GRANTED: March 17, 2011

GRANTED: March 17, 2011

CBCA 1966

SINGLETON ENTERPRISES-GMT MECHANICAL

Appellant,

v.

DEPARTMENT OF VETERANS AFFAIRS,

Respondent.

Wayne Singleton, Joint Venture Partner of Singleton Enterprises-GMT Mechanical,

Luthersville, GA, appearing for Appellant.

Lisa M. Clark, Office of the Regional Counsel, Department of Veterans Affairs,

Brecksville, OH, counsel for Respondent.

Before Board Judges BORWICK and POLLACK.

POLLACK, Board Judge.

This appeal arises out of contract no. VA541-C-0089, between Singleton EnterprisesGMT Mechanical, a Joint Venture (JV or appellant), and the Department of Veterans Affairs

(VA) for replacement of approximately 36,000 square feet of polyisobutylene (PIB) roof on

the second floor of a building at the VA Medical Center, Wade Park, Ohio, along with new

underlying insulation, associated masonry, carpentry, and other items. Supplemental Appeal

File , Exhibit 1; Transcript at 83, 117, 119. This case centers on contract provisions dealing

with the placement of new insulation on the roof deck (using asphalt), and how that related

to the contract’s requirement for a twenty-year manufacturer warranty on the PIB roof being

installed.

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2

A hearing on this appeal was held on November 9, 2010, in Cleveland, Ohio. Each

party provided testimony from various witnesses. Appellant, however, provided only one

affirmative witness, Mr. Wayne Singleton, and thus when testimony of appellant is

referenced below, it refers to his testimony. The VA appeal file was divided into sections;

however, it was not otherwise tabbed or numbered. Appellant provided a tabbed

supplemental appeal file, which included most of the documents in the VA file. Because the

supplemental appeal file has been numbered, we use it as the primary citation source in this

decision. Additionally, the parties provided limited documents at the hearing. The Board

here issues a two-judge decision, as appellant elected the Board’s accelerated procedure.

Rule 53 (48 CFR 6101.53 (2010)).

Facts

The contract called for appellant to place layers of insulation on the roof deck and to

attach to that insulation a new PIB roof (PIB membrane). The roofing membrane was to be

attached to the insulation by means of specified proprietary adhesives manufactured by

Republic Powdered Metals, Inc. (RPM). Supplemental Appeal File, Exhibit 1; Appeal File,

sec. 4. While not stated in the specifications, the testimony of various VA witnesses makes

it clear that the VA wrote the PIB roofing specification for this contract around RPM’s PIB

product. Supplemental Appeal File, Exhibit 1; Transcript at 9, 119, 225, 246, 327. There

was no evidence, however, that the insulation provisions of the contract were written around

any particular manufacturer’s product.

Appellant submitted a bid of $777,020. The VA opened bids on September 28, 2007,

and awarded the contract on October 12, 2007. The contract initially called for five months

to complete from the date of award. That was later changed at the time of notice to proceed

(NTP) to 180 days. Supplemental Appeal File, Exhibit 1, 3; Transcript at 42.

Section 07220, Roof and Deck Insulation (eight pages) set out the requirements for

providing and installing new insulation on the project. It clearly addressed using asphalt for

adhering insulation to the existing concrete roof deck. It detailed the type (grade) of asphalt

to be used, as well as included details such as heating temperatures and coverage rates for

application of the material. Nothing in the section made reference to the use of adhesive as

the means for adhering insulation to the roof and deck. Supplemental Appeal File,

Exhibit 20.

Section 07531, Elastomeric Sheet Roofing Polyisobutylene Tear Off And

Replacement, which ran eighteen pages and contained parts of two separate roofing

specifications, addressed the tearing off of the existing roof and replacement with a new PIB

membrane which was to be attached to the new insulation by means of RPM adhesives.

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3

Portions of section 07531 were confusing and could only be explained as a mistake. Appeal

File, sec. 4; Transcript at 206-08, 231. For example, as set out below, the roofing

specification had two warranty paragraphs, rather than one. While there were differences in

the two warranty specifications, each called for a twenty-year warranty and thus the

duplication does not materially affect our analysis in this appeal. The following provisions

from section 07531 are relevant to the claim. We list the warranty provisions in the order

they appeared in the specification.

1.10 WARRANTY

A. Provide manufacturers standard twenty (20) year warranty covering

materials and labor. Must be 100 mil. Polyisobutylene membrane adhered

with GEOTAC or GEOBOND Adhesive.

1.6 WARRANTY

Roofing work subject to the terms of the Article “Warranty of Construction”

of Section, General Conditions, except extend the warranty period to twenty

years.

3.03 ROOF INSULATION.

A. Apply insulation neatly fitted to penetrations, projections, and nailers.

Install tapered or feathered insulation around roof drains in such a way as to

provide proper slope (maximum 3: 12 pitch) for drainage.

B.

Adhere insulation with Manufacturers Insulation Adhesive, or

mechanically fasten per manufacturers recommendations.

Paragraph 3.03, above, although in the roofing specification, addressed the placement

of insulation. It was clear from the testimony of various VA witnesses that the VA wanted

insulation attached by adhesive (as set out in Paragraph 3.03) and the VA had not meant to

include asphalt as either the preferred method or an option. Transcript at 183-93, 222, 327.

However, nothing in the specifications conveyed that intention or even suggested that

asphalt could not be used. The VA’s best explanation as to how the two methods were to be

treated was from Mr. Edward Hazel, current chief of construction at the VAMC. He

described asphalt and adhesive as alternatives and also said that while asphalt was provided

in the specification, the Government did not intend or imply that appellant had to use asphalt.

Transcript at 117, 120, 180-81.

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4

There is no dispute between the parties as to appellant’s responsibility for providing

a twenty-year roof warranty. However, as addressed below, the central dispute in this case

turns on how the use of asphalt meshed with appellant’s ability to secure that warranty.

Although the VA did not name a roof membrane supplier, the VA wrote the PIB

roofing specification around use of the RPM PIB roof. The VA did specify the RPM

adhesive in section 07531. Further, although RPM was not specified as the sole source for

the roof membrane, the VA wanted that product on this project. As noted by Mr. Brian Rice,

the contracting officer’s technical representative (COTR), had a contractor on this project

come in with a different roof (non-RPM), the VA would have probably disapproved it.

Transcript at 225, 246, 327. The VA had used RPM roofs at this facility for ten to fifteen

years and had approximately fourteen roofing areas with the RPM PIB roofing product.

Supplemental Appeal File, Exhibit 10-11; Transcript at 222-23. Mr. Rice explained the VA

had a policy at the facility to standardize, so it would not have to deal with ten different

roofing companies or ten different processes. Transcript at 327.

The VA held a pre-bid conference. Appellant did not attend; however, Gire Roofing

Construction (Gire), the firm appellant used for the roofing work, attended, as did another

potential subcontractor, Warren Roofing & Insulation Co. (Warren). Warren was a local

contractor with prior experience at the site. Gire was from Illinois, and there was no

evidence it had previously worked on the facility. Supplemental Appeal File, Exhibit 10-12;

Transcript at 196. Mr. Nick Carrozza, a VA engineer, and Mr. Rice represented the VA.

Supplemental Appeal File, Exhibit 22; Transcript at 94-95, 254, 323-26. Neither VA

official, however, addressed specifics as to roofing at the meeting. Instead, that was handled

by Tom Dornbrook, sales representative for RPM. On roofing matters, it appeared that the

VA had essentially turned its program over to Mr. Dornbrook. In a 2008 memo, where the

VA was seeking some advice on this claim from the Corps of Engineers, Mr. Hazel referred

the recipient to Mr. Dornbrook for details and described Mr. Dornbrook as “the VA’s main

contact for the roofing materials system in use for the entire hospital.” Supplemental Appeal

File, Exhibit 34. Under questioning from the VA counsel, Mr. Dornbrook confirmed that on

this project, he assisted as a consultant to the VA. Transcript at 236.

Mr. Dornbrook testified as to what he said at the pre-bid conference. He confirmed

that his presentation essentially focused on the RPM product and its requirements. He did

not address the use of asphalt during the meeting, and stated that at the time of the pre-bid

conference, he was in fact unaware that the VA even had provided an asphalt specification

in its contract. He acknowledged he did not say anything involving the operation of the RPM

warranty and use of asphalt, nor did he say that the use of asphalt would void the warranty.

At the close of the meeting he provided the attendees with an RPM material sheet. The sheet

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was not later distributed by the VA to other potential bidders. Transcript at 236, 245, 255-56,

262, 265-66.

Appellant received three to four bids on roofing, including bids from Gire and

Warren. Gire provided a single price, based on seating the insulation in asphalt. Transcript

at 11-12. Warren provided two prices. The first was a primary price of $645,000 (based on

providing adhesive to attach insulation). The second specified a $50,000 deduct to the first

price if asphalt was used. Warren appended the following note to its bid: “For Asphalt as the

insulation adhesive, DEDUCT: $50,000. Asphalt is specified as the insulation adhesive but

in (sic) not compatible with warranty requirements.” Supplemental Appeal File, Exhibit 9.

Warren’s bid was based on using the RPM roof, and its comments as to the warranty

referred to that product. Supplemental Appeal File, Exhibit 9. After appellant received

Warren’s bid, it attempted to contact the VA for clarification, but was unsuccessful. It then

proceeded to provide its bid, relying on its understanding that the specifications clearly

provided for the use of asphalt and relying upon Gire’s pricing, which was based on asphalt.

Transcript at 12, 42, 333. Because appellant had utilized RPM’s price for the roof

membrane, appellant planned on using the RPM roof on top of the new insulation. While

RPM was local, there were other manufacturers that could furnish a PIB roof. Insulation was

not being provided by RPM. Transcript at 17, 26. The firm, quoting asphalt to appellant,

verbally agreed to keep its price firm for ninety days from bid. Supplemental Appeal File,

Exhibit 12; Transcript at 18-19, 45.

When asked to explain how it reconciled bidding with the note in Warren’s bid as to

the warranty, appellant stated it relied on the fact that the specifications called for the use of

asphalt and further that it saw nothing in the specifications that led it to believe that RPM

would not accept asphalt for attaching insulation, or that asphalt would void an RPM

warranty. Essentially, appellant was stating that because the specifications were explicit as

to the suitability of asphalt, there was no reason to assume a connection between how the

insulation was being connected and the roofing membrane warranty. At the time of bid,

appellant believed that the warranty could be issued. Appellant also pointed out that

Warren’s letter related solely to RPM and that Gire’s bid contained no similar qualification

or concern as to the use of asphalt. Supplemental Appeal File, Exhibit 24; Transcript at 331­

37.

After award, appellant proceeded with gathering information for submittals from

RPM. During that process, appellant was advised, either directly by Mr. Dornbrook or

through Gire, that RPM would not provide a twenty-year warranty unless insulation was laid

with adhesive. Appellant testified that this was the first it knew of the problem; however,

as noted above, Warren had warned of a possible problem in its bid. Transcript at 13-14.

CBCA 1966

6

Based on what it had learned from RPM as to the warranty, appellant provided a letter, dated

November 27, 2007, to the VA along with an asphalt submission. The letter advised the VA

that RPM had said that the use of asphalt was not compatible with the RPM warranty and

appellant would have to use adhesive. Appellant advised that adhesive would be more costly.

Supplemental Appeal File, Exhibit 21; Transcript at 14.

The VA did not respond, so on December 28, 2007, appellant sent a letter seeking a

decision on the submittal. Appeal File, sec. 3. At this time, appellant was in contact with

Mr. Dornbrook as to the roofing materials. From those contacts and conversations it became

obvious to appellant that it was going to have to use adhesive for the insulation and do that

regardless of whether the Government issued a formal change order or not. Appellant

testified that after several discussions with Mr. Dornbrook, it was evident that the PIB roof

was to be supplied using RPM materials and Mr. Dornbrook “was calling the shots.”

Appellant characterized the use of RPM for the roofing material as essentially cast in

concrete. With that in mind, appellant, even without a change order, took steps to secure

adhesive so as to protect the price. Accordingly, Gire ordered 200 pails of insulation

adhesive from Dornbrook Marketing LTD on January 11, 2008. Notice to proceed (NTP)

was finally issued by the VA on January 14, 2008. Supplemental Appeal File, Exhibit 13;

Transcript at 15, 18, 55, 276.

The COTR explained the VA’s failure to respond, saying that the VA could not reject

a submittal until there was a NTP. Transcript at 100. The VA, however, did begin an

internal analysis. In his January 4, 2008, memo to engineering, the contracting officer (CO)

stated, “The specifications called for asphalt as the adhesive for insulation, but the

manufacturer may not honor the warranty using asphalt, according to the contractor.”

Supplemental Appeal File, Exhibit 5; Transcript at 14, 42.

On February 12, 2008, the VA rejected appellant’s submittal and provided under

Remarks, “Revise and resubmit in accordance with design bulletin No. 1.” Three days later,

the VA issued Bulletin No. 1, which provided: “The adhesive to be used to secure the roofing

insulation shall be RPM Insulation Primer and RPM Insulation Adhesive as manufactured

by Republic Metals, Inc. Asphalt shall not be used to secure insulation to the roof deck.”

Supplemental Appeal File, Exhibit 23. Mr. Hazel described the bulletin as a clarification and

not a contract modification. He said it addressed an ambiguity in the specifications.

Transcript at 181-82. Pursuant to the direction, appellant provided a new submittal noting

that the use of adhesive was based on the Government’s direction. Supplemental Appeal

File, Exhibit 24.

On March 13, 2008, the VA asked appellant for a proposal to delete a segment of

construction services in the southwest corner of the roofing project. This is relevant to the

CBCA 1966

7

claim, in that it reduced the square footage to be replaced. After negotiation, the parties

agreed that appellant would provide a credit for the deleted work. The VA has asserted that

the claim must be adjusted for the reduced area. Appellant has contended otherwise, pointing

out that in the modification, appellant gave the VA a credit based on the use of adhesive

instead of asphalt as planned. Supplemental Appeal File, Exhibit 28-32; Transcript at 103.

Appellant in this claim seeks to recoup the difference between what it provided in the credit

for adhesive and what that credit would have been if it had been based on asphalt.

On April 22, 2008, appellant submitted what it designated as its claim and change

order proposal, seeking $56,004 for changing the originally specified asphalt to RPM

insulation adhesive. The claim included a breakdown for subcontractor costs (Gire) of

$47,774. The remainder of the claim sought markups for the prime of 7.5% for overhead,

7.5% for profit, and 1.44% for bond. The subcontractor costs were broken down as follows:

Delete Asphalt

Delete Asphalt Labor

5-Gallon Pails Adhesive

Labor for Pails of Adhesive

7.5% overhead

1.5%(sic) profit

Total

14 Ton @ $500

14 Ton @ $ 90

200 EA @ $216

200 EA @ $ 32

($ 7,000)

( 1,260)

43,200

6,400

41,340

3,101

44,441

3,333

47,774

The 1.5% for subcontractor profit was intended to be 7.5%. Supplemental Appeal File,

Exhibit 6.

Although not provided to the VA in April 2008, appellant provided at the hearing a

further breakdown from Gire, dated April 25, 2008. It includes comparative labor prices for

asphalt and adhesive and shows 1344.75 manhours @ $46.55 per manhour for a total of

$62,598 for installing insulation with adhesive; and 1207.25 manhours @ $46.55 per manhour

for a total of $56,198 for installing insulation with asphalt. Supplemental Appeal File,

Exhibits 12, 29; Transcript at 58-59, 103, 106-07.

On May 7, 2008, Mr. Rice authored an estimate comparing the costs for using asphalt

versus adhesive based on 844.70 squares of roof insulation (versus 899 squares used by

appellant). His estimate provided no breakdown as to labor or material, but rather set out an

estimated combined cost of $56.67 per square for labor and material for laying insulation in

CBCA 1966

8

asphalt, and $43.22 per square for laying it with adhesive. He concluded the VA was entitled

to a net credit of $11,905.92. Supplemental Appeal File, Exhibit 36; Transcript at 65-66. The

numbers he used in the estimate were figures he secured from Mr. Dornbrook, who in turn had

secured the information from contractors he had contacted. Supplemental Appeal File,

Exhibit 36-37; Transcript at 87-88. There was no background information as to what

information was provided to the sources, and Mr. Rice under questioning stated that he did

not have any work papers with him. It appeared he had not reviewed any work papers prior

to the hearing. Transcript at 207-08. At some point, the VA tweaked its numbers and in a

June 12, 2009, memo increased the cost of the asphalt work to $57.87 per square. The change

was never addressed nor explained. Supplemental Appeal File, Exhibit 41.

On May 27, 2008, the VA and appellant spoke by telephone regarding appellant’s

costs, with VA advising that it needed more justification for appellant’s numbers. Transcript

at 296. On the same date, appellant wrote two letters to the contracting officer (CO). The

first, referencing the earlier conversation as to costs, addressed seven cost issues. Among

those were explanations as to how appellant arrived at square footage, appellant’s labor cost

differences, and how appellant arrived at the asphalt credit. In the letter, appellant stated that

by that point, asphalt cost was approaching $700 a ton, as compared to the $484 a ton it had

bid. Supplemental Appeal File, Exhibit 17. In the second letter, appellant stated the

following, “Unless directed otherwise in writing from the Contracting Officer, we are going

to proceed with changing the application material from asphalt to adhesive and consider it to

be a constructive change order coming from the Contracting Officer.” Supplemental Appeal

File at 18. As of May 27, work had not yet begun on the roof. Roofing commenced some

time in June or July.

The VA provided no response to either of the two letters. It did continue to review the

claim, focusing on pricing and still contending that using adhesive was cheaper. On

November 6, 2008, Mr. David Sabel, chief of engineering, provided a memorandum to the

acting CO. The memo affirmed confidence in Mr. Rice’s estimate, stating that it had been

provided to the VA from the roofing supplier (RPM), and further addressing alleged flaws in

appellant’s cost breakdown. Mr. Sabel claimed (1) appellant used the wrong size for the roof

(896 squares versus 844 squares), (2) used too low a cost per ton ($487) for asphalt, since it

based its figure on a September 2007 date (before asphalt increases in the summer of 2008),

and (3) asserted that appellant failed to include costs such as transport, maintenance, and

delivery of hot asphalt to the roof in its comparison of costs. In his memo, Mr. Sabel provided

no dollar figure for any of the purported omitted items; he similarly provided no figures at

trial. Finally, the memo said engineering had confirmed its costing through a contact person

with the Corps of Engineers (who got her information through a subconsultant) and that the

Corps concluded that there should be little difference in price between the two processes, with

any cost increase for adhesive being be offset by reduced labor costs in placing adhesive in

lieu of asphalt. Supplemental Appeal File, Exhibit 39.

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On February 1, 2009, appellant asked for a final CO decision. Again it received no

reply. On June 12, 2009, Mr. Sabel authored another internal memorandum that in general

tracked the prior one. Supplemental Appeal File, Exhibit 41. Still having received no reply,

appellant filed its appeal with the Board on a deemed denial basis. Transcript at 32-33.

In order to resolve this dispute we must determine (1) whether a twenty-year PIB roof

was available from a manufacturer other than RPM and (2) whether a twenty-year warranty

could be secured if insulation was placed in asphalt. Mr. Dornbrook said he knew of at least

two RPM competitors that could have bid the project to provide the roof membrane. He

additionally confirmed that in some instances RPM had allowed use of asphalt and honored

warranties with asphalt. Transcript at 247-52. Mr. Sabel testified that he understood that

RPM installed material with asphalt and he further acknowledged that the use of asphalt was

an accepted method in certain situations. Transcript at 224. He also confirmed that there

were “a few manufacturers that provided” a PIB system. He also testified that he assumed

that there was another manufacturer that could have provided the roof with a warranty, stating,

“My assumption is that if it’s a method that’s accepted, that there is a warranty available to

install appropriately.” Transcript at 225-27. Finally, he testified that it was his understanding

that if a contractor installed insulation with asphalt, and installed the appropriate security

devices around it, “that would have a warranty to it.” Transcript at 224-25.

As noted earlier, Mr. Rice’s estimate provided that the combined labor and material

costs for adhesive should be $43.22 per square. When that figure is multiplied by 844

squares, claimed by the VA, the result is $36,477.68. Adhesive comes in five gallon pails,

which on this project cost $216 a pail. Each square requires a gallon of adhesive.

Accordingly, using the VA number of 844 squares, one would need 169 pails. When 169

pails are multiplied by the cost per pail, the total comes to $36,504 for material only. If we

use what was purchased on the project (200 pails), the number increases to $43,200. In each

instance, the cost of materials alone exceeds Mr. Rice’s price for materials as well as labor.

Multiplying the VA cost of $56.67 a square for asphalt by 844 squares, the result is $47,830

for both labor and material to lay insulation in asphalt. Even if we were to assume the cost

of asphalt at $1000 a ton (a number we do not find valid, but use for ease of calculation), the

difference (between $47,830 less $14,000 (for 14 tons)) would leave $33,830 for labor costs

to place insulation in asphalt. Obviously, the comparisons make no sense. Mr. Rice’s

calculation (once one accounts for material) yields no labor costs for adhesive, but labor of

$33,830 for asphalt. Additionally, since the VA provided no breakdown for Mr. Rice’s

numbers, his estimate is impossible to analyze. Finally, Gire’s labor breakdown shows total

labor costs of $56,000 for asphalt and $62,500 for adhesive. Supplemental Appeal File,

Exhibit 12, 36-37.

At the hearing, appellant provided further confirmation as to its costs. It could not

provide a written quote for asphalt on this job, because it had proceeded on a verbal quote.

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It did, however, provide an August 2007 pricing proposal on another project, where prices

ranged from $415 to $450 a ton. Supplemental Appeal File, Exhibit 7; Transcript at 45.

Appellant also provided an excerpt from R.S. Means Building Construction Cost Data (65 th

ed. 2007) (Means). The excerpt showed comparative costs for using asphalt and adhesive

with roofing (it had no insulation listing). The comparisons showed labor of $44.50 per

square for adhesive, versus $33 for asphalt, an approximate 35% difference. Supplemental

Appeal File, Exhibit 42; Transcript at 211-14. That compares to an 11% difference in Gire’s

labor estimate. Supplemental Appeal File, Exhibit 12; Transcript at 211-12 . Finally, and a

further buttress to appellant’s labor claim, Mr. Sabel in his testimony referred to “Means”

several times as a valid industry source. Transcript at 206-08. His attempts to backtrack on

that were unconvincing.

As a final point, one of the VA bases for claiming that the credit for asphalt material

was understated by appellant, is that the appellant should have used the prices in effect for the

summer of 2008 and further (particularly of concern to Mr. Hazel), that the appellant was not

comparing like periods, since appellant was using a September 2007 date for asphalt and an

April 2008 date for adhesive. Transcript at 139-40, 145-46. The record shows, however, that

adhesive at $216 a pail was ordered in early January 2008, and the September 2007 price

(while quoted at that time) was firm until late December. Thus, appellant compared prices

for similar time frames. Supplemental Appeal File, Exhibit 13; Transcript at 18-19.

After the hearing, each party filed a brief. The VA brief consisted of two pages and

listed four conclusory positions with two record cites and no legal analysis. The VA points

were that appellant’s claim was overstated, that appellant knew at bid time that adhesive was

required, that appellant failed to properly seek clarification, and finally, that appellant did not

follow proper procedures in submitting its claim. As an aid to the Board in assessing the

procedural defense, the VA provided, as one of its record cites, pages 31 to 78 of the contract.

Discussion

When all is said and done, this case turns on the fact that in February 2008, the VA

changed appellant’s method of performance by first rejecting appellant’s submittal calling for

the use of asphalt to secure insulation to the existing roof; and then coupled that with issuing

what the VA called a design bulletin. That design bulletin required appellant to use an RPM

adhesive product to secure insulation to the roof, instead of asphalt, as appellant had bid.

The contract clearly specified that asphalt could be used to attach new insulation to the

existing roof deck. In fact, asphalt was the only material mentioned in the section of the

contract specifically addressing insulation. While we recognize that the contract’s PIB

roofing specification also contained limited provisions that addressed using adhesive to attach

insulation to the roof deck, that limited treatment, at best, permitted an alternative means of

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performance to the asphalt. The roofing provision’s limited inclusion of directions for use of

adhesive (to attach insulation) in no way negated appellant’s right to set its insulation in

asphalt, as set forth in the insulation specification. There was no patent ambiguity in the

contract created by the two performance methods. The methods could be harmonized.

Accordingly, in forbidding appellant from using asphalt and in directing it to use adhesive,

the VA imposed a method of performance that appellant was not contractually required to

provide.

However, to resolve this dispute, we need to address additional facts. In addition to

identifying means of adhering the insulation to the roof deck, the contract also required that

the contractor provide the VA with a twenty-year manufacturer’s warranty for the PIB roof

it would install on top of the insulation. At least on this particular contract, RPM (the

manufacturer around whose products the VA wrote the roofing specifications) would not

provide a twenty-year warranty with its roofing product, unless adhesive was used to secure

the insulation below (which RPM was not providing). It would not provide the warranty if

insulation was set in an asphalt base. That was the case, even though the VA did not appear

to know at the time it prepared the specifications, or at the time of contract award, that RPM

would impose such a condition on its warranty.

In pricing this project, the record shows that appellant anticipated using asphalt for

securing the insulation and anticipated using the PIB roofing membrane as manufactured by

RPM. RPM had been providing roofs at the facility, and that fact was highlighted at the prebid conference, well established on the facility, and a logical choice for contractors to bid.

It was implicit that the VA wanted and was familiar with an RPM roof, and logical that VA

specifications would reflect that familiarity and not conflict with RPM requirements.

Additionally, we find that despite the fact that RPM was not specified as a sole source, it was

highly likely that it’s the only roofing product the VA would have accepted for this project.

Further, while the VA included asphalt as a means of attaching insulation, the VA clearly did

not want that product and likely would never have allowed it. That said, the VA not only

included, but also highlighted asphalt in its specifications as the means for setting insulation.

Mr. Singleton testified that by the time appellant provided its asphalt submittal to the

VA, it had learned from RPM that RPM was not willing to provide a twenty-year warranty,

absent the use of its adhesive. Appellant had also concluded from conversations that the VA

was going to require the use of the RPM roof. Given those circumstances, appellant appended

a letter to its asphalt submittal, advising the VA of a potential RPM warranty problem. In the

letter, appellant did not contest its obligation to provide the specified warranty, nor did it give

up its intention to use asphalt. Instead, the letter was advising the VA of a potential problem.

The VA did not respond to the submittal until February 12, 2008, when it returned the

submittal and marked asphalt as rejected. The VA followed that with the design bulletin,

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which explicitly provided appellant could not use asphalt to secure the insulation and directed

appellant to use a specific RPM adhesive product in order to adhere the insulation.

Once the VA received the asphalt submission in November 2007, it could have entered

into a dialogue with appellant as to possible solutions. Alternatively, it could have simply sent

the submittal back to appellant with a note specifying its concerns as to the warranty and the

use of asphalt, and directed appellant to advise the VA as to how (with using asphalt)

appellant intended to provide the warranty. Had appellant been unable to provide assurance

as to the warranty, then the VA may have had a basis to issue a direction. However, the VA

first was obligated to give appellant an opportunity to meet the contract specifications. The

VA action, in issuing the bulletin and directing how appellant was to perform, took matters

out of appellant’s hands. Once the VA issued the bulletin, setting out directions, appellant

no longer had control of its performance. It no longer had the opportunity to pursue the option

of finding its own way of complying with the contract. The VA action in denying appellant

that opportunity constituted a change. Moreover, thereafter, appellant made its disagreement

with the VA position clear, but the VA did nothing to change its position.

In finding the VA action to be a change, we are mindful of the argument that appellant

had a duty to inquire because of the “note” in the Warren letter. However, it is critical to our

decision that Warren’s statement as to a possible conflict only involved one potential supplier,

RPM. That is particularly significant, because testimony of government witnesses has led us

to conclude that there were likely other manufacturers who could have provided a conforming

PIB roof and it was likely that those manufacturers would have been willing to provide a

warranty that would not have been voided due to setting insulation in asphalt.

The fact that appellant’s bid had contemplated using the RPM roof does not change our

view. A contractor is not obligated to stay with its intended bid, if after bidding it learns that

due to mistake, improvident analysis, or changed conditions it needs to move to an alternate

(but contract compliant) means of performance in order to comply with the contract. As long

as the contractor performs in compliance with the specifications, it has the right to proceed

as it finds best, even where that varies from how it bid. That is particularly the case where,

as here, appellant appeared to have other options.

In Shirley Construction Corp., ASBCA 46670, 94-2 BCA ¶ 26,868, at 133,690, the

Armed Services Board of Contract Appeals addressed the relationship between a claimed

conflict and a contractor’s right to perform. There, the Government asserted that there was

a conflict between the contractor’s reading of the specifications and a clear specification

requirement as to a required wind resistance warranty. Specifically, the Government claimed

that the contract required a warranty that covered damage from sustained winds up to seventyfive miles an hour, and such a warranty was only available from the manufacturer specified

in the contract if the contractor employed a combined system of roof application. The

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Government contended that appellant’s reading, which was otherwise reasonable, did not

result in the needed combined system, and therefore, the appellant’s reading created a patent

conflict with the warranty. In addressing the matter, the board said the following:

We cannot conclude the requirement of the 75 mph warranty created an obvious

conflict. Indeed we believe the 75 mph warranty was a clear and unambiguous

contract requirement the successful bidder was obligated to supply under any

interpretation of the installation specifications. Whether it was attainable under

appellant’s interpretation from a manufacturer other than JPS is not discernable

from this record. However, respondent’s directions to appellant effectively

precluded appellant from pursuing its own interpretation and attempting to

provide a 75 mile per hour sustained wind warranty. In this regard, we note

respondent’s directions to appellant were focused on the method with the

warranty to be complied with “in addition” as part of the combined system

installation required under respondent’s interpretation.

In Shirley, the board ruled in favor of the appellant, even though it could not discern from the

record whether the appellant would have been able to secure the disputed warranty and

thereby proceed as it planned.

In summary, while we recognize that on the disputed contract, appellant initially

intended to use the RPM roof, and that the combination of that roof and the use of asphalt was

incompatible (at least on this facility), the fact remains that the contract permitted appellant

to pursue finding an alternate roofing manufacturer (even contrary to how it bid). Had it had

that option, it is likely that it could have provided asphalt and otherwise fully complied with

the contract. We find the VA’s actions in directing the use of adhesive, instead of asphalt, to

be a change.

Appellant has claimed $56,004.76. In reviewing the evidence on quantum, the primary

disputes involve the comparative costs of adhesive versus asphalt and the comparative labor

costs for placing the insulation with one product versus the other. On both material and labor,

we find appellant’s evidence to be significantly more convincing. The bulk of appellant’s

claim is the material cost differential between the $43,200 paid for adhesive versus the $7000

expected to have been expended for asphalt. As to the cost of adhesive, there was no real

dispute that it cost $216 per pail. While the VA challenges appellant’s pricing of asphalt, the

VA provides no credible evidence of a substitute number. In fact, the only credible

contemporaneous information as to the price of asphalt was provided by appellant. It showed

the cost in late December to be approximately $475 and in May to be as high as $700. In

evaluating this claim, we accept the price for asphalt of $500 a ton, as claimed by appellant.

We find that price is in line with the firm price it had up until the end of December 2007 and

further find that given an October award, that firm price should have held. Finally, the

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adhesive price used in the claim is the early January 2008 price and therefore, by using a late

December date for asphalt pricing, we are using comparable time frames. As to labor, we find

the VA evidence as to labor costs to be second hand, on its face unreasonable, and the VA

estimate based on it to be incapable of logical analysis. In contrast, appellant’s numbers for

adhesive and asphalt, particularly in comparison to each other, appear generally reasonable.

Additionally, appellant provided sufficient data to allow a critical analysis of its labor costs.

As to the VA’s contention that because of the modification deleting part of the roof,

we must reduce appellant’s claim, we again find in favor of appellant. While some roofing

was deleted, the fact is that in pricing the deletion, appellant gave the VA a credit based on

laying the insulation with adhesive. Now that we have found that the requirement for

adhesive was a change, appellant is entitled to recoup the difference between the credit it gave

the VA for adhesive and the credit it would have given if it had been priced on the basis of

using asphalt.

Finally, we find that interest should start on April 22, 2008, the date on which appellant

first identified the dispute as a claim.

Decision

Based on the foregoing, we GRANT the appeal in the amount of $56,004 plus interest

under the Contract Disputes Act, 41 U.S.C. § 7109 (as amended by Pub. L. No. 111-350, 124

Stat. 3677, 3825-26 (2011).

_____________________________

HOWARD A. POLLACK

Board Judge

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I concur:

___________________________

ANTHONY S. BORWICK

Board Judge

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