To help you navigate the rough seas of doing business with the federal government in the Trump administration, Washington PTACPacific Northwest Defense CoalitionAGC of Washington, and the Government Contracts team at Oles Morrison have assembled a group of nationally recognized government contracts professionals for a seminar covering topics relevant to government contractors across all industries.

Session topics include:

  • Federal Design-Build Challenges | Doug Oles, Partner, Oles Morrison Rinker & Baker LLP   |   With a long history in design-bid-build construction, federal agencies have struggled with the design-build project delivery system. This session will highlight some of these key challenges, and how contractors can avoid falling victim.
  • DCAA Audit & Investigation Essentials | David Yang, Partner, Oles Morrison Rinker & Baker LLP; Tony Worick, Manager, PricewaterhouseCoopers  |  The session will cover the types of audits and investigations conducted by the Defense Contract Audit Agency (DCAA), what you should expect during them, best practices for maximizing your position while minimizing risk, and a look at the key DCAA trends from FY2018 as well as what we can expect from DCAA in FY2019.
  • Are You Sure That Your Small Business Size Certification Is Accurate? | Dominique Casimir, Partner, Arnold & Porter; Adam Lasky, Partner, Oles Morrison Rinker & Baker LLP     SBA’s complex size and affiliation rules lead many federal contractors to inaccurately certify that they are small, which can lead to FCA liability and debarment. This session will provide a guide to SBA’s Affiliation Rules, plus best practices for managing the accuracy of your size certifications and mitigating/correcting inaccurate certifications.
  • Panel: Roadblocks to Commercial Items Contracting | Howard Roth, Of Counsel, Oles Morrison Rinker & Baker LLP; Laurie Davis, Sr. Contract Specialist; Shaun Kennedy, Senior Attorney, Ball Corporation   |   This session provides private and government sector perspectives on recent changes in commercial item contracting and provides practical tips for making commercial item determinations (i.e., price reasonableness, commerciality, of-a-type, etc.).  The panel will also address to what extent the Federal Circuit’s recent decision in Palantir will affect commercial item purchasing. 
  • Lunch Speaker: Understanding Your Obligations and Potential Compliance Gaps Regarding Bribery, Gratuities, Kickbacks and Other Government Contract Ethics | Paul Bowen, Partner, K&L Gates LLP   |   Conducting business with the government requires strict compliance with all ethical business practices. This includes avoiding, detecting, and, in some cases, reporting bribery, illegal gratuities, and kickbacks. This session will help you understand the key ethical obligations in government and recognizing compliance gaps in your ethics program.
  • Labor Compliance Pitfalls: Obama-Era Challenges and Regulations Remain | Eric Crusius, Partner, Holland & Knight LLP   |   This session will cover how to spot and comply with various government contracts-specific labor requirements, including the Service Contract Act, Davis-Bacon Act, and Fair Labor Standards Act, plus new regulatory requirements such as mandatory sick leave and minimum wage. In addition, Eric will discuss the Top 10 labor compliance pitfalls in government contracting.
  • Navigating Tariffs, Shutdowns and Other Sovereign Acts | James Nagle, Of Counsel, Oles Morrison Rinker & Baker LLP   |   Acts by the government in its sovereign (public, as opposed to contracting) capacity, such as tariffs, government shutdowns, or new EPA or OSHA rules, can throw a monkey wrench into a contractor’s planned costs and schedule. Learn how to anticipate, plan for and react to such acts, which is indispensable to a contract’s and contractor’s success.
  • Keynote:  Hot Topics in Procurement Reform | Prof. Steven Schooner, Nash & Cibinic Professor of Government Procurement Law and Co-Director of the Government Procurement Law Program, The George Washington University Law School    |   Our distinguished keynote speaker will discuss and provide commentary on the hottest topics in federal procurement reform, including the proposed Section 809 Panel reforms, which could change the face of government procurement.

Two Ways to Attend:

  • In-person, AGC of Washington (Second-floor Conference Room, 1200 Westlake Avenue North, Seattle, WA 98109).  Parking will be validated.
  • Live Webinar

When:

  • October 25, 2018
  • 8:00 a.m. – 3:00 p.m. PST (Breakfast and Lunch included)
  • Networking Reception: 3:30 p.m. – 4:30 p.m.

Click HERE for the program flyer and complete schedule.

Click HERE to Register.

Questions? Contact Tiffany Scroggs at 360.464.6041 or via email at tscroggs@thurstonedc.com

The Ninth Circuit Court of Appeals in the recently issued case of United States ex. rel. Rose v. Stephens Institute (Rose) held that the two-step test of Universal Health Services, Inc. v. United States ex rel. Escobar (Escobar) is mandatory in implied false certification cases brought under the False Claims Act (FCA).

In Escobar, the Supreme Court held that implied certification cases under the FCA can proceed where the defendant makes a claim with specific representations and the defendant’s failure to comply with a material requirement makes those representations false or misleading.

 [W]e hold that the implied certification theory can be a basis for liability, at least where two conditions are satisfied: first, the claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant’s failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.

However, the question left open in the wake of Escobar was whether proving these two conditions was necessary or merely sufficient to prevail in an implied certification FCA case, an issue on which lower courts have split since Escobar, as previously discussed in this blog.

In Rose, the Ninth Circuit appears to have joined those courts which have held that the Escobar test is a necessary condition which the government or a qui tam relator must meet to prevail in an implied certification case.  This is good news for defendants in the Ninth Circuit because the plaintiff must meet a more exacting standard (i.e., show that the defendant made an affirmative statement that is proven to be false or misleading by the defendant’s failure to comply with a material requirement) in order to proceed on an implied certification case.

In Rose, the relators were former admissions representatives for the Academy of Art University in San Francisco. The relators alleged violations of Title IV of the Higher Education Act in that the Academy’s incentive compensation plan improperly violated the Department of Education incentive compensation ban. The relators claimed compliance statements made to the Department constituted FCA violations. The Academy brought a motion for summary judgment in the district court, which was denied.

Following the denial, the Supreme Court issued Escobar. The Academy filed a motion for reconsideration, which was likewise denied. An interlocutory appeal to the Ninth Circuit followed, which included the question of whether Escobar’s two-part test was mandatory in all implied certification cases.

The three-judge panel in Rose held that the Escobar test was indeed mandatory in such actions and thus upheld the central premise of Escobar that an implied false certification theory must comply with at least the two-step test, though the panel noted if the issue came before the court en banc, the full Ninth Circuit might find that the Escobar standards are not necessary in all cases.  Thus, the Rose opinion suggests that, if confronted with the issue on a later date, the Ninth Circuit may allow plaintiffs to proceed on an implied certification case without needing to prove the specific two parts of the Escobar test as they may be able to rely on other or broader elements such as those set forth in prior Ninth Circuit decisions interpreting the implied certification theory of FCA liability.  However, for the time being, the Rose decision bodes well for defendants and reinforces the point that, although Escobar brought much-needed clarity to implied certification theory cases under the FCA, the issue remains jurisdiction-specific for the time being, which should be a consideration and a reality in any defense strategy.

Customers will frequently want you to complete performance sooner than may be required by the contract.  When presented with such a dilemma, contractors face the challenge of keeping the customer happy while performing the work in a manner that will meet specifications and the contractor’s business expectations.  To navigate this process effectively, it is important for contractors to have a working knowledge of the circumstances in which an acceleration claim may arise and what to do when such an event does arise in order to manage the project in a smooth and efficient manner that protects the contractor.  As this post discusses, while there are different types of acceleration, a common situation encountered by contractors on federal jobs is constructive acceleration.  This occurs where, because of an intervening event that creates an excusable delay in the project, a contractor has a justified claim for an extension of time, the contracting officer knows about the contractor’s claim and the circumstances causing the delay, but the contractor is forced to incur additional costs due to the customer’s refusal or failure to grant an extension, thus requiring the contractor to complete the work as originally agreed upon prior to the rise of the delay.  Of course, if the customer grants an extension, the contractor is not required to accelerate and, thus, any costs incurred to accelerate the project will be deemed voluntary and not compensable.

The Constructive Acceleration Claim:

Constructive acceleration has its origins as a common law claim—meaning it was developed by the courts/boards of contract appeal, rather than being created by regulations such as the Federal Acquisition Regulation.  The doctrine allows a contractor to recover additional compensation when, despite some intervening excusable delay in the project that has arisen through no fault of their own, the contractor is nevertheless required by the customer to accelerate its work by being required to comply with the contract schedule, despite an excusable delay.  To prevail on a constructive acceleration claim, the contractor needs to prove four elements: (1) the existence of an excusable delay; (2) knowledge of the contracting officer of the excusable delay; (3) order to accelerate; and (4) the contractor, based on the order to accelerate, accelerated the work and incurred additional costs.

  1. Existence of an Excusable Delay

In order to recover for a constructive delay, the first thing a contractor must show is that there is an excusable delay—if there is no excusable delay, there can be no constructive acceleration.  This first element is arguably the most important, as it goes to the heart of a constructive acceleration claim.  There are many factors, even unintended ones, which arise during the course of any project but most are not excusable delays which may give rise to additional compensation if the customer decides to hold the contractor to the original schedule.  However, if an excusable delay does arise – typically some act of God, war, embargo or strike — and even if the contract is silent as to the contractor’s entitlement to a time extension, the contractor will be entitled to recover its costs for constructive acceleration if it is shown that the contractor was forced to accelerate to overcome an excusable delay (and the other elements of constructive acceleration are satisfied).

  1. Contracting Officer’s Knowledge of the Excusable Delay

Second, the contractor must show that the contracting officer had knowledge of the excusable delay.  While this second element is frequently thought of as a requirement that the contractor make a timely claim for extension due to an excusable delay, you may have a constructive acceleration claim even where no claim is made to the contracting officer so long as the contracting officer has actual notice of the delay and your actions to address it.  However, in order to recover for constructive acceleration absent a formal request for an extension, the contractor must show that (1) the contracting officer has clearly indicated that no time extensions will be granted, and (2) the contracting officer has actual knowledge of the excusable delay.

  1. Order to Accelerate

Third, the contractor must show that the contracting officer has given some order that could reasonably be construed as a demand to accelerate the work.  Typically, this takes the form of the contracting officer either demanding work be completed pursuant to the schedule in the face of a clear excusable delay, or the contracting officer rejecting a request for an extension of time due to an excusable delay and subsequently demanding that the work be completed on schedule.  While a direct order is the most common situation leading to a constructive delay, contracting officers have been found to have ordered acceleration in the following circumstances: (1) failing to review and grant an extension (with nothing more, including no direct order to meet the schedule), which took away the contractor’s ability to perform at a normal pace, and (2) delaying granting a time extension where the contractor was forced to modify/accelerate its schedule by the time the time extension was eventually granted.

  1. Causation and Damages

The final element of constructive acceleration is evidence that the contractor accelerated its work in response to the contracting officer’s order, and that the contractor incurred additional costs as a result.  In most cases, particularly cases in which the contractor requested an extension that was denied, it will be fairly obvious if the contractor accelerated the work in response to the contracting officer’s order.  In addition to proving causation, the contractor must be able to show that it incurred additional costs in accelerating the work.

Other Notes for Constructive Acceleration:

  • A contracting officer is able to cut off liability for constructive acceleration by granting a time extension, even if the contractor was originally forced to accelerate
  • Courts have typically refused to award damages for acceleration where there is a concurrent, inexcusable delay by the contractor and the contract allows the government to order acceleration for contractor-caused delays.

Conclusion:

While constructive acceleration claims provide contractors with a safeguard against incurring costs due to an excusable delay, there are several milestones, sometimes hurdles, that a contractor must check off or overcome in order to prevail.  Accordingly, while there is some flexibility in the standards which the contractor must meet, the safest approach, whenever possible and which should always be carefully documented, for a contractor experiencing an excusable delay is to: (1) make a request for a time extension as soon as possible, and include the facts and circumstances giving rise to the delay and your efforts to date in addressing the matter, regardless of the likelihood that the contracting officer grant an extension, and (2) if the contracting officer does ultimately deny the extension, carefully document that denial as well as the contractor’s acceleration efforts and resultant costs.  Performing these steps, and documenting them, will help ensure that there is sufficient evidence that the contracting officer was aware of the excusable delay and evidence of causation and damages.

So-called “sovereign acts” may soon affect the performance of a wide swath of government contracts by shielding the federal government from the fallout of President Trump’s newest tariffs. The sovereign acts doctrine is rarely discussed, but it can have a profound impact on contract profitability.

While a contractor might normally be granted additional compensation when its performance is hindered by government action, the sovereign acts doctrine protects the government from liability where the impact on particular contract results from the government’s “public and general acts as a sovereign.” In other words, because the federal government’s legislative and regulatory powers take precedence over fidelity to any particular private contract, the government is not responsible when its higher-order actions happen to disrupt contract performance.

In March 2018, the Trump administration began imposing tariffs on steel (25%) and aluminum (10%) imports. These tariffs have since been expanded to a number of close U.S. trading partners, including the European Union, Canada, and Mexico. On July 6, the Trump administration also set a tariff of 25% on approximately $50 billion in Chinese imports, and has announced an additional 25% tariff on approximately $200 billion in Chinese consumer goods.

The question of whether a particular federal action is “public and general” enough to trigger the doctrine varies from case to case, but there is a substantial possibility that tariffs on imported steel and other building supplies may qualify. This would leave contractors to cover recent increases in materials costs that flow directly from these trade policies.

While these national-scale government actions are certainly the most visible examples of the sovereign acts doctrine, contractors should also be prepared to confront more localized government actions that benefit from the same defense.

Work site access restrictions are a common example of such “local” sovereign acts. For example, in Conner Bros. Const. Co., Inc. v. Geren, the Army and one of its commanders made the operational security decision to exclude construction personnel from a worksite within an Army base in the days following the September 11, 2001 terrorist attacks. This was deemed a sovereign act that precluding recovery for the contractor’s delay damages, though the contractor was allowed additional time to perform.

Similarly, in Garco Const., Inc. v. Secretary of the Army, (which also involved administrative deference issues that we have covered in previous posts), the sovereign acts doctrine protected the Army from liability after the more stringent enforcement of its existing base access policy barred entry for large number of subcontractor workers.

While it can be difficult to plan for circumstances like these, contractors should keep a close eye on the price risks that they and their subcontractors accept when bidding on federal contracts. If there is a substantial chance that an imminent sovereign act could interfere with performance, contractors would be well-advised to ensure that their bids reflect contingencies that account for this possibility.

To learn more about how the sovereign acts doctrine could intersect with these new tariffs, or for information about the potential impact of other governmentwide disruptions, consider attending our upcoming seminar, Navigating Federal Government Contracts Northwest 2018.” The seminar/webinar will include a keynote speech by James Nagle specifically addressing the application of the sovereign acts doctrine to government shutdowns and other current or looming political disputes. 

Regardless of your industry, companies that have business dealings with the federal government face the persistent risk of False Claims Act (FCA) investigations and lawsuits. The FCA, 31 U.S.C. §§ 3729 – 3733, imposes civil and criminal liability for knowingly making a false or fraudulent claim to the United States for money or property; or to avoid an obligation to pay money (reverse false claim). 31 U.S.C. §§ 3279-3733. Under the FCA, the government may bring its own action or may intervene in the existing qui tam complaint, a private right of action brought by a whistleblower (relator), against an individual or company accused of engaging in fraudulent activities against the government. Contractors face the possibility of treble damages.  In addition, the contractor may face civil penalties. 31 U.S.C. 3729(a)(1)(G). In 2018, The maximum per claim penalty is $22,363.

In recent years, FCA claims have been on the rise as the government continues to crack down on fraud, waste, and abuse in order to protect taxpayer dollars. The DOJ reported it obtained over $3.7 billion from FCA cases in FY 2017—making it the eighth straight year the federal government recovered more than $3 billion in FCA cases. This trend does not appear to be changing any time soon.

The uptick in FCA activity has made insurance coverage for FCA contractors an evolving area of law subject to different interpretations by different courts. Accordingly, any risk management program that should include insurance coverage that may be leveraged to cover FCA investigations and claims.  To proactively manage these risks, companies should make sure they (1) have appropriate liability insurance in place, given their risk profile; (2) if a FCA claim is asserted against the company, to respond in a manner that does not jeopardize coverage; and (3) carefully consider insurance coverage issues prior to resolving an FCA lawsuit.

Review Your Policy Language

Claims under the FCA primarily implicate three types of liability insurance: (1) directors and officers (D&O) liability insurance; (2) employment practices liability (EPL) insurance; and (3) errors and omissions (E&O) insurance. Although the three types of policies provide different coverages, each commonly covers loss resulting from a claim for a negligent act (as defined in the policy).

As with any insurance matter, the starting point is with the policy itself. How is “claim” defined? How is “loss” defined? How are “professional services” defined? It is important to be aware of how these terms are defined in your policy. The term “claim,” for instance, may not be limited to the filing of the lawsuit—it may include the service of subpoena, a written or oral demand for monetary damages or equitable relief, or even a request to toll statute of limitations. Some policies expressly provide that the definition of “claim” includes government investigations and informal investigations. The policy’s definitions not only set the parameters for what is covered, but also may affect your notice obligations. It may be beneficial for policyholders to procure insurance policies with a broad definition of “claim,” but policyholders should note that there may be a corresponding need to make sure notice is provided in a broader set of circumstances.

Likewise, the definition of “loss” is critical. To maximize potential protection for FCA claims and to better navigate inevitable disputes with the insurance company, the definition should expressly include fines and penalties and any damages multipliers. Similarly, policyholders should avoid definitions of “loss” that exclude “matters uninsurable.” For instance, policies may exclude returned money (restitution) from their definition of “loss” under the policy.

Policyholders should anticipate that insurers may attempt to avoid coverage obligations by asserting exclusions in the policies apply. Be wary of language in your policy for exclusions for fraud or intentional, reckless, or even grossly negligent conduct as well as notice provisions that may later bar your ability to seek coverage against an insurer.

Things to Remember While Negotiating FCA Settlements to Preserve your Coverage Rights

Like most claims, many FCA lawsuits are ultimately resolved by settlement. When drafting a settlement agreement, be cognizant of your insurance policy, including how the conduct is characterized, and whether your settlement needs to include language to allocate between covered and non-covered portions based on the “relative legal exposure” of the covered and non-covered claims (so as to streamline future claims against your insurer). Under this method, the portion of the settlement amount that may be allocated to a non-covered loss is determined by the extent that liability motivated the parties to settle. These considerations will be important in determining how settlements are structured and language is drafted. Nonetheless, the policy language, jurisdiction and public policy will determine to what extent the insurance company can allocate an FCA settlement to a non-insured loss.

Join Oles Morrison partner Adam Lasky for Road Map to Federal Bid Protests, a webinar presented by the Pacific Northwest Defense Coalition (PNDC), on Monday, September 17, 2018, from 11:00AM – 12:15PM PDT.

This webinar will provide contractors a look behind the curtain at GAO and U.S. Court of Federal Claims bid protests. Attendees will leave with a much better understanding of how the bid protest process really works at the federal level. The webinar will also cover how contractors can best prepare for a protest by maximizing their debriefing; analyzing which protest avenues are most advantageous; recent protest trends; and debunking common protest myths.

Click here to register for the webinar.  The webinar is Free for PNDC members, and $35 for non-members

On June 27, 2018, the Armed Services Board of Contract Appeals (ASBCA) held for the first time that the government, much as with commercial customers, does not affirmatively need to agree to or even be aware of a commercial computer software license to be bound by the terms of the license. In Appeal of CiyaSoft Corporation, CiyaSoft appealed a claim asserting that the Army had breached the terms of its license by using more copies of the software than were permitted. Specifically, CiyaSoft objected to the government’s installation of the software on multiple computers, passing the software to non-government personnel and copying of the software thousands of times without CiyaSoft’s consent. When CiyaSoft objected and ultimately filed a claim, the Army denied CiyaSoft’s claim asserting that the contract between the parties contained no specific terms regarding how the government would access, secure and protect the software. Continue Reading Commercial Software License Terms Bind the Government Just Like any Customer

To help you navigate the rough seas of doing business with the federal government in the Trump administration, Washington PTAC, Pacific Northwest Defense CoalitionAGC of Washington, and the Government Contracts team at Oles Morrison have assembled a group of nationally recognized government contracts professionals for a seminar covering topics relevant to government contractors across all industries.

Session topics include:

  • Navigating Tariffs, Shutdowns & Sovereign Acts
  • Roadblocks to Commercial Items Contracting
  • Design-Build Challenges
  • Small Business Certifications & SBA Affiliation Rules
  • Cost/Pricing Audits & Investigations
  • Bribery, Gratuities, Kickbacks and other Government Contract Ethics
  • Labor Compliance Pitfalls (SCA, DBA, FLSA)
  • Hot Topics in Procurement Reform

Speakers:

Two Ways to Attend:

  • In-person, AGC of Washington (Second-floor Conference Room, 1200 Westlake Avenue North, Seattle, WA 98109).  Parking will be validated.
  • Live Webinar

When:

  • October 25, 2018
  • 8:00 a.m. – 3:00 p.m. PST (Breakfast and Lunch included)
  • Networking Reception: 3:30 p.m. – 4:30 p.m.

Click HERE for the program flyer and complete details.

Click HERE to Register.

Questions? Contact Tiffany Scroggs at 360.464.6041 or via email at tscroggs@thurstonedc.com

Many politically charged issues are likely to steal the headlines during the confirmation hearings for President Trump’s nominee for the U.S. Supreme Court, D.C. Circuit Court of Appeals Judge Brett Kavanaugh.  However, one issue unlikely to make headlines is the impact that Judge Kavanaugh’s confirmation may have on the doctrine that gives “controlling weight” to the way government agencies interpret their own regulations — known as the Auer Deference doctrine.

Given the composition of the Supreme Court, recent Judicial attempts to re-examine the doctrine, and Judge Kavanaugh’s previous statements, Judge Kavanaugh’s confirmation signals the probability of the Supreme Court’s eventual overturning of the Auer Doctrine  — which would be good news for government contractors.

What is Auer Deference?

Auer deference (also referred to as Seminole Rock deference) is a principle of administrative law that requires courts to give “controlling weight” to the way government agencies interpret their own regulations, even where the agency’s interpretation is not “the best” reading of the text in question. Developed from the U.S. Supreme Court’s holdings in Auer v. Robbins, 519 U. S. 452 (1997) and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945), the doctrine mandates that courts credit the agency’s interpretation as controlling as long as it is not “plainly erroneous or inconsistent with the regulation.”

This obviously puts a thumb on the scale for agencies in the context of contract disputes or bid protests tied to certain regulatory interpretations. It can be particularly harmful to contractors when the agency has altered its interpretation during the performance or procurement of a contract, or worse, during the course of litigation. Unlike agencies whose procurements rely on interpretation of the FAR, agencies that draft and enforce their own regulations (such as the Small Business Administration) are sometimes empowered under Aeur to alter their interpretation to suit the agencies’ needs on a case-to-case basis. Continue Reading Why Judge Kavanaugh’s Confirmation Could be Good News for Government Contractors

The federal regulations and procurement framework for design-build project delivery concerning direct government procurements, and indirect federal projects where the government provides funding but does not procure the construction, has been in place for the past twenty-two years (The Clinger-Cohen Act passed in 1996, part of Federal Acquisition Regulation at subpart 36.300 et seq.)  Design-build delivery can provide a streamlined project to federal agencies at many times better value than a design-bid-build delivery

In the next three years, design-build projects are expected to to be just about 20% of all of the total U.S. Construction Put in Place ($1.2 trillion of the $5.4 trillion estimated total; See Fails Management Institute June 2018 Market Study ) Highway and road projects are expected to make-up fourteen percent of the design-build delivered projects over the same time period (Ibid.)  As the twenty-fifth anniversary of design-build procurement at the federal level approaches, we can take a few minutes to look at a couple of the benefits and pitfalls for contractors of design-build projects.

Benefit

Generally speaking, design-build projects take less time to complete than traditional design-bid-build projects.  This benefit is realized by eliminating a second procurement process, reducing the errors and omissions in the drawings, and allowing for concurrent design and construction.

Pitfall

Despite Federal Acquisition Regulation subparts 36.303-1, Phase One, and 36.303-2, Phase Two setting for the criteria for evaluating proposals in phases, the evaluation of the criteria is necessarily subjective when the government is awarding a negotiated contract on best value.  The constraints on the wide discretion of the awarding body are that the decision cannot be arbitrary or capricious, contrary to established procedures, or unsupported by substantial evidence (5 U.S.C. § 706(2)) Meeting this burden during the protest process is a more challenging burden of proof.

Benefit

Because the design team and the contractor are under the same umbrella, often times working together during the programming phase of a project, design-build projects generally have less litigation.  A significant reason is that one of the main points of tension, design vs. contractor, is removed in a design-build project.

 Pitfall

Making sure that the design-build team, and the project, is protected by the appropriate insurance coverage can be a challenge for the design-builder.  In our experience, most of the design-builders are traditionally general contractors that contract with a design or engineering firm to be part of the design-build team.  For example, this creates a potentially problematic situation if a project specific insurance policy will have to cover general and professional liability, which is a non-standard type of coverage requiring savvy brokers, builders, designers, and underwriters.  Care must also be taken when negotiating the design-build contract with the awarding agency to include language and insurance requirements appropriate for both the professional liability side (“design”) and the general liability side (“build”).

Despite presenting unique challenges, design-build delivery can provide a streamlined project to federal agencies at many times better value than a design-bid-build delivery.