Bradley Arant Boult Cummings LLP has secured a key reversal from the United States Court of Appeals for the Federal Circuit on behalf of government contractor Metcalf Construction Company, Inc. The decision in Metcalf Construction Company, Inc. v. United States, which involves failures by the federal government to properly administer a contract, has broad implications for the rest of the government contracting community.
“We are pleased for our client that the court ruled in their favor,” said Bradley Arant Boult Cummings partner Robert J. Symon who, along with partner Eric A. Frechtel, served as counsel to Metcalf. “The Federal Circuit clarified important legal principles that are critical to the fair administration of contracts with the federal government. The decision also alleviated the concerns of many others in the government contract and construction community who were very critical of the lower court’s ruling and its negative impact.”
“I am elated with this result, which restores my faith in this country’s legal system,” said company owner Terry Metcalf. “Hopefully, this decision will put me back on the path to justice.”
The Metcalf case involved a $50 million contract to design and build 212 duplex housing units for the United States Navy on a Marine Corps base in Hawaii. Due to unanticipated soil conditions and other issues, made worse by the failure of the government to administer the contract fairly and according to its terms, Metcalf Construction was forced to spend more than $76 million over more than four years to finish the project. Metcalf sued to recover those costs, alleging the government’s action breached its duty of good faith and fair dealing. In ruling, the United States Court of Federal Claims (CFC) applied the narrow Precision Pine standard to the case, denied Metcalf any recovery, and awarded damages of $2.4 million to the government on a counterclaim for project delays.
On appeal, Metcalf argued that the CFC applied the wrong standard to the claim, arguing it was governed not by Precision Pine, but by a broader standard applied in numerous cases predating that decision. Many in the government contracting community supported Metcalf in the appeal. They worried the CFC’s decision left contractors fully exposed to the risk of bad management on behalf of the government which could lead to grossly inflated bids loaded with contingency money and potentially chase qualified contractors out of federal work altogether. As a result, several industry groups filed amicus briefs in support of Metcalf’s appeal, including Associated General Contractors of America, Associated Builders and Contractors, The Design-Build Institute of America, and the American Institute of Architects.
In ruling, the Federal Circuit agreed with Metcalf and the brief authors, reversing the CFC decision and vacating the damages award to the government. It also remanded the case back to the CFC “for further proceedings using the correct standard.”