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Watts Constructors, LLC (Watts) was required to remove and replace electrical wiring because it failed to comply with contract specifications requiring wiring to be installed inside rigid conduit. Armed Services Board of Contract Appeals (ASBCA) found that Watt’s electrical subcontractor “saw what it wished to see when it reviewed the contract’s plans and specifications and used metal clad (MC) cable instead of the required rigid conduit. Although the use of the MC cable was observed by the government’s quality assurance inspectors from the Army Corps of Engineers and not objected to until late in the game, the government was not estopped from rejecting the cable and requiring it to be removed and replaced when a higher ranking quality assurance inspector more knowledgeable with the conduit requirements inspected the project and learned of the deviation from the specifications. The court stated, “though it would have been far better for the quality assurance inspectors from the Corps to have recognized and halted Helix’s divergence from the requirements of the contract, their inaction did not change the meaning of the contract and was insufficient to support a finding of waiver of contractual compliance by the government.” Appeal of Watts Constructors, LLC, 20-1 BCA P 37563 (ASBCA), ASBCA No 61493, 2020 WL 1867740.

Watts was awarded a contract with the U.S. Army to build a facility for satellite communications on Camp Roberts, California. It subcontracted the electrical work to Helix Electric, Inc. (Helix). The electrical specifications relevant to this dispute provided:

Execution, part: “3.1.3 Wiring Methods

Provide insulated conductors installed in rigid steel conduit, IMC [a type of conduit], rigid nonmetallic conduit, or EMT [another type of conduit], except where specifically indicated or specified otherwise or required by NFPA 70 to be installed otherwise.”

The Board stated that the Corps has an institutional preference for utilizing rigid conduit as described in this specification and that Helix personnel were well aware of this general desire, but held their own preference for power cabling, which was the use of flexible MC, which the Board states shares some characteristics with conduit but is not itself conduit.

The Board states that,

“Despite their concerns that the Corps would not permit the use of MC, Helix personnel involved in planning the construction found portions of the contract’s specifications that, they believed, permitted the use of MC cable throughout and which we note below (tr. 22-24).

Part 2 of the Interior Distribution System section of the Electrical portion of the contract’s specifications3 is titled “Products” and lists required specifications for several dozen identified electrical distribution products. One of these products is MC, and the applicable subsection provides, in its entirety:

2.8.6 Metal-Clad Cable

UL 1569, NFPA 70, Type MC cable.

(R4, tab 4 at 1886 (footnotes not in original))

A government witness characterized this portion of the contract as ““boilerplate” (tr. 150). Supporting this characterization, there are at least two other products listed in the Products category that were not applicable to the project: armored cable and flat conductor cable (tr. 177-78; R4, tab 4 at 1887 (Section 2.8.7, Armored Cable; Section 2.8.9, Flat Conductor Cable)).

The other location that MC is mentioned in the contract is in Part 3 of the specifications, labeled, “Execution.” Section 3.1, “Installation,” includes direction about how to install different items. MC is included in this section and the applicable subsection provides, in its entirety:

3.1.3.2 Metal Clad Cable

Install in accordance with NFPA 70. Type MC cable.

(R4, tab 4 at 1900).”

In reviewing these sections the Board noted that they there are several boilerplate sections describing materials and products that, IF used, would have to be done in a certain manner, but those were not germane to the actual detailed specifications applicable in this instance. Those sections would only be germane if some other section of the contract actually called for the use of the materials or products described in the boiler plate.

Editor’s Comment: This is an important point because most government contracts will contain superfluous product descriptions, and as noted by the Board here, that doesn’t mean that those boilerplate descriptions entitle the contractor to use those products. Those sections only come into play if some detailed plans and specifications make them applicable. In this particular case, Helix’s project manager conceded during testimony that “nothing in the drawings explicitly indicated the use of MC and generally agreed that the drawings required the use of conduit.”

MC Is Not Conduit

The Board states, “During the hearing and the post-trial briefing, Watts made an attempt to allege that MC was a type of conduit, and thus permissible in the contract where it demands conduit (see app. br. at 9-10; app. reply br. at 6). As a matter of fact finding, we do not find this allegation persuasive and find that MC is not conduit as referenced in the contract.”

Wiring was inspected without objection by Corps Personnel

For the first three buildings completed under the contract, about 60 percent of the wiring installed by Helix was MC wire and not inside rigid conduit. The Board found that,

“Corps personnel on site did not prevent Watts from installing MC during most of the preliminary construction of the project. In fact, on several occasions, the Corps inspected wiring installation inside walls prior to the ““closing” of the walls by the installation of drywall and made no objection to the use of MC. It is important to note, however, that the quality assurance person on site for the Corps was not primarily performing a quality assurance function for electrical work, but was focused on other disciplines.”

Government Didn’t Waive Right to Reject Non-Compliant Wiring

At some point, late in construction, the Corps Quality Assurance Electrical Engineer for the project, [ ], inspected the work already performed and determined that Watts had not complied with the contract due to its use of MC, rather than conduit. The Board noted:

“The lower level quality assurance persons on site for the Corps had never been made aware that Watts’s use of MC was in any way contra-indicated by the plans and specifications before then. There is no evidence in the record that the contracting officer or any other government employee with authority to change the contract’s requirements were aware of Watts’s use of MC in lieu of conduit throughout the project.”

The contractor argued that the government’s acquiescence to its use of MC, and the government inspectors’ beliefs that MC was permitted, provide evidence that the Corps interpreted the contract the same way Watts and Helix did. The Board acknowledged that contemporaneous interpretation of a contract prior to a dispute is entitle to some consideration by the Board, but it rejected Watts arguments here primarily because, “we do not find the contract to be ambiguous.” “Accordingly, we need not go beyond the language of the contract to divine its meaning. Even if we were inclined to go beyond the contract language here, however, we would not find the government inspectors’ inaction or their opinions on the meaning of the contract to be particularly helpful.”

The Board also noted that, “In terms of equity, the failure of Corps inspectors to halt the use of MC early in the contract, before the closure of walls and near completion of wiring work, is troubling, to say the least. Nevertheless, in terms of equity, it was also Watts’s responsibility to comply with the terms of the contract. Moreover, absent affirmative misconduct (not alleged or proved here) the government’s failure to enforce the terms of a contract is not a matter of estoppel.”

Board concluded,

“Here, there is no evidence that any government personnel knowingly waived the contractual terms inasmuch as the quality assurance representatives on site who observed the use of MC appear to have been of the opinion that it was not precluded by the contract. Moreover, as a matter of authority, under the Changes Clause, only the contracting officer is noted as having the authority to alter the terms of the contract on behalf of the government. Whether such authority may be delegated to such persons as quality assurance representatives, there is no evidence that they possessed such authority or that the contracting officer was made aware of any waiver of contract terms. Watts has proved no knowing waiver of adherence to contract terms by anybody who could do so on behalf of the government.”

The contractor attempted to argue that a notation on a drawing referencing “conduit” could not trump the detailed specification that called for rigid conduit. The Board explained even if the drawing could successfully be argued to create any ambiguity, that wouldn’t help the contractor since the basic contract premise is that specifications take priority and precedence over conflicting drawings.

Comment: This decision demonstrates several important principles of government contract law. If there is a potential ambiguity in contract documents a contractor should submit a request for information (RFI) to clarify what the documents intend. The contractor in this case didn’t do this. They just interpreted the documents how they wanted to and proceeded with no clarification or direction from the government. Detailed specifications take priority over boilerplate and drawings and any deviation from the specifications must be obtained by change order. Just because the government personnel observe non compliant work without objection when it is being installed doesn’t necessarily preclude the government from later rejecting the non-compliant work. The government is not estopped from later enforcing the terms of a contract absent affirmative misconduct by the government.

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk Report, Vol. 22, No. 6 (Jul/Aug 2020).

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