Many contractors are facing work stoppages or suspensions because of COVID-19—especially where working from home is not feasible. This post aims to provide a little bit of clarity about work stoppages, suspensions, and the FAR’s excusable delays provision.
Government agencies can pause, or stop, work for several different reasons and in a number of different ways. I’ll discuss the major ones below: stop-work orders and suspensions.
FAR 52.242-15-Stop-Work Order is used for supplies, services, or research and development contracts. It allows a contracting officer to require a contractor to “stop all, or any part, of the work” under the contract for up to 90 days, or more if the parties all agree to extend it. Under FAR 42.1303, the contracting officer should discuss such an order with you after issuing it and modify it if necessary. The contracting officer must provide this order to contractors in writing. This kind of order is likely to come by email nowadays, but a phone request to stop work is not a stop-work order.
Typically, before the stop-work period ends, a contracting officer must cancel the stop-work order or terminate the work for default (placing fault with the contractor) or for convenience. Fortunately for contractors facing COVID-19 related work stoppages, default termination won’t be an option. FAR 52.249-14- Excusable Delays precludes default terminations if a contractor’s failure to perform “arises from causes beyond the control and without the fault or negligence ” of the Contractor. See our post here for more information about this provision.
After a stop-work order is in place, affected contractors must “immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage.” Put differently, contractors must stop working and take steps to mitigate any additional costs that may rack up while waiting for work to begin again. Some examples for mitigating costs might include moving workers to different projects or using equipment at different sites if you can.
Under fixed-price construction or architect-engineer contracts, contracting officers may also suspend work. FAR 52.242-14 covers work suspensions. Similar to work stoppages, suspensions must be made by a Contracting Officer in writing. While there is no mitigation requirement, it is good practice to try to mitigate costs where you can.
Along with mitigating costs during a work stoppage or suspension period, remember to document all costs throughout so that you can request equitable adjustment in the event the work resumes or is terminated. If stopped work is resumed, then the contracting officer must make an equitable adjustment to the contract. To receive an equitable adjustment, a contractor must assert the right to adjustment “within 30 days after the end of the period of work stoppage.” In addition, if the work is terminated, then the contracting officer must also allow compensation of “reasonable costs resulting from the stop-work order.”
Unfortunately, equitable adjustment is not likely if your work is suspended due to COVID-19, rather than under a stop-work order. Unlike work stoppage, if work is suspended, FAR 52.242-14 only allows for equitable adjustments when the Contracting Officer causes the delay by failing to act in reasonably and accordance with the contract or by acting unreasonably. Because COVID-19 related suspensions are highly unlikely to be deemed a contracting officer’s fault, equitable adjustments similarly unlikely.
What are the takeaways? In the coming weeks (and maybe months) contractors are likely to face work stoppages or suspensions because of COVID-19. In that case, they should do what they can to mitigate costs associated with the stopped or suspended work—and keep in mind the differences between the two. In addition, taking extensive notes on any and all discussions with agency officials about the effects of work stoppages or suspensions will provide a useful record in the long run.
If you have questions about work stoppages or suspensions related to COVID-19, email us or give us a call at 785-200-8919.