Government Contracts Monitor

Timber! A Government Contractor Asks for Mercy and Gets None

April 1, 2013

A recent Board of Contract Appeals case demonstrates that regardless of how solid a contractor’s past history may be, failure to perform is failure to perform.  In Payne Enterprises v. Dept. of Agriculture, CBCA No. 2899 (Mar. 19, 2013), the Board granted the government’s motion for summary relief and denied the appeal of Payne Enterprises, a lumber wholesaler from Kane, Pennsylvania.   Payne was awarded the Sheriff West Timber Sale contract on June 1, 2001.  The company completed 92% of the contract, but was not able to complete the remaining 8%.  Both Payne and the government agreed that the contractor’s failure to complete the contract was caused by economic conditions, a decrease in new house construction and house remodeling, and the declining price of lumber.  However, the government still sought damages for failure to perform.

The contracting officer issued a decision that Payne owed the government $283,708.79 for failing to complete the contract by the termination date.  Payne appealed the decision, and essentially begged the Board for mercy stating:  “The Appellant respectfully requests that the Board take into consideration the Appellant’s history of diligent performance under contracts and good faith in its dealing with the Government over a period of many years and recognize that the Appellant was the victim of economic forces beyond its control which prevented it from fully performing under the contract, despite its best efforts.”  The company also referred to the fact that the government bailed out other private businesses, and asked for the Board’s discretion.

The Board denied Payne’s pleas. The Board stated that the government provided the contractor with several contract term adjustments to allow it to continue to perform and complete the contract, but unfortunately, Payne could not perform.  Therefore, the Board denied the appeal, holding that: “[t]here are no contractual provisions that would relieve appellant of its obligations to pay the damages assessed. The Board does not have authority or discretion to relieve appellant from its contractual liability.”  Therefore, instead of sending lumber, Payne will now have to send a significant amount of money to the government.

 

Brian Stolarz is the attorney responsible for the content of this article.