Contractor Authority Over Means and Methods

Construction and Procurement Law News, Q2 2015

Client Alert

A central principle of construction contracts is that, where a contractor (a) commits to construct in accordance with plans and specifications (b) provided by the owner (c) in exchange for payment of a firm, fixed price, the contractor controls its means and methods, unless the plans and specifications clearly dictate a particular means or method. (For example, the structural engineer may specify a particular jacking procedure for raising a space frame.) When the owner, after contract execution, requires the contractor to perform in a different manner than the contractor planned, even though the contractor’s original plan also meets the contract requirements, the contractor is due compensation for the increased costs it suffers as a result of this direction. This principle was again at play in Columbia Construction Co. v. General Services Administration.

In 2009, Columbia Construction Co. (“Columbia”) contracted with the General Services Administration (“GSA”) to upgrade an existing IRS service center in Andover, Massachusetts. The upgrade included a whole building renovation and, pertinent to this case, included an upgrade of the building’s security system. Columbia subcontracted with Wayne J. Griffin Electric, Inc. (“Griffin”) for Griffin to provide the electrical, communications, and security contract work.

The security system work was detailed in multiple specifications and drawings in the contract documents. The pre-existing building security system was an “open” system, with security cabling not run in conduit or raceways. According to the plans and specifications, in the renovated building this security wiring was required to be “concealed or in conduit (EMT) unless specifically approved in writing by the contracting officer.”

The specifications defined “concealed” as follows: “covered completely by building materials, except for penetrations (by boxes and fittings) to a level flush with the surface as necessitated by functional or specified accessibility requirements.” Griffin interpreted these specifications to mean that it would be permitted to install security cabling in cable trays either above the ceiling or underneath the raised access floor, because this would “cover” the security cabling “with building materials.” When GSA observed Griffin installing security cable on cable trays in the raised access floor system, the GSA Contracting Officer (“CO”) immediately directed Griffin to stop this work. GSA then instructed Columbia in writing to install cabling in conduit “per the contract.”

Griffin noted its disagreement with this interpretation, but began installing security wiring in cable tray per the GSA direction. Griffin then submitted a request for equitable adjustment (“REA”) to Columbia for the costs it claimed it would incur as a result of being forced to install security cable in conduit. Columbia passed this REA through to the GSA. After a series of meetings to discuss security cabling, GSA rejected this REA and required Griffin to continue installing security wiring in conduit.

Columbia submitted a certified claim to GSA on behalf of Griffin, which the CO denied. Columbia then appealed this decision to the Civilian Board of Contract Appeals (the “Board”), the judicial body which governs appeals from CO decisions of the GSA, Department of Veterans Affairs, and other civilian governmental bodies.

The Board ruled in favor of Columbia and Griffin. The Board noted that the contract gave the contractor the option of using conduit or another installation method that concealed the security cabling by covering it completely in building materials. The Board rejected the GSA’s argument that the drop ceiling and the raised access flooring did not meet the definition of “building materials” under a plain interpretation of the contract. Considering the contract as a whole, and the various other specifications that clearly showed that “concealed” could include installation below the raised access flooring or above the drop ceiling, the Board held that it would be unreasonable to interpret the contract to exclude security cabling from this permitted installation method. Because “GSA unreasonably stopped [Griffin’s] planned installation” it was required to “pay the increased price for demanding that the security cabling be installed in conduit.”

This case demonstrates once again that the Government cannot require more than its plans and specifications require without paying its contractor additional compensation. It is also of interest because of what was revealed in discovery. The Government produced a document from a GSA electrical engineer that essentially admitted that the GSA requirement to use conduit exceeded the security system specifications, and noted that “if this case were to proceed forward, the government would likely be found responsible for a large portion of the stated costs…” The document also detailed a lack of consensus among GSA personnel as to whether conduit was required for this installation. The Board cited this document in its decision, although it did not state that it based its decision on it. The document was certainly harmful to the Government’s position, and it brings to mind another practice point: be aware that non-privileged project documentation and correspondence is likely discoverable and could one day wind up in the hands of potential adversaries. As such, make sure that such documentation is accurate and factual, but be wary of including negative discussions of issues or “lessons learned” in such written documentation. In addition, be sure your counsel is aware of any such documentation when you seek guidance about the merits of your case.