COURT RULES THAT A TERMINATION CAN TAKE PLACE EVEN IF AN AGENCY DOESN’T ISSUE ONE
The Court of Federal Claims recently determined that a federal agency can be determined to have issued a Termination for Convenience even if they really didn’t. You know it must still be 2020 for this type of ruling to have been issued. In JKB Solutions and Services, LLC v. United States, the Court held that the Army constructively terminated a contract for convenience and, therefore, did not breach it. The Court was not swayed by the fact that the Army did not, in actuality, terminate the contract. Importantly, the company’s claim was based on the fact that the Army contract specified that a certain number of training classes were to be delivered, but that the Army never actually ordered all of the classes. This is just the latest example of a frequent occurrence: a federal customer contracts for one thing, only to have the task orders not match it. Whether in this case, or others like it, way too many contractors just “go with the flow” and don’t insist that task orders be consistent with the underlying contract. This approach NEVER works in the company’s favor if there is a dispute later on. Here, the company’s claim for payment on the classes contracted for, but not actually held, was denied. Adding insult to injury, the firm had to pay extensive legal fees for the benefit of having the Claims Court invent new protections for the government. There are two main take-aways from this case that contractors should remember: 1. The government’s Termination for Convenience authority is, indeed, very broad. 2. It is only worth the time and effort to ensure that task orders match with the awarded contract if you actually want to get paid.