Wednesday, July 25, 2018

Contractor Waives Its Rights to File a Claim

In 2014, the AAFES (Army and Air Force Exchange Service) awarded a contract to Team Hall Venture to operate a frozen yogurt concession at a food court on a military base. The contract period of performance was for up to ten years. The concession opened that November but had to close from time to time due to rodent infestation and flooding. About a year and a half after opening, the concession ceased operations and the contract was terminated.

As part of the termination agreement, Team Hall released AAFES from any and all obligations related to the contract and waived any claim against AAFES for monetary or other relief to the contract including any that may arise in the future.

In September 2015, about two months following termination, Team Hall presented a certified claim for $673 thousand representing lost profits for the eight years remaining on the contract. The contracting officer denied all but $30 thousand  of the $673 thousand. Team Hall appealed the contracting officer's final decision to the ASBCA (Armed Services Board of Contract Appeals).

The ASBCA denied the appeal, noting the plain language of the waiver signed by Team Hall. The ASBCA gave no credence to Team Hall's assertion that the Government slipped the language into the contract modification at a later date.

The ASBCA did not rule on the validity of the claimed amount - i.e. whether lost profits are recoverable under a contract termination. The Board didn't have to as the contractor had waived any rights to additional monies.

The full decision can be read or downloaded here.

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