A recent matter with the Civilian Board of Contract Appeals discusses a cardinal change theory of liability.
A cardinal change “occurs when the government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for.” … A cardinal change can occur even when there is no change in the final product because “it is the entire undertaking of the contractor, rather than the product, to which we look.”
Boyd Atlanta Rhodes, LLC v. General Services Administration, CBCA 7753, 2025 WL 1202011 (CBCA 2025) (citations omitted).
In this matter, a lessor was pursuing additional compensation from the government (as lessee) due to delays (more than 400 days) in the government’s acceptance of its lease term. The lease provided that the contracting officer could, at any time, make direct changes to tenant improvements, etc., prior to the lease term commencing. There were more than 400 days of delay that resulted in the government’s delay in accepting the lease term. The lessor claimed the government was responsible for the delay and sought lost rental income under the argument of cardinal change.
The government moved to dismiss the cardinal change claim arguing that because the lease gave it the unrestricted ability at any time to make changes prior to the lease term commencing, this could never lead to a cardinal change because the government could essentially never breach the lease. The Board found this argument unpersuasive, that being that the government had the unrestricted ability to make changes such that it had the unfettered right to eliminate a breach of the lease. For this reason, the Board denied the government’s motion to dismiss without determining whether the lessor was entitled to delay compensation (e.g., lost rent) based on the lessor’s cardinal change argument.
Think about the underlined language in the cardinal change quote above: “A cardinal change can occur even when there is no change in the final product because ‘it is the entire undertaking of the contractor, rather than the product, to which we look.’” In other words, the entire, factual undertaking of the contractor is examined to see whether the contractor’s undertaking is so drastic that it materially exceeds the changes clause in the contract (because the undertaking is materially different than what was bargained for in the contract). See Boyd Atlanta Rhodes, supra. Hence, when arguing under cardinal change, you want to demonstrate: (1) the entire, factual undertaking; (2) the undertaking is drastic compared to the original undertaking; and (3) the drastic undertaking was materially different than what was bargained for.
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