DFL Legal is operating remotely without interruption and is your partner for navigating the challenges and uncertainties of the COVID-19 crisis.

EPC Contracts

DFL Legal, regardless of the industry sector, is thoroughly familiar with all aspects of the turnkey engineering, procurement, construction (EPC) contract method of project delivery. We believe that there are few firms that can match our experience with EPC projects.

We have been involved with EPC contracting in the US and abroad for more than 30 years in various sectors, including oil & gas, iron & steel, pulp & paper, petrochemical, power generation (coal, natural gas, hydro and renewable), pharmaceutical and pipeline. Within the EPC contracting model, we have experience working with various structures, including consortia, joint ventures, contractor/subcontractor, contractor/supplier and other arrangements.

The lawyers of DFL Legal have been involved in numerous large-scale EPC projects in the construction industry with overall values in excess of $1 billion and have resolved EPC project disputes in state and federal courts and domestic and international arbitrations. Some of the areas of dispute we have handled in connection with EPC projects include: scope of work definition and interface; verification; change orders and notices; performance guarantees and associated performance liquidated damages; schedule delays and disruptions and associated schedule liquidated damages; consequential damages; warranties; terminations for default and convenience; force majeure, flow down of risk; and insurance, indemnities, bonds and letters of credit.

Recent examples of our dispute resolution experience in connection with the EPC contract project delivery method include the following:

  • Offshore Oil and Gas Fields Development – South America

    DFL Legal has represented the EPC contractor for the last decade in connection with an offshore oil and gas project. At a contract price of more than $2.5 billion, this project was reported in the year 2000 to be the largest off-shore project under a single contract in the history of the industry. The owner of the project is the national oil company of a South American Country. The project involved the conversion of two very large crude carriers (VLCCs) into floating production storage and offloading (FPSOs) facilities, the procurement and modular fabrication of the topsides for each FPSO, the drilling of 54 oil and gas and water injection wells and the supply of all the subsea umbilicals and accessories. The project has the capacity to produce 300,000 barrels of oil per day (bopd). Claims in dispute between the parties exceeded $1 billion. After extensive negotiation, all claims, with one exception, were resolved through a series of settlement agreements. The disputes involved issues concerning engineering and construction changes and delays, claims of cardinal change, liquidated damages for delay, schedule analysis and claims of time and money entitlement, international letters of credit, value added taxes (VAT), force majeure claims and project finance issues in connection with a worldwide syndicate of commercial and national banks. The one exception to the settlement of all claims relates to a dispute concerning the subsea flow lines which has been the subject of a four-year arbitration proceeding.

  • Coal-Fired, Super-Critical Power Generation Facility - Kentucky

    DFL Legal represents the steam generator or boiler supplier in connection with a series of disputes with the EPC contractor for a 700 megawatt super-critical, coal-fired power generation facility in the State of Kentucky with a value of approximately $1.5 billion. The disputes involved alleged delays, liquidated damage claims, guaranteed quantity overruns, changes and back-charges. After commencing arbitration against the EPC Contractor, all pending disputes were settled. We continue to provide ongoing advice in connection with the project.

  • Gas-to-Liquids Plant – Africa

    We served as lead counsel for the EPC contractor in connection with an onshore gas-to-liquids project located in Africa. The project started as a lump sum turnkey contract with a lump sum contract value of approximately $1.7 billion. Initially, we assisted in preparing change orders and claims that resulted in a $250 million increase in the contract price. Due to continuing events of force majeure and community disturbances, we then assisted in converting the contract from a lump sum to a cost reimbursable contract.

  • Coke Oven Battery Rebuild – Indiana

    Lead counsel for the EPC contractor in Bethlehem Steel Corporation v. Davy International / Davy Songer, a Joint Venture, et al., and the related coverage action of Kvaerner Metals Division of Kvaerner U.S. Inc.. et al. v. Commercial Union Insurance Company, et al., both in the Court of Common Pleas of Northampton County, Pennsylvania. This dispute arose out of an EPC project for the rebuild of a coke battery located in Burns Harbor, Indiana, with a value of US $126 million plus DM 46.0 million.

In addition to our dispute resolution experience, we have negotiated dozens of EPC contracts on behalf of owners and contractors for all types of projects. We have also negotiated all forms of downstream contracts associated with EPC contracts, such as purchase orders for large items of capital equipment, including turbines and boilers, service contracts for construction services and professional engineering contracts and letters of intent. Two examples of our experience negotiating EPC contracts and related agreements include the following:

  • Coal-Fired, Super-Critical Power Generation Facility - Iowa

    Negotiated the entire EPC Contract and all ancillary project agreements on behalf of the Owner for an approximate 700 megawatt super-critical, coal-fired power generation facility located in the State of Iowa with a value of approximately $1 billion. The project has been completed and no significant claims were asserted against the Owner by the EPC contractor.

  • Nature Gas Pipeline Project – Puerto Rico

    Lead counsel for one of the world’s largest multi-national construction companies for the negotiation of the first natural gas pipeline project located in the Commonwealth of Puerto Rico. This matter included negotiating the terms and conditions of a turnkey engineering, procurement, construction and finance (EPCF) contract with the Puerto Rico Electric Power Authority. Our responsibilities included advising on the initial tender, including the submission of qualifications to the form of the contract included with the tender package, and negotiating the EPCF contract and all ancillary agreements (including letters of credit, scope of work, and payment security).

Finally, we have advised on and developed risk management programs and procedures associated with the execution of EPC projects.