Teaming Agreement Amendment
But the FCI didn`t stop there. Following the settlement of certain offer events, the CFI entered into negotiations with CGI at an even lower percentage than the amended proposal or team agreement. CGI began its work under a temporary agreement, received more than $2 million for its work, and was subsequently terminated by the CFI for an important reason. CGI filed an action against FCi alleging: (1) breach of contract because FCi did not renew a subcontract of 41 per cent and 10 management positions in CGI; (2) unjustified enrichment, as CGI would have spent $300,000 to support FCi for the proposal that would result in a profit of $6 million for FCi; and (3) fraudulent inducements to make unrealized profits. The jury awarded CGI nearly $12 million, but the Circuit Court overturned the verdict and rendered a verdict for the CFI and CGI on appeal. An illustrative case occurred here in Virginia and was decided by the Virginia Supreme Court. This is CGI`s Fed. Inc. v. FCi Fed. Inc.
While this isn`t necessarily a „construction case,“ it helps set up some of the pitfalls of team agreements in general. The court then argued that the method of inducing CGI into the team agreement (whether fraudulent or otherwise) was irrelevant, as CGI confirmed the explicit contract. An explicit contract cannot form the basis for undue enrichment or other quasi-contractual right. The Tribunal then decided that any compensation in the event of incentive fraud was speculative, given that CGI`s potential loss of profits, based on its incentive to accept subcontracting in the future (i.e. the team agreement), did not contain any provision to quantify the loss of profits. Taken together, these provisions make it clear that the parties have never accepted the final terms of a subcontract and have explicitly made the establishment of a subcontract conditional on future events and negotiations. Just as FCi could not have invoked that agreement to compel CGI to perform subcontracted work, CGI could not rely on the agreement to obtain work from FCi as subcontractors. The Tribunal will not impose a subcontract on the parties to a team agreement if they have expressly agreed to negotiate the essential terms of a subcontract in the future. The court upheld the Circuit Court on all points. First, it found that the teaming agreement (the details of which are well set out in the opinion) contained too many contingencies to be an enforceable contract for certain subcontracting clauses, and that: FInally, the Court upheld the stay of the judgment for unfair enrichment by finding that the teaming agreement is applicable and reciprocal in this case, the parties have a fairly typical big business (CGI) Small Business Teaming Agreement (FCI) for visa processing for the Ministry of Foreign Affairs….