Prismatic Development Corp. v. Dep t of Sanitation OATH Index No. 1239/16, mem. dec. (June 30, 2016)

Prismatic Development Corp. v. Dep t of Sanitation OATH Index No. 1239/16, mem. dec. (June 30, 2016) General contractor sought extra compensation for costs to install devices that it furnished under the Contract, arguing that the electrical contractor was responsible for installation. City moved to dismiss claim as time-barred and waived because the contractor had not expressly reserved the claims when it applied for time extensions. CDRB granted respondent s motion to dismiss the petition on the grounds of timeliness. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS CONTRACT DISPUTE RESOLUTION BOARD In the Matter of PRISMATIC DEVELOPMENT CORP. Petitioner - against - DEPARTMENT OF SANITATION Respondent MEMORANDUM DECISION ASTRID B. GLOADE, Administrative Law Judge/Chair VICTOR O. OLDS, ESQ., Mayor s Office of Contract Services PAUL D. WEXLER, ESQ., Prequalified Panel Member Presently pending before the Contract Dispute Resolution Board ( CDRB or Board ) is the petition of Prismatic Development Corporation ( Prismatic ). The petition arises from a contract between the New York City Department of Sanitation ( DOS or respondent ) and Prismatic for general construction work to replace the existing Marine Transfer Station on Flushing Bay, Queens, New York (Pet. Ex. A). Prismatic seeks an additional $37,535.40 for costs associated with installing electrical wiring for devices it furnished under the Contract, contending that the electrical contractor was responsible for installation. Prismatic submitted its petition to the CDRB on December 28, 2015. The parties engaged in settlement negotiations, which were unsuccessful, and by mutual agreement,

- 2 - respondent s time to answer was extended to April 11, 2016. In lieu of filing an answer, respondent filed a motion to dismiss on the grounds that Prismatic did not timely file its Notice of Dispute ( NOD ) with the DOS Commissioner and waived its claim by failing to reserve it with specificity when it applied for time extensions. Prismatic filed its opposition to the motion on May 17, 2016. For the reasons set forth below, the Board finds that Prismatic s claim is time-barred. BACKGROUND On September 8, 2009, Prismatic and the City of New York, by and through DOS, entered into Contract 4G - Structures and Equipment, for $161,195,000 for the demolition of the existing Marine Transfer Station and the construction of a new one ( Contract ) (Pet. Ex. 1). In addition to Prismatic, there were several contractors on the project, including Barbaro Electric Co. Inc. ( Barbaro ), the electrical contractor. A dispute arose over whether Prismatic or Barbaro was responsible for installing electrical wiring for devices that Prismatic was required to furnish for the project. Prismatic contended that Barbaro was responsible for the electrical work based upon DOS s response to question 68 in Addendum number 3 ( Addendum 3 ) to the Contract. URS/LiRo served as DOS s construction manager on the project and Tony Aguero of URS/LiRo was the senior project manager. Aguero met with representatives of DOS and Barbaro on November 20, 2012, to discuss the scope issue. Representatives of Prismatic were not in attendance. On November 21, 2012, Aguero submitted the issue regarding the scope of electrical work to Edmund Lee of Greeley and Hansen ( G & H ), the project engineer, for interpretation (Pet. Ex. C6 at 4). That same day, Prismatic s project manager, Grant Macdonald, stated in an e- mail to Aguero that he was confused to learn that the scope issue had been referred to G & H. Macdonald explained that he thought the issue had been addressed in the bid addendums for the project, which provided for the work to be performed by the electrical contractor (Pet. Ex. C6 at 7-8). Forty minutes after Macdonald sent the e-mail, Aguero responded that he had already informed Prismatic that its interpretation of the contract is not correct (Pet. Ex. C6 at 7). Aguero stated that Prismatic s specifications and drawings clearly indicates [sic] that Prismatic is responsible for the installation of the equipment you are furnishing. He advised Macdonald

- 3 - that the question in Addendum 3 that Prismatic relies upon is not part of the Contract Document [and] does not supsedes [sic] your Contract. Aguero directed Prismatic to install the devices furnished by Prismatic as indicated by the Contract Documents (Pet. Ex. C6 at 7). Aguero renewed his request to G & H for its opinion on December 18, 2012. In an e- mail sent to a DOS representative, on which Prismatic was not included, Aguero states, [a]lthough I directed Prismatic to install the panels, they are waiting G & H interpretation of the Contract before requesting a Commissioner s Determination (Pet. Ex. C6 at 4). Aguero included Macdonald in a subsequent e-mail on December 18, 2012, which appears to be part of the same e-mail chain. Aguero wrote Grant [Macdonald] is being Grant and refuses to review Barbaro s interpretation. That is why I need G & H s interpretation. Macdonald responded to the e-mail that same day, noting that he was under the impression that the determination of the scope of work issue must come from G & H and that Prismatic s review of Barbaro s interpretation had never been presented (Pet. Ex. C6 at 2-3). On December 20, 2012, in an e-mail to Aguero on which G & H and DOS representatives were copied, Prismatic reiterated to Aguero that it was waiting for G & H s interpretation and provided its assessment of the scope of work issue (Pet. Ex. C7). Aguero responded by stating that Prismatic s interpretation was incorrect and directing Prismatic to install the devices furnished by Prismatic as indicated in the contract drawings. DO YOU UNDERSTAND! (Pet. Ex. C7) (emphasis in original). G & H provided its opinion in an e-mail from Lee to Aguero on December 27, 2012 (Pet. Ex. C8). Lee stated that Addendum 3 is excluded from the Contract and that the scope of work is based on the bid drawings, addendum and the revised specifications and drawings issued to the contractor. He further indicated that the G contractor provides (furnish and install) the complete system including its controls, internal wiring and all external wiring to accessories required in accordance to the contract drawings and specifications. The interpretation of vendor supplied control panel by G contractor noted in the contract drawing in relation to the installation responsibility is incorrect (Pet. Ex. C8). That same day, Aguero forwarded G & H s opinion to Prismatic, noting that it confirmed URS/LiRo s interpretation of the Contract. Aguero instructed Prismatic to [p]lease proceed with the work (Pet. Ex. C8). Prismatic failed to perform the work for several months. On May 7, 2013, Aguero e- mailed Prismatic again directing Prismatic to installed [sic] the controllers and wire them to the

- 4 - hose reels as part of the Contract. You are delaying the completion of the Project (Pet. Ex. D4) (emphasis in original). Macdonald replied on May 8, 2013, advising Aguero that they had initiated the requested work, but disagreed with URS/LiRo s position and reserve our rights to recuperate the costs (Pet. Ex. D4). Prismatic then performed the work and submitted two change order requests seeking compensation for extra work performed relative to the disputed electrical work. The first, PCO 143, was submitted to URS/LiRo on May 22, 2013. In PCO 143, Prismatic sought $22,352.40, to cover its costs for installing the electric panels for various systems, switches for doors, radiation panels, and lights (Pet. Ex. C2). Prismatic noted that this was a partial interim request and costs for additional work [would] be forwarded (Pet. Ex. C2). Approximately one year later, on May 30, 2014, Prismatic submitted the second change order request, PCO 219, to URS/LiRo in which it sought an additional $15,183. This represented the costs for the final portion of the claimed additional work and it supplemented PCO 143 (Pet. Ex. C3). On September 3, 2014, Prismatic asked for a status report on its open change order requests (Pet. Ex. C1). Two days later, on September 5, 2014, Aguero responded to Macdonald s e-mail by indicating that PCO 143 and PCO 219 are Contract work (Pet. Ex. C1). On September 19, 2014, Prismatic informed Aguero that the e-mail response was not sufficient and asked for a written response with explanation if URS/LiRo was rejecting the change order requests (Pet. Ex. C1). Prismatic submitted its NOD to the DOS Commissioner on October 17, 2014 (Pet. Ex. C). The Commissioner s designee denied Prismatic s claim on August 13, 2015 (Pet. Ex. D1). The Commissioner concurred with the project engineer s findings that wiring for contractor supplied equipment is the responsibility of the contractor supplying the equipment. The Commissioner also found that Prismatic s NOD was untimely filed and that Prismatic waived its claim when it failed to expressly reserve it in its requests for time extensions. Prismatic submitted its Notice of Claim ( NOC ) to the Comptroller on September 16, 2015 (Pet. Ex. D). The Comptroller denied the claim on November 24, 2015, because Prismatic did not timely file its NOD and because it did not expressly reserve its claim in its time extension requests (Pet. Ex. E).

- 5 - ANALYSIS The Board s authority to resolve contract disputes between the City of New York and a vendor is set forth in the Procurement Policy Board Rules ( PPB Rules ). The PPB Rules were incorporated into Article 27 of the Contract, and authorize the Board to resolve disputes about the scope of work delineated by the contract, the interpretation of contract documents, the amount to be paid for extra work or disputed work performed in connection with the contract, the conformity of the vendor s work to the contract, and the acceptability and quality of the vendor s work.... 9 RCNY 4-09(a)(2) (Lexis 2015). The Board reviews the decision of the agency head, and the Board s decision must be consistent with the terms of the contract. 9 RCNY 4-09(g)(4). DOS moves to dismiss the petition on two procedural grounds: (i) that Prismatic did not timely file its NOD; and (ii) that Prismatic waived the claim when it failed to expressly reserve it in its requests for time extensions. To invoke the conflict dispute resolution procedure under a City contract, the contractor and the agency are obliged to act promptly. The time frames for dispute resolution established by the Contract and the PPB rules may not be disregarded without good cause. See Commodore Construction Corp. v. Dep t of Parks & Recreation, OATH Index No. 2040/15, mem. dec. at 10 (Mar. 22, 2016); Ferreira Construction Co. Inc. v. Dep t of Transportation, OATH Index No. 1619/12, mem. dec. at 7 (Nov. 16, 2012), and cases cited therein. A dispute arises when the Engineer, Resident Engineer, Engineering Audit Officer, or other designee of the Commissioner makes a determination with which the Contractor disagrees. Contract Art. 27.1.2; see also 9 RCNY 4-09(a)(2). Section 4-09(d)(1) of the PPB rules required Prismatic to submit its dispute in writing ( Notice of Dispute ) to the Agency Head within... thirty days of receiving written notice of the determination or action that is the subject of the dispute. 9 RCNY 4-09(d)(1); see also Article 27.4 of the Contract. In determining whether a NOD was timely, [t]he Board has consistently held that a letter from a person with authority within the agency unambiguously denying a contractor s request is a determination or action that triggers the 30-day period to file a NOD. TAP Electrical Contracting Services, Inc. v. Dep't of Environmental Protection, OATH Index No. 2185/10, mem. dec. at 4 (July 20, 2010), and cases cited therein. Prismatic did not dispute that the construction manager has agency authority, but challenged DOS s contention that its

- 6 - construction manager issued an unambiguous determination regarding the disputed work in e- mails to Prismatic. Accordingly, at issue is whether the communication between Prismatic and DOS constitute the determination or action that commenced the 30-day time frame within which Prismatic was required to submit its NOD. DOS contends that under every analysis of the facts here, Prismatic s NOD was untimely. DOS first urges that the November 21, 2012 e-mail from Aguero to Prismatic be deemed the determination or action that commenced the time frame (DOS s Motion to Dismiss ( Mot. ) at 4). According to DOS, in that communication, Aguero issued a clear, unambiguous directive for Prismatic to perform work that it maintained was not its responsibility. However, Prismatic counters that the November 21 e-mail was not a determination because Aguero asked its project engineer to evaluate the issue (Prismatic s Answer to the Motion to Dismiss ( Ans. ) at para. 4). DOS conceded as much, acknowledging that the November 21 e-mail may have been ambiguous because Aguero ordered Prismatic to perform the work at the same time that he asked the project engineer to assess whether Prismatic was required to do so under the Contract (Mot. at 4). Therefore, it was reasonable for Prismatic to believe that as of November 21, 2012, there was no determination or action that would trigger the time frame for submitting the NOD. Respondent contends, however, that on December 27, 2012, after the project engineer opined that Prismatic was required to perform the disputed electrical work, Aguero issued a determination that triggered the time frame for petitioner to file a NOD. This argument is persuasive. DOS argues that Aguero s December 27, 2012 e-mail to Prismatic, in which it forwarded the project engineer s opinion that Prismatic was contractually obligated to perform the disputed electrical work and instructed Prismatic to perform the work, commenced the 30 day period within which Prismatic was required to submit its NOD. The e-mail notified Prismatic that G & H agreed with DOS s conclusion that Prismatic was responsible for performing the electrical work, which is the subject of the present dispute. See Dell Tech Enterprises, Inc. v. Dep t of Environmental Protection, OATH Index No. 427/07, mem. dec. at 5-6 (Nov. 22, 2006) (a letter that clearly rejected a contractor s position and stated that the agency s interpretation was consistent with contract requirements was notice to the contractor that additional payment would not be made and triggered the thirty-day time frame for filing an NOD). It is of significance that in a December 20, 2012 e-mail to URS/LiRo, Prismatic stated

- 7 - that it was awaiting G & H s interpretation of the scope issue (Pet. Ex. C7). Implicit in that statement is Prismatic s acknowledgement that it considered G & H s interpretation to be determinative of whether it would be required to perform the disputed electrical work. Moreover, subsequent communications between Prismatic and DOS bolster respondent s contention that the December 27 e-mail was unambiguous notice of the determination that the electrical work was Contract work. In May 2013, after Prismatic had continued to persist in its refusal to perform the work, Aguero directed Prismatic to perform electrical work as part of its obligations under the Contract. Prismatic responded that it disagreed with URS/LiRo s position but would initiate the work and reserve its rights to recuperate its costs. By stating that it disagreed with the project manager s position, Prismatic acknowledged in essence that LiRo s decision regarding the scope of work was the determination that was the subject of its dispute. Petitioner contends that the e-mails do not constitute a determination because they do not specifically invoke section 27.2 of the Contract and do not satisfy the provision s requirement that all determinations be made in writing clearly stated, with a reasoned explanation for the determination. (Ans. at paras. 1, 4). However, failure to include reference to section 27.2 in the written notice is not fatal to finding that it is a determination as the PPB rules do not require invocation of the provision. See 9 RCNY 4-09(a)(2), (d)(1). Similarly unconvincing is Prismatic s argument that the determination that triggers the 30-day time frame must contain a reasoned explanation. In A-1 First Class Viking Moving & Storage, Inc. v. NYC Office of Admin. Trials & Hearings, 2012 N.Y. Misc. LEXIS 2619 (Sup. Ct. N.Y. Co. May 30, 2012), the court upheld the Board s finding that the reasoned explanation provision in the PPB rules did not apply to decisions rendered before the filing of a NOD. The court concluded that the only requirement set forth by section 4-09 that is applicable to a determination that is the subject of the dispute... is that it must be written. A-1 First Class Viking Moving & Storage, Inc., 2012 N.Y. Misc. LEXIS 2619 at *12. While the decision discusses section 4-09(b) of the PPB rules, the provision is almost identical to section 27.2 of the Contract and the court s reasoning is equally applicable to the Contract clause. Nonetheless, even assuming that a reasoned explanation is required, one was provided in communication between the parties, including the project engineer s e-mail dated December 27, 2012. The e- mail explained that the addendum upon which Prismatic relied in contesting its obligation to perform the electrical work is excluded from the Contract and that the scope of work is based on

- 8 - the Contract documents (Pet. Ex. C8). URS/LiRo forwarded the project engineer s e-mail to Prismatic that same day, noting that it confirmed the construction manager s interpretation of the Contract and directing Prismatic to proceed with the disputed work. Petitioner further noted that the May 7, 2013 e-mail did not address or issue a determination on entitlement for additional compensation for the electrical work, as if to suggest that this is required for the writing to constitute a determination. This argument is without merit. Having determined that the electrical work was encompassed by Prismatic s contractual obligations, it would have been illogical for DOS to make reference to additional compensation for that work. Prismatic argues that submission of a change order request is the first step for any potential dispute and that [o]nly upon the official rejection of a PCO do the claim time frames commence (Ans. at para. 5). No authority is cited in support of this proposition, which is inconsistent with the plain language of the PPB rules and the Contract. Indeed, the PPB rules provide that a dispute arises when particular employees or a Commissioner s designee makes a determination with which the Contractor disagrees. The Contract provides that 30-day period starts to run when the contractor receives written notice of the determination or action that is the subject of the dispute. 9 RCNY 4-09(a)(2), (d)(1); Contract Art. 27.1.2. Neither the rule nor the Contract requires that a change order be submitted and rejected in order for the 30-day time frame for filing a NOD to commence. See B & F Skilled, Inc., et al v. Dep't of Transportation, OATH Index No. 2199/05, mem. dec. at 4 (Sept. 9, 2005), aff d, 45 A.D.3d 281 (1st Dep t 2007) ( Nothing in the contracts or PPB rules limits an action or dispute to the rejection of an invoice ); Dell Tech Enterprises, Inc., OATH 427/07 at 5-6 (noting that the Court of Appeals has recognized that article 27 of the contract was designed to protect the public interest in avoiding costly and disruptive delays during public works projects, the Board held that public policy considerations supported its finding that a contractor is required to promptly file a NOD soon after learning of an adverse interpretation of the contract, rather than wait until the work is performed and expenses incurred). Finally, there is merit to respondent s argument that even under Prismatic s version of the events, the NOD was untimely (Mot. at 4). Petitioner contends that [o]nce Prismatic did finally receive the rejection of [the change order requests] in September 2014, albeit in an informal manner, it submitted the NOD accordingly (Ans. at 3). It is telling that Petitioner did not

- 9 - specify the date on which it was notified that the change order requests had been rejected, since focus on that date makes clear that the NOD was untimely. The relevant communication occurred on September 5, 2014, when, in response to Prismatic s request for a status report on is open change order requests, Aguero indicated that the work was Contract work. It was not until October 17, 2014, beyond the 30-day time frame, that Prismatic submitted its NOD. The fact that Prismatic continued to press respondent to provide a written response with an explanation for its decision on September 19, 2014 did not toll it s time to file its NOD. See Commodore Construction Corp., OATH 2040/15 at 12; A-1 First Class Viking Moving & Storage, Inc. v. Human Resources Admin., OATH Index No. 2655/11, mem. dec. at 5 (Oct. 28, 2011), aff d, 2012 N.Y. Misc. LEXIS 2619 (Sup. Ct. N.Y. Co. 2012); Cauldwest Realty Corp. v. City of New York, 160 A.D.2d 489, 491 (1st Dep t 1990) ( Absent some clear indication that an agency has misled a petitioner into foregoing the right to commence a timely proceeding, a mere inquiry or even a request for reconsideration outside the formal administrative review process will not render a prior determination non-final. ). In sum, the Board finds Prismatic s NOD to be time-barred and it is unnecessary to consider whether respondent waived its claim. Having found the NOD untimely, it is appropriate to grant respondent s motion to dismiss the petition. A-1 First Class Viking Moving & Storage, Inc. v. Human Resources Admin., 2012 N.Y. Misc. LEXIS 2619 (upholding dismissal of claim where NOD untimely); Mark Contracting NY, Inc., v. Dep t of Housing Preservation & Development, OATH Index No. 1615/13, mem. dec. at 8-9 (July 31, 2013) (motion to dismiss the petition as untimely granted); Manuel Elken Co., P.C. v. Dep't of Design and Construction, OATH Index No. 1010/07, mem. dec. at 5 (Feb. 22, 2007) (motion to dismiss petition granted where claim was time-barred). CONCLUSION This constitutes the final decision of the Board. All panel members concur. June 30, 2016 Astrid B. Gloade Administrative Law Judge/Chair

- 10 - APPEARANCES: PECKAR & ABRAMSON Attorney for Petitioner BY: HOWARD M. ROSEN, ESQ. ZACHARY W. CARTER, ESQ. CORPORATION COUNSEL Attorney for Respondent BY: CRYSTAL VENNING, ESQ.