101 Fed. Cl. 1
Fed. Cl.2011Background
- Contract No. DTFH70-98-C-00027 between White Buffalo Construction and FHWA to repair Siskiyou National Forest roads; contract terminated for default and later converted to termination for convenience; FHWA sought to convert termination based on differing site conditions and environmental constraints; White Buffalo sought damages including lost profits and pre-termination costs; trial held with substantial documentary exhibits and 17 witnesses; court ultimately awarded damages of $352,237.36 plus interest and rejected bad-faith claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Government acted in bad faith in terminating the contract | White Buffalo contends bad faith and betrayal of duty of good faith. | FHWA acted within contract terms and FAR provisions; decisions were based on project realities. | No bad faith; termination conversion and conduct found to be in good faith. |
| Whether the termination for default was properly converted to a termination for convenience | Conversion was improper and intended to dodge liability for profits. | Conversion was reasonable given differing site conditions and project risks. | Conversion valid; termination for convenience substituted for default termination. |
| What costs and profits White Buffalo may recover under a termination for convenience | Entitled to anticipated profits plus pre-termination costs and certain settlement costs. | Costs limited to allowable termination costs; no post-termination profits; profits at 19% applied to pre-termination costs. | Recoverable costs found at $370,233; pre-termination profit at 19% resulting in $440,577.27 total costs; post-termination profits disallowed; settlement expenses awarded at $113,977.09; total award $352,237.36 plus interest. |
| Whether White Buffalo is entitled to post-termination lost profits and certain settlement-related expenses | Should recover post-termination lost profits and settlement expenses. | No post-termination profits; some settlement and specific costs disallowed. | Post-termination lost profits denied; certain settlement costs allowed; specific costs (e.g., Westlaw subscription, excavator damage) excluded or limited. |
| Whether interest and related statutory awards are proper | CDA interest rate to be determined; prompt payment act interest denied where disputes existed; EAJA fees denied pending final judgment. |
Key Cases Cited
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed.Cir.2010) (implied duty of good faith and fair dealing in government contracts)
- Bannum, Inc. v. United States, 80 Fed.Cl. 239 (Fed.Cl.2008) (presumption government officials act in good faith; clear and convincing evidence required for bad faith)
- Keeter Trading Co. v. United States, 85 Fed.Cl. 613 (Fed.Cl.2009) (aggregate actions of government agents; bad faith proven by bad-faith level of conduct)
- Pratt v. United States, 50 Fed.Cl. 469 (Fed.Cl.2001) (specific intent to injure required for bad faith)
- Texas Instruments, Inc. v. United States, 991 F.2d 760 (Fed.Cir.1993) (standard for bad faith and contract disputes)
- Takota Corp. v. United States, 90 Fed.Cl. 11 (Fed.Cl.2009) (preconstruction schedule requirements; material breach for failure to submit plans)
- Universal Fiberglass Corp., 210 Ct.Cl. 206 (Ct.Cl.1976) (contract documentation requirements; meaningful compliance as material)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed.Cir.2010) (affirming good faith standards in federal contracting)
- White Buffalo Constr., Co. v. United States, 52 Fed.Cl. 1 (Fed.Cl.2002) (precedent on termination for convenience settlements)