Construction Forecast Issue Home

March 30, 2000

Contractor, King County face off over Redondo project

Caicos Construction’s lawyer discusses the Redondo Seawall case, telling what went wrong and how other contractors can avoid similar messes.

By SAM E. BAKER, JR.
Oles Morrison Rinker & Baker

Few construction claim settlements warrant public attention, but the construction industry can learn several valuable lessons from the recent resolution of Caicos Construction’s claims against King County concerning the Redondo Seawall project.

Our firm has been in many construction disputes, but none in which a contractor has endured any greater adversity - including overruns of nearly 100 percent in both cost and time to complete what today is undeniably an asset to the county. As the contractor’s attorney, this is our version of the events.

The project

The Redondo seawall was a most unusual challenge, even though it featured work components typical for a Puget Sound marine project. The work involved reconstructing Redondo Beach Drive South to be supported by a seawall built of H-pile and precast concrete. The project, which extended over one-half mile south of Salty’s Restaurant in Des Moines, was unusual due to its tight schedule and limited landward access - not to mention the extraordinary political interest it commanded. When it went out to bid in spring of 1996, the project had been under design for 10 years, during which time a public protest brewed over whether the old storm-damaged road should be converted to a park.

Expecting to take advantage of its extensive experience with marine related civil and earthwork construction, Caicos bid the project at just over $4 million, some $800,000 low. The specified duration was just five months. However, environmental regulations required that all work affecting the beach, principally the seawall, be constructed within a 3-1/2 month period called the "fish window." If the work within the fish window was not accomplished by Sept. 30, 1996, that work could not be restarted until 9-1/2 months later- which was politically unthinkable for the County.

The Redondo Seawall project involved reconstructing Redondo Beach Drive South to be supported by a seawall built of H-pile and precast concrete. The project, which extended over one-half mile south of Salty’s Restaurant in Des Moines, was unusual due to its tight schedule and limited landward access - not to mention the extraordinary political interest it commanded.

Caicos planned to mobilize in mid-June 1996, drive the pile - beginning with those furnished by King County, place the panels, proceeding to construct the roadway embankment and utilities in a smooth sequential flow, beginning (as the contract required) in the north and working south.

King County began to delay the work immediately, with its first H-pile arriving 10 days late, a long delay at the front of a mere 3-1/2 month period. Also, King County changed the first 51 piles (welded reinforcement was added) which were then not delivered until the later part of September 1996 - more than three months late. Thus, Caicos was forced to start its H-pile driving operations out of sequence several hundred feet from the contractually required project starting point.

Also, considerable difficulty was experienced in driving the H-pile to the specified depth of roughly 10 feet below the depth of the boring logs. The County agreed to pay to replace nine pile but refused to grant any time extension for piling delays. The refusal/failure to evaluate or even consider time extensions on this project, at least not until late in the game, after the fish window had closed, proved to be a big mistake for the County.

While Caicos toiled with the critical pile work, it experienced even more frustration with its precast supplier- for which the County bore no responsibility. The precast panels were conventional concrete wall components, but to meet the critical time frames imposed by the contract, it was necessary for the supplier to expedite normal lead time requirements such as for shop drawing submittals, form procurement, and concrete mix approval. Then to maintain a sequential (north to south) flow, panels would have to be cast and delivered in order rather than by type.

Unfortunately, the precast supplier contended from the outset that its bid did not contemplate a timing or sequence to meet the project schedule requirements. As the parties argued over the form of the supply agreement, valuable time was lost. The first panels were delivered over one month later than Caicos scheduled, and they were not in sequence. Thus, Caicos could not begin work behind the seawall until "special" panel types were delivered to fill the gaps created by the supplier’s chosen casting sequence. These special panels did not begin to arrive until late August 1996, nearly two months late.

County threatens default termination

On Sept. 11, 1996, King County took an unexpected and drastic step: it issued a formal notice threatening to default terminate the contract, charging that the contractor’s schedule and resources were not adequate to assure timely completion of work governed by the fish window closure. Default terminations are the most severe of all contract sanctions and by law can only be declared in the most compelling circumstances.

Following the Sept. 11 termination threat, Caicos and its bonding company’s representatives promptly met the County and reached agreement to avoid the termination. Caicos, by intensive acceleration, overcame undisputed months of delay and in fact did construct the seawall within the fish window (extended by Fisheries from Sept. 30 to Oct. 8, 1996). The impressive progress was unmistakable. The County issued a letter on Sept. 27 stating: "This letter constitutes written notice . . . that the breach described in our Sept. 11 letter has been remedied, and that Caicos is no longer in default . . . ."

However, at that very same time King County’s management became highly concerned over environmental issues and launched a personal attack on Caicos President David Berry, who also served as on-site manager. Incidents cited included: equipment operated once in the water; Caicos worked past 5 p.m. one evening; and concrete spilled in the water while filling a pile. Berry, who acknowledged these incidents occurred despite the exercise of care to avoid them, was ordered to demonstrate why he should not be removed as the project superintendent.

While meeting with the County on Sept. 27, 1996, to address Berry’s removal, Caicos’ crews encountered an unanticipated blue clay in excavating the northern portion of the beach, work put off until last because of King County’s piling delays. Unlike the beach materials encountered on the balance of the job, the excavated blue clay material created a "plume" when met by the rising tide. Reacting in a punitive fashion, King County cited Caicos for some $105,000 in "fines."

The incident received considerable attention. Area newspapers issued articles with headlines such as "Heavy fines levied against Redondo Drive contractor," "Road Project fouls Redondo shoreline" and "Multiple deficiencies found on Redondo Drive project." Nonetheless, Caicos reacted as promptly as the job restrictions allowed to remove the "blue clay" and complete the seawall. The following spring, Caicos defended its position before a King County Hearing Officer and was cleared of all environmental infractions except for $500 on an unrelated matter. The Hearing Officer made special note of Caicos’ marine work experience and history of permit compliance and attributed the "blue clay" incident to an "enmeshment of personalities."

In spite of Caicos’ efforts, King County issued its second notice of threatened termination for default on Oct. 1, 1996, contending primarily - but without noting that the permitting authorities had agreed to extend the deadline - that work specified to be completed by the Sept. 30 fish window closure was not accomplished. The notice went further, ordering that Berry be removed from the project.

Company president removed from project

Again the threat prompted meetings with Caicos and its bonding company, and agreement was reached to set aside the termination on the only basis King County would accept - Berry indeed was to be removed. Absent its leader, there was no chance Caicos could complete in an efficient fashion, even with new management arranged for by the bonding company.

With the seawall completed, Caicos’ replacement management immediately confronted the largest critical path delay on the project. King County had suspended all work above the seawall (most notably the concrete pile cap), contending that the H-pile were not within the 2-inch specified tolerance. Two inches was an unrealistic tolerance, and this had been noted both by the County’s geotechnical engineering report and by experienced contractors at the prebid conference.

Well after the piling were rejected and the pile cap had been delayed on the critical path over one month, King County finally referred the matter to the firm of Berger/ABAM, who designed the project. Berger/ABAM immediately issued a report concluding the pile were acceptable as placed; the concern was merely "aesthetic." Work was then authorized to proceed immediately.

Within three months after removing Berry, King County issued two more default notices. The first occurred on Nov. 20, 1996, the day after a severe storm destroyed some 600 feet of pile cap formwork which had finally been placed in anticipation of the first pile cap pour. As a condition to avoid the termination, Caicos and its bonding company had to agree to complete the job by Christmas 1996. That deadline was impossible, and the County’s own staff admitted it.

When the work was not finished by Christmas - to no informed person’s surprise - King County threatened once again to default terminate. This time the threat of termination was acknowledged by the County to be a means to preserve the County’s right to hold Caicos responsible for failing to achieve a Christmas completion.

By January 1997 (without Berry), Caicos had brought on another contractor, TEK Construction, which was ably moving the project toward completion, and that was openly acknowledged by King County.

Given the magnitude of the controversy, upon receipt of the fourth termination threat, Caicos hired our law firm. Our response on Caicos’ behalf, and with its surety’s concurrence, took the County by surprise: we encouraged the County to terminate the contract. After hearing this, I will long remember the question asked by the head of the County’s Road Services Division: "What do you recommend to avoid the termination?" On behalf of Caicos, we suggested partnering.

It was mid-January 1997 and still months remained to finish the job. We recommended that Caicos and King County work cooperatively with a top notch partnering facilitator to address the numerous field issues remaining, to complete the job as efficiently as possible and to finally address the claim issues on an objective basis. If relations could be improved, there was a chance the process would work. Construction claims rarely end up in court where the parties finish the project with a good working relationship. King County responded affirmatively, and Caicos had reason for optimism. Berry was allowed to participate actively and neutral construction consultants were jointly engaged to assist the parties with resolution of the claims.

The project was finished in March 1997 at enormous overruns in time and cost. The partnering efforts persisted, but it became obvious that the King County assistant prosecutor and its project level management would not buy into a negotiated result as recommended by the consultants. As a result, the partnering efforts failed.

Mediation to the rescue

Following the submission of Caicos’ claim, in November 1998, King County responded with an exceedingly aggressive claim response attacking Caicos’ position point by point with voluminous reference to the project documents, photographs and expert work product. After roughly one year of pretrial preparations including nearly 30 depositions, the case settled in January following two days of mediation.

The settlement figure was just below $3.8 million - much more than the County declined to pay in the partnering effort. The result was rewarding for Caicos because it was able to reimburse its surety and will surely get back into business at its historical level.

Lessons learned

After a major case comes to an end, it is much easier to look back at what could have been done differently. Did Caicos make mistakes? Perhaps it should have: (1) stepped forward and thoroughly explained its innovative plans, such as to recycle materials and better prepare the County for the need for extraordinarily prompt decisions in the face of the tight time demands of the job; (2) tied down its precast supplier in advance to definite schedule commitments or gone to a different entity altogether which better understood the importance of cooperating to meet project schedule requirements; or (3) put more effort into its schedule.

In my view, none of this would have made any difference unless the County management had been willing to work with its contractor and put the needs of the project above strict compliance with disputed specification requirements. In some cases, disputes originate due to inexperience or incompetence. That was not the case here despite the many accusations to that effect coming from both sides. Here, what was lacking was effective communication, and because of its absence, the extensive talent available on both the part of the County and Caicos was rendered inefficient. When that happens someone always loses.

Partnering could have worked and should have, but it is more than a process. It requires leadership to instill a cooperative attitude in an organization, and King County did not then understand that. Fortunately for Caicos, its surety had the foresight to help it survive until the loss could be placed on King County’s side of the ledger.