On September 18, 2019, California Governor Gavin Newsom signed California’s Assembly Bill 5 (“AB 5”). This landmark bill takes effect on January 1, 2020, and will require gig economy workers to be reclassified as employees instead of independent contractors. As it relates to the construction industry, AB 5 provides that the “relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry” shall be governed by pre-existing law, provided that the contractor satisfies seven new criteria set forth in AB 5.[1]  AB 5 also includes an exception for certain construction trucking services performed prior to January 1, 2022,[2]  as well as active California licensed architects and engineers.[3] Continue Reading Update on California Assembly Bill 5 and its Potential Impact on Construction Contractors and Subcontractors

Introduction 

Congress enacted the Contract Disputes Act of 1978 (CDA)[1] to “provide a fair, balanced, and comprehensive statutory system of legal and administrative remedies in resolving government contract claims.”[2]  But for many involved in public construction projects, the CDA does not always feel like a fair or comprehensive scheme for resolving disputes caused by the acts or omissions of the Government.  In particular, subcontractors and suppliers are barred by principles of sovereign immunity from suing procuring agencies directly where Government representatives impact, delay, or increase the cost of the work.[3]  Because subcontractors and suppliers lack privity with the agency, their recourse for Government interference is limited to “pass-through” or “sponsored” claims, which hinge on the general contractor’s willingness to take up the torch on their behalf.[4]  Continue Reading On the Effective Use of Liquidating Agreements

The Illinois Contractor Prompt Payment Act, 815 ILCS 603/1, et seq. (the “Act”) was first enacted in 2007 and designed to safeguard contractors and subcontractors on private projects by providing a mechanism to expedite payments for work performed. The Act applies to all private construction projects in Illinois, except those involving single family residences or multiple family residences with twelve or fewer units in a single building. With the Act, Illinois joined a growing number of states that had enacted similar legislation.

On August 20, 2019, Illinois amended the Act and again joined a growing number of states that are expanding their protections for contractors, this time by restricting the amount of retainage that may be withheld on a construction project. The amendment, codified at 815 ILCS 603/20, imposes a ten percent (10%) cap on the amount of retainage that may be withheld and reduces that cap to five percent (5%) once the project is fifty percent (50%) complete. Specifically, the Act provides: Continue Reading Illinois Expands Protections Under the Contractor Prompt Payment Act by Imposing New Restrictions on Retainage

Seyfarth Construction Associate Michael Wagner presented the “Construction Site Data Disclaimers: Who Really Carries the Risk?” webinar for Lorman on August 26, 2019, and an on-demand version of the webinar is available. This program presents the owner and the contractor’s perspectives on the risk of differing or concealed site conditions and the role disclaimers of liability for site data plays in managing the risk. Learn the use and enforceability of such disclaimer clauses and the contract risk management techniques owners and contractors use to mitigate downside risk.

For more information or to view the on-demand version of this program, visit the Lorman website.

President Trump continues to push forward with his “Buy American, Hire American” initiative with the issuance of his third Executive Order No. 13881 (the “Order”) on July 15, 2019, entitled “Maximizing Use of American-Made Goods, Products, and Materials.” This Order attempts to strengthen the standards that federal agencies must follow under the Buy American Act (“BAA”) by raising the threshold for domestic purchasing requirements. Continue Reading President Trump Issues Third Installment of Buy American Initiative

Congress enacted the Buy American Act (“BAA”) during the Great Depression, in order to protect American industry from foreign competition on federal procurement contracts. While the BAA is simplistic in its policy goal of promoting domestic purchasing, government contractors and subcontractors are often faced with complex and confusing rules for compliance. Continue Reading The Two-Part Manufacturing Test Under the Buy American Act

Developments in virtual reality (VR) and augmented reality (AR) have undoubtedly streamlined traditional design and engineering methods.  With VR technology, users are able to fully imagine themselves in a realistic replication of a physical space (think head-mount displays). AR technology supplements what can be imagined in the actual world by adding computer generated images (think Pokémon Go).  By utilizing software and devices to map physical space in virtual environments, VR and AR technology allows parties to a construction contract to mitigate the risk of design defects and the inevitable claims and litigation that follow them.  VR and AR sectors are predicted to generate $150 billion by 2020.[1] Continue Reading Legal Issues to Consider for Projects that Utilize Virtual and Augmented Reality

Seyfarth Shaw partner Chuck Wall will moderate a panel entitled “(Don’t) Kill All the Lawyers…Untangling Risk Issues in P3 Projects” on Friday, July 19. The panel will be featured at the American Road & Transportation Builders Association (ARTBA) Public-Private Partnerships in Transportation Conference.  The program is intended to explore legal perspectives on key contractual risk issues in the current P3 market. Topics will include a look at the current state of risk allocations and whether P3 risk profiles and tolerances may be shifting.

The ARTBA P3 Conference is at the Grand Hyatt Washington hotel in Washington, D.C., July 17-19.

For more information or to register, click here.

On June 17, 2019, from 1:00 to 2:30 p.m. Eastern, David Blake is co-presenting a Strafford webinar entitled: “Construction Management Agreements: Key Provisions Common Areas of Dispute, and Minimizing Performance Risks.” The panel, which includes construction practitioners experienced in negotiating construction management contracts, will focus on best practices for drafting and negotiating these agreements. They will also cover the critical clauses to include in the contracts and provide strategies for avoiding common drafting pitfalls and resolving contract disputes.

For more information or to register for the webinar, click here.

As a response to an increasingly demanding market place, project delivery methods have evolved from the more traditional methods of design-bid-build, design-build, and construction-manager-at-risk into what is known as Integrated Project Delivery (“IPD”). In the typical construction contract, each party seeks to avoid and transfer risk to other parties. The IPD approach employs a different philosophy—the project participants accept and manage design and construction risks as a team. The pure IPD method often does this with a single, multi-party contract that is executed by the owner, general contractor, and designer. The team members to a multi-party contract share financial risks and rewards using a profit/incentive pool that is based upon measurable project-outcomes. Team members collaborate on how the profit and incentive pool is structured to ensure that each member is accountable for its contribution to the project outcome. The goal is to motivate each member in a way that encourages candid communication and accountability for overall design and construction. Continue Reading The Integrated Project Delivery Model: Why, What, and How to Decide if it is Right for Your Project