As we move into the second year of a global pandemic, construction contractors are not only taking stock of project delays and disruption experienced to date, but also preparing for more of the same. What better time than now for contractors to take affirmative steps to protect themselves from default actions and to preserve their right to a time extension and/or contract adjustment.
Delay and Disruption in a Pandemic
As construction contractors well know, delay to agreed-upon construction schedules can result from a host of circumstances. The COVID-19 pandemic presents numerous challenges that may result in such delays, including, for example, project site closures or restrictions; labor impacts due to employee illness, exposure, and/or quarantine; new health and safety protocols such as on-site screenings; supply chain issues; subcontractor impacts; and delays to Government activities such as permitting and issuing approvals. Of course, the type of delay and the extent to which a contractor may be entitled to additional time or compensation depend on the circumstances.
A threshold question is whether a delay to the project schedule is excusable in the first instance—i.e., whether the contractor will or should be excused from being found in default by virtue of the delay. The Excusable Delay clause at FAR 52.249-14 provides some guidance. This clause excuses contractors from default for failure to perform—including failure to make progress in a manner that endangers performance—if the failure “arises from causes beyond the control and without the fault or negligence of the contractor.” Of potential relevance to COVID-related delays, the clause identifies specific causes deemed beyond contractors’ control. These include epidemics, acts of God or the public enemy, and quarantine restrictions, among others.
A second question is whether a contractor delayed by such causes is due any relief. To establish entitlement to an extension of time, the contractor must show that the cause of the delay was unforeseeable, beyond the contractor’s control and without the fault or negligence of the contractor, and that any Government caused delays were not concurrent with delays caused by the contractor. To establish entitlement not only to time, but also to additional compensation, the contractor must show that the Government was the “sole proximate cause” of the delay such that “the contractor would not have been delayed for any other reason during that period.”
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The current government shutdown is now the longest in U.S. history, and many federal contractors are incurring costs as a result of shutdown-related work stoppages and delays. Luckily, many federal contracts contain clauses that provide a potential avenue for recovery of such costs. Further, there are practical steps that contractors can take to increase their chances of recovering shutdown-related costs from the government.
Here’s a situation my colleagues and I see with some frequency: a contractor, in the course of working on a government contract, submits a request of some sort to the agency. Then waits for a response. And waits some more. Meanwhile, the government’s delay in responding prevents the contractor from moving forward with some aspect of the project, causing the contractor to incur costs.
Agencies have just under two years to move to the new governmentwide telecommunications contract called Enterprise Infrastructure Solutions.
For federal contractors, it is not an exaggeration to say that performance evaluations are the lifeblood of the business.
Anyone in the construction business can attest to the fact that it’s an industry that defines the phrase “stuff happens.” And most of the time, there is someone to blame.
