With the kids off for spring break this week, we nestled around the big screen for a family favorite. “The Great Oz has spoken! . . . Pay no attention to that man behind the curtain!” My littlest chuckled.
Just like the old man who couldn’t hide behind the curtain in The Wizard of Oz, contractors and subcontractors should be reminded that pre-bid documents, such as draft proposals and bid estimates, can’t be hidden behind the curtain of “trade secrets”. This is especially true when there is a delay claim in dispute, according to a recent ruling by a trial court in New York County.
In WDF, Inc. v. City of New York, No. 652478 (N.Y. Sup.) (Mar. 12, 2021), the contractor filed suit to recover damages from the City on numerous combined waste water treatment projects. The contractor claimed that the City breached its contract by supplying incomplete and inaccurate contract documents, which allegedly caused delays and a two-year extension to the project completion. The contractor’s $15.7 million delay claim included approximately $2.3 million for damages experienced by one of its subcontractors.
The dispute is currently in the discovery phase and the City filed a motion to compel the contractor’s internal pre-bid documents and bid estimates, as well as the subcontractor’s base documents. In the trial court’s order, Judge Borrok concluded that the contractor and subcontractor’s claims for unanticipated delay damages “affirmatively put in issue what it was they contemplated in formulating their bids.” The court relied on an old 1979 case where another trial court rejected claims that pre-bid documents constituted undiscoverable trade secrets.
So what? The trial court’s decision is a good reminder for contractors and subcontractors to implement a document retention policy for maintaining its pre-bid documents and estimates. Parties need to understand that these type of documents may be entirely relevant in the event of disputes, and the contractor will not be able to hide behind a curtain of “trade secrets” to keep the documents confidential.