Contract Performance - Contract Interpretation

A contract for water tower painting provides for the rehabilitation and painting of three water towers located on an Army base. This refurbishment included painting, welding and other improvements.The specifications provided that each tower was to be drained of all water "during all cleaning, application and curing of the paint.Draining of pipes shall be by Government personnel."Only government personnel were authorized to operate the valves and equipment, including the closing of valves, and the switching, starting, stopping or removal from service of any equipment.

The specifications included a sequence of activities to accomplish work on each tower, whichincluded: draining the tower by government personnel; interior steel demolition, sandblasting, steel work, including welding; exterior sandblasting and steel work; painting of the tank interior and exterior; and sterilization, refilling, testing of the tank and placing the tank back into service.

While the specifications provided a sequence of activities for work on each individual tower, they did not mention, limit or restrict the sequence of activities or timing of work on the three towers, including the timing for draining of the towers.

The contractor had responsibility for developing a schedule of performance, with the specifications requiring the contractor to prepare and submit a practicable schedule showing the order in which the contractor proposed to perform the work.

The military base on which the water towers are located also obtains its water from two outside sources, a local water company and a city water supply which provide more water to the base each day than is contained in the three water towers.

The contractor had originally planned to work on one tank at a time, completing one tank before beginning work on the next one.However, a series of government and weather-caused delays put the contractor behind schedule.This schedule delay impacted the contractor's ability to utilize certain work crews, such as welders. In an effort to make up time, reduce costs and expedite completion, the contractor asked the government to drain a second tank, prior to completion of work on the first tank. The contractor had re-staffed its welding crew and had the capability to perform welding and other repairs on two tanks at once.The government denied the request on the grounds that only one tank could be drained at any one time.The government also claimed that the base would not allow the draining of two tanks for reasons of fire safety, arguing that taking more than one tank out of service at one time would leave insufficient water in the event of a fire.

The government's refusal to drain more than one tank at a time prevented the contractor from implementing its revised schedule to utilize its increased resources, which increased its costs of performance.

After completion of the contract, the contractor sought an equitable adjustment, arguing that the government's refusal to drain more than one tank at a time amounted to a constructive change and resulted in increased costs for the contractor.

The government denied the claim. In support of its position, the government, argued that the omission of a clause restricting the number of tanks that could be drained at one time created an ambiguity in the contract, which imposed duty on the contractor to inquire prior to contract award as to how many tanks could be drained at one time.

Please consider the following questions in your analysis and response:

1. 1. Keeping in mind the essential elements and goals of the rules of contract interpretation, choose either the contractor's or government's position and discuss how these rules can be used to resolve this dispute in favor of your position.
   2. Based on the facts presented above, is the issue of how many tanks may be drained at one time subject to more than one reasonable interpretation, as argued by the government? If so, why?