Textron Defense Systems v. Sheila E. Widnall, Secretary of the Air Force
143 F.3d 1465 | Court of Appeals for the Federal Circuit | 1998
What This Case Means for Subcontractors
Textron contracted with the Air Force on a cost-plus-award-fee research project. When the Air Force terminated the contract for convenience before completion, Textron claimed it deserved a partial share of the unearned award fees. The Federal Circuit Court ruled against Textron, holding that the contract's award fee clause was explicitly exempted from the termination clause. This means Textron got only what it earned—no payment for work it never performed.
Key Takeaways
- •Award fee clauses can be written to exclude termination protections. Review your contract language carefully to see if fees are protected or excluded when work stops.
- •You cannot claim payment for unperformed work, even on cost-plus contracts. The contract's plain language controls, not your expectations about what you might have earned.
- •Incremental funding and contract modifications do not guarantee future payments. Each funding allotment is separate, and termination cuts off all unearned compensation unless the contract explicitly protects it.
The plain language of the contract clearly exempts the Award Fee from the Termination clause.
Frequently Asked Question
If my contract is terminated for convenience, can I get paid for award fees I didn't earn yet?
Not if your contract exempts the award fee from the termination clause. Courts enforce the plain language of the contract. You are only entitled to fees you actually earned through completed work. Always check whether your award fee clause is protected or excluded from termination provisions before signing.
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