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GSA Endorses Third Party Rating Systems for Federal Buildings

Posted Nov 07, 2013
Meghan A. Dourisview author profile and contact info

November 7, 2013

On October 25, 2013, the U.S. General Services Administration (“GSA”) concluded that federal agencies should continue to use third party rating systems to evaluate the performance of federal buildings.  Specifically, GSA advocated that agencies use U.S. Green Building Council’s (USGBC) LEED green building rating system or the Green Globes system to advance energy efficiency and to save taxpayers’ money.  For more info on this decision, click here.

Earlier this year, the GSA released its initial findings surrounding green building in the federal government, but announced its intent to seek public input as to which rating systems “are most likely to encourage a comprehensive and environmentally sound approach to the certification of green federal buildings” before issuing its formal recommendation. See Feb 2013 DJC article.

Under Section 436(h) of the Energy Independence and Security Act of 2007 (EISA), GSA is required to identify a certification system that is “most likely to encourage a comprehensive and environmentally sound approach to the certification of green buildings” and made a recommendation to the Secretary of Energy.

GSA’s decision comes a year after more than 1,250 businesses and organizations urged GSA to continue to use LEED to improve the energy and environmental performance of federal buildings, against push back from other groups.  Now, based on the findings of the inter-agency “§436(h) Ad-Hoc Review Group on Green Building Certification Systems,” GSA continues to formally voice its support for LEED and Green Globes as third-party rating system for construction of government buildings.

To assist in making its recommendations, GSA engaged the Pacific Northwest National Laboratory (PNNL).  A study by PNNL found that GSA LEED certified buildings used 25 percent less energy than the national average and cost 19 percent less to operate.  There are currently more than 4,000 LEED certified government projects, with another 8,000 in the pipeline as registered projects. A recent report from GSA shows the agency has successfully reduced its energy use by nearly 20 percent since 2003 and water use by almost 15 percent since 2007. 

GSA advised buildings should achieve at least LEED Silver or 2 Green Globes. In renovating existing buildings, agencies should set a minimum goal of LEED Certified or 1 Green Globe.  In addition to recommending the use of third party rating systems and specifying that those systems be LEED 2009 and Green Globes 2010, the GSA made four other recommendations:

    1. Agencies should use credits that align with federal sustainability requirements, set forth by statute and Executive Order.
    2. Agencies should only use one third party certification system.
    3. GSA should establish a process to keep current with revisions to the rating system.
    4. Federal government should participate in ongoing development of green building rating systems.

While the GSA’s report leaves a variety of unanswered questions [which we will address in future posts over the next few weeks], the good news is that the agency continues to voices its support for sustainability practices at the federal level.

Alaska Supreme Court Decision Could Have Harsh Effects on Contractors

Posted Sep 17, 2013
Meghan A. Dourisview author profile and contact info

On September 6, 2013,  the Alaska Supreme Court handed down its ruling in North Pacific Erectors, Inc. v. Department of Administration, 2013 W.L. 4768380.  North Pacific Erectors (“North Pacific”) sought review of the trial court’s decision to uphold a decision by the Department of Administration (the “Department”) denying its request for additional payment for the differing site condition surrounding the removal of asbestos.  North Pacific argued the Department breached its duty to disclose, among other procedural issues.  

The Supreme Court’s decision upholding the denial of the differing site condition is especially harsh to contractors because (1) it redefines superior knowledge/duty to disclose standards and requires the Government to have “absolute control” over the disputed information to be found liable; and (2) it sets up a precedent in Alaska that contractors will be strictly held to the terms and language of the contract.  The decision also truly highlights the need for contractors to keep proper records when performing changed work, including accurate job cost records to track that changed work, since here the Court barred the contractor’s recovery for its valid differing site condition claim due to its failure to keep detailed and accurate records, as required by the contract.  

The case involved the renovations and asbestos abatement for one floor of the State Office Building in Juneau, Alaska, which is owned by the Alaska Department of Administration.  As is typical for public contracts, the invitation for bid stated potential bidders were responsible for conducting a site investigation of the project, and that by submitting a bid the contractor represented it had "visited and carefully examine[d] the site and is satisfied as to the conditions to be encountered in performing the Work."[1]  North Pacific was awarded the contract and it subcontracted out the asbestos abatement work. Unfortunately, the subcontractor quickly discovered that instead of the pan deck surface being flat and smooth, it was embossed, which greatly expanded the time and effort necessary to clean the pan deck.  The changed condition and extensive efforts (including the subcontractor’s employees having to use toothbrushes to clean the pan deck) were only documented in one daily report, which did not include a time estimate to perform this extra work.

The subcontractor notified North Pacific of this differing site condition and North Pacific transmitted the same to the Department and requested additional compensation.  The Department denied this request.  North Pacific subsequently filed a claim per the contract’s (fairly standard) differing site condition clause.  All told, there were five underlying administrative hearings/decisions before the issue was litigated before the Courts.  Both the initial and the remanded decision by the hearing officer sided in favor of North Pacific, concluding that (1) the Department should have disclosed the embossed condition of the deck, (2) the embossed condition was a differing site condition and (3) damages of approximately $156,000 would be awarded to North Pacific.  However, these decisions of the hearing officer were overturned by the deputy Commissioner, who concluded that North Pacific failed to bear the burden sufficient to award additional compensation, since it had not conducted a pre-site investigation. The Superior Court handled the appeal, noting it was “troubled” by the procedural issues, but that the Agency’s decision was not “legally flawed” and was “reasonable.”  It was then appealed to the Supreme Court.

Duty to Disclose   

The Supreme Court upheld the deputy Commissioner’s decision that the Department did not have a duty to disclose the nature of the deck pan.  The Court stated “[i]n short, a successful superior knowledge claim by a contractor requires the government to have unique control over information.”  The Court reasoned that here, while the State owned the buildings and a mere visual inspection would not have revealed the condition, and the State had “more control” over the information than in other precedential duty to disclose cases, because the State did not have “absolute control” over the information and thus it had no duty to disclose.  It emphasized that for a successful duty to disclose award in Alaska, the contractor must show it was “dependent on the [State] as the only reasonable avenue for acquiring the information.”

Differing Site Condition

In analyzing the differing site condition claim, the Supreme Court emphasized that the differing site conditions clause also contained the following language:

If the Contractor believes additional compensation or time is warranted, then he must immediately begin keeping complete, accurate, and specific daily records concerning every detail of the potential claim including actual costs incurred.

In the event that the Contracting Officer and the Contractor are unable to reach an agreement concerning an alleged differing site condition, the Contractor will be required to keep an accurate and detailed record which will indicate the actual “cost of the work” done under the alleged differing site condition. Failure to keep such a record shall be a bar to any recovery by reason of such alleged differing site conditions.

[t]otal cost, modified total cost or jury verdict forms of presentation of damage claims are not permissible to show damages.

[l]abor inefficiencies must be shown to actually have occurred and can be proven solely based on job records.

Based on the above contract language, the Court concluded that the failure by the contractor to strictly comply with these provisions barred its recovery for the differing site condition.  Specifically, it had only one daily report with no time or work estimates attributed to the additional work and it did not explain why it could not provide a contemporaneous record of the actual additional costs incurred and thus North Pacific could not support its argument in favor of using an alternate method to calculate damages.  The Court also inserted dialogue emphasizing preference for “actual cost data” in deciding these claims.  The Supreme Court then awarded attorneys’ fees to the State as the prevailing party.

Going forward, contractors doing business in Alaska should take particular note of the Contract language and expect to be bound literally.  Contractors should be prepared to accurately document all changed conditions, including accurately tracking all costs related to the changed work.  Contractors should also not brush over the “duty to investigate” prior to bidding the job in hopes of relying on the trusty “duty to disclose” argument, as this Court made quite clear it will be an uphill battle to prove duty to disclose in Alaska going forward.


[1] North Pacific did not in fact visit the site; however, it is uncontested that the differing site condition would not have been exposed during the pre-bid meeting, unless a specific request had been made to view exposed pan deck.

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