FORMAL REQUEST FOR TIME EXTENSION NOT ALWAYS REQUIRED TO SUPPORT CONSTRUCTIVE ACCELERATION

Does a constructive acceleration claim require the contractor to always request an extension of time which is then denied by the owner?  While this is certainly the preference and the contractor should be requesting an extension of time as a matter of course for an excusable delay, the answer is NO! in certain circumstances.  This is conveyed in the factually detailed case discussed below where a formal request for an extension of time was not required for the contractor to support its constructive acceleration claim.

But first, what is constructive acceleration:

Constructive acceleration “occurs when the government demands compliance with an original contract deadline, despite excusable delay by the contractor.” The Federal Circuit in Fraser defined the elements of constructive acceleration as follows:

(1) that the contractor encountered a delay that is excusable under the contract; (2) that the contractor made a timely and sufficient request for an extension of the contract schedule; (3) that the government denied the contractor’s request for an extension or failed to act on it within a reasonable time; (4) that the government insisted on completion of the contract within a period shorter than the period to which the contractor would be entitled by taking into account the period of excusable delay, after which the contractor notified the government that it regarded the alleged order to accelerate as a constructive change in the contract; and (5) that the contractor was required to expend extra resources to compensate for the lost time and remain on schedule.

Nova Group/Tutor-Saliba v. U.S., 2022 WL 815826, *42 (Fed.Cl. 2022) quoting Fraser Constr. Co. v. U.S., 384 F.3d 1354, 1361 (Fed. Cir. 2004) (internal citations omitted).

Of importance, different formulations proving the elements of constructive acceleration can be used.  Id. (where Court discussed three essential elements to constructive acceleration: “excusable delay, an order to accelerate, and acceleration with attendant costs.”

In Nova Group/Tutor-Saliba, discussed below, the Court stated the “Fraser standard requiring the contractor to submit a time extension request would not be appropriate here since the evidence established that the Government was insisting on compliance with the original schedule despite the [known] delay caused by the global stability dispute.”  Nova Group/Tutor-Saliba, supra, at *43.  A formal request for a time extension was not required by the contractor to support and sustain its constructive acceleration claim.

In this case, a contractor was hired to demolish existing piers and design and construct a new ship wharf and other structures.  During construction, the government sent a letter (supported by its engineer) questioning the structural global stability of the contractor’s design and the design’s conformance with the government’s request for proposals AFTER the design had already been approved.  This resulted in what the contractor claims was an excusable delay because no reasonable contractor would have moved forward when the government lost confidence in the structural integrity of the design; thus, the contractor could not perform critical path activities until the issue was resolved.  When a certain redesign over a different issue (dealing with a batter pile issue) was approved, the global stability issue was put to bed by the government and the contractor implemented its acceleration plan.

The Federal Claims Court went through constructive acceleration factors recognizing different formulations of the elements can be applied to support the claim.

 

(1) Excusable Delay

The government argued its letter questioning the global stability of the design did not stop the contractor’s critical path work.  Rather, the work was stopped so the contractor could complete a batter pile redesign.  Further, the government argued that even if the letter caused a delay, it would have been concurrent with the contractor’s redesign which would have prevented the contractor from completing the work absent the global stability issue.

The Federal Claims Court, however, found that the delay was the result of the government’s letter questioning the global stability of the design and design’s conformance with the request for proposals.

Here, months after approving the design, the Government informed [the contractor] that it believed the design might be out of conformance with the RFP, an unforeseeable act given the Government’s prior approval.  Because the entire design was called into question, it was reasonable for [the contractor] to stop critical path work until the issue was resolved. [The contractor’s] reaction that the Navy’s March 8 letter questioning its design was a ‘bombshell’ and a ‘very, very scary moment’ underscored its reasonable concern about the Project’s path forward.

Nova Group/Tutor-Saliba, supra, at *44.

The Federal Claims Court also rejected the government’s concurrent delay argument.

The Government further contends that delays due to the Delta 12 [batter pile] redesign and global stability were concurrent, which would preclude Plaintiff from recovering. “Where both parties contribute to the delay, neither can recover damage[s], unless there is in the proof a clear apportionment of the delay and the expense attributable to each party.”  However, the record indicates that the Delta 12 redesign delay occurred after the global stability issue delay, not concurrently. This is evident from the fact that [the contractor] was able to start some critical construction work on May 7 — 20 days before the Delta 12 redesign was even approved — once it felt assured the global stability issue would be resolved based on emails from the Government. The Government approved the Delta 12 redesign on May 27, 2010, but work on the redesign was not performed until later. The Court is persuaded by Plaintiff’s expert’s opinion that there were two separate acceleration periods: Acceleration Period 1 covering June through November 2010 resulting from the global  stability issue….

Nova Group/Tutor-Saliba, supra, at *44.

 

(2) Government Knowledge of Excusable Delay

The Federal Claims Court found that the government was well aware of the delay due to the global stability design issue.  Further, government representatives were at the site daily and attended daily production meetings. The delay caused by the government’s concern over the global stability of the design was not a surprise.

 

(3) Government Statements that Can be Construed as Acceleration Orders

The contractor never formally requested an extension of time because it was understood the government required the project to be completed ahead of the contract completion date, and time extensions would not be granted.  Even after the global stability design issue was resolved which included the known work stoppage, the government still pressed the contractor to complete on time.  The government even notified the contractor its concern in the decline in the float available in the schedule and that if the float becomes negative the contractor will be required to submit a recovery plan.  “Here, the Government’s repeated warnings that [the contractor] maintain the original project schedule despite a critical path work stoppage of over two months constituted an order to accelerate.”   Nova Group/Tutor-Saliba, supra, at *48.

 

(4) Government on Notice of Constructive Change Claim

Although the government claimed it had no notice of the contractor’s constructive change claim, the Federal Claims Court found: “[t]he contracting officer had actual knowledge of the circumstances giving rise to [the contractor’s] constructive change claim, because it was the Government that issued the letters questioning [the contractor’s] previously approved design, requested KPFF [contractor’s engineer] to respond to BergerABAM’s [government engineer’s] letters, and reiterated that [the contractor] needed to adhere to the schedule, which caused [the contractor] to accelerate after the stoppage of critical path work.” Nova Group/Tutor-Saliba, supra, at *48

 

(5) Costs Incurred for Constructive Acceleration

The Federal Claims Court found that the contractor proved it incurred costs due to the constructive acceleration.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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