Financial & Realty Services, LLC v. United States
128 Fed. Cl. 770
| Fed. Cl. | 2016Background
- FRS held a firm-fixed-price GSA task order for on-site project management at the New Orleans field office priced at $8,809.60/month; task order required personnel cleared by NACI and an alternate for absences.
- The incumbent PM resigned effective October 9, 2014; FRS proposed replacements (Williams, then Lombard); GSA approved candidates and initiated security screening.
- No cleared project manager or alternate was on site from October 10, 2014 through January 11, 2015; FRS invoiced for full months October–December 2014 and January 2015.
- GSA refused payment for October–December 2014 (paid January 2015), citing that it would not pay for services not rendered and offering alternatives (contract extension or extra hours); FRS submitted a contractual claim for $26,428.80.
- Contracting officer denied the October–December invoices; FRS sued in the Court of Federal Claims for breach of contract, arguing the government-caused security-screening delay excused nonperformance and that the firm-fixed-price nature required payment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether firm-fixed-price task order entitles FRS to full monthly payments despite not providing services | Firm-fixed-price obligates GSA to pay monthly fee; FRS sought full payment for Oct–Dec 2014 | Government need not pay for services not performed even under fixed-price contracts | Held for GSA except for Oct 1–9: no duty to pay for periods when FRS did not perform beyond the brief Oct 1–9 period |
| Whether government security-screening delay excuses FRS’s nonperformance | Delay was caused by government screening over which FRS had no control; FRS took timely steps to nominate replacements | FRS was contractually obligated to maintain cleared personnel and an alternate; failure to do so was FRS’s responsibility | Held for GSA: plaintiff failed to plausibly allege government-caused, unreasonable delay that excuses nonperformance |
| Whether GSA waived its right to deny payment by initiating screening, not issuing cure notices, and later paying | FRS asserts GSA’s conduct constituted waiver of defense to nonpayment | GSA’s contemporaneous communications warned it would not pay for unrendered services; later payments unrelated to disputed months; no waiver shown | Held for GSA: waiver argument unpersuasive and not pleaded adequately |
| Proper scope of pleadings on contract interpretation at motion to dismiss | FRS contends facts suffice to plead breach for entire period invoiced | Government argues contract terms control and interpretation may be resolved at pleading stage | Held: contract interpretation appropriate at 12(b)(6); complaint survives only as to Oct 1–9, 2014 and is dismissed for Oct 10–Dec 31, 2014 |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must permit reasonable inference of liability)
- TEG-Paradigm Envtl., Inc. v. United States, 465 F.3d 1329 (Fed. Cir. 2006) (government entitled to strict compliance with contract specs)
- P.R. Burke Corp. v. United States, 277 F.3d 1346 (Fed. Cir. 2002) (government-caused delay recoverable only if contractor shows government alone delayed work)
- Ind. Mich. Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) (measure and limits of contract damages)