Contractor Claim Not Dismissed under Contract Disputes Act for Failure of Timely Notice

Almost two years into a multi-year design-build contract, the government questioned the basis of design of the piles for a ship repair wharf. The contractor stopped work while the design issue was resolved with the government. The work stoppage led to acceleration measures later in the project in an effort to make up time. When the contractor pursued a claim for delay, the government moved to dismiss the claim, as the contractor had failed to give notice of the delay within 20 days of commencement, as required under the Contract Disputes Act. But a federal court has denied the government’s motion to dismiss, noting that the government had actual knowledge that work had been suspended pending resolution of the design issue. The case is Nova Grp./Tutor-Saliba v. United States, 2016 U.S. Claims LEXIS 198 (Mar. 16, 2016).

The original pile design had been approved by the governing agency, the Naval Facilities Engineering Command (NAVFAC). When the design was later questioned via a March 8, 2010 letter, NAVFAC did not direct that the work stop, but still knew that the contractor halted work until the design issue had been resolved. NAVFAC later confirmed the original design, by letter of May 27, 2010, and work resumed the same day. The first contractor notice seeking an equitable adjustment was issued on Sept. 3, 2010, and the quantification of the request for equitable adjustment (REA) was submitted on April 1, 2011. The REA was denied about two years later.

The contractor sued to recover costs arising from the delay in work and subsequent acceleration, and the government moved to dismiss the claim for failure to give notice within 20 days, as required by FAR 52.243-4. The government relied on an earlier decision in the case of K-Con Bldg. Sys., Inc. v. United States, where delay in notice by the contractor was fatal to the contractor’s claim. But the court distinguished the circumstances in that case from the present one:

Importantly, [the contractor]'s allegation that the Government knew about both the work stoppage and acceleration falls within an exception to the 20-day notice requirement adopted by the Federal Circuit in K-Con. Specifically, the K-Con Court expressly recognized that extenuating circumstances such as the Government's actual or imputed notice of circumstances giving rise to the claim "have weighed against strict enforcement of the time limit" imposed by FAR 52.243-4.

The court went on to state that the current case “fall squarely within the exception to strict enforcement of the 20-day notice requirement where the Contracting Officer is on notice of the circumstances giving rise to the claim.” Thus, “the lack of timely notice does not warrant dismissal of this action.”