THE CENTECH GROUP, INC. v. United States
1:19-cv-01752
| Fed. Cl. | Mar 11, 2025Background
- CENTECH, a government contractor, sued the U.S. Air Force for breach of contract after the Air Force canceled a previously approved Bill of Materials (BOM) for communications infrastructure at Vandenberg Air Force Base.
- CENTECH had acquired the BOM materials through subcontractor Iron Bow, following explicit government approval, and incurred nearly $2 million in costs, plus expenses for storage, transport, and insurance after the Air Force refused to accept or pay for the materials.
- The Air Force halted the installation due to concerns over labor costs, approved only partial invoicing for delivered materials, and instructed CENTECH to cancel the remainder of the BOM order.
- CENTECH submitted claims for damages under the Contract Disputes Act, including the cost of materials, related handling expenses, and attorneys’ fees incurred during negotiation.
- The matter is before the Court on cross-motions for summary judgment regarding breach, damages, and entitlement to attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to reimburse for BOM materials | USAF approved purchase; CENTECH complied with contract; entitled to reimbursement for all materials | Materials weren't ultimately required/used; full reimbursement not owed | USAF breached duty by failing to reimburse for all government-approved materials |
| Effect of delivery/invoicing compliance | Failure to deliver or invoice via proper system was technical, not material; USAF prevented completion | Materials were neither delivered nor accepted; contract not complied with | Delivery/acceptance requirements excused as USAF hindered performance; noncompliance not material breach |
| Damages for handling (storage/transport/insurance) | Costs arose naturally from breach; were foreseeable and directly caused by USAF’s failure to pay | Costs are indirect/collateral; not directly caused by USAF’s breach | Costs were foreseeable and directly caused by breach; genuine factual disputes over mitigation remain |
| Attorneys’ fees as contract administration costs | Fees were for pre-claim negotiations, reasonable under FAR | Fees relate to Iron Bow (no longer a subcontractor) and are mostly for claim/litigation, thus unallowable | Factual dispute: unclear if fees were for negotiation vs. claim prosecution; no summary judgment |
Key Cases Cited
- San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957 (Fed. Cir. 1989) (sets forth requirements for breach of contract claim: contract, duty, breach, damages)
- Coast Fed. Bank, FSB v. United States, 323 F.3d 1035 (Fed. Cir. 2003) (plain language of unambiguous contracts governs)
- LAI Servs., Inc. v. Gates, 573 F.3d 1306 (Fed. Cir. 2009) (plain contract language controls interpretation)
- Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) (non-breaching party must act reasonably to mitigate damages)
- Bill Strong Enters., Inc. v. Shannon, 49 F.3d 1541 (Fed. Cir. 1995) (standard for distinguishing allowable contract administration costs from unallowable claim prosecution costs)