Construction Law

Bell BCI Co. v. United States - Release of Cumulative Impact Claims

By John P. Ahlers

Bell involved a construction contract under which the government issued an extensive series of change orders. Following the first of those change orders, the parties executed Modification 93, which stated in part the increased contract amount set forth in the Modification represented "full and equitable adjustment for the remaining direct and indirect costs of the [changed work] . . . and full and equitable adjustment for all delays resulting from any and all Government changes transmitted to the Contractor on or before August 31, 2000." Modification 93 also included the following "release" language: "the Modification agreed to herein is a fair and equitable adjustment for the Contractor's direct and indirect costs. This Modification provides full compensation for the changed work, including both Contract costs and Contract time. The Contractor hereby releases the Government, including all liability under the Contract for further equitable adjustment attributable to the Modification."

Following a trial on the merits, the Court of Federal Claims (COFC) awarded Bell $2,058,456 for "labor inefficiency costs attributable to the cumulative impact of the [series of government] changes. Bell BCI Co., v. United States, 81 Fed.Cl. 617, 619, (2008). As noted by the Federal Circuit:

"In finding for Bell, the Court of Federal Claims drew a distinction between a "delay" claim and a "disruption" for "cumulative impact" claim . . . ."

The Court then looked to the contract's "Changes" clause and determined that "[u]nless provided otherwise, the bi-lateral modifications will compensate the Contractor for the changed work, but no for the impact for the multiple change orders on the unchanged work."

Because in the court's view, Modification 93 did not "provide otherwise," the Court concluded that Bell did release its cumulative impact claims. The Federal Circuit reversed the COFC, however, the Federal Circuit examined the plain language of the release and, after determining that its terms were ambiguous, ruled that "Bell released the government from any and all liability for equitable adjustments attributable to Modification 93." The Federal Circuit then remanded the issue to the COFC to determine "which of Bell's cumulative impact claims, if any, are "attributable to" modifications other than those modifications that contain the release language discussed above.

To read the case click here

Full post as published by Construction Law Blog on August 16, 2009 (boomark / email).