Last week, I posted an article about an Army Corps of Engineers project that ran 25 percent over budget, in part because of costs associated with LEED certification. At the end of the article, I asked the question "what do you think would have happened if the Corps of Engineers refused to pay the cost overruns associated with LEED certification?" Reader James responded: "I’m more interested to know what you think would have happened."
James’ response reminded of a blog post that I have been meaning to write. The idea for this blog post came from my friend, Scott Fitzsimmons. Let’s reframe the question:
What happens if a federal agency, like the Army Corps of Engineers, refuses to pay a contractor for additional costs associated with LEED certification?
As a construction litigator, I have drafted large construction claims so here is how I see a LEED dispute developing with most federal agencies:
- The contracting officer orders the contractor to obtain LEED certification after construction has begun.
- The contractor submits documentation of a "change" to the contract due to the LEED-related work and also submits a request for an equitable adjustment to the contract price to reflect the additional work.
- The contracting officer denies that a change occurred that affected the contract price and denies the equitable adjustment.
- The contractor then files a lawsuit based on the denied request for equitable adjustment in either the U.S. Court of Federal Claims or the appropriate Board of Contract Appeals.
Some of you may wonder if the contracting officer can do this. Absolutely. Keep in mind, contracting officers have tremendous discretion in making decisions. It simply takes the decision of one contracting officer to deny a modification or withhold payment, and you can have LEEDigaiton on your hands.
What’s been your experience with projects that make changes to the design to accomodate LEED certification?