In a recent Board of Contract Appeals case, the contractor sought over a $1M for “the remaining balance” under a contract for the general storage and delivery of stored goods. The contract contained clause H.2, “Option to Extend the Term of the Contract – Fixed-Price Contract.” This clause allowed the Government to extend the term of the contract for three additional periods. The contractor sought compensation for services had the Government exercised this option, claiming that the Government was somehow obligated to do so.
The Civilian Board of Contract Appeals denied the contractor’s claim, noting that “an option clause does not obligate the Government to exercise an option” and that “the Government’s decision not to exercise an option can provide a vehicle for relief only if the contractor proves that the decision was made in bad faith or was so arbitrary or capricious as to constitute an abuse of discretion.” In this case, there was no evidence that the Government’s decision not to exercise the option was done in bad faith.
G2G, LLC, Appellant, v. Department of Commerce, CBCA 4996 (February 24, 2016)
Posted in Claims
We previously reported the decision of the Board of Contract Appeals last year declaring that Kiewit-Turner was excused from performance and entitled to stop construction, mid-project, based on the VA’s material breach of Contract in the construction of the Aurora VA Medical Center. (Kiewit-Turner, a joint venture, CBCA 3450, 2015-1 BCA P35,820 (December 9, 2014).
The Board’s decision was based on VA’s failure to provide a design that could be constructed within its budget limitations and VA’s inability to obtain funding to complete the project. The Board decision referred to VA mismanagement and cited testimony describing project management “as the least effective and most dysfunctional staff on any project that he had ever seen.”
Earlier this month the Board of Contract Appeals endorsed a settlement with Kiewit-Turner, resolving claims exceeding 100 million dollars. CBCA Order – Kiewit Turner (January 12, 2016)
Congress subsequently provided additional funding and, in October 2015, the Army Corp of Engineers awarded a $571 million contract to Kiewit-Turner to complete the project. The projected completion date is January 23, 2018.
Posted in Claims
