If the contractor didn't fool anyone about the equipment purchases, i.e it was either owned by the agency and supposed to be stored there or was owned by the contractor, there probably wasn't any actual contract default to justify termination. In a termination for the convenience of the government (No default proven), the contractor still gets lost profits. If the contractor actually BS'd the EPA about using the dough that bought the equipment for some legit operating expense, that's another story.