ECCO III Enterprises, Inc

ECCO III Enterprises, Inc. v. Dep't of Environmental Protection OATH Index No. 1044/06, mem. dec. (Apr. 21, 2006)

Petitioner sought review of Department’s denial of a specific contractor as a supplier. CDRB held that the matter is not within the Board's jurisdiction. Respondent’s motion to dismiss granted. ______

NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS

CONTRACT DISPUTE RESOLUTION BOARD In the Matter of ECCO III ENTERPRISES, INC. Petitioner - against - DEPARTMENT OF ENVIRONMENTAL PROTECTION Respondent ______

MEMORANDUM DECISION

KARA J. MILLER, Administrative Law Judge/Chair

KENNETH JOCKERS, Deputy General Counsel, Mayor's Office of Contracts

ALAN SHAW, Prequalified Panel Member

Presently pending before the Contract Dispute Resolution Board ("CDRB" or "the Board") is the petition of ECCO III Enterprises, Inc. ("ECCO"). ECCO is seeking compensation due to the Department of Environmental Protection's ("DEP") denial of Craft Machine Works (“Craft”) as a supplier for DEP Contract CRO-205, for the reconstruction of the Kensico and Muscoot Dams. On January 26, 2006, respondent filed a motion to dismiss the claim on jurisdictional grounds. On February 16, 2006, petitioner filed a response opposing the motion. Respondent 2 2 filed a reply on February 27, 2006 and petitioner filed a sur-reply on March 2, 2006. After considering the parties' submissions, the Board grants respondent's motion for the reasons provided below. ANALYSIS This dispute arises out of a contract between ECCO, the construction manager, and the City to provide all labor, materials and equipment necessary to reconstruct two dams and a bridge in Westchester. On December 1, 2004, ECCO submitted Craft for subcontractor vendor and manufacturer approval. Roy Tysvaer, DEP's chief engineer, denied the use of Craft as a vendor/manufacturer for the furnishing of material and equipment for the contract on January 25, 2005, because recent performance by Craft on other projects had been found to be unsatisfactory. On February 7, 2005, ECCO requested reconsideration of the use of Craft as a vendor/manufacturer because it had relied heavily on Craft in the bid proposal for the contract. Mr. Tysvaer again denied the use of Craft for this purpose on February 23, 2005, stating,

. . . CMW will not be considered for work by this Bureau until after July 1, 2005. At that time, CMW's status (based on performance on in-process work) will be re- evaluated. Should your schedule permit, we have no objection to your re- submittal of CMW after July 1, 2005.

ECCO requested reconsideration of the use of Craft for vendor/manufacturer approval again on March 22, 2005 because raw material costs had increased since the bid was accepted and ECCO was unable to find a vendor who would supply the sluice gates at a similar price. On May 11, 2005, in response to the reconsideration request, DEP permitted ECCO to use Craft sluice gates, taking into consideration escalating steel prices. DEP, however, denied permission to use Craft for fabricated items citing Craft’s inability to fulfill contractual obligations on other projects. The May 11, 2005 letter further states that, “[w]ith regard to your request for considering Craft for the fabricated items submitted under this contract, your request is hereby denied.” Disregarding the May 11, 2005 denial, ECCO requested approval of Craft as a material supplier once again on July 8, 2005, citing DEP's February 23, 2005 letter stating that it would re-evaluate Craft after July 1, 2005. On July 12, 2005, Mr. Tysvaer indicated that DEP's May 11, 2005 letter, stating that no further consideration would be given to using Craft for fabricated items, superseded the February 23, 2005 letter.

2 3 3 On August 8, 2005, ECCO filed a notice of dispute with the DEP commissioner. On September 6, 2005, First Deputy Commissioner David Tweedy denied consideration of ECCO's notice of dispute because it was untimely. Commissioner Tweedy also addressed the merits of the dispute, finding that Craft was not a company of “good reputation” because of its unwillingness and/or inability to fulfill its contractual obligations on other work. ECCO filed a notice of claim with the Comptroller on September 29, 2005. The Comptroller denied the claim on November 22, 2005, finding that the May 11, 2005 determination required ECCO to submit its notice of dispute within 30 days of its receipt, and that ECCO had not done so until August 8, 2005. ECCO thereafter filed a claim with the CDRB. Respondent moved to dismiss the petition on two grounds, that the subject matter of the dispute is outside the Board's jurisdiction and that petitioner's claim is untimely due to petitioner's failure to file its notice of dispute with the agency head within 30 days of the denial as required by section 4-09(d)(1) of the New York City Procurement Policy Board’s (“PPB”) rules and Article 27 of the Contract. Respondent argues that the Board has no jurisdiction over the agency's denial of a construction manager's choice of a subcontractor or supplier because the approval or denial of a subcontractor or supplier is within the discretion of the agency. Respondent contends that the contract itself limits which disputes may be heard. Article 27 of the contract, which governs disputes, indicates that it applies only to: . . . disputes about the scope of work delineated by the Contract, the interpretation of Contract documents, the amount to be paid for Extra Work or disputed work performed in connection with the Contract, the conformity of the Contractor's Work to the Contract, and the acceptability and quality of the Contractor's Work; such disputes arise when the Engineer1 makes a determination in which the Contractor disagrees.

Respondent asserts that the denial of the choice of a supplier is not a determination as to the scope or quality of the contractor's work, nor is it an assessment of how much should be paid for the work completed. Conversely, ECCO argues that the denial of its choice of Craft as a supplier is within the jurisdiction of the Board. It asserts that the Board may review disputes regarding the conformity

1 In addition to the engineer, the PPB Rules allow for such disputes to arise when "the Resident Engineer, Engineering Audit Officer, or other designee of the Agency Head under the contract (as defined in the contract) makes a determination with which the vendor disagrees."

3 4 4 of the contractor’s work and the acceptability and quality of the contractor’s work. Since contractors are directly responsible for their subcontractors or suppliers, it follows that the acceptability and quality of a subcontractor or supplier would fall within this portion of Article 27 of the contract. In addition, ECCO argues that both DEP and the Comptroller's office advised it that the denial of Craft as a supplier could be appealed to the CDRB by complying with the dispute resolution process set forth in Article 27 of the contract. The Board finds that terms of the contract and PPB rules preclude the Board from resolving a dispute over whether a particular supplier may be used on a project. Such dispute does not involve contract delineated work, the amount paid for extra or disputed work, the conformity, acceptability or quality of contractor's work, but rather, it involves whether a supplier is permitted to do the work. Article 27 of the contract and section 4-09 of the PPB rules address whether work has been satisfactorily performed, not whether a particular subcontractor or supplier is approved prior to commencing the work. The Board further notes that it is not precluded from considering whether a dispute is within its jurisdiction. See GVC II, Inc. v. Dep’t of Transportation, OATH Index No. 894/03, mem. dec. (July 3, 2003) (reviewing, sua sponte, the Board's subject matter jurisdiction). The Board’s authority to determine whether a dispute is within its jurisdiction is derived from the contract and the PPB rules, not correspondence from the agency or Comptroller, advising respondent of its right to an appeal. Finally, since the Board concludes that it does not have jurisdiction over the dispute, it is unnecessary to address whether the petition is time barred. For these reasons, we hold that the Board does not have jurisdiction over petitioner’s claim and therefore respondent’s motion to dismiss is granted. All concur.

KARA J. MILLER Administrative Law Judge/Chair

April 21, 2006

APPEARANCES:

KRISTEN FLYNN, ESQ.

4 5 5 Attorney for ECCO III Enterprises, Inc.

MICHAEL A. CARDOZO, ESQ. NYC Corporation Counsel Attorney for Respondent BY: STEVEN BLIVESS, ESQ.