{"id":903382,"date":"2024-10-02T16:04:48","date_gmt":"2024-10-02T22:04:48","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903382"},"modified":"2024-10-02T16:04:53","modified_gmt":"2024-10-02T22:04:53","slug":"termination-for-default-challenges","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/termination-for-default-challenges\/","title":{"rendered":"Challenging a Termination for Default"},"content":{"rendered":"\n<p>David Adelstein | <a href=\"https:\/\/www.floridaconstructionlegalupdates.com\/8213-2\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Florida Construction Legal Updates<\/a><\/p>\n\n\n\n<p>No contractor wants to be\u00a0<strong><a href=\"https:\/\/www.myconstructionexpert.com\/blog\/termination-for-default-proper\/\">terminated for default<\/a><\/strong>. It is the harshest contractual recourse. It is a recourse that has implications, particularly in the public sector. However, a party needs to be in a position to support the basis of the termination for default, and the terminated party, in most instances, should not be in a position to imply accept the basis of the default. This applies regardless of the project.<\/p>\n\n\n\n<p>In the federal context: \u201c<strong>When a contractor challenges a default termination, the government bears the burden of establishing the validity of the termination<\/strong>.\u201d&nbsp;<em>Sergent\u2019s Mechanical Systems, Inc. v. U.S<\/em>., 2024 WL 4048175, *7 (Fed.Cl. 2024) (internal quotation and citation omitted).&nbsp;&nbsp;<strong>Once the government establishes the default, \u201cthe contractor bears the burden of establishing that the default was excused by fault of the government<\/strong>.\u201d&nbsp;<em>Id<\/em>. at *8 (internal quotation and citation omitted).<\/p>\n\n\n\n<p><strong>Relevant considerations as to whether the contractor is in default include the contractor\u2019s failure to meet contract specifications or the required schedule<\/strong>.&nbsp;<em>Sergent\u2019s Mechanical Systems, supra<\/em>, at *8. \u201c<strong>[T]here is \u2018a requirement that the contractor give reasonable assurances of performance in response to a validly issued cure notice<\/strong>.\u201d&nbsp;<em>Id<\/em>. (internal quotation and citation omitted).<\/p>\n\n\n\n<p>In&nbsp;<em>Sergent\u2019s Mechanical Systems<\/em>, there was not a big fight as to the material facts.&nbsp; Instead, the fight centered on whether the government properly terminated the contractor for default based on the facts.<\/p>\n\n\n\n<p>The contractor first argued that its untimely performance was&nbsp;<strong>excused<\/strong>&nbsp;by the actions of the government. In other words, was there&nbsp;<strong>excusable delay<\/strong>. &nbsp;The Court of Federal Claims found this argument unpersuasive.&nbsp; The contractor\u2019s argument was premised on the government somehow assuming the contractor\u2019s obligations relative to asbestos abatement. However, this would result in a&nbsp;<strong>modification<\/strong>&nbsp;to the prime contract and there was no evidence that the contract was modified as a contract modification must be supported by consideration. There was no excusable delay. The court found: \u201c<strong>Instead [contractor] chose to wait, failed to make progress, blew the contractual deadline, was terminated for default<\/strong>\u2026.<strong>But that is precisely what a contractor may not do. A government contractor cannot disregard the government\u2019s directive under the FAR\u2019s changes and disputes clauses and then fail to make progress on the required work<\/strong>.\u201d&nbsp;<em>Sergent\u2019s Mechanical System, supra<\/em>, at *12.<\/p>\n\n\n\n<p>Moreover, as it pertained to other excusable delay arguments raised by the contractor, the contractor did not provide any&nbsp;<strong>critical path delay<\/strong>&nbsp;(CPM) analysis.&nbsp;<em>See Sergent\u2019s Mechanical Systems, supra<\/em>&nbsp;at *14 (<em>citing Blinderman Cont. Co. v. U.S<\/em>., 39 Fed.Cl. 529, 585 (1997) for proposition that only way to assess the effect of delays is based on CPM analysis.) To this point, the Court held, \u201c<strong>Absent any analysis of how specific events resulted in specific delays according to reliable methodology \u2013 let alone a CPM analysis \u2013 this Court cannot credit [contractor\u2019s] bare assertion that its confusion over coils and tubes resulted in anything more than negligible hassle that [contractor] could have overcome all along, albeit, perhaps, at increased cost<\/strong>.\u201d&nbsp;<em>Id<\/em>. at *14. &nbsp;<strong>Stated simpler, there needs to a be nexus between the delay caused by the government and the contractor\u2019s failure to timely complete which \u201ccannot be shown merely by hypothetical, after-the-fact projection.<\/strong>\u201d&nbsp;<em>Id<\/em>. (internal quotation and citation omitted).<\/p>\n\n\n\n<p>While here, the contractor was not able to demonstrate its burden to overcome the termination for default, this does not mean the contractor should not have tried. It absolutely should have tried because of the consequences associated with the termination for default.<\/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\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>David Adelstein | Florida Construction Legal Updates No contractor wants to be\u00a0terminated for default. It is the harshest contractual recourse. It is a recourse that has implications, particularly in the public sector. However, a party needs to be in a position to support the basis of the termination for default, and the terminated party, in&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/termination-for-default-challenges\/\">Continue reading <span class=\"screen-reader-text\">Challenging a Termination for Default<\/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":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,10027],"class_list":["post-903382","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>Challenging a Termination for Default - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"description\" content=\"No contractor wants to be\u00a0terminated for default. 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