Justia Government Contracts Opinion Summaries

Before the invasion of Iraq, KBR entered into contracts with the U.S. Army for the provision of dining facility (DFAC) services in Iraq. The contract at issue was for DFAC services at Camp Anaconda, one of the largest U.S. bases in Iraq. KBR subcontracted with Tamimi to provide services in Anaconda. As troop levels increased, the Defense Contract Auditing Agency (DCAA) engaged in audits of DFAC subcontracts. With respect to Anaconda, the DCAA concluded that KBR had charged $41.1 million in unreasonable costs for services provided from July 2004 to December 2004 and declined to pay KBR that amount. KBR sued and the government brought counterclaims, including a claim under the Anti-Kickback Act. The Court of Federal Claims held that KBR was entitled to $11,460,940.31 in reasonable costs and dismissed the majority of the government’s counterclaims, but awarded $38,000.00 on the AKA claim. The Federal Circuit affirmed the determination of cost reasonableness and dismissal of the government’s Fraud and False Claims Act claims and common-law fraud claim. The court remanded in part, holding that the Claims Court improperly calculated KBR’s base fee and erred in determining that the actions of KBR’s employees should not be imputed to KBR for purposes of the AKA. . View "Kellogg Brown & Root Servs, Inc. v. United States" on Justia Law

The Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6301, states that an executive agency must use: “a procurement contract . . . when . . . the principal purpose … is to acquire … property or services for the direct benefit or use” of the government and must adhere to the Competition in Contracting Act and the Federal Acquisition Regulation However, an “agency shall use a cooperative agreement . . . when . . . the principal purpose … is to transfer a thing of value … to carry out a public purpose of support or stimulation … instead of acquiring . . . property or service” and can avoid procurement laws. Under Section 8 of the Housing Act, HUD provides rental assistance, including entering Housing Assistance Program (HAP) contracts and paying subsidies directly to private landlords. A 1974 amendment gave HUD the option of entering an Annual Contributions Contract (ACC) with a Public Housing Agency (PHA), which would enter into HAP contracts with owners and pay subsidies with HUD funds. In 1983, HUD’s authority was amended. HUD could administer existing HAP contracts, and enter into new HAP contracts for existing Section 8 dwellings by engaging a PHA if possible, 42 U.S.C. 1437f(b)(1). Later, HUD began outsourcing services and initiated a competition to award a performance-based ACC to a PHA in each state, with the PHA to assume “all contractual rights and responsibilities of HUD.” After making an award, HUD chose to re-compete, seeking greater savings, expressly referring to “cooperative agreements,” outside the scope of procurement law. The Government Accountability Office agreed with protestors that the awards were procurement contracts. HUD disregarded that recommendation. The Claims Court denied a request to set aside the award. The Federal Circuit reversed, finding that the awards are procurement contracts, not cooperative agreements.View "CMS Contract Mgmt. Servs. v. United States" on Justia Law

Biggers had been employed by the Navy for 29 years and in 2007 was Security Manager for the Naval Facilities Engineering Service Center. The position required him to maintain a top secret security clearance. In 2008, a duty officer found that an outer vault door of the Secret Internet Protocol Router Network room was left open. Biggers notified the Commanding Officer of the potential violation. After an investigation, the Command Evaluator recommended that all security personnel (including Biggers) have their access to classified material suspended because “the investigation revealed numerous systemic problems, violations and deficiencies.” Biggers’ security clearance was suspended pending a final determination by the Department of Navy Central Adjudication Facility (DONCAF) pursuant to 5 U.S.C. 7513. Ultimately, DONCAF concluded that the information provided by Biggers and the Center “sufficiently explained, mitigated, or provided extenuating circumstances,” and Biggers was found eligible for a Top Secret clearance and assignment to a sensitive position and returned to duty status.. His suspension had lasted nine months. The Navy did not provide back pay or treat him as employed for calculation of retirement benefits. Biggers alleged that the suspension was motivated by retaliatory animus arising from his participation in an EEOC proceeding. An AJ determined that the Merit Systems Protection Board may not review the merits of a security clearance revocation or suspension. The Federal Circuit affirmed, holding that Biggers was not entitled to back pay. View "Biggers v. Dep't of the Navy" on Justia Law

Plaintiffs are or were air-traffic-control specialists or traffic-management coordinators with the Federal Aviation Administration and alleged that the FAA’s policies governing how to compensate them when they worked overtime did not comply with the time-and-a-half- payment requirement of the Fair Labor Standards Act 29 U.S.C. 207. They sought damages under 29 U.S.C. 216(b) and invoked jurisdiction under the Tucker Act, 28 U.S.C.1491. The Claims Court ruled in their favor, holding that the agency’s personnel policies are contrary to the FLSA and are not authorized by any other provision of law. The Federal Circuit vacated, holding that the FAA has such authority under the federal personnel laws, 5 U.S.C. 5543 and 6120-6133. The court remanded for determination of whether the challenged FAA policies are fully, or only partly, within the authority of those title 5 exemptions from the FLSA. View "Abbey v. United States" 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

DeLeon and Williams were separated from their jobs as cooks at a facility at Fort Riley installation, for allegedly removing government-owned food from the facility without authorization. The facility was a non-appropriated fund instrumentality (NAFI), and DeLeon and Williams were paid with non-appropriated funds. After denial grievances, filed under the collective bargaining agreement with their union, an arbitrator upheld the charges and removal penalties. The Federal Circuit dismissed for lack of jurisdiction, citing 5 U.S.C. 2105(c), which excludes NAFI employees from appealing adverse actions to the Merit Systems Protection Board As NAFI employees, DeLeon and Williams had no route available other than the grievance process; 5 U.S.C. 7121 (f) does not establish jurisdiction. View "Deleon v. Dep't of the Army" on Justia Law

Plaintiff brought a claim against the State Procurement Policy Board challenging the validity of Haw. Admin. R. 3-122-66, claiming it was contrary to the “minimum of three” persons requirement in Haw. Rev. Stat. 103D-304(g) and should be struck down. Plaintiff also sought a declaration that every government contract issued under the invalid authority of Rule 3-122-66 was void ab initio. The circuit court concluded that Plaintiff had standing to bring the action and that Rule 3-122-66 was invalid, but the court declined invalidate all contracts issued under Rule 3-122-66. Both parties appealed. The Supreme Court affirmed, holding (1) Petitioner had standing to bring his claim based on his status as an “interested person” and in order to satisfy the “needs of justice”; (2) Rule 3-122-66 is invalid because manifestly exceeds the scope of authority given by the legislature to the Board; and (3) the circuit court did not err in refusing to rule that every government contract issued under Rule 3-122-66 was void ab initio. View "Asato v. State Procurement Policy Bd." on Justia Law

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

Reimbursement providers for inpatient services rendered to Medicare beneficiaries is adjusted upward for hospitals that serve disproportionate numbers of patients who are eligible for Supplemental Security Income. The Centers for Medicare & Medicaid Services annually submit the SSI fraction for eligible hospitals to a “fiscal intermediary,” a Health and Human Services contractor, which computes the reimbursement amount and sends the hospitals notice. A provider may appeal to the Provider Reimbursement Review Board within 180 days, 42 U. S. C. 1395oo(a)(3). The PRRB may extend the period, for good cause, up to three years, 42 CFR 405.1841(b). A hospital timely appealed its SSI fraction calculations for 1993 through 1996. The PRRB found that errors in CMS’s methodology resulted in a systematic under-calculation. When the decision was made public, hospitals challenged their adjustments for 1987 through 1994. The PRRB held that it lacked jurisdiction, reasoning that it had no equitable powers save those granted by legislation or regulation. The district court dismissed the claims. The D. C. Circuit reversed. The Supreme Court reversed. While the 180-day limitation is not “jurisdictional” and does not preclude regulatory extension, the regulation is a permissible interpretation of 1395oo(a)(3). Applying deferential review, the Court noted the Secretary’s practical experience in superintending the huge program and the PRRB. Rejecting an argument for equitable tolling, the Court noted that for nearly 40 years the Secretary has prohibited extensions, except as provided by regulation, and Congress not amended the 180-day provision or the rule-making authority. The statutory scheme, which applies to sophisticated institutional providers, is not designed to be “unusually protective” of claimants. Giving intermediaries more time to discover over-payments than providers have to discover underpayments may be justified by the “administrative realities” of the system: a few dozen intermediaries issue tens of thousands of NPRs, while each provider can concentrate on its own NPR. View "Sebelius v. Auburn Reg'l Med. Ctr." on Justia Law

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. View "General Dynamics Corp. v. United States; The Boeing Co. v. United States" on Justia Law