Procurement Lawyer

The Rhetoric and Reality of Termination for Default

by Steven W. Feldman

Steven W. Feldman is an attorney advisor with the U.S. Army Engineering and Support Center in Huntsville, Alabama. This article represents only the opinions of the author and not that of any federal agency.

Termination for default (or termination for cause as it is known in commercial contracts)1 has been a fundamental government right in public procurement since the nineteenth century.2 Despite the government’s unquestioned need for this remedy, courts and boards frequently make negative observations about the procedure. Some cases declare that termination for default is a “harsh”3 remedy and “disfavored” in the law.4 A refrain with roots going back to 1875 is that “default terminations [are] a species of forfeiture.”5 Along similar lines, courts and boards frequently state that the government has a “heavy burden”6 in proving the grounds for a termination for default (which is a government claim under the Contract Disputes Act).7 Still other tribunals observe that the remedy is “strictly construed”8 against the government and that it is a “drastic sanction”9 and an avenue of “last resort.”10 Accordingly, courts and boards have asserted that “every reasonable presumption against the party seeking to invoke [termination for default] will be drawn.”11

Generally, these adverse observations are more rhetoric than reality. For this article, no cases were found where a court or board drew every reasonable presumption against the government, or explicitly relied on the government’s supposed “heavy” or “strict burden” in deciding a termination for default appeal in favor of the contractor. The closest the cases have come to these observations is the comment that “[c]ourts are averse to default terminations, but nonetheless the court must ‘strike a balance between [this aversion] and the fact that “the [g]overnment, just as any other party, is entitled to receive that for which it contracted.”’”12

As I will show, the actual (and much less onerous) standard of review is whether contracting officials used this recourse upon “good grounds and solid evidence.”13 The reality of termination for default is that attorneys and their clients in both industry and government should pay less attention to what courts and boards say in passing and concentrate more on their holdings in light of the facts of the case — and that is strong general approval of termination for default.14

This article will proceed as follows. After summarizing the elements of termination for default, the article will challenge the dictum that termination for default is a “species of forfeiture.” Then, it will disapprove dicta that the government has a “heavy burden” in proving this claim or that the remedy is “strictly construed” against the government. Next, it will consider several common law doctrines that facilitate the government’s ability to default the contractor. The first such common law doctrine is that even when physically missing from the contract, the default clause is included by operation of law. The second common law principle is that the agency may assert post hoc reasons for the default termination, even if the agency was unaware of those reasons at the time of the original contracting officer’s decision, provided that those reasons existed at the time of the default action. Finally, I will explain how courts and boards in refusing to enforce the plain meaning of FAR 49.402-3(f) — a regulation requiring the contracting officer to consider specific factors pertaining to a pending default — have tilted too far in favoring the government when imposing a termination for default.

The Basics of Termination for Default

A “termination for default” is the government’s exercise of the right to terminate a contract, either in whole or in part, because of the contractor’s actual or anticipated failure to perform its contractual obligations.15 To support their mission, agencies need this remedy to discharge deficient contractors. Accordingly, FAR 49.101(b) provides that the contracting officer “shall terminate [a contract] for default … only when it is in the Government’s interests.” The procurement regulations give the contracting officer discretion to impose this remedy and do not require this official do so upon simple proof of a default.16

When the contractor before a court or board successfully challenges the termination for default, the contractor’s remedy under standard contract clauses is a conversion of the improper default termination to a termination for the convenience of the government.17 Putting it another way, an unjustified termination for default is a constructive termination for convenience.18 This conversion device protects the government from a separate action for breach of contract arising from an allegedly improper default termination.19 Thus, when the government legitimately invokes the convenience remedy, the contractor cannot obtain breach damages for anticipated profits.20

Is Termination for Default a Species of Forfeiture?

Although numerous decisions state in unqualified dicta that termination for default is a “species of forfeiture,”21 most courts and boards overlook that this antiforfeiture policy applies in narrow circumstances. The true gist of the “forfeiture” doctrine is to protect the promisor from being terminated for minor or trivial reasons and to preclude the promisor’s resulting loss of uncompensated investment of effort and money expended in substantial performance of the contract.22 Accordingly, the decisions properly abhor contractual forfeiture of the contract only where the government essentially has received the benefit of its contractual bargain but where the agency still seeks to default the contractor for essentially insignificant reasons.23

If the courts and boards feel compelled to invoke the language of forfeiture because the contractor no longer has a contract, they overlook that loss of a contract is not necessarily forfeiture. Cases outside the government contracts arena provide sound guidance on this distinction. Under the common law, courts regularly enforce the loss of a contract where the agreement “cannot be construed in any other way.”24 As the U.S. Court of Appeals for the Second Circuit has observed, “[e]quity may intervene to ‘prevent a substantial forfeiture occasioned by a trivial or technical breach’”; however, “the ‘contracted-for financial consequence of the [parties’] own failure to do that which they promised to do’ is not a forfeiture.”25

The Second Circuit’s explanation is directly on point regarding termination for default in government contracts. Where the parties have included a standard FAR clause specifically authorizing termination for default under prescribed circumstances and the court or board holds that the government complied with the clause in imposing the default, no sound reason exists for the same decision to imply that somehow all default terminations are a “species of forfeiture.”26

The Parties’ Evidentiary Burdens

Many decisions state without qualification that the government has a “heavy burden”27 in proving the grounds for default. Other cases state in a similar vein that the remedy is “strictly construed”28 such that the tribunal will invoke “every reasonable presumption”29 against the government. An in-depth review of the parties’ evidentiary burden will reveal the excerpts quoted above are dicta and frequently misleading.

The Government’s Prima Facie Case. Many cases hold to the following evidentiary principle: “a default termination, even though ultimately a question of law, is a fact-sensitive inquiry.”30 The first aspect of the burden of proof in default cases is that by a preponderance of the evidence, the government must establish “prima facie” proof of a default.31 In the law generally, a “prima facie case” is defined as “[t]he establishment of a legally required rebuttable presumption” or “[a] party’s production of enough evidence to allow the fact-trier to infer the fact at issue and rule in the party’s favor.”32 Put another way, “[t]he judge, using ordinary reasoning, may determine that fact A might reasonably be inferred from fact B, and therefore that the party has satisfied its burden, or as sometimes put by the courts, has made out a ‘prima facie’ case.”33 Courts and boards select the quantum and type of evidence needed to establish a prima facie case where it constitutes a “sensible, orderly way to evaluate the evidence in light of common experience as it bears upon the critical question” in the case.34

An example will show the prima facie case in operation. When the government’s theory of the case is late delivery of the contractual subject matter — perhaps the most common basis for default termination — the proof for the prima facie case can be as minimal as the contractor failed to meet the delivery schedule.35 Courts outside the government contract arena similarly impose on the plaintiff a “very minimal showing” or a “low bar” to make out a prima facie case of the claimant’s cause of action.36 Where a court or a board considers a termination for default, such as for late delivery, this low burden is appropriate because, nothing else appearing, the judge could infer that such deficient performance justifies the use of the government’s default remedy.

Shifting the Burden of Nonpersuasion. As just indicated, once the government makes out the prima facie case, the burden of producing evidence shifts to the contractor to show by a preponderance of the evidence that the default was excusable, waived, or subject to some other affirmative defense.37 Most termination for default cases center on whether the contractor has met its burden of proving an affirmative defense rather than whether the government has satisfied the prima facie case (which is almost always done without difficulty). Thus, the reality is that the contractor — and not the government — bears the burden of nonpersuasion in termination for default cases.

Public policy requires placing this burden shifting on the contractor because the law vigorously endorses the presumption that public officials act conscientiously in the discharge of their duties, and so it is only right for the contractor to prove otherwise.38 Another reason for imposing this evidentiary burden on the contractor is to promote procedural fairness where the allocation conforms with a party’s “superior access to the proof.”39 Here, the contractor would usually have the best knowledge of possible defenses to a default action because the contractor is closest to the firm’s course of performance and the possible extenuating facts surrounding the default termination.

The most frequently asserted contractor defense to a default termination is that the government’s action was “arbitrary and capricious.”40 The quoted concept means “[t]here was no reasonable basis for the adverse administrative decision or that the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations.”41 A good example of such improper action is where the government wishes to rid itself of a contractor and does so by way of a technical default as a “pretext” for the real (nonperformance) reason for the agency’s action.42 Under consistent precedent, the government agency’s action here would be arbitrary and capricious because no valid “nexus” exists between the decision to terminate for default and the actual quality of contractual performance.43

The following criteria (in the disjunctive) can show that the agency’s determination was arbitrary and capricious: (1) evidence of the government official’s subjective bad faith; (2) absence of a reasonable, contract-related basis for the official’s decision; (3) exceeding the amount of discretion given to the official; and (4) the official’s violation of an applicable statute or regulation.44 A progovernment legal doctrine as indicated above largely overcomes the availability of the first-mentioned “subjective bad faith” theory — to induce a court or board to abandon the presumption of governmental good faith dealing, the contractor’s burden of proving abuse of that discretion is “very high.”45 The contractor must present “well- nigh irrefragable proof,” i.e., clear and convincing evidence, of some specific intent of the government to injure the plaintiff.46

The discussion in this section demonstrates that the courts and boards impose a lenient evidentiary standard on the government and a strict burden on the contractor to the point that contractor victories in default cases are rare. Courts and boards will not substitute their judgment for the contracting officer’s reasoned exercise of discretion in termination for default cases.47 Given the settled state of the law on the parties’ evidentiary burdens, it remains a puzzlement why courts and boards continue to repeat inaccurate dicta that termination for default is a “disfavored” and “strictly construed” remedy that imposes a “heavy burden” such that “every reasonable presumption” is held against the government.

Special Common Law Rules Favoring Termination for Default

Some special common law rules facilitate the government’s discretionary right to default the contractor.

The Christian Doctrine. Under the procurement regulations, a contract must contain a termination for default contract clause.48 Under the Court of Claims’ Christian doctrine, a physically missing termination for default clause is incorporated into the agreement by operation of law because such a clause is a “deeply ingrained” strand of public procurement policy.49 Based on Christian, tribunals give short shrift to contractor arguments that the government may not default the contractor absent the express inclusion of the default termination clause in the contract.50

Admissibility of Post Hoc Explanations. Another common law doctrine has greatly assisted agencies in upholding default terminations. Courts and boards routinely allow post hoc agency justifications for the default termination. The U.S. Court of Appeals for the Federal Circuit has ruled:

Our decisions have consistently approved default terminations where the contracting officer’s ground for termination was not sustainable if there was another existing ground for a default termination, regardless of whether that ground was known to the contracting officer at the time of the termination. … This court [will sustain] a default termination if justified by the circumstances at the time of termination, regardless of whether the Government originally removed the contractor for another reason.… Thus, the subjective knowledge of the contracting officer … is irrelevant, and the government is not required to establish that the contracting officer conducted the analysis necessary to sustain a default under the alternative theory.51

A good example of this principle occurred in a 1999 federal district court decision permitting the government, well after the fact, to rely on the standard inspection clause in the contract to justify a contract cancellation.52

This generous principle of review favoring the government is necessary under the Contract Disputes Act (CDA). As provided by the CDA, the Court of Federal Claims and the boards of contract appeal must employ a de novo review of the agency’s termination decision.53 That is to say, a court or board must independently review the evidence and circumstances surrounding the termination, and that judicial assessment can involve new consideration of factual and evidentiary issues.54 Once a court or board makes the requisite fact findings, it will not substitute its judgment for that of the contracting officer or decide whether another remedy was better for the agency.55 Accordingly, post hoc reasons for default termination by themselves present no legal difficulties.

The decisions have considered contractor jurisdictional challenges to the admissibility of post hoc arguments. Courts and boards have turned away contractor objections that the forum lacks jurisdiction to consider an agency’s after-the-fact rationale for a default termination until the agency has first propounded the new justification in a contracting officer’s final decision.56 Courts and boards have reasoned that in a CDA case, they (and the parties) start with a “clean slate” and are not bound by the findings of fact and conclusions of law in the contracting officer’s final decision.57 Although some commentators strongly criticize this post hoc principle because it “overlooks the long-standing practical common law justification for cure notices to encourage contractors to cure their curable deficiencies in lieu of termination,”58 the courts and boards remain unmoved.

FAR 49.402-3(f): Advisory or Mandatory? In perhaps the most important (and even questionable) doctrine relaxing the rules restraining the government’s discretion, the courts and boards have not strictly enforced the government’s obligation in FAR 49.402-3(f) to consider seven factors before imposing a default termination. According to the regulation, the contracting officer “shall” consider, among other matters, “[t]he degree of essentiality of the contractor in the Government acquisition program and the effect of a termination for default upon the contractor’s capability as a supplier under other contracts.”59 Another mandatory factor from FAR 49.402-3(f) is that the contracting officer “shall” consider the impact of a termination for default “on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments.”60 Perhaps most important, the regulation requires contracting officials to address “[t]he specific failure of the contractor and the excuses for the failure.”61 Thus, the plain meaning of FAR 49.402-3(f) and its reliance on the word “shall” is that government officials must take these issues into account when they decide whether a default is in the interests of the government.62

Nevertheless, the Federal Circuit and its subordinate forums have almost universally reasoned that contracting officer analyses of the FAR factors “are not prerequisites to a valid termination” for default.63 The Court of Federal Claims and the Armed Services Board of Contract Appeals (ASBCA) have rationalized that the regulation “does not confer rights on a defaulting contractor,” but is merely “instructive” in aiding a board or court in deciding whether the government properly exercised its discretion.64 The ASBCA has explained the rationale for this construction of FAR 49.402-3(f):

It is well settled that this regulation does not confer rights on the defaulting contractor, and failure to consider one or more of the factors does not require a default termination to be converted into a termination for convenience. Indeed, [the] determination whether to terminate for default requires judgment and is a not [sic] mechanical boxchecking exercise. The contracting officer’s consideration of these factors is merely one element in evaluating whether there has been an abuse of discretion.65

Courts and boards have not satisfactorily explained their failure to follow a plain meaning construction of FAR 49.402-3(f). The decisions holding that FAR 49.402- 3(f) confers no rights upon contractors are not well taken. To the contrary, as detailed below, FAR 49.402-3(f) explicitly obligates the contracting official to protect the contractor’s interests as the contracting officer acts in his quasi-judicial capacity on the government’s request for a contracting officer’s final decision authorizing a default.66

First, FAR 49.402-3(f) states that the contracting officer “shall” consider numerous extenuating or mitigating factors in favor of the contractor, such as the contractor’s specific failure underlying the default and the reasons for the failure. The government already has this obligation under case law.67 Given this precedent, it strains credulity for a court or board to conclude that the regulation was not designed to confer rights upon contractors, or that contractors should be barred from asserting these protections. Thus, in their efforts (and even zeal) to aid the government in executing a termination for default, courts and boards denying the contractor of the benefits of FAR 49.402-3(f) have weakened the well-established plain meaning rule of regulatory interpretation.

Second, boards and courts have established a false dilemma in the construction of FAR 49.402- (f) when they say the regulation does not afford rights to contractors. Unquestionably, the general rule is that “[i]n order for a private contractor to bring suit against the Government for violation of a regulation, that regulation must exist for the benefit of the private contractor.”68 What the court and board decisions have missed in construing FAR 49.402-3(f), however, is that the analysis is not a zero-sum decision; “it is possible for a regulation or law to benefit both the government and a class of private parties.”69 In comments common to all default terminations, the Court of Federal Claims has observed that the agency “[m]ust look beyond [the] mere default and consider [the] interests of both [the] government and [the] contractor.”70 FAR 49.402-3(f) comfortably fits within this category. Based on this dual-purpose doctrine, the courts and boards have erred in reasoning that FAR 49.402-3(f) does not benefit private contractors.

A few board decisions from the early 1990s held out the possibility of a more contractor- friendly regulatory construction. These decisions stated in dicta that a contracting officer’s prejudicial failure to abide by FAR 49.402-3(f) could be grounds for overturning a default “[w]here compliance with the requirements might have led the contracting officer not to terminate the contract for default.”71 This reasoning faithfully implements longstanding Federal Circuit guidance that arbitrary and capricious agency action can be present where a government official “violated an applicable statute or regulation.”72 However, no other board cases mention this competitive prejudice doctrine in default cases, and the Federal Circuit in DCX, Inc. v. Perry73 held that FAR 49.402-3 confers no enforceable rights in contractors. For unknown reasons, the DCX court did not discuss prejudicial violation of the regulation as possible grounds for relief.74 Thus, it appears that the 1996 Federal Circuit decision has overruled the above-mentioned board decisions sub silentio and no avenue likely exists under current law for contractor relief based solely on agency noncompliance with FAR 49.402-3(f).

Conclusion

The rhetoric of termination for default is confusing and does not comport with the reality that boards and courts rarely uphold contractor challenges. “The mere fact that harsh results may accompany a default termination cannot be used as a basis to deny the government this contractual right.”75 Termination for default decisions repeat the rhetoric so frequently that the dicta have become more important than the actual holdings.76 Indeed, these inaccurate statements have likely misled contracting officials and their advisors such that they might misunderstand their true chances for prevailing in litigation. Because an in-depth assessment of the cases shows that they (1) place excessive importance on dicta about termination for default; (2) rely heavily on common law doctrines that strongly favor the government in the administration of this remedy, most prominently the burden of proof; and (3) readily condone the evasion of FAR 49.402-3(f), this article has made a substantial contribution toward a better understanding of this remedy and its place in the procurement system.

  1. DMW Marine Grp. v. Dep’t of Commerce, CBCA 3518, 14-1 BCA ¶ 35,696 (stating the concepts are equivalent).
  2. See Jones v. United States, 11 Ct. Cl. 733 (1875), aff’d, 96 U.S. 24 (1878).
  3. E.g., Composite Laminates, Inc. v. United States, 27 Fed. Cl. 310, 325 (1992). In a Westlaw search, four decisions of the U.S. Court of Appeals for the Federal Circuit (CAFC), seven cases from the U.S. Court of Federal Claims (COFC), and 25 decisions of the boards of contract appeals (BCA) use this description.
  4. E.g., Pinckney v. United States, 88 Fed. Cl. 490, 505 (2009). Three COFC cases and two BCA decisions use this description.
  5. DeVito v. United States, 413 F.2d 1147, 1153 (Ct. Cl. 1969); Jones, 11 Ct. Cl. at 746. Three CAFC cases, seven COFC cases, and 57 BCA decisions employ this description.
  6. E.g., Composite Laminates, 27 Fed. Cl. at 316. Ten COFC cases and 17 BCA decisions use this description. See also Pipe Tech, Inc., ENGBCA Nos. 5959, 6005, 94-2 BCA ¶ 26,649 (“Courts and Boards . . . assiduously scrutinize the grounds allegedly supporting a declaration of default.”).
  7. Malone v. United States, 849 F.2d 1441, 1443 (Fed. Cir. 1988) (construing prior version of 41 U.S.C. §§ 7101 et seq. (1982)).
  8. E.g., DeVito, 413 F.2d at 1153. Seven CAFC decisions, 10 COFC decisions, and 90 BCA decisions use this description.
  9. Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). Fifteen CAFC decisions, 38 COFC cases, and 167 BCA decisions use this description.
  10. R.F. Lusa & Sons Sheetmetal, Inc., LBCA No. 2000, 04-2 BCA ¶ 32,780. One CAFC decision, one COFC case, and one BCA decision use this description.
  11. Adivari, VABCA No. 1365, 81-1 BCA ¶ 15,051. Four BCA decisions use this description.
  12. Tr. Title Co. v. United States, 118 Fed. Cl. 99, 120 (2014) (alterations in original) (citing decisions).
  13. J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969); Interstate Gen. Gov’t Contractors, Inc. v. United States, 40 Fed. Cl. 585, 606 (1998).
  14. From January 1, 2014, to October 30, 2017, courts and boards considered 104 appeals against a termination for default. With an 8.6 percent contractor success rate on the merits, the decisions have struck down the default termination in nine cases: Jennings v. United States, 126 Fed. Cl. 764 (2016); Nelson, Inc., ASBCA Nos. 57201, 58166, 16-1 BCA ¶ 36,195; Military Aircraft Parts, ASBCA No. 59978, 15-1 BCA ¶ 36,101; Paradise Pillow, Inc. v. Gen. Servs. Admin., CBCA 3562, 15-1 BCA ¶ 36,153; Capy Mach. Shop, Inc., ASBCA No. 59133, 15-1 BCA ¶ 36,133; Rodriguez-Rivera v. U.S. Postal Serv., PSBCA No. 6490, 15-1 BCA ¶ 36,107; DMW Marine Grp. v. Dep’t of Commerce, CBCA 3518, 14-1 BCA ¶ 35,696; and ACM Constr. & Marine Grp., Inc. v. Dep’t of Transp., CBCA 2245, 2345, 14-1 BCA ¶ 35,537. Interestingly enough, the last time the CAFC overturned a default termination in any decision, reported or unreported, was 37 ago, in Monaco Enterprises v. United States, 907 F.2d 159 (Fed. Cir. 1990) (unpublished table decision). According to one (somewhat dated) treatise, “if one considers all appealed terminations, rather than merely the appeals that are decided, the contractor is successful in overturning only about one out of 20 terminations.” Walter F. Pettit et al., Government Contract Default Termination 16-2 (1991 & Supp. 1995). The paucity of board and court cases during the 2014– 2017 time frame deciding in favor of the contractor indicates the treatise’s conclusions are likely equally valid today.
  15. FAR 2.101; FAR 49.401(a).
  16. See U.S. Coating Specialties & Supplies, LLC, ASBCA No. 58245, 15-1 BCA ¶ 35,957, at 175,708 (“The default clause does not mandate termination; it merely gives the contracting officer the discretion to terminate for default.” (quoting Radar Devices, Inc., ASBCA No. 43912, 99-1 BCA ¶ 30,223, at 149,528)).
  17. E.g., FAR 52.249-10(c) (“If, after termination of the Contractor’s right to proceed, it is determined that the Contractor was not in default, or that the delay was excusable, the rights and obligations of the parties will be the same as if the termination had been issued for the convenience of the Government.”).
  18. A/S Dampskibssetskabet Torm v. United States, 64 F. Supp. 2d 298, 311–13 (S.D.N.Y. 1999).
  19. Claude Mayo Constr. Co. v. United States, 132 Fed. Cl. 634, 637 (2017).
  20. Id.; A/S Dampskibssetskabet Torm, 64 F. Supp. 2d at 311–13.
  21. E.g., DeVito v. United States, 413 F.2d 1147, 1153 (Ct. Cl. 1969); J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969). Statements in judicial opinions that are not “fitted to the facts,” or that extend “further than the facts of that case,” or that are “not necessary to the decision of an appeal given the facts and circumstances of the case” are dicta. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 762 (11th Cir. 2010). Dicta is not precedential. Mylan Labs. Inc. v. Am. Motorists Ins. Co., 700 S.E.2d 518, 529 (W. Va. 2010).
  22. See Franklin E. Penny Co. v. United States, 524 F.2d 668, 676 (Ct. Cl. 1975) (“Substantial performance, as that term is used here, refers to the equitable doctrine that guards against forfeiture in situations where a party’s contract performance departs in minor respects from that which had been promised.”).
  23. Id. (applying doctrine to supply, service, and construction contracts).
  24. Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 239 (Tex. 2016).
  25. Gaia House Mezz LLC v. State St. Bank & Tr. Co., 720 F.3d 84, 94 (2d Cir. 2013) (alteration in original) (emphasis added).
  26. E.g., Decker & Co. v. West, 76 F.3d 1573, 1580 (Fed. Cir. 1996) (concluding that an agency’s termination for default was justified but still referring to this remedy as a “species of forfeiture”); Precision Standard, Inc., ASBCA No. 59116, 15-1 BCA ¶ 36,040 (granting the government’s motion for summary judgment but still referring to termination for default as a “species of forfeiture”).
  27. E.g., Composite Laminates, Inc. v. United States, 27 Fed. Cl. 310, 316 (1992); Ryste & Ricas, Inc., ASBCA No. 51841, 02-2 BCA ¶ 31,883.
  28. DeVito v. United States, 413 F.2d 1147, 1153 (Ct. Cl. 1969).
  29. See Adivari, VABCA No. 1365, 81-1 BCA ¶ 15,051 (“[T]he default clause is strictly construed and every reasonable presumption against the party seeking to invoke it will be drawn.”).
  30. McDonnell Douglas Corp. v. United States, 567 F.3d 1340, 1347, 1348 (Fed. Cir. 2009).
  31. E.g., Rashed Elham Trading Co., ASBCA Nos. 58383, 58619, 58620, 2017 WL 4838505 (Oct. 12, 2017); Asia Commerce Network, ASBCA No. 58623, 2017 WL 49253731 (Oct. 4, 2017); John E. Beever, Inc., GSBCA No. 6467, 82-2 BCA ¶ 15,919.
  32. See In re Villere, 208 So. 3d 940, 949 (La. Ct. App. 2016) (alterations in original) (citing Black’s Law Dictionary (10th ed. 2014)).
  33. 2 McCormick on Evidence § 342 (Kenneth M. Broun ed., 7th ed. 2013).
  34. Page v. Bolger, 645 F.2d 227, 236 n.17 (4th Cir. 1981) (stating these policies for the elements of a prima facie case and citing U.S. Supreme Court decisions).
  35. See DayDanyon Corp., ASBCA No. 57611, 14-1 BCA ¶ 35,507 (finding that absence of contract-compliant delivery by the due date is prima facie evidence of default).
  36. See, e.g., Ezold v. Wolf, Block, Schorr & Solis-Cohen, 983 F.2d 509, 523 (3d Cir. 1993); Thornbrough v. Columbus & Greenville R.R. Co., 760 F.2d 633, 639 (5th Cir. 1985) (Title VII employment discrimination).
  37. Martin Constr., Inc. v. United States, 102 Fed. Cl. 562, 573 (2011); Asheville Jet & Charter Mgmt., Inc. v. Dep’t of the Interior, CBCA 4079, 17-1 BCA ¶ 36,834; Pyrotechnic Specialties, Inc., ASBCA Nos. 57890, 58355, 59103, 17-1 BCA ¶ 36,696; Delfasco LLC, ASBCA No. 59153, 17-1 BCA ¶ 36,659; DODS, Inc., ASBCA No. 57667, 12-2 BCA ¶ 35,078; Prof’l Servs. Supplier, Inc., ASBCA No. 49236, 97-2 BCA ¶ 29,327.
  38. Mergentime Corp. v. Wash. Metro. Area Transp. Auth., No. 89-1055, 2006 WL 416177, at *73 (D.D.C. Feb. 22, 2006) (citing cases); see also infra notes 45–46 and accompanying text (further explaining doctrine).
  39. Mergentime, 2006 WL 416177, at *73.
  40. See Darwin Constr. Co. v. United States, 811 F.2d 593, 598 (Fed. Cir. 1987) (citing decisions); see also Highland Al Hujaz Co., ASBCA No. 58243, 16-1 BCA ¶ 36,336 (recognizing that the contractor has the burden to show abuse of discretion).
  41. Int’l Verbatim Reporters, Inc. v. United States, 9 Cl. Ct. 710, 715 (1986); see also Darwin Constr., 811 F.2d at 597 (“[W]hile the contracting officer had the discretionary authority to terminate the contract, ‘the exercise of that discretion must be fair and reasonable, not arbitrary or capricious.’”).
  42. See McDonnell Douglas Corp. v. United States, 182 F.3d 1319, 1326 (Fed. Cir. 1999) (analyzing Schlesinger v. United States, 390 F.2d 702 (Ct. Cl. 1968), where the agency terminated a contract solely because of pressure from a congressional oversight committee with no independent contracting officer consideration of the contractor’s quality of performance), cert. denied, 529 U.S. 1097 (2000).
  43. Id.
  44. See id.
  45. Empire Energy Mgmt. Sys., Inc., ASBCA No. 46741, 03-1 BCA ¶ 32,079, at 158,553.
  46. Horn & Assocs., Inc. v. United States, No. 8-415C, 2017 WL 2303513, at *43–45 (Fed. Cl. May 25, 2017) (extensive analysis); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004); Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir. 2002) (noting that the contractor’s burden “is intended to be very difficult”).
  47. See Penn Airborne Prods. Co., ASBCA No. 14835, 1970 WL 1458 (July 20, 1970) (concluding that the board will not “substitute its judgment” for the contracting officer’s reasoned exercise of discretion in termination for default cases); Composite Laminates, Inc. v. United States, 27 Fed. Cl. 310, 325 (1992) (same).
  48. See FAR 49.504.
  49. H&R Machinists Co., ASBCA No. 38440, 91-1 BCA ¶ 23,373 (citing G.L. Christian & Assocs. v. United States, 312 F.2d 418 (Ct. Cl. 1963)) (incorporating termination for default clause by implication); cf. Gen. Eng’g & Mach. Works v. O’Keefe, 991 F.2d 775, 779 (Fed. Cir. 1993) (explaining that the Christian doctrine incorporates mandatory contract clauses that express “a significant or deeply ingrained strand of public procurement policy”). Some states have approved the Christian doctrine. E.g., Dep’t of Gen. Servs. v. Harmans Assocs. Ltd. P’ship, 633 A.2d 939, 947 (Md. Ct. Spec. App. 1993).
  50. See H&R Machinists, 91-1 BCA ¶ 23,373.
  51. Empire Energy Mgmt. Sys., Inc. v. Roche, 362 F.3d 1343, 1357 (Fed. Cir. 1994), cited in Aeon Grp., LLC, ASBCA No. 56142, 14-1 BCA ¶ 35,692. But see McDonnell Douglas Corp. v. United States, 35 Fed. Cl. 358, 374 (1996) (“[T]ermination for default is improper if the reasons stated for termination are different from the reasons given in the cure notice.”), rev’d on other grounds, 182 F.3d 1319 (Fed. Cir. 1999); Lamb Eng’g & Constr. Co. v. United States, No. 01-225, 2002 WL 32933387, at *10 (Fed. Cl. Aug. 26, 2002) (concluding that “the ‘post hoc’ justification exception is limited to those circumstances in which the cure notice could not have been a factor, i.e., where the reason asserted at trial was non-curable.”).
  52. A/S Dampskibssetskabet Torm v. United States, 64 F. Supp. 2d 298, 311–13 (S.D.N.Y. 1999).
  53. Pinckney v. United States, 88 Fed. Cl. 490, 505 (2009) (citing 41 U.S.C. § 7104(b)(4)); Aeon Grp., 14-1 BCA ¶ 35,692 (applying de novo standard of review to an agency default action).
  54. Wilner v. United States, 24 F.3d 1397, 1401–02 (Fed. Cir. 1994) (reasoning that findings of fact by the contracting officer are not binding on the court, the contracting officer’s final decision is not treated as the decision of a lower tribunal that is accorded special deference, and the correctness of the contracting officer’s final decision is not presumed); see also Cerberonics, Inc. v. United States, 13 Cl. Ct. 415, 418 (1987) (noting that de novo review permits the introduction of new facts and legal theories in support of the original claim).
  55. See, e.g., William A. Hulett, AGBCA No. 92-196-3, 93-1 BCA ¶ 25,389 (“The Board’s role is not to make independent decisions on behalf of the [contracting officers], but to determine if [contracting officers’] decisions are supported by the facts and are reasonable.”); Penn Airborne Prods. Co., ASBCA No. 14835, 1970 WL 1458 (July 20, 1970) (concluding that the board will not “substitute its judgment” for the contracting officer’s reasoned exercise of discretion in termination for default cases); Composite Laminates, Inc. v. United States, 27 Fed. Cl. 310, 325 (1992) (same).
  56. Glazer Constr. Co. v. United States, 52 Fed. Cl. 513, 527–28 (2002).
  57. Wilner, 24 F.3d at 1402.
  58. 5 Philip L. Bruner & Patrick J. O’Connor Jr., Bruner & O’Connor on Construction Law § 18:37 (2016).
  59. FAR 49.402-3(f)(5).
  60. FAR 49.402-3(f)(6).
  61. FAR 49.402-3(f)(2).
  62. See FAR 49.101(b) (“The contracting officer shall terminate contracts [for default] only when it is in the Government’s interest.”). The term “shall” in the Federal Acquisition Regulation “means the imperative.” FAR 2.101. All words in a regulation should be given effect. Dantran, Inc. v. U.S. Dep’t of Labor, 171 F.3d 58, 63–64 (1st Cir. 1999). In the interpretation of regulations, courts and boards are bound by the plain meaning. Ingalls Shipbuilding, Inc. v. Dalton, 119 F.3d 972, 976 (Fed. Cir. 1997); AEY, Inc. v. United States, 99 Fed. Cl. 300, 307 (2011).
  63. DCX, Inc. v. Perry, 79 F.3d 132, 135 (Fed. Cir. 1996).
  64. Dawson Bldg. Contractors Inc. v. United States, 2002 WL 34735583, at *4 (Fed. Cl. Sept. 3, 2002); Lafayette Coal Co., ASBCA No. 32174, 89-3 BCA ¶ 21,963, at 110,482.
  65. Truckla Servs., Inc., ASBCA No. 57564, 17-1 BCA ¶ 36,638 (citations omitted); see also Highland Al Hujaz Co., Ltd., ASBCA No. 58243, 16-1 BCA ¶ 36,336 (“While consideration of the FAR factors may aid in determining whether there has been an abuse of discretion in the decision to terminate, the regulation does not confer any rights on the defaulting contractor . . . .”); Danrenke Corp., VABCA No. 3601, 93-1 BCA ¶ 25,365 (citing Chuprov, AGBCA No. 86-101-3, 87-2 BCA ¶ 19,778).
  66. Monroe M. Tapper & Assocs. v. United States, 611 F.2d 354, 359 (Ct. Cl. 1979) (stating that contracting officers reviewing claims act in a “quasi-judicial” capacity); see also John J. Cibinic Jr. et al., Administration of Government Contracts 1187 (5th ed. 2016) (same).
  67. See surpa notes 42–46 and accompanying text.
  68. Freightliner Corp. v. Caldera, 225 F.3d 1361, 1365 (Fed. Cir. 2000).
  69. Todd Constr., L.P. v. United States, 656 F.3d 1306, 1314 (Fed. Cir. 2011) (emphasis added) (citing Rough Diamond Co. v. United States, 351 F.2d 636, 640–42 (Ct. Cl. 1965)).
  70. McDonnell Douglas Corp. v. United States, 35 Fed. Cl. 358, 372 (1996) (emphasis added), rev’d on other grounds, 182 F.3d 1319 (Fed. Cir. 1999).
  71. Danrenke Corp., VABCA No. 3601, 93-1 BCA ¶ 25,365; see also Shepard Printing, GPOBCA No. 23-92, 1993 WL 526848 (Apr. 29, 1993); Air, Inc. v. Gen. Servs. Admin., GSBCA No. 9535, 93-1 BCA ¶ 25,429; Darwin Constr. Co., GSBCA No. 10193, 91-1 BCA ¶ 23,419.
  72. McDonnell Douglas, 182 F.3d at 1326 (citing United States Fid. & Guar. Co. v. United States, 676 F.2d 622, 630 (Ct. Cl. 1982)).
  73. 79 F.3d 132, 135 (Fed. Cir. 1996).
  74. Id. (ruling that “the factors in section 49.402-3(f) that contracting officers are directed to consider before terminating contracts are not prerequisites to a valid termination”).
  75. Cibinic et al., supra note 66, at 871.
  76. Numerous fields of law face the same problem. See Judith M. Stinson, Why Dicta Becomes Holding and Why It Matters, 76 Brook. L. Rev. 219 (2010).