PANDEMIC: A FIRST LOOK AT CLAIMS

This is a reminder that an epidemic or pandemic is an excusable cause for delay of a government contract and a defense to a termination for default.  The fixed price supply and services default termination clause in FAR 52.249-8 and the fixed price construction default termination clause in FAR 52.249-10 list an epidemic as an excusable cause of delay and failure to perform.  But ignoring the contracting officer and hoping for the best is not a good idea.

As with any disruption of performance, documenting events as they occur is of the upmost importance.  Keep good records of delays and disruptions.  Assign separate charge accounts for collection of costs associated with these delays and disruptions.  And put the contracting officer on notice of that you will be seeking relief.  In fact, now is an excellent time to get to know your contracting officer even better.  Often a contracting officer can be a good source of information on the government's view of how to handle the crisis.

What about affirmative relief?  A pandemic is an excuse for delay or non performance and a defense to a termination for default, but can a contractor also recover losses resulting from the pandemic?  The answer is yes under the Suspension of Work and Changes clauses.  The government may suspend performance for its own convenience and the case law holds a contractor should be compensated even though the government is not at fault in ordering the suspension.  The Suspension of Work clause precludes recovery under the clause where provision is made for an equitable adjustment in price and schedule in another clause.  The Changes clause is one such clause.

The sovereign act defense may apply to suspensions and therefore preclude recovery.  However, it has been held that the defense does not apply if the contracting officer orders the suspension of work.  The boards and courts recognize constructive suspensions.  The Suspension of Work clause states the suspension can be for the convenience of the government and the Court of Federal Claims has held that "despite the lack of fault in the actions of the government. . .the contractor cannot reasonably be expected to bear the risk and costs of the delay."

Relief also may be available under Public Law 85-804, FAR Subpart 50.1.  The act, and implementing regulations, permit agencies such as the Department of Defense, the Department of Homeland Security, the General Services Administration, NASA, other agencies listed and any other agency authorized by the President to provide monetary relief.

Relief can take the form of a contract modification without consideration to cover the contractor's loss if there is a finding it will inure to the benefit of national defense.  A request for relief must be submitted to the contracting officer supported by information described in FAR 50.103-3 and 50.103-4.  Agencies also have established Contract Adjustment Boards with authority to approve, authorize, and direct appropriate actions under FAR Subpart 50.1.

bill@spriggsconsultingservices.com              bill@spriggslawgroup.com