Free Joint Preliminary Status Report - District Court of Federal Claims - federal

Case 1:07-cv-00613-FMA

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS NORTHRUP GRUMMAN COMPUTING SYSTEMS, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) )

No. 07-613C (Judge Allegra)

JOINT PRELIMINARY STATUS REPORT Pursuant to Rule 16 and Appendix A of the Rules of the United States Court of Federal Claims ("RCFC"), plaintiff, Northrop Grumman Computing Systems, Inc., and defendant, the United States, by their representative attorneys, respectfully submit this Joint Preliminary Status Report: a. Does the Court have jurisdiction over the action?

Plaintiff states that the Court has jurisdiction to consider and decide this action pursuant to 28 U.S.C. § 1491 and 41 U.S.C. § 609. Defendant is not aware of any basis upon which to challenge the Court's jurisdiction at this time. b. Should the case be consolidated with any other case?

The parties agree that this case should not be consolidated with any other case. c. Should the trial of liability and damages be bifurcated?

At this time, the parties do not believe that trial should be bifurcated as to liability and damages.

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d.

Should further proceedings in this case be deferred pending consideration of another case before this Court or any other tribunal? .

The parties agree that further proceedings in this case should not be deferred pending consideration of another case before this Court or any other tribunal. e. Will a remand or suspension be sought?

The parties do not believe that remand or suspension will be sought. f. Will additional parties be joined?

The parties do not currently anticipate that additional parties will be joined. g. Does either party intend to file a motion pursuant to RCFC 12(b), 12(c), or 56, and, if so, what is the proposed schedule for the intended filing? .

The plaintiff currently intends to file a motion pursuant to RCFC 56 after it conducts discovery on the issues set forth in (h) below. Defendant anticipates filing a motion for summary judgment pursuant to RCFC 56 regarding the contract interpretation issues prior to discovery. h. What are the relevant factual and legal issues?

Plaintiff's Statement of Factual and Legal Issues Plaintiff currently identifies at least the following relevant factual and legal issues: (1) Whether DHS/ICE is currently using software to perform functions

described in the Essential Use Statement, i.e., software that performs "similar or comparable functions, of which the [Oakley] software was intended to perform." (2) Whether the software used by DHS/ICE since its "decision not to exercise

Option year #1 (09/30/05 thru 09/29/06) under Delivery Order COW-4-D-1025, Contract No. NAS5-01143, for providing software, hardware, and services" must be a replacement of the Oakley Software based on the representations of DHS/ICE in the Essential Use Statement.

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(3) from all sources." (4)

Whether DHS/ICE did "use its best efforts to seek and utilize funding

Whether DHS/ICE did "request and reserve funds from the annual budget

as a first priority designation, to pay the required lease payments under this lease agreement." (5) Whether there were funds available to DHS/ICE sufficient to make the

final three lease payments. (6) Whether DHS/ICE's properly failed and refused to make the final three

payments due under the Contract totaling $2,697,558.00. (7) Whether DHS/ICE was bound by the non-substitution clause for a period

of the remaining full term of the lease or a period of twelve (12) months from the date the Department of Homeland Security discontinues its performance obligations under the lease, whichever is longer. Defendant's Statement of Factual and Legal Issues Defendant asserts that its decision not to exercise Option Year 1 under the Delivery Order COW-4-D-1025 with plaintiff was within the sole discretion of defendant's contracting officer pursuant to the contract, NAS5-01143, which adopts the definition of an "option" as "a unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract." 48 C.F.R. § 2.101. To the extent that there may be a conflict between the contract, the essential use statement prepared after contract award, and plaintiff's supplemental leasing terms, which were accepted by defendant in a subsequent amendment, the contract states that inconsistencies shall be resolved first by looking at the schedule of supplies/services, which

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states the "period of performance shall be for one twelve (12) month base year and three twelve (12) month Option years." Thus, the terms of the contract give the Government the unilateral right to exercise option years regardless of whether any supplemental leasing terms limit this right. In the event the Court denies our motion for summary judgment based on the interpretation of the contract, the Government posits that its decision to not exercise the option with plaintiff did not violate the contract. Paragraph 1 of the supplemental leasing terms only requires that "the Department of Homeland Security shall use its best efforts to seek and utilize funding from all sources, and to request and reserve funds from the annual budget as a first priority designation, to pay the required lease payments under this lease agreement," which necessarily requires that defendant first obligate itself to exercise the option before any lease payment would become due (emphasis added). The contracting officer chose not to exercise the option and, therefore, even if the lease agreement placed an additional responsibility on the contracting officer to seek funding for the lease, it only did so if the contracting officer chose to exercise the option. Such a reading is consistent with the contract terms, which grants the Government the right to terminate for convenience. Any representations contained in the essential use statement that contradict the contract, or otherwise purport to limit the rights of defendant, were not validly incorporated into the contract. In any case, defendant has not replaced the Oakley software. i. What is the likelihood of settlement? Is alternative dispute resolution contemplated?

The parties currently intend to discuss settlement and/or ADR.

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j.

Do the parties anticipate proceeding to trial? Does any party, or do the parties jointly, request expedited trial scheduling? What is the requested place of trial? .

Assuming that the case is not resolved upon dispositive motions, or that the case does not settle, the parties anticipate proceeding to trial. The parties do not request expedited trial scheduling. If trial is required, both parties request that the trial be held in Washington, DC. k. Are there special issues regarding case management needs?

The parties are unaware of any special issues regarding case management needs. l. Is there any other information of which the Court should be aware at this time?

Defendant invites the Court's attention to the case of Northrop Grumman Information Technology, Inc. v. United States, No. 05-595C (Fed. Cl. Aug. 14, 2007) (Damich, C.J.), appeal pending, No. 2008-5003 (Fed. Cir. Nov. 11, 2007), which concerned whether a letter of essential use was validly incorporated into the contract at issue. m. Discovery Plaintiff proposes the following schedule: Deadline for Fact Discovery Deadline for Disclosure of any Expert Reports Deadline for Depositions or other Discovery of Experts Deadline for the filing of dispositive motions June 30, 2008 May 31, 2008 August 31, 2008 September 30, 2008

Defendant proposes that the Court stay discovery until it resolves defendant's motion for summary judgment on the contract interpretation issue, for which discovery is not required, and adopt the following schedule: Defendant's Motion for Summary Judgment Solely on the Contract Interpretation Issue

March 1, 2008

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Plaintiff's Response to Above Defendant's Reply Plaintiff's Reply to Cross Motion, if any

April 1, 2008 April 18, 2008 May 30, 2008

In the event, the Court does not grant defendant's dispositive motion, or otherwise decides that the parties should conduct discovery, defendant proposes the following schedule: Exchange of Initial Disclosures Deadline for Serving Written Discovery Designation of Experts Disclosure of Expert Reports Deadline for Completion of Fact Depositions Deadline for Expert Depositions Close of All Discovery Deadline for Filing of Dispositive Motions March 1, 2008 June 2, 2008 May 2, 2008 August 1, 2008 September 1, 2008 October 31, 2008 January 2, 2009 March 27, 2009 Respectfully submitted,

JEFFREY S. BUCHOLZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director s/Kirk T. Manhardt KIRK T. MANHARDT Assistant Director

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s/David C. Aisenberg DAVID C. AISENBERG Looney, Cohen, Reagan & Aisenberg LLP 33 Broad Street Boston, MA 02109 Tel: (617) 371-1050 Fax: (671) 371-1051

s/Armando A. Rodriguez-Feo ARMANDO A. RODRIGUEZ-FEO Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit, 8th Floor 1100 L St., NW Washington, D.C. 20530 Tel: (202) 307-3390 Fax: (202) 514-8624 Attorneys for Defendant

Attorney for Plaintiff 4 February ___, 2008

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CERTIFICATE OF FILING 4 I hereby certify that on this __th day of February, 2008, a copy of foregoing "JOINT PRELIMINARY STATUS REPORT" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ Armando Rodriguez-Feo