Busy contractors focused on day-to-day issues and future opportunities sometimes put other matters off to the extent they miss contractual deadlines. The recent decision of the Armed Services Board of Contract Appeals (ASBCA) in Black Bear Construction Company, ASBCA No. 61181 (November 14, 2017) reminds us of the termination for convenience deadlines.
In the Black Bear Construction Co. case, the contracting officer’s denied a claim seeking $462,160.00 for settlement costs due to the government’s termination for convenience of its contract for runway improvement construction in Afghanistan. The government filed a motion for summary judgment alleging that Black Bear waited more than one year to file its settlement proposal as required by the contract. After the government terminated the contract for its convenience on August 12, 2012, Black Bear waited until March 25, 2017 before submitting its termination settlement claim to the contracting officer.
The contract incorporated by reference Federal Acquisition Regulation (FAR) clause 52.249-2, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) (APR 2012)-ALTERNATE I. That clause provides:
After termination, the Contractor shall submit a final termination settlement proposal to the Contracting Officer . . . promptly, but not later than I year from the effective date of termination, unless extended in writing by the Contracting Officer upon written request of the Contractor within this I-year period.
The record contained no evidence that Black Bear had requested an extension of time from the contracting officer. The Board made short work of Black Bear’s claim. FAR 52.249-2 allowed Black Bear one year to file unless it received an extension of time from the contracting officer. Because no extension of time was ever sought, much less granted, and the claim was submitted to the contracting officer after that one year period had passed, the Board had no trouble agreeing with the government that the claim was late and the appeal must be denied.
The takeaway here is simple: don’t let other concerns prevent you from timely preparing and submitting your termination settlement claim before the due date established by your contract. If you do, you’re essentially throwing money away.
Every government contract (or subcontracts) holds a termination for convenience clause. Every contractor should know and understand the possibilities of receiving a termination for convenience to make sure you obtain all things you are entitled to in the termination settlement process. Although you may not receive the amount of profit you had expected, as a terminated contractor, you do deserve reimbursement for all permissible out-of-pocket costs and may receive a sensible profit.