Can the government pull back tasking that has already been awarded?

[heatgrab]

We have been awarded a small business set aside contract and have been issued tasking. I was wondering if there is anything in the FAR that covers whether or not the government can issue tasking to a SB contractor and then pull it back to give it to a gov. worker.

Thanks.

[Desparado]

I would think that the government could do a termination for convenience at any time.

[Guest Vern Edwards]

When you say "give it to a gov. worker," do you mean terminate an order and do the work in-house?

[heatgrab]

Yes, can they issue tasking for one our people to do under our contract and then decide to pull that tasking back in-house? I haven't been able to find anything in the FAR that addresses this either way.

[Guest Vern Edwards]

Yes, they can do that. FAR does not address it, but it is unquestionably do-able.

[Don Mansfield]

Is the contract a requirements contract?

[Retreadfed]

Look at Torncello v. U.S. 231 Cl. Ct. 20 and Colonial Metals Co. v. U.S. 204 Ct. Cl. 320. They might give you some ideas.

[metteec]

Is the contract a requirements contract?

Don, can you help me understand the position I am assume you are making? My understanding of a requirements contract under FAR 16.503 only limits the Government's ability to purchase from Contractors, not its ability to perform the work in-house.

[Guest Vern Edwards]

Don is alluding to Torncello v. U.S., cited above by Retread, which was about the assignment of work in house instead of to the holder of a requirements contract, which the old Court of Claims, predecessor to the Federal Circuit, ruled to be a breach of contract from which the government was not insulated by the termination for convenience clause. See the in-depth discussion of the case in The Nash & Cibinic Report of October 1996, "Convenience Terminations: What Are The Limits?" Torncello overruled Colonial Metals, the other case cited by Retread.

Torncello is much cited, much discussed, and controversial. It has been commented upon, both briefly and at length, in at least 60 publications. See, generally, Cibinic et al., Administration of Government Contracts 4th (2006), Ch. 11, 'Termination for Convenience."

[metteec]

Vern, thank you for the explanation. I always thought the Torncello rule prevented the Government from refusing to pay anticipatory profits in a Termination for Convenience. Based upon reading Administration of Government Contracts 4th, Ch. 11, that you referenced, the Government cannot terminate for convenience at all unless there is a change in circumstances (p. 1062).

Do you know if in the Torncello case, whether the Government reinstated the contract, or converted the termination for default to a termination for convenience, and paid Torncello's termination costs inclusive of anticipatory profit?

[Guest Vern Edwards]

The Torncello decision did not hold that a contractor can get anticipatory profits in a termination for convenience. It held that the termination for convenience in that case was improper and thus a breach of contract, because there was no change in circumstances to justify the T for C. The appellate court remanded the case to the trial court for calculation of damages. I don't know what happened thereafter. I think the parties settled.

The Torncello standard (there must be a change in circumstances) is no longer generally accepted. Torncello must be read in conjunction with Krygoski Construction Co. v. U.S., 94 F.3d 1537 (Fed. Cir. 1996). The generally accepted rule today is that the Government can terminate for convenience at any time and for any reason unless it (1) acted in bad faith, (2) abused its discretion, or (3) entered into the contract with no intention of keeping its promises. Thus, the government cannot terminate for convenience to get a better bargain if it knew of the better bargain at the time of award. See Administration of Government Contracts 4th, 1066 - 1067 and Nash, "Terminations for Convenience: When Are They Improper?" The Nash & Cibinic Report (October 2012).