Imagine you’re a Government Contractor under a firm, fixed-price contract and you’ve done nothing wrong. Nevertheless, the Government has decided to unilaterally end its contract with you. Yes, the Government can do this (for almost any reason). No, you cannot get your anticipated profit for unperformed work. You can only recover:
- Costs you actually incurred;
- Profit on the work actually done; and
- Costs of preparing a termination settlement proposal.
Costs actually incurred include preparing to perform (e.g., costs incurred after award and before notice-to-proceed) because “a settlement should compensate the contractor fairly for the work done and preparations made for the terminated portions of the contract…”). FAR 49.201(a); Appeal of Pro-Built Construction Firm, ASBCA No. 59278 (June 1, 2017).
“Cost and accounting data may provide guides, but are not rigid measures, for ascertaining fair compensation.” FAR 49.201(c). But, contract line items (CLINs) regarding price have no meaning in a T4C settlement focused on costs. Appeal of Atlas Sahil Construction Co., ASBCA No. 58951 (November 9, 2017).
If you get a T4C notice, promptly stop incurring further costs and present a reasonable and well-supported termination settlement proposal to the Government.
Substandard is Not Defective
The government need not follow the industry standard. It can do less or more.
Hide, Seek, & Seek
Have you ever played hide and seek? If you are the seeker, do you win the game when you find the hidden person? Yes, of course! Unless, you’re a government contractor.
Contractor Schooled School
Have you ever done exactly what you were supposed to do, but it didn’t work and you were blamed anyway? Nevertheless, if contractors follow the owner’s plans and it still doesn’t work, the contractor may be without fault – this is as it should be.
Walk It Off, Keep Going
During a recent soccer game, my seven-year-old son took the ball squarely in the face. But, he walked it off and continued playing. Contractors must do the same with changes.
Are We There Yet?
Next time you close a deal, get the essential terms on paper and signed by all parties before it’s Miller Time.
Show Me the Money!
You told the guy to do the work, the work is done, and now it’s time for payment, right? But, you only told […]
Reasonable ≠ Ratio
“Circuit court litigation comes at a price, sometimes a heavy price.”
Words Matter
Remember the adage, “what you say today could bite you tomorrow.”
Recently, a Contractor won its argument before the Armed Services Board of […]
Run Through the Base, Not To the Base
Run Through the Base, Not To the Base
Thankfully, baseball season is back. While listening to a broadcast of my favorite team yesterday, […]
