Agility Defense & Government Services, Inc. v. United States
115 Fed. Cl. 247
Fed. Cl.2014Background
- DGS (formerly Taos) entered an IDIQ contract with the U.S. Army to procure Soviet-style weapons for Afghanistan security assistance, with firm fixed-price delivery orders and a $30,000–$50,000,000 order cap.
- Delivery Order 6 (Dec. 7, 2007) called for 225 SPG-9s at a fixed unit price of $5,864 each, total $1,319,400, with a delivery date of April 7, 2008.
- Hungarian and Bulgarian governments blocked weapon releases, delaying delivery; DGS did not deliver by April 7, 2008 and still hadn’t delivered by 2010.
- On April 1, 2010, Bilateral Modification 4 waived the April 7, 2010 delivery deadline and provided 20,000 YAK-B Links as late-delivery consideration; another modification would set a new delivery date.
- March 10, 2011 Bilateral Modification 7 allowed DGS to deliver new production SPG-9 variants, made delivery dates subject to government actions, and waived the 2-year post-original-date delivery restriction; no price increase was stated.
- DGS delivered 225 SPG-9s on December 24, 2011; it later sought an equitable adjustment of $1,369,377.47 (April 25, 2012) for costs to acquire the new variants; the contracting officer denied the REA and final claim, leading to this litigation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DGS is entitled to an equitable adjustment for additional costs on a fixed-price contract. | DGS argues government actions and contract modifications caused extra costs. | Fixed-price contracts allocate risk to the contractor; no basis for adjustment. | Denied for DGS; no equitable adjustment allowed. |
| Whether the Government constructively changed the contract by pressuring continued performance after April 7, 2010. | DGS asserts constructive change due to government insistence. | Modification 4/7, not a government-imposed change; parties agreed to new terms. | No constructive change; modifications show agreement, not unilateral change. |
| Whether express changes (FAR 52.243-1) justified an adjustment for delivering different SPG-9 variants. | Government required differing and more expensive goods. | Agreement to new production SPG-9 variants was mutual, not unilateral change. | Inapplicable; no unilateral change occurred. |
| Whether impossibility (commercial impracticability) justified an adjustment given risk of price performance. | Unforeseen events rendered original price impracticable. | Contract fixed-price allocates risk; market changes are ordinary risk. | Not available; contractor assumed risk of higher costs. |
Key Cases Cited
- Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed. Cir. 2002) (impossibility/practicability limitations and contractor risk under fixed-price contracts)
- Allegheny Teledyne Inc. v. United States, 316 F.3d 1366 (Fed. Cir. 2003) (contractor bears cost risk under fixed-price contracts)
- Dalton v. Cessna Aircraft Co., 98 F.3d 1298 (Fed. Cir. 1996) (contractor bears cost risk; impossible to adjust price under fixed-price)
- NavCom Def. Elecs., Inc. v. England, 53 F. App’x 897 (Fed. Cir. 2002) (lack of unilateral change; when government insists on contract-compliant performance, no adjustment)
- Int’l Data Prod. Corp. v. United States, 492 F.3d 1317 (Fed. Cir. 2007) (constructive change; equivalent to unauthorized work)