A recent Armed Services Board of Contract Appeals decision serves as a timely reminder for contractors to carefully read and consider any release of claims before signing — especially when you may have otherwise-recoverable coronavirus-related cost increases. Continue Reading Look Before You Release — ASBCA Enforces Release of Claims to Contractor’s Detriment
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Key Takeaways From Recent Decisions Discussing Release Of Claims Provisions
Over the last few months, we’ve reported on various government contracts decisions that illustrate the impact a release of claims provision can have on contractors. A few weeks ago, we published a Feature Comment in The Government Contractor (titled “Release Me? Five Things Every Government Contractor Needs To Know Before Signing A Release Of Claims”) in which we provided contractors practical guidance on minimizing the risks of inadvertently releasing potential claims against the government and avoiding unnecessary (and costly) litigation regarding the interpretation of a release. For example, we recommended that contractors should: (1) be precise when drafting and negotiating a release provision and, whenever possible, avoid using sweeping language, and (2) maintain contemporaneous documentation of release negotiations, including of any communications with the government before, during and after the release is executed. This guidance likely would have helped the contractor in MBD Maintenance, LLC v. United States Post Service, PSBCA Nos. 6625, 6642, the latest Board of Contract Appeals decision to bar a contractor’s claims based on a broad release of claims provision.
In MBD Maintenance, the contractor submitted a claim (and initiated an appeal) after signing a broad release of claims form associated with its request for final payment. That release stated the contractor would “remise, release, and discharge the Postal Service . . . of and from all liabilities, obligations, claims, and demands whatsoever under or arising” from the contract. This release also included a block that allowed the contractor to identify any excepted claims, but the contractor left that block blank.
The Postal Service moved for summary judgment, arguing that the general release provision barred the claim. The contractor asserted that the release should not apply because it “reasonably believed it could continue to pursue its claim based on conversations between the parties” about the claim and prior to executing the release. In denying the appeal, the Postal Service Board of Contract Appeals rejected the contractor’s argument, in part, because of lack of evidence supporting its argument. In other words, the presentation of contemporaneous documentation may have helped the contractor overcome summary judgment and live to fight another day.
The bottom line: Contractors should never treat a release of claims provision as an afterthought or assume that the parties’ contemporaneous ─ but undocumented ─ discussions will provide a sufficient basis upon which to pursue claims moving forward. To the contrary, as demonstrated by this decision, and as discussed in our recent article, a broad release provision can result in a claim being dismissed outright – regardless of the substantive merits of the claim itself.
A self-effectuating deemed release of claims? Say it ain’t so.
A few weeks ago, we provided a few tips for negotiating and assessing a release contained in a contract modification, and discussed why the Civilian Board of Contract Appeals (CBCA) found that a global release contained in one of many contract modification was ambiguous.
Now, we consider a different scenario: what happens when a final payment clause requires the government to present a “final [payment] voucher” and “draft release of claims” form to the contractor—as opposed to the typical reverse scenario prescribed by FAR 52.232-5(h)—and the contractor fails to sign and return that voucher and release of claims form before the deadline stated therein? According to the CBCA in Ahtna Envtl., Inc. v. Dept. of Transp., CBCA 5456 (December 22, 2016) (AEI), this type of self-effectuating deemed release will not bar a contractor’s claim when the government knew about the claim and considered it despite the alleged release.
Continue reading for a summary of the AEI decision and our key takeaways. Continue Reading A self-effectuating deemed release of claims? Say it ain’t so.
DoD Releases Guidance on Inflation and Economic Price Adjustments for Fixed-Price Contracts
In response to industry-wide questions about price adjustments for economic inflation, the Department of Defense (DoD) has released guidance about when and how contracting officers may provide financial relief to contractors working on fixed-price contracts. The guidance generally discourages contracting officers from granting adjustments under the Changes clause due solely to inflation. But it does not completely close the door to adjustments, and it offers modest options for fixed-price contracts that contain an economic price adjustment clause. Moreover, DoD encourages contracting officers to consider inserting economic price adjustment clauses in new solicitations.
This blog post summarizes DoD’s guidance, explains the mechanics of economic price adjustment clauses, and offers views about evaluating other grounds for relief.Continue Reading DoD Releases Guidance on Inflation and Economic Price Adjustments for Fixed-Price Contracts
DOJ Records Historic False Claims Act Recoveries in FY 2021
On February 1, 2022, the Department of Justice (“DOJ”) released its annual report summarizing False Claims Act (“FCA”) enforcement activity in FY 2021. The report confirmed what many practitioners already suspected: FY 2021 was another banner year in FCA enforcement. DOJ’s annual judgments and settlements exceeded $5.6 billion, making FY 2021 the second largest annual recovery ever (and the largest since 2014). But beyond this top line number, a closer analysis of the figures in DOJ’s report offers additional insight on strategies for preventing and mitigating costly FCA exposure.
Continue Reading DOJ Records Historic False Claims Act Recoveries in FY 2021
COVID-19 Vaccine Mandate for Federal Contractors Could Pose False Claims Act Risk
Many of our clients have been calling to ask whether failure to comply with the Administration’s Executive Order imposing vaccine mandates on federal contractors could lead to False Claims Act liability, and what steps they can take to minimize the risk of liability. Much remains unknown, especially what specific obligations will be included in the FAR clause to be released on October 8. However, we have highlighted a few key considerations that should be front of mind for all contractors and subcontractors.
Continue Reading COVID-19 Vaccine Mandate for Federal Contractors Could Pose False Claims Act Risk
DoD Releases Draft Section 3610 Reimbursement Guidance
Last week, DoD released a draft of its much-anticipated guidance implementing Section 3610 of the CARES Act, which authorizes the government to reimburse qualifying contractors for the costs of providing certain paid leave to employees as a result of the COVID-19 pandemic. DoD previously published a collection of memoranda, Q&A documents, and a class deviation addressing Section 3610 reimbursement, but the new draft guidance (“Guidance”), which includes a “reimbursement checklist” and accompanying instructions, provides significantly more detail regarding the process for requesting and substantiating claims for reimbursement under the statute.
A number of open questions remain pending the issuance of final guidance, as discussed below, but the contours of DoD’s Section 3610 process are becoming increasingly clear. Contractors interested in pursuing recovery under the statute should start preparing now to satisfy these emerging rules and requirements.
Continue Reading DoD Releases Draft Section 3610 Reimbursement Guidance
In Sexual Orientation Nondiscrimination Claims, “EEO Is the Law,” and Not Just for Government Contractors
A few years ago, we reported on regulations governing federal contractors’ nondiscrimination obligations with respect to LGBT employees. The Trump Administration has taken steps to roll back many Obama-era efforts, although the Executive Order and rules establishing LGBT-related protections for employees of federal contractors remain in force, at least for now. The Second Circuit recently decided a high-profile case that affirmed the legal basis for those obligations and extended them beyond the federal contractor community. In doing so, the Second Circuit rejected the Trump Justice Department’s position with respect to LGBT nondiscrimination.
The case, which has generated significant press coverage, deserves close attention from all employers, including contractors, as LGBT nondiscrimination rules continue to develop in courts, executive agencies, and legislatures. In this post, we examine the considerations for government contractors and outline some best practices for companies that work with the federal government. Continue Reading In Sexual Orientation Nondiscrimination Claims, “EEO Is the Law,” and Not Just for Government Contractors
Left Holding the Bag: Release Provision Precludes Recovery for Costs Incurred Post-Release
Over the last year, we have reported extensively on various government contract decisions regarding contract releases. In Sylvan B. Orr v. Department of Agriculture, CBCA 5299 (Sep. 29, 2017), the Civilian Board of Contract Appeals (“CBCA” or “Board”) published yet another notable opinion on this topic. This decision demonstrates why it is critical to reserve your rights regarding potential claims sparked by conduct that occurs before a release of claims provision is signed—even when the additional costs at issue are not incurred until after the release is executed.
Continue Reading Left Holding the Bag: Release Provision Precludes Recovery for Costs Incurred Post-Release
A Tale of Two Contract Releases: One for the Government, One for the Contractor
On the heels of our recent post offering key takeaways from recent release of claims decisions, the ASBCA and the CBCA have published another round of notable opinions regarding contract releases: Supply & Service Team GmbH, ASBCA No. 59630 and ServiTodo, LLC, CBCA 5524. Both decisions are important, albeit for different reasons. The ASBCA decision demonstrates how a release provision in a contract modification providing an equitable adjustment can bar the government from processing an administrative offset against a contractor. The CBCA decision illustrates the difficulties contractors face when attempting to minimize the impact of a broadly worded release of claims provision.
Continue Reading A Tale of Two Contract Releases: One for the Government, One for the Contractor