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NELLO L. TEER CO. v. WASHINGTON METRO. AREA TRANSI

July 15, 1988

NELLO L. TEER COMPANY, Plaintiff,
v.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant



The opinion of the court was delivered by: GASCH

 HONORABLE OLIVER GASCH, SENIOR UNITED STATES DISTRICT JUDGE

 INTRODUCTION

 This is an appeal by the Nello L. Teer Co. ("Teer"), a construction contractor, from the final decision of the General Manager of the Washington Metropolitan Area Transit Authority ("WMATA") concerning the equitable adjustment of a contract. WMATA substantially adopted an advisory opinion of the Corps of Engineers Board of Contract Appeals ("Board of Contract Appeals" or "Board"), except to the extent that it addresses and offers conclusions concerning the allowance of "additional profits."

 The underlying dispute arises out of a contract awarded to plaintiff by WMATA for the construction of "Section K-2, Clarendon Station, Vienna Route, of the Washington Metrorail System in Arlington, Virginia." Plaintiff has sought an equitable adjustment of $ 12,336,342 for costs arising from WMATA's delay in providing necessary easements for underpinning buildings immediately adjacent to the subway station and line that was built by plaintiff pursuant to the contract. There is no dispute that WMATA failed to timely provide to Teer the easements it was obligated to provide under the terms of the contract. The dispute in this case centers on the effect of the delay on Teer's operations and costs, or in other words, the amount due to Teer as an equitable adjustment.

 On November 16, 1979, WMATA's Contracting Officer unilaterally granted an equitable adjustment of $ 592,814 to Teer for the effects of the delay in furnishing the easements. Five years after an exhaustive thirteen-day evidentiary hearing held in April of 1981, the Board of Contract Appeals issued an advisory opinion on September 30, 1986, determining that Teer was entitled to an additional $ 195,807, for a total equitable adjustment of $788,621, which included $ 58,870 for additional profit. On December 30, 1986, the Board denied WMATA's motion for reconsideration, which focused on the award of additional profit. On August 24, 1987, WMATA adopted the Board's adjustment of the equitable award, except for the additional profit, from which WMATA claims immunity. WMATA thereby allowed an additional equitable adjustment of $136,937.

 BACKGROUND FACTS

 On May 7, 1974, plaintiff and WMATA entered into contract number 1K0021, for the construction of Section K-2, Clarendon Station of the Metrorail System's Vienna Route for a fixed price of $ 29,664,702. The project involved approximately 3,000 feet of subway cut-and-cover construction, as well as construction of the Clarendon Station. The project included eight major construction activities: relocation of utilities, underpinning, installation of soldier piles, excavation, support of excavation (performed concurrently with excavation), form, rebar, and pour ("FRP") concrete, backfill and restoration.

 Four buildings adjacent to the construction site (the Sears, Underwood, Kimels and Medical buildings) required underpinning of their foundations in order to safely perform the necessary excavation. *fn1" The lump sum price for underpinning by terms of the contract was $ 700,000. WMATA was obligated by the terms of the contract to obtain the rights (referred to by the parties as easements) from the owners of the four buildings necessary for Teer to begin underpinning.

 On May 21, 1974, Teer submitted a Preliminary Progress Schedule to WMATA, which shows underpinning as one of the seven necessary activities to begin upon receipt of WMATA's notice to proceed. On June 17, 1974, WMATA approved Teer's proposal of Spencer White & Prentice as the subcontractor for underpinning on the four buildings. On June 17, 1974, WMATA issued a notice to proceed.

 Teer submitted a Critical Path Method Schedule ("CPM"), depicting its plan for performing the work, which WMATA approved on October 17, 1974. The schedule provided for completion of all work by September 20, 1976, (a total of 826 calendar days after its inception) with interim dates specified for certain aspects of the work. Teer planned to complete all of the underpinning by December 6, 1974.

 According to Teer's original plan, all of its major construction activities were to proceed in a continuous west to east fashion, with no more than one operation going on at a time. As planned, Teer could procure "backfill" materials directly from concurrently performed excavation. Teer contends that the delay in obtaining easements necessitated a change in the sequence of its work, for which it is entitled to acceleration costs. It is clear from the record developed below, however, that other factors contributed to the difficulties that Teer faced in performing the contract.

 The record reflects that "for various reasons, including problems with labor union pickets and the withdrawal from the work of the originally-intended subcontractors for the underpinning work and the excavation support system, Teer got off to a very slow start." Opinion, Corps of Engineers Board of Contract Appeals (hereinafter "Board Opinion") at 4, para. 9. Starting around June 26, 1974, labor pickets attempted to prevent Teer's unionized subcontractors from working with Teer's own nonunion labor. The Board found, and the record supports its finding, that the early critical operations of utility relocation, underpinning, and support of excavation were significantly affected by the labor problem. Board Opinion at 7, para. 14. The record reflects that on August 12, 1974, Teer noted an eight week delay caused by labor disputes and the withdrawal of a subcontractor. Teer also noted a delay in getting the Underpinning Drawings from its subcontractor.

 On August 23, 1974, Teer submitted to WMATA the Underpinning Drawings. The utility relocation and underpinning of the buildings were scheduled under the CPM to begin upon receipt of the notice to proceed. Utility relocation was to proceed ahead of excavation and was to take 265 days. Underpinning was planned to take 120 days. Teer was finally able to man the project in a normal manner on August 26, 1974. When it requested that WMATA grant it a 67 day extension on September 3, 1974, Teer referred to the labor disruption as requiring the redesign of the support of excavation scheme. In that letter Teer said:

 
Union action has caused several of our subcontractors to refuse to proceed with their work. This refusal has required us to redesign our support excavation scheme. Also we have been required to retain a consultant for our underpinning operations. In essence, all relocation of utilities was stopped due to union pickets on the project.

 Board Opinion at 9-10, para. 14 (emphasis added). Ten days later, on September 13, 1974, having heard rumors that WMATA had not yet obtained the underpinning easements, Teer's project manager informed WMATA that although the contractor was prepared to proceed with the underpinning, it could not "due to lack of right-of-way." Id. at 6, para. 9.

 Not until September 19, 1974 did Teer submit for approval its CPM depicting the proposed west to east continuous construction plan. At the same time, however, Teer proposed a dual shift, five day work week plan for the underpinning to be completed within 120 days. In actuality, the dual shift for underpinning did not commence until March of 1975, although there was a dual shift at work on drilling and other operations as of October of 1974. On October 17, WMATA approved the CPM submitted by Teer. In a letter on that same date, Teer again refers to the labor problems as the cause of their delays, stating:

 
The CPM has not yet been approved, but it is evident that any delay to the underpinning and start of excavation support will delay the start of construction in the station area and this is a highly critical area. . . . To reduce the effect of this delay, we have started a second shift on the drilling operations and will have a second shift during excavation of the station. We are claiming a delay from June 17, 1974, because the union intimidation caused ECI-SOLETANCHE and Spencer, White and Prentice to back out on their agreement. Approximately two months' design time was lost because of this. More time was lost mobilizing our equipment and men to perform these operations.

 Board Opinion at 11, para. 14.

 On October 31, 1974, WMATA issued a stop work order directed at the underpinning of the Kimels and Medical buildings. The order was lifted as to the Medical building on November 15, 1974 and Teer began to underpin it on December 4, 1974. With respect to the Kimels building, the stop work order was lifted on December 6, 1974, and Teer began to underpin it on December 9, 1974.


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