Preserving the Owner's Options in GC/CM Negotiations

Public agencies using the General Contractor/Construction Manager (GC/CM) method of public works construction contracting should ensure that they preserve their options in the event that negotiations with the GC/CM for the Maximum Allowable Construction Cost (MACC) are not successful.

Owners often have language in the Request for Proposals to the effect that the owner may cancel negotiations and begin negotiations with the next highest ranked contractor if the parties are unable to successfully negotiate a MACC. However, negotiation with the next highest ranked contractor may not be in the owner's best interest given the status of the project, and the owner should preserve its right to take other actions.

I suggest that wording similar to the following be included in the Request for Proposals: "Should the Contractor and Owner not agree on a MACC, the Owner may cancel the negotiations and begin negotiations with the next highest ranked proposer, or pursue other options for completing the work as may be in the Owner's best interests."

This additional language gives the owner the right to put the work out for competitive bids if that would be most advantageous to the owner and the project.