On April 18, President Trump signed the “Presidential Executive Order on Buy American and Hire American” (the Order), which declares the Executive branch’s policy to buy American goods and rigorously enforce and administer laws governing entry into the United States of workers from abroad. The Order is keeping with President Trump’s campaign promises regarding hiring American workers and promoting U.S. manufacturing, and signals a renewed focus on domestic sourcing requirements as well as the likelihood of greater restrictions on work visas for non-U.S. citizens.
In Kellogg Brown & Root Services, Inc. v. Murphy, Kellogg Brown & Root Services (KBR) filed a claim with the Army to recover costs associated with a subcontractor’s work on a dining facility in Iraq. The Army denied the claim and KBR appealed to the Armed Services Board of Contract Appeals (the Board). On the Army’s motion, the Board dismissed the claim, finding the six-year statute of limitations under the Contracts Dispute Act (CDA) had expired. KBR appealed to the Federal Circuit, which reversed the Board’s decision, finding the claim did not accrue, and thus the limitations period did not begin to run, until KBR had a basis for a “sum certain” to “fix” its liability.
Under a cost-plus-award-fee contract with the Army, KBR subcontracted work to the joint venture of KCPC/Morris. KBR later terminated the subcontract for delay and KCPC/Morris stopped work on September 12, 2003. On January 24, 2005, after KCPC/Morris had filed suit against KBR, the parties entered into a settlement agreement that liquidated a portion of KCPC/Morris’ claim. On the remainder of the claim, the parties agreed to cooperate to submit an invoice to the government.
In a recent Armed Services Board of Contract Appeals (ASBCA) decision, Nelson, Inc., a Small Business Administration (SBA) certified HUBZone construction company based in Memphis, Tennessee, succeeded in reversing the termination for default of its $9.2 million contract with the U.S. Army Corps of Engineers (Corps). The decision highlights how important it is for contractors to maintain careful records of delays caused by factors outside of their control, not just to prove entitlement to additional time or damages, but also to protect against improper default terminations.
Nelson had a contract with Corps to build stone dikes on the Mississippi River. The project involved four sites, Loosahatchie, Robinson Crusoe, Friars Point and Cow Island, and spanned across three states, Tennessee, Mississippi and Arkansas. Nelson’s progress was significantly delayed at one of the sites, due to low water levels that precluded Nelson floating its equipment, then high water levels that prevented the contractor from working, as well as delayed guidance from the Corps regarding differing site conditions. When Nelson exceeded the 165 days allotted for the entire project, the Corps terminated the contract for default despite having not yet issued notices to proceed at two of the sites. Although extra days were supposed to be added to the schedule when river levels were too high or low for construction, the Corps ignored these days when calculating its timeline.