The Government Needs Just One Good Reason To Terminate For Default

Wednesday, December 27, 2017 9:31 am
January 2018 - Volume 40 Number 1

A contractor tried to shift project delay blame onto the government by naming everything from differing conditions and work suspensions to government delays. This was a large, clearly challenging job---to be performed in a remote and dangerous area of Afghanistan prone to extreme weather. Nevertheless, the contractor couldn’t show that anything but its own failings was to blame for its slow, inadequate, and ultimately "default," performance.

The facts behind the dispute in Appeals of: MOQA - AQYOL JV Ltd., 2017 ASBCA Nos. 57963, 60456 Lexis 428 (Nov. 7, 2017) were as follows: MOQA-AQYOL JV LTD (MOQA) was the general contractor on a U.S. Army Corps of Engineers (Corps) project to build a district police headquarters compound in Takhar Province for $2.5 million. Three weeks before the completion deadline, the Corps terminated MOQA for default because the contractor had allegedly completed just 30 percent of the work in 95 percent of the contract time. MOQA appealed the termination to the Armed Services Board of Contract Appeals and sought $1.8 million for materials and equipment left at the site, consulting fees, and unpaid work.

MOQA conceded that it couldn’t have completed the project by the contract deadline: November 22, 2011. What it argued in this appeal was that, given all the hindrances to performance, it should have been granted a new, reasonable deadline, estimated by its expert to be six months later: May 27, 2012. The Board didn’t find this date credible ("because it would have required MOQA to achieve a level of proficiency that had thus far eluded it"), but it was a useful date with which to consider the key question here: Who was to blame for delaying the project such that it could only be completed six (or more) months late?

It was up to MOQA to prove that the Corps delayed the project by six months to account for the gap between November 22, 2011 and May 27, 2012. It could not.

A general release is generally enforceable

The government was indisputably responsible for several project delays: failing to obtain a construction license, altering the size of the compound, and dragging its heels to resolve a collapsible soil problem. But, for each of[..]