Jenner & Block

Partner Joe Smith and Associate Sati Harutyunyan Secure Significant Settlement in Morganti Joint Venture Dispute

Jenner & Block Partner D. Joe Smith and Associate Sati Harutyunyan secured a settlement of more than $6 million for The Morganti Group, Inc. and Hassan Allam Construction (the JV) in its joint-venture dispute against the US Army Corps of Engineers.

The US Army Corps of Engineers contracted with the Morganti-Hassan Allam JV to repair runways and construct facilities on an air base in Egypt used by the Egyptian Air Force. The project, which was supposed to take two years to complete, lasted more than four years and by the end of the project, the JV’s contract was valued at more than $70 million, but the JV had incurred substantial unreimbursed overhead costs related to the extended time of performance. With assistance from Joe and Sati, the JV submitted a certified claim to the Corps of Engineers seeking the unabsorbed overhead costs, arguing that the Corps of Engineers or the Egyptian Air Force were liable for the delays.  While the Corps of Engineers recognized and compensated the JV for approximately $2.1 million of the costs claimed, the JV appealed its claim for the remaining amount to the Armed Services Board of Contract Appeals. Following initial discovery and the setting of a trial date for June 2020, the Corps of Engineers requested a settlement conference to be held in Amman, Jordan.

In a two-day negotiating session, each side presented its view of the facts and the analysis of its scheduling experts.  Following several hours of negotiations, the Corps of Engineers agreed to pay the JV an additional $6 million plus statutory interest to the JV.  Altogether, the settlement amount will total approximately $6.3 million.