When a project owner issues a deductive change order reducing the scope of the project work, the owner is entitled to a credit against the fixed contract price. The deduction should reflect the cost of performing the deleted work. What if the deductive change order results from the owner’s own error in its specifications? And, what if the contractor tries to read the defective spec out of the contract, arguing it had no impact on the bid price?
The Federal Circuit of the U.S. Court of Appeals recently addressed this situation. While the parties had argued vigorously over whether the error was latent or patent—affecting the contractor’s duty to seek pre-bid clarification—the contractor’s own documentation indicated it was aware of the error prior to bid submittal. The government was entitled to the deductive credit.
The second case in this issue involves the calculation of an architect’s design fee that was based on a percentage of total construction cost. When the construction has not been completed, can the total cost be extrapolated from the actual cost of partially completed work? If estimated costs are based on bid prices, must the architect’s fee be derived from the low bid?
The third case applied a no-damages-for-delay clause to the statutory definition of money “due and owed” under a public works construction contract. The trial court had jurisdiction to consider the contractor’s claim for delay damages.
