Government Contracts

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U.S. ex rel. Platinum Mechanical, LLC v. U.S. Surety. Co.
07 Cv. 3318(CLB), 2007 U.S. Dist. LEXIS 94026( S.D.N.Y. Dec. 21, 2007)
CFP Group, Inc. was awarded a contract with the United States Government to refurbish facilities at Stewart Air National Guard Base in New York. Platinum Mechanical, LLC subcontracted to perform all of the plumbing and HVAC work for the Project. All work on the Project was to be completed by March 12, 2007. Notice to proceed issued on June 14, 2006.

National American Insurance Company v. United States
No. 2007-5016, 2007 U.S. App. LEXIS 20058 (Fed. Cir. August 23, 2007)
The US Court of Appeals for the Federal Circuit upheld the lower court’s grant of a motion for summary judgment. The Court held that a payment bond surety is equitably subrogated to the rights of the contractor whose debt it discharges, and thus can pursue a claim directly against the government.
The case arose out of a contract between Innovative PBX Services, Inc. (“Contractor”) and the United States Small Business Administration (the “government”) for the replacement of a telephone system at the Department of Veterans Affairs Medical Center. The Contractor subcontracted part of the work to Nortel Communications Systems, Inc. (“Subcontractor”). As required by the Miller Act, the Contractor executed payment and performance bonds in favor of the government with National American Insurance Company (“Surety”) as the surety. After completion of the contract work, the Subcontractor notified the Surety that it was owed approximately $675,000 for labor and materials that the Contractor had failed to pay for. The Subcontractor then instituted a Miller Act claim under the payment bond against the Surety, which the Surety settled. The Surety also notified the government that no addition payments should be made to the Contractor in light of the Miller Act claim and requested that all remaining contract funds be held for the Surety’s benefit. The government, however, did not follow the Surety’s request and made its final contract payment to the Contractor. As a result, the Surety filed a complaint against he government seeking damages of $280,000.

Polydyne, Inc. v. City of Philadelphia
No. 2454 C.D. 2001 (Pa. Commw. Ct. April 4, 2002)
The City of Philadelphia solicited bids for the provision of polymers for use by the City Water Department. Cytec Industries, Inc. (“Cytec”) was the successful bidder. Polydyne, Inc. (“Polydyne”), a disappointed bidder, filed a claim against the City of Philadelphia, seeking to enjoin the award to Cytec. After review of the merits, the trial court rejected the request for equitable relief.

Kit-San-Azusa v. United States,
1996 U.S. App. LEXIS 10370 (Fed. Cir. Ct. App., May 7, 1996).
Government contractor’s differing site conditions claim based on the discovery of unanticipated boulders during excavation was upheld even though the Government’s general description of the site stated that cobbles and boulders were present at…

United States of America, for the Use and Benefit of Evergreen Pipeline Construction Co., Inc. v. Me,
No. 90 Civ. 5106, 890 F. Supp. 1213, 1995 U.S. Dist. LEXIS 9385 (S.D.N.Y. July 7, 1995)
Oral Requests for Extra Work – Under New York law, either oral directions to perform extra work, or a general course of dealing may effectuate a waiver or modification of contract provisions which otherwise expressly require written authorization or notice of such extra work claims. No Damage for Delay – Under New York law, an exculpatory “no damage for delay” clause will not be enforced where the delay was: 1) not contemplated by the parties 2) caused by the contractor’s bad faith, or willful, malicious, or grossly negligent conduct; 3) so unreasonable that it constituted an intentional abandonment of the contract; or, 4) the result of a fundamental breach of the contract by the contractor. Punitive Damages – Punitive damages on purely contractual claim will not be awarded where there is insufficient evidence for a jury to conclude that public rights were implicated or that objectionable conduct was directed at the public generally. Prejudgment Interest – Subcontractor is entitled to prejudgment interest for services rendered seven years before judgment was entered. Rule 11 Sanctions – Defendants’ assertion of a civil RICO counterclaim without sufficient basis therefor warrants imposition of sanctions under Rule 11. Attorney’s fees awarded as a Rule 11 sanction is a matter committed solely to the discretion of the district court. In ascertaining “reasonable” fees, the court must bear in mind that the principined a verdict in favor of subcontractor Evergreen and found that Merritt materially breached the subcontract and that certain provisions regarding extra work and delay damages were either waived or eliminated by the parties. Merritt filed various post trial motions challenging the jury’s verdict regarding: the oral requests for extra work under a contract which required that all such requests be in writing; the award of delay damages under a contract with an express “no damage for delay” provision; and challenging the propriety of permitting a claim for punitive damages to be submitted to the jury. Evergreen also filed various post trial motions seeking prejudgment interest and attorney’s fees incurred in defending baseless civil RICO claims.