It is a common principle of contract interpretation that a court will not set aside the clear intent of the parties particularly when it comes to assignments or releases of claims. However, the unique legislative history of the Contract Disputes Act (“CDA”) grants the agency boards of contract appeals the power to set aside an assignment of a claim, if that assignment would waive the contractor’s right to appeal a Contracting Officer’s decision to the boards. A recent Armed Services Board of Contract Appeals (ASBCA) decision highlights this power, which is of great importance to contractors because they keep their right to file affirmative monetary contractor claims against the government and appeal government claims, such as a termination for default.
In Ikhana, LLC, the Armed Services Board of Contract Appeals held that an assignment of all claims to a surety in an indemnity agreement for a performance and payment bond in the event of a default did not prevent the contractor from bringing claims and an appeal of that default to the Board. ASBCA No. 60462. Ikhana entered into a contract with the Army Corps of Engineers to provide secured access lanes and remote screening facilities at the Pentagon. In October 2015, Ikhana filed four claims with the Contracting Officer. In December 2015, the Contracting Officer terminated the contract for default. On February 25, 2016, Ikhana appealed the termination for default as well as its four affirmative claims. The government then made a claim against Ikhana’s performance bond. Continue Reading Assignment of Claims to a Surety Cannot Waive A Contractor’s CDA Appeal Rights