Claims and Disputes Litigation

Disputes between the government, prime contractors, and lower-tier subcontractors are as old as government contracting itself, and an inevitable part of the business. These disputes often involve government laws, regulations, and contract clauses that have no counterpart in commercial transactions and that require specific knowledge of federal procurement law. Moreover, when a large government procurement goes bad, the amounts at stake can be staggering. Crowell & Moring's government contract lawyers have decades of experience involving some of the largest contractors and government programs and are knowledgeable in drafting claims, shaping entitlement theories, formulating methods of computing the amount of recovery, and processing and litigating claims.

Our Claims Preparation Approach

The most persuasive claim is one that both presents good facts in the best light and confronts and controls bad facts and law. To this end, we pursue a thorough and disciplined investigation of the facts with substantial support from company technical, contracts, and accounting personnel. This approach, described in Crowell & Moring's "Change Proposal Preparation Guide," is adopted by many of our major clients to educate their employees in the claims process.

Our Results

While not all claims are equally meritorious, we are confident that our approach yields better than anticipated results. We have helped our clients achieve numerous favorable claims settlements and thereby avoid litigation, which would most often be brought against a valued customer.

Representative Settlements

• Represented contractor in $12.3 million settlement payment from the U.S. Air Force for contract changes after an ADR hearing before an ASBCA neutral
• Obtained a $21.5 million settlement for extra-contractual work required by the U.S. Air Force
• Assisted in the preparation and presentation of several changes claims that were included in a settlement of approximately $1.4 billion
• Negotiated conversion of a termination for default into a termination for convenience, with claims for defective specifications, defective government-furnished property, breach of duty to cooperate, excess inspection, and impossibility — $77 million recovered
• Counseled on subcontractor claim against a prime for defects in aircraft design and specifications — $72 million recovered
• Advised on claim for anticipatory profit from the U.S. Postal Service for wrongfully terminating a contract — $50 million recovered
• Advised on claims for defective specifications and inadequate government-furnished equipment — $26 million recovered
• Counseled on claim for government breach of contract — $21.5 million recovered
• Counseled on claim for constructive changes and improper option exercise — $24 million recovered
• Advised on claim for inadequate and late government-furnished property and government-furnished information related to a global communications system — $10 million recovered

Claims Litigation

If we are unable to obtain a satisfactory settlement, and with a complete assessment of the litigation risk and strategy, we do not hesitate to litigate claims. We have done so both in pursuit of equitable adjustments and in defending against government demands.

Representative Engagements

• Argued as amicus curiae for reversal on reconsideration of an ASBCA decision holding that the inclusion of expenses related exclusively to performance of commercial contracts in an overhead pool allocable to commercial and government contracts was a violation of the requirement in CAS 418 that indirect costs must be allocated on the basis of causal/beneficial relationships. 
  
• Argued as amicus curiae that an ASBCA decision finding that the failure of a contractor to complete a "segment closing" adjustment under CAS 413 during the same year as the closing had damaged the government should be reversed on reconsideration. 
• Argued to the Army Contract Adjustment Board that Holston Defense Corporation (HDC) should be awarded extraordinary contractual relief under Public Law 85-804 in the amount of $90 million, plus interest, for the projected costs of post-retirement benefits earned by HDC employees under a series of contracts with the U.S. Army. 
• Argued that a cost-reimbursement contract that was repriced because of congressional funding changes after the contractor had made changes in its cost accounting practices was not an "affected contract" and, therefore, was not subject to a price adjustment reflecting the impact of the accounting changes. 
• Argued that the government was not entitled to a price adjustment for CAS-covered firm-fixed price contracts due to a change in accounting practice given that the change did not cause the government to incur increased costs.