Opinion ID: 2513995
Heading Depth: 4
Heading Rank: 1

Heading: The mobilization and demobilization award

Text: Quality advances alternative theories supporting its claim for an increase in its award for mobilization and demobilization costs. Quality first argues that as a matter of contract interpretation, it is entitled to recover $767,067 of the $1 million its bid allocated for mobilization and demobilization costs because it was an agreed price. [2] The state responds that the hearing officer did not err by basing the award on costs incurred rather than Quality's bid price. We substitute our own judgment on questions pertaining to contract interpretation. [3] The contract specifies that [T]he Contractor, for and in consideration of the payment or payments herein specified and agreed to by the Department, hereby covenants and agrees to furnish and deliver all the materials and to do and perform all the work and labor required in the construction of project Chena Hot Springs Road Widening. (Emphasis added.) Quality argues that agreed to is equivalent to an agreed price. The hearing officer ruled that [m]obilization was not an `agreed price' since it was not agreed to by the parties. We agree with the hearing officer. The contract term that Quality relies on cannot be read in isolation. The second clause clearly links payments... agreed to with [Contractor] hereby covenants and agrees to furnish and deliver all the materials and to do and perform all the work.  (Emphasis added.) But Quality did not deliver all the materials, and it did not perform all the work. It was therefore permissible for the hearing officer to base Quality's award on costs incurred rather than the agreed price for complete performance. [4] Quality alternatively argues that even if it was correct to base compensation on the costs it actually incurred, the uncontroverted evidence demonstrates that Quality was entitled to a higher award. Quality contends that the hearing officer's reliance on the state audit report to determine mobilization and demobilization costs was not supported by substantial evidence, and that the state's expert testified to a much higher amount. The state responds that the hearing officer was not required to accept either party's figure for mobilization.... [T]he hearing officer was free to choose among actual cost data, accounting records, estimates by law and expert witnesses, and calculations from similar projects. (Quotations omitted.) We review the hearing officer's findings of fact under the substantial evidence test. [5] The hearing officer ruled that The State's expert testified that $127,000 would be a reasonable sum for mobilization and demobilization costs.... By contrast, [Quality] was claiming $767,067.... [T]he most reasonable figure ... is in the State's Special Audit Report. I am adopting that amount ($287,708, plus profit and overhead), subject to one modification. I am persuaded by the evidence that the barging of equipment ... was triggered by the contractor's anticipation of being awarded this contract.... Therefore, I find that the amount the contractor is entitled to for mobilization and demobilization is the sum of $449,621. Quality argues that testimony by the state's expert, Ronald Maus, conflicts with the state audit report. Quality argues that Maus's reasonable person approachwhich returns to the contractor the costs of its performanceresults in an award several hundred thousand dollars greater than the hearing officer's award. But Quality's argument simply advocates substituting Maus's award figure for the hearing officer's; it does not demonstrate that the hearing officer's approach was unsupported by substantial evidence. Indeed, there are several methods for calculating mobilization expenses. Maus's approach is one; the hearing officer relied on another. The hearing officer used his own reasonable judgment and determined that figures from the state's special audit report best compensated Quality for mobilization and demobilization. Quality describes Maus's approach in detail. But demonstrating that an alternative method for calculating mobilization costs is valid does not establish that substantial evidence fails to support the hearing officer's award. The hearing officer was presented with a variety of figures on this matter. He adopted the state's audit figure, but allowed additional barging costs, which were triggered by the contractor's anticipation of being awarded this contract. [6] The hearing officer permissibly based Quality's award on expert testimony, supporting evidence provided by the audit report, and the hearing officer's own expertise. We therefore hold that substantial evidence supports the hearing officer's mobilization award.