Volume 8 - Number 1 | January 4, 2010 - Construction Claims Advisor

Recent Issues

EDITOR'S NOTES | Issue 8-1: An outstanding contractor claim at the time of contract completion raises some difficult issues. The dispute may, under the terms of the contract, entitle the project owner to continue withholding funds. Or, the project owner may want to make final payment and close the contract out. Either way, the contractor's acceptance of final payment will generally operate as a waiver of existing claims and a bar to future claims.

In a recent case, a contractor attempted to reserve an existing differing site condition claim while accepting and depositing the owner's check for the balance of the original contract amount. The contractor argued, to no avail, that this had not really been "final payment" because the reservation of right had put the owner on notice that the contractor expected additional compensation.

Other cases this week involve the negotiated procurement of a design/build contract and a homeowner's guarantee of a cabinet allowance in a residential construction contract. The procuring agency was allowed to downgrade an offeror's proposal rating without ever raising the shortcomings during discussions. And, the homeowner inadvertently guaranteed payment to a cabinet supplier even though a stipulated amount had been included in the price of the home.

CONTRACTOR COULD NOT RESERVE CLAIM WHILE ACCEPTING FINAL PAYMENT: When accepting final payment, a contractor, under the terms of the construction contract, waived and released a pre-existing claim. The contractor’s effort to reserve its claim rights was an impermissible attempt to unilaterally alter the terms of the contract.

PROPOSAL DOWNGRADED WITHOUT ANY MENTION DURING DISCUSSIONS: Agency evaluators conducted meaningful discussions even though they did not mention the offeror’s limited relevant experience. There were no deficiencies or weaknesses in the proposal itself, just a lack of experience.

OWNER GUARANTEED CONTRACTOR’S PAYMENT OF ALLOWANCE: An owner inadvertently guaranteed a homebuilder’s payment of a stipulated allowance to a cabinet supplier. But, the supplier could not maintain a lien on the home to the extent the owner had paid the builder for the cabinetry.