Constructively Debarred Contractor Allowed to Proceed with Claims for De Facto Debarment and Contractual Interference

Ever think a government officially was unofficially blackballing you? Sebastian Phillips and his company, Marine Design Dynamics, felt so and filed suit in the U.S. District Court for the District of Columbia (Phillips v. Mabus, D.D.C. No. 11-2021) seeking money damages for de facto debarment and interference with contract after they felt the Navy systematically stopped giving them work. The government defendants moved to dismiss on various grounds, but the court overruled the motion to dismiss based on the complaints' allegations that: 1) Navy officials stated that Phillips and MDD would not receive future work; 2) the Navy's conduct amounted to a systematic effort to preclude MDD from future contracting; and 3) plaintiffs were de facto debarred because of fraudulent rumors of overbilling by plaintiffs started by key employees that left MDD to work for a competitor firm. Whether plaintiffs can prove their claims remains to be seen, but the claims have been allowed to proceed for now. Judge Sullivan's memorandum opinion (9/30/12) is an interesting read for anyone who feels in similar circumstances, and is a decision regarding which government officials should take heed.