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Recent Issues

  EDITOR'S NOTES | Issue 8-6 (in: Volume 8 - Number 6 | February 8, 2010)
The mandatory bid listing of intended subcontractors has become common in public contracting. Imposed by statute, regulation or simply administrative policy, bid listing prohibits the successful contract awardee from substituting listed subcontractors without the authorization of the public project owner. The purpose is to protect the interests of trade contractors by preventing the practice of "bid shopping" after contract award. Bid listing is also used to mandate participation by minority and women-owned business enterprises (MBEs/WBEs).

A recent California case illustrates the pitfalls of unauthorized substitution or under-utilization of listed subcontractors. A prime contractor completed a complex public works project for the City of Los Angeles. Everyone involved agreed the project was a tremendous success. Yet, the contractor was assessed a $200,000 penalty for allowing a reduced scope of work for two listed MBE lower-tier subcontractors. The listing of lower-tier subs and the penalty itself were called for not under the state bid listing statute, but under the terms of the city's contract, which the court found to be enforceable.

Other cases this week involved progress payments and a technical/price tradeoff in a "best value" evaluation. A project owner's failure to make a progress payment was justified by the contractor's prior deviation from the specifications. And, award of a contract to a higher price offeror was not justified by an adequately documented comparison of technical proposals.
  CONTRACTOR PENALIZED FOR UNDER-UTILIZATION OF LISTED LOWER-TIER SUBS (in: Volume 8 - Number 6 | February 8, 2010)
Under the terms of a public works contract, the municipal project owner could assess a penalty against the prime contractor for the under-utilization of bid-listed MBE and WBE suppliers and lower-tier subcontractors.
  CONTRACTOR DEVIATION JUSTIFIED LACK OF PROGRESS PAYMENT (in: Volume 8 - Number 6 | February 8, 2010)
Regardless of when a progress payment was due, the contractor’s deviation from the specifications justified the project owner’s nonpayment.
  TECHNICAL/PRICE TRADEOFF NOT JUSTIFIED (in: Volume 8 - Number 6 | February 8, 2010)
A procuring agency failed to document numerical scores assigned to technical proposals and failed to make direct comparisons between the proposals. A technical/price tradeoff, awarding the contract to a higher price offeror, was unjustified.
  EDITOR'S NOTES | Issue 8-5 (in: Volume 8 - Number 5 | February 1, 2010)
The legal principle of "negligent misrepresentation" enables one party on a construction project to sue another party even though there is no contractual relationship between the two. If, in the course of business, a party generates information upon which it knows other parties will reasonably rely, that party can be held liable for purely economic loss caused by misinformation. The most common example on construction projects is the ability of constructors to sue design professionals for faulty contract documents.

In a recent case in Pennsylvania, an excavator sued a utility company for failing to accurately mark the location of the utility's subsurface lines in the job site area, thus delaying the excavator's work. The Pennsylvania Supreme Court previously allowed a contractor to recover from an architect for defective design documents. However, the court did not extend liability to the utility. The court reasoned that unlike the architect, the utility was not in the business of selling its information (the location of utility lines) for a profit. The contractor could not recover its delay damages.

Other cases this week involved the lack of an original signature on an e-mail transmission and a cost-plus contractor's failure to adequately document its costs. A low bid was spoiled because the bid bond, sent as an e-mail attachment from the bonding agent to the bidder, lacked an original signature of the agent. And the cost-plus contractor was denied any further payment from the owner. The documentation of costs was incomplete, duplicative and devoid of credibility.
  UTILITY NOT LIABLE TO CONTRACTOR FOR INACCURATE MARKING OF SUBSURFACE LINES (in: Volume 8 - Number 5 | February 1, 2010)
A utility company that mismarked the location of subsurface lines could not be held liable to a construction contractor for delay damages under a theory of negligent misrepresentation.
  E-MAIL TRANSMISSION OF BID BOND SPOILS LOW BID (in: Volume 8 - Number 5 | February 1, 2010)
A printout of an electronically transmitted bid bond was not valid bid security because it did not contain an original signature of the bonding agent. The Federal Acquisition Regulation requires an original signature and the E-SIGN Act does not apply to federal contracting.
 
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