“The Davis-Bacon Act, 40 U.S.C. sections 3131-3148, is a fact of life in federal government construction contracting.” So said the Armed Services Board of Contract Appeals regarding a contractor’s entitlement to wage rate increases incurred in the option year of a fixed-price, indefinite quantity painting contract.
The case involved the interplay between the Construction Wage Rate clause and the so-called No-Adjustment clause. The contractor was on the losing side. The contractor had been expected to carry a contingency when pricing its elements of work for the option year.
Also in this issue, a Michigan appellate court sorted out conflicting dispute resolution clauses in a prime contract and a subcontract. The project owner was a third-party beneficiary of the subcontract but was not bound by its arbitration clause. The subcontract incorporated the owner’s prime contract by reference, but that did not include the prime contract dispute resolution clause.
The third case in this issue addressed commercial general liability insurance coverage for defective work. A federal appeals court said it covered property damage outside the contractor’s scope of work but not the contractor’s work itself.
