The Contractor Missed the Performance Deadline. Why Couldn’t the Agency Terminate for Default?

If an agency wants to terminate for default, it needs to do something when a contractor misses a deadline. If the agency sits around while the contractor plods along, the agency will waive the default.

Appeal of Consorzio Stabile GMG S.c.ar.l., ASBCA No. 62753

• Agency Waived Completion Date – The contractor challenged a default termination, arguing the agency waived the contract’s completion date. The ASBCA sided the contractor. If the government doesn’t assert its rights or invoke liquidated damages after a default, the government waives the completion date. Here, the agency knew the contractor wouldn’t meet the deadline, but it never asserted its rights—it allowed the contractor “to muddle through” for six months.
• Agency Didn’t Set a New Completion Date – Even if the government waives a completion date, it may still be able to terminate if (1) the parties agreed to a new date, or (2) the government notifies the contractor of a new date. Here, the parties discussed a new completion date, but they never agreed on one. What’s more, the agency never imposed a new date.
• Default Termination Converted to Termination for Convenience – The termination for default was improper. The ASBCA terminated the default termination into a termination for convenience.

Consorzio is represented by Marc Lamer of Kostos and Lamer, P.C. The government is represented by Craig D. Jensen and Patricia Walter of the Navy.

–Case summary by Craig LaChance, Senior Editor

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