Imagine a severe thunderstorm damages a local public school such that classes cannot be held. Total repairs will cost almost $1.5 million and they must be completed soon so classes can resume.
What if you’re the contractor working diligently to repair the school building so students can resume classes? You promptly finish all the work, the school district pays for 2/3 of your work, but refuses to pay the balance, so you file a lawsuit against the school district.
But, the school district successfully argues your contract was void an unenforceable. Without a valid contract, the school district has no duty to pay for any of your work. Unfortunately, under the Virginia Public Procurement Act, the school district wins the lawsuit; so, it doesn’t have to pay you for the work that you timely and properly completed and it could sue you for return of the partial payments.
This recently happened to a public contractor in Virginia. Under the Virginia Public Procurement Act, there are provisions to expedite the creation of some contracts, but the public entity must properly justify and document the process.
Contractors, protect your rights by:
- Knowing the law governing your project and
- Verifying the public entity has complied with that law before it’s too late.
In this case, the Contractor performed its work well, but didn’t verify the public entity was properly performing its obligations until it was too late.
Owner Nonpayment is No Defense to Miller Act Claim
As if you needed confirmation that the Federal Miller Act is a powerful tool for unpaid subcontractors, this is it. Even when a Prime ordered and accepted the Sub’s work, but didn’t have to pay under the Subcontract, the Subcontractor still. . . .
Trust, but Verify
Rely at your own risk upon a Contracting Officer’s statements when statutes or contract provisions may conflict.
Payment for Verbal Changes When a Writing was “Required”
Even if your agreement can only be modified by a writing, you may still have a good argument to be paid for extra work.
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
Keep a Pass-Thru Claim Burning, Don’t Extinguish Liability
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 government?
