Georgia Tech Procurement Assistance Center

Construction contract disputes are getting longer, more complex

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Construction contract disputes across the world are getting longer, more complex and more expensive, according to the “Global Construction Disputes Report 2018” from design and consultancy firm Arcadis.

The value of North American disputes — or total costs added to a project for the additional work being claimed — dropped for a fourth consecutive year to $19 million in 2017, compared with the $43 million global average, the report found. Meanwhile, the average length of North American disputes increased from 15.6 months in 2016 to 17.7 months last year, exceeding the global average of 14.8 months.

Contract errors and/or omissions were the top cause of disputes in North America last year, followed by poor contract administration, which was trailed by failure on the part of an owner, contractor or subcontractor to understand or comply with contractual obligations.

Social infrastructure and the public sector collectively saw the most disputes while the transportation sector saw the second most.

Keep reading this article at: https://www.constructiondive.com/news/report-contract-disputes-are-getting-longer-more-complex/527970/

What to expect from OTA protests and disputes

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Ready or not — federal agencies are increasingly utilizing “other transactions authority” (OTA) to craft agreements that are not subject to traditional procurement laws and therefore should, in theory, allow the government greater access to innovative solutions.

While the goal of OTA procedures may be to avoid bottlenecks inherent in procurement under the Federal Acquisition Regulation, in the end they may result in valuable contracts with the government. As with any such contracts, it is inevitable that disputes will arise during their formation and administration.

While there is very little precedent relating to protests of OTA awards or claims arising under OTA-awarded contracts, there are some fundamental principles and analogous decisions that suggest how this early history of OTA protests and claims may unfold.

This article attempts to portray the current landscape for protests of OTA awards and contract claims arising during performance of an OTA agreement.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=721778

What contractors need to know about arbitration

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Many construction firms have never had a legal dispute that couldn’t be resolved quickly and amicably without a lawyer. But for those who aren’t so lucky, it can sometimes be surprising to take a good look at a construction agreement to see what legal remedies are available and find that a traditional jury trial is not even an option.

In those cases, the last legal stop could be arbitration.

Contractors sometimes conflate arbitration with mediation, which is another form of alternative dispute resolution in which contractors try to work out their differences with the assistance of a neutral third party well versed in construction law who is only there to be a sounding board.

Keep reading this article at: https://www.constructiondive.com/news/the-dotted-line-what-contractors-need-to-know-about-arbitration/523167/

Can contractors force a written decision on a claim?

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For a contractor with a claim on a federal construction project, an essential occurrence is a “final decision” by the government contracting officer.  Ideally, this is a formal written response addressing the merits of the claim.

But if the contracting officer declines to respond within 60 days, it becomes a “deemed denial” of the claim.  A final decision, formal or deemed, is a jurisdictional prerequisite to the contractor’s right to appeal.

Contractors would obviously prefer a government agency to go on the record with a response to a claim. The Contract Disputes Act allows a contractor to petition a board of contract appeals “to direct a contracting officer to issue a decision in a specified period of time.” Does this empower contractors to force a written claim decision by the government?  Unfortunately, that question was recently answered in the negative.

Keep reading this article at: http://www.constructiondive.com/news/can-contractors-force-a-written-decision-on-a-claim/505464/

Bad-faith federal litigation tactics compel court to award small business attorneys’ fees

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Even though the federal government maintains an entire agency whose mission is purportedly to assist small businesses — the Small Business Administration (SBA) — regulators seem ever oblivious to their impact on entrepreneurs. The National Labor Relations Board’s (NLRB) effort to redefine who is an “employer” and the NLRB’s and the Department of Labor’s (DOL) enmity toward independent contracting are two current examples. A third is DOL’s so-called Fiduciary Rule, which hits sole-practitioner and small-business investment and insurance advisors especially hard.

Small businesses are also at a particular disadvantage when disputes with the government end up in court. A recent U.S. Court of Federal Claims decision, SUFI Network Services, Inc. v. US, exhibits government’s unfortunate willingness to exploit its power in disputes with a small business and the role courts can play in protecting entrepreneurs’ rights.

SUFI contracted with the U.S. Air Force (USAF) in 1996 to be the exclusive long-distance-call service provider for the guest lodging facilities on Air Force bases in Germany. Over the next 8 years, USAF personnel made it impossible for SUFI to successfully offer services.

For example, calling cards were provided to guests to circumvent SUFI’s service. Also, requests by SUFI that government phones be removed from the facilities were repeatedly ignored. SUFI declared that the USAF had committed a material breach of the contract and ceased services in August 2004. As required by the contract, SUFI filed a claim with its contracting officer for $130 million in damages. The officer awarded $133,000.

Obviously dissatisfied, SUFI appealed to the Armed Services Board of Contract Appeals (hereinafter, Board), increasing its request to $163 million.

Keep reading this article at: http://www.forbes.com/sites/wlf/2016/11/25/bad-faith-federal-litigation-tactics-compel-court-to-award-small-business-attorneys-fees/#14f0203f1f35

Failure to follow correct claim submission procedures results in jurisdictional doom

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The late, great Yogi Berra once said that “Baseball is 90 percent mental. The other half is physical.”  Sometimes it seems as if Yogi’s logic is equally applicable to the claims process in the world of Government contracting, where 90 percent of the early battle is following the correct claim initiation procedures prescribed by the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109.

asbcaThe CDA is an indispensable statute that, inter alia, codifies a disputes process for companies wishing to assert claims based on Government acts and/or omissions in connection with a contract to which the CDA applies. Although the CDA is omnipresent in the world of Government contracting, an August 4, 2016, decision by the Armed Services Board of Contract Appeals (Board) highlights the danger faced by contractors who fail to comply with its most basic requirement – i.e., the written submission of a valid “claim” to the Contracting Officer in the first instance. The case is Arab Shah Constr. Co., ASBCA No. 60553, and the facts are straightforward:

  • In March 2011, Arab Shah Construction Company (“Arab Shah”) was awarded a contract for $62,000 to construct a metal pole barn in the village of Mangwal, Afghanistan.
  • On May 23, 2011, the Contracting Officer informed Arab Shah via e-mail that the pole barn was needed in Gardez, Afghanistan, instead of Mangwal, and that the contract would be modified to effect the change in location if Arab Shah could “keep the same price.” Later that day, Arab Shah agreed to the contract modification, but indicated that the change in location would cost “more money.”  In response, the Contracting Officer purportedly pledged to pay Arab Shah’s relocation costs. Although the modification was executed just hours later, it did not provide Arab Shah with any additional funding.
  • On May 26, 2011, Arab Shah paid $19,000 to transport the materials to Gardez.
  • On September 22, 2011, the Government paid Arab Shah $62,224.09 – constituting the $62,000 contract amount plus $224.09 in interest.
  • Arab Shah filed an undated Notice of Appeal (Appeal) that was received by the Board on April 22, 2016. The Appeal stated that Arab Shah “never got the payment for the services” despite the fact that it delivered “all the equipment . . . to the site.”
  • The Government filed a Motion to Dismiss (Motion) the Appeal on May 17, 2016, for lack of jurisdiction. In so doing, the Government argued that Arab Shah “never submitted a claim in a sum certain” to the Contracting Officer.

Keep reading this article at: http://www.mccarter.com/Government-Contractors-Can-Learn-From-Yogi-Berra-Failure-to-Follow-Correct-Claim-Submission-Procedures-Results-in-Jurisdictional-Doom-08-30-2016/

Reminder: Requests for equitable adjustment are not claims

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A request for equitable adjustment (REA) is not a “claim” under the Federal Acquisition Regulation (FAR).  Although a REA and a claim can look very similar, there are important legal distinctions.

And as one contractor recently learned, the distinction between a REA and a claim can make all the difference when it comes to a potential appeal.

First things first: what exactly is the difference between a REA and a claim?

Keep reading this article at: http://smallgovcon.com/claims-and-appeals/reminder-a-rea-is-not-a-claim/

The Dispute Continuum

The 4 stages of a construction dispute

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In this posting, construction attorney Christopher G. Hill of Richmond, VA discuses the four stages of a construction dispute.  He writes:

What started as a kernel of thought in my mind turned into what has seemed to be a popular set of four posts that I hope were both informative and interesting.  Because of the great feedback I’ve gotten, I thought that I’d consolidate the posts into one so that my readers (thank you, by the way) will have them all in one place.  Here they are:

The Anatomy of a Construction Dispute- The Claim– This post discussed the steps for setting out a claim under your construction contract and the steps to lay the groundwork should you need to move forward with a more formal means of collection.

The Anatomy of a Construction Dispute Stage 2- Increase the Heat– This post discussed various methods to increase the heat on the party with whom you have a claim prior to litigation or arbitration.

The Anatomy of a Construction Dispute Stage 3- The Last Straw–  This post discussed what to do when your construction claim is not resolved in either of the first two stages and the steps in either litigation or arbitration.

Anatomy of a Construction Dispute- An Alternative– This post discussed my favorite form of dispute resolution, mediation, as an alternative to the cost and uncertainty of construction litigation or arbitration.

Each of these posts provides a brief overview of the construction dispute process.  Your particular construction issues and necessary actions will depend on your state’s laws and the contract between you and the other party.  I always recommend that you consult a local construction attorney to help advise you through this process.

Source: http://constructionlawva.com/anatomy-of-construction-dispute-wrap-up

A faster way for contractors to recover on claims

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Filing claims against the government is not contractors’ preferred method of resolving problems on a federal project, but often contractors are left with little choice with federal procurement officials spread thin. For example, the U.S. Army Corps of Engineers has not moved on a significant number of pending changes and refused to pay the contract balance because the Corps has assessed an equal amount in liquidated damages for delay. The delay was caused by a differing site condition, for which the contractor submitted a claim for time and money. After waiting 60 days, the Corps responded by stating that it will issue the contracting officer’s final decision in seven months. Meanwhile, the contractor continues to spend money trying to close out the project. 

How can contractors speed up the claims process, recover on favorable terms, and avoid throwing good money after bad on a multiyear dispute resolution process?   The answer: Unbundle your claims and file as many under $50,000 or $100,000 as possible to take advantage of the various board of contract appeals’ expedited or accelerated procedures. Then consolidate all expedited appeals and push aggressively toward a fast and cost-effective global resolution.

Keep reading this article at: http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=15032395091

Contracting officer’s death didn’t waive claim requirement

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A Contracting Officer’s death did not waive the requirement that a contractor file a claim with the agency before bringing its claim to federal court.

In a recent decision, the Court of Federal Claims held that a contractor was not entitled to forego the claim requirement because of the Contracting Officer’s death–even though the agency did not appoint a replacement.

The Court’s decision in Delaware Cornerstone Builders, Inc. v. United States, No. 10-588C (Fed. Cl. 2014) involved a contract between Delaware Cornerstone Builders, Inc. and the VA.  Under the contract, DCB was to replace a VA health care facility in Maryland.

The project reached substantial completion in June 2004.  In 2004, DCB and the Contracting Officer began discussions about additional payments DBC believed to be due and owing.  The parties never reached a resolution, and communications apparently ceased for a period of years.  In September 2006, the Contracting Officer died.

Keep reading this article at: http://smallgovcon.com/claims-and-appeals/contracting-officers-death-didnt-waive-claim-requirement/

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