Issue

The cost and time to perform change order work may increase as a result of COVID-19 impacts that arise after the change order is agreed upon. The Contractor can include contingencies for that risk in its lump sum pricing, but the Owner will have paid an unnecessary premium if those impacts do not materialize.

Proposed Solution

Consider utilizing a COVID-19 Rider with your change orders. The Rider details the types of COVID-19 impacts that entitle the Contractor to relief, as well as the specific relief. This allows the parties to use their standard process and format for change orders, with the COVID-19 issues addressed in the Rider. A one-page Rider is often all you need. The primary issues to address in the Rider are discussed below. Continue Reading COVID-19 Riders for Construction Change Orders

In heavy-civil, excavation, and infrastructure work, the risk of encountering differing, unknown, or concealed conditions is significant, as it is nearly impossible to document or predict everything that the contractor will encounter below the surface when performing its operations. Although standard pre-bid site surveys, including soil and geotechnical reports, are good resources to evaluate potential concerns, they will almost never be all encompassing as to what a contractor will face when its work is in progress. Given these unique, complicated, and costly risks, some project owners will seek to pass liability for such risk onto the those performing the work. Indeed, owners may seek to transfer these unknown risks, including unforeseen conditions, to contractors making the financial burden significant for those bidding the work. Accordingly, it is imperative that the contractor balance the desire to submit a competitive price to win the work with the need to ensure that it has some type of remedy or recovery should it encounter such concealed or differing conditions. Faced with this balancing act, contractors performing excavation and foundation work should be intimately familiar with the site disclaimer, exculpatory, and risk-transferring clauses present in their agreements and the effect that such provisions may have on their ability to recover additional costs and time should they encounter differing conditions. Continue Reading Construction Site Disclaimers: Navigating Risk Allocation for Differing, Concealed and Unknown Conditions in Heavy-Civil, Excavation, and Infrastructure Work

Thursday, October 7, 2021
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

Register Here

Real estate developers face numerous pandemic-related challenges. In this webinar, we will discuss how developers are changing the terms of their loan agreements, construction contracts, and leases to meet those challenges. The panels’ personal experience negotiating those documents will provide a practical perspective of what you can reasonably expect to achieve. We will also highlight litigation trends and how courts have addressed key issues affecting your bottom line, including whether a tenant’s lack of business legally excuses it from paying rent. Topics include:

Litigation

  • Force majeure / impossibility / impracticability / frustration of purpose
  • Co-tenancy covenants

Real Estate Finance

  • Expanding project completion deadlines in loan agreements
  • Modifying cash management provisions
  • Non-performing loan observations

Construction 

  • Allocating the risk of COVID-19 delays and cost increases
  • Utilizing COVID-19 riders for change orders
  • Supply chain trends

Leasing

  • Revising force majeure clauses in leases
  • Rental abatement / cost sharing trends
  • Permitted use clause: countering an impossibility argument

Speakers

David Blake, Partner, Seyfarth Shaw LLP
James O’Brien, Partner, Seyfarth Shaw LLP
Daniel Evans, Partner, Seyfarth Shaw LLP
Mark Johnson, Partner, Seyfarth Shaw LLP

Register Here

Mounting Evidence of a Sea Change?

On August 16, 2021, the District Court for Clark County, Nevada, denied an insurance company’s motion to dismiss a property owner’s lawsuit seeking business interruption insurance coverage due to COVID-19. A key defense often asserted by insurers in response to such claims is that physical loss or damage is required to trigger coverage and neither results from COVID-19. In this lawsuit, the property owner asserted the impact of SARS-COV-2 virions and COVID-19 exposure on the building’s interior surfaces amounts to an alteration of the property’s conditions resulting in physical damage. Without deciding the issue on its merits, the court found the complaint sufficiently alleged physical damage to trigger insurance coverage and allowed the matter to proceed. Continue Reading Court Allows Another Lawsuit Seeking Business Interruption Insurance Coverage for COVID-19 to Proceed

On September 23, 2021, James Newland, AIA, partner in Seyfarth’s Construction group, will be a panelist on the program: “Developing High Performance Structures Through Integrated Project Delivery (IPD),” presented by the Construction Management Association of America (CMAA).

The program features participants from DPR Construction and HKA Consulting and will address key aspects of the (IPD) method and its impact on contract structure, with the goal of producing high performance and sustainable structures. It will also address the most important aspects of the IPD method and how they are implemented even before any IPD contracting structure is developed.

CMAA is an industry association dedicated to the practice of professional construction management. CMAA members include federal/state/local government and private sector owners, construction consultants, technology suppliers, academia, and legal organizations.

Find more information and register for the webinar on CMAA’s website.

Potential Damages

Potential damages arising from the failure to achieve statutory or contractual requirements concerning Leadership in Energy and Environmental Design (LEED) or other green building standards are far ranging and may include: fines, loss of financing or tax incentives, loss of tenants, decreased building value, decreased worker productivity, and increased utility costs.

Direct v. Consequential Damages

Damages are often characterized as direct or consequential. Generally speaking, direct damages are foreseeable and naturally and ordinarily follow the breach, whereas consequential damages are unforeseeable to the breaching party and result from special circumstances. For example, if you were in a car accident, the damage to your car and medical expenses to treat whiplash would be direct damages. If you were on your way to a job interview and lost the job because you missed the interview due to the accident, the lost wages would likely be consequential damages. In our context, a fine arising from the failure to achieve a statutory LEED requirement, such as Silver certification, is probably a direct damage. However, the loss of revenue due to tenants who back out of leases because the building is not LEED certified may be a consequential damage. Continue Reading Contract Drafting Tip: “LEED” Damages and the Waiver of Consequential Damages Clause

Since the dawn of the historic COVID-19 relief packages, which have doled out approximately $2.6 trillion to date (with more to be spent), the federal government has made no secret of the fact that it intends to ferret out and prosecute any wrongdoing involving those funds. In addition to misappropriation of relief funds, the government has also gone after those attempting to capitalize on the COVID-19 pandemic by defrauding consumers and the government alike. A number of violators have already been uncovered and prosecuted. And the government continues to ramp up its efforts and stay true to its word. Continue Reading More Enforcement is on the Way: The COVID-19 Fraud Enforcement Task Force

While most federal contractors are eminently familiar with the False Claims Act (“FCA”)—government’s most potent weapons for prosecuting false claims—the anti-fraud provision of the Contract Disputes Act (“CDA”) does not receive nearly as much attention in the headlines. CDA anti-fraud cases are rarer than FCA cases for a couple reasons. First, the government’s remedies under the CDA pale in comparison to the robust deterrents available under the FCA, which include five-figure fines (between $11,000 and $22,000 per claim) and potential treble damages.[1] Second, the government is limited to enforcing FCA fraud claims in the federal court system, which complicates matters when the government seeks to assert FCA counterclaims as leverage in cases pending in the Civilian Board of Contract Appeals or the Armed Services Board of Contract Appeals.[2]  Thus, case law addressing CDA anti-fraud claims is sparse; indeed the US Court of Appeals for the Federal Circuit has never issued a published opinion discussing such claims. Last month, however, emerged an anti-fraud decision in the US Court of Federal Claims (“COFC”) that may eventually find itself worthy of higher-level scrutiny.

Continue Reading US Court of Federal Claims Clarifies the Statute of Limitations for CDA Anti-Fraud Claims

Chuck Wall, partner in Seyfarth’s Construction group, will co-host and moderate the Maryland Transportation Builders and Materials Association (“MTBMA”) webinar “Public-Private Partnerships: Demystifying the P3 Delivery Model” on April 20, 2021, at 1 p.m. Eastern.

As the need for dramatic improvements to transportation infrastructure continues to increase, available state and local resources are becoming even more scarce. Maryland has joined many other states in implementing public-private partnerships (P3s) as a means to help bridge this funding gap. Many owners are viewing P3s as a useful tool to help deliver projects faster and more efficiently by introducing private financing along with customized risk allocations affecting design/construction and long-term operation and maintenance. This program will cover project procurement, financing alternatives, and implications for the construction, engineering and materials industries.

Click here for more information and to register. For non-MTBMA members, please use promo code: ‘p3_101’ to receive 100% off the registration cost. The promo code is requested on the last step of the registration page. For questions, please reach out to Jahna Barbar at jbarbar@seyfarth.com.

Executive Order 14005

Not even one week into the Biden Administration’s tenure, Buy American rules are yet again taking center stage as a fundamental policy objective. On January 25, 2021, President Biden issued Executive Order 14005 entitled “Ensuring the Future is Made in All of America by All of America’s Workers,” which sets forth the new Administration’s policy of utilizing the federal procurement process to maximize the use of goods, products, and materials that are US-origin. Executive Order 14005 takes aim at overhauling “Made in America Laws,” which it defines broadly as inclusive of all statutes, regulations, rules, and Executive Orders relating to federal financial assistance awards or federal procurement—known interchangeably as Buy America or Buy American rules—which provide a preference for purchase of domestic goods and materials that are US-origin. But unlike Executive Order 13788 issued by the Trump Administration making changes to Buy America rules, President Biden’s Executive Order 14005 does not make any immediate changes to those rules. Rather, it calls for a review of existing laws and implementing rules. That review, however, and what proposed changes in existing laws comes out of that review, could be significant. Continue Reading Biden Administration Issues Executive Order 14005 Aimed at Strengthening Made in America Laws