A Northrop Grumman unit has removed to Virginia federal court a dispute over whether DynCorp overcharged the U.S. Department of Defense on a counter-narcotics subcontract, saying a pending request for U.S. Army interpretation of the deal requires federal oversight of the case.
Because the dispute — involving competing claims that DynCorp International LLC improperly withheld information on its labor practices and Northrop Grumman Technical Services Inc. improperly withheld payment — requires an interpretation by the Army under the federal Contracts Disputes Act, the proper forum is now in federal court, not Fairfax County Circuit Court, Northrop said in its notice of removal filed on May 12.
“Northrop Grumman submitted the Army claim to obtain a definitive answer to the question [of] whether DynCorp properly assigned its employees to labor categories under [the relevant Army task orders],” the company said.
The case stems from Northrop’s 2007 contract with the Pentagon’s Counter Narco-Terrorism Technology Program Office, or CNTPO, to conduct counter-narcotics programs in Afghanistan. DynCorp was a subcontractor under that deal, providing services such as training pilots to fly drug interdiction missions, according to Northrop.
DynCorp was supposed to provide suitably qualified employees, assign them to appropriate labor categories and bill for reasonable hours, but a DOD Office of Inspector General report in 2014 raised “serious concerns” over more than $100 million in DynCorp’s claimed labor charges, touching off further investigations from the U.S. Department of Justice and the Army, as well as a whistleblower False Claims Act suit unsealed in 2014 — later voluntarily dismissed — Northrop said.
Acting in light of those investigations, Northrop reasonably asked DynCorp to provide information on its labor assignment and billing practices, which was well within a contractual clause to maintain adequate records and provide related information upon request, it argued.
But DynCorp refused to do so, prompting Northrop to stop submitting DynCorp’s invoices to the Pentagon in November 2014, following up with a breach of contract suit in March 2015, seeking the requested information and for DynCorp to pay back any invoices that Northrop had paid out on but had been unable to collect on from the Pentagon, according to the notice.
Instead of complying, however, DynCorp in September instead filed a counterclaim, arguing that it was owed more than $40 million on unpaid invoices submitted to Northrop, that it had followed Northrop’s directions on labor “mapping” practices, and that it was Northrop who had breached the agreement.
As part of discovery in the suit, Northrop was able to access much of the information it had originally sought from DynCorp, it said, prompting its claim for contract interpretation by the Army to determine whether DynCorp properly assigned its employees to labor categories under the disputed subcontract.
Northrop asked the court to hold off on ruling on DynCorp’s counterclaims while the Army makes its decision, saying those claims will ultimately hinge on a determination of whether DynCorp complied with CNTPO requirements or not, which only the government can decide.
Mary Lawrence, a spokeswoman for DynCorp, said Monday that the company believed the removal action was “not supported in law or fact,” and would swiftly move to have the case remanded back to state court and proceed to a trial. It is looking forward to “finally being paid for the over $40 million that Northrop is withholding unlawfully,” she said, reiterating its argument that it had carried out its work at the direction of Northrop.
“The version of events Northrop offers in its notice of removal is incomplete and inaccurate, and undermined by the documents produced by Northrop in the litigation,” Lawrence said. “We believe the ongoing federal investigation is of Northrop.”
SOURCE LAW360 - www.law360.com
