Court Reaffirms Government’s Duty To Act In Good Faith Under Its Contracts

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The Court of Federal Claims recently reiterated the basic principles of the government’s duty to act in good faith and engage in fair dealing under its contracts.  The case involved a contracting officer’s allegedly improper review of a claim brought by the contractor.  In rejecting an argument by the government that the government’s duty could only apply to its explicit obligations under a contract, the Court held that the duty “addresses the parties’ reasonable expectations that may not have been embodied in explicit contractual language.”  The Court noted that the government’s obligation to perform the contract in good faith “emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.” The Court also noted that a contractor did not have to meet the high standard of showing bad faith by the government in order to show the government violated its duty to act in good faith.  By way of example, the Court noted that the duty could be violated by actions which were candid but unfair.

 

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