Volume: 16, Issue: 19 - 10/15/2018
Most states have some version of a “prevailing wage” statute. These laws allow the establishment of minimum compensation levels for workers on publicly funded construction projects and are based on trade and location. The stated purpose of the laws is to attract and retain skilled workers for public projects. The stipulated wage levels also enable union contractors to compete with non-union contractors when bidding public contracts.
Not all workers involved in the construction process are covered by prevailing wage laws. Coverage is usually limited to on-site workers, so parties involved in off-site fabrication or truck drivers delivering materials to a job site may be excluded; but concrete truck drivers may be an exception. Read more.
Favorable treatment of ready-mix concrete delivery drivers under a state prevailing wage statute could withstand an Equal Protection challenge. The drivers had more involvement with on-site construction activities than drivers of other vehicles delivering construction materials. And, that participation required a higher level of skill.
Where a contractor was in material breach of the construction contract, the project owner’s recovery was not limited to the cost of completion of the work. The owner could treat the contract as void and elect to be restored to the financial position it occupied prior to entering into the contract.
Volume: 16, Issue: 18 - 09/28/2018
Long before the current trade disputes, the Buy American Act was passed to support domestic producers of goods. Enacted during the Herbert Hoover Administration, the law provides a federal procurement preference for U.S. manufactured products. The Federal Acquisition Regulation has implemented this policy by requiring the use of domestic products unless certain stipulated exceptions apply. In a recent case, a bidder filed an exception on construction materials and was improperly rejected as non-responsive. Read more.
A bidder invoked an exception to the Buy American Act, but failed to provide contact information for the suppliers of the foreign products. The omitted information did not enable the bidder to manipulate its bid price or alter its relative standing. The bid should not have been rejected as nonresponsive.
Two commonly owned corporations were separate legal entities despite the owner’s failure to observe all corporate formalities. One construction company’s collective bargaining agreement with a union was not binding on the other company.
Volume: 16, Issue: 17 - 09/15/2018
What prudent businessperson would not like to be paid in advance for work? The cost of performance, which is fundamentally the cost of capital, is shifted to the customer. Construction contractors have a long history of attempting to “front load” their contract pricing into the early phases of a project, effectively recouping performance costs before those costs are incurred.
For project owners, the dangers of front-loaded pricing are apparent. It can result in a loss of contractor incentive for expeditious project completion and weaken a contractor in the latter stages of performance. In the event of a default, the owner is financially exposed. Performance bonds are reassuring, but provide an incomplete form of protection. Read more.
Even though a procuring agency knew, prior to contract award, that performance costs had been front-loaded into the mobilization price on a bid, the agency could still, after contract award, invoke the “Payment for Mobilization and Demobilization” clause and defer payment of those performance costs until project completion.
Three claimants vying for recovery from the same pool of money held by the project owner each required separate counsel. Representation of multiple claimants presented a conflict of interest.
Volume: 16, Issue: 16 - 08/31/2018
When a federal contractor seeks a price increase, the contractor may submit an informal request for a price adjustment or a formal “claim.” Under the Contract Disputes Act, a claim that exceeds $100,000 must be certified for accuracy. The government contracting officer issues a final decision on the claim, which triggers a 90-day appeal period. If the contractor misses the statutory deadline, the contractor loses its appeal rights.
This raises a question: Can the government issue a final decision on an uncertified request in excess of $100,000, triggering the appeal period even though the contractor did not submit a claim? The answer, surprisingly, is yes. Read more.