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To:
From:
Date:
Re:
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Secretary Jeffrey B. Mullan, MassDOT
Stephen H. Clark, Administrative Law J g
April 8, 2010
Report and Recommendation
I am pleased to submit for your consideration and approval the attached report
and recommendation.
N.E.L., Inc. (NEL) seeks $16,814.92 for work that was apparently
omitted from the pay items and specifications of contract #3941 for
emergency repair of bridges in District 4.
The Contract provided that NEL take no advantage of an error in the
plans or specifications and obliged it to "immediately notify the
engineer" of omissions.
NEL knew of the apparent omissions before it bid but did not notify
the engineer or take action that would have allowed the engineer to
correct errors and publish clarifications to all prospective bidders.
A contractor must inquire if he finds an obvious error. If a contractor
fails to at least ask for clarification before bid he may not rely on the
principle that errors, omissions and ambiguities may be held against
the government drafter. Because NEL did not ask the Engineer for
corrections but acted to take advantage of the omissions it believed
existed it is barred from recovery. John F. Miller Co., Inc v. George
Fichera Construction Corp., 7 Mass. App. Ct. 494, 499 (1979).
I recommend that NEL's appeal be denied.
www.mass.gov/massdot
T:NP,\IIKPlALf\ •
8om)N,MA02116-3969 • PHON.:: 617.973.7000 • F/\x:617.973.8031 • TOO:617.973.7306
INTRODUCTION
N.E.L., Inc. (NEL) appeals from two decisions of the claims committee (Committee)
of MassHighway, 1 which denied six (6) claims arising under contract #39741 (Contract). The
Contract was awarded to NEL on May 12, 2005 for emergency repair and maintenance of all
bridges in District 4.
The Committee first denied NEL’s claim for extra work of $2,231.25 for these tasks:
(1) jacking and shoring of existing stringers; (2) highway guard removal and reset; (3) fence
removal and reset; (4) temporary precast concrete median barrier; (5) cleaning of pier
caps/abutments of debris left behind by other contractors. The Committee then denied extra
work of $14,583.67 to (6) remove and reset guardrail and “Jersey” barriers. 2 The unpaid
work is referred to as “Claimed Extra Work” or “Omitted Tasks.”
NEL argues that the Claimed Extra Work was not specified in the Contract. Though
the Omitted Tasks were necessary to perform the Contract, it argues the Contract
specifications were defective because no plain language or separate bid pay item identified the
Omitted Tasks, as had been done in previous District 4 emergency-maintenance bridge
contracts. NEL points out that the Omitted Tasks were entirely absent from Special Provision
905.2, “Cement Concrete Masonry.”
MassHighway responds that the Omitted Tasks were included within Special
Provision 905.2 because they were “incidental” to cement concrete masonry work on the
theory that it is not possible to excavate or replace concrete without them. MassHighway also
contends that NEL can not claim extra work in any event because it failed before it bid to
1
On November 1, 2009, the Massachusetts Highway Department was reorganized as the Highway Division of
the Massachusetts Department of Transportation (MassHighway). See G.L. c. 6C, s.40.
2
Claims 1 through 5 were decided in the Committee’s first ruling on March 6, 2006; claim 6 in the
Committee’s second ruling on December 17, 2006. The appeals are consolidated here.
1
notify the Engineer of the obvious apparent omissions in the specifications, which Subsection
5.04 of the Standard Specifications requires.
I conclude that it is unnecessary to determine whether the specifications were
defective or whether NEL performed extra work because NEL failed to adhere to the
requirements of the Contract. Subsection 5.04 prohibited NEL from taking advantage of “any
apparent error or omission in the plans and specifications” and placed on it the affirmative
obligation to “immediately notify the Engineer” of errors or omissions it discovered so that
the Engineer could make needed corrections or interpretations.
When NEL discovered before it bid that obvious tasks needed to excavate and replace
concrete to perform bridge repair were apparently missing, it did not notify the Engineer.
NEL prevented MassHighway from correcting obvious omissions or clarifying the intent of
the Contract to all prospective bidders. Accordingly, NEL is barred from recovery. John F.
Miller Co., Inc. v. George Fichera Construction Corp., 7 Mass. App. Ct. 494, 499 (1979).
BACKGROUND AND FINDINGS
NEL submitted the winning bid of $2,052,042 for the Contract to perform scheduled
and emergency repairs on all bridges in District 4. The specific bridges in need of repair were
not identified in the bid documents; bidders were notified that locations were to be stated at
the preconstruction conference.
The Contract generally described the work to be performed as (1) removing
deteriorated concrete from stem piers, pier caps, pier columns, wing walls, back walls and
abutments; (2) replacing excavated concrete and damaged reinforcing steel with new
materials, as specified; (3) replacing existing but damaged slope paving with cement concrete
slope paving, as directed, and (4) providing related traffic control. Contract at A0081-1.
2
NEL and MassHighway disagree about what work is described (or not described) in
Special Provision 905.2, “Cement Concrete Masonry.” 3
Special Provision 905.2 provides, among other things
The work under this Item 905 consists of excavating existing areas, as
identified by work order or as directed by the Engineer, and placing 30 Mpa,
10 mm, 425 kg cement concrete masonry of the excavated areas….
The Basis of Payment for Item 905.2 provides:
All labor, excavation of existing reinforced concrete, materials including
bonding grout, tools, equipment, engineering services and incidentals
necessary to complete the work… [which] consists excavating existing areas,
and placing… concrete… also consists of the removal and disposal of all
deteriorated and spalled concrete located at the existing surfaces of the various
substructure units. (Emphasis added.)
The Method of Measurement for Item 905.2 states the work “shall be measured by the
cubic meter [of concrete], complete in place and accepted.”
NEL is an experienced public contractor that has successfully bid and performed many
MassHighway district-wide emergency bridge repair and maintenance contracts. NEL knew
before it bid that the specifications of MassHighway maintenance contracts varied from
district to district.
Mr. Galasso, a corporate officer of NEL, prepared NEL’s bid. After reviewing the bid
documents Mr. Galasso came to believe that a description of six tasks--the Omitted Tasks-which had previously been separate bid items on District 4 emergency bridge repair contracts
was entirely absent. Mr. Galasso noted that Item 905.2 paid for both excavation and
3
The parties argue whether the Omitted Tasks were included in Item 905.2. Their dispute centers on the
meaning of the word “incidental” found in Special Provision 905.2. NEL contends the Omitted Tasks can only
be incidental to a unit price bid item when explicitly stated, since a “careful description of the work item [is]
imperative.” It says MassHighway’s arguments are “patently untenable” because neither party knew whether
the Omitted Tasks would be required at all or in what quantities. MassHighway counters that it intended that all
work required to excavate and replace concrete was paid by Item 905.2 as contractors knew that work could
never be performed otherwise. A resolution of this dispute is not necessary in order to decide this appeal.
3
replacement of cement concrete but did not expressly refer to any of the Omitted Tasks. In
previous District 4 emergency repair contracts the work of concrete excavation and
replacement was separately bid and paid, as the Omitted Tasks had been.
When preparing NEL’s bid Mr. Galasso knew that excavating and replacing cement
concrete under Special Provision 905.2 would necessitate in every instance NEL to perform
some or all of the Omitted Tasks. Mr. Galasso believed that, because six pay items apparently
had been omitted from the bid sheet and because that work was not particularly described in
905.2, NEL would be successful in a claim for extra work.
Before NEL bid Mr. Galasso telephoned three MassHighway employees he knew.
The first was to the “contracts office.” Mr. Galasso told the employee that he believed that
unit price pay items for work specified in previous bridge maintenance contracts was
apparently omitted from the Contract. The conversation consisted of “whether [pay items for
the Omitted Tasks] were purposefully left out of the contract or I considered them a mistake,”
Galasso testified. According to Mr. Galasso the employee told him MassHighway would take
Mr. Galasso’s views “under advisement.” 4
Mr. Galasso then separately called two employees in District 4. Mr. Galasso told
each that he considered the Omitted Tasks outside the Contract and thus extra work.
According to Mr. Galasso neither employee told him whether the Omitted Tasks were
included within “Cement Concrete Masonry” bid under Item 905.2.
Mr. Galasso did not make any contemporaneous record of his telephone calls. NEL
did not write to MassHighway seeking clarification or explanation. NEL did not attempt to
notify the Engineer of the apparent omissions in the specifications it thought existed. NEL
4
Mr. Galasso testified he was not “absolutely sure” of whom he spoke to in the contract section, though he
named the person he “normally” spoke to “when I have those problems.”
4
did not submit a written question to MassHighway seeking clarification about the work
included within Special Provision 905.2 or why the anticipated pay items for the Omitted
Tasks were unexpectedly absent.
NEL submitted its bid on March 29, 2005. When NEL bid it believed that
MassHighway would have to pay NEL extra for performing the Omitted Tasks.
On March 29, 2005 MassHighway opened and read contractor proposals. NEL
submitted the lowest bid and was awarded the Contract on May 12, 2005. The notice to
proceed was issued on May 26, 2005; the pre-construction conference held on June 3, 2005.
On or before June 16, 2005 NEL notified District 4 that there were “missing” bid items in the
Contract.
On July 19, 2005 NEL requested a meeting with District 4 to discuss extra work
orders “that have already become necessary.” On July 28, 2005 NEL formally requested
extra work orders for the Omitted tasks, which were denied by District 4 on August 10, 2005.
On September 15, 2005, NEL submitted a written “claim” for extra work items “as they
become required.” The District denied the claim and the matter was forwarded to the
Committee, which denied the claim. On May 3, 2006 NEL appealed the Committee’s denial
here.
On April 14, 2006, NEL notified the District that it claimed additional extra work of
$14,583.67 for removal and reset of guard rail and temporary concrete barriers. NEL
submitted that claim to this Office on that day. On August 25, 2006, this Office notified NEL
that it had no jurisdiction over the claim because the Committee had not ruled. The
Committee then heard NEL’s claim for $14,583.67, denying it on December 26, 2007. NEL
then appealed.
5
The Hearing
All NEL’s claims under the Contract were heard on September 29, 2008, as continued
to October 3, 2008. Present were:
Stephen H. Clark
Edmund Naras, Esq.
Jane Estey, Esq.
Prem Kapoor
Michael Deverix
John S. Davagian, II, Esq.
Albert Enos
Michael J. Galasso
Administrative Law Judge
Assistant Counsel, MassHighway
Assistant Counsel, MassHighway
Structure Maintenance Eng. (9/29/08 only)
Construction Engineer, District 4
Attorney for NEL
President, NEL
Vice president, NEL
The following exhibits were admitted into evidence.
Bench Exhibits
ALJ #1 Contract #39741
ALJ #2 Statement of Claim, May 3, 2006
ALJ #3 District Response to Statement of Claim, May 18, 2006
ALJ #4 Statement of Claim, February 8, 2007
ALJ #5 District Response to Statement of Claim, February 26, 2007
ALJ #6A Memo to Tanya Barros from Judge Clark, August 15, 2007
ALJ #6B Memo to Tanya Barros from Judge Clark, August 15, 2007
ALJ #7 Standard Specification Section 748 (1995 Metric)
ALJ #8 MHD Contract #41856
Exhibits of NEL
Ex. #1 Contract #39741
Ex. #2 Section 100 of Standard Specifications for Highway and Bridges (1995 Metric)
Ex. #3 Section 101 of the Metric Supplemental Specifications (12/11/02)
Ex. #4 Section 901 of Standard Specifications for Highway and Bridges (1995 Metric)
Ex. #5 Section 901 of Metric Supplemental Specifications dated December 11, 2002
Ex. #6 Bid List for Project No. 603678 (Contract #39741)
Ex. #7 Substructure List (06/03/05)
Ex. #8 NEL Statement of Claim 5/3/06
Ex. #9 NEL Statement of Claim 2/8/07
Ex. #10 MHD contract #99192
Ex. #11 MHD contract #99193
Ex. #12 MHD contract #55025
6
Exhibits of MassHighway
Ex. C-1
Ex. C-2
Ex. D-1
Ex. E-1
Ex. E-2
Section 700 of Supplemental Specifications (12/11/02) (1995 Metric) Section 900 of Supplemental Specifications (12/11/02) (1995 Metric) Construction Diary, Nat. Ass. of Women in Construction (1991 8th ed.) “Wikipedia” Definitions for construction terms (“Falsework”) as of 9/17/08 “Wikipedia” Definitions for construction terms (“Shoring”) as of 9/17/08 NEL and MassHighway submitted post-hearing briefs.
DISCUSSION
NEL’s duty to clarify errors and omissions in the specifications is expressly set forth
in Subsection 5.04, which provides
The Contractor shall take no advantage of any apparent error or omission in the
plans or specifications. In the event the Contractor discovers such an error or
omission he shall immediately notify the Engineer. The Engineer will then
make such corrections and interpretations as may be deemed necessary for
fulfilling the intent of the contract.
Generally, provisions such as Subsection 5.04 that obligate contractors before bidding
to seek clarification of specifications are designed “to enable potential contractors (as well as
the Government) to clarify the contract’s meaning before the die is cast.” Beacon Constr. Co.
v. United States, 314 F.2d 501, 504 (Ct. Cl. 1963) (Beacon). Specifically, the duty to seek
clarification during the pre-bid phase is a means of “preventive hygiene” to (1) resolve issues
of interpretation and prevent post award disputes; (2) advance “the goal of informed bidding”
by putting bidders on an equal footing and encouraging competitive bids based on equal
information; and (3) deter a bidder who knows (or should have known) of obvious errors or
ambiguities from making a low bid and then “crying ‘change’ or ‘extra’ ” when the
government disagrees with his interpretation after award. S.O.G. of Ark. v. U.S., 546 F.2d
367, 370-71 (Ct. Cl. 1976).
7
In Massachusetts it is settled law that “[w]here a contractor … is presented with an
obvious omission, inconsistency or discrepancy, he should at least ask for clarification” if he
expects to rely on his pre-bid interpretation of a specification to support a later claim. John F.
Miller Co., Inc. v. George Fichera Construction Corp., 7 Mass. App. Ct. 494, 499 (1979)
(Miller), citing Beacon at 504. 5
Where a contractor fails to properly seek clarification, he
can not rely on the principle that all errors, omissions and ambiguities in specifications written
by the government will be held against the drafter. Id. 6
Where a mistake is obvious, so that
a contractor reviewing specifications should have seen it, he must bring it to the government’s
attention before bid; but if the mistake is subtle, so that a contractor might be excused for not
finding it, the contractor may recover. See Miller at 499-500.
Subsection 5.04 places an affirmative obligation on the contractor to address and
resolve errors and omissions that might lead to claims; and it prohibits the contractor from
taking “advantage” of obvious errors. In order to prevail on a claim based on its own
interpretation of a provision that contains an obvious, apparent omission, the contractor must
first discharge his duty to clarify—that is, “at least ask for clarification if he intends to “bridge
the crevasse [of a disputed interpretation] in his own favor.” Miller at 499, citing Beacon at
504. Subsection 5.04 is the bridge over the “crevasse” which the contractor must cross. If he
fails to do so he is “barred from recovery.” Beacon at 504.
Here, there is no doubt that NEL knew before it bid that MassHighway had apparently
omitted work that NEL knew would have to be done to perform the Contract for emergency
5
Whether the contractor actually knows an obvious omission exists is not necessary to establish, since it is “the
obviousness of discrepancy which imposes the duty of inquiry” not the fact of actual knowledge. Chris Berg,
Inc. v. U.S., 455 F.2d 1037 (Ct. Cl. 1972).
6
“The bidder who is on notice of an incipient problem, but neglects to solve it as he is directed to do by this
form of contractual preventive-hygiene, cannot rely on the principle that ambiguities in contracts written by the
Government are held against the drafter.” Beacon at 504.
8
bridge repair. The Omitted Tasks were not called out by name in the specifications. The omissions were obvious, indeed glaring, which NEL perceived at the time. But instead of forthwith notifying the Engineer and seeking a clarification, as obliged by the Contract, NEL took no affirmative steps. NEL was content that all the apparently obvious omissions were left unresolved before bid. It did not properly seek any pre-bid clarification that would have resulted in the Engineer’s pre-bid “corrections and interpretations” published to all prospective bidders. Instead, NEL bid on the Contract believing glaring omissions to exist. 7
NEL did not satisfy the notice requirement of Subsection 5.04. NEL did not write the
engineer seeking clarification; it did not submit a formal question pre-bid that would have
elicited the Engineer’s written response to all prospective bidders. Nor did NEL’s phone calls
suffice. Phone calls without concomitant written notice to persons charged with the
responsibility of finally approving the Contract’s specifications before bid did not
“immediately” notify the Engineer. Rather, I think NEL’s actions are consistent with a belief
that the apparent omissions would require MassHighway to pay extra work post award. 8
7
NEL argues without citation that District 4’s departure from its practice asking unit price bids for the
Omitted Tasks was so great that the changes “should be explicitly stated in the bid documents.” The very fact
that the apparent omissions were so glaring are a compelling reason that NEL should have notified the Engineer.
8
There is no evidence on this record to show what other bidders knew before the bid. MassHighway’s routine
comparison of all bids shows that for Item 905.2, “Cement Concrete Masonry,” the office estimated a quantity of
423 cubic meters (CM) at $4,156/CM, for a total estimated price of $1,757,988. The estimate for Item 905.2 was
78% of total office estimate for the entire contract ($2,254,815.00). The bid comparison sheet, which is part of
the Contract, shows
Office
NEL
SPS
Const. Dyn.
MIG
Item 905.2
Quantity (CM)
Item 905.2
$/CM
Item 905.2
Bid Price
Total Bid
All Items
423
423
423
423
423
4,156
3,854
4,905
5,375
7,000
1,757,988
1,630,242
2,074,815
2,273,625
2,961,000
2,254,815
2,052,042
2,131,940
2,664,163
3,132,300
9
Per Cent
905.2 Bid Price/
Total Bid
78
79
97
85
95
I conclude that NEL’s pre-bid actions were designed from the outset to take advantage
of the obvious, apparent omissions it found. NEL’s silence on the one hand and private
contacts with public employees on the other worked to vitiate the salutary purpose of
Subsection 5.04. The net result was that MassHighway was unable to correct errors, avoid
claims or assure that all bidders were privy to the same information. NEL did not bridge the
“crevasse in its own favor” and so is “barred” from recovery. See Miller at 499; Beacon at
504.
CONCLUSION
Because NEL failed to notify the Engineer of the obvious omissions it found and
because its failure precluded MassHighway from clarifying or correcting any error that may
have existed in the specifications, NEL should not recover for the Claimed Extra Work.
RECOMMENDATION
NEL’s appeal should be denied. Respectfully submitted,
Stephen H. Clark
Administrative Law Judge
Dated: _________
10