Avoiding Mistakes In a Breach of Contract Defense based on Impossibility to Perform or Commercial Impracticality

To get a government contract claim excused from performance due to defense to breach of contract of impossibility or commercial impracticability, you must inform the contracting officer early in the process.

You cannot wait until the case is at the appeals level to bring it up.  Failure to follow this simple rule will cause the Court to dismiss the case for lack of jurisdiction.

What is Impossibility to Perform in Government Contracting?

In government contracting, impossibility to perform refers to a situation where a contractor becomes unable to fulfill its contractual obligations due to circumstances that are beyond its control and could not have been reasonably anticipated or prevented. Impossibility to perform may excuse the contractor from performance under the contract.

Impossibility to perform can arise in various situations, such as:

1. Acts of God or Natural Disasters: Events like earthquakes, hurricanes, floods, or other natural disasters that make performance impossible or commercially impracticable.

2. Government Actions: Changes in laws, regulations, or government orders that render performance illegal or impossible.

3. Labor Disputes: Strikes, labor shortages, or other labor-related issues that prevent the contractor from obtaining necessary workforce to perform the contract.

4. Supplier or Subcontractor Failure: The failure of a crucial supplier or subcontractor, such as bankruptcy or unforeseen closure, which makes it impossible for the contractor to procure necessary materials or services.

5. Destruction of Property: Destruction or loss of essential equipment, facilities, or property necessary for contract performance due to fire, vandalism, or other unforeseen events.

It’s important to note that the defense of impossibility to perform is not easily invoked. To establish this defense, the contractor must show that the impossibility was truly unforeseeable and beyond its control, that it took reasonable steps to mitigate the effects, and that it is objectively impossible to perform the contract as a result of the unforeseen circumstances.

When faced with a situation of impossibility to perform, it is crucial for the contractor to promptly notify the government contracting officer and provide documentation supporting the claim. The government may review the circumstances and negotiate a resolution, such as contract modification, suspension, or termination, based on the specific facts and applicable laws and regulations.

It’s highly recommended that contractors consult with legal professionals specializing in government contracting to understand the implications of impossibility to perform and to navigate the process effectively.

Contractor Impossibility Defense on Federal Projects

According to the Federal Circuit Court of Appeals, the Impossibility” of performance exists “when it is objectively determined that no contractor could perform the work.” Conner Bros. Const. Co., Inc. v. United States, 65 Fed. Cl. 657, 686 (2005) (citations omitted).

If on appeal, your lawyer asserts  “impossibility” as a breach of contract defense, a grave problem can occur because your inability to perform may not necessarily be impossible. Instead, it may constitute a claim of commercial impracticality, not impossibility. 

On the other hand, and as is often the case in a government contract claims disputes, construction specifications, and defects in plans prepared by the government will not make you responsible for the consequences of defects in those plans and specifications. The appropriate remedy would be to allow the impossibility defense of performance is impracticable because of excessive and unreasonable difficulty or expense.

Commercial Impracticability as  a Breach of Contract Defense

what is commercial impracticability? In government procurement,  the breach of contract defense of impracticability occurs if there is a type of constructive change to the contract; because a commercially impracticable contract imposes substantial unforeseen costs on the contractor. In that case,  a contractor is entitled to an equitable adjustment.

Watch for Impossibility of Performance Issues to Increased Expense

The U.S. Supreme Court has long ruled that one is not excused from performance merely because performance becomes more expensive than originally contemplated. Mere unforeseen difficulty or expense does not constitute impossibility of performance and is not ordinarily an excuse. (Transatlantic Financing Corp. v. U.S. 363 F.2d 312 (1966.)

As often the case in a federal construction contract, when your company agrees to perform a project at a firm fixed price, the government will deny claims because of additional compensation or because unforeseen difficulties are encountered. This is why submitting bidding prices in a lowest priced technically acceptable LPTA Contract can be risky.

Failure to Bring the Issue up at the Claims Submission Stage Strips Jurisdiction of a Court on Appeal

The Court of Appeals has ruled that a contractor could not assert a defense of excusable delay against the government’s claim for liquidated damages where the contractor failed to present that claim to the contracting officer.  See Appeal of Maropakis 609 F.3d at 1331.

The Court rejected the contractor’s argument for an exception to the Contract Disputes Act notice requirement when a contractor’s claim for contract modification is made in defense to a government claim.

The Court also held that “a contractor seeking an adjustment of contract terms must meet the jurisdictional requirements and procedural prerequisites of the Contract Disputes Act, whether asserting the claim against the government as a claim against the federal government or as a defense to an agency’s action. See also Raytheon Co. v. United States, 747 F.3d at 1354.

Failure to follow the above rule will alert the Agency to file a summary judgment motion that will ultimately get your appeal dismissed.

Provide Evidence To Support Your Defense

As a practical matter, each claim you submit to the Agency should be supported with documentation, facts, and sometimes affidavits.  When submitting a claim to the federal government, most contractors simply focus on providing documentation for financial claims. This is not enough.

• Providing detailed facts such as dates and times are always helpful;
• If you are trying to show impossibility of performance or commercial law impracticality as a contract defense, you must also make you position clean and unavailable to challenge
• You cannot raise these issues and breach of contract defenses at the appeal stage for the first time.

For additional information or immediate help with the government contract impossibility to perform defense or impracticability as a breach of contract defense, contact our government contracts attorneys. Call 1-866-601-5518.