ANOTHER "C.O.F.E.D." DANGER - TO WHOM TO GIVE THAT CRITICAL NOTICE

By Henry L. Goldberg

The New York City Standard Construction Contract, and the standard form contracts for other New York State and local public agencies, are riddled with time-sensitive "notice" requirements. In most cases these are little more than brazen Contractor Forfeiture Enhancement Devices, or "C.O.F.E.Ds."

As we have repeatedly emphasized, contractors must strictly comply with all of these in order to be entitled to compensation for extra or disputed work and owner-caused delays. However, as important as the timeliness of such "notices," is ensuring that the "notice" is sent to the correct government representative. This is not always easy to do, particularly when no assistance, and, in fact, misinformation, is often provided by agency field personnel.

We had to address this issue recently after a contractor sent required notices to the president of New York City Health & Hospitals Corp. ("HHC"). HHC field representatives forcefully complained to the contractor that such correspondence should not be sent to the president of the agency, notwithstanding clear contractual language to the contrary.

In this instance, the construction management company ("CM") hired by HHC (wrongly) advised the contractor that, pursuant to a "Notice to Proceed" letter (which was, itself, an official contract document), all project correspondence should only be sent to the CM (as the HHC president's designated project representative) and HHC's project manager, and should never be sent to the HHC president. Apparently, it was, not in the CM's or project manager's interest to keep the president apprised of the contractor's potential claim, particularly where HHC personnel had failed to timely obtain required building permits.

Clearly, the CM and HHC's project manager were not reading their own contract correctly. Failure by the contractor to send its notice to HHC's president under these circumstances could have been "fatal," resulting in the contractor having waived all of its right to be compensated fairly. Not only were the HHC personnel giving the contractor the wrong information, they were doing so in a forceful and threatening manner.

G&C COMMENTARY

The most basic principles of fairness inform us that it shouldn't be this way. The work involved may absolutely have been extra work. The impact may absolutely have resulted from this delay caused by the owner. However, if the required notice was not sent by the required deadline to the required person, the contractor could have suffered the harsh result of unjust forfeiture. Contractors must remember that, while the owner's field and supervisory personnel may direct a contractor to only send notices to themselves, or not to send notices at all and to simply "come over to the trailer" to settle any issues, they rely on such advice at their own peril. It is a public owner's upper management and legal department, not project level staff, which will ultimately approve the resolution of any claims. All verbal assurances by the owner's project staff that "we'll work it out amongst ourselves" will, when it counts, be meaningless.

If you encounter resistance in complying with specific contractual procedures, inform agency field personnel that you are simply complying with the specific requirements of their contract. If someone from the owner with authority to change contract terms provides written confirmation (which will never happen) that the contractor does not have to follow the contract's strict notice and/or dispute provisions, then, and only then, should a contractor back off. Otherwise, a contractor must strictly comply with all contractual notice requirements.

The contract is the bible. Review all contract terms with counsel. Be fully aware of all aspects of the applicable notice and damage "recordkeeping" requirements. Never let these provisions frustrate your right to clear entitlement.

Henry L. Goldberg may be contacted by email, hlgoldberg@goldbergconnolly.com or by telephone, 516-764-2800.

For more information on Goldberg & Connolly, please visit www.goldbergconnolly.com.

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