Last Week in the Federal Circuit (August 10-14): Clear Skies for Boeing After No-Waiver Ruling

Last week was apparently CFC week at the Federal Circuit, with several precedential decisions in government contracts and Tucker Act cases. Below we give our usual week’s statistics and case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 6 

Non-precedential opinions: 2 

Rule 36:  0

Longest pending case from argument: Kisor v. Wilkie, No. 16-1929 (Aug. 12, 2020) (1163 days) (after remand from the Supreme Court) 

Shortest pending case from argument (non-Rule 36):  Dupuch-Carron v. HHS, No. 20-1137 (Aug. 11, 2020) (35 days) 

Case of the week:  The Boeing Co. v. United States, No. 19-2148 (Aug. 10, 2020)

Panel:  Judges Moore, Taranto, and Chen, with Judge Taranto authoring the opinion 

Read this case if:  you have a matter involving the Blue & Gold contract waiver doctrine.

This week’s featured case is about an issue the government often raises in contract cases—waiver, particularly under Blue & Gold Fleet, L.P. v. United States. In Blue & Gold, the Federal Circuit held that “a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action.” This week in Boeing, the Federal Circuit limited that rule’s reach when the contracting agency could not have granted any meaningful relief during the pre-award process.

Boeing involved a contract that the Department of Defense awarded to Boeing in 2008. During the course of performance, Boeing told the contracting officer that it was changing its cost accounting practices across a number of contracts. Some of the changes would increase the government’s costs while others would save the government money, with the net across all changes being a savings of almost $1.5 million to the government. Yet despite those net savings, the government required Boeing to reimburse the increased costs based on FAR 30.606, which the government said prohibited it from considering offsetting benefits when deciding how to deal with the cost effects of accounting changes.

Boeing then sued the government in the Court of Federal Claims raising both contract and illegal exaction claims. It argued that FAR 30.606 was unlawful because, among other reasons, it violated 41 U.S.C. § 1503(b), which states that “[t]he Federal Government may not recover costs greater than the aggregate increased cost to the Federal Government.” The trial court dismissed Boeing’s claims, holding that Boeing had waived its contract claims because it failed to challenge the legality of FAR 30.606 before entering into the contract and that there was no Tucker Act jurisdiction over the illegal exaction claim because § 1503(b) is not a money-mandating statute.

The Federal Circuit reversed on both claims. On the contract claim, it held that “a pre-award objection by Boeing to the Defense Department would have been futile, as the government concededly could not lawfully have declared FAR 30.606 inapplicable in entering into the contract.” Given the “inability of the agency itself to grant the relief that the party later sought in court”—a circumstance missing from past waiver cases—the Federal Circuit refused to find waiver. Nor did the Federal Circuit find any basis for requiring Boeing to have sought judicial review of FAR 30.606 before entering into the contract, especially because “the government has not identified a judicial forum” where Boeing could have done so.  Finally, on the illegal exaction claim, the Federal Circuit held that the trial court had misapplied jurisdictional requirements for a money-mandating-statute claim to an illegal-exaction claim: to show jurisdiction for an illegal-exaction claim, a “party that has paid money over to the government and seeks its return” need only “make a non-frivolous allegation that the government, in obtaining the money, has violated the Constitution, a statute, or a regulation.”

Samuel B. Goldstein co-authored this article as an associate in our Appellate + Supreme Court practice before departing the firm for a judicial clerkship.