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    I have a construction contract that has experienced COVID delays. I believe that using FAR 52.249-14(a)(5) Excusable Delays for non-compensable time is appropriate while others in my office say to use FAR 52.243-4. I disagree with FAR 52.243-4 because I as KO didn't make any changes to the contract, the pandemic did. What is the best solution in this situation?


          As clarified in our discussion with the questioner, neither 52.249-14 nor 52.243-4 would be applicable.  Clause 52.249-14 is for cost reimbursement contracts, and 52.243-4 refers to contracting officer changes that did not occur.  We believe 52.249-10 is applicable, since it covers fixed price construction contracts and provides a remedy of more time, rather than monetary compensation.  

    Let's look deeper into excusable and compensable delays to get a better understanding of this unique Covid situation.  

    In order for the contractor to receive compensation for the delays, they must meet the criteria for one of the two types of compensable delays (see below under "compensable delays"). An excusable delay is not a compensable delay, much like the Ebola case sited below, the period of performance is extended but the scope or requirements of the contract are not, so contractor cannot justify compensation.

    Compensable delays

    A contractor’s ability to recover increased costs resulting from delays will depend upon the cause of the delay, the nature of its impact on the contractor, and the contractual provisions dealing with compensation for delays. Broadly speaking, there are two types of compensable delays: (1) government-ordered suspensions; and (2) constructive suspensions.

    Government-ordered suspensions arise when the contracting officer issues a directive to stop or suspend work. These suspensions are generally covered by Federal Acquisition Regulation 52.242-14 addressing suspension of work, and FAR 52.242-15, addressing stopwork orders.

    Constructive suspensions occur when work is stopped absent an express order by the contracting officer and the government is found to be responsible for the work stoppage. (constructive suspension) Regarding COVID-19, contractors should look out for constructive delays arising from restrictions of access to facilities, or other actions by the government that may impact or delay performance. In such a case, the contractor should promptly notify the contracting officer of the impacts associated with these directives or restrictions. If the directive did not come from the contracting officer, the contractor should seek ratification or direction on how to proceed with performance from the contracting officer, which may provide the opportunity for recovery under the changes clause. Thus, government contractors should be mindful of whether a government action or change creates constructive suspensions or delays. Contractors who have been constructively suspended should be ready to timely assert a constructive suspension claim. Contractors should also be diligently documenting the actual cost impact resulting from any constructive suspension.

    Excusable delays

    Whereas the focus of compensable delays is on compensating the contractor for the cost impact resulting from the delay, the focus of an excusable delay is to protect the contractor from sanctions for late performance. Whether or not a delay is excusable usually depends on the language of the contract provision at issue. Several FAR provisions address excusable delays relating to quarantine restrictions or epidemics that may apply to COVID-19-related delays on federal contracts. For example, excusable delays in fixed-price construction contracts are addressed in FAR 52.249-10, the default fixed-price construction clause. Importantly, FAR 52.249-10 lists epidemics and quarantine restrictions as excusable delays.

    While inarguably disruptive, the spread of COVID-19 within the U.S. does not create an excusable delay per se. Cases analyzing delays claimed from the onset of an epidemic require that the contractor prove both the occurrence of the epidemic and that the epidemic was the material contributing cause of the performance delay.Thus, the contractor should be prepared to prove aspects of the onset of the epidemic or mandated quarantine that materially impacted performance and the extent of delay directly caused by the epidemic. Generally, contractors should carefully document: (1) the onset and duration of the epidemic; (2) which personnel were affected by the epidemic, and for what periods they were absent or quarantined as a result of the disease; (3) whether or how such absences caused a delay in performance and the duration of that delay; and (4) what reasonable efforts were made during those epidemic-related absences to continue operations. Accordingly, contractors who have experienced delays because of COVID-19-related events and occurrences should also be prepared to timely demonstrate that such delays were, in fact, caused by a recognized excuse. Indeed, failure to do so could result in harsh sanctions, including but not limited to being terminated for default. 

    While there is no significant caselaw development specifically related to COVID-19 construction delays at this time, there’s plenty of guidance relating to government contracts from past unforeseeable events and their subsequent construction delays. Legal precedent suggests, that contractors should not hold their breath for delay-related compensation. The FAR is very particular when it comes to a contractor’s right to delay-related compensation (i.e., government must be the sole cause of the delay to justify compensation). Contractors will have a difficult time arguing that delays resulting from COVID-19 were foreseeable by the government in a way that would entitle them to compensation. In the now infamous case, Pernix Serka JV c. Department of State, a contractor was unable to meet certain deadlines due to the Ebola virus outbreak in Sierra Leone. The contractor was given time extensions by the government agency but was ultimately terminated due to the continued delays. The contractor brought suit, seeking compensation for the costs it incurred to protect the health of its employees by arguing that the government agency’s expectation that work continue during the Ebola outbreak constituted a constructive and cardinal change. The Civilian Board of Contract Appeals denied the claim, noting that the government agency never changed the scope of work expected of the contractor and that, even though the Ebola outbreak was unexpected, the government agency did not direct the contractor to make any changes as it related to the construction to justify compensation. Using this example, contractors may be expected to show that the government ordered revisions to the schedule or scope of work in lieu of the pandemic, which would then entitle the contractor to compensation. Additionally, contractors should note that any delay in their own project management during the pandemic may provide the government with a concurrent delay counterclaim that could eliminate the ability to receive compensation.

    Past flu epidemic excusable delay cases suggest that contractors claiming a delay in performance due to the COVID-19 pandemic should be prepared to establish, with specificity, how the pandemic directly caused their delays. Merely pointing to COVID-19 as a cause for delay will likely be insufficient, especially because – unlike past flu epidemics – the COVID-19 pandemic has impacted industries across the country for longer than just a few months. In other words, while certain Stay-at-Home Orders that did not identify construction workers as “essential” is likely cause for an excusable delay, lack of manpower due to employee illness may require more detail.

    Bottom line- COVID-19 related excusable delay claims must be equipped with detailed documentation that establish the causal link between the pandemic and the specific delays. Contractors need to identify the precise ways in which they attempted to mitigate such delays in order to avert government claims of concurrent delay. 

    More background on:  The CARES Act

    Something to consider- The CARES Act – initially enacted in March 2020 to address the COVID-19 pandemic and subsequently amended through further legislation – provides a limited exception to cost-reimbursement rules for a limited time. Section 3610 of the CARES Act permits Federal agencies to reimburse contractors’ costs of paid leave (including sick leave) for employees and subcontractors when they are unable to perform work on-site because of facility closures and also unable to telework. The leave costs must meet several conditions, including that they were not reimbursed under other COVID-19 relief programs. This authority is limited to contractors who cannot perform work on an approved government-owned or leased site due to facility closures or other restrictions, and who cannot telework during the COVID-19 public health emergency because their job duties cannot be performed remotely. In the cognizant agency’s discretion, even contractors performing fixed-price contracts may benefit from this limited exception, which applies to costs incurred through September 30, 2021 (extended for a full year from the initial deadline of September 30, 2020).


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