Opinion ID: 688710
Heading Depth: 3
Heading Rank: 1

Heading: LaBarge Seeks Reformation of a CDA Contract

Text: 20 The government assumes that LaBarge's claim asserts only a breach of the implied-in-fact contract to treat bids fairly. However, LaBarge also asserts a claim relating to the coupling contract, which indisputedly is a CDA contract. In accordance with Coastal Corp., a prospective contractor's pre-award bid protest based solely on the implied-in-fact contract is not covered by the CDA. However, LaBarge, an actual government contractor, brings a post-award claim for reformation of an existing CDA contract. In addition, that claim has two express and independent bases: (1) the implied contract of fair dealing; and (2) violations, during the bidding process, of 48 C.F.R. (FAR) Sec. 15.610(d) (1984) prohibiting auction techniques. 3 21 One of our predecessor courts, the United States Court of Claims, has applied the equitable principle of contract reformation when a contract has been written in violation of a law or regulation enacted for the benefit of prospective contractors. CRF-A Joint Venture, Etc. v. United States, 624 F.2d 1054, 1061-62, 224 Ct. Cl. 312, 324-26 (1980) (treating contracting officer's illegal requirement that first article samples be converted to production quality radio transmitters as an exercise of contract's option provision entitling contractor to increased payments); Applied Devices Corp. v. United States, 591 F.2d 635, 640-41, 219 Ct.Cl. 109, 119-20 (1979) (holding contractor was entitled to reformation of contract's cancellation charge term because government had violated regulation in calculating charge). These cases are binding precedent. South Corp. v. United States, 690 F.2d 1368, 1370 (Fed.Cir.1982) (in banc). See also Beta Sys., Inc. v. United States, 838 F.2d 1179, 1185 (Fed.Cir.1988) (if government violated applicable regulations in setting economic index incorporated into contract, the government cannot, by law, benefit from it and contract must be reformed). 22 In this case, the prohibition of auction techniques in FAR Sec. 15.610(d) is plainly for the benefit of the contractor. The regulation insures that every bidder and potential contractor operates with equal knowledge of its competitors' positions. Because LaBarge alleges that the government engaged in auctioning techniques violating section 15.160(d) in the formation of its contract, LaBarge may seek reformation of that contract. Because LaBarge's reformation claim may independently rest on this theory, it does not solely concern the implied contract to treat bids honestly and fairly. 23 According to the government, LaBarge's allegations of government misconduct are the kind of allegations that are ordinarily made in pre-award bid protests, not after award of a contract. However, if government officials make a contract they are not authorized to make, in violation of a law enacted for the contractor's protection, the contractor is not bound by estoppel, acquiescence or failure to protest. Chris Berg, Inc. v. United States, 426 F.2d 314, 317, 192 Ct.Cl. 176, 183 (1970); Rough Diamond Co. v. United States, 351 F.2d 636, 639-43, 173 Ct.Cl. 15, 20-27 (1965), cert. denied, 383 U.S. 957, 86 S.Ct. 1221, 16 L.Ed.2d 300 (1966). In cases in which a breach of law is inherent in the writing of the contract, reformation is available despite the contractor's initial adherence to the contract provision later shown to be illegal. Chris Berg, Inc., 426 F.2d at 317-18, 192 Ct.Cl. at 183 (contractor was entitled to reformation of a price increase after being denied leave to correct a mistaken bid in violation of applicable regulations, even though contractor had performed the uncorrected contract). Like the contractor in Chris Berg, Inc., LaBarge may seek reformation of its price term, even after performance, if that term was allegedly diminished by unlawful government acts. 24 Moreover, LaBarge's claim relates to the coupling contract both as to operative facts and requested relief. 4 The operative facts as alleged affected the lawfulness of contract formation and the reformability of contract terms. LaBarge alleges that the coupling price in its contract is lower than it would have been if the government had acted lawfully during the solicitation process and had not violated the FAR's prohibition on disclosing bids to competitors. Because the admitted leaking of LaBarge's bid and allegedly illegal request for best and final offers arguably could have affected the price of the coupling contract, there can be no doubt that a claim based upon these actions relates to that contract. The causal connection establishes the requisite relationship. Second, LaBarge submitted its claim to the contracting officer after completing the coupling contract, seeking reformation and additional compensation under that contract, thus requesting relief which clearly relates to the contract. Therefore, LaBarge's claim relates to the coupling contract even though it also asserts a breach of the implied-in-fact contract to treat bids fairly and honestly. 25 Accordingly, LaBarge brings a claim for reformation based on the valid theory of violation of a government regulation. Moreover, by looking to the operative facts, the alleged, adverse consequences of improper government acts, and the relief requested, it becomes clear that LaBarge's claim relates to the coupling contract within the meaning of that phrase intended by Congress, as demonstrated below. 26