Many standard contract documents, public and private, call for the project architect or project engineer to serve as the initial arbiter of claims and disputes. That decision may be an initial threshold to dispute resolution or it may purport to be a “final” decision. Either way, contractors are advised to be aware of the procedure. Lack of knowledge can lead to some negative consequences.
A public works contract in Nebraska stipulated that the owner’s project engineer had sole authority to approve increases in the contract price. The terms of the prime contract had been incorporated by general reference into a subcontract. The sub argued it had submitted a claim for additional compensation to the prime contractor in the expectation the prime would resolve the matter in good faith. But the subcontractor was bound by the determination of the owner’s engineer.
A private project in Nevada utilized the AIA General Conditions, and named the project architect as the initial decider of claims. The contractor had 30 days to appeal that decision by demanding mediation. When the contractor missed the deadline, the contractor waived the right to challenge the architect’s decision.
The third case in this issue involved a federal agency’s attempt to negotiate contract price after bid opening and exposure of bid prices. The claims court said this would “allow losing bidders to undercut the low bidder and unfairly force the low bidder to compete with itself.”
