{"id":903267,"date":"2024-09-10T14:10:18","date_gmt":"2024-09-10T20:10:18","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903267"},"modified":"2024-09-10T14:10:20","modified_gmt":"2024-09-10T20:10:20","slug":"government-contracting-five-issues-to-consider","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/government-contracting-five-issues-to-consider\/","title":{"rendered":"Five Issues to Consider in Government Contracting (or any Contracting!)"},"content":{"rendered":"\n

David Adelstein | Florida Construction Legal Updates<\/a><\/p>\n\n\n\n

The appeal of\u00a0Appeals of \u2013 Konecranes Nuclear Equipment & Services, LLC<\/em>, ASBCA 62797, 2024 WL 2698011 (May 7, 2024) raises interesting, but important, issues that should be considered.\u00a0 In this case, the government (in a supply contract) procured four portal cranes from the claimant.\u00a0 After an initial test of one of the cranes failed, the government refused to accept delivery even after the issue was addressed by the claimant. The government did not accept the manner in which the claimant addressed the issue and would only accept cranes if the claimant employed \u201can unnecessary alternative solution [that] caused further delay and increased [claimant\u2019s] costs.\u201d On appeal, it was determined the government\u2019s decision to delay delivery based on its demand for the alternative solution was not justified, i.e., constituted a breach of contract. \u00a0Below are five issues of consideration in government contracting, or, for that matter, any contracting<\/a>.<\/p>\n\n\n\n

Issue #1- Patently Ambiguous Specifications<\/h4>\n\n\n\n

The government argued that the specifications were patently ambiguous and because the claimant failed to inquire regarding the ambiguous specifications prior to performance, its interpretation of the ambiguous specifications should govern. The contractor countered that the specifications were unambiguous and it met the specifications.<\/p>\n\n\n\n

\u201cContract interpretation begins with the language of the written agreement.\u201d If unambiguous, the plain meaning of a contract controls. \u201cA contract term is unambiguous if there is only one reasonable interpretation.\u201d However, \u201c[w]hen a contract is susceptible to more than one reasonable interpretation, it contains an ambiguity.\u201d \u201c\u2018To show an ambiguity it is not enough that the parties differ in their respective interpretations of a contract term,\u2019 rather, both interpretations must be reasonable.\u201d  To show a patent ambiguity, which we construe against the non-drafting party, the drafting party must show an \u201c\u201cobvious, gross, [or] glaring\u201d ambiguity so substantial as to impose a \u201cduty to inquire\u201d before contract formation<\/u>. <\/strong><\/p>\n\n\n\n

Appeals of \u2013 Konecranes, supra <\/em>(internal citations omitted).<\/p>\n\n\n\n

Here, it was determined \u201cthere was no ambiguity, much less an obvious, gross, or sufficiently glaring ambiguity that would trigger [claimant\u2019s] duty to inquire before contract formation.\u201d  Id<\/em>.<\/p>\n\n\n\n

Issue #2 \u2013 Rejection of Work Based on Specifications<\/h4>\n\n\n\n

The government rejected the cranes for not complying with the specifications.<\/p>\n\n\n\n

\u201cWhen the Government rejects work as being not in compliance with its specifications, the Boards of Contract Appeals have held that the burden is upon the Government to demonstrate that fact.\u201d We have explained this anomaly of the government bearing the burden for a contractor claim \u201cas a variation of the implied warranty of specifications seen in impossibility and defective specifications cases and characterized it as the government \u2018putting in issue the sufficiency of its own specifications.\u201d\u2019 In assessing these \u201c\u201cinspection and rejection cases,\u201d we focus on whether the evidence demonstrates that a product fails \u201cto meet contract requirements.\u201d<\/strong><\/p>\n\n\n\n

Appeals of \u2013 Konecranes, supra (internal citations omitted).<\/em><\/p>\n\n\n\n

Here, it was determined, \u201c[r]egardless of which party bears the burden of proof, [claimant] proved by a preponderance of the evidence that the luffing drums [in the cranes] complied with the Contract\u2019s specifications after changing the wire rope and should not have been found defective with the new rope.\u201d Id<\/em>.<\/p>\n\n\n\n

Issue #3 \u2013 Delay<\/h4>\n\n\n\n

The claimant argued the government had no basis to reject delivery of a crane because it complied to the specifications after the claimant addressed the initial issue.  To this point, the claimant argued the government\u2019s refusal to allow it to ship cranes unless it employed the unnecessary alternative solution resulted in delays.<\/p>\n\n\n\n

\u201cA contractor seeking to prove the government\u2019s liability for a delay must establish the extent of the delay, the contractor\u2019s harm resulting from the delay, and the causal link between the government\u2019s wrongful acts and the delay.\u201d As to causation, \u201ca contractor has the burden of demonstrating that the specific delays were due to government-responsible causes, that the overall completion was delayed as a result, and that any government-cause[d] delays were not concurrent with delays within the contractor\u2019s control.\u201d<\/strong><\/p>\n\n\n\n

Appeals of \u2013 Konecranes, supra <\/em>(internal citations omitted).<\/p>\n\n\n\n

Here, it was determined the government\u2019s refusal to accept delivery when the cranes met the specifications resulted in compensable delay.<\/p>\n\n\n\n

Issue #4 \u2013 Implied Duty Not to Interfere<\/h4>\n\n\n\n

Yes, there is an implied duty of good faith and fair dealing that exists in government contracts:<\/p>\n\n\n\n

In the absence of a contract provision allowing the government to unilaterally stop or delay a contractor\u2019s performance, any government caused delay constitutes a breach of the government\u2019s implied duty not to interfere with a contractor\u2019s performance.The implied duty not to interfere derives from the implied duty of good faith and fair dealing, assuring that one party cannot destroy the other party\u2019s reasonable expectations regarding the fruits of a contract. \u201cAn implied duty of good faith and fair dealing exists in government contracts and applies to the government just as it does to private parties.\u201d<\/strong><\/p>\n\n\n\n

Any implied duty derives from the explicit terms of a government contract. Here, as we concluded above, the [government] unreasonably inspected [claimant\u2019s] cranes pursuant to the inspection provisions of the Contract Terms and Conditions \u2014 Commercial Items clause and Contract\u2019s specifications. The [government\u2019s] unreasonable inspection and ensuing delays resulted in a breach of the implied duty not to interfere.<\/strong><\/p>\n\n\n\n

Appeals of \u2013 Konecranes, supra<\/em>.<\/p>\n\n\n\n

Issue # 5 \u2013 Christian Doctrine<\/h4>\n\n\n\n

This was a supply contract so it did not incorporate a provision that allowed the government to stop or suspend work where it was determined such provision did not need to be incorporated:<\/p>\n\n\n\n

However, the Contract does not include a Stop-Work Order, Government Delay of Work, or Suspension of Work clause. Instead, because we cannot incorporate these clauses by operation of law in a commercial items contract, we find that the Navy breached its implied duty not to interfere by unreasonably inspecting the cranes. There can be no \u201cconstructive\u201d suspension or stop-work order if there is no clause to base it on. It becomes a breach.<\/strong><\/p>\n\n\n\n

For our Board \u201cto incorporate a clause into a contract under the Christian<\/em> doctrine, it generally must find (1) that the clause is mandatory; and (2) that it expresses a significant or deeply ingrained strand of public procurement policy.\u201d Here, the Suspension of Work, Government Delay of Work, and the Stop-Work Order clauses are not mandatory for commercial items contracts and, thus, we will not incorporate any of these clauses into the contract by operation of law.<\/strong><\/p>\n\n\n\n

In particular, the Contract does not incorporate a Suspension of Work, Government Delay of Work, or Stop-Work Order clause.  \u2026 Notably, the FAR implements the congressional requirement that commercial items contracts \u201cshall, to the maximum extent practicable, include only those clauses\u201d required by law or \u201cconsistent with customary commercial practice.\u201d So, given the policy preference to limit the number of standard FAR contract clauses in a commercial items contract, we should not be surprised that there is no explicit suspension, delay, or stop-work provision to hang the parties\u2019 \u201cconstructive\u201d hat on.<\/strong><\/p>\n\n\n\n

Instead, we must assess whether any of these clauses is mandatory and must be incorporated by operation of law under the Christian<\/em> doctrine. Only fixed-price construction or architect-engineer contracts, not commercial items contracts, require the Suspension of Work clause. The Government Delay of Work clause would permit similar suspension of work for a fixed-price supply contract. FAR However, the Government Delay of Work clause is \u201coptional,\u201d not required, for commercial supply contracts such as this one.<\/strong><\/p>\n\n\n\n

Appeals of \u2013 Konecranes, supra\u00a0<\/em>(internal citations omitted).<\/p>\n\n\n\n

\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

David Adelstein | Florida Construction Legal Updates The appeal of\u00a0Appeals of \u2013 Konecranes Nuclear Equipment & Services, LLC, ASBCA 62797, 2024 WL 2698011 (May 7, 2024) raises interesting, but important, issues that should be considered.\u00a0 In this case, the government (in a supply contract) procured four portal cranes from the claimant.\u00a0 After an initial test… Continue reading Five Issues to Consider in Government Contracting (or any Contracting!)<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224],"class_list":["post-903267","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nFive Issues to Consider in Government Contracting (or any Contracting!) - 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