Publication

FOR IMMEDIATE RELEASE:

COURT FINDS FOR SUBCONTRACTOR FIGHTING BACK PRIME’S ABUSE

Owings Mills, MD | March 21, 2011- Offit KurmanĀ  assisted SciTech Services, Inc. of Aberdeen, MD, in vindicating years of subcontract abuse at the hands of its prime contractor, STEM International, Inc. In a 43 page decision, the Honorable Angela Eaves of the Harford County Circuit Court, issued a comprehensive opinion finding that STEM engaged in subcontract management practices which were geared toward having SciTech fail in performing its subcontract. Issuing a stern warning to prime contractors, the Court frequently described STEM’s conduct as “disingenuous” and “obfuscatory” and awarded SciTech $2,000,000 in damages for the three years of abuse as well as reaffirming STEM’s obligation to perform its contracts with SciTech. The ordeal which led to this decision is a storied past which involves a deteriorating friendship and business agreement which has led to SciTech recovering over $4,000,000 through two court cases from STEM and its owner, Chilin Shiva Prakash. The parties originally entered into subcontracting agreements where SciTech was to obtain 49% of the work under two government contracts which STEM had with the Environment Chemical Biological Center out of APG, Maryland and the Defense Threat Reduction Agency in Ft. Belvoir, VA. Despite winning the prime contracts based on SciTech’s experience and expertise in the area, within months of the contracts being awarded to STEM, it refused to provide SciTech work in accordance with the subcontracts. An Arbitration Award against STEM and Prakash in 2005 found that STEM breached the subcontracts and awarded SciTech damages and specific performance. When STEM refused to abide by those orders, SciTech was forced to again file suit in 2007 as STEM continued to materially manipulate the subcontracts. After a six day trial, the decision issued by Judge Eaves found that STEM’s claims of ambiguity and inexperience had no merit. The Court rejected Prakash’s “self-serving assessment of being inexperienced in drafting contracts” as well as similar testimony from STEM’s program managers, Robert Metzger and Kevin Walls, and found the contracts far easier to understand than STEM argued at trial. In supporting its finding that STEM had materially breached its subcontracts with SciTech, the Court concluded that despite STEM’s claim that SciTech’s performance was beyond its control, “STEM made the hiring process-the most critical step in fulfilling the terms of the contract and which in turn would facilitate the ability of SciTech to undertake 49% of the work-difficult for SciTech.” The Court found that STEM accomplished this by undermining SciTech’s efforts to hire employees, by providing half-hearted support to shift employees under the contracts, by inflating performance standards for SciTech above those used by the government, by setting artificial deadlines not set by the government, by competing with SciTech to hire employees for positions needed under the prime contracts, by modifying rates which could be charged, and by STEM arbitrarily hiring candidates who did not meet the minimum requirements and skills STEM established for SciTech’s hiring on the programs. “Each time SciTech challenged STEM’s rejection of applicants offered by SciTech, STEM offered weak or disingenuous rationales for interfering and undermining SciTech’s ability to hire employees.” Ramesh Srivastava, owner and President of SciTech was very pleased with the decision. “I am happy that SciTech has finally been vindicated in its claims that it was not being treated fairly and honestly. SciTech has a good reputation in the community, and the perception created by STEM in this situation was undeserved. I am glad we can now return to our core focus and success of working to meet the government’s needs.”

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