Justia Government Contracts Opinion Summaries

KBR, an Army contractor, subcontracted with KCPC/Morris to implement work release orders for construction of dining facilities and provision of food services in Iraq. KBR terminated the subcontract based on performance. KCPC/Morris disputed the termination and continued performance until transition to a new subcontractor in September 2003. In January 2005, the parties signed an agreement, converting the default termination into a termination for convenience. A $17,400,000 settlement was paid, but the parties disputed costs. In August 2006, KCPC/Morris submitted a certified claim, which KBR forwarded to the Army, stating that it would not certify validity and lacked supporting documentation. The Army responded in May 2007, that it was KBR’s responsibility to negotiate with its subcontractors, and refused to consider the submission. In October 2007, KBR “sponsored” the claim, followed by certification dated January 2008. In September 2010, KBR withdrew the claim. In August 2011, KCPC/Morris filed suit, which was withdrawn after the parties entered reached agreement dated February 2012. In May 2012, KBR filed a certified claim for the agreed amount. The contracting officer did not act, placing the claim in “deemed denied” status. The Board of Contract Appeals dismissed KBR’s appeal, holding that the limitations period had run before May 2012. The Federal Circuit reversed, holding that the KBR claim had not accrued, for limitation purposes, before May 2006. The Contract Disputes Act, 41 U.S.C. 7103(a)(4)(A), does not require the filing of protective claims related to subcontractors while those claims are being resolved between the prime and sub. View "Kellogg Brown & Root Servs., Inc. v. Murphy" on Justia Law

Lal was appointed as a distinguished consultant at the Centers for Disease Control, a component of the Department of Health and Human Services, in the excepted service under 42 U.S.C. 209(f), which provides that consultants “may be appointed without regard to the civil-service laws.” The agency understood this to mean that Lal was not subject to the statutory due process requirements of the civil-service laws under title 5 of the United States Code, and terminated her employment without providing notice of the termination or a right to respond, as would ordinarily be required by the civil-service laws. The Merit Systems Protection Board concluded that section 209(f) deprived it of jurisdiction. The Federal Circuit reversed. While section 209(f) placed Lal into the excepted service, it did not exempt her from the Civil Service Due Process Amendments of 1990, which provide appeal rights to certain excepted service employees, 5 U.S.C. 7511(a)(1)(C). View "Lal v. Merit Sys. Protection Bd." on Justia Law

Nguyen, a U.S. Patent and Trademark Office Supervisory Examiner, received a Notice of Proposed Reduction in Grade to Patent Examiner, alleging that she had violated rules prohibiting nepotism in attempting to prevent her son, a probationary examiner, from being fired. Nguyen received her yearly performance review, which reflected a reduced rating. Nguyen discussed with her supervisor, Banks, the possibility of resigning. Believing that Nguyen had resigned, Banks ordered that technicians collect Nguyen’s government-supplied laptop. Nguyen objected and sent an email to Banks, stating that she felt “forced . . . to resign.” Banks and another supervisor stopped by Nguyen’s office and assured her that “[a]s we stated multiple times today, the decision of whether to resign or stay is completely up to you.” Banks ordered that Nguyen’s access to computer supervisory functions be revoked, pending her grade reduction. Nguyen went to human resources to pick up retirement papers and sent Wallace emails offering to drop all appeal rights in exchange for a suspension instead of the grade reduction. Wallace was out of the office until the following Monday, one day after the reduction would be effective. Nguyen filed retirement papers that Friday, effective the next day, one day before her reduction would have gone into effect.. The Federal Circuit affirmed dismissal by the Merit Systems Protection Board. Nguyen failed to articulate a nonfrivolous argument that her retirement was involuntary. View "Nguyen v. Merit Sys. Protection Bd." on Justia Law

The Navy's Diego Garcia facility, a 10.5-square-acre Indian Ocean atoll, 1,800 miles east of Africa and 1,200 miles south of India, had no commercial or civilian infrastructure. In 2005, the Navy sought bids on a firm fixed-price contract for Diego Garcia support services, ranging from information technology to refuse collection. For contractor vehicles and equipment, “contractor-furnished fuel,” was to be provided by the Navy at the prevailing Department of Defense rate. DG21 submitted a bid and, for contractor-furnished fuel, arrived at “a significantly lower number of gallons than” reflected in the solicitation. DG21 indicated that if fuel rates varied from historical rates by 10% or more, it would request an equitable adjustment. The Navy clarified that the solicitation was fixed-price, “DG21 assumes the full risk of consumption and/or rate changes. Please price ... accordingly.” The Navy questioned the lack of an escalation clause. DG21 did not change its estimate or pricing, but removed the equitable adjustment reference. DG21’s $455,292,490 proposal was accepted. During the contract term, fuel prices rose dramatically, reaching a maximum of more than double the historical rate indicated in the solicitation. In 2011, DG21 requested an equitable adjustment, characterizing the fuel cost as a $1,171,475.90 contract “change” under FAR 52.243-4. The contracting officer and the Board of Contract Appeals rejected the request. The Federal Circuit affirmed. The cost increase was not a change to the contract triggering FAR 52.243-4; the contract allocated that risk to DG21. View "DG21, LLC v. Mabus" on Justia Law

Knight Systems, Inc., owned and operated by Buddy Knight, engaged primarily in the mortuary transport business until 2007. Knight Systems entered into an asset purchase agreement with Palmetto Mortuary Transport, Inc., a business owned by Donald and Ellen Lintal. Pursuant to the agreement, Knight Systems sold various tangible assets, goodwill, and customer accounts (including body removal service contracts with Richland County, Lexington County, and the University of South Carolina) to Palmetto in exchange for a purchase price of $590,000. The agreement also contained an exclusive sales provision that obligated Palmetto to purchase body bags at specified discounted prices from Knight Systems for ten years, and a non-compete clause. At issue in this case was a Richland County-issued request for proposal (RFP) seeking mortuary transport services from a provider for a period of five years. At that time, Palmetto still held the services contract with Richland County as a result of the Agreement. Palmetto timely submitted a response to the RFP. One day before responses to the RFP were due, Buddy accused Palmetto of breaching the agreement by buying infant body bags from other manufacturers in 2008. After this telephone conversation, Buddy consulted with his attorney and submitted a response to the RFP. After the RFP deadline passed, Buddy contacted an official at the Richland County Procurement Office, seeking a determination that Knight Systems be awarded the mortuary transport services contract because it was the only provider of odor-proof body bags required by the RFP. Although Palmetto asserted its response to the RFP contained the lowest price for services and had the highest total of points from the Richland County Procurement Office, Richland County awarded Knight Systems the mortuary transport services contract for a five-year term. Palmetto filed a complaint against Knight, asserting claims for breach of contract, breach of contract accompanied by a fraudulent act, and intentional interference with prospective contractual relations. A special referee ruled in favor of Palmetto, and Knight appealed. Knight argued the special referee erred in failing to find: (1) the geographic restriction in the parties' covenant not to compete was unreasonable and void; (2) the Covenant's territorial restriction was unsupported by independent and valuable consideration; (3) the Covenant was void as a matter of public policy; and (4) the Covenant became void after any breach by Palmetto. The Supreme Court found that the Covenant's 150-mile territorial restriction was unreasonable and unenforceable. Accordingly, the Court reversed and remanded for further proceedings. View "Palmetto Mortuary Transport v. Knight Systems, Inc." on Justia Law

In 2009 and 2010, the south wing of the Detroit Public Library was renovated. Defendant KEO & Associates, Inc. (KEO) was the principal contractor for this project. Defendant Westfield Insurance Company supplied KEO with a payment bond worth $1.3 million, as required by the public works bond act (PWBA). KEO was identified as the principal contractor and Westfield as the surety on the bond. KEO subcontracted with defendant Electrical Technology Systems, Inc. (ETS) to provide labor and materials for electrical work. The agreement between KEO and ETS included a pay-if-paid clause, obliging KEO to pay ETS only after KEO had been paid for the relevant portion of work performed. ETS in turn subcontracted with Wyandotte Electric Supply Company for materials and supplies, making Wyandotte a sub-subcontractor from KEO’s perspective. ETS and Wyandotte first formed a relationship in 2003, when they entered into an “open account” agreement that governed ETS’s purchases from Wyandotte. Over the course of the project, ETS paid Wyandotte only sporadically and the unpaid balance grew. Initially, Wyandotte supplied materials on credit and credited ETS’s payments to the oldest outstanding balance, but eventually Wyandotte began to ship materials only for cash on delivery. Wyandotte sent certified letters to KEO and Westfield asking for a copy of the payment bond related to the library renovation project. The letter, on Wyandotte’s letterhead, referred to the “Detroit Public Library South Wing with [ETS.]” According to Wyandotte, KEO provided a copy of the payment bond the next day. Wyandotte also sent KEO a 30-day “Notice of Furnishing” in accordance with MCL 129.207, explaining that it was one of ETS’s suppliers. Wyandotte also sent copies of the letter to Westfield, the library, and ETS. The issue this case presented for the Supreme Court's revie centered on whether actual notice was required for a sub-subcontractor to recover on a payment bond when that sub-subcontractor complied with the notice requirements set forth in MCL 129.207. Furthermore, this case raised the question of whether a PWBA claimant could recover a time-price differential and attorney fees that were provided for by the claimant’s contract with a subcontractor, but were unknown to the principal contractor holding the payment bond as well as the principal’s surety. The Supreme Court concluded that the PWBA contained no actual notice requirement for claimants that comply with the statute, that the trial court properly awarded a time-price differential and attorney fees on past-due invoices to Wyandotte, and that the trial court erred in awarding postjudgment interest under MCL 600.6013(7). Accordingly, the Court affirmed the Court of Appeals with regard to the first two issues and reversed with regard to the third. View "Wyandotte Electric Supply Co. v. Electrical Technology Systems, Inc." on Justia Law

This matter stemmed from a public works project for the construction of a gymnasium in Terrytown. JaRoy Construction Inc. served as the general contractor, and pursuant to statute, furnished a surety bond to Jefferson Parish. Ohio Casualty Insurance Company was the surety. JaRoy entered into a written subcontract with Pierce Foundations, Inc. to provide and install pilings for the project. Once finished, Pierce alleged JaRoy failed to pay certain funds due under the subcontract. Pierce sued both JaRoy and Ohio Casualty Insurance, alleging they were jointly and severally liable to Pierce. JaRoy filed for bankruptcy, leaving only Ohio Casualty Insurance as party to the suit. When the project was substantially completed, the Jefferson Parish government filed a notice of acceptance of work with the Jefferson Parish mortgage records office. This occurred over a year after Pierce amended its lawsuit to add Ohio Casualty as a defendant. Pierce never filed a sworn statement of claim in the mortgage records. Ohio Casualty filed a motion for summary judgment, contending that Pierce was required to comply with statutory notice and recordation, and because it failed to do so within 45 days of Jefferson Parish’s acceptance of the project, Pierce could not recover from Ohio Casualty. Pierce argued that the statute did not affect its right to proceed in contract. After a bench trial, the trial court rendered judgment in favor of Pierce for sums owed under the contract plus judicial interest from the date of the original judgment. Ohio Casualty appealed, arguing that the trial court erred in not dismissing Pierce's claims. The court of appeal reversed and ruled in Ohio Casualty's favor. The Supreme Court, however, disagreed and affirmed the trial court judgment. View "Pierce Foundations, Inc. v. JaRoy Construction, Inc." on Justia Law

Under the 1887 General Allotment Act and the 1934 Indian Reorganization Act, the U.S. is the trustee of Indian allotment land. A 1996 class action, filed on behalf of 300,000 Native Americans, alleged that the government had mismanaged their Individual Indian Money accounts by failing to account for billions of dollars from leases for oil extractions and logging. The litigation’s 2011 settlement provided for “historical accounting claims,” tied to that mismanagement, and “land administration claims” for individuals that held, on September 30, 2009, an ownership interest in land held in trust or restricted status, claiming breach of trust and fiduciary mismanagement of land, oil, natural gas, mineral, timber, grazing, water and other resources. Members of the land administration class who failed to opt out were deemed to have waived any claims within the scope of the settlement. The Claims Resolution Act of 2010 ratified the settlement and funded it with $3.4 billion, The court provided notice, including of the opt-out right. Challenges to the opt-out and notice provisions were rejected. Indian allotees with interests in the North Dakota Fort Berthold Reservation, located on the Bakken Oil Shale (contiguous deposits of oil and natural gas), cannot lease their oil-and-gas interests unless the Secretary approves the lease as “in the best interest of the Indian owners,” 122 Stat. 620 (1998). In 2013, allotees sued, alleging that, in 2006-2009, a company obtained Fort Berthold allotment leases at below-market rates, then resold them for a profit of $900 million. The Federal Circuit affirmed summary judgment for the government, holding that the allotees had forfeited their claims by failing to opt out of the earlier settlement. View "Two Shields v. United States" on Justia Law

Miller served on active duty, 2003-2007, and has a VA disability rating of 60 percent. Since 2008, Miller has been employed as an FDIC Economic Analyst. He was hired at the GS-9 level and has risen to the GS-12 level. In 2012 the FDIC posted vacancy announcements for a CG-13 Financial Economist position: one open to all citizens and another for status candidates. Miller applied under both procedures and was one of three finalists. Three FDIC employees participated in the interviews, rating each candidate’s answers to questions on bank failure prediction models as Outstanding, Good, or Inadequate. All of the candidates received some "inadequate" ratings. No candidate was selected; the vacancy was cancelled. Miller filed a Department of Labor complaint, stating that the cancellation was in bad faith to avoid hiring a veteran or having to request a “pass over” from the Office of Personnel Management. The Merit Systems Protection Board denied his petition under the Veterans Employment Opportunities Act, finding that the allegation of non-selection in violation of veterans’ rights was sufficient to confer jurisdiction, but that Miller had not established a violation because the FDIC “conducted a thorough, structured interview of each of the candidates” and “none of the interviewees possessed the requisite skills and knowledge for the position.” The Federal Circuit affirmed; substantial evidence indicated that cancellation was predicated on a lack of appropriately qualified candidates. View "Miller v. Fed. Deposit Ins. Corp." on Justia Law

This appeal concerns CityCenterDC, a large private development in the heart of Washington, D.C. At issue is whether the Davis-Bacon Act, 40 U.S.C. 3142(a), applies to the construction of CityCenterDC. In this case, the court concluded that the District of Columbia was not a party to the construction contracts for the building of CityCenterDC, and CityCenterDC is not a “public work.” Based on either of these two alternative and independent reasons, the court determined that the Davis-Bacon Act does not apply to the construction of CityCenterDC. Accordingly, the court affirmed the judgment of the district court. View "District of Columbia v. DOL" on Justia Law