Skip to main content

Settlement Agreements: Pratt & Whitney Decision A Step In The Wrong Direction

The Nash & Cibinic Report

In this article, Jason Workmaster and Elissa Harwood write that the Federal Circuit's latest decision in the decades-long Pratt & Whitney dispute narrows contracting officers' ability to enter into prospective settlement agreements and undermines contractors' confidence in negotiated resolutions. The court invalidated part of a 2006 cost-allocation agreement on procedural grounds under FAR 31.109, allowing the government to walk back previously agreed upon terms while still holding the contractor to its obligations. The authors note that this shift places the risk of an alleged non-compliance with the FAR squarely on parties seeking to enforce advance agreements and raises concerns about the stability of such agreements, potentially inviting future reopening of settled cost treatment issues and eroding trust between contractors and the government.