Fixed-Price or Firm-Fixed-Price? Contractor’s Right to Seek Reimbursement of Legal Costs in Defending Qui Tam Suits

On October 26, 2018, the Court of Federal Claims denied the government’s motion to dismiss a contractor’s lawsuit seeking reimbursement of legal costs incurred in defense of a False Claims Act qui tam suit, and found that the contractor sufficiently pled the requirements for allowability. Tolliver Group, Inc. v. United States, 2018 WL 5307076 (Fed. Cl. Oct. 26, 2018). Tolliver alleged that the legal costs are allocable to the initial fixed-price, level of effort contract, while the government argued that a modification changed the contract to firm-fixed-price—precluding any cost adjustments absent a contract clause providing otherwise. The Court found that the qui tam suit could only have been brought based on Tolliver’s work under the initial task order, and held that the terms and conditions under the initial contract remained in full force and effect, including—by operation of law under the Christian doctrine—the provisions of FAR § 31.205-47 covering allowable legal costs.