In the latest Weekly Wright Report:
Picky, Picky, Picky – Government Over-Inspection Could Be A Breach
“Persnickety” – “giving too much attention to small details that are not important in a way that annoys other people.” Cambridge Dictionary. Not only can a persnickety person be annoying, it may also result in a breach of contractual duties. In a recent case the Armed Services Board of Contract Appeals denied the government’s motion for summary judgment finding a factual dispute as to whether the government’s alleged over-inspection breached its implied duty of good faith and fair dealing.
Watts Constructors, LLC, ASBCA No. 61518, 19-1 B.C.A. (CCH) 37382 (2019), arose out of a construction contract at Fort Carson in Colorado. In Watts the contractor asserted that the government’s inspectors were overzealous, interfered with work, arbitrarily rejected work, over-inspected and required minute tasks such as scraping glue resin without justification, cleaning out and brushing the interior of electrical boxes, painting wires. It was also alleged that government inspectors were slow, repetitive, covered work that they should not have, and performed multiple inspections.
The Board reaffirmed that every contract has an implied covenant of good faith and fair dealing that imposes a “duty not to interfere with the other party’s performance and not to act so as to destroy the reasonable expectations of the other party regarding the fruits of the contract.” Breach of the covenant of good faith and fair dealing does not require the violation of an express term of the contract, “[b]ut a specific promise must be undermined for the implied duty to be violated.” Improper motive is not an element of such a breach. The duty may be breached even if the actor believes their conduct to be justified.
The Board noted that confusing and vacillating inspections, multiple inspections to differing standards, or arbitrary and capricious inspections leading to additional work not required by the contract, can establish a basis for contractual recovery under a constructive change theory and may constitute a breach of the implied duty of good faith. The Board held that the contractor provided sufficient evidence of interference, over-inspection, slow, redundant, and multiple inspections, to require more factual development to determine the application of the good faith and fair dealing doctrine.
If you are dealing with a persnickety government inspector that is over-inspecting or interfering with performance of the work, you may also have grounds to claim a breach. Our government contracts group is ready to help you.
President Trump Terminates Executive Order Requiring First Right of Refusal for Incumbent Staff
On October 31, 2019, President Donald Trump rescinded an executive order issued by his predecessor in 2009 which provided federal contract workers rights of first refusal on successor contracts and directed that all investigations for noncompliance cease. Executive Order 13,495 required that successor contractors offer qualified workers on a federal service contract who would otherwise lose their jobs as a result of the contract’s completion or expiration a right of first refusal for employment on the successor contractor. President Trump’s rescission indicates that it is designed “to promote economy and efficiency in Federal Government procurement.”
It will take time to see if this rescission has an impact given that many contractors look to hire incumbent staff anyway which is also frequently identified in some fashion in RFPs. From the employees’ perspective, it may impact their desire to jump onto contracts which do not have much stability for staff from recompete to recompete.
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