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RAGNAR BENSON, INC. v. BECHTEL POWER CORP.

December 31, 1986

RAGNAR BENSON, INC., Plaintiff,
v.
BECHTEL POWER CORPORATION, Defendant


R. DIXON HERMAN, United States District Judge.


The opinion of the court was delivered by: HERMAN

R. Dixon Herman, United States District Judge.

 I. INTRODUCTION

 This case is a contract dispute involving the construction of the Limerick Nuclear Generating Station (Limerick). Bechtel Power Corporation (Bechtel), the defendant in this suit, was the general contractor hired by Philadelphia Electric Company to construct the generating station. In December, 1970, Bechtel entered into a contract with Ragnar Benson, Inc. whereby Ragnar Benson agreed to construct the concrete cooling towers for the plant.

 During the course of construction, and before construction actually began, Bechtel and Ragnar Benson encountered a series of delays, labor slow downs, changes to the proposed method of work, and other cost-escalating factors. Many amendments to the subcontract were executed in an attempt to address these problems and to fully compensate Ragnar Benson for its work while at the same time ensuring timely completion of the project. The disputes in this case arise out of a series of these amendments and principally involve the issue of the correct amount of compensation due Ragnar Benson for its work in constructing the concrete shells for the cooling towers.

 Nearly two weeks of testimony has been taken on the factual issues of this case, the legal issues have been fully briefed and the case is ripe for decision.

 II. FACTUAL BACKGROUND

 In June, 1978, after a prolonged delay in the start of construction, Bechtel and Ragnar Benson executed the first of the subcontract amendments with which we are here concerned. Amendment No. 7 (Defendant's exhibit 9) updated the subcontract terms by adding paragraph H governing "Changes and Extra Work" to the "Special Provisions" section of the contract. Paragraph H defined a "change" as "a substitution for, an addition to, or deletion of, any work or other requirement the performance of or compliance with which is contemplated by the Subcontract." "Extra Work" was defined as "the performance of any work or compliance with any requirement which is not contemplated by the Subcontract." Paragraph H gave to Bechtel, as the contractor, the power to, at any time, "make changes and . . . request the Subcontractor to perform extra work." Changes or requests for extra work were to be in writing. Upon receipt of the written orders, Ragnar Benson, as the subcontractor, agreed to submit in writing within ten days, "a proposal for accomplishing such work, which proposal shall reflect the increase or decrease, if any, in cost to the Subcontractor of performing work under the Subcontract in comparison to what the cost would have been, had such work not been ordered." In the absence of such a proposal, compensation was to be calculated on a "cost-plus" basis.

 Also in June, 1978, prior to commencement of the cooling tower shell construction, Bechtel concluded that the wire brush method of cleaning construction joints proposed by Ragnar Benson would not be adequate to insure the structural integrity of the cooling towers. By letter of June 22, 1978, Bechtel solicited a proposal to clean the horizontal construction joints by water blasting or air-water cutting. Defendant's exhibit 29. On July 31, 1978, Ragnar Benson submitted its initial proposal for cleaning the joints in accordance with Bechtel's requirements. The letter by which Ragnar Benson submitted its proposal stated "we offer the following proposal to treat the horizontal construction joints in the tower shells in accordance with Addendum 1 to Revision 2 of Specification M-9, paragraph 5.2" yet the letter clearly referred to Bechtel's letter soliciting a proposal for "water blasting or air-water cutting of the horizontal joints in the shell of the cooling towers." See Defendant's exhibits 31 and 29. Beginning with these two letters, Bechtel and Ragnar Benson consistently, in their course of dealing with each other, referred to the process used to remove laitance as "treatment" of the horizontal construction joints, rather than as "cleaning" of the joints, despite the language of the technical specifications. *fn1"

 Construction of the shell for Cooling Tower No. 1 began in July of 1979. Ragnar Benson employed a second shift, nine member crew to clean the construction joints. Ragnar Benson used a second-shift crew for the cleaning work because the joint could only be hydroblasted when the concrete had attained a sufficiently hard set that the hydroblaster would not remove large portions of the prior pour. Furthermore, Ragnar Benson could not allow the concrete to set overnight, before hydroblasting, because the concrete would become too hard and the laitance could not be removed. The second shift often worked overtime to complete the hydroblasting operation because the operation could not commence until the concrete had attained the proper set, often hours after the concrete had been poured, and hours after the second shift had arrived on the construction site.

 At the conclusion of the 1979 construction season, Ragnar Benson had expended over 50% of its estimated manhours for unit 1 joint cleaning work, yet it had only completed construction of 30% of the lifts. Of the 8,230 manhours expended on the joint cleaning work, 1,359.5 manhours were overtime hours.

 By letter of November 21, 1979 on the subject of "Shell Horizontal Joint Treatment, Amendment No. 25," Ragnar Benson requested compensation for the overtime manhours incurred in cleaning the shell joints during 1979. See Defendant's exhibit 50. In a meeting on November 29, 1979, Ragnar Benson informally stated that "they are confronted with many different problems in constructing the Limerick towers and, as a result, much more money will now be required to complete the work as scheduled." At the end of the meeting, Wayne Messer, Vice-President of Ragnar Benson, agreed to "specifically and ...


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