Lessons Learned from Pipeline Construction Cases

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2 Lessons Learned from Pipeline Construction Cases PBI November 7, 2018 Presented by David E. White, Esquire

3 Conflicting Contract Documents

4 Conflicting Contract Documents Master Services Agreement Purchase Order General Conditions Supplementary Conditions Specifications Drawings Company Policy(s) Industry Standards Regulations Permitting Documents FERC Submissions

5 Master Services Agreement

6 Instructions to Bidders

7 Contractor Bid Proposal

8 Notice of Award

9 Conflicting Contract Documents MSA Company and Contractor agree that, with respect to every Project awarded to Contractor, all Work performed by Contractor shall be in accordance with and governed by the Purchase Order issued by the Company to Contractor to which this Agreement is incorporated, these General Articles of Agreement for Construction Projects, and all specifications, drawings, schedules, riders, exhibits, supplements, amendments, addenda, standards and other conditions referenced herein (collectively hereinafter defined and referred to as the Contract Documents )

10 Conflicting Contract Documents Where do issues arise? Warranties E&S Controls Welding Standards Restoration Requirements Right-of-Way Issues

11 Conflicting Contract Documents Warranties MSA: Contractor warrants its Work against all deficiencies and defects in materials and/or workmanship and as required in the Contract Documents. Contractor shall guaranty or warrant its Work for a period of one (1) year from the date of substantial completion of its Work. Project Specifications: Contractor shall warrant all earthwork for a period of fifteen (15) months after the retention has been accepted. Earthwork shall cover all trench subsidence, any slips or slides and excessive erosion attributable to the improper installation of erosion control devices. Contractor agrees to remobilize to repair any earthwork or piping defect within fourteen (14) calendar days after receiving written notification that a project defect is attributable to the Contractor s workmanship or materials.

12 Conflicting Contract Documents Warranties (cont.) Additional MSA Provision: Contractor will comply with the Contract Documents as they may be modified, will complete the Work in a good and workmanlike manner free from defects and will use the skill and judgment customarily utilized in the trade of Contractor in performing the Work. The Work will at all times will meet the approval of the Company. Contractor will inspect all surfaces prior to commencing Work. Contractor will not commence work until deficiencies and other surface/subsurface conditions that would adversely affect the integrity of Contractor s completed Work have been corrected. Contractor shall inform Company immediately should any surface/subsurface be unacceptable to commence or continue the Work. Contractor s start of the Work constitutes Contractor s acceptance of the existing surfaces and conditions.

13 Conflicting Contract Documents E&S Controls Instructions to Bidders: Environmental Controls Environmental controls shall be installed and maintained per the ESPC plan and any deviation from the ESPC plan is to have written or approval from the Company. It is assumed that Bidder is familiar with applicable regulations of the area for which they are proposing to perform work. The price submitted should account for any and all quantities of environmental controls necessary to properly complete the job in compliance with all jurisdictional regulations. Quantities required by jurisdictional agencies regardless if identified in the ESPC are considered part of this scope item. Additional quantities requested by jurisdictional agencies due to site conditions created by Contractor means and methods will be at Contractor cost. Additional items requested by the Company for reasons other than jurisdictional, will require an approved Change Authorization Request (CAR) and will be at Company cost.

14 Conflicting Contract Documents E&S Controls (cont.) Owner s Winter Stabilization Plan Purpose of Plan is to maintain the environmental objective set forth in the project permits and the Erosion and Sediment Control Plans and to provide guidelines for addressing the special considerations and concerns associated with construction and restoration during winter conditions.

15 Conflicting Documents Case Example Contractor attempted to claim Owner s Winter Stabilization Plan increased its scope of work beyond the contract documents and sought change order for alleged additional work Owner claimed the Plan did not impose any additional requirements upon the Contractor and that the other Contract Documents imposed the same requirements as those the Contractor claimed were in the Stabilization Plan Court sided with Contractor

16 Conflicting Contract Documents -- Case Welding Standards Every company has its own Standards Specifically incorporate company Standards into Contract Provide a copy of the Standards to Contractor Post Standards on Project share file site

17 Conflicting Contract Documents -- Case Restoration Road Bonds Owner s standards, which were incorporated into contract, stated Contractor shall be responsible for maintaining and repairing existing roads such that the condition of the road after construction equals the condition of the road prior to construction. DOT demanded that the roads be restored to their pre-construction condition before it would release Owner from the road bonds. Contractor claimed contract specifications requiring it to videotape the road before construction and after construction obligated it to pay only for road damage that it had caused, but not for road damage caused by others.

18 Conflicting Contract Documents -- Case Right-of-Way Issues Contractor made claim for costs to pick rocks from the Project outside of the ROW in wooded areas and for picking rocks larger than 3 from the Right-of-Way Multiple Contract Documents addressed rock-picking

19 Conflicting Contract Documents -- Case Scope of Work: Contractor is responsible for all equipment, materials, labor, plant and services necessary to clear the right-of-way of all waste, materials, debris, and rock resulting from operations in accordance with all applicable permits. Owner s Construction Manual: Any loose rock encountered during grading, trenching, boring, and other work that is not backfilled into the ditch, shall be removed from the right-of-way during cleanup operations. Land-Owner Agreements: Requirements varied remove rock 3 or larger from surface of ROW and remove large amounts of rock that will interfere with standard farming practices. remove any rock 3" in diameter, or larger from surface of the ROW.

20 Conflicting Contract Documents Priority: Wherever possible, the Contract Documents are to be read as cumulative and complementary. However, to the extent that any provisions of any of the Contract Documents are or may be inconsistent, the Contract documents shall be interpreted and applied in the following order of priority: (a) the provisions of this Agreement, (b) the Purchase Order; (c) the other schedules and other documents attached to and incorporated into the Purchase Order by the Company; (d) the schedules and other documents attached to and incorporated into the Agreement; and (e) the remaining Contract Documents under and made a part of this Agreement.

21 Conflicting Contract Documents The Prime Contract Subcontracts frequently incorporate the prime contract and make provisions within it flow down to the subcontractor. Obtain and review copy of prime contract (prior to entering subcontract). Identify important flow-down provisions. Common flow-down clauses: Scope of work provisions applicable to subcontract scope Dispute resolution and claim procedures Change order provisions Payment terms (i.e. pay-if-paid ) Indemnification and insurance

22 Conflicting Contract Documents The only enforceable written contract is the one signed by all parties. Knock Out Rule: If acceptance contains terms that are additional or different from those contained in the offer, the conflicting terms in both the offer and acceptance are knocked out of the contract and replaced by UCC gapfiller provisions Be certain that the contract says what you intend it to say!

23 Conflicting Contract Documents If you are the Contractor At time of bid, seek clarification of ambiguities in Contract Documents and specifications If you are the Owner Provide written clarification, and incorporate it into the Contract Documents

24 Initial Bid Proposal -- Case

25 2nd Bid Proposal -- Case Company will guarantee up to $1,000, stand down fee for inclement non working weather conditions as agreed upon between Company and Contractor at the time of incident for the package. The day rate for this stand down will be invoiced at a daily rate of $ per spread

26 Conflicting Contract Documents The Take Away Put it in writing! Use clear, concise language in Contract Documents Use similar language in all Contract Documents Identify which Contract Documents take priority should there be a discrepancy

27 Project Documentation in the Cyber Era

28 Sources of Information Paper Documents s Project Share Sites FTP Sites Drop Boxes Text Messages Verbal Communications

29 s Key source of information in project disputes Information provided Help to create a chronology of events Help to disclose who knew what and when Create a contemporaneous record of happenings However, s frequently contain information that may reflect poorly on you and your company Foul language Personal information Damaging statements

30 s s are discoverable! Federal Discovery Rules: All electronically stored information ( ESI ) relevant to a claim or defense to a claim must be disclosed Delete does not mean it is gone! Destruction of evidence can lead to presumption or inference that evidence would have been unfavorable Follow document retention policies for s and other ESI Implement a plan to incorporate relevant communications into the Project File Issue and enforce litigation holds

31 s Case Example Contract was silent as to withholding of retainage Contractor claimed Owner wrongly withheld retention from progress payments s produced in discovery revealed Contractor was aware that Owner would be withholding retainage from the progress payments Subsequent s also confirmed what was discussed at pre-bid meeting about retainage Contractor submitted pay apps showing 10% being withheld

32 FTP and Share File Sites More and more Project Owners are using FTP ( file transfer protocol ) and file share sites to exchange and manage project information Creates issues when determining what constitutes the Contract Documents Creates issues when attempting to prove what was posted to the site and when it was posted

33 What did you know and when did you know it? Failure to read a contract does not nullify its provisions Beware of documents posted to Project Site that may change contractual obligations

34 Project Documentation in the Cyber Era The Take Away For FTP and Share File Sites: Understand what your obligation is regarding posting (and retrieving) information to/from the project share site Designate a point person to upload/download project records Maintain logs of when information was posted Be specific in describing information Consider screenshots Send notification s when new information is posted to site Seek confirmation Send follow-up

35 Project Documentation in the Cyber Era The Take Away Designate a Contract Administrator Administrator is copied on all communications related to Contract Documentation Centralize the Information Create an electronic repository for all relevant records Maintain Logs Keep track of when information is received/submitted Update Records Addenda Re-submittals Periodic reporting

36 Questions

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38 Topics Conflicting Contract Documents Project Documentation in the Cyber Era