Fed. Circ. Limits Gov't Contractors' Litigation Cost Claims

The U.S. Court of Appeals for the Federal Circuit's landmark decision in Geren v. Tecom Inc. in 2009 flipped decades of case law on its head and established the general rule governing the ability of contractors to recover costs of settling certain third-party litigation under government contracts.¹ In Bechtel National Inc. v. United States, the contractor sought to carve an exception from Tecom and potentially reverse the Tecom rule. Instead, the Federal Circuit doubled down on its prior decision.

In the July 16 Bechtel decision, the Federal Circuit affirmed the U.S. Court of Federal Claims' strict application of Tecom and rejected the argument that a Department of Energy contract clause providing for contractor recovery of litigation costs in some circumstances served as an exception to Tecom, notwithstanding regulatory history and prior course of dealing indicating that the parties intended such costs to be recoverable.