CBCA 6149

CBCA 6149 GRANTED IN PART; CBCA 7071 AND CBCA 7597 DENIED: March 21, 2025 CBCA 6149, 7071, 7597 ALARES CONSTRUCTION, INC., Appellant, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. Douglas L. Patin and Lee-Ann C. Brown of Bradley Arant Boult Cummings LLP, Washington, DC, counsel for Appellant. Jennifer L. Hedge, Office of General Counsel, Department of Veterans Affairs, Pittsburgh, PA; and Kathleen E. Ramos, Office of General Counsel, Department of Veterans Affairs, Arlington, TX, counsel for Respondent. Before Board Judges LESTER, RUSSELL, and ZISCHKAU. LESTER, Board Judge. These appeals are before us following a five-day hearing that was conducted in March 2023 before Judge Jerome M. Drummond. During post-hearing briefing, Judge Drummond unexpectedly passed away. After a new presiding judge was assigned to the appeals, the parties elected to rely on the transcripts of the March 2023 hearing rather than again to present witnesses for live testimony before the new presiding judge. The parties also provided extensive and helpful closing arguments to the new presiding judge. CBCA 6149, 7071, 7597 2 In CBCA 6149, appellant, Alares Construction, Inc. (Alares), seeks to recover damages of $1,691,701.85 (a figure that has been revised several times during the course of litigation) for delays and changes on a construction project at a Department of Veterans Affairs (VA) medical center but with a reduction to its claimed general conditions costs to account for its settlement and release of some of its earlier claims under this contract. With the reduction, Alares tells us, the claim is approximately $1.5 million. Closing Argument Transcript (Oct. 18, 2023) at 66. Alares asserts that the VA caused all 765 days of delay on this project, but it seeks to recover extended general conditions for only 653 of those days. Appellant’s Corrected Pre-Hearing Brief (Mar. 7, 2023) at 5. Following a thorough review of the record, we find that, although there were some defects in the specifications for the project that had to be addressed and corrected, which cost Alares time and money and for which the VA is responsible, the project design was not, as Alares alleges, “riddled with fundamental design errors.” Appellant’s Corrected Pre-Hearing Brief at 1. To the contrary, much of the delay on this project was the result of Alares’ difficulty in managing and coordinating the work of its subcontractors. We reject Alares’ contention that the VA’s issuance of cure notices and a show cause notice, as well as the VA’s purported refusal to acknowledge its alleged responsibility for changes in a timely manner, were motivated by fears about not having sufficient appropriations to fund the contract or as retaliation for Alares’ submission of claims. We find that, in CBCA 6149, the VA is responsible for 218 days of delay to the critical path of performance on this project but that Alares bears responsibility for the remaining delays. In CBCA 7071, Alares seeks to recover direct costs associated with alleged extra work to the patient lift supports in several rooms of the building, and, in CBCA 7597, Alares asserts entitlement to the same damages that it seeks in CBCA 6149 on the basis of the VA’s alleged breach of the implied duty of good faith and fair dealing. We deny both of those appeals. Findings of Fact I. The Contract On April 28, 2016, the VA awarded a firm-fixed-price construction contract (contract VA241-16-C-0037 (the contract)) to Alares1 for the replacement/relocation of the deficient 1 The contract was originally awarded to Alares LLC, see Appeal File, Exhibit 1 at 2, but, on May 25, 2016, was novated through contract modification P00001 to identify Alares Construction, Inc., as the contractor. Appeal File, Exhibit 14 at 1-31. CBCA 6149, 7071, 7597 3 Intensive Care Unit (ICU) at the Providence VA Medical Center in Providence, Rhode Island, for a lump-sum price of $7,753,880.20. Appeal File, Exhibit 1 at 1-2.2 The project required the construction of a two-story addition to an existing building. See Exhibit 12. Alares was to connect the addition to the existing building through an elevated hallway, which would run between the second floor of the addition and a second-floor opening in the existing building. See id. Contract duration was to be 425 calendar days from the date that the VA issued the Notice to Proceed (NTP).