Beware The Cooperative Agreement

In Rick's Mushroom Service, Inc. (Apr. 2, 2008), the Federal Circuit held that a contractor who had a cooperative cost sharing agreement for mushroom waste remediation was out of luck when it followed defective government specifications and had to pay third parties close to $1 million for environmental violations. The Federal Circuit denied Rick's claims for indemnification, holding there was no Contract Disputes Act jurisdiction and that the Spearin doctrine, which provides that the government breaches an implied warranty when it supplies a contractor with defective specifications, was inapplicable because there was no procurement contract and because the doctrine does not extend to third-party claims.