FAR Suspension of Work v. Stop-Work Order: What Contractors Need to Know
By Oles Morrison on June 26, 2018 | Posted in Claims and Disputes
While FAR 52.242-14 (the “Suspension of Work Clause”) and FAR 52.242-15 (the “Stop-Work Order Clause”) both allow a contracting officer to require a contractor to stop all, or any part, of the work at the Government’s convenience, they contain some key differences that prudent contractors should know to protect their interests when contracting with the Government. The two clauses contain differences in relation to allowable damages, when claims must be presented, the time of suspension or work interruption, and what must be proved to recover damages.
A contractor not aware of which of these clauses is in play could unknowingly submit an untimely or invalid claim.
The Suspension of Work Clause:
The FAR requires that the Suspension of Work Clause be inserted in fixed-price construction and architect-engineer contracts. The Suspension of Work Clause allows the Contracting Officer to order the Contractor “to suspend, delay, or interrupt all of any part of the work…for the period of time that the Contracting Officer determines appropriate for the convenience of the Government.” Even if a Suspension Order is not given, if the conduct of the government forces the Contractor to interrupt or cease its work, that conduct may be treated as a “constructive suspension,” affording the Contractor the same rights under the Clause. The four-part test for recovery under the Suspension of Work Clause is as follows: (1) the resulting delay was for an unreasonable period of time, (2) the delay was proximately caused by the Government’s actions, (3) the delay resulted in some injury to the Contractor, and (4) there is no delay concurrent with the suspension that is the fault of the Contractor.
For directed suspensions, a claim, in an amount stated, must be asserted in writing as soon as practicable after the suspension, delay, or interruption, but not later than the date of final payment under the Contract. In the case of a constructive suspension under the Suspension of Work Clause, the Contractor may submit a written claim for added costs, exclusive of profit, incurred within 20 days of notice that the work is suspended, delayed, or interrupted for an unreasonable period of time by (1) an act of the Contracting Officer, or (2) by the Contracting Officer’s failure to act within the time specified in the contract. However, courts have indicated that this notice requirements may be liberally construed. See Hoel-Steffen Const. Co. v. U.S., 197 Ct.Cl. 561, 570-571 (1972); K-Con Bldg. Sys., Inc. v. U.S., 115 Fed. Cl. 558, 573 (2014). In addition, no allowance for delay is permitted to the extent performance would have been delayed by any other cause.
The Stop-Work Order Clause:
The Stop-Work Order Clause may be inserted by the contracting officer when contracting by negotiation in solicitations and contracts for supplies, services, or research and development. Unlike the Suspension of Work Clause, it is not mandatory that this clause be included. The Stop-Work Order Clause allows the Contracting Officer, by written order, to “require the Contractor to stop all, or any part, of the work called for by [the] Contract.” The Stop-Work Order Clause requires the Government to either cancel the stop-work order and resume work within 90 days (or any other agreed upon period), or terminate the work covered by the order.
The Contractor must assert its right to a contract adjustment within 30 days of the work stoppage and is entitled to either an equitable adjustment for work that is resumed or is allowed reasonable costs for work that is terminated either by convenience or default. Because, unlike the Suspension of Work Clause, profit is not specifically excluded under the Stop-Work Order Clause, it has been held that profit should be included as part of an adjustment to the contract price. See, e.g., In re Appeal of Rex Systems, Inc., 04-2 BCA ¶ 32741, ASBCA No. 54444 (2004).
Key Differences Between the Clauses:
The important differences are summarized as follows:
- Suspension of Work Clause: Profit is not recoverable.
- Stop-Work Order Clause: Profit is not explicitly excluded, and thus is recoverable.
- Notice and/or Presentation of Claims:
- Suspension of Work Clause:
- Directed Suspension: A claim, in an amount stated, asserted in writing as soon as practicable after the termination of the suspension, delay, or interruption, but not later than the date of final payment under the contract.
- Constructive Suspension: Generally, cannot include costs incurred more than 20 days prior to written notice to the Contracting Officer “of the act or failure to act involved.”
- Stop-Work Order Clause: Contractor must assert its right to an adjustment within 30 days after the end of the period of the work stoppage.
- Suspension of Work Clause:
- Timeframe of Stoppage:
- Suspension of Work Clause: “for a period of time that the Contracting Officer determines appropriate for the convenience of the Government.”
- Stop-Work Order Clause: “for a period of 90 days after the order is delivered to the Contractor, and for any further period to which the parties may agree.”
- Requirements to Recover Damages/Costs:
- Suspension of Work Clause: May only recover for suspensions, delays, or interruptions for an “unreasonable period of time.”
- Stop-Work Order Clause: Contractor is entitled to an equitable adjustment of the schedule and/or price if: (1) the stop-work order results in an increase in contract time or cost, (2) the stop-work order is not canceled and the work covered is terminated for the convenience of the Government, or (3) if the stop-work order is not canceled and the work is terminated for default, the Contractor Officer shall allow, via equitable adjustment or otherwise, reasonable costs resulting from the stop-work order.
Suspension of Work and Stop-Work Order are sometimes used interchangeably, but it is important for contractors to closely review their contract to be sure which is applicable. While the general idea of each clause is similar, and many of the requirements are the same, there are key distinctions necessary to how and when a contractor presents its claim. If a contractor is not aware of which of these clauses is in play, it could unknowingly submit an untimely or invalid claim.