FORCE ACCOUNT WORK: PROTECT YOUR RIGHTS

Force account can be a contractor’s best friend or worst nightmare if not handled carefully. In today’s tough construction market, getting paid for the work you perform is critical. A trap exists for the unwary, however. We want you to be aware of that trap and give you strategies to avoid it. Contractors can waive their rights to impact and delay damages by signing force account change orders that compensate the contractor for all costs associated with the force account work. Because of the change order’s broad inclusion of “all costs,” signing the change order can have the unintended consequence of waiving the contractor’s claim for delays and impacts which often result from performing the force account work.

Contractors need to remember that public agencies each have their own procedures for administering force account. Private contracts usually have a variation of force account often referred to as time and material work.

Some public agencies pay for force account work under contract force account bid items. The potential trap that contractors must recognize is that some public owners issue change orders to pay for force account work. These change orders are often issued regardless of whether a bid item already exists in the contract.

Contractors must understand what a contract says about signing a change order and what rights are waived by its execution, whether the work is related to force account or not. Force account work is sometimes a major cause of delay and disruption. Here, a contractor must recognize the effects force account work may have on the contractor’s resources and schedule and follow the contract notice requirements accordingly. Unfortunately, the effects of force account work can be very subtle and not readily recognizable. And while the contractor may unknowingly be incurring time and cost impacts resulting from force account work, the contractor may also unknowingly be waiving rights to related time and cost impacts by executing force account change orders.

Contracts typically fail to distinguish between change orders that pay for force account work and change orders that pay for any other changed or extra work. The Washington State Department of Transportation Standard Specification Book (the “Standard Specs”) is a prominent example. Under the Standard Specs Section 1 04.5, the contractor waives all rights to impacts and delays by signing any change order, regardless of whether the change order arises from force account work.

Section 1-04.5 reads in part:

A change order that is not protested as provided in this section shall be full payment and final settlement of all claims for Contract time and for all costs of any kind, including costs of delays, related to any Work either covered or affected by the change. By not protesting as this section provides, the Contractor also waives any additional entitlement and accepts from the Engineer any written or oral order (including directions, instructions, interpretations, and determinations).

So what should a contractor do when delay and disruption are incurred because of force account work? First, if you are suffering or may suffer delay or impact damages relating to force account work, follow your contract’s notice and dispute resolution procedures regarding those damages. That force account work can cause delays and impacts to a contractor, including to unchanged work, is recognized in the Standard Specs.

Section 1-09.6, Force Account, reads:

Nothing in this provision shall preclude the Contractor from seeking an extension of time or time related damages to unchanged Work arising as a result of the force account work.

Under Section 1-09.6, the Standard Specs recognize that additional force account work can impact and delay a project. However, this section does not override the change order waiver language found in Section 1-04.5, or the notice and dispute resolution procedures found elsewhere in the contract. The section simply provides the contractor with the right to claim for delay and impact damages arising from force account work.

Second, negotiate a reservation of rights to incorporate into executed change orders. The reservation must be specifically agreed to in writing with the owner. Again, proceed with caution. You cannot reserve rights that the contract does not provide, so once again, there is no substitute for reading and following your contract. Before deciding on this option, it’s best to seek legal counsel to ensure your reservation of rights will be enforceable.

Third, and most importantly, do not sign a change order without carefully considering the rights you are giving up. Owners are increasingly relying on procedural defenses to defeat otherwise valid claims. Courts are increasingly willing to rule against contractors when owners raise these defenses. Follow the terms of your contract, and make sure you get paid the money you deserve.