The Armed Services Board of Contract Appeals (ASBCA or Board) issued an opinion in Appeal of StructSure Projects, Inc., granting StructSure additional COVID-19 related costs arising under a fixed-price task order.  ASBCA No. 62927 (Aug. 8, 2023).  To date, federal contractors performing under that type of task order have had difficulty recovering for additional costs.  Here, the Board allowed the contractor to recover additional temporary facility rental costs, because the Government continued to use and benefit from the rented facilities throughout the COVID-19 delay and the task order included a specific contract line-item to compensate StructSure for the rental costs of the temporary facility.

The Government awarded StructSure a fixed-price task order for “design and alteration services at the David Grant Medical Center [at] Travis Air Force Base.”  The task order required StructSure to provide temporary medical facilities for the Government to use while the work was being performed and included a specific contract line-item to pay for those rental facilities.  In response to the COVID-19 pandemic, the Government designated StructSure’s work as non-mission essential and suspended StructSure’s site access for 44 days.  The Government continued to use the temporary facilities provided by StructSure throughout the suspension.  StructSure submitted a claim seeking reimbursement of additional out-of-pocket rental costs incurred for the temporary facilities resulting from the restricted site access.  The contracting officer denied the claim.

On appeal, the Board overruled the contracting officer’s decision and awarded StructSure the requested costs under the contract’s changes clause (FAR 52.243-4).  The Board concluded that while StructSure assumed the risks associated with the scope of its task order, the Government modified the scope of the task order by requiring StructSure to supply the temporary facilities for an extended period.  The Board also rejected the contracting officer’s reliance on the sovereign act defense, which protects the Government from having to pay contractors additional costs incurred as a result of sovereign acts that (1) are “public, general, and only incidentally fall[] upon the contractor” and (2) make it impossible or impracticable for the government (in its capacity as a contractor) to render performance under the contract. 

Here, the Board found that the sovereign act defense did not apply because the Government’s decision to suspend access to the site may have stopped the majority of the project, but it did not render supplying the temporary facilities impossible.  In fact, the Government continued to use and benefit from the supplied facilities throughout the entire 44-day period.  The Board’s decision focused extensively on the existence of a specific contract line-item that specifically compensated StructSure for providing the temporary facilities. 

The Board’s decision in StructSure provides federal contractors who incurred additional costs as a result of the COVID-19 pandemic another potential avenue for recovery.  In evaluating whether the StructSure decision applies, it is important to consider whether the Government continued to receive a benefit during the delay and whether the contract included a specific contract line-item to compensate the contractor for providing that benefit.  If both conditions are met, the contractor will have a strong argument for recovery under StructSure.