Public-Private Partnerships: Robin G. Banks Goldberg & Banks, - - PowerPoint PPT Presentation

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Public-Private Partnerships: Robin G. Banks Goldberg & Banks, - - PowerPoint PPT Presentation

Oct 27, 2022 112 likes •449 views

In partnership with Public-Private Partnerships: Robin G. Banks Goldberg & Banks, PC Are Design Professionals 56 th Annual Meeting of Invited Attorneys Chicago, Illinois May 25 26, 2017 Partners or Pawns? Our Story CNA

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Robin G. Banks Goldberg & Banks, PC 56th Annual Meeting of Invited Attorneys

Chicago, Illinois May 25 – 26, 2017

In partnership with

Partners

  • r

Pawns? Are Design Professionals

Public-Private Partnerships:

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58th Annual Meeting of Invited Attorneys

Our Story …

CNA University City of Victorville

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CNA University Plans to Build…

Biggest Problem: FUNDING

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Our Team

Institution Developers School Builders WeDesign

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Risks

Contract Provision Risks Reconciliation Risks Timing Risks

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Timing Risks

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Timing Risks

Know Your Partners

  • Prior experiences
  • Risk philosophy
  • Financial wherewithal
  • A/E claims history

Institution Developers & School Builders

  • Prior experiences
  • On-board early

Major Subconsultants

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  • What is a Teaming Agreement?

– Why is it necessary? – Necessary elements in Teaming Agreement

  • When are Teaming and Design Agreements

negotiated and executed? – Before issuance of RFQ vs. Before issuance of RFP vs. After issuance of RFP

Timing Risks

Negotiation and Execution of Teaming Agreement (or MOU) and Design Agreements

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  • Risks

– Institution Developers financing arrangements unknown – No sample lease between City and Institution Developers – Terms of Design-Build Agreement Unknown

  • How to Manage Risks

– Clarify the services being provided – Disclaim services not being provided – Reserve right to amend proposal

Timing Risks

Negotiation and Execution of Teaming Agreement (or MOU) and Design Agreements

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  • Risks

– WeDesign bears the entire risk of early efforts if team is unsuccessful

  • How to Manage Risks

– Negotiate a piece of stipend, if any – Develop compensation model

Timing Risks

Payment for Early Services

Sweat Equity Multiplier of Direct Labor Costs Expenses

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  • Risks

– WeDesign performs early services based upon information in RFQ or RFP – Institutional Developers and School Builders treats design as final

  • How to Manage Risks

– Identify assumptions – Clarify need for further development of design – Verify design contingency – Disclaim liability for costing and quantity errors

Timing Risks

Design Assumptions

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Contract Risks

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AIA Document B101-2017 § 2.2 The Architect shall perform its services consistent with the professional skill and care ordinarily provided by architects practicing in the same or similar locality under the same or similar circumstances. The Architect shall perform its services as expeditiously as is consistent with such professional skill and care and the orderly progress of the Project.

Contract Risks

Standard of Care

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  • Obvious Warranties

– Agreement to perform services:

  • “in a highly professional manner”
  • “in accordance with the highest professional standards”

– Design will be:

  • “defect-free”
  • “fit for its intended purpose”
  • “in compliance with all laws and codes”
  • “Ghost Warranties”

– “Back to Back” or Flow Down

Contract Risks

Standard of Care Risks

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Contract Risks

Standard of Care – Risk Mitigation

Link performance exclusively to standard of care Disclaim express and implied warranties and guarantees

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  • Risks

– WeDesign assumes the risk of existing site conditions – School Builders (and higher tier parties) disclaim liability for reference documents

  • How to Manage Risks

– Disclaim obligation to inspect site – Ensure right to rely on reference documents

Contract Risks

Existing Site Conditions & Reference Documents

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Contract Risks Indemnification

What are they being asked to do? Who are they being asked to do it for? Why are they being asked to do it? How can they avoid uninsurable risk?

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  • Risks

– Time is of the Essence – WeDesign is liable for its delayed performance, regardless

  • f negligence
  • How to Manage Risks

– Position #1 – No LD’s at all – Position #2 – LD’s caused solely by WeDesign delays to critical path – Position #3 – LD’s to the proportionate extent caused by WeDesign’s negligent acts or omissions

Contract Risks

Timing & Liquidated Damages

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  • Risks

– Design Agreement has mutual waiver of CD’s, but includes exceptions – Most losses are consequential – exposure enormous

  • How to Manage Risks:

– Negotiate “clean” mutual waiver of consequential damages

  • Only exceptions for fraud, willful misconduct, or gross

negligence

Contract Risks Waiver of Consequential Damages

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Contract Risks

General Mitigation

Negotiation

  • f limitation
  • f liability

Erosion of limitation of liability

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  • Risks

– Performance guarantees flow down – Obligation to remediate defects (E&O’s) for free for a specified period following Substantial and Final Completion – Extension of liability beyond statute of limitations and statute

  • f repose
  • How to Manage Risks

– Disclaim performance guarantees – Disclaim “defect remediation” obligations – Disclaim extended warranties and guarantees

Contract Risks

Extended Warranties & Guarantees

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  • Risks

– School Builders may withhold payment without limitation – Cross-default

  • How to Manage Risks

– Position #1 – Strike the withholding/set-off provision in its entirety – Position #2 - Limit right to withhold until WeDesign is found legally liable – Position #3

  • Limit ability to withhold to agreement at issue and
  • Retain right to go to immediate dispute resolution on claimed

errors and omissions

Contract Risks

Withholding and Set-off of Payments

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  • Federal and common law provide protection for

WeDesign’s instruments of service

  • But:

– The Design-Build Agreement requires that School Builders convey all right, title and interest in all instruments of service to Institution Developers; and – The Design Service Agreement requires that all instruments of service prepared by WeDesign for the Project be treated as “works for hire”

Contract Risks

Ownership of Instruments of Service

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  • Position #1

– Only give a license to use IOS

  • Position #2:

– Give ownership of IOS to Institution Developers to the extent required by the Design-Build Agreement, and – License to School Builders

Contract Risks

Ownership of Instruments of Service – Risk Mitigation

1. Obtain indemnification for modification

  • r reuse of IOS

2. Negotiate compensation for reuse in event of T for C

  • Position #3

– Give up all rights to IOS, but still negotiate indemnification for modification or reuse of IOS

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  • Risks

–Erosion of privity of contract requirement

  • How to Manage Risks

–Strike the provision in its entirety

Contract Risks

Third Party Beneficiaries

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WHAT CONTRACT RISK IS THE MOST IMPORTANT TO YOU AND/OR YOUR CLIENTS?

  • A. Standard of Care
  • B. Indemnification
  • C. Consequential Damages
  • D. Limitation of Liability
  • E. Other

?? Polling Question ??

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Reconciliation Risks

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Reconciliation Risks Moving Targets

Developer Agreement Lease Design- Build Agreement

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  • Review all higher tier Project documents
  • Amend the design proposal to address

differing risks and responsibilities

  • Rank the “must have’s”
  • Be aware of the “break point”

Reconciliation Risks

Managing the Risks

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Final Thoughts

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  • Design Professionals are typically

pawns, not partners

  • Design Builders typically do not care

if agreements are insurable

Final Thoughts

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Questions