It is not uncommon for the government to attempt to avoid liability by putting forth a variety of claims.

Waiver and Estoppel. The government may assert a waiver or estoppel argument against contractors’ claims for flawed EPA clauses but the courts have repeatedly rejected such defenses. In Beta Systems, the contractor sought reformation of the contract based upon the legal theories of mutual mistake and violation of the applicable procurement regulation because the EPA clause’s index did not accurately track costs of contract performance.  The contractor had initially objected to the EPA index but later capitulated and accepted the clause in its contract where the government defended against the claim by asserting the contractor had waived its rights by knowingly accepting the clause. The court sided with the contractor ruling the selected index was defective and hence violated procurement law whether or not the contractor accepted it. 

Late contractor claims. In Bataco Industries the contractor alleged and the government conceded the contract’s EPA clause incorporated the wrong index but still the government asserted the contractor had failed to comply with a provision in the clause that required adjustments be made within a 180-day period, which was exceeded by the contractor.  The court sided with the government stating even if the index was flawed the contractor could obtain no relief due to its tardy claim. 

Government offsets. Another common defense is for the government to claim offsets to contractor damages stemming from a defective EPA clause to the extent the government has made overpayments under the contract or related contracts.  In such a claim in Barret Refining Corp. the court ruled that because the government made these payments under an illegal contract the government has a right to recover unauthorized payments in excess of both the fair market value and base contract price. 

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