Contractors often seek to recover attorney’s fees if they successfully present and resolve a claim, either through a negotiated settlement or litigation. In reality, of course, the government usually requires a waiver of Equal Access to Justice Act (EAJA) fees as part of a settlement. When winning or partially winning a case before a board or court, a contractor has the right to file an Application for Attorney’s Fees to recover attorney’s fees subject to the statutory limit of $125/hour and various upward adjustments for inflation. Unfortunately, winning is not always enough.
Derian, Inc. entered into a contract with the U.S. Army Corps of Engineers (USACE) to construct oil-water separator systems and install new turbine pit sump pumps at Lower Monumental Dam in Washington State. The project faced challenges, including delays and changes, prompting Derian to submit a Request for Equitable Adjustment (REA) claiming increased costs due to the government’s actions. After failing to resolve the request, the contractor submitted and litigated claims regarding deductive credits and liquidated damages. On August 26, 2024, the Armed Services Board of Contract Appeals (ASBCA) ruled partially in favor of Derian, Inc.’s application for attorney fees and expenses under EAJA.
The Board acknowledged that Derian was a prevailing party on certain claims, notably regarding modifications for split pump plates and deductive credits for terminated work. However, the crux of the decision centered on the government’s justification for its positions. The EAJA stipulates that even if a party is deemed a prevailing party, attorney fees may be denied if the government’s position is substantially justified. In this case, the Board determined that the government had reasonable bases in law and fact for its positions regarding each contested claim.
Understanding the criteria for prevailing parties and the implications of substantial justification is crucial in submitting claims under the EAJA. In essence, while Derian achieved some victories in its claims, the overarching lesson from this case is that success in federal contracting disputes often hinges on the government’s legal position’s reasonableness, not just the outcomes of individual claims. The government has often acted unreasonably and cannot justify its position. Each case must be decided on its individual facts.