Government Contracts Brief – Week of February 10, 2020

Constructive Waiver Elements

Pursuant to guidance outlined in a recent ASBCA decision, federal construction contractors may be entitled to receive additional compensation for time and costs associated with corrections when it is not in strict compliance with the specifications outlined in the contract. The argument: constructive waiver. If the contractor can show that the government knew of the defective or out of scope work, acted in a manner indicating acceptance of that work, and the contractor relied on those actions, then additional compensation may be obtained. (Appeal of Buck Town Contractors & Co.)

Termination For Default Requirements

The government may terminate for convenience (determines it no longer needs the benefit of the contract) or for default. A termination for default is the exercise of the government’s right to terminate in whole or in part because of a contractor’s actual or anticipated failure to perform. The performance failure must relate to a material (i.e. significant) requirement of the contract and can include anticipatory repudiation (i.e contractor saying it will not or cannot perform).

Must Prove Liability and Damages

A recent decision out of the COFC reminds contractors that prevailing on liability under a Contract Dispute Act claim does not necessarily mean that the contractor will recover damages. As with any litigation, the movant must demonstrate liability and damages. In Pacific Coast Community Services, Inc. v. United States, the Court ruled in favor of the contractor indicating that the agency’s actions constituted a constructive change to the contract and therefore the contractor was entitled to recover costs for the changes. However, the Court pointed out that the contractor failed to provide any proof of its damages and therefore was awarded no monetary relief. The lesson here for contractors is to track and document additional costs as they are incurred.

Attorney Kristi Morgan AronicaOur government contracts briefs, reports, and articles are published by Attorney Kristi Morgan Aronica. She serves as counsel to government contractors and subcontractors throughout Texas and nationally.