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Posted By: John P. Ahlers | Apr 13, 2010 | Topics: Construction News and Notes, Department of Labor & Industries, Government Contracts, Regulatory Administration | View Article

EPA New Lead Paint Requirements

The Environmental Protection Agency has instituted a new requirement for contractors who perform work on buildings constructed before 1978 to reduce exposure to lead paint. All contractors performing renovation, repair, and painting projects that disturb paint in homes, childcare facilities, and schools before built before 1978 must be certified in the new EPA Renovation, Repair, and Painting Rule (RRP) and follow specific work practices to reduce human exposure to lead paint by April 22, 2010. All contractors must be trained certified by April 22, 2010. Landlords, property manager, and their employees are responsible for ensuring compliance with the rule. To locate an EPA-accredited training provider, visit the EPA’s Get Lead Safe website at http://www.epa.gov/opptintr/lead/pubs/renovation.htm or contact the National Lead Information Center at 1-800-425-5323.



Posted By: John P. Ahlers | Apr 12, 2010 | Topics: Construction News and Notes, Government Contracts | View Article

Sound Transit Takes on Obayashi at the Beacon Hill Tunnel

Sound Transit accuses Japanese contractor Obayashi Corp. of leaving nine voids in the two-mile Beacon Hill tunnel that was built as part of Sound Transit’s regional Light Rail construction. Sound Transit has engaged another contractor to fill the voids and has made a claim against Obayashi for $1.6 million. Obayashi disputes that it has any liability for the alleged voids.

To read the article click here



Posted By: John P. Ahlers | Jan 13, 2010 | Topics: Government Contracts | View Article

The Government Owes a Duty of Good Faith in Exercising its Contract Termination Rights:

Moreland Corp. ("Moreland") contracted with the Department of Veterans Affairs ("V.A.") to design and construct a two-story medical clinic in Las Vegas, Nevada under a fifteen (15) year lease-back agreement. The V.A. took occupancy of the building in 1997. Five years later, the V.A. terminated the lease for default, claiming the building was unsafe for occupancy and that Moreland had failed to repair structural defects in a timely manner. The V.A. identified three (3) problems at the time of the default: (1) missing gusset plate welds on the second floor lateral bracing; (2) exterior cracking on pre-cast panels and on architectural covers around the steel columns; and (3) under design of the structural steel columns. The V.A. contended the building was not in compliance with building codes. Regardless, the V.A. continued to occupy the building and pay rent for nine (9) months after the default termination. Thereafter, the V.A. moved to another facility, a year later Moreland lost the building in foreclosure. In its wrongful termination action, Moreland sought to recover more than $17 million for unpaid rent on the balance of the lease and $20 million for the asset value of the building lost through foreclosure. The V.A.'s Contracting Officer maintained that the default termination, if improper, converted to a termination for convenience and thus denied Moreland's claim for unpaid rent.

The Court of Federal Claims reviewed the default termination and found in favor of the contractor on its claim for the balance of the rent, plus interest. The court ruled that the default termination by the government was improper. It concluded the defects were largely cosmetic and easily could have been repaired if the V.A. had permitted Moreland to do so. It held that the building was safe to occupy during the repairs and the V.A.'s refusal to allow repairs breached the lease. Terming the government's conduct in its administration of the lease as "deplorable by any measure," the court held that even if the contractor had been in technical default, the V.A.'s bad faith compels the court to overturn the termination for default." The court invited Moreland to apply for attorneys' fees under the Equal Access to Justice Act. The V.A. breached it covenant of good faith and fair dealing – implied into every contract, including Government contracts." The court found two instances of bad faith by the V.A., the first was when the Contracting Officer denied two claims for added labor costs during construction, even though he believed they were meritorious and was prepared to grant nearly $300,000 in changes for them. The Contracting Officer denied the claims on advice of the V.A.'s legal counsel, "so the agency would have greater leverage in negotiating other claims."

Noting that government contractors are required to submit accurate and complete claims, the court held that the government has a reciprocal obligation to act in good faith. The court held that the outright denial of meritorious claims to obtain bargaining advantage over a contractor "will not be condoned by this Court" The second act of bad faith related to the V.A's need to install an auxiliary HVAC system on the roof, not part of the contract specifications. The V.A. demanded that Moreland conduct a structural loading study at no cost to the V.A. and justified its request with a two page report in which a V.A. engineer claimed there were many structural deficiencies in the building. Moreland declined to perform the study after consulting with the project's architect and engineer.

Finally, the court found that the V.A. report was used as a pretext to shift the cost of the structural study to Moreland and gave no credence to it because of the V.A.'s ulterior motive in having it prepared. The court awarded Moreland $17,673,850, plus interest and $438,188 in attorneys' fees under the Equal Access to Justice Act.

Moreland Corp. v. United States, 76 Fed.Cl. 268 (2007)



Posted By: John P. Ahlers | Oct 08, 2009 | Topics: Employment, Government Contracts, Regulatory Administration | View Article

Employment Verification Form I-9 Extended To August 31, 2012

The U.S. Citizenship and Immigration Services (USCIS) announced that the Office of Management and Budget has extended its approval of Form I-9 (Employment Eligibility Verification) to August 31, 2012. Accordingly, USCIS has amended the form to reflect a new revision date of August 7, 2009.

Employers may use the Form I-9 with the revision date of either August 7, 2009 or February 2, 2009. The revision dates are located on the bottom right-hand portion of the form. For more information on USCIS and its programs, or to obtain Form I-9 and the Handbook for Employers visit www.USCIS.gov/I-9



Posted By: John P. Ahlers | Oct 05, 2009 | Topics: Construction News and Notes, Employment, Government Contracts, Regulatory Administration | View Article

Court Rules E-Verify Will Take Effect On September 8, 2009

The U.S. District Court for the District of Maryland upheld the legality of a federal regulation that will require many federal government contractors to use the E-Verify system to verify the employment eligibility of new hires, as well as certain existing employees. The regulation requires a new E-Verify clause to be included in certain federal contracts awarded or solicited on or after September 8, 2009. In a departure from the voluntary E-Verify, employers that are a party to a contract (or subcontract) containing this E-Verify clause will be required to use E-Verify to confirm the employment eligibility of all new hires and all employees who perform work directly under the contract.

Chamber of Commerce of the United States of America v. Janet Napolitano, Civil Action No. AW-08-3444 (D. Maryland M.D.) See Regulation 73 Fed. Reg. 67,651 (November 14, 2008).



Posted By: John P. Ahlers | Aug 17, 2009 | Topics: Change Orders, Construction News and Notes, Delay Claims, Government Contracts, Settlements/Releases | View Article

Bell BCI Co. v. United States - Release of Cumulative Impact Claims

Bell involved a construction contract under which the government issued an extensive series of change orders. Following the first of those change orders, the parties executed Modification 93, which stated in part the increased contract amount set forth in the Modification represented "full and equitable adjustment for the remaining direct and indirect costs of the [changed work] . . . and full and equitable adjustment for all delays resulting from any and all Government changes transmitted to the Contractor on or before August 31, 2000." Modification 93 also included the following "release" language: "the Modification agreed to herein is a fair and equitable adjustment for the Contractor's direct and indirect costs. This Modification provides full compensation for the changed work, including both Contract costs and Contract time. The Contractor hereby releases the Government, including all liability under the Contract for further equitable adjustment attributable to the Modification."



Posted By: John P. Ahlers | Aug 13, 2009 | Topics: Construction News and Notes, Government Contracts, Recent Legislation | View Article

Federal Government Employment Eligibility and Verification Regulation

On June 6, 2008, the FAR council released a new provision requiring the use of the Department of Homeland Security's Electronic Employment Eligibility Verification System ("E-Verifiy"). The contractor performing construction work in excess of $100,000, a "covered contract" must enroll in E-Verify within thirty (30) calendar days of contract award and start using E-Verify within ninety (90) calendar days of enrollment to verify the employment eligibility of a new employee.

Posted By: John P. Ahlers | Aug 12, 2009 | Topics: Construction News and Notes, Government Contracts, Recent Legislation | View Article

American Recovery & Investment Act, Federal Work Requires Familiarity with Federal Acquisition Regulations (FARs) and Business and Ethics Compliance. New AGC Federal Government Contractor Ethics And Compliance Program, Tool Kit & Guidance Publication

The interest in bidding on federal work, considering the new American Recovery and Reinvestment Act (Stimulus Bill) has attracted many new bidders to federal procurements. Federal contractors need to take note of the recent Business and Ethics compliance provisions of the Federal Acquisition Regulations. Any contractor receiving a government contract in excess of $5 million with a duration of 120 or more days shall:

  • Adopt a written code of business ethics and conduct and make its "available to each employee during the covered contract;
  • Exercise "due diligence" to prevent and detect criminal conduct;
  • Promote an organizational culture that encourages ethical conduct and compliance;
  • Make a timely written disclosure to the agency inspector general with a copy to the contracting officer whenever the contractor as "credible evidence: of a violation of the Civil False Claims Act or a federal criminal law involving fraud, conflict of interest, bribery or gratuity violations.

Every contractor (except for small business) must establish a business ethics and awareness program and an internal control system within 90 days of contract award. The contractor's system and program shall include:

  • Reasonable steps to communicate standards, procedures and provide training;
  • An internal control system that includes standards and procedures to facilitate timely discovery of improper conduct, periodic assessments of criminal conduct, reporting mechanisms such as a hotline and disciplinary action for improper conduct for failing to prevent or detect improper conduct;
  • Disclosure of improper conduct to the federal government. Not only must the contractor comply with these business and ethics provisions, these provisions must be included in subcontracts in purchase orders in excess of $5 million and 120 day's duration.

In addition, the contractor must verify subcontractor and supplier compliance. The Associated General Contractor's (AGC) Federal Government Contractor Ethics And Compliance Programs, tool kit and guidance publication includes generic ethics and compliance programs. This sample program assists contractors to navigate these complex and new regulatory waters.



Posted By: Brett Hill | Jul 30, 2008 | Topics: Claims, Government Contracts, Liens/Bond Claims | View Article

Court of Appeals rules that employee trust funds cannot recover against payment bond and retainage

In an unpublished opinion, the Division II Court of Appeals ruled this month that union managed employee benefit trust funds could not recover against a general contractor's payment bond and against an owner's retained percentage for unpaid trust fund contributions. In Leo Finnegan Construction Company v. Northwest Plumbing and Pipefitting Industry, a number of union managed employee benefit trust funds ("Trusts") filed lien notices against the general contractor's, Finnegan, performance bond and retainage held by the City of Tacoma on the Tacoma Police Department project. Finnegan had subcontracted with Chapman Mechanical. Chapman was required under a collective bargaining agreement between it and the Plumbers and Pipefitters Local 26 to pay monthly employee benefit contributions to the Trusts. Chapman failed to pay the required contributions and the Trusts recorded liens against the payment bond and retainage.



Posted By: Ryan Sternoff | Jun 26, 2008 | Topics: Construction Bidding, Government Contracts | View Article

Redacted GAO Decision on Boeing Protest

Further to the June 18, 2008 post, GAO Sustains Boeing Bid Protest of Massive Air Force Contract, the United States Government Accountability Office has released the full, redacted, decision on the Boeing protest, which can be found here.   

While this was certainly the World Series of bid protests, as noted in the previous posting, the process undertaken by Boeing and its team of attorneys is the same required by construction contractors in their protests of most federal procurements.



Posted By: Ryan Sternoff | Jun 18, 2008 | Topics: Construction Bidding, Government Contracts | View Article

GAO Sustains Boeing Bid Protest of Massive Air Force Contract

Today, the United States Government Accountability Office ("GAO") upheld the bid protest of The Boeing Company ("Boeing") of the award of a $35 billion tanker contract to Northrop Grumman Corp. and European Aeronautic Defense and Space Co ("EADS").   The award of the massive government contract to the group which includes European based EADS had been widely criticized by lawmakers and patriots alike. 

Posted By: Brett Hill | May 07, 2008 | Topics: Claims, Government Contracts | View Article

City's Pre-Suit Claim Filing Ordinance Not Applicable to GC's Contract Claim

This case (Matia Contractors, Inc. v. City of Bellingham, Court of Appeals, Div I) addressed the question of whether a general contractor who is filing a lawsuit against a public entity for breach of contract is required to give notice to the public entity prior to filing its lawsuit.  Matia was the general contractor on the Joe Martin Field project, Bellingham's municipal baseball stadium.  Bellingham terminated Matia's contract and Matia sued. 

Bellingham argued that Matia's lawsuit was barred because Matia did not notify the City before it filed its lawsuit as required by a City ordinance and state statute.  Cities can enact ordinances providing for claim filing requirements but they cannot be more restrictive than the authorizing state statute.  The authorizing state statute, RCW 4.96.010, provides that the pre-lawsuit claim filing requirements apply only to tort claims (i.e. personal injury, negligence, etc.).  Therefore, because Matia's claim was for breach of contract, and not tort, it was not required to comply with the pre-lawsuit claim filing requirements of the City and the state statute. 

Although the Division One Court of Appeals' ruling in this case may seem self apparent, the Division Three Court of Appeals reached the opposite result in a case decided in 2004. 



Posted By: Brett Hill | May 07, 2008 | Topics: Claims, Damages, Delay Claims, Government Contracts | View Article

Idaho Court denies GC's claim against project engineer

In Beco Constr. v. J-U-B Engineers, Inc., the Idaho Supreme Court denied a general contractor's claim against the project engineer on a public project located in Pocatello.  The general had alleged that the engineer's improper conduct and delays resulted in delays to the general's work on the project and liquidated damages assessed against the general contractor.  The general had alleged that the engineer intentionally interfered with the general's contract with the owner.  The Supreme Court denied the general's intentional interference claim because the engineer, as an agent of the owner, was acting on behalf of the owner. 

Posted By: John P. Ahlers | Apr 07, 2008 | Topics: Claims, Government Contracts | View Article

Government Contractor Collects Consultant’s Fees incurred in Preparing a Request for Equitable Adjustment

In government contracting, claim preparation costs (attorneys' fees and consultant costs) are generally not recoverable by the contractor when pursuing a claim. On the other hand, if  consultant costs are incurred in preparing a "request for equitable adjustment,"  the consultant costs and attorneys' fees may be recoverable.  It depends on the somewhat nebulous distinction between an administrative cost and a cost incurred incident to prosecution of a contract claim.  As long as the consulting costs and attorneys' fees are incurred in the preparing of a request for equitable adjustment, for the purpose of seeking a negotiated resolution of pending issues, the costs are allowable.  If the contractors' "genuine purpose" in incurring the costs was to further the negotiation process, it is a contract administrative cost allowable under FAR 31.205‑33.  On the other hand, however, if the underlying purpose was to promote the prosecution of a Contract Disputes Act (CDA) claim, the costs are not allowable.  Under FAR 31.205‑33(b), the cost of legal and consulting services are generally allowable "when reasonable in relation to the service rendered."  "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business."  FAR 31.201‑3.