Selected Legal Mechanisms Whereby the Government Can Hold Contractors Accountable for Failure to Perform or Other Misconduct [September 23, 2015] [open pdf - 859KB]
From the Summary: "Reports of 'waste, fraud, and abuse' in federal contracting often prompt questions about what the government can do to hold its vendors accountable for failure to perform as required under their contracts, or for legal violations or other misconduct unrelated to contract performance. Broadly speaking, the government can be seen as having two types of legal recourse available to it in such situations. The first type involves rights provided to the government as terms of its contracts, which the government may exercise without resort to judicial proceedings. The second type involves other actions, not necessarily provided for by contract. In some cases, the government may take these actions on its own behalf, without resort to judicial proceedings. In other cases, the government must seek sanctions or damages through the courts. Not all of these mechanisms involve 'penalties' as that term is generally understood. In some cases, the controlling legal authority expressly provides that the government may take certain actions only to protect the government's interest, and 'not for purposes of punishment.' However, in all cases, the government's action represents a consequence of and response to the contractor's delinquencies, and could be perceived as punitive by the contractor or other parties. The government generally has discretion as to whether to employ any of these mechanisms in particular circumstances, and could employ multiple mechanisms in a given case. In some cases, though, the government must choose between particular mechanisms."
CRS Report for Congress, R44202
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html