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EDITOR'S NOTES | Issue 7-26 (in: News) Jun 29, 2009: When a construction contract calls for the testing and approval of a material sample, the contractor faces a possible obstacle. The contractor cannot proceed until it has established compliance with the specifications. But, the contractor is not the only party presented with risk in this situation.

In the first case reported this week, a project owner’s engineer became frustrated after a paving contractor’s hot-mix samples failed to meet specifications four times in a row. Based on an unwritten “rule,” the engineer ordered a shutdown of the contractor’s batching plant and a redesign of the mix formula. With fixed plant costs of $27,000 a day, enforcement of this unwritten rule could prove expensive for the owner.

Other cases this week involve a project labor agreement and a subcontractor’s proof of damages for breach of contract. A federal appeals court was asked whether a prime contractor and subcontractor could be held responsible for a lower-tier sub’s failure to make contributions to union benefit trust funds. And, an Ohio court considered whether a subcontractor could recover for a prime contractor’s breach without proving the cost savings realized by the sub when it was relieved of further performance obligations by the breach.

HIGHWAY CONTRACTOR RECOVERS DELAY DAMAGES AFTER WRONGFUL REJECTION OF MIX FORMULA (in: Recent Court Opinions) Jun 29, 2009: A state engineer enforces an unwritten rule and orders a highway contractor to shut down its asphalt batching plant after a fourth test batch fails to meet specifications. The shutdown is not justified, rules an Ohio court.

PRIME AND SUB NOT LIABLE FOR BENEFIT CONTRIBUTIONS OF LOWER-TIER SUB (in: Recent Court Opinions) Jun 29, 2009: A project labor agreement obligates employers to contribute to union benefit plans for employees. The plain meaning of “employees” is one’s own employees, says a federal appeals court. A prime contractor and subcontractor are not liable for a lower-tier subcontractor’s failure to make contributions.

SUB PROVED BREACH BUT NOT COST OF COMPLETION (in: Recent Court Opinions) Jun 29, 2009: Even though a subcontractor shows that a prime contractor breached the payment terms of the subcontract, the sub cannot recover damages for breach without proving the cost of completion.

EDITOR'S NOTES | Issue 7-25 (in: News) Jun 22, 2009: The deletion of work from a construction contract poses unique problems. The project owner is entitled to a credit - a reduction of the contract price reflecting the work the contractor no longer has to perform. But, how is that credit calculated? What happens if the contractor has already started that work? And, what happens if the work has been subcontracted to another company?

This week's issue covers two cases involving deleted work. In one, the owner deleted work the contractor thought it had subcontracted out. The owner took a credit against the prime contract price. The contractor attempted to take a credit against the subcontract price, only to discover that the subcontract did not cover the deleted work. The prime contractor may be left holding the bag.

The other case involves the cost of labor and materials needed for deleted work. This is a recurring challenge with deductive change orders. How does one put a price on work that was never performed?

Also this week, we report on a price/technical tradeoff decision in which a disappointed offeror argued that a numerical scoring system was a flawed evaluation process.

BOARD ADDRESSES DELETED LABOR AND MATERIAL COSTS (in: Recent Court Opinions) Jun 22, 2009: The government deletes a significant portion of a contractor's work, but the parties cannot agree on how much it would have cost the contractor to perform that work. The Armed Services Board is asked to deal with conflicting estimates, as well as special order material that could not be returned to the supplier.

DELETED WORK WAS NOT INCLUDED IN SUBCONTRACT (in: Recent Court Opinions) Jun 22, 2009: Neither the subcontractor's price proposal nor the prime contractor's purchase order reference a certain section of the specifications. When the owner deletes that work from the prime contract, a Texas court must determine whether the prime can take a credit against the subcontract price.