Government Contracts Government Constructively Waived Contract Requirements
Thursday, February 6, 2020

Government Constructively Waived Contract Requirements

By Government Contracts Editorial Staff

The Armed Services Board of Contract Appeals ruled a contractor was entitled to additional compensation for performing rework on a levee reconstruction project because, based on the imputed knowledge of the contracting officer and the actual knowledge of quality assurance representatives, the government constructively waived contractual requirements. The hurricane protection levee reconstruction contract required the contractor to place a layer of geotextile material at the base of the levee in continuous machine-direction lengths, without seams, and to install overlaps perpendicular to the centerline of the levee. The contractor used another method, which resulted in an overlap running parallel to the centerline of the levee. The government objected to this method and required the contractor to degrade the levee and install a second layer of geotextile material in rows without seams before rebuilding the levee to the required elevation.

Elements of Constructive Waiver. The contractor sought a contractual adjustment based on the government’s constructive waiver of the specification prohibiting parallel overlaps of the geotextile material. Constructive waiver occurs when: (1) the CO possessed knowledge of the work outside the scope of the contract; (2) the CO’s action or inaction indicated the acceptance of nonspecification performance; (3) the contractor relied on the CO’s action or inactions; and (4) an inequity would result from a retraction of the CO’s acceptance (see 39 CCF ¶76,635). As to the first element, based on the totality of the evidence, the board found the CO knew, or should have known, that the contractor was installing overlapping partial-length pieces of geotextile material with seams parallel to the centerline of the levee. While the CO disclaimed knowledge of the contractor’s method, the CO had visited the jobsite while the contractor was installing the geotextile material. Also, the government’s QA representatives visited the site three times and took photographs showing the contractor installing overlapping pieces of geotextile material, and the project engineer visited the site and observed the geotextile installation on two occasions without noting a deficiency. The second element was also satisfied. The CO’s and QA team’s inaction indicated to the contractor the government’s acceptance of its geotextile placement. Third, it was clear the contractor had relied on the government’s acceptance of its geotextile work. Finally, it would be inequitable to force the contractor to bear the costs of the government’s failure to enforce, in a timely manner, the contractual provision against overlapping geotextile parallel to the levee centerline. (Buck Town Contractors & Co., ASBCA, ¶95,920)

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