2013 FEDCON SUMMIT
Government Contract Disruptions, Delays
and Changes

Presented By:

David L. Hayden
Smith, Anderson, Bl...
AGENDA
•
•
•
•
•

2

Captain Phillips and the Maersk Alabama
Disruption-What is the impact
Delay-When is it compensatory?
...
Disruptions
Example: Differing Site Conditions (DSC)
• FAR 52.236-2
– Allows equitable adjustment if contractor provides
p...
TYPE I DSC
• FAR 52.236-2(a)(1) Contractor must prove:
– Contract implicitly or explicitly indicated particular site
condi...
TYPE II DSC
• FAR 52.236-2 (a)(2) Contractor must prove:
– Conditions encountered were unusual physical
conditions that we...
Delays Due to Suspension of Work
FAR 52.242-14: The KO may suspend, interrupt, or delay
work for the government’s convenie...
Delays Due to Suspension of Work
• Contractor may be entitled to a performance period
extension even if the delay is reaso...
Loss of Efficiency
• Disruption caused by government changes and/or delays
may cause a loss of efficiency to the contracto...
TYPES OF DELAY/DISRUPTION
• Excusable – delay is not the result of actions or inactions
by either party at contract.
• Del...
DELAY/DISRUPTION = CHANGE ORDER?
• Compensatory – a delay caused by actions or inactions by one of
the contracted parties ...
CHANGE ORDERS
•

Differing site conditions.

•

Regulatory changes.

•

Owner changes.
– Scope added/deleted during constr...
CHANGE ORDERS
• Changes may have both cost and schedule impacts.
• Dealing with changes promptly will have the least
amoun...
CHANGE ORDER
• Most Contracts do not
spell out a formal
“Contractor Change
Request” process.

• If the Contractor wants to...
CHANGE ORDERS
• Compensatory – a delay caused by actions or inactions by one of
the contracted parties that results in fin...
EXAMPLE: ADVERSE WEATHER
•
•
•
•
•
•
•
•
•

Non Compensable
Notification to Government
UPDATED Schedule – CPM (Monthly)
Ex...
Questions?
Paulanne Page
pagep@ncmbc.us
(910) 330-8560

David Hayden
dhayden@smithlaw.com
(919) 821-6755
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FEDCON Summit: Change Orders & Contract Disruptions/Delays

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FEDCON Summit: Change Orders & Contract Disruptions/Delays

  1. 1. 2013 FEDCON SUMMIT Government Contract Disruptions, Delays and Changes Presented By: David L. Hayden Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP & Paulanne Page (Team Leader, NCMBC)
  2. 2. AGENDA • • • • • 2 Captain Phillips and the Maersk Alabama Disruption-What is the impact Delay-When is it compensatory? Change Orders Questions
  3. 3. Disruptions Example: Differing Site Conditions (DSC) • FAR 52.236-2 – Allows equitable adjustment if contractor provides prompt, written notice of DSC – Ensure clause is in contract or remedy not available – Type I DSC (Relies on contract representations) – Type II DSC (Unusual & unknown physical conditions) 3
  4. 4. TYPE I DSC • FAR 52.236-2(a)(1) Contractor must prove: – Contract implicitly or explicitly indicated particular site condition – Reasonable interpretation and reliance by contractor on site conditions – Latent or subsurface conditions differed materially from those indicated in contract – Costs were attributable solely to differing site conditions. 4
  5. 5. TYPE II DSC • FAR 52.236-2 (a)(2) Contractor must prove: – Conditions encountered were unusual physical conditions that were unknown at the time of contract – The conditions differed materially from those ordinarily encountered • • • • 5 Acts of nature after 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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.
  10. 10. 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.
  11. 11. 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
  12. 12. 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.
  13. 13. 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.
  14. 14. 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.
  15. 15. 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
  16. 16. Questions? Paulanne Page pagep@ncmbc.us (910) 330-8560 David Hayden dhayden@smithlaw.com (919) 821-6755

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