If a construction contractor working on a federal government project is impacted by a government-caused change, the contractor must take steps to preserve its right to obtain additional compensation or time to complete the project. In particular, a contractor must comply with the contract’s claim process. (Click here for the six most common contractor claims.)

Generally, there are three steps to obtaining additional money or time on a federal government project:

1. Submit a request for equitable adjustment: If the government causes a change to the project, the contractor should submit an REA that explains the change, how that change has impacted the contractor’s work, the amount of additional money and/or time to which the contractor is entitled, and backup for the amounts claimed.

Although a contractor is not required to submit an REA before submitting a formal claim, contractors frequently submit the REA first, because it can serve as a starting point for the contractor and the contracting officer to negotiate. The main downside to submitting an REA rather than a claim is that interest will not to start running until a claim is submitted. Also, there is no deadline for the contracting officer to make a decision on an REA.

Continue Reading How to Get More Money and Time on Federal Government Construction Projects

As I have stated before, differing site condition claims remain fairly common. They can also one of the most difficult claims for a contractor to prove at trial. There are two types of differing site condition claims–Type I and Type II.

Generally, a contractor may make a Type I differing site condition claim where the contractor encounters a subsurface or latent physical condition at the project site that differs materially from the conditions indicated in the parties’ contract.

Under a Type II claim, a contractor may assert a differing site condition claim where there are unknown and unusual physical conditions at the project site that differ materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the parties’ contract.

The United States Court of Federal Claims recently considered a contractor’s $10.5 million differing site condition claim in Nova Group/Tutor-Saliba, Joint Venture v. United States.

Continue Reading Contractor’s $10.5 Million Differing Site Condition Claim Torpedoed

If a contractor is unable to perform its work as efficiently as expected due to the actions of other project participants, the contractor may incur loss of productivity damages. There are many ways to price those types of damages. Some methods are better than others, but the least accepted method is the total cost method.

Under the total cost method, the contractor shows the amount it cost to complete its work and subtracts the contract amount. For example, if the contract amount was $10 million, but it cost the contractor $15 million to complete its work, the contractor might claim that it is owed $5 million.

Courts frequently reject the use of the total cost method because it does not take into account damages that are the result of the contractor’s unrealistic bid or the contractor’s own improper performance of its work.

Continue Reading Subcontractor’s Modified Total Cost Claim Allowed to Proceed to Trial

In 2020, I read many articles addressing how contractors can mitigate the effects of COVID-19 on construction projects. I also wrote similar articles, including tracking COVID-19 impacts and whether a contractor can get more time and money due to COVID-19 impacts.

Fast forward to 2022 and the new hot topic is inflation. The cost of many things used to build a project have gone up significantly the last year and a half, including lumber and plywood (+101%), copper and brass mill shapes (+52%), plastic construction products (+45%), and gypsum or drywall (+29%).

As a result, many contractors are feeling the pinch of these increased costs and find themselves in a position where they may lose money on a project if construction costs do not go back down.

Public owners are addressing the impacts of inflation on existing and new contracts in different ways. For example, the United States Department of Defense (DOD) recently issued a memorandum providing guidance to contracting officers (COs) how to deal with the impact of inflation.

Continue Reading How to Address Cost Increases Due to Inflation on Construction Projects

Change-in-scope claims are one of the most common contractor claims. Typically, scope disputes center on whether work that the owner directed a contractor to perform was part of the original scope of the contractor’s work. If it was part of the original scope, then the contractor may not be entitled to additional compensation or time to perform that work. But if it was out-of-scope work, it may be a breach of contract for the owner to refuse to pay for that work.

At times, scope disputes can result in the termination of the parties’ contract. That’s what happened in a recent dispute between the federal government and a contractor in GSC Construction, Inc. v. Secretary of Army.

Continue Reading Federal Court Rejects Scope-Change and Time-Extension Claims

Contractor claims for differing site conditions remain fairly common. There are two types of DSC claims. Under a Type I claim, a contractor can obtain additional time and compensation where the contractor encounters a subsurface or latent physical condition at the project site that differs materially from the conditions indicated in the parties’ contract.

For example, contractors have successfully asserted Type I claims where the contractor encountered a groundwater table that was higher than indicated in the contract documents while performing underground work.

With a Type II claim, a contractor may be entitled to additional time and compensation where there are unknown and unusual physical conditions at the project site that differ materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the parties’ contract.

An example of a Type II condition may be where a contractor performing a job that requires soil work encounters tough soils that are more difficult to excavate than expected and no bidder, no matter how experienced, would have anticipated the conditions actually found.

If a contractor believes it is entitled to additional time and compensation on a project due to a DSC, the contractor should consider submitting a claim. There are four things a contractor should know about DSC claims:

Continue Reading Four Things to Know About Differing Site Condition Claims

There are two types of differing site condition claims–Type I and Type II claims. Generally, a contractor may make a Type I differing site condition claim where the contractor encounters a subsurface or latent physical condition at the project site that differs materially from the conditions indicated in the parties’ contract.

Under a Type II claim, a contractor may assert a DSC claim where there are unknown and unusual physical conditions at the project site that differ materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the parties’ contract.

Both Type I and Type II DSC claims can be difficult to prove. Last week, after having a seven-day trial, a federal court rejected a subcontractor’s $2.4 million DSC claim in Phillips & Jordan, Inc. v. United States.

Continue Reading Federal Court Rejects Subcontractor’s $2.4 Million Differing Site Condition Claim

Payment bonds protect subcontractors, sub-subcontractors, and others who provide labor and materials for a public project. Subcontractors and others who want to make a payment bond claim must follow the legally-required steps. The required steps depend on the type of project (e.g., federal and state government projects) and the role of the company making the claim (e.g., subcontractor, sub-subcontractor, supplier to sub-subcontractor, etc.). If you do not follow the steps by the required deadlines, you may lose your payment bond rights.

This post provides a high-level overview of the steps that must be taken to perfect a payment bond claim on most Florida state and federal public projects.

Continue Reading How to Make a Payment Bond Claim on a Public Project