A recent decision resolving a dispute arising from pre-pandemic supply chain issues that delayed construction of a wind farm in Illinois illustrates the ever-present risks posed by supply chain disruptions and provides a sobering demonstration of how liability for these risks can be shifted by adherence (or failure to adhere) to contractual notice provisions.

In Boldt Co. v. Black & Veatch Construction, Inc., 19-cv-08383 (N.D. Ill. 2023), a federal judge in Chicago recently resolved cross-motions for and granted summary judgment in favor of an engineering, procurement and construction contractor and against its subcontractor for project delays based largely on the subcontractor’s failure to strictly follow the notice provisions in its subcontract.  The dispute arose out of the construction of a 60-turbine wind farm in rural Illinois during the fall of 2019.  Boldt, as the subcontractor to Black & Veatch Construction, Inc. (“BVCI”), was to take delivery of the turbines from another subcontractor, offload them, and erect them.  The work involved numerous lifts involving cranes Boldt rented from a sub-subcontractor.  The turbines were delivered late and Boldt informed BVCI of this, as well as lodging complaints about the crane pads (which BVCI had responsibility to construct) and about the site’s soil conditions.  Despite these steps by Boldt, the court ultimately ruled that Boldt had not strictly followed the notice provisions of its contract.  Even though Boldt had submitted several five-day notices of impacts due to these issues, as required by its contract, it failed to submit any follow-up 20-day notices, which were also required by its contract and were intended to more fully document the costs associated with each issue raised by a five-day notice.  This failure proved costly, since the court found Boldt’s failure to submit the 20-day notices fatal to both its defenses and its affirmative claims against BVCI—in part, because BVCI strictly complied with its pre-termination default notice obligations.  

In retrospect, it is clear that Boldt’s failure to follow the notice requirements of its contract led to this result.  It is worth noting that the root of the overall dispute was tied to delays in receiving materials onsite—materials that were the engineering, procurement and construction contractor’s responsibility to provide.  Therefore, had Boldt strictly complied with its contract, the outcome of this case could have been very different.  As such, this case not only offers a reminder of the damages that can be caused by supply chain disruptions, but also strongly reinforces the message that serious consequences can result from even seemingly small deviations from contractual notice provisions.  In sum, prudent risk management includes strict contractual compliance.