A recent decision from the Armed Services Board of Contract Appeals (ASBCA or Board) offers a useful reminder that the government must do more than point to performance problems when terminating a contract for default before completion. Although Jaxon Construction, Inc., ASBCA No. 64432 (June 24, 2026) was issued under the ASBCA’s Small Claims/Expedited procedures and therefore lacks precedential value (previously explained in our blog series about how the Boards of Contract Appeals work), government contractors should still take note of the Board’s analysis. This blog explains the Board’s decision in Jaxon Construction and why contractors facing a potential pre-completion default termination should be mindful of the government’s burden of proof.
Not All Performance Problems Justify Default
The dispute in Jaxon Construction arose from a firm-fixed-price Army contract for removal and replacement of a roofing system. As the Board described it, Jaxon faced performance problems from the start, including roof-access issues, late document submissions, and several rejected submittals. By the time the Army issued a cure notice and later terminated the contract for default, Jaxon had not begun the physical roofing work. Jaxon appealed the default termination to the ASBCA, contending that the termination was legally unsupported and should be converted to a termination for convenience.
The Board did not minimize Jaxon’s performance issues. It recognized that the contractor’s missed deadlines, incomplete submissions, and lack of field progress reasonably caused concern. But those facts did not end the analysis. Relying on Federal Circuit precedent, the Board explained that when the government terminates a contract for default before the completion date, it must prove that the contractor was unlikely to finish within the time reasonably available for performance. The Army failed to make that showing where the record supported the possibility that the project could be suspended during winter and resumed during the spring construction season.
In other words, the key issue was not whether Jaxon Construction had performed flawlessly; rather, the question before the Board was whether the Army proved that there was no reasonable prospect Jaxon could complete the work within a realistic performance period despite its imperfect performance. On that point, the Board found that the government’s record fell short. The evidence showed, among other things, that winter conditions affected roofing work, government personnel anticipated the possibility of a seasonal suspension, and certain alleged deficiencies with Jaxon’s work were never conveyed to Jaxon so it could attempt to cure and avoid termination.
Not Every Request for More Time is Anticipatory Repudiation
The Army attempted to defend the termination by arguing that Jaxon anticipatorily repudiated its contract obligations. The Board rejected that argument because Jaxon continued taking steps toward performance rather than abandoning the contract. Jaxon’s proposal to complete the project in the spring, standing alone, did not amount to an unwillingness to perform.
The Board noted that to successfully claim anticipatory repudiation, the Army would have needed to demonstrate Jaxon’s 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 the circumstances Jaxon faced was very different from refusing to fulfill the contract.
Key Takeaways
- The government’s burden in pre-completion default terminations is high. Termination for default is one of the government’s most severe contractual remedies. A contractor’s performance issues like administrative shortcomings, deficient paperwork, or project delays do not automatically justify a default termination. Instead, contracting officers must use objective evidence to establish such poor performance by the contractor that timely completion is no longer reasonably possible. Courts and boards continue to treat default termination as the very drastic sanction that contractors know it to be, and the Jaxon Construction decision underscores that the government must satisfy a substantial evidentiary burden before exercising that remedy.
- Continued performance and documentation are key. Jaxon’s saving grace, despite its imperfect performance, was that it stayed the course and documented communications regarding project delays, weather limitations, site access, and government-directed changes. As Jaxon Construction demonstrates, when agencies acknowledge practical constraints affecting performance, those facts may become highly relevant if a termination decision is later challenged. Not only was Jaxon able to demonstrate that its performance did not rise to the level justifying a default termination, but it was also able to demonstrate its continued intent to perform, eliminating the government’s anticipatory repudiation defense.
- Government contractors should engage legal counsel at the first sign of a default termination. An ounce of prevention is worth a pound of cure, and cure notices often put a contractor on the fast track to a default termination if not addressed immediately and supported by careful documentation. Counsel can help contractors respond in a way that reduces termination risk and strengthens appeal arguments if the government later issues a default termination. Because the government failed to establish that default termination was justified in Jaxon’s case, FAR 52.249-10(c) required the termination to be treated as one for the convenience of the government, and the Board accordingly converted the default termination into a termination for convenience. We have written and presented extensively on the difference between these two types of terminations, most recently in our Contract Claims 101 series. Suffice it to say that a termination for convenience is preferable in many ways, including the fact that it avoids having a prejudicial impact on a contractor’s future past performance record and may allow recovery of termination settlement costs. Counsel can also assess whether a contractor should pursue monetary compensation, an equitable adjustment, and/or a contract time extension.
Should you have any questions or concerns about terminations, claims, appeals, or anything else discussed in this blog, please contact Lauren Brier, Josie Farinelli, or another member of PilieroMazza’s REAs, Claims, and Appeals Group or Government Contracts Group.
