The global spread of the COVID-19 virus may put many federal contractors at risk of missing contractual deadlines. In a growing number of cases, supply chains may become cut off, work spaces may be closed, or employees may need to stay home, all of which could impact a contractor’s ability to perform in a timely manner. This is the first in a series of blog posts aimed at helping contractors navigate performance delays, changes, and other complications caused by the coronavirus outbreak.

When confronting challenges caused by the coronavirus, contractors should know that their contracts may contain clauses that would excuse these delays such as FAR 52.249-14 (cost reimbursement and time and material contracts), FAR 52.249-8 (fixed price supply and service contracts), and FAR 52.212-4 (commercial contracts). All of these clauses share a common thread – a contractor should not be in default because of a failure to perform the contract if the failure arises from causes beyond the control and without the fault or negligence of the contractor.

Among the examples of causes beyond a contractor’s control cited in the clauses include “epidemics” and “quarantine restrictions.” See FAR 52.249-14(a); FAR 52.249-8(c) and (d); FAR 52.249-9(c) and (d); FAR 52.212-4(f). These exceptions appear to contemplate situations like the spread of the COVID-19 virus, which has been declared a public health emergency by U.S. authorities, and which has resulted in quarantine restrictions around the world. See, e.g., Ace Elec. Assocs., Inc., ASBCA No. 11781, 67-2 BCA ¶ 6456 (“Illness occasioned by the onset of a flu epidemic is in general an excusable cause for delay provided it can be shown that performance was in fact delayed by reason of such epidemic.”).

If the failure to perform is caused by the default of a subcontractor and the cause of the default is beyond the control of both the contractor and subcontractor, contractors may be excused from liability for excess costs under FAR 52.249-14 and FAR 52.249-8 and -9. This excuse, however, may not apply under non-commercial contracts if the subcontracted supplies or services were obtainable from other sources in sufficient time for the Contractor to meet the required delivery schedule. See FAR 52.249-14(b); FAR 52.249-8(d); FAR 52.249-9(d). Under FAR 52.249-14, contractors also may not be entitled to relief if the contracting officer ordered the contractor to purchase the supplies from another source and the contractor unreasonably failed to comply with that order. FAR 52.249-14(b). The commercial item clause does not address excess costs specifically but it does add a notice obligation.

Key here is that these provisions do not entitle the contractor to compensation. Non-compensable delays are delays for which the contractor is entitled to a time extension, but there is no entitlement to any additional monetary compensation. The theory is that neither the contractor nor the federal government has control over the non-compensable delay. Therefore, both parties assume their own additional costs. The contractor absorbs its delay costs for being out on the project longer and the federal government absorbs its costs by granting a time extension to the contractor and extending the contract.

To obtain protection under the excusable delay provisions, contractors should carefully consider the circumstances of each case, provide notice as required, and take reasonable steps to perform, and rigorously document events and impacts. See, e.g., Nat’l Fruit Prod. Co., Inc. v. Dep’t of Agriculture, CBCA No. 2445, 12-1 BCA ¶ 34979 (finding contractor could have taken additional steps to perform during an alleged insect epidemic); Crawford Dev. and Mfg. Co., ASBCA No. 17565, 74-2 BCA ¶ 10660 (finding contractor failed to demonstrate how a flu epidemic impacted its work force).

In addition to the excusable delay provisions, other standard FAR clauses also may provide for protection. For example, the standard FAR changes clauses, e.g., FAR 52.243-1 or FAR 52.243-2, provide options for obtaining an equitable adjustment for increased work. In the next post in this series, we will address the instances where a contractor is entitled to compensation because of added requirements imposed due to the coronavirus.

Print:
EmailTweetLikeLinkedIn
Susan B. Cassidy

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government…

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government contractors and represents her clients before the Defense Contract Audit Agency (DCAA), Inspectors General (IG), and the Department of Justice with regard to those investigations.  From 2008 to 2012, Ms. Cassidy served as in-house counsel at Northrop Grumman Corporation, one of the world’s largest defense contractors, supporting both defense and intelligence programs. Previously, Ms. Cassidy held an in-house position with Motorola Inc., leading a team of lawyers supporting sales of commercial communications products and services to US government defense and civilian agencies. Prior to going in-house, Ms. Cassidy was a litigation and government contracts partner in an international law firm headquartered in Washington, DC.

Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.