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The solicitation required offerors to disclose whether they had been involved in legal proceedings over the last five years in connection with a government contract. The awardee and its principal had been involved in several suits and had been found liable. The protester alleged the awardee had failed to disclose these matters as required by the solicitation. But the court found the awardee didn’t have to disclose, reasoning the legal matters had either not occurred within the last five years or were not directly connected to a government contract.

The Logistics Company, Inc. v. United States, COFC No. 22-cv-603

Background

The Solicitation and Award

The Army issued a solicitation seeking logistics support services. The solicitation included FAR 52.209-7, which requires offerors to disclose whether, in the last five years, the offeror or its principals been the subject to a proceeding in connection with the award or performance of federal contract that resulted in (1) a finding of civil or criminal liability, (2) a disposition of consent or compromise with an acknowledgement of fault.

The Logistics Company, Inc. (TLC) and Vanquish Worldwide, LLC, among others, submitted proposals. The Army awarded the contract to Vanquish. An unsuccessful offeror filed an agency protest, alleging Vanquish had made false certifications by failing disclose settlements and outstanding judgments against the company. The Army took corrective action and reviewed additional information about Vanquish’s litigation history. But the Army found Vanquish had complied with FAR 52.208-7 and reaffirmed the award to Vanquish.

TLC filed a GAO protest alleging that Vanquish had improperly failed to disclose past litigation. TLC further alleged the Army had erred in assessing Vanquish’s responsibility. But GAO denied the protest. TLC then filed suit at the COFC.

Vanquish’s Litigation History

TLC alleged Vanquish failed to disclose the following matters:

  • Sadat Matter – Vanquish’s subcontractor on a government contract for logistics services in Afghanistan sued Vanquish in the International Chamber of Commerce Court of Arbitration. That tribunal found Vanquish liable for conversion. A U.S. district confirmed the tribunal’s decision. Vanquish and the subcontractor ultimately entered a settlement agreement.
  • Koshani Matter – Vanquish’s principal, Barton, had a joint venture with a company, Koshani, in Afghanistan. Koshani sued Barton in U.S. district court for breach of contract. A jury found in favor in Koshani, assessing over $33 million in damages. But Barton ended up settling with Koshani. As a result of that settlement, the judgement was vacated.
  • Barton Matter – A state court ordered Barton to pay his ex-wife over $7 million in alimony. That judgment included a lien on property owned by Vanquish.
  • Vanquish v. U.S – Vanquish filed suit against the government in the COFC challenging the Army’s termination for cause of another contract. The government asserted counterclaims against Vanquish. The case was still pending.

Analysis

Failure to Disclose

TLC contended that Vanquish was required to disclose its various legal dispute to the Army under 52.209-7. For each matter, however, the court found no duty to disclose:

  • Sadat – FAR 52.209-7 requires disclosure of a dispute in connection with a government contract within the last five years. The International Chamber of Commerce decision was entered in 2015, which was five years before Vanquish submitted its proposal.
  • Koshani – The court found that the joint venture agreement at issue in Koshani was connected to a government contract and that judgment in that suit had been entered within the last five years. But Barton and Koshani had settled the matter. The settlement required the court to vacate judgement. Because the matter had settled and the judgment had been vacated, Vanquish was not required to disclose the matter as a judgment. Moreover, because the settlement agreement did not admit to any fault, Vanquish was not required to disclosed under the settlement provision of FAR 52.209-7.
  • Barton – The Barton matter was a divorce proceeding, which was “personal in nature” and was thus not connected to a government contract.
  • Vanquish – Vanquish’s case against the government in the COFC was still pending and had not resulted in a finding of fault or liability.

Responsibility Determination

TLC argued that the agency did not have information on the substance of Vanquish’s various proceedings and thus the CO didn’t consider all the necessary evidence in assessing whether Vanquish was a responsible party. Additionally, TLC contended, in light of the allegations made against Vanquish in the various legal proceedings, any finding that Vanquish was responsible was necessarily arbitrary.

But the court found that CO was well aware of the litigation involving Vanquish. Also, the court opined, the information in the administrative record was sufficient for the agency to make a responsibility determination. As to the propriety of that determination, the court opined that an agency has broad discretion in making responsibility determinations and that the court would not substitute its own judgment for that of the agency.

TLC is represented by Justin Chiarodo, Elizabeth N. Jochum, Stephanie M. Harden, and Amanda C. DeLaPerrirere of Blank Rome LLP as well as Jackson W. Moore, David L. Hayden, and Amelia L. Errat of Smith, Anderson, Blount, Dorsett Mitchell & Jernigan, L.L.P. The intervenor, Vanquish, is represented Todd W. Miller of Miller & Miller. The government is represented by Michael D. Snyder, Brian M. Boynton, Patricia McCarthy, and Douglas K. Mickle of the Department of Justice along with Christopher T. Delgiorno of the Army.

–Case summary by Craig LaChance, Senior Editor