Keeter Trading Co. v. United States
79 Fed. Cl. 243 | United States Court of Federal Claims | 2007
What This Case Means for Subcontractors
The USPS terminated a mail delivery contract with Keeter Trading Co. for default, but the court voided the termination. The government had unilaterally changed the contractor's service duties beyond what the contract allowed without getting mutual agreement. The court ruled this violated the contract's Changes clause, making the default termination improper. This matters to subcontractors because it protects you from being terminated for default when the owner makes unauthorized changes to your work scope.
Key Takeaways
- •If your contract has a Changes clause with a dollar threshold for unilateral changes, the owner cannot exceed that threshold without your written agreement—even if they claim it's necessary.
- •Document every service or scope change the owner requests or imposes. If they exceed the contract's change threshold without a formal amendment, you have grounds to challenge a default termination.
- •A default termination can be voided if the owner breached the contract first by making unauthorized changes. Don't accept blame for non-performance caused by the owner's unilateral scope creep.
Default termination was improper; government breached contract's Changes clause.
Frequently Asked Question
Can an owner terminate me for default if they changed my work scope without my agreement?
No. If your contract requires mutual agreement for scope changes above a certain dollar amount, the owner cannot unilaterally exceed that threshold and then terminate you for default. The court will void the termination because the owner breached the contract first. Always get changes in writing and track whether they exceed your contract's change threshold.
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