Government’s motion to partially dismiss a breach of contract claim is denied, and the plaintiff’s motion to amend its complaint is granted, where the plaintiff sought to submit additional allegations regarding the authority of the agency contracting officer to authorize changes to the contract requirements, which the court wished to consider.
BGT Holdings LLC moved to amend its complaint, in which it alleged the Navy breached BGT’s contract to provide a gas turbine generator. The government previously moved to partially dismiss the complaint and opposed the motion to amend.
BTG alleged that after it won the contract to provide a gas turbine generator, the Navy contracting officer stated that the Navy would not provide certain equipment, including an exhaust collector and engine mounts. BTG asserted this refusal was contrary to the Navy’s obligations under the contract. In its complaint, BTG sought reimbursement for the cost of these materials under three theories: equitable adjustment, breach of contract, and breach of the duty of good faith and fair dealing.
The government moved to dismiss the first three counts of the complaint, arguing first that the Navy CO lacked the authority to change the requirements and therefore the government is not liable for any cost incurred as a result. The government also argued that BTG failed to timely assert its right to an equitable adjustment and that the contract language precludes the government’s liability for breach of contract. Finally, the government argued that the claim for a breach of the duty of good faith and fair dealing must be dismissed, because allowing recovery on this theory would violate the rule that a party cannot rely on the implied covenant of good faith and fair dealing to change the text of their contractual obligations.
In response, BGT argued that the CO did have the authority to modify the contract and was the relevant decision maker with regard to the provision of equipment. Alternatively, BGT claimed that the CO’s decision to alter the contract was properly ratified. BGT also argued the government waived the thirty-day requirement for filing claims for equitable adjustment and that the failure to provide the equipment was a cardinal change and was therefore a material breach. Finally, BGT argued that an allegation that the government breached the duty of good faith and fair dealing is not an attempt to change the text of the contract.
Alternatively, BGT asked the court to permit it to amend its complaint.
COFC granted the motion to amend. The court noted that BTG had not previously sought to amend the complaint, and there is no suggestion—either from the government or on the basis of the facts as alleged—that BGT had any dilatory or otherwise improper motive in seeking to amend the complaint. Rather, the government’s only basis for opposing the motion is that the amendment would be futile.
While the government’s position may ultimately prove to be correct, the court declined to make that determination. BGT raised the possibility that it may be able to make more precise or additional allegations, particularly with regard to the CO’s role as the relevant decision maker, which the court wished to consider.
BGT Holdings is represented by Milton C. Johns. The government is represented by Borislav Kushnir, Trial Attorney, with whom were Chad A. Readler, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, Elizabeth M. Hosford, Assistant Director, Commercial Litigation Branch, Civil Division, Department of Justice.
