CBCA Denies the Government’s Motion for Summary Judgment Based on an Issue of Fact Regarding the Contractor’s Reservation of Rights via a Transmission Email

In Fortis Industries, Inc., CBCA 7967 (Sept. 18, 2024), the Civilian Board of Contract Appeals (CBCA) denied in part the government’s motion for partial summary judgment on the issue of whether the contractor released its claims by signing a modification terminating the contract for convenience. During contract performance, the General Services Administration (GSA) imposed monthly deductions to contract payments as a response to certain performance issues. GSA later proposed to terminate the contract for convenience and sent a contract modification stating that all obligations under the contract were concluded except payment for work performed in June 2022. The contractor signed the modification but stated in its transmittal email that it was owed payment for services in May 2022 as well. 

When the GSA contracting officer later denied the contractor’s claim for recovery of the monthly deductions, the contractor appealed to the CBCA. On appeal, GSA sought summary judgment, citing the executed contract modification. The CBCA denied that motion as it pertained to payment for services provided in May and June 2022. The CBCA held that whether the contractor’s transmission email reserved its rights to payment for services provided in May 2022 was “a factual matter that need[ed] further development,” because the correspondence indicated that the parties may not have intended to release the May 2022 deduction claim.

This holding is consistent with a decision issued by the Armed Services Board of Contract Appeals’ (ASBCA), NMS Management, Inc., ASBCA No. 61519 (Apr. 11, 2019) which we reported on here. In that decision, the ASBCA also addressed a government motion for summary judgment based upon the contractor’s execution of a contract modification, holding that the plain meaning rule required consideration of not only the modification but also the contractor’s transmittal email, which had included a reservation of the contractor’s rights. This case is another reminder to contractors of the importance of carefully reviewing the terms of any release, and reserving rights in writing when appropriate.