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A federal judge on Tuesday cleared construction on the White House ballroom project to move forward, according to multiple sources, but construction lawyers say the ruling does little to reduce risk for contractors tasked with building it.
The National Trust for Historic Preservation sued the Trump administration earlier this month stop the project to build a ballroomwhich is now linked 400 million dollarsdouble the initial estimate of $200 million, according to The Hill. The claim filed with the administration early demolition and construction activity began before the necessary approvals were secured.
For contractors, this kind of conditional green light creates a familiar but costly problem. The work may go on, but so does the uncertainty. The national attention the job has garnered highlights the risks contractors face when they take on a controversial project that becomes embroiled in litigation.
“When litigation affects a project like this, a contractor has two immediate jobs,” said Jason Lien, partner and co-chair of the construction and real estate litigation group at Maslon, a Minneapolis-based law firm. “Find out what, if any, progress can be made and how a potential work stoppage is addressed in the contract.”
The Trump administration announced based in Bethesda, Maryland Clark Construction Group as the project’s lead builder in July, with Dallas-based AECOM providing engineering services. Neither company immediately responded to requests for comment for this story.
The White House also called on ACECO, a contractor based in Silver Spring, Maryland, for the demolition of the East Wing. The company could not be reached for comment Wednesday.
Awkward decisions
The ballroom project differs markedly from a typical commercial or residential renovation, Chris Staine, a partner at Shumaker, Loop & Kendrick, a law firm based in Toledo, Ohio, told Construction Dive. A major factor is the administration’s decision to demolish the east wing before plans for the new ballroom were completed or submitted for approval, he added.
While owners sometimes authorize demolition before final plans are completed, Staine said sequencing occurs only after designs are substantially developed and is rare on a project of this scale and sensitivity.
“What’s so unusual is that they continued, especially because we’re talking about not just your standard garden-variety project,” Staine said. “You’re talking about the White House. You’re talking about the East Wing. They took it down. It was pretty impressive to do that under the circumstances.”
From a contractor’s perspective, Staine said one of the most troubling issues is being asked to do demolition work before permits are approved. This scenario typically raises red flags in almost any jurisdiction.
“If I were a contractor and they asked me to go ahead with demolition in the absence of a permit, obviously I would be very uncomfortable with that,” Staine said. “I would advise the homeowner that this directive goes against what the local building code and building department requirements say.”
In that situation, Staine said, a contractor would likely demand compensation from the owner and might even refuse to continue.
“I don’t know if I would feel comfortable as a contractor,” he said. “I would absolutely demand that the owner compensate me for the negative consequences associated with this type of instruction.”
A favorable decision does not guarantee protection
Once litigation arises, the contractor’s risk increases rapidly, Lien said. This is true even if the courts do not order an immediate closure.
“The risks to the contractor increase rapidly once a lawsuit enters the picture,” Lien said. “Litigation can slow work, trigger demobilization and remobilization, cause inefficiencies, increase material costs, or delay payments, none of which are within the control of the contractor.”
That uncertainty becomes especially important in widely watched projects like the White House ballroom, where public scrutiny and legal pressure can spill beyond the courtroom and into a construction company’s broader business, he added.
“On higher-profile projects like the White House ballroom project, contractors can become embroiled in the dispute or the public narrative, even if they had no role in the underlying controversy,” Lien said. “Uncertainty burns money through delays, late payments and unwanted attention.”
In October, for example, ACECO was the target of increased online reviews, the company reported at the time.
The federal judge’s ruling Tuesday underscored the risk. The judge said the government should be prepared start the underground works if it later prevents changes in what happens above ground, according to the NBC report.
The details of the contract do the heavy lifting
Lawyers stress that the construction contract will become the contractor’s primary protection against negative outcomes.
“Contractors navigating these situations will treat them like any other major project interruption,” Lien said. “They document cost and schedule impacts, communicate early and often with the owner, and keep their options open in the event of a court-ordered slowdown or closure.”
Staine echoed that view. He called construction contracts “risk allocation vehicles” that ultimately determine who absorbs delays and uncertainty when things go wrong.
“There are risks that are very much out of the contractor’s control,” Staine said. “It is these types of risks that a contractor must be particularly aware of when entering into the contract, so that they are not responsible for risks that are beyond their control.”
Whether a contractor decides to stay on a project immersed in litigation becomes a business decision, shaped by these contractual protections.
“Whether to stay depends on the contract, cash flow and reputation. If they don’t line up, it may be time to walk,” Lien said. “A contractor’s reputation suffers when the public stops seeing him as a builder and starts seeing him as part of the struggle.”
That decision will ultimately come down to a risk-reward calculation, Staine said. The outcome of this choice will vary due to the size of the company and overall financial strength.
“Some contractors just can’t withstand sustained legal battles,” Staine said. “The juice just isn’t worth the squeeze.”
