• R.D. Lieberman,Consultant

Conceding the Government's Case In Termination for Default

A government termination for default is a drastic sanction which requires that the government produce solid evidence proving that the termination was reasonable and justified. If the government establishes a prima facie case of the contractor's default, then the contractor bears the burden to show that its default was excusable (due to causes beyond the control and without the fault or negligence of the contractor) or was caused by the government's material breach. Contractors are well advised to take every potential default very seriously, and be fully responsive to any Show Cause or Cure Notice that they might receive. In a recent Armed Services Board of Contract Appeals Case, apparently, the contractor did not take the government’s warnings seriously, and admitted its mistake in the subsequent litigation. Ballistic Recovery Systems, Inc., ASBCA No. 61333, Dec. 13, 2018.

Ballistic involved a fixed price contract for parachute sleeves issued by the Defense Logistics Agency (“DLA”). The contract required a first article test (“FAT”) submission, which must be passed. The Army (which tested the articles) found numerous major deficiencies in the first article, including three significant failure scenarios in the drop test. Any one of these deficiencies would be considered “major defects.” Ballistic resubmitted the FAT samples a second time, but the Army again found major deficiencies again—any one of which would be sufficient to disapprove the first article.

The government then issued a Show Cause notice to Ballistic, stating it was considering terminating the contract for default. Ballistic’s response did not address any of the major deficiencies cited by DLA/Army. Instead, Ballistic referred to an earlier contract for deployment sleeves where its FAT articles had been approved (even though the Contracting Officer had previously denied Ballistic’s request for a FAT waiver). The Contracting Officer terminated the contract for default as a result of multiple first article tests which failed to conform to the technical data package.

The Board held that the government had established a prima facie case demonstrating that the default was reasonable and justified based on major deficiencies and failures in the drop test. In its pleadings to the Board, Ballistic made two errors fatal to its case:

· It admitted that its FAT samples were “non-conforming products”

· It admitted that any one of the major deficiencies cited by the Government would be sufficient to constitute a FAT failure.

The board found the default justified, noting that Ballistic had effectively conceded the government’s case.

Takeaway. Clearly, FAT samples as well as production items must meet the requirements of the technical data package and the contract. When a FAT is disapproved, a contractor must take necessary steps to obtain approval. Also, when a Show Cause or Cure Notice is received, a contractor must seriously respond to every allegation in that document, explaining why its performance was excused. And finally, if you are going to litigate a default at a Board or in a court, don’t concede the Government’s case in your pleadings.

For other helpful suggestions on government contracting, visit:

Richard D. Lieberman’s FAR Consulting at https://www.richarddlieberman.com/, and Mistakes in Government Contracting at https://richarddlieberman.wixsite.com/mistakes

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The website of Richard Donald Lieberman, a government contracts consultant and retired attorney who is the author of both "The 100 Worst Mistakes in Government Contracting" (with Jason Morgan) and "The 100 Worst Government Mistakes in Government Contracting." Richard Lieberman concentrates on Federal Acquisition Regulation (FAR) consulting and training, including  commercial item contracting (FAR Part 12), compliance with proposal requirements (FAR Part 15 negotiated procurement), sealed bidding (FAR Part 14), compliance with solicitation requirements, contract administration (FAR Part 42), contract modifications and changes (FAR Part 43), subcontracting and flowdown requirements (FAR Part 44), government property (FAR Part 45), quality assurance (FAR Part 46), obtaining invoiced payments owed to contractors,  and other compliance with the FAR. Mr.Lieberman is also involved in numerous community service activities.  See LinkedIn profile at https://www.linkedin.com/in/richard-d-lieberman-3a25257a/.This website and blog are for educational and information purposes only.  Nothing posted on this website constitutes legal advice, which can only be obtained from a qualified attorney. Website Owner/Consultant does not engage in the practice of law and will not provide legal advice or legal services based on competence and standing in the law. Legal filings and other aspects of a legal practice must be performed by an appropriate attorney. Using this website does not establish an attorney-client relationship. Although the author strives to present accurate information, the information provided on this site is not guaranteed to be complete, correct or up-to-date.  The views expressed on this blog are solely those of the author. FAR Consulting & Training, Bethesda, Maryland, Tel. 202-520-5780, rliebermanconsultant@gmail.com

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