On-Time Completion - Not a Bar to Damages for Government Delay

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November 07, 2005

On time and on budget completion are the hallmarks of efficient contracting. However, many contractors who finish on time, but not on budget, fail to pursue rightful damages for government-caused delay. From the contractor’s perspective, what is the value of on-time performance when the company suffers a loss? It depends. A contractor can obtain damages for government-caused delay where it can prove that it planned to (and would have) actually finished the contract prior to the contract completion date but for certain government-caused acts and/or omissions.

In a recent federal Board of Contract Appeals decision, the contractor had been awarded a competitively bid construction contract by the National Parks Service to repair the parking garage at the John F. Kennedy Center for Performing Arts in Washington D.C. The contract called for completion within three years. After completion of the project within the time prescribed by the contract, the contractor sought an equitable adjustment for “alleged charges, delays, disruptions, and loss of labor productivity” caused by the government, totaling approximately $1.5 million. The contractor argued that government-caused actions prevented it from completing the project within its “as bid” schedule.

An important issue in this case was whether there was early notification to the government of the contractor’s intent to better the original contract schedule. Significantly, however, the Board found, that “the proper focus is whether [the contractor] would have completed the project early, but for the government-caused delay.”

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The federal law applicable to delay claims focuses primarily on facts related to the actual performance of the contract. Detailed evidence must be presented that demonstrates whether the contractor intended to, and actually would have, completed the project early but for any proven government-caused delay. The issue as to whether or not the contractor informed the government at the outset of its intention to complete early is not determinative. Evidence of such advice is relevant, but the weight to be given it is in the discretion of the Board of Contract Appeals, to be determined on a case-by-case basis after a full hearing.

Federal contractors should and will be given an opportunity to present evidence of their original intent to finish early, as well as the extent to which government-caused delay frustrated that plan. If a contractor protected the project’s schedule at its own expense, despite the government’s delay or disruption, and still finished early or on time, it should be entitled to an opportunity to protect its lost profits as well.

G&C Commentary

This case clearly establishes that contractors will have the opportunity to seek damages from the federal government when they are frustrated in effectuating their “as bid” early completion schedules. In this regard, it would be extremely helpful to advise the government, in writing, of such intent at the earliest possible time. However, this case now establishes that such notice is not essential. It is crucial to maintain accurate and sufficiently detailed “as bid” schedules, schedule analyses and other estimating records. Furthermore, a contractor must be prepared to prove its intended “means and methods” for early completion. Both the contractor’s “as bid” early completion schedule and its planned means and methods must be feasible and credible.

The foregoing does not present a particularly difficult burden particularly where these records are kept on a contemporaneous basis. The records must be prepared with advanced thought and careful planning. A contractor who determines late in the job that it “could have” completed early, but for the actions of the government, will (and should) have a much more difficult burden of demonstrating entitlement to damages for government-caused delay where it completes on time.

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