Construction contracts are sometimes stated as fixed price, but that price is the sum of a series of unit-priced line items. Payments under the contract are based on the fixed price. The unit prices may, or may not, be useful in pricing progress payments or changes in the work. Otherwise, what is their purpose? The Rhode Island Supreme Court was recently presented with an analogous dilemma under an architectural services agreement.

The design contract stipulated what it called a “fixed lump sum fee.” Progress payments based on that fee were to be made at various milestones in the design process. The contract also stated compensation was calculated as 11% of the estimated construction cost, with final payment to the architect subject to adjustment based on actual construction cost. The architect performed 80% of the design work; however, the project was never constructed as designed.

The second case in this issue involves a bidder’s right to withdraw a mistaken bid and recover its bid security. A Virginia state statute gave public project owners the right to reject mistaken bids, but it was silent regarding the rights of the bidder. Could a low bidder alleging a transcription error during the bidding process force the project owner to release it from its bid?

The third case interprets the “Damage to Work” standard federal construction contract clause. Is the storm surge placement of debris on the job site “damage?” And, is the removal of that debris “repair”?

The fee provision in an architectural services agreement used language of both lump sum and percentage of construction cost. The provision was not ambiguous, however. A reasonable reading established it was a fixed-price fee. Language regarding adjustment of final payment based upon actual construction cost did not apply because the project was never constructed as designed.

While a state statute regarding a public project owner’s right to reject a mistaken bid was ambiguous, precedent from other states established a corresponding right for a bidder to withdraw its mistaken bid. And, the bidder was entitled to the return of its bid security.

Under the federal “Damage to Work” construction clause, debris deposited on a job site by a storm surge was not “damage,” and removal of the debris was not “repair.”

A project owner’s issuance of a “notice to proceed” is a crucial step in a construction project. The contractor’s scheduling and sequencing of the work is dependent on a known start date. The contractual performance period starts to run upon notice to proceed.

A Virginia court recently addressed a situation in which the contract documents did not stipulate a deadline for issuing a notice to proceed. It appeared the owner could award the contract and then leave the contractor hanging regarding a commencement date. The project architect had stated, at a pre-bid conference, that he anticipated a notice to proceed in mid-May. But was that enforceable?

The other case in this issue also involved timely commencement of the work. In this case, the contract stipulated a deadline for authorizing a start. The project owner did not have the site ready in time and issued change orders granting the contractor certain extended site costs. Did the change orders waive the no-damages-for-delay clause in the contract?

The minutes to a pre-bid conference were not effectively incorporated into the contract documents. A statement by the project architect regarding the timing of issuance of notice to proceed was therefore not contractually binding on the project owner.

Change orders granting one element of delay damages were issued under a contractual exception to the no-damages-for-delay clause. The change orders did not waive the project owner’s right to enforce the clause.

When a subcontractor breaches its agreement, the contractor is forced to expend considerable time and effort dealing with the problem. The contractor is clearly entitled to recover the cost of corrective or replacement work as direct damages for breach of contract. Can the contractor also recover compensation for the time its employees devoted to the problem as a consequence of the breach?

An Indiana appellate court recently answered that question in the affirmative. A fabrication subcontractor shipped nonconforming materials to the job site. The contractor’s administrative staff spent hours obtaining replacement materials from another fabricator. The contractor was allowed to recover the in-house cost of those efforts, although the method of proof was surprising.

The second case in this issue addresses the mandatory use of project labor agreements on large federal construction projects. A Biden-era executive order appears to restrict the “full and open competition” required by the Competition in Contracting Act.

The third case involves a contractor’s sponsorship of a subcontractor delay claim against a public project owner. The sub was hindered by a no-damages-for-delay clause. Did the contractor owe a duty to the subcontractor to effectively argue that well-recognized exceptions to enforceability of the clause might apply?

When a fabrication subcontractor delivered noncompliant materials, the contractor could recover consequential damages for the time its employees spent dealing with the problem. Those damages were supported by a chart of “typical” hourly rates drafted in preparation for the litigation.

An executive order mandating the use of project labor agreements on large federal construction projects without any evaluation of benefit versus cost risk violated the Competition in Contracting Act and was unenforceable.