Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Aerospace & Defense newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (June 15, 2021, 7:39 PM EDT) -- A small-business supplier of personal protective equipment has sued the U.S. Department of Veterans Affairs, saying the VA wrongly terminated a contract to supply protective gloves based only on a change in packaging.
The gloves provided by Noble Attorney LLC remained the same after a change in "trade dress," or packaging, and continued to meet the VA's specifications, Noble said in a Court of Federal Claims complaint filed Friday. A contracting officer had not properly justified his decision to terminate the company's contract, the company said.
"There can be no greater harm to a contractor's performance ratings than to terminate for cause," Noble said. "This negatively affects every solicitation that Noble has bid on since the termination for cause and intends to bid on in the future, causing Noble to already have incurred, and continue to incur, financial damages."
The VA issued a solicitation in February seeking nitrile examination gloves to meet an uptick in demand driven by the COVID-19 pandemic, Noble said. Those gloves had to meet or exceed certain requirements, such as coming in a variety of sizes, being puncture resistant, and complying with standards organization ASTM International's specific D6319 standard for nitrile medical gloves.
Noble, a minority-owned small business that has supplied personal protective equipment throughout the pandemic, submitted quotes to supply gloves made by several original equipment manufacturers, or OEMs, it said.
The VA partially accepted Noble's bid, awarding it a contract in April to supply 25 million gloves manufactured by OEM Mercator Medical to be delivered by June 10, according to the complaint. The value of the contract is not listed.
After Noble started delivering the gloves, Mercator overhauled its packaging, a move intended to prevent counterfeiting, Noble said. The gloves inside those packages remained the same and continued to meet the VA's specifications, but the VA contracting officer said he would reject the gloves because the packaging no longer matched a photograph supplied during bidding, according to Noble.
At no point before that had the VA said the packaging for the delivered product had to match the initial photo, and Noble tried to explain why the packaging had been altered, with a representative from Mercator also weighing in to state that the gloves themselves had not changed, Noble said.
Despite those explanations, the contracting officer issued a 10-day "notice to cure" on May 20, directing the company to address the packaging issue, and halfway through that period, on May 25, terminated Noble for cause, according to the complaint.
Termination for cause is only supposed to follow a material breach of contract, and Noble was still able and willing to provide gloves that met the required standard, the actual material part of the contract, it said, arguing the VA's termination notice lacked proper justification.
The VA contracting officer had acted in bad faith, "finding a nonmaterial issue to pick" to arbitrarily terminate the contract and allowing him to award a new deal the next day to another company at a higher price, Noble said.
Even if Noble had failed to meet a material term of the contract, the termination must be invalidated and turned into termination for convenience due to the VA's failure to give the company the full 10 days specified in the cure notice, according to the complaint.
Noble noted in a separate court document that its lawsuit was preceded by a similar case filed in May at the federal claims court by Servant Health LLC — represented by the same firm, the Federal Practice Group — which also had a nitrile glove contract terminated by the VA based on a packaging design.
Servant said in its complaint that its contract was terminated after negotiations over a proposed extension of time to deliver the gloves stalled. The complaint said the VA contracting officer cited a difference in packaging after Servant had to turn to an alternative supplier when it had problems getting gloves that were warehoused overseas to the VA.
A representative for the VA and counsel for Noble did not immediately respond to requests for comment late Tuesday.
Noble is represented by Eric S. Montalvo and Carol A. Thompson of the Federal Practice Group.
Counsel details for the VA weren't immediately available.
The case is Noble Attorney LLC v. U.S., case number 1:21-cv-01456, in the U.S. Court of Federal Claims.
--Editing by Robert Rudinger.
For a reprint of this article, please contact reprints@law360.com.
