Owner’s Failure to Coordinate on a Multi-Prime Construction Project

This is the last blog post in a six-part series about an owner’s duty to coordinate and cooperate on multi-prime construction projects. The purpose of this series is to provide awareness of the owner’s duties along with case examples on the subject. This post provides an example of an owner’s failure to coordinate that resulted in a prime contractor’s recovery of damages that another prime contractor caused.

Case Example No. 4 – Owner’s Failure to Coordinate
In Stephenson Associates, Inc.,¹ the Board of Contract Appeals (the “BCA”) found that the government was responsible for damages that one prime contractor suffered and another prime contractor caused, despite a clause disclaiming the government’s liability for any costs incurred by the contractor as a result of another contractor’s failure to coordinate. The claim arose out of a contract for the phased construction of the Federal Law Enforcement Training Center (the “FLETC”) in Brunswick, Georgia.

Stephenson Associates’ contract was one of six prime contracts that the government let for work on the FLETC. Under the terms of its contract with the government, Stephenson Associates was responsible for coordinating with other prime contractors. With the following contract language, the government attempted to disclaim its responsibilities for consequences that one prime contractor suffered because of another prime contractor’s failure to coordinate:

The Government shall not…be liable for any costs incurred by the Contractor by reason of (an)other contractor’s failure to comply with directives of the Construction Manager or the Contracting Offices, it being understood and agreed that the Government does not guarantee that other contractors will not breach their obligations to coordinate their work with that of the Contractor.

The BCA held, however, that the government’s exculpatory language did not relieve the government of responsibility to coordinate the performance and timely completion of various prime contractors. The BCA stated:

However, we have held that even affirmatively exculpatory language such as this does not overcome the Government’s liability under the Suspension of Work clause for unreasonable delays caused by the Government’s failure to coordinate the work of its prime contractors…

Even with this exculpatory language in the contract, the government had a duty to coordinate. Further, the BCA referred to an earlier ruling from Pierce Associates, Inc.,² stating the following:

The Government may not give such exculpatory language precedence over the Suspension of Work clause which has been mandated by the Federal Procurement Regulations. Under the terms of its contract, the Government had the responsibility to make all reasonable efforts to keep its other contractors on schedule when the timely performance of one contractor was dependent on that of others. To allow the Government to escape the responsibility imposed upon it by terms of the contract and to deny the Appellant the adjustment cognizable under a relief-granting clause would remove much of the Government’s incentive to properly supervise the progress of a phased construction project.

The BCA found that the government breached its duty to coordinate and ruled in favor of Stephenson Associates.

Conclusion
If the owner or owner’s agents do not practice or provide effective contract administrative control with respect to coordination and cooperation on multi-prime construction projects, then a chaotic work environment will likely follow. Since timely start and completion of specific work packages by one or many prime contractors may dictate the timely start and completion of subsequent prime contractors, delays and disruption issues attributed to poor owner coordination and cooperation can negatively impact the least-cost performance of the successor prime contractors. The resulting domino effect can trigger protracted claims and disputes due to the owner having the duty to coordinate and cooperate.

¹     Stephenson Associates, Inc., GSBCA 6573, 86-3 BCA ¶19,071 (1986).

²     Pierce Associates, Inc., GSBCA 4163, ¶13,078 (1978).

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