Constructive acceleration occurs when a project owner requires the contractor to comply with the original completion deadline, even though the contractor has encountered an excusable delay. (To read about the basics of acceleration claims, click here.)
Some courts have held that there are three “essential elements” of a constructive acceleration claim: (1) the contractor encountered an excusable delay, (2) the owner issued an acceleration order, and (3) the contractor incurred additional costs to accelerate its work.
Sometimes there are disputes about whether the owner or prime contractor issued an acceleration order.
Recently, a federal court considered whether a subcontractor adequately alleged a constructive acceleration claim against a prime contractor, which included a discussion of implied acceleration orders.
In L3Harris Maritime Services, Inc. v. BAE Systems Norfolk Ship Repair Inc., a subcontractor entered into a nearly $1.9 million firm, fixed-price contract with a prime contractor to provide ship repair services for a U.S. Navy ship. The subcontractor sued the prime contractor for millions of dollars of impacts the subcontractor allegedly had at the project, including increased costs due to delays caused by the COVID-19 pandemic.
The subcontractor alleged that the COVID-19 pandemic was an excusable delay under the subcontract and that despite that excusable delay, the prime contractor required the subcontractor to continue to perform without a time extension. As a result, the subcontractor asserted a constructive acceleration claim against the prime contractor.
The prime contractor filed a motion to dismiss the subcontractor’s constructive acceleration claim because the associated costs were incurred while performing the subcontractor’s existing contractual obligations. The subcontractor argued that it adequately pled the elements of a constructive acceleration claim, which it claimed was compensable under the changes clause of the subcontract.
Court Concludes the Subcontractor Properly Alleged a Constructive Acceleration Claim
The court wrote that “the Federal Circuit has approved ‘different formations’ of the constructive acceleration elements, so long as the ‘essential elements’, excusable delay, an acceleration order, and acceleration with associated costs, are present.” The court continued that “it is well settled that an order to accelerate need not be specific, and ‘even an expression of concern about lagging progress, may have the same effect as an order.'”
The court held that the subcontractor adequately alleged facts sufficient to state a constructive acceleration claim. In particular, the subcontractor alleged:
(1) COVID-19 impacted the subcontractor’s performance;
(2) the COVID-19 pandemic constituted an excusable delay under the subcontract;
(3) the prime contractor directed the subcontractor to continue to perform despite the COVID-19 pandemic; and
(4) the subcontractor incurred increased costs due to the prime contractor’s direction for the subcontractor to continue performance during the COVID-19 pandemic.
The court wrote that the prime contractor’s “direction that [the subcontractor] continue performing the subcontract during the pandemic amounted to a constructive acceleration order under the changes clause[.]”
The court rejected the prime contractor’s argument that the prime never required the subcontractor to meet the original schedule. The court noted that the Federal Circuit has made it apparent that “any pressure by the government to continue to perform through excusable delay, ‘even if it were merely implicit,’ is sufficient to constitute an acceleration order.”
Based on the above, the court denied the motion to dismiss the constructive acceleration claim because “the complaint permits the reasonable inference that [the prime contractor] directed [the subcontractor] to perform within the existing contract schedule, despite excusable delay, and [the subcontractor] incurred increased costs as a result.”
Bottom Line: When asserting a constructive acceleration claim, some courts will not require the owner or prime contractor to have expressly required the other party to maintain the project schedule. Instead, the mere implicit pressure to perform through an excusable delay may be sufficient to trigger a constructive acceleration claim under certain circumstances.
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