{"id":589,"date":"2014-03-01T23:58:41","date_gmt":"2014-03-01T23:58:41","guid":{"rendered":"http:\/\/fwhtlaw.com\/?post_type=briefing-papers&p=589"},"modified":"2022-12-12T22:00:23","modified_gmt":"2022-12-12T22:00:23","slug":"mn-department-transportation-standard-specifications-construction-2014-edition","status":"publish","type":"post","link":"https:\/\/www.fwhtlaw.com\/blog\/2014\/03\/01\/mn-department-transportation-standard-specifications-construction-2014-edition\/","title":{"rendered":"MN Department of Transportation Standard Specifications for Construction, 2014 Edition – Contractors Need to Be Aware of MnDOT’s Significant Division I Revisions – Part 1 of 3 – Sections 1100 through 1400"},"content":{"rendered":"

As most contractors that contract with the Minnesota Department of Transportation are already aware, MnDOT has significantly revised its Standard Specifications for Construction. The 2014 Standard Specifications went into effect for projects let on or after December 2, 2013.[1] <\/sup>In developing the 2014 Standard Specifications, MnDOT stated that its intent was to make grammatical revisions that emphasized the active voice, to increase consistency, and to reduce redundancy. Despite MnDOT\u2019s stated intent, the 2014 Standard Specifications include significant changes to nearly all Division I sections that could greatly increase contractors\u2019 risk and raise the procedural hurdles for recovery on claims. Dramatic changes have been made to sections on claims (Sections 1402, 1403, and 1517); progress schedules (Section 1803); extensions of time (Section 1806); and additional compensation (Sections 1903-1907). When MnDOT released the initial draft of what is now the 2014 Standard Specifications, we in consultation with the Minnesota AGC, MAPA, and other industry groups, provided comments to try to balance the risk to contractors and to conform the revised specifications with the law.MnDOT accepted some important change, but it would not change many others. The result is that the 2014 Standard Specifications increase risks to contractors and increase the obligations of contractors that will contract with MnDOT.<\/span><\/p>\n

The changes made by MnDOT are so many that they cannot be covered completely or in detail in only one Briefing Paper, so we are issuing three on this topic. Recently, our firm gave a seminar on these changes at which we were able to discuss them in much more detail. If a more complete discussion interests you, we videotaped the seminar and you can listen to it at the following link<\/span>[2]<\/sup> (which you can also find on our website): <\/span>http:\/\/www.fwhtlaw.com\/files\/pdf\/MnDOT_Update_Seminar_Sept_2013.pdf<\/a>. This three part briefing paper will provide an overview of each section of Division I to highlight some of the risk shifting provisions in the 2014 Standard Specifications as compared to the 2005 Standard Specifications. However, it is not intended to explain every change that potentially adds risk or cost to the contractor. Part 1 will focus on Sections 1100 through 1400.<\/span><\/p>\n

Can MnDOT Even Do This?<\/span><\/strong><\/span><\/p>\n

As a preliminary consideration, the 2014 Specifications are far broader than technical contract revisions and far exceed changes to the technical requirements on how Contractors should build roads and bridges. Instead, the new Specifications limit and change Contractors\u2019 existing legal remedies, change existing Supreme Court precedent, and in many respects, govern precisely how a Contractor must schedule and account for its business operations. When a state agency attempts to make such significant changes to people\u2019s rights and remedies, it must usually go through a process known as formal Rulemaking that requires public hearings to be scheduled and public testimony offered about the appropriateness of the new rules. Minnesota law requires that rules be adopted in accordance with specific notice and common procedures established by statute, and if MnDOT does not comply with these necessary procedures, the rules are invalid. <\/span>See <\/em>Minn. Stat. \u00a714.45.<\/span><\/p>\n

Minnesota Statutes \u00a714.02, subd. 4 defines a \u201cRule\u201d as \u201cevery agency statement of general applicability and future effect . . .adopted to implement or make specific the law enforced or administered by that agency or to govern its organization or procedure. \u201dMnDOT has denied that the changes to its 2014 Standard Specifications constitute Rulemaking, but Minn. Stat. \u00a7161.32, subd. 1(a) is a statutory basis for MnDOT\u2019s authority to create its standard specific specifications, and that statute states that contracts for work on trunk highways must be based on specifications prescribed by the Commissioner of Transportation. The word \u201cspecification\u201d is not defined in MnDOT\u2019s enabling statute, but Minnesota case law has already found that certain aspects of the standard specifications are in fact Rules to implement or make specific the law enforced or administrated by MnDOT.<\/span><\/p>\n

The issue becomes important because when one considers the broad risk shifting and law changing provisions in the new Standard Specifications, the question will arise if these provisions are enforceable or whether certain provisions of them have to go through Rulemaking before MnDOT can impose them on and enforce them against Contractors.<\/span><\/p>\n

Section 1100 \u2013 Shifting Risk Through New and Changed Definitions<\/span><\/strong><\/p>\n

Section 1100 of the 2014 Standard Specifications includes about 170 definitions. More than 70 of these definitions are new and very few definitions from the 2005 Standard Specifications were left unchanged. While not every definition creates added risk, there is risk if the Contractor assumes that it knows what a defined terms means. The many changes mean that Contractors need to review the definitions in the 2014 Standard Specifications along with the other sections because, if you think you know what something means in your contract with MnDOT, you may be wrong.<\/span><\/p>\n

More troubling than the 2014 Standard Specifications containing so many changes to the definitions is that some of the definitions that MnDOT has included create potential ambiguities and even conflict with standard industry meanings. Definitions are supposed to assist in clarifying contract meaning, but the definitions in the 2014 Standard Specifications, in several instances, do the opposite.<\/span><\/p>\n

As an example of a troubling definition is the definition of \u201cErrors and Omissions,\u201d a new definition that the 2014 Standard Specifications defines as \u201cA deficiency in the <\/span>Contract<\/strong> that results in multiple interpretations of a requirement, as determined by the <\/span>Engineer<\/strong>, except for those resolved by the orders of precedence in 1504, \u2018Coordination of Contract Documents.\u2019\u201d This definition is not the model of clarity, but its greatest problem is that it gives \u201cerrors and omissions\u201d a non-standard meaning. The concept of \u201cerrors and omissions\u201d is generally understood to mean a mistake by a <\/span>person<\/span>, not a contract deficiency. More typically, \u201cerrors and omissions\u201d refer to mistakes by an <\/span>engineering <\/em>or <\/span>design professional<\/em>. Notwithstanding the commonly used meaning of errors and omissions, the 2014 Standard Specifications instead state that \u201cErrors and Omissions\u201d are essentially ambiguous provisions of the Contract \u2013 and then only if the Engineer says so.<\/span><\/p>\n

The definitions begin to demonstrate the increasing burdens and complications of the 2014 Standard Specifications. More than twenty of the new definitions pertain to the new and expanded scheduling requirements in Sections 1803 and 1806. Changes to \u00a71800 will be discussed in Part 3 of this briefing paper series, but some of the new definitions themselves demonstrate that Contractors will have to become or will have to hire scheduling experts.<\/span><\/p>\n

This briefing paper would be as long as the Standard Specifications if it highlighted the problems of each of the Section 1100 definitions, but the main Section 1100 take away is that potential risk lurks everywhere. You cannot take for granted that you know what a Contract term means.<\/span><\/p>\n

Section 1200 \u2013 Increasing the Pre-Bid Investigation Burden on the Contractor<\/span><\/strong><\/span><\/p>\n

Section 1200 contains the bidding requirements and conditions. In the 2014 Standard Specifications, MnDOT has placed expanded requirements for investigation and information on the Contractor while attempting to restrict its own risk regarding unknown conditions or differing site conditions.<\/span><\/p>\n

Section 1205.1 includes an expanded list of inspection requirements. The 2014 Standard Specifications provide a list of what constitutes \u201ca reasonable site investigation,\u201d including an investigation of the Project Site, borrow sites, utility property, \u201call other locations related to the performance of the Work,\u201d and any additional information that MnDOT makes available. The Contractor has the burden to be \u201csatisfied with quality, quantities, and conditions to be encountered\u201d and it is up to the Contractor to request any \u201cadditional information\u201d if it believes that it needs any \u2013 MnDOT would not agree to include language in the 2014 Standard Specifications that it would be required to disclose all information in its possession. Section 1205.2 only states that MnDOT \u201cmay\u201d make information in its possession available. Nevertheless, Bidders are deemed to have knowledge of any information in MnDOT\u2019s possession whether or not MnDOT actually gives it to the Bidders.<\/span><\/p>\n

MnDOT also does not imply a warranty on the information that it does provide. Section 1205.2 states that the Bidder\u2019s review of information provided by MnDOT \u201cis not a substitute for a Bidder\u2019s own evaluation, interpretation, or judgment,\u201d is not part of the Proposal Package, and will not become part of the Contract. MnDOT also expressly does not warrant the completeness or accuracy ofborings. The 2014 Standard Specifications attempt to undercut a project owner\u2019s implied warranty of accuracy. Whether this attempted \u201cboiler plate\u201d disclaimer will be effective remains to be seen.<\/span><\/p>\n

MnDOT has also expanded its authority in the consideration of bids. A Bidder can be disqualified from bidding if it \u201cfailed to perform on a previous contract with the State.\u201d MnDOT states that its authority for this provision is Minn. Stat. \u00a7161.32, subd. 1d., which permits MnDOT to reject the bid of a bidder that failed to perform on a previous contract with the State. Neither the statute nor the Standard Specifications provides any discussion on what the vague phrase, \u201cfailure to perform,\u201d means. Does a delay constitute failure to perform? Does the existence of repair work constitute a failure to perform? This language should not be applied to effectively debar a Contractor without debarment requirements being followed.<\/span><\/p>\n

Section 1200 take away \u2013 Beware of the information that you have and what you do not have.<\/span> Always ask MnDOT in the pre-bid stage to release all information in its possession relating to the project<\/strong>.<\/span> Inform MnDOT of what you have investigated and to what you have been provided access and specifically request MnDOT to inform you if it believes that other investigation is required.<\/span><\/span><\/p>\n

Section 1300 \u2013 No Major Changes to Bid Consideration and Award of Bids<\/span><\/strong><\/span><\/p>\n

There are no major risk allocation changes in Section 1300 from the previous 2005 version of the Standard Specifications.<\/span><\/p>\n

Section 1400 \u2013 Muddying the Scope of Work and Restricting the Claims Process<\/span><\/strong><\/span><\/p>\n

The modifications to Section 1400 of the 2014 Standard Specifications may be summarized under two main points: (1) MnDOT is expanding the Contractor\u2019s scope of work without compensation, and (2) MnDOT is increasingly restricting the Contractor\u2019s ability to assert claims for extra time and compensation.<\/span><\/p>\n

   1.  <\/span>An Expanding Scope of Work<\/span><\/p>\n

Multiple changes in Section 1400 potentially expand the Contractor\u2019s scope of work for MnDOT\u2019s benefit. Under the definition of Work, in addition to the performance of the duties required under the Contract, the Contractor is required to provide all labor and equipment and \u201cother incidentals necessary or convenient for successful completion of the Project.\u201d This language is problematic for its breadth, its lack of clarity, and its potential subjectivity. Who determines what is necessary or convenient? Who determines what is \u201csuccessful\u201d completion? The Project can also be broader than the limited Work that is the subject of the bid. Section 1401 does not help to increase the clarity when it states that the Contract \u201cmay not fully describe every detail\u201d or \u201cmake allowances for all probable exceptions.\u201d If the Contract fails to provide a description, it is up to the Contractor to \u201cperform in accordance with the best general practice.\u201d MnDOT further leaves itself the discretion to enforce the Contract unequally.<\/span><\/p>\n

In \u00a7\u00a71402.1 and 1402.3, MnDOT, through the Engineer, may also change quantities and Work \u201cfor reasons of the Department\u2019s interest\u201d or \u201cas are necessary to satisfactorily complete the project.\u201d This is broader than previous specifications, which permitted alteration of details if that was in the public interest. A determination that a change was in the <\/span>public <\/em>interest often required that MnDOT make factual findings \u2013 it is uncertain whether there would be a requirement of factual findings to determine what is in <\/span>MnDOT\u2019s <\/em>interest.<\/span><\/p>\n

   2.  <\/span>Contractor\u2019s Narrowing Rights on Contract Revisions<\/span><\/p>\n

The 2014 Standard Specifications permit the Contractor to assert that any of these changes constitute a Contract Revision and to claim additional time and\/or payment. However, the 2014 Standard Specifications restrict the Contractor\u2019s ability to assert such a claim. The Contractor must give notice of a claim for extra work according to the requirements of <\/span>\u00a71403 or, under the 2014 Standard Specifications, it waives the claim. And if the Contractor performs the extra Work before it receives a signed Supplemental Agreement, the Work may be considered unauthorized and it shall be at Contractor\u2019s expense.<\/span><\/p>\n

Section 1403 sets forth the multi-step \u201cContract Revision\u201d process. Under the new specifications, \u201cthe Engineer will consider requests for Contract revisions only if the notification procedures in this section are followed.\u201d<\/span><\/p>\n