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The Federal Circuit recently affirmed the Civilian Board of Contract Appeals’ (CBCA) decision denying a pandemic-related claim in Pernix Serka Joint Venture v. Secretary of State, CBCA No. 5683, 20-1 BCA ¶ 37,589.  Pernix involved a firm-fixed-price construction contract in Sierra Leone that was impacted by an Ebola outbreak several months into the project.  The Department of State (DOS) declined to provide direction or to issue a suspension of work order, and instead advised Pernix to make its own business decisions regarding performance and employee safety.  Pernix chose to demobilize its workforce and, later, to remobilize with the addition of its own on-site medical facility and services.  Pernix then submitted a claim for the increased medical, safety, and demobilization and remobilization costs.  DOS granted an adjustment to the schedule for the Ebola-related delays under the contract’s excusable delay clause, but denied Pernix’s monetary claim.

At the CBCA, Pernix argued that the Ebola outbreak resulted in a cardinal change, a constructive change, and/or a constructive suspension of work.  The Board rejected each argument.  First, the Board held that a cardinal change cannot occur when the work required by the contract is unchanged (and the Board found that the additional medical and safety precautions did not change the fundamental construction work required under the contract).  Second, the Board held there was no constructive change in the absence of direction from the Government, and noted that the Government permitted Pernix additional time to perform.  Third, the Board dismissed Pernix’s constructive suspension of work argument because it had not been presented to the contracting officer in Pernix’s certified claim.

Pernix appealed to the Federal Circuit.  However, on June 9, 2021, the Circuit affirmed the Board’s decision in a one-line summary Rule 36 decision.  Although the Federal Circuit did not address the specific issues and legal theories in Pernix’s claim, the summary decision is a reminder to contractors that actions taken in the absence of government direction may potentially be treated as business decisions, even if they were intended to safeguard employee health during a pandemic.  Moreover, contractors should be aware that even where they may be entitled to time extensions, they may not necessarily be entitled to additional costs.  Thus, as always, contractors who anticipate submitting claims should carefully consider and consult with counsel regarding potential legal theories for recovery and, where possible, ground those theories in specific direction from the cognizant Government contracting officer.

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Photo of Steve McBrady Steve McBrady

Steve McBrady is a partner and co-chair of Crowell & Moring’s Government Contracts Group. He also serves as a member of the firm’s Finance and Strategic Growth Committees, where he has played a leading role in expanding client service offerings throughout the U.S.…

Steve McBrady is a partner and co-chair of Crowell & Moring’s Government Contracts Group. He also serves as a member of the firm’s Finance and Strategic Growth Committees, where he has played a leading role in expanding client service offerings throughout the U.S., Europe, Asia, and the Middle East.

In recent years, Steve has received the National Law Journal’s “Winning Litigator” award as a lawyer who has “tackled some of the most widely watched cases of the year,” as well as the “D.C. Trailblazer” award, recognizing lawyers who have “made significant marks on the practice.” In 2018, he was named “Government Contracts MVP” by Law360.

Photo of Charles Baek Charles Baek

Charles Baek is a counsel in Crowell & Moring’s Washington, D.C. office, where he practices in the Government Contracts Group.

Charles represents government contractors in both litigation and counseling matters. His practice focuses on contract claims/disputes under the Contract Disputes Act (CDA), litigation…

Charles Baek is a counsel in Crowell & Moring’s Washington, D.C. office, where he practices in the Government Contracts Group.

Charles represents government contractors in both litigation and counseling matters. His practice focuses on contract claims/disputes under the Contract Disputes Act (CDA), litigation before the Armed Services Board of Contract Appeals (ASBCA), federal regulatory and ethics compliance and due diligence, bid protests before the Government Accountability Office (GAO), and False Claims Act (FCA) investigations. His practice also includes state contracting due diligence and litigation before the Court of Federal Claims.

Photo of Michelle Coleman Michelle Coleman

Michelle D. Coleman is a partner in Crowell & Moring’s renowned Government Contracts Group in the firm’s Washington, D.C. office. Michelle advises clients from diverse industries in connection with contract disputes and other government contract matters, including Contract Disputes Act (CDA) claims and…

Michelle D. Coleman is a partner in Crowell & Moring’s renowned Government Contracts Group in the firm’s Washington, D.C. office. Michelle advises clients from diverse industries in connection with contract disputes and other government contract matters, including Contract Disputes Act (CDA) claims and requests for equitable adjustments, terminations, prime-sub disputes, other transaction authority, and AI.

Michelle also has an active pro bono practice, representing clients as an attorney volunteer with the Washington Legal Clinic for the Homeless. Michelle has helped multiple clients receive long term housing through the Rapid Rehousing Program and other permanent voucher programs. In addition to being a volunteer, Michelle serves as an ambassador and as co-chaired the firm’s fundraising campaign for the Clinic for the last two years.

Prior to working at Crowell & Moring, Michelle served as an attorney in the Air Force’s Acquisition Law and Litigation Directorate, where she provided acquisition and litigation risk advice on procurements valued over $14 billion on major Air Force procurements. She also served as a trial attorney in the Air Force Legal Operations Agency, Commercial Law and Litigation Directorate. As a trial attorney, Michelle litigated complex contract disputes before the Armed Services Board of Contract Appeals (ASBCA) and bid protests before the Government Accountability Office (GAO).

As an Air Force litigator, Michelle litigated a broad range of issues before the ASBCA, including organizational conflicts of interest; small business issues; price realism analysis; past performance; NAICS code issues; technical acceptability; nonmanufacturing rule, brand name, or equal issues; construction claims; commercial items; terminations; assignment of claims; reprocurement; limitation of funds; release; differing site conditions; setoffs/withholding; and evidentiary issues. Among the construction cases, Michelle litigated a $28 million Air Force design-build construction claim involving complex differing site conditions and delay issues, and she also litigated and won a claim for alleged defective specifications, undisclosed information, constructive interpretation, and technical impossibility for a contract for the design and construction of an Air Force dynamic break test stand.

Before her Air Force career, Michelle was employed by a defense contractor, where she gained valuable government contract experience in her roles as a business analyst and a subcontracts administrator. Michelle’s government and contractor experience gives her the unique ability to take both parties’ perspectives into consideration when providing advice on government contract issues.

Photo of Rob Sneckenberg Rob Sneckenberg

Rob Sneckenberg is a government contracts litigator in Crowell & Moring’s Washington, D.C. office. He routinely first chairs bid protests before the U.S. Government Accountability Office (GAO) and U.S. Court of Federal Claims (COFC), and has successfully argued multiple appeals before the U.S.

Rob Sneckenberg is a government contracts litigator in Crowell & Moring’s Washington, D.C. office. He routinely first chairs bid protests before the U.S. Government Accountability Office (GAO) and U.S. Court of Federal Claims (COFC), and has successfully argued multiple appeals before the U.S. Court of Appeals for the Federal Circuit. He also represents contractors in contract claim and cost accounting disputes before the Armed Services Board of Contract Appeals (ASBCA), and counsels clients on a wide array of government contracts investigations. Rob is very active in Crowell & Moring’s pro bono program, where he focuses on civil and criminal appeals.

Photo of John Nakoneczny John Nakoneczny

John Nakoneczny is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office.

John represents and counsels contractors from diverse industries on contract disputes and other government contract matters. Prior to joining Crowell & Moring, he clerked at the…

John Nakoneczny is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office.

John represents and counsels contractors from diverse industries on contract disputes and other government contract matters. Prior to joining Crowell & Moring, he clerked at the Civilian Board of Contract Appeals, where he supported its judges in resolving and mediating appeals under the Contract Disputes Act. John earned his J.D. from The George Washington University Law School, where he was the president of the Government Contracts Student Association and on the Federal Circuit Bar Journal. While in law school, John served as a legal intern at the U.S. General Services Administration and the Fraud Section of the U.S. Department of Justice, Criminal Division. Upon graduation, John was awarded the President’s Volunteer Service Award.

Photo of Catherine Shames Catherine Shames

Catherine O. Shames is an associate in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Catherine’s government contracts practice focuses on contract claims/disputes under the Contract Disputes Act (CDA), prime-sub disputes, transactional…

Catherine O. Shames is an associate in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Catherine’s government contracts practice focuses on contract claims/disputes under the Contract Disputes Act (CDA), prime-sub disputes, transactional due diligence, internal investigations, and disclosures under the Mandatory Disclosure Rule. She also assists contractors with cost allowability issues and responding to DCAA audits.