The shutdown of state government is finally over. Mn/DOT is now sending out notices to resume work and reminding contractors of the deadlines for submitting claims for the work suspension. Many contractors are now preparing their requests for extras.
The budget bill that ended the shutdown, however, includes troubling language that clouds the ability of contractors to recover on their claims. Section 1 of Article 5 of the bill states:
PAYMENT FOR 2011 GOVERNMENT SHUTDOWN CAUSES OF ACTION. No appropriation under this or any other law, regardless of when enacted, may be used to pay or settle judgments for damages by contractors or third-parties arising out of, or relating to, the government shutdown of July 2011. This limitation does not apply if the contract expressly provides for the payment by the state or an agency of the state for measures or activities undertaken by the contractor or third-party arising from or caused by the government shutdown.
The State and the owners of state-funded contracts may assert that this limiting language bars some or all contractor claims on their projects.
Contractors will of course dispute that their claims are barred. Contractors can certainly argue that, under the exception in the budget bill, the Mn/DOT specifications or other contract provisions "expressly" entitle them to extra money. Mn/DOT Specification 1402.2B, for example, specifically entitles contractors to extra compensation for work that is suspended or delayed by Mn/DOT. Contractors can also argue that any bar is ineffective because it is unconstitutional under both the federal and state constitutions. Depending upon their particular circumstances and contracts, contractors may also have additional arguments. The question may have to be resolved in court.
Despite the question of entitlement, contractors should continue compiling and submitting their claims. To avoid later arguments over the timeliness and sufficiency of the claim, contractors should carefully follow the claim provisions in each contract.