Siemens Electrical, LLC v.
Dep’t of Environmental Protection
OATH Index Nos. 1303/15 & 1310/15, mem. dec. (Feb. 18, 2015)
Consolidated appeal dismissed. Contractor’s claim for extra costs
related to relocation of conduits is time-barred. Claim for delay
damages is outside the jurisdiction of the CDRB.
____________________________________________________
NEW YORK CITY OFFICE OF
ADMINISTRATIVE TRIALS AND HEARINGS
CONTRACT DISPUTE RESOLUTION BOARD
In the Matter of
SIEMENS ELECTRICAL, LLC
Petitioner
- against DEPARTMENT OF ENVIRONMENTAL PROTECTION
Respondent
____________________________________________________
MEMORANDUM DECISION
ALESSANDRA F. ZORGNIOTTI, Administrative Law Judge/Chair
LAURA RINGELHEIM, ESQ., Special Counsel, Mayor’s Office of Contract Services
PAUL WEXLER, ESQ., Prequalified Panel Member
Pending before the Contract Dispute Resolution Board (“CDRB” or “Board”) is a motion
of respondent, the Department of Environmental Protection (“DEP”), to dismiss two
consolidated appeals filed by petitioner, Siemens Electrical, LLC (“SE”). The disputes arise out
of a $134,680,000 contract that SE entered into with DEP in 2007 for the performance of lowvoltage electrical work at the Croton Water Treatment Plant (“Contract”). The Construction
Manager on the project was URS/Malcom Pirnie (“Resident Engineer”) and the General
Contractor was Skanska/Tully Joint Venture (“Skanska”).
In the first claim, SE seeks implementation of a change order assessing $337,637.40
against Skanska to cover costs due to improper work coordination related to the installation of
variable frequency drives (“VFD claim”). In the second claim, SE seeks $456,684.94 to cover
increased labor costs due to Skanska and DEP’s failure to provide adequate ventilation at the
worksite which caused excessive heat (“heat claim”).
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On September 27, 2013, the parties’ mutual request to mark the cases off-calendar for
settlement discussions was granted. The matter was restored to the calendar on December 9,
2014. For the reasons below, the Board finds that the VFD claim is time-barred and that the
Heat claim is for delay damages which are outside the Board’s authority. Accordingly, the
CDRB grants DEP’s motion to dismiss both appeals.
ANALYSIS
VFD claim (OATH Index No. 1310/15)
The Contract provides that contractors are responsible for coordinating their work,
reviewing all plans, and giving notifications if errors in the plans or drawings are discovered. It
also provides that DEP will not pay extra compensation for any corrective work resulting from a
lack of coordination among contractors, that contractors are obligated to notify the Resident
Engineer if another contractor is failing to coordinate its work, and that the contractor
responsible for the improper coordination agrees to reimburse the other contractor for damages.
Contract Art. 12; Detailed Specification 01331.
The Contract required SE, among other things, to install 32 VFDs for chemical metering
pumps. The VFD claim arises from Skanska reissuing drawings that relocated several VFD
equipment boxes after SE had completed much of the work in accordance with the original
drawings. SE alleges that Skanska failed to coordinate the VFD work causing SE to incur extra
costs to reroute the VFD conduits.
On January 18, 2012, SE requested that the Resident Engineer approve a change order for
extra compensation for reconfiguring the conduits to keep the project moving (Pet. Ex. 11).
The Resident Engineer denied the change order on January 30, 2012, indicating that SE
should not have relocated the conduits based on new drawings and that SE failed to timely raise
any objections pursuant to Detailed Specification 01331 (Pet. Ex. 12).
By letter dated February 10, 2012, SE asked the Resident Engineer to reconsider his
decision before it initiated a formal claim with the agency head.
SE provided further
documentation regarding the Contract drawings and the locations of the VFDs and reiterated
Skanska’s failure to coordinate the work (Pet. Ex. 13).
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On February 13, 2012, the Resident Engineer again denied the request after reviewing the
additional information provided (Pet. Ex. 14). He informed SE that while “we do empathize
with the fact that there was improper coordination between contractors,” a change order could
not be approved because SE failed to object to the relocation of the VFD panels in accordance
with Detailed Specification 01331, which also states that DEP will not pay extra compensation
for work done without proper coordination among the contractors. The Resident Engineer
concluded by stating, “This is the Resident Engineer’s Final Determination.”
On May 3, 2012, SE submitted a Notice of Dispute to DEP (Pet. Ex. 15). SE noted the
Resident Engineer recognized that there was improper coordination between the contractors but
continued “to reject the facts which clearly indicate Skanska failed to properly coordinate their
work.” For the first time, SE asserted that costs should be assessed against Skanska.
On June 13, 2012, the Commissioner’s designee denied the claim, finding that SE should
have sought clarification with DEP when it received information that was in conflict with its
contractual requirements and that DEP never authorized the relocation of the VFDs (Pet. Ex. 16).
On July 16, 2012, SE wrote to the Resident Engineer and requested reconsideration
before “presenting this claim to the Comptroller” (Pet. Ex. 17). SE indicated that it did not seek
“extra compensation from DEP,” rather that DEP assess the additional costs caused by Skanska’s
improper coordination.
On July 21, 2012, the Resident Engineer responded that after receiving SE’s July 16 letter
he understood SE’s position “more clearly” (Pet. Ex. 18). He previously believed SE’s request
“to be an addition of work by DEP,” but now understood that SE requested a change order to
resolve an improperly coordinated work issue. In any event, the Resident Engineer denied the
request, finding again that SE was responsible for the incorrect installation of the conduits and
that SE failed to timely object to performing work other than that shown in the Contract
drawings. He noted that this constituted “the Resident Engineer’s Final Determination.”
On August 22, 2012, SE submitted another Notice of Dispute to DEP (Pet. Ex. 22). SE
noted the Resident Engineer had made a determination that there was improper coordination
between the contractors but refused to assess the cost of SE’s additional work to Skanska. SE
requested that DEP assess the extra costs to Skanska for the improper coordination of the work.
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On December 17, 2012, the Commissioner’s designee denied the claim finding that DEP
was not responsible for coordination failures between contractors and that SE had failed to
timely notify the Resident Engineer of any discrepancies after receipt of the drawings.
SE submitted a Notice of Claim to the Comptroller on January 16, 2013 (Pet. Ex. 24).
The Comptroller denied SE’s claim for the same reasons cited by DEP (Pet. Ex. 25).
SE filed a timely petition with the CDRB.
DEP argues that SE’s VFD claim is untimely because it failed to file a Notice of Dispute
and a Notice of Claim within the timeframes required by the Contract and the Procurement
Policy Board (“PPB”) rules. The Board agrees.
Under section 4-09 of the PPB rules, incorporated into the Contract under Article 27,
certain disputes are subject to an alternative dispute resolution process consisting of three levels
of review. When a dispute arises, the PPB Rules and Article 27 of the Contract provide
timeframes for contractors to make submissions at each stage of the process. First, a Notice of
Dispute must be submitted to the agency head “within thirty days of receiving written notice of
the determination or action that is the subject of the dispute.” 9 RCNY § 4-09(d)(1) (Lexis
2014). Second, a Notice of Claim must be submitted to the Comptroller “[w]ithin thirty days of
receipt of a decision by the Agency Head . . . .” 9 RCNY § 4-09(e)(1) (Lexis 2014). Finally, a
petition to the CDRB may be made 30 days after the Comptroller has issued its determination. 9
RCNY § 4-09(g) (Lexis 2014).
The Board has held that a letter from a person with agency authority who unambiguously
denies a contractor’s request is a determination that triggers the 30-day period to file a Notice of
Dispute. Maracap Construction Industries, Inc. v. Dep’t of Transportation, OATH Index No.
711/08, mem. dec. at 5 (May 9, 2008) (“The statutory period for challenging a determination
commences when unambiguous notification is issued.”); Ajet Construction Corp. v. Dep’t of
Parks & Recreation, OATH Index No. 1418/01, mem. dec. (June 28, 2001) (claim time-barred
where letter from the project engineer unambiguously denied change order).
Here, the Resident Engineer’s letter dated January 30, 2012, unambiguously denied SE’s
request for a change order. Knowing that the next step was to file with the Commissioner, SE
instead sought reconsideration of the Resident Engineer’s decision. However, a mere request for
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reconsideration does not suspend the dispute resolution process triggered by a determination at
the engineer level. See Alta Indelman, Architect/Builders Group, LLC v. Dep’t of Sanitation,
OATH Index No. 1092/05, mem. dec. at 6 (June 16, 2005) (letter from engineer denying a
change order “was a final determination triggering the dispute resolution process, as opposed to a
preliminary finding subject to further argument or reconsideration at the project engineer level”).
Even if the Resident Engineer’s January 30 determination did not initiate SE’s time to file
a Notice of Dispute, SE still failed to timely file its Notice of Dispute with DEP after it received
the engineer’s February 13, 2012 determination denying SE’s claim and stating that this is “the
Resident Engineer’s Final Determination.” SE waited until May 3, 2012, approximately 80 days
after the February 13 decision to file its Notice of Dispute.
SE argues that it did not file until May 3, 2012, because the Resident Engineer’s February
13 determination was based on a misunderstanding of who the extra costs should be assessed
against and that SE anticipated a change order for improper coordination by Skanska. However,
there is nothing in the record showing that DEP planned to approve the change order subsequent
to the February 13 determination. Even if there were discussions to this effect, the Board has
found that ongoing settlement discussions do not automatically suspend a contractor’s obligation
to timely file a Notice of Dispute. Dynamic Painting Corp. v. Dep’t of Transportation, OATH
Index No. 901/04, mem. dec. at 6 (May 21, 2004) (“Although petitioner argues that ongoing
settlement discussions suspended its obligation to file a Notice of Dispute, nothing in the record
suggests a longer period of time for filing was appropriate here.”).
Petitioner’s reliance on Kreisler Borg Florman General Construction Co. v. Dep’t of
Design & Construction, OATH Index Nos. 1079/06, 1100/06, mem. dec. (June 1, 2006) is
misplaced. In Kreisler, the Board found that letters relating to the disputed change orders,
instructing the contractor to authorize, review, and sign the orders, did not clearly put the
contractor on notice that a final determination had been made triggering the time frame to file a
Notice of Dispute. Here, the January 30 and February 13 determinations unambiguously denied
the claim. The rules governing the alternative dispute process require the contractor to resolve
this type of dispute in a timely way following a denial. Even if SE believed that the Resident
Engineer misunderstood its claim, it still should have elevated it to the agency head.
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SE also failed to file a Notice of Claim with the Comptroller within 30 days of receipt of
the agency head’s June 13, 2012 decision, denying SE’s Notice of Dispute. Knowing that the
next step was to file with the Comptroller, SE instead sought reconsideration from the Resident
Engineer. When the Resident Engineer denied the claim for a third time, SE filed another Notice
of Dispute with DEP. DEP again denied the claim on December 17, 2012. While DEP issued
decisions on both Notice of Disputes, DEP’s first decision initiated the 30-day time period to file
a Notice of Claim. However, SE did not submit a Notice of Claim until January 16, 2013, which
was approximately 217 days later.
SE argues that its July 16 request for reconsideration revealed that the Resident Engineer
and the Commissioner misunderstood the relief sought. Thus, its filing within 30 days of receipt
of the agency head’s second determination was timely. This claim is without merit.
In an Article 78 proceeding, “[e]ven where a request for reconsideration is granted, the
four-month Statute of Limitations within which a challenge must be commenced will run from
the initial determination unless the agency conducts a fresh and complete examination of the
matter based on newly presented evidence.” Quantum Health Resources v. De Buono, 273
A.D.2d 730, 731-32 (3d Dep’t 2000) (citations omitted); see also Nationwide Court Services,
Inc. v. Dep’t of Health & Mental Hygiene, OATH Index No. 2042/06 at 3-4 mem. dec. (Nov. 3,
2006) (first letter terminating the contract triggered dispute resolution process, while second
letter only reiterated the damage calculation stated in the original determination).
SE’s July 16 request for reconsideration did not present any new evidence to the Resident
Engineer, but only sought to clarify that it was Skanska not DEP who was responsible for the
claim. Even though the Resident Engineer responded that he understood SE’s position “more
clearly” he denied the request based on the same evidence and for the same reasons cited in his
January 30 and February 13 decisions. More importantly, SE had already received a final
determination from the Commissioner’s designee on June 13, 2012, denying SE’s claim seeking
extra compensation from Skanska.
SE’s VFD claim is time-barred for failing to timely submit a Notice of Dispute to the
agency head and for failing to timely submit a Notice of Claim to the Comptroller.
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Heat claim (OATH Index No. 1303/15)
In June 2012, the adjusted temperatures on the project site met or exceeded 97-degrees
Fahrenheit. In accordance with OSHA guidelines, SE implemented work-rest cycles where
employees worked for 40 minutes and then rested for 20 minutes. SE claims that the extreme
temperatures resulted from Skanska’s failure to provide adequate ventilation.
On October 16, 2012, SE submitted a change order in the amount of $456,684.94 for
“increased labor costs and lost productivity caused by excessive heat in the plant from June 20,
2012, to September 6, 2012” (Pet. Ex. 11).
On November 2, 2012, the Resident Engineer denied SE’s request finding that there is no
maximum temperature requirement in the Contract (Pet. Ex. 14). SE submitted a Notice of
Dispute to DEP on December 3, 2012, alleging that DEP could have prevented SE’s damages by
requiring Skanska to provide adequate ventilation or taking over the fans and cooling units (Pet.
Ex. 15). On February 12, 2013, the Commissioner’s designee found that the change had been
properly denied (Pet. Ex. 16). SE submitted its Notice of Claim to the Comptroller on March 14,
2013 (Pet. Ex. 18). On April 3, 2013, the Comptroller denied SE’s claim as delay damages, and
found that SE did not have a claim against DEP for damages caused by the act or omission of
another contractor (Pet. Ex. 19). SE timely filed a petition with the CDRB.
The PPB rules and Article 27.1.2 of the Contract authorize the Board to hear claims
“about the scope of work delineated by the contract, the interpretation of contract documents, the
amount to be paid for extra work or disputed work performed in connection with the contract, the
conformity of the vendor’s work to the contract, and the acceptability and quality of the vendor’s
work . . . .” 9 RCNY § 4-09(a)(2) (Lexis 2014).
The Board has interpreted analogous contract provisions and section 4-09(a)(2) of the
PPB Rules as limiting its jurisdiction to those claims, placing delay damages beyond its purview.
See Commodore Maintenance Corp. v. Dep’t of Transportation, OATH Index No. 1118/14,
mem. dec. at 17-18 (Apr. 3, 2014); Schlesinger-Siemens Electrical, LLC v. Dep’t of
Environmental Protection, OATH Index No. 1817/10, mem. dec. at 4-5 (Apr. 28, 2010); J.H.
Electric of New York, Inc. v. Dep’t of Sanitation, OATH Index No. 2637/09, mem. dec. at 7
(Aug. 27, 2009); Samson Construction Co. v. Dep’t of Parks & Recreation, OATH Index No.
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1327/06, mem. dec. at 3 (May 15, 2006). This approach has been affirmed by the Appellate
Division, which has stated that the dispute resolution process is a “procedural device [that] is
limited by the parties’ agreement to claims arising out of disputed work, a category that does not
include delay damages.” CAB Assoc. v. City of New York, 32 A.D.3d 229, 232 (1st Dep’t 2006)
(citation omitted). The Contract, which provides that the Board’s “decision must be consistent
with the terms of the Contract” (Contract, Art. 27.7.4; see also 9 RCNY § 4-09(g)(4)), also
expressly precludes claims for delay damages:
No Damage for Delay: The Contractor agrees to make no claim for
damages for delay in the performance of this Contract occasioned
by any act or omission to act of the City or any of its
representatives, and agrees that all it may be entitled to on account
of any such delay is an extension of time to complete performance
of the Work as provided herein.
Contract, Art. 13.10.
In considering whether a claim constitutes delay damages, the Board has consistently
found the cause of the damages to be determinative. Calcedo Construction Corp. v. Dep’t of
Homeless Services, OATH Index No. 345/12, mem. dec. at 5 (Mar. 1, 2012). For example, in
Expert Electric, Inc. v. Department of Design and Construction, OATH Index No. 1879/02,
mem. dec. (Oct. 10, 2002), the Board found that delivery of an Uninterrupted Power Supply
System that was timely delivered but not “energized” within the required six months, thereby
jeopardizing the viability of its batteries, was a delay claim. Likewise in Prismatic Development
Corp. v. Department of Sanitation, OATH Index No. 109/15, mem. dec. (Nov. 18, 2014), the
Board held that the provision of temporary power due to scheduling issues was a delay claim that
could not be resolved through the dispute resolution process. See also Schlesigner-Siemens
Electrical, LLC v. Dep’t of Environmental Protection, OATH Index No. 604/10, mem. dec. (Apr.
16, 2010) (delay claims where contractor was not granted access to a new fuel tank and boiler
facilities, a “basic premise” of the contract, until 18 months after the start of the contract).
As the Court of Appeals stated:
All delay damage claims seek compensation for increased costs,
however, whether the costs result because it takes longer to
complete the project or because overtime or additional costs are
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expended in an effort to complete the work on time. It is of no
consequence that the obstruction, whatever its cause, occurs during
the term of the contract or afterwards or whether it disrupts the
contractor’s anticipated manner of performance or extends his time
for completion. The claims are claims for delay and the
exculpatory clause was drafted and included in the contract to bar
them.
Corinno Civetta Construction Corp. v. City of New York, 67 N.Y.2d 297, 313-14 (1986).
SE’s claim stems from excessive heat at the worksite. As a result, SE implemented
OSHA mandated work-rest cycles where employees worked for 40 minutes and rested for 20
minutes. This caused SE to incur increased labor costs and lost productivity because it took
longer to complete the project. We find that the increased costs, due to the implementation of
rest cycles for excessive heat, is a delay claim that cannot be resolved through the dispute
resolution process.
SE’s assertion that “there was no worksite entry bar or delay” and that the fault lies with
DEP who failed to maintain ambient temperatures in accordance with various requirements, does
not change that this is a delay claim. C.f. LAWS Construction Corp. v. Dep’t of Parks &
Recreation, OATH Index No. 1445/14, mem. dec. (May 28, 2014) (claims arising from agency’s
provision of contaminated material and its failure to timely procure and deliver suitable material,
which resulted in unanticipated costs associated with the storing, hauling, and placement of the
new material, were delay claims).
Similarly, SE’s assertion that its claim should be construed as an extra work claim, not a
delay claim, must also fail. Attempts by contractors to characterize delay claims as extra work
claims are routinely rejected. See, e.g., Commercial Electrical Contractors, Inc. v. Pavarini
Construction Co., Inc., 50 A.D.3d 316, 317 (1st Dep’t 2008) (characterizing damages from
“defendant’s improper scheduling and organization of subcontractors, changes to the work, and
failure to provide temporary heating” as delay damages); Blue Water Environmental, Inc. v.
Village of Bayville, 44 A.D.3d 807, 810 (2d Dep’t 2007) (“Extra work caused by the delay falls
within the category of damages for delay.”) (citation omitted); Gemma Construction Co., Inc. v.
City of New York, 246 A.D.2d 451, 453 (1st Dep’t 1998) (“[W]hile a contractor may be required
to perform additional work on account of a delay . . . that expense does not, ipso facto, become
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‘extra’ work, as that term is defined in the contract.”); Calcedo Construction Corp., OATH
345/12 at 7 (claim for “extra work,” including unanticipated field labor, clearly claim for delay
damages).
CONCLUSION
Petitioner’s appeals are dismissed. This constitutes the final decision of the Board. All
panelists concur.
Alessandra F. Zorgniotti
Administrative Law Judge/Chair
February 18, 2015
APPEARANCES:
MANATT, PHELPS & PHILLIPS, LLP
Attorneys for Petitioner
BY: RON GRODZINSKI, ESQ.
MICHAEL A. CARDOZO, ESQ.
CORPORATION COUNSEL
Attorney for Respondent
BY: DEANNA DEFRANCESCO, ESQ.