The Montgomery Point Lock & Dam project involved the construction of a new lock and dam on the White River in Arkansas for the U.S. Army Corps of Engineers for a contract price, as revised, of approximately $200 million. The claims included deficient concrete mix designs supplied by the Corps, a government-caused labor shortage, and four other claims for defective specifications, constructive changes and delays, as well as associated remission of liquidated damages withheld by the Corps. The Government asserted counterclaims for $3.5 million in liquidated damages and for a $9.2 million “credit” for an alleged change it made to the order of work specified in the contract that purportedly allowed the contractor to finish the Project 1-1/2 years earlier than it would have without the alleged change.
After the trial, and while the case was under advisement by the court, the government filed a motion to dismiss, alleging the court lacked subject matter jurisdiction over the pre-takeover agreement claims of the sureties that had been assigned to the sureties by the bankrupt contractor. The government argued that the sureties were not a “contractor” for the purposes of the Contract Disputes Act as it related to the pre-takeover claims.
The Court, in its decision, denied the government’s jurisdictional challenge, denied any recovery on the government’s counterclaims, and awarded damages inclusive of interest in the amount of over $11.3 million.