DISTRICT OF COLUMBIA v. DISTRICT OF COLUMBIA CONTRACT APPEALS BOARD, and PRINCE CONSTRUCTION CO., INC., and W.M. SCHLOSSER CONSTRUCTION CO., INC , 145 A.3d 523 ( 2016 )

District of Columbia
Court of Appeals
No. 14-AA-396
AUG 18 2016
DISTRICT OF COLUMBIA,
Petitioner,
v. CAB-D-1369, D-1419, & D-1420
DISTRICT OF COLUMBIA CONTRACT APPEALS BOARD,
Respondent,
and
PRINCE CONSTRUCTION CO., INC., and W.M. SCHLOSSER CONSTRUCTION
CO., INC.,
Intervenors.
On Petition for Review of an Order
of the District of Columbia Contract Appeals Board
BEFORE: BLACKBURNE-RIGSBY and EASTERLY, Associate Judges; and REID,
Senior Judge.
JUDGMENT
This case came to be heard on the administrative record, a certified copy of
the agency hearing transcript and the briefs filed, and was argued by counsel. On
consideration whereof, and as set forth in the opinion filed this date, it is now hereby
ORDERED and ADJUDGED that the order of the Contract Appeals Board
(“CAB”) is reversed with respect to the intervenors’ delay claims related to the storm
drainage pipe relocation, the fire pump installation, and the truck scales wiring. The case
is remanded to the CAB to adjust the award accordingly. The CAB’s decision is
otherwise affirmed regarding the claims related to the roof deck modification, subsurface
concrete obstruction, fire-suppression system permit, and concrete mix.
For the Court:
Dated: August 18, 2016.
Opinion by Associate Judge Anna Blackburne-Rigsby.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
DISTRICT OF COLUMBIA COURT OF APPEALS
8/18/16
No. 14-AA-396
DISTRICT OF COLUMBIA, PETITIONER,
v.
DISTRICT OF COLUMBIA
CONTRACT APPEALS BOARD, RESPONDENT,
and
PRINCE CONSTRUCTION CO., INC. AND W.M. SCHLOSSER CONSTRUCTION CO., INC.,
INTERVENORS.
Petition for Review of a Decision of the
District of Columbia Contract Appeals Board
(CAB Nos. D-1369, D-1419 & D-1420)
(Argued October 6, 2015 Decided August 18, 2016)
James C. McKay, Jr., Senior Assistant Attorney General for the District of
Columbia, with whom Eugene A. Adams, Interim Attorney General at the time the
brief was filed, Todd S. Kim, Solicitor General, and Loren L. AliKhan, Deputy
Solicitor General, were on the brief, for petitioner.
Richard K. Rothschild, General Counsel for District of Columbia Contract
Appeals Board, was on the statement in lieu of brief for respondent.
Douglas L. Patin, with whom Michael J. Cohen was on the brief, for
intervenors.
2
Before BLACKBURNE-RIGSBY and EASTERLY, Associate Judges, and REID,
Senior Judge.
BLACKBURNE-RIGSBY, Associate Judge: In this case, a contractor seeks
compensation for construction work that it completed on the Fort Totten Solid
Waste Transfer Facility in Northeast Washington, D.C. for the District of
Columbia, which went beyond the initial parameters of the construction contract.
The primary question presented in this appeal is whether the contractor’s claims
for reimbursement are barred because the contractor failed to adhere to certain
procedural requirements of the contract.
The District of Columbia (“Petitioner” or “District”) hired joint venturers
Prince Construction Co., Inc. and W.M. Schlosser Construction Co., Inc.,
(“Intervenors” or “Prince/Schlosser”), to complete alterations and repairs to the
Fort Totten Solid Waste Transfer Facility. Unexpected and unbudgeted changes
during the course of the project caused the project to be delayed by nearly one
year, and increased the cost of completing the project by over one-half million
dollars. Prince/Schlosser filed claims with the District to be compensated for the
indirect costs (such as paying employees and subcontractors to work extended
hours, increased overhead, lost profits, and additional bond costs) resulting from
the delays (“delay claims”). Prince/Schlosser also filed separate claims for
3
additional uncompensated work it completed during the project. Principally, the
District argues that Prince/Schlosser’s delay claims are procedurally barred under
the terms of the parties’ contract because: 1) Prince/Schlosser did not “within
[thirty] days after receipt of a written Change Order”1 give the government written
notice that it “intend[ed] to assert a claim,” and 2) Prince/Schlosser did not submit
“cost or pricing data and [a] certification that the cost or pricing data submitted
was accurate . . . .”2 On the merits, the District alternatively argues that it is not
responsible for the direct or indirect costs associated with the claims.
The District of Columbia Contract Appeals Board (“CAB”) rejected the
District’s arguments, found in favor of Prince/Schlosser, and awarded the
contractor a total of $585,498.98, plus the interest accrued from the date of the
filed claims, pursuant to D.C. Code § 2-359.09 (2012 Repl.). On review of the
1
The District’s contracting officer is permitted to issue “change orders,”
which the parties sometime refer to as “basic change directives,” that “make any
change in the work within the general scope of the Contract” at any time pursuant
to Article 3 of the District’s 1973 Standard Contract Provisions for Use with
Specifications for District of Columbia Construction Projects (“Standard Contract
Provisions”). Change orders could also be prompted when the contractor provides
the contracting officer with what the parties call a “proposed change order” stating
the date, circumstances, and sources of the order.
2
See Section 3.C of the Standard Contract Provisions (stating the thirty-day
notice requirement); Subsection H.33.E of the Contract (stating the “cost or pricing
data” requirement).
4
record and the District’s legal arguments, we affirm in part. We hold that
Prince/Schlosser’s delay claims are not procedurally barred by the contract because
the District was on notice of the circumstances giving rise to the claims, and
therefore was not prejudiced by the late claims. We also conclude that
Prince/Schlosser’s submission of data reflecting actual expenses already incurred
instead of “cost and pricing data” does not bar its claims for reimbursement.
Regarding the merits, however, we hold that the CAB erred in awarding
Prince/Schlosser damages for three of its claims: 1) the delay claim for relocating
a storm drainage pipe, 2) the delay claim for installing a fire pump, and 3) the
“constructive change” claim seeking compensation for installing wiring to five
truck scales. Finally, we affirm the CAB’s award to Prince/Schlosser on its
remaining four claims relating to: 1) a roof deck modification, 2) subsurface
concrete obstruction, 3) obtaining a fire-suppression system permit, and 4)
purchasing a sulfate-resistant concrete mix. Thus, we reverse the CAB’s decision
on three claims, affirm the remaining four claims, and remand to the CAB to adjust
the award accordingly.
5
I. Factual Background
On September 13, 2006, the District and Prince/Schlosser entered into a
government construction contract, entitled “Contract No. POKT-2005-B-0085-CM
for Alterations and Repairs of the Fort Totten Waste Transfer Facility”
(“Contract”). “The project included the construction of a new, three-level building
addition, including foundations, a ‘tipping’ floor [a floor where trash from
incoming trucks is tipped into tractor trailers on the ramp below], walls, louvers,
roofing, truck ramps, five truck scales, compaction cranes, and a truck wash
facility.” The initial Contract price was $13,266,000, and the project was
scheduled to be completed within 275 calendar days, with a set completion date of
July 17, 2007.
During the course of construction, however, the District directed
Prince/Schlosser to complete additional, previously unbudgeted work due to
unanticipated problems and authorized price adjustments to compensate
Prince/Schlosser for the additional work, which were reflected in five change
orders. Collectively, the five change orders authorized an increase to the Contract
price of approximately $1,028,178, but only authorized a time extension to the
6
project by one day. The project did not meet the scheduled deadline and concluded
on April 4, 2008, 261 days after the planned completion date.
The five change orders only compensated Prince/Schlosser for the costs
directly associated with the unexpected problems, and they did not reimburse
Prince/Schlosser for the indirect costs incurred during the additional 261 days of
work that were not budgeted for under the contract. These indirect costs included
paying employees and subcontractors to work extended hours, increased overhead,
lost profits, and additional bond costs. In May 2008, one month after closing the
project, Prince/Schlosser submitted written notice to the District that it would be
seeking reimbursement for those additional costs. The parties negotiated in May
and November of 2008, but failed to reach an agreement.
Prince/Schlosser then submitted delay claims to the District’s contracting
officer on April 23, 2009, in an effort to obtain compensation.3 Prince/Schlosser
sought delay claims for indirect costs in the amount of $1,099,325.
Prince/Schlosser also submitted two additional claims for direct costs on June 24,
3
Prince/Schlosser submitted the claims pursuant to 27 DCMR § 3803
(2004), which permits a contractor to file claims arising from the contract with the
District’s contracting officer if the parties are “unable to resolve a dispute . . .
through informal discussions.”
7
2009: 1) $32,280.67 for the additional cost of wiring five truck scales; and 2)
$8,908.63 for the additional cost of making a concrete solution sulfate-resistant.4
The District’s contracting officer did not approve any of the claims, and
Prince/Schlosser appealed to the CAB.
During a hearing before the CAB, the District argued primarily that
Prince/Schlosser’s delay claims were barred under the contract and that, in any
event, all of the claims lacked merit. Specifically, the District asserted that the
delay claims were barred because Prince/Schlosser: 1) failed to submit written
notice of its intended claims within “[thirty] days after receipt of a written Change
Order,”5 and 2) failed to submit certified “cost or pricing data,”6 which prevented
the District from properly assessing the merits of Prince/Schlosser’s claims.
4
The parties attempted to resolve these issues for several months before
these claims were submitted but failed to reach an agreement.
5
Section 3.C of the Standard Contract Provisions states that “[i]f the
Contractor intends to assert a claim for an equitable adjustment under this Article,
he must, within [thirty] days after receipt of a written Change Order . . . submit to
the Contracting Officer a written statement setting forth the general nature and
monetary extent of such claim . . .”
6
Section H.33.E states that “the Contractor shall, before negotiating any
price adjustments pursuant to a change order or modification, submit cost or
pricing data and certification that, to the best of the Contractor’s knowledge and
belief, the cost or pricing submitted was accurate, complete, and current as of the
date of negotiation of the change order or modification.”
8
The CAB disagreed with the District, and held that Prince/Schlosser’s failure
to comply with the thirty-day notice requirement was not a violation of the
Contract because “[b]oards and courts have generally not strictly enforced such
notice requirements absent a finding that the government is prejudiced” by the
untimely notice. The CAB concluded that there was no prejudice to the District
here because “the District was well aware of the operative facts underlying each of
the” delay claims given that Prince/Schlosser “promptly notified the District” of
each event leading to the delays. The CAB also held that Prince/Schlosser was not
required to submit certified “cost or pricing data” with its delay claims because it
filed the claims after it accrued the actual costs associated with the delay, and once
Prince/Schlosser incurred “the impact costs by performing changed work, cost or
pricing data [was] no longer the basis of negotiation of the adjustment.” The CAB
determined that Prince/Schlosser complied with the Contract when it provided the
actual breakdown of its indirect costs.
Regarding the merits of the claims, the CAB reviewed the Contract, heard
testimony from representatives of both parties as well as an expert witness who
evaluated the schedule delays, and found that Prince/Schlosser should be awarded
damages. Specifically, the CAB found the District responsible for the contractor’s
indirect costs resulting from the additional work, including: 1) relocating a storm
9
drainage pipe, 2) installing a fire sprinkler pump, 3) removing a subsurface
concrete obstruction, 4) obtaining a fire-suppression system permit, and 5)
completing a roof deck modification.7 It also found the District responsible for the
costs incurred from the unanticipated tasks of wiring truck scales and using a
sulfate-resistant concrete mix. The CAB calculated the award by adding together
Prince/Schlosser’s incurred costs for which the CAB concluded the District was
responsible, which amounted to $585,498.98.8 This petition for review followed.
II. Discussion
A. Standard of Review
Contractual interpretation is a legal question, which this court reviews de
novo. Tillery v. District of Columbia Contract Appeals Bd., 912 A.2d 1169, 1176
(D.C. 2006). We nonetheless “accord great weight to the [CAB’s] construction of
a government contract, so long as that construction is not unreasonable.” Id. at
7
The CAB considered but denied Prince/Schlosser’s delay claim for costs
associated with the delay in obtaining a Master Building Permit because the
District was not responsible for that delay. Prince/Schlosser does not challenge
this conclusion.
8
The District does not dispute the CAB’s calculations.
10
1175 (quoting Unfoldment, Inc. v. District of Columbia Contract Appeals Bd., 909
A.2d 204, 208–09 (D.C. 2006)) (alteration in original). In reviewing the CAB’s
decision, we “look not only to the case law on which the [CAB] relied but to other
decisions of the United States Court of Appeals for the Federal Circuit, the former
United States Court of Claims and its successors, and the various federal boards of
contract appeals.” District of Columbia v. Org. for Envtl. Growth, Inc.
(“OFERGO I”), 700 A.2d 185, 198 (D.C. 1997); see also Abadie v. District of
Columbia Contract Appeals Bd., 916 A.2d 913, 919 (D.C. 2007).9
9
Preliminarily, Prince/Schlosser contends that the District waived the
following three arguments before this court because it did not bring them before
the CAB: 1) the District was prejudiced by Prince/Schlosser’s late notice of the
delay claims, 2) there is no legal basis for Prince/Schlosser’s recovery for the roof
deck modification delay claim, and 3) there was a patent ambiguity in the contract
regarding the truck scales claim. This court will generally not review issues raised
for the first time on appeal, yet the principle that an argument is waived if not
raised below is “one of discretion rather than jurisdiction.” McClintic v. McClintic,
39 A.3d 1274, 1277 n.1 (D.C. 2012) (quoting District of Columbia v. Helen
Dwight Reid Educ. Found., 766 A.2d 28, 33 n.3 (D.C. 2001)). “Moreover, even if
a claim was not ‘pressed’ below, that claim is properly reviewed on appeal if it has
been ‘passed upon.’” Id. Here, the CAB “passed upon” each of the three issues in
its decision as it mentioned or analyzed each one. We see no prejudice in
reviewing all of the District’s arguments and thus find that none of the District’s
arguments are waived.
11
B. Prince/Schlosser’s Delay Claims are not Barred
The District relies on two contract provisions to challenge Prince/Schlosser’s
delay claims for reimbursement and urges this court to adopt a strict adherence
approach to interpreting the Contract. First, the District argues that the delay
claims are barred because Prince/Schlosser violated a thirty-day notice requirement
found in Article 3 of the “Standard Contract Provisions,” which governed the
procedures for altering the Contract terms, as modified by Subsection H.33 of the
Contract. Second, the District argues that the delay claims are barred because
Prince/Schlosser failed to include certified “cost or pricing data” when it submitted
the claims pursuant to Subsection H.33.E of the Contract. We address each
argument in turn.
1. Thirty-Day Notice Requirement
The District argues that the Contract bars Prince/Schlosser’s delay claims
because the claims are untimely and their untimeliness prejudiced the District.
Section C of Article 3 of the Standard Contract Provisions requires the contractor
to submit to the contracting officer, in writing, a statement of “the general nature
and monetary extent” of any claim it intends to file within thirty days of receiving
12
a change order. The District first asserts that this thirty-day notice requirement
should be strictly construed to bar all of Prince/Schlosser’s delay claims, regardless
of prejudice, because Prince/Schlosser submitted the claims over a year and half
after receiving the respective change orders. Alternatively, the District claims that,
while it is not required to show prejudice, it was in fact prejudiced because the lack
of notice of the upcoming claims prevented the District from mitigating damages
to avoid the delays. We disagree and affirm the CAB’s ruling on this issue,
concluding that the thirty-day notice requirement should be liberally construed to
only bar Prince/Schlosser’s claims if failure to give timely notice prejudiced the
District, which was not the case here.
Recent case law in our jurisdiction interpreting notice requirements within
government construction contracts is scarce. However, contract appeal boards and
federal courts have adopted a flexible stance on notice requirements for delay
claims: that they should be liberally construed and only strictly enforced where the
government is unaware of the circumstances surrounding the delay claims, thereby
prejudicing the government.10 See e.g., K-Con Bldg. Sys., Inc. v. United States,
10
We look to other boards of contract appeals and certain federal courts,
“which have particular expertise in this area,” that have interpreted analogous
notice requirements. OFERGO I, supra, 700 A.2d at 198 (quoting Dano Resource
Recovery, Inc. v. District of Columbia, 620 A.2d 1346, 1351 (D.C. 1993)); see also
(continued . . .)
13
115 Fed. Cl. 558, 573 (2014) (“The notice requirement contained in the contract’s
changes and suspension of work clauses . . . is flexible; and [the government] has
not demonstrated that it was prejudiced by the timing of [the contractor’s] notice.”
(citing Hoel-Steffen Constr. Co. v. United States, 456 F.2d 760, 768 (Ct. Cl.
1972))); Nova Group/Tutor-Saliba v. United States, 125 Fed. Cl. 469, 474 (2016)
(“This case falls squarely within the exception to strict enforcement of the [twenty-
day] notice requirement where the Contracting Officer is on notice of the
circumstances giving rise to the claim”); Monster Gov’t Solutions, Inc. v. United
States Dept. of Homeland Security, DOTCAB No. 4532, 06-2 BCA ¶ 33,312 (June
7, 2006) (“When a contracting officer has actual knowledge of the facts, lack of
written notice does not bar a claim absent evidence of prejudice to the
[g]overnment.”).
(. . . continued)
Abadie, supra, 916 A.2d at 919. Historical support for the liberal approach to
notice requirements adopted by other boards of contract appeals and federal courts
can be found in United States v. Cunningham, 125 F.2d 28, 30 (D.C. Cir. 1941),
which involved a government construction contract provision that required the
contractor to give the government written notice of any delays to the project
“within ten days from the beginning of any such delay.” Id. at 29. The underlying
purpose of the requirement was “to inform the government of the cause of delay
and afford an opportunity to remove [the cause of delay].” Id. at 30. Cunningham
held that a contractor’s claim is barred “unless the contractor had at the time
notified the government in writing of the facts and circumstances” surrounding the
delay. Id. (internal quotations omitted).
14
In this case, the CAB recognized that Prince/Schlosser submitted monthly
schedule adjustments throughout the project and “[m]onth-by-month, the schedules
show the expected completion date slipping further into the future as delaying
events occurred.” The CAB also noted that “[t]hroughout the period of
performance, the District did not reject any of the monthly schedule updates.” In
fact, after reviewing “the Contract plans and specifications, meeting minutes, daily
reports, [requests for information], payment applications, email and other
correspondence,” the expert witness at the CAB hearing testified that
Prince/Schlosser’s “periodic schedule updates were consistent with the contract
requirements and conformed to industry practice,” and that the project would have
been completed on time “but for the delays caused by the District.” Contrary to
the District’s arguments, Prince/Schlosser provided timely written notice to the
District “of the circumstances giving rise to the claim[s].” Nova Group/Tutor-
Saliba, supra, 125 Fed. Cl. at 474. The District’s assertion that it would have hired
another contractor to complete the work had it known of the upcoming delay
claims, thereby taking the “opportunity to remove [the cause of the delay],” does
not negate the fact that the District was aware of the facts underlying the delay
claims, and continued to press forward with the contract. See Cunningham, supra
note 10, 125 F.2d at 30 (explaining that notice requirements allow the government
to eliminate the cause of the delay). There is no prejudice to the District for
15
Prince/Schlosser’s failure to meet the technical requirement to submit its claims
within the thirty-day window.
The District contends that we took the opposite approach in OFEGRO I,
supra, 700 A.2d at 204, where we strictly interpreted the Material Management
Manual, which contains a similar thirty-day notice requirement. We disagree. In
OFEGRO I, we questioned whether the violation of a thirty-day notice requirement
would bar a claim, but we did not explicitly hold so. Id. at 205. Instead, we
remanded the case to the CAB to decide that issue, id., and, on remand, the CAB,
citing several CAB decisions and federal court opinions, stated that the thirty-day
requirement should be liberally construed and held that a contractor’s claim should
only be barred where the government is prejudiced.11 In re Org. for Envtl. Growth,
Inc., DCCAB No. D-850, 2001 WL 433422 (Apr. 13, 2001). We now expressly
adopt the rule well-established by federal courts and contract appeal boards that the
thirty-day notice requirement should be liberally construed. By adopting this rule,
we adhere to the sound policy underlying its purpose — that “[i]f the contracting
11
That decision was appealed for a second time, where we stated that the
CAB’s conclusion appeared to conflict with another ruling in its order, and we
remanded the case again for the CAB to address a separate issue. Abadie v. Org.
for Envtl. Growth, Inc. (OFEGRO II), 806 A.2d 1225, 1230 (D.C. 2002). In
OFEGRO II, we gave no further opinion or conclusion on how the thirty-day
notice requirement should be interpreted or applied.
16
officials have knowledge of the facts or problems that form the basis of a claim and
are able to perform necessary fact-finding and decision[-]making,” the government
is not prejudiced by a late claim and should not be permitted to avoid
compensating a contractor for services provided simply due to the contractor filing
a late claim. Calfon Const. Inc. v. United States, 18 Cl. Ct. 426, 438–39 (1989).
2. Certified Cost or Pricing Data
The District also argues that the delay claims are barred because
Prince/Schlosser failed to submit certified “cost or pricing data” with its request for
compensation, which prevented the District from properly assessing the merits of
the contractor’s claims. The District relies on Subsection H.33.E of the Contract
which provides that:
the Contractor shall, before negotiating any price
adjustments pursuant to a change order or modification,
submit cost or pricing data and [a] certification that, to
the best of the Contractor’s knowledge and belief, the
cost or pricing data submitted was accurate, complete,
and current as of the date of negotiation of the change
order or modification.
The Contract explains that cost and pricing data:
includes all facts as of the time of price agreement that
prudent buyers and sellers would reasonably expect to
17
affect price negotiations significantly. Cost or pricing
data are factual, not judgmental, and are therefore
verifiable. While they do not indicate the accuracy of the
prospective Contractor’s judgment about estimated future
costs or projections, cost or pricing data do include the
data forming the basis for that judgment.12 (emphasis
added)
The District’s reliance on Subsection H.33.E.1 of the Contract is misplaced.
Prince/Schlosser did not bring these claims when costs were prospective but
instead brought them post-performance when the actual costs incurred were readily
available. Rather, Subsection H.33.C.2 of the Contract is the applicable provision.
It states that “if agreement on costs cannot be reached prior to execution of
changed work, payment will be made for the actual costs[,] provided records of
such costs are made available and that such costs are reasonable.” (emphasis
added). Prince/Schlosser submitted a record of the actual costs it incurred, which
permitted the District to assess the merits of the claims.13 See Civil Constr., LLC,
12
Separate from change orders and modifications, Article 7 of the Standard
Contract Provisions explains that the contractor can bring “any dispute concerning
a question of fact arising under the Contract which is not disposed of by the
agreement,” to be decided by the contracting officer in a written decision. The
contractor can then appeal the contracting officer’s written decision on the claim to
the CAB. Notably, Article 7 does not require that certified “cost or pricing data”
be submitted to the contracting officer with the filed contract claims.
13
The District’s reliance on the District of Columbia Procurement Rules, 27
DCMR § 1624 (1988), which the District claims requires the submission of
certified “cost or pricing data” with contract claims, is also misplaced. Instead, the
(continued . . .)
18
CAB Nos. D-1294, D-1413 & D-1417, 2013 WL 3573982, at *16 (Mar. 14, 2013)
(stating that actual costs incurred should be submitted when available). We
conclude that Prince/Schlosser’s delay claims are not procedurally barred, and now
turn to the merits of all of Prince/Schlosser’s claims for compensation.
C. The District Is Not Responsible for the Costs Underlying Three of
Prince/Schlosser’s Claims
The District asserts that the language found in the Contract and other
documents (including contract modifications signed by the parties, drawings of the
proposed work, and specifications of the work in the Contract) indicate that the
District is not responsible for the costs underlying all of Prince/Schlosser’s
claims.14 We conclude that the District is partially correct; it must compensate
(. . . continued)
applicable section of the District of Columbia Procurement Rules is 27 DCMR
§ 3803.2 (2004), which addresses claims by a contractor and requires that a
contractor submit “any data or other information in support of the claim,” and does
not require that the data be certified “cost or pricing data.” (emphasis added).
Prince/Schlosser met this requirement by submitting its actual cost breakdown, and
thus the claims are not barred.
14
In addition to challenging the merits of the delay claims, the District
argues that the CAB incorrectly placed the burden of proof on the District to prove
that there were concurrent causes of the delays, which is inconsistent with federal
contract law that requires the contractor to prove that the delays caused by the
District were “not concurrent with a delay caused by the contractor or some other
(continued . . .)
19
Prince/Schlosser for the costs associated with its claims except for the three claims
(. . . continued)
reason.” P.J. Dick Inc. v. Principi, 324 F.3d 1364, 1370 (Fed. Cir. 2003). In the
District of Columbia, however, the CAB has established that the “District bears the
burden of proving concurrency” as an “affirmative defense to liability for delay
damages.” MCI Constructors, Inc., DCCAB No. D-924, 1996 WL 331212 (June
4, 1996). The CAB acknowledged in footnote 53 of the order that this affirmative
defense is different from the burden generally placed on the contractor in federal
contract law. The CAB supported this distinction by citing Williams Enterprises v.
Strait Mfg. & Welding Inc., 728 F. Supp. 12, 16, 23 (D.D.C. 1990), aff’d sub nom.
Williams Enters., Inc. v. Sherman R. Smoot Co., 938 F.2d 230 (D.C. Cir. 1991),
where the United States District Court for the District of Columbia stated that
defendants, such as the District in this case, “have the burden of proof of claim in
the District [of Columbia]” for affirmative defenses “tending to exculpate
defendants from liability.” We will not disturb the legal standard for the burden of
proof of concurrent delays adopted by the CAB in this jurisdiction. See OFEGRO
I, supra, 700 A.2d at 198 (“On questions of law, although the Board’s decision is
not final or conclusive, ‘we give careful consideration to [its] interpretation
because legal interpretations by tribunals having expertise are helpful even if not
compelling.’”).
The District also points to the language in Section H.33.C of the Contract
governing changes in the time period of performance, which states that
Prince/Schlosser is required to “describe in detail” how a change in the time period
of performance “affects the . . . concurrency with other delays,” and points to
Section H.33.D, which states that the project would only be extended by the
number of days “which is not concurrent with another delay for which a time
extension” has been requested. The District argues that this language places the
burden on Prince/Schlosser to disprove concurrency and requests that we remand
for the CAB to apply that burden on Prince/Schlosser. However, remand on this
issue is not necessary because the record reflects that Prince/Schlosser did indeed
proffer an expert witness who testified that “there was no concurrent delay of
[Prince/Schlosser’s] making,” and the CAB accepted this conclusion.
20
discussed in this section: 1) the delay claim for the storm drainage pipe relocation,
2) the delay claim for the fire pump installation, and 3) the constructive change
claim for wiring truck scales. We reverse the CAB’s holdings for these claims
because the CAB misinterpreted the Contract and incorrectly applied the law.
1. Delay Claim for Relocating Storm Drainage Pipe
While laying concrete during the performance of the Contract,
Prince/Schlosser discovered a storm drainage pipe that interfered with its work.
Prince/Schlosser was not previously aware of the pipe because the District
incorrectly indicated the pipe’s location in the project drawings that it gave to
Prince/Schlosser. Prince/Schlosser notified the District of the problem by
submitting Proposed Change Order No. 20. In response, the District’s contracting
officer issued Basic Change Directive No. 3, directing Prince/Schlosser to relocate
the pipe, and Basic Change Directive No. 5, directing Prince/Schlosser to fill and
replace the storm drains. This additional work of relocating the pipe caused
delays, and Prince/Schlosser incurred additional costs as a result.
21
The contracting officer also issued Change Order No. 3, which compensated
Prince/Schlosser for the direct costs of the additional work but contained language
releasing the District
from any and all actual or potential claims and demands
for delays and disruptions, additional work which the
contractor or any person claiming by, through, or under
the contractor, may now have, or may in the future, have
against the District of Columbia government, for . . .
any manner connected with the subject Change Order or
the prosecution of the work hereunder. (emphasis added)
Change Order No. 3 referenced Basic Change Directive Nos. 3 and 5 and
specifically listed the task of “[d]emolishing the existing storm sewer pipe at
column lane #1 and filling it with concrete,” among other tasks. The District
claims that the language in Change Order No. 3 releases the District from liability
for any “claims and demands for delays” resulting from the storm drainage pipe
relocation because that work was referenced in the change order and is therefore
“connected with” Change Order No. 3.
The CAB held that the release language did not apply to the storm drainage
pipe work because Change Order No. 3 did not reference any of Prince/Schlosser’s
Proposed Change Orders including Proposed Change Order No. 20, which
specifically discussed the storm drainage pipe work. Yet, Change Order No. 3
referenced the contracting officer’s Basic Change Directive No. 3, which directed
22
Prince/Schlosser to relocate the pipe, and Basic Change Directive No. 5, which
directed Prince/Schlosser to fill and replace the storm drains. Change Order No. 3
also listed the task of demolishing the storm drainage pipe. Because Change Order
No. 3 expressly referenced the storm drainage pipe work, the District is released
from liability for any delay claims seeking additional compensation for relocating
the storm drainage pipe. Patterson v. District of Columbia, 795 A.2d 681, 683
(D.C. 2002) (“[T]he written language of a contract governs the parties’ rights
unless it is not susceptible of clear meaning.”).
2. Delay Claim for Fire Pump Installation
Under the Contract, Prince/Schlosser had the responsibility of designing and
installing a fire-suppression system for the project, but the Contract’s drawings and
specifications did not indicate whether a fire pump would be necessary for the fire-
suppression system. Before awarding the Contract, Prince/Schlosser asked the
District for clarification regarding whether a fire pump was a necessary element of
the fire suppression system. The District responded that a fire pump was not
necessary as long as the system’s performance requirements could “be met with
available water supply.” During the performance of the Contract, the parties
discovered that a fire pump was necessary to meet the performance requirements,
23
and the contracting officer ordered Prince/Schlosser to furnish and install a fire
pump. The installation led to delays in the project, which caused Prince/Schlosser
to incur additional costs. The District issued Change Order No. 5, authorizing
additional compensation of $108,224 for this work, but it did not compensate
Prince/Schlosser for the indirect costs of the delay such as increased overhead and
lost profits.
The CAB held that Prince/Schlosser was entitled to compensation for the
delay costs resulting from the installation of the fire pump because the fire pump
was not included in the original Contract. The failure to include the fire pump in
the original Contract, the CAB held, was a breach of the implied warranty that the
plans and specifications would produce an acceptable result. See White v. Edsall
Constr. Co., 296 F.3d 1081, 1084 (Fed. Cir. 2002) (awarding a contractor
additional costs resulting from a subtle flaw in the design drawings). We reverse
the CAB’s decision on this claim because it misapplied the law.
Where the government provides drawings or specifications that a contractor
must adhere to, the document creates an implied warranty that the specifications
are accurate and, if followed, will yield satisfactory results. Id. at 1084–85. But,
“[t]his implied warranty attaches only to design specifications detailing the actual
24
method of performance” and “does not accompany performance specifications that
merely set forth an objective without specifying the method of obtaining the
objective.” Id. at 1084. The Contract provisions discussing the fire suppression
system were “performance specifications,” which gave Prince/Schlosser discretion
to choose the method of completing the system. The Contract makes clear that the
fire-suppression system was a performance specification because it tasked
Prince/Schlosser with “designing, fabricating, and installing” the fire-suppression
system but did not elaborate on how this task should be completed.
Prince/Schlosser acknowledged that the work was a performance specification in
communications with the District by distinguishing the task from other work that
had to be “performed per plans and specs.” As a result, the fire-suppression
system work was a performance specification, and the implied warranty does not
apply.15 See White v. Edsall Contr. Co., supra, 296 F.3d at 1084; see also District
of Columbia v. Savoy Constr. Co., 515 A.2d 698, 702 (D.C. 1986) (“This rule rests
on the presumed expertise of the government where it sees fit to prescribe detailed
specifications.”). We reverse the CAB’s holding requiring the District to
15
The fact that the District compensated Prince/Schlosser for the fire pump
is not dispositive because, as we stated in OFEGRO I, a contractor “may not
properly use a change order as an excuse to shift his own risks or losses to the
government.” OFEGRO I, supra, 700 A.2d at 203. Thus, there is no basis to hold
the District liable for the delays related to this performance specification.
25
compensate Prince/Schlosser for the indirect costs for the delay resulting from
installing the pump for the fire suppression system.16
3. Constructive Change Claim for Truck Scales Wiring
Pursuant to the contract, Prince/Schlosser was required to “[f]urnish and
install” five truck scales along with their “associated electronic controls.” During
pre-contract negotiations, Prince/Schlosser informed the District that “Project
Drawing E6” did not provide instructions for wiring three of the five truck scales
that Prince/Schlosser would be responsible for installing. The District responded
in Addendum No. 2, which was later included in the Contract, that “ductbanks will
be used by others to automize [sic] the operations of the two new scales.”
(emphasis added). A District representative testified that this answer meant that
“other individuals ‘outside the contract’ would be responsible for the wiring, rather
16
Prince/Schlosser also argues that, even though the work was a
performance specification, the District still had the responsibility to ensure that the
information provided was accurate and that the District’s omission of the fire pump
constituted a defect. Prince/Schlosser muddies the waters with this argument.
Given that the fire suppression system was a performance specification,
Prince/Schlosser carried the responsibility of the method of execution for this part
of the project. Moreover, Section 13921 of the Contract Specifications specifically
mentions the maintenance of fire pumps in the performance requirements.
Therefore, some information about a fire pump was included in the original
Contract.
26
than Prince/Schlosser or its subcontractors.” Yet, during the performance of the
contract, District representatives required Prince/Schlosser to complete the wiring
for all five truck scales.
The CAB held that, although the Contract originally required
Prince/Schlosser to complete the wiring, and although Prince/Schlosser’s pre-
contract inquiry only asked about “the three outbound scales, . . . the District’s
response reasonably led [Prince/Schlosser] to the conclusion that other entities . . .
would be providing the power and signal wiring for the scales.” As a result, the
CAB held, Prince/Schlosser did not anticipate wiring any of the truck scales and
did not account for the cost of that work in its bid for the Contract. Accordingly,
the CAB concluded that when the District required Prince/Schlosser to complete
the wiring, it was required to provide additional compensation for that work.
However, the District’s answer in Addendum No. 2 states that other entities
would do the wiring for “the two new scales.” (emphasis added). Indeed, a
District representative confirmed during the hearing that the answer referred to
“the two inbound scales as opposed to the three outbound scales.” There is no
other evidence in the record supporting the CAB’s application of the language to
all five truck scales. Given that Prince/Schlosser’s inquiry referred to the three
27
outbound scales, the District’s response about the “two new scales” appears non-
responsive to Prince/Schlosser’s question. The District argues on appeal that there
is no support for the CAB’s conclusion that a reasonable reading of Addendum No.
2 released Prince/Schlosser from the task of wiring all five truck scales and that the
non-responsive answer in Addendum No. 2 created a patent ambiguity about which
Prince/Schlosser had the duty to inquire. We agree.
The doctrine of patent ambiguity “is an exception to the general rule of
contra proferentem, which courts use to construe ambiguities against the drafter.”
Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007)
(quoting E.L. Hamm & Assocs. v. England, 379 F.3d 1334, 1342 (Fed. Cir. 2004).
The doctrine states that “where a government solicitation contains a patent
ambiguity, the government contractor has ‘a duty to seek clarification from the
government.’” Id. Should the contractor fail to inquire about the patent ambiguity
during the bidding processes, it is precluded from recovering any costs associated
with the ambiguity. See E.L. Hamm & Assocs., supra, 379 F.3d at 1342. An
ambiguity is deemed to be patent if “it is so glaring as to raise a duty to inquire”
regardless of the contractor’s interpretation. Newson v. United States, 676 F.2d
647, 650 (Ct. Cl. 1982).
28
The District’s answer in Addendum No. 2 constitutes a patent ambiguity.
The Contract initially required Prince/Schlosser to install five truck scales. The
Contract dictates that Prince/Schlosser is to “[f]urnish and install three-70 foot,
multi-platform steel deck and two-60 foot, mono platform concrete platform motor
truck scales and associated electronic controls.” Thus, a clear distinction was
made between a set of two scales and a set of three scales that needed wiring.
Prince/Schlosser inquired about the wiring for three of the scales, and in its
response, the District informed Prince/Schlosser that another entity would be
wiring two of the scales. While the record shows that the District intended to
relieve Prince/Schlosser of the task of wiring the set of two scales, this response
“glaringly raises a duty [for Prince/Schlosser] to inquire” about whether the
District’s response was addressing the three outbound scales referenced in
Prince/Schlosser’s question to the District. Prince/Schlosser failed to inquire about
this ambiguity, and therefore cannot recover the cost of wiring those three scales.
Thus, we conclude that Addendum No. 2 only relieved Prince/Schlosser of its
responsibility of wiring two of the truck scales, but the District ultimately required
Prince/Schlosser to wire those two truck scales, and the District must therefore
compensate Prince/Schlosser for the cost of wiring only those two scales. We
reverse the CAB’s award for this claim and remand for the CAB to adjust the
award accordingly.
29
D. The District Is Responsible for the Costs Underlying the Remaining
Claims
We affirm the CAB’s holding regarding the remaining delay claims and
summarily address the arguments raised in connection with these remaining
claims.
1. Delay Claim for Roof Modification
Prince/Schlosser was tasked with installing a roof deck addition for the
project. Prior to installing the roof deck addition, the contractor took the required
steps to verify that the existing conditions of the roof matched the dimensions in
the District’s drawings. Upon inspection, Prince/Schlosser discovered a five-inch
difference between the height of the existing structure and the height of the roof in
the drawings. Prince/Schlosser performed additional work to correct this
discrepancy, which caused delays and additional delay costs.17 The CAB held that
the District breached its implied warranty that these drawings, or design
specifications, were sufficient and must compensate Prince/Schlosser for the
17
The work ultimately delayed the project by nineteen days and also
delayed the installation of the sprinkler system, which was to be connected to the
roof deck.
30
additional work and cost of delay. We agree.18 Savoy Constr. Co., supra, 515
A.2d at 702 (stating that government-issued design specifications create an implied
warranty that the specifications are accurate and, if followed, will yield satisfactory
results).
2. Delay Claim for Subsurface Concrete Obstruction
During the project, Prince/Schlosser encountered subsurface concrete that
obstructed its work. The contracting officer issued Change Order No. 4, directing
Prince/Schlosser to remove the concrete and compensating it for the additional
work but not extending the timeline for the project. The District relies on Section
H.33.C of the Contract and argues that, by agreeing to the upward adjustment in
the contract price but no adjustment in the period of performance in Change Order
No. 4, Prince/Schlosser accepted this price adjustment as full compensation for the
work, including any costs of delay. This provision, however, does not bar
subsequent delay claims based on the work mentioned in the change order.
18
The District contends that the verification clause in the Contract requiring
Prince/Schlosser to verify the work conditions releases the District from any
liability for the discrepancy. Such verification clauses in a contract, however, do
not override the implied warranty created by design specifications. See White,
surpa, 296 F.3d at 1086 (holding that the verification clause “did not shift the risk
of design flaws to” the contractor). Thus, the implied warranty in the District’s
design specifications still applied.
31
Instead, Article 7 of the Standard Contract Provisions allows the contractor to
bring “any dispute concerning a question of fact arising under the Contract, which
is not disposed of by the agreement.” See supra note 12. Thus, we affirm the
CAB’s decision that the District must compensate Prince/Schlosser for those
indirect delay costs, which resulted from the concrete obstruction.
3. Delay Claim for Obtaining Fire-Suppression System Permit
Under the Contract, Prince/Schlosser had the responsibility of obtaining a
fire alarm system permit for the project. Prince/Schlosser requested that the
District assist in obtaining the permit by providing plans and project drawings to
submit with the application. However, the District’s engineers repeatedly
mislabeled certain rooms in the drawings, which caused delays in obtaining the
approval for the permit. Further, Prince/Schlosser asked one of the District’s
engineers to meet with the Fire Marshal to assist in the approval process; however,
the engineer did not meet with the Fire Marshal until one month before the
application was finally approved.
“[I]n every contract there is an implied covenant that neither party shall do
anything which will have the effect of destroying or injuring the right of the other
32
party to receive the fruits of the contract, which means that in every contract there
exists an implied covenant of good faith and fair dealing.” Abdelrhman v.
Ackerman, 76 A.3d 883, 891 (D.C. 2013) (alteration in original). The CAB held
that the record reflects reluctance on the District’s part to cooperate with
Prince/Schlosser in obtaining the permit for the alarm system because the
engineers delayed in responding to Prince/Schlosser’s request for help and delayed
in meeting with the Fire Marshal, which caused the Fire Marshal to approve the
application long after the scheduled Contract completion date. The District
provides no explanation for its behavior and instead adheres to its argument that
Prince/Schlosser had the ultimate responsibility to obtain the permit. The fact that
Prince/Schlosser was tasked with obtaining the permit does not overcome the
evidence that the District did not fully comply with its duty to cooperate. We
affirm the CAB’s conclusion that the District did not fully cooperate with
Prince/Schlosser in getting the permit, and therefore, is responsible for the costs
associated with the delay in obtaining the alarm system permit, and the District
must compensate Prince/Schlosser for those delay costs.
33
4. Constructive Change Claim for Concrete Mix
Just before pouring concrete for the project, Prince/Schlosser notified the
District that the project required a different kind of concrete mix. In response, the
District directed Prince/Schlosser to use a more expensive sulfate-resistant mix
“regardless of what is specified in structural plans or project specifications.” The
District, however, refused to compensate Prince/Schlosser for the additional cost of
the new more expensive concrete mix, which amounted to $8,908.63 in additional
costs. In awarding Prince/Schlosser the cost, the CAB relied on an unchallenged
finding of fact to conclude that the subcontractor “could have met the strength
specifications in the Contract . . . by supplying less expensive concrete of a non-
sulfate-resistant mix.” Instead, the District directed Prince/Schlosser to use a more
expensive mix “regardless of what is specified in structural plans or project
specifications.” Thus, the District acknowledged that it issued a directive that was
outside of the specifications of the Contract. Had Prince/Schlosser known it would
have to purchase and use more expensive concrete mix, it would have accounted
for the cost in its bid for the Contract. Thus, we affirm the CAB’s conclusion that
the District is responsible for the cost of the more expensive concrete.
34
III. Conclusion
We hold that the two contractual provisions requiring thirty-day notice and
certified “cost or pricing data” do not bar Prince/Schlosser’s delay claims. We
conclude, however, that the CAB erred in its interpretation of the contract and
application of law for the three claims related to the storm drainage pipe relocation,
the fire pump installation, and the truck scales wiring. We therefore reverse the
CAB’s order with respect to those three claims and remand to the CAB to adjust
the award accordingly. We otherwise affirm the CAB’s decision on the remaining
claims related to the roof deck modification, subsurface concrete obstruction, fire-
suppression system permit, and concrete mix.
So ordered.