The agency declined to exercise option years under the contract. The contractor alleged the agency declined the options in bad faith. The CBCA wasn’t convinced. To overcome an agency’s discretion to not exercise an option, a contractor must show almost irrefragable evidence of bad faith. The contractor in this case had not made the showing. Indeed, the contractor had a history of deficient performance. The agency was within its rights to decline the option years.
Brightwood Management Partners v. Department of Veterans Affairs, CBCA 7351
Background
Brightwood Management Partners had a contract with the Department of Veterans Affairs. The contract was for grounds maintenance at a national cemetery. The VA wasn’t happy with Brightwood’s performance. The VA issued Brightwood several contract discrepancy reports. When the base year was about end, the VA told Brightwood that it would not exercise the first option.
Brightwood submitted a claim alleging the VA acted in bad faith in not exercising the option. Brightwood argued it had been denied an economic expectancy. Also, Brightwood argued, without the ability to amortize costs over the options, it had lost money. The VA denied the claim. Brightwood appealed to the CBCA
Analysis
Bad Faith
Brightwood alleged the agency didn’t exercise the option because the VA wanted to use another contractor for the cemetery. Generally, contractors do not have a right to relief if the government declines to exercise an option. The only way to overcome the government’s discretion in exercising an option is to show the decision was made in bad faith or was so arbitrary as to constitute an abuse of discretion.
Brightwood had not made this showing. Brightwood had a history of performance issues. The agency was justified in not wanting to continue the contract.
Good Faith and Fair Dealing
Brightwood also alleged the VA breached the duty of good faith and fair dealing by not exercising the option years. But the duty of good faith and faith dealing cannot be used to expand a party’s duty beyond what’s in the contract. Here, the VA simply exercised a right it had under the contract—the right not to exercise an option. The VA had no good faith duty to exercise an option.
Brightwood is represented by S. Sadiq Gill of Gerson & Gill P.C. The government is represented by Krishon Gill-Edmond and Shawn Larson of the Department of Veterans Affairs
–Case summary by Craig LaChance, Senior Editor
