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Jamaal Valentine

Consequences of Bad Faith Conduct

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I recently read an article discussing a case involving the Department of Labor (DoL) and, a contractor, Gate Guard Services.


I don't claim to have an understanding of the nuances of the body of law that deals with bad faith, but what I did find particularly interesting is the DoL conduct the court found to be improper, which includes the following (emphasis added):

Assigning an inexperienced and untrained investigator
•Confronting a company’s low-level employee instead of communicating with company counsel
•Expressing an intent to destroy a company
Conducting a cursory investigation
Destroying witness interview notes
Interviewing an insufficient number of employees
Misstating what a witness said in an interview
Discounting or ignoring facts that are favorable to the company
Failing to ask relevant questions during an investigation
•Inflating the amount of damages due
Disregarding precedent in similar cases
Communicating with a company’s employees in a biased manner
Violating internal DOL policy
Continuing prosecution when the factual basis for it has eroded

While contracting officials are not investigators or prosecutors as depicted in the case we do fulfill an investigative role and maintain a form of prosecutorial discretion (power to influence or make decisions) and would be well served to learn what we can from the case.

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The case that you cited is not a Government contracts case. Different problem; different law. In Government contracting, the issue is not prosecutorial discretion, but the implied duty of good faith and fair dealing. Bad faith is a breach of contract. The kind of behavior that constitutes bad faith in contracting is not the same as the list you posted.

For an introductory discussion of the implied duty of good faith and fair dealing and of bad faith in contracting, see Cibinic, Nash, and Nagle, Administration of Government Contracts, 4th ed., Ch. 3, Part IV, "Implied Duty of Good Faith and Fair Dealing," pp 296 - 314.

For the leading government contracts case, see Metcalf Construction Co., Inc., 742 F.3d 984 (Fed. Cir. 2014). The decision describes the kind of conduct that constitutes bad faith in contracting.

The Metcalf decision and the topic of bad faith have been much discussed. See e.g., Dietz, "Metcalfe and the Implied Duty of Good Faith and Fair Dealing," Procurement Lawyer (Winter 2015); Claybrook, "A Twice-Told Tale: The Strangely Repeated Story of 'Bad Faith' in Government Contracts," Federal Circuit Bar Journal (2014); and Nibley and Conant, "The Federal Circuit Breathes New Life Into The Government's Contractual Obligation To Observe The Duty Of Good Faith And Fair Dealing," Government Contractor (Mar. 19, 2014). Professors Cibinic and Nash have addressed the topic several times over the years in The Nash & Cibinic Report.

For a discussion of the reversed Court of Claims decision, see "The story of Metcalf Construction and why it’s bad for federal construction contracting," http://www.contractorsperspective.com/construction-contracting/the-story-of-metcalf-construction-and-why-its-bad-for-federal-construction-contracting/. See also http://www.americanbar.org/publications/under_construction/2015/january_2015/differing_site_condition_claim.html.

Black's Law Dictionary 10th ed. defines prosecutorial discretion as follows:

A prosecutor's power to choose from the options available in a criminal case, such as filing charges, prosecuting, not prosecuting, plea-bargaining, and recommending a sentence to the court.

I am not aware of prosecutorial discretion having been defined as "power to influence or make decisions." Nor am I aware of any discussion anywhere about contracting officers have any kind of "prosecutorial discretion."

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Thank you for the references, I'll be sure to invest some time reading them. I was hesitant in posting originally, but thought and still think that there is something to be learned here. The government's behavior in the case was not unlike some behavior in contracting offices. Conflating contracting officer's authority with "a form of prosecutorial discretion" was likely a bad choice since my intent was to simply highlight the discretion and authority contracting officers are given in making or applying final decisions, claims, liquidated damages, penalties, etc (or as you connected for me - implied duty of good faith and fair dealing).

I definitely agree it is different law, but I also believe we should all strive for fairness and accountability, in all things, and in that regard the improper conduct listed is something I feel we should consider. In fact, as I originally posted I was thinking of the themes I previously read in Administration of Government Contracts concerning the Implied Duty of Good Faith and Fair Dealing and interference, abuse of discretion, etc. Those are thoughts and considerations I wanted to generate for either discussion or reflection.

Hindsight being what it is, I should have thought the post through better, but then again I wouldn't have learned all I just did.

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After reading the case and associated commentary, Vern's point is made clearer. The Federal Circuit's Metcalf decision would have been more appropriate for establishing a legal standard, of duty of good faith and fair dealing, under contract law.

Had I been familiar with the case it would have served as a better reference point for that purpose, outside of seeking discussion and reflection. With that being, said could any of the behavior listed above be deemed a bad faith breach under contract law?

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