NCLN20, Inc. v. United States
99 Fed. Cl. 734
Fed. Cl.2011Background
- GSA awarded two Michigan contracts to NCLN20: Michigan Guard Contract (security guards) and Battle Creek Contract (alarm monitoring/telecom).
- The Michigan Guard Contract was indefinite delivery, fixed-price with post-award task orders; start date was October 1, 2001, with potential 4 one-year options.
- NCLN20 misbid on August 23, 2001 (mistake in bid) but withdrew it under a signed accord; formal award followed in September 2001.
- GSA terminated the Michigan Guard Contract for default on September 28, 2001 for failure to obtain required weapons licenses and start-up readiness; later converted to a termination for convenience in 2007.
- GSA paid some Battle Creek invoices but withheld others related to the Michigan termination; GSA later released Battle Creek payments in 2008 with interest due under the CDA.
- NCLN20 sought damages under the Contracts and CDA, leading to the court’s 2008–2011 proceedings, culminating in a decision that certain post-termination start-up costs and interest are payable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was GSA’s post-award guard-post requirement a breach of the Michigan Guard Contract? | NCLN20 alleges increased posts violated contract terms and timing; seeks breach for not amending/payments. | GSA had right to issue post-award task orders for guard posts under the contract; no breach. | No breach; post-award staffing allowed by contract; no denial of good faith. |
| Was the September 28, 2001 termination for default lawful? | Termination without a ten-day cure period and failure to honor cure requirements was unlawful. | Termination justified for failure to progress; cure not required under contract terms at that moment. | Unlawful termination for default; converted to termination for convenience. |
| Was the 2007 conversion to termination for convenience improper due to bad faith or abuse of discretion? | GSA acted with animus or sought a better bargain via bad faith. | No clear evidence of bad faith or discretionary abuse; CO acted within bounds. | Not improper; no clear bad faith or abuse of discretion. |
| Did GSA’s handling of the Battle Creek Contract constitute bad faith or breach of implied duties? | Withholding/offsetting payments and alleged interference with performance. | Offsets and payment handling were lawful; no implied breach. | No violation of good faith or implied duties in Battle Creek administration. |
| Did GSA enter into an implied-in-fact contract to extend the Battle Creek Contract? | There was an alleged verbal extension beyond September 2001. | No binding implied contract; written proposals and unilateral actions did not establish mutuality of contract. | No implied-in-fact extension. |
| Are NCLN20’s CDA claims cognizable given jurisdictional requirements? | CDA certification and final decision satisfied; claims timely and properly certified. | Some CDA prerequisites satisfied; others denied or deemed denied; court has jurisdiction for certain claims. | CDA prerequisites satisfied; court adjudicates Michigan Guard and Battle Creek claims; tort claims dismissed. |
Key Cases Cited
- Keeter Trading Co. v. United States, 79 Fed.Cl. 243 (2007) (termination for convenience must be justified; bad faith requires clear proof)
- Krygoski Constr. Co., Inc. v. United States, 94 F.3d 1537 (Fed.Cir.1996) (damages from termination for convenience exclude anticipated profits absent bad faith)
- Salsbury Indus. v. United States, 905 F.2d 1518 (Fed.Cir.1990) (contracting with no intention to honor a contract invalidates a convenience termination)
- Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283 (Fed.Cir.2000) (anticipatory repudiation and duty to segregate delays/matters in government contracts)
- Bailey Specialized Bldgs., Inc. v. United States, 404 F.2d 355 (Ct.Cl.1968) (failure to provide ten-day cure period constitutes wrongful termination)