During the performance of a federal project, a government contract release of contract claims statement can blindside contractors. In good faith, they believe that once the agency gets the benefit of services that they will be paid.
Unfortunately, many appeals at the various boards of contract appeal show that release of claims can be a tricky subject.
Before signing documents that could essentially bar any future rights to a federal contract claim, you should get professional help. Too many small and large businesses have lost contractor release of claims cases on appeal simply because they do not quite understand the risks and language contained in the release.
The General Rule of Law in Government Contractor Release of Claims Statement
When it comes to a federal government contractor release statement, the general rule is those absent applicable exceptions, an unconditional release bars a contractor from recovering additional compensation based on events occurring before the release was executed. The was decided in the case of ToddPacific Shipyards Corp., ASBCA No. 55126, 08-2 BCA 33,891 at 167,759.
Real Cases where contractors lost on appeal
ServiTodo, LLC v. HHS, CBCA 5524 (Mar. 3, 2017) (clear release language of bilateral settlement agreement bars current claim)
Perry Bartsch Jr. Construction Co. v. Dept. of Int., CBCA 4865, 5071 (Dec. 8, 2016) (denies Government’s motion for summary judgment because of ambiguities and unresolved factual issues concerning scope of release language in bilateral modification)
- Hope for contractors can be revived if the government contract claims release is conditional.
If a specific contract release is broad in scope, then it is conditional. For example, if a government contract bases the release on something that could occur in the future, (such as receiving payment at a future date) then arguably the release of claims is conditional.
- Contractors must carefully review their government contract release for language and legal implications.
- Businesses can literally lose out on millions in hard-earned money if they make a mistake with a contractor release of claims statement.
The Armed Services Board of Contract Appeals stated in the case of Cox Palmer Construction Corp., ASBCA No. 43438 et al, that in reviewing bilateral modifications involving time extensions, it recognizes that “the action of the contracting parties in agreeing to new performance schedule eliminates from consideration the causes of delay occurring prior to the extension.”
But when the modification does not include waiver or contract claims release, “the failure to reserve claim for delay costs is not fatal to later claim when the circumstances do not indicate the parties’ intention to include delay costs.” See information about accord and satisfaction.
Once a Government Contract Release of Claims is Waived, It’s Hard to Recover
As one can see, a government contract release statement can cost a contractor a substantial amount of money. Always include an experienced government contract claims attorney to proactively assess and overcome costly hurdles.
For help with your federal government contractor release of claims form, call our law office at 1-866-601-5518.