terminations: a review of three recent publications

Terminations: A Review of Three Recent PublicationsGovernment Contract Default Termination by Walter F. Pettit; Carl L. Vacketta; David V.Anthony; Simplifying Contract Terminations, 2d Ed by Margaret C. Rumbaugh; ConstructionDefaults: Rights, Duties, and Liabilities by Robert Cushman; Charles MeekerReview by: James F. NaglePublic Contract Law Journal, Vol. 21, No. 2 (Winter 1991), pp. 323-329Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/25755662 .

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Book Reviews

specifically designed to numb the brain with a flood of citations and polysyllabic and Latin words. It is a practical, down-to-earth

(as befits the topic) treatment that is written in clear, concise

language, logically presented and authoritatively supported. The case citations are to the point and well selected. I heartily recom

mend this book to those of you involved in construction contracts,

representing either prime or subcontractors. I also recommend that your clients keep it close at hand because its commonsense

approach, which emphasizes early problem identification and vari ous ways to solve such problems, constitutes advice that they should take to heart.

Terminations: A Review of Three Recent Publications

Terminations for default and convenience are of vital interest in

public contracts, yet surprisingly little scholarship has been devoted to them. Certainly the law reviews and trade magazines contain articles dealing with types of excusable delays and expounding on the vagaries of excess reprocurement costs, and the treatises on

government contracts have large sections devoted to terminations, but until recently there had been a real dearth of book-length publications devoted exclusively to that topic. Now three books

deal with the subject but because of their different focus and audi ence, they complement rather than compete with each other. I

decided the best way to review them is to present all three and

highlight their differences.

Government Contract Default Termination

Walter F. Pettit, Carl L. Vacketta and David V. Anthony

Published by Federal Publications, Inc., 1991.

Although this book is entitled Government Contract Default Termi nation, it refers often to the Uniform Commercial Code, the

Restatement of Contracts, and the Common Law, both to give a

historical understanding of the concepts of default termination and to fill any voids in the federal regulations and case law. Because the book's sixteen chapters are written by different authors, and

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Public Contract Law Journal

because the subject matter changes so drastically, the amount of

time the individual authors spend on the U.C.C. or the Restate

ment will vary. For example, Chapter 5, dealing with anticipatory

repudiation, has an excellent discussion of the Uniform Commer

cial Code and the Common Law, as might be expected since none

of the standard federal default clauses lists anticipatory repudica tion as a grounds for default.

The book is organized as follows. Part One, the introduction, covers Chapters 1 and 2. Chapter 1 is a standard chapter in all the Federal Publications Government Contracts texts. It describes the

book, its organization and provides a guide to its use. Chapter 2

covers the default clause itself. It gives a historical overview and

lists the current clauses and how they work. It really is a mini

distillation of the rest of the book. Part Two covers grounds for termination. Chapter 3 deals with

failure to deliver or perform; Chapter 4 failure to make progress; Chapter 5 anticipatory repudiation. I particularly enjoyed Chapter 6, "Breach of Other Provisions," because that is an open-ended

subject not often fully explained. Especially informative was the discussion of terminations under independent clauses such as the

gratuities clause, the officials not to benefit clause and the cove

nant against contingent fees clause. That discussion of other bases

for terminations, many of which have their own rules, will benefit

any reader.

The book then logically proceeds to Part Three, "Contractor

Defenses." Chapter 7 covers excusable delay and gives a wonder

ful historical perspective to the concept of excusable delay before

launching into a discussion of the enumerated and unenumerated, but well-recognized, excusable delays. Chapter 8 is devoted exclu

sively to changes in and suspension of work. Chapter 9 concerns

other government-caused delay; Chapter 10 is defective specifi cations and impossibility; while Chapter 11 discusses waiver of due date.

Part Four then deals with government remedies. Chapter 12

addresses excess costs of reprocurement; Chapter 13 focuses on

other remedies and covers the recovery of unliquidated progress

payments, the right to supply contract materials and inventory, and damages for breach of contract. Chapter 14 explains liqui dated damages, including contractor defenses such as concurrent

delay and substantial completion.

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Book Reviews

Part Five deals with procedures. Chapter 15 analyzes govern ment procedures, specifically the standard notices that the govern ment must give, the government's termination decision-making process, and its post-termination procedures. Here there is some

overlap with other sections such as the section on excess repro curement costs but the book is excellently cross-referenced. Chap ter 16 deals with contractor procedures and explains the different

procedures available under supply and service contracts, cost

reimbursement contracts and construction contracts, and concludes

with how to contest the termination.

Part Forty-nine is the part devoted to terminations in the Federal

Acquisition Regulatory System. The book's thirteen appendices contain these parts from the FAR, the DFARS and various agency

supplements. Because the book is published by Federal Publications, it contains

the standard Federal Publications index. The benefit of this is that if you have used that index in any other Federal Publications texts

and periodicals, such as the Government Contractor or Yearbook

of Procurement Articles, and found exactly the subject matter you need, you will be able to find it equally readily in this volume. Also, the book includes citations to the Government Contractor

series in its case citations. I have always found that to be particu

larly helpful, especially if the Government Contractor contains a

note interpreting the case and its significance because those notes are uniformly insightful.

I do have one criticism of the book and that is a personal one.

I like references to law review articles. Such references direct the

reader to a particular article on point to find a much more in

depth analysis than is available in the volume itself. Very few law review or similar articles are cited in this book. When they are,

they are primarily to the Federal Publications Government

Contracts Briefing Papers series. I have no quarrel with that excel

lent series but sometimes these are cited to the exclusion of more

recent works. For example, citing a 1965 briefing paper on "The Weather" as an excusable delay and not citing a much more recent

law review article on the subject, such as Howell, Unusually Severe

Weather in Government Construction Contracting, 23 Air Force L.

Rev. 156 (1982-1983), is not particularly helpful to the reader. Nevertheless, such picayune and personal criticisms do not detract

from the fact that this is a major contribution to the government contracts field.

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Simplifying Contract Terminations, 2d Ed.

Margaret C. Rumbaugh

Published by National Contract Management Association, 1991.

My time with the government taught me to disclose all possible conflicts of interests to avoid even the appearance of impropriety. So I begin this review by acknowledging that when the author had finished writing the second edition of this book, she sent me, and several other people, a draft copy for comments. I did so, and some of my comments were incorporated into the final version.

That was my only part in the development of this book, and from

my obviously jaundiced viewpoint, does not disqualify me from

reviewing it. I shall, of course, not comment on the incisive, if not

brilliant, comments that were incorporated into the book at my

suggestion. This is an excellent book, but you must understand its purpose

and intended audience. The book is written by contract managers for contract managers. It is designed primarily for people who need a step-by-step approach to educate them on the termination pro cess and to refer them to more detailed outlines and materials if

that becomes necessary. If you are looking for a book chock-full of citations to cases and articles to help you prepare a brief arguing that ten inches of snow in Buffalo, New York is unusually severe

weather, this book is not what you need. It is not a law book, and it cites only a handful of cases, and only those that are truly land

marks in the subject, such as G. L. Christian & Assoc. v. United States and Torncello v. United States. It does, however, have a

worthwhile reference section which lists the principal books, arti

cles, regulations, clauses, and theses that Ms. Rumbaugh has relied

upon in compiling this book. Unlike the Federal Publications text, this book deals with both

terminations for convenience and default. It takes readers step by step through the termination for convenience process and gener

ously cites to the forms required. It also has a separate appendix for calculating unabsorbed overhead. Besides a chapter on termi nation for convenience and a chapter on termination for default, the book also has a chapter on subcontract considerations and the

complex relationships that must evolve between the prime and the

sub, and sometimes directly with the government itself.

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Book Reviews

The book then elaborates on the basic settlement principles and

the financial considerations of settlement and goes into great detail on loss adjustment calculations and the applicability of the Prompt Payment Act. The book also has a generous list of figures and

sample letters to help. This book is a wonderful roadmap through the process with plenty of signposts telling the reader where to go for more detailed information. It satisfies its title?it simplifies what can be a process filled with hair-pulling frustration.

Construction Defaults: Rights, Duties, and Liabilities

Robert Cushman and Charles Meeker, Editors

Published by John Wiley and Sons, 1989.

This third book in our trilogy, unlike the Rumbaugh book, focuses

solely on terminations for default but, unlike the Federal Publications book, it does not focus only on federal contracts. This

book deals exclusively with construction contracts defaults but

treats the subject on the federal, state, local, and private levels.

Because, however, most of the issues dealing with terminations for

default apply regardless of whether the contract is a construction

contract or a supply contract, this book will have value to many members of the section, especially since many of the people affected

by and involved in the construction default process will not be

construction companies but material suppliers and services

companies. This book is particularly timely. The Surety Association of

America and the National Association of Surety Bond Producers

announced that over 7,000 construction firms go out of business

annually and the failure rate among construction companies which

have been in business between six and ten years is the highest fail

ure rate in that age group of all industries covered by industry reports in the country. Most of those business failures are either

preceded by or immediately followed by default terminations of one or all of the company's contracts.

Construction contracts typically involve more types of parties than the usual government contract. Because of that and because

each of these characters will have a differing viewpoint, rights and

responsibilities in a termination for default, the editors have wisely

327




assembled a variety of authors who specialize in representing the

entities they discuss in their respective chapters.

Chapter 1, for example, is entitled "Representing the Architect

and Engineer," but does not focus on the subject of defaults. It

does, however, cover the A&E's liability and discusses the potential claimants, ranging from the owner, the contractor, subcontrac

tors, sureties, lenders, investors, prospective tenants and others.

Those principles can certainly be applied in a default because it is

typically in a default situation in which those claimants turn liti

gious. Chapter 2 deals with representing the subcontractor and

supplier and has an excellent discussion on bankruptcy which really

applies to all the different claimants. Chapter 3 deals with repre

senting the general contractor in default and is replete with prac tical fact situations.

Chapter 4 is a particularly interesting chapter. It is entitled

"Representing Other Primes on the Project," and deals with that

situation, very common in construction contracts and becoming more common in supply and services contracts, in which a variety of primes are working in the same area. So it is difficult for the

government to coordinate all these contractors without construc

tively delaying some of them. Chapters 5 and 6 deal, respectively, with representing the performance and payment bond sureties.

For those who are interested in that topic the American Bar Asso

ciation came out with an excellent book a few years ago, "The

Bond Default Manual." Chapter 7, dealing with representing the

liability insurer, addresses a subject not often considered but vitally

important. Similarly, Chapter 10 deals with representing the lender, again an entity not often considered. Chapters 8 and 9 deal

with the public owner and the private owner, respectively. Members of this section will find Chapter 8, "Representing the Public Owner," especially helpful since it was written by Don Gavin, a former chair of this section, and Steven West and Robert

Caporossi. The first ten chapters deal with "representing" but the last three

take a somewhat different perspective. They are entitled "The

Role of and deal with the consulting engineer and claims consult ant, the accounting firm and the completing contractor. These

entities are not necessarily adversaries and so do not need separate

representation, but understanding the effect they can have on the

default process is especially important.

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Book Reviews

Because of its treatment of the smorgasbord of characters,

unfortunately much duplication occurs in the book, especially in the performance bond and bankruptcy areas, and it might have

been helpful to have divided each chapter into law and tactics. Nevertheless, the completeness of this book, indeed the unique perspective of some of the entities represented, makes this an

extremely valuable book to any practitioner. These three books taken together comprise a truly outstanding

library on terminations. Unlike their subject matter, they are

commendable.

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terminations: a review of three recent publications

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