DUTRA DREDGING
A MEMBER OF THE DUTRA GROUP
1000 POINT 5AN PEDRO ROAD
SAN RAFAEL, CALIFORNIA 94901
(415) 121-2131   FAX  (415) 121-1394
Contractor License #707580 A


November 7, 1996

Department Of The Army
San Francisco District
Corps of Engineers
333 Market Street
San Francisco, CA 94105

Attn: Thomas Benero, Contracting Officer

Re: Contract No. DACW07-95-C-0003

Subj: Exception To Unsatisfactory Performance Evaluation

Gentlemen:

At the outset it should be noted that the threat, of an "Unsatisfactory Interim Performance Rating", contained in the Contracting Officer's letter of May SO, and reiterated in his letter of June 3, 1996, pertained, as explained in those letters, to the submittal of an updated schedule and a forward projection of anticipated expenditures, within an arbitrary time frame prescribed by the Corps, NOT the diligent pursuit of the work, as stated in the remarks section of the DD Form 2626. Those submittals were delivered within the time frame dictated by the Corps, even though the forward projection of expenses is an extra-contractual requirement which has been submitted from time to time purely as an accommodation to the Corps. The employment of an adverse performance evaluation on the Oakland Inner and Outer Harbor Dredging Project apparently has nothing to do with missed submittal deadlines and everything to do with the frustrated expectations of those employing it.

The Corps asserts that the list of equipment and production rates presented at

our 7 June 1996 meeting with Corps officials, as confirmed in our correspondence of June 11 and 12, does not support a contract completion date of April 1997. That assertion is simply not true and cannot form the basis for a charge of unsatisfactory performance. The conventional equipment itemized in the noted correspondence made measurable progress preparatory to the arrival of the Marine Hydraulic Excavator "Antone" in late August 1996. There should be no difficulty in meeting the original contract completion date as extended. It should be borne in mind that the Contractor is entitled to time extensions for excusable delay, differing site conditions and an extensive increase in overall quantities to be dredged under the Contract. Further on this point, it should be noted that the Corps has refused to acknowledge that there are over 80O,OOO more cubic yards of material above grade, as shown by the original survey, than specified in the original contract, as well as site condition changes which add yardage. This additional yardage equates to time which results in a completion date well into August of 1997. Other time related issues also have been ignored.
By setting an artificial and inaccurate time line for contract completion, the Corps justifies the issuance on an interim unsatisfactory rating. The fact is that we were not and are not behind schedule. The contractor has every right to pursue the work in a manner which maximizes efficiencies and minimizes costs. Because Corps personnel may not understand the work patterns, does not allow the Corps to make a detrimental finding against the contractor just to satisfy an apparently internal agenda. Unfortunately this is what appears to have been done in the Corps notice of June 13, 1996.

Since that time the Corps has also retained funds from progress payments in the amount of 10% of each pay estimate. This retention is asserted by the Corps to be a method of assuring timely completion. Such is not the case. This retention scheme is purely punitive. Any thought process which speculates that withholding funds will accelerate work is severely flawed. Its result is the exact opposite. Cash flow is impaired with resultant harm to the contractor and the impairment of work efficiency. Retention under this Contract is unwarranted and unjustified. Moreover, it violates the spirit of the agreement and may constitute interference with the prosecution of the work.

We hereby request that the practice of withholding retention on the Project be stopped and that retained funds be released to the Contractor immediately. Additionally, we formally request the immediate retraction of the Corps' "Unsatisfactory Performance Rating". Continuing this course of action will result in unnecessarily negative perceptions of the San Francisco District's Engineer and his management staff; may damage the contractor's business reputation; could jeopardize the economic well-being of the (contractor and the Project; will certainly impair efficiency and production on the job and damage otherwise harmonious relationships on the Project and will inevitably result in claims and litigation at Project conclusion.

There will be ample time to successfully and timely complete the Contract work, if the parties to this venture can begin to work together a little more effectively. In closing, I specifically refer to the atmosphere created by the Corps' actions. That atmosphere has resulted in weekly project meetings which are overrun by contract management staff from the Corps instead of the technical people for which it was intended.