Opinion ID: 744196
Heading Depth: 2
Heading Rank: 2

Heading: Termination of the LSA

Text: 26 Under Article VII, the government could terminate the LSA upon a determination in writing that NASA is required to [t]erminate such services for Reasons Beyond NASA's Control. Article XX defined Reasons Beyond NASA's Control to include acts of the United States Government other than NASA, in either its sovereign or contractual capacity. The government argues that the President's 1986 directive, coupled with NASA's October 30, 1986, letter to New Valley, constituted a termination in accordance with Article VII. 27 The government's argument is strained, inconsistent with NASA's actions, and foreclosed by Hughes and ASC. It never terminated the LSA. Indeed, it was quite adamant that it was not terminating the LSA. In its October 30, 1986, letter to New Valley, the government stated that it was certain only that the launch of Westar VI-S would be delayed far in excess of the nine-month period described in Article VII; thus, should New Valley wish to terminate [the] LSA prior to expiration, it could do so based on this delay. This was not a termination by NASA; it was merely a recognition by the space agency that New Valley was entitled under the LSA to terminate the contract and was an invitation to exercise that right. 28 Moreover, after New Valley requested damages in its January 29, 1987, letter, NASA responded that its position [was] that the LSA [wa]s still in existence. Indeed, it objected to giving New Valley any refund unless New Valley terminated the LSA because a refund without a termination could be seen as acknowledgment that NASA has in some way terminated the LSA. NASA could not have been clearer that it was not terminating the contract; indeed, it was endeavoring to avoid even the potential perception that it had terminated the LSA. Thus, the government not only failed to make a written determination that the President's directive was a reason beyond NASA's control, requiring it to terminate the agreement, it steadfastly maintained the contrary. Under these circumstances, we cannot hold that the government terminated the contract in accordance with Article VII. 29 Nor could the government have done so, as the trial court appears to have held. It concluded that the President's decision to cease launching commercial payloads was a reason beyond NASA's control, which allowed NASA to terminate the contract. The court was careful not to hold that NASA made a written determination that the President's decision required it to terminate the LSA. We read its opinion to say that notwithstanding NASA's protestations to the contrary, the government constructively terminated the contract because it could have done so. We disagree. 30 In Hughes and ASC, the government argued, and the Court of Federal Claims agreed, that the President's 1986 decision to cease launching commercial payloads was a sovereign act for which the government was not liable. We reversed and remanded, holding that regardless of the sovereign acts doctrine, the contracts shifted responsibility to the government for changes in its launch priority and scheduling policy. 998 F.2d at 958-59 & n. 8. The court's construction of the LSA in this case cannot be reconciled with ours. The court effectively held that the same contract 5 that we construed to shift the risk to the government for changes in launch priority and scheduling policy, allows the government to terminate the LSA for such changes. Stated otherwise, the court held that the same policy change for which we held the government was liable under the LSA permits the government to terminate the contract. In Hughes and ASC we left open the possibility that on remand the government might be able to raise another defense that might prevail. See 998 F.2d at 959. We did not, however, open the door to a defense that patently conflicts with our construction of the LSA.