Articles Posted in Government Contracts

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In 1996, the Federal Communications Commission awarded spectrum licenses to Alpine, for use in the provision of wireless telecommunications services. Alpine bid approximately $8.9 million for one license and $17.3 million for the other. As a small business, Alpine was eligible to pay in installments over the 10-year term of the licenses. Alpine’s failure to make required payments in 2002 triggered automatic cancellation under FCC regulations. In addition to taking other steps in response, Alpine sought relief from the FCC and, on review under the Communications Act, 47 U.S.C. 402(b)(5), from the District of Columbia Circuit. In 2016, Alpine filed this action against the United States under the Tucker Act, 28 U.S.C. 1491(a)(1), arguing that the FCC breached contractual obligations in canceling the licenses and that the cancellation was a taking for which Alpine was entitled to just compensation. The Federal Circuit affirmed dismissal by the Claims Court for lack of jurisdiction under the Tucker Act. The Communications Act provides a comprehensive statutory scheme through which Alpine could raise its contract claims and could challenge the alleged taking and receive a remedy that could have provided just compensation in this case, foreclosing jurisdiction under the Tucker Act. View "Alpine PCS, Inc. v. United States" on Justia Law

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Henderson was a VA Program Analyst. Veterans may, under certain circumstances, obtain medical care from private physicians and facilities after obtaining preauthorization from a VA supervisory physician. An “unresolved authorized consult” means that a veteran’s medical appointment with an outside provider has not been scheduled or completed, or the completed appointment has not been memorialized. Henderson was charged with 50 counts of making false statements related to health care matters, 18 U.S.C. 1035, for ordering VA employees under his direction to close 2700 unresolved authorized consults by falsely declaring the consults were completed or refused by the patients. The VA informed Henderson that it proposed to suspend him for an indefinite period, noting that if convicted, he would face a maximum sentence of five years in prison on each count. Henderson, through counsel, denied the allegations, requested documentary evidence from the VA regarding his alleged wrongdoing, and asked that the proposed suspension be stayed pending the outcome of the criminal proceedings. The VA indefinitely suspended Henderson. A Merit Systems Protection Board administrative judge found, and the Board, and Federal Circuit affirmed, that the indictment provided the VA with reasonable cause to believe that he had committed a crime for which imprisonment could be imposed. The VA established a nexus between the criminal charges and the efficiency of the service. View "Henderson v. Department of Veterans Affairs" on Justia Law

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TRICARE provides current and former members of the military and their dependents' medical and dental care. Hospitals that provide TRICARE services are reimbursed under Department of Defense (DoD) guidelines. TRICARE previously did not require, DoD to use Medicare reimbursement rules. A 2001 amendment, 10 U.S.C. 1079(j)(2), required TRICARE to use those rules to the extent practicable. DoD regulations noted the complexities of the transition process and the lack of comparable cost report data and stated “it is not practicable” to “adopt Medicare OPPS for hospital outpatient services at this time.” A study, conducted after hospitals complained, determined that DoD underpaid for outpatient radiology but correctly reimbursed other outpatient services. TRICARE created a process for review of radiology payments. Each plaintiff-hospital requested a discretionary payment, which required them to release “all claims . . . known or unknown” related to TRICARE payments. Several refused to sign the release and did not receive any payments. Although it discovered calculation errors with respect to hospitals represented by counsel, TRICARE did not recalculate payments for any hospitals that did not contest their discretionary payment offer. The Claims Court dismissed the hospitals’ suit. The Federal Circuit reversed in part, finding that they may bring a claim for breach of contract but may not bring money-mandating claims under 10 U.S.C. 1079(j)(2) and 32 C.F.R. 199.7(h)(2) because the government’s interpretation of the statute was reasonable. View "Ingham Regional Medical Center v. United States" on Justia Law

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LFD operates a Lake Cumberland, Kentucky marina under a lease from the Army Corps of Engineers, covering approximately 130 acres of water and 36 acres of land. The Lease states: The right is reserved to the United States ... to enter upon the premises at any time and for any purpose necessary or convenient ... to flood the premises; to manipulate the level of the lake or pool in any manner whatsoever; and/or to make any other use of the lands as may be necessary in connection with project purposes, and the Lessee shall have no claim for damages. By 2007, Wolf Creek Dam, which created the lake, was at a high risk of failure; the Corps began lowering the lake's water level. The Corps returned the lake to its previous levels in 2014, when restoration was complete. LFD submitted a certified claim to the District Engineer, asserting $4,000,000 in damages. The Federal Circuit affirmed rejection of the claim. While the Lease is a contract for “the disposal of personal property” under 41 U.S.C. 7102(a)(4), giving the court jurisdiction, LFD did not properly present its reformation claim to the District Engineer. Rejecting a breach of contract claim, the court stated the Lease granted the Corps the right to manipulate the level of the lake in any manner whatsoever. View "Lee's Ford Dock, Inc. v. Secretary of the Army" on Justia Law

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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

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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

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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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Comments that the Court of Federal Claims made during a hearing, before the government’s corrective action materially altered the relationship between the parties, were not sufficient to qualify the contractor as a “prevailing party” under the Equal Access to Justice Act, 28 U.S.C. 2412(a), (d)(1)(A). The Federal Circuit remanded the case, which involved Dellew’s post-award bid protest, alleging that the Army improperly awarded TSI a contract because TSI did not accept a material term of the request for proposals when it refused to cap its proposed general and administrative rate, and the contract awarded varied materially from TSI’s proposal. During oral argument, the Claims Court provided “hint[s]” about its views favorable to Dellew on the merits, and repeatedly expressed its belief that corrective action would be appropriate. The Army subsequently terminated the TSI contract. The Claims Court dismissed Dellew’s action, determined that it retained jurisdiction despited mootness, and awarded Dellew $79,456.76 in fees and costs, stating that it made “numerous substantive comments during oral argument regarding the merits,” that “carried a sufficient judicial imprimatur to materially alter the relationship between [Dellew] and [the Government] such that [Dellew] qualifies as a prevailing party under the EAJA.” View "Dellew Corp. v. United States" on Justia Law

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The Federal Circuit affirmed summary judgment in favor of the United States in Northwest Title Agency’s (NWTA) suit based on contracts, under which NWTA provided closing services for homes owned by the Department of Housing and Urban Development (HUD). The courts concluded that the contracts unambiguously preclude NWTA from charging additional closing fees and declined to consider the affidavit of industry practice submitted by NWTA. The fee prohibition does not conflict with the buyers’ rights, as stated in the contracts, to retain a title company of their own choosing. View "Northwest Title Agency, Inc. v. United States" on Justia Law

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The Federal Circuit affirmed dismissal of a claim against the U.S. government, finding that the government had no contractual obligation to reimburse plaintiff’s pension withdrawal liability costs, incurred under the Multi-Employer Pension Plan Amendment Act (MPPAA), 29 U.S.C. 1381. Plaintiff had a contract with NASA to provide services, which was subject to the McNamara-O’Hara Service Contract Act (SCA), 41 U.S.C. 6701, under which service contracts specify a “wage determination,” setting wage rates and fringe benefits. The SCA insures that service employees who were protected by a collective bargaining agreement (CBA) with one contractor are not deprived of that CBA’s wages and benefits when the contract they work on is competitively awarded to a new contractor. Otherwise, if an incumbent contractor agreed to a CBA that provided for wages and benefits greater than the prevailing rate, a challenger could underbid the incumbent for the follow-on contract by providing its employees with less. The government is willing to increase contract prices when contractors incur increased costs as a result of an increase in the wage determination. The courts concluded that this plaintiff independently chose to negotiate a CBA with the Teamsters and join the Teamsters’ pension plan and independently assumed the risk of MPPAA withdrawal liability. NASA did not require plaintiff to do so and had no contractual recourse if plaintiff failed to satisfy its MPPAA obligations, so the SCA does not allocate the risk of MPPAA liability to the government. View "Call Henry, Inc. v. United States" on Justia Law