Agency’s motion to dismiss a claim for delay costs is denied. The agency argued that the contractor’s costs had not actually increased as a result of delay. But the contractor had alleged that the costs were the result of delay, and that well-pled allegation was sufficient to survive a motion to dismiss. What’s more, the agency admitted it had not complied with a contract obligation. That admission, by itself, established a right to relief and defeated the motion to dismiss.
WSSA Birmingham, LLC entered a lease with the General Services Administration for a building to be used by the Internal Revenue Service. The lease required GSA to convene a design intent drawing workshop within ten days of award. The workshop would occur before occupancy. GSA did not have to pay rent until the building was occupied.
Instead of convening the workshop within ten days of award, GSA delayed for 274 days. WSSA submitted a claim to GSA to recover costs—including taxes, overhead, loan interest, and insurance—incurred as a result of the delay. GSA denied the claim. WSSA appealed to CBCA. GSA moved to dismiss for failure to state a claim.
GSA argued that WSSA’s costs had not increased as a result of the delay. Rather, GSA contended, WSSA was seeking compensation for costs it would have incurred regardless of the delay, and that these costs would eventually be recovered through rental payments.
But in ruling on a motion to dismiss, the board must assume that well-pled allegations are true and indulge reasonable inferences in favor of the non-movant. Here, WSSA had asserted that its costs would not be covered by the rent. While WSSA would still need to prove entitlement to these costs, under the applicable standard of review, WSSA’s allegations were sufficient to survive a motion to dismiss.
More fundamentally, the motion to dismiss could not succeed because GSA admitted it had failed to schedule the workshop in a timely manner. GSA’s acknowledgment of its failure to satisfy the terms of the contract established WSSA’s right to relief beyond a speculative level, and thus was sufficient to defeat a motion to dismiss.
WSSA is represented by Diana Parks Curran and Hadeel N. Masseoud of Curran Legal Services Group, Inc. The government is represented by Jay Bernstein of the General Services Administration.
