The contractor’s duty to proceed with performance pending the resolution of disputes is a basic concept in the law of government contracts. It is laid out explicitly in FAR 52.233-1(i), the mandatory disputes clause that appears in nearly all federal contracts: “The Contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the Contracting Officer.”

But the duty to proceed has important limits. A contractor is excused from its duty to proceed and may stop work if the government materially breaches its own obligations under the contract.

Breaches occur in many contexts. A cardinal change in the scope of work is a breach that excuses a contractor’s performance. Terminating a contract just to get a lower price is a breach. Refusing to pay for a contractor’s work without an adequate excuse is also a breach.

According to the decision in Kiewit-Turner v. Dep’t of Veteran Affairs, CBCA No. 3450 (Dec. 9, 2014) [pdf], the government breaches the contract by ordering a contractor to continue performance when it is clear that there will be no funds available to pay for the work. The Civilian Board of Contract Appeals recognized Kiewit-Turner‘s right to stop work when the Department of Veteran Affairs failed to provide a design that would have allowed construction to be completed within the budget established by the available appropriations. Despite the general duty to proceed, Kiewit-Turner was not required to continue performance because it was clear that the construction costs would exceed the available funds and the VA refused to seek additional funding or incorporate value engineering changes to reduce the overall construction cost.
Continue Reading Kiewit-Turner and the right to stop work

It’s a worst-case scenario for many government contractors. Despite using strict confidentiality agreements and bold restrictive legends, the government releases a valuable trade secret to the public. The Trade Secrets Act may result in criminal consequences for the offending individuals, but the more pressing question for the contractor is how to recoup the loss of a valuable asset. The recent decision in Spectrum Sciences and Software, Inc. v. United States, No. 04-1366C (Fed. Cl. Feb. 14, 2011) [pdf], offers some guidance.
Continue Reading Measuring damages for government theft of contractor trade secrets

Even a dog knows the difference between being accidentally stepped on and intentionally kicked.  Having your contract terminated by the government is similar. If it happens because circumstances have changed, it’s like being accidentally stepped on. You don’t like it, but you know it wasn’t intentionally done to harm you. But if your contract is terminated solely because the agency seeks a better price—that is an intentional kick to the gut. Does the law recognize the difference between these two scenarios? Read on.
Continue Reading Can the government terminate your contract to get a better price?