In these uncertain times unanticipated delays caused by events or actions beyond the contractor’s control, are likely, if not certain to occur. Further, contractors and subcontractors are likely to incur additional costs and extensions of time to comply with the safety precautions mandated by the State. Claims for and/or additional costs on most State projects are governed by the General Conditions issued by the Bureau of Real Estate Management.¹
Under sections 31.1 and 37.1of the General Conditions the Contractor is entitled to an extension of the contract time if the work is delayed by an act of the Owner or causes beyond the Contractor’s control. Governor Mill’s order regarding the coronavirus situation and the situation itself provide the basis for making a claim for such an extension. Section 31.2 requires the Contractor to provide written notice of the delay to the Consultant (i.e. the Project Architect or Engineer). If, as is likely in this instance, the delay is continuing, the initial notice is sufficient. The General Conditions do not exclude claims for additional cost arising out of the cause for the delay. (§ 31.4)
Contractors are also entitled to additional compensation for work required by construction change directives (§ 27.4), changes in scope (§ 27.11), and the discovery of latent conditions. (§ 27.13). The current situation does not fit neatly into any one of these categories, but an argument can be made that all three apply in this instance. Regardless, it would be wise to assert a claim for additional costs incurred as a result of the current situation. Section 27.14 requires that notice be given within ten calendar days for claims asserting additional compensation. Contractors should carefully document their costs so as meet the requirements of sections 27.5-27.10. Claims for additional cost might include the cost of protective equipment and reduced productivity due to the loss of labor, or restrictions on the number of employees that can be present on the job site.
Due to the unique nature of the COVID-19 pandemic, Contractors should also consider section 26.10 which states that “Contractors may act with their sole discretion in emergency situations that potentially effect health, life or serious damage to the premises or adjacent properties, to prevent such potential loss or injury.” The Governor’s March 24th Executive Order makes it clear that an emergency exists and imposes certain restrictions on the prosecution of the work required under the contract. Under this section the Contractor is entitled to “negotiate” “compensation for expenses due to such emergency work,” providing another avenue to additional compensation in the section 27 process.
If you have questions on specific projects, please contact Michael Hodgins or David Pierson. Our office is trying as best we can to work remotely, while continuing to timely and effectively respond to, and anticipate, client concerns.
¹ This is based on the May, 2019 version of the General Conditions.
COVID-19 Resources:
Paycheck Protection for Small Businesses
Dealing with Debt: COVID-19’s Effect on Foreclosures, Bankruptcy, and Collections
Families First Corona Virus Response Act
COVID-19 and the Construction Industry
Essential Businesses – Construction Industry
These materials have been prepared for general informational purposes only and are not intended as legal advice.