Contract analysis

I. INTRODUCTION AND PARTIES TO THE STIPULATION Plaintiff Whitmore Aerospace LLC ("WAL"), a Virginia limited liability company with its principal place of business and headquarters located at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151, by and through its attorneys of record, Calderwood & Harkness LLP, 600 Lexington Avenue, 28th Floor, New York, New York 10022, and Defendant Hargrove-Dalton Defense

II. BACKGROUND AND PROCEDURAL HISTORY

1. On November 28, 2022, Plaintiff Whitmore Aerospace LLC filed a Verified Complaint for Declaratory Judgment (ECF No. 1) pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201–2202, seeking a declaration from this Court regarding the Parties' respective rights and obligations under Section 11.4 of that certain Teaming Agreement dated June 12, 2019 (the "Teaming Agreement"), entered into between WAL and HDDS in

2. The COPD relates to the Advanced Tactical Airframe Program ("ATAP"), a United States Air Force acquisition program administered by the Air Force Life Cycle Management Center ("AFLCMC") at Wright-Patterson Air Force Base, Ohio. Under Prime Contract No. FA8620-19-C-0337, HDDS serves as the prime contractor for the ATAP program, and WAL serves as a subcontractor and teaming partner pursuant to the Teaming Agreement.

3. The ATAP program is a developmental acquisition program for a next-generation tactical airframe platform, with an estimated total contract value in excess of $1.2 billion over a multi-year period of performance. WP-4 encompasses the fabrication of advanced titanium structural components, including load-bearing fuselage frames, wing-root fittings, and bulkhead assemblies, and represents a critical path element of t

4. On January 13, 2023, Defendant HDDS filed its Answer and Counterclaim (ECF No. 14), in which HDDS asserted a counterclaim against WAL for Fourteen Million Seven Hundred Twenty-Six Thousand Five Hundred Eighty-Three Dollars ($14,726,583) in contractual indemnification pursuant to Section 11.4 of the Teaming Agreement, together with attorneys' fees and costs of litigation pursuant to Section 11.6 of the Teaming Agre

5. On February 3, 2023, WAL filed its Reply to Counterclaim (ECF No. 19), denying the material allegations of HDDS's Counterclaim and asserting affirmative defenses, including, inter alia, that the cost-overrun allocations contained in the COPD are preliminary and subject to revision, that a significant portion of the overruns attributed to WP-4 are the result of Government-directed engineering change proposals and s

6. On February 10, 2023, WAL filed a Motion to Stay Proceedings (ECF No. 24), supported by the Declaration of Catherine Soo-Hyun Park, Vice President of Government Contracts for WAL (ECF No. 25), and the Declaration of Priya Anand, counsel for WAL (ECF No. 26), as well as a Memorandum of Law in Support of the Motion to Stay (ECF No. 27). In its Memorandum of Law, WAL argued that the primary-jurisdiction doctrine and

7. On February 17, 2023, counsel for the Parties conferred in good faith regarding WAL's Motion to Stay and reached agreement that a stay of all proceedings is appropriate under the circumstances described herein. HDDS does not oppose WAL's Motion to Stay.

III. THE PENDING DCMA ADMINISTRATIVE REVIEW

8. On August 1, 2022, Administrative Contracting Officer Lieutenant Colonel Sandra M. Vickers, USAF, issued the COPD under Prime Contract No. FA8620-19-C-0337. The COPD identified aggregate cost overruns totaling Fourteen Million Seven Hundred Twenty-Six Thousand Five Hundred Eighty-Three Dollars ($14,726,583) across the ATAP program and provided a preliminary allocation of those overruns among the various work packa

9. Specifically, the COPD attributed Twelve Million Eight Hundred Seventeen Thousand Four Hundred Forty-One Dollars ($12,817,441), representing approximately 87.03% of the total overruns, to Work Package 4, for which WAL is the responsible subcontractor and teaming partner. The remaining One Million Nine Hundred Nine Thousand One Hundred Forty-Two Dollars ($1,909,142), representing approximately 12.97% of the total o

10. With respect to WP-4, the COPD identified the following approximate root-cause categories for the cost overruns: (a) Titanium raw-material cost escalation, in the approximate amount of $4,200,000, attributed to increases in the market price of aerospace-grade titanium alloy (Ti-6Al-4V) and related supply-chain disruptions during the period of performance; (b) Rework due to non-conforming machining tolerances, in

11. On October 15, 2022, HDDS, in its capacity as prime contractor under Prime Contract No. FA8620-19-C-0337, filed a formal response to the COPD with the DCMA, disputing the cost-overrun allocations set forth in the COPD and requesting that ACO Lt. Col. Vickers issue a Contracting Officer's Final Decision ("COFD") under the Contract Disputes Act of 1978, as amended, 41 U.S.C. § 7103. In its formal response, HDDS cha

12. The DCMA administrative review is currently ongoing, and ACO Lt. Col. Vickers has not yet issued a COFD. Based on representations made by the DCMA to counsel for the Parties, the Parties understand that the DCMA's review involves a comprehensive audit and analysis of the cost data, production records, quality assurance records, and engineering documentation associated with the ATAP program, and that the review is

13. The administrative proceeding will directly address the factual predicate underlying the indemnity dispute in this action. Specifically, the COFD, when issued, will address the allocation of cost overruns between WP-4 and other work packages under the Prime Contract, the root causes of the cost overruns, whether any costs are unallowable, unreasonable, or otherwise subject to formal disallowance under applicable

IV. AGREED TERMS OF THE STIPULATION The Parties hereby stipulate and agree to the following terms, subject to the approval of the Court: (a) Stay of All Proceedings. All proceedings in the above-captioned action, including but not limited to all discovery (whether written, oral, or electronic), all motion practice, all pretrial conferences, and all other deadlines set by the Court or by agreement of the Parties, shal

V. BASIS FOR THE STIPULATION The Parties agree that a stay of proceedings is appropriate in this action for the following reasons:

14. Resolution or Narrowing of Disputed Issues. The DCMA administrative review under the Contract Disputes Act of 1978, as amended, 41 U.S.C. §§ 7101–7109, is expected to resolve or substantially narrow the factual and legal issues underlying this action. In particular, the COFD, when issued, will address the proper allocation of cost overruns among the work packages under Prime Contract No. FA8620-19-C-0337, the roo

15. Primary-Jurisdiction Doctrine. The primary-jurisdiction doctrine counsels deference to the DCMA's specialized expertise in government contract cost accounting, cost allocation, and contract administration. The DCMA and the DCAA possess technical capabilities, institutional knowledge, and access to program cost data and production records that are uniquely suited to the resolution of the cost-overrun allocation is

16. Judicial Economy. Judicial economy will be served by staying this action pending the conclusion of the DCMA administrative review. If the Court were to permit this action to proceed in parallel with the administrative review, the Parties would be required to conduct discovery and brief motions on the same factual issues that the DCMA is currently investigating, resulting in duplicative proceedings, unnecessary ex

17. Absence of Prejudice. Neither party will be prejudiced by the stay. Both Parties' claims and defenses will be expressly preserved, and all applicable limitation periods will be tolled during the pendency of the stay. The cost-overrun claims at issue in this action have been identified but have not yet been finally determined by the DCMA, and no final financial obligation has been imposed on either party with resp

18. Consent of Both Parties. Both Parties consent to the entry of the stay on the terms set forth in this Stipulation. The Parties have negotiated the terms of this Stipulation in good faith and at arm's length, and both Parties believe that a stay is in the best interests of the Parties and the efficient administration of justice. WHEREFORE, the Parties respectfully request that the Court enter the [Proposed] Order

1. IT IS HEREBY ORDERED that all proceedings in this action, including but not limited to all discovery (whether written, oral, or electronic), all motion practice, all pretrial conferences, and all other deadlines previously set or that may hereafter arise, are STAYED pending the earlier of: (i) the issuance of a Contracting Officer's Final Decision ("COFD") by the DCMA Contracting Officer with respect to the cost-o

2. IT IS FURTHER ORDERED that the Parties shall file joint status reports with the Court every one hundred and twenty (120) days from the date of this Order, advising the Court of the status of the DCMA administrative review and any material developments bearing on the duration or appropriateness of the stay. Each joint status report shall address, at a minimum, the current status of the DCMA's review, any communicat

3. IT IS FURTHER ORDERED that within fourteen (14) calendar days of the issuance of a COFD by the DCMA Contracting Officer with respect to the cost-overrun claims identified in the COPD dated August 1, 2022, the Parties shall file a joint notice with the Court advising of such issuance, attaching a copy of the COFD (or an appropriate summary thereof if the COFD contains Controlled Unclassified Information or other re

4. IT IS FURTHER ORDERED that either party may, at any time during the pendency of the stay, move to lift or modify the stay upon a showing of good cause, including but not limited to unreasonable delay in the issuance of the COFD, material change in circumstances, or prejudice to either party.

5. IT IS FURTHER ORDERED that the stay of proceedings shall not constitute a waiver, release, or abandonment of any claims, defenses, counterclaims, affirmative defenses, or rights of any party, and all such claims, defenses, counterclaims, affirmative defenses, and rights are expressly preserved in their entirety. Nothing in this Order shall be construed as an admission by any party of any fact, liability, or legal

6. IT IS FURTHER ORDERED that the Clerk of Court is directed to administratively close this case for statistical purposes only, without prejudice to either party's right to move to reopen the case upon issuance of the COFD or upon other good cause shown. Administrative closure shall not affect the jurisdiction of this Court over this action or the rights of the Parties hereunder. SO ORDERED. _________________________