McDonnell Douglas Corp. v. United States

37 Cont. Cas. Fed. 76,273, 25 Cl. Ct. 342, 1992 U.S. Claims LEXIS 67, 1992 WL 30189
CourtUnited States Court of Claims
DecidedFebruary 20, 1992
DocketNo. 91-1204C
StatusPublished
Cited by4 cases

This text of 37 Cont. Cas. Fed. 76,273 (McDonnell Douglas Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDonnell Douglas Corp. v. United States, 37 Cont. Cas. Fed. 76,273, 25 Cl. Ct. 342, 1992 U.S. Claims LEXIS 67, 1992 WL 30189 (cc 1992).

Opinion

OPINION AND ORDER

HODGES, Judge.

This case comes before the court on defendant’s motion to dismiss for lack of jurisdiction. We find that plaintiffs’ claims and defendant’s termination for default are properly before this court for the reasons stated below. Defendant’s motion to dismiss is therefore denied in part.

FACTS

In 1984, the Department of the Navy introduced the Advanced Tactical Aircraft Program (A-12) to develop a carrier-based, low observable (Stealth) attack aircraft. The Navy asked four defense contractors to form teams to compete for the A-12 Studies and Full Scale Engineering Development contracts. These contractors included McDonnell Douglas Corporation and General Dynamics Corporation (plaintiffs), who agreed to bid for the contracts as a team.

Plaintiffs’ November 2, 1984 Teaming Agreement provided that the contractors would respond jointly to A-12 Requests for Proposals. The parties also agreed to an integrated organizational system to manage and allocate A-12 work equally.

The scope of the teaming relationship was described in Section 10:

10. Teaming Relationship
10.1 This Agreement provides exclusively for a teaming relationship and related technology exchange with respect to the [A-12] System and variants or derivatives thereof, specifically including other new tactical aircraft designed for substantially the same mission roles and performance requirements, and the correlative rights and duties of the Parties ---- [T]his Agreement is not intended to and shall not in any way abridge, limit or restrict the rights of either Party to pursue, either independently or in conjunction with any other person or entity, business opportunities relating to products other than the System, including products in competition with the System. This Agreement does not constitute and shall not be construed or given effect as a joint venture, partnership, pooling arrangement, or other formal business organization, or as creating any fiduciary relationship. Except as expressly provided herein, nothing herein shall be construed as providing for the sharing of profits or loss, nor shall either Party be liable to the other for any of the costs, expenses, risks, or liabilities arising out of the other’s activities in connection with the performance of programs outside this agreement, (emphasis added)

Plaintiffs submitted a joint proposal for the A-12 Full Scale Engineering Development contract, and were awarded the contract in January 1988. Plaintiffs’ representatives executed a single contract to bind their respective corporations. The contract contained standard terms, but a special provision was inserted to hold the team members responsible for their actions:

H-44 JOINT AND SEVERABLE LIABILITY
If this contract is awarded to contractors whose contractual relationship with the government will be as a team, this clause shall apply. McDonnell Aircraft Company and General Dynamics Fort Worth Division shall be jointly and sever-ably liable for all obligations of this contract. It is specifically agreed that the liability of the parties to the Government under this contract shall not be limited by any provision of the Teaming Agreement relating to the division of responsibility or by any other provision of the Teaming Agreement.

The contract required that team members have the capacity to produce the aircraft independently and to compete against each other in production.

[345]*345Problems developed during performance, and plaintiffs requested that the contract be restructured. Instead, the Navy issued plaintiffs a cure notice on December 17, 1990. On December 31, plaintiffs submitted equitable adjustment requests total-ling $1,401,181,205. The requests did not demand a Contracting Officer’s final decision “in light of on-going discussions and the mutually perceived desire to restructure the program.”

The requests included two certifications, one from each contractor. The president of General Dynamics Corporation signed one of the certifications:

CERTIFICATE

Herbert F. Rogers, the Senior General Dynamics Corporation official in charge at the General Dynamics Fort Worth Division, hereby certifies, that this claim is made in good faith, the supporting data are accurate and complete to the best of the company’s knowledge and belief, and the amount requested accurately reflects the contract adjustment, under the A-12 FSD contract and/or a contract implied-in-fact, for which the company believes the government is liable. This certificate extends only to those elements of the claim as to which General Dynamics has estimated a pricing impact, and neither company certifies to the pricing of amounts for which the other company has estimated the government is liable.

Mr. G.A. Johnston signed the second certification, and identified himself as “the Senior McDonnell Douglas Corporation official in charge at McDonnell Aircraft Company.” The body of the second certification duplicated that submitted by General Dynamics.

The Contracting Officer issued a January 7, 1991 decision terminating the contract for default. The decision was designated “final” and included a disclosure that plaintiffs could appeal to this court within 12 months. The decision was followed by a February 5, 1991 letter demanding return of $1,352,459,644 in unliquidated progress payments as a result of the termination. The Navy demanded payment by check and stated that interest would begin to accrue after 30 days.

The letter informed plaintiffs of their administrative rights to obtain a review of their indebtedness and “an opportunity to make a written agreement with the head of the agency to repay this debt.” The letter did not advise plaintiffs of their appeal rights pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 601-613 (1988).

On the day the demand letter was issued, plaintiffs contested the demand for return of progress payments and signed a Deferment Agreement with the Navy. The agreement described the demand as a government claim, and acknowledged plaintiffs as individual contractors responsible for the payments. Representatives of the contractors signed the agreement on behalf of their respective corporations.

On February 18, 1991, plaintiffs advised the Government that their December 31, 1990 requests were claims which had been constructively denied by the Navy’s decision to terminate the contract. If plaintiffs’ claims were not denied, the team requested a Contracting Officer’s decision.

The Contracting Officer advised plaintiffs on February 22, 1991 that the certifications attached to their December 1990 requests were defective because either the team or each team member should have certified the claims. The Contracting Officer further noted that plaintiffs’ certifying language was “impermissibly qualified and vague.”

Defendant informed the contractors of another defect in their submission on May 16, 1991: “[Y]ou have never furnished to the contracting officer, either with or without the required CDA certifications, a package containing the requisite factual detail and supporting documentation necessary to fulfil the statutory and regulatory requirements of a ‘claim’.”

Plaintiffs filed new certifications for their December requests on June 7, 1991.

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37 Cont. Cas. Fed. 76,273, 25 Cl. Ct. 342, 1992 U.S. Claims LEXIS 67, 1992 WL 30189, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdonnell-douglas-corp-v-united-states-cc-1992.