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Complex contract dispute holds $100 million (and lives) in balance

We often talk about how complicated business law can be, especially when it comes to two companies disputing intellectual property or rightful claims to a lucrative contract.

Regarding the latter, a story out of our nation's capital exemplifies how these complications can cause major strife not only for the businesses involved, but for the Average Joes too.

Two companies, M.C. Dean (hereafter referred to as "Dean") and Citelum, are engaged in legal battle over a District of Colombia contract that grants a company $100 million to perform maintenance and upkeep on the city's 70,000 streetlights. Three months ago, the district's Department of Transportation selected Dean for the contract, a decisions that was appealed by Citelum.

To ensure the city had a company to perform streetlight maintenance, DDOT issued a "Determination and Finding" -- which supports and enforces a contract -- on the day their last contract expired. Without the D&F, D.C.'s residents could have been injured because a bad streetlight was not fixed.

Gratuitous acronyms aside, Citelum also appealed this move by DDOT which prompted the latter to pull their D&F, allowing the former to proceed with their legal action against Dean. While this appeal is in place, Dean will perform maintenance on the city's streetlights -- but that deal is only in place for 30 days (it is unknown when this deal began or when it will expire).

In this case, you don't have a company disputing another company breaching or violating a contract -- instead, Citelum is disputing whether the award process for the lucrative deal was fair and they are contesting DDOT's actions after the decision, which they say were "calculated" so as to deny Citelum a legitimate chance to appeal the decision.

Losing out on a contract like this can be devastating to a company; but if it was under wrongful circumstances, any business would seek legal action to ensure their financial well-being is not illegitimately undermined.

Source: Washington Business Journal, "Big stakes, big questions in $100M D.C. streetlight contract dispute," Michael Neibauer, Oct. 2, 2012

  • Breach of contract claims need to be taken seriously, as they can ruin a business. To learn more about what can be done to ensure your company is well-represented during such a contentious time, please visit our Connecticut contract dispute page.

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