March 31, 2000
Appeal of
SAE AMERICON
Under Contract No. 419980-90-B-0148
PSBCA No. 3866
APPEARANCE FOR APPELLANT:
Roy S. Cohen, Esq.
APPEARANCE FOR RESPONDENT:
Francis M. Bartholf, Esq.
OPINION OF THE BOARD
Appellant, SAE Americon, has appealed from a decision of a contracting officer denying, in part, Appellant's claims for additional compensation in connection with its contract with Respondent, United States Postal Service, for the construction of a General Mail Facility and Vehicle Maintenance Facility in Harrisburg, Pennsylvania. The claims are being litigated in Appellant's name by its excavation and site work subcontractor, Adams County Asphalt. A hearing was held in Philadelphia, Pennsylvania. Only entitlement is at issue in this proceeding.
There are five specific claims at issue, which are referred to in this Opinion as the Rock Disposal claim, the Sand Cover claim, the Pond "A" Excavation claim, the Delay claim, and the Erosion Control claim. All of the claims arose out of the work performed by Adams County Asphalt.
FINDINGS OF FACT - GENERAL
1. Contract No. 419980-90-B-0148 ("contract" or "prime contract") was awarded to Appellant, SAE Americon,[1] on May 8, 1990. The contract, in the total amount of $43,265,000, called for the construction of a General Mail Facility/Vehicle Maintenance Facility ("GMF/VMF") in Harrisburg, Pennsylvania. (Appeal File Tab (AF) 3.7; Stipulation paragraphs (Stip.) 6, 9) The work under this contract was the second phase of construction of the GMF/VMF. Phase 1 of the work consisted of clearing and leveling the site and installing load bearing piles. (Tr. 28, 172).
2. On or about June 25, 1990, Appellant entered into a subcontract ("subcontract") with Adams County Asphalt ("ACA") to perform excavation and site work on the project. The amount of the subcontract was $3,714,000. (Stip. 7, 8; Appellant's Exhibit (Appnt. Exh.) 2; AF 2.5, Exh. 2).
3. Sverdrup-Gilbane was a joint venture engaged by Respondent to act as construction manager for the project. A Sverdrup-Gilbane employee was designated the Contracting Officer's Representative ("COR") for the project. (Stip. 4; AF 4.8).
ROCK DISPOSAL CLAIM
FINDINGS OF FACT
4. Under the contract's Changes clause, the contracting officer had the right to make changes in the specifications and the method or manner of performance. The clause provided that
"If any change under this clause causes an increase or decrease in the contractor's cost of, or the time required for, the performance of any part of the work under this contract, whether or not changed by any order, the contracting officer will make an equitable adjustment and modify the contract in writing …." (AF 3.1, Clause G-20, "Changes (Construction)," October 1987).
5. The contract provided that excavated material not suitable for use as fill or backfill was to be disposed of off site. Rock was classified as unsuitable material. (Stip. 10, 17; AF 3.2, Specifications, section 02200, pages 02200-4, -5; Tr. 67). Appellant "was entitled to do as it wished with any excavated rock removed from the site." (Stip. 23).
6. ACA was very familiar with the construction site and the surrounding area, having been the prime contractor on Phase 1 of this project. It believed that rock would be encountered on the site, and in pricing the site work subcontract, ACA (which also owned two quarries in the area) intended to sell any rock removed from the site to other contractors, or use the rock on another of its projects, as it had done on other projects in the past. ACA also expected that it would supply (and be paid for, in addition to its subcontract price) any fill that had to be imported to the site during the course of construction. ACA calculated its subcontract price based on these two factors. (Stip. 23; Tr. 26, 28, 39, 42, 43, 44-46, 70, 73).
7. The solicitation that led to the contract provided that bidders were to include in their "Base Bid Prices," the excavation of 25,000 cubic yards of open rock and 15,000 cubic yards of trench rock. In addition, bidders were required to provide unit prices for the "removal and disposal off site" of rock in addition to the amounts included in the bid – both open excavation and trench excavation – to be used "in computing additions to and deductions from the Contract.” (Stip. 10; AF 3.4, pages A1-2, 1A1).
8. The prime contract required Appellant to provide all material necessary for filling and backfilling operations as part of the contract price (AF 3.2, Specifications, Division 2, Section 02220, page 02220-1).
9. The subcontract between Appellant and ACA incorporated into its terms, among other documents, the prime contract between Appellant and Respondent. Under the subcontract, ACA agreed to perform part of the work required by the prime contract, including the work required by Division 2, Section 02220, of the plans and specifications (see Finding 8). The Scope of Work portion of the subcontract also contained a section entitled "Unit Prices." That paragraph contained unit prices and prime contractor markups for "Rock," consisting of 15,000 cubic yards of "Trench" and 25,000 cubic yards of "Bulk." In addition, on a separate line, the section provided, "Removal of unsuitable fill from site: $3.50/cy" (Appnt. Exh. 2; AF 2.5, Exhibit 2 (Paragraphs 1, 2; "Exhibit A, Scope of Work," paragraph A.4)).
10. Construction on this project was subject to the provisions of an Earth Disturbance Permit issued to Respondent by the Pennsylvania Department of Environmental Resources (“DER”).[2] Under a "Special Condition" made part of the permit when it was issued, the "permittee" was required to provide and secure approval of a separate erosion and sediment pollution control (E&S) plan for any site at which work was to be performed, if the site was not covered by the original permit. (AF 4.1).
11. On October 3 and 4, 1990, DER inspectors conducted inspections at two sites, away from the GMF/VMF site, which Appellant (ACA) was using for disposal of material removed from the GMF/VMF site. The inspectors found violations in the operation of both sites, and noted specifically that no [E&S] plans had been reviewed or approved for either site. By letters dated October 22, 1990, DER notified Respondent that a further inspection of one of the sites showed that violations were continuing, and explained the deficiencies in the E&S plan that had been submitted. Respondent's COR directed Appellant to provide certain information that DER had identified as missing. In reply, Appellant's Project Executive took the position that Appellant was not responsible for providing DER approved sites for disposal of material. (AF 4.34, 4.41, 4.44, 4.45).
12. By letter dated October 26, 2000, the Chief of DER's Permits and Compliance Section issued a formal "Notice of Violation" to Respondent with respect to earthmoving activities on the project (AF 4.47).
13. By October 1990, ACA had excavated approximately 18,000 cubic yards of rock from an area on the site referred to as the "sawtooth" area. At that time, Respondent's COR urged Appellant to remove the rock from the site, because it was blocking access to another part of the site. A dispute then arose between Appellant and ACA with respect to removal of the rock. ACA took the position that it was entitled to be paid separately (by Appellant) for removing the rock from the site (in accordance with its subcontract), while Appellant took the position that removal of the rock was included in ACA's subcontract price, by virtue of the incorporation by reference of the prime contract into the subcontract (see Finding 9). (Tr. 184, 186-90, 227, 424; AF 4.124, photograph dated Oct. 24, 1990).
14. By letter dated November 1, 1990, the COR wrote to Appellant's Project Executive, noting that Appellant was contractually obligated to dispose of the excavated rock off the project site and complaining that he had seen no movement in that direction. The COR then stated,
"To facilitate job progress it makes sense to dispose of the rock on-site. If properly installed, this material could be placed in the employee parking area. This would allow work on the east side to continue and remove the necessity to submit an E&S plan for an off-site disposal site. Therefore, based on your unit rates the following alternatives are proposed:" (AF 4.51).
Respondent proposed two alternatives (designated "A" and "B"), both of which provided that Respondent would receive a credit in a specified amount against an earlier change order, based on an assumed net savings to Appellant for not having to transport the rock from the site. The alternatives differed only in the manner in which the credit was to be calculated and applied. (AF 4.51).
15. In a reply letter dated November 13, 1990, Appellant's Project Executive stated, "This is to confirm that Carlson will exercise Alternate B of your letter of November 1, 1990."[3] At that time, the Project Executive was concerned because of ACA's refusal to take the rock off site without additional compensation, and he considered the COR's proposal to keep the rock on-site and to use it as fill in the employee parking area to be a good solution to the problem. (AF 4.63; Tr. 231, 232).
16. The rock excavated from the sawtooth area was used as fill in the employee parking lot. However, notwithstanding the earlier exchange of letters (Findings 14 and 15), Respondent ultimately did not apply a credit to the earlier change order, but left the item open pending settlement of the other rock and site related issues. (Stip. 24; AF 4.103).
17. The parties continued to disagree with respect to the responsibility for providing DER-approved sites for disposal of material removed from the GMF/VMF site. The COR took the position that the responsibility was Appellant's under the contract, while Appellant's Project Executive contended that because the Earth Disturbance Permit had been issued after contract award and had been issued to Respondent, Appellant was not responsible for complying with the requirement for separate E&S plans. (AF 4.64 (¶11), 4.66, 4.67).
18. On December 6, 1990, DER issued a formal "Compliance Order" to Respondent's Eastern Regional Postmaster General. The Order directed Respondent to "cease and desist any and all earthmoving activity" on the project, except those activities necessary to comply with the approved E&S plan. Cited as one reason for the Order was the failure to have obtained approved E&S plans for the offsite disposal area (Finding 11). Issuance of this Order by DER was viewed as a significant event within the Postal Service, which apparently became involved in court litigation with DER. (AF 4.71; Tr. 208-209).
19. Although DER and the Postal Service were engaged in litigation, work continued on the site and by March 1991, approximately an additional 25,000 cubic yards of rock had been excavated, primarily from an area on the site referred to as "Pond A." At this point, the COR was concerned about disposal of the rock if it had to be removed from the site, and was concerned that Respondent might be required to find a suitable disposal site. He was also particularly concerned about remaining "legal" in view of the ongoing litigation. The COR would have prevented removal of the rock from the site until there was an approved revision to the Earth Disturbance Permit. He so advised Appellant's Project Executive and then suggested that it might be in "everybody's best interest" to also use this rock on the site. By agreement between Respondent and Appellant's Project Executive, the rock was left on-site, was further crushed and mixed with other material on the site, and the resulting mixture was used as fill, primarily behind a retaining wall. However, the parties did not agree to any specific financial arrangements with respect to use of this rock. In a letter to the Project Executive, the COR recognized that Appellant believed Respondent had unfairly benefited from leaving the rock on site. In reply, the Project Executive agreed that the rock would be left on the site and agreed, based on his understanding of the COR's letter, that "final settlement of costs versus benefits to parties involved [will be] determined upon completion of site work and all quantities of rock determined." The evidence does not show that the COR disagreed with that interpretation of the parties' agreement. (AF 4.79, 4.80; Tr. 53, 207, 208, 214, 256, 261, 262).
20. In December 1993, ACA filed a claim (in Appellant's name)[4] with the contracting officer, seeking, among other elements, damage for alleged loss of income as a result of using the rock on-site instead of removing it. The claim contained two parts related to rock export. First, Appellant claimed that ACA had lost the expected benefit of being able to sell the rock that it had anticipated removing from the site. Based on an alleged fair market value of $6.67 per cubic yard, Appellant valued that portion of the claim at $76,759.67. Second, Appellant claimed that when the rock from Pond A was mixed with other material and used on-site as fill material instead of being removed from the site, ACA, as the presumed supplier of fill for the project, lost the financial benefit of selling fill that would have been necessary in order to replace the removed rock. Appellant claimed that ACA produced 51,200 cubic yards of fill when the 25,000 cubic yards of rock was mixed with the other on-site material. Appellant estimated the market value of this fill material at $9.54 per cubic yard, and valued that portion of the claim at $488,448.00, plus a 10 percent markup, for a total of $537,290.80. (AF 2.1, 2.5).
21. In a final decision dated June 21, 1995, the contracting officer denied the rock disposal claim in its entirety (AF 1).
ROCK DISPOSAL CLAIM
DECISION
Appellant seeks to recover costs incurred and income allegedly lost by its subcontractor, ACA, because of what Appellant alleges was a constructive change to the contract. Appellant argues that ACA is entitled to recover, as an equitable adjustment under the Changes clause, income that ACA would have earned from selling the rock that was excavated and that ACA expected to remove from the site. Further, Appellant argues that ACA lost what it viewed as the financial benefit of selling fill to replace the rock that was to be removed from the site and that it is entitled to be compensated for the value of the fill that ACA produced on-site and placed behind the retaining wall.
Respondent, which concedes that there was a change to the contract, argues that Appellant is not entitled to any recovery for the alleged loss of revenue, because the wording of the Changes clause allows recovery only if there is an increased "out of pocket" cost of performance, as opposed to a loss of income. In addition, Respondent argues that the alleged loss of income is "too remote and consequential" to be the basis for recovery. As to the portion of the claim related to the fill, Respondent also argues that Appellant may not recover because it was required by the specifications to provide all necessary fill as part of the contract price and, therefore, was not harmed by a reduction in the amount of fill it had to import to the site. Respondent also argues that, with respect to the initial 18,000 cubic yards of rock (Findings 13-16), the parties agreed to a specific equitable adjustment for the change, in the form of a credit to be applied in Respondent's favor.
With respect to the contract change associated with the initial 18,000 cubic yards of rock, we agree with Respondent that the parties reached an agreement with respect to the equitable adjustment which would result. Respondent suggested the change as a way of avoiding a dispute between Appellant and ACA, which dispute was delaying work on the site. Respondent's COR suggested two possible alternatives, Appellant's Project Executive expressly agreed to one of the alternatives, and the parties proceeded on that basis. Under these circumstances, Appellant may not now seek an additional recovery on ACA's behalf inconsistent with the contracting parties' earlier agreement. Therefore, this portion of the appeal is denied.
With respect to the second quantity of rock removed, the parties agreed that a change to the contract had occurred, but did not agree on the equitable adjustment due Appellant, if any (Finding 19). Under the Changes clause, Appellant may recover to the extent that it can show that ACA's cost of performing the contract increased as a result of the change.[5]
Under the contract as initially awarded, Appellant would have been obligated to remove the excavated rock from the site and to provide any fill necessary.[6] As actually performed after the agreed-to change, Appellant did not have ACA remove the excavated rock from the site, but, instead had ACA crush it, mix it with other material on the site, and use the resulting material as fill. Therefore, if the costs to ACA of this portion of the contract work as actually performed exceeded what would have been its costs under the originally specified method, Appellant may recover those excess costs under the Changes clause.
In establishing what would have been its costs under the original contract, Appellant may not consider the income it would have received from the sale of the rock removed from the site. Even assuming (without deciding) that the loss of income represented a "cost of performance" which could be recoverable under the Changes clause, see, e.g., Xplo Corp., DOT CAB No. 1409, 86-3 BCA ¶ 19,280, we agree with Respondent that such a "cost" would be too remote and speculative to be recoverable under these facts. See, e.g., Lionsgate Corp., ENG BCA No. 5393, 88-2 BCA ¶20,770 at 104,923, 104,940. In general, losses related to other, unrelated contracts and related to general loss of business may not be recovered as part of an equitable adjustment. See, e.g., Wells Fargo Bank v. United States, 88 F.3d 1012, 1022, (Fed. Cir. 1996), cert. den. 520 U.S. 1116 (1997). Accordingly, Appellant may not consider the unrealized income from the sale of rock in calculating the "would-have-cost" figure.[7]
This portion of the appeal is sustained. However, the record in this entitlement proceeding is insufficient for the Board to determine whether Appellant will actually be entitled to a positive recovery. The matter is remanded to the parties for negotiation of the amount due, if any, subject to the limitations contained in the above discussion.[8]
SAND COVER CLAIM
FINDINGS OF FACT
22. The contract required the installation of electrical heating mats beneath the concrete slabs in the GMF loading dock areas. The mats were required to be covered by a 12-inch layer of sand before concrete was poured. The specification recommended the use of a "small tracked machine" to spread the sand over the mats, and prohibited the use of wheeled vehicles because of possible damage to the mats. (Stip. 30-33, 38; AF 3.2, specification section 02999, paragraph 3.01).
23. Under its subcontract with Appellant, ACA was the entity responsible for spreading the sand necessary for the heat mats. That work was performed between April and June 1991. At some point, not clear in the record, ACA was instructed by Appellant to spread the sand manually – i.e., without the use of machinery – which was a more expensive procedure than using machinery and was not the method ACA had planned.[9] (Stip. 36; Tr. 113, 115, 116, 163; AF 4.123).
24. ACA protested to Appellant that it was being forced to spread the sand manually notwithstanding the specification language that permitted machinery to be used. On at least one occasion the topic was discussed on-site with representatives of Appellant, in the presence of Sverdrup-Gilbane employees who worked for the COR. Those Sverdrup-Gilbane employees expressed their agreement with Appellant's direction to ACA that the sand be spread manually. ACA spread at least a portion of the sand manually. (Tr. 114-116; Stip. 34).
25. By letter dated May 3, 1991, ACA stated to Appellant that it considered the direction to spread the sand by hand to be a constructive change in the contract requirements, entitling ACA to additional compensation. By letter dated May 6, 1991, Appellant forwarded ACA's letter to the COR and requested the COR to "[p]lease advise as to method to be followed for the major portion of this work still remaining. Work is scheduled to resume May 6, 1991." (AF 4.84).
26. Prior to his receipt of Appellant's May 3, 1991 letter, the COR had seen sand being spread by hand. By letter dated May 8, 1991, the COR responded to Appellant, stating that,
"A contractor may elect to use an alternate method of installation from that specified so long as the alternate method is equivalent or superior to the specified method….
SAE may elect to continue its present method of installation or may elect to adhere strictly to the specified method…."
The COR also denied that Appellant had received any direction from him concerning the method of installation being used. (Tr. 356; AF 4.85).
27. The portion of the sand-spreading work performed after receipt of the COR's letter was performed using a tracked vehicle (Tr. 287, 356).
28. In its December 1993 claim (Finding 20), ACA sought to recover what it calculated was the excess cost for labor and equipment allegedly incurred because of the direction to install the sand by hand. The amount sought was $64,004.31. In his final decision, dated June 21, 1995, the contracting officer denied the claim in its entirety based on his conclusion that there had been no direction given by the Postal Service or the COR requiring that the sand be spread by hand. Further, the contracting officer challenged the calculations of the excess cost of manual installation, as alleged by ACA. (AF 1, 2.1, 2.5).
SAND COVER CLAIM
DECISION
Appellant alleges that it was directed to spread the sand manually over the heat mats by representatives of Respondent who had apparent or actual authority to direct changes to the contract. Appellant relies heavily on direction ACA claims it received at the on-site meeting from Sverdrup-Gilbane employees (Finding 24) and argues that such direction, even if not itself constituting a constructive change to the contract, was later ratified by the COR in a conversation with ACA's president. Finally, Appellant argues that the COR was aware that ACA had been directed to spread the sand manually, but took no steps to change that direction or allow the use of machinery.
Respondent contends that, while some of the sand was spread manually, that activity was not directed by any person with authority to modify the contract on behalf of Respondent. In particular, Respondent argues that the Sverdrup-Gilbane employees who participated in the on-site meeting, had no such authority. Further, Respondent argues that the COR did not ratify any such direction.
We note first that the initial direction to ACA to install the sand manually came not from Respondent's representatives, but from Appellant, the prime contractor, over ACA's objections. As to Appellant's specific arguments with respect to ratification, there is no evidence that the Sverdrup-Gilbane employees who participated in discussions at the on-site meeting (Finding 24) had any authority to issue changes to the contract. Therefore, Appellant's argument that their agreement that manual spreading of the sand was required constituted a change to the contract is without merit. See Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947).
As to ratification by the COR, we need not decide whether the COR was authorized by the contracting officer to modify the contract or whether his actions may be attributed to the contracting officer. The evidence before us does not demonstrate that, even if authorized, the COR's actions constituted either a directed change or a constructive change in this instance.
Appellant argues that ratification of the constructive "change" occurred because the COR was aware that sand was being spread by hand, contrary to the specifications, but took no action. The difficulty with this argument is that spreading the sand by hand was not a violation of the specifications. The specifications recommended, but did not require, that the sand be spread using a tracked vehicle. Nothing in the specifications prohibited the method then being employed by ACA at Appellant's direction. Therefore, Appellant has shown no obligation on the part of the COR to bring the matter to Appellant's attention. Further, when the issue was finally raised formally in writing with the COR, his response was both prompt and correct – i.e., within two days of receiving the letter from Appellant, the COR responded that, under the specifications, Appellant could either continue to spread the sand manually or it could switch to the method specifically set out in the specifications.
Appellant also relies on an informal conversation that ACA's president alleges took place between the COR and him at which the COR gave direction that the work continue by hand. The COR denied giving any such direction, and ACA's president was unable to provide any details as to the timing of the conversation relative to the other events that took place. Because of the lack of persuasive evidence, we did not find that the conversation took place or that the alleged direction was given by the COR.
Appellant has failed to meet its burden of proving that the contract was directly or constructively changed by Respondent to require manual spreading of the sand, contrary to the specification's allowance of the use of a small, tracked vehicle for that purpose. Accordingly, this claim is denied.
POND "A" EXCAVATION CLAIM
FINDINGS OF FACT
29. Contract Special Clause G-9 ("Permits and Responsibilities") provided, in part:
"The contractor is responsible, without additional expense to the Postal Service, for obtaining any necessary licenses and permits, and for complying with any applicable Federal, State, and municipal laws, codes, and regulations in connection with the prosecution of the work."
(AF 3.2).
30. The Solicitation provided that, among others, drawing EC-1, was incorporated into the contract as part of the specifications. Drawing EC-1, titled "Erosion Control Plan," included notes labeled "G.M.F., Sequence of Work," which required the installation of sediment ponds A, B and D, and sediment trap #5 immediately after installation of construction entrances, and before clearing, grubbing, and grading the site. (AF 3.2, clauses B.2 and B.3; AF 3.2, Section I; AF 3.3; Stip. 27). Pond A, initially to be installed as a sediment trap, ultimately was to remain in place and serve as a location for dumping snow and ice plowed at the GMF and as a retention pond for storm water that drained from the site (Tr. 50). At the beginning of the work under this contract, the location specified for Pond A was covered by an approximately 15-foot high stockpile of soil and other materials that had been placed there by ACA during the Phase 1 work (Finding 6) and which had to be removed before Pond A could be excavated. At a pre-bid meeting, the contracting officer had informed potential bidders of the presence of the stockpile over the Pond A site. (Tr. 35, 44, 124; AF 3.4 (Minutes of prebid meeting of February 16, 1990)).
31. Erosion control drawing, EC-1, was included in the solicitation issued by Respondent and received by ACA (Tr. 58, 322).
32. In July 1989 (with a revision in January 1990), Respondent had applied to the DER for an Earth Disturbance Permit for the GMF/VMF project. The information included in the application included a proposed sequence of work identical to that contained in erosion control drawing EC-1. The Earth Disturbance Permit was issued on June 25, 1990, after award of the prime contract, and included the same construction sequence. (Stip. 11, 12; AF 4.5).
33. Beginning no later than August 1990, the DER began to inspect the site and report violations of the Earth Disturbance Permit to the COR. In particular, the DER reports cited the fact that Pond A had not been completed. On a number of occasions, these reports were forwarded by the COR to Appellant, with directions to take action necessary to resolve violations. (AF 4.15, 4.21; Stip. 29).
34. In its December 1993 claim (Finding 20), ACA contended that Respondent directed SAE/ACA to comply with the DER site permit requirements (regarding the sequence of the work) and sought to recover $42,449.89 as the additional cost of complying with those directions. This portion of the claim was denied in its entirety by the contracting officer, primarily based on his assertion that the contractor was aware of the work sequence contained in the contract documents before bidding. (AF 1, 2.1, 2.5).
POND "A" EXCAVATION CLAIM
DECISION
Appellant argues that the sequence of work that ACA intended to pursue as of the time it bid was disrupted by the fact that Respondent applied for and secured the DER earth disturbance permit, which permit had a sequence that required that Pond A be excavated at the beginning of the work and that did not take into account the presence of the stockpile of soil on the Pond A site. Appellant contends that Respondent's actions in securing the permit were contrary to the Permits and Responsibilities clause in the contract, which placed the responsibility for securing such permits on the contractor, not Respondent. Appellant argues that the sequence of work in the permit was not the sequence contemplated by ACA when it "bid," and that if Appellant had applied for the permit, it would have proposed a more efficient sequence of operations.
Respondent argues first that under the Permits and Responsibilities clause, the contractor was responsible for complying with all state and local laws, codes and regulations and that Respondent is not liable for the costs of compliance. Second, Respondent argues that when Appellant entered into the prime contract, it had all the information that was included in the solicitation, including the erosion control plans and the information related to the stockpiles on site, and could have raised the issue of the sequence of work before bidding, but failed to do so. Therefore, Respondent argues that it was not any action by it that caused the additional costs sought by Appellant/ACA.
Having considered the evidence and arguments, we conclude that Appellant may not recover the costs sought. The sequence of work contained in the solicitation was the same as that included in the application submitted by Respondent to, and approved by, the DER. Therefore, as argued by Respondent, Appellant entered into the contract with full knowledge of the sequence of work required for erosion control. While it is true that Respondent applied for the earth disturbance permit, if Appellant or ACA had applied for the permit, they would have had to use the same sequence of work, since that sequence was specified in the contract. Accordingly, by securing the earth disturbance permit and directing Appellant to comply with the directions of the DER and the sequence of work in the contract, Respondent did not change the contract or create entitlement to an equitable adjustment in Appellant. As argued by Respondent, if Appellant believed that the specified sequence of work was unsound or inefficient, it had the duty to raise the matter before bidding. See Jim Smith Contracting Co., Inc., ENG BCA Nos. 5870, 5883, 94-2 BCA ¶ 26,879 at 133,793.
Accordingly, this claim is denied.
DELAY CLAIM
FINDINGS OF FACT
35. Clause C.3 ("Suspensions and Delays") of the contract provided, in part:
"a. If the performance of all or any part of the work of this contract is suspended, delayed, or interrupted by—
1. An order or act of the contracting officer in administering this contract; or
2. By a failure of the contracting officer to act within the time specified in this contract—or within a reasonable time if not specified—an adjustment will be made for any increase in the cost of performance of this contract caused by the delay or interruption.… However, no adjustment may be made under this clause for any delay or interruption to the extent that performance would have been delayed or interrupted by any other cause.…" (AF 3.1).
36. ACA began work at the site in July 1990. At the time the contract was awarded, in June 1990, both Appellant's Project Executive and Respondent's COR believed that the material in at least two of the on-site stockpiles, including the one over the Pond A site, would be suitable for use to fill in the ravine that was to become the employee parking area. During July and August of 1990, ACA was working to clear the site of shrubs, trees and topsoil, including in the area of the ravine, and was also performing other work on site. For that reason, ACA was not directed to move the material from the stockpiles to the ravine during that period. (Tr. 130, 270, 293-94, 308-11, 319, 350).
37. By September 1990, Appellant had moved some of the suitable material from the stockpiles to the ravine. In early September, discussions began among Appellant, Respondent and ACA, about how to provide fill for the ravine, since more of the material from the stockpiles had been found unsatisfactory than had been expected. In response to a request from Appellant, the COR provided direction on September 5, 1990, as to how to proceed to use the suitable on-site fill material or material that could be made suitable by aeration. (AF 4.104 (minutes of September 4, 1990 meeting), 4.125; Tr. 276, 278, 317-18, 320).
38. Questions regarding movement of unsuitable material also did not specifically arise until September 1990. By letter dated September 4, 1990, ACA indicated to Appellant that there was unsuitable material in the amount of 20,000 cubic yards on the Pond A site left from the previous contract and that ACA intended to remove the material from the site beginning September 8, 1990. (AF 4.104 (minutes of progress meetings); AEx. 7).
39. By letter dated September 14, 1990, Appellant notified the COR that as of that date, all satisfactory on-site soil had been exhausted and asked for advice as to how to proceed (AF 4.113). By letter dated September 18, 1990, the COR provided the requested advice/direction with respect to removing some materials from the site and using other material (including some of the material above the Pond A site) as fill in the ravine (AF 4.114). This advice/direction satisfied Appellant's need for direction at the time (Tr. 279). Funding for removal of the unsuitable material from the site and for relocation of other material on the site was provided by several contract modifications over the next month (AF 4.27, 4.28, 4.40).
40. There were some weather delays on the project in August and September and also in November (Tr. 132, 244). The record does not indicate the duration of those delays.
41. In its December 1993 claim (Finding 20), ACA sought an adjustment under Clause C-3 of the contract (Finding 35) for delays allegedly caused by lack of direction from Respondent regarding stockpiling of materials on site, removal of unsuitable materials from the site, and providing suitable fill materials to the site. ACA alleged that there had been delays totaling 153 days and sought the payment of $221,391 for increased overhead because of the delays. In his final decision, the contracting officer denied the claim in its entirety, stating that Appellant had not shown the delays to be the result of an order or act of the contracting officer, that decisions as to how to handle the stockpiled material were the responsibility of the contractor, and that, when required, Postal Service decisions were made in a timely manner. (AF 1, 2.1, 2.5).
DELAY CLAIM
DECISION
Appellant argues that Respondent caused delay to ACA as a result of Respondent's tardy responses to ACA's request for directives. Appellant cites as a "prime example" Respondent's alleged failure to issue timely directives with respect to the stockpile of material on the Pond A site. Appellant contends that it (or ACA) sought direction regarding the use of the material in the stockpile as early as July 1990, but that the necessary direction was not given until September 1990.
Respondent argues that Appellant has not shown that any of the delays ACA allegedly suffered were due to the failure of Respondent to give any necessary directions. Respondent contends that whenever Appellant, which was generally responsible under the contract for making all scheduling, sequencing and method-of-work decisions, asked for direction, that direction was provided within a reasonable period of time. Respondent also argues that ACA has failed to separate the effects of these alleged delays from the effects of other delays that ACA's president testified occurred on this project. Finally, Respondent argues that ACA has failed to prove that alleged delays in receiving direction regarding the stockpiles actually created a delay in ACA's completion of its part of the contract – i.e., that the delay in receiving direction was on the critical path of ACA's work.
The essence of Appellant's delay claim is that it (or ACA) was delayed by the failure of Respondent to give necessary direction with respect to the removal and disposal of unsuitable material located in the stockpiles on the site, and particularly the stockpile located above Pond A. Where, as here, Appellant alleges that Respondent failed to act in a timely manner, Appellant must show that Respondent failed to act within a "reasonable time" in order to recover under the Suspensions and Delays clause (Finding 35).
Appellant did not request direction from Respondent with respect to the disposal of the unsuitable material or the availability of suitable fill material until September 1990. Contrary to Appellant's assertions, the evidence does not show that these questions were of concern to Appellant in July 1990 or that they were raised with Respondent prior to September 1990. Further, as argued by Respondent, the record indicates that when the questions were raised, Respondent provided direction within several days at most. Appellant has not shown that period to represent an unreasonable response time under the circumstances. While it may be that there was some delay in filling the ravine and moving the stockpiled material from the Pond A site, the record does not show that any failure by Respondent to provide needed direction contributed to the delay in any material way. In addition, the record also shows that there were some weather-caused delays during August and September 1990 and Appellant has not shown that the alleged failure by Respondent to provide direction would have delayed the project over and above the delays caused by the weather.
Accordingly, Appellant may not recover under this claim.
EROSION CONTROL CLAIM
FINDINGS OF FACT
42. At some point during the period of construction, a change to the Erosion and Sedimentation Control Plan was necessitated by a slight change in building location. Respondent's architect performed the necessary work, but the COR took the position that Appellant should have been responsible for the cost of making the change, which was $2,011. However, Respondent never assessed that cost against Appellant. (Tr. 353; AF 4.101[10]).
43. In March and May 1991, ACA wrote to Appellant protesting Appellant's apparent intent to assess the same costs against ACA (AF 2.5, Exh.14). The record does not show whether the costs were actually assessed against ACA.
44. In its December 1993 claim (Finding 20), Appellant sought to recover the amount it alleged had been previously withheld, arguing that the costs were attributable to difficulties in the initial design and were Respondent's responsibility. In his final decision, the contracting officer denied this claim in its entirety, contending that the cost had never been actually assessed against Appellant. (AF 2.1, 1).
EROSION CONTROL CLAIM
DECISION
Respondent takes the position that as the cost was never assessed against Appellant, it may not be recovered here. Respondent argues that if Appellant assessed the cost against ACA, notwithstanding that the cost had not been assessed against Appellant, that is a matter between Appellant and ACA, but does not provide a basis for ACA to recover the amount from Respondent in Appellant's name. Appellant offered no arguments in its brief or reply brief with respect to this claim and did not take issue with Respondent's proposed finding of fact that the disputed amount was never assessed against Appellant.
The record contains uncontroverted testimony by the COR that the disputed amount was never actually assessed against Appellant, and Appellant has offered no arguments seeking to dispute that conclusion. The record also does not show that the amount was actually assessed against ACA. Under these circumstances, Appellant may not recover and this claim is denied.
Accordingly, Appellant may recover under the Rock Disposal Claim as discussed under that portion of this Opinion. The appeal is otherwise denied.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1] Appellant was then known as Carlson Mid-Atlantic, Inc. (Stipulation paragraph (Stip.) 9).
[2] See Findings 32 & 33, below.
[3] "Alternate B" provided that Respondent would receive a credit in the form of an allowance of 11,603 cubic yards against an amount owed to Appellant under an earlier change order.
[4] The claim was certified by Appellant, as prime contractor.
[5] Respondent has neither argued nor proved that Appellant would not be liable to its subcontractor, ACA, for ACA's increased costs as a result of the change. Accordingly, Appellant is presumed to be liable to, and may recover on behalf of, ACA. E. R. Mitchell Construction Co., v. Danzig, 175 F.3d 1369, 1371, 1373 (Fed. Cir. 1999).
[6] Contrary to the position taken by ACA, providing fill to replace the removed rock would not have represented a source of additional income to it or Appellant, since both were already responsible for providing any necessary fill as part of the contract price. Therefore, lost profits from the "opportunity" to provide fill on the site would not be recoverable in any event. See Findings 8, 9.
[7] There is no evidence that Respondent had actual knowledge, either at the time of contract award or at the time the parties agreed to the change, that ACA intended to sell the rock. In addition, other than the evidence that ACA had used this type of pricing in the past, there is no evidence that that practice was a common one in the industry, or any other evidence that would cause us to conclude that compensation for such a loss would have been reasonably within the contemplation of the parties when the contract was made or when the change was agreed to. See, e.g., Paul Hardeman v. United States, 406 F.2d 1357, 1362 (Ct. Cl. 1969); Richard R. Wilson (reconsideration), PSBCA No. 3469, 98-1 BCA ¶ 29,499.
[8] Respondent claims an offset against any positive recovery for savings Appellant experienced by not having to remove the rock from the site. In view of our decision, Respondent's offset claim is moot. The first portion of the offset is subsumed in the agreed-to equitable adjustment for the first 18,000 cubic yards of rock. The second portion of the claimed offset relates to savings from not removing the remaining 25,000 cubic yards and will be a factor in the quantum negotiations by the parties.
[9] The record is unclear as to whether this direction occurred at the beginning of the sand-spreading activity or whether the direction was given after ACA had already performed some of the work using machinery.
[10] AF 4.101 is an executed bilateral contract modification that, in its "typewritten" form appears, among other items, to credit Respondent with the disputed $2,011. However, that item was crossed out by hand in the version of the modification in the record and the total amount of the modification was also adjusted by hand to reflect the elimination of the credit. The record contains no evidence as to when and under what circumstances the alterations to the modification were made.