Attorney Kenneth E. Rubinstein of the Preti Flaherty law firm said with Trump again prioritizing tariffs, contractors should seek protection in case short-term price spikes return, according to the Engineering News-Record.
Rubinstein recommended contractors negotiate to include material price escalation clauses in new fixed-price construction contracts, which he said may have helped when prices escalated during the the first Trump administration and the COVID-19 pandemic.
In October 2019, Rubinstein and his colleague, Gregory L. Silverman, provided advice regarding material inflation in an Engineering News-Record commentary. At the time, the attorneys said contractors who did not lock in prices from suppliers before tariffs were announced often had to suffer the consequences because most standard-form contracts do not allow them to recover the higher costs that result.
Rubinstein and Silverman said locking in prices at project inception can limit the ability to take advantage of price declines. However, they said material cost escalation clauses typically allow a firm to obtain a change order to increase the contract price when the price of any material rises above an established percentage—usually 10%. Contractors still are required to shoulder the burden of typical price fluctuations but can get relief if a major increase occurs that neither party expected when the contract was signed.
