Government’s Negligent Estimate a Trick?

Among its other duties, the Defense Logistics Agency is charged with disposing of and re-purposing certain surplus military equipment.  After several years of failing to keep up with such duties, the Government outsourced the work to a Contractor.  With the RFP, the Government’s work estimate included: (1) historical workload data and (2) workload projections.

Soon after performance began, the Contractor encountered a significant backlog of work.  No information about a backlog was included in the RFP or related communication.  The Government refused to negotiate an equitable adjustment, denied the Contractor’s claim, and the Court of Federal Claims found no fault by the Government.

The Federal Circuit Court of Appeals reversed the decision of the Court of Federal Claims and held the Government’s negligent estimate failed to provide the “most current information available.”  Such information included the Government’s knowledge that there was a significant backlog of work facing the Contractor.  The Government’s obligation to provide a “realistic estimate [including] the most current information available” doesn’t mean it must go out and create such information.  Rather, to the extent such information exists, the Government must share it with the Contractor.

Although the Government’s behavior was only negligent (i.e., not intentional), it seems like a trick to withhold pertinent information while demanding the work be performed and refusing to pay for it.

Ultimately, the Contractor was entitled to an equitable adjustment to the contract price and time for the backlog.

Agility Defense & Government Services, Inc. v. United States, 847 F.3d 1345 (Fed. Cir. 2017)

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