Risk Management

On March 25, 2020, the Massachusetts Governor’s Legal Office issued a letter to Municipal Chief Executive Officers in the Commonwealth that “provides guidance regarding the effect of the Governor’s March 23, 2020 Order ‘Assuring Continued Operation of Essential Services in the Commonwealth, Closing Certain Workplaces, and Prohibiting Gatherings of More than 10 People’ insofar as the Order intersects with municipal efforts to address the COVID-19 crisis.”

The Governor’s order deemed construction services as essential services, but some Cities/Towns have issued temporary suspensions of construction projects in their locale.  The letter emphasizes the importance that “public officials avoid conflicting directives and duplication of efforts.”  The Chief Legal Counsel stated:

Then, the letter confirms that the Governor’s March 23, 2020 Order included such a superseding provision “to ensure unitary management of this crisis.”  The letter concludes, after reciting that constructions services were included as “essential services” in the list of essential services of the March 23 Order,

Accordingly,

On March 22, 2020, Governor Raimondo issued the Seventh Supplemental Emergency Declaration that ordered “[a]ll business service personnel that can work from home are required to do so.”  The order was effective immediately and operates through March 30, 2020.

At the time of preparing this post, Rhode Island has not suspended business activities for “essential businesses.”  Based upon this policy, field construction services cannot be performed remotely so they can continue provided the following practices are in place:

Gatherings of ten (10) or more people in public or private spaces in Rhode Island are prohibited.  In addition, businesses that remain open must post notices of these policies as noted in paragraph 5 below.

For Rhode Island news and updates about COVID-19, visit https://health.ri.gov/diseases/ncov2019/.

Effective March 24th at 12:00 noon, Massachusetts is closing all non-essential businesses “physical workplaces and facilities (“brick-and-mortar premises”) through April 7, 2020.   See COVID-19 Order No. 13.

As an update to my post from Friday on Non-Essential Businesses, Massachusetts did not adopt the CISA Guidelines, but appears to have followed the structure of them.

The essential services list for Massachusetts can be found HERE.   Construction services is included as “essential” servcies as follows:

All indication is that MassDOT, MBTA, and MassPort projects are continuing (as noted by the above-referenced public works inclusion as an essential service.  During a board meeting of MassDOT, the Commissioner stated that the work is continuing but each project will be reviewed on a case-by-case basis.  Below is a letter Construction Industries of Massachusetts received from MassDOT on March 23, 2020 stating

There are increasing reports that some subcontractors have decided to suspend operations during the COVID-19 outbreak.  The subcontractors made this difficult decision even though the construction projects for which the general contractor has a continuing performance obligation remain ongoing with CDC health and safety measures in place.

What should a general contractor do if it receives such a notice (assuming the project is still moving forward)?  My thoughts are below recognizing that our present environment changes from day to day based upon news reports and governmental orders.

1. Reply to the subcontractor.  Confirm receipt of the notice and inquire about the subcontractor’s reasons for suspension and corporate policies regarding COVID-19 if not clear from the notice letter.  If not already established, provide a contact person for the subcontractor to provide updates as to the subcontractor’s policies and work plan schedule. Include a reservation of rights so that it is clear that you are preserving claims arising from the suspension and state that

The day-to-day professional and personal impact of the COVID-19 pandemic is substantial.  The global event will have dozens of common legal implications that we will address in this blog over the coming days, but for now I wanted to start with the basic starting point for any event of delay and/or additional cost on a construction project — THE NOTICE! 

The time is now to send your notice.  

This is not an adversarial notice.  Your contracting party will understand the impacts experienced and should appreciate the proactive approach in communicating the COVID-19 impacts.  If discussions have occurred between with your contracting party, I would still send a formal notice as to avoid further legal defenses down the line.  Also, providing the formal notice creates a structure that is helpful in creating a productive communication pathway regarding the delays/costs incurred and ways to mitigate them.

No matter what the legal theory, the COVID-19

Below is the City of Boston’s Press Release suspending all regular activity at construction sites in Boston as of today – March 17, 2020.  Sites need to be made safe by March 23, 2020.  Policy will be revisited in two weeks.

CONSTRUCTION SITES

Effective tomorrow, Tuesday, March 17, 2020, the City is suspending all regular activity at construction sites in Boston. Employers should maintain the necessary crews to keep their sites safe and secure, keep any materials from blowing away, and prevent trespassing. This work needs to be completed in the next week, by Monday, March 23, 2020. After sites have been secured, skeleton crews will be permitted for the remainder of this suspension to ensure safety. The only work that will be permitted moving forward will be emergency work, which will need to be approved by the City of Boston’s Inspectional Services Department.

That essential work includes:

• emergency utility, road or building work, such as