TM Corp claim on CUC unfounded and past due—OAG

The Office of the Attorney General shares the Commonwealth Utilities Corp.’s view that no further payment should be made to TM Corp., which has insisted they have a $904,619 claim on CUC for a wastewater project completed years ago.

Essentially, TM’s claim is for a combination of standby costs and claims for “hard rock excavation” done during their project in the Chinatown Sewer Project in the early 2000s.

In a letter to CUC, assistant attorney general Christoper Timmons said the records reviewed reflect a disagreement between CUC and TM regarding delayed performance.

Timmons said, however, that the request should be denied based in part upon the compromise reached and reflected in a “Change Order 2.” This was a “no cost time extension” that encompassed the delays for which TM is seeking compensation.

“By entering into this change order, TM waived any claims it may have had for standby costs, and in turn, CUC waived its claims for liquidated damages for delayed performance.”

Timmons said that CUC procurement regulations governing the contract provide that “any dispute regarding these events should have been brought by the firm to CUC within 10 days of the facts giving rise to the dispute.

“And to the extent it disagreed [with CUC’s] determination it should have made a timely appeal,” Timmons added.

In the OAG letter, Timmons also concurred with CUC’s earlier analysis that the order of precedence for the contract terms and conditions gives “preference” to the “special provisions” in the contract. This, over the plans, specifications, or general provisions.

The special provisions, Timmons said, clearly indicate that no payment will be made for hard rock excavation.

“Accordingly this claim was properly denied,” Timmons writes.

And just like the standby issue, any claims should have conformed with CUC procurement regulations and made within 10 days of the facts giving rise to the claim.

“TM Corp. did not timely appeal the [CUC executive] director’s decision rendered on Aug. 25, 2003, stating ‘your claims for hard rock and standby charges are not justified and that [sic] no additional payment will be made for them.’ TM Corp. failed to exhaust its administrative remedies in this regard. Instead of following CUC procurement regulations…it is clear from the files that TM Corp. executed Change Order No. 2 on Nov. 10, 2003, in effect waiving its previously asserted claims.

“Having waived these claims and having failed to exhaust its administrative remedies, TM Corp. attempted to revive its claims again in August of 2004, then again in 2007, and now again in 2015. Just as its requests were denied previously, they should be denied again,” Timmons said.

Timmons concluded that the company’s claims have long been “time barred” as a result of the applicable statute of limitations.

The OAG recommends that CUC and its board decline to further consider TM’s request, Timmons said, adding that should TM attempt to sue CUC for these claims, the Office of Attorney General would defend the Commonwealth against such charges.