Excusable Delays, Liquidated and Eichleay Formula Damages in Government Claims

When submitting or appealing a government contract claim based upon excusable delays or Eichleay formula in government claims, contractors have the legal  burden to prove their claim. This has been a continuing problem in the various boards of contract appeals. As a result, both large and small businesses lose out on thousands of dollars in earned revenue. 

A clear understanding how government contract claims for delay actually work is the first step in avoiding costly mistakes in litigation and appeals.

Eichleay Damages – What You Have to Prove

To actually prove a claim for excusable delays, you be able to properly use the eichleay formula for overhead cost and prove liability, causation and resultant injury.  This means documentation, documentation, and more documentation.

• When the government gives extra time to do the work, make sure that the time is compensable. Review your changes carefully.
• Any time already granted by the government during the delay period is hard to retrieve excusable delays and claims damages. You have to show entitlement to recovery of any direct cost beyond that granted by the government.
• If for some reason the government terminates you for default and there were excusable delays, it is up to you to show the court that the default was excusable.
• A contractor can show a termination for default was due to excusable delays “by showing that improper government actions were the primary or controlling cause of the default.”

As stated in many articles, the key to winning an excusable delays claim against the federal government means communicating given advance written notice of the problem. If you expect a delay, that is no fault of your own, promptly notify the contracting officer in writing. When this happens not only is you record preserved for appeal. You delay claim can more than likely be compensated if you can show the basic claim requirements.

To be entitled to Eichleay formula damages or delays,  government contractors also have to show that:There was a government-caused delay to its planned contract performance  and “that was not concurrent with a delay caused by the contractor or some other reason.”See P.J. Dick,Inc., 324 F.3d at 1370. See also Contract Disputes Act COFC & Boards Appellate Jurisdiction.

To receive Eichleay excusable delays claim damages, government contractors must also  show that the original contract performance time was thus extended or, alternately, that it completed its performance on time or early but incurred additional, unabsorbed overhead cost because it had planned to finish even earlier. 

Lastly, to receive excusable delays damages under the Eichleay theory; government contractors must also show they were required to remain on “standby” during the delay. See Consequences of Procurement Fraud Schemes & Avoiding Criminal Liability

Where a contractor proves these elements for excusable delays, “it has made a prima facie case of entitlement” and the burden of production shifts to the government “to show that it was not impractical for the contractor to take on replacement work and mitigate its damages.”

• These legal issues are very fact specific.
• As stated earlier, you have to keep detailed documents and communicate in writing to the government.
• You have a high burden to show that you could not be performing other work. Sometimes logs with dates and scheduled can make the difference.

OMB M-20-18 Guidance and Successful Contract Performance in the Shadow of the COVID-19 Coronavirus Pandemic.

Proving Stand-by Excusable Delays Cost 

On appeal, even though you can show that government-caused the contract delay which extended performance of the contract, you still have to show that your company was on  “stand-by” throughout the delay period to receive compensation.

• To get stand-by costs, you must you were precluded from performing much, if not all, contract work. 
• Failure to provide this level of evidence will more than likely get your excusable delays claim denied.

For additional help with government contract excusable delays claims or Eichleay formula claims, call our government contract claims attorneys at 1-866-601-5518 for a FREE Initial Consultation.