Corrective Action Protest Grounds for GSA Schedule Federal Construction Contractors

On May 16, 2024, the U.S. Court of Federal Claims (COFC) reinstated a contract award after determining that a Government Accountability Office (GAO) corrective action recommendation was without a rational basis.

A contract awarded, protested, terminated, appealed, then reinstated. It’s no secret that federal construction procurements are plagued with uncertainty. From delays, constructive suspensions, compromised supply chains, the litigation-laden critical path method, and the mandate for all construction materials used in federally funded projects for infrastructure to be produced in the United States under the Build America, Buy America Act (BABAA) (to name just a few traditional and emerging favorites), just one of these issues could fill the rest of anyone’s month with substantive research. To add one more, which is entirely unique to bid protests, federal contractors–including construction contractors–listed in a General Service Administration (GSA) Schedule may have new grounds to have a contract award reinstated that was terminated by a federal agency pending a GAO decision.

GAO Protest

An initial GAO protest filed by Deloitte & Touche LLP (Deloitte) argued that the National Geo-Spatial Intelligence Agency (Agency) wrongfully made an award to Kearney & Company, P.C. (Kearney) when the Agency: (1) improperly evaluated quotes; and (2) failed to conduct a proper best-value tradeoff analysis. At issue was a competed task order with Kearney under a GSA FSS multiple-award contract. Before the GAO issued an opinion, however, it held an unrecorded predictive-outcome conference with Deloitte and Kearney where the only mutual consensus was the likely ineligibility of all offerors for the relevant award. The Agency subsequently elected to take corrective action, terminating Kearney’s contract award for convenience, amending the solicitation to avoid issues (including undisputed issues) addressed in the GAO protest. After the Agency adopted their corrective action, the GAO protest was dismissed as academic and moot.

COFC Protest

Shortly after the GAO decision, Kearney filed a COFC protest which reinstated their contract. The COFC held, among other things, that the Agency’s decision to adopt the GAO recommendation was irrational because the recommendation itself was irrational. Kearney & Company, P.C. v. United States, Nos. 24-162 and 24-201. The GAO solely misunderstood the solicitation to require FSS labor categories to exactly match personnel requirements, notwithstanding that the parties agreed the solicitation stated otherwise. The Agency’s corrective action was based on this GAO misunderstanding, resulting in the corrective action lacking the requisite rational basis. See Dell Fed. Sys., L.P. v. United States, 133 Fed. Cl. 92, 101, 104 (2017).

Implications on Construction Contractors in the GSA Schedules

While large federal construction procurements are generally competed under sealed bidding procedures, construction contractors offering services on a GSA Schedule can potentially have awards reinstated that were terminated due to agency corrective actions. For example, the GSA’s Multiple Award Schedule for “Facilities – Facilities Maintenance and Repair” lists contractors offering services for complete operations, maintenance and repair of federal real property. This includes maintenance for elevators, HVAC, electrical, plumbing, septic, amongst others. In this situation, if an agency holds a competition for task orders making an award to one of the offerors, resulting in a GAO protest, an agency’s corrective action based on the protest or a GAO predictive-outcome conference call may be fair game for contract reinstatement at the COFC.

Considering the expanding range of protest issues involved in construction projects, the mere mention of an agency corrective action while a GAO protest decision is forthcoming may be worth watching. Besides, who says the critical path method couldn’t creep into your personal life more than it already does?

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Author, Marcus Burden, is an incoming associate at Pillsbury Winthrop’s DC office, and a recent graduate of the George Washington University Law School. His legal experience as a 1L - 2L summer associate and part-time law clerk with Pillsbury during law school, involved city and federal government procurement protests and disputes, CFIUS review, and various real estate and construction-related litigation matters and transactions. He is a current member of the American Bar Association’s Section on Public Contract Law, Forum on Construction Law, and Young Lawyers Division. During law school, he served as Director of Events for the Government Contracts Student Association, was an active member of the Black Law Student Association, and was the recipient of the Larry D. Harris Memorial Law Scholarship.

Editor The Honorable Jeri K. Somers (ret.) is an arbitrator and mediator, focusing on the areas of government contracts matters, construction matters, and other industry disputes.  Judge Somers is also a member of the Military Justice Review Panel, established pursuant to 10 U.S.C. § 946, and the Department of State Foreign Services Grievance Board.  

eDiscovery for Construction Litigation: 3 Data Challenges to Understand

Constructions litigation isn’t going anywhere, and the 2023 report from Arcadis found the average value of construction disputes in North America rose 42% in 2022 to $42.8 million, which is the highest it has ever been. The report found that most parties prefer an early resolution to these disputes, which is more feasible than ever thanks to software and technology advancements that allow for faster analysis of huge document sets. This highlights the importance of having a trusted document review platform that legal teams can rely on for accurate searching and secure storage in these complex matters.

Data collection can be the most complex and technically rigorous of all discovery phases. It involves the extraction of potentially relevant electronically stored information from its native source into a separate, secure repository for review. Construction litigation creates unique challenges when it comes to managing data, and it’s essential to plan ahead and understand potential roadblocks to ensure a smooth discovery process.

In this post, we’ll share the three primary data challenges we see

customers face in construction litigation. Thinking through these challenges at the collection stage will minimize issues as you head into document review and production. 

1) Large Data Collections

Electronic evidence in litigation continues to grow, and construction disputes see some of the largest collections due to the wide variety of data sources and information at play, including:

• Email
• Text messages & chat programs
• Virtual meeting recordings
• Document control systems
• Images & drone footage
• Project databases
• Schedules & timelines
• Change orders
• Bidding materials
• Estimates and cost reports
• Payrolls

Additionally, while most of this evidence is already in electronic form, there are usually a good amount of paper documents that must be digitized so that they can be searched and sorted more easily.

While you can’t ignore the seemingly never-ending sources of potentially relevant data, you can be strategic on how to identify, target, and collect the data. The goal is to avoid over-collection by taking the time to reasonably identify custodians and sources rather than blindly casting a wide net.

It may be prudent to identify certain data sources that will be preserved but not yet collected until you have more information on the matter. You could also consider collecting or producing data on a rolling basis, starting with the most relevant sources first, then moving on to less critical groups. That’s a reasonable approach that can help keep costs lower, or at least spread them out evenly.

Another option is to consider using data filtering and analytics tools such as deduplication, near-duplicate grouping (similarity scoring), clustering, etc. These tools can help your team get to relevant data more quickly and reduce the need for a time-slogging manual review, saving time and money and avoiding frustration.

2) Images and Videos from Mobile Devices

Another growing ediscovery challenge in construction litigation disputes is the massive quantity of images and videos taken with mobile phones and devices. Almost everyone on a construction project has a mobile device, and it’s easy to quickly snap a picture of a crack or measurement for later reference or to share with the team. There could be dozens of mobile devices with thousands of images and videos that could be highly relevant to a dispute. Collecting images from all those mobile devices can be a chore, and the options for collection range from self-taken screenshots to professionally captured forensic images. Text messages and other communications on the cell phones may need to be collected as well.

It's critical to have a solid plan for collecting images and videos from mobile devices, since you want to make sure you collect all of the associated metadata, including any GPS information (something that is not possible with screenshots, for example). This information can be useful for authenticating the subject matter of the media. Plus, remember that the images are not inherently searchable, so having this additional metadata, including dates, timestamps, and location information, can be helpful in sorting and filtering the images and videos. (You can also make images searchable with AI image recognition tools, like those featured in Nextpoint Data Mining.)

3) Specialized Software for Timelines and Project Management

Lastly, the construction market often uses specialized and proprietary software to monitor tasks and keep the project on track. Most document review platforms are not capable of viewing this information in its native database format, so the pertinent information is often exported as reports in PDF form or another more static format. Those exports can be loaded into a review platform, but it’s important to consider exactly what information will be most helpful so that the exports can be more targeted.

In addition, there might be important recordings of online meetings from Zoom or Microsoft Teams that need to be collected and reviewed. It’s important to know under whose account these meetings may be stored, what formats that they can be retrieved in, and if a transcript is available along with the media recording.

While there are always complicated challenges involved with any litigation matter, these are some of the more prominent areas where we see frustrations from our customers. At Nextpoint, we have experts that can help make sure you’re thinking about every option so you can successfully overcome the challenges in your own construction disputes.

Bonus: Questions to Devise a Collection Strategy

Here is an excerpt from our ediscovery collection checklist to help you think through important questions as you develop a data collection strategy.

1. How many parties are involved?
2. Who are your key custodians and where are they located?
3. Do any identified custodians have direct IT resources available?
4. What are each custodian’s key sources? (e.g. email, phone, tablet, company server, etc.)
5. Do you anticipate the authenticity of any evidence may come into question during the course of your matter?
6. Is there a priority hierarchy that can be created from all identified custodians and their respective sources?
7. Are there any parameters to be applied at the time of collection? (e.g. date range)

Additional Resources

• eDiscovery Collections eGuide: The Definitive Guide to Managing Modern Data Collections
• The Art of eDiscovery Data Filtering eGuide
• eDiscovery Case Management Checklist

Brett Burney is VP of eDiscovery Consulting at Nextpoint Law Group and a widely recognized authority on the complex ediscovery issues facing litigators today. In addition to consulting with corporations and law firms on their data management and legal technology issues, Brett is a journalist, podcaster, speaker, and author. Brett can be reached at bburney@nextpointlawgroup.com.

Design-Build Projects – Engineering Considerations From Concept to Bid to Detailed Design

Design-build is a project delivery method in which the owner contracts the design and construction of a project to a single entity. These types of projects shift the risk away from the owner to the design-build entity. Due to reduced owner risk, this approach is one of the most widely used methods of project delivery in the United States.

A design-build entity consists of a contractor (builder) and an engineer/architect (designer) working together collaboratively. Typically, the builder oversees construction, and the designer oversees the engineering and architectural design aspects of the project.

This article outlines the stages involved in design-build projects and briefly discusses disputes that may arise due to engineering and design issues. 

Concept stage - Request for qualifications and request for proposal

The design-build process often begins with the owner issuing a request for qualifications (RFQ). The RFQ documents identify the services needed and invite design-build entities to submit their qualifications to provide those services. The owner will then select the entities that respond to and meet these qualification criteria for inclusion in the request for proposal (RFP) process.

The owner’s RFP documents are distributed to the entities that meet the qualification criteria. The RFP includes a summary of work, technical requirements, preliminary drawings and plans, project constraints, reference materials, contractual requirements, and expected timelines.

Bid stage - Scope of work review

The designer prepares bid drawings and their basis of design using the RFP documents as a point of reference. These documents will establish the designer’s understanding of the owner’s RFP package.

The design team typically comprises a lead designer and sub-designers for each discipline (e.g., architectural, structural, mechanical, electrical, and plumbing (MEP), site, and civil drawings). The lead designer must coordinate with the sub-designers to establish scope boundaries, ensure consistency in the design approach across disciplines, and verify all RFP requirements are considered and included.

During this stage, the design team should collaborate with the builder and the owner to make sure they understand the scope of the project. If the design-build team finds the RFP documents to be unclear and/or missing critical information, it should issue a request for information (RFI) to the owner prior to submitting its bid.

The level of detail in bid drawings should capture the full scope of work and include the location, quantity, and type of materials needed to complete the project. Because the builder uses the bid drawings to prepare the bid price, any missing scope would impact the project cost down the road. If certain scope items are not shown or clearly defined in the bid drawings due to time constraints or a need for more detail, the designer should clearly communicate this to the builder so a proper contingency can be included in the bid. It should be noted that bid drawings are not meant to provide enough detail to start construction of the project.

When bid documents are incomplete, sub-designers lack proper coordination, or the designer misunderstands the bid documents, builders may underestimate both the bid price and the time required to complete the project. This is a major area where disputes can arise as the project progresses.

Detailed design stage - Issued for construction (IFC) and shop drawings

Once the owner chooses the design-build entity, the designer will proceed with the detailed design and prepare the drawings and specifications necessary for the construction and execution of the project. These documents are a comprehensive set of construction drawings and material specifications that reflect all design changes, revisions, and approvals made during the design phase. If the owner requests any design or scope changes post-bid award, contract change orders should be issued to reflect resulting cost increases and any potential delays not accounted for in the bid stage. This is critical to avoiding disputes between the parties as the project progresses.

Shop drawings are highly detailed plans that describe how components will be manufactured, fabricated, and assembled. They are prepared by the subcontractors, fabricators, and/or manufacturers and issued to the designer for review. The designer’s job is to ensure the shop drawings align with the design intent as shown in the IFC drawings. Construction will not proceed until the designer approves the shop drawings. The contractor is also required to review the shop drawings and coordinate with the various trades required to complete the work. The designer’s approval of incomplete or erroneous shop drawings or the builder’s failure to coordinate with the trades can lead to disputes between the parties involved.

Conclusion

In summary, design-build projects may encounter disputes related to engineering and design issues due to the following factors:

1. Incomplete bid documents, lack of sub-designer coordination, and designer’s misunderstanding of the bid documents.

2. Inadequate tracking and documentation of owner’s post-bid design and/or scope changes.

3. Designer’s approval of incomplete or erroneous shop drawings.

Disclaimer: This article presents the views, thoughts, or opinions only of the author and not those of any HKA entity. The information in this article is provided for general informational purposes only. While we take reasonable care at the time of publication to confirm the accuracy of the information presented, the content is not intended to deal with all aspects of the referenced subject matter, should not be relied upon as the basis for business decisions, and does not constitute legal or professional advice of any kind. HKA Global, LLC is not responsible for any errors, omissions, or results obtained from the use of the information within this article. This article is protected by copyright © 2024 HKA Global, LLC. All rights reserved. 

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Author Rahul Ratakonda is a Director with HKA. Rahul Ratakonda is a professional engineer with more than 15 years of experience. He has been retained as a forensic technical expert on more than 50 occasions. Rahul’s technical expertise includes forensic engineering, structural engineering, façades, building code analysis, and emergency response. He has provided damage assessments and repair scope recommendations for insurance claims related to natural disasters, fire events, and construction defects. 

Editor Thanh Do is a Structural Forensic Engineer with Thornton Tomasetti. As an expert in Design-Build project delivery, he has served as a designer on Design-Build projects, as well as conducted forensic investigations of various Design-Build disputes. His specialties also include investigations of construction/design defects and collapses, and standard of care assessment. Furthermore, he also oversees the Forensic Visualization group, which produces graphics and animations for trial exhibits/demonstratives. 

What Every Project Participant Needs to Know About Delay Claims

A “delay” on a construction project is defined as the stretching out of the time for completion of certain key milestone scopes of work which can impact the completion date of an entire project, due to some circumstances or events that were not reasonably anticipated when the project began. 2 Construction Law ¶ 6.01 (Matthew Bender, 2024). While delays can be caused by any number of events, the most common are defective plans and specifications; design changes; severe weather and other, similar unforeseeable events; unforeseen or differing site conditions; unavailability of materials or labor; labor inefficiencies or stoppages; contractor negligence; and owner influences, including construction changes or outright interference by the owner or its agents. If the project schedule is not recovered following a delay, then the project schedule will likely be extended, resulting in an increase in the contractor’s costs of performance.  A contractor that has experienced a delay on a project can take certain actions to pursue recovery of any damages the contractor may have incurred.  However, to do so it is important to understand the different types of delays and the methods for establishing the delays.

I. Types of Delays

Delays may be categorized as (1) critical versus non-critical delays, (2) excusable versus non-excusable delays, and (3) compensable versus non-compensable delays. A critical delay is a delay that affects the project completion date and delays the entire project. In essence, a critical delay is one that will extend the critical path of a project.  A non-critical delay is a delay that has no effect on the project’s critical path. Courts have recognized that delays to work not on the critical path will generally not delay the completion of a project.  G.M. Shupe, Inc. v U.S., 5 Cl. Ct. 662, 728 (1984).  Such a non-critical delay may affect the completion of certain activities, but does not affect the completion date of the entire project. In order for a delay to provide the basis for a claim for additional time or money, the delay must impact critical path activities on the project schedule.

In addition to determining if a delay is a critical or non-critical delay, it is important to determine if a delay is non-excusable or excusable. An excusable delay is a delay that is unforeseeable and beyond the control of the contractor and often allows a contractor to recover an extension of time, an increase in the contract sum, or both. In contrast, a non-excusable delay is a delay that is foreseeable or within the contractor’s control. Obviously, the distinction between these two is significant in that it determines which party is liable for the delay and dictates whether a contractor is entitled to additional time (and possibly money) or may need to compensate the owner for the delay. To prove its entitlement to delay damages, the contractor is typically required to maintain some form of reliable schedules if the parties desire to hold one another accountable for delays and ultimately determine the party responsible for the delays.

Contractor-caused delays typically entitle the owner to recover damages, such as any liquidated damages, or to terminate the contract for the contractor’s material breach in having delayed the project. Likewise, because the contractor is responsible for the delay, the contractor will not be entitled to either additional time or additional compensation for its own costs or damages associated with the delay. In fact, a contractor dealing with a non-excusable delay routinely will have to accelerate its work, at its own expense, to avoid delaying the project.

Excusable delays are usually caused by conditions that are reasonably unforeseen and not within the contractor’s control. In other words, an excusable delay is usually one not due to the contractor’s negligence. The most common example of an excusable delay usually falls under a force majeure clause and may include fire, floods, earthquakes, natural disasters, owner changes, errors or omission in the plans and specifications, differing or unforeseen site conditions, and acts of governmental bodies.

For a delay not set forth in or addressed in the contract to be excused, it normally has to fall within one or both of the following categories: “(1) the delay resulted from interference with the contractor’s performance by the owner or those for whom the owner is responsible; or (2) the risk of the delay was not expressly or impliedly assumed by either party to the contract.”  2 Construction Law ¶ 6.09 (Matthew Bender, 2024).

After determining that a delay is an excusable delay, you have to determine if it is a non-compensable or compensable delay. A good place to start is to analyze the controlling contract language as it will usually include terms as to whether a delay is compensable or non-compensable. Non-compensable delays are delays for which the contractor is entitled to a time extension but not entitled to additional monetary compensation. Neither party is responsible for the damages incurred by the other party. Thus, both parties assume their own additional costs arising out of the delay. Such delays are typically addressed in the context of force majeure clauses.

Compensable delays are delays to the critical path that are unforeseeable and beyond the contractor’s control or fault, for which the contractor is entitled to a time extension and additional compensation. Determination of the critical path is necessary for determining if a delay is compensable because only work on the critical path has an impact upon the time in which the project is to be completed.  LCC-MZT Team IV v United States, 155 Fed. Cl. 387, 458 (2021) (citing Ultimate Concrete, LLC v. United States, 141 Fed. Cl. 463, 480 (2019)).

Courts have held that a critical path delay is compensable if it was entirely caused by events within the other party’s control.  Cobb Mech. Contrs., Inc. v. Morganti Grp. Inc., 2007 U.S. Dist. LEXIS 108103, *11 (S.D. Texas, Aug. 4, 2007). However, if a general contractor is unable to prove that the owner was responsible for the event(s) that caused the delay, then the delay is excusable but normally non-compensable.  Houston v. R. F. Ball Constr. Co., 570 S.W.2d 75, 77 (Tex. Civ. App. – Houston [14th Dist.] 1978, writ ref’d n.r.e.   In general, a compensable delay is caused by the owner or its agent, but could also be caused by “no fault” events, such as acts of God and the like. Depending upon the controlling contractual terms, compensable delays may include circumstances, such as a changes to the design or the contract terms; a suspension of work; inability to provide site access; untimely review of submittals, shop drawings, or responses to RFIs; delayed issuance of the notice to proceed; defective plans and specifications; and, differing site conditions.

II. Methods of Proving Delays

When a party experiences a delay and has determined that the delay is an excusable and compensable delay, the party must then determine how to properly analyze and quantify the damages associated with the delay. There are multiple methods for proving delays and each has its “pros” and “cons.” Attorneys must be sure that the method chosen is best for the available facts and data surrounding the delay and that the analysis will be accepted as reliable and credible by those that ultimately review the claim regarding the delay (i.e. the court or the arbitrators). Some of the common methods of delay analysis include (1) the Total Cost Method, (2) the Modified Total Cost Approach, and (3) the Measured Mile Method.

    A. Total Cost Method

In general, the Total Cost Method is a process whereby you subtract the contractor’s bid estimate from the total of all project costs incurred and seek recovery of the overrun as the damages caused by the delay. While it is one of the simplest methods for calculating delay damages, it carries the least amount of weight with those opposing delay claims as it does not eliminate the fact that the party seeking the delay claim may have been responsible for some of the delay.  Additionally, it has also been disfavored due to concerns about bidding inaccuracies. Servidone Constr. Corp. v. United States, 931 F.2d 860, 861-62 (Fed. Cir. 1991) IMany courts, such as the one in Servidone, are openly critical of the Total Cost Method and have even noted that the Total Cost Method should be used with caution and as a last resort.

    B. Modified Total Cost Approach

 

The Modified Total Cost Approach is preferred over the Total Cost Method as it eliminates the sole reliance on the contractor’s original estimate by taking into account deficiency or performance issues caused by the contractor and factoring in non-compensable delays such as Acts of God. Courts have explained that when using the Modified Total Cost Approach, safeguards must be used to ensure that the burden of excess expenses falls on the party responsible for those expenses. Raytheon Co. v. White, 305 F.3d 1354, 1366 (Fed. Cir. 2002). In Raytheon, the Federal Circuit has clarified that a plaintiff utilizing a Modified Total Cost methodology must prove that (1) the nature of the losses make it impossible or highly impracticable to determine them with a reasonable degree of accuracy; (2) the plaintiff’s bid or estimate was realistic; (3) its actual costs were reasonable; and (4) it was not responsible for the added expenses. If a plaintiff is successful, the plaintiff may recover the total cost of the contract minus the bid price with various adjustments for delays the contractor caused or any miscalculations. Propellex Corp. v. Brownlee, 342 F.3d 1335, 1339 (Fed. Cir. 2003).

    C. Measured Mile Method

 

The Measured Mile Analysis is the preferred method for calculating lost productivity and delay damages. It is a technique whereby an unimpacted period or area or activity of construction work is compared with another period or area or activity of construction work that has been disrupted, the assumption being that the difference between the labor or equipment hours expended per unit of work performed in the unimpacted and impacted periods represents the loss to the contractor due to the impact or disruption for which another party is responsible. United States ex rel. Salinas Constr., Inc. v. W. Sur. Co., No. C14-1963JLR, 2016 U.S. Dist. LEXIS 88267, at *9 (W.D. Wash. July 7, 2016). It is often said to be the preferred method of proving damages as it has the ability to isolate the productivity loss during an impacted period from other project factors.

Contractors will eventually incur some type of delay on a construction project. Thus, it is important to understand the different types of delay and whether or not a delay is compensable.  At the same time, it is also important to understand the different delay claim methodologies to understand what information and project documentation will assist in proving entitlement to recovery for damages due to delays. While you may eventually have to retain a delay expert to assist with the claim, it is important to understand delays and delay claims so that you can proactively support any such claims.

Navigating FIDIC Contracts in the Americas: Trials and Tribulations

Overview of FIDIC

The International Organization for Consulting Engineers (FIDIC) is a global organization that represents national associations of consulting engineers and more than one million engineering professionals in over 100 countries (FIDIC). The United States of America joined FIDIC in 1958 (100 years history of FIDIC, 1913-2013). FIDIC’s North American group, FIDIC North America, represents the industry’s interests in the region and supports FIDIC activities at the national and regional levels (FIDIC North America). 

FIDIC contracts have been developed for over 50 years as the international standard for the consulting industry. They are recognized and used globally in many jurisdictions, on all types of construction projects. The key component of the success of the FIDIC contracts as industry standard lies in their balanced approach to the roles and responsibilities of the main parties, as well as the allocation and management of risk. For this reason, the fundamental principle behind the FIDIC contracts is the use of General Conditions of Contract, deemed to be suitable in all cases, as evidenced by thousands of successful projects around the world (FIDIC: Why Use FIDIC Contracts?). 

The primary purpose of an FIDIC contract is to protect the interests of the public when dealing with construction projects that involve home construction and ownership. These contracts are also used to help with title issues and prevent any potential problems with legal ownership and contract disputes (Everything You Need to Know about FIDIC Contracts).

FIDIC in the United States

Although 3% of the FIDIC contracts sales are attributed to the United States, FIDIC contracts remain underused in the region. Cases in which FIDIC contracts are being used by the US parties have involved projects where the engineering and other professional services will be primarily performed by a US firm but constructed in other countries or for private company owners who do not have extensive experience with US industry contract forms (Kromann Reumert, FIDIC: International Standard Forms of Contracts). The lack of use of FIDIC forms in the US and Canada is attributed to the fact that most government agencies have their own forms available and that private clients tend to use either their own forms or one of the other industry forms (FIDIC Conference Spotlights USA, Canada, and Caribbean Use of FIDIC Contracts).

Although the exposure of American construction lawyers to FIDIC contracts has been quite limited so far, it is important to increase awareness of FIDIC contracts in the US given the potential benefits of utilizing their fair balance of risk / reward.  Indeed, one of FIDIC’s Golden Principles recommends that the parties to FIDIC contracts do not change the balance of risk / reward allocation in the contract. Moreover, being originally based on the English legal system, which is known for its tradition of detailed regulation, FIDIC contracts are suitable and well-tailored to serve the US construction market (Kromann Reumert, FIDIC: International Standard Forms of Contracts).

FIDIC vs. American Institute of Architects

The question arises as to how the US industry contract forms differ from the FIDIC contracts. The A-201 General Conditions and other forms published by the American Institute of Architects (AIA) are probably the most widely used in local government and private construction projects in the US. See, e.g., M. Maged Hegazy, Major Differences between FIDIC-JCT-NEC (May 2021). It is worth comparing the terms of payment, suspension of work, and termination by the contractor under the AIA and FIDIC sets of contracts given the importance of these provisions for the performance of construction contracts.

“Payment” Clause. For the payment, FIDIC sub-clause 14.7 indicates that the employer must pay the contractor’s financial dues from the contractor’s submission of payment documents, review, and approval by the Engineer within eight weeks, while the AIA section 9.6.1 provides that the time period for payment will be determined by the contract. For the delayed payment, the AIA section 9.6.1 provides that the contractor will be compensated for the delay with a rate mentioned in the contract or with the legal rate prevailing in the project place, while FIDIC sub-clause 14.8 indicates a constant rate that the contractor should gain for his delayed dues in currencies that constitute the value of the contract.

“Suspension of Work” Clause. FIDIC sub-clause 8.9 indicates that in the event of a suspension by the employer, (s)he must compensate the contractor either by increasing the project time or adjusting the cost in addition to a reasonable profit with the inclusion of these amendments in the contract, provided that the Engineer determines what is owed to the contractor. Sections 4.3.6 and 4.3.7.1 of the AIA refer to the contractor submitting a claim for additional costs if the employer suspends the works, and if there is a claim to increase the time, cost, and the effect of the delay on the progress of works.

“Termination by the Contractor” Clause. Sub-clause 16.2 of the FIDIC indicates that the period for the contractor to send a notice of the termination of contract to the employer is 14 days, while the same period under AIA section 14.1.3 is 7 days. Sub-clause 16.2 of the FIDIC and AIA sections 14.1.1 and 14.1.2 indicate that the contractor should be compensated for the work performed, in addition to fair overheads, profits, and damages. See FIDIC, Construction Contract (2nd ed., 2017 Red Book); AIA Contract Documents (AIA Contract Documents).

FIDIC in the Caribbean and Latin America

Despite the lack of reliable statistics on the use of FIDIC contracts in the Americas, the research suggests that FIDIC contracts have been used for many years in the English common law jurisdictions of the Caribbean.  For example, Trinidad & Tobago is known for using FIDIC’s Red Book (hospital project) and Pink Book (water project). More recently, in June of 2024, FIDIC has renewed and expanded a major agreement with the Caribbean Development Bank (CDB) that will see CDB adopting the use of 12 FIDIC standard contracts for the next five years. The suite of contracts covered by the agreement with FIDIC covers a wide range of international construction and infrastructure works, and the CDB’s move represents a further key endorsement for FIDIC contracts from a major international funding organization, following similar agreements signed with the World Bank and many other multilateral development banks around the world (FIDIC, Caribbean Development Bank Renews and Expands Agreement to Use FIDIC Standard Contracts for Another Five Years).

An example of another such agreement is from a few years ago, when the World Bank and the Inter-American Development Bank signed an agreement with FIDIC, whereby the international funding organizations adopted the use of the 2017 FIDIC set of standard contracts for the five-year term. Without a doubt, the endorsement of FIDIC contracts by these two major international organizations will cause an increase in the use and presence of FIDIC contracts in the region. Additionally, some other international organizations, like the United Nations Office for Project Services (UNOPS) and Fondo del Milenio El Salvador (FOMILENIO), have been using FIDIC contracts extensively in the Central America for some years with very positive outcome. See DRIVER TRETT, Trends in the Use of International Standard Forms of Contracts in the Latin American Market (July 1, 2022).

The FIDIC contracts are also being used increasingly in Latin America. Examples include Argentina (Yellow Book, water project), Brazil (mainly Silver Book for mining, sewage, airports, energy, ports, metro and logistics projects), Chile (Silver Book, two run-of-river hydropower projects; Red Book, construction of the pier; Yellow Book, hydropower plant), Colombia, Ecuador (Pink Book, Quito metro), El Salvador (Red Book, highways and bridges; Yellow Book, water plant), Honduras (Red Book, highways and bridges), Panama (Yellow Book, Panama Canal expansion; Silver Book, hydroelectric project contract and tunneling contract), Paraguay (Pink Book, highways), and Peru (Pink, Silver and Yellow Books for at least nine projects including, among others, an airport, a pavilion, a hydroelectric plant, and a hospital). See FIDIC Contract Users’ Conference (May 16-17, 2022).

Concluding Remarks

With the formation of FIDIC North America in 2021, it becomes more likely that FIDIC contracts will make their way into the construction industry of the US, Canada, and Mexico. The coming together of the American Council of Engineering Companies (ACEC), Association of Consulting Engineering Companies Canada (ACEC-Canada) and the National Chamber of Consulting Companies Mexico (CNEC) under the umbrella of FIDIC North America is a major step for FIDIC and one that will strengthen cooperation between all the engineering organizations throughout the region.

The objectives of the memorandum of understanding signed by the three member associations of FIDIC North America include identifying mutual interests, promoting networking opportunities and exchange of information on market conditions, facilitating cooperation and collaboration between member firms, sharing of business best practices, and providing platforms for exchanging published information between the three associations for use by member firms. See ACEC Signs Memorandum of Understanding with Engineering Associations in Mexico and Canada, ACEC (May 14, 2021).

The establishment of FIDIC North America creates cautious optimism that FIDIC contracts will be adopted by the regional contractors and engineers as an alternative to domestic standard contract forms.

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Author, Madina Lokova is a New York and Washington, D.C.-based litigation associate at Victor Rane. Her work involves handling various commercial and aviation-related litigations in state and federal courts across the United States. Madina is an active member of the American Bar Association, currently serving in the leadership roles in the ABA Young Lawyers Division, International Law Section, and Section of Dispute Resolution. She is a Member of the Chartered Institute of Arbitrators. Prior to her practice in the United States, Madina had practiced law with several global and national law firms and at a major asset-management company in Russia and Switzerland.

Editor Thanh Do, Ph.D., PE, is a Structural Forensic Engineer and Forensic Visualization Manager with Thornton Tomasetti, Inc. As a technical expert, he specializes in investigations of construction/design defects and collapses, standard of care assessment, and visualization/storytelling for litigation.