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)
