CONTACTS 
0201 - O-0395 0301 Department of Natural      406 444 6699 fax   406 444 6721
020101 - Ms. Sarah Bond, Esquire, =406 444 6660
020102 - Legal Department
0202 - O-0387 0101 Tudor Engineering Company  415 543 9820 fax   415 543 5538
020201 - Mr. Clyde Earnest,

SUBJECTS
Sletten claim settlement
Review draft agreement

0504 -    ..
0505 - Summary/Objective
0506 -
050601 - Reviewed Sarah's document, ref DRT 1, with Norm and prepared
050602 - comment memo, ref DCT 2.  Faxed to Clyde and Sarah per her request for
050603 - ASAP.
050604 -
050605 - The settlement document appears adequate with respect to form, and
050606 - may require consideration with respect to scope prior to final
050607 - agreement, as set out below.
050608 -
050609 - Approximately $150K is subject to question under the language of the
050610 - proposed settlement.  There also appears to be questions on unit
050611 - price adjustments and punch list scope, of an indeterminate amount.
050612 - Language is proposed below to resolve these issues to preserve DNRC's
050613 - interest in settling for an amount certain.
050614 -
050615 -
050616 -
050617 - Detailed discussion
050618 -
050619 - Norm is concerned that the parties do not have the same scope in mind.
050620 - I asked if there was a memo prepared following the meeting on what was
050621 - said by the parties and intended by DNRC.  Norm has some rough notes,
050622 - but a regular memo is not available.  I discussed this with Wayne  and
050623 - he recalled that the Director generally represented DNRC.
050624 -
050625 - Norm cited a discussion with Hal at the site today, who related a
050626 - discussion he had with Paul Robinson.  Hal understood Paul to indicate
050627 - that Sletten views the agreement as encompassing only the items on
050628 - Sletten's 890228 PE.  If true, the following items appear questionable
050629 - under the criteria in Sarah's draft para "A" stating:
050630 -
050631 -   A)  [Sletten] will perform the work of the Contract as amended by
050632 -       change orders issued before march 17, 1989, to substantial
050633 -       completion, ...
050634 -
050635 -
050636 - Lightening Strike, claim #06
050637 -
050638 - Norm also related that Paul maintains Sletten omits the Lightening
050639 - strike from the settlement, so that it can pursue independent recovery
050640 - from the surety.  In a discussion with Sarah this afternoon, she
050641 - recalls that Marty Becker acknowledged the Lightening Strike claim is
050642 - included.
050643 -
050644 - Sletten views this as a $60,000 matter.
050645 -
0507 -
0508 -
0509 - HVAC, CO #14
0510 -
051001 - A grey area of potential difference is the HVAC system.  We examined
051002 - the file and found a proposal was offered by Sletten in July for
051003 - $58,000.  Tudor wrote and accepted this offer in August, advising a
051004 - CO would be issued.  But a CO has not been issued.  The CO log shows
051005 - this matter is "on hold;" there is no comment explaining this status.
051006 -
051007 - Accordingly, it could be argued this item is outside the scope of the
051008 - agreement, as defined by para "A" (see above).
051009 -
051010 - This is $58,000 matter.
051011 -
051012 -
0511 -
0512 -
0513 - Utility Water & Compressed Air, CO #3.15
0514 -
051401 - A CO for $30,678 was prepared on 881013, and issued on 881115.
051402 - Sletten informed the Engineer in a letter of 890126  that it could
051403 - not perform the CO at the originally quoted price, due to increased
051404 - work area conjestion arising from the Voith contract.  DNRC on
051405 - 890209, advised Tudor that DNRC desired to award this work to Voith
051406 - instead of having Sletten perform it.  Tudor attempted to award the
051407 - work to Voith on 890303 and was unsuccessful, (see attached memo on
051408 - this topic for more detail).
051409 -
051410 - At this time a CO is in the record.  Sletten's objection may not be
051411 - timely, nor substantively correct.  Voith was scheduled to be per-
051412 - forming from September to March and there is no apparent basis for
051413 - Sletten or its subcontractor to have expected a different level of
051414 - conjestion during that period than exists now.  Moreover, Sletten was
051415 - a principal cause of the delay.
051416 -
051417 - In any case, Sletten could argue this matter is not within the
051418 - meaning of DNRC's proposed para "A" definition.
051419 -
051420 - This is a $30,678 (plus) matter.
051421 -
051422 -
0515 -
0516 - Louvers, CO 19
0517 -
051701 - Tudor prepared the CO on 890306 and issued same on 890315 modifying
051702 - some louver work.  The change requests the Contractor's proposal and
051703 - does not authorize work to proceed.
051704 -
051705 - The contractor has not responded.
051706 -
051707 - This is a matter of cost less than $5,000.
051708 -
051709 -
0518 -
0519 - Silt Barrier, CO #21
0520 -
052001 - The contractor objected that the requirements in approved transmittal
052002 - 139 required extra expense.  The engineer indicated Sletten could
052003 - submit a price to comply with MFWD requirements, or avoid the extra
052004 - expense through alternate constructon methods.  Inspection on 890321,
052005 - showed the contractor adopted the alternate methods.   Therefore, no
052006 - additional expense should arise from this matter shown as "Pending
052007 - Quote" on the CO Log Summary.
052008 -
052009 -
0521 -
0522 -
0523 - Unit Price Adjustments
0524 -
052401 - The CO log shows total adjustments of $445,565.  This includes an
052402 - increase of $197,191 to the October PE adjustments, based on
052403 - discussions with Jeff at the meeting on 890316 (DNRC offices).
052404 -
052405 - Norm and I did a detailed review of Unit Prices (put it in file
052406 - 0406.wk1, see DCT 1), and found the actual adjustments as of the
052407 - February PE appear to total:  $460,151.  This $14,586 more than the
052408 - $445,565 shown in the 890317 CO log used to develop DNRC's settlement
052409 - position.  We also found there are a number of minor electrical
052410 - conduit unit price items which Norm feels are not complete as of the
052411 - February estimate.  He believes the final adjustments on these items
052412 - will be less than $10,000, and so is not material to the agreement.
052413 -
052414 - If the agreement is written so Sletten takes the risk of these
052415 - differences, then DNRC would not incur expense beyond the $7 225 000
052416 - amount (assuming no adjustments from the above items).  This appears
052417 - to be the intent of settlement, as drafted, but is not explicitly set
052418 - out in the agreement as currently drafted.  "Unit prices" might not be
052419 - construed as "claims" or "change orders."
052420 -
052421 - Recommend including in the agreement a specific reference to unit
052422 - price adjustments in order clarify this matter.  At the end of para
052423 - one (1) on page two (2), add:
052424 -
052425 -   "and will constitute full compensation for all adjustments to
052426 -   contract unit price items required to complete the work."
052427 -
052428 -
052429 - A subsidiary question is the amount of overrun on concrete, rebar and
052430 - certain steel quantities, of approximately 27%, or $466 000.  Item
052431 - #19, Waterway Roof and Turbine concrete increased nearly 60%  or
052432 - $140,000.  Ordinarily formed concrete would not be expected to vary
052433 - by this amount from plan dimensions.  Some of this overage results
052434 - from change orders; however, since the quantities are derived from
052435 - contractor valuations (i.e. its monthly payment application)  a
052436 - reconciliation may be in order.
052437 -
052438 - The parties could agree to the above settlement subject to audit of
052439 - unit price adjustments.  Of course this poses a risk of increased
052440 - expense to DNRC.  To evaluate the risk, the point might be posed as a
052441 - question to ascertain how sensitive the Sletten side is to the issue.
052442 - If they readily agree, it could dropped.  If they strongly react
052443 - negatively, then the thing might be worth pursuing.
052444 -
052445 -
052446 - Backfill Concrete
052447 -
052448 -
052449 - Additionally, Norm pointed out that full payment has been recognized
052450 - under the February PE for the following backfill concrete items:
052451 -
052452 -   24b ... under retaining walls                $50,150
052453 -   24c ... under slab                           $25,200
052454 -   24d ... at side walls                        $12,750
052455 -
052456 -
052457 - Items #24b and c are $7,650 over the original estimate.  This is not
052458 - a material difference in the context of settlement.  However  the
052459 - total payment for backfill concrete of $88,100, appears to conflict
052460 - with Engineer determinations that the contractor was responsible for
052461 - this backfill as a result of over excavation (see Section 02200 para
052462 - 3.5 A Item #1, and C).
052463 -
052464 - The contractor should show what work was backfilled under these
052465 - headings that warrants the payment being sought.  The amount at this
052466 - point appears most likely to constitute a settlement of Sletten's
052467 - Rock claim.
052468 -
052469 -
0525 -
0526 -
0527 - Punch list Determinations
0528 -
052801 - Norm noted the pending punch list determinations (approximately 13)
052802 - required by the Engineer (see ref DCP 3, and SDS 3, see attached line
052803 - 1201).  Until the determinations are issued it is unclear whether
052804 - additional claims will result.  The current settlement language would
052805 - appear to permit such claims as matters arising after 890317  since
052806 - the basis will depend upon Engineer determinations not yet issued.
052807 -
052808 - One solution is to attach the Engineer's determinations to the
052809 - agreement, or to refer to it in the settlement.  Alternatively, if
052810 - the Engineer can determine prior to signing the agreement that the
052811 - impact will be insubstantial with respect to cost, then it may be
052812 - appropriate to simply accept the risk of claims relative to the
052813 - benefit of rest of the agreement.
052814 -
052815 -
0529 -
0530 -
0531 - Norm feels that Sletten may make an acceleration claim on cofferdam
0532 - removal.  I indicated such claim would be no more valid than the pri-
0533 - mary cofferdam claim.
0534 -
0535 - Norm advised that Sletten indicated during the settlement meeting on
0536 - 890317, that they would complete removal of the upstream cofferdam by
0537 - today, 890322. At 1800 today, they have removed about 25% of the
0538 - cofferdam.
0539 -
0540 -
0541 -
0542 - Further comments
0543 - to Settlement draft
0544 - -------------------
-
0546 - Para 1
0547 -
054701 - Omit last sentence because the point appears to be adequately made in
054702 - the preceeding sentence.
054703 -
054704 -
0548 -
0549 - Para 2
0550 -
055001 - The last sentence is generally okay.  I believe the language prior to
055002 - the last sentence should be struck.  By setting out some kinds of
055003 - claim and dispute issues, it leaves open whether other matters not so
055004 - described could be claimed, and that appears to conflict with DNRC's
055005 - intent.
055006 -
055007 -
0551 -
0552 -