decided: December 2, 1980.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION, PETITIONER
ACCHIONE AND CANUSO, INC., RESPONDENT
Appeal from the Order of the Board of Claims in case of Acchione and Canuso, Inc. v. Commonwealth of Pennsylvania, Department of Transportation, Docket No. 503.
Paul A. Logan, Assistant Attorney General, with him John T. Kalita, Jr., Assistant Attorney General, Robert W. Cunliffe, Deputy Attorney General, and Edward G. Biester, Jr., Attorney General, for petitioner.
Marvin Comisky, with him Richard M. Rosenbleeth, Alan C. Gershenson, and Michael Minkin, of counsel, Blank, Rome, Comisky & McCauley, for respondent.
President Judge Crumlish and Judges Wilkinson, Jr., Rogers, Blatt, Craig and MacPhail. Judges Mencer and Williams, Jr. did not participate. Opinion by President Judge Crumlish. Judge Rogers dissents.
[ 55 Pa. Commw. Page 66]
This is an appeal of the Pennsylvania Department of Transportation (PennDOT) from a Board of Claims' decision awarding $191,272.05 in damages to claimant Acchione and Canuso, Inc. (Acchione).
These facts are pertinent. On October 5, 1973, general contractor Acchione and PennDOT entered into a contract for highway improvements to Roosevelt Boulevard in Philadelphia. Trenching excavation work was necessary to replace conduit encasing traffic signal wiring at existing intersections.*fn1
After reviewing the project plans, subcontractor Tony DePaul & Sons, Inc., noted a discrepancy between its calculation of 16,658 lineal feet of trenching and the bid materials calling for 13,131 lineal feet. As
[ 55 Pa. Commw. Page 67]
a result, DePaul telephoned PennDOT's engineers and was informed that PennDOT had directed its engineers to assume that approximately half of the existing conduit would be reusable. Relying on its own calculations and this oral representation, DePaul arrived at a unit price of $24.00 by averaging the cost per lineal foot of earth, pavement and roadway trenching.*fn2
In the course of the project, PennDOT discovered most of the conduit was not reusable, and that the engineers had failed to include a contingency item in the contract for this eventuality. PennDOT orally directed DePaul to perform the necessary trenching and then executed a written work order calling for an additional 17,433 lineal feet at the contract unit price. When the job was completed, Acchione was paid at this contract rate for all work performed, 34,738.70 lineal feet.
However, in 1976, Acchione filed a complaint with the Board requesting increased compensation for all trenching performed, alleging that its cost per lineal foot substantially increased because the majority of the additional work was the more expensive roadway trenching.*fn3 The Board of Claims awarded additional compensation, finding that the increased amount of trenching materially changed the character of the work to be performed under the contract.
[ 55 Pa. Commw. Page 68]
PennDOT raises two primary issues: whether Acchione timely filed its claim with the Board and whether the Board erred in its construction of the contract.
Timeliness of the Claim
By the terms of Acchione's contract*fn4 and Section 6 of the Arbitration Act, Act of May 20, 1937, P.L. 728, as amended, 72 P.S. § 4651-6, the Board's jurisdiction is dependent on the contractor filing its claim with the Board within six months of the date the claim accrues. The contract further provides that an aggrieved contractor must notify PennDOT of its intention to file a claim with the Board within ten days of the completion of all or part of the work in question.*fn5
On August 4, 1975, after substantially all trenching was completed, Acchione wrote to PennDOT requesting an adjustment in the contract unit price. The request was denied by letter dated November 17, 1975.
[ 55 Pa. Commw. Page 69]
PennDOT contends the August 4th letter provided notice of Acchione's intent to file a claim, and that the claim accrued on November 17, 1975 when PennDOT denied Acchione's request. PennDOT further contends the contractor's December 15, 1976 filing with the Board was untimely since it occurred more than six months after PennDOT's November 17, 1975 denial. We disagree.
We read Section 109.09 to require a clear statement by the contractor of his intent to file a claim so as to enable PennDOT to carefully consider the contractor's claim before relief is sought with the Board. The August 4th letter fails to evidence an intent by Acchione to file a claim, and therefore Acchione's claim did not accrue on November 17, 1975 as PennDOT would have us believe. On January 6, 1976, Acchione wrote a second letter renewing its request for more money and seeking a meeting with PennDOT personnel to resolve the matter. Though a meeting was held and the request again denied on January 29, 1976, no intent is found to this date.*fn6
However, Acchione provided, by letter dated March 16, 1976, the 10-day notice of intent to file a claim, since the record reveals that the disputed work was not completed until March 30, 1976. Acchione's claim then accrued on June 21, 1976, when PennDOT notified the contractor that its claim had been denied. Accordingly, we must conclude that Acchione timely filed its claim with the Board on December 15, 1976, well within six months of PennDOT's June 21st denial.
[ 55 Pa. Commw. Page 70]
if Acchione is to recover, it must be under the terms of its agreement with the Commonwealth.
On December 31, 1974, PennDOT ordered Acchione, in writing, to perform the additional 17,433 feet of trenching at the contract unit price. Acchione worked under this order over eight months and completed the majority of the trenching before it made any objection to PennDOT's directive. The narrow issue presented by this case is whether Acchione is barred from recovery because it failed to seek increased compensation at the time additional work was ordered.
The Board concluded that the additional trenching materially changed the character of the work and/or the unit cost. Under the terms of the contract, Acchione and PennDOT were required to either negotiate a price adjustment*fn8 or institute a "force-account" procedure*fn9
[ 55 Pa. Commw. Page 72]
if the contract unit cost was substantially affected by the increase in trenching. PennDOT was justified in assuming that an increase in the lineal footage of trenching would not affect the unit price and was under no duty to negotiate an increase.
Conversely, considering both the manner in which its bid was prepared and the nature of the work involved, Acchione was in the best position to foresee the consequences of an increase in trenching and to initiate negotiations with PennDOT. It is clear that the contract procedures were designed to not only resolve the issue of increased costs at the time additional work is ordered but prevent the situation where a contractor like Acchione performs work without keeping track of actual expense and then later claims increased costs.
Our analysis is not affected by the Board's finding that Acchione did not realize that its costs had increased until July of 1975. We do not conclude that Acchione should have known that the additional trenching would cost more, but merely hold that Acchione knew additional work would be paid for at the contract unit price unless (1) an increase was negotiated with the engineer when the additional work was ordered or (2) the work was done on a force-account basis. By failing to utilize either of these alternatives, Acchione bore the risk that the work would cost more.
Although our review of this case compels us to deny recovery of more than the contract price, we are not insensitive to the problems and complexities inherent in government contracts. We cannot lend support to a strict constructional view that would require contractors to cease work and negotiate or renegotiate an agreement with every unforeseen occurrence before it
[ 55 Pa. Commw. Page 73]
proceeds to perform its obligation under the contract. To so hold would not only prove practically and financially disastrous to contractors, but damaging to those citizens of our Commonwealth who have a vital interest in the prompt finality of locally important public projects.
However, Acchione's predicament is not the result of its efforts to expeditiously perform the contract obligations. On the contrary, the contractor's successive failure to carefully prepare its bid, to make certain that the additional amounts of trenching would not affect the contract's unit price, or to follow the established contract procedures bar recovery beyond the bid price. Regretfully for the contractor, reliance on unregulated inferences and practices cannot be found by us to cure errors of interpretation and tacit understandings in the execution of public contracts.*fn10
Accordingly, the decision of the Board of Claims awarding $191,272.05 in damages to Acchione and Canuso is set aside and judgment is entered in favor of the Commonwealth.
The decision of the Board of Claims, dated January 31, 1979, awarding $191,272.05 in damages to Acchione
[ 55 Pa. Commw. Page 74]
and Canuso, is hereby set aside and judgment is entered in favor of the Commonwealth.
Judge Rogers dissents.