Nova Group/Tutor-Saliba v. United States, 125 Fed. Cl. 469 (Fed. Cl. Mar 16, 2016)

The United States Naval Facilities Engineering Command (the “Navy”) contracted with the joint venture of Nova Group and Tutor-Saliva (the “JV”) for construction of a pier at the Puget Sound Navy Shipyard in Bremerton, Washington. The contract assigned selection of pier stability assessment methods to the JV’s discretion. Exercising that discretion, the JV selected a SAP 2000 model for performance design loads. Five months after the Navy had approved the JV’s design submittals, the Navy’s construction manager voiced concerns about the design and questioned the JV’s reliance upon the SAP 2000 model.

Although the Navy did not direct the JV to stop construction, the JV immediately halted work and revisited the design for fear of extensive corrective work should construction continue and the Navy’s concerns prove correct. Ultimately, the JV reevaluated the design and, after several months, confirmed to the Navy’s satisfaction that the design was adequate. The design reevaluation caused the JV to incur delays and to accelerate its work in order to meet the contract deadline for completion. The JV alleged that the Navy’s explicit questioning of the previously approved design was a misinterpretation of the contract documents which gave rise to a constructive change and entitled the JV to recover acceleration costs.

The JV began to incur acceleration costs once it resumed work on May 27, 2010. It did not submit written notification of the cost increase and request for equitable adjustment until more than three months later. The contracting officer rejected the JV’s claim of construction change on the basis that the JV failed to submit written notice of the claimed constructive change within the 20-day period required by FAR 52.243-4. The JV then filed suit in the Court of Federal Claims, and the government moved to dismiss the complaint for failure to state a claim, basing its motion on the same rationale as the contracting officer’s decision.

The court denied the government’s motion to dismiss, ruling that the JV’s claims fell within a recognized exception to the 20-day notice requirement of FAR 52.243-4 because the Navy had actual knowledge of the circumstances giving rise to the constructive change claim. In support of its ruling, the court cited the JV’s allegations that the Navy was aware of the work stoppage, participated in meetings with the JV during the stoppage, and observed and approved the subsequent employment of manpower, equipment, and overtime to accelerate the work. The Navy was aware of the circumstances giving rise to the claim and had no demonstrable prejudice from the lack of a written notice within the 20-day period. As a result, the court held that FAR 52.243-4 did not serve as a bar to the claims.

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