The COVID-19 pandemic has already been causing significant turmoil for Canadian Federal Government and Provincial/Territorial Government ("Government") contractors.
On a daily basis, contractors are facing a changing landscape, government-imposed or public health restrictions and other measures that create a challenge to and potentially hinder the timely delivery of goods and/or services to the Government.
For many businesses who are contracting with Government entities, the crisis has focused their attention to their ability to perform their contract and risks that this may pose to their organization. Unfortunately, there has been no judicial treatment of the Government's excusable delay clause. Whether it applies to the current pandemic is therefore difficult to say with certainty.
Points to Consider for Government Contracts
- Federal Government contracts incorporate Standard Acquisition Clauses and Conditions ("SACC") by reference. Look for SACCs here.
- Some contracts refer to a specific SACC, but will replace or supplement the standard language found in the referenced SACC clauses.
- The majority of SACCs include a standard "excusable delay" provision that addresses a delay in performance caused by an unforeseeable event beyond a contractor's control, which affects its ability to deliver on a contract. A contractor must advise the contracting authority of the expected delay and provide a plan to minimize the impact of the delay. It is important that contractors follow the notice provisions if faced with a possible delay.1
- If a contractor gives notice of an excusable delay and attempts to meet its obligations, and the Government still terminates the contract, there could be limits on a claim and the extent of compensation the Government will pay to the contractor.
- Does the contract permit amendments to purchase orders or task authorizations?
- Provinces do not use SACCs like the Federal Government. Depending on the Province, their own standard terms and conditions can be incorporated by reference and could include an excusable delay and/or force majeure clause.
1. See for example: https://buyandsell.gc.ca/policy-and-guidelines/standard-acquisition-clauses-and-conditions-manual/3/2035/17#excusable-delay, though you have to check which specific SACC conditions apply to your contract
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