Government Can’t Assert Accord and Satisfaction Defense When It Continued to Negotiate With Contractor After Alleged Accord; Appeal of WECC, Inc., ASBCA No. 60949

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Appeal of claim seeking delay costs for differing site conditions is granted in part and denied in part. The contractor alleged 249 days in delay. The board found 169 days were compensable. The contractor sought field overhead costs incurred for the delay. The government contended it had resolved those costs in contract modifications, so the claim was barred by the doctrine of accord and satisfaction. The board found the parties had continued to negotiate after the alleged accord, indicating they had not intended to be bound by an accord and satisfaction. The board, however, found the contractor could not recover home office overhead under the Eichleay formula. Also, the government was entitled to liquidated damages for delay attributable to the contractor.

Background

WECC, Inc. had a contract with the Army and Air Force Exchange Service to renovate an Air Force base exchange. While performing, WECC encountered differing site conditions, including a degraded concrete slab and an unexpected storm drain. The parties agreed to two bilateral amendments, and the government issued additional unilateral amendments extending the period of performance.

After completing the work, WECC submitted a claim, alleging 249 days of compensable delay and seeking $1.6 million in overhead and other costs. After negotiations, the government extended the contract by another 38 days, but the government also assessed over $200,000 in liquidated damages for delay attributed to WECC. WECC appealed to the ASBCA.

Legal Analysis

  • WECC Demonstrated 169 Days of Compensable Delay — WECC had shown that it experienced 78 days of delay for a degraded concrete slab, 56 compensable days for the unexpected storm drain, and 35 days for time spent on change orders.
  • Government Entitled to Some Liquidated Damages — While WECC had shown 169 days it failed to present compelling evidence to explain an additional 80 days of delay. The board found that the government was entitled to liquidated damages at a rate of $1,500 per day for the extra 80 days.
  • The Parties Didn’t Reach an Accord and Satisfaction — WECC sought field office overhead — i.e., costs related to supervision, timekeeping, supplies, travel — for the delay. The government argued that contract modifications fully settled all claims relating to the delays and thus delays costs were barred by the doctrine of accord and satisfaction. But the board will not bar a claim based on accord and satisfaction when the parties’ conduct indicates the claim is not fully settled. Here, after WECC submitted its claim, the parties continued to negotiate the amount alleged, indicating there had been no meeting of the minds for an accord and satisfaction.
  • WECC Not Entitled to Home Office Overhead Under Eichleay — WECC also sought over $266,00 for home office overhead—that is, the costs of managing contractor work. A contractor may recover home office overhead under the formula articulated in Eichleay Corp., ASBCA No. 5183, but that formula requires that the agency suspend work or expressly put the contractor on standby. In this case, the government never ordered a suspension of work. WECC was not entitled to Eichealey damages.

WECC is represented by G. Scott Walters, Brian S. Wood, Alexander Gorelik, Jacob W. Scott of Smith, Currie & Hancock LLP. The government is represented by Scott N. Flesch, Lieutenant Colonel Stephen M. Hernandez, and Harry M. Parent III of the Army.

ASBCA - WECC, Inc.