Over the years, I have written several articles stressing the paramount importance to contractors of strictly adhering to written notice requirements in their contracts regarding changes in the work, delays and other unforeseen events, and highlighting the harsh consequences of failing to do so.
Appeal of UNIT Company, ASBCA 60581, 18-1 BCA ¶ 36,974 involved a $20,025,555 fixed-price contract with the U.S. Army Corps of Engineers for construction of a battle command training center in Alaska. The contract contained the Federal Acquisition Regulation (F.A.R.) clause 52.236-21, Specifications and Drawings for Construction (Feb 1997), which states, in pertinent part, the following: “In case of discrepancy in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contractor without such a determination shall be at its own risk and expense.”
During the project, the contractor submitted over 20 Requests for Information (RFIs) to the Corps concerning piping and the engineering design associated with new air handling units (AHU) and computer room air conditioning units (CRAC), which the contractor contended were not adequately shown on the drawings. One such RFI stated the following: “There are no pipe sizes shown from CRAC [Units] 1 & 2 to their corresponding dry coolers. Sheet M241 shows the pipe sizes from AC 1&2 to their dry coolers, but there is nothing documented anywhere in the drawings showing us pipe sizes for CRAC [Units] 1 & 2.”
The Corps’ response indicated that “the CRAC system was intended to be vendor provided for full and complete system. Note 5 in the Computer Room AC Unit Schedule indicates the need for providing a complete and functional system. The Vendor should be consulted for sizing of piping based upon the pumps selected by the Vendor.”
In a subsequent RFI, the contractor indicated the following: “AHU 1 & 2 may require additional unplanned work efforts including, but not limited to, condensate lines that stub out into the service vestibules. The condensate lines appear to require a p-trap below the services vestibule floor and would connect together to a main line that would run under the AHU and exit through the architectural curb. There is no design/engineering specificity [sic] for this effort.”
The Corps responded that “this matter will be assigned to Change Item #036, and will be the subject of future correspondence.”
The contractor proceeded with designing and installing the piping as no further correspondence was forthcoming from the Corps. After completing the work, the contractor submitted a Request for Equitable Adjustment (REA) seeking $1,076,012 for defects in the Corps’ design. After the Contracting Officer (CO) denied the REA, the contractor took the necessary action to convert it to a certified claim. The CO denied the claim and the contractor appealed to the Armed Services Board of Contract Appeals.
On appeal, the Corps filed a motion for summary judgment in which it sought to dispose of the entire appeal on the grounds the contractor failed to (1) submit to the CO notice of a discrepancy in the specifications or drawings, and (2) await the CO’s determination regarding that discrepancy, before performing the additional work. The contractor countered that the RFIs it submitted constituted sufficient notice within the meaning of FAR 52.236-21.
While not determining one way or the other whether the contents of the multiple RFIs did, in fact, suffice for adequate notice, the board ruled that they did rise to the level of creating a genuine issue of material fact on the matter, thereby making a trial on the matter necessary. In doing so, it rejected the Corps’ contention that an RFI is an improper vehicle for communicating notice under FAR 52,236-21 and that such notice must come in the form of a serial letter.
The parties settled, and a trial was never held. Thus, the board did not have to decide whether the language in the RFIs was sufficient to constitute effective notice. This decision is nevertheless important because it disposes of the notion that notice must take a particular form. Rather, the focus is on whether the information conveyed effectively placed the government on notice of a discrepancy.
Contractors should not consider the UNIT Co. decision a guide on how to give effective notice. Rather, it should serve as a reminder to federal agencies that the board will employ a common sense approach when deciding whether notice was given.
