Construction projects rarely, if ever, go precisely as planned. One of the most common issues government contractors face is falling behind schedule. A schedule is developed, and then the contractor is confronted with differing site conditions, changes, or a litany of other causes of delay. The contract completion date that seemed easily achievable when performance began may now appear to be impossible to meet. What should a government contractor do to ensure they are compensated and to avoid liquidated damages?
The first step in most situations is to notify the contracting officer in writing. There are several FAR provisions that require a contractor to provide notice (e.g., FAR 52.242-17 Government Delay of Work; FAR 52.243-1 Changes - Fixed-Price; and FAR 52.236-2 Differing Site Conditions), and providing notice helps to preserve one’s rights moving forward.
The next step is determining the type of delay that has occurred. There are three types of delay: inexcusable, excusable, and compensable. Determining the type of delay requires an analysis of responsibility, impact, and the existence of other delays during the same time period.
- An inexcusable delay is a delay that is solely caused by the contractor or their team. This includes rework or slower than expected production.
- An excusable delay is a delay that occurs because of unforeseeable events outside of a contractor’s control, and without the contractor’s fault or negligence. Common excusable delays include acts of God or unusually severe weather. To obtain an extension of time, the contractor must demonstrate that the event delayed the overall completion of the project (known as the critical path), and the delay did not coincide with another delay (a concurrent delay). An excusable delay extends the period of performance, but it does not include any monetary relief.
- A compensable delay is a delay entirely caused by—and the responsibility of—the government. This includes differing site conditions, directed changes, and defective specifications. Like an excusable delay, to recover compensation, the contractor must show that the delay affected overall completion of the project, and it was not concurrent with any other delays. A compensable delay extends the period of performance and entitles a contractor to delay damages.
If the delays encountered are excusable or compensable, the next step may be submitting a request for equitable adjustment (REA) or a claim to modify the period of performance and seek delay damages if appropriate. Because an REA or claim is more likely to succeed if the contractor has regularly updated the project schedules and kept accurate and complete daily logs/reports, recordkeeping and documentation is extremely useful. For complex projects, a schedule analysis prepared by an outside consultant may be needed. A successful REA or claim can help a contractor avoid liquidated damages and potentially recover additional compensation.