Krygoski Construction Company, Inc. v. United States

The United States Army Corps of Engineers (government) (plaintiff) entered into a contract with Krygoski Construction Company, Inc. (Krygoski) (defendant) to demolish an abandoned air field and missile site in Michigan. Ten percent of the contract work involved asbestos removal and remediation. Krygoski conducted a pre-demolition site survey and discovered that there was significant additional asbestos contamination. Krygoski proposed to remove the additional asbestos for an additional $320,000 on top of the original approximately $415,000 contract price. The government’s contracting officer (CO) determined that the additional asbestos removal amounted to a material change in the contract terms because it would increase the total contract cost by over 33 percent. Accordingly, the CO terminated the contract for the government’s convenience and reprocured the contract with the additional asbestos removal included. Krygoski bid for, but was not awarded, the reprocured contract. Krygoski sued the government in the Court of Federal Claims, arguing that the government breached its contract with Krygoski. The district court awarded Krygoski approximately $1.4 million in breach-of-contract damages holding that, pursuant to the Torncello test, there was not a sufficient change-in-circumstances to justify the termination. The government appealed.