Appeal of KNIGHT ARCHITECTS ENGINEERS PLANNERS, INC.

October 6, 1994

Appeal of

KNIGHT ARCHITECTS ENGINEERS PLANNERS, INC.

Under Contract No. 169982-90-J-0063

PSBCA No. 3474

APPEARANCE FOR APPELLANT:

Frank J. Bernstein

APPEARANCE FOR RESPONDENT:

Maria T. Robinson, Esq.

OPINION OF THE BOARD

Appellant, Knight Architect Engineers Planners, Inc., requested an equitable adjustment under its architect-engineer contract with the United States Postal Service, Respondent, contending it was required to spend far more time reviewing the shop drawing submittals of Respondent's construction contractor than its contract required. This appeal followed the contracting officer's denial of Appellant's claim.

At the election of the parties, the appeal is being decided on the record, which consists of the pleadings, the appeal file, supporting documents filed with Appellant's complaint, and declarations, with exhibits, submitted by Respondent. Appellant filed a response to Respondent's answer but, although afforded an opportunity to do so, did not file additional evidence or a brief. Appellant's evidence contained no declarations or affidavits of persons with knowledge of the events surrounding performance of its contract and its claim.

Because Appellant has not demonstrated that Respondent caused it to perform work in excess of that required under its contract, the appeal is denied.

FINDINGS OF FACT

1. On May 23, 1990, Respondent awarded Appellant a contract to conduct feasibility studies for a proposed expansion of Respondent's Mail Processing Center ("MPC") at O'Hare Airport in Chicago. The contract included options under which Respondent could negotiate with Appellant to obtain design services and services during construction of the facility, including review of shop drawings. (Appeal File Tab ("AF") 28, Section A.3; Publication 59, "Architect-Engineer Project Requirements," Section 4.2 a).

2. Appellant's contract described the services to be performed if the construction option was exercised:

"ARCHITECT-ENGINEER SERVICES DURING CONSTRUCTION (Clause FB-206)(June 1988)

Services are not to be performed until the contracting officer exercises this option in writing. The right reserved by this contract to exercise this option activates the potential fee and its labor-rate bases and is a one-time procedure. After the exercise of this option, the architect-engineer must provide services only to the extent authorized in writing by the contracting officer or a duly appointed representative." (AF 28, Section G.1).

3. Appellant's contract contained a Changes clause which authorized the contracting officer to order changes to the work, and provided for an equitable adjustment for any such changes as well as for constructive changes resulting from other orders of the contracting officer (AF 28, Section H.2 b).

4. After execution of the contract, Respondent exercised its option to obtain design services from Appellant. The contract was modified accordingly, and Appellant designed the MPC. (Declaration of Paul L. Kelly dated March 11, 1994, ("Kelly Decl.") ¶ 9b).

5. In August of 1991, Respondent asked Appellant to submit a price proposal for architect-engineer services to be provided during construction as described in the contract (Kelly Decl. ¶¶ 3, 6; AF 7).

6. Appellant submitted its proposal on September 10, 1991. After a meeting with the contracting officer, Appellant, on September 18, submitted a revised proposal in which it substantially reduced the fixed fee it proposed for shop drawing review by reducing the hours to be expended by Appellant's professional personnel from 5098 to 2874. (AF 7, 9).

7. Respondent accepted Appellant's September 18 proposal, and, in December, 1991, the parties executed Modification M-03 which added the construction phase services to the contract "in accordance with Knight's September 18, 1991 proposal letter." The shop drawing review component was included in the fixed-fee portion of the modification. The parties did not agree that resubmittals of shop drawings by the construction contractor would be limited to 25% or any other percentage of Appellant's shop drawing reviews. (Kelly Decl. ¶¶ 9, 9a; AF 9, 10, 28, Section F.2 c).

8. The contract for construction of the MPC was awarded to Power Contracting and Engineering Corporation ("Power") in September, 1991 (AF 3, p. 5).

9. Power's contract with Respondent required it to submit shop drawings as designated in the plans and specifications to demonstrate that its proposed method of installation complied with the requirements of the contract. Power was required to coordinate and to check the work shown in the shop drawings before submitting them for review and to indicate its approval by placing its stamp on the drawings. Drawings and schedules submitted without evidence of the contractor's approval could be returned for resubmission. Likewise, incomplete submittals or submittals that had not been reviewed or had been reviewed only superficially could be returned to the construction contractor without being reviewed. (AF 29, Section C.6 c and f (p. 6 of 95), Specification General Requirements, Section 01040, 1.05, 1.06).

10. Respondent's review and approval of the shop drawings, which Appellant was to perform, were to be general, and approval would not relieve Power of responsibility for any errors in the shop drawings. Appellant understood that it was only required to perform a general review of Power's submittals for conformance with the plans and specifications. (Declaration of Conrad Saltenberger dated March 23, 1994, ¶ 8b; AF 8, 13, 29, Section C.6 f (p. 6 of 95), Specification General Requirements, Section 01040, 1.01.A; Complaint, p. 2).

11. On June 23, 1992, Appellant wrote to the project manager, complaining that Power had been allowed to begin fabrication and delivery of steel before submitting and receiving approval of the steel shop drawings. According to Appellant, this practice increased the effort it was required to commit to drawing review. Appellant proposed that it be compensated in the amount of $18,347 for its work, which it contended was beyond the scope of its contract. (Complaint, Exhibit E). The record contains no response to this letter.

12. On July 8, 1992, Appellant advised the contracting officer that Power was not complying with the requirements of Power's contract in that Power was not reviewing shop drawings to assure that there were no conflicts between the work of its subcontractors. Appellant noted that as a result it was having difficulty completing its shop drawing reviews promptly and that it was expending additional hours reviewing them. Appellant stated, "However, unless the current submittal situation improves, Knight will require additional turnaround time and may require additional compensation." (AF 11).

13. On August 12, 1992, Appellant submitted to Respondent a request for additional compensation in the amount of $89,912 for "out-of-scope" services it was performing due to Power's failure to coordinate the subcontractor's submittals before submitting them to Respondent (interdisciplinary review). The claimed figure represented services Appellant had already performed as well as those anticipated in the future. (AF 5).

14. In a second August 12, 1992 letter, Appellant submitted a request for an additional $114,799 for out-of-scope services it claimed to have performed because Power was not properly reviewing shop drawings before submitting them as its contract required. This proposed adjustment was based on the difference between the review time Appellant allegedly discussed with Respondent during the fee negotiations and the review time required because of Power's lack of appropriate review before submission. In its letter, Appellant pointed out, "In the interest of completing the project we are continuing to incur time and labor charges in the review of submittals." (AF 4).

15. Notwithstanding that the parties did not execute Modification M-03 until December, 1991, Appellant had begun reviewing shop drawings in October, 1991. By the end of July, 1992, ten months into the construction phase of the project, Appellant had reviewed almost 3000 submittals from Power. Even though Appellant had regular contact with Respondent, including monthly construction meetings, it had never expressed its concerns about the adequacy of Power's shop drawing reviews before June, 1992, and until the correspondence of June, July and August, had never stated that it expected additional compensation. (Declaration of Allen Brooks dated March 22, 1994 ("Brooks Decl."), Exhibit A; Kelly Decl. ¶ 21).

16. By letter dated August 26, 1992, Respondent's project manager replied to the August 12 letter seeking additional compensation for interdisciplinary review, advising Appellant that its obligation under the contract was to review the shop drawings for the negotiated, lump-sum fee and that Appellant was not due additional compensation (AF 12).

17. On September 9, Respondent, Appellant and Power met to discuss Appellant's complaints regarding the submittals (AF 15).

18. In a letter of September 10, 1992, Respondent objected to Appellant's intention to keep a separate account of what Appellant considered the out-of-scope hours because Respondent had not authorized Appellant to perform out-of-scope services. The project manager wrote,

"This letter will serve to document the verbal comments made by the Contracting Officer during our September 9th meeting that Knight has not been authorized in the past and is not authorized in the future to spend any additional service hours without his prior written authorization.

***

In conclusion, we wish to reiterate the fact that Knight is not authorized to perform any additional services without Contracting Officer approval . . . . " (AF 14).

19. On September 28, 1992, Appellant wrote to the contracting officer complaining that an additional circumstance causing its costs associated with shop drawing review to be substantially greater than expected was that the rate of resubmittal of shop drawings exceeded the 25% level Appellant contended the parties agreed to in the original negotiations for Modification M-03 (AF 16).

20. On November 2, 1992, Appellant submitted a certified claim for $324,711 to the contracting officer. The claim consisted of the $114,799 and $89,912 asserted in Appellant's August 12, 1992 letters, plus $120,000 for the additional costs Appellant claimed it incurred as a result of the higher than expected level of resubmittals of shop drawings (AF 6).

21. The contracting officer denied the claim in its entirety, and this appeal followed.

22. In its complaint, Appellant has restated the amount of its claim to be $182,402. That figure is derived by subtracting the total costs for shop drawing review (professional and clerical) included in Appellant's September 18, 1991 proposal, $287,659, from the total costs it claims to have actually incurred in reviewing the submittals, $470,061.

DECISION

Appellant argues that in negotiating Modification M-03 to provide services during construction, it estimated the level of effort (and, consequently, the cost) required to review shop drawings based on its expectation that its review of the construction contractor's submittals would be cursory. According to Appellant, this expectation, which caused it to reduce substantially its proposed price for the construction services, was reasonably based on representations of the contracting officer during negotiations that the construction contractor would perform the presubmittal coordination and review required in the construction contract. Appellant also argues that the contracting officer represented that Appellant's review of resubmittals of shop drawings would not exceed 25% of all submittal reviews.

Appellant says Power did not coordinate and adequately review submittals before submitting them. Appellant contends that because of Power's failure to meet its contractual obligations in this regard, Appellant was required to coordinate the shop drawings and to conduct a detailed review of the submittals, expending far more effort than contemplated by its contract. Additionally, it contends the rate of resubmittals exceeded 25% of all submittals, and that its work increased beyond the contract requirements as a result. Appellant considers Respondent to be liable for its extra costs because Respondent failed to require Power to comply with the shop drawing requirements of the construction contract and because the rate of resubmittals exceeded the 25% limit Appellant claims the parties agreed to.

Respondent characterizes Appellant's claim as one based on an alleged constructive change to its contract, and argues that Appellant has failed to demonstrate that Respondent changed Appellant's work under the contract. It points out that Modification M-03 established that the shop drawing review services were to be provided on a fixed-fee basis and that the modification contained no limit on the number of submittals (or resubmittals) Appellant could be required to review under the contract.

Respondent also argues that the contract only required Appellant to ensure that Power's submittals conformed generally to the plans and specifications and that if Appellant conducted a detailed review without the direction or knowledge of the contracting officer, it did so as a volunteer and is not entitled to additional compensation. Respondent argues that under the contract and pursuant to Respondent's specific direction Appellant was not to expend effort it considered beyond the scope of its contract without the authorization of the contracting officer, authorization which was never given.

Finally, Respondent contends that Appellant's inadequate original design, modification of a substantial number of its drawings after award of the construction contract and inefficient administration of the review process led to any additional shop drawing costs Appellant might have experienced.

If Appellant increased its costs of performance by escalating the detail of its review beyond that required in its contract, it did so without the contracting officer's authorization and at its own risk. See Stephens Associates, PSBCA No. 976, 83-1 BCA ¶ 16,234. Appellant's contract directed Appellant not to perform services without the written authorization of the contracting officer, and it is undisputed that the contracting officer never authorized Appellant to perform services beyond the scope of the contract. Nevertheless, Appellant claims to have performed extra work for at least nine months before it notified Respondent. Once Appellant notified Respondent, Respondent promptly directed Appellant to stop performing work Appellant considered to be extra.

Appellant understood that its contract required only a general review of Power's shop drawings and that, as provided by the construction contract, it could return inadequate submissions to the construction contractor without review. Therefore, if Appellant took on work that should have been done by Power without advising Respondent and obtaining Respondent's approval, it did so as a volunteer, and it is not entitled to an equitable adjustment. See Jowett, Inc., ASBCA No. 47,364, 1994 WL 462109, August 19, 1994; Services Alliance Systems, Inc., ASBCA No. 37864, 89-3 BCA ¶ 22,002; E.D. Conto, PSBCA No. 962, 1982 WL 8937, April 20, 1982; Charles H. Siever d/b/a Charles H. Siever Company, PSBCA No. 460, 80-2 BCA ¶ 14,740 at 72,736.