Keeter Trading Co. v. United States, No. 05-243C (Fed. Cl. Jul. 19, 2007).
The COFC concluded that the USPS breached the contract when it unilaterally attempted to add 52 new mailboxes to the contractor’s 250-mailbox route. The court stated that this act represented a cardinal change to the contract that was serious enough to justify the contractor’s discontinuance of contract performance altogether. As a result, in accordance with well-established Government contracts law, the court converted the improper termination for default to a termination for the convenience of the Government. Although terminations for the convenience of the Government generally entitle the contractor to recover only its costs incurred prior to the termination, a reasonable profit on the work performed, and certain additional costs associated with termination, the COFC stayed the case for further factual development regarding whether the USPS terminated the contract in bad faith, which, if proven, would allow the contractor to recover additional damages.