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By: Katz & Stone

When claiming entitlement to cost for constructive acceleration, contractors must prove that any time extensions received were inadequate to remedy their excusable delays.  Time extensions do not have to be granted immediately, and the mere failure to grant extensions does not, by itself, constitute constructive acceleration so long as the procedures set forth in the parties’ contract for time extensions are being followed.

In Fraser Construction Co. v. United States, 384 F.3d 1354 (Fed Cir. 2004), the government contracted with a contractor to excavate material from the bottom of a shallow lake.  The contract period was from May to September of 1993.  To facilitate excavation, the water level of the lake was lowered, leaving only a small stream running through the lakebed which the contractor diverted with a dike.  The contractor designed the dike to withstand water flow substantially higher than the average water flow for the lake.

Shortly after the project began, the lake began experiencing high water flows because of rain in the region.  The high water flows overran and destroyed the dike and caused damage to the work site.  The contractor experienced delays associated with repairing the dike and inundation of the work site.  The contractor requested a time extension which the government denied but later granted.  The contractor contended that the extensions that were later granted were not sufficient to compensate it for the extra expenses it had incurred in dealing with the high water flows, because upon being told that it would not receive time extensions or that those extensions would be dealt with later, it was forced to continue its operations at a substantial additional cost. The contractor further argued that many of the time extensions that it was ultimately granted were of no use to it because they were not granted on a timely basis.

The court rejected the contractor’s argument that the extensions were not timely, finding that it was standard practice for parties to negotiate after the fact to determine the number of days to extend the contract period.  The court found it significant that the government followed the standard procedure for reviewing extension requests and had daily discussions with the contractor regarding delays and progress on the project.

The court also rejected the contractor’s claim that the government forced it to accelerate its performance by pressuring it to work through delays that should have resulted in an extension.  The contractor’s evidence of constructive acceleration consisted of a letter from the government urging the contractor to adhere to the contract schedule and threatening termination if it did not.  An expression of concern about progress combined with a refusal to issue extensions can be the equivalent of an order to accelerate.  However, this letter was sent by the government before the contractor ever made a claim for excusable delay based on high water flow.  Also, the delays which precipitated the government’s letter were due to subcontractor problems not associated with high water levels.

As a result of this case, contractors should be aware that when making claims for constructive acceleration, they must prove that extensions granted by the government were not sufficient to offset excusable delays.  Furthermore, time extensions do not have to be granted immediately and the mere failure to grant extensions does not, by itself, constitute constructive acceleration so long as the procedures set forth in the parties’ contract for time extensions are being followed.

About the Author: This article is reprinted with permission from Katz & Stone, L.L.P. Construction Newsletter (March/April 2005 issue).  Katz & Stone’s practice is devoted to the construction industry, with its attorneys working exclusively for those who own, develop, design, build and bond construction projects.  The address is 8230 Leesburg Pike, Suite 600 , Vienna , VA 22182 . (703) 761-3000.

ConstructionRisk.com Report, Vol. 7, No. 7 (Nov 2005)

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