COVID Costs Claim Succeeds: Contractor Entitled to Recover for Performance of Contract Despite Base Closure

In StructSure Projects, Inc., ASBCA No. 62927, the Armed Services Board of Contract Appeals (Board) granted an appeal seeking recovery for increased costs resulting from the COVID-19 pandemic.  The underlying task order involved design and alteration services for existing medical facilities at Travis Air Force Base, and included a specific Contract Line Item Number (CLIN) for the provision of temporary phasing facilities that the Government could use while the construction work was ongoing.  When the pandemic began in March 2020, StructSure and its subcontractors had to stop their on-site construction work for 44 days because the Government had limited base access for contractors deemed to be not mission-essential.  StructSure later sought schedule and monetary relief, but the Government only granted schedule extensions under the Default clause.

StructSure eventually submitted a monetary claim for the additional costs associated with renting furniture and equipment for the temporary phasing facilities because the schedule extensions meant that it would continue to incur cost beyond the original period of performance.  Although the Government had continued to use the facilities during the stop-work period, the Government denied the claim on the basis that the base closure was a sovereign act rather than a change, and also because the Coronavirus, Aid, Relief, and Economic Security Act (“CARES Act”) was not intended to provide this type of relief on a fixed-price task order.

On appeal before the Board, the Government again raised the sovereign acts defense. Neither party disputed that the base closure was a “public and general sovereign act,” and the Board agreed that the closure delayed completion of the construction activity.  However, the Board found that the sovereign acts doctrine did not apply, because the COVID restriction did not prevent StructSure from delivering the temporary phasing facilities.  The Board found that StructSure was entitled to compensation because StructSure delivered, and the Government utilized, the temporary facilities during the delay period and during the extension granted due to the COVID delay.

This decision is a significant reminder that, even where a sovereign act is involved, contractors still may be entitled to recover for certain increased costs of performance.  Contractors should examine the circumstances and impacts carefully to ensure that they request equitable adjustments to the contract price where appropriate.