Hard Hat Case Notes

• Author: By Christopher M. Burke and Lauren P. McLaughlin
• Pages: 38-41

THE CONSTRUCTION LAWYER38 Summer 2020

Published in The Construction Lawyer, Volume 40, Number 3 Summer2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

HARD HAT CASE NOTES

By Christopher M. Burke and Lauren P. McLaughlin

Christopher M. Burke is a partner with Varela, Lee, Metz

& Guarino, LLP in Tysons Corner, Virginia. Lauren P.

McLaughlin is a partner with Smith, Currie & Hancock

LLP in Tysons Corner, Virginia.

Federal Contractor’s Pandemic Delays Ruled Not

Compensable

Unquestionably, a new body of case law will emerge from

COVID-19-related construction disputes. In what may

be a preview of pandemic jurisprudence, the Board of

Contract Appeals recently issued a decision evaluating

a contractor’s $1.2 million request for equitable adjust-

ment relating to the 2014 Ebola outbreak in Sierra Leone.

In 2013, the Department of State (DOS) awarded a

rm-xed-price contract for $10 million to Pernix Serka

Joint Venture (PSJV) to build a rainwater capture and

storage system in Freetown, Sierra Leone. The contract

permitted PSJV to obtain additional compensation for

value-added taxes, not to exceed $1.6 million. The con-

tract included an “Excusable Delays” clause that followed

the Federal Acquisition Regulations (FAR). This clause

provided for “force majeure” type scenarios that would

entitle the contractor to time extensions (but no compen-

sation) for delays such as acts of God, governmental acts,

res, oods, epidemics, quarantine restrictions, strikes,

freight embargoes, or unusually severe weather.

For any of the “force majeure” instances, the failure

of the contractor to perform work related to any of those

delays must have been without the fault or negligence of

the contractor, and the failure to perform must have also

been tied to one of three prerequisites for a time exten-

sion: (1) the delay must have been one that the contractor

could not have reasonably anticipated, (2) the delay could

not have been overcome by reasonable efforts to resched-

ule the work, and (3) the delay must not have directly and

materially affected the nal date of completion.

The State Department issued a notice to proceed on

December 17, 2013, and the contract required project

completion eleven months later, by November 17, 2014.

By August 2014, PSJV had completed approximately 65

percent of the project. At that time, however, an out-

break of the Ebola virus had spread from New Guinea

to Freetown, Sierra Leone. Concerned about the virus’s

impact on the project and safety of the personnel, PSJV

contacted the contracting ofcer seeking instructions or a

joint consensus on how to best proceed. The contracting

ofcer responded via email providing little to no guid-

ance, only saying, “I can’t at this time tell you to leave

the Post due to current conditions. I do understand that

the situation there is [going] downhill fast. ... It is up to

you to make a decision as to if your people should stay

or leave at this time ... but the decision for your people

to stay or leave for life safety reasons rests solely on your

shoulders....”

On August 7, 2014, PSJV then sent a notice of delay

to the DOS related to the Ebola crisis. The next day, the

World Health Organization (WHO) declared the outbreak

an “international public health emergency” and airlines

suspended ights. Some contractor and subcontractor

personnel asked to leave Sierra Leone because of the

Ebola threat and the increased risk of not being able to

leave the country. Given the worsening conditions, PSJV

decided to shut down the project worksite as a tempo

-

rary measure. In response to the temporary shutdown,

the DOS sent a letter stating, “[s]ince you are taking this

action unilaterally based on circumstances beyond the

control of either contracting party, we perceive no basis

upon which you could properly claim an equitable adjust-

ment from the Government....”

PSJV submitted an order of magnitude cost proposal

for the additional life safety measures needed to complete

the project. The DOS rejected the proposal, citing the

potential for a time extension only and not costs. PSJV

ultimately returned to the project in March 2015. The

DOS granted a time extension for the 195 additional days

requested by PSJV resulting from the Ebola outbreak. In

2017, PSJV submitted a certied claim for $1,255,759,

seeking $608,891 in additional life safety measures to

maintain a safe work site and $646,868 in disruption and

demobilization costs.

The DOS denied the claim and PSJV appealed the

denial to the Civilian Board of Contract Appeals (Board).

The DOS moved for a quick resolution before the Board,

arguing on summary judgment that because the contract

at issue was a rm-xed-price contract, PSJV assumed

the risk of any unexpected costs not attributable to the

government. The Board began its analysis by agreeing

with the government that xed-price contracts are simply

Christopher M. Burke Lauren P. McLaughlin