A-E Responsibility Management Program

1. A-E ResponsibilityManagement Program Marilyn W. Lewis, PE Deputy, Engineering Division 28 January 2009 BUILDING STRONG

2. References • EP 715-1-7, dtd 22 May 07 Architect-Engineer Contracting • FAR 52.233-1, contract “Disputes” clause • FAR 52.236-23, “Responsibility of the Architect-Engineer Contractor” • FAR 36.608, “Liability for Government Cost” BUILDING STRONG

3. A-E Responsibility Management Program (AERMP) is a formal process for holding A-E firms accountable for their work and recovering damages to the Government caused by the A-E firms. Goal - Maintain and improve quality of services & products BUILDING STRONG

4. The AERMP…. • conducted in a fair, consistent and reasonable manner • no demand for damages without adequate review • investigations pursued in a cost-effective & timely manner • damages pursued only when economically justified & in the best interest of the government • prefer to resolve actions through partnering & negotiation • ultimately the Contracting Officer’s decision BUILDING STRONG

5. Roles and Responsibilities • A-E Responsibility Administrator (AERA) – Chief, ED • responsible for timeliness, cost-effectiveness, reasonableness and fairness of AERMP • A-E Responsibility Coordinator (AERC) • appointed by AERA • responsible for day-to-day management of AERMP • A-E Responsibility Management Review Board (AERRB) • consists of Chiefs of Engineering, Construction, Programs/Project Management, Contracting, Counsel BUILDING STRONG

6. Roles and Responsibilities • A-E Responsibility Administrator (AERA) • Stephen Durrett, PE, Chief, Engineering Division • A-E Responsibility Coordinator (AERC) • Rachael Haunz, PE • A-E Responsibility Management Review Board (AERRB) • Stephen Durrett, PE (Chairman) • George Jageman, PE, Chief, Construction Division • Dale Dale, PE, Chief, P3MD • Mark Yates, Chief, Contracting Division • Dale Holmes, Chief, Office of Counsel BUILDING STRONG

7. Responsibility of the Architect-Engineer… FAR 52.236-23 • An A-E firm shall be responsible for the professional quality, technical accuracy and coordination of all designs, specifications, and other services it furnishes. • The A-E firm shall, without additional compensation, correct or revise any errors or deficiencies in its work. • The Government’s review, approval or acceptance of the A-E services is not a waiver of any of the Government’s rights. • The A-E firm shall be and remain liable for all damages to the Government caused by its negligent performance. BUILDING STRONG

8. Deficiency must be due to error or omission by A-E firm Did not meet the reasonable standards of care of the profession (negligence) or the contractual requirements Government must prove that it suffered damage as a result of the A-E firm's error or omission Conditions for A-E Liability BUILDING STRONG

9. Legal Principles • Negligence – failure to meet the standard of reasonable care, skill and diligence that one in the A-E profession would ordinarily exercise under similar circumstances. • Burden of Proof – government must prove that the firm was negligent and that the error or omission by the firm was the cause of the damages. • Comparative Negligence – Government is not barred from any recovery of damages if it is also negligent, but there will be an apportionment of damages or responsibility in proportion to the relative fault of the parties involved. BUILDING STRONG

10. Legal Principles • Mitigation – Government has responsibility to minimize damages resulting from the A-E firm’s deficiencies. The firm must be notified promptly and provided a reasonable opportunity to correct its work. • Government Assumption of Risk – A-E firm may be relieved of responsibility for a design deficiency due to action by the Government, such as if the gov’t corrects the design deficiency without the concurrence of the firm and the corrected design is the cause of a failure. BUILDING STRONG

11. Other Considerations • Not necessary for the deficiency to be corrected for the gov’t to recover damages. It is only necessary to show that the gov’t has incurred damages, or will incur them in the future (diminished value theory). • Economic factors can be considered in deciding whether to initiate an A-E liability case. • Risk of Government being overly zealous in pursuit of A-E liability. BUILDING STRONG

12. Schedule is important • Cases must be pursued in a timely manner to mitigate damages and strengthen likelihood for full recovery. • Funds recovered can be credited to the project if the appropriation is still open. • Quick action is highly desirable if the damages are significant. • Schedules established by the AERC based on dollar value, complexity and other pertinent considerations. BUILDING STRONG

13. Funding • Detailed project costs are maintained for all cases, starting when it is apparent that a liability case will be initiated. • Cost records include all costs associated with investigation, deliberation and prosecution of the case. • Funding initially comes from: • planning & design funds, • construction S&A funds, • customer • overhead BUILDING STRONG

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15. Determination of Damages • Construction costs • tearout and demolition, scrap material, restocking charges, premium for expedited delivery, reinstallation, difference in new and salvage value of unused or removed material or equipment, delay and impact, and extended overhead • Ancillary costs • construction S&A, administrative costs to prepare and award a purchase order or contract, in-house costs for the corrective design, cost of re-procurement of A-E services, diminished value, loss of use or function • Investigation and Recovery Costs • technical and administrative costs to investigate, document, and review liability, and recover the damages, including actions by the AERC, technical specialists, expert witnesses and counsel BUILDING STRONG

16. Small Errors or Deficiencies • Consideration of small errors or deficiencies may be deferred until the total number and/or total damages warrants recovery. • Small errors typically defined as those between $2,500 and $5,000. • AERC will periodically review the deferred liability actions on each contract to see if aggregate recovery is warranted. • At end of construction contract any decision not to pursue will be documented in the contract file. BUILDING STRONG

17. FAR 33.206(b) • A 6-year limitation of a Government claim is applicable to A-E liability cases. • The 6-year period begins on the date the A-E firm submits its completed work. BUILDING STRONG

18. A-E Performance Evaluation • Liability arising during design is reflected on performance evaluation prepared after completion of design. • Liability related to construction is reflected on A-E construction performance evaluation. • A revised evaluation will be submitted if a liability case is settled after the final performance evaluation has been prepared. BUILDING STRONG

19. QUESTIONS? BUILDING STRONG