Call Henry, Inc. v. United States, No. 16-1732 (Fed. Cir. 2017)Annotate this Case
The Federal Circuit affirmed dismissal of a claim against the U.S. government, finding that the government had no contractual obligation to reimburse plaintiff’s pension withdrawal liability costs, incurred under the Multi-Employer Pension Plan Amendment Act (MPPAA), 29 U.S.C. 1381. Plaintiff had a contract with NASA to provide services, which was subject to the McNamara-O’Hara Service Contract Act (SCA), 41 U.S.C. 6701, under which service contracts specify a “wage determination,” setting wage rates and fringe benefits. The SCA insures that service employees who were protected by a collective bargaining agreement (CBA) with one contractor are not deprived of that CBA’s wages and benefits when the contract they work on is competitively awarded to a new contractor. Otherwise, if an incumbent contractor agreed to a CBA that provided for wages and benefits greater than the prevailing rate, a challenger could underbid the incumbent for the follow-on contract by providing its employees with less. The government is willing to increase contract prices when contractors incur increased costs as a result of an increase in the wage determination. The courts concluded that this plaintiff independently chose to negotiate a CBA with the Teamsters and join the Teamsters’ pension plan and independently assumed the risk of MPPAA withdrawal liability. NASA did not require plaintiff to do so and had no contractual recourse if plaintiff failed to satisfy its MPPAA obligations, so the SCA does not allocate the risk of MPPAA liability to the government.