Aclr, LLC v. United States

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
ACLR, LLC,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2023-1190
______________________
Appeal from the United States Court of Federal Claims
in No. 1:15-cv-00767-PEC, Judge Patricia E. Campbell-
Smith.
______________________
Decided: September 27, 2024
______________________
J OHN BONELLO, Reston Law Group LLP, Reston, VA,
argued for plaintiff-appellant. Also represented by
T HOMAS D AVID.
J OSEPH ALAN P IXLEY , Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by BRIAN M. B OYNTON, AUGUSTUS J EFFREY G OLDEN,
MARTIN F. H OCKEY , J R., P ATRICIA M. MCC ARTHY .
______________________
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ACLR, LLC v. US 2
Before P ROST , HUGHES , and STARK, Circuit Judges.
STARK, Circuit Judge.
ACLR, LLC (“ACLR”) appeals from the United States
Court of Federal Claims’ grant of summary judgment to the
government on ACLR’s claims for breach of contract,
breach of the implied covenant of good faith and fair deal-
ing, and recovery of certain termination-for-convenience
damages. We affirm.
I
A
Medicare Part D is a voluntary outpatient prescription
drug reimbursement program that went into effect on Jan-
uary 1, 2006. Under the program, prescription plan spon-
sors, such as private insurance providers, pay for
prescription drugs for their beneficiaries and then receive
reimbursements from the government. Specifically, the
Centers for Medicare & Medicaid Services (“CMS”) makes
monthly prospective payments to insurance providers and
then, at the end of each year, reconciles those payments
with the insurers’ actual costs, to ensure that the govern-
ment has not overpaid (e.g., by making duplicate pay-
ments).
ACLR is a management consulting company that offers
recovery auditing services. On June 17, 2010, ACLR en-
tered into a federal supply schedule contract with the Gen-
eral Services Administration (“GSA”), which made ACLR
eligible to offer recovery auditing services to government
agencies. Relevant to this appeal, the GSA contract in-
cluded Federal Acquisition Regulation (“FAR”) 52.212-4(l),
which expressly permits an ordering agency, i.e., an agency
contracting ACLR’s services, such as CMS, to “terminate
[a] contract or any part [t]hereof, for its sole convenience.”
J.A. 4624; see also 48 C.F.R. § 52.212-4(l). This “termina-
tion for convenience” provision further sets out the
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ACLR, LLC v. US 3
damages a terminated contractor, such as ACLR, could at-
tempt to recover. It provides that if an ordering agency
elects to terminate the contract for convenience, the con-
tractor is entitled to “a percentage of the contract price re-
flecting the percentage of the work performed prior to the
notice of termination, plus reasonable charges the Contrac-
tor can demonstrate[,] to the satisfaction of the ordering
[agency] using its standard record keeping system, have re-
sulted from the termination.” J.A. 4624; see also 48 C.F.R.
§ 52.212-4(l).
On December 2, 2010, CMS issued a Request for Quote
(“RFQ”), inviting proposals for an award of a contingency
fee task order for recovery audit contractor (“RAC”) ser-
vices in support of the Medicare Part D program. The RFQ
specifically advised potential bidders that, consistent with
the FAR provision in the GSA contract, the “Government
may . . . terminate for convenience if it deems such termi-
nation to be in the best interest of the Government.” J.A.
1941. ACLR submitted a proposal. On January 13, 2011,
CMS awarded a task order to ACLR, by which ACLR
agreed to identify and seek to recover overpayments CMS
had made to private insurers under the Medicare Part D
program. The task order incorporated the GSA contract by
reference, thereby also incorporating the FAR 52.212-4(l)
termination for convenience provision. As the parties do,
we henceforth refer to the contract between ACLR and
CMS, which includes the provisions of the task order and
GSA contract, as the “Part D RAC Contract.”
Initially, the task order required that ACLR “perform
the work required in accordance with the attached perfor-
mance work statement (PWS).” J.A. 1174. The PWS did
not explicitly require CMS approval for the steps ACLR
would take to conduct its audits. Moreover, ACLR had pre-
pared and submitted the PWS along with its proposal, and
CMS provided no input regarding the PWS at the time it
awarded the task order to ACLR. Therefore, the 2007 au-
dit, which was governed by the terms of the Part D RAC
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ACLR, LLC v. US 4
Contract – including the task order and the PWS – could
potentially be conducted in a manner never approved by
CMS.
Subsequent events led the parties to spend approxi-
mately two years negotiating a Statement of Work (“SOW”)
that would replace the PWS. On December 31, 2013, ACLR
and CMS agreed to eliminate the PWS and substitute in its
place the SOW, which explicitly required CMS approval for
audits to be conducted by ACLR. The 2010 audit was gov-
erned by the terms of the Part D RAC Contract, including
the task order and the SOW.
With respect to ACLR’s compensation, the task order
was explicit that payments to ACLR would be dependent
on what ACLR collected on behalf of CMS, providing:
All payments shall be paid only on a contingency
basis. The recovery audit contractor will receive
7.5% of all amounts collected. The contingency fees
shall be paid once the recovery audit contractor col-
lects the Medicare overpayments. . . . The recovery
audit contractor shall not receive any payments for
the identification of the underpayments or overpay-
ments not recovered/collected.
J.A. 1175 (emphasis added).
ACLR performed work for CMS between 2011 and
2015, eventually conducting at least 20 audits. For seven
of those audits, ACLR obtained all necessary approvals
from CMS, collected monies from private insurers, and was
then paid contingency fees for its work on these audits.
The remaining thirteen ACLR audits were not approved by
CMS. Two of these, relating to payments to insurers for
the years 2007 and 2010, are the subject of this appeal.
B
CMS began transmitting the 2007 audit records to
ACLR on November 17, 2011, and shortly thereafter ACLR
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ACLR, LLC v. US 5
began reviewing those records. On November 30, 2011,
during a conference call, ACLR informed CMS that it had
already identified potential duplicate payments in the 2007
records and was ready to commence recovery of the im-
proper payments. On that same call, the CMS Contracting
Officer’s Technical Representative, Marnie Dorsey, told
ACLR that the then-governing PWS was only a “proposal”
and “hadn’t been approved per se.” J.A. 1301-05. The CMS
Contracting Officer Desiree Wheeler then told ACLR “[t]o
not issue demand letters” to private insurers, effectively
terminating the 2007 audit. J.A. 1288; see also J.A. 2425
(ACLR report summarizing review of 2007 audit).
No duplicate payments were ever recovered as a result
of the 2007 audit. Hence, CMS did not pay ACLR any con-
tingency fees for this work. ACLR contends that, before
CMS’s breach, it had identified $313,808,241 in potential
duplicate payments and is entitled to be paid 7.5% of this
amount as contingency fees, which comes to $23,535,616.
In January 2014, CMS authorized ACLR to undertake
an audit of 2010 payments, consistent with the then-gov-
erning SOW. On June 9, 2014, ACLR provided CMS with
its accounting of potential duplicate payments, and in De-
cember 2014 it submitted its final 2010 review package.
CMS, working with a data validation contractor, found in-
accuracies in ACLR’s submission and questioned its find-
ings. After much back and forth, CMS terminated the 2010
audit by letter dated April 24, 2015, due to “concerns with
the validity of the overall audit results.” J.A. 793.
As with the 2007 audit, ACLR never recovered any pay-
ments in connection with the 2010 audit and, therefore,
CMS did not pay ACLR any contingency fees. ACLR con-
tends it had identified $15,909,552 in duplicate payments
during the 2010 audit and is entitled to payment of 7.5%,
or $2,209,146, in contingency fees.
C
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ACLR, LLC v. US 6
On July 22, 2015, ACLR filed a complaint in the Court
of Federal Claims under the Contract Disputes Act
(“CDA”), 41 U.S.C. § 7101 et seq., accusing CMS of breach
of contract and breach of the implied covenant of good faith
and fair dealing, by “failing to permit ACLR to recover im-
proper payments identified” during the 2007 and 2010 au-
dits. J.A 38. On March 23, 2020, following discovery,
extensive briefing, and oral argument, the Court of Federal
Claims issued a decision (i) denying ACLR’s motion for
summary judgment for recovery of contingency fees for its
efforts in connection with the 2007 and 2010 audits, and
(ii) granting the government’s motion for summary judg-
ment that CMS had committed no breach. See ACLR, LLC
v. United States, 147 Fed. Cl. 548 (2020) (“ACLR I”). The
trial court specifically found no breach of contract or duty
of good faith and fair dealing because it concluded, instead,
that CMS had constructively terminated the pertinent por-
tion of the Part D RAC Contract for convenience, and was
permitted to do so. Although, prior to the litigation, neither
party had ever described what had occurred as a termina-
tion for convenience, the Court of Federal Claims deter-
mined that this was the only reasonable characterization
of what had actually happened.
Because the parties had not adequately addressed
what recovery ACLR would be entitled to as a result of a
termination for convenience, the trial court remanded the
case to CMS. On remand, CMS’ contracting officer denied
ACLR’s damages claim for the 2007 audit in its entirety,
because ACLR had been “unable to identify sufficient doc-
umentation to support compensat[ion].” J.A. 5132. For the
2010 audit, CMS awarded ACLR $157,318 in termination
for convenience damages plus interest.
The parties then returned to the Court of Federal
Claims. ACLR filed an amended complaint, seeking termi-
nation for convenience damages “of at least $5,923,754,”
plus interest and attorney’s fees. J.A. 5145. On November
19, 2021, the Court of Federal Claims denied ACLR’s
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ACLR, LLC v. US 7
motion for summary judgment. ACLR, LLC v. United
States, 157 Fed. Cl. 324 (2021) (“ACLR II”).
The government thereafter sought and obtained leave
to file a motion for summary judgment based on ACLR’s
purported failure to keep records sufficient to establish
costs it was seeking to recover as damages. The govern-
ment argued that ACLR had failed to “demonstrate a claim
for reasonable charges, with relevant supporting docu-
ments allocated to the two audits at issue using its stand-
ard record keeping system, as required by the termination
for convenience clause in the contract, FAR 52.212-4(l).”
J.A. 7248. The Court of Federal Claims granted the gov-
ernment’s motion. See ACLR, LLC v. United States, 162
Fed. Cl. 610 (2022) (“ACLR III”).
ACLR timely appealed. The Court of Federal Claims
had jurisdiction under 28 U.S.C. § 1491(a)(1) and 41 U.S.C.
§ 7104(b)(1). We have jurisdiction under 28 U.S.C.
§ 1295(a)(3).
II
The Court of Federal Claims’ grant or denial of sum-
mary judgment is “in all respects reviewed de novo.” Bar-
low v. United States, 86 F.4th 1347, 1353 (Fed. Cir. 2023).
“Summary judgment is appropriate when the moving party
demonstrates that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Stimson Lumber Co. v. United States, 82
F.4th 1346, 1350 (Fed. Cir. 2023) (internal quotation
marks omitted). We view “all factual inferences . . . in the
light most favorable to the non-moving party.” Chi. Coat-
ing Co., LLC v. United States, 892 F.3d 1164, 1169 (Fed.
Cir. 2018).
III
On appeal, ACLR presses four issues. It argues that
the Court of Federal Claims erred by: (1) denying it sum-
mary judgment and instead granting summary judgment
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ACLR, LLC v. US 8
to the government (in ACLR I) on ACLR’s claims of breach
of contract and breach of the implied covenant of good faith
and fair dealing; (2) holding (in ACLR II) ACLR is not en-
titled to compensation for a percentage of the contract
price; (3) denying (in ACLR II) ACLR’s motion for summary
judgment to recover settlement claim costs; and (4) grant-
ing summary judgment (in ACLR III) to the government on
the issue of ACLR’s standard record-keeping system. We
address each issue in turn.
A
We first agree with the Court of Federal Claims that
CMS did not breach the Part D RAC Contract – which in-
cludes the task order, GSA contract, and either the PWS
(for the 2007 audit) or the SOW (for the 2010 audit) – and
also did not breach the implied covenant of good faith and
fair dealing. It is undisputed that CMS and ACLR had a
valid contractual relationship. It is further undisputed
that CMS terminated the portion of the contract that re-
lated to ACLR’s 2007 and 2010 audits. The parties disa-
gree, however, over whether CMS’ termination was a
breach of contract and/or of the implied covenant. We, like
the Court of Federal Claims, find that no breach occurred.
As an initial matter, ACLR is wrong when it asserts
that the government waived its constructive termination
for convenience defense. It is true that CMS did not invoke
FAR 52.212-4(l) or make any reference to termination for
convenience when it directed ACLR not to proceed with the
2007 and 2010 audits. But that simply makes CMS’ termi-
nation for convenience constructive rather than express.
See generally JKB Sols. & Servs., LLC v. United States, 18
F.4th 704, 708 (Fed. Cir. 2021) (“Where a contracting of-
ficer does not actually exercise a contract’s termination for
convenience clause but stops or curtails a contractor’s per-
formance for ultimately questionable or invalid reasons,
the contract’s termination for convenience clause may
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ACLR, LLC v. US 9
constructively justify the government’s actions, avoid
breach, and limit liability.”).
Nor do we agree with ACLR that the government was
required to plead constructive termination for convenience
as an affirmative defense no later than in its answer. The
district court cases on which ACLR relies, which are of
course not binding,1 address only express termination for
convenience, and do not persuade us to find the govern-
ment waived constructive termination for convenience by
not including it in its initial pleading. This is especially so
here, where the government raised constructive termina-
tion for convenience in its summary judgment briefing, af-
ter which the Court of Federal Claims ordered
supplemental briefing, providing ACLR ample opportunity
to be heard. See generally Novosteel SA v. United States,
284 F.3d 1261, 1274 (Fed. Cir. 2002) (noting concern un-
derlying waiver is party’s inability to respond).
Turning to the merits, we agree with the Court of Fed-
eral Claims that the government is entitled to summary
judgment, as CMS committed no breach, either of contract
or of its duty of good faith and fair dealing. There is no
error in the trial court’s conclusion that CMS’ terminations
relating to the 2007 and 2010 audits constituted retroac-
tive, constructive terminations for convenience, consistent
with the FAR 52.212-4(l) clause incorporated into the per-
tinent task order and, thereby, into the Part D RAC Con-
tract. That provision expressly authorized CMS, as the
ordering agency, “to terminate [the task order], or any part
hereof, for its sole convenience,” and further provided that
“[i]n the event of such termination, the Contractor,” ACLR,
1 See Open. Br. at 30 (citing Van Engers v. Perini
Corp., No. 92-1982, 1993 WL 235911, at *10 (E.D. Pa. June
28, 1993); Millgard Corp. v. E.E. Cruz/Nab/Fronier-Kem-
per, No. 99 Civ.2952 LBS, 2003 WL 22801519, at *5
(S.D.N.Y. Nov. 24, 2003)).
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ACLR, LLC v. US 10
“shall immediately stop all work hereunder.” J.A. 4624.
We have repeatedly held that termination pursuant to such
a provision “will not be considered a breach but rather a
convenience termination.” Maxima Corp. v. United States,
847 F.2d 1549, 1553 (Fed. Cir. 1988). Even after drawing
all reasonable inferences in favor of ACLR as the non-mov-
ing party, the record only supports a finding that CMS con-
structively terminated the 2007 and 2010 audits for
convenience.
Moreover, while the government “may not resort to the
doctrine of constructive termination for convenience if it
evinced bad faith or a clear abuse of discretion in its ac-
tions,” JKB, 18 F.4th at 709 (internal quotation marks
omitted), ACLR has failed to adduce evidence from which
a reasonable factfinder could find that ACLR met its “very
weighty” burden of showing that CMS acted in such a man-
ner, Krygoski Const. Co. v. United States, 94 F.3d 1537,
1541 (Fed. Cir. 1996); see also Kalvar Corp. v. United
States, 543 F.2d 1298, 1301 (Ct. Cl. 1976) (“Any analysis of
a question of Governmental bad faith must begin with the
presumption that public officials act conscientiously in the
discharge of their duties.”) (internal quotation marks omit-
ted); see also S. Corp. v. United States, 690 F.2d 1368, 1370
(Fed. Cir. 1982) (“[T]he holdings of the Court of Claims . . .
before the close of business on September 30, 1982 . . . [are]
herewith adopted by this court sitting in banc.”). The spe-
cific type of bad faith ACLR accuses CMS of committing is
“enter[ing] into the Part D RAC Contract with no intent to
honor the contract,” Open. Br. at 21, but it points to no ev-
idence that reasonably supports this assertion. Instead, it
does little more than identify evidence showing that after
entering into the contract CMS determined that the PWS
was problematic and needed to be replaced.2 This evidence
2 In its briefing and at oral argument, ACLR cited to
various pieces of evidence, based on which it contends a
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ACLR, LLC v. US 11
provides an explanation for why the government termi-
nated the contract for convenience, but does not raise a
genuine dispute of fact as to whether CMS acted in bad
faith when entering into the Part D RAC Contract.
To the extent that our analysis to this point focuses pri-
marily on ACLR’s claim for breach of contract, the outcome
is no different for its claim for breach of the implied cove-
nant of good faith and fair dealing. “Every contract, includ-
ing one with the federal government, imposes upon each
reasonable factfinder could find that the government en-
tered into the RAC Part D Contract having no intent to
perform. See, e.g., Open. Br. at 22-23, 34-36 (citing evi-
dence); Reply Br. at 17 (same); Oral Arg. at 26:40-29:10,
available at https://oralarguments.cafc.uscourts.gov/de-
fault.aspx?fl=23-1190_05082024.mp3 (same). We have re-
viewed the totality of this evidence and conclude, as did the
trial court, that it cannot reasonably be viewed as sufficient
to allow ACLR to satisfy its burden. ACLR’s evidence al-
most entirely falls into the following categories: (i) evidence
post-dating when the government entered into the con-
tract, see, e.g., J.A. 1290 (July 2011 email); J.A. 1352 (De-
cember 2013 email); (ii) evidence showing government
concerns with the PWS and the need to replace it with the
SOW, see, e.g., J.A. 1251 (deposition testimony of CMS per-
sonnel describing development of SOW due to government
disagreements with PWS); J.A. 1034 (deposition testimony
of CMS personnel agreeing that ACLR was unable to per-
form auditing activities until PWS was replaced); (iii) evi-
dence showing CMS obtained assistance from another
contractor, Booz Allen Hamilton, Inc., around the same
time it entered into the contract with ACLR, see J.A. 1028,
1249-50; and (iv) evidence chronicling CMS’ directions to
ACLR to “hold off on” its collection efforts, J.A. 1610-14,
and to alter its methodology, J.A. 1150-57, 1160-70, 1617-
18.
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ACLR, LLC v. US 12
party an implied duty of good faith and fair dealing in its
performance and enforcement.” Dobyns v. United States,
915 F.3d 733, 739 (Fed. Cir. 2019). This duty “imposes ob-
ligations on both contracting parties . . . not to interfere
with the other party’s performance and not to act so as to
destroy the reasonable expectations of the other party re-
garding the fruits of the contract.” Centex Corp. v. United
States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). We agree with
the Court of Federal Claims that the record, viewed in the
light most favorable to ACLR, does “not rise to the level of
an evasion of the spirit of the bargain.” J.A. 5119 (internal
quotation marks omitted).
In particular, the implied covenant does not give rise to
any obligation on the part of the government to pay ACLR
contingency fee payments when ACLR failed to recover any
overpayments. “The implied duty of good faith and fair
dealing cannot expand a party’s contractual duties beyond
those in the express contract.” Precision Pine & Timber,
Inc. v. United States, 596 F.3d 817, 831 (Fed. Cir. 2010).
The contract between ACLR and the government only obli-
gated CMS to make contingency fee payments in relation
to Medicare Part D overpayments ACLR actually recov-
ered. For the 2007 and 2010 audits, ACLR made no such
recoveries. The implied covenant cannot be used to expand
CMS’ payment duties beyond those to which it agreed.
Hence, ACLR’s claim lacks merit.
For these reasons, the Court of Federal Claims
properly denied ACLR’s summary judgment motion, and
granted the government’s motion, with respect to ACLR’s
claims for breach of contract and breach of the implied cov-
enant of good faith and fair dealing.
B
ACLR additionally challenges the Court of Federal
Claims’ holding that the “percentage of the contract price”
portion of the FAR-mandated damages owed by the govern-
ment for its termination by convenience is zero. That is,
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ACLR, LLC v. US 13
according to ACLR, even though it never recovered a single
dollar for CMS in connection with the 2007 and 2010 au-
dits, the government should still, it insists, pay it a 7.5%
contingency fee based on the tens of millions of dollars of
potential overpayments ACLR identified. Like the Court
of Federal Claims, we reject this contention.
“[T]he effect of a constructive termination for conven-
ience is to moot all breach claims and to limit recovery to
costs which would have been allowed had the contracting
officer actually invoked the clause.” Kalvar, 543 F.2d at
1304. Specifically, here, ACLR’s recovery of damages is
limited to what is provided for in FAR 52.212-4(l), which
was incorporated into the Part D RAC Contract.3 It pro-
vides for potential recovery by a contractor of “a percentage
of the contract price reflecting the percentage of the work
performed prior to the notice of termination, plus reasona-
ble charges the Contractor can demonstrate to the satisfac-
tion of [CMS] using its standard record keeping system,
have resulted from the termination.” J.A. 4624.
We agree with the Court of Federal Claims that this
provision means ACLR, as the party injured by a termina-
tion for convenience, may recover “a percentage of the con-
tract price reflecting the percentage of work” ACLR
performed prior to CMS’ termination. J.A. 7204. Contrary
to ACLR’s position, however, we further agree with the
Court of Federal Claims that ACLR “cannot recover under
th[is] first category of compensation” because payment
3 ACLR wrongly predicated its summary judgment
motion for termination for convenience damages on FAR
52.249-2(g), which applies to fixed-price, non-commercial
item contracts. See 48 C.F.R. § 52.249-2(g). As the trial
court rightly held, damages here are instead governed by
FAR 52.212-4(l), which is expressly cited in the Part D RAC
Contract.
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ACLR, LLC v. US 14
under the Part D RAC Contract was contingent on recover-
ing improper payments, and ACLR’s “work had not yet
reached the stage of recovering improper payments.” J.A.
7205. The trial court correctly concluded that while ACLR
“had performed some portion of the work under the con-
tract,” its contract price “was to be paid based on a contin-
gency fee – a portion of [ACLR’s] recovery of any improper
payments.” Id. Because ACLR’s work “was terminated at
the data analysis stage, . . . the amount to which [ACLR]
was technically entitled . . . remained at zero.” Id.
The task order governing the audits expressly states
“[t]he recovery audit contractor will receive 7.5% of all
amounts collected. The contingency fees shall be paid once
the recovery audit contractor collects the Medicare over-
payments.” J.A. 1175. It further, and unambiguously, pro-
vides that “[t]he recovery audit contractor shall not receive
any payments for the identification of the underpayments
or overpayments not recovered/collected.” Id. Thus, the
Court of Federal Claims did not err in finding that the con-
tract price “remained at zero” until “the recovery audit con-
tractor collects the Medicare overpayments.” J.A. 7205.
Since 7.5% of zero is zero, the trial court correctly held that
ACLR could not prove entitlement to any compensation in
the form of a “percentage of the contract price.”
C
ACLR next attacks the Court of Federal Claims’ refusal
to allow it to recover as damages attorney’s fees and other
costs purportedly incurred in preparation of settling its
claim against the government. ACLR sought to recover
these “settlement” costs for the period prior to the March
23, 2020 effective date of the constructive termination for
convenience – i.e., the date the trial court issued its opinion
in ACLR I – and for the period thereafter. We agree with
the Court of Federal Claims’ denial of ACLR’s motion for
summary judgment on its claim for these costs.
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ACLR, LLC v. US 15
The Court of Federal Claims correctly understood that
FAR 52.212-4(l) requires the government, after terminat-
ing for convenience, to make “payment of reasonable
charges” incurred by the contractor that result from the
termination. J.A. 7204 (internal quotation marks omitted).
Such reasonable charges potentially include “settlement
expenses.” Id. But, as the trial court also rightly con-
cluded, recoverable settlement expenses cannot include le-
gal fees or other charges associated with ACLR’s pressing
of a claim against the United States, as such fees are “not
allowable costs, absent a waiver of sovereign immunity.”
J.A. 7214; see also Chiu v. United States, 948 F.2d 711, 714
(Fed. Cir. 1991) (“Absent . . . specific statutory waiver of
sovereign immunity, attorney fees may not be recovered in
suits against the United States.”); FAR 31.205-47(f)(1)
(stating “[c]osts . . . incurred in connection with . . . prose-
cution of claims or appeals against the Federal Govern-
ment” are “unallowable”). ACLR identifies no such waiver
of sovereign immunity. Because ACLR was pressing its
claim against the government up until the time the Court
of Federal Claims declared the retroactive constructive ter-
mination for convenience, in March 2020, all costs associ-
ated with ACLR’s claim until that point are associated with
pressing the claim against the United States and are not
recoverable. See Kalvar, 543 F.2d at 1304-06 (ruling simi-
larly in case where, as here, “the termination is construc-
tive, by imposition of the court, and hence plaintiff had no
opportunity to engage in settlement negotiations,” and
therefore could not recover “settlement costs” for the period
prior to the constructive termination).
While ACLR’s legal fees and other costs associated
with preparation, presentation, and pursuit of settlement
became potentially recoverable after the March 2020 con-
structive termination, the Court of Federal Claims
properly rejected these as well, because ACLR failed to seg-
regate its costs and show that what it was seeking for this
period were reasonable charges. J.A. 7214. We see no error
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ACLR, LLC v. US 16
in the trial court’s legal analysis on this point or its deter-
mination that the record was insufficient to support a rea-
sonable finding on ACLR’s behalf. ACLR’s speculation as
to what might have happened had it “been issued a timely
termination for convenience of the Part D RAC Contract in
November 2011,” and complaints about “the unfair burden
imposed on ACLR by the retroactive constructive termina-
tion for convenience,” Open. Br. at 43, 46, provide no basis
for us to differ with the Court of Federal Claims’ conclu-
sions.
D
Finally, ACLR challenges the Court of Federal Claims’
grant of summary judgment to the government on the issue
of ACLR’s record keeping system. FAR 52.212-4(l) limits
recovery of reasonable charges to those a contractor “can
demonstrate to the satisfaction of the ordering [agency] us-
ing its standard record keeping system, have resulted from
the termination.” J.A. 4624. Looking to dictionary defini-
tions, the Court of Federal Claims held that a “standard
record keeping system” requires “a regular, organized
method for tracking relevant costs,” J.A. 7; see also J.A. 5-
6 (looking to definitions of “standard” and “system” and de-
termining “standard system” is “a regularly used, carefully
thought-out method that involves a set of organizing and
orderly procedures”); Info. Tech. & Applications Corp.
v. United States, 316 F.3d 1312, 1320 (Fed. Cir. 2003)
(“[W]e may consult dictionaries [for statutory term’s] ordi-
nary, established meaning.”). The Court of Federal Claims
then determined that the record before it, which consisted
of a mass of documents as well as a declaration from
ACLR’s Chief Executive Officer, “merely describes a vast
collection of documents, some of which reflect post hoc es-
timates, rather than a systematic or organized method of
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ACLR, LLC v. US 17
tracking costs relevant to a particular project.” J.A. 7.4
This, in the trial court’s view, could not reasonably be con-
sidered a “standard record keeping system.”
Reviewing the evidence in the light most favorable to
ACLR, we agree with the Court of Federal Claims that no
reasonable factfinder could view ACLR’s record keeping
system as regularly used, carefully thought-out, or even or-
ganized and orderly. Instead, it “belies the plain meaning
of a standard system to conclude that virtually every docu-
ment in [ACLR’s] possession, along with estimates to sup-
ply records not kept contemporaneously, meets this
regulatory requirement.” Id. We agree with the Court of
Federal Claims that “[t]o find that plaintiff’s records are
sufficient to recover pursuant to FAR 52.212-4(l) would be
to read both ‘standard’ and ‘system’ out of the regulation.”
J.A. 7.
ACLR and amicus contend that the trial court’s inter-
pretation “ignores the reference to ‘its’ in the phrase ‘its
standard record keeping system,’ . . . [which] is meant to
allow the contractor to demonstrate costs by using ‘its
standard record keeping system,’ not some specific or
overly sophisticated time tracking system.” Open. Br. at
49. We agree to the limited extent that FAR 52.212-4(l)’s
reference to “its” does not impose any broad prescription as
to precisely how every government contractor must main-
tain its books and records. But this does not mean, con-
trary to ACLR and amicus, that ACLR could fail to
contemporaneously track and allocate its costs and then,
only for purposes of litigation, dump essentially every rec-
ord it can find on the court, and expect the court to sift
4 ACLR unpersuasively asserts that the Court of
Federal Claims “wholly ignore[d]” its CEO’s declaration.
Open. Br. at 55. In fact, the court expressly considered and
cited, repeatedly, to that declaration in its opinion. J.A. 3,
6.
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ACLR, LLC v. US 18
through it and find it to be a “standard record keeping sys-
tem.” Contrary to ACLR’s characterization, the Court of
Federal Claims did not hold that a “standard record keep-
ing system” must be “specific” or “overly sophisticated.”
Open. Br. at 49. Nor, in affirming, do we.
Thus, we affirm the award of summary judgment to the
government.
IV
We have considered ACLR’s remaining arguments and
find them unpersuasive. Accordingly, for the foregoing rea-
sons, we affirm the judgment of the Court of Federal
Claims.
AFFIRMED
COSTS
No costs.
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