Recent developments in government contracting highlight three significant litigation matters involving contractor whistleblower protections, procurement integrity, and recovery of increased contract performance costs. The latest updates include a $1.2 million jury verdict against a US Department of War (DoW) contractor for whistleblower retaliation, two Government Accountability Office (GAO) decisions sustaining protests involving the disclosure of competitors' pricing information, and a $461 million lawsuit against the US Department of State arising from COVID-19-related construction cost overruns.
Jury Awards $1.2 Million to Former DoW Contractor Employee in Whistleblower Retaliation Suit
A Colorado federal jury recently awarded $1.2 million to a former employee of DoW contractor Serco Inc. who alleged that he was harassed, disciplined, and ultimately terminated in retaliation for reporting contract compliance and billing irregularities.
Following a five-day trial, the jury found Serco liable for wrongful discharge and violations of the Defense Contractor Whistleblower Protection Act. The jury also rejected Serco's defense that it would have terminated the employee regardless of his protected whistleblower activity.
The verdict highlights the financial and legal considerations for government contractors when taking adverse employment actions against employees who report suspected misconduct, including ensuring that disciplinary actions and termination decisions are supported by well-documented reasons independent of protected whistleblower activity.
GAO Sustains Protests Over Disclosure of Competitors' Pricing Information in $1.87 Billion Air Force Procurement
GAO recently sustained two bid protests challenging the Air Force's award of a $1.87 billion operations and maintenance contract to Strategic Test Solutions LLC (STS).
After inadvertently disclosing competitors' relative pricing information to one offeror, the Air Force shared the same information with all three competitors in an effort to restore a level playing field. Although the information was competitively sensitive, the Air Force maintained that it had not disclosed proprietary information because the pricing data was aggregated.
STS, which ultimately received the award, acknowledged that it considered the disclosed information when it reduced its proposed price by approximately $72 million.
In Fluor Federal Solutions LLC and Reliance Test & Technology, GAO rejected the Air Force's conclusion that the disclosure did not prejudice the competition. GAO noted that the information revealed offerors' relative pricing positions and could potentially be used to derive underlying cost elements.
The decisions underscore the risks associated with disclosing competitively sensitive pricing information during a procurement. Although agencies may attempt to remedy an inadvertent disclosure by sharing the same information with all offerors, doing so does not necessarily eliminate competitive prejudice. Contractors should carefully evaluate whether such disclosures could affect pricing strategies or otherwise undermine the fairness of a procurement.
Contractor Seeks $461 Million from State Department for COVID-19 Construction Cost Overruns
B.L. Harbert International LLC recently filed suit against the State Department in the US Court of Federal Claims, seeking at least $461 million for increased costs incurred while performing 12 overseas construction contracts during the COVID-19 pandemic.
The contractor alleges that the State Department directed continued performance despite pandemic-related disruptions. After submitting more than $500 million in requests for equitable adjustment (REAs), the contractor alleges that the State Department agreed to settle the claims for $370 million but subsequently reversed course and paid only approximately $500,000.
The lawsuit asserts claims for equitable adjustment, breach of contract, and breach of the implied covenant of good faith and fair dealing.
The dispute highlights potential disagreements over compensation when agencies direct continued contract performance despite extraordinary circumstances. Although fixed-price contractors generally bear the risk of increased costs, government-directed changes or acceleration may support equitable adjustments.
For contractors, the case reinforces the importance of carefully documenting government directives, increased costs, and REA negotiations. Contractors should also ensure that settlement agreements are properly authorized and documented to preserve their contractual rights and reduce the risk of subsequent disputes.
Looking Ahead
These latest developments illustrate the significant litigation considerations for contractors across employment practices, procurement competitions, and contract performance. Contractors should remain attentive to potential competitive prejudice arising from procurement disclosures and preserve detailed records of government-directed changes, increased costs, and settlement negotiations when pursuing contract adjustments or claims.
Law clerk Emily B. Parmentier contributed to this blog post.