AMEC Civil, LLC's contract with VDOT regarding a Route 58 project has been in ongoing litigation for many years. AMEC recovered a significant damages award from the Circuit Court, only to have much of it reversed on appeal. Since the original judgment, the case has been going back and forth between the Virginia Court of Appeals, the Virginia Supreme Court, the Norfolk Circuit Court, and now most recently back to the Virginia Court of Appeal, which in an unpublished opinion reversed additional damages findings of the Norfolk Circuit Court, and remanded aspects of the decision back to the lower court for additional factual findings, and recalculations based on those findings ("AMEC CA2"). While the case seems destined for additional appeals, the current decision offers various insights regarding damage claims for VDOT projects. This blog will explore those in a series of posts, starting with the question of "what are actual costs?"
This question was one of the main focuses of AMEC CA2 because the VDOT specification in question expressly provides that only "actual costs" will be considered for adjustments. This was a key issue in the case because the lower court had measured damages, in part, by averaging estimated costs using varied means testified to at trial. In the earlier appeal, the Virginia Supreme Court had held that "actual costs" was a term of art, and included direct costs, like materials and wages, and indirect costs, like overhead, but did not include profit. Apply this, the Court of Appeals concluded that, other than the Blue Book, which the Virginia Supreme Court had expressly approved for calculating actual costs for the use of owned equipment, estimates were not a permissible means of establishing actual costs, and that averaging of monthly costs would not reflect actual costs, which must be proven by actual cost records, absent expert testimony otherwise.
This decision makes clear the obligation for keeping accurate records of actual costs for force account work. More to follow in discussion about the continuing AMEC CA2 ramifications.