Termination for Default is a Government Claim

Termination for default is a government claim that the government bears the burden of proving.  Heffler Contracting Group, ASBCA No. 63565, Feb. 13, 2024.  Even though the government moved to dismiss the claim on procedural grounds (lack of jurisdiction), the Armed Services Board of Contract Appeal dismissed the government’s motion.

The Navy sought to dismiss Heffler’s appeal of a termination for default, suggesting that Heffler made an excusable delay claim in its complaint as a defense to the default without submitting a time extension claim to the contracting officer.  Such an extension claim must be submitted in order to raise excusable delay as an expense.  This matter was discussed in a previous blog.

However, the Board found the government’s motion to dismiss Hefler’s claim was “fundamentally flawed.”  Although the Contract Disputes Act required Heffler to initiate the appeal, a default is actually a government claim, and the government bears the burden of proving the default.  In order for the Board to possess jurisdiction over an appeal from a default, there need only be a final decision that terminates the contract, followed by a notice of appeal within 90 days of the contractor’s receipt of that final decision.  Heffler met those requirements, and the Board has jurisdiction to adjudicate this matter whether Heffler raises any affirmative defenses or not.  Because the Board has jurisdiction, the Navy must first carry its burden on the merits of proving the default.  The Board cited cases where the government has the initial burden to establish the default, and then the Board will consider whether it possesses jurisdiction to hear a contractor’s delay defenses.

Accordingly, the Navy’s motion to dismiss the appeal for lack of jurisdiction was denied.

Takeaway.  The government has the burden of establishing that a default is proper, and then the contractor may present defenses.  The Board decides whether it possesses jurisdiction to hear any delay defenses of the contractor.

For other helpful suggestions on government contracting, visit:

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