This paper clarifies the distinction between notice of award and notice to proceed—two essential stages in the contract award process. The notice of award is the initial notification that an award has been made and funds may be requested, while the notice to proceed is the formal authorization for work to begin after bonds and contract forms are accepted. The paper examines how delays between these two notices can result in costly project delays, subcontractor complications, and legal protections available to contractors. It concludes with recommendations for drafting both notices concurrently and establishing realistic project timelines through mutual agreement between contractors and owners.
There is often confusion between the concepts of a "notice of award" versus a "notice to proceed" in the awarding of contracts. Both reflect different stages of the award process, and clarity regarding their precise definitions is essential to avoid miscommunication and misunderstanding. It is also critical to understand the difference because a contractor cannot proceed with work until both notices are issued. A delay between the notice of award and notice to proceed can result in costly delays to the project overall.
The notice of award is the initial notice to the contractor or recipient of another type of grant, informing them that the award has been made and funds may be requested. The notice will include the names of the recipient and project, the budget period, authorized funds, terms and conditions of the award, and directions for the use of funds. According to the National Institutes of Health, acceptance is conveyed by requesting funds to complete the project from the designated agency. The notice of award thus serves as the first official communication that an award has been approved and sets the foundation for the financial and contractual relationship between the grantor and the recipient.
In contrast, a notice to proceed is the formal authorization that allows the project to begin or go ahead. A notice to proceed is sent to the contractor, the contracting officer, the resident engineer, or the chief of engineering service. According to the Legal Information Institute, the contracting officer must provide construction contractors with a written notice to proceed for the work.
The notice is sent after the contractor's performance and payment bonds or payment protection, along with completed contract forms, have been accepted. In cases where urgency requires the contractor to begin work immediately, the contracting officer may include a notice to proceed in the award letter with the reservation that payments are contingent upon receipt and approval of the required bonds or payment protection.
Certified mail is required only if the contract provides for liquidated damages on the part of the contracting officer. When certified mail is required, the date of completion of the contract must be specified in the contract. This formality ensures that both parties have clear documentation of when work authorization was granted and what timeline is expected.
A delay between the notice of award and notice to proceed can result in significant project delays, given that the contractor cannot begin work until the second phase of validation is complete and payment has been authorized. As noted by construction management experts, "Owners and contractors alike can and usually will lose money when their construction projects take longer than expected." This delay can leave the contractor with insufficient time to complete the deliverables because of a much shorter actual period available to begin the project than originally planned.
Additionally, subcontractors may be involved in the project, and delays in issuing the notice to proceed can force the grantee to renege upon these agreements with third parties. Such situations create legal liability and strain business relationships. However, the law does provide protections for the contractor. According to federal contract regulations, "It is basic that where the government, by express words or by implication, warrants the date of commencement in the contract, a contractor who is not permitted to start by this date is entitled to recover damages for breach of this warranty." This legal protection acknowledges that contractors rely on timely authorization to begin work and should not bear the financial burden of government or owner delays.
"Recommendations for concurrent drafting and realistic scheduling"
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