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    Government Contracting Database

    Labor Shortages

    The general rule is that the contractor is presumed to be capable of doing the work called for in the contract and to have available a sufficient number of competent people for this purpose. An ability to obtain competent labor generally is not an excusable cause of nonperformance, excusable delay or basis for an equitable adjustment in the contract price. Yates-Desbuild Joint Venture, CBCA 3350, 17-1 BCA ¶ 36870; Forsberg & Gregory, Inc., ASBCA No. 18309, 76-2 BCA ¶ 12037; Whitener & Skillman, ASBCA No. 11729, 68-1 BCA ¶ 699. However, there are some exceptions. In order for a contractor to obtain a time extension for excusable delay due to a labor shortage, it will be necessary to establish that the shortage was unforeseeable at time of bid, beyond the contractor’s control and due to abnormal circumstances which the contractor cannot be held to anticipate. Yates-Desbuild Joint Venture, CBCA 3350, 17-1 BCA ¶ 36870; Robert McMullen & Son, Inc., ASBCA No. 11988, 68-1 BCA ¶ 7068. The Boards and Courts have not been generous in their interpretation of what constitutes an abnormal circumstance. As an example, in instances where the contracts were in a rural setting with a limited labor market and the construction and employment practices of a new concern caused an exodus of workers, the boards have ruled against the contractor. The boards contend that although the disruption may not have been foreseeable, the solution was not beyond the contractor’s control since it could have retained most of the workers by giving them wage increases. Stephens Garment Co. (1952); Weaver Lumber Co.,(1953); McKee General Contractor, Inc., ASBCA No. 5621, 60-1 BCA ¶ 2504 (1960); see also Yates-Desbuild Joint Venture, CBCA 3350, 17-1 BCA ¶ 36870; and Bus. Mgmt. Research Assocs., Inc., CBCA 464, 07-1 BCA ¶ 33486.

    Moreover, in instances where the shortage was caused by a contract action of the government, or where the government provided misleading information before bid upon which a contractor relied, or where the government knew of the impending shortage and withheld that information from the bidders, the boards and courts have also found that a delay was excusable. In such a situation, the delay may also be compensable. One example was where the government knew of the impending shortage and withheld that information from the bidders. Jones Construction Co. v. U.S., 182 Ct. Cl. 615 (1968).

    The Court of Claims has also recognized that an exception to the general rule is where labor shortages were caused by the government. Fireman’s Fund Ins. Co. v. United States, 92 Fed. Cl. 598, 661 (2010) (citing Bateson Stolte, Inc. v. U.S., 145 Ct. Cl. 387 (1959)). The ASBCA also limited the contractor’s risk of a labor shortage where a contractor’s highly skilled employees were hired away by a competitor which was performing a small business set aside. In Re Ntc Grp., Inc., ASBCA No. 53720, 04-2 BCA ¶ 32706 (citing Bannercraft Clothing Co., Inc., ASBCA No. 6247, 1963 BCA 3995).

    Updated: August 2, 2018

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