During the performance of a federal project, a government contractor 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. Cases show that is simply not true.
Unfortunately, many appeals at the various boards of contract appeal show that government contractor release of claims language 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 FAR release of claims cases worth millions on appeal.
General Rule of Law – FAR Release of Claims Language?
When it comes to a federal government contractor release of claims statement, the general rule is that absent applicable exception, an unconditional release bars a contractor from recovering additional compensation based on events occurring before the release was executed. This issue 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 contract 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, in the release form, 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 FAR release of claims is conditional.
- Companies must carefully review their government contractor mutualrelease of claims language and its 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 CONTRACTOR RELEASE OF CLAIMS IS WAIVED, HARD TO RECOVER
As one can see, a general 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 statement call our law office at 1-866-601-5518.