On March 21, 2012, the U.S. Court of Federal Claims granted a motion for partial summary judgment, ruling for the CPA firm of Horn & Associates in its $279 Million breach of contract suit against NASA. Details are sketchy, but Law360 (subscription required) reported the case as follows—

NASA contracted Horn & Associates Inc. in 2004 to look at its books and determine whether the agency had overpaid for various services over a 10-year period. After Horn began work, NASA began to dispute what exactly it had contracted the firm to do.

From what we can gather, NASA issued an RFP for firms to assist in auditing contracts for improper payments. The RFP specified that the auditors would review only firm fixed-price contract types. When Horn & Associates submitted its proposal it “recommended” that NASA review all contract types. Law360 reported—

When NASA awarded the contract to Horn & Associates, it included a clause stating ‘[t]he contractor shall perform a primary audit recovery on all contract payments for the period beginning Oct. 1, 1997 through Sept. 30, 2003, identifying overpayments and/or underpayments.’

Accordingly, the dispute between the contracting parties centered on whether NASA had, or had not, hired Horn & Associates to audit all contract types, or just firm fixed-price contract types. NASA itself was confused about what it had hired the auditors to audit. The Law360 story stated—

Evidence of NASA’s confusion about what was required under the contract was evident by emails that went back and forth with different language about it, according to the judge’s opinion. NASA eventually provided Horn & Associates with some information about contracts other than fixed ones.

Judge Horn of the COFC (no relation to the plaintiff) found that the language in the contract superseded the language in the RFP. The Judge found, further, that if there was any ambiguity, the doctrine of contra proferentum would dictate that the ambiguity be construed against the drafter (i.e., NASA).

Law360 quoted Judge Horn’s decision as follows—

‘In this case, the contracting officer, with authority to do so, issued and signed the order, with its attached statement of work to audit all contracts,’ the judge said. ‘The contracting officer personally put the order number on the upper right hand corner of each page of the order, including the statement of work identifying the scope of work as encompassing all contracts, signifying the contracting officer’s review and approval of the language of the order and the statement of work attached thereto.’

Being interested in this David vs. Goliath victory, we contacted Mr. Horn, who told us—

“We think we have a good case and we won the first of a series of battles that we are expecting. We just hope we win the war! You never know in these situations until the check clears the bank.”

It is important to remember, in the words of Mr. Horn, that this represents one battle in a long campaign. But should Horn & Associates prove victorious at the end of the war, they will cash a whopping $279 Million check. We wish them the best of luck.