Ever had buyer’s remorse or second-guessed a decision? When the U.S. Army Corps of Engineers did that, a Contractor won its claim for time and money.
On a flood control project near Nogales, Arizona, severe flooding delayed and impacted the Project. Thereafter, the Government and Contractor both signed modifications for other changes. Subsequently, the Government internally circulated a draft Mod pertaining to flood-related delays and impacts. Even later, the Government invited and the Contractor submitted an REA for several claim items, including an item for flood-related events. The Government internally considered the REA, but never rendered a decision. (The only failure is not deciding. – Gen. George S. Patton)
When the Contractor appealed to the Court of Federal Claims, the Government argued that the bilateral mods included release language broad enough to be an accord and satisfaction of the flood-related events.
The affirmative defense of accord and satisfaction requires four elements: (1) proper subject matter, (2) competent parties, (3) a meeting of the minds of the parties, and (4) consideration.
The Court held the proper subject matter element was not met when the signed mods were for changes unrelated to the flood. More interestingly, the Court also held the parties did not come to a meeting of the minds (i.e., the parties did not share the same understanding or belief) because after both parties signed the modifications with the release language, the Government continued to consider the Contractor’s flood-related claim item by: (1) internally circulating a draft modification for the flood-related events and (2) requesting and internally considering the Contractor’s REA.
Perhaps the most bothersome fact about all of this is that the Contractor would not have learned about the Government’s continued consideration of its claim for flood-related events had the Contractor given up the fight.
Meridian Engineering Company v. U.S., Court of Federal Claims, No. 11-492C (Sept. 23, 2019).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
Keep a Pass-Thru Claim Burning, Don’t Extinguish Liability
Prime contractors, have you ever submitted a subcontractor’s claim to a public owner? Subcontractors, have you ever wanted to submit a claim against the government, but you had no contract with government?
When You Can’t Recover from a Third-Party (The Economic Loss Doctrine)
Suppose that you (the Contractor) had extra costs and want payment for those extra costs from the designer.
Barbecue and Construction Contracts
While barbecue recipes can be short and simple, contracts can be long and complicated. Fundamentally, though, recipes are very much like contracts: what’s required, how much of each part/ingredient, in what order should they be assembled/added, when, and for how long?
Show Your Work
A mentor of mine once said that process and procedures can be more important than substance and results. Like solving a math problem, how you solve it is often more important than the answer itself. The same is true in resolving construction contract disputes with public owners.
Substandard is Not Defective
The government need not follow the industry standard. It can do less or more.
Hide, Seek, & Seek
Have you ever played hide and seek? If you are the seeker, do you win the game when you find the hidden person? Yes, of course! Unless, you’re a government contractor.
Contractor Schooled School
Have you ever done exactly what you were supposed to do, but it didn’t work and you were blamed anyway? Nevertheless, if contractors follow the owner’s plans and it still doesn’t work, the contractor may be without fault – this is as it should be.
Walk It Off, Keep Going
During a recent soccer game, my seven-year-old son took the ball squarely in the face. But, he walked it off and continued playing. Contractors must do the same with changes.
