Iron Bow Technologies, LLC v. United States
CourtUnited States Court of Federal Claims
Date FiledJuly 29, 2026
Docket25-436
JudgeKathryn C. Davis
StatusPublished
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Full Opinion
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
______________________________________
)
IRON BOW TECHNOLOGIES, LLC, )
)
Plaintiff, ) No. 25-436
)
v. ) Filed: July 29, 2026
)
THE UNITED STATES, )
)
Defendant. )
______________________________________ )
OPINION AND ORDER
Plaintiff Iron Bow Technologies, LLC (“Iron Bow”) seeks to recover damages allegedly
resulting from the Department of the Army’s (“Army” or “the Agency”) decision not to exercise
the third and fourth option years of an information technology (“IT”) software contract Iron Bow
held with the Agency. Iron Bow asserts that this decision violated the contract’s terms, specifically
alleging that the Army: (1) breached its contractual obligation to exercise all option years subject
only to its receipt of appropriations; (2) breached the contract’s non-substitution clause by
acquiring replacement products during the unexercised option periods; (3) materially
misrepresented its intent to exercise all option years and its expectation that the IT products that
were the subject of the contract would remain essential for the full term of the contract; and
(4) breached the implied duty of good faith and fair dealing by destroying Iron Bow’s reasonable
expectations. The Government argues that it did not violate the contract and that Iron Bow’s
interpretation of the contract would violate the Anti-Deficiency Act (“ADA”), the Federal
Acquisition Regulation (“FAR”), and the Competition in Contracting Act (“CICA”).
Before the Court is the Government’s Motion to Dismiss for failure to state a claim
pursuant to Rule 12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”).
For the reasons stated below, the Court GRANTS IN PART the motion as to Counts I and III,
and DENIES IN PART the motion as to Counts II and IV.
I. BACKGROUND
A. Formation and Terms of the Delivery Order
On August 31, 2020, the Army issued Iron Bow indefinite-delivery indefinite-quantity
(“IDIQ”) Contract No. W52P1J-20-D-0058 1 as part of the Information Technology Enterprise
Solutions-Software 2 initiative in support of the Computer Hardware Software and Solutions
program. Pl.’s First Am. Compl. ¶ 16, ECF No. 8. Under that IDIQ contract, the Army awarded
Delivery Order No. W91RUS-21-F-0073 (“Delivery Order”) to Iron Bow on May 26, 2021. Id.
¶ 22. Through the Delivery Order, Iron Bow supplied the Army’s Network Enterprise Technology
Command (“NETCOM”) with “certain Quest / NETPRO Enterprise Licenses,” consisting of
“software products that provide infrastructure optimization solutions and manage complex
network infrastructures . . . in support of the Army’s enterprise network directory services”
(collectively “the Products”). Id. ¶ 25. Quest and NETPRO were the original manufacturers of
the Products. See id.; Ex. 1 to Pl.’s First Am. Compl. at 30, ECF No. 8-1.
Many of the Products supported the modernization of NETCOM’s Active Directory
(“AD”) environment. ECF No. 8 ¶¶ 25–26. AD refers to a “set of processes and services for
various directory-based identity-related services” supporting Windows-domain networks. ECF
No. 8-1 at 2 n.1. “The database (or directory) contains critical information about the network
environment, including the identity and permissions of users and computers.” Id. System
administrators use AD for “controlling the authentication and authorization of users and related
1
While Iron Bow’s First Amended Complaint refers to the IDIQ as Contract No. W52PIJ-
20-D-0058, see Pl.’s First Am. Compl. ¶ 16, ECF No. 8, the Delivery Order refers to the IDIQ as
Contract No. W52P1J-20-D-0058, see Ex. 1 to Pl.’s First Am. Compl. at 15, ECF No. 8-1. The
Court assumes this distinction in Iron Bow’s pleading reflects a typographical error.
2
permissions for accessing and modifying the network.” Id. The specific software Products
provided by Iron Bow included “Change Auditor, Recovery Manager (Forest Edition),
ActiveRoles, Enterprise Reporter, Active Admin, Safeguard Virtual Session, Safeguard Privilege
Security Bundle, and Quest Migration Manager.” Id. at 30.
The Products perform four functions in particular: (1) AD management and migration,
(2) AD security, (3) threat mitigation, and (4) recovery management. ECF No. 8 ¶ 28. Tying these
functionalities to the specific Products provided, Iron Bow explains that “Quest Active Roles
provides user and group account management, . . . role-based security, and identity
administration.” Id. ¶ 68. “Change Auditor and Recovery Manager . . . identify which users or
administrators made changes to AD objects, restore deleted objects, and monitor and secure ADs
against exploits.” Id. ¶ 69. “SafeGuard enables device discovery, compliance evaluation,
continuous monitoring, and access control by managing user privileges and sign-ins.” Id. ¶ 70.
Finally, “Quest InTrust manages and maintains log information of all user workstation and
administrator activity, including both system log-ons and logoffs,” which “enables agencies to
respond to threats by deploying automated responses to suspicious activity.” Id. ¶ 71.
The Delivery Order included an initial 11-month base period of performance beginning on
June 1, 2021, and four subsequent year-long option periods. Id. ¶¶ 22, 30. The Delivery Order
incorporated the Terms and Conditions (“payment terms”) of Iron Bow’s proposal, stating
“Proposal # NETCOM05142021, dated May 14, 2021, including the Terms and Conditions
outlined in Attachment 1 thereto, is hereby, in its entirety made part of, incorporated by reference
and included into the Delivery Order pagination.” ECF No. 8-1 at 17. Iron Bow’s proposal
included several terms relevant to the parties’ dispute:
2. Regarding FAR 52.232-19, Availability of Funds, Government will pay for the
use of the products and/or services described in this contract (collectively, the
3
“Products”) in the annual option year installment payments set forth herein (the
“Installment Payments”), during the base period and multiple option periods (the
“Term”), subject to the Anti-Deficiency Act, 31 USC § 1341. Government intends
to exercise all options and remit amounts owing in each option period in accordance
with the Prompt Payment Act (FAR 52.232-25) subject only to its receipt of
appropriations from Congress. Government will use best efforts to obtain
appropriations and will allocate the same to make Installment Payments (which
amounts are set forth on the Installment Payment Table above). There is no
discount for early payment and no credit card payments are accepted. . . .
4. Government may extend or terminate this contract in whole but not in part. In
the event of any termination or expiration of this contract prior to the end of the
Term, Government will not during the Term replace the Products with or use
products or devices having functions that the Products perform.
5. Government affirms that the Products will be essential to Government for the
full Term.
6. If any of these payment terms conflict[] with any other provision of this contract
or any other document, the FAR terms prevail. These terms will apply to all
extensions of this contract.
Id. at 29 (italicization in original).
The Delivery Order also incorporated FAR 52.217-9, Option to Extend the Term of the
Contract (Mar. 2000), in full text:
(a) The Government may extend the term of this contract by written notice to the
Contractor within 1 Day provided that the Government gives the Contractor a
preliminary written notice of its intent to extend at least 30 Days before the contract
expires. The preliminary notice does not commit the Government to an extension.
(b) If the Government exercises this option, the extended contract shall be
considered to include this option clause.
(c) The total duration of this contract, including the exercise of any options under
this clause, shall not exceed 5 years[.]
(End of clause)
ECF No. 8-1 at 22 (red text and emphasis in original). Finally, the Delivery Order
incorporated FAR 52.232-19, Availability of Funds for the Next Fiscal Year (Apr. 1984),
in full text:
4
Funds are not presently available for performance under this contract beyond 02
May 2022. The Government’s obligation for performance of this contract beyond
that date is contingent upon the availability of appropriated funds from which
payment for contract purposes can be made. No legal liability on the part of the
Government for any payment may arise for performance under this contract beyond
02 May 2022, until funds are made available to the Contracting Officer for
performance and until the Contractor receives notice of availability, to be
confirmed in writing by the Contracting Officer.
(End of clause)
Id. (red text in original).
As an IT software reseller, Iron Bow obtained discounts on the Products from the original
manufacturers. ECF No. 8 ¶ 1. Iron Bow then passed on these discounts to the Agency. Id. Under
the Delivery Order, the base period and option periods were each priced at $12,484,900. Id. ¶ 22.
B. Performance and Expiration of the Delivery Order
Contract performance commenced on June 1, 2021. Id. ¶ 30. The Army exercised the first
option year on April 12, 2022, extending performance until May 2, 2023. Id. ¶¶ 31–32. On April
4, 2023, the Army exercised the second option year, further extending performance until May 2,
2024. Id. ¶ 33. On July 25, 2023, the contracting officer informed Iron Bow of the Agency’s
decision not to exercise the third option year and noted that the Delivery Order would expire at the
end of the second option year on May 2, 2024. Id. ¶ 34.
In August 2023, the Army corresponded directly with an original manufacturer of the
Products, Quest, about the Army’s use of AD products and the pricing available to the Army. Id.
¶¶ 35–43. On August 7, 2023, Army Enterprise Directory Capability Manager Robert Loiseau
emailed Quest Global Army Team Lead Jonathan Smith, explaining that “NETCOM has decided
to divest itself of all Quest tools for the Army, but the use and need [for] those tools has not gone
away.” ECF No. 8-1 at 62–63. In this email, Mr. Loiseau asked “what [it] would . . . cost to use
just those tools (Change Manager, Active Roles) for each theater, with training and support for
5
those tools[.]” Id. Mr. Loiseau noted that this information would be used “to advise NETCOM
leadership or the [Regional Cyber Commands] on what is required, funding wise, to retain the
license and support for these tools.” Id. Mr. Smith responded to Mr. Loiseau on August 10, 2023,
providing a cost breakdown of the Army’s use of Change Manager, Active Roles, and other related
tools. Id. at 60–62.
The next day, Mr. Loiseau clarified that NETCOM was interested only in the Active Roles
and Change Auditor tools, and that these licenses would be used exclusively for NETCOM. Id. at
60. In that email, Mr. Loiseau explained his understanding that “the other tools that Quest offers
(under the current contract) were never used because they required additional infrastructure that
[the Army] could not support.” Id. On August 18, 2023, Mr. Smith responded, clarifying that
Quest “products work within [the Army’s] networking structure.” Id. at 59.
Separately, Iron Bow attempted to demonstrate the Delivery Order’s necessity to the Army
by giving an in-person presentation to the Agency in February of 2024. Id. at 65–67; ECF No. 8
¶ 44. Despite Iron Bow’s effort to persuade the Army to further extend the contract, the Delivery
Order expired on May 2, 2024, at the conclusion of the second option year. ECF No. 8 ¶ 46.
Iron Bow alleges that, since the expiration of the Delivery Order, the Agency must have
been using substitute products to provide some or all of the functions previously provided by the
Products under the Delivery Order because they are essential to the Agency’s use of AD systems.
Id. ¶¶ 66–67. For example, Iron Bow asserts that many of these functionalities, including “group
account management, . . . role-based security, and identity administration,” are “necessary
requirements for AD management.” Id. ¶ 68. Other functionalities previously provided by the
Products, such as “identify[ing] which users or administrators made changes to AD objects,
restor[ing] deleted objects, and monitor[ing] and secur[ing] ADs against exploits,” are similarly
6
“necessary to manage complex ADs safely and efficiently.” Id. ¶ 69. Thus, according to Iron
Bow, the Army must be “us[ing] native Microsoft tools or other products to provide these
functionalities.” Id. Similarly, Iron Bow argues that “device discovery, compliance evaluation,
continuous monitoring, and access control [through] managing user privileges and sign-ins” are
all “critical functions of AD management” that the Army must necessarily be acquiring through
other means. Id. ¶ 70. Finally, Quest InTrust’s “real-time log monitoring and alerting enables [the
Army] to respond to threats by deploying automated responses to suspicious activity,” which “is a
critical element of AD management” that Iron Bow alleges is either being provided through a
substitute product or “the native functionality of Microsoft AD products.” Id. ¶ 71.
C. Procedural History
On October 21, 2024, Iron Bow submitted a certified claim to the contracting officer
seeking $24,969,800 in damages, the contract value of the two unexercised option years, for the
Army’s alleged breach of its obligations under the Delivery Order. Id. ¶ 50; ECF No. 8-1 at 2.
Specifically, Iron Bow asserted that the Agency breached the Delivery Order “by failing to
exercise the final two option periods for reasons apparently unrelated to the availability of
appropriations” and by “using products or devices having functions that the Products performed.”
ECF No. 8-1 at 2. On January 24, 2025, the contracting officer denied Iron Bow’s certified claim.
ECF No. 8 ¶ 54; Ex. 2 to Pl.’s First Am. Compl. at 2–3, ECF No. 8-2.
Iron Bow filed its Complaint in this Court on March 5, 2025. See Pl.’s Compl., ECF No.
1. The Government filed a Motion to Dismiss Iron Bow’s original Complaint on June 4, 2025.
ECF No. 7. In response, Iron Bow filed its First Amended Complaint on June 25, 2025. ECF No.
8. Iron Bow’s First Amended Complaint asserts four claims for relief. First, Iron Bow alleges that
the Army’s decision not to renew the Delivery Order for the third and fourth option years breached
the terms of the Delivery Order, which required the Army to exercise all options subject only to
7
its receipt of appropriations. Id. ¶¶ 55–63. Second, Iron Bow contends that the Agency violated
the non-substitution clause because the Agency necessarily used other products providing some or
all of the same functions as the Products under the Delivery Order. Id. ¶¶ 64–72. Third, Iron Bow
asserts that the Army breached the Delivery Order by materially misrepresenting (a) its intent to
exercise all options and (b) that the Products would be essential to the Government for the full
term, which the Delivery Order defined to include the base year and multiple option periods. Id.
¶¶ 73–80. Fourth, Iron Bow alleges that the Agency breached the implied duty of good faith and
fair dealing by interfering with Iron Bow’s reasonable expectation that the Agency would exercise
all options under the Delivery Order. Id. ¶¶ 81–85.
The Government filed the instant Motion to Dismiss on July 16, 2025. See Gov’t’s Mot.
to Dismiss, ECF No. 10. The Government argues that Iron Bow’s First Amended Complaint must
be dismissed in its entirety because Iron Bow’s interpretation of the Delivery Order, as requiring
the Army to exercise all options subject only to receipt of appropriations, would violate the ADA.
See id. at 18–29. The Government further contends that Iron Bow’s interpretation of the non-
substitution clause would violate the ADA, the FAR, and CICA. Id. at 29–32. Next, the
Government argues that Iron Bow’s material misrepresentation claim must be dismissed because
any assertion as to the Agency’s future intent to exercise all options and its belief about the
essentiality of the Products for the full term cannot form the basis for such claim. Id. at 33–36.
Finally, the Government maintains that Iron Bow’s claim for breach of the covenant of good faith
and fair dealing must be dismissed because Iron Bow could not have reasonably expected the
Army to violate the ADA, the FAR, or CICA. Id. at 36–37.
Iron Bow filed its Response on August 13, 2025. See Pl.’s Opp’n to Gov’t’s Mot. to
Dismiss, ECF No. 11. In its Response, Iron Bow first argues that it adequately pled a breach of
8
contract claim based on the Agency’s non-renewal decision and violation of the non-substitution
clause because the Delivery Order terms comply with the ADA, the FAR, and CICA. Id. at 11–
27. Second, Iron Bow contends that it adequately pled a material misrepresentation claim because
its theory of liability does not rest upon an assertion as to a future event, but rather the Army’s
intent at the time of contract, which it had authority to represent. Id. at 27–28. Third, Iron Bow
asserts it adequately pled a breach of the covenant of good faith and fair dealing because its
expectations were reasonable and consistent with the ADA, the FAR, and CICA. Id. at 28–29.
Alternatively, Iron Bow contends that factual issues preclude dismissal. Id. at 29–30. The
Government filed its Reply on August 27, 2025. See Gov’t’s Reply in Supp. of Mot. to Dismiss,
ECF No. 12. The Court heard oral argument on January 16, 2026. See Min. Entry, Jan. 16, 2026.
The motion is ripe for disposition.
II. LEGAL STANDARDS
A. Dismissal for Failure to State a Claim
A court may dismiss an action if it fails to state a claim for which relief may be granted.
RCFC 12(b)(6). To avoid dismissal under Rule 12(b)(6), “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to
draw a reasonable inference that the defendant is liable for the misconduct alleged.” Pupols v.
U.S. Pat. & Trademark Off., 413 F. App’x 232, 234 (Fed. Cir. 2011) (citing Ashcroft, 556 U.S. at
677–78). Although a complaint need not contain detailed factual allegations to raise a plausible
claim, the plaintiff must provide “more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Twombly, 550 U.S. at 555; see id. (explaining that
“courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation’”
9
(quoting Papasan v. Allain, 478 U.S. 265, 286 (1986))). In reviewing a Rule 12(b)(6) motion, a
court may consider the complaint itself, “the written instruments attached to it as exhibits,
‘documents incorporated into the complaint by reference, and matters of which a court may take
judicial notice.’” Todd Constr., L.P. v. United States, 94 Fed. Cl. 100, 114 (2010) (quoting Tellabs,
Inc. v. Makor Issues & Rts. Ltd., 551 U.S. 308, 322 (2007)), aff’d, 656 F.3d 1306 (Fed. Cir. 2011).
The reviewing court “must assume all well-pled factual allegations are true and indulge in all
reasonable inferences in favor of the nonmovant.” United Pac. Ins. Co. v. United States, 464 F.3d
1325, 1327–28 (Fed. Cir. 2006) (quoting Anaheim Gardens v. United States, 444 F.3d 1309, 1314–
15 (Fed. Cir. 2006)).
B. Breach of Contract
“When the United States enters into contract relations, its rights and duties therein are
governed generally by the law applicable to contracts between private individuals.” Franconia
Assocs. v. United States, 536 U.S. 129, 141 (2002) (quoting Mobil Oil Expl. & Producing Se., Inc.
v. United States, 530 U.S. 604, 607 (2000)). To plead a breach of contract claim against the
Government, a plaintiff must plausibly allege: “(1) a valid contract between the parties, (2) an
obligation or duty arising out of the contract, (3) a breach of that duty, and (4) damages caused by
the breach.” San Carlos Irr. & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir.
1989). A plaintiff sufficiently pleads the first element—a valid express or implied-in-fact contract
with the Government—where it alleges facts showing “(1) mutuality of intent, (2) consideration,
(3) an unambiguous offer and acceptance, and (4) ‘actual authority’ on the part of the
government’s representative to bind the government in contract.” Hanlin v. United States, 316
F.3d 1325, 1328 (Fed. Cir. 2003) (quoting City of Cincinnati v. United States, 153 F.3d 1375, 1377
(Fed. Cir. 1998)). In assessing whether a breach of contract claim survives dismissal, “the court
must interpret the contract’s provisions to ascertain whether the facts plaintiff alleges would, if
10
true, establish a breach of contract.” Bell/Heery v. United States, 739 F.3d 1324, 1330 (Fed. Cir.
2014). Finally, the plaintiff must allege its damages were caused by the breach by pleading facts
showing that “(1) the damages were reasonably foreseeable by the breaching party at the time of
contracting; (2) the breach [was] a substantial causal factor in the damages; and (3) the damages
are shown with reasonable certainty.” Ind. Mich. Power Co. v. United States, 422 F.3d 1369, 1373
(Fed. Cir. 2005).
III. DISCUSSION
The Court grants the Government’s Motion to Dismiss as to Count I—breach of contract
based on the Army’s non-renewal decision—because the Delivery Order did not and could not
require the Army to exercise all options. The Court likewise grants the Government’s motion as
to Count III—breach of contract based on the Agency’s alleged material misrepresentation—
because Iron Bow has not plausibly alleged that the Army misrepresented its intent at the time of
contract. The remainder of the Government’s motion is denied. Count II—breach of the non-
substitution clause—states a plausible claim because that provision survived expiration of the
Delivery Order and did not violate the ADA, the FAR, or CICA. Count IV—breach of the
covenant of good faith and fair dealing—also survives dismissal because the claim is not redundant
of Count III and Iron Bow’s alleged expectations were not unreasonable as a matter of law.
A. Iron Bow’s Claim for Breach of Contract Based on the Army’s Non-Renewal
Decision Fails as a Matter of Law.
Iron Bow’s allegation that the Army breached the Delivery Order by failing to exercise the
third and fourth option years fails to state a claim because the Delivery Order did not require the
Army to exercise the option years and, in any event, the Agency lacked authority under the ADA
to agree to an option-renewal term consistent with Iron Bow’s alleged interpretation. As such,
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Iron Bow’s allegations fail to satisfy the first element of a breach of contract claim—i.e., that the
alleged obligation or duty arose out of the contract. Bell/Heery, 739 F.3d at 1330.
1. The Delivery Order Did Not Require the Army to Exercise the Option Years.
Iron Bow’s first count must be dismissed because the Agency did not contractually commit
to exercising all option years. In analyzing Iron Bow’s claim, the Court must “begin with the plain
language” of the Delivery Order. Hunt Constr. Grp., Inc. v. United States, 281 F.3d 1369, 1372
(Fed. Cir. 2002) (quoting McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir.
1996)). When interpreting contract terms, the Court must give the contract language its “ordinary
meaning unless the parties mutually intended and agreed to an alternative meaning.” Harris v.
Dep’t of Veterans Affs., 142 F.3d 1463, 1467 (Fed. Cir. 1998). And it must consider the contract
“as a whole and interpret[] [it] so as to harmonize and give reasonable meaning to all of its parts,”
such that no portion is rendered “useless, inexplicable, void, or superfluous.” NVT Techs., Inc. v.
United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004). “When the contract language is unambiguous
on its face, [the Court’s] inquiry ends, and the plain language of the contract controls.” Hunt, 281
F.3d at 1373. Contract interpretation is a matter of law and may be addressed in resolving a motion
to dismiss if the language is unambiguous. Bell/Heery, 739 F.3d at 1330.
The contract interpretation dispute underlying Count I centers on the amount of discretion
the Army retained to exercise option years. As the Government emphasizes, the standard option
clause, FAR 52.217-9, which was incorporated into the Delivery Order, see ECF No. 8-1 at 22,
provided the Army “complete discretion” as to whether “to exercise the option years.” Beacon
Point Assocs., LLC v. Dep’t of Veterans Affs., 139 F.4th 1306, 1308 (Fed. Cir. 2025) (interpreting
the plain language of FAR 52.217-9). Iron Bow argues, however, that the payment terms of its
12
proposal, which were also incorporated into the Delivery Order, 2 limited the Agency’s discretion
under FAR 52.217-9 by stating that the “Government intends to exercise all options and remit
amounts owing in each option period . . . subject only to its receipt of appropriations from
Congress,” which the “Government will use best efforts to obtain.” ECF No. 8-1 at 29. According
to Iron Bow, this option-renewal term “required” the Army to exercise all options provided that it
received appropriations. See ECF No. 8 ¶ 56. The Government counters that this term was merely
a statement of the Army’s “present intention,” at the time of contract, rather than “a statement of
future obligation.” ECF No. 10 at 26. The Court agrees with the Government.
The ordinary meaning of the payment term stating that the “Government intends to exercise
all options,” ECF No. 8-1 at 29, is that the Army, at the time of entering the Delivery Order,
planned to exercise all options. It does not mean that the Army was contractually required to do
so. The plain meaning of the word “intend” is “to have in mind” or to “plan.” Intend, The
American Heritage Dictionary (5th ed. 2022). Conversely, the ordinary meaning of the word
“require” is “to impose an obligation on” or to “compel.” Require, The American Heritage
Dictionary (5th ed. 2022). This interpretation is also consistent with caselaw analyzing similar
expressions of intent. See, e.g., Westlands Water Dist. v. United States, 109 Fed. Cl. 177, 199
(2013) (holding that “government representations are not binding contractual obligations unless
stated as an undertaking rather than an intention”); Uniq Computer Corp. ex rel. U.S. Leasing
Corp. v. United States, 20 Cl. Ct. 222, 232 (1990) (holding that a “statement by the optionee of a
present intention to accept in the future is different from a statement of an intention to accept now”
(quoting Arthur L. Corbin, Corbin on Contracts, A Comprehensive Treatise on the Working Rules
2
At this stage, neither party disputes that the payment terms of Iron Bow’s proposal were
incorporated into the Delivery Order. See Oral Arg. Tr. at 17:22–18:1, ECF No. 16.
13
of Contract Law § 264 (1963))); Chattler v. United States, 632 F.3d 1324, 1333 (Fed. Cir. 2011)
(“The obligation of the government, if it is to be held liable, must be stated in the form of an
undertaking, not as a mere prediction or statement of opinion or intention.” (quoting Cutler-
Hammer, Inc. v. United States, 441 F.2d 1179, 1182 (Ct. Cl. 1971)).
Thus, reading the Delivery Order’s language as a whole and in harmony, as the Court must,
see NVT Techs., 370 F.3d at 1159, the Army retained complete discretion to exercise option years
while also representing its contemporaneous plan to exercise all options subject to its receipt of
appropriations, although it did not commit itself to do so. 3
Iron Bow argues that this interpretation is unreasonable because the option-renewal term
specified only one qualifier on the Agency’s intent to exercise the options—that it was “subject
only . . . to its receipts of appropriations.” ECF No. 11 at 19 (emphasis added in Iron Bow’s
Opposition) (citing ECF No. 8 ¶ 19 and ECF No. 8-1 at 29). In Iron Bow’s view, reading the term
as a statement of present intention rather than one of future obligation would render this qualifying
language superfluous. Id. at 19–20. The Court disagrees. The sole qualifier is not superfluous as
it modified the Army’s present intent. That is, the Agency indicated its intent was to exercise all
options unless appropriations were not available.
3
Relying on FAR 52.217-9, the Government invokes the order of precedence provision in
Iron Bow’s payment terms, which provided that “[i]f any of these payment terms conflict[] with
any other provision of this contract or any other document, the FAR terms prevail.” ECF No. 8-1
at 29. The Court need not resort to the order of precedence provision because the option-renewal
term does not conflict with FAR 52.217-9. Rather, as explained, Iron Bow’s term reflected the
Agency’s present intent to exercise the option years but did not obligate the Agency to do so. See
Int’l Transducer Corp. v. United States, 30 Fed. Cl. 522, 526 (1994) (“Established court precedent
and rules of construction require that contract provisions should not be interpreted as conflicting
with one another unless there is no other possible reasonable construction of the language.” (citing
Hol–Gar Mfg. Corp. v. United States, 169 Ct. Cl. 384, 395 (1965))), aff’d, 48 F.3d 1235 (Fed. Cir.
1995); Sperry Corp. v. United States, 845 F.2d 965, 968 (Fed. Cir. 1988) (affirming decision
declining to apply order of precedence clause where no inconsistency existed).
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In any event, Iron Bow’s attempt to use the qualifying language to wholly alter the meaning
of the first part of the option-renewal term is a leap too far. A “qualification” is a “modification
or limitation of terms or language.” Qualification, Black’s Law Dictionary (12th ed. 2024). And
the word “modify” is generally understood to mean “to make modest adjustments and additions to
existing provisions, not transform them.” Biden v. Nebraska, 600 U.S. 477, 494–95 (2023) (citing
Webster’s Third New International Dictionary 1952 (2002); and Modify, Black’s Law Dictionary
(11th ed. 2019)). Iron Bow seeks to use this qualifier to replace the word “intends” with “is
required to.” See ECF No. 11 at 19–20. Such an effort “transform[s]” the meaning of the term
rather than “make[s] modest adjustments.” Biden, 600 U.S. at 494 (holding that a statute giving
the agency authority to “waive or modify” existing statutory or regulatory provisions did not give
the agency authority “to rewrite th[e] statute from the ground up”). Thus, Iron Bow’s reliance on
the option-renewal term’s sole modifier is unavailing.
Finally, although the Government invokes the doctrine of contra proferentem, see ECF No.
10 at 26–27, the Court finds the doctrine irrelevant here because the option-renewal term is
unambiguous. “[T]he rule of contra proferentem . . . requires that ambiguous or unclear terms that
are subject to more than one reasonable interpretation be construed against the party who drafted
the document.” Turner Constr. Co. v. United States, 367 F.3d 1319, 1321 (Fed. Cir. 2004). The
plain language of the relevant term is only subject to one reasonable interpretation: that the Army,
at the time the parties entered into the Delivery Order, intended to exercise all option years under
the Delivery Order subject only to its receipt of appropriations. Iron Bow seeks to rewrite the
word “intends” to mean “is required to,” but such an interpretation is unreasonable as it is
inconsistent with the ordinary meaning of the option-renewal term. Thus, the Delivery Order did
not require the Agency to exercise all option periods subject only to its receipt of appropriations.
15
2. The Army Lacked Authority at the Time of Contract to Contractually Obligate the
Government to Exercise All Options.
Even if the meaning of the term at issue was ambiguous, the ADA prohibits an
interpretation under which the Agency committed itself at the time of contract to exercising all
options. The Government argues that Iron Bow’s interpretation of the option-renewal term would
conflict with the ADA, which—under U.S. Supreme Court precedent—provides that a contract
extending beyond the initial period of available appropriations can only bind the Government for
each subsequent period if an appropriation is made for the period and the agency affirmatively
renews the contract under the authority of that appropriation. See ECF No. 10 at 18–25. Iron Bow
counters that its interpretation of the option-renewal term complies with the ADA because the
Delivery Order did not contemplate automatic renewal and instead only limited the Army’s
discretion not to exercise the options. See ECF No. 11 at 12–19. The Court finds that Iron Bow’s
interpretation of the Delivery Order impermissibly limits the Agency’s discretion as to whether to
take affirmative action to exercise the option years such that, under Iron Bow’s reading, the
Agency essentially agreed to exercise all option periods at the time of entering the Delivery Order
in violation of the ADA.
With limited exceptions not relevant here, the ADA prohibits federal employees or
agencies from involving the “government in a contract or obligation for the payment of money
before an appropriation is made.” 31 U.S.C. § 1341(a)(1)(B). Thus, government employees and
agencies lack statutory authority to “enter[] into a contract for future payment of money in advance
of, or in excess of, an existing appropriation.” Hercules Inc. v. United States, 516 U.S. 417, 427
(1996). Where a government agent, “acting beyond the scope of their authority,” purports to do
so, “the government is not bound.” Johnson Mgmt. Grp. CFC, Inc. v. Martinez, 308 F.3d 1245,
1255–56 (Fed. Cir. 2002).
16
Given the ADA’s prohibition against contracting in advance of existing appropriations,
and the associated limitation on the Government’s authority to contract for future needs, the
Supreme Court has held that two requirements must be met before a contract funded with a one-
year appropriation may bind the Government for additional years beyond the first. 4 Leiter v.
United States, 271 U.S. 204, 207 (1926). First, an “appropriation [must] be made available for the
payment.” Id. Second, the Government must “affirmatively continue the [contract] for such
subsequent year.” Id. Put differently, to bind the Government for each subsequent year, the
Supreme Court’s precedent interprets the ADA to require that the Government must “in effect,
make a new [contract] for [each subsequent] year under the authority of such appropriation.”
Goodyear Tire & Rubber Co. v. United States, 276 U.S. 287, 292 (1928).
Courts and boards have consistently applied Leiter and Goodyear as precluding
interpretations of contract terms that purport to bind the Government beyond the period of
available appropriations. For example, other judges of the Court of Federal Claims have
interpreted Leiter and Goodyear to require that, where an agency enters into a multi-year contract
with a one-year appropriation, the Government must affirmatively renew the contract following
receipt of subsequent appropriations in order to bind the Government for each succeeding period.
See Cray Rsch., Inc. v. United States, 44 Fed. Cl. 327, 333 (1999) (construing contract as affording
the Government the “unilateral right to renew” because a contrary interpretation would not result
in “a valid and binding document”); RCS Enters. v. United States, 57 Fed. Cl. 590, 595 (2003)
4
Congressional appropriations are categorized based on the duration of their availability
for obligation: (1) a one-year appropriation “is available for obligation only during a specific fiscal
year”; (2) a multiple-year appropriation “is available for obligation for a definite period of time in
excess of one fiscal year”; and (3) a no-year appropriation “is available for obligation for an
indefinite period.” Gov’t Accountability Off., Principles of Federal Appropriations Law 2-9, ch.
2, § A.8.a, GAO-16-464SP (4th ed., 2016 rev.).
17
(holding that a “contract, on its face, violates the ADA” if the remaining years after the base years
were not “true options” such that “the Government merely could decline to exercise its option with
respect to those years”). At least one other court has similarly interpreted Leiter and Goodyear to
hold that “[a] contract will only bind the government in subsequent years if appropriations are
made in those ‘out years,’ and if the government affirmatively renews the contract.” Williams v.
District of Columbia, 902 A.2d 91, 95 (D.C. 2006). Likewise, the Armed Services Board of
Contract Appeals (“ASBCA”) has interpreted Leiter as “preclud[ing] the initial contract from
imposing upon future government officials a duty to automatically renew the lease.” Mach I AREP
Carlyle Ctr. LLC, ASBCA No. 59821, 16-1 BCA ¶ 36,389 at 177,419 (June 1, 2016).
At the time of issuing the Delivery Order to Iron Bow, the Army did not have authority to
commit to an obligation for the payment of money for performance of the contract beyond the
2021 fiscal year. Iron Bow does not allege the existence of either multiple-year or no-year
appropriations, and indeed, the Government explains that the Delivery Order’s Line of Accounting
indicates that the Army used a one-year appropriation limited to fiscal year 2021. See ECF No.
10 at 10–11. Thus, even viewing the facts in the light most favorable to Iron Bow, the Agency
utilized appropriations limited to fiscal year 2021 to enter into the Delivery Order and could not,
under the AD