Justia Aerospace/Defense Opinion Summaries

Articles Posted in Government Contracts
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Boeing entered into contracts with the Air Force that require Boeing to deliver technical data with “unlimited rights,” meaning that the government has the right to “use, modify, reproduce, perform, display, release, or disclose [the] technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so.” Notwithstanding the government’s unlimited rights, Boeing retains ownership of any technical data it delivers under the contracts.Boeing marked each submission to the Air Force with a legend that purports to describe Boeing’s rights in the data with respect to third parties. The government rejected Boeing’s technical data, finding that Boeing’s legend is a nonconforming marking because it is not in the format authorized by the contracts under the Defense Federal Acquisition Regulation Supplement, Subsection 7013(f). Boeing argued that Subsection 7013(f) is inapplicable to legends that only restrict the rights of third parties. The Armed Services Board of Contract Appeals agreed with the government.The Federal Circuit vacated. Subsection 7013(f) applies only in situations when a contractor seeks to assert restrictions on the government’s rights. The court remanded for resolution of an unresolved factual dispute remains between the parties regarding whether Boeing’s proprietary legend, in fact, restricts the government’s rights. View "Boeing Co. v. Secretary of the Air Force" on Justia Law

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The Joint Enterprise Defense Infrastructure Cloud procurement is directed to the long-term provision of enterprise-wide cloud computing services to the Defense Department. Its solicitation contemplated a 10-year indefinite-delivery, indefinite-quantity contract with a single provider. The JEDI solicitation included “gate” provisions that prospective bidders would be required to satisfy, including that the contractor must have at least three existing physical commercial cloud offering data centers within the U.S., separated by at least 150 miles, providing certain offerings that were “FedRAMP Moderate Authorized” at the time of proposal (a reference to a security level). Oracle did not satisfy the FedRAMP Moderate Authorized requirement and filed a pre-bid protest.The Government Accountability Office, Claims Court, and Federal Circuit rejected the protest. Even if Defense violated 10 U.S.C. 2304a by structuring the procurement on a single-award basis, the FedRAMP requirement would have been included in a multiple-award solicitation, so Oracle was not prejudiced by the single-award decision. The FedRAMP requirement “constituted a specification,” not a qualification requirement; the agency structured the procurement as a full and open competition. Satisfying the gate criteria was merely the first step in ensuring that the Department’s time was not wasted on offerors who could not meet its minimum needs. The contracting officer properly exercised her discretion in finding that the individual and organizational conflicts complained of by Oracle did not affect the integrity of the procurement. View "Oracle America Inc. v. United States" on Justia Law

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After the U.S. invasion of Iraq, Agility was awarded a contract for support of staging area operations (PCO Contract). Under the Contract, the Coalition Provisional Authority (CPA) could issue individual task orders to Agility. Funds obligated under the contract were sourced from the Development Fund for Iraq (DFI). The CPA controlled the DFI, which consisted of Iraqi money. The Contract provided that “[n]o funds, appropriated or other, of any Coalition country are or will be obligated under this contract” and recognize[d] that a transfer of authority from the CPA to the interim Iraqi Governing Council (IIG) would occur in June 2004. The contracting parties were the CPA and Agility. The Contract expressly preserved the right of the United States to assert claims against Agility. A Contract amendment provided that any claim Agility had after the transfer to IIG could not be brought before the Armed Services Board of Contract Appeals but could only be brought in an Iraqi court. The U.S. Army was designated as the administrator of the PCO contract.In 2010, following an audit of the PCO Contract, the Army contracting officer sent demand letters for overpayments allegedly made under 12 task orders. The Claims Court upheld the offsets, holding that the United States (rather than Iraq) was owed the alleged overpayment and the United States was authorized to offset the alleged overpayment. The Federal Circuit in part and vacated in part. The Claims Court did not evaluate the merits of the offset determination nor the procedures required by law. View "Agility Public Warehousing Co. v. United States" on Justia Law

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The Navy began a program to design and build littoral combat ships (LCS) and issued a request for proposals. During the initial phase of the LCS procurement, FastShip met with and discussed a potential hull design with government contractors subject to non-disclosure and confidentiality agreements. FastShip was not awarded a contract. FastShip filed an unsuccessful administrative claim, alleging patent infringement. The Claims Court found that the FastShip patents were valid and directly infringed by the government. The Federal Circuit affirmed.The Claims Court awarded FastShip attorney’s fees and expenses ($6,178,288.29); 28 U.S.C. 1498(a), which provides for a fee award to smaller entities that have prevailed on infringement claims, unless the government can show that its position was “substantially justified.” The court concluded that the government’s pre-litigation conduct and litigation positions were not “as a whole” substantially justified. It unreasonable for a government contractor to gather information from FastShip but not to include it as part of the team that was awarded the contract and the Navy took an exceedingly long time to act on FastShip’s administrative claim and did not provide sufficient analysis in denying the claim. The court found the government’s litigation positions unreasonable, including its arguments with respect to one document and its reliance on the testimony of its expert to prove obviousness despite his “extraordinary skill.” The Federal Circuit vacated. Reliance on this pre-litigation conduct in the fee analysis was an error. View "FastShip, LLC v. United States" on Justia Law

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In 1942-1943, the Government contracted with the Oil Companies to purchase aviation gasoline, vital to the war effort, permitting a profit margin “between 6% and 7%.” The manufacture of avgas from crude oil uses a 98% purity sulfuric acid as a catalyst in alkylation, a process that dilutes the sulfuric acid such that it turns it into “spent alkylation acid,” which may be used to catalyze the alkylation process again following purification; produce non-avgas petroleum by-products; or be disposed of. If spent alkylation acid is used to produce other petroleum by-products, it becomes "acidic sludge," a secondary waste with a lesser percentage of acid content that can be used to manufacture fertilizer, burned, or disposed of. Unable to reprocess the increased amount of spent alkylation acid given the prioritization of production, the Companies dumped spent alkylation acid and acid sludge in California: 12 percent of the waste was spent alkylation acid, and 82.5% was acid sludge. In 1991, the Government and California sued the Companies under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, for costs of cleaning up the disposal site. The Companies countersued. After years of litigation, the Claims Court granted the Companies partial summary judgment to prevent discovery into insurance settlements; denied the Government’s motion for leave to assert counterclaims in fraud; held that the Government was liable for clean-up costs for nonbenzol waste--$99,509,847.32, including accrued interest. The Federal Circuit affirmed, rejecting arguments that the Claims Court failed to allocate between recoverable and nonrecoverable costs, wrongfully admitted stipulations to calculate damages, and wrongly refused to allow proof of double recovery by insurance settlements. View "Shell Oil Co. v. United States" on Justia Law

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The Court of Federal Claims enjoined the U.S. Army from proceeding with, or awarding, a contract to Airbus Helicopter, finding that Army Execution Order 109-14, which implemented the Army’s Aviation Restructure Initiative designating the UH-72A Lakota helicopter as the Army’s “Institutional Training Helicopter,” was a procurement decision in violation of the Competition in Contracting Act and the Federal Acquisition Regulation. The court also found the Sole Source Justification and Approval (J&A) was arbitrary and capricious. The Federal Circuit reversed and vacated the injunction, holding that Execution Order 109-14 was not a procurement decision subject to Tucker Act review because it did not begin “the process for determining a need for property or services.” The Order simply formalized the Army’s decision designating the UH-72A Lakota as the Army’s training helicopter. The Sole Source J&A was not arbitrary and capricious, and it was an abuse of discretion to supplement the administrative record. The J&A sufficiently supports the Army’s decision to award a sole-source follow-on contract because it is likely that award to any other source would result in substantial duplication of cost to the government that is not expected to be recovered through competition, or unacceptable delays in fulfilling the agency’s requirements.” View "AgustaWestland North America v. United States" on Justia Law

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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

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The Defense Supply Center Philadelphia (DSCP), a sub-agency of the Defense Logistics Agency, issued a solicitation for an Indefinite-Delivery/Indefinite-Quantity commercial item contract to provide food and non-food products to customers, including the military, in three overseas zones. In May 2003, DSCP awarded a contract to Agility to supply “Full Line Food and Non-Food Distribution” to authorized personnel in Kuwait and Qatar. After many modifications, in December 2005, Agility submitted a Request for Equitable Adjustment for $13.1 million related to trucks being held in Iraq by the government for longer than 29 days. In April 2007, the government’s contracting officer denied Agility’s claim. The Armed Services Board of Contract Appeals denied Agility’s appeal in August 2015, finding that Agility had accepted all risks associated with delays beyond 29 days. The Board stated that it “need not decide whether the government constructively changed contract performance or whether it breached its implied duty of cooperation” because “whether the government breached the contract comes down to contract interpretation.” The Federal Circuit affirmed-in-part, agreeing that the government did not breach the express terms of the contract or a later agreement to consider exceptions, but finding that the Board erred when it concluded that it “need not decide” Agility’s implied duty and constructive change claims. View "Agility Public Warehousing Co. KSCP v. Mattis" on Justia Law

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Within the Department of Defense, DRMS disposes of surplus military property at Defense Reutilization and Marketing Offices (DRMOs). Property that cannot be reutilized is demilitarized and/or reduced to scrap that can be sold. A 2007 DRMS Request for Proposals sought performance of DRMO activities for up to five years. A referenced website showed DRMS’s historical workload and scrap weight; an amendment indicated that “the contractor may experience significant workload increases or decreases” and outlined a process to “renegotiate the price” if workload increased. DRMS awarded its first contract to Agility to operate six DRMOs for one base year with four option years at a fixed price of $45,233,914.92 per year. Upon commencing work in Arifjan, the largest of the DRMOs, Agility immediately fell behind. It inherited a backlog of approximately 30 weeks. From the start, the volume received at Arifjan was greater than Agility anticipated. The parties terminated their contract for convenience in 2010. Agility thereafter requested funding for its additional costs, claiming DRMS provided inaccurate workload estimates during solicitation. The contracting officer awarded Agility only $236,363.93 for its first claim and nothing for the second, noting that Agility received an offset from its scrap sales. The Federal Circuit reversed, as “clearly erroneous,” the Claims Court’s findings that DRMS did not inadequately or negligently prepare its estimates and that Agility did not rely on those estimates. Agility’s receipt of scrap sales and the parties’ agreement did not preclude recovery. View "Agility Defense & Government Services, Inc. v. United States" on Justia Law

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Kase was exposed to asbestos insulation used on nuclear submarines during the early 1970s. The trial court rejected claims against a broker that arranged for asbestos-containing insulation to be shipped to the Mare Island Naval Shipyard, where workers packed it around the submarine piping it protected. The court held, on summary judgment, that the Navy‘s procurement of asbestos insulation for its nuclear submarines implicated the government contractor defense set forth in the Supreme Court’s 1988 holding, Boyle v. United Technologies Corp. The broker procured the insulation pursuant to and in compliance with relatively detailed performance and testing specifications, although those specifications did not expressly call out for asbestos in the insulation. According to undisputed evidence, the specifications could only be met by asbestos-containing insulation, and the only product on the Navy‘s approved list of suitable products was the product at issue, Unibestos. The court of appeal affirmed, stating that the defense does not necessarily exclude the procurement of products also sold commercially. The Navy‘s procurement of the asbestos insulation at issue occurred after years of evaluating and weighing the utility of and the health hazards associated with asbestos products and pursuant to specifications that required an asbestos product. View "Kase v. Metalclad Insulation Corp." on Justia Law