MITA End of Lockout: Labor Dispute Continues – Guidance Bulletin #2

Although the lockout of the Operating Engineers, Local 324 (OE 324) ended on September 27, 2018, when the industry agreed to go back to work, project schedules are still experiencing delays due to the ongoing labor dispute with OE 324. MITA continues to communicate information about the disruptive tactics and actions of OE 324 to the Governor’s office and MDOT leadership, so that they are fully informed of and understand the challenges the MITA contractors are dealing with in maintaining our commitment to get back to work and demonstrate our best efforts to get projects completed or to a condition where they can be safely buttoned-up for the coming winter season.


This bulletin will give you guidance on how you should proceed on MDOT let projects as it relates to a Request for Time Extension associated with a delay due to the OE 324 labor dispute.


MDOT leadership has acknowledged that their prior responses to contractors’ notices of intent to file claim for a time extension and additional compensation1 were unusual and premature as the Standard Specifications for Construction (Std. Specs.) do not require a written response to a simple “notice of intent” letter. MDOT explained that since they were responding to a few contractors who actually submitted a Request for Time Extension due to the labor dispute, they decided they would communicate the department’s position on extensions of time related to the labor dispute with all contractors, including those who had simply submitted a notice of intent letter.


Based on information that MITA has provided to the Governor’s office and MDOT leadership, MDOT leadership acknowledges that project schedule delays due to the OE 324 labor dispute are ongoing.


The following are the Std. Specs. contractual next steps (and anticipated MDOT responses) as we see them related to your submittal of a Request for Time Extension for project schedule delays due to the OE 324 labor dispute:


Step 1: Filing Your Request For Time Extension


The length of the delay to a project schedule must be evaluated and decided by the contractor on an individual project basis.


As the contractor, you must decide when the delay in your project schedule due to the labor dispute has ended.


When you have determined the end of the delay, per subsection 108.09.A of the Std. Specs., you have 14 calendar days after the last day of the delay to submit your request for time extension.


Be attentive to this 14 calendar day submittal timeframe.


Step 2: Engineer’s Response To Request For Time Extension


Per subsection 108.09.A of the Std. Specs., the Engineer has 14 calendar days from receipt of your request for time extension to provide you a written decision.


Based on conversations MITA has had with MDOT leadership, and responses we have already seen from submitted request for time extensions, we fully anticipate the Engineer’s response will include language detailing the following key points:


·      Acknowledgement that your request has been reviewed


·      A statement that based on current information the request/XX days is approved


·      A statement that liquidated damages (LDs) will be assessed for the extension of time


·      A statement that the assessment of LDs is subject to re-evaluation at final acceptance of the project


·      A statement that they will consider all labor dispute claims and associated extension of time request claims to be timely filed if they are filed per subsection 104.10.D.2 of the Std. Specs. (i.e., within 60 days of final acceptance)


Step 3:  Contractor’s Notice Of Intent To File Claim For Assessment Of LDs


Per subsection 108.09.A of the Std. Specs., the Contractor has 7 calendar days from receipt of the Engineers written decision to notify the Engineer in writing of the Contractor’s intent to file a claim related to any part of the Engineer’s decision on the request for extension of time.


Therefore, within 7 calendar days of your receipt of the Engineer’s decision on your request for time extension, you must submit your Notice of Intent to File Claim for the assessment of LDs on your approved extension of time.


Be attentive to this 7 calendar day notice submittal timeframe.


Click here for a sample Notice of Intent to File Claim letter.


Step 4:  Filing of a Claim for Assessment of LDs


Within 60 calendar days (or an agreed to extension of this timeframe) of the final acceptance of the project, you must submit your claim package disputing the Engineers assessment of LDs on your approved extension of time.


MITA believes that at some point in time, before any LDs are actually charged on any project delayed by the OE 324 labor dispute, MDOT will acknowledge that the industry’s defensive lockout was in fact a “labor dispute” within the context of subsection 108.08.  We anticipate MDOT could then reverse their prior determination and thus conclude that delays due to the OE 324 labor dispute are “excusable delays” such that time extension can be granted without the assessment of LDs.


MITA continues to have conversations with MDOT leadership and legal counsel about the contract situations resulting from the OE 324 lockout, the ongoing labor dispute and the guidance given herein and will immediately notify all members of any changes and/or additions to our guidance.


1MDOT’s denial of all notices of intent to claim additional compensation was not unexpected as we have acknowledged in prior bulletins that the MDOT Standard Specifications for Construction do not include “labor disputes” as a “compensable delay” in subsection 108.09.B, and that you should not anticipate you will receive additional compensation for costs incurred or related to a labor dispute delay. A contractor’s evaluation of valid claims for additional compensation can be made subsequent to a return to work and in accordance with subsection 104.10 of the Standard Specifications for Construction.


If you have any questions, please contact Mike Nystrom, Executive Vice President, at 517-896-1493 or Glenn Bukoski, Vice President of Engineering Services, at 517-256-0741.