Court of Federal Claims awards attorney's fees to contractor under EAJA

by Ben Vernia | September 4th, 2014

On August 7, the Court of Federal Claims, in Ulysses, Inc. v. United States, granted attorneys fees and expenses to a small defense contractor in a dispute over a contract for electronic parts. The government’s purchase orders called for parts to be manufactured by two specific companies, but the contractor believed that it was an approved source because it had previously manufactured and supplied parts of which the contract part was a component. The Defense Supply Center Columbus canceled two purchase orders at no cost to the government, and the contractor sued, arguing that the terminations were for the convenience of the government (and not for default), and that it was entitled to compensation.

The Department of Justice counterclaimed, raising several fraud-related allegations, including violations of the False Claims Act, the fraud provision of the Contract Disputes Act, and the Forfeiture of Fraudulent Claims Act. On the merits of the case, the Court upheld the termination of one of the purchase orders (for which the contractor had submitted an unqualified bid), but not the other (for which the named manufacturer first appeared in the purchase order, and not during the bidding process). The contractor sought attorney’s fees and expenses under the Equal Access to Justice Act (EAJA).

First, the Court found the government’s position with respect to the False Claims Act to be not substantially justified. The government, the judge wrote, equated the contractor’s reasonable, yet erroneous interpretation of the request for quotation (which it described as having a “cryptic language and structure”), with the knowing submission of false claims, despite introducing no evidence to support its position. (The Court likewise rejected the government’s argument that the contractor’s failure to oversee an employee with substance abuse problems rose to the level of gross negligence, since there was no evidence that the employee in question entered the quote in question or worked while intoxicated.)

For similar reasons, the Court found that the government’s allegations were not substantially justified that the contractor submitted the claim to the Court violated the Contract Disputes Act’s antifraud provision, or required forfeiture under the Forfeiture of Fraudulent Claims Act.

The Court granted fees and expenses, declining to reduce the requested award in proportion to the issues on which the contractor lost.

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