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The Construction Law Corner: “At the Intersection of Construction and Law”
Recovering Costs from COVID: A Brief Primer on REAs in Federal Construction Contracts
  by Shaun Kennedy and Sean Hanlon
The COVID-19 public health emergency disrupted business operations within the construction industry, causing significant financial impacts. This pandemic particularly impacted business continuity, availability of personnel, supply chain disruptions, and work site access.
If these business disruptions sound familiar, below is a brief primer of federal contract clauses that may provide contractors compensable and/or schedule relief:
Suspension of Work Clause
What? Under the Suspension of Work clause, FAR 52.242- 14, either by written notice or other actions/inactions, the Government may suspend or delay all or any part of the work under the contract.
When? The contractor must: (1) notify the Government of a directed or constructive suspension “as soon as practicable,” and (2) assert entitlement to additional costs within 20-days after the suspension or delay.
Why? If the suspension or delay is for an unreasonable period of time, the contractor may be entitled to an equitable adjustment for additional costs incurred (excluding profit) and/or schedule impacts.
Stop Work Clause
What? Under the Stop Work clause, FAR 52.242-15, the Government may issue a written order requiring the contractor to stop all, or any part, of the work under the contract. Within 90-days (subject to extension), the Government must either cancel the stop-work order or terminate the work subject to the order.
When? The contractor must assert entitlement to additional costs within 30-days after the cancellation of the stop-work order.
Why? The contractor may be entitled to an equitable adjustment for additional costs incurred and/or schedule impacts resulting from the stop-work order. Recovery of profit is not excluded.
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Excusable Delay
What? Under the Default clause, FAR 52.249-10(b)(1), a contractor may be excused from performance delays if: (i) the delay was without the fault or negligence of the contractor; and (ii) the delay arose from an act of God, an epidemic, or a quarantine restriction.
When? The contractor must notify the Government within 10 days from the beginning of the delay, or any other time as agreed upon by the Government.
Why? Unlike the Suspension of Work and Stop-Work Order clauses, which allow for the recovery of additional costs, the contractor is only entitled to a schedule relief for the excusable delay.
Equitable Adjustments
The purpose of equitable adjustment is to determine
the extent of a contractor’s cost impact based upon
changes arising from the Government’s actions/inactions. Contractors should take proactive steps to demonstrate compensable or excusable delays stemming from the COVD- 19 pandemic, including:
1. Review their applicable contract clauses;
2. Compile communications to the Government that may qualify as notifications of delays;
3. Work with necessary consultants to analyze whether an equitable adjustment is appropriate; and
4. Promptly submit requests for equitable adjustment demonstrating entitlement to additional costs and/or schedule impacts. |

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