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Common Contract Claim Scenarios

PACA Pulse

Contractors who sustain an unexpected financial injury performing a contract with the federal government, either in the form of greater costs or lost profits, will need to consider whether the circumstances give rise to a claim against the contracting officer pursuant to the Contract Disputes Act. Contract claims can take many forms, but nevertheless certain common claim scenarios are well-established. These scenarios include negligent estimates, increased cost of performance, differing site conditions, terminations for convenience and breach of the duty of good faith and fair dealing. To assert a claim arising from one of these situations, a contractor needs to be cognizant of recent case law defining the requirements of such claims.

Negligent Estimates

In Phoenix Mgmt., Inc., ASBCA No. 59273, 15-1 BCA ¶ 35,956, a contractor was awarded a contract to maintain fire detection and suppression systems for the Air Force at Homestead Air Reserve Base. The contract’s work statement estimated the number of emergency calls that the contractor should expect during the period of performance. After award, the contractor sought an equitable adjustment to the contract price based on its allegation that the Air Force failed to disclose that (1) most of the systems were proprietary systems that could only be serviced at a higher price by firms licensed by the original equipment manufacturer, (2) more than half of the existing fire detection systems were in failing condition and in urgent need of repair, having not been previously maintained to industry standards, and (3) none of the detection systems had been inspected during the previous five years. The ASBCA held that the Air Force’s failures to disclose prevented the Board from dismissing the contractor’s appeal as a matter of law.

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