The coronavirus (COVID-19) is gaining speed and construction projects across the country and in Florida have reportedly been slowing or shut down as a result. It’s time for construction contractors, including those working on government projects, to consider whether they will be entitled to additional money and/or time on their projects. In this post, we will take a brief look at how things might shake out on federal government and Florida Department of Transportation (“FDOT”) projects.
Federal Government Projects
Unlike many private project contracts, the Federal Acquisition Regulation (“FAR”) specifically addresses epidemics and quarantines in FAR 52.249-14:
[T]he Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are . . . epidemics . . . [and] quarantine restrictions[.] In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor.
Under the above provision, if a federal government project is delayed due to coronavirus-related issues, that delay would be excusable and the contractor would almost certainly be entitled to a time extension.
But what about getting additional money for a coronavirus-caused impact to a project? Unfortunately, the FAR does not expressly give a contractor additional compensation for coronavirus impacts.
Regardless, it is important that contractors give timely notice to the federal government of any impacts, including the need for additional time. Failure to do so may result in the contractor losing its right to a time extension.
Florida Department of Transportation Projects
Under section 8-7.3.2 of the Standard Specifications that apply to FDOT projects, a time extension should be available:
The Department may grant an extension of Contract Time when a controlling item of work is delayed by factors not reasonably anticipated or foreseeable at the time of bid. The Department may allow such extension of time only for delays occurring during the Contract Time period or authorized extensions of the Contract Time period.
It would be difficult for FDOT to argue that the coronavirus pandemic was reasonably anticipated or foreseeable at the time of bid, so a contractor would have a strong argument that it is entitled to extra time to complete the project.
Note that two tiers of notice to FDOT are required for a time extension. First, a preliminary time extension request must be submitted in writing to FDOT within 10 days after a delay to a controlling item of work. Second, a written time extension request must be submitted to FDOT within 30 days after elimination of the delay to the controlling item of work. Failure to comply with both notice requirements may result in the contractor waiving its right to a time extension.
The Standard Specifications leave open the possibility of a contractor receiving additional compensation for a delay that is beyond the control of and not caused by the contractor. Similar to a time extension request, a contractor needs to submit timely notice of its intent to make a claim for additional compensation within 10 days after the start of a delay to a controlling work item.
Contractors should read their contracts closely and determine how to address projects that are delayed by coronavirus-related issues. At this point, the most important thing is submitting notices to the owner that the current pandemic is impacting the contractor’s ability to timely construct the project. At the same time, a contractor should do its best to track any additional costs incurred due to the coronavirus.
If you are a contractor looking for a form letter to send to a government owner regarding potential coronavirus-related impacts to a project, please send me an e-mail, and I would be happy to share a form letter with you.