Concurrent Delays: The Importance of Apportionment

By John S. Mrowiec

There were a number of factual disputes in George Sollitt Construction Co. v. United States, 2005 U.S. Claims LEXIS 52 (Fed. Cl. Feb. 23, 2005).

On a multi-phase federal renovation project, the owner changed the design of a major element in phase one during construction. The contractor was delayed in procuring steel for phase one when its chosen supplier failed to obtain the required certification.

In phases two and three, the contractor encountered lead paint that had to be abated and found the subfloors were not level enough for the required terrazzo installation. The owner changed the electronic locks for the doors.

There was a differing site condition that caused a redesign of a foundation wall but the contractor delayed in submitting a price proposal for the changed work and then failed to commence the changed work. The owner also changed some access flooring but the contractor took three months to submit a price proposal.

The substantial completion dates of phase one and phases two and three of the project were each 96 calendar days late. The owner assessed liquidated damages. The contractor denied that it was responsible for the delays to substantial completion. The contractor submitted a claim for an equitable adjustment of the contract price for winter conditions and extended site and home office overhead costs.

After determining the cause and extent of specific events, the most important facts and legal issues surrounded the question of the apportionment of possibly "concurrent" delays.

Why Concurrent Delays are Key

Why is apportionment of concurrent delays important? The important legal requirements for the contractor's and owner's recovery of damages for delay set the stage for answering that question.
When a contractor seeks an equitable adjustment for government-caused delay, "the contractor has the burden of proving the extent of the delay, that the delay was proximately caused by government action, and that the delay harmed the contractor" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *13, quoting Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994).
"In some cases, this burden may be met if the contractor proves four elements: the government's delay was of unreasonable length [not required when delay is caused by defective design], the government was the proximate cause of the contractor's delayed performance, the contractor was injured, and there was no concurrent delay on the part of the contractor" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *14 citing P.J. Dick, Inc. v. Principi, 324 F.3d 1364, 1374-75 (Fed. Cir. 2003).

The George Sollitt Construction court admitted that "[t]he exact definition of concurrent delay is not readily apparent from its use in contract law, although it is a term which has both temporal and causation aspects" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *15 n.8. "Concurrent delays affect the same 'delay period'" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *15 n.8 citing Tyger Construction Co. v. United States, 31 Fed. Cl. 177, 259 (1994). "A concurrent delay is also independently sufficient to cause the delay days attributed to that source of delay" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *15 n.8 citing Beauchamp Construction Co. v. United States, 14 Cl. Ct. 430, 437 (1988).

"The general rule barring recovery for government-caused unreasonable delay when there has been concurrent delay caused by the contractor does permit recovery, however, when 'clear apportionment' of the delay attributable to each party has been established" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *14 citing T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 734 (Fed. Cir. 1997).

For the contractor's equitable adjustment claim for compensable delay, the burden is on the contractor to apportion the delay between the parties, George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *15 citing William F. Klingensmith, Inc. v. United States, 731 F.2d 805, 809 (Fed. Cir. 1984).

Regarding the government's assessment of liquidated damages, "the government first must meet its initial burden of showing that 'the contract performance requirements were not substantially completed by the completion date and that the period for which the assessment was made was proper.'

Once the government has met that burden, the burden then shifts to the contractor 'to show that any delays were excusable and that it should be relieved of all or part of the assessment'" George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *31 citing PCL Construction Services, Inc. v. United States, 53 Fed. Cl. 479, 484 (2002), aff'd, 96 Fed. Appx. 672 (Fed. Cir. 2004).

When the alleged excuse for the delay is inaction by the government, the case law is conflicting whether the government delay, if proved, completely voids a contract's liquidated damages provision, or whether apportionment of liquidated damages is possible where there has been concurrent delay by both parties, George Sollitt Construction, 2005 U.S .Claims LEXIS 52 at *32.

Because the case law was unsettled, the George Sollitt Construction court examined the facts under both approaches.

A complicating factor is when one party has caused multiple delays that might themselves be concurrent in addition to possibly being concurrent with the other party's delays. In that situation, "the court first examines the proven delays caused by only one party to make sure that the delay days which are concurrent with each other are not counted more than once . . . then the court apportions the overall critical path concurrent delays from each party to determine the outcome. George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *29-30.

Acquiring Proof of Delay

But how are these burdens of proof to be met? According to the court, "[t]he only way to accurately assess the effect of the delays alleged . . . on the . . . project's process is to contrast updated CPM schedules prepared immediately before and immediately after each purported delay" George Sollitt Construction, 2005 U.S. Dist. LEXIS 52 at *30 quoting Blinderman Construction Co. v. United States, 39 Fed. Cl. 529, 585 (1997).

This rule proved to be the undoing of the contractor's equitable adjustment claim.

The George Sollitt Construction court emphasized particular contractor scheduling deficiencies. The contractor, "for some months at the beginning and end of the project," failed to provide monthly CPM schedule updates, a contractual requirement, making proof of criticality and apportionment delay more difficult.

Some of the schedule updates lacked specific information about the start and end dates of certain work activities on the critical path, because those activities were reported only as to their percentage of completion. In several instances, when specific activity dates could be determined from the schedule updates, the dates were inaccurate.

Lastly, the court was not persuaded that the government's failure to grant time extensions restricted the contractor's ability to report delays accurately in its monthly schedule updates, George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *52-53.

Claims Fall Short

Despite finding some significant owner-caused critical path delays, the contractor failed in its equitable adjustment claims. Even with supporting expert testimony, the court held the contractor failed to meet its burden to segregate delays caused by the owner from the contractor's own critical path delays, George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *86, 137-38.

The owner fared no better on its claims of liquidated damages. Although the owner also submitted expert testimony, the owner too failed to trace a critical path or to apportion the contractor's delay from the owner's delays, George Sollitt Construction, 2005 U.S. Claims LEXIS 52 at *88-89, 138.

The result was that neither of the parties received any compensation for critical path delays caused by the other party.

The George Sollitt Construction case is instructive, not only on the need to apportion critical path delays when caused by different parties and the scheduling information to do it, but other principles of delay claim issues in federal construction cases. Courts outside the federal contracting context often cite federal contracting cases when deciding delay disputes.

John S. Mrowiec is a partner with Chicago-based Conway & Mrowiec, a construction and public contracts law and litigation practice. He may be reached at (312) 658-1100. For information, go to the firm's Web site at www.cmcontractors.com.