• R.D. Lieberman,Consultant

Contractor Can Seek Payment for Work That Was Invoiced and Accepted Prior to Default Termination

Claude Mayo Construction Company, Inc. (“Mayo”) had a contract with the General Services Administration (“GSA”) to renovate a U.S. Attorney’s Office in Syracuse, NY. Before Mayo completed the project, GSA terminated the contract for default. Mayo sought to overturn the default, which is not the subject of this appeal. However, Mayo also sought damages for a breach of contract because GSA, without basis, failed and refused to pay Mayo for work completed and accepted by GSA prior to the default termination. Claude Mayo Const. Co., Inc., No. 15-1263C (Fed. Cl. June 23, 2017).

GSA sought to dismiss the breach of contract, asserting failure to state a claim. The government alleged that Mayo failed to identify a duty arising from the contract or a breach of that duty, and further, that the breach of contract allegation was “subsumed by its improper termination for default claim.”

The Court first noted that Mayo had sufficiently pleaded the existence of a duty arising out of the GSA contract, as well as a breach thereof, when GSA failed to pay proper invoices for work that it had accepted prior to the default termination. The Court noted that failure to pay Mayo for completed work constituted a breach of contract.

Then the Court concluded that Mayo’s breach of contract allegation was not subsumed by its termination for default. The court noted that Mayo’s breach of contract was not based upon the allegedly improper default termination. Rather, it was based on the government’s failure to pay for work it accepted prior to the default termination. Even if the default was proper, and is ultimately upheld by the Court, Mayo might still be entitled to recover on its breach claim.

The takeaway is straightforward: a claim for money properly owed by the Government prior to a termination for default is a valid and viable claim and contract appeal, even if the contract is subsequently terminated for default.

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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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