United States District Court, D. Rhode Island.

C.A. No. 07-129ML.

ADP MARSHALL, INC., a Division of Fluor NE, Inc., Plaintiff/Counter­claim Defendant, v. NORESCO, LLC and Lumbermens Mu­tual Casualty Company, Defen­dants/Counterclaim Plaintiffs/Third-­Party Plaintiffs, v. St. Paul Fire and Marine Insurance Company and Fidelity and Deposit Company of Maryland, Third-Party Defendants.

April 30, 2010.

Andrew J. Tine, Law Office of Andrew J. Tine, Bristol, RI, for Plaintiff/Counter­claim Defendant.

Cheryl B. Pinarchick, Matthew P. Sgro, Brown Rudnick Berlack Israels LLP, Bos­ton, MA, William M. Dolan, III, Brown Rudnick Berlack Israels LLP, Providence, RI, for Defendants/Counterclaim Plain­tiffs/Third-Party Plaintiffs.

DECISION AND ORDER

MARY M. LISI, Chief Judge.

Plaintiff ADP Marshall, Inc. (“ADPM”), a subsidiary of Fluor NE, Inc., brings this action for breach of contract against defen­dant Noresco, LLC (“Noresco”) in connec­tion with the construction of a cogenera­tion facility (the “Facility”) for the Rhode Island Department of Mental Health, Re­tardation and Hospitals (“MHRH”). ADPM has also raised claims pursuant to a payment bond issued by Noresco’s sure­ty, Lumbermens Mutual Casualty Co. (“Lumbermens”). Both Noresco and Lumbermens have asserted counterclaims against ADPM1 as well as third-party claims against ADPM’s co-sureties, St. Paul Fire and Marine Insurance Company (“St. Paul”) and Fidelity and Deposit Com­pany of Maryland (“Fidelity”), together with St. Paul, the (“Co-Sureties”). The action was tried by the Court sitting with­out a jury and the parties have submitted extensive post-trial memoranda. The Court’s Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52(a) are set forth below.

BACKGROUND

I. Procedural History

On April 6, 2007, ADPM filed a com­plaint in this Court against Noresco for breach of contract, book account, unjust enrichment, quantum meruit, and attor­ney’s fees. ADPM also asserted a bond claim against Lumbermens. ADPM sought payment from Noresco for “unpaid labor, materials and costs” in connection with a construction agreement it had en­tered with Noresco in April 2002. Based on an approved contract price of $13,643,156 and ADPM’s receipt of pay­ments totaling $12,415,451, ADPM initially sought payment from Noresco in the amount of $1,227,705.2 Complaint ¶¶ 14-­16. In addition, ADPM sought $1,629,222 for what it claimed as uncompensated in­creases in scope of work.3 Id. ¶ 17.

Noresco asserted a counterclaim for breach of contract; a claim against ADPM’s payment bond; and a claim for specific performance for the delivery of “as-built” drawings of the completed Facil­ity, certificates of inspection, operational and maintenance manuals, and a valid Cer­tificate of Occupancy. Further, Noresco brought a third-party claim against the Co-Sureties for refusing to indemnify No­resco when ADPM failed to pay its subcon­tractors.

On April 7, 2009, this Court dismissed several claims which had been withdrawn or rendered moot; in the same order, the Court denied the parties’ cross motions for partial summary judgment. ADP Mar­shall, Inc. v. Noresco, C.A. No. 07-129ML, Docket No. 107 (D.R.I. April 7, 2009). During the course of discovery, the parties engaged in settlement discussions but were unable to resolve their differences. Before commencement of the trial, both parties presented numerous motions in li­mine, which the Court took under advise­ment.

II. The Trial

The Court conducted an eight-day bench trial from September 21 through Septem­ber 30, 2009. Prior to trial, the parties submitted a Joint Statement of Undisput­ed Facts (hereinafter cited as “SUF”) that listed 81 statements regarding the case on which all parties agreed. C.A. No. 07-129 ML, Docket No. 127. At the trial, ADPM presented two witnesses as part of its case-in-chief: (1) Edward McNaught (“McNaught”), who was employed by ADPM as project manager on the Project4 ; and (2) Douglas Coppi (“Coppi”), who testified as an expert on construction scheduling. Noresco presented four wit­nesses: (1) Wade Carleton (“Carleton”), Y.P. of Construction for Noresco; (2) Theresa McKinnon (“McKinnon”), general counsel for Noresco; (3) Bradford Bright (“Bright”), who testified as an expert on the scope of construction projects and analysis of change orders; and (4) Ken­neth Monson (“Monson”), who testified as an expert on construction schedule analy­sis and delay. The parties elicited testi­mony from their respective witnesses with reference to more than 230 multi-page ex­hibits, including construction contracts and attachments; communications between the parties; change order requests with appli­cable backup information; daily reports; design sketches; and detailed construction plans. In addition to Exhibits 1 through 952,5 which were admitted by joint consent of the parties, the Court admitted into evidence approximately two dozen disput­ed exhibits. On the fourth day of trial, ADPM and Noresco submitted a three-­tabbed stipulation (the “Deviation Stipula­tion”), which listed certain change order requests submitted by ADPM that were (1) approved by Noresco but not paid to ADPM; (2) not approved by Noresco and in dispute; or (3) initially claimed by ADPM but withdrawn or reduced in the course of discovery.6 In addition to listing the various change order requests, the jointly submitted document also describes their payment status. For a majority of requests categorized as “Approved by No­resco but Not Paid to [ADPM],” a note indicates that Noresco paid the Subcon­tractors directly. Deviation Stipulation, Tab 1. Similarly, of the disputed devia­tions, a number are noted to have been “Mettled by Noresco directly to subcon­tractors,” or resulting in “[u]ndisputed credits to Noresco.” Id., Tab 2, p. 2.

At the conclusion of the trial, the parties were requested to submit post trial memo­randa for the Court’s consideration. The findings of fact that follow herein are based on the Court’s thorough evaluation of the evidence and its determination of the relevancy and substance of the various witnesses’ testimony.

FACTS

I. The Prime Contract

On September 25, 2000, Noresco entered into the “Howard Center Cogeneration Project Design and Construction Agree­ment” (the “Prime Contract”) with MHRH to “furnish turnkey construction services to design, permit, build, install, startup, test, and train operators for a cogeneration facility” (the “Facility”) at the Pastore Center in Cranston, Rhode Island (the “Project”). SUF ¶ 1, Ex. 1 p. Noresco 00003797. A cogeneration facility pro­duces steam for heat and electricity for use or sale to a local power grid. See URI Cogeneration Partners, L.P. v. Bd. of Gov­ernors for Higher Educ., 915 F.Supp. 1267, 1273 (D.R.I.1996). The Project included the construction of a new cogeneration plant with two electricity generating tur­bines, two heat recovery boilers, and a stand-alone boiler. The Facility was to be built adjacent to an existing boiler facility which contained older equipment and was, in part, in disrepair. Trial Tr. vol. I, 17:18-18:3, Sept. 21, 2009.

The price for Noresco’s work under the Prime Contract was set at $27,550,919 (the “Guaranteed Maximum Price”), subject to approval of the performed work and au­thorized changes in the work. Ex. 1 ¶ 6.1. Attached to the Prime Contract as Exhibit I are the technical specifications which de­fine Noresco’s scope of work and include preliminary drawings of the Facility. Ex. 2. Noresco obtained performance and pay­ment bonds from Lumbermens for the Project, which guaranteed payment of any subcontractor claims asserted against No­resco. Ex. 1, Noresco 0000454-460, Ex­hibit VII to Prime Contract. Under the terms of the bonds, Noresco was obligated to defend and indemnify Lumbermens against such claims.

On October 10, 2001, Noresco provided a letter of intent to ADPM, informing it that Noresco intended to enter into a subcon­tract with ADPM no later than October 31, 2001, in order to engage ADPM for con­struction management services for the Project. SUF 6. At the same time, Nores­co provided to ADPM an Inspection Re­port (referred to by the parties as the “Vortex Report”) regarding the presence of asbestos at the existing facility. SUF 5. On October 12, 2001, Noresco provided ADPM with certain design drawings for the Project, which were labeled “75% com­plete.” SUF 7.

II. The Purchase Orders

Prior to ADPM and Noresco entering into the Procurement and Construction Agreement (the “Agreement”) that is at the heart of this dispute, Noresco issued a series of purchase orders to ADPM which engaged ADPM’s pre-agreement services. The parties understood that, once the Agreement had been executed, it would govern their relationship and the purchase orders would be incorporated into the Agreement.

On November 14, 2001, Noresco issued a $500,000 purchase order (the “Purchase Order”) to ADPM and requested it “to proceed with services required prior to final contract negotiations and execution of a sub-contract for construction manage­ment services” for the Project. SUF ¶ 8, Ex. 401 p. 1. The Purchase Order provides that, if “a separate subcontract or other agreement has been entered into between the parties ... the separate agreement shall control in the event of conflict.” Id. Following issuance of the Purchase Order, ADPM prepared a Project schedule and began to hire subcontractors to perform some of the initial work on the Project site. Trial Tr. vol. 1,13:6-17.

On December 21, 2001, Noresco issued a revised purchase order (the “First Revised P.O.”) which added $250,000 to the total cost “due to delay in contract execution.” SUF ¶ 10, Ex. 402 p. 5. Like the original Purchase Order, the First Revised P.O. states that “upon final execution of the subcontract, this purchase order shall be amended to include the firm fixed price, scope, schedule, and terms and conditions of that agreement.” ¶ 10, Ex. 401. On the same day, ADPM’s project manager McNaught presented a first payment re­quest to Noresco for $678,127, reflecting a 5% retainage. SUF ¶ 11, Ex. 8. As McNaught’s request acknowledged, the initial contract sum, then set at $11,821,410, already encompassed the first requested payment. Ex. 8. Noresco paid $678,127 to ADPM on March 12, 2002. SUF ¶ 16.

On April 2, 2002, Noresco issued a sec­ond revised purchase order (the “Second Revised P.O.”) to ADPM to “add all future work performed by [ADPM] as outlined in accordance with the subcontract agree­ment dated March 22, 2002.” Ex. 957 p. 107. The Second Revised P.O. reflects a fixed contract price of $12,365,105. SUF ¶ 32, Ex. 957 p. 101. Shortly thereafter, ADPM secured performance and payment bonds in the amount of $12,365,105 from St. Paul and Fidelity as Co-Sureties and Noresco as Obligee. Ex. 406, 407.

On December 3, 2003, Noresco issued a final revised purchase order to ADPM re­flecting an increase of the authorized amount under the construction contract to $13,478,498, to include approved change order work. SUF 34. Noresco has paid a total amount of $12,415,451 to ADPM. SUF 35.

III. The Agreement

On or about April 12, 2002, ADPM and Noresco entered into the Agreement, dat­ed March 22, 2002, which engaged ADPM “to provide comprehensive construction services, and procurement services ... and support for its startup and testing.” SUF 17, Ex. 14 p. 9. The Agreement states that it includes “all Attachments hereto and any items specifically incorporated by reference.” Ex. 14 p. 10, Art. 1.3. The following is a summary of the most perti­nent provisions of the Agreement; addi­tional sections will be discussed in this Decision and Order as necessary.

A. Scope of Work

The Agreement generally defines the work to be undertaken by ADPM (the “Work”) as “collectively all services and duties, obligations, and responsibilities re­quired to be undertaken by [ADPM] hereunder or in connection herewith, in­cluding those relating to the procurement of materials, construction and renovation, coordination and Commissioning, and cali­bration of skid mounted sensors and transmitters.” Ex. 14 p. 15, Art. 1.60. The Work, which is described in further detail in Article 1.60, also includes “all equipment, labor and materials, with sole [sic] the exception of the Noresco Provid­ed Equipment and Noresco Supplied Sys­tems, required for a complete and fully functioning Facility ... all as set forth in this Agreement, and its Attachments.” Ex. 14 p. 15. Art. 1.60. Under the Agree­ment, ADPM also assumed the responsi­bility “to familiarize itself with the scope of supply of the Noresco Provided Equip­ment and Noresco Supplied Systems.” Id. The definition of “Work” includes an acknowledgment that the Design Docu­ments were “in some respects conceptu­al.” Id. Nevertheless, ADPM’s scope of work included “all items to be depicted on the final drawings, except to the extent the final design materially differs from the Design Documents.” Id.

B. Noresco Provided Equipment

Pursuant to Article 1.44 of the Agree­ment, Noresco was to provide certain equipment packages to ADPM for installa­tion and preparation for startup. Ex. 14 p. 13, Art. 1.44. The equipment, which in­cluded gas turbines, heat recovery steam generators (“HRSGs”), and various boil­ers, compressors, pumps, and tanks, is fur­ther described in Attachment II to the Agreement, and depicted on shop drawings set forth in Attachment XIX. Under the Agreement, it was ADPM’s responsibility to install and start up the equipment and to provide oil and propylene glycol as needed for lubrication and transport. Id.

C. Noresco Supplied Systems

Noresco’s responsibilities also extended to supplying certain systems such as fuel oil tanks, OEMs (continuous emissions monitors) and opacity meters, and a con­crete stack with metal liners (the “Stack”), to be installed by Noresco specialty con­tractors. Ex. 14 p. 15, Art. 1.61. Under the Agreement, ADPM was required to schedule and coordinate the installation of the Noresco provided systems “so that it is performed efficiently and in proper se­quence.” Id. In addition, ADPM was re­quired to furnish a foundation, piping con­nections, and power and control wiring for the fuel oil tanks; provide an electrical power circuit to the CEM Subcontractor; and supply a foundation, connecting duct-­work, insulation, and expansion joints nec­essary for the Stack. Ex. 14. p. 16, Art. 1.61.1.

D. 75% Design Documents

The Agreement refers to certain design documents (the “Design Documents”) that were issued and delivered to ADPM on or about October 12, 2001; these drawings were labeled “75% complete.” Ex. 14 p. 57, Attachment I, Art. 3. With respect to the completeness of the Design Docu­ments, Article 1.60 provides as follows:

It is acknowledged that the Design Documents are in some respects concep­tual. However [ADPM’s] scope of Work includes all items to be depicted in the final drawings, except to the extent the final design materially differs from the Design Documents. It is acknowledged that notwithstanding any provision of the Design Documents to the contrary, [ADPM] is to provide for the Facility a pre-engineered metal building. Ex. 14 p. 15 (Emphasis added).

The Design Documents included the “Drawings and Specifications” referenced in Attachment XVIII to the Agreement and listed in Attachment I, Ex. 14 pp. 58-­62.8 ADPM received “issued for construc­tion” drawings on March 15, 2002; these drawings purported to be 100% complete, however, they were subsequently amended and reissued. Ex. 214. As the Project progressed, the Design Documents were amended to incorporate additional details necessary for construction. ADPM was responsible to provide weekly drawings (the “Record Drawings”) that “completely and accurately portray[ed] the work done to that time.” Ex. 14 p. 25. At the con­elusion of the Project, ADPM was required to furnish so-called “as-built” drawings (the “as-builts”)9 to reflect the final status of the completed Facility. Ex. 14 p. 78, Attachment VI, Part B.

E. Technical Specifications

Pursuant to the Agreement, ADPM ac­knowledged and agreed “to perform the Work in accordance with the provisions of this Agreement, including without limita­tion the Technical Specifications attached hereto as Attachment I.” Ex. 14 p. 9. At­tachment I to the Agreement (“Attach­ment I”) lists the technical specifications of the Project, which include (1) the Prime Contract and Exhibit I thereto (“Exhibit I,” setting forth the Prime Contract’s tech­nical requirements), that were “previously provided to [ADPM];” and (2) the “Nores­co 75% design drawings and specifications issued on October 12, 2001 [to] clarify ar­eas of Exhibit I that were not fully devel­oped.” Ex. 14 p. 57. In addition, Attach­ment I contains the following language:

It is intended that the drawings and specifications establish design and oper­ating conditions and that it [sic] indicate general construction and special features of the desired equipment which is com­plete and operable when installed and operated in accordance with the manu­facturer’s recommendations. Incidental items which are essential for complete and operable units, but which may not be specifically described in the specifica­tions or not shown in the drawings, shall be included and shall be of the best available quality at no additional cost to Noresco or to [MHRH]. Ex. 14 p. 57.

F. Fixed Price

The Agreement quotes a “Fixed Price” for ADPM’s work in the amount of $12,365,105, subject to changes in the work as described therein. Ex. 14 pp. 28-37, Art. 6.1, 7. The Fixed Price also includes a sum of $ 1,052,870 in various allowances (the “Allowances”) that provide specific amounts for work that was not clearly defined at the onset of construction. Ex. 14 p. 28, Art. 6.1.1. Trial Tr. vol. I, 29:12-­15. To the extent allowance items exceed­ed or fell below the corresponding allow­ance amounts, the Fixed Price was to be adjusted. Id.

G. Milestone Payments

Payment to ADPM for completed work was based on the “accomplishment of milestones and events, each of which rep­resents a specific percentage of the Guar­anteed Maximum Price10 and the costs as­sociated with the allowances.” Ex. 14 p. 73. A schedule detailing such milestones and events (the “Milestone Schedule”) is provided in Part B of Attachment VI to the Agreement. The Agreement sets forth April 2003 as the Milestone Deadline for Mechanical Completion and Readiness for Testing11, SUF ¶ 28, Ex. 14 p. P. 89, and it required ADPM to meet such dead­lines “unless the period for completion is extended in accordance with this Agree­ment.” SUF 30, Ex. 14 p. 17. Readiness for Testing required Noresco’s written ac­ceptance of ADPM’s certification that “the Facility is mechanically complete except for remaining Punch List12 items and the Facility, including all equipment and sub­systems are ready for energized and oper­ated (Startup) as set forth in Section 12.3 of the Agreement.” Ex. 14 p. 86, Attach­ment VIII.

H. Bonds

Article 9 of the Agreement required ADPM to “provide a performance and la­bor and payment bond in the amount of the Fixed Price” which was to remain in effect until Final Acceptance of ADPM’s performance under the Agreement. Ex. 14 p. 39, Art. 9.1.

I. Exclusions and Clarifications

Attachment XX to the Agreement pro­vides a list of items (the “Exclusions and Clarifications”) that ADPM either agreed to provide or specifically excluded from the Agreement. Ex. 14 pp. 121-126. Pursu­ant to Attachment XX, ADPM was not required to perform certain tasks specified therein, which included, inter alia, archi­tectural and engineering services; engi­neering services for the process/system work; obtaining any regulatory approvals required by federal, state or local authori­ties; and paying electric company charges. Id. at 123. ADPM excluded asbestos abatement outside the area to remain ac­tive in the existing building and on under­ground piping, but specifically included spot abatements for tie-ins. Id. at 121. Attachment XX also specifies some of the aspects of the pre-engineered structure which ADPM was required to furnish un­der the Agreement. Ex. 14 p. 122.

J. Liquidated Damages

Article 10.3 of the Agreement contains the following liquidated damages provision for ADPM’s failure to meet the April 2003 Readiness for Startup Milestone:

In the event [ADPM] fails to achieve Readiness for Startup on or before the Readiness for Startup Milestone Dead­line (as the same may be amended from time to time), [ADPM] shall be liable to Noresco as liquidated damages and not a penalty, the sum of Three Thousand Dollars ($3,000.00) for each day after the Readiness for Startup Milestone that Readiness for Startup is not achieved. Ex. 14 p. 42, Art. 10.3(b).

Once MHRH acknowledged Readiness for Startup beyond the April 30, 2003 13 deadline, ADPM and Noresco were re­quired “in good faith to endeavor to agree on the amount, if any, of liquidated damages” or to determine the matter in accordance with expedited arbitration procedures. Ex. 14 p. 42, Art. 10.4. All liquidated damages payable by ADPM under the liquidated damages provision of the Agreement became due “within thirty (30) days following the date Noresco sub­mits to [ADPM] an invoice therefor.” Ex. 14 p. 33, Art. 6.7. To the extent Noresco was in default of its payment obligations to ADPM, no liquidated dam­ages could be charged against ADPM. Id.

K. Merger Clause

Article 18.7 of the Agreement is a merg­er clause which states as follows:

This Agreement, which includes the Attachments referred to herein, repre­sents the entire understanding of Nores­co and [ADPM] with respect to the sub­ject matter hereof. In the event of a conflict between the Agreement and the Attachments, the Agreement shall gov­ern. No prior oral or written under­standing shall be of any force or effect with respect to any matter covered here­under. This Agreement may not be modified or altered except in writing signed by both parties. Ex. 14 pp. 52-­53, Art. 18.7 (Emphasis added).

L. Entire Agreement

Finally, the Agreement lists 22 separate Attachments that are “made part of’ the Agreement, including, as part of the tech­nical specifications in Attachment I, the Prime Contract and Exhibit I thereto. Ex. 14 pp. 53-54, Art. 18.11. Article 18.11 further provides that “[t]o the extent of a conflict between the [Agreement] and the Rhode Island General Conditions of Purchase 14, the provision imposing the higher standard, duty, cost, or obligation on [ADPM] shall govern.” Ex. 14 p. 54.

IV. The Subcontracts

To perform most of the work required under the Agreement, ADPM entered into various agreements (the “Subcontracts”) with a number of specialized subcontrac­tors (the “Subcontractors”). See, e.g. Ex. 217, 218, 219, 220, 221, 222. Payment from ADPM to the Subcontractors for complet­ed work was due only after ADPM had received payment from Noresco (the “pay-­when-paid” clause, which mirrored the payment provision of the Prime Contract). As expressed in all of the Subcontracts, “[r]eceipts of funds by [ADPM] from Own­er 15 is a condition precedent to [ADPM’s] obligation to pay contractor under this Agreement, regardless of the reason for Owner’s nonpayment.” Subcontracts Sec­tion 6. 8, Ex. 217, Document page 6 of 9; Ex. 218, doc. p. 5 of 8; Ex. 219, doc. p. 5 of 6; Ex. 220, doc. p. 5 of 9; Ex. 221, doc. p. 5 of 9; Ex. 222, doc. p. 6 of 9.

The Subcontractors submitted bills to ADPM for work as they performed it and, if ADPM considered such work outside of its scope under the Agreement, it submit­ted a change order request (“COR”) or “deviation” to Noresco and requested addi­tional payment for the particular task. Trial Tr. vol. I, 72:19-73:3. Noresco then made its own determination of whether the work was included in ADPM’s scope and either approved or disapproved the COR.

V. Asbestos Abatement

On October 8, 2001, Noresco provided ADPM with the Vortex Report for “infor­mation and use.” Ex. 741, 742, Trial Tr. vol. I, 93:10-94:14, SUF 5. The Vortex Report was based on “visually inspecting and assessing ... the condition of all known or assumed ACBM [asbestos con­taining building materials]” in the existing cogeneration plant. Ex. 742 p. 2. The Report had been issued by Vortex Inc. Consulting Services Division on June 30, 1995. Ex. 741 p. 1. As related by McNaught, ADPM relied solely on the Vortex Report in determining the scope of work it was required to perform under the Agreement. Trial Tr. vol. I, 96:21-97:2. ADPM also used the Vortex Report in configuring its bid package for the asbes­tos abatement subcontractor, Ascension Environmental, Inc. (“Ascension”). Id. 95:3-14.

While performing the preconstruction work under the Purchase Orders, ADPM discovered that the extent of the necessary asbestos abatement was far greater than previously anticipated. Ex. 168, Ex. 175, Trial Tr. vol. I, 99:21-104:4. On March 2, 2002, McNaught received a letter from Ascension, which expressed concern “over the conditions of the work areas per the specification and most notably the survey done by Vortex Inc.” Ex. 168 p. 2. Ascen­sion attached a report from MEI Environ­mental Inc. (“MEI”), the consultant Ascen­sion had hired in order to develop an asbestos abatement plan. Ex. 168 pp. 3-5. MEI alerted Ascension that it found the sampling performed for the Vortex Report insufficient. MEI concluded that “the va­lidity of the identification and quantifica­tion of all asbestos-containing building ma­terials within the specified areas is in question.” Ex. 168 p. 3. In addition, MEI noted the discovery of “multiple potentially hazardous substances that appear to be contaminated with asbestos-containing ma­terials.” Id.

Upon receipt of the letter from Ascen­sion, McNaught contacted Steven Bosland (“Bosland”), Project Manager for Noresco, and forwarded to him the information re­ceived from Ascension and MEI. Ex. 168 p. 1. McNaught informed Bosland that As­cension had been directed to “incorporate all necessary requirements” into the asbes­tos abatement plan to be presented to MHRH. McNaught also noted that “[w]e are tracking these potential impacts as ADP Marshall Deviation No. 000024.” Following a meeting with MHRH, McNaught submitted a revised schedule for asbestos abatement to Noresco on April 5, 2002. The schedule reflects that the abatement would have to be performed in stages, rather than all at once, and McNaught notes that there will be “a cost related” to the segmented abatement plan. Ex. 169 p. 2. McNaught’s April 5, 2002 communication also states that develop­ment of the abatement schedule “is a com­plicated effort, which is further hindered by the uncertainty related to the Tempo­rary City Water Booster Pumps.” Ex. 169 p. 2.

VI. Early Construction Delay

One of the first tasks on the Project was the relocation of site utilities, including a 16 inch waterline that was located in the footprint of the planned new building. Trial Tr. vol. II, 33:10-18, Sept. 22, 2009. In late November 2001, ADPM directed a request for information (“RFI”)16 to No­resco, in which ADPM noted a conflict with the routing of the planned waterline. ADPM proposed the employment of a tem­porary booster pump and relocation of the new main waterline around the northern side of the new boiler plant. Trial Tr. vol. II, 37:24-38:7, Ex. 96 p. 1 and ADPM Revision to P-300. Noresco agreed and incorporated ADPM’s proposed solution into the design, adding an additional pump in the process. Id. ADPM then encoun­tered significant delays in the implementa­tion of the design, in part because the temporary booster pumps could not readi­ly be obtained or were not compatible with the dimensions of the existing waterlines. As a result, the relocation of the waterline was not substantially completed until May or June 2002, pushing out several other subsequent activities, such as excavation of the new building footprint. Trial Tr. vol. II, 39:16^0:12.

VII. Readiness for Startup

Construction eventually progressed throughout 2002 and well into the second half of 2003. On September 7, 2003, more than four months after the April 2003 Readiness for Startup deadline had passed, ADPM submitted a “Certificate of Readiness for Startup” to Noresco, certify­ing that the Facility was “Mechanically Complete, except for remaining Punch List items” and that it was ready to be ener­gized and operated. Ex. 436.

In response, Noresco informed ADPM by letter dated October 2, 2003, that it would not accept ADPM’s certificate be­cause “the activities that we are able to complete in a start up capacity are very limited and require significant work around effort on those items necessary for mechanical completion that are not com­plete.” Ex. 437 p. 1. Attached to Nores­co’s response letter is a six page list (the “Incomplete Work List”) with outstanding items related primarily to the two HRSGs and Boiler No. 8. Noresco noted that “[n]one of the attached checklists have been officially submitted by ADPM for acceptance” and that no startup checklists for the major electrical equipment had been provided. Ex. 437 p. 1. The attached Incomplete Work List, which details “sig­nificant work items that are incomplete, many of which have a direct impact on Mechanical Readiness for Start up,” id. at 2, includes the HRSG, an essential piece of equipment in the Project. Trial Tr. vol. II, 10:15-24.

Between November 3, 2003 and Decem­ber 18, 2003, ADPM submitted a series of additional punchlists, detailing the devel­oping status of outstanding items required for acceptance of ADPM’s Certificate of Mechanical Readiness for Start-Up. Ex. 472, 473, 474, 475, 476, 477, 478.

On November 13, 2003, Noresco deliv­ered to MHRH a signed Certificate of Readiness for Testing for the Gas Turbine Generators and the HRSGs. The accom­panying coverletter notes that a separate certificate will be delivered with respect to Boiler No. 8, which is “currently being tuned with different firing tips.” Ex. 149 p. 1.

VIII. The Subcontractors’ Litigation

In September 2003, ADPM submitted to Noresco an application for payment of $690,374 related to work performed on the Project, App. 18, Ex. 133 p. 1. The pay­ment application was not accepted nor paid by Noresco. Trial Tr. vol. I, 72:10-14, Ex. 135 p. 1. ADPM then submitted two addi­tional payment applications for October and November 2003, for which Noresco also declined payment. Ex. 133 pp. 4-6. On December 9, 2003, McNaught submit­ted revised summary payment applications for September, October, and November 2003, now totaling $1,449,223. Ex. 37 p. 2. McNaught followed up with a letter to Carleton on December 12, 2003, express­ing his concern that “the Subcontractors are chasing ADP Marshall for open Change Orders, which have not been ap­proved and are not billable, and it makes it more difficult to fend them off if we are not paying them for billable items as well.” Ex. 135 p. 1.

A December 15, 2003 letter from McNaught to Carleton again requested payment of $1,449,223 for the months of September, October, and November 2003. In the letter, McNaught urged that “it is imperative Noresco provide these funds no later than Wednesday, December 17th, in order to assure we are able to fund our Subcontractors.” Ex. 37 p. 1. According to McNaught, the Subcontractors “were more difficult to deal with” if ADPM did not pay them, and McNaught was concerned that ADPM would not be able to issue checks so close to year’s end. Trial Tr. vol. I, 68:8-69:1.

On December 18, 2003, McNaught sub­mitted a “Deviation Status Report” to No­resco, summarizing all the currently open change orders. ADPM now claimed that $1,812,098 were outstanding, including $329,362 for early construction delay and $123,060 for Asbestos Abatement “due to Vortex Report Issues.” Ex. 113 pp. 2-3.

While ADPM made such increasing re­quests for payment to Noresco, ADPM refrained from paying its Subcontractors, relying on the pay-when-paid clause in the Subcontracts. At the time of McNaught’s December 18, 2003 letter, ADPM was a month and a half late paying the Subcon­tractors for September 2003. Trial Tr. vol. I, 68:25-69:11.

Previously, during the course of con­struction, Subcontractors had repeatedly requested relief from the pay-when-paid provisions in the Subcontracts. McNaught received permission from his Project Di­rector to pay some of the Subcontractors immediately, particularly those whose work at the Project had been completed. Trial Tr. vol. II, 92:25-93:14. ADPM, in turn, had appealed to Noresco for relief from the Milestone payment provision in the Agreement, and Noresco allowed ADPM to make partial billings against the Milestones after only a percentage of the work was completed. Id. at 96:21-97:8. Nevertheless, with respect to Subcontrac­tors who were still working on the Project and who were now owed considerable sums of money, ADPM was unable to fund their payments out of pocket. Id. at 93:15-94:1.

As McNaught conceded, ADPM’s prob­lems over paying its Subcontractors stemmed, at least in part, from the incon­sistency of the payment provisions in the Agreement and the Subcontracts. Trial Tr. vol. II, 99:7-100:23. Although Article 2.1 of the Agreement required the Subcon­tracts to be consistent with the Agree­ment, the Subcontracts provided a pay-­when-paid clause instead of a Milestone schedule, which resulted in Subcontractors not being paid for completed work if No­resco declined payment applications sub­mitted by ADPM. Id.

On December 31, 2003, Noresco served ADPM with a “Notice to Cure Default for Non-Payment of Subcontractor,” demand­ing that ADPM satisfy a claim for compen­sation made by Atlantic Contracting & Specialties, LLC (“AC & S”) for work performed on behalf of ADPM’s Subcon­tractor Arden Engineering (“Arden”). Noresco stated that, if ADPM failed to cure the default, Noresco would either withhold money from ADPM’s next pay­ment or make demand on ADPM’s pay­ment bond issued by the Co-Sureties. Ex. 440. After Noresco served a second notice to that effect, see Ex. 640, ADPM respond­ed that it was Noresco that was in default of its payment obligations under the Agreement. Ex. 645. ADPM stated that Noresco’s failure to make timely payments to ADPM was “at the root” of AC & S’s claim and that “any further withholding of funds by Noresco will only result in addi­tional claims from subcontractors and ven­dors who do not get paid.” Ex. 645.

Beginning in March 2004, Subcontrac­tors began filing bond claims in Rhode Island state court against ADPM, Noresco, Lumbermens, and/or the Co-Sureties for non-payment of labor and materials pro­vided to the Project. SUF 56-58; see certified copies of civil docket sheets, Ex­hibits 223-230, see certified copies of Com­plaints, Exhibits 231, 233, 236, 238, 240, 242, 244, 246. In their defense, ADPM and its Co-Sureties relied on the pay-­when-paid clauses in the Subcontracts. SUF 61. ADPM also filed cross-claims against Noresco and Lumbermens in most of the Subcontractor claims. SUF 59.

On April 6, 2005, the Rhode Island Su­perior Court issued a decision in one of the bond claims related to the Project, Hydro­Chem Indust. Serv., Inc. v. Lumbermens Mut. Cas. Co., et al., PC 2004-1992 (R.I.Super. April 6, 2005), Ex. 235. Hy­droChem, which had been hired through ADPM’s Subcontractor Arden, sought pay­ment of $35, 651 pursuant to a purchase order issued by Arden for the “pre-opera­tional degreasing of the boilers” that Hy­droChem had performed. HydroChem Transcript of Decision at 2, Ex. 235. The state court decision notes that ADPM and its Co-Sureties agreed to cooperate in the prosecution of HydroChem’s claim on Lumbermens’ bond “ ‘because Noresco has never paid [ADPM] for the services pro­vided by [HydroChem].’ ” HydroChem Tr. 4, Ex. 235.

In response to HydroChem’s motion for summary judgment, Lumbermens suggest­ed that Noresco was not required to pay HydroChem because the degreasing proce­dure provided by HydroChem was differ­ent from the “boil-out” required under the Agreement. The court rejected Lumber­mens’ argument and pointed out that Rhode Island law does not require accep­tance of a plaintiffs labor or material to entitle the plaintiff to payment for com­pleted work under a bond claim. Hydro-­Chem 11, citing R.I. Gen. Laws § 34-28-­30. The court held that, because Hydro-­Chem established that Lumbermens is­sued a bond to secure payment for work performed on the Project, and HydroChem had performed and completed the work requested by Arden, HydroChem was enti­tled to summary judgment on its timely filed bond claim. HydroChem 9-11.

Following the HydroChem decision, and anticipating a similar outcome in the other Subcontractor claims, Noresco settled the remaining cases and paid a total amount of $840,000 in settlement of all their claims. SUF 78-81. (With the exception of one of these Subcontractor claims, ADPM agrees that the amounts expended by Noresco to pay the claims were reasonable. ADPM suggests that Noresco’s payment of $120,677.11 to R.P. Iannuccillo & Sons Construction Company (“Iannuccillo”) re­sulted in overpayment because the amount due to the Subcontractor was only $88,874. Trial Tr. vol. VIII, 55:3-56:2, Sept. 30, 2009.

Based on the forum selection clause in the Agreement, which expressly requires litigation in this Court, ADPM’s and the Co-Sureties’ cross-claims in the Subcon­tractor litigations were dismissed by the state court on October 2, 2006. Noresco’s counterclaims against ADPM and its Co-­Sureties remain pending in state court.

ANALYSIS

This is a diversity case pursuant to 28 U.S.C. 1332, in which the Court must ap­ply the choice of law rules of the forum state, i.e. Rhode Island. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). The Agreement at issue, which was negotiated, executed, and intended to be performed in Rhode Island, provides that it “shall be governed by and interpreted under the laws of the State of Rhode Island.” Ex. 14 p. 53, Sec. 18.8. Consequently, this Court will apply Rhode Island law in this case.

I. Breach of Contract

For all the complexities of the par­ties’ arguments and the overwhelming amount of trial evidence, this is essentially a breach of contract case between the gen­eral contractor of a large construction pro­ject and its primary subcontractor. In order to prevail in a breach of contract claim, the plaintiff has the burden to prove, by a preponderance of the evidence, that it has complied with the contract’s provisions and that the defendant has failed to perform its own obligations. Del-­Farno v. Aetna Cas. & Sur. Co., 673 A.2d 71, 72 (R.I.1996).

As established by the parties’ jointly submitted undisputed facts, the Agree­ment constitutes a valid contract that gov­erns the obligations of the parties. SUF 17 through 22. See Rhode Island Five v. Med. Assoc. of Bristol, 668 A.2d 1250, 1254 (R.I.1996) (“The long-recognized essential elements of a contract are ‘competent par­ties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.’ ”) (citation omitted). Conse­quently, the determination this Court must undertake is whether the parties have performed their respective obli­gations under the terms of the Agreement or whether the conduct of either party constitutes a breach of the Agreement and whether damages are to be awarded ac­cordingly. Women’s Dev. Corp. v. City of Central Falls, 764 A.2d 151, 158 (R.I.2001) (Factfinder in breach of contract case to determine whether party “has substantial­ly performed or materially breached its contractual obligations.”)

In addition, it falls to this Court to ascertain whether any of the Agreement’s provisions or terms are ambiguous, and to interpret such terms as necessary for the resolution of the parties’ claims. Clark-Fitzpatrick, Inc./Franki Foundation v. Gill, 652 A.2d 440, 443 (R.I.1994) (“Con­tract interpretation is a question of law; it is only when contract terms are ambiguous that construction of terms becomes a ques­tion of fact”). A contract is “viewed in its entirety and the words used in the con­tract are given their ordinary meaning.” Sturbridge Home Builders, Inc. v. Down­ing Seaport, Inc., 890 A.2d 58, 62-63 (R.I.­2005).

The Court’s main objective when construing contract terms is to “ascertain the parties’ intent.” The Elena Carcieri Trust—1988 v. Enterprise Rent-A-Car, 871 A.2d 944, 947 (R.I.2005). If the lan­guage of a written contract clearly divulg­es the intention of the parties, “the words of the contract are assigned their plain and ordinary meaning.” Id. To the extent a contract contains an ambiguity, the Court may consider “the construction placed upon the terms by the parties” and “the circumstances surrounding the execution of the contract.” Johnson v. Western Nat. Life Ins. Co., 641 A.2d 47, 48 (R.I.1994).

The Agreement between Noresco and ADPM incorporates, by reference, the Prime Contract and its Exhibits and, par­ticularly, Exhibit I. Ex. 14 pp. 52-53, Art. 18.7, Art. 18.11. A reference in a subcon­tract to the main contract, “made for a particular purpose, makes it part of the subcontract only for the purpose speci­fied.” A.F. Lusi Constr., Inc. v. Peerless Ins. Co., 847 A.2d 254, 261 (R.I.2004) (cit­ing Guerini Stone Co. v. P.J. Carlin Constr. Co., 240 U.S. 264, 277, 36 S.Ct. 300, 60 L.Ed. 636 (1916)). The Agreement de­fines “Technical-Specification” as “the in­formation, engineering data, drawings and conditions, including civil, electrical and mechanical specifications describing the Work, set forth in Attachment I, and in this Agreement.” Ex. 14 p. 14, Art. 1.50. The technical specifications are listed in Attachment I to the Agreement, which states that Exhibit I was “[previously pro­vided to [ADPM],” and set “the project scope of supply and the systems for the project.” Ex. 14 p. 57, Attachment I. Ac­cordingly, this Court holds that the incor­poration by reference of Exhibit I serves to set the scope and quality of perform­ance of ADPM’s work under the Agree­ment.

The second determination by this Court regarding the Agreement relates to the Agreement’s merger provision. Pursuant to Article 18.7, the Agreement, including all the attachments thereto, “represents the entire understanding of Noresco and [ADPM] ... No prior oral or written un­derstanding shall be of any force or effect with respect to any matter covered here­under.” Ex. 14 pp. 52-53.

It is well established that “a com­plete written agreement merges and inte­grates all the pertinent negotiations made prior to or at the time of execution of the contract.” Fram Corp. v. Davis, 121 R.I. 583, 401 A.2d 1269, 1272 (1979). Once the parties in this case adopted the writing as their “entire understanding,” the Agree­ment became integrated. Golden Gate Corp. v. Barrington College, 98 R.I. 35, 199 A.2d 586, 590 (1964) (Integrated agree­ment is “one where the parties thereto adopt a writing or writings as the final and complete expression of the agree­ment”)(quoting Restatement (First) of Contracts § 228, p. 307). Any other oral or written expressions “that occurred prior to or concurrent with the integrated agree­ment, are not viable terms of the agree­ment.” Filippi v. Filippi, 818 A.2d 608, 618 (R.I.2003).

The merger clause of the Agreement clearly expresses the intent of both parties to be bound by terms contained therein, including the fixed price. Whatever un­derstanding ADPM had prior to entering the Agreement, and regardless of the con­tent of negotiations between the parties and their performance under the Purchase Orders, barring any written amendments executed by the parties, the integrated Agreement is the sole document that gov­erns the performance of these parties.

II. The Parties’ Claims

ADPM asserts that it has substantially fulfilled the terms of the Agreement and is entitled to payment of the full contract price, as well as additional compensation for change order work. Complaint ¶¶ 13-­19. ADPM has also raised claims of un­just enrichment and quantum meruit. In defense, Noresco asserts that ADPM can­not recover for (1) delay damages that arose prior to the execution of the Agree­ment, (2) any work ADPM performed that was already covered and compensated un­der the terms of the Agreement, and (3) work performed by ADPM’s subcontrac­tors that was ultimately paid for by Nores­co. In its counterclaim, Noresco seeks specific performance from ADPM, includ­ing the delivery by ADPM of “as-built” drawings. Amended Counterclaim ¶¶ 32-­38. Noresco also seeks liquidated dam­ages under the Agreement for a four month delay with respect to the April 30, 2003 deadline for Readiness for Testing. Id. ¶ ll.k.17 Both parties have requested reasonable attorney’s fees pursuant to R.I. Gen. Laws § 9-1-45.

III. The Change Order Process

Generally, the disagreements between Noresco and ADPM require discrete de­terminations of which party was responsi­ble, under the Agreement, to perform cer­tain work or to furnish certain materials or equipment. ADPM’s claims are primarily based on the contention that Noresco failed to pay ADPM the agreed upon con­tract price or compensate it for work that ADPM deemed outside of its contractual obligations. ADPM asserts that such work was not covered by the Agreement’s fixed price or that it resulted from addi­tional requests or material changes to ADPM’s scope of work. ADPM’s related demands for additional payment are docu­mented by numerous change order re­quests (“CORs”) which ADPM submitted to Noresco over the course of the Project.

Because the design drawings made available to ADPM were only 75% com­plete at the commencement of the Project, not every detail of the Facility was appar­ent. In addition, as the Project developed, amendments were made to the design drawings, e.g. to overcome difficulties in implementing the specifics of the design; to adhere to the obligations under the Prime Contract; to comply with Rhode Island code regulations; or to accommo­date certain equipment that was different­ly sized than anticipated.

If modifications in the construction pro­cess became necessary, Noresco informed ADPM accordingly, and ADPM directed the appropriate Subcontractor to perform the work and/or to provide additional ma­terials. Trial Tr. vol. II, 21:12-22:7. If the work was not specifically included in the scope of the applicable Subcontract, the Subcontractor requested additional payment, which ADPM passed on to No­resco as a COR, referencing a specific deviation number. It was standard prac­tice for the COR to include the actual charge for the work done by the applicable Subcontractor, as well as a general condi­tions charge and a liability insurance charge, plus ADPM’s fee for work per­formed under the Agreement. See, e.g. Ex. 364 p. 1, Trial Tr. vol. II, 113:15-­114:13.

If Noresco determined that the work was outside of ADPM’s scope of work un­der the Agreement because it constituted a material change from the design, see Ex. 14, Art. 1.60, Noresco approved the COR and ADPM received additional payment, a portion of which it passed down to the Subcontractor. If Noresco determined that the work was already included in ADPM’s scope of work or that the neces­sary material or equipment was required to be provided by ADPM under the fixed-­price Agreement, the COR would be disal­lowed. Pursuant to Article 7.5 of the Agreement, Noresco was required to pro­vide a notice of acceptance or rejection within fifteen days after receipt of a COR. Ex. 14 p. 36, Art. 7.5. In the event the parties disagreed about the COR, either party was entitled to submit the matter to dispute resolution. Id.

IV. Testimony by Wade Carleton

Noresco’s Vice President of Construc­tion systematically described the process of assessing whether CORs submitted by ADPM reflected work that fell within or outside of its contractual obligations. Carleton testified regarding his reasons for accepting or rejecting approximately three dozen CORs. To determine whether a particular COR reflected work included in ADPM’s scope of work, Carleton con­ducted a review of the Agreement, the Exhibit I documents, and the 75% com­plete drawings, including subsequent amendments to such drawings. Trial Tr. vol. IV, 133:20-135:12, Sept. 24, 2009.

Generally, Carleton rejected any CORs for work related to the asbestos abatement work because he determined that ADPM was responsible for abatement of all asbes­tos contained in the active area of the Facility and was not limited to the pres­ence of asbestos as described in the Vortex Report. Trial Tr. vol. IV, 135:13-136:16, Exhibits 381, 338, 339, 353, 384 (Deviation Nos. 490, 32, 37, 247, 501, respectively). In a February 5, 2003 letter to then ADPM construction manager Salamon, Carleton explained his reasons for denying asbestos abatement CORs by stating that “ADPM has requested change orders for work that Noresco believes is clearly part of the base bid scope of supply.” Ex. 413. In support of Noresco’s position, the letter includes references to those sections in Exhibit I which specifically address asbes­tos abatement. Ex. 413, Ex. 2.

Another series of CORs rejected by Carleton was related to the early construc­tion delay resulting from the waterline re­location. See, e.g. Exhibits 347, 374, 393, 360, 372, 372, 388 (Deviation Nos. 161, 465, 551, 378, 461, and 536, respectively). Be­cause the submitted CORs were based on events that occurred prior to the Agree­ment and that were not specifically ad­dressed at the time the Agreement was negotiated and executed, Carleton rejected ADPM’s claims. Trial Tr. vol. IV, 143:17-­144:7. Carleton pointed out that Noresco was never provided with a schedule analy­sis regarding responsibility for the early construction delay. Id. at 144:14-20.

Carleton also rejected ADPM’s request for “general conditions for staffing and expenses,” which ADPM claimed to have incurred beyond August 2003, because it related to the early construction delay. Ex. 374 (Dev. 465), Trial Tr. vol. IV, 145:5-­18. For the same reason, and because Article 8.3 of the Agreement required ADPM’s provision of builder’s risk insur­ance through substantial completion18 of the Facility, Carleton rejected ADPM’s re­quest for extension of such coverage. Ex. 388.

Carleton further rejected ADPM’s CORs related to lowering the roofline of the prefabricated metal building that ADPM was required to provide under the Agreement. Ex. 341, Ex. 14 p. 122, Ex. 2 pp. 203, 205, 208. In rejecting these CORs, Carleton took the position that ADPM was aware of the height of the equipment to be installed in the prefabri­cated building and that any required field modification was ADPM’s responsibility. Trial Tr. vol. V, 26:22-32:7.

In a similar vein, Carleton rejected CORs for other work he deemed to be included in ADPM’s scope of work or that ADPM was otherwise responsible for un­der the Agreement, as well as items that were required for Rhode Island code com­pliance. see e.g. Exhibits AA, 357, 341, 349, 355, 356, 343, 375, 348, 351, 373, 386, 382, 344, 350, 366, 378 (Deviation Nos. 349, 81, 191, 273, 3326, 106, 468, 173, 227, 462, 530, 499, 147, 201, 420, and 482, respectively).

A number of CORs were rejected by Carleton for insufficient or inconsistent backup documentation that was not provid­ed even after it had been requested by Noresco. See, e.g., Exhibits 340, 359, 365, 387, 363, 380 (Deviation Nos. 44, 361, 407, 532, 398, and 496, respectively). Carleton also rejected a COR for reimbursement for a pricing and activity proposal which No­resco and ADPM jointly provided to the State. Trial Tr. vol. V, 71:12-72:12, Ex. 367 (Deviation No. 422).

Finally, Carleton rejected several CORs submitted for additional funds to insulate Noresco provided equipment. See, e.g. Exhibits 358, 371, 377, 379, 357 (Devia­tions 351, 461, 474, 483, 349, respectively). Pursuant to Article 1.44 of the Agreement, Noresco was responsible to provide the equipment as described by the shop draw­ings in Attachment XIX, and ADPM was responsible for installing and starting up the equipment. Trial Tr. vol. V, 8:2-14:3, Ex. 14 p. 13. Although Noresco was re­quired to supply the HRSGs and other equipment, a review of the construction drawings, the vendor manuals, and the trim/materials lists informed ADPM that certain equipment would be provided without insulation. Such insulation was necessary, however, due to the high temp­eratures to which the components or equipment would be exposed. Trial Tr. vol. V, 14:3-13:24, Ex. 627, Ex. RR.

V. Expert Testimony by Bradford Bright

The majority of the eight-day bench trial was spent in separately reviewing more than 65 CORs, together with the applica­ble background information and the vari­ous provisions of the Agreement which relate to the work details at issue. The Court declines to engage in a similar exer­cise in this Decision and Order. Instead, the Court will proceed to address the al­leged discrepancies between ADPM’s con­tractual scope of work and the work for which ADPM claims additional compensa­tion by applying the COR categories devel­oped by Noresco’s expert witness Brad­ford Bright, whose testimony the Court found to be relevant, coherent, and eluci­dating.

Bright, who has spent almost 30 years in the construction industry, including two years as a field engineer on two separate power plant projects, was retained by No­resco to (1) analyze ADPM’s claims related to construction delays;19 (2) analyze devia­tions submitted by ADPM for work ADPM considered outside of its scope; (3) review Noresco’s claims for payment to Subcon­tractors for work it considered within ADPM’s scope; (4) determine the reason­ableness of Noresco’s settlement payments to Subcontractors; (5) review CORs and allowance items; (6) compute liquidated damages; and (7) analyze the punch list to determine whether ADPM was responsible for unfinished items. Trial Tr. vol. VII, 65:24-67-1; Ex. WW.

In order to conduct his analyses, Bright reviewed (1) the relevant provisions in the Agreement; (2) the technical specifications of Exhibit I; (3) the vendor packages for Noresco supplied equipment; (4) the Sub­contracts; (5) the 75% complete construc­tion drawings and subsequent versions thereof; (6) and various Project records supplied to him by Noresco and ADPM. Trial Tr. vol. VII, 67:6-68:20.

Bright organized the various deviations submitted by ADPM to Noresco into six distinct categories: (1) deviations related to Noresco supplied equipment; (2) devia­tions resulting from the asbestos remedia­tion and related re-insulation of abated areas; (3) deviations for work on pumps, tanks, and associated utilities; (4) a single deviation for flex connectors; (5) devia­tions related to the pre-engineered metal building provided by ADPM; and (6) devi­ations related to electrical work. Trial Tr. vol. VII, 80:23-82:14. Bright explained that he grouped the ADPM submitted de­viations in their respective groups because the deviations tended to be described by referring to the same provisions in the Agreement or to other related documents. Trial Tr. vol. VII, 82:15-25. A summary of the analyses regarding the various cate­gories was provided as part of Bright’s expert report. Ex. YY.

The first category, related to Noresco Supplied Equipment, includes deviations set forth in exhibits 357, 358, 371, 377, and 379 (Deviations Nos. 349, 351, 445, 474, and 483, respectively). Trial Tr. vol. VII, 81:8-9. Article 1.60 of the Agreement de­fines the work ADPM was required to perform, and the description of duct work insulation is contained in Exhibit I. Id. at 86:1-8, Ex. 14 p. 15, Ex. 2 p. 79. In addition, the manufacturer of the Noresco supplied boiler provided a “trim list” that was furnished to ADPM, together with other manuals and documentation. Trial Tr. vol. VII, 86:9-15, Ex. QQ.

Generally, vendor supplied trim lists and drawings specify which of their compo­nents are delivered with factory installed insulation. If a certain component is deliv­ered uninsulated but, based on its function, requires insulation, the party responsible for the installation of that component was responsible to insulate it. Trial Tr. vol. VII, 88:15-89:12. At the time it entered the Agreement, ADPM had been provided with all the vendor manuals, trim lists, construction drawings and other items nec­essary to determine whether a particular component to be installed by ADPM would be delivered insulated or not. Id. at 89:18-90:9. Attachment II to the Agree­ment specifically referred ADPM to “shop-­drawings describing the Noresco supplied equipment” provided as Attachment XIX. Ex. 14 p. 63.

Pursuant to Item D.8 of Exhibit I to the Agreement, the scope of work includes to “[f]urnish and install thermal insulation on equipment, piping, and ductwork.” Ex. 2 p. 79. Each of the deviations submitted by ADPM in the Noresco supplied equipment category relates to components that had to be installed by ADPM. Although those components were delivered without factory installed insulation, them intended function rendered insulation necessary. According­ly, under the terms of the Agreement, ADPM was required to insulate the com­ponents before installing them. Ex. YY p. 2. Because the work described in this ser­ies of deviations was included in ADPM’s scope of work under the Agreement, ADPM is not entitled to additional pay­ments for such work.

The second category, related to asbestos abatement work, includes Exhibits 338, 339, 352, 353, 381, and 384 (Deviations Nos. 32, 37, 246, 247, 498, and 501, respec­tively). Exhibit I to the Agreement re­quires that “[t]he Active Areas of the Fa­cility shall have all asbestos removed.” Trial Tr. vol. VII, 93:1-94:4, Ex. 2 p. 15., Section 28.1. (Emphasis added). Exhibit I also provides for the delineation of the Facility into “active” and “inactive” areas and for rehabilitation of the “active” area to include “[rjemediation of all asbestos containing materials. Reinstallation of all piping, ducts and vessels to be retained.” Ex. 2 pp. 5, 72, Section 5. (Emphasis add­ed). The Exclusions and Clarifications provision, included by ADPM in the Agreement as Attachment XX, only ex­cluded asbestos abatement outside of the area to remain active. Trial Tr. vol. VII, 94:5-95:6, Ex. 14 p. 121. In other words, the Agreement required that ADPM un­dertake asbestos abatement work of all active areas of the Facility. Consequently, and notwithstanding ADPM’s stated reli­ance on the Vortex Report, Noresco right­fully rejected ADPM’s related CORs.

Category 3, referred to by Bright as “pads, pumps, and tanks,” includes Exhib­its 364, 348, 359, 365, and 387 (Deviation Nos. 400, 173, 361, 407, and 532, respec­tively). These deviations primarily relate to the size and orientation of certain con­crete “housekeeping” pads, on which equipment had to be installed. Trial Tr. vol. VII, 99:14-100:2. Pursuant to Section 1.09 A 2 in Exhibit I, ADPM was required to “[m]ount equipment and panels on con­crete housekeeping pads.” Ex. 2 p. 82. ADPM’s Subcontractor Arden performed mechanical work related to the pads; Mas­sachusetts Electric provided electrical work; and Iannuccillo poured the concrete pads. Trial Tr. vol. VII, 100:3-14. Bright concluded that all work detailed in the deviations were ADPM’s responsibility, primarily based on the depiction of the pads on the 75% complete construction drawings. Id. at 101:1-104:3, Ex. 123, p. M510. The drawings only show the pads’ general location and arrangement, but the actual configuration and orientation of such pads were not finalized until the par­ticular equipment to be installed was iden­tified. Trial Tr. vol. VII, 104:12-108:15.

As explained by Bright, a contractor working with a 75% complete drawing that shows only a general configuration of such pads is expected to anticipate where suit­able placement of the pads will eventually occur. Id. at 106:10-22. By example, the 75% complete drawings show a group of four concrete pads for the installation of four separate tanks. Ex. 123 p. M510. However, as depicted on the backup infor­mation attached to Deviation 400, eventu­ally a single concrete pad was installed to accommodate placement of five tanks. Ex. 364 p. 34. To the extent the pads were not actually installed and then removed and relocated, ADPM’s work did not constitute a material change in work. Moreover, the installation of only one larger pad instead of a configuration of four such pads actual­ly resulted in less work. Trial Tr. vol. VII, 106:16-107:10. As long as the pad was placed in the same general location as originally depicted, neither the mechanical nor the electrical services attached to the equipment would have been affected. Id. Because ADPM was required to provide equipment pads for certain equipment, and because the work performed did not re­flect a material change from the original 75% plan, the deviations related to the housekeeping pads were rightfully rejected by Noresco. Id. at 104:4-108:15.

The fourth category includes only one deviation related to flexible retrofit con­nectors on the soft water pumps. Trial Tr. vol. VII, 109:22-110:8, Ex. 375 (Devia­tion No. 468). Section 1.09 of Exhibit I specifically requires the provision of “flexi­ble connections so piping can be easily assembled and disassembled.” Ex. 2. p. 82, Section 1.09, Item A 13. In addition, Section 3.03 of Exhibit I calls for installa­tion of “vibration insulators such as flexi­ble connectors to ductwork, piping and wiring” for operating equipment that “can transmit objectionable vibration and noise.” Ex. 2 p. 92, Section 3.03, Item A 1. As Bright explained, the soft water pump at issue required a flexible connector be­cause the pump vibrates when it “kicks in”. Trial Tr. vol. VII, 112:25-113:4. Based on the provisions in Exhibit I to the Agreement, ADPM was required to pro­vide flexible connectors as part of its scope of work.

The fifth category includes deviations resulting from work on the pre-engineered building ADPM was required to provide under the Agreement. The deviations are set forth in Exhibits 340,20 341, 349, 354, and 355 (Deviation Nos. 44, 81, 191, 269, and 273, respectively). Specifically, Ex-­Mbits 341 and 354 relate to the penetration of a flue and a silencer through the roof of the budding. The 75% drawings depicted the location of that equipment within the new building and the vendor drawings de­tailed what components were designed to penetrate the roof. Trial Tr. vol. VII, 115:11-116:5.

In October 2001, the roof of the pre­engineered building was designed with a building height of approximately 33 feet. Id. at 120:1-3. However, after determin­ing that Rhode Island code would require a building of that height to contain a costly sprinkler system, it had been decided by the parties as early as November or De­cember 2001 that the height of the build­ing woMd be reduced. Trial Tr. vol. VII, 120:3-19. In other words, all information about the height of the building, as well as the location and size of the equipment to be installed therein, was known to ADPM prior to entering the Agreement and should have been provided to the manufac­turer of the pre-engineered building prior to construction. Id. at 120:15-23. Any field modifications to the manufactured building was the responsibility of ADPM.

Other deviations in the fifth category related to certain duct metal supports that were not provided by the supplier of the metal building, but that were depicted on construction drawings. As set forth in Section 13121 of Exhibit I, ADPM was required to “[fjurnish all labor, materials, equipment and incidentals required and design, fabricate, deliver to project site and erect the pre-engineered metal build­ing system and as specified herein.” Ex. 2 p. 203, Trial Tr. vol. VII, 123:7-125:7. In addition, the building was to be designed to withstand the weight of “concentrated loads from piping and equipment that will be attached to the building,” Ex. 2. p. 204, and it required framed openings to “carry loads and vibrations imposed, including equipment furnished under process, me­chanical or electrical work.” Ex. 2 p. 208, Trial Tr. vol. VII, 125:21-126:20. As Bright explained, the Specifications in Ex­hibit I required the contractor and the building supplier to evaluate the affect of dead weight and wind load of equipment to be attached to the building and design the structure accordingly. Id. at 127:3-128:17. Because ADPM was required to perform such assessment prior to construction, any deviations requesting additional funds for providing adequate support for duct work attached to the building were rightfully rejected.

The sixth category of deviations, related to electrical work, includes Exhibits 344, 350, 362, 363, 366, 368, 369, 370, 376, 380, 387, and 394, (Deviation Nos. 147, 207, 391, 398, 420, 429, 444, 472, 496, 532, and 552, respectively) and Exhibit 496. For the most part, Bright agreed with Carleton’s assessment about the merits of these devi­ations, based on a determination that the electrical work was included in ADPM’s scope of work under the Agreement and Exhibit I, and was, therefore, not compen­sable. Trial Tr. vol. VII, 131:18-132:5.

However, Bright also concluded that ADPM was entitled to payment for some of these deviations, e.g. for the replace­ment of light fixtures. Id. at 132:6-133:4. With respect to Deviation 391, Ex. 362, Bright accepted the entire amount of $2,611. Likewise, he accepted in full Devi­ation 429, Ex. 368 ($3,112), Deviation 439, Ex. 369 ($700), and Deviation 472, Ex. 376 ($5,580). With respect to Deviation 496, Ex. 380, which was a request for $7,644 related to rewiring the city water booster pump VFD (variable frequency drive), Bright allotted 50% of the value, based on his determination that the request was excessive and lacked sufficient documenta­tion. Trial Tr. vol. VII, 135:6-136:7. Bright conceded that he did not undertake a separate cost analysis, but that, based on his own construction experience, he stated that the deviation contained a “lot of unex­plained hours” for the work performed and that further explanation for that level of effort and cost should have been provided. Trial Tr. vol. VIII, 66:7-67:19. Bright also concluded that ADPM was entitled to full payment for Deviation 552, Ex. 394 ($1,547), that was previously included in COR No. 6, which had been accepted by Noreseo but not yet paid. Trial Tr. vol. VII, 136:13-137:5.

Based on Bright’s detailed analysis of the deviations, the Court concludes that ADPM is entitled to payment only for those deviations specifically identified by Bright. The work reflected by those devi­ations was outside of ADPM’s scope of work or constituted a material change un­der the Agreement. Accordingly, ADPM is due $17,372 from Noreseo on these claims.

In addition to the categorized deviations subjected to Bright’s analysis, ADPM seeks payment for a number of miscellane­ous deviations. See September 24, 2009 Deviation Stipulation, Exhibits 342, 343, 351, 356, 361, 367, 373, 378, 382, and 386 (Deviations 97, 106, 227, 336, 382, 422, 462, 482, 499, and 530, respectively). One of the largest of these deviations is a request for $25,747 to reimburse ADPM for tempo­rary electrical power to complete certain work. Deviation 499, Ex. 382. Although MHRH was to “provide electrical energy at no cost to Noreseo,” Ex. 2 p. 75, Sec. 1.05 B.2., the Agreement itself required ADPM to “provide and pay for all facilities and conveniences that it may require for the performance of its work including, but not limited to, ... light, power, and heat.” Ex. 14 pp. 21-22, Art. 3.19. ADPM points out it had specifically excluded “Electric Company Charges” in Attachment XX, however, the Agreement clearly provides that “[i]n the event of a conflict between the Agreement and the Attachments, the Agreement shall govern.” Ex. 14 pp. 52-­53, Art. 18.7. Accordingly, ADPM’s recov­ery for those electrical bills is foreclosed by the terms of the Agreement.

With respect to Deviations 97, 106, 227, 336, 382, 422, and 482, ADPM has failed to provide sufficient evidence to support its assertion that the performed work was not within its contractual scope of work.

However, Deviations 462 and 530, relat­ed to clean-up of the Project site, appear to represent costs outside of ADPM’s obli­gations. Noreseo insists that the “unam­biguous language” of the Agreement im­poses responsibility on ADPM “for all cleaning of the Project site,” Noresco’s Post-trial Brief ¶¶ 247-248. Article 3.23 of the Agreement states that “[i]n addition to its own cleaning obligations, [ADPM] shall follow Noresco’s cleanup directions, and ... [a]t all times keep the building and premises free from debris and unsafe con­ditions resulting from [ADPM’s] work.” Ex. 14 p. 22, Art. 3.23.1. (Emphasis add­ed). The Agreement does not expressly require ADPM to undertake, or pay for, cleanup of the Project site resulting from work performed by Noresco’s own subcon­tractors. Moreover, the backup documen­tation for those deviations support ADPM’s contention that the cleanup in­volved, at least in part, debris generated by other parties. Accordingly, ADPM is entitled to recover $9,514 for Deviations 462 and 530.

VI. Testimony by Edward McNaught

In general, the testimony by McNaught, ADPM’s principal construction manager on the Project, did little to controvert Carleton’s testimony or Bright’s thorough and systematic analysis of CORs that were disallowed by Noreseo. Although McNaught established, inter alia, that the work reflected in various CORs was per­formed by ADPM and that Noresco had declined payment for such work, such tes­timony failed to get at the core of the dispute between the parties. Noresco does acknowledge that ADPM performed much of the work for which it now seeks payment. Noresco maintains, however, that the fixed price of the Agreement al­ready included such work, together with materials that ADPM was required to fur­nish.

As McNaught understood it, the equip­ment supplied by Noresco was to be deliv­ered complete with all their necessary components such as insulation, ductwork, and connectors, as depicted on the 75% drawings. Accordingly, McNaught did not consider any work pertaining to that equipment, other than assembly and instal­lation, to be included in ADPM’s scope of work. Trial Tr. vol. I, 154:24-155:6. Based on that understanding, McNaught submitted CORs for items which he con­sidered to fall under Noresco’s responsibil­ity. For example, since Noresco supplied certain equipment such as turbines togeth­er with expansion joints, McNaught sub­mitted a COR for furnishing and applying insulation blankets to the expansion joints. Id. at 156:20-157:1, Ex. 377 p. 1, Deviation 474. Similarly, McNaught submitted a change order request for insulating Nores­co supplied ductwork as part of the HRSGs. Trial Tr. vol. I 161:16-22, ex. 379, Deviation No. 483.

The terms of the Agreement, however, support Noresco’s contention that ADPM was already obligated to supply the work and materials for which ADPM seeks addi­tional payment. Specifically, Exhibit I to the Agreement states that thermal insula­tion is to be provided on “equipment, pip­ing, and ductwork.” Ex. 2 p. 79, Section 01920, 1.01 D.8. Prior to executing the Agreement, Noresco provided ADPM with Exhibit I, as well as a vast array of manu­als, trim lists, and drawings. A thorough review of such documentation would have alerted ADPM to determine the extent to which it had to supply certain materials or components and would have enabled ADPM to negotiate a contract price that would have compensated it accordingly. In fact, the Agreement itself required ADPM to “familiarize itself with the scope of supply of the Noresco Provided Equip­ment and the Noresco Supplied Systems.” Ex. 14 p. 15.

Similarly, ADPM submitted a number of CORs for the installation of concrete “housekeeping” pads on which chemical storage tanks were to be located. See e.g. Exhibits 364, 366, 387. However, Exhibit I to the Agreement specifically requires ADPM to “[mjount equipment and panels on concrete housekeeping pads.” Ex. 2 p. 82, Section 01920, 1.09 A.2. Moreover, Bright’s undisputed testimony established that ADPM’s work did not involve reloca­tion of pads that had been previously in­stalled and then been removed. Trial Tr. vol. VII, 107:14-108:15. Instead, ADPM installed the pads in a finalized configura­tion that had only been approximated in the 75% complete drawings. As such, the work on the pads did not constitute a “material change” for which ADPM would be paid outside of the Agreement.

In sum, ADPM has generally failed to provide sufficient evidence supporting its claims for additional payment for change order work. With the exception of those CORs which, as acknowledged by Nores­co’s expert or determined by this Court, reflected tasks outside of ADPM’s scope of work, Noresco has demonstrated that the submitted deviations reflected work that ADPM was obligated to perform, or mate­rials that ADPM was required to provide, under the fixed-price Agreement.

VII. Early Construction Delay

The question of delay during the initial construction period is of twofold sig­nificance. First, ADPM claims that it in­curred additional costs related to continu­ing work beyond the anticipated end date of the Project. Second, ADPM seeks to extend the Milestone Deadlines in order to avoid an obligation for liquidated damages. ADPM would be entitled to additional pay­ment and to an extension of the Project deadlines only if it can show that the delay was excusable and compensable.

In order to recover for the asserted delay, ADPM must prove that the delayed activity was on the critical path of the Project.21 Mega Constr. Co., Inc. v. Unit­ed States, 29 Fed.Cl. 396, 424-425 (Ct.Fed. Cl.1993) (“It is not enough that an activity is delayed: there must be delay of an activity on the critical path for there to be project, or compensable, delay”); R.P. Wallace, Inc. v. United States, 63 Fed.Cl. 402, 409 (Ct.Fed.Cl.2004) (“Contractor must prove that ... the delay affected activities on the critical path”). In addi­tion, ADPM has the burden to demon­strate that the delay was solely attribut­able to Noresco. Mega Constr. Co., Inc. v. United States, 29 Fed.Cl. at 425; PCL Constr. Serv. Inc. v. United States, 47 Fed.Cl. 745, 801 (Ct.Fed.Cl.2000) (Only if delay was solely caused by defendant will contractor be entitled to extension of time and recovery of additional costs caused by delay). In other words, ADPM must show that Noresco was the “sole proximate cause” of the delay and that no concurrent cause would also have resulted in a delay of the Project. PCL Constr. Serv. Inc. v. United States, 47 Fed.Cl. at 801.

Before beginning work on the Project, ADPM created a baseline time schedule labeled CG01 (the “Schedule”). Under the Agreement, ADPM was required to update the Schedule on a monthly basis and sub­mit it to Noresco. Each subsequent Schedule was sequentially numbered, e.g. the first updated version of the Schedule was labeled CG02. Trial Tr. vol. II, 31:19— 32:13. Initially, ADPM expected to com­plete the construction approximately 12-14 months after the December 2001 start date. Id. at 59:25-60:9. The evidence submitted at trial demonstrated, however, that ADPM’s projections failed to take into account the progress, or lack thereof, that was already obvious to anyone involved in the Project.

The baseline Schedule, CG01, current as of December 3, 2001, anticipated the com­mencement of electrical work in April 2002, to be finished by December 2002, which was generally consistent with the 12-14 months time frame for the Project. Trial Tr. vol. II, 67:7-9. However, ADPM did not hire an electrical contractor to perform the work until October 15, 2002, nearly six months after the electrical work was scheduled to start. Id. at 74:15-75:21. Similarly, ADPM anticipated asbestos abatement to begin on February 1, 2002 and take approximately one month. Id. at 70:13-24. However, by March 2002, the final plan for asbestos abatement had not yet been submitted by ADPM. Id. at 76:25-77:10.

A subsequent version of the Schedule, labeled CG05, also reflected that many of the commencement dates for construction activities had already expired by the time ADPM and Noresco entered into the Agreement. Id. at 80:14-81:8. As early as March 4, 2002, ADPM notified Noresco about the delay problem related to the temporary water pumps. Ex. 347 p. 6, Ex. 454 p. 5-8. Around the same time, ADPM learned that the Vortex Report provided inadequate information about the extent of asbestos in the existing budding and that the required abatement work would be more extensive than ADPM had anticipat­ed.

Nevertheless, ADPM did not immediate­ly request extensions for the April 30, 2003 Milestone deadlines, nor did it negotiate additional payment for the increased work prior to executing the Agreement on April 12, 2002. Instead, ADPM only requested an extension of the milestone deadline a month and a half after the Milestone date had already passed. See Ex. 360, Devia­tion No. 378. Similarly, ADPM proceeded with its work on the Facility and did not request additional funds for the early con­struction delay until a year after the delay had first been identified. Ex. 347 p. 25.

In July 16, 2003, ADPM submitted Devi­ation 161 to Noresco, seeking recovery for a four month delay that occurred early on in the construction process. The delay was the result of (1) the relocation of the waterline at the Project site; and (2) the construction of the Stack by Noresco22. Deviation 161, Ex. 347, Trial Tr. vol. II, 55:18-56:5. In Deviation 161, ADPM sought additional payment of $329,362 for cost of ADPM personnel and site equip­ment. Specifically, Deviation 161 calcu­lates the time spent by ADPM staff “for added or inefficient onsite labor during the delay (to help resolve the situation).” Ex. 347 p. 3. An accompanying back-up letter from McNaught to Carleton, dated June 17, 2003, states that ADPM “will continue to work with Noresco to resolve this open issue.” Id. at 4. McNaught’s letter ex­plains that ADPM initially asserted a six months delay, but that, based on conversa­tions between the parties, ADPM would “agree to a delay period of four (4) months from March 2002[sic] to June 2002[sic].” Ex. 347 p. 4. McNaught also proposed that ADPM generate a further COR “to con­tractually extend our Readiness for Start-­Up date from April 30, 2002[sic] to August 30, 2002[sic].23” Id. The intended purpose of the second COR was to “stop the Liqui­dated Damages from accruing until the new milestone date.” Id.

McNaught attached a February 21, 2003 communication to his letter, in which then acting Project Manager Salamon relates the history and development of the delay. Ex. 347 pp. 6-9, Ex. 454 pp. 1-4. In it, Salamon describes how the original plan for relocating the waterline was not worka­ble and that ADPM proposed an alterna­tive plan in late November 2001. ADPM’s alternative plan resulted in the develop­ment of a final design in late February 2002, as part of the 90% complete design drawings. Ex. 454 pp. 5-8.

Salamon’s February 21, 2003 letter also references a March 4, 2002 letter from McNaught to Carleton. Ex. 347 p. 6, Ex. 454 p. 1. In that March 4, 2002 letter, McNaught states that the letter is intend­ed to “formally document the issues” lead­ing to a February 2002 work stoppage and “the resultant schedule implications.” Ex. 454 p. 5. McNaught specifically identifies a power road closure; a 16 inch water main relocation; a gas main relocation; a tem­porary electric relocation; and the north oil tank removal as items that would result in significant delays prior to commencing the actual construction of the facility. Ex. 454 pp. 5-6.

On cross examination, McNaught con­ceded that all the issues identified in his March 4, 2002 letter occurred prior to execution of the Agreement and were known to ADPM prior to execution of the Agreement. Trial Tr. vol. Ill, 22:24-23:25, Sept. 23, 2009. At the time of McNaught’s letter, ADPM was performing work pursu­ant to the Purchase Orders, for which it was paid before the Agreement was en­tered. Id. at 24:9-21. The sums paid under the Purchase Orders were intended to be incorporated into the final price of the Agreement. Id. at 26:24-28:19, Ex. 11. As McNaught acknowledged, although ADPM was aware of the issues raised in Deviation 161 while the Agreement was being negotiated, ADPM did not negotiate with Noresco for an increase in the fixed price of the Agreement or for compensa­tion outside of the Agreement. -Trial Tr. vol. Ill, 30:19-32:10.

With respect to the waterline relocation, McNaught explained that the waterlines were located in the footprint of the planned building and had to be removed prior to excavation. However, pursuant to Exhibit I to the Prime Contract, which was specifically incorporated into the Agreement, ADPM was obligated to en­sure uninterrupted utility services to the campus that the Facility is designed to supply. Ex. 2 p. 7, Trial Tr. vol. Ill, 34:4-­8. Noresco originally provided the design for the relocation and ADPM had difficul­ties implementing Noresco’s design. Id. at 42:24-43:15. When ADPM suggested an alternative solution as early as November 2001, see Ex. 96, it did not request a corresponding increase in compensation from Noresco. Trial Tr. vol. Ill, 50:17-20.

The actual implementation of ADPM’s alternative solution was also fraught with difficulties. Inter alia, ADPM experi­enced significant work delays with Iannuc­cillo, one of its Subcontractors. The man­ufacturer of the temporary booster pumps supplied incorrect data related to the pump curve. Trial Tr. vol. Ill, 52:1-11. The temporary pumps failed to deliver 1500 GPM (gallons per minute) required for approval by MHRH’s engineer. Id. at 56:9-23. The variable frequency drives (“VFDs”), which had to be installed in connection with the pumps in order to regulate the pump motor speed, had to be returned because the drive size was inader quate and one of VFDs was delivered with the wrong computer chip. Redelivery of the VFDs resulted in a further two month delay. Id. at 61:10-65:18, Ex. 423.

A final solution to the waterline reloca­tion was not achieved until August 15, 2002, Trial Tr. vol. Ill, 59:6-12. As McNaught conceded, none of these difficul­ties and resulting delays were caused by Noresco; instead, they were all part of ADPM’s responsibility under the Agree­ment. Id. at 66:17-67:22.

Although ADPM only sought an exten­sion of the April 30, 2003 deadline to Au­gust 30, 2003, it continued to work on the Project to achieve Readiness for Startup well after August 2003. On September 12, 2003, shortly after presenting the Certifi­cate of Readiness, together with a list of unfinished items, ADPM submitted COR Deviation No. 465, Ex. 374. In that devia­tion, ADPM requested payment of $121,603 for general costs of staffing and expenses for 13 weeks from September 1, 2003 to November 30, 2003, the date ADPM anticipated finishing its work on the Project. Ex. 374, Deviation No. 465, Trial Tr. vol. II, 57:24-58:21. In addition, ADPM requested $90,274 for the cost of extending the builder’s risk insurance cov­erage it was required to maintain under the Agreement as long as ADPM was on site. Ex. 372, Deviation No. 461, Trial Tr. vol. II, 108:9-25. On January 9, 2004, ADPM submitted a further COR, Devia­tion 551, in which it sought general condi­tions (staffing or general costs) of $56,160 for the period from December 1, 2003 to January 31, 2004. Ex. 393, Deviation No. 551, Trial Tr. vol. II, 59:2-20.

The evidence submitted by the parties in this case reveals that ADPM’s expecta­tions regarding the time line of the Project were unrealistic from the very beginning. Although ADPM was aware of a signifi­cant delay during the preconstruction peri­od, it failed to adjust the time line accord­ingly or to request an extension of the Readiness for Testing Milestones before entering the Agreement. Instead, ADPM continued to proceed with the construction, apparently with the expectation that, by submitting CORs later in the process, it could recover additional costs resulting from the initial delay and avoid liquidated damages for failing to meet its deadlines. It is this Court’s conclusion that, because ADPM failed to provide evidence that it was entitled to time extensions or damages resulting from preconstruction delays, it is likewise not entitled to payments related to general conditions or for the cost of extending the Builder’s Risk Insurance.

VIII. Expert Testimony by Douglas Coppi

Coppi testified as ADPM’s expert in scheduling and delay analysis. Prior to tri­al, Coppi’s testimony was the subject of two separate motions in limine. First, Noresco sought to exclude testimony by Coppi regarding three newly developed theories of purported delay that were dis­closed in a supplemental disclosure shortly before trial and months after the close of discovery and Coppi’s deposition. Noresco also objected to the inclusion of a “new” summary schedule analysis in the supple­mental disclosure. The Court took that motion under advisement.

Secondly, immediately before Coppi’s testimony on the fourth day of trial, No­resco filed a further motion in limine pur­suant to Fed.R.Evid. 702, which sought to exclude Coppi’s testimony in its entirety, on the ground that delays in the Project construction were undisputed and that Coppi’s testimony was not expected to of­fer factual or expert opinion regarding the cause of such delays. Following Coppi’s testimony and arguments by counsel, No­resco’s second motion was denied by the Court after determining that the motion concerned the weight of the evidence, not its admissibility.

However, after listening to Coppi’s testi­mony and reviewing the record post trial, the Court is inclined to conclude that Cop-­pi’s opinion offered little in way of sub­stance. Rule 702 provides that a qualified expert witness may testify “[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. The expert’s testimony must be “based upon sufficient facts or data,” “the product of reliable principles and methods,” and the expert must “appl[y] the principles and methods reliably to the facts of the case.” Id.

In determining whether expert testimony is helpful to the trier of fact, i.e., whether it is reliable and relevant to the facts of the case, the Court performs a gatekeeping function. Bogosian v. Mer­cedes-Benz of North America, Inc., 104 F.3d 472, 476 (1st Cir.1997). To be admis­sible, expert testimony must be relevant “in the incremental sense that the expert’s proposed opinion, if admitted, likely would assist the trier of fact to understand or determine a fact in issue.” Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling Co., 161 F.3d 77, 81 (1st Cir.1998). The Court is afforded “substantial latitude in the ad­mission or exclusion of opinion evidence.” Crowe v. Marchand, 506 F.3d 13, 16 (1st Cir.2007).

At trial, Coppi testified that he reviewed Project correspondence; the Agreement; ADPM daily job reports; deviation files; the MHRH RFP (request for proposal); Project monthly reports; the baseline CPM (critical path method); Design Draw­ings, and meeting minutes of all involved parties. Trial Tr. vol. IV, 72:7-73:2. In addition, Coppi reviewed the Project schedule, beginning with the baseline schedule, titled CG01, through the final updated schedule, titled CG33. Id. at 73:3-­7. Coppi explained that he reviewed the developing Project schedule to see the progress on the Project as well as the critical path. Id. at 75:19-23.

In order to determine the occurrence of and reasons for construction delays, Coppi undertook a “time window analysis.” Id. at 78:25-79:8. Coppi’s analysis was in­tended to determine what significant events happened during a particular time-­frame of the Project and whether they had an impact on the project completion. Id. at 79:9-17. Coppi identified ten such time windows during which the Project sched­ule was delayed for varying lengths, speci­fying a time frame for each window and the event to which he attributed a result­ing delay. Coppi’s overall conclusion was that the Project was delayed 227 days with respect to Readiness for Testing and 372 days with respect to Substantial Comple­tion. Id. at 94:4-19.

On cross examination, Coppi acknowl­edged that his engagement by ADPM was limited to “identifying] whether there was a delay to the completion date and whether the delay was on the critical path.” Id. at 98:20-99:1. Nevertheless, Coppi main­tained that, “based on the general informa­tion in the documents [he] reviewed,” he formed a “general opinion” whether the delays were or were not ADPM’s responsi­bility. Id. at 98:14-19. Coppi conceded, however, that he was not offering an opin­ion as to who was responsible for the delay “in a strict engineering supported stamped analysis,” id. at 99:8-11, and that he had not performed any independent analyses to determine fault. Id. at 99:18-100:21. Instead, Coppi’s analysis consisted of a general review of the Project record, limit­ed to those documents that were supplied to him by ADPM’s counsel. Id. at 106:18-­113:1.

At the conclusion of Coppi’s testimony under cross examination, Noresco’s coun­sel renewed his motion in limine on the grounds that (1) Coppi’s opinion merely confirmed that the Project was subject to delays; and (2) Coppi failed to undertake an independent analysis to confirm that the CG01 baseline schedule was reason­able. Determining that Noresco’s objec­tion addressed the weight of Coppi’s testi­mony as opposed to its admissibility, the Court again denied the motion. Id. at 118:2-119:25.

Having now had the opportunity to di­gest all of the evidence presented, the Court is of the opinion that the testimony presented by Coppi carried little weight because Coppi failed to offer an opinion on the cause of the various delays during the Project. Instead, Coppi’s testimony mere­ly confirmed certain facts that are essen­tially undisputed in this litigation, i.e., that the Project was significantly delayed and that the Milestone deadlines were not met.

Coppi conceded on cross examination that, in order to establish that a delay is compensable, a claimant must prove, inter alia, that the delay was not the claimant’s responsibility. Trial Tr. vol. IV, 96:20-­98:7. Coppi’s findings, which were entire­ly based on selected Project records and documentation, shed no light on the cause of such delays, nor did Coppi ascribe re­sponsibility for such delays to a particular party. Given the lack of any independent analyses, including whether the CG01 baseline schedule could be reasonably achieved, Coppi’s “general opinion” as to responsibility for the delays is insufficient to support ADPM’s claims related to Pro­ject delays.

IX. Testimony by Kenneth Monson

Noresco Expert Monson’s analysis fo­cused on determining whether ADPM’s delay claims against Noresco, as set forth in the Coppi Report, were excusable or compensable. Trial Tr. vol. VIII, 80:17-­81:15. Monson first explained that excusa­ble delays are delays that are beyond a contractor’s control and that, therefore, entitle the contractor to an extension of the contract milestones. Id. at 80:25-81:4. In order for such a delay claim also to be compensable, the contractor is required to show that the delay was solely caused by the party from whom the contractor is seeking damages. Id. at 81:5-8. Monson reviewed the Coppi Report; the docu­ments referenced therein; documents pro­duced by ADPM and Noresco; and the Project construction schedules generated by ADPM, which range from the initial CG01 schedule, through the monthly up­dates, to the final CG33 schedule. Trial Tr. vol. VIII at 81:16-24. In addition, Monson interviewed Carleton and visited the Project site.

In order to prove excusable and/or com­pensable delay, ADPM was required to demonstrate that (1) the baseline schedule was reasonable; and (2) the delayed activi­ties were located on the critical path. Id. at 84:1-7. According to Monson, ADPM failed (1) to confirm the reasonableness of the Project schedule; (2) to account for concurrent delay; and (3) to demonstrate that the delays were caused by others. Id. at 86:7-18.

Several items on the Project Schedule related to commencement of construction appear to call the reasonableness of the Project schedule into question. By exam­ple, ADPM proposed the use of a tempo­rary city water booster pump as early as November 26, 2001, but the activity was not reflected in baseline Project Schedule CG01 dated December 3, 2001, which ren­dered the schedule inaccurate from the beginning. Ex. 96, Ex. 1058, Trial Tr. vol. VIII, 89:3-91:13. As the construction pro­gressed, the use of the booster pumps resulted in one of the most significant de­lays on the Project, preventing timely com­pletion of initial construction activities, such as relocation of the 16 inch waterline and general excavation for the new build­ing.

ADPM’s baseline schedule also indicated that spot asbestos abatement was to begin on December 19, 2001. Trial Tr. vol. VIII, 92:10-18. The spot abatement, in turn, was necessary to locate the temporary waterpumps in the basement of boiler room No. 3. Id. 93:10-14. However, ADPM did not submit an asbestos abate­ment plan until January 2002 and the plan developed by ADPM’s Subcontractor As­cension was not submitted until March 19, 2002. Id. at 94:8-95:7, Ex. 1212.

Moreover, the Project Schedule closest in date to the execution of the Agreement also appears to have failed the reasonable­ness test. Id. p. 96:6-97:5. At the time Schedule CG05, dated March 31, 2002, was developed, ADPM had already incurred a delay of approximately 97 calendar days relative to Schedule CG01. Id. at 97:6-9. Specifically, excavation and installation of the concrete foundation were held up by the difficulty in finding and installing tem­porary city water booster pumps. Id. at 97:10-15. Schedule CG05, however, re­flected only a 27 day shift of the milestone by simply compressing the expected dura­tion of upcoming activities, which appears to be unsupported, unrealistic and, there­fore, unreasonable. Id. at 97:18-98:15.

In sum, based on a review and analysis of the submitted documentation, this Court agrees with Monson’s overall conclusion that “ADPM failed to satisfy the elements of proof necessary to demonstrate entitle­ment to either excusable or compensable delay.” Id. at 86:7-11. The evidence sub­mitted in this case clearly supports Nores­co’s contention that the early construction delay was already apparent and known to ADPM prior to entering the Agreement. With respect to the other delays occurring over the course of construction, Monson’s detailed critical path analysis revealed that the delays were neither excusable nor compensable. Accordingly, ADPM is not entitled to an extension of the Milestone Deadlines or to recovery of any of the additional costs it claims to have incurred as a result of construction delays.

X. Asbestos Abatement

Another significant claim by ADPM relates to the $123, 060 COR ADPM submitted to Noresco for the al­leged increased work involved in removing asbestos from the Facility. Ex. 381 (Dev. No. 498). Noresco rejected the claim on the grounds that (1) the abatement is in­cluded in ADPM’s scope of work under the Agreement; and (2) ADPM was aware of the extent of the work and the additional costs prior to entering into the Agreement.

Under the express terms of the Agree­ment and the therein referenced Exhibit I, ADPM was required to remove “all asbes­tos” in the active area of the Facility. Specifically, Exhibit I to the Prime Con­tract, which incorporates by reference the technical specification of the Prime Con­tract into the Agreement, provides that the existing cogeneration facility was “to be divided into Active and Non-Active Areas for delineation of asbestos related occupan­cy requirements.” Ex. 2 p. 5, Section 1.1. ADPM’s scope of work included removal of “all asbestos” from the active area of the Facility. Ex. 2 p. 15, Sec. 28.1.

In order to estimate the extent of the asbestos abatement work, ADPM and As­cension conducted a visual inspection of the Project Site, see SUF 48, and ADPM provided a copy of the Vortex Report to Ascension as part of the bid package. Af­ter Ascension learned from its consultant, MEI, that the Vortex Report was outdated and inadequate and that the presence of asbestos was more widespread than antici­pated, Ascension increased its contract price considerably. On March 2, 2002, Ascension forwarded the MEI report to ADPM, informing ADPM that the Vortex Report was “incomplete and grossly inade­quate.” Ex. 381, p 06. On March 7, 2002, McNaught informed Noresco about the is­sues regarding the Vortex Report and MEI’s concerns with the scope of work. Ex. 381 p. 5. McNaught also noted that “[w]e are tracking these potential impacts as ADP Marshall Deviation No. 000024.”24 Id.

On March 10, 2002, Ascension provided McNaught with an itemized list of addi­tional costs associated with “abatement, removal, disposal, sampling and survey not within the base scope of work defined in the Vortex Report,” which amount to $132,575. Ex. 404, Trial Tr. vol. Ill, 79:19-80:6. On March 25, 2002, ADPM and Ascension entered into a contract (the “Ascension Subcontract”) to perform the asbestos abatement. Ex. 219 p. 4, Trial Tr. vol. Ill, 69:23-70:9. The Ascension Subcontract provides that “[a]ll work shall be performed in strict accordance with the following described specifications, draw­ings and other documents, which by this reference are made a part hereof.” Ex. 219 p. 6, Art. 2.0. Under “Specifications,” the Ascension Subcontract includes (1) MHRH “project specifications for Pastore Center Cogeneration Project 75% Design,” which McNault interpreted as the 75% complete design, and (2) Manufacturer’s Instructions. Id., Art. 2.1. The contract base price for the asbestos abatement was initially set at $27,400. Ex. 219 p. 3, Art. 4.0. In addition, Article 3.2 of the Subcon­tract lists eight items of “alternate work” priced at $151,772, bringing the total price of the Ascension Subcontract to $179,172. Ex. 219 p. 8, Trial Tr. vol. Ill, 70:12-21.

As Noresco established at trial, neither the Agreement between Noresco and ADPM, nor any of the numerous attach­ments thereto refer to the Vortex Report, on which ADPM relied in assessing its scope of abatement work and in obtaining a subcontractor bid from Ascension. Id. at 77:25-78:16. Although Noresco fur­nished the Vortex Report to ADPM for “information and use,” see Ex. 741, the Agreement itself provides that “[ejxcept for Representations expressly set forth in this Agreement, Noresco makes no repre­sentations and ... [ADPM] may not rely upon any statement ... now or hereafter made by an officer, employee, agent or representative of Noresco.” Ex. 14 p. 17, Art. 3.2, Trial Tr. vol. Ill, 79:4-17. In other words, although ADPM may have relied on the Vortex Report in attempting to define its scope of work with respect to asbestos abatement, the Agreement specif­ically precluded ADPM from relying on that report.

Moreover, ADPM learned that the as­bestos abatement work was more exten­sive than anticipated before it entered the fixed-price Agreement. As McNaught conceded on cross examination, ADPM “was made aware of the delta between the Vortex” and “what was really in the plant” prior to the signing of the Agreement. Trial Tr. vol. IV, 12:16-13:22. In addition, ADPM was informed by Ascension that the cost of the abatement had been in­creased by $132,000. Id. at 13:7-13. Nev­ertheless, and although ADPM communi­cated with Noresco regarding the asbestos issue, ADPM did not negotiate to have the increase included in the Agreement’s fixed price. Trial Tr. vol. Ill, 81:4-82:21, Trial Tr. vol. IV, 13:18-14:2. Instead, ADPM sought to recover the additional cost of abatement in October 2003, when it pre­sented COR Deviation No. 49825 for a sum of $123,060 to Noresco. Ex. 381, Trial Tr. vol. TV, 16:10-17:16.

In light of the evidence submitted to this Court, it is apparent that, under the ex­press terms of the Agreement, ADPM was responsible for removing all asbestos from the active area of the Facility. At the time ADPM entered into the Agreement, it was aware that (1) the Vortex Report was in­sufficient for an assessment of the work; (2) the abatement necessary was more ex­tensive than anticipated; and (3) the cost of the abatement was increased by approx­imately $132,000. Nevertheless, ADPM agreed to perform the work without nego­tiating additional payment or requesting an extension of the contractual deadline. Under those circumstances, the Court finds that ADPM is not entitled to recover additional payment from Noresco for the asbestos abatement or an extension of the construction deadlines.

XI. ADPM’s Claims for Unjust En­richment and Quantum Meruit

A plaintiff is required to prove three elements to recover for unjust en­richment: “(1) a benefit must be conferred upon the defendant by the plaintiff, (2) there must be appreciation by the defen­dant of such benefit and (3) there must be an acceptance of such benefit in such cir­cumstances that it would be inequitable for a defendant to retain the benefit without paying the value thereof.” Bouchard v. Price, 694 A.2d 670, 673 (R.I.1997) (citation omitted). To recover in quantum meruit, ADPM must prove that Noresco derived some benefit from ADPM’s services and “would be unjustly enriched without mak­ing compensation thereof.” Nat'l Chain Co. v. Campbell, 487 A.2d 132, 135 (R.I.1985).

As determined by this Court, the major­ity of claims which ADPM has raised against Noresco and addressed at trial are based on work that was included in ADPM’s scope of work under the fixed-­price Agreement. The testimony and evi­dence submitted at trial demonstrated that ADPM understood that the parties’ rela­tionship would be governed by the negoti­ated Agreement. With the benefit of hind­sight, it is clear that ADPM should have taken the opportunity to incorporate any side issues while the negotiations between the parties were taking place. It is not, however, the Court’s role to reform the bargain that was struck by the parties. See e.g. RCI Northeast Serv. Div. v. Bos­ton Edison Co., 822 F.2d 199, 205 (1st Cir.1987) (“It is no appropriate part of judicial business to rewrite contracts freely entered into between sophisticated busi­ness entities”). ADPM and Noresco are both sophisticated corporations who en­tered into a commercial transaction while represented by counsel and after months of negotiations. Under the circumstances of this case, it would not be inequitable for Noresco to retain the benefits for which it had bargained, nor was Noresco unjustly enriched by ADPM’s performance of such work. Therefore, ADPM cannot recover under either theory.

XII. Noresco’s Counterclaims

(1) Reimbursement for Subcontractor Payments

In order to meet its obligations under the Prime Contract, Noresco hired a number of Subcontractors to complete work it expected ADPM to perform under the Agreement. Noresco now seeks reim­bursement from ADPM for those expendi­tures. Inter alia, Noresco issued a $44,780 purchase order to Anchor Insula­tion Co, Inc. (“Anchor”) to install insula­tion on the HRSG. Ex. 622, Trial Tr. vol. VI, 21:14-16, Sept. 28, 2009. A circular duct was delivered uninsulated, per the previously submitted materials list. Trial Tr. vol. VII, 164:24-165:1. However, be­cause Noresco was responsible for some of the work, it only paid $33,860 to Anchor. Exhibits 317, 318, 320.

Carleton explained in detail how he de­termined which portion of the HRSG insu­lation fell under ADPM’s scope of work. Trial Tr. vol. VI, 23:17-24:20. In addition to Articles 1.44 and 1.6 of the Agreement, which address Noresco-provided equip­ment and define the “work” to be per­formed by ADPM, Carleton relied on a particular provision in Exhibit I: Section 01920 addresses Steam and Power Genera­tion Systems scope of work, which includes the “[f]urnish[ing] and installation of] thermal insulation on equipment, piping and ductwork.” Ex. 2 p. 79, Sec. 101 D 8. The HRSG assembly drawing, Ex. 627, requires insulation of a heat duct section; however, the corresponding materials list provided by the vendor, Ex. RR, shows that the duct section will be delivered un­insulated.

Carleton then listed the various other Subcontractors Noresco had hired in order to perform work that Noresco contends was ADPM’s responsibility under the Agreement, and for which Noresco is seek­ing a total sum of $260,411 in reimburse­ment from ADPM. For each item, Carle­ton pointed to provisions in the Agreement and its various attachments to support No­resco’s conclusion that the subcontracted work was within ADPM’s scope:

(1) Noresco hired Solar Turbines to per­form inlet ductwork after notifying ADPM that it considered such work to be included in ADPM’s scope of work under the Agreement. Trial Tr. vol. VI, 25:13-28:5, Exhibits 311-314, Ex. SS. Noresco provid­ed the turbine under the Agreement and the duct work was shown on the construc­tion drawings, but not supplied by the vendor. On February 5, 2003, Carleton informed then Project Manager Salamon that the duct work would have to be sup­plied by ADPM. Ex. SS pp. 2-3. In his letter, Carleton points out that ADPM was provided with a full set of Solar drawings in December 2001 which “do NOT show the ductwork in question as provided by Solar.” Ex. SS p. 2. The letter also states that Carleton reviewed the bid package ADPM submitted to its Subcontractor for the Solar work, which indicates that the duct work is to be supplied by ADPM. Carleton concludes that “if the drawings provided to ADPM in December 2001 had been utilized as a basis of bid to the sub­contractors, this would not be an issue today.” Ex. SS p. 3. Solar Turbines charged $86,590 for its work.

(2) Noresco hired General Glass to per­form window work in the active area of the boiler plant for a total of $69,482. Trial Tr. vol. VI, 28:6-10, Ex. 324-326. This work was deemed to fall within ADPM’s scope of work because Exhibit I required repair of all broken interior or exterior windows in the existing building, or re­placement with steel or aluminum win­dows. Trial Tr. vol. VI, 29:22-30:13, Ex. 2 p. 105, Sec. 2.03(b), p. 107, Sec. C. Carleton explained that the work had been dis­cussed in an onsite meeting in late fall of 2001 in which McNaught participated. Trial Tr. vol. VI, 30:14-31:7. Because the extent of the work was difficult to deter­mine at that time, a $45,000 allowance was set aside for repair to exterior walls, with­out a reference to window repair or re­placement. Ex. 14 p. 28, Art. 6.1.l.a. Up­dated design drawings delivered to ADPM on August 12, 2002, specified that ADPM was to “[cjover existing window opening with exterior grade plywood, painted” and “[pjrovide new plate glass in existing win­dows.” Ex. 215 p. 5. However, once con­struction proceeded, it appeared that the windows needed to be replaced altogether, as provided in Exhibit I. The allowance for exterior repairs had been exhausted at that time, and Carleton concluded that the work fell under ADPM’s general scope of work under the Agreement.

(3) Noresco hired Goldenrold Welding to fill in several window openings to seal up the inactive area of the Facility. Gol­denrod charged $9,600 for its services. Trial Tr. vol. VI, 33:16-34:5, Ex. 336.

(4) Noresco paid $2,964 to Interstate Electrical for wiring electric window oper­ators. Trial Tr. vol. VI, 35:11-24, Ex. 336.

(5) Noresco hired Arden Engineering to clean out piping by steam blow process. Arden charged $8,315 for the blow-out. Trial Tr. vol. VI, 36:8-37:1, Ex. 602.

(6) Noresco hired R.J. Sanders to install a temporary steam silencer for the steam blow. R.J. Sanders charged $5,600 for its service. Trial Tr. vol. VI, 38:6-23, Ex. I.

(7) Noresco paid $29,000 to Acme Boiler for the rental of temporary equipment in order to maintain plant capacity during the asbestos abatement when Boiler No. 7 needed to be shut down during asbestos abatement. Trial Tr. vol. VI, 41:3-14, Ex. 321-322. Pursuant to Exhibit I, “firm electrical capacity” and “firm steam capac­ity” of the Facility had to be maintained throughout the Project. Ex. 2. p. 69, Item 1.01. “[W]ith the exception of minor agreed to outages during the construction of the facility,” ADPM was required to “provide temporary equipment to meet the existing firm capacity.” Ex. 2 p. 72, Item 5.d.

Finally, Noresco claimed that a boil-out performed by ADPM’s Subcontractors was inadequate and that Noresco had to per­form a second boil-out, at an estimated cost of $15,000. Trial Tr. vol. VI, 43:22-­44:22.

In sum, the work performed by the vari­ous Subcontractors all served to fulfill No­reseo’s obligations under the Prime Con­tract. Noresco does not allege that it already paid ADPM for this work, rather, it hired Subcontractors to complete vari­ous tasks that ADPM had left unfinished. The fact that Noresco paid the Subcon­tractors directly instead of flowing the payments through ADPM, as originally provided under the Agreement, does not result in additional costs to Noresco, un­less such payments exceed the fixed-price of the Agreement. In other words, Nores­co would be entitled to reimbursement of the payments it made to Subcontractors for work within ADPM’s scope only to the extent such payments, together with the amounts already paid to ADPM for billed work or paid in settlement of Subcontrac­tor litigation, exceed the total amount No­resco owed to ADPM under the Agree­ment.

(2) Specific Performance

“[S]pecific performance is ap­propriate when adequate compensation cannot be achieved through money dam­ages.” Yates v. Hill, 761 A.2d 677, 679 (R.I.2000). The remedy of specific per­formance “ ‘rests within the sound discre­tion of the trial justice.’ ” DePetrillo v. Lepore, 871 A.2d 907, 909 (R.I.2005) (cita­tion omitted).

In Spring 2004, Carleton began creating a punch list of work that needed to be completed on the Project. As items on the list were completed, they were deleted from the list. Trial Tr. vol. VI, 44:23-45:9, Ex. 144. Noresco also hired a startup and commissioning engineer and began for­warding updated versions of the punch list to MHRH in order to close out the Pro­ject. Trial Tr. vol. VI, 45:19-46:12. On its part, MHRH continued to withhold money from Noresco based on outstanding punch list items. Id. at 46:13-16, Ex. UU.

In May .2008, Carleton prepared a final punch list that included the estimated cost to complete the Project by ascribing a specific sum to each unfinished task. With respect to the monetized values on the list, Carleton offered that some of the amounts were based on CORs submitted by ADPM for particular tasks, and that he “estimat­ed” the value of other tasks. Trial Tr. vol. VI, 47:13-20. ADPM concedes that the work on the punch list was within its scope of work, but takes exception to the values Noresco has placed on the various list items. Trial Tr. vol. VII at 161:4-17.

Bright’s testimony also supports the conclusion that ADPM was responsible for items on the monetized punch list Noresco had prepared in the context of this litiga­tion. Ex. W, Trial Tr. vol. VII, 140:18-25. The so called “as-builts,” drawings docu­menting the finalized construction, were to be provided by ADPM under the Agree­ment. Particularly, Article 3.32 requires ADPM to prepare record drawings docu­menting the work done on a weekly basis. Ex. 14 p. 25, Trial Tr. vol. VII, 150:6-151:7. The Drawdown Schedule, included as At­tachment VI to the Agreement, features as the last item to be provided by ADPM for payment delivery of the “as-builts.” Ex. 14 p. 78, Trial Tr. vol. VII, 145:3-14. In addition, Exhibit I to the Agreement speci­fies that ADPM “shall furnish two copies of shop drawings, which depict and de­scribe all equipment and fabricated items furnished in the work,” Ex. 2 p. 74 Section 1.04 A 1., and requires ADPM to provide “a set of reproducible as-built drawings.” Ex. 2 p. 74-75, Sec. 1.04 C 1.

With respect to the monetized value of the “as-builts,” Bright conceded that those values had been estimated by Carleton and that Bright himself did not attempt to estimate their actual value. Trial Tr. vol. VII, 147:6-13. Bright explained that to reconstruct the “as-built” drawings of the completed Facility would be nearly impos­sible and prohibitively expensive. Id. at 147:22-148:18. In other words, the mone­tized value of $50,000 for the “as-builts” depicting underground work, sewer, gas, electric and water, is based on educated guesswork rather than accurate assess­ment. Ex. YY, document page 19. The Court notes that the Agreement does pro­vide for a payment of $52,036 (0.46% of the $11,312,235 Preset Price) for the Milestone of ADPM’s delivering to Noresco “the complete set of ‘As Built’ drawings and confirmed specifications.” Ex. 14 p. 78, Attachment VI, Part B.26 However, the Court finds it plausible that it would be more costly, if not entirely impossible, to generate such documentation after the fact.

Based on the specifications contained in Exhibit I to the Agreement, ADPM was required to repair or replace the ID (in­duced draft) fan for Boiler No. 7. Ex. W, document page 21, Item 1. Pursuant to Section 1.1.4. of Exhibit I, general modifi­cations to the existing Facility include re­placement of the “Boiler 7 ID fan motor as it cannot be reconnected for 480V opera­tion.” Ex. 2 pp. 6-7. Trial Tr. vol. VII, 154:2-156:7. Similarly, the section ad­dressing electrical design criteria states that “Boiler No. 7 fan motor which cannot be reconfigured for operation at 480 volts is to be replaced.” Ex. 2 p. 152. Noresco set a monetary value of $91,399 for this punch list item, based on a proposed devia­tion submitted by ADPM for the same work. However, the deviation was later withdrawn by ADPM, presumably because the work was not actually performed by ADPM, which landed it on the punch list. ADPM’s counsel objected to the proposed value at trial and the Court agreed, on the basis that the deviation was no longer a part of the case. However, it would seem to be a reasonable estimate, given that ADPM calculated the cost for the work.

Two other significant items on the punch list concern the emergency diesel genera­tor outside the Facility, which had to be tied to the internal switchboard. Ex. W, document page 21, Items 4 and 6. Bright conceded that he did not determine the value of this work. He explained that connecting the generator would have been relatively easy during construction but that the work must now be done on an accelerated basis because it requires an interruption of the power supply. Trial Tr. vol. VII, 163:7-164:9.

The submitted May 2008 punchlist is of little assistance to this Court, as it contains numerous items that are likely to have been completed at this time, see e.g. Gen­eral Punchlist Item No. 8 (“Manhole cover outside of Turbine Hall # 1 is below grade, manhole fills with water when it rains;” Estimated Costs to Complete Project— $4,000) Ex. UU p. 1. Moreover, the majori­ty of items on the punchlist cannot be reconciled with the specific requirements under the Agreement, and no testimony was elicited from Noresco’s witnesses re­garding the status of those items. In addi­tion, Noresco’s witnesses both conceded that the monetary valuations of the items were the result of guesswork, not indepen­dent analysis or any other reliable pricing mechanism.

Based on the provisions of the Agree­ment and the testimony regarding specific items of the punchlist, the Court concludes that ADPM is required to provide the “as­builts” and the “Operations and Mainte­nance Manuals” to Noresco. Pursuant to the Drawdown Schedule, Noresco would ordinarily be required to pay ADPM for the as-builts and manuals, see Ex. 14 p. 78. However, the amounts Noresco has paid to ADPM for completed work and to the Subcontractors in settlement of their claims or to complete work that fell within ADPM’s scope already exceed the fixed price of the Agreement. Therefore, ADPM shall provide the as-builts and manuals to Noresco without receiving fur­ther compensation. In the event ADPM fails to provide such documentation to No­resco, it shall pay to Noresco the amounts specified in the Agreement’s Drawdown Schedule.

In addition, ADPM shall repair or re­place the ID fan for Boiler No. 7 or reim­burse Noresco for such repair or replace­ment as supported by invoice, up to the amount of $91,399. With respect to the other items Noresco has requested in its First Amended Counterclaim, Noresco has provided no testimony or evidentiary sup­port that it is entitled to those items; they are, for the most part, not contained on the punchlist; and the Court is disinclined to search through the considerable record in order to evaluate the validity of Noresco’s requests.

XIII. Liquidated Damages

A liquidated damages clause is enforceable when “the harm caused by the breach is difficult to estimate and when the amount fixed as liquidated damages is a reasonable forecast of the actual harm.” Howarth v. Feeney, 1992 WL 813502 at *3 (R.I.Super. Jan. 15, 1992) (citing Restate­ment (First) of Contracts § 339(1)(1932)). Under Rhode Island law, the loss resulting from delay in a construction contract is related to the value of the use of the property. Psaty & Fuhrman, Inc. v. Housing Auth. of City of Providence, 76 R.I. 87, 68 A.2d 32, 38 (1949) (upholding liquidated damages provision of $250.00 per day in contract for construction of 744 rental units). In the event actual damages cannot be reasonably established, a fair liquidated damages provision is valid. Id. To be considered reasonable, the amount specified must “approximate actual loss or loss anticipated at the time the contract was executed.” Space Master Int'l, Inc. v. City of Worcester, 940 F.2d 16, 17 (1st Cir.1991). In addition, “ ‘[t]he greater the difficulty either of proving that loss has occurred or of establishing its amount with the requisite certainty ... the easier it is to show that the amount fixed is reason­able.’ ” Id. at 17-18 (quoting Restatement (Second) of Contracts § 356 cmt b.)

The purpose of a liquidated damages provision is to compensate for loss, not to exact punishment for breach. If no loss has been sustained as a result of the breach, a liquidated damages provision may amount to an unenforceable penalty. Howarth v. Feeney, 1992 WL 813502 at *3, see Restatement (Second) of Contracts § 356 cmt (e) (1981)(“If ... it is clear that no loss at all has occurred, a provision fixing a substantial sum as damages is unenforceable”); Space Master Int’l, Inc. v. City of Worcester, 940 F.2d at 18 (find­ing liquidated damages provision to be “unenforceable penalty because no loss had been sustained as a result of the breach”) (citing Priebe & Sons, Inc. v. United States, 332 U.S. 407, 413, 68 S.Ct. 123, 127, 92 L.Ed. 32 (1947)).

Bright calculated that the period during which liquidated damages were incurred lasted from April 30, 2003 through Novem­ber 17, 2003. Trial Tr. vol. VII, 75:3-16. Article 12.3 of the Agreement called for Mechanical Completion and Readiness for Startup on April 30, 2003 and Bright opined that those deadlines were not achieved until November 17, 2003, when Boiler No. 8 was ready for startup. Trial Tr. vol. VII, 75:23-78:20, Ex. 14 p. 45, Ex. 149. Based on the calculated 201 day de­lay and a $3,000 per diem liquidated dam­ages rate provided by Article 10.3(b) of the Agreement, Bright determined a liqui­dated damages amount of $603,000. Trial Tr. vol. VII, 80:1-8, Ex. 14 p. 42.

Pursuant to the Prime Contract, Nores­co itself was liable to MHRH for liquidated damages if it failed to achieve Substantial Completion of the facility on or before the applicable deadline. Art. 10.3(b), Ex. 1 doc. p. 24. The specified amount of $5,000 per day could be reduced to $3,000 per day for the first six months past the deadline, provided Noresco implemented reasonable procedures to correct its delay and the Existing Facility continued to operate at capacity. Art. 10.3(c), Ex. 1 doc. p. 25.

The Prime Contract’s Substantial Com­pletion Deadline was set at 19 months after “the later of receipt of permit to construct from the Rhode Island Depart­ment of Environmental Management or Notice to Proceed.” Ex. 1 doc. p. XI-1, Noresco 0000469 (“Exhibit XI Milestone Schedule”). The environmental permit was received on March 10, 2002, and No­resco informed ADPM of that fact. Joint Pretrial Memorandum p. 2, SUF ¶ 15. Ac­cordingly, Noresco was required to bring the Project to Substantial Completion on or before October 10, 2003. Under the Prime Contract, Readiness for Testing was required 17 months after receipt of the permit, or August 10, 2003. Ex. 1 doc. p. XI-1. The parties agree that MHRH has never formally acknowledged Substantial Completion of the Facility, which was op­erational on December 26, 2003, nor has MHRH sought liquidated damages from Noresco under the Prime Contract.

Although ADPM takes the position that the Facility was essentially mechanically complete on September 7, 2003 and that Noresco could begin the startup and test­ing of the equipment, it is undisputed that ADPM did not meet the Agreement’s Milestone Deadline of April 30, 2003. Tri­al Tr. vol. Ill, 11:21-12:10. Pursuant to Articles 3.1, 12.3, and Attachment XI to the Agreement, ADPM was contractually obligated to certify the Facility as mechan­ically complete and ready for testing on April 30, 2003, unless the period for com­pletion was extended by Noresco. ADPM submitted a Certificate of Readiness on September 7, 2003. Ex. 436, which was promptly rejected by Noresco because the certification lacked start-up checklists for major electrical equipment and because significant work items remained incom­plete. Ex. 437. On November 13, 2003, Noresco confirmed to MHRH that the Fa­cility was ready for start-up, with the ex­ception of the Noresco supplied Boiler No. 8. Ex. 149.

ADPM also acknowledged that it was responsible to complete the unfinished work and provide the appropriate docu­mentation required under Article 12.3. Ex. 14 p. 45. Several communications by McNaught to Noresco establish that ADPM continued to work on delivering the missing items for at least two months after issuing the completion certificate. Trial Tr. vol. Ill, 12:4-10, Ex. 472-478. More­over, there has been no assertion that Noresco granted an extension of the mile­stone deadlines to ADPM or that it 're­lieved ADPM of the liquidated damages provision under the Agreement.

Noresco provided no proof at trial that it has incurred any loss as a result of ADPM’s failure to meet the April 30, 2003 deadline. Carleton conceded that Noresco never provided ADPM with a written doc­ument specifying the liquidated damages it now claims, nor did Noresco provide ADPM with an invoice as described in Article 6.7 of the Agreement. Trial Tr. vol. VI, 122:8-15, Ex. 14 p. 33. Bright also confirmed that he was not provided with an invoice related to liquidated damages. Trial Tr. vol. VIII, 23:13-17. Instead, he merely established that the deadline was not met by ADPM and he explained his method for calculating the liquidated dam­ages sum under the Agreement provisions.

As Noresco acknowledged, it has not been assessed any liquidated damages by the. State of Rhode Island for failing to meet construction deadlines imposed by the Prime Contract. SUF 75. Under those circumstances, the Court finds that an imposition of liquidated damages would amount to a penalty, not compensation for damages.

Moreover, it is not clear that the liqui­dated damages provision was triggered in this case. The Agreement provides that, in the event the April 30, 2003 Milestones were not met, the parties should attempt to agree on the amount of liquidated dam­ages once MHRH acknowledged that the Facility was ready for testing. If the par­ties were unable to agree within ten days of receiving MHRH’s confirmation, then “upon submission by either party the mat­ter shall be determined in accordance with the expedited procedures set forth in the Construction Industry Arbitration Rules of the American Arbitration Association.” Ex. 14 p. 42, Article 10.4. The parties agree that MHRH did not provided formal notice of Readiness for Testing. In addi­tion, no evidence has been submitted to this Court that the parties have complied with the provision of Article 10.4, which provides for good faith negotiation and, if such negotiations have failed, for determi­nation of the matter by arbitration.

In sum, although it is undisputed that ADPM failed to meet the Readiness for Startup deadline, no evidence has been submitted that Noresco suffered a loss from such delay, or that MHRH acknowl­edged eventual achievement of that mile­stone, which would have triggered calcu­lation of the liquidated damages. The parties concede that neither of them sub­mitted the issue of liquidated damages to arbitration as mandated by the Agree­ment. Ex. 14 p. 42, Art. 10.4. Accord­ingly, Noresco’s claim is denied without prejudice to submit the matter to arbitra­tion as provided in Article 10.4 of the Agreement.

XIV. Cost of Defense in Subcontrac­tors’ Litigation

Noresco seeks to recover $373,670.50 from ADPM for attorney’s fees Noresco incurred in defending itself in the Subcontractor litigation. Noresco asserts in its post-trial brief that it is entitled to indemnification by ADPM based on Article 14.1 of the Agreement, which provides for indemnification of Noresco and MHRH against third party claims. Noresco’s Post-trial Brief, pp. 81-82, ¶¶ 55-60. Ex. 14 p. 47. This specific claim was first alluded to at trial, where Noresco’s general counsel testified that Noresco’s claim for attorney’s fees in the Subcontractor litiga­tion was based on the indemnification pro­vision in Article 14.1. Trial Tr. vol. VII, 11:10-12:12, Ex. 14 p. 47, Art. 14.1. Arti­cle 14.1 of the Agreement states in perti­nent part:

Indemnification. [ADPM] hereby agrees and covenants to indemnify, de­fend, and hold harmless Noresco and [MHRH], to the extent of [ADPM’s] re­sponsibility, from and against any liabili­ty of whatsoever kind or character, in­cluding but not limited to, attorneys’ fees and expenses, arising from any claim by a third party arising out of all accidents, injuries, or damages of any kind to the extent caused, or claimed to be caused, in whole or in part by the negligence, or willful misconduct of [ADPM], its agents, employees, vendors or subcontractors. Ex. 14 p. 47, Art. 14.1. (Emphasis added).

It is an established rule of law that “indemnification provisions are to be strictly construed against the party assert­ing a right of indemnification.” Sansone v. Morton Mach. Works, Inc., 957 A.2d 386, 393 (R.I.2008); Gordon v. Campanella Corp., 112 R.I. 417, 311 A.2d 844, 849-50 (1973)(“Where money is sought because of an indemnity provision in a contract, we have emphasized that such clause will be strictly construed against the indemni­tee.”).

The language of this provision, broadly worded as it is, indicates that it is intended to provide indemnification for claims aris­ing in tort, not from breach of contract or for claims asserted through mechanics liens. ADPM’s obligation to indemnify Noresco or MHRH under this particular provision is limited to claims by third par­ties for accidents, injuries or damages caused by negligence or willful misconduct. The indemnification clause is silent with respect to any obligation on ADPM’s part to indemnify Noresco (or MHRH) for third party claims arising out of contractual breach.

Noresco provided no evidence at trial to support its recently invoked legal theory for imposing indemnification obligations on ADPM in connection with the Subcontrac­tor litigations. Noresco’s blank assertion that “ADPM’s failure to pay the Subcon­tractors for work performed by them on the Project constitutes willful misconduct, or, in the alternative, negligence,” Noresco post-trial brief p. 82, ¶ 58, is as unconvinc­ing as it is unsupported. ADPM’s efforts in obtaining payment from Noresco in or­der to pay its Subcontractors are well-­documented, see e.g., Ex. 135, Ex. 37, and Noresco has made no allegations that ADPM’s failure to pay its Subcontractors promptly was the result of negligence or willful refusal rather than lack of sufficient funds. In other words, the Agreement’s indemnification clause provides no basis for a direct indemnification claim against ADPM.27 Consequently, Noresco’s claim against ADPM for attorney’s fees incurred in the Subcontractor litigation is denied.

XV. Calculation of Damages

Pursuant to the Agreement, ADPM was required to perform all work specified therein for the fixed price of $13,487,498, subject to any change orders approved by Noresco. To the extent the payments made by Noresco (1) to ADPM for com­pleted and billed work, (2) to the Subcon­tractors in settlement of their claims for completed work, and (3) to complete tasks that fell within ADPM’s scope of work exceed that fixed price, Noresco has suf­fered certain damages and is entitled to compensation from ADPM. In addition, it has been established that Noresco may incur additional costs to complete the re­pair or replacement of Boiler No. 7 and to obtain as-builts and Operations and Main­tenance Manuals, all of which ADPM was required to perform or furnish under the Agreement.

ADPM and Noresco have submitted, in their post-trial briefs, detailed calculations regarding their respectively asserted dam­ages. According to ADPM, by late 2003, it had billed Noresco $13,182,256 for com­pleted work and had received $12,415,451 in payments. ADPM Brief ¶ 8. ADPM further asserts that “[t]he amount billed to Noresco for work completed but unpaid to [ADPM] as of December 30, 2003 was $766,805.” ADPM Brief ¶ 8.

According to McNaught’s testimony, ADPM submitted its last monthly billing requisition (“Requisition No. 24”) to No­resco on December 30, 2003. Trial Tr. vol. I, 46:5-20, Ex. 39. Requisition No. 24 quotes a sum of $13,182,256 for “Total Completed & Stored to Date;” prior pay­ments of $12,742,173; and an agreed upon 2 1/2% retainage28 of $329,556. Ex. 39, second page of unpaginated exhibit. The current payment due is set at $110,527, with a balance to finish of $625,798. McNaught explained that $100,661 worth of scope work had not been completed, including the delivery of Operations Main­tenance Manuals and As-Builts. Trial Tr. vol. I, 49:23-50:25. Further incomplete items include $171,444 for Allowance work, and $24,137 for change order work. In other words, the “balance to finish” of $625,798 was comprised of the retainage and the value of the work that had not yet been completed by ADPM ($329,556 for retainage + $100,661 for unfinished base work + $171,444 for unfinished allowance work + $24,137 for change order work = $625,798).

ADPM did not establish at trial, and it remains unclear, why ADPM did not re­ceive payment for work that it claimed to have already completed and for which it had billed Noresco accordingly. Nor did ADPM support its claim that its obli­gations under the Agreement had been “substantially completed.” ADPM’s certi­fication of completeness was promptly re­jected by Noresco, and, although ADPM had received a large percentage of the fixed price due under the Agreement, a significant number of tasks remained that were essential for completion of the Pro­ject. ADPM’s submitted testimony and evidence was primarily focused on out­standing payments for deviations that, ac­cording to ADPM, resulted from material changes to the scope of work set forth in the Agreement.

However, as Noresco apparently agrees, without further argument, that ADPM is owed $766,805 for completed work, that amount serves as a starting point for the Court’s calculation of damages. Likewise, Noresco agrees that ADPM is owed $162,327 for approved deviations.29 ADPM’s Brief ¶21, Ex. B to Noresco’s Brief p. 2. In addition, as established by Noreseo’s own expert, ADPM is owed $17,-­37230 for deviations for work outside the Agreement. For reasons detailed in Sec­tions V, VII, and X herein, ADPM has failed to prove that it is entitled to pay­ment for any of the remaining CORs. As explained in Section VII of this Decision and Order, ADPM has also failed to prove that it was entitled to an extension of the milestone deadlines. It is, therefore, not entitled to additional payments for costs of ADPM personnel and site equipment or for the cost of extending the builder’s risk insurance coverage.

With respect to a payment request of $20,000 for completion of switchgear change order work in January 2004, as reflected by Deviation 87, Ex. 1141, see ADPM’s Brief p. 4, ¶ 17, ADPM failed to establish at trial that it was still owed payment for such work. Testimony by McNaught was inconclusive whether the work had been actually performed and he could not recall whether payment had been received for the work. Trial Tr. vol. I, 60:15-20, 61:19-24.

In sum, based on the testimony and evidence submitted at trial, as well as the stipulated facts submitted by the parties, this Court concludes that ADPM is owed a sum of $956,018 from Noresco. ($766,805 for completed work + $162,327 approved deviations + $26,886 for disputed devia­tions = $956,018).

Noresco, on its part, has submitted un­controverted evidence that it has expended $840,000 to pay Subcontractors for work they performed on ADPM’s behalf.31 As noted before, apart from maintaining that one of the Subcontractors was overpaid, a contention for which it provided no further evidentiary support, ADPM agreed that the work performed by the Subcontractors was within the scope of the Agreement.

Further, Noresco has submitted evi­dence that it paid a total of $260,411 to complete work on the Project which fell within ADPM’s scope of work.

Regarding Noresco’s claim for monetary damages or specific performance for items on the punch list, Noresco has demon­strated that it is entitled to certain items on the list which ADPM is obligated to deliver under the Agreement. See Section XII supra. However, Noresco’s value as­sessment of the remaining punch list items is largely based on guesswork and, there­fore, insufficient to support its claim for monetary compensation of those items. Therefore, Noresco’s claim for $505,949 for incomplete punch list items is denied. However, in the event ADPM fails to re­place or repair the Boiler No. 7 ID fan, as provided in Section VII(2) of this Decision and Order, Noresco shall be entitled to re­imbursement for the cost of repairing or replacing the fan; such reimbursement is not to exceed the amount of $91,399. Likewise, if ADPM fails to provide Nores­co with the as-builts or Operations and Maintenance Manuals, it shall pay to No­resco the amounts specified therefor in the Drawdown Schedule.

With respect to liquidated damages, as detailed in Section XIII herein, Noresco has made no showing that it suffered any damages as a result of ADPM’s failure to miss the Milestone deadlines. Moreover, the parties have not engaged in arbitration to resolve this issue, as mandated by the Agreement. Therefore, no sums will be awarded to Noresco for liquidated dam­ages at this time.

Noresco also seeks to recover $144,058 in “undisputed credits” from ADPM, as itemized in Deviations 545, 546, 547, and 548 (Exhibits 389, 390, 391, and 392, re­spectively). None of these deviations were addressed at trial. Instead, they belong to the more than 900 exhibits which were entered into evidence with the consent of Noresco and ADPM but without further explanation. Nevertheless, the jointly submitted Deviation Stipulation states that these deviations were “[ujndisputed credits to Noresco” related to “Allowance Resolu­tion.” Deviation Stipulation, Tab 2, p. 2. Moreover, a review of the deviations re­veals that they were signed by McNaught on January 9, 2004 and that they reflect “work not executed,” resulting in a “return to Noresco.” In addition, McNaught testi­fied at trial that Noresco was entitled to $829 in connection with work performed by Arden, as documented in Deviation 152, Ex. 345. Trial Tr. vol. I, 143:19-25. Based on the joint submissions by Noresco and ADPM, and in the absence of any challenge to these deviations, the Court finds that Noresco is entitled to a credit of $144,058.

Finally, Noresco seeks a credit of $25,223 for payment it made to ADPM under Deviation 412, Ex. AA, while reserv­ing its right to determine whether the work was within ADPM’s scope.32 ADPM submitted a COR for insulating HRSG risers in August 2003. Dev. 412, Ex. AA. After reviewing the applicable provisions in the Agreement, the materials supplied by Energy Recovery International, and the trim list for Noresco supplied equip­ment, Carlton determined that the work was within ADPM’s scope. However, he approved the deviation with a note of res­ervation because he “needed to have this insulated to keep the job moving.” Trial Tr. vol. V, 24:20-25:17. The note states that “Noresco and [ADPM] will reach final resolution on ownership before money is to be released for this.” Ex. AA. Subse­quently, Noresco paid ADPM for the work but now seeks a credit.

Although Carleton’s testimony on this point was not further disputed at trial, it was insufficiently specific to allow a deter­mination whether ADPM was responsible for insulating the HRSG risers, nor was this deviation addressed by Noresco’s ex­pert. In addition, no testimony was pre­sented whether the parties came to a reso­lution of the issue prior to payment of the COR by Noresco, as indicated by the note. Therefore, Noresco’s request for the re­turn of its payment for Deviation 412 is denied.

In sum, Noresco is entitled to credit or payments from ADPM in the amount of $1,244,469. ($840,000 for settlement pay­ments + $260,411 to complete work on the Project + $144,058 in undisputed credits = $1,244,469) As previously stated, Nores­co owes to ADPM payment in the amount of $956,018. It is, therefore, this Court’s determination that ADPM shall pay to No­resco the sum of $288,451.

XVI. Attorney’s Fees in the Instant Case

Pursuant to Section 9-1-45 of the Rhode Island General Laws, the Court may award reasonable attorney’s fees to the prevailing party in a breach of contract action only if the Court finds that “there was a complete absence of judiciable issue of either law or fact raised by the losing party.” R.I. Gen. Laws § 9-1-45 (1956). The award of attorney’s fees rests within the discretion of the Court. Greensleeves, Inc. v. Smiley, 754 A.2d 102, 103 (R.I.­2000).

In this breach of contract case, both Noresco and ADPM have prevailed on some of their claims, based on validly raised and amply supported questions of fact and law. Noresco is correct in point­ing out that, in the course of litigation, ADPM reduced the size of its claims sig­nificantly and also conceded that Noresco was entitled to reimbursement for the Subcontractor settlements and for per­forming work that had not been completed but fell within ADPM’s scope. However, it has also been established, in the course of this litigation, that ADPM was entitled to payment of more than $950,000 for com­pleted work and approved deviations. Therefore, this Court is of the opinion that neither position can be described as frivo­lous and that the statutory prerequisite standard of Section 9-1-45 has not been met. Accordingly, no award of attorney’s fees is warranted in connection with this litigation.

XVII. Third Party Cross Claim

Noresco seeks indemnification from the Co-Sureties for payments it made to settle the Subcontractor litigation. As already determined by this Court, Noresco was ultimately required to pay for work the Subcontractors performed on behalf of ADPM. See Section XII herein. Without the Subcontractor litigation and resulting settlements, such payments would have simply flowed through ADPM as part of the regular billing process. However, be­cause such work was included in ADPM’s scope of work, Noresco is now entitled to, and has been awarded by this Court, a credit of $840,000 which it expended on paying the Subcontractors for their com­pleted work.

Therefore, the dispute between Noresco and the Co-Sureties is limited to claims for $373,670.5033 in attorney’s fees in­curred by Noresco in the Subcontractors litigations.

(1) The Performance Bond

Although the Performance Bond at issue contains no choice of law provision, it is intended to insure performance of the Agreement, which is governed by Rhode Island Law. Ex. 14 p. 51, Art. 18.1. Therefore, Rhode Island law applies to the Performance Bond as well. Marshall Con­tractors, Inc. v. Peerless Ins. Co., 827 F.Supp. 91, 93-94 (D.R.I.1993) (perform­ance bond is “to be construed in accor­dance with ‘the law governing the princi­pal’s obligation which the [performance bond] was intended to secure’ ”). It is a long established rule under Rhode Island law that a surety bond is to be strictly construed and that, “[i]n the absence of ambiguity, the extent of the liability of the surety on a common-law bond is deter­mined solely by the language of the bond.” Narragansett Pier R. Co. v. Palmer, 70 R.I. 298, 38 A.2d 761, 763 (1944); State of Rhode Island Dept. of Corr. v. ADP Mar­shall, Inc., 2004 WL 877560 *8 (R.I.Super. March 29, 2004).

A. Performance Bond Provisions

In April 2002, the Co-Sureties issued a Performance Bond and a Payment Bond with ADPM as Contractor and Noresco as Obligee34 for the Project. Exhibits 406, 407. Pursuant to the Performance Bond, if ADPM defaulted under the Agreement, and subject to certain conditions, the Co-­Sureties were obligated for (1) correction of defective work and completion of the Agreement; (2) additional legal, design professional and delay costs resulting from ADPM’s default; and (3) liquidated or ac­tual damages caused by delayed perform­ance or non-performance of ADPM. Ex. 406 p. 2, ¶ 6.1 -6.3.

The Co-Sureties’ obligations were trig­gered only if Noresco was not in default under the Agreement. Owner default is defined in the Performance Bond as “fail­ure ... to pay [ADPM] as required by the [Agreement] or to perform and complete or comply with the other terms thereof.” Ex. 406 p. 3, ¶ 12.4. In addition, Noresco was required to comply with the following conditions: First, Noresco had to notify ADPM that it considered declaring a Con­tractor default and attempt to arrange a conference with ADPM and the Surety within 15 days of such notice. Ex. 406, p. 2 ¶ 3.1. Second, Noresco had to declare a Contractor default and formally terminate ADPM’s right to complete the Agreement. Id. p. 2 ¶ 3.2. Third, Noresco had to agree to pay the balance of the Agreement price to the Co-Sureties. Id. p. 2 ¶ 3.3.

Once Noresco met those conditions, the Co-Sureties were required to elect wheth­er to (1) arrange for ADPM, with Nores­co’s consent, to perform and complete the Agreement, ¶ 4.1; (2) undertake perform­ance and completion of the Agreement themselves, through agents or independent contractors, ¶ 4.2; (3) arrange for a re­placement contractor acceptable to Nores­co, ¶ 4.3; or (4) waive their rights as set forth in the preceding sections and (a) determine the amount of the Co-Sureties’ liability and tender payment to Noresco, or (b) deny liability and notify Noresco ac­cordingly. Id. ¶ 4.4.

Any legal proceedings under the Per­formance Bond were expressly limited to initiation within two years following the earlier of these three trigger events: (1) ADPM was in default of the Agreement; (2) ADPM ceased working; or (3) the Co-­Sureties refused or failed to perform their obligations under the Bond. Ex. 406 p. 2, ¶ 9.

B. Factual Background

McKinnon, general counsel for Noresco, initially reviewed the Subcontractor claims that were brought against Noresco and Lumbermens beginning in March 2004. Trial Tr. vol. VII, 6:21-7:2. By letter dat­ed June 17, 2004, McKinnon informed St. Paul and Fidelity that ADPM “failed to complete its performance” on the Project. Ex. 942. McKinnon’s letter asserted that the Project was “incomplete” and that ADPM “has not been actively engaged in the project for several months.” Id. McKinnon warned that, unless ADPM “re­sumes performing its obligations under the contract immediately, Noresco will termi­nate the contract and invoke performance provisions under the above referenced per­formance bond.” She also requested a meeting between Noresco and the Co-In­surers to “discuss methods for completing the project.” Id. McKinnon’s letter refer­ences 400SP8413-10/8642263, which is the number of both the performance bond and the payment bond issued by the Co-Sure­ties to ADPM. Id. Ex. 406, 407. According to McKinnon, she received no response to her correspondence from the Co-Insurers. Trial Tr. vol. VII, 8:25-9:4.

By letter dated August 12, 2004, Nores­co informed ADPM that Noresco was ter­minating the Agreement based on ADPM’s failure to adhere to the Milestone Sched­ule, resulting in a continuing default under the Agreement. Ex. 944. Prior to this termination, Noresco requested that ADPM finish incomplete punch list items identified by Noresco, and provide a com­plete ADPM generated punch list. Id. Noresco’s August 12, 2004 letter states that “Noresco will deduct all costs in­curred in correcting the remaining defi­ciencies from the monies due. Should the amount expended thereby exceed the un­paid balance of the [Agreement], Noresco shall make demand on ADPM’s Payment Bond issued by St. Paul Fire and Marine Insurance Company.” Id. (Emphasis add­ed).

Following this communication from No­resco, St. Paul responded by letter dated September 7, 2004, in which it asserted that “Noresco has not yet met the condi­tions precedent of the AIA 312 Perform­ance Bond; at this time, the Surety has no obligation to take any action.” Ex. 945. St. Paul also voiced its understanding that ADPM and Noresco “are mediating then-­disputes September 8-10, 2004” and that the parties anticipated a resolution of then-­differences without the Surety’s involve­ment. Id.

In the interim, Noresco and Lumber­mens filed cross-claims against ADPM and its Co-Sureties in several of the Subcon­tractor actions. Noresco and Lumber­mens’ cross-claims for breach of contract by ADPM and the Co-Sureties solely ref­erence the Payment Bond. See e.g. Ex. 946 pp. 6-7, ¶¶ 5, 10; Ex. 947 pp. 8-9. ¶¶ 5, 12; Ex. 948 pp. 5-6, ¶¶ 5,11; Ex. 949 pp. 6-7, ¶¶ 5, 10; Ex. 950 pp. 5-6, ¶¶ 5, 10. On their part, the Co-Sureties filed cross-­claims and a third party complaint against Noresco and Lumbermens in the Hydro-­Chem litigation on July 30, 2004, in which they asserted that ADPM’s performance had been satisfactory; that Noresco caused any delays resulting in additional costs to ADPM; and that Noresco had wrongfully refused to pay ADPM’s in­voices.

C. Arguments by the Parties

The Co-Sureties have consistently ar­gued that any claims Noresco has raised in this litigation under the Performance Bond are barred by the two-year statute of limi­tations set forth in Section 9 therein. The Co-Sureties also submit that Noresco failed to comply with conditions precedent contained in the Performance Bond. Par­ticularly, they allege that Noresco was in default under the Agreement; that it as­serted a claim under the Payment Bond only; and that it did not agree to pay the balance of the Agreement price to the Co-­Sureties, as required by Paragraph 3.3 of the Performance Bond.

In response, Noresco maintains that it “timely filed its claims against the Sureties in state court.” Noresco Brief p. 95, ¶ 109. Noresco also suggests that the limitations period should be tolled because its cross-­claims in state court were never dismissed, and are therefore still pending. Id. ¶ 110.35 Noresco further suggests that the Co-Sureties were in default for failing to participate in a requested conference with Noresco and ADPM, and that Noresco was excused from agreeing to pay the balance of the Agreement price because no such balance existed.

D. Discussion

The evidence and testimony relating to Noresco’s claims under the Performance Bond is essentially undisputed. On June 17, 2004, Noresco declared ADPM in de­fault of its obligations under the Agree­ment. Ex. 942. The submitted correspon­dence does not clearly establish the exact date on which ADPM ceased working on the Project. By the time the Co-Sureties filed cross-claims and counterclaims in the Subcontractor cases in July, 2004, it was evident that they refused to make payment under the Performance Bond. Subsequent­ly, on August 12, 2004, Noresco terminated the Agreement after ADPM allegedly failed to cure the deficiencies listed in No­resco’s Notice to Cure Default letter dated July 14, 2004. Ex. 944.

Noresco appears to concede that its ter­mination of the Agreement on August 12, 2004 triggered the limitations period dur­ing which Noresco could institute “legal or equitable proceedings, under this Bond ... in any court of competent jurisdiction.” Ex. 406 p. 2, ¶ 9 (Emphasis added). No­resco Brief p. 95, ¶ 109. Therefore, Nores­co was limited to commence proceedings against the Co-Sureties under the Per­formance Bond by August 12, 2006, at the latest. Noresco’s claims against the Co-­Sureties were first asserted in this Court on June 11, 2007 in its answer and coun­terclaim, ten months after the contractual deadline for instituting such litigation had passed.36 Although Noresco argues for a tolling of the statute of limitations based on its pending cross-claims in state court, such claims were raised solely under the Payment Bond, which is separate and dis­tinct from the Performance Bond. Nores­co’s belated amendment of its pleadings in state court to include claims against the Performance Bond provides no basis for ignoring the plain language of the Per­formance Bond, which unambiguously lim­its the time period during which claims against it may be raised.

Based on the established timeline of No­resco’s claims against the Co-Sureties, the Court concludes that Noreseo’s claim un­der the Performance Bond is barred by the contractual time limitation contained therein. Because a determination that Noresco’s claim on the Performance Bond was untimely is decisive on the matter, the Court need not address the additional ar­guments raised by the parties.

2. The Payment Bond

The obligation of a surety under a payment bond is distinct and separate from its obligation under a performance bond. While a performance bond is in­tended “to secure to the [owner] the faith­ful performance of all obligations which a contractor may assume towards it,” the payment bond is intended “to protect third persons from whom the contractor may obtain materials or labor ... ”’ Equitable Sur. Co. v. McMillan, 234 U.S. 448, 454, 34 S.Ct. 803, 805, 58 L.Ed. 1394 (1914); First Nat’l Ins. Co. of America v. Lynn, 525 F.2d 1, 3-4 (1st Cir.1975).

The Payment Bond, which was issued simultaneously with the Performance Bond, binds ADPM and the Co-Sureties to Noresco to pay for “labor, materials and equipment furnished for use in the per­formance of the [Agreement].” Ex. 407 p. 2 ¶ 1. Specifically, the Payment Bond se­cures payment by the Co-Sureties to “Claimants”37 for work such Claimants have performed or for materials they have furnished. With respect to Noresco, the obligation under the Payment Bond is “null and void” if (1) ADPM promptly pays all Claimants for sums due; and (2) ADPM defends and indemnifies Noresco from all claims for payment for labor, materials and equipment provided under the Agree­ment; and (3) “provided there is no Owner Default,” Ex. 407 p. 2, ¶¶ 2.1, 2.2., which is defined as failure by Noresco to “pay [ADPM] as required under the Agreement or to perform and complete or comply with the other terms thereof.” Id. p. 3, ¶ 15.3. Likewise, the Co-Sureties’ obligation to pay the Claimants is “null and void” if ADPM “promptly makes payment, directly or indirectly, for all sums due.” Ex. 407 p. 2, ¶ 3.

Once proper notice is given of a claim under the Payment Bond (which includes notice by Noresco to ADPM or the Co-­Sureties), the Co-Sureties must either (1) provide an answer to the Claimant, “stat­ing the amounts that are undisputed and the basis for challenging any amounts that are disputed;” or (2) “[p]ay or arrange for payment of any undisputed amounts.” Id. ¶ 6.1, 6.2. The Payment Bond also provides that “[a]mounts owed by [Noresco] to [ADPM] under the [Agreement] shall be used for the performance of the [Agree­ment] and to satisfy claims, if any, under the Construction Performance Bond.” Id. ¶ 8. Unlike the Performance Bond, the Payment Bond contains no provisions that address the issue of legal expenses in­curred by the Claimants.

Noresco’s sole argument for recovery under the Payment Bond is that, under the principle of equitable subrogation, it as­sumed the Subcontractors’ rights to pay­ment by the Co-Sureties once Noresco paid the Subcontractors’ claims in settle­ment. Noresco Brief, pp. 96-98. The Co-­Sureties respond that Payment Bonds are intended for the benefits of labor and ma­terialmen; that Noresco is not a proper “Claimant;” and that, generally, obligees have no right of recovery under a payment bond. Co-Sureties Brief p. 19.

Subrogation is intended to reim­burse a party compelled to discharge a debt owed by another party. Pearlman v. Reliance Ins. Co., 371 U.S. 132, 136-37, 83 S.Ct. 232, 235, 9 L.Ed.2d 190 (1962). Al­though subrogation may originate from a contractual agreement, “ ‘[i]t is a creature of equity; it is enforced solely for the purpose of accomplishing the ends of sub­stantial justice; and is independent of any contractual relations between the par­ties.’ ” Pearlman v. Reliance Ins. Co., 371 U.S. at 137 n. 12, 83 S.Ct. 232. “Tradition­ally sureties compelled to pay debts for their principal have been deemed entitled to reimbursement ... there are few doc­trines better established that a surety who pays the debt of another is entitled to all the rights of the person he paid to enforce his right to be reimbursed.” Id. at 137, 83 S.Ct. at 235. See U.S. Fidelity & Guar. Co. v. Rhode Island, 53 R.I. 397, 167 A. 143, 146 (1933) (“A surety which has to pay out money as surety on a building contrac­tor’s bond is entitled to be subrogated to the rights of the contractor in any balance due him.”). Conversely, claims by own­ers/obligees under a payment bond are not favored by easelaw. See, e.g., Fed. Ins. Co. v. Maine Yankee Atomic Power Co., 183 F.Supp.2d 76, (D.Me.2001) (collecting cases); Am. Mfrs. Mut. Ins. Co. v. Sherb­orn Meadows, 2008 WL 5396479 *6 (D.Mass. Dec. 22, 2008) (unpublished deci­sion).

In this case, Noresco paid certain amounts to the Subcontractors directly for completed work on the Project which it, otherwise, would have paid to ADPM un­der the Agreement and which ADPM would have used, in part, to pay the Sub­contractors. Because the Subcontractors’ work was performed on behalf of ADPM and within ADPM’s scope of work, Nores­co is entitled to a credit against any claims ADPM has raised against it. Noresco has been awarded by this Court the amount of $840,000 which Noresco paid to Subcon­tractors in settlement. Therefore, subro­gation of Noresco to the rights of the Subcontractors is not implied by equity considerations.

The remaining question in this case is whether Noresco is entitled to equitable subrogation with respect to the attorney’s fees it has incurred in defending the Sub­contractor litigation. The Co-Sureties’ ob­ligations under the Bond are limited to (1) paying Subcontractors for claimed amounts that are undisputed or (2) provid­ing a basis for those amounts which they challenge. Those obligations do not ex­tend to providing reimbursement of legal expenses incurred by the Subcontractors for raising claims against the Bond or to defending and/or indemnifying Noresco from claims for labor or materials. As Noresco has pointed out, its cross-claims against ADPM and the Co-Sureties re­main pending in the state court, and No­resco is not precluded from seeking reim­bursement for its litigation expenditures there.

For the foregoing reasons, Noresco’s claims for equitable subrogation under the Payment Bond are denied and judgment shall enter in favor of the Co-Sureties.

CONCLUSION

This Court has been presented with ex­tensive testimony and an overwhelming ev­identiary record generated in the course of the Project. To address each and every claim by the parties, no matter how insig­nificant, is beyond the capability of a trial and the precise assessment of damages would require a team of accountants.

The picture that emerged during the trial is that ADPM agreed to undertake a complex construction project pursuant to design plans that were only 75% complete. If ADPM completed the construction as specified in the Agreement in a timely fashion and for less than the fixed price, it stood to reap the benefits of a higher profit. Likewise, ADPM assumed the risk that its profits would be reduced or elimi­nated by increased costs and unforeseen delays.

Prior to entering into the Agreement with Noresco, ADPM examined the site of the Project, reviewed the provided 75% design plans and conducted meetings with the State “to get a better understanding of the existing facilities.” Trial Tr. vol. I, 31:25-32:3. In addition, ADPM received Exhibit I to the Prime Contract which provided detailed technical specifications of the Project. Id. at 32:4-33:7. The con­struction documents in this case are almost as complex as the Project itself. In order to determine the extent of its obligations, ADPM had to review not only the Agree­ment with its numerous attachments and referenced exhibits, but it also had to re­view documentation provided by various manufacturers, and cross reference specif­ic provisions with construction design plans.

From the outset, it appears that ADPM failed to explore and fully under­stand the extent of its contractual obli­gations, or to appreciate that the continu­ing development of the 75% design plans would require ADPM to supply items or perform work not necessarily specified at the time the Agreement was executed. As soon as ADPM commenced the pre­construction work, it learned that the as­bestos abatement work was more exten­sive than anticipated. Although ADPM informed Noreseo accordingly, it failed to negotiate inclusion of the resulting addi­tional cost of such work into the Agree­ment.

Similarly, although ADPM became aware early in the Project that the site utilities relocation work would result in significant construction delays and addi­tional costs, it failed to negotiate an amendment to the April 2003 Milestone Deadlines prior to executing the Agree­ment. In addition, the Subcontractors’ ob­ligations under the Subcontracts apparent­ly did not satisfy the obligations ADPM had under the Agreement, leaving work to be performed by ADPM for which the Subcontractors demanded additional pay­ment that Noreseo declined to pay.

Once the Subcontractors commenced lit­igation against Noreseo, and in light of the unfavorable outcome of the HydroChem case, Noreseo had no alternative than to settle the Subcontractors’ outstanding claims. Moreover, in order to fulfill its own obligations under the Prime Contract, Noreseo was required to hire Subcontrac­tors directly to continue and finish con­struction of the Facility. As this Court repeatedly indicated to the parties, Nores­co would have been required to pay for such work in any case, by flowing the payments through ADPM. However, be­cause the direct payments to ADPM, the amounts paid in settlement, and the cost of finishing the Project, together, exceed the amount owed to ADPM under the fixed-­price Agreement, Noreseo has established that it was damaged, at least in part, by making such payments. As previously stated, Noreseo is, therefore, entitled to recover the sum of $288,451 from ADPM.

Regarding Noresco’s claims for specific performance, Noreseo has supported its claims only with respect to (1) delivery of “as-builts” and “Operations and Mainte­nance Manuals,” and (2) repair or replace­ment of the ID fan for Boiler No. 7. Be­cause Noreseo has conceded that the monetary values assigned to the remain­ing Punch list items are the result of guesswork and not further supported by analysis, no monetary award is appropri­ate for such work.

With respect to Noresco’s claim for liq­uidated damages, Noreseo has failed to submit any evidence of a loss resulting from ADPM’s failure to meet the Mile­stone deadline. Moreover, the Agreement requires the parties “in good faith [to] endeavor to agree on the amount,” or, otherwise, submit the matter to arbitra­tion.

Noresco’s claim against ADPM for legal costs incurred in the Subcontractor litiga­tion pursuant to an indemnification provi­sion in the Agreement is unsupported by the plain language of the provision or by any evidence Noresco presented at trial.

With respect to Noresco’s third party claims against the Co-Sureties, it is appar­ent that Noresco failed to assert a timely claim under the Performance Bond, and that it is precluded from recovery under the Payment Bond on a contractual or an equitable basis.

For the reasons stated herein, the Court decides as follows:

(1) Judgment shall enter in favor of ADPM for the amounts owed to ADPM for billed and finished work and those CORs which this Court deemed to be meritori­ous, for a total of $950,018.

(2) Judgment shall enter in favor of Lumbermens for any claims ADPM has raised against it.

(3) Judgment shall enter in favor of No­resco for payments to any Subcontractors (a) in settlement of their claims against Noresco; (b) for work performed to fulfill Noresco’s obligations under the Prime Contract or (c) resulting in an undisputed credit, for a total amount of $1,244,469.

(4) Judgment shall enter in favor of No­resco on Noresco’s claim for specific per­formance as specified herein. ADPM is ordered to provide, within 90 days of this Decision and Order, the “as-builts” and “Operations and Maintenance Manuals.” In the event ADPM fails to provide the as­builts and/or the Operations and Mainte­nance Manuals to Noresco, it shall instead pay to Noresco the respective amounts specified in the Drawdown Schedule.

In addition, ADPM shall repair or re­place the ID fan for Boiler No. 7 or reim­burse Noresco for the cost of repair or replacement, as supported by invoice or appropriate backup documentation, up to the amount of $91,399.

(5) The Court denies Noresco’s claim for liquidated damages, without prejudice to submitting its claim to arbitration in accordance with the Agreement.

(6) The Court denies Noresco’s indemni­fication claims against ADPM under Arti­cle 14.1 of the Agreement for costs Nores­co incurred in the Subcontractor litigation.

(7) The Court finds in favor of the Co-­Sureties on Noresco’s third party claims pursuant to the Performance Bond and the Payment Bond.

(8) The Court declines to award attor­ney’s fees to either party.

SO ORDERED.

1

. Lumbermens' claims against ADPM have since been dismissed. See ADP Marshall, Inc. v. Noresco, C.A. No. 07-129ML, Docket No. 107 (D.R.I. April 7, 2009). ADPM did not pursue its counterclaims against Lumbermens at trial.

2

. This amount has since been reduced to $949,132. See ADPM's Post-trial Brief at ¶ 47.

3

. This amount has now been reduced by $465,504. See September 24, 2009 Stipula­tion, Tab. 3; see n. 6 herein.

4

. From Fall 2002 to Spring or Summer 2003, ADPM reassigned McNaught to a different construction project and replaced him with Kris Salamon (“Salamon”). Pursuant to Arti­cle 3.6 of the construction agreement between the parties, ADPM was required to “assign a competent and experienced project manager, who shall not be removed or replaced without the prior consent of Noresco.” Ex. 14 p. 18. Art. 3.6. Although this issue has been re­peatedly alluded to by Noresco, no testimony was presented at trial as to whether McNaught was replaced without Noresco's consent.

5

. Exhibit 121 was withdrawn by stipulation after the trial. C.A. No. 07-129 ML, Docket No. 148.

6

. The stipulation was handed to the Court by the parties on September 24, 2009 but was not marked in evidence or noted on the case docket.

7

. Article and Section numbers refer to the actual documents. Unless otherwise noted, page numbers refer to the pages of the exhib­its, not to the pages of the respective docu­ments. Exhibits lacking pagination are iden­tified by Bates numbers, where provided.

8

. Complete versions of the Drawings and Specifications were submitted at trial as Ex­hibits 122, 123, 124, 125, and 126 by ADPM and Exhibits 213, 214, 125, and 216 by No­resco. ADPM also produced a reduced ver­sion of some of the drawings for the conven­ience of the witnesses and the Court. After the trial, the complete sets of drawings were withdrawn and replaced by a compilation of those drawings the parties considered rele­vant. Stipulation dated October 9, 2009, C.A. No. 07-129ML, Docket No. 148.

9

. "As-builts” serve to document the progress of construction over the course of the Project and provide a record of the final state of construction for operation and maintenance of the Facility. Trial Tr. vol. VII, 152:13-­153:10.

10

. "Guaranteed Maximum Price” is not a separately defined term in the Agreement; it is, however, defined in the Prime Contract, which is incorporated into the Agreement as part of the technical specifications. From the Milestone Schedule, it appears that the pay­ments for certain "Elements of Work” were actually calculated as a percentage of the “Preset Price” of $11,312,235. Ex. 14 p. 73, Attachment VI, Part B.

11

. Although the Milestone Schedule attached to the Agreement refers to “Readiness for Testing,” which term is used in the Prime Contract, that term is used interchangeably with "Readiness for Startup” in the Agree­ment. See Ex. 14 p. 45, Art. 12.3, p. 86, Attachment VIII, p. 89, Attachment XI. "Me­chanical Completion,” which is not a defined term in the Agreement or the Prime Contract, is a prerequisite to begin starting up the Facil­ity in order to test it.

12

. A Punch List reflects incomplete or partial­ly complete work that is required to be final­ized for the Project to reach a full and com­plete status. Trial Tr. vol. VII, 139:16-21, Sept. 29, 2009. See Ex. 2 p. 14, Art. 1.52.

13

. Although the Agreement only specifies an April 2003 deadline, the parties agree that April 30, 2003 served as the actual date.

14

. The State of Rhode Island Office of Pur­chases "General Conditions of Purchase," are set forth in Exhibit XV to the Agreement. According to Exhibit XV to the Agreement, all purchase orders, contracts, solicitations, de­livery orders and services requests by the State of Rhode Island are subject to the provi­sions of Title 37 Chapter 2 of the General Laws of Rhode Island; specific requirements in the applicable contract; and a list of 37 general conditions of purchase. Ex. 14 pp. 93-106.

15

. Although "Owner” in the Subcontract's boilerplate may refer to the owner of the Facility, the parties clearly understood this term to refer to Noresco.

16

. An RFI is the means by which ADPM ob­tained information from the Project Engineer, Architect, or MHRH, regarding questions about construction details or drawings. McNaught estimated that the Project entailed between 300-400 RFIs. Trial Tr. vol. I, 150:6-­15.

17

. While Noresco’s counterclaim does not ex­plicitly request liquidated damages as a reme­dy, it does assert that “ADPM materially breached various terms and conditions of the [Agreement], including, but not limited to: ... failing to timely achieve Mechanical Readiness and Readiness for Testing.” Amended Counterclaim ¶ 11 .k.

18

. According to Carleton, MHRH never for­mally acknowledged "substantial completion” to signify that construction of the Facility had been substantially completed and that any remaining work was "not impacting the in­tent or performance of the Facility.” Trial Tr. vol. V, 6:9-10, Sept. 25, 2009. Carleton ac­knowledged that MHRH received "beneficial use” of the Facility on December 26, 2003, when the boilers and turbines were operation­al, although some temporary systems re­mained in place. Id. at 6:4-8.

19

. Bright’s colleague, Kenneth Monson, fo­cused on analysis of the construction delays.

20

. Deviation 44, Ex. 340, was rejected by Noresco because the requested amounts were inconsistent with the provided back-up docu­ments.

21

. As explained by Noresco's expert on sched­uling delays, the critical path is “the path of activities that controls the end date of a job. The activities are linked together by various relationships and the longest path of activities is the critical path of the project.” Trial Tr. vol. VIII, 84:810-14. The United States Court of Claims offers the following defini­tion: “The project can be represented by a network of discrete paths that sequence inter­dependent tasks or milestones leading to pro­ject completion. The critical path, the longest path at any point in time, determines the project’s expected completion date.” Gulf Contracting, Inc. v. United States, 23 Cl.Ct. 525, 529 n. 2 (Cl.Ct.1991).

22

. ADPM initially submitted a separate COR related to the construction of the Stack. Ex. 346, Dev. 160. ADPM’s claim related to that COR was subsequently withdrawn because the delay in question overlapped with the delay related to the temporary water pumps.

23

. As McNaught acknowledged at trial, the 2002 dates were editing errors and should have read March and June 2003, April 30, 2003 and August 30, 2003. Trial Tr. vol. II, 141:6-21.

24

. Deviation 24 was eventually rolled into Deviation 498. Ex. 381.

25

. Deviation 498 included Deviation 24.

26

. The Agreement also calls for payment of $31,674 (0.28% of the Preset Price) for deliv­ery of Operation and Maintenance Manuals. Ex. 14 p. 78, Attachment VI, Part B.

27

. In its third-party complaint against the Co-Sureties, Noresco also seeks damages for the Co-Sureties' refusal "to honor their con­tractual obligations under the ADPM Bonds and hold Noresco harmless from the Subcon­tractors' claims.” Answer and Third-Party Complaint p. 17, ¶ 16.

28

. Article 6.4 of the Agreement provides for Noresco to "withhold a retainage amount of five percent (5%) of each monthly payment.” The retainage was intended to be applied by Noresco to "complete the performance of [ADPM's] obligations pursuant to this Agree­ment if [ADPM] defaults in the performance of its obligations hereunder.” Ex. 14 p. 32. Payment of the retainage to ADPM was to be included in the final payment after both par­ties executed a Certificate of Final Accep­tance. Ex. 14 p. 33, Art. 6.5. Apparently, the retainage was subsequently reduced to 2 1/2% by agreement of the parties.

29

. Neither party addresses whether any of the approved deviations are already included in the $13,478,498 fixed price of the Agreement, or whether they result in a further increase of the fixed price.

30

. Noresco’s calculation spread sheet speci­fies only $15,825, which does not include $1,547 for a further deviation which had been accepted by Noresco as part of Change Order No. 6. Trial Tr. vol. VII, 136:10-137:5, Dev. 552, Ex. 394. In addition, the Court deter­mined that ADPM was owed $9,514 related to clean-up of debris generated by other Noresco subcontractors, see Dev. 462, Ex. 373, Dev. 530, Ex. 386, for a total of $26,886.

31

. It is unclear whether, in light of the differ­ent payment schedules under the Agreement and the Subcontracts, Noresco had already made any payments to ADPM for the work the subcontractors had performed on behalf of ADPM.

32

. In its brief, Noresco refers to the Deviation Stipulation in support. The Deviation Stipu­lation, however, only reflects that Noresco is owed $25,977 for Dev. 520 related to electri­cal work and Dev. 453 related to asbestos removal (Exhibits 981 and 986), which were not discussed at trial. Noresco’s Brief at p. 100, ¶ 10. It is unclear whether Noresco seeks credit for these two deviations as well; nor can it be determined, absent any explana­tory testimony, whether such credit has al­ready been received by Noresco.

33

. Following the trial, Noresco revised its earlier figure of $382,753. Trial Tr. vol. VII, 21:3-7.

34

. While the cover pages of the bonds specifi­cally identify Noresco as the "Obligee,” the provisions in the documents refer to Noresco as the "Owner” of the respective bonds. See Ex. 406 p. 1, 2 and Ex. 407 p. 1, 2.

35

. It is undisputed, however, that Noresco did not amend its cross-claims in Rhode Is­land Superior Court to include claims under the Performance Bond until more than two months after the trial in this Court was con­cluded. Noresco Brief 95, ¶ 112. Noresco’s reference to the amendment of its cross-­claims in its post trial brief is subject to a motion to strike by the Co-Sureties that was filed a month after the post trial briefs were submitted. C.A. No. 07-129ML Docket No. 162. As previously noted by this Court at trial, the mere assertion of a claim related to the Performance Bond falls short of providing support for a tolling argument. See Trial Tr. vol. VII, 20:16-19.

36

. The Court notes that, although Noresco’s counterclaim makes reference to both bonds, see Noresco’s First Amended Counterclaim at 4, its asserted “Count II — Breach of Con­tract” claim again only specifies the ADPM Payment Bond. Id. at 6, ¶ 13.

37

. The term ''Claimants” is defined under the Payment Bond as "[a]n individual or entity having a direct contract with [ADPM] or with a subcontractor of [ADPM] to furnish labor, materials or equipment for use in the per­formance of the [Agreement].” Ex. 407 p. 3, ¶ 15.1.

United States District Court,

N.D. California.

HPS Mechanical, Inc., Plaintiff,

v.

JMR Construction Corp., et al., Defendants.

Case No. 11–cv–02600–JCS

Signed August 1, 2014

Attorneys and Law Firms

David Bryan Potter, Arrache Clark & Potter, Bakersfield, CA, for Plaintiff.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

JOSEPH C. SPERO, United States Magistrate Judge

TABLE OF CONTENTS

*1 I. INTRODUCTION ...––––

II. FINDINGS OF FACT ...––––

A. Overview of the Project ...––––

B. Project Deadlines ...––––

C. Course of the Project ...––––

i. June 2008—August 2008 ...––––

ii. September 2008—March 2009 ...––––

iii. March 2009—October 2009 ...––––

iv. October 2009—March 2010 ...––––

v. March 2010—August 2010 ...––––

D. JMR's Request for Equitable Adjustment ...––––

E. Overview of the Parties' Claims ...––––

III. CONCLUSIONS OF LAW ...––––

A. The Miller Act ...––––

B. Section 8.4 of the Subcontract ...––––

C. HPS's Claims ...––––

i. Delay Claim (PCO 23) ...––––

ii. Valves out of Sequence (PCO 7) ...––––

iii. Acceleration (PCO 9) ...––––

iv. Directional Drilling (PCO 24) ...––––

v. Installation of Steel Offsets at Chanterella (PCO 44) ...––––

vi. Reinstallation of Steel Offset at Chanterella (PCO 51) ...––––

vii. Installation of Test Plate (PCO 53) ...––––

viii. Total HPS Claims Recoverable (Before Offset) ...––––

D. JMR's Claims ...––––

i. Delay Claim ...––––

ii. Backcharge No. 1 ...––––

iii. Backcharge No. 2 ...––––

IV. CONCLUSION ...––––

I. INTRODUCTION

1. The disputes in this case arose during the construction of the San Ramon Valley Recycled Water Project—Pump Station R200A and Pipeline, located in the City of San Ramon, California (hereafter, “the Project”).

2. The owner of the Project was the United States Army Corps of Engineers (“USACE”).

3. JMR Construction Corp. (“JMR”) submitted a bid to the USACE on April 14, 2008. Morrill Expert Report, Exh. 291 at 3. The USACE awarded the Prime Contract to JMR on April 30, 2008 in Contract No. WP912P–08–C–0004. See id.; Exh. 329 (Prime Contract).

4. JMR awarded HPS Mechanical, Inc. (“HPS”) a Subcontract Agreement for the Project (hereafter, “the Subcontract”). See Subcontract, Exh. 328.

5. Pursuant to the Miller Act, 40 U.S.C. § 3131, JMR was required to furnish a “payment bond with a surety ... for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person.” 40 U.S.C. § 3131(b)(2). JMR obtained a payment bond with a surety, Great American Insurance Company (“GAIC”), which made GAIC liable to “[e]very person that has furnished labor or material in carrying out work provided for” the Project “and that has not been paid....” 40 U.S.C. § 3133(b)(1).

6. On June 1, 2011, HPS filed this action against JMR and GAIC (collectively, “Defendants”). Dkt. No. 1. HPSasserts claims under the Miller Act, 40 U.S.C. § 3133(b)(1), and for breach of contract. On September 9, 2011, JMR filed a counterclaim against HPS for breach of contract. Dkt. No. 13.

7. On November 6, 2013, the Court denied Defendants' motion for partial summary judgment. See HPSMech., Inc v. JMR Constr. Corp., No. 11–cv–02600–JCS, Dkt. No. 111, 2013 WL 5954895 (N.D.Cal. Nov. 6, 2013). A bench trial for this case was held on the 19th, 20th, 24th and 25th of February of 2014. Dkt. Nos. 139–44. The parties submitted post trial briefing on the 11th and 28th of April of 2014, along with proposed findings of fact and conclusions of law. Dkt. Nos. 150–55. Given the extensive nature of this briefing, the Court finds that final oral argument is not necessary.

*2 8. After considering and weighing all the evidence and the parties' arguments, and having assessed the credibility of the witnesses, the Court enters the following findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a).

II. FINDINGS OF FACT

A. Overview of the Project

9. The Project involved two components. The first component entailed the installation of a pipeline in one traffic lane of Bollinger Canyon Road in the City of San Ramon (hereafter, “the Pipeline”). Testimony of John Morrill (“Morrill”), Tr. 474. The second component of the Project entailed the construction of a pump station to allow the system to stay pressurized (hereafter, “the Pump Station”). Id. at 475.

10. The Pipeline component of the Project required installation of approximately 6,558 feet of a 16–inch mainline. Morrill Expert Report, Exh. 291 at 5. Eight-inch branch laterals were to be connected to the 16–inch mainline by special butterfly valves at three intersections along Bollinger Canyon Road. Morrill, Tr. 476–77; Testimony of Jack Sloss (“Sloss”), Tr. 31.

11. HPS submitted a bid to conduct certain work on the Project on April 10, 2008. See HPS Bid, Exh. 212. HPSand JMR entered into a Subcontract on June 16, 2008. See Subcontract, Exh. 328 at 34. Under the Subcontract, HPS was required to do most of the work for the Pipeline portion of the Project. HPS expert John Irwin describes HPS's scope of work for the Pipeline as follows:

HPS had to trench the street, then transport each fused section and drop it into the pipe trench. HPS then connected sections together with couplings, installed 16–inch butterfly valves where required along the line, installed air release piping and valves, installed blow off piping, and installed the laterals.

Irwin Expert Report, Exh. 623 at 8; see also Subcontract, Exh. A (Subcontractor's Scope of Work). HPS was also responsible for “backfill” of the trench, which required HPS to fill and compact aggregate base in the trench up to about six inches below asphalt paving. Testimony of Gareth Figgness (“Figgness”), Tr. 595.

12. The Subcontract also required HPS to do some work on the Pump Station. John Irwin describes HPS'sscope of work for the Pump Station as follows:

HPS's scope of work at the Pump Station included piping within the Pump Station and underground piping outside the Pump Station to the existing 16–inch DERWA pipe in Iron Horse Trail. HPS did not provide or install any of the mechanical equipment inside the Pump Station—pumps, air compressor, surge tank and HVAC equipment. HPS only was required to connect piping to equipment.

Irwin Expert Report, Exh. 623 at 8.

B. Project Deadlines

13. The contract performance period was 365 days from the day the USACE issued JMR the Notice to Proceed, which occurred on May 16, 2008. Prime Contract, Exh. 329 at 21. Therefore, May 16, 2009 was the deadline for completion of the entire Project. Morrill, Tr. 472.

14. In addition, August 22, 2008 was a milestone deadline for the installation of the Pipeline portion of the Project. The following provision is included in the Scope of Work of the Subcontract:

The pipeline portion of the project shall begin no sooner than May 1, 2008 and be completed before August 22, 2008 (before school begins). Once work on the pipeline begins it shall be continuous and uninterrupted, the work on the pipeline shall not remain dormant once begun.

*3 Exh. 328 at 31. Section 3.4 of the Subcontract incorporates the specifications for the Project and the Prime Contract, which also require complete installation of the Pipeline by August 22, 2008. Subcontract, Exh. 328 at 5 (Art. III, § 3.4); Prime Contract, Exh. 329 at 21, Specifications, Exh. 278 at 196.

15. This August 22, 2008 deadline for complete installation of the Pipeline was noted in Section 3.3.2 of the Project specifications. Exh. 278 at 196. When HPS submitted its bid to JMR on April 10, 2008, HPS was aware of the August 22, 2008 deadline. Testimony of Kenneth Pourroy (“Pourroy”), Tr. 316.

16. The August 22, 2008 deadline was put in place because the City of San Ramon (hereafter, “City”) was concerned that installation after school began would cause undue traffic congestion on Bollinger Canyon Road, a main thoroughfare. Testimony of Theresa Peterson (“Peterson”), Tr. 218. The encroachment permit issued by the City for the installation of the Pipeline expired on August 22, 2008. Encroachment Permit, Exh. 404 at 43. An encroachment permit was necessary for any work to encroach upon the City's property. Peterson, Tr. 218.

17. HPS contends that August 22, 2008 was only a deadline to install the mainline portion of the Pipeline, and not the laterals and valves. However, the evidence supports the Court's conclusion that August 22, 2008 was the deadline to complete full installation of the Pipeline, including the 16–inch mainline, the 8–inch laterals, and the specialty butterfly valves. Testimony of Eileen Nixdorf (“Nixdorf”), Tr. 117–18; Peterson, Tr. 216; Testimony of Roy Shields (“Shields”), Tr. 252; Morrill, Tr. 484, Figgness, Tr. 570; Testimony of Ron Rivard (“Rivard”), Tr. 606.

18. HPS's evidence to the contrary is unpersuasive. HPS notes that by June 11, 2008, the City had only approved a traffic control plan for installation of the mainline, and planned to create a traffic plan for the laterals and valves at a later date. Meeting Notes, Exh. 695; Shields, Tr. 257. However, JMR presented testimony that it only takes one day to approve a traffic control plan. Rivard, Tr. 610. Thus, the fact the traffic control plan was not complete did not have a material impact on the August 22, 2008 deadline.

19. Moreover, the contemporaneous evidence shows that the traffic control plan was not complete for the installation for the laterals and valves because JMR, HPS and the City sought to redesign the location of the valves away from the intersections. See Meeting Notes, Exh. 695. Contrary to HPS's contention, the fact the traffic control plan was incomplete in June 2008 does not say anything about what HPS was required to install by August 22, 2008.

20. HPS also contends that JMR prepared a baseline schedule on May 19, 2008, which indicated that the intersection work on the Pipeline would take place in the evenings beginning on August 18, 2008, and continue through September 16, 2008. See Irwin, Tr. 368–69; Exh. 442 (May 19, 2008 project schedule). This schedule depicted in Exhibit 442 indicates that Pipeline construction would be complete on September 19, 2008, that only the mainline portion of the pipeline would be complete by August 21, 2008, and that work on the valves and laterals would take place at night after August 22, 2008. Exh. 442 at 12; Irwin, Tr. at 368–70.

*4 21. However, evidence of record shows that this “baseline schedule”¹ was created in reaction to information that the butterfly valves would not be delivered in time to connect the 8–inch laterals to the 16–inch mainline. See JMR's REA, Exh. 523 at 6 (“the delivery of the needed valves for interconnecting the lateral ties at the roadway intersections could not be delivered for full completion of all pipeline work by August 22, 2008. Therefore, completion of this remaining portion of the lateral pipeline work was to be performed during a night shift operation upon delivery of the valves to the site.”) (emphasis added). As discussed below, the delayed delivery of the valves was the responsibility of HPS.

22. Pursuant to section 3.8 of the Subcontract, “[n]o modification of [the Subcontract] shall be binding unless the same is in writing signed by the Contractor and the Subcontractor.” Subcontract, Exh. 328 at 6. HPS has not presented evidence of any change order or any other writing signed by JMR relieving HPS of its obligation to install the laterals and valves by August 22, 2008. The “baseline schedule” proffered by HPSdoes not relieve HPS of its contractual obligations. Accordingly, the Court finds that HPS was at all times required to complete the Pipeline portion of the Project, including the valves and laterals, by August 22, 2008.

C. Course of the Project

i. June 2008—August 2008

23. HPS started physical construction on the Project between June 16 and 19, 2008. Morrill, Tr. 472; Irwin Expert Report, Exh. 623 at 24.

24. HPS did not complete installation of the Pipeline by the milestone deadline of August 22, 2008.

25. As discussed below, there are several reasons why HPS did not complete installation of the Pipeline by the August 22, 2008 milestone deadline. The most important factor was the delayed delivery of the butterfly valves that would connect the 8–inch laterals to the 16–inch mainline of the Pipeline. Other factors include: 1) the initial delay in starting work; 2) HPS encountering several obstructions in the path of the Pipeline; 3) HPS's forty-seven failed compaction tests; and, 4) a two-day Safety Stand–Down in which all work was stopped.

Delayed Delivery of the Valves

26. The butterfly valves required for the Pipeline were unusual because they opened clockwise instead of counterclockwise. Testimony of Les DenHerder (“DenHerder”), Tr. 428–29; Morrill, Tr. 558; Exhs. 424, 441.

27. To supply the valves, HPS subcontracted with a supplier, R & B Company (“R & B”). Testimony of Kurt Vincellete (“Vincellete”), Tr. 120. R & B sourced the valves from the manufacturer, Henry Pratt Company. Pourroy, Tr. 123. On March 22, 2008, Henry Pratt Company informed R & B that the valves had a 10 to 14 week lead time after receipt of order. Exh. 738.

28. Prior to the time in which HPS submitted its bid to the USACE, R & B did not inform HPS that the valves had a 10 to 14 week lead time after receipt of order. Pourroy, Tr. 316. HPS was not informed of the long lead time until the USACE approved the submittals for the valves on July 25, 2008. Id. at 324; Vincellete, Tr. 124–25; Exh. 731.

*5 29. At trial, Kenneth Pourroy testified that HPS did not determine whether the valves had a long lead time prior to submitting its bid because its “normal protocol is to rely on [its] suppliers” to determine the lead time. Pourroy, Tr. 316. R & B states that it did not inform HPS of the long lead time because R & B “did not have a general practice of providing that information until” it receives a “firm lead time” from the manufacturer, which it does not receive until the USACE approves the submittals. Vincellete, Tr. 124–25, 129.

30. An order for the valves was submitted to Henry Pratt Company on or around July 25, 2014, commencing the 10 to 14 week lead time. Notably, the “firm lead time” provided on July 25, 2008 after the USACE approved the submittals is the same 10 to 14 week lead time provided to R & B on March 22, 2008. See Exhs. 731, 738.

31. In addition to the 10 to 14 week lead time, the manufacturing of the valves was further delayed because worm gear for the valves required in the specifications needed to be outsourced. Vincellete, Tr. 131. For these reasons, the valves did not arrive in California until the first shipment arrived on October 28, 2008, and the second shipment arrived on November 3, 2008. Irwin, Tr. 370.

Other Factors Causing Delay

32. There was an initial delay in both procuring the valves and in the start of construction on the Pipeline. The contract documents state that construction on the Pipeline could begin on or after May 1, 2008. Subcontract, Exh. 328 at 31. USACE awarded JMR the Prime Contract on April 30, 2008, and issued the Notice to Proceed on May 16, 2008. Irwin Expert Report, Exh. 623 at 24. HPS received the Subcontract from JMR on June 3, 2008, though it had received letter of intent to contract from JMR on May 9, 2008 that had requested HPS to “forward a complete submittal package” by May 16, 2008. Exh. 675 (Letter of Intent to Contract); Morrill Expert Report, Exh. 291 at 3.

33. HPS did not begin the process of procuring the valves until June 8, 2008, after HPS received the Subcontract on June 3, 2008. Irwin Expert Report, Exh. 623 at 24. On June 13, 2008, JMR received the Subcontract from HPS, which it signed on June 16, 2008. Subcontract, Exh. 328 at 34; Dkt. No. 152, ¶ 17. JMRobtained an encroachment permit from the City on June 9, 2008. Encroachment Permit, Exh. 404. HPSbegan construction between June 16 and 19, 2008. Morrill, Tr. 472; Irwin Expert Report, Exh. 623 at 24.

34. Once HPS actual began construction, HPS was delayed when it encountered a total of eleven obstructions in the path of the Pipeline. See Sloss, Tr. 11–13; Irwin Expert Report, Exh. 623 at 24–25. HPSclaimed that these obstructions caused approximately five days of delay. See Morrill Expert Report, Exh. 291 at 6.

35. HPS was also delayed when it failed forty-seven compaction tests. Figgness, Tr. 578; Morrill Expert Report, Exh. 291 at 6; Irwin, Tr. 355; Irwin Expert Report, Exh. 623 at 25 (“HPS had some issues in early July in not achieving appropriate compaction of the trench backfill.”). This also caused approximately five days of delay. See id.

36. There was a two-day delay for a “Safety Stand–Down” called by JMR's superintendant on the Project, John Morrill, “in response to unsafe conditions involving HPS activity in a trench that contained unidentified electrical lines.” Morrill Expert Report, Exh. 291 at 6. Morrill excerpts correspondence between JMR and HPSregarding this issue in his expert report:

HPS was notified on numerous occasions of unsafe work habits, and consistently performed excavation for the 16‘ pipeline without prior potholing. A meeting with HPS' site superintendant occurred during this stand-down time period to discuss safety, and project coordination requirements in an effort to remedy the problems.

*6 Id. Testimony at trial revealed that HPS employees had run over and removed traffic control, not worn hard hats, and unsafely excavated around the Kinder Morgan Pipeline. See Bewley, Tr. 145–46; Peterson, Tr. 238–41; Morrill, Tr. 491; Figgness, Tr. 579.

37. Prior to August of 2008, HPS only had one crew working on the Pipeline. Shields, Tr. 274–75. Starting in late July and August 2008, JMR directed HPS's crew to work overtime on nights and weekends. Sloss, Tr. 26; Pourroy, Tr. 323; Morrill, Tr. 509; Exhs. 593, 864. At this time, HPS increased its crew from about 9 workers to 13. Irwin Expert Report, Exh. 623 at 26.

Directional Drilling

38. The contract documents gave HPS the option to install the Pipeline in the intersections by one of two methods: 1) direct drilling, or 2) open cut. “Directional drilling” means boring a hole. “Open cut” means digging a trench and laying the pipe. Bewley, Tr. 140; Pourroy, Tr. 198, 303–04, 308–09; DenHerder, Tr. 425–26; Rivard, Tr. 453–54; Exhs. 419, 440.

39. In an attempt to finish installation of the mainline of the Pipeline prior to the August 22, 2008 deadline, “HPS along with the concurrence of JMR engaged a subcontractor Wellco to install the pipe through the three intersections using directional drilling.” Irwin Expert Report, Exh. 623 at 25–26.

40. There is a factual dispute as to whether JMR required HPS to use the directional drilling method through the intersections, or if HPS decided to directionally drill on its own initiative. Sloss, Tr. 21; Pourroy, Tr. 196–99; Exh. 711. An email shows that JMR gave HPS the option to hire and pay for a directional driller, or have a deductive back charge be issued reducing the amount of their Subcontract amount. Exh. 711. One can infer from this email that JMR did not give HPS any other option but to use the directional drilling method, and pay for it. See id.

41. JMR has presented evidence which shows that HPS may have intended to use the directional drilling method at the time HPS submitted its bid to JMR. Morrill testified that HPS excluded 2,580 cubic yards from its bid for JMR to cover the cost of that haul off, but that if HPS had planned to use the open cut method in the intersections, HPS would have estimated twice that amount of dirt to be hauled off. Morrill, Tr. 515. Morrill also testified that HPS would have needed a shoring plan to use the open cut method on the intersections, and that HPS had not submitted a shoring plan at any point prior to telling JMR they were going to directionally drill. Id.

42. JMR does not dispute that HPS actually began to use the open cut method on the first intersection they approached, but was prevented by JMR from continuing with the open cut method. See Sloss, Tr. 20. Thus, JMR's evidence does not show that HPS “always intended” to use the direct drilling method. See JMR Br. at 17. Rather, JMR's evidence shows, at best, that HPS changed its mind, as was its option, after HPS submitted its bid to use the open cut method instead of the direct drilling method.

ii. September 2008—March 2009

43. HPS was not allowed to do any further excavation after the expiration of the encroachment permit on August 22, 2008. From Monday, August 25, 2008 through September 9, 2008, HPS worked on some incidental repairs on the Pipeline. Irwin Rebuttal Report, Exh. 624 at 15.

*7 44. From September 9, 2008 to March 28, 2009, HPS did not do any work for the Project. Id.; Irwin, Tr. 358–59. During this period, HPS asked JMR on several occasions when it would be allowed to return to work. Pourroy, Tr. 321; Exhs. 834, 836, 843. HPS would often receive no response. Pourroy, Tr. 321

45. The reason for the work stoppage between September 2008 and March 2009 is the source of much dispute between the parties. The Court finds that there were three main reasons why work was stopped during this time: 1) the delayed delivery of the valves; 2) the dispute about fees for the City's encroachment permit fees; and 3) the delay in having the submittals for the redesign of the laterals and valves approved. The Court discussed the delayed delivery of the valves in the previous section. The Court now addresses the permit fee dispute and the submittals for the redesign.

The Permit Fee Dispute

46. After the Encroachment Permit expired on August 22, 2008, the City offered to issue an extension to the Encroachment Permit once JMR paid its outstanding balance of permit fees and submitted a new down deposit. Peterson, Tr. 230–32; Exhs. 768, 774.

47. However, JMR did not believe it was required to pay any additional permit fees, as it had already paid the City of San Ramon a $25,000 deposit at the onset of the Project. Nixdorf, Tr. 111; Exh. 789.

48. The permit fees reflected the City's costs of having employees on-site during construction and to write their reports. Nixdorf, Tr. 111. The City's permit fees were relatively high in this case because of safety issues and the delays. Peterson, Tr. 242–43.

49. Ultimately, the Corps agreed to pay the additional permit fees requested by the City. By the end of the Project, the permit fees totaled approximately $250,000. Nixdorf, Tr. 118.

50. In the winter of 2008–2009, before JMR learned that the Corps would pay for the additional permit fees, JMR told HPS that it would be responsible for the additional permit fees, which JMR believed were the result of HPS's poor performance. Exhs. 200, 834 at 8436.

51. The Corps issued a change order for the additional permit fees, and on February 17, 2009, JMR issued two checks in favor of the City in the amounts of $51,358.35 and $20,000. Morrill, Tr. 531; Exh. 327 at 66–69. This effectively ended the permit fee dispute.

Submittals for Relocating the Valves & Laterals

52. The original design for the Project had the butterfly valves connecting the 8–inch laterals to the mainline in the middle of the intersections. Shields, Tr. 258–59; Exhs. 437–39.

53. In June 2008, the City, HPS and JMR suggested that the Project be redesigned to relocate the valves and laterals away from the intersections. See Figgness, Tr. 582. Because the pipe was installed in the intersections at a deeper depth, relocating the valves and laterals away from the intersections allowed for time and cost savings. Morrill, Tr. 529; Figgness, Tr. 582–83.

54. On September 23, 2008, JMR submitted a Request for Information No. 12 on behalf of HPS to seek the USACE's approval to relocate the valves and laterals outside the intersections. See Exh. 327 at 1.

55. On November 4, 2008, HPS wrote to JMR in an email: “Also, we plan on remobilizing later this week so we are ready to start on Monday with the valve installations and final pipeline work. Have the proposed relocation drawings been approved by the USACE? Will we be able to start the remainder of our work Monday ?” Exh. 834 at 8436.

*8 56. On January 6, 2009, JMR wrote a letter to HPS asking it to forward the submittals for the relocation of the valves and laterals “at your earliest convenience for submission to the USACE.” Exh. 327 at 14.

57. The USACE approved the submittals to relocate the laterals away from the intersection on March 20, 2009. Exh. 327 at 49; Morrill, Tr. 529. Installation of the laterals and valves could not begin until the Corpsapproved the submittals. Shields, Tr. 272–73; Morrill, Tr. 529.

* * *

58. In finding that the above factors contributed to the delay in this phase of Project, the Court also finds that other factors did not contribute to this delay. First, the absence of a traffic control plan to install the valves and laterals did not cause any significant portion of this delay. See Rivard, Tr. 610. Once the submittals for the valves and laterals were approved by the USACE, JMR could put together a traffic control plan for the City to approve within one or two days. See id.

59. There is also insufficient evidence to indicate that weather or “winterization” was the cause of any delay during this period of time. The City's manger for the Project, Theresa Peterson, testified that she could not recall whether the installation of the Pipeline was stopped on account of weather. Peterson, Tr. 234–35. The contemporaneous evidence shows that the City would have allowed JMR/HPS to continue working if JMRwould pay the permit fees. See Exhs. 768, 774. Further, while JMR expert John Elmer constructed an “as-built” schedule that displays a planned winter shut down, Elmer relies on John Morrill for the factual conditions of the Project, and Morrill's expert report does not mention any period in which there would be no progress on the Project due to “winterization.” Elmer Expert Report, Exh. 244 at 9; see generally, Morrill Expert Report, Exh. 291.

iii. March 2009—October 2009

60. Work on the Project resumed on March 29, 2009. Irwin Expert Report, Exh. 623 at 27; Irwin, Tr. 358–59. By this time, HPS still needed to finish installing the last few hundred feet of the 16–inch mainline, connect the 8–inch laterals to the mainline with the valves, test the Pipeline, and also do the required work on the Pump Station. See Sloss, Tr. 45; Morrill, Tr. 489–90.

61. In April 2009, HPS installed the remaining portion of the mainline. Then, HPS installed the valves and laterals. Irwin Expert Report, Exh. 623 at 27.

62. If the valves had been available in the summer of 2008, HPS would have installed the valves and laterals while installing the mainline. Testimony of Mike Jones (“Jones”), Tr. 56–58. However, due to the delayed delivery of the valves, HPS had to re-excavate portions of the Pipeline to install the valves, which created more work and increased HPS's and JMR's costs. Id.

Chanterella Intersection

63. HPS continued work without significant difficulties until early June 2009, when problems arose at the Chanterella intersection. See Irwin Expert Report, Exh. 623 at 27.

64. On or before June 5, 2009, HPS installed PVC offsets for a lateral at the Chanterella intersection, but East Bay Municipal Utilities District (“East Bay MUD”) objected to the installation and demanded that steel offsets be used. Jones, Tr. 60–69; Morrill, Tr. 544. East Bay MUD and Dublin—San Ramon Services District, as partners in an entity known as “DERWA,” contributed about 25% of the money for the Project. Bewley, Tr. 134.

*9 65. HPS eventually installed steel offsets at the direction of JMR and the USACE. The steel offsets were not available to be picked up from East Bay MUD until late July 2009. Exh. 476 at Report No. 439. Thus, HPSstopped working on the Chanterella intersection on July 6, 2009, and resumed again on July 20, 2009. Irwin Expert Report, Exh. 623 at 27. HPS then continued installation of the Pipeline.

66. While installing one of the steel offsets, HPS encountered a pipe that supplied a fire hydrant at the elevation for the steel offset depicted on the plans. Jones, Tr. 62–63. While the hydrant pipe was marked the plans, “[t]he elevation [of the hydrant pipe] wasn't on the plans.” Id. HPS had to re-install the steel offset at a different elevation. Id. at 63.

67. The delay caused by steel offset requirement was exacerbated by excess water run-off. Jones, Tr. 59. The excavation was deeper than the other excavations, and the Chanteralla intersection is located at the bottom of a hill. Id. On August 20, 2009, JMR described the delay at the Chanteralla intersection as follows:

This has been an ongoing operation delayed for various reasons. The excavation is next to an existing pipe and the area has been open longer than would be ideal. This condition coupled with ground conditions affected by excessive water runoff not noted in soils reports for that area. Thus, HPS was dealing with the situation the best they could under differing conditions.

Exh. 476 at Report No. 461.

Pipeline Testing

68. After completing the installation of the Pipeline, HPS began to test the Pipeline on September 11, 2009. Irwin Expert Report, Exh. 623 at 28.

69. Generally, a pipeline is tested at different sections as installation is completed. However, due to the late delivery of the valves, the Pipeline was not tested until it was fully installed. See Irwin Expert Report, Exh. 623 at 27; Exh. 949; Jones, Tr. 64.

70. HPS discovered the first leak when it started testing the Pipeline in September 2009. Jones, Tr. 64. HPSdid not finish testing the Pipeline until May 26, 2010. Morrill, Tr. 472; Exh. 271 at 34.

71. HPS was not, however, testing the pipeline from September 2009 to May 2010. On or around October 20, 2009, HPS was directed to stop work when JMR was temporarily terminated from the Project in October 2009, and HPS could not resume work until the City issued another extension to the permit in March 2010. Irwin Expert Report, Exh. 623 at 28.

iv. October 2009—March 2010

72. The leaks in the Pipeline delayed HPS's progress past the extension to the encroachment permit. On September 23, 2009, the City issued a one-week extension on the encroachment permit to September 30, 2009, and informed JMR that this new deadline was “essential.” Exh. 271 at 1.

73. On Friday, October 2, 2009, JMR issued a “Notice to Comply” for HPS to repair a failed pipe at the Chanterella intersection. Exh. 271 at 7. In a letter sent to HPS that day, JMR wrote, “If you fail to continue work this weekend at the Chanterella intersection pipe repair we will be forced to bring in others to perform this work and make appropriate back charges to your contract to cover the cost of this work.” Id. at 6.

74. HPS's crew worked on the repairs on Saturday, October 3, 2009, but not on Sunday, October 4, 4009. Exh. 271 at 9–10.

75. On October 4, 2009, the USACE wrote the following in a letter to JMR:

*10 We have received no reply to our serial letter C–0030 to you and you have failed to perform work on Sunday, October 4, 4009, as you had committed to in order to complete this work per our agreement. Based on these facts, the Government is considering terminating said contract pursuant to the Clause titled ‘Default’ of the contract clauses.

Exh. 271 at 9.

76. JMR was verbally terminated by the USACE on Friday, October 16, 2009, after the City refused to issue another extension to the encroachment permit. Exh. 949; Exh. 271 at 14. JMR and HPS were directed to vacate the City of San Ramon. Exh. 476 and Report No. at 519.

77. In an effort to avoid termination, JMR wrote a letter to the USACE on October 19, 2009, in which JMRlisted several “unforeseeable” reasons why the pipeline was not completed by August 22, 2008, and therefore, why JMR should not be terminated: (1) the pipeline portion of the work was to begin on May 1, 2008, but JMR was not issued a Notice to Proceed by the Corps until May 15, 2008; (2) the butterfly valves were a specialty item and were not on site until January 2009; (3) pipeline testing took longer because valve installation and testing was done out of sequence; (4) the City did not want work to restart until weather permitting in late March 2009; and (5) East Bay MUD's request for steel offsets caused a 60–day delay in June and July 2009. See Exh. 949.

 HPS contends that JMR's position in this lawsuit—denying liability for certain HPS's change orders—contradicts JMR's representations in the letter regarding HPS's performance.

78. On October 22, 2009, JMR wrote a letter to HPS:

Gentlemen, As you know from previous verbal conversations, the USACE has verbally terminated JMR's contract on the Sam Ramon project for failure to complete the pipeline work in the time frame granted by the City of San Ramon's encouchment [sic] permit. As you are well aware, this scope of work is entirely HPS's responsibility.... Please be advised in the event the encoarchment [sic] permit extention [sic] and the USACE terminates the contract, JMR will be holding HPS accountable to the extent HPS caused the issue.

Exh. 271 at 14.

79. The USACE ultimately allowed JMR/HPS to return to work, and the City issued an extension to the encroachment permit to commence on March 15, 2010. Exh. 408 (encroachment permit extension).

iv. March 2010—August 2010

80. HPS resumed testing the Pipeline on March 15, 2010. Irwin Expert Report, Exh. 623 at 28. Testing of the Pipeline was complete by May 26, 2010. Morrill, Tr. 472; Exh. 271 at 34.

81. After HPS finished testing the Pipeline, HPS resumed work on the Pump Station and other change order work approved by the USACE. Irwin Expert Report, Exh. 623 at 22.

82. In June of 2010, after HPS had completed installing and testing the Pipeline, the USACE issued the change order incorporating Specification 01660 into the Prime Contract. See Morrill Reply Report, Exh. 293 at 8. Specification 01660 clarifies that the Pipeline and the Pump Station had to be tested together. See id.

D. JMR's Request for Equitable Adjustment

83. The final testing of the Pump Station and Pipeline was completed on August 17, 2010, though HPS did not do further work on the Pipeline after May 26, 2010. See Exhibit 539 at 5 (Price Negotiation Memorandum).

84. As noted above, the contractual deadline to complete the Project was May 16, 2009. Prime Contract, Exh. 329 at 21. Thus, the final completion of the Project was delayed by 459 days between May 16, 2009 and August 17, 2010.

*11 85. On May 4, 2011, JMR submitted a Request for Equitable Adjustment (“REA”) to the USACE, in which JMR sought compensation for all 459 calendar days of delay between the contractual deadline of May 16, 2009 and the final completion on August 17, 2010. JMR REA, Exh. 523 at 1–3.

86. In the REA, JMR alleged that the USACE was responsible for all 459 days of delay. See Exh. 523 at 3. JMRtook the position that “the Pipeline impacts were not critical and therefore did not control nor dictate the delay to the Project Completion.” Id. at 7.

87. The Corps and JMR held formal negotiations regarding the REA in March, July and September of 2012. See Exh. 539 at 6. HPS was not a participant in the REA negotiations.

88. The USACE and JMR negotiated a settlement of the REA, the terms of which were memorialized in a Price Negotiation Memorandum (“PNM”). See Exh. 539. The PNM reflects that the settlement was divided into two parts: (1) JMR's submission of 17 of “itemized project damages,” which included change order requests that JMR had previously submitted on HPS's behalf, but which the USACE had already denied; and (2) JMR'sclaim for 459 days of delay. PNM, Exh. 539 at 1–6.

89. With few exceptions, the USACE denied all of the change order requests JMR submitted on behalf of HPS. The USACE approved a few of HPS's proposed change orders (“PCOs”), including PCO 40 ($3,244), PCO 59 ($3,683), and partially approved PCO 53, which HPS submitted in the amount of $11,859.

90. JMR was compensated for 320 days of delay out of the 459 days JMR requested. PNM, Exh. 539 at 3; Testimony of Gerado Prado (“Prado”), Tr. 281. JMR was compensated at the rate of $2,052 per day, and was paid an additional $43,310 for other the REA preparation and follow-up work in 2012. PNM, Exh. 539 at 6. Thus, JMR received $699,950 with respect to the delay claim issues. Id. at 4.

91. JMR was also granted a 459–day time extension, which includes 320 days of compensable delay and 139 days of concurrent, non-compensable delay. PNM, Exh. 539 at 6. If JMR had not been granted this time extension in the REA, it would have been liable for $2,800 in liquidated damages for each day of delay. SeeJMR REA, Exh. 523 at 4.

92. An Administrative Contracting Officer made the final decision for the USACE. Prado, Tr. 298.

E. Overview of Parties' Claims

93. HPS has filed a breach of contract claim against JMR, and a Miller Act claim against JMR and USACE. Through these claims, HPS seeks to recover damages associated with various change orders that JMRsubmitted to the USACE, but which the USACE rejected. The parties dispute whether HPS should be compensated for the following PCOs:

*12 94. There are additional PCOs for which HPS initially sought compensation, but has now conceded and withdrawn as a basis for recovering damages. HPS Proposed Conclusions of Law at 23, ¶ 3. These include PCOs 6, 8, 15, 20, 22, 49, 50, which all reflect the extra costs HPS allegedly incurred when HPS encountered obstructions in the path of the Pipeline. See id.

95. JMR has also conceded liability for PCOs 40 and 59. See Reply at 16 (“PCOs 40 and 59 were paid by the COE on behalf of HPS and are valid claims.”). These claims are valued at $3,244 and $3,683, respectively.

96. JMR has also filed a counter-claim against HPS. JMR's counter-claim is comprised of three main parts: (1) JMR's delay claim, through which JMR seeks Eichleay damages for critical path delay on the Pipeline from December 23, 2009 to May 26, 2010; (2) Backcharge No. 1, through which JMR seeks damages for HPS'sfailure to perform work as required by the Subcontract; (2) and Backcharge No. 2, through which JMR seeks damages for the costs of testing, traffic control and paving incurred by JMR after the milestone deadline of August 22, 2008. JMR seeks $341,062.00 for its delay claim, $93,234.41 for Backcharge No. 1, and $308,282.62 for Backcharge No. 2.

II. CONCLUSIONS OF LAW

A. The Miller Act

1. Under the Miller Act, “[b]efore any contract of more than $100,000 is awarded for the construction, alteration, or repair of any public building or public work of the Federal Government, a person must furnish to the Government” a “payment bond with a surety ... for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for the use of each person.” 40 U.S.C. § 3131(b)(2).

2. “The Miller Act is the modern-day remedy to the historical dilemma faced by contractors and materialmen denied compensation in federal construction projects.” Technica LLC ex rel. U.S. v. Carolina Cas. Ins. Co., 749 F.3d 1149, 1151 (9th Cir.2014). “A mechanic's lien under state law against improved property provides security for suppliers of labor and material to private construction projects, but a mechanic's lien cannot attach to government property.” United States ex rel. T.M.S. Mechanical Contractors v. Millers Mutual Fire Ins. Co. of Texas, 942 F.2d 946, 949 (5th Cir.1991). Thus, the Miller Act “provides an alternative to a mechanic'slien” in federal construction projects. Id.

3. The Miller Act creates a cause of action in favor of all furnishers of labor and materials to recover the amount due under the contract:

Every person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished under section 3131 of this title and that has not been paid in full ... may bring a civil action on the payment bond for the amount unpaid at the time the civil action is brought and may prosecute the action to final execution and judgment for the amount due.

40 U.S.C. § 3133(b)(1). “A provider of labor or materials is entitled to all sums justly due, meaning that the provider is entitled to be paid in full under the subcontract.” United States ex rel. Taylor Construction, Inc. v. ABT Service Corp. Inc., 163 F.3d 1119, 1122 (9th Cir1998). “[T]here is no doubt that under the Miller Act recovery for work performed under the subcontract is the amount due under the subcontract.” Id. (citing cases).

*13 4. “As a general matter, a surety's liability is defined by the liability of the underlying contract.” Morganti Nat'l, Inc. v. Petri Mechanical Co., Inc., No. 98–0309, 2004 WL 1091743, at *1 1 (D.Conn. May 13, 2004). Indeed, “[i]t is a cardinal rule of the surety/principal relationship that a surety occupies the shoes of its principal and ‘may avail himself of any defense’ available to the principal other than those that are purely personal, such as bankruptcy or infancy.” United States ex rel. Walton Technology v. Westar Engineering, 290 F.3d 1199, 1209 (9th Cir.2002) (Trott, J., dissenting) (citing 72 C.J.S. Principal and Surety § 189 at 318–19 (1987)). Accordingly, this general rule provides that “if a principal and surety are jointly sued and the action fails as to the principal, the surety is for that reason discharged and judgment against it cannot be taken.” Am. Cas. Co. of Reading, Pa. v. Arrow Road Const. Co.,309 F.2d 923, 924 (9th Cir.1962).

5. There is, however, an exception to this general rule for Miller Act sureties. “In the context of Miller Act cases,” courts “must look beyond the principal's contractual liability, to the Miller Act itself, in defining the limits of coextensive liability between surety and its principal.” Walton Technology, 290 F.3d at 1206. “It is clear that ‘the surety's liability on a Miller Act bond must be at least coextensive with the obligations imposed by the Act if the bond is to have its intended effect.’ ” Id. (quoting Sherman, 353 U.S. at 215–16). “Thus, the liability of a surety and its principal on a Miller Act payment bond is coextensive with the contractual liability of the principal only to the extent that it consistent with the rights and obligations created under the Miller Act.” Walton Technology, 290 F.3d at 1206; see also Morganti Nat'l, Inc. v. Petri Mechanical Co., Inc., No. 98–0309, 2004 WL 1091743, at *11 (May 13, 2004) (noting that the general rule “is true for a Miller Act surety with the exception that this rule cannot, of course, conflict with the actual terms of the Miller Act.”).

6. Thus, there are circumstances in which a surety is not entitled to use the principal's contract defenses to defend against liability under the Miller Act. For instance, in Walton, the subcontract contained a clause requiring the contractor to pay the subcontractor only “when and if paid by the Navy.” Walton, 290 F.3d at 1203. Finding that enforcement of the “pay if paid” clause contradicted the express terms of the Miller Act, and constituted an invalid “implied waiver of Walton's rights under the Miller Act,” the Ninth Circuit reversed the district court's grant of summary judgment in favor of the surety. Walton, 290 F.3d at 1208–09.

7. In Walton, the Ninth Circuit found that the “pay if paid” clause in the subcontract affected the subcontractor's right of recovery under the Miller Act. The court explained:

A subcontractor's right of recovery on a Miller Act payment bond accrues ninety days after the subcontractor has completed its work, not “when and if” the prime contractor is paid by the government. Permitting a Miller Act surety to avoid liability on the payment bond based on an unsatisfied “pay when and if paid” clause in the subcontract would, for all practical purposes, prohibit a subcontractor from exercising its Miller Act rights until the prime contractor has been paid by the government. In cases where the government does not pay the prime contractor within the one year statute of limitations period, the subcontractor would be barred from asserting its Miller Act rights.

Walton, 290 F.3d at 1208.

*14 8. Generally, in Miller Act cases, courts look to Subcontract terms to determine the “measure of recovery.” Taylor Construction, 163 F.3d at 1122 (“The Ninth Circuit has consistently followed that method and used the underlying bonded subcontract as the measure of recovery in Miller Act cases.”) (citing Colvin v. United States ex rel. Magini Leasing & Contracting, 549 F.2d 1338, 1342 (9th Cir.1977) (basing recovery on “the terms of the contract”); United States ex rel. A.V. DeBlasio Construction Inc. v. Mountain States Construction Co., 588 F.2d 259, 262–63 (9th Cir.1978) (approving award of damages because it was in accordance with the provisions of the contract)).

9. In Walton, the Ninth Circuit noted that there is a distinction between contract terms that determine the measure of recovery in a Miller Act case from contract terms which affect the right of recovery under the Miller Act:

Considerable differences exist between a case in which the measure of recovery in a Miller Act case is determined by reference to subcontract terms governing how work performed under the subcontract will be compensated and one in which the timing of recovery, and, in some cases, the right of recovery under the Miller Act is dictated by such terms.

Walton, 290 F.3d at 1207 (emphasis added). The court held that “[w]here subcontract terms effect the timing of recovery or the right of recovery under the Miller Act, enforcement of such terms to preclude Miller Act liability contradict the express terms of the Miller Act.” Id. (emphasis added).

10. A Miller Act surety may assert a counterclaim against a Miller Act claimant to offset the amount owed under the Miller Act, but only if the claimant is in direct contractual relationship with the principal of the payment bond. U.S. ex rel. Bartec Indus., Inc. v. United Pac. Co., 976 F.2d 1274, 1278 (9th Cir.1992) opinion amended on denial of reh'g, 15 F.3d 855 (9th Cir.1994) (declining to offset a Miller Act claim by the amount owed under a counterclaim because the Miller Act claimant, a supplier of steel, was not in privity with the principal); U.S. for Use & Benefit of Martin Steel Constructors, Inc. v. Avanti Constructors, Inc., 750 F.2d 759, 762 (9th Cir.1984) (same).

B. Section 8.4 of the Subcontract

11. Defendants contend that Section 8.4 of the Subcontract unequivocally binds HPS to the USACE's decision to deny the PCOs submitted on HPS's behalf. Therefore, Defendants contend that section 8.4 precludes JMR's liability on HPS's breach of contract claim relating to unapproved PCOs.²

*15 12. The Court agrees. Section 8.4 of the Subcontract provides that JMR is not liable to HPS for damages described in a PCO if the USACE considered and rejected the PCO:

Notwithstanding any other provision, if the Subcontract Work for which the Subcontractor claims additional compensation is determined by the [USACE] not to entitle the Contractor to a Change Order, additional compensation or a time extension because such work is within the scope of the Subcontract Work as defined by Paragraph 3.1, then the Contractor shall not be liable to the Subcontractor for any additional compensation or time extension for such Subcontract Work, unless the Contractor agrees in writing to pay such additional compensation or to grant such extension.

Exh. 328 at 21. HPS's claims in this case were first presented to the USACE via JMR's submission of PCOs on HPS's behalf. The USACE denied payment for these PCOs. JMR never agreed in writing to pay additional compensation for any of HPS's PCOs. Accordingly, under section 8.4 of the Subcontract, JMR is not liable to HPS for the PCOs which have been rejected by USACE, which include the disputed PCOs 7, 9, 23, 24, 44, 51 and 53.

13. JMR also contends that section 8.4 affects the “measure of recovery” under the Subcontract, and therefore, also precludes GAIC's liability under the Miller Act for the unapproved PCOs. The Court disagrees. Section 8.4 grants the USACE the sole authority to determine whether HPS is entitled to a PCO. The USACE has such authority notwithstanding HPS's right to recover under the Miller Act. Assuming arguendo that USACE has wrongfully denied one or more PCOs, “enforcement of [section 8.4] to preclude Miller Act liability [would] contradict the express terms of the Miller Act.” Walton, 290 F.3d at 1206.

14. Moreover, the USACE only approves a change order if there is a “change” in the contract work to be performed that is the responsibility of the USACE. However, the USACE denies a change order request if HPSor JMR create the circumstances that require a change in the contract work regardless of whether it was HPSor JMR who created such circumstances. Therefore, even if USACE rightfully denies one or more PCOs, HPSmay still have a right to recover under the Miller Act if JMR is responsible for the circumstances that required the change.

15. The Court's conclusion that section 8.4 may affect the “right to recovery” under the Miller Act is supported by at least one other district court's decision. In Foundation Fence, Inc. v. Kiewit Pacific, a court from the Southern District of California considered whether the following contract provision, which is similar to section 8.4 in the Subcontract between HPS and JMR, affected the right of recovery or the measure of recovery:

For changes in the Prime Contract that have been initiated by Owner, for acts or omissions of the Owner and for defects in the Prime Contact, Subcontractor shall submit any claims it may have, including notice thereof, for adjustment in the price, schedule or other provisions of the Subcontract to Contractor in writing in sufficient time and form to allow Contractor to process such claims within the time and in the manner provided for and in accordance with the applicable provisions of the Prime Contract. Subcontractor agrees that it will accept such adjustment, if any, received by Contractor from Owner as full satisfaction and discharge of such claim.

*16 No. 09–2062, 2010 WL 4024877, at *2 (S.D.Cal. Oct. 13, 2010). The court found that under the Ninth Circuit's decision in Walton, the foregoing contract provision operated as an “implied waiver” of the subcontractor's rights under the Miller Act. Id. at *3; see also U.S. for Use & Benefit of U.S. Prefab, Inc. v. Norquay Const., Inc., No. 06–1598, 2007 WL 1839279, at *7 (D. Ariz. June 26, 2007) (noting that a similar contract provision “appears to be an attempt to obtain a waiver of Prefab's Miller Act rights....”).

16. Defendants seek to distinguish Foundation Fence on the basis that the foregoing contractual provision has more “restrictive language” than section 8.4. JMR Br. at 12. This argument is without merit. Defendants are correct to note that section 8.4 does not include language that makes the grant of an “adjustment, if any,” constitute “full satisfaction and discharge of such claims.” However, Defendants ignore the plain fact that section 8.4 has the same effect on HPS's Miller Act rights as the provisions in the Foundation Fencesubcontract had on the subcontractor in that case. In both cases, the provisions preclude the subcontractor from bringing a claim in the event the owner decides a change order or “adjustment” is not warranted. When such a change order is warranted and otherwise recoverable under the Miller Act, these terms constitute implied waivers of a Miller Act claimant's rights. Walton, 290 F.3d at 1208–09.

C. HPS's Claims

17. The Subcontract price is $1,293,130. Subcontract, Exh. 328 at 16, 30. It is also undisputed that the USACE approved change orders submitted on HPS's behalf in the amount of $121,695. Further, JMR does not dispute only having paid HPS $1,089,316.28, which leaves a current balance of $325,508.72.

18. JMR has withheld $325,508.72 from HPS under Sections 7.3.8 and 7.3.9 of the Subcontract, which grant JMR the right “to retain out of any payments due or to become due to the Subcontractor an amount sufficient to completely protect the Contractor from any and all loss, damage or expense therefrom,” including “possible” damages resulting from defective work, delay and third-party claims. Subcontract, Exh. 328 at 18.

19. As discussed above, a surety may offset amount owed under Miller Act if principal and claimant are in privity, as is the case here with HPS and JMR. Bartec Indus., 976 F.2d at 1278; Martin Steel Constructors, Inc. v. Avanti Constructors, Inc., 750 F.2d 759, 762 (9th Cir.1984) (same). Therefore, HPS is entitled to recover the undisputed amount to the extent that amount is not offset by JMR's counterclaim.

20. As noted above, HPS has withdrawn its claims relating to obstructions in the path of the Pipeline. HPSProposed Conclusions of Law at 23, ¶ 3. These include PCOs 6, 8, 15, 20, 22, 49, 50. Accordingly, these claims are denied.

21. JMR has also conceded the merits of HPS's PCOs 40 and 59, valued at $3,244 and $3,683, respectively. See JMR Reply Br. at 16 (“PCOs 40 and 59 were paid by the COE on behalf of HPS and are valid claims.”). Thus, the additional undisputed amount of $6,927 is due to HPS if no offset applies. Accordingly, without consideration of any offsets based on JMR's counterclaim, JMR and GAIC are jointly and severally liable to HPS for the undisputed amount of $332,435.72.

i. Delay Claim (PCO 23)

*17 22. HPS seeks damages in the amount of $121,255.97 for costs associated with the work stoppage from September 11, 2008 to March 29, 2009. These damages consist of unabsorbed home office overhead and field standby costs. DenHerder, Tr. 407; Exhs. 600–01, 605. For the following reasons, this claim is denied.

23. Provisions in the Subcontract indicate that HPS can only recover for delay that was within the sole control of JMR. Section 6.5.3 states that the Subcontractor may recover “direct damages resulting from unreasonable delay caused solely by the Contractor.” Subcontract, Exh. 328 at 16 (emphasis added). Section 6.5.1 governs owner-caused delay, and provides that the “Subcontractor shall not be entitled to any increase in the Subcontract price or to damages or additional compensation as a consequence of such [owner-caused] delays, except as otherwise permitted by law.” Id. at 15 (emphasis added). Accordingly, under the Subcontract, HPS may recover damages for a delay within the sole control of JMR, but HPS may not recover delay damages to the extent USACE was in control.

24. In the context of HPS's Miller Act claim, section 6.5.1's preclusion of HPS's right to recover delay damages if USACE caused the delay requires further analysis. In Mai Steel Service Inc. v. Blake ConstructionCo., the Ninth Circuit held that recovery of out of pocket expenses attributable to a delay from a general contractor's Miller Act surety is not limited to situations in which the delay was caused by the general contractor. 981 F.2d 414, 418 (9th Cir.1992). In Mai, a subcontractor recovered damages attributable to delay from the contractor's surety even though the delay was caused by another subcontractor, and not the contractor. Id. at 414. Similarly, in Millers Mutual, the Fifth Circuit held that a subcontractor was allowed to recover from the Miller Act surety damages resulting from a delay caused by government change orders. Miller Mutual, 942 F.2d at 951. However, in neither Mai nor Millers Mutual was there any discussion of an underlying subcontract term that specifically precluded the subcontractor's recovery for delay if the contractor was not solely at fault.

25. Moreover, there is authority in support of the position that section 6.5.1, which precludes HPS's recovery for owner-caused delay, affects the “measure of recovery” as opposed to the “right to recovery,” and therefore, does not constitute an implied waiver of Miller Act rights under Walton. In Morganti, a district court from the District of Connecticut held that a subcontract clause precluding the recovery of any damages for delay “affects the measure of damages, i.e., whether there is any liability for monetary damages.” Morganti, 2004 WL 1091743, at *11. The court found that this clause “simply delineates the extent of the general contractor's liability or, in the context of the Miller Act, what sums are ‘justly due’ to the subcontractor.” Id. Accordingly, the Morganti court found that “the ‘no damages for delay’ clause just as much defines liability for [the surety] as it does the liability of [the contractor]....” Id.

26. The Court ultimately need not decide whether HPS may recover delay damages under the Miller Act if the USACE was at fault for the delay. Section 10.2.3 of the Subcontract provides:

*18 Neither the Subcontract Price nor the Schedule of the Subcontract Work shall be adjusted under this Article for any suspension, delay or interruption to the extent that performance would have been suspended, delayed or interrupted by the fault or negligence of the Subcontractor or by a cause for which Subcontractor would have been responsible.

Subcontract, Exh. 328 at 24 (emphasis added). In addition, the Ninth Circuit held in Mai that recovery of damages for delay under the Miller Act “would be inappropriate” in instances “when the delay is attributable to the subcontractor's own conduct.” Mai Steel, 981 F.2d at 419 n. 8; see also Millers Mutual, 942 F.2d at 952 n. 14 (“A subcontractor cannot recover from a Miller Act surety for additional or increased costs caused by its own delay.”). Accordingly, under both the Subcontract and the Miller Act, it is clear that HPScannot recover delay damages to the extent HPS was at fault for the delay.

27. The Court finds that HPS cannot recover delay damages for the work stoppage between August 2008 and March 2009 because HPS is at least partly responsible for this entire period of delay. More specifically, the Court finds that (1) HPS is responsible for the delay until November 3, 2008 when the valves arrived in California; (2) HPS is responsible for the delay caused by the permit fee dispute until February 17, 2009; and (3) HPS has not shown that it is not responsible for the untimely approval of submittals for the redesign of the laterals and valves.

Valves

28. As discussed above, the delayed delivery of the valves was the primary reason HPS was unable to meet the August 22, 2008 milestone deadline. Section 4.1 of the Subcontract provides that HPS “shall be responsible for ... ordering of materials and all other actions as required to meet the Schedule of Work.” Subcontract, Exh. 328 at 6. HPS does not dispute its contractual obligation to timely supply the butterfly valves to be installed on the Pipeline.

29. HPS nonetheless contends that it was not responsible for the delayed delivery of the valves. HPS Br. at 17. There was a 10 to 14 week manufacturing lead time for the valves, and that lead time only commenced after the USACE approved the submittals for the valves on July 25, 2008. R & B also testified that it does not receive a “firm” lead time until after the USACE approves submittals. Vincellete, Tr. 125. There is also evidence which shows that HPS did not learn of the 10 to 14 week lead time until July 25, 2008. Exh. 731; Pourroy, Tr. 316; Vincellete, Tr. 125.

30. However, HPS was unaware of the long lead time until July 25, 2008 because of poor communication between HPS and HPS's subcontractor, R & B. R & B was informed on March 22, 2008 by the manufacturer, Henry Pratt Company, that the valves would have a lead time of 10 to 14 weeks after an offer was received and the submittals were approved. Vincellete, Tr. 120; Pourroy, Tr. 123; Exh. 738 (indicating that the valves had a “Lead Time” of “10–14 Weeks ARO Approved Submittals”). Although R & B had this information prior to the time in which HPS submitted its bid to JMR, R & B did not share this information with HPS until months had passed and the Project was already underway.

*19 31. HPS is responsible for the acts and omissions of R & B in the performance of R & B's work to procure the valves because R & B was HPS's subcontractor. HPS is responsible for the acts of its chosen subcontractors. At a minimum, HPS was responsible for determining whether it could fulfill its contractual obligations before it bid on the Project. See 5 Bruner & O'Connor Construction Law § 15:24 (“A party is legally responsible for its own acts and omissions as well as acts and omissions of those vicariously within its legal ‘control.’ ”). Accordingly, the Court finds that HPS was responsible for the delayed delivery of the valves.

32. HPS also contends it is not responsible for the delayed delivery of the valves because there was a defective specification for the valves. HPS made this argument for the first time at trial. DenHerder, Tr. 429–32; Irwin, Tr. 355–56.

33. The Court finds that the specification for the valves was not defective. Section 15112 of the specifications provides: “Unless otherwise specified, all valves shall be left hand to open (counterclockwise).” Exh. 424 at 2 (emphasis added). The Court finds that the plans for Project indeed specified that the valves for the Pipeline opened clockwise, as note 7 in Detail 8 provides: “Buried valves shall open clockwise,” Exh. 441, and the valves installed in the Pipeline were buried valves, DenHerder, Tr. 429.

34. HPS argues that note 7 in Detail 8 does not show that specifications were not defective because Detail 8 is not in the specifications. However, section 15112 does not state that all valves are counterclockwise “unless otherwise specified in the specifications.” Under the plain language of section 15112, which does not limit the documents which may indicate an irregular type of valve to the specifications, it would be reasonable to include specifications, contract documents, and the Project plans.

35. In any event, section 00700 of the specifications provides: “Anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. In the case of difference between drawings and specifications, the specifications shall govern.” Exh. 278 at 99 (emphasis added).

36. Because section 15112 of the specifications only states that valves open counterclockwise “[u]nless otherwise specified,” and because note 7 in Detail 8 specifies that the valves buried with the Pipeline open clockwise, the Court finds that there was no “difference between [the] drawings and specifications.” Exh. 278 at 99. Instead, the requirement that the valves open clockwise was “shown on the drawings and not mentioned in the specifications,” and therefore, “shall be of like effect as if shown or mentioned in both.” Id.

37. Further, even if there was a “difference” between the drawings and specifications with respect to the valves, id., section 4.2 of the Subcontract requires HPS to “make a careful analysis and comparison of the drawings, specifications, other Subcontract Documents, and information furnished by the Owner relative to the Subcontract Work,” and to notify JMR of any inconsistencies within three days of its discovery. Exh. 328 at 6. Section 4.2 further provides that “[i]f the Subcontractor fails to perform the obligations of this paragraph, the Subcontractor shall pay such costs and damages to the Contractor as would have been avoided if the Subcontractor had performed such obligations.” Id.

38. Accordingly, the Court finds that HPS was responsible for the delayed delivery of the valves. The evidence shows that the valves did not arrive in California until the first shipment arrived on October 28, 2008 and the second shipment arrived on November 3, 2008, months after the August 22, 2008 deadline.Irwin, Tr. 370. Accordingly, the Court finds HPS responsible for this delay between September 2008 and November 3, 2008.

Permit Fee Dispute

*20 39. The Court also finds HPS has responsibility for the delay caused by the permit fee dispute, which did not end until the USACE issued a change order and JMR paid the City of San Ramon for the additional encroachment permit fees on February 17, 2009. While JMR is responsible for not resolving this dispute expeditiously, the Court also finds that HPS contributed the circumstances that required an extension of the permit and the increase in permit fees.

40. HPS would not have needed an extension to the encroachment permit to finish installation of the Pipeline if HPS had complied with its contractual obligation to finish installing the Pipeline by August 22, 2008. The delayed delivery of the valves was the primary reason HPS did not meet the deadline. Other events that were within the control of HPS also caused delay, such as the obstructions that were encountered as a result of HPS's failure to pothole, the safety Stand–Down, and HPS's 47 failed compaction tests.

41. Moreover, the dispute about the encroachment permit was tied to the City's subsequent demand for a large increase in fees. These fees reimburse the City for the staff time City employees spent on the Project. Peterson, Tr. 242. Due to the safety issues and long duration of the Project, the City's staff spent a lot of time at the site of the Project, which caused the fees to be very high. See id. at 242–43.

Submittals

42. Even after the valves arrived and the permit fee dispute was resolved, HPS was unable to return work because the submittals for the redesign of the valves and laterals had not been approved by the USACE. The USACE approved the submittals to relocate the laterals away from the intersection on March 20, 2009. Exh. 327 at 49; Morrill, Tr. 529. HPS resumed its work on the Pipeline shortly thereafter on March 29, 2009. Irwin Expert Report, Exh. 623 at 27.

43. Under Section 4.9 of the Subcontract, HPS is responsible for the timely approval of its submittals:

The Subcontractor shall promptly submit for approval to the Contractor all shop drawings, samples, product data, manufacturers' literature and similar submittals required by the Subcontract Documents. The Subcontractor shall prepare and deliver its submittals to the Contractor in a manner consistent with the Schedule of Work and in such time and sequence so as not to delay the Contractor or others in the performance of work.

Subcontract, Exh. 328 at 7. HPS has not disputed this contractual obligation.

43. JMR presented testimony that HPS delayed in submitting all of the submittals required for the valve redesign, and that USACE ultimately approved the submittals on March 20, 2009. Exh. 327 at 49; Morrill, Tr. 529. HPS has not presented evidence to rebut this evidence. Accordingly, the Court also finds that HPS has responsibility for this delay.

* * *

45. Even if HPS were not responsible for the work stoppage between September 2008 and March 29, 2009, HPS would not be able to recover the full amount of its delay claim, which HPS currently values at $129,716. HPS submitted PCO 24 seeking $44,968 in damages for the delay from November 3, 2008 until December 8, 2008. See Exh. 581. HPS seeks damages relating to the time period after the initial PCO was submitted on December 2, 2008. However, HPS was required under sections 6.5.2 and 6.5.4 of the Subcontract to submit additional PCOs covering that time. Subcontract, Exh. 328 at 15–16. HPS did not. Accordingly, HPS failed to give JMR timely notice of the full extent of its delay claim.

*21 46. Moreover, under the Miller Act, HPS cannot recover the portion of requested damages that constitute rent for its own equipment. The “use value of [HPS]'s own equipment for the period of delay [does] not constitute ‘labor or material’ within the meaning of the Miller Act.” Millers Mutual, 942 F.2d at 952(citing United States ex rel. Edward E. Morgan Co. v. Maryland Casualty Co., 147 F.2d 423, 425 (5th Cir.1945)); see also Mai Steel, 981 F.2d at 417 (finding the Fifth Circuit's decision in Millers Mutual “persuasive.”). Rather, the use value of a subcontractor's own equipment “is far more analogous to lost profits—for which recovery against the surety is not allowed—than to actual expenditures for labor or materials utilized in the performance of the subcontract—for which [recovery] is allowed.” United States ex rel. Pertun ConstructionCo. v. Harvesters Group, Inc., 918 F.2d 915, 918 (11th Cir.1990) (citing Morgan, 147 F.2d at 425).

47. Finally, to the extent HPS seeks to recover home office overhead on its breach of contract claim by using the Eichleay formula,³ HPS has failed to satisfy the “strict prerequisites for application of the formula.” Nicon, Inc. v. United States, 331 F.3d 878, 883 (Fed.Cir.2003). To use the Eichleay formula, there must have been a delay of uncertain duration, that was not caused by the party seeking Eichleay damages, and the party seeking damages must have been “on standby and unable to take on other work during the delay period.” Id. The Court has already explained how HPS failed to prove it was not responsible for the delay. Moreover, HPS has not submitted any evidence to show it was unable to take on other work from September 2008 to March 2009.

ii. Valves out of Sequence (PCO 7)

48. HPS seeks damages in the amount of $24,105.69⁴ for the costs associated with having to install ten butterfly valves after the main pipeline had been installed, buried and paved. See Exh. 591. If the valves had been available during the first phase of construction in the summer of 2008, HPS would have installed them while installing the mainline of the pipeline. Jones, Tr. 56–58. Installing the valves after already installing the mainline increased HPS's costs. Pourroy, Tr. 312.

*22 49. The delayed delivery of the valves was the responsibility of HPS. Section 10.2.3 provides that the Subcontractor will not be entitled to any additional costs or time “to the extent that the performance would have been suspended delayed or interrupted by the fault or negligence of the Subcontractor or by a cause for which a Subcontractor would have been responsible.” Id. at 24.

50. The Court finds that section 10.2.3 affects the “measure of recovery” because it simply precludes HPS'srecovery when HPS is negligent or otherwise responsible for an interruption in Subcontract work. Consequently, HPS is not entitled to recover the cost of installing the valves out of sequence under the Miller Act.

iii. Acceleration (PCO 9)

51. HPS seeks damages in the amount of $21,456 for costs of accelerating its work in August of 2008 to meet the milestone deadline of August 22, 2008.⁵

52. JMR directed HPS to have its crew work overtime and on weekends. Sloss, Tr. 26; Pourroy, Tr. 323; Morrill, Tr. 509. The contemporaneous evidence shows that at the time, JMR acknowledged having ordered HPS to work an accelerated schedule. See Exhs. 751, 811, 864, 949.

53. Nevertheless, JMR was entitled to accelerate HPS's work under section 6.3 of the Subcontract, which provides:

Whenever, in the Contractor's opinion, the Subcontractor fails to maintain its part of the Schedule of Work, the Contractor may direct the Subcontractor to take all steps, such as overtime or shift work, until the Subcontract Work is in accordance with such Schedule. Such steps shall be without additional cost or compensation from the Contractor.

Subcontract, Exh. 328 at 15 (emphasis added). The Court finds that section 6.3 of the Subcontract affects the “measure of recovery” under the Miller Act because it simply precludes HPS's recovery for costs of acceleration when HPS has fallen behind its schedule of work.

54. HPS was responsible for the delay prior to the August 22, 2008 milestone deadline. Even without installing the valves and laterals in the first phase of the Project, HPS was unable to complete installation of the full length of the mainline by August 22, 2008. Sloss, Tr. 25. This was largely due to HPS's safety violations, failed compaction tests, and failure to pothole to avoid obstructions.

55. The Court rejects HPS's contention that it was unreasonable for JMR to accelerate HPS's work when, due to the delayed delivery of the valves, it was impossible to meet the August 22, 2008 milestone deadline. Complete installation of the valves and laterals by August 22, 2008 was a contractual obligation to which JMR and HPS were bound notwithstanding the delayed delivery of the valves. See Figgness, Tr. 576–77.

56. Moreover, even though HPS could not install the valves and laterals by August 22, 2008, it was still important to complete installation of the mainline by August 22, 2008. The encroachment permit allowed HPS to work with a permanent lane closure on Bollinger Canyon Road until the permit's expiration on August 22, 2008. Peterson, Tr. 218. After August 22, 2008, the lane closure needed to be opened to ease traffic congestion at the start of the school year. Morrill, Tr. 508. While installation of the mainline required a permanent lane closure, “the laterals and the valves and the T's, ... [by] contrast, could be isolated.” Figgness, Tr. 576.

iv. Directional Drilling (PCO 24)

*23 57. HPS seeks damages for the additional costs associated with installing the pipeline in the intersections by using the direct drilling method as opposed to the open cut method.

58. JMR contends this claim fails for the same reason as the acceleration claim. Section 6.3 allows JMR to “direct the Subcontractor to take all steps, such as overtime or shift work,” to accelerate HPS's work if HPS is behind schedule. Exhibit 328 at 15 (emphasis added). JMR contends that section 6.3 authorizes JMR to direct HPS to use the directional drilling method in lieu of the open cut method.

59. JMR's interpretation of section 6.3 is supported by the words “all steps,” which can be broadly construed to cover methods of construction, such as directional drilling or open cut. However, the words “all steps” is further defined by the subsequent phrase, “such as overtime or shift work,” which implies that “all steps” should be interpreted more narrowly.

60. The Court ultimately need not decide whether section 6.3 of the Subcontract authorizes JMR to direct HPS to use the direct drilling method if HPS is behind on its schedule of work. HPS's claim for directional drilling fails for other reasons.

61. HPS initially sought $79,616 for the additional costs incurred while using the directional drilling method, submitted as PCO 24. See Exh. 582. This amount was based on HPS's estimation that it would have cost $39.24 per foot to do open cut installation in the intersections. Pourroy, Tr. at 309. This estimate applied to the entire pipeline, without differentiation between the cost of installing the Pipeline inside and outside of the intersections. Id.

62. In his expert report, John Morrill wrote that the average cost per foot of installing the Pipeline in the intersections would be greater than the average cost per foot of installing the entire pipeline because there are more obstructions in the intersections. See Morrill, Tr. 523, 542–43; Morrill Expert Report, Exh. 291 at 12–14. HPS has now conceded this point, and has noted that its $39.24 figure underestimated the average cost per foot of open cut installation in the intersections, which resulted in an overestimate of this claim. Pourroy, Tr. at 309; HPS Br. at 19.

63. HPS states that it re-calculated the price per foot of open cut installation to equal $59 instead of $39.24. Pourroy, Tr. at 309. HPS's re-calculation decreases the total amount sought in HPS's directional drilling claim, but it is unclear by how much. See id. During trial, HPS represented that the directional drilling claim was reduced to $52,413. See Exh. 1037. In HPS's post-trial briefing, HPS represents that the direct drilling claim has been reduced to $48,000. See HPS Br. at 19. Trial Exhibit 612, which is supposedly an in-house estimate of the direct drilling claim prepared in December of 2013, does not contain either of these numbers. See Pourroy, Tr. 309–12; Exh. 612.

64. Nor does HPS explain how it arrived at the $59 figure. See Pourroy, Tr. 309:12. While HPS states that Exhibit 612 reflects HPS's final estimation of the cost of open cut installation in the intersections, the actual text of Exhibit 612 does not even appear relevant to this analysis, and certainly does not support HPSarriving at the $59 figure. See Pourroy, Tr. 309–12.

*24 65. Absent any explanation regarding how HPS arrived at the new $59 figure, the Court cannot determine whether HPS used a reasonable method to estimate these damages. There is no indication that, in a previous project, HPS ever used the open cut method in an intersection, such that HPS was able to estimate the cost for this Project. Rather, the $59 figure seems to be derived by simply adding $20 per cubic foot to the first $39 estimation.

66. JMR has also submitted more detailed estimations showing that HPS would not have incurred any additional cost by using the directional drilling method. Morrill Expert Report, Exh. 291 at 15–16. Accordingly, without any factual basis in support of HPS's estimation that it incurred an additional $59 per cubic foot for using the direct drilling method, the Court finds that HPS is not entitled to damages for direct drilling.

v. Installation of Steel Offsets at Chanterella (PCO 44)

67. HPS seeks $8,841 in damages associated with the USACE's requirement that HPS install steel offsets at the Chanterella intersection. See Exh. 594. HPS states that East Bay MUD demanded that steel offsets be used, Jones, Tr. 60–61, and that the USACE should have issued a change order because the contract documents do not require HPS to use steel piping in that location.

68. The contemporaneous evidence shows that in 2009, JMR took the same position as HPS. On several occasions, JMR wrote in its daily quality control report that, “We are proceeding under protest as this work was called for by changed EBMUD drawing that was not part of the contract and not detailed to be steel....” See e.g., Exh. 476 at Report No. 460.

69. This evidence shows that the requirement that steel offsets be used in the Chanterella intersection was a change in the contract's scope of work. JMR does not dispute this.

70. Rather, JMR now takes the same position the USACE took in the REA negotiations—that HPS created the circumstances for this change by using the direct drilling method. When JMR/HPS initially submitted the Request for Information No. 32, requesting direction on the piping requirements due to constraints in existing conditions relating to shoring difficulties, the USACE approved East Bay MUD's requested change and requested a cost proposal from JMR/HPS. See Morrill Expert Report, Exh. 291 at 20–21. However, JMRstates that upon further evaluation of the condition, the USACE ultimately withdrew its cost proposal after concluding that HPS chose to use the direct drilling method, which changed the Pipeline's elevation in the Chanterella intersection and created the need for the steel offsets. See id.

71. Section 4.18.1 of the Subcontract states:

If the Contractor or some other entity for which the Subcontractor is not responsible caused the nonconforming condition, and the Subcontractor was unaware of this condition when the work was covered, the Contractor shall be required to adjust this Agreement by change order for all such costs and time.

Subcontract, Exh. 328 at 10. Thus, HPS must show that it was not responsible for creating the circumstances (i.e. directional drilling) that required steel offsets to be used in the first place.

72. The Court finds the evidence inconclusive as to whether JMR required HPS to use the direct drilling method. Irwin's expert report cast doubt on HPS's position that this was required by JMR. See Irwin Expert Report, Exh. 623 (“HPS along with the concurrence of JMR engaged a subcontractor Wellco to install the pipe through the three intersections using directional drilling.”) (emphasis added).

*25 73. Nevertheless, even if JMR did compel HPS to use the direct drilling method, HPS has not met its burden to show that it was not responsible for the need to use the direct drilling method. HPS was behind its schedule of work and had not submitted any shoring submittals, which would have been required to use the open cut method in the intersections. Shoring submittals would have taken approximately one month for the USACE to approve, delaying HPS's progress even further. Accordingly, the Court finds HPS partly responsible for creating the conditions that required use of the direct drilling method.

74. In light of the uncontroverted evidence that USACE believed the use of the direct drilling method created the circumstances that required steel offsets to be used at the Chanterella intersection, see Morrill Expert Report, Exh. 291 at 20–21, the Court finds that HPS has not shown that it was not responsible for creating the circumstances that necessitated PCO 44.

vi. Reinstallation of Steel Offset at Chanterella Intersection (PCO 51)

75. HPS seeks $4,132 in damages associated with having to re-install one of the steel offsets on or around September 3, 2009. See Exh. 587. The evidence shows that HPS encountered a pipe that supplied a fire hydrant at the same elevation where the steel offset was depicted on the plans. Jones, Tr. 63. While the hydrant pipe was marked the plans, “[t]he elevation [of the hydrant pipe] wasn't on the plans.” Id.; see alsoExh. 476 at Report No. 475 (daily report for September 3, 2009 states, “The pipe feeding the fire hydrant was at a different elevation then shown on the profile on contract drawing.”). Thus, HPS had to re-install the steel offset at a different elevation. Id.

76. JMR has presented evidence that obstructions are often not marked in their exact locations, and that the standard practice is for an excavation crew to first locate the exact location of any obstruction by potholing prior to excavation. Figgness, Tr. 580–81. Moreover, Section 4.3 of the Subcontract requires HPS to “become fully acquainted with the nature and location of the Subcontract Work,” including “obstructions.” Subcontract, Exh. 328 at 6.

77. HPS also admitted that it did not pothole prior to commencing the work around the hydrant pipe. Jones Tr., 80. Accordingly, the Court finds that the additional costs HPS incurred as reflected in PCO 51 were a result of HPS's own performance. This cost is not recoverable under the Miller Act payment bond.

vii. Installation of a Test Plate (PCO 53)

78. HPS seeks $11,859 in damages associated with the cost of installing a test plate on an existing valve that was not installed by HPS. Jones, Tr. 52; see also Exh. 588. HPS's superintendent, Mike Jones, testified that he and two other HPS employees worked 30 hours each to install the test plate, and used the equipment as reflected in PCO 53. See Jones, Tr. 52–53; Exh. 588. On cross-examination, JMR did not ask Jones any question pertaining to the test plate.

79. JMR now contends that PCO 53 was rejected by the USACE because HPS failed to substantiate its costs and hours reflected in PCO 53 with additional evidence. While Morrill writes in his expert report that HPSfailed to provide sufficient information supporting this PCO, JMR presented no evidence at trial to dispute Jones's testimony that costs reflected in PCO 53 accurately depict the cost of providing materials and labor to install the test plate. Therefore, JMR's contention that these costs are not substantiated is without merit.

80. Further, the Court finds that the costs included in PCO 53 reflect the cost of HPS's provision of “labor and material in carrying out the work provided for in the contract....” 40 U. S.C. § 3131(b)(2); see Jones, Tr. 52. Accordingly, GAIC is liable for the full amount of PCO 53 equal to $11,859.

viii. Total HPS Claims Recoverable (Before Offset)

*26 81. In sum, without consideration of any offset based on JMR's counterclaim, Defendants JMR and GAIC are jointly and severally liable to HPS for the uncontested balance due, which is equal to $332,435.72. GAIC is also liable to HPS for PCO 53 in the amount of $11,859. Any amount awarded on JMR's counterclaim will be offset against these amounts combined, which is equal to $344,294.72. See Bartec Indus., 976 F.2d at 1278.

D. JMR's Claims

i. Delay Claim

82. JMR seeks $341,062 for delay, which is the amount JMR contends USACE would have compensated JMRbut for HPS's defective work causing delays. As discussed above, the entire Project was delayed by 459 days. PNM, Exh. 539. During the REA negotiations, USACE agreed to compensate JMR for 320 days of delay. That leaves a difference of 139 delay days for which JMR was not compensated by the USACE because they were deemed concurrent delays. See id. JMR contends that HPS should pay for the delay associated with the remaining 139 days because HPS was responsible for causing that delay. JMR Reply Br. at 3 (“But for the defective pipeline product HPS put in the ground, JMR would have received compensation for all 459 days of delay from the [USACE].”) (emphasis added).

83. Gerardo Prado, a USACE representative who was present at the REA negotiation, could not recall the reason why JMR was not compensated for the remaining 139 days. Testimony of Gerardo Prado (“Prado”), Tr. 293. The PNM drafted by the USACE does not refer to the delays associated with the Pipeline at all, but rather states that JMR conceded that it had delayed the Project through its shoring submittals:

JMR did not make any significant concessions until the 17 July meeting when they stated that they had not met the specified shoring requirements of a contiguous pile system until the third of four submittals which was submitted on 5 December 2008. Per the Government analysis there was no float remaining in JMR's schedule for the shoring approval as of 1 October 2008. At the 17 July meeting JMR agreed to reduce their request for extended delay from 459 days to 365 days.

PNM, Exh. 539 (emphasis added). While the PNM does not conclusively establish that JMR's inadequate shoring submittals caused the bulk of delay, it certainly discredits JMR's argument that the USACE believed HPS was the sole cause of concurrent delay.

84. In any event, JMR's agreement to reduce its request for compensation from USACE, and its settlement with USACE, is not a proper basis to claim delay damages, and JMR recognizes as much. JMR's main argument is that the Pipeline went on the critical path on December 23, 2009, and that HPS's testing of the Pipeline delayed the Project by the 155 days between December 23, 2009 and May 26, 2010, when the testing on the Pipeline alone was complete. Prior to discussing JMR's delay claim and the critical path analysis proffered by Mr. John Elmer, the Court reviews the basic principles relating to the critical path method.

The Critical Path Method

85. The critical path method (“CPM”) is a tool for scheduling and coordinating separate components in a construction project, and is useful in analyzing the extent and duration of time impacts attributable to many different causes. See 5 Bruner & O'Connor on Construction Law § 15:6 (2014). The theoretical advantages of the CPM are described by the United States Court of Claims in Haney v. United States :

*27 Essentially, the critical path method is an efficient way of organizing and scheduling a complex project which consists of numerous interrelated separate small projects. Each sub project is identified and classified as to the duration and precedence of the work (e.g., one would not carpet an area until the flooring is down and the flooring cannot be completed until the underlying electrical and telephone conduits are installed). The data is then analyzed, usually by computer, to determine the most efficient schedule for the entire project. Many sub projects may be performed at any time within a given period without any effect on the completion of the entire project. However, some items of work are given no leeway and must be performed on schedule; otherwise the entire project will delayed. These latter items of work are on the “critical path.” A delay, or acceleration, to work along the critical path will affect the entire project.

Haney v. U.S., 230 Ct. Cl. 148, 676 F.2d 584, 595, 30 Cont. Cas. Fed. (CCH) ¶ 70189 (1982).

86. A CPM schedule is created by identifying the activities which must be performed for the project, estimating the duration for each of those activities, and determining the sequential relationships or “logic” necessary to establish the most efficient sequence of activities to complete the project. 5 Bruner & O'Connor Construction Law § 15:8. Then, a “baseline” schedule using CPM network logic may be prepared using a computer scheduling program. Id. The baseline schedule “reflects the earliest dates by which each activity can be started and finished based on the logical ordering, sequencing and estimated duration of each activity.” Id. “By finding the longest continuous chain of interdependent activities running through the project, one can identify both the project's critical path and the planned estimated completion date.” Id.

87. “The time difference between the early start and late start or the early finish and late finish of each activity is ‘float,’ that is, the time that the start of the activity can be delayed without affecting the critical path and timely completion of the project.” Id. In other words, the total float for a given activity “represents the amount of scheduling discretion or flexibility that may be available for that activity before its total project duration will be adversely affected.” Id. An activity with zero float is on the critical path. Id.

88. A CPM that has been regularly updated to reflect a historical “as-built” record is generally considered the “best evidence” of causation and duration of events impacting the critical path. 5 Bruner & O'Connor Construction Law § 15:10. “Both causation and duration of such events typically are addressed in the update ‘narrative’ documenting the reasons for scheduling changes, and revised activity durations and sequences are reflected on the CPM itself.” Id. “Where a party pursuing or defending against a time impact claim relies, without more proof, upon an outdated CPM schedule for evidentiary proof of impact, the proof routinely is rejected.” Id.

89. To determine which party is responsible for an impact on the critical path of a project, courts must consider which entity or entities had legal “control” over the activity which caused the impact. 5 Bruner & O'Connor Construction Law § 15:24. Several factors influence whether an entity has “control,” including the scope of a party's undertaking and allocation of risk in the contract, a party's fault or negligence in the performance of its contractual duties, and in the case of the non-breaching party, the party's ability to reasonably mitigate damages. 5 Bruner & O'Connor Construction Law § 15:25; see also Titan Pacific Const. Corp. v. U.S., 17 Cl.Ct. 630, 1989 WL 78828 (1989), aff'd, 899 F.2d 1227 (Fed.Cir.1990)).

90. “Concurrent delay” is delay to the critical path caused concurrently by multiple events not exclusively within the “control” of one party. 5 Bruner & O'Connor Construction Law § 15:29. When there is concurrent delay, the remedy is usually limited to a time extension. Id. This is because to receive compensation for delay, “the party seeking damages for delay must prove that delay to the critical path would not have occurred ‘but for’ an event within the ‘control’ of the other party.” Id.

*28 91. To determine whether there is “concurrent delay,” one must analyze the impact of each cause of delay on the critical path. “Delay of noncritical activity, which by definition cannot delay the critical path of the project, cannot be a ‘concurrent’ cause of project delay.” 5 Bruner & O'Connor Construction Law § 15:68. However, there may be multiple events causing critical path delays. “The crucial issue for analysis is whether the critical path activity could have proceeded ‘but for’ only one or more delaying event.” Id.

92. “Recovery of damages by either contracting party requires proof that the other party ‘controlled’ a time impacting event that was the sole cause of the damages.... The crucial battleground in time impact litigation is the determination of causation, measurement of duration and proof of ‘control.’ ” 5 Bruner & O'Connor Construction Law § 15:120 (emphasis added).

93. “Proof of a specific cause and effect relationship between occurrence of an event and time impact to the critical path is essential ... for validating time impact claims or defenses.” 5 Bruner & O'Connor ConstructionLaw § 15:124. The starting point for the analysis is the baseline schedule that has been properly and frequently updated. Id. Contemporaneous evidence should also be used to determine the causes and impacts of actual delays to the project. Id. “Moreover, any analysis that fails to take into consideration the effect of all delays to the critical path will be rejected.” Id. (emphasis added).

Analysis ofJMR's Delay Claim

94. JMR contends the Pipeline went on the critical path on December 23, 2009, the day the Pump Station was ready to be tested with the Pipeline. JMR presented evidence that the Pump Station was substantially finished and ready for testing on December 23, 2009. Elmer Expert Report, Exh. 244; Morrill, Tr. at 549–50. JMR also presented evidence that HPS did not finish its testing of the Pipeline until May 26, 2010. Id. JMRstates that HPS's delayed testing of the Pipeline delayed the entire Project by 155 days, which reflects the number of days between December 23, 2009 and May 26, 2010. Id.

95. HPS contends that at all times the critical path went through the Pump Station and never went through the Pipeline. Irwin Expert Report, Exh. 623, Exh. A at 9; Irwin, Tr. 363. HPS states that the critical path is measured by the longest path of construction, and contends that because the Pump Station had a longer path of construction than the Pipeline, the critical path only went through the Pump Station. This is the same position JMR took when JMR submitted its REA to the USACE. See JMR REA, Exh. 523.

96. In the REA, JMR's expert John Elmer wrote that USACE was responsible for all 459 days of delay because “the Pipeline impacts were not critical and therefore did not control nor dictate the delay to the Project Completion.” JMR REA, B.5, Exh. 523 at 7. Rather, JMR's REA attributed the cause of all delay to the Project to the construction of the Pump Station. JMR wrote:

The causes [of project delay], though varied, resulted from 4 main issues that controlled much of the work at Pump Station. Those issues are: 1) USACE untimely approval of the Pump Station shoring design; 2) USACE untimely change in Pump Station concrete waterproofing; 3) USACE directed change to the relocation of the Repeater Station, and redesign of the discharge pipe flow meter coupler/restraints both of which impacted completing the Pump Station work; and 4) USACE untimely approval and directed changes to JMR's Pump Station Start Up and Testing Plan.

*29 JMR REA, A. Executive Summary, Exh. 523 at 1. Notably, there is no mention of the Pipeline causing critical path delay.

97. JMR explains that in 2010, JMR finally understood why the USACE believed the Pipeline was on the critical path. See Morrill Rebuttal Report, Exh. 293. Specification 01660 was missing from the contract documents, and Specification 01660 clarifies that to finish the Project, the Pipeline and the Pump Station must be tested together. Morrill explains:

These specification [sic] were used on the previous R200B–R300 sister project to this project. Suffice it to say, had this missing specification been incorporated as intended in the above # 4 Testing Specifications the Corps 7–day system operation test for the entire plant would have been easily resolved much sooner than later. Clearly the inclusion of the missing specification 01660 defines the pump station and pipeline system 7–day operational and commissioning testing versus the component testing requirements that were incorporated into the Project specifications for the existing project.

Morrill Rebuttal Report, Exh. 293 at 14. This may explain why JMR took to contrary position in the REA than it does in this lawsuit.

98. The incorporation of Specification 01660 casts doubt on HPS's critical path analysis, which assumes that the Pump Station and the Pipeline did not need to be tested together. See Irwin Expert Report, Exh. 623 at 12 (noting that in both the baseline schedule and the “asbuilt” schedule, “the Pump Station and the Pipeline were treated as two separate projects” and the Pump Station at all times had the longest path to completion). In 2010, USACE issued a change order incorporating Specification 01660 into the contract documents, which shows that the Pump Station and Pipeline had to be tested together. Morrill Expert Report, Exh. 293 at 14. Thus, the fact the Pump Station had a later completion date than the Pipeline does not show that Pipeline was never on the critical path. Rather, because of the 7–day dual test, any event that delayed the Pipeline beyond the date in which the Pump Station was ready for the 7–day test would be on the critical path.

99. The CPM analysis JMR presented to this Court is not any more persuasive than HPS's. See Elmer Expert Report, Exh. 244; see also Exh. 285 (Elmer Rebuttal Report). Elmer's report consists of a cursory analysis and a graph comparing the as-built schedule to an earlier schedule. See id. The graph shows that the Pump Station was ready to be tested on December 23, 2009, and that HPS completed testing of the Pipeline on May 26, 2010. Id. at 9.

100. The conclusory nature of Elmer's CPM analysis is most striking when compared to the CPM analysis Elmer drafted for JMR's REA. There, Elmer considered eleven schedules, including the baseline schedule and ten updates throughout the course of the Project (SR01—SR10), to evaluate all of the delays to the critical path of the Project. JMR REA, Exh. 523, Exh. 1.1 (Project Delay Analysis). Elmer introduces his CPM analysis contained in the REA as follows:

The [CPM] analysis provides a reiteration of the Contract schedule requirements, methodology used for determining project delays, detail chronicle of what JMR considers the most significant schedule impacts affecting the project, and a monthly chronology of the project including progress status and identified delays or gains based on the contemporaneous Project Schedule Updates. In addition to the monthly narratives, corresponding schedule graphic have been provided comparing each month planned and actual work as a basis for the delays and/or gains as they occurred during the project.

*30 Id. at 1–2. The type of CPM analysis Elmer included in the REA, which included an in-depth analysis of the causes at each of the regular updates, is generally considered to be the “best evidence” of causation and duration of events impacting time during construction. See 5 Bruner & O'Connor Construction Law § 15:10. The CPM analysis JMR submitted in this case will not be accorded the same weight.

101. The CPM analysis JMR submitted in this case does not show that the Pipeline was actually on the critical path as of December 23, 2009. See generally, Elmer Expert Report, Exh. 244; Morrill Rebuttal Report, Exh. 293. The evidence shows that only the final 7–day test required both the Pipeline and Pump Station to be tested together. Morrill Rebuttal Report, Exh. 293 at 9, 13. Three other tests for the Pump Station were required to precede this final 7–day test. Id. at 9. JMR's submittals for these three tests were not approved by USACE until March 9, 2010. Id. at 8. This suggests that the 7–day dual test could not have occurred until sometime after the other tests had been approved on March 9, 2010, and then completed. JMR has not explained why, as of December 23, 2009, the Pipeline was on the critical path if the Pump Station was not ready for the 7–day test.

102. Elmer's CPM analysis also does not discuss whether there was any concurrent delay between December 23, 2009 and May 26, 2010. Even assuming the Pump Station was ready for the 7–day dual test on December 23, 2009, that does not prove the Pipeline was the “but for” cause of critical path delay to May 26, 2010. See5 Bruner & O'Connor Construction Law § 15:120. If the delayed testing of the Pipeline were indeed the sole cause of this critical path delay, then one would presume that immediately after HPS finished testing the Pipeline on May 26, 2010, JMR would have conducted the dual test of the Pipeline and Pump Station. That is not what happened. JMR did not commence the final 7–day dual test of the Pipeline and Pump Station until August 2, 2010, the same day the USACE approved the submittals for this last test. Irwin Expert Report, Exh. 623 at 19.

103. JMR states that the USACE was solely responsible for the delay between May 2010 and August 2010. Elmer Expert Report, Exh. 244 at 4. This may be true. Nevertheless, even assuming the USACE is exclusively responsible for the delay after May 26, 2010, JMR must still show that JMR and/or USACE was not in control of any events causing concurrent delay prior to May 26, 2010.

104. The evidence shows that there were other events causing delay to the critical path between December 23, 2009 and May 26, 2010. See Elmer Expert Report, Exh. 244 at 4 (noting that the resumption of HPS's work in 2010 was dependent “upon several factors.”). As noted above, three of the four submittals for JMR'stesting were approved on March 9, 2010. Irwin Expert Report, Exh. 623 at 19; Morrill Expert Report, Exh. 291 at 8. Even if the approval of these submittals on March 9, 2010 does not show that the Pipeline was not on the critical path as of December 23, 2009, it still shows that there was concurrent delay.

105. In addition to failing to address concurrent delay between December 23, 2009 and May 26, 2010, Elmer's CPM analysis fails to address whether HPS was in exclusive control of the fact it began testing the Pipeline so late in Project. In other words, Elmer's CPM analysis fails to take into account whether any events prior to December 23, 2009 caused an impact on the critical path after December 23, 2009. By only looking at events after December 23, 2009, JMR improperly equates “critical path” to “causation.” However, these are two separate elements that both must be considered when assessing liability for time impacts on the critical path. 5 Bruner & Construction Law § 15:29.

*31 106. In addition to proving that HPS was exclusively responsible for critical path delay and that there was no concurrent delay, JMR also must show that it gave HPS timely notice of the delay claim. 5 Bruner & Construction Law § 15:121. However, JMR concedes that JMR was not even aware of the pertinent information which put the Pipeline on the critical path until June 2010, after HPS had finished testing the Pipeline. During the actual testing of the Pipeline, JMR believed that the delay to the Pump Station caused by the Pipeline delay was “insignificant.” Elmer Expert Report, Exh. 244 at 4. The USACE only later issued a change order incorporating Specification 01660 into the Prime Contract. See Morrill Reply Report, Exh. 293 at 8 (“[T]he requirement of providing a 7–day operation system test of the entire pump station as a complete unit, i.e., pipeline and pump station was a directed change and added to JMR's scope of testing per the 6.1.2010 meeting between JMR and USACE.”).

107. The Court also finds that JMR has not presented evidence showing entitlement to recover Eichleaydamages. The Court discussed Eichleay damages in the section above addressing HPS's delay claim. Like HPS, JMR must prove “effective suspension of much, if not all, of work on the contract.” P.J. Dick v. Principai,324 F.3d 1364, 1371 (Fed.Cir.2001).

As long as the contractor is able to continue performing the contact, although not in the same way or as efficiently or effectively as it had anticipated it could do so, it can allocate a portion of its indirect costs to that contract and there is accordingly no occasion in that situation to resort to recovery under the Eichleay formula, which is an extraordinary remedy.

Charles G. Williams Constr. v. White, 326 F.3d 1376, 1380 (Fed.Cir.2003). In other words, a contractor cannot recover home office overhead simply because of a critical path delay if the contractor was engaged in other work during the time period for which it seeks compensation. See id.

108. JMR has not presented evidence that it was not engaged in any other work during the period between December 23, 2009 and May 26, 2010. JMR states that the costs and elements of the Eichleay damages were verified by an independent CPA and accepted by the USACE in the REA negotiations. See Messina Tr., 680; Exh. 314. While true, the fact the Eichleay damages were verified by a CPA does not show that JMR was unable to work during that time. Mr. Messina is an accountant who just calculated the numbers, and even testified that he had no opinion as to the import of the calculation. See Messina Tr., at 671.

109. In any event, JMR has not submitted any evidence supporting its request for $341,062 in Eichleaydamages for other reasons. Mr. Messina submitted a report calculating a daily rate of combined indirect field costs and extended overhead of $2,228.64. See Messina Report, Exh. 314 at 32. That report indicates that this daily rate should be multiplied by the 139 days of uncompensated delay, to arrive at a total damages figure of $309,780.37. See id. There is no explanation for how JMR arrived at the $341,062 damages figure.

110. As a final point, JMR did not use a reasonable method to estimate the indirect field costs. The table displaying Mr. Messina's calculations of indirect field costs is incomprehensible. See Messina Report, Exh. 314 at 33. Mr. Messina testified that he “simply took the costs or the delay days that [he] was given for each of those short periods, and – and came up with a number. [He] didn't consider any details of the job outside of that.” Messina Tr., at 672. However, merely taking an average of the field costs for the entire Project does not adequately estimate the extent of field costs during the period between December 23, 2009 and May 26, 2010. Indeed, Mr. Messina's report even shows that field costs differed among different time periods for the Project. See Messina Report, Exh. 314 at 33 (noting that field costs between May and December 2008 averaged at $802 per day and that field costs between January and October 2009 averaged at $1,135 per day). Thus, it was improper to estimate field costs pertaining to a specific period (December 23, 2009 to May 26, 2010) by averaging the field costs per day for the entire Project.

*32 111. Therefore, JMR shall recover nothing on its delay claim.

ii. Backcharge No. 1

112. A backcharge is issued when a general contractor incurs costs on behalf of one of his performing subcontractors, and then charges the subcontractor for the work. Figgness, Tr. 586.

113. In Backcharge No. 1, JMR seeks $93,234.41 in damages associated with direct costs JMR allegedly incurred as a result of HPS's failure to perform in accordance with the subcontract. Exh. 200 at 1. These costs include: Dirt Haul Off Charges ($4,575); Asphalt Off Haul Disposal Fee ($3,240); HPS Trucking Charges to JMRAccount ($45,872.82); Compaction Failure Re–Test ($3,914.58); Subcontractor Back Charges–Terra Construction ($10,604.96); and Asphalt Paving Overages ($15,037.65). Id. JMR has also assessed a 12% markup on the subtotal of $83,245.01 to yield $93,234.41 as the total amount allegedly owed. Id.

114. Before addressing each individual portion of Backcharge No. 1, the Court addresses JMR's contention that prior to trial, HPS admitted that each of the charges comprising Backcharge No. 1 were “valid backcharges.” See JMR Reply Br. at 9–11; see Exh. 209 at 2. JMR made this argument for the first time in its rebuttal brief, thereby depriving HPS of any opportunity to respond. The document on which JMR relies was never discussed at trial. See Exh. 209 at 2. While the document reflects a list of “valid” backcharges and “disputed” backcharges, the author of the document is not apparent from the document itself. See id. The document is accompanied by a one-line cover letter (for which there is also no apparent author) which states that the document is a letter from Kenny Pourroy to Les DenHerder. Id. at 1. However, JMR never questioned Mr. Pourroy nor Mr. DenHerder regarding this apparent admission. Accordingly, JMR has failed to prove that HPS ever admitted that Backcharge No. 1 is comprised of “valid backcharges.”

a. HPS Trucking Charges to JMR Account:

115. HPS concedes that it is liable to JMR for $45,872.82 incurred for trucking charges. HPS Br. at 8; see Exh. 203.

b. Dirt Haul Off Charges

116. JMR seeks $4,575 for the extra cost JMR allegedly incurred for additional dirt or “spoils” that needed to be hauled off from the Project. See Exh. 201. HPS excluded “Dirt Disposal about 2580 [cubic yards]” in its bid. HPS Bid, Exh. 212 at 4. JMR relied on HPS and estimated its own cost of hauling 2580 cubic yards in the bid it submitted to USACE. Figgness, Tr. 587–88.

117. HPS contends that JMR was not entitled to rely on HPS's estimation of the amount of material as if it were a guarantee. The Court disagrees. If HPS had not excluded 2580 cubic yards of dirt haul off in its original bid, HPS would have been responsible for hauling all the material. Figgness Tr., 587–88.

118. Section 3.1 of the Subcontract states that Subcontractor will “provide all labor, materials equipment and services necessary or incidental to complete the part of the work which the Contractor has contracted with the Owner....” Subcontract, Exh. 328 at 5 (emphasis added). The haul of dirt that is excavated is a service that is “necessary and incidental” to the installation of the Pipeline.

*33 119. JMR initially bore the cost of hauling additional tons of dirt, and JMR is entitled to be compensated for the additional amount that HPS did not estimate in its original bid.

c. Asphalt Haul Off Disposal Fee

120. JMR seeks $3,240 that it paid in fees to dispose of asphalt. See Exh. 202. HPS notes that its bid excluded “All Permits and Fees,” which HPS contends include asphalt disposal fees. See HPS Bid, Exh. 212 at 4. This exclusion is also noted in Exhibit A to the Subcontract, which governs HPS's scope of work. See Subcontract, Exh. A at 31. This “specific exclusion” controls and nullifies the “general inclusion,” which states that the Subcontract is responsible for “[a]ll licenses, fees and permits associated with the Subcontractor's scope of work.” See id.

121. JMR contends that the exclusion of “All Permits and Fees” on HPS's bid does not refer to fees for asphalt disposal, but only to the fees JMR would be responsible for paying under the Prime Contract, such as the fee for the encroachment permit.

122. HPS's bid included Specification 02300, and Specification 02300 was ultimately included in HPS'sscope of work in the Subcontract. See HPS Bid, Exh. 212; Subcontract, Exh. 328 at 31. Section 3.09 of Specification 02300, entitled “Disposal of Materials,” provides in subsection (C): “Material which is unsuitable for fill, including rock, cemented materials, boulders, broken concrete, asphalt and other materials, shall be removed and disposed of at the Contractor's expense at a waste disposal or landfill site conforming to all local, State and Federal regulations.” Exh. 412 at (emphasis added). Because HPS's bid included Specification 02300, HPS was responsible for the expense of the asphalt disposal.

123. HPS notes that Specification 02220, which pertains to selective site demolition and includes all asphalt demolition on the Project, was not included in HPS's bid. See HPS Bid, Exh. 212; DenHerder Tr. 685; Exh. 410 (Specification 02220). Nor was it included in HPS's scope of work on the Subcontract. Nevertheless, JMRdoes not seek the costs of asphalt demolition through this portion of Backcharge 1. Rather, JMR seeks to recover the expense of asphalt disposal, which HPS was responsible to pay for pursuant to the Subcontract and Specification 02300.

d. Compaction Failure RE–Test:

124. JMR seeks $3,914.58 for JMR's additional costs associated with HPS's failed compaction tests in the summer of 2008. See Exh. 204. HPS's bid specifically excluded “Compaction Test.” HPS Bid, Exh. 212 at 4. “Compaction Test” is also excluded from HPS's scope of work in the Subcontract. Subcontract, Exh. A at 31. Nevertheless, JMR contends that the cost of HPS's 47 failed compaction tests should be borne by HPSbecause a re-test had to be conducted in each case as a result of HPS's poor compaction in the first instance. Figgness, Tr. 592.

125. JMR contends that the Subcontract makes HPS responsible for the costs of any failed test. The Court agrees. Section 4.18.2.1 of the Subcontract provides:

If the Subcontract work is not in conformance with the Subcontract Documents, the Subcontractor shall promptly correct the Subcontract Work whether it had been fabricated, installed or completed. The Subcontractor shall be responsible for the costs of correcting such Subcontract Work, any additional testing, inspections, and compensation for services and expenses ... made necessary by the defective Subcontract Work.

*34 Subcontract, Exh. 328 at 11 (emphasis added).

126. In addition, section 1.04 of Specification 02300, entitled “Soil Testing/Quality Assurance,” provides:

If test results are unsatisfactory, all costs involved in correcting the deficiencies in compacted materials shall be borne by the Contractor without additional cost to the Government. Costs of retesting and reinspection required as a result of inadequate, insufficient, or incomplete work by the Contractor shall be deducted from the Contract amount.

Exh. 278 at 392 (emphasis added). As discussed above, HPS is responsible for the work described in Specification 02300. Accordingly, the Court finds HPS liable for the additional costs of the 47 failed compaction tests.

e. Subcontractor Back Charges—Terra:

127. JMR seeks $10,604.96 for back charges related the additional costs incurred by JMR to compensate one of the paving subcontractors, Terra Construction, through change orders that were allegedly issued because of HPS's deficient work. See Exh. 205. Terra Construction was responsible for placing a trench plate and/or asphalt over the aggregate base that was placed by HPS after installing the pipe and backfilling the trench. Figgness, Tr. 593.

128. This portion of Backcharge No. 1 is the sum of the following back charges that were issued by Terra Construction to JMR: (1) a portion of Terra Construction's fixed overhead costs reflecting the lost productivity for Terra Construction when HPS's failed compaction tests on August 4, 2008 ($782.46) and August 13, 2008 ($1,033.88); (2) labor and equipment use paid to Terra Construction for working 1.5 hours to re-grade the aggregate base and place asphalt after HPS discarded asphalt due to an oil spill in a previously paved trench patch ($1,147.20); (3) labor and use of equipment paid to Terra Construction for regrading aggregate base that “was substantially high and un-even” on August 20, 2008 ($940.51) and “unsuitable ... due to the elevation and smoothness” on August 21, 2008 ($1,626.34); (4) overtime wages paid to Terra Construction employees working on Saturday, August 23, 2008 ($4,499.04); and (5) labor and equipment use paid to Terra Construction for the time spent waiting for HPS to remove a plate over a trench on August 28, 2008 ($575.53). See Exh. 205.

129. HPS contends that it is not liable for this portion of JMR's Backcharge No. 1 because JMR failed to establish that the grade was left low by HPS. As shown above, only a portion of this part of Backcharge No. 1 is based on HPS's allegedly poor grading. In any event, JMR presented evidence that in certain areas, the trench was left “8 or 9 inches deep, rather than 6, which represents a 50 percent overrun....” Figgness Tr. at 595. JMR also submitted photographs of a worker standing in a trench demonstrating with a ruler that the trench is 8 to 9 inches deep. See Exh. 211 at 3–5. There is also contemporaneous evidence in letters written by Terra Construction to JMR explaining how HPS's aggregate base was “un-even” and “unsuitable.” Exh. 205 at 8, 10. HPS has presented no evidence to controvert JMR's evidence of HPS's poor quality grading.

*35 130. HPS specifically challenges the $4,499.04 paid to Terra Construction for its employees to work overtime on Saturday, August 23, 2008. See HPS Br. at 9; HPS Reply Br. at 17. This claim is similar to HPS'sacceleration claim, which the Court rejected because section 6.3 of the Subcontract authorizes JMR to direct HPS to accelerate if HPS falls behind schedule. See Subcontract at 15. As discussed above, HPS was behind on its schedule of work and did not meet the August 22, 2008 milestone deadline.

131. The Court finds that JMR is entitled to this portion of Backcharge No. 1, including the charges for overtime performed by Terra Construction employees. Section 4.18.2.1 of the Subcontract states that HPS is responsible for the costs of JMR's additional compensation obligations “made necessary” by HPS's“defective” work. There is sufficient evidence that HPS's defective work made Terra Construction incur additional costs. Moreover, because HPS was behind in its schedule of work, Terra Construction was also delayed. The encroachment permit from the City of San Ramon officially expired on Friday, August 22, 2008, and school would commence the following week. Therefore, it was “necessary” for JMR to pay for Terra Construction employees to work on Saturday, August 23, 2008.

132. However, JMR has not submitted evidence showing entitlement to the $1,147.20 back charge JMR paid to Terra Construction after its crew “discovered a substantial oil spill within the previously paved trench patch” on August 15, 2008. Exh. 205 at 6. The spill covered approximately 270 square feet. Id. The letter Terra Construction sent to JMR explains that “HPS removed and off hauled the [asphalt] and our crews re-Graded the aggregate base and placed the asphalt.” Id. There is no indication from Terra Construction's letter, or any other evidence submitted by JMR, that HPS was responsible for this oil spill. See id.; Figgness, Tr. 593–94. JMR's daily report for August 15, 2008 does not mention any oil spill. See Exh. 476 at Report No. 91.

f. Asphalt Paving Overages

133. JMR also seeks $15,037.65 for asphalt paving overages, which reflect the cost of 92.8 tons of asphalt that were used in excess of the contract amount. See Exh. 206. HPS contends that JMR failed to show that this asphalt was used to correct grading that was left too low by HPS. HPS Br. at 9. As mentioned above, however, JMR presented testimony, photographs and contemporaneous evidence attesting to HPS's low and poor-quality grading in certain areas. See Figgness Tr. at 595; Exh. 211 at 3–5; Exh. 205. This evidence is uncontroverted.

134. Nevertheless, JMR's evidence on this portion of Backcharge No. 1 is inadequate. JMR only presented testimony from Gareth Figgness that Exh. 200 is an “accurate” summary of the charges comprising Backcharge No. 1, and that the “back up” substantiating these charges is depicted in Exhs. 202 to 216. The “back up” for the charge for asphalt paving overages is Exhibit 206, which consists of a single page document that calculates an asphalt overage of 92.825 tons, which, at $162 per ton, purportedly cost JMRan additional $15,037.65. There are no invoices showing that JMR actually paid this additional amount to an asphalt supplier. There are no letters from Terra Construction accompanying a back charge submitted to JMR for this additional asphalt. There is no testimony attesting to the method used to calculate the asphalt overage, or to the accuracy of the amount of this portion of Backcharge No. 1. Aside from JMR's conclusory evidence showing that HPS did not always leave the aggregate base at the correct grade, there is not any evidence explaining the $15,037.65 charge for asphalt paving overages.

* * *

*36 135. Accordingly, the Court finds that JMR is entitled to recover the costs reflected in Backcharge No. 1 ($83,245.01), less the costs associated with the Terra Construction's additional work resulting from the oil spill in the previously patched trench plate ($1,147.20), less the purported costs of paving overages ($15,037.65), for a total of $67,060.16.

136. JMR has not proven entitlement to the 12% markup on Backcharge No. 1. At trial, Gareth Figgness, who prepared Backcharge No. 1, testified that he “believed that was the markup stipulated in the subcontract agreement or changed work or back-charged work. I believe it was 12 percent, and that's why it's 12 percent.” Figgness, Tr. 595–96. JMR has not cited on contractual provision that entitled it to a 12% markup. Accordingly, JMR is not entitled to the 12% markup.

137. Therefore, HPS is liable to Defendants for $67,060.16 on Backcharge No. 1, consisting of Dirt Haul Off Charges ($4,575); Asphalt Off Haul Disposal Fee ($3,240); HPS Trucking Charges to JMR Account ($45,872.82); Compaction Failure Re–Test ($3,914.58); and Subcontractor Back Charges—Terra Construction($9,457.76).

iii. Backcharge No. 2

138. In Backcharge No. 2, JMR seeks to recover $308,282.62, which is the amount JMR contends represents all of the direct costs for testing, traffic control and paving JMR incurred after August 22, 2008. JMR contends these damages were incurred as a result of HPS's failure to complete installation of the Pipeline by August 22, 2008, and HPS's installation of defective piping that required extensive testing and repair in 2009 and 2010. See Exh. 217.

139. Backcharge No. 2 also includes a 12% markup equal to $33,030.28, which is not warranted for the reason discussed above. Accordingly, JMR can at most recover $275,252.34 through Backcharge No. 2. SeeExh. 217.

140. Whether JMR can recover this amount depends on whether JMR can prove that HPS is the proximate cause of the damages contained therein. See Cal. Civ.Code § 3300. Backcharge No. 2 contains all of the costs JMR incurred for testing, traffic control and paving between August 22, 2008 and June 6, 2010. Under the contract documents, JMR was responsible for testing, traffic control and paving. Defendants nonetheless seek to show that JMR incurred additional costs for these tasks because of HPS's breach of the August 22, 2008 milestone deadline, and HPS's installation of defective piping, which required extensive testing and repair.

141. The Court agrees that JMR may recover additional costs incurred for traffic control, testing and paving as a proximate result of HPS's defective work or other events within HPS's exclusive control. This is required by Section 4.18.2.1 of the Subcontract. See Exh. 328 at 11 (The Subcontractor shall be responsible for the costs of ... the Contractor made necessary by the defective Subcontract Work.”) (emphasis added). Nevertheless, JMR has made no attempt to prove that each charge or even each group of charges contained in Backcharge No. 2 was proximately caused by an event within HPS's control.

142. Despite the fact Backcharge No. 2 comprises a high portion of the total amount of JMR's counterclaim, JMR has presented very little evidence on this issue. Unlike the charges in Backcharge No. 1, there is no analysis describing why each category of cost was incurred. The Vice President of JMR, Ron Rivard, testified in an extremely conclusory manner that all of the damages in Backcharge No. 2 were the result of HPSbreach of the milestone deadline and installation of defective piping. Rivard, Tr. 612–15, 632.

*37 143. HPS is responsible for the additional costs JMR incurred as a result of the leaks in the Pipeline, which required HPS to perform extensive testing and repair. However, it is undisputed that no leak was discovered in the Pipeline until HPS began testing in September 2009. Morrill, Tr. 496. Thus, none of the costs incurred prior to September 2009 were a result of the leaks in the Pipeline.

144. HPS is also responsible for the additional costs JMR incurred having to install the laterals and valves out of sequence. Nevertheless, JMR makes no effort to show that all of the costs incurred prior to September 2009 were caused by the late delivery of the valves. The evidence only indicates when the charge was incurred and for what (i.e., testing, traffic control or paving). See Exhs. 218–42. There is no evidence from which the Court can discern why these charges were incurred.

145. In fact, JMR includes charges from September 2008 to December 2008, which is prior to the time HPSever installed the laterals and valves. See Exhs. 217–22. Three of the four categories of charges were for traffic control after August 22, 2008, after HPS had stopped work on the Project. See id. JMR has presented no evidence that the JMR incurred additional costs for traffic control in 2008 as a result of events within HPS's control. The fact HPS was not even working on the Project at this time render these claims dubious.

146. JMR even admitted that all of the charges reflected in Backcharge No. 2 were not proximately caused by events within HPS's control. At trial, Rivard testified that the USACE had approved certain change orders that included costs for traffic control, which Rivard estimated to be work about $10,000. Rivard, Tr. 612–13. JMR did not make any effort to exclude these costs from Backcharge No. 2. Rivard, Tr. 636.

147. HPS has also demonstrated that JMR gave inadequate credit to HPS for paving work. JMR deducted $8,658 as a credit “for the paving [JMR] would have incurred in 2008 for the laterals that would have gone in.” Rivard, Tr. 626; see Exh. 241. Rivard admitted that this credit is based on the original design for the laterals, even though the laterals that were installed were actually “much longer.” Rivard, Tr. 633. The evidence also shows that Rivard failed to provide any credit for the laterals installed at Alcosta, one of the three intersections. See Exh. 241; Rivard, Tr. 632–33.

148. The paving credit estimates that each square foot of paving is valued at $1.95, which includes the cost of labor, paving material and hard costs. Rivard, Tr. 643–34; see also Exh. 241. However, HPS presented evidence that when JMR submitted its charges to the USACE relating to an approved change order, which included costs for paving, JMR sought $11 per square foot. See Exh. 496; Rivard, Tr. 636–37. An $11 rate would increase the amount of HPS's credit from $8,658 to $48,840. That amount does not account for the additional square footage that should have been included for the longer length of the laterals and the Alcosta intersection.

149. Rivard explains that the price charged to the USACE was higher because change orders deal with a small area which must absorb the costs of mobilization and demobilization, and those costs are spread out in the initial bid. See Rivard, Tr. 637. Nevertheless, JMR has not presented any evidence substantiating its $1.95 figure, and the Court finds that amount discredited based upon the $11 price in the change order.

*38 150. There is also evidence that JMR failed to credit HPS for the permanent paving restoration JMR was required to do under the contract. A representative from the City testified that in 2008, JMR did not complete its final paving restoration. Shields, Tr. 265–67. Regardless of any defects or delay that were the responsibility of HPS, JMR would have had to complete the final paving in these areas. HPS explains:

In 2008 JMR could not have performed final paving restoration or traffic control in connection with the remaining 300 feet of Bollinger Canyon road, the tie in East of Chanterella, the tie in at Iron horse Trail, the laterals at the three intersections, the air relief valves, or the 16 inch Pratt valves, because none of that work had been performed in 2008.

HPS Reply Br. at 17.

151. HPS cites the Fifth Circuit's decision in Pizani v. M/V Cotton Blossom, 669 F.2d 1084, 1086–88 (5th Cir.1982), which the Ninth Circuit cited with approval in Faria v. M/V Louise, 945 F.2d 1142, 1144 (9th Cir.1991). In Pizani,

the plaintiff sued for damages that occurred when the defendant's ship collided with the plaintiff's dock. The plaintiff's sole proof of the amount of damages was a lump sum estimate, prepared by a constructionfirm, of the total cost for making a variety of repairs to the dock.... The defendant argued that the estimate included costs for work unrelated to the damage caused by the defendant, and the plaintiff offered no evidence showing how the estimate should be apportioned.... Nevertheless, the district court awarded the plaintiff the full amount requested because the defendant had failed to show the amount of the claimed damages for which it was not liable.

The Fifth Circuit reversed, holding that “[t]he plaintiff bears the burden of proof to show the amount, as well as the fact, of damages.... [W]hen a defendant shows that the figure claimed by the plaintiff includes non-compensable improvements, the plaintiff must prove ... the amount by which the original figure must be decreased.” ... The court further held that the main error in the case arose “from the fact that the sole basis of Pizani's proof of the amount of damages, the single lump-sum bid by [the construction firm], afforded no means whereby the district court could have properly determined the actual amount of damages caused by the defendant.”

Faria, 945 F.2d at 1144 (quoting Pizani, 669 F.2d at 1086–88).

152. Pizani and Faria are relevant here. HPS has shown that JMR's Backcharge No. 2 includes charges which were not proximately caused by events within HPS's control. Therefore, JMR bears the burden to prove the amount by which Backcharge No. 2 must be decreased. See id. JMR has not met this burden with respect to the period preceding HPS's testing of the Pipeline. HPS began testing the Pipeline on September 11, 2009. Irwin Expert Report, Exh. 623 at 28. Accordingly, JMR is not entitled to any damages incurred prior to this date with one exception. The $2,953.52 cost JMR incurred in November 2008 to fix trench plates installed by HPS is the only charge in Backcharge No. 2 for which there is contemporaneous evidence showing why the costs were incurred. See Exh. 221.

153. Pizani is distinguishable from this case because JMR has proffered more evidence in support of Backcharge No. 2 than a mere lump-sum estimate of the total charges. See Pizani, 669 F.3d at 1086–88. The Court has invoices, and may discern from the date of these invoices whether the charges were incurred when HPS was testing the Pipeline as a result of the leaks. The damages in Backcharge No. 2 incurred after September 11, 2009 are equal to $202,167.72. See Exhs. 222 ($890); Exh. 223 ($4,300.82); Exh. 224 ($3,369.48); Exh. 225 ($19,510.77); Exh. 226 ($300); Exh. 227 ($3,115); Exh. 229 ($4,596); Exh. 230 ($1,680); Exh. 231 ($7,607.18); Exh. 232 ($5,186.08); Exh. 233 ($57,526.39); Exh. 234 ($28,317.06); Exh. 235 ($9,600); Exh. 236 ($2,659.44); Exh. 237 ($5,602.50); Exh. 238 ($40,607); Exh. 239 ($1,960); Exh. 240 ($5,340).

*39 154. HPS has made a strong showing that JMR did not include an adequate credit for charges that JMRwould have incurred regardless of HPS's conduct. The Court will use the $11 per square foot cost that JMRsought from the USACE. This equals $48,840. Because Rivard testified that the size of the Alcosta intersection is similar to the other intersections, the Court will award an additional credit of 300 square feet. Rivard, Tr. 632–33. The Court also awards an additional credit of 400 square feet for the final paving. See HPSRebuttal at 17. Finally, because JMR concedes it did not account for the full length of the laterals, the Court awards an additional credit of 300 feet. These additional credits, which are charged at the $11 rate, bring the total credit to $59,840.

155. Accordingly, the Court awards JMR damages for the costs JMR incurred in November 2008 while fixing trench plates installed by HPS ($2,953.52), plus additional costs JMR incurred after September 11, 2009 when HPS was the sole proximate cause of the damages ($202,167.72), less the charges that JMR would have incurred regardless of HPS's conduct ($59,840), for a total of $145,281.24.

IV. CONCLUSION

156. Defendants JMR and GAIC are jointly and severally liable to HPS in the amount of $332,435.72. GAIC is severally liable to HPS in the additional amount of $11,859, for a total amount of $344,294.72 against GAIC.

157. JMR is entitled to recover $67,060.16 on Backcharge No. 1 and $145,281.24 on Backcharge No. 2, which together are equal to $212,341.40. Defendants are entitled to offset the amount owed to HPS by the amount of JMR's counterclaim.

158. Accordingly, JMR and GAIC are jointly and severally liable in the amount of $120,094.32, and GAIC is severally liable to HPS in the additional amount of $11,859.

IT IS SO ORDERED.

All Citations

Not Reported in F.Supp.2d, 2014

FOOTNOTES

1  Both parties have presented evidence that the schedule created in May of 2008 was not the actual baseline schedule for the Project, which was not submitted to the USACE until July 15, 2008. Irwin Expert Report, Exh. 623 at 26 (“the Baseline Schedule ... was not submitted until 7.15.2008.”); Elmer Tr. at 662; see also JMR REA, Exh. 523, Exh. 1.2.1 (Baseline Schedule). The only schedule complete by May 2008 was the “Preliminary Project Schedule Submission,” which was required to be complete within 20 days of the Notice to Proceed by section 3.4.1 of Specification 01320–6. See Exh. 278 at 246.

2 JMR also contends that section 6.5.2 unequivocally binds HPS to the USACE's previous decision to deny the PCOs. The Court disagrees. Section 6.5.2 provides that “[i]n the event of any dispute or claim between Contractor and Owner which directly or indirectly involves” the Subcontractor, the Subcontractor is bound to “all decisions, findings or determinations” that are made by a “person so authorized in the Owner–Contract Agreement, or by an administrative agency or court of competent jurisdiction or by arbitration, whether or not Subcontractor is party thereto.” Subcontract, Exh. 328 at 15–16. HPS's PCOs were ultimately rejected through a REA settlement process between JMR and the USACE. There were no “decisions, findings or determinations” on the PCOs rendered by “an administrative agency or court of competent jurisdiction or by arbitration,” to which HPS would be bound under section 6.5.2. Nor has JMR shown that the decision to deny the PCOs was made “by the person so authorized in the OwnerContractor Agreement.” JMR has cited no authority for the proposition that a subcontractor is bound to the final REA settlement negotiation between a contractor and the government. Accordingly, the Court finds that section 6.5.2 does not preclude JMR's liability to HPS for the PCOs which have been rejected by USACE.

3 The Eichleay formula is used to “equitably determine allocation of unabsorbed overhead to allow fair compensation of a contractor for government delay.” Wickham Contracting Co. v. Fischer, 12 F.3d 1574, 1578 (Fed.Cir.1994). The formula was first developed by the Armed Services Board of Contract Appeals in Eichleay Corp., 60–2 B.C.A. (CCH) ¶ 2688 (1960), aff'd on reconsideration, 61–1 B.C.A. (CCH) ¶ 2894 (1961). That formula requires the following threestep analysis:

[1] The total home office overhead for the contract performance period is multiplied by the ratio of contract billings to total company billings; this calculation results in the amount of home office overhead allocable to the contract. [2] That amount is then divided by the number of days of contract performance; the result is the daily home office overhead rate allocable to the contract. [3] That rate is then multiplied by the number of days of delay; the result is the amount of recovery.

George Hyman Constr. Co. v. Washington Metro. Area Transit Authority, 816 F.2d 753, 757 (D.C.Cir.1987).

4 HPS initially sought $38,919 for this claim, and HPS submitted a revised PCO 7 for this amount. See Exh. 591. HPS writes in its brief: “JMR rightfully contended that 20 couplings included in the change order would have been required whenever the valves were installed. HPS also included profit and overhead. Without the 20 couplings, and deleting profit and overhead, the change order is $21,914.26. Including 10% profit and overhead raises the total claim to $24,105.69.” HPS Br. at 18.

5 HPS originally sought $69,075 through the claim associated with PCO 9, but now admits that the “original change order request for acceleration costs erroneously included the base wages in the calculation.” HPS Br. at 23; see also Exh. 607; Exh. 593.