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Contractor Recovers for Constructive Acceleration After Receiving Insufficient Time Extensions
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March 6, 2006
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Thelen Reid Brown Raysman & Steiner LLP
A general contractor contracted with the U.S. Army Corps of Engineers to build temporary lodging facilities and a service building at Altus Air Force Base in Oklahoma. The project included installation of an underground irrigation system and utilities. The contract allowed for time extensions for unusually severe weather that caused delays. Another provision in the contract addressed delays due to differing site conditions. It required the contractor to give prompt notice of them and the Corps' contracting officer to investigate claims that differing site conditions increased the contractor's time and cost of completing the job. Excusable delays would extend the completion deadline.
Just over a month after the contract was awarded, the contractor began excavation. A Corps inspector told the contractor to stop excavation until the Corps secured excavation permits. The contractor proceeded to landscape above ground but was delayed two weeks by the lack of excavation permits. Once the permits were secured, the contractor was further delayed by pre-existing but undisclosed underground utilities and storm drains. Once these problems were resolved, the contractor experienced more delays because of unusually severe weather. The contractor properly notified the Corps of all these delays.
Almost eight months after the project began, the contractor submitted bar-charts of critical activities to the contracting officer, which showed total delays of almost five months and project completion almost five months after the date called for in the contract. The contracting officer told the contractor that its completion date "wouldn't work" for the Corps. Instead, the contracting officer told the contractor to submit a progress schedule showing a completion date that represented a 75-day extension to the initial contract - half the amount of time the contractor needed to finish the job.
Shortly after this discussion, the contracting officer told the contractor by phone to "accelerate your schedule" although no written order was given. The contractor later sent a letter to the contracting officer documenting such direction and providing a revised schedule. To meet this demand, the contractor told its subcontractors to accelerate their schedules by increasing crew sizes and extending work hours. The contractor incurred an estimated 12 times more overtime hours than before the acceleration directive.
Once the project was completed, the Corps withheld liquidated damages for 25 days of delays. The contracting officer also denied that he ever told the contractor to accelerate the work schedule. In response, the contractor filed a claim with the Corps for almost $400,000 in acceleration costs and for release of the liquidated damages. The Corps denied the claim, and the contractor appealed to the Armed Services Board of Contract Appeals. The main issue before the Board was whether the contracting officer's communication to the contractor was a constructive acceleration.
In deciding the issue, the Board relied on a 5-pronged test long used by the Court of Federal Claims. A contractor must prove all of the following elements:
| 1. | The contractor encountered a delay that is excusable under the contract.
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| 2. | The contractor made a timely and sufficient request for an extension of the contract schedule.
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| 3. | The government denied the contractor's request for an extension or failed to act on it within a reasonable time.
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| 4. | The government insisted on completion of the contract within a period shorter than the period to which the contractor would be entitled by taking into account the period of excusable delay, after which the contractor notified the government that it regarded the alleged order to accelerate as a constructive change in the contract.
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| 5. | The contractor was required to expend extra resources to compensate for the lost time and remain on schedule.
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The Board determined that the contractor proved 130 days of delay and that the contractor timely notified the contracting officer of delays and requested schedule adjustments for them. The Board next found that the Corps denied the time extension requested by the contractor for excusable delays. Finally, the Board found that the contractor increased its workforce and schedule to complete the project as close to the extended completion date as possible. Accordingly, the Board held that the contractor proved a constructive acceleration to the extent of 55 days (130 days of delay - 75 days extended by the Corps). Robust Construction, LLC, 05-2 BCA ¶33,019 (ASBCA 2005). The Board also held that the Corps erred by withholding liquidated damages. The case was remanded to the parties to negotiate the amount of recovery.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-369-7229 or at pwberning@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2006 Thelen Reid Brown Raysman & Steiner LLP
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