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In Tolliver Group, Inc. v. United States, No. 2020-2341, 2021 WL 5872256 (Fed. Cir. Dec. 13, 2021), the Federal Circuit vacated and remanded the Court of Federal Claims’ (“COFC”) decision holding that the contractor was entitled to an equitable adjustment for damages caused by the Government’s breach of the implied warranty that satisfactory contract performance will result from adherence to contractual specifications.

The contractor’s underlying claim sought an equitable adjustment to a fixed-price contract for costs incurred to successfully defend against a False Claims Act (“FCA”) suit, claiming the costs as allowable under FAR 31.205-47, Costs related to legal and other proceedings. The FCA suit, brought by a whistleblower, alleged that the contractor violated the FCA in the performance of the contract, but the Government declined to intervene and the FCA suit was ultimately dismissed. The contracting officer denied the contractor’s claim for costs defending against the FCA suit on the basis that the fixed price contract did not permit recovery of costs in excess of the agreed-upon contract price.

In the COFC decision, which we reported on here, the court held sua sponte that the contractor was entitled to recover damages under the Spearin doctrine (citing to United States v. Spearin, 248 U.S. 132 (1918)) because the Government breached the implied warranty of performance. On appeal, the Federal Circuit vacated the COFC’s decision, holding that the contractor did not present a claim for breach of the implied warranty to the contracting officer for a final decision, and therefore the COFC lacked jurisdiction to grant entitlement under the Spearin doctrine.

The Tolliver decision is an example of the tension (discussed here and here) that can exist between the purpose of the CDA—to provide for timely and cost-effective resolution of contract disputes—and the CDA’s procedural requirements when a court or Board determines they have not been met. In this case, after more than four years litigating its claim, the service-disabled veteran-owned small business contractor must now go back to the drawing board, a reminder to all contractors to engage in a thorough claim assessment at the outset of any CDA litigation.

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Photo of Steve McBrady Steve McBrady

Steve McBrady is a partner and co-chair of Crowell & Moring’s Government Contracts Group. He also serves as a member of the firm’s Finance and Strategic Growth Committees, where he has played a leading role in expanding client service offerings throughout the U.S.…

Steve McBrady is a partner and co-chair of Crowell & Moring’s Government Contracts Group. He also serves as a member of the firm’s Finance and Strategic Growth Committees, where he has played a leading role in expanding client service offerings throughout the U.S., Europe, Asia, and the Middle East.

In recent years, Steve has received the National Law Journal’s “Winning Litigator” award as a lawyer who has “tackled some of the most widely watched cases of the year,” as well as the “D.C. Trailblazer” award, recognizing lawyers who have “made significant marks on the practice.” In 2018, he was named “Government Contracts MVP” by Law360.

Photo of Nicole Owren-Wiest Nicole Owren-Wiest

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most…

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most complex areas in government contracting: accounting, cost, and pricing, and intellectual property/data rights. With over 20 years’ experience, Nicole has a broad counseling and dispute-resolution practice and leads the Group’s cost accounting practice, which focuses on helping clients navigate the government’s complex cost and pricing rules, including the FAR Part 31 cost principles, the Cost Accounting Standards (CAS), and Truth in Negotiations Act/Truthful Cost or Pricing Data (defective pricing).

Photo of Michelle Coleman Michelle Coleman

Michelle D. Coleman is a counsel in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. Michelle advises clients from diverse industries in connection with contract disputes and other government contract matters, including Contract Disputes Act (CDA) claims and requests for…

Michelle D. Coleman is a counsel in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. Michelle advises clients from diverse industries in connection with contract disputes and other government contract matters, including Contract Disputes Act (CDA) claims and requests for equitable adjustments, fiscal law questions, prime-sub disputes, and bid protests.

Photo of Erin Rankin Erin Rankin

Erin Rankin is counsel in the Government Contracts Group and is experienced in resolving government contract disputes with a particular focus on cost allowability, cost accounting issues, and DCAA audit findings. Erin also advises clients on all aspects of FAR and DFARS compliance…

Erin Rankin is counsel in the Government Contracts Group and is experienced in resolving government contract disputes with a particular focus on cost allowability, cost accounting issues, and DCAA audit findings. Erin also advises clients on all aspects of FAR and DFARS compliance in connection with the administration, performance, and closing out of government contracts. Erin has extensive experience representing government contractors before the Boards of Contract Appeals, defending companies against False Claims Act allegations, conducting internal investigations, and advocating for clients in mandatory disclosures and suspension and debarment proceedings.

Photo of Eric Herendeen Eric Herendeen

Eric Herendeen is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He advises clients on a wide array of performance dispute issues, including requests for equitable adjustments, CDA claims, cost allowability issues, and prime-sub disputes. He has…

Eric Herendeen is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He advises clients on a wide array of performance dispute issues, including requests for equitable adjustments, CDA claims, cost allowability issues, and prime-sub disputes. He has represented clients before the Civilian Board of Contract Appeals, Armed Services Board of Contract Appeals, and the U.S. Court of Appeals for the Federal Circuit. In addition to his disputes and litigation practice, Eric has also counseled clients through internal investigations to support disclosures to the government and to advocate before the Department of Justice on False Claims Act matters.