In an Unusual Move, ASCBCA Grants COVID-Related Claim. How Did this Contractor Prevail?

Since the beginning of the pandemic, the boards and courts have denied the vast majority of claims seeking pandemic-related costs under fixed-price contracts. But this contractor was able to ring the bell.

Appeal of StructSure Projects, Inc., ASBCA No. 62927

• The Claim – The contractor had a task order to renovate a medical center on a military base. The contract required the contractor to provide temporary facilities during construction. When the COVID–19 pandemic hit, the government suspended performance, designating the work as non-essential. While performance was suspended, the government continued to use the temporary facilities. The contractor submitted a claim for costs incurred from the use of the temporary facilities during the suspension. The government denied the claim.
• Fixed Price Contract – On appeal, the government argued this was a fixed-price task order, so the contractor bore the risk of any increased costs due to the pandemic. But the ASBCA found the contractor was not merely seeking increased costs. Rather, the contractor essentially asserted a change—that is, it had been required to provide temporary facilities while the contractor was not actually performing the contract. Here, the government had modified the task order to change the completion date due to the pandemic. This meant the contractor had to provide temporary facilities for a longer period of time. The contractor was entitled to recover for this change.
• Sovereign Act Defense– The government also argued the contractor could not recover because the closing of the base and the resulting suspension of work had been a sovereign act. The board found the sovereign acts defense only applies when the sovereign act makes performance impossible. But the government’s act had not made the performance at issue—the provision of temporary facilities—impossible. In fact, the temporary facilities were a separate CLIN, and the contractor had met that deliverable. Thus, the sovereign act defense didn’t apply.

The claimant is represented by Michael S. Alfred of Hallett & Perrin, PC. The government is represented by Michael P. Goodman. Michael T. Geiselhart, and Allen S. Black of the Army Corps of Engineers.

–Case summary by Craig LaChance, Senior Editor