Manual was not in the instructions

DOT's move to bypass contract claim via office guide does not hold up in court

Article July 17, 2003
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State DOT construction manuals are sometimes used by project
managers and inspectors to interpret the state DOT standard specifications or
special provisions. This creates contract interpretation disputes such as the
one decided in Thomas M. Durkin & Sons, Inc. v. Pennsylvania Department of
Transportation, 742 A.2d 233 (Pa.Cmwlth. 1999).

On April 6, 1987, Durkin and the Pennsylvania Department of
Transportation (Penn-DOT) entered into a contract for $53,897,182.97 for the
construction of 3.375 miles of "Section 600" of I-78. The project
included reconstruction and rehabilitation of local roads and construction of bridge
structures and retaining walls.

PennDOT issued a notice to proceed on April 10, 1987, and
set a completion date of  Dec. 17,
1988.

After the work began, multiple problems arose which delayed
Durkin's performance and prevented project completion within the specified
time. To resolve Durkin's potential contract claims against PennDOT, the
parties executed an interim settlement agreement dated Nov. 10, 1988. The
agreement provided a $2.25 million lump-sum payment to resolve Durkin's claims;
smaller lump-sum payments for specified construction tasks; construction of two
retaining walls on a force account basis; and revised unit prices for certain
contract items.

The project was completed within the extended year, but
during that time additional disputes arose. On Dec. 15, 1992, Durkin identified
13 claims requiring additional compensation. After efforts to resolve them
failed, Durkin filed a complaint with the Pennsylvania Board of Claims. On
March 4, 1999, the board awarded Durkin $416,208.73 of the $1,534,075.48 claimed.
Of the 13 claims heard by the board (Claims A-M), Durkin appealed the board's
order as to Claims C and J and PennDOT appealed the board's order as to Claim
G.

Stand and take it

In this column I will discuss only Claim C, which was
PennDOT's refusal to pay Durkin force amount, equipment standby costs of
$140,314.61 incurred when Durkin chose not to work on rain days, weekends and
holidays. In refusing payment, PennDOT relied on its Project Office Manual,
which specified: "[D]ay[s] on which the contractor elects not to work,
standby time will not be paid." Durkin argued that the manual was never
made part of the contract.

The board found that the manual was "in effect"
during the project and awarded Durkin $25,662.40 of the $140,314.61 claimed.

On appeal, Durkin contended the board erred in relying on
PennDOT's Project Office Manual because the document represented a Penn-DOT
internal operating manual which was not made part of the contract.

Instead, Durkin asserted that compensation for equipment
standby time is governed solely by Section 110.03(d)(3) of PennDOT Standard
Specifications. Section 110.03(d)(3) provides:

"If machinery or equipment is not operating,
compensation will be at the hourly rental rate, exclusive of operating
costs."

Durkin asserted that if contract language is clear and
unequivocal, its meaning must be determined solely by the contents of the
contract. PennDOT argued that the board found that the Project Office Manual
encapsulated the industry standard for payment of equipment standby costs and
that it was within the board's discretion to define the term "standby
time" as it is understood in the trade. The court disagreed.

The court reiterated the well-established principle that the
meaning of an unambiguous contract can be ascertained without "any guide
other than a knowledge of the simple facts on which, from the nature of
language in general, its meaning depends; and a contract is not rendered
ambiguous by the mere fact that the parties do not agree upon the proper construction."

Because the equipment standby contract terms were clear and
did not need to be interpreted without any other guide, the court concluded
that the board erred in considering PennDOT's manual in arriving at the amount
of standby costs.

The board was restricted to considering only the terms of
the agreement.

The court remanded the claim to the board for it to modify
its findings, as necessary, to arrive at an appropriate award for standby costs
consistent with credible documentation presented by Durkin to support the
claim.

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