1019-00005 · Whitmore Aerospace LLC · Correspondence

letter-ashford-reeves-coordination-protocol.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com

Washington, D.C. Office: 1900 K Street NW, Suite 1100, Washington, D.C. 20006 Telephone: (202) 881-3200

January 5, 2023

Harold Reeves, Esq. Senior Partner Ashford & Reeves LLP 2001 Pennsylvania Avenue NW, Suite 700 Washington, D.C. 20006

Re: Coordination Protocol — DCMA Administrative Review of Cost Overruns Under Prime Contract No. FA8620-19-C-0337 (Advanced Tactical Airframe Program); *Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc.*, No. 1:22-cv-10147-RMB (S.D.N.Y.)

Dear Harold:

1. Purpose and Background

I write to propose and formalize a coordination protocol between Calderwood & Harkness LLP ("C&H") and Ashford & Reeves LLP ("A&R") in connection with their concurrent representation of Whitmore Aerospace LLC ("WAL" or "Whitmore"), a Virginia limited liability company headquartered at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151. As you know, WAL faces parallel proceedings that span both the regulatory/administrative arena and federal civil litigation, and it is imperative that our respective firms align their efforts to protect WAL's interests consistently and effectively across both tracks.

The purpose of this letter is to establish a clear framework governing the respective roles and responsibilities of each firm, the procedures for sharing information and documents, the cadence of communications between the firms and with the client, and the protocols for ensuring that positions taken in either track do not inadvertently undermine WAL's posture in the other. This coordination protocol is intended to supplement, and not to replace, each firm's independent engagement arrangements with WAL.

By way of background, C&H was retained as WAL's outside litigation counsel effective November 1, 2022, pursuant to an engagement letter executed on that date by Gregory Poole, General Counsel and Vice President of Legal Affairs of WAL. Our engagement encompasses the prosecution and defense of the declaratory judgment action pending in the United States District Court for the Southern District of New York, as well as related advisory matters arising from the underlying dispute. A&R, as you are well aware, has served for a number of years as WAL's government contracts regulatory counsel and is currently advising WAL on the regulatory and administrative aspects of the Defense Contract Management Agency ("DCMA") administrative review that is at the heart of this dispute.

Throughout this engagement, the common client contacts at WAL are Gregory Poole (General Counsel), Catherine Soo-Hyun Park (Vice President, Government Contracts & Compliance), and Marcus J. Whitmore (Chief Executive Officer and Managing Member), who serves as the ultimate decision-maker on matters of corporate strategy and litigation authority. Both firms should continue to take direction from Mr. Poole and Ms. Park on day-to-day matters, with escalation to Mr. Whitmore as warranted by the significance of any particular decision or development.

2. Summary of the Underlying Dispute and Procedural Posture

To ensure that both firms and their respective teams are operating from a common factual and procedural baseline, I set forth below a summary of the key facts, contractual provisions, and procedural history relevant to both the DCMA administrative review and the declaratory judgment litigation.

2.1 The DCMA Administrative Review

The dispute arises under Prime Contract No. FA8620-19-C-0337, which governs the Advanced Tactical Airframe Program ("ATAP"). The ATAP contract was issued by the United States Air Force through the Air Force Life Cycle Management Center ("AFLCMC"), headquartered at Wright-Patterson Air Force Base, Ohio. The prime contractor under this contract is Hargrove-Dalton Defense Systems, Inc. ("HDDS"), a Delaware corporation with its principal place of business at 1100 Garrison Boulevard, Suite 2200, Bethesda, Maryland 20817.

The ATAP contract is structured as a cost-plus-incentive-fee ("CPIF") arrangement. The key financial parameters are as follows:

• Target Cost: $412,000,000

• Target Fee: 8% ($32,960,000)

• Ceiling Price: $470,000,000

• Share Ratios: 70/30 (government/contractor) for cost overruns; 60/40 for cost underruns

WAL's role in the program is that of a subcontractor and teaming partner, operating under a Teaming Agreement with HDDS dated June 12, 2019. Under the Teaming Agreement, WAL is responsible for Work Package 4 ("WP-4"), which encompasses the fabrication and delivery of titanium structural assemblies, including wing-box substructure components, center fuselage longerons, and bulkhead fittings. WAL's share of the total contract value amounts to approximately 18% of the target cost, or $74,160,000.

On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, of DCMA Northern Virginia, issued a Contracting Officer's Preliminary Determination ("COPD") concerning cost overruns on the ATAP contract. The COPD identifies total cost overruns of $14,726,583 across the program. Critically, the COPD attributes $12,817,441 — representing 87.03% of the total — to WP-4, with the remaining $1,909,142 (12.97%) attributed to work packages outside WAL's scope.

The COPD identifies four principal root causes for the cost overruns attributed to WP-4:

(a) Titanium raw-material cost escalation, accounting for approximately $4,200,000 in additional costs, driven by disruptions in the global titanium supply chain;

(b) Rework necessitated by non-conforming machining tolerances on titanium structural components, estimated at approximately $5,100,000;

(c) Schedule delays resulting in idle-labor charges incurred by WAL's production workforce during periods of downtime, estimated at approximately $2,300,000; and

(d) Costs associated with the implementation of engineering change proposals issued during the performance period, estimated at approximately $1,200,000.

On October 15, 2022, HDDS filed a formal response to the COPD and submitted a request for a Contracting Officer's Final Decision ("COFD") under the Contract Disputes Act of 1978, 41 U.S.C. §§ 7101–7109. The DCMA administrative review remains ongoing, and no COFD has been issued to date. A&R has been monitoring the progress of the DCMA field audit and engaging with the ACO's office on WAL's behalf.

2.2 HDDS Indemnification Demand

On September 9, 2022, HDDS transmitted a formal indemnification demand letter to WAL seeking recovery of the full $14,726,583 in cost overruns identified in the COPD. HDDS bases its demand on Section 11.4 of the Teaming Agreement, which contains mutual indemnification obligations between the teaming partners.

Section 11.4(b) of the Teaming Agreement provides, in relevant part, that each Team Member shall indemnify the other "for any and all claims, losses, costs, damages, and expenses (including reasonable attorneys' fees) arising from government cost-disallowance claims, to the extent such claim is caused by Team Member's acts or omissions." The phrase "to the extent such claim is caused by" imposes a causation requirement that WAL contends has not been satisfied.

In addition, Section 11.5 of the Teaming Agreement caps WAL's aggregate liability under the indemnification provisions at 120% of the WP-4 contract value, yielding a maximum liability exposure of $88,992,000. While this cap is well above the current demand amount, it remains an important contractual protection should HDDS attempt to assert additional or expanded claims as the administrative review progresses.

WAL's position, as communicated to HDDS and as articulated in the declaratory judgment complaint, rests on three principal grounds:

(1) The causation requirement of Section 11.4(b) is not satisfied. Specifically, titanium raw-material cost escalation was driven by global supply-chain disruptions beyond WAL's control and constitutes a force majeure event under Section 15.1 of the Teaming Agreement. The rework costs are attributable to engineering specifications supplied by HDDS that contained dimensional tolerances inconsistent with the manufacturing processes specified in the Statement of Work. And the schedule delays were caused by HDDS's late delivery of Government-Furnished Equipment ("GFE"), for which WAL bears no responsibility.

(2) HDDS's demand improperly includes $1,909,142 in cost overruns attributed to work packages other than WP-4, for which WAL has no responsibility whatsoever under the Teaming Agreement.

(3) The DCMA finding is preliminary in nature — the COPD is not a final agency action, no formal cost disallowance has been issued, and no COFD has been rendered. Accordingly, the indemnification obligation under Section 11.4(b) has not been triggered, as there is no final "government cost-disallowance claim" within the meaning of the Teaming Agreement.

2.3 Pre-Litigation Dispute Resolution Efforts

Prior to the commencement of litigation, the parties engaged in senior executive-level negotiations in an effort to resolve the dispute. A meeting between Marcus J. Whitmore, CEO and Managing Member of WAL, and William Fong, Senior Vice President of Contracts & Procurement at HDDS, took place on September 30, 2022. A second meeting between the same individuals was held on October 14, 2022. Neither meeting produced a resolution or meaningful narrowing of the parties' positions.

On October 21, 2022, WAL proposed mediation as an alternative dispute resolution mechanism, referencing Section 18.3 of the Teaming Agreement, which provides that the parties "may submit any dispute arising under this Agreement to non-binding mediation before a mutually agreed mediator." On October 28, 2022, HDDS declined WAL's mediation proposal, characterizing the Teaming Agreement's mediation clause as permissive rather than mandatory and asserting that mediation would be premature given the pendency of the DCMA review.

2.4 The Declaratory Judgment Action

Following the failure of pre-litigation negotiations and HDDS's refusal to participate in mediation, C&H, on behalf of WAL, filed a Verified Complaint for Declaratory Judgment on November 28, 2022, in the United States District Court for the Southern District of New York. The action is captioned Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc., and has been assigned Case No. 1:22-cv-10147-RMB. The case is assigned to the Honorable Richard M. Brannigan, United States District Judge, with the Honorable Allison P. Kurtz, United States Magistrate Judge, assigned for pretrial matters.

The Verified Complaint asserts a single count under the Declaratory Judgment Act, 28 U.S.C. §§ 2201–2202, seeking a judicial declaration that WAL is not obligated to indemnify HDDS under the Teaming Agreement for the cost overruns identified in the COPD. Venue is proper in the Southern District of New York under the forum-selection clause set forth in Section 18.2 of the Teaming Agreement, and the substantive law of the State of New York governs the Teaming Agreement by virtue of the choice-of-law provision in Section 18.1.

On January 13, 2023, HDDS filed its Answer and Counterclaim through its litigation counsel, Voss, Trager & Kendall LLP ("VTK"). The VTK team is led by Leonard Trager, a partner in VTK's Washington, D.C. office, with Megan Forsythe, a senior associate, serving as day-to-day counsel. VTK's offices are located at 900 17th Street NW, Suite 800, Washington, D.C. 20006. HDDS's counterclaim seeks recovery of $14,726,583 in contractual indemnification under Section 11.4(b) of the Teaming Agreement, together with attorneys' fees and costs pursuant to Section 11.6 of the Teaming Agreement, which contains a prevailing-party fee-shifting provision.

C&H is currently preparing a Reply to HDDS's Counterclaim, which we intend to file in early February 2023. In addition, C&H intends to file a motion to stay the declaratory judgment action pending the conclusion of the DCMA administrative review. The motion will be grounded in the primary-jurisdiction doctrine and considerations of judicial economy, given that the outcome of the DCMA review — and in particular the issuance of a COFD — will materially inform the factual and legal questions at issue in the litigation. We anticipate seeking a supporting declaration from Catherine Soo-Hyun Park regarding the nature and expected timeline of the DCMA administrative process, and A&R's input on the factual assertions contained in that declaration will be important.

3. Respective Roles and Responsibilities

In order to avoid duplication of effort, ensure consistent messaging, and preserve the client's ability to take coordinated and well-informed positions in both the administrative and litigation tracks, the following allocation of roles and responsibilities is proposed.

3.1 Ashford & Reeves LLP — Regulatory/Administrative Track

A&R shall have lead responsibility for all interactions with DCMA and the Administrative Contracting Officer, Lt. Col. Sandra M. Vickers, in connection with the DCMA administrative review of cost overruns under the ATAP contract. Specifically, A&R's responsibilities include, but are not limited to, the following:

(a) Monitoring the DCMA administrative review on an ongoing basis, including tracking the progress of the field audit being conducted by the ACO's office and obtaining the best available information regarding the anticipated timeline for the issuance of a COFD by Lt. Col. Vickers.

(b) Advising WAL on all regulatory and administrative developments, and keeping C&H promptly informed of the same, including, without limitation, audit requests directed to WAL or HDDS, document productions to DCMA, scheduled or ad hoc meetings with the ACO, and any interim findings, preliminary determinations, or final determinations issued by DCMA.

(c) Preparing or reviewing any formal submissions that WAL may need to make in connection with the DCMA administrative proceedings, including responses to audit inquiries, position papers, and any other correspondence directed to the ACO's office.

(d) Advising WAL on the implications of any DCMA actions for WAL's facility security clearance, currently held at the SECRET level, and for WAL's broader government contracting posture. As you know, WAL has maintained subcontractor positions on more than thirty Department of Defense programs since 2009, and any adverse DCMA action carries the potential for significant collateral consequences to WAL's eligibility and past-performance record.

The primary A&R contacts for purposes of this coordination protocol shall be Harold Reeves (Senior Partner) and Natalie Cheng (Associate).

3.2 Calderwood & Harkness LLP — Declaratory Judgment Litigation Track

C&H shall have lead responsibility for all aspects of the declaratory judgment action pending in the Southern District of New York, Case No. 1:22-cv-10147-RMB. Specifically, C&H's responsibilities include, but are not limited to, the following:

(a) Managing all court filings, motion practice, discovery (if and when the anticipated stay is lifted or if the Court declines to impose a stay), deposition preparation and attendance, expert retention and management, and trial preparation in the DJ action.

(b) Handling all related third-party matters connected to the litigation, including:

(i) Insurance-coverage correspondence with Meridian Surety & Insurance Group regarding WAL's directors and officers liability policy (Policy No. MSI-DO-2022-07814) and its commercial general liability policy (Policy No. MSI-CGL-2021-33291). As you may be aware, Meridian issued a reservation-of-rights letter dated November 1, 2022, and C&H is monitoring the coverage determination process;

(ii) Compliance with lender notification obligations under WAL's $75 million senior secured revolving credit facility with Ridgeline National Bank, N.A. C&H coordinated the delivery of initial notices under Section 6.07(b) of the credit agreement on September 28, 2022, and delivered a supplemental notice on December 5, 2022, to reflect the filing of the DJ complaint and the subsequent Answer and Counterclaim; and

(iii) Coordination with Pinnacle Advisory Partners LLC, WAL's independent auditor, regarding the appropriate treatment of the HDDS claim as a contingent liability under Accounting Standards Codification Topic 450 (ASC 450), including the assessment of whether the claim is "probable," "reasonably possible," or "remote" for financial-reporting purposes.

(c) Evaluating the impact of any outcomes in the DCMA administrative review on WAL's litigation posture in the DJ action, and advising WAL, in consultation with A&R as appropriate, on settlement strategy and negotiation parameters.

The primary C&H contacts for purposes of this coordination protocol shall be Priya Anand (Responsible Partner), Douglas Carmichael (Billing Partner), Patrick Gallagher (Lead Associate), and Simone Laroche (Working Associate, based in C&H's Washington, D.C. office). I note that Ms. Laroche holds a Bachelor of Science degree in aerospace engineering from Virginia Polytechnic Institute and State University (Virginia Tech), which provides a valuable technical background for understanding the manufacturing processes and engineering specifications at issue in the WP-4 cost-overrun dispute.

3.3 Shared Responsibilities

Certain responsibilities necessarily fall within the shared domain of both firms, given the interdependence of the administrative and litigation tracks. These include:

(a) Document Preservation. Both firms must coordinate on document-preservation obligations. C&H issued a litigation hold notice to WAL on November 2, 2022, two days after our engagement, directing the preservation of all documents and electronically stored information potentially relevant to the dispute. A&R should ensure that any documents produced to DCMA or received from DCMA in the course of the administrative review are preserved in a manner consistent with the litigation hold. If A&R becomes aware of any document categories or custodians not currently covered by the hold notice, please bring those to C&H's attention immediately.

(b) Contract Disputes Act / DJ Action Interplay. Both firms should collaborate on the legal analysis of the interplay between the Contract Disputes Act proceedings and the declaratory judgment action. This analysis will inform C&H's anticipated motion to stay the DJ action and the primary-jurisdiction arguments that will be advanced in support of that motion. A&R's expertise in CDA practice and DCMA administrative procedures will be particularly valuable in this regard.

(c) Consistency of Positions. Both firms must consult with each other before WAL takes any position in the DCMA administrative proceedings that could affect the litigation posture, and conversely, before C&H takes any position in the DJ action that could affect WAL's standing or arguments in the administrative review. The importance of this coordination cannot be overstated — an inconsistent position taken in one forum could be used by HDDS or VTK to impeach WAL's credibility in the other.

4. Information-Sharing Procedures

Effective coordination between the firms depends upon reliable and timely information sharing. The following procedures are proposed.

4.1 Designated Points of Contact

To streamline day-to-day communications and avoid the inefficiency of ad hoc multi-party exchanges, each firm shall designate a primary point of contact and an escalation contact as follows:

C&H Primary Contact: Simone Laroche, Associate, based in C&H's Washington, D.C. office at 1900 K Street NW, Suite 1100, Washington, D.C. 20006. Ms. Laroche can be reached at (202) 881-3247 (direct) and slaroche@calderwoodharkness.com.

C&H Escalation Contact: Priya Anand, Partner, based in C&H's New York office. Ms. Anand can be reached at (212) 554-7112 (direct) and panand@calderwoodharkness.com.

A&R Primary Contact: Natalie Cheng, Associate. Contact information as maintained by A&R.

A&R Escalation Contact: Harold Reeves, Senior Partner. Contact information as maintained by A&R.

The rationale for designating Ms. Laroche as C&H's day-to-day point of contact is twofold. First, her physical proximity to A&R's Washington, D.C. office facilitates efficient communication and, when needed, in-person coordination meetings. Second, her educational background in aerospace engineering enables her to engage productively with the technical dimensions of the WP-4 cost-overrun issues — including the titanium machining tolerances, rework specifications, and engineering change proposals — without the need for extensive technical translation.

4.2 Privileged Communication Protocol

All inter-firm communications relating to the representation of WAL shall be treated as protected by the attorney-client privilege and/or the attorney work-product doctrine, as applicable. To preserve these protections, the following practices should be observed:

(a) All written communications between the firms (whether by email, letter, or memorandum) should bear the legend: "PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT" in the header, footer, or subject line, as appropriate.

(b) Both firms share a common client in WAL. The common-interest privilege (also referred to as the allied-lawyer doctrine or community-of-interest privilege) applies to protect from disclosure communications between the firms that are made in furtherance of their common objective of advancing WAL's legal interests. Both firms should take care to frame inter-firm communications in a manner that reinforces the applicability of this privilege.

(c) Neither firm shall share the other firm's work product, legal analyses, or internal memoranda with any third party without the prior written consent of the producing firm, except that either firm may share such materials with the designated WAL client contacts (Mr. Poole, Ms. Park, and Mr. Whitmore) in the ordinary course of the representation.

4.3 Document Sharing

The timely sharing of key documents between the firms is essential to maintaining situational awareness and ensuring consistency of positions. The following document-sharing protocols are proposed:

(a) A&R shall provide C&H with copies of all correspondence with DCMA, including but not limited to audit requests, WAL's submissions and responses, DCMA determinations or interim findings, meeting agendas and summaries, and any other written communications with the ACO's office, within three (3) business days of receipt or dispatch.

(b) C&H shall provide A&R with copies of all court filings in Case No. 1:22-cv-10147-RMB, including complaints, answers, counterclaims, motions, briefs, court orders, and scheduling notices, as well as any significant correspondence with opposing counsel at Voss, Trager & Kendall LLP, within three (3) business days of filing or receipt.

(c) Documents shall be shared via secure file transfer protocol or encrypted email. Both firms should ensure that their respective information-technology systems support encrypted transmission and that documents are not transmitted via unsecured channels. Given the sensitivity of the matters at issue — including the potential involvement of classified or export-controlled technical data — both firms should exercise particular care in selecting appropriate transmission methods.

5. Communication Cadence

5.1 Regular Status Calls

The designated contacts at both firms — Ms. Laroche (C&H) and Ms. Cheng (A&R) — shall participate in a regularly scheduled conference call on a biweekly (every two weeks) basis. I propose that these calls be scheduled on alternating Wednesdays at 2:00 p.m. Eastern Time, beginning the week of January 16, 2023, though the precise scheduling can be finalized during our initial coordination call.

In addition, the responsible partners — Ms. Anand (C&H) and Mr. Reeves (A&R) — shall join the biweekly call at least once per month, and more frequently as circumstances require.

Each biweekly call should cover, at a minimum, the following standing agenda items:

(a) Status of the DCMA field audit and any new developments in the administrative review, including any communications from or meetings with the ACO's office;

(b) Status of the DJ action in Case No. 1:22-cv-10147-RMB, including any pending or anticipated court deadlines, motion practice, or scheduling developments;

(c) Upcoming WAL obligations in either track, including document-production deadlines, filing deadlines, and scheduled meetings; and

(d) Any developments requiring joint strategic discussion, including potential settlement overtures, adverse rulings or findings, or changes in the factual landscape.

5.2 Ad Hoc Communications

In addition to the regularly scheduled calls, either firm shall notify the other promptly — and in no event later than twenty-four (24) hours after learning of — any material development affecting either track, including without limitation:

(a) The issuance of a COFD by Lt. Col. Vickers or any interim determination that materially advances the DCMA administrative review;

(b) Any correspondence from DCMA that introduces new issues, expands the scope of the audit, or requests information not previously sought;

(c) Any court order in Case No. 1:22-cv-10147-RMB, including a ruling on C&H's anticipated motion to stay the proceedings;

(d) Any contact from HDDS or VTK regarding settlement discussions, mediation, or the administrative proceedings; and

(e) Any other development that, in the professional judgment of the receiving attorney, warrants prompt communication to the other firm.

5.3 Joint Status Reports to the Court

Should the Court grant C&H's anticipated motion to stay the DJ action pending the conclusion of the DCMA administrative review, the stay order is expected to require the parties to submit periodic joint status reports updating the Court on the progress of the administrative proceedings. Based on C&H's experience with comparable stay orders in this district, we anticipate a reporting interval of approximately 120 days.

Before each joint status report is filed with the Court, C&H will circulate a draft to A&R and to WAL for review and input. A&R's contribution will be particularly important with respect to the portions of each report addressing the current status of the DCMA review, the progress of the field audit, and the anticipated timeline for the issuance of a COFD. To allow adequate time for review and comment, A&R should provide a current written summary of the DCMA review status to C&H at least ten (10) business days before each filing deadline.

5.4 Quarterly Client Updates

C&H and A&R shall collaborate on a joint or coordinated quarterly update to WAL, to be addressed to Gregory Poole (General Counsel) and Catherine Soo-Hyun Park (VP, Government Contracts & Compliance). Each quarterly update should provide a comprehensive overview of developments in both the administrative and litigation tracks during the preceding quarter, and should identify key upcoming milestones, risks, and strategic considerations.

The first quarterly update should be prepared for delivery to WAL by no later than March 31, 2023, covering the period from the commencement of the coordination protocol through the end of the first quarter.

Each firm may also provide separate, track-specific updates to WAL as appropriate in the ordinary course of the representation, and nothing in this protocol is intended to limit such communications.

6. Key Upcoming Milestones and Action Items

For the avoidance of doubt, and to ensure both firms are aligned on near-term priorities, the following key milestones and action items are identified:

(a) Reply to Counterclaim. C&H is preparing a Reply to HDDS's Counterclaim filed on January 13, 2023. Target filing date: early February 2023. C&H will circulate a draft to A&R for informational purposes prior to filing.

(b) Motion to Stay. C&H intends to file a Motion to Stay the DJ action pending the conclusion of the DCMA administrative review. Target filing date: mid-February 2023. The motion will be predicated on the primary-jurisdiction doctrine and considerations of judicial economy. C&H will seek a supporting declaration from Catherine Soo-Hyun Park regarding the DCMA administrative process, its expected duration, and its bearing on the factual issues in the litigation. A&R's input on the factual assertions regarding DCMA procedures and the anticipated timeline for a COFD will be essential to the preparation of this declaration and the supporting memorandum of law. We will circulate drafts to A&R for review and comment.

(c) DCMA Field Audit Monitoring. A&R shall continue to monitor the progress of the DCMA field audit and shall report to C&H any indication of the timeline for the ACO's issuance of a COFD, as well as any change in the scope or direction of the audit.

(d) Coordination on DCMA Audit Responses. Both firms shall confer on the content and substance of any positions WAL may take in response to DCMA audit inquiries, to ensure that such positions are consistent with WAL's litigation posture in the DJ action. This coordination should occur in advance of any submission to DCMA and should involve review of draft responses by both firms' designated contacts.

7. Billing and Client Authorization

Each firm shall continue to bill WAL separately under its own engagement arrangements, and the coordination protocol described in this letter does not create any fee-sharing arrangement, joint venture, partnership, or other financial relationship between the firms. Each firm is solely responsible for its own fees, costs, and disbursements, and neither firm assumes any obligation to pay or guarantee the other firm's fees.

The WAL client contact for legal and engagement matters is Gregory Poole, General Counsel. The WAL contact for billing, payment, and financial matters is Elaine Whitmore, Co-Founder and Chief Financial Officer.

For reference, C&H's engagement with WAL is governed by an engagement letter dated November 1, 2022. The current standard hourly rates applicable to the matter are as follows:

C&H's estimated litigation budget through trial is in the range of $1,800,000 to $2,400,000, subject to revision based on the duration of the DCMA review, the outcome of the motion to stay, the scope of discovery if and when it proceeds, and other variables. C&H will continue to provide WAL with periodic budget updates as the litigation develops.

8. Confidentiality and Ethical Considerations

Both firms acknowledge that WAL holds an active facility security clearance at the SECRET level, issued pursuant to the National Industrial Security Program. In the course of the DCMA administrative review, it is possible that both firms may encounter or be exposed to classified or security-sensitive information. Any classified information must be handled in strict accordance with the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), 32 C.F.R. Part 117, and applicable DoD directives. Neither firm should transmit classified information via unclassified email, unsecured file transfer, or any other unclassified channel. If either firm encounters classified information in the course of its work, it should immediately consult with Ms. Park at WAL regarding appropriate handling and storage procedures.

Beyond the specific requirements pertaining to classified information, both firms shall maintain the confidentiality of WAL's proprietary business and technical information in accordance with applicable rules of professional conduct, the terms of each firm's engagement letter with WAL, and any applicable nondisclosure agreements. Both firms recognize the particular sensitivity of WAL's proprietary manufacturing processes, cost data, and technical specifications, and shall take all reasonable steps to prevent unauthorized disclosure.

9. Agreement and Confirmation

I would be grateful if you would countersign this letter in the space provided below, or alternatively return a confirming email to my attention indicating A&R's agreement to the coordination protocol described herein. Either form of acknowledgment will suffice for our purposes.

This protocol may be revised or supplemented by mutual agreement of the firms at any time as circumstances evolve. Any material revisions should be documented in writing and communicated to the WAL client contacts.

In the meantime, I propose that we schedule an initial coordination call among Priya Anand, Harold Reeves, Simone Laroche, and Natalie Cheng during the week of January 9, 2023, to discuss the protocol, address any questions or suggestions you may have, and align on the near-term action items identified above. Ms. Laroche will reach out to Ms. Cheng to coordinate scheduling.

Harold, I am confident that the coordination framework proposed in this letter will enable our respective firms to work together productively and efficiently on behalf of our common client. WAL faces a complex and consequential dispute that spans both the regulatory and litigation arenas, and the alignment of our efforts is critical to protecting WAL's interests across both tracks. I look forward to a close and collaborative working relationship with you and your team as we navigate these proceedings together.

Please do not hesitate to contact me or Ms. Laroche with any questions or comments.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Direct: (212) 554-7112 panand@calderwoodharkness.com

ACKNOWLEDGED AND AGREED:

ASHFORD & REEVES LLP

By: ________

Harold Reeves, Esq. Senior Partner

Date: ________

cc:

Gregory Poole, General Counsel, Whitmore Aerospace LLC Catherine Soo-Hyun Park, VP Government Contracts & Compliance, Whitmore Aerospace LLC Douglas Carmichael, Partner, Calderwood & Harkness LLP Patrick Gallagher, Associate, Calderwood & Harkness LLP Simone Laroche, Associate, Calderwood & Harkness LLP Natalie Cheng, Associate, Ashford & Reeves LLP

Enclosures:

(1) Verified Complaint for Declaratory Judgment, Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc., No. 1:22-cv-10147-RMB (S.D.N.Y.) (filed November 28, 2022)

(2) Answer and Counterclaim of Hargrove-Dalton Defense Systems, Inc. (filed January 13, 2023)

(3) Calderwood & Harkness LLP Litigation Hold Notice to Whitmore Aerospace LLC (dated November 2, 2022)

Timekeeper	Role	Hourly Rate
Priya Anand	Responsible Partner	$1,150/hr
Douglas Carmichael	Billing Partner	$1,150/hr
Patrick Gallagher	Lead Associate	$725/hr
Simone Laroche	Working Associate	$575/hr

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law
600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
Washington, D.C. Office: 1900 K Street NW, Suite 1100, Washington, D.C. 20006 Telephone: (202) 881-3200
January 5, 2023
Harold Reeves, Esq. Senior Partner Ashford & Reeves LLP 2001 Pennsylvania Avenue NW, Suite 700 Washington, D.C. 20006
Re: Coordination Protocol — DCMA Administrative Review of Cost Overruns Under Prime Contract No. FA8620-19-C-0337 (Advanced Tactical Airframe Program); *Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc.*, No. 1:22-cv-10147-RMB (S.D.N.Y.)
Dear Harold:
1. Purpose and Background
I write to propose and formalize a coordination protocol between Calderwood & Harkness LLP ("C&H") and Ashford & Reeves LLP ("A&R") in connection with their concurrent representation of Whitmore Aerospace LLC ("WAL" or "Whitmore"), a Virginia limited liability company headquartered at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151. As you know, WAL faces parallel proceedings that span both the regulatory/administrative arena and federal civil litigation, and it is imperative that our respective firms align their efforts to protect WAL's interests consistently and effectively across both tracks.
The purpose of this letter is to establish a clear framework governing the respective roles and responsibilities of each firm, the procedures for sharing information and documents, the cadence of communications between the firms and with the client, and the protocols for ensuring that positions taken in either track do not inadvertently undermine WAL's posture in the other. This coordination protocol is intended to supplement, and not to replace, each firm's independent engagement arrangements with WAL.
By way of background, C&H was retained as WAL's outside litigation counsel effective November 1, 2022, pursuant to an engagement letter executed on that date by Gregory Poole, General Counsel and Vice President of Legal Affairs of WAL. Our engagement encompasses the prosecution and defense of the declaratory judgment action pending in the United States District Court for the Southern District of New York, as well as related advisory matters arising from the underlying dispute. A&R, as you are well aware, has served for a number of years as WAL's government contracts regulatory counsel and is currently advising WAL on the regulatory and administrative aspects of the Defense Contract Management Agency ("DCMA") administrative review that is at the heart of this dispute.
Throughout this engagement, the common client contacts at WAL are Gregory Poole (General Counsel), Catherine Soo-Hyun Park (Vice President, Government Contracts & Compliance), and Marcus J. Whitmore (Chief Executive Officer and Managing Member), who serves as the ultimate decision-maker on matters of corporate strategy and litigation authority. Both firms should continue to take direction from Mr. Poole and Ms. Park on day-to-day matters, with escalation to Mr. Whitmore as warranted by the significance of any particular decision or development.
2. Summary of the Underlying Dispute and Procedural Posture
To ensure that both firms and their respective teams are operating from a common factual and procedural baseline, I set forth below a summary of the key facts, contractual provisions, and procedural history relevant to both the DCMA administrative review and the declaratory judgment litigation.
2.1 The DCMA Administrative Review
The dispute arises under Prime Contract No. FA8620-19-C-0337, which governs the Advanced Tactical Airframe Program ("ATAP"). The ATAP contract was issued by the United States Air Force through the Air Force Life Cycle Management Center ("AFLCMC"), headquartered at Wright-Patterson Air Force Base, Ohio. The prime contractor under this contract is Hargrove-Dalton Defense Systems, Inc. ("HDDS"), a Delaware corporation with its principal place of business at 1100 Garrison Boulevard, Suite 2200, Bethesda, Maryland 20817.
The ATAP contract is structured as a cost-plus-incentive-fee ("CPIF") arrangement. The key financial parameters are as follows:
•  Target Cost: $412,000,000
•  Target Fee: 8% ($32,960,000)
•  Ceiling Price: $470,000,000
•  Share Ratios: 70/30 (government/contractor) for cost overruns; 60/40 for cost underruns
WAL's role in the program is that of a subcontractor and teaming partner, operating under a Teaming Agreement with HDDS dated June 12, 2019. Under the Teaming Agreement, WAL is responsible for Work Package 4 ("WP-4"), which encompasses the fabrication and delivery of titanium structural assemblies, including wing-box substructure components, center fuselage longerons, and bulkhead fittings. WAL's share of the total contract value amounts to approximately 18% of the target cost, or $74,160,000.
On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, of DCMA Northern Virginia, issued a Contracting Officer's Preliminary Determination ("COPD") concerning cost overruns on the ATAP contract. The COPD identifies total cost overruns of $14,726,583 across the program. Critically, the COPD attributes $12,817,441 — representing 87.03% of the total — to WP-4, with the remaining $1,909,142 (12.97%) attributed to work packages outside WAL's scope.
The COPD identifies four principal root causes for the cost overruns attributed to WP-4:
(a) Titanium raw-material cost escalation, accounting for approximately $4,200,000 in additional costs, driven by disruptions in the global titanium supply chain;
(b) Rework necessitated by non-conforming machining tolerances on titanium structural components, estimated at approximately $5,100,000;
(c) Schedule delays resulting in idle-labor charges incurred by WAL's production workforce during periods of downtime, estimated at approximately $2,300,000; and
(d) Costs associated with the implementation of engineering change proposals issued during the performance period, estimated at approximately $1,200,000.
On October 15, 2022, HDDS filed a formal response to the COPD and submitted a request for a Contracting Officer's Final Decision ("COFD") under the Contract Disputes Act of 1978, 41 U.S.C. §§ 7101–7109. The DCMA administrative review remains ongoing, and no COFD has been issued to date. A&R has been monitoring the progress of the DCMA field audit and engaging with the ACO's office on WAL's behalf.
2.2 HDDS Indemnification Demand
On September 9, 2022, HDDS transmitted a formal indemnification demand letter to WAL seeking recovery of the full $14,726,583 in cost overruns identified in the COPD. HDDS bases its demand on Section 11.4 of the Teaming Agreement, which contains mutual indemnification obligations between the teaming partners.
Section 11.4(b) of the Teaming Agreement provides, in relevant part, that each Team Member shall indemnify the other "for any and all claims, losses, costs, damages, and expenses (including reasonable attorneys' fees) arising from government cost-disallowance claims, to the extent such claim is caused by Team Member's acts or omissions." The phrase "to the extent such claim is caused by" imposes a causation requirement that WAL contends has not been satisfied.
In addition, Section 11.5 of the Teaming Agreement caps WAL's aggregate liability under the indemnification provisions at 120% of the WP-4 contract value, yielding a maximum liability exposure of $88,992,000. While this cap is well above the current demand amount, it remains an important contractual protection should HDDS attempt to assert additional or expanded claims as the administrative review progresses.
WAL's position, as communicated to HDDS and as articulated in the declaratory judgment complaint, rests on three principal grounds:
(1) The causation requirement of Section 11.4(b) is not satisfied. Specifically, titanium raw-material cost escalation was driven by global supply-chain disruptions beyond WAL's control and constitutes a force majeure event under Section 15.1 of the Teaming Agreement. The rework costs are attributable to engineering specifications supplied by HDDS that contained dimensional tolerances inconsistent with the manufacturing processes specified in the Statement of Work. And the schedule delays were caused by HDDS's late delivery of Government-Furnished Equipment ("GFE"), for which WAL bears no responsibility.
(2) HDDS's demand improperly includes $1,909,142 in cost overruns attributed to work packages other than WP-4, for which WAL has no responsibility whatsoever under the Teaming Agreement.
(3) The DCMA finding is preliminary in nature — the COPD is not a final agency action, no formal cost disallowance has been issued, and no COFD has been rendered. Accordingly, the indemnification obligation under Section 11.4(b) has not been triggered, as there is no final "government cost-disallowance claim" within the meaning of the Teaming Agreement.
2.3 Pre-Litigation Dispute Resolution Efforts
Prior to the commencement of litigation, the parties engaged in senior executive-level negotiations in an effort to resolve the dispute. A meeting between Marcus J. Whitmore, CEO and Managing Member of WAL, and William Fong, Senior Vice President of Contracts & Procurement at HDDS, took place on September 30, 2022. A second meeting between the same individuals was held on October 14, 2022. Neither meeting produced a resolution or meaningful narrowing of the parties' positions.
On October 21, 2022, WAL proposed mediation as an alternative dispute resolution mechanism, referencing Section 18.3 of the Teaming Agreement, which provides that the parties "may submit any dispute arising under this Agreement to non-binding mediation before a mutually agreed mediator." On October 28, 2022, HDDS declined WAL's mediation proposal, characterizing the Teaming Agreement's mediation clause as permissive rather than mandatory and asserting that mediation would be premature given the pendency of the DCMA review.
2.4 The Declaratory Judgment Action
Following the failure of pre-litigation negotiations and HDDS's refusal to participate in mediation, C&H, on behalf of WAL, filed a Verified Complaint for Declaratory Judgment on November 28, 2022, in the United States District Court for the Southern District of New York. The action is captioned Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc., and has been assigned Case No. 1:22-cv-10147-RMB. The case is assigned to the Honorable Richard M. Brannigan, United States District Judge, with the Honorable Allison P. Kurtz, United States Magistrate Judge, assigned for pretrial matters.
The Verified Complaint asserts a single count under the Declaratory Judgment Act, 28 U.S.C. §§ 2201–2202, seeking a judicial declaration that WAL is not obligated to indemnify HDDS under the Teaming Agreement for the cost overruns identified in the COPD. Venue is proper in the Southern District of New York under the forum-selection clause set forth in Section 18.2 of the Teaming Agreement, and the substantive law of the State of New York governs the Teaming Agreement by virtue of the choice-of-law provision in Section 18.1.
On January 13, 2023, HDDS filed its Answer and Counterclaim through its litigation counsel, Voss, Trager & Kendall LLP ("VTK"). The VTK team is led by Leonard Trager, a partner in VTK's Washington, D.C. office, with Megan Forsythe, a senior associate, serving as day-to-day counsel. VTK's offices are located at 900 17th Street NW, Suite 800, Washington, D.C. 20006. HDDS's counterclaim seeks recovery of $14,726,583 in contractual indemnification under Section 11.4(b) of the Teaming Agreement, together with attorneys' fees and costs pursuant to Section 11.6 of the Teaming Agreement, which contains a prevailing-party fee-shifting provision.
C&H is currently preparing a Reply to HDDS's Counterclaim, which we intend to file in early February 2023. In addition, C&H intends to file a motion to stay the declaratory judgment action pending the conclusion of the DCMA administrative review. The motion will be grounded in the primary-jurisdiction doctrine and considerations of judicial economy, given that the outcome of the DCMA review — and in particular the issuance of a COFD — will materially inform the factual and legal questions at issue in the litigation. We anticipate seeking a supporting declaration from Catherine Soo-Hyun Park regarding the nature and expected timeline of the DCMA administrative process, and A&R's input on the factual assertions contained in that declaration will be important.
3. Respective Roles and Responsibilities
In order to avoid duplication of effort, ensure consistent messaging, and preserve the client's ability to take coordinated and well-informed positions in both the administrative and litigation tracks, the following allocation of roles and responsibilities is proposed.
3.1 Ashford & Reeves LLP — Regulatory/Administrative Track
A&R shall have lead responsibility for all interactions with DCMA and the Administrative Contracting Officer, Lt. Col. Sandra M. Vickers, in connection with the DCMA administrative review of cost overruns under the ATAP contract. Specifically, A&R's responsibilities include, but are not limited to, the following:
(a) Monitoring the DCMA administrative review on an ongoing basis, including tracking the progress of the field audit being conducted by the ACO's office and obtaining the best available information regarding the anticipated timeline for the issuance of a COFD by Lt. Col. Vickers.
(b) Advising WAL on all regulatory and administrative developments, and keeping C&H promptly informed of the same, including, without limitation, audit requests directed to WAL or HDDS, document productions to DCMA, scheduled or ad hoc meetings with the ACO, and any interim findings, preliminary determinations, or final determinations issued by DCMA.
(c) Preparing or reviewing any formal submissions that WAL may need to make in connection with the DCMA administrative proceedings, including responses to audit inquiries, position papers, and any other correspondence directed to the ACO's office.
(d) Advising WAL on the implications of any DCMA actions for WAL's facility security clearance, currently held at the SECRET level, and for WAL's broader government contracting posture. As you know, WAL has maintained subcontractor positions on more than thirty Department of Defense programs since 2009, and any adverse DCMA action carries the potential for significant collateral consequences to WAL's eligibility and past-performance record.
The primary A&R contacts for purposes of this coordination protocol shall be Harold Reeves (Senior Partner) and Natalie Cheng (Associate).
3.2 Calderwood & Harkness LLP — Declaratory Judgment Litigation Track
C&H shall have lead responsibility for all aspects of the declaratory judgment action pending in the Southern District of New York, Case No. 1:22-cv-10147-RMB. Specifically, C&H's responsibilities include, but are not limited to, the following:
(a) Managing all court filings, motion practice, discovery (if and when the anticipated stay is lifted or if the Court declines to impose a stay), deposition preparation and attendance, expert retention and management, and trial preparation in the DJ action.
(b) Handling all related third-party matters connected to the litigation, including:
(i) Insurance-coverage correspondence with Meridian Surety & Insurance Group regarding WAL's directors and officers liability policy (Policy No. MSI-DO-2022-07814) and its commercial general liability policy (Policy No. MSI-CGL-2021-33291). As you may be aware, Meridian issued a reservation-of-rights letter dated November 1, 2022, and C&H is monitoring the coverage determination process;
(ii) Compliance with lender notification obligations under WAL's $75 million senior secured revolving credit facility with Ridgeline National Bank, N.A. C&H coordinated the delivery of initial notices under Section 6.07(b) of the credit agreement on September 28, 2022, and delivered a supplemental notice on December 5, 2022, to reflect the filing of the DJ complaint and the subsequent Answer and Counterclaim; and
(iii) Coordination with Pinnacle Advisory Partners LLC, WAL's independent auditor, regarding the appropriate treatment of the HDDS claim as a contingent liability under Accounting Standards Codification Topic 450 (ASC 450), including the assessment of whether the claim is "probable," "reasonably possible," or "remote" for financial-reporting purposes.
(c) Evaluating the impact of any outcomes in the DCMA administrative review on WAL's litigation posture in the DJ action, and advising WAL, in consultation with A&R as appropriate, on settlement strategy and negotiation parameters.
The primary C&H contacts for purposes of this coordination protocol shall be Priya Anand (Responsible Partner), Douglas Carmichael (Billing Partner), Patrick Gallagher (Lead Associate), and Simone Laroche (Working Associate, based in C&H's Washington, D.C. office). I note that Ms. Laroche holds a Bachelor of Science degree in aerospace engineering from Virginia Polytechnic Institute and State University (Virginia Tech), which provides a valuable technical background for understanding the manufacturing processes and engineering specifications at issue in the WP-4 cost-overrun dispute.
3.3 Shared Responsibilities
Certain responsibilities necessarily fall within the shared domain of both firms, given the interdependence of the administrative and litigation tracks. These include:
(a) Document Preservation. Both firms must coordinate on document-preservation obligations. C&H issued a litigation hold notice to WAL on November 2, 2022, two days after our engagement, directing the preservation of all documents and electronically stored information potentially relevant to the dispute. A&R should ensure that any documents produced to DCMA or received from DCMA in the course of the administrative review are preserved in a manner consistent with the litigation hold. If A&R becomes aware of any document categories or custodians not currently covered by the hold notice, please bring those to C&H's attention immediately.
(b) Contract Disputes Act / DJ Action Interplay. Both firms should collaborate on the legal analysis of the interplay between the Contract Disputes Act proceedings and the declaratory judgment action. This analysis will inform C&H's anticipated motion to stay the DJ action and the primary-jurisdiction arguments that will be advanced in support of that motion. A&R's expertise in CDA practice and DCMA administrative procedures will be particularly valuable in this regard.
(c) Consistency of Positions. Both firms must consult with each other before WAL takes any position in the DCMA administrative proceedings that could affect the litigation posture, and conversely, before C&H takes any position in the DJ action that could affect WAL's standing or arguments in the administrative review. The importance of this coordination cannot be overstated — an inconsistent position taken in one forum could be used by HDDS or VTK to impeach WAL's credibility in the other.
4. Information-Sharing Procedures
Effective coordination between the firms depends upon reliable and timely information sharing. The following procedures are proposed.
4.1 Designated Points of Contact
To streamline day-to-day communications and avoid the inefficiency of ad hoc multi-party exchanges, each firm shall designate a primary point of contact and an escalation contact as follows:
C&H Primary Contact: Simone Laroche, Associate, based in C&H's Washington, D.C. office at 1900 K Street NW, Suite 1100, Washington, D.C. 20006. Ms. Laroche can be reached at (202) 881-3247 (direct) and slaroche@calderwoodharkness.com.
C&H Escalation Contact: Priya Anand, Partner, based in C&H's New York office. Ms. Anand can be reached at (212) 554-7112 (direct) and panand@calderwoodharkness.com.
A&R Primary Contact: Natalie Cheng, Associate. Contact information as maintained by A&R.
A&R Escalation Contact: Harold Reeves, Senior Partner. Contact information as maintained by A&R.
The rationale for designating Ms. Laroche as C&H's day-to-day point of contact is twofold. First, her physical proximity to A&R's Washington, D.C. office facilitates efficient communication and, when needed, in-person coordination meetings. Second, her educational background in aerospace engineering enables her to engage productively with the technical dimensions of the WP-4 cost-overrun issues — including the titanium machining tolerances, rework specifications, and engineering change proposals — without the need for extensive technical translation.
4.2 Privileged Communication Protocol
All inter-firm communications relating to the representation of WAL shall be treated as protected by the attorney-client privilege and/or the attorney work-product doctrine, as applicable. To preserve these protections, the following practices should be observed:
(a) All written communications between the firms (whether by email, letter, or memorandum) should bear the legend: "PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT" in the header, footer, or subject line, as appropriate.
(b) Both firms share a common client in WAL. The common-interest privilege (also referred to as the allied-lawyer doctrine or community-of-interest privilege) applies to protect from disclosure communications between the firms that are made in furtherance of their common objective of advancing WAL's legal interests. Both firms should take care to frame inter-firm communications in a manner that reinforces the applicability of this privilege.
(c) Neither firm shall share the other firm's work product, legal analyses, or internal memoranda with any third party without the prior written consent of the producing firm, except that either firm may share such materials with the designated WAL client contacts (Mr. Poole, Ms. Park, and Mr. Whitmore) in the ordinary course of the representation.
4.3 Document Sharing
The timely sharing of key documents between the firms is essential to maintaining situational awareness and ensuring consistency of positions. The following document-sharing protocols are proposed:
(a) A&R shall provide C&H with copies of all correspondence with DCMA, including but not limited to audit requests, WAL's submissions and responses, DCMA determinations or interim findings, meeting agendas and summaries, and any other written communications with the ACO's office, within three (3) business days of receipt or dispatch.
(b) C&H shall provide A&R with copies of all court filings in Case No. 1:22-cv-10147-RMB, including complaints, answers, counterclaims, motions, briefs, court orders, and scheduling notices, as well as any significant correspondence with opposing counsel at Voss, Trager & Kendall LLP, within three (3) business days of filing or receipt.
(c) Documents shall be shared via secure file transfer protocol or encrypted email. Both firms should ensure that their respective information-technology systems support encrypted transmission and that documents are not transmitted via unsecured channels. Given the sensitivity of the matters at issue — including the potential involvement of classified or export-controlled technical data — both firms should exercise particular care in selecting appropriate transmission methods.
5. Communication Cadence
5.1 Regular Status Calls
The designated contacts at both firms — Ms. Laroche (C&H) and Ms. Cheng (A&R) — shall participate in a regularly scheduled conference call on a biweekly (every two weeks) basis. I propose that these calls be scheduled on alternating Wednesdays at 2:00 p.m. Eastern Time, beginning the week of January 16, 2023, though the precise scheduling can be finalized during our initial coordination call.
In addition, the responsible partners — Ms. Anand (C&H) and Mr. Reeves (A&R) — shall join the biweekly call at least once per month, and more frequently as circumstances require.
Each biweekly call should cover, at a minimum, the following standing agenda items:
(a) Status of the DCMA field audit and any new developments in the administrative review, including any communications from or meetings with the ACO's office;
(b) Status of the DJ action in Case No. 1:22-cv-10147-RMB, including any pending or anticipated court deadlines, motion practice, or scheduling developments;
(c) Upcoming WAL obligations in either track, including document-production deadlines, filing deadlines, and scheduled meetings; and
(d) Any developments requiring joint strategic discussion, including potential settlement overtures, adverse rulings or findings, or changes in the factual landscape.
5.2 Ad Hoc Communications
In addition to the regularly scheduled calls, either firm shall notify the other promptly — and in no event later than twenty-four (24) hours after learning of — any material development affecting either track, including without limitation:
(a) The issuance of a COFD by Lt. Col. Vickers or any interim determination that materially advances the DCMA administrative review;
(b) Any correspondence from DCMA that introduces new issues, expands the scope of the audit, or requests information not previously sought;
(c) Any court order in Case No. 1:22-cv-10147-RMB, including a ruling on C&H's anticipated motion to stay the proceedings;
(d) Any contact from HDDS or VTK regarding settlement discussions, mediation, or the administrative proceedings; and
(e) Any other development that, in the professional judgment of the receiving attorney, warrants prompt communication to the other firm.
5.3 Joint Status Reports to the Court
Should the Court grant C&H's anticipated motion to stay the DJ action pending the conclusion of the DCMA administrative review, the stay order is expected to require the parties to submit periodic joint status reports updating the Court on the progress of the administrative proceedings. Based on C&H's experience with comparable stay orders in this district, we anticipate a reporting interval of approximately 120 days.
Before each joint status report is filed with the Court, C&H will circulate a draft to A&R and to WAL for review and input. A&R's contribution will be particularly important with respect to the portions of each report addressing the current status of the DCMA review, the progress of the field audit, and the anticipated timeline for the issuance of a COFD. To allow adequate time for review and comment, A&R should provide a current written summary of the DCMA review status to C&H at least ten (10) business days before each filing deadline.
5.4 Quarterly Client Updates
C&H and A&R shall collaborate on a joint or coordinated quarterly update to WAL, to be addressed to Gregory Poole (General Counsel) and Catherine Soo-Hyun Park (VP, Government Contracts & Compliance). Each quarterly update should provide a comprehensive overview of developments in both the administrative and litigation tracks during the preceding quarter, and should identify key upcoming milestones, risks, and strategic considerations.
The first quarterly update should be prepared for delivery to WAL by no later than March 31, 2023, covering the period from the commencement of the coordination protocol through the end of the first quarter.
Each firm may also provide separate, track-specific updates to WAL as appropriate in the ordinary course of the representation, and nothing in this protocol is intended to limit such communications.
6. Key Upcoming Milestones and Action Items
For the avoidance of doubt, and to ensure both firms are aligned on near-term priorities, the following key milestones and action items are identified:
(a) Reply to Counterclaim. C&H is preparing a Reply to HDDS's Counterclaim filed on January 13, 2023. Target filing date: early February 2023. C&H will circulate a draft to A&R for informational purposes prior to filing.
(b) Motion to Stay. C&H intends to file a Motion to Stay the DJ action pending the conclusion of the DCMA administrative review. Target filing date: mid-February 2023. The motion will be predicated on the primary-jurisdiction doctrine and considerations of judicial economy. C&H will seek a supporting declaration from Catherine Soo-Hyun Park regarding the DCMA administrative process, its expected duration, and its bearing on the factual issues in the litigation. A&R's input on the factual assertions regarding DCMA procedures and the anticipated timeline for a COFD will be essential to the preparation of this declaration and the supporting memorandum of law. We will circulate drafts to A&R for review and comment.
(c) DCMA Field Audit Monitoring. A&R shall continue to monitor the progress of the DCMA field audit and shall report to C&H any indication of the timeline for the ACO's issuance of a COFD, as well as any change in the scope or direction of the audit.
(d) Coordination on DCMA Audit Responses. Both firms shall confer on the content and substance of any positions WAL may take in response to DCMA audit inquiries, to ensure that such positions are consistent with WAL's litigation posture in the DJ action. This coordination should occur in advance of any submission to DCMA and should involve review of draft responses by both firms' designated contacts.
7. Billing and Client Authorization
Each firm shall continue to bill WAL separately under its own engagement arrangements, and the coordination protocol described in this letter does not create any fee-sharing arrangement, joint venture, partnership, or other financial relationship between the firms. Each firm is solely responsible for its own fees, costs, and disbursements, and neither firm assumes any obligation to pay or guarantee the other firm's fees.
The WAL client contact for legal and engagement matters is Gregory Poole, General Counsel. The WAL contact for billing, payment, and financial matters is Elaine Whitmore, Co-Founder and Chief Financial Officer.
For reference, C&H's engagement with WAL is governed by an engagement letter dated November 1, 2022. The current standard hourly rates applicable to the matter are as follows:
C&H's estimated litigation budget through trial is in the range of $1,800,000 to $2,400,000, subject to revision based on the duration of the DCMA review, the outcome of the motion to stay, the scope of discovery if and when it proceeds, and other variables. C&H will continue to provide WAL with periodic budget updates as the litigation develops.
8. Confidentiality and Ethical Considerations
Both firms acknowledge that WAL holds an active facility security clearance at the SECRET level, issued pursuant to the National Industrial Security Program. In the course of the DCMA administrative review, it is possible that both firms may encounter or be exposed to classified or security-sensitive information. Any classified information must be handled in strict accordance with the requirements of the National Industrial Security Program Operating Manual ("NISPOM"), 32 C.F.R. Part 117, and applicable DoD directives. Neither firm should transmit classified information via unclassified email, unsecured file transfer, or any other unclassified channel. If either firm encounters classified information in the course of its work, it should immediately consult with Ms. Park at WAL regarding appropriate handling and storage procedures.
Beyond the specific requirements pertaining to classified information, both firms shall maintain the confidentiality of WAL's proprietary business and technical information in accordance with applicable rules of professional conduct, the terms of each firm's engagement letter with WAL, and any applicable nondisclosure agreements. Both firms recognize the particular sensitivity of WAL's proprietary manufacturing processes, cost data, and technical specifications, and shall take all reasonable steps to prevent unauthorized disclosure.
9. Agreement and Confirmation
I would be grateful if you would countersign this letter in the space provided below, or alternatively return a confirming email to my attention indicating A&R's agreement to the coordination protocol described herein. Either form of acknowledgment will suffice for our purposes.
This protocol may be revised or supplemented by mutual agreement of the firms at any time as circumstances evolve. Any material revisions should be documented in writing and communicated to the WAL client contacts.
In the meantime, I propose that we schedule an initial coordination call among Priya Anand, Harold Reeves, Simone Laroche, and Natalie Cheng during the week of January 9, 2023, to discuss the protocol, address any questions or suggestions you may have, and align on the near-term action items identified above. Ms. Laroche will reach out to Ms. Cheng to coordinate scheduling.
Harold, I am confident that the coordination framework proposed in this letter will enable our respective firms to work together productively and efficiently on behalf of our common client. WAL faces a complex and consequential dispute that spans both the regulatory and litigation arenas, and the alignment of our efforts is critical to protecting WAL's interests across both tracks. I look forward to a close and collaborative working relationship with you and your team as we navigate these proceedings together.
Please do not hesitate to contact me or Ms. Laroche with any questions or comments.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand Partner Calderwood & Harkness LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Direct: (212) 554-7112 panand@calderwoodharkness.com
ACKNOWLEDGED AND AGREED:
ASHFORD & REEVES LLP
By: ________
Harold Reeves, Esq. Senior Partner
Date: ________
cc:
Gregory Poole, General Counsel, Whitmore Aerospace LLC Catherine Soo-Hyun Park, VP Government Contracts & Compliance, Whitmore Aerospace LLC Douglas Carmichael, Partner, Calderwood & Harkness LLP Patrick Gallagher, Associate, Calderwood & Harkness LLP Simone Laroche, Associate, Calderwood & Harkness LLP Natalie Cheng, Associate, Ashford & Reeves LLP
Enclosures:
(1) Verified Complaint for Declaratory Judgment, Whitmore Aerospace LLC v. Hargrove-Dalton Defense Systems, Inc., No. 1:22-cv-10147-RMB (S.D.N.Y.) (filed November 28, 2022)
(2) Answer and Counterclaim of Hargrove-Dalton Defense Systems, Inc. (filed January 13, 2023)
(3) Calderwood & Harkness LLP Litigation Hold Notice to Whitmore Aerospace LLC (dated November 2, 2022)
Timekeeper | Role | Hourly Rate
Priya Anand | Responsible Partner | $1,150/hr
Douglas Carmichael | Billing Partner | $1,150/hr
Patrick Gallagher | Lead Associate | $725/hr
Simone Laroche | Working Associate | $575/hr

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGED AND AGREED:

ASHFORD & REEVES LLP

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