Volume 7 - Number 25 | June 22, 2009
Recent Issues
EDITOR'S NOTES | Issue 7-25
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
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
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.
NUMERICAL SCORING DID NOT INDICATE "MECHANICAL" EVALUATION OF PROPOSAL
The use of numerical scores when evaluating technical proposals does not necessarily indicate a flawed process, says the GAO. The important question is whether the underlying evaluation of relative strengths and weaknesses justifies a price/technical tradeoff.
