In Vanda Pharmaceuticals, Inc. v. United States, No. 23-629C (Fed. Cl. 2024), 2024 WL 201890, the Court of Federal Claims (COFC) addressed whether government disclosure of a company’s trade secrets and commercial information could create a viable claim for a taking under the Fifth Amendment or for breach of an implied-in-fact contract. The company, Vanda Pharmaceuticals (Vanda), claimed that the government’s disclosure of its confidential trade secrets—including its trademarked drugs’ dissolution rates—to competitors seeking U.S. Food and Drug Administration (FDA) approval of generic drug alternatives was an unlawful regulatory taking that diminished the value of Vanda’s brand name drugs and infringed upon Vanda’s right to exclude generics from the market. The government moved to dismiss Vanda’s claims for lack of subject matter jurisdiction and for failure to state a claim. The COFC denied the government’s motion in part, holding as a matter of first impression that Vanda adequately stated a takings claim based on the government’s disclosures but failed to state a claim for breach of an implied-in-fact contract. The COFC also held that Vanda’s claims involving one generic drug manufacturer were outside the Tucker Act’s six-year statute of limitations and were time barred. Continue Reading Does Government Disclosure of a Company’s Trade Secrets Amount to an Unlawful Taking Under the Fifth Amendment?
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).
In Aviation Training Consulting, LLC, ASBCA No. 63634 (Jan. 11, 2024), the Armed Services Board of Contract Appeals (ASBCA) confirmed that a contractor’s properly asserted claim for relief under Section 3610 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a claim under the Contract Disputes Act (CDA) and denied the Air Force’s motion to dismiss for lack of jurisdiction.Continue Reading Who CARES? The ASBCA Might.
In JE Dunn Construction Company, ASBCA No. 63183, the Armed Services Board of Contract Appeals (“ASBCA”) issued its first published decision applying the Federal Circuit’s recent holding that the FAR sum-certain requirement for Contract Disputes Act claims is not jurisdictional. The Board held that, because the government did not raise the issue until after a hearing on the merits, the government forfeited its right to challenge the contractor’s satisfaction of the sum-certain requirement.Continue Reading Use It or Lose It: ASBCA Finds That the Government Forfeited its Sum-Certain Defense
The Department of Defense recently issued a long-awaited final rule prohibiting DoD prime contractors from “flowing down” FAR and DFARS clauses in subcontracts for commercial products or services, unless flowdown is specified by regulation. This rule implements language, dating from the 2017 National Defense Authorization Act, intended to reduce administrative burdens on DoD contractors and subcontractors by adding a prohibition on extraneous flowdowns at DFARS 252.244-7000 Subcontracts for Commercial Products or Commercial Services.Continue Reading Be Careful What You Wish For: Limited Commercial Subcontract Flowdowns May Increase Administrative Burdens
In ECC Int’l Constructors Inc. v. Army, No. 2021-2323 (Fed. Cir. Aug. 22, 2023), the Court of Appeals for the Federal Circuit overturned longstanding precedent by holding that the requirement to state a “sum certain” in a claim submitted under the Contract Disputes Act (CDA) is not a jurisdictional requirement. The Court based its decision on recent Supreme Court guidance to “treat a procedural requirement as jurisdictional only if Congress ‘clearly states’ that it is.” The Court parsed the CDA and found that Congress never used the words “sum certain,” evidencing that Congress did not intend the requirement to be jurisdictional. This is important because jurisdictional requirements can be raised at any time—even years after the claim was filed and a full hearing on the merits was held—and result in dismissal of the case. The Court explained that the “sum certain” is “nonetheless a mandatory rule that claimants must follow.” Continue Reading Sum-Thing Is Missing from the Contract Disputes Act: Federal Circuit Holds that “Sum Certain” Requirement is Non-Jurisdictional
In Voxtel, Inc., ASBCA No. 60129 (March 9, 2023), the Armed Services Board of Contract Appeals (ASBCA) issued a decision that presents a primer on the resolution of indirect cost rate disputes. The ASBCA granted the contractor’s appeal in part, finding that its claimed executive compensation and independent research and development (IR&D) costs were allowable, but that certain rental costs related to the “fit-up” of a leased facility were unallowable.
The Defense Contract Audit Agency (DCAA) performed “adequacy” and “nomenclature” reviews of Voxtel’s indirect cost rate proposals (or incurred cost proposals, “ICPs”) for fiscal years 2007 to 2009, but did not conduct audits. The Contracting Officer (CO) then issued a final decision unilaterally setting indirect rates and finding that the ICPs included unallowable executive compensation, IR&D, and rental costs. The contractor appealed. Continue Reading If At First You Don’t Succeed: Contractor Successfully Challenges Disallowed IR&D and Compensation Costs
In Triple Canopy, Inc., ASBCA Nos. 61415, et al. (March 23, 2023), the Armed Services Board of Contract Appeals (ASBCA) resolved a long-running dispute in favor of the contractor over reimbursement of fees imposed by the Afghan government on large security firms operating in the country. The ASBCA found the fees were akin to after-imposed taxes, reimbursable by the U.S. government, and not penalties for illegal conduct.
Triple Canopy had six fixed-price contracts with the U.S. Department of Defense (DoD) to provide private security services to military bases in Afghanistan. These contracts, awarded between March 2009 and September 2010, required Triple Canopy to comply with local laws. The contracts also included FAR 52.229-6, Taxes-Foreign Fixed Price Contracts, which states that the contract price shall be increased by the amount of any after-imposed tax the contractor is required to pay. In March 2011, the Afghan government issued a directive limiting the number of employees of any private security company to 500, imposing a fee for each employee over the cap. Triple Canopy was assessed a fee in March 2011, with the right to appeal, and that same month, the DoD issued a memo to the Afghan government requesting that Triple Canopy be exempted from the 500-employee limit. Triple Canopy appealed the assessment, which the Afghan government reduced, and Triple Canopy paid the reduced amount in July 2011. Triple Canopy submitted claims to the Contracting Officer (CO) for reimbursement of the fees, and then appealed to the ASBCA on the basis of the CO’s deemed denials. The ASBCA initially found Triple Canopy’s claims were barred by the Contract Dispute Act’s six-year statute of limitations and denied the appeals, which the Federal Circuit reversed and remanded in Triple Canopy, Inc. v. Sec’y of Air Force, 14 F.4th 1332 (Fed. Cir. 2021). Continue Reading Third Time’s A Charm: Government Must Reimburse Triple Canopy for Afghan Taxes
On March 22, 2023, the Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to allow a procuring contracting officer (PCO) to delegate the authority to the contract administration office (CAO) to negotiate and settle direct costs questioned in an indirect cost rate proposal audit. After the delegation…
In General Atomics Aeronautical Systems, Inc., ASBCA Nos. 61633, 61731 (Feb. 8, 2023), released March 14, 2023, the Armed Services Board of Contract Appeals (ASBCA) considered, but declined to answer, the existential question of whether intracompany lease payments are “costs.” The ASBCA denied the Government’s motion for summary judgment, finding that material facts about the…
On December 19, 2022, DoD issued a DFARS proposed rule that seeks to (1) implement the data-rights portions of the May 2, 2019 Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive (SBIR/STTR Policy Directive), and (2) impose significant changes to technical data and computer software marking requirements. The SBIR/STTR portion of the proposed rule follows DoD’s advance notice of proposed rulemaking issued on August 31, 2020 (see 85 FR 53758) and incorporates the eight written public comments that DoD received. The proposed changes to marking requirements go beyond the SBIR/STTR Policy Directive and respond to the Federal Circuit’s decision in The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020). Continue Reading DFARS Proposed Rule on SBIR/STTR Data Rights and the Marking of Unlimited Rights Data