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.
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