Recovered $2.8M Using a Constructive Termination Theory

We persuaded the agency that its deductive modification was really a constructive termination for convenience so our client would receive $2.8 million instead of pay $400,000.

The GSA awarded our client a contract to build a new port of entry on the US/Canadian border. Later, the GSA suspended all work due to design issues raised by Canadian authorities. Shortly thereafter, the GSA told our client that the GSA would take possession of the project site and directed our client to vacate the site. According to the GSA, it intended to pursue a deductive modification for the remaining work. 

 When the GSA took complete possession of the project, the project was approximately 71% complete. The GSA believed that it was entitled to a deductive change of more than $6.23 million, which meant our client would have owed the GSA over $400,000 due to alleged overpayments. Our client asked us to assist in the negotiations. 

 We advised our client that the GSA had constructively terminated the contract for convenience, which would result in the GSA paying our client several million dollars instead of our client owing the GSA more than $400,000. We then prepared and submitted a termination for convenience settlement proposal, which the GSA returned without consideration, asserting that it did not terminate the contract. 

 In response, we submitted the termination for convenience settlement proposal as a certified claim and demanded a final decision. When the GSA failed to timely issue the final decision, we filed an appeal from the deemed denial at the U.S. Court of Federal Claims.  

 The DOJ initially took the position that there was no termination; however, before discovery began, the DOJ filed an amended answer conceding that the GSA had terminated the contract for the convenience of the government. As a result, the only issue that remained was the amount of our client’s recovery under the termination for convenience settlement proposal.  

 We deposed the government’s damages expert and established that he used the wrong standard. Within hours of the deposition, the government moved for leave to serve a supplemental expert report and enlarge expert discovery. The court promptly granted the motion. We moved for reconsideration, pointing out that what the government intended to serve was not a supplemental report but an entirely new opinion based on a different methodology. The court agreed, leaving the government without proof of damages. As a result, we settled the litigation, and the government paid our client $2.8 million. 

Lead Attorney
Mark Jackson
Mark Jackson
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We solve problems for government contractors.
Recovered $2.8M Using a Constructive Termination Theory