News Article

Raytheon Owes $2.7M For Breached Contract, L'Garde Says
Date: Jan 28, 2014
Author: Daniel Siegal
Source: Law360 ( click here to go to the source)

Featured firm in this article: L'Garde Inc of Tustin, CA

Law360, Los Angeles (January 28, 2014, 9:48 PM ET) -- Space technology company L'Garde Inc. told a California federal jury on Tuesday that Raytheon Space & Airborne Systems owes it $2.7 million for a breach of contract after Raytheon bailed on their deal by hiring a L'Garde rival to complete work on an advanced military airship prototype.
L'Garde sued defense contractor Raytheon for terminating their contract for the design of a support component of the airship, known as the "pill." The contract required the two companies to negotiate a second contract for the actual construction, work that Raytheon instead gave to ILC Dover LP.

On Tuesday, Peter Jones of Jones & Donovan, attorney for L'Garde, told the jury that Raytheon allowed experts at L'Garde to do the "heavy lifting" of designing the pill before hiring ILC Dover to build it at a lower cost.

"Raytheon never had any intention of negotiating the definitive subcontract [to construct the pill] with L'Garde," Jones said.

Don Featherstun of Seyfarth Shaw LLP, representing Raytheon, countered in his opening statement, saying that the contract only required Raytheon to negotiate with L'Garde over a contract to build the pill, not actually issue one. Featherstun added that Raytheon paid L'Garde $1.1 million for its design work.

"We paid every penny ... We paid them for everything they did," he said. "They're here to try and get paid for something they didn't do."

L'Garde brought the $2.7 million suit over the design of a radar mounting system for the Integrated Sensor Is Structure program being run by the U.S. Department of Defense's Defense Advanced Research Projects Agency. The proposed ISIS airship would feature a powerful Raytheon-built radar and would be capable of flying at high altitudes for months at a time.

DARPA in 2009 awarded Lockheed Martin, which is not involved in the case, a $400 million contract to work on a particular phase of the ISIS aircraft. The lawsuit stems from Raytheon and Tustin, Calif.-based L'Garde's collaborative efforts to win a subcontract from Lockheed to design the airship — a cloth structure that would support a 1,500-pound radar device inside the airship.

L'Garde submitted to Raytheon its proposal to design the pill structure with an estimated cost of as much as $6.8 million, according to the lawsuit. Raytheon forwarded the proposal to Lockheed Martin for approval and touted the fact that the work would be performed by L'Garde, a small business, according to the lawsuit.

But months after L'Garde commenced work on the project, the company sent Raytheon letters voicing concerns that it had not commenced negotiations to finalize certain terms of the contract before the passing of a March 31, 2010, deadline, which would terminate the contract, the lawsuit said. L'Garde claims that during this time, Raytheon was in discussions to contract the remaining work on the project with rival ILC Dover.

L'Garde claimed in its complaint that it gave Raytheon a 134-page report detailing specific design specifications of the ISIS Pill structure days before the company received a stop-work order. The company launched its lawsuit against Raytheon in April 2011, alleging breach of contract and fraud.

On Tuesday, Featherstun told the jury that Raytheon had hired L'Garde under the assumption that the project would use a proprietary fabric provided by DARPA, but which proved unworkable. The company realized it would have to use a replacement fabric, Vectran, and this played into its decision to move on from L'Garde, he said.

"We now have a contract with L'Garde for a fabric that won't work," Featherstun said. "ILC Dover's experience with Vectran dwarfs L'Garde's."

L'Garde is represented by Peter B. Jones and Brian J. Donovan of Jones & Donovan

Raytheon is represented by Donald G. Featherstun and Giovanna A. Ferrari of Seyfarth Shaw LLP

The case is L'Garde Inc. v. Raytheon Space & Airborne Systems, case number 2:11-cv-04592, in the U.S. District Court for the Central District of California.