Government Contracts, REAs, and Claims: Excusable Delays/Cardinal Change vs Force Majeure

Pernix Serka Joint Venture v. Dept of State, a case study

This program has been cancelled

A live 90-minute CLE webinar with interactive Q&A


Thursday, July 30, 2020

1:00pm-2:30pm EDT, 10:00am-11:30am PDT


This CLE webinar will examine the recent finding of the Civilian Board of Contract Appeals (CBCA) in Pernix Serka Joint Venture v. Department of State. The expert panel will address if and when a government contractor can successfully recover additional costs incurred as a result of unforeseen circumstances, such as an epidemic or quarantine restrictions. Additionally, the panel will discuss the concepts of cardinal and constructive changes and will provide practical advice on how to negotiate these issues before contract formation and during performance to improve the success of claims to recover the additional costs.

Description

On Apr. 22, 2020, the CBCA issued a decision denying a contractor's claim for the costs associated with demobilizing and later remobilizing at a construction site out of concern for worker safety during an Ebola virus outbreak. Pernix Serka Joint Venture v. Department of State, CBCA No. 5683, is an indicator of the position the federal government may take in response to claims submitted for COVID-19-related delays and other future disruptions on government construction contracts.

The case arises from a fixed-price contract to construct a rainwater capture and storage system in Freetown, Sierra Leone. The contractor became concerned about the spread of the Ebola virus where it was operating and sought direction from its State Department customer; the Contracting Officer declined to provide the contractor any advice about whether to stay or leave the work site.

The World Health Organization's declaration of an international public health emergency led the contractor to shut down the project, evacuate its personnel, and advise the government of its decision to shut down the work site temporarily. The contractor provided limited staff to the project, which was shut down for more than six months.

When the project resumed, the contractor initiated additional health and safety measures, including expanding its health facilities and hiring full-time medical staff. The contractor sought to recover those additional costs from the State Department.

The CBCA held that, due to the nature and language of the fixed-price contract, including the default clause, FAR 52.249-10, which explicitly addresses how to treat acts of God, epidemics, and quarantine restrictions (e.g. force majeure events), the contractor was entitled to additional time to remobilize and accommodate the impacts of the virus but was not entitled to recover payment for its additional Ebola-related costs. The CBCA stated that the contractor had not identified any clause in the contract that shifted the risk from the contractor to the government for the contractor’s costs incurred due to an unforeseen epidemic. It rejected the contractor's arguments that there was a cardinal change or a constructive change to the contract, which would have allowed it to recover these costs.

Listen as our expert panel reviews the findings in this case and how specific language in a contract can determine whether the government will bear any financial responsibility for contractor actions in response to pandemic-type concerns, especially shutting down a project site. The panel will discuss how to establish how to identify and substantiate government's contractual acts, which will be critical to any recovery.

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Outline

  1. Pernix Serka Joint Venture v. Department of State
    1. History
    2. Findings
    3. FAR 52.249-10
    4. Conditional/constructive change
  2. Best practices for negotiations

Benefits

The panel will review these and other issues:

  • What were the findings in CBCA Pernix Serka Joint Venture v. Department of State?
  • Does the ability to seek monetary damages change if the contract is not fixed price?
  • What is necessary to establish a cardinal change based on government action (or inaction)?
  • How can a contractor negotiate upfront to ensure collection of additional costs in the event of acts of God?

Faculty

Duncombe, Barbara
Barbara A. Duncombe

Partner
Taft Stettinius & Hollister

Ms. Duncombe is an attorney who advises regional and national businesses on the legal and compliance issues that arise...  |  Read More

Graves, Sean
Sean A. Graves

Attorney
Taft Stettinius & Hollister

Applying seven years of United States Air Force contracting experience to his practice, Mr. Graves advises clients on...  |  Read More

Mattox, John
John Mattox

Attorney
Koprince Law

Mr. Mattox's practice spans the breadth of federal procurement law, from dispute resolution to transactional...  |  Read More