Covid-19 May Cause Disruption as Well as Delay

Obermayer Rebmann Maxwell & Hippel LLP
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Obermayer Rebmann Maxwell & Hippel LLP

Last week our blog addressed delays and suspensions on government contracts as a result of Covid-19 (also called the Coronavirus).  However, some government contractors are not being told to stop work, but rather to work remotely to keep their projects going.  Remote work may not actually delay project completion, but it can make the work less efficient and have a significant impact on the cost of performance.  Such impacts are commonly referred to as disruption or inefficiency.  The good news is that the Courts and Boards of Contract Appeals recognize disruption as a valid basis for an equitable adjustment to the contract that is distinct from a delay or suspension claim.  The key to succeeding on this type of claim is understanding the differences between delay and disruption.

To bring a successful disruption claim, it is important to first recognize what costs you can recover in a disruption claim, as opposed to a delay claim.  As stated by the Court of Federal Claims “a ‘delay’ claim captures the time and cost of not being able to work, while a ‘disruption’ claim captures the cost of working less efficiently than planned.”  Bell BCI Co. v. United States, 72 Fed. Cl. 164, 168 (2006).  So what kind of damages does this encompass?  One example would be if a government contractor has to add additional personnel to a project to perform necessary work remotely rather than on-site.  The cost of those additional workers could be asserted as a disruption claim.  An even more common example would be when the government directs a contractor to perform work remotely, but is unable to provide efficient, consistent or reliable remote access, or the necessary clearances or log-in information necessary for such access, causing daily delays and inefficiency.  That is exactly the sort of impact that could be asserted as a disruption claim. 

In terms of what steps you can take right now, it is all about notice and documentation.  It is important to notify the government as soon as possible if you believe you will incur significant disruption damages as the result of a direction to work remotely, or for any other government action.  Proving disruption to the government can be difficult and usually involves a complex productivity analysis provided by an expert.  Distinguishing between delay and disruption damages is also challenging, as a direction to perform work remotely may both delay project completion and make the work less efficient to perform.  That is why it is vital to involve a legal professional and a productivity expert early in the process when asserting this sort of claim.  If you need help drafting a notice, putting together a productivity analysis, or drafting a claim for disruption as a result of a direction to work remotely, give us a call.  We can help!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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