ASBCA Declares Material Breach, Allows Contractor To Stop Work

In a declaratory action in SUFI Network Servs., Inc. (Aug. 18, 2004), the Armed Services Board of Contract Appeals agreed with the contractor supplying telephone services to Air Force lodgings in Germany that the Air Force had improperly directed it to allow lodging guests to use their calling cards from the contractor's phones and thereby avoid paying long-distance charges to the contractor. Because this resulted in a significant diminution of the contractor's revenues, the board also found the AF direction to be a material breach which allows the contractor to stop work and collect lost profit damages.