By Bruce Jervis
It is common, almost standard, for public works construction contracts to stipulate an administrative claim resolution procedure. A contractor must initially submit a claim to an agency official. If the agency denies the claim, the contractor may appeal to an administrative board, whose decision may subsequently be reviewed by a court.
A Vermont highway contractor recently argued it could skip this wasteful process and take its claim directly to court. The contractor said the initial claim decision is made by agency employees, who lack objectivity and are not required to conduct a full fact-finding hearing. The appeals board then deferentially reviews the agency’s incomplete and biased findings of fact, essentially rubber stamping the agency decision. The contractor contended this was a denial of due process of law.
The Vermont Supreme Court agreed with the contractor’s characterization of the agency-level procedure. The court ruled, however, that the administrative board had statutory authority to conduct its own fact-finding hearing and review the agency decision with a clean slate. This afforded the contractor due process of law. The contractor was not entitled to take its claim straight to court.
What is your opinion? Are these administrative claim procedures a waste of time and money, clearly stacked in favor of the public project owner? Or, do the procedures provide a balanced review of carefully developed findings of fact? I welcome your comments.