Brown Rudnick PROFESSIONALS
POPULAR TAGS
A/E procurements, AFR & Associates Inc. v. HUD, Air Force, Al Gore, American Recovery and Reinvestment Act of 2009, Armed Services Board of Contract Appeals (ASBCA), Army, ASBCA, Bayh-Dole Act, bid protests, Buy American Act, Centers for Disease Control and Prevention (CDC), CFC, cloud computing, Combating Trafficking in Persons, compliance programs, Contract Disputes Act of 1978, Contracting Officer, Court of Federal Claims, Davis Bacon Act (DBA), defense acquisition, Defense Base Act (DBA), Defense Federal Acquisition Regulation Supplement (DFARS), Defense Logistics Agency (DLA), Democrats, Department of Defense (DOD), Department of Energy (DOE), Department of Homeland Security, Department of Homeland Security (DHS), Department of Justice (DOJ), Department of Labor (DOL), DHS, DSD, DSD Laboratories, Exalt, Exalt Technologies, Executive Order, Fair Labor Standards Act (FLSA), False Claims Act, FAR Council, Federal Acquisition Regulation (FAR), Federal Circuit Court of Appeals, Federal Register, Federal Risk and Authorization Management Program (FedRAMP), Final Proposal Revisions (FPRs), Fluor Hanford, fraud, Fraud Enforcement and Recovery Act of 2009 (FERA), Freedom of Information Act (FOIA), General Services Administration (GSA), Government Accountability Office (GAO), government contracting, health care, Historically Underutilized Business Zone (HUBZone), Housing Authority, IDIQ, Inc., Indefinite Delivery Indefinite Quantity, Kellogg Brown & Root (KBR), LLC, McKissack, Medicare, National Defense Authorization Act for 2013, Navy, Obama Administration, Office of Federal Contract Compliance Programs (OFCCP), Office of Federal Procurement Policy (OFPP), Office of Management and Budget (OMB), outsourcing, President Obama, privity of contract, reimbursement, Renal Care Group, Republicans, Sarah Palin, Senate, Service Contract Act (SCA), Small Business Administration (SBA), Small Business Fair Competition Act, Small Business Jobs Act of 2010, social media, Sole-Source Contract Awards, sole source contracts, SPC, stimulus funds, subcontractor, Supreme Court, System Planning Corporation, System Planning Corporation v. United States, Transportation Security Administration, TSA, U.S. Customs and Border Protection (Customs), U.S. Department of Agriculture (USDA), U.S. military, United States District Court, United States v. Renal Care Group Inc, USAF, US Court of Appeals, Women-Owned Small Business (WOSB), World Trade Organization (WTO)

News/Resources: Blog

Government Contracts BLOG

The slow wheels of justice

Posted on Monday, Jul 23, 2012

BY Kenneth B. Weckstein

The Court of Federal Claims (CFC) recently confirmed that it does not use a crystal ball to divine what a contract means.  Instead, it looks to the contract’s plain language when determining whether a party breached its terms.

In 1993, System Planning Corporation (SPC) signed a contract to provide security software for several Air Force bases. In March 2000, the USAF inked a contract with Mosler–SPC’s subcontractor.  In April 2000, the USAF advised SPC that Mosler was making modifications to the SPC software.  Should the USAF be able to modify SPC’s software without SPC’s permission?  It seems like SPC should have some rights.  SPC thought so too.  And SPC’s response was to file a certified claim in October 2000.  But SPC filed that claim under the option clause of the contract.  The contract included an option clause that stated in part: “Should the contractor be in danger of default, in a nonperformance posture under this contract, or discontinue the…software line after the system is installed at one or more bases, the Government may exercise the contract option to buy limited software data rights….The computer software may be modified or adapted by the Government to support the system over its life cycle provided that the additional, negotiated fee is paid for the software code.”  Thus, SPC demanded that the Government pay the $7 million negotiated fee stated in the contract for altering its software.

But apparently the Contracting Officer was not in a hurry to decide the claim.   And SPC was not in a hurry to pursue the claim.  After waiting almost seven years without receiving a final decision of the Contracting Officer, in September 2007, SPC regarded the failure to respond to the claim as a deemed denial and filed suit at the CFC.  On June 20, 2012, the CFC heard oral argument on the parties’ cross-motions for summary judgment.

You know where this is going.  The contractor was not in danger of default.  The contractor was not in a non-performance posture.  The contractor had not discontinued the software line.  Result?  The conditions for exercising the option had not taken place so there could be no exercise of the option.  Twelve years after it had submitted its claim, SPC had its answer.  You lose.

That doesn’t seem like a fair result.  But technically the USAF never exercised the option.  Was there another way to achieve justice?  Maybe.  Courts have applied contract clauses before when the exact letter of the clause has not been met.  Think constructive change and constructive termination.  How about a constructive exercise of the option?  The case is System Planning Corporation v. United States.  The decision can be be found at http://www.uscfc.uscourts.gov/sites/default/files/HEWITT.SYSTEM071112.pdf

 

*Lara Jensen, a law clerk, also contributed to this blog. Blogs