Article Date: 12/21/2012

Loulakis Discusses Several ‘Significant’ New Developments in Design-Build Case Law

By Steve Rizer


While no landmark case in design-build construction emerged this year, there were some important developments in this area worth noting, Capital Project Strategies LLC President Michael Loulakis reported during a webinar that WPL Publishing held earlier this month. During the past year, there have been “several cases that are really significant in that what they’ve done is to establish a sense of where the courts might be going in some very specific doctrines that we have in construction law in general,” he told a target audience of owners, consultants, engineers, architects, subcontractors, and construction law attorneys.


“What we saw, really, were some attacks on good faith [and] fair dealing in design-build,” Loulakis said. In making this point, he alluded to three cases that he believes the industry needs to review and understand. They are Bell/Heery v. U.S. 2012 WL 3104885 (Fed. Cl.); Fluor Intercontinental, Inc. v. Department of State, 2012 WL 1144972 (Civilian BCA); and Metcalf Construction, Inc. v. U.S., 102 Fed. Cl. 334 (2011). Later in the webinar, during the question-and-answer period, he added, “I think that it’s going to be critical for us to get a handle on how to approach dealing with this good-faith-and-fair-dealing argument and whether or not that is going to go away.”


Loulakis told webinar attendees that he continues to see “a lot of normal contract administration problems -- providing notice, handling change orders properly within the context of a contract -- and … those have created some problems for design-builders.”


During the webinar, Loulakis listed the following lessons learned in design-build case law:

  • Design-builders are being held responsible for problems caused by third parties.
  • Design-builders may be seeing an erosion of the Spearin and Good Faith and Fair Dealing doctrines.
  • Contractors take great risk in failing to follow the requirements of the Changes Clause.
  • Cost-plus contracts are not “no risk” contracts.
  • When a request for proposal says, “No exceptions allowed,” it means, “No exceptions allowed.”
  • Agencies are given deference in making their procurement decisions.
  • Pay attention to the conditions precedent to arbitration/litigation.
  • Designers can be targets when things go wrong.

A recording of the webinar, entitled “Lessons Learned: Recent Developments in Design-Build Case Law,” can be purchased via the following link:



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