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CONTRACTOR BORE RISK OF PERFORMANCE INTERFERENCE BY THIRD PARTY

Tuesday, October 23, 2012 05:05 am

 

Contracts

Bell/Heery JV v. U.S., 2012 U.S. Claims Lexis 929 (Fed. Cl. July 31, 2012)

The government always has an implied duty to act in good faith, but it's the contract that dictates just what that duty entails. Here, the duty did not entail helping the contractor obtain state permits.

In contracting to design and build a New Hampshire prison for the Federal Bureau of Prisons (FBO), Bell/Heery, JV (Bell) agreed to comply with all state laws, regulations, and permitting requirements. During the construction phase, the permit authority of New Hampshire Department of Environmental Services made multiple changes to Bell's phasing plan and intervened to such an extent as to cost Bell an extra $8 million. FBO refused to compensate Bell for that additional cost, asserting that Bell shouldered all the risk of the state's interference. The Court of Federal Claims agreed.

The parties' contract contained FAR 52.236-7, the "Permits and Responsibilities Clause" (the P&R clause), which holds the contractor responsible, "without additional expense to the Government, ... for obtaining any necessary licenses and permits, and for complying with any Federal, State, and municipal laws, codes, and regulations applicable to the performance of the work.

Bell argued against the absoluteness of [...]

 
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