This is CGI`s Fed. Inc., vs. FCi Fed., Inc., Record No. 170617 (Va. S. Ct. June 7, 2018), the Virginia Supreme Court upheld a lower court`s decision to overturn a jury decision of US$12 million in damages for breach of contract and fraudulent incentive claims. The Court found that the teaming agreement at issue did not justify an enforceable obligation to conclude a subcontract with certain conditions, but rather contained a language which explicitly made the formation of a subcontract conditional on future events and negotiations and which contained other conditions indicating that the relationship could end without the formation of a subcontract. In addition, the Tribunal found that CGI Federal, Inc.

(CGI) was unable to claim damages for its fraudulent inducement claim because CGI was not entitled to a loss of profits on a subcontract in which the final terms were uncertain and unenforceable. The Tribunal also upheld the trial`s decision to render a summary judgment in favour of FCi Federal, Inc. (FCi) on CGI`s alternative right to unjustified enrichment. As a rule, team agreements are organized in such a way that one company is the main contractor and one or more other companies are subcontractors. The main contractor is usually related to the government. The main contractor agrees in the team agreement that if it obtains the contract from the government, it uses the goods or services of the subcontractor. Conversely, the subcontractor agrees to provide the goods and services at the costs proposed in the offer. The court also found that the court correctly overturned the jury`s damages, but the court did not accept the lower court`s decision that CGI`s fraud damage was limited by the 90-day termination provision in the amended team agreement. Instead, the court held that “loss of profits is not refundable for a fraudulent incentive right if it is based on the unenforceable provisions of a contract”,” namely the unenforceable provisions of the amended teaming agreement. The Tribunal also found that CGI had demonstrated the existence of its loss of profits on the basis of the amounts it allegedly earned in the context of the subcontracting. However, the Tribunal found that due to the final terms of the subcontracting, including CGI`s share of the work, it was uncertain (subject to negotiations and contingencies) that any damages resulting from a loss of profits on the foreseeable subcontracting were also uncertain and non-refundable. [1] The Tribunal`s opinion (point 1) suggests that CGI may have been able to bring an action for breach under the teaming agreement for failing to conduct bona fide negotiations for a subcontractor after FCi received the main contract, but CGI did not do so here.

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