• R.D. Lieberman,Consultant

Final Signed Release Bars Future Claims

Once again, a contractor was barred from raising future claims on a contract where the same contractor had executed a final release that included no reservations or exceptions, the government had made final payment, and none of the limited situations for re-opening the contract to a claim applied. “Unnamed” (Redacted name) Contractor, ASBCA No. 61065, Nov. 14, 2017.

The Unnamed contractor was awarded a $1.9 million contract to construct and provide building upgrades for the Afghan Police Headquarters. The construction was inspected, accepted and deemed complete by the government on November 4, 2013. On the same day, Unnamed submitted an invoice that specifically released and discharged the government from all liabilities, obligations and claims arising out of or by virtue of the contract, except specified claims. The outstanding, specified claims section was left blank, and the box beside “NONE” on the release was checked.

In December 2013, after two rounds of clerical corrections between Unnamed and the Defense Finance and Accounting Service, the contractor submitted an amended final invoice, which contained the release language and no exceptions. Later in December 2013, the government made final payment to Unnamed.

In October 2016 (about two years and 10 months after final payment), Unnamed submitted a claim for $144,000 which asserted that the contracting officer’s representative had directed and approved work under the contract, and the contractor had been informed that the contracting officer would issue a modification for that amount. Unnamed stated that it “forgot to check [its] record and signed the final release in error.” The Contracting Officer denied the claim based on the final release, and the Board fully concurred in the denial.

The Board noted that a final release followed by a final payment to a contractor generally bars recovery of the contractor’s claims under the contract, except for those excepted on the release. Mingus Contractors, Inc. v. United States, 812 F.2d 1387, 1394 (Fed Cir. 1987). The only special and limited exceptions to this rule include mutual mistake, continued consideration of a claim after the execution of the release, fraud, or duress. The Board held that none of the exceptions applied. Unnamed had several opportunities to notify the government of additional work giving rise to a claim, but never raised the issue. And, the mistake, if there was one, was solely on the part of Unnamed (not mutual). Therefore, Unnamed could not benefit from any of the special and limited exceptions to the general rule that a final release bars recovery of claims made after the release had been executed.

The takeaway: Contractors should only sign a release when all potential claims have been acted upon by the government. If you believe you have a claim but have not submitted it, include a description of the claim in the release when you sign the release or final invoice.

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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Square Corners

Nearly 100 years ago, U.S. Supreme Court Justice Holmes wrote “Men must turn square corners when they deal with the Government.” Rock Island, Ark. & LA RR Co. v. United States, 254 U.S. 141, 143 (19

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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