Excusable Delay: Government’s Failure To Extend Was “Constructive Acceleration”

Federal contractors not so infrequently find themselves in a position where they are unable to complete performance of a contract by the agreed-upon deadline. So, what happens when the delay is neither party’s fault, but the government denies extension of the period of performance or provides inadequate extensions?

In IAP Worldwide Services, Inc. (ASBCA Nos. 59397, 59398, and 59399), the Armed Services Board of Contract Appeals found under the legal theory of “constructive acceleration” that the U.S. Army Corps of Engineers was liable for extra costs incurred by IAP due to the Corps insistence of timely contract delivery despite excusable delays.

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Government Tenant Liable For Damaging Leased Space

A government agency was liable for damaging leased space, even though the lease didn’t contain an explicit clause requiring the government to repair the space.

In a recent decision, the Civilian Board of Contract Appeals held that the VA was required to compensate the landlord for damage to the space, because every lease–including those entered by government tenants–contains an implied provision requiring the tenant not to damage the leased space, except for ordinary wear and tear.

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Contractor Awarded $31,000 In Attorneys’ Fees For $6,000 Claim

A contractor was awarded more than $31,000 in attorneys’ fees and costs after a government agency unjustifiably refused to pay the contractor’s $6,000 claim–forcing the contractor to go through lengthy legal processes to get reimbursed.

A recent decision of the Civilian Board of Contract Appeals is a cautionary tale for government contracting officials, a few of whom seem inclined to play hardball with low-dollar claims, even when those claims are entirely justified.

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ASBCA Says Contractor Wasn’t Exempt From State Tax

They say that two things in life are guaranteed – death and taxes – and status as a federal contractor may not exempt one from the latter, according to a recent Armed Services Board of Contract Appeals decision.

In Presentation Products, Inc. dba Spinitar, ASBCA No. 61066 (2017), the ASBCA held the contractor was liable to pay a state tax, and the government had no duty to reimburse the contractor. The problem arose from the fact that the contractor did not incorporate state tax costs into its proposed price, despite being required to pay the taxes under the terms of the contract and applicable state law.

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Contractor’s Lackadaisical Proposal Preparation Sinks Its Claim for Costs

To federal construction contractors, the true legwork may seem to begin only after the government has accepted a proposal and performance has begun. However, a recent Armed Services Board of Contract Appeals decision reinforces that federal construction contractors’ work often should begin long before contract award.

In Zafer Construction Company, ASBCA No. 56769 (2017), the ASBCA rejected a construction contractor’s allegations of unilateral mistake, unconscionability, and differing site conditions (among other claims for additional costs). The problem? The contractor did not attend a government scheduled site visit, conduct an independent site visit, review technical drawings, submit any inquiries during the proposal stage, or otherwise take reasonable steps necessary to better ascertain the nature of the work prior to submitting a multimillion dollar proposal on a complex project.

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Government Liable For Negligent Estimate, Court Rules

The government’s use of specifications within a contract carries an implied warranty that the specifications are free from errors. When a contractor is misled by the erroneous specifications, the contractor may seek recovery through an equitable adjustment to the contract. But what happens when the government seeks services through a requirements contract and is simply negligent in estimating its needs?

A recent Federal Circuit decision, Agility Defense & Government Services, Inc., v. United States, No. 16-1068 (Fed. Cir. 2017)  finds that a contractor may be able to recover damages in such instances under a negligent estimate theory.

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Board: Contractor On Hook For Incumbent Employees’ Vacation Time

The Service Contract Act requires contractors to pay certain provide no less than certain prevailing wages and fringe benefits (including vacation) to its service employees. The amount of vacation ordinarily is based on an employee’s years of service—and service with a predecessor contractor counts. The FAR’s Nondisplacement of Qualified Workers provision, in turn, requires follow-on contractors to offer a “right of first refusal” to many of those same incumbent employees.

A follow-on contractor is to be given a list of incumbent service personnel, but that information ordinarily isn’t available at the proposal stage. So what happens when a follow-on contractor unknowingly underbids because it isn’t aware how much vacation is owed to incumbent service personnel? The answer, at least in a fixed-price contract, is “too bad for the contractor.”

So it was in SecTek, Inc., CBCA 5036 (May 3, 2017)—there, the Civilian Board of Contract appeals held that a contractor must pay employees retained from the incumbent nearly $170,000 in wage and benefit costs based on its underestimate of those costs in its proposal.

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