Event Recap: October Construction Breakfast Roundtable on Delegated Design

The Construction Team hosted back-to-back Breakfast Roundtables in Portland and Seattle earlier this month. Attendees included contractors, suppliers, design professionals, in-house counsel, and others from across the construction industry. The topic: delegated design. We kicked off the discussion by defining the topic as delegating to the contractor a portion of the design of the work. For example, a contractor may have delegated design responsibility for portions of the exterior system, and then delegate that design out to various specialty subcontractors who both design and construct that portion of the exterior. Delegated design is not design-build or an architect delegating to design subcontractors (e.g., structural engineers). There was consensus among the groups that delegated design was becoming more prevalent in the industry. Delegated design provides potential cost savings, efficiencies in having subcontractors participate in the design, and more. On the other hand, we discussed potential pitfalls and solutions to better managing delegated design. These included:

  • Avoiding gaps in the scope of the project through clear contractual delegation of responsibilities and assigning responsibility for ensuring coordination between design elements.
  • Ensuring communication between all parties, including through preconstruction meetings by all potentially involved parties.
  • Avoiding costly and protracted disputes, including through the use of early dispute resolution and third-party neutrals.
  • Effectively using technology to prevent miscommunications and gaps in the scope.
  • Obtaining appropriate insurance that covers delegated design.
  • Analyzing the applicability of design professionals’ obligations under existing regulations and the potential for future regulatory changes applicable to delegated design.

Thank you to those who joined us in our discussions! If you were not able to attend, but would like more information on this topic, contact Jacob Zahniser, Tristan Swanson, James Walker, or Tara O’Hanlon.

Breakfast Roundtable: A 360° Discussion on Delegated Design

Please join us for a roundtable discussion on the risks and benefits of delegated design. Delegating design has been the industry standard for fire-suppression and elevator trades and is common for mechanical, electrical, and plumbing work. Delegated design is extending beyond its traditional place to encompass more building elements and trades, including entire envelope systems. The discussion will focus on the increased use of delegated design and the inherent changes it brings to communication, responsibility, budgets, and risk exposure.

Who should attend? This program will be helpful for owners, general contractors, design professionals, subcontractors, and others who routinely deal with the management of development projects. Space is limited, so RSVP early to reserve your seat at the table! The program is complimentary and will include free parking and a continental breakfast.

Click here for more information and to register.

2020 Brings Change to Oregon’s Public Contracting Code

Changes are coming to Oregon’s public contracting code in the form of HB 2769, passed during the Oregon Legislature’s 2019 session.

As those familiar with Oregon’s public contacting rules know, under ORS 279C.110, contracting agencies are required to use a qualification-based selection process when choosing consultants to provide architectural, engineering, photogrammetric mapping, transportation planning, or land surveying services. In other words, public agencies are prohibited (with some exceptions) from factoring in price when evaluating responses to requests for proposals from consultants for the services listed above; proposals must be evaluated on the basis of qualifications alone. This means that a contracting agency has no information about what its chosen consultant will charge for services until contract negotiations between the two parties begin. ORS 279C.110 is an outlier in this regard—Oregon’s public contracting code permits (and in some cases, requires) contracting agencies to consider price when selecting providers of goods, general services, and construction services. Continue Reading

Understanding Insurance Terms in Construction Contracts

Miller Nash attorneys Seth Row and Shanelle Honda were published in the Fall 2019 issue of the NAMC-OR Newsletter. The link to the full story is available below.

Construction contracts at all tiers usually include terms requiring certain types of insurance, and often contain related provisions about indemnity. This “boilerplate” can be important if a job goes south, so here’s a short explanation of some of the key terms and how they relate to one another.

Click here to read the full article (page 5).

Bid Protest Time Extension

Washington contractors now have more time to file a bid protest on a public works project.

Under prior law, an aggrieved contractor had to submit their bid protest within two days after the bid opening. RCW 39.04.105. For many contractors, they often did not know the basis to protest an award without receiving access to the other bids to understand whether the winning bid was in fact responsive to the bid criteria. Some public owners provided copies of the bids if requested at the bid opening. However, other public entities were refusing or delaying providing copies of the other bids until after the two day protest deadline passed. Continue Reading

Supreme Court Gives Government Contractors Greater Protection for Their Confidential Information

As we’ve discussed on our IP Law Trends blog, there is significant tension between government’s duty to give the public access to its records, and the desire of those who deal with the government to keep some of their information confidential. Yesterday, confidentiality won. In a 6-3 decision, the Supreme Court overturned the Eighth Circuit’s decision in Food Marketing Institute v. Argus Leader Media and held that the government (or those that deal with it) only need to show that records are actually “confidential” to exempt them from the Freedom of Information Act (FOIA). In doing so, the Supreme Court overruled the Eighth Circuit’s (and D.C. Circuit’s) more restrictive previous test, which required an additional showing of a likelihood of substantial harm from the information’s disclosure. As now clarified by the Supreme Court, “where commercial or financial information is both customarily and actually treated a private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of [FOIA] Exemption 4.”

This expansion of FOIA’s confidential information exemption will make it easier for those who deal with the government to protect their competitive information. But there are still traps for the unwary when providing such information, and laying the foundation for such protection still takes forethought and action (and state and local governments are subject to different rules). So if you are bidding on or working on a government contract, or otherwise providing information to the government, make sure you take the steps ahead of time to protect your confidential information. And if you don’t know how to do that, we’re here to help.

The U.S. Supreme Court Rids Constitutional Takings Claims of the “San Remo Preclusion Trap”

On June 21, 2019, the U.S. Supreme Court released Knick v. Township of Scott, in which the Court overruled a 1985 decision holding that a property owner’s claim against a local government under the Takings Clause of the Fifth Amendment was not ripe until a state court had denied the just-compensation claim under state law.  After that 1985 decision was released, however, it set up a trap that the Knick decision dubbed the “San Remo preclusion trap.”  In 2005, the Court held in San Remo Hotel, L.P v. City and County of San Francisco, that a state court’s resolution of a claim for just compensation under state law has a preclusive effect if the property owner subsequently brings a takings action in federal court.  In other words, the property owner has to go to state court before that owner can go to federal court to adjudicate the claim; but if the owner’s claim is denied in state court, the federal court will almost assuredly deny it as well on that basis.  Thus, the San Remo preclusion trap.  In overruling the state litigation requirement, the Knick decision stated that the existence of the trap is a tip-off that the San Remo decision rests on a faulty understanding of the Fifth Amendment.

Responding to a Crisis: How Human Resources Can Make Things Better, Not Worse

Cody Elliott and Mike Porter, two Miller Nash partners, were published in Constructor Magazine, a publication of Associated General Contractors. The link to the full story is available below.

Just as unforeseen site conditions can test a contractor’s problem-solving skills, unexpected events can test a construction employer’s crisis-management readiness. Crises can hit at any time, and individuals involved in human resources are usually — and rightly — on the front lines of working with a company’s management team to address the challenges that any present.

Click here to read the full article.

Judging Java: California Reverses Need for Proposition 65 Warnings on Coffee

California’s coffee industry breathed a collective sigh of relief earlier this month when the state’s Office of Environmental Health Hazard Assessment (“OEHHA”), the agency charged with implementing Proposition 65, finalized a regulation that exempts coffee from the need to bear a cancer warning.[1]

California maintains a list of chemicals that it considers to cause cancer or reproductive harm.[2] California’s list includes common carcinogens such as alcohol, lead, diesel exhaust fumes, asbestos, and nicotine, but also some that you might not suspect, including aloe vera leaf extract and wood dust.[3] The state’s Safe Drinking Water and Toxic Enforcement Act, commonly known as Proposition 65, requires businesses to provide warning labels before “exposing” consumers to any of the nearly 900 listed chemicals.[4] Businesses that violate Proposition 65 could face penalties of up to $2,500 per day for each violation.[5] A warning is not required if the carcinogen exposure poses no significant risk of cancer.[6] Businesses, however, have struggled with the financial and evidentiary burdens associated with meeting this standard.  Continue Reading

Dealing With the Ups & Downs: The Importance of Price Escalation Clauses in Construction Contracts

Vanessa Triplett, a Miller Nash construction law attorney, was published in the Summer 2019 issue of the NAMC-OR Newsletter. The newsletter is published by the National Association of Minority Contractors—Oregon and the Daily Journal of Commerce. The link to the full story is available below.

In this era of trade wars and tariffs, the likelihood that fluctuating building material costs will derail present and future construction projects is greater than ever. This is because over the past year the volatile world economy has made the price and availability of essential building materials such as steel, aluminum, lumber, asphalt, copper, and quartz increasingly uncertain. Without predictable access to standard construction materials, owners and contractors now face critical hurdles in building and completing construction projects on time and within budget.

Click here to read the full article.

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