Gavel on Presidential flag.
Gavel on Presidential flag. Executive order.

On March 26, 2026, the President issued Executive Order 14398, “Addressing DEI Discrimination by Federal Contractors” (the “Order” or “EO 14398”).  The Order buttresses Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“EO 14173”) issued on January 21, 2025, which we have previously reported on. EO 14173 revoked the longstanding affirmative action requirements for federal contractors of Executive Order 11246 and imposed a certification requirement causing contractors to certify that they do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws. 

EO 14398 establishes a new mandatory federal contract clause requiring federal contractors and subcontractors to agree that “in connection with the performance of work under [the applicable] contract” they (i) “will not engage in any racially discriminatory DEI activities,” (ii) will provide access to books and records for purposes of ascertaining compliance, and (iii) report any “known or reasonably knowable conduct” of a subcontractor that may violate the prohibition against “racially discriminatory DEI activities.”  The contract clause required by the Order also embeds a contractual acknowledgement that compliance is material to government payment decisions for purposes of the False Claims Act, creating additional exposure for non-compliance.

The Order defines “racially discriminatory DEI activities” as disparate treatment based on race or ethnicity in the recruitment, employment (e.g. hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of any entity’s resources.  Further, “program participation” is defined in the Order as membership or participation in, or access or admission to: training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or established by the contractor or subcontractor.  This definition encompasses a wide variety of activities that may violate the Order if they favor or burden any race or ethnicity. 

The Order requires the mandatory clause to flow down through subcontracts, imposing the obligations at each tier. Contractors at each tier will be required to include the clause in their subcontracts and will be subject to the requirement to report any “known or reasonably knowable conduct” of a subcontractor that may violate the prohibition against “racially discriminatory DEI activities.”  The prime contractor is obligated to report potential violations of any subcontractor and is exposed to a range of penalties set forth in the Order for noncompliance by any subcontractor.  Penalties for non-compliance by contractors and subcontractors include contract termination, suspension, debarment and exposure to civil action under the False Claims Act. EO 14398 requires that all federal agencies must add the new mandatory clause to their contracts and “contract-like instruments” within 30 days, by April 25, 2026. 

The Order effectively narrows the scope of permissible diversity initiatives contractors can engage in when doing business with the federal government and these prohibitions flow down to all subcontractors. This may create tension with relevant state and local affirmative action requirements, many of which affect race.  Contractors should carefully review their practices in light of the prohibitions in EO 14398 with an eye toward seeking a balance that could avoid risk under the Order without overcorrecting and being out of compliance with state and local mandates. 

Hahn Loeser will continue to monitor the implementation of EO 14398 closely and provide updates as they become available.

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When a building envelope fails, whether from natural disaster, construction defect, or wear and tear, the first dispute in a condominium setting may not be, “What failed?”  It may be, “Who owns the problem?”  Is the association responsible because it is part of the common elements, or is it on the unit owner because it falls within the unit or a limited common element?  The answer impacts budgets, schedules, insurance coverage, and lien rights.

Default rules governing condominium maintenance and repair responsibilities vary by state (for example, Florida’s Condominium Act, Chapter 718, Florida Statutes and Ohio’s Condominium Law, Chapter 5311, Ohio Revised Code). Every condominium also has its own community-specific governing documents, including the declaration of condominium, articles of incorporation, bylaws, and amendments. Chief among these is the declaration, which functions as the association’s constitution, and sets key restrictions and obligations. Before you price, schedule, or assign responsibility for repairs, confirm what state law and the governing documents say about unit boundaries versus common elements, and who must maintain, repair, and replace each component.

Across jurisdictions, certain principles are consistent. Every unit owner holds an undivided interest in the common elements, and the association is charged with operating and maintaining them. See, e.g., Ohio Rev. Code 5311(O) and Fla. Stat. 718.103(14). Common elements usually include the structure and shared systems (roof assemblies serving multiple units, foundations and framing, stairs/elevators, corridors, garages, and vertical mechanical/electrical/plumbing distribution), plus other components outside the unit boundary. They are generally repaired, maintained and replaced by the association as a common expense shared by unit owners.

In the simplest case, the unit owner maintains the unit, and the association maintains the common elements. However, there are exceptions. First are limited common elements (patios, lanais, balconies, storage spaces) – common elements reserved for one unit’s exclusive use. See, e.g., Ohio Rev. Code 5311(W) and Fla. Stat. 718.103(22). These “gray zone” components may be owned by the association, but the unit owner may have day-to-day maintenance duties (or vice versa) depending on the particular declaration. Further, many communities (and some statutes) shift costs back to an owner when damage is caused by intentional conduct, negligence or noncompliance with the governing documents by the unit owner, or the unit owner’s family, guests, or tenants. See, e.g., Fla. Stat. 718.111(11).

In more complicated cases, parties may disagree about how certain components are classified, even after reference to statute and governing documents. These disagreements often involve the building envelope, including roofs, walls, doors, and windows, when inadequate maintenance has caused substantial damage to units or common elements. Many associations’ governing documents are silent or ambiguous as to the responsibility for maintenance, repair and replacement of components of a building envelope. For example, responsibility for roof maintenance and repair in a traditional condominium building with a single roof may be straightforward (the association), but standalone or townhouse-style condominiums may present a more difficult question, as there are multiple roofs in the condominium, each of which benefits less than all units in the condominium.  Similarly, where a unit owner shares responsibility for exterior maintenance or painting and the governing documents are otherwise silent, disputes may arise over responsibility for exterior walls and waterproofing that are appurtenant only to that unit.  Windows and sliding glass doors can be even murkier because “window” may mean only the glass, or the entire assembly – framing, jambs, weatherstripping, tracks, locks and hardware.  When the governing documents are unclear, parties can end up arguing over responsibility while water intrusion spreads, and the repair scope grows.

Inadequate repairs and maintenance, by any party, could compromise the envelope, allow water intrusion, and lead to rot, mold and other life-safety issues affecting multiple units and shared spaces. Given the interdependent nature of condominium living, unit owners and associations, and the construction professionals contracting with them, should be proactive in determining and executing maintenance and repair obligations.

Practical takeaways for unit owners, associations and contractors:

(1) Pull the declaration before finalizing scope; confirm unit boundaries and responsibilities for building envelope components. 

(2) Tie each observed condition (leaks, damaged finish, failed waterproofing, etc.) to the responsible party under the documents and applicable statutes. 

(3) If responsibility is ambiguous or disputed, prioritize temporary dry-in and moisture control measures while the dispute is resolved; the longer the envelope stays open, the broader the damage footprint and the higher the total cost.

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As of March 19, 2026, all nonresidential construction contractors, subcontractors, and labor brokers are required to utilize the federal government’s E-Verify program for employees who work on a nonresidential construction project in Ohio. The “E-Verify Workforce Integrity Act” (Ohio House Bill 246) affects employers, regardless of their size, responsible for nonresidential construction projects such as highways, bridges, utilities, and related infrastructure in Ohio, but not employers responsible for residential construction projects such as industrialized units, manufactured or mobile homes, or other residential buildings.

While many non-residential construction contractors and subcontractors have been using E-Verify for well over a decade in compliance with the Federal Acquisitions Regulation (FAR) E-Verify clause in contracts with federal agencies, the Act marks the first time the State of Ohio has mandated use of E-Verify. Under the Act, nonresidential construction employers and labor brokers must now use the Department of Homeland Security and Social Security Administration’s E-Verify program to confirm the identity and legal working status of all employees, with minimal exceptions. Such employers must also keep records of the verification for each employee for three years from the date of hire or one year after the employee’s termination, whichever is later, in concert with the form I-9 retention requirement. The Act further prohibits employers from continuing to employee individuals for whom they receive a final nonconfirmation of eligibility. For those employers who have not already enrolled in E-Verify, the E-Verify website contains step-by-step enrollment instructions and guidance on use of the system.

Penalties in Ohio for E-Verify Violations

The Act authorizes the Ohio Attorney General to investigate complaints alleging violations of the Act and assess increasingly strict penalties to employers found to have committed violations of the Act, in addition to penalties which may be assessed under applicable federal law. The penalty for failing to use E-Verify starts at $250 per violation but increases to $1,000 for employers previously fined for such violations within three years, and $1,500 thereafter. Penalties for employing individuals for whom the employer received a final nonconfirmation of eligibility are noticeably stiffer, starting at $5,000 per violation, and escalating to $10,000 per violation for employers previously fined within three years, and $25,000 for subsequent violations. In addition, employers found to have committed two or more willful violations of the Act will be disqualified from bidding on or participating in future state contracts for a period of up to two years.

Employers who receive a notice of violation from the Ohio Attorney General have only 10 days to either provide proof of eligibility for the employee(s) in question or request an adjudicative hearing to explain why it is not in violation of the Act. Consequences for employers who fail to abide by the Act or who fail to comply with any orders assessing penalties can be dire, including civil litigation, assessment of additional penalties, and even permanent revocation of the employer’s business license(s).

For more information or guidance on the use of E-Verify, please contact a member of Hahn Loeser’s Labor and Employment Group.

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The construction industry has been quick to integrate AI into its business practices and efficiencies are being recognized. However, such adoption is not without risk. Two recent court rulings help to illustrate one risk stemming from the use of AI: the potential for waiver of the attorney-client privilege or the attorney work-product protection. The law is not settled on these issues – it is still developing. As such, it is critical that AI users be cautious and consult an attorney before inputting information relating to legal issues into AI systems or generating documents for use in litigation, mediation, or arbitration.

What Are the Attorney-Client Privilege and Work-Product Protections?

The attorney-client privilege. Communications between attorneys and their clients, for the purpose of obtaining or dispensing legal advice, are generally protected from disclosure to third parties (such as an opposing party in litigation). Importantly, this “privilege” applies only when the communications are confidential.  That is, the communications are not shared with any third party.  If an otherwise privileged communication is shared with a third party (i.e., someone beyond the attorney or their client), the privilege is usually considered waived, meaning third parties can then access the communication.

The attorney work-product doctrine. This doctrine protects the mental impressions and strategies developed by attorneys from being disclosed to an adverse party. This protection covers work-product generated by attorneys and their legal teams, and information prepared at an attorney’s direction, including documents created by an attorney’s clients.  As with the attorney-client privilege, the work-product protection can be waived if the work-product is not kept confidential.

How Does the Use of AI Affect These Protections?

Two recent decisions highlight the main concerns relating to AI and these protections, as well as the varied approaches courts take when addressing these emerging questions. In short, it is a best practice that an attorney be consulted before AI is used to weigh in on a legal issue.

In United States v. Heppner, a criminal defendant input information into Anthropic’s Claude following receipt of a grand jury subpoena. —F.Supp.3d—- (S.D.N.Y. Feb. 17, 2026). The defendant’s goal was to prepare “reports that outlined defense strategy.” Id. at *1. When these reports were seized, the defendant argued that they were protected by the attorney-client privilege and the work-product doctrine because they were prepared using information provided by his lawyers, were created for the purpose of obtaining legal advice, and were subsequently shared with counsel. Id. at *2. The court rejected the defendant’s arguments and found that the documents were not privileged “because Claude is not an attorney” and thus it cannot dispense legal advice. Id. The court further found that the information submitted to Claude was not confidential for purposes of the attorney-client privilege because the information was shared outside the attorney-client relationship, nor was it shared with Claude at the direction of legal counsel. Id. Because the information was not kept confidential, it was not privileged and thus subject to disclosure. Id.

On the other end of the spectrum is the decision in Warner v. Gilbarco, Inc. There, the court denied a motion to compel production of “all documents and information concerning [the plaintiff’s] use of third-party AI tools in connection with this lawsuit.” 2026 WL 373043 at *4 (S.D. Mich. Feb. 10, 2026). Unlike in Heppner, the court protected the information input into ChatGPT under the work-product doctrine.  The court reasoned that ChatGPT and other generative AI programs are “tools, not persons” and thus disclosing information to the programs does not waive any privilege or protection. Id. The court firmly rebuked the defendant’s attempt to access the plaintiff’s “mental impressions” through what it deemed to be an “intrusive . . . fishing expedition.” Id.

The varying outcomes in Heppner and Warner demonstrate the developing nature of this issue and the need for caution when employing AI to assist with legal issues. As stated above—and it is worth reiterating here—an attorney should be consulted before information is submitted to AI to assist with a legal issue, especially when litigation is imminent or already pending.

The Hahn Loeser Construction Team is monitoring court decisions surrounding the use of generative AI, implementing AI processes within our firm, and collaborating with clients to develop internal AI systems and policies. We are available to answer questions about using generative AI in construction and other industries to develop best practices for protecting your confidential information.

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On February 26, 2026, the United States Department of Labor proposed a new rule addressing the analysis used for classifying workers as either employees or independent contractors. The proposal would rescind the Biden administration analysis for determining employee or independent contractor status that has been used since January 2024. The proposed rule would return to an analysis similar to that imposed in 2021 during the first Trump administration.

The proposed rule applies a streamlined “economic reality” test in order to determine whether a worker is economically dependent on an employer for work. The rule used during the Biden administration utilized six different factors as part of the economic reality test. The newly proposed rule, instead, gives priority to two “core” factors: (1) the nature and degree of the individual’s control over the work; and (2) the individual’s opportunity for profit or loss (i.e. the worker’s ability to earn more money based on their own initiative or investment). These two factors are to be considered first, and if both point towards the same conclusion, there is a substantial likelihood that the conclusion is an accurate classification for the worker.

If the first two factors are inconclusive, the analysis considers the following additional factors: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production. These factors are considered less probative than the two “core” factors.

This proposed rule change could have an effect on a number of workers and industries, including healthcare, restaurants, construction and transportation. Companies that utilize a business model reliant upon gig workers would also be impacted by this potential change as the proposed rule provides a more simplified analysis for employers to consider when classifying their workers.

A public comment period on the proposed rule is open until April 28, 2026. The rule will not become final until some time after the public comment period closes.

For more information or guidance in the classification of workers, please contact a member of Hahn Loeser’s Labor and Employment Group.

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On February 20, 2026, the United States Supreme Court struck down the tariffs President Trump enacted under the International Emergency Economic Powers Act (“IEEPA”) against numerous countries.[1]  The tariffs struck down include those levied against Canada, Mexico, and China, enacted under IEEPA in an effort to stop the influx of illegal drugs from those countries, and the so-called “reciprocal” tariffs against dozens of countries meant to reduce the United States’ trade deficit. The Supreme Court’s decision did not address tariffs issued under Section 232 of the Trade Expansion Act of 1962. Those tariffs, which are product-specific (explained further below), remain in place.

The Supreme Court held that Congress’s delegation of authority to the Executive Branch under IEEPA—which includes the power to “regulate . . . importation” of goods during an emergency—does not include the authority to tax or raise revenue (such as the enactment of tariffs). When Congress delegates such taxing authority (the so-called “power of the purse”), the Court reasoned, it does so in precise and express terms. IEEPA contains no such language. As such, IEEPA does not empower the Executive Branch to enact tariffs. The Supreme Court noted that, unlike the tariffs enacted under Section 232 of the Trade Expansion Act of 1962, President Trump’s IEEPA tariffs were unlimited in “amount and duration” and could be levied “on any product from any country.” For this reason, too, the Court found the IEEPA tariffs invalid.

While the decision provides some predictability to those in the construction industry, the fact remains that prices continue to rise.  As mentioned above, the Section 232 tariffs remain in place.  Those tariffs include:

  • 10% on lumber;
  • 50% on steel and iron, including derivative products (with the following exceptions: 25% for the United Kingdom); and
  • 50% on aluminum and derivative products (with the following exceptions: 25% for the United Kingdom; 200% for Russia).

With the Section 232 tariffs remaining in place—and with the specter of possible additional tariffs—it remains critical for contractors to continue to mitigate risk on this issue. There is no silver bullet.  Rather, a wholistic approach to mitigating risk is recommended. Measures that contractors can take to mitigate the risk of price increases include, but are not limited to: clearly setting forth all pricing assumptions or exclusions in bid documents; the inclusion of price escalation or adjustment clauses in contracts; negotiating risk-sharing provisions for price increases so that no single actor in the contract chain solely bears the brunt of price increases; and, where appropriate, the use of IncoTerms to clearly define shipping- and duty-related risks.

[1] The case is Learning Resources, Inc. v. Trump, No. 24-1287, and Trump v. V.O.S. Selections, Inc., case no. 25-250, which was consolidated with Learning Resources.

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One can hardly turn on the television today without being inundated by artificial intelligence (AI), whether in the form of commercials during the big game, as the lead segment on the news, or through advertisements on your favorite podcast, or elsewhere. AI is all around us, and yet, its practical uses in everyday life – and in the real estate development and construction world – are still in flux.

While some developers and contractors have already implemented AI into their operations, others continue to sit on the sidelines, waiting and watching to see how things play out before jumping in.

Potential uses for AI in real estate development + construction

The potential uses for AI in real estate development and construction are almost as endless as one’s imagination. For instance, AI can be used to assist with or double-check project designs, project administration, schedule revisions, inspections, or to summarize meeting notes from toolbox talks or other meetings. Using AI to assist with designs can relieve architects or engineers from mundane tasks. It can be used to create initial designs and drafts of drawings, and can even be used to cross-check the cost of materials, the source of materials, the impact of any taxes or tariffs, the constructability of a design or a given design’s energy efficiency.

AI may also be helpful in streamlining legal disputes. While AI cannot replace an advocate in the courtroom or render legal decisions and judgments, other uses are readily apparent. For example, AI could be used to analyze and summarize the voluminous documentation that is generated on a construction project every day (and it seems that the volume of documentation is ever-increasing) or to review and identify a handful of key, operative documents out of a sea of thousands (if not tens of thousands). By employing AI in this way, legal disputes could become more cost-efficient and quicker to resolve.

Risks associated with AI

But these benefits are not without risk. As it stands, the most appreciable risks with implementing AI in real estate development and construction are the risks that are more generally associated with implementing AI in any business. Those risks include hallucinations (i.e., AI is wrong or makes a mistake), training deficiencies (most AI models need to be trained – what happens if those tasked with training the model are mistaken or wrong?) and the potential for user error or user abuse. Regardless of how a hallucination or error occurs, the end result is the same: a mistake has been made that is in need of correction. But who should shoulder the blame for a mistake made by AI? The user? The AI vendor? Someone else?

Issues with assigning blame can be particularly troublesome because software like AI often comes with what is referred to as a “clickwrap agreement.” That is, the purchaser or user of the AI software must first “click through” a set of terms and conditions, noting acceptance of the terms and conditions (by clicking an “I accept” button), before the software can be used. Such clickwrap agreements are generally enforceable, meaning that the terms and conditions contained therein are also enforceable. One common term included in clickwrap agreements is a limitation of liability (also known as a damages cap). Oftentimes, these limitations of liability set forth a very low amount of damages that can be recovered from the AI vendor, such as a pre-set dollar figure or the cost of the software (which of course can vary). So, what happens if AI hallucinates and is responsible for a six-figure design bust, but the clickwrap agreement limits the AI vendor’s liability to, say, $10,000? Further complicating the issue, what if the project owner required the design team or contractor to use the AI that caused error? Who should be responsible for the delta between the clickwrap agreement’s limit of liability and the actual costs incurred to correct the error?

Mitigating risk through clear contractual provisions

It is essential that real estate development and construction contracts account for the emergence of AI. Key issues to consider include who will shoulder the cost for an AI hallucination or what role, if any, might AI play in assisting with dispute resolution. If a project owner requires that AI be used to assist with the design, then it stands to reason that the project owner should be responsible for any costs incurred to remedy the AI error. 

Alternatively, the contract could provide that if a project participant decides to employ AI, then it is solely responsible for any costs incurred to correct an AI error. Or, for dispute resolution, will the parties agree to using a certain AI platform to assist with the review of voluminous project records in an effort to keep costs down? If yes, then such an agreement should be memorialized in the parties’ contract. When drafting such provisions, it is important to remember that clarity is king.

Identifying these issues upfront and determining how they will be addressed will allow all parties to go into the project with “eyes wide open.” That is, each party knows the allocation of risk for a given scenario, thereby enabling them to better plan against, or mitigate, that risk.

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Columbus’ new pay transparency law took effect on December 3, 2025, but enforcement does not start until January 1, 2027, giving Columbus employers ample time to update their hiring practices. Columbus, Cleveland, Cincinnati, and Toledo each have similar salary history laws on the books that prohibit inquiries into an applicant’s salary history. With the amendment to Columbus City Code Chapter 2335, Columbus joins Cleveland in requiring that job postings contain a position’s salary or salary range; however, the Columbus ordinance also requires that the salary range be “reasonable,” a requirement not found in Cleveland’s ordinance. For easy reference, key provisions of the ordinance and actionable steps for compliance are outlined below.

Who is Covered?

Employers subject to these requirements include individuals, firms, partnerships, corporations, or other entities with fifteen or more employees within the City of Columbus. This includes job placement and referral agencies acting on behalf of a covered employer but does not apply to any government employers other than the City of Columbus. Importantly, the ordinance applies regardless of where the employer is headquartered or an interview takes place. The focus is on whether the prospective employment will occur within the City of Columbus.

Existing Requirements

Chapter 2335 of the Columbus City Code, which has been in place since March 1, 2024, contains the following restrictions:

No inquiring about salary history. Employers cannot communicate with an applicant or an applicant’s former employer for the purpose of obtaining the applicant’s salary history. Nor can an employer search publicly available records or reports for that purpose.

No screening applicants or hiring decisions based on salary history. Employers cannot screen applicants based on their current wages or salary history, require that an applicant’s past wages or salary history satisfy certain minimum or maximum criteria, or use salary history as the sole factor in hiring or contract negotiation decision-making. Any refusal to hire, or retaliation against, an applicant who refuses to disclose salary history is prohibited.

New Requirements

Effective December 3, 2025, Chapter 2335 as amended by Ordinance 2898-2025 now requires Columbus employers to:

Provide reasonable salary range or scale in employment postings. All job postings must include a reasonable salary range or scale. Under the Ordinance, covered job postings are those that include a description of the position and/or desired qualifications. Salary is defined as financial compensation in exchange for labor, including wages, commissions, hourly and other monetary earnings. Unlike Cleveland’s ordinance, the definition of salary does not explicitly include benefits.

What is reasonable? Whether a salary range or scale will be considered reasonable is based on factors specific to the position, including the flexibility of a hiring budget, the range of anticipated experience among applicants, potential variation in position responsibilities, opportunities for growth, cost of living, and market research regarding comparable positions and salaries.

What is Permitted?

Employers may discuss salary expectations for the new position, including unvested equity or deferred compensation. The prohibition covers past compensation only, not forward-looking discussions.

Other exceptions to the restrictions include:

  • Voluntary, unprompted disclosure by an applicant of current or prior compensation;
  • Internal transfers and promotions;
  • Incidental disclosure during background checks (if not relied upon solely);
  • Rehired employees where prior salary information exists that is three years old or less;
  • Collective bargaining arrangements; and
  • Reliance on salary histories that are authorized by another superseding law.

Enforcement and Penalties

While the original requirements of Chapter 2335 are already in effect, new requirements added through Ordinance 2898-2025 will not be enforced until January 1, 2027. This gives Columbus employers more than a year to ensure compliance with the new job posting requirements.

Should a violation occur, applicants must file a written complaint with the Community Relations Commission within six months of the alleged unlawful hiring or salary practice.

Resolution process. Following receipt of a complaint, the Commission may conduct an investigation. If the investigation uncovers a reasonable basis to believe that an unlawful practice has occurred, the investigator will work with the employer to cure any violations.

Civil penalties. If a violation is not cured, employers may be assessed with civil penalties. These civil penalties will be assessed in compliance with Columbus City Code Section 2331.05, but the precise amount of those civil penalties still appears to be under discussion. 

Immediate Action Items

Review all job postings. Audit employment postings recruiting in Columbus across every platform and add reasonable salary ranges/scales in line with the factors discussed above.

Bottom Line

Columbus employers have likely already removed salary history inquiries from their interviewing and screening practices. Still, it never hurts to audit current practices and refresh employee training. In the lead up to the January 1, 2027 enforcement deadline, employers should review all job postings and ensure compliance with the new reasonable salary requirement.

Questions?

In Ohio, the lack of statewide laws regulating salary history and transparency results in varied regional approaches. For employers with applicants in multiple Ohio cities, our labor & employment team stands ready to assist you with compliance questions, policy updates, or concerns about specific hiring situations. Please reach out if you would like to discuss how the new ordinance affects your organization or if you need assistance with implementation.

The full text of the ordinance as codified is available here.

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Whether contractors are involved during early project planning or become involved at the time of bidding when project drawings and specifications have been established, there may be risk factors involved with specified sole-source materials.  When faced with a sole-source requirement, it is important to proceed with caution and take the necessary steps to avoid risks and potential conflict with quality, performance, safety, and/or warranty requirements. Here are some suggested steps and considerations contractors can take before proceeding.

Take Precautions During the Bidding Process

Taking the time to be diligent during the bidding process can save you from headaches later. Consider submitting a pre-bid RFI to obtain clarity and to confirm the use of the sole-source material. Confirming the use of the sole-source material prior to submitting a bid on the project can help you as the contractor identify potential issues prior to beginning any work on site and can also help the owner and design team become aware of potential issues that may not be considered during the selection process, such as warrantability.

Negotiate Prior to Entering into a Contract

Another area where clarity can be achieved is in the negotiation process. Seek a formal scope review process and clarify the design requirement of the sole-source in your Assumptions and Clarifications (“As & Cs”).  Negotiate the incorporation of your notes from the scope review and your As and Cs into your contract prior to signing.  This will allow you to work with the other parties to home in on the specifics of the sole-source requirement and even express concerns that may have come to your attention with the use of the specified material in other known applications.  It is also the imperative step in communicating the procurement process and potential exposures of purchasing products that may have unreliable lead time commitments.

Submit Requests for Information (RFIs)

Submitting an RFI can save time and effort as well as provide clarity as to the specific use of the sole-source material, even if it is simply a confirming RFI.  If there is a problem that is identified due to the use of the sole-source material, a detailed RFI can allow the owner and relevant parties to re-evaluate the product and provide additional information, detail, and direction. Submitting RFIs are important and are a great way to show compliance with the contract and that you are moving in accordance with the owner’s vision for the project.  After getting clarification and/or confirmation for the use of the sole-source material through the RFI process, reference or include the RFI and its response with the product data submittal for an additional layer of clarity.  Consider utilizing the returned submittal to create a formal execution procedure as the last step to mitigate risk; outline to the Owner and design team how your team plans to install the material to align with the specifications and request any feedback that they may have.  When the project is completed, be sure to include the project RFIs and submittals in addition to the other necessary documents such as operations and maintenance data (“O & Ms”) and warranties to close out the project.

Follow the Contract

Following the contract may sound simple but it is essential. You may have concerns with the use of sole-source material for various reasons but remember, at this point, you have signed a contract and are obligated to complete your work on time, as agreed upon and specified in the contract documents. If you comply with the contract, even if you disagree with it, it will reduce risks and potential conflict.

In sum, using sole-source materials can seem difficult to navigate because of the limitations and risks that may come with their use for quality, performance, safety, and warranty. However, if there is one thing to take away from this, it is that communication is key at every level of the project from the pre-bid process to the closeout stage. Communicating at the pre-bid and negotiating stage can prevent problems down the road. Even if you may have overlooked a portion of the sole-source requirement at the beginning of the project, clarity can always be obtained during the construction phase by using the RFI process as a tool. It is important to follow the terms of your agreement, but it is also important that you mitigate and reduce your risks. Do not let a sole-source material requirement stop you from bidding or completing a project successfully.

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The American Arbitration Association (AAA-ICDR®) is launching a first-of-its-kind AI arbitrator this November 2025, designed to handle smaller “documents-only” construction disputes. This change will take small disputes, typically handled on a fixed fee by a single arbitrator, and offer instead AI serving as a finder of fact and law. For an industry where time is money and claims can pile up fast, the promise of innovation claiming to deliver faster, more cost-effective resolutions to modest-sized claims, is an attractive option. But can AI adequately dole out justice and are parties to a construction dispute willing to trade speed for fairness or risk of early AI errors?

The AAA’s Sales Pitch

  • Faster Turnaround: The AAA claims that an AI arbitrator is built to handle high-volume cases quickly, helping contractors, developers, and legal teams resolve disputes without lengthy delays associated with human scheduling. A case schedule is set, written submissions are made, and the AI arbitrator will quickly render its decision.
  • The AI was Trained on Real Construction Cases: The AI arbitrator claims to have been trained on over 1,500 actual AAA-construction awards. The AAA claims that the AI arbitrator reflects the reasoning and standards familiar to industry professionals. Of course, the question is which cases, who won, and whether this bias affects your area of practice?
  • For Now, the AI Arbitrator Has Human Oversight to Ensure Quality: Every AI-generated draft award will be reviewed by experienced human arbitrators to ensure accuracy, transparency, and due process. However, it is unclear how much subjective determination will be implemented by the human overseer who may not be selected by the parties and may have their own biases.
  • The AAA Claims Parties Will Receive Clear, Legally Sound Decisions: The AI arbitrator will be interacted with by using structured legal prompts and conversational AI. The AAA states that the AI arbitrator will deliver decisions that are easy to understand and rooted in solid legal principles.

Does the AAA’s Sales Pitch Match Anyone’s Experience to Date with AI?

Virtually everyone has interacted with AI in some manner, including Google searches, AI chatbot for a store, or creating images on Chat GPT. Many others have used AI in more sophisticated ways to review contracts or generate whole documents or presentations. 

Most parties to a dispute understand there is risk of loss. Their concern is whether the process was “fair” and that often means that their concerns – right or wrong – were heard and considered. The question that individuals in the Construction Industry will have to decide is whether finality and speed are more valuable than the familiarity of working with a human arbitrator. 

What’s Next for the AI Arbitrator?

The AAA may push AI on smaller disputes on the parties. It is unclear whether there is a genuine appetite for this solution. Widespread adoption of this technology, particularly on higher-value claims, will likely take years and seems unlikely. Laws may also need to change because the very narrow bases for overturning an arbitration seem ill-equipped to challenge the model on which an AI was trained. Finally, will an AI need to be tested and licensed by the state bar?

Should You Use It?

Maybe. You might wish to test out the technology on a small dispute over a specification or contract, where both parties seek a quick resolution, and the stakes are low (and where documents are typed rather than in handwriting). When and if the results are unfavorable, a party who has opted to have an AI will have little or no way to redress any questions about the fairness of the process.