## Facts

- Information Systems and Networks Corporation (ISN) contracted to convert the Air Force’s PFORMS database system to a new mainframe environment under a government statement of work (SOW).
- The SOW required the converted system to support simultaneous access by multiple users.
- ISN used a TSO/ISPF mainframe environment for the conversion; as implemented, the delivered system did not satisfy the SOW’s multi-user requirement.
- ISN delivered the converted system on time, but the government deemed it nonconforming for failure to meet the multi-user requirement.
- The government issued a show cause notice warning that ISN must justify its failure to deliver an adequate system or face termination for default.
- After approximately seven months with limited communications, the government terminated the contract for default based on failure to perform to the SOW.
- ISN sued under the Contract Disputes Act, seeking to convert the default termination to a termination for convenience, and moved for partial summary judgment on liability.
- ISN argued (i) the TSO/ISPF requirement was a government design specification that made compliant performance impossible and (ii) the government waived default by delaying termination after the show cause notice.
- The government contended TSO/ISPF was selected based on ISN’s recommendation and that the show cause notice reserved default rights, defeating waiver.

## Issues

1. Whether the contract requirements constituted government-imposed design specifications (including any TSO/ISPF requirement) that carried an implied warranty and rendered performance impossible, precluding default termination.
2. Whether the government waived its right to terminate for default by delaying termination after issuing a show cause notice.

## Decision

- The Court of Federal Claims denied ISN’s motion for partial summary judgment.
- Material factual disputes existed as to whether the TSO/ISPF approach was dictated by the government or recommended by ISN, affecting characterization of the specifications and any implied warranty.
- Material factual disputes also existed regarding whether the government’s conduct after the show cause notice—despite the passage of time—amounted to waiver of default rights.
- Because liability turned on disputed facts, the court declined to convert the default termination to a termination for convenience at the summary-judgment stage.

## Legal Principles

- Government-provided design specifications may carry an implied warranty that compliance will yield acceptable performance; performance specifications generally place the method-and-means risk on the contractor.
- Whether a requirement is a design specification, and whether any impossibility defense follows from it, can present fact questions when the contractor influenced or recommended the technical approach.
- Waiver of the government’s right to terminate for default is fact-specific and depends on the government’s knowledge, communications, and conduct after the breach.
- A show cause notice is strong evidence of an express reservation of default rights; delay alone does not establish waiver as a matter of law.

## Conclusion

The court held that disputed facts regarding who selected the technical approach and whether the government’s post-notice conduct constituted waiver barred summary judgment, leaving the default termination in place pending further proceedings.


Info. Sys. & Networks Corp. v. United States, 34 Fed. Cl. 457 (1995)