IAP Worldwide Services, Inc.
ASBCA No. 59397, 59398, 59399
A.S.B.C.A.May 17, 2017Background
- IAP Worldwide held an IDIQ fixed-price contract with the U.S. Army Corps of Engineers to supply and install large generator plants at three Afghan forward operating bases (Shank, Dwyer, Sharana).
- IAP based its proposals on shipping heavy equipment via the Pakistan route (UAE → Karachi → overland into Afghanistan); that route was normally fastest and least costly and had been used repeatedly.
- On 28 Nov 2011 Pakistan closed its border and port to U.S./NATO shipments after a military incident; shipments already in Karachi were detained and other planned shipments were halted.
- IAP timely notified the contracting officer of delay and requested schedule relief; the contracting officer initially refused extensions and warned of default, then later granted only 75 days for two of the task orders and none for the third.
- Facing threats of default and insufficient extensions, IAP shipped equipment via the costlier, slower Northern Distribution Network (NDN) and leased/shipped a second set of generators for Shank, incurring substantial extra costs.
- IAP submitted certified claims for increased costs; the Board found Pakistan’s closure was an excusable delay but that the government’s refusal/insufficient extensions amounted to constructive acceleration, entitling IAP to equitable adjustment for costs reasonably and actually incurred in complying with acceleration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constructive acceleration (claim for extra costs) | Government denied timely/sufficient extensions after an excusable delay and threatened default, forcing IAP to incur extra costs to meet deadlines | Government contends delay was physically/legally avoidable (NDN or air available) and later granted 75-day extensions | Held for IAP: excusable delay admitted; initial refusals + inadequate 75-day extensions and default threats constituted constructive acceleration; IAP entitled to equitable adjustment for extra, reasonable costs incurred to comply |
| Constructive change (government-directed work) | Government’s conduct in demanding timely performance effectively required IAP to use alternate, costlier routes—a constructive change | Government says it did not order NDN shipments; contractor assumed transport risk under fixed-price contract | Held for IAP as corollary to acceleration: government’s acceleration rendered it liable for resulting constructive change costs |
| Constructive suspension / government convenience | IAP argues government’s handling caused a constructive suspension entitling it to costs | Government says border closure was action by Pakistan, not government convenience | Held for government: no constructive suspension—closure was a third-party act, not for government convenience |
| Warranty of route availability / breach | IAP argues government implicitly warranted availability of Pakistan route via approvals/course of dealing | Government relies on FAR clauses and fixed-price allocation of transport risk; no explicit warranty | Held for government: no warranty established; risk of third-party closures not assumed by government |
Key Cases Cited
- Zafer Taahhut Insaat ve Ticaret A.S. v. United States, 833 F.3d 1356 (Fed. Cir. 2016) (defines elements of constructive acceleration)
- Fraser Constr. Co. v. United States, 384 F.3d 1354 (Fed. Cir. 2004) (standard for acceleration recovery under changes clause)
- Norair Eng'g Corp. v. United States, 666 F.2d 546 (Ct. Cl. 1981) (acceleration where government insists on original schedule despite excusable delay)
- Jennie-O Foods, Inc. v. United States, 580 F.2d 400 (Ct. Cl. 1978) (discusses limits on extension entitlement when alternate performance methods exist)
- Merritt-Chapman & Scott Corp. v. United States, 429 F.2d 431 (Ct. Cl. 1970) (constructive suspension for unreasonable government delay for its convenience)
- Raytheon Co. v. White, 305 F.3d 1354 (Fed. Cir. 2002) (commercial impracticability and constructive change principles)
- Oman-Fischbach Int'l (JV) v. Pirie, 276 F.3d 1380 (Fed. Cir. 2002) (elements for government breach of warranty)