Construction Labor Strikes: Inexcusable Delay

This is the fourth blog post in a five-part series about construction labor strikes and contractors’ potential recovery of delay and damages, along with case examples on the subject. The first post provides a brief history of the formation of labor unions and types of labor strikes, and the second post discusses entitlement and excusable delay. The third post focuses on compensable delay, and this post addresses inexcusable or non-compensable delay. The final post will offer recommendations for contractors facing labor strikes.

Strikes can justify excusable delay in cases of labor unrest besides direct strikes by the contractor’s employees. These include circumstances such as refusal of workers to cross picket lines,¹ strikes by subcontractors’ employees,² organizational strikes,³ picketing of the subcontractors of other contractors,⁴ informational strikes,⁵ and other concerted employee actions.⁶ However, these events only constitute grounds for excusable delay if they meet the criteria of being “beyond the contractor’s control,” “unforeseeable, and not caused by the contractor’s refusal to bargain in good faith.”

Standard contract clauses addressing default, excusable delays, etc., do not relieve contractors or subcontractors from responsibility for delays that are within their control. A delay caused by a strike that the contractor or subcontractor could not reasonably prevent can be excused, but not beyond the point at which a reasonably diligent contractor or subcontractor could have acted to end the strike.

Also, a delay may not be considered to be excusable or compensable if the labor dispute was foreseeable during contract formation. A strike does not constitute an excusable delay if the strike was happening at the time the contract was signed and was therefore “foreseeable.”⁷ For example, one court held that a delay in steel delivery was not excusable because at the time the contract was entered, the possibility of a strike could be foreseen, and the contractor assumed the risk by not providing for it in the contract.⁸

In another example, a contractor’s delay claim against the owner, caused by striking employees from another contractor, was unsuccessful. The contractor claimed that the owner was responsible for the delay because it was customary for the federal government to limit picketing to one gate and allow non-striking labor access from another gate. The Armed Services Board of Appeals found no convincing evidence of this custom as well as no owner-required contractual obligation to provide a secondary gate for non-striking labor.⁹

A contractor’s refusal to bargain in good faith with labor unions may render a strike inexcusable. For example, in Diversacon Industries Inc.,¹⁰ a board ruled that a contractor was not entitled to a time extension for a delay caused by a strike. Local 25 Marine Division, International Operating Engineers AFL-CIO, petitioned under the guidelines of the National Labor Relations Act for an election to determine if the contractor’s dredging employees were interested in representation in collective bargaining. The contractor and Local 25 agreed to the election. When the election was held, Local 25 received a majority vote. The contractor, however, filed objections to the election results, claiming that the election did not represent the free choice of the employees because of misrepresentations, threats, and promised benefits by Local 25 prior to the election.

The National Labor Relations Board (NLRB) overruled the contractor’s objections, but the contractor still refused to recognize Local 25. Consequently, Local 25 filed a charge with the NLRB against the contractor, alleging that the contractor’s refusal to bargain collectively constituted an unfair labor practice. The dredging employees voted to strike and picket. An NLRB trial examiner found that the contractor was engaging in unfair labor practice, and the examiner ordered the contractor to cease its refusal to bargain collectively.

The contractor notified the United States Army Corps of Engineers (USACE) that it was seeking a time extension for the strike as allowable under Clause 5 of the contract between the parties. The contracting officer for the USACE denied the contractor’s request because the NLRB found the contractor was engaging in an unfair labor practice against its employees by refusing to bargain collectively. The Board of Contract Appeals reviewed the case findings, and it agreed with the NLRB that the strike was foreseeable by, within the control of, and due to the fault and negligence of the contractor. The strike constituted an inexcusable delay with no time extension or compensation.

Thus, issues of control, foreseeability, and unfair labor practice may classify a labor strike as an inexcusable delay that does not entitle contractors to an extension of time or recovery of additional costs.

¹         See Fred A. Arnold, Inc., ASBCA No. 16,506, 72-2 BCA ¶9608 (1972); Montgomery Ross Fisher, Inc., ASBCA No. 16,843, 73-1 BCA ¶9799 (1972).

²         See Electronic & Missile Facilities, Inc., ASBCA No. 9325, 1964 BCA ¶4127 (1964).

³         See Fred A. Arnold, Inc., supra, note 53.

⁴         See Arnold M. Diamond, Inc., ASBCA No. 45,072, 93-3 BCA ¶25,904 (1993).

⁵         See Andrews Constr. Co., GSBCA No. 4364, 75-2 BCA ¶11,598 (1975).

⁶         See The NTC Group, Inc., ASBCA Nos. 53720, et al., 04-2 BCA ¶32,706 (2004).

⁷         Chas. I. Cunningham, IBCA No. 242, 60-2 BCA ¶2816 (1960) (finding that a steel strike that was in progress at the time the contract was signed could not be considered “unforeseeable” and therefore did not constitute an excusable delay).

⁸         See John F. Miller, Inc. v. George Fichera Construction Corp., 7 Mass. App. 494, 388 N.E.2d 1201 (1979); Woodington Corp., ASBCA No. 37885, 91-1 B.C.A. (CCH) ¶23,579 (1990).

⁹         ASBCA No. 45072, 93-3 B.C.A. (CCH) ¶ 25,904 (1993).

¹⁰         Diversacon Industries Inc., ENGBCA Nos. 3284, 3286 ¶ 11,875 (1976).

ADDITIONAL RESOURCES

Blog

Discover industry insights on construction disputes and claims, project management, risk analysis, and more.

MORE

Articles

Articles by our engineering and construction claims experts cover topics ranging from acceleration to why claims occur.

MORE

Publications

We are committed to sharing industry knowledge through publication of our books and presentations.

MORE