Too often I’ve heard, “we didn’t want to rock the boat, so we just discussed the problem, but didn’t provide written notice.” But, remember The Godfather – “It’s not personal, it’s strictly business.”
Under a contract to furnish and install HVAC piping for a U.S. Army training facility at Joint Base Elmendorf-Richardson in Anchorage, Alaska, the Contractor argued the contract drawings and specs lacked the design details necessary to perform the work. The Contractor submitted several RFIs.
The Government argued the Contractor must use a letter, not an RFI, to notify the Contracting Officer of design problems. The Board held the information conveyed in the Contractor’s RFIs was sufficient to notify the government of a design discrepancy and “the Board (and the government) should not elevate form over substance in evaluating the sufficiency of a contractor’s notice.”
The Government also argued that the Contractor bore the risk of performing the changed work before the CO responded to the Contractor’s notice. Holding in the Contractor’s favor, the Board reasoned the risk borne by the Contractor is the risk of an incorrect course of action. If the Contractor takes the correct course of action (i.e., if it performs the work exactly as the CO would have directed) the Government suffers no harm, so the Contractor bears no such risk. When the Contractor acts before the CO responds, the Contractor bears the risk of taking incorrect action. If you’re gonna act, make it the correct action.
This case did not decide which party was at fault for the missing design details (i.e., Spearin Doctrine). But, [spoiler alert] the Government doesn’t automatically bear such responsibility even if it is a design-bid-build contract.
Appeal of UNIT Company, Armed Services Board of Contract Appeals, No. 60581 (Feb. 12, 2018).
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?
