CAN A MIS-APPLIED CONTRACT CLAUSE STILL CONTROL YOUR CONTRACT?

Most IDIQ contractors know that ordering agencies love to load-up task orders with unneeded, or even conflicting, contract clauses.  It’s an established best practice to pushback at least once to see if extraneous clauses can be removed.  Why should contractors have to comply with more requirements than needed?  The issue of whether extraneous clauses are enforceable has always been a concern.  Certainly, agency IG’s and Department of Justice attorneys believe that they should be.  Now, however, the Federal Circuit Court has offered some hope to contractors in this area.  A recent JD Supra article written by Kristi Morgan Aronica of Weitz Morgan, PLLC stated that the court determined that a termination for convenience clause prescribed by the Federal Acquisition Regulation (FAR) for commercial item contracts that was inserted into a contract for services had no effect. As a result, the government was not able to rely on the express terms of the agreement to limit its liability for canceling the contract.  (JKB Sols. and Services, LLC v. U.S., 18 F.4th 704 (Fed. Cir. 2021)). This ruling could also benefit contractors in cases where an improper clause was added to their contract or task order and that later find themselves subject to a dispute or False Claims Act litigation.  While arguments can be made that the correct clause, if one exists, is incorporated by the Christian Doctrine, the company should not have to comply with clauses that have no business being in their contract or task order.  Importantly, the Court of Federal Claims had rejected the companies assertion when it originally decided the case.  It was only on appeal to the Federal Circuit that the company obtained relief.  Contractors, therefore, should be aware that they may have to fight for their rights and incur expensive litigation.  This is all the more reason why companies should read every contract and task order and work to remove extraneous clauses before they become an issue.  See the story here for more