A significant decision (attached) issued recently by the Worcester Superior Court could have significant ramifications for contractors undertaking public projects using the c.149A CM at Risk ("CMR") delivery method. AGC Executive Board member Tony Starr, Esq. and his colleague at Mintz Levin, Peter McCarthy, Esq., have provided an excellent summary (also attached) of the case, Coghlin Electrical Contractors, Inc. v. Gilbane Building Co. & Travelers Casualty & Surety Co. of America which merits your consideration. The decision raises the specter that CMs could, by virtue of their constructability reviews on CMR projects, be treated as virtual guarantors of the design specifications and without recourse when they or subcontractors incur additional costs due to change order requests brought about by problematic design elements. To the extent that the decision expands CM culpability for design problems in a way never imagined by AGC, the decision, if upheld upon the expected appeal, could greatly discourage contractors from undertaking CMR projects.
While AGC weighs various courses of action in response, we urge all members to consult with their own legal counsel and sureties to review the implications of the attached decision. Some contractors may determine that it creates an untenable degree of risk on certain public projects and that they wish to refrain from pursuing those projects. Other contractors might seek contractual protections to ward off similar results. CMs continuing to pursue projects will need to determine whether their price proposals need to be enhanced commensurate with the additional risk associated with the court's interpretation of c.149A.
As a principal author and supporter of the Construction Reform Act of 2004 which launched CMR as an important and successful tool in public construction, AGC seeks to work with stakeholders to maintain the viability and original intent of this delivery method for its members. AGC will hold a conference call of its Chapter 149A Task Force members during the next couple of weeks to discuss the impact of the decision for CMs, subcontractors, and awarding authorities.
If you would like to be included for participation in that conference call or have other questions or comments on the enclosed materials, please contact Brian O'Donnell at AGC at [email protected] or 781-235-2680 x 16.
