ASBCA Rejects Contractor’s $24 Million Claim for “Gratis” Performance
Article by: Matthew Saliman, Associate
In a recent decision, the Armed Services Board of Contract Appeals (“ASBCA”) reinforced a fundamental principle of government contracting: contractors that perform work without a finalized contract face substantial risk that they may never be paid. In Futures, Inc., ASBCA No. 61566, the Board denied a contractor’s attempt to recover approximately $24 million in costs allegedly incurred supporting an Army-affiliated employment platform for transitioning service members.
According to the Board’s decision, Futures, Inc. developed and supported the H2H.jobs employment portal, which helped match military personnel with civilian job opportunities. Beginning around 2011, Army officials discussed potentially expanding the use of the platform and making it the Army’s primary employment portal. Futures argued that these discussions, along with subsequent Army promotion and use of the website, created either an express or implied-in-fact contract obligating the Army to reimburse the company for years of support services.
The ASBCA disagreed.
The Board found that although both parties may have anticipated a future contract award, no binding agreement was ever finalized. Critically, the Board emphasized that an implied-in-fact contract with the Government requires more than general discussions or expectations. Rather, contractors must establish mutual intent to contract, an unambiguous offer and acceptance, consideration, and the involvement of a Government representative with actual contracting authority.
The Board concluded that those elements were missing here. No contracting officer awarded a contract, essential terms were never finalized, and Futures never invoiced the Army during the years it allegedly provided support services. The Board also rejected the contractor’s attempt to characterize the Army’s conduct as acceptance of a contractual obligation, finding instead that Futures voluntarily provided support “gratis” while hoping to secure a future contract award.
The decision serves as a cautionary reminder for contractors performing work in anticipation of future business opportunities or while awaiting contract definitization.
Key Takeaways for Contractors
- Do Not Rely on Informal Assurances. Expressions of interest, programmatic support, or discussions with agency personnel generally do not create enforceable contractual obligations. Contractors should ensure that agreements are memorialized through proper contracting channels.
- Verify Contracting Authority. Only authorized Government contracting officers can bind the Government contractually. Statements from program officials or other agency personnel may not be sufficient to establish a contract.
- Avoid Performing Significant Work Without a Definitized Agreement. Contractors that voluntarily perform work in hopes of securing future work or maintaining goodwill risk nonpayment if negotiations fail.
- Document Expectations and Payment Terms Early. If interim performance is necessary, contractors should seek written authorization, bridge agreements, or other formal mechanisms establishing scope, compensation, and authority before incurring substantial costs.
- Billing Practices Matter. The Board viewed Futures’ failure to submit invoices during the relevant period as evidence undermining its claim that a contractual relationship existed.
The Futures decision highlights the continued importance of disciplined contracting practices and careful attention to authority, documentation, and contract formation requirements when working with federal agencies.
Read the Board decision here: LinkClick.aspx