When a contractor falls behind schedule, it is common for a public project owner to send a “cure notice.” The contractor must show how it will get on the path to timely completion. There is an implicit threat of termination for default, but the government can’t terminate prior to the contractual completion deadline unless the contractor has no reasonable likelihood of timely completion. What happens when a contractor responds to a cure notice with a proposed “revised schedule” that indicates completion after the deadline?

The US Court of Appeals for the Federal Circuit recently ruled that such a response was a breach of contract. Rather than showing how it would achieve timely completion of the work, the contractor repudiated its contractual obligation to do so. There was no evidence of excusable delay, and the government could default the contractor without a showing of no reasonable likelihood.

The second case in this issue involved a prime contractor’s sponsorship of a subcontractor’s pass-through claim against the federal government. The prime contractor said it had no reason to believe the sub’s claim pricing was incorrect. This did not meet the standard for certifying a sponsored subcontractor claim; however, the defective certification could be corrected. The contractor and subcontractor could proceed with appeal of the government’s denial of the claim.

The third case comes from the New Hampshire Supreme Court. A contract stated the change order clause could not be waived by failure to strictly conform to the change order process. There had been a waiver nonetheless—the parties had not just deviated from the process; they had persistently ignored it altogether.

A default termination was justified when a tardy contractor responded to a government cure notice with a request for an extension of the contract completion deadline. This was a repudiation of the contractor’s contractual obligations. There had been no excusable delay.

While a subcontractor claim against the government was initially submitted in the sub’s own name, there was adequate evidence the government was aware at all times this was a pass-through claim sponsored by the prime contractor. The prime’s certification of its sub’s claim had been deficient, but that was a curable defect.

Although a construction contract said a change order provision would not be waived by failure to strictly comply with the clause, a pattern of conduct between the project owner and contractor went beyond failure to strictly comply. Both parties ignored the specified procedures and thereby waived the clause.

Individuals enter into business associations for a variety of good reasons. One is the limitation of personal liability. Corporations, limited liability companies and limited partnerships all offer this advantage. But when conducting business, individuals must be careful. When signing any document, the individual should include their title and name of the business entity they represent.

The managing member of an LLC accepted an electronically transmitted proposal from a contractor. The individual apparently did not notice that the signature block read “Individually and Managing Member.” The individual was personally sued for payment under the contract.

The other case in this issue involves filed sub-bids on public works projects. While these trade contracts are tied to sections of the contract specifications, they may incorporate by reference other work that is outside of the trade. A drawing listed in the mechanical specifications depicted elements of site improvement work.

The managing member of a limited liability company signed a signature block that referred to the member “individually.” The body of the agreement, however, consistently referred to the LLC as the contracting party. The agreement was ambiguous regarding the member’s personal liability on the contract.

A contract drawing had not been admitted into the judicial record. Consequently, an appellate court could not determine whether out-of-trade site improvements had been incorporated into the masonry subcontract.

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.

Contract documents called for improvements to a non-existing chilled water system. The contractor acknowledged it was aware of the error when it bid the contract but had taken it into consideration when pricing the work. Nonetheless, the government could take a credit when it deleted the improvements from the contract requirements.

A Massachusetts appeals court has addressed an architect’s fee stated as a percentage of the cost of the construction. When construction was not completed, the actual cost of the work performed was not relevant. Bid prices could be used to determine estimated cost, but the lowest bid was not necessarily determinative.