In Mansoor International Development Services, Inc., v. United States, No. 14-496C (Filed May 11, 2015), the U.S. Court of Federal Claims denied the government’s motion to dismiss after finding that the contractor has ‘manifestly stated a potentially viable claim for relief based on an alleged breach of the implied duty of good faith and fair dealing in the enforcement of the contract at issue.’
In this case, on March 31, 2012, the contracting officer terminated Mansoor International Development Services (Mansoor), an Afghan corporation based in Kabul, for default. Initially, in August 2011, Mansoor was awarded a multi-award IDIQ contract to provide trucking services in Afghanistan. Under the contract, the government issued task orders of Transportation Movement Requests (TMR) for transportation missions.
After the termination, Mansoor submitted a certified claim for 519 requests in the amount of 81,473,654 Afghanis, or $1,406,660. The contracting officer offered to discuss a settlement, but he insisted that Mansoor had to agree to a single claim adjudication for all 519 requests in an amount of 30,000,000 Afghanis, or $493,503. Apparently, the contracting officer arrived at this number by using unclear statistical data and methodology, which Mansoor argued that it violated the implied covenant of good faith and fair dealing at the U.S. Court of Federal Claims. Mansoor insisted on each request being considered individually.
In his ruling on the government’s motion to dismiss, honorable judge Lettow rejected the government’s argument that Mansoor failed to state a claim upon which relief could be granted. The judge found that the duty of good faith and fair dealing extended to settlement and litigation of contract claims and defenses. This ruling demonstrates that the analysis for contractors does not end with the termination for default, and that the contracting officer has a duty to act in good faith in settling and evaluating each claim, and using transparent methods to do so.
If you would like to know more about avoiding terminations for default, filing a certified claim, or settling claims with the contracting officer, you may call Centre Law and Consulting at 703-288-7010. In addition to offering a free initial consultation, we offer Government Contract Law training and consulting. The next training opportunity is next month, tentatively scheduled between June 15 and 16, 2015. For more information visit our website at http://centrelawgroup.com/government-contract-law/. We are conveniently located in Tysons Corner, VA.