Justia Government Contracts Opinion Summaries

Several counties and municipalities in New York initiated lawsuits in state courts against two pharmacy benefit managers, Express Scripts, Inc. and OptumRx, Inc., alleging that these companies contributed to the opioid epidemic in their communities. The claims are based on state law and center on the defendants’ alleged practices in negotiating with opioid manufacturers and managing prescription formularies, which plaintiffs contend led to an oversupply of prescription opioids and caused substantial public harm and government expense.The defendants removed the cases to federal court—the United States District Courts for the Southern and Eastern Districts of New York—arguing removal was proper under the federal officer removal statute, 28 U.S.C. § 1442(a)(1), because some of the challenged conduct was performed under contracts with federal agencies, such as the Department of Defense (TRICARE), the Office of Personnel Management (FEHBP), and the Veterans Health Administration. After removal, the plaintiffs amended their complaints to disclaim any claims based on the defendants’ work for federal clients, seeking to have the cases remanded to state court. The district courts accepted the disclaimers and remanded the cases.The United States Court of Appeals for the Second Circuit reviewed the district courts’ decisions. It concluded that the disclaimers were ineffective because the alleged wrongful conduct and resulting harms could not be separated between federal and non-federal clients; the conduct was indivisible. Relying on the Supreme Court's decision in Chevron USA Inc. v. Plaquemines Parish, the Second Circuit held that the defendants satisfied all statutory requirements for federal officer removal: they acted under federal direction, were sued for acts relating to federal authority, and asserted colorable federal defenses. The Second Circuit therefore reversed the remand orders and returned the cases to the district courts for further proceedings. View "County of Westchester v. Express Scripts" on Justia Law

Two companies competed for a Federal Aviation Administration (FAA) hardware contract related to air traffic control tower simulators. Adacel, having already secured a related software contract, knew that its own software would be used, giving it an informational advantage over Adsync, which was unaware of the software selection. Adacel’s bid was lower, and it initially won the hardware contract. Adsync protested, and the FAA’s Office of Dispute Resolution for Acquisition (ODRA) found Adacel’s advantage unfair. The FAA allowed Adsync to revise its bid with knowledge of the software, but restricted changes to those attributable to the new information and barred Adacel from revising its bid.After Adsync revised its proposal with significant price reductions, the FAA’s contracting team accepted most, but rejected about $734,000 in reductions pertaining to basic hardware, finding Adsync had failed to justify their connection to the software selection. As a result, Adacel’s bid remained lower, and it again won the contract. Adsync filed a second protest with ODRA, challenging the FAA’s rejection of some price reductions, the technical evaluation, and the best value determination. ODRA concluded that the FAA had a rational basis for its decisions and recommended denial of the protest. The FAA adopted ODRA’s recommendations.Adsync sought review in the United States Court of Appeals for the District of Columbia Circuit. The court held that the FAA did not violate its Acquisition Management System Guidance’s “price realism” provision, as it was not applicable to the remedial rebid context. The court further found substantial evidence supported the FAA’s rejection of certain price reductions and concluded that ODRA did not abuse its discretion in denying bid and proposal costs. Accordingly, the petition was denied. View "Adsync Technologies, Inc. v. FAA" on Justia Law

Several employees of Veolia Water Contract Operations USA, Inc. sued their employer, seeking prevailing wages under the Massachusetts Prevailing Wage Act (PWA) for certain repair and replacement work they performed pursuant to a contract between Veolia and the Springfield Water and Sewer Commission. That contract was authorized by a 1997 Massachusetts Special Act, which provided that work falling within "the construction and design of improvements" remained governed by the PWA. The disputed work occurred during the contract’s second stage, which involved ongoing operation, maintenance, repair, and replacement of wastewater facilities.After both sides moved for summary judgment, the United States District Court for the District of Massachusetts ruled for Veolia. The court concluded that the employees’ work did not fall under "construction and design of improvements" as used in the Special Act and, relying on the Supreme Judicial Court of Massachusetts’s (SJC) decision in Metcalf v. BSC Group, Inc., determined that the structure of the procurement scheme made the PWA inapplicable to the service contract as a whole. The employees appealed.The United States Court of Appeals for the First Circuit, reviewing the case, certified two questions regarding Massachusetts law to the SJC. The SJC clarified that "construction and design of improvements" in the Special Act is broader than the PWA’s definition of “construction” but does not include ordinary repairs or maintenance. The SJC also held that the Special Act was not incompatible with the PWA and that Metcalf was not controlling. Based on the SJC’s answers, the First Circuit held that the district court’s summary judgment for Veolia could not stand, reversed the order, vacated the judgment, and remanded the case for further proceedings to determine which, if any, of the employees’ tasks fell within the statutory phrase. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

A Chinese drone manufacturer and its subsidiary challenged their designation by the U.S. Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. The designation, which is published annually, restricts the company from contracting with certain government agencies and can damage its business reputation. DJI was added to the list in 2022 and again in 2024 and 2025 without prior notice. DJI petitioned for removal, which was denied, and subsequently received a report explaining the designation, though portions of the rationale were redacted.DJI filed suit in the United States District Court for the District of Columbia, alleging violations of the Fifth Amendment’s Due Process Clause and the Administrative Procedure Act. The company argued that it was denied due process, that there was insufficient evidence for the designation, that the agency failed to explain disparate treatment compared to other companies, and that the Secretary’s finding that DJI “contributes” to the Chinese defense industrial base was unsupported. The district court granted summary judgment against DJI, relying solely on the unclassified administrative record and declining to review the classified materials.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo. The appellate court affirmed the district court’s rejection of DJI’s due process, evidentiary, and disparate treatment claims, holding that DJI failed to show deprivation of a protected liberty or property interest, and that sufficient evidence supported the finding that DJI received government assistance. However, the appellate court reversed the district court’s conclusion regarding DJI’s “contribution” to the Chinese defense industrial base, finding that the lower court improperly relied on post hoc agency arguments and failed to review the classified record. The case was remanded for further proceedings on that issue. View "SZ DJI Technology Co., Ltd. v. DOD" on Justia Law

The Maine Department of Health and Human Services conducted a competitive bidding process in 2023 to award contracts for medical nonemergency transportation services for MaineCare and Children’s Health Insurance Program recipients. Penquis C.A.P., Inc., previously the incumbent provider for two regions, submitted bids for four regions but lost to ModivCare Solutions, LLC, which received the highest scores and was awarded contracts for all eight transit regions. Penquis CAP challenged the awards for four regions, asserting irregularities in the evaluation process and seeking access to additional DHHS records through Freedom of Access Act requests.Penquis CAP first pursued administrative appeals before a Department of Administrative and Financial Services (DAFS) appeal committee, which held a hearing and ultimately validated the contract awards to ModivCare. Penquis CAP then sought judicial review in the Superior Court (Penobscot County), which was transferred to the Business and Consumer Docket. After briefing and oral argument, the Business and Consumer Docket affirmed the appeal committee’s decision, finding no legal or procedural error in the bidding and award process. Penquis CAP subsequently appealed to the Maine Supreme Judicial Court, which stayed the contract awards pending appeal.The Maine Supreme Judicial Court reviewed the administrative record for errors of law, unsupported factual findings, or abuse of discretion. The Court held that Penquis CAP was not entitled under statute or the Administrative Procedure Act to delay the hearing until all FOAA requests were fulfilled, nor to obtain evidence beyond what it already possessed. The Court found no clear and convincing evidence justifying invalidation of the contract awards, and affirmed the judgment, lifting the stay on the awards. View "Penquis C.A.P., Inc. v. Department of Administrative and Financial Services" on Justia Law

The dispute centers on the government’s use of TETRA® software, developed by 4DD Holdings, LLC. The Department of Defense and Department of Veterans Affairs sought to improve data interoperability for healthcare records and decided to purchase commercial software. After a competitive process, Systems Made Simple (SMS), the government’s contractor, selected TETRA. The government acquired licenses for specific numbers of TETRA’s components through an authorized reseller, Immix Technology, Inc., with explicit restrictions on copying. However, SMS exceeded license limits by making thousands of unauthorized copies during development and testing. 4DD discovered these excess copies and initiated negotiations, ultimately settling for payment for additional cores at the previously agreed license rate. The government later ended its use of TETRA.The United States Court of Federal Claims reviewed the case after 4DD filed suit for copyright infringement. During discovery, evidence destruction by the government led to sanctions. Following a bench trial, the court found the government had significantly exceeded its licenses and assessed damages using a hypothetical negotiation approach, considering factors like the existence of alternative software and the nature of the use, instead of defaulting to the rates in the licensing agreements. The court awarded $12,683,065.86 in damages, including compensatory and non-compensatory (statutory) damages.The United States Court of Appeals for the Federal Circuit examined whether damages should be calculated by reference to the license rates or through a hypothetical negotiation. The court held that neither statute nor precedent compels using the license agreement rates for damages; courts may use hypothetical negotiations when material differences exist between licensed and infringing uses. However, the trial court erred by considering unforeseeable future events (like TETRA’s cancellation) in its damages analysis and by awarding non-compensatory statutory damages against the government. The Federal Circuit affirmed in part, vacated in part, and remanded for further proceedings. View "4DD HOLDINGS, LLC v. US " on Justia Law

A group of employees working for a private contractor, which operated and maintained a municipal wastewater treatment facility under a long-term contract with the local water and sewer commission, claimed they were entitled to be paid prevailing wages for their work. The contract, authorized under a special legislative act, included both initial capital improvements (which were subcontracted out and paid at prevailing wage rates) and ongoing operations, maintenance, repair, and replacement work, which was paid according to collective bargaining agreements. The employees performed work in the latter category and argued that the prevailing wage requirements should apply to their activities.After the employees brought suit in Massachusetts Superior Court, the case was removed to the United States District Court. Both sides filed for summary judgment. The District Court judge ruled for the contractor, finding that the employees' work was not covered by the phrase "construction and design of improvements" in the special act, and therefore was not subject to the prevailing wage law. The employees appealed, and the United States Court of Appeals for the First Circuit certified two questions of Massachusetts law to the Supreme Judicial Court.The Supreme Judicial Court of Massachusetts held that the phrase "construction and design of improvements" in the special act is not synonymous with the broader definition of "construction" in the prevailing wage law and does not include ordinary repairs, routine inspections, day-to-day operations and maintenance, or ordinary replacements. The Court further concluded that its previous decision in Metcalf v. BSC Group, Inc., 492 Mass. 676 (2023), which addressed different statutory provisions relating to professional services contracts, does not control or render the special act incompatible with the prevailing wage law. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

This case centers on a contractor’s claim for a Type I differing site condition relating to a flood control project in Jefferson Parish, Louisiana. The United States Army Corps of Engineers issued a solicitation for work on the Trapp Canal, which included boring logs and cross-sections of the canal but lacked specific information about the southwest bank. Hamp’s Construction LLC, after being awarded the contract, encountered unexpected bank failures in the southwest quadrant, resulting in unsafe conditions for land-based equipment and significant delays. Hamp’s Construction submitted a request for equitable adjustment and later a formal claim, asserting that the conditions encountered were materially different from those indicated in the contract documents.The contracting officer denied Hamp’s Construction’s request and subsequent claim, concluding there was insufficient proof of a differing site condition under the relevant Federal Acquisition Regulation clause. Hamp’s Construction appealed to the Armed Services Board of Contract Appeals. After a hearing, the Board found that although Hamp’s Construction had faced unforeseen difficulties and increased costs, the contract documents did not provide representations or indications about the subsurface conditions of the southwest bank. The Board emphasized the absence of boring logs or explicit information for the area where the failures occurred and denied the appeal.The United States Court of Appeals for the Federal Circuit reviewed the Board’s legal conclusions de novo and factual findings for substantial evidence. The court held that, for a Type I differing site condition claim, the contract must affirmatively indicate conditions at the disputed site. The court determined that Hamp’s Construction could not reasonably rely on contract documents as indications for the southwest bank. The court affirmed the Board’s decision, holding that Hamp’s Construction failed to establish a threshold element of a Type I differing site condition claim. View "HAMP'S CONSTRUCTION LLC v. SECRETARY OF THE ARMY" on Justia Law

The case concerns the United States Postal Service’s contract for canine explosive-detection services. The USPS awarded the contract to K2 Solutions, Inc. (“K2”), while Global K9 Protection Group (“Global K9”) and Michael Stapleton Associates, Ltd. were unsuccessful bidders. Global K9 filed a bid protest in the United States Court of Federal Claims, initially challenging the evaluation of its bid but not directly alleging misconduct by K2. K2 received notice of the original complaint and chose not to intervene, believing the government would adequately defend its interests.The Claims Court case evolved when Global K9 filed an amended complaint under seal, adding new allegations that K2 had materially misrepresented its capabilities during the bidding process. Contrary to court rules and the protective order, Global K9 did not file a redacted public version of the amended complaint, and K2 did not receive notice of these new allegations. The Claims Court ultimately found that K2 had made a material misrepresentation and issued an injunction disqualifying K2 from contract performance. After learning of the injunction, K2 moved to intervene, but by then, the USPS had terminated K2’s contract for default, relying in part on the court’s findings.K2 appealed the denial of its motion to intervene. The United States Court of Appeals for the Federal Circuit held the case was not moot because K2’s interests in contesting the misrepresentation finding remained live in separate proceedings. However, the appellate court affirmed the Claims Court’s decision that K2’s motion to intervene was untimely, as K2 could have sought intervention upon learning of the amended complaint’s existence. The Federal Circuit also found that K2 was not a necessary party because it failed to act promptly to protect its interests. The judgment of the Claims Court was affirmed. View "GLOBAL K9 PROTECTION GROUP, LLC v. US " on Justia Law

A former Army specialist was seriously injured in a suicide bombing at a U.S. military base in Afghanistan. The attack was carried out by Ahmad Nayeb, a Taliban operative hired by Fluor Corporation, a military contractor, as part of a program encouraging the hiring of Afghan nationals. The Army’s investigation concluded that Fluor was primarily responsible due to negligent supervision and failure to enforce proper security procedures, including allowing Nayeb to check out tools used in the bombing and to move about the base unsupervised. The plaintiff sued Fluor in federal court in South Carolina, seeking damages under state law for negligent supervision, negligent entrustment, and negligent retention of Nayeb.The United States District Court for the District of South Carolina granted summary judgment to Fluor, holding that state-law tort claims were preempted under Fourth Circuit precedent whenever they arose out of combatant activities in a wartime setting. The United States Court of Appeals for the Fourth Circuit affirmed, adopting a broad “battlefield preemption” doctrine. It reasoned that the Federal Tort Claims Act’s (FTCA) combatant-activities exception, which preserves government immunity for claims arising out of military combatant activities, reflected an intent to bar all tort suits against contractors connected with those activities, regardless of whether the contractor followed or violated military instructions.The Supreme Court of the United States vacated the Fourth Circuit’s judgment and remanded the case. The Court held that the Fourth Circuit erred in finding the state-law tort claims preempted where the federal government neither ordered nor authorized the challenged conduct. The Supreme Court clarified that neither the Constitution, federal statutes, nor its precedents support such broad preemption. Preemption applies only if the contractor was following government directives or if there is a significant conflict between federal interests and state law, which was not the case here. View "Hencely v. Fluor Corp." on Justia Law