Tongue Twister: Commander Closes Construction Site for COVID and Contractor Can’t Recover Contract Costs

Burr & Forman

Burr & Forman

Last month, the Armed Services Board of Contract Appeals held that a public contractor could not recover $100k in construction costs incurred following the government’s decision to close down a base in Tennessee due to COVID-19.

APTIM Federal Services, LLC (ASBCA No. 62982) sought to recover $99,076 in operational costs incurred for a construction contract during a two-month period in 2020.  The commander of Arnold Air Force Base closed the base in order effort to mitigate the spread of COVID-19.  The contractor also sought 59 days of time extension for the period the project was inaccessible.

The government argued that under the Sovereign Acts Doctrine actions taken by the United States in its sovereign capacity shielded it from contractual liability for those acts, including the actions taken in in response to the COVID-19 pandemic.   The administrative law judge agreed:

Here, [the contractor] was excluded from Arnold Air Force Base equally along with many other contractors by act of the base commander, in pursuit of a larger public health danger, which itself threatened a national security impact. This exclusion made performance of each party’s contractual obligations impossible during the time period at issue.

The judge found similarities between the COVID-19 shutdown and the decision in Conner Bros. Constr. Co., Inc. v. Geren, 550 F.3d 1368 (Fed. Cir. 2008), wherein a government contractor sought compensation for being barred from a military base for 41 days following the 9/11 terrorist attacks. In that case, the court held that the government’s actions were not directed at nullifying the contractor’s contract rights, but “rather at larger national security interests” that was permissible.

The APTIM decision expressly addresses the Sovereign Acts defense, which ultimately denied the contractor’s claim for additional compensation.  However, the case does establish implicitly that a work stoppage due to COVID-19 can support the basis for a time extension.

[View source.]

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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