Trent Cotney, Partner, Adams and Reese LLP
Non-disclosure agreements (NDAs) are quickly becoming an essential part of doing business in the construction industry. For construction company owners, understanding how to navigate and implement NDAs effectively is critical to safeguarding your interests and maintaining trust with clients. The recent case of Venture Global Calcasieu, LLC vs. Kiewit Louisiana Co. highlights the potential risks and challenges associated with NDAs in construction projects, making it imperative for contractors to establish clear guidelines and protections.
Liquified natural gas (LNG) developer Venture Global entered into an agreement with Kiewit, a construction company, to complete work at its LNG facility in Louisiana. During the course of this project, Venture Global claimed that Kiewit provided confidential information to Shell, one of its competitors, in spite of the NDA included in the contract. Venture Global sued and obtained a temporary restraining order against Kiewit in August 2024. The companies reached a settlement shortly thereafter and the terms were not disclosed.
One of the most common pitfalls of NDAs is ambiguity. Construction company owners should ensure that their NDAs clearly define what constitutes confidential information. It is advisable to avoid broad statements such as “everything” being confidential. Instead, companies should specify the types of information that are protected, whether it’s design plans, project methodologies, pricing details or client lists.
For instance, in the Venture Global case, the NDA was so restrictive that even the existence of the facility was confidential. While such stringent requirements may be appropriate for specific projects, they can be difficult to enforce on active construction sites with numerous subcontractors, tradespeople and suppliers involved. Ensuring that the terms of the NDA are realistic and enforceable is key to avoiding disputes.
Additionally, it is crucial to have a system for labeling and identifying confidential information. Marking proprietary documents with labels such as “Confidential” ensures that all parties understand what falls under the NDA. This approach is fundamental on large projects with multiple stakeholders, where miscommunication can lead to unintentional breaches.
One challenge construction company owners often face is balancing the need to protect a client’s confidential information with leveraging their experience for future projects. NDAs can sometimes restrict a contractor’s ability to discuss
or showcase previous projects, which can hinder marketing efforts and new client acquisition.
However, there are ways to navigate this limitation. While sharing specific blueprints or project plans may violate an NDA, using knowledge gained from past projects to solve similar challenges on new ones is generally permissible. For example, if a company developed an innovative workaround on one project, applying that solution to a similar issue on a new project is acceptable as long as proprietary details are not shared. When in doubt, companies must consult their legal team to ensure compliance.
Construction projects often involve a web of subcontractors, suppliers and consultants. General contractors must ensure that all parties working on a given project are aware of and comply with the NDA. Copies of the NDA must be provided to subcontractors, emphasizing the importance of adhering to its terms.
However, general contractors should avoid taking on the role of enforcer. If a subcontractor violates the NDA, the responsibility should fall to the project owner to take legal action. This approach protects the company from liability and allows focus on project delivery. During NDA negotiations, contractors should make reasonable efforts to ensure compliance but ultimate enforcement is the client’s responsibility.
NDAs should include a time limit for confidentiality obligations, typically ranging from two to five years. This parameter ensures that contractors are not indefinitely burdened with maintaining records or safeguarding information. The appropriate duration depends on the nature of the protected information. For example, confidentiality related to a project’s design may need to be extended for several years, while information tied to a one-time proposal request may have a shorter lifespan.
Additionally, keep in mind that NDAs may have limited enforceability in public projects since open records laws apply. Understanding these nuances can help you craft agreements that are both practical and enforceable.
The use of NDAs is becoming more prevalent in the construction industry, particularly in sectors such as alternative energy, high-end retail and luxury sports venues. Clients often seek to protect unique designs, proprietary processes and high-end features. Additionally, as workers and contractors move between jobs more frequently, clients are increasingly concerned about safeguarding their competitive advantages.
To adapt to this trend, construction company owners should work with their attorneys to draft NDAs that balance the client’s need for confidentiality with the practicalities of running a construction business. This proactive approach not only helps avoid disputes but also protects project timelines and budgets from unnecessary delays.
For construction company owners, NDAs are not just legal formalities. They are becoming essential tools for building trust with customers and protecting your business.
The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. Trent Cotney is a Partner and Construction Team Leader at the law firm of Adams & Reese, LLP and FRSA General Counsel. For more information, you can contact him at trent.cotney@arlaw.com or by phone at 813-227-5501.
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