Government Contracts Failure to Provide Data Package Gave Rise to Qui Tam Suit
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Tuesday, February 25, 2020

Failure to Provide Data Package Gave Rise to Qui Tam Suit

By Government Contracts Editorial Staff

A contractor was entitled to legal fees incurred in successfully defending its contract performance against a qui tam relator, according to the Court of Federal Claims, because the government’s failure to provide a data package constituted the basis of the suit. A task order required the contractor to produce a series of technical manuals. After the government directed the contractor to proceed without a technical data package, it issued a contract modification removing the data package requirement. The relator alleged that the contractor violated the False Claims Act during the period before the modification by certifying compliance with the data package despite having never received it. After the contractor prevailed in the qui tam suit, the contracting officer denied the contractor’s claim for an equitable adjustment seeking reimbursement of “allowable legal fees” incurred in defending the suit.

Spearin Doctrine. Under the Spearin doctrine, when the government provides a contractor with defective, erroneous, or missing specifications, “the government is deemed to have breached the implied warranty that satisfactory contract performance will result from adherence to the specifications, and the contractor is entitled to recover costs proximately flowing from the breach.” To merit an equitable adjustment, the contractor must establish liability, causation, and injury (46 CCF ¶77,869). Here, the government breached the implied warranty because it never provided the technical data package and engineering drawings as required by the contract but still directed the contractor to perform without the data package. As to causation, there was little doubt the government’s failure to comply with the data package requirement ultimately led to the qui tam suit and thus the costs the contractor incurred defending against it. Although the contractor did not assert its claim within the 30-day period prescribed by FAR 52.243-1, the government did not suffer prejudice due to the late filing. Also, the government’s argument that the firm-fixed-price, level-of-effort contract was not subject to adjustment ignored the fact that the contractor could not perform in accordance with contract specifications. Finally, the bar against recovering the costs of defending against third-party claims did not apply here because the government is considered the actual plaintiff in qui tam litigation. (Tolliver Group, Inc. v. U.S., FedCl, 64 CCF ¶81,839)

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