This Directive provides a method for resolution and cost recovery in the event that the standard of care has not been met, and ODOT has suffered damages.
E&O Claims Process
The goals of the E&O Claims Process are to:
- identify E&O issues and associated costs early,
- set expectations of timely notification to the Consultant of problem E&O issues,
- establish a requirement to work together to correct, mitigate, or minimize the effects on the construction project’s quality, schedule and budget, and
- identify associated costs when the standard of care has not been met and provide resolution of responsibility for Premium Costs incurred.
The Dispute Resolution and E&O Claims Process is identified within the contract.
The Contract Administrator (CA) must ensure the Chief Engineer, or Chief Engineer’s designee, has been copied at each step of Exhibit I:
Step
|
Description
|
Lead by
|
Supported by
|
Addressed to
|
Approved by
|
1
| Notice of concern
| CA
| Technical resources as needed
| Consultant
| *see authorities section of the directive
|
2
| Written acknowledgement
| Consultant
| N/A
| Agency
| N/A
|
3
| Information exchange meeting
| CA
| Consultant
| All
| *see authorities section of the directive
|
4
| Standard of care determination
| Chief Engineer
| CA and technical resource as needed
| Consultant
| Chief Engineer
|
4a
| Tolling agreement
| Department of Justice
| CA
| Consultant
| Department of Justice
|
5
| Letter of intent to claim
| CA
| Department of Justice
| Consultant
| *see authorities section of the directive
|
6
| Cost evaluation and recovery of premium costs
| CA
| Department of Justice
| Consultant
| *see authorities section of the directive
|
6a
| Alternative methods of recovery
| CA
| N/A
| Consultant
| *see authorities section of the directive
|
There are additional points of interest that may concern the Chief Engineer or designee. These points of interest may not be under the Contract Administrator's control; if the Contract Administrator becomes aware of them, they should also inform the Chief Engineer or designee. These additional points of interest include, but are not limited to:
- Tolling agreement rejection
- Professional Liability Assessment
- Mediation Failure
- First Demand Letter
At the sole discretion of the Chief Engineer or designee, an investigation may be suspended. A suspended investigation will not be considered resolved until all relevant supporting information is available or all associated contracts are closed.
The process focuses on resolving E&O issues at the lowest possible administrative level, in a spirit of collaboration. However, if the Agency Contract Administrator (CA) cannot reach a resolution with the Consultant regarding E&O issues, the Agency CA may request a standard of care determination from the Chief Engineer or the Chief Engineer’s designee.
Upon request from the Agency CA, the Chief Engineer or designee shall initiate an Internal Investigation utilizing one of the following three options:
-
Option 1: The Chief Engineer or designee reviews the information provided by the Agency CA and determines whether the Consultant met the standard of care.
-
Option 2: The Chief Engineer or designee appoints a Technical Investigator (TI) to review records related to the E&O issue. The Agency TI renders a recommendation to the Chief Engineer or designee regarding whether the standard of care was met.
-
Option 3: The Chief Engineer’s designee chairs a Technical Review Committee (TRC). The designee will then select at least three (3) additional technical experts from within the Agency, ACEC or other technical experts. TRC members shall have no connection to the underlying dispute.
The materials that the TRC members will review include, but are not limited to the following:
- Terms of the applicable contract
- Statement of Work
- Agency-supplied data
- Consultant supplied documentation/correspondence
- Deliverables
- Design standards and guidelines
Both the Consultant and the Agency’s CA will present their perspectives on the facts and E&O issues to the TRC. The TRC will make a recommendation to the Chief Engineer or designee as to whether the standard of care was met.
In all 3 options, the Chief Engineer’s designee will convene with the Chief Engineer, and the Chief Engineer will render the Agency's determination on whether the standard of care has been met.
If the Chief Engineer determines that the standard of care has been met, all parties are to continue working together to correct, minimize, or mitigate the effects of the E&O issue, and it is the Agency’s responsibility to cover the Premium Costs.
If the Chief Engineer determines that the standard of care has not been met, then Cost Evaluation and Recovery will be pursued.
E&O Process Steps:
Notice of Concern
A description of the symptom observed causing concern that an Error or Omission may have occurred. It is advisable to suggest an initial date for the first Information Exchange Meeting in this notice.
Written Acknowledgement
Written acknowledgement is a simple response to the notice of concern. It may refute the claims of the Notice of Concern, agree with the claims, or only state that it was received.
Information Exchange Meeting(s)
Meetings/emails/etc. as needed to find the root cause of the symptom described in the Notice of Concern. These are commonly a compilation of meetings, emails, and phone calls.
Standard of Care Determination
The Chief Engineer or designee will author a Standard of Care Determination letter. The CA and Technical Resource will support this effort by providing the following:
- Detailed description of where the Error or Omission occurred on the Plans, specifications, or Engineering Report.
- Detailed description of how the standard of care was met or was not met.
- Results of the information gathering exchanges and any additional investigative reports generated.
- List of portions where A&E contract have been compromised by the E&O.
Tolling agreement
A Tolling agreement is an optional step that delays the need to begin litigation. If the costs of the E&O are unknown or the project is under construction, the parties may agree to toll the statutory limitations. A Tolling agreement must be in place before the statute of limitations runs out on the Error or Omission. The statute of limitation can be determined by Department of Justice, but is generally considered two (2) years from the date that an Error or Omission is discovered or should have been discovered.
Letter of Intent to Claim
A letter to the Consultant issued after failure to reconcile after a Standard of Care Determination. This letter conveys the Agency’s intent to file a first demand (beginning of litigation). Typically this letter is issued two (2) months before the statute of limitations expires, allowing one final attempt at negotiating before litigation.
Cost Evaluation and Recovery of Premium Costs
The Premium Costs incurred by the Agency and construction project resulting from the Consultant’s failure to meet the standard of care will be evaluated and quantified by the Agency CA, Contract Administration Engineer (CAE) with assistance from the Chief Engineer or designee. These costs will include any contractor delays, contract change orders or dispute resolution associated with the construction of the project. Any extenuating or mitigating factors in relation to cost recovery, such as limitations on fee and scope of services, time constraints for performance of services, unforeseen or changed conditions, third party requirements, responsibility and comparative fault of other parties, or other circumstances or constraints affecting the Consultant’s performance will be considered.
Utilizing cost information generated by the Agency’s internal investigation, including additional costs during construction, the Agency CA will meet with the Consultant in an attempt to reach agreement for resolution of responsibility and corresponding Premium Costs. If resolution is not reached, then the Chief Engineer or designee will meet with the Consultant and pursue one or all of the following actions:
- Negotiate a resolution with the Consultant.
- Agree with the Consultant to share equally the cost to jointly present the E&O issue to a credible, neutral third-party panel to obtain a non-binding recommendation.
- Pursue other Alternate Dispute Resolution methods as agreed to with the Consultant.
- Escalate the E&O issue to litigation.
Alternate Methods of Recovery
When the parties reach agreement on cost recovery for a failure to meet the standard of care determination, the Consultant may make restitution to the Agency in the following methods, as agreed to by both Parties:
- Making direct payments to the Agency.
- Correcting the deficient services (if deficient services are the only impact).
- Re-performing the deficient services according to the appropriate standard of care (if deficient services are the only impact).
- Forfeiting payments for other services on other Agency contracts.
- Providing in-kind services at no cost to the Agency.
- Utilizing other methods acceptable to both parties.
Documentation
The Agency CA or designee shall document the contract file with all correspondence, notices, meeting notes and letters of concern related to E&O issues, claims or potential claims. The file must include a written statement summarizing the findings of the claims process and the outcome, including:
- The determination of whether or not the Consultant met contract requirements and met the standard of care.
- The determination of responsibility and whether there were mitigating circumstances beyond the reasonable control of the Consultant.
- The determination of whether or not the work requested by the Agency was within the scope of services of the contract.
- If the Consultant was not required to correct deficiencies at no cost to the Agency, provide the reasons for that decision.
- A record of negotiation for any negotiated settlement, subject to the rules regarding confidentiality of mediations, in OAR 731 division 001.
Definitions
- A&E Contracts
Professional Service agreements for Architectural and Engineering services- Agency
Oregon Department of Transportation (ODOT)- Agency CA
Agency Consultant Contract Administrator overseeing the consultant contract and deliverables. This would be a Resident Engineer –Consulting Projects (RE-CP), Resident Engineer (RE), or similar on a full-service Consultant Contract or a Technical Discipline Leader in a Region Technical Center overseeing Technical Discipline Specific Consultant Contracts.- Agency TI
Agency Technical Investigator. An Agency manager familiar with the technical discipline at issue who independently reviews records and interviews personnel pertinent to the claim to determine if the standard of care was met.- CE
Construction Engineering, which may include construction engineering, inspection services and construction contract administration.- Chief Engineer’s Designee
An Agency employee, designated by the Chief Engineer, familiar with Errors and Omissions allegations, impacts, processes and common resolutions.- Consultant
Private sector entity, which has entered into a contract with the Agency to provide Architectural or Engineering services and which employs or engages the services of the POR.- Contract
Price Agreement, Work Order Contract (WOC) or project specific Contract between Agency and Consultant.- Contract Administration Engineer (CAE)
This positon is located in the Construction Section and has delegated authority to approve contract change orders, dispute resolution, and claim resolution for ODOT construction projects using the Oregon Standard Specifications for Construction.- Error
Plan or specification details or contract administration actions which are incorrect, conflicting, insufficient or ambiguous.- E&O
Errors and Omissions- Omission
The plans, specifications or contract administration actions are silent on an issue that should otherwise be addressed in the documents.- Parties
Refers to Agency and Consultant collectively- Party
Refers to Agency and Consultant separately- PM
Project Manager (Agency)- POR
Professional of Record – All professional disciplines included in ODOT A&E contracts who are in responsible charge of final design and construction engineering deliverables and services including; Professional Engineers, Professional Land Surveyors, Registered Professional Geologists, Certified Engineering Geologists, Registered Landscape Architects and Registered Architects.- Premium Costs
The additional costs incurred by the Agency and a construction project which result from the Consultant’s failure to meet the standard of care. Premium Costs are dollar amounts paid for non-value added work. Premium costs are not reimbursed by the federal government on federal aid projects. Delays, inefficiencies, rework or extra work as shown below, caused by the Consultant’s failure to meet the standard of care, will be considered as non-value added work. Non-value added work can occur in three distinct situations:• Work delays or inefficiencies – The Premium Costs are the total delay/inefficiency damages paid to the construction contractor.
• Rework – The Premium Costs are the dollar amount of the original items of work that have to be removed and the costs to remove these items.
• Extra work – The Premium Costs are computed as the net difference between the final agreed prices paid to the construction contractor and what the cost would have been had the extra work been included in the original bid at letting.
- Price Agreement
The written document of understanding negotiated between the Agency and a Consultant for the provision of services with no guarantee of a minimum or maximum purchase. A Price Agreement contains clauses and pricing information that will apply to potential future contracts to be established through work order contracts that will incorporate the required and applicable clauses of the Price Agreement.- Responsible Charge
Final authority and responsibility for professional work as defined by ORS 671 and 672, to have supervision and control of final design of work with responsibility for design decisions. Supervision and control means establishing the nature of, directing and guiding the preparation of, and approving the work product and accepting responsibility that the work product is in conformance with standards of professional practice.- Services in Kind
Services provided by a Consultant – in lieu of money – as restitution for damages caused by the failure to meet the standard of care.- Technical Resource
An Agency representative familiar with the discipline(s) at issue who provides technical expertise to the CA.- TRC
Technical Review Committee. A committee convened by the Agency Chief Engineer or designee, chaired by the Chief Engineer’s Designee and staffed by at least three (3) technical experts chosen by the Agency TI from a list of Agency, ACEC and other technical experts. The committee is charged with reviewing records and interviewing personnel pertinent to the claim to determine if standard of care was met.- WOC
Individual written work order contracts which define specific tasks agreed to by the Contracting Agency and Consultant, executed within the broader contractual scope of a Price Agreement.
Professional
|
Governing Board
|
Laws/Rules
|
Professional engineers
| Oregon Board of Examiners for Engineering and Land Surveying (OSBEELS)
| ORS Chapter 672
|
Professional land surveyors
| Oregon Board of Examiners for Engineering and Land Surveying (OSBEELS)
| ORS Chapter 820
|
Registered Professional Geologists
| State Board of Geologist Examiners
| ORS Chapter 672
|
Certified Engineering Geologists
| State Board of Geologist Examiners
| ORS Chapter 809
|
Registered Landscape Architects
| State Board of Architect Examiners
| ORS Chapter 671
|
For the purposes of this Directive the term “Professional-of-Record” (POR) is intended to encompass all professional disciplines included in ODOT Architectural and Engineering (A&E) contracts, including those listed above.
POR’s are held accountable to two professional legal duties:
- to have the appropriate technical competence necessary for the task, and
- to use the appropriate care and professional judgment in applying his/her professional skill to the task.
These legal duties form the basis for “Standard of Care” required from the POR. Embedded in these two legal duties are three important concepts.
- First, a professional must limit his/her professional practice to areas where he/she is competent. Each individual professional is responsible for assessing his/her own abilities.
- Second, a professional needs to utilize care and judgment when practicing. He/she needs to be aware of and follow industry practices and do so with the appropriate attention to detail.
- Third, a professional needs to know what the state of the practice is in the project’s location, for the task involved, given the project’s unique circumstances. The field of engineering is not stagnant. Research is continually being conducted and new design theories, new materials, new understanding of the properties of existing materials and new procedures for construction and maintenance are constantly being developed. The standard of care may be measured differently when one is initially relying on research and theory, versus later, when the state of practice is well established and documented or regulated through design codes, policies and procedures.
Although at all times a professional must exercise sound technical judgment when performing his/her duties, it is important to understand that meeting the standard of care does not mean that projects are engineered 100 percent during the design phase of development. It is often cost-prohibitive or logistically impossible to gather all field information to have 100 percent confidence in the engineered solution. As an example, borings are taken to analyze and model soil conditions when building bridge foundations, yet soil conditions can vary between borings.
It is also often impossible to gather enough information to successfully detail all engineering information in a set of contract documents. For instance when repairing the superstructure of a bridge, often the details necessary to rebuild the bridge cannot be fully defined with 100 percent confidence without removing the deck to verify dimensions, which doesn’t happen until the project is under construction.
In the examples above, accepted documented industry practice, in the form of design codes, manuals, policies, standard drawings, details and specifications, help address appropriate level of engineering effort for a variety of project elements. The level of uncertainty regarding field conditions or the level of risk of failure of an element is often accounted for by the use of “Factors of Safety” in the design process, which again is addressed in documented industry practice.
ODOT will often require the use of specific directives and standards in the development of projects. And while this creates a basis for “accepted documented industry practice”, it does not relieve the Consultant of the responsibility of checking for the appropriateness of all applicable practices and standards to be used in performing their Services.
It is the Consultant’s responsibility to inform and demonstrate to ODOT if directives or standards required by ODOT in performance of the work are insufficient, in conflict with applicable standards, or otherwise create a problem for the design. If ODOT is so notified and continues to require the same standards or directives demonstrated as being problematic, the Consultant shall be considered as conforming to the standard of care under the Agreement with respect to the standards and directives.
Consultant Contract Professional Accountability
A Consultant may fall below the standard of care in two main areas:
- Errors – plan or specification details or contract administration actions which are incorrect, conflicting, insufficient or ambiguous.
- Omissions – the plans, specifications or contract administration actions are silent on an issue that should otherwise be addressed in the documents.
It should be noted that the Consultant could also fail to meet the standard of care by non-compliance with Professional Practice statues and state regulations as outlined above and which are outside the authority of ODOT and the scope of this Directive.
The relationship between ODOT and the Consultant is one of Owner – Independent Contractor and thus the contract is used as a mechanism to clarify performance expectations and ensure accountability of both parties. That relationship is most effective when the parties are cooperating, within the confines of the contract, towards a common goal.
ODOT uses three main contract components to define the expected risk issues and financial responsibility - Indemnity, Insurance and Standard of Care.
Indemnity & Insurance
All public sector employees, including professional staff, are protected from personal liability in the performance of their duties by the Oregon Tort Claims Act. ORS 30.285 specifically states:
- The governing body of any public body shall defend, save harmless and indemnify any of its officers, employees and agents, whether elective or appointive, against any tort claim or demand, whether groundless or otherwise, arising out of an alleged act or omission occurring in the performance of duty.
- The provisions of subsection (1) of this section do not apply in case of malfeasance in office or willful or wanton neglect of duty.
Private-sector consultants, by definition, are not covered by the Oregon Tort Claims Act. The entity they are employed with or themselves may be liable for general liability claims for their torts, including negligence, as well as for professional liability claims. ODOT requires the Consultant to indemnify, defend and hold ODOT harmless for the Consultant’s general
performance under the contract and for the Consultant’s professional negligence. ODOT also requires the Consultant to carry General and Professional Liability Insurance, at limits which best protect ODOT and the public against potential damages caused by the Consultant’s negligent performance of work under the contract.
Standard of Care
ODOT includes the definition of Standard of Care in the Terms and Conditions portion of Architectural and Engineering (A&E) contracts. For the standard of care definition that applies to a current project, refer to the standard of care language included in the contract for the project.
Following is a sample definition for standard of care:
“The Consultant shall perform all Services in accordance with the degree of skill and care ordinarily used by competent practitioners of the same professional discipline under similar circumstances, taking into consideration the contemporary state of the practice and the project conditions.”
The Indemnity, Insurance and Consultant Standard of Care contract language holds the Consultant accountable for the technical accuracy and quality of their work. However, mistakes can and do occur, which may or may not amount to a departure from standard of care. Thus, it is important to have a claims process detailed in the contract language available for use when there is a “problem” perceived as caused by the performance of the Consultant.
The intent of this claims process is to identify E&O issues and associated costs early and notify the Consultant and Construction Contractor immediately so all parties can work together to resolve the E&O issue quickly. The hope is to be able to mitigate where possible and avoid potential future damage claims. The claims process enables the parties to work together to solve the E&O issue at hand and keep the project on track, while preserving each party’s right (along with the proper documentation) to assess/negotiate potential cost responsibilities at a later date, if it is determined that the standard of care has not been met.
AUTHORITIES
As the nature of E&O cost recovery is to recover damages incurred, formal delegation orders and letters of authority are not necessary. Instead, ODOT’s Chief Engineer will allow negotiation on their behalf up to the dollar values as listed in the following tables.
Item
|
Contract Administrator
|
Region/Branch Manager
|
Cheif engineer
|
E&O and Claim Settlements
| $10k
| $50k
| All
|
When modification of Project budget is necessary due to E&O corrective actions budget correction must occur through the Change Management Request (CMR) process.
Procedure for Resolution of Disagreements
General
When the Agency or Consultant discovers or determines that actions, omissions, or deliverables by the other Party may be incorrect or outside the terms of the Contract, the following steps shall be followed:
- Provide oral notice and written Notice of Concern (email or hard copy) to the other Party which sets forth the potential E&O.
- Consultant shall provide Agency CA Written Acknowledgement of the Notice of Concern within 7 calendar days of receipt of a Notice of Concern.
- Consultant shall provide Agency CA requested records and documents pertaining to the potential E&O.
- If requested, Consultant shall participate in a Technical Review Committee (“TRC”).
- At the conclusion of Agency’s review, the Chief Engineer or designee will make a Standard of Care Determination.
- Letter of Intent to Claim – Formal notification that the Agency will be proceeding to Cost Evaluation and Recovery.
- Cost Evaluation and Recovery of Premium Costs - When the Standard of Care has not been met, the parties will work together to determine responsibility for any Premium Costs incurred as a result of the Error or Omission.
- Letter of Decision – Formal notification that Agency’s review of the E&O issue has been concluded.
- Email notices are acceptable and do not require a signature. Written letters must include a signature, but may be transmitted by email. All notices and letters must include the following 3 recipients at a minimum:
- Consultant’s Project Manager (“PM”)
- Agency CA
-
ErrorsAndOmissionsSu@ODOT.oregon.gov
- If at any time the parties reach a proposed agreement, the Agency CA will seek concurrence from the appropriate authorities (e.g. Area Manager and Contract Administration Engineer) and proceed directly to the “Letter of Decision.”
A summary of actions is provided in the following table.
Step
|
Description
|
Responsible Party
|
When is it due?
|
1
| Notice of Concern
| Agency
| After discovery of a potential error or omission
|
2
| Written Acknowledgement
| Consultant
| Within 7 calendar days of receiving Notice of Concern
|
3
| Information Exchange Meeting(s)
| All
| Initial meeting scheduled within 14 calendar days of Written Acknowledgment
|
4
| Standard of Care Determination
| Agency
| As determined by the Agency
|
4a
| Tolling agreement
| All
| [optional] If the costs of the Errors and Omissions are unknown at Standard of Care Determination then parties may agree to toll the statutory limitations.
|
5
| Letter of Intent to Claim
| Agency
| After conclusion of Information Exchange Meeting and Standard of Care Determination.
|
6
| Cost Evaluation and Recovery of Premium Costs
| Agency
| After Letter of Intent to Claim
|
6a
| Alternate Methods of Recovery
| All
| optional] After Letter of Intent to Claim
|
7
| Letter of Decision
| Agency
| Within 14 calendar days of the conclusion of Cost Evaluation and Recovery assessment
|
If the Consultant disagrees with any Notice of Concern, Standard of Care Determination or other written order of the Agency, the Consultant shall provide oral notice and written Notice of Protest (email or hard copy) to the Agency CA within 7 days of receiving the written notice from the Agency.
Notice of Concern
When either Party discovers or determines that actions, omissions, or work products by either Party may be incorrect or outside the terms of the Contract, the discovering Party shall give timely oral notice and a written Notice of Concern to the other Party.
Written Acknowledgement
The Party receiving the Notice of Concern shall send a Written Acknowledgement that it has received the Notice to the Agency within 7 days of receipt of the Notice.
Information Exchange Meeting(s)
The Consultant and Agency CA shall schedule to meet within 14 calendar days of sending or receiving the Written Acknowledgement, to discuss the potential Error or Omission and provide to the Agency CA all requested information pertaining to the issue.
The primary purpose of this meeting is to determine how, at the Agency’s sole discretion, to correct, mitigate, or minimize the effects of the issue, including impacts of the issue on the construction project’s work quality, schedule, and costs.
Following the Agency’s determination of the appropriate corrective action, the Consultant and the Agency CA shall work together to resolve responsibility and corresponding Premium Costs related to the Error or Omission.
If the Agency CA is unable to reach a satisfactory resolution of responsibility and corresponding Premium Costs with the Consultant, the Agency CA will request the Chief Engineer or designee to initiate a Standard of Care Determination.
Standard of Care Determination
The Agency, upon request of the Agency CA and at the discretion and direction of the Chief Engineer, will undertake an internal review for the purpose of determining whether the Standard of Care was met. The Consultant shall cooperate with the internal review as requested.
If the Chief Engineer or designee determines that the Standard of Care has been met, then all parties are to continue to work together in good faith to correct, minimize, or mitigate any negative impacts to the project as a result of issues identified in this process.
If the Chief Engineer or designee determines that the Standard of Care has not been met, then Cost Evaluation and Recovery will be pursued.
Tolling Agreement
If the costs and impacts of the Errors and Omissions are unknown, the parties may agree to toll the statutory limitations.
Letter of Intent to Claim
If the Agency determines the Consultant has not met the required Standard of Care, the Agency will provide the Consultant oral notice and a written Letter of Intent to Claim within 7 calendar days after the Standard of Care Determination. The Consultant shall acknowledge, in writing, within 14 calendar days of receipt of the Agency’s Letter of Intent to Claim and provide the Agency with all requested project-related information.
The Agency may, at any time, present the Consultant with a Claim and proceed to litigation for actual damages incurred due to any disagreement concerning the Standard of Care issues and all subsequent damages suffered by the Agency arising from such issues.
Cost Evaluation and Recovery of Premium Costs
The Premium Costs incurred by the Agency and construction project resulting from the Consultant’s failure to meet the Standard of Care will be evaluated and quantified. Any extenuating or mitigating factors in relation to cost recovery, such as limitations on fee and scope of Services, time constraints for performance of Services, unforeseen or changed conditions, third party requirements, responsibility and comparative fault of other parties, or other circumstances or constraints affecting the Consultant’s performance will be considered.
Utilizing cost information generated by the Agency’s internal investigation, the Agency CA will meet with the Consultant in an attempt to reach an agreement on responsibility and corresponding Premium Costs. If resolution is not reached, then the Chief Engineer or designee will meet with the Consultant and pursue one or all of the following actions:
- Negotiate a resolution with the Consultant.
- Agree with the Consultant to share equally the cost to jointly present the issue to a neutral third-party panel to obtain a non-binding recommendation;
- Pursue other Alternate Dispute Resolution methods as agreed to with the Consultant; or
- Escalate the issue to litigation.
Alternate Methods of Recovery
When the parties reach an agreement on cost recovery for a failure to meet the Standard of Care, the Consultant may make restitution to the Agency according to the tolling or settlement/restitution agreement. A settlement or restitution agreement may use one or more of the following methods to reimburse the Agency for Premium Costs:
- Making direct payments to the Agency;
- Correcting the deficient Services;
- Re-performing the deficient Services to meet the Standard of Care;
- Forfeiting payments for other services on other Agency Contracts;
- Providing in-kind services at no cost to the Agency;
- Utilizing other methods acceptable to both parties.
Letter of Decision
The Letter of Decision must summarize the findings of the claims process and outcome, and include:
- The determination of whether or not the Consultant met Contract requirements and met the standard of care;
- The determination of responsibility and whether there were mitigating circumstances beyond the reasonable control of the Consultant;
- The determination of whether or not the work requested by the Agency was within the scope of the Services of the Contract;
- A summary of the Premium Cost determination;
- If the Consultant was not required to correct deficiencies at no cost to the Agency, provide the reasons for that decision.
- A record of negotiation for any negotiated settlement is subject to the rules regarding confidentiality of mediations in OAR 731 division 001.
Notice of Protest
If the Consultant disagrees with any Notice of Concern, Standard of Care Determination or other written order of the Agency, the Consultant shall provide oral notice and written Notice of Protest to the Agency CA within 7 days of receiving the order from the Agency. The Notice of Protest shall provide an explanation of why the Consultant disagrees with any Notice of Concern, Standard of Care Determination, or other written order. The Agency CA shall acknowledge in writing receipt of the Consultant Notice of Protest.
Documentation
The Agency CA or designee shall include in the Contract file all correspondence, notices, meeting notes and letters related to E&O issues, claims, or potential claims. The file must include the Letter of Decision.
DEFINITIONS
Agency Oregon Department of Transportation (ODOT).Agency CA Agency Contract Administrator overseeing the consultant contract and deliverables. This would be a Resident Engineer-Consultant Projects (RE-CP) on a full-service Consultant Contract or a Technical Discipline Leader in a Region Technical Center overseeing technical discipline-specific consultant contracts.Chief Engineer’s Designee An Agency representative familiar with the Errors and Omissions Claims Process or technical discipline at issue who independently reviews records and interviews personnel pertinent to the claim to determine if the standard of care was met.Consultant
Private Sector entity, which has entered into a Contract with the Agency to provide Architectural or Engineering services and which employs, or engages the services of, the Professional of Record.Contract Price Agreement, Work Order Contract (WOC), or project specific Contract between Agency and Consultant.Error Plan or specification details or contract administration actions which are incorrect, conflicting, insufficient or ambiguousE&O Errors and OmissionsNotice of Concern Written communication between Parties which describes the alleged Error or Omission. The Notice of Concern is the first written action in the E&O Claims Process.Omission The plans, specifications or contract administration actions are silent on an issue that should otherwise be addressed in the documents.Parties Refers to Agency and Consultant collectively.Party Refers to Agency and Consultant separately.Premium Costs The additional costs incurred by the Agency and a construction project which result from the Consultant’s failure to meet the Standard of Care. Premium Costs are dollar amounts paid for non-value-added work. Premium costs are not reimbursed by the federal government on federal aid projects. Delays, inefficiencies, rework, or extra work as shown below, caused by the Consultant’s failure to meet the standard of care, will be considered as non-value added work. Non-value added work can occur in three distinct situations:-
Work delays or inefficiencies. The Premium Costs are the total delay/inefficiency damages paid to the construction contractor.
-
Rework. The Premium Costs are the dollar amount of the original items of work that have to be removed and the costs to remove these items.
-
Extra work. The Premium Costs are computed as the net difference between the final agreed prices paid to the construction contractor and what the cost would have been had the extra work been included in the original bid at letting.