Construction Law Blog
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Since December 2013, the tunnel boring machine ("TBM") known as "Bertha,"
built by of Hitachi Zosen Corp. of Osaka, has been stuck underground Seattle's waterfront about 1,000' from where it began. It (she) is now expected to resume digging at the end of March 2015, after crews fix the damage to its seals and bearings. Seattle Tunnel Partners ("STP"), the general contractor for the project, is digging a concrete-piling-lined pit in front of the stuck TBM. STP will then tunnel its way through the pilings, giving workers access to Bertha's cutter head. Next, STP is expected to remove the cutter head and repair whatever needs to be repaired. This is no simple task: at 57.5' in diameter, Bertha is the world's largest TBM. Since the machine is stuck underground, STP does not presently know the extent of damage. There is simply no telling what will happen once Bertha is "unearthed." In a recent radio interview, Washington's Transportation Secretary Lynn Peterson acknowledged that there was a "small possibility" that the tunnel will never get built. The only scenario in which that might happen, according to Ms. Peterson, is if STP and WSDOT discover that "the machine is not going to actually be fixable."
One of the primary benefits of conducting business through a corporation or limited liability company is the limitation of personal liability. Shareholders or members are not generally liable for the debts of the entities that they own. The corporate structure, however, can be abused by shareholders in order to defraud creditors from recovering on debts owed by the corporation. As you will read below, shareholders may transfer a corporation's assets into the hands of another of the shareholder's business entities to shield those assets from creditors.
The Washington State Department of Transportation ("WSDOT") is moving forward with its proposal to exclude non-minority women-owned businesses from Washington's Disadvantaged Business Enterprise ("DBE") program goals for federally-funded contracts. In early March 2014, WSDOT submitted its proposal to the U.S. Department of Transportation's Federal Highway Administration ("FHWA"). If approved by FHWA, this significant change will go into effect in Washington for the rest of federal fiscal year (FFY) 2014 and remain in place through FFY 2017. WSDOT's proposal was originally reported on the Ahlers & Cressman blog on January 9, 2014. Read our original article here.
Historically, a major factor preventing small businesses from participating in the government contracts was “bundling.” Bundling occurs when two or more contract requirements, previously provided or performed under smaller contracts, are consolidated into a solicitation for a single contract that is likely to be unsuitable for award to a small business. Attempting to increase efficiency and decrease administrative costs, Congress passed the Federal Acquisition Streamlining Act in 1994, encouraging the consolidation of certain contracts. As a result, between 1992 and 2001, 44.5% of all reported prime contract dollars were in bundled contracts.
Washington Supreme Court Overturns 30-Year Law Protecting General Contractors From Trust Fund Liens on Public Works Projects
Under Washington’s Public Works Statutes (RCW 39.08 and 60.28), general contractors who perform public works are legally required to post payment bonds and have retainage withheld from progress payments. The purpose of these laws is to protect the public entity (owner) from subcontractor and supplier claims against the public project, while preserving the interests of mechanic’s lien rights (subcontractors and suppliers are provided bond claim and retainage rights, but have no lien rights in the public property).
A problem that often arises with respect to change orders concerns the nature and amounts of compensation that the change order payment is intended to provide. While the contract documents will commonly set forth specific methods for determining the direct cost of extra work, the contract documents may not address whether the issue of impact costs is to be included in the change order or not. It is important to ascertain if the extra work provisions in the contract provides for such coverage, especially in preparing an impact claim after the extra work price has been accepted. Generally, the contractor should make a careful review of the contract documents and follow the methods set forth in the contract for change order pricing.
Washington State Supreme Court Justice James Johnson is retiring at the end of this month, which creates an opening on this State's highest bench. Under the law, Governor Jay Inslee will appoint a jurist to fill that vacancy. This firm is very proud and excited that our good friend and partner Douglas R. Roach is being considered for that exalted and honored position. Douglas has met with the members of the Governor's staff tasked with finding a replacement for Justice Johnson.
A differing site condition is a condition other than weather, climate, or other act of God, discovered on or affecting a construction site that differs in some material respect from what was reasonably anticipated.[i] The conditions must be physical; changes in political or economic conditions, or labor issues are not differing site conditions. It may surprise some contractors that in the absence of a contract clause providing otherwise, the risk of any cost or difficulty associated with unexpected subsurface conditions are generally borne by the construction contractor.
Barely a day goes by without a major newspaper article speculating on the shutdown of Big Bertha, the tunnel boring machine presently stuck underground only 1,000 feet into the two-mile long SR 99 Alaskan Way Viaduct Replacement Project. It now appears that Big Bertha will be inactive until September 2014. The tunneling crews are digging a 120-foot deep pit to fix the bearings and seals on the cutter head of Big Bertha. In the meantime, much of the work on the project has come to a halt. Before Big Bertha can be rescued, dozens of boring probes need to be made to see if ancient Native American artifacts or other archaeological items exist in the area where the 120-foot deep pit is being excavated.
Discussion of Changed Work Results in Waiver of Contract's Written Change Order Requirements - Contractor Can Lien for Extra Work
On March 10, 2014, Division I of the Washington Court of Appeals held that a contract's written change order requirements had been mutually waived when a contractor and owner encountered issues that necessitated changes to plans and specifications, then usually (but not always) discussed the changes and associated costs, and then the contractor performed the extra work. The Court of Appeals further held that recovery for the extra work where the parties had not agreed on price would be based upon the equitable doctrine of quantum meruit, and that the amounts recovered for extra work were subject to a RCW Ch. 60.04 lien.