G4s Technology LLC v. United States
2015 U.S. App. LEXIS 3547
| Fed. Cir. | 2015Background
- RUS (USDA) made a $267M loan to Open Range to build rural broadband; Open Range subcontracted work to firms including G4S under MSAs approved as templates by RUS.
- Open Range lost spectrum rights in 2010, threatening project viability and subcontractor payments; RUS repeatedly issued letters, advanced funds into a pledged deposit account (PDA), and publicly reassured vendors to preserve the project.
- The loan was amended in April 2011 to downsize the project and required additional equity from OEP; Schedules B-1/B-2 attached to the amendment listed outstanding subcontractor arrears (including amounts owed to G4S).
- RUS advanced funds tied to those schedules and Open Range paid G4S $2.7M but remained insolvent; Open Range later filed bankruptcy.
- G4S sued in the Court of Federal Claims alleging the government was liable on G4S’s contract claims as a third-party beneficiary; the claims survived initial jurisdictional scrutiny but the court granted summary judgment for the government, holding G4S was not a third-party beneficiary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether G4S is a third-party beneficiary of the RUS–Open Range contract | RUS’s use of PDA, approved MSA template, schedules listing arrears, public assurances, and fund advances show intent to directly benefit and guarantee payment to subcontractors | Government’s actions reflect standard oversight and safeguarding of taxpayer funds; payments were made to Open Range (not directly to G4S) and documents (PDA, MSA, schedules) are routine, not promises to subcontractors | No — G4S is not a third-party beneficiary; evidence insufficient to show government intended to be directly liable |
| Whether circumstantial evidence (letters, emails, assurances) creates triable issue on intent to bind government | Reassurances induced continued performance; RUS’ communications and offers to speak with vendors show intent to ensure subcontractors paid | Communications aimed to restore Open Range’s credibility so it could pay subcontractors; RUS did not directly promise payment or communicate with G4S | No — communications are consistent with oversight and do not show intent to create direct obligations to subcontractors |
| Whether standard contractual mechanisms (PDA, MSA, schedules) converted indirect funding into direct government payment obligation | These mechanisms show RUS approval and knowledge of subcontractor obligations and functioned to secure payment to subcontractors | These are standard, regulatory-driven oversight tools intended to protect public funds, not to create enforceable rights for subcontractors | No — standard mechanisms alone do not confer third-party beneficiary status |
| Whether summary judgment was appropriate given record and legal standards | Factual record (advances, schedules, assurances) raises non-frivolous claim and precludes summary disposition | Even viewing facts favorably to G4S, law requires a direct benefit and objective intent attributable to contracting officer; those are absent | Affirmed — summary judgment for the government was proper |
Key Cases Cited
- Astra USA Inc. v. Santa Clara Cnty., 131 S. Ct. 1342 (Sup. Ct.) (no third‑party beneficiary inference where contract merely incorporates statutorily required terms)
- German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220 (U.S.) (third‑party beneficiary privilege is exceptional; benefit must be direct)
- Glass v. United States, 258 F.3d 1349 (Fed. Cir.) (intent to benefit must be express or implied and attributable to contracting officer; benefit must be direct)
- D & H Distrib. Co. v. United States, 102 F.3d 542 (Fed. Cir.) (government made subcontractor a beneficiary where payment mechanism created direct payment relationship)
- U.S. Ecology, Inc. v. United States, 245 F.3d 1352 (Fed. Cir.) (substantial government oversight does not by itself create third‑party beneficiary status)
- J.G.B. Enterprises, Inc. v. United States, 497 F.3d 1259 (Fed. Cir.) (escrow/direct payment mechanisms supported third‑party beneficiary finding)
- Flexfab, L.L.C. v. United States, 424 F.3d 1254 (Fed. Cir.) (third‑party beneficiary status should not be granted liberally)
- Metcalf Constr. Co. v. United States, 742 F.3d 984 (Fed. Cir.) (government contract performance governed by general duty of good faith and fair dealing)