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 | All According to Plan
ALL ACCORDING TO PLAN | Exact Measurements Go a Long Way
In December 2013, a contractor agreed to replace four bridges for the […]
Roads & Bridges | Connecting the Dots
CONNECTING THE DOTS | Showing Causation in Contracting Cases is Critical
In this asphalt case, the prime contractor agreed to perform a $13 […]
Roads & Bridges | Liquidated Damages
LIQUIDATED DAMAGES | Penalties and What is Unenforceable
Liquidated damages typically flow from delays, but they are not always solidly enforced.
In June 2017, […]
Roads& Bridges | Warranty Provisions
WARRANTY PROVISIONS | Contracts must be interpreted thoroughly to avoid absurd results
You are responsible for things within your control. Be careful if […]
Roads& Bridges | The Agreed Price
THE AGREED PRICE | This case stands as a warning about pay-if-paid clause
History cannot be rewritten and a bad, but legal, […]
Roads& Bridges | Confusing Waters
CONFUSING WATERS | A Supreme Court ruling leaves room for ambiguity
What happens when there may be a “significant nexus” between “adjacent” and/or […]
Roads & Bridges | Authority Defined
AUTHORITY DEFINED | The Law of Agency is Important to Understand
For any project, this Russian proverb is helpful: Doveryay, no proveryay – […]
Jurisdiction is Power
Not bad power, but the ability of a decision-maker (e.g., court) to decide which side is right (or which is more correct). […]
Roads & Bridges | Defining Labor
DEFINING LABOR | How the Miller Act continues to shape the industry
In the late 1700s, risks of nonpayment caused a shortage of […]
Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio