Tuesday, February 14, 2012


We've written often about the rules of contract interpretation.  Recently, the Armed Services Board of Contract Appeals (ASBCA) addressed again these important rules.  See Space Gateway Support, LLC, ASBCA No. 56592, January 30, 2012.  In a cost allowability case, Judge Ting was asked to look at the word "use" in the context of a contractual provision providing that use of accrued sick leave encompasses any permissible use of regular sick leave or reserve sick leave.  (The opinion also reminds us that the government bears the burden of establishing that a cost is unallowable by operation of a specific contract provision.) 

In the interpretation of contractual language, the Court of Appeals for the Federal Circuit (COFC) begins with the plain meaning of the language.  The COFC will "give the words of the agreement their ordinary meaning unless the parties mutually intended and agreed to an alternate meaning."  This rule essentially says look it up in the dictionary unless the parties reached an agreement to change that meaning.  The COFC also says it must interpret the contract so as to give meaning to all provisions.  The court tries to make sense of the language in the complete context of the entire contract.

Moreover, the COFC has said "interpretative tools such as dictionaries are frequently used by courts to determine the meaning of a document's phrase or provision."  In Space Gateway Support, LLC, Judge Ting used the dictionary to define the word "use".

In our experience, we have seen the government often take words and phrases out of context, sometimes ignoring the plain meaning and frequently forcing an interpretation which does not make sense when the contract is viewed as a whole.  This is just another clarion call for sticking to the rules.  Begin with the plain meaning and interpret the contract in a manner that gives meaning to all of the contract provisions and makes sense.

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