Government Contracts Accord and Satisfaction Findings Reversed on Remand
Tuesday, November 12, 2019

Accord and Satisfaction Findings Reversed on Remand

By Government Contracts Editorial Staff

On remand from the Court of Appeals for the Federal Circuit, the Court of Federal Claims found two modifications did not bar the contractor’s claims for flood-event damages, because the subject matter of the releases did not encompass such damages and there was no meeting of the minds between the parties as to the claims. In a dispute arising from a contract to complete a flood control project, the contractor contended it was entitled to additional costs because modifications and specification defects required it to perform during inclement weather. The CFC found two bilateral modifications constituted accord and satisfaction of a flood-event claim, and the government’s subsequent “draft modification,” which considered additional estimates for flood damage, was not evidence the parties continued to negotiate the claim, because the contractor did not know about the government’s internal memorandum prior to discovery (59 CCF ¶80,688). The Federal Circuit ruled the CFC should have considered evidence that, after the execution of the modifications, the government directed the subcontractor to submit revised estimates for the claim on multiple occasions and planned to review the contractor’s additional requests for equitable adjustments that included adjustments on the flood claim (62 CCF ¶81,352).

Continued Negotiation. On remand, the CFC found that, although the release language referred to “all costs and markups directly or indirectly attributable for the change ordered” and “for all delays related thereto,” future flood-event damage claims were simply too attenuated from the subjects of the modifications—an access ramp and survey delays—to be within the subject matter of the releases. In addition, there was no meeting of the minds. The parties continued to negotiate the flood-event damages claim after the releases were issued, as shown by the draft modification, the government’s request for and the contractor’s submission of a request for an equitable adjustment that included a claim for flood events, and the government’s consideration of the REA. (Meridian Engineering Co. v. U.S., FedCl, 63 CCF ¶81,756)

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