The U.S. Court of Federal Claims has allowed Associated Energy Group LLC (AEG) to proceed with its more than $53 million damages claim against the Defense Logistics Agency (DLA), rejecting the agency’s bid to dismiss the suit as precluded by related litigation and permitting discovery into allegations that DLA terminated AEG’s Djibouti fuel-supply contract in bad faith.
In a Thursday bench ruling (formal order issued later), Judge Armando O. Bonilla denied the government’s motion to dismiss the core bad-faith termination claim, stating: “As the government acknowledged in its motion to dismiss, that there is a rational basis for a decision does not mean the decision was made in good faith.” The judge emphasized that, at this stage, the court must draw all reasonable inferences in AEG’s favor and allow discovery on the bad-faith allegations.
The court did dismiss AEG’s alternative “constructive or cardinal change” claim, which sought recovery of costs to obtain a required Djiboutian petroleum activity license that DLA allegedly failed to disclose upfront.
AEG sued in August 2025, accusing DLA of misleading it into believing the February 2023 contract award was a competitive procurement for U.S. military fuel supply in Djibouti, when the Djiboutian government allegedly favored only competitor United Capital Investment Group (UCIG) as supplier. AEG claims that after award, Djibouti demanded a petroleum license — which AEG attempted to secure — but the government insisted AEG either partner with UCIG or make an “under-the-table” payment.
DLA issued a stop-work order, awarded UCIG a $134 million sole-source contract in September 2023, and terminated AEG for lacking the license. AEG alleges DLA “acquiesced to the corrupt demands” of Djibouti’s Ministry of Energy, allowing foreign selection of the awardee and jeopardizing U.S. national security.
AEG also pursues a breach-of-contract claim for pre-termination preparation costs (not challenged in the motion to dismiss).
The Federal Circuit previously ruled AEG lacked standing to protest the UCIG award, but Judge Bonilla held the present suit’s issues (bad-faith termination of AEG’s own contract) are not identical and can proceed independently.
Representatives for the parties did not immediately respond to requests for comment Monday.
AEG is represented by Todd J. Canni, Kevin T. Barnett, and Kevin N. Dorn of BakerHostetler. The government is represented by Steven M. Sosko and Deanna Y. Everett of the DLA, plus Brett A. Shumate, Patricia M. McCarthy, Douglas K. Mickle, and John H. Roberson of the U.S. Department of Justice.
The ruling opens the door for discovery into DLA’s decision-making process, potentially exposing details on foreign influence in U.S. military fuel procurement and the limits of “rational basis” review when bad faith is plausibly alleged.
