As a construction attorney with more than 25 years in the trenches, I have seen my share of high-stakes disputes. One case that stands out is Kiewit-Turner v. Department of Veterans Affairs (CBCA 3450) from December 2014, where I helped secure a win for my client, Kiewit-Turner, allowing the joint venture contractor to stop work on a nearly $2 billion VA hospital project due to the government’s material breach — specifically, underfunding massive design changes.
Widely covered at the time as a rare “contractor win” by outlets like Engineering News-Record (ENR) and The Wall Street Journal, it challenged the Federal Acquisition Regulation (FAR) mandate that a contractor must always “continue work” even when they have legitimate disputes. While this was a federal government contract’s case, the principles apply generally to all commercial construction contracts.
Landmark decision affirming a material breach must go to a contract’s “essence”
The Kiewit-Turner case affirmed that when a party, here an owner, commits a breach that goes to the contract’s essence (like funding shortfalls), it may allow the non-breaching contractor to stop performance. This was a landmark decision that revived the discussion many contractors face about complex, large construction projects: At what point can a contractor contractually and legally stop working?
Fast forward a decade since the Kiewit-Turner decision: Has the legal landscape evolved?
Material breach doctrine alive and well
A review of cases citing Kiewit-Turner shows that courts and boards still uphold the material breach doctrine, but apply it cautiously.
In Adventus Techs. v. Dept. of Agriculture (CBCA 7283, 2023), the Civilian Board of Contract Appeals (CBCA) found that failing to provide janitorial services after the contractor had labor issues was a material breach justifying default by the government, as this breach went “to the essence of the contract.”
In Klamath Wildlife Res. v. DOI (CBCA 3764, 2016), the CBCA upheld a termination for default in which the contractor failed to comply with requirements for northern spotted owl surveys, including conducting only four-hour (not six-hour) follow-ups, providing inadequate GPS coordinates for call stations, and neglecting to mark inspection points with flagging tape. These shortcomings were deemed a material breach, as they prevented verification of survey locations and went to the contract’s essence.
These cases echo the Kiewit-Turner‘s breach standard in upholding the owner’s decision to terminate the contractor because the contractor failed to provide the “essence” of its contractual duties.
“Document everything, seek assurances early, and consult counsel before walking off a job or terminating a contractor.”
Duty of good faith and fair dealing
The implied duty of good faith and fair dealing was also a key issue in Kiewit-Turner. This doctrine requires that a party to a contract must not impede or hinder the other party from performing. Importantly, this doctrine does not require proof of bad faith. For example, in Griz One Firefighting v. Dept. of Agriculture (CBCA 6358, 6567, 2022), the contractor claimed a breach after suspensions by the government agency for investigating accidents at the site, but the CBCA found no violation, as the government acted reasonably to investigate safety and professionalism.
Similarly, in First Kuwaiti Trading v. Dept. of State (CBCA 3506, 6167, 2018) the CBCA denied summary judgment by the government regarding the contractor’s claims for delays from excessive “duck and cover” alarms during Baghdad embassy construction, citing disputed facts about whether they unreasonably hindered work. The CBCA cited the Kiewit-Turner standard on good faith rejecting the government’s sovereign acts defense for those claims.
Both decisions cite Kiewit-Turner, emphasizing that cooperation is the standard, and there is no need to prove malice.
While after 10 years, no case directly mirrors Kiewit-Turner‘s factual scenario in which the owner issued multiple changes and refused to pay for them citing to an alleged fixed-price contract, the principle holds still true today: Material breaches discharge duties if they deprive expected benefits and it cannot be cured.
This issue is more critical now amid economic headwinds.
Construction’s economic downcycle
The Dodge Construction Network reports that US total construction starts are down 10.2% in July 2025, while the AIA’s Architecture Billings Index has lagged below 50 for 18 months, signaling contraction.
With tariffs, high interest rates, and potential stagflation, cash-strapped owners may delay payments or changes, pushing contractors toward tough calls. Owners will risk the “capital punishment” of contracting if they decide to terminate a contractor, likely resulting in bet-the-company litigation due to the impact to the terminated contractor’s reputation, bonding capacity, and ability to win new work as they will have to disclose defaults on future bids.
My advice? Document everything, seek assurances early, and consult counsel before walking off a job or terminating a contractor. In this volatile market, understanding these risks can prevent disputes from escalating to litigation.