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Govt. Must Mitigate Its Reprocurement Damages After A Default

Wednesday, August 01, 2012 05:41 am


Contract Termination--Damages

M.E.S., Inc. v. United States, 2012 U.S. Ct. Fed. Cl. Lexis 551 (May 23, 2012)

A contractor that was terminated for default was nevertheless able to hold the government accountable for failing to mitigate its own resulting damages.

In September 1998, the United States Postal Service (USPS) awarded contractor M.E.S., Inc. (MES) a $4 million contract to construct a postal facility in Riverhead, New York. In June 1999, USPS terminated that contract for default because MES allegedly caused a four-and-a-half month project delay. In April 2004, USPS hired a replacement contractor to complete the work and then filed a claim against MES seeking $800,000 in excess reprocurement costs. MES contended that the claim must be dismissed because the USPS unreasonably delayed the reprocurement for more than four years.

Due to various factors, USPS's four-year delay in reprocuring the project pushed up project costs, such as costs associated with design, construction management, site maintenance, and labor and materials. A government consultant admitted that the project could have been completed within 15 months of MES's termination had it been timely reprocured. Further, a letter from the contracting officer (CO) to MES, sent shortly after termination, indicated that reprocurement could be completed on budget, with no excess reprocurement costs.

USPS argued that the facts were [...]

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