Georgia Tech Procurement Assistance Center

Construction contracts: Everything you need to know

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hardhatContracts are crucial components of the construction process, but they can be among the most complicated and controversial aspects as well.

As the industry shifts to increasingly collaborative project delivery methods and adopts new materials and technologies, construction professionals need to stay up to date on the how the legal landscape is evolving — or not — to ensure their work is verified and protected.

In the latest monthly series of articles published by Construction Dive, an in-depth look at the evolving world of construction contracts and project delivery is presented.

The series covers the period from bidding to close-out, including project delivery and contract type, terms and conditions, and additional factors to keep in mind.  To see all the details, click on this link: http://www.constructiondive.com/news/construction-contracts-resource/429229

5 of the most commonly misinterpreted terms in construction contracts

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People are fallible, and misunderstandings are a part of life. Construction work is no exception.

hardhatHowever, when it comes to construction contracts, time and money are at stake.  A lack of legal background is, of course, one of the primary drivers behind misinterpretations, but there’s also the fact that many contractors think they’ve seen and know everything based on experience.

“Most construction contractors follow custom and standard practice in the industry, or what they’ve always done in the past,” said Chicago attorney Matthew Horn, a long-time construction law attorney and founder of Legal Services Link. “But when something goes wrong … that’s when you get into litigation.” Horn said that it doesn’t even have to be a “newbie” in the construction business who gets it wrong. “It’s not unusual for (experienced) parties to a construction contract not to fully understand what it says,” he said.

Attorney Ken Perry, with Perry & Aronin in New York, said the degree to which contractors should worry about misinterpreting the terms in a contract often varies depending on how well they know the other party. He said it’s always smart to scrutinize a contract no matter the source, but he added that the odds of a positive outcome in the event of a misunderstanding are always higher when doing business with a trusted partner. “Relationships are the most important consideration,” he said. “Know who you’re dealing with.”

Attorney Daryl Williams, with Baird Williams & Greer in Phoenix, said, “There are some people who can work with others on a handshake, and that is the best type of relationship, but a contract with a new party … who will not consent to simple things — or demands extraordinary things — means you are in trouble.” Williams said contractors, as well as other parties, enter into contracts for the protection they provide, so contractors need to pay close attention to any “form contract” from the other party. “You can count on the fact that the form produced by the other side is slanted it its favor,” he said.

Keep reading this article to see some of the most commonly misinterpreted clauses, phrases and terminology in construction contracts: http://www.constructiondive.com/news/the-dotted-line-5-of-the-most-commonly-misinterpreted-terms-in-constructio/427486/

Software vendors be warned: The old rules may no longer apply to government

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Software vendors take notice: The General Services Administration (GSA) is proposing a new rule regarding something arcane but important.

GSA logoGSA has identified 15 terms and conditions common in commercial supplier agreements that it considers incompatible with existing federal law. And where there is a conflict, government’s own commercial terms rule. It’s designed to save everyone time. Vendors won’t have to comb their contracts for offending clauses — they just can’t be enforced.

For now it applies to any GSA contract that includes software. But don’t rule out the possibility of the rule going governmentwide.

For example, GSA is forcing an end to automatic renewals of period-limited software licenses or maintenance agreements. Instead, ordering agencies will award one-year with renewal options to be negotiated and re-awarded in subsequent years. The legal basis for this is that a contracting officer may not obligate funds that have not been appropriated, lest he or she be found in violation of the Anti-Deficiency Act.

Keep reading this article for a complete description of all the nullified terms and conditions: http://www.bizjournals.com/washington/blog/fedbiz_daily/2015/04/software-vendors-be-warned-the-old-rules-may-no.html

How to manage a Federal contract during the Government shutdown

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In the wake of the Government’s October 1, 2013 shutdown, clients of the Georgia Tech Procurement Assistance Center (GTPAC) have been asking our counselors a lot of questions about the implications.  Here is a summary of the advice we are giving:

  • Generally, if you are competing for a Federal contract, everything is on hold.  Watch FedBizOpps (www.fbo.gov) where a majority of Federal solicitations are posted to see updates on the status of anything you are bidding on, or have bid on recently.  Don’t expect up-to-the-minute information since so many Federal employees are on furlough, but that’s the best place to check on the status of most Federal procurements.  If you discover that the procurement official assigned to managing the solicitation in which you are interested is not on furlough, an inquiry by email is permissible.  Be patient in waiting for a reply — remember that literally hundreds of thousands of Federal employees are on furlough status at the moment.
  • Some procurements, related to essential Government functions, are proceeding with minimal disruption, but expect delays.
  • If you have an active Federal contract, it is imperative that you comply with all contractual terms and conditions, and that accurate records of shutdown-related impacts be maintained.  Knowing the terms and conditions of your contract inside-out will pay-off right now.  Be sure to read the rest of this article for tips on managing an active Federal contract.

Specific contractual actions to protect your company’s interest will vary by contract type and contract terms.  All have to do with the specific provisions contained in your contract.   Some things to consider include:

Cost-Type/Fixed Price-Type (incrementally funded) Contracts

  • Ensure compliance with the notification requirements of the “Limitation of Cost” or “Limitation of Funds” provision of the contract (cost-type contracts).
  • Develop plans to minimize the impact to the customer (the end-user within the Government) and your firm (i.e., curtail non-essential program elements to stretch program funding) and request a Stop Work be issued by the Government’s Procurement Contracting Officer (PCO or just CO) for the non-essential elements.
  • If a Stop Work is not issued, notify the PCO/CO of potential delays under “Government Delay” and/or “Excusable Delay” provisions. (fixed price-type contracts).
  • Provide direction to your supplier base consistent with the PCO/CO’s direction.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.
  • Segregate costs as documentation for a potential delay and disruption under the Request for Equitable Adjustment (REA) provision of your contact.

Fixed-Price Type Contracts (fully funded)

  • The Government shutdown does not have an immediate impact on contract performance but, over time, the unavailability of Government inspectors or support could lead to delays and disruptions and should be documented for future Request for Equitable Adjustment (REA) consideration.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.

Other Items to Consider

  • Proposals and unexercised options could expire during an extended shutdown period.  If it is in the best interest of your firm, a non-solicited proposal extension/option exercise date extension could be provided to the Government.
  • The Government may not be able to provide inspectors (e.g., Defense Contract Management Agency) under a shutdown and delay, so disruption impacts should be captured and documented for a future Request for Equitable Adjustment (REA).
  • The Anti-Deficiency Act (ADA) does not allow the government to spend money that is not obligated, therefore and firms should be leery of      non-warranted individuals requesting you to work and get paid later; e.g., contracting officer representatives (CORs) or other Government officials.  Only COs and PCOs can make binding commitments.
  • Be mindful of mission creep, where the Government requests you to perform additional contract tasks due to Government personnel unavailability.
  • The Government shutdown potentially impacts to your rates and long-range plans based on prolonged funding gaps and/or stop work orders, so alert your accounting staff to document all impacts of the shutdown.

As always, feel free to contact a GTPAC procurement counselor if you have questions or need guidance.  All contact information is posted at: http://gtpac.org/team-directory.

 

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