As we highlighted yesterday, two cases being argued in May at the Federal Circuit attracted amicus briefs. One of these cases is ACLR, LLC v. United States, a government contract case. In this case, the Federal Circuit will review a judgment of the Court of Federal Claims, which granted the government’s motion for summary judgment. This is our argument preview.
In its opening brief, ACLR argues the Court of Federal Claims “erred in denying” its motion for summary judgment “on its breach of contract claim . . . because there was undisputed evidence of the Government’s breach.” It contends the lower court should not have applied “retroactive constructive termination” because the government entered the contract with “no intent to honor” it, “waived any constructive termination for convince defense, and there are unique facts here that do not justify constructive termination.”
ACLR also argues the lower court “erred in granting” the government’s motion for summary judgment regarding ACLR’s breach of duty of good faith and fair dealing claims because the facts it relied on for those claims are “unique” from the facts in support of its breach of contract claim. It argues ACLR was “entitled to compensation for a percentage of its contract price” because “in any termination for convenience action, a contractor’s work efforts must be compensated” either by “a percentage of contract price analysis” or by looking to “reasonable charges” as a result of the termination. It contends the lower court’s reasoning “was flawed because it eliminates the possibility that contractors operating under contingency fee contracts can recover” under the percentage analysis.
ACLR also argues that the lower court was incorrect in holding that the ACLR failed to “make any argument about the reasonableness” of its settlement costs and that costs “associated with prosecuting a claim against the United States are not allowable.” Finally, ACLR contends, the lower court erred when granting the government’s motion for summary judgment “on the issues of ACLR’s standard record keeping system” when it did maintain a system from which it “could prove its costs.”
The government, in its response brief, counters ACLR’s arguments by asserting that the lower court correctly granted summary judgment to the United States in two decisions and correctly denied summary judgment to ACLR on ACLR’s claims involving constructive termination for convenience. It argues that, because ACLR’s contract contained a termination for convenience clause, the lower court appropriately held that the government’s cancellation of the two audits resulted in a constructive termination for convenience, not a breach of contract.
The government argues the lower court correctly denied ACLR’s motion for summary judgment for “failing to prove entitlement to termination for convince damages.” It contends the lower court correctly granted its cross-motion for summary judgment, “finding that ACLR failed to demonstrate compliance with FAR 52.212-4(l)’s requirement of maintaining a ‘standard record keeping system’ to demonstrate termination for convenience costs.” And, the government argues, instead of “demonstrating error in the trial court’s decisions” the appellants “rase a host of new arguments” that it waived by failing to raise at the trial court.
In its reply brief, ACLR maintains the government incorrectly argues the lower court’s “retroactive constructive termination for convenience was appropriate” because it disregards precedent. ACLR reiterates that the lower court “erred when it failed to grant ACLR summary judgment on its breach of contract claim.” ACLR argues there is “overwhelming evidence” to support its claim that “CMS’s purported interference, hindrance, and lack of cooperation.”
The Coalition for Government Procurement filed an amicus brief in support of the appellant and reversal. It argues the lower court’s interpretation of FAR 52.212-4(I) is “contrary to the plain language of the provision” and the “regulatory scheme as a whole.”
Oral argument will be heard on Wednesday, May 8. We will keep track of this case and report on any developments.