Opinion ID: 1672252
Heading Depth: 1
Heading Rank: 8

Heading: Pavers' Claim

Text: Pavers contracted with the University to perform earthwork (overexcavation and backfill), add crushed rock for stabilization, construct a chain link fence and a silt fence, clear the site, remove contaminated soil, and remove and dispose of seepage water. The project proceeded without any major changes to the type of construction activities, and most of the work was completed by the end of 2003. For each work unit, the University bid proposal form contained an estimated quantity. Pavers submitted a unit price based on the quantity set forth on the bid proposal form. The form stated that the contract could be modified by change orders which increased or decreased the Contract Sum by the actual quantities for each of the work units. Substantial overruns on the University project were experienced for the disposal of soil and the removal and disposal of seepage water (work units 9 through 11). The actual amount of soil disposed of was 8,071.29 tons, compared to the estimate of 1,400 tons. The actual seepage water removed and disposed of was 173,900 gallons, compared to the estimate of 1,200 gallons. As the project progressed, Pavers notified the University of the overruns. By fax, Pavers notified Aksamit, the lead project manager, and the University's consultant of the substantial overruns on work units 9 through 11. The University was also aware that cost overruns were occurring, because its lead project manager and its consultant were regularly on the project site. Without requiring a change order for work units 9 through 11, the University told Pavers to continue working on the project, even though the University knew that large quantity overruns, and therefore substantial increases in cost, were imminent. The University instructed Pavers to proceed with the work despite these overruns because the project needed to be completed as soon as possible. During the course of the project, Pavers maintained detailed records of its expenses, including labor costs, disposal fees, subcontractor charges, trucking expenses, and miscellaneous costs (crushed rock, fuel, and incidentals). Pavers did not keep a separate record of the expenses for each work unit, nor was it required by the contract to do so. The only cost documentation required by the contract for a separate work unit was a record of the soil disposal costs and the seepage water disposal costs associated with the landfill and the water treatment facility. Pavers submitted a total claim of $1,714,996.40 for the work performed, which included the cost of the large overruns of quantity on work units 9 through 11. Pavers asserted that the contract required that payment be made at the contract unit price bid and that there should not be an equitable adjustment to the contract. Because of the substantial changes in the quantity of soil disposed of and seepage water removed and disposed of (work units 9 through 11), the University claimed that the unit prices for this work should be equitably adjusted. The district court did not determine what would have been an equitable adjustment to the unit prices for work units 9 through 11. Instead, it concluded that a total cost method should be used to adjust the contract. The court found that Pavers incurred $1,216,383.59 in costs and assigned a 14.2-percent overhead for general administrative costs. It further found that the total costs for the project were $1,389,110.06, which did not include any profit. The district court concluded that neither awarding Pavers its full unit price for work units 9 through 11 nor requiring Pavers to pay out of its own pocket the increased costs would be equitable. The court found that the University failed to meet its burden for an equitable adjustment to the unit prices. However, it reasoned that a total cost method should be applied, since Pavers' exact losses and increased expenses were difficult to determine because expenses were not tracked on a per work unit basis. The court found that the total costs expended by Pavers to complete the project were reasonable.