Liability lessons from the ASBCA's Granite decision

In Granite Construction Company, ASBCA No. 62281 (November 1, 2023), the Armed Services Board of Contract Appeals ("Board") addressed the issue of what constitutes a reasonable period of time to suspend work under the suspension-of-work clause (FAR 52.242-14).

Background

In Granite, the contractor entered into a contract with the United States Army Corps of Engineers (government) to construct new outlet structures and cutoff walls at two dams to support a federal flood control project in Houston. The contract incorporated by reference the suspension-of-work clause and also included a provision (section 1.4) that explained how time extensions would be determined for unusually severe weather.

In August 2017, Hurricane Harvey brought rain and flooding to the project site, leading to the government releasing water from the dams at the project site. Thereafter, the government issued a suspension of work directing the contractor to cease work on the new construction. The suspension lasted 49 days.

The contractor subsequently filed a request for equitable adjustment for the costs resulting from the suspension. The government and the contractor executed a modification for 30 days of the suspension but left open the contractor's right to claim for the remaining 19 days of the suspension. The government took the position that the 19 days were anticipated adverse weather days identified in section 1.4 of the contract.

Decision

The Board granted the contractor partial summary judgment by holding that adverse weather delays set forth in section 1.4 of the contract may not be subtracted from a suspension period issued pursuant to the suspension-of-work clause. The Board stated that section 1.4 only defines what constitutes "unusually severe weather" for determining if a default is excused under the default clause, and there is nothing linking that section and the default clause to the suspension of work clause.

The Board then stated the remaining issue was "whether the 49 day suspension period was 'reasonable,' as that word is used in the Suspension Clause, or not." The Board noted that under the suspension-of-work clause, a contractor is only entitled to an equitable adjustment when the government suspends work for an unreasonable period of time, thereby delaying the work. The Board explained that a contractor may be compensated only for unreasonable government delays because there are "some situations in which the government has a reasonable time to make changes before it becomes liable for delay."

The Board then set forth the contractor's burden of proof: (1) establish there was a delay of unreasonable length extending the contract completion time; (2) establish the unreasonable delay was proximately caused by the government's action or inaction, (3) establish the delay resulted in some injury, and (4) establish there was no concurrent delay that was the contractor's fault.

The Board found that the contractor failed to prove the government suspended the contract for an unreasonable amount of time, noting that the suspension was limited in nature, and while it prohibited the contractor from performing new construction, it permitted the contractor to perform other work such as emergency repairs, repairs to damaged work and recovery and restoration activities. The Board also found that the contractor's own reports established that the contractor could not perform work on critical activities during the 49-day suspension due to flooding. The Board held that this established the suspension period was reasonable because the contractor could not perform work prior to the end of the suspension period. Since the delay was proximately caused by the flooding, the government could not be the sole cause of delay for purposes of the suspension-of-work clause.

Takeaway

The teaching point from this decision is that when the government suspends work pursuant to the suspension-of-work clause, the contractor must focus on tying the delay to government action as opposed to its own or third-party action.