Highlights

Shutdown suggestions:

Maintain job-site safety, traffic control and any stormwater permit obligations, and establish internal cost codes to track those expenses.

Document equipment and crews idled by the stop-work order. This information will be invaluable for any later delay claim.

Knowing an owner will not make payment for an unknown period of time, a contractor may be entitled to stop work now. However, always be especially cautious about refusing to work.

No one wants construction to stop on July 1. As that date nears, however, the government shutdown appears more and more likely. Some work has already been suspended. Many contractors are wondering how they can best protect themselves legally from the delays and disruptions that will inevitably result if some or all of their jobs are shut down. Some suggestions follow:  

Maintain Safety

At a minimum, contractors will want to maintain job-site safety, traffic control and any stormwater permit obligations. Safety always comes first.

Detail Shutdown-Related Expenses

Contractors should establish internal cost codes or otherwise track all shutdown-related expenses. They should carefully review the claim provisions in their contracts to make sure that they provide proper and timely requests for extra time and money.

Document Suspended Jobs

Contractors should document the progress of each suspended job and status the schedule through the shutdown. They should accurately document the equipment and crews that have been on the job and that are being idled by the stop-work order. This information will be invaluable for any later delay claim.  

Moving to a New Project/Standing By

Contractors facing an indefinite suspension of work are generally entitled to send their crews and equipment to another project unless the owner orders the contractor to stand by and agrees to issue a change order compensating the contractor. A contractor need not idle equipment and forces without an extra while waiting for the owner to order the work resumed. In fact, the contractor has a legal obligation to minimize losses by working elsewhere if other work is reasonably available.  

Fulfilling Other Commitments

An owner cannot expect the contractor to return to the job immediately after the suspension is lifted. The contractor may have to complete other commitments before returning. Before leaving a job, however, the contractor should give the owner the opportunity to agree to pay the contractor to stand by. The contractor should also tell the owner that, once gone, the exact date of return cannot be guaranteed.  

When to Say No

Knowing that an owner will not make payment for an unknown period of time, a contractor may be entitled to stop work now. Contractors have been told that they will not be paid after July 1 for an indefinite period of time. They do not have to work if they are not being paid. If an owner orders a contractor to pave thousands of tons of asphalt on June 29 and 30, for example, the contractor could probably refuse to pave unless the owner pays in advance. Some contractors are setting deadlines beyond which they will not work. Contractors, however, must be especially cautious about refusing to work.

Because jobs and contracts can vary greatly and these differences do not always lead to the same legal conclusion, a contractor may want to consult an attorney before moving to another project or refusing to perform.

Hope for the best but prepare for the worst.