC’s proposal. In 2005 the subcontract ended and title to the dining facility passed to the Army. In 2007, the Defense Contract Auditing Agency suspended payment of certain costs paid by KBR to ABC pursuant to the change order. KBR prepared a new price justification for the concrete dining facility and ultimately filed suit, seeking recovery of the $12,529,504 in costs disapproved for reimbursement. The Claims Court awarded $6,779,762. The Federal Circuit affirmed.View "Kellogg Brown & Root Servs. v. United States" on Justia Law

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USM builds military boats. Working with VT Halter, USM designed a special-operations craft with a hull made out of composite materials for use in competing for the Navy's “MK V Special Operations Craft and Transporter System Contract.” With its 1993 bid, VT Halter submitted drawings stamped with a “Limited Rights Legend” to invoke Defense Federal Acquisition Regulations Supplement Section 252.227-7013(a)(15), which limits governmental use and disclosure of certain information. VT Halter won the contracts and delivered 24 Mark V special-operations craft. In 2004, the Navy awarded University of Maine a research grant to improve the ride and handling of the Mark V and provided detailed design drawings of the Mark V to contractors, stamped with the DFARS Limited Rights Legend, but did not obtain VT Halter’s consent for disclosure. The Navy awarded Maine Marine a contract to design and construct a prototype Mark V.1. USM sued under the Federal Tort Claims Act, 28 U.S.C. 1346(b), alleging misappropriation of trade secrets. The district court awarded damages, but the Fifth Circuit held that the matter lay exclusively within the jurisdiction of the Court of Federal Claims under the Tucker Act, 28 U.S.C. 1491(a)(1). The Fifth Circuit vacated the judgment and ordered transfer. The Federal Circuit affirmed. View "U.S. Marine, Inc. v. United States" on Justia Law

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Sharp, a federal supply contractor, submitted a termination compensation claim to the Department of the Army contracting officer, and later brought a Contracts Dispute Act claim before the Armed Services Board of Contract Appeals, claiming that, because the Army failed to exercise the entirety of the last option year under a delivery order, Sharp was entitled to premature discontinuance fees under its General Services Administration schedule contract. The ASBCA dismissed for lack of subject-matter jurisdiction, concluding that the Federal Acquisition Regulation, does not permit ordering agency contracting officers to decide disputes pertaining to schedule contracts. The Federal Circuit affirmed. Under FAR 8.406-6, only the GSA contracting office may resolve disputes that, in whole or in part, involve interpretation of disputed schedule contract provisions. View "Sharp Elec. Corp. v. McHugh" on Justia Law

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The Army solicited proposals for aerial target flight operations and maintenance services. Kratos provided these services under a predecessor contract. The solicitation listed three evaluation factors: Technical/Management; Past Performance; and Price/Cost to be rated as “outstanding,” “satisfactory,” “marginal,” or “unsatisfactory.” The contract was subject to the Service Contract Act of 1965, under which the Federal Acquisition Regulation requires that “successor contractors … in the same locality must pay wages and fringe benefits … at least equal to those contained in any bona fide collective bargaining agreement … under the predecessor contract.” The Army received three proposals, including the offers from SA-TECH and Kratos. After review, the Technical Evaluation Committee announced a Final Evaluation Report, noting potential difficulties for SA-TECH under the Labor sub-factor, but rating SA-TECH as “outstanding” for all factors. Kratos also received “outstanding” ratings. The Source Selection Authority concluded that SA-TECH offered the best value for the government. Kratos filed a protest with the Government Accountability Office. SA-TECH subsequently protested the Army’s decision to engage in corrective action instead of allowing SA-TECH’s award to stand. The Claims Court denied the Army’s motion to dismiss and found the Army’s actions unreasonable and contrary to law. The Federal Circuit affirmed. View "Sys. Application & Tech., Inc. v. United States" on Justia Law