Justia Government Contracts Opinion Summaries

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

Two builders’ associations, whose members are largely non-union construction contractors, challenged a federal procurement mandate issued by executive order in February 2022. The order, issued by the President, presumptively requires all contractors and subcontractors on federal construction projects valued at $35 million or more to enter into project labor agreements with unions. The order allows for three specific exceptions if a senior agency official provides a written explanation. The Federal Acquisition Regulatory Council issued regulations implementing the order, and the Office of Management and Budget provided guidance. The associations argued that the mandate unfairly deprived their members of contracting opportunities and brought a facial challenge under several statutory and constitutional grounds, seeking to enjoin the mandate’s enforcement.The United States District Court for the Middle District of Florida denied the associations’ motion for a preliminary injunction. It found that the associations were likely to succeed on their claim under the Competition in Contracting Act, since the government was not meaningfully applying the order’s exceptions, but concluded that the associations would not suffer irreparable harm because they could challenge individual procurements in the United States Court of Federal Claims. The district court did not consider irreparable harm as to the associations’ other claims.On interlocutory appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the denial of the preliminary injunction, although for different reasons. The Eleventh Circuit held that the associations were unlikely to succeed on the merits of their facial challenge under the Competition in Contracting Act, the Federal Property and Administrative Services Act, the First Amendment, the Administrative Procedure Act, the Office of Federal Procurement Policy Act, and the National Labor Relations Act. The court emphasized that the existence of written exceptions in the executive order precluded a facial invalidity finding, and that the government acted within its statutory and proprietary authority. The court affirmed the district court’s order. View "Associated Builders and Contractors Florida First Coast Chapter v. General Services Administration" on Justia Law

During the Second World War, Chevron’s corporate predecessor operated oil fields in Plaquemines Parish, Louisiana, producing crude oil that was refined into aviation gasoline (avgas) for the United States military under federal contracts. Decades later, following the enactment of Louisiana’s State and Local Coastal Resources Management Act of 1978, which imposed permit requirements on certain uses of the coastal zone but exempted uses lawfully commenced before 1980, Plaquemines Parish and other parishes brought suit in state court. They alleged that Chevron and other oil companies had failed to obtain required permits and that some pre-1980 activities, including those during the war, were illegally commenced and not exempt.The parish’s expert report specifically challenged Chevron’s wartime crude-oil production methods, including its use of vertical drilling, canals, and earthen pits, as harmful to the environment and not in compliance with the Act. Chevron sought removal to federal court under the federal officer removal statute, 28 U.S.C. §1442(a)(1), arguing that the suit was “for or relating to” acts under color of its duties as a federal contractor refining avgas. The United States District Court granted the parish’s motion to remand to state court. The United States Court of Appeals for the Fifth Circuit affirmed, reasoning that although Chevron acted under a federal officer as a military contractor, the suit did not “relate to” those acts because the federal refining contract did not govern how Chevron obtained or produced crude oil.The Supreme Court of the United States held that Chevron plausibly alleged a close, not tenuous or remote, relationship between the challenged crude-oil production and its federal avgas refining duties. The Court concluded that the suit satisfied the “relating to” requirement for removal under §1442(a)(1), vacated the Fifth Circuit’s judgment, and remanded the case for further proceedings. View "Chevron USA Inc. v. Plaquemines Parish" on Justia Law

A company that had previously operated a federal warehouse under contract with the government challenged the government’s decision to override an automatic statutory stay that halted performance of a newly awarded contract to a competitor. After the incumbent’s contract expired, the government solicited new bids and awarded the contract to another company. The incumbent protested this decision to the Government Accountability Office, which triggered an automatic stay under the Competition in Contracting Act (CICA) that prevented the new contractor from beginning performance. A few weeks into the stay period, however, the government determined that urgent and compelling circumstances warranted overriding the stay, and it allowed the new contractor to begin work.The incumbent then filed suit in the United States Court of Federal Claims, contending that the government’s override was arbitrary and capricious in violation of the Administrative Procedure Act. The Court of Federal Claims ruled in favor of the incumbent, issuing a declaratory judgment that the override was arbitrary and capricious. The court found that in the context of a CICA stay, the protestor was not required to prove the traditional four equitable factors for injunctive relief, since Congress had provided for an automatic stay mechanism.On appeal to the United States Court of Appeals for the Federal Circuit, the government argued that the case was moot after the override was withdrawn, but the Federal Circuit found the dispute to be capable of repetition yet evading review. On the merits, the Federal Circuit affirmed the Court of Federal Claims, holding that a protestor seeking to set aside a CICA stay override need only show that the agency’s action was arbitrary and capricious, and is not required to satisfy the four-factor test for equitable relief. The judgment was affirmed and costs were awarded to the protestor. View "LIFE SCIENCE LOGISTICS, LLC v. US " on Justia Law

An employee of a major defense contractor, serving in a senior internal audit role, claimed to have discovered fraudulent activity involving government contracts for military aircraft. The contractor, which assembles aircraft using parts supplied by numerous subcontractors, is subject to detailed regulatory requirements intended to ensure fair pricing, including the Truth in Negotiations Act (TINA), the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement (DFARS). The plaintiff alleged that the contractor systematically ignored and concealed fraudulent inflation of cost and pricing data by its subcontractors, resulting in overbilling the government.The plaintiff brought a qui tam action under the False Claims Act (FCA), which allows private individuals to sue on behalf of the government. Previously, another relator had filed a separate FCA action against the same contractor, alleging a different fraudulent scheme: obtaining parts in bulk at a discount but charging the government full price. The United States District Court for the Northern District of Texas dismissed the plaintiff’s suit for lack of subject matter jurisdiction, ruling that the FCA’s “first-to-file” bar applied because the earlier action covered the same essential elements of fraud.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision. The appellate court found that the two complaints alleged distinct fraudulent schemes: one involving bulk pricing manipulation, and the other involving the submission of inflated subcontractor cost data. The Fifth Circuit held that the first-to-file bar under the FCA did not apply because the plaintiff’s complaint was based on a different mechanism of fraud, not merely additional details or locations of the same scheme. The court reversed the district court’s dismissal and remanded the case for further proceedings. View "Ferguson v. Lockheed Martin" on Justia Law

A company operating a private detention facility in Colorado under contract with U.S. Immigration and Customs Enforcement was sued in a class action by a former detainee. The lawsuit challenged two of the company’s work policies for detainees: a sanitation policy that required unpaid cleaning under threat of punishment, and a voluntary work program offering minimal pay. Plaintiffs alleged that the sanitation policy violated federal anti-forced-labor laws and that the voluntary work program constituted unjust enrichment under Colorado law.After discovery, the United States District Court for the District of Colorado considered the company’s argument that, under the Supreme Court’s decision in Yearsley v. W. A. Ross Construction Co., it could not be held liable for conduct that the government had lawfully “authorized and directed.” The District Court concluded that the government contract did not instruct the company to adopt the specific work policies at issue and that the company had developed those policies on its own. Therefore, the court held that the Yearsley doctrine did not shield the company from liability and allowed the case to proceed to trial.The company appealed immediately, but the United States Court of Appeals for the Tenth Circuit dismissed the appeal for lack of jurisdiction, holding that a denial of Yearsley protection is not subject to interlocutory appeal under Cohen v. Beneficial Industrial Loan Corp.The Supreme Court of the United States affirmed the Tenth Circuit’s decision, holding that Yearsley provides a merits defense, not an immunity from suit. Therefore, a pretrial order denying Yearsley protection cannot be immediately appealed; any review must wait until after final judgment. The Court remanded the case for further proceedings. View "Geo Group, Inc. v. Menocal" on Justia Law

The case centers on a competitive bidding process conducted by the Maine Department of Health and Human Services (DHHS) for a contract to provide medical nonemergency transportation (NET) brokerage services in one of the state’s transit regions. Waldo Community Action Partners (Waldo CAP), the incumbent provider in Region 5 since 2014, submitted a proposal in response to the Request for Proposals (RFP). The RFP required bidders to detail their qualifications and provide three examples of relevant projects. Waldo CAP only completed details for one project, leaving the remaining two project sections blank except for the notation “NA.” After scoring, Waldo CAP did not receive the highest overall score; ModivCare Solutions, LLC, a vendor with extensive experience in other regions, was awarded the contract.Waldo CAP appealed the contract award to the Department of Administrative and Financial Services (DAFS) appeal committee, arguing that the process violated procurement laws and that the decision was arbitrary and capricious. The appeal committee affirmed DHHS’s decision, finding the point deduction for incomplete information justified and not arbitrary. Waldo CAP then sought judicial review in the Maine Superior Court, which also affirmed the committee’s decision.The Supreme Judicial Court of Maine reviewed the case, applying a deferential standard to the agency’s factual findings and statutory interpretations. The Court held that the “best-value bidder” under Maine law is determined strictly by the criteria and requirements set forth in the RFP, and that the agency acted within its discretion in scoring and did not act arbitrarily or capriciously. The Court affirmed the lower court’s judgment, upholding the award to ModivCare and lifting the stay on the contract award. View "Waldo Community Action Partners v. Department of Administrative and Financial Services" on Justia Law

The United States Department of Commerce issued a request for proposals seeking enterprise-wide information technology services. After evaluating numerous proposals, the agency announced fifteen presumptive contract awardees. CAN Softtech, Inc. (CSI) and other unsuccessful offerors challenged the awards, alleging flaws in the evaluation process. The agency responded by reevaluating the proposals multiple times, making adjustments to the technical evaluation team, and ultimately reissuing awards to the same fifteen companies. Each time, CSI and others filed new or amended bid protests, contending that the agency’s corrective actions and reevaluations were improper.The United States Court of Federal Claims initially found the agency’s evaluation of CSI’s proposal arbitrary and capricious and enjoined performance of the contracts pending reevaluation. After further corrective action by the agency, including terminating awards and issuing new evaluations, the trial court determined that the agency’s final evaluation and contract awards were rational and supported by the record. The court considered the agency’s process for reevaluation and corrective action to have satisfied procedural requirements, and rejected CSI’s argument that the agency needed to seek voluntary remand before taking corrective action.The United States Court of Appeals for the Federal Circuit reviewed the trial court’s judgment de novo. The court held that administrative agencies possess inherent authority to terminate contract awards and take unilateral corrective action in response to bid protests, so long as they act within statutory and procedural bounds and avoid arbitrary or capricious conduct. The court also determined that the agency’s actions in this case did not violate the Administrative Procedure Act and were not arbitrary, capricious, or an abuse of discretion. The Federal Circuit affirmed the trial court’s denial of CSI’s bid protest. View "SYNEREN TECHNOLOGIES CORP. v. US " on Justia Law

Nicole Schuster, a mechanical engineer at the Naval Foundry and Propeller Center, led two Navy procurement projects for large machines known as vertical turning centers (VTCs) in 2017 and 2019. In 2017, she favored Company 1, which won the SU22 contract, while Company 2’s bid was rejected as technically unacceptable. In 2019, Schuster again favored Company 1 for the SU25 contract and, after learning Company 2 had bid, she disclosed Company 2’s confidential bid information from the earlier SU22 procurement to an employee of Company 1. This information included cost data and proprietary manufacturing details. Company 1 subsequently won the SU25 contract, with Company 2’s bid deemed too expensive.Schuster was charged in the United States District Court for the Eastern District of Pennsylvania with violating the Procurement Integrity Act, specifically 41 U.S.C. §§ 2102(a) and 2105(a), which prohibit disclosure of contractor bid or proposal information before the award of the procurement to which the information relates. Schuster pled guilty based on a plea agreement, which included a factual basis describing the machines as “virtually identical” but did not detail whether the information she disclosed was the same in substance as that submitted for the pending SU25 procurement. The District Court accepted her guilty plea and sentenced her to one year and one day in prison.The United States Court of Appeals for the Third Circuit reviewed the case, applying plain error review to Schuster’s challenge to the sufficiency of the factual basis for her plea. The Court held that the District Court erred by accepting the guilty plea without sufficient facts to establish that the disclosed information related to the pending procurement as required by statute. The Third Circuit vacated Schuster’s conviction and sentence and remanded the case for repleading, rather than entering judgment of acquittal. View "United States v. Schuster" on Justia Law

For many years, one company exclusively provided emergency medical services (EMS) in a California county. Seeking improvements, the county initiated a competitive bidding process, issuing a request for proposals (RFP) and identifying policy goals such as improved service, efficiency, and reinvestment. Two entities submitted proposals. After evaluation by a review committee, one received the highest cumulative score, while the other received higher scores from most individual evaluators. The county determined the scores were substantially equivalent and proceeded to negotiate with both parties, ultimately awarding the contract to the bidder that did not have the highest cumulative score.The company that lost the contract protested the decision, arguing the county was required to negotiate only with the highest-scoring proposer, as set forth in the RFP. After an unsuccessful protest, the losing bidder first sued in federal court, where its federal antitrust claims were dismissed under the Parker immunity doctrine, and the district court declined to address state law claims. The company then filed a new action in San Bernardino County Superior Court, seeking a writ of mandate and a preliminary injunction. The superior court found the county’s selection process was ministerial and that the RFP required negotiations only with the highest-scoring proposer. The court granted a preliminary injunction, halting the contract’s implementation.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that neither the governing statute (the EMS Act) nor the RFP imposed a ministerial duty on the county to negotiate exclusively with the highest-scoring proposer. The court further concluded the county acted within its discretionary authority and did not abuse its discretion by considering both proposals. The appellate court reversed the preliminary injunction and remanded the case to the superior court, directing it to deny the motion for a preliminary injunction and reconsider the bond amount. View "American Medical Response of Inland Empire v. County of San Bernardino" on Justia Law