By Government Contracts Editorial Staff
The government breached the duty of good faith and fair dealing, according to the Armed Services Board of Contract Appeals, because it did not timely respond to the contractor’s requests to amend the statement of work. The dispute arose from a contract to provide pre-fabricated relocatable buildings for use in Afghanistan. The board found the government was within its rights to require compliance with the SOW and that the government did not withhold superior knowledge with regard to the contractor’s attempt to alter the SOW to allow for a “sandwich panel” in lieu of drywall and insulation. However, the record indicated the contractor “twist[ed] in the wind” for four months while the government considered whether to allow the sandwich panel, which was an actionable breach of the duty of good faith and fair dealing. The doctrine of good faith and fair dealing is based on the notion that every contract “imposes upon each party a duty of good faith and fair dealing in its performance and enforcement” (58 CCF ¶80,262).
Timelines Obligation. While the doctrine could not override the express terms of the contract, it did impose on the government certain obligations with regard to responding to the contractor’s requests to amend the SOW. Here, the government’s delays in addressing the contractor’s requests unreasonably interfered with contract performance and therefore constituted a breach. The factors that supported this conclusion included: the government was familiar with the requested change; the government was aware the contractor was awaiting an answer for several months, while the contractor continually prompted the government to act; the government was aware that its delay in decision-making was potentially detrimental to the contractor in terms of incurring additional costs; and there were no circumstances that justified an extended wait on the government’s part. Given these considerations, the government’s failure to act in a more timely manner was “inconsistent with the contract’s purpose and deprive[d] the other party of the contemplated value.” (Relyant, LLC, ASBCA, ¶95,519).
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