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Volume 5 - Number 42 | October 22, 2007

EDITOR'S NOTES
In 1986, the U.S. Supreme Court ruled, “Arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986). This week’s first case, which mentions the above citation, extends the question of arbitrability to third parties—in this case, a contractor’s performance bond surety. If the contract between the builder and surety does not require arbitration but includes, by reference, the contract between builder and owner, which does require arbitration for disputes, can the owner compel the surety to arbitrate? In a legal culture where arbitration is often the favored method of dispute resolution, the topic is worthy of ongoing discussions.

In the next case, a state legislature leaves several questions unanswered after it adds some exceptions to its procurement code. And finally, the ASBCA reviews a case in which it must determine if consultant and attorney fees are permissible for contract administration costs.


Expert Witness on Fru-Con Case Joins Next Week's Audioconference
This week's summary of the ASBCA ruling on the appeal of Fru-Con Construction Corp. places a reality check on those who engage professional services with the expectations of recovery on a construction claim. Expert witness Stu Ockman testified for the government in the recent case as a "construction expert with specialized knowledge of construction means and methods, estimating and cost engineering" (as opposed to a cost accounting). Ockman is one of the three panelists in next week's audioconference on "Construction Delay - How Opposing Experts Can Come to Different Conclusions from the Same Set of Facts: Honest Mistake, System Failure or Deceptive Practice?" Here's a great opportunity to ask your questions on this and other topics facing those involved in schedule analysis and delay claims.

SURETY NOT REQUIRED TO ARBITRATE DESPITE CLAUSE IN CONSTRUCTION CONTRACT
A school district and contractor must arbitrate disputes related to a school expansion and remodel, according to the terms of their contract. However, the district cannot compel the contractor’s performance bond surety to participate.

PENNSYLVANIA HIGH COURT ALLOWS COMPETITIVE NEGOTIATION FOR CONSTRUCTION TRADE CONTRACTS
When sealed bidding is neither practical nor advantageous to a Pennsylvania state agency, the state’s legislature has OKed proceeding with a more open procurement approach. However, the procurement code leaves many questions that the legislature will need to revisit.

CONTRACTOR RECOVERS TWELVE PERCENT OF $734K CONSULTANT AND ATTORNEY BILL AS COST OF CONTRACT ADMINISTRATION RELATED TO CLAIMS RESOLUTION
Consultant and attorney fees are allowable expenses when billing for contract administration, rules the ASBCA. However, meticulous record keeping is necessary to prove such costs.

BRIEFLY NOTED
Here’s a look at what’s happening in the industry.