TERMINATION FOR CONVENIENCE ABUSED

Perhaps we should call this Changes clause abused.

Lately, we have seen an alarming increase in agencies attempting to "descope" work.  What's disturbing is the abuse of the rules because descoping means price reduction. Much of the time, this action by the government is illegal.

Descoping much of the time legally is a partial termination for convenience, entitling the contractor to recover its termination costs and to reprice the remaining work. 

Many court and board cases have discussed deductive changes (descoping) versus terminations for convenience. The seminal claim arose in 1962 when the appellate court said: “The long and short of it is that the proper yardstick in judging between a change and a termination in projects of this magnitude would best be found by thinking in terms of major and minor variations in the plans.” A legion of cases has followed this reasoning by concluding that the Changes clause is appropriate for minor deletions of work. For significant omissions, the termination for convenience clause must be used.

Here is what we know so far. Descoping is not defined and described in FAR. Check 2.101 definitions. Arguably, since descoping is MIA, the contractor's first line of defense is to say descoping does not exist, is not countenanced, is illegal, and cannot be done. Warning. The case law is clear that if you go along with descoping, you cannot come along later after you have read this and argue it was a partial termination for convenience. Be forearmed.

So what is descoping? Yep. It's a code word for deductive change.  Remember those things nobody ever uses? You studied them in class and never saw them again or seldom see them at most. Well, there must be a memo from some bright young lawyer for the government wanting to make a name for herself promoting descoping as a way for the government to deduct work without suffering the pecuniary disadvantage and budget hit of a termination for convenience. Deductive changes have been around forever, and we all know when to use them, as limited as those occasions may be.

The problem is abuse. Poison for the unwary. And the courts and boards have yet to help, something the young lawyer undoubtedly stumbled upon. The case law is all over the lot. And the result? If a minor change, deductive change.  If significant, T for C. What a fine recipe for litigation. What is little, and what is central. How many angels can dance on the head of a pin?

There is a solution. Tackle the issue in FAR.  We need a "legislative" fix.

bill@spriggslawgroup.com