Slsco, Ltd. v. United States

In the United States Court of Federal Claims

SLSCO, LTD.,

Plaintiff,

No. 24-447

v. Filed: June 24, 2025

THE UNITED STATES,

Defendant.

Dean Baxtresser, Kyle R. Jefcoat, Genevieve P. Hoffman, Latham & Watkins LLP,

Washington, D.C., for Plaintiff.

Nelson Kuan, Trial Attorney, Eric P. Bruskin, Assistant Director, Patricia M. McCarthy,

Director, Commercial Litigation Branch, Brett A. Shumate, Acting Assistant Attorney

General, Civil Division, United States Department of Justice, Washington, D.C., and J.

Drew Piersa, Assistant District Counsel, Los Angeles District, United States Army Corps

of Engineers, Los Angeles, California, for Defendant.

OPINION AND ORDER

HADJI, Judge.

Plaintiff SLSCO, Ltd. (SLS) brings this action against the United States under the

Tucker Act, 28 U.S.C. § 1491, and the Contract Disputes Act (CDA), 41 U.S.C. § 7101 et

seq., challenging a Contracting Officer’s Final Decision (COFD) declining to overturn

allegedly improper Contractor Performance Assessment Report (CPAR) ratings. Before

the Court is the Government’s Motion to Dismiss pursuant to Rule 12(b)(1) and 12(b)(6)

(ECF 32). For the following reasons, the Government’s Motion to Dismiss is GRANTED.

BACKGROUND

Plaintiff was one of several construction contractors tasked by the Government to

construct a border wall on the United States’ southern border in 2019 and 2020. Am.

Compl. ¶ 2. On April 9, 2019, the United States Army Corps of Engineers (USACE)

awarded Contract No. W912PP-19-C-0018 (the Contract) to SLS for “a design-build

project consisting of approximately 46 miles of primary bollard fence replacement

including gates, drainage, roads, power distribution, demolition and disposal in El Paso

Sector, New Mexico.” Pl.’s Ex. 1 at 1; see also Am. Compl. ¶¶ 36, 38. Work did not

commence immediately due to ongoing environmental litigation. Am Compl. ¶ 36.

In the following months, Plaintiff and USACE were unable to reach agreement on

price or schedule. Am. Compl. ¶ 37. In September 2019, USACE unilaterally definitized

the Contract via modification P00005, effectively setting fixed prices under which Plaintiff

would perform and establishing January 5, 2021, as the contract completion date. Am.

Compl. ¶ 37. Although Plaintiff deemed the schedule unreasonable, Am. Compl. ¶ 37, it

does not allege that it asserted any right to an adjustment in accordance with Federal

Acquisition Regulation (FAR) 52.243-4(e) (the Changes Clause) within 30 days of the

change. See Pl.’s Ex. 1 at 7 (Plaintiff “failed to comply with contractually mandated notice

provisions”).

Several months later, in modification P00006, USACE again unilaterally modified

the Contract to add an additional segment of border wall to the work requirements. Pl.’s

Ex. 1 at ¶ 2. The additional 2.4-mile segment covered “steep and rocky terrain,” different

in kind from the terrain previously involved in the Contract. Am. Compl. ¶ 40. Although

Plaintiff assessed that additional days were necessary to complete the primary barrier and

again raised scheduling concerns, USACE added no additional construction days to

complete the extra 2.4 miles. Am. Compl. ¶¶ 41-43. Instead, USACE required that

construction of the entire 48.4 miles of primary border barrier be completed no later than

December 31, 2020. Am. Compl. ¶ 43. However, as part of the same action, USACE

extended the overall contract completion date to the end of June 2021, giving Plaintiff

additional time to complete the attributes (electrical, CCTV, fiber, and lighting). Am.

Compl. ¶ 43. Again, Plaintiff did not assert any right to an adjustment in accordance with

the Changes Clause of the Contract. See Pl.’s Ex. at 7.

Plaintiff alleges that, in performing the Contract, it faced significant unexpected

delays caused by events beyond its control, including severe weather, the COVID-19

pandemic, and Government-caused delays and requirements associated with blasting

operations. Am. Compl. ¶¶ 44-57. Nonetheless, Plaintiff completed the original 46-mile

segment of border wall in mid-December 2020, as well as “nearly all of the 2.4-mile

segment … except for approximately 2000 linear feet” located on a mountain peak. Am.

Compl. ¶¶ 58-59. Plaintiff does not allege that, when the performance period closed, it

notified USACE of any delays within 10 days as required by FAR 52.249-10(b)(2) (the

Default Clause) or sought additional time to complete the project. See Pl.’s Ex. at 7.

On January 21 and 23, 2021, USACE formally suspended Plaintiff’s performance

on the Contract. Am. Compl. ¶ 27. On May 1, 2021, USACE terminated the Contract in its

entirety for convenience. Am. Compl. ¶ 27, 60.

USACE issued the initial CPAR for the Contract on October 10, 2020 (the 2020

CPAR). Am. Compl. ¶ 62. USACE rated Plaintiff as “Marginal” for each evaluation factor.

Am. Compl. ¶ 62. Plaintiff challenged the 2020 CPAR, with the Contracting Officer

ultimately recognizing that the “Government failed to meet many of the requirements and

guidelines in the FAR and CPARS guidance.” Am. Compl. ¶ 64. The Contracting Officer

directed that the 2020 CPAR be vacated and that Plaintiff’s performance be reassessed.

Am. Compl. ¶ 64.

2

Rather than reissue the 2020 CPAR, the Government issued a new CPAR on

January 27, 2022, which covered the entire performance period, from April 9, 2019 – April

30, 2021 (the 2021 CPAR). Am. Compl. ¶ 65. Plaintiff was assessed “Marginal” ratings in

Quality, Management, and Regulatory Compliance, an “Unsatisfactory” rating in

Schedule, and a “Satisfactory” rating in Small Business Subcontracting. Am. Compl. ¶ 65.

Although Plaintiff again challenged these ratings, the Reviewing Official finalized the

CPAR on March 28, 2022. Am. Compl. ¶ 67.

On September 7, 2022, Plaintiff submitted a claim pursuant to the CDA and FAR

52.233-1 (the Claim) in connection with the Contract. Am. Compl. ¶ 13. The Claim

requested that USACE vacate and reassess the 2021 CPAR. Am. Compl. ¶ 13.

On March 23, 2023, the Contracting Officer issued a COFD granting in part and

denying in part the Claim. Am. Compl. ¶ 15; see generally Pl.’s Ex. 1. Specifically, the

Contracting Officer concluded that Plaintiff’s Schedule and Regulatory Compliance

ratings warranted adjustments from “Marginal” to “Satisfactory.” Pl.’s Ex. 1 at 6; see also

Am. Compl. ¶ 124. However, the Contracting Officer affirmed Plaintiff’s “Marginal”

Quality and Management ratings. Am. Compl. ¶¶ 20, 124; Pl.’s Ex. 1 at 6. The Contracting

Officer deemed Plaintiff’s arguments with respect to timeliness meritless. Am. Compl. ¶

20; Pl.’s Ex. 1 at 8.

On March 22, 2024, Plaintiff brought this suit under the Tucker Act, 28 U.S.C. §

1491(a), and the CDA, 41 U.S.C. §§ 7101-7109. Compl. at 1; Am. Compl. ¶ 18.

LEGAL STANDARDS

The Government moves to dismiss this suit pursuant to Rules 12(b)(1) and 12(b)(6)

of the Rules of the Court of Federal Claims. Rule 12(b)(1) permits dismissal for lack of

subject-matter jurisdiction.1 This Court’s jurisdiction is dependent on an unequivocal

waiver of sovereign immunity by the United States. United States v. Testan, 424 U.S. 392,

399 (1976). If the Court determines that it lacks subject-matter jurisdiction, it must dismiss

the action. Rule 12(h)(3); see Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94

(1998). The plaintiff bears the burden to demonstrate that jurisdiction is proper by a

preponderance of the evidence. Reynolds v. Army and Air Force Exch. Serv., 846 F.2d 746,

748 (Fed. Cir. 1988). When considering a motion to dismiss under Rule 12(b)(1), “a court

must accept as true all undisputed facts asserted in the plaintiff’s complaint and draw all

reasonable inferences in favor of the plaintiff.” Trusted Integration, Inc. v. United States,

659 F.3d 1159, 1163 (Fed. Cir. 2011).

1

Court of Federal Claims Rule 12(b)(1) is the same as Federal Rule of Civil Procedure 12(b)(1). Compare

RCFC 12(b)(1) with Fed. R. Civ. P. 12(b)(1).

3

Rule 12(b)(6) permits the Court to dismiss an action for failure to state a claim upon

which relief may be granted.2 Dismissal is proper under Rule 12(b)(6) “when a complaint

does not allege facts that show the plaintiff is entitled to the legal remedy sought.” Steffen

v. United States, 995 F.3d 1377, 1379 (Fed. Cir. 2021). The Court “must accept as true all

the factual allegations in the complaint and … must indulge all reasonable inferences in

favor of the non-movant.” Fishermen’s Finest, Inc. v. United States, 59 F.4th 1269, 1274

(Fed. Cir. 2023). However, “pleadings that, because they are no more than conclusions, are

not entitled to the assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To

survive a challenge pursuant to Rule 12(b)(6), a plaintiff must plead more than “labels and

conclusions” or “a formulaic recitation of the elements of a cause of action[.]” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Factual allegations must be enough to raise

a right to relief above the speculative level.” Id.

DISCUSSION

Plaintiff alleges that USACE’s actions were not only unlawful, arbitrary, capricious,

and an abuse of discretion,3 but constitute a breach of the Contract, a breach of the covenant

of good faith and fair dealing, and a breach of the implied duty to cooperate. Am. Compl.

¶ 15. The Government moves to dismiss Plaintiff’s Amended Complaint for lack of

standing (with respect to its procedural allegations) and failure to state a claim (with respect

to its substantive allegations). See generally ECF 32.

I. Plaintiff Does Not Have Standing to Challenge Procedural Violations

Relating to the Issuance of the 2021 CPAR

The Court begins by addressing the Government’s standing argument. As relevant

here, Plaintiff alleges that USACE failed to follow required procedures for issuing a CPAR

assessment.4 See, e.g., Am. Compl. ¶ 130. Specifically, Plaintiff alleges that, in violation

of FAR 42.15, “[t]he 2021 CPAR was untimely, being issued late and covering a two-year

rather than an annual period[.]” Id. The Government maintains that Plaintiff lacks standing

to assert this claim, which is incorporated into Counts I, III, and IV of the Amended

Complaint. ECF 32 at 10.

2

Court of Federal Claims Rule 12(b)(6) is the same as Federal Rule of Civil Procedure 12(b)(6). Compare

RCFC 12(b)(6) with Fed. R. Civ. P. 12(b)(6).

3

As discussed infra, Plaintiff’s response to the Motion to Dismiss argues that application of the arbitrary

and capricious standard is inappropriate in the instant case. See ECF 33 at 43-46. However, in its Amended

Complaint, Plaintiff explicitly pled that “USACE’s evaluation of SLS’s performance in the 2021 CPAR is

unlawful, arbitrary, capricious, and an abuse of discretion.” Am. Compl. at 39; see also Am. Compl. ¶¶

136, 138.

4

The Government does not argue the Court should dismiss Plaintiff’s Complaint for lack of standing with

respect to its substantive allegations regarding USACE’s assignment of CPAR ratings. See generally ECF

32.

4

“[The Supreme Court] has repeatedly held that an asserted right to have the

Government act in accordance with law is not sufficient, standing alone, to confer

jurisdiction on a federal court.” Allen v. Wright, 468 U.S. 737, 754 (1984). For a party to

have Article III standing,5 it must show: (1) an injury in fact; (2) “a causal connection

between the injury and the conduct complained of;” and (3) a likelihood that the injury will

be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61

(1992).

In Todd Construction, the Federal Circuit considered whether a contractor

contesting an adverse performance evaluation had standing to challenge the Government’s

alleged failure to follow four procedural requirements, to include: (1) re-evaluating the

interim “unsatisfactory” rating every three months; and (2) issuing a final evaluation within

sixty days of project completion. 656 F.3d 1306, 1315 (Fed. Cir. 2011). There, the Federal

Circuit recognized that in cases involving fundamental procedural rights, some courts of

appeals have relaxed the causation standard when determining standing for procedural

injuries, and deemed it “satisfied when following the correct procedures plausibly may

have changed the result.” Id. (emphasis added).6 However, the Federal Circuit explained

that, in cases where a plaintiff alleges “minor procedural violations,” it must “show that it

was prejudiced by a significant error” to have standing. Id. Put another way, the plaintiff

must show that “but for the error, it would have had a substantial chance” of redress. Id.

(citing Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1378 (Fed. Cir. 2009)). The

Federal Circuit concluded that the procedural timing requirements raised by the plaintiff in

that case “d[id] not fall into the category of fundamental procedural rights” and declined

to apply the relaxed standard to such “minor procedural violations.” Id.

Here, Plaintiff alleges procedural violations that are cut from the same cloth as those

in Todd Construction. Specifically, Plaintiff alleges that the 2021 CPAR impermissibly

covers a two-year period of performance and was “woefully late” with respect to both the

2020 and 2021 performance periods. Am. Compl. ¶¶ 82, 84; see also ECF 33 at 15. As in

Todd Construction, the allegations here relate to relate to timeliness; they concern the

frequency of evaluations and the timing of issuance. 656 F.3d at 1310. Although Plaintiff

attempts to distinguish Todd Construction by arguing that the procedural violations here

“were neither minor nor inconsequential,” ECF 33 at 16, 23-24, Plaintiff ignores that two

of the purported procedural errors in Todd Construction were remarkably similar to the

ones alleged here. Compare Am. Compl. ¶ 77 (alleging failure to evaluate annually) with

656 F.3d at 1315 (alleging failure to re-evaluate the interim “unsatisfactory” rating every

5

“The Court of Federal Claims, though an Article I court, … applies the same standing requirements

enforced by other federal courts created under Article III.” Anderson v. United States, 344 F.3d 1343, 1350

n.1 (Fed. Cir. 2003).

6

See also Todd Constr., 656 F.3d at 1315 n.8 (citing Richard J. Pierce, Jr., Making Sense of Procedural

Injury, 62 Admin. L. Rev. 1, 9 (2010) (“Each of the contexts in which courts have applied [the relaxed

standard] … involved deprivation of a fundamental procedural right. Each of the procedural rights at issue

was either … constitutionally required or the subject of a statute in which Congress required the agency to

provide the procedure.”).

5

three months); compare also Am. Compl. ¶¶ 78, 80 (alleging failure to issue an evaluation

within 120 days of performance) with 656 F.3d at 1315 (alleging failure to issue a final

evaluation within sixty days of project completion). Given these similarities, the Court

finds that Plaintiff’s allegations fall squarely within the ambit of Todd Construction; they

are not so different as to implicate “fundamental procedural rights,” which would trigger a

relaxed standing analysis.7 Todd Constr., 656 F.3d at 1315. Accordingly, to establish

standing, it is not enough to merely show that following the correct procedures “may have

changed the result.” See id. at 1315-16. Instead, Plaintiff must “show that it was prejudiced

by a significant error.” Id. at 1315.

Resisting this reasoning, Plaintiff effectively resorts to asking the Court to ignore

binding precedent. ECF 33 at 25 (“To the extent the Federal Circuit in Todd Construction

requires [allegations of prejudice], this is in error.”). The Court cannot ignore the precedent

of a higher court. “[T]he Court of Federal Claims may not deviate from the precedent of

the … Federal Circuit any more than the Federal Circuit can deviate from the precedent of

the … Supreme Court.” Crowley v. United States, 398 F.3d 1329, 1335 (Fed. Cir. 2005).

The Federal Circuit has held that, to establish standing in connection with a minor

procedural violation, a plaintiff must allege prejudice. Todd Constr., 656 F.3d at 1315-16.

The Court faithfully follows that precedent today, and thus turns to an analysis of Plaintiff’s

allegations of prejudice.

In its Amended Complaint, Plaintiff alleges four types of prejudice. See Am. Compl.

¶¶ 87- 91. The leading one is that the delay in issuance “deprived SLS of the ability to

address, and where necessary, improve, its performance in future review periods.” Am.

Compl. ¶ 88. Plaintiff maintains that, had the Government timely issued its performance

evaluations, it “would have had an earlier opportunity to respond to the government’s

concerns and correct any perceived deficiencies.” Am. Compl. ¶ 88 (emphasis added).

Crucially, as in Todd Construction, Plaintiff does not allege in connection with this

so-called prejudice that “the outcome of the performance evaluation[] would have been any

different if the purported procedural errors had not occurred” or that “government

compliance with its procedural standards would have changed its actions.” 656 F.3d at

1316. Instead, Plaintiff merely alleges it was deprived of an opportunity to take curative

action, leaving it “no chance to correct or address purported performance issues.” See Am.

Compl. ¶¶ 12, 88 (“SLS could either have disputed sooner, or corrected” the CPAR)

(emphasis added). When faced with almost identical allegations of harm in Todd

Construction, the Federal Circuit declined to find prejudice and concluded that the plaintiff

lacked standing with respect to procedural violations. 656 F.3d at 1316 (“Although [the

plaintiff] alleged it was not provided ‘an opportunity to cure any perceived deficiencies in

7

The Court likewise rejects Plaintiff’s suggestion that the Federal Circuit’s holding in Todd Construction

is limited to the exact procedural violations alleged by the plaintiff in that case. See ECF 33 at 17 n.2.

Instead, the Federal Circuit distinguished between “cases involving fundamental procedural rights” and

those involving “minor procedural violations,” Todd Constr., 656 F.3d at 1315 (emphasis added), indicating

that all procedural violations fall into one category or the other.

6

its performance,’ [it] did not allege that if the required procedures had been followed, it

would have taken curative action or that the performance evaluation would have been

different.”) (emphasis added) (citation omitted).

Skipping ahead, the third prejudice Plaintiff cites is more of the same. Specifically,

Plaintiff alleges that “the [G]overnment’s failure to timely issue the 2021 CPAR has

hindered SLS’s ability to protect its rights and reach a resolution on this issue faster.” Am.

Compl. ¶ 90. Plaintiff maintains that such delay “made it more difficult both for SLS to get

an accurate account of its performance during the relevant period, and for SLS to challenge

the accuracy of the CPAR it did receive.” Id. ¶ 90. Like Plaintiff’s first allegation of

prejudice, this prejudice is based on lost opportunity. See id. ¶ 88 (lost ability to address

performance), id. at ¶ 90 (lost ability to protect rights). But lost opportunity alone is not

sufficient to establish prejudice, and Plaintiff has not alleged any plausible facts to indicate

that, had required procedures been followed, it “would have taken curative action or that

the performance evaluation would have been different.” Todd Constr., 656 F.3d at 1316.

Instead, when presented with the opportunity to clarify its position, Plaintiff merely asserts

that, “if the CPAR [had] been issued earlier, SLS might have been able to either alter its

performance or bring a challenge more quickly … which might have altered the outcome

of the COFD.” ECF 33 at 19 (emphasis added). These mere possibilities are not sufficient

to establish prejudice. As discussed, the standard for minor procedural violations is not

whether “following the correct procedures plausibly may have changed the result;” it is

whether Plaintiff has shown actual prejudice. Todd Constr., 656 F.3d at 1315-16.

Plaintiff’s second and fourth allegations of prejudice fare no better. First, Plaintiff

alleges without explanation that, “by combining two review periods … USACE has

artificially downgraded the 2021 CPAR, making it seem as if SLS has shown no

improvement.” Am. Compl. ¶ 89. On its face, Plaintiff’s allegation appears to allege that

the outcome of its performance evaluation would have been different had the purported

procedural error not occurred. However, the Government disputes this allegation, ECF 32

at 12, and Plaintiff offers no plausible facts to support its conclusory allegation. Nothing

in the Amended Complaint explains why Plaintiff believes that a separate CPAR for the

2020-2021 performance period would have rated SLS’s performance any higher than the

previous period. Instead, Plaintiff simply complains that “SLS did not have the benefit of

being put on notice of potential problems by the first CPAR it should have received,” Am.

Compl. ¶ 89, a grievance born of lost opportunity, much like Plaintiff’s first and third

alleged harms.8

8

The fact that the thrust of Plaintiff’s second alleged prejudice arises from a lost opportunity to take curative

action is made even more apparent from Plaintiff’s MTD Response, where Plaintiff clarifies that “SLS also

alleges that had it been properly issued the first and second annual performance evaluations, it could have

corrected any perceived deficiencies in its performance sooner.” ECF 33 at 18 (citing Am. Compl. ¶ 88)

(emphasis added).

7

Plaintiff’s final allegation of prejudice is that, “by delaying issuance of the CPAR,

the [G]overnment deprived SLS of a performance review to rely on in procurement

competitions,” resulting in “a ‘neutral confidence’ rating on past performance in at least

one procurement because it did not appear to have sufficient experience in the requisite

area.” Am. Compl. ¶ 91. But this argument is also wholly speculative and conclusory.

Plaintiff’s Complaint is devoid of any plausible facts to show that, had the CPAR been

timely issued, it would have improved upon its “neutral confidence” assessment on past

performance in the cited procurement competition. As such, there is simply no basis to

conclude that, even had the Government perfectly complied with the FAR’s timing

regulations, Plaintiff would have received a higher past performance rating in the

subsequent procurement. Put differently, Plaintiff simply has not alleged facts which, taken

as true, “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

Moreover, in its Response to the Motion to Dismiss, Plaintiff makes clear that the perceived

harm is based only on the possibility of a different outcome: “if the CPAR had been timely

issued, SLS might not have received the split Marginal/Satisfactory ratings in 2021 and/or

it might have been able to challenge those ratings sooner, potentially giving SLS a valid

CPAR to rely on in other procurements.” ECF 33 at 20 (emphases added).

For the foregoing reasons, the Court finds that Plaintiff has not shown, as required,

that it was prejudiced by a significant error. Todd Constr., 656 F.3d at 1315. Instead,

Plaintiff’s allegations related to prejudice are thin and conclusory to the extent they are

made at all. Having failed to show prejudice, Plaintiff lacks standing to sue with respect to

the procedural violations alleged here.

II. Plaintiff Fails to State a Claim for Relief

In contrast to the procedural allegations described in Part I, Plaintiff has standing to

sue based on its substantive allegations, including that USACE: (1) breached the Contract

(Count I); (2) acted unlawfully, arbitrarily, and capriciously in assigning an inaccurate and

unfair performance evaluation (Count II); (3) breached the covenant of good faith and fair

dealing (Count III); and (4) breached the duty to cooperate (Count IV).

A. Plaintiff’s Breach of Contract Claim (Count I)

In Count I, Plaintiff argues that USACE’s evaluation of its performance in the 2021

CPAR was substantively inaccurate,9 in violation of FAR 42.15, and thus in breach of the

Contract. Am. Compl. ¶ 133. This count fails.

To have a valid claim for breach of contract, Plaintiff bears the burden of showing:

(A) a valid contract between the parties; (B) an obligation or duty arising out of the

contract; (C) a breach of that duty; and (D) damages caused by the breach. Peanut Wagon,

9

Plaintiff also alleges that the CPAR was untimely, claiming it was issued late and improperly covered a

two-year rather than an annual period. Am. Compl. ¶ 130. Because the Court finds that Plaintiff lacks

standing to challenge alleged procedural errors, the Court need not address the timeliness concerns raised

by Plaintiff.

8

Inc. v. United States, 167 Fed. Cl. 577, 602 (2023) (citing San Carlos Irrigation &

Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 1989)). When considering a

motion to dismiss a breach of contract claim, the Court must “interpret the contract’s

provisions to ascertain whether the facts plaintiff alleges would, if true, establish a breach

of contract.” Bell/Heery v. United States, 739 F.3d 1324, 1330 (Fed. Cir. 2014).

It is undisputed that USACE and SLS entered into a valid contract. See ECF 30-1 at

2; Am. Compl. ¶ 36. As such, the Court’s inquiry begins with the second element, whether

the Government had an obligation or duty arising out of the Contract to provide a fair and

accurate performance report to Plaintiff. Here, Plaintiff does not allege that the Contract

contains any express reference to FAR 42.15 or the requirement for performance

evaluations. See generally Am. Compl. Instead, in its Amended Complaint, Plaintiff

alleges without support that:

Courts have recognized that the CPAR review process and its

requirements outlined in FAR 42.15 are incorporated into all

government contracts, and benefit both the government and the

contractor. Thus, the government’s failure here to comply with

the requirements of FAR 42.15 governing CPARs, as outlined

above, constitutes a breach of the Contract.

Am. Compl. ¶ 132. See also ECF 33 at 39 (“By entering into the Contract, the government

assumed an obligation and duty to conduct a performance review process that complies

with FAR 42.15, since FAR 42.15 is an obligation and duty arising out of the Contract.”).

In the alternative, Plaintiff argues that FAR 42.15 should be read into the contract as a

USACE obligation because (1) the appropriate avenue to challenge a CPAR is through the

CDA; and (2) courts have recognized that certain mandatory regulations may be implicitly

read into government contracts. ECF 33 at 39. These arguments lack merit.

“Whether and to what extent material has been incorporated by reference into a host

document is a question of law.” Cook Biotech, Inc. v. Acell, Inc., 460 F.3d 1365, 1376 (Fed.

Cir. 2006). Here, Plaintiff has not cited—and the Court is unaware of—any case that stands

for the proposition that FAR 42.15 is automatically incorporated into all government

contracts. Furthermore,

[The Federal Circuit] has been reluctant to find that statutory

or regulatory provisions are incorporated into a contract with

the government unless the contract explicitly provides for their

incorporation. Smithson v. United States, 847 F.2d 791, 794

(Fed. Cir. 1988). In Smithson, the court warned that wholesale

incorporation of regulations into a contract would allow the

contracting party to “choose among a multitude of regulations

as to which he could claim a contract breach—and thus ‘[a]

wholly new ground of obligation would be summarily created

by mere implication.’” Id. (internal quotation omitted).

9

St. Christopher Assocs., L.P. v. United States, 511 F.3d 1376, 1384 (Fed. Cir. 2008). With

the above standard in mind, this Court has previously rejected the suggestion that the

FAR’s CPAR regulations should be read into government contracts that do not otherwise

reference or incorporate those regulations. Gray Owl Servs., Inc. v. United States, No. 13-

963, 2014 WL 3955803, at *5 (Fed. Cl. Aug. 14, 2014), aff’d, 616 F. App’x 419 (Fed. Cir.

2015).

Likewise, the Court rejects Plaintiff’s contention that FAR 42.15 is incorporated

into the Contract simply because CPAR challenges fall under the CDA. ECF 33 at 39

(“Th[e] contention [that FAR 42.15 is not specifically incorporated into the Contract]

cannot be taken seriously considering that the appropriate avenue to challenge a CPAR is

through the Contract Disputes Act.”) (emphasis in original). It does not necessarily follow

that CPARs regulations are incorporated into contracts simply because a performance

evaluation dispute is treated as a contract-related claim pursuant to the CDA. Indeed, in

Todd Construction, the Federal Circuit explicitly rejected this argument:

CDA jurisdiction exists when the claim has some relationship

to the terms or performance of a government contract. A

contractor’s claim need not be based on the contract itself (or

a regulation that can be read into the contract) as long as it

relates to its performance under the contract.

656 F.3d at 1314 (internal quotation marks and citation omitted) (emphasis in original).

The Federal Circuit went on to clarify that “[i]n holding that the Claims Court has

jurisdiction under the CDA, we do not suggest that the performance evaluation regulation

should be read into the contracts. Rather, the regulation applies of its own force and directly

governs the parties’ performance under the contracts.” Id. at 1314 n.6.

Having found that FAR 42.15 was not incorporated into the Contract, the Court

concludes that the Government owed Plaintiff no contractual duty to provide a performance

report, fair or otherwise. The facts Plaintiff alleges, if true, simply do not establish a breach

of contract. See Bell/Heery v. United States, 739 F.3d at 1330. Accordingly, Count I fails

to state a claim.

B. Plaintiff’s Claim for an Unlawful, Arbitrary, and Capricious CPAR (Count II)

Count II alleges that USACE’s evaluation of SLS’s performance in the 2021 CPAR

is unlawful under FAR 42.15 and inconsistent with formal DoD Guidance, arbitrary,

capricious, and an abuse of the Contracting Officer’s discretion. Am. Compl. § 136.

Specifically, Plaintiff alleges that the CPAR failed to accurately reflect SLS’s performance

due to errors on the Management and Quality factors and the Contracting Officer’s failure

to consider relevant information bearing on SLS’s performance. See, e.g., Am. Compl. §§

74, 92-121, 138; ECF 33 at 27. The Government moves to dismiss on the basis that Count

II fails to state a claim for an arbitrary and capricious CPAR where the Amended Complaint

fails to deny the deficiencies supporting Plaintiff’s “Marginal” ratings. ECF 32 at 15-20.

10

1. The CPAR Evaluation Process

The FAR mandates that agencies prepare past performance evaluations and submit

such evaluations into CPARS, the Governmentwide evaluation reporting tool for all past

performance reports. FAR 42.1502(a). In accordance with FAR 42.1503(b)(1), a

performance evaluation:

should include a clear, non-technical description of the

principal purpose of the contract or order. The evaluation

should reflect how the contractor performed. The evaluation

should include clear relevant information that accurately

depicts the contractor’s performance, and be based on

objective facts supported by program and contract or order

performance data. The evaluations should be tailored to the

contract type, size, content, and complexity of the contractual

requirements.

The FAR further provides that each assessment shall include an evaluation of the following

factors: (1) technical (quality of product or service); (2) cost control; (3)

schedule/timeliness; (4) management or business relations; and (5) small business

subcontracting. FAR 42.1503(b)(2). The agency is to evaluate contractor performance

using a rating scale, with these five ratings: “Exceptional,” “Very Good,” “Satisfactory,”

“Marginal,” and “Unsatisfactory.” FAR 42.1503(b)(4).

As relevant here, the definition of a “Marginal” rating is as follows:

Performance does not meet some contractual requirements.

The contractual performance of the element or sub-element

being evaluated reflects a serious problem for which the

contractor has not yet identified corrective actions. The

contractor’s proposed actions appear only marginally effective

or were not fully implemented.

FAR 42.1503 Table 42-1(d). To justify a “Marginal” rating, the Government must “identify

a significant event … that the contractor had trouble overcoming and state how it impacted

the Government. A Marginal rating should be supported by referencing the management

tool that notified the contractor of the contractual deficiency (e.g., management, quality,

safety, or environmental deficiency report or letter).” Id. The FAR provides that “[t]he

ultimate conclusion on the performance evaluation is a decision of the contracting agency.”

FAR 42.1503(d).

11

2. Standard of Review

Before addressing the merits, the Court must first address the appropriate standard

of review.10 The CDA provides that review of a contracting officer’s decision subject to

the Act must “proceed de novo in accordance with the rules of the appropriate court.” 41

U.S.C. § 7104(b)(4). The parties agree on this point. ECF 33 at 43; ECF 35 at 12. They

disagree, however, on whether a CPAR evaluation or COFD is nonetheless afforded any

deference. The Government maintains that, “according to Todd Construction, a CPAR

claim is a CDA claim in which the question to be answered is whether the contracting

officer abused their discretion, [and thus] the standard of proof is arbitrary and capricious,

which the Court is to determine de novo.” ECF 35 at 13. In contrast, Plaintiff argues that,

in a CDA case, no deference is afforded to agency decisions, and thus a CPAR evaluation

need only “be reasonable based on the facts and evidence before the court.” ECF 33 at 26-

27, 44.

In Todd Construction, the Federal Circuit recognized that, to state a claim for relief

arising from the assignment of a performance evaluation, “[a plaintiff] must plead facts

which give rise to a plausible inference that the government abused its discretion in

awarding the negative performance ratings.” 656 F.3d at 1316. Although Plaintiff

characterizes this statement as dicta and maintains the Federal Circuit “never directly

addressed whether a deferential standard or the CDA’s de novo standard applied,” ECF 33

at 45, the Court disagrees. The Federal Circuit’s position in Todd Construction is clear and

unequivocal; courts must review performance evaluations for an abuse of discretion. Todd

Constr., 656 F.3d at 1316.

That is not to say that the Court disregards its obligation under the CDA to apply

this substantive standard de novo, rather than through a deferential standard of review. The

Federal Circuit has explained:

The plain language of the CDA … make[s] it clear that, in court

litigation, a contractor is not entitled to the benefit of any

presumption arising from the contracting officer’s decision. De

novo review precludes reliance upon the presumed correctness

of the decision. Thus, once an action is brought following a

contracting officer’s decision, the parties start in court or

before the board with a clean slate.

10

Plaintiff accuses the Government of relying on the wrong standard of review for CDA claims. ECF 33 at

43. However, despite taking issue with the “arbitrary and capricious” standard, Plaintiff explicitly

acknowledged that “a contracting officer may be accorded discretion in preparing a performance evaluation

under FAR Subpart 42.15” and pled that USACE’s assessment of SLS in the 2021 CPAR was “arbitrary,

capricious, and an abuse of the Contracting Officer’s discretion under the Contract.” Am. Compl. ¶¶ 136-

37; see also id. ¶¶ 74, 76. The Court will not fault the Government for responding to the allegations as pled.

12

Wilner v. United States, 24 F.3d 1397, 1401-02 (Fed. Cir. 1994) (en banc). More recently,

the Federal Circuit elaborated:

The CDA’s de novo standard—rooted partly in the statute’s

command that “‘[s]pecific findings of fact are not required:” to

be made by the contracting officer, and “[i]f made, specific

findings of fact are not binding in any subsequent

proceeding,’” 41 U.S.C. § 7103(e)—requires a determination

by the [Court] on the evidentiary record developed in the

proceeding. One aspect of that requirement is that the statute

“demands an objective inquiry, not an evaluation of the

contracting officer’s subjective beliefs” when ascertaining

whether the government has met its burden.

Dep’t of Transp. v. Eagle Peak Rock & Paving, Inc., 69 F.4th 1367, 1375-76 (Fed. Cir.

2023).

In reconciling the CDA’s de novo standard and the Federal Circuit’s admonition to

review performance ratings for an abuse of discretion, the Court finds Eagle Peak

instructive. Plaintiff argues that Eagle Peak stands for the proposition that “a deferential

‘arbitrary and capricious’ or ‘abuse of discretion’ standard is simply not consistent with

the CDA’s commands.” ECF 33 at 46. The Court’s reading of Eagle Peak is more nuanced.

In Eagle Peak, the Federal Circuit found that the Board of Contract Appeals failed to

separate its analysis of whether a contracting officer’s decision to terminate a contract for

default was pretextual (which required examination of the officer’s reasoning) from the

required de novo analysis of whether a termination for default was reasonable under

contract standards. 69 F.4th at 1377-78 (Fed. Cir. 2023). After discussing how a substantive

“reasonableness” standard applied in failure-to-make progress cases, the Federal Circuit

noted that the CDA requires an objective inquiry into whether the Government met its

burden in establishing the contracting officer had a reasonable basis for terminating a

contract for default. Id. at 1375-76. The Federal Circuit concluded that, in a CDA case,

adjudication must proceed on the evidence and arguments made in the adjudicatory

proceeding and, in that case, the “substantive contract standard … doubly considers what

is ‘reasonable’… but the CDA tribunal must apply that substantive contract requirement

de novo, not through one of the deferential standards of review.” See also id. at 1377

(emphasis added). Put differently, the Federal Circuit reviewed de novo whether the

substantive standard was met. Id.

The Court discerns no reason the same logic would not apply in similar cases,

especially as the Federal Circuit has previously recognized that, notwithstanding the

CDA’s requirement of de novo review, some deference may still be appropriate in a CDA

case. See, e.g., Burnside-Ott Aviation Training Ctr. v. Dalton, 107 F.3d 854, 859-60 (Fed.

Cir. 1997) (interpreting contract terms de novo in a CDA case to find that the Board of

Contract Appeals may not reverse a contracting officer’s affirmance of a discretionary

decision “unless the discretion employed in making the decision is abused”). The Court

13

thus rejects the suggestion that the Federal Circuit’s guidance in Eagle Peak is

fundamentally inconsistent with Todd Construction.

Accordingly, applying the binding precedent of Todd Construction, and considering

it alongside consistent Federal Circuit cases, the Court reviews de novo whether Plaintiff

met its burden in plausibly alleging that the Contracting Officer abused her discretion in

assigning (and ultimately affirming) negative performance ratings.

3. Minimum Requirements for Performance Reviews

Turning to Plaintiff’s substantive challenges concerning the content of its CPAR, a

decision constitutes an abuse of discretion if it is found to be arbitrary and capricious. U.S.

Fid. & Guar. Co. v. United States, 676 F.2d 622, 630 (Ct. Cl. 1982). “[A] showing that

there was clearly no reasonable basis for the official action would be enough to demonstrate

an abuse of discretion.”11 JKB Sols. and Servs., LLC v. United States, 170 Fed. Cl. 241,

256 (Fed. Cl. 2024) (citing Keco Indus., Inc. v. United States, 492 F.2d 1200, 1204-05 (Ct.

Cl. 1974), abrogated on other grounds by Impresa Construzioni Geom. Domenico Garufi

v. United States, 238 F.3d 1324, 1331-33 (Fed. Cir. 2001)).

Here, Plaintiff first alleges that the 2021 CPAR fails to meet the minimum

requirements for performance reviews because it failed to evaluate Plaintiff’s technical

performance in constructing the border wall. Am. Compl. ¶¶ 92-99. Specifically, Plaintiff

alleges:

the CPAR does not contain any discussion of the quality of the

work that SLS had performed up until [the contract was

terminated for convenience]—indeed, there is no discussion of

whether the bollard fence or other structures meet contractual

requirements (they do), nor of the quality of SLS’s

workmanship on these efforts.

Am. Compl. ¶ 95. In Plaintiff’s view, such omission runs afoul of “the most fundamental

requirement of a performance review—assessing the actual performance of the contractor

in accomplishing the purpose of the Contract.” Am. Compl. ¶ 93.

However, no language in the FAR expressly imposes such a requirement. As

discussed, the FAR provides that an “evaluation should include a clear, non-technical

description of the principal purpose of the contract or order” and “reflect how the contractor

performed.” FAR 42.1503(b)(1). Although the evaluation must be “based on objective

facts” and “accurately depict[] the contractor’s performance, the plain language of FAR

42.1503(b)(1) does not actually specify that an evaluation must address the contractor’s

11

The Court notes that, for all practical purposes, under either standard the ultimate question is one of

reasonableness. Compare ECF 33 at 26 (“the CPAR’s evaluation must be reasonable based on the facts

and evidence before the court”) (emphasis added) with Todd Constr., L.P. v. United States, 88 Fed. Cl. 235,

248 (2009) (“Despite the discretionary nature of the assignment of a performance evaluation rating, the

exercise of that discretion must be reasonable.”) (emphasis added).

14

performance in meeting the principal purpose of the contract, as alleged by Plaintiff. Am.

Compl. ¶ 93 (emphasis added). Similarly, although FAR 42.1503(b)(2)(i) mandates that an

agency assess a contractor’s “Technical (quality of product or service),” it does not specify

that the evaluation address the contractor’s performance in meeting the contract’s primary

purpose. Nor does Plaintiff cite any legal authority for this proposition. Instead, Plaintiff

simply argues without support that the “[Technical (quality of product or service) factor]

exists so that government agencies [can] provide information on ‘the principal purpose of

the contract or order’ and ‘how the contractor performed’ in meeting the principal purpose

of the contract.” Am. Compl. ¶ 93.

Not only does the FAR’s plain language not compel Plaintiff’s interpretation, but

Plaintiff’s statements concerning the FAR requirements constitute legal conclusions, not

facts. Though the Court indulges all reasonable inferences in favor of Plaintiff’s factual

allegations, Fishermen’s Finest, 59 F.4th at 1274, Plaintiff’s legal conclusions are not

entitled to the assumption of truth. Iqbal, 556 U.S. at 679. Left only with Plaintiff’s factual

allegations, the Court discerns no basis to support “a plausible inference that the

government abused its discretion” by declining to address—in the detail wished for by

Plaintiff—the quality of its work. Todd Constr., 656 F.3d at 1316.

4. Management Rating

Plaintiff next complains that its “Marginal” rating on “Management” incorrectly

attributed issues with the project to a purported lack of effective project management. See

Am. Compl. ¶ 100. Specifically, the 2021 CPAR reported that “[l]ack of adequate

personnel, lack of design approvals and an acceptable schedule … greatly impacted

SLSCOs ability to manage the project effectively.” ECF 10-1 at 4.

Here, Plaintiff alleges three bases for challenging its “Marginal” rating. In addition

to arguing that the CPAR failed to assess Plaintiff’s actual performance on the “principal

purpose of the contract or order,” Am. Compl. ¶ 114, as discussed above, Plaintiff alleges

that the “Marginal” rating ignores Government-caused and other excusable delays, to

include USACE’s unilateral addition of 2.4 miles to the project without an extension of

time, unreasonable agency demands, and COVID-related and weather delays. See Am.

Compl. ¶¶ 101-08. Plaintiff maintains that, because USACE upgraded Plaintiff’s

“Schedule” rating to “Satisfactory” following Plaintiff’s initial challenge, so too must

USACE upgrade Plaintiff’s “Management” rating, for “a ‘Management’ rating based on

schedule problems cannot stand” under such circumstances. Am. Compl. ¶ 100.

But Plaintiff conflates the Schedule evaluation with the Management evaluation.

Per the FAR, “Schedule” and “Management” are two separate evaluation factors. See FAR

42.1503(b)(2). Plaintiff cites no authority for the proposition that separate subfactors must

be rated identically, and it does not necessarily follow that, just because USACE upgraded

Plaintiff’s “Schedule” rating, Plaintiff also merits a higher “Management” rating. The

Court is mindful that even excusable delays may be poorly managed.

15

Regarding Plaintiff’s complaint that its “Marginal” rating improperly ignores the

Government’s unilateral addition of additional miles of fencing to the project with no

accompanying schedule change, Am. Compl. ¶¶ 102-04, the Court likewise finds that

Plaintiff’s allegations do not plausibly suggest entitlement to relief. See Steffen, 995 F.3d

at 1379. Review of the relevant Contract modification reveals that the change was entered

into pursuant to FAR 52.243-4 (the Changes Clause). ECF 10-2 at 1. The Changes Clause

empowers contracting officers to unilaterally issue change orders but affords contractors

an opportunity to assert rights to an adjustment within thirty days. FAR 52.243-4(a), (e).

Critically, Plaintiff does not allege that it complied with this contractually mandated notice

provision by asserting any right under the Changes Clause within thirty days, as required.

See ECF 30-1 at 7. Accordingly, Plaintiff accepted the period of performance and cannot

now plausibly allege that the Contracting Officer abused their discretion by failing to

account for the Government’s so-called “unilaterally-imposed, wildly unrealistic project

deadlines.” Am. Compl. ¶ 101.

Next, Plaintiff alleges that its “Marginal” Management rating ignores the

Government’s acceleration of construction for a one-day photo opportunity at the behest

of the USACE Chief of Construction and Project Engineer, who allegedly agreed to set

aside contracting requirements in order to meet a political construction milestone. See Am.

Compl. ¶¶ 109-112. Plaintiff does not allege that these officials were authorized to waive

contracting requirements. As such, given the long-settled authority that only contracting

officers may modify a contract or issue a contract change, the Court finds this allegation

wholly unsupported by the relevant legal authorities. See 48 C.F.R. 1.602-1(a)

(“Contracting officers have authority to … administer … contracts”); FAR 43.102(a)

(“Only contracting officers acting within the scope of their authority are empowered to

execute contract modifications ….”); FAR 43.202 (providing that “Change orders shall be

issued by the Contracting Officer” unless such authority is properly delegated); Winter v.

Cath-dr/Balti Joint Venture, 497 F.3d, 1339, 1344 (Fed. Cir. 2007) (“With respect to

contracts for supplies and services, the federal government has given the authority to enter

into and modify contracts to only a limited class of government employees: contracting

officers.”). As such, Plaintiff cannot plausibly state a claim for relief on this basis.

As a general matter, Plaintiff simply has not plausibly pled any facts that entitle it

to relief. To plausibly plead an arbitrary and capricious assignment of a “Marginal” rating,

a contractor must plead facts demonstrating that its performance did in fact meet contract

requirements, and that the contractor’s actions were effective in resolving the identified

problem(s). See FAR 42.1503, Table 42-1(d). However, not only do some of Plaintiff’s

arguments run afoul of long-settled authority and contract principles, but Plaintiff does not

challenge other examples of poor management that support Plaintiff’s “Marginal” rating in

the 2021 CPAR. For example, the CPAR reports that Plaintiff proposed multiple design

variances which did not comply with contract requirements and that “[e]ven SLSCOs

superintendent and QC manager could not tell us where the crew would be working the

16

following day.” ECF 10-1 at 3, 4. With these facts unchallenged, Plaintiff cannot plausibly

raise a right to relief above the speculative level. Twombly, 550 U.S. at 555.

5. Quality Rating

Plaintiff next alleges that the “Marginal” rating it received for the Quality evaluation

factor was improper for two reasons. First, Plaintiff alleges that the same problems with

the CPAR that affected the Management rating similarly affected Plaintiff’s Quality rating.

Am. Compl. ¶ 117. For the same reasons discussed above, this argument fails.

Next, Plaintiff challenges its Quality rating due to its singular focus on quality

control issues rather than the quality of the work Plaintiff was hired to perform. Am.

Compl. ¶ 119. This claim similarly fails. First, as previously discussed, Plaintiff points to

no actual requirement that the Government evaluate a contractor’s performance on “the

principal purpose of the contract or order” and “how the contractor performed” in meeting

that purpose. See Am. Compl. ¶ 121.

Second, CPARS Guidance provides that, for construction contracts, “Quality

reflects the contractor’s management of the quality control program, as well as the quality

of the work itself.” Guidance for the Contractor Performance Assessment Reporting

System ¶ A3.27.4.1 (July 2024), Ex. C at 45, ECF 11-3. Assessing officials are thus

directed to “[s]pecifically describe contractor’s quality control system.” Id. Given this

guidance, the Court finds that there was a reasonable basis for the Contracting Officer to

base Plaintiff’s Quality assessment on documented quality control issues, and did not abuse

their discretion by deeming quality control “necessary to ensure an end product which

complies with the contract requirements.” ECF 10-1 at 7. Moreover, the Court notes that,

though the CPAR itself was silent as to the quality of Plaintiff’s work, the COFD issued

following Plaintiff’s Claim explicitly noted deficiencies in quality (e.g., drainage gates

welded shut, miles of ungrouted barrier) and tied those deficiencies directly to Plaintiff’s

lack of appropriate quality control personnel. See ECF 30-1 at 7 (“[W]ithout these proper

quality control personnel, the quality of the project suffered.”). Plaintiff does not deny

those deficiencies or allege that its performance actually met the quality and quality control

requirements of the Contract, as required to contest a “Marginal” rating. See FAR 42.1503,

Table 42-1(d). Accordingly, the Court finds that Plaintiff has not plausibly stated a claim

for an arbitrary and capricious Quality rating. See U.S. Fid. & Guar. Co., 676 F.2d at 630.

Taken as a whole, nothing in Plaintiff’s Complaint “give[s] rise to a plausible

inference that the government abused its discretion in awarding the negative performance

ratings.” Todd Constr., 656 F.3d at 1316. At most, Plaintiff’s arguments merely reflect a

disagreement with USACE’s discretionary judgment. Accordingly, Count II is dismissed.

17

C. Plaintiff’s Breach of Good Faith and Fair Dealing Claim (Count III)

The Court next turns to the question of whether “USACE breached the covenant of

good faith and fair dealing by issuing a procedurally and substantively deficient CPAR that

USACE knew failed to meet the requirements of the FAR and DoD Guidance.” Am.

Compl. ¶ 141.

Every contract, including one with the federal government, imposes upon each party

an implied duty of good faith and fair dealing in its performance and enforcement. Metcalf

Constr. Co. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014) (quoting Restatement

(Second) of Contracts § 205 (1981)). The covenant requires a party “not to interfere with

the other party’s performance and not to act so as to destroy the reasonable expectations of

the other party regarding the fruits of the contract.” Centex Corp. v. United States, 395 F.3d

1283, 1304 (Fed. Cir. 2005); see also Restatement (Second) of Contracts § 205 (1981).

“Although the implied duty of good faith and faith dealing attaches to every contract, what

that duty entails depends in part on what that contract promises (or disclaims).” Precision

Pine & Timber, Inc. v. United States, 596 F.3d 817, 830 (Fed. Cir. 2010).

To be sure, “a breach of the implied duty of good faith and fair dealing does not

require a violation of an express provision in the contract.” Metcalf Constr., 742 F.3d at

994 (emphasis in original). However, “[t]he 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 817, 831 (Fed. Cir. 2010). In other words, “the duty of good faith must be

connected to a duty clearly imposed by the contract itself.” 2 E. Allan Farnsworth,

Farnsworth on Contracts § 7.17 at 358 (3d ed. 2004); see also Dobyns v. United States, 915

F.3d 733, 740-41 (Fed. Cir. 2019) (“Inferring an implied duty … without a tether to the

contract terms, would fundamentally alter the balance of risks and benefits associated with

the 2007 agreement and cannot be the basis of a claim for breach of the implied duty of

good faith and fair dealing.”). This is because “while the implied duty exists because it is

rarely possible to anticipate in contract language every possible action or omission by a

party that undermines the bargain, the nature of that bargain is central to keeping the duty

focused on ‘honoring the reasonable expectations created by the autonomous expressions

of the contracting parties.’” Metcalf Constr., 742 F.3d at 991 (citation omitted).

Here, Plaintiff alleges it was deprived of the benefits of its bargain under the

Contract, which included the right to a fair and accurate CPAR. Am. Compl. ¶ 142.

However, Plaintiff makes no showing that the alleged breach was in some way connected

to the bargain struck in the Contract. Instead, Plaintiff’s alleged entitlement stems from

FAR 42.15. See Am. Compl. ¶¶ 142-43. Because the allegedly breached duty is “without

a tether to the contract terms,” Dobyns, 915 F.3d at 740-41, and “[t]he implied duty of good

faith and fair dealing cannot expand a party’s contractual duties beyond those in the express

contract,” Precision Pine, 596 F.3d at 831, the Court concludes that the implied duty of

good faith and fair dealing provides no basis for relief in this case. See Allen Eng’g

Contractor Inc. v. United States, 611 Fed. App’x. 701, 709 (Fed. Cir. 2015) (rejecting

18

argument that Navy breached the covenant of good faith and fair dealing by not following

its own procedures because no contractual duty attached).

In reaching this conclusion, the Court notes that the facts described in the Complaint

bear no resemblance to the types of cases that are typical of a good faith and fair dealing

case:

Cases in which the government has been found to violate the

implied duty of good faith and fair dealing typically involve

some variation on the old bait-and-switch. First, the

government enters into a contract that awards a significant

benefit in exchange for consideration. Then, the government

eliminates or rescinds that contractual provision or benefit

through a subsequent action directed at the existing contract.…

the government may be liable for damages when the

subsequent government action is specifically designed to

reappropriate the benefits the other party expected to obtain

from the transaction, thereby abrogating the government’s

obligations under the contract.

Precision Pine, 596 F.3d at 829 (finding no breach where government’s actions were not

“specifically targeted” and did not reappropriate any benefit guaranteed by the contracts).

Here, there is no indicia of governmental bait-and switch or double crossing. Nor is there

any indication that the Government sought to injure Plaintiff in some way. See White

Buffalo Constr., Inc. v. United States, 546 F. App’x 952, 956 (Fed. Cir. 2013). Instead,

Plaintiff’s claim arises from a disagreement over the content of the 2021 CPAR and

whether it accurately reflects SLS’s performance under the Contract. See Am. Compl. ¶¶

142-43. However, the fact that USACE reached a different conclusion than SLS regarding

SLS’s performance and the contents of the CPAR does not, on its own, state a breach of

the duty of good faith and fair dealing. See Dotcom Assocs. I, LLC v. United States, 112

Fed. Cl. 594, 600 (2013) (rejecting plaintiff’s “failure-to-agree-with-plaintiff theory of

breach of the implied covenant of good faith and fair dealing.”).

For the foregoing reasons, the Court finds that Plaintiff’s Complaint simply does

not “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570.

Accordingly, Count III is dismissed.

D. Plaintiff’s Claim for Breach of the Implied Duty to Cooperate (Count IV)

Plaintiff similarly alleges that USACE breached its implied duty to cooperate by

issuing a CPAR that failed to accurately reflect its performance. Am. Compl. ¶ 147. In

Plaintiff’s view, issuance of an inaccurate CPAR “hindered SLS’s performance on the

Contract and resulted in substantial long-term damage to SLS’s ability to procure

additional work on behalf of the federal government.” Am. Compl. ¶ 148.

19

“Both the duty not to hinder and the duty to cooperate are aspects of the implied

duty of good faith and fair dealing.” Metcalf Constr., 742 F.3d at 991 (citation omitted);

see also Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1291 (Fed. Cir. 2000) (“Every

contract, as an aspect of the duty of good faith and fair dealing, imposes an implied

obligation ‘that neither party will do anything that will hinder or delay the other party in

performance of the contract.’”). Accordingly, this claim fails for the same reasons as Count

III.

CONCLUSION

For the foregoing reasons, the Government’s Motion to Dismiss (ECF 32) is

GRANTED. Plaintiff’s Amended Complaint is DISMISSED in its entirety. The

allegations regarding procedural violations are dismissed for lack of standing pursuant to

Rule 12(b)(1), while the remaining contentions are dismissed for failure to state a claim

upon which relief can be granted pursuant to Rule 12(b)(6). The Clerk is DIRECTED to

enter judgment accordingly.

IT IS SO ORDERED.

PHILIP S. HADJI

Judge

20