{"id":901434,"date":"2023-07-19T14:37:08","date_gmt":"2023-07-19T20:37:08","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901434"},"modified":"2023-07-19T14:37:11","modified_gmt":"2023-07-19T20:37:11","slug":"terminate-for-default-failure-to-make-progress","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/terminate-for-default-failure-to-make-progress\/","title":{"rendered":"Government&#8217;s Termination of Contractor for Default for Failure-to-Make Progress"},"content":{"rendered":"\n<p>David Adelstein | <a href=\"https:\/\/www.floridaconstructionlegalupdates.com\/governments-termination-of-contractor-for-default-for-failure-to-make-progress\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Florida Construction Legal Updates<\/a><\/p>\n\n\n\n<p>Whenever you elect to\u00a0<strong><a href=\"https:\/\/www.myconstructionexpert.com\/blog\/termination-provision-construction-contract\/\">terminate<\/a><\/strong>\u00a0the other party for cause or for default, you need to\u00a0<strong>JUSTIFY<\/strong>\u00a0the basis of the cause or default. The reason being is that a termination for default or cause is the harshest contractual remedy. This is why the other party will typically either (i) convert the termination for default into one for convenience, or (ii) if there is no termination for convenience provision in the contract, argue the terminating party breached the contract by terminating the contract without rightful justification.<\/p>\n\n\n\n<p>The key is if you are going to terminate a party for cause of default, make sure you have memorialized the&nbsp;persuasive&nbsp;reasons for exercising the termination, and can otherwise reasonably support the justification. &nbsp;Do not, and I repeat, do not haphazardly exercise a termination for default and think you do not have to justify the basis for the termination.<\/p>\n\n\n\n<p>In the federal arena on a federal construction project, \u201c<strong>[w]hen a contracting officer terminates a contract for default, and the contractor appeals that termination decision, \u2018the&nbsp;<u>government\u2026bear[s] the burden of proof<\/u>&nbsp;with respect to the issue of whether termination for default was justified<\/strong>.\u2019\u201d&nbsp;<em>Department of Transportation v. Eagle Peak Rock and Paving, Inc.,<\/em>&nbsp;2023 WL 3829625, *4 (Fed. Civ. 2023) (citation omitted).<\/p>\n\n\n\n<p>In&nbsp;<em>Eagle Peak Rock and Paving<\/em>, the government terminated the contractor for cause for not maintaining progress,&nbsp;<em>i.e<\/em>., the contractor was not going to timely complete the project. \u201c<strong>In failure-to-make-progress cases, the government must establish that \u2018the contracting officer\u2019s decision to terminate\u2026was&nbsp;<u>reasonable<\/u>&nbsp;given the events that occurred before the termination decision was made.\u2019 If the government makes this showing, the contractor then bears the \u2018burden of providing that its nonperformance was excusable.<\/strong>\u2019\u201d&nbsp;<em>Eagle Peak Rock and Paving, supra<\/em>, at *4 (internal citations omitted).<\/p>\n\n\n\n<p><strong>On the often-central issue of whether it was reasonable to view timely completion as not reasonably likely, the tribunal must focus on \u2018tangible, direct evidence reflecting the impairment of timely completion. In particular, the [tribunal] must \u2018decide the actual performance that the contract requires and the amount of time remaining for performance\u2019 and \u2018may also consider\u2019 factors such as \u2018the contracting officer\u2019s testimony and contemporaneously documents[,]\u2026a comparison of the percentage of work completed and the amount of time remaining under the contract, the contractor\u2019s failure to meet progress milestones, problems with subcontractors and suppliers, the contractor\u2019s financial situation,\u2026a contractor\u2019s performance history, and other pertinent circumstances.\u2019 This is a de novo adjudication: If the adjudicatory tribunal finds, based on all the evidence before it, that the standard for termination under the contract\u2019s default clause is met, it is to uphold that decision whether or not the contracting officer stated the basis for that finding.<\/strong><\/p>\n\n\n\n<p><em>Eagle Peak Rock and Paving, supra<\/em>, at *4 (internal citations omitted).<\/p>\n\n\n\n<p>Importantly, \u201c<strong>the termination-for-default decision must be performance-based and&nbsp;<u>not pretextual<\/u><\/strong>.\u201d&nbsp;<em>Eagle Peak Rock and Paving, supra<\/em>, at *5 (citation omitted).&nbsp;&nbsp;<strong>There must be a connection between the decision to terminate for default and the terminated contractor\u2019s performance<\/strong>.&nbsp;&nbsp;<em>Id<\/em>. (citation omitted).<\/p>\n\n\n\n<p><strong>[A]s long as \u2018the termination for default was predicated on contract-related issues,\u2019&nbsp;<em>i.e<\/em>., \u2018the government\u2019s default termination was not pretextual or unrelated to Contractor\u2019s alleged inability to fulfill their obligations under the contract,\u2019 the reasoning of the contracting officer at the time of termination is not the subject of the [Contract Disputes Act] adjudication, must proceed on the evidence and arguments made in the adjudicatory proceeding, not through arbitrary-and-capricious or abuse-of-discretion review. Of course, the substantive contract standard in its endangerment-of-timely-completion component, doubly considers what is \u2018reasonable\u2019\u2014whether it was \u2018reasonable\u2019 to find that there was no \u2018reasonable likelihood\u2019 of timely completion.<\/strong><\/p>\n\n\n\n<p>\u00a0<em>Eagle Peak Rock and Paving, supra<\/em>, at *5 (internal citation omitted).<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>David Adelstein | Florida Construction Legal Updates Whenever you elect to\u00a0terminate\u00a0the other party for cause or for default, you need to\u00a0JUSTIFY\u00a0the basis of the cause or default. The reason being is that a termination for default or cause is the harshest contractual remedy. This is why the other party will typically either (i) convert the&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/terminate-for-default-failure-to-make-progress\/\">Continue reading <span class=\"screen-reader-text\">Government&#8217;s Termination of Contractor for Default for Failure-to-Make Progress<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,10027],"class_list":["post-901434","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-termination-for-default","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Government&#039;s Termination of Contractor for Default for Failure-to-Make Progress - Advise &amp; 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