Justia Government Contracts Opinion Summaries

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

In August 2021, following the withdrawal of U.S. military and diplomatic personnel from Afghanistan due to the Doha Agreement with the Taliban, the U.S. government vacated several leased properties in Kabul, comprising five residential villas owned by Abdul Mutakaber and two military vehicle storage lots owned by Hamidullah. These leases were executed between 2013 and 2020, during Afghanistan’s Ghani administration. After the Taliban seized control of Kabul, they occupied all the properties previously leased by the U.S., preventing the owners from regaining access. The U.S. government then sent notices to terminate the leases, invoking force majeure, and requested refunds of advance rental payments from both landlords.Both Mutakaber and Hamidullah filed certified claims with the State Department under the Contract Disputes Act, seeking unpaid rent, restoration of possession, or purchase of the properties. After the contracting officer denied their claims, they appealed to the United States Civilian Board of Contract Appeals. The Board denied their breach of contract claims, finding that the government did not properly terminate the leases under the force majeure clause but did validly terminate for convenience under the leases’ termination provisions. The Board also determined the government was not obligated to return physical possession of the properties, as the leases did not impose such a duty. The Board awarded judgments for unpaid rent and refunds based on pre-paid amounts: Mutakaber was found to owe the government $115,429.85, while Hamidullah was awarded $193,270.15.The United States Court of Appeals for the Federal Circuit reviewed the Board’s legal conclusions de novo. The court held that the leases did not expressly or impliedly obligate the government to restore physical possession of the properties to the landlords upon termination, nor did Afghan law require such action under the circumstances. The court affirmed the Board’s judgments. View "Mutakaber v. Secretary of State" on Justia Law

A manufacturer of aircraft engines contracted with both the federal government and commercial clients. The contracts at issue were cost-plus agreements, requiring the government to reimburse the manufacturer for a share of overhead costs, calculated under federal Cost Accounting Standards (CAS), specifically CAS 418. The manufacturer used unique “collaboration agreements” with suppliers, involving payments tied to program revenues rather than direct part costs. A central dispute arose over whether certain costs, known as “Drag”—representing amounts paid by collaborators to compensate the manufacturer for shared expenses—should be included in the pool of overhead costs to be allocated, and over how to measure the material costs of parts for allocation purposes.After protracted disagreements and administrative decisions dating back to the 1990s, a contracting officer in 2013 determined that the manufacturer’s accounting violated CAS 418 and that Drag amounts should be excluded from the overhead pool. The manufacturer appealed to the Armed Services Board of Contract Appeals. The Board held in part for each side: it found the Drag agreement between the parties valid, so Drag need not be excluded, but rejected the manufacturer’s method for calculating material costs, settling on a “net revenue share” approach. The Board remanded to the parties to negotiate quantum (the amount owed), retaining jurisdiction if they failed to agree.The United States Court of Appeals for the Federal Circuit reviewed the case. It held that it lacked jurisdiction to review the Board’s decision on the material cost allocation base (CAS 418 Claim) because no final determination of quantum had been made. However, the court found the Board’s decision on the Drag Claim was final and reviewable. The Federal Circuit held that the Drag agreement was unenforceable against the government because it did not comply with required federal regulations for advance agreements, and therefore reversed the Board’s ruling on that point. The case was remanded for further proceedings. View "SECRETARY OF DEFENSE v. PRATT & WHITNEY" on Justia Law

The Department of Veterans Affairs (VA) issued a request for quotes for leasing a cranial surgical navigation system. Beacon Point Associates LLC submitted a quote, which included a payment schedule and terms stating the government must exercise all renewal options if it obtained sufficient funds. The VA awarded the contract to Beacon Point, which included the same payment schedule but did not explicitly incorporate the terms of Beacon Point’s quote.The Civilian Board of Contract Appeals dismissed Beacon Point’s appeal for failure to state a claim, determining that the contract did not incorporate the terms of Beacon Point’s quote. Beacon Point then appealed to the United States Court of Appeals for the Federal Circuit.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the Board’s decision. The court held that the contract did not incorporate Beacon Point’s quote by reference. The court noted that the contract’s reference to the quote in block 29 did not clearly communicate an intent to incorporate the quote’s terms into the contract. The court emphasized that incorporation by reference requires clear and express language, which was absent in this case. Consequently, the VA retained complete discretion to exercise the option years as per the incorporated Federal Acquisition Regulation (FAR) clauses, and Beacon Point could not rely on the terms of its quote as binding obligations on the VA. The court affirmed the Board’s dismissal of Beacon Point’s appeal. View "Beacon Point Associates LLC v. Department of Veterans Affairs" on Justia Law

Associated Energy Group, LLC (AEG) initiated multiple bid protests concerning contracts managed by the U.S. Department of Defense, Defense Logistics Agency Energy (DLA) to deliver fuel to a U.S. military base and nearby airfield in Djibouti. This appeal concerns whether AEG has standing to bring its second bid protest in the U.S. Court of Federal Claims, challenging a one-year sole-source bridge contract awarded to the incumbent contractor. AEG argued that officials within the Djiboutian Ministry of Energy and Natural Resources were preventing contract performance by threatening AEG’s contracted fuel delivery truck drivers and refusing to issue or renew petroleum activity licenses (PALs) to AEG and its contractors.The U.S. Court of Federal Claims dismissed AEG’s complaint for lack of subject matter jurisdiction, ruling that AEG lacked both Article III constitutional standing and Tucker Act statutory standing to challenge the sole-source bridge contract awarded to United Capital Investments Group, Inc. (UCIG). The Claims Court found that neither AEG nor its contractors possessed the required PAL, making AEG ineligible to bid on the contract.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the Claims Court’s dismissal. The court held that AEG lacked Article III standing because it could not bid on or compete for the bridge contract due to the lack of a PAL. Additionally, the court found that AEG lacked statutory standing under the Tucker Act, as it did not have a substantial chance of winning the contract even if the alleged errors by DLA were corrected. The court concluded that an exception to mootness applied to the case, but AEG’s inability to secure the required PAL meant it had no concrete stake in the lawsuit. View "ASSOCIATED ENERGY GROUP, LLC v. US " on Justia Law

FlightSafety International Inc. (FlightSafety) supplied the U.S. Air Force with commercial technical data under subcontracts awarded by CymSTAR, LLC. The data included restrictive markings, which the Air Force challenged. The Armed Services Board of Contract Appeals (Board) determined that the restrictive markings were improper under applicable statutes and regulations, leading FlightSafety to appeal.The Board found that the restrictive markings placed by FlightSafety on the technical data were improper. The Board concluded that the government had unrestricted rights to the data, as it was necessary for operation, maintenance, installation, or training (OMIT data). The Board also determined that the government could challenge the restrictive markings under the Validation Clause, which was not limited to challenges based on the funding source of the data.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the Board's decision. The court held that the government had unrestricted rights to the OMIT data and that the restrictive markings placed by FlightSafety contradicted these rights. The court also held that the government could challenge the restrictive markings under the Validation Clause, which was not limited to challenges based on the funding source of the data. The court found that the restrictive markings, including the terms "proprietary" and "confidential," as well as the requirement for written authorization, were impermissible as they contradicted the government's unrestricted rights. The court also found that the copyright notice in the markings was misleading and contradicted the government's rights. View "FLIGHTSAFETY INTERNATIONAL INC. v. AIR FORCE " on Justia Law

The case involves 27-35 Jackson Avenue LLC ("Jackson"), the owner of a New York City office building, which leased two floors to the United States government for the United States Citizenship and Immigration Services (USCIS) Field Office. The lease, starting in May 2009, included a clause allowing termination if the premises were rendered untenantable by fire or other casualty, as determined by the government. In January 2015, a burst sprinkler head caused extensive water damage, leading the government to vacate the premises and eventually terminate the lease, citing untenantability.The United States Court of Federal Claims granted summary judgment in favor of the government, finding that the government did not breach the lease agreement. The court held that the government’s determination of untenantability was within its discretion and was not made in bad faith. Jackson's claim that the government acted unreasonably and in bad faith was rejected, as the court found no evidence to support these allegations.The United States Court of Appeals for the Federal Circuit reviewed the case and affirmed the lower court's decision. The appellate court held that the government’s determination of untenantability was not arbitrary, capricious, or unreasonable. The court emphasized that the lease explicitly allowed the government to make this determination. Additionally, the court found that Jackson failed to provide clear and convincing evidence of bad faith or a breach of the implied covenant of good faith and fair dealing. The court concluded that the government acted within its contractual rights and upheld the summary judgment in favor of the government. View "27-35 JACKSON AVE LLC v. US " on Justia Law

In 2008, Lee began an appointment under the Federal Career Intern Program (FCIP) with U.S. Citizenship and Immigration Services, Department of Homeland Security. Before that appointment. Lee had completed almost six years of federal service under a series of term appointments. In 2010, the agency notified Lee that her FCIP appointment would expire on March 15, 2010, and that upon completion of the appointment, the agency would not convert it into a competitive service appointment. She completed her FCIP term and was terminated from federal service. A Merit Systems Protection Board Administrative Judge dismissed her appeal for lack of jurisdiction. The Board and Federal Circuit affirmed. Lee was not subject to an adverse action appealable to the Board; successful completion of her internship and satisfaction of other Office of Personnel Management requirements did not guarantee her the right to further federal employment when her internship expired. View "Lee v. Merit Systems Protection Board" on Justia Law

Shareholders lacked standing to challenge, as an illegal exaction, U.S. government’s acquisition of AIG stock as loan collateral. In 2008, during one of the worst financial crises of the last century, American International Group (AIG) was on the brink of bankruptcy and sought emergency financing. The Federal Reserve Bank of New York granted AIG an $85 billion loan, the largest such loan to date. The U.S. Government received a majority stake in AIG’s equity under the loan, which the Government eventually converted into common stock and sold. One of AIG’s largest shareholders, Starr, filed suit alleging that the Government’s acquisition of AIG equity and subsequent actions relating to a reverse stock split were unlawful. The Claims Court held that the Government’s acquisition of AIG equity constituted an illegal exaction in violation of the Federal Reserve Act, 12 U.S.C. 343, but declined to grant relief for either that or for Starr’s reverse-stock-split claims. The Federal Circuit vacated in part, holding that Starr and the shareholders it represented lack standing to pursue the equity acquisition claims directly, as those claims belong exclusively to AIG, rendering the merits of those claims moot. The court affirmed as to Starr’s reverse-stock-split claims. View "Starr International Co. v. United States" on Justia Law

Tightened security at base, preventing access by contractor's ex-felon employees, did not justify contract adjustment. Malmstrom Air Force Base in Great Falls, Montana, houses intercontinental ballistic missiles. Garco's contract to construct base housing incorporated Federal Acquisition Regulation 52.222-3, providing that contractors may employ ex-felons and requiring contractors to adhere to the base access policy. Malstrom’s access policy indicated that it would run the employees’ names through the National Criminal Information Center. “Unfavorable results will be scrutinized and eligibility will be determined on a case-by-case basis.” Garco’s subcontractor, JTC, experienced difficulty bringing its crew onto the base. JTC used workers from a local prison’s pre-release facility. JTC had not encountered access problems in its performance of other Malmstrom contracts over the preceding 20 years. Security had been tightened after an incident where a prerelease facility worker beat his manager. JTC requested an equitable adjustment of the contract, stating that its inability to use convict labor greatly reduced the size of the experienced labor pool so that it incurred $454,266.44 of additional expenses; JTC did not request a time extension. The Federal Circuit affirmed the Armed Services Board of Contract Appeals’ denial of the claim, rejecting a claim of constructive acceleration of the contract. The court concluded that there was no change to the base access policy. View "Garco Construction, Inc. v. Secretary of the Army" on Justia Law