September 7, 2001
Appeal of
M.E.S., INC.
Under Contract No. 332495-98-B-0360
PSBCA No. 4553
APPEARANCE FOR APPELLANT:
Timothy A. Sullivan, Esq.
APPEARANCE FOR RESPONDENT:
Daniel P. Gimmy, Esq.
OPINION OF THE BOARD
Appellant, M.E.S. Inc., has appealed the decision of the contracting officer denying its claim for loss of materials that were to be installed by Appellant at the Manville, New Jersey Post Office, under a contract with Respondent, United States Postal Service, to upgrade the facility. A hearing was held in New York, New York. Only entitlement is at issue.
1. On September 9, 1998, Respondent awarded Appellant Contract No. 332495-98-B-0360, in the amount of $720,000.00, for the renovation of the Manville, New Jersey Main Post Office. The contract provided 340 calendar days from receipt of the Notice to Proceed for completion of work. The Manville Post Office was to remain in operation during contract performance. (Stipulation of the Parties No. (Stip.) 3; Transcript page (Tr.) 110; Appeal File Tab (AF) 1).
2. Under paragraph G.13 of the contract, “Permits and Responsibilities” (Construction) (Clause B-47) (January 1997), the contractor was responsible “for all materials delivered and work performed until completion and acceptance of the entire construction work, . . .”. (AF 1).
3. Paragraph G.31, Builder’s Risk Insurance (Clause FB-263) (March 1989), informed the contractor that the Postal Service does not carry Builder’s Risk insurance coverage and that “[t]he contractor, at its own option and expense, may elect to provide this insurance for its work.” (AF 1).
4. Paragraph C.2, Suspensions and Delays (Clause B-16) (January 1997), granted the Postal Service the right to suspend or delay performance of the work on the contract in return for granting a commensurate time extension in the contract completion date, as well as paying the contractor the costs incurred as a result of the delay (AF 1).
5. On October 15, 1998, Respondent informed Appellant that the pre-construction conference would be held on October 21, 1998, and that Appellant would be given the Notice to Proceed at the pre-construction meeting (Stip. 4).
6. On October 20, 1998, Respondent cancelled the October 21, 1998 pre-construction meeting and rescheduled it to be held on November 19, 1998 (Stips. 5, 6).
7. The pre-construction meeting was held on November 19, and Appellant was issued the Notice to Proceed at the meeting. However, Respondent informed Appellant at this meeting that it wanted Appellant to delay scheduling commencement of work until after the Christmas mailing season, and to submit a revised construction schedule indicating a January 1999 start of interior construction work. (Tr. 73, 74; Appellant’s Supplemental Appeal File Tab (ASAF) B-01).
8. Appellant submitted a construction schedule that indicated completion of the project by June 17, 1999. Appellant subsequently extended this completion date to August 24, 1999. (Tr. 74, 77; ASAF E-03, E-08).
9. The contract required Appellant to, inter alia, install a closed circuit television system (CCTV). In January 1999, Respondent notified Appellant that there would be a redesign of the CCTV system. (Tr. 13, 75, 76; ASAF B-4).
10. As of July 26, 1999, the project was 94% complete. However, Appellant could not install the CCTV system since Respondent had not yet completed its redesign of the system. Respondent completed the redesign and authorized Appellant to install the CCTV system by Modification No. M01 to the contract. This modification was signed by Appellant on September 23, 1999, and signed and issued by Respondent on September 29, 1999. The modification contained the following statement:
“The contractor agrees that the compensation provided by
the modification constitutes full and complete satisfaction for all direct
costs, indirect costs, applicable interest, impact and delay costs, and
additional contract completion time (beyond that specified herein) which either
has been or will be
incurred in performing all work described by this modification.” (Stip. 7; Tr.
88, 89, 111; ASAF D-08).
11. On September 16, 1999, a hurricane caused severe flooding at the site of the Manville Post Office. The flood caused damage to the boiler room and other interior areas in the post office, as well as damaging materials stored by Appellant in a trailer at the site. (Stip. 9; Tr. 42, 43, 51, 52, 55, 56).
12. The materials stored in the trailer that were damaged by the flood consisted of light fixtures, ceiling tiles and other miscellaneous materials that were to be installed after Appellant installed the redesigned CCTV system (Tr. 52-54).
13. In a letter dated October 13, 1999, Appellant claimed compensation from Respondent for the flood-damaged materials in the trailer (Stip. 11; ASAF C-15).
14. In a letter dated December 10, 1999, Appellant requested the contracting officer’s final decision on its October 13, 1999 claim for flood damaged materials in the trailer (Stip. 12).
15. On May 18, 2000, Appellant filed an appeal with the contracting officer of the contracting officer’s deemed denial of its claim for recovery of the costs of flood damaged material in the trailer (Stip. 13). The Board docketed the appeal on June 6, 2000.
16. By Modification
M02, dated April 7, 2000 (and signed by Appellant on May 26, 2000), Respondent
reimbursed Appellant for the costs to repair the flood damage to the boiler
room and in the postmaster’s office. This modification did not include any
reimbursement for damage to the materials stored in Appellant’s trailer.
The modification contained release language identical to that contained in
Modification M01. (Tr. 117; AF 1).
Appellant argues that Respondent should be liable for the flood damage to the materials stored in the trailer because Appellant would have completed the job prior to the flood, but for the delays to the project caused by Respondent’s delay in issuing the notice to proceed and the redesign to the CCTV system. Appellant also argues that it should not be held liable because the flood was beyond Appellant’s control. Appellant further argues that Respondent waived application of the contract’s “Permits and Responsibilities” clause by paying for flood damage to Appellant’s work in the interior of the Manville Post Office. Finally, Appellant argues that it should not be held liable because Respondent denied reimbursement to Appellant on the mistaken belief that Appellant’s insurance covered the loss when, in fact, the Builder’s Risk insurance Appellant obtained did not cover flood damage.
Respondent argues that Appellant assumed responsibility, under the contract’s “Permits and Responsibilities” clause, for the flood damage to the materials stored in the trailer, and that this responsibility did not shift to the Postal Service because of Postal Service-caused delays to the project or by Respondent’s waiver of its rights under the “Permits and Responsibilities” clause. Respondent further argues that Appellant’s claim is barred by accord and satisfaction because Appellant signed two modifications to the contract that contained waivers of its right to pursue the subject claim.
Under the “Permits and Responsibilities” clause Appellant assumed responsibility “for all materials delivered and work performed until completion and acceptance of the entire construction work, . . . .” (Finding of Fact No. (FOF) 2). Appellant remained responsible for the materials stored on the site until the project was accepted by the Postal Service. If stored materials were damaged prior to project acceptance, Appellant was obligated to replace the material without compensation. This responsibility arises from the clear language of the clause and does not require a demonstration of fault or negligence. John McShain, Inc. v. United States, 179 Ct. Cl. 632, 375 F.2d 829 (1967); HK Systems, Inc., PSBCA No. 3712, 97-2 BCA ¶ 29,079; Entech Sales and Service, Inc., PSBCA No. 2061, 88-1 BCA ¶ 20,447. Although Appellant is correct in arguing that this clause does not make Appellant an absolute insurer of all work and materials stored on the project site (see e.g., Gilles and Cotting, Inc., GSBCA No. 5754, 83-1 BCA ¶ 16,480; J. Young Construction Co. Inc., ASBCA No. 10761, 66-1 BCA ¶ 5551), the circumstances necessary to shift this responsibility to the Postal Service are not present in this appeal.
To avoid liability under the “Permits and Responsibilities” clause, Appellant must demonstrate that the damage was due to the fault or negligence of Respondent and not the result of an act of God. See HK Systems, Inc., PSBCA No. 3712, supra; see also J. Young Construction Co., Inc., supra. There is no evidence in this appeal to support a finding that the stored materials were damaged as a result of the fault or negligence of the Postal Service. Rather, it is quite clear that the damage resulted from an act of God, i.e., the flood that occurred on September 16, 1999.
There is no merit to Appellant’s argument that Respondent should bear the costs of the flood-damaged materials because Respondent delayed Appellant’s completion of the project. To the extent the Postal Service is solely responsible for the delays that occurred, Appellant has the right to recover delay related costs under the contract’s Suspensions and Delays clause (see FOF 4). However, the fact that the Postal Service may be responsible for delays on the project does not automatically shift to Respondent the risk of loss Appellant assumed under the contract’s “Permits and Responsibilities” clause. H.R. Beebe, Inc., ASBCA No. 4606, 59-1 BCA ¶ 2301, cited by Appellant, is distinguishable in this regard. In Beebe, the Board found that the Government had, in fact, accepted the work under the contract and, therefore, assumed responsibility prior to the damage. Similarly, in Gilles and Cotting, Inc., supra, the critical element the Board found in holding the Government liable, notwithstanding the “Permits and Responsibilities” clause, was the conclusion that the most likely cause of damage to the chiller was negligence by Government employees, not the delays that occurred on the project. Finally, we note that the critical finding by the Board in J. Young Construction Co. Inc., supra, was the fact that the cause of damage was a ruptured water main which was under the exclusive control of the Government and that only the Government could have prevented the damage that occurred. That circumstance is not present in this case.
Moreover, there is no merit to Appellant’s argument that Respondent waived its rights under the “Permits and Responsibilities” clause by choosing to reimburse Appellant for the costs associated with flood damage to the interior of the Manville Post Office (see FOF 16). A waiver will not be found unless the party asserting the waiver has detrimentally changed its position in reliance on the supposed waiver. Gresham v. United States, 470 F.2d 542, 554 (Ct. Cl. 1972). Assuming, without deciding, that Respondent waived its rights under the “Permits and Responsibilities” clause by paying for the damage to the interior of the post office, its waiver was limited to the extent of its payment. Appellant has not demonstrated any reliance or change of position as a result of the supposed waiver by the Postal Service that would cause us to conclude that the waiver should be extended to the payment for all damage caused by the flood. Therefore, we do not accept Appellant’s argument.
Similarly, there is no
merit to Appellant’s assertion that the risk of loss should shift to Respondent
simply because one of Respondent’s employees may have, at one time, believed
that Appellant had insurance that covered the loss. Appellant has not
demonstrated that the contracting officer took any action on this mistaken
belief or demonstrated that either party acted in reliance on the alleged
mistake. In these circumstances, there is no basis to conclude that the risk
of loss that Appellant
assumed under the contract’s “Permits and Responsibilities” clause shifted to
Respondent.
Accordingly, the appeal is denied[1].
William K. Mahn
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1] Having concluded that Appellant remained liable under the contract’s “Permits and Responsibilities” clause for flood damage to the material stored in the trailer, there is no need to address Respondent’s accord and satisfaction argument.