When faced with termination for default appeals, courts deciding government contract cases understand that a default termination is “a drastic sanction which should be imposed … only for good grounds and on solid evidence.” This was the decision on J.D.Hedin Construction Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969). The impact of the termination can severely impact your company’s future and you chance of doing future business with the federal government. Therefore, understanding the rules, being proactive, or knowing general detail about appealing a termination for default letter can be very helpful.
What is the Government’s Burden for Ending the Contract?
Although the government’s rationale can be attacked in a termination for default appeals cases, understanding how to address the various legal thresholds is critical to appealing your case.
When the contracting finally issues a termination notice, the government bears the burden of proving that the termination for default letter was justified. This is a tough standard. However, if you are not familiar with how to document and ask the right questions at the right time, government contracting agencies have been successful in winning on appeal.
- When issued a cure notice, make sure to give detailed plans of action to finish the project.
- Your plan to finish the project should not change the terms of the contract.
- Asking for extensions to finish the project can be granted. However, it could be used on appeal to show that you had problems performing.
When the government meets the burden of justifying the default termination, your company then shifts to you to show why your termination for default appeals should be decided in your favor. This is called the burden of production.
To support termination for default appeals for your failure to make progress to endanger performance of the contract, the Contracting Officer must have and show a reasonable belief that there is no reasonable likelihood that your company can perform the entire contract effort within the time remaining for contract performance.
After the government meets that legal threshold, the burden then shifts to you to give evidence of a legal excuse for your default.
- You have to show valid excuses, not any excuse will work in court.
- Was the government and primary reason that you could not perform?
- Was a third party, in the control of the government –a side factor?
Given the above information, it is essential to know that appellate courts may find other facts, whether or not investigated by the CO, that were present at the time of the termination. This is a catchall rule that can ruin your case when there is a termination for default appeals case.
Your Role in Defending Termination for Default Appeals Cases
When the government issues you a cure notice, you have to carefully provide sound assurances that you can timely perform. This is sometimes under-valued by many contractors. You don’t want to make irrelevant statements about other contracts that you have successfully performed. Instead, you must focus on the contract at hand and convincing the CO that there are minimal risk in trusting you to finish the project on time.
- Sometimes the government may give you some extra time. However, it has no obligation to do so.
- Do not take directions from the contracting officer representative (COR). They do have have authority to commit the government
If you have problems with subcontractors, you may want to develop a plan of getting another contractor to perform. Again, the government contracting agency does not have to suspend a termination for default action simply because you propose another subcontractor.
- What you are going to do to solve the problem is critical when responding to a cure notice
- You want to develop a sound a meaningful plan of action that includes the How’, When’s and Who’s
- It might be also helpful to engage the CO to see what exactly he or she would like to see in your plan
The government does have a right to demand strict compliance with any federal contract. Failure to offer strict compliance with the terms and conditions can be grounds for a valid termination for default letter. This was part of a wrongful termination for default appeals decision in the case of Mission Valve and Pump Co., ASBCA Nos. 13552, 13821, 69-2 BCA iJ 8010 at 37,243. Get help from Federal Appeals Court Lawyers that can clarify these complex nuances.
Proactive Suggestions When Contemplating Termination for Default Appeals
To avoid a contract termination for default, it is always a wise decision to keep the government involved at all phases of performance. If you wait until too late to discuss problems with the Agency, a court may disregard any assertions on appeal.
- You should always document and communicate problems to the CO during contract performance.
- Find the cause of any potential problems and make sure that the CO gets timely notice.
- Notify the contracting officer in writing that other factors beyond your control is leading to project delay.
- Document problems with other contractors under the control of the government.
If you are contemplating a cure notice or notice of termination for default, protect your rights early. Call our termination for default appeals attorney at 1-866-601-5518.