Contractors Need to Be Aware of All Contract Changes

December 28, 2016

Contractor Wins Claim for Additional Costs After Partial Termination by Government

Source: Fox Rothschild LLP, The Federal Government Contracts & Procurement Blog, Nicholas T. Solosky, December 20, 2016

It is common for government contractors to file claims on federal projects where there are government-directed changes to the contract that add time or scope.

But what if – instead of adding time and/or scope – the government de-scopes work from the contract by issuing a partial termination?  A recent successful claim shows that the contractor can still recover its increased costs.

In a decision by the Armed Services Board of Contract Appeals (ASBCA), the Board considered a contract for the provision of food service operations at 18 dining facilities at Fort Leonard Wood, Missouri.  After two years, the agency issued a partial termination for convenience and removed six facilities from the contractor’s scope.  The contractor continued to provide services at the remaining 12 facilities, but could not reach an agreement with the government for the cost of completing the contract.

After negotiations with the government broke down, the contractor filed a certified claim seeking to recover its increased costs.  The government denied the claim, but on appeal, the ASBCA agreed that the partial termination increased the contractor’s costs to complete the contract.  Specifically, the Board looked to calculations of the contractor’s fixed costs – which stayed the same despite the partial termination – and estimated production hours at the remaining facilities. READ MORE….

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