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Surety Casenotes—California Appellate Court Upholds Surety’s Right Under Indemnity Agreement to Unilaterally Settle Principal’s Affirmative Claim Against Obligee

posted 13 days ago
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By Brian Kantar and Jase A. Brown of Chiesa Shahinian & Giantomasi PC Originally published in the October 2023 Surety Claims Institute Newsletter Pickard & Butters Constr., Inc. v. Buttonwillow Recreation & Parks Dist. , 2023 WL 4842047 (Cal. Ct. App. July 28, 2023). The surety issued payment and performance bonds on behalf of Pickard & Butters Construction, Inc. (PBC) in connection with numerous projects, including a public works project for the update of a 12-acre park in Buttonwillow, an unincorporated area in Kern County (the Buttonwillow Project), for the Buttonwillow Recreation and Park District (District). As is customary, ...
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Surety Casenotes—Court Reaffirms a Surety’s Right to Select Completion Contractor of Its Choosing Under Section 5.2 of AIA A312 Performance Bond

posted 13 days ago
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By Brian Kantar and Jase A. Brown of Chiesa Shahinian & Giantomasi PC Originally published in the October 2023 Surety Claims Institute Newsletter Lexon Ins. Co. v. Borough of Union Beach , 2023 WL 3727791 (D.N.J. May 30, 2023). The surety issued an AIA 312 Performance Bond in the penal sum amount of $3,012,483 on behalf of Brunswick Builders, LLC (“Brunswick”), which was a general contractor and low bidder for a project to expand and renovate the Borough of Union Beach Municipal Building. Shortly after Brunswick commenced construction on the project, Union Beach’s representatives determined that Brunswick was incapable of properly performing ...
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Precision in Construction Contracts: Lessons from Wood Group v. Targa

posted 13 days ago
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By E. Peyton Aldrich of Smith Currie Oles Originally published October 25, 2023 The success of any construction project hinges on careful planning, execution, and administration. The same is true for construction contracts. A recent Texas Court of Appeals case, Wood Group USA, Inc. v. Targa NGL Pipeline Company, LLC , emphasizes the need for precision in construction contracts and highlights the significant impact such cases have on contracting parties. Case Background In September 2018, Targa NGL Pipeline Company, LLC (“Targa”) contracted Wood Group USA, Inc. (“Wood Group”) to construct an 80-mile section of the Grand Prix NGL Pipeline System. The ...
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Five Ways AI Will Likely Impact the Construction Industry

posted 20 days ago
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by David Jean, CPA, CCIFP, CExP of Albin, Randall & Bennett Artificial intelligence has already begun to change an industry notorious for being slow to accept change. Over the next decade the construction industry is likely to see explosive growth and evolution, thanks to AI. The chief innovation officer for the country’s largest construction firm (Turner Construction) earlier this year told Construction Dive that “artificial intelligence will transform our industry in the next 10 years more than any other technology in the past 100 years.” It is likely that AI will eventually touch nearly every process that construction firms perform. While some ...
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New Davis-Bacon Act Rules Start October 23, 2023—Is Your Business Ready? – Part 3: How the New DBA Rule Raises Rates and Sets New Hurdles for Fringe Benefit Credit

posted 20 days ago
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By Nena Lenz of Fredrikson & Byron Originally published October 17, 2023 on The Construction Counselor from Fredrikson & Byron This is the third post in a three-part series discussing the impact of the U.S. Department of Labor (DOL) f inal Davis-Bacon Act (DBA) Labor Standards rule changes that go into effect on October 23, 2023. One of DOL’s goals with the new rule was to create mechanisms to increase wage and fringe benefit rates on a more frequent basis. This post examines how the new rule impacts wages and fringe benefit rates. The first post examined how the new rule expands DBA coverage. The second post examined how the new rule ...
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New Davis-Bacon Act Rules Start October 23, 2023—Is Your Business Ready? – Part 2: How the New DBA Rule Raises the Stakes and Likelihood of Noncompliance

posted 20 days ago
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By Nena Lenz of Fredrikson & Byron Originally published October 13, 2023 on The Construction Counselor from Fredrikson & Byron This is the second post in a three-part series discussing the impact of the U.S. Department of Labor (DOL) f inal Davis-Bacon Act (DBA) Labor Standards rule changes that go into effect on October 23, 2023. With the rule changes, DOL aimed to accelerate and streamline enforcement by attaching responsibility to those with the deepest pockets, holding upper-tier contractors accountable for lower-tier errors, increasing recordkeeping obligations, and claiming the right to inspect voluminous records on demand. The first ...
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New Davis-Bacon Act Rules Start October 23, 2023—Is Your Business Ready? – Part 1: How the New DBA Rule Reaches New Workers, Worksites and Projects

posted 20 days ago
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By Nena Lenz of Fredrikson & Byron Originally published October 10, 2023 on The Construction Counselor from Fredrikson & Byron On October 23, 2023, substantial changes to U.S. Department of Labor (DOL) regulations governing federally funded construction projects subject to the Davis-Bacon Act and Related Acts (DBA) go into effect. The DOL Final DBA Rule Changes are wide-ranging and require close consideration by contractors because they are expected to impose higher wages on most projects and increase the stakes of noncompliance. The 1931 Davis-Bacon Act labor standards apply to contractors and subcontractors performing work on federally ...
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The Good, the Bad, and the Board Minutes: Mississippi Court Says Public Bodies Must Fully Explain Why Lowest and Best Bidder Is a Better Choice Than the Lowest Bidder

posted 10-26-2023
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By R. Sumner Fortenberry and Ralph B. Germany, Jr. of Bradley Arant Boult Cummings LLP Originally published October 2, 2023 Contractors know when they bid a public job that it’s the lowest and best bidder that will ultimately come out on top. Contractors and public bodies also know that when a public body rejects the lowest bid, it needs to explain why the low bidder isn’t the best bidder. But in a recent twist, the Mississippi Court of Appeals has taken that old notion a step further: A public body must also explain why the selected bidder is the best bidder. In the consolidated cases of J&A Excavation v. City of Ellisville and J&A v. Jones ...
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IRS Announces Pause to Processing of New Employee Retention Claims Until 2024

posted 10-26-2023
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By Jennifer Rohen and Carey Heyman of CliftonLarsonAllen Originally published September 25, 2023 Over the past couple of months, the Internal Revenue Service (IRS) has issued multiple warnings, published a generic legal advice memorandum, and even opened their 2023 “Dirty Dozen” article cautioning taxpayers of aggressive Employee Retention Credit (ERC) program schemes. On September 14, 2023, the IRS took a more drastic measure, announcing a temporary moratorium on the processing of new ERC refund claims until 2024. The goal of the temporary suspension will be to use the rest of 2023 to gain a better handle on potentially fraudulent claims and to ...
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8(a) Construction Contractors Get More Time to Meet SBA’s Bona Fide Office Requirement

posted 10-25-2023
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By Meghan F. Leemon of PilieroMazza Originally published August 24, 2023 On August 21, 2023, Small Business Administration (SBA) Administrator Isabella Casillas Guzman announced the extension of the 8(a) Business Development Bona Fide Place of Business (BFPOB) Requirement Moratorium from September 30, 2023 to September 30, 2024. Construction contractors in the 8(a) Program should make note of the new date and prepare accordingly to ensure eligibility for future contracts. Visit this link for PilieroMazza’s previous coverage on this topic. The BFPOB requirement provides that for 8(a) Business Development Program participants working on government construction ...
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IT and Cybersecurity Challenges Facing the Construction Industry

posted 10-25-2023
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By Lindsay Timcke of CliftonLarsonAllen Originally published October 2, 2023 Encryption software firms’ research reveals that the construction industry is at the highest risk of being targeted by ransomware attacks. In 2021, Nordlocker, an encryption software firm, analyzed 1,200 companies to discover which industries were affected by ransomware attacks the most. The construction sector was revealed to be targeted the most out of the 35 industries analyzed. This rate of ransomware attacks has only gotten worse since then. As in 2023, Nordlocker disclosed that the construction industry suffered the largest amount of ransomware attacks from Jan. 2022 ...
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Are Standard Form Construction Contracts Fit for the ‘Smart Infrastructure’ of the Future?

posted 10-06-2023
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By Rupert Sydenham and Annie Lund of Hogan Lovells Originally published September 20, 2023 Infrastructure projects increasingly involve constructing both physical infrastructure and digital infrastructure works. But the current standard form construction contracts have not been designed to address the risks particular to these kinds of projects. What are the risks particular to projects involving both physical and digital infrastructure? And how might standard form construction contracts need to adapt to address them? We recently published an article in the July 2023 edition of the International Bar Association's journal Construction ...
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Grounds for Vacating an Arbitration Award Remain Extremely Limited

posted 10-06-2023
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By D. Bryan Thomas , John Mark Goodman , and Jennifer Ersin of Bradley Arant Boult Cummings LLP Originally published August 23, 2023 The Eleventh Circuit Court of Appeals issued a decision last week upholding an arbitral award, despite the failure of the arbitrators to make certain pertinent disclosures. The case involves an international arbitration before the International Chamber of Commerce (ICC) stemming from the design and construction of the Panama Canal expansion, which was “severely delayed and disrupted” and over twenty months late. Following an arbitration hearing on the merits, the panel of three arbitrators ordered ...
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NASBP Adds New Resources to the NASBP Producer Communications Toolkit 2.0

posted 10-04-2023
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Now there are even more reasons to use the NASBP Producer Communications Toolkit 2.0 in your client discussions, presentations, emails, and more! NASBP recently added 14 new items to the Toolkit 2.0. The NASBP Industry Relations Committee helped identify new resources that would help producers discuss the value of surety bonding with construction project stakeholders. The new items include four new resources targeted to project owners , one resource targeted to architects , three new resources for contractors , and six additional resources to help producers in their day-to-day work and in general discussions with all project stakeholders (NASBP login ...
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Liquidated Damages Disproportionate to Actual Damages Deemed Unenforceable

posted 09-29-2023
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By John Mark Goodman of Bradley LLP Originally published September 11, 2023 Construction contacts often include provisions that provide for pre-determined or “liquidated” damages in the event of a breach. Such provisions can provide certainty to the parties as to the consequences of a breach and can simplify the task of proving up damages at trial. However, as one contractor found out recently, courts may refuse to enforce liquidated damages provisions if the amount specified is disproportionate to the actual damages (see Smart Construction & Remodeling v. Suchy , 2023 WL 5525071 (Minn. Ct. App. August 28, 2023) ). Smart Construction ...
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Makin’ New Davis-Bacon (Regs): DOL Issues Final Rule on Prevailing Wages

posted 09-29-2023
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By Whitney J. Jackson and Anne R. Yuengert of Bradley Arant Boult Cummings LLP Originally published August 18, 2023 Recently the U.S. Department of Labor (DOL) issued a final rule that provides, among many other things (the rule is more than 700 pages long), (1) an update to the formula DOL uses to set “prevailing wages” under the Davis-Bacon Act and related regulations, (2) enforcement options for DOL to penalize employers for retaliation, and (3) the codification of annualizing bona fide and unfunded fringe benefits. Davis-Bacon applies to federal contractors and subcontractors performing on contracts in excess of $2,000 for ...
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Buy America: Impact on Construction Contractors

posted 09-21-2023
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By Joseph Natarelli of Marcum LLP Originally published August 22, 2023 President Joe Biden’s “Buy America” initiative, one facet of the administration’s $1 trillion infrastructure program, promotes domestic manufacturing and job creation by increasing the percentage of American-made goods used in federally funded projects. Binding Buy America guidance was finalized by the White House Office of Management and Budget on August 14, here’s what you need to know about these regulations with significant impact for construction contractors. BUY AMERICA, SINCE 1933 The Buy America regulations, which were first introduced in 1933, initially required that materials ...
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The Requirements to State a “Sum Certain” No Longer a Jurisdictional Bar to Government Contract Claims

posted 09-21-2023
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By Marcos R. Gonzalez of Peckar & Abramson, P.C. Originally published August 28, 2023 The Boards of Contract Appeals, Court of Federal Claims, and the Federal Circuit have long held that the elements of a claim under the Contract Disputes Act (CDA) to be jurisdictional. Those requirements are as follows: (a) Claims generally.– (1) Submission of contractor’s claims to contracting officer.–Each claim by a contractor against the Federal Government relating to a contract shall be submitted to the contracting officer for a decision. (2) Contractor’s claims in writing.—Each claim by a contractor against the Federal Government relating to a contract shall ...
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Contract’s ADR Term Not a Condition Precedent

posted 09-15-2023
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By Nell M. Hurley of Ernstrom & Dreste LLP Originally published Summer 2023 All parties, including the sureties and the obligee in this declaratory judgment action, were likely surprised by the outcome of a recent New York federal district court decision. The obligee’s motion to dismiss the sureties’ complaint was denied, but not because the court found the underlying construction contract’s ADR provision inapplicable to the sureties. Instead, it found the contract language failed to qualify the term as a condition precedent to commencing litigation and thus was no barrier to the sureties’ suit. The court’s decision 1 upheld the magistrate’s initial ...
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The Limits of Third-Party Beneficiary Rights in New York

posted 09-15-2023
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By Aman Kahlon of Bradley Arant Boult Cummings LLP On complex construction projects, there may be multiple contractors, subcontractors, vendors, suppliers, and sub-subcontractors working along side one another. With various entities working parallel there are substantial risks that one contractor’s work will interfere with that of another contractor on the project. When the two parties have direct contracts with one another ( e.g. , owner and general contractor or general contractor and subcontractor), the non-interfering or non-breaching party can pursue whatever rights and remedies are available under the contract. However, it is trickier when two parties ...
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