Armed Services Board of Contract Appeals Restrictively Interprets Standard Government Release Language

Key Takeaways

• The ASBCA restrictively interpreted standard release language in a government modification.
• In the Sauer Construction case, ambiguous release language couldn't bar a remediation claim, highlighting the need for clear reservations.
• Contractors should ensure precise drafting of modifications to avoid risks with broad release language and include clear reservations to protect their claims.

In Sauer Construction, LLC, ASBCA No. 63738 (January 30, 2025), the Armed Services Board of Contract Appeals ("ASBCA") restrictively interpreted the standard release language in a government modification. In that case, the contractor received two changes. The first, Modification No. 20, was for metal truss changes. The second, Modification No. 21, was for structural steel changes. Both modifications contained broad release language.

The contractor subsequently identified rust and corrosion on material and equipment that occurred during a period of government directed suspension. The contractor filed a claim for rust remediation, which the government denied. The contractor then filed its appeal of the denial in the ASBCA. The government moved for summary judgment, arguing the releases barred the rust remediation claim.

The ASBCA denied the motion. After reciting the summary judgment standard, the board noted that a release is contractual in nature and must be interpreted in the same manner as any other contract term or provision. The board further noted that the first inquiry is whether the release is ambiguous, i.e., susceptible to more than one reasonable interpretation. If the release is ambiguous, then the dispute generally is not amenable to summary judgment.

In this instance the board noted that language in a release indicating that a modification "constitutes compensation in full … for all costs and markups directly or indirectly attributable for the change ordered, for all delays related thereto" suggests that the release is only for the particular change ordered and is not a more general release. The board ruled that "there is a genuine issue of material fact as to whether the releases bar the rust remediation claims because the releases are, at best for the government, ambiguous as to whether they bar the rust remediation claim, and Sauer has presented sufficient evidence upon which a reasonable fact-finder, drawing all reasonable inferences in favor of Sauer and applying the applicable evidentiary standard, could decide that the parties did not intend that the releases bar the rust remediation claims."

The teaching point from this decision is that when drafting a modification, the contractor should be precise in defining the scope of the changed work. Precise drafting will mitigate the risk presented by a broadly worded scope of work that would be subject to the broad language of the government release typically found in a government modification. Further, if the parties intend for there to be reservations in the release, it is incumbent upon the contractor to ensure that those reservations are included in the release language.