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Volume: 22, Issue: 11 - 06/14/2024

 

Value engineering as a procurement tool was pioneered by the federal government and has spread to other public works contracting. The idea is that a contractor in the field may conceive changes in the contract design that will save the government money in constructing the project and then submit a value engineering change proposal (VECP). If the government accepts the proposal, the government shares the resulting cost savings with the contractor.

 

The federal VECP clause requires detailed information regarding changes in the contract documents, resulting cost savings and extra-contractual cost impacts. Because the government wants to encourage these cost-saving proposals, the requirements are liberally construed in favor of the contractor. In the first case, a contractor that never submitted a comprehensive, compliant VECP could meet the requirements piecemeal through a series of submittals and communications.

 

The second case involves expert testimony regarding an architect’s standard of care during the administration of a construction contract. A court allowed a licensed professional engineer to offer such testimony. In the area of contract administration, there is considerable overlap between the two professions.

 

The third case addresses a performance bond surety’s recovery of its attorney fees from the project owner. While the owner’s demand against the bond proved unfounded, the surety could not recover its fees because it had never stepped into the contractor’s shoes in a take-over capacity.


 

While no single submittal met the requirements for a value engineering change proposal, a valid proposal was presented piecemeal through multiple submittals. The government accepted this proposal when it issued a unilateral contract modification incorporating the proposed change, entitling the contractor to a share of the cost savings.


 

A licensed professional engineer could offer expert opinion on an architect’s administration of a construction contract but wisely refrained from opining on the architect’s other standards of care.


 

A surety incurred attorney fees successfully defending a project owner’s demand against a performance bond. The surety could not, however, recover the fees from the owner because the surety never took over the contractor’s role.


Volume: 22, Issue: 10 - 06/03/2024

 

When a party asserts the right to arbitrate a claim or dispute under a construction contract, some initial questions arise: Is there an enforceable arbitration clause? What is the scope of the arbitration agreement? Does it apply to this dispute? Collectively, these threshold matters are known as the “arbitrability” of the dispute. Traditionally, a court makes this determination as it is a question of law. It is possible, however, for the parties to the arbitration agreement to assign responsibility for determining arbitrability to the arbitrator.

 

In a recent Florida case, the arbitration clause expressly incorporated the American Arbitration Association Construction Industry Rules, which delegate the arbitrability determination to the arbitrator. The appellate court found this persuasive when it reversed a lower court ruling on arbitrability. The matter was remanded with instructions to send the question to the AAA arbitrator.

 

The second case in this issue involves a consolidated claim submitted on a federal construction contract. The claim comprised numerous sub-claims. The total consolidated claim was priced, as were most of the sub-claims. The unpriced sub-claims were dismissed for failure to state a sum certain. The contractor had the right, however, to resubmit those claims to the government contracting officer.


 

Courts usually rule on the arbitrability of a dispute, but authority can contractually be shifted to the arbitrator. A contract reference to the rules of the American Arbitration Association had such an effect.


 

In order to state a “sum certain” in accordance with the Contract Disputes Act, sub-claims in a consolidated claim have to be separately priced when based on distinct operative facts. While a consolidated claim withstood a motion to dismiss, several sub-claims were dismissed without prejudice.


Volume: 22, Issue: 9 - 05/15/2024

 

Design professionals can have their licenses suspended or revoked for conduct unrelated to the practice of their profession. As with any other licensed professional, certain types of egregious behavior may indicate an individual is a danger to the public when practicing that profession.

 

A licensed architect designed two houses. There were no complaints about the designs or the architect’s practice of his profession. However, once the designs were complete, the architect contracted to serve as general contractor for the construction of the homes. It was alleged he diverted and misdirected contract payments during the construction process, which led to criminal indictments. His architect’s license was summarily suspended pending resolution of the criminal charges.

 

The second case in this issue involves the timing of the government’s baseline survey of elevations for purposes of measuring the quantity of unit-priced compacted fill. Did performance of the survey prior to, rather than after, clearing and grubbing of the site result in an understatement of the quantity of placed fill?

 

The third case addresses the difficult issue of bid security for an electronically submitted bid. Did the concurrent submission of an electronic image of a cashier’s check suffice? Or was the low bid rendered unsecured and nonresponsive?


 

The license of an architect, who also served as the general contractor on the projects he designed, was summarily suspended after he was accused of misapplying payments under the construction contracts.


 

In a unit-priced contract for the placement of compacted fill, performance of the baseline quantity survey prior to clearing and grubbing of the site was consistent with the terms of the contract and not inconsistent with customary construction practice.


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