Federal contractors may enter into joint venture agreements to pursue and perform federal contracts and carry out specific business activities. Governed by the terms of the joint venture agreement, joint ventures are independent entities that typically exist separate and apart from their member firms. In the event the joint venture is awarded a government contract, it is this separate entity that is in privity with the government, not its member firms. Similarly, when a joint venture submits a claim and brings an appeal, it must do so in its own capacity. While each member firm possesses the requisite authority to act for or bind the joint venture, the member firms can agree otherwise in the joint venture agreement. In addition to the requirement that the appeal be brought by the contract holder, the person or entity bringing the appeal on behalf of the joint venture must have the necessary authority to do so under the terms of the joint venture agreement. An adjudicative forum’s jurisdiction over an appeal brought by a joint venture may depend entirely upon whether the person or entity bringing the appeal on behalf of the joint venture possesses the necessary authority to do so under the terms of the joint venture agreement.

Most aptly described as a legal fiction, the doctrine of constructive termination is invoked when the basis upon which the government contract was actually terminated is legally inadequate to justify the government’s actions. Stated another way, the doctrine of constructive termination is invoked to prevent the government’s breach of contract in case of an improper termination. Similar to termination for convenience, constructive termination is an option uniquely available to the government. The doctrine may be applicable as long as the contract, or a portion thereof, is actually terminated. Thus, in cases where the government has stopped the contractor’s performance for questionable or invalid reasons, the government’s actions can amount to a convenience termination under this doctrine. Notably, in such cases, the contractor is entitled to an amount it would otherwise be owed if the government had in fact terminated the contract for convenience. Consequently, the contractor may not recover for work not performed or any anticipatory profits. This means that fixed-price contracts or line items are essentially converted into a cost-reimbursement contract for the purposes of calculating the contractor’s recovery under the constructive termination.

The federal government has the right to unilaterally terminate contracts when it is in the government’s interest to do so. In the event of a termination for convenience, the contractor may typically submit its termination settlement proposal within a year of the termination. Since the contractor submits the settlement proposal primarily for negotiation purposes, it is not considered a claim under the Contract Disputes Act (CDA) when it is first submitted to the contracting officer (CO). Stated another way, the termination settlement proposal is considered an instrument of negotiation rather than a non-routine request for payment or a request for the CO’s final decision. For this reason, the costs of preparing a termination settlement proposal are also generally considered allowable. However, if the termination settlement proposal otherwise meets the requirements of a claim, it can be converted into a CDA claim if the parties’ negotiations reach an “impasse” and the contractor demands that the CO issue a final decision. In this context, an impasse means a deadlock or a point where a resolution through continued negotiations is unlikely when viewed from the perspective of an objective, third-party observer. Notably, whether the parties’ negotiations have reached an impasse is a question of fact, to be determined on a case-by-case basis.