Court Opinion

ID: 2722460
Source: CourtListenerOpinion
Date Created: 2014-09-01 12:00:48.451814+00
Date Added: 2024-06-11T10:02:54.728552
License: Public Domain

In the United States Court of Federal Claims
                                     No. 13-599C
                                    August 29, 2014

* * * * * * * * * * * * * * * * * * *
THRESHOLD TECHNOLOGIES,             *
INC.                                *
                                    *
                      Plaintiff,    *             Motion to Dismiss; Third-Party
                                    *             Beneficiary; Privity of Contract.
                 v.                 *
                                    *
UNITED STATES,                      *
                                    *
                      Defendant.    *
                                    *
* * * * * * * * * * * * * * * * * *
      Scott L. Levitt, Law Offices of Levitt Law, APC, Seal Beach, CA, for plaintiff.

      Gregg P. Yates, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C., for defendant. With him were
Donald E. Kinner, Assistant Director, Commercial Litigation Branch, Robert E.
Kirschman, Jr., Director, Commercial Litigation Branch, Civil Division, and Stuart F.
Delery, Assistant Attorney General.

                                      OPINION

HORN, J.

        Plaintiff, Threshold Technologies, Inc. (Threshold)1 brings this action against the
United States related to the National Aeronautics and Space Administration’s (NASA’s)
alleged failure to pay plaintiff for airplane “operations, maintenance, and
installation/disintegration services.” Threshold alleges that it provided these services as
a subcontractor to a government contract between Flight Test Associates and NASA for
“High Ice Water Content testing;” contract NNC11BA04B (the prime contract), and that it
then continued to provide these services upon request from NASA after the prime
contract between NASA and Flight Test Associates ended. Threshold states that the
prime contract between Flight Test Associates and NASA for “High Ice Water Content
testing” required “the fitting of specialized government owned equipment,” on a jet
aircraft, and “subsequent flights with such equipment providing data to NASA pertaining

1
  In its complaint, Threshold explains that although it brings suit under the name
Threshold Technologies, Inc., Threshold is “also referred to as Threshold Aviation
Group,” and represents that there is no difference between the entities.
to weather conditions, specifically in areas of high ice accumulation.” Plaintiff claims it
has an express and implied-in-fact contract with the government, and is “a third party
intended beneficiary to the” prime contract between the government and Flight Test
Associates. Plaintiff claims, therefore, that defendant (1) breached an express contract
with plaintiff,2 (2) breached an implied contract with plaintiff, (3) breached the covenant
of good faith and fair dealing in contracts, and (4) is liable to plaintiff under a theory of
quantum meruit. Plaintiff seeks as relief, “$562,559.69 for services provided,” interest,
attorney’s fees, and costs of the suit.3

        Defendant filed a partial motion to dismiss for lack of subject matter jurisdiction
and for failure to state a claim upon which relief may be granted, pursuant to Rule
12(b)(1) and Rule 12(b)(6) of the Rules of the United States Court of Federal Claims
(RCFC) (2014). Defendant contends that the government never entered into an express
contract with plaintiff, Threshold, and that plaintiff is not an intended third-party
beneficiary to the prime contract between the government and Flight Test Associates.
Defendant, however, “does not move to dismiss count II of Threshold’s complaint to the
extent that it is based upon a theory of breach of an implied-in-fact contract for services
performed after the October 19, 2012 decision by the Government to terminate the FTA
[Flight Test Associates] contract for default.” (emphasis in original). Defendant contends
that plaintiff’s third claim for relief, for a breach of the implied covenant of good faith and
fair dealing, fails to state a claim upon which relief can be granted: “Because the
complaint acknowledges that the parties have no express contract, there can be no
implied covenant of good faith and fair dealing.” Defendant, finally, contends that
plaintiff’s fourth claim for relief, under a theory of quantum meruit, is an implied-in-law
contract claim outside of this court’s jurisdiction under the Tucker Act, 28 U.S.C. § 1491
(2012).

2
  Plaintiff confuses its breach of express contract claim with its claim for relief as a third
party beneficiary to the prime contract. As discussed below, these are not the same
legal theories.
3
   Another subcontractor to the same prime contract between Flight Test Associates and
NASA, contract NNC11BA04B, New Hampshire Flight Procurement, LLC (New
Hampshire), also brought a suit alleging that NASA failed to compensate New
Hampshire for supplying the Gulfstream jet which Threshold, as a subcontractor, helped
maintain under the “High Ice Water Content testing” prime contract between Flight Test
Associates and NASA. See New Hampshire Flight Procurement, LLC, v. United States,
No. 13-567C (Fed. Cl. filed Aug. 9, 2013). The lawsuit in the New Hampshire case was
filed by the same attorney and the briefs filed in both cases closely resemble each
other, with factual differences noted, but arguments and case citations closely parallel
each other. In the New Hampshire case, defendant filed a motion to dismiss for lack of
subject matter jurisdiction and for failure to state a claim upon which relief may be
granted.

                                              2
                                  FINDINGS OF FACT

        According to plaintiff, on December 20, 2010, NASA entered into a contract,
NNC11BA04B, with Flight Test Associates for “High Ice Water Content testing.”
Plaintiff’s complaint attaches a portion of the prime contract between Flight Test
Associates and NASA, which was signed on behalf of NASA by contracting officer
Timothy M. Bober and the president of Flight Test Associates, John Ligon. According to
the prime contract’s first page, the prime contract between Flight Test Associates and
NASA was awarded to Flight Test Associates on December 20, 2010.4

       Defendant attaches to its motion to dismiss plaintiff’s complaint the prime
contract’s statement of work. The statement of work for the prime contract between
Flight Test Associates and NASA does not reference Flight Test Associates or the
subcontractor Threshold. According to the introduction to the statement of work:

      Over the past 10 years, there have been a significant number of jet engine
      power-loss events (flameout, stall, rollback and surge) occurring in and
      around areas of deep tropical convection at higher altitudes (mostly above
      20,000 ft).
                                         ...

      The intent of this contract is for a Contractor to provide an aircraft modified
      with Government furnished instrumentation to conduct High Ice Water
      Content (HIWC) flight research during a trial flight campaign and primary
      flight campaign(s) based out of Darwin Australia during the monsoon
      season between January - March. This Statement of Work (SOW) sets
      forth the requirements to conduct HIWC research through an Aircraft
      Services Contract. The research to be conducted by the Government will
      require close coordination between Government and Contractor personnel
      during all phases of this contract.

According to the scope of the statement of work for the prime contract between Flight
Test Associates and NASA, “[t]he Contractor shall provide all personnel (including
pilots), equipment, tools, etc., except as provided in Section 4.1 or as otherwise noted,
necessary to conduct the HIWC research flights required to meet NASA's testing
requirements.” The statement of work also explains that:

4
   The parties have not provided the entire prime contract between Flight Test
Associates and NASA to the court. Rather, plaintiff, Threshold, provided in its complaint
Parts I through III of the prime contract NNC11BA04B, the contract “SCHEDULE,”
“CONTRACT CLAUSES,” and “LIST OF DOCUMENTS, EXHIBITS AND OTHER
ATTACH.” (capitalization in original). Defendant also provided, as part of its motion to
dismiss, “Attachment A” to the prime contract, titled “Statement of Work (Change A) for
Aircraft Services to Conduct High Ice Water Content Flight Research.”

                                            3
      The Contractor shall provide . . . Aircraft Preparation . . . an aircraft as
      specified in Section 4.3 and integrate all instrumentation as specified in
      Section 4.1 of this document on the aircraft while coordinating the
      instrument locations, mounting design concepts and fabrication, and
      instrument installation with NASA and partner researchers and aviation
      safety personnel.

(emphasis in original). The statement of work indicates that the prime contractor was
also to be responsible for, “Trial Flight Campaign,” “Primary Flight Campaign(s),”
and “Aircraft final de-integration and return of Government Furnished Properly
(GFP) and partner hardware.” (emphasis in original).

       The prime contract between Flight Test Associates and NASA states under
“SCOPE OF CONTRACT,” “[t]he contractor shall, except as otherwise specified herein,
furnish all personnel, facilities, materials and services required to perform the work
outlined in Section C hereof.” (capitalization and emphasis in original). The prime
contract between Flight Test Associates and NASA was to be a firm fixed price contract
for $9,962,787.00. The prime contract between Flight Test Associates and NASA states
that payments to the contractor were to be milestone-based, with separate payments
after plaintiff completed “Aircraft Preparation,” “Trial Flight Campaign,” “Primary Flight
Campaign,” “Aircraft De-integration and Return of GFP,” with an “Option for an
Additional Flight Campaign.” The prime contract further states that, “[o]nly the
Contracting Officer may issue task orders to the Contractor,” and that “[n]o other costs
are authorized unless otherwise specified in the contract or expressly authorized by the
Contracting Officer.”

       The prime contract between Flight Test Associates and NASA put the risk of
delay or issues with the aircraft on the prime contractor, Flight Test Associates:

      In accordance with Section 8.5 of the Statement of Work, the following
      performance standards will exist for calculating payments for aircraft
      usage under task orders:

             (a) Should the aircraft preparation schedule get delayed due to
             Contractor issues and prevent NASA from conducting the flight
             campaigns as stated in this SOW, the Government will not incur
             any costs for occupying the aircraft from the start of the originally
             proposed flight campaign to the start of the actual flight campaign.

             (b) When a flight is not possible during a given day due to failure of
             the Contractor's equipment or documentation to pass NASA safety
             requirements, the aircraft occupancy payment may be reduced by
             10% for each day lost for that week.

             (c) NASA will not pay for flights benefiting the Contractor, such as
             flights for maintenance testing, for ferrying to and from maintenance

                                            4
              facilities, flights required following an engine change, commercial
              charters, and flights solely for transporting Contractor's personnel.

The prime contract between Flight Test Associates and NASA also incorporates by
reference Federal Acquisitions Regulations “52.233-4 APPLICABLE LAW FOR
BREACH OF CONTRACT CLAIM (OCT 2004),” “52.242-13 BANKRUPTCY (JUL
1995),” as well as “52.249-8 DEFAULT (FIXED PRICE SUPPLY AND SERVICE) (APR
1984).” (capitalization and emphasis in original).

        Plaintiff alleges that, “FTA [Flight Test Associates] does not, nor has it ever
owned a Gulfstream II aircraft, or any other aircraft that could be used under the
Contract.” Plaintiff further alleges that, “[d]efendant had complete knowledge of the fact
that FTA [Flight Test Associates], the ‘Contractor’ under the Contract did not own such
aircraft.” Plaintiff contends that Section H.13 of the prime contract between Flight Test
Associates and NASA makes clear that the contractor would be relying on a
subcontractor to provide the aircraft. According to Section H.13 of the prime contract
between Flight Test Associates and NASA:

       H.13 MONITORING OF SUBCONTRACTOR

       The parties agree that this contract was negotiated on the basis that the
       Contractor's proposed operations subcontractor, Threshold Aviation
       Group,[5] will provide the aircraft under lease to the prime contractor and
       will be performing contract requirements related to the airworthiness of the
       aircraft, aircraft operations, and aircraft maintenance. The parties agree
       that the proposed subcontractor's performance is critical to the success of
       the contract. Therefore, the Contracting Officer's written approval is
       required for any substitution of another operations subcontractor.

       Additionally, the Contractor shall ensure that the subcontractor's
       operations conform to all contract requirements, including, without
       limitation, the requirement that performance conform to the requirements
       of NPR 7900.3, Aircraft Operations Management, as set forth in sections
       6-8 of the Statement of Work (SOW) and the requirements pertinent to the
       authority and responsibility of the NASA Test Director as set forth in
       section 8.10.9 of the SOW.

5
  New Hampshire, in a separate complaint filed in this court, No. 13-567C, asserts it was
the entity that contracted with Flight Test Associates to supply the aircraft, through a
separate subcontract, an aircraft lease agreement New Hampshire signed with Flight
Test Associates. See Compl. ¶ 20, New Hampshire Flight Procurement, LLC, v. United
States, No. 13-567C (Fed. Cl. filed Aug. 9, 2013). Defendant admits that, “[t]he prime
contract incorrectly identifies Threshold as the provider of the aircraft,” and explains that
Threshold only provided “operations, maintenance, and installation services.”

                                             5
       The Contractor shall ensure that there are clear lines of communications,
       including, when necessary, direct communications, between the
       Government and the operations subcontractor to ensure airworthiness,
       and safe and successful operations and maintenance of the aircraft.

       Nothing herein relieves the Contractor from responsibility for performing
       this contract.

(emphasis and capitalization in original). Threshold states that itself, “Defendant, and
FTA [Flight Test Associates], all knew and understood prior to, at the time of execution,
during and after the Contract duration that Plaintiff [Threshold] was to provide all of the
services required to ready and maintain the Aircraft under the Contract requirements,”
however, Threshold does not assert in its complaint that it ever provided the physical
aircraft.

        In its complaint, plaintiff Threshold provides a copy of a subcontract agreement
between Threshold and the prime contractor Flight Test Associates, titled an
“AIRCRAFT OPERATING AGREEMENT,” “by and between Threshold Technologies,
Inc., a California corporation, having its principal office at 8352 Kimball Avenue, Hangar
#3, Chino, California 91708 (hereinafter referred to as ‘TTI’), and Flight Test Associates,
Inc., a Delaware corporation, having its principal office at 1031 Mobley, Hangar 100,
Mojave, California, 93501 (hereinafter referred to as ‘FTA’).” (emphasis and
capitalization in original). The term of the operating agreement between Threshold and
Flight Test Agreement was to be for twenty-nine months, ending on May 31, 2013.
Under the operating agreement between Threshold and Flight Test Agreement,
Threshold was to provide to Flight Test Associates one pilot for “any and all Flights
conducted under the NASA Contract for the HIWC program,” “Train, Monitor and track
Flight Crews per the NASA Contract requirements,” provide one mechanic and one
quality assurance inspector for maintenance purposes, source all jet fuel, and “[c]onduct
all domestic and international flight planning activities.” In addition, under the operating
agreement between Threshold and Flight Test Agreement, Threshold was to modify the
aircraft for the NASA experiments, provide security for the aircraft, and, “at no cost to
FTA, provide all maintenance and aircraft related services required by NHFP [New
Hampshire Flight Procurement LLC] for Aircraft support and maintenance under the
Aircraft Lease Agreement,[6] during the term of that agreement.” Under the operating
agreement, at the conclusion of the prime contract between Flight Test Associates and
NASA, Flight Test Associates was to “return the Aircraft to its original condition and
6
  The operating agreement between Threshold and Flight Test Agreement indicates that
Threshold, separately, “contracted with NHFP [New Hampshire Flight Procurement]
(‘TTI/NHFP Contract’) to accomplish the NHFP Aircraft maintenance and support
services required of NHFP under the Aircraft Lease Agreement.” The operating
agreement between Threshold and Flight Test Agreement states that, “TTI [Threshold
Technologies, Inc.] shall not invoice FTA for any goods and/or services that are the
responsibility of NHFP under the Aircraft Lease Agreement, or are to be provided by TTI
under its agreement with NHFP that supports the Aircraft Lease Agreement.”

                                             6
operating category as described in the NHFP Aircraft Lease Agreement. Upon the
return of the Aircraft to its original category by FTA, the Aircraft will be delivered to TTI
who will Re-Install the Interior in the Aircraft.” According to the operating agreement
between Threshold and Flight Test Agreement, Flight Test Associates agreed to pay
hourly rates for the pilots, pilot training activities, mechanic, and inspector. The
operating agreement also provides a table with prices for other maintenance and
modification services plaintiff would provide to Flight Test Associates.

       The operating agreement between Threshold and Flight Test Associates
contained many provisions in case either party defaulted. Threshold would be in default
under the operating agreement if it failed “to provide its services for Aircraft operational,
maintenance and support services when due,” and the failure continued un-remedied
for ten days after written notice. Either party would be in default if it, for example, failed
to “perform or observe any other covenant, condition or agreement . . .” without remedy
within ten days after written notice, or if it made a false representation, “cease[d] doing
business as a going concern,” filed for bankruptcy, or had an insolvency order,
judgment, or decree entered against it that was not resolved within sixty days. If a party
to the operating agreement between Threshold and Flight Test Agreement was in
default, the non-defaulting party, could “at its option, declare this Agreement to be in
default,” “[t]erminate or cancel this Agreement upon 10 days notice of default” unless
the default was cured, and,

       recover from the defaulting Party damages and sue for any and all
       applicable remedies, including, but not limited to, specific performance of
       this Agreement, costs and damages related to the non-defaulting Parties
       [sic] inability to complete its HIWC contract with NASA, costs of de-
       modification of the Aircraft and for reasonable attorney's fees.

If Threshold were to default, Flight Test Associates also was allowed additional
remedies under the operating agreement. This included obtaining the same services
elsewhere and charging Threshold for any excess costs incurred, causing Threshold,
“at TTI's expense, to return the Aircraft to FTA,” and retaking “possession of the Aircraft”
without liability for damage. The operating agreement between Threshold and Flight
Test Agreement stated that “[n]o governmental approval other than that of NASA which
is already received is required for FTA or TTI (together with its affiliates AMG [Aircraft
Maintenance Group] and TAC [Threshold Air Charter]) to enter into this Agreement.”

      Also attached to plaintiff Threshold’s complaint is an “ADDENDUM TO
AIRCRAFT OPERATING AGREEMENT,” between Threshold and Flight Test
Associates. (capitalization and emphasis in original). The addendum was written
because “the parties have met, discussed and defined a payment schedule that will
address outstanding invoices that are the subject of a lien Threshold has filed with the
Federal Aviation Administration (FAA), and litigation filed by FTA in the Kern County
Superior Court,” in California. The operating agreement addendum between Threshold
and Flight Test Agreement laid out a schedule for future payments by Flight Test
Associates to plaintiff, which were to be paid into an escrow account managed by

                                              7
plaintiff’s counsel. The operating agreement also stated that “FTA will within five
working days dismiss the action, Case Number S-1500-CV-276992, filed in the Kern
County Superior Court, Metropolitan Division.“ Flight Test Associates represented in the
addendum that “FTA here by [sic] does represent that it has been, continues to be, and
will be solvent during the course that it engages Threshold for work on the project which
is the subject of this Addendum and Agreement.” The operating agreement was signed
by John Ligon, President of Flight Test Associates, and Mark DiLullo, Chief Executive
Officer of Threshold on July 27, 2012.

       According to Threshold’s complaint, “[w]ithin the first few months of the [prime]
Contract duration, FTA began to breach the Contract, and had stopped paying Plaintiff
[Threshold] and other subcontractors, suppliers, and vendors.” Plaintiff alleges that “[o]n
June 14, 2012, Mark DiLullo, CEO of Threshold, sent Ron Colantonio and Peter Struk,
both of NASA, a letter detailing the lack of payment by FTA:”

       “Specifically, FTA has breached its agreement with TTI {Threshold
       Technologies Inc.} by failing to make timely payments for services
       provided by TTI. The current amount exceeds $244,000 with invoices
       dating back as far as March 4, 2011.

       A meeting was held on Tuesday, June 12, 2012 at FTA's office . . . At the
       meeting FTA advised TTI that it was unable to pay TTI for any of the
       current or past due amounts and that FTA was unwilling to discuss or
       establish a payment schedule for the invoices that are currently due and
       payable. Further, FTA was unwilling to provide any assurances as to when
       TTI would be paid, if at all . . .”

(modifications in original). Plaintiff continued, “[d]espite this June 14, 2012 letter, NASA
continued to make payments to FTA, even though they had actual knowledge that
Plaintiff had not received payments due.” Plaintiff states that on August 29, 2012, Mr.
John Ligon, “president and owner of FTA,” passed away, and that, “FTA, without its
owner, essentially ceased to function and continued to default with regard to its
obligations under the Contract and in its failure to pay Plaintiff.” On September 21,
2012, NASA sent a cure notice e-mail to Flight Test Associates, stating that: “You [Flight
Test Associates] are hereby notified that the Government considers FTA's current
financial condition and failure to remain current on its financial obligations to be
conditions that are endangering performance of the contract.” On October 9, 2012,
NASA sent Flight Test Associates another e-mail, stating in relevant part:

       FTA notified NASA on September 25, 2012 that the personnel working on
       the HIWC project were furloughed, and all ongoing work on aircraft
       modifications was stopped. On September 28th, NASA leased hangar
       space for the G-II [Gulfstream II] at ASB Avionics and requested that FTA
       coordinate the movement of the plane from the FTA hangar to the ASB
       hangar in order to provide a more secure environment for the plane and

                                             8
      the Government property on board. NASA has been paying the hangar
      rental fees since that date.

      NASA was copied on a letter from attorney Scott L. Levitt dated October 1,
      2012 indicating that FTA is in default of the lease terms with New
      Hampshire Flight Procurement. This letter leaves us uncertain as to the
      status of the plane. NASA's current lease of the ASB hangar space is paid
      through 10/12/12. Because there is still a substantial amount of
      Government property on board the plane, and the ongoing status of the
      HIWC project within NASA is still undetermined, we need to ensure that
      the aircraft will be kept in a secure location where Government personnel
      can have continued access.

      We have not received any notice from FTA regarding any change in the
      official status of the aircraft lease. NASA is hereby requesting response to
      the following questions:

             1. What is the current status of the aircraft lease between FTA and
             NHFP?
             2. Who has legal custody of the aircraft at this time?
             3. Is the aircraft currently covered by insurance? What are the limits
             of that coverage?
             4. What is your intent regarding the location of the plane and the
             hangar rental beyond 10/12/12?

      Please respond to the above questions by October 11, 2012 and copy
      both myself and NASA counsel Jerald Kennemuth.

        Plaintiff Threshold alleges that, finally, “after numerous correspondences by
Plaintiff and NASA, regarding lack of payments and lack of progress by FTA on the
Contract requirements, on October 19, 2012, NASA terminated the Contract with FTA.”
According to defendant, on November 3, 2012, “Threshold arranged to fly the aircraft
from NASA’s leased hangar in to its own hangar in Chino, California.[7] At the time that
Threshold moved the aircraft, the aircraft still had NASA’s HWIC [sic] [High Ice Water
Content testing] equipment installed in it.” (internal citation omitted). According to
7
  Defendant, in support, submitted a letter from a Mr. Mark DiLullo, to Ms. Huth, stating
that “N81RR departed KMHV arrived KCNO on 11/3/2012.” As understood from the
operating agreement between Threshold and Flight Test Associates, N81RR is the
registration identification for the Gulfstream G-1159 airplane leased to Flight Test
Associates by another subcontractor, New Hampshire. The acronym “KMHV” refers to
Mojave Airport, in Mojave, California, see Mojave, CA, Weather.gov, Nat’l Weather
Service, http://w1.weather.gov/xml/current_obs/KMHV.xml (last updated Aug. 29, 2014),
and “KCNO” refers to Chino Airport in Chino, California. See Chino Airport, Cnty. of San
Bernardino Dep’t of Airports, http://cms.sbcounty.gov/airports/Airports/Chino.aspx (last
visited Aug. 29, 2014).

                                           9
plaintiff’s complaint, the aircraft was being stored at plaintiff’s facility “at Plaintiff’s
expense.”

        Threshold contends, however, that even though the plane was moved to
Threshold’s facility, “NASA continued to maintain dominion and control over the
Gulfstream II aircraft, and continuously communicated with Plaintiff [Threshold] directly
regarding the security of the Aircraft and Defendant's equipment.” Plaintiff presents as
“[e]vidence of such possession,” “a March 12, 2013 e-mail sent by Karin Huth,
Contracting Officer of NASA to Plaintiff stating, ‘Once these items have been removed
from the plane, I anticipate that NASA will want to do a final review of the aircraft and
will then be ready to have the plane returned to possession by the aircraft owner.’”
Plaintiff further contends, “[s]ince March 2011, through the date of the filing of this
Complaint, Plaintiff has performed work and/or stored the Aircraft at the request and
benefit of NASA,” and that “Plaintiff has requested payment for such work/and or [sic]
storage.”

      Plaintiff alleges that on March 25, 2013, “[a]fter months of unanswered payment
requests,” “Mark DiLullo, CEO of Plaintiff, sent Karin Huth, Contracting Officer for
NASA, a letter requesting past due payments for work performed under the Contract.” A
copy of a letter, dated March 25, 2013, from Threshold to Ms. Huth, states in relevant
part:

       As a follow up to the March 25th correspondence, we believe that a
       meeting with yourself and any other appropriate NASA personnel is
       appropriate. TAG [Threshold Aviation Group], NHFP and NASA need
       resolution and closure in the form of payment for services rendered and
       the return of government owned property, which are mutually exclusive. A
       fast and friendly resolution is in the best interests of all parties.

The letter included a list of “TAG [Threshold Aviation Group] Unpaid Costs and
Loss of Revenue Resulting From HIWC Cancellation.” (capitalization and emphasis
in original). According to plaintiff, on April 18, 2013, the NASA “Contracting Officer sent
back a response denying all of the amounts request [sic] except for one, in the amount
of $22,528.00, which had previously been paid by Defendant as of the date of the
letter.”

       According to plaintiff, “[f]inally, on May 15, 2013, NASA had the final government
owned equipment removed from the Aircraft.” On June 13, 2013, plaintiff sent “its
formal, certified claim letter to Karin Huth, Contracting Officer for NASA,” for
$562,559.69. Plaintiff states that on August 14, 2013, “Plaintiff received the response
from NASA to its June 13, 2013, certified claim. Such response denied all damages and
denied all monies sought.”

      Plaintiff filed a complaint in this court, alleging four causes of action. Plaintiff first
claims that defendant breached (1) an express contract with plaintiff, arguing at the
same time that plaintiff is an intended third party beneficiary to the prime contract

                                              10
between the government and Flight Test Associates. Plaintiff also claims defendant
breached (2) an implied contract with plaintiff, and (3) the covenant of good faith and fair
dealing. Finally, plaintiff (4) argues for recovery under a theory of quantum meruit.
Plaintiff seeks “$562,559.69 for services provided,” interest, attorney’s fees, and costs
of the suit.

        In response, defendant filed a motion to dismiss for lack of subject matter
jurisdiction and for failure to state a claim upon which relief may be granted, pursuant to
RCFC 12(b)(1) and RCFC 12(b)(6). Regarding plaintiff’s breach of express contract
claim, defendant maintains that, “[t]he contracts attached to the complaint demonstrate
that the Government, through its agency NASA, contracted only with FTA for the
procurement of flight services, and the prime contract had no provision indicating that
the Government would be directly liable to FTA’s vendors.”8 Defendant also contends
that plaintiff is not an intended third party beneficiary under the prime contract, as “[t]he
complaint does not allege that the entire purpose of any provision of the prime contract
is to grant Threshold a right to payment.” Regarding plaintiff’s breach of implied contract
claim, defendant does not move to dismiss whether or not an implied-in-fact contract
could have come into existence after October 19, 2013, the date NASA cancelled the
prime contract between Flight Test Associates and NASA. Defendant maintains,
however, that any implied-in-law contract claims are outside of this court’s jurisdiction
under the Tucker Act. Regarding plaintiff’s breach of the covenant of good faith and fair
dealing claim, defendant argues that plaintiff states a claim upon which relief cannot be
granted, because the covenant does not apply “[b]ecause the complaint acknowledges
that the parties have no express contract.” Finally, regarding plaintiff’s quantum meruit
claim, defendant argues that the claim is an implied-in-law contract argument, “outside
this Court’s jurisdiction.”

                                       DISCUSSION

       It is well established that “‘subject-matter jurisdiction, because it involves a
court’s power to hear a case, can never be forfeited or waived.’” Arbaugh v. Y & H
Corp., 546 U.S. 500, 514 (2006) (quoting United States v. Cotton, 535 U.S. 625, 630
(2002)). “[F]ederal courts have an independent obligation to ensure that they do not
exceed the scope of their jurisdiction, and therefore they must raise and decide
8
   Defendant’s counsel, who defended both the Threshold and New Hampshire
complaints on behalf of the government, in its motion to dismiss Threshold’s complaint
makes numerous references to the other subcontractor, New Hampshire. For example,
defendant states, “[t]his Court does not possess subject matter jurisdiction to entertain
NHFP’s [New Hampshire Flight Procurement’s] complaint for unpaid rent for its aircraft
and related costs. As demonstrated below, there is no privity of contract between the
Government and NHFP,” although New Hampshire’s relationship with the government is
not at issue in this case. These appear to be drafting mistakes, in which plaintiff copied
language from its motion to dismiss New Hampshire’s complaint in the related case
New Hampshire Flight Procurement, LLC, v. United States, also before this court for
review.

                                             11
jurisdictional questions that the parties either overlook or elect not to press.” Henderson
ex rel. Henderson v. Shinseki, 131 S. Ct. 1197, 1202 (2011); see also Gonzalez v.
Thaler, 132 S. Ct. 641, 648 (2012) (“When a requirement goes to subject-matter
jurisdiction, courts are obligated to consider sua sponte issues that the parties have
disclaimed or have not presented.”); Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010)
(“Courts have an independent obligation to determine whether subject-matter
jurisdiction exists, even when no party challenges it.” (citing Arbaugh v. Y & H Corp.,
546 U.S. at 514)); Avid Identification Sys., Inc. v. Crystal Import Corp., 603 F.3d 967,
971 (Fed. Cir.) (“This court must always determine for itself whether it has jurisdiction to
hear the case before it, even when the parties do not raise or contest the issue.”), reh’g
and reh’g en banc denied, 614 F.3d 1330 (Fed. Cir. 2010), cert. denied, 131 S. Ct. 909
(2011); Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d 1354, 1369 (Fed.
Cir.) (“Subject matter jurisdiction is an inquiry that this court must raise sua sponte, even
where . . . neither party has raised this issue.” (citing Textile Prods., Inc. v. Mead Corp.,
134 F.3d 1481, 1485 (Fed. Cir.), reh’g denied and en banc suggestion declined (Fed.
Cir. 1998)), reh’g and reh’g en banc denied (Fed. Cir. 2004), cert. granted in part, 546
U.S. 975 (2005), cert. dismissed as improvidently granted, 548 U.S. 124 (2006); Special
Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1342 (Fed. Cir. 2001) (“[A] court has a duty
to inquire into its jurisdiction to hear and decide a case.”); View Eng'g, Inc. v. Robotic
Vision Sys., Inc., 115 F.3d 962, 963 (Fed. Cir. 1997) ("[C]ourts must always look to their
jurisdiction, whether the parties raise the issue or not."). “The objection that a federal
court lacks subject-matter jurisdiction . . . may be raised by a party, or by a court on its
own initiative, at any stage in the litigation, even after trial and the entry of judgment.”
Arbaugh v. Y & H Corp., 546 U.S. at 506; see also Centr. Pines Land Co., L.L.C. v.
United States, 697 F.3d 1360, 1364 n.1 (Fed. Cir. 2012) (“An objection to a court's
subject matter jurisdiction can be raised by any party or the court at any stage of
litigation, including after trial and the entry of judgment.”); Rick’s Mushroom Serv., Inc. v.
United States, 521 F.3d 1338, 1346 (Fed. Cir. 2008) (“[A]ny party may challenge, or the
court may raise sua sponte, subject matter jurisdiction at any time.” (citing Arbaugh v. Y
& H Corp., 546 U.S. at 506; Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir.),
reh’g and reh’g en banc denied (Fed. Cir. 2004), cert. denied, 545 U.S. 1127 (2005);
and Fanning, Phillips & Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998))); Pikulin v.
United States, 97 Fed. Cl. 71, 76, appeal dismissed, 425 F. App’x 902 (Fed. Cir. 2011).

       “Determination of jurisdiction starts with the complaint, which must be well-
pleaded in that it must state the necessary elements of the plaintiff's claim, independent
of any defense that may be interposed.” Holley v. United States, 124 F.3d 1462, 1465
(Fed. Cir.) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1
(1983)), reh'g denied (Fed. Cir. 1997); see also SRA Int’l, Inc. v. United States, 114 Fed.
Cl. 247, 251 (2014); Klamath Tribe Claims Comm. v. United States, 97 Fed. Cl. 203,
208 (2011); Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed. Cl. 710, 713
(2010). “Conclusory allegations of law and unwarranted inferences of fact do not suffice
to support a claim.” Bradley v. Chiron Corp., 136 F.3d 1317, 1322 (Fed. Cir. 1998); see
also McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1363 n.9 (Fed. Cir. 2007) (Dyk, J.,
concurring in part, dissenting in part).

                                             12
        In examining what must be pled in order to state a claim, under both RCFC
8(a)(2) and Rule (8)(a)(2) of the Federal Rules of Civil Procedure, a plaintiff need only
state in the complaint “a short and plain statement of the claim showing that the pleader
is entitled to relief.” RCFC 8(a)(2); Fed. R. Civ. P. 8(a)(2) (2014); see also Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). The United States Supreme Court, in the
Twombly case, stated that:

       While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
       need detailed factual allegations, a plaintiff’s obligation to provide the
       “grounds” of his “entitle[ment] to relief” requires more than labels and
       conclusions, and a formulaic recitation of the elements of a cause of
       action will not do. Papasan v. Allain, 478 U.S. 265, 286 (1986) (on a
       motion to dismiss, courts “are not bound to accept as true a legal
       conclusion couched as a factual allegation”). Factual allegations must be
       enough to raise a right to relief above the speculative level, see 5 C.
       Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d
       ed. 2004) (hereinafter Wright & Miller) (“[T]he pleading must contain
       something more . . . than . . . a statement of facts that merely creates a
       suspicion [of] a legally cognizable right of action”), on the assumption that
       all the allegations in the complaint are true (even if doubtful in fact), see,
       e.g., Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508 n.1 (2002) (“Rule
       12(b)(6) does not countenance . . . dismissals based on a judge’s disbelief
       of a complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S. 232,
       236 (1974) (a well-pleaded complaint may proceed even if it appears “that
       a recovery is very remote and unlikely”). . . . [W]e do not require
       heightened fact pleading of specifics, but only enough facts to state a
       claim to relief that is plausible on its face.

Bell Atl. Corp. v. Twombly, 550 U.S. at 555-56, 570 (footnote and other citations
omitted; brackets and omissions in original); see also Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555–57, 570); Bell/Heery v.
United States, 739 F.3d 1324, 1330 (Fed. Cir.), reh’g and reh’g en banc denied (Fed.
Cir. 2014); Kam-Almaz v. United States, 682 F.3d 1364, 1367 (Fed. Cir. 2012) (“The
facts as alleged ‘must be enough to raise a right to relief above the speculative level, on
the assumption that all the allegations in the complaint are true (even if doubtful in
fact).’” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. at 555)); Totes-Isotoner Corp. v.
United States, 594 F.3d 1346, 1354-55 (Fed. Cir.), cert. denied, 131 S. Ct. 92 (2010);
Bank of Guam v. United States, 578 F.3d 1318, 1326 (Fed. Cir.) (“In order to avoid
dismissal for failure to state a claim, the complaint must allege facts ‘plausibly
suggesting (not merely consistent with)’ a showing of entitlement to relief.” (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. at 557)), reh’g and reh’g en banc denied (Fed. Cir.
2009), cert. denied, 561 U.S. 1006 (2010); Cambridge v. United States, 558 F.3d 1331,
1335 (Fed. Cir. 2009) (“[A] plaintiff must plead factual allegations that support a facially
‘plausible’ claim to relief in order to avoid dismissal for failure to state a claim.” (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. at 570)); Cary v. United States, 552 F.3d 1373,
1376 (Fed. Cir.) (“The factual allegations must be enough to raise a right to relief above

                                              13
the speculative level. This does not require the plaintiff to set out in detail the facts upon
which the claim is based, but enough facts to state a claim to relief that is plausible on
its face.” (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555, 570)), reh’g denied (Fed.
Cir.), cert. denied, 557 U.S. 937 (2009); Vargas v. United States, 114 Fed. Cl. 226, 232
(2014); Fredericksburg Non-Profit Housing Corp. v. United States, 113 Fed. Cl. 244
(2013); Peninsula Grp. Capital Corp. v. United States, 93 Fed. Cl. 720, 726-27 (2010),
appeal dismissed, 454 F. App’x 900 (2011); Legal Aid Soc’y of New York v. United
States, 92 Fed. Cl. 285, 292, 298, 298 n.14 (2010).

       When deciding a case based on a lack of subject matter jurisdiction or for failure
to state a claim, this court must assume that all undisputed facts alleged in the
complaint are true and must draw all reasonable inferences in the non-movant's favor.
See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“In addition, when ruling on a
defendant's motion to dismiss, a judge must accept as true all of the factual allegations
contained in the complaint.” (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555-56 (citing
Swierkiewicz v. Sorema N. A., 534 U.S. at 508 n.1))); Scheuer v. Rhodes, 416 U.S. at
236 (“Moreover, it is well established that, in passing on a motion to dismiss, whether on
the ground of lack of jurisdiction over the subject matter or for failure to state a cause of
action, the allegations of the complaint should be construed favorably to the pleader.”),
abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982), recognized
by Davis v. Scherer, 468 U.S. 183, 190 (1984); United Pac. Ins. Co. v. United States,
464 F.3d 1325, 1327–28 (Fed. Cir. 2006); Samish Indian Nation v. United States, 419
F.3d 1355, 1364 (Fed. Cir. 2005); Boise Cascade Corp. v. United States, 296 F.3d
1339, 1343 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2002), cert. denied,
538 U.S. 906 (2003).

      Defendant in its motion to dismiss contends that “there is no privity of contract
between the government and Threshold.” Contract claims against the United States are
governed by the Tucker Act, which grants jurisdiction to this court as follows:

       The United States Court of Federal Claims shall have jurisdiction to render
       judgment upon any claim against the United States founded either upon
       the Constitution, or any Act of Congress or any regulation of an executive
       department, or upon any express or implied contract with the United
       States, or for liquidated or unliquidated damages in cases not sounding in
       tort.

28 U.S.C. § 1491(a)(1) (2012). As interpreted by the United States Supreme Court, the
Tucker Act waives sovereign immunity to allow jurisdiction over claims against the
United States (1) founded on an express or implied contract with the United States, (2)
seeking a refund from a prior payment made to the government, or (3) based on federal
constitutional, statutory, or regulatory law mandating compensation by the federal
government for damages sustained. See United States v. Navajo Nat., 556 U.S. 287,
289-90 (2009); United States v. Mitchell, 463 U.S. 206, 215 (1983); see also Kam-
Almaz v. United States, 682 F.3d at 1368; Greenlee Cnty., Ariz. v. United States, 487

                                             14
F.3d 871, 875 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2007), cert. denied,
552 U.S. 1142 (2008); Palmer v. United States, 168 F.3d 1310, 1314 (Fed. Cir. 1999).

       As stated in the Tucker Act, privity of contract between a plaintiff and the United
States government is required to bring a cause of action in the United States Court of
Federal Claims for express and implied contracts. See Cienega Gardens v. United
States, 194 F.3d 1231, 1239 (Fed. Cir. 1998) (“Under the Tucker Act, the Court of
Federal Claims has jurisdiction over claims based on ‘any express or implied contract
with the United States.’ 28 U.S.C. § 1491(a)(1) (1994); We have stated that ‘[t]o
maintain a cause of action pursuant to the Tucker Act that is based on a contract, the
contract must be between the plaintiff and the government.’ Ransom v. United States,
900 F.2d 242, 244 (Fed. Cir. 1990).”), cert. denied, 528 U.S. 820 (1999); see also Estes
Exp. Lines v. United States. 739 F.3d 689, 693 (Fed. Cir. 2014); Flexfab, L.L.C. v.
United States, 424 F.3d 1254, 1265 (Fed. Cir. 2005) (The “government consents to be
sued only by those with whom it has privity of contract.”); S. Cal. Fed. Sav. & Loan
Ass'n v. United States, 422 F.3d 1319, 1328 (Fed. Cir.) (“A plaintiff must be in privity
with the United States to have standing to sue the sovereign on a contract claim,” but
noting exceptions to this general rule (citing Anderson v. United States, 344 F.3d 1343,
1352 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir. 2003))); United States v.
Algoma Lumber Co., 305 U.S. 415, 421 (1939))), reh’g and reh’g en banc denied (Fed.
Cir. 2005), cert. denied, 548 U.S. 904 (2006); Erickson Air Crane Co. of Wash. v. United
States, 731 F.2d 810, 813 (Fed. Cir. 1984) (“The government consents to be sued only
by those with whom it has privity of contract.”).

        To have privity of contract with the government, and, therefore, invoke the
jurisdiction of the United States Court of Federal Claims for its breach of contract claim,
plaintiff “must show that either an express or implied-in-fact contract underlies [the]
claim.” Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997) “For
there to be an express contract, the parties must have intended to be bound and must
have expressed their intention in a manner capable of understanding. A definite offer
and an unconditional acceptance must be established.” Russell Corp. v. United States,
210 Ct. Cl. 596, 606, 537 F.2d 474, 481 (1976), cert. denied, 429 U.S. 1073 (1977).
Implied-in-fact contracts are agreements “‘“founded upon a meeting of the minds, which,
although not embodied in an express contract, is inferred, as a fact, from conduct of the
parties showing, in the light of the surrounding circumstances, their tacit
understanding.”’” Trauma Serv. Grp. v. United States, 104 F.3d at 1325 (quoting
Hercules, Inc. v. United States, 516 U.S. 417, 424 (1996) (quoting Balt. & Ohio R.R. Co.
v. United States, 261 U.S. 592, 597 (1923))); see also Kam-Almaz v. United States, 682
F.3d at 1368; Bank of Guam v. United States, 578 F.3d at 1329 (citing Trauma Serv.
Grp. v. United States, 104 F.3d at 1326); Bay View, Inc. v. United States, 278 F.3d
1259, 1265-66 (Fed. Cir. 2001), reh’g and reh’g en banc denied, 285 F.3d 1035 (Fed.
Cir.), cert. denied, 537 U.S. 826 (2002); Westlands Water Dist. v. United States, 109
Fed. Cl. 177, 203 (2013); Peninsula Grp. Capital Corp. v. United States, 93 Fed. Cl. at
728 (citing Balt. & Ohio R.R. Co. v. United States, 261 U.S. at 597; Russell Corp. v.
United States, 210 Ct. Cl. at 609, 537 F.2d at 482. Such an agreement will not be
implied “unless the meeting of minds was indicated by some intelligible conduct, act or

                                            15
sign.” Balt. & Ohio R.R. Co. v. United States, 261 U.S. at 598; see also Russell Corp. v.
United States, 210 Ct. Cl. at 609, 537 F.2d at 482.

        “A party alleging either an express or implied-in-fact contract with the government
‘must show a mutual intent to contract including an offer, an acceptance, and
consideration.’” Bank of Guam v. United States, 578 F.3d at 1326 (quoting Trauma
Serv. Grp. v. United States, 104 F.3d at 1325); see also Chattler v. United States, 632
F.3d 1324, 1330 (Fed. Cir.) (citing Trauma Serv. Grp. v. United States, 104 F.3d at
1325), reh’g en banc denied (Fed. Cir. 2011); Hanlin v. United States, 316 F.3d 1325,
1328 (Fed. Cir. 2003) (citing City of Cincinnati v. United States, 153 F.3d 1375, 1377
(Fed. Cir. 1998)); Total Med. Mgmt., Inc. v. United States, 104 F.3d 1314, 1319 (Fed.
Cir.) (“The requirements for a valid contract with the United States are: a mutual intent
to contract including offer, acceptance, and consideration; and authority on the part of
the government representative who entered or ratified the agreement to bind the United
States in contract.”) (citations omitted), reh’g denied and en banc suggestion declined
(Fed. Cir.), cert. denied, 522 U.S. 857 (1997); Huntington Promotional & Supply, LLC v.
United States, 114 Fed. Cl. 760, 767 (2014); Eden Isle Marina, Inc. v. United States,
113 Fed. Cl. 372, 492 (2013); Council for Tribal Emp’t Rights v. United States, 112 Fed.
Cl. 231, 243 (2013). “‘A well pleaded allegation of an express, or implied-in-fact,
contract necessarily includes allegations going to each of the requisite elements of a
contract.’” De Archibold v. United States, 57 Fed. Cl. 29, 32 (2003) (quoting McAfee v.
United States, 46 Fed. Cl. 428, 432, appeal dismissed, 243 F.3d 565 (Fed. Cir. 2000)).
The elements of a binding contract with the United States are identical for express and
implied-in-fact contracts. See Night Vision Corp. v. United States, 469 F.3d 1369, 1375
(Fed. Cir. 2006) (“The elements of an implied-in-fact contract are the same as those of
an oral express contract.”), cert. denied, 550 U.S. 934 (2007); Hanlin v. United States,
316 F.3d at 1328 (“Thus, the requirements for an implied-in-fact contract are the same
as for an express contract; only the nature of the evidence differs.”); City of Cincinnati v.
United States, 153 F.3d at 1377 (“Like an express contract, an implied-in-fact contract
requires ‘(1) mutuality of intent to contract; (2) consideration; and, (3) lack of ambiguity
in offer and acceptance.’ . . . When the United States is a party, a fourth requirement is
added: The government representative whose conduct is relied upon must have actual
authority to bind the government in contract.” (quoting City of El Centro v. United States,
922 F.2d 816, 820 (Fed. Cir. 1990)); Trauma Serv. Grp. v. United States, 104 F.3d at
1325; Russell Corp. v. United States, 210 Ct. Cl. at 608–09); Huntington Promotional &
Supply, LLC v. United States, 114 Fed. Cl. at 767 (“The elements are the same for an
express or implied-in-fact contract . . .”); Vargas v. United States, 114 Fed. Cl. at 233;
Prairie County, Montana v. United States, 113 Fed. Cl. 194, 202 (2013); Mastrolia v.
United States, 91 Fed. Cl. 369, 384 (2010) (citing Flexfab, L.L.C. v. United States, 424
F.3d at 1265). The government, however, “‘is not bound by its agents acting beyond
their authority and contrary to regulation.’” Urban Data Sys., Inc. v. United States, 699
F.2d 1147, 1153 (Fed. Cir. 1983) (quoting Yosemite Park and Curry Co. v. United
States, 217 Ct. Cl. 360, 370, 582 F.2d 552, 558 (1978) (citing Fed. Crop Ins. Corp. v.
Merrill, 332 U.S. 380, 384 (1947))) (other citations omitted); see also Chattler v. United
States, 632 F.3d at 1330; Toon v. United States, 96 Fed. Cl. 288, 299-300 (2010);
Gonzalez-McCaulley Inv. Grp., Inc. v. United States, 93 Fed. Cl. at 714.

                                             16
         Although plaintiff argues that defendant breached an express contract between
plaintiff and the federal government, plaintiff confuses this claim with its other, primary
argument that plaintiff is an “intended third party beneficiary” under the prime contract
between Flight Test Associates and the federal government. The United States Court of
Appeals for the Federal Circuit has viewed claims for relief due to third party beneficiary
status as distinct from claims for relief due to privity of express or implied contract. See
Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d 1041, 1056 (Fed. Cir.), cert.
denied, 133 S. Ct. 126 (2012) (“A plaintiff lacking privity of contract can nonetheless sue
for damages under that contract if it qualifies as an intended third-party beneficiary.”);
Alpine Cnty., Cal. v. United States, 417 F.3d 1366, 1368 (Fed. Cir. 2005) (“In order to
sue for damages on a contract claim, a plaintiff must have either direct privity or third-
party beneficiary status.”); Anderson v. United States, 344 F.3d at 1352 (“Without either
direct privity or third-party beneficiary status, the Paul sons lack standing to sue the
government and cannot therefore recover damages from the United States.”); Nelson
Const. Co. v. United States, 79 Fed. Cl. 81, 95 (2007); Entergy Nuclear Indian Point 2,
LLC v. United States, 64 Fed. Cl. 515, 523 (2005) (“To have standing to bring a breach
of contract claim, plaintiffs must also be in privity of contract with the government or a
third party beneficiary of a contract with the government.”); see also Sullivan v. United
States, 625 F.3d 1378, 1380 (Fed. Cir. 2010) (“This Court has recognized limited
exceptions to that general rule when a party standing outside of privity ‘stands in the
shoes of a party within privity.’” (quoting First Hartford Corp. Pension Plan & Trust v.
United States, 194 F.3d 1279, 1289 (Fed. Cir. 1999), reh’g en banc denied (Fed. Cir.
2000))); O. Ahlborg & Sons, Inc. v. United States, 74 Fed. Cl. 178, 188 (2006) (“The
third-party beneficiary exception exists to cover situations in which the subcontractor
‘stands in the shoes of a party with privity.’” (quoting First Hartford Corp. Pension Plan &
Trust v. United States, 194 F.3d at 1289)). But see Chancellor Manor v. United States,
331 F.3d 891, 901 (Fed. Cir. 2003) (holding that “Appellants could establish privity of
contract if they are intended third-party beneficiaries of a contract with the United States
. . . .” (citing First Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d at
1289); Stockton E. Water Dist. v. United States, 70 Fed. Cl. 515, 526 (2006) (“One
method of ‘establish[ing] privity of contract [is] if [plaintiffs] are intended third-party
beneficiaries of a contract with the United States . . . .’” (quoting Chancellor Manor v.
United States, 331 F.3d at 901)) (modifications in original), judgment entered, 75 Fed.
Cl. 321, modifying in part, 76 Fed. Cl. 470, reconsideration denied, 76 Fed. Cl. 497
(2007), rev’d on other grounds, 583 F.3d 1344 (Fed. Cir. 2009), partial reh’g granted,
638 F.3d 781 (Fed. Cir. 2011); Klamath Irrigation Dist. v. United States, 67 Fed. Cl. 504,
532 (“Such privity would exist if the irrigators are properly viewed as third-party
beneficiaries to the district contracts.” (citing Chancellor Manor v. United States, 331
F.3d at 901, and First Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d at
1289)), modifying order, 68 Fed. Cl. 119, denying certification, 69 Fed. Cl. 160 (2005).

       Plaintiff, Threshold, in the case currently before the court, does not allege any
facts that cause the court to believe that plaintiff could establish that Threshold held an
express contract with defendant. See Bank of Guam v. United States, 578 F.3d at 1326
(“A party alleging either an express or implied-in-fact contract with the government must

                                            17
show a mutual intent to contract including an offer, an acceptance, and consideration.”)
(quotation omitted); Russell Corp. v. United States, 210 Ct. Cl. at 608 (“For there to be
an express contract, the parties must have intended to be bound and must have
expressed their intention in a manner capable of understanding. A definite offer and an
unconditional acceptance must be established.”); see also Black’s Law Dictionary 393,
701 (10th ed. 2014) (“[E]xpress” is defined in part as “[c]learly and unmistakably
communicated; directly stated with direction and clarity.” “[E]xpress contract” is
defined as “[a] contract whose terms the parties have explicitly set out.”). (emphasis in
original).

        Plaintiff Threshold alleges that both parties “provided consideration for the
Contract,” one of the requirements of contract formation, since “Plaintiff, provided the
services necessary and required under the Contract, and Defendant promised to pay
compensation in exchange for such services.” Plaintiff, however, does not allege any
written agreement between plaintiff and defendant, or any form of unconditional
acceptance or intent by government to be bound to plaintiff. Plaintiff does not contend
that it ever was a signatory party to the prime contract between Flight Test Associates
and the federal government, and admits in its complaint that it was a “subcontractor.”
The contract plaintiff provides only shows, as signatories, the government contracting
officer and Mr. Ligon from Flight Test Associates. The prime contract contains none of
the terms one would expect to see if the government intended to contract directly with
plaintiff, such as a length of employment or prices for the various services plaintiff was
to provide. The prime contract between Flight Test Associates and NASA also does not
specify a right of recourse against the government on behalf of any subcontractor – only
Section H.13, “MONITORING OF SUBCONTRACTOR” even mentions any
subcontractor. (capitalization and emphasis in original). Threshold’s operating
agreement with Flight Test Associates also provides no support for plaintiff’s claim that
it expressly contracted with the federal government. Although the operating agreement
between Threshold and Flight Test Agreement states that the NASA’s approval was
required for the operating agreement to be effective, nowhere in operating agreement is
there any indication NASA committed itself to directly compensating plaintiff for its
services, nor is NASA a signatory to the operating agreement. Instead, the operating
agreement between Threshold and Flight Test Agreement makes clear that, in the event
of nonpayment, Threshold is to seek recourse against Flight Test Associates, and

      recover from the defaulting Party [Flight Test Associates or Threshold,
      depending on who defaults] damages and sue for any and all applicable
      remedies, including, but not limited to, specific performance of this
      Agreement, costs and damages related to the nondefaulting Parties [sic]
      inability to complete its HIWC contract with NASA, costs of de-modification
      of the Aircraft and for reasonable attorney's fees.

Plaintiff, therefore, has failed to demonstrate that an express contract was created
between Threshold and the United States government.

                                           18
        Alternatively, plaintiff argues that Threshold is an intended third party beneficiary
to the prime contract between defendant and Flight Test Associates. According to
plaintiff:

       The fact that the Contract explicitly lists the subcontractor, dedicates an
       entire section to the subcontractor, and states that the, “subcontractor's
       performance is critical to the success of the contract . . .” more than
       satisfies the Court's requirements that, the contract reflect the express or
       implied intention of the [contracting] parties to benefit the third party.

(modification in original). Plaintiff repeats Section H.13 of the prime contract, stating:

       “H.13 MONITORING OF SUBCONTRACTOR

       The parties agree that this contract was negotiated on the basis that the
       Contractor's proposed operations subcontractor, Threshold Aviation
       Group, will provide the aircraft under lease to the prime contractor . . . The
       parties agree that the proposed subcontractor's performance is critical to
       the success of the contract. . . {emphasis added}

       The Contractor shall ensure that there are clear lines of communications,
       including, when necessary, direct communications, between the
       Government and the operations subcontractor to ensure airworthiness,
       and safe and successful operations and maintenance of the aircraft.”

(modifications and emphasis in original). Plaintiff argues that, “Plaintiff, Defendant, and
FTA, all knew and understood prior to, at the time of execution, during and after the
Contract duration that Plaintiff was to provide all of the services required to ready and
maintain the Aircraft under the Contract requirements.” Plaintiff states that “[t]he
installation and maintenance of NASA's monitoring equipment is the salient item under
the Contract,” and that plaintiff exclusively provided such services.

       Plaintiff points to Chevron U.S.A. v. United States, a 2013 decision by a Judge of
this court, for the proposition that:

       “For third party beneficiary status to be conferred on a party, the ‘contract
       must reflect the express or implied {emphasis added} intention of the
       [contracting] parties to benefit the third-party.’ Montana v. United States,
       124 F.3d 1269, 1273 (Fed. Cir. 1997). While third party does not need
       to be specifically identified in the contract {emphasis added}, third
       party beneficiary status can only be bestowed on the those [sic] parties
       that ‘fall within a class clearly intended to be benefited’ by the contract . . .”

(quoting Chevron U.S.A., Inc. v. United States, 110 Fed. Cl. 747, 782–83 (2013)
(quoting State of Montana v. United States, 124 F.3d at 1273)). According to plaintiff,
“‘to determine whether a non-party to a contract is a third party beneficiary, the court

                                              19
must “look to whether the beneficiary would be reasonable in relying on the promise as
manifesting an intention to confer a right on him.”’” (quoting Chevron U.S.A., Inc. v.
United States, 110 Fed. Cl. at 783 (quoting Dewakuku v. Martinez, 271 F.3d 1031, 1041
(Fed. Cir. 2001))). Plaintiff states that, in Chevron U.S.A., the intended third party
beneficiary was an owner of certain oil fields. According to plaintiff, the prime
contracting party, Chevron, “leased the fields from the land owner for the purpose of
entering into a contract with the Government,” and the court, therefore allowed the
plaintiff, the owner of the oil fields, to claim a third party beneficiary right to a contract to
extract oil from the fields. Plaintiff contends that the facts of the above captioned case
parallel those in Chevron U.S.A., Inc. v. United States, because although plaintiff was
not a named party to the contract, the unnamed party, like the oil field owner, had a
critical role in the contract. According to plaintiff in the case currently before the court,
an entire section was dedicated the subcontract’s performance, and stated that the
“‘subcontractor's performance is critical to the success of the contract.’” (emphasis in
original). According to plaintiff, “[t]he party who supplies the staff for a multi-million dollar
government experiment is the evident recipient of the implied intention of the parties to
this contract,” especially when the prime contract between Flight Test Associates and
NASA “explicitly calls out for such technical expertise, and the named party to the
Contract did not, nor had it ever employed such technicians required under the
specifications of the Contract with the Government.” Plaintiff also points to a number of
other decisions from this Circuit, each allegedly supporting the proposition that a third
party benefit does not need to be explicitly mentioned in a prime contract to be granted
relief, but instead, “[t]he test for intended third party beneficiary status is whether the
contract reflects the intent of the parties to the contract to benefit the third party.” (citing
Roedler v. Dep't of Energy, 255 F.3d 1347, 1352 (Fed. Cir. 2001), U.S. Ecology, Inc. v.
United States, 245 F.3d 1352, 1356 (Fed. Cir. 2001), Caguas Cent. Fed. Savings Bank
v. United States, 215 F.3d 1304, 1309 (Fed. Cir. 2000), and State of Montana v. United
States, 124 F.3d at 1273).

        Defendant responds that “[t]he Federal Circuit recognizes that third parties to a
contract with the Government may sue the Government only if the ‘contract reflect[s] the
express or implied intention of the [contracting] parties to benefit the third-party.’”
(quoting State of Montana v. United States, 124 F.3d at 1273) (modifications in original).
Defendant claims that “[i]n order for a third party subcontractor to sue the Government
under a prime contract, the prime contract must have a provision, the entire purpose of
which is to confer rights upon the third-party subcontractor.” Defendant indicates that an
example of when a party can be a third party beneficiary comes from D&H Distributing
Co. v. United States, in which the government made the affirmative step of creating “a
joint payment clause in the prime contract that required the Government to pay part of
its payments under the prime contract directly to a subcontractor.” (citing D&H Distrib.
Co. v. United States, 102 F.3d 542, 547 (Fed. Cir. 1996)). Defendant also suggests that
proper evidence of a third party beneficiary status can be found in “a prime contractor’s
payment bond, which is a contract between the contractor and the surety that ensures
that such subcontractors will be paid if the contractor defaults.” (citing Fireman’s Fund
Ins. Co. v. United States, 909 F.2d 495, 499 n.1 (Fed. Cir. 1990)). Defendant argues
that in the case currently before this court, however, as opposed to the examples cited,

                                               20
the prime contract between Flight Test Associates and NASA “confers no right to
Threshold at all.” Defendant contends that Section H.13 of the prime contract,
“MONITORING OF SUBCONTRACTOR,” “is to ensure that the prime contractor [Flight
Test Associates] utilize a reliable aircraft provider—that is, the purpose of this provision
is to provide protection to the Government; it cannot reasonably be read to confer a
right upon a subcontractor.” (capitalization and emphasis in original). Defendant cites as
support State of Montana v. United States, 124 F.3d at 1273-74, for the proposition that
a third party beneficiary “must be ‘reasonable in relying on the promise as manifesting
an intention to confer a right on him.’” Defendant argues that mere “[e]vidence that the
Government has notice that a subcontractor is providing certain services necessary for
a prime contract is insufficient” to enable the subcontractor to claim a third party status
in the prime contract. Defendant also maintains that any other indications of the
government’s intent, after the contract was executed, such as the communications
between Threshold and NASA, do not confer a third party beneficiary status onto
plaintiff, as “[t]he relevant inquiry with respect to third party beneficiary status is the
intent of the prime contract parties at the time they entered into the prime contract.”

       Defendant claims that plaintiff’s reference to Chevron U.S.A., Inc. v. United
States is misplaced, because, “[c]ontrary to Threshold’s assertion otherwise, Chevron
U.S.A., Inc. did not involve a plaintiff that was an ‘actual owner (in fee simple or via
lease) of certain oil fields,’” who then leased the oil fields to the government. Instead,
according to defendant, in Chevron U.S.A., Chevron already had a contract with the
government, acquired through its predecessor Standard Oil, regarding the “joint
operation and production of a petroleum reserve.” Defendant contends that the dispute
in Chevron U.S.A. concerned the narrow issue of ex parte communications with an
independent petroleum engineer responsible for allocating rights between Chevron and
the government, and that,

       in finding that Chevron was a third party beneficiary of the prime contract,
       the Court expressly found that the prime contract parties intended to
       benefit Chevron upon the ground that the entire purpose of the 1996
       agreement between the Government and the IPE [independent petroleum
       engineer] was to assist the Department and Chevron in finalizing their
       interest in certain oil fields.

(citing Chevron U.S.A. v. United States, 110 Fed. Cl. at 783).

       Instead, defendant analogizes the above captioned case to the United States
Court of Appeals for the Federal Circuit’s decision in Flexfab, LLC v. United States, 424
F.3d 1254. Defendant contends that in Flexfab, the United States Court of Appeals for
the Federal Circuit held that intent to benefit requires more than notice; but also that the
government “‘knows of a condition precedent to a third-party’s performance as a sub-
contractor, and specifically modifies the prime contract so as to ensure the third-party’s
continued performance.’” (quoting Flexfab, LLC v. United States, 424 F.3d at 1263)
(emphasis in original).

                                            21
       Regarding third party beneficiary status, the United States Supreme Court wrote:

       it is recognized as an exception to the general principle, which proceeds
       on the legal and natural presumption that a contract is only intended for
       the benefit of those who made it. Before a stranger can avail himself of the
       exceptional privilege of suing for a breach of an agreement to which he is
       not a party, he must, at least, show that it was intended for his direct
       benefit.

German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220, 230 (1912); see
also Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 307 (1927); Sioux Honey
Ass'n v. Hartford Fire Ins. Co., 672 F.3d at 1056 (“‘In order to prove third party
beneficiary status, a party must demonstrate that the contract not only reflects the
express or implied intention to benefit the party, but that it reflects an intention to benefit
the party directly.’” (quoting Glass v. United States, 258 F.3d 1349, 1354 (Fed. Cir.)))
(emphasis in original), amended on reh'g, 273 F.3d 1072 (Fed. Cir. 2001); G4S Tech.
LLC v. United States, 114 Fed. Cl. 662, 671 (2014). The United States Court of Appeals
for the Federal Circuit has stated that: “‘[t]he intent of the parties to the contract is
therefore the cornerstone of a claim for third-party beneficiary status,’” Sioux Honey
Ass'n v. Hartford Fire Ins. Co., 672 F.3d at 1056 (quoting Flexfab, L.L.C. v. United
States, 424 F.3d at 1259), and that a “party does not obtain third-party beneficiary
status, however, ‘merely because the contract would benefit them.’” Id. (quoting FDIC v.
United States, 342 F.3d 1313, 1319 (Fed. Cir. 2003)); see also Astra USA, Inc. v. Santa
Clara Cnty., Cal., 131 S. Ct. 1342, 1347 (2011) (“A nonparty becomes legally entitled to
a benefit promised in a contract . . . only if the contracting parties so intend.”).

        “One way to ascertain such intent is to ask whether the beneficiary would be
reasonable in relying on the promise as manifesting an intention to confer a right on
him.” State of Montana v. United States, 124 F.3d at 1273 (citing Restatement (Second)
of Contracts § 302(1)(b) cmt. d); Dewakuku v. Martinez, 271 F.3d at 1041; US Ecology,
Inc. v. United States, 245 F.3d at 1356; Chevron U.S.A., Inc. v. United States, 110 Fed.
Cl. at 783. Of particular importance in the intent analysis is the “contracting officer’s
understanding of the situation.” Flexfab, L.L.C. v. United States, 424 F.3d at 1263. As
the United States Court of Appeals for the Federal Circuit explained:

       We thus hold that for third-party beneficiary status to lie, the contracting
       officer must be put on notice, by either the contract language or the
       attendant circumstances, of the relationship between the prime contractor
       and the third-party subcontractor so that an intent to benefit the third party
       is fairly attributable to the contracting officer.

Id.; FloorPro, Inc. v. United States, 98 Fed. Cl. 144, 147 (2011), vacated on other
grounds, 680 F.3d 1377 (Fed. Cir. 2012); Kawa v. United States; 86 Fed. Cl. 575, 587–
88 (noting that “the duty lies with the contractor and/or the third party to make any third-
party beneficiary status known to the person in the Government with contracting
authority”), motion for relief from judgment denied, 368 F. App’x 106 (Fed. Cir. 2009);

                                              22
see also G4S Tech. LLC v. United States, 114 Fed. Cl. at 671 (“[I]t is possible to infer
the requisite intent on the part of the government ‘from the actions of the contracting
officer and circumstances providing the contracting officer with appropriate notice that
the contract provision at issue was intended to benefit the third party.’” (quoting Flexfab,
L.L.C. v. United States, 424 F.3d at 1262). In addition, “the nonparty must still ‘fall within
a class clearly intended to be benefited thereby.’” Sioux Honey Ass'n v. Hartford Fire
Ins. Co., 672 F.3d at 1056-57 (quoting State of Montana v. United States, 124 F.3d at
1273); G4S Tech. LLC v. United States, 114 Fed. Cl. at 671; Arbelaez v. United States,
94 Fed. Cl. 753, 767 (2010).

       Third party beneficiary status is an “exceptional privilege,” German Alliance Ins.
Co. v. Home Water Supply Co., 226 U.S. at 230, which “should not be granted liberally.”
Flexfab, L.L.C. v. United States, 424 F.3d at 1259; Carter v. United States, 98 Fed. Cl.
632, 637 (2011); see also Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d at
1056. As a Judge of this court explained, “‘Government contracts often benefit the
public, but individual members of the public are treated as incidental beneficiaries
unless a different intention is manifested.’” Carter v. United States, 102 Fed. Cl. 61, 71
(2011) (quoting Restatement (Second) Contracts § 313, cmt. a (1981)); see also G4S
Tech. LLC v. United States, 114 Fed. Cl. at 670 (“Nevertheless, it remains the general
rule that a subcontractor that agrees to supply materials or labor to a general contractor
is only an incidental beneficiary of any contract between the general contractor and its
ultimate client. See 9 Corbin on Contracts § 45.3 (rev. ed. 2007); Restatement (Second)
of Contracts § 302 cmt. e., illus. 19.”).

        The analysis, however, is not completely black-and-white; courts can look past
the words of the contract, although only in exceptional circumstances. See State of
Montana v. United States, 124 F.3d at 1273 (“The intended beneficiary need not be
specifically or individually identified in the contract . . . .”); G4S Tech. LLC v. United
States, 114 Fed. Cl. at 671; Chevron U.S.A., Inc. v. United States, 110 Fed. Cl. at 782;
see also Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d at 1056. “When the
intent to benefit the third party is not expressly stated in the contract, evidence thereof
may be adduced.” Sioux Honey Ass'n v. Hartford Fire Ins. Co., 672 F.3d at 1056-57
(quoting Roedler v. Dep't of Energy, 255 F.3d at 1352; Boye v. United States, 90 Fed.
Cl. 392, 409 (2009); O. Ahlborg & Sons, Inc. v. United States, 74 Fed. Cl. at 189 n.12.
Nonetheless, “it is extremely difficult to establish status as an intended third-party
beneficiary by inference in the context of a government contract.” G4S Tech. LLC v.
United States, 114 Fed. Cl. at 671. Thus, the question of whether a party is “a third-
party beneficiary under the contract is a mixed question of law and fact.” Flexfab, L.L.C.
v. United States, 424 F.3d at 1259 (citing Glass v. United States, 258 F.3d at 1353).

        Considering the facts in the above captioned case in the most favorable light to
plaintiff, plaintiff fails to credibly allege any intent by the government to directly benefit
plaintiff at the time of awarding the prime contract between Flight Test Associates and
NASA. There is no clause in the prime contract that grants a remedy or right or remedy
to the plaintiff, the subcontractor Threshold. Although the “critical” importance of the
subcontractor Threshold, and the services Threshold provides is made clear in the

                                             23
prime contract, the subcontractor Threshold is not given any rights under the prime
contract between Flight Test Associates and NASA as a result. Instead, the clause of
the prime contract between Flight Test Associates and NASA that mentions Threshold
or any subcontractor, as defendant correctly notes, is designed to protect the
government’s position, not confer any rights or remedies to the subcontractor,
Threshold:

      H.13 MONITORING OF SUBCONTRACTOR

      The parties agree that this contract was negotiated on the basis that the
      Contractor's proposed operations subcontractor, Threshold Aviation
      Group, will provide the aircraft under lease to the prime contractor and will
      be performing contract requirements related to the airworthiness of the
      aircraft, aircraft operations, and aircraft maintenance. The parties agree
      that the proposed subcontractor's performance is critical to the success of
      the contract. Therefore, the Contracting Officer's written approval is
      required for any substitution of another operations subcontractor.

                                           ...

      The Contractor shall ensure that there are clear lines of communications,
      including, when necessary, direct communications, between the
      Government and the operations subcontractor to ensure airworthiness,
      and safe and successful operations and maintenance of the aircraft.

      Nothing herein relieves the Contractor from responsibility for performing
      this contract.

Section H.13 puts additional requirements on the prime contractor to “ensure that there
are clear lines of communications, including, when necessary, direct communications,
between the Government and the operations subcontractor to ensure airworthiness, and
safe and successful operations and maintenance of the aircraft.” The clause also
requires “written approval” by the government before the aircraft subcontractor is
switched. The last sentence of the provision, “[n]othing herein relieves the Contractor
from responsibility for performing this contract,” further emphasizes that the clause is
designed to place burdens on the prime contractor, Flight Test Associates, and protect
the government, not create a third party beneficiary relationship with plaintiff Threshold.

        An examination of the remedies for default and payment provisions under the
prime contract between Flight Test Associates and NASA, and the operating agreement
between Threshold and Flight Test Associates, also do not support plaintiff’s argument
that it is a third party beneficiary of the prime contract between Flight Test Associates
and NASA. No particular right to payment, or remedy in case of default was made
specifically available to plaintiff Threshold in the prime contract between Flight Test
Associates and NASA, nor are any facts alleged that indicate that the government
specifically modified, or intended to modify the prime contract to guarantee any payment

                                            24
or assurance of payment to the third party. Cf. Kawa v. United States, 86 Fed. Cl. at 587
(“‘[W]hen a government agent with authority to contract on the government's behalf
knows of a condition precedent to a third party's performance as a sub-contractor, such
as receipt of payment directly from the government, and specifically modifies the prime
contract so as to ensure the third party's continued performance,’” an intent to benefit
the third party can be found. (quoting Flexfab, L.L.C. v. United States, 424 F.3d at
1623)). The prime contract, in terms of remedies, incorporates by reference “52.233-4
APPLICABLE LAW FOR BREACH OF CONTRACT CLAIM (OCT 2004),” which
states, that “United States law will apply to resolve any claim of breach of this contract.”
48 C.F.R. § 52.233-4 (2013) (last revised October 5, 2004). The prime contract between
Flight Test Associates and NASA also lists a number of specific remedies for delays in
schedule, but these are only between Flight Test Associates and NASA. Threshold’s
rights to payment and remedies in case of breach are instead in its January 1, 2011
operating agreement with Flight Test Associates, which came into being after the
December 20, 2010 signing of the prime contract between Flight Test Associates and
the federal government. The operating agreement between Threshold and Flight Test
Associates specifies the hourly rates for plaintiff’s staff, and the payment plaintiff would
achieve for its various services. The operating agreement addendum between
Threshold and Flight Test Agreement further explained plaintiff’s rights to payment by
Flight Test Associates. The operating agreement also provided rights to plaintiff if Flight
Test Associates breached the contract, including if Flight Test Associates went bankrupt
or otherwise ceased to function. Although NASA had to approve the operating
agreement, the operating agreement did not make NASA liable for any payments to
plaintiff, nor guarantee plaintiff any right to recourse against NASA. In a subcontracting
arrangement that does not grant the subcontractor a remedy or any direct ability to
collect from the government, it is unreasonable for plaintiff to rely on the subcontract “as
manifesting an intention to confer a right on” the third party by the government. See
State of Montana v. United States, 124 F.3d at 1273; Sioux Honey Ass'n v. Hartford Fire
Ins. Co., 672 F.3d at 1056-57.

       In Flexfab, the decision by the United States Court of Appeals for the Federal
Circuit is an indication of how difficult it is to achieve third party beneficiary status in a
contract with the United States. In Flexfab, the Defense Logistics Agency, Defense
Supply Center Columbus contracted with Capital City Pipes, Inc. (Capital City Pipers) to
supply air duct hose. See Flexfab, L.L.C. v. United States, 424 F.3d at 1257. “As a
supplier without manufacturing capabilities, Capital City [Pipes] entered into a sub-
contract with C & S [C & S Industrial Supply Co.], which in turn entered into a sub-
contract with Flexfab for production of the hose.” Id. Upon request from Flexfab, Capital
City Pipes sent a letter to the government to request a modification of the prime contract
between Capital City Pipes and the government, so that Flexfab’s address could be
given as the “Place of Performance” and the destination for remittance of payment. See
id. at 1258. The fact that this modification was made specifically for Flexfab’s benefit
was unknown to the agency. See id. Capital City Pipes, however, neglected to change
the electronic remittance account to send electronic payments to Flexfab. See id. After
delivery by the subcontractor, Flexfab to the government, the agency paid Capital City
Pipes in full, electronically, and, subsequently, “Capital City later became insolvent and

                                             25
never paid Flexfab.” See id. In affirming a United States Court of Federal Claims
decision not to award plaintiff third party beneficiary status, the Federal Circuit stated:

       The record reflects that neither Mr. Cook [Chief Executive Officer of C &S
       Industrial Supply Co.], nor Mr. Taylor [an agency small business
       specialist], nor any Flexfab personnel ever communicated with the
       contracting officers to explain and memorialize the alleged demand by
       Flexfab that it would perform only if paid directly by the government into an
       escrow account for its benefit. In short, Flexfab relied entirely on others,
       mainly Capital City, to assure that Flexfab, not Capital City, would receive
       direct payment for the delivered hose.

Id. at 1258. The Flexfab court stated that, “the contracting officer's understanding of the
situation that is key,” and emphasized that Flexfab failed to ensure that the contracting
officer was aware of, and agreed to, any intent to benefit Flexfab through modification of
the prime contract between Capital City Pipes and the government. See id. The Flexfab
court stated that “[n]either the contract nor the modification shows intent by the
contracting officers to benefit Flexfab by linking in any way the remittance address to
Flexfab. Looking beyond the contract itself, Flexfab can point to no evidence of record
that establishes such intent.” Id. at 1264. In the above captioned case, the mere
mention of the subcontractor in a section that discusses monitoring and oversight,
coupled with some discussion about the importance of the subcontractor’s services,
similarly does not indicate any intent by the government’s contracting officer to link
payment, or any other right under the contract, to the subcontractor.9

        Although not cited by the parties, another case also involving the failed Capital
City Pipes entity, is instructive. In Kawa v. United States, the plaintiff, as the escrow
agent, represented another subcontractor to Capital City Pipes also producing hose
equipment, JGB Enterprises. See Kawa v. United States, 86 Fed. Cl. at 578. The
plaintiff was the “remit to” beneficiary in the prime contract between Capital City Pipes
and the Defense Logistics Agency. See id. at 578, 580 (internal quotation omitted).
Although the prime contractor, Capital City Pipes, and plaintiff understood this to mean
“that it reflected the Government’s acceptance of an assignment from Capital City to
JGB of the right to receive payment,” the government, and Lu Ann Boscy, the
contracting officer, did not share that view. See id. at 580. The agency continued
remitting to Capital City Pipes, and after Capital City Pipes went bankrupt, plaintiff sued
for payments under the contract. See id. The Kawa court held, quoting from Flexfab,
that:

9
  The court in Flexfab also wrote: “By requiring an authorized government contracting
officer to be engaged in the creation of enforceable obligations under these section 8(a)
contracts, we better equip the government to insure that contracting parties comply with
the regulations pertaining to their participation in the program.” Flexfab, L.L.C. v. United
States, 424 F.3d at 1263–64.

                                            26
       Unfortunately for plaintiff, as in Flexfab, 424 F.3d at 1258, “[t]he record is
       void of evidence that [Ms. Boscy] knew that the modification to the
       contract was in any way associated with [JGB's] escrow account. The
       record reflects that neither [Mr. Bernhardt], nor Mr. Taylor, nor [Mr. Kawa,
       nor] any [JGB] personnel ever communicated with the contracting officer[ ]
       to explain and memorialize the alleged demand by [JGB] that it would
       perform only if paid directly by the government into an escrow account for
       its benefit. In short, [JGB and Mr. Kawa] relied entirely on others, mainly
       Capital City, to assure that [Mr. Kawa], not Capital City, would receive
       direct payment for the delivered hose.”

Id. at 587 (quoting Flexfab, L.L.C. v. United States, 424 F.3d at 1258) (modifications in
original). The court noted, “the duty lies with the contractor and/or the third party to
make any third-party beneficiary status known to the person in the Government with
contracting authority.” See id. at 589 (internal quotation omitted).

        In the case currently before the court, even with every factual inference viewed in
the most favorable light to plaintiff, Threshold, offered no indication of any effort to make
its alleged right to payment under the prime contract between Flight Test Associates
and NASA known to the government’s contracting officer, until well after payments
stopped being received by Threshold from the prime contractor Flight Test Associates.
See id. at 588; Flexfab, L.L.C. v. United States, 424 F.3d at 1263. Threshold did not
attempt to amend the prime contract between Flight Test Associates and NASA to have
NASA remit payments directly to Threshold, like the plaintiffs in Kawa and Flexfab
attempted to do. See Kawa v. United States, 86 Fed. Cl. at 588; Flexfab, L.L.C. v.
United States, 424 F.3d at 1258. The court in Kawa stated that “[o]f course, the
appearance of an entirely new entity in the remittance address, along with specific
notifications to the Government that rights under the contract were being assigned to
that entity and unmistakable Government recognition of that assignment would likely
create rights in the assignee.” Kawa v. United States, 86 Fed. Cl. at 588–89 (citing
Riviera Finance of Texas, Inc. v. United States, 58 Fed. Cl. 528 (2003)). Neither in
Kawa, nor in Threshold’s case, however, did those actions occur or were alleged to
have occurred. Cf. JGB Enters., Inc. v. United States, 63 Fed. Cl. 319, 334 (2004),
motion for relief from judgment denied, 71 Fed. Cl. 468, appeal dismissed, 192 F. App’x
962 (Fed Cir. 2006), aff’d, 496 F.3d 1259 (Fed. Cir. 2007) (finding that JGB Enterprises
was a third party beneficiary to another purchase order because “[t]he only reasonable
interpretation of the record mandates a finding that the Government intended to modify
the contract to assure JGB of payment so that JGB would ship the hose assemblies that
were ‘urgently’ needed.”) (internal citation omitted).

       Plaintiff points to discussions plaintiff had with the government about Flight Test
Associates’ failure to pay its subcontractors. Plaintiff alleges that it informed NASA that
it was not getting paid by Flight Test Associates as early as June 14, 2012, when “[o]n
June 14, 2012, Mark DiLullo, CEO of Threshold, sent Ron Colantonio and Peter Struk,
both of NASA a letter detailing the lack of payment by FTA.” Plaintiff, Threshold also
states that “[a]fter months of unanswered payment requests, on March 25, 2013, Mark

                                             27
DiLullo, CEO of Plaintiff [Threshold], sent Karin Huth, Contracting Officer for NASA, a
letter requesting past due payments” from its subcontract with Flight Test Associates.
Plaintiff also states in its complaint that “[s]ince March 2011, through the date of the
filing of this Complaint, Plaintiff has performed work and/or stored the Aircraft at the
request and benefit of NASA,” and that during that time “Plaintiff has requested payment
for such work/and or storage.” None of those conversations indicate, however, that
plaintiff would not perform unless a “condition precedent” was met by the government,
or that the contracting officer was going to modify “the prime contract [between Flight
Test Associates and NASA] so as to ensure the third party's continued performance.”
See Flexfab, L.L.C. v. United States, 424 F.3d at 1263. Defendant correctly contends
that intent to endow third party beneficiary status requires more than notice to the
government; but also that the government “‘knows of a condition precedent to a third-
party’s performance as a sub-contractor, and specifically modifies the prime contract so
as to ensure the third-party’s continued performance.’” (quoting id.) (emphasis in
original). In fact, plaintiff admits that, despite not being paid, “Plaintiff has performed
work and/or stored the Aircraft at the request and benefit of NASA,” indicating that it did
not exercise any condition precedent with the government.

        The decision in G4S Technology LLC v. United States also speaks to plaintiff’s
contention that its numerous correspondences with the government somehow garnered
a third party beneficiary right in the prime contract to plaintiff. In G4S Technology LLC v.
United States, a subcontractor, G4S Technology LLC (G4S), provided engineering
services to the prime recipient of a loan by the federal Rural Utilities Service, named
Open Range, for the construction of rural wireless broadband. See G4S Tech. LLC v.
United States, 114 Fed. Cl. at 664–65. When Open Range started running into financial
troubles, “the Administrator of the RUS [Rural Utilities Service], received multiple e-
mails indicating that Open Range's vendors were seeking immediate payment of past-
due bills from Open Range.” Id. at 666–67. The court in G4S Technology noted that
multiple conversations were ongoing by and within the Rural Utilities Service about
subcontractor payments, and that the agency was aware that, “Open Range's
arrearages to its vendors represented a risk to deploying the broadband network.” See
id. at 667. In the litigation that ensued after Open Range’s bankruptcy, G4S asserted a
claim against the government for payments defaulted on by Open Range. See id. at
668–69. The court wrote the following:

       [I]n order for a subcontractor to obtain the status of an intended third-party
       beneficiary, it must provide clear evidence that an authorized government
       official approved a contract provision for the express purpose of
       effectuating payment from the government to the subcontractor(s). This
       showing can be satisfied by the unambiguous language of the prime
       contract and any modifications made thereto, and by other objective
       evidence that clearly demonstrates the authorized official's unambiguous
       intent to ensure payment to the subcontractor(s). The court will not,
       however, infer that the government intended to directly benefit the
       subcontractor merely because an authorized government official (1)
       oversees the activities of the prime contractor; (2) becomes aware that the

                                            28
       prime contractor has failed to timely pay its subcontractors, and/or (3)
       makes funds available to the prime contractor in order for the prime
       contractor to pay its subcontractors.

Id. at 672–73. The G4S Technology court found that, despite the agency being aware of
vendor issues, “plaintiff has not identified any provision of the Loan Amendment, Equity
Commitment Letter (including Schedule B–1), or Shareholder Agreement in which RUS
unambiguously agreed to modify the loan advance process for the express purpose of
effectuating payment directly to Open Range's vendors.” Id.

         Similarly, in the above captioned case, NASA’s mere awareness of plaintiff’s
difficulties getting payment from Flight Test Associates was insufficient to create a third
party status, as plaintiff, Threshold, has failed to allege that the agency “unambiguously
agreed to modify” any agreement in order to effectuate payment to plaintiff. See id. The
court in G4S Technology also went on to find that increased oversight by the
government on the prime contractor still fails to create a third party beneficiary status in
a subcontractor. See id. (“RUS’s close oversight of Open Range, awareness of Open
Range's arrearages, and willingness to advance loan funds to Open Range, taken
individually or in combination, are insufficient to demonstrate that RUS approved the
Loan Amendment for the express purpose of directly or jointly paying Open Range's
vendors.”). In the above captioned case, the provision “H.13 MONITORING OF
SUBCONTRACTOR” similarly allowed for close oversight of Flight Test Associates by
the government, but, as in G4S Technology, did not empower any subcontractor with
third party beneficiary status. (capitalization and emphasis in original)

       The case plaintiff points to, Chevron U.S.A. v. United States, is distinguishable
from the above captioned case. In Chevron U.S.A., as noted above, Chevron's
predecessor, Standard Oil Company and the United States had entered into an earlier
contract governing joint operation and production of Naval Petroleum Reserve No. 1.”
Chevron U.S.A., Inc. v. United States, 110 Fed. Cl. at 752–53. The government’s
interest was then transferred to the Department of Energy. See id. at 754. To resolve
the equity allocation within Naval Petroleum Reserve No. 1 between Chevron and the
Department of Energy, Congress required the Department of Energy to determine the
equity interests after obtaining the recommendation from an independent petroleum
engineer, who was mutually acceptable to the parties. See id. The contract engaging
the independent petroleum engineer was made between the Department of Energy and
the engineer, and Chevron was not a party to it. See id. at 798–99. As part of this
process, the Department of Energy and Chevron agreed on a procedure for interacting
with the engineer, which “prohibited Chevron and DOE [the Department of Energy] from
having ex parte communications with the” expert. See id. at 756. The Department of
Energy was found to have breached this protocol in a number of ways. See id. at 800.
Although the government tried to argue that Chevron could not bring suit for this breach,
as it was not in privity with the engagement contract between the Department of Energy
and the independent petroleum engineer, the court found that Chevron was a third party
beneficiary to the agreement. See id. at 782–83. The court directed that, “to determine
whether a non-party to a contract is a third party beneficiary, the court must ‘look to

                                            29
whether the beneficiary would be reasonable in relying on the promise as manifesting
an intention to confer a right on him.’” Id. at 783 (quoting Dewakuku v. Martinez, 271
F.3d at 1041). The Federal Circuit in Dewakuku found:

       In this case, the July 8, 1996 contract between DOE and the Equity IPE
       expressed that both DOE and the Equity IPE intended Chevron to benefit
       from the procedures set forth in the Equity IPE Protocol. The Equity IPE
       was retained to provide “independent and impartial” equity determinations
       to “adequately protect” the interests of both DOE and Chevron. In fact, Ms.
       Egger agreed that it was reasonable for Chevron to rely on the ex parte
       prohibition in the Equity IPE Protocol.

Dewakuku v. Martinez, 271 F.3d at 1041.

       The unique fact pattern in Chevron U.S.A. is far different from the procurement
contract at issue in the above captioned case. The contract in Chevron U.S.A. was
designed also to “protect” the interests of Chevron in a dispute between the Department
of Energy and Chevron, and the Department of Energy stated that Chevron could
reasonably rely on the contract. See id. In plaintiff’s case, however, the prime contract
between Flight Test Associates and NASA makes clear that, “[t]he intent of this contract
is for a Contractor to provide an aircraft modified with Government furnished
instrumentation to conduct High Ice Water Content (HIWC) flight research.” There is no
evidence the contract was intended to protect or assure payment to any subcontractor,
no matter how critical their role, or that the contracting officer ever indicated that
Threshold could rely on the prime contract between Flight Test Associates and NASA to
create a direct relationship with defendant.

        Plaintiff relies on the fact that the services it provided to Flight Test Associates
were essential to the prime contract, since high-altitude atmospheric testing requires a
working airplane and a pilot. Plaintiff notes that “[t]he installation and maintenance of
NASA's monitoring equipment is the salient item under the Contract.” The importance of
a third party to a contract, however, does not mean the parties to the contract intended
their arrangement to directly benefit the third party. See Sioux Honey Ass'n v. Hartford
Fire Ins. Co., 672 F.3d at 1056 (“In order to prove third party beneficiary status, a party
must demonstrate that the contract not only reflects the express or implied intention to
benefit the party, but that it reflects an intention to benefit the party directly.” (quoting
Glass v. United States, 258 F.3d at 1354)) (emphasis in original). In many government
contracts there are multiple subcontractors, each with critical roles to play. Allowing any
subcontractor to attain a third party beneficiary status upon a showing that it was a
“critical” part of the work statement would go against the United States Supreme Court’s
guidance that third party beneficiary status is an “exceptional privilege,” German
Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. at 230, which, as the Federal
Circuit additionally notes, “should not be granted liberally.” Flexfab, L.L.C. v. United
States, 424 F.3d at 1259. A finding of third party beneficiary status creates a waiver of
sovereign immunity in disputes before this court, and the traditional view is that
“[w]aivers of sovereign immunity are construed narrowly.” Hinck v. United States, 446

                                             30
F.3d 1307, 1313 (Fed. Cir. 2006) (quoting Chancellor Manor v. United States, 331 F.3d
at 898; Flexfab, L.L.C. v. United States, 424 F.3d at 1263 (“But the government does
not lightly consent to suit.”); Travelers Cas. & Sur. Co. of Am. v. United States, 103 Fed.
Cl. 101, 103 (Fed. Cl. 2012); see also Normandy Apartments, Ltd. v. United States, 100
Fed. Cl. 247, 254 (2011) (“[T]he effect of finding privity of contract between a party and
the United States is to find a waiver of sovereign immunity.” (quoting Cienega Gardens
v. United States, 194 F.3d at 1239)); Carter v. United States, 98 Fed. Cl. at 635.
Allowing a “critical” subcontractor to be given third party beneficiary rights under a prime
contract, based simply on its importance to the prime contract, does not comport with
established precedent.

        Plaintiff also argues in its complaint that “[f]rom October 19, 2012 (the day
Defendant explicitly cancelled the Contract), until the present day, Defendant has
utilized Plaintiff’s services and/or facilities,” and that “[f]rom November 3, 2012 through
at least August 15, 2013, Defendant has had the Aircraft stored at Plaintiff’s facility.”
Plaintiff states that, therefore, from October 19, 2012, “Defendant imposed an obligation
on Plaintiff,” and created an implied contract between Threshold and the government.
Although plaintiff does not clarify in its complaint what type of “implied” contract it is
referring to, in its response to defendant’s motion to dismiss plaintiff’s complaint, plaintiff
states that it its jurisdictional arguments are in part, “based upon the theories of . . .
implied-in-fact contract.” Defendant “does not move to dismiss count II of Threshold’s
complaint to the extent that it is based upon a theory of breach of an implied-in-fact
contract for services performed after the October 19, 2012 decision by the Government
to terminate the FTA contract for default.” (emphasis in original). To the extent plaintiff
argues that an implied-in-law contract arose between plaintiff and defendant, as is
discussed more below, the court does not have jurisdiction to resolve claims arising
from implied-in-law contracts. See Lumbermens Mut. Cas. Co. v. United States, 654
F.3d 1305, 1316 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2011); Cent. Freight Lines,
Inc. v. United States, 87 Fed. Cl. 104, 112 n.8 (2009); Enron Fed. Solutions, Inc. v.
United States, 80 Fed. Cl. 382, 409 (2008).

        Plaintiff claims a breach of the covenant of good faith and fair dealing, alleging
that “[b]eginning as early as March of 2011, or sooner, Defendant knew that FTA was
defaulting in its duties under the Contract, including failure to make payment to vital
parties who were essentially subcontractors,” and yet, despite communications of these
failures by plaintiff, defendant failed to act. Plaintiff contends that this violated the
covenant of good faith and fair dealing, as well as 48 C.F.R. § 1.602-2, which, according
to plaintiff, “requires the contracting officer to ensure impartial, fair, and equitable
treatment.” Plaintiff also contends that an implied contract for services was created after
October 19, 2012, when NASA terminated its contract with Flight Test Associates, and
that the government’s “refusal to compensate Plaintiff for the services provided and
storage of the Aircraft constitutes a breach of Defendant’s implied and express duty of
good faith and fair dealing.” Plaintiff also alleges that defendant “employed delay tactics”
to get out of forming a contract with plaintiff, “all the while, slowly having Defendant’s
property removed from the Aircraft and the Aircraft stored at Plaintiff’s facility.”
Defendant argues that “‘[t]he covenant of good faith and fair dealing is an implied duty

                                              31
that each party to a contract owes to its contracting partner,’” quoting from Centex v.
United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). Defendant states that “[t]he
covenant of good faith and fair dealing, therefore, does not arise where the parties have
no contract between them, as is the case here.” Defendant argues that the covenant of
good faith and fair dealings requires that an “express” contract be in existence; an
implied contract is insufficient. According to defendant, “[b]ecause the complaint
acknowledges that the parties have no express contract, there can be no implied
covenant of good faith and fair dealing.” Therefore, according to defendant, this claim
must be dismissed “because it fails to state a claim upon which relief may be granted.”

        “All government contracts contain an implied covenant of good faith and fair
dealing.” Nat’l Australia Bank v. United States, 55 Fed. Cl. 782, 790 (2003), aff’d, 452
F.3d 1321 (Fed. Cir. 2006). “However, the implied obligation ‘“must attach to a specific
substantive obligation, mutually assented to by the parties.”’” Detroit Housing Corp. v.
United States, 55 Fed. Cl. 410, 417 (2003) (quoting Allstates Air Cargo, Inc. v. United
States, 42 Fed. Cl. 118, 124 (1998) (quoting State of Alaska v. United States, 35 Fed.
Cl. 685, 704 (1996), aff'd, 119 F.3d 16 (Fed. Cir. 1997) (table), cert. denied, 522 U.S.
1108 (1998))); see also Night Vision Corp. v. United States, 68 Fed. Cl. 368, 389 (2005)
(“Clearly, the case has at its predicate the existence of a valid, mutually assented-to
contract, for which a covenant arises that proscribes the government from interfering
with reasonable expectations flowing from that particular contract.”), aff’d, 469 F.3d
1369 (Fed. Cir. 2006), cert. denied, 550 U.S. 934 (2007). In this instance, since plaintiff
has no express contract with the government and is not a third-party beneficiary to the
prime contract, the covenant of good faith and fair dealing cannot attach until the start of
plaintiff’s implied-in-fact contract with the government. Defendant has not moved to
dismiss plaintiff’s implied-in-fact contract claim, but attempts to argue that, because
there is no express contract between plaintiff and defendant, the implied duty of good
faith and fair dealing does not apply. The United States Court of Appeals for the Federal
Circuit, however, has stated repeatedly that “the implied duty of good faith and fair
dealing attaches to every contract,” not just certain contracts. See Precision Pine &
Timber, Inc. v. United States, 596 F.3d 817, 830 (Fed. Cir.), reh’g and reh’g en banc
denied (Fed. Cir. 2010), cert. denied, 131 S. Ct. 997 (2011) (emphasis added); see also
Metcalf Const. Co., Inc. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014) (“‘Every
contract imposes upon each party a duty of good faith and fair dealing in its
performance and enforcement.’” (quoting Restatement (Second) of Contracts § 205
(1981)); Bell/Heery v. United States, 739 F.3d at 1334 (“Implied in every contract is a
duty of good faith and fair dealing . . . .”). “The implied duty of good faith and fair dealing
cannot expand a party's contractual duties beyond those in the express contract or
create duties inconsistent with the contract's provisions.” Precision Pine & Timber, Inc.
v. United States, 596 F.3d at 831 (citing Centex Corp. v. United States, 395 F.3d at
1304–06); see also Metcalf Const. Co., Inc. v. United States, 742 F.3d at 991 (“The
implied duty of good faith and fair dealing is limited by the original bargain: it prevents a
party's acts or omissions that, though not proscribed by the contract expressly, are
inconsistent with the contract's purpose and deprive the other party of the contemplated
value.”); Bell/Heery v. United States, 739 F.3d at 1335. This does not mean that the
implied duty of good faith and fair dealing cannot attach to implied contracts formed

                                              32
between parties. In Centex Corp. v. United States, the Unites States Court of Appeals
for the Federal Circuit applied the covenant of good faith and fair dealing to a payment
provision that was not in the express contract. See Centex Corp. v. United States, 395
F.3d at 1306. The plaintiff in Centex alleged a breach of contract due to the passage tax
legislation that interrupted the company’s original bargain with the federal government.
See id. at 1287. The Centex court stated:

       The government suggests that if the parties had wished to ensure against
       the risk of a change in the tax laws, they could have included a clause
       providing for the payment of damages in that event. While it is true that the
       parties could have included a clause specifically ensuring against
       legislation that destroyed the benefits of the contract, such covenants
       have not been required in the past to protect contracting parties against
       the risk of contract breaches by the government, see Winstar [v. United
       States], 518 U.S. [839,] at 887 [(1996))], 116 S. Ct. 2432 (plurality opinion)
       . . . . Indeed, it would be inconsistent with the recognition of an implied
       covenant if we were to hold that the implied covenant of good faith and fair
       dealing could not be enforced in the absence of an express promise to
       pay damages in the event of conduct that would be contrary to the duty of
       good faith and fair dealing.

Id. at 1306 (modifications added); see also N. Star Alaska Housing Corp. v. United
States, 76 Fed. Cl. 158, 188 (2007) (rejecting the government’s proposition that it is
impossible to have “bad faith unless it is shown that a breach of an express contract
provision has occurred”). As shown above, the requirements for an express and
implied-in-fact contract are the same. See Night Vision Corp. v. United States, 469 F.3d
at 1375 (“The elements of an implied-in-fact contract are the same as those of an oral
express contract.”); Hanlin v. United States, 316 F.3d at 1328 (“Thus, the requirements
for an implied-in-fact contract are the same as for an express contract; only the nature
of the evidence differs.”); City of Cincinnati v. United States, 153 F.3d at 1377. Once an
implied-in-fact contract has formed, there is no reason that the covenant of good faith
and fair dealing should not apply. This court will not, generally, as a matter of law, on a
motion to dismiss, dismiss plaintiff’s claim of a breach of the covenant of good faith and
fair dealing as long as a potentially valid implied-in-fact contract claim is outstanding. In
this instance, plaintiff has alleged sufficient facts of a potential breach of good faith and
fair dealing under the implied-in-fact contract, “to raise a right to relief above the
speculative level.” See Bell Atl. Corp. v. Twombly, 550 U.S. at 555; Bell/Heery v. United
States, 739 F.3d at 1330; Kam-Almaz v. United States, 682 F.3d at 1367. These include
Threshold’s allegations that defendant kept the Gulfstream aircraft maintained by
Threshold “at Plaintiff’s facility at Plaintiff’s expense since November 3, 2012,” and that
“Plaintiff has performed work and/or stored the Aircraft at the request and benefit of
NASA,” supported by a letter from NASA Contracting Officer Karin Huth indicating that,
even as of March 12, 2013, NASA was not yet ready “to have the plane returned to
possession by the aircraft owner.” The correspondences between the parties meet the
minimal standard to survive a motion to dismiss. For the same reasons, plaintiff also
can move forward on its claim that the NASA contracting officer allegedly violated 48

                                             33
C.F.R. § 1.602-2, because she failed to, “[e]nsure that contractors receive impartial, fair,
and equitable treatment.” See 48 C.F.R. § 1.602-2 (“Contracting officers are responsible
for ensuring performance of all necessary actions for effective contracting, ensuring
compliance with the terms of the contract, and safeguarding the interests of the United
States in its contractual relationships. . . . Contracting officers shall-- . . . Ensure that
contractors receive impartial, fair, and equitable treatment.”).

       Plaintiff’s last claim for recovery is under a theory of quantum meruit. According
to the Federal Circuit:

       Quantum valebant is “[t]he reasonable value of goods and materials.”
       Black's Law Dictionary 1276 (8th ed. 2004). In general, the difference
       between quantum meruit and quantum valebant is that “[t]he former is said
       to apply to services and the latter to goods . . . .” Urban Data Sys., Inc. v.
       United States, 699 F.2d 1147, 1154 n. 8 (Fed. Cir. 1983).

United Pac. Ins. Co. v. United States, 464 F.3d at 1330 n.3. This court has noted that
“[t]he distinction however, is not significant, as courts have used quantum meruit to refer
to both.” Enron Fed. Solutions, Inc. v. United States, 80 Fed. Cl. at 410 n.26 (citing
United States v. Amdahl, 786 F.2d 387).

        Plaintiff contends that, “[w]ithin the last two years Plaintiff supplied and delivered
certain services at the special request of Defendant; and Defendant agreed to pay the
reasonable value of those goods.” Plaintiff further contends that although defendant had
“dominion and control” over the airplane, it never compensated plaintiff, and, therefore,
“has been unjustly enriched by storing the Aircraft at Plaintiff’s facility for over eight
months without paying for such occupation.” Defendant argues, in response, that the
court’s jurisdiction under the Tucker Act “‘extends only to contracts either express or
implied in fact, and not to contracts implied in law,’” quoting Hercules, Inc. v. United
States, 516 U.S. at 423. Defendant maintains, “where the Government accepts services
for which it is not otherwise contractually obligated to pay, only an implied-in-law
contract is at issue and any resulting claim is outside this Court’s Tucker Act
jurisdiction,” and “[u]njust enrichment is an example of a theory of recovery based upon
an implied-in-law contract.” Therefore, according to defendant, plaintiff’s quantum meruit
claim is an implied-in-law contract claim outside of this court’s jurisdiction. See
Hercules, Inc. v. United States, 516 U.S. at 423 (The United States Supreme Court has
“repeatedly held that this jurisdiction [under the Tucker Act] extends only to contracts
either express or implied in fact, and not to claims on contracts implied in law.”);
Lumbermens Mut. Cas. Co. v. United States, 654 F.3d at 1315 (When plaintiff “sought
reimbursement from the government under the theory that, by fully performing its bond
obligation, Lumbermens conferred more benefit on the government than was legally
required and the government was unjustly enriched,” the court concluded that this was
an implied-in-law theory of recovery, because plaintiff wanted recovery under equity
principles “in order to prevent an injustice.”); Barrett Refining Corp. v. United States, 242
F.3d 1055, 1059 (Fed Cir.) (stating that the Tucker Act “‘does not reach claims based on
contracts implied in law, as opposed to those implied in fact’” (quoting United States v.
Mitchell, 463 U.S. at 218), reh’g denied (Fed. Cir. 2001); Lawndale Restoration Ltd.

                                             34
P’ship ex rel. Boulevard Realty Servs. Corp. v. United States, 95 Fed. Cl. 498, 506
(2010), appeal dismissed, 459 F. App’x 913 (2011); see also Cent. Freight Lines, Inc. v.
United States, 87 Fed. Cl. at 112 n.8 (Agreeing with the government’s view that “a claim
of unjust enrichment is equitable in nature and is not based on a contractual
relationship,” and “‘is therefore based upon a contract implied in law, over which this
court has not been given jurisdiction.’” (quoting Enron Fed. Solutions, Inc. v. United
States, 80 Fed. Cl. at 409)).

      The United States Court of Appeals for the Federal Circuit has indicated:

      A recovery in quantum meruit[ or quantum valebant,] is based on an
      implied-in-law contract. That is, a contract in which there is no actual
      agreement between the parties, but the law imposes a duty in order to
      prevent injustice. The Court of Federal Claims, however, lacks jurisdiction
      over contracts implied in law. 28 U.S.C. § 1491(a)(1) (2000).

Int’l Data Prods. Corp. v. United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007); see also
Perri v. United States, 340 F.3d 1337, 1343 (Fed. Cir. 2003) (In an quantum meruit
claim implied in law, “[t]he theory is that if one party to a transaction provides goods or
services to the other party that the parties intended would be paid for, but the recipient
refuses to pay for them, the law will imply a contract for the recipient to pay the fair
value of what it has received.” (citing United States v. Amdahl Corp., 786 F.2d 387, 393
(Fed. Cir. 1986))); Am. Tel. & Tel. Co. v. United States, 124 F.3d 1471, 1479 (Fed. Cir.
1997) (“Quantum meruit is the name given to an implied-in-law remedy for unjust
enrichment. As a general rule, it falls outside the scope of relief available through the
Court of Federal Claims.” (citing Trauma Serv. Group v. United States, 104 F.3d at
1324–25)), granting reh’g en banc and vacating on other grounds, 136 F.3d 793 (Fed.
Cir. 1998), reh’g en banc, 177 F.3d 1368 (Fed. Cir. 1999).

      In limited circumstances, a contractor can seek recovery on a contract claim on a
quantum meruit or quantum valebant basis when, for example, the government
attempted to form a contract with a private party, but a defect prevented the contract
“from actually coming into existence or the government simply refuses to pay.” Enron
Fed. Solutions, Inc. v. United States, 80 Fed. Cl. at 409-10; see also Lumbermens Mut.
Cas. Co. v. United States, 654 F.3d at 1317 n.9; Council for Tribal Emp’t Rights v.
United States, 112 Fed. Cl. at 252-53. As explained by the Federal Circuit:

      On the other hand, “[w]here a benefit has been conferred by the contractor
      on the government in the form of goods or services, which it accepted, a
      contractor may recover at least on a quantum valebant or quantum meruit
      basis for the value of the conforming goods or services received by the
      government prior to the rescission of the contract for invalidity. The
      contractor is not compensated under the contract, but rather under an
      implied-in-fact contract.” United Pac. Ins. Co. v. United States, 464 F.3d
1325, 1329–30 (Fed. Cir. 2006).

                                            35
Int’l Data Prods. Corp. v. United States, 492 F.3d at 1325. The Federal Circuit also
stated in United Pacific Insurance Co. v. United States:

      “Where a benefit has been conferred by the contractor on the government
      in the form of goods or services, which it accepted, a contractor may
      recover at least on a quantum valebant or quantum meruit basis for the
      value of the conforming goods or services received by the government
      prior to the rescission of the contract for invalidity. The contractor is not
      compensated under the contract, but rather under an implied-in-fact
      contract.”

United Pac. Ins. Co. v. United States, 464 F.3d at 1333 (quoting United States v.
Amdahl Corp., 786 F.2d 387, 393 (Fed. Cir. 1986)) (footnote omitted; emphasis in
original).

       The United States Court of Appeals for the Federal Circuit, in Perri v. United
States, explained that the exception to the traditional rule to refer to quantum valebant
or quantum meruit claims as implied-in-law claims requires that at some point there was
an attempted express contract between the government and the plaintiff:

      Perri relies upon cases in which this court, the Court of Claims, and the
      Court of Federal Claims recognized quantum meruit recovery. See, e.g.,
      Gould, Inc. v. United States, 935 F.2d 1271 (Fed. Cir. 1991); Prestex, Inc.
      v. United States, 162 Ct. Cl. 620, 320 F.2d 367 (1963). Those cases,
      however, involved situations in which the plaintiff provided goods or
      services to the government pursuant to an express contract, but the
      government refused to pay for them because of defects in the contract
      that rendered it invalid or unenforceable. Since in that circumstance it
      would be unfair to permit the government to retain the benefits of the
      bargain it had made with the plaintiff without paying for them, the courts
      utilized quantum meruit as a basis for awarding the plaintiff the fair value
      of what it supplied to the government.

      We know of no case, however, and Perri has not cited any, in which either
      we, the Court of Claims, or the Court of Federal Claims has permitted
      quantum meruit recovery in the absence of some contractual arrangement
      between the parties. In the present case, the Court of Federal Claims
      ruled that there was no contract between Perri and the government to pay
      him twenty-five percent of the amount the government received from the
      forfeiture that Perri alleged he aided the government in obtaining.

Perri v. United States, 340 F.3d at 1343-44. The United States Court of Federal Claims
interpreted Perri as follows:

      While it is true that the Federal Circuit and Court of Claims have permitted
      quantum meruit recovery, this occurs in the very limited circumstance

                                           36
      where a plaintiff provides services or goods to the government pursuant to
      an attempted express contract, but either some defect prevents an
      express contract from actually coming into existence or the government
      simply refuses to pay. See Perri v. United States, 340 F.3d 1337, 1343–44
      (Fed. Cir. 2003) (citing Gould, Inc. v. United States, 935 F.2d 1271 (Fed.
      Cir. 1991); United States v. Amdahl Corp., 786 F.2d 387, 393 (Fed. Cir.
      1986); and Prestex, Inc. v. United States, 162 Ct. Cl. 620, 320 F.2d 367
      (1963)). In this type of case, a contract is found if a meeting of the minds
      can be inferred, “as a fact, from conduct of the parties showing, in the light
      of the surrounding circumstances, their tacit understanding.” Hercules,
516 U.S. at 424, 116 S. Ct. 981 (quoting Baltimore & Ohio R.R. Co. v.
      United States, 261 U.S. 592, 597, 58 Ct. Cl. 709, 43 S. Ct. 425, 67 L. Ed.
816 (1923)).

Enron Fed. Solutions, Inc. v. United States, 80 Fed. Cl. at 409 (footnote omitted;
emphasis in original); see also Council for Tribal Emp’t Rights v. United States, 112
Fed. Cl. at 252-53 (“quantum meruit permits the contractor to be ‘compensated under
an implied-in-fact contract when the contractor confers a benefit to the government in
the course of performing a government contract that is subsequently declared invalid.’”
(quoting Gould, Inc. v. United States, 67 F.3d at 930) (emphasis in original); Veridyne
Corp. v. United States, 83 Fed. Cl. 575, 585-86 (2008) (“‘[T]hough a contract be
unenforceable against the Government, because not properly advertised, not
authorized, or for some other reason, it is only fair and just that the Government pay for
goods delivered or services rendered and accepted under it.’ Id. [United States v.
Amdahl Corp., 786 F.2d at 393.] This is so even where ‘an award is plainly or palpably
illegal” and “made contrary to statutory or regulatory requirements because of some
action or statement by the contractor.’ Id. at 395.”).

       A Judge of United States Court of Federal Claims explained that to recover on a
quantum meruit or quantum valebant basis, however, the circumstances must permit
the court to conclude that all the basic elements of an implied-in-fact contract were
present between plaintiff and the government at the time of the alleged contract
creation, including mutual intent, offer, acceptance, consideration, and authority on
behalf of the government party to contract:

      “For contracts with the United States, however, an implied-in-fact
      contract—just as an express contract—requires an authorized agent of the
      Government.” Trauma Service Group v. United States, 104 F.3d at 1326
      (citing City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir.
      1990)). Importantly, an implied-in-fact contract will not be found if an
      express contract already covers the same subject matter. Id. [Trauma
      Serv. Grp. v. United States, 104 F.3d at 1326]; see also Atlas Corp. v.
      United States, 895 F.2d 745, 754–55 (Fed. Cir. 1990).

Enron Fed. Solutions, Inc. v. United States, 80 Fed. Cl. at 10; see also Council for Tribal
Emp’t Rights v. United States, 112 Fed. Cl. at 253 (“Because Ms. Forcia did not

                                            37
possess the authority to bind the government to Amendments 2 or 6, the Council cannot
demonstrate the existence of an implied-in-fact contract on which to base quantum
meruit recovery. Its claim for such recovery must accordingly be denied.” (internal
citation omitted)). As explained above, “[t]he requirements for a valid contract with the
United States are: a mutual intent to contract including offer, acceptance, and
consideration; and authority on the part of the government representative who entered
or ratified the agreement to bind the United States in contract.” Total Med. Mgmt., Inc. v.
United States, 104 F.3d at 1319; City of Cincinnati v. United States, 153 F.3d at 1377.

       In the above captioned case, plaintiff pleads, and defendant has not moved to
dismiss, that an implied-in-fact claim may have existed between the parties after
October 19, 2013. Before that time, however, even with all reasonable factual
inferences read in favor of plaintiff, no attempted express or implied-in-fact contract
existed between plaintiff and defendant. See Total Med. Mgmt., Inc. v. United States,
104 F.3d at 1319. This Circuit requires at a minimum a mutually attempted contract to
allow for recovery on a “quantum meruit basis.” See Int’l Data Prods. Corp. v. United
States, 492 F.3d at 1325; Perri v. United States, 340 F.3d at 1343–44; Enron Fed.
Solutions, Inc. v. United States, 80 Fed. Cl. at 409–10. Plaintiff, however, tries to point
to equity considerations to support its pre-October 19, 2013 claim. Plaintiff pleads that,
although over “the last two years Plaintiff has supplied and delivered certain services at
the special request of Defendant,” “Plaintiff has not received proper payment due for
such services.” Plaintiff’s pleadings, however, mirror the prototypical definition of an
implied-in-law quantum meruit argument. See Lumbermens Mut. Cas. Co. v. United
States, 654 F.3d at 1316; Perri v. United States, 340 F.3d at 1343–44. Threshold
reemphasizes this conclusion when it states in its complaint that defendant, “has been
unjustly enriched by storing the Aircraft at Plaintiff’s facility for over eight months without
paying for such occupation.” A claim of “unjust enrichment” is an implied-in-law contract
claim. See Lumbermens Mut. Cas. Co. v. United States, 654 F.3d at 1315; Am. Tel. &
Tel. Co. v. United States, 124 F.3d at 1479.

                                       CONCLUSION

      For the foregoing reasons, plaintiff did not enter into in an express contract with
defendant and is not a third party beneficiary to the prime contract between the federal
government and Flight Test Associates, nor can plaintiff recover under a theory based
on a contract implied in law. Plaintiff has pleaded sufficient facts to support a claim
based on plaintiff’s implied in fact contract theory and it is not dismissed. Therefore,
defendant’s motion to dismiss is GRANTED in part. Plaintiff shall file an amended
complaint within thirty days of the issuance of this opinion.

       IT IS SO ORDERED.

                                                          s/Marian Blank Horn
                                                          MARIAN BLANK HORN
                                                                   Judge

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