As we enter into the second year of the global pandemic, architects should take steps to prepare for the likelihood of COVID-19 related delay claims as contractors seek additional compensation and time extensions in response to what they believe are COVID-19 related impacts. This article discusses a few key issues for architects to consider when asked to review a delay notice or change order request from a contractor in the COVID-19 era.
Is the global pandemic addressed in the construction contract?
When issuing COVID-19 related delay claims to the owner, the contractor will likely look to contractual provisions that allocate the responsibility for delay impacts. Most construction contracts contain what is typically referred to as “force majeure” clauses, which address delays that are outside the control of either party. For example, the current AIA contract language addressing delay is found in the A201–2017 General Conditions, which includes the following provision:
- 8.3 Delays and Extensions of Time
- 8.3.1If the Contractor is delayed at any time in the commencement or progress of the Work by . . . unusual delay in deliveries, unavoidable casualties . . . or other causes beyond the Contractor’s control . . . or (5) by other causes that the Contractor asserts, and the Architect determines, justify delay, then the Contract Time shall be extended for such reasonable time as the Architect may determine.
Similarly, the Excusable Delay clause at FAR 52.249-14 provides guidance, which states that contractors are excused from default if the failure “arises from causes beyond the control and without the fault or negligence of the contractor”. FAR 52.249-14 goes on to identify acts of God or of the public enemy, acts of the Government in either its sovereign or contractual capacity, epidemics, and quarantine restrictions as potential causes for excusable delay.
The broad language in these provisions lead to the question of whether a pandemic-related delay to the project schedule is excusable, such that the Contract Time should be extended. And, even if there is entitlement to an adjustment to the Contract Time, there may be a dispute over whether there is entitlement to the Contract Sum due to the contractor. Courts and Government Boards have only just begun to directly address COVID-related delays, but architects should be considering these provisions when evaluating pandemic-related delay claims.
Is the Contractor entitled to relief, and if so, what type?
Applying current legal standards to COVID-19 related delay claims, the contractor must show that the delay was unforeseeable, beyond the contractor’s control and without fault on the part of the contractor while showing that the delay was not caused by any concurrent delays caused by the contractor. In essence, to be excused from the delay, the contractor may have to show that the pandemic was the sole cause of the delay. To establish entitlement to additional compensation because of the delay, the contractor would have to show that there was no other reason for the delay during the claimed period. It follows that the only way a contractor can make this showing is through meticulous documentation, which the architect should be prepared to request from the contractor for review and evaluation.
Cases filed with the Armed Services Board of Contract Appeals in 1967 and 1972 exemplify the threshold that must be met by the contractor to prove that the pandemic is the sole cause of the delay. For example, in Ace Electrical Associates, Inc., the Board accepted the fact that a flu epidemic that passed through a contractor’s plant causing a 30% to 40% rate of absenteeism could create excusable delay as the flu epidemic was unforeseeable and beyond the control of the contractor; however, the Board found that the contractor failed to present sufficient evidence to support its claim. In Crawford Development and Manufacturing Co., while the contractor was able to provide documentation showing the impact on its performance of a prevailing flu epidemic in the Tucson, Arizona area, because the record also showed that the flu epidemic occurred at the same time as other causes for delay, the Board denied the claim. Both cases involved a contractor’s appeal of the Government’s termination of the construction contract for default because of contractor delay.
These cases highlight the importance of documentation to establish delay in the first place, and to support an assertion that the pandemic was the only cause of the claimed delay. Architects should require documentation showing delay to the critical path, additional costs claimed by the contractor, instructions from the Government, and revisions to the project schedule. In reviewing documents in support of a delay claim, the Architect should consider the following:
- What were the governing COVID-19 emergency orders in the jurisdiction of the project? Was the construction industry exempted?
- Is this the only project in the area that is facing a delay claim?
- Regardless of those orders, how did the Owner respond? Did COVID slow communication or decision making on the part of the Owner? Did the Owner impose significant constraints on the operations at its site that slowed the progress of the work?
What contractual rights does the Owner have with respect to such claims?
Contractors will likely rely on contract provisions to seek time extensions and additional compensation for COVID-19 related delays. Construction contracts typically require that certain conditions precedent to entitlement to a claim be met by the contractor. Looking again to the current AIA contract language in the A201–2017 General Conditions for example, notice of a claim shall be given “within 21 days after occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later.” In many contracts, the contractor agrees to waive its right to time extensions or increased general conditions costs if notice is not provided in accordance with the contract. When presented with a delay claim, architects should evaluate whether there are any notice provisions in the construction contract which bear upon the contractor’s entitlement to recovery.
In reviewing a COVID-19 related delay notice or change order request from a contractor, architects should consider these key issues when examining the contract documents, Governmental orders and documentation provided by the contractor in support of any such claim to determine entitlement and to what extent. An architect must exercise reasonable care in evaluating any change order, and careful review of contractor claims will demonstrate the architect’s value and develop the Owner’s trust.
Dalene A. Radcliffe is an Associate at Lee/Shoemaker PLLC, a law firm devoted to the representation of design professionals, in DC, Maryland, and Virginia. The content of this article was prepared to educate related to potential risks, but is not intended to be a substitute for professional legal advice.