## Facts

- The Greek government issued an RFP for 61 communications shelters for the Hellenic Army, including bidder financial-capability requirements.
- ATACS and AIRTACS specialized in designing and integrating communications shelters but lacked the assets to bid as prime contractor.
- Trans World Communications, Inc. (TWC) manufactured radio equipment and could bid as prime contractor but lacked ATACS’s shelter-integration experience.
- The parties formed a “teaming” arrangement: TWC would bid as prime contractor; ATACS would serve as major subcontractor providing shelter design/manufacture and related integration work.
- The parties exchanged letters and drafts reflecting an exclusive relationship for the Greek project and ATACS’s role as the shelter source if TWC won.
- ATACS provided substantial technical, design, and pricing information used by TWC to prepare and submit the bid.
- TWC won the Greek contract, but the relationship deteriorated after award.
- TWC did not finalize a subcontract with ATACS and instead sourced shelters from another supplier, excluding ATACS from performance.
- ATACS sued under Pennsylvania contract law (diversity jurisdiction), alleging breach of a binding teaming agreement and seeking expectation damages, including lost profits.

## Issues

1. Whether the parties’ teaming arrangement was a legally enforceable contract under Pennsylvania law or an unenforceable “agreement to agree.”
2. Whether TWC breached the teaming agreement by failing to subcontract with ATACS after receiving the prime contract award.
3. Whether expectation damages, including lost profits, were recoverable and, if so, how they should be calculated with reasonable certainty.

## Decision

- The Third Circuit affirmed the finding that the parties formed an enforceable teaming agreement under Pennsylvania law.
- The court affirmed that TWC breached the agreement by replacing ATACS with another shelter supplier after obtaining the Greek award.
- The court agreed that expectation damages, including lost profits, were available in principle if proven with reasonable certainty.
- The court affirmed in part and remanded in part for adjustment/recalculation of damages to conform to proper limits on causation and certainty.

## Legal Principles

- Under Pennsylvania law, contract formation turns on intent to be bound; a contract may exist even if the parties anticipate a later, more formal subcontract document.
- An agreement is not unenforceable solely because some terms remain open, so long as essential obligations are sufficiently definite or reasonably ascertainable from the parties’ writings, bid framework, and conduct.
- A teaming agreement tied to a government bid can be enforceable when it reflects a present commitment allocating roles (prime contractor/subcontractor) and a workable method for determining performance and pricing within the bid structure.
- Expectation damages are the ordinary remedy for breach; lost profits may be recovered if they were within the parties’ contemplation, flow directly from the breach, and are shown with reasonable certainty.
- Damages must be confined to losses proximately caused by the breach and must avoid awards based on speculation or amounts untethered to the subcontractor’s expected share of performance.

## Conclusion

The court held that the parties’ teaming agreement created enforceable obligations requiring TWC to subcontract shelter work to ATACS upon award of the Greek contract, found a breach when TWC substituted another supplier, and remanded to ensure the expectation-damages award—including any lost profits—was limited to reasonably certain, causally connected subcontractor losses.


ATACS Corp. v. Trans World Commc’ns, Inc., 155 F.3d 659 (3d Cir. 1998)