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Tardy Contractor Performance Can Merit Default Termination But Excuses Shall Be Heard

Thursday, September 04, 2008 03:42 pm

Tardy Contractor Performance Can Merit Default Termination — But Excuses Shall Be Heard

Sometimes you can't finish what you started — certainly not if the government terminates a contract in the middle of a job. When a dispute over default termination winds up in court, the government must prove it acted properly in pulling the plug. But contractors don't get off the hook too easily. They best have a good excuse for nonperformance — and be able to prove it in the face of solid evidence for the government's action. The following rulings offer a lesson in fighting for your rights to proceed or terminate.

Beware of faulty info

The government has the right to terminate for default when its contractor fails to perform in a timely fashion — but it doesn't have to. And that second part is key because deciding to terminate is to walk a thorny path. The decision must take into consideration all relevant circumstances (Ryan Co., ASBCA No. 48151, 00-2) and be based on accurate information or accurate analysis of that information (L&H Construction Co., ASBCA No. 43833, 97- 1)) in order to stand up in court.

For instance, in L & H, the Armed Services Board of Contract Appeals ruled that the government's decision to terminate was based on "materially erroneous information as to appellant's culpability for the delay, and materially erroneous information as to the labor and time required to compete the work." If a reasonable contractin [...]

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