The General Services Administration (“GSA”) awarded our client a contract to build a new land port of entry on the border between Canada and the United States. The Contract was a firm-fixed price in the amount of $16,790,287. Less than two years later, the GSA suspended all work on the Project due to design issues with the Project raised by Canadian authorities. Shortly thereafter, the GSA told our client that the GSA would take possession of the project site and directed our client to vacate the site. According to the GSA, it intended to “suspend work and … pursue a deductive modification for the remaining balance of work.”
As of the date upon which the GSA took complete possession of the Project, the Project was approximately 71% complete. The GSA believed it was entitled to a deductive change in the amount of more than $6.230 million, which meant our client would have owed the GSA over $400,000. Our client asked us to assist in the negotiations.
Because there had been no meeting of the minds and no agreement on the scope and pricing of the GSA’s proposed deductive modification, we advised our client to assert that the GSA had constructively terminated the contract for convenience of the government, which would result in the GSA paying our client several million dollars, instead of our client owing the GSA more than $400,000. We then prepared and submitted a termination for convenience settlement proposal, which the GSA returned without consideration, asserting that it did not terminate the contract.
The GSA then issued a unilateral deductive modification and a demand letter, asserting that our client owed the GSA over $800,000 (up from $400,000) as a result of the unilateral deductive modification.
In response, we submitted the termination for convenience settlement proposal as a certified claim and demanded a final decision. When the GSA failed to timely issue the final decision, we filed an appeal from the deemed denial at the Court of Federal Claims. We chose to file there, rather than at the Civilian Board of Contract Appeals, because we believed that the Department of Justice would agree with our position that GSA had terminated the contract for the convenience of the government.
The DOJ initially took the same position as the GSA did, i.e., that there was no termination for convenience. However, before discovery began, the DOJ filed an amended answer conceding that the GSA had terminated the contract for the convenience of the government. As a result, the only issue that remained was negotiating the amount of our client’s recovery under the termination for convenience settlement proposal. Ultimately, we were able to settle the litigation and the government paid our client millions of dollars under the termination for convenience proposal.