The contractor had to install a roof that could tolerate hail with a 1.5 inch diameter. While the contractor was performing, the roof was damaged by hail. The contractor claimed the government was responsible for the damage because it had taken possession of the buildings before work was completed. The board rejected this argument. The government had not accepted the work, and the government’s mere possession had not caused the damage. The contractor also argued the contract had defective specifications—the 1.5 inch diameter threshold was not sufficient. But the board found this really wasn’t a defective specifications issue. The contractor was aware of the risk posed by hail. And the specifications had not prevented the contractor from actually installing the specified roof.
Appeals of Betance Enterprises, Inc., ASBCA Nos. 63076, 63077, 63078, 63079
Background
Betance Enterprises had a contract with the Army Corps Engineers. The contract was for construction at Fort Carson, Colorado. The contract incorporated FAR 52.236-11. That provision states the government has the right to take possession of partially completed work. Nevertheless, the government’s possession shall not be deemed acceptance of any work.
The Corps awarded Betance four task orders for roof repairs on several buildings. The task orders required the roofs withstand hail up to 1.5 inches in diameter.
In the summer of 2018, while Betance was performing the task orders, Fort Carson was hit by several hail storms. The hail damaged Betance’s roof work. Due to the hail, Betance and the Corps agreed to a contract extension.
Betance also submitted a claim for damage caused by the hail. The Corps denied the claim. Betance appealed to the ASBCA.
Analysis
Use and Possession Prior to Completion
The board noted the contract included the standard Permits and Responsibility clause. That clause provides that a contractor is responsible for all work except for any completed that has been accepted. Notwithstanding that clause, Betance argued that FAR 52.236-11 made the Corps liable. That clause provides, in part, that when the government takes possession of uncompleted work, the contractor shall be relieved of responsibility or loss caused by the government’s possession. Here, the government was using the buildings damaged by the hail. Therefore, Betance maintained, the government was liable for the damage to those buildings.
The board found Betance was misreading FAR 52.236-11. That provision only relieves the contractor of responsibility for damages resulting from the government’s use. Here, the government’s use of the building did not cause the damage. Rather, the damage was caused by hail. The risk of such damage remained with Betance.
Performance During Hail Season
Betance reasoned that the government was responsible for the damage because the government had phased work to extend into Colorado’s hail season.
The board didn’t find this argument compelling. The contract required Betance to investigate weather conditions and plan for weather hazards. Consequently, Betance was free to determined how best to perform in light of weather factors. What’s more, Betance claimed it had experience working in Colorado and presumably knew about the hail season. Having agreed to the terms of the contract and the task orders, Betance could not argue the terms were unfair or that it was entitled to an adjustment.
Defective Specifications
The task order specifications required a roof that that could withstand a hailstone with a 1.5 inch diameter. Betance claimed these specifications were defective because they did not preclude damages from larger hailstones.
The board opined that the 1.5 inch specification was in no way defective. Betance had no problems installing the roof as specified and was able to obtain a 20-year warranty from the roof manufacturer.
Breach of Good Faith and Fair Dealing
Betance maintained the government breached the implied duty of good faith and fair dealing by requiring phased installation of a roof system with 1.5 inch hail tolerance while knowing there was a high risk of hail that would exceed 1.5 inches in diameter. The board didn’t find the argument compelling. As noted Betance agreed to the terms of the contract, which included phased construction with a 1.5 inch tolerance through Colorado’s hail season. The government does not breach the implied duty of good faith when it enforces the contract as written.
Betance is represented by Dennis C. Gardner of Ogletree, Deakins, Nash, Smoak & Stewart, P.C. The agency is represented by Michael P. Goodman and Stacy K. Birkel of the Army Corps of Engineers.
–Case summary by Craig LaChance, Senior Editor
