Appeal challenging an agency’s decision on the quantum due to a contractor for a changed condition is denied where contractor failed to prove its costs by a preponderance of the evidence, primarily because many of the contractor’s alleged costs were incurred when the contractor persisted in installing conduit over the government’s objections.
Lebolo-Watts Constructors 01 JV, LLC had a contract the U.S. Army Corps of Engineers to build a satellite communications operations center in Maryland. During performance, a dispute arose over electrical conduit. LWJV and its electrical subcontractor believed that the contract allowed for the installation of flexible metal clad cable (MCC). The government believed that some parts of the building needed electrical metallic tubing (EMT) instead of MCC. After a significant amount of MCC had been installed, the government asked LWJV to remove MCC in concealed spaces above a suspended ceiling and replace it with EMT.
LWJV submitted a $1.5 million claim to the government for removal of the MCC and replacement with EMT. The government found the claim meritorious because the contract did not specify that MCC could not be used in concealed spaces. Nevertheless, the government believed LWJV was only owed about 10 percent of the claimed costs. After lengthy negotiations, the government ultimately granted the company an almost $500,000 equitable adjustment to cover the costs of replacing MCC with EMT. LWJV appealed to the ASBCA, contending it was owed more than $800,000.
The board found that LWJV was not entitled to the costs for installation of MCC. The board noted that the company had incurred many of its costs by persisting with installation of MCC over the government’s objections. The government notified LWJV before construction began that it disagreed with the planned use of MCC. The company, however, believed the government’s interpretation of the contract was wrong, so it just went ahead with the installation of MCC. While the government ultimately agreed with LWJV’s interpretation of the contract, that still did not warrant compensation to LWJV for its noncompliance with the government’s repeated direction to use EMT instead of MCC.
The board also found that LWJV had failed to show that it was entitled to costs incurred replacing the MCC in concealed spaces with the EMT. LWJV contended it should receive its actual expenses for the replacement. The board found that LWJV’s actual replacement costs did not comport with the work recorded in the government’s quality control reports or other parts of the record. Rather, the board ruled that the government’s estimate, which relied on the RSMeans estimating standards, was the better measure.
Finally, although the government had granted LWJV an almost $500,000 equitable adjustment, the company made some pre- and post-hearing revisions to its claims, ultimately reducing its claim by $123,000. The board found that this amount needed to be deducted from LWJV’s equitable adjustment. While noting that the decision to deduct from LWJV’s equitable adjustment had been difficult and seemed harsh, the board found that by appealing the equitable adjustment, LWJV had exposed it to re-evaluation. The board was not going to allow the company keep money that the company itself agreed it was not entitled to.
LWJV is represented by Herman M. Braude and Edward D. Manchester of Braude Law Group. P.C. The government is represented by Michael B. Goodman, Scott C. Seufert, and David B. Jerger of the U.S. Army Corps of Engineers.
