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Hello:

I would like to learn more, and start a discussion, about 'specific performance'. Is specific performance a remedy (for the goverment) in goverment contracts? If not, what are your thoughts on why not?

For additional context, the scenario I am thinking about is where a contractor on a sole source contract is considering an efficient breach. The relief available under a termination for cause/default, monies or reprocurement, are not adequate remedies for the goverment's purposes.

Please provide any commentary, links to authoritative guidance, or cite cases were the goverment pursued specific performance.

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Below are some cases referenced in the Contract Attorney's Deskbook and the Government Contract Guidebook (4th ed).  I don't believe they relate to the Government pursing specific performance, but rather the contractor pursuing the remedy.

 

Boards of appeal cannot order specific performance.  (General Elec. Automated Sys. Div., ASBCA No. 36214, 89-1 BCA ¶ 21,195; Western Aviation Maint., Inc. v. General Services Admin, GSBCA No. 14165, 98-2 BCA ¶ 29,816 (Tucker Act does not waive the government’s immunity from specific performance suits)).

 

Also, the COFC does not have the authority to order specific performance.  (John C. Grimberg Co. v. United States, 702 F.2d 1362 (Fed. Cir. 1983); Rig Masters, Inc. v. United States, 42 Fed. Cl. 369 (1998); Paragon Energy Corp. v. United States, 645 F.2d 966 (Ct. Cl. 1981); Valley View Enterprises, Inc. v. U.S., 35 Fed. Cl. 378, 40 Cont. Cas. Fed. (CCH) ¶76920 (1996), 15 FPD ¶42, 38 GC ¶358; Cardiosom, LLC v. U.S., 91 Fed. Cl. 659 (2010)).

 

I haven’t researched the issue much or reviewed the above cases, but if this type of remedy cannot be ordered in favor of the contractor, I wouldn’t think it could be ordered in favor of the Government.  I’d be interested to hear from those more knowledgeable on the issue.

 

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On 11/21/2017 at 9:30 AM, Jamaal Valentine said:

Is specific performance a remedy (for the goverment) in goverment contracts?

I have been told by reliable authority that the answer is yes. The government can seek specific performance as a nonmonetary remedy, but not from a board of contract appeals. It would have to go to a court under other than the Contract Disputes Act.

A contractor may not seek specific performance by the government.

I have not researched the matter myself, but my source is generally reliable. I'm too busy now to dig out statutes, cases, or secondary sources..

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From your own source:

"Most commonly ordered in cases involving real property and rare chattels."

I'm guessing that it's safe to say that compelling performance isn't really a practical tool in the Government CO's toolbox.  It appears that Specific Performance is primarily applicable to real property, because property tends to be unique and its value is subjective.  Also, it's not something that could be built into a contract anyway (i.e., it would be the potential remedy to a legal dispute, like paying the protester's costs.)

I would also add that logic dictates there would have to be a clear and unequivocal act with a definite outcome that would be compelled, such as transferring title in a land sale.  Contrast that with, for example, HHS demanding Specific Performance  defined as "a working Affordable Care Act  web site" :P

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@here_2_help:

I found this in the U.S. Attorneys' Manual:

Quote

219. Specific Performance

The United States may obtain specific performance. See, e.g., Bastian v. United States, 118 F.2d 777 (6th Cir. 1941), enforcing a contract to purchase land notwithstanding the available legal remedy of eminent domain. See also United States v. Harrison County, Miss., 399 F.2d 485 (5th Cir. 1968), rehearing denied, 414 F.2d 784 (1969), cert. denied, 397 U.S. 918 (1970), granting specific performance of a contract to insure maintenance of a beach as a public beach. In contrast, specific performance does not lie against the United states. United States v Jones, 131 U.S. 1 (1889). Other actions for specific relief against the United States have also been denied without a waiver of sovereign immunity. Identification Devices, Inc. v United States, 121 F.2d 895 (D.C. Cir.), cert denied, 314 U.S. 615 (1941) (injunction); Clay v. United States, 210 F.2d 686 (D.C. Cir. 1953), cert. denied, 347 U.S. 927 (1954) (action to void assignment of patents to United States); Leather v. United States, 61 Ct. Cl. 388 (1925), cert. denied, 271 U.S. 660 (1926) (derivative stockholders' action to set aside corporate conveyance to United Sates denied); Blanc v. United States, 244 F.2d 708 (2d Cir.), cert. denied, 355 U.S. 874 (1957) (equitable relief to compel reversal of denial of compensation benefits). See also, Coggeshall Dev. Corp. v. Diamond, 884 F.2d 1, 3 (1st Cir. 1989) (citing Florida Dept of State v. Treasure Salvors, Inc., 458 U.S. 670, 689 (1982).

https://www.justice.gov/usam/civil-resource-manual-219-specific-performance

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See Marker v. U.S., 646 F.Supp. 433 (1986,  D. De.) in which the district court granted the government's plea for specific performance of a contract.

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Vern,

I suspect you meant that cite for Jamaal.

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1 hour ago, REA'n Maker said:

From your own source:

"Most commonly ordered in cases involving real property and rare chattels."

I'm guessing that it's safe to say that compelling performance isn't really a practical tool in the Government CO's toolbox.  It appears that Specific Performance is primarily applicable to real property, because property tends to be unique and its value is subjective.  Also, it's not something that could be built into a contract anyway (i.e., it would be the potential remedy to a legal dispute, like paying the protester's costs.)

I would also add that logic dictates there would have to be a clear and unequivocal act with a definite outcome that would be compelled, such as transferring title in a land sale.  Contrast that with, for example, HHS demanding Specific Performance  defined as "a working Affordable Care Act  web site" :P

Thanks REA, but I am not concerned with 'most commonly' or 'primarily'. I want to discuss and understand the gamut of applications. I offered the definition so people would know what I was talking about. I figured most wouldn't.

I don't know why you think its something that cannot be built into a contract. I'd like to hear it. Same goes for your last paragraph; I am unsure why you believe that and what is your assertion based.

To be fair, you did preface it by stating you were guessing. I would still like to know your rationale.

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Thanks, Retreadfed. Good info. The theoretical is not a Defense Priorities and Allocations System (DPAS) rated contract.

 

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help: Yes, it was meant for Jamaal.

Jamaal: Do yourself a favor and consult with your legal office. Getting a court-ordered specific performance is way beyond what a CO could do.

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Todd, Vern, et. al.

Thank you. I read through the references I have reasonable access to (Contract Attorney's Deskbook and the Government Contract Guidebook (4th ed)).

Found some good reading in the Journal of Empirical Legal Studies. March 2015, Vol. 12 Issue 1, p29-69. It discusses what specific performance is, a brief history, and arguments for and against it.

"Specific performance is a central contractual remedy but, in Anglo-American law, generally is subordinate to damages. Despite rich theoretical discussions of specific performance, little is known about parties’ treatment of the remedy in their contracts. We study 2,347 contracts of public corporations to quantify the presence or absence of specific performance clauses in several types of contracts."

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Here is the Black's Law Dictionary definition of "specific performance":

Quote

specific performance (18c) The rendering, as nearly as practicable, of a promised performance through a judgment or decree; specif., a court-ordered remedy that requires precise fulfillment of a legal or contractual obligation when monetary damages are inappropriate or inadequate, as when the sale of real estate or a rare article is involved. • Specific performance is an equitable remedy that lies within the court's discretion to award whenever the common-law remedy is insufficient, either because damages would be inadequate or because the damages could not possibly be established. — Also termed specific relief; performance in specie.

 

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On 11/21/2017 at 4:52 PM, Jamaal Valentine said:

I don't know why you think its something that cannot be built into a contract. I'd like to hear it. Same goes for your last paragraph; I am unsure why you believe that and what is your assertion based.

BLUF: What vendor in their right mind would ever sign a contract which gave the CO the unilateral right to demand Specific Performance?  

Could the CO demand Doubleplus Specific Performance to remedy deficient Specific Performance?  

Risk = $$.  So even if you DID get a vendor to bite on such a term, what are the chances their price would be deemed fair & reasonable?  

Would you compel a vendor to build  an F-35? Would you want to fly that F-35?!

 

On 11/21/2017 at 12:30 PM, Jamaal Valentine said:

The scenario I am thinking about is where a contractor on a sole source contract is considering an efficient breach.

I don't think that Efficient Breach and Specific Performance are related concepts. The remedy to an Efficient Breach is  liquidated damages, which is the primary factor in the Efficient Breach decision in the first place.  And if I am breaching, how could I be held to a 'Specific Performance' term in the contract I am repudiating, outside of a court decision?   Also, whither T4D ?  Would Specific Performance take its place, or would Specific Performance be in addition to T4D?

Kudos on starting a discussion thread that doesn't involve Part 31!!!   Hypotheticals like yours are much more entertaining and thought-provoking!

(Coincidentally: "Big Tobacco's court-ordered ads make their debut" http://www.cnn.com/2017/11/21/health/tobacco-ads-court-order-bn/index.html)

 

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Thanks! I do think this is an interesting topic. Just this week, in the process of selling a home, I read that specific performance is stated as a remedy in my sales contract.

10 hours ago, REA'n Maker said:

BLUF: What vendor in their right mind would ever sign a contract which gave the CO the unilateral right to demand Specific Performance?

That is different than saying "it's not something that could be built into a contract". Plus I listed an article that reviewed over 2,000 contracts and found the inclusion of specific performance in some contracts of every type.

10 hours ago, REA'n Maker said:

Risk = $$.  So even if you DID get a vendor to bite on such a term, what are the chances their price would be deemed fair & reasonable?  

A fair and reasonable price is simply the price that a prudent and competent buyer would be willing to pay given available knowledge of the market conditions. If the price increases because of terms and conditions (e.g. specific performance), fair and reasonableness is still a determination that involves judgment regarding the fact-scenario. What are the chances their price would be deemed fair and reasonable? No better or worse than any other similarly situated action. Pay for play.

10 hours ago, REA'n Maker said:

Would you compel a vendor to build  an F-35? Would you want to fly that F-35?!

It depends. Why am I compelling them in the first place? Can they perform adequately? Nonetheless, just because a tool is not universal does not mean it is not a valid or useful tool. The tool isn't the problem; shoddy tool application is the problem. An artisan draws on myriad tools as needed.

10 hours ago, REA'n Maker said:

I don't think that Efficient Breach and Specific Performance are related concepts. The remedy to an Efficient Breach is  liquidated damages, which is the primary factor in the Efficient Breach decision in the first place.  And if I am breaching, how could I be held to a 'Specific Performance' term in the contract I am repudiating, outside of a court decision?

Efficient breach and specific performance are related in the sense that one party may opt for an efficient breach and the other party may desire specific performance. I am not sure what you mean when you say you don't think that they are related concepts.

10 hours ago, REA'n Maker said:

And if I am breaching, how could I be held to a 'Specific Performance' term in the contract I am repudiating, outside of a court decision?

How do you enforce any contract terms or remedies--aside from specific performance--against any breaching party? I believe it is widely accepted that a court would not disturb the contract if it has confidence that the contract was entered into properly. In other words, a board or court should enforce a specific performance clause so long as there is nothing procedurally or substantively unconscionable about the contract. I don't think specific performance is inherently unconscionable.

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Guys, "specific performance" is a court order. The court orders the defaulting party to do what it agreed to do, and failure to comply can have judicial consequences. It would be contempt of court.

See this https://www.americanbar.org/publications/insights_on_law_andsociety/14/winter-2014/understanding-injunctions.html and this http://www.stevenslee.com/injunctions-a-practical-guide-to-one-of-the-laws-most-powerful-tools/.

It doesn't make sense to talk about putting a clause in a contract that empowers the CO to order specific performance. That suggestion reflects a profound misunderstanding of the topic. It's not interesting; it's silly. Such an order from a CO would be nothing but a demand for the contractor to do what it had already agreed to do, but didn't. It would not be a court order. And it would be silly to ask a court to enforce a specific performance clause when you're in court because the contractor didn't and wouldn't perform.

"Efficient breach" is a legal theory. It is the theory that breach may be less costly than complete performance. Efficient breach does not make much sense if specific performance is a realistically likely court-ordered remedy. See Loeb, "Judicial Application of the Efficient Breach Theory--A Critical Examination," Georgetown Journal of Legal Ethics (Fall. 2017).

Do some research.

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"A fair and reasonable price is (1) simply the (2) price that a (3) prudent and (4) competent buyer would be willing to pay given (5) available knowledge of the market conditions."

Jamaal, I counted five assumptions in the declarative sentence quoted above, any of which I could challenge, especially in the defense acquisition environment. You make it sound so simple and yet we have multi-year solicitations and multiple bid protests and post-award litigation that belies the simplicity of it all.

My favorite is assumption (2), divorcing price from proposed/negotiated costs. I would purely love life if we could "simply" submit proposed prices and then, using available knowledge of the market conditions, the CO would determine which price was the right price to pay, regardless of the costs we expected to incur. How can we make this happen?

Yours in jest, H2H

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20 hours ago, Vern Edwards said:

It doesn't make sense to talk about putting a clause in a contract that empowers the CO to order specific performance. That suggestion reflects a profound misunderstanding of the topic.

Vern:

I am not suggesting, nor meant to suggest, a clause that empowered the CO to enforce specific performance. REA suggested that a specific performance clause couldn't be added to a contract and I questioned it. As previously stated, my personal residential resale contract includes specific performance as a remedy. It also lists liquidated damages. I think it can make sense to include a specific performance clause in the sense it should make it easier to get a court ordered specific performance.

As far as efficient breach - I agree. Specific performance was initially discussed as a potential remedy and counter to an attempt at efficient breach.

H2H:

The concept of price fair and reasonableness is simple (DAU Acquisition Encyclopedia). The application may be a bit messier. But rest easy…if there is a way to overcomplicate something, people will find a way. To be fair, price analysis and cost analysis are two different animals and cost analysis may increase the complexity.

To answer your question on how: short of only operating on requirements that do not require cost analysis, I don't know. I am sure you have some thoughts about it?!?!

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5 hours ago, Jamaal Valentine said:

I think it can make sense to include a specific performance clause in the sense it should make it easier to get a court ordered specific performance.

Let's suppose that is true. (Which I do not believe, but let's suppose.) What tribunal do you think would order specific performance? Neither the BCAs nor the COFC have authority to order specific performance under the CDA. They cannot grant injunctive relief, which is what they would have to be able to do to order specific performance. Do you think an agency could get the Department of Justice to pursue the matter before a district court under some legal theory that you have not named?

You cannot equate a real estate contract with a government contract for supplies, services, or construction.

It makes no sense whatsoever to include a "specific performance clause" in a government contract. In any case, if some CO wrote such a clause its use would be a deviation from FAR.

@here_2_help

22 hours ago, here_2_help said:

I would purely love life if we could "simply" submit proposed prices and then, using available knowledge of the market conditions, the CO would determine which price was the right price to pay, regardless of the costs we expected to incur. How can we make this happen?

You cannot make that happen for the biggest part of government contracting, which is for things for which there is no "market" in the economist's sense of that word. There are no market prices for weapon systems, custom-designed IT systems, and custom-specified long-term and complex services. The government will always have to determine price reasonableness through some for of cost analysis for those kinds of things..

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8 hours ago, Vern Edwards said:

Do you think an agency could get the Department of Justice to pursue the matter before a district court under some legal theory that you have not named?

I thought we agreed that specific performance is a remedy in government contracts. With or without a clause it would need to go to a district court under other than the Contract Disputes Act, as you mentioned. It seems reasonable that if the government contracts, in the cases you cited, had a specific performance clause it would make the courts decision easier.

8 hours ago, Vern Edwards said:

You cannot equate a real estate contract with a government contract for supplies, services, or construction.

It makes no sense whatsoever to include a "specific performance clause" in a government contract.

As a general rule, I agree. However, the government enters into many real property (real estate) contracts. This discussion wasn't limited to a particular type of government contract.

GSA enters into a lot of real property contracts and I now wonder if they have a specific performance clause. I know USACE is pretty good about creating clauses for their agency's purposes.

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Sigh.

Jamaal:

Please do some reading. You are lost in unfamiliar terrain. Read the text of the CDA, 41 USC Ch. 71. Then read Administration of Government Contracts 4th ed., Ch. 13, "Disputes" for elucidation.

The CDA does not cover contracts for the purchase of real property. It does cover contracts for leases of real property. I'm not sure this is the right forum If you're interested in Government contracts for the purchase of real property. That's a specialty field.

District courts have no authority under the CDA, except with respect to the Tennessee Valley Authority and claims involving fraud. It's a complicated matter. I'm sure you'll figure it out. Most of us don't think about the district courts unless we're dragged into fraud or criminal cases.

Specific performance is not available from the COFC and the BCAs.

All kinds of agencies create special clauses of their own. I presume that they comply with FAR Subpart 1.4.

Enjoy your studies.

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I did not know those details about CDA and the purchase of real property. Nonetheless, nobody argued that a contract for real property was subject to CDA. In fact, we prefaced the discussion and concluded that any action would be 'under other than the Contract Disputes Act'.

Either way, thanks for the information and discussion. I do have a lot of reading to do.

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On 11/29/2017 at 1:28 AM, Jamaal Valentine said:

Plus I listed an article that reviewed over 2,000 contracts and found the inclusion of specific performance in some contracts of every type.

Commercial real estate contracts, yes?

On 11/29/2017 at 10:10 AM, Vern Edwards said:

It's not interesting; it's silly. 

It may seem that way to the overtly pedantic, but the topic clearly goes to the whole meaning of a contract, and what you can 'do' with one. Is it a document to compel action, or is it a joint agreement towards a goal?   Does it show good faith and fair dealing on the part of the government to include a term such as that ? As Jamaal said, it IS used as a contract term, but within very specific  applications.  The conclusion is clearly that Specific Performance is not a contractual remedy in the general sense.  So why and why not?   

 It goes to the very heart of those 5 words which define the CO's mission: "In the Government's best interests".    We can't spend all of our time yammering over the treatment of indirect overheads.

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here_2_help:

I recently read the following in the Department of Defense Guidebook for Acquiring Commercial Items,  PART B: PRICING COMMERCIAL ITEMS:

"Determining a fair and reasonable price is easy when acquiring commercially available off-the-shelf (COTS) items. Determining a fair and reasonable price is
challenging when the commercial market does not exist for a specific item or when market price data is not readily available. Ultimately, the effectiveness of price analysis will depend on what meaningful data the Government successfully obtains to conduct the pricing analysis."

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