33rd ANNUAL SCHOOL - perkinscoie.com

PowerPoint Presentation| © 2021 Perkins Coie LLP2
2021 Legislative and Case Law Update – Mica Klein 9:10 - 9:35
The 2021 Reauthorization of RCW 39.10: Updates on What Changed – Andrew Greene, Janice Zahn (Port of Seattle), and Scott Middleton (MCAWW)
9:40 - 10:10
10:15 - 10:45
9:00 - 9:10
9:10 - 9:35
The 2021 Reauthorization of RCW 39.10: Updates on What Changed – Andrew Greene, Janice Zahn (Port of Seattle), and Scott Middleton (MCAWW)
9:40 - 10:10
10:15 - 10:45
Agenda
The “New” COVID-19 Requirements: What You Need to Know – Andrew Greene and Jon Goddard
11:00 - 11:30
The “New” AIA Documents: A Refresher – Graehm Wallace and Michelle Maley
11:30 - 12:00
Break 12:00 - 12:15
Contractor Requests for Time and Money (Including for COVID-19!) in a Pandemic Influenced Market – Graehm Wallace and Geoff Palachuk
12:15 - 12:45
Q&A and Closing Thoughts – Dick Prentke 12:45 - 1:00
The “New” COVID-19 Requirements: What You Need to Know – Andrew Greene and Jon Goddard
11:00 - 11:30
The “New” AIA Documents: A Refresher – Graehm Wallace and Michelle Maley
11:30 - 12:00
12:00 - 12:15
Contractor Requests for Time and Money (Including for COVID-19!) in a Pandemic Influenced Market – Graehm Wallace and Geoff Palachuk
12:15 - 12:45
12:45 - 1:00
2021 LEGISLATIVE AND CASE LAW UPDATE 33RD ANNUAL SCHOOL CONSTRUCTION WORKSHOP
OCTOBER 29, 2021 | PRESENTED BY: MICA KLEIN
NEW LEGISLATION
• Amendments to RCW 39.30.060 correct technical error
• Listing requirements do not apply to design-build, GC/CM, or job order contracts
• CPARB must report on fairness and transparency of subcontractor listing policies
On a prime contract that is expected to cost $1,000,000 or more, bidders must submit:
• a listing of HVAC, plumbing, and electrical subcontractors within one hour of the published bid submittal time, OR AND
• a listing of the structural steel installation and rebar installation subcontractors within 48 hours of the published bid submittal time
| © 2021 Perkins Coie LLP7
• Amendments intended to expand public contracting opportunities for WMBE by increasing regulatory oversight and accountability of the OMWBE
• Audit and Review unit established
• OMWBE to annually identify state agencies and educational institutions with low levels of participation
| © 2021 Perkins Coie LLP
ALTERNATIVE PUBLIC WORKS REAUTHORIZED
COVID DELAY COSTS
• Proposed amendments to “no damages for delay” statute (RCW 4.24.360)
• Amendments would prohibit public works contracts from waiving rights of a contractor to damages or equitable adjustment arising out of a delay caused by the COVID- 19 pandemic
“Any clause in a public works contract which purports to waive, release, or extinguish the rights
of a contractor, subcontractor, or supplier to damages or an equitable adjustment arising out of a delay in performance which delay is caused by
the COVID-19 pandemic emergency proclamations is against public policy and is void and
unenforceable.”
CORRECTION TO CM RULES
• Proposed bill would confirm low bid requirements do not apply to personal service contracts for construction management, value engineering, constructability review, and building commissioning services.
“When, in the opinion of the board of directors of any school district, the cost of any furniture,
supplies, equipment, building, improvements, or repairs, (or) other construction work by a contractor who meets the criteria in RCW
39.04.350, or other purchases, except books, will equal or exceed the threshold levels specified in subsections (2) and (4) of this section, complete
plans and specifications for such work or purchases shall be prepared . . .”
CASE LAW UPDATES
MIXED-USE DISPUTE
payment • Mixed verdict, net judgment
to GC totaling $9.2M • Court of Appeals held jury
instruction was misleading and reversed for new trial
• Supreme Court reversed
“AP has the burden to prove that Lake Hills provided the plans and specifications for an area of work at issue, that AP followed those plans and specifications, and that the [construction] defect resulted from defects in the plans or specifications. If you find from your consideration of all the evidence that this affirmative defense has been proved for a particular area, then your verdict should be for AP as to that area.”
GC/CM BID PROTEST DISPUTE
• Preliminary injunction denied in Superior Court
• Appeal to Washington Court of Appeals (Division I)
• Appeal dismissed “. . . [O]ur Legislature has created [CPARB] to advise the legislature on policies related to public works delivery methods like RCW 39.10.390. Its membership includes many stakeholders in public contracting . . . stakeholders impacted by the GC/CM delivery method, have a clear avenue to pursue questions about RCW 39.10.390 through their advisory role.”
AGC of Washington, et. al., Appellants v. Jay Inslee, et. al., Respondents
PREVAILING WAGE STATUTE
• Senate Bill 5493: prevailing wage rates solely based on CBAs
• AGC and other contractor organizations challenged law
• Court of Appeals (Division II) held new RCW 39.12.015(3) unconstitutional
TERMINATION DISPUTE
• Superior Court converted to termination for convenience and awarded damages
• Court of Appeals (Division I) largely affirmed
• Supreme Court affirmed in part, holding that City was not entitled to termination for default
WSDOT PROJECT DISPUTE
• Earthwork sub sued, claiming $12M in damages
• GC counterclaimed, alleging earthwork sub caused delays
• Split result following bench trial • Following cross appeals, Court
of Appeals (Division I) affirmed, confirming enforceability of notice and claim provisions
DEVELOPER DISPUTE
• Concrete and steel sub brought suit against developers for non-payment
• Developers counterclaimed for fraud, other claims
• Arbitrator awarded sub $5.2M • Superior Court and Court of
Appeals affirmed and awarded attorneys’ fees
THANK YOU
THE 2021 REAUTHORIZATION OF RCW 39.10: UPDATES ON WHAT CHANGED
33RD ANNUAL SCHOOL CONSTRUCTION WORKSHOP
OCTOBER 29, 2021 | PRESENTED BY: ANDREW GREENE JANICE ZAHN, PORT OF SEATTLE SCOTT MIDDLETON, MCAWW
• Two new CPARB positions: one representing diverse business community and one representative from a transit agency
• Consolidation of existing provisions regarding heavy civil GC/CM procurement into one new section
• New WSU pilot program for small design-build projects of less than $2mil • Requirement for project approval if public agency elects to use design-build for
pre-engineered metal buildings • Provisions to improve opportunities for minority, women, and veteran-owned
businesses and small businesses; including a work plan for best practices guidelines
• Project Review Committee must represent a balance of public and private sector representatives with at least one member representing the interests of disadvantaged business enterprises
High Level Summary of RCW 39.10 Changes
• The public body is encouraged to post the design-build opportunity in additional areas, such as websites for business associations or the office of minority and women's business enterprises, to further publicize the opportunity for qualified design-build teams.
• Evaluation factors must include a proposer's inclusion plan for small business entities and disadvantaged business enterprises as subconsultants, subcontractors, and suppliers for the project, to the extent permitted by law.
• Evaluation factors may also include, but not be limited to, the technical approach ((, design concept, and the outreach plan to include small business entities and disadvantaged business enterprises as subconsultants, subcontractors, and suppliers for the project)) or the design concept.
Changes related to Design Build – RCW 39.10.330
• Any contract must require the firm awarded the contract to track and report to the public body and to the office of minority and women's business enterprises its utilization of the office of minority and women's business enterprises certified businesses and veteran certified businesses.
• A public body shall establish a committee, including a member with knowledge and experience in state and federal laws, rules, and best practices concerning public contracting for minority, women, and veteran-owned businesses and small businesses, to evaluate the proposals.
Changes related to Design Build – RCW 39.10.330
• “Budget Contingencies” and “Risk Contingency” now defined
• These contingency types have been interpreted and used inconsistently in public works construction - For example, “risk contingency” (contractor’s contingency) has been used to
cover overall budget shortfalls
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• Reduces time for public owners to process and respond to requests for equitable adjustments, change orders and claims from 60 days to 30 days
• If 30-day period expires without a response from the public owner, the EA, change order, or claim is not “deemed denied” so the parties do not necessarily need to move on to dispute resolution process.
GCCM-Related Changes
FEE AND OTHER PRICE-RELATED FACTORS IN SELECTION OF GCCM – RCW 39.10.360
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• While statute still requires evaluation of a fee, it now gives public owners the option to request other price-related factors for evaluation purposes - Specified general conditions (SGCs) are no longer a requirement - Fee and SGCs are still required in alternative subcontractor selection process
• RFP must define any price-related factors used for evaluation purposes
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• Authorized for all trades with a $3M anticipated subcontract value • PRC approval to use process required for non-certified public owners • Notice of intent to use process must be published in same publication as
call for proposals • RFP must include definitions of what should be included as a specified
general condition and what should be included as the fee (matrix) • Written final determination must reasonably address comments received • RFP must describe how interviews, if used, will be evaluated • Cumulative scoring of nonprice and price factors is required
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• RCW 39.10.380(1) now requires individual bid packages to be prepared with trades separated in a manner consistent with industry practice
• Bundling of trades in a manner inconsistent with industry practice is prohibited without justification and specific approval by public owner
• More work being done on this topic in best practices
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• RCW 39.10.380(6) now allows more flexibility for GCCMs to negotiate with the lowest responsible and responsive bidder on an adjustment to the low bid or proposal price based on agreed changes to plans and specs when: - All responsive bids and proposal prices exceed published bid package
estimates; and - The apparent low responsive bid does not exceed the published bid package
estimate by more than 10 percent
• Publishing bid package estimates is a new statutory requirement
• "Coefficient" means the job order contractor's competitively bid numerical factor applied to the public body's prices as published in the unit price book.
• "Job order contract" means a contract in which the contractor agrees to a fixed period, indefinite quantity delivery order contract which provides for the use of ((negotiated, definitive)) work orders for public works as defined in RCW 39.04.010.
• "Unit price book" means a book containing specific prices, based on generally accepted industry standards and information, where available, for various items of work to be performed by the job order contractor. ((The prices may include: All the costs of materials; labor; equipment; overhead, including bonding costs; and profit for performing the items of work. The unit prices for labor must be at the rates in effect at the time the individual work order is issued.))
Definitions RCW 39.10.210 related to JOC
• The public body is encouraged to post the request for proposals for job order contracts and the availability and location of the request for proposal documents in other areas, such as websites for business associations, the office of minority and women's business enterprises, and other locations and mediums that will further publicize the opportunities.
• The identity of the specific unit price book to be used and a description of which elements shall be included in the coefficient as necessary to establish a firm fixed price on work orders to be awarded under the job order contract.
• The public body shall ensure that evaluation factors include, but are not limited to, ((proposal price)) the coefficient and the ability of the proposer to perform the job order contract.
Request for Proposal for JOC
• After the committee has selected the most qualified finalists, the finalists shall submit ((final proposals, including sealed bids based upon the identified unit price book)) a sealed bid including, but not limited to, coefficient(s). Such bids may be in the form of coefficient ((markups from)) adjustments to the listed unit price book ((costs)).
• As part of annual notification: - The job order contractor is encouraged to post the notification of
intent to perform public works projects in other areas, such as websites for business associations, the office of minority and women's business enterprises, and other locations and mediums that will further publicize subcontractor opportunities.
• Job order procedure—Required information.
• Each public body shall maintain and make available the following information for each job order contract: • (1) A list of work orders issued; • (2) The cost of each work order; • (3) A list of subcontractors hired under each work order, including whether those subcontractors were certified small, minority, women, or veteran-owned businesses; and • (4) A copy of the intent to pay prevailing wage and the affidavit of wages paid for each work order subcontract.
RCW 39.10.460
• CPARB shall publish best practices guidelines for increasing and sustaining access to contracting opportunities in alternative public works for minority, women, and veteran-owned businesses, and small businesses and recommendations for changes to state law by June 30, 2022
• Business Equity/Diverse Business Inclusion Committee is conducting enhanced public engagement and developing best practices guidelines
• RCW 39.10 must be reauthorized before the sunset date of July 1, 2031
Continued work beyond ESB 5032
QUESTIONS?
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• Janice Zahn, Assistant Director of Engineering Port of Seattle (206) 787-3798 [email protected]
• Scott Middleton, General Counsel & Government Affairs Director MCA of Western Washington (206) 442-9029 [email protected]
Contact Information
OMWBE: DIVERSITY & INCLUSION IN SCHOOL DISTRICT CONSTRUCTION 33RD ANNUAL SCHOOL CONSTRUCTION WORKSHOP
OCTOBER 29, 2021
Statutory Framework: Overview
The legislature finds that minority and women-owned businesses are significantly underrepresented and have been denied equitable competitive opportunities in contracting. It is the intent of this chapter to mitigate societal discrimination and other factors in participating in public works and in providing goods and services and to delineate a policy that an increased level of participation by minority and women-owned and controlled businesses is desirable at all levels of state government.
RCW 39.04 RCW 39.19
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• “. . . agency procedures and guidelines shall include a plan to ensure that minority and women-owned firms and veteran-owned firms are afforded the maximum practicable opportunity to compete for and obtain public contracts for services.”
• “The level of participation by minority and women-owned firms and veteran-owned firms shall be consistent with their general availability within the professional communities involved.”
Statutory Framework: Architects
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• CPBARB members must be knowledgeable about best practices concerning public contracting for minority, women, and veteran-owned businesses and small businesses
• One CPARB member must be from OMWBE • CPARB must reflect the gender, racial, ethnic, and
geographic diversity of the state, including the interests of persons with disabilities
• PRC must include at least one member representing the interests of disadvantaged business enterprises
• Evaluative factors must include proposer’s past performance in utilization of disadvantaged businesses and the inclusion plan for small business entities and disadvantaged business enterprises as subconsultants, subcontractors, and suppliers for the project.
• Bid packages must be prepared to reduce barriers for and increase participation by disadvantaged business enterprises.
• Evaluation factors must include past performance in utilization of disadvantaged business enterprises.
• Evaluation factors must include proposer’s inclusion plan for small business entities and disadvantaged business enterprises as subconsultants, subcontractors, and suppliers for the project
• Contracts must require the design-builder to submit inclusion plans and track and report to the public body and OMWBE utilization of certified businesses and veteran certified businesses.
2021 School District Construction Seminar
Who we are – OMWBE Established in 1983, OMWBE was created to mitigate societal discrimination and other barriers to minority- and women-owned businesses participating in public works and providing goods and services.
“…. minority and women-owned businesses are significantly underrepresented and have been denied equitable competitive opportunities in contracting”
Certification
Governor’s Subcabinet on Business Diversity
• Best practices, tools, guides, templates, and more available on our website.
• Additional releases over the next year, plus training offerings on all topics
• OMWBE will monitor progress of agencies in using these tools and best practices, and measure statewide M/WBE participation
Tools for Equity in Public Spending
Share information about OMWBE and Veteran Business certifications, and small business registration in WEBS.
Familiarize yourself with OMWBE’s directory of certified businesses and reach out to OMWBE to schedule an in-depth training.
Send OMWBE areas you see gaps in the directory of certified businesses and partner to conduct targeted outreach to fill those gaps.
Sign up for OMWBE’s monthly supplier diversity emails to learn about newly certified businesses and get the latest news on training opportunities and best practices.
Invite OMWBE to review your solicitations and provide feedback as part of the evaluation process.
Forecast future spending, to allow time for planning outreach strategies, conducting pre- bid conferences, and lengthening solicitation timelines.
Evaluate contract sizes and scopes and consider unbundling.
Review boilerplate contract language for barriers, especially focusing on experience, insurance, and bonding requirements.
Increase small and diverse business access to information by conducting robust outreach.
Require inclusion plans that outline commitments a contractor, vendor, or consultant will make towards your agency's goals of increasing participation by historically underutilized businesses.
Why our work matters • Supports all facets of the economy and helps “diversify” our
economic investments, contributing to resiliency and recovery • Promotes competition, innovation, and better-quality service delivery
for the government • Small businesses make up a large part of our economy and over 51% of
jobs, supporting success, prosperity, and resiliency of our communities and families
• Government contracts can provide stable, predictable work and help M/WBEs weather economic changes and grow their businesses
Timolin Abrom, Assistant Director of Supplier Diversity [email protected], 360-280-3121
Tools for Equity in Public Spending bit.ly/2X7hEWr
Questions / Contact us
OCTOBER 29, 2021 | PRESENTED BY: ANDREW GREENE JON GODDARD
Agenda
• What are the current COVID-19 requirements applicable to school construction in Washington?
• How have these rules changed over time?
• What do the recently enacted rules require?
• Key issues to consider.
Timeline
• March 13, 2020: Statewide school closures • March 23, 2020: “Stay Home, Stay Healthy” Order
issued, effective March 25, 2020 • March 25, 2020: “Construction Guidance” issued • May 4, 2020: “Safe Start Washington” for phased re-
opening commences • May 15, 2020: Additional guidance issued for
construction in “Phase 2” • April 21, 2021: Updated guidance issued for
construction • Today: April 2021 guidance still applies
• COVID-19 Site Supervisor
• COVID-19 Safety Training
April 21, 2021 Guidance Changes
• Activities for which social distancing may not be maintained is authorized to resume
• Aligned quarantine requirements for out-of-state workers with CDC guidance
Source: https://www.portseattle.org/sites/default/files/2021-04/COVID19-Construction- Guidance_20210421.pdf
https://www.portseattle.org/sites/default/files/2021-04/COVID19-Construction-Guidance_20210421.pdf
Highlights: • Contractor develop a COVID-19 mitigation plan • General obligation to keep safe site • Educate and following L&I requirements • Designate a COVID-19 site supervisor • Provide COVID-19 safety training • Physical distancing • PPE, sanitation, and cleanliness • Employee health/symptom self-assessment Source: https://www.portseattle.org/sites/default/files/2021- 04/COVID19-Construction-Guidance_20210421.pdf
Highlights: • Maintain face coverings • Separate employees with possible or confirmed
cases • Provide written notice of any potential exposure • Report outbreaks of 10+ employees • Protect high-risk employees Sources: https://www.governor.wa.gov/issues/issues/covid-19- resources/covid-19-reopening-guidance https://lni.wa.gov/forms-publications/F414-164- 000.pdf https://lni.wa.gov/forms-publications/F417-291- 000.pdf
the Secretary of Heath’s current guidance on facial coverings
• Fully vaccinated employees, if: - Working alone or in a location inaccessible to the
public - No volunteers, visitors, or non-employees nearby
• Otherwise, maintain facial covering and physical distance
Sources: https://www.governor.wa.gov/issues/issues/covid-19- resources/covid-19-reopening-guidance https://www.governor.wa.gov/sites/default/files/COVID 19%20Facial%20Coverings%20Guidance.pdf
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Vaccine Requirement (Proclamation 21-14.1)
• Prohibits “a Worker to engage in work . . . After October 18, 2021 if the Worker has not been fully vaccinated against COVID-19 and provided proof thereof as required”
• “On-site contractors are not Workers if they do not work in places where students or persons receiving services are present.”
• May “elect to require the employer of a contractor who is subject to this Order to assume responsibility for the vaccination verification and accommodations requirements in this Order.”
• “Contractor” includes subcontractors and other tiers.
See FAQs: https://www.governor.wa.gov/VaccineMandateFAQ
SEPARATED VS. NON-SEPARATED
OCTOBER 29, 2021 | PRESENTED BY: GRAEHM WALLACE MICHELLE MALEY
• 2019 Updates: A133 for GC/CM
• June 2021: Old A133 retired; including the A201
AIA Updates: Two Waves
• Highest-grossing film: Pirates of the Caribbean: At World’s End
• Top-rated TV show: American Idol
• Super Bowl: Colts defeat Bears, 29-17
• World Series: Red Sox sweep Rockies
• Atlanta Braves: 84-78 (88-73 this year)
• Houston Astros: 73-89, not yet cheaters
Throwback alert! What happened in 2007?
AIA Documents
History: Standard form documents since 1888 Interpretive case law (AIA Legal Citator) Evolved to reflect practices in the construction industry Nearly 200 agreements and forms Revision drafting process / industry commentary
A201-2017: Primary Changes
1. Technology • AIA 201 § 1.6 – Permits notice, but not notice of Claims, via
electronic transmission
2. Sustainability • Revisions contained in underlying agreements (e.g., A101 / A133)
3. Insurance and Bonds (Article 11) • Most language removed; new “Exhibit A, Insurance and Bonds”
4. BIM Protocols • Identifies protocols for the use of, and reliance on, BIM (§ 1.8)
5. Electronic Documents • Clarifies that the Contractor may maintain Contract Documents and
other Project records at the site in electronic format (§ 3.11)
6. Direct Communications • Allows for more direct communication between the Owner and
Contractor while maintaining the Architect’s ability to keep apprised of communications (§ 4.2.4)
7. Termination Fee • Allowing for the establishment of a “termination fee” in the event the
Owner terminates the Contractor for convenience (§ 14.4.3)
A201-2017: More Changes
A201-2017: Other Changes
§ 6 – Work by Other Contractors • § 6.2.2 – “Contractor shall not be responsible for discrepancies or defects in the
construction or operations by the Owner or Separate Contractor that are not apparent.”
§ 9 – Payment Process • § 9.6.8 – So long as Owner has made payment, Contractor must indemnify Owner for
lien and Subcontractor claims
§ 11.1.4 – Notice of Cancellation or Expiration of Insurance • Contractor must provide Owner with notice of an impending or actual cancellation or
expiration of coverage. Owner has the right to stop the Work until lapse cured – unless lapse caused by Owner
Supervision • AIA 201 § 3.3.1 (Contractor to propose alternative means/methods if unsafe instruction)
Construction Schedules • AIA 201 § 3.10.1 (a few more details required)
Design Responsibility • AIA 201 § 3.12.10 (Contractor entitled to rely upon performance criteria provided)
Minor Changes in the Work • AIA 201 § 7.4 (waiver if Contractor performs Work without notice of costs)
Decisions to Withhold Payment Certification • AIA 201 § 9.5.2 (either party may submit a Claim if they disagree with a certification)
THE A133: 2009 - 2019
A133: Owner-Construction Management Agreement
• Winner of the Bachelor: Melissa Rycroft Molly Malaney
• Latest fashion trend: Velvet track suits
• Cringiest moment: Kanye West interrupts Taylor Swift’s VMA acceptance speech
• Actual cringiest moment: Flash mobs
• World Series: The Red Sox would win the World Series in four short years
Throwin’ it back again: What happened in 2009?
• Permits Owner to contract with Contractor before design is completed
• Role: • GC/CM is engaged in project planning
• Services: • Preconstruction: cost estimating, value engineering, feedback
on constructability and scheduling
• For consistency:
• Reflects changes to make the A133 consistent with the A201, as amended in 2017.
• Keeping up with the times:
• Burgeoning prominence of GC/CM work
• Incorporates feedback from architects, construction manages, owners, and professional consultants.
• Greater flexibility to define scope of preconstruction services • § 3.1.14 – Parties can describe “any other Preconstruction Phase services to be
provided by the Construction Manager.”
• § § 3.1.3.3, 3.1.6.3 – GC/CM has greater advisory role in deciding whether to establish BIM or other protocols and collaborating with the Architect.
• Insurance obligations • Mirror those of the project Architect.
A133-2019: Construction Phase Commencement
• Greater flexibility to permit early start of construction work • E.g., ordering long-lead items, demolition, site work
• § 3.3.1.2 – “The Construction Phase shall commence upon the Owner’s execution of the Guaranteed Maximum Price Amendment or, prior to acceptance of the Guaranteed Maximum Price proposal, by written agreement of the parties. The written agreement shall set forth a description of the Work,” etc.
• Greater flexibility to define Substantial Completion • Exhibit A – provides fill-ins for Substantial Completion of certain phases of the Project
• § A.2.3.3 – liquidated damages may be applicable to different phases of the Work
THANK YOU!
CONTRACTOR REQUESTS FOR TIME AND MONEY (INCLUDING FOR COVID-19!) IN A PANDEMIC INFLUENCED MARKET
OCTOBER 29, 2021 | PRESENTED BY: GRAEHM WALLACE GEOFF PALACHUK
• What is the current environment doing to construction?
• What do the contracts say?
• How can we navigate those issues?
- What the courts have said / might say
- Project-specific scenarios
• Questions & Answers
DELAY, DELAY, DELAY
• Supply chain issues • Labor shortages • Material price increases • Loss of productivity • Changing legislation • Vaccine mandates • Permitting agencies
Causes of Most Delays
Every Contract is Different
• What is underlying the delay?
§ 8.3.1 If the Contractor is delayed at any time in the commencement or progress of the Work by … labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather conditions documented in accordance with Section 15.1.6.2, or other causes beyond the Contractor’s control … and the Architect determines, justify delay, then the Contract Time shall be extended for such reasonable time as the Architect may determine.
• Right (entitlement) to assert a claim? Was it properly asserted?
§ 8.3.2 Claims relating to time shall be made in accordance with applicable provisions of Article 15.
Relevant Contract Language
Contractor Delays
Revised Contract Language
• Our Supreme Court requires strict compliance with these claims provisions
• Mike M. Johnson (2003); Realm v. City of Olympia (2012); NOVA v. City of Olympia (2018)
• Recent $12M+ claim dismissal in King County at summary judgment
Revised Contract Language
DELAYS RESULTING IN EXTRA TIME OR MONEY (OR BOTH)*
1. Inexcusable Delay – (a) caused by an event within the Contractor’s or its Subcontractors’ control; (b) beyond the Owner’s control; and (c) may entitle the Owner to damages.
2. Excusable Delay – (a) caused by an event beyond the control of the Contractor or its Subcontractors; and (b) may entitle the Contractor to an extension of time only.
Delays Resulting in Extra Time / Money
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Delays Resulting in Extra Time / Money
3. Compensable Delay – (a) caused by an event within the Owner’s control; (b) beyond the control of the Contractor; (c) may entitle the Contractor to additional time and compensation.
4. Concurrent Delay – (a) caused by two or more “concurrent” events above; and (b) should be treated as an “excusable delay” for which Contractor and affected Subcontractor(s) are entitled additional contract time only.
*Bruner & O’Connor, Construction Law § 15:29, Delay (2021)
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Downstream Delays
Because the contractor normally (1) imposes the use of its own subcontract form, (2) selects its subcontractors and suppliers, (3) decides whether or not to require them to post surety bonds to assure their subcontract performance, (4) coordinates their work and material deliveries, (5) can pursue legal recourse against them for indemnity or contribution with respect to its own liability for owner and third-party delay claims and (6) can pursue them for its own damages for breach of their subcontracts, the contractor normally is charged with the ‘inexcusable’ delay of any and all of its subcontractors and suppliers.
• See Bruner & O’Connor, Construction Law § 15:32, Delay (2021); see also S. Leo Harmonay, Inc. v. Binks Mfg. Co., 597, F. Supp. 1014, 1027 (S.D.N.Y. 1984), aff’d 762 F.2d 990 (2d Cir. 1985) (contractor controls coordination of subs within its bid); Graham v. United States, 231 U.S. 474 (1913) (contractor responsible for delivery of late materials); Caddell Constr. Co., Inc. v. United States, 78 Fed. Cl. 406 (2007) (contractor and steel fabricator on the hook for delays and issues related to shop drawings and RFIs).
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Other Potential Areas of Claims Upstream
• Increased Material Costs* - Lumber & Plywood (+56.8%) - Copper & Brass Mill Shapes (+49%) - Steel Pipe and Tube (+49%) - Metal Bar, Joists, Rebar (+38%) - Aluminum / Structural Steel (+33%) - Plastic Construction Products (+26%) - Sheet Metal (+24%) - Gypsum Products (Drywall) (+22%)
*U.S. Bureau of Labor Statistics, Last 12 Months (Sept. 2021)
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• Material Shortages & Bottlenecks - Longer than anticipated lead times - Raw material shortages - Increased global costs and bottlenecks
• China, South America, Africa • Requires supply-chain restructuring
- Cost escalation and material delays - Transportation closures
• Labor Shortages - Sick-outs - Mandatory quarantines - “Adjusting” to vaccine mandates
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Delay Claims vs. Disruption Claims
• A delay extends the planned duration of a project, and a delay claim seeks added contract time due to the delayed period of performance. The contractor may also seek to recover added costs incurred due to the prolonged period of performance, but its entitlement to compensation is dependent upon whether the delay is compensable or not.
• Disruption claims seek compensation for damages suffered as the result of impacts to productivity, which made the contractor’s work more difficult or less efficient to perform. Disruption or inefficiency can occur even if the project was completed on time if the disruption reduced the contractor’s planned or expected productivity.
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WHAT DO THE COURTS SAY? (*SPOILER ALERT: NOT MUCH YET*)
The Courts Say What?
“To prevail on its claim for equitable adjustment(s), plaintiff must demonstrate first that any increased costs arose from conditions differing materially from those indicated in the bid documents, and that such conditions were reasonably unforeseeable in the light of all the information available to the contractor [at the time of bidding]. Plaintiff must also show that its contract costs actually increased, and that the cost increases were the direct and necessary result of the change.”
Sterling Millwrights v. United States, 26 Cl. Ct. 49, 72 (1992) (citations omitted).
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• Willamette Crushing Co. v. State, 188 Ariz. 79, 932 P.2d 1350 (Ariz. Ct. App. 1997)
- Contractor [Wildish] was awarded a highway construction project to be completed within 360 days. After being awarded the contract, Wildish decided it could not meet the staging or milestone deadlines and sought a revised schedule. The State refused, and Wildish eventually adopted its own staging and milestone plan, met the same deadline, but incurred cost overruns of $3M.
- State rejected the claim for $3M, and Wildish sued. The trial court granted summary judgment and dismissed the claim. Wildish appealed. The Arizona Court of Appeals affirmed dismissal.
- Wildish argued the increased costs arose from conditions that “differed materially” from the bid documents, and that the changes were “unforeseeable,” sufficient to prohibit any contractor from being able to complete the job within in the required time.
126
• “Performance specifications [rather than design specifications] set forth an objective and allow the contractor to determine how to achieve it.” Id. at 81. - Owner’s implied warranty under Spearin only arises for design specifications:
• “[The] due date in a public contract is not a warranty by the government; it is a warranty by the bidding contractor that, if awarded the contract, it can do the work in the specified time.”
• “[Contractor] was tightly circumscribed by the contract due date, but the due date is not a design specification; it is a performance specification…. How long it takes to perform a contract is a function of the specification requirements and the contractor's capabilities. The bidder knows or should know both before bidding, but the government knows but one....”
• Id. at 83 (citing Am. Ship Building v. United States, 228 Ct. Cl. 220, 654 F.2d 75 (Ct. Cl. 1981)).
127
• The court reasoned that contractors bear such sequencing risks when bidding the project. Id. at 81.
- A contractor saying “it can’t be done” after bidding the job usually won’t justify a delay claim or request for additional compensation…
• Based on the current construction dilemmas, courts might be willing to impute knowledge upon project bidders (e.g., current market for lead times, supply chain bottlenecks, cost increases, etc.).
- It is a more difficult question for those projects that bid before supply chain issues arose.
128
• Appeal of Ace Elec. Assoc., Inc., ASBCA Nos. 11781 & 11496, 67-2 B.C.A. (CCH) ¶ 6456 (July 18, 1967) - Contractor claimed excusable delay caused by 1965 flu epidemic. Board of Contractor
Appeals rejected the claim.
- Contractor asserted that flu caused a 30-40% rate of absenteeism over several weeks.
- “Illness occasioned by the onset of a flu epidemic is in general an excusable cause for delay provided it can be shown that performance was in fact delayed by reason of such epidemic. It is incumbent upon appellant to establish not only the existence of an excusable cause for delay but also that such cause actually contributed materially to such delay as well as the actual extent of the delay so caused.”
129
• Pernix Serka JV v. Dept. of State, CBCA 5683, 2020 WL 1970843 (C.B.C.A. Apr. 22, 2020) - Claim arising from Ebola outbreak in Sierra Leone. Contractor was not entitled to any
additional compensation – only an extension of time.
- Contractor requested guidance from contracting officer regarding whether it should evacuate the site following Ebola outbreak. Contracting officer provided no guidance regarding the Ebola outbreak, and the Contractor decided to temporarily demobilize.
- Contractor later sought an equitable adjustment of time and additional compensation. The request for compensation was denied by the contracting officer, and the court agreed and granted the State’s motion for summary judgment.
130
• Pernix Serka JV v. Dept. of State, CBCA 5683, 2020 WL 1970843 (C.B.C.A. Apr. 22, 2020) - Court held the Contractor could receive added time, but not additional costs, since
neither party contemplated an Ebola outbreak during the bidding / negotiations.
- The Board found that “given the Excusable Delays clause, [Contractor] has not identified any clause in the contract that served to shift the risk to the Government for any costs incurred due to an unforeseen epidemic.”
- “It is well-established that a contractor with a fixed price contract assumes the risk of unexpected costs not attributable to the Government. . . . and [a]bsent a special adjustment clause, a contractor with a fixed price contract assumes the risk of increased costs not attributable to the Government.”
131
• “[Contractor’s] fixed-price contract obligated [it] to perform and receive only the fixed price. ... A contractor is entitled to additional time but not additional costs. Appellant’s attempts to shift the risks clearly articulated by the contact are unavailing.”
• “Particularly given the Excusable Delays clause, [Contractor] has not identified any clause in the contract that served to shift the risk to the Government for any costs incurred due to an unforeseen epidemic. Nor does the contract require the Government to provide [it] with direction on how to respond to the Ebola outbreak. Thus, under a firm, fixed-price contract, [Contractor] must bear the additional costs of contract performance, even if [it] did not contemplate those measures at the time it submitted its proposal or at contract award.”
This 2020 decision obviously parallels with the COVID-19 pandemic.
132
Navigating Delays During Construction
• If the Contractor seeks additional time (not additional compensation) due to industry-wide impacts or shortages…
- Then evaluate the claim, ask whether any better methods of claim analysis might exist, and consider granting a time extension.
• If the Contractor seeks additional compensation and/or time extensions based on project-specific disruptions…
- Then evaluate the backup documentation and consider best approach to handle claim:
• Execute a change order / grant time extension? Challenge entitlement? Execute a contractual amendment or rider (particularly for cost escalation)? Rely on claims procedures of the contract? Pursue mediation?
134
Navigating Delay Claims & Litigation
• If the Contractor’s request for additional time due to industry-wide impacts or shortages, or for additional compensation and time based on project-specific disruptions or impacts, does not get resolved…
- Then (1) Challenge the Contractor’s claim methodology
• MCAA Factors? Measured Mile? Total Cost / MTC Claim? Critical path analysis?
- Then (2) Rely on the Notice and Claims procedures of the Contract and find other ways to challenge contractual entitlement.
- Then (3) Request and perform an audit of all backup related to the claim.
- Then (4) If litigating, make sure to capture and address any other lower-tier claims that might also exist alongside the claim at issue.
135
IF [DECISION] DOESN’T GET RESOLVED, THEN [RESULT] (PART II)
136
Navigating Delay Claims & Litigation
• If the Contractor claims additional compensation as a “constructive change” to the Contract, due to mask mandates, social distancing mandates, vaccine mandates, or any other governmental mandate… - Then Contractor must establish the existence of both (1) a change (i.e., that its
performance requirements were altered), and (2) an order (i.e., that the added work was not volunteered, but resulted from the direction of the Owner).
- Then Contractor must establish entitlement – that person directing the change had contractual authority to unilaterally alter the contractor's duties.
- Same defenses apply, based on prior slide.
Slide Number 1
Slide Number 11
Lake Hills Investments, LLC v. Rushforth Construction Co.
PELLCO Construction, Inc. v. Cornerstone General Contractors, Inc.
AGC of Washington, et. al., Appellants v. Jay Inslee, et. al., Respondents
Conway Construction Company v. City of Puyallup
Scarsella Brothers, Inc. v. Flatiron Constructors, Inc.
Serpanok Construction, LLC v. Point Ruston, LLC
Slide Number 18
Slide Number 19
RCW 39.10.460
Contact Information
OMWBE
Who we are – OMWBE
Tools for Equity in Public Spending
Strategies to make your contracts more accessible
Share information about OMWBE and Veteran Business certifications, and small business registration in WEBS.
Familiarize yourself with OMWBE’s directory of certified businesses and reach out to OMWBE to schedule an in-depth training.
Send OMWBE areas you see gaps in the directory of certified businesses and partner to conduct targeted outreach to fill those gaps.
Sign up for OMWBE’s monthly supplier diversity emails to learn about newly certified businesses and get the latest news on training opportunities and best practices.
Invite OMWBE to review your solicitations and provide feedback as part of the evaluation process.
Forecast future spending, to allow time for planning outreach strategies, conducting pre-bid conferences, and lengthening solicitation timelines.
Evaluate contract sizes and scopes and consider unbundling.
Review boilerplate contract language for barriers, especially focusing on experience, insurance, and bonding requirements.
Slide Number 57
Slide Number 58
April 21, 2021 Guidance Changes
Slide Number 69
L&I Requirements and Guidance
Updated Facial Covering Guidance
OSPI Guidance and Resources
Slide Number 77
Slide Number 78
Back to the Future: What happened in 2017?
Three Influences: 2007-2017
Fast-forward to 2019
Downstream Delays
Delay Claims vs. Disruption Claims
Slide Number 122
Slide Number 124

33rd ANNUAL SCHOOL - perkinscoie.com

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