News

By now, most contractors are cognizant of the impact of Virginia Code § 11-4.6.  Enacted in 2020, this statute allows general contractors to be liable if their subcontractors fail to properly pay their employees. In 2021, the General Assembly modified this statute and general contractors need to be aware of this revision.

The modified statute provides that a general contractor may provide a “certification” as evidence that they did not know, and had no reason to know, that their subcontractors were not paying their employees properly. The general contractor must obtain this certification, in writing, from their subcontractor, and the certification must be signed by the subcontractor under oath. The certification must also state that the subcontractor and its sub-subs, paid all of their employees all wages due for the work performed on the project. Construction companies should review this newly modified statute and update their subcontracts and lien waivers accordingly.

Moore & Lee is pleased to announce that Allison Hemmer and Brandon Lee have joined the firm as Associates.  Allison graduated from George Mason University School of Law in 2021.  Brandon graduated from the UNLV William S. Boyd School of Law in 2021. Allison and Brandon worked as Summer Associates at Moore & Lee in 2020.

Moore & Lee is pleased to announce that Erica Rutner has joined the firm as a Partner in Moore & Lee, LLP’s Florida office.  Erica previously practiced for many years at Weil, Gotshal & Manges LLP representing clients in a variety of complex commercial litigation matters throughout the country, including complex class action litigation.

Moore & Lee partners Robert M. Moore and Charlie C.H. Lee were recognized in the 28th Edition of The Best Lawyers in America^©.  Specifically, Mr. Moore and Mr. Lee were selected by their peers for recognition of their professional excellence in Construction Law and Construction Litigation.

In a decision issued by the United States Court of Federal Claims, Anthem Builders, Inc. v United States, 121 Fed. Cl. 24, the Court considered a Contracting Officer’s right to deny a bid on a project based on an entity’s use of an unacceptable individual surety.  Proper bonding is essential, because without a safety net, the government is left with no protection if the contractor fails to meet its contractual obligations.  Under FAR 28.203 an entity can use an individual surety, instead of a corporate surety, for all types of bonds, with the exception of position schedule bonds.  Anthem bid on a government construction project and the bidding package included a bond secured by an individual surety.  The Contracting Officer rejected the bid as “nonresponsible.”

Contractors have been careful about using an individual surety to secure bonds because of the difficulty in verifying assets and the questionable practices of some individual sureties.  Since these problems arise with an individual surety a Contracting Officer is given wide latitude under FAR 28.203(a).  FAR 28.203(a) gives the Contracting Officer the right to find the individual surety “nonresponsible.”  The right of a Contracting Officer to reject an individual surety was cemented in Anthem Builders.  The Court found that even though pursuant to FAR 52.228–15(d), the bond was supported by an individual surety, the Contracting Officer had the right to deny the bid if the individual surety was “nonresposible” and the funds were not guaranteed.

For Contracting Officers, the validation that a bid does not have to be accepted if the individual surety raises severe financial red flags for the project provides some much needed relief and mitigates a common fear of having to accept fraudulent transactions.  Entities bidding on a federal government project should try and obtain bonding from a surety listed on the Treasury Department Circular.  If an entity is using an individual surety as security for the bond, the entity could take steps to avoid Anthems’ fate in this case.  The entity should ensure that the individual surety provides an escrow account where the Contracting Officer has the sole and unrestricted right to draw on the funds, provides proof of unencumbered assets, or provides an Irrevocable Trust Receipt that is issued by an FDIC insured financial institution.

Moore & Lee partner Robert D. Windus was recognized in the Official Educational Journal of the American Subcontractors Association, The Contractor’s Compass, for his peer review of the 2018 edition of Mechanical Contractors Association of America, Inc.’s (MCAA) publication Change Orders, Productivity, Overtime: A Primer for the Construction Industry.  Specifically, Mr. Windus was credited for helping ensure that the content and data in 2018 edition was correct, reasonable, and applicable to the current state of construction management and construction law.  The American Subcontractors Association recently joined the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) and the National Electrical Contractors Association (NECA) in announcing its full support and formal endorsement of the 2018 edition of MCAA’s publication.  Read the full article here.