09/16/2019

Editor’s Notes

The federal courts, over the past four decades, have developed clear parameters for contractor recovery of unabsorbed home office overhead incurred as a result of owner-caused delay. An equation known as the “Eichleay formula” is used to measure these damages, and the courts have articulated prerequisites for the use of the formula.

 

Many state appellate courts, rather than “reinvent the wheel,” have adopted the federal rule. Ohio is among those states. An Ohio appeals court recently upheld denial of unabsorbed overhead because the contractor was never in a true “standby” position and had been able to perform replacement work to absorb its fixed home office expenses.


Another case in this issue addressed which statute of limitations applied to a project owner’s claim against an architect. A California court ruled that a claim for negligent failure to perform contractual duties was governed by the statute pertaining to professional negligence, not the statute for breach of contract.


The third case involves a bidder’s certification that its employees had been E-Verified to work legally in the United States. A Pennsylvania court ruled that if the bidder believed a solicitation requirement was unenforceable, the bidder had to protest when the contract was advertised. The bidder could not wait until its bid had been rejected as nonresponsive due to noncompliance.

 

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