The Armed Services Board of Contract Appeals recently dismissed an appeal from Peritia LLC, a contractor providing services to the U.S. Army, regarding the termination of its contract. The court ruled that the appeal was moot because the Army converted the termination from a 'for-cause' to a 'convenience' termination. This decision affects Peritia and highlights the complexities of government contracting disputes.
Peritia LLC was under contract to provide Defense Travel System Administration services for the U.S. Army at Shaw Air Force Base in South Carolina. On March 24, 2026, the Army terminated Peritia's contract for cause, which led Peritia to file an appeal against this termination on March 26, 2026. The company argued that the termination should be converted to a convenience termination due to alleged bad faith by the Army.
Following the appeal, the Army converted the termination to a convenience termination on April 14, 2026. This conversion allowed Peritia to submit a termination settlement proposal. However, the Army then moved to dismiss the original appeal, ASBCA No. 64495, claiming it was now moot since the conversion had granted the relief Peritia sought.
Peritia opposed the motion, arguing that the dismissal would deny them a judicial check on the Army's conduct, which they characterized as egregious. They also claimed that the conversion did not resolve their request for damages related to the Army's alleged bad faith. The Board held off on the Army's deadlines to respond to the complaint while considering the motion to dismiss.
On June 12, 2026, the Army issued a final decision on Peritia's claim for convenience termination costs and breach damages, granting a small amount of the costs but denying the majority of the claimed damages. Peritia subsequently filed another appeal, ASBCA No. 64586, to challenge this decision. The two appeals were consolidated.
The court ultimately ruled that ASBCA No. 64495 was moot because the Army's conversion of the termination meant there was no longer a live controversy for the Board to resolve. Administrative Judge Eric E. Laufgraben stated, "The conversion provided Peritia with the requested relief, including the right to seek convenience termination costs." Thus, the Board found that there was no remaining claim for them to adjudicate.
In its decision, the Board acknowledged Peritia's arguments regarding the Army's alleged bad faith but determined that these claims were not sufficient to prevent the dismissal of the appeal as moot. The Board noted that Peritia's allegations of bad faith were not part of the original complaint in ASBCA No. 64495, and therefore, the Board did not have jurisdiction to consider them in that appeal.
The impact of this ruling is significant for Peritia LLC as it navigates its ongoing disputes with the Army. The dismissal of ASBCA No. 64495 does not limit Peritia's ability to pursue its claims in ASBCA No. 64586, where it can still address the issues of convenience termination costs and breach damages. This case illustrates the challenges contractors face when dealing with government contracts and the importance of understanding the implications of contract terminations.
Looking ahead, Peritia may continue to appeal the Army's decisions in ASBCA No. 64586. The Board's dismissal of ASBCA No. 64495 is without prejudice, meaning that it does not prevent Peritia from raising similar issues in future proceedings. The outcome of ASBCA No. 64586 will be closely watched as it may set important precedents for how similar disputes are handled in the future.