The Armed Services Board of Contract Appeals (ASBCA) recently issued an important decision explaining when a federal agency may terminate a contractor for default before contract performance is complete. In Jaxon Construction, Inc., ASBCA No. 64432 (June 24, 2026), the board recognized that although the contractor may have committed numerous performance deficiencies, the Army failed to satisfy its legal burden of proving that a pre-completion default termination was justified. As a result, the board converted the default termination into a termination for the convenience of the government.

While the decision was issued under ASBCA Rule 12.2 and has no precedential value, it provides valuable guidance regarding default terminations, cure notices, anticipatory repudiation, contractor performance, and the government’s burden of proof under the Contract Disputes Act and the Federal Acquisition Regulation (FAR).

Quick Answer: Why Did the ASBCA Overturn the Default Termination?

The ASBCA held that the government failed to prove there was no reasonable likelihood that Jaxon Construction could complete the project within a realistic performance period. Although the contractor allegedly missed critical deadlines, submitted deficient preconstruction submittals, and had not started physical construction, the evidence demonstrated that winter weather delayed roofing work, government personnel acknowledged the likelihood of a winter suspension, the alleged deficiencies were never communicated to the contractor before termination, and the contractor continued attempting to perform rather than refusing performance.

Background of the Dispute

The Army awarded Jaxon Construction a firm-fixed-price contract valued at approximately $438,765 to remove and replace an ethylene propylene diene monomer (EPDM) roofing system at Rock Island Arsenal. The contract required completion within 80 working days after the notice to proceed and required submission of multiple administrative, quality control, technical, and safety documents before construction could begin. Jaxon experienced difficulties prior to the start of performance, including access to the roof. Required schedules, quality control plans, and safety documents were submitted late or rejected as deficient. The contractor also failed to begin physical roofing work before the Army issued a cure notice and ultimately terminated the contract for default. Jaxon appealed the termination, arguing that the government’s decision was legally unsupported and should instead be converted into a termination for convenience.

Why the Government Lost the Appeal

The board acknowledged that Jaxon substantially underperformed during the early stages of contract administration. Missed deadlines, incomplete submittals, and the absence of physical construction gave the contracting officer legitimate reasons for concern.

However, those facts alone were insufficient. Under long-standing Federal Circuit precedent, including Lisbon Contractors, Inc. v. United States, the government bears the burden of proving that a contractor could not reasonably complete performance within the remaining contract period when terminating for default before the contract completion date. The board concluded that the Army failed to satisfy that burden because the evidence showed that the project could realistically continue during the spring construction season after a winter suspension.

Government witnesses acknowledged that EPDM roofing could not be installed during winter temperatures and testified that winter “holds” were necessary on “roughly 90 percent of outdoor contracts” at Rock Island. The contracting officer further informed Jaxon that if acceptable submittals were received, the parties would discuss a winter hold and an adjusted schedule. Those facts significantly undermined the government’s argument that immediate default termination was necessary.

Uncommunicated Deficiencies Played a Critical Role

One of the most significant aspects of the opinion involved the contractor’s Accident Prevention Plan. The government identified multiple deficiencies within the revised safety plan but never informed Jaxon of those specific deficiencies before terminating the contract. The board concluded that an uncommunicated deficiency demonstrates only that a document is currently unacceptable. It does not establish that the contractor is incapable of correcting the problem. Because the contractor never received the opportunity to address those concerns, the government lacked objective evidence that the deficiencies were incurable.

The Proposed Spring Schedule Was Not an Anticipatory Repudiation

The Army also argued that Jaxon’s proposed spring completion schedule demonstrated an unwillingness to perform. The board disagreed. Anticipatory repudiation requires a clear, positive, and unequivocal refusal to perform contractual obligations. Instead of refusing performance, Jaxon continued submitting revised documentation, requested meetings with government personnel, and proposed a revised construction schedule that aligned with weather limitations acknowledged by the government itself. The board concluded that requesting additional time under those circumstances was entirely different from refusing to perform the contract.

The Government’s Burden in Default Terminations Remains High

Perhaps the most important takeaway from the decision is that termination for default remains one of the government’s most severe contractual remedies. A contractor’s administrative shortcomings, deficient paperwork, or project delays do not automatically justify default termination. Instead, contracting officers must establish through objective evidence that timely completion is no longer reasonably possible. Courts and boards continue to describe default termination as a “drastic sanction,” and agencies must satisfy a substantial evidentiary burden before exercising that remedy.

Why the Board Converted the Termination

Because the government failed to establish that default termination was justified, FAR 52.249-10(c) required the termination to be treated as one for the convenience of the government. The board therefore converted the default termination into a termination for convenience.

However, it separately dismissed Jaxon’s requests for reimbursement, lost business opportunities, emotional distress damages, and additional contract time because those affirmative claims had never been properly presented to the contracting officer under the Contract Disputes Act. Without a certified claim presented to and decided by the contracting officer, the board lacked jurisdiction to award those forms of relief.

Practical Lessons for Federal Contractors

Federal contractors should view this decision as a reminder that cure notices deserve immediate attention and careful documentation. Contractors should continue demonstrating their intent to perform even when disagreements arise over schedules, submittals, or project conditions. Requests for additional time, standing alone, rarely constitute anticipatory repudiation.

The decision also underscores the importance of documenting communications regarding project delays, weather limitations, site access, and government-directed changes. When agencies acknowledge practical constraints affecting performance, those facts may become highly relevant if a termination decision is later challenged.

Finally, contractors should remember that any request for monetary compensation, equitable adjustment, or contract time extension generally must first be submitted as a proper claim under the Contract Disputes Act before the boards or the U.S. Court of Federal Claims may consider that relief.

Frequently Asked Questions

• What is a termination for default?

A termination for default is the government’s contractual remedy when a contractor fails to perform according to the contract requirements. Because it can expose the contractor to significant financial and reputational consequences, boards and courts require the government to prove that default termination is legally justified.

• Can a contractor challenge a default termination?

Yes. Contractors may appeal default terminations before the ASBCA, the Civilian Board of Contract Appeals, or the U.S. Court of Federal Claims, depending on the agency involved and the contractor’s election of forum.

• What happens if a default termination is overturned?

If a default termination is found to be improper, it is generally converted into a termination for the convenience of the government. The contractor may then pursue allowable termination-for-convenience costs under the FAR.

• Does missing submittal deadlines automatically justify default termination?

No. Missed deadlines may support agency concerns, but the government must still demonstrate that the contractor had no reasonable likelihood of completing the contract within the remaining performance period.

Conclusion

Although Jaxon Construction, Inc. is a nonprecedential Rule 12.2 decision, it reinforces enduring principles of federal procurement law. A termination for default is an extraordinary remedy, and the government bears the burden of proving that the contractor could not reasonably complete performance before exercising that authority. Where the record demonstrates continued efforts to perform, realistic opportunities to cure deficiencies, and project circumstances suggesting that completion remains feasible, converting a default termination into a termination for convenience may be the appropriate result. Government contractors facing cure notices or default terminations should carefully preserve the administrative record, continue demonstrating their willingness to perform, consult experienced government contracts counsel, and evaluate their appeal rights promptly under the Contract Disputes Act.

If you have any questions about the foregoing or require assistance, please do not hesitate to contact Aron Beezley or Steve Herrera.