Maria Panichelli | Obermayer Rebmann Maxwell & Hippel
Many construction contractors working with the United States Army Corps of Engineers (USACE) have seen it happen: they experience a government-caused delay or suspension, which USACE agrees to pay for, but then USACE deducts the anticipated adverse weather days stated in the contract for the delay period from the compensable time extension. That may no longer be a defensible practice after the ASBCA’s recent decision in the Appeal of Granite Construction Company. In that case, the Board held that USACE was not entitled to automatically deduct the anticipated days of adverse weather stated in the contract from the compensable delay caused by a government suspension of work.
In Granite Construction, the contractor was constructing new outlet structures and cutoff walls below two federally administered dams. The contract included a common clause called “Time Extensions for Unusually Severe Weather,” which set forth days of adverse weather anticipated for each month of the year. Following Hurricane Harvey, the government began releasing water from the dams, causing the contract work site to flood. The government then suspended contract performance for 49 days. Afterwards, the government agreed to compensate the contractor for 30 of the 49 days, but refused to pay for the remaining 19 days. What was the government’s reasoning? The contract stated that there were 19 days of anticipated adverse weather days during the period at issue, so USACE unilaterally deducted those days from the compensable delay. In fact, USACE has taken a similar position in other cases, but this time the contractor was not willing to accept the agency’s decision. The contractor appealed to the ASBCA, arguing that the suspension was not a weather delay at all, but was caused by the government’s release of water from the dams and the resulting flooding of the work site.
The Board held that USACE was not entitled to automatically deduct the days of adverse weather anticipated by the contract from the compensable suspension. The Board determined that the days of anticipated adverse weather were applicable to calculating a delay under the contract’s Default clause, but not under the Suspension clause. The Board ultimately left the question of whether the contractor was entitled to compensation under the Suspension clause for a later trial. Nonetheless, this case is important for any contractor doing work for USACE, because it provides a legal basis for contractors to resist USACE’s practice of automatically deducting anticipated adverse weather days from government-caused delays and suspensions.