Construction contracts commonly call for advance written, signed change orders to authorize additional or changed work, but the realities of a bustling, fluid construction site get in the way. Even with reasonable project management by owner and contractor, this is a difficult standard to meet. Case law consistently holds written change order requirements enforceable. Yet the doctrine of “waiver” is always in play.

An Ohio court recently addressed this situation. Ohio has rock-solid judicial support for the enforceability of written change order requirements, yet even Ohio precedent has on occasion recognized the possibility of waiver. On the project in question, a lower-level owner administrator without contractual authority had consistently sent the contractor emails regarding changed work while implying the authorized individual was in the informational loop.

The second case in this issue addressed the question of when the payment period under a state Prompt Payment Act started to run. Did it start when the contractor’s payment application was received by the project architect in accordance with the contractual procedure? Or did it not start to run until the owner received the application, certified for payment, from the architect?

The third case involves certification of claims under the federal Contract Disputes Act. When a claim is certified in a defective manner, can the certification be corrected even though the statutory time limitation for submission of claims has expired?

A change order clause requiring advance written, signed orders would generally be enforceable against the contractor; however, it was possible the project owner waived the requirement through a pattern of email authorization by a lower-level manager.

A statutory 21-day prompt payment period started to run when the project owner’s designated architect received a contractor payment application, not when the owner itself received the application. The fact the architect had not yet certified the application for payment did not make the application “disputed.”

If a contractor amended its defective claim certification language after expiration of the statutory claim limitation period, the contractor could still correct the certification and proceed with the claim.

Courts favor the enforcement of arbitration clauses as this binding form of alternative dispute resolution is beneficial to judicial economy and efficiency. Courts are willing to review the validity of the arbitration clause itself, but are reluctant to allow collateral attacks based on other provisions of the contract.

A recent case from Rhode Island is an example. Subcontractors argued that a “pay-if-paid” clause in the subcontracts violated state law and was void. The subs contended this voided the subcontracts in their entirety, including the arbitration clause. The Supreme Court of Rhode Island, however, ruled in favor of arbitration. The arbitrators could determine the enforceability of the pay-if-paid clause.

The other case in this issue involves what the Court of Federal Claims described as “a fundamental conflict” between best procurement practices and congressional favoritism toward small businesses. Could agency requirements for contract eligibility be superseded by the Small Business Administration?

Where defendants challenged the enforceability of pay-if-paid clauses in subcontracts, but did not challenge the arbitration clause incorporated into the subcontracts, the question of the enforceability of the pay-if-paid clauses had to be referred to arbitration.

The Small Business Administration Certificate of Competency process takes precedence over any special experience requirements stipulated in a contract solicitation. The Court of Federal Claims has no jurisdiction to review an SBA grant of a COC.

Most public works contracts at the federal, state and local levels are subject to prevailing wage rate laws. Contractors bidding on these contracts have a fairly good idea what the labor costs will be if awarded the contract, and they know that failure to pay the mandatory minimum wages will subject them to substantial penalties. Are these bidders required to carry, in their bids, labor costs that comply with prevailing wage rate laws?

A New Jersey appellate court recently addressed this issue. The bid solicitation required the successful bidder to comply with wage rate determinations, but the solicitation was silent on how the labor component of the work should be priced in the bid. The apparent low bidder priced certain labor well below the prevailing rate. Was the bid nonresponsive to the terms of the solicitation? Was the bid unreasonably unbalanced?

The second case in this issue involved a project owner’s rights when a contractor allegedly substituted materials without authorization. The AIA contract documents prohibited such substitution. Was the owner’s sole recourse a suit under the contract or was there recourse in a tort suit for willful and wanton misconduct?

The third case concerned a contract to design, build and lease a building. Government mismanagement delayed issuance of a notice to proceed with construction. Lease payments would commence only when the government tenant took occupancy of the building. Could the contractor recover fixed costs incurred during the extended preoccupancy period or would such recovery constitute impermissible lost rent?

While a successful bidder was required to comply with prevailing wage rate determinations, the solicitation did not mandate labor pricing in accordance with those rates. A bidder was allowed to understate its labor costs. Furthermore, the bid was not unreasonably unbalanced.

A project owner’s remedy against a contractor for property damage allegedly caused by unapproved substitution of materials was strictly contractual. The AIA contract documents prohibited that substitution. The owner’s insurer could not morph the claim into one for negligence.