State Halts Funding Of Public Works

Law Talk

Valley Contractors Exchange, Inc.

Since the state can't sell bonds to raise cash, cash is short. Because cash is short, it was annonced yesterday that cash would not be distributed to fund public works projects. At this time it's too soon to have facts about what this means for your public works jobs in process or out to bid.

Contractors, suppliers and professionals should react prudently and proactively:

  • Do you have a project affected by the State announcement? A list of jobs that are being impacted is on Valley Contractors Exchange, Inc.'s website.
  • Do your contracts have a suspension of work clause or termination for convenience clause? Is there consistency in the prime contract and the subcontrractor contract regarding these clauses?

All companies and prfessionals need to communicate in writing about the impact of ptential work stoppage.

Consider the effect to schedules, progres payments, labor rates material costs, storage expense, overhead expense, site security and insurance, SWPPS, demobilization expenses, loss of workers, equipment rental, permits and more.

  • How will a suspension of work be handled in regard to completion dates?
  • Compensation for a unavoidable fixed costs?
  • Site safety including equipment, materials, SWPF-'Ps. Who will assume responsibility for securing and insuring the site?
  • Project overhead personnel - reassign? Release? Risk losing?
  • Demobilization of equipment and manpower?
  • Subcontracts and purchase orders? How to handle goods in the manufacturing process, or being shipped?

The challenge right now is that this is un~chartered territory. No one knows howlong the funding stoppage will last. Contractors, owners and suppliers should communicate frequently and work together to avoid making a bad situation worse.