Government Contractor? – Your sophistication may be presumed

06/17/2011

Most everyone would like to be considered “sophisticated,” but those performing federal contracts might feel otherwise. The GAOCAB recently noted in Grunley Constr. Co., Inc. v. Architect of the Capital, GAOCAB No. 2009-1, 2010 WL 2561431 (June 16, 2010) that “[u]like private contractors, government contractors who perform large contracts for the government are ‘neither unsophisticated nor careless’ . . . .”

As a result, the Board concluded the contractor in that case should have anticipated possible project delays and charged a higher price for the work because of that. In that case, the included “no damages for delay” clause was at issue, and whether it should be enforced so as to prohibit delay claims by the contractor. The GAOCAB concluded yes, those claims were precluded because it was a reasonable limitation on the contractor’s recovery. The GAOCAB also rejected the contractor’s argument that the Sovereign Acts Doctrine prohibited enforcement of the no damages for delay clause.

The sophistication presumption could be applied in any number of similar instance to other contract issues, so government contractors beware!

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