Specifications Trump Industry Practices

When the specifications call for temporary structures to be paid in a certain manner, it does not matter what the industry practice may be. That is the lesson learned by a structural steel supplier on a large bridge project.

During the run-up to bidding, the public authority was asked how Grade 36 steel for temporary bracing was to be paid, among the various bid items. The answer, documented in pre-bid Addendum No. 7, was that temporary steel supports should be bid and paid as part of the Grade 50 permanent steel structure. That is, all costs associated with or incidental to permanent steel, including temporary steel, were to be built into the price for the permanent steel.

As the project was nearing completion, the steel supplier claimed it had not been paid for the temporary cross frames, which comprised 182,873 pounds of steel. The prime contractor sent the claim up the chain to the owner, but the owner’s representative said no payment was due, citing Addendum No. 7.

A lawsuit ensued, and the supplier argued that it is industry practice for steel to be paid by the pound in this type of project. It demonstrated that its bid price was derived from the quantity of steel for temporary supports combined with the quantity of steel for the permanent structure, divided by the total weight to get a per pound number. Thus, its per pound price was a blended rate to include both Grade 36 and Grade 50 steel, for the total amount of both grades, and on the assumption that it would be paid per pound for the total amount of steel supplied, both temporary and permanent. But the Rhode Island Supreme Court construed the contract, and specifically Addendum No. 7, in another manner.

Per the court, Addendum No. 7 required the parties to adjust the per pound price of permanent steel to incorporate the cost of the temporary support steel. The Rhode Island high court held:

The contract clearly articulated that, as with the other costs associated with, but incidental to, Work Item No. 312 [for permanent steel], all costs essential to temporary bracing were to be built into the price per pound of Grade 50 structural steel. As such, because we deem the contract clear and unambiguous, we need not address appellants' alternative arguments that flow from a determination of contract ambiguity.

Thus, the supplier was held to the unit price and payment standard established by Addendum No. 7, even if that standard varied from industry practice. And the supplier who had priced the steel in a different, albeit typical, manner, learned that it would not get paid for the temporary steel supports. The case is High Steel Structures v. Cardi Corp., 2017 R.I. LEXIS 11 (Jan. 20, 2017).