## Facts

- The U.S. Army Corps of Engineers contracted with Krygoski Construction Company, Inc. to demolish an abandoned Air Force airfield and missile site in Michigan.
- The solicitation identified asbestos in limited quantities and included line items for asbestos abatement; Krygoski won as the low bidder at about $414,696.
- After award, further inspection revealed substantially more asbestos contamination, including debris apparently spread at the site, making asbestos-related work potentially close to half the project cost.
- Krygoski proposed to perform the additional asbestos work for about $320,000 beyond the original contract price.
- The contracting officer concluded the magnitude of added asbestos work was a material change in scope, terminated the contract for the Government’s convenience under the standard clause, and resolicited the project with the expanded asbestos requirement.
- Krygoski bid on the resolicitation but did not receive the reprocurement award.
- Krygoski sued in the Court of Federal Claims, alleging the termination for convenience was improper and constituted a breach.

## Issues

1. Whether the Government validly exercised the termination-for-convenience clause when post-award information revealed a major increase in asbestos work, or whether the termination was an improper breach under limits associated with *Torncello*.
2. Whether compliance with full-and-open competition requirements under the Competition in Contracting Act supported termination and resolicitation rather than contract modification.
3. Whether the record showed bad faith or an abuse of discretion sufficient to invalidate the termination for convenience.

## Decision

- The Federal Circuit reversed the Court of Federal Claims and remanded.
- The court held the termination for convenience was proper because the newly discovered asbestos created a significant scope change and the agency reasonably chose to resolicit to satisfy statutory competition requirements.
- The court found no evidence of bad faith or abuse of discretion by the contracting officer.
- The court rejected the trial court’s expansive reading of *Torncello*, explaining it does not impose a rigid, generally applicable “change-in-circumstances” prerequisite beyond the ordinary limits of bad faith and abuse of discretion.

## Legal Principles

- A termination for convenience is valid when the contracting officer reasonably determines termination is in the Government’s interest, unless the decision is made in bad faith or constitutes an abuse of discretion.
- Termination for convenience is improper if used as a pretext to avoid contractual obligations, such as to obtain a better bargain after award, or if the Government entered the contract without intent to perform.
- A substantial post-award change in the Government’s requirements may justify termination and resolicitation, including to meet statutory procurement duties requiring full and open competition.
- *Torncello* is confined largely to fact patterns involving bad faith or lack of intent to perform and does not create a broad, rigid limitation on terminations for convenience beyond the ordinary bad-faith/abuse-of-discretion constraints.

## Conclusion

The Federal Circuit held that the Corps’ termination for convenience, prompted by a major increase in asbestos-removal requirements and a reasonable decision to resolicit under competition statutes, was not a breach because Krygoski did not prove bad faith or an abuse of discretion.


Krygoski Constr. Co. v. United States, 94 F.3d 1537 (Fed. Cir. 1996)