BOARHOG LLC v. United States
1:16-cv-00678
Fed. Cl.Nov 14, 2016Background
- Navy awarded Boarhog LLC a one-year, firm-fixed-price services contract ($476,216) on Sept. 18, 2014, with performance to begin Sept. 26, 2014.
- Two days before performance, on Sept. 24, 2014, the Navy terminated the contract for convenience to implement corrective action in response to an agency protest; the award was reissued to a competitor.
- Boarhog filed protests with the Navy, GAO, and this Court; the Navy later took corrective action and re-awarded an identical contract to Boarhog on March 10, 2015, and Boarhog began performance on March 26, 2015.
- Boarhog submitted a CDA claim seeking $229,608 for the six-month period it was prevented from performing (Sept. 26, 2014–Mar. 26, 2015); the contracting officer denied the claim, citing zero performance costs and the replacement award.
- Boarhog sued in the Court of Federal Claims; the Government moved to dismiss under RCFC 12(b)(6) for failure to state a claim. The Court granted the motion and dismissed without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Navy’s termination for convenience was a breach | Termination prevented Boarhog from performing for six months; termination was improper | Government argues termination for convenience is unilateral and lawful absent bad faith or abuse | Court: No breach alleged; Boarhog did not plead bad faith or abuse of discretion |
| Whether Boarhog pleaded facts sufficient to require discovery on bad faith | Court’s prior dismissal and corrective action imply government misconduct | Navy’s corrective action and dismissal do not establish bad faith | Court: Complaint lacks sufficient factual allegations to plausibly show bad faith |
| Whether Boarhog suffered compensable damages from the termination | Boarhog seeks $229,608 for lost performance period | Government: Boarhog incurred no performance costs, received replacement contract with identical terms | Court: No recoverable injury—Boarhog performed nothing under terminated contract, percentage performed = 0 |
| Availability of consequential or lost-profit damages after termination for convenience | Boarhog argues termination caused loss of anticipated earnings | Government: Contract and precedent bar recovery of anticipated profits/consequential damages absent other grounds | Court: Denies recovery of anticipated profits or consequential damages under the contract and case law |
Key Cases Cited
- Krygoski Const. Co. v. United States, 94 F.3d 1537 (Fed. Cir. 1996) (termination for convenience lawful absent bad faith or abuse of discretion)
- Salsbury Indus. v. United States, 905 F.2d 1518 (Fed. Cir. 1990) (contracting officer’s election to terminate for convenience is conclusive absent bad faith)
- TigerSwan, Inc. v. United States, 110 Fed. Cl. 336 (Fed. Cl. 2013) (contractor must show clear and convincing evidence of misconduct to overturn a termination for convenience)
- Kalvar Corp. v. United States, 211 Ct. Cl. 192 (Ct. Cl. 1976) (termination-for-convenience principles and limits on recovery)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard: plausible entitlement to relief required)
- Cary v. United States, 552 F.3d 1373 (Fed. Cir. 2009) (complaint must plausibly suggest entitlement to relief)
- Digital Techs., Inc. v. United States, 89 Fed. Cl. 711 (Fed. Cl. 2009) (contractor must plead sufficient facts to warrant further inquiry into entitlement)