Contract performance

Army Lawyer, Jan, 2005 by Steven Patoir, Andrew Kanter, Michael Benjamin, James Dorn

The circuit court first determined that the government successfully carried its burden to prove it properly terminated Bender for default. Pursuant to FAR section 52.249.10, the government can terminate a contractor, if the contractor "fails to prosecute the work ... with the diligence that will insure its completion" by the scheduled completion date. (1331) Applying the analogous clause in FAR section 52.249-9, the federal circuit held in 2003, adequate grounds for default exist if the contracting officer has "a reasonable belief ... that there was 'no reasonable likelihood that the [contractor] could perform the entire contract effort within the time remaining for contract performance.'" (1332) In the instant case, "repeated delays extending over two years" coupled with Bender's inability to provide evidence it could meet the completion deadline, justified the default termination. (1333)

Next, the court found Bender's delay was not excusable. First, Bender did not carry its burden to show that but for a partial suspension of work, it could have completed the project in a timely manner. (1334) Secondly, Bender could not pin delay on the Army for failing to obtain a necessary approval from the local German government, when the contract explicitly required the contractor to "obtain any necessary licenses and permits, and to comply with any ... laws, codes, and regulations." (1335) The court affirmed the board's judgment upholding the termination for default.

Indivisible with Termination for All

In Brett Arnold, P.C. v. United States, (1336) Arnold agreed to provide real estate closing services to the HUD. (1337) A key provision of the contract required Arnold to timely wire sales proceeds to the HUD. (1338) One of four of Arnold's offices, "on numerous occasions" failed to provide such proceeds to the HUD within the contract's time limits. (1339) Arnold alleged the contract was "severable and divisible." Citing a 1964 Court of Claims decision, Murphy v. United States, (1340) Arnold argued the HUD should have terminated only the non-performing office. (1341)

According to the CAFC, in Murphy, a dam construction contract, the work subject to termination--irrigation work--was "wholly separate from and incidental to," the dam construction. The government had "no concerns" about timely completion of the dam. (1342) Because timely transmitting sales proceeds was a critical function of the contract and not "separate from" or "incidental to" the contract, Murphy did not apply and the HUD properly terminated the entire contract. (1343)

OK, So We Made Some Mistakes; But You Can't Prove We Caused Your Delays and Increased Costs

In PCL Construction Services, Inc., v. United States, (1344) a third per curiam decision from the CAFC, the contractor alleged that the United States Bureau of Reclamation (USBR) breached PCL's fixed-price construction contract to build a parking structure and visitor's center near the Hoover Dam. The breach allegedly arose out of USBR's provision of inaccurate construction drawings. (1345)