Better Roads July 2014 21
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On July 22, 2013, Hanover and Lodge filed separate
lawsuits against the Corps in the Court of Federal Claims.
They both argued the Corps' termination for default was
wrongful, and as a result, they should be entitled to the
$23,995,183.86 owed to the Corps under the Tender and
Release Agreement. The two lawsuits were consolidated.
The Government moved to dismiss the consolidated
lawsuit, arguing the court lacked jurisdiction because
Hanover's and Lodge's claims for $24 million, based on
an alleged improper termination for default, were never
submitted to the CO and were not the subject of a final
decision. Hanover and Lodge responded that the court had
proper jurisdiction because their claims were effectively
part of the CO's termination for default and execution of
the Tender and Release Agreement.
They further argued it would have been futile to submit
a claim for money damages to the CO based on an alleged
improper termination because there was little (to no)
chance the decision would be reversed.
The court disagreed with Hanover and Lodge. The court
found the CDA requires contractors to submit claims to the
CO and obtain a final decision before proceeding to court.
In fact, the failure to obtain a final decision – regardless of
how futile it might appear – results in the court's lack of
jurisdiction to even hear a contractor's appeal. As a result,
the court dismissed the consolidated lawsuit based on lack
of jurisdiction.
The Hanover matter emphasizes the importance of mak-
ing a claim for any and all relief being sought to the
Contracting Officer. A final decision by the Contracting
Officer is a prerequisite to appealing to the next level.
Without a final decision, a contractor (and its surety) can
be foreclosed from pursuing any claimed damages.
In Hanover, the contractor's failure to obtain a final deci-
sion relating to the termination for default resulted in the
court's dismissal of its claim for $24 million.
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