Vol. 9 No. 9		September 1990

Every time we begin to believe the weeds are under control, a hardy new strain seems to emerge. So it is with contracting for professional services. Frustrated by the distracting annoyance of having to negotiate with architects and engineers seeking fair and equitable agreements, some owners are turning to a troublesome new tactic. It is one you can ill-afford to ignore. This weed could take over the garden.

It comes in the form of an ever-so-slight modification to the selection process. It goes something like this:

Also enclosed is a copy of our "Standard Contract for Professional Services." It is the basis for all professional service agreements entered into by this institution. Minor adjustments may be made to suit the specific requirements for the project.

Please review our terms and conditions, and note any exceptions on the enclosed "Pre-Contract Acceptance of Terms." Use the entire two inches of space, if necessary.

This form must be signed and submitted with your Statement of Qualifications. We reserve the right to negotiate with alternate candidates if expeditious agreement cannot be reached within the fee structure proposed by the initially selected firm.

This is as close to "Take it or leave it!" as this particular institution feels it can venture without running afoul of public policy. For you, it poses a difficult problem.

It is not as if the agreement were reasonable or fair. Consider the following sampling of terms. They are taken from a very real "Standard Contract for Professional Services," preselection acceptance of which is currently being demanded by a major university on the West Coast in connection with a highly desirable, if somewhat modest project.

Architect shall be responsible to see that the Project, as designed, can operate as a fully functional, efficient, high quality facility.

Architect shall prepare full and complete Drawings and Specifications sufficient for contractors to perform the Work without the need for more drawings, details, or change orders to correct or clarify the Drawings and Specifications....

Architect is responsible for providing a design which can be built for less than the Construction Budget as determined by construction bids received by the Owner.

There is more in this genre. As ludicrous as the demands may be, the owner's methods are anything but funny. Never mind that the language appears to have been drafted by an attorney whose understanding of design and construction ended with basic Lego. The owner is taking it all very seriously.

The dilemma for you, and for every one of your competitors for the project, is that you really want the job. It promises to be challenging, prestigious, and professionally rewarding. If you make too much of an issue of the owner's agreement, you may be stopped dead in your tracks by others who are willing to sign the precontract acceptance of terms and hope for the best. If you do not, you may find yourself saddled with an agreement under which the very best outcome you can hope for is narrow avoidance of disaster.

So, what do you do? You might start by giving your competitors credit for at least a basic level of sanity. The agreement is no less onerous for them than it is for you. If you can surmount this hurdle, you do have options. Consider the following:

1. Pick a new target.

   What you have been asked to do is to acknowledge, either that no exceptions to the agreement will be taken, or that the minor exceptions you have identified represent your only concerns. Why not introduce a third choice? Search the project documentation and the agreement for scope issues which remain unclear and require resolution. If you can find them, take careful aim at the questions they leave unanswered:

   "We would be pleased to discuss the terms and conditions of your professional services agreement. There remain open, however, a number of uncertainties as to the scope of our services. They include.... Once the scope of the project is finalized, we will be in a position to identify adjustments which may be needed to meet the requirements of the project. We look forward to discussing them with you."

2. Blur the focus.

   If you cannot identify elements of scope which afford an opportunity to deflect the owner's focus on terms and conditions, you might try hanging your hat on confusion as to the owner's intent. Use the space the owner has allocated for exceptions to communicate your uncertainty:

   "We have reviewed your 'Standard Contract for Professional Services,' and we find it to be an acceptable basis for negotiation. It raises important issues of risk and responsibility, some of which require discussion and clarification of intent. We are prepared to explore these issues with you in detail at an appropriate time."

3. Open a new window.

   Many issues of risk and responsibility can be dealt with very effectively with a healthy dose of the owner's money. You might be willing, for example, to assume certain risks in return for the potential for extraordinary profit. Or, you may be in a position to accept unusual responsibilities, but only if the owner is willing to compensate you for the costs involved. The point is, you will want to avoid the trap of agreeing on your fee before issues of risk and responsibility are resolved:

   "We would be pleased to discuss your standard terms and conditions with you. There are, however, a number of differences between those terms and conditions and the assumptions on which our professional fees are based. We hope to resolve these differences during the course of our negotiations, and we look forward to the opportunity to do so."

If you are less than comfortable sidestepping the issue, and if you are willing to risk rejection in return for the opportunity to send a message to the owner of some importance, there is a more direct approach. You can open the fee window a little wider. Append a copy of your own standard agreement to the owner's preselection acceptance form. Then, point out that the assumptions on which your fees are based, "... are reflected in the attached document setting forth the terms and conditions under which we customarily work."

This may not bring in the job, but it does communicate a point which badly needs making. It is not a pesticide suitable for indiscriminate use, but, carefully applied, it just may help to control the new weeds in the garden.