Disputes frequently arise because the government refuses to agree that a contractor is entitled to additional money or time resulting from constructive changes, differing site conditions, government-caused delays, or countless other reasons. These disagreements typically are dealt with through the submission of Requests for Equitable Adjustment (REAs) or certified claims and are ultimately resolved through the disputes process. They focus on the rights of the parties under the specific terms of the contract. The problem, however, is that contractors also incur costs because of government indecisiveness that has not yet generated an REA or claim under a particular contract clause. This places the contractor in a state of limbo, not knowing whether there will be a significant impact to the project.
The failure to promptly review and determine the acceptability of a submittal, respond to a Request for Information (RFI), or to review a shop drawing can have a significant impact on the cost and time of performance. As esteemed Professor Ralph Nash once observed, “indecision by the government can be very costly” and the “ball is in the government’s court” when a contractor puts the government on notice of a problem, submits a document for approval, or requests additional information. Nash & Cibinic Report, February 1988, Vol. 2, No. 2. Particularly frustrating are those situations where the government is guilty of lethargy or fails to act because necessary funding is not yet available. This causes the contractor to finance project performance to an extent that it could not have reasonably anticipated at the time of bidding.
To increase the chance of getting paid in a timely manner, contractors should diligently document the time lost and cost incurred as the result of government indecision. The government’s contracting and field personnel must be provided with prompt notice of the impact of the government’s failure to act with specific reference to the possibility that a claim might result. Above all, government representatives must be reminded that contractors are not bankers and they are not in the business of providing financing for the additional costs that arise because of government inaction or indecision.