# THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND

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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND
IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON
MAY 5, 2017

CBCA 2862 GRANTED IN PART; CBCA 4085, 4802 GRANTED: April 14, 2017

CBCA 2862, 4085, 4802

TURNER CONSTRUCTION COMPANY,
Appellant,
v.
SMITHSONIAN INSTITUTION,
Respondent.
Douglas L. Patin and Michael S. Koplan of Bradley Arant Boult Cummings LLP,
Washington, DC, counsel for Appellant.
Scott D. Cessar of Eckert Seamans Cherin & Mellott, LLC, Pittsburgh, PA, counsel
for Subcontractor March-Westin Company.
Lawrence M. Prosen and Christian F. Henel of Kilpatrick Townsend & Stockton,
LLP, Washington, DC, counsel for Subcontractors Welch and Rushe, Inc. and M.C. Dean,
Inc.
Roger C. Jones of Huddles Jones Sorteberg & Dachille, P.C., Columbia, MD, counsel
for Subcontractors Stromberg Metal Works, Inc. and Apro Enterprises, Inc.
Robert Windus of Moore & Lee, LLP, McLean, VA, counsel for Subcontractor C.J.
Coakley Co., Inc.

CBCA 2862, 4085, 4802

2

Craig A. Holman and Kara L. Daniels of Arnold & Porter Kaye Scholer LLP,
Washington, DC, counsel for Respondent.
Before Board Judges KULLBERG, SULLIVAN, and CHADWICK.1
SULLIVAN, Board Judge.
Appellant, Turner Construction Company (Turner), filed three appeals from
contracting officer decisions issued by respondent, the Smithsonian Institution (Smithsonian
or SI), concerning matters arising on its contract to provide design and construction services
in a long-term, multiple-phase project entitled “Public Space Renewal Project at the National
Museum of American History.” Turner Construction Co. v. Smithsonian Institution, CBCA
2862, 13 BCA ¶ 35,290, at 173,252; see Turner Construction Co. v. Smithsonian Institution,
CBCA 2862 et al., 15-1 BCA ¶ 36,139, at 176,388.
Turner’s first appeal (docketed as CBCA 2862) was of the contracting officer’s
decision denying its claim for approximately $14 million, which included Turner’s claim for
general conditions costs of approximately $7 million and subcontractor claims for delay and
disruption costs of approximately $7 million. In an initial ruling, the Board held that the
parties had failed to agree upon a firm fixed price for the base contract work to be performed
by Turner and that Turner was entitled to be paid a reasonable price for that work. Turner
Construction, 13 BCA at 173,260.
Following that initial ruling, Smithsonian conducted an audit of all the costs incurred
by Turner on the project. Based solely upon the results of that audit, the contracting officer
issued a second decision, finding that Turner had been overpaid by approximately $40
million. To effect repayment, the contracting officer denied Turner’s claim in its entirety and
asserted a claim for an additional $24.5 million paid to Turner on the contract. Turner also
appealed that decision to the Board, docketed as CBCA 4085.
Turner filed a second claim in 2015, seeking costs of approximately $440,000 that it
incurred to install a second steam generator in the museum. The contracting officer denied
Turner’s claim, and Turner appealed, docketed as CBCA 4802. The second and third appeals
were consolidated with the first appeal when they were filed.
1

When the first appeal was filed, a panel composed of Judges Somers, McCann,
and Kullberg was assigned to hear these appeals. The matter was transferred to Judge
Sullivan on December 17, 2014. Upon the retirement of Judge McCann, Judge Walters was
assigned to the panel. Upon the retirement of Judge Walters, Judge Chadwick was assigned
to the panel.

CBCA 2862, 4085, 4802

3

The contract between Turner and Smithsonian, by its terms, is not subject to the
Contract Disputes Act (CDA). 41 U.S.C.§§ 7101-7109 (2012). Exhibit 1_F at 320.2
Instead, the Disputes clause of the contract provides that a contractor may appeal a
contracting officer’s decision to the Secretary of the Smithsonian Institution. Id. at 321. By
memorandum of agreement between Smithsonian and the Board, dated June 5, 2012, the
Board agreed to hear and decide the appeals arising from this contract. Turner Construction,
13 BCA at 173,258.
The Board conducted a hearing in November 2015. The Board heard testimony from
thirty witnesses over fourteen days. The parties submitted approximately 4000 exhibits as
part of the appeal file and voluminous post-hearing briefing.
The Board’s role in this matter is to find a reasonable price for the construction
services that Turner provided in the renovation of the American History Museum. We are
tasked with this assignment because, despite Smithsonian’s promises both in the original
contract and during contract performance, Smithsonian never negotiated a firm fixed price
for much of the work Turner performed. Smithsonian has a renovated museum, and the
Board is deciding herein what additional sums are owed to Turner for that building. The
difficulty in this case was principally of Smithsonian’s own making. If Smithsonian had
agreed to a firm fixed price for the construction, Turner would have been bound to that price,
subject to adjustment for changes and other increases. Having failed to execute the bargain
prior to the provision of services, Smithsonian cannot reap the benefits of a bargain it wishes
it had struck.
Smithsonian’s arguments are rooted in its continued belief that the parties agreed upon
a price, which the Board should adjust or not adjust based upon the provisions of the
contract, most notably the Equitable Adjustment clause. Because the parties did not agree
upon a price for the base contract work, as we held in our earlier decision, see 13 BCA at
173,259-60, the Board’s effort is not controlled by those provisions. Moreover, while the
Board does not find that Smithsonian breached the contract by failing to negotiate a price,
that failure leaves Smithsonian without many of the safeguards and defenses that would have
been available to it under a firm fixed-price agreement.
The Board finds that Turner and its subcontractors incurred costs to address problems
for which Smithsonian is responsible—hazardous waste abatement, mechanical, electrical
and plumbing (MEP) interferences, and continuing design changes. On this record, Turner
may recover based upon a quantum meruit theory. Turner’s subcontractors used more
conventional methods to attempt to prove their disruption claims arising from these same

2

All exhibits are found in the appeal file.

CBCA 2862, 4085, 4802

4

issues, and some succeeded. However, none of Turner’s subcontractors proved their claims
for extended overhead flowing from contract delays.
Regarding Smithsonian’s claim for overpayment based upon its audit of Turner’s
project costs, the Board finds that Smithsonian has not met its burden. While the audit
exposed areas that merited further investigation, Smithsonian did not undertake those
necessary steps. Instead, it simply demanded repayment and has failed to establish a proper
basis for that demand.
We decide that Turner is owed an additional $3,149,638 over what it has been paid
to date for the renovation of the museum. Turner may also recover $2,803,430 on behalf of
its subcontractors. Pursuant to the contract, Turner may also recover interest on these
amounts, calculated from the dates of its claims to the Smithsonian.
Findings of Fact
I.

Contract Terms and Timeline
A.

Scope of Work/Existing Conditions

In May 2002, Smithsonian awarded a contract to “lead a design/build team for the
National Museum of American History Public Space Renewal Project.” Exhibit 1_A.3 The
design and construction services were divided into seven separate phases. The first phase
was the “concept phase,” to be performed for a fixed price of $250,000. Exhibit 1 at 2. The
contract listed six additional construction/design phases as options, for which the “[t]erms
and conditions, prices, schedule and other relevant matters will be negotiated.” Exhibit 1_A
at 21.
In September 2005, Smithsonian awarded Turner a follow-on contract to “Revitalize
National Museum of American History (NMAH), Behring Center, Public Space Renewal,
Package II-B,” to “[p]rovid[e] design services to revise 35% design development package,
construction phase documents at 65%, 95%, and 100% construction documents supporting
the central core infrastructure system of the building,” as well as soft demolition supporting

3

The contract was originally awarded to the architectural firm Skidmore,
Owings & Merrill LLP (SOM), but in early 2004, the parties agreed that the contract with
SOM would be novated and that Turner would assume the responsibilities under the SOM-SI
contract. Exhibit 2_C at 6. Turner agreed to be “bound by and will perform in accordance
with the requirements contained in” the SOM contract. Id. at 7.

CBCA 2862, 4085, 4802

5

the central core infrastructure system. Exhibit 5 at 1; Transcript at 752-53.4 Smithsonian
agreed to pay Turner a “not-to-exceed [NTE] price” of $10,645,174.12, for
(1) architect/engineer (A/E) design – $4,109,719.16, (2) long lead item requisitioning – NTE
$6,000,000, and (3) soft demolition – NTE $535,454.96. Exhibit 5 at 1, 4.
The contract described the requirements to provide design documents at various stages
of the design. It required “[t]he 95% construction documents [to be] complete and biddable
in every aspect. Only very minor changes should be required after review.” Exhibit 1_H at
395. The contract contained two broad clauses regarding Turner’s responsibility for the
design. The first made Turner responsible for accuracy and quality of its design and required
Turner to “correct or revise any errors or deficiencies in its designs, drawings, specifications
. . . without additional compensation.” Exhibit 5 at 6. The second clause made Turner
responsible for preparing change order documents at no expense to Smithsonian, if the
changes resulted from deficiencies in the Turner design, even if a deficiency was due to
incomplete information about existing conditions. Exhibits 1_H at 391, 5_A at 14.
There was also a requirement that sole-source items not be specified in the design
absent approval of the contracting officer’s technical representative (COTR). Exhibit 1_H
at 421. This clause is in a section of the contract that pertains to submission of construction
documents by the architect/engineer. Id. at 419 (titled “CONTENT of 95% Construction
Documents Submission”).
The scope of work noted the age of the building and work that had been performed
previously:
Since its opening in 1964, [the museum] has undergone many changes
reflecting the evolving needs for the display of objects, the trend toward more
thematic and story-driven exhibits, larger public gathering areas, the
modernization of public facilities, and upgrades to the infrastructure.
However, with any highly visited public facility, the needs of our visitors, staff
and collections are constantly changing, as are building codes and building
technologies.

4

Seeking to emphasize the design-build nature of the project, Smithsonian
contends that this second contract was a work order under the first contract. Smithsonian
Proposed Findings of Fact (PFF) ¶ 119. Turner asserts that it held two contracts with
Smithsonian, but does not disavow its obligations and responsibilities under the original
contract. Because this disputed issue does not figure into our analysis, we simply describe
the contractual requirements as flowing from a single contract.

CBCA 2862, 4085, 4802

6

Exhibit 1_A at 33. The contract directed the A/E to contact the Smithsonian’s archivist to
obtain access to the existing drawings for the building. Id. at 37. The contract advised that
the existing drawings would be found on various media and “[t]he accuracy of these
drawings in documenting the existing conditions cannot be guaranteed.” Id.
The contract required Turner to conduct a survey of the existing conditions in the
museum:
The Architect Engineer Design Team shall perform all pre-design, existing
conditions surveys, programming, conceptual design, schematic design, design
development, construction documents, construction, construction management,
and all other design and engineering services as necessary to complete the
NMAH-BC Public Space Renewal Project that is described in the basic scope
of work and unpriced options.
Exhibit 1_C at 56-57; Exhibit 1_H at 393. Smithsonian agreed to provide access to the data
files it had to assist the A/E in “determining the existing conditions” but warned that “[f]iles
are not warranted to show present existing conditions at the site.” Exhibit 1_H at 408
(Clause 4.6, Existing Conditions and SI Data Files). Smithsonian’s Deputy Director of the
Office of Planning, Design and Construction (OPDC) testified that the purpose of this
warning was to “invite [contractors] . . . to make sure that they take whatever opportunities
they can to develop a better understanding of what the building is and how it operates.”
Transcript at 3645.
The contract also required Turner to abate hazardous materials found in the building,
including asbestos and lead paint, during construction in accordance with applicable laws and
regulations. Exhibit 1_H at 403.
B.

Contract Clauses at Issue in Smithsonian’s Audit

The contract contained Smithsonian’s own Equitable Adjustment clause (SI 252.24371) that supplemented the first Changes clause, Federal Acquisition Regulation (FAR)
52.243-4. Exhibit 1_F at 270. The Equitable Adjustment clause permitted the COTR to
request itemized proposals for change work. Itemized proposals would include an “estimate
of the time required to perform the change” and “itemize[] with unit quantity and unit costs
segregated by labor and materials for the various components of the change.” Id. The clause
also required the submission of daily time and material tickets for any change work that the
contracting officer elected to have performed on a time and materials basis. Id. at 274.

CBCA 2862, 4085, 4802

7

The Equitable Adjustment clause limited overhead and profit recoverable by the
contractor or a subcontractor to 21% for work performed by its own forces and 10% for work
performed by other subcontractors. Ex. 1_F at 274. The clause further required Turner and
its subcontractors to include in overhead “unless specified by [Smithsonian] [amounts] for
project management; insurance, except workers compensation and general liability, field and
office supervisors, engineers and their assistants, watchmen, use of small tools, incidental
job burdens and general home office expenses.” Id. at 275. The clause permitted Turner to
include in the direct costs of a change the costs of any foreman labor. Id. at 270-71.
Finally, this clause limited the types of costs that could be sought in change order
proposals:
The Contractor shall not be entitled to any amount for indirect costs, damages
or expenses of any nature, including, but not limited to, so-called impact costs,
labor inefficiency, wage material or other escalations beyond the prices upon
which the proposal is based and which are identified pursuant to this Clause,
and which the Contractor, its Subcontractors or Suppliers may incur as a result
of delays, interference, suspensions, changes in sequence or the like, from
whatever cause, whether reasonable or unreasonable, foreseeable or
unforeseeable, or avoidable or unavoidable, arising from the performance of
any and all changes in the Work performed pursuant to this Clause. It is
understood and agreed that the Contractor’s sole and exclusive remedy in such
event shall be recovery of his costs and specified markups for overhead, profit
and/or commission as set forth in this Clause and an extension of the Contract
Time, but only in accordance with the provisions of the Contract Documents.
Exhibit 1_F at 275.
The Audit clause required Turner to “maintain books, records and accounts of all costs
in accordance with generally accepted accounting principles and practices” and permitted
Smithsonian to conduct an audit in specified circumstances, including:
In the event of a disagreement between the Contractor and the SI over the
amount due the Contractor under the terms of this contract;
To check or substantiate any amounts invoiced or paid which are required to
reflect the costs of the Contract, or the Contractor’s efficiency or effectiveness
under this contract or in connection with extras, changes, claims, additions,
back-charges, or other, as may be provided for in this contract;

CBCA 2862, 4085, 4802

8

Exhibit 1_F at 286. The clause further permitted Smithsonian to audit Turner’s records
despite payments previously made for performance:
The S.I. will make all payments required of it under this Contract subject to
audit, under circumstances stated above, which audit may be performed at the
S.I.’s option, either during the Contract time period or during the above record
retention time period. Regardless of authorization, approval or acceptance,
signatures or letters which were given by the S.I. and are part of the S.I’s
control systems or are requested by the Contractor, the payment made under
this Contract shall not constitute a waiver or the S.I.’s right to audit, nor shall
payments constitute a waiver or agreement by the S.I. that it accepts as correct
the billings, invoices or other charges on which the payments are based. If the
S.I.’s audit produces a claim against the Contractor, the S.I. may pursue all its
legal remedies even though it has made all or part of the payments required by
the Contract.
Id. at 286-87. The Audit clause provided for reimbursement of amounts overpaid: “If such
audit discloses an overpayment, the Contractor shall have the obligation to reimburse the S.I.
for the amount of the overpayment.” Id. at 287.
The contract also contained a flowdown clause requiring that subcontractors be bound
by its terms and assume all of the same obligations that Turner had toward Smithsonian.
Exhibit 1_F at 156.
The contract did not require that Turner certify that it had paid its subcontractors prior
to seeking payment from Smithsonian. Instead, Turner had to certify that “[p]ayments to
subcontractors have been made from previous payments received under the contract, and
timely payments will be made from the proceeds of the payments” requested. Exhibit 1_F
at 294 (FAR 52.232-5, Payments Under Fixed-Price Construction Contracts).
The contract required that Turner obtain insurance and bonds for the work. Exhibit
1_F at 171-75. It required Smithsonian to pay bond premiums upon proof of payment of
these costs by Turner. Id. at 295.
Finally, the Disputes clause provided for the payment of simple interest on claims, at
a rate fixed by the Secretary of the Treasury, running from the date the contracting officer
received the claim. Exhibit 1_F at 321. We construe this interest calculation to be the same
as the one required by the CDA, 41 U.S.C. § 7109.

CBCA 2862, 4085, 4802
C.

9

Contract Modifications
1.

Modification 7

The fixed price for the construction phase was to be negotiated at the completion of
the 95% construction documents. Exhibit 6 at 22; Turner Construction Co., 13 BCA at
173,258. On September 16, 2006, Turner completed its 95% construction documents,
Exhibit 9 at 11-24, and on October 30, 2006, Turner submitted its 95% pricing proposal.
Transcript at 780. Turner attached to its price proposal a document titled, “Assumptions &
Clarifications,” which identified what items or issues were included or excluded from
Turner’s price proposal. Id. at 789-90; Exhibit 9 at 3-9. With these assumptions and
clarifications, Turner provided several important caveats regarding its pricing of the
construction work:
General
....
9.
During the construction period despite Turner’s best effort, it cannot
guarantee that the conditioned space of the building can be maintained at 50%
humidity and 70 degrees F. We have not included any supplementary HVAC
[heating, ventilation, and air conditioning] or Humidity equipment to try to
maintain these environmental conditions.
....
16.

Turner has not included any cost for unforeseen conditions.

....
24.
The design and the budget are both based on existing condition
inspections and as-built documents provided by The Owner and included here
as the attached list. [See Exhibit 9 at 10.] Neither SOM or Turner were able
to verify all existing conditions in the field as they were limited to visual
inspections only. Inspections requiring demolition to observe were permitted
by [t]he Smithsonian only in areas that were not open to the public, had no
artifacts or exhibits in place and were not operational. All verification
inspections that were completed are reflected on the 95% drawings issued
September 15th, 2006.

CBCA 2862, 4085, 4802

10

25.
Turner has included only the work shown on the 95% Construction
Documents as identified on the attached document list dated October 5, 2006.
....
31.
Turner’s design team has based the [Public Space Renewal Package]
design on existing building drawings provided by Smithsonian.
....
Hazardous Materials
2.
This proposal includes a $80,000 [a]llowance for [a]batement of
hazardous materials noted in the project specific abatement survey.
Demolition
....
3.
Turner excludes the cost of demolition of any systems, piping,
ductwork, wiring, fixtures equipment etc. not shown on the contract
documents.
....
Mechanical / Plumbing
....
2.
Turner excludes the cost to relocate any of the existing MEP systems
unless shown on the contract documents.
....
8.

This proposal includes a HVAC system designed to the loads provided
by [t]he [o]wner to SOM/[Turner’s A/E for mechanical systems].

Exhibit 9 at 3-5, 7. The as-built drawings, referenced above, included the original drawings
for the construction of the museum (prepared by architects McKim, Mead, and White) as

CBCA 2862, 4085, 4802

11

well as other drawings from previous projects at the museum. Exhibit 9 at 10. The drawings
bear dates from 1959 until 1996, although most of the drawings are not dated. Id.
In December 2006, the parties executed modification 7, which provided additional
funding for the construction of the Public Space Renewal and Star-Spangled Banner (SSB)
projects. Exhibit 7_G. The modification noted that it was “a funding action only [and] is not
intended to represent a total firm fixed amount obligation on the part of the Contractor.” Id.
at 137. Smithsonian directed Turner to undertake construction services in accordance with
the 95% construction documents, dated September 16, 2006, and stated that “[o]nce
construction activities [are] definitized, funding will represent a firm fixed contract amount.”
Id. at 138. The parties further agreed that, “[w]ith the exception of the changes made herein,
all terms and conditions of [the contract] remain in effect.” Id. “[B]ecause Turner and SI
were in the process of negotiating the 95% construction documents price as of December 27,
2006, Modification 0007 did not establish a fixed construction price.” Turner Construction
Co., 13 BCA at 173,254.
The Board previously found that the parties never agreed upon a fixed price for the
construction phase of the project. Turner Construction Co., 13 BCA at 178,259. After a
thorough review of the record and the briefing, we see no basis to disturb that finding.5 The
significant amount of testimony that both parties elicited regarding whether they agreed on
Turner’s assumptions and clarifications does not matter in the Board’s analysis. What does
matter is that Turner’s price proposal for the base contract work was conditioned upon these
assumptions, and the parties never agreed on the price of the base work.
2.

Modifications 8 through 32

Smithsonian issued a total of thirty-two contract modifications, each of which added
funding, up to a final contract funding of $75,030,697.77. Exhibits 7_H through 7_FF.
Some of the modifications funded specific elements of construction phase work. See, e.g.,
Exhibit 7_J (modification 10, dated May 4, 2007, accessibility shell, SSB work, design and
engineering of the abstract flag and Lemelson Center). Other modifications included change
order work, including abatement of hazardous materials. See, e.g., Exhibit 7_K
(modification 11, dated May 4, 2007, repair of sprinkler system and abatement work). Still
other modifications funded design changes, referred to as addenda, made after submission
of the 95% drawings. Exhibit 7_U (modification 21, dated November 16, 2007).

5

Although the parties did not agree upon a final contract price for the base
contract work, Turner invoiced Smithsonian based on the detailed schedule of values in the
November 21, 2006, price proposal and its revised counterpart in the January 19, 2007, cost
proposal, which is more general in its cost breakouts. Transcript at 825-28.

CBCA 2862, 4085, 4802
3.

12

Substantial Completion Date–Modifications 16 and 26

Smithsonian issued two modifications to the contract related to the date for substantial
completion. In September 2007, the parties executed modification 16, which established a
substantial completion date of June 20, 2008. Exhibit 7_P. However, the parties also
“mutually agreed and understood that some work will likely extend past the substantial
completion date.” Id. at 599. The parties further agreed that the modification was a funding
action only and that a large portion of the contract price was undefinitized. Id. The parties
listed modifications that contained work for which a price had not been definitized. Id. at
600.
Shortly after the initial substantial completion date was set, the parties exchanged
correspondence about the possibility of extending it. Smithsonian was willing to extend the
date, but wanted either an agreement that all the delays were concurrent and, therefore, at no
cost to Smithsonian, or an analysis showing that the delays were Smithsonian’s
responsibility. Exhibit 862. Turner responded with an explanation of the nature of the delays
it believed it had experienced. Exhibit 933 at 4. Turner estimated that the cost of these
delays could be between $3 and $5 million. Id. at 1. To this document, Turner attached a
schedule analysis. Id.
The back-and-forth on schedule and cost continued throughout the spring of 2008.
Respondent’s PFF ¶ 396. On July 8, 2008, Smithsonian unilaterally issued modification 26,
which moved the substantial completion date back to October 31, 2008, and deemed thirtyfive days of delay to be compensable. Exhibit 7_Z. The determination of thirty-five days
of compensable delay was based upon an analysis of Turner’s schedule by Hill International.
Respondent’s PFF ¶ 400. Based upon this determination, Smithsonian unilaterally made an
equitable adjustment in the amount of $1,420,837, for “differing site conditions, extended
overhead delays and other factors.” Exhibit 7_Z at 1640.
Turner presented no evidence that it requested a further schedule extension past
October 31, 2008. The superintendent of Welch & Rushe, Inc., Turner’s mechanical and
plumbing subcontractor, testified that everyone was working hard to permit President George
W. Bush to open the SSB exhibit in November, before he left office. Transcript at 2679.
The former contracting officer testified that time extensions of the project cost Smithsonian
money, both for contract management by Smithsonian personnel and because the museum
shops, which bring in substantial revenue, remained closed. Id. at 3818. Turner substantially
completed the project on October 31, 2008. Turner Construction, 13 BCA at 173,258.

CBCA 2862, 4085, 4802
II.

13

Contract Performance Issues

Turner, its subcontractors, and Smithsonian all presented evidence regarding
performance issues that arose during the project. According to Turner and its subcontractors,
Smithsonian is responsible for issues that underlie their claims for delay and disruption:
hazardous material abatement, MEP interferences, and continuing design changes.
Smithsonian disputes that it is responsible for these issues and argues that Turner is
responsible for poor subcontractor performance and design issues that increased its
performance costs.
A.

Hazardous Material Abatement

Turner and its subcontractors discovered extensive quantities of two hazardous
materials that required abatement during the project: asbestos and lead paint. In September
2006, MACTEC, Turner’s hazardous waste consultant, provided Turner a survey of
hazardous material in the building, which reported the presence of these two materials (four
locations for asbestos and three locations for lead paint). Exhibit 332 at 5-11. MACTEC
also advised Turner that there was probably additional hazardous material hidden from view.
Exhibits 332 at 7; Transcript at 717-18.
Turner subcontracted with APRO Enterprises, Inc. (APRO) for demolition services.6
Exhibit 3067 at 19-28. After demolition began in October 2006, APRO encountered asbestos
behind existing walls and above existing ceilings. Transcript at 3381. In December 2006,
because APRO was already mobilized for demolition work, Turner subcontracted with
APRO for hazardous material abatement. Id. at 550-51. APRO’s contract was for a fixed
price of $77,200, a contract amount based on the MACTEC survey and Turner and APRO’s
inspection of the quantities of hazardous material at the specific locations identified by
MACTEC. Id. at 3381-83; Exhibit 3167 at 12-37. Turner and APRO anticipated that
additional hazardous material would be found and stated in the subcontract that “the total
scope is therefore unknown.” Exhibit 3167 at 35.
In May 2007, Turner subcontracted with Air Services for hazardous material
abatement work. Exhibit 509; Transcript at 719-20. Turner needed to augment APRO’s
abatement work because APRO could not keep up with either the demolition or abatement
schedule. Transcript at 720.

6

Exhibit 350.

Turner also subcontracted with Basic Services, another demolition firm.

CBCA 2862, 4085, 4802

14

Smithsonian’s resident engineer and COTR testified at the hearing that the scope and
effort of the abatement work on the project was not difficult and that the abatement problems
were caused by APRO. Transcript at 3942, 4163. These opinions are contradicted by the
record. During the course of the project, APRO encountered asbestos-containing material
in forty areas of the museum and lead-based paint in twenty areas. Id. at 3388-89. All of this
material had to be abated in a very time-consuming process.7 The work could last for a
couple of days or weeks, depending on the size of the area and the quantities of hazardous
material. Id. at 3405-11.
When hazardous material was discovered, all other work in the area would cease and,
if it was asbestos, a containment area would be set up, effectively shutting down those areas
of the project until the abatement was complete. Transcript at 1110, 3405-11. For example,
the project manager for March Westin Company, Inc., Turner’s structural steel subcontractor,
testified about discovering lead paint on the steel beams where his company was supposed
to weld new beams. Id. at 1979; Exhibit 3766.8 Similarly, Welch & Rushe’s project
manager testified about discovering black mastic (tape covering pipes that contains asbestos)
on duct work and piping that needed to be moved. Transcript at 2385-87. As a result of
these stoppages, subcontractor crews repeatedly were required to stop and find other areas
of the project to work on until the abatement areas were released. See, e.g., id. at 2427.
On November 15, 2007, Air Services stopped performing the abatement work,
blaming Smithsonian’s purported slow approval and payment process, including
Smithsonian’s reduction of payments for abatement costs after the abatement work had been
completed. Transcript at 1762-63. On December 12, 2007, Turner subcontracted with

7

When APRO or another subcontractor found hazardous material (lead paint,
asbestos, and black mastic), a technician would have to confirm that the material was
hazardous and submit an abatement plan to Turner for approval. For asbestos, the area would
be sealed off to all of the subcontractor personnel while the remediation was undertaken.
Often efforts required scaffolding to be set up so that remediation personnel could reach the
area. For lead paint, a chemical paint stripper was applied and then the paint was scrapped
off by hand. After the work was completed, a technician would reinspect the area to confirm
the hazardous material was abated. Transcript at 3407-08. APRO could then demobilize all
abatement equipment and continue demolition work. Id. at 3410.
8

March Westin’s project manager testified that March Westin did not know
about the presence of lead paint on the concrete-encased steel beams when it bid the project.
Transcript at 1976. The MACTEC survey does not mention lead paint on steel beams,
Exhibit 332, and Smithsonian does not identify any evidence to the contrary. Respondent’s
PFF ¶¶ 1486-87.

CBCA 2862, 4085, 4802

15

Diversified Environmental to replace Air Services. Exhibit 896. According to Zafar
Farooqi, Turner’s schedule and delay expert, the abatement work in the mechanical shafts
resumed on December 20, 2007. Exhibit 5045 at 18.
The abatement work continued from the beginning of the project through 2007.
Transcript at 233, 1110-11. Turner and its subcontractors performed more than $1 million
in abatement work. Id. at 869, 3723-24. Smithsonian contracting personnel recognized at
the time that the extent of hazardous material abatement required on the contract was “an
unforeseen condition.” Id. at 4718-19; Exhibits 4826, 5355 at 4.
B.

Mechanical, Electrical, and Plumbing Interferences
1.

Existing Conditions Survey

Turner and its subcontractors had to address numerous MEP interferences. According
to the report of the survey of existing conditions, dated July 15, 2004, the Turner team both
reviewed the existing drawings and conducted a field survey of the building. Exhibit 320 at
4. During the field survey, the Turner team verified the room layout for the basement and
fourth and fifth floors and “visually confirmed” the plans for the public areas of the museum,
where possible. Id. However, because the museum was still open to the public, the survey
team was limited to visual and other non-invasive inspection activities, meaning the team
could not open walls or ceilings. Transcript at 755-56. If the systems or wiring were located
above a hard ceiling, the team would not have seen those systems during this survey. Id. at
1224. In the survey report, the team noted that further design work would have to be
undertaken when system components above unaccessible ceilings were confirmed:
The emphases for our field survey were the clear dimensions for the public
space areas in the museum and material finishes. Any systems components
located above inaccessible ceilings or otherwise not readily accessible were
not visually confirmed. As a result, all drawings shall be field verified before
performing design work in any given area.
Exhibit 320 at 4.
2.

Effect of MEP Interferences Upon Coordination Drawings

After construction began, Turner discovered many MEP interferences that slowed the
progress of construction when the interference had to be addressed before coordination
drawings could be finalized. The interferences involved piping, conduits, wiring, and other
systems. While Smithsonian points to its correspondence with Turner in which it states that

CBCA 2862, 4085, 4802

16

identified MEP interferences were visible in the basement or the mechanical rooms,
Respondent’s PFF ¶ 1049, Turner’s subcontractors described discovering MEP interferences
when the hard ceilings, often more than one, were removed. E.g., Transcript at 2395, 2890.
Several witnesses described “a rat’s nest of wires” that would fall from the ceiling when
exposed. Id. at 2434-36, 3299-303; Exhibit 4876 at 51-52.9
Once the interferences were discovered, subcontractors were required to investigate
and decide how to remove, relocate, or establish temporary service for the systems. Welch
& Rushe required several additional experienced crew members to conduct this investigation
work. Transcript at 2409-10. In investigating the systems, subcontractors often traced the
piping or wires to outside the designated construction area, resulting in further delays as
subcontractor personnel had to wait for a Smithsonian escort into the still-occupied portions
of the museum. Id. at 2395-98, 3299, 3303. Discovery of these interferences and the effort
needed to address them caused delays in the preparation of the coordination drawings. Id.
at 2436-37. Welch & Rushe was assigned the lead responsibility for the coordination
drawings, Exhibit 3050 at 103, but M.C. Dean, Inc., Turner’s subcontractor for the
installation of electrical, security, fire alarm, and telecommunications systems, and Turner’s
fire sprinkler subcontractor also contributed to these drawings. Transcript at 2430.
3.

Agreement on MEP Interferences

Some of these interferences were depicted on the existing building drawings, but
many were not. Transcript at 1731. To address the costs and delays arising from these
interferences, senior management at Smithsonian and Turner agreed in December 2007 that
Smithsonian would pay for interferences not shown on the existing building drawings, and
Turner would absorb the cost of those that were depicted. Id.; Exhibit 117 at 2.10 Turner
tracked the MEP interferences it discovered on a field log that was provided to Smithsonian

9

This case proved the adage “a picture is worth a thousand words.” The Board
was shown pictures of the MEP interferences during the testimony of several witnesses, and
these pictures uniformly showed a mess of wires, ductwork, and piping in areas after ceilings
had been removed. E.g., Exhibit 4735.
10

The COTR initially rejected Turner’s request for additional compensation to
address these interferences based upon the mechanical, electrical, plumbing, and structural
general notes in SOM drawings. See, e.g., Exhibits 107, 3403; Transcript at 4077-80. The
drawing notes provided that the work by subcontractors was to be coordinated with other
trades “at no additional cost to the owner.” Exhibit 107. However, these notes do not
address the existence of MEP interferences that were not shown on existing drawings and
were not visible prior to demolition.

CBCA 2862, 4085, 4802

17

on a bi-weekly basis. Transcript at 1731-34; Exhibit 4780. According to the log, Turner
found approximately 200 MEP interferences from January 2007 through January 2008, only
fifty-one of which were depicted on the existing drawings. Exhibits 4780, 5057 (updated
version of Exhibit 4780).11
During the hearing, Smithsonian’s Deputy Director of OPDC testified that
Smithsonian’s position was that if interferences could be discovered by review of the existing
drawings (McKim, Mead documents, as well as others), the 2004 existing conditions survey,
interviews Turner could have and should have had with Smithsonian personnel, or soft
demolition prior to the full demolition, then Turner should bear the cost of the MEP
interferences. Transcript at 3689. Smithsonian highlights MEP interferences that were
shown on existing drawings, but these interferences either were noted before the agreement
between senior management, see, e.g., Exhibit 885, or are captured on the log prepared by
Turner. Respondent’s PFF ¶ 377 (noting fifty-four instances in which the MEP interference
is noted on the existing drawings).
C.

Addenda to Construction Documents

Turner issued a series of addenda to the 95% construction documents that, in part,
included further design changes requested by Smithsonian. The parties’ negotiations
regarding the scope and price for these addenda continued through September 2007. Turner
Construction Co., 13 BCA at 173,255.
Turner issued addendum 1 on January 17, 2007. Exhibit 358. Addendum 1
incorporated Smithsonian’s comments on its review of the 100% drawings.12 Turner issued
addendum 2 on April 13, 2007, and issued a revised version on July 18, 2007. Exhibit 617

11

Mr. Farooqi testified as to his analysis of this log, but that analysis took place
after his deposition in this matter at the request of Turner’s counsel. Smithsonian objected
to Mr. Farooqi’s testimony regarding his review of this log on this basis. The Board has not
considered Mr. Farooqi’s testimony about this log, but is able to discern what the log says
on its face about whether the MEP interferences could be determined from the existing
drawings.
12

It is unclear from the record whether the 100% construction documents and
addendum 1 were submitted concurrently, or were substantively distinguishable from each
other. Compare Appellant’s PFF ¶ 93 (Addendum 1 “included final dimensional
configurations, coordination with the SSB dimensions, and incorporated 100% review
comments”) with Respondent’s PFF ¶ 236 (Addendum 1 “contained revisions to complete
the Contract Scope of Work from the 95% to the 100% Construction Documents”).

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18

at 3, 33. Addendum 2 incorporated final drawings for a fire suppression system for the SSB
chamber, fire zone changes, and mechanical specifications. Transcript at 829-30. The
contracting officer directed Turner to proceed with addenda 1 and 2 on July 19, 2007.
Exhibit 18.
Turner issued addendum 3 on June 27, 2007. Addendum 3 incorporated revisions to
electrical and mechanical systems to implement Smithsonian’s request to upgrade switch
gear. Exhibits 7_S at 4, 617 at 44-45; Transcript at 830. Smithsonian directed Turner to
proceed with addendum 3 on July 24, 2007. Exhibit 7_S at 2.
Turner issued addendum 4 on July 11, 2007. Addendum 4 revised the design for the
accessibility office, revised the door into the SSB chamber, and added signage. Exhibit 617
at 46-48; Transcript at 830. Smithsonian directed Turner to proceed with addendum 4 on
November 16, 2007. Exhibit 7_S at 2.

On August 1, 2007, Turner directed its subcontractors to implement the work in
addenda 1 and 2 and to prepare shop drawings and submittals based upon addenda 1 through
4. Exhibit 651.
Turner issued addendum 5 on August 29, 2007. Addendum 5 incorporated the SSB
exhibit package. Exhibit 617 at 49-50; Transcript at 831. The Board is unable to determine
from the record when the notice to proceed was issued for this addendum.
Turner and its subcontractors testified that the continuing design changes delayed
development of the coordination drawings. Transcript at 93-94. As Welch & Rushe’s
program manager explained, even if an addendum did not require work by a particular trade,
that trade was still required to review the new work presented by the addenda and the plans
of the other trades to make sure that the work could still all be coordinated. Id. at 2433.
Based solely upon an email message from SOM, Smithsonian asserts that addenda 1
and 2 were necessary to address incomplete construction documents. Exhibit 821.
Smithsonian also notes that Turner delayed the submission of its price proposals for these
addenda, which delayed the final design changes. Respondent’s PFF ¶¶ 245-57. The Board
finds that Smithsonian often directed Turner to proceed with addenda before it issued
funding modifications.

CBCA 2862, 4085, 4802
D.

19

Subcontractor Performance Issues

Smithsonian contends that several problems in the performance of APRO led to the
delays and increased costs of performance experienced by Turner and its subcontractors.
Smithsonian highlights five instances in which APRO broke sprinkler system supply lines.
Exhibit 560 at 1. Although Smithsonian established that the instances occurred, Smithsonian
did not identify periods of time in which these incidents delayed the project. One of Turner’s
project managers testified that the sprinkler incidents did not affect the preparation of the
coordination drawings, which was the critical path activity at the time. Transcript at 1244;
Exhibit 5045 at 11. Turner backcharged the costs of these broken sprinkler lines to APRO,
so the direct costs of these broken supply lines are not in the costs sought by Turner. See,
e.g., Exhibit 59 at 31.
Smithsonian also points to the difficulty APRO experienced in demolishing the
concrete within the beam pockets of the structural steel. Exhibit 501. Both Turner and
APRO acknowledge that APRO experienced this difficulty, Exhibit 439; Transcript at 344243, but assert that it arose because APRO could only use hand tools for this effort to limit the
vibration, which could harm exhibits and artifacts in the museum.13 Exhibit 3055 at 50.
APRO withdrew its claim for the additional time it spent demolishing the beam pockets.
Transcript at 3442-43.
Finally, Smithsonian highlights Turner’s complaints about APRO’s lack of adequate
staffing and progress on its contracts as evidence of the difficulties APRO experienced. On
July 24, 2007, Turner issued a cure notice to APRO regarding its progress on its demolition
contract, Exhibit 82, but it did not terminate APRO’s subcontract. The Board credits the
testimony of APRO’s president that APRO experienced difficulty meeting schedules on its
demolition contract because of the unexpected volume of abatement required. Transcript at
3424.
E.

Design and Management Issues

Smithsonian highlights several issues related to the design that it contends are
Turner’s responsibility pursuant to the design-build contract. The first issue was the slow

13

Smithsonian chose to leave exhibits and artifacts in the museum during the
renovation. Because of concerns about vibration, sensors were placed throughout the
museum, including one on a statue of George Washington. When the vibration caused by
demolition activities became too great, the sensor would send a signal to the cell phone of
Turner’s superintendent. The superintendent regularly received calls from George
Washington during the course of the project. Transcript at 1101-02.

CBCA 2862, 4085, 4802

20

processing of requests for information (RFIs) by SOM, which became part of Turner’s team.
Smithsonian points to complaints by Turner subcontractors M.C. Dean and Welch & Rushe
about these slow responses. Respondent’s PFF ¶¶ 1031-37. Smithsonian also highlights an
email message that Turner’s program manager sent internally about the need for additional
manpower commitments by SOM to address the issues that arose because of “their
incomplete design.” Exhibit 951. When asked about this statement, the project manager
explained that some of the issues arose because of incomplete drawings but others arose
because there were “conflicts with the existing building. And there’s a lots of elements out
there that never showed up on any of the drawings that we had access to at the time.”
Transcript at 907-08.
Smithsonian also points to several items that were the subject of change orders as the
result of what Smithsonian describes as design errors and omissions. Respondent’s PFF
¶¶ 311-22. Turner’s program manager explained that, based upon his experience with
museum renovation, it is not unusual to see errors in drawings prepared by architects.
Transcript at 1242. Further, Turner included contingencies in its pricing to correct such
errors. Id. at 1243. Smithsonian’s Deputy Director of OPDC, when asked what Turner’s
obligations were as the designer on the design-build contract, stated: “To design the project.
To give us a project that met the scope of work, the intent and deliver a fully functional,
usable space.” Id. at 3640.
Finally, Smithsonian offers several findings about Turner’s management of the
project, highlighting correspondence regarding performance failures of individuals employed
by Turner. Respondent’s PFF ¶¶ 292-99. While Smithsonian asked Turner personnel about
the performance of these individuals, Smithsonian did not elicit any testimony or provide
other evidence that these performance issues were responsible for the delays or disruption
experienced on the project.
III.

Performance Problems Led to Disruption and Delay
A.

Testimony About Disruption

Turner and each of the subcontractors presented testimony about the disruptive effects
of these issues to their planned performance.
Turner’s superintendent testified about the continuing abatement and MEP
interferences that he saw when he started on the project in August 2007. Transcript at 1060,
1097. In an effort to put the project back on track, he took “an aggressive approach on
schedule.” Id. at 1076. He also released a greater number of areas for subcontractors to
work on and worked to stack subcontractors. Id. at 1073, 1076. These efforts caused a

CBCA 2862, 4085, 4802

21

decrease in subcontractors’ productivity and an increase in Turner’s general conditions costs,
as Turner was required to supervise more work. Id. at 1076, 1098.
Welch & Rushe experienced delays and labor inefficiencies as the result of numerous
areas becoming inaccessible due to abatement work and additional work required as a result
of the addenda and MEP interferences that had to be investigated. Transcript at 2434-44,
2673-88. Welch & Rushe also had to spend time investigating pipes and cables that were not
on the existing building drawings and were often abandoned. Id. at 2410. Welch & Rushe
had to develop a plan to address the interferences, which had to be approved by Smithsonian,
prior to installation of the new pipes. Id. at 2401-03. The difficulties were compounded by
Smithsonian escorts showing up late or without keys to areas to be investigated. Exhibit
4974. Welch & Rushe brought in additional crew members to investigate and plan around
these interferences. Transcript at 2410. Welch & Rushe repeatedly had to start and stop its
work on the coordination drawings and the installation of piping for the plumbing and
electrical systems because of these problems. Id. at 2443-45, 2682. Welch & Rushe’s
superintendent testified that “sometimes you couldn’t put two full lengths of pipe together.”
Id. at 2682. As a result of these problems, Welch & Rushe’s plan for working on the project
was disrupted. Id. at 2683.
Welch & Rushe witnesses also testified to delays caused by inoperable freight
elevators and security requirements. There were two freight elevators on the project, which
had to be operated by Smithsonian personnel and were often broken. Transcript at 2408,
2678. Welch & Rushe also experienced delays in gaining access to the work site in the
morning when Smithsonian guards were late arriving to check identification. Id. at 2405.
Three of Welch & Rushe’s subcontractors also testified as to the disruption
experienced on the project. Stromberg Metal Works, Inc. (Stromberg) was Welch & Rushe’s
HVAC duct installer. Both Stromberg’s senior project manager and executive vice president
testified in support of Stromberg’s claim and described the interferences as “sprinkler piping,
electrical conduits and communication cabling.” Transcript at 2888; Exhibit 4876 at 6-7.
Stromberg’s project manager testified that these interferences were not indicated on the
building drawings and could not have been known until the ceilings were demolished.
Transcript at 2889-90. Once these ceilings were demolished, “utilities started falling out of
the air.” Id. at 2890. Because of these interferences, Stromberg could not install the HVAC
lines in the efficient manner it planned. Id. at 2870-71. Instead, Stromberg would install
lines where possible and then return to connect the lines to larger lines when they were
installed. Id. at 2885, 2892, 2946; Exhibit 4876 at 9, 12 (pictures of piecemeal installation
of ductwork).

CBCA 2862, 4085, 4802

22

Southern Insulation, Inc. (Southern), Welch & Rushe’s subcontractor for piping and
ductwork insulation, experienced lost productivity because it could not work in the sequence
it had planned. Instead, Southern was required to insulate piecemeal as piping and ductwork
were installed in a patchwork pattern all over the project. Transcript at 3128-29. Similarly,
Siemens Industry, Inc. (Siemens), Welch & Rushe’s subcontractor for the installation of
automation controls for the mechanical and security systems in the building, could not work
in accordance with its original plan because it had to wait until other trades had finished their
work. Id. at 3225-26. Siemens often had to return several times to finish a single task. Id.
at 3231-32.
M.C. Dean, Turner’s electrical subcontractor, experienced delays and loss of
productivity as the result of unforeseen hazardous materials, differing site conditions, and
MEP interferences. Transcript at 3291-92. Whenever M.C. Dean encountered unexpected
wiring, it would have to investigate what the wiring was for and where it went. Id. at 330304. These investigations often required it to enter the parts of the museum that Smithsonian
still occupied, which further delayed efforts as M.C. Dean waited for an escort into the space.
Id. at 3302. M.C. Dean was also required to bring in additional crews to install temporary
wiring to enable systems to continue to operate while they were reconfigured. Id. at 3341.
M.C. Dean’s work was complicated by these conditions so that it could not proceed in the
sequence that M.C. Dean anticipated. Id. at 3298, 3303.
March Westin was to install structural steel on all five floors of the museum and
planned to work from the top floor to the ground floor. Transcript at 1963-64. March
Westin experienced delays and labor inefficiencies when it repeatedly encountered hazardous
material that had to be abated or MEP interferences that had to be relocated before it could
perform its work. Id. at 1975-90. As a result of these conditions, March Westin was
required to perform work out of sequence or in a “hopscotch” manner. Id. at 2017. March
Westin’s employees were forced to move around the building seeking areas in which they
could proceed with their efforts. Id. at 2020-21. This method of proceeding added
performance time and increased its labor costs. Id. March Westin also experienced
acceleration and trade stacking as Turner pushed everyone to complete the project. Id. at
2018-19. March Westin increased its crews from the planned number of two to four to finish
the work. Id. at 2019-20.
APRO discovered material that required abatement in every area in which it was
assigned demolition work, which, in turn, caused inefficiency in its demolition work.
Transcript at 3410. APRO would mobilize for demolition in an area, only to be required to
demobilize for abatement, and could only work in a “small piecemeal fashion,” out of
sequence and moving from one area to another. Id. at 3410-11, 3424-25. APRO could not
use the building electrical shafts as trash chutes, as it had planned, because of the presence

CBCA 2862, 4085, 4802

23

of hazardous materials. Id. at 3379. Instead, APRO had to use the two elevators, which were
used by all contractor personnel, at a greater cost of labor and time. Id. at 3425; Exhibit 41
at 900.
C.J. Coakley Company, Inc. (Coakley) was Turner’s subcontractor to finish the
interior spaces, installing drywall and acoustical ceilings. Coakley’s work was affected by
all of the problems experienced by the other subcontractors simply by the nature of its work.
As Coakley’s vice president testified, Coakley had to wait for the demolition to be completed
before it could begin marking lines and installing framing. It then had to await the rough-ins
by the other trades before it could beginning hanging drywall. Transcript at 3478. The
process was similar for the ceiling work: Coakley installed the framing and then returned to
install the ceilings after the other trades had finished their work. Id. at 3479.
B.

Turner’s Delay Analysis

In support of the delay and disruption claims, Turner presented a delay analysis
prepared by its expert, Mr. Farooqi. Mr. Farooqi identified 133 days of critical path delay,
equal to the period of time between the initial substantial completion date, June 20, 2008, and
the actual substantial completion date, October 31, 2008. Transcript at 218-19. During this
period, the critical path activities were the erection of structural steel, preparation of
coordination drawings, abatement activities, and relocation of steam lines. Exhibit 5045;
Transcript at 228-65. Earlier hazardous waste abatement, MEP interferences, and design
changes caused these delays.14 Transcript at 228, 240, 243, 338, 340.
Smithsonian provided its own delay analysis performed by Daniel Stewart of Hill
International. For the most part, Mr. Stewart identified the same activities on the critical path
and the same causes of delay. Mr. Stewart agreed that the structural steel work was on the
critical path and found a compensable delay of twenty-six days due to hazardous material
abatement. Similarly, Mr. Stewart agreed that the coordination drawings were on the critical
path during the same period. Exhibit 4747 at 10-12. Mr. Stewart disagreed with Mr.
Farooqi’s assessment that Smithsonian was responsible for these delays. Transcript at 4423.
Mr. Farooqi did not testify or offer any opinion as to any specific periods of delay
experienced by Turner’s subcontractors. Similarly, none of the subcontractors’ witnesses

14

Mr. Farooqi also acknowledged that there was a concurrent delay in the beam
pocket demolition work performed by APRO, a predecessor activity for installation of the
structural steel, and he could not separate the two causes of delay. Transcript at 395-96.

CBCA 2862, 4085, 4802

24

testified as to specific periods of delay tied to Mr. Farooqi’s analysis.15 Because of this gap
in proof, the Board does not need to decide whether Turner proved that it experienced critical
path delay for the entire period identified by Mr. Farooqi.
IV.

Turner’s Claims
A.

Turner’s 2011 Claim for General Conditions Costs16
1.

Nature of Turner’s claim

Turner incurred $12 million in general conditions costs in performance of the project,
of which approximately $10 million was for construction activities. Transcript at 1682.
Patrick McGeehin, Turner’s damages expert, and his firm reviewed Turner’s general
conditions and removed costs that were unallowable based upon guidance in the FAR. Id.
at 1390. Smithsonian’s auditor, Jeffrey DuVal of the Kenrich Group, LLC, agreed that
Turner incurred these general conditions costs. Id. at 4979; Exhibit 236 at 37 n.69.
Turner seeks these costs as part of the reasonable price for the renovation of the
museum. Turner’s general conditions costs, often referred to as field overhead costs, were
the direct costs of Turner’s supervision in the field and include the costs of the project
manager, field superintendent, and others assigned to staff the project. Transcript at 1389.
These sorts of costs, which may have increased due to delays and difficulties experienced on
the project, are incurred on any construction project. Having failed to obtain a firm fixed
price for the contract effort, Turner seeks all of the general conditions costs incurred to
perform the undefinitized contract work. Id. at 1805.
Smithsonian contends that Turner should not recover any additional general conditions
amounts, in part because evidence in the record demonstrates that the project experienced
problems with safety issues and poor management by Turner. Respondent’s PFF ¶¶ 292-304.
While the evidence cited in these proposed findings demonstrates that Turner had
management difficulties, Smithsonian offered neither documentary evidence nor testimony

15

Timothy Calvey, March Westin’s claim expert, in response to Mr. Stewart’s
report, testified that March Westin’s activities were on the critical path identified by Mr.
Farooqi, but he did not testify as to a specific period of delay in March Westin’s activities.
Transcript at 2244-45.
16

Exhibit 41.

Turner hand-delivered its claim to the contracting officer on May 24, 2011.

CBCA 2862, 4085, 4802

25

that these difficulties were unusual for a project of this complexity. Smithsonian also did not
isolate the cost of these management difficulties.
Smithsonian also challenges Turner’s entitlement based upon problems with
subcontractor performance, such as the sprinkler leaks caused by APRO. However, as
previously noted, the direct costs of these leaks are not in the claim. Transcript at 1744;
Exhibit 59. We find that any general conditions costs that might have been associated with
this problem were minimal.
Finally, Smithsonian asserts that Turner’s claim includes “massive overtime amounts
caused by Turner management decisions or subcontractor poor performance,” but cites only
one instance of Turner directing a subcontractor to work overtime. Respondent’s PFF ¶ 420.
Turner directed the overtime work Smithsonian highlights at no cost to Turner or
Smithsonian. Id. The subcontractors’ claims include other instances of overtime, but the
Board has not included those costs in what the subcontractors or Turner may recover.
2.

Compilation of Turner’s Claim for General Conditions

Turner’s second project manager assembled Turner’s claim.17 He compiled from
Turner’s accounting system all of the direct costs that Turner incurred on the project, which
were tracked using different project codes, for both design and construction efforts.
Transcript at 1666, 1671. The direct costs of construction totaled approximately $57 million.
Exhibit 257 at 2-3.18 Within the construction effort, the project manager identified all work
that was performed for a definitized price based upon the language of contract modifications.
Transcript at 1684, 1694. Using pay applications and other accounting records, he identified
the costs incurred to perform the modifications. Id. at 1702, 1705. The project manager
collected the remainder of the direct costs as “undefinitized costs,” which totaled $45.4
million. Id. at 1715-16; Exhibit 257 at 3. Turner never defined the terms definitized or
undefinitized. The Board understands that, in seeking to identify “undefinitized work,” it
is seeking to identify the cost of the work for which there was no definitized price.

17

Turner employed two construction managers on the project. The first manager
was brought in at the beginning and focused upon the design aspects of the project. The
second manager was brought to the project in November 2007 and managed the project
through the claim period and the installation of the second steam generator. Transcript at
1657.
18

Exhibit 257 is Turner’s revised claim calculation, after adjustments were made
to correct for errors identified in the audit. Transcript at 1682-83.

CBCA 2862, 4085, 4802

26

The project manager determined the ratio of priced to unpriced direct construction
work ($12.5 million (22%) to $45.4 million (78%)). Transcript at 1393, 1670. Applying
these percentages to the total construction costs, he divided the general conditions costs
incurred based upon these percentages and determined that Turner incurred almost $8 million
in general conditions costs associated with the direct costs of the unpriced work. Exhibit 257
at 3. The project manager added the general conditions costs and the direct costs of
construction together and applied a percentage for fee (3%). Id. He also added amounts for
insurance and bond costs that included actual costs and projected costs determined on a
percentage basis to derive a total cost of unpriced construction of $56.6 million. Id.; Exhibit
41 at 2; Transcript at 1679.19 He subtracted from this figure the $49.6 million that Turner
had been paid and determined that Turner was owed an additional $7 million. Transcript at
1668; Exhibit 257 at 1.
Turner’s cost expert, Mr. McGeehin, determined that, of the $10 million in general
conditions costs incurred for the construction effort, Turner was paid approximately $6
million, leaving $4,133,521 unrecovered. Transcript at 1442; Exhibit 3607 at 77.20
Mr. DuVal, Smithsonian’s auditor, criticized the project manager’s calculation as
unreliable. Exhibit 236 at 9-10. Because Turner’s accounting system did not track
contemporaneously the costs of priced versus unpriced work, the determination of what work
was unpriced was based upon the project manager’s analysis after the work was complete.
Transcript at 4790, 4795.21 Mr. DuVal reviewed Turner accounting records that identified

19

Turner identified the percentages for insurance (1.06%), and bond (1.624%)
but did not identify the incurred amounts. Exhibits 41 at 2, 257 at 3.
20

Mr. McGeehin also calculated a daily rate for Turner’s general conditions and
then spread those costs, based upon that daily rate, across the periods of delay. Transcript
at 1397-98; Exhibit 3607 at 27-28. While Turner did not quantify its direct cost claims as
delay claims, Mr. McGeehin performed this alternative analysis in case the Board determined
that there were periods of delay that were not compensable. Transcript at 1397-98.
Smithsonian incorrectly asserts that this analysis shows that Turner incurred the bulk of its
general conditions costs after the date of substantial completion. Respondent’s Brief at 47.
It does not appear that Mr. McGeehin actually analyzed when the general conditions costs
were incurred; he only calculated the general conditions costs across a time period based
upon a calculated daily rate. Transcript at 1398.
21

Mr. DuVal’s criticism was also a pretense to audit all of Turner’s costs incurred
on the contract. Because these costs were not tracked in the accounting system, Mr. DuVal
determined that he should audit the entirety of Turner’s incurred costs. Exhibit 236 at 6.

CBCA 2862, 4085, 4802

27

several of the costs the project manager identified as associated with unpriced work as being
associated with priced work. Id. at 4791. Because Turner allocates its general conditions
costs based upon the ratio of the costs of unpriced verus priced work, Mr. DuVal explained
that a larger percentage of costs in the latter category would reduce Turner’s claim. Id. at
4794, 4965. Despite these criticisms, after auditing the entirety of Turner’s incurred costs,
Mr. DuVal did not identify costs that were incorrectly allocated to either priced or unpriced
work. Exhibit 236.
Smithsonian, in its post-hearing brief, points to two purported errors in Turner’s
compilation of costs. Respondent’s Brief at 34-35. Smithsonian asserts that some of the
costs for the SSB exhibit were incorrectly allocated to the unpriced effort. Respondent’s PFF
¶¶ 592-93. However, the program manager’s analysis is supported by the underlying
modifications. Exhibits 7_H, 7_J. Smithsonian also claims that the program manager’s
analysis does not comport with internal Turner budget documents. Respondent’s PFF ¶ 599.
However, as the program manager and others testified, the documents cited by Smithsonian
are project budget documents, not accounting records. See, e.g., Transcript at 1807.
From the $10 million in construction general conditions costs, Mr. DuVal removed
all of the costs attributable to supervision, engineering, and estimating because he said they
were not allowable under the Equitable Adjustment clause. Transcript at 4958. The resulting
amount was roughly $5 million, which Turner has been paid. Id. at 4961.
Mr. DuVal also observed that this $5 million in general conditions costs represented
a greater percentage of overhead recovery than Turner had agreed to for change work.
Transcript at 4959. When applied to the approximately $66 million in direct construction
costs, $5 million is 7.6%. Id. Mr. DuVal noted that Turner agreed to charge only 4% for
general conditions on change work. Transcript at 4959. Finally, Mr. DuVal opined that
Turner had agreed to receive general conditions costs as a percentage of direct costs. With
its claim, he maintained, it was seeking actual costs. Id. at 4962-65. Finally, Mr. DuVal
noted that the costs in the claim for general liability insurance and bond, which total
$355,187, appeared to be estimates, as he was not shown any evidence that these costs were
incurred. Id. at 4956.
3.

Analysis of Undefinitized Direct Costs Underlying Turner’s
General Conditions Claim

To aid in the presentation of evidence, Turner’s program manager prepared a pie chart
that allocated the $45.4 million in costs of unpriced construction work into three categories:

CBCA 2862, 4085, 4802

28

base contract work ($34.4 million), change work approved by Smithsonian ($3.9 million),
and pending/approximate change work ($7 million). Appellant’s Demonstrative Exhibit 24.
The program manager also prepared summaries of the direct costs that totaled these amounts.
Exhibits 5341, 5342, 5343.22
a.

Base contract work

The first category includes the costs of the base subcontracts Turner issued for the
construction effort. Transcript at 1718; Exhibit 5342. The program manager divided the
subcontracts based upon priced versus unpriced work under the base contract. Exhibit 5342.
Smithsonian challenges Turner’s inclusion of several of the costs within the pool of
unpriced work. Respondent’s PFF ¶¶ 605-07. First, the compilation includes an SOM
subcontract for $3.347 million, which is identified elsewhere as a fixed-price design contract.
Id. ¶ 605; Exhibit 257 at 2. To adjust for this error, the Board reduces the total direct costs
for construction from $58 to $54.6 million. Smithsonian identifies three other contract
amounts (totaling $377,415) that it says are not part of the unpriced construction effort.
These are contracts with TriPyramid ($367,480), Siemens ($3135), and Seneca Balancing
($6800). Smithsonian also challenges the inclusion of costs for a subcontractor that was
terminated for default ($79,700) and the costs of the follow-on subcontractor ($118,700).
Respondent’s PFF ¶ 609. In addition, Smithsonian identifies $115,900 in allowances that
Turner never reconciled. Id. ¶ 610. The Board is unable to determine from the record
whether these costs are properly included in the tally of unpriced construction work. If these
contracts and their corresponding costs are removed ($691,715), the amount of unpriced base
contract work is reduced to $33.7 million.23 This amount is 62% of Turner’s total direct
construction costs.

22

The Board admitted these summaries over Smithsonian’s objection because
Smithsonian had sought the same information in discovery and the summaries assist the
Board in its determination of a reasonable price. Transcript at 1785. Because the Board uses
this evidence to reduce Turner’s claim and has made adjustments based upon the errors
identified by Smithsonian, the Board discerns no prejudice to Smithsonian from admitting
the summaries. Fed. R. Evid. 103.
23

Smithsonian challenges other amounts included in the chart, but the Board
accepts Turner’s explanation in response to these challenges. Respondent’s PFF ¶¶ 605-10.

CBCA 2862, 4085, 4802
b.

29
Approved change work

The next group of costs that Turner associates with unpriced construction work is the
direct costs of the change work approved by Smithsonian. Exhibit 5341. This work is
included in the unpriced work because it was covered by unilateral modifications. Transcript
at 1910. Although these change orders were not issued through bilateral modifications, the
prices for the changes were negotiated between Turner and Smithsonian. Id. at 1659-60. For
each of these pieces of change work, the record includes Smithsonian’s request for a proposal
and Turner’s proposals from its subcontractors, to which Turner added general conditions
costs and fees. See, e.g., Exhibit 7_X at 1156-57. The program manager removed the
general conditions and fee amounts when he tallied the cost of the change work. Compare
Exhibit 7_X at 1161 with Exhibit 5341 at 5 (only subcontractor proposed cost included);
Transcript at 1723, 1796-98.
c.

Pending change work

The final group of costs that Turner associates with unpriced work consists of
additional work that was undertaken but either not presented to Smithsonian as a change
request or rejected by Smithsonian, prior to the submission of Turner’s 2011 claim.
Transcript at 1723-24. Turner included the costs of this “pending change work” in its claim
because they were incurred in performance of the project and include costs for inspections
and testing, MEP interferences, overtime, design development, ceiling work, and additional
scope. Id. at 1727; Exhibit 5343. Turner’s project manager testified that these amounts do
not include the $6 million in subcontractor claims, Transcript at 1730, but the Board can
match some of the subcontractors’ claims for additional work to figures listed in this
summary. Exhibit 5343. No one explained why the bulk of these additional costs was not
presented as change order requests to Smithsonian.
Turner did not submit all of the proposed change orders that underlie these requests
for the record, although it did present this documentation to Smithsonian in support of its
claim. Transcript at 1724; Respondent’s PFF ¶ 625. Examining change orders in the record,
the Board found discrepancies. For example, Turner submitted a change order request for
subcontractor overtime (COR 223), but the amount of the request does not match the amount
in Turner’s compilation. Compare Exhibit 3532 at 3 with Exhibit 5343 at 4.

CBCA 2862, 4085, 4802
B.

30

Turner’s 2015 Claim for Second Steam Generator24

As part of its scope of work, Turner was required to upgrade the mechanical system
for the renovated portion of the museum. Exhibit 5_E at 209. This system was required to
maintain humidity levels at 50%, plus or minus 5% during the heating season. Appellant’s
PFF ¶ 457; Respondent’s PFF ¶¶ 928-29.25 In the 95% drawings, and the specifications that
accompanied them, Turner proposed to install a system that would meet this requirement.
Respondent’s PFF ¶ 930. This system included only one steam generator to service four air
handling units that were installed as part of the renovation. Transcript at 3979-80.
Smithsonian asserts that Turner’s proposed system was definitized with the submission of
these drawings. Respondent’s PPF ¶ 933.
The parties agree that the HVAC system did not maintain the required humidity levels
beginning with the first heating season after substantial completion. Transcript at 1736-37.
To determine why, the parties agreed that Turner would hire AECOM to conduct an
investigation. Id. at 1737.
The AECOM engineer responsible for investigating the problem testified that,
although the steam generator installed by Turner had sufficient capacity to meet the humidity
requirements, it did not have a “safety factor built in for unforeseen conditions.” Transcript
at 994. Such a condition would be the steam provided to the museum by the General
Services Administration (GSA) steam plant. According to the engineer, the GSA steam
“does not have the best reputation as far as being reliable. The pressure can fluctuate. The
condition of the steam itself being clean or dirty can inhibit the steam generator’s ability to
produce steam at its rated capacity.” Id. The inconsistency of the GSA steam coupled with
several other factors in the equipment design and layout kept the HVAC system from
maintaining the required humidity levels. Id. at 998-99. The AECOM engineer testified
further that Smithsonian had made modifications to the control systems and had chosen to
override the system to try to get the system to perform as required; however, he also
acknowledged that AECOM was able to get a baseline measurement with the system
operating as intended. Id. at 1000. Finally, AECOM’s report noted that exterior doors
should not be propped open, but the AECOM engineer acknowledged that AECOM’s testing
occurred before the museum opened to the public in the morning. Id. at 1035. AECOM

24

25

The contracting officer received Turner’s claim on May 6, 2015. Exhibit 309.

The contract also required Turner to warrant and guarantee that “mechanical
[] equipment shall be fit and fully useable for its intended and specified purpose and shall
operate satisfactorily with ordinary care.” Exhibit 1_F at 211 (Clause 72(a)(5)).

CBCA 2862, 4085, 4802

31

recommended several changes to the existing system to address the problems, but did not
recommend the installation of a second steam generator. Exhibit 309 at 21.
After the issuance of AECOM’s report, believing that none of the recommended fixes
would address the issue, Smithsonian directed Turner to install the second steam generator.
Transcript at 1742. Smithsonian noted in its direction to proceed that Turner was responsible
for all of the costs of the work because the contract was a design-build contract and “Turner
is entirely responsible for the success of its own design and installation.” Exhibit 302.
Smithsonian accepted the second steam generator after the system was shown to meet the
required humidity levels in November 2014. Respondent’s PFF ¶¶ 951-52.
Turner submitted a claim in the amount of $438,668. Exhibit 309 at 4. That amount
includes the $400,000 in direct costs paid to Welch & Rushe and markups for commission,
insurance, and bonding. Id. at 4, 140. Turner did not include costs for any design work
associated with the additional installation. Id. at 4. Smithsonian offered no evidence that
Turner’s actual cost to install the second steam generator was unreasonable or in excess of
what Turner would have incurred if it had installed a second steam generator originally. See
generally Respondent’s PFF ¶¶ 926-62.
Turner also seeks $424,698 for an “unpaid approved contract balance.” Appellant’s
Response Brief at 51; Appellant’s PFF ¶ 456. Smithsonian’s proposed findings are silent as
to whether this amount is owed to Turner. Respondent’s Response to Appellant’s PFF ¶ 456;
Respondent’s PFF ¶ 581. We expect that any outstanding balance due and owing will be
paid.
V.

Subcontractor Claims for Labor Inefficiency, Extended Overhead, and Change Work
A.

Change Order Releases

Smithsonian asserts that the subcontractors’ claims have been released through the
execution of change orders or lien releases during performance of the contract.26 APRO,
Coakley, and March Westin signed change orders with Turner that added or deducted
individual items of work from their respective subcontracts. Exhibits 59, 76, 103. With the
exception of the change orders for the payment of overtime to Coakley discussed below,
none of these change orders appear to address claims for delay or disruption caused by MEP

26

The contracting officer did not mention these releases in either of her decisions
rejecting the subcontractors’ claims, Exhibits 42, 237, but Smithsonian did assert the
affirmative defense of release in its answer to Turner’s complaint in the second appeal, filed
October 24, 2014.

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32

interferences or hazardous material abatement. All of the change orders contain the
following release:
Through acceptance of this Change Order, this Subcontractor acknowledges
that it has reviewed the progress of the Work related to this Project and the
potential time impact of the added [or deleted] work on the progress of the
project in the future. As a result, this Change Order includes compensation to
the Subcontractor for any and all effects, delays, inefficiencies or similar
demands associated with this Project and the Subcontractor recognizes that
there is no basis for any such claim in the future.
See, e.g., Exhibit 103 at 1.
B.

Lien Releases
1.

Language of the Lien Releases

Coakley, Welch & Rushe, M.C. Dean, and March Westin executed documents titled,
“Affidavit, Partial Waiver of Lien and Release,” in exchange for progress payments on the
project. Exhibits 394, 395, 3197, 3711. These affidavits all contain the following language:
The undersigned has received payment in full for all deliveries of material to
and/or for all work performed in connection with the construction of the
project through the date of the [Turner] Application for payment No. [xx] for
the period ending [date] and hereby represents and warrants that there are
no outstanding claims by the Company in connection with the project through
the date of Application for Payment No. [xx] except for any retention, pending
modifications and changes, or disputed claims for extra work as stated herein:
In consideration of the above-mentioned payment in full, the undersigned does
hereby waive, release and quit claim in favor of the development manager,
owner of the project, each and every party acquiring title to and/or making a
loan on the project, the title company or companies examining and/or insuring
title to the project, any surety or guarantor, the general contractor, Turner
Construction Company and other party having an interest in the project and
any and all of their successors and assigns (hereinafter collectively referred to
as the “Released Entities”), all rights that presently exist or hereafter may
accrue to the undersigned to assert a lien upon the land and improvements
comprising the project by virtue of any law regarding the rights of a contractor,
subcontractor, laborer, supplier, or materialman to assert a lien or claim against

CBCA 2862, 4085, 4802

33

the project for deliveries of material to and/or work performed in connection
with the construction of the project through the date of Application for
Payment No. [xx], except for those items listed under No. 1 above.
....
The undersigned does hereby forever release, waive, and discharge the
Released Entities from any and all causes of action, suits, debts, accounts,
damages, encumbrances, judgments, claims and demands whatsoever, in law
or equity or otherwise, and whether known or unknown and whether presently
ascertainable or not, which the undersigned and/or its successors and/or its
assignees ever had, now have, or ever will have against the Release Entities,
by reason of delivery of material and/or performance of work relating to
the project through Application for Payment No. [XX], except for those
items listed under No. 1 above.
See, e.g., Exhibit 395 at 2. Turner’s contract with Smithsonian required that Turner obtain
lien releases prior to requesting progress payments from Smithsonian. Exhibit 1_F at 297-98.
2.

Evidence of Continuing Consideration of Claims

Welsh & Rushe noted on several of the lien releases that it had attached a change
order reconciliation log. See, e.g., Exhibit 395 at 2. Welsh & Rushe also notified Turner of
the effect the problems with MEP interferences and hazardous material abatement were
having on its work on the project. See, e.g., Exhibit 4930.
M.C. Dean did not note any reservations on the lien releases, Exhibit 3197, but did
note that it reserved its rights on change orders that it executed. See, e.g., Exhibit 128. M.C.
Dean also notified Turner of the effect that the problems with MEP interferences and
unanswered requests for information were having on its work on the project. See, e.g.,
Exhibit 882.
March Westin noted its reservation of its delay claim in its September 1, 2009, lien
release, Exhibit 3711 at 1, and noted in correspondence with Turner its claim for extended
general conditions costs due to delays. See, e.g., Exhibit 909 at 2.
Coakley did not note any reservations, Exhibit 394, but contemporaneously notified
Turner of its inability to make progress due to “hold ups and coordination issues.” Exhibit
711.

CBCA 2862, 4085, 4802
C.

34

Elements of Individual Subcontractor Claims

Turner presented pass-though claims for five of its subcontractors. The subcontractors
assert three different types of claims: lost labor efficiency due to disruption, extended
overhead due to delay, and uncompensated change work. March Westin also seeks extended
home office overhead costs and retainage.
1.

Welch & Rushe

Welch & Rushe seeks $1,672,432.71: $815,675 for labor inefficiency costs,
$123,245.71 for extended overhead costs, and $733,512 for pending change work. Exhibit
41 at 679.
Labor inefficiency costs. Because the disruptive impacts were constant and pervasive,
Welch & Rushe could not identify a portion of its work that was not affected by these factors
for the purposes of performing a measured mile analysis. Transcript at 2441-42. Welch &
Rushe’s expert, Paul Stynchcomb, testified that, because Welch & Rushe worked with
different materials and different sizes of pipes, identifying a “measured mile” analysis would
have been difficult. Id. at 3008.
Instead, Welch & Rushe relied on the Mechanical Contractors Association of
America, Inc. (MCAA) factors to quantify its labor inefficiency claim. Mr. Stynchcomb
recommended, and Welsh & Rushe applied, four MCAA factors: reassignment of manpower,
concurrent operation, dilution of supervision, and site access. Exhibit 41 at 672; Transcript
at 2568-69. Welch & Rushe’s superintendent explained how each of these factors was
appropriate, given the difficulties that Welch & Rushe experienced on the project. Transcript
at 2687-703. Based upon the severity of these factors, Welch & Rushe calculated a 42% loss
of productivity on a portion of its total labor costs. Id. at 2568-69.
Welch & Rushe made several adjustments to its labor hours prior to the application
of the MCAA factors. First, Welch & Rushe bid the project with a MCAA labor factor of
0.65, which it uses for all of its Washington, D.C., area projects. Transcript at 2560-61;
Exhibit 41 at 669, 676. Despite this fact, Welch & Rushe adjusted its labor factor up to 1.0,
which increased its labor estimate from 8832 hours to 15,791 hours—a difference of 6959
hours, for which Welch & Rushe does not claim inefficiency costs. Transcript at 2560-65;
Exhibit 41 at 670. Second, Welch & Rushe tallied its actual labor hours based on certified
payroll records and excluded supervision costs. Transcript at 2569-70; Exhibit 41 at 772815. It reduced its actual labor hours by 25% to account for any inefficiencies Welch &
Rushe may have caused. Based upon these adjustments, its labor hours were reduced from
46,542 to 34,907. Transcript at 2569; Exhibit 41 at 672-73.

CBCA 2862, 4085, 4802

35

Welch & Rushe multiplied the 42% loss factor by the adjusted actual labor hours and
then subtracted the efficient hours from the resulting amount to derive a total of 10,325
inefficient hours. Exhibit 41 at 673. Welch & Rushe multiplied this figure by its
contractually agreed upon unit rate for journeyman laborers of $79 per hour, resulting in a
claim for $815,675. Transcript at 3090; Exhibit 5059 at 174.
Smithsonian criticizes Welch & Rushe’s choice of MCAA factors, asserting that the
problems that Welch & Rushe experienced were tied to the resolution of requests for
information (RFI), without determining who was responsible for the delays. Transcript at
3050-51. However, Mr. Stynchcomb testified that Welch & Rushe identified the relevant
MCAA factors based upon a myriad of issues, including “addressing the RFIs, the absence
of work spaces, and the movement of job crews, which could also be affected by the elevator,
by security, and by other issues beyond just RFIs … [and] unforeseen issues.” Id. at 3051-52.
Smithsonian asserts further that, by applying a factor for site access, Welch & Rushe seeks
to recover for site access restraints that Welch & Rushe was aware of at the time of bidding.
The site access constraints, however, went beyond what was expected based upon the
solicitation’s warning of “normal site access requirements.” Id. at 2405-06, 2702.
Smithsonian contends that recovery on the claim would result in a windfall to Welch
& Rushe because evidence in the record suggests that Welch & Rushe’s estimate for the
project was 34,314 labor hours but there were 25,677 labor hours in the original bid. Exhibit
1451. However, the hours set forth in Exhibit 1451 match the hours in Welch & Rushe’s
claim for total hours expended on the project. Compare Exhibit 1451 at 2 with Exhibit 41
at 771. Smithsonian also proffers Welch & Rushe’s October 19, 2009, request for equitable
adjustment (REA) that asserts that Welch & Rushe’s bid was based upon 18,340 hours, but
Welch & Rushe explains that the reference in the REA was to all hours, not only craft hours,
as in its 2011 claim. Compare Exhibit 1441 at 7 with Exhibit 41 at 677. Smithsonian notes
that Welch & Rushe did not provide proof of its bid estimate, instead relying upon the
testimony of its superintendent and director of operations that Welch & Rushe’s bid applied
an MCAA factor of 0.65, which was adjusted upward. Exhibit 1451; Transcript at 2623-24.
The Board credits this testimony of the Welch & Rushe witnesses regarding the company’s
standard practice for contracts in the Washington, D.C., area. Transcript at 2561.
Smithsonian correctly notes that Welch & Rushe did not remove hours for approved
or pending change work from its labor hour total. Respondent’s PFF ¶ 1342; Exhibit 41 at
677. Although Welch & Rushe reduced its total labor hours by 25% prior to calculating the
number of inefficient hours to account for inefficient hours that may have been Welch &
Rushe’s responsibility, this reduction does not address whether Welch & Rushe has been paid
already for some of these inefficient hours. If the hours attributable to approved and pending

CBCA 2862, 4085, 4802

36

change orders are removed (12,605), the total labor hours drops to 33,937.27 Applying the
42% inefficiency factor, the inefficient hours are 7528.28. When this number is multiplied
by the hourly rate of $79, Welch & Rushe’s claim for loss of productivity is reduced to
$594,734.
Extended overhead costs. Welch & Rushe calculated a daily overhead rate of
$1987.09 for supervision and job site costs. Exhibit 41 at 816. It multiplied this rate by 205
days, the number of days between Welch & Rushe’s subcontract completion date and its
actual completion date. From the resulting figure, Welch & Rushe removed the overhead
costs sought on approved and pending change orders, resulting in a claim of $123,245.71.
Exhibit 41 at 816.
Pending changes. Welch & Rushe seeks $733,512 for seventy-two unpaid change
orders. Exhibit 5094 at 12-15 (list of change orders). Copies of most, but not all, of these
change orders appear to be in the record. Welch & Rushe’s director of operations testified
that the amounts presented were negotiated by Welch & Rushe and Turner. Transcript at
2604. The director was asked about three specific items of change work. Id. at 2593-2607.
For two changes, he could not provide details about why the work was necessary. Exhibits
744, 919. He recalled the details regarding the third change, but did not explain why the
change was Smithsonian’s responsibility. Exhibit 1404; Transcript at 2595-98. Instead, the
director of operations only testified that “[w]e were having a lot of problems with steam on
the project, and one of the biggest things was the humidity level in that building and how the
humidifiers were operating.” Transcript at 2595.28 The proposed change orders themselves
do not provide sufficient detail for the Board to determine why the work was undertaken, and
Welch & Rushe provided no further explanation in post-hearing briefing.
The Board finds that many of the change orders include invoices or quotes from
Welch & Rushe’s subcontractors, Stromberg, Southern Insulation, and Siemens. See, e.g.,
Exhibits 805 at 3, 983 at 3. It also appears that Stromberg seeks recovery of the same
amounts in its change orders. Compare Exhibits 471 at 3 with 4890 at 66. Welch & Rushe
provided no method by which the Board can deduct the amounts sought by Stromberg to
ensure that there is no double recovery. Siemens has calculated its claim as a total cost claim

27

Total labor hours expended (46,542) - labor hours for approved and pending
change orders (9088 + 3517) = labor hours subject to productivity factors (33,937).
28

Based upon this testimony, the Board could surmise that this change work was
undertaken to address the humidity levels in the museum, work that is also the subject of
Turner’s 2015 claim to the contracting officer. The Board is unwilling to do so without a
better explanation from Welch & Rushe or Turner.

CBCA 2862, 4085, 4802

37

and the Board has no way to determine whether these pending change order costs are
included in Siemens’s total cost claim. Southern Insulation, on the other hand, removed the
costs of both its approved change orders and its pending change work from its claim.
Exhibit 41 at 722.
Welch & Rushe also passed through the claims of its three subcontractors, Stromberg,
Southern Insulation and Siemens.
2.

Stromberg

Stromberg seeks $1,318,348.79: $1,011,243.58 for labor inefficiency costs, $71,702
for extended overhead costs, and $235,425 for unpaid changes. Exhibit 5334; Transcript at
2817.
Labor inefficiency costs. Stromberg performed a measured mile analysis to support
its labor inefficiency claim. For its measured mile, Stromberg used its work in level two
south, an area not affected by unknown MEP interferences. Transcript at 2898, 2929. In this
area, Stromberg installed 9500 pounds of HVAC ductwork trunk lines and branch lines in
an efficient manner. Exhibit 4879. Stromberg determined it took 807 labor hours, excluding
supervision, to install this ductwork, based on its detailed job cost report. Exhibit 4878 at
94-98; Transcript at 2930-31. Stromberg computed the field labor production rate in this area
to be 11.77 pounds per labor hour. Transcript at 2931.
During the project, Stromberg installed a total of 228,212 pounds of ductwork, from
which it deducted ductwork installed pursuant to both approved and unapproved change
orders (25,882 pounds) and ductwork it installed in the section used as the measured mile in
level two south (9500 pounds), which left a total of 192,830 pounds. Transcript at 2919,
2927-29; Exhibit 41 at 718. Based upon its field labor production rate, Stromberg calculated
that it should have spent 16,380 hours to install the ductwork on the project. Transcript at
2938. Instead, Stromberg spent a total of 34,985 hours (excluding level two south) to
complete its work on the project. Id. at 2939. Stromberg claims the difference, 18,605
hours, as the measure of its labor inefficiency. Id.
Stromberg multiplied this hours figure by its average burdened hourly field labor rate
of $43.61 to derive a labor inefficiency cost of $811,364.05. Transcript at 2941; Exhibit 41
at 719.29 To this figure, Stromberg added 18.7% overhead and 5% profit, to arrive at a total
claim of $1,011,243.58. Transcript at 2944-45.

29

719.

In Stromberg’s claim, two digits are transposed ($811,346.56). Exhibit 41 at

CBCA 2862, 4085, 4802

38

Smithsonian asserts that Stromberg chose as its baseline “non-contiguous sections of
work.” Respondent’s PFF ¶ 1361. This assertion is not supported by the testimony cited.
Transcript at 2929, 2962, 3074-75. Moreover, the fact that the baseline was not all of level
two does not affect the quality of the baseline. As Stromberg’s executive vice president
testified, Stromberg could not use all of level two because there were too many interferences
in some places. Id. at 2961, 3074-75.
Extended overhead costs. Stromberg calculates a delay of 109 work days between its
planned substantial completion date and the date it substantially completed its work.
Transcript at 2951-52; Exhibit 5334 at 4. Stromberg calculated a daily rate $813.13 for its
general conditions costs, but inexplicably converted this rate to a “workday” rate, even
though the components of its daily rate already reflected work day charges. Exhibit 41 at
719; Exhibit 5334 at 4. After multiplying Stromberg’s daily rate times 109 days and
subtracting the overhead costs on change orders ($52,380.55), Stromberg’s claim for
extended overhead is $36,250.62. Exhibit 5334 at 4.
Pending changes. Stromberg also seeks to recover for unpaid changes totaling
$235,425. Exhibit 5334. Three of these change orders are for overtime premium pay
incurred by Stromberg between July and October 2008, in a total amount of $106,641.
Transcript at 2825. Stromberg incurred these costs after Smithsonian established the new
substantial completion date of October 31, 2008. Transcript at 2823; Exhibit 7_Z.
Stromberg’s senior project manager testified, “To help with all the delays in the project that
were taking place . . . the only way we could even hope to achieve the October 31st date was
to start working on our work forces, ten hour days, six to seven days a week.” Transcript at
2823.
Smithsonian asserts that Turner directed Stromberg to work overtime because
Stromberg had not completed its work. Respondent’s PFF ¶ 762 (citing Exhibit 1284 at 54).
Turner noted in this direction, issued on August 29, 2008, that Stromberg could work the
overtime under protest and track its hours for submission as a change. Id.
Stromberg’s senior project manager testified in detail about ten other unpaid change
orders, explaining that the additional work was needed either because of changed
requirements or for issues that were not known until the ceilings were removed. Transcript
at 2832-62; Exhibit 5334. For example, one change was necessary to provide additional air
supply to the SSB chamber after it was discovered that the unique fire suppression system
chosen by Smithsonian was generating too much heat. Transcript at 2854-55. With regard
to the remaining changes, totaling approximately $30,000, the senior project manager
explained that they all arose from issues or items that were not indicated on the 95%
drawings. Id. at 2863. Stromberg included in the record its change order proposals for all

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39

of this work, Exhibit 4890 at 66-122, and the senior project manager testified as to the
pricing of these proposals. Transcript at 2836-37. The change orders include overhead of
10% and profit of 5%. Exhibit 4890 at 66-122. The total cost of the change work excluding
the overtime costs is $128,784.
Smithsonian’s only response to Stromberg’s evidence is that Stromberg, like all of
Turner’s subcontractors, has failed to prove that the work is a proper charge under the
contract and that the amounts sought are reasonable and allowable. Respondent’s PFF ¶ 725.
3.

Southern Insulation

Southern seeks $218,489 for costs incurred due to lost productivity. Exhibit 41 at
722; Transcript at 3122-23.
Southern used the modified total cost method because of the nature of its productivity
losses and its work being all over the museum. Transcript at 3133. There was not a segment
of work upon which Southern could have determined a measured mile. Id. at 3134.
Southern’s actual costs totaled $692,082. It reduced this amount to $490,697 after removing
amounts for errors in labor burdens, budgeted costs for approved change orders and pending
change orders. Exhibit 41 at 722; Transcript at 3134-40. Southern’s president testified as
to how Southern developed its original bid estimate of $299,958 and determined that it had
underestimated the cost of scissor lifts by $16,505 when it bid the job. Transcript at 313539. 30 Southern subtracted this revised bid estimate ($316,463) from its reduced actual costs
to derive $174,234, the difference in its total costs. To this figure, it applied an overhead
percentage rate of 14% and 10% profit to derive a total claim of $218,489. Id. at 3141-42.
While Southern’s president testified as to Southern’s extensive experience on government
projects and museums, id. at 3123-24, he did not testify as to any analysis that was performed
to determine that the additional costs incurred were caused solely by issues for which
Smithsonian was responsible. Id. at 3122-66.
Smithsonian asserts that Southern’s bid estimate does not provide information
regarding its hourly rate, but this contention is refuted by both the testimony cited and the bid
estimate itself. Exhibit 41 at 725, 732; Transcript at 3145-46. Smithsonian also asserts that
Southern’s markups for overhead and profit contravene the terms of Welch & Rushe’s
contract with Turner. Respondent’s PFF ¶ 1392. However, the cited provision addresses
markups for change orders, but not base contract work. Exhibit 3050 at 59.

30

Southern planned upon using scaffolding to perform its work. Transcript at
3140. As the president of Southern and other witnesses explained, it was impossible to use
scaffolding on the job because of the pervasive hazardous material abatement. Id.

CBCA 2862, 4085, 4802
4.

40

Siemens

Siemens seeks $203,161.60 in costs it incurred on the project due to delays,
unforeseen conditions, and lost productivity. Transcript at 3226-27; Exhibit 41 at 734.
Siemens calculated its claim by the total cost method. Transcript at 3229-30. Siemens
calculated the difference between its actual and planned hours for the project for its three
different skills. Id. at 3230-31. Siemens then removed hours for previously settled changes.
Id. at 3231. There is no indication that Siemens removed the hours that may be included in
the pending Welch & Rushe changes. Siemens then multiplied those hours by its burdened
labor hour rate for a total of $116,477.46. Exhibit 41 at 735. Siemens then added labor costs
of $11,509.34 from its subcontractor, Metropolitan Electric, and applied its audited corporate
overhead rate of 44.32% and profit of 10% to derive its claim of $203,181.60. Exhibit 41
at 735; Transcript at 3234, 3437.
Siemens’s operations manager, the only witness to testify in support of Siemens’s
claim, could not testify as to any details about the reasonableness of Siemens’s bid because
he did not prepare it and had not reviewed it in preparation for his testimony. Transcript at
3226, 3244. The operations manager also provided no information regarding the costs
included in Metropolitan’s claim, other than to note he had removed costs paid through
approved changes. Id. at 3236.
5.

M.C. Dean

M.C. Dean seeks $1,374,658: $808,572 for lost productivity, $433,474 for extended
overhead, and $132,612 for pending changes. Exhibit 41 at 823-27; Transcript at 3336-45.
Loss of productivity. M.C. Dean seeks the costs attributable to its loss of productivity
and acceleration during the last thirteen weeks of the project when M.C. Dean saw the effects
of the disruptions in the coordination work in the percentages of total hours worked and
overtime hours incurred, as compared to the remainder of the project. Transcript at 3337-38.
M.C. Dean incurred costs for 35,783 hours during this thirteen-week period. Exhibit 41 at
823. Looking at industry manuals for calculating productivity losses, M.C. Dean determined
that its productivity loss was 34%. Transcript at 3339. M.C. Dean multiplied the number
of hours worked during the last thirteen weeks of the project by that percentage to determine
that its lost productivity resulted in 12,166 additional hours. It multiplied this figure by its
average hourly rate of $44.07, to derive a lost productivity cost of $536,165.32. Id. at 3340;
Exhibit 41 at 823. To this figure, M.C. Dean applied 15% markup for supervision
($80,424.80) and added its overtime premium costs for the period of $191,982.84, resulting
in a total claim for $808,572.95. Exhibit 41 at 823.

CBCA 2862, 4085, 4802

41

Smithsonian asserts that M.C. Dean’s claims for loss of productivity and premium
overtime are “overlapping.” Respondent’s PFF ¶ 1582. M.C. Dean explains that the claims
are not overlapping because M.C. Dean seeks only the overtime premium for those hours.
Appellant’s Response to Respondent’s PFF ¶ 1582. Smithsonian also contends that M.C.
Dean failed to explain sufficiently its 34% lost productivity factor based upon curves found
in industry publications. Respondent’s PFF ¶ 1583. As discussed below, we adopt
Smithsonian’s objections regarding this lack of proper support.
Extended overhead costs. M.C. Dean also seeks the costs of extended general
conditions for a period of delay of 154 days, the difference between M.C. Dean’s actual
completion and its planned completion dates. Exhibit 41 at 822. M.C. Dean determined that
its daily general conditions rate was $2814.77, for the field office, indirect labor, field labor,
and equipment it required on-site. Id. It, therefore, seeks $433,474, for extended overhead.
Pending changes. M.C. Dean also seeks the costs of three items of change work. The
first change was attributable to the “inefficient and poor performance” of a contractor that
Smithsonian required for the security system. M.C. Dean PFF ¶ 16. M.C. Dean seeks
$37,668 for the labor and materials costs associated with these inefficiencies, but provided
no explanation as to how this amount was calculated and no supporting documentation.
Exhibit 41 at 823; Transcript at 3343-44.
The second change was to “program the controls for the Creston light projection
system that illuminates the SSB exhibit.” M.C. Dean PFF ¶ 17 (citing Exhibit 1279). The
Board does not find support for the $8416 that M.C. Dean seeks for this item. Exhibit 1279
includes a Smithsonian memorandum approving the cost for controls for the SSB projectors
in the amount of $2811 and M.C. Dean’s quote for the work in the amount of $2562.59.
Exhibit 1279 at 2, 9.
The third change was for the “purchase and installation of a new public address
system to integrate with the new fire alarm and audio visual system.” M.C. Dean PFF ¶ 17
(citing Exhibit 1197). The cited document describes the requirement to install new speakers
and includes M.C. Dean’s claimed amount for the work, $86,528. Exhibit 1197 at 1, 6. M.C.
Dean’s group manager described the system as the “existing public address system” and
stated his belief that the change order request came from Smithsonian. Transcript at 3330.
Smithsonian contends that the work was within the original scope of the project, which
required, in part, that “the existing fire alarm speaker system [remain] operational” and that

CBCA 2862, 4085, 4802

42

it properly denied the change request on this basis. Respondent’s PFF ¶ 768 (citing Exhibit
1180 at 4).31
6.

March Westin

March Westin seeks $1,539,142.71: $909,346.86 for inefficiency, $364,457.41 for
extended overhead, $155,100.44 for extended home office overhead, $82,007 for outstanding
change orders, and $28,231 for earned retainage. Exhibits 41 at 831, 840-48, 3702 at 136,
3714.
Labor inefficiency costs. Mr. Calvey performed a measured mile analysis to calculate
March Westin’s labor inefficiency claim. As the baseline, Mr. Calvey used March Westin’s
work prior to September 17, 2007, because its labor productivity was “less impacted” during
this period. Transcript at 2228; Exhibit 5217 at 19. By comparing pay applications for the
measured mile to those for the remainder of the project, Mr. Calvey calculated that March
Westin accumulated 12,616 inefficient labor hours. Transcript at 2230. Mr. Calvey
calculated an average burdened hourly field labor rate of $72.08, which includes 10%
overhead and 5% profit. Id. at 2233-34; Exhibit 3675. He multiplied the hourly rate by the
additional labor hours to determine March Westin’s labor inefficiency costs. Transcript at
2232. The Board calculates this amount to be $909,361.28 (12,616 x $72.08).
Smithsonian criticizes Mr. Calvey’s selection of the measured mile, asserting that
March Westin had not begun steel installation work by September 2007. Respondent’s PFF
¶ 1515. Mr. Calvey testified that he isolated the erection field labor in performing his
analysis. Transcript at 2224-28. March Westin’s project manager also testified that March
Westin did perform erection work prior to September 17, 2007, although the bulk of the work
was after that point. Id. at 2148. Smithsonian also questions why Mr. Calvey calculated a
labor rate different from the contractual rate of $47.49. Respondent’s PFF ¶ 1508. However,
the latter rate appears to be for a laborer, not an iron worker. Exhibit 45 at 46. As Mr.
Calvey testified, the labor rate was an average of rates paid by March Westin and its
subcontractors. Exhibit 3675.
Extended general conditions costs. Although March Westin estimated that it would
require 164 days to complete its work, it required 460 days, a difference of 296 days.
Transcript at 1989. March Westin provided its daily reports and testimony about examples
of delays it experienced. Transcript at 1998-2000; Exhibit 3719 at 14, 17. Mr. Calvey also
prepared an analysis of the periods of delay on each floor, but explained that the work was

31

This change order request with the amount sought by Turner is on the list of
“pending change orders.” Exhibit 5343 at 8.

CBCA 2862, 4085, 4802

43

“intermittent and non-sequential, inefficient and required multiple mobilizations.” Exhibit
5217 at 13.
Mr. Calvey calculated field supervision costs by determining the average supervision
manhours by day (5.3) and multiplying by the number of days of delay (296) to determine
that March Westin expended an additional 1571 supervision manhours. Exhibit 5217 at 22.32
He multiplied this number of manhours by the supervisor’s hourly rate to derive a total added
salary cost of $108,251.95. Transcript at 2236. Similarly, Mr. Calvey calculated an average
per day for field costs ($168.19) and multiplied this figure by the number of days of delay
(296) to determine that March Westin incurred an additional $49,784 in field expenses. To
this figure, Mr. Calvey applied 10% profit to derive a total of $54,763.02. Transcript at
2237. He used the same method to determine the additional cost of equipment and
scaffolding of $201,442.44. Id. at 2238; Exhibit 5217 at 23.
Extended home office overhead. Mr. Calvey also calculated an extended home office
cost attributable to the additional days of work on the contract. However, March Westin’s
project manager testified that March Westin had other contracts during the pendency of the
Smithsonian project, so many that it had to use subcontract labor to finish the museum
project. Transcript at 1985-86.
Outstanding changes. March Westin also seeks payment on four pending changes.
These change orders were included in the claim passed through to Smithsonian. Exhibit 41
at 849-96. March Westin’s project manager explained that the change work was required as
the result of design changes or to provide additional structural reinforcement. Transcript at
2042-49. Based upon the Board’s review of this supporting documentation, Exhibit 3714,
it appears that March Westin seeks only the direct costs of these changes. Id.
Smithsonian challenges the claim as to two of these change orders, suggesting that
both were the result of design failures by Turner. The first, Smithsonian asserts, was the
result of a “design coordination error.” Respondent’s PFF ¶ 771. Although the issue was
the subject of an RFI, the Board finds no support for the contention that the change was the
result of a coordination error. Exhibits 1156, 1157. Instead, the additional work was needed
reroute the ductwork through the structural steel. Transcript at 2047. The second change
was necessary after Turner’s structural engineer determined the need for additional
reinforcement in the SSB chamber in response to an RFI. Respondent’s PFF ¶ 772. Nothing
in the documentation indicates that the work was necessary as the result of a design failure.

32

This calculation appears to contain an error (296*5.3=1569).

CBCA 2862, 4085, 4802

44

Retainage. March Westin also seeks the earned retainage withheld by Turner. Exhibit
41 at 831; Exhibit 3702 at 136; Transcript at 2063. Mr. Quick testified that the amount is
already reflected in Turner’s costs, so it was removed from the tally of the subcontractors’
claims. Transcript at 1673. Smithsonian offered no evidence that this amount was paid or
is not owed to March Westin.
7.

APRO

APRO seeks $651,272: $465,825 for labor inefficiency and $185,447 for extended
overhead. Exhibit 41 at 899-08.
Labor inefficiency costs. To calculate its inefficiency claim, APRO used a measured
mile analysis. Exhibit 41 at 901-08. APRO used the month of October 2006 as its measured
mile because it worked efficiently performing demolition during this month before it first
found hazardous material in November 2006. Transcript at 3427-28. During October 2006,
APRO expended 856 labor hours to dispose of twelve dumpster loads of debris. Id. at 3428.
APRO calculated that its production rate was seventy-one labor hours per dumpster load,
which closely tracked its estimate of sixty-nine hours per dumpster load. Id.
APRO filled a total of 440 dumpster loads of debris during the project, but adjusted
this figure to 375 loads to remove change order work and the disputed beam pocket work.
Exhibit 41 at 908; Transcript at 3429. APRO multiplied 375 dumpster loads by its average
production rate of seventy-one hours to determine that it should have spent a total of 26,625
labor hours in performing the demolition work. Transcript at 3430.
APRO expended 58,720 labor hours for the demolition work during the period of
labor inefficiency, but adjusted this amount down to 50,318, again to remove hours related
to the disputed beam pocket work and change work. Transcript at 3429. APRO also
subtracted 856 labor hours in October and 1660 labor hours as a reasonable estimate of
inefficient labor hours for which APRO may have been responsible. Id. at 3431. Finally,
APRO subtracted the hours it should have spent performing the work (26,625) to derive a
total of 21,177 inefficient labor hours. Id. at 3432. APRO multiplied the total inefficient
labor hours by $19.05, an average burdened labor rate for demolition labor, then added 10%
overhead and 5% profit. Id. at 3432-33; Exhibit 41 at 901.33
Smithsonian challenges APRO’s selection of October 2006 as its measured mile
because APRO has not established that the work during the first month of demolition was
the same as work done later. Respondent’s PFF ¶ 1245. APRO’s president acknowledged

33

APRO’s calculation contains an error: 21,177 * $19.05=$403,421.85.

CBCA 2862, 4085, 4802

45

that the demolition activities on each floor had different scopes of work and different
manpower requirements. Transcript at 3450-51.
Extended overhead costs. APRO also seeks delay costs for the additional 6.75 months
it spent on the project beyond its planned completion date of April 2007. Exhibit 41 at 901.
During this period, APRO incurred additional costs for project supervision, additional
equipment rental costs, and additional scaffolding rental costs. Id. at 901, 903; Transcript
at 3435. APRO withdrew its claim for the disputed beam pocket work that included the same
types of costs (supervision and equipment costs). Exhibit 41 at 911-12; Transcript at 344243. The Board cannot tell whether APRO adjusted its delay claim to remove time
attributable to the beam pocket work.
8.

Coakley

Coakley seeks $468,204: $120,811 for labor inefficiency and $347,393 for change
work. Exhibit 41 at 940; Exhibit 252 at 46-52.
Labor inefficiency costs. Coakley seeks to recover the labor inefficiency costs it
incurred at the end of the project when it was directed to work overtime beginning in
September 2008. Transcript at 3496, 3515-16. Coakley was paid the direct costs of its
overtime in change orders signed by Coakley beginning at the end of October 2008 through
the beginning of 2009. Transcript at 3538; Exhibit 76 at 29-31, 43-55. Each of these change
orders contained a release that stated:
Through acceptance of this change order, the Subcontractor acknowledges that
it has reviewed the progress of the Work related to this Project and the
potential impact of the added work on the progress of the project in the future.
As a result, this Change Order includes compensation to the Subcontractor for
any and all effects, delays, inefficiencies or similar demands associated with
this project and the Subcontractor recognizes that there is no basis for any such
claim in the future.
Id. at 29. Coakley’s vice president testified that Coakley did not intend to release its claims
for labor inefficiency when it signed these change orders and that Coakley “continued to
interact” with Turner regarding its claim after the project was completed. Transcript at 3517,
3529.
Coakley’s labor inefficiency claim involves only its activities on the first and second
floors of the project—those activities that were most affected by the loss of productivity.
Transcript at 3510; Exhibit 41 at 940. Coakley used a total cost method to quantify its labor

CBCA 2862, 4085, 4802

46

inefficiency claim, stating that it could not use a different method given the pervasive impact
of the overtime on its efficiency.34 Exhibit 41 at 936-40; Transcript at 3506-08, 3518.
Coakley’s vice president testified that Coakley’s cost estimate was reasonable because its
hours for the fourth and fifth floors, where it had fewer problems, matched its estimate.
Transcript at 3466-68, 3508; Exhibit 41 at 941.
Coakley calculated the total labor costs for certain activities on the first and second
floors and subtracted its estimated labor costs from that figure to arrive at its claim for
$79,719. Exhibit 41 at 940; Transcript at 3512. Coakley applied its rates for labor burden,
fringe costs, overhead, and profit to derive a total claim of $120,811. Exhibit 41 at 940;
Transcript at 3512. Coakley’s vice president testified that Coakley was not responsible for
any of the labor inefficiency costs it claims, Transcript at 3516, but acknowledged that
Coakley had not looked into what created the need to accelerate at the end of the project. Id.
at 3539.
Pending changes. Coakley also seeks $347,393 for 130 pending change orders (PCO)
listed in Turner’s indicated outcome report (IOR). Transcript at 3522; Exhibit 252 at 46-52.
Coakley’s vice president testified about only two of these orders, 273.1 and 876. Exhibits
682, 1532. Unlike the other subcontractors, who included the pending change orders in their
claim amounts, Coakley did not include these amounts in its claim to Turner.35
Smithsonian asserts that Coakley has not established that these costs are
Smithsonian’s responsibility. With regard to PCO 876, Smithsonian notes that Turner’s IOR
report indicates that some costs will be backcharges to SOM. With regard to PCO 273.1,
Smithsonian notes that Turner included an estimate of $145,000 for this work in its 95%
price proposal, and only $20,000 had been spent at that time. Exhibit 682 at 3. Smithsonian

34

Turner apparently adjusted the subcontractor claim amounts to remove amounts
paid through change orders or owed through retention. Exhibit 257 at 4. However, the
amount of Coakley’s claim did not change. The Board cannot tell whether no adjustment
was made because Coakley had already made the adjustments. In addition, Coakley’s vice
president testified that Coakley used a measured mile analysis to quantify its claim, but his
testimony about the claim and appellant’s brief describe a claim based upon the total cost
method. Transcript at 3512; Appellant’s Brief at 65.
35

PCO 273.1 and 876 are on Turner’s list of pending change work. Exhibit 5343.
Turner’s claim to the contracting officer includes an amount for “subcontractor pending
changes” in the amount of $1,495,233, but Turner never explained what amounts are
included in this figure. Exhibit 41 at 656.

CBCA 2862, 4085, 4802

47

asserts that this budget amount should have been sufficient for the work. Respondent’s PFF
¶ 748. Coakley and Turner provide no factual response.
VI.

Smithsonian’s Counterclaim for Overpayment
A.

Audit Report and Contracting Officer’s Decision

Following the Board’s April 2013 decision, Smithsonian’s counsel retained Mr.
DuVal to independently review and audit certain contractual costs related to Turner’s claims.
Exhibit 236 at 3. Prior to conducting his audit, Mr. DuVal reviewed the contract and
Turner’s 2011 claim, and then met with various Smithsonian personnel to walk the site and
review the general scope of the project. Transcript at 4786-88.
The Board heard conflicting testimony regarding whether Mr. DuVal m

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Acbca%3A54a6362c08b145b3. Public record. Not legal advice.