7.20 Vdot Contracts, Claims, and Claims Procedures

• Library: Virginia Construction Law Deskbook (Virginia CLE) (2019 Ed.)

7.20 VDOT CONTRACTS, CLAIMS, AND CLAIMS PROCEDURES

7.2001 In General. Road maintenance and construction contracts are among the largest contracts awarded by any public body. VDOT has an annual budget for Fiscal Year 2019 of $5.4 billion, $2.2 billion of which is for maintenance and operations (41 percent), and $1.7 billion for construction

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(32 percent). ⁴⁸⁴ Consequently, awarding these contracts and handling the claims arising from them are important duties for the responsible public bodies. Road and transportation contracts and claims are, like other public contracts, governed both by the statutes and the contract documents, which are discussed below.

7.2002 Contracts.

A. In General. For transportation-related projects in excess of $5 million, the Commonwealth Transportation Board (the "CTB" or "Board") is empowered to let all contracts, which are to be administered by VDOT. ⁴⁸⁵ For projects up to $5 million in value that are VDOT-administered contracts for highway construction, maintenance, and improvements, the Commissioner of Highways (the "Commissioner") has authority to let the contracts. ⁴⁸⁶

B. Compliance with the VPPA. VDOT is obligated to comply with the policies and procedures for letting construction contracts set out in the VPPA. ⁴⁸⁷ VDOT contracts are typically design-bid-build projects procured using competitive sealed bidding, for fixed prices based on a combination of lump sum and unit priced bid items. In addition, VDOT is permitted to award construction contracts on a design-build basis. ⁴⁸⁸ In cases of emergencies or when the project for construction or maintenance is reasonably estimated to cost less than $600,000, or under certain circumstances when VDOT enters into an agreement with a locality, VDOT may build or maintain any road using state or local employees. ⁴⁸⁹

Prior to bidding, prime contractors must prequalify with VDOT and receive a certification of prequalification, unless waived by the terms of the contract. ⁴⁹⁰ VDOT's rules and regulations regarding prequalification are

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available from VDOT's website. ⁴⁹¹ A contractor's prequalification must be renewed every two years, and a contractor may be disqualified and removed from the approved list as provided by VDOT's prequalification rules. ⁴⁹²

VDOT uses electronic ITB's and bid submissions. ⁴⁹³ Irregularities in bids may result in the bid being rejected. ⁴⁹⁴ Bids may be withdrawn only if the bidder does so prior to bid closing. ⁴⁹⁵ To protect the contractor from being awarded more contracts than the contractor is capable of performing, bidders are allowed to submit bids subject to a "conditional withdrawal" to allow a contractor to bid on more than one project for which bids are to be opened on the same date. ⁴⁹⁶ Bidders are not required to register with eVA (the Department of General Services' electronic procurement website) to submit a bid, but the lowest responsive and responsible bidder must register prior to being awarded the contract. ⁴⁹⁷

At the time and place specified in the notice of advertisement, electronic bids are decrypted, opened, printed to paper and, along with all other bids, read publicly. Bid openings are streamed on YouTube and bid results may be viewed in real time on the Bid Express website. ⁴⁹⁸ As-read results will be posted on the Construction link on VDOT's website as soon as possible on the day of reading. ⁴⁹⁹

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Bids will be compared on the basis of a summation of the products of the quantities shown in the bid schedule and the unit bid prices. ⁵⁰⁰ VDOT may correct arithmetical errors in the bid prior to such comparison. ⁵⁰¹ The results of the comparisons will be available to the public after the determination is made to award the contract. ⁵⁰²

C. Essential Requirements. The essential requirements for VDOT contracts are provided by statute and include the following provisions: (i) the time when work must commence and when the contract must be completed; (ii) the time and manner of payment for the work; and (iii) a requirement that the contractor comply with all requirements, conditions, and terms of the contract, including but not limited to environmental permits that are part of the contract. ⁵⁰³ Standard general conditions and specifications for all VDOT contracts are published by VDOT in its Road and Bridge Specifications. ⁵⁰⁴ For a particular project, the specifications in the manual are modified and supplemented with special provisions, supplemental specifications, and special provision copied notes. ⁵⁰⁵

If the contractor violates a contract provision and the violation results in environmental damage or if the contractor violates environmental laws or environmental permits, VDOT may suspend the contractor from future bidding or initiate debarment. VDOT may also recover either (i) the loss or damage that VDOT suffered as a result of the violation or (ii) any liquidated damages provided for in the contract, and (iii) reasonable attorney fees and expert witness fees. ⁵⁰⁶

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7.2003 Claims Procedures.

A. Notice of Intent to File Claim. Knowledge of an existing or potential claim gives VDOT the opportunity to mitigate or eliminate the cause of the claim. Consequently, giving VDOT timely notice of intent to file a claim is critical to preserving a contractor's right to make a claim. ⁵⁰⁷ The contractor must submit to the project engineer a written statement specifying that it is a notice of intent to file a claim. In addition, the notice must:

1.	Describe the act or omission on the part of VDOT or its agents that allegedly caused damage to the contractor;
2.	Describe the nature of the claimed damage;
3.	Provide an itemized list of materials, equipment, and labor for which additional compensation will be claimed. 508

Once the contractor has given notice of a claim for additional compensation, it must give VDOT the opportunity to keep an actual cost record of the disputed work, or else the claim is waived except to the extent that it can be substantiated by VDOT's records. The contractor and VDOT should compare records and bring them into agreement each day. Neither submittal of a notice of intent nor VDOT's keeping of cost records establishes the validity of a claim. ⁵⁰⁹

The notice of intent is a "condition precedent" to filing and maintaining a cause of action against the Commonwealth, meaning that this is not merely a procedural requirement but a part of the substantive cause of action. Giving the notice in the time and manner required is an element of the contractor's prima facie case. ⁵¹⁰ Neither actual notice nor meeting minutes can satisfy the requirement for notice, which must be a written document

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clearly stating the contractor's intention to file a claim given to VDOT by letter or equivalent communication at the appropriate time. ⁵¹¹ An oral notice or statement will not be sufficient, nor will a notice or statement given after the event. ⁵¹²

The contractor must give VDOT notice of intent to file a claim at the time of the occurrence or the beginning of the work on which the claim is based. ⁵¹³ Where a contractor relies on "time of occurrence," the "time of occurrence" in some instances is deemed to be when the parties develop a legitimate dispute over the claim or when VDOT denies a request for additional compensation. ⁵¹⁴ The VDOT Road and Bridge Specifications define an occurrence as, among other events, the denial of the contractor's timely request for time, additional compensation, change order, adjustment, or other request under the contract, or any other decision, instruction, directive, or order that it believes will result in a claim. ⁵¹⁵ If the project engineer gives the contractor an order that the contractor is certain will result in damage if implemented, the contractor must immediately take written exception to the order. ⁵¹⁶

Given that claims arise under different circumstances, the court must consider the circumstances of each case to determine whether the notice requirements have been met. ⁵¹⁷ The court will enforce the contract as written, and the contract becomes the law of the case unless the contract is repugnant to some rule of law or public policy. ⁵¹⁸

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The VDOT Road and Bridge Specifications, which are incorporated into VDOT contracts, contain terms and conditions of the contract as well as technical specifications for the work. Section § 105.19 pertains to the submission and disposition of claims in a manner consistent with the VDOT claims statutes, which are discussed below.

B. Submission of and Response to Claim.

1. Time Limit for Submission. At the completion of any contract for the construction of any state highway project awarded by the Board or by the Commissioner, if the contractor or its subcontractors or material suppliers have a claim for costs and expenses caused by the acts or omissions of VDOT, the contractor may, within 60 days after the final estimate date, deliver to VDOT, through proper administrative channels as determined by VDOT, a written claim for the contractor...