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).
Trick or Treat in Government Contract Claims
Without a request for a contracting officer’s final decision, claimants may seek treats, but get tricked instead.
Owner Nonpayment is No Defense to Miller Act Claim
As if you needed confirmation that the Federal Miller Act is a powerful tool for unpaid subcontractors, this is it. Even when a Prime ordered and accepted the Sub’s work, but didn’t have to pay under the Subcontract, the Subcontractor still. . . .
Trust, but Verify
Rely at your own risk upon a Contracting Officer’s statements when statutes or contract provisions may conflict.
Payment for Verbal Changes When a Writing was “Required”
Even if your agreement can only be modified by a writing, you may still have a good argument to be paid for extra work.
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
