Government Contracts Monitor

CBCA Sides with GSA Auction Bidder Because Government Breached Its “Duty of Cooperation”

March 19, 2013

The Civilian Board of Contract Appeals (CBCA) recently ruled in favor of the high bidder at a GSA auction for a lemon of a barge on the grounds that GSA failed to disclose issues with the barge and breached its implied duty of cooperation.  See Expediters Worldwide USA, Inc. v. GSA, CBCA Nos. 2748, 3237 (Feb. 28, 2013).

The appellant was the high bidder for a large barge that had been used by NASA to transport rocket thrusters.  The barge was advertised as “in fair condition for transit.”  After winning its bid, however, the appellant learned that the barge had a large amount of potentially contaminated ballast water that had to be removed before the barge could be moved.

The appellant notified GSA that its failure to notify bidders of the presence of the water was a misrepresentation and that it expected the government to pay for the water’s removal.  GSA contacted NASA about the claims and learned that NASA was willing to remove the water, which it believed was not contaminated as it had been filled and emptied many times from the water in the Space Center’s canals.  GSA, however, did not disclose any of these details to the appellant, but instead asserted that the water was not contaminated and demanded immediate payment on the contract.  When the appellant refused, GSA terminated the contract, assessed liquidated damages and retained the appellant’s deposit.

The Board had little difficulty finding that the failure to disclose the presence of the ballast water that had to be removed before the barge could be moved constituted a “misdescription.”  Moreover, the Board found that GSA’s failure to disclose NASA’s willingness to remove the ballast water “was entirely inappropriate and in breach of the implied duty of cooperation inherent in all contracts.”  The Board therefore denied the government’s claims and ordered GSA to return appellant’s deposit. 

 

Jeffry Cook is the attorney responsible for the content of this article.