We would be remiss if we did not mention Breach of Contract during our articles on contract terminations. In a Breach of Contract by the government recoverable costs (damages) may include monetary costs such as forecasted profits, overhead, and damages for time lost or otherwise needed to perform the work required by the contract. You cannot recover these cost types under a Termination for Convenience.
It is advisable to first review your contract to ensure that you are correct in your assumption. If you do not understand a contract clause go to the FAR for further assistance or contact your contracting officer.
Breach of Contract – Demonstrate 4 Facts
Contractors that want to pursue a breach of contract with the federal government must demonstrate four facts. First the contractor must how a valid contract between the government and themselves. Secondly the contractor must show an obligation or duty. Third the contractor must show a breach of that duty. Lastly, the contractor much show damages caused by the breach.
It is not easy to recover your losses when the government has breached its contract. After all, filing a claim does not result in payment from the government. Why? Well government contracts contain clauses that protect the it from legal ramifications, or limit any remedies that can be provided. In many cases if you fulfill your obligations as stated in the contract the government will honor the specific terms therein. This can happen even if the government has altered the contract.
Breach of Contract is Based on Actual Losses.
Breach of Contract requires remedies based on actual losses. But government contracts usually contain two special clauses that may limit or specify the amount of damages owed. This limits your ability to obtain compensation from the government. What are those two clauses? The first “change clause” which allows the government to modify the contract. The second is termination for convenience. We have discussed this clause in our earlier episodes.
Does this mean that you cannot file a claim against the government for the breach of contract? No, it does not. However the monetary recovery you receive depends on your representation and the nature of the claim.
Successful claims are usually rewarded immediately unless there are terms added into a settlement that you agree upon after your claim was awarded.
If you elect to file a breach of contract your best bet is to hire a competent legal team that has experience both with the government and breach of contract. Under no circumstances, would I suggest that a business travel down this path without legal representation.
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