COVID-l9 and Excusable Delay on Public Projects 042020

COVID-l9 and Excusable Delay on Public Projects in the District of Columbia, Maryland and Virginia
By Gina L. Schaecher and Eric S. Lammers, Rees Broome, P.C.
While COVID-I9 stay-at-home orders have not shut down all construction projects in the
District of Columbia, Maryland and Virginia, the impacts of COVID-19 may cause significant
delays to construction throughout the region – whether from a shortage of workers, an inability
to obtain timely supplies, the implementation of social distancing protocols, or some other
pandemic-caused reason. For contractors on public jobs, the applicable contract provisions and
incorporated regulations often provide for a time extension for delays outside of the contractor’s
control, including for pandemics and other “acts of God.” To obtain this extension, however, it
is important that the contractor comply with the contract requirements. While those
requirements vary among jurisdictions, as a general rule, contractors facing COVID-1g-imposed
delays should: (l) promptly notify the appropriate contracting authority of the delay and its
causes; (2) document, in as much detail as possible, how COVID-I9 has impacted and is
impacting the contractor’s performance; and (3) develop and implement a plan, with the
contracting authority’s approval, for how the contractor will proceed with the work. Some of the
specific provisions found in many government contracts in the District of Columbia, Maryland
and Virginia are briefly addressed below.
Excusable Delay in Public Contracts
Construction contracts for public projects in the District of Columbia, Maryland and
Virginia typically include provisions that allow for additional time for excusable delay, which
may include delays caused by COVID-l9.
Federal Construction Contracts. On federal jobs, many construction contracts will
include FAR 52.249-14, for “Excusable Delay” (or a similar provision, such as FAP. 52.249-10,
“Default (Fixed-Price Construction).” This provision provides that the government will not hold
the contractor in default for failure to perform where that failure was not caused by the
contractor’s fault or negligence. The provision specifically includes “epidemics” and
“quarantine restrictions” as examples. However, the contractor still should establish and
document that the epidemic was the actual cause of the delay, how the epidemic impacted
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performance, and that the contractor attempted to mitigate the epidemic’s adverse effects on the
contractor’ s performance.
District of Columbia Construction Projects. For District of Columbia construction
projects, the Department of General Services Standard Contract Provisions and the Department
of Transportation Standard Specifications for Highways and Structures provide that the District
may not terminate a contractor or impose liquidated damages if the “delay in the completion of
the Work arises from unforeseeable causes” beyond the control or fault of the contractor. Such
causes include “acts of God,”‘epidemics,” “quarantine restrictions” and “delays of
Subcontractors or suppliers arising from unforeseeable causes.” However, the contractor must
notify the Contracting Officer in writing of the delay and its causes within ten days from the
beginning of any such delay (unless additional time is granted by the Contracting Officer).
Maryland Construction Projects. In Maryland, COMAR}L}7.02.07(4) and State
Highway Administration Standard Specification GP-8.08(dXl) also preclude the State from
imposing liquidated damages against a contractor for delay arising from unforeseeable causes
beyond the control and without the fault or negligence of the Contractor.” Such causes expressly
include “epidemics” and “quarantine.” Again, prompt notice is essential – as with the District of
Columbia requirements, these provisions generally require notice within l0 days unless
additional time is granted by the procurement officer. Some counties include language similar to
that of the State Highway Administration Standard Specification in their construction contracts.
Not all counties and cities use this provision, however, so contractors working on such projects
will need to carefully check their contracts if faced with delay caused by the current pandemic.
Virginia Construction Projects. For Virginia Department of Transportation projects,
Section 108.04 of the current Road and Bridge Specifications state that, for fixed price contracts,
the Department will consider permitting an extension of time “when a delay occurs due to
unforeseen causes beyond the control of or without the fault or negligence of the Contractor.” In
a Memorandum dated March 12,2020, the Department acknowledged that the Specifications
authorize contract modifications and time extensions that may be necessitated by COVID-I9, but
stated that the Department would address these impacts on a “case-by-case basis.” Contractors
working on projects for the Department should provide timely notice of delays and all
information required by the Department to evaluate the request. For example, Section 108.04
provides that the contractor should provide information regarding certain delays to the
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Department “within three days of experiencing such a delay.” Contractors working on County
and City construction projects should review their contracts to determine the requirements for
pursuing an excusable delay claim for COVID-19 project impacts.
Other Contract Adjustments for COVID-19 Impacts
The foregoing “excusable delay” provisions provide for a contract time adjustment, but
typically do not provide any compensation for the additional costs that may be imposed upon
contractors by COVID-19. The ability to recover such costs will vary from project to project,
and jurisdiction to jurisdiction. As a general matter, however, a contractor may have one or
more avenues available to pursue a claim for additional costs:
o Government-Ordered Suspensions of Work. Most federal and state construction
contracts contain provisions allowing the contractor to recover costs where work is
temporarily stopped or suspended. On federal projects, for example, contractors may
be able to recover costs pursuant to FAPt 52.242-15 (Stop Work Orders) or FAR
52.242-14 (Suspensions of Work). The District of Columbia Department of
Transportation Standard Specifications permit a cost adjustment where the
contractor’s work is, “for an unreasonable period of time, suspended, delayed or
interrupted by an act of the Contracting Officer.” Maryland contractors may recover
for additional costs “caused by an unreasonable suspension, delay, or interruption”
caused by the state’s procurement officer pursuant to COMAR 21.07.02(4) and State
Highway Association Standard Specification 8.07(b). Finally, in Virginia, the Road
and Bridge Specifications also allow compensable delay for certain Engineer-ordered
suspensions according to Section 108.05. As always, compliance with applicable
notice and documentation requirements is essential.
o Government-Imposed Changes. COVID-19 may necessitate government-ordered
changes to schedules, work site accessibility or other impacts to the contractor’s
work. For federal construction projects, the contractor may be able to request a cost
adjustment pursuant to the standard FAR Changes clauses: FAR 52.243-l (“Changes
– Fixed Price”), FAF* 52.243-2 (“Changes – Cost Reimbursement”), FAP* 52.243-3
(“Changes – Time and Materials or Labor-Hours”), or FAP. 52.243-4 (“Changes”).
For District of Columbia projects, the Department of General Services Standard
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Contract Provisions and the Department of Transportation Standard Specifications
permit cost adjustments where “alterations or changes in quantities significantly
change the character of the Work under the Contract.” For Maryland projects, State
Highway Association Standard Specification 4.06 and COMAR21.07.02.02 provide
for an equitable adjustment where a government change causes an increase or
decrease in the Contractor’s cost of, or the time required for, the performance of any
part of the work under this Contract.” Similarly, Virginia’s Road and Bridge
Specifications provide for compensable delay in the case of delays due to alteration of
quantities or character of work according to Section 104.02. Again, the contractor
should pay close attention to notice and documentation requirements.
In addition to the above two examples, contractors may be able to seek recovery of additional
costs pursuant to other contract provisions – but it is important that contractors identify such
potentially applicable provisions quickly as timely notice and documentation undoubtedly will
be key to the contractor’s ability to recover.
Every construction claim, and every project, is different, and the contract clauses
applicable to such projects likewise vary. Accordingly, a complete recitation of all of the
possible contract clauses and requirements applicable to the COVID-I9 pandemic is beyond the
scope of this short article. Please consult an attorney to obtain legal advice regarding your
particular situation. Also, if you have any questions or comments regarding this article, please
contact Gina Schaecher or Eric Lammers at Rees Broome, P.C. Ms. Schaecher may be reached
at Gschaechner@ReesBroome.com or (703) 790-1911. Mr. Lammers may be reached at
Elammers@ReesBroome.com or (703) 226-17 60.

While keeping on top of the pandemic response, DC Water last week capitalized on the volatile investment market, saving $50 million by refinancing Series 2012 A and C subordinate-lien bonds.

DC Water completed the Series 2022 Forward Direct Purchase with JP Morgan through DNT Asset Trust to refund almost $300 million in outstanding debt. The transaction locked in a total interest cost of 2.18% to be recognized in July 2022. This is among the lowest average interest rates for any refunding deal in DC Water’s history.
 
“We acted quickly to secure this private market opportunity,” said DC Water CEO and General Manager David L. Gadis. “Swift action by our Board of Directors and the financing team enabled us to capture these historically low rates.”

“Refinancing now saves us about $3.8 million annually from Fiscal Year 2022 to Fiscal Year 2037,” added DC Water Chief Financial Officer Matthew Brown. “We repay our debt service from our operating budget, which is one component that drives rate increases. Therefore, savings like these benefit our ratepayers in future budgets.”

For more information about DC Water’s bond offerings, please visit the Investor Relations portion of DC Water’s website at dcwater.com/investor-relations.

Lapse in Appropriations Notice: SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

To learn more about the relief options available for your business, click here.

On March 18, 2020, the President signed the Families First Coronavirus Response Act (“FFCRA”), which contains two provisions permitting leave for employees on the basis of the COVID-19 crisis. The Emergency Paid Sick Leave Act (“EPSLA”) requires that all covered employers provide two weeks of paid sick leave to an employee who is unable to work or telework due to a range of reasons related to COVID-19, including the employee being subject to a quarantine or isolation order, experiencing symptoms of COVID-19 and seeking a diagnosis, or caring for a son or daughter whose school or childcare provider is closed or unavailable. The Emergency Family and Medical Leave Expansion Act (“EFMLEA”) grants employees 12 weeks of protected leave if an employee is unable to work or telework because he or she is caring for a son or daughter whose school or childcare facility is closed or whose caretaker is unavailable due to COVID-19 related reasons. On April 6, 2020, the Department of Labor published regulations implementing these new leave provisions, which are far reaching and will affect a broad scope of businesses. Below are several of the questions that I anticipate many will be asking about compliance with the FFCRA.  TO SEE THE ENTIRE DOCUMENT AND THE ANSWERS TO THE BELOW QUESTIONS:  DOL Issues Regulations Implementing FFCRA-1

My small business has less than 50 employees — do I have to provide childcare related leave under the EPSLA or the EFMLEA?

How does the leave provided under the FFCRA interact with my company’s existing leave policy?

Can my employees take intermittent leave under either the EPSLA or EFMLEA?

I provided specific COVID-19 related leave prior to April 1, 2020 — am I still required to provide additional leave under the FFCRA?

Can I require my employees to provide advance notice prior to taking leave under the FFCRA?

Can I ask my employees to provide documentation before approving leave under the EPSLA or EMFLEA?

What are my record keeping obligations under the FFCRA?

On April 15, 2020, DC Mayor Muriel Bowser issued Mayor’s Order 2020-063 to extend the state of emergency and public health emergency for Washington, DC through May 15, 2020, as the District continues to fight the spread of the coronavirus (COVID-19).

The Mayor extended the emergencies and issued new health and safety requirements in an effort to protect vulnerable populations during the COVID-19 public health emergency. The new order clarifies that face masks are required for:

hotel workers, guests, and visitors;
individuals using taxis, ride shares, private transportation providers;
workers and customers of food sellers; and
strongly encouraged for workers and individuals using public transit.

Individuals living, working, and visiting Washington, DC should continue to stay at home, only leaving for essential purposes. If leaving their residence, all individuals must continue to social distance from others not in their household, and should wear face coverings if visiting essential businesses, such as grocery stores and pharmacies. Masks are not a replacement for social distancing. Non-essential businesses remain closed, and DC students will continue to learn at home.DC MayorsOrder2020.063

For more information on the District’s response, visit coronavirus.dc.gov.

DC Mayor’s Order 2020-054 Stay at Home

On Tuesday, March 24, 2020, Mayor Muriel Bowser declared the closure  of all non-essential businesses and prohibiting gatherings of 10 or more people, effective from March 25 at 10:00 PM through April 24, 2020. Non-essential businesses include tour guides and touring services; gyms, health clubs, spas, and massage establishments; theaters, auditoriums, and other places of large gatherings; nightclubs; hair, nail, and tanning salons and barbershops; tattoo parlors; sales not involved in essential services; retail clothing stores; and professional services not devoted to assisting essential business operations.

Commercial and residential construction, ad the suppliers were fundamentally exempted from the closure order. .

On March 30, Washington DC followed both Virginia and Maryland requiring individuals to stay at home if they are not engaged traveling to work for and engaging in activity for Essential Businesses. The March 30 order continued the March 24 order’s listing of numerous construction trades as Essential Businesses, enabling construction work to continue.

On March 23, 2020, Governor Northam issued an order limiting public gatherings and events to 10 or fewer people and encouraging social distancing. The order went into effect at 11:59 PM on March 24 and currently remains in place until April 23, 2020. Under the order, recreational and entertainment businesses must close, and restaurants and other restaurants providing food and beverage services may only offer take-out and delivery. Other businesses that remain open must utilize telework as much as possible and otherwise adhere to social distancing recommendations, enhanced sanitizing procedures, and apply relevant workplace guidance from state and federal authorities, including CDC, OSHA, and the Virginia Department of Labor and Industry. As such, construction continues and contractors may continue their operations both in the field and at the office as long as they follow those guidelines.

On March 30, the Governor issued an order that required all individuals in Virginia to remain at home unless engaged in permissible activity such as seeking food, medical attention, or permissible travel subject to social distancing requirements. Permissible travel includes traveling to and from one’s place of work. The March 30 order also extended the duration of the above restrictions to June 10, 2020. The new order did not articulate any changes to the business closures outlined in the March 23 order, and it appears that, like Maryland, Virginia is permitting construction activities to continue.

Executive Order 55:    Virginia EO-55-Temporary-Stay-at-Home-Order-Due-to-Novel-Coronavirus-(COVID-19)-1

Executive Order 53:    Virginia EO-53-Temporary-Restrictions-Due-To-Novel-Coronavirus-(COVID-19)

As some NUCA  members are experiencing through enforcement of their Governor’s stay-at-home (SAH) order, NUCA National has drafted a sample “essential letter” template that our members can customize for their employees traveling through quarantined areas.     We have uploaded this sample letter to the website  – See link below!

 

If you think your employees may need a “travel pass” in your area of business, please feel free to use this template.  While this letter may not satisfy LEOs or code enforcement entities who are stopping vehicles checking on travel needs, we believe having a company document with the employee stating our essential industry position to infrastructure maintenance and repair in a local community is better than nothing at all.

Please make sure that you verify your final letter on your company letterhead with your own legal counsel before committing to its use!

Sample Covid-19 Essential Letter Template FINAL 04-02-20