1:24-cv-00447
Fed. Cl.Jun 24, 2025Background
- SLSCO, Ltd. (SLS) was contracted by the United States Army Corps of Engineers (USACE) in 2019 to construct miles of border wall in New Mexico, but the project faced delays due to environmental litigation, disputes over price and schedule, and subsequent unilateral modifications by USACE.
- SLSCO did not comply with certain contractual notice provisions required by the Federal Acquisition Regulation (FAR) when USACE unilaterally modified the contract schedule and scope, nor did it request time extensions for delays.
- USACE issued an initial Contractor Performance Assessment Report (CPAR) rating SLS as "Marginal" in all areas for 2020; after challenge, this CPAR was vacated, but a new consolidated 2021 CPAR again rated SLS "Marginal" or "Unsatisfactory" in key areas.
- SLSCO challenged the 2021 CPAR ratings through the Contract Disputes Act (CDA), arguing procedural errors (untimely and overly broad CPAR) and substantive errors (arbitrary, inaccurate evaluations).
- SLSCO filed suit under the Tucker Act and CDA, seeking to have negative CPAR ratings vacated and reassessed; the United States moved to dismiss for lack of standing and failure to state a claim.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Standing- Procedural CPAR violations | SLS was harmed by late, non-annual CPAR (denied opportunity to remedy performance) | No prejudice shown; minor procedural violations require showing of prejudice per Federal Circuit precedent | No standing; allegations insufficient to show prejudice per Todd Construction |
| Breach of Contract (CPAR ratings) | Failure to follow FAR 42.15 CPAR requirements is a breach of contract | FAR 42.15 not incorporated into contract unless expressly referenced | No breach; FAR 42.15 not incorporated into contract, so no duty breached |
| Substantive CPAR ratings (Arbitrary/Capricious) | CPAR's negative ratings unjustified, failed to properly account for SLS's performance | SLS did not deny key deficiencies; evaluations were reasonable per CPAR guidance | No plausible claim; ratings were not arbitrary or capricious |
| Breach of Good Faith, Fair Dealing, and Duty to Cooperate | USACE's issuance of an unfair CPAR violates implied covenants | Implied duties cannot expand obligations beyond contract terms | No claim; no contractual tether for implied duty claim |
Key Cases Cited
- United States v. Testan, 424 U.S. 392 (Supreme Court clarified that subject-matter jurisdiction requires a clear waiver of sovereign immunity)
- Allen v. Wright, 468 U.S. 737 (Defines elements of Article III standing)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Pleading standard for plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (Factual vs. conclusory pleadings)
- Todd Construction, L.P. v. United States, 656 F.3d 1306 (Precedent for standing and pleading requirements in CPAR procedural challenges)
- Metcalf Constr. Co. v. United States, 742 F.3d 984 (Implied covenant of good faith and fair dealing explained)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Limits of implied covenant in government contracts)
- Wilner v. United States, 24 F.3d 1397 (CDA de novo standard of review)
- Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283 (Implied duty not to hinder or delay performance)