Contract Fights to get Uglier as Budgets Shrink

July 16, 2012

Contractors and their lawyers are bracing for an era of bitter legal fights, as severe budget cuts force agencies to reduce, scale down and terminate contracts, perhaps as early as this year.

"It's going to be ugly," said John Jaeger, president of YRCI, a human resources and acquisition support company, in an interview.

The disputes won't be over whether agencies can cancel contracts so much as how much compensation is paid to the terminated contractor, said Elizabeth Ferrell, a partner at McKenna, Long and Aldridge law firm.

"The issue is what's the economic impact on the contractor and whether the contractor can recover additional monies as a result of that adverse action," Ferrell added. 

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