04/30/2020

The Sovereign Act and Coronavirus Shutdowns and Slowdowns

In last week's Suspension of Work webinar presented by Jim Zack, an attendee asked "Our projects are located inside a military base. Our contract is with USACE not with the base administration. The base took all our employee passes due to COVID-19 preventing all contractors from entering the base. The base administration sent a letter advisng us about their policy, but USACE did not send any written instructions.

 

Is this a suspension of work? (yes) Is this a compensable delay? (probably not)

 

According to the Federal Circuit ruling in Conner Brothers Construction Co. v Geren, 550 F.3d 1368 (Fed. Cir. 2008) where the contractor was barred from entering a military base for 41 days following the 9/11 attacks, the court ruled that the contractor was entitled to time, but not cost under the auspices of The Sovereign Act.  The Sovereign Act's doctrine provides that "the United States when sued as a contractor cannot be held liable for an obstruction to the performance of the particular contract resulting from its public and general acts as a sovereign."  [See Construction Claims Advisor (Vol. 7, No. 4).]

 

On a related note, citing Conner Brothers and The Sovereign Act, in 2012 the ASBCA ruled that the government's "sovereign act" defense to a contractor's claim was not limited to military exercises or war-making powers.  The defense applies to all governmental acts of a public and general nature. In the Appeal of M.E.S., Inc., the Air Force changed entry procedures to improve physical security, causing the contractor and subcontractor to spend one hour of each working day complying with the new procedures.  MES was granted a time extension, but the government said it was not responsible for the increased costs caused by the changed procedures. Anticipating that the Coronavirus may cause similar procedural changes including worker health checks upon entry/exit to the site and/or social distancing, it is anticipated that some government agencies may take a similar position. [See Construction Claims Advisor (Vol. 10, No. 13).]   

 

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