Welcome to this glamorous, star-studded, 12th biannual Contract Disputes Act (CDA) case law update covering the winners and the losers in the second half of 2025 and following up on our summary of noteworthy decisions from the first half of 2025 published in THE GOVERNMENT CONTRACTOR. 1 As Conan O'Brien has a scheduling conflict, we will be your hosts for this evening of entertainment. But in lieu of an extended opening monologue, please don your finest red carpet attire and allow us to guide you through the many worthy nominees under our perhaps less-thanconventional award categories.
Most Dramatic: Termination
The most coveted awards relate to the drama categories, and in CDA claims nothing is more dramatic than a termination. The boards of contract appeals and the U.S. Court of Federal Claims addressed multiple genres of termination-related claims in the second half of 2025, and while likely none of the claimants would say it was "an honor to be nominated," movie-goers (readers of this BRIEFING PAPER) have much to learn from their experience.
First, in Medical Receivables Solutions, Inc.,2 a contractor tripped while walking up to the terminations stage (erm, submitting their termination settlement proposal or TSP) by accepting a partial payment from the government post-termination that contained a release barring future claims for additional costs. In response to the contractor's TSP, the government offered to pay less than a quarter of the amount proposed. The contractor disputed the calculation but expressed interest in receiving payment for the amount not in dispute as quickly as possible. The government issued a purchase order and bilateral modification to effectuate the payment, which provided in relevant part: "The Contractor unconditionally waives any charges against the Government arising under the terminated portion of the contract by reason of its termination."3 The contractor signed the first page of the modification and submitted an invoice for payment, which the government paid. When the contractor brought an appeal seeking the remainder of its claimed termination expenses, the Armed Services Board of Contract Appeals (ASBCA) agreed with the government that the plain language of the release barred any further recovery.4 To prevent a teary situation like the hospital scene in prior winner Terms of Endearment, contractors should carefully review any modifications for language that may release or satisfy pending liability.
Second, in Texas Industrial Security, Inc. v. General Services Administration, 5 the contractor would have benefited from a different screenwriter or director to guide its post-termination submissions. After the government terminated the contractor for convenience, the contractor brought an appeal requesting the Civilian Board of Contract Appeals (CBCA) "suspend the contract cancellation and effectively reinstate performance."6 The board held "that type of specific performance is a remedy that the Board does not possess jurisdiction to order."7 The board cited the CDA itself for this proposition, which provides the boards of contract appeals "may grant any relief that would be available to a litigant asserting a contract claim [under the CDA] in the United States Court of Federal Claims."8 Because the "Court of Federal Claims lacks authority under the CDA to issue injunctive relief, including to direct performance of a terminated contract," so does the board.9 The board recounted that while terminations for default are immediately appealable government claims, terminations for convenience are not, meaning the board lacked jurisdiction over the dispute until the contractor presented a claim for compensation to the contracting officer. Regardless, the board noted that the contract at issue was a General Services Administration Schedule contract, which has a mutual cancellation clause permitting cancellation upon 30 days' notice. Even if the government may have exercised this cancellation right "indelicately," the board could neither order reinstatement of the contract nor order damages.10
Third, while box office receipts may not be a factor at the Oscars, how termination settlement proposals are calculated is vitally important to recovery for contractors. The Court of Federal Claims considered how to calculate "just compensation" in Intelligent Investments, Inc. v. United States. 11 To set the stage, a key decision point is whether the contractor calculates its termination settlement on a "total cost" basis (which focuses on the total costs the contractor incurred up to the effective date of termination) or an "inventory" basis (which instead focuses on valuing in-progress work and remaining inventory).12 In the instant decision, the government sought summary judgment arguing that the contractor's claim was meritless because the Federal Acquisition Regulation (FAR) requires advanced approval by the contracting officer before a contractor may use a total cost basis, and the contracting officer did not grant such approval.13 The court declined to grant judgment on the method of accounting, observing that the contract did not incorporate FAR 49.206-2 (requiring contracting officer approval), and finding "dubious the Government's contention that selecting the method of accounting is a decision solely controlled by the Government," as "[s]uch a reading would make superfluous other parts of FAR Subpart 49.2, which explain in more general terms that a request for equitable adjustment must be equitable."14 The court reasoned that the government's argument reduced to a contention that "because the Contract was fixed-price, use of the inventory basis is required as a matter of law," a contention which was flawed because FAR 49.206-2 "is explicitly written for fixed-price contracts [and] offers a non-exhaustive list of examples where use of the total cost basis might be appropriate, thus expressly contemplating scenarios where the total cost basis might be used."15 Because the government had submitted no facts addressing these scenarios other than the fact that the contract was firm fixed price, the court declined to issue summary judgment on which accounting basis was appropriate.16
Fourth, the Academy (erm, ASBCA) found the government had "lost the plot" in Targe Logistics Services Co., 17 which involved the appeal of the government's denial of termination costs arising out the Army's termination for convenience of a logistics service provider's contract after the U.S.'s withdrawal from Afghanistan. The Army sought to amend its answer to include the affirmative defense of material breach of contract, on the theory that the contractor (whose inventory was seized by the Taliban as the U.S. withdrew) had failed to obtain required insurance for its lost assets. The board found this defense "futile and not necessary," holding that if the Army wanted to hold the contractor responsible for breach, then it should have terminated the contract for default in the first place: "The government waived its right to assert a prior material breach claim to avoid paying legitimate termination settlement costs when it chose to terminate the contract for convenience."18 But, that did not mean the government could not raise the contractor's purported failure to obtain sufficient insurance as a defense to the contractor's entitlement to its claimed termination costs (which included the costs for the lost fuel and equipment), because contractors have a duty to avoid costs on a terminated contract. As such, the board denied the government's motion to amend its answer but provided guidance for the future production (er, proceedings).19
Best (Worst) Reprise: Covid Claims And The Sovereign Acts Doctrine
Some themes arise again and again in cinema; on the CDA silver screen, the COVID-19 pandemic is a repeat muse of judges and litigants alike. In the latter half of 2025, the ASBCA issued two decisions grappling with pandemic impacts and the scope of the sovereign act doctrine, which, like some acceptance speeches, have lingered on far longer than most audiences desire.
For example, the ASBCA found the Navy's extended closure of the Atlantic Undersea Test and Evaluation Center (the Center) on Andros Island, Bahamas to constitute a sovereign act in Haskell Co. 20 The contractor, hired to build austere housing quarters at the Center for a firm fixed price, submitted a claim for increased costs incurred due to the Center's closure to non-essential (to include the contractor's) personnel for approximately one year. During the facility closure, the contractor continued work to the extent possible, to include completion of the project's design phase and preparatory efforts for the construction phase. The contractor warned that the government's failure to promptly issue a notice to proceed with the construction phase would result in increased costs, but the government did not fully reopen the facility until March 2021. The contractor subsequently submitted a claim for additional time and monetary damages, and the contracting officer granted a time extension but denied monetary relief. On appeal, the ASBCA largely agreed that the contractor's exclusion from the Center was a sovereign act barring recovery because the government closed the Center to protect public health and applied generally. The closure did not target the contractor. Given its conclusion that the closure was a sovereign act, the ASBCA declined to investigate the reasonableness of maintaining the closure even after other Navy installations reopened as the contractor requested. The board found it relevant that the contract included FAR 52.249- 10, which permits the contractor extra time in the event of delays caused by sovereign acts, epidemics, and quarantine restrictions but "does not authorize additional compensation."21 As such, the contractor was not due any additional costs caused by the closure. Of note, the contractor also claimed costs resulting from allegedly changed conditions at the Center post-reopening. The board found those costs potentially recoverable, but ongoing disputes of material fact prevented resolution at this juncture.22
Conversely, in HECO Pacific Manufacturing, Inc., 23 the ASBCA rejected the government's attempt to avoid liability for increased pandemic-related costs on the basis of sovereign act doctrine. This appeal involved a 2016 ontract for cranes; the contractor argued that government delays pushed performance into the pandemic, resulting in higher costs to include costs resulting from pandemic mitigation measures (masks, time spent hand washing) and increased shipping expenses, as well as changed site conditions. After the government denied the claim, the contractor appealed, and the government moved for summary judgment on three bases. The board denied all three. First, the board found the government's reliance on a modification, which included release language and settled two pre-pandemic requests for equitable adjustment, misplaced, holding that the modification related only to previously incurred costs. Although the release language itself was broad, the board found the costs at issue were incurred complying with COVID-19 requirements imposed by the government after the modification was executed, and thus were not released or covered by the modification. Second, the government invoked a prior appeal (BCI Construction USA, Inc.) 24 for the proposition that the government is not liable for increased costs caused by delays pushing the period of performance into the pandemic's era of historically high costs because the pandemic was not foreseeable. The board rejected this defense as well, as the contractor submitted the claim at issue in September 2020, at which point the pandemic's impacts were eminently foreseeable. Third, the board rejected the government's invocation of the sovereign acts doctrine, at least at this juncture, because the contractor "denies that its claim is premised upon imposition of the COVID requirements themselves, basing it instead upon the government delaying its performance into the period they were imposed."25 The board analogized the contractor's argument to a weather delay that pushes performance into a more experience timeframe. The government had not presented evidence the delays themselves were caused by sovereign acts and therefore had failed its burden on summary judgment.26
Footnotes
1 Kara Daniels & Amanda Sherwood, "Feature Comment: Camp CDA: Fun and Games With Case Law Developments in the First Half Of 2025," 67 GC ¶ 177 (July 23, 2025).
2 Medical Receivables Sols., Inc., ASBCA No. 64036, 2025 WL 2166199 (July 15, 2025).
3 Medical Receivables Sols., Inc., ASBCA No. 64036, 2025 WL 2166199 (July 15, 2025).
4 Medical Receivables Sols., Inc., ASBCA No. 64036, 2025 WL 2166199 (July 15, 2025).
5 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025).
6 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025).
7 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025).
8 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025) (citing 41 U.S.C.A. § 7105(e)(2)).
9 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025) (citing 41 U.S.C.A. § 7105(e)(2)).
10 Texas Indus. Sec., Inc. v. Gen. Servs. Admin., CBCA 8467, 2025 WL 3498013 (Nov. 28, 2025) (citing 41 U.S.C.A. § 7105(e)(2)).
11 Intelligent Invs., Inc. v. United States, 178 Fed. Cl. 143 (2025).
12 See FAR 49.206-2.
13 Intelligent Invs., Inc. v. United States, 178 Fed. Cl. at 148.
14 Intelligent Invs., Inc. v. United States, 178 Fed. Cl. at 148.
15 Intelligent Invs., Inc. v. United States, 178 Fed. Cl. at 149.
16 Intelligent Invs., Inc. v. United States, 178 Fed. Cl. at 149.
17 Targe Logistics Servs. Co., ASBCA No. 63282, 2025 WL 3781250 (Dec. 10, 2025).
18 Targe Logistics Servs. Co., ASBCA No. 63282, 2025 WL 3781250 (Dec. 10, 2025) (citing New York Shipbldg, Co., A Div. of Merritt-Chapman & Scott Corp., ASBCA No. 15443, 73-1 BCA ¶ 9852 at 46,020, 1972 WL 1601 (Dec. 21, 1972).
19 Targe Logistics Servs. Co., ASBCA No. 63282, 2025 WL 3781250 (Dec. 10, 2025).
20 Haskell Co., ASBCA Nos. 63332, 63586, 2025 WL 3242425 (Oct. 1, 2025).
21 Haskell Co., ASBCA Nos. 63332, 63586, 2025 WL 3242425 (Oct. 1, 2025).
22 Haskell Co., ASBCA Nos. 63332, 63586, 2025 WL 3242425 (Oct. 1, 2025).
23 HECO Pac. Mfg., Inc., ASBCA No. 63217, 25-1 BCA ¶ 38,902, 2025 WL 2684322 (Sept. 4, 2025).
24 BCI Construction USA, Inc., ASBCA No. 62657 et al., 24-1 BCA ¶ 38,522, 2024 WL 773324 (Feb. 6, 2024).
25 HECO Pac. Mfg., Inc., ASBCA No. 63217, 25-1 BCA ¶ 38,902, 2025 WL 2684322 (Sept. 4, 2025).
26 HECO Pac. Mfg., Inc., ASBCA No. 63217, 25-1 BCA ¶ 38,902, 2025 WL 2684322 (Sept. 4, 2025).
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