Government Contracts Partial Constructive Change Entitled Contractor to Adjustment
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Tuesday, December 18, 2018

Partial Constructive Change Entitled Contractor to Adjustment

By Government Contracts Editorial Staff

An appeal from the deemed denial of a request for an equitable adjustment was granted in part, and denied in part by the Armed Service Board of Contract Appeals, because the contractor established the government constructively changed the contract with regard to some requirements, but did not change other design elements required by the contract. The dispute arose from a contract for the design and construction of a water treatment plant at a military base. Because of the base’s location in a desert, to remove wastewater produced by the plant, it was it was advantageous to remove the liquid component of the wastewater through natural evaporation in evaporation ponds, and then to haul the remaining solid waste to a landfill. The contractor alleged the government constructively changed the contract by compelling it to include one backup EP, to use a 3 million gallon per day average daily flow, and to use a 0.8 pan evaporation coefficient only if the maximum water depth was 3 feet or less. Where the government misinterprets contract provisions that require a contractor to perform more or different work, or to higher standards, not called for under the contract terms, the contractor is entitled to an equitable adjustment (Emerson-Sack-Warner Corp., 61-2 BCA ¶3248).

Contract Documents. Here, the requirement to provide an operational backup EP was not a constructive change, because the plain language of the contract required the contractor to provide at least one “STANDBY” EP. By using “standby” to modify “pond,” the contract plainly required a backup EP that was operationally ready but not deployed unless needed for an emergency. Moreover, the term “standby” did not have a customary meaning within the trade that differed from the standard dictionary definition. However, the government’s directions regarding use of a 3.0 mgd ADF and a 0.8 pan evaporation coefficient were constructive changes. Although contract drawings were based on a 3.0 mgd ADF, the contract did not require the contractor to use any particular ADF. In addition, contract documents required the contractor to use an ADF in the range of 2.0 to 2.5 mgd to measure actual daily demand. It was therefore reasonable for the contractor to conclude it could use an ADF of 2.25 mgd. The government’s argument the contractor changed the ADF from the 3.0 mgd it had proposed in its 65 percent design to 2.25 mgd in its revised 100 percent design lacked merit. The proposed ADF, which the government rejected, was not a contract requirement, and the contractor was free to select an ADF that was sound and supported. Similarly, the contract documents did not require the contractor to use any particular evaporation coefficient for any particular water depth, and it was the government, not the contractor, that that sought to change the evaporation coefficient relative to the water depth in the contractor’s proposal. (CDM Constructors, Inc., ASBCA, ¶95,624).

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