In an imperfect world

On the subject of contract time extensions

Law Article June 05, 2018
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Larry Caudle

Most heavy-highway contracts contain either a fixed date for contract completion or a stated number of calendar or work days within which all work must be completed. They also contain a mechanism or procedure through which the contractor may receive an extension to the allotted time for changes in the work or for events encountered that are beyond the contractor’s control. Upon receipt of a justified time-extension request, the government must either grant additional time or pay the contractor to accelerate its performance in order to meet the deadline.

 

If the government wrongfully refuses to grant a time extension for an excusable delay or otherwise ignores the contractor’s request, any claim for delay damages by the government will be unjustified. More importantly, in such an event, the government will be deemed to have “constructively” ordered the contractor to accelerate the schedule, and thus may be responsible for reasonable costs the contractor incurs attempting to complete the project within the original contract time period.

 

In a perfect world, a contractor that encounters a delay outside of its control promptly alerts the government to the delay-causing event, and once the extent of the delay can be quantified, the government responds to a formal request for time by either granting all or a portion of the request or denying it altogether.

 

This is “perfect” because both the government and contractor are placed in a position where they can make intelligent decisions on going forward. The government, presented with a timely request, can consider both the entitlement and quantum of the time request and whether it desires the contractor to accelerate to make up for lost time. The contractor, having received a prompt response to its request, is either relieved from the cloud of delay damages hanging over its head (if the request is granted) or is empowered to decide whether it makes more sense to finish late and face the government’s delay damages, or incur additional costs to accelerate the schedule. Regardless of whether the contractor or owner is ultimately responsible for the delay, the contractor’s decision whether or not to accelerate must be reasonable.

 

Constructive Acceleration occurs when the government requires the contractor to meet the original delivery schedule despite the existence of excusable delays. There are five requirements for Constructive Acceleration: (1) an excusable delay; (2) knowledge by the government of the delay; (3) a statement or act by the government that can be construed as an order to accelerate; (4) notice to the government by the contractor that such statement or act is construed as an acceleration order; and (5) the incurrence by the contractor of acceleration costs.

 

In practice, Constructive Acceleration most commonly occurs when the government either wrongfully denies a legitimate time-extension request or fails to act in a timely manner on such request. To fully satisfy the five requirements identified above, the contractor must first turn in a substantiated request for a time extension. Then, it is not enough that the government either wrongfully denies the request or fails to respond within a reasonable time. The contractor’s next step is to place the government on notice that its failure to act on the request or its denial of such request is considered by the contractor as an order to accelerate the project. The contractor should also inform the government in writing that it will seek at a later date all costs incurred in connection with acceleration efforts.    

 

Until a formal request for a time extension is made, the government has no duty to extend the contract time. It is always up to the contractor to submit a formal time-extension request. More importantly, any acceleration efforts or re-sequencing of the work by the contractor to mitigate the impact of an excusable delay will not be compensable until the government (1) expressly orders such mitigation; (2) wrongfully denies a legitimate time request; or (3) fails to act within a reasonable time on the request.

 

Contractors, therefore, must instill in their project management personnel the importance of quantifying the impact of excusable delays as soon as possible and promptly placing before the government a formal request for extension of time. Similarly, government contract administration personnel must be mindful of the ramifications of their decisions on time-extension requests and their failure to provide a timely decision.

 

About the author: 
Caudle is a principal in Kraftson Caudle LLC, a law firm in McLean, Va., specializing in heavy-highway and transportation construction. Caudle can be contacted via e-mail at [email protected]
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