Unsure About the Standard of Review in Appeal of a Default Termination? This Split Decision from the Federal Circuit May Leave You Wanting.

The CBCA found a default termination improper. The government appealed to the Federal Circuit, which reversed and remanded. A majority held the CBCA didn’t apply the proper de novo standard of review. A dissenting judge, however, opined that remand back to the CBCA was a waste of time.

Department of Transportation v. Eagle Peak Rock & Paving, Inc., Fed. Cir. 2021-1837

• Procedural History– The agency terminated a contract for default. The contractor appealed to the CBCA. The board found the termination was improper. The government appealed to the Federal Circuit. A majority of the Federal Circuit vacated the board’s decision and remanded for a new determination. 

•  Performance-Based v. Pretextual – The court noted that when reviewing a termination, a board must determine, as a threshold matter, whether the termination was based on actual problems with performance or whether it was pretextual. The court found the CBCA erred by not making an express finding on the threshold performance/pretext issue.

• De Novo Review – The court noted an appellate tribunal must review a termination for default de novo. In this case, the majority held the CBCA did not assess the evidence de novo. Instead, the board focused too heavily on what the contracting officer considered in making the termination decision. The court reasoned the board focused too much on the contracting officer’s subjective beliefs about the termination. Instead, the board should have reviewed the record de novo and not worried about whether the contracting officer reasonably terminated. 

• Dissent – One of the judges on the panel dissented from the majority. The dissenting judge opined that a remand was unnecessary. The facts of the case were not in dispute. The CBCA had made its position clear. The court itself could simply conduct the required do novo review of the termination. A remand just wasted time.

The government is represented by Ashley Akers, Brian M. Boynton, and Patricia M. McCarthy of the Department of Justice as well as Rayann L. Speakman of the Federal Highway Administration. Eagle is represented by David Wonderlick, Bennett J. Lee, and Louis Pessagno, Jr. of the Varela, Lee, Metz & Guarino LLP.

–Case summary by Craig LaChance, Senior Editor