1019-00005 · Whitmore Aerospace LLC · Stay Motion

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF WHITMORE AEROSPACE LLC'S MOTION TO STAY PROCEEDINGS PENDING COMPLETION OF ADMINISTRATIVE REVIEW BY THE DEFENSE CONTRACT MANAGEMENT AGENCY

Filed: February 10, 2023

CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 506-7400 Facsimile: (212) 506-7401 Attorneys for Plaintiff Whitmore Aerospace LLC

Priya Anand (Lead Counsel) Douglas Carmichael Patrick Gallagher Simone Laroche (Washington, D.C. Office: 1900 K Street NW, Suite 1100, Washington, D.C. 20006)

TABLE OF AUTHORITIES

Cases

Statutes and Regulations

Other Authorities

PRELIMINARY STATEMENT

Plaintiff Whitmore Aerospace LLC ("WAL") respectfully moves this Court for an order staying all proceedings in this declaratory judgment action pending the conclusion of the ongoing administrative review by the Defense Contract Management Agency ("DCMA") of cost-overrun claims arising under Prime Contract No. FA8620-19-C-0337 for the Advanced Tactical Airframe Program ("ATAP"), and the issuance of the Contracting Officer's Final Decision ("COFD") by Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF.

At bottom, this case involves a single core question: whether Section 11.4 of the Teaming Agreement dated June 12, 2019, between WAL and Defendant Hargrove-Dalton Defense Systems, Inc. ("HDDS") obligates WAL to indemnify HDDS for $14,726,583 in cost overruns identified in the Contracting Officer's Preliminary Determination ("COPD") issued by DCMA on August 1, 2022. That question, in turn, depends entirely upon the factual determination of the amount, allocation, and root cause of the cost overruns on the ATAP program — and specifically, the extent to which those overruns are attributable to WAL's Work Package 4 ("WP-4") as opposed to other work packages or HDDS's own conduct.

Those factual determinations are not matters for this Court to resolve in the first instance. They are actively being adjudicated by DCMA — the specialized administrative agency charged with precisely this type of government-contract cost analysis. On October 15, 2022, HDDS itself filed a formal response to the COPD and requested a COFD under the Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101–7109. That administrative proceeding is pending before ACO Lt. Col. Vickers at DCMA Northern Virginia. The COFD, once issued, will constitute the authoritative administrative determination of the amount of cost overruns, their allocation among work packages, their root causes, and the allowability of the costs at issue under the CPIF prime contract structure.

The COFD thus will directly determine the factual predicate underlying the private-party indemnity dispute before this Court. If the COFD reduces or eliminates the cost attribution to WP-4, WAL's indemnity exposure may be substantially narrowed or eliminated altogether. If the COFD attributes overruns to causes other than WAL's acts or omissions — such as titanium-market conditions beyond WAL's control, HDDS-supplied defective engineering specifications, or HDDS's late delivery of government-furnished equipment — it will support WAL's causation defense under Section 11.4 of the Teaming Agreement. In either event, the COFD will materially inform, and may substantially simplify or render moot, the issues pending before this Court.

A stay of proceedings is warranted under the Court's inherent discretionary authority to manage its docket, the primary-jurisdiction doctrine, and the strong policy interests favoring judicial economy and the avoidance of inconsistent outcomes. The administrative proceeding is already underway, the issues before the agency overlap almost entirely with the issues before this Court, and DCMA possesses specialized expertise in government-contract cost determinations that this Court does not.

Importantly, HDDS does not oppose this motion. Counsel for WAL has conferred with counsel for HDDS, and the parties are in agreement that a stay is appropriate. A joint stipulation reflecting the parties' agreement to the stay and proposed conditions will be filed separately on or before February 24, 2023.

WAL respectfully submits that the interests of justice, judicial economy, and the orderly administration of this case all weigh decisively in favor of granting the requested stay.

STATEMENT OF FACTS

A. The Parties

Plaintiff Whitmore Aerospace LLC ("WAL") is a Virginia limited liability company with its principal place of business at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151. WAL is an aerospace and defense manufacturer specializing in precision-machined turbine components, integrated propulsion sub-assemblies, and structural airframe parts for military and commercial aerospace platforms. The company was founded in 2006 by Marcus J. Whitmore and Elaine Whitmore, and has grown into a mid-tier defense contractor with approximately $287 million in annual revenue for fiscal year 2022 and approximately 1,400 employees across manufacturing facilities in Virginia, Ohio, and South Carolina. WAL holds an active facility security clearance at the SECRET level and maintains a longstanding record as a reliable supplier to major prime defense contractors, including HDDS. (Verified Complaint ("Compl.") ¶¶ 1–5; Anand Decl. ¶ 3.)

Defendant Hargrove-Dalton Defense Systems, Inc. ("HDDS") is a Delaware corporation headquartered at 1100 Garrison Boulevard, Suite 2200, Bethesda, Maryland 20817. HDDS is a large prime defense contractor engaged in systems integration, avionics, and airframe manufacturing for the U.S. Department of Defense and allied foreign governments. HDDS reports approximately $3.4 billion in annual revenue for fiscal year 2022 and employs approximately 12,500 individuals across multiple domestic and international facilities. HDDS serves as the prime contractor on the ATAP program that lies at the heart of this dispute. (Compl. ¶¶ 6–8; Answer ¶¶ 6–8.)

B. The Prime Contract and the Teaming Agreement

The underlying government contract at issue is Prime Contract No. FA8620-19-C-0337, awarded by the United States Air Force through the Air Force Life Cycle Management Center ("AFLCMC"), Wright-Patterson Air Force Base, Ohio, to HDDS for the Advanced Tactical Airframe Program ("ATAP"). The ATAP program involves the design, development, and manufacture of a next-generation tactical airframe platform intended for deployment by the United States Air Force and selected allied nations. The Program Executive Officer for ATAP is Colonel Brian T. Matsuda, USAF. (Compl. ¶¶ 10–12; Anand Decl. Ex. A (excerpts of Prime Contract).)

The prime contract is structured as a cost-plus-incentive-fee ("CPIF") contract, a contract type defined by Federal Acquisition Regulation ("FAR") § 16.405-1, under which the contractor is reimbursed for allowable costs and receives an incentive fee that adjusts based on the relationship between actual costs and target costs. The key financial terms of the prime contract are as follows:

• Target Cost: $412,000,000

• Target Fee: 8% of Target Cost ($32,960,000)

• Ceiling Price: $470,000,000

• Share Ratio (Overruns): 70% Government / 30% Contractor

• Share Ratio (Underruns): 60% Government / 40% Contractor

• Period of Performance: September 1, 2019, through August 31, 2024 (five base years), with two one-year option periods extending through August 31, 2026, if exercised.

The CPIF structure creates a financial incentive for the contractor to control costs, because the contractor bears 30% of any cost overruns above the target cost, up to the ceiling price. This cost-sharing mechanism is central to the dispute, as cost overruns on the ATAP program directly affect HDDS's financial position and, derivatively through the Teaming Agreement, WAL's potential indemnity obligations. (Compl. ¶¶ 13–18; Anand Decl. Ex. A.)

In connection with the prime contract, WAL and HDDS entered into a Teaming Agreement dated June 12, 2019 (the "Teaming Agreement"), pursuant to which HDDS served as the Team Lead and WAL served as a Team Member. Under the Teaming Agreement, WAL's scope of work encompasses the fabrication and delivery of titanium structural assemblies — specifically, the wing-box substructure, center fuselage longerons, and bulkhead fittings — designated as Work Package 4 ("WP-4"). WAL's share of the target cost was set at 18% of the overall target cost, equaling approximately $74,160,000. (Compl. ¶¶ 19–23; Anand Decl. Ex. B (Teaming Agreement).)

Several provisions of the Teaming Agreement are directly relevant to this motion:

Section 11.4 (Indemnification). Section 11.4 of the Teaming Agreement sets forth WAL's indemnification obligations. It provides, in relevant part:

"Team Member shall indemnify, defend, and hold harmless Team Lead and its officers, directors, employees, agents, and representatives from and against any and all Losses arising out of or relating to (a) Team Member's negligent acts or omissions, willful misconduct, or material breach of this Agreement, or (b) any claim by the U.S. Government that costs incurred under Team Member's Work Package are unallowable, unreasonable, or otherwise subject to disallowance under the Prime Contract, to the extent such claim is caused by Team Member's acts or omissions."

(Teaming Agreement § 11.4 (emphasis added); Anand Decl. Ex. B.) The critical qualifying language — "to the extent such claim is caused by Team Member's acts or omissions" — is the crux of the parties' dispute. WAL maintains that this language limits its indemnification obligation to those overruns that are demonstrably caused by WAL's own conduct, not overruns attributable to force majeure events, HDDS's defective specifications, or HDDS's own failures. HDDS takes a broader view, asserting that WAL bears indemnification responsibility for all costs attributed to WP-4 regardless of causation. The resolution of this contractual interpretation issue depends, as a threshold matter, on the factual determination of the amount, allocation, and root causes of the cost overruns — the very issues being adjudicated by DCMA.

Section 11.5 (Limitation of Liability). The Teaming Agreement includes a liability cap providing that the aggregate liability of the Team Member under Section 11.4 shall not exceed 120% of the value of WP-4, which equals $88,992,000. (Teaming Agreement § 11.5; Anand Decl. Ex. B.)

Section 18.1 (Governing Law). The Teaming Agreement is governed by the laws of the State of New York, without regard to its conflict-of-laws principles. (Teaming Agreement § 18.1; Anand Decl. Ex. B.)

Section 18.2 (Forum Selection). The parties consented to the exclusive jurisdiction of the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, for any dispute arising under the Teaming Agreement. (Teaming Agreement § 18.2; Anand Decl. Ex. B.)

Section 18.3 (Dispute Resolution). Before commencing litigation, the parties agreed to a multi-step dispute resolution process consisting of: (i) senior executive negotiation for a period of not less than thirty (30) days; (ii) non-binding mediation administered by JAMS or another mutually agreed neutral; and (iii) if the dispute remains unresolved, litigation in the agreed forum. The Teaming Agreement does not include a mandatory arbitration clause. (Teaming Agreement § 18.3; Anand Decl. Ex. B.)

C. The DCMA Cost-Overrun Determination

On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, acting in her capacity as the cognizant ACO for Prime Contract No. FA8620-19-C-0337, issued a Contracting Officer's Preliminary Determination ("COPD") identifying $14,726,583 in cost overruns on the ATAP program through the end of the reporting period. (Compl. ¶¶ 28–30; Anand Decl. Ex. C (COPD).)

The COPD attributed $12,817,441 — representing 87.03% of the total overruns — to WP-4, the titanium structural assemblies work package performed by WAL. The remaining $1,909,142 (12.97%) was attributed to other work packages performed by HDDS and other team members. (Compl. ¶¶ 31–32; Anand Decl. Ex. C.)

The COPD identified the following root causes for the WP-4 overruns:

(a) Titanium Raw-Material Cost Escalation: Approximately $4,200,000 in overruns were attributed to significant escalation in the price of aerospace-grade titanium alloys (primarily Ti-6Al-4V) driven by global supply chain disruptions and sanctions-related restrictions on Russian titanium exports. This factor was entirely beyond WAL's control.

(b) Rework Due to Non-Conforming Machining Tolerances: Approximately $5,100,000 in overruns were attributed to rework costs incurred when titanium structural components failed to meet specified dimensional tolerances. WAL contends that the root cause of these machining failures was HDDS's provision of defective engineering specifications and computer-aided design ("CAD") models, which contained errors in tolerance stackup analysis.

(c) Schedule Delays Causing Idle-Labor Charges: Approximately $2,300,000 in overruns were attributed to idle-labor charges resulting from schedule delays. WAL contends that these delays were caused by HDDS's late delivery of government-furnished equipment ("GFE"), including critical tooling and inspection fixtures, which prevented WAL from commencing fabrication activities on schedule.

(d) Engineering Change Proposal ("ECP") Implementation Costs: Approximately $1,200,000 in overruns were attributed to costs incurred in implementing engineering changes directed by HDDS during the performance period. WAL contends that these ECPs were initiated at the direction of the U.S. Government and flowed down to WAL by HDDS, and that WAL is not responsible for overruns caused by government-directed design changes.

(Compl. ¶¶ 33–37; Anand Decl. Ex. C.)

The COPD is a preliminary determination. It represents DCMA's initial assessment of the cost-overrun situation, but it is not a final agency action. The COPD expressly states that HDDS may file a formal response contesting the preliminary findings and requesting a COFD. The administrative review process that follows the COPD involves a comprehensive analysis of the underlying cost data, contractor submissions, audit findings, and supporting documentation, and is conducted in accordance with the Cost Accounting Standards (48 C.F.R. Part 30) and the FAR Part 31 cost principles (48 C.F.R. Part 31). (Anand Decl. Ex. C; Anand Decl. ¶ 12.)

WAL's position is that the overruns attributed to WP-4 were not caused by WAL's acts or omissions, but rather by: (i) force-majeure titanium price escalation beyond WAL's control; (ii) defective engineering specifications provided by HDDS that necessitated costly rework; and (iii) HDDS's late delivery of government-furnished equipment that caused schedule delays and associated idle-labor charges. WAL therefore maintains that Section 11.4 of the Teaming Agreement does not require WAL to indemnify HDDS for these overruns, even assuming the COPD's cost attributions are ultimately confirmed. (Compl. ¶¶ 38–44.)

D. HDDS's Indemnification Demand and Pre-Litigation Dispute Resolution

On September 9, 2022, HDDS sent WAL a formal indemnification demand letter pursuant to Section 11.4 of the Teaming Agreement. The demand sought payment of $14,726,583 — the full amount of the cost overruns identified in the COPD, including the $1,909,142 in overruns attributed to non-WP-4 work packages. WAL maintains that this demand is facially overbroad, as it seeks indemnification for overruns that are not even attributed to WAL's work package. (Compl. ¶¶ 45–48; Anand Decl. Ex. D (Demand Letter).)

In accordance with Section 18.3 of the Teaming Agreement, the parties engaged in senior executive negotiations before resorting to litigation. WAL Chief Executive Officer Marcus J. Whitmore and HDDS Senior Vice President of Programs William Fong held in-person meetings on September 30, 2022, and October 14, 2022, at HDDS's Bethesda headquarters. Those discussions were substantive but ultimately did not produce a resolution. The principal impasse related to the parties' fundamentally different interpretations of the causation language in Section 11.4 and the appropriate scope of WAL's indemnification obligation. (Compl. ¶¶ 49–53; Anand Decl. ¶¶ 15–17.)

On October 21, 2022, WAL's counsel sent a letter to HDDS's counsel proposing that the parties proceed to non-binding mediation pursuant to Section 18.3 of the Teaming Agreement, and suggested JAMS as the administering organization. (Anand Decl. Ex. E.) On October 28, 2022, HDDS's counsel responded, declining to participate in mediation. HDDS took the position that the mediation provision in Section 18.3 is permissive rather than mandatory, noting that the clause uses the word "may" in connection with mediation, and asserted that the dispute was not amenable to resolution through non-binding processes given the parties' divergent legal positions. (Compl. ¶¶ 54–56; Anand Decl. Ex. F.)

E. The DCMA Administrative Review Under the Contract Disputes Act

Separately from the private-party dispute between WAL and HDDS, the government-contract cost-overrun determination is proceeding through the administrative channels established by the Contract Disputes Act, 41 U.S.C. §§ 7101–7109.

On October 15, 2022, HDDS filed a formal response to the COPD with ACO Lt. Col. Vickers and submitted a request for a Contracting Officer's Final Decision ("COFD") under the CDA. In its response, HDDS contested certain aspects of the COPD, including the allocation of overruns between WP-4 and other work packages, and provided additional cost data and narrative justifications for the overruns. (Anand Decl. ¶ 18; Anand Decl. Ex. G (redacted excerpts of HDDS's formal response).)

The COFD, once issued, will constitute the definitive administrative determination of the amount, allocation, and allowability of the cost overruns under the prime contract. The Contracting Officer will assess the overruns in light of the applicable Cost Accounting Standards, the FAR Part 31 cost allowability principles, and the specific terms of the CPIF contract. The COFD will set forth detailed findings of fact and conclusions regarding the causes of the overruns and the appropriate allocation of responsibility among the various work packages and program participants.

The administrative proceeding is currently pending before ACO Lt. Col. Vickers at DCMA's Northern Virginia office. WAL's government contracts regulatory counsel, Ashford & Reeves LLP — specifically, Harold Reeves (Senior Partner) and Natalie Cheng (Associate) — is monitoring the proceeding on WAL's behalf and has been in contact with DCMA regarding the anticipated timeline for the COFD. While DCMA has not committed to a specific issuance date, the ACO's office has indicated that the field audit is underway and that the COFD is expected to be issued within the next six to twelve months. (Anand Decl. ¶¶ 19–22.)

The CDA administrative process is designed to produce precisely the type of authoritative factual determination that this Court will need in order to resolve the indemnity dispute between WAL and HDDS. The COFD will address the final amount of cost overruns, the allocation of those overruns to specific work packages, the root causes of the overruns, and the allowability and reasonableness of the costs at issue — all of which are directly relevant to the question of whether WAL owes indemnification under Section 11.4 of the Teaming Agreement, and if so, in what amount.

F. This Litigation

On November 28, 2022, WAL filed its Verified Complaint for Declaratory Judgment in this Court, invoking the Court's jurisdiction under 28 U.S.C. §§ 1332 and 2201. The Complaint seeks the following declaratory relief:

(1) A declaration that Section 11.4 of the Teaming Agreement does not obligate WAL to indemnify HDDS for the $14,726,583 identified in the COPD;

(2) A declaration that WAL's indemnification obligation under Section 11.4 extends only to those cost overruns that are "caused by" WAL's own acts or omissions, and not to overruns caused by force-majeure events, HDDS-supplied defective specifications, or HDDS's late delivery of government-furnished equipment; and

(3) A declaration that HDDS's indemnification demand is overbroad to the extent it seeks recovery of $1,909,142 in cost overruns attributed to non-WP-4 work packages for which WAL bears no responsibility.

(Compl. ¶¶ 58–72.)

On January 13, 2023, HDDS filed its Answer to the Verified Complaint and a Counterclaim. HDDS's Counterclaim seeks $14,726,583 in contractual indemnification under Section 11.4 of the Teaming Agreement, together with attorneys' fees and costs pursuant to Section 11.6 of the Teaming Agreement, which provides for recovery of fees incurred in enforcing indemnification obligations. HDDS is represented in this action by Leonard Trager, Esq. and Megan Forsythe, Esq. of Voss, Trager & Kendall LLP, Washington, D.C. (Answer and Counterclaim, Dkt. No. 14.)

On February 3, 2023, WAL filed its Reply to the Counterclaim, denying HDDS's entitlement to the claimed indemnification and reasserting WAL's affirmative defenses. (Reply, Dkt. No. 18.)

No discovery has yet commenced in this action. The Court has not yet entered a scheduling order or set dates for discovery, dispositive motions, or trial. The present motion is timely filed at the earliest practicable stage of the litigation, before the parties and the Court have invested significant resources in proceedings that may prove unnecessary or duplicative of the DCMA administrative review.

ARGUMENT

I. LEGAL STANDARD FOR A STAY OF PROCEEDINGS

It is well established that "the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. North American Co., 299 U.S. 248, 254 (1936). The authority to grant a stay is vested in the sound discretion of the trial court. Id. at 254–55; see also Clinton v. Jones, 520 U.S. 681, 706 (1997) ("The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket.").

The Second Circuit has consistently recognized the district court's broad discretion to stay proceedings where doing so advances the interests of judicial economy and fairness to the parties. See In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116, 127 (2d Cir. 2007) (affirming district court's exercise of discretion in managing complex litigation); Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 96–97 (2d Cir. 2012) (district court has "wide latitude in determining the scope and timing of discovery and in managing the course of litigation").

In determining whether to grant a stay, courts in this Circuit consider three principal factors:

(1) Whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party;

(2) Whether a stay would simplify the issues in question and streamline the trial; and

(3) Whether a stay would reduce the burden of litigation on the parties and on the Court.

See Syncsort Inc. v. Sequential Software, Inc., 50 F. Supp. 2d 318, 325 (S.D.N.Y. 1999); see also Dependable Highway Express, Inc. v. Navigators Insurance Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (articulating substantially identical factors). These factors are not rigid prerequisites but rather guideposts for the exercise of the court's discretion. The movant bears the burden of demonstrating that a stay is appropriate under the circumstances. See Landis, 299 U.S. at 255.

Where a stay is sought pending the outcome of a parallel or related administrative proceeding, courts apply these factors with particular attention to the relationship between the judicial and administrative proceedings. A stay is especially appropriate where the administrative proceeding is expected to resolve or significantly narrow the issues before the court, thereby avoiding wasteful duplication of effort. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976) (recognizing the importance of "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation"); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15 (1983) (similar). Courts regularly stay civil actions where a pending administrative proceeding addresses the same or substantially overlapping factual and legal issues. See Arkwright-Boston Manufacturers Mutual Insurance Co. v. City of New York, 762 F.2d 205, 210 (2d Cir. 1985).

As demonstrated below, all three factors weigh heavily in favor of a stay in this case. The primary-jurisdiction doctrine provides additional and independent support for deferring to DCMA's ongoing administrative review.

II. THE PRIMARY-JURISDICTION DOCTRINE COUNSELS DEFERRAL TO DCMA'S ADMINISTRATIVE REVIEW

A. The Primary-Jurisdiction Doctrine. The primary-jurisdiction doctrine is a prudential doctrine that applies "whenever enforcement of a claim originally cognizable in the courts requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." Reiter v. Cooper, 507 U.S. 258, 268 (1993) (quoting United States v. Western Pacific Railroad Co., 352 U.S. 59, 64 (1956)). The doctrine recognizes that certain questions, while falling within the jurisdiction of the courts, are better resolved — at least in the first instance — by specialized administrative agencies possessing the technical expertise and institutional competence to address them.

The Supreme Court has identified two purposes underlying the primary-jurisdiction doctrine. First, the doctrine "promotes proper relationships between the courts and administrative agencies charged with particular regulatory duties" by ensuring that courts do not prematurely adjudicate issues that are within the agency's domain. Far East Conference v. United States, 342 U.S. 570, 574 (1952). Second, the doctrine safeguards against "the danger of a court imposing upon an agency inconsistent duties" and "the possibility that judicial resolution of a question . . . might be at odds with agency action." Western Pacific R.R. Co., 352 U.S. at 64; see also Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998).

In deciding whether to invoke the primary-jurisdiction doctrine, courts consider the following factors:

(1) Whether the agency has specialized expertise relevant to the resolution of the dispute;

(2) Whether there is a need for uniform administrative treatment of the issues presented;

(3) Whether the agency proceeding is likely to resolve or substantially narrow the issues before the court; and

(4) Whether deferral to the agency would promote judicial economy and avoid the risk of inconsistent outcomes.

See Reiter, 507 U.S. at 268–69; Ellis v. Tribune Television Co., 443 F.3d 71, 81 (2d Cir. 2006). Application of the doctrine "does not indicate that the court has no jurisdiction over the matter" but rather "is a doctrine specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency." Western Pacific R.R. Co., 352 U.S. at 63–64.

When primary jurisdiction applies, the typical remedy is "not to dismiss but to stay judicial proceedings pending a determination by the agency." Reiter, 507 U.S. at 269; see also Far East Conference, 342 U.S. at 577. This approach preserves the court's jurisdiction while allowing the administrative process to run its course, ensuring that the court has the benefit of the agency's specialized findings when it returns to the merits.

Each of the relevant factors strongly supports invoking the primary-jurisdiction doctrine in this case and staying these proceedings pending the DCMA's issuance of the COFD.

B. DCMA Has Specialized Expertise in Government Contract Cost Determinations. DCMA is the contracting agency responsible for the administration of Prime Contract No. FA8620-19-C-0337. Pursuant to FAR § 42.302, DCMA performs a wide range of contract administration functions, including the review and approval of contractor cost submissions, the determination of cost allowability and allocability under the applicable Cost Accounting Standards and FAR Part 31 cost principles, and the issuance of contracting officer determinations relating to cost performance under CPIF and other cost-reimbursement contract types. See 48 C.F.R. § 42.302; Defense Contract Management Agency, DCMA Manual 2301-01, Contracting Officer Determinations (2020).

The cost-overrun analysis at the heart of this dispute is quintessentially within DCMA's area of specialized expertise. The COPD identified four categories of overruns on WP-4 — titanium raw-material cost escalation, rework due to non-conforming machining tolerances, schedule-related idle-labor charges, and engineering change proposal implementation costs — each of which requires detailed government-contract cost-accounting analysis to evaluate properly. The determination of whether these costs are allowable, allocable, and reasonable under FAR Part 31 (48 C.F.R. Part 31) and the Cost Accounting Standards (48 C.F.R. Part 30) involves highly technical and specialized inquiries that fall squarely within DCMA's institutional competence.

Specifically, the COFD process requires DCMA to analyze, among other things:

• The cost data submitted by HDDS and WAL under the applicable cost-accounting disclosure statements and contract cost-reporting requirements;

• The allocability of material cost escalation under the applicable cost-accounting practices and the prime contract's provisions regarding economic price adjustment;

• The reasonableness of rework costs in light of the engineering specifications provided, the applicable quality standards, and industry norms for titanium machining operations;

• The propriety of idle-labor charges in the context of schedule delays, including the analysis of critical-path impacts, government-furnished equipment delivery timelines, and the contractor's duty to mitigate;

• The allowability and allocability of ECP implementation costs under the prime contract's change-order provisions and FAR Part 43.

These are precisely the types of technical, regulation-intensive cost determinations that DCMA's administrative contracting officers are trained and authorized to make. See Bethlehem Steel Corp. v. EPA, 638 F.2d 994, 998 (7th Cir. 1980) (deferring to agency expertise where "the issues require an understanding of a complex regulatory scheme"); Fenmore Industries v. United States, 563 U.S. 478, 486 (2011) (recognizing the specialized nature of government contract cost and pricing determinations). This Court would benefit from deferring to DCMA's specialized analysis rather than conducting its own independent assessment of these technical government-contract cost issues — an assessment that would likely require extensive expert testimony and the Court's immersion in the intricacies of Cost Accounting Standards and FAR Part 31 cost principles.

The administrative record developed by DCMA will provide a comprehensive evidentiary foundation that can inform the Court's eventual resolution of the indemnity dispute. DCMA's field audit team has access to the contractor's books and records, the cost-accounting systems, the relevant engineering documentation, and the government's own contract administration files — a depth of access and expertise that cannot easily be replicated through civil discovery in this Court.

C. The COFD Will Directly Address the Factual Predicate for the Indemnity Dispute. The indemnity dispute before this Court turns on three factual questions: (1) what is the amount of cost overruns on the ATAP program; (2) what portion of those overruns is properly attributed to WP-4; and (3) what are the root causes of the WP-4 overruns — specifically, whether they were "caused by" WAL's acts or omissions, as required for indemnification under Section 11.4 of the Teaming Agreement. The COFD will address each of these questions directly.

Section 11.4(b) of the Teaming Agreement provides that WAL's indemnification obligation arises with respect to "any claim by the U.S. Government that costs incurred under Team Member's Work Package are unallowable, unreasonable, or otherwise subject to disallowance under the Prime Contract," but only "to the extent such claim is caused by Team Member's acts or omissions." This language imposes two preconditions on WAL's indemnity obligation: (i) there must be a government claim regarding cost unallowability or unreasonableness; and (ii) the claim must be caused by WAL's acts or omissions. Both of these preconditions depend on factual determinations that DCMA is in the process of making.

The COFD will determine:

(i) The final amount of cost overruns. The COPD's figure of $14,726,583 is preliminary. The COFD may adjust this figure upward or downward based on the comprehensive audit and review that is currently underway.

(ii) The allocation of overruns between WP-4 and other work packages. The COPD attributed 87.03% of overruns to WP-4. HDDS, in its own formal response to the COPD, has contested certain aspects of the allocation. The COFD will issue a definitive allocation that will clarify the extent to which overruns are properly chargeable to WAL's work package.

(iii) The root causes of the overruns. The COFD will assess the causes of the overruns, including the extent to which they resulted from titanium market conditions, defective specifications, government-furnished equipment delays, or government-directed engineering changes — all factors that WAL contends are not attributable to its own acts or omissions.

(iv) Whether costs are allowable, reasonable, and allocable. The COFD will apply the FAR Part 31 cost principles and the Cost Accounting Standards to determine the allowability, reasonableness, and allocability of the costs at issue — the very government cost determinations that trigger (or do not trigger) WAL's indemnification obligation under Section 11.4(b).

Each of these determinations is directly relevant to — and may be dispositive of — the indemnity dispute pending before this Court. If the COFD reduces the WP-4 cost attribution, WAL's maximum indemnity exposure is correspondingly reduced. If the COFD determines that the overruns were caused by factors outside WAL's control, WAL's causation defense under Section 11.4 is bolstered. If the COFD finds that the costs are in fact allowable and reasonable under FAR Part 31, the trigger for indemnification under Section 11.4(b) may not even be met.

The COFD's factual findings may also have preclusive or, at a minimum, significant persuasive effect in this proceeding. See 3 Richard A. Lord, Williston on Contracts § 7:21 (4th ed. 2022) (discussing the effect of administrative findings on private contractual disputes incorporating or referencing administrative determinations). Because the Teaming Agreement expressly conditions WAL's indemnification obligation on government claims regarding cost allowability, the government's own final determination on those issues is logically and legally relevant to the interpretation and application of the indemnification clause.

In short, it would be imprudent for this Court to proceed to adjudicate the indemnity dispute before DCMA has issued its definitive findings on the underlying cost-overrun questions. Doing so would risk a result inconsistent with the forthcoming COFD, would require this Court to make its own technical cost-accounting determinations on an incomplete record, and would deprive the Court of the informed foundation that the administrative process is designed to provide.

III. A STAY WILL PROMOTE JUDICIAL ECONOMY AND AVOID DUPLICATIVE PROCEEDINGS

A. The Administrative Proceeding Will Likely Resolve or Narrow the Issues. The DCMA's COFD process involves a comprehensive review of contract performance, cost data, and the parties' respective contributions to the overruns on the ATAP program. The ACO's review encompasses detailed field audit work by DCMA and Defense Contract Audit Agency ("DCAA") auditors, analysis of the contractor's cost data submissions and incurred cost proposals, review of engineering and technical documentation, and assessment of the contractor's cost-accounting practices. This administrative process will produce detailed factual findings on the very cost-allocation and causation issues that lie at the heart of the present litigation.

The COFD's findings have the potential to resolve or substantially narrow the issues before this Court in several ways. If the COFD significantly reduces the total overrun figure or the amount attributed to WP-4, the parties may be able to resolve the indemnity dispute without further litigation. If the COFD identifies root causes that exonerate WAL — such as HDDS-supplied defective specifications or force-majeure market conditions — it may effectively eliminate the basis for HDDS's indemnity claim. Even if the COFD does not fully resolve the dispute, it will almost certainly clarify the factual landscape and narrow the issues that require judicial determination, reducing the scope and complexity of any remaining litigation.

Courts routinely recognize that the pendency of an administrative proceeding that is expected to inform or clarify the issues in a civil action weighs in favor of a stay. See Manual for Complex Litigation, Fourth § 20.132 (2004) (discussing stays pending administrative proceedings as a tool for promoting judicial economy). The strong overlap between the issues before DCMA and the issues before this Court makes this case a paradigmatic candidate for a stay.

Moreover, proceeding with litigation while the administrative review is ongoing creates a significant risk of inconsistent outcomes. This Court could reach a determination regarding the amount, allocation, or causation of overruns that is subsequently contradicted by the COFD — a result that would undermine the finality and efficiency of both the judicial and administrative proceedings. A stay eliminates this risk by ensuring that the Court has the benefit of DCMA's authoritative findings before rendering its own judgment.

B. A Stay Will Conserve Party and Judicial Resources. If this action proceeds without a stay, the parties would be required to embark on an extensive and costly discovery program addressing the same cost-accounting, allocation, and causation issues that DCMA is currently reviewing. This would include, at a minimum:

• Production and review of tens of thousands of pages of cost data, incurred cost submissions, contractor performance reports, engineering change documentation, and correspondence between the parties and the government;

• Depositions of DCMA and DCAA personnel regarding the COPD findings, the audit process, and the government's cost-accounting analysis;

• Depositions of WAL and HDDS program managers, cost accountants, and engineers regarding the root causes of the overruns;

• Retention of expert witnesses on government-contract cost accounting, FAR Part 31 allowability analysis, and Cost Accounting Standards compliance;

• Preparation of expert reports analyzing the allocation of overruns and the causation of specific cost categories; and

• Potentially, a Daubert or in limine process to address the admissibility and reliability of the parties' respective expert analyses.

This discovery and expert analysis would impose substantial costs on both parties and significant demands on the Court's time and resources. More importantly, much of this work would be duplicative of the analysis that DCMA is already performing — and that DCMA is far better positioned to perform, given its institutional expertise, its access to the contractor's cost records, and its familiarity with the applicable cost-accounting standards and regulatory framework.

A stay would allow the parties to benefit from the COFD's factual findings, potentially eliminating the need for much of the discovery and expert analysis that would otherwise be required. At a minimum, the COFD would provide a factual baseline that would significantly streamline the discovery process and reduce the scope of contested issues. The savings in time, expense, and judicial resources would be substantial.

The Court's own resources would also be conserved. Without a stay, the Court would be called upon to resolve complex and technical government-contract cost-accounting issues on which DCMA has specialized expertise and an ongoing proceeding. A stay avoids the need for the Court to grapple with these technical issues prematurely and allows the Court to benefit from the informed analysis that the administrative process is designed to produce.

IV. THE CONTRACT DISPUTES ACT FRAMEWORK SUPPORTS A STAY

The Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101–7109, establishes a comprehensive administrative framework for the resolution of disputes arising under or relating to government contracts. The CDA provides that "[a]ll claims by a contractor against the government relating to a contract shall be submitted to the contracting officer for a decision." 41 U.S.C. § 7103(a). The contracting officer's final decision is then subject to appeal to the Armed Services Board of Contract Appeals ("ASBCA") or the United States Court of Federal Claims. 41 U.S.C. § 7104.

HDDS itself invoked this framework on October 15, 2022, when it filed a formal response to the COPD and requested a COFD under the CDA. By doing so, HDDS initiated the administrative process through which the Contracting Officer — ACO Lt. Col. Vickers — will render a final decision on the cost-overrun issues. The CDA requires the Contracting Officer to issue a decision within a reasonable time, taking into account the urgency and complexity of the claim. 41 U.S.C. § 7103(f). That decision, once issued, will constitute the definitive government determination of the amount, allocation, and allowability of the cost overruns under the prime contract.

While the private-party indemnity dispute between WAL and HDDS is not itself a CDA claim — it arises under the Teaming Agreement, not the prime contract — the underlying government cost determination that triggers (or fails to trigger) WAL's indemnification obligation under Section 11.4 is proceeding through CDA channels. The CDA's administrative process is specifically designed to produce authoritative factual findings on cost-allocation, allowability, and causation issues of precisely the type at the heart of this case.

Allowing the CDA administrative process to reach its conclusion before this Court adjudicates the derivative indemnity question is both prudent and consistent with the statutory scheme. The CDA reflects a congressional determination that government-contract cost disputes should be resolved in the first instance by the contracting officer, subject to administrative and judicial review through the specialized channels established by the Act. See Fenmore Industries v. United States, 563 U.S. 478, 486 (2011) (recognizing the importance of the CDA framework in resolving government contract disputes); Bowen v. Georgetown University Hospital, 488 U.S. 204, 213–14 (1988) (deferring to administrative expertise in government-contract cost determinations). Although this Court has jurisdiction over the private contractual dispute, principles of comity, judicial economy, and respect for the administrative process all counsel in favor of staying these proceedings until the COFD is issued.

Moreover, there is a practical concern about the interaction between the judicial and administrative proceedings. If this Court were to render a judgment on the indemnity dispute before the COFD is issued, that judgment would necessarily rest on the preliminary findings of the COPD — findings that may be materially revised by the COFD. This would create the anomalous situation of a judicial determination based on a factual predicate that has not yet been finalized by the responsible administrative agency. A stay avoids this problem by ensuring that the Court's eventual adjudication of the indemnity dispute is grounded in the COFD's authoritative findings. See Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1061 (9th Cir. 1991) (noting the importance of allowing administrative proceedings to conclude before judicial adjudication of related issues).

V. NEITHER PARTY WILL BE PREJUDICED BY A STAY

A. HDDS Does Not Oppose the Stay. Counsel for WAL has conferred with counsel for HDDS — Leonard Trager, Esq. and Megan Forsythe, Esq. of Voss, Trager & Kendall LLP — regarding the requested stay. HDDS has indicated that it does not oppose a stay of proceedings pending the conclusion of the DCMA administrative review and the issuance of the COFD. The parties have agreed in principle to the terms of a stay, and a Joint Stipulation and Proposed Order to Stay Proceedings will be filed with the Court on or before February 24, 2023, reflecting the parties' agreement. (Anand Decl. ¶¶ 24–26.)

The absence of opposition from the non-moving party is itself a significant factor weighing in favor of a stay. Where both parties agree that a stay is appropriate, the risk of prejudice is minimal and the Court's inquiry is substantially simplified. See Landis, 299 U.S. at 255 (stay should be evaluated in terms of prejudice to the parties).

B. WAL Will Not Be Prejudiced. WAL is the movant and affirmatively seeks the requested stay. WAL's claims for declaratory relief and its defenses to HDDS's counterclaim will not be impaired by a stay. The statute of limitations is not a concern, as WAL has already filed its Complaint and the parties' respective claims and defenses are preserved by the pendency of this action. WAL's access to evidence will not be compromised, as WAL has issued a litigation hold preserving all relevant documents and electronically stored information as of November 2, 2022, and WAL's government contracts regulatory counsel continues to monitor the DCMA proceeding. (Anand Decl. ¶ 27.)

WAL is prepared to comply with all conditions the Court may impose in connection with a stay, including periodic status reports and prompt reactivation of the case upon the issuance of the COFD.

C. HDDS Will Not Be Prejudiced. HDDS will likewise suffer no prejudice from the requested stay. HDDS's counterclaim seeking $14,726,583 in contractual indemnification and attorneys' fees will remain pending and will be fully preserved during the stay. HDDS will not lose any substantive rights as a result of the temporary pause in litigation proceedings.

Indeed, HDDS itself initiated the DCMA administrative review that provides the basis for this stay request. On October 15, 2022, HDDS filed a formal response to the COPD and requested a COFD under the CDA. Having invoked the administrative process to obtain a final government determination on the cost-overrun issues, HDDS cannot credibly claim prejudice from a stay of the private litigation that awaits the outcome of that very proceeding. HDDS's decision to seek a COFD reflects its own recognition that the administrative process is the appropriate forum for resolving the underlying cost questions.

There is no risk of evidence spoliation during the pendency of a stay. Both parties are subject to document preservation obligations arising from this litigation. WAL issued a formal litigation hold to all relevant custodians on November 2, 2022, immediately upon the conclusion of the pre-litigation dispute resolution process and in anticipation of filing this action. HDDS's document preservation obligations arose no later than the filing of its Answer and Counterclaim on January 13, 2023. The parties' respective litigation hold obligations will remain in effect throughout any stay period. (Anand Decl. ¶¶ 28–29.)

Further, HDDS's indemnification demand has not been reduced to a judgment. HDDS is not suffering any ongoing, irreparable harm from a temporary delay in the adjudication of its counterclaim. The indemnification demand represents a disputed contractual claim, not a liquidated obligation. There is no evidence that WAL is dissipating assets, that HDDS faces any risk of inability to collect on a future judgment, or that any exigent circumstances require immediate adjudication.

Finally, and perhaps most significantly, HDDS does not oppose the stay. HDDS's non-opposition is itself powerful evidence of the absence of prejudice. See Landis, 299 U.S. at 255. When the party that might be prejudiced by a stay affirmatively consents to it, the Court may comfortably conclude that the stay serves the interests of both parties and the administration of justice.

VI. PROPOSED STAY CONDITIONS

To ensure that the Court retains oversight of this matter during the pendency of the stay and that the case is promptly reactivated when the administrative review concludes, WAL proposes that the stay be subject to the following conditions:

1. Periodic Status Reports. The parties shall file joint status reports with the Court every one hundred twenty (120) days during the pendency of the stay. Each status report shall advise the Court of the current status of the DCMA administrative review, the anticipated timeline for the issuance of the COFD, and any material developments in the administrative proceeding that may affect the scope or duration of the stay.

2. Motion to Lift Stay. Either party may, upon a showing of good cause, move to lift the stay at any time. Good cause may include, without limitation, a material change in circumstances that renders the stay inappropriate, an unreasonable delay in the issuance of the COFD, or evidence that the administrative proceeding will not address the issues relevant to this litigation.

3. Automatic Termination. The stay shall automatically terminate upon the issuance of the COFD by ACO Lt. Col. Sandra M. Vickers (or her successor in office), or upon further order of this Court. Within thirty (30) days of the issuance of the COFD, the parties shall file a joint status report with the Court and a proposed schedule for the resumption of proceedings, including proposed deadlines for discovery, dispositive motions, and trial.

These proposed conditions are designed to balance the interests of judicial economy with the need for accountability and the parties' right to a timely resolution of their dispute. The periodic reporting requirement ensures that the Court remains informed of the progress of the administrative review and can intervene if the stay becomes unwarranted. The motion-to-lift and automatic-termination provisions ensure that the stay does not continue beyond its useful purpose and that the case is promptly reactivated when the COFD is issued.

WAL understands that the Court may wish to impose additional or modified conditions, and WAL is prepared to comply with any terms the Court deems appropriate.

CONCLUSION

For the foregoing reasons, Plaintiff Whitmore Aerospace LLC respectfully requests that this Court enter an order staying all proceedings in this action pending the conclusion of the Defense Contract Management Agency's administrative review under Prime Contract No. FA8620-19-C-0337 and the issuance of the Contracting Officer's Final Decision by ACO Lt. Col. Sandra M. Vickers, subject to the periodic reporting requirements and other conditions described above.

The primary-jurisdiction doctrine, the interests of judicial economy, the avoidance of duplicative proceedings and inconsistent outcomes, and the absence of prejudice to either party all weigh decisively in favor of the requested stay. The administrative proceeding is already underway, the issues before the agency overlap almost entirely with the issues before this Court, and DCMA possesses specialized expertise in government-contract cost determinations that will materially inform — and may substantially narrow or resolve — the indemnity dispute at the heart of this litigation.

A proposed order is submitted herewith for the Court's consideration.

Dated: February 10, 2023 New York, New York

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Priya Anand (admitted S.D.N.Y.) Douglas Carmichael (admitted S.D.N.Y.) Patrick Gallagher (admitted S.D.N.Y.) Simone Laroche (admitted S.D.N.Y.; pro hac vice pending — Washington, D.C. office)

600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 506-7400 Facsimile: (212) 506-7401 panand@calderwoodharkness.com

Attorneys for Plaintiff Whitmore Aerospace LLC

CERTIFICATE OF SERVICE

I, Priya Anand, hereby certify that on February 10, 2023, I caused a true and correct copy of the foregoing Memorandum of Law in Support of Plaintiff Whitmore Aerospace LLC's Motion to Stay Proceedings Pending Completion of Administrative Review by the Defense Contract Management Agency to be filed electronically via the Court's CM/ECF electronic filing system, which will automatically serve notice and a copy of the filing upon all counsel of record registered to receive electronic notifications in this case, including:

Leonard Trager, Esq. Megan Forsythe, Esq. Voss, Trager & Kendall LLP 900 17th Street NW, Suite 800 Washington, D.C. 20006 Telephone: (202) 441-3200 Facsimile: (202) 441-3201 ltrager@vtklegal.com mforsythe@vtklegal.com

Attorneys for Defendant Hargrove-Dalton Defense Systems, Inc.

________________________________________

Priya Anand

WHITMORE AEROSPACE LLC,

Plaintiff,

HARGROVE-DALTON DEFENSE SYSTEMS, INC.,

Defendant.

Page

PRELIMINARY STATEMENT	1
STATEMENT OF FACTS	3
<!-- indent:1 -->A. The Parties<!-- /indent -->	3
<!-- indent:1 -->B. The Prime Contract and the Teaming Agreement<!-- /indent -->	4
<!-- indent:1 -->C. The DCMA Cost-Overrun Determination<!-- /indent -->	7
<!-- indent:1 -->D. HDDS's Indemnification Demand and Pre-Litigation Dispute Resolution<!-- /indent -->	9
<!-- indent:1 -->E. The DCMA Administrative Review Under the Contract Disputes Act<!-- /indent -->	10
<!-- indent:1 -->F. This Litigation<!-- /indent -->	11
ARGUMENT	13
<!-- indent:1 -->I. LEGAL STANDARD FOR A STAY OF PROCEEDINGS<!-- /indent -->	13
<!-- indent:1 -->II. THE PRIMARY-JURISDICTION DOCTRINE COUNSELS DEFERRAL TO DCMA'S ADMINISTRATIVE REVIEW<!-- /indent -->	15
<!-- indent:2 -->A. The Primary-Jurisdiction Doctrine<!-- /indent -->	15
<!-- indent:2 -->B. DCMA Has Specialized Expertise in Government Contract Cost Determinations<!-- /indent -->	17
<!-- indent:2 -->C. The COFD Will Directly Address the Factual Predicate for the Indemnity Dispute<!-- /indent -->	19
<!-- indent:1 -->III. A STAY WILL PROMOTE JUDICIAL ECONOMY AND AVOID DUPLICATIVE PROCEEDINGS<!-- /indent -->	21
<!-- indent:2 -->A. The Administrative Proceeding Will Likely Resolve or Narrow the Issues<!-- /indent -->	21
<!-- indent:2 -->B. A Stay Will Conserve Party and Judicial Resources<!-- /indent -->	23
<!-- indent:1 -->IV. THE CONTRACT DISPUTES ACT FRAMEWORK SUPPORTS A STAY<!-- /indent -->	25
<!-- indent:1 -->V. NEITHER PARTY WILL BE PREJUDICED BY A STAY<!-- /indent -->	27
<!-- indent:2 -->A. HDDS Does Not Oppose the Stay<!-- /indent -->	27
<!-- indent:2 -->B. WAL Will Not Be Prejudiced<!-- /indent -->	28
<!-- indent:2 -->C. HDDS Will Not Be Prejudiced<!-- /indent -->	28
<!-- indent:1 -->VI. PROPOSED STAY CONDITIONS<!-- /indent -->	30
CONCLUSION	31
CERTIFICATE OF SERVICE	32

Page(s)

Arkwright-Boston Manufacturers Mutual Insurance Co. v. City of New York, 762 F.2d 205 (2d Cir. 1985)	14
Bethlehem Steel Corp. v. EPA, 638 F.2d 994 (7th Cir. 1980)	18
Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988)	26
Clinton v. Jones, 520 U.S. 681 (1997)	13
Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976)	14
Dependable Highway Express, Inc. v. Navigators Insurance Co., 498 F.3d 1059 (9th Cir. 2007)	14
Ellis v. Tribune Television Co., 443 F.3d 71 (2d Cir. 2006)	16
Far East Conference v. United States, 342 U.S. 570 (1952)	15, 16
Fenmore Industries v. United States, 563 U.S. 478 (2011)	18, 26
Hachamovitch v. DeBuono, 159 F.3d 687 (2d Cir. 1998)	15
In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116 (2d Cir. 2007)	14
Landis v. North American Co., 299 U.S. 248 (1936)	13, 14, 28
Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83 (2d Cir. 2012)	14
MedImmune, Inc. v. Pemberton Partners LLC, 549 U.S. 118 (2007)	15
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983)	14
Reiter v. Cooper, 507 U.S. 258 (1993)	15, 16, 17
Syncsort Inc. v. Sequential Software, Inc., 50 F. Supp. 2d 318 (S.D.N.Y. 1999)	14
Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056 (9th Cir. 1991)	26
United States v. Western Pacific Railroad Co., 352 U.S. 59 (1956)	15, 16, 17

Page(s)

41 U.S.C. §§ 7101–7109 (Contract Disputes Act)	2, 10, 25, 26, 27
41 U.S.C. § 7103(a)	25
41 U.S.C. § 7103(f)	26
41 U.S.C. § 7104	26
48 C.F.R. Part 31 (FAR Part 31 — Contract Cost Principles and Procedures)	8, 18
48 C.F.R. Part 30 (Cost Accounting Standards)	8, 18
48 C.F.R. § 42.302 (Contract Administration Functions)	17
48 C.F.R. § 16.405-1 (Cost-Plus-Incentive-Fee Contracts)	5

Page(s)

3 Richard A. Lord, Williston on Contracts § 7:21 (4th ed. 2022)	20
Manual for Complex Litigation, Fourth § 20.132 (2004)	22
Defense Contract Management Agency, DCMA Manual 2301-01, Contracting Officer Determinations (2020)	17, 18

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF WHITMORE AEROSPACE LLC'S MOTION TO STAY PROCEEDINGS PENDING COMPLETION OF ADMINISTRATIVE REVIEW BY THE DEFENSE CONTRACT MANAGEMENT AGENCY
Filed: February 10, 2023
CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 506-7400 Facsimile: (212) 506-7401 Attorneys for Plaintiff Whitmore Aerospace LLC
Priya Anand (Lead Counsel) Douglas Carmichael Patrick Gallagher Simone Laroche (Washington, D.C. Office: 1900 K Street NW, Suite 1100, Washington, D.C. 20006)
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes and Regulations
Other Authorities
PRELIMINARY STATEMENT
Plaintiff Whitmore Aerospace LLC ("WAL") respectfully moves this Court for an order staying all proceedings in this declaratory judgment action pending the conclusion of the ongoing administrative review by the Defense Contract Management Agency ("DCMA") of cost-overrun claims arising under Prime Contract No. FA8620-19-C-0337 for the Advanced Tactical Airframe Program ("ATAP"), and the issuance of the Contracting Officer's Final Decision ("COFD") by Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF.
At bottom, this case involves a single core question: whether Section 11.4 of the Teaming Agreement dated June 12, 2019, between WAL and Defendant Hargrove-Dalton Defense Systems, Inc. ("HDDS") obligates WAL to indemnify HDDS for $14,726,583 in cost overruns identified in the Contracting Officer's Preliminary Determination ("COPD") issued by DCMA on August 1, 2022. That question, in turn, depends entirely upon the factual determination of the amount, allocation, and root cause of the cost overruns on the ATAP program — and specifically, the extent to which those overruns are attributable to WAL's Work Package 4 ("WP-4") as opposed to other work packages or HDDS's own conduct.
Those factual determinations are not matters for this Court to resolve in the first instance. They are actively being adjudicated by DCMA — the specialized administrative agency charged with precisely this type of government-contract cost analysis. On October 15, 2022, HDDS itself filed a formal response to the COPD and requested a COFD under the Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101–7109. That administrative proceeding is pending before ACO Lt. Col. Vickers at DCMA Northern Virginia. The COFD, once issued, will constitute the authoritative administrative determination of the amount of cost overruns, their allocation among work packages, their root causes, and the allowability of the costs at issue under the CPIF prime contract structure.
The COFD thus will directly determine the factual predicate underlying the private-party indemnity dispute before this Court. If the COFD reduces or eliminates the cost attribution to WP-4, WAL's indemnity exposure may be substantially narrowed or eliminated altogether. If the COFD attributes overruns to causes other than WAL's acts or omissions — such as titanium-market conditions beyond WAL's control, HDDS-supplied defective engineering specifications, or HDDS's late delivery of government-furnished equipment — it will support WAL's causation defense under Section 11.4 of the Teaming Agreement. In either event, the COFD will materially inform, and may substantially simplify or render moot, the issues pending before this Court.
A stay of proceedings is warranted under the Court's inherent discretionary authority to manage its docket, the primary-jurisdiction doctrine, and the strong policy interests favoring judicial economy and the avoidance of inconsistent outcomes. The administrative proceeding is already underway, the issues before the agency overlap almost entirely with the issues before this Court, and DCMA possesses specialized expertise in government-contract cost determinations that this Court does not.
Importantly, HDDS does not oppose this motion. Counsel for WAL has conferred with counsel for HDDS, and the parties are in agreement that a stay is appropriate. A joint stipulation reflecting the parties' agreement to the stay and proposed conditions will be filed separately on or before February 24, 2023.
WAL respectfully submits that the interests of justice, judicial economy, and the orderly administration of this case all weigh decisively in favor of granting the requested stay.
STATEMENT OF FACTS
A. The Parties
Plaintiff Whitmore Aerospace LLC ("WAL") is a Virginia limited liability company with its principal place of business at 4200 Commerce Park Drive, Suite 600, Chantilly, Virginia 20151. WAL is an aerospace and defense manufacturer specializing in precision-machined turbine components, integrated propulsion sub-assemblies, and structural airframe parts for military and commercial aerospace platforms. The company was founded in 2006 by Marcus J. Whitmore and Elaine Whitmore, and has grown into a mid-tier defense contractor with approximately $287 million in annual revenue for fiscal year 2022 and approximately 1,400 employees across manufacturing facilities in Virginia, Ohio, and South Carolina. WAL holds an active facility security clearance at the SECRET level and maintains a longstanding record as a reliable supplier to major prime defense contractors, including HDDS. (Verified Complaint ("Compl.") ¶¶ 1–5; Anand Decl. ¶ 3.)
Defendant Hargrove-Dalton Defense Systems, Inc. ("HDDS") is a Delaware corporation headquartered at 1100 Garrison Boulevard, Suite 2200, Bethesda, Maryland 20817. HDDS is a large prime defense contractor engaged in systems integration, avionics, and airframe manufacturing for the U.S. Department of Defense and allied foreign governments. HDDS reports approximately $3.4 billion in annual revenue for fiscal year 2022 and employs approximately 12,500 individuals across multiple domestic and international facilities. HDDS serves as the prime contractor on the ATAP program that lies at the heart of this dispute. (Compl. ¶¶ 6–8; Answer ¶¶ 6–8.)
B. The Prime Contract and the Teaming Agreement
The underlying government contract at issue is Prime Contract No. FA8620-19-C-0337, awarded by the United States Air Force through the Air Force Life Cycle Management Center ("AFLCMC"), Wright-Patterson Air Force Base, Ohio, to HDDS for the Advanced Tactical Airframe Program ("ATAP"). The ATAP program involves the design, development, and manufacture of a next-generation tactical airframe platform intended for deployment by the United States Air Force and selected allied nations. The Program Executive Officer for ATAP is Colonel Brian T. Matsuda, USAF. (Compl. ¶¶ 10–12; Anand Decl. Ex. A (excerpts of Prime Contract).)
The prime contract is structured as a cost-plus-incentive-fee ("CPIF") contract, a contract type defined by Federal Acquisition Regulation ("FAR") § 16.405-1, under which the contractor is reimbursed for allowable costs and receives an incentive fee that adjusts based on the relationship between actual costs and target costs. The key financial terms of the prime contract are as follows:
• Target Cost: $412,000,000
• Target Fee: 8% of Target Cost ($32,960,000)
• Ceiling Price: $470,000,000
• Share Ratio (Overruns): 70% Government / 30% Contractor
• Share Ratio (Underruns): 60% Government / 40% Contractor
• Period of Performance: September 1, 2019, through August 31, 2024 (five base years), with two one-year option periods extending through August 31, 2026, if exercised.
The CPIF structure creates a financial incentive for the contractor to control costs, because the contractor bears 30% of any cost overruns above the target cost, up to the ceiling price. This cost-sharing mechanism is central to the dispute, as cost overruns on the ATAP program directly affect HDDS's financial position and, derivatively through the Teaming Agreement, WAL's potential indemnity obligations. (Compl. ¶¶ 13–18; Anand Decl. Ex. A.)
In connection with the prime contract, WAL and HDDS entered into a Teaming Agreement dated June 12, 2019 (the "Teaming Agreement"), pursuant to which HDDS served as the Team Lead and WAL served as a Team Member. Under the Teaming Agreement, WAL's scope of work encompasses the fabrication and delivery of titanium structural assemblies — specifically, the wing-box substructure, center fuselage longerons, and bulkhead fittings — designated as Work Package 4 ("WP-4"). WAL's share of the target cost was set at 18% of the overall target cost, equaling approximately $74,160,000. (Compl. ¶¶ 19–23; Anand Decl. Ex. B (Teaming Agreement).)
Several provisions of the Teaming Agreement are directly relevant to this motion:
Section 11.4 (Indemnification). Section 11.4 of the Teaming Agreement sets forth WAL's indemnification obligations. It provides, in relevant part:
"Team Member shall indemnify, defend, and hold harmless Team Lead and its officers, directors, employees, agents, and representatives from and against any and all Losses arising out of or relating to (a) Team Member's negligent acts or omissions, willful misconduct, or material breach of this Agreement, or (b) any claim by the U.S. Government that costs incurred under Team Member's Work Package are unallowable, unreasonable, or otherwise subject to disallowance under the Prime Contract, to the extent such claim is caused by Team Member's acts or omissions."
(Teaming Agreement § 11.4 (emphasis added); Anand Decl. Ex. B.) The critical qualifying language — "to the extent such claim is caused by Team Member's acts or omissions" — is the crux of the parties' dispute. WAL maintains that this language limits its indemnification obligation to those overruns that are demonstrably caused by WAL's own conduct, not overruns attributable to force majeure events, HDDS's defective specifications, or HDDS's own failures. HDDS takes a broader view, asserting that WAL bears indemnification responsibility for all costs attributed to WP-4 regardless of causation. The resolution of this contractual interpretation issue depends, as a threshold matter, on the factual determination of the amount, allocation, and root causes of the cost overruns — the very issues being adjudicated by DCMA.
Section 11.5 (Limitation of Liability). The Teaming Agreement includes a liability cap providing that the aggregate liability of the Team Member under Section 11.4 shall not exceed 120% of the value of WP-4, which equals $88,992,000. (Teaming Agreement § 11.5; Anand Decl. Ex. B.)
Section 18.1 (Governing Law). The Teaming Agreement is governed by the laws of the State of New York, without regard to its conflict-of-laws principles. (Teaming Agreement § 18.1; Anand Decl. Ex. B.)
Section 18.2 (Forum Selection). The parties consented to the exclusive jurisdiction of the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, for any dispute arising under the Teaming Agreement. (Teaming Agreement § 18.2; Anand Decl. Ex. B.)
Section 18.3 (Dispute Resolution). Before commencing litigation, the parties agreed to a multi-step dispute resolution process consisting of: (i) senior executive negotiation for a period of not less than thirty (30) days; (ii) non-binding mediation administered by JAMS or another mutually agreed neutral; and (iii) if the dispute remains unresolved, litigation in the agreed forum. The Teaming Agreement does not include a mandatory arbitration clause. (Teaming Agreement § 18.3; Anand Decl. Ex. B.)
C. The DCMA Cost-Overrun Determination
On August 1, 2022, Administrative Contracting Officer Lt. Col. Sandra M. Vickers, USAF, acting in her capacity as the cognizant ACO for Prime Contract No. FA8620-19-C-0337, issued a Contracting Officer's Preliminary Determination ("COPD") identifying $14,726,583 in cost overruns on the ATAP program through the end of the reporting period. (Compl. ¶¶ 28–30; Anand Decl. Ex. C (COPD).)
The COPD attributed $12,817,441 — representing 87.03% of the total overruns — to WP-4, the titanium structural assemblies work package performed by WAL. The remaining $1,909,142 (12.97%) was attributed to other work packages performed by HDDS and other team members. (Compl. ¶¶ 31–32; Anand Decl. Ex. C.)
The COPD identified the following root causes for the WP-4 overruns:
(a) Titanium Raw-Material Cost Escalation: Approximately $4,200,000 in overruns were attributed to significant escalation in the price of aerospace-grade titanium alloys (primarily Ti-6Al-4V) driven by global supply chain disruptions and sanctions-related restrictions on Russian titanium exports. This factor was entirely beyond WAL's control.
(b) Rework Due to Non-Conforming Machining Tolerances: Approximately $5,100,000 in overruns were attributed to rework costs incurred when titanium structural components failed to meet specified dimensional tolerances. WAL contends that the root cause of these machining failures was HDDS's provision of defective engineering specifications and computer-aided design ("CAD") models, which contained errors in tolerance stackup analysis.
(c) Schedule Delays Causing Idle-Labor Charges: Approximately $2,300,000 in overruns were attributed to idle-labor charges resulting from schedule delays. WAL contends that these delays were caused by HDDS's late delivery of government-furnished equipment ("GFE"), including critical tooling and inspection fixtures, which prevented WAL from commencing fabrication activities on schedule.
(d) Engineering Change Proposal ("ECP") Implementation Costs: Approximately $1,200,000 in overruns were attributed to costs incurred in implementing engineering changes directed by HDDS during the performance period. WAL contends that these ECPs were initiated at the direction of the U.S. Government and flowed down to WAL by HDDS, and that WAL is not responsible for overruns caused by government-directed design changes.
(Compl. ¶¶ 33–37; Anand Decl. Ex. C.)
The COPD is a preliminary determination. It represents DCMA's initial assessment of the cost-overrun situation, but it is not a final agency action. The COPD expressly states that HDDS may file a formal response contesting the preliminary findings and requesting a COFD. The administrative review process that follows the COPD involves a comprehensive analysis of the underlying cost data, contractor submissions, audit findings, and supporting documentation, and is conducted in accordance with the Cost Accounting Standards (48 C.F.R. Part 30) and the FAR Part 31 cost principles (48 C.F.R. Part 31). (Anand Decl. Ex. C; Anand Decl. ¶ 12.)
WAL's position is that the overruns attributed to WP-4 were not caused by WAL's acts or omissions, but rather by: (i) force-majeure titanium price escalation beyond WAL's control; (ii) defective engineering specifications provided by HDDS that necessitated costly rework; and (iii) HDDS's late delivery of government-furnished equipment that caused schedule delays and associated idle-labor charges. WAL therefore maintains that Section 11.4 of the Teaming Agreement does not require WAL to indemnify HDDS for these overruns, even assuming the COPD's cost attributions are ultimately confirmed. (Compl. ¶¶ 38–44.)
D. HDDS's Indemnification Demand and Pre-Litigation Dispute Resolution
On September 9, 2022, HDDS sent WAL a formal indemnification demand letter pursuant to Section 11.4 of the Teaming Agreement. The demand sought payment of $14,726,583 — the full amount of the cost overruns identified in the COPD, including the $1,909,142 in overruns attributed to non-WP-4 work packages. WAL maintains that this demand is facially overbroad, as it seeks indemnification for overruns that are not even attributed to WAL's work package. (Compl. ¶¶ 45–48; Anand Decl. Ex. D (Demand Letter).)
In accordance with Section 18.3 of the Teaming Agreement, the parties engaged in senior executive negotiations before resorting to litigation. WAL Chief Executive Officer Marcus J. Whitmore and HDDS Senior Vice President of Programs William Fong held in-person meetings on September 30, 2022, and October 14, 2022, at HDDS's Bethesda headquarters. Those discussions were substantive but ultimately did not produce a resolution. The principal impasse related to the parties' fundamentally different interpretations of the causation language in Section 11.4 and the appropriate scope of WAL's indemnification obligation. (Compl. ¶¶ 49–53; Anand Decl. ¶¶ 15–17.)
On October 21, 2022, WAL's counsel sent a letter to HDDS's counsel proposing that the parties proceed to non-binding mediation pursuant to Section 18.3 of the Teaming Agreement, and suggested JAMS as the administering organization. (Anand Decl. Ex. E.) On October 28, 2022, HDDS's counsel responded, declining to participate in mediation. HDDS took the position that the mediation provision in Section 18.3 is permissive rather than mandatory, noting that the clause uses the word "may" in connection with mediation, and asserted that the dispute was not amenable to resolution through non-binding processes given the parties' divergent legal positions. (Compl. ¶¶ 54–56; Anand Decl. Ex. F.)
E. The DCMA Administrative Review Under the Contract Disputes Act
Separately from the private-party dispute between WAL and HDDS, the government-contract cost-overrun determination is proceeding through the administrative channels established by the Contract Disputes Act, 41 U.S.C. §§ 7101–7109.
On October 15, 2022, HDDS filed a formal response to the COPD with ACO Lt. Col. Vickers and submitted a request for a Contracting Officer's Final Decision ("COFD") under the CDA. In its response, HDDS contested certain aspects of the COPD, including the allocation of overruns between WP-4 and other work packages, and provided additional cost data and narrative justifications for the overruns. (Anand Decl. ¶ 18; Anand Decl. Ex. G (redacted excerpts of HDDS's formal response).)
The COFD, once issued, will constitute the definitive administrative determination of the amount, allocation, and allowability of the cost overruns under the prime contract. The Contracting Officer will assess the overruns in light of the applicable Cost Accounting Standards, the FAR Part 31 cost allowability principles, and the specific terms of the CPIF contract. The COFD will set forth detailed findings of fact and conclusions regarding the causes of the overruns and the appropriate allocation of responsibility among the various work packages and program participants.
The administrative proceeding is currently pending before ACO Lt. Col. Vickers at DCMA's Northern Virginia office. WAL's government contracts regulatory counsel, Ashford & Reeves LLP — specifically, Harold Reeves (Senior Partner) and Natalie Cheng (Associate) — is monitoring the proceeding on WAL's behalf and has been in contact with DCMA regarding the anticipated timeline for the COFD. While DCMA has not committed to a specific issuance date, the ACO's office has indicated that the field audit is underway and that the COFD is expected to be issued within the next six to twelve months. (Anand Decl. ¶¶ 19–22.)
The CDA administrative process is designed to produce precisely the type of authoritative factual determination that this Court will need in order to resolve the indemnity dispute between WAL and HDDS. The COFD will address the final amount of cost overruns, the allocation of those overruns to specific work packages, the root causes of the overruns, and the allowability and reasonableness of the costs at issue — all of which are directly relevant to the question of whether WAL owes indemnification under Section 11.4 of the Teaming Agreement, and if so, in what amount.
F. This Litigation
On November 28, 2022, WAL filed its Verified Complaint for Declaratory Judgment in this Court, invoking the Court's jurisdiction under 28 U.S.C. §§ 1332 and 2201. The Complaint seeks the following declaratory relief:
(1) A declaration that Section 11.4 of the Teaming Agreement does not obligate WAL to indemnify HDDS for the $14,726,583 identified in the COPD;
(2) A declaration that WAL's indemnification obligation under Section 11.4 extends only to those cost overruns that are "caused by" WAL's own acts or omissions, and not to overruns caused by force-majeure events, HDDS-supplied defective specifications, or HDDS's late delivery of government-furnished equipment; and
(3) A declaration that HDDS's indemnification demand is overbroad to the extent it seeks recovery of $1,909,142 in cost overruns attributed to non-WP-4 work packages for which WAL bears no responsibility.
(Compl. ¶¶ 58–72.)
On January 13, 2023, HDDS filed its Answer to the Verified Complaint and a Counterclaim. HDDS's Counterclaim seeks $14,726,583 in contractual indemnification under Section 11.4 of the Teaming Agreement, together with attorneys' fees and costs pursuant to Section 11.6 of the Teaming Agreement, which provides for recovery of fees incurred in enforcing indemnification obligations. HDDS is represented in this action by Leonard Trager, Esq. and Megan Forsythe, Esq. of Voss, Trager & Kendall LLP, Washington, D.C. (Answer and Counterclaim, Dkt. No. 14.)
On February 3, 2023, WAL filed its Reply to the Counterclaim, denying HDDS's entitlement to the claimed indemnification and reasserting WAL's affirmative defenses. (Reply, Dkt. No. 18.)
No discovery has yet commenced in this action. The Court has not yet entered a scheduling order or set dates for discovery, dispositive motions, or trial. The present motion is timely filed at the earliest practicable stage of the litigation, before the parties and the Court have invested significant resources in proceedings that may prove unnecessary or duplicative of the DCMA administrative review.
ARGUMENT
I. LEGAL STANDARD FOR A STAY OF PROCEEDINGS
It is well established that "the power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. North American Co., 299 U.S. 248, 254 (1936). The authority to grant a stay is vested in the sound discretion of the trial court. Id. at 254–55; see also Clinton v. Jones, 520 U.S. 681, 706 (1997) ("The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket.").
The Second Circuit has consistently recognized the district court's broad discretion to stay proceedings where doing so advances the interests of judicial economy and fairness to the parties. See In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116, 127 (2d Cir. 2007) (affirming district court's exercise of discretion in managing complex litigation); Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 96–97 (2d Cir. 2012) (district court has "wide latitude in determining the scope and timing of discovery and in managing the course of litigation").
In determining whether to grant a stay, courts in this Circuit consider three principal factors:
(1) Whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party;
(2) Whether a stay would simplify the issues in question and streamline the trial; and
(3) Whether a stay would reduce the burden of litigation on the parties and on the Court.
See Syncsort Inc. v. Sequential Software, Inc., 50 F. Supp. 2d 318, 325 (S.D.N.Y. 1999); see also Dependable Highway Express, Inc. v. Navigators Insurance Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (articulating substantially identical factors). These factors are not rigid prerequisites but rather guideposts for the exercise of the court's discretion. The movant bears the burden of demonstrating that a stay is appropriate under the circumstances. See Landis, 299 U.S. at 255.
Where a stay is sought pending the outcome of a parallel or related administrative proceeding, courts apply these factors with particular attention to the relationship between the judicial and administrative proceedings. A stay is especially appropriate where the administrative proceeding is expected to resolve or significantly narrow the issues before the court, thereby avoiding wasteful duplication of effort. See Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976) (recognizing the importance of "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation"); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 15 (1983) (similar). Courts regularly stay civil actions where a pending administrative proceeding addresses the same or substantially overlapping factual and legal issues. See Arkwright-Boston Manufacturers Mutual Insurance Co. v. City of New York, 762 F.2d 205, 210 (2d Cir. 1985).
As demonstrated below, all three factors weigh heavily in favor of a stay in this case. The primary-jurisdiction doctrine provides additional and independent support for deferring to DCMA's ongoing administrative review.
II. THE PRIMARY-JURISDICTION DOCTRINE COUNSELS DEFERRAL TO DCMA'S ADMINISTRATIVE REVIEW
A. The Primary-Jurisdiction Doctrine. The primary-jurisdiction doctrine is a prudential doctrine that applies "whenever enforcement of a claim originally cognizable in the courts requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." Reiter v. Cooper, 507 U.S. 258, 268 (1993) (quoting United States v. Western Pacific Railroad Co., 352 U.S. 59, 64 (1956)). The doctrine recognizes that certain questions, while falling within the jurisdiction of the courts, are better resolved — at least in the first instance — by specialized administrative agencies possessing the technical expertise and institutional competence to address them.
The Supreme Court has identified two purposes underlying the primary-jurisdiction doctrine. First, the doctrine "promotes proper relationships between the courts and administrative agencies charged with particular regulatory duties" by ensuring that courts do not prematurely adjudicate issues that are within the agency's domain. Far East Conference v. United States, 342 U.S. 570, 574 (1952). Second, the doctrine safeguards against "the danger of a court imposing upon an agency inconsistent duties" and "the possibility that judicial resolution of a question . . . might be at odds with agency action." Western Pacific R.R. Co., 352 U.S. at 64; see also Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir. 1998).
In deciding whether to invoke the primary-jurisdiction doctrine, courts consider the following factors:
(1) Whether the agency has specialized expertise relevant to the resolution of the dispute;
(2) Whether there is a need for uniform administrative treatment of the issues presented;
(3) Whether the agency proceeding is likely to resolve or substantially narrow the issues before the court; and
(4) Whether deferral to the agency would promote judicial economy and avoid the risk of inconsistent outcomes.
See Reiter, 507 U.S. at 268–69; Ellis v. Tribune Television Co., 443 F.3d 71, 81 (2d Cir. 2006). Application of the doctrine "does not indicate that the court has no jurisdiction over the matter" but rather "is a doctrine specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency." Western Pacific R.R. Co., 352 U.S. at 63–64.
When primary jurisdiction applies, the typical remedy is "not to dismiss but to stay judicial proceedings pending a determination by the agency." Reiter, 507 U.S. at 269; see also Far East Conference, 342 U.S. at 577. This approach preserves the court's jurisdiction while allowing the administrative process to run its course, ensuring that the court has the benefit of the agency's specialized findings when it returns to the merits.
Each of the relevant factors strongly supports invoking the primary-jurisdiction doctrine in this case and staying these proceedings pending the DCMA's issuance of the COFD.
B. DCMA Has Specialized Expertise in Government Contract Cost Determinations. DCMA is the contracting agency responsible for the administration of Prime Contract No. FA8620-19-C-0337. Pursuant to FAR § 42.302, DCMA performs a wide range of contract administration functions, including the review and approval of contractor cost submissions, the determination of cost allowability and allocability under the applicable Cost Accounting Standards and FAR Part 31 cost principles, and the issuance of contracting officer determinations relating to cost performance under CPIF and other cost-reimbursement contract types. See 48 C.F.R. § 42.302; Defense Contract Management Agency, DCMA Manual 2301-01, Contracting Officer Determinations (2020).
The cost-overrun analysis at the heart of this dispute is quintessentially within DCMA's area of specialized expertise. The COPD identified four categories of overruns on WP-4 — titanium raw-material cost escalation, rework due to non-conforming machining tolerances, schedule-related idle-labor charges, and engineering change proposal implementation costs — each of which requires detailed government-contract cost-accounting analysis to evaluate properly. The determination of whether these costs are allowable, allocable, and reasonable under FAR Part 31 (48 C.F.R. Part 31) and the Cost Accounting Standards (48 C.F.R. Part 30) involves highly technical and specialized inquiries that fall squarely within DCMA's institutional competence.
Specifically, the COFD process requires DCMA to analyze, among other things:
• The cost data submitted by HDDS and WAL under the applicable cost-accounting disclosure statements and contract cost-reporting requirements;
• The allocability of material cost escalation under the applicable cost-accounting practices and the prime contract's provisions regarding economic price adjustment;
• The reasonableness of rework costs in light of the engineering specifications provided, the applicable quality standards, and industry norms for titanium machining operations;
• The propriety of idle-labor charges in the context of schedule delays, including the analysis of critical-path impacts, government-furnished equipment delivery timelines, and the contractor's duty to mitigate;
• The allowability and allocability of ECP implementation costs under the prime contract's change-order provisions and FAR Part 43.
These are precisely the types of technical, regulation-intensive cost determinations that DCMA's administrative contracting officers are trained and authorized to make. See Bethlehem Steel Corp. v. EPA, 638 F.2d 994, 998 (7th Cir. 1980) (deferring to agency expertise where "the issues require an understanding of a complex regulatory scheme"); Fenmore Industries v. United States, 563 U.S. 478, 486 (2011) (recognizing the specialized nature of government contract cost and pricing determinations). This Court would benefit from deferring to DCMA's specialized analysis rather than conducting its own independent assessment of these technical government-contract cost issues — an assessment that would likely require extensive expert testimony and the Court's immersion in the intricacies of Cost Accounting Standards and FAR Part 31 cost principles.
The administrative record developed by DCMA will provide a comprehensive evidentiary foundation that can inform the Court's eventual resolution of the indemnity dispute. DCMA's field audit team has access to the contractor's books and records, the cost-accounting systems, the relevant engineering documentation, and the government's own contract administration files — a depth of access and expertise that cannot easily be replicated through civil discovery in this Court.
C. The COFD Will Directly Address the Factual Predicate for the Indemnity Dispute. The indemnity dispute before this Court turns on three factual questions: (1) what is the amount of cost overruns on the ATAP program; (2) what portion of those overruns is properly attributed to WP-4; and (3) what are the root causes of the WP-4 overruns — specifically, whether they were "caused by" WAL's acts or omissions, as required for indemnification under Section 11.4 of the Teaming Agreement. The COFD will address each of these questions directly.
Section 11.4(b) of the Teaming Agreement provides that WAL's indemnification obligation arises with respect to "any claim by the U.S. Government that costs incurred under Team Member's Work Package are unallowable, unreasonable, or otherwise subject to disallowance under the Prime Contract," but only "to the extent such claim is caused by Team Member's acts or omissions." This language imposes two preconditions on WAL's indemnity obligation: (i) there must be a government claim regarding cost unallowability or unreasonableness; and (ii) the claim must be caused by WAL's acts or omissions. Both of these preconditions depend on factual determinations that DCMA is in the process of making.
The COFD will determine:
(i) The final amount of cost overruns. The COPD's figure of $14,726,583 is preliminary. The COFD may adjust this figure upward or downward based on the comprehensive audit and review that is currently underway.
(ii) The allocation of overruns between WP-4 and other work packages. The COPD attributed 87.03% of overruns to WP-4. HDDS, in its own formal response to the COPD, has contested certain aspects of the allocation. The COFD will issue a definitive allocation that will clarify the extent to which overruns are properly chargeable to WAL's work package.
(iii) The root causes of the overruns. The COFD will assess the causes of the overruns, including the extent to which they resulted from titanium market conditions, defective specifications, government-furnished equipment delays, or government-directed engineering changes — all factors that WAL contends are not attributable to its own acts or omissions.
(iv) Whether costs are allowable, reasonable, and allocable. The COFD will apply the FAR Part 31 cost principles and the Cost Accounting Standards to determine the allowability, reasonableness, and allocability of the costs at issue — the very government cost determinations that trigger (or do not trigger) WAL's indemnification obligation under Section 11.4(b).
Each of these determinations is directly relevant to — and may be dispositive of — the indemnity dispute pending before this Court. If the COFD reduces the WP-4 cost attribution, WAL's maximum indemnity exposure is correspondingly reduced. If the COFD determines that the overruns were caused by factors outside WAL's control, WAL's causation defense under Section 11.4 is bolstered. If the COFD finds that the costs are in fact allowable and reasonable under FAR Part 31, the trigger for indemnification under Section 11.4(b) may not even be met.
The COFD's factual findings may also have preclusive or, at a minimum, significant persuasive effect in this proceeding. See 3 Richard A. Lord, Williston on Contracts § 7:21 (4th ed. 2022) (discussing the effect of administrative findings on private contractual disputes incorporating or referencing administrative determinations). Because the Teaming Agreement expressly conditions WAL's indemnification obligation on government claims regarding cost allowability, the government's own final determination on those issues is logically and legally relevant to the interpretation and application of the indemnification clause.
In short, it would be imprudent for this Court to proceed to adjudicate the indemnity dispute before DCMA has issued its definitive findings on the underlying cost-overrun questions. Doing so would risk a result inconsistent with the forthcoming COFD, would require this Court to make its own technical cost-accounting determinations on an incomplete record, and would deprive the Court of the informed foundation that the administrative process is designed to provide.
III. A STAY WILL PROMOTE JUDICIAL ECONOMY AND AVOID DUPLICATIVE PROCEEDINGS
A. The Administrative Proceeding Will Likely Resolve or Narrow the Issues. The DCMA's COFD process involves a comprehensive review of contract performance, cost data, and the parties' respective contributions to the overruns on the ATAP program. The ACO's review encompasses detailed field audit work by DCMA and Defense Contract Audit Agency ("DCAA") auditors, analysis of the contractor's cost data submissions and incurred cost proposals, review of engineering and technical documentation, and assessment of the contractor's cost-accounting practices. This administrative process will produce detailed factual findings on the very cost-allocation and causation issues that lie at the heart of the present litigation.
The COFD's findings have the potential to resolve or substantially narrow the issues before this Court in several ways. If the COFD significantly reduces the total overrun figure or the amount attributed to WP-4, the parties may be able to resolve the indemnity dispute without further litigation. If the COFD identifies root causes that exonerate WAL — such as HDDS-supplied defective specifications or force-majeure market conditions — it may effectively eliminate the basis for HDDS's indemnity claim. Even if the COFD does not fully resolve the dispute, it will almost certainly clarify the factual landscape and narrow the issues that require judicial determination, reducing the scope and complexity of any remaining litigation.
Courts routinely recognize that the pendency of an administrative proceeding that is expected to inform or clarify the issues in a civil action weighs in favor of a stay. See Manual for Complex Litigation, Fourth § 20.132 (2004) (discussing stays pending administrative proceedings as a tool for promoting judicial economy). The strong overlap between the issues before DCMA and the issues before this Court makes this case a paradigmatic candidate for a stay.
Moreover, proceeding with litigation while the administrative review is ongoing creates a significant risk of inconsistent outcomes. This Court could reach a determination regarding the amount, allocation, or causation of overruns that is subsequently contradicted by the COFD — a result that would undermine the finality and efficiency of both the judicial and administrative proceedings. A stay eliminates this risk by ensuring that the Court has the benefit of DCMA's authoritative findings before rendering its own judgment.
B. A Stay Will Conserve Party and Judicial Resources. If this action proceeds without a stay, the parties would be required to embark on an extensive and costly discovery program addressing the same cost-accounting, allocation, and causation issues that DCMA is currently reviewing. This would include, at a minimum:
• Production and review of tens of thousands of pages of cost data, incurred cost submissions, contractor performance reports, engineering change documentation, and correspondence between the parties and the government;
• Depositions of DCMA and DCAA personnel regarding the COPD findings, the audit process, and the government's cost-accounting analysis;
• Depositions of WAL and HDDS program managers, cost accountants, and engineers regarding the root causes of the overruns;
• Retention of expert witnesses on government-contract cost accounting, FAR Part 31 allowability analysis, and Cost Accounting Standards compliance;
• Preparation of expert reports analyzing the allocation of overruns and the causation of specific cost categories; and
• Potentially, a Daubert or in limine process to address the admissibility and reliability of the parties' respective expert analyses.
This discovery and expert analysis would impose substantial costs on both parties and significant demands on the Court's time and resources. More importantly, much of this work would be duplicative of the analysis that DCMA is already performing — and that DCMA is far better positioned to perform, given its institutional expertise, its access to the contractor's cost records, and its familiarity with the applicable cost-accounting standards and regulatory framework.
A stay would allow the parties to benefit from the COFD's factual findings, potentially eliminating the need for much of the discovery and expert analysis that would otherwise be required. At a minimum, the COFD would provide a factual baseline that would significantly streamline the discovery process and reduce the scope of contested issues. The savings in time, expense, and judicial resources would be substantial.
The Court's own resources would also be conserved. Without a stay, the Court would be called upon to resolve complex and technical government-contract cost-accounting issues on which DCMA has specialized expertise and an ongoing proceeding. A stay avoids the need for the Court to grapple with these technical issues prematurely and allows the Court to benefit from the informed analysis that the administrative process is designed to produce.
IV. THE CONTRACT DISPUTES ACT FRAMEWORK SUPPORTS A STAY
The Contract Disputes Act ("CDA"), 41 U.S.C. §§ 7101–7109, establishes a comprehensive administrative framework for the resolution of disputes arising under or relating to government contracts. The CDA provides that "[a]ll claims by a contractor against the government relating to a contract shall be submitted to the contracting officer for a decision." 41 U.S.C. § 7103(a). The contracting officer's final decision is then subject to appeal to the Armed Services Board of Contract Appeals ("ASBCA") or the United States Court of Federal Claims. 41 U.S.C. § 7104.
HDDS itself invoked this framework on October 15, 2022, when it filed a formal response to the COPD and requested a COFD under the CDA. By doing so, HDDS initiated the administrative process through which the Contracting Officer — ACO Lt. Col. Vickers — will render a final decision on the cost-overrun issues. The CDA requires the Contracting Officer to issue a decision within a reasonable time, taking into account the urgency and complexity of the claim. 41 U.S.C. § 7103(f). That decision, once issued, will constitute the definitive government determination of the amount, allocation, and allowability of the cost overruns under the prime contract.
While the private-party indemnity dispute between WAL and HDDS is not itself a CDA claim — it arises under the Teaming Agreement, not the prime contract — the underlying government cost determination that triggers (or fails to trigger) WAL's indemnification obligation under Section 11.4 is proceeding through CDA channels. The CDA's administrative process is specifically designed to produce authoritative factual findings on cost-allocation, allowability, and causation issues of precisely the type at the heart of this case.
Allowing the CDA administrative process to reach its conclusion before this Court adjudicates the derivative indemnity question is both prudent and consistent with the statutory scheme. The CDA reflects a congressional determination that government-contract cost disputes should be resolved in the first instance by the contracting officer, subject to administrative and judicial review through the specialized channels established by the Act. See Fenmore Industries v. United States, 563 U.S. 478, 486 (2011) (recognizing the importance of the CDA framework in resolving government contract disputes); Bowen v. Georgetown University Hospital, 488 U.S. 204, 213–14 (1988) (deferring to administrative expertise in government-contract cost determinations). Although this Court has jurisdiction over the private contractual dispute, principles of comity, judicial economy, and respect for the administrative process all counsel in favor of staying these proceedings until the COFD is issued.
Moreover, there is a practical concern about the interaction between the judicial and administrative proceedings. If this Court were to render a judgment on the indemnity dispute before the COFD is issued, that judgment would necessarily rest on the preliminary findings of the COPD — findings that may be materially revised by the COFD. This would create the anomalous situation of a judicial determination based on a factual predicate that has not yet been finalized by the responsible administrative agency. A stay avoids this problem by ensuring that the Court's eventual adjudication of the indemnity dispute is grounded in the COFD's authoritative findings. See Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1061 (9th Cir. 1991) (noting the importance of allowing administrative proceedings to conclude before judicial adjudication of related issues).
V. NEITHER PARTY WILL BE PREJUDICED BY A STAY
A. HDDS Does Not Oppose the Stay. Counsel for WAL has conferred with counsel for HDDS — Leonard Trager, Esq. and Megan Forsythe, Esq. of Voss, Trager & Kendall LLP — regarding the requested stay. HDDS has indicated that it does not oppose a stay of proceedings pending the conclusion of the DCMA administrative review and the issuance of the COFD. The parties have agreed in principle to the terms of a stay, and a Joint Stipulation and Proposed Order to Stay Proceedings will be filed with the Court on or before February 24, 2023, reflecting the parties' agreement. (Anand Decl. ¶¶ 24–26.)
The absence of opposition from the non-moving party is itself a significant factor weighing in favor of a stay. Where both parties agree that a stay is appropriate, the risk of prejudice is minimal and the Court's inquiry is substantially simplified. See Landis, 299 U.S. at 255 (stay should be evaluated in terms of prejudice to the parties).
B. WAL Will Not Be Prejudiced. WAL is the movant and affirmatively seeks the requested stay. WAL's claims for declaratory relief and its defenses to HDDS's counterclaim will not be impaired by a stay. The statute of limitations is not a concern, as WAL has already filed its Complaint and the parties' respective claims and defenses are preserved by the pendency of this action. WAL's access to evidence will not be compromised, as WAL has issued a litigation hold preserving all relevant documents and electronically stored information as of November 2, 2022, and WAL's government contracts regulatory counsel continues to monitor the DCMA proceeding. (Anand Decl. ¶ 27.)
WAL is prepared to comply with all conditions the Court may impose in connection with a stay, including periodic status reports and prompt reactivation of the case upon the issuance of the COFD.
C. HDDS Will Not Be Prejudiced. HDDS will likewise suffer no prejudice from the requested stay. HDDS's counterclaim seeking $14,726,583 in contractual indemnification and attorneys' fees will remain pending and will be fully preserved during the stay. HDDS will not lose any substantive rights as a result of the temporary pause in litigation proceedings.
Indeed, HDDS itself initiated the DCMA administrative review that provides the basis for this stay request. On October 15, 2022, HDDS filed a formal response to the COPD and requested a COFD under the CDA. Having invoked the administrative process to obtain a final government determination on the cost-overrun issues, HDDS cannot credibly claim prejudice from a stay of the private litigation that awaits the outcome of that very proceeding. HDDS's decision to seek a COFD reflects its own recognition that the administrative process is the appropriate forum for resolving the underlying cost questions.
There is no risk of evidence spoliation during the pendency of a stay. Both parties are subject to document preservation obligations arising from this litigation. WAL issued a formal litigation hold to all relevant custodians on November 2, 2022, immediately upon the conclusion of the pre-litigation dispute resolution process and in anticipation of filing this action. HDDS's document preservation obligations arose no later than the filing of its Answer and Counterclaim on January 13, 2023. The parties' respective litigation hold obligations will remain in effect throughout any stay period. (Anand Decl. ¶¶ 28–29.)
Further, HDDS's indemnification demand has not been reduced to a judgment. HDDS is not suffering any ongoing, irreparable harm from a temporary delay in the adjudication of its counterclaim. The indemnification demand represents a disputed contractual claim, not a liquidated obligation. There is no evidence that WAL is dissipating assets, that HDDS faces any risk of inability to collect on a future judgment, or that any exigent circumstances require immediate adjudication.
Finally, and perhaps most significantly, HDDS does not oppose the stay. HDDS's non-opposition is itself powerful evidence of the absence of prejudice. See Landis, 299 U.S. at 255. When the party that might be prejudiced by a stay affirmatively consents to it, the Court may comfortably conclude that the stay serves the interests of both parties and the administration of justice.
VI. PROPOSED STAY CONDITIONS
To ensure that the Court retains oversight of this matter during the pendency of the stay and that the case is promptly reactivated when the administrative review concludes, WAL proposes that the stay be subject to the following conditions:
1. Periodic Status Reports. The parties shall file joint status reports with the Court every one hundred twenty (120) days during the pendency of the stay. Each status report shall advise the Court of the current status of the DCMA administrative review, the anticipated timeline for the issuance of the COFD, and any material developments in the administrative proceeding that may affect the scope or duration of the stay.
2. Motion to Lift Stay. Either party may, upon a showing of good cause, move to lift the stay at any time. Good cause may include, without limitation, a material change in circumstances that renders the stay inappropriate, an unreasonable delay in the issuance of the COFD, or evidence that the administrative proceeding will not address the issues relevant to this litigation.
3. Automatic Termination. The stay shall automatically terminate upon the issuance of the COFD by ACO Lt. Col. Sandra M. Vickers (or her successor in office), or upon further order of this Court. Within thirty (30) days of the issuance of the COFD, the parties shall file a joint status report with the Court and a proposed schedule for the resumption of proceedings, including proposed deadlines for discovery, dispositive motions, and trial.
These proposed conditions are designed to balance the interests of judicial economy with the need for accountability and the parties' right to a timely resolution of their dispute. The periodic reporting requirement ensures that the Court remains informed of the progress of the administrative review and can intervene if the stay becomes unwarranted. The motion-to-lift and automatic-termination provisions ensure that the stay does not continue beyond its useful purpose and that the case is promptly reactivated when the COFD is issued.
WAL understands that the Court may wish to impose additional or modified conditions, and WAL is prepared to comply with any terms the Court deems appropriate.
CONCLUSION
For the foregoing reasons, Plaintiff Whitmore Aerospace LLC respectfully requests that this Court enter an order staying all proceedings in this action pending the conclusion of the Defense Contract Management Agency's administrative review under Prime Contract No. FA8620-19-C-0337 and the issuance of the Contracting Officer's Final Decision by ACO Lt. Col. Sandra M. Vickers, subject to the periodic reporting requirements and other conditions described above.
The primary-jurisdiction doctrine, the interests of judicial economy, the avoidance of duplicative proceedings and inconsistent outcomes, and the absence of prejudice to either party all weigh decisively in favor of the requested stay. The administrative proceeding is already underway, the issues before the agency overlap almost entirely with the issues before this Court, and DCMA possesses specialized expertise in government-contract cost determinations that will materially inform — and may substantially narrow or resolve — the indemnity dispute at the heart of this litigation.
A proposed order is submitted herewith for the Court's consideration.
Dated: February 10, 2023 New York, New York
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Priya Anand (admitted S.D.N.Y.) Douglas Carmichael (admitted S.D.N.Y.) Patrick Gallagher (admitted S.D.N.Y.) Simone Laroche (admitted S.D.N.Y.; pro hac vice pending — Washington, D.C. office)
600 Lexington Avenue, 28th Floor New York, NY 10022 Telephone: (212) 506-7400 Facsimile: (212) 506-7401 panand@calderwoodharkness.com
Attorneys for Plaintiff Whitmore Aerospace LLC
CERTIFICATE OF SERVICE
I, Priya Anand, hereby certify that on February 10, 2023, I caused a true and correct copy of the foregoing Memorandum of Law in Support of Plaintiff Whitmore Aerospace LLC's Motion to Stay Proceedings Pending Completion of Administrative Review by the Defense Contract Management Agency to be filed electronically via the Court's CM/ECF electronic filing system, which will automatically serve notice and a copy of the filing upon all counsel of record registered to receive electronic notifications in this case, including:
Leonard Trager, Esq. Megan Forsythe, Esq. Voss, Trager & Kendall LLP 900 17th Street NW, Suite 800 Washington, D.C. 20006 Telephone: (202) 441-3200 Facsimile: (202) 441-3201 ltrager@vtklegal.com mforsythe@vtklegal.com
Attorneys for Defendant Hargrove-Dalton Defense Systems, Inc.
________________________________________
Priya Anand
WHITMORE AEROSPACE LLC,
Plaintiff,
v. | Case No. 1:22-cv-10147-RMB
HARGROVE-DALTON DEFENSE SYSTEMS, INC.,
Defendant.
Page
PRELIMINARY STATEMENT | 1
STATEMENT OF FACTS | 3
A. The Parties | 3
B. The Prime Contract and the Teaming Agreement | 4
C. The DCMA Cost-Overrun Determination | 7
D. HDDS's Indemnification Demand and Pre-Litigation Dispute Resolution | 9
E. The DCMA Administrative Review Under the Contract Disputes Act | 10
F. This Litigation | 11
ARGUMENT | 13
I. LEGAL STANDARD FOR A STAY OF PROCEEDINGS | 13
II. THE PRIMARY-JURISDICTION DOCTRINE COUNSELS DEFERRAL TO DCMA'S ADMINISTRATIVE REVIEW | 15
A. The Primary-Jurisdiction Doctrine | 15
B. DCMA Has Specialized Expertise in Government Contract Cost Determinations | 17
C. The COFD Will Directly Address the Factual Predicate for the Indemnity Dispute | 19
III. A STAY WILL PROMOTE JUDICIAL ECONOMY AND AVOID DUPLICATIVE PROCEEDINGS | 21
A. The Administrative Proceeding Will Likely Resolve or Narrow the Issues | 21
B. A Stay Will Conserve Party and Judicial Resources | 23
IV. THE CONTRACT DISPUTES ACT FRAMEWORK SUPPORTS A STAY | 25
V. NEITHER PARTY WILL BE PREJUDICED BY A STAY | 27
A. HDDS Does Not Oppose the Stay | 27
B. WAL Will Not Be Prejudiced | 28
C. HDDS Will Not Be Prejudiced | 28
VI. PROPOSED STAY CONDITIONS | 30
CONCLUSION | 31
CERTIFICATE OF SERVICE | 32
Page(s)
Arkwright-Boston Manufacturers Mutual Insurance Co. v. City of New York, 762 F.2d 205 (2d Cir. 1985) | 14
Bethlehem Steel Corp. v. EPA, 638 F.2d 994 (7th Cir. 1980) | 18
Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) | 26
Clinton v. Jones, 520 U.S. 681 (1997) | 13
Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) | 14
Dependable Highway Express, Inc. v. Navigators Insurance Co., 498 F.3d 1059 (9th Cir. 2007) | 14
Ellis v. Tribune Television Co., 443 F.3d 71 (2d Cir. 2006) | 16
Far East Conference v. United States, 342 U.S. 570 (1952) | 15, 16
Fenmore Industries v. United States, 563 U.S. 478 (2011) | 18, 26
Hachamovitch v. DeBuono, 159 F.3d 687 (2d Cir. 1998) | 15
In re Literary Works in Electronic Databases Copyright Litigation, 509 F.3d 116 (2d Cir. 2007) | 14
Landis v. North American Co., 299 U.S. 248 (1936) | 13, 14, 28
Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83 (2d Cir. 2012) | 14
MedImmune, Inc. v. Pemberton Partners LLC, 549 U.S. 118 (2007) | 15
Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983) | 14
Reiter v. Cooper, 507 U.S. 258 (1993) | 15, 16, 17
Syncsort Inc. v. Sequential Software, Inc., 50 F. Supp. 2d 318 (S.D.N.Y. 1999) | 14
Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056 (9th Cir. 1991) | 26
United States v. Western Pacific Railroad Co., 352 U.S. 59 (1956) | 15, 16, 17
Page(s)
41 U.S.C. §§ 7101–7109 (Contract Disputes Act) | 2, 10, 25, 26, 27
41 U.S.C. § 7103(a) | 25
41 U.S.C. § 7103(f) | 26
41 U.S.C. § 7104 | 26
48 C.F.R. Part 31 (FAR Part 31 — Contract Cost Principles and Procedures) | 8, 18
48 C.F.R. Part 30 (Cost Accounting Standards) | 8, 18
48 C.F.R. § 42.302 (Contract Administration Functions) | 17
48 C.F.R. § 16.405-1 (Cost-Plus-Incentive-Fee Contracts) | 5
Page(s)
3 Richard A. Lord, Williston on Contracts § 7:21 (4th ed. 2022) | 20
Manual for Complex Litigation, Fourth § 20.132 (2004) | 22
Defense Contract Management Agency, DCMA Manual 2301-01, Contracting Officer Determinations (2020) | 17, 18

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

TABLE OF CONTENTS

TABLE OF AUTHORITIES

PRELIMINARY STATEMENT

STATEMENT OF FACTS

ARGUMENT

I. LEGAL STANDARD FOR A STAY OF PROCEEDINGS

III. A STAY WILL PROMOTE JUDICIAL ECONOMY AND AVOID DUPLICATIVE PROCEEDINGS

IV. THE CONTRACT DISPUTES ACT FRAMEWORK SUPPORTS A STAY

V. NEITHER PARTY WILL BE PREJUDICED BY A STAY

VI. PROPOSED STAY CONDITIONS

CONCLUSION

CALDERWOOD & HARKNESS LLP

CERTIFICATE OF SERVICE

WHITMORE AEROSPACE LLC,

HARGROVE-DALTON DEFENSE SYSTEMS, INC.,

Record

Parties

Dates

Amounts