The National Academies

NCHRP 20-06/Topic 25-05 [RFP]

The Legal Issues Associated with Consequential Damages Provisions in Construction Contracts
[ NCHRP 20-06 (Legal Problems Arising out of Highway Programs) ]

Posted Date: 8/1/2019

  Project Data
Funds: $75,000
Contract Time: 12 months
Authorization to Begin Work: 1/20/2020 -- estimated
Staff Responsibility: Gwen Chisholm-Smith
   Phone: 202-334-3246
   Email: gsmith@nas.edu
Comments: RFP
RFP Close Date: 10/16/2019
Fiscal Year: 2018


The National Cooperative Highway Research Program (NCHRP) plans to award a contract for a study and report. Legal research reports sponsored by this project are published in NCHRP’s Legal Research Digest (LRD) series. Publications are made available to some libraries and to approximately 4,000 transportation lawyers and officials through the TRB distribution network.


A crucial and often contentious element for any transportation construction contract is the identification and allocation of potential damages and liabilities among the parties. Contractual provisions can derail negotiations if too rigid or leave the public entity with unnecessary risk exposure if not carefully drafted. Consequential damages are often restricted in construction contracts to limit the state department of transportation's (DOT) exposure to potential liability. Parties seek to limit liability by including a clause to preclude recovery of consequential damages, i.e., losses “fairly and reasonably” arising from the breach of the contract. Research is needed on the legal issues associated with consequential damages provisions in construction contracts. This study should take into account the contract value as well as the type of project.

For purposes of this study, consequential damages are defined as damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation. They go beyond the contract itself and into the actions that flow from the failure to fulfill. Consequential damages occur when the contractor breaches a contract and is liable for all foreseeable losses incurred by the owner. They also go beyond the express terms and conditions of the contract itself and into the actions that flow from the breach. Some examples include any profits, rents, financing costs, or business opportunities that are lost.


The objective of this research is to produce a legal research digest that will provide trends among major transportation construction contracts as they relate to consequential damages, and create an elemental framework for inclusion in construction contracts.

At a minimum, the research should also address the following topics:

  • Various approaches to consequential damages used in major transportation contracts;
  • State restrictions on consequential damages and the impact of those restrictions on potential recoveries;
  • Contractual language for consequential damage provisions that may limit and/or waive potential damages or theories of recovery;
  • Whether DOTs are implementing consequential damages in the absence of state restriction;
  • Trends among major transportation construction contracts; and
  • Elemental framework for future contracts.

The final digest should include:

  • A summary of consequential damage provisions;
  • Relevant statutes;
  • Contract provisions;
  • A discussion on whether limitations are based on a percentage of the contract value, a lump sum or other measure;
  • Whether the recovery varies with project duration or delay;
  • Whether there are caps associated with the maximum recovery amount;
  • Whether caps are used at all or in a particular combination;
  • How consequential damages are framed in construction contracts;
  • How wording for these contractual provisions may influence recovery options; and
  • Additional considerations when including clauses in a construction contract to limit risk to the public entity or allocate risks among the parties.

This study may include other modes of transportation in addition to highways.



This research will be conducted in four tasks pursuant to a firm fixed price agreement.

The tasks will be as follows:

Task 1. Research plan and detailed report outline. The consultant will conduct background research and collect relevant material. Based on the initial but complete review of the source material, consultant will propose a detailed report outline. The outline should be about 8 to12 pages, include a proposed survey if one is to be used, and contain sufficient detail to inform the NCHRP project panel of what a 75- to 100-page report will contain. This outline should also contain the estimated pagination for each proposed section and/or subsection. This material will be submitted to NCHRP for consideration and approval.

Task 2. After approval of the work plan, the consultant should conduct additional research, and case and statutory/regulatory analysis.

Task 3. Draft report in accordance with the approved work plan (including modifications required by TRB).

Task 4. Revise report as necessary. The consultant should estimate that two revisions will be necessary. One revision may be required after review by the NCHRP staff and members of a select subcommittee. Additional revisions may be required after the full committee has reviewed the report.

FUNDING: $75,000


25% paid upon submission and approval of the Task 1 Report.

50% paid upon submission and approval of the Task 3 Report.

25% paid upon submission and approval of the Final Report (following revisions as required by NCHRP).

An important factor in rating proposal offers will be the proposer’s commitment to promptly undertake and complete this study.



Proposals should be submitted as a single PDF with the following information and in the following order:

  1. Summary sheet. (Here is the summary sheet ).
  2. A statement of interest and qualifications.
  3. Resume of key team members along with a description of responsibilities.
  4. A list of your relevant prior publications (you may enclose one or two samples).
  5. A statement of resources you will allocate to this project; any additions, deletions, or changes you may wish to suggest for undertaking the work; and your requested compensation.
  6. An executed, unaltered liability statement. Here is a printable version of the Liability Statement.
  7. Proposals should not exceed a total of 25 pages (including writing samples).

Proposals are evaluated by project panel members and NCHRP staff consisting of individuals collectively knowledgeable in the problem area. Evaluations are based upon the proposers': (1) experience in the subject area; (2) understanding of the work (demonstrated by the commitment of resources); (3) prior relevant publications (including briefs); (4) schedule for completing the work; and (5) price.

Proposals should be uploaded via this link: https://www.dropbox.com/request/xmnBPOCxqzaPdk3rxr64 by 5:00 (EST) on October 16, 2019. Proposals will not be accepted after this time.

For additional information and guidance, click here: Guidance for Working on NCHRP and TCRP Legal Projects.

Proposals are due not later than 5:00 p.m. on 10/16/2019.

This is a firm deadline, and extensions are not granted. In order to be considered for award, the agency's proposal accompanied by the executed, unmodified Liability Statement must be in our offices not later than the deadline shown, or the proposal will be rejected.

Liability Statement

The signature of an authorized representative of the proposing agency is required on the unaltered statement in order for TRB to accept the agency's proposal for consideration. Proposals submitted without this executed and unaltered statement by the proposal deadline will be summarily rejected. An executed, unaltered statement indicates the agency's intent and ability to execute a contract that includes the provisions in the statement.

Here is a printable version of the Liability Statement (pdf). A free copy of the Adobe Acrobat PDF reader is available at http://www.adobe.com.

General Notes

1. According to the provisions of Title 49, Code of Federal Regulations, Part 21, which relates to nondiscrimination in federally assisted programs, all parties are hereby notified that the contract entered into pursuant to this announcement will be awarded without discrimination on the grounds of race, color, religion, sex, national origin, or disability.

2. The essential features required in a proposal for research are detailed in the current brochure entitled "Information and Instructions for Preparing Proposals" (updated March 2018). Proposals must be prepared according to this document, and attention is directed specifically to Section V for mandatory requirements. Proposals that do not conform with these requirements will be rejected. This brochure is available here.

3. The total funds available are made known in the project statement, and line items of the budget are examined to determine the reasonableness of the allocation of funds to the various tasks. If the proposed total cost exceeds the funds available, the proposal is rejected.

4. All proposals become the property of the Transportation Research Board. Final disposition will be made according to the policies thereof, including the right to reject all proposals.

5. Potential proposers should understand that follow-on activities for this project may be carried out through either a contract amendment modifying the scope of work with additional time and funds, or through a new contract (via sole source, full, or restrictive competition).

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