Physical conditions beneath the Earth's surface can be difficult to predict. Project owners hire soil test borings and provide the logs from those borings to prospective bidders. But cost and restricted access limit the number and location of the borings. How much may a bidder infer from borings performed in a different section of the project? And to what extent can surface conditions alert bidders to possible problems?

The Federal Circuit recently addressed these issues on a government canal restoration project. The contractor’s inferences and assumptions relied on the boring logs from a different section of the project, but depressions in the surface should have alerted the contractor to subsidence in the area.

The second case in this issue involves a project owner’s refusal to pay for work performed by a subcontractor. The subcontractor completed the work with the owner’s knowledge and encouragement. The Arizona Supreme Court said it would be unjust for the owner to benefit from this work and pay no one for it.

The third case addresses the severity of disciplinary action against a wayward architect. The Nebraska Supreme Court said the falsification of continuing education documents warranted revoking the architect’s license for five years.

A contractor relied on soil test boring logs from other areas of the work site when it was not reasonable to do so. The contractor could not draw conclusions about site conditions from a contract provision that had been deleted prior to bid submittal.

A property owner allegedly received improvements performed by a subcontractor and paid no one for the work. The Arizona Supreme Court said that even in the absence of owner misconduct, the owner could be liable to the subcontractor for unjust enrichment. The lack of contractual privity did not insulate the owner.

The Nebraska Supreme Court upheld a five-year ban from practice for an architect who falsified continuing education documents.

It is common for people in the same industry or line of work to discuss business. Trade associations exist primarily to address challenges or problems common to the trade, but any discussion that includes the cost or pricing structure of individual businesses is a slippery slope.

A federal district court convicted an executive of a ready-mix concrete company for criminal conspiracy to restrain trade. The defendant tried to portray his communication with competitors as innocent trade talk. A federal appeals court, however, ruled that the evidence supported findings of price fixing, bid rigging and market allocation.

The other case in this issue involved a labor union’s ability to recover from a public works payment bond. The union alleged that a subcontractor on a job had failed to pay mandatory contributions to employee benefit plans. A Massachusetts court ruled that a collective bargaining agreement created a “contractual relationship” between the prime contractor (the principal on the payment bond) and the labor union.

A federal appeals court has ruled that although the exchange of cost or pricing information among competitors is not necessarily a criminal act, a jury may infer price fixing or bid rigging from such communication.

A Massachusetts appellate court has ruled that for purposes of public works payment bond protection, a labor union had a “contractual relationship” with the prime contractor. The union could pursue the bond for a subcontractor’s unpaid benefit plan contributions.   

When a contractor falls behind schedule, it is common for a public project owner to send a “cure notice.” The contractor must show how it will get on the path to timely completion. There is an implicit threat of termination for default, but the government can’t terminate prior to the contractual completion deadline unless the contractor has no reasonable likelihood of timely completion. What happens when a contractor responds to a cure notice with a proposed “revised schedule” that indicates completion after the deadline?

The US Court of Appeals for the Federal Circuit recently ruled that such a response was a breach of contract. Rather than showing how it would achieve timely completion of the work, the contractor repudiated its contractual obligation to do so. There was no evidence of excusable delay, and the government could default the contractor without a showing of no reasonable likelihood.

The second case in this issue involved a prime contractor’s sponsorship of a subcontractor’s pass-through claim against the federal government. The prime contractor said it had no reason to believe the sub’s claim pricing was incorrect. This did not meet the standard for certifying a sponsored subcontractor claim; however, the defective certification could be corrected. The contractor and subcontractor could proceed with appeal of the government’s denial of the claim.

The third case comes from the New Hampshire Supreme Court. A contract stated the change order clause could not be waived by failure to strictly conform to the change order process. There had been a waiver nonetheless—the parties had not just deviated from the process; they had persistently ignored it altogether.

A default termination was justified when a tardy contractor responded to a government cure notice with a request for an extension of the contract completion deadline. This was a repudiation of the contractor’s contractual obligations. There had been no excusable delay.

While a subcontractor claim against the government was initially submitted in the sub’s own name, there was adequate evidence the government was aware at all times this was a pass-through claim sponsored by the prime contractor. The prime’s certification of its sub’s claim had been deficient, but that was a curable defect.