Appeal of

DELRIC CONSTRUCTION COMPANY, INC.

PSBCA No. 5284

Under Contract No. 3324-95-03-B-0139

APPEARANCE FOR APPELLANT:
Robert Ricciardi

APPEARANCE FOR RESPONDENT:
Barbara H. Frazier, Esq.
St. Louis Law Office
United States Postal Service

OPINION OF THE BOARD

            Appellant, Delric Construction Company, Inc., completed a building renovation and electrical switchgear replacement project for Respondent, United States Postal Service.  Appellant claimed that Respondent delayed its performance and asserted a claim for extended overhead.  The contracting officer partially granted the claim, and Appellant appealed the denial of the remainder.

            At the election of the parties, this appeal is being decided on the record without an oral hearing in accordance with 39 C.F.R. §955.12.  Both entitlement and quantum are at issue (Order dated November 7, 2005).

FINDINGS OF FACT

            1.  On December 19, 2003, Respondent awarded Appellant a construction contract covering two projects at Respondent’s Hackensack, New Jersey Business Mail Entry Unit (“BMEU”).  Project A was a general renovation of part of the building and a two-bay dock addition.  Project B was a replacement of the facility’s electrical transformer and switchgear.  (Appeal File, Tab (“AF”) 5; Stipulation of Facts and Statement of Issues, paragraphs (“Stip.”) 14-17).

            2.  The contract provided that the entire work was to be completed within 180 days after Appellant’s receipt of the Notice to Proceed.  Appellant received the Notice to Proceed on January 5, 2004, making July 2, 2004, the contract completion date.  (AF 5 (Contract Clause C.4), 7; Stip. 18-20).

            3.  The contract’s Suspensions and Delays clause provided, in part,

“a.  If the performance of all or any part of the work of this contract is suspended, delayed, or interrupted by:

(1)  An order or act of the contracting officer in administering this contract; or

(2)  by a failure of the contracting officer to act within the time specified in this contract—or within a reasonable time if not specified—an adjustment will be made for any increase in the cost of performance of this contract caused by the delay or interruption (including the costs incurred during any suspension or interruption).  An adjustment will also be made in the delivery or performance dates and any other contractual term or condition affected by the suspension, delay, or interruption.  However, no adjustment may be made under this clause for any delay or interruption to the extent that performance would have been delayed or interrupted by any other cause, including the fault or negligence of the supplier, or for which an adjustment is provided or excluded under any other term or condition of this contract.”

(AF 5, Contract Clause C.2, Suspensions and Delays (Clause B-16) (January 1997); Stip. 23).

            4.  The contract’s Excusable Delays clause authorized granting Appellant a time extension for performance, but without compensation, if Appellant’s work was delayed by a cause beyond Appellant’s control and without Appellant’s fault or negligence (AF 5, Contract Clause C.3, Excusable Delays (Clause B-19) (January 1997); Stip. 24).

            5.  The work of Project B included installation of a power pole and replacement and relocation of the facility’s transformer.  The contract required Appellant to “provide all material, labor, services, equipment, licenses, and other items required for the work,” and Appellant was responsible for construction associated with the new transformer, coordinating the switchover of the new electric service, allowing the local utility (PSE&G) to inspect the installation before backfilling, and providing a qualified, independent electrical inspector to approve the installation and submit a “cut card” to PSE&G.  (AF 5, 7; Stip. 28).

            6.  PSE&G was to supply the new transformer and to identify the location of the new power pole.  Appellant’s first progress schedule, submitted January 6, 2004, showed the electric transformer relocation work to begin with PSE&G’s placement of the pole on June 8, 2004 (AF 8; Stip. 31).  However, Appellant needed the location of the pole so that it could construct necessary trenching and install primary electrical conduits in advance of placing the new transformer.  The old transformer location interfered with and prevented certain of the Project A work on the building platform, namely excavation for the platform footings and work around the new carrier entrance, so performance of that work turned on a prompt relocation of the transformer.  (AF 61, 76).

            7.  Before PSE&G would begin its work, including marking the location of the pole, the utility required that the transformer order be finalized and that it receive advance payment for the new transformer and for its costs associated with the installation (AF 1, 7, 12, 18; Declaration of Kirk Bennett (“Bennett Decl.”) ¶ 9; Declaration of William C. Slack dated October 31, 2005 (“Slack Decl.”), ¶ 5; Declaration of Manuel Montesino ¶ 3).

            8.  Finalizing the order for the transformer and making the advance payment were Respondent’s obligations (AF 1, 7, 12; Bennett Decl. ¶ 9; Slack Decl. ¶ 5).

            9.  On March 15, 2004, Appellant advised Respondent’s construction administrator in writing that it needed the pole location from PSE&G immediately.  It repeated the advice at the March 22 job meeting, stating that if the pole location were not received immediately, the job schedule would be impacted.  (AF 16, 33; Stip. 34).

            10.  On April 7, 2004, PSE&G sent Respondent an invoice for the required advance payment, and Respondent made the payment to PSE&G on or about April 26, 2004 (AF 26; Bennett Decl. ¶¶ 10, 11; Slack Decl. ¶ 5; Stip. 39).  PSE&G marked the location of the pole on May 25, 2004, and the final layout of the primary electric feed was approved at the June 1, 2004 job meeting (AF 32, 33; Stip. 42).

            11.  At the July 26, 2004 job meeting it was reported that the PSE&G vendor had installed the power pole.  The report also noted that PSE&G would not be ready to set the new transformer until at least two weeks hence.  (AF 43).

            12.  In an August 5, 2004 letter to Respondent’s architect/contract administrator, Appellant claimed entitlement to “general conditions” of $20,000 per month for the three months it claimed to have been delayed by PSE&G in marking the location of the new utility pole and verifying the location of the transformer and switchgear pads.  According to Appellant, the area most affected was the BMEU platform as work in that area could not begin until the existing transformer was relocated.  (AF 47, 48).

            13.  By the August 23, 2004 job meeting, the new transformer had been installed and the switchgear delivered to the site (AF 52).

            14.  Between March 15, when Appellant first advised Respondent of the importance of the pole location, and May 25, 2004, when the location of the power pole was marked, Appellant continued to perform work on the project.  This work included, but was not limited to, demolition, pouring curbs for interior footings, relocating electrical connections for compactors, forming and pouring foundation walls, backfilling, measuring for steel beams, electrical service rough-in, and interior masonry walls.  (Declaration of William C. Slack dated January 16, 2006 (“Second Slack Decl.”), ¶¶ 10-11; AF 17, 18, 24, 25, 27, 30; Stip 42).

            15.  A private company rented space on the roof of Respondent’s building for a cellular telephone tower, and AT&T, as a sub-lessee, had its equipment on the tower (Declaration of Andrew Fistner ¶ 4).  Before the new transformer could be energized, AT&T had to transfer its electrical connections to the new transformer.  Respondent had notified AT&T and the tower owner before the project began and at the beginning of the project that their electrical connections would need to be relocated to the new transformer.  (Declaration of Andrew Fistner ¶ 4; Slack Decl. ¶ 5; Second Slack Decl. ¶ 15)).

            16.  Appellant knew that AT&T’s connections would have to be relocated to the new transformer before it was energized and had been notified by Respondent’s architect at the February 10, 2004 job meeting that AT&T was interested in contracting with Appellant’s electrical subcontractor for this work.  Appellant was given the name of the person to contact at AT&T.  (AF 10, 55).

            17.  AT&T engaged another contractor to transfer its electrical connections.  However, when this contractor came on site to switch the connections sometime before the September 7, 2004 job meeting, he was unprepared for the scope of the work required and could not perform it.  (AF 57).

            18.  By September 16, 2004, necessary inspections had been completed, and PSE&G was prepared to energize the transformer, but would not until AT&T had completed its work.  Appellant notified Respondent’s architect that this issue was delaying job progress and asked for assistance.  (AF 56, 58, 61).

19.  On September 25, 2004, Appellant’s electrical subcontractor submitted a proposal to AT&T to perform the necessary work to transfer AT&T’s connections to the new transformer (through the same contact person Appellant was made aware of in February 2004 (Finding 16)) (AF 64; Declaration of Robert Ricciardi dated October 10, 2005 (“Ricciardi Decl.”), ¶ 40; Declaration of Manuel Montesino ¶¶ 5, 6).  On October 7, 2004, AT&T issued a purchase order to Appellant’s subcontractor for the work (AF 65).  The work was reported as completed in the October 18, 2004 job meeting report (AF 67), and the transformer was energized on October 29, 2004 (AF 68, 69).

            20.  The contract required Appellant to submit shop drawings and receive approval from the architect in advance of constructing certain elements of the project, including the masonry products.  The contract required Appellant to submit the shop drawings “sufficiently in advance of construction requirements to permit at least 10 working days for checking and appropriate action.”  (AF 5, Contract Clause C.6, Shop Drawings, Coordination Drawings, and Schedules (Clause B-56) (January 1997), subsection e).

            21.  Appellant submitted the masonry shop drawings to Respondent’s architect on March 24, 2004, and they were received by the architect on March 25, 2004.  At the April 5 project meeting, Appellant’s representative stressed that it needed a response immediately regarding the masonry and asked that a verbal approval be given as soon as possible.  It followed up that request by memo of April 9 to the construction administrator and pointed out that interior masonry work could not begin without the approvals.  (AF 18, 22, 23, 24; Second Slack Decl. ¶ 13; Stip. 36, 37).

            22.  The architect’s formal written approval of the masonry submittals was sent on or about April 12, 2004, although oral approval had been provided to Appellant before April 12 (AF 23; Declaration of Michael Krawiec ¶¶ 4, 6, 7, 8; Second Slack Decl. ¶ 13; Stip. 38).

            23.  Appellant submitted about 60 Requests for Information (“RFIs”) throughout the project, seeking clarification from the architect of plan and specification requirements (AF 9, 11, 98 (pp. 4-5); Ricciardi Decl. ¶ 5).

           24.  By letter of December 6, 2004, to the contracting officer’s representative, Appellant asserted again (see Finding 12) its entitlement to $60,000, representing its general conditions for a delay of 3 months caused by PSE&G delays in locating the power pole and powering the new transformer.  It argued that Respondent’s failure to provide the check to PSE&G caused delay, but noted that, additionally, “PSE&G true to form reacted very slowly at every turn, including powering the new transformer.”  Appellant also mentioned delays caused by AT&T’s failure to transfer its electrical connections promptly, Respondent’s architect’s delay in returning the masonry submittals, plan discrepancies necessitating 60 RFIs, and numerous changes to the work.  Appellant claimed that it suffered reduced productivity, although it noted that it had continued to work throughout the entire contract period.  (AF 76; Bennett Decl. ¶ 6; Stip. 3).

            25.  On or about March 18, 2005, the parties reached agreement regarding a number of items of changed work, memorialized as Modification 1 to the contract.  By its terms, the Modification constituted full satisfaction and release of Appellant’s claims related to matters addressed in the Modification, including impact and delay costs.  In the Modification, Respondent allowed Appellant $40,000 and a 90-day delay “due to PSE&G Transformer delay.”  The Modification specifically provided that Appellant did not release Respondent from its claim for additional costs associated with the 90-day delay.  (AF 78, 93, 94; Bennett Decl. ¶¶ 15, 16, 17; Stip. 50).

            26.  In a March 24, 2005 letter to the contracting officer, Appellant stated its claim for $20,000, the additional amount Appellant claimed for general conditions due to PSE&G delays over the $40,000 that Respondent had allowed in Modification 1.  Appellant’s letter also cited delays associated with approval of the masonry submittals as grounds for an extension.  Appellant attached its December 6, 2004 letter to the contracting officer’s representative (Finding 25), in which it enumerated other causes for the delay claim: AT&T delays, plan discrepancies, and an excessive number of change orders.  In support of its claim, Appellant submitted backup information, including copies of correspondence and a document entitled “Breakdown of General Conditions for Post Office.”  That document listed certain field expenses (superintendent, cell phone, backhoe, etc.) followed by monthly dollar figures totaling $21,954.20.  It also included a line item denoted “Home Office Overhead” with a monthly dollar figure of $31,686.60, making a grand total monthly figure of $53,640.80.  The submission also included a spreadsheet relating to calculation of the “Home Office Overhead” line item in the Breakdown.  (AF 95).

            27.  On June 27, 2005, Appellant appealed the decision to grant it only $40,000 of the $60,000 it claimed for extended general conditions (AF 97).  That appeal was docketed as PSBCA No. 5284 on June 30, 2005.

            28.  By final decision issued October 11, 2005, the contracting officer denied Appellant’s claim, and asserted Respondent’s claim against Appellant for liquidated damages (AF 99).

DECISION

            Appellant claimed entitlement to $20,000 per month for extended general conditions for a period of three months of delay it alleges was caused by Respondent.  Although granting Appellant a 90-day time extension in Modification 1, Respondent agreed to pay Appellant only $40,000, apparently considering only two months of the delay to be compensable.  In this appeal, Appellant seeks to show it is entitled to payment of $20,000 for the third month of the delay.

Appellant argues that its completion of the project was delayed by PSE&G’s delay in marking the location of the new utility pole, and delivering and eventually energizing the transformer.  Further, it claims that it was also delayed by the masonry submittal process, numerous discrepancies in the plans, an excessive number of change orders on the project, and AT&T’s delay in moving its electrical connection to the new transformer.  It contends that it has shown at least 90 days of compensable delay and that it has demonstrated that it incurred monthly general conditions expenses far in excess of the $20,000 per month it claimed from Respondent.

            Respondent argues that Appellant has failed to demonstrate that any conduct by Respondent was the sole cause of identifiable, specific, unreasonable delay to the project and that Respondent’s grant of Appellant’s extended general conditions for two of the three months claimed fully compensated Appellant for any delay damages.  Furthermore, Respondent claims that Appellant’s attempt to base its claim for extended general conditions on alleged delays other than that related to PSE&G’s conduct is (1) barred by the general release in Modification 1 and (2) beyond the Board’s jurisdiction because Appellant has never submitted a delay claim to the contracting officer based on these other grounds.

          Appellant contends that Respondent is responsible for all delay caused by PSE&G, but focuses most on Respondent’s alleged failure to make the required advance payment to the utility in a timely manner.  Appellant first requested that Respondent make the payment on March 15, 2004 (Finding 9), and Respondent made the payment on April 26 (Finding 10), 42 days later.  Appellant claims this delayed its work because the utility would not mark the location of the new power pole until the payment was made.  The record does not include evidence that would allow the Board to determine what part, if any, of the 42-day period might have constituted unreasonable delay by Respondent.  However, such a determination is not necessary to resolution of this appeal.

            To establish entitlement to extended general conditions for a period of delay, it is Appellant’s burden to demonstrate the extent to which overall completion of the project was delayed.  See Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994).  Here, the project was never stopped, and while waiting for Respondent to make the advance payment to PSE&G, Appellant continued substantial work in other areas (Findings 14, 24).  Showing that a particular task—marking the location of the electric pole, for example—was delayed does not automatically translate to overall project delay.  To warrant a contract time extension, Appellant must show that delay to a particular task impacted its overall progress on the contract.  Appellant has not shown that the 42-day period between its request for the advance payment and Respondent’s payment had a day-for-day effect or any quantifiable effect on overall project completion.  See Bruno Law v. United States, 195 Ct. Cl. 370, 386-387 (1971); Essential Constr. Co. and Himount Constructors Ltd., Joint Venture, ASBCA No. 18706, 89-2 BCA ¶ 21,632 at 108,834; Youngdale & Sons Constr. Co. v. United States, 27 Fed. Cl. 516, 550 (1993).  Thus, regardless whether Respondent was at fault for all or part of the 42 days it took to issue the advance payment check, Appellant has not shown the extent, if any, of delay to the overall project that resulted.  Moreover, even assuming Appellant was entitled to compensable project delay for the full 42 days relating to the advance payment, that is less than the 60 days of extended general conditions granted by the contracting officer.

            In addition to claiming that Respondent’s alleged delay in making the required advance payment delayed it, Appellant claims to have been delayed by PSE&G’s failure to respond promptly to Appellant’s requests to mark the location of the new power pole once the payment was made, verify the location of transformer and switchgear pads, deliver the transformer, and energize the transformer once it was installed (Finding 24).  However, the contract required Appellant to coordinate with PSE&G (Finding 5), and other than the responsibility to make the advance payment, Respondent was not shown to have had any duty or ability to control the actions of PSE&G.  Accordingly, PSE&G’s delays unrelated to the advance payment were not delays caused by Respondent.  Therefore, to the extent Appellant was entitled to an extension of time due to PSE&G’s conduct, such extension would not be compensable.  See Finding 4; Asheville Contracting Co., DOT CAB Nos. 74-6, 74-6A, 76-2 BCA ¶ 12,027 at 57,712.[1]

            We are not persuaded by Respondent’s arguments that Appellant’s reliance on other grounds for its delay claim is barred by Modification 1 or is beyond the Board’s jurisdiction as not included in a claim considered by the contracting officer.  The broad release language in Modification 1 relates only to the items included in the Modification (Finding 25).  The other grounds asserted herein by Appellant were not addressed in the Modification.  Furthermore, Appellant’s claim of March 24, 2005 (Finding 26) included in the text of the letter or in its attachments the other grounds urged by Appellant herein as grounds for granting an extension.  It was from the deemed denial of that claim that Appellant appealed.  Additionally, the contracting officer considered those other grounds in his final decision of October 2005.  Accordingly, we are not barred from considering whether those additional grounds support Appellant’s claim for extended general conditions for the final month of its alleged period of delay.

            Appellant claims that AT&T’s delay in transferring its electrical connections to the new transformer supports its claim to a compensable time extension.  However, as with the PSE&G delay discussed above, Appellant has failed to demonstrate that this delay led to a delay in overall project completion.  See Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994).  Additionally, Appellant has not shown Respondent to be the sole cause of the AT&T delay.  Respondent had notified its lessee and AT&T early in the project of the need to relocate electrical connections to the new transformer (Finding 15).  There is insufficient evidence in the record from which we can conclude that Respondent had the responsibility or power to do more to effect the transfer of AT&T’s connections.

            In any event, Appellant bears some responsibility for delay by AT&T.  Appellant knew that AT&T had to transfer its electrical connections to the new transformer, and Respondent had notified Appellant in February 2004 of AT&T’s interest in contracting with Appellant’s electrical subcontractor to perform the work and identified the contact person at AT&T (Finding 16).  There is no evidence Appellant pursued this path until late in the project, and, eventually, Appellant’s electrical subcontractor did relocate AT&T’s electrical service (Finding 19), but later than Appellant wished.  As both parties may have had an opportunity to avoid the AT&T delay, even if Appellant had shown the existence of overall project delay, any time extension to which Appellant might be entitled on this basis would not be compensable.  See ADCO Constr. Inc., PSBCA Nos. 2355, 2465, 2480, 90-3 BCA ¶ 22,944 at 115,173; The Polote Corp., PSBCA Nos. 1297, 1428, 87-1 BCA ¶ 19,490 at 98,497.

             The other grounds Appellant contends justify payment of its extended general conditions do not.  The delay in the architect’s review of the masonry submittals was, at most, one working day beyond the 10-working-day period suggested in the contract for conducting such review (Findings 20-22), and oral approval of the submittals was given even earlier (Finding 22).  This has not been shown to be unreasonable.  See Bruno Law v. United States, 195 Ct. Cl. 370, 385 (1971).  Additionally, Appellant has not proved that the plans were defective.  The number of Requests for Information did not, in and of itself, prove that the plans were defective, and Appellant has offered no other evidence in that regard.  Finally, Appellant did not show that the number of change orders on the project was excessive.

Appellant has failed to prove by a preponderance of the evidence that it is entitled to compensation for its extended general conditions beyond that included in Modification 1.  The appeal is denied.[2]

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                                      I concur:
William A. Campbell                                                     David I. Brochstein
Administrative Judge                                                  Administrative Judge
Chairman                                                                    Vice Chairman

[1] That the contracting officer granted Appellant the full 90-day extension it requested does not raise a presumption that Respondent was at fault for the delay on which the extension was based.  See England v. Sherman R. Smoot Corp., 388 F.3d 844, 851-857 (Fed. Cir. 2004).  The Federal Circuit has made plain that such a presumption is not created by Respondent’s grant of an extension of time in a construction contract.  Accordingly, the Board will no longer follow the holding to the contrary in Gavosto Associates, Inc., PSBCA Nos. 4058, 4131, 4144, 4333, 01-1 BCA ¶ 31,389 at 155,061.

[2]  This appeal was from the deemed denial of Appellant’s March 24, 2005 claim (Findings 25, 26).  On October 11, 2005, the contracting officer issued a final decision denying Appellant’s claim and asserting Respondent’s claim for liquidated damages.  Appellant did not appeal the liquidated damages claim to the Board, and the parties have not addressed liquidated damages in this proceeding.  Accordingly, the Board has not addressed liquidated damages.