Contract analysis

1. I am a partner at the law firm of Calderwood & Harkness LLP, with offices at 600 Lexington Avenue, 28th Floor, New York, New York 10022. I am duly admitted to practice law in the State of New York and before this Court. I am counsel of record for Plaintiff Whitmore Aerospace LLC ("WAL") in the above-captioned action. I make this declaration under penalty of perjury pursuant to 28 U.S.C. § 1746.

2. This declaration is submitted in support of Plaintiff WAL's Motion to Stay Proceedings Pending Conclusion of Administrative Review by the Defense Contract Management Agency ("DCMA"). Unless otherwise indicated, the matters set forth herein are within my personal knowledge or are based upon information obtained in my capacity as the responsible partner on this matter at Calderwood & Harkness LLP. If called as a wit

I. BACKGROUND ON THE DECLARANT AND THE ENGAGEMENT

3. I am a partner in the Litigation Department of Calderwood & Harkness LLP, resident in the firm's New York office. I have practiced law for approximately eighteen (18) years, during which time I have concentrated my practice on complex commercial litigation and government-contracts disputes. Over the course of my career, I have represented defense contractors, aerospace manufacturers, and technology companies in a

4. Calderwood & Harkness LLP was retained by WAL, a Virginia limited liability company with its principal place of business at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151, pursuant to an engagement letter dated November 1, 2022. WAL retained Calderwood & Harkness LLP in connection with the indemnity dispute with Defendant Hargrove-Dalton Defense Systems, Inc. ("HDDS"), a Delaware corporation with i

5. The dispute between WAL and HDDS arises under Section 11.4 of a Teaming Agreement dated June 12, 2019, by and between WAL and HDDS (the "Teaming Agreement"). The Teaming Agreement is governed by New York law, as specified in Section 18.1 thereof, and designates the United States District Court for the Southern District of New York as the exclusive forum for the resolution of disputes, as specified in Section 18.2

II. PROCEDURAL HISTORY OF THIS ACTION A. Pre-Litigation Events

6. On August 1, 2022, DCMA issued a Contracting Officer's Preliminary Determination ("COPD") identifying a total of $14,726,583 in cost overruns on the Advanced Tactical Airframe Program ("ATAP") under Prime Contract No. FA8620-19-C-0337. The COPD was issued by Administrative Contracting Officer Lieutenant Colonel Sandra M. Vickers, United States Air Force, at DCMA Northern Virginia. A true and correct copy of the CO

7. The COPD attributed $12,817,441 — approximately 87.03% — of the total cost overruns to Work Package 4 ("WP-4"), which encompasses the titanium structural assembly work performed by WAL in its capacity as subcontractor and teaming partner to HDDS under the Teaming Agreement. The remaining $1,909,142 in cost overruns was attributed to other work packages not performed by WAL.

8. On September 9, 2022, HDDS sent WAL a formal indemnification demand letter (the "Demand Letter") asserting that WAL is contractually obligated under Section 11.4 of the Teaming Agreement to indemnify HDDS for the full amount of $14,726,583 in cost overruns identified in the COPD — including, notably, the $1,909,142 in overruns attributed to work packages other than WP-4. A true and correct copy of the Demand Lette

9. In an effort to resolve the dispute without litigation, and in accordance with the dispute resolution provisions of Section 18.3 of the Teaming Agreement, WAL's Chief Executive Officer, Marcus J. Whitmore, and HDDS's Senior Vice President of Contracts & Procurement, William Fong, participated in senior executive negotiations on September 30, 2022, and again on October 14, 2022. Despite the good-faith efforts of bo

10. On October 21, 2022, WAL proposed that the parties engage in non-binding mediation, as contemplated by Section 18.3 of the Teaming Agreement, which provides that the parties "may submit the dispute to non-binding mediation before a mutually agreed mediator" following the failure of executive-level negotiations. On October 28, 2022, HDDS declined WAL's mediation proposal, taking the position that the mediation cla

11. On October 15, 2022 — prior to the conclusion of the parties' executive-level negotiations and prior to WAL's proposal for mediation — HDDS filed a formal response to the COPD with DCMA and simultaneously requested that Administrative Contracting Officer Lt. Col. Vickers issue a Contracting Officer's Final Decision ("COFD") pursuant to the Contract Disputes Act, 41 U.S.C. § 7103. A true and correct copy of HDDS's

12. On November 28, 2022, WAL filed its Verified Complaint for Declaratory Judgment (Dkt. 1) in this Court, thereby initiating the above-captioned action pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201–2202. The Complaint seeks declarations from the Court that: (1) Section 11.4 of the Teaming Agreement does not obligate WAL to indemnify HDDS for the cost overruns identified in the COPD; (2) to the extent

13. Upon filing, this case was assigned to the Honorable Richard M. Brannigan, United States District Judge, and to the Honorable Allison P. Kurtz, United States Magistrate Judge, for all pretrial matters. D. HDDS's Answer and Counterclaim

14. On January 13, 2023, HDDS, through its counsel of record, Leonard Trager and Megan Forsythe of the law firm Voss, Trager & Kendall LLP, 900 17th Street NW, Suite 800, Washington, D.C. 20006, filed its Answer and Counterclaim (Dkt. 12). In its Answer, HDDS denied the material allegations of the Complaint and asserted numerous affirmative defenses. In its Counterclaim, HDDS seeks judgment against WAL in the amount

15. On February 3, 2023, WAL filed its Reply to HDDS's Counterclaim (Dkt. 16), denying the material allegations set forth therein and asserting affirmative defenses, including, inter alia, that HDDS's indemnification demand exceeds the scope of Section 11.4 of the Teaming Agreement, that certain of the claimed cost overruns were caused by factors beyond WAL's control, and that HDDS failed to mitigate its damages.

III. THE PENDING DCMA ADMINISTRATIVE REVIEW

16. Prime Contract No. FA8620-19-C-0337 is a cost-plus-incentive-fee ("CPIF") contract between HDDS, as prime contractor, and the United States Air Force, Air Force Life Cycle Management Center ("AFLCMC"), Wright-Patterson Air Force Base, Ohio, for the design, development, and production of advanced tactical airframe systems under the ATAP program. The material financial terms of the Prime Contract, as relevant to th

17. Under the Teaming Agreement, WAL's scope of work encompasses the fabrication of titanium structural assemblies designated as WP-4, including the wing-box substructure, center fuselage longerons, and bulkhead fittings for the ATAP airframe. WP-4 represents approximately 18% of the Prime Contract's target cost, or approximately $74,160,000.

18. The COPD issued by ACO Lt. Col. Vickers on August 1, 2022 identified the following principal root causes for the WP-4 cost overruns: (a) Titanium raw-material cost escalation: approximately $4,200,000, arising from market-driven increases in the price of aerospace-grade titanium alloy (Ti-6Al-4V) during the 2021–2022 period; (b) Rework due to non-conforming machining tolerances: approximately $5,100,000, attribut

19. The DCMA administrative review currently pending before ACO Lt. Col. Vickers is being conducted pursuant to the Contract Disputes Act, 41 U.S.C. §§ 7101–7109, and the applicable provisions of the Federal Acquisition Regulation. As of the date of this declaration, ACO Lt. Col. Vickers has not yet issued a Contracting Officer's Final Decision.

20. Based on my communications with Harold Reeves, Senior Partner, and Natalie Cheng, Associate, at the law firm of Ashford & Reeves LLP, located at 2001 Pennsylvania Avenue NW, Suite 700, Washington, D.C. 20006 — which serves as WAL's government contracts regulatory counsel — the DCMA administrative review is expected to involve a comprehensive field audit and cost analysis of the WP-4 expenditures and related cost

21. The COFD, once issued, will constitute an authoritative administrative determination of the allocation of cost overruns between WP-4 and non-WP-4 work packages, the allowability of the costs at issue under the applicable cost principles (FAR Part 31), and the reasonableness of those costs in light of the contract terms and performance conditions. These are the very factual predicates and cost-accounting determina

IV. HDDS DOES NOT OPPOSE THE STAY

22. I have communicated directly with Leonard Trager of Voss, Trager & Kendall LLP, counsel of record for Defendant HDDS, regarding the appropriateness of a stay of the proceedings in this action pending the conclusion of the DCMA administrative review. Mr. Trager has confirmed to me, both in writing and telephonically, that HDDS does not oppose the entry of a stay on the terms described herein. A true and correct co

23. The parties have agreed upon the terms of a Joint Stipulation Regarding Stay of Proceedings, which is being filed concurrently herewith, or, if not filed concurrently, will be filed with the Court on or before February 24, 2023 (the "Joint Stipulation"). The Joint Stipulation provides for the stay of all proceedings in this action — including discovery, depositions, dispositive motions, and all other pretrial act

24. The Joint Stipulation further provides that the parties will file joint status reports with the Court every one hundred and twenty (120) days from the date of the Court's order granting the stay, for the purpose of keeping the Court apprised of the progress of the DCMA administrative review. The status reports will include, to the extent known to the parties, an update on the anticipated timeline for the issuance

25. I respectfully represent to the Court that the agreement reflected in the Joint Stipulation was reached through arm's-length discussions between Calderwood & Harkness LLP, on behalf of WAL, and Voss, Trager & Kendall LLP, on behalf of HDDS. The parties' mutual agreement to the stay reflects a shared recognition that the DCMA administrative review will materially inform, and may substantially narrow, the factual a

V. THE STAY WILL SERVE JUDICIAL ECONOMY AND THE INTERESTS OF THE PARTIES

26. The DCMA's administrative determination will directly bear upon the factual issues underlying the indemnity dispute in this action. In particular, the COFD is expected to address: (a) the allocation of cost overruns between WP-4 and non-WP-4 work packages; (b) the identification and categorization of the root causes of the cost overruns; (c) the determination of whether any of the costs claimed by HDDS are formal

27. A stay of proceedings will conserve the resources of this Court and of the parties by avoiding potentially duplicative and costly discovery and motion practice on factual issues that may be resolved, or substantially narrowed, by the DCMA administrative proceeding. Absent a stay, the parties would be required to engage in extensive document discovery, third-party subpoenas, expert discovery, and potentially depos

28. Moreover, the doctrine of primary jurisdiction supports deference to the DCMA's specialized expertise in government contract cost accounting and administration. The DCMA possesses technical competence, institutional knowledge, and access to Government cost data that are not readily available through the ordinary course of civil discovery. Allowing the DCMA to complete its review before this Court adjudicates the

29. Neither party will suffer undue prejudice from the entry of a stay. This case is in its very early stages. No discovery has been conducted. No depositions have been taken. No expert reports have been exchanged. No dispositive motions have been filed. The Court has not yet entered a scheduling order or set any pretrial deadlines. The underlying indemnity obligation, if any exists, will not become fully ripe or qua

30. For these reasons, the entry of a stay pending the conclusion of the DCMA administrative review is appropriate and will serve the interests of justice, judicial economy, and the orderly resolution of the parties' dispute.

VI. AUTHENTICATION OF EXHIBITS

31. In my capacity as lead counsel for WAL in this matter, and in connection with the preparation of WAL's Motion to Stay Proceedings and this supporting Declaration, I have reviewed and authenticated the following documents, true and correct copies of which are attached hereto: (a) Exhibit A: Teaming Agreement dated June 12, 2019, by and between Hargrove-Dalton Defense Systems, Inc. and Whitmore Aerospace LLC. This

32. Each of the foregoing exhibits is identified, described, and attested to as a true and correct copy of the original document, obtained and maintained in the ordinary course of Calderwood & Harkness LLP's representation of WAL in this matter.

33. I respectfully submit this declaration in support of WAL's Motion to Stay Proceedings Pending Conclusion of the DCMA Administrative Review. For the reasons set forth above, the entry of a stay is appropriate and warranted. The DCMA administrative review will yield an authoritative determination of the allocation, allowability, and reasonableness of the cost overruns at issue — determinations that are central to t

34. I respectfully request that this Court grant Plaintiff WAL's Motion to Stay Proceedings on the terms set forth in the accompanying Memorandum of Law in Support of Plaintiff's Motion to Stay Proceedings and the Joint Stipulation Regarding Stay of Proceedings filed concurrently herewith. ATTESTATION I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and corr