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Bad Timing – Board Denies Claim Before “Handshake Settlement” is Finalized

Posted on February 3rd, 2016 by

In RELIABLE CONTRACTING GROUP, LLC (January 26, 2016) the Civilian Board of Contract Appeals (“Board”) refused to vacate its decision denying a contractor’s claim for providing back-up emergency generators. The Board denied the contractor’s claim because the generators were not “new” and thus the contractor was responsible for procuring others at a higher cost. The Contractor appealed the Board’s decision to the Federal Circuit. On appeal, the Federal Circuit remanded the case back to the Board to determine if damage to the emergency generators meant they were not “new.”

While the Board was in the process of writing a decision on the contractor’s claim in light of the Federal Circuit’s instructions, the parties engaged in settlement discussions. On September 15, 2015, the parties reached a “handshake agreement” to settle the claim for $550,000. Before the parties could finalize this agreement and sign a written settlement agreement, the Board issued a decision denying the contractor’s claim.

The contractor asked the Board to vacate or reconsider its decision given the parties’ “handshake agreement.” The Board refused to do so and allowed the judgment denying the contractor’s claim to stand. This effectively meant that the VA owed the contractor nothing and the $550,000 “deal” was moot or off the table.

This is a case of bad timing. The Board noted that “it seems to us that to vacate our decision denying recovery, and then enter a
judgment in favor of Reliable for the stipulated amount of $550,000, where we have concluded that no recovery is due, would weaken the judicial process.” The board blamed also blamed both parties “by waiting too long to settle the appeal.”

This case illustrates the inherent risks in trying to settle a case while a decision is still pending before the Board. In retrospect, Appellant could have asked the Board to stay proceedings pending settlement discussions.



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