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An Oral Government Contract Can Exist

Posted on August 17th, 2016 by

In the Appeal of Academy Partners, Inc. v Department of Labor (August 11, 2016), the Civilian Board of Contract appeals refused to toss out a case based on an alleged oral agreement.  The contractor had a contract with the DOL to perform maintenance services on computer servers. The Government did not exercise an option to renew the contract after the base period ended. The contractor, however, continued to perform maintenance services after the base period, claiming that the DOL promised that it would renew the contract.  The DOL never did so.

The Contractor argued that an oral agreement existed and the DOL must pay for the services provided after the base period ended.  The DOL filed a motion to dismiss the appeal for “lack of subject matter jurisdiction or, alternatively, for failure to state a claim upon which relief may be granted.”

The Board denied the DOL’s motion, concluding that an oral agreement or “implied-in-fact contract” might exist based on the parties’ conduct. The Board noted that “the documentary evidence necessary to prove the existence of an oral express contract need not include a formal contract” and that “a contractor can allege the existence of a contract with the Government for the continued performance of an expired contract when the Government fails to timely exercise an option. “

This case is very instructive for those who seek compensation based on the Government’s verbal promise to pay.

 

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