Court of Federal Claims Limits Contractor's Ability to Contest Negative Performance Evaluation

Last month, the U.S. Court of Federal Claims took up an issue not previously decided by the Federal Circuit – whether the Court of Federal Claims has authority to issue injunctive relief to revise a federal contractor’s “unsatisfactory” rating.  In Davis Group, Inc. v. United States, No. 12-275, 2012 WL 2688053 (Fed. Cl. July 6, 2012), the United States Army Corps of Engineers (“USACE”) entered into a design-build contract with a general contractor to perform construction services at an airfield in Savannah, Georgia. After the project’s completion was delayed by almost seven months, the USACE withheld substantial liquidated damages to cover the delay period and rated the contractor’s performance as “unsatisfactory.”  Pursuant to 48 C.F.R. § 42.1503(c), this rating was entered into the Government’s Past Performance Information Retrieval System (“PPIRS”) for use by agencies for the next six years.  After submitting claims to the contracting officer for additional costs associated with a design defect and remission of liquidated damages, which were denied, the contractor filed suit directly in the Court of Federal Claims. In addition to its claims for monetary relief, the contractor moved for a preliminary injunction, seeking removal of the “unsatisfactory” rating from the PPIRS.

On the contractor’s motion, the court first considered whether it had authority to issue injunctive relief in these circumstances. While the court agreed that it had jurisdiction over a contractor’s claim for a performance evaluation deemed unfair and inaccurate, it did not have authority to issue a preliminary injunction to remove or alter that evaluation during the pendency of the action.  In making this determination, the court rejected the contractor’s argument that the parties start with a “clean slate” when commencing an action. Rather, the court held that, although there was judicial precedent for the “clean slate” notion, such a suggestion was meant to refer to the legal standard of review– i.e., de novo proceedings are reviewed “from the beginning.” Furthermore, the court rejected the contractor’s argument that the court’s power to “remand appropriate matters to any…official with such direction as it may deem proper and just”  granted the court the authority to direct the contracting officer to remove the “unsatisfactory” rating during the pendancy of the case. By filing the action with the Court of Federal Claims, the contractor divested the contracting officer of any authority to act on the claim while the action was pending. Finally, the absence of any express statutory authority led the court to the inevitable conclusion that it lacked the power to proceed by way of injunctive relief in these circumstances. Therefore, the contractor was without a remedy to remove the negative evaluation during the pendency of the case. Given the lengthy process of litigating claims at the Court of Federal Claims level, this decision has significant ramifications for contractors looking for immediate redress.

To read the decision, click here.

Categories: Legal Updates