A contractor’s claims against the government for constructive acceleration and delays are governed, in part, by the applicable clauses of the Federal Acquisition Regulations (FAR) incorporated into its contract with the government. Whereas a subcontractor’s claims against a contractor for constructive acceleration and delays are governed, in part, by which FAR clauses are incorporated into its subcontract. Prime contractors and subcontractors on federal projects should be aware of the importance of understanding flow-down provisions in subcontracts and how they can govern subcontractor constructive acceleration and delay claims against contractors.
In L3Harris Mar. Servs., Inc. v. BAE Sys. Norfolk Ship Repair Inc.[1], a subcontractor alleged a constructive acceleration claim against the contractor associated with COVID-19 related delays, as well as a constructive delay claim associated with contractor caused delays and interferences. The court held that the subcontractor alleged a sustainable cause of action for constructive acceleration against the prime contractor in connection with COVID-19 delays. The subcontract—through a flow-down clause—incorporated FAR clauses governing Excusable Delays[2] (including epidemics) and Changes[3], and applied federal common law in interpreting the same. In ruling on the contractor’s motion to dismiss, the court considered the incorporated FAR clauses, as well as factors governing constructive acceleration claims:
- excusable delay,
- timely request for extension that was denied,
- an order to accelerate, and
- acceleration with incurred increased resources and costs.
The court held that the subcontractor sufficiently alleged facts to sustain its claim for constructive acceleration. It further rejected the contractor’s argument that the subcontractor failed to allege that it was ordered to meet the original schedule despite an excusable delay, finding that such an order may be implicit, including a refusal to grant a request for an extension.
Central to the court’s decision was the flow-down provision of the parties’ subcontract, which incorporated the FAR clauses governing Excusable Delays and Changes. This is highlighted by the court’s dismissal of the subcontractor’s delay claims against the contractor. The court noted that the alleged contractor delays were not constructive changes to the work wherein the contractor expressly or implicitly required performance beyond the contract requirements, rendering the Changes clause inapplicable. Rather, delays are governed by the FAR §52.242-14 Suspension of Work clause, which was not part of the flow-down provisions in the subcontract. Because the subcontractor failed to allege any changes to the scope of work and the foregoing suspension clause was not incorporated into the subcontract, the delay claims were dismissed.
Prime contractors and subcontractors must pay careful attention to the flow-down provisions in their subcontract, as well as which laws apply in interpreting the parties’ rights and obligations under the subcontract. Flow-down provisions and applicable case law interpreting the same can expand or restrict rights and liability for such claims. If you are a prime contractor or subcontractor and have questions about construction claims related to acceleration or need assistance with a claim on a federal construction project, please contact Jessica duHoffmann, Arthur Dore, or another member of PilieroMazza’s Construction or Government Contracts practice groups.
[1] 2023 WL 7095096 (E.D.Va. Oct. 26, 2023).
[2] 48 C.F.R. § 52.249-14.
[3] § 52.243-1.
