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NYC 9/11 Public Portal Document

The DEP Final Determination letter, in denying FKDP’s claim, stated that FKDP is not entitled to receive payment for toe storage of material because FKDP received advanced payment under General Condition Article 2E and by doing so FKDP is responsible to pay shipping costs. It cites a paragraph 5 of Article 2E which it claims states that costs, charges and eiipenses arising out ofthe storage ofsuch materials shall be paid by the Contractor.

The DEP is not only confused wito toe facts of this matter but it has also misapplied General Conditions Article 2E. The correct facts and this misapplication are discussed below:

1) The initial paragraph of Article 2E specifies in what circumstances the article should be utilized. It states that “In order to better insure the availability ofmaterials, fixtures, and equipment -when neededfor the work, the Commissioner may authorize partied poymentfor certedn materials, fixtures and equipment, prior to their incorporation in eiccordance with the work...” This was not toe case in toe present matter. In accordance wito toe DEP’s direction FKDP had its subcontractor purchased material, fabricated toe hood components, and pre-assembled two (2) hoods. Die final step was to deliver toem directly to toe project site by April 29,2005 at an onsite location to be determined by toe DEP. FKDP was only required to supply these items and there was no intent by either toe DEP or FKDP that FKDP would have to incorporate toe hoods into toe work; installation would be performed by a future contractor. At no time during tois process did FKDP request any payment from toe DEP under Article 2E for toe hoods. In fact what FKDP had expect to do was deliver toe material to a H&S designated storage area on toe project site and be paid 100% of toe change order amount less retainage. Unfortunately, toe area designated for project site storage was not available when the hoods were ready for delivery and FKDP was directed to store toe hoods off site. Diis unanticipated storage cost was never included in any change order or m any price H&S negotiated for toe hoods. At toe time FKDP had no concern toat it would be paid for its storage costs. In fact, H&S’s field memo REO-57G-2841 dated May 27,2005 not only confirmed toat toe hoods would not be installed but also stated that toe cost for delivery and storage of toe hoods would be addressed in change order BB-57G-58R. However, for unknown reasons toat were inconsistent with every prior statement made by H&S, a field memo, REO 57G-3275 dated March 6, 2006, was issued by H&S denying FKDP its rightful payment of storage costs. Subsequent, on August 18, 2005 (Payment Requisition No. 74), when it became apparent that toe DEP was not in a hurry to take delivery of toe hoods at toe project site, FKDP did finally request partial payment for toe hoods imder Article 2E. this was toe only way that it would be able to receive some payment for toe money it had expended. At no time did FKDP waive its rights to receive storage costs, which had never been included in toe original change order.

2) The DEP relied on paragraph 5 of Article 2E as its justification for denying storage cost As stated above, toe DEP claims that it places toe obligation to pay for all costs, charges and expenses arising out of toe storage of materials on toe Contractor. Die DEP cannot rely on Article 2E for two (2) reasons. One, Article 2E is not applicable in toe present situation because FKDP did not seek advanced payment - this is toe basic requirement for applying this article, and two, there is no paragraph 5 in toe Article 2E that is included in toe contract documents for BB-57G. Article 2E contains just two (2) paragraphs and neither paragraph contains language that would prohibit toe contractor from receiving payment for storage costs. [See attached]

3) This is not a unique situation. The DEP has paid FKDP to store other items offsite when storage was (1) not available at the site and (2) toe items were no longer intended to be incorporated into toe work. For example, toe mstallation of seven (7) large sewage pumps was removed from toe BB-S7G scope of work. These pumps were manufactured for toe project by Fairbanks Morse. Since there was no space available at toe project site to store these pumps toe DEP paid FKDP for toe costs associated wito toe short and long term storage of the pumps. Refer to change orders BB-57-167 and BB-57-169.

4) FKDP submitted invoice documentation demonstrating what its subcontractor had paid to store the hoods for two (2) years offsite as it waited for H&S to finally release the hoods for delivery to toe site. H&S had no interest in discussing this storage cost issue with FKDP. As a result, there was no agreement between toe parties regarding toe type of proof of payment that the DEP would require.

NYC-WTC_000159292