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Lockheed Martin Corp. v. United States

ELR Citation: 33 ELR 20065
Nos. No. 02-5042, 48 Fed. Appx. 752/(Fed. Cir., 09/30/2002)

The court upholds the dismissal of a subcontractor's Contract Disputes Act and Tucker Act claims against the U.S. Department of Energy (DOE) that arose in connection with the cleanup of a nuclear waste site at the Idaho National Engineering and Environmental Laboratories complex near Idaho Falls, Idaho. An environmental remediation company entered into a contract with the government to oversee cleanup of the site. It hired one of its subsidiaries as a prime contractor, and the prime contractor then hired a subcontractor, which also was a subsidiary of the remediation company. Because the prime contractor and subcontractor were both subsidiaries of the same parent company, DOE required a mitigation plan to cover any conflicts of interest. DOE retained contracting power over the cleanup until the mitigation plan was implemented. The subcontractor was unable to perform the work, and the prime contractor terminated the services of the subcontractor. The prime contractor then filed suit against the United States alleging claims under the Contract Disputes Act, the Tucker Act, and the Fifth Amendment. The prime contractor also filed suit against the subcontractor and the subcontractor's parent. The subcontractor and the parent counterclaimed, alleging the same Contract Disputes Act, Tucker Act, and Fifth Amendment claims that the prime contractor brought against the government.

The court holds that the subcontractor's and parent's claims were properly dismissed. There is no basis for privity between the subcontractor and DOE. The U.S. Congress waived sovereign immunity when it permitted lawsuits under the Contract Disputes Act and Tucker Act. However, that waiver must be strictly construed. The subcontractor argued that the government stepped into the prime contractor's shoes and, therefore, was in privity with the subcontractor through the prime contractor. However, DOE's exercise of sovereign acts, without more, does not make the contractor an agent of DOE. The subcontractor failed to show how the government's actions while the prime contractor developed the mitigation plan, or the mitigation plan itself, manifested an intent by the government to waive its sovereign immunity. The subcontractor's theories of direct control or direct dealings as a basis for privity fail because direct interaction between the government and a subcontractor do not, by themselves, constitute a contract. Nor did the prime contractor act as an agent of DOE because the record shows no clear contractual consent between the parties. Additionally, because the parent company raises for the first time on appeal an independent cause of action based on a guarantee of performance it offered, it has waived that argument, and the court does not reach the issue.

Counsel for Plaintiff
Linnea Brown
Holme, Roberts & Owen
1700 Lincoln St., Denver CO 80203
(303) 861-7000

Counsel for Defendant
John T. Stahr
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

33 ELR 20065a | Environmental Law Reporter | copyright © 2003 | All rights reserved