Termination For Default: The “No Reasonable Likelihood” Standard

Sometimes you may find yourself running late. It happens to the best of us for a multitude of reasons. But what happens to federal contractors when they are running late in performing under a contract and there is “no reasonable likelihood” of timely performance?

Unfortunately for contractors in this position, as illustrated by a recent Civilian Board of Contract Appeals (CBCA) decision, the result may be a default termination.

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No Protest Of Terminated Task Order, Court Says

A contractor could not file a valid bid protest challenging an agency’s decision to terminate the contractor’s task order, according to the U.S. Court of Federal Claims.

In a recent decision, the Court agreed with the GAO, which also held that the contractor’s challenge involved a matter of contract administration–something outside the bid protest process.

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ASBCA: Government Properly Terminated Contractor for Preliminary Finding of SCA Violation

The government can terminate a contract when the Department of Labor has made a preliminary finding of non-compliance with the Service Contract Act, even if the contractor has not exhausted its remedies fighting or appealing the finding.

The 3-0 (unanimous) decision by the Armed Services Board of Contract Appeals in Puget Sound Environmental Corp., ASBCA No. 58828 (July 12, 2016) is troubling because it could result in other contractors losing their contracts based on preliminary DOL findings–perhaps even if those preliminary findings are later overturned.

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GAO Considers “Intertwined” Protest of Task Order Valued Below Jurisdictional Threshold

GAO’s bid protest jurisdiction is defined—and limited—by both statute and its regulations. As part of these jurisdictional limits, GAO ordinarily may only consider protests relating to task order procurements if those orders are valued in excess of $10 million.

But despite this rule, GAO recently considered a protester’s challenge to a task order valued at only $8.7 million. It did so after deciding that the challenge was “intertwined” with the protester’s challenge to its own termination for convenience–another matter the GAO only considers in unusual circumstances.

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Nonmanufacturer Rule Violation Leads To Default Termination

A procuring agency appropriately terminated a small business set-aside contract for default when the SBA determined, after contract award, that the prime contractor was not complying with the nonmanufacturer rule.

A recent decision of the Armed Service Board of Contract Appeals involved a very interesting factual situation, in which the small business in question told the SBA that it planned to perform the contract in compliance with the nonmanufacturer rule, but then failed to do so.  This failure, according to the ASBCA, justified a default termination.

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ASBCA: Contractor’s Request For Cancellation Was Not A Default

A contractor’s request that the agency issue a “no-cost” cancellation of its contract was not a default–and did not justify the government’s default termination of the contract.

In a recent decision, the Armed Services Board of Contract Appeals held that a contractor did not repudiate its contract by requesting a cancellation because the contractor’s request was not a “positive, definite, unconditional, and unequivocal refusal to perform.”

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Contractor’s Price Revealed to Competitors, GAO Says “Tough Luck”

When a contractor is declared the winner of a competition, the contractor’s bottom-line pricing is usually revealed to competitors.  Typically, the winner has no complaints: it is well-understood that the bottom-line pricing of winning contractors is usually considered public information (the taxpayers have a right to know how the government is spending their money).

But what if, after announcing the supposed awardee’s price, the agency changes its mind and re-opens the competition?  The price of the former “winner” is exposed, while the prices of its competitors remain a mystery.  It sounds unfair, but in a recent GAO bid protest decision, the GAO refused to require the procuring agency to level the playing field.

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