Opinion ID: 2513995
Heading Depth: 4
Heading Rank: 3

Heading: Awarding idle equipment time at Blue Book rental rates

Text: The state argues in its cross-appeal that the hearing officer erred in awarding idle equipment time to Quality at Blue Book [13] rental rates. [14] The state argues that § 108-1.09 of the contract expressly prohibits the use of `published rental rates' in calculating equipment costs for claims. The state claims that the contract instead required Quality to be reimbursed for actual costs. Quality responds that the hearing officer permissibly used Blue Book rates and that his findings are supported by substantial evidence. Paragraph five of § 108-1.09 describes claims following a termination for convenience: After receipt of a Notice of Termination, the Contractor shall submit to the Contracting Officer, his claim for additional damages or costs not covered above or elsewhere in these specifications. Such claim may include such cost items as reasonable idle equipment time, mobilization efforts, bidding and project investigative costs, overhead expenses directly allocable to the project termination and not covered under work paid for at agreed unit prices or contract bid prices, legal and accounting charges and other expenses reasonably necessary in claim preparation, subcontractor costs not otherwise paid for, actual idle labor costs if work is stopped in advance of termination date, guaranteed payments for private land usage as part of the original contract, and any other costs or damage items for which the Contractor feels reimbursement should be made. The intent of negotiating this claim would be an equitable settlement figure to be reached with the Contractor. In no event, however, will loss of anticipated profits be considered as part of any settlement. The state argues that the hearing officer erred in concluding that he could award idle equipment time at Blue Book rates under paragraph five of § 108-1.09. The state argues that the word `reasonable' modifies the word `time' in [the second sentence], and not the word `cost,' and therefore that paragraph five requires the rate for idle equipment to be based on actual costs. But the state's narrow construction is defeated by the next-to-last sentence of paragraph five, which states that [t]he intent of negotiating this claim would be an equitable settlement figure to be reached with the Contractor. The provisions of § 108-1.09 taken together do not imply the narrow construction urged by the state. Rather, they suggest that the hearing officer has broad authority under § 108-1.09 to reach an equitable award. The state also argues that the contract controls reimbursement for idle equipment time and that the hearing officer had no authority under the termination clause of § 108-1.09 to substitute his judgment and base the award on Blue Book rates rather than actual costs. We disagree. Section 108-1.09 states in part that the intent of negotiating [a] claim [is to reach] an equitable settlement figure ... with the Contractor. The state drafted this standard form contract. We will not defer to the state's narrow interpretation of a term that indicates on its face an alternative and reasonable interpretation. [15] The state cites our decision in Southeast Alaska Construction Co. ( SEACO ) v. State [16] to support its argument that the hearing officer impermissibly applied the Blue Book rate in determining Quality's idle equipment claim. In SEACO the superior court concluded that recovery was limited to actual equipment rates even though a contract term plausibly allowed recovery at Blue Book rates. [17] On review we held that the superior court did not err in refusing to compensate SEACO for the use of extra equipment at Blue Book rental rates. [18] But we did not hold that it would have been error to apply Blue Book rates. We simply held there that the contract did not compel that result. Similarly, the hearing officer in this case was not compelled to use the Blue Book rates. But he was not forbidden to use them, either. The hearing officer based his decision to employ Blue Book rates on a number of relevant reasons. He stated that from the testimony and my own experience... contractors, generally, do not keep equipment costs for the purposes of developing claims. He also pointed out that a difficulty in not using Blue Book rates is that contractors with different accounting systems would be treated differently. He also explained that industry custom routinely permits the use of rates such as those found in the Blue Book. [19] It is this type of expertise to which we defer in reviewing a decision under the substantial evidence standard. Because the hearing officer's decision does not rely on an improper interpretation of the contract, and because his decision relied on substantial evidence, we hold that it was not error to use Blue Book rates in determining Quality's standby costs. [20]