Volume: 22, Issue: 6 - 03/29/2024


It is not unusual for project owners to furnish equipment or material for the contractor to use in a project. The motivation is usually financial. There is nothing improper about this practice so long as the use of the owner-furnished property is stipulated in the contract. However, if the equipment or material proves unsuitable for the project, the owner cannot hold the contractor responsible.


A federal appeals court addressed a situation in which an owner mandated the use of gravel stockpiled at the project site as the base for a paved parking lot. The owner designated a third-party materials testing company to evaluate the gravel. The company reported the gravel was suitable, and the contractor used the gravel. However, the pavement started to heave and crack as a result of inadequate drainage in the base, and the project owner sought to hold the contractor liable for breach of the contractual warranty.


The other case in this issue involves an equipment manufacturer that employed multiple licensed professional engineers at its production facility. A claimant alleged the manufacturer was practicing engineering.


A project owner mandated the use of material stockpiled on its site and designated a third-party testing company to evaluate the material for suitability. The owner could not hold the construction contractor responsible when the material proved unsuitable.


A firm that employs licensed professional engineers is not necessarily providing professional engineering services or engaging in the practice of engineering. Only evidence establishing the specific responsibilities of those employees can establish the practice of engineering.

Volume: 22, Issue: 5 - 03/15/2024


“Substantial completion” is a significant project milestone that carries both legal and financial ramifications. Broadly defined as the point at which the project is fit for occupancy or its intended use by the owner, it is a factual determination that must be made in the field. Many contracts designate the project architect or project engineer as the final arbiter of substantial completion, but is certification of final completion really final and binding? Not necessarily.


A California court recently said the term, as used in a statute of limitation, established a statutory standard, not a contractual standard. The AIA contract documents designated the project architect as the certifier. Certificates could be considered as evidence of when substantial completion occurred, but only a judicial finder of fact could make the ultimate determination.


The second case in this issue involved a construction manager’s insurance coverage whose commercial general liability policy excluded coverage for “professional services.” While the CM’s responsibilities arguably involved a mix of professional and non-professional functions, a federal appeals court ruled that the insurer could deny coverage altogether for claims arising out of the CM’s performance.


The third case addressed a municipality’s withholding of public records—settlement agreements with polluters—pending conclusion of the bidding process for a water treatment facility. The Alabama Supreme Court ruled that concern about bid inflation justified the temporary withholding.


While an AIA construction contract form made the project architect the final arbiter of substantial completion, that certification could not alter the terms of a statute of limitation. The certification was merely evidence to be considered in applying the statute.


A construction manager’s commercial general liability insurance policy excluded professional services. Although some of the CM’s alleged shortcomings involved activities that might not be considered professional, the activities were interrelated with expressly excluded professional activities. The exclusion applied and the insurer had no duty to defend.


A city’s temporary nondisclosure of public records in the form of settlement agreements was justified. Disclosure of the funds available for construction of a facility would have encouraged inflated bidding. Temporary nondisclosure was in the best financial interest of the public.

Volume: 22, Issue: 4 - 02/29/2024


The United States government is the largest consumer of construction services in the world. As such, federal construction contract documents have served as a prototype for public works contracts in states and municipalities throughout the country. Federal construction projects have also generated a comprehensive body of legal precedent, with decisions from the federal administrative boards, the U.S. Court of Federal Claims and the U.S. Court of Appeals for the Federal Circuit. Both cases in this issue are from the federal administrative boards.


Test boring logs are an indication of subsurface conditions at a project site. But how much information can a contractor reasonably deduce or extrapolate from those logs? A set of contract documents included 10 boring logs, but none of the tests were performed in the site’s southwest quadrant. The contractor encountered subsurface problems, not indicated in the logs, in the southwest quadrant of the site. Did it constitute a Type I differing site condition?


Proprietary or sole source equipment specifications are prohibited under federal procurement law. Specifications for a pneumatic tube system were arguably sole source, but the contractor did not protest the terms of the contract prior to bid submittal. Having signed the contract, was the contractor bound by its terms despite the seemingly improper specifications?


It was not reasonable for a contractor to apply test boring log information from one area of a project to a separate area where no test borings had been performed. There had been no material misrepresentation of site conditions in the contract documents.


The Civilian Board of Contract Appeals has ruled that although an equipment specification may have been a de facto sole source requirement, the contractor—having failed to protest the terms of the solicitation prior to bidding—was bound by the terms of the contract.

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