Contractors often have difficulty recovering delays in fixed-price construction contracts because they generally assume the risk of unexpected performance cost increases that are not the government's fault. When applicable, the Default (Fixed-Price Construction) clause at Federal Acquisition Regulation (FAR) § 52.249-10 provides the conditions required for construction contractors to show that any delays in their performance were excusable. Specifically, FAR § 52.249-10 (b) lists examples of delays that may be excusable in fixed-price construction contracts provided the general requirements of the clause are demonstrably met. It is crucial that contractors meticulously review the causes of excusable delays and the specific language of the included default clause in their contract to adequately understand their recovery options. Some examples of events or causes for excusable delay include:
- Acts of God
- Sovereign government actions
- Acts of other contractors performing on a government contract
- Fires, floods, and unusually severe weather
- Epidemics and quarantine restrictions
- Strikes
- Freight embargoes
- Excusable delays subcontractors or suppliers
In addition to listing scenarios where construction delays may be excusable, FAR § 52.249-10 (b) (1) requires contractors to demonstrate that the delay in completing the work occurred due to unforeseeable causes beyond the contractor's control. Furthermore, the contractor seeking to establish the excusability of the delay must prove that the events at issue could not have been reasonably foreseen. Foreseeability generally refers to whether the contracting parties could have reasonably anticipated that the events causing the delay would occur. Notably, just because the events causing the delay were possible at the time of formation does not necessarily mean that they were foreseeable for the purposes of establishing excusable delay. In addition to proving the lack of foreseeability of events causing the delay, the contractor must also show that it could not have prevented or mitigated the events causing the delay. That is, the events causing the delay were beyond its control. Finally, the contractor must also prove that it did not contribute to the delay by its own mistake or negligence.
In an appeal before the Civilian Board of Contract Appeals, CBCA No. 5683, the contractor could not recover increased costs of performance despite meeting the requirements of excusable delay due to the default clause only allowing for additional time and not monetary recovery. In that case, the contractor performing a fixed-price construction contract in Sierra Leone sought recovery for increased costs due to delays caused by the Ebola epidemic in 2014. The contract at issue included clause titled “Excusable Delays” that referenced default clause at FAR § 52.249-10 for defining excusable delays and expressly stated that the contractor would be allowed time, not money, for any excusable delays. The contractor, in that case, met the requirements for excusable delay as outlined in FAR § 52.249-10 (b). Firstly, Ebola was an excusable cause for delay as listed under FAR § 52.249-10 because the outbreak was a World Health Organization (WHO) declared epidemic by August 2014. Secondly, at contract formation, the contractor could not have reasonably foreseen that the epidemic would occur. Furthermore, the epidemic was beyond the contractor’s control. Finally, the contractor also did not cause the epidemic through its own fault or negligence. Therefore, all the requirements for an excusable delay as defined in FAR § 52.249-10 (b) were met. However, the CBCA determined that the contractor could not recover additional costs associated with the delay because the “Excusable Delays” clause in the contract expressly precluded monetary recovery. That is, in the event of an excusable delay, the contractor could obtain more time to perform the contract as described in FAR § 52.249-10 (b)(2), but not money for added performance costs. Largely, due to this provision, the contractor was unable to shift the risk of increased performance costs to the government and could not obtain monetary recovery for increased costs under the fixed-price contract.
While the clause at FAR § 52.249-10 offers a framework for establishing excusable delays in fixed-price construction contracts, recovering additional costs associated with delays will depend on the specific facts, and the rights and obligations of the parties under the contract. Contractors should carefully review any excusable delay provisions in their contract during formation to understand the possible avenues of recovery in case of excusable delays. Failing to do so could leave contractors in the unenviable position of having to absorb unforeseen cost increases despite meeting the criteria for an excusable delay. Finally, excusable delay provisions should be even more meticulously reviewed and negotiated in fixed-price construction contracts without a price adjustment clause, as contractors may have limited options for recovery in the event of excusable delays in such contracts.
This Federal Contract Claims Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.
