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Government Contracts Monitor

If You’re Terminated for Convenience, Don’t Put Off Submission of Your Termination Settlement Claim

December 14, 2017

By: Hopewell Darneille

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) serves as a reminder of the potentially high cost of excessive procrastination.

The matter involved an appeal by Black Bear Construction Company (Black Bear) of a contracting officer's denial of 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. Black Bear claimed the costs sought were incurred between its receiving a notice to proceed and the government’s terminating the contract for convenience. The government filed a motion for summary judgment based on the fact that Black Bear waited more than one year to file its settlement proposal as required by the contract.

The parties did not dispute that 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 in pertinent part: “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.” Also undisputed was the time line: 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 record contained no evidence that Black Bear had requested an extension of time from the contracting officer.

The Board first confirmed its jurisdiction over the appeal, explaining that the Court of Appeals for the Federal Circuit has held that the ASBCA has jurisdiction over termination settlement appeals where, as here, the contractor has failed to submit a settlement proposal within one year but has filed a certified claim with the contracting officer. It then 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.

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