Government Contractor Teaming Agreement Ruled Unenforceable

Posted on April 22, 2013 by Malik Cutlar

In the world of government contracts, companies frequently team together to put forward the most persuasive bid in response to a Request for Proposal (“RFP”). Such teaming arrangements often result in a teaming agreement between government contractors. A teaming agreement typically sets forth the relationship of the companies, the purposes for which they are teaming together, the rights of the companies and general terms, as well as a provision which sets forth that for a specific project a second document (i.e., a subcontract or work order) will be executed by the parties. Well, what happens if the prime contractor is awarded the contract, but ultimately refuses to sign a subcontract with its teaming partner, the sub? Can the sub successfully sue the prime contractor by relying on the teaming agreement?

In the case of Cyberlock Consulting, Inc. v. Information Experts, Inc. (2013), the United States District Court for the Eastern District of Virginia said “No” to Plaintiff subcontractor’s breach of contract claim and held that the Teaming Agreement in that case was an agreement to agree and thus unenforceable under Virginia law. Cyberlock Consulting, Inc. (“Cyberlock” or “Plaintiff”) entered into two Teaming Agreements with Information Experts, Inc. (“IE” or “Defendant”) for the purpose of assisting IE with work it hoped to get in response to RFPs from the U.S. Office of Personnel Management (“OPM”). The first Teaming Agreement had attached to it a Statement of Work setting forth in detail the work that Cyberlock would perform for IE, the period of performance, place of performance, and project management requirements for the work. The first Teaming Agreement also had attached to it as an exhibit the actual subcontract that the parties agreed they would enter into upon award of the prime contract to IE. IE was in fact awarded the prime contract by OPM and obligations under the first Teaming Agreement were satisfied.

Subsequently, OPM revealed that it would seek bids for a new project and the parties negotiated and entered into a second Teaming Agreement. While the second Teaming Agreement set forth general provisions of the parties’ responsibilities if IE was awarded the prime contract, and even included a Scope of Work document as an exhibit which stated that Cyberlock would perform 49% of the work awarded to IE under a prime contract, [according to the Court] the second Agreement did not specifically set out in detail what work Cyberlock would perform. In addition, unlike the first Teaming Agreement, there was no subcontract attached to the second Teaming Agreement that the parties agreed to sign in the event that IE was awarded the prime contract. As it turns out, IE was awarded the second prime contract. However, after a month of negotiations and several drafts of a proposed subcontract exchanged between the parties, IE terminated the negotiations. Cyberlock sued to enforce the second Teaming Agreement and claimed that it was entitled to 49% of the work awarded to IE in the prime contract.

The Court disagreed, and stated that although there was language in the second Teaming Agreement which indicated the parties’ intent to enter into a subcontract if IE was awarded the work by OPM, there was no specific subcontract that had been negotiated and to whose terms the parties’ had agreed. The Court held that the post-award obligations in the second Teaming Agreement were, at most, an agreement to agree to enter into a yet agreed upon (future) subcontract agreement, and therefore the second Teaming Agreement was unenforceable as a matter of law since agreement to agree contracts are unenforceable under Virginia law.


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U.S. District Court (Alexandria): No Personal Jurisdiction Over Defendant In Website Defamation Case

Posted on August 18, 2011 by H. Scott Johnson, Jr.

The U.S. District Court in Alexandria, Virginia (often referred to as the "rocket docket") recently held that a Canadian businessman who does business in Loudoun County, Virginia cannot sue an out-of-state resident who purportedly defamed the businessman on her website. The court concluded that it could not exercise personal jurisdiction over the defendant because there was no evidence that the defendant intended to target a Virginia audience with its website.

Under Virginia law, in order for a court to exercise personal jurisdiction over a defendant, a plaintiff must demonstrate that its lawsuit arises from activities that occurred in Virginia (“specific jurisdiction”). Alternatively, a plaintiff can establish a basis for personal jurisdiction over a defendant by showing that the defendant has such “continuous and systematic contacts” with Virginia that the defendant, for all intents and purposes, is domiciled in Virginia (“general jurisdiction”).

In this action, as the website did not target Virginia and the plaintiff could not put forth any evidence to show that the out-of-state defendant had a “continuous and systematic” presence in Virginia, the court held that it could not subject the defendant to jurisdiction in a Virginia court.

Knight v. Grayson and John Doe # 1, United States District Court for the Eastern District of Virginia (Alexandria Division)

 
 

 

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Virginia Federal Court: 'Twiqbal' Standard Doesn't Apply To Affirmative Defenses

Posted on January 26, 2011 by H. Scott Johnson, Jr.

 An Alexandria, Virginia federal court judge has held that the heightened pleading requirements under the so-called ‘Twiqbal’ cases do not apply to affirmative defenses.

 
In a recent failure to pay overtime case under the Fair Labor Standards Act, Senior U.S. District Court Judge James C. Cacheris held that the defendant employer’s general, boilerplate affirmative defenses were sufficient under the federal rules as they provided the plaintiff employee with fair notice of the nature of the defense. 
 
Judge Cacheris’ ruling marks a striking departure from the rulings of a majority of the other federal district courts in the Fourth Circuit (comprised of federal courts in Maryland, North Carolina, South Carolina, Virginia, and West Virginia), which had each previously held that the ‘Twiqbal’ standard should apply equally to a plaintiff’s complaint and a defendant’s defenses. (Under the ‘Twiqbal’ standard, which was borne out of the cases of Bell Atlantic v. Twombly and Ashcroft v. Iqbal, the U.S. Supreme Court held that a plaintiff’s complaint must be based on more than just “threadbare recitals” to survive a motion to dismiss; instead, a plaintiff’s complaint must contain sufficient facts to give rise to a plausible entitlement to relief.)
 
While acknowledging that policy considerations such as “fairness, common sense, and litigation efficiency” are “compelling,” Judge Cacheris opined that, unlike the federal rules which govern the pleading requirements for a plaintiff’s claims for relief, the federal rules which govern a defendant’s affirmative defenses merely require a responding party to “state in short and plain terms its defenses to each claim asserted against it.”
 
Until the Fourth Circuit chimes in on this issue, plaintiffs and defendants alike will continue to litigate whether Twiqbal applies to affirmative defenses. Until then, defendants (especially those appearing in a Virginia federal court) can use Judge Cacheris’ opinion as authority in support of their position. 
 
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