Obermayer Rebmann Maxwell & Hippel LLP

In an important case for architects and design-builders, the Armed Services Board of Contract Appeals (ASBCA) held that the United States Army Corps of Engineers (USACE) is liable for delays arising from design-reviewer comments that change the design process specified in the contract.  Many architects and design-builders have seen it happen: they submit a design submittal in accordance with the requirements of the contract, only to have a Government design-reviewer cause a delay by demanding details that either are not required, or are contractually required later in the design process.  In the Appeals of RBC Construction Corp., the ASBCA confirmed that the Government can be held liable for such delays when the contractor can show that the design-reviewer’s comments were contrary to the contract requirements.

In RBC Construction, the contract provided for a fast-track design process that would allow the design-builder to proceed with portions of the construction work once the Government approved the initial design submittals.  The contractor took advantage of this process, and promptly submitted its site and foundation plan so that it could move forward with the foundation work while completing the rest of the design process.  The site and foundation plan showed an underground fire-suppression water cistern under the foundations of one of the buildings.  Concerned that the foundation would have to be torn-out later if the cistern was incorrectly sized, the USACE design-reviewer entered a comment in DR Checks (the Government’s design-review comments platform) demanding that the contractor provide calculations for the sizing of the cistern before proceeding with construction.  The problem?  The contract specifically provided that such calculations were not required as part of the foundation plan, but rather were to be included in a later submittal.  Providing these calculations and satisfying the design-reviewer’s concerns caused a 119-day delay to the project’s critical path.

The ASBCA recognized that the USACE design-reviewer was well-intentioned, and merely wanted to avoid expensive rework later in the project.  However, the contract specifically provided that the contractor did not have to provide the water cistern calculations demanded until later in the design process.  The design-reviewer’s comment, no matter how well meant, was a constructive change to the contract that entitled the contractor to recover compensation for a portion of the delay.  It is important to note that the contractor was unable to recover for the entire delay to the design process because there were legitimate government comments on the site and foundation plan that the contractor needed to address.  The contractor’s efforts to address these comments caused a concurrent, contractor-caused delay.  The takeaway for architects and design-builders is two-fold: 1) the Government can be held liable for delays arising from Government changes to the design process; and 2) when faced with such a delay, the contractor should promptly address comments on other issues to avoid a finding of concurrent delay. If you need help addressing a delay to the design process, call us.

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