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    Government Contracting Database

    Economic Duress

    It is settled law that a Contracting Officer is under an obligation to deal fairly with a contractor and that he must always act in good faith within the ambit of his authority. In Re Appeal of Coastal Gov’t Servs., Inc., ASBCA No. 50283, 01 – 1 BCA ¶ 31353; Varaburn Ltd. & Lin Heng Engineering Ltd., Joint Venture, ASBCA No. 22177, 82 – 1 BCA ¶ 15,744; Warren Bros. Roads Co. v. United States, 173 Ct. Cl. 714, 720 (1965). The federal government possesses enormous leverage in its administration of a contract. It has been held, however, that a contracting party which reserves rights to dictate the details or to determine the consequences of contract performance imposes upon itself duties greater than those charged to other parties which do not do so. Thus the g government’s implied duty of fair dealing under its contracts must be judged on a different plane than in private contracts. Nash Janitorial Service Inc., GSBCA No. 6390 – R, 84 – 2 BCA ¶ 17,355.

    In Systems Technology Associates, Inc. v. United States, 699 F.2d 1383, 1386 – 87 (Fed. Cir. 1983) the court held that the concept involves three elements: “(l) an involuntary assent, substantially induced by (2) the lack of any other reasonable alternative (3) in circumstances either resulting from, or enhanced by, coercive acts of the opposite party.” The court further ruled that if an act violates notions of fair dealing, the act was coercive, even if lawful or proper. In other words, the standard focuses on the “coercive nature of the act as dispositive of its wrongfulness, and “looks more closely at the defeat of the will of the party coerced.” Ace Van & Storage, lnc. and Mission Van & Storage, Inc., ASBCA No. 23759, 83 – 1 BCA 16,547.

    Updated: July 30, 2018

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