Despite “abhorrent” behavior by the Army Corps of Engineers, a majority of the Armed Services Board of Contract Appeals held there was no breach of the duty of good faith and fair dealing. Yet, the Contractor recovered almost all of its claimed damages because the Corps forced the Contractor to sign a modification under duress and ignored a significant constructive change.
In this story, two bids were submitted for maintenance dredging of the Scarborough River, Scarborough, Maine. The successful bidder was 40% lower than the Government’s initial estimate. Before contract award the Corps requested a change to the winning bidder’s plan at no additional cost to the Government and the Corps revised its Government estimate to be only 14% higher than the winning bid.
After award, the Corps unilaterally reduced the amounts it had agreed to pay for certain CLINs, which effectively cut off the contractor’s cash flow for the Project.
From these facts, a minority of the Board found the Corps breached its duty of good faith and fair dealing. However, a majority of the Board held there was no breach, despite the Corps’ “abhorrent” and unreasonable behavior. (A split of opinion on the Board is rare.)
The full opinion has more detail of how unfairly the Corps treated the Contractor.
Appeals of North American Landscaping, Construction, and Dredge, Co., Inc., Armed Services Board of Contract Appeals Nos. 60235, 60236, 60237, and 60238 (August 9, 2018).
Roads & Bridges | Written Notice
WRITTEN NOTICE | Beware that strict compliance of the contract might be required.
When an owner replaced a contractor for significant safety violations, […]
Roads & Bridges | Mommie Dearest
MOMMY DEAREST | The story of an ESA without a MOM
Nobody enters this world, or a contract, without a mother: There can […]
IIJA | Does Closing a “Giant Loophole” Cost Contractors?
A recent article published by Roads and Bridges magazine reports that the Office of Management and Budget is working to broaden the scope […]
Roads & Bridges | Buy American Plan Gets an Update
BUY AMERICAN PLAN GETS AN UPDATE
The Office of Management and Budget is developing standards to replace the current Buy […]
Roads & Bridges
Where Does the Buck Stop?
WHERE DOES THE BUCK STOP? | A shallow concrete pour leads to an interesting lawsuit
On the desk of President Harry S. Truman […]
Roads & Bridges | Reshaping Agreements
RESHAPING AGREEMENTS | Oral Agreements Must Be Written in Stone
Reuse, reshaping, and/or reapplication of existing materials was the goal in this roadway […]
Pay-If-Paid Unenforceable in Virginia Starting Jan. 1, 2023
As of Jan. 1, 2023, pay-if-paid clauses are unenforceable, regardless of whether a surety/payment bond claim is involved. This is only for […]
How Short is Too Short
A limitations period is too short when it’s unreasonably short.
Construction Contracting Without Relief Clauses During COVID-19
What to do if your contract lacks the parts to handle COVID-19? Considerations for creating new contracts during COVID-19.

Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio
