The government may sometimes unilaterally direct the contractor to perform additional work outside the scope of the changes clause of a government contract. Such an order for alterations is a cardinal change and amounts to a breach. In order to establish that a cardinal change has occurred, the contractor must show that the work ordered by the government, either explicitly or impliedly, was beyond the contract requirements and materially different from what the contract specified. To determine whether a cardinal change exists, claim adjudicative forums compare the total altered work with the work included in the contract. If the alterations in the work are out of character with the work contemplated in the contract or require a level of effort reasonably unforeseeable at the time of formation, a cardinal change has occurred. In other words, a cardinal change exists when the government requests a unilateral change that so drastically alters the work that the contractor must essentially perform duties that are materially different from those it originally bargained for. While facts and figures involving the number of days of delay and performance cost increases may be helpful in understanding the extent of the additional work, establishing whether a cardinal change has occurred involves a highly fact specific inquiry that must look beyond such numbers alone, into the contractor’s entire undertaking. Once established, a cardinal change is a breach of contract and accordingly has the effect of freeing the contractor from its contractual obligations.

Government agencies have a prima facie case for default termination when a contractor fails to deliver performance in a timely manner. However, even when terminating the contractor on this basis, the government must exercise its broad discretion fairly and reasonably. In this regard, when the government elects to allow a contractor to continue performance past the contract completion date, it may waive the due date and thus its ability to terminate the contract for default for the contractor’s failure to meet it, provided two conditions are satisfied. First, the government fails to terminate within a reasonable period following the default, indicating forbearance. Second, the contractor relies on the government’s failure to terminate and continues performing under the terms of the contract with the government’s knowledge and express or implied consent. A waiver of the contract completion date under such conditions protects contractors who may be under the impression that time is no longer of the essence and, as a result, continue to expend significant effort and resources even after the performance deadline has passed. In construction contracts, the government’s imposition of liquidated damages after a performance date has passed or an express reservation of its rights in the performance deadline typically renders this waiver doctrine inapplicable. However, the completion deadline may be waived in construction contracts when the liquidated damages provision is not invoked or the government otherwise fails to adequately reserve its rights with respect to the completion deadline. Once the original completion deadline is waived, the government must establish a new deadline before it can terminate the contractor for default for failing to make progress.

Contractors may encounter delays when performing government contracts that increase the time or cost of performance. Contractors typically bear the risk of such increases for delays that are avoidable or otherwise within their control. When both the government and the contractor are responsible for a delay, neither party can recover damages unless the delay can be clearly apportioned and the increased expenses can be attributed to each party. To establish entitlement to an extension based on an excusable delay or to monetary damages for a compensable delay, contractors must demonstrate that the delay was caused by unforeseen events beyond their control and without their fault or negligence. In addition, contractors must show that the unforeseeable events delayed the overall contract completion timeline by impacting the critical path of performance. Notably, in cases involving a delivery schedule extended by the parties’ agreement, delays caused by either party before the agreement are excluded from consideration, so neither party may recover for delays before the date of the agreement. The government may terminate a contract for default due to the contractor’s failure to complete contract performance in a timely manner. Once terminated for this cause, the contractor may prove the excusability of the delay to convert the default termination into a termination for the government’s convenience. However, an impact on the overall schedule and the critical path must be demonstrated to establish the compensability of the delay.