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Ultra Electronic Ocean Systems, Inc., ASBCA No. 62804 (June 17, 2021), the Armed Services Board of Contract Appeals (the “Board”) held that a contracting officer’s letter terminating the contract for default “effective immediately” constituted a Contracting Officer’s Final Decision for the purpose of granting the Board jurisdiction over the contractor’s appeal.

In Ultra, the Navy issued a “Notice of Intent to Terminate for Default,” stating that “effective immediately . . . , the Government hereby exercises its right to terminate the contract.” Although the letter unequivocally terminated the contract, it was not styled as a final decision, and did not provide the contractor appeal rights language that is generally required in a Contracting Officer’s Final Decision. Nonetheless, the contractor appealed the termination letter, after which the contracting officer issued a second letter titled “Notice of Termination,” which was expressly characterized as a final decision and described the contractor’s right to appeal. The Government filed two motions to dismiss the contractor’s appeal of the first termination letter, arguing first that it was not a final decision and second, that it had been made moot by the second termination letter.

The Board analyzed the language used in the first termination letter, and held that it constituted the final expression of the Government’s position, making it an appealable final decision. The Board also reaffirmed that the absence of appeal rights language in a final decision does not render an otherwise valid appeal invalid. Finally, the Board held that the second termination letter cannot render the earlier termination letter moot, because the second letter did not grant the contractor the relief it sought: conversion of the default termination to that of a termination for the convenience of the Government. The Board denied the Government’s motions.

This decision is another example of the occasional tension between the unique procedural requirements of the Contract Disputes Act, and the Act’s purpose of providing for the fair and efficient resolution of disputes. The Government’s attempt to use a default termination letter as both a sword to terminate the contract and a shield from judicial review of that decision, served only to delay resolution and increase costs to both the contractor and, ultimately, the U.S. taxpayer.

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Photo of Nicole Owren-Wiest Nicole Owren-Wiest

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most…

Nicole Owren-Wiest is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group in the firm’s Washington, D.C. office. Nicole is nationally ranked by Chambers USA in Government Contracts and a recognized leader in two of the most complex areas in government contracting: accounting, cost, and pricing, and intellectual property/data rights. With over 20 years’ experience, Nicole has a broad counseling and dispute-resolution practice and leads the Group’s cost accounting practice, which focuses on helping clients navigate the government’s complex cost and pricing rules, including the FAR Part 31 cost principles, the Cost Accounting Standards (CAS), and Truth in Negotiations Act/Truthful Cost or Pricing Data (defective pricing).

Photo of Erin Rankin Erin Rankin

Erin Rankin is counsel in the Government Contracts Group and is experienced in resolving government contract disputes with a particular focus on cost allowability, cost accounting issues, and DCAA audit findings. Erin also advises clients on all aspects of FAR and DFARS compliance…

Erin Rankin is counsel in the Government Contracts Group and is experienced in resolving government contract disputes with a particular focus on cost allowability, cost accounting issues, and DCAA audit findings. Erin also advises clients on all aspects of FAR and DFARS compliance in connection with the administration, performance, and closing out of government contracts. Erin has extensive experience representing government contractors before the Boards of Contract Appeals, defending companies against False Claims Act allegations, conducting internal investigations, and advocating for clients in mandatory disclosures and suspension and debarment proceedings.

Photo of Matthew Lewis Matthew Lewis

Matthew Lewis is an associate in Crowell and Moring’s Washington, D.C. office, where he works in the Government Contracts Group.

Before coming to Crowell and Moring, Matt clerked at the Civilian Board of Contract Appeals, working on Contract Disputes Act appeals and administrative…

Matthew Lewis is an associate in Crowell and Moring’s Washington, D.C. office, where he works in the Government Contracts Group.

Before coming to Crowell and Moring, Matt clerked at the Civilian Board of Contract Appeals, working on Contract Disputes Act appeals and administrative cases. Matt received his law degree from The George Washington University Law School, where he was awarded a Concentration in Government Procurement Law. During law school, Matt interned at the Civilian Board of Contract Appeals, as well as in the Office of the General Counsel at the Department of Health and Human Services. Prior to attending law school, Matt coordinated international contract manufacturing projects.