8/21/2012 Pre-Co Pre-Contra ract Ph Phase ase Con Contract ct - PDF document

8/21/2012  Pre-Co Pre-Contra ract Ph Phase ase  Con Contract ct Ph Phas ase/Co Contract Te Terms  Statutory Assistance Statutory Assistance on on Fe Federa d d eral Project l l Projects  Liens Liens  Post Con Post Contrac ract Ph Phase ase  Litigati Litigation Risks on Risks  Due Due Dilige Diligence ce Client Invest Client Investigat ation ◦ Dunn & Dunn & Bradstr Bradstreet et ◦ Courtlink tlink Search ◦ What is What is the the Contra Contract cting Entity? g Entity? ◦ Proof of Proof of Financi Financial Solve lvency y 1

8/21/2012  Due Due Dilige Diligence ce Proje Project Invest Investigatio ion ◦ Likelihoo lihood o of completion on/succe ccess ss ◦ Fundin Funding ◦ Other Other Player Players  Clear Stan Clear Standard rd Contrac Contract Terms Terms ◦ When When invoic invoiced ◦ When When paymen payment t due due ◦ Inter Interest or or finance finance charg charge for for late late payment payment ◦ Costs sts for for colle collect ction, inclu , , including attorne g g attorneys f y s fees ees  Unde Underst rstand upfro upfront the the Client Client’s Billin Billing g Practice Pr ce ◦ Elect Electron onic billin billing procedu g procedures ◦ Thir ird party party review reviewer ers/ s/pa payer yers  Le Lend nders  Insu Insurance compan companie ies  Proje oject invest investor ors 2

8/21/2012  Othe Other Contrac Contract Conside Considerat ations ◦ Advanc Advance De e Deposit posits ◦ Secu curi rity Arrangem Arrangemen ents ts ◦ Guaran Guarantees es ◦ Ri Right g ht to to Withhol Withhold Deliver Deliverables ◦ Obli Obligation to to Wo Work rk when when Paymen Payment in t in Dispute spute?  Clauses w uses with Signif ificant icant Conseq equences uences ◦ Pay Pay-wh when en-pa -paid/ d/Pay- y-if-p -pai aid  Desir Desired by by Prime Prime; Detested Detested by by Sub Sub  Samp Sample le Claus Clause:  Paym Payment. Subcontractor shall submit its invoices by the ___ day of each month for services rendered during the prior month. Architect shall review such invoices and upon approval process them for payment by including them in the next billing to the Owner. Payment shall be made to Subcontractor within 10 days following receipt of made to Subcontractor within 10 days following receipt of payment from the Owner for Subcontractor’s work. Subcontractor understands that it is accepting the risk of non-payment by the Owner and agrees that Architect’s obligation to make payment to Subcontractor is expressly conditioned upon Architect’s receipt of payment from the Owner for Subcontractor’s work. This clause does not create an implied postponement of payment for any period of time, but rather expressly conditions payment to Subcontractor upon prior payment by the Owner. 3

8/21/2012  Clauses w uses with Signif ificant icant Conseq equences uences ◦ Pay Pay-wh when en-pa -paid/ d/Pay- y-if-p -pai aid  Enfor forcea eabi bilit lity  Unenfo enforcea eabl ble as e as against p against public ic polic licy  Impl plied “rea “reasonable” ti time peri period fo for pay r payment  Enforce forceable ble i if clear a r and u unambigu mbiguous us  Clauses w uses with Signif ificant icant Conseq equences uences ◦ Waiv Waiver er o of Lien Right Lien Rights ◦ Subord rdinat ination ion C Clauses  Pro Prompt pt Pay Paymen ent (31 U.S. (31 U.S.C. Sec. Sec. 39, 5 39, 5 C.F. C.F.R. Pa Part 1315) 1315) ◦ Applicability ility  Proc Procurement contr contract cts for for servic services es with with federal federal a agenc g g ency y y  Ex Exemptions 4

8/21/2012  Pro Prompt pt Pay Paymen ent (31 U.S. (31 U.S.C. Sec. Sec. 39, 5 39, 5 C.F. C.F.R. Part 1315) Pa 1315) ◦ Deter Determining pay g paymen ent t due due dates dates  Speci Specifie ied in in contrac contract  Receip Receipt of of a proper proper invoic invoice  Acce cceptan ance ce ◦ Failu Failure re to make to make payment payments on time on time ◦ Taki Taking d disc scounts ◦ State counter ate counterpa parts  Pro Prompt pt Pay Paymen ent (31 U.S. (31 U.S.C. Sec. Sec. 39, 5 39, 5 C.F. C.F.R. Part 1315) Pa 1315) ◦ Failu Failure re to make to make payment payments on time on time ◦ Taki Taking d disc scounts ◦ State counter ate counterpa parts  Mille Miller Act Act Paym Payment Bonds Bonds (41 (41 U.S. U.S.C. Sec Sec 3131 3131 et. seq.) et. seq.) ◦ Applicability ility  All const ll construction contrac contracts in in excess excess of of $100, $100,000 nd tier  Cove Covers subs and subs and 2 nd tier subs if subs if proper proper notice notice  Profe ofessional servic al services es if if pa part rt of of origin original scope of al scope of work work (design/buil (desig ild) 5

8/21/2012  Mille Miller Act Act Paym Payment Bonds Bonds (41 (41 U.S. U.S.C. Sec Sec 3131 3131 et. seq.) et. seq.) ◦ Rig Right to to Rec Receiv ive Co Copy of Bo Bond ◦ 90 day days withou without being t being paid paid ◦ Ri Ri Ri ht t Right ht to o Bring B i ng Ci Civil Ci il A ti il Acti tion ti on in i n U.S. U S Di t i t C . Di District Cour ourt t whe where contract e contract pe performed rformed nd Tier Sub, ◦ If 2 If 2 nd Tier Sub, must must provide provide notice to notice to Prime Prime within within 90 days o 90 ys of last wo last work ◦ Must file Must file lawsui lawsuit withi within 1 1 year followin year following last last day day of work of work ◦ State counter ate counterpa parts  Liberally C berally Construed/Creatur trued/Creature of of Statute/Vari atute/Varies es from S State t e to State  Key time period Key time periods from s from last day last day of of work work  Dete Determinin ing Last Last Day Day of of work (impr work (imprope per exten extensio extensi nsions ions for ns for for lien for lien lien filings) lien filings) filings) ilings)  Notic Notice to to Owner Owner requir requirements  Spec Special circum l circumstances f s for pr prof ofessiona essional ser servic ices ◦ Doing work be Doing work before fore obvious obvious construc construction on be begins  Wha  What What profess at pr professional profess ofessional onal services al serv services are ices are cov are covere covered? overed ered? 6

8/21/2012  When When to to Start F Start Forec reclosu osure of of the the Lien Lien  Pri Priorit rity of of Lien Claiman Lien Claimants  Inv Invali lid Liens d Liens  Moni Monitor A/R A/R  Ev Evaluate uate Security bef rity before F re Foreclosur closure/ e/ Execu Executio ion ◦ Liti Liti Litigat Litigation gation on guarant on guarant guarantee (title guarantee (title (title report) title report) report) for eport) for for real for real real propert eal propert property roperty ◦ Secr Secretary of y of State filings State filings for for UCC UCC  Ne Nego gotiating Pay Payment ◦ Use of of promiss promissory note notes ◦ Discount unts  Execu Executin ing on on securi security ty ◦ Lien Lien foreclo foreclosure ◦ Payme Payment bond bond civil suit civil suit ◦ Perso ◦ Person Personal Personal al propert al pro property ex propert erty ex exec exec ecuti ecuti ution ution 7

8/21/2012  Obta Obtainin ing a g a Judgm Judgment ◦ Gener Generally good for 1 ood for 10 years years (check (check state state law) law )  Execu Executin ing on on the the judg judgme ment nt  Bankruptcy c nkruptcy cautions ions  When Whenever a a lawsu lawsuit is filed to is filed to collect collect on on unpa unpaid d servi services, a a real real risk risk exist exists that that the the client will clien will defend the lawsu defend the lawsuit by by allegin alleging profe professio sional al negli negligence ce and and filing a filing a count counterclai counterclai count aim again aim aga against the gainst the the plaint the pla plaintiff laintiff ntiff design ff design design design professio profe sional!! al!!  Case Studie Case Studies  Key T y Take ke-Aways ways: ◦ 1) Know y Know your ur clien client, the project the project partici participan ants and the and the project project ◦ 2) 2) Nego Negotia tiate c e clear payment ear payment terms using bo terms using both th swords and swords and carrots carrots ◦ 3) Consider nsider special special securit security arrang arrangem ement ents for for hig higher er risk risk jobs jobs 8

8/21/2012  Key T y Take ke-Aways ways: ◦ 4) 4) Know the Prompt Know the Prompt Payment Payment and Miller and Miller Act Act requi requiremen ements ts for for your ur federal federal jobs jobs ◦ 5) 5) Maintai Maintain an an intern internal procedu procedure for for lien timeli lien timeline nes and decisi and decision ons ◦ 6) Make 6) Make sure decisio sure decision to to file a file a lawsui lawsuit is is an an informed decisio inform decision 9