Volume 7 - Number 1 | January 5, 2009
Recent Issues
EDITOR'S NOTES | Volume 7 - Number 1
In federal contracting, only a contracting officer is legally authorized to make constructive changes to a contract. Similar rules also apply to municipal and private contracts. Contractors who take direction from individuals who appear to have authority but lack an official contracting warrant, may or may not receive payment for extra work performed even when acting in good faith. Such is the situation with two of this week’s cases. In the first, the end user on a federal project requested additional work after the contractor signed the claims release form issued by the GSA. Neither the contracting agency nor the end user was held responsible for the extra payment. In the second, a mayor made a similar request on a municipal drilling project. The mayor lacked authority to modify the contract and as a result, the municipality’s insurer would not defend it against a breach of contract claim for non-payment of that work.
Lastly, an alternative dispute resolution clause need not be explicitly included in a subcontract. Incorporation of the prime contract’s general conditions document, which includes an ADR clause, is sufficient to trigger mediation proceedings on the subcontract.
ARMY EMPLOYEE LACKED AUTHORITY TO MODIFY GSA CONTRACT
A contractor is twice disappointed in its appeal for payment for additional work on a federal project. It cannot argue against a typo on its signed claims release. And, because it admits to performing the non-contracted work at the request of the end-user, the contracting agency is not liable for the payment.
CLAIM FOR EXTRA WORK NOT COVERED BY OWNER’S INSURANCE
A municipality’s insurer is not required to provide a defense against a breach of contract claim, rules a state high court. The policy specifically excludes defense liability for breach of contract claims.
SUBCONTRACT INCORPORATED ADR PROCEDURES FROM PRIME CONTRACT
Alternative dispute resolution procedures are incorporated into a subcontract via inclusion of an AIA general conditions document from the prime contract.
