By Bruce Jervis
Completion of a construction project would be impossible if, every time there is a disagreement regarding work requirements or conditions, the contractor ceased operations. Consequently, most contracts require the contractor to continue work pending resolution of any dispute in accordance with the dispute resolution procedures of the contract. The prototypical example is the standard “Disputes” clause found in federal construction contracts.
While the federal clause unequivocally requires the contractor to “proceed diligently with performance,” the Court of Federal Claims recently ruled that the obligation is not absolute. The contractor may be justified in stopping work if the government refuses to provide additional information necessitated by unforeseeable circumstances.
Contractors must be cautious. The burden of proof is stern and the consequences of a default termination are severe. The requested information must be truly unforeseeable and necessary for performance. Yet the ruling appears to give contractors more leverage.
What do you think? Should the obligation to continue performance during a dispute be absolute? Or, should contractors be allowed to cease performance if the project owner is uncooperative with vital information? Your opinion is welcomed.