The relationship between the U.S. Government and the International Federation of Consulting Engineers (FIDIC), although two different systems, has become particularly important in the last few years. U.S. Government Contractors are performing major projects throughout the world in places such as Iraq and Afghanistan. The relationship with the U.S. Government is controlled by the U.S. Government contract law while the majority of the subcontracts are controlled by FIDIC terms. This timely and vitally important course begins with an analysis of the unique aspects of international contracts such as applicable treaties and differing legal systems. The course continues by providing an in-depth analysis of construction contracting under the mandatory laws, regulations and terms of U.S. Government contracts regardless of where those contracts are performed. The discussion will include the basic authorizing statutes, and implementing regulations and resulting contract terms. In particular, the instructors will discuss the process for implementing changes (variations), obtaining both compensable and non-compensable time extensions and presenting differing physical conditions and other types of claims. As well as, the disputes process and the alternatives available to a contractor. The third portion of the course describes the FIDIC Conditions of Contract and its vastly different procedures for implementing variations, obtaining extensions of time, and processing disputes. The relationship between these two different systems has become particularly important in the last few years. U.S. Government Contractors are performing major projects throughout the world in places such as Iraq and Afghanistan. The relationship with the U.S. Government is controlled by the U.S. Government contract law while the majority of the subcontracts are controlled by FIDIC terms. The course is taught by experts in both types of contracting. It is a necessity for anyone who is involved or might become involved in either type of contracting. **Please stay tuned for upcoming registration information on this program. Call 888-494-3696 and a Federal Publications Seminar representative will address your questions.
PART I, INTERNATIONAL CONSTRUCTION CONTRACTS I. CONTRACT STRUCTURES A. Types of Contracts 1. Supply of Equipment 2. Supply and Erect 3. Engineer, Procure, and Construct 4. Single Prime Contractor 5. Multiple Prime Contractors 6. Construction Management 7. Fast Track Construction 8. Engineering Only Contracts 9. Joint Venture or Consortium 10. Prime Contractor/Subcontractor II. BASIC CONTRACT LAW A. Common Law Principles and Applicability 1. Definition 2. Applicability 3. Mutuality 4. Offer and Acceptance 5. Consideration 6. Breach 7. Damages B. Civil Law of Contract 1. Definition 2. Applicability 3. Contract Formation 4. Purpose of the Contract/“Cause” 5. Penalties C. Shari’a 1. Definition 2. Applicability 3. Law of Contract D. General Principles of Contract Law 1. Sources a. UNIDROIT Principles b. International Conventions c. Model Laws and Guides d. Standard Forms of Contract 2. General Principles a. Freedom of Contract b. Binding Effect c. Good Faith and Fair Dealing d. Industry Practice e. Intention of the Parties f. Interest E. Amiable Compositeur/Ex Aequo Et Bono III. PRINCIPLES OF CONTRACT INTERPRETATION A. Common Law Rules of Interpretation 1. Objective Interpretation and Intent 2. Duty to Seek Clarification of Ambiguities 3. Parol Evidence Rule 4. Ordinary Meaning 5. Custom and Usage of Trade 6. Order of Precedence 7. Contra Proferentem a. Ambiguity Required b. Identifiable Drafter c. Reliance 8. Incorporated and Implied Conditions a. Incorporated by Reference b. Incorporated by Law c. Implied Conditions B. Civil Law Rules of Interpretation 1. Subjective Intention of the Parties 2. Code Provisions 3. The Effects of a Contract a. Interpreting and Determining the Contents of a Contract b. The Content of the Contract 4. The Binding Force of a Contract C. Shari’ a Rules of Interpretation IV. GOVERNING LAW/CHOICE OF LAW PROVISIONS A. General Principles of Conflicts of Law 1. Where Contract is Made and Performed Test 2. Significant Contacts Test 3. Seat of the Relationship Test 4. Balance of Interests Test 5. Comparative Impairment Test 6. The “Better Rule” Test 7. United States Constitutional Limitations B. Importance of Choice of Law Provisions 1. Statute of Limitations 2. Retainage 3. Indemnity Obligations 4. Pay if Paid/Pay When Paid Provisions 5. No Damages for Delay Provisions C. Choice of Law Provisions 1. Factors in Selection 2. Form of Provision 3. Enforceability a. Generally b. Conflicting Terms c. Choice Prohibited by Statute V. MULTILATERAL AND BILATERAL CONVENTIONS AFFECTING INTERNATIONAL CONSTRUCTION CONTRACTING A. United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards B. United Nations Convention on Contracts for the International Sale of Goods (CISG) C. U.N. Convention on Independent Guarantees and Stand-By Letter of Credit D. U.N. Convention on the Use of Electronic Communications in International Contracts E. U.N. Convention on Corruption F. Energy Treaty G. Bi-Lateral Investment Treaties PART II – UNITED STATES GOVERNMENT CONTRACTS I. LEGAL BASIS OF UNITED STATES GOVERNMENT CONTRACTS A. Basic Contracting Authority 1. Basic Statutes 2. Federal Acquisition Regulations (FAR’s) 3. Role of the Contracting Officer B. Contract Disputes Act of 1978 C. False Claims Act D. Administrative Improvement Act E. Foreign Corrupt Practices Act II. CHANGES AND DIFFERING SITE CONDITIONS A. Types of Contract Specification 1. Design 2. Performance 3. Function 4. Mixed B. Specification Rights and Obligations 1. Warranty of Specifications 2. Nature of Warranty a. Accuracy b. Suitability c. Safety 3. Scope of Warranty a. Manufacturing Method b. Tolerances c. Standard Products d. Brand Name or Equal e. Proprietary Product f. Sole-Source Subcontractor 4. Exceptions a. Exculpatory Provisions b. Obligation to Investigate c. Contractor’s Reliance d. Changes Proposed by Contractor 5. Strict Compliance a. General Rule b. Scope of Contractor’s Obligation c. Examples C. CHANGES & DIFFERING SITE CONDITIONS 1. Most Important Of All Standard Clauses 2. Distinction: Government Contract From Commercial Contract 3. Basic Objectives of the Changes Clause 4. Analysis of the Clause a. “The Contracting Officer” b. “At Any Time” c. Conditions Not Within the Clause 5. Changed Condition Occurring Subsequent to Contract Award 6. Duty to Investigate Site a. Experts Not Required b. When Site Investigation Not Required – Government Representations c. When Contractor Assumes Risk d. Contractor Must Rely on Representations e. duty to Inquire f. Superior Knowledge 7. Site Availability 8. Notice Requirements a. The Clause b. Reason for Requirement c. Difference Between Notice Requirements of Changes Clause and Differing Site Conditions Clause d. Actual Knowledge of Contracting Officer e. Waiver of Notice Requirements f. Requirement of Government Notice g. General Rule for Notice Requirements III. TIME: DELAY, SUSPENSION, ACCELERATION A. Time and The Overall Concept 1. Planning for Delays 2. Commencement and Completion 3. Termination and Liquidated Damages for Delay 4. Enforceability of Liquidated Damages Clauses 5. Remission of Liquidated Damages B. Scheduling 1. Requirement and Use of Schedules 2. Bar Charts 3. CPM and Other Network Scheduling Techniques a. The Planning Phase b. The Scheduling Phase c. The Control-Monitor Phase 4. CPM As Evidence C. Contract Clauses D. Basic Legal Principles of Implied Warranties E. Delays 1. Excusable Causes of Delay a. Acts of God b Public Enemy c. Acts of the Government i. Unjustified Failure to Make Payments ii. Delay in Approvals iii. Improper Inspection iv. Late or Defective GFP v. Delay in Responding to RFIs vi. Defective Plans or Specifications d. Weather e. Strikes f. Labor Supply g. Financial Difficulty h. Subcontractor Delay i. Delays and Subsequent Time Frame 2. Concurrent Delays 3. Float Time 4. Delay to Early Completion 5. Delays and the Rice Doctrine F. Suspension of Work 1. Affirmative Suspension 2. Constructive Suspension 3. Requirement of Government Fault a. Delay in Issuing NTP b. Delay in Making Site Available after NTP c. Delay in Issuing Change Orders d. Delay in Responding to Information Requests e. Delay in Approval of Shop Drawings, Samples, Models, Etc. f. Delays Caused by Defective Government Specifications 4. Reasonable vs. Unreasonable Delay 5. Notice Requirements G. Acceleration 1. Actual Acceleration 2. Constructive Acceleration 3. Notice 4. Elements of Acceleration IV. TERMINATIONS A. Termination for Default 1. Basis for Default Termination a. Failure To Complete By The Contract Delivery Date b. The Doctrine of Substantial Completion i. Background ii. Percentage of Completion iii. Suitability for Intended Purpose c. Refusal or Failure to Prosecute the Work d. Repudiation of the Contract by the Contractor e. Failure to Secure Required Bonds f. Defective Workmanship 2. Severable Contracts 3. The Requirement of the Exercise of Discretion 4. Excusable Delays and Defaults a. Acts of God b. Public Enemy c. Acts of the Government d. Commercial Impracticability e. Weather f. Strikes g. Labor Problems h. Financial Difficulty i. Subcontractor Or Supplier Delay j. Delay in Transportation by Common Carriers 5. Estoppel and Waiver: Defenses Against the Government’s Right to Terminate a. Waiver of Delivery Date b. Conduct Demonstrating Government Intent 6. Government Remedies Upon Default a. Reprocurement by the Government i. Reasonableness of the Reprocurement: Duty to Minimize Excess Costs and Mitigate Damages ii. Post-Delivery Date Waivers iii. The Concept of Waiver In Construction Contracts b. Conduct Demonstrating Government Intent i. Affirmative Government Acts ii. Nonaffirmative Government Acts 7. Government Remedies Upon Default a. Reprocurement by the Government i. Reasonableness of the Reprocurement: Duty to Minimize Excess Costs and Mitigate Damages ii. Changed Requirements iii. Equitable Adjustments to Reduce Excess Costs iv. No Administrative Costs v. Reprocurement by Negotiation vi. Reprocurement Predating Default Termination vii. Utilization of Termination Inventory viii. Liquidated Damages b. Completion by the Government c. The Rights of the Surety d. Surety Takeover Agreements e. Providing a Completion Contractor to the Government 8. Actual or Liquidated Damages a. Liquidated Damages i. Uncertainty ii. Fairness and Reasonableness iii. Duty to Mitigate b. Defenses to a Claim by the Government for Liquidated Damages i. Substantial Completion ii. Excusable Delay iii. Concurrent Delay c. Problems in Measuring the Period During Which Liquidated Damages are Payable d. Actual Damages 9. The Contractor’s Remedies for Wrongful Termination for Default a. Conversion of the Default Termination into a Termination for Convenience b. Rescission and Restitution B. Termination for Convenience 1. The Right to Terminate a. Absolute Right to Terminate b. Termination to Secure a Lower Price 2. Rights of the Parties Upon Termination 3. Procedures Upon Giving and Receiving Notice of Termination for Convenience a. Duties of the Government i. Written Notice of Termination ii. Settlement of the Contractor’s Claim b. Duties of the Contractor i. Cessation of Work ii. Notification to Subcontractors or Vendors; Settlement of Claims iii. Preparation of Termination Inventory iv. Disposal of Inventory v. Submittal of Settlement Proposals vi. Negotiation of Final Settlement 4. Monetary Recovery a. Negotiated Settlements b. Settlements by Contracting Officer Determination i. Contractor Costs ii. Profit iii. Adjustment for Loss 5. Partial Terminations for Convenience 6. Termination for Convenience vs. Deletion of Work by Change Order V. DETERMINING DOLLAR RECOVERY A. Equitable Adjustments 1. Introduction 2. Contract Measures of Recovery a. Examples of Contract Clauses b. Equitable Adjustment Defined 3. Outcome of Other Work is Irrelevant 4. Unit Prices and Equitable Adjustments 5. Some Methods Used or Rules Applied 6. Breach of Contract B. Burden of Proof C. The “Total Cost” Approach to Recovery 1. Conditions for Recovery 2. Modified “Total Cost” 3. Unit Prices and Total Cost 4. The “Total Cost” Method Applied to Time D. The “Jury Verdict” 1. Development of the “Jury Verdict” Award 2. The Rendition of “Jury Verdict” Awards 3. Effect of Insufficient Evidence E. Elements of Recovery 1. Application of Cost Principles FAR Part 31 a. Development of Cost Principles b. Current Regulations c. Advance Agreements d. Allowability Factors e. Allowability of Selected Costs 2. Costs as Part of Equitable Adjustments a. Direct Costs Defined and Illustrated b. Indirect Costs Defined c. Overhead d. Impact/Delay/Acceleration Costs e. Claim Presentation Costs/Legal Fees f. Equipment Use Costs 3. Profit a. Allowability b. Rate Applicable c. Structured Approaches d. Subcontract Work e. Contract Clauses f. Anticipatory Profit g. Interest on Profit 4. Interest VI. THE DISPUTES PROCESS A. The Contractor’s Burden of Asserting the Remedies in the Contract 1. The Heavy Burden on the Contractor 2. The Defenses of the Government B. The Contract Disputes Act (CDA) of 1978 1. Significance of the Act 2. Determining the Coverage of the Act 3. The Crucial First Step; Getting the Contracting Officer’s Decision on All Claims a. “All Claims” Covered; C.O. Final Decision as a Prerequisite to Appeal b. What Constitutes a Claim? c. Recognizing Receipt of a Final Decision 4. Certification of CDA Claims 5. Appeals from Default Terminations 6. Interest Rates on CDA Claims 7. Fraud 8. The Duty to Proceed While Change Order Work is Being Performed; Financing the Cost of Changed Work 9. Time Limits for Issuing Contracting Officer Decisions 10. C.O. Findings of Fact Not Binding C. Appealing the Contracting Officer’s Decision 1. Undue Delays 2. Court of Federal Claims 3. The Boards Contract Appeals a. 90 Days To Appeal b. Fast Procedures for Small Claims c. Expanded Board Powers d. Subpoenas, Depositions and Discovery 4. Interest on Unreasonable Payment Delays of Settled Claims D. Payment of Board Awards and Court Judgments E. Practical Considerations Concerning Appeals to a Board of Contract Appeals F. Right To Appeal Board Decisions 1. To the United States Court of Appeals for the Federal Circuit 2. The Supreme Court Has Said That There Should Be A “Speedy Settlement of Claims” G. Direct Claims to the Court of Federal Claims 1. Jurisdiction of The United States Court of Federal Claims a. Former Jurisdiction of the Court of Claims b. Expanded Jurisdiction 2. Time to File – 1 Year 3. Jurisdiction of the U.S. Court of Appeals for the Federal Circuit H. Equal Access to Justice Act 1. Purpose of the Act 2. “Party” Defined 3. Burden of Proof 4. Submission of Application 5. Monetary Recovery I. Prompt Payment Act (PPA) 1. Purpose and Effective Date of PPA and Amendments 2. Coverage 3. Application of Interest and “Penalty” J. Private Bills K. Extraordinary Contractual Relief under Public Law 85-804 1. Types of Relief Available a. Correction of Mistakes b. Formalization of Informal Commitments c. Amendments Without Consideration L. False or Fraudulent Claims a. The False Claims Act b. The Contract Disputes Act of 1978 M. Debarment and Suspension a. What Are They? b. Grounds for Debarment c. Sanctions d. Procedure e. Suspension f. DeFacto Debarment and Suspension PART III – FIDIC CONTRACTS I. FIDIC CONSTRUCTION CONTRACT CONDITIONS A. Benefits of a Standard Form of Contract B. FIDIC Family of Documents a. Conditions of Contract for Works of Civil Engineering Construction, Fourth Edition, 1987 b. Conditions of Contract for Electrical and Mechanical Works (Including Erection on Site), Third Edition, 1987 c. Works of Civil Engineering Construction (Red Book) Subcontract, First Edition, 1994 d. Conditions of Contract for Design-Build and Turnkey, First Edition, 1995 e. Short Form of Contract, First Edition, 1999 f. Conditions of Contract for EPC/Turnkey Projects, First Edition, 1999 g. Conditions of Contract for Plant and Design Build, First Edition, 1999 h. Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, First Edition, 1999 i. Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and Engineering Works Designed by the Contractor, First Edition, 1999 j. Conditions of Contract for Construction (Multilateral Development Bank Harmonized), Harmonized Edition, 2006 k. Client/Consultant Model Services Agreement, Fourth Edition, 2006 l. Joint Venture Agreement, First Edition, 1992 m. Model Representative Agreement (Test Edition 2004) n. Conditions of Contract for Construction, Multilateral Development Bank Harmonized Edition (March, 2006) o. Conditions of Contract for Design Build and Operate Projects (2007) II. OTHER STANDARD FORMS IN INTERNATIONAL USAGE A. European Development Fund B. Engineering Advancement Association of Japan (ENAA) C. General Conditions for Works Contracts of the Institution of Civil Engineer (ICE) D. Joint Contracts Tribunal (JCT) E. American Institute of Architects (AIA) International Form of Contract F. Building Information Modeling G. Consensus Documents III. KEY PROVISIONS OF FIDIC CONSTRUCTION CONTRACTS A. Payment Provisions 1. Progress Payments 2. Retainages 3. Reduction in Retainages 4. Claim and Lien Waiver Requirements B. Performance and Payment Guarantees 1. Types of Performance and Payment Guarantees a. Bank Guarantee b. Letters of Credit c. Performance Bonds d. Payment Guarantees e. Repayment Guarantees 2. United Nations Convention on Independent Guarantees and Stand-by Letters of Credit a. Applicability b. Undertakings Defined c. Issuance/Amendment d. Assignment and Transfer e. Cessation of Right to Demand Payment f. Expiration of the Undertaking g. Standard of Conduct h. Demand i. Examination of Demand j. Payment k. Judicial Review l. Applicable review 3. Unfair Calling 4. International Chamber of Commerce Uniform Rules for Contract Guarantees (UPC 600) C. Delay Liquidated Damages/Penalties/Bonuses 1. Establishing the Delay 2. Compensable Delay 3. Excusable Delay 4. No Damages for Delay Clause D. Default 1. Grounds for Default by Owner 2. Grounds for Default by Contractor 3. Remedies a. Owner’s Default b. Contractor’s Default 4. Optional Termination E. Schedule 1. Types of Scheduling Systems a. Bar Charts b. Critical Path Method (CPM) 2. Monitoring the Schedule a. Approving the Base Schedule b. Updating the Schedule c. Evaluation of Performance Problems (Changes, RFIs, Delays) d. Multi-Prime Contractor Projects and the Schedule (i) Owner Responsibilities (ii) Construction Manager Projects F. Insurance G. Designated Representative 1. Owner’s Authorized Agents 2. Owner’s Role and Responsibility 3. Defining the Role of the Engineer IV. CLAIMS UNDER THE FIDIC CONDITIONS A. Changes/Variations B. Differing Physical Conditions C. Force Majeure/Changed Conditions 1. Special Risks; Force Majeure 2. Frustration D. Site Access E. Drawings and Information F. Delays 1. Bases for Time Extensions 2. Additional Costs 3. Use of the Project Program to Establish the Effects of Delays G. Suspension of Work H. Acceleration I. Non-Payment or Late Payment 1. Failure to Make Payment 2. Non-Payment by the Owner of a Certified Amount 3. Non-Payment Due to Lack of Certification or Under Certification by the Engineer 4. Late Payment a. Contract Provisions b. Right to Suspend Work c. Interest and Other Damages V. DAMAGES A. Direct Labor Costs 1. Additional Labor Hours 2. Determination and Application of Wage Rates a. Taxes and Insurance b. Union Fringes c. Supervision d. Small Tools B. Equipment Costs 1. Definition 2. Determining Additional Usage a. Recording Additional Hours b. Productivity of Equipment and Quantity of Work c. Additional Contract Time d. Correlation to Man-hours e. Modified Total Usage f. Standby Time g. Actual costs h. Outside Rentals i. Intra-Company Charges C. Material Costs 1. Reason for Material Claims 2. Calculating Additional Material Quantities 3. Computing Additional Material Costs 4. Credit for Deleted Materials 5. Additional Material Handling D. Overhead Costs 1. Jobsite Overhead 2. Home Office Overhead 3. Extended Performance Costs a. Idle Labor b. Idle Equipment c. Jobsite Overhead d. Extended Home Office Overhead (i) Commonwealth Countries (ii) United States E. Interest/Financing Costs 1. Common Law Countries 2. Civil Law Countries 3. Islamic Law F. Profit 1. Profit on Work Performed 2. Profit on Unperformed Work VI. RESOLUTION OF DISPUTES A. Claim Preparation 1. Introduction 2. Collecting Data 3. Records (Force Account) 4. Audit and Records a. Correspondence b. Project Schedule c. Cost Reports d. Inspection Reports e. Photographs and Videotapes B. FIDIC Disputes Procedure 1. Submission to the Engineer 2. Engineer’s Decision 3. Period of Amicable Settlement 4. Disputes Review Board 5. Arbitration C. Arbitration 1. Enforceable Provisions 2. Points to Include in an Arbitration Provision a. Selection of the Arbitrator(s) b. Location of the Arbitration c. Limitations on Electronic Discovery d. Ability to Conduct a Multi-Party Arbitration e. Allocation of Attorney’s Fees and Costs f. Waiver of Right of Appeal g. Confidentiality 3. Available Arbitration For a a. International Chamber of Commerce b. International Centre for Settlement of Investment Disputes c. American Arbitration Association d. London Court of International Arbitration e. Stockholm Chamber of Commerce f. Dubai Chamber of Commerce g. Dubai International Finance Centre D. Mediation
