Wal-Mart Stores, Inc., partnered with a general contractor to build a store in Washington, Ind. Under the contract, representatives were required to perform daily stormwater pollution prevention program (SWPPP) inspections of the job site and complete inspection reports, and once every two weeks, a compliance officer was to perform an inspection and complete a report.
On September 12, 2005, the contractor’s project manager, performing the role of compliance officer, signed a daily inspection report without having actually visited the job site on that date.
Wal-Mart was already operating under two consent decrees with the EPA related to stormwater violations. When the company discovered that the daily inspection submission was “false or misleading,” they terminated the contract and filed suit against the contractor.
The Court ruled in favor of Wal-Mart. It was determined that the contractor breached the agreement, and as a result, Wal-Mart was awarded damages in excess of $3 million.
- The lack of integrity in the inspection documentation prompted Wal-Mart to terminate the contract rather than issuing a penalty. Wal-Mart’s strict stance on SWPPP compliance is a result of previous consent decrees. The company has zero tolerance for failure to fulfill contract obligations related to SWPPP implementation.
- The contractor failed to operate in accordance with the compliance environment that Wal-Mart desired, they did not fully embrace the specific needs of their client.
- When working with a client whose SWPPP requirements are more stringent than those imposed by the governing agency, the client’s requirements become the compliance standard, from a contract performance standpoint.
- A single act by one person can jeopardize the contract status of a very large project as well as the compliance status.
- Falsifying compliance inspection reports can result in agency enforcement action against the company and the individual. You can be held personally responsible for knowingly violating legal requirements.
To read more details on the case, click here. For counsel on compliance documentation, contact us.