When a contractor leases equipment to the government, the contractor typically expects that the government will take good care of that equipment. But a recent Armed Services Board of Contracts Appeals case reveals the government does not always take such proper care of leased goods or equipment.
What happens then? Well, the contractor may be able to recover damages under the contract and common law principles.
The government’s use of specifications within a contract carries an implied warranty that the specifications are free from errors. When a contractor is misled by the erroneous specifications, the contractor may seek recovery through an equitable adjustment to the contract. But what happens when the government seeks services through a requirements contract and is simply negligent in estimating its needs?
A recent Federal Circuit decision, Agility Defense & Government Services, Inc., v. United States, No. 16-1068 (Fed. Cir. 2017) finds that a contractor may be able to recover damages in such instances under a negligent estimate theory.