Termination for Default

In the decades since the enactment of the Contract Disputes Act (CDA), contractors, agencies, and the tribunals that decide government contract disputes have grappled with the question of what constitutes a claim. In 2010, the Federal Circuit ruled in M. Maropakis Carpentry, Inc. v. U.S. that to raise the adjustment of contract terms as a defense when litigating a CDA claim, a contractor must satisfy the CDA’s jurisdictional and procedural prerequisites by filing a claim with the contracting officer (CO) and receiving a final decision. To some, the Federal Circuit’s Maropakis decision appeared to impose an additional burden on contractors litigating CDA claims. Total Engineering, Inc. v. U.S., a recent decision from the CFC, helpfully suggests a limited application of the Maropakis decision.
Continue Reading Defenses to the Government’s CDA Claim Are Not Independent Claims

A termination for default (T for D) is “a drastic sanction which should be imposed or sustained only for good grounds and on solid evidence.” A T for D will impact future responsibility determinations and needs to be fought by contractors who want to continue to work in the Government market. In DMW Marine Group v. Department of Commerce, the Civilian Board of Contract Appeals (CBCA) granted a contractor’s appeal, effectively reversing the National Oceanic and Atmospheric Administration’s (NOAA) T for D based on the contractor’s failure to provide a certification called for under the contract. The Board’s decision reflects a common-sense understanding of the exchanges between the parties—and a proper rejection of an overly aggressive use of the “drastic sanction.”
Continue Reading The CBCA Issues an Interesting “T for D” Decision, Applying UCC Principles to Reach a Common-Sense Result

Tajik

The Court of Federal Claims issued a lengthy decision in a case arising from a construction project gone awry in which the contractor was terminated for default (T for D), ended up in bankruptcy, and lost a fraud counterclaim to DOJ. The contractor had taken a substantial risk by agreeing to a firm-fixed price that was substantially lower than it had originally proposed—then (after a few problems) lacked the necessary liquidity to complete the project. The decision in Liquidating Trustee Ester Du Val of Ki Liquidation, Inc. v. US is a reminder that contractors agreeing to a firm-fixed price are accepting substantial risk, and when entering into this type of contract in unpredictable circumstances, they must be able to bear that risk, as a lifeline is unlikely to be forthcoming from the agency.


Continue Reading A Tajik Construction Project Nightmare Serves as a Lesson Regarding the Perils of Firm-Fixed Price Contracting in Uncertain Situations