Relief possible for government freight delayed by COVID-19

For government-related freight affected by COVID-19, most prime contracts contain an “excusable delay” provision under the Federal Acquisition Regulation (FAR), which provides that the contractor will not be in default due to failure to perform its contractor obligations if the failure occurred due to “causes beyond the control and without the fault or negligence” of the contractor.

In a policy alert published March 11, Hoang noted that among “excusable” causes are epidemics, quarantine restrictions, and “acts of the Government in either its sovereign or contractual capacity.” Many delays and disruptions associated with COVID-19 arguably fall within the categories of all three, Hoang pointed out, noting that the World Health Organization has declared COVID-19 a public health emergency. In addition, President Donald Trump declared a national emergency in the U.S. on Friday.

While some trucking companies contract directly with the federal government and are therefore prime contractors — moving military equipment for the Department of Defense, for example — others may be subcontractors, such as those hauling laptops to a federal agency purchased from a private company. But trucking companies that are considered subcontractors may also be shielded from harm caused by COVID-19 disruptions, Hoang said, depending on “flow-down” provisions in the prime contract.

Prime contractors are not required to include excusable-delay clauses in their supplier or subcontractor agreements. However, “it’s a good idea to check those flow-down provisions that might be in those agreements to see whether an excusable-delay provision is there,” according to Hoang.

“If it’s not, then a lot of these agreements still include a force majeure clause, which might still provide for an excusable delay for certain acts that are beyond the control of either party. Whether that clause applies will depend on the specifics of the clause that’s in the contract.”

If contract relief is there, it will likely excuse the contractor from the original delivery schedule set out in that contract, Hoang said, “which may allow you an extension to your delivery schedule, or at least release you from an obligation to cover your customer’s costs of procuring the services or supplies elsewhere.”

Hoang added that the provision won’t obligate the government to cover your excess costs resulting from the delay, “but in terms of a fixed price contract, the FAR clause states that the contractor won’t be liable for any of the government’s excess costs that result from the delays. Both the government and the contractor will generally bear their own costs.”