Businesses who are engaged in construction related activities, whether on public or private projects, can anticipate that there will be new and challenging legal issues related to COVID-19.
While COVID-19 continues to affect your supply chain and work efficiencies, the typical contract force majeure and delay clauses may no longer offer you remedies to address COVID-19 cost and time impacts. Without a doubt, COVID-19 delays are now foreseeable and as such it is important to make sure your future construction contracts include provisions that will help minimize the continued COVID-19 adverse impacts.
Below are couple of options to consider when entering into future contracts:
- Bid Disclaimers:
- If you are submitting a bid: Sample Language: This proposal is based on the Bidder’s current labor conditions and material pricing; any labor or material increases prior to start of project will be adjusted and passed on to the Client. Because of the COVID-19 pandemic, Bidder reserves all rights to make a claim for an adjustment to the Contract Sum and/or Contract Time.
- If you are issuing an RFP: Sample Language: Bidder assumes all risk associated with impacts resulting from the COVID-19 pandemic. The Contract Sum and the bid submitted by Contractor has factored in the risks associated with impacts from COVID-19. Impacts resulting from or related to COVID-19 shall not be a basis for a Contractor to make a claim for an adjustment to the Contract Sum and/or Contract Time.
- Price Acceleration and Escalation Clauses – These types of provisions help control cost overruns due to supply chain disruptions. A price acceleration provision gives the contractor control to adjust the contract price to reflect the revised actual cost of the materials and labor.
- Change in Law – This clause can be useful to protect against unexpected events that arise in a project.
- Excusable Delay Clauses – May cover delays caused by “epidemics” or “quarantine restrictions.”
Federal Contracts – Relevant FAR provisions
- Excusable Delays (FAR 52.249-14) – This clause provides specific procedures for handling delays beyond the control of the contractor. FAR language includes specific reference to epidemic and quarantine restrictions as causes of a Contractor’s excusable failure to perform a contract.
- Suspension of Work (FAR 52.242-14)
- Stop Work Order (FAR 52.242-15)
- Government Delay of Work (FAR 52.242-17)
For our local clients entering into contracts with the local DMV public agencies (not Federal government), refer to each agency’s existing standard set of General Conditions. For example, Maryland COMAR 21.07.02.07(4) and State Highway Administration Standard Specification GP-8.08(d)(1), liquidated damages may not be assessed against a contractor whose delay “arises from unforeseeable