Leidos Accuses US Navy of Breaching Enterprise Network Contract

Leidos Inc. says the US Navy owes it $37 million for breaching part of a multi-year enterprise-wide IT network services contract with a maximum value of $7.7 billion.

The Navy’s failure to properly compensate Leidos under a contract line item involving services for maintenance, configuration, and deployment of tools constitutes a contract breach, and a violation of the implied duty of good faith and fair dealing, the company told the US Court of Federal Claims in a July 18 complaint.

The court should issue declaratory relief that will reject the Navy’s unreasonable contract interpretation, and allow the parties to negotiate Leidos’ compensation as required by the contract, Leidos says.

The court should also award damages in the form of actual and projected costs, plus a reasonable profit, the complaint says.

The Navy awarded the contract in 2020. Quantity, price, and the maximum amount of Leidos’ services for the CLIN at issue in this suit are undefined, which means the parties must negotiate a reasonable price once services begin, the complaint says.

The government may determine a reasonable price, subject to a contractor’s appeal, if the parties don’t reach an agreement, the complaint says.

But the Navy chose to only partially definitize the CLIN and demand that Leidos provide the services without setting the price for those services, the complaint says.

The Navy April 25 unilaterally exercised the first option year under the contract which requires Leidos to continue to provide services, the complaint says.

Leidos’ actual costs through June 6 are $28.5 million, and its projected costs for the time period between June 7, 2025, and Sept. 30, 2026—when the first option year ends—are $8.9 million, the contractor says.

Leidos in September 2024 submitted a certified claim that the Navy’s contracting officer denied May 29, the complaint says.

The US Department of Justice didn’t immediately respond to a request for comment.

Rogers Joseph O’Donnell PC represents Leidos.

The case is Leidos Inc. v. United States, Fed. Cl., No. 1:25-cv-01203, complaint 7/18/25.