The United States Court of Federal Claims recently amended its Rules of Procedure, effective November 15, 2007. Among other changes, the amendments incorporate revisions to the federal Rules of Civil Procedure regarding electronic discovery. While some contractors may be familiar with these rules from private litigation in federal court (or state court with similar rules), any company that anticipates the possibility of claims litigation against the federal Government should familiarize itself with these new rules. (Although the Boards of Contract Appeal have their own, separate rules, the Boards often look to the Federal Rules for guidance on discovery matters.)

In addition to provisions defining the scope and methods of electronic discovery, the new Rules underscore a contractor's substantive responsibility to preserve electronic evidence before litigation commences. Following other federal courts, the Court of Federal Claims holds that the duty to preserve evidence, including electronic evidence such as email and backup tapes, attaches when the contractor knows or should know that the evidence may be relevant to anticipated litigation. Failure to preserve this evidence can result in sanctions, including monetary penalties, adverse findings of fact, and potential dismissal of a contractor's claim. As a result, once a contractor reasonably anticipates claims litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold. While the new Rules recognize a limited "safe harbor" if evidence is destroyed "as a result of the routine, good-faith operation of an electronic information system," courts have held that this protection does not exempt a party who fails to stop the operation of a system that is obliterating information that may be discoverable in litigation.

Complying with the duty to preserve electronic evidence requires early and open dialogue among contractors, their IT personnel, and inside and outside counsel.