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THE STIPULATED SUM CONTRACT FOR SCHOOL CONSTRUCTION DID NOT ALLOW THE SCHOOL DISTRICT ACCESS TO THE PROGRAM MANAGER’S ACTUAL CONSTRUCTION AND ADMINISTRATIVE COSTS (FOURTH DEPT).

The Fourth Department, over a two-justice partial dissent, in a complex decision covering many issues not summarized here, determined that the language of the contracts and agreements re: the construction of new schools precluded the City of Buffalo Joint Schools Construction Board (Board) from learning the program manager’s (LPC’s) construction and administrative costs. The Board entered construction agreements with LPC as an agent of the City of Buffalo School District (District):

In 2014 and 2015, after operating under the [relevant contracts and agreements] for over 12 years, the Board and the District refused to process or pay the last four payment requisitions until LPC provided them with documentation concerning LPC’s actual construction and administrative costs, information that LPC contended was confidential, proprietary and not subject to disclosure under the [relevant contracts and agreements]. * * *

[The relevant agreements provide] the District with audit and examination rights to any and all records related to the ” construction contingency’ ” portion of the stipulated sum. Nevertheless, that section further provides that, “[n]otwithstanding anything to the contrary contained herein, the foregoing audit and examination rights do no[t] apply to any records maintained by [LPC] (or . . . on behalf of [LPC]) with respect to any Project Administration Costs or Construction Costs other than records directly related to the expenditure of the construction contingency.’ ” …

The contract is a stipulated-sum construction contract. In such contracts, “[t]he owner is obligated to pay the contractor the fixed amount no matter what it costs to finish the work” and, generally, “the owner is not entitled to review the costs that the contractor incurs during the project” … . Considering the general purpose of the contract and the fact that the [related agreements] specifically provide that the audit rights for construction contingency funds did not apply to records concerning LPC’s “Project Administration Costs or Construction Costs” unrelated to the construction contingency, we conclude that the only reasonable way to interpret [the applicable contract] is to determine that it applies to the District’s actual costs only. City of Buffalo City Sch. Dist. v LPCiminelli, Inc., 2018 NY Slip Op 01832, Fourth Dept 3-16-18

CONTRACT LAW (THE STIPULATED SUM CONTRACT FOR SCHOOL CONSTRUCTION DID NOT ALLOW THE SCHOOL DISTRICT ACCESS TO THE PROGRAM MANAGER’S ACTUAL CONSTRUCTION AND ADMINISTRATIVE COSTS (FOURTH DEPT))/CONSTRUCTION CONTRACTS (THE STIPULATED SUM CONTRACT FOR SCHOOL CONSTRUCTION DID NOT ALLOW THE SCHOOL DISTRICT ACCESS TO THE PROGRAM MANAGER’S ACTUAL CONSTRUCTION AND ADMINISTRATIVE COSTS (FOURTH DEPT))/STIPULATED SUM CONTRACTS (THE STIPULATED SUM CONTRACT FOR SCHOOL CONSTRUCTION DID NOT ALLOW THE SCHOOL DISTRICT ACCESS TO THE PROGRAM MANAGER’S ACTUAL CONSTRUCTION AND ADMINISTRATIVE COSTS (FOURTH DEPT))

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