Vanguard Constr., Inc. v. United States, 2015 U.S. Claims LEXIS 1158 (Fed. Cl. Sep. 8, 2015)

The United States Air Force (the “Government”) entered into a contract with Vanguard Construction, Inc. (“Contractor”) to replace a roof (the “Contract”).  The Contract incorporated by reference portions of the Federal Acquisition Regulation (FAR).

Contractor’s demolition of the existing roof revealed that a significant section of the roof stem wall was missing.  The Contract did not address the contingency of a missing stem wall.  Contractor sent the Government several letters asking for guidance on how to proceed, including a request for information on structural requirements for building a stem wall.  The Government refused to provide the requested information, asserting that the terms of the contract allocated to the Contractor the risk of dealing with latent or unanticipated site conditions and the burden of devising a solution to the problem.

While Contractor disputed the Government’s assertions, it installed approximately ninety percent of the new roof, leaving undone only the portion of the roof near the missing stem wall, before demobilizing, claiming there was no more work able to be completed.  The Government issued to Contractor a Notice of Default, citing Contractor’s failure to comply with its duty to “proceed diligently with performance” pending resolution of a dispute under FAR § 52-233-1(i), and terminated the Contract.

Contractor sought a conversion of the Government’s termination for default into a termination for convenience in the Court of Federal Claims.  Contractor argued that its failure to complete the roof was justified by the Government’s refusal to provide requested guidance and information necessary to complete the roof.  The Government filed a motion for summary judgment, arguing that as a matter of law its termination for default was justified because Contractor’s duty to proceed with performance was absolute.

The court held that a contractor’s duty to continue performance under the standard “Disputes” clause is not absolute, but may be excused “if the decision to stop work is warranted under the particular facts,” citing three cases in which the court had previously considered whether a contractor needed additional information from the government to complete performance.  The court then denied the Government’s motion for summary judgment because the parties disputed two facts material to the issue of whether Contractor’s decision to stop work was warranted: whether the missing stem wall was visible prior to demolition, and whether the information requested by Contractor was necessary to complete the roof near the missing stem wall.

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