Court of Appeals of Virginia

Case no.: 0134-25-3
Date filed: December 16, 2025

The Armed Services Board of Contract Appeals has ruled that while a bilateral contract modification granted additional time for performance of extra work, it did not cover the government’s delay in issuing the modification. The absence of an express reservation of right did not prevent the contractor from pursuing that claim.

The US Army Corps of Engineers awarded a fixed-price contract to Group III Management Inc. for improvements to an entry gate at Seymour Johnson Air Force Base in North Carolina. The contract required substantial completion within 365 days of notice to proceed and called for liquidated damages of $753 per day for late completion.

After work commenced, the parties discovered there was a design defect regarding drainage at the site. The Corps requested a proposal for a substantial expansion of the storm drainage system. Group III’s proposal stated the extra work would require an additional 115 days of performance time. The proposal also said Group III would need a contract modification by November 21, 2022, or it would suffer “day for day” delay to the work.

The Corps did not issue a contract modification until February 22, 2023. The Corps attributed the slow issuance to funding problems. Modification No. P00003 called for a price increase of $515,693 and extended the completion deadline by 115 days. Group III signed the contract modification.

Group III subsequently requested an additional extension of time to account for the slow issuance of the contract modification and the resulting delay to work on the schedule’s critical path. The Corps unilaterally granted an additional 52 days, but the contractor said this was not enough.

Group III completed the project 84 days after the extended deadline, and the Corps withheld liquidated damages of $63,252 (84 days at $753 per day). Group III submitted a certified claim for an additional extension of time, remission of the liquidated damages and extended jobsite overhead during the period of delay in issuing the contract modification. The Corps contracting officer denied the claim, saying the time extension and price increase in the bilateral contract modification had fully compensated the contractor. Group III appealed, and the government moved for summary judgment.

The board said the contract modification had applied to the time and costs required for performing the additional storm drainage work; it did not apply to the delay Group III experienced waiting for issuance of the modification.

“Although Modification No. P00003 provided additional time and money associated with performing the drainage-revision work, the modification did not compensate Group III for USACE’s separate delay in issuing the modification, which affected the critical path…. USACE has not shown that Modification No. P00003 unambiguously covers the issuing-delay claim” (emphasis provided by the board).

The board acknowledged the Corps’ argument that the modification did not contain an express reservation of the contractor’s right to pursue the issuing-delay claim. “But no reservation is required as the issuing-delay claim is outside Modification P00003’s scope…. [Therefore], we must consider extrinsic evidence.”

The board noted the conduct of the parties. Prior to executing the modification, the contractor expressed concern that 115 days was insufficient to include the issuing-delay. The contracting officer told Group III it needed to sign the bilateral contract modification in order to lock in the funding. The issuing-delay would be treated separately. The Corps contended this was merely a “reminder of the contractor’s contractual rights,” but the Corps did in fact unilaterally extend the performance period by 52 days. “For these reasons, we deny USACE’s motion to dismiss for lack of jurisdiction, and for failure to state a claim, and for summary judgment.”

While this was a denial of the government’s motion for summary judgment, the board’s opinion gave a clear indication of where it comes down on the merits of the dispute.

It would have been prudent for the contractor to expressly reserve its rights to the issuing-delay claim when executing the bilateral contract modification. This would have avoided the subsequent argument over the scope of the modification.

Participants:
For Group III Management: Paul E. Davis, Raleigh, North Carolina
For the Corps of Engineers: Allie E. Vandivier, Savannah, Georgia

Before: Administrative Judges Lauforaben, Wilson, and O’Connell

Opinion by: Administrative Judge Lauforaben

Outcome: Government motion for summary judgment denied

Source: Please click here to read the complete opinion.