Volume 8 - Number 8 | February 22, 2010 - Construction Claims Advisor

Recent Issues

EDITOR'S NOTES | Issue 8-8: When a project owner alters the scope of work, it is customary to ask the contractor for a change order cost proposal. This may occur prior to issuance of the change order, when the owner is merely considering the change. Or, it may occur after the owner has issued a unilateral contract modification. In either event, the preparation of change order cost proposals can be time-consuming and expensive.

Under most construction contracts, change order cost proposals are part of the contractor's administrative overhead. But on federal construction contracts, the expense of these efforts is sometimes recoverable as a direct cost. Recovery is predicated, however, on the proper documentation and allocation of the expenses. A federal contract appeals board recently grappled with this issue when awarding a contractor some - but not all - of its change order cost proposal expenses.

Other cases this week involve payment for design services under a design/build contract and the application of an "anti-SLAPP" statute to a public procurement protest. Careless drafting of the design/build document left the contractor without a contractual right to payment after the owner decided not to build. And the anti-SLAPP statute was intended to protect free speech in public matters, not to shield violators of the competitive bidding laws.

BOARD ADDRESSES RECOVERY OF CHANGE ORDER PROPOSAL COSTS: Contractor costs incurred in preparing change order proposals were allowable items of contract administration. But, the costs had to be properly documented and allocated.

DESIGN SERVICES NOT COMPENSABLE UNDER DESIGN/BUILD DOCUMENT: A design/build agreement lacked sufficient detail to be enforceable. However, the contractor could pursue the equitable remedy of unjust enrichment for the design services it furnished before the project was abandoned.

PROCUREMENT PROTEST NOT SUBJECT TO ANTI-SLAPP LAW: A contractor could challenge a public works contract award without being subject to the state “anti-SLAPP” statute.