The Navy terminated the contractor’s task order for default after the contractor failed to assemble the required team of 20 professionals. The contractor filed suit in the Court of Federal Claims. After losing on summary judgment, the contractor filed a second complaint raising the same issues and alleging the government had fabricated a key document. The court dismissed the second complaint under the doctrine of issue preclusion, finding the contractor had a full and fair opportunity to litigate its claims in the first action.
ASG Solutions Corporation dba American Systems Group v. United States, U.S. Court of Federal Claims, No. 24-1966 (Filed: May 6, 2026)
- Background: The contractor was awarded a task order to provide engineering and program-management support services. The solicitation required a team of at least 20 credentialed professionals. The contractor struggled to staff its team. Despite receiving a letter of concern, a cure notice, and a show cause notice, the contractor had placed only five of the required 20 professionals by the midpoint of the contract. The Navy terminated for default. The contractor filed a complaint challenging the termination, lost on summary judgment, and lost again on appeal to the Federal Circuit in December 2025. While that appeal was pending, the contractor filed a second complaint in November 2024.
- Issue Preclusion: The government moved to dismiss the second complaint under the doctrine of issue preclusion. Issue preclusion bars a party from relitigating an issue that is identical to one litigated and decided in a prior proceeding. The contractor argued it had not received a fair opportunity in the prior proceeding because the government fraudulently introduced a key document into the record of the first case. The court rejected this argument. Both complaints rested on the same legal question—whether the contractor was terminated in bad faith—which had already been resolved against the contractor in the first action and affirmed by the Federal Circuit.
- The Allegedly Fraudulent Memo: The second complaint was premised the contractor’s allegation that a contracting officer memorandum recommending termination—filed by the government just days before oral argument in the first case—was fraudulently backdated and manufactured to fill a gap in the record. The contractor identified eight formatting and procedural irregularities as evidence of fraud. The court was unpersuaded. It found the memo was not central to the outcome of the first case because courts review contract terminations de novo under the Contract Disputes Act, without deference to the agency’s initial reasoning. More fundamentally, a termination for default is valid as long as any legitimate basis existed at the time, regardless of the reasons the agency first articulated.
- FAR Compliance and Contractor Rights: FAR 49.402-3(f) requires contracting officers to consider seven specific factors before terminating a contractor for default, and the contractor argued the allegedly fraudulent memo was the government’s attempt to manufacture evidence of that analysis. The court dispatched this argument on two grounds. First, the Federal Circuit has held that a contracting officer’s evaluation of the FAR 49.402-3(f) factors is not a legal prerequisite to a valid termination for default. Second, a defaulting contractor has no legal right to enforce that FAR provision in the first place.
- Proper Remedy for Alleged Fraud: The court noted that even if the contractor’s fraud allegations had merit, filing a new complaint was the wrong vehicle. The correct path was a motion for relief from judgment under RCFC 60(b)(3), which allows a court to reopen a final judgment based on fraud, misrepresentation, or misconduct by an opposing party. That standard requires clear and convincing evidence that the alleged fraud actually prevented the movant from receiving a fair hearing. The court observed that even under this standard the contractor would face long odds.
The plaintiff is represented by David S. Demian of Finch, Thornton & Baird LLP, San Diego, CA. The government is represented by Anna B. Eley of the Civil Division, U.S. Department of Justice, Washington, DC.