Contractor Not Entitled to Delay Costs for Time Spent Asking Agency to Move Construction Site; Appeal of AISG, Inc., ASBCA Nos. 58696, 59151


Contractor’s claim for delay costs is denied. The contract was for construction of a police station in Afghanistan. The contractor claimed it was entitled to recover costs incurred over several months while it tried to convince the agency to move construction site to a more suitable location. The ASBCA rejected the contractor’s argument. Although the agency eventually agreed to move the site, it did not cause any delay. The contractor could have begun construction at the original site. The contractor chose to hold out for a new site. Any delay costs the contractor incurred trying to get the site changed were not the agency’s obligation.

The Army Corps of Engineers awarded AISG, Inc. a contract to build a police station in Afghanistan. Encroachment on the initial site by the military, however, made the site untenable, so the Corps had to select a new site.

The Corps selected a new site and requested a proposal from AISG for this new site. This second site had some features that complicated construction. First, the site was rocky and would require extensive cutting and grading. Second, the site already had an Afghan police station on it that would need to removed. This, the site abutted a village wall that would also need to be removed. Despite these issue, AISG informed the Corps that it agreed to all the terms in the RFP. Indeed, its proposal even described the work it would do to remove the police station and the village wall.

But around the time it was supposed to begin work, AISG decided that it didn’t like the second site. Instead, it liked another, third site. Over the next several months, AISG submitted multiple requests for information to the Corps, proposing to move construction to the company’s favored third site. The Corps rebuffed AISG, reasoning that it did not have authority to deviate from the second site identified in the contract.

After almost six months, AISG obtained certification from the Afghan Ministry of Interior to build on the third site. At this point the Corps agreed to relocate. AISG then submitted a claim to the Corps for $700,000 in delay costs incurred during the time that AISG was trying to talk the Corps into moving sites. The Corps denied the claim, and AISG appealed to the ASBCA.

AISG first claimed that it was entitled to delay costs because the Corps had never obtained authorization for construction at the second site, and that AISG could not gain access to the second site due to the presence of the extant police station. The board rejected this argument, finding that the Corps had a license to build on site 2, and AISG had failed to demonstrate any infirmity in the license. Additionally, while it may have been working in a dangerous area, AISG had not presented any evidence showing that it had been denied access to the site.

Alternatively, AISG argued that the Corps admitted it was necessary to change sites due to the problems at the second site. The board did not find this argument compelling. There was really no dispute that the Corps agreed that site 3 was better than site 2. Rather, the Corps had refused to change sites, because prior to obtaining the new license for the Ministry of the Interior, neither the Corps nor AISG had permission to work on site 3.

Moreover, the problems with site 2 were obvious to AISG. Indeed, the company had submitted a proposal that acknowledged the issues and specifically addressed them. There was no ambiguity regarding site 2 or the representations of the government. If there was a patent ambiguity in the solicitation, then AISG should have raised before award of the contract.

AISG also the existing policy station and the village all were differing site conditions. The board noted that a differing site is a condition that differs materially from the conditions indicated in the contract. Having addressed the police station and wall in its proposal, AISG could not claim that it could not have anticipated those issues.

Finally, AISG argued that the government was liable for the delay costs because it caused the delay by not approving site 3. But the board found the Corps did not cause the delay. The Corps was not obligated to change the construction site because AISG had promised the contract for site was performable. What’s more, the government did not prevent AISG from performing work at site 2. AISG could have begun pre-construction submittals during the delay period by refused to do so.

AISG is represented by Lochlin B. Samples, Karl Dix, Parker A. Letwon, and J. Daniel Puckett of Smith, Currie, & Hancock, LLP. The government is represented by Michael P. Goodman, Rebecca L. Bockman, Cara M. Mroczek, Aimee L. Rider, and Edward J. McNaughton of the Army Corps of Engineers.