Never say die: the continued existence of the government officials' good faith presumption in federal contracting law and the well-nigh irrefragable proof standard after Tecom

Air Force Law Review, Spring, 2009 by Bryan O. Ramos

  I. INTRODUCTION

 II. THE GOOD FAITH PRESUMPTION AND HEIGHTENED STANDARD
     OF PROOF PRIOR TO TECOM, INC. V. UNITED STATES

III. TECOM, INC. V. UNITED STATES
     A. Factual Overview
     B. Court of Federal Claims' Findings
     C. Judge Wolski's Analysis in Reaching the Tecom
        Decision
        1. The Supreme Court's Treatment of the Good
           Faith Presumption and Evidentiary Standard of
           Proof.
           a. Application of the Good Faith Presumption
           b. Evidentiary Proof Required by the Supreme
              Court
         2. The Court of Claims and Federal Circuit's Treatment
            Of the Good Faith Presumption and Corresponding
            Standard of Proof.
            a. Application of the Good Faith Presumption
            b. Evidentiary Proof Required by the Court of
               Claims and Federal Circuit
     D. Am-Pro Protective Agency, Inc. v. United States and Its
        Influence on Judge Wolski's Analysis
     E. Flaws in the Tecom Analysis
        1. Incorrect Adaptation of the Limits Am-Pro Places on
           the Good Faith Presumption
            a. First Indicator: Am-Pro's Adoption and Use of
               Evidentiary Standards
            b. Second Indicator: Am-Pro's Ruling Required
               Clear and Convincing Evidence to Demonstrate
               Bad Faith
        2. Improper Over-Analysis of the Supreme Court's
           Ruling in Crawford-El v. Britton

 IV. IMPACT OF THE TECOM DECISION ON ALL CONTRACT
     TRIBUNALS

  V. CONCLUSION

   The Government's long touted desideratum that "irrefragable proof"
   is needed to demonstrate the absence of good faith in the
   administration of government contracts has been given its last
   rites. (1)

I. INTRODUCTION

There is a long-standing presumption in federal contracting law that government officials act in "good faith." (2) This presumption in alleged government bad faith cases is so strong that a majority of federal courts and boards require a contractor to establish an elevated showing of "well-nigh irrefragable" proof, or as it is more modernly termed, "clear and convincing" evidence, to show the contrary. (3) This raised evidentiary standard that government contractors must meet is more demanding than the "preponderance of the evidence" standard applied to commercial contractors in breach cases. (4)

The long history of unanimity among the federal courts and boards to apply this enduring good faith presumption and its applicable evidentiary standard has become somewhat fractured by Judge Victor Wolski's written opinion in the 2005 United States Court of Federal Claims (COFC) decision Tecom, Inc. v. United States. (5) In the Tecom decision, Judge Wolski concludes that the good faith presumption given to government officials is not applicable in ordinary breach cases. (6) Therefore, according to Judge Wolski, only a preponderance of evidence, rather than the higher clear and convincing standard of proof, is necessary to prove government breach. (7) This easing of the evidentiary standard would make it far less difficult for contractors to prevail on allegations of bad faith and to obtain a judgment for breach of contract damages.

Lawyers in the private-contracting sector, who for the past several years called for a uniform evidentiary standard that would apply equally to both the government and contractors, have embraced Tecom as the new standard to which all government contract cases involving bad faith should be judged. (8) In addition to the private sector, a handful of courts have also concluded that Tecom is the new standard. (9) In 2005, the COFC in H & S Manufacturing, Inc. v. United States, went so far as to state, "[T]he Government's long touted desideratum that irrefragable proof is needed to demonstrate the absence of good faith in the administration of government contracts has been given its last rites." (10)

This article proposes the last rites of the well-nigh irrefragable proof standard have been read too soon. To date, the limited exercise of the presumption of good faith and heightened standard of proof enunciated in Tecom has had little lasting impact on federal courts and boards. (11)

This article will address three main issues. First, it will describe the well-established presumption that government officials act in good faith, as well as the corresponding well-nigh irrefragable proof requirement, as they have each stood prior to the introduction of Tecom. Second, it will examine the approach and analysis Judge Wolski used to develop his competing theory in Tecom and explain why this theory is incorrect. Third, it will analyze the limited impact of the Tecom ruling demonstrating that contract tribunals have either disregarded Tecom or followed it only in cases in which its application had no bearing on the final outcome.

II. THE GOOD FAITH PRESUMPTION AND HEIGHTENED STANDARD OF PROOF PRIOR TO TECOM, INC. V. UNITED STATES

Prior to the June 2005 ruling in Tecom, federal courts and boards consistently recognized a presumption in government contracts that government officials exercise their duties in good faith and to prove otherwise requires well-nigh irrefragable proof. (12) The existence of the good faith presumption can be traced back to the early 1800s. (13) It first appeared, without attribution, in an 1816 Supreme Court case, Ross v. Reed. (14) Ross involved a dispute over a parcel of land in which both the plaintiff and defendant claimed ownership. (15) The Court ruled in favor of the defendant, who had been given a survey and grant to the land in question by officials with the state recorder's office. (16) Justice Todd, writing for the Court stated "[i]t is a general principle to presume that public officers act correctly until the contrary be shown." (17) The Court therefore presumed that the government officials would not have conducted the land survey or issued the land grant unless the defendant had produced evidence at the time, sufficient to convince them in their official capacities, that he was the rightful owner. (18)