Justia Government Contracts Opinion Summaries

In an earlier order explained in this opinion the Supreme Court denied Motorola Solution, Inc.'s Rule 17 motion for stay pending review in this matter involving Utah Communications Authority's (UCA) efforts to hire a private contractor to implement a new statewide emergency public radio system, holding that UCA's motion for a stay was moot.Motorola requested the stay to stop UCA from entering into a contract with Harris Corporation until Motorola's appeal protesting UCA's decision to award that contract for the purpose of implementing the emergency radio system had been resolved. In response, UCA and Harris argued that the motion for a stay was moot because UCAs executive director had already entered into a contract with Harris. Motorola countered that a contract could not be formed until the UCA board had approved it. The Supreme Court denied the motion requesting a stay as moot, holding that the UCA executive director had authority to enter into contracts on UCA's behalf. View "Motorola Solutions, Inc. v. Utah Communications Authority" on Justia Law

The Army Corps of Engineers awarded Ikhana a contract to build a Pentagon facility by October 12, 2015. Ikhana procured required performance and payments bonds from GCNA, which required Ikhana to execute a general indemnity agreement, including a provision that assigned GCNA all rights under the contract if Ikhana defaulted or if GCNA made a payment on any bond. Each time Ikhana discovered a new worksite problem, it had to halt work until the Corps issued a unilateral contract change, causing significant delays and cost overruns. One modification required a power outage at the Pentagon, but the Corps never scheduled the outage. By mid-October 2015, construction stopped; Ikhana submitted claims seeking additional compensation and an extension of the deadline. Ikhana’s sub-contractors filed claims against GCNA’s bond. The Corps terminated Ikhana and made a claim on the bond. Ikhana appealed the termination and its claims to the Armed Services Board of Contract Appeals. GCNA and the Corps negotiated for GCNA to tender a completion contractor. GCNA invoked the indemnity agreement and entered into a settlement with the Corps then sought a declaratory judgment that the agreement authorized it to settle Ikhana’s dispute with the Corps and dismiss the Board appeal. The district court stayed GCNA’s action pending resolution of Ikhana’s Board appeal. The Federal Circuit affirmed the denial of GCNA’s motion to intervene and withdraw Ikhana’s Board appeal. GCNA lacked standing. A party seeking to supplant the plaintiff must be able to show that it could have initiated the complaint on its own. GCNA’s settlement agreement with the Corps, even if it constitutes a takeover agreement, does not entitle GCNA to assert claims that arose before the settlement. View "Guarantee Co. of North America USA v. Ikhana, LLC" on Justia Law

Charte (relator) filed a False Claims Act (FCA), 31 U.S.C. 3729–3733, "qui tam" suit alleging that defendants, including Wegeler, submitted false reimbursement claims to the Department of Education. Relators are entitled to part of the amount recovered. As required to allow the government to make an informed decision as to whether to intervene, Charte cooperated with the government. Her information led to Wegeler’s prosecution. Wegeler entered into a plea agreement and paid $1.5 million in restitution. The government declined to intervene in the FCA action. If the government elects to pursue an “alternate remedy,” the statute provides that the relator retains the same rights she would have had in the FCA action. Charte tried to intervene in the criminal proceeding to secure a share of the restitution. The Third Circuit affirmed the denial of the motion. A criminal proceeding does not constitute an “alternate remedy” to a civil qui tam action, entitling a relator to intervene and recover a share of the proceeds. Allowing intervention would be tantamount to an interest in participating as a co-prosecutor in a criminal case. Even considering only her alleged interest in some of the restitution, nothing in the FCA suggests that a relator may intervene in the government’s alternative-remedy proceeding to assert that interest. The text and legislative history regarding the provision indicate that the court overseeing the FCA suit determines whether and to what extent a relator is entitled to an award. View "United States v. Wegeler" on Justia Law

States may provide certain home-based services through Medicaid's Home and Community Based Waiver program, 42 U.S.C. 1396n(c). Illinois operates a waiver under which it contracts with non-profit organizations (ISCs) to provide case management services for adults with developmental disabilities receiving home- and community-based services as part of Medicaid. Illinois awarded 17 ISC contracts through a non-competitive, annual renewal process. The plaintiffs had received contracts for at least 25 years. In 2018, the state announced a new competitive bidding process to begin on July 1, 2019. The plaintiffs submitted bids but learned in January that their contracts would not be renewed. They sued under 42 U.S.C. 1983, alleging violations of Medicaid’s free-choice-of-provider provision, 42 U.S.C. 1396a(a)(23). On June 5, 2019, with new contracts to go into effect in less than 30 days, they sought a preliminary injunction. The district court denied their motion on June 25, reasoning that ISCs were not “qualified providers” under the statute. The plaintiffs appealed that same day. Four days later, they sought emergency injunctive relief pending appeal, which the Seventh Circuit denied. Months later, at oral argument, plaintiffs’ counsel acknowledged that vacating the new contracts would be too disruptive. The Seventh Circuit dismissed the appeal. With the plaintiffs no longer challenging the denial of their preliminary injunction, it is unnecessary to address the meaning of “qualified providers” or determine what kinds of services the plaintiffs provide. The passage of time has rendered the issue moot. View "Western Illinois Service Coordination v. Illinois Department of Human Services" on Justia Law

This dispute arose out of a project known as Phase III Levee Repairs at Rockefeller Wildlife Refuge located in Grand Chenier, Louisiana (“the Project”). In May 2017, the State, through the Division of Administration, Office of Facility Planning and Control (“State”) issued an advertisement for bids for the Project. Following the close of bidding, LeBlanc Marine, L.L.C. (“LeBlanc”) was the apparent low bidder on the Project, and Southern Delta Construction, L.L.C. (“Southern Delta”) was the apparent second low bidder. However, on September 20, 2017, the State informed LeBlanc that its bid was rejected because it failed to comply with Section 5.1.9 of the instructions to bidders. Specifically, the State claimed LeBlanc failed to submit written evidence of the authority of the person signing the bid as set forth in the instructions. The State thereafter determined Southern Delta was the lowest responsive bidder and awarded the contract for the Project to Southern Delta. LeBlanc filed a petition for injunctive and declaratory relief, seeking to enjoin the State from awarding the contract to Southern Delta, or alternatively, a declaration that any contract entered into by the State and Southern Delta was null and void. LeBlanc’s petition alleged that Southern Delta’s bid was also non-responsive because it violated Section 5.1.9 of the instructions to bidders by failing to include written evidence proving that the person who signed the bid had the authority to sign and submit the bid on Southern Delta’s behalf. In reasons for judgment, the district court found that the State was bound by the more restrictive requirements set forth in its instructions to bidders than what was provided in La. Rev. Stat. 38:2212(B)(5). The Louisiana Supreme Court found the district court erred in granting declaratory and injunctive relief in favor of LeBlanc based on a finding the State was bound by the more restrictive requirements set forth in its instructions to bidders. The Court therefore reversed the judgment of court of appeal which affirmed the judgment of the district court. View "LeBlanc Marine, L.L.C. vs. Louisiana, Division of Administration, Office of Facility Planning and Control" on Justia Law

In 2005, Raytheon submitted its 2004 incurred cost rate proposal for a Cost-Plus-Fixed-Fee contract for engineering services associated with the Patriot Weapons system. Raytheon’s Corporate Controller certified that all included costs "are allowable in accordance with the cost principles of the [FAR] and its supplements applicable to the contracts to which the final indirect cost rates apply; and (2) This proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR." The Defense Contract Audit Agency reviewed the proposal and concluded that it contained expressly unallowable costs. In 2011 a Corporate Administrative Contracting Officer of the Defense Contract Management Agency (DCMA) issued a final decision determining that Raytheon’s proposal included, among other expressly unallowable costs, over $220,000 of expressly unallowable lobbying salary costs. The contracting officer demanded that Raytheon repay the government for these reimbursed expressly unallowable costs, and assessed penalties and interest under Federal Acquisitions Regulation (FAR) 42.709-1(a)(1). Although Raytheon admitted that salary costs associated with lobbying are unallowable and that it committed cost errors or omissions in its calculations, Raytheon argued that salaries were not specifically referenced in Subsection 22 and, accordingly, were not “expressly unallowable.” The Armed Services Board of Contract Appeals and Federal Circuit affirmed, finding that the lobbying costs are subject to penalty because salary costs for lobbying activities are expressly unallowable under FAR 31.205-22. View "Raytheon Co. v. Secretary of Defense" on Justia Law

The Supreme Court affirmed the order of the district court directing the City of Saint Paul to put a referendum question regarding the City's ordinance that established organized waste collection in the City on the ballot for the next municipal election, concluding that holding a referendum on the issue will not unconstitutionally impair the City's contract with haulers that provide organized waste collection.The City refused to put the referendum question on the ballot, concluding that the referendum was preempted by state statutes that govern solid waste collection, conflicts with state policy, and would by an unconstitutional interference with the City's contract with the haulers. Respondents with filed a petition challenging the City's refusal. The district court granted the petition. The Supreme Court affirmed, holding that the City has not demonstrated that a substantial impairment of its contractual obligation will occur with the referendum vote, and therefore, the Court need not address the other two factors. View "Clark v. City of Saint Paul" on Justia Law

Ron Koenig was the superintendent and principal of the Warner Unified School District (the district). He and the district entered an agreement to terminate his employment one year before his employment agreement was due to expire. Under the termination agreement, Koenig agreed to release any potential claims against the district in exchange for a lump sum payment equivalent to the amount due during the balance of the term of his employment agreement, consistent with Government Code section 53260. The district also agreed to continue to pay health benefits for Koenig and his spouse "until Koenig reaches age 65 or until Medicare or similar government provided insurance coverage takes effect, whichever occurs first." The district stopped paying Koenig's health benefits 22 months later. Koenig then sued to rescind the termination agreement and sought declaratory relief he was entitled to continued benefits pursuant to his underlying employment agreement, which provided that Koenig and his spouse would continue receiving health benefits, even after the term of the agreement expired. After a bench trial, the trial court determined the district's promise in the termination agreement to pay health benefits until Koenig turned 65 violated section 53261, was unenforceable, and rendered the termination agreement void for lack of consideration. Both Koenig and the district appealed the judgment entered after trial. Koenig contended the trial court properly determined the termination agreement was void but should have concluded he was entitled to continued health benefits until the age of 65. The district contended the trial court erred when it concluded the termination agreement was void; rather, the trial court should have severed the termination agreement's unenforceable promise to continue paying benefits, enforced the remainder of the termination agreement, and required Koenig to pay restitution for benefits paid beyond the term of the original agreement. The Court of Appeal concluded the termination agreement's unlawful promise to pay health benefits in excess of the statutory maximum should have been severed to comply with sections 53260 and 53261, Koenig did not establish he was entitled to rescind the termination agreement, and the district was entitled to restitution for health benefits paid beyond the statutory maximum. Judgment was reversed and the trial court directed to enter judgment in favor of the district for $16,607. View "Koenig v. Warner Unified School District" on Justia Law

In 1983-1984, the Farmers Home Administration issued apartment owners (Appellants) 50-year loans to provide low-income housing under 42 U.S.C. 1485. A promissory note provided that prepayments “may be made at any time at the option of the Borrower.” The mortgage stated that the loan must be used in compliance with the statute and that Appellants must use the property for low-income housing for 20 years before they could prepay and exit the program. The documents were contemporaneously executed and cited each other. The Emergency Low Income Housing Preservation Act of 1987 and Housing and Community Development Act of 1992 provided that borrowers could no longer prepay after the 20-year period but must notify FmHA’s successor, which was to make “reasonable efforts" to extend the low-income use,” 42 U.S.C. 1472(c)(4)(A). If the agreement is not extended, the borrower must attempt to sell the property at fair market value to a nonprofit organization or a public agency. Appellants rejected incentive offers and, in 2009-2010, unsuccessfully marketed their properties for the required period. Facing foreclosure and low occupancy due to high unemployment, Appellants submitted deeds in lieu of foreclosure, then filed suit. The Federal Circuit reinstated certain claims. In transferring deeds to the government, Appellants did not assign away their accrued claims for breach of the prepayment right. The Claims Court properly dismissed a contract-based Fifth Amendment “takings” claim. In entering contracts, the government acts in its commercial capacity and remedies arise from the contracts themselves, rather than from constitutional protections. Appellants can succeed under a theory premised on their property interests in the land and buildings before entering the contracts. View "Callaway Manor Apartments v. United States" on Justia Law

S. Mark Booth petitioned the Alabama Supreme Court for a writ of mandamus directing the the trial court to dismiss an action filed against him by the City of Guin. In 2008, Booth and the City entered into a contract entitled "Commercial Development Agreement." The agreement provided that the City would sell Booth approximately 40 acres of real property located in Marion County at a price of $5,000 per acre. Booth, in turn, promised to subdivide the property into lots for commercial development. The agreement included a provision granting the City the right to repurchase the property should Booth fail to develop the land within three years following the execution of the agreement. In 2017, the City sued Booth, asserting a claim for specific performance pursuant to the agreement's repurchase option. The City alleged Booth failed to construct at least one commercial facility on the property within three years from the effective date of the agreement. The City alleged that it had "timely tendered the purchase price to [Booth] and requested a conveyance of the real property described in the contract but [that Booth] refused to accept the tender or to make the conveyance." Booth moved to dismiss, arguing that, although he had fulfilled his obligations under the agreement by developing a hotel on the property, the City's complaint seeking to specifically enforce the repurchase of the property pursuant to its option to repurchase in Section 4.4(b) of the agreement was time-barred by the two-year statutory limitations period for such options in 35-4-76(a), Ala. Code 1975. After review, the Supreme Court granted Booth's petition as to the City's claims for specific performance, and its claims alleging fraud and breach of contact; the trial court was ordered to dismiss those claims. The Court denied Booth's petition relating to the City's rescission claim. View "Ex parte S. Mark Booth." on Justia Law