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Volume 7 - Number 10 | March 9, 2009

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  EDITOR'S NOTES | Issue 7-10
A pithy adage pronounces, “Nothing ruins the truth like stretching it.” While human nature inclines most of us to a little truth stretching on occasion (particularly when recounting fishing expeditions), the levels of exaggeration attempted by contractors in this week’s first two cases go beyond general acceptance. In the first case, the contractor filed a $64 million claim for incurred damages and “projected additional costs” on an Army Corps of Engineers paving project. The claimed costs didn’t add up and after a lengthy dispute, the contractor was handed a $50 million citation for violating the Contract Disputes and False Claims Acts. It also forfeited its legitimate claims as part of the statutory penalty for the falsified claims.

Another exaggeration of monies owed comes from a contractor that was wrongfully terminated in the early days of a commercial construction project. In its mechanic’s lien, it enumerated costs that far exceeded the amount of work actually performed. Its methodology for cost analysis may have been more successful had it substantially completed the project.

In this week’s final case, the ASBCA instructs a contractor that compliance with safety regulations is the duty of the contractor, not the contracting agency. In this situation, the contractor should have noticed the problem and proactively clarified any questions during the pre-bid site inspection.

If you haven’t yet signed up for the final webinar in WPL Publishing’s four-part series on lost productivity claims, there’s still time. The March 11 webinar, Measuring Productivity for Improved Project Performance, will be presented by William Zollinger with guest panelists William Ibbs, James Adrian and William Schwartzkopf. This panel of experts will present working models and project control techniques to help analyze jobsite productivity. To learn more and to sign up, visit www.projectcontrols.com.
  APPEALS COURT UPHOLDS $50 MILLION PENALTY FOR FRAUDULENT CLAIM
A federal appeals court employs the Contract Disputes Act to whittle a $50 million claim down to nothing. Because the contractor falsified its numbers, it also forfeits an additional $13 million in legitimate claims.
  PERCENTAGE-OF-COMPLETION CALCULATION WAS WILLFUL EXAGGERATION OF LIEN
The decision to pursue a mechanic’s lien using a percentage-of-completion calculation rather than a cost of performance plus mark-ups proves disappointing to the contractor.
  SITE INVESTIGATION SHOULD HAVE ALERTED CONTRACTOR TO SAFETY REQUIREMENTS
Adherence to safety regulations is the responsibility of the contractor, not the contracting government agency, says the ASBCA.