Can a federal contractor avoid a termination for default because its supplier refuses to provide the products needed to perform the contract? Generally, no. A recent decision from the Armed Services Board of Contract Appeals (“ASBCA”) reinforces an important principle for federal contractors: contractors generally bear the responsibility — and the risk — of securing reliable sources of supply before bidding and throughout contract performance.

In Vision Distributors LLC, ASBCA No. 64357 (July 17, 2026), the Board upheld the termination for cause of a contract after the contractor was unable to obtain the equipment it had promised to deliver. The contractor argued that its failure to perform was caused by circumstances beyond its control because the manufacturer ultimately refused to allow the contractor to purchase and resell the required equipment.

The ASBCA rejected that argument.

<span style="font-size: 110%">Who Bears the Risk When a Supplier Fails?</span>

The central lesson of Vision Distributors is that the contractor had assumed the risk that it might not be able to obtain the required equipment.

Before submitting its bid, Vision Distributors had confirmed pricing with an authorized distributor. It had not, however, obtained a firm and enforceable commitment that the distributor would actually supply the equipment. When the manufacturer later refused to supply the products, the contractor was unable to perform.

The Board emphasized that contractors have a responsibility to investigate their sources of supply and delivery terms before submitting a bid. A reasonably prudent contractor should take steps to ensure that the materials or products necessary for contract performance will actually be available.

In other words, confirming a price is not necessarily the same as confirming a reliable source of supply.

<span style="font-size: 110%">Is a Supplier’s Failure an Excuse for Nonperformance?</span>

Not necessarily. The fact that a contractor's supplier fails or refuses to deliver does not, standing alone, transform the contractor's inability to perform into an excusable default.

When a contractor promises the government that it will provide a particular product, the contractor generally assumes responsibility for determining whether it can obtain that product. If the contractor has not adequately investigated its supply chain before bidding, the resulting supply problem may remain the contractor's problem — not the government's.

That distinction is particularly important for contractors operating in industries affected by manufacturer restrictions, limited distribution networks, shortages, tariffs, rapidly changing product availability, or other supply-chain disruptions.

<span style="font-size: 110%">What Should Federal Contractors Do Before Submitting a Bid?</span>

The practical lesson from Vision Distributors is straightforward: supply-chain due diligence should occur before the bid is submitted, not after the contract is awarded.

Contractors should consider taking the following steps:

1. ‍Confirm your sources of supply before bidding. Determine who will provide the products or materials necessary for performance and whether those sources are actually authorized and capable of supplying them.‍
2. Obtain firm commitments whenever possible. A quoted price or informal assurance may not provide the same protection as a written commitment addressing availability, quantity, pricing, delivery, and other material terms.‍
3. Understand the manufacturer's distribution restrictions. If a contractor is relying on a particular manufacturer or authorized distributor, it should determine whether the manufacturer permits the proposed purchase and resale arrangement.‍
4. Do not assume a supplier's failure will excuse your performance. Once a contract is awarded, the government's expectation generally is that the prime contractor will perform the contract it promised to perform.‍
5. Have a Plan B. Contractors should identify alternative suppliers or sources of supply before performance problems arise. A contingency plan may be especially important when a contract requires a specific product or manufacturer.

<span style="font-size: 110%">The Bottom Line for Federal Contractors</span>

Vision Distributors serves as a useful reminder that a contractor cannot necessarily shift supply-chain risk to the government simply because its supplier ultimately fails to deliver.

For federal contractors, the time to evaluate supply-chain risk is before submitting the bid. Confirming that the required products are available, understanding the terms under which they can be obtained, and securing reliable commitments from suppliers can help prevent a supply problem from becoming a contract-performance problem — and potentially a termination for default.

Before you bid, make sure you can actually deliver.