Aegis Defense Services, LLC, f/k/a Aegis Defence Services Ltd.
ASBCA No. 59082, 60111, 60259
| A.S.B.C.A. | Nov 15, 2017Background
- Aegis (contractor) performed a task order (TO 2) under an Army ID/IQ contract to provide security services in Iraq; the government agreed to provide 155 up‑armored SUVs (LAVs) for use, with Aegis registering them in its name to comply with Iraqi requirements.
- Aegis submitted proposals to purchase 52 LAVs on behalf of the government; Mod 6 incorporated Aegis’s 11 Dec 2011 proposal for 14 vehicles and Mods 7 and 10 amended the PWS to reflect contractor purchase/registration and stated that if the USG did not wish to take title, the contractor would be given a first right of refusal to negotiate purchase.
- Aegis purchased, titled, and registered the 52 LAVs (contractor-acquired for government use) and used them during performance; contract close‑out approached and Aegis sought to exercise its contractual right to negotiate purchase if the government had no further use.
- Internal government review vacillated; some officials agreed to sell, but DoD demilitarization/export-control guidance was cited by decisionmakers as precluding sale to a civilian contractor, leading the CO to direct FEPP (transfer) of the LAVs to the Government of Iraq instead of selling to Aegis.
- Aegis submitted a non‑monetary claim; CO denied it. Aegis later submitted two monetary claims for the lost opportunity to buy the LAVs; appeals were filed with the ASBCA (Nos. 59082, 60111, 60259). The Board decided entitlement only.
Issues
| Issue | Plaintiff's Argument (Aegis) | Defendant's Argument (US) | Held |
|---|---|---|---|
| Whether contract granted Aegis a right of first refusal to purchase LAVs if USG had no further use | The incorporated proposal and modified PWS together give Aegis a right of first refusal when the Government had no further use for the vehicles | Government says PWS conditions trigger only if Government wishes to take title—i.e., depends on Government’s subjective desire, not on use | Held for Aegis: read together, contract reasonably requires offering the vehicles to Aegis if Government had no further use; “title” language reconciled as practical equivalent to “use.” |
| Whether the Government in fact had a use for the LAVs at contract end | Aegis contends the Government had no use and thus must have offered sale | Government contends transfer to Iraq furthered US interests and regulations precluded sale | Held for Aegis: contemporaneous internal emails and CO testimony show Government had no operational use; transfer to Iraq was disposal, not a use. |
| Whether Government’s regulatory/export-control concerns excuse nonperformance (legal impossibility / mutual mistake) | Aegis argues Government cannot rely on an unpleaded affirmative defense and offered no proof of impossibility | Government relied on perceived regulatory prohibitions but never pleaded mutual mistake or proved regulatory bar | Held for Aegis: Government waived and failed to prove any legal‑impossibility defense. |
| Whether damages are too speculative because sale price terms were not fixed | Aegis seeks damages based on the difference between what it paid for replacements and contract price formula it proposed | Government argues pricing was not agreed (proposal’s depreciation was rejected) so damages speculative | Held: Contract required negotiation of price (an agreement to agree obligating good‑faith negotiation). Entitlement remanded for quantum; Aegis must prove damages. |
Key Cases Cited
- United States v. Winstar Corp., 518 U.S. 839 (1996) (contract interpreted to effectuate parties’ intent)
- TEG‑Paradigm Environmental, Inc. v. United States, 465 F.3d 1329 (2006) (contract interpretation generally begins and ends with contract language)
- Hercules, Inc. v. United States, 292 F.3d 1378 (2002) (contract should be construed to give reasonable meaning to all parts)
- Hunkin Conkey Constr. Co. v. United States, 461 F.2d 1270 (1972) (rejecting interpretation that would render clause meaningless)
- Blinderman Constr. Co. v. United States, 695 F.2d 552 (1982) (contemporaneous construction entitled to great weight)
- North Star Steel Co. v. United States, 477 F.3d 1324 (2007) (agreement to negotiate imposes obligation to act in good faith)
- Gardiner, Kamya & Assocs., P.C. v. Jackson, 369 F.3d 1318 (2004) (agreements to agree can be sufficiently definite to support contract)