Your employment is "at-will" unless you had an express or implicit contract stating otherwise. That means you can quit and they can fire you for any reason or no reason, other than for violation of public policy.
The fact that the employer is incompetent in their business, as you claim, does not give you any rights and merely because they do government contracts does not give you any additional rights that are any different from any employee.
Sorry, but based on your limited facts, I don't see much of a basis for a suit. If you have a basis for an employment contract because of an implied contract would require further review and more facts.
You should speak with a local employment lawyer to get legal advice.
This answer is for informational purposes only and is not legal advice regarding your question and does not establish an attorney-client relationship.
I agree with the previous post, but am a little confused by one statement - you say you have an annual salary contract - what does that mean? Do you have an actual written contract? If so, you should look at it to see your rights. Otherwise, as the previous poster stated you are an at will employee and probably would have a very hard time establishing a case.
Also, keep in mind if you did have a case, you have a duty to mitigate damages - meaning you should be looking for work to minimize your damages.
Based on the facts presented, this does not appear to be a government contracts question. However, it is good that you included the fact that the employer was a government contractor.
You never know which details will make a big difference.
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