2013 FEDCON SUMMIT Government Contract Disrup?ons, Delays and Changes Presented By: David L. Hayden Smith, Anderson, Blount, DorseM, Mitchell & Jernigan, LLP & Paulanne Page (Team Leader, NCMBC) •
•
•
•
•
2 AGENDA Captain Phillips and the Maersk Alabama Disrup7on-­‐What is the impact Delay-­‐When is it compensatory? Change Orders Ques7ons Disruptions
Example: Differing Site Conditions (DSC)
•  FAR 52.236-­‐2 –  Allows equitable adjustment if contractor provides prompt, wriMen no7ce of DSC –  Ensure clause is in contract or remedy not available –  Type I DSC (Relies on contract representa7ons) –  Type II DSC (Unusual & unknown physical condi7ons) 3 TYPE I DSC
•  FAR 52.236-­‐2(a)(1) Contractor must prove: –  Contract implicitly or explicitly indicated par7cular site condi7on –  Reasonable interpreta7on and reliance by contractor on site condi7ons –  Latent or subsurface condi7ons differed materially from those indicated in contract –  Costs were aMributable solely to differing site condi7ons. 4 TYPE II DSC
•  FAR 52.236-­‐2 (a)(2) Contractor must prove: –  Condi7ons encountered were unusual physical condi7ons that were unknown at the 7me of contract –  The condi7ons differed materially from those ordinarily encountered •
•
•
•
5 Acts of nature a\er contract award are not DSC Contractor cannot create its own DSC Contractor may not recover if reasonably discoverable It is harder to show Type II vs. Type I DSC Delays Due to Suspension of Work
FAR 52.242-14: The KO may suspend, interrupt, or delay
work for the government’s convenience
•  Delay is compensable if:
–  It is unreasonable
–  The KO orders it
–  The contractor has not caused the suspension by its negligence
or failure to perform
–  The cost of performance increases because of KO order
•  See also FAR 42.13 Suspension of Work, Stop-Work
Orders, and Government Delay of Work
6 Delays Due to Suspension of Work
•  Contractor may be entitled to a performance period
extension even if the delay is reasonable.
•  Profit is not recoverable
•  Delay costs limited to 20 days unless contractor notifies
the Government (KO) •  Is delay due to federal government shutdown
unreasonable?
Connor Bros. Const. Co., Inc. v. Geren, 550 f.3d 1368 (Fed. Cir. 2008)
7 Loss of Efficiency
•  Disruption caused by government changes and/or delays
may cause a loss of efficiency to the contractor
•  Contractor may recover for loss of efficiency if it can
show:
–  Increased cost
–  Government was responsible
Luria Bros. & Co. v. United States, 177 Ct. Cl. 676, 369 F.2d 701 (1966) 8 TYPES OF DELAY/DISRUPTION •  Excusable – delay is not the result of actions or inactions
by either party at contract.
•  Delay arises from unforeseeable causes beyond the
control and without the fault or negligence of the
Contractor.
(FAR 52.249-10 -- Default (Fixed-Price Construction)
•  Inexcusable – delay caused by the contractor
•  Examples include failure to coordinate work, too few
workers, and low productivity.
DELAY/DISRUPTION = CHANGE ORDER? •  Compensatory – a delay caused by actions or inactions by one of
the contracted parties that results in financial injury to the other party
at contract.
•  The burden of proving a compensable delay is borne by the
contractor.
•  Government caused delays = equitable adjustment/claim
•  The contractor must prove the extent of the governmentcaused delay, and its increased costs, to prove its injury, and
there was no concurrent delay.
•  Contractor caused delays = liquidated damages
•  The Government must prove the extent of contractor caused
delay, and there was no concurrent delay.
CHANGE ORDERS •  Differing site conditions.
•  Regulatory changes.
•  Owner changes.
–  Scope added/deleted during construction.
–  Late design changes.
–  Changes in Owner-provide equipment.
•  Information missing from the contract documents, ambiguities, errors
and omissions
•  Schedule delays and revisions.
•  Adverse Weather – Normal and Severe
CHANGE ORDERS •  Changes may have both cost and schedule impacts.
•  Dealing with changes promptly will have the least
amount of impact on the budget and schedule.
•  Delaying resolution can increase costs, jobsite friction,
extend the completion of the project and result in a
dispute.
CHANGE ORDER •  Most Contracts do not
spell out a formal
“Contractor Change
Request” process.
•  If the Contractor wants to
submit a change request
it needs to follow the
“claims” process defined
in the contract to request
a change.
CHANGE ORDERS •  Compensatory – a delay caused by actions or inactions by one of
the contracted parties that results in financial injury to the other party
at contract.
•  The burden of proving a compensable delay is borne by the
contractor
•  Government caused delays = equitable adjustment/claim
•  The contractor must prove the extent of the governmentcaused delay, and its increased costs, to prove its injury, and
there was no concurrent delay.
•  Contractor caused delays = liquidated damages
•  The Government must prove the extent of contractor caused
delay, and there was no concurrent delay.
EXAMPLE: ADVERSE WEATHER •
•
•
•
•
•
•
•
•
Non Compensable
Notification to Government
UPDATED Schedule – CPM (Monthly)
Extends Contract Completion
Calendar Work Days per Week – 5 or 7
Scheduled CP Activities – 50% production
Daily Reports (Temp, Winds, Humidity)
Fragnet of Impact entered into schedule
Analysis of As-Planned to As-Built
Ques?ons? Paulanne Page
David Hayden pagep@ncmbc.us dhayden@smithlaw.com (910) 330-­‐8560 (919) 821-­‐6755