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Contract Changes, Claims, and Supporting Documentation

Contract Changes, Claims, and Supporting Documentation. Lee Potter, P.E. Assistant Division Administrator Federal Highway Administration, Wyoming Division. Contract Changes. Used to make the design a better fit for actual field conditions. Changed Conditions.

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Contract Changes, Claims, and Supporting Documentation

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  1. Contract Changes, Claims, and Supporting Documentation Lee Potter, P.E. Assistant Division Administrator Federal Highway Administration, Wyoming Division

  2. Contract Changes • Used to make the design a better fit for actual field conditions

  3. Changed Conditions • Three Standardized Changed Condition Clauses • Differing Site Conditions (104.2.2) • Engineer-Ordered Suspensions (104.2.3) • Significant Changes In The Character Of The Work (104.2.4)

  4. Changed Conditions • Differing Site Conditions • Type I - Subsurface or latent physical conditions that differ materially from the contract • Type II - Unknown physical conditions of an unusual nature that differ from those ordinarily encountered

  5. Changed Conditions • Differing Site Conditions • Either party can identify • Engineer is to promptly investigate and determine if adjustment warranted • Timely Notice Required • One of the most frequently cited clauses in contractor requested changes !!!!!!!!!

  6. Changed Conditions • Engineer-Ordered Suspensions • Not due to a contractor’s actions • For an activity not customary to highway construction • Contractor can request compensation or time if request is in writing and follows notice procedures

  7. Changed Conditions • Significant Changes in the Character of Work • Engineer can alter the work or the quantities as necessary without invalidating the contract • If determined to be a significant change to character of work an adjustment will be made • change results in materially different work requirements • major item changes +/- 25%

  8. Contract Amendments/Claims • Entitlement-Identifies Contract Change • Impact-Identifies Effect Of Change • Cost

  9. Documentation • Clearly identify entitlement (what was encountered that was different than what is stated in the contract) • How was the contractor impacted? Was there a change in his operations, equipment needed, or time required to perform the work?

  10. Documentation • Contract changes require an independent evaluation of costs (this is the basis of negotiation with contractor) • FHWA expects an “estimate” of costs for contract change approval • Estimate can be based on existing bid items or a WYDOT developed independent cost estimate • Document negotiation (letters, email, phone calls)

  11. What is a Claim? • Formal demand for additional compensation • Money and/or time • Disputes the determination of entitlement, impact, or cost

  12. Contractor’s Responsibility • Timely Notice • Identify Entitlement • Answer the question what was the change • Identify Impact (including secondary impacts) • What was the effect of the change • Cost • Price or value of the change

  13. False Claims “A false claim is an act of knowingly making, using, or causing to be made or used a false record or statement that results in payment or approval by a Federal, State, or local government.”

  14. FHWA Involvement • FHWA would be included in contract changes for FHWA oversight projects (Notification prior to work being accomplished; verbal approval would be documented with FHWA 1365) • FHWA needs to be notified of claims on all Federal projects • Stewardship Agreement Requires FHWA concurrence in claim settlement of all projects

  15. FHWA Involvement • RE to notify FHWA Area Engineer when a contractor submits a claim under Standard Specification 105.15 • Area Engineer will work with RE to address the Contractor’s claim • Work with the contractor to get a complete claim package, but continuous negotiation with the contractor is not recommended • Being fair does not mean waiving specifications

  16. FHWA Review • Early Notification Of Claims • Basis Is State’s Responsibility • Cost Determination • May Require An Audit Of Contractor’s Costs • Administrative Settlements • Require Support and Legal Opinion that may include costs of potential litigation

  17. FHWA Review (continued) • Participation In Court Or Arbitration Judgements Greater Than Can Be Supported • FHWA Was Consulted And Concurred With Course Of Action • All Courses Of Action Were Considered • State Was Diligent

  18. FHWA Review (continued) • Federal Funds Will Not Participate In • Administrative Settlements Without Support Or Basis • Claims for anticipated profit • Claims due to impacts of other projects (each project is independent)

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