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Compliance With Contractual Notice Provisions

A recent decision of New York City Office Of Administrative Trials And Hearings (“OATH”) highlights the significance of compliance with each and every provision of a construction contract. Ferreira Construction Co., Inc. v. Dep’t of Transportation, OATH Index No. 1619/12 (Nov. 16, 2012), involved a public contract to reconstruct a pedestrian bridge in Manhattan at East 78th Street and the FDR Drive. The New York City Department of Transportation (“DOT”) contract contained a contractor initiated value engineering change (“CIVEC”) provision that gave the contractor an incentive to propose innovations by allowing for an award to the contractor of 50% of the cost savings if the proposal was accepted by DOT. The dispute concerned the application of the CIVEC clause. The contractor claimed that its accepted proposal under the CIVEC clause saved DOT $252,320.50, and that it was entitled to 50% of the savings of $126,160.25. DOT claimed that the proposal saved the agency only $93,011.50, and that the contractor was entitled to only $46,505.75 additional compensation.

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