We are all too familiar with the false claim actions that result
in criminal and civil penalties and potential disbarment. In the last month
alone, a Connecticut construction company paid a $2.4 Million dollar fine, a
Chicago based company settled the claims against it for $12 Million, a New York
based company forfeited $55 Million in a plea deal with the District Attorney’s Office and finally the US Attorney for the Southern District of New York
commenced an action against another contractor for allegedly using a “pass
through” to meet its DBE requirements on a contract.
The heightened scrutiny of our industry has raised some
interesting questions when it comes to even mundane day to day practices. One
that I want to touch upon today, is when there is “wiggle room” on your price
for an additional work order to allow for negotiating movement. Can that
situation result in a false claim? You know you are going to end up at the
negotiation table to get “beat up” on your number for the work. Have you ever
just given a quote and the owner accepted it? I don’t think so.
There are many variables in determining the price for a
proposal. It is not an exact science. Delays, impacts, weather, labor
efficiency, and material cost fluctuations all play a role. Some helpful
hints for staying out of trouble: (i) document everything (ii) have detailed
backup as to how the price, overhead and profit was calculated including labor,
material, insurance, difficulties expected to be encountered, overall impact
costs to the project, etc.; (iii) document everything; (iv) maintain all
correspondence; (v) document everything; (vi) be truthful, do not inflate the
numbers; always (vii) document everything; and finally (vii) negotiate in good
faith.
If you ever find yourself facing a false claim or unsure of your
legal footing, feel free to contact Connell
Foley’s New York Construction Law Group for
guidance on this or any other construction related issues.
