United States Court Of Federal Claims Recognizes General Contractor’s Claim For Cumulative Impact Resulting From Many Modifications And Rejects Defense That Modifications Constituted Accord And Satisfaction

Bell BCI Company v. United States
81 Fed. Cl. 617; 2008 U.S. Claims LEXIS 116, (April 21, 2008)

Note: This case was affirmed in part, vacated in part, and remanded in Bell BCI Co. v. United States, 570 F.3d 1337 (Fed. Cir. 2009), to be discussed in a a future issue of Constructlaw.

Plaintiff, Bell BCI Company (Bell), a general contractor, sued the Government for $6,200,672 in damages plus interest under the Contract Disputes Act for unpaid balance of the price, unresolved changes, delay damages, labor inefficiency costs and profit thereon. Bell also asserted claims on behalf of five subcontractors.

Bell contracted with U.S. to construct a laboratory building for the National Institute of Health (the “Agency”). After 9 months of construction, the agency added a new floor, issued over 200 modifications that delayed completion by 19 ½ months and increased the price by 34 percent or $21.4 million. Although Bell was paid for performing most of the changed work, Bell asserted an impact claim for the cumulative effect of the changes on Bell’s overall performance and asserted pass-through impact claims on behalf of Subcontractors 1 through 5. The U.S. denied liability based on the defense of accord and satisfaction and claimed that Bell was liable for $447,678 in liquidated damages for failing to complete the project on time.

The Court found the Government’s accord and satisfaction defense was without merit because none of the contract modifications included any payment to Bell for cumulative impact or labor inefficiency. The U.S. needed to establish the following requirements for an accord and satisfaction: 1) proper subject matter; 2) competent parties; 3) a meeting of the minds; and 4) consideration. The Court held a hearing to determine whether the U.S. satisfied these standards and found that it did not. Further, the Court found Bell did not expressly release its cumulative impact claim in any modification. The Government. relied on a particular Modification, No. 93, to support its position, however, the release language did not address cumulative impact claims and Modification No. 93 preceded many of the events giving rise to the claim.

The Court accordingly awarded Bell over $6 million plus interest under the Contract Disputes Act

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