Prime contractors, have you ever submitted a subcontractor’s claim to a public owner? Subcontractors, have you ever wanted to submit a claim against the government, but you had no contract with the government?
Generally, if the prime has or could have at least some liability (even potentially), then the prime can “pass-thru” the sub’s claim against the government.
A pass-thru claim will fail if the prime has severed or extinguished all liability for the claim between itself and its sub. This can be done by language that may already be in the subcontract or by a later agreement of release or settlement.
But, the same subcontract with the right language or a later agreement between the prime and sub (e.g., liquidation agreement) can preserve liability to keep a pass-thru claim alive.
A short success story:
A prime contractor on a project in Slick Rock, Colorado for the U.S. Dept. of Energy agreed to remediate uranium mill tailings. The prime submitted a pass-thru claim by one of its subcontractors against the Government (the Sub’s claim “passed-thru” the Prime to the Government).
The Government’s efforts to dismiss the claim failed because the prime had to pay whatever recovery it got from the Government to the sub. Only when the recovered amount (no matter how small) was paid, by the Government to the prime and then from the prime to the sub, was the prime’s liability extinguished. Until that point, the fire of the claim kept burning.
M.K. Ferguson Co., et al. v. U.S., Ct. Fed. Claims, No. 12-57C (April 14, 2016)
Roads & Bridges | Written Notice
WRITTEN NOTICE | Beware that strict compliance of the contract might be required.
When an owner replaced a contractor for significant safety violations, […]
Roads & Bridges | Mommie Dearest
MOMMY DEAREST | The story of an ESA without a MOM
Nobody enters this world, or a contract, without a mother: There can […]
IIJA | Does Closing a “Giant Loophole” Cost Contractors?
A recent article published by Roads and Bridges magazine reports that the Office of Management and Budget is working to broaden the scope […]
Roads & Bridges | Buy American Plan Gets an Update
BUY AMERICAN PLAN GETS AN UPDATE
The Office of Management and Budget is developing standards to replace the current Buy […]
Roads & Bridges
Where Does the Buck Stop?
WHERE DOES THE BUCK STOP? | A shallow concrete pour leads to an interesting lawsuit
On the desk of President Harry S. Truman […]
Roads & Bridges | Reshaping Agreements
RESHAPING AGREEMENTS | Oral Agreements Must Be Written in Stone
Reuse, reshaping, and/or reapplication of existing materials was the goal in this roadway […]
Pay-If-Paid Unenforceable in Virginia Starting Jan. 1, 2023
As of Jan. 1, 2023, pay-if-paid clauses are unenforceable, regardless of whether a surety/payment bond claim is involved. This is only for […]
How Short is Too Short
A limitations period is too short when it’s unreasonably short.
Construction Contracting Without Relief Clauses During COVID-19
What to do if your contract lacks the parts to handle COVID-19? Considerations for creating new contracts during COVID-19.

Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio
