In Holloway Consulting’s construction claims engagements, we have found that a labor strike can be an excusable delay and valid defense for contractors against liquidated damages and non-performance claims by the owner. The controlling test as to whether a strike is in fact excusable lies in determining if the strike was an unforeseeable cause beyond the control and without the fault or negligence of the contractor, his subcontractors or his suppliers. A strike might not qualify as an unforeseeable cause of the contractor’s delay in commencing work under a construction contract where the strike began several months before the contractor submitted its bid.

Compensable Delay

A strike caused by an owner’s or a contractor’s unfair labor practices is not a strike beyond their respective control. If the owner precipitated the strike, the entitlement improves and becomes compensable. In order to establish a strike as an excusable cause of delay in a construction claim, it is necessary that a causal relationship between the strike and the ultimate delay to contract completion be established. In other words, the strike must cause the delay, and if the delay would have occurred for other reasons even without the strike, the contractor is not entitled to an extension of time.

If contractor accepts contract award notwithstanding an existing strike that affects him directly and does not notify the contracting officer or owner before award of the possibility of delay, he cannot later claim the strike as an excusable cause of delay – either because he is estopped by his failure to notify the Government – or because he has warranted that he could perform despite the strike (implied warranty).

Where the labor strike is nationwide, as in a nationwide steel worker’s union strike, the cases are split. There are some decisions supporting the view that, if the strike is imminent or in progress at the time the contract is awarded, both parties contract with equal knowledge and thus assume the risk of whatever delays may result from the strike. Under these circumstances, the Government probably cannot assess liquidated damages for such delay.

Contact Steve Holloway – (303) 984-1941 about your construction claim

Holloway Consulting
Construction Claims Consultants
10885 W. Beloit Pl.
Lakewood, CO 80227
Denver Phone: (303) 984-1941

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com


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