The government’s motion to dismiss an appeal seeking recovery of contract performance costs is denied, where there is a reasonable dispute about whether the contractor’s use of RFIs to communicate discrepancies in the contract designs satisfied its contractual requirement to provide such notice to the contracting officer, and where the government did not demonstrate that it was prejudiced by either a lack of notice or the contractor’s work, because there is no evidence the agency would have directed the contractor any differently.
UNIT Company appealed the final decision of the U.S. Army Corps of Engineers contracting officer denying its claim for costs incurred to design, furnish, and install piping for air handling and air conditioning units.
The government moved for summary judgment, opposing the recovery of costs on grounds that UNIT failed to provide the CO with a contractually-required notice of a discrepancy in the specifications or drawings, and failed to await the CO’s determination regarding that discrepancy, before installing the units. The government cited FAR 52.236-21(a), which states that a discrepancy shall be submitted to the contracting officer for a determination and that any adjustment by a contractor without the determination would be at the contractor’s own risk and expense.
In response, UNIT argued that it provided sufficient notice of the discrepancy when it submitted a request for information inquiring about specifications missing from the contract drawings. UNIT asserted that, at a minimum, the RFIs created a disputed issue of material fact concerning whether UNIT provided the required notice, and therefore, preclude summary judgment. UNIT also maintained that even if the discrepancy was not timely submitted to the CO, the government was not prejudiced.
The government disputed UNIT’s contention that the RFI’s satisfied the FAR requirement for notice, because an RFI is not the appropriate vehicle for communicating a specification discrepancy because it specifically states that the government’s response does not authorize changed work. The government also argued that the RFIs did not clearly convey the discrepancy at issue and that UNIT criticized its own subcontractor for raising the issue too late. Finally, the government complained that it was deprived of an opportunity to review the alleged defect and elect how it wished to proceed.
The board denied the motion for summary judgment, agreeing that a disputed issue of material fact existed as to whether the contractor timely submitted the alleged discrepancy to the contracting officer. The board determined that it was plausible to infer that at least some of UNIT’s RFIs noting the absence of details in the specification were submitted and responded to prior to the disputed work.
The board also found no reason an RFI would be inappropriate to provide sufficient notice to the government of a discrepancy, noting that no contract language constrained RFI communications. Further, the board declined to evaluate form over substance in evaluating the sufficiency of the notice. The board also noted that the RFIs appeared to have described UNIT’s concerns about the missing details.
Finally, the board concluded that the government failed to demonstrate prejudice. ASBCA noted the agency’s response suggested it did not believe the specifications were defective. ASBCA therefore found it reasonable to infer the agency would not have directed UNIT any differently had the contractor provided earlier notice of the discrepancy.
UNIT Company is represented by Michael A. Brain and Law Offices of Royce & Brain. The government is represented Thomas J. Warren, Carl F. Olson, and Kyle B. Davis of the U.S. Army Engineer District, Alaska.
