Q: We are a specialty design consulting firm that works for a number of architects, primarily doing design-related public works construction. We often specify proprietary products we are familiar with. Recently, one of the architectural firms that we work for refused our specification on the grounds that it was a sole-source specification that could not be included in the bid package. We disagreed and made sure the specification stated "or equal." Is this sufficient?

A: If your specifications contained in the bid package included features unique to a particular brand or distributor of a product, you may run into problems with public contract bidding laws. Even though you specified an "or equal" product, the architect would be within his discretion to refuse the same if the product specified was unique and essentially there was no known equal, or if it was too difficult to procure an equal. The objective of statutes that prohibit specifying proprietary or unique products is to protect the taxpayers. Another objective is to put all bidders on an equal footing to protect their rights and access to public contracts. This problem typically arises when a design firm retains a distributor of a proprietary product as a design consultant on a public project and that distributor of the proprietary product specifies or drafts the specifications to favor their own product. It sounds, based on the information, that the architect may have had a valid point in refusing to use the specification, or at the minimum, request modification of the specification.

Q: Our firm is a consultant on a major building program for a significant public entity. The program manager scheduled a number of design reviews in which deadlines were missed and generally mismanaged by the program manager during the design coordination process. As a result, our firm lost a lot of money. Even though we do not have a contract with the program manager, can we sue the program manager for faulty scheduling and design coordination?

A: This is a very general question and a lot will depend on the jurisdiction and law controlling this project. Generally speaking, in many jurisdictions, a party cannot recover for the alleged negligence if they do not have a contract with another party. In this case, the design coordination duties of the program manager arose under the program manager’s agreement with the project owner, an agreement to which this engineer was apparently not a party. However, if this engineer can state a claim for some type of negligent misrepresentation of the schedule, that might be another matter. In many jurisdictions, if an individual or entity who in the course of their business, professional or employment, or any other transaction in which a party has a monetary interest negligently supplies false information to others who justifiably rely on such information, they will be liable for resulting economic losses incurred by those relying on such information. In this case, this engineer should consult a lawyer in his or her jurisdiction to explore this possibility. There is no question that it is certainly foreseeable and justifiable that a member of the design team would rely on the program manager for scheduling information as is required under these program contracts. In fact, that may have been an essential part of the services the program manager was to provide.

Q: Our consulting engineering contract with the architect does not contain an arbitration clause, but the architect’s contract with the owner, which is incorporated by reference into our architect consulting engineer agreement, does contain an arbitration clause. A claim has arisen on the project, and now the architect is demanding that we join in arbitration and is arguing that because the owner’s contract is incorporated into our architect agreement, we have to arbitrate even though the architect/engineer agreement does not have an arbitration clause. Can we be forced to arbitrate in these circumstances?

A: Courts are divided on the question of whether a general incorporation by reference clause is sufficient to incorporate an arbitration clause. Some courts have held that an express, prominent reference to arbitration is required, and other courts have held a general reference is sufficient. Again, this is a situation that depends primarily upon the law in your jurisdiction and your state court’s approach to these types of agreements and legal attitude toward arbitration. Often times, whether such a clause is incorporated and whether arbitration can be compelled will depend on how sufficiently precise the incorporation of the arbitration clause is accomplished. If the consulting engineering contract is ambiguous with regard to arbitration and if the architect was the drafter of the contract, generally speaking, ambiguities are construed against the drafter and this consulting engineer may not be forced to arbitrate the claim. Without reviewing the exact language from both contracts, a definitive conclusion cannot be drawn.

Michael J. Baker, Esq., is a partner in the Cerritos, Calif.-based law firm of Atkinson, Andelson, Loya, Ruud & Romo. He is an expert in design and construction contracts, mediation, and litigation. Please send him your legal questions via e-mail at mbaker@gostructural.com.