Loss of Efficiency Caused by the Government As Recoverable Damages

Wed, Oct 24th, 2018

Loss of efficiency has widely been recognized as a recoverable cost when the Government is responsible for causing certain problems under a contract, which impacts a contract’s planned sequence or work flow. Some examples of this disruption include working in bad weather, working out of sequence, shut-down of the jobsite or lack of access to the job site, and perhaps being pushed into bad weather season (i.e. winter conditions).

In a recent Armed Services Board of Contract Appeals case, Optimum Services, Inc., 2016-1 BCA ¶ 36,490, at 30-32 (Sept. 6, 2016), the Contractor was granted recovery for loss of efficiency costs using the “Measured Mile Method,” which, essentially, compares the efficiency during the period of loss versus a period of normally productive work effort. The Boards of Contract Appeals and Courts have accepted this “Measured Mile Method” manner of determining impact or damages.