When there is a dispute over the pricing of changed or extra work, there is a temptation for contractors or subcontractors to exert leverage where they can. Yet most contracts and subcontracts require adherence to directives and the expeditious prosecution of the work, while reserving claim rights as necessary. How much leverage can a party actually exert?
In a recent case, a prime contractor accused its structural steel subcontractor of “slow-walking” the shop drawing process in an effort to exert pressure in a dispute over the pricing of changed work. The sub responded that the prime was not making full payment of its invoices. The steel work was on the front end of the project schedule’s critical path. An Illinois appeals court was asked to determine which party had breached the subcontract.
The second case in this issue involved a price adjustment clause in a fixed-price contract. An upward adjustment would result in a contract price that exceeded the limits of the contractor’s state license. A South Carolina court had to decide whether the contract was enforceable by the contractor.
The third case deals with the use of alternative dispute resolution (ADR) procedures at the federal Civilian Board of Contract Appeals. Does the board have authority to compel participation in mediation over the objection of a party? Or is mutual consent always required for the use of ADR procedures at the board?