Much like Taylor Swift's new album, the promise of relief and Closure¹ can come crashing down with Haunted disappointment when a request for equitable adjustment is answered with Treacherous release language. An equitable adjustment of time and/or money is normally a welcome sign that the government reasonably agreed that some Change to the contract occurred which warranted relief. However, contractors should Stay Stay Stay vigilant and not be blinded by the shiny object in the room before they read the fine print. A recent Civilian Board of Contract Appeals (CBCA) decision should provide contractors some pause and remind them that any bi-lateral modification containing release language may severely limit their future efforts for additional money or time for past constructive and actual changes made to a contract. Contractors would find Happiness with narrow, specific release language that ensures that the contractor can bring additional claims down the road.

The Board's Decision

The April 18, 2024, decision in Enfield Enterprises, Inc. (EEI) v. Department of Homeland Security found that a bi-lateral modification with broad release language barred EEI's monetary claim for delays caused by government changes and unforeseeable weather events. EEI, a Springfield, Massachusetts construction company, was awarded a task order by the U.S. Coast Guard (USCG) for the renovation of the Coast Guard Station in Grand Isle, Louisiana. The task order was originally awarded at a cost of $2 million with the date of completion of May 5, 2020. The parties modified the contract to increase the price and/or extend the period of performance four times. EEI was The Lucky One because the first three modifications contained no release language. 

By the fourth modification, however, the USCG was probably asking "Is It Over Now?" because it included language releasing it from future liability for the first time. The broad release included in the fourth modification released the USCG from any claims arising under "this contract or any modification" in exchange for the time extension. 

In August 2022, EEI submitted a claim to the contracting officer seeking $186,152.88 for delays due to government changes and unforeseeable weather conditions. EEI alleged that because of government errors and omissions that required modifications to the contract, its construction work was pushed into a period of adverse weather causing the delays. The contracting officer denied the appeal and EEI timely appealed to the CBCA.

The CBCA denied the appeal, finding that the "very broad" language of the release barred any relief. EEI had "agreed to release USCG from 'any and all claims and liability under or by virtue of this contract or any modification'" with no exceptions. The CBCA did not buy into EEI's argument that it was Out of the Woods because the release failed to mention weather delays because EEI's claim arose from other modifications to the contract, which pushed performance into a period of adverse weather.

We've Heard this Tune Before

This CBCA decision may seem like Nothing New for some. Contractors have heard this tune  before and those that ignored the fine print must either Shake It Off or just Tolerate It. In support of its decision, the CBCA cited a 1987 decision by the U.S. Court of Appeals for the Federal Circuit (CAFC) in Mingus Constructors, Inc. v. United States. In Mingus, the CAFC affirmed the Claims Court's dismissal of Mingus's appeal based on the contractor's release of claims. The contractor in Mingus had signed a Release of Claims form that provided that "after completion of all work, and prior to final payment, the contractor will furnish the United States with a release of all claims." Mingus executed the release but included the following statement: "Pursuant to correspondence we do intend to file a claim(s)—the amount(s) of which is undetermined at this time." The Claims Court rejected Mingus's argument that the exception made on the release was sufficient to put the government on notice as to specific claims. The CAFC affirmed the dismissal holding that the terms of the exception were "too broad to constitute a 'claim' under the terms of the contract." The Mingus decision advised contractors to Speak Now to protect their future claims from any release. Specifically, the CAFC cautioned that contractors should "investigate the existing facts before signing the required release, rather than merely listing on the release a vague intention to file a claim."

Steps to Avoid Barring Future Relief 

The End Game for contractors is to recover relief from the government without barring any future effort to seek further claims. The first option contractors can pursue is ensuring there is no release language in any bi-lateral modification the contractor is signing. This is the approach that EEI took in the first three modifications. Contractors can also choose to agree to release language in the modification but Mastermind that language to ensure that it does not prohibit future claims. The key here is to confirm there is no Blank Space or defect in the release language where the government could assert to the contractor that You're On Your Own, Kid, and that certain categories of future claims are included in the language of the release and necessarily barred.

Taking these steps when negotiating modifications granting equitable adjustments can ensure contractors have Peace when negotiating with the government.

Miller & Chevalier attorneys help contractors navigate the Labyrinth of requests for equitable adjustment and bi-lateral modifications and will continue to monitor and report on the emerging case law related to contract claims before the CBCA. If you have any questions regarding release language, requests for equitable adjustment, or contract claims in general, please contact one of the Miller & Chevalier attorneys listed below. 

Scott N. Flesch, sflesch@milchev.com, 202-626-1584

Alexandra S. Prime, aprime@milchev.com, 202-626-5940

Alex L. Sarria, asarria@milchev.com, 202-626-5822

Jason N. Workmaster, jworkmaster@milchev.com, 202-626-5893

Ashley Powers, apowers@milchev.com, 202-626-5564

Connor W. Farrell, cfarrell@milchev.com, 202-626-5925

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¹The authors include song titles from Taylor Swift's long and distinguished music career in this article – they are embedded and italicized throughout. Several authors are Swifties but two are not – you can guess who is who. Regardless, our lightheartedness is meant to humanize the practice of the government contract litigators at Miller & Chevalier Chartered. This article is not an endorsement by Miller & Chevalier of every Taylor Swift song – but maybe just a few. 

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