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Volume: 21, Issue: 17 - 09/15/2023

 

Prevailing wage statutes mandate payment of stipulated minimum “prevailing” wage rates on public works projects. State labor departments establish labor categories and determine rates that will apply to workers performing the same function on the same project. However, the wage rate coverage is not always as uniform as one might think.

 

The highest court in Massachusetts addressed a situation in which highway field surveyors employed by construction contractors were paid more than highway field surveyors employed by an engineering services contractor. The surveyors performed the same functions on the same projects. The construction contracts had been competitively bid and the engineering contract had been procured under a procedure pertaining to professional services. Were the different wage rates permissible?

 

The second case in this issue involved an architect’s grant to a client of a nonexclusive license to use preliminary design schematics prepared by the architect. Did the right to “reproduce” the schematics give the project owner, then working with a different architect, the right to use the schematics to create a derivative work?

 

The third case arose under a federal road construction contract. Did the government-furnished information have to establish the presence of rock as a known fact in order to defend the contractor’s differing site condition claim? Or, were indications that made the presence of rock reasonably foreseeable sufficient?


 

A state prevailing wage act did not apply to professional services contracts. Highway field surveyors employed by an engineering contractor to the state were not entitled to the same wages as highway field surveyors employed by construction contractors to the state, even though they performed the same functions on the same public works projects.


 

An architectural services agreement to produce preliminary design schematics for a project granted the client a license to “reproduce” the schematics. A federal appeals court interpreted this to confer the right to create derivative works from the copyrighted drawings.


 

Although a government geotechnical report may not have established the presence of rock as a known fact, the report provided ample indication that the presence of rock was reasonably foreseeable. Additionally, the report’s clause recommending a contingency placed the risk of rock squarely with the bidder.


Volume: 21, Issue: 16 - 08/31/2023

 

The Architectural Works Copyright Protection Act (AWCPA), enacted by Congress in 1990, created important protections for the intellectual property of architects. It protects their design documents and the appearance of the buildings that are the physical embodiment of those drawings. But the AWCPA also considered the legitimate concerns of property owners. An owner may alter or destroy a structure without violating the copyright protections of the design architect.

 

A federal appeals court recently addressed a situation in which the original developer of a building went bankrupt. The new owner wanted to complete the building, and the design architect, who had not been paid in full by the original developer, sought to block completion without the architect’s consent. Is the property owner’s right to complete a building encompassed by the statutory right to alter or destroy a building?

 

The other case in this issue involved a public project owner’s reservation of the statutory right to reject any and all bids. Is this right absolute? Or would that approach condone graft and bid rigging?


 

The purchaser of a partially completed building could complete the building without the design architect’s consent. The rights created by the Architectural Works Copyright Protection Act are limited—while the building completed in accordance with the architect’s design documents would be a tangible embodiment of those documents, the new owner could complete the building using new design documents generated by a different architect.


 

A municipality did not have sovereign immunity from a suit by a disappointed bidder and did not have an absolute statutory right to reject any and all bids. However, the municipality did have broad discretion when rejecting a low bidder as not responsible.


Volume: 21, Issue: 15 - 08/15/2023

 

Liquidated damages are intended to compensate project owners for the costs they incur due to contractor late completion. It is often difficult to measure and document these damages, so they are contractually “liquidated” in advance and expressed as a fixed daily rate. This does not mean, however, that an owner can just grab a number out of the air and wield it over the head of a tardy contractor.

 

In a recent Georgia case, a municipal project owner stipulated liquidated damages of $1,000 per day for late completion of a neighborhood park, calling it a “standard” daily rate. There was no evidence the owner had attempted to estimate or forecast its actual damages for late completion. The contractor argued it was an unenforceable penalty designed as an incentive for prompt completion.

 

The second case in this issue addressed a performance surety’s coverage dispute with the beneficiary of the bond. The performance bond issued by the surety incorporated the construction contract by reference and the contract included an arbitration clause. Was the surety required to submit the coverage dispute to arbitration? Or, did the arbitration clause apply only to disputes relating to performance of the construction contract?

 

The third case involved a subcontract for custom-fabricated metal components. The subcontract required shop drawings that included 3D models of the components. The models were a stand-alone item in the schedule of values. Could the sub recover payment for the models alone even though the order for the actual components had been cancelled?


 

A municipal construction project stipulated liquidated damages for late completion of the work, but there was no evidence the project owner had attempted to estimate, prior to contract award, the actual damages it would incur in the event of late completion. The clause was merely a disincentive to contractor delay and therefore an unenforceable penalty.


 

Where a subcontract was incorporated by reference into a performance bond, an arbitration clause in the subcontract was not binding on the surety. The dispute did not involve construction contract performance, but rather the surety’s rights and obligations under the bond.


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