"UNCLEAN HANDS" APPLIES TO CLAIMS

The Armed Services Board of Contract Appeals (ASBCA) recently reaffirmed the doctrine of "unclean hands" as it applies to contractor's claims.  The doctrine, which has long been a staple of the common law in equity, is described by the Board as "one who seeks equity must do equity."  The doctrine prevents the contractor tainted with inequity or bad faith from obtaining the relief sought.

The recent case arose on the issue of whether the government could amend its Answer to the contractor's Complaint to include the affirmative defense of unclean hands.  We expect we may see more of this approach from government attorneys.  The Board concluded, however, that there was insufficient evidence for the Board to decide whether the government had a reasonable basis for its allegation.  Appeal of Raytheon Company, ASBCA Nos. 60448, 60785, April 9, 2018.

The government alleged Raytheon tried to sell more missiles to the government than otherwise would be paid for by the fund amount available for the contract when signed, in violation of the Anti-Deficiency Act.  Raytheon contended the government had not submitted its position in the form of a claim.  The Board rejected the argument saying the government was not seeking money or an adjustment of the contract terms.

To us, the articulation of the unclean hands doctrine in this case is just another way of alleging bad faith on the  part of the contractor. 

You might think the unclean hands doctrine might work the other way when the government takes unreasonable positions on contractors' claims.  However, keep in mind that it is hard wired in government contract law that there is a presumption that government officials act in good faith and that presumption may be overcome only by clear and convincing evidence.

bill@spriggsconsultingservices.com