Contractors face risk on $400M White House project

A federal judge cleared construction on the $400 million White House ballroom project to proceed Tuesday, but attorneys say contractors still face significant risks from ongoing litigation.

A federal judge cleared construction on the White House ballroom project to proceed on Tuesday. However, construction attorneys say the ruling does little to reduce contractor risk, Construction Dive reports.

The National Trust for Historic Preservation sued the Trump administration earlier this month to halt the project. The lawsuit alleged demolition and early construction began before required approvals were secured.

The project’s cost has doubled to $400 million from an initial $200 million estimate, according to The Hill.

The Trump administration named Clark Construction Group as lead builder in July. Meanwhile, AECOM will provide engineering services. ACECO is handling East Wing demolition.

The conditional approval creates uncertainty for contractors. Work can continue, but litigation continues as well.

“When litigation impacts a project like this, a contractor has two immediate jobs,” said Jason Lien, partner at Maslon law firm. “Figure out what work can move forward and how a potential suspension is addressed in the contract.”

The project’s timing raised concerns among construction attorneys. The administration demolished the East Wing before completing or submitting ballroom plans for approval.

“What’s so unusual is that they proceeded, especially since we’re talking about the White House,” said Chris Staine, partner at Shumaker, Loop & Kendrick. “They demolished it. That was pretty breathtaking.”

Contractors typically demand owner indemnification when asked to work without permits. Nevertheless, many would still decline to proceed.

The federal judge warned the government should prepare to tear out below-ground work if it later prevents above-ground changes, according to NBC.

Attorneys emphasize construction contracts become a contractor’s primary protection. The contracts determine who absorbs delays and uncertainty when problems arise.

“Whether to stay comes down to contract, cash flow and reputation,” Lien said. “If those don’t line up, it may be time to walk.”