Morrison Foerster’s Government Contracts Insights provides our in-depth analysis of developments and trends impacting government contracting. Through Insights, our attorneys offer a real-time assessment of the statutory, regulatory, legal, and business-related developments and trends that are shaping the industry. We also examine a full array of non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Morrison Foerster’s nationally recognized Government Contracts and Public Procurement practice represents the world’s leading companies in the aerospace and defense, intelligence, cybersecurity, information technology, financial and professional services, education, healthcare, infrastructure, and logistics support sectors. We are enlisted to address our clients’ most complex and important legal issues. Our work includes contract and subcontract negotiation and other transactional matters, business and regulatory compliance counseling, internal investigations, bid protests, and a wide array of enforcement and litigation matters. Our clients range from Fortune 50 companies to small and medium-sized companies just entering the public sector. We advise both U.S. and non-U.S. companies involved in municipal, state, federal, and non-U.S. procurement matters.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Tina is Co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She represents a wide variety of government contractors including information technology, defense, biotechnology, and pharmaceutical companies, with a focus on general contract counseling and compliance, particularly concerning intellectual property, and cybersecurity matters and federal grant funding.Tina counsels contractors on compliance with federal, state and local acquisition and ethics regulations and with the evolving myriad of requirements pertaining to data security and cybersecurity. She has been involved with numerous internal investigations and compliance reviews, and with mandatory and voluntary disclosures to agencies, and litigation of False Claims Act matters.Tina routinely advises clients concerning:<ul><li>Prime-subcontractor relationships</li><li>Sources of supply and country of origin requirements</li><li>Price reductions and price reporting issues</li><li>Organizational conflicts of interest</li><li>Safeguarding of intellectual property and other proprietary interests</li><li>Licensing and data rights issues</li><li>Handling of classified materials and controlled unclassified information</li><li>Agency suspension and debarment proceedings</li></ul>She also assists clients with due diligence and other activities related to the acquisition of government contracting concerns, and with the drafting and negotiation of teaming agreements, subcontracts, licensing agreements, and cooperative research and development agreements. She also assists clients applying for federal grants (including SBIR and STTR agreements), and those who seek to obtain other transactional authority agreements, as well as those competing for state and local government work.Tina’s litigation experience includes government contracts claims litigation in federal courts and before boards of contract appeals, bid protests before the Government Accountability Office and the Court of Federal Claims, and complex disputes in federal courts, including civil fraud and False Claims Act litigation and reverse Freedom of Information Act litigation.Prior to joining Morrison Foerster, Tina worked at another large national firm and as a trial attorney in the Office of the General Counsel of the Navy, Navy Litigation Office.<h4>Representative Experience</h4><ul><li>Negotiation of largest CHIPS Act federal funding agreement between multinational semiconductor corporation and U.S. Department of Commerce.</li><li>Negotiated prime contract and major subcontracts related to the Department of Energy’s next generation supercomputer program, including extensive IP rights negotiations and negotiation of associated patent rights waivers.</li><li>Negotiated series of other transaction authority agreements with DARPA and associated subcontracts with more than a dozen research universities on behalf of a firm biotech client, including complex IP rights allocations and material transfer agreements.</li><li>Assist clients with FedRAMP authorization process and with development of license agreements for software products sold to federal, state and local government agencies.</li><li>Cyber incident response counseling to some of the largest companies and organizations impacted by security incidents.</li><li>Advises clients on Bayh-Dole reporting of inventions and IP strategies for contracts and grants.</li><li>Conducts due diligence for major government contract mergers and acquisitions.</li></ul>

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Our government contracts and procurement attorneys counsel businesses on legal and compliance issues encountered when doing business with government entities.

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Tina is co-chair of Morrison Foerster’s Government Contracts & Public Procurement practice. She counsels a wide variety of government contractors on compliance with federal acquisition and ethics regulations. She drafts and negotiates contracts on their behalf and has been involved with numerous internal investigations and compliance reviews, and with bid protest, contract claims, and False Claims Act litigation. She also advises on M&A transactions involving government contractors.

Tina D. Reynolds

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters. He has represented both protesters and awardees in scores of protests before the Government Accountability Office, the Court of Federal Claims, and procuring agencies, in acquisitions ranging from small business procurements to multibillion-dollar contracts of global significance. His representative protest matters span the aerospace sector, the Intelligence Community, base operations and logistics, healthcare, nuclear and environmental work, and information technology and software acquisitions. His protests have included both classified and unclassified programs. In addition to prevailing in published decisions, Jim has also secured favorable corrective action on behalf of clients in a wide variety of protests that were resolved without a published decision.Jim’s work also focuses on disputes over cost allowability and compliance with the Cost Accounting Standards, and he has appeared before the Armed Services and Civilian Boards of Contract Appeals, in size and status protests before Small Business Administration (SBA) area offices, and appeals before the SBA Office of Hearings and Appeals. Jim regularly counsels clients on contract interpretation, organizational conflicts of interest, and small business compliance.Jim graduated with high honors from the George Washington University Law School, where he focused his studies on federal procurement law, was a member of the Law Review, and interned with the General Services Administration’s suspension and debarment office. Jim also holds a degree in theology magna cum laude from the Pontifical Gregorian University in Rome and a bachelor’s degree in classical languages and literature summa cum laude from the University of Kentucky, where he graduated Phi Beta Kappa.

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Jim maintains an active practice in bid protests before the Government Accountability Office and contracting agencies and counsels clients in contract disputes and compliance obligations.

Jim Tucker is of counsel in Morrison Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office. Jim’s practice runs the gamut of litigation and counseling in federal procurement matters, with an emphasis on bid protests, Cost Accounting Standards disputes, and small business matters.

James Tucker

<div style="margin-bottom: 15px;" class="videoWrapper"><iframe class="sticky-video" title="Meet Alex Ward, Government Contracts Practice Co-Chair" src="https://www.youtube-nocookie.com/embed/TkliwdSlTaQ?rel=0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen="1" title="iframe"></iframe></div>J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. His practice covers a full range of government contracts matters, including investigations, bid protests, claims, general litigation, corporate transactions, and counseling. Alex strives in all matters is to provide his clients the highest level of efficient and effective representation.Alex represents contractors in internal and external investigations, disclosures to the government, and qui tam litigation, with great success in reducing or eliminating his clients’ exposure through active engagement with the government. His work in this area includes obtaining numerous declinations and dismissals of False Claims Act cases in their earliest stages, sparing his clients the cost, risk, and exposure of litigation.He has also served as lead counsel in dozens of bid protests involving military and civilian agency procurements of a wide range of products and services, including all manner of pre- and post-award protests in the GAO, the U.S. Court of Federal Claims, and state tribunals, as well as appeals to the U.S. Court of Appeals for the Federal Circuit and size protest appeals before the SBA’s Office of Hearings and Appeals.Alex handles all aspects of the claims process, from the initial assessment and drafting of requests for equitable adjustment through litigation in the Boards of Contract Appeals and the Court of Federal Claims. Alex’s practice also covers the full gamut of other controversies confronting government contractors, including prime-sub, teaming partner, employer-employee, competitor, and indemnification disputes. His litigation work also includes a wide variety of pro bono engagements, in which he has represented both individual and institutional clients in matters ranging from immigration and criminal defense to sustainable procurement and protection of the environment.Prior to joining the firm, Alex served in the U.S. Army as a commissioned officer and an Assistant to the General Counsel of the Army responsible for civil works and international matters, and as a clerk for judges on the U.S. Courts of Appeals for the Armed Forces and the D.C. Circuit. He is a member of the Boards of the Morrison & Foerster Foundation and the Chesapeake Bay Foundation and of Law360’s Government Contracts Editorial Board.

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Alex is co-chair of Morrison Foerster’s Government Contracts and Public Procurement practice. His practice covers a full range of government contracts matters, including bid protests, claims, investigations, corporate transactions, and counseling.

J. Alex Ward

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Morrison Foerster’s Government Contracts Insights blog provides an in-depth analysis of news, developments, and trends impacting government contracting and procurement. Through Insights, attorneys from our nationally recognized Government Contracts and Public Procurement practice will offer a real-time assessment of the statutory, regulatory, legal, and business-related developments that are shaping the industry. This blog will also examine a full array of U.S. and non-U.S. public procurement issues, mindful that our clients compete in a global marketplace.Read about our <a href="http://govcon.mofo.com/editors/">Authors</a>.Never miss a post. Subscribe to get real-time updates.

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Telesto: Another Call For Clarity In Other Transactions Protest Jurisdiction

Strengthening the American Drone Industrial Base

Bid Protest Spotlight: Jurisdiction, Price Range, Late-Is-Late

Trump Issues Executive Order on Cybersecurity Rolling Back Some Prior Policies and Introducing New Ones

GAO Reaffirms Agencies’ Discretion to Award Sole-Source SBIR Phase III Contracts (Even to a Successor-in-Interest)

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Forty-five years after enactment of the Contract Disputes Act of 1978 (CDA), contractors and agencies still often struggle to identify what is and isn’t a CDA claim—a term the CDA itself does not define. Until the CDA’s administrative dispute process is complete, a contractor is jurisdictionally barred from bringing its claim (or its challenge to a government claim) to a Board of Contract Appeals or the Court of Federal Claims. For contractors (and agencies) navigating the CDA’s superficially simple procedures and deceptively clear timelines, such uncertainty can jeopardize otherwise meritorious claims.    In <a href="https://cafc.uscourts.gov/opinions-orders/22-1035.OPINION.4-25-2023_2116161.pdf" target="_blank">Lockheed Martin Aeronautics Company v. Secretary of the Air Force</a>, the Court of Appeals for the Federal Circuit provides a clear answer to what a claim is, at least with respect to a contracting officer’s unilateral definitization of an undefinitized contract action (UCA).  Federal Circuit: A Unilateral Definitization Is Not a CDA ClaimUCAs or “letter contracts” are mechanisms that allow an agency to authorize critical contract performance to begin before the parties have settled on all contractual terms and conditions—even price. In a typical UCA scenario, the agency authorizes the contractor to begin work and reimburses a fraction of the contractor’s incurred costs, subject to a cost ceiling, and the parties agree promptly to determine definite terms and figure out a price while performance proceeds. As we have commented before (<a href="https://govcon.mofo.com/topics/undefinitized-contract-action-proposed-rule" target="_self">Undefinitized Contract Action Proposed Rule</a> and <a href="https://govcon.mofo.com/topics/the-basics-of-undefinitized-contractual-actions-ucas" target="_self">The Basics of Undefinitized Contractual Actions (UCAS)</a>), UCAs pose risks to contractors, have a history of abuse, and are supposed to be used only on those rare occasions when it is critical that work begin immediately and there is no time to negotiate definitive terms. See FAR 16.302; DFARS Subpart 217.74. In Lockheed Martin, two UCAs worth billions of dollars remained undefinitized for years before the Air Force unilaterally definitized their terms and set their prices at amounts with which the contractor disagreed. (The fact that the government awarded the contracts as UCAs in the first place and then left them undefinitized for years is a cautionary tale for another blog post.) The contractor treated the unilateral definitizations as government claims and appealed them directly to the Armed Services Board of Contract Appeals. The government moved for dismissal of the appeal for lack of jurisdiction, arguing the underlying claim was really a contractor claim that was never submitted to the contracting officer for a final decision—thus barring an appeal. Is a unilateral definitization a government claim that may immediately be appealed? Or must a contractor first submit its own mirror-image claim to the contracting officer for what the contractor contends the correct definitization amount should be? The latter approach would entail requesting a contracting officer’s final decision on the same question the contracting officer has already decided and proceeding to a Board or the Court of Federal Claims only after receiving a contracting officer’s final decision, which presumably will be the same decision already reflected in the contracting officer’s definitization determination. In a divided opinion, the Armed Services Board held that an earlier Board decision from 1988 compelled it to dismiss the appeal for lack of jurisdiction. Over the dissent of one Board judge, the majority found that the 1988 case was still good law and binding precedent. Based on that precedent, the Board held that, if a contractor disagrees with a contracting officer’s unilateral definitization of a UCA, the contractor must submit its own claim to the contracting officer and wait for a final decision. Until that process is completed, the Board held it lacks jurisdiction over an appeal of the dispute. The contractor appealed, and the Federal Circuit <a href="https://cafc.uscourts.gov/opinions-orders/22-1035.OPINION.4-25-2023_2116161.pdf" target="_blank">affirmed</a> the Board’s decision. The Court acknowledged “it is not always clear whether a claim has been made and, if so, which party made it” and lamented that the CDA itself provides only “minimal guidance” on what a claim may be. Following its own precedent, the Circuit cited the Federal Acquisition Regulation’s definition of a “claim” as a “written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract.” FAR 2.101. The Court found the government’s unilateral definitization of price simply followed the definitization procedures spelled out in the UCAs themselves. The Court determined the contractor was the only party “making a demand or an assertion seeking relief,” and, therefore, only the contractor had a potential claim—one that it must submit to the contracting officer for a final decision before seeking review of the claim by a Board or the Court. This surely is not the result the contractor hoped for, but at least it is a clear and easily applied rule for future contractors to follow.  TakeawaysOver the years, the lack of clarity about what a CDA claim is has caused contractors and agencies many troubles and generated abundant litigation. The uncertainty about definitization claims is now resolved, but plenty of other CDA uncertainty remains. There is the recurring problem of when a request for equitable adjustment is a claim (sometimes it is, and sometimes it isn’t, without a bright-line way to distinguish one from the other). Guessing wrong can cause one to miss crucial deadlines to assert a claim or file an appeal. There is also <a href="http://cafc.uscourts.gov/sites/default/files/opinions-orders/09-5024.pdf" target="_blank">the problem</a> of when one party’s defense to a claim might constitute a separate claim: if a defense is deemed a separate claim, the defending party must run the defense through the administrative disputes process before a Board or the Court may consider it; if the defense isn’t deemed a claim, the party is not required to jump over those procedural hurdles. As Judge Solomson of the Court of Federal Claims <a href="https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2020cv1903-29-0" target="_blank">recently commented in yet another controversy</a> over the definition of “claim,” the lack of clear rules “gives rise to the jurisprudential equivalent of situational ethics, jurisdictional confusion and, thus, extensive litigation,” which is “unfortunate and imposes unnecessary costs on the procurement system and, in turn, the public fisc.” It also can lead to injustice, when a party that does its best to comply with the fuzzy rules but guesses wrong and cannot recover on a meritorious claim. In Lockheed, the contractor was prudent enough both to file its immediate appeal of the definitization as a government claim and submit a contractor claim to the contracting officer—meaning its claim eventually will be judged on its merits, notwithstanding the loss in the Federal Circuit. The contractor’s attorneys clearly were tracking the risks, watching the statute of limitations, and taking steps to mitigate the uncertainty.   Thanks to Lockheed, we now know how to handle definitization-related claims. But, until the powers that be resolve all the other areas lacking clarity, contractors and contracting officers alike would do well to seek good legal counsel when deciding whether a CDA claim may have accrued or been asserted.

Challenging Unilateral Definitizations of Undefinitized Contract Actions: What Is a Claim?

Jim Tucker is of counsel in Morrison & Foerster’s Government Contracts and Public Procurement Practice Group and is based in the firm’s Washington, D.C. office.
Jim’s practice runs the gamut of litiga

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Challenging Unilateral Definitizations of Undefinitized Contract Actions: What Is a Claim?

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Forty-five years after enactment of the Contract Disputes Act of 1978 (CDA), contractors and agencies still often struggle to identify what is and isn’t a CDA claim—a term the CDA itself does not define.

Federal Procurement

Defense

Compliance

The following is an excerpt from “Quarterly Cartel Catch-Up: Recent Developments in Criminal Antitrust for Busy Corporate Counsel ‒ 2nd Quarter 2020.” To read the entire newsletter, please click <a rel="noopener noreferrer" target="_blank" href="https://www.mofo.com/resources/insights/200706-quarterly-cartel-catch-up.html">here</a>.Division Continues Increased Focus on Procurement Collusion, Presents Strike Force to International EnforcersKey Point: The Division has heightened scrutiny of anticompetitive conduct in the public procurement space in the first half of 2020.On April 8, 2020, the Division <a rel="noopener noreferrer" target="_blank" href="https://www.justice.gov/opa/pr/doj-agrees-civil-settlement-additional-firm-involved-bid-rigging-and-fraud-targeting-defense">announced</a> that South Korea-based fuel supply company Jier Shin Korea Co. Ltd., and its president, Sang Joo Lee, agreed to pay $2 million to resolve civil antitrust and False Claims Act violations for their involvement in a bid‑rigging conspiracy that targeted contracts to supply fuel to U.S. military bases in South Korea. This resolution marks the conclusion of the Division’s investigation, in conjunction with the Civil Division, which previously resulted in settlements with six additional fuel suppliers.  The settlements have totaled over $205 million in civil penalties and an additional $150 million in criminal fines. In each case, the Division relied on Section 4A of the Clayton Act, which permits the government to recover treble civil damages when it is the victim of a violation of the antitrust laws.The Division’s increased reliance on Section 4A is part of a broader focus on collusion in government contracting, which led to the creation of a Procurement Collusion Strike Force (PCSF) in November of 2019. On June 16, 2020, AAG Makan Delrahim <a rel="noopener noreferrer" target="_blank" href="https://www.justice.gov/opa/pr/assistant-attorney-general-makan-delrahim-presents-procurement-collusion-strike-force">presented </a>on the PCSF at a meeting of the Organization for Economic Cooperation and Development’s (OECD’s) Competition Committee, which brought together enforcers from over 38 countries and seeks to promote cooperation and best practices on competition issues. Delrahim explained that the PCSF serves as an important tool in facilitating cooperation across multiple federal and state law enforcement agencies and has already shown signs of success, including several open grand jury investigations. Delrahim also expressed hope that the PCSF could serve as a model to other competition authorities seeking to fight more effectively bid rigging and other anticompetitive conduct in government contracting. We will continue to monitor developments from the PCSF and any future international counterparts, including efforts related to anticompetitive conduct resulting from the COVID-19 pandemic.

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Co-chair Global Antitrust Law Practice Group


Lisa M. Phelan, former Chief of the National Criminal Enforcement and Washington Criminal I Sections of the Antitrust Division of the U.S. Department of Justice (DOJ), is a partner and Co-Chair of Mo

Lisa M. Phelan

Lisa Phelan

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Eliot Adelson is a partner in Morrison Foerster’s Global Antitrust Litigation practice where he handles complex legal issues facing clients in jurisdictions around the world. 

Eliot Adelson

Eliot A. Adelson

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Megan E. Gerking is a partner in Morrison & Foerster’s Global Antitrust Law Practice, where she specializes in government-facing antitrust matters. Megan represents companies in criminal and civil con

Megan Gerking

Megan E. Gerking

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Division Continues Increased Focus on Procurement Collusion, Presents Strike Force to International Enforcers

CIO-SP4 Draft RFP Implications for JV/Partnerships

The following is an excerpt from “Quarterly Cartel Catch-Up: Recent Developments in Criminal Antitrust for Busy Corporate Counsel ‒ 2nd Quarter 2020.” To read t

Division Continues Increased Focus on Procurement Collusion, Presents Strike Force to International Enforcers

False Claims Act

We have <a href="https://govcon.mofo.com/defense/who-bears-the-risks-of-war/">previously written</a> about the challenges contractors face when pursuing costs incurred because of combat zone risks.  These risks, and the resulting costs, can be unpredictable and are not always compensable.  In ECC Int’l Constructors, LLC, ASBCA No. 59138, 19-1 BCA ¶ 37252 (Jan. 24, 2019), for example, the Armed Services Board of Contract Appeals (“Board”) held that the Army was not liable for the inclusion of a construction site within the secure perimeter of an International Security and Assistance Force (“ISAF”) base because the contract’s discussion of security requirements did not amount to a warranty that ISAF would not change the security procedures for the site.  On appeal, the Federal Circuit affirmed.ECC International Constructors, LLC (“ECC” or “appellant”) contracted with the U.S. Government to construct a compound outside the ISAF military base in Afghanistan.  The ISAF was a third party, not an agency of the U.S. Government.  The contract provided that “[t]he Compound will be sited … on a dedicated area located outside the perimeter fencing of the existing base.”  ECC Int’l Constructors, LLC, ASBCA No. 59138, 19-1 BCA ¶ 37252 (Jan. 24, 2019).  Because the compound would be outside the base security perimeter, the construction site for that compound was not subject to base security procedures.  Instead, the contract required ECC to erect a temporary security fence around the project and to provide physical security for the compound and all materials, supplies, and equipment.That arrangement eventually changed.  “Initially, appellant performed its work on the compound outside the base security fence, not subject to base security procedures, and provided the security measures that the contract required, including temporary fencing, necessary to secure the compound; however, in 2012, ISAF (1) completed an expansion of the base security fence that encompassed the contract work site; and (2) exercised its authority to establish, monitor, and enforce all of the strict base security procedures at the contract work site.”  Id.ECC argued that the imposition of base security procedures amounted to a constructive change to the contract.  ECC filed a motion for summary judgment arguing that ISAF’s actions breached an express warranty that (1) the contract work would take place outside the base perimeter; (2) ECC would control security and access to the contract work site; and (3) ECC would control when the work site would be “tied-in” to the base and thus become subject to base security procedures.  ECC contended that ISAF’s extension of base security procedures to the work site, in violation of these warranties, constituted a constructive change to the contract.  The government cross-moved for summary judgment, arguing that ECC was not entitled to compensation for ISAF’s security procedures.The key question in the case became “whether, when a third party controlling a military base interfered with access to a compound that the government contracted appellant to build outside the base, an express contract warranty was breached, entitling appellant to recover for a constructive change to the contract.”  Id.In answer to that question, the Board stated, “absent fault or negligence or an unqualified warranty on the part of its representatives, the government is not liable for damages resulting from the action of third parties.” Id. (citing Oman-Fischbach International (JV) v. Pirie, 276 F.3d 1380, 1385 (Fed. Cir. 2002)).  “Unless the parties in unmistakable terms agreed to shift the risk of increased costs due to acts by the ISAF, no liability on the part of the government attaches from such acts.”  Id.  Because the parties did not agree in unmistakable terms that the Government would assume the risk of increased costs resulting from acts of ISAF that affected access to the work site, the Board concluded that there was no breach of a contract warranty and no constructive change to the contract.  Therefore, appellant was not entitled to compensation for costs and delays incurred because of ISAF’s base security procedures at the contract work site.  The Board granted the Government’s request for partial summary judgment that “[t]he change to the security posture of the … Compound was not a constructive change to the Contract for which [appellant] is entitled to Compensation.”  Id.On appeal, the Federal Circuit affirmed the Board’s conclusion that the change in security posture was not a constructive change.  ECC Int’l Constructors, LLC v. Sec’y of the Army, 817 F. App’x 952 (Fed. Cir. 2020).  The Federal Circuit reasoned that ISAF is a third party, and the expansion of the ISAF military base in Afghanistan was the act of that third party, not the U.S. Government.  “[T]he government is not liable under contract for increased costs caused by acts of a third party absent the breach of an unqualified warranty that would amount to a constructive change in the agreed terms.”  Id. at 953.The Federal Circuit agreed with the ASBCA that there was no meaningful distinction between this case and Oman-Fischbach.  As the Federal Circuit explained, “[i]n Oman‑ Fischbach, the mere fact that the contract depicted several routes to a disposal site on a map did not explicitly assure the contractor of access to any particular route.”  Id. at 954.  Similarly, in ECC’s case, there were no contract provisions warranting that ISAF would not change the security procedures that would apply to the worksite.  “ECC’s contractual responsibility to enforce security procedures on the work site did not unmistakably give it the right to determine the particular security procedures applicable thereto or the timing of when the work site might be brought within the Base perimeter fence and subject to heightened security procedures.”  Id.  The Federal Circuit thus affirmed the ASBCA’s decision that ECC bore the risk of changes to base access, because the changes in security procedures were not a constructive change entitling ECC to compensation.The Federal Circuit also agreed with the Board that various contemporaneous communications cited by ECC were insufficient to establish that the contract contained an unmistakable warranty.  Id. at 954-55.  As the Court explained, the contract itself was clear on its face, making it unnecessary and inappropriate to resort to parole evidence.  Id.  In addition, the Court pointed out that parole evidence is generally limited to communications occurring before a dispute arises, while the communications cited by ECC in this case came after the security situation had changed.  Id.<a href="#_ftn1" name="_ftnref1">[1]</a> Perhaps most importantly, the Court also observed that the communications were not as clear as ECC contended.  Id.  ECC’s unsuccessful attempt to rely on parole evidence drives home the importance of focusing on what the contract itself says.While the results in cases stemming from war zone risks can run the gamut, the Federal Circuit’s affirmation in this case confirms the one point that is clear from all of those cases: contractors should look closely at how contract provisions allocate the risk of additional costs or delays that may arise in a combat environment and should think carefully about how to respond when security, access, or other types of changes occur.<a href="#_ftnref1" name="_ftn1">[1]</a> The general preference for pre-dispute evidence seems designed to prevent a party from citing its own posturing as support for its position.  In this case, however, the Board and the Court disregarded post-dispute communications by the Government that arguably were contrary to the Government’s litigation position.  It is not clear whether the preference for pre-dispute communications should bar this type of evidence, which is in essence an admission against interest.

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J. Alex Ward is co-chair of Morrison Foerster’s Government Contracts and Public Procurement group. 

J. Ward

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Associate

Tori Dalcourt Angle is an associate in the Government Contracts practice in Morrison Foerster’s Washington, D.C. office.
Tori advises clients on various government contract matters, including both pre

Victoria Dalcourt Angle

Victoria Angle

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Who Bears the Risks of War? Federal Circuit Affirms ASBCA’s Decision That the Contractor Bore the Risk of Changes to Worksite’s Security

Who Bears the Risks of War? Federal Circuit Affirms ASBCA’s Decision That the Contractor Bore the Risk of Changes to Worksite’s Security