February 9, 1994
Appeal of
PORT-A-BUILT
Under Contract No. 039990-89-B-0371
PSBCA No. 3134
APPEARANCE FOR APPELLANT:
Sam Zalman Gdanski, Esq.
APPEARANCE FOR RESPONDENT:
Karren M. Dickson, Esq.
OPINION OF THE BOARD
Appellant, Port-A-Built Systems, Inc., has appealed from the denial of its claim for additional costs arising out of its contract with Respondent, United States Postal Service, for the construction of trailers to be used as mobile postal facilities. Only entitlement is at issue in this proceeding.
FINDINGS OF FACT
1. Following a competitive procurement, Contract No. 039990-89-B-0371 was awarded to Appellant on August 31, 1989. The contract required Appellant to design and build eleven trailers, in accordance with Postal Service specifications, to be used as post offices in various locations in Texas and New Mexico. The original contract price was $331,589.22. Through a series of nine contract modifications,[1] the contract quantity was increased to thirteen trailers and the contract price was ultimately increased to $394,979.52. (Appeal File Tab (AF) 1; Stipulation paragraphs (Stip.) 1-4).
2. Prior to issuance of the solicitation which led to the contract at issue in this appeal, Appellant had performed another contract under which it designed and constructed two other trailers for the Postal Service.[2] As part of that earlier contract, Appellant delivered specifications and drawings to Respondent. The drawings were ultimately included in the solicitation for the contract at issue in this appeal. (Transcript pages (Tr.) 14-15, 24, 57-58, 74, 88, 115)
3. The solicitation and resulting contract at issue here contained several references to the requirement that the trailers be constructed in accordance with the specifications attached to and referenced in the contract (AF 1, p.2 (Item A.2), p.4 (paragraphs B.2 & B.4)). The contract further provided that the "attachments to the statement of work/specifications listed in Section I are hereby made part of this solicitation and any resultant contract" ( id., p.4 (paragraph B.3)). Attached to the specifications, and also listed in Section I of the contract were the drawings produced under the earlier contract and a list of property to be supplied by the Postal Service for use by the contractor.
4. The contract also contained the following provisions relevant to this appeal:
"E.1 PAYMENT DUE DATE
a. Payments under this contract will be due on the 30th calendar day after --
1. The date of actual receipt of a proper invoice ...; or
2. The date the deliverables are accepted by the Postal Service, whichever occurs later.
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E.5 FIRST ARTICLE APPROVAL - POSTAL SERVICE TESTING
a. At the time specified for first article testing, the contractor must deliver the units specified in the Schedule to the Postal Service at the testing facility set forth in the Schedule....[[3]]
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G.2 RECORD 'AS BUILT' DRAWINGS
a. The contractor must, during the progress of the work, keep a master set of prints on the job site, on which is kept a careful and neat record of all deviations from the contract drawings prepared by the architect-engineer made during the course of the work.
b. Upon completion of the project, these 'as built' prints must be certified as to their correctness by the signature of the contractor and turned over to the architect-engineer for use in preparing a permanent set of 'as built' drawings.
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H.15 POSTAL SERVICE PROPERTY- FIXED PRICE
a. Postal Service-Furnished Property
1. The Postal Service will deliver ... the property described as Postal Service-furnished property....
3. ...[I]f the Postal Service-furnished property is received in a condition not suitable for its intended use, the contractor must notify the contracting officer and (as directed by the contracting officer) either (a) return it ..., or (b) effect repairs...."
5. The "MOBILE POSTAL FACILITY TRAILER SPECIFICATIONS" that were a part of the solicitation contained the following relevant provisions:
"I. SCOPE OF WORK
Design and construct a 12' x 56' ... trailer to be used as a postal facility .... [T]he unit must be constructed to comply with all applicable inter and intra state, as well as local ordinances and regulations, plus meet the [Postal Service Handbook] RE-4 requirements for accessibility by the handicapped....
The design, shop drawings and equipment submittals must be approved by the Postal Service prior to the start of construction (see submittal requirement).
Construction and equipment is to be guaranteed free from defects and undue wear for a period of one (1) year from date of final acceptance by the USPS....
A. SHOP DRAWINGS AND RELATED DATA
Submittal of Shop Drawings and related data shall conform to the requirements of the Clause titled, 'Shop Drawings, Coordination Drawings and Schedules' of the General Provisions[[4]] and is specified herein.
If approved by the Contracting Officer, the reproduction will be identified as having received such approval by being so stamped and dated. The Contractor small [sic] make any corrections required by the Contracting Officer.... The approval of the Shop Drawings by the Contracting Officer shall not be construed as a complete check but will, in itself, not relieve the Contractor of the responsibility for any error which may exist as the [sic] satisfactory construction of all work....
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E. AS-BUILT DRAWINGS
Contractor to furnish final specifications and blueprints. They will upgrade the approved Shop Drawings and specifications to actual Design Sets bearing the appropriate Architect/Engineer Registration Seal. Both will be submitted ... for reviews, corrections and revisions as necessary prior to an approved final product....
All final drawings shall bear an appropriate registration seal.
All submissions required for approval by the Postal Service shall be correlated, checked and signed by a responsible official of the architect/engineer's firm and shall be accompanied by a certification in the following format:
'I certify that all phases of this project (1) have been coordinated and checked for accuracy; (2) are complete in accordance with all applicable requirements; and (3) are in compliance with local building codes and Postal Service requirements.'
***
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H. PLUMBING
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3. HOT WATER HEATER: An electric, point-of-use, hot water heater shall be located near the lavatory as shown on the plans....
4. WATER CLOSET AND LAVATORY: Water closet and lavatory to be commercial grade, designed for trailer use that meets the OSHA standards for the handicapped....
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K. SPECIALTY ITEMS
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4. SECURITY DOOR: Roll-up security door (over service counter): A steel or aluminum clad foam insulation panel or solid metal security roll-up door, manually operated by a crank on the workroom side and secured by bolts on the sides shall be provided to completely close the area above the service counter...." (AF 1; Stip. 12)
6. Delivery of the trailers was to begin 120 days from the date of the notice to proceed (NTP), in accordance with the delivery schedule set out in the contract (Stip. 10).[5] The contract also specified a "period of performance" of twelve months after the effective date of the contract, with an additional period of up to twelve months based on the exercise of certain options. The parties ultimately agreed to a contract completion date of August 31, 1991. (Stip. 6, 7; AF 1-F).
7. Appellant specialized in the construction of this type of building and had a 10,000 square-foot production facility in which it "prebuilt" walls and other components and then assembled those components into finished buildings (Tr 11-13). Appellant's president, Jerry Hayes, believed that the solicitation which led to the current contract called for construction of "basically the same building" as that which Appellant had previously constructed for Respondent (Tr. 17). Appellant anticipated it could use the drawings it had submitted under its earlier contract as shop drawings under the current contract (Tr. 24). Before award of the contract, Appellant had been asked to verify its prices and had done so (Tr. 22-23).
8. The record is unclear as to whether Appellant's earlier contract required the trailers to meet the same handicapped accessibility requirements as those under the contract at issue here. However, the trailers built by Appellant under its earlier contract did not actually meet those requirements, and the drawings which Appellant supplied under the earlier contract did not reflect the Handbook RE-4 accessibility requirements referred to in Section I of the specification. (Tr. 49-51).
9. A preconstruction conference was held on September 15, 1989, with representatives of both parties present. At the conference Appellant's president told Respondent's personnel that he had priced the contract on the basis of being able to construct the trailers in a single production run, without interruption or delays, at the rate of about one trailer every ten days to two weeks. Respondent's personnel told Mr. Hayes that there was no rush for the trailers but that there was no objection to his building the trailers quickly, if he wanted to. They emphasized to Mr. Hayes that this was a "design and construct" contract, especially with respect to the requirements for handicapped accessibility. Mr. Hayes also stated that he had cash flow problems and needed to be paid in less than 30 days after delivery. The record does not support a finding that any shorter payment period was agreed to by Respondent. (Tr. 20-22, 90; AF 6A).
10. Appellant submitted a set of shop drawings to Respondent on October 16, 1989. Those drawings were initially rejected and were resubmitted on October 18, 1989. By letter dated October 26, 1989, the Contracting Officer's Representative (COR), advised Appellant that the drawings had been "approved for design purposes and can be used for construction of the first trailer, pending issuance of the 'Notice to Proceed.'" Appellant was also advised that a revised set of shop drawings would have to be made available at the time of the first on-site inspection. The letter did not, however, note any requirement for "certified" drawings. (AF 5, 6B). The reason the COR granted approval for only the first trailer was because he considered the first trailer to be a "prototype" on which the design work would be done and which would be built before production started on the other trailers (Tr. 92).
11. By letter dated October 23, 1989, Appellant informed the Contracting Officer that it had been notified that its lumber supplier could no longer hold to the prices which had been quoted in August. Appellant estimated the immediate price increase to be from 6 to 8 percent. (AF 3B).
12. The Contracting Officer issued the Notice to Proceed to Appellant on October 25, 1989. Notwithstanding the COR's understanding that it was to apply only to the first trailer, the NTP authorized the construction of all 13 trailers. (AF 2, 5).
13. During the course of contract performance, several on-site inspections were conducted at Appellant's facility. The first inspection was held from December 6 through 8, 1989. At that time, Appellant was asked for a revised set of shop drawings "with certifications" and for the equipment submittals. None of these items were available. No details of the results of the inspection are in the record, but the Postal Service representatives concluded that the first trailer was not close to being ready for final inspection and that work had started on the second trailer. Further, the representatives concluded Appellant was installing materials, fixtures, and equipment which had not been submitted for approval. At that time, Appellant was told by the COR not to proceed with any further trailers until the required drawings and submittals were supplied and approved - including "certification." (Tr. 30; AF 5, 6).
14. The second inspection took place on January 2 and 3, 1990, and covered the first two trailers. At that time a number of items relevant to this appeal were noted by the inspectors in their report.[6] Under a category labeled "NO COST MODIFICATIONS/ CHANGES" the inspectors required relocation of the hot water heater, captive air system tank, water flow meter, pressure gauge, water supply valve, bypass valve, and "related water piping" from the interior of the restroom to the corner of the "mailing vestibule."[7] The reason cited for the change was interference with handicapped access to the restroom. In addition, the inspectors required the deletion of a "stubout" for a proposed future water cooler. (AF 6Ci).
15. Under a category labeled "DEFICIENCIES," the inspectors noted four items relevant to this appeal. First, referencing a "previous drawing and [Postal Service Handbook] RE-4" the inspectors noted that the dimensions of the restroom should be increased on later units (but not on the units they were inspecting) from 5'-2" x 7'-3" to 5'-6" x "approximately" 8'-0". The latter dimensions were shown on the drawings which accompanied the solicitation and which were incorporated into the contract. Second, the inspectors provided construction requirements for the wicket portion[8] of one of the interior doors. Third, the inspectors noted a requirement to move the crank assembly for the security roll-up door so that it would not interfere with the scale and telephone. Finally, the inspectors stated that the trailer identification plate was to be installed on the exterior vestibule door or adjacent to it on the wood siding [rather than near the customer entrance door]. (Id.).
16. Sometime during the period surrounding first and second inspections, Appellant received one or more shipments of post office boxes and racks from the Postal Service. When Appellant's personnel opened the cartons they found that some of the equipment was damaged. At some point Appellant orally notified the COR of the problem and was told to set aside the items they couldn't use and use only the good ones. Respondent later provided replacement racks and boxes. Appellant also expended some effort in straightening and repairing some of the equipment, although there is no evidence it was told to do so. (Tr. 37-39, 110-112).
17. During the period between the first inspection (December 6-8, 1989) and January 25, 1990, Respondent's personnel certified for payment 95 percent of the price of the first two trailers and 50 percent of the price of trailers 3 and 4. The certification for trailers 3 and 4 apparently represented Appellant's purchase of material. On January 25, 1990, Appellant was advised that no further payments would be made until receipt of the drawings and submittals required by the contract. On March 10, 1990, Appellant was notified to "resume production," since Respondent had received what were considered "marginally acceptable original final drawings" and because it appeared that Appellant's architect/engineer was then working on the drawings. (AF 5, 6, 6H).
18. On this record we conclude that production, except for the first two trailers, was shut down at Respondent's direction from December 8, 1989, through March 10, 1990, because of the lack of drawings and submittals (see Findings 13 & 17).
19. In February 1990, the parties entered into a "Basic Pricing Agreement" under which Respondent agreed to pay $130 per month as a "monthly space and insurance charge" for the storage of trailers at Appellant's facility. Respondent's personnel were to place orders under the agreement on an as-needed basis. (AF 21).
20. On March 22, 1990, a third on-site inspection (which Respondent considered a "First Article Inspection") was held at Appellant's facility, covering the first four trailers (two of which had also been inspected at the January 2 inspection). The inspectors noted a number of relatively minor deficiencies. Of relevance to this appeal were notations to relocate the EXIT sign, that the wicket door was not constructed "per standard detail," and to change locations for the roll-up door [security screen] handle and electrical switches and outlets. (AF 6 E, 6 Ei). Although the timing is not clear from the record, at some point the COR suggested to Appellant the names of three or four door manufacturers for the wicket door, but did not direct Appellant to use the manufacturer it apparently chose to use (Stip. 18).
21. On April 7, 1990, Appellant received written notifications from Respondent's facilities engineer to make a number of changes beginning with trailer 7. Appellant was directed to change the location of a number of electrical switches, the telephone pull-box, and the handle used to operate the security roll-up door over the service counter. In addition, Appellant was directed to move the wall between the restroom and vestibule so that the restroom would have a "clear width" of 63 inches.[9] The latter change was stated to be the result of an onsite visit by the "Architectural Barriers People." (AF 3 B-E; Tr. 87; Stip. 26).
22. Deliveries continued under the contract on a fairly regular basis thereafter and were completed by the end of August 1990. (AF 6 H).
23. By letter dated November 14, 1990, the COR, invoking the contract warranty provisions, notified Appellant that the exterior paneling on the first trailer, which had been installed in Saragosa, Texas, was deteriorating. There were also defects discovered in other trailers after delivery. Although informed of the defects, Appellant made no repairs. (Tr. 46-47, 112-113; AF 7-11, 14, 17, 19)
24. By letter dated January 8, 1991, Appellant notified the Postal Service that it was going out of business as of January 15, 1991, and that it would no longer be responsible for any warranties. Appellant attributed this to its having submitted a low bid and to delays in inspection and payment under the contract. The Postal Service retained $1,804.29, the outstanding contract balance, as a result of Appellant's statement. Although Appellant stated that it intended to file for bankruptcy, it never did so. (Stip. 17, 28, 29; AF 18).
25. By letter dated June 16, 1991, (AF 3) Appellant submitted a certified claim to the Contracting Officer seeking the payment of $160,773.64 under the contract.[10] The claim was divided into 15 separate items, as follows:
A. Additional overhead expenses because of delays in issuing the notice to proceed, changes in specifications, changes in drawings, late payments and inspections.
Amount claimed: 26 weeks at $2,000 per week $52,000
B. Increased cost of material because of delay in issuing notice to proceed and other delays in production caused by Respondent.
Amount claimed: $30,631.12
C. Downtime caused by production stoppage ordered by the COR because of the dispute over shop drawings. Appellant claimed that the COR improperly required the delivery of as-built drawings instead of shop drawings before he would let production continue.
Amount claimed: $16,000
D. Improper failure to accept the wicket doors resulted in expense of using an outside manufacturer to custom make the doors.
Amount claimed: $5,584
E. Electrical changes imposed on Appellant without any allowance for increased costs or delay.[11]
Hot water heater relocation
Height of receptacles
Location of exit lights
Relocation of telephone outlets
Height of light switch in restroom
Relocation of the thermostat.
Amount claimed: $11,050
F. Plumbing changes imposed without any allowance for increased costs or delay.11
Relocate hot water heater and flow meter.
Improper failure to accept restroom in first unit even though it met contract drawings and specifications.
Change in water cooler outlet location and its eventual deletion.
Amount claimed: $3,250
G. Added labor and materials (bumper boards) caused by the process of moving the hot water heater and flow meter from the restroom to the vestibule.11
Amount claimed: $14,300
H. Cost of relocating the handle for the security roll-up door.
Amount claimed: $250
I. Relocating identification plate from the front of the trailer to the rear of the trailer after the walls had already been painted.
Amount claimed: $455
J. Delays and labor caused by receipt of damaged post office boxes and racks.
Amount claimed: $3,466.66
K. Delay in approval of drawings to relocate walls in the restroom and vestibule.
Amount claimed: $4,238
L. Escalation in shipping costs ("gas, permits, and taxes at port-of-entry") caused by storing finished units in the contractor's facility before shipping them.
Amount claimed: $6,749.83
M. Relocation of vestibule walls in each unit.
Amount claimed: $6,400
N. Late payment of invoices (measured against a 14-day standard) and unpaid invoices.
Amount claimed (for unpaid invoices only):[12] $3,943.94
O. Outstanding balance remaining unpaid.
Amount claimed: $6,398.23[13]
26. In a decision dated October 18, 1991, the Contracting Officer denied the claim in its entirety.[14] Appellant thereafter filed a timely appeal. (AF 4).
27. The amount remaining unpaid under the contract is $1,804.29 (Stips. 28, 30).
28. In an April 1992 audit report by the Postal Inspection Service, the auditor took no issue with Appellant's assertion that the invoices claimed as unpaid under claim item N had actually not been paid, but questioned the claim as relating to a different contract (the basic pricing agreement). The auditor further recommended that the Contracting Officer investigate this matter. (AF 22, p. 3 and Appendix 4-3 ("Schedule of Trailer Storage Invoices Outstanding")).
DECISION
Appellant makes a number of arguments, none of which directly addresses the merits of the individual elements of its claim. Appellant first argues that Respondent improperly required as-built drawings at a stage in contract performance when shop drawings were required, and that Respondent's failure to accept the shop drawings delayed contract performance. Appellant purports to draw an analogy between the situation here and situations in which the government has been held liable for interference with contract performance caused by repeated, unreasonable inspections. Appellant argues that through Respondent's inspection and refusal to accept the shop drawings, Respondent imposed a higher level of performance than called for by the contract and that Appellant is, therefore, entitled to an equitable adjustment under the Changes clause.
Appellant's second argument, although not particularly clear and not addressed to any particular claim items, apparently is that the contract specifications were defective in that they both incorporated the drawings from Appellant's earlier contract and also added the handicapped accessibility requirements in Handbook RE-4, which requirements were incompatible with the layout shown on the drawings -- i.e., Appellant contends that trailers built to the drawings would not meet the accessibility requirements and that it is entitled to recover the costs of trying to comply with the defective specifications.
Appellant's final argument relates to its claim for late payment of invoices, which claim was not quantified. Appellant argues that it is entitled to costs incurred as a result of Respondent's failure to pay on time and that the payment of interest under the Prompt Payment Act does not absolve Respondent of responsibility for its late payments.
Respondent argues generally that any delays, including delays in issuing the notice to proceed, were caused by Appellant or were, at worst, concurrent delays for which Appellant is not entitled to compensation. Moreover, Respondent argues that Appellant has not presented evidence that it could have completed the trailers in 26 weeks, the time period against which it measures its delay claim. Finally, on the subject of delays, Respondent argues that Appellant failed to advise the Contracting Officer that it was incurring delays caused by the Postal Service, as required by the Suspensions and Delays clause.
As to the dispute over shop and as-built drawings, Respondent argues that the contract required submission of as-built drawings "prior to an approved final product," which Respondent interprets as meaning the first trailer. Respondent contends that although the Postal Service may have allowed Appellant to proceed with construction based on "less than perfect" shop drawings, it had the right to insist on as-built drawings prior to final approval of the first trailer.
As to Appellant's claims for additional costs related to the wicket doors, electrical items, plumbing items, relocating the handle for the security roll-up door, relocating the identification plate, and relocating the vestibule/restroom walls, Respondent argues that these were not changes, but were corrections of items that were not in compliance with the contract requirements. In the alternative, Respondent argues that Appellant may not recover because even if these items were changes, they were ordered by the COR or the Postal Service facilities engineer, who were without authority to direct such changes.
Respondent argues that Appellant may not recover for repair of unsuitable post office boxes and racks because it failed to comply with the requirements of the Postal Service Property clause, which directed the contractor to notify the Contracting Officer before taking any action to repair defective Postal Service furnished property. By not contacting the Contracting Officer as required, Respondent argues that the Contracting Officer was not given the opportunity to choose how to solve the problem.
With respect to the claim for additional transportation costs, Respondent argues first that Appellant paid for delivery of only seven trailers, not the thirteen on which the claim is based. The other six trailers were to be delivered on Government bills of lading, rather than at Appellant's expense. Further, Respondent argues that the basic pricing agreement entered into between the parties to cover storage costs is all that Appellant is entitled to with respect to Respondent's postponement of delivery of some of the trailers.
Finally, Respondent argues that it was justified in retaining the outstanding contract balance based on Appellant's statement that it would no longer honor the contract warranty. Respondent contends that, in fact, Appellant never made any warranty repairs, even though it was notified of various problems.
In general, Appellant bears the burden of proving entitlement to the various parts of the claim which are at issue in this proceeding. Wunderlich Contracting Co. v. United States, 173 Ct. Cl. 180, 351 F.2d 956 (1965); Gemini Services, ASBCA No. 30247, 86‑1 BCA ¶ 18,736; Fred A. Arnold, Inc., ASBCA Nos. 20150, 22154, 84‑3 BCA ¶ 17,624. The basic test to show proof of liability where, as here, quantum is not in issue is to demonstrate that entitlement "is not purely academic; that some damage has been incurred." Cosmo Constr. Co. v. United States, 165 Ct.Cl. 463, 470, 451 F.2d 601, 605, 606 (1971); Montgomery‑Ross-Fisher, Inc., PSBCA No. 1033 and 1096, 84‑2 BCA ¶ 17,492, recon. denied, 84‑3 BCA ¶ 17,607.
Claim Items A and C
Turning to the individual elements of Appellant's claim, we consider first the items seeking additional overhead expenses (Claim items A and C). Where, as here, the contractor is able to complete the work within the period of performance set out in the contract, notwithstanding alleged government-caused delays, the contractor may not recover additional overhead expenses unless it can prove that "from the outset of the contract it: (1) intended to complete the contract early; (2) had the capability to do so; and (3) actually would have completed early, but for the government's actions." Interstate General Government Contractors, Inc. v. Secretary of the Army, No. 92-1430, slip op. at 11, 1993 WL 498936 (Fed. Cir. December 6, 1993). See also Ehrlich Contracting, Inc., GSBCA No. 10936, 93-1 BCA ¶ 25,316 at 126,142; Frazier-Fleming Co., ASBCA No. 34537, 91-1 BCA ¶ 23,378 at 117,287-88. In this appeal, the evidence shows that at the outset Appellant intended to complete the contract early. In addition, the fact that it actually completed the contract on time or early (when compared against the August 1990 or August 1991 contract completion dates, respectively) and the absence of any evidence that it accelerated the work by adding personnel or took any other extraordinary actions in order to do so, leads us to conclude that Appellant has also met the second and third parts of the test set up by Interstate and may recover additional overhead to the extent it can show that its progress was unreasonably delayed by Respondent's actions.
In items A and C of its claim, Appellant seeks recovery for additional overhead incurred because of delays in issuing the notice to proceed, changes in specifications, changes in drawings, late payments and inspections, and production stoppage caused by the allegedly improper requirement to supply as-built drawings at a time when only shop drawings were required. We will consider each of these separately.
The specifications required that the design, shop drawings, and equipment submittals be approved prior to the start of construction. A preconstruction conference took place on September 15, 1989, approximately two weeks after contract award. Following the preconstruction conference Appellant prepared a set of shop drawings and submitted them to the COR on October 16, 1989. The drawings were rejected and a second set was submitted to Respondent on October 18, 1989. On October 25 and 26, the drawings were approved and the Contracting Officer issued the notice to proceed with construction. Although the COR anticipated that the NTP would authorize production of only the first trailer, no such restriction was imposed by the Contracting Officer. Appellant has provided no evidence that under the circumstances of this contract any of the time periods taken by Respondent were unreasonable, and none of them appears unreasonable per se. Under these circumstances, we conclude that Respondent did not unreasonably delay Appellant by issuing the NTP when it did. Accordingly, Appellant may not recover additional overhead for delays in issuing the NTP.
With respect to Appellant's claim for delays due to changes in specifications and drawings, and due to late payments and inspections, Appellant has not provided any details as to the basis for its claim. The specification and drawing "changes" which occurred during the course of the contract either resulted in bilateral modifications to the contract for which Appellant received compensation [see footnote 1] or were corrections made by Appellant in order to comply with the handicapped accessibility requirements [see footnote 11]. Appellant has not provided evidence of unreasonable Postal Service-caused delays associated with these changes. Appellant has also provided no evidence that any inspections were delayed by Respondent or that any delays in payments, including those measured against Appellant's 14‑day payment standard [see claim item N], caused any delays in production under the contract. Accordingly, Appellant may not recover additional overhead for such delays.
In its claim item C, Appellant alleges that production was stopped by the COR and Postal Service engineer because of a dispute over the type of drawings which had to be submitted. We have concluded that production was shut down, except for work on the first two trailers, from December 8, 1989, through March 10, 1990, a period of 92 days [Finding 18]. Respondent does not challenge Appellant's assertion that production was shut down, but argues that it had the right to receive final as-built drawings with Appellant's architect/engineer's certification before production of any but the first trailer could proceed. Appellant's argument is not particularly clear, but the heart of the argument appears to be that Appellant is entitled to an equitable adjustment to the contract because Respondent required a higher level of performance than that required by the contract.
Having considered the arguments, we conclude that Respondent improperly directed Appellant to stop production. Since the contract required the approval of the design, shop drawings, and equipment submittals prior to the start of production, Respondent would have been within its contractual rights to have refused to issue the NTP until the design, as reflected in the shop drawings and equipment submittals, was complete and in accordance with the specifications. Once having issued the NTP and authorized production of all the trailers, Respondent did not have the right to then stop production in order to force Appellant to produce as-built drawings. The as-built drawings, on the other hand, were intended to be an accurate reflection of what was produced; they were to be derived from the approved shop drawings (which did not require certification) and any changes that were made during the course of performance. Under the "As Built" requirements of the contract, a master set of drawings was to be kept up to date as performance progressed. Those drawings were to be certified at the completion of the project and were to become the "as built" drawings. Therefore, their completion clearly was not intended to be a prerequisite to production of the trailers. Respondent had the right to reject trailers which did not comply with the contract requirements, but it did not have the right to stop production.
Further, although the contract contained the "boilerplate" first article inspection clause, none of the implementing provisions were included in the contract. The contract did not specify a first article unit; no separate time for the delivery of a first article was specified; and no first article test facility was specified. Additionally, the Contracting Officer's NTP placed no limit on Appellant's production. Thus, Appellant was not required to await first article approval before proceeding with production of the full quantity of production items.
Therefore, we conclude that Respondent unreasonably delayed Appellant's contract performance by directing it to halt production. However, as we held in The Polote Corporation, PSBCA Nos. 1297, 1428, 87‑1 BCA ¶ 19,490, in order for Appellant to recover for this delay:
"[S]uch delay must result solely from the Government's action.... If ... a period of delay can be attributed simultaneously to the actions of both the Government and the contractor, there are said to be concurrent delays, and the result is an excusable but not a compensable delay...."
Further, the general rule is that "[w]here both parties contribute to the delay 'neither can recover damage[s], unless there is in the proof a clear apportionment of the delay ... attributable to each party.'" Blinderman Const. Co., Inc. v. United States, 695 F.2d 552, 559 (Fed. Cir. 1982), quoting Coath & Goss, Inc. v. United States, 101 Ct. Cl. 702 (1944). See also, William Klingensmith v. United States, 731 F.2d 805 (Fed. Cir. 1984); Harris Manufacturing, Inc., ASBCA No. 40434, 1993 WL 398684 (September 30, 1993); ADCO Const. Co., PSBCA Nos. 2355, 2465, 2480, 90-3 BCA ¶ 22, 944.
In this appeal, the record is insufficient for us to determine how much of the 92‑day period during which production was stopped is to be attributed solely to Respondent. We note that production was not stopped with respect to the first two trailers. Therefore, the only production potentially affected by Respondent's order involved trailer 3 and beyond. We note also that because of deficiencies in Appellant's construction and its failure to meet the handicapped access requirements, the first trailer (on which production was not stopped) was not in a substantially complete state until sometime after the January 2 inspection and, perhaps, not until approximately the time of the March 22 inspection. Further, we have insufficient information concerning the physical capacity of Appellant's facility and personnel to determine whether actual construction of any other trailers could have started in any event until the first trailer was completed and out the door. On the record presented, the delay attributable to each party cannot be apportioned. Therefore, Appellant may not recover under these items.
Claim Item B
Appellant's claim item B seeks compensation for increases in material costs due to delays allegedly the responsibility of Respondent, including delays in issuing the NTP. With respect to the latter delay, we have determined that there was no unreasonable delay in issuing the NTP. While Respondent would be liable for material cost increases to the extent that they would not have been incurred but for the delays attributable solely to Respondent, Bootz Manufacturing Co., Inc., ASBCA No. 18,787, 76‑1 BCA ¶ 11,799; J. D. Hedin Constr. Co. v. United States, 347 F.2d 235, 255‑256 (Ct. Cl. 1965), as discussed above the record does not allow us to apportion the delays. Accordingly, Appellant may not recover on this item.
Claim Item D
In claim item D, Appellant seeks compensation for additional costs incurred in constructing wicket doors after Respondent rejected the door in the first trailer. Appellant contends that the doors it installed in the first and second trailers met the contract specifications and that they were improperly rejected. Respondent contends that the doors were deficient and were properly rejected.
Neither party has directed us to any contract specifications for construction of the wicket door, and we have found none in the record before us, other than a designation of which full-size door was to receive the wicket door. In the absence of any specifications, Appellant was free to produce the doors using any reasonable method. A.S. McGaughan Co., Inc., PSBCA Nos. 1752, 1754, 88‑1 BCA ¶ 20,326; Dempsey Engineering Co., AGBCA No. 78‑119, 80‑1 BCA ¶ 14,235; Mecon Co., ASBCA No. 13620, 69‑2 BCA ¶ 7786; see also Spruce Constr., Inc., ASBCA No. 30679, 86‑3 BCA ¶ 19,106. The evidence shows that the level of workmanship on the wicket doors in the first two trailers was at least as good as that on the wicket doors which had been accepted by Respondent under the earlier contract. Respondent has offered no reason for rejecting the doors under this contract, nor any evidence that the approach taken by Appellant in response to the rejection was unreasonable. Accordingly, Appellant may recover its reasonable costs resulting from Respondent's improper rejection of the doors.
Claim Items E, F and G.
In claim items E, F and G, Appellant seeks to recover costs incurred in making changes necessary to comply with the handicapped accessibility requirements of the contract. The parties have stipulated that the trailers did not comply with those requirements when Appellant was told to make the changes [footnote 11]. On these facts alone Appellant would not be entitled to recover any costs for this work. However, in connection with these claim items we also consider Appellant's argument that the specifications were defective in that a trailer built to the contract drawings would not meet the handicapped accessibility requirements. In answer to this argument, Respondent takes the position that the issue of specification impossibility, having been raised for the first time in Appellant's brief, may not be considered by the Board because it constitutes a new claim, which has not been presented to the Contracting Officer for a decision.
Contrary to Respondent's contention, Appellant's argument merely offers a new theory of recovery rather than a new claim and, therefore, the Board has jurisdiction to consider it. See e.g. Hayes International Corp., ASBCA Nos. 21758, 21759, 21972, 79‑1 BCA ¶ 13,596 at 66,622 (neither Board nor Appellant bound by legal theories presented to the Contracting Officer); Defense Electronics, Inc., ASBCA No. 11898, 67‑1 BCA ¶ 6336 (Board jurisdiction not affected by the presentation of a different theory of recovery); MacDonald Constr. Co., IBCA No. 507-8-65, 67‑2 BCA ¶ 6476 (new legal theory advanced in brief is not a new claim).
As to the merits of Appellant's argument, we note that although Appellant is correct in its assertion that the drawings and specification requirements were contradictory,[15] Appellant was in a unique position to have known that to be the case in advance of bidding. Under its earlier contract, Appellant produced the drawings which did not reflect handicapped accessibility requirements and, therefore, Appellant should have been aware of the likelihood of conflict between the drawings and the specification requirement for accessibility. A conflict such as existed here constituted an ambiguity in the contract requirements. At least as to Appellant, that ambiguity was or should have been patent and obligated Appellant to inquire as to which requirements governed. Having failed to do so, Appellant may not rely on its interpretation of the contract provisions and is not entitled to recover those costs associated with meeting the handicapped accessibility requirements. See S.O.G. of Arkansas v. United States, 212 Ct.Cl. 125, 546 F.2d 367 (1977); Ashbach Construction Co., PSBCA No. 2718, 91‑2 BCA ¶ 23,787; Mark A. Carroll and Son, Inc., PSBCA No. 252, 77‑2 BCA ¶ 12,601. Accordingly, Appellant may not recover under items E, F and G of its claim.
Claim Item H
In this item Appellant seeks to recover costs associated with relocating the handle used to operate the security roll-up door, but has provided no details of the nature of the costs allegedly incurred. Respondent contends that the change in location was not a change, but was a correction of a deficiency in the initial installation.
The specification requires only that the handle be located on the workroom side of the wall. The record contains three references to moving the handle -- in the reports of the January 2 and March 22 inspections, and in the written direction dated April 7, 1990 [Findings 15, 20, 21]. However, the record does not persuade us that the handle was actually moved after having been installed in any trailer. Rather, we conclude that the location assigned to the handle was changed prospectively for trailers 7-13, corresponding to the change in the location of one of the light switches. Further, as it appears that the location at which the handle was bolted to the wall was changed by only a few inches, it is not apparent that there would have been any actual costs incurred in implementing such a prospective change. Since Appellant has failed to show that there would have been any costs associated with the change in location, it may not recover under this portion of its claim.
Claim Item I
In this item, Appellant seeks to recover costs associated with moving the trailer identification plate from a location near the customer entrance door to a location near the rear of the trailer. Appellant claims the costs of patching holes and repainting at the original location of the plate. Respondent contends that this item constituted the correction of a deficiency, rather than a change to the contract requirements.
Neither party has directed us to any contract provision designating the location of the identification plate, and we have found none. Therefore, Appellant was free to install the plate at any reasonable location, and there is no evidence that the original location selected by Appellant was unreasonable. Accordingly, we have no basis for accepting Respondent's argument that this work constituted correction of a deficiency. In addition, it appears that in at least one instance Appellant was required to move a plate which had already been installed and thereby incurred actual costs. Accordingly, Appellant may recover the costs associated with moving any identification plates previously installed.
Claim Item J
In this claim item, Appellant seeks the costs incurred in straightening and otherwise repairing Postal Service supplied racks intended to hold post office boxes in the trailers. The costs claimed are for labor hours incurred in performing the corrective work, although Appellant has supplied no information concerning the number of racks actually repaired. Respondent does not challenge the assertion that at least some of the racks arrived in a damaged condition. However, Respondent contends that Appellant may not recover because it did not inform the Contracting Officer of the problem before undertaking the repairs, as required by the Postal Service Property clause.
We agree that Appellant may not recover under this item, but not for the same reason argued by Respondent. Rather, in this instance the evidence shows that Appellant did notify the Contracting Officer's Representative of the damaged equipment, but received direction to set aside the damaged units and use only the suitable items. There is no evidence Respondent directed that Appellant undertake the repair of the damaged units. Therefore, having failed to follow the directions received, Appellant may not recover the cost of repair.
Claim Item K
In this item Appellant seeks compensation for "[d]elay in Production time until Mike Delamore approved drawings to relocate walls in the restroom and vestibule...." Appellant has provided no further details concerning when the delay actually occurred or which drawings are involved. To the extent that Appellant is referring to approval of the as-built drawings, the delay would be concurrent with the delay discussed under Items A and C, above, and would not form the basis for any recovery. In addition, the record shows only one specific instance in which relocation of the walls was directed. In that instance, Appellant received direction (including a drawing) on April 7, 1990, referring to a conversation the day before in which Appellant was given oral direction. In addition, the direction applied only prospectively -- to trailers 7 through 13. The record contains no evidence demonstrating a delay caused by the approval process cited by Appellant. Accordingly, Appellant is not entitled to any recovery under this claim item.
Claim Item L
Under this item, Appellant seeks increased costs of delivering the trailers due to Respondent's storing the trailers at Appellant's facility and delaying deliveries. Respondent opposes the claim on the basis that Appellant was only responsible for delivery of seven of the trailers rather than the thirteen on which the claim is based, and on the basis that these costs were included in the separate basic pricing agreement for storage of the trailers [Finding 19].
This claim item is expressed by Appellant on a cost-per-unit basis. Therefore, Respondent correctly argues that Appellant would not be entitled to recover any costs attributable to the six trailers it shipped on government bills of lading. However, there is no evidence in the record that the basic pricing agreement was intended to cover anything but the "monthly space and insurance charge" stated in the agreement. Therefore, we conclude that Appellant may also recover additional shipping costs which it actually incurred in shipping any units which were first stored at its facility under the basic pricing agreement.
Claim Item M
This claim item, under which Appellant seeks to recover the costs and delay of "relocat[ing] the vestibule walls on each unit," appears to be related in some manner to claim item K, discussed above. Again, Appellant has provided no details as to the nature of the costs it is seeking nor any evidence that the relocation of the walls, directed prospectively only, had any cost impact on construction of the trailers.[16] Accordingly, Appellant may not recover any costs under this item.
Claim Item N
This item consists of two separate subitems. First, Appellant claims entitlement to an unquantified amount due to what it alleges was the late payment of invoices. Second, Appellant seeks payment of what it alleges are unpaid invoices totalling $3,943.94.
As to the claim for costs associated with allegedly late payments of contract invoices, Appellant argues that it is seeking more than the payment of interest under the Prompt Payment Act. However, Appellant has provided no details of what it is seeking, has not attempted to quantify this claim in any way, and has provided insufficient evidence for us to conclude that it is entitled to recover more than Prompt Payment Act interest. Therefore, Appellant may not recover under this portion of the claim.
As to the second part of this claim item, in the final decision the Contracting Officer specifically declined to consider Appellant's entitlement to collect the unpaid invoices, alleging that the invoices were related to the separate basic pricing agreement and not to the contract at issue here. Notwithstanding the fact that the invoices may have related to the other agreement, the Contracting Officer was obligated to render a decision on the claim within the period mandated by the Contract Disputes Act. Under the CDA, failure to render a decision within the required time period, as happened with respect to this portion of the claim, is deemed to be a denial of the claim and empowers the contractor to file an appeal and the Board to take jurisdiction over the dispute. 41 U.S.C. §605(c)(5); Jake Sweeney Auto Leasing, Inc., PSBCA No. 3279, 93‑3 BCA ¶ 26,186; Rice King, ASBCA No. 43352, 92‑2 BCA ¶ 24,805. Therefore, the claim was properly before the Board as part of Appellant's appeal.
The evidence does not show that the invoices in question have been paid. Further, Respondent has offered no argument to support a decision that they should not be paid. Therefore, we conclude that to the extent the invoices have not actually been paid, Appellant may recover under this claim item.
Claim Item O
Claim item O consists of Appellant's claim to $6,398.23 as the outstanding balance due under the contract. The parties have since stipulated that the amount remaining unpaid under the contract is $1,804.29. Respondent argues that it properly retained this unpaid balance because of Appellant's repudiation of its warranty obligations under the contract when it announced its intentions to go out of business and declare bankruptcy, and because Appellant in fact did not repair any of the defects under the warranty provisions of the contract [see Finding 23]. In the light of our finding that Appellant failed to repair defects in a number of trailers and in view of the relatively small sum retained by Respondent, we conclude that the retention by Respondent was reasonable pending resolution of the warranty problems. However, to the extent, if any, that the retained amount exceeds the cost of repairs actually made, Respondent is obligated to pay the balance to Appellant.
As detailed above, the appeal is sustained in part and denied in part. The matter is remanded to the parties for the negotiation of quantum. If the parties are unable to reach agreement, the Contracting Officer should issue a final decision, which may be appealed in accordance with the Contract Disputes Act.
David I. Brochstein
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
James D. Finn, Jr.
Administrative Judge
Vice Chairman
[1] Bilateral modification no. M03 provided for changes in the actual construction of the trailers (AF 1-C). Bilateral modification no. M09 changed the delivery of six of the trailers to reflect shipment on government bills of lading rather than at contractor expense (AF 1-I). The remaining modifications related primarily to destination changes and changes in funding, but had no impact on actual construction (AF 1-A, B, D-H).
[2] Neither the earlier contract, its specifications nor any other documents related to that contract were included in the record of this appeal.
[3] None of the information anticipated by this clause was included in the contract document. The contract specified no first article units, no time for first article testing, and no testing facility.
[4] No such clause appears in the General Provisions or elsewhere in the contract document.
[5] Although the stipulation executed by the parties stated that deliveries were to begin 120 days after the NTP, the contract actually required that all of the items be delivered within 120 days after the NTP. (AF 1, page 1 (block 8), page 5 (paragraph C.1), pages 13a-13d (paragraph C.1); AF 2). However, resolution of this inconsistency is not necessary as both parties appear to have proceeded on the expectation that deliveries would be as provided in the stipulation.
[6] The report of the inspection is 10 pages long, but only a few of the items are relevant to the claim which became the basis for this appeal.
[7] The hot water heater had been shown in the restroom on the contract drawings. The original location of the other items was not shown.
[8] A "wicket door" is a small door inserted in an opening cut out at about face height in a standard sized solid door. The purpose of the wicket door is to allow transactions to be performed when the rest of the post office is closed, but still provide security for the postal employee conducting the transactions. (Tr. 101). The contract specifications and drawings provided no construction requirements or details for the wicket door (AF 1). The level of workmanship on the wicket door in the first trailer presented for inspection was at least as good as that on the wicket doors which had been accepted under the earlier contract (Tr. 82).
[9] Although the wording of the direction received on April 7, 1990, with respect to moving the walls appears to apply only to trailers after trailer 6, the parties have stipulated that Appellant "was instructed to correct in all trailers the wall placement between the restroom and the vestibule in order to comply with Handbook RE-4...." (emphasis added) (Stip. 26).
[10] Appellant had previously submitted an uncertified claim in the amount of $130,000 in March 1991. That claim was returned by the Contracting Officer who noted the requirement that the claim be certified. In May 1991 Appellant submitted a claim in the amount of $160,773.64 but with only partial certification language. After being advised by the Contracting Officer of the need for a complete certification, Appellant submitted the claim now before the Board. (AF 12, 13, 15, 16).
[11] The parties have stipulated that the "[T]he Postal Service told [Appellant] to make the electrical and plumbing item corrections, listed in Items E, F and G of [Appellant's] June 16, 1991 claim, in order to meet the handicapped accessibility requirements of Handbook RE-4, as specified in the contract. These items did not comply when inspected." (Stip. 21).
[12] The claim did not contain any amount allegedly attributable to the late payment of invoices.
[13] This amount included, among other items, a sum for unpaid rental invoices -- the same invoices listed as unpaid under claim item N, above (AF 22).
[14] Item "N" for unpaid invoices was not addressed on its merits but was denied as relating to a different contract -- The Basic Pricing Agreement for the storage of trailers at Appellant's facility. The remaining items were denied on their merits.
[15] At least with respect to the size and arrangement of the restroom and placement of the water heater and other plumbing fixtures -- the major sources of problems in this contract.
[16] We note that the January 2 & 3, 1990 inspection report listed the size of the restroom (and hence the location of the vestibule/restroom wall) as a deficiency, and stated that the restroom should be larger. To the extent this may be considered "direction," it too was prospective only and there is no indication that any walls in existence were actually moved as a result. (Finding 15).