The Navy terminated Universal Shelters' contract for cause after the company's containment structures failed wind resistance tests during installation on a ship. The court agreed the termination was justified because the structures didn't meet the contract's wind speed specifications. However, the court ruled it lacked the authority to award the government reprocurement costs at that time. This case shows that even when a contractor fails to perform, the government may face limits on recovering additional costs.
Design specifications matter: If your contract includes performance standards (like wind resistance), you must meet them exactly or face termination for cause. Test early and document compliance.
Cure notices are your warning: When the Navy issued a cure notice, Universal had a chance to fix the problem. Respond quickly and thoroughly to cure notices or risk losing the contract.
Termination for cause can stick: Courts will uphold terminations when you fail to meet technical specifications, even if the government can't immediately recover all damages.