The contractor appealed a termination. The government moved to dismiss, arguing a corporate transaction had negated privity with the contractor. The CBCA denied the motion. The contractor had made a non-frivolous allegation of a contract with the government. That was enough for CDA jurisdiction.
Gardner Construction & Industrial Services, Inc. v. Department of the Interior, CBCA 7807
- Motion to Dismiss – The agency terminated the contract for default. The contractor appealed to the CBCA. The agency moved to dismiss for lack of jurisdiction. The agency alleged that a year before the termination, the contractor’s principal had sold all his existing shares to another individual. The agency argued that as a result of the sale, the contractor was no longer the same company; in fact, it appeared the contractor was winding up its business. The agency reasoned the entity that appealed was not the same entity the government contracted with. Absent an assignment to the new entity, the government argued it lacked privity.
- Board Denies Motion – The board denied the motion. Jurisdiction under the CDA requires no more than a non-frivolous allegation of a contract with the government. Here, while there had been a stock sale, the contractor still had a non-frivolous allegation of a contract with the government. The government could still argue lack of privity, but that issue went to the validity of the contract, not the board’s jurisdiction.
- Concurrence – One of the judges concurred with the majority but also wrote separately to say they would have addressed the issue on the merits. The concurring judge reasoned that a mere stock sale, without a reorganization or change in structure did not destroy privity and did not require an assignment of the contract.
The contractor is represented by Michael P. Sams and Jessica A. Hartman of Kenney & Sams, P.C. The agency is represented by Marnie Ajello of the Department of Interior.
--Case summary by Craig LaChance, Senior Editor