Georgia Tech Procurement Assistance Center

ASBCA voids release of government’s liability because small business subjected to duress

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As a general rule, when a contractor signs a full settlement and release with respect to a dispute with the Government, the dispute is considered settled, and the Government is released from any further liability for that particular claim.

There are, however, exceptions to the rule.

One rare exception is when the Government subjects the contractor to duress, which may render the release null and void.

In a remarkable decision, the Armed Services Board of Contract Appeals (ASBCA) recently voided a release for precisely this reason and sustained an appeal where there was evidence of a pattern of improper procurement practices, abuse of discretion in the administration of the contract, and a breach of the Government’s duty of good faith and fair dealing.

The ASBCA also made a point of scolding the procurement and contracting officials who treated a struggling small business in such an appalling manner.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/747456/

Government’s delayed response breached contract, says ASBCA

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Note: Author of “The Small Business Guide to Government Contracts,” Steven J. Koprince blogged recently about a recent ruling by the Armed Services Board of Contract Appeals (ASBCA) that the government breached a contract when it waited more than three months to respond to a contractor’s request to amend the contract’s scope of work.  Here is his writing, along with a link to his post:

Here’s a situation my colleagues and I see with some frequency: a contractor, in the course of working on a government contract, submits a request of some sort to the agency.  Then waits for a response.  And waits some more.  Meanwhile, the government’s delay in responding prevents the contractor from moving forward with some aspect of the project, causing the contractor to incur costs.

For contractors faced with this type of government inaction, a recent decision by the Armed Services Board of Contract Appeals is welcome news.  In that case, the ASBCA held that the government breached its implied duty of good faith and fair dealing by waiting more than three months to respond to the contractor’s request to amend the Statement of Work – allowing the contractor to “twist in the wind” during that period.

The ASBCA’s decision in Relyant, LLC, ASBCA No. 59809 (2018) involved an Army contract for the acquisition of pre-fabricated relocatable buildings (abbreviated “RLBs” in the decision) for use at two different sites in Afghanistan.

The solicitation’s Statement of Work included certain specifications for the RLBs.  Among those specifications, the SOW required the installation of gypsum interior drywall to the interior of the shipping containers that would cover fiberglass insulation.  But in its proposal, Relyant, LLC proposed a different configuration: the use of a “sandwich panel,” including Styrofoam as the insulator instead of separate insulation and drywall.

Keep reading this article at: http://smallgovcon.com/claims-and-appeals/governments-delayed-response-breached-contract-says-asbca/

A two-way street: The duty of good faith and fair dealing

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The contractual duty of “good faith and fair dealing” is well established in private contracts.  Depending on your jurisdiction, there is very likely either a formal or an informal rule that parties to a contract must deal with each other honestly and in good faith.  This is (usually) not a written contract term – rather, the duty is implied automatically in order to reinforce the parties’ intent when entering into the agreement.

But, did you know that the same kind of duty exists in public contracts – and runs as a two-way street between contractors and the Federal government?  It is true.  And it can help your business in the pursuit of time or damages from the government as part of an REA or Claim.

Implicit in every government contract is the duty for the government to treat the contractor fairly and act in good faith.  Courts discussing this duty place both affirmative and negative obligations on the government.  In other words, the government: 1) must take active steps to enable the contractor’s performance, and 2) must not willfully or negligently interfere with said performance.

Keep reading this article at: https://governmentcontracts.foxrothschild.com/2017/04/articles/government-contracting-101/government-contracting-101-duty-of-good-faith-and-fair-dealing/

Good faith and fair dealing upheld in federal construction contracts

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In United States v. Metcalf, the Federal Circuit Court of Appeals agreed to review a decision of the lower court. If upheld, it would make contractor claims against the government for the breach of the duty of good faith and fair dealing very difficult by requiring the contractor to show intentional bad faith by the government, as opposed to prior precedent that the contractor need only prove that the government objectively acted unreasonably.

US Court of AppealsThe policy arguments for reversal of the lower court decision in Metcalf were straightforward and compelling. Contractors, when bidding work, must consider the risk of government-caused delays, impacts and changes. If the very high burden of proof for the breach of the implied duty of good faith and fair dealing applied, then contractors would either be forced to increase their price or forgo bidding government work. In either case, the market, the procurement process and the public would suffer.

In a far-reaching decision, the Court of Appeals reversed the lower court and set forth the standards for a claim of the breach of the duty of good faith and fair dealing.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=390454

Federal Circuit’s Metcalf decision a big win for contractors

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In a recent decision, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) the supervising court for the Court of Federal Claims and the Boards of Contract Appeals, among others) clarified important legal principles concerning the federal government’s duty of good faith and fair dealing and its responsibility for differing site conditions. Metcalf Construction Company, Inc. v. United States controls disputes with the federal government and also provides authority and rationale useful to contractors in disputes with any project owner, public or private.

In October 2002, Metcalf Construction, a small business based in Hawaii, was awarded a $48 million contract to design and build 212 housing units for the U.S. Navy on a Marine Corps base in Hawaii. Saying the project did not go smoothly is an understatement. Metcalf’s performance was hindered and delayed by unanticipated soil conditions and other issues made worse by the Navy’s failure to administer the contract fairly and according to its terms. By the time the Navy finally accepted the project as complete in March 2007, almost two full years after the original completion date, Metcalf had incurred costs in excess of $76 million — leaving the contractor with losses of approximately $27 million.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/311802/Building+Construction/Federal+Circuits+Metcalf+Decision+a+Big+Win+for+Contractors&email_access=on

The government’s duty of good faith and fair dealing

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The long-standing principle that the federal government had the same implied duty of good faith and fair dealing as any commercial buyer was put in jeopardy by a 2010 decision of the U.S. Court of Appeals for the Federal Circuit, Precision Pine & Timber, Inc. v. U.S., 596 F.3d 817 (Fed. Cir. 2010).

There a panel of the court adopted a narrow rule seemingly limiting application of the principle to situations where a government action was “specifically targeted” at the contractor or had the effect of taking away one of the benefits that had been promised to the contractor.

Although the decision concerned a timber sales contract not a procurement contract, when I wrote it up in the May 2010 Nash & Cibinic Report (24 N&CR ¶ 22), I expressed the fear that the reasoning would be subsequently applied to procurement contracts.

My fear was realized in a construction contract case, Metcalf Construction Co. v. U. S., 102 Fed. Cl. 334 (2011). In that decision, the judge described eggregious conduct on the part of the government officials that would have been held to be a breach of the implied duty of good faith and fair dealing under many earlier cases.

Keep reading this article at: http://www.wifcon.com/discussion/index.php?/blog/47/entry-3042-the-governments-duty-of-good-faith-and-fair-dealing/ 

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