Taliban Attacks Don’t Excuse Contractor Non-Performance
Your employees have been shot at by armed insurgents. Multiple times. Your work crews have been attacked by small arms and mortar fire, machine gun fire, and rocket-propelled grenades. One of your teams also was ambushed and assaulted by rocket and machine gun fire. Finally, an IED (improvised explosive device) took out one of your vehicles, killing the driver and seriously injuring two security guards.
You suspend operations due to security concerns and ask the Government to push back the delivery date. The Government accedes to your request. But it’s too late; the die has been cast. The IED incident led to severe workforce disruption among security personnel. They walked off the job. You miss the new delivery date, and the Government terminates your contract soon thereafter.
What just happened and what are your rights?
The place is Afghanistan. The time is November 2012 through March 2013. The Taliban has claimed responsibility for suicide bombing attacks against U.S. and NATO forces in advance of their announced pull-out and planned hand over to Afghan forces in 2014. These facts were the subject of appeals before the Armed Services Board of Contract Appeals (ASBCA) brought by the contractor challenging the default termination and seeking to recover delay costs.
The ASBCA recently issued its decision in Terraseis Trading Ltd., ASBCA Nos. 58731, 58732 (Nov. 19, 2015), denying the contractor’s challenge to the contract termination. The contractor argued that its failure to meet the delivery deadline should be excused by the lack of security. Based on the facts above, the contractor’s argument was not unreasonable. But there were other facts in play and specific contract language that controlled the outcome of this case.
The Board cited to several provisions in the Contract, including the following:
Contract performance may require work in dangerous or austere conditions. Except as otherwise provided in the contract, the Contractor accepts the risks associated with required work performance in such operations.
The Contract also stated: “Unless specified elsewhere in the contract, the Contractor is responsible for all logistical and security support required for contractor personnel engaged in this contract.”
The Board’s decision came down to foreseeability, and the facts here did not favor the contractor. Were these security challenges foreseeable? The ASBCA said yes and held:
Even before the contract was awarded, it was understood that security would be a difficult and constant challenge. Indeed, Terraseis foresaw the threat, and proposed specific measures to address it. Within a week of the start of field operations, the threat presented itself and never fully abated. Security was always a concern; consequently, it was always foreseeable that something might go wrong and security efforts might not succeed, either because the challenge was too great or because Terraseis would be unable to persuade the Afghan government to provide the necessary level of security.
The contractor also argued that its failure to meet the deadline should be excused because the Afghan President had issued a decree that “disbanded” all private security companies and “monopolized” all security under the Afghan government. The contractor thus could not bring in its own security personnel or hire other private security contractors to protect its workforce. The Board had no problem rejecting that argument because the decree was issued in 2010, long before the contractor signed the Contract. The Board also pointed out that the “contractor alone is responsible for deficiencies of its . . . subcontractors.”
The ASBCA did find in favor of the contractor on one part of its claim, finding that the Government was responsible for a six day delay in delivering equipment.
The Contract here was to provide seismic data collection services in Afghanistan as part of a program to attract investment in the hydrocarbon sector of the Afghan economy. The contractor proposed to meet the security challenges by creating a “security bubble” at various worksites. Clearly, the security challenges overwhelmed the contractor’s seismic data collection efforts. And the Contract’s terms ensured that the Government was not on the hook when the security bubble burst.