breach of contract | The Contracting Education Academy

March 2, 2021 By cs

For government-furnished property, the government not granting an equitable adjustment may be a breach of contract

The Federal Circuit’s published decision in BGT Holdings LLC v. United States (Dec. 23, 2020) holds that the government’s refusal to adequately consider a contractor’s request for equitable adjustment (REA) could be considered a breach of contract.

In this case, BGT Holdings LLC (BGT) was appealing a dismissal of its claims by the Court of Federal Claims (COFC) in a dispute with the Navy.

BGT was performing a fixed-price contract to build and deliver a gas turbine generator for the Navy. As part of its performance, BGT was to receive and incorporate certain government-furnished equipment (GFE) into its deliverable. Well into performance, the Navy cancelled two of the GFE items, requiring BGT to purchase them on the open market. BGT filed an REA to recoup the costs to purchase the cancelled GFE, consistent with FAR § 52.245-1(d)(2)(i), Government Property and FAR § 52.243-1, Changes – Fixed-Price. The Navy rejected the REA.

On appeal, the Federal Circuit considered BGT’s five grounds for relief in its complaint:

The Navy’s withdrawal of the GFE was a constructive change, entitling BGT to an equitable adjustment;
The reduction of GFE was an official change to the contract for which BGT was entitled to an equitable adjustment;
The Navy breached its contractual duty to deliver the GFE, and therefore BGT was entitled to damages;
The Navy breached its contractual duty to provide an equitable adjustment after failing to deliver the GFE and obligating BGT to provide it; and
The Navy breached its implied duty of good faith and fair dealing by failing to deliver the GFE.

Keep reading this article at: https://www.mondaq.com/unitedstates/government-contracts-procurement-ppp/1040080/for-government-furnished-property-the-government-not-granting-an-equitable-adjustment-may-be-a-breach-of-contract

July 17, 2017 By AMK

ASBCA issues important ruling in ‘contractor-on-the-battlefield’ dispute

Last month, the Armed Services Board of Contract Appeals (ASBCA) held that the U.S. Army breached its contractual obligation to provide physical security to its principal logistical support contractor, KBR, during the height of the Iraq War.

As a consequence, the Board found that KBR was entitled to be reimbursed for $44 million, plus interest, in costs that the Government had withheld from KBR relating to KBR’s and its subcontractors’ use of private security. A copy of the opinion is available here.

Before the Board, the Army had argued that the costs in question were unallowable because KBR’s LOGCAP III contract with the Government prohibited the use of private security. In response, KBR argued (among other things) that any violation of this prohibition had been excused by the Government’s prior material breach of its obligation to provide physical security. On the basis of an extensive documentary and testimonial record (including a month-long trial), the Board agreed with KBR, finding:

[D]espite the many and continuing failures of the government to provide the promised level of force protection to KBRS and its subcontractors . . . , the government seeks to disallow the PSC costs incurred . . . in order to accomplish [the] mission under the LOGCAP contract despite the government’s breach, and argues that its breach was not material. It is hard to imagine a contract breach more material than this one, which eviscerated the promise at the heart of the justification for the government’s claim.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/06/asbca-issues-important-ruling-contractor-battlefield-dispute/

September 11, 2012 By AMK

Contract law gives U.S. government options for automatic cuts

A little-known aspect of U.S. contract law may provide a road map for how the Obama administration can implement billions of dollars of automatic budget cuts due to take effect in January without having to pay massive change fees to its contractors.

U.S. courts have found that the government has certain contractual rights because of its sovereign standing, including the right to unilaterally change the terms of its contracts, delay or stop work on contracts or terminate them outright, a congressional report found.

Keep reading this article at: http://www.reuters.com/article/2012/08/29/us-pentagon-budget-cuts-idUSBRE87S1DX20120829.

The Federal Circuit’s published decision in BGT Holdings LLC v. United States (Dec. 23, 2020) holds that the government’s refusal to adequately consider a contractor’s request for equitable adjustment (REA) could be considered a breach of contract.

Last month, the Armed Services Board of Contract Appeals (ASBCA) held that the U.S. Army breached its contractual obligation to provide physical security to its principal logistical support contractor, KBR, during the height of the Iraq War.

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