Volume: 23, Issue: 10 - 05/30/2025
Design-build contracting has been common for decades. When statutes or rules based on traditional construct-only procurements interface with design-build practices, challenges arise. Two cases in this issue are illustrative.
A California appellate court addressed a novel issue: does the statute conferring rights on listed subcontractors on fixed-price public works contracts grant a remedy to a would-be subcontractor on a public works design-build project? The sub was denied a remedy, but only because the prospective subcontract was too small to qualify under the Subcontracting Practices Act.
A Colorado appeals court considered an incorporation by reference of a geotechnical report into a design-build subcontract. Was a recommendation in the report superseded by the scope of the request for a price quotation and the back-and-forth shop drawing procedures that determined the final design?
The third case in this issue involved an unobservable site condition. A note in the contract conveyed inaccurate information, but another contract provision contradicted that note. And, the contractor had previously performed work on the same structure. Should the contractor have anticipated the site condition notwithstanding the misrepresentation?
A state procurement statute for design-build contracts incorporated the Subcontracting Practices Act. The interplay between the two statutes was a matter of first impression.
A geotechnical report incorporated by reference into a design-build subcontract recommended an element of work not included in the completed project. A jury could find, however, that the recommendation was superseded by the solicitation for the subcontracted work and the shop drawing review and approval process.
A “general note” in a contract constituted an affirmative representation of a site condition; however, that representation proved to be inaccurate. Nonetheless, in light of the complete circumstances of the project, the actual site condition was reasonably foreseeable.
Volume: 23, Issue: 9 - 05/16/2025
A contract clause establishing “disincentive deductions” was described as unusual. The clause authorized the government to withhold $2,700 per calendar day if the contractor failed to meet an interim milestone in the contractual construction schedule.
The defaulted contractor argued that the clause did not allow the government to withhold both the disincentive deductions and liquidated damages for late completion of the overall project. The Civilian Board of Contract Appeals disagreed.
The other case in this issue involved the commencement date of a claim limitation period. The date was established not by the contractor’s demand letters or change order proposals, but by a state statute defining when a public project owner must make final payment.
A construction contract called for “disincentive deductions” for failure to meet an interim scheduling milestone and liquidated damages for failure to meet the overall contract completion deadline. The clause was interpreted to allow government recovery of both types of damages.
Although a contractor’s claim against a project owner was for unjust enrichment, it was essentially a claim for money owed for public construction work. Timing of final payment was governed by a state statute. That timing determined commencement of a one-year claim limitation period.
Volume: 23, Issue: 8 - 05/01/2025
When signing off on a change order, contractors may reserve the right to seek some additional increased costs that may be incurred as a result of the change. Sometimes referred to as “carve-outs,” these reservations are interpreted narrowly. The contractor only reserves the rights it expressly defined.
A contractor signed a bilateral contract modification that reserved the right to seek “any time extension due to the changed work, and resulting increased cost.” The contractor did not seek a time extension, instead electing to accelerate the pace of the work in order to avoid winter work conditions. The contractor could not recover the cost of acceleration.
The second case in this issue involves the mechanic’s lien rights of an unpaid architect. The architect did not have a contract with the property owner and did not provide any services on site. The architect had no recourse.
The third case addresses a situation in which the contract documents described subsurface conditions through test boring logs, but warned of “local variations.” This effectively placed the risk of certain undisclosed, latent conditions with the contractor.
Carve-out language in a waiver in a contract modification reserved a contractor’s right to the increased costs of a time extension. The contractor, however, did not request an extension and accelerated the work to mitigate winter work conditions. The reservation did not apply to the contractor’s acceleration costs.
An architect did not contract with the property owner for the preparation of plans. The work was never constructed, so neither the architect nor its staff participated in activities at the job site. Therefore, the architect was not entitled to mechanic’s lien protection to secure its payment.