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Quality Asphalt Paving, Inc. v. State, Dept. of Transportation and Public Facilities (6/13/2003) sp-5702
Quality Asphalt Paving, Inc. v. State, Dept. of Transportation and Public Facilities (6/13/2003) sp-5702
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
QUALITY ASPHALT PAVING, )
INC., an Alaska corporation, ) Supreme Court Nos. S-
10154/10183
)
Appellant/Cross-Appellee, ) Superior Court No. 3AN-98-
7680 CI
)
v. ) O P I N I O N
)
STATE OF ALASKA, DEPART- ) [No. 5702 - June 13, 2003]
MENT OF TRANSPORTATION )
AND PUBLIC FACILITIES, )
)
Appellee/Cross-Appellant. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Eric T. Sanders, Judge.
Appearances: Sam E. Baker, Jr., and William
K. Renno, Oles, Morrison, Rinker & Baker,
LLP, and David J. Schmid and Eric R. Cossman,
Law Offices of David J. Schmid, Anchorage,
for Appellant/Cross-Appellee. Paul R. Lyle
and E. John Athens, Jr., Assistant Attorneys
General, Fairbanks, and Bruce M. Botelho,
Attorney General, Juneau, for Appellee/Cross-
Appellant.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
We consider in these cross-appeals whether a hearing
officer erred in awarding costs and prejudgment interest to
Quality Asphalt Paving, Inc. after the State of Alaska exercised
the termination-for-convenience clause in Quality's public works
contract. Both parties dispute the award and advance conflicting
interpretations of the contract. We conclude that substantial
evidence supports the cost awards and that the hearing officer
did not misinterpret the contract, but that Quality was not
entitled to prejudgment interest. We therefore affirm the
superior court's appellate decision which upheld the cost awards
but vacated the prejudgment interest award.
II. FACTS AND PROCEEDINGS
These appeals concern a highway construction contract
for the Chena Hot Springs Road widening project that the State of
Alaska, Department of Transportation (DOT) terminated for
convenience shortly after awarding the contract to Quality
Asphalt Paving, Inc. (Quality).1
Quality successfully bid on the project on April 30,
1996. The state issued Quality a letter of intent to award the
contract on May 2. On May 17 the state authorized Quality to
proceed with work on the $10.76 million contract. Although the
parties dispute the exact date, as of late May or early June both
parties believed a buried utility cable conflicted with the
project plans. Quality advised the state that delaying the
project would cost about $30,000 per day. After the parties
failed to resolve the problem, the state on June 19, 1996
terminated the contract under the termination-for-convenience
clause, which allows DOT to end a contract "whenever, for any
reason, the Contracting Officer shall determine that such
termination is in the best interest of the Department." As it
turned out, the parties discovered on June 20 that there were no
conflicting buried utilities cables, but by then the contract had
been terminated and Quality had begun notifying its suppliers and
subcontractors.
On September 10, as provided for in the termination-for-
convenience clause, Quality submitted to the state a claim for
damages and costs Quality claimed the termination caused Quality
to incur. Quality alleged that the state owed it $4,577,215.
The state conducted an audit of Quality's claim. The state's
audit, completed in February 1997, recommended paying Quality
$10,358. The state and Quality could not reach agreement after
the audit. They continued to disagree about claims for
mobilization costs, demobilization costs, standby costs,
overhead, and prejudgment interest. We discuss in Part III the
facts relevant to the appellate disputes.
DOT's contracting officer issued a decision on the
termination claim in August 1997. Quality appealed the
contracting officer's decision to DOT's commissioner in September
1997.
The commissioner appointed as hearing officer Leroy J.
Barker, an attorney with substantial experience in commercial,
contract, and construction litigation who had previously served
as a hearing officer for the State of Alaska and the Municipality
of Anchorage in construction disputes. The hearing officer's
June 30, 1998 decision recommended awarding Quality $1,945,857.79
plus prejudgment interest. The commissioner adopted the hearing
officer's decision in July 1998.
Quality appealed the commissioner's decision to the
superior court, which issued a decision in January 2001. The
state cross-appealed aspects of the agency decision. The
superior court vacated Quality's prejudgment interest award but
affirmed the commissioner's decision in all other respects.
Quality then filed a petition for a rehearing on the issue of
prejudgment interest. The superior court denied the petition.
Quality appeals the superior court's decision vacating
the prejudgment interest award, and both Quality and the state
appeal the award or denial of specific claim items.
III. DISCUSSION
The contract's termination-for-convenience clause
allowed DOT to terminate "[t]he performance of work under the
contract . . . in whole or in part, whenever, for any reason the
Contracting Officer shall determine that such termination is in
the best interest of the Department." Once the state serves a
notice of termination, this clause requires the contractor to
stop all work, place no further orders for materials, and cancel
all existing orders, among other things.
The clause permits the contractor to pursue certain
claims due to the state's termination of the contract. This
provision explains that "payment for partially completed work
will be made either at agreed prices or by time and materials
methods as described" elsewhere in the contract. Additionally,
the contractor must:
submit to the Contracting Officer, his claim
for additional damages or costs [not
otherwise covered]. Such claim may include
such cost items as reasonable idle equipment
time, mobilization efforts, bidding and
project investigative costs, overhead
expenses directly allocable to the project
termination and not covered under work paid
for . . . . The intent of negotiating this
claim would be an equitable settlement figure
to be reached with the Contractor.
The appeal and cross-appeal concern the cost and damage items
Quality may recover under the termination-for-convenience clause.
A. It Was Not Error To Deny Quality Additional
Compensation for Mobilization and Demobilization.
Quality claimed $767,067 of the $1 million its
successful bid specified for mobilization and demobilization
costs. The hearing officer awarded Quality a total of $449,621
for this item. "Mobilization" covers preparatory work and
operations, including movement of personnel, equipment, and
supplies to the job site. "Demobilization" covers equivalent
activities upon completion of the project. The termination-for-
convenience clause allows recovery for "mobilization efforts."
Although Quality's project bid included an amount for the
"mobilization and demobilization" item, it is the standard
practice of the industry - and of Quality - to charge only
mobilization costs to a project, and to charge demobilization
costs as part of mobilization for the next project.
Consequently, Quality's arguments on this issue, while directed
at the "mobilization and demobilization" award, deal principally
with mobilization costs.
1. The mobilization and demobilization award
Quality advances alternative theories supporting its
claim for an increase in its award for mobilization and
demobilization costs. Quality first argues that as a matter of
contract interpretation, it is entitled to recover $767,067 of
the $1 million its bid allocated for mobilization and
demobilization costs because it was an "agreed price."2 The
state responds that the hearing officer did not err by basing the
award on costs incurred rather than Quality's bid price.
We substitute our own judgment on questions pertaining
to contract interpretation.3
The contract specifies that
[T]he Contractor, for and in consideration of
the payment or payments herein specified and
agreed to by the Department, hereby covenants
and agrees to furnish and deliver all the
materials and to do and perform all the work
and labor required in the construction of
project Chena Hot Springs Road Widening.
(Emphasis added.) Quality argues that "agreed to" is eqivalent
to an "agreed price." The hearing officer ruled that
"[m]obilization was not an `agreed price' since it was not agreed
to by the parties." We agree with the hearing officer. The
contract term that Quality relies on cannot be read in isolation.
The second clause clearly links "payments . . . agreed to" with
"[Contractor] hereby covenants and agrees to furnish and deliver
all the materials and to do and perform all the work." (Emphasis
added.) But Quality did not deliver all the materials, and it
did not perform all the work. It was therefore permissible for
the hearing officer to base Quality's award on costs incurred
rather than the "agreed price" for complete performance.4
Quality alternatively argues that even if it was
correct to base compensation on the costs it actually incurred,
"the uncontroverted evidence demonstrates that Quality was
entitled to a higher award." Quality contends that the hearing
officer's reliance on the state audit report to determine
mobilization and demobilization costs was not supported by
substantial evidence, and that the state's expert testified to a
much higher amount. The state responds that the "hearing officer
was not required to accept either party's figure for
mobilization. . . . [T]he hearing officer was free to choose
among actual cost data, accounting records, estimates by law and
expert witnesses, and calculations from similar projects."
(Quotations omitted.)
We review the hearing officer's findings of fact under
the substantial evidence test.5
The hearing officer ruled that
The State's expert testified that $127,000
would be a reasonable sum for mobilization
and demobilization costs. . . . By contrast,
[Quality] was claiming $767,067. . . . [T]he
most reasonable figure . . . is in the
State's Special Audit Report. I am adopting
that amount ($287,708, plus profit and
overhead), subject to one modification. I am
persuaded by the evidence that the barging of
equipment . . . was triggered by the
contractor's anticipation of being awarded
this contract. . . . Therefore, I find that
the amount the contractor is entitled to for
mobilization and demobilization is the sum of
$449,621.
Quality argues that testimony by the state's expert,
Ronald Maus, conflicts with the state audit report. Quality
argues that Maus's "reasonable person approach" - which returns
to the contractor the costs of its performance - results in an
award several hundred thousand dollars greater than the hearing
officer's award. But Quality's argument simply advocates
substituting Maus's award figure for the hearing officer's; it
does not demonstrate that the hearing officer's approach was
unsupported by substantial evidence. Indeed, there are several
methods for calculating mobilization expenses. Maus's approach
is one; the hearing officer relied on another. The hearing
officer used his own reasonable judgment and determined that
figures from the state's special audit report best compensated
Quality for mobilization and demobilization.
Quality describes Maus's approach in detail. But
demonstrating that an alternative method for calculating
mobilization costs is valid does not establish that substantial
evidence fails to support the hearing officer's award. The
hearing officer was presented with a "variety of figures on this
matter." He adopted the state's audit figure, but allowed
additional barging costs, which were "triggered by the
contractor's anticipation of being awarded this contract."6 The
hearing officer permissibly based Quality's award on expert
testimony, supporting evidence provided by the audit report, and
the hearing officer's own expertise. We therefore hold that
substantial evidence supports the hearing officer's mobilization
award.
2. Quality's separate demobilization theory
Despite Quality's standard practice of charging
demobilization costs for one job to its next job as mobilization
costs,7 Quality argues that in this case it should receive
$161,581 (before markups) for demobilization as part of a
$767,067 award for mobilization and demobilization costs.
Quality claims that its normal policy regarding demobilization
was inapplicable to the Chena project because the termination
left Quality without a new job to which to charge $166,027 in
demobilization costs. The state responds that "it is beyond
dispute that: (1) [Quality] charges demobilization costs from one
project as a mobilization cost to its next project, and (2)
[Quality] did not follow this policy in preparing its claim for
the Chena project." The state further argues that federal cost
accounting principles support the hearing officer's application
of Quality's stated demobilization policy.8
The hearing officer relied on the state auditor's
report, which states that it "is common in the highway
construction industry" to charge "[d]emobilization costs . . . as
mobilization costs of the next project." This finding is
consistent with Quality's stated policy about how it treats
demobilization costs. Although the termination was unexpected,
it was a foreseeable possibility when Quality bid on the state's
project. Quality had an opportunity when it submitted its bid to
make allowance for the risk that the state would terminate the
project, and the consequences to Quality.
We hold that the industry standard and Quality's own
policy regarding demobilization costs constitute substantial
evidence supporting the hearing officer's decision to deny
Quality additional demobilization costs.
B. Quality Is Not Entitled to Additional Compensation for
Equipment Standby.
The termination-for-convenience clause allowed recovery
for "reasonable idle equipment time," which covers periods during
which equipment was idled for reasons other than mobilization or
demobilization efforts. The hearing officer determined that this
period began May 17, 1996 and ended August 17, 1996, and awarded
Quality $901,305.50 for this item. Quality argues that it should
recover for equipment standby beginning May 3 and ending October
31; it sought $1,182,000 for this item. The state's cross-appeal
argues that the recovery period should be limited to June 19
through July 31.
1. Equipment standby between May 3 and May 17, 1996
Quality argues that it was entitled to compensation for
equipment standby during the period between its receipt of the
state's notice of intent on May 3 and its receipt of the notice
to proceed on May 17. Quality claims that the contract terms
allowed recovery for standby once the state accepted Quality's
bid and issued a notice to proceed. The state responds that
Quality would only be entitled to compensation for standby if the
state "took some action that subsequently forced [Quality's]
equipment to be idle." The state further argues that the terms
of the contract do not support Quality's claim.
The state's intent to award letter of May 2, 1996 to
Quality stated in part:
The transmittal of these documents
constitutes only an intent to award. A
Contract will not be in force until these
documents are fully executed by the
Department and a Letter of Award and Notice
to Proceed are issued. You are advised that
work prior to that Notice is unauthorized and
the State will assume no responsibility for
the work, the work site or any event arising
therefrom.
The hearing officer determined that the state's notice
of intent to award was not sufficient to grant Quality recovery
of standby costs before the state issued the notice to proceed.
Quality argues that the notice of intent to award did not define
the parties' rights "once [the] notice to proceed [was] issued
and a contract [was] in force." Quality argues that, taken
together, 101-1.34-.35 and 108-1.02 of the contract permit
recovery for work before the effective date of the notice to
proceed.9
We hold that the hearing officer did not err in denying
Quality compensation for standby from May 3 to May 17.10 Section
108-1.02 states that "[c]ommencement of work by the Contractor
prior to the effective date of the Notice to Proceed constitutes
a waiver of this notice and will begin contract time." Quality
argues that this provision "make[s] clear that the contractor may
properly commence certain types of work prior to the notice to
proceed." But Quality incorrectly reads 108-1.02 in isolation
from other portions of the contract. Section 101-1.17 defines
"contract time" as "[t]he time allowed under the contract,
including authorized time extensions, for the completion of all
work by the Contractor." The purpose of 108-1.02 is not to
allow a contractor compensation for starting early, as Quality
argues, but rather to prevent a contractor from altering the
"calendar days" or "completion date" of a project and thereby
avoid liquidated damages.11
Moreover, 101-1.71 defines "work" as "the act of, and
the result of, performing services, furnishing labor, furnishing
and incorporating materials and equipment into the project and
performing all other duties and obligations required by the
contract." Quality did not perform "work" by letting its
equipment sit idle from May 3 to May 17. It completed no "work"
as defined by 101-1.71 of the contract until May 17 when it
received the state's notice to proceed. Perhaps circumstances
could arise in which action by the state would result in the
idling of a contractor's equipment after it had started "work,"
but that was not the case here. Any claim for compensation for
Quality's preparation before May 17 was properly categorized by
the hearing officer as a claim for mobilization costs.
Because the state's letter of intent to award did not
conflict with the contract's provisions, the hearing officer did
not err in determining that the letter of intent to award
"relieve[d] the State of any responsibility for idle equipment
costs incurred between May 2 . . . and May 17."
2. Equipment standby after August 17, 1996
The hearing officer determined that Quality could
recover for equipment standby only through August 17, 1996.
Quality argues that the hearing officer's decision was not
supported by substantial evidence and instead claims that it is
entitled to recovery through October 31.12 It argues that "[t]he
Hearing Officer relied on one sentence from a letter from
[Quality's] president to three legislators, dated October 13,
1997, . . . which stated that [Quality] `had gone back to work in
full force by mid-August [1996].' " Quality alleges that "the
undisputed evidence presented at trial . . . established that
many items of equipment that had been dedicated to the project
remained idle after August 17, 1996."
The state responds that substantial evidence supports
the hearing officer's finding regarding the standby termination
date. The state argues that the letter was only one piece of
evidence the hearing officer examined in determining that August
17, 1996 was the appropriate date to terminate standby expenses.
The state argues that Quality president, Gordon Hayes, "confirmed
[the hearing officer's] interpretation of [Hayes's letter] at the
administrative hearing during cross-examination."
The hearing officer's decision stated that it "used
August 17, 1996 as the date the dedicated equipment period should
terminate. . . . [This date] is based on [Quality]'s October 13,
1997 letter [stating Quality was able to go back to work in full
force by mid-August]."
But contrary to Quality's assertion on appeal, other
evidence supported the decision. Before issuing the June 1998
proposed decision, the hearing officer heard testimony in May
1998 by Gordon Hayes. At the May 1998 hearing Hayes acknowledged
the contents of his October 1997 letter:
Q. Isn't it true that by mid August of
1996, you were back to work in full force?
[Hayes]. I think closer to the end of
August.
Q. Would you turn to Exhibit 337 for
me, please. This is a letter that you sent
to the -- to some of your legislators?
[Hayes]. Yes.
Q. Isn't it true that in the last
sentence of the first full paragraph of that
letter, you told your legislators that you
were able to go back to work in full force by
mid August?
[Hayes]. Okay. Yes.
The hearing officer also used Blue Book daily equipment
rates in calculating the days Quality's equipment was on standby.
He explained that the standby calculation consisted of counting
the work days on which Quality employed specific items of
equipment for the Chena project and applying the appropriate Blue
Book rate. Quality asserts that the hearing officer erred
because he did not fully compensate Quality for "some equipment
[that] remained unassigned months past August 17." Quality
incorrectly equates "idle" time with recoverable expense.
Although the state was obliged to compensate Quality for standby
costs due to the state's termination of the contract, it was not
Quality's insurer for equipment that remained idle after August
17.
We hold that substantial evidence supports the hearing
officer's decision to deny Quality standby compensation after
August 17.
3. Awarding "idle equipment time" at Blue Book rental
rates
The state argues in its cross-appeal that the hearing
officer erred in awarding idle equipment time to Quality at Blue
Book13 rental rates.14 The state argues that 108-1.09 of the
contract "expressly prohibits the use of `published rental rates'
in calculating equipment costs for claims." The state claims
that the contract instead required Quality to be reimbursed for
actual costs. Quality responds that the hearing officer
permissibly used Blue Book rates and that his findings are
supported by substantial evidence.
Paragraph five of 108-1.09 describes claims following
a termination for convenience:
After receipt of a Notice of Termination, the
Contractor shall submit to the Contracting
Officer, his claim for additional damages or
costs not covered above or elsewhere in these
specifications. Such claim may include such
cost items as reasonable idle equipment time,
mobilization efforts, bidding and project
investigative costs, overhead expenses
directly allocable to the project termination
and not covered under work paid for at agreed
unit prices or contract bid prices, legal and
accounting charges and other expenses
reasonably necessary in claim preparation,
subcontractor costs not otherwise paid for,
actual idle labor costs if work is stopped in
advance of termination date, guaranteed
payments for private land usage as part of
the original contract, and any other costs or
damage items for which the Contractor feels
reimbursement should be made. The intent of
negotiating this claim would be an equitable
settlement figure to be reached with the
Contractor. In no event, however, will loss
of anticipated profits be considered as part
of any settlement.
The state argues that the hearing officer erred in
concluding that he could award idle equipment time at Blue Book
rates under paragraph five of 108-1.09. The state argues that
"the word `reasonable' modifies the word `time' in [the second
sentence], and not the word `cost,' " and therefore that
paragraph five "requires the rate for idle equipment to be based
on actual costs." But the state's narrow construction is
defeated by the next-to-last sentence of paragraph five, which
states that "[t]he intent of negotiating this claim would be an
equitable settlement figure to be reached with the Contractor."
The provisions of 108-1.09 taken together do not imply the
narrow construction urged by the state. Rather, they suggest
that the hearing officer has broad authority under 108-1.09 to
reach an equitable award.
The state also argues that the contract controls
reimbursement for idle equipment time and that the hearing
officer had no authority under the termination clause of 108-
1.09 to substitute his judgment and base the award on Blue Book
rates rather than actual costs. We disagree. Section 108-1.09
states in part that the "intent of negotiating [a] claim [is to
reach] an equitable settlement figure . . . with the Contractor."
The state drafted this standard form contract. We will not defer
to the state's narrow interpretation of a term that indicates on
its face an alternative and reasonable interpretation.15
The state cites our decision in Southeast Alaska
Construction Co. (SEACO) v. State16 to support its argument that
the hearing officer impermissibly applied the Blue Book rate in
determining Quality's idle equipment claim. In SEACO the
superior court concluded that recovery was limited to actual
equipment rates even though a contract term plausibly allowed
recovery at Blue Book rates.17 On review we held that "the
superior court did not err in refusing to compensate SEACO for
the use of extra equipment at Blue Book rental rates."18 But we
did not hold that it would have been error to apply Blue Book
rates. We simply held there that the contract did not compel
that result.
Similarly, the hearing officer in this case was not
compelled to use the Blue Book rates. But he was not forbidden
to use them, either. The hearing officer based his decision to
employ Blue Book rates on a number of relevant reasons. He
stated that "from the testimony and my own experience . . .
contractors, generally, do not keep equipment costs for the
purposes of developing claims." He also pointed out that a
"difficulty in not using Blue Book rates is that contractors with
different accounting systems would be treated differently." He
also explained that industry custom routinely permits the use of
rates such as those found in the Blue Book.19
It is this type of expertise to which we defer in
reviewing a decision under the substantial evidence standard.
Because the hearing officer's decision does not rely on an
improper interpretation of the contract, and because his decision
relied on substantial evidence, we hold that it was not error to
use Blue Book rates in determining Quality's standby costs.20
4. The "dedicated equipment" theory for idle
equipment
The hearing officer awarded Quality compensation for
idle equipment time from May 17, 1996 through August 17, 1996.
The state contends in its cross-appeal that this was error,
because "post-termination idle equipment time is limited to the
reasonable time it should take the contractor to remove its
equipment from the project site." The state argues that
Quality's recovery for idle equipment should not be based on a
"dedicated equipment" theory, but instead should be limited to
compensating Quality for its idle equipment time from the
termination of the contract on June 19 until July 31, when
Quality removed its equipment from the job site.
Quality responds that it should be reimbursed for
reasonable idle equipment time as provided in the termination-for-
convenience clause of the contract.
Section 108-1.09 of the contract permits an award of
costs for "reasonable idle equipment time." The hearing officer
correctly realized that "a contractor must `dedicate' equipment
to a project once it is awarded the contract." Contractors must
be assured that they may maintain some level of minimal
readiness, otherwise they would be reluctant to dedicate any
equipment to a job site in preparation for a job, and perhaps
even after a job is awarded. In determining Quality's standby
award, the hearing officer relied on the state's May 17, 1996
notice-to-proceed letter and the statement in Gordon Hayes's
October 13, 1997 letter that Quality was back "in full force by
mid-August." We hold that substantial evidence supports the
hearing officer's decision.21
Our own interpretation of the termination-for-
convenience clause also leads us to conclude that it was
plausible to read the contract to grant recovery for idle time
beyond the time for removing equipment from the Chena site.
Given evidence that it was the industry custom not to charge
demobilization costs to a current project, it is logical to
conclude that the words "reasonable idle equipment time" in the
termination-for-convenience clause cover something other than
removing equipment from a job site. We recognize that this is
not the only reading those words might have, but it is a
plausible reading shared by the hearing officer and accepted by
the commissioner. The hearing officer applied what he
termed the "business judgment rule" to determine what equipment
Quality dedicated to the Chena project and the duration of that
dedication. The state asserts that the hearing officer erred in
applying the dedicated equipment theory doctrine and that this
was a legal error. It does not appear, however, that the hearing
officer was creating a separate category of recovery that turned
simply on whether equipment was "dedicated" or not. The real
question was the duration of idle time, and substantial evidence
supported the hearing officer's choice in this regard. We are
not prepared to say as a matter of law based on the record here
that a termination-for-convenience clause that permits recovery
for reasonable idle equipment time precludes recovery after some
brief period of removal ends.
The state cites Nolan Bros. v. United States,22 in which
the United States Court of Claims examined a termination-for-
convenience claim for idle equipment time, as holding that the
standby period for idle equipment is limited to the time
"immediately following the termination of the contract." The
court of claims then proceeded to define "immediately" as 1.6
months based on the facts before it.23 The essential debate in
Nolan, an issue not very different from that in this case, was
over the length of time for which recovery would be reasonable.
As Quality notes, the court in Nolan relied on Brand Investment
Co. v. United States, which explained that
when the Government . . . in effect condemns
a contractor's valuable and useful machines
to a period of idleness and uselessness, we
think that it should make compensation
comparable to what would be required if it
took the machines for use for a temporary
period, but did not in fact use them.[24]
The superior court declined to read Nolan and other cases cited
by the state to be so persuasive that they compel Alaska courts
to hold that idle equipment recovery time must end as soon as
equipment reasonably could have been removed from a job site.
The state's final argument is that Quality's "dedicated
equipment claim is for loss of anticipated profits," a loss
category which is not allowable under 108-1.09. Section 108-
1.09 explicitly allows recovery for reasonable idle equipment
time. The hearing officer awarded Quality standby for
"equipment" dedicated to or utilized for the project.25 This
award did not grant anticipated profits to Quality and was not
contrary to 108-1.09 of the contract. We therefore conclude
that it was not error to grant this award.
C. Quality Is Not Entitled to Additional Compensation
for Unabsorbed Home Office Overhead.
The termination-for-convenience clause allows recovery
for "overhead expenses directly allocable to the project
termination and not covered under work paid for at agreed unit
prices or contract bid prices." Overhead includes
organizational, administrative, and other general costs that are
incurred for continuing operations. The hearing officer awarded
Quality $92,200 for unabsorbed home office overhead. Quality
sought an award totaling $365,785.
Quality advances three arguments to support its claim
for additional compensation for unabsorbed office overhead. The
state responds that Quality's arguments lack merit. We agree
with the state.
Quality first argues that the hearing officer committed
"a simple accounting error" in awarding Quality $92,200 for
overhead.26 It argues that amounts the hearing officer denied as
to other items should have been added to the overhead award,
which Quality calculates should have been $365,785. But Quality
does not actually allege an accounting error. Instead, Quality's
calculation merely attempts to shift denied items to the overhead
category. Giving effect to Quality's argument would circumvent
much of the hearing officer's decision. The hearing officer
denied certain claims for reasons his opinion discussed at
length. We decline to shift those claims to the overhead
category.27
Quality next argues that it was error to calculate
daily overhead by dividing the overhead by 365 days rather than
184 days, the length of Quality's construction season. The state
responds that Quality did not present this issue to the hearing
officer and that it is waived. The state also argues that
experts for both parties "agreed that unabsorbed overhead (if
allowed) should be calculated over a one-year period."
To calculate Quality's overhead award, the hearing
officer divided $365,785, the amount of Quality's claimed
overhead costs, by 365 days. This resulted in a daily rate of
$1,002.15. The hearing officer then multiplied this figure by
92, the number of calendar days he attributed to the state's
termination for convenience, and awarded $92,200. Quality cites
the following testimony by Ronald Maus, the state's expert, to
support its argument that the hearing officer incorrectly
calculated its award over 365 days rather than a shorter period
reflecting the seasonal nature of Quality's business:
Q. Well, the period in which the
overhead was not absorbed included . . . some
six months of fiscal year 1997 costs; isn't
that right?
[Maus]. That's true. But . . . the
absorption is done in the operating season
only, which essentially runs from May 1
through October 31.
The state argues that Quality took this testimony out
of context. We agree, because Maus next testified:
Q. Sir, the overhead is fixed and it
runs basically consistent year after year -
or month after month after month, all through
the winter, right?
[Maus]. That's true.
Q. But the period that they earn
monies to absorb that overhead is generally
just in the summer months, isn't it?
[Maus]. That's true.
The hearing officer reasonably could have concluded
from this testimony that overhead costs for a seasonal
construction business continue over the course of a year even
though revenues are generated primarily during summer months.
The hearing officer based his decision on the expert testimony
and his own expertise. Substantial evidence supports his
decision.
Quality finally argues that "cut[ting] off recovery of
a daily calculated rate at August 17, just produces a wholly
arbitrary and capricious number that is unrelated to . . . the
amount of home office overhead that is unabsorbed as a result of
the termination." The state responds that the hearing officer's
choice of August 17 is supported by the same evidence he
considered in deciding Quality's claim for standby costs.
It does not matter whether other cutoff dates would
have been reasonable because the hearing officer's choice of
August 17 was supported by substantial evidence, including
Hayes's October 13, 1997 letter.
The state's cross-appeal disputes the hearing officer's
$92,200 award for unabsorbed overhead. The state argues that
this overhead is an indirect cost not chargeable to the state's
termination. Because we hold for the reasons discussed in this
subpart that substantial evidence supports the hearing officer's
decision, we do not need to consider whether alternative
approaches would also have been valid. We will not reweigh
evidence when substantial evidence supports the hearing officer's
decision.28
D. The Superior Court Did Not Err in Vacating the
Commissioner's Award of Prejudgment Interest.
The hearing officer awarded Quality an unspecified sum
for "appropriate prejudgment interest." The superior court
vacated the award. Quality advances two theories why the
superior court erred by vacating the prejudgment interest award.
1. Alaska Statute 36.30.685 and our ruling in Danco
Exploration
v. State preclude Quality's recovery of
prejudgment interest.
Quality first argues that because its "contract" claim
is of the type allowable under AS 09.50.250, prejudgment interest
is recoverable under AS 09.50.280.29 The state responds that
Quality's contract claim is the type required to be filed as an
administrative appeal under AS 36.30.685.30 The state therefore
argues that Quality cannot bring an action under AS 09.50.250.
Quality appealed the commissioner's decision under AS
36.30.685(a) and Alaska Rule of Appellate Procedure 602(a)(2).
Quality asserts that AS 36.30 merely states an "exhaustion
requirement" and "simply require[s] . . . claimants to exhaust
their administrative remedies" before bringing suit under AS
09.50.250. We addressed a similar situation in Danco
Exploration, Inc. v. State.31 Danco was the winning bidder in a
state lease sale.32 A division of the Department of Natural
Resources informed Danco that it forfeited its leases because
Danco was late returning documents to the state.33 Danco appealed
this decision to the commissioner of natural resources, who
rejected Danco's claim.34 Danco then appealed the commissioner's
decision to the superior court, which reversed the commissioner's
decision.35 Danco attempted to recover prejudgment interest under
AS 09.50.280 after the superior court ruled in Danco's favor in
its administrative appeal.36 We held:
Danco's claim that it could have sued the
State in tort or in contract lacks merit.
Oil and gas lessees and lease bidders which
have grievances with the State must pursue .
. . administrative procedures[.] . . . A
party who brings an appeal from a
commissioner's decision to the superior court
is bound by the result of such an appeal and
may not maintain a separate action under [AS
09.50.250].[37]
Quality argues that Danco is distinguishable because
"[Quality's] claim is undisputedly a `contract claim.' " We
disagree. This is not an instance in which the difference
between bringing a claim under alternative statutes is merely a
matter of form. Quality did not have the option of bringing its
claim under AS 09.50.250; that statute expressly provides that a
"person who may bring [a procurement action] may not bring an
action under [AS 09.50.250] except as set out in AS 36.30.685."38
But AS 36.30.685(a) did not authorize Quality to file a contract
claim under AS 09.50.250. Instead, AS 36.30.685(a) addresses
administrative appeals, the process Quality followed.
We assume for discussion's sake that a procurement
claim prosecuted in the superior court at a trial de novo under
AS 36.30.685(b) is the procurement claim to which AS 09.50.250
refers when it states that a "person who may bring [a procurement
action] may not bring an action under [AS 09.50.250] except as
set out in AS 36.30.685." (Emphasis added.) We therefore also
assume for discussion's sake that a claimant who successfully
pursues a procurement claim in a superior court trial de novo
under AS 36.30.685(b) may recover prejudgment interest under AS
09.50.280.39 Because administrative appeals do not qualify
for prejudgment interest, Danco, 924 P.2d at 434, and because
subsection .685(a) governs traditional administrative appeals of
procurement claims, we can safely assume that AS 09.50.250's
reference to AS 36.30.685 must be a reference to subsection
.685(b). Proceedings under that subsection are distinct from
administrative appeals under subsection .685(a), because of the
trial de novo provision for claims brought under subsection
.685(b). The distinction appears logical because claims
presented to the superior court under subsection .685(b) at a
trial de novo have the characteristics of traditional contract
claims against the state, for which prejudgment interest is
recoverable. But we do not have to decide here precisely what
type of superior court proceeding would entitle a successful
procurement claimant to prejudgment interest because Quality's
superior court proceeding was clearly an appeal under AS
36.30.685(a), and was therefore governed by Danco.
Quality next argues that "the real issue presented for
review is whether the agency had the authority to award
prejudgment interest to [Quality] on its claim, as the DOT did in
the administrative claims proceedings." Quality tries to
distinguish its claim by arguing that the state and the superior
court wrongly perceived the issue as being whether the court
could award prejudgment interest. Quality explains that "[t]he
doctrine of sovereign immunity applies only to judicial actions
brought against the State, and has no application to
administrative proceedings." But we have previously held that
"unless interest is specifically authorized by legislative
enactment, it may not ordinarily be assessed against the State in
any action."40
Because Quality could not maintain its claim under AS
09.50.250 and because the state had not specifically authorized
prejudgment interest for this type of claim when Quality brought
its administrative appeal, the superior court correctly vacated
the prejudgment interest award.41
2. Quality is not contractually entitled to
prejudgment interest.
Quality alternatively argues that the express terms of
the contract require the state to pay interest and that "the
state's immunity to the assessment of such interest is waived
along with its waiver of sovereign immunity for claims arising
from the contract." Quality further urges us to follow the
holding of the Washington Supreme Court in Architectural Woods,
Inc. v. State.42 The court there reversed "the trial court's
denial of interest to the plaintiff based on sovereign immunity
and [held] that any sovereign immunity possessed by [the state]
was waived by its entry into an authorized contract."43 The
court also held that "such waiver extended to every aspect of its
contractual liability including liability for interest."44 The
Washington court based its reasoning on principles of fairness
and the concept that the state should not expect favorable
treatment.45 The state here responds that in Alaska, "the
authorization to pay interest may not be implied, but must be
specifically and explicitly authorized solely by legislative
enactment."
The state is correct. Alaska Statutes 09.50.250 and
09.50.280 provide limited exceptions to the general rule and
permit awards of prejudgment interest against the state in tort
and contract claims.46 Given the statutory approach the
legislature has chosen, the considerations that persuaded the
Washington Supreme Court in Architectural Woods have no
application here.
We have observed that "the prohibition against
prejudgment interest can easily work an injustice on a party who
has contracted with the state."47 The legislature apparently
agreed when it enacted AS 36.30.623 in 2001, but the legislature
did not choose to make that statute retroactive. It consequently
does not assist Quality in this case.48
E. The Hearing Officer Did Not Err in Awarding
Quality Recovery for a Utility Delay or in Allowing
Quality To File a Late Utility Delay Claim.
Quality filed a late claim for the utility delay that
held up the project. The hearing officer included the "utility
delay component" in awarding Quality recovery for mobilization
and demobilization, standby, and overhead. The state's cross-
appeal argues that the hearing officer erred in considering the
claim because Quality waived the claim by not giving adequate,
timely notice of the claim, and because 105-1.06 of the
contract precluded monetary recovery for utility delays. Section
105-1.06 states in part:
It is understood and agreed that the
Contractor has considered in his bid all of
the permanent and temporary utility
appurtenances in their present or relocated
positions as shown on the plans, and the
completion dates for various utility
adjustments as may be stated in the Special
Provisions, and that no additional
compensation will be allowed for any delays,
inconvenience or damage sustained by the
Contractor due to any interference from the
said utility appurtenances or the operation
of moving them.
The state emphasizes the portion of the provision that
states "no additional compensation will be allowed for any
delays." But the cited provision clearly refers to delays caused
by known utility appurtenances - i.e., those "as shown on the
plans." Because the delay arose due to an unforseen (although
ultimately nonexistent) utility conflict,49 we reject the state's
argument that 105-1.06 precluded recovery for the utility
delay.50
The hearing officer based his decision to allow
Quality's delay claim to go forward on the state's recognition of
the perceived utility conflict in early June and the state's
efforts to resolve it. He noted that "the State was aware that
the contractor was not going to be able to conduct its work until
the utility conflict had been resolved," and then determined that
once the state terminated the contract, "[c]learly . . . the
State recognizes that the contractor will be submitting a claim."
The hearing officer observed that, even though the utility delay
claim was not separately presented, "the State was aware
generally of the nature of the claim."
The hearing officer determined that a critical piece of
evidence supporting his decision was documentation of a June 6,
1996 meeting between state and Quality representatives. He found
the document to be "consistent with [Quality's] letter of the
same date expressing its concerns regarding the utility conflict
that was discussed at the preconstruction conference."
Substantial evidence therefore supports his decision that
"[Quality] was delayed as a result of the utility conflict and
that delay is a compensable damage item."51
F. It Was Not Error To Deny the State's Mutual Fault
Counterclaim.
The state argues that Quality was mutually at fault for
the termination because Quality did not obtain a "utility locate"
to identify any utility conflicts before construction started.
The state alleges that "a reasonable contractor" would have
obtained a utility locate when first advised of the previously
undisclosed buried cable. The state argues that 105-1.06
required Quality to obtain the locate. That section provides:
"Before starting construction, the Contractor shall request all
utility owners to locate their utilities and at points of
possible conflict the Contractor shall uncover the located
utilities." Quality responds that the contractor's duty to
request a utility locate does not arise until shortly before
excavation.
The hearing officer ruled that "a contractor normally
does not obtain a locate until shortly before he begins actual
excavation." His ruling did not conflict with 105-1.06 and was
based on evidence of a June 7, 1996 meeting in which the utility
manager stated that there "existed [a] . . . cable in the center
of the right-of-way." Substantial evidence supports the hearing
officer's decision to deny the state's claim of mutual fault.52
G. The Issue Whether the Attorney General Had Authority to
Appeal the Commissioner's Decision Is Waived.
Quality argues that DOT's commissioner "is vested with
sole statutory authority to make the final decision on behalf of
the State regarding [Quality's] claims, [and that] the Attorney
General had no authority to challenge or appeal the
Commissioner's decision." We do not need to reach this issue
because Quality raises it for the first time on appeal, and
because it is not so compelling that it would justify review for
plain error.53 Nonetheless, we note that Quality's argument does
not appear to be consistent with our prior decisions or the
Alaska statutes.54
IV. CONCLUSION
We AFFIRM the superior court's decision which affirmed
Quality's individual claim awards but which vacated the award for
prejudgment interest.
_______________________________
1 The termination-for-convenience clause provides: "The
performance of work under the contract may be terminated by the
Department in accordance with this section in whole or in part,
whenever, for any reason the Contracting Officer shall determine
that such termination is in the best interest of the Department."
2 Section 108-1.09 of the contract states that "[p]ayment for
partially completed work will be made either at agreed prices or
by time and materials methods . . . ." The contract form did not
separate amounts for mobilization and demobilization; it
scheduled a "lump sum" amount for the "mobilization and
demobilization" item.
3 State Farm Mut. Auto. Ins. Co. v. Lawrence, 26 P.3d 1074,
1076 (Alaska 2001).
4 Because Quality had completed only minimal work when the
state terminated the contract, we need not consider whether there
had been substantial performance entitling Quality to recover the
contract price. Alaska State Hous. Auth. v. Walsh & Co., 625
P.2d 831, 836 (Alaska 1980).
5 Estate of Basargin v. State, Commercial Fisheries Entry
Comm'n, 31 P.3d 796, 799 (Alaska 2001). We will uphold the
hearing officer's findings if they are supported by "such
relevant evidence as a reasonable mind might accept as adequate
to support a conclusion." Id. at 800.
6 Quality argues that the state audit report is not
substantial evidence. But the hearing officer did not rely
exclusively on the audit report. He considered a range of
figures in determining Quality's award. It was not error to use
the audit report to help identify this range of estimates. We
therefore do not need to consider whether the audit report taken
alone would have been substantial evidence sufficient to uphold
the hearing officer's award.
7 The record contains a written statement on Quality
letterhead stating: "It is Quality Asphalt policy to charge
projects with mobilization cost only for the bid item
mobilization and demobilization. Demobilization charges are
charged to mobilization cost of the next project. We believe
this is an industry standard for contractors like ourselves who
move from job to job."
8 Federal Acquisition Regulation (FAR) 31.105(d)(3) provides
that costs incurred at the job site are allowable so long as "the
accounting practice used is in accordance with the contractor's
established and consistently followed cost accounting practices
for all work."
9 Sections 101-1.34 and 101-1.35 of the contract state:
101-1.34 NOTICE OF INTENT TO AWARD. The
written notice by the Department announcing
the apparent successful Bidder and
establishing the Department's intent to award
the Contract when all required conditions are
met.
101-1.35 NOTICE TO PROCEED. A written
notice to the Contractor to begin the work
establishing the date on which Contract Time
begins.
Section 108-1.02 further provides:
108-1.02 NOTICE TO PROCEED. The Notice to
Proceed will stipulate the date on which it
is expected the Contractor will begin the
construction and from which date contract
time will be charged. Commencement of work
by the Contractor prior to the effective date
of the Notice to Proceed constitutes a waiver
of this notice and will begin contract time.
Construction operations shall not be
performed before the effective date of the
Notice to Proceed. The Contractor shall
notify the Engineer at least 48 hours in
advance of the time actual construction
operations will begin.
10 When the superior court acts as an intermediate court of
appeal in an administrative matter, we will substitute our own
judgment for questions of law not involving agency expertise,
such as contract interpretation. Williams v. Abood, 53 P.3d 134,
139 (Alaska 2002); see also Ellingstad v. State, Dep't of Natural
Res., 979 P.2d 1000, 1004 (Alaska 1999).
11 Section 108-1.06 defines "calendar days" and "completion
date" for purposes of liquidated damages:
Calendar Days. When the contract time is
specified on a calendar days basis, all work
under the contract shall be completed within
the number of calendar days specified. The
count of contract time begins on the day
following receipt of the Notice to Proceed by
the Contractor, if no starting day is
stipulated therein. . . .
Completion Date. When the contract time is
specified by a completion date, all work
under the contract shall be completed by that
date.
12 We will uphold the hearing officer's findings if they are
supported by substantial evidence. Estate of Basargin v. State,
Commercial Fisheries Entry Comm'n, 31 P.3d 796, 799 (Alaska
2001).
13 Dataquest, Rental Rate Blue Book for Construction Equipment
(2002). The Blue Book is an annually published "industry-
sponsored construction equipment cost guide." 48 C.F.R.
31.105.
14 We review legal questions relating to contract
interpretation de novo. Earth Movers of Fairbanks, Inc. v.
State, 824 P.2d 715, 717 n.4 (Alaska 1992). We review the
hearing officer's ruling on the appropriateness of recovery at
Blue Book rates under the substantial evidence standard of
review. Anderson v. State, Dep't of Revenue, 26 P.3d 1106, 1109
(Alaska 2001).
15 See, e.g., 5 MARGARET N. KNIFFIN, CORBIN on CONTRACTS
24.27, at 282 (1998) (stating that fact written terms of contract
were authored by one party and merely assented to by other may
influence court's interpretation of these terms); see also
Rockstad v. Global Fin. & Inv. Co., 41 P.3d 583 (Alaska 2002)
(construing lease term against lessor responsible for drafting
lease); Little Susitna Constr. Co. v. Soil Processing, Inc., 944
P.2d 20, 25 n.7 (Alaska 1997) (construing terms against party in
adhesion contract, but also stating party had bargaining strength
relative to other party).
16 791 P.2d 339 (Alaska 1990).
17 Id. at 341.
18 Id. at 342.
19 The hearing officer did not err in considering FAR
guidelines in his decision. We need not decide whether exclusive
use of FAR principles would have been error because the hearing
officer's decision relied on a number of relevant factors, each
of which is supported by the record.
20 The state also argues that "the claims clause prohibits the
use of Blue Book rates." But 105-1.17 addresses claims for
"additional compensation." Quality's claim for standby costs is
not for "additional compensation." The hearing officer therefore
did not err in concluding that 105-1.17 "does not have any
application to this case."
21 The state also cites cases from other jurisdictions in
arguing that the hearing officer impermissibly allowed Quality to
recover costs for dedicated equipment. Although these cases may
support the choice of a different period than the one the state
would choose, they do not alter the conclusion that the hearing
officer's choice is supported by substantial evidence. We will
not reweigh evidence in light of the state's suggested
alternative. We only review the record to ensure that
substantial evidence supports the decision. Anderson v. State,
Dep't of Revenue, 26 P.3d 1106, 1109 (Alaska 2001).
22 Nolan Bros. v. United States, 437 F.2d 1371, 1386 (Ct. Cl.
1971).
23 Id. at 1386.
24 Id. at 1387 (quoting Brand Inv. Co. v. United States, 58 F.
Supp. 749 (Ct. Cl. 1944)).
25 Section 101-1.23 defines "equipment" as "[a]ll machinery
together with the necessary supplies for upkeep and maintenance,
and also tools and apparatus necessary for the proper
construction and acceptable completion of the work."
26 We review questions of fact under the substantial evidence
standard. Basargin, 31 P.3d at 799.
27 Similarly, we are unpersuaded by Quality's argument that
because "neither [the superior court judge] nor [the hearing
officer] are accountants . . . they fail to grasp from the very
fact of [Quality's] claim calculation that a deductive credit
based on the assumed granting of another claim is no longer valid
when that other claim is disallowed." The deficiency is not with
the decisions of the hearing officer or the superior court, but
with Quality's approach. As discussed, this is not an accounting
problem but rather an attempt to impermissibly shift losing
claims to the amorphous "overhead" category.
28 Anderson, 26 P.3d at 1109.
29 AS 09.50.250 states in part:
A person or corporation having a contract,
quasi-contract, or tort claim against the
state may bring an action against the state
in a state court that has jurisdiction over
the claim. A person who may present the
claim under AS 44.77 may not bring an action
under this section except as set out in AS
44.77.040(c). A person who may bring an
action under AS 36.30.560 - 36.30.695 may not
bring an action under this section except as
set out in AS 36.30.685.
AS 09.50.280 states:
If judgment is rendered for the plaintiff, it
shall be for the legal amount found due from
the state with interest as provided under AS
09.30.070 and without punitive damages.
30 AS 36.30.685 states in part:
(a) A final decision of . . . the
commissioner of transportation and public
facilities under AS 36.30.610, 36.30.635(a),
36.30.650, or 36.30.680 may be appealed to
the superior court in accordance with the
Alaska Rules of Appellate Procedure.
(b) A final decision of . . . the
commissioner of transportation and public
facilities under AS 36.30.630(b) [hearing of
a contract controversy] may be appealed to
the superior court for a trial de novo.
31 924 P.2d 432 (Alaska 1996).
32 Id. at 433.
33 Id.
34 Id.
35 Id. at 434.
36 Id.
37 Id.
38 AS 09.50.250 provides in relevant part: "A person who may
bring an action under AS 36.30.560 - AS 36.30.695 may not bring
an action under this section except as set out in AS 36.30.685."
39 An unsuccessful procurement claimant may seek superior court
relief under AS 36.30.685. Whether the superior court proceeding
falls under subsection .685(a) or subsection .685(b) depends on
the procedure followed at the administrative level. If the
claimant has received a hearing at the administrative level,
subsection .685(a) applies, and the proceeding is treated as an
administrative appeal. In comparison, subsection .685(b) applies
- providing for a superior court trial de novo - if the
commissioner of administration or the commissioner of
transportation and public facilities decided the claim under AS
36.30.630(b), i.e., by "adopt[ing] the decision of the
procurement officer as the final decision without a hearing." AS
36.30.630(b).
40 Stewart & Grindle, Inc. v. State, 524 P.2d 1242, 1245
(Alaska 1974). The legislature has since authorized the payment
of interest for claims, like Quality's, filed under AS 36.30.620.
See AS 36.30.623. But this statute did not become effective
until October 2001 and therefore does not apply to Quality's
claim. Ch. 98, 1, SLA 2001 (Effective Oct. 8, 2001). The
state argues that "[t]he absence in 1996 of a statute like AS
36.30.623 . . . significantly undercuts [Quality's] argument. . .
. There would have been no need to enact AS 36.30.623 if AS
09.50.250 - .280 were an explicit waiver of immunity for payment
of interest on DOT contract claims." We agree with the state's
argument, but our holding does not depend upon it because
Quality's claim is clearly an administrative appeal that falls
outside AS 09.50.250.
41 See Samissa Anchorage, Inc. v. State, 57 P.3d 676 (Alaska
2002) (reaffirming that AS 09.50.250 and .280 do not allow for
prejudgment interest in cases brought as administrative appeals
that could not have been brought under section .250).
42 598 P.2d 1372 (Wash. 1979).
43 Id. at 1377.
44 Id.
45 Id.
46 Danco Exploration, Inc. v. State, 924 P.2d 432, 434 (Alaska
1996); Stewart & Grindle, Inc. v. State, 524 P.2d 1242, 1245
(Alaska 1974).
47 State v. Phillips, 470 P.2d 266, 272 (Alaska 1970)
(quotations omitted) (citing Wright Truck & Tractor Serv., Inc.
v. State, 398 P.2d 216, 220 (Alaska 1965)).
48 See supra note 40.
49 The contract allows the state to make changes under 105-
1.06 and 104-1.02 in the work requirements "should conflicts
occur or utilities be discovered that are not shown on the plans
that require adjusting." But these provisions do not impact
Quality's delay claim, which is based instead on the state's
termination.
50 We review questions of contract interpretation de novo.
Earth Movers, 824 P.2d at 717 n.4.
51 Because the delay claim is established on the alternative
grounds discussed in this subpart, we do not need to consider
Quality's response that the state breached express and implied
warranties.
52 We review this interpretation issue under the substantial
evidence standard because the interpretation of 105-1.06
requires extrinsic evidence. Little Susitna Constr. Co. v. Soil
Processing, Inc., 944 P.2d 20, 23 (Alaska 1997).
53 Von Stauffenberg v. Comm. for Honest & Ethical Sch. Bd., 903
P.2d 1055, 1061 (Alaska 1995).
54 Pub. Defender Agency v. Superior Court, Third Judicial
Dist., 534 P.2d 947, 950 (Alaska 1975); AS 44.23.020(3), (8).
