James G. Davis Construction Corporation ( 2014 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of - )
)
James G. Davis Construction Corporation ) ASBCA Nos. 58000, 58002
)
Under Contract No. W912BU-09-C-0018 )
APPEARANCES FOR THE APPELLANT: Adam C. Harrison, Esq.
Eli Y. Robbins, Esq.
Harrison Law Group
Towson, MD
APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.
Engineer Chief Trial Attorney
James D. Mirynowski, Esq.
Maria E. Kolokithias, Esq.
Engineer Trial Attorneys
U.S. Army Engineer District, Philadelphia
OPINION BY ADMINISTRATIVE JUDGE THRASHER
These appeals arise out of a contract between the U.S. Army Corps of Engineers
(Corps) and James G. Davis Construction Corporation (Davis) to construct a building at
Aberdeen Proving Ground, Maryland. Davis appeals on behalf of one of its
subcontractors, HMI Insulation, LLC (HMI), for the cost of installing insulation on some
segments of the building's Heating, Ventilation and Air Conditioning (HVAC) system.
We have jurisdiction under the Contract Disputes Act (CDA) of 1978, 41 U.S.C.
§§ 7101-7109. We decide entitlement only. For the reasons set forth below, we deny
both appeals.
FINDINGS OF FACT
The Project
1. The Corps issued Invitation for Bids No. W912BU-09-B-0006 on 26 January
2009 to construct a Command Control/Communication Network Transportation
(C2/CNT) East Facility (Building) on the C4ISR Campus at Aberdeen Proving Ground,
Maryland (Project) (R4, tab 2). The building was large, approximately half a million
square feet, consisting of a primary building (3 and 4 stories), a high bay building
(2 stories) and a high bay link (tr. 21158). The building was designed to be a
multi-purpose computer facility for research, development and support of troop
telecommunications and information technologies, which included certain spaces that
were designated mission critical with no HVAC failures permitted (tr. 2/157-58). Below
is an artist's rendering of the project from the solicitation drawings:
(R4, tab 1, disc 12, 509B0006-DWGS-Vol 5.PDF)
The Project HVAC Systems
2. The designer of record for this project was the architect/engineering
firm ofEwingCole, and the project's HVAC system was designed by
Mr. William C. Jarema, a EwingCole employee (supp. R4, tab 37 at 1). Mr. Jarema, who
testified at the hearing as both a government fact and expert witness, explained that the
individual components of the HVAC system are not unique but the way they are
combined creates a unique system (tr. 2/159). Pertinent to these appeals, one unique
feature of the HVAC system design is that there was no overall mechanism to control the
temperature of the entire building with a single thermostat. Instead, the design required
two systems to work together in series but not in parallel. One system pulls in outside
air, preconditions the air in an Outside Air Unit (OAU) and then delivers it to the spaces
to be conditioned. A second system of individual small units, "closets" located within
each space to be conditioned, then conditions the air to the exact temperature for that
space. The conditioned air is then returned to the OAU to be exhausted outside the
building. (Tr. 2/164-65)
2
OAUs
3. Outside air enters the HVAC system through the eight OAUs located on top of
the roof of the eight penthouses (supp. R4, tab 39, drawing H4.l). 1 Air is also returned to
the OAUs to be exhausted to the outside. However, before the air is exhausted it passes
through an enthalpy wheel. Specification § 23 82 02, it 2.2.8.a requires the contractor to:
Provide an enthalpy wheel which will transfer both sensible
and latent energy from exhaust air stream into outside air
stream. In the summer, both heat and moisture shall be
transferred from the outside air to the exhaust air. In the
winter the transfer is to be reversed.
(R4, tab 1, disc 12, folder vol. 3, § 23 82 02, it 2.2.8.a. at 9)
4. The OAUs regulate the air flowing from the OAU within certain temperature
and humidity parameters set by the contract. Specification§ 23 82 02, it 2.2.9, Operating
Controls, describes control of the OAUs stating in pertinent part at it 2.2.9c.1:
The dehumidifier shall praovide [sic] the scheduled leaving
air dew point or less year round and be capable of providing
natural discharge air to the space with free hot gas reheat
energy at all dehumidification conditions. Controls shall
automatically operate the dehumidification heat recovery
system in response to system requirements and adjust its
output to maintain specified conditions. The heat recovery
unit shall be capable of rejecting 75% of the total heat of
rejection (THR) to the air to maintain discharge air
temperature at setpoint (70 degree F) or to a water-cooled
condenser/water loop on a call for cooling.
(R4, tab 1, disc 12, folder vol. 3, § 23 82 02 at 10) Thus, the enthalpy wheel exchanges
energy (air) between the incoming and outgoing air to set temperature and humidity
parameters. The specific temperature and humidity parameters are found on the OAU
Schedule on drawing H4.1. (Supp. R4, tab 39, drawing H4.1)
Heat Recovery System vs. Energy Recovery System
5. Although Specification§ 23 82 02, it 2.2.9c.1 employs the terms "heat recovery
system" and "heat recovery unit" in reference to the operating parameters of the OAUs,
1
Only three of the penthouses are relevant to these appeals: the North, Southwest and
East penthouses (supp. R4, tab 39, drawings H5.2, H5.3, H5.4).
3
Davis' expert witness, Mr. Kenneth McLauchlan, testified that there is no "heat recovery
system" on this project. He opined instead that the OAUs are "energy recovery systems"
as defined by industry standards but are not "heat recovery systems." As he explained, a
"heat recovery" system is different from an "energy recovery system" in that it seeks to
use high temperature exhaust to preheat the incoming outside air. In contrast here, the
enthalpy wheel transfers energy from the returning air to the incoming air; heat in the
winter and cool air in the summer. (Tr. 1/211-12) Mr. Stephen Prosser, an HMI
employee, similarly testified that the enthalpy wheel transfers energy and that there is no
"heat recovery system" on the project (tr. 1/154). Although the government's expert
witness and designer of the system, Mr. Jarema, agreed that the enthalpy wheel in the
OAUs transfers energy between the intake and exhaust air streams as described in the
American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc.
(ASHRAE) Standard 62.1 definition of energy recovery ventilation system, he did not
assert they are also "heat recovery systems" (tr. 2/177).
HVAC Ductwork Insulation Drawings 2
6. Three areas of the HVAC ductwork are pertinent to these appeals: ductwork
labeled on the drawings as Outside Air (OA) running horizontally through the corridors,
Exhaust Air (EA) running horizontally through the corridors and EA labeled vertical
ductwork running through the mechanical shafts. 3 Drawing HGOl defined abbreviation
OA as outside air and EA as exhaust air but did not specifically further define these
terms. (Supp. R4, tab 39) The original solicitation drawings did not include the OA and
EA notations (supp. R4, tab 38). These terms were added to revisions of the solicitation
mechanical drawings by Mr. Jarema during the bidding process to clarify the special
requirements of the solicitation (tr. 2/167).
OA Labeled Ductwork Running Horizontally Through the Corridors
7. The OA labeled ductwork system in the drawings indicates air entering the
penthouse, flowing through the OAU and then being distributed down and throughout the
building running vertically down through the floors through a mechanical shaft between
the floors. At each floor, the ductwork branches off horizontally. This branch ductwork
(labeled on the drawing as OA) travels through the corridors of the building to
mechanical rooms on each floor. (Supp. R4, tab 39 at areas highlighted in blue) The OA
2
The parties refer to drawings, plates and schematics interchangeably. For purposes of
clarity, we will refer to all these documents as drawings.
3
The pertinent ductwork shown on the drawings at supp. Rule 4, tab 39, were color coded
by the government for purposes of this appeal. The pertinent drawings are
Volume 5-Mechanical Drawings H2.l.A.l, H2.l.B.l, H2.l.C.l, H2.l.D.l, H2.2.A.l,
H2.2.B.l, H2.2.C.l, H2.2.D.l, H2.3.A.l, H2.3.B.l, H2.3.C.l, H2.3.D.l, H2.4.A.J,
H2.4.B.l, and H2.4.C.l.
4
ductwork runs along the ceiling of the corridors. Because there is no dropdown ceiling
under the ductwork, the ductwork is exposed to the temperature of the air in the corridor.
By industry practice, this ductwork would normally be referred to as supply air ductwork
and the drawings indicate the project included some supply air ductwork that were not
labeled OA (supp. R4, tab 39 at areas highlighted in red).
EA Labeled Ductwork Running Horizontally Through the Corridors
8. Once the air is distributed throughout the building, the air is returned to the
OAU through the ductwork system labeled on the drawing as EA. These horizontal runs
of ductwork, for the most part, travel parallel to the OA ductwork through the same
corridors of the building to mechanical shafts. (Supp. R4, tab 39 at ductwork highlighted
in green)
EA Labeled Ductwork in the Vertical Mechanical Shafts
9. The horizontal ductwork enters the mechanical shaft and connects to vertical
ductwork (labeled on the drawing as "EXH") that brings the air back up to the penthouse.
There is a notation beside each of the EXH symbols on the drawings indicating a
dimension and EA UP. (See supp. R4, tab 39, drawing H2.4.B. l )4 Once the vertical
ductwork reaches the penthouse, it makes a 90° left tum to horizontal, and runs back to
the OAU. The air enters the OAU where the enthalpy wheel recovers heat and moisture
from the air. Once the air passes through the enthalpy wheel, the air is exhausted outside
the building. (App. supp. R4, tab 5)
HVAC Ductwork Insulation Specifications
10. Specification § 01 11 00, ii 1.4. 8 .1, Air Distribution Systems, at subparagraph 1,
states in pertinent part, "All ductwork shall be insulated" (supp. R4, tab 18 at 8).
11. The relevant mechanical insulation requirements for the project are contained
in Specification § 23 07 00, ii 3 .3 .1.1, which lists the ductwork and casings that are to be
insulated. Specification § 23 07 00 provides, in pertinent part as follows:
3 .3 .1.1 Listing of Ductwork and Casings to be Insulated
a. All air conditioning system supply air ductwork,
casings and plenums except:
4
There are two ducts in each vertical shaft. One is labeled OA UP. However, these
ducts are not the subject of these appeals.
5
1. Ductwork exposed in air conditioned spaces served
by the ductwork
b. Air conditioning system return air and relief air
ductwork, casings and plenums located in:
1. Mechanical equipment room and penthouse
2. Ceiling space or plenum where there is roof above.
3. Shaft with exterior wall(s) or shaft passing through
non-air conditioned space.
4. Non-air conditioned space, including shaft not
surrounded by air conditioned spaces on all sides
and ceiling space or plenum with non-air
conditioned space either above or below.
m. Outside air ductwork, casings and plenums.
o. Heat recovery system exhaust ductwork on inlet air
side of heat recovery coil/unit.
t. Indoor exhaust/relief plenums and ductwork from fan
discharge to louver or exhaust hood/gooseneck.
(R4, tab 7 at 27-28)
ASHRAE Standards
12. Some of the terms used in Specification§ 23 07 00, il 3.3.1.1 are not defined
within the contract but are industry terms-of-art. The terms-of-art, relevant to this appeal,
include: "Outside Air," 5 "Supply Air," "Return Air," "Exhaust Air," "Air Conditioning
System," and "Heat Recovery System" (supp. R4, tab 34 at 3-4). These terms are defined
5
ASHRAE Standard 62. l does not define the term "Outside Air" but does define the
term "air, outdoor" (supp. R4, tab 34 at 3-4).
6
by ASHRAE Standard 62.1, Ventilation for Acceptable Indoor Air Quality, which is
considered an industry standard in the HV AC industry and was applied to this project. In
this regard, Mr. Jarema explained in his testimony that ASHRAE does not apply in every
project but most building codes now use it as a guide for designing ventilations systems
and that he used it as a guide on this project. He also stated that one could look to
ASHRAE 62.1 to define the terms "outside air," "exhaust air," "supply air," "return air,"
"air conditioning system" and "energy recovery ventilation system." (Tr. 2/175-77)
13. Relevant to these appeals, ASHRAE Standard 62.1 defines the following
industry terms-of-art:
air conditioning: the process of treating air to meet the
requirements of a conditioned space by controlling its
temperature, humidity, cleanliness, and distribution.
air, ambient: the air surrounding a building; the source of
outdoor air brought into a building.
air, exhaust: air removed from a space and discharged to
outside the building by means of mechanical or natural
ventilation systems.
air, outdoor: ambient air that enters a building through a
ventilation system, through intentional openings for natural
ventilation, or by infiltration.
air, return: air removed from a space to be then recirculated
or exhausted.
air, supply: air delivered by mechanical or natural ventilation
to a space, composed of any combination of outdoor air,
recirculated air, or transfer air.
energy recovery ventilation system: a device or combination
of devices applied to provide the outdoor air for ventilation in
which energy is transferred between the intake and exhaust
airstreams.
7
(Supp. R4, tab 34 at 3-4)
14. In addition, Specification § 23 07 00, ,-i 3 .3. I. I a. I refers to "Ductwork
exposed in air conditioned spaces served by the ductwork" as ductwork that is not
required to be insulated (R4, tab 7 at 27). However, the contract does not define the term
"air conditioned spaces served by the ductwork" or provide any guidance with respect to
when a space is "served by the ductwork." In reference to this provision,
Mr. McLauchlan testified that the air coming from the OAU is conditioned air because
the enthalpy wheel controls both the temperature and humidity of the air to set parameters
(tr. 1/179-85). In contrast, Mr. Jarema testified that the OAUs do not condition the air
because they perform no air conditioning or heating function and do not control the
temperature in the building; only the closets perform this function (tr. 2/170-71).
Davis' Bid
15. Mr. Prosser, HMI, prepared the HVAC segment ofDavis' bid on the project
(tr. 1/31). 6 Mr. Prosser testified he reviewed the drawings and specifications but based
the proposed bid primarily on the specifications. He reviewed the revised drawings,
noting the OA and EA labeled ductwork, but interpreted the designations as merely
indicating the source or destination of the air flow; OA indicating it was coming from the
OAU and EA that it was returning to the OAU (tr. 1/163-64). He viewed the OA labeled
ductwork as supply and the EA labeled ductwork as return ductwork (tr. 1/51-54). He
did not include a price for insulation for the ductwork in the corridors labeled as OA or
EA because his reading of the specifications was that ductwork ran through corridors and
the shafts were conditioned and therefore were not required to be insulated (tr. 1157-62).
He interpreted Specification§ 23 07 00, ,-i 3.3.1.lm only to require insulation on the air
ducts in the penthouses on the louver to the unit (tr. 1/72). He also testified that he often
reviews specifications that include requirements that don't exist on a particular project
(tr. 1/63-64).
The Contract
16. Contract No. W912BU-09-C-0018, as amended, was awarded to Davis on
20 April 2009 (R4, tab 2 at 2). Receipt of Notice to Proceed was acknowledged by
Davis on 26 June 2009 (R4, tab 3). Following award, Davis entered into a subcontractor
agreement with Delcard Associates, Inc., (Delcard) for the provision ofHVAC services.
On 16 June 2009, Hudak executed a "Standard Form Subcontract Agreement" with
6
As a fourth tier subcontractor, his bid estimate was submitted by Hudak Mechanical
Insulation (Hudak), Davis' third tier subcontractor. In addition, his bid estimate
was also submitted to three or four other companies also bidding on the project.
(Tr.1/76)
8
Delcard requiring it to furnish and install the insulation for the HVAC system on
this project in accordance with plans and specification prepared by EwingCole dated
20 January 2009 (supp. R4, tab 28). 7 HMI (Mr. Prosser) began the HVAC work in
June 2010 (tr. 1/I4I). On 13 August 20IO, Hudak filed for bankruptcy protection
pursuant to Chapter I I of the United States Bankruptcy Code. Subsequently on
20 October 20 I 0, Hudak assigned its rights in the subcontract with Delcard to HMI
which was recognized by a Consent to Assignment of Subcontract Agreement executed
by Delcard (supp. R4, tab 29).
Coordination Drawings, Shop Drawings and Meetings
I 7. The contract specification required the contractor and any of its subcontractors,
including HVAC subcontractors, to participate in creating and updating a composite set of
coordination drawings (supp. R4, tab I8 at I5, § 1.6). The purpose of the coordination
drawings was to pre-plan installation of various segments of the project, specifically
including HVAC, and to identify any coordination problems with any other trades
working on the project (id., § 1.6. I). Delcard subcontracted with CadTech, Inc., to
produce its coordination drawings which were submitted by Davis to the Corps in October
2009 (supp. R4, tab I9). Mr. Michael Rew, CadTech's Senior Coordinator, testified that
the coordination drawings prepared by his company on this project depicted insulation on
the OA and EA ductwork in the form of dashed lines following the length of both sides of
the ductwork (tr. 2/9I-95; supp. R4, tab I9), and the representation was "the standard
method to indicate insulation on ductwork" (tr. 2/IOI). We find that the coordination
drawings, which Davis submitted to the government during performance, depicted
insulation required on all OA and EA labeled ductwork at issue in these appeals. These
drawings also depicted insulation on some segments of the supply air ducts which were
not labeled OA and did not require such insulation (supp. R4, tab 39, drawing H2. I .B. I
highlighted in red, tab I9 at TCD-IB-OI, TCD-IB-02, TCD-IB-03, TCD-IB-04). 8
I 8. Coordination meetings were held concerning the effort to prepare the required
coordination drawings and to identify any coordination problems between the various
7
Delcard did not execute the agreement until IO February 20IO, seven months later and
almost one year after the contract was executed between the Prime and the
government (supp. R4, tab 28).
8
Drawing H2. I .B. I generally depicts the first floor ductwork in Project Segment B. The
areas highlighted in red depict the government's interpretation of supply air
ductwork that are exposed in a corridor that serves the corridor i.e., that fall within
the exception of Specification § 23 07 00, i! 3 .3. I. I a not requiring insulation.
(Supp. R4, tab I39) A comparison of the coordination drawings TCD-lB-01,
TCD-lB-02, TCD-lB-03, and TCD-IB-04, indicates these drawings depict the
same ductwork to require insulation (supp. R4, tab I9).
9
trades working on the project (supp. R4, tab 18 at 15, § 1.6.1). These meetings took
place between fall of 2009 and mid-February 2010. The minutes of these meetings
indicate attendees included representatives of the Corps, EwingCole, Davis, Delcard and
CadTech, among other subcontractors. (Supp. R4, tab 21) Mr. Rew who prepared the
drawings, testified he did not recall HMI attending the coordination meetings but that
HMI's absence was not unusual because HVAC trades rarely attend these meetings
(tr. 2/114-15).
19. In addition to the coordination drawings, Specification § 0 I 33 00, ii 1.1.1
SD-02, required Davis to submit various shop drawings pursuant to the listing in
the Submittal Register under the contract (R4, tab I, disc 12, folder vol. 2, § 01 33 00
at 2). CadTech also prepared the shop drawings on behalf ofDelcard which were
submitted to the government by Davis. Mr. Rew testified he depicted insulation in the
form of dashed lines following the length of both sides of the OA and EA ductwork on
the shop drawings based upon his reading to the specifications. (Supp. R4, tab 20;
tr. 2/96-97) We find that the shop drawings, which Davis submitted to the government
during performance, depicted insulation required on all OA and EA labeled ductwork at
issue in these appeals.
Preparatory Meeting and Mechanical Systems Submittal Reviews
20. On 25 January 2010, Davis forwarded Hudak/HMI's Thermal Insulation
for Mechanical Systems submittal to EwingCole for review pursuant to Specification
§ 23 07 00, ii 1.3, Submittal (supp. R4, tab 23 at 2). EwingCole approved the submittal
(23 07 00-001Rev01, Thermal Insulation for Mechanical Systems) on 8 February 2010
with comments (id. at I). One of the comments stated, "Insulate all relief air ductwork,
all exhaust ductwork on the discharge side of the Outside Air Units and all ductwork
carrying outdoor air, including all supply ductwork from Outside Air Units, per
specification paragraph 3 .3. I" (id. at 6 note 7).
21. On 8 April 20 I 0, Davis forwarded submittal review 23 07 00-00 I,
Rev 02-Thermal Insulation to EwingCole (supp. R4, tab 24 at 2). EwingCole reviewed
the submittal and responded on 27 April 2010 with comments. Two of the comments
repeated the previous comments related to insulation of the exhaust ductwork on the
discharge side of the OAUs and outside air supply ductwork from the OAUs (id. at 6
notes 3-4). Mr. Prosser testified that his review of the comment related to the outside air
supply from the OAUs was the first time he realized there might be a different
interpretation of the insulation specifications related to the ductwork in the corridors
because it referred to supply air from the OAUs, despite the fact the comment from the
first submittal on 8 February 2010 did as well (see supp. R4, tab 23 at 6 note 7). As a
result of this realization, Mr. Prosser approached Delcard and asked what the government
meant by these comments. Delcard responded that they had to insulate the ductwork in
10
the hallways. Mr. Prosser's question and Delcard's response was elevated to Davis and
ultimately led to the submittal of Request for Information (RFl)-0889. (Tr. 1/79-81)
22. On 13 April 2010, a Preparatory Meeting was held pursuant to Specification
§ 01 45 01, ii 3.6.1, Preparatory Phase, requiring completion of such a meeting prior to
starting a definable feature of work, namely, Thermal Insulation for Mechanical Systems
(R4, tab 1, disc 12, folder vol. 2, § 01 45 01, ii 3 .6.1 at 5-6). Present at the meeting were
representatives of the Corps, Davis, Delcard and HMI (Mr. Prosser). As part of this
meeting pursuant to section II of the agenda, all submittals were checked for approval,
which included shop drawings. In addition, as indicated in section IV of the agenda,
the plans and applicable specifications were also reviewed. (Supp. R4, tab 25) The
13 April 2010 Corps Quality Assurance Report of the meeting does not reflect any
disagreement relating to the extent of the contract's insulation requirements (supp. R4,
tab 26; tr. 2/35-37).
RFI-0889
23. On 17 June 2010, the Corps received RFI-0889 from Davis seeking
clarification of the insulation requirements of the contract, as follows:
DAVIS feels that the following areas of specification 23 07
00 are unclear.
1.) Exposed Supply Air Ductwork.
Please confirm that per section 3.3.1.1 (a.)(1.), all supply air
ductwork exposed in conditioned spaces will not be insulated.
This includes all OA supply air duct located in the corridors.
The OA ductwork (from louver to OAU), casings, and
plenums in the Penthouses will be insulated with Type D 1
insulation.
II.) Return Air Risers in Shafts.
Please confirm that per section 3.3.1.1 (b.)(4.), all return air
duct located in the interior shafts (which are conditioned on
all sides) will not be insulated.
IV.) Discharge Side of the OAU Clarification
11
Ewing Cole's Note #3 in the returned submittal 23 07 00-1.1
states "Insulate all exhaust ductwork on the discharge side of
the OAUs."
Please confirm that DAVIS is correct in providing Type D 1
insulation on the ductwork from the OAU to the louver in the
penthouse as this is our understanding of the "exhaust
ductwork on the discharge side of the OAU" referenced.
(R4, tab 9)
24. On June 28, 2010, the Corps responded to each item, stating in pertinent part:
I. Incorrect. All 0/A Supply ductwork in corridor shall be
insulated. Section 3.3.1.1-a-l only permits ductwork serving
the space it is in to be uninsulated. All ductwork scheduled to
be painted shall be provided with paintable ASJ.
II. Incorrect. Most, if not all, shafts on the project have
non-air conditioned spaces either directly above or below
shaft.
IV. Correct.
(Note: All OAU ductwork in Penthouse to be insulated:
Supply Air duct - 3.3.1.la; Return Air duct - 3.3.l.lb; Outside
Air duct - 3.3.1. lm; Exhaust Air duct - 3.3.1.lt).
(R4, tab 9 at 1-2)
Request for Equitable Adjustment
25. On 29 July 2010, Davis submitted HMI's Request for Equitable Adjustment
(REA) No. 157 for an alleged change due to the Corps' response to RFI-0889 in pertinent
part regarding the insulation requirement related to insulating the outside air in exposed
corridors and return ducts in the shafts. The REA requested an equitable adjustment in
the amount of $470,871. 9 (R4, tab lOA)
9
The total of $470,871 included $339,458 to insulate the outside air ducts in exposed
corridors, $44,464 for increasing the fiberglass board thickness and $20,042 to
12
26. The Corps responded to the 29 July 2010 REA (157) on 9 August 2010 with a
finding of no merit (R4, tab 11 ).
27. The Corps internally clarified its position on 6 August 2010 by developing a
revised response to RFI-0889 which stated its position in more detail (supp. R4, tab 27). 10
28. On 8 July 2011, Davis submitted an uncertified request for a contracting
officer's final decision (COFD) for the insulation of OA ductwork and insulation of EA
ductwork in the shafts in the amount of$419,043 (R4, tab 14). 11 The request was later
certified by letter dated 1August2011 (R4, tab 15).
29. On 31August2011, Davis filed REA No. 399, on behalf ofHMI, requesting
an equitable adjustment of $479,444 for insulation of the exhaust air ducts (R4, tab lOB
at 13).
30. On 22 September 2011, the government responded to REA No. 399, finding it
had no merit (R4, tab 1OB at 11 ).
31. The contracting officer issued a COFD on 22 November 2011, denying Davis'
1August2011 claim (finding 28) in its entirety (app. supp. R4, tab 1).
32. On 5 December 2011, Davis submitted a certified claim and requested a
COFD related to REA No. 399 for the insulation of EA labeled ductwork running
horizontally through the corridors. The request stated that, Delcard, Davis'
subcontractor, split the REA into two parts: REA No. 399A in the amount of $398,900
and REA No. 399B in the amount of $80,543. Davis only requested a decision on 399A.
(R4, tab 1OB at 1) The contracting officer issued a COFD on 19 January 2012, denying
Davis' claim (app. supp. R4, tab 2).
33. Davis appealed both COFDs to the Board on 16 February 2012. The appeal
from the 22 November 2011 final decision, regarding the insulation of OA ductwork and
insulate return air ducts in shafts. The remaining amounts were Davis mark-ups.
(R4, tab 1OA at 2)
10
Appellant objected to admission of this document into evidence during the hearing.
We overruled appellant's objection retaining it in evidence but stated we would
give it whatever weight, if any, in our decision it was due (tr. 1/11-12). We give it
no weight in our decision. It was only transmitted internally within the Corps.
We do not find it to be useful in assisting us in discerning the meaning of the
contract terms at issue. It is only included in our findings of fact for completeness.
11
The claim dropped the request for $44,464 (plus Davis mark-ups associated therewith)
for increasing the fiberglass board thickness.
13
insulation of EA ductwork in the shafts, was assigned ASBCA No. 58000 and the appeal
from the 19 January 2012 final decision, the insulation of EA ductwork in the corridors,
was assigned ASBCA No. 58002.
DECISION
These appeals tum upon our interpretation of the contract specifications and
drawings for insulating the project's HV AC system, which is a legal, not a factual,
determination. Fortec Constructors v. United States, 760 F.2d 1288, 1291 (Fed. Cir.
1985). A threshold question is whether the plain language of the contract "supports only
one reading or supports more than one reading and is ambiguous." NVT Technologies,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004). Ifa contract is susceptible to
more than one reasonable interpretation, it is ambiguous. Hills Materials Co. v. Rice, 982
F.2d 514, 516 (Fed. Cir. 1992). Such a determination begins with an examination ofthe
plain language of the contract to discern the objective intent of the parties. Valley
Apparel, LLC, ASBCA No. 57606, 12-1BCA~35,013 at 172,052 (citing MA.
Mortenson Co. v. Brownlee, 363 F.3d 1203, 1206 (Fed. Cir. 2004)). Any examination of
the contract language must interpret the contract as a whole giving reasonable meaning to
all terms of the contract. Hercules Inc. v. United States, 292 F.3d 1378, 1381 (Fed. Cir.
2002).
The specific ductwork systems at issue are: ( 1) the HV AC supply-air ductwork
running horizontally through the corridors on the project labeled on the drawings as OA
(finding 7); (2) the HVAC return-air ductwork running horizontally through the corridors
on the project labeled on the drawings as EA (finding 8); and (3) the HVAC return-air
ductwork running vertically through mechanical shafts located in the interior areas of the
project also labeled on the drawings as EA (finding 9). We will address each in tum.
Insulation of OA Labeled Ductwork Running Horizontally through the Corridors
Appellant contends the contract specifications did not require insulation of the OA
labeled HVAC ductwork running through the corridors because that ductwork falls
within an exception found in the contract at Specification § 23 07 00, ~ 3 .3 .1.1 a, which
reads:
3 .3 .1.1 Listing of Ductwork and Casings to be Insulated
a. All air conditioning system supply air ductwork,
casings and plenums except:
14
1. Ductwork exposed in air conditioned spaces
served by the ductwork.
(App. hr. at 18-19; finding I I)
In support of its argument, appellant asserts that an interpretation of§ 23 07 00,
ii 3 .3 .1.1 a. I can only be, and should be, determined by looking to industry standards and
customs because the government does not define the terms air conditioning, supply air
and spaces served by the ductwork. Since these terms are not defined within the contract,
appellant argues, the Board should look to trade usage to define the terms. Appellant's
logic is that if you look to trade usage for guidance, the Board should specifically look to
the definitions within ASHRAE 62. I. If ASHRAE 62. I definitions are applied, the
ductwork in question would in industry terms be referred to as supply air and the
corridors through which the ductwork are located would be defined as air conditioned
spaces (ASHRAE 62.I) (app. br. at I4-I8; findings I2, I3).
Appellant further argues that ASHRAE 62. I defines the terms air conditioning
and supply air as used in § 23 07 00, ii 3 .3. I. I a. I. ASHRAE 62. I defines "air
conditioning" as "the process of treating air to meet the requirements of a conditioned
space by controlling its temperature, humidity, cleanliness, and distribution" (finding 13).
Applying this definition, appellant asserts the OAUs on the project are air conditioners
within the definition of ASHRAE 62. I because they control the temperature, humidity,
cleanliness and distribution of air flowing through the building (app. br. at I4-6). "[A]ir,
supply" is defined as "air delivered by mechanical or natural ventilation to a space,
composed of any combination of outdoor air, recirculated air, or transfer air" (app. br. at
I 7; finding 13). Appellant argues that the ductwork in question also falls within the
coverage of this section because it specifically refers to "supply air ductwork" and this
ductwork is substantively supply air ductwork despite the fact the government labeled it
OA (app. br. at I 7).
Appellant recognizes that unlike the terms "air conditioning" and "air, supply," the
phrase "air conditioned spaces served by the ductwork" is neither defined by the contract
nor ASHRAE but asserts that an interpretation based upon industry practice and custom
gleaned from ASHRAE 90.I exempts ductwork installed in exposed, conditioned,
corridors from the insulation requirement. Appellant's logic on this point is as follows:
ASHRAE Standard 90. I discusses, among other things, the
minimum duct insulation R-Value for combined heating and
cooling supply and return ducts required to meet the energy
goals enunciated in ASHRAE Standard 90. I. Table 6.8.2B in
ASHRAE Standard 90. I directs that supply-air and return-air
ductwork located in indirectly conditioned space does not
need to be insulated. ASHRAE Standard 90. I uses a corridor
15
as the prime example of a space, that is indirectly conditioned
by ductwork serving that space, wherein exposed ductwork
installed in that space would not need to be insulated. This is
precisely the exemption enunciated in Contract § 23 07 00
3 .3. I. I .a. I. Thus, while the Contract is silent with respect to
what is meant by the phrase "air conditioned spaces served by
the ductwork," the industry standard and trade custom, which
must be referenced in order to interpret the Contract, clearly
exempts ductwork installed in exposed, conditioned, corridors
from the insulation requirement.
(App. br. at I8) (Footnotes omitted)
In contrast to appellant's reliance upon Specification§ 23 07 00, ii 3.3.1.Ia.I, as
viewed through the lens of industry standards and customs, the government relies upon a
plain reading of Specification§ 23 07 00, ii 3.3.1.Im, which simply states:
3 .3 .1.1 Listing of Ductwork and Casings to be Insulated
m. Outside air ductwork, casings and plenums.
(Finding I I) The drawings label the ductwork in question as OA, which is defined on the
drawings as "outside air." The government argues a plain reading of this provision
unequivocally requires all ductwork labeled as OA in the drawings be insulated, with no
exceptions and without resort to industry standards. In addition, the government argues
this interpretation is consistent with the exception appellant relies upon in 3 .3 .1.1 a. I
because the intent of that provision was to address project supply air ductwork depicted
on the drawings that was not labeled OA, which the government identifies. (Gov't
br. at 12; finding 7)
We agree with the government that there is no need to refer to industry standards
on this issue; a plain reading of the contract language is sufficient to glean the parties'
intent. Here the government explicitly stated that all "[O]utside air ductwork, casings
and plenums" would be insulated, specifically labeled the ductwork intended as OA and
defined OA in the drawings as outside air (findings 6, I I). We conclude the contract
language to be unambiguous. If the language of the contract is clear and unambiguous,
as is the case here, our review is generally limited to the contract itself. See TEG-
Paradigm Environmental, Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006)
("[Unambiguous language] must be given its 'plain and ordinary' meaning and the court
may not look to extrinsic evidence to interpret its provisions."). However, even when a
contract is unambiguous, there may be some instances when it is appropriate to tum to
I6
one common form of extrinsic evidence-evidence of trade practice and custom. Hunt
Construction Group, Inc. v. United States, 281 F.3d 1369, 1373 (Fed. Cir. 2002).
Appellant's case relies heavily upon trade practice and custom arguing that the QA
ductwork in question, based upon trade practice and custom, is substantively supply air
ductwork despite the fact they are labeled QA and, therefore, fall within an exception to
the insulation requirements at Specification§ 23 07 00, ii 3.3.1.la (app. br. at 18-19;
finding 11 ). This argument relies upon trade standards to supply the definition of two
terms and trade practice to define a third term that are not defined in the contract. 12 To
the extent appellant argues that we should substitute trade practice and custom for the QA
ductwork requirement as written, as seems to be the case, we reject that argument. The
government has the right to demand strict compliance with its requirements which can
vary from the norm in the trade. Jowett, Incorporated v. United States, 234 F.3d 1365,
1369 (Fed. Cir. 2002) (citing Wright Construction Company v. United States, 919 F.2d
1569, 1572-73 (Fed. Cir. 1990)), (stating that affidavits describing common industry
practice of not insulating air supply ducts in ceilings found to be irrelevant where the
language of the contract is unambiguous on its face because the government can vary
from the norm in the trade when contracting). Since we have concluded the plain
language of the contract is unambiguous, trade practice and custom may not be used "to
create an ambiguity where a contract was not reasonably susceptible of differing
interpretations at the time of contracting." Metric Constructor v. National Aeronautic
and Space Administration, 169 F.3d 747, 752 (Fed. Cir. 1999).
In addition, "evidence of trade practice and custom does not trump other cannons
of contract interpretation, but rather cooperates with them;" we must interpret the
contract language in a manner that gives meaning to all its provisions. Metric, 169 F.3d
at 753. Appellant's interpretation effectively renders the QA label and definition in the
drawings meaningless. In contrast, the government's interpretation gives meaning to all
the terms. Although the majority of supply air ductwork was labeled QA, there were
supply air ducts on the project that did not require insulation and were not labeled QA
and fell within the meaning of Specification § 23 07 00, ii 3 .3 .1.1 a (finding 7).
12
Appellant points out three terms within the exception, "air conditioning", "supply air'',
and "air conditioned spaces served by the ductwork" that are not defined within
the contract and urges us to look to trade practice and custom to define these
terms: the definitions of the first two are found in an industry standard,
ASHRAE 62.1, and the third in industry practice found in ASHRAE 90.1. As to
the third definition, appellant asserts that "industry standard and trade
custom ... clearly exempts ductwork installed in exposed, conditioned, corridors
from the insulation requirement." (App. br. at 14-19; findings 12, 13, 17)
17
Therefore, our plain reading of the contract as a whole, leads us to the conclusion
appellant was required to insulate all OA labeled ductwork per Specification § 23 07 00,
ii 3.3.1.lm. 13
Insulation ofEA Labeled Horizontal Ductwork in the Corridors and the EA Labeled
Vertical Ductwork in the Interior Mechanical Shafts
1. EA Labeled Horizontal Ductwork in the Corridors
Appellant argues that the EA labeled ducts are mislabeled and are in fact return air
ducts by the common usage in the HVAC industry and the definition in ASHRAE 62.1.
Furthermore, appellant notes they also do not fall within the only requirement that
specifically refers to return air ducts, § 23 07 00, ii 3.3.1.1 b. As a result, appellant argues
there is no specific requirement in § 23 07 00, ~ 3 .3 .1 to insulate the horizontal EA return
ductwork in the corridors as there is under § 23 07 00, ii 3 .3 .1.1 a, which specifically
required supply air ducts to be insulated. (App. br. at 20-22)
The government counters that the contract requires all exhaust, EA labeled,
ductwork to be insulated pursuant to specifications § 23 07 00, ii 3 .3 .1.1 o and § 23 07 00,
~ 3.3.1. lt (gov't br. at 14). Specification§ 23 07 00, ii 3.3.1. lo requires insulation on,
"[H]eat recovery system exhaust ductwork on inlet air side of heat recovery coil/unit"
(finding 11). The government argues that the drawings indicate all EA ductwork is on
the inlet air side of the OAU, arguing the OAU is a "heat recovery system" and "heat
recovery coil/unit" as addressed by this provision (gov't br. at 14). In support of this
argument, the government points out that specification § 23 82 02, ii 2.2.9c. l uses the
terms "heat recovery system" and "heat recovery unit" in reference to the OAU's
operating parameters (gov't br. at 14; finding 4).
Appellant does not dispute that all EA labeled ductwork is on the inlet air side of
the OAU but responds by arguing that the OAU is not contemplated by Specification
§ 23 07 00, ii 3.3.1. lo because the OAU is not a "heat recovery system" nor a "heat
recovery coil/unit" (app. reply br. at 7-9). Both Mr. Prosser, appellant's HVAC
subcontractor, and Mr. McLauchlan, appellant's expert witness, testified the OAUs are
not "heat recovery systems" as defined by industry standards but are instead an "energy
recovery system" and in fact there is no "heat recovery system" on the project. The
government failed to rebut this testimony. Although the government disagrees,
Mr. Jarema, the government's expert witness and the individual who designed the HVAC
13
Given our conclusions here, there is no need to address the parties' arguments related
to the weight to be given the coordination and shop drawings as they relate to the
OA labeled ductwork since consideration of those drawings does not enter into our
decision. Additionally, there is no need to address appellant's arguments related
to application of the doctrine of contra proferentum.
18
system on the project, agreed with Mr. McLauchlan that the OAUs are "energy recovery
systems" but did not assert they are also "heat recovery systems." (Finding 5)
The government also argues that Specification§ 23 07 00, ii 3.3.1.lt requires
insulation on the "Indoor exhaust/relief plenums and ductwork from fan discharge to
louver or exhaust hood/gooseneck." However, the government does not explain why
Specification § 23 07 00, ii 3.3 .1.1 t requires insulation other than to reference the
drawings marked EA (gov't br., summary table at 16). Appellant's response is that
Specification § 23 07 00, ii 3 .3.1. lt is inapplicable to the ductwork in the corridors; it
only applies to the exhaust ductwork in the penthouse, from the discharge to exhaust
louver (app. reply br., matrix at 7).
2. Insulation of EA Labeled Ductwork in the Interior Mechanical Shafts
As with the EA labeled horizontal ductwork, appellant argues that it applied
industry standards when it developed its bid and considered the EA labeled ductwork in
the interior mechanical shafts to be return air based upon common usage in the HVAC
industry and the definition in ASHRAE 62.1. Additionally, they do not fall within the
only requirement that specifically refers to return air ducts, § 23 07 00, ii 3 .3 .1.1 b
(app. hr. at 19-20). Specifically, Specification§ 23 07 00, ii 3.3.1.lb.3 requires return-air
ductwork installed in a "[s]haft with exterior wall(s) or shaft passing through non-air
conditioned space" to be insulated. Thus appellant asserts, pursuant to the express
requirement of Specification§ 23 07 00, ii 3.3.1.1 b3, the only return-air ductwork
installed in mechanical shafts which needed to be insulated was that ductwork installed in
mechanical shafts that either had an exterior wall or that passed through non-air
conditioned space. Based upon this logic, appellant argues:
The mechanical shafts provided the vertical connection
between each of these penthouses to the floors of the
building. All of the mechanical shafts on the Project were
located in the interior of the Project building, and as such,
none of the mechanical shafts had any exterior walls.
Moreover, since the mechanical shafts were located in the
interior of the building, and the building was completely air
conditioned, the mechanical shafts were necessarily
surrounded by air conditioned space. Therefore, the
requirements of Contract§ 23 07 00 3.3.1.1.b.3 did not
require Davis to insulate the vertical return-air ductwork
installed in the mechanical shafts on the Project.
(App. hr. at 23) (Footnotes omitted)
19
As with the EA labeled horizontal ductwork, the government adamantly rejects
appellant's assertion that the ductwork at issue is return air or that the spaces are air
conditioned. The government's position is that appellant was required to insulate all EA
labeled ductwork in the interior mechanical shafts. As with the EA labeled ductwork in
the corridors, the government relies upon Specifications § 23 07 00, if 3.3 .1.1 o and
§ 23 07 00, if 3.3.1. lt (gov't br. at 13).
In response regarding Specification § 23 07 00, if 3 .3 .1.1 o, appellant argues this
section only requires insulation on "[h]eat recovery system exhaust ductwork on inlet air
side of heat recovery coil/unit" and since there is no heat recovery system on the project,
this section is inapplicable (app. reply br. at 8).
Regarding Specification§ 23 07 00, if 3.3.1.lt, appellant argues the terms of this
provision only require it to insulate "[i]ndoor exhaust/relief plenums and ductwork from
fan discharge to louver or exhaust hood/gooseneck." In support of this position,
appellant identifies two examples from the drawings where insulation would be
required by this provision 14 but also argues there is no requirement to insulate the
mechanical shafts because they do not run from the exhaust fan discharge (which is
inside the OAU) to the exhaust louvers or exhaust hood/gooseneck. (App. reply br.
at 9-10)
Unlike the OA labeled ductwork, we are unable to determine the parties' intent
from a plain reading of contract provisions related to the EA labeled ductwork. If it was
the government's intent to insulate all EA labeled ductwork, it could have simply stated
that in the specifications, as it did with the OA labeled ductwork. By not doing so, it left
the EA labeled ductwork insulation requirements open to possible alternative
interpretations. As a result, we must determine if the contract provisions are ambiguous.
As stated previously, a contract provision is only ambiguous if it is susceptible of more
than one reasonable interpretation. Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751
(Fed. Cir. 1999); Edward R. Marden Corp. v. United States, 803 F.2d 701, 705 (Fed. Cir.
1986).
Appellant argues the government has failed to provide a reasonable interpretation
that differs from the one employed by appellant in submitting its bid (app. br. at 24). In
addition, appellant argues in the alternative that even if we should find the government's
interpretation reasonable and the contract provisions ambiguous, it would still prevail
based upon the doctrine of contra proferentum, which would require ambiguities in the
contract language to be construed against the drafter, the government (app. br. at 25).
In contrast, the government maintains the language of the contract is unambiguous
and consistent with its interpretation. However, it goes further to argue that appellant is
14
(See app. reply br. at 10 n.40)
20
now precluded from taking a position that differs from its interpretation of the insulation
requirements during performance (findings 17-19), when it submitted its contractually
required coordination and shop drawings depicting insulation in agreement with the
government's interpretation. The government relies upon Max Drill, Inc. v. United
States, 427 F.2d 1233, 1240 (Ct. Cl. 1970), and Midland Maintenance, Inc., ENG BCA
No. 6087, 96-2 BCA ii 28,301, for the proposition that "where the contracting parties'
interpretations of the requirements of the contract are in unison prior to the controversy,
that interpretation is binding on the parties." (Gov't hr. at 16-17) In support of this
argument, referencing the coordination and shop drawings, the government notes:
In the present case, Davis commissioned and received
coordination drawings and shop drawings of the HVAC
ductwork, as required by the contract, which indicated the
presence of the insulation now at issue. Davis submitted
these drawings to the Government and Davis utilized these
drawings in multiple coordination meetings without ever
questioning the need for the extensive insulation the drawings
indicated. The eventual questions surrounding the insulation
requirements of the contract simply did not exist prior to the
insulators arrival on site.
(Gov't hr. at 17) (Citations omitted)
In response, appellant urges us to give no weight to the coordination and shop
drawings in arriving at a decision on the EA labeled ductwork 15 based upon two 16
arguments (app. reply hr. at 14). First, appellant argues that the government's reliance on
the coordination and shop drawings is misplaced because these drawings are created and
submitted after award and do not define the scope of the work as the government
proposes. Instead, the purpose of these drawings was to pre-plan various installations of
various segments of the project, specifically including HVAC, and identify any
coordination problems between the various trades working on the project. As a result,
appellant argues, theses drawings have no relevance to defining the scope of work under
the contract. (App. reply hr. at 11-12; finding 17)
Second, appellant asserts the government's reading of Max Drill and Midland
Maintenance, that an ambiguity in a contract should be resolved by looking at the parties'
15
Appellant objected to admission of these documents during the hearing. We overruled
appellant's objection retaining them in the record but stated we would give them
whatever weight, if any, they are due in our decision (tr. 1/8-11).
16
Appellant also proposed a third argument but it was only directed to the OA labeled
ductwork based upon the coordination drawings labeling some areas as insulated
but were areas the government maintains were not required to be insulated.
21
interpretation prior to the controversy, is incorrect. Appellant argues the cited cases
address whether a parties' interpretation is reasonable to determine if an ambiguity exists;
not to resolve any ambiguities that may exist (app. reply hr. at 14-18).
We found that the coordination and shop drawings depict insulation in agreement
with the government's interpretation requiring insulation of all EA labeled ductwork
(findings 17, 19). We need not address appellant's now proffered interpretation because
we conclude that appellant did not rely upon its current interpretation during the bidding
process or performance. Our findings confirm appellant's contemporaneous
interpretation of these contract provisions during performance matched the government's
current interpretation and that interpretation was communicated to the government
through its submittals (findings 17, 19). It was only later, when appellant's fourth tier
subcontractor interpreted these provisions differently, that appellant adopted a different
position (findings 20, 21 ). The parties' conduct during performance is persuasive
evidence that we should construe the contract now as was performed by the parties then;
we give great weight to the parties' contemporaneous words and conduct in attempting to
resolve ambiguous provisions of a contract. Julius Goldman Egg City v. United States,
697 F.2d 1051, 1058 (Fed. Cir. 1983); Head, Inc. ASBCA No. 39824, 92-1 BCA
ii 24,755 at 123,518; Curry Contracting Company, Inc., ASBCA No. 53716, 06-1 BCA
ii 33,242 at 164,754.
Therefore, we conclude that appellant was required to insulate all exhaust, EA
labeled, ductwork pursuant to Specifications § 23 07 00, ii3 .3 .1.1 o and § 23 07 00,
ii3.3.l.lt.
CONCLUSION
For the reasons stated, the appeals in ASBCA Nos. 58000 and 58002 are denied.
Dated: 19 November 2014
Administrative Judge
Armed Services Board
of Contract Appeals
(Signatures continued)
22
I concur I concur
4m~• -- RICHARD SHACKLEFORD
-
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 58000, 58002, Appeals of
James G. Davis Construction Corporation, rendered in conformance with the Board's
Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
23