Word to the Wise: Upfront Discussions Won’t Stop an Amendment from Waiver of a Contractor’s Right to Enforce a Future Claim | Dunlap Bennett & Ludwig LLC

0

Often, contractors face changing circumstances during contract execution due to delays or order changes, then seek to recoup additional time and funds through a bilateral amendment with the government. Contractors may be eager and willing to sign off on a proposed change, but this potentially waives a contractor’s right to assert a future claim.

Arbitration of the viability of a future claim depends on the scope and wording of the release to determine whether the parties intended the release to extinguish a future claim. For example, in the Appeal from Horton Construction Co., Inc.ASBCA No. 61085 (2020), the Armed Services Board of Contract Appeals (ASBCA) ruled:

Where a waiver is clear, unequivocal, and unconditional, the waiver shall be given its plain meaning and effect…Where such a waiver exists, it prohibits any further claims for compensation based on events that occurred prior to the execution of the waiver . (quotes omitted).

Despite the existence of an unambiguous waiver in a contract amendment, the United States Court of Appeals for the Federal Circuit (CAFC), the Contract Appeals Boards, and the United States Court of Federal Claims (COFC) reviewed contractor claims in “special cases and limited circumstances”. For example, the Civil Contracts Appeal Board (CBCA), in Walsh/Davis Joint Venture v. General Services AdministrationCBCA 1460, 11-2 BCA ¶ 34,799, quoted JG Watts Construction Co.v. United States, 161 CT. Cl. 801, 810 (1963), where the COFC explained:

For example, if it is shown that due to mutual error, neither party intended the release to cover a certain claim, the court will reform the release. In the same way, where the conduct of the parties in continuing to pursue a claim after the execution of the release clearly shows that they never interpreted the release as constituting an abandonment of the claimor where it is obvious that the inclusion of a claim in a release was due to error or oversight, or where there is fraud or coercion, the release shall not be deemed to bar the prosecution of claim.

Construction JG Watts, 161 CT. Cl. at 806-07 (emphasis added).

However, in a recent LCSA decision, Glen/Mar Construction, Inc. v. Department of Veterans AffairsCBCA 6905 (2021), the LCSA barred the contractor from asserting its claim for delay based on verbal agreements to pay late fees that occurred before the release was executed. Glen/Mar Constructionat 12. In Glen/Mar, the contractor surprisingly accepted the proposed change which included a waiver statement and did not sufficiently reserve the right to assert any future claim associated with the additional work. Identifier. at 11. Ultimately, the LCSA determined that general discussions of the timing and calculation of the claim were insufficient to show that the parties continued to negotiate the claim or that the government actively considered award extra time or liquidated damages or negotiate with the contractor regarding extra work. . Identifier. at 13.

The Glen/Mar The case provides important information and guidance for contractors signing an amendment containing language that releases a future claim. First, even a verbal agreement with the government to pay late fees before a change is executed can deprive the contractor of the ability to assert a future claim. Second, contractors should be aware of the language and scope of a release included in a proposed change. Third, contractors should be careful in negotiating changes to ensure that they reserve the right to assert a future claim under Federal Acquisition Regulation (FAR) 43.204(c)(2).

[View source.]

Share.

Comments are closed.