DISTRICT OF COLUMBIA
CONSTRUCTION LAW
TABLE OF CONTENTS
Preface.....................................................................................
xvii
About the
Authors..........................................................
xviii
Chapter
One............................................................................
21
D.C. LAW: A UNIQUE LEGAL
FRAMEWORK
1.1
Introduction............................................................ 21
1.2 History of D.C.
law................................................ 21
1.3 “Federalism” In the
District of
Columbia.......................................... 22
1.4 PRIVATE VS. PUBLIC;
FEDERAL VS. LOCAL
CONTRACTS IN D.C......................................................
23
1.4.1 Public
Contracts....................................................... 23
1.4.1.1
Contracting with the
Federal Government....................................... 24
1.4.1.1.1 The Law Governing
Federal Procurements............................ 24
1.4.1.1.1.1 Competition in
Contracting Act (CICA)............... 24
1.4.1.1.1.2 Federal Acquisition
Regulation (FAR) ........................ 25
1.4.1.1.2 Federal Boards of
Contract Appeals .................................. 25
1.4.1.1.2.1 Armed Services
Board of Contract
Appeals (ASBCA)........................ 25
1.4.1.1.2.2 General Services
Board of Contract
Appeals (GSBCA)........................ 26
1.4.1.2 Contracting with the District
Of Columbia Government.............................. 26
1.4.1.2.1
The Law Governing District of
Columbia Procurements.......................... 26
1.4.1.2.2
District of Columbia Contract
Appeals Board (DCCAB)...................... 27
1.4.2 Private Contracts.....................................................
27
1.4.3
Contracting with the Washington
Metropolitan Area Transit
Authority (WMATA).............................................. 28
1.4.4
Determining Whether the Project is
Public or Private, State or Federal........................... 28
1.5 D.C. Licensing Requirements
.......................... 29
1.5.1 Contractors
................................................................ 30
1.5.2 Design
Professionals................................................... 30
1.5.3
Where and How to Obtain
Necessary
Licenses..................................................... 31
Chapter Two
.......................................................................... 41
Construction Contracts
2.1
Introduction...........................................................
41
2.2
CONSTRUCTION PROJECT
DELIVERY SYSTEMS.................................................. 41
2.2.1 Design-Bid-Build....................................................
42
2.2.2
Construction Management Contracts...................... 42
2.2.2.1
Construction Manager
As Advisor or “Agent”................................... 43
2.2.2.2 Construction Manager At-Risk....................... 44
2.2.3
Design-Build............................................................ 44
2.3
CONSTRUCTION CONTRACT
PRICING APPROACHES.............................................. 45
2.3.1 Fixed
Price............................................................... 45
2.3.2 Cost Plus
Fee........................................................... 45
2.3.3 Guaranteed Maximum Price.................................... 45
2.4
CONTRACT DRAFTING............................................... 46
2.4.1 Basic
Terms.............................................................. 46
2.4.1.1 Scope of Work Provisions.............................. 46
2.4.1.2 “Changes” and “Extras” Clause...................... 47
2.4.1.3 Differing Site Conditions Clause................... 47
2.4.1.4 Payment Clause.............................................. 48
2.4.1.5 Dispute Resolution Clause.............................. 49
2.4.1.6 Delay Clause................................................... 50
2.4.2
Provisions Required by
Law or
Regulation................................................... 51
2.5
STANDARD FORM Contracts..............................
51
2.5.1 AIA Forms and Documents.................................... 52
2.5.1.1 Owner-Architect Agreements......................... 52
2.5.1.1.1 AIA Document B141............................ 52
2.5.1.1.2 AIA Document B151............................ 53
2.5.1.2 Owner-Contractor Agreements...................... 53
2.5.1.2.1 AIA Document A101............................ 53
2.5.1.2.2 AIA Document A111............................ 53
2.5.1.2.3 AIA Document A201............................ 54
2.5.2
Other Organizations’ Forms.................................... 54
Chapter
three....................................................................... 65
Bidding on public construction
Contracts in the District of Columbia
3.1
INTRODUCTION........................................................... 65
3.2
Bidding Mechanisms............................................
65
3.2.1 Competitive Sealed Bidding
And Invitations for Bids.........................................
65
3.2.2
Competitive Negotiation
And Request for Proposals...................................... 65
3.2.3 Request for Quotations............................................ 65
3.3
Bid Solicitation.....................................................
66
3.3.1
Pre-Solicitation........................................................ 66
3.3.2
Solicitations............................................................. 66
3.3.3
Bidding.................................................................... 67
3.3.4 Plans and Specifications.......................................... 68
3.3.4.1 Federal Government Contracts....................... 69
3.3.4.2 D.C. Government Contracts........................... 69
3.4
Errors in
Bids.......................................................... 70
3.4.1 Errors in Bids – Federal
Government Contracts.............................................
70
3.4.1.1 Relief Before Award of Contract................... 70
3.4.1.2 Relief After Award of Contract..................... 71
3.4.2 Errors in Bids – D.C.
Government Contracts.............................................
72
3.4.2.1 Relief Before Award of Contract................... 72
3.4.2.2 Relief After Award of Contract..................... 73
3.4.3 Unilateral vs. Mutual Mistakes................................ 74
3.5
BID SECURITY: BID BONDS..................................... 75
3.5.1 Definition of a Bid Bond........................................ 75
3.5.2 Types of Bid Bonds................................................. 75
3.5.2.1 Damages Bonds.............................................. 75
3.5.2.2 Forfeiture Bonds............................................. 76
3.5.3
Requirements for Bid Bonds:
Federal
Projects....................................................... 76
3.5.3.1 When Bid Bonds are Required................. 76
3.5.3.2 Amount of Bid Bonds.............................. 76
3.5.4 Requirements for Bid Bonds:
Local Public
Projects............................................... 77
3.5.4.1 When Bid Bonds are Required................. 77
3.5.4.2 Amount of Bid Bonds.............................. 78
3.5.4.3 Form of Security for
D.C. Public Projects.................................. 78
3.6
Discussions Prior to
Award........................... 79
3.7
Contract Award....................................................
79
3.7.1
Federal Government Contract Awards................... 79
3.7.1.1 Contractor Responsibility............................... 79
3.7.1.2 Contractor Responsiveness............................. 79
3.7.1.3 Notice of Award............................................. 80
3.7.1.4 Protest of Award by
Unsuccessful Bidder....................................... 80
3.7.2
Local Government Contract Awards...................... 80
3.7.2.1 Contractor Responsibility............................... 80
3.7.2.2 Contractor Responsiveness............................. 81
3.7.2.3 Resolving “Tie Bids”...................................... 81
3.7.2.4 Notice of Award............................................. 81
3.7.2.5 Protest of Award by
Unsuccessful Bidder....................................... 82
3.8
Bid Protests..............................................................
82
3.8.1 What to
Protest........................................................ 82
3.8.1.1 Pre-Award Bid Protests.................................. 82
3.8.1.1.1 Protests Alleging
Improprieties in the
Solicitation Terms.................................. 82
3.8.1.1.2 Government Sole
Source Awards
And Set Asides...................................... 83
3.8.1.2 Post-Award Bid Protests................................ 83
3.8.1.2.1 Procurement Decision
Lacked a Rational
Basis....................................................... 84
3.8.1.2.2 Award Made in
Violation of
Procurement Rules
And Procedures..................................... 84
3.8.2 Protest Procedure.....................................................
84
3.8.2.1 Protesting Federal
Procurement Contracts................................... 85
3.8.2.1.1 Filing a Bid Protest
With the Procuring
Agency................................................... 85
3.8.2.1.2 Filing a Bid Protest
With the GAO....................................... 85
3.8.2.1.3 Protesting in Federal
Court: The U.S. Court
Of Federal Claims.................................. 87
3.8.2.2
Protesting Local
Public Contracts..............................................
89
3.8.2.3 Protesting D.C. Public
Schools Contracts........................................... 91
3.8.2.4 Protesting WMATA Contracts....................... 91
Chapter four
....................................................................... 115
Subcontracts
4.1
Introduction.........................................................
115
4.2
Subcontract Bids................................................
115
4.2.1 Enforceability of
Subcontractor Bids................................................
115
4.2.2 Subcontractor Bid Mistakes.................................. 118
4.3
Risk Apportionment...........................................
119
4.4 Flow-Down and Incorporation
By Refernce
Provisions................................... 119
4.5
Bonding.....................................................................
121
4.5.1
Subcontract Bonding: Private
Construction Contracts in D.C.............................. 121
4.5.2
Subcontract Bonding: Public
Construction Contracts in D.C.............................. 121
4.5.2.1 Bonds Posted by the
General Contractor to
Benefit the Subcontractor............................. 121
4.5.2.2 Bonds Posted by the
Subcontractor to Benefit
The General Contractor................................ 122
4.6 Time, Schedules, Delays &
Disruptions... 122
4.7
Subcontractor
Payment................................ 126
4.7.1
Payment Pursuant to Terms of Subcontract.......... 126
4.7.1.1 “Pay-when-paid” Clauses............................. 126
4.7.1.2 “Pay-if-paid” Clauses................................... 127
4.7.2
Prompt Payment on Public Contracts.................... 127
4.7.3
Retention............................................................... 128
Chapter five
........................................................................ 141
Scheduling and delays
5.1
Introduction.........................................................
141
5.2
Type of Contract.................................................
141
5.3
Scheduling MethodS.........................................
141
5.3.1 Bar
Chart............................................................... 141
5.3.2 Critical Path Method (CPM)................................. 142
5.3.2.1 Understanding
CPM Scheduling........................................... 142
5.3.2.2 Use of CPM Scheduling
In the District of Columbia........................... 143
5.4
Float...........................................................................
144
5.4.1 Total
Float.............................................................. 145
5.4.2 Free
Float............................................................... 145
5.4.3 Independent Float................................................. 145
5.4.4 Interfering Float.....................................................
146
5.5
Delay..........................................................................
146
5.5.1 Definition of Delay................................................
146
5.5.2 Types of Delay.......................................................
147
5.5.2.1 Excusable Delay........................................... 147
5.5.2.2 Compensable Delay...................................... 147
5.5.2.3 Inexcusable Delay......................................... 150
5.5.2.4 Concurrent Delay.......................................... 150
5.5.3 Delay Claims..........................................................
151
5.5.4 Acceleration Claims............................................... 152
5.5.5 Calculating Delay Damages................................... 153
5.6
Disruption................................................................
155
5.6.1 Definition of Disruption........................................ 155
5.6.2 Disruption Claims..................................................
155
5.6.3 Calculating Disruption Damages........................... 155
Chapter six
........................................................................... 167
Damages
6.1
Introduction.........................................................
167
6.2
“General” versus “Special” Damages......
167
6.3
PROVING DAMAGES................................................ 168
6.3.1
Injury..................................................................... 168
6.3.2
Causation............................................................... 169
6.3.3 Amount of Damages.............................................. 169
6.4
Types of
Damages................................................ 169
6.4.1 General Damages................................................... 169
6.4.1.1 The Owner’s General Damages.................... 169
6.4.1.2 The Contractor’s General Damages.............. 170
6.4.2 Consequential Damages......................................... 170
6.4.3 Punitive Damages.................................................. 171
6.4.4 Liquidated Damages.............................................. 172
6.5 Calculating Construction
Contract
Damages............................................. 173
6.5.1 Actual Cost Method.............................................. 173
6.5.2 Total Cost Method................................................. 174
6.5.3 Modified Total Cost Method................................ 175
6.5.4 Quantum Meruit.....................................................
175
6.5.5 Jury Verdict Method............................................. 177
6.6
Common Types of Construction
Contract damages.............................................
177
6.6.1 Labor and Materials............................................... 177
6.6.2
Equipment.............................................................. 178
6.6.3 Delay Damages......................................................
178
6.6.3.1 General Conditions and Field Overhead...... 179
6.6.3.2 Home Office Overhead................................ 179
6.7
Interest.....................................................................
180
6.7.1 Contract Interest....................................................
180
6.7.2 Pre-Judgment Interest............................................ 181
6.7.3 Post-Judgment Interest.......................................... 181
6.8 No Damages for
Delay..................................... 181
6.9 Requirement to Mitigate
DAMAGES........... 182
Chapter seven
.................................................................... 199
Remedy Provisions
7.1
introduction.........................................................
199
7.2 The “Changes”
Clause....................................... 199
7.2.1
Federal Contracts: FAR 52.243-4......................... 200
7.2.2
District of Columbia Contracts:
D.C. Regs. § 27-3603.01....................................... 202
7.2.3
AIA Document: A201-1997, § 7........................... 202
7.2.3.1 Change Orders.............................................. 203
7.2.3.2 Construction Change Directives................... 203
7.2.3.3 Orders for Minor Changes in Work.............. 203
7.3 Differing Site
Conditions............................... 204
7.3.1 Federal Contracts: FAR 52.236-2......................... 205
7.3.2 District of Columbia Contracts:
D.C.
Code § 2-305.07(a)(5)................................... 206
7.3.3
AIA Document: A201-1997, § 4.3.4..................... 207
7.4 Suspension of
Work........................................... 207
7.4.1
Federal Contracts: FAR 52.242-14....................... 207
7.4.2
District of Columbia Contracts:
D.C. Code § 2-305.07(a)(6)................................... 209
7.4.3
AIA Document: A201-1997, § 14.3...................... 209
7.5
Terminations..........................................................
210
7.5.1
Federal Contracts: FAR 52.249............................. 210
7.5.1.1 Termination for Default................................ 210
7.5.1.2 Termination for Convenience....................... 213
7.5.2 District of Columbia Contracts:
D.C. Regs. §§ 27-3700 – 27-3799......................... 219
7.5.2.1 Termination for Default................................ 220
7.5.2.2 Termination for Convenience....................... 221
7.5.3
AIA Document: A201-1997,
§§ 14.1, 14.2 & 14.4..............................................
222
7.5.3.1 Termination by Owner:
A201-1997, §§ 14.2 & 14.4.......................... 223
7.5.3.1.1 Termination for Cause......................... 223
7.5.3.1.2 Termination for Convenience.............. 224
7.5.3.2 Termination by Contractor:
A201-1997, § 14.1........................................ 224
7.5.3.2.1 Termination Based
On Work Stoppage.............................. 225
7.5.3.2.2 Termination Based
On Delay or Disruption....................... 226
7.6 Liquidated
Damages.......................................... 226
7.6.1
Federal Contracts: FAR 11.501 et seq................... 227
7.6.2 District of Columbia Contracts:
D.C. Code § 2-305.07(a)(2)................................... 228
7.6.3
AIA Document: A201-1997, § 4.3.10................... 228
7.7
No Damages for Delay clause....................
229
7.7.1 Federal Contracts...................................................
230
7.7.2 District of Columbia Contracts.............................. 230
7.7.3
AIA Document: A201-1997, §§ 8.3.3 & 4.3.10.... 231
7.8
Disputes Provisions............................................
232
7.8.1 Federal Contracts: FAR 52.233-1......................... 232
7.8.2 District of Columbia Contracts:
D.C. Code § 2-305.07(a)(7).................................. 234
7.8.3
AIA Document: A201-1997, §§ 4.4-4.6............... 235
7.9 Notice
Provisions................................................ 236
7.10 Administrative Remedy
Provisions......... 237
Chapter Eight
..................................................................... 251
Mechanic’s LienS
8.1
Introduction.........................................................
251
8.2
Notice.........................................................................
251
8.3 Parties Entitled to a Mechanic’s
Lien in the district of
Columbia................ 253
8.3.1 Contractors and Subcontractors............................ 254
8.3.2 Sub-subcontractors................................................ 254
8.3.4
Suppliers, Materialmen, and Laborers................... 254
8.3.5
Architects and Design Professionals..................... 255
8.4 Public
Policy......................................................... 255
8.5 Amount of
Lien...................................................... 255
8.6 Property Affected by
Lien............................. 257
8.7 Identifying the
Owner..................................... 258
8.7.1
Generally................................................................ 258
8.7.2 Tenants by the Entireties....................................... 258
8.7.3
Leases.................................................................... 259
8.8
Priority.....................................................................
259
8.9
Enforcement of Mechanic’s Lien...............
260
8.9.1
When and How to File Suit
To Enforce a Mechanic’s Lien............................... 260
8.9.2
Owner’s Ability to Redeem its Property............... 261
8.9.3
Sale of Land: Allocation of Proceeds.................... 264
Chapter nine
........................................................................ 271
Performance Bonds
9.1
Introduction.........................................................
271
9.2 Coverage of Performance
BONDS............. 271
9.3 When Performance Bonds ARE
Required In THE DISTRICT of
Columbia.... 272
9.4 Surety’s Rights and Obligations
on the Performance
Bond............................. 272
9.4.1
Surety’s Role Before Principal Default................. 273
9.4.2
Obligee’s Declaration of Principal’s
Default and Notice to Surety................................ 273
9.4.3
Surety’s Duty to Investigate.................................. 274
9.4.4
Surety’s Obligation
Upon Principal’s Default....................................... 275
9.4.4.1 Agreement on Final Payment....................... 275
9.4.4.2 Finance the Principal..................................... 275
9.4.4.3 Takeover Agreement..................................... 276
9.4.4.4 Tender of a New Completion Contractor..... 276
9.4.4.5 Do Nothing................................................... 277
9.5
The Surety’s Defenses.......................................
277
9.5.1
The Surety’s Defenses Based
On the Principal’s Defenses................................... 277
9.5.2 Surety’s Own Defenses......................................... 278
9.5.2.1 Material Alteration
Of Bonded Contract..................................... 278
9.5.2.2 Improper Payment
Or Non-payment........................................... 279
9.5.2.3 Statute of Limitations................................... 279
9.5.2.4 Fraud or Misrepresentation By Obligee........ 280
9.5.2.5 Bad Faith By Obligee................................... 280
9.6
The Surety’s Remedies.......................................
280
9.6.1
Subrogation............................................................ 280
9.6.2 Indemnification ....................................................
282
Chapter ten
.......................................................................... 291
Payment Bonds
10.1
Introduction.......................................................
291
10.2 Public Projects in
D.C...................................... 291
10.2.1 Payment Bonds Under Federal Law.................. 291
10.2.1.1 Recovering Under the Federal
Miller Act Payment Bond........................... 292
10.2.1.1.1 Parties Covered.................................. 292
10.2.1.1.2 Covered Claims................................. 293
10.2.1.1.3 Notice Requirements......................... 294
10.2.1.1.4 Ripeness............................................. 295
10.2.1.2 Payment Bond Suit Under
The Federal Miller Act ............................... 295
10.2.2 Payment Bonds Under Local D.C. Law............. 296
10.2.3 The D.C. Little Miller Act................................... 296
10.2.3.1 Recovering Under the Little
Miller Act Payment Bond........................... 297
10.2.3.1.1 Parties Covered.................................. 297
10.2.3.1.2 Covered Claims................................. 297
10.2.3.1.3 Notice Requirements......................... 298
10.2.3.1.4 Ripeness............................................. 298
10.2.3.2 Payment Bond Suit Under
The Little Miller Act................................... 298
10.3 Private
Projects................................................. 299
10.4 Surety
Defenses................................................. 299
Chapter eleven
................................................................. 309
Dispute resolution
11.1
Introduction.......................................................
309
11.2 Informal Settlement
Efforts.................... 309
11.3 Alternative Dispute
Resolution............. 310
11.3.1
Mediation............................................................. 310
11.3.2
Arbitration........................................................... 311
11.3.2.1 The Federal Arbitration Act....................... 312
11.3.2.2 The District of Columbia Arbitration Act.. 313
11.3.2.2.1 Parties Must Have a Written
Agreement to Arbitrate...................... 314
11.3.2.2.2 Arbitration Award: Confirming,
Vacating, or Modifying..................... 315
11.3.2.2.2.1 Confirming or Vacating............ 315
11.3.2.2.2.2 Modifying or Correcting........... 316
11.3.2.3 Consolidation of Arbitrations..................... 316
11.3.3 Mandatory Alternative Dispute
Resolution Procedures.........................................
319
11.3.3.1 D.C. Superior Court “Multi
Door Dispute Resolution”.......................... 319
11.3.3.2 Federal Court.............................................. 319
11.4 Litigation and Judicial
Trial.................... 319
11.4.1 Jurisdiction and Venue........................................ 320
11.4.1.1 D.C. Superior Court.................................... 320
11.4.1.2 United States Court for the
District of Columbia................................... 320
11.4.1.3 Removal from State
To Federal Court......................................... 321
11.4.1.4 Venue.......................................................... 321
11.4.2 Other Litigation Considerations.......................... 321
11.4.2.1 Evidence..................................................... 321
11.4.2.2 Discovery.................................................... 322
11.4.2.3 Expert Witnesses........................................ 323
11.4.2.4 Jury Trials.................................................... 323
11.4.2.5 Post-Judgment Motions and Appeals......... 324
11.5
The District of Columbia
Contract Appeals Board..............................
324
11.5.1 Contract Disputes with the D.C. Government – DCCAB 324
11.5.1.1 First Step: Make a Claim
To the Contracting Officer......................... 324
11.5.1.2 Appealing the Contracting
Officer’s Decision to the DCCAB............. 325
11.5.1.3 Appeals $10,000 or Less:
Small Claims Procedure.............................. 326
11.5.1.4 Appeals $100,000 or Less:
Accelerated Procedure................................ 327
11.5.2 Judicial Review of DCCAB Decisions:
District of Columbia Court of Appeals............... 327
11.6 Choice of
Law...................................................... 328
11.7 Forum Selection
Clauses............................. 328
11.8 Contract
Interpretation............................. 329
Appendix...................................................................................
343
