Jacobs Engineering Group, Inc. v. United States

Jacobs Engineering Group, Inc. (Jacobs) (plaintiff) entered into a construction and development contract with the government to install a gasification improvement facility. Gasification is a process by which solid biomass is converted into liquid or gaseous fuel without combustion. Jacobs’ contract contained a cost-sharing provision under which Jacobs would share certain specified contract costs with the government, with the government paying 80 percent and Jacobs paying 20 percent. Jacobs did not receive any fees from the contract but would obtain valuable patent rights following contract completion. The contract also contained the standard Federal Acquisition Regulations (FAR) termination for the convenience of the government clause (termination clause). Pursuant to the termination clause, if the government terminated the contract for its convenience, then the government would be required to pay Jacobs all reimbursable contract costs. The contract specifically defined which costs were considered reimbursable. During contract performance, the government terminated Jacobs’ contract for its convenience. Jacobs submitted a termination settlement proposal to the government to recover 100 percent of all reimbursable costs. The government rejected the proposal, stating that Jacobs was only entitled to recover 80 percent of reimbursable costs. Jacobs appealed to the Court of Federal Claims, which granted summary judgment to the government, holding that the cost-sharing clause in Jacobs’ contract must be read as a limit on Jacobs’ recovery under the contract’s termination clause. Jacobs appealed.