COMMONWEALTH OF MASSACHUSETIS
MASSACHUSETTS HIGHWAY DEPARTMENT
BOARD OF CONTRACT APPEALS
DATE:
May 26, 2004 Item #1
CLAIM:
SPS New England, Inc., aggrieved by the Massachusetts
Highway Department's denial of its claim for payment for
extra work io the amount of $13,333.33 on Contract No.
99118 appealed to Board of Contract Appeals.
RECOMMENDATION:
The claim of SPS New England, Inc. 's under Contract No.
99118 for extra work hased on alleged 33% overrun on
Item #851 Safety Controls for ConstlUction Operations io
the amount of$13,333.33 should be denied.
FOR DEPARTMENT SECRETARY
1temN-lL-------------­
Date
1lA¥ 2 6 2004------­
Board of Commissioners accepted recommendation to deny.
Claim DENIED.
1
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INTRODUCTION
SPS New England Inc. (SPS or Contractor), aggrieved by the denial of the claims
committee of the Massachusetts Highway Department (MHD or Department) to approve
its claim for extra work in the amount of $13,333.33 based on an alleged 33% “overrun”
in lump sum payment item 851, “Safety Controls For Construction Operations,” appealed
to the Board of Contract Appeals (Board). The claim arose when the term of MHD
Contract #99118 for reconstruction of Main Street in Amesbury was extended more than
200 days after necessary work by the local gas utility company had delayed the SPS
work. The extension of time for performance granted by the Department was the cause
of the alleged “overrun” for payment Item 851 work.
I find that the appeal of SPS is without merit. In substance SPS’s claim is
grounded on the delays caused by utility company work, which the Contract expressly
precludes. Additionally, there is no “overrun” here. Because Pay Item 851 work is bid
and paid for as a lump sum, payment of the lump sum amount is complete payment for all
the work.
STATEMENT OF THE CASE
On April 16, 2001 SPS requested additional compensation for the work of Safety
Controls For Construction Operations (Safety Controls Work) for the time the Contract
term was extended. On May 10, 2001 the district highway director denied the claim,
which was duly forwarded to the claims committee on June 12, 2001. On July 20, 2001
the claims committee denied the claim. SPS appealed to the Board. Its completed
Statement of Claim was filed on August 1, 2001.
On March 14, 2002 a hearing was held on SPS’s appeal. There was a tape
recording made of the hearing. Present were
Peter Milano
Isaac Machado
Joseph D’Angelo
Timothy McLaughlin
Chief Administrative Law Judge
Deputy Chief Counsel, MHD
Asst. Dist. Construction Engineer
Vice President, SPS
The following exhibits were entered in evidence:
Ex.#1
Ex.#2
Ex.#3
MHD Contract #99118
SPS Statement of Claim
Memo of Joseph D’Angelo to Judge Milano 11/2/01
The matter was taken under advisement at the end of the hearing. In July 2003
Chief Administrative Law Judge Peter Milano resigned. At the time of Judge Milano’s
resignation no report had been made to the Board. On March 1, 2004 the undersigned
was appointed Chief Administrative Law Judge.
There are no disputed issues of fact. It is therefore appropriate that I make this
report and recommendation to the Board based on the administrative record.
FINDINGS OF FACT
Substantial evidence on the record, which consisted of tape-recorded testimony
and the three exhibits admitted by Judge Milano, supports the following findings of fact,
which I recommend the Board adopt.
1.
The Department entered into Contract #99118 for roadway reconstruction
on a section of Main Street in the town of Amesbury with SPS New
England, Inc. (SPS or Contractor) on November 9, 1998. The SPS bid
price for the work was $4,070,235.22.
2
2.
The Contract included by reference, among other things, the Plans, the
Special Provisions; and the Standard Specifications for Highways and
Bridges (1995 Metric ed.).
3.
The original completion date was November 29, 2000. The completion
date was extended three times by the Department for reasons beyond the
control of either SPS or the Department.
4.
The Department granted time extensions to SPS because the local gas
utility company had to move and reset its gas services at the project site.
5.
The Contract provides at Subsection 5.05, in part:
“The Contractor shall so carry on his work under the direction of
the engineer that Public Service Corporations… may enter on the
work to make changes in their structures or to place new structures
and connections therewith without interference and the Contractor
shall have no claim for, or on account of any delay which may be
due to or result from said work of Public Service Corporations
….No allowance of any kind will be made except as provided in
Subsection 8.10 [Determination and Extension of Contract Time
For Completion].”
6.
As a result of time extensions granted by the Department the original
Contract term of 741 days was extended to 1,142 days, a 55% increase.
7.
Subsection 850.21 of the Contract, captioned “Safety Control for
Construction Operations,” provides in pertinent part
Safety Controls for Construction Operations consists of
furnishing, positioning, repositioning, maintaining and
removing, as needed and/or as directed: traffic cones, high
level warning devices, delineators, floodlights, Type I and
II barricades, portable flashing and steady burning lights
….
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8. The payment item for work done under Subsection 850.21 is specified in
Subsection 850.82, “Payment Items,” which provides in pertinent part: “851.
Safety Controls for Construction Operations
Lump Sum.”
9. SPS bid a lump sum price of $40,000 for work included in Payment “Item 851
… Safety Controls for Construction Operations … Lump Sum.”
10. The Department required SPS to position “traffic cones” during the original
term and during the extended term of the Contract, which work was paid for
under Item 851.
11. SPS filed its claim for extra work with the Board on August 1, 2001. O
n
August 1, 2001 the time of Contract performance had increased by 33%. SPS
calculated its claim for extra work of $13,333.33 under Item 851 by applying
a 33% factor to its original lump sum bid (.33 X $40,000). SPS offered no
evidence of its actual costs incurred to perform Safety Controls Work during
the time the Contract was extended.
12. The Department denied the SPS claim in part because a Department policy
provided, in substance, that lump sum bid items, such as Payment Item 851,
are not time dependent, but are instead bid prices in effect for the duration of
the Contract.
13. SPS’s claim asserts that due to the Contract time extensions it faced “extended
[legal] liability” for risks it would not have been subject to but for the delays
caused by the utility company in moving gas services.
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14. The unit of payment for all work under for Section 850 of the Contract, except
for Payment “Item 851, Safety Controls For Construction Operations Lump
Sum,” is unit price.
15. Subsection 850.81 titled “Basis of Payment” provides in pertinent part:
The contract prices under these [Section 850] items shall constitute full
payment for all material, labor and equipment required or incidental to
the satisfactory completion of the work as described above…. Lump
sum payments will be made in equal amounts on each estimate based
on the number of months estimated to complete the work.
16. The Department calculated the payment of “lump sum” item 851 by following
the requirements of Subsection 850.81 under which it found the number of
months remaining until completion of the work when it prepared a periodic
payment estimate and calculated the amount to be paid by dividing the unpaid
balance of the $40,000 lump sum by that number of months. Each time the
Contract was extended a new equal amount was calculated in like manner.
17. Subsection 9.01 “Measurement of Quantities,” appearing in Section 9.03
“Measurement and Payment,” provides
“The term “lump sum” when used as a unit of payment will
mean complete payment for the work described in the
Contract.”
DISCUSSION
A.
Issue Presented and Positions of the Parties
The issue in this appeal is whether SPS may claim extra work for the positioning
and repositioning of traffic cones during the time of extended contract performance
where delays in the work were caused primarily by a public utility company that had to
move and replace its gas services.
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SPS argues that, once the term of the contract was extended because of delays
attributable to utility work, the Safety Controls Work performed during the extended term
is extra work. According to SPS the additional compensation should be paid by the
following formula: divide the original lump sum bid price by the original estimated time
of completion and multiply that monthly rate times the number of months the Contract
was extended.
The Department asserts that Safety Controls Work is bid as a “lump sum,” with
payments made while the work progresses under an installment payment formula set
forth in Subsection 851.81. The Department contends that payment of the “lump sum”
amount fully discharges all its obligations under the Contract, even where the time of
completion is extended.
B.
The Contract Provisions
The issues in this appeal are resolved by construing the provisions of the Contract
according to its plain and ordinary meaning. See Thomas v. Hartford Accident &
Indemnity Co., 398 Mass. 782, 784 (1986).
1.
The No Damage For Delay Provision
SPS claim is in effect a delay damage claim, which is not a compensable claim
under the Contract.
SPS’s appeals to recover costs for Safety Controls Work allegedly incurred as a
result of delays caused by the removal and installation of services by a gas utility
company. The delays in the Contract work were substantial and caused SPS to be at the
work site longer than the original Contract term of 741 days. There is no dispute that the
needs of the gas utility company caused the Department to grant SPS an additional 401
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days in which to perform the Contract. At the time it filed its appeal the time allowed for
performance had increased by 233 days, or 33%. SPS claims compensation for Safety
Controls [“extra”] Work,” is calculated by applying a 33% factor to its original lump sum
bid for Item 851 (.33 X $40,000). SPS did not offer any evidence of its actual costs to
position and reposition traffic cones (or perform other Safety Controls Work) during the
extended Contract term.
I find that SPS’s claim for extra work is rooted in the delays caused by the gas
company. Because the delay in the Contract work was caused by a public service
corporation, Subsection 5.05 of the Contract controls the outcome. Under Subsection
5.05 SPS agrees that public utility companies may
enter on the work to make changes in their structures or to place new
structures and connections therewith without interference, and [SPS] shall
have no claim for, or on account of any delay which may be due to or
result from said work of [utility companies] ….
Subsection 5.05 also provides “No allowance of any kind will be made except as
provided in Subsection 8.10.” Subsection 8.10 provides that the time for performance
“shall be adjusted” … “[I]n case the work is delayed by Public Service Corporations ….”
Subsection 8.10(E). Here the Department adjusted the time of performance by granting
SPS extensions of time for performance by 401 days. That is all SPS was entitled to
under the Contract.
SPS may not avoid the “no claim” provision in Subsection 5.05 by calling its
claim here one for “extra work” or an “overrun” of Safety Controls Work. As a matter of
law, labeling a delay claim something else does not avoid the Contract’s prohibition to
claims grounded in delays caused by public service corporations. See Reynolds Bros.,
Inc., v. Commonwealth, 412 Mass. 1, 7 (1992) (prohibited delay damages may not be
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pursued under another name). Accordingly, as SPS’s claim for extra work claim is in
fact a claim based on costs allegedly incurred because of public utility delays, the plain
words of the Contract require it be denied.
2.
Unit Of Payment: “Lump Sum”
SPS also seeks compensation on the theory that the Contract itself required
additional payments for Safety Controls Work during the extended Contract term.1 The
basis of its contention is that Subsection 850.81, the applicable basis of payment
provision applying to the Safety Controls Work, requires the Department to pay
compensation for each month the Contract was extended.
Subsection 851.81 provides
Lump sum payments will be made in equal amounts on each estimate
based on the number of months estimated to complete the work.
The language instructs how and when lump sum payments will be made; it does
not purport to raise or lower the lump sum amount SPS bid for Safety Controls Work
under Payment Item 851. The fact that Subsection 850.81 requires that the lump sum
price bid for Safety Controls Work shall be paid out in installments does not alter the fact
that SPS bid a lump sum price of $40,000 for the Safety Controls Work.
Subsection 851.81 does not expressly address how lump sum payments are made
if a contract is extended. It merely requires that “lump sum” payment units, such as Item
851 for Safety Controls Work, be paid out in “equal amounts” “based on” the “estimated”
number of months needed to complete lump sum work. This the Department did.
At the time of each estimate, the Department calculated the “equal amounts” to be
paid on remaining estimates by dividing the amount of the unpaid balance of the lump
1
Such work is described in Subsection 850.21 but is paid for in a lump sum under Payment Item 851, as
expressly required under Subsection 850.82, “Payment Items.”
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sum by the estimated number of months remaining for the work. When the contract term
was extended, the time estimated to complete the work accordingly changed. The
Department then recalculated the “equal amounts” due, which were then paid in future
estimates. The Department’s method of interpreting the Contract’s formula is a rational
means to carry out the requirements of Subsection 851.81. It does not violate that
provision.
SPS proposed interpretation of Subsection 851.81 would have the effect of
transforming the “lump sum” payment item for Safety Controls Work into a “unit price”
payment item.
The Contract distinguishes between a “lump sum” and a “unit price” unit of
payment. Subsection 9.01 “Measurement of Quantities,” appearing in Section 9.03
“Measurement and Payment,” provides:
The term “lump sum” when used as a unit of payment will mean complete
payment for the work described in the Contract.
By contrast where a bid is made under a unit price unit of payment, it establishes
a unit price for the Contract. Payments are then made to the contractor based on the
number of units used in the work multiplied by the unit price bid. For example,
Subsection 4.06, “Increased or Decreased Contract Quantities,” provides:
When the accepted quantities of work vary from the quantities in the bid
schedule, the Contractor shall accept as payment in full, so far as contract
items are concerned, payment at the original contract unit prices for the
accepted quantities of work done.
Where the Contract contains a unit price and extra work is ordered, payment for
such extra work is to be made at the unit prices bid. See Subsection 9.03(A).
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Subsection 850.82 plainly requires that Safety Controls Work, Payment Item 851,
shall be bid as a lump sum. Developing a monthly payment amount and applying that
figure to each month the Contract is extended necessarily transforms that lump sum into a
unit price. SPS offers no support for its proposed interpretation from any part of the
Contract. It provides no citation to legal authority.
I find the proposed construction of Subsection 850.81 would re-write, not
interpret, the Contract. I find that the proposed formula plainly contradicts the
requirement in Subsection 9.01 that payment of the lump sum “will mean complete
payment” for the work described. In conclude that SPS’s claim is without merit.
FINDINGS
I find that SPS claim is grounded on the delays caused by necessary work of a
public service corporation and that the Contract precludes such a claim.
I find that SPS proposed construction of Subsection 851.81 would violate the
lump sum unit payment requirements under the Contract and is without merit.
RECOMMENDATION
The Board should adopt the findings of fact set forth. The Board should deny SPS’s appeal. Respectfully submitted,
Stephen H. Clark
Administrative Law Judge
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