Justia Government Contracts Opinion Summaries

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

In connection with construction of a pipeline to ship natural gas from Wyoming to Eastern Ohio, Rockies Express and Minerals Management Service (MMS), within the Department of the Interior, entered into contracts containing Royalty-in-Kind (RIK) provisions. Under the RIK program, the government receives its royalty for mineral resources extracted under federal leases “in kind,” i.e., in natural gas, rather than in cash, 30 U.S.C. 192; 42 U.S.C. 15902(b). In exchange, the government makes monthly payments to ensure that a certain quantity of the mineral resources is made available for its purposes. The government then enters into processing and transportation contracts to sell the mineral royalties, often at a substantial profit over royalties received in cash. The Civilian Board of Contract Appeals determined that MMS had materially breached the contract, but that Rockies Express was only entitled to damages that had accrued before the Secretary of the Interior announced a decision to phase-out RIK contracts. The Federal Circuit affirmed that MMS materially breached the contract, but reversed the decision to limit damages. Rockies Express is entitled to compensatory damages to put it in as good a position as that in which it would have been put by full performance of the contract.View "Rockies Express Pipeline, LLC v. Salazar" 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

Plaintiff Victor Virgin Construction Corporation appealed a Superior Court remitting a jury award following an advisory jury finding of breach of contract and negligent misrepresentation by defendant New Hampshire Department of Transportation (DOT). DOT cross-appealed, asking that the award be further reduced. In 2008, Virgin bid on a DOT project to replace a stone box culvert located underneath Depot Road in Hollis. Virgin submitted the lowest bid and was awarded the contract. After completion of the project, DOT paid Virgin the sum agreed to in the contract with only a minor upward adjustment. Virgin sued DOT for both breach of contract and negligent misrepresentation. The trial court denied DOT's request to bifurcate the trial; subsequently the jury found in favor of Virgin. DOT then moved for a new trial or to set aside the jury's damages award. The trial court granted remittitur, but did no enter a finding of liability on the breach of contract claim, finding that the award could only be sustained on the negligent misrepresentation claim. Virgin then appealed, seeking the full amount of damages awarded by the jury. The Supreme Court found that Virgin's negligent misrepresentation claim for money damages was capped by statute, therefore it was not entitled to the full amount of damages originally awarded by the jury. That cap does not apply to breach of contract, however, and because the trial court did not include findings with regard to liability on the breach of contract claim, the case was remanded for further proceedings.View "Victor Virgin Construction Corp. v. New Hampshire Dep't of Transportation" 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

Crewzers was awarded blanket purchase agreements (BPAs) with the Forest Service to provide buses that transport fire crews to wildfires and other disaster areas in regional and national wilderness zones and to provide flame retardant tents to disaster areas. Both BPAs established dispatch priority lists within geographic zones. When an emergency arose, the Service would to submit an order for the highest-ranked (lowest-priced) resource available on the priority. BPAs are frameworks for future contracts and state that “If a Contractor cannot be reached or is not able to meet the time and date needed, the dispatcher may proceed with contacting the next resource on the dispatch priority list.” The Service has discretion to deviate from priority lists as needed and did not make any guarantee that it would actually place orders under the BPAs. The BPAs required Crewzers to accept orders only if “willing and able.” The Service terminated the Crewzers BPA for buses after Crewzers allegedly responded with unauthorized vehicles and attempted to bill at a higher-than-authorized rate and later terminated its BPA for tents after Crewzers allegedly provided tents that did not meet specifications or failed to deliver on time. Crewzers sought a declaratory judgment that it was entitled to damages or to reinstatement of the BPAs. The Claims Court dismissed. The Federal Circuit affirmed, finding that the BPAs were not binding contracts for purposes of invoking Tucker Act (28 U.S.C. 1491(a)) jurisdiction. View "Crewzers Fire Crew Transp., Inc. v. United States" on Justia Law