When unanticipated conditions impact a contractor’s ability to perform its work as efficiently as expected, the contractor may consider pursuing a lost productivity or inefficiency claim. There are many ways to price or calculate a contractor’s inefficiency claim damages, some of which can be quite “creative.” Despite the temptation to calculate inefficiency damages in a manner that will create the biggest claim possible, contractors are best served to make their claims as accurate as possible. That is especially true when a contractor must submit its claim to a government owner such as the federal government. In a very recent case, Lodge Construction, Inc. v. United States, the contractor learned its lesson the hard way regarding the submission of inflated inefficiency claims to the government.
In Lodge, the United States Army Corps of Engineers awarded a project to a contractor to rehabilitate a levee in South Florida, which was part of the Corps’ overall “Everglades Update” restoration mission. During construction, the contractor’s cofferdam breached in two sections, flooding the project site. Later, the contractor submitted several claims to the government for three alleged conditions that impacted the contractor’s performance, including constructive changes to the contract specifications and a differing site condition. The contracting officer denied those claims, and the contractor appealed the decisions by filing lawsuits with the United States Court of Federal Claims. Those lawsuits were consolidated, and a five-day bench trial was held regarding the contractor’s claims.
After the trial, the court issued a 46-page opinion in which the court essentially threw out the contractor’s nearly $4 million in collective inefficiency claims against the federal government, because the court found the contractor’s claims were fraudulent. In particular, the court concluded that the contractor’s claims were fraudulent in at least four ways: