February 7, 1973 Robert L. Dragoo (Exh. 39) concerning Cen-Vi-Ro's difficulty in obtaining qualified personnel at the compensation offered. Mr. Dragoo confirmed the accuracy of his statement at the hearing (Tr. 1206, 1207). Suspension of Pipe Laying Operations Cen-Vi-Ro's original construction program, dated April 13, 1964 (Exh. 77), contemplated that laying of pipe for Specifications DC-6000 would commence on August 1, 1964.13 At a meeting on October 28, 1964, attended by representatives of the Bureau, Cen-Vi-Ro and R. H. Fulton, Cen-Vi-Ro conceded that overestimation of the capabilities of the 20-foot spinner and other pipe manufacturing problems made the original schedule impossible to meet.14 Among the measures to improve pipe production discussed at the meeting was rebuilding the 20foot spinner,15 the installation of an 12 Tr. 1841. In fact, the subcontractor, R. H. Fulton, did not commence laying operations (66" pipe) until September 2, 1964 (Tr. 1841; Inspectors Daily Report, dated August 27, 1964). By September 21, 1964, the supply of 66-inch pipe had been exhausted and R. H. Fulton skipped a section of the line and commenced laying 54-inch and 60-inch pipe (Tr. 1842). 14 Letter, dated October 30, 1964, Exh. 9. These statements are attributed to Mr. S. R. "Duke" Hubbard, vice president and general manager of Cen-Vi-Ro (Tr. 1095). The Board finds that the letter accurately reflects events at the meeting (Tr. 563, 677, 1844). 15 Mr. Franklin testified that the gyro spinner was essentially out of production from September 1, 1964, to January 1, 1965, for modifications and machining of forms which were sent to Fort Worth and Los Angeles (Tr. 559). A total of 760 pipes had been produced on this spinner by November 16, 1964 additional 16-foot spinner, the procurement of additional forms and hydrostatic testing equipment,16 the addition of two key supervisory personnel and the hiring and training of additional pipe repairmen. Cen-Vi-Ro presented a revised pipe laying schedule, dated September 28, 1964 (note 14, supra), which contemplated a suspensation of pipe laying operations for the period November 3, 1964, until February 1, 1965, in order that sufficient quanti ties of acceptable pipe could be man ufactured to assure economical laying operations. Representatives of R. H. Fulton pointed out that the proposed suspension represented minimum down time and proposed that pipe laying operations be discontinued in mid-November 1964, and resume May 1, 1965 (letter dated October 30, 1964, note 14, supra). Pipe laying operations were discontinued on November 21, 1964, and resumed on May 10, 1965 (Tr. 1843). The suspension necessarily reduced Cen-Vi-Ro's revenue 17 and (Tr. 1862). While the gyro spinner had previously been used for the manufacture of 32 miles of 87-inch X 40-foot pipe for the East Bay Municipal Utility District (Oakland, California), this was not RCP pipe (Tr. 565, 566, 595). Mr. Franklin expressed the opinion that the machine was capable of producing good quality pipe under proper supervision, i.e., skilled operators (Tr. 614). 16 Mr. Franklin stated that production during this period was sometimes curtailed awaiting additional forms (Tr. 562). This testimony is confirmed by a memorandum from the resident engineer dated October 22, 1964 (Exh. S) and Inspectors Daily Reports, dated August 3, September 11, 21 and 26, and October 16, 19, and 20, 1964. 17 It appears that Cen-Vi-Ro received approximately 60% (less 10% retainage) of a pay item for pipe accepted but not laid (Franklin memoranda of March 1 and May 1, 1965, Cen-Vi-Ro Correspondence). resulted in Cen-Vi-Ro carrying a large pipe inventory for the suspension period. Under date of September 23, 1965, Cen-Vi-Ro and R. H. Fulton entered into amendments of Cen-ViRo Purchase Order No. 10 to R. H. Fulton under Specifications DC6000 and R. H. Fulton Purchase Order No. 1050 to Cen-Vi-Ro under specifications DC-6130 (Exhs. 25, 81F; see also Cen-Vi-Ro Correspondence). The amendments provided for the revision of the existing production construction schedules so as to complete the Bureau contracts on or before March 1, 1967, for the waiver by R. H. Fulton of all claims against Cen-Vi-Ro based on prior schedules and commitments, for the substitution of pretensioned pipe manufactured by Gifford-Hill-American in lieu of NCP high head pipe manufactured by Cen-Vi-Ro for Specifications DC-6130 and for a lump-sum payment of $100,000 to R. H. Fulton.18 Cen-Vi-Ro's claim for reimbursement of this sum is considered infra. Specifications DC-6130 As we have previously noted CenVi-Ro, as subcontractor to R. H. Fulton under Specifications DC6130, completed a facility (south plant) for the manufacture of RCP pipe in diameters of 42-inch and below on or about February 1, 1965 (note 10, supra). RCP pipe in diameters below 54 inch for Specifica 18 Mr. Franklin testified that the $100,000 payment was to settle a claim by R. H. Fulton of twice that sum (Tr. 381, 382). tions DC-6000, were manufactured in the south plant. As in the north plant, Cen-Vi-Ro experienced difficulties in manufacturing cages having cover and spacing of steel within permissible tolerances (Inspectors Daily Reports, dated February 1, 3, 4, 11, 18, 26, and 27, 1965, Exh. 100). Some pipes had defects such as fallouts, rocky bells, circum ferential and longitudinal cracks and broken and cracked spigots. (Inspectors Daily Reports, dated February 11, 12, 13, 19, 22, 24, 26, and 27; April 1, 2, 7, 15, 19, 23, and 29, 1965, Exh. 100.) A total of 188 RCP pipe units, sizes 42 inches and below, were rejected for all causes prior to May 15, 1965.19 Cen-Vi-Ro experienced difficulties manufacturing high head NCP pipes that would successfully pass the hydrostatic tests. 20 Some of these pipes were downgraded, i.e., they were accepted at a lower head than for which they were designed.21 Mr. Murray, Cen-Vi-Ro's production 19 Exh. 94. Mr. W. B. Murray testified that in addition to problems encountered on DC6000, the south plant had insufficient floor space in stripping and spinning areas (Tr. 918). See also the memorandum written by Mr. Murray, dated July 8, 1965 (Cen-Vi-Ro Correspondence). 20 Tr. 925, 926; Inspectors Daily Reports, dated June 3, 10, 11, 15, 21, and 25, 1965, Exh. 100. The specifications required each unit of NCP pipe to be tested and to withstand a pressure of 125% of the design head for four minutes without cracking and without leakage appearing on the exterior surface (Subparagraph 79.1.(2), Specifications DC 6130). 21 Tr. 930, 931; Murray memorandum, dated July 8, 1965, note 19, supra. Cen-Vi-Ro manufactured only 865 NCP pipe units (Exh. 93). Exhibit 81W reflects that of a total of 590 pipe units designed for heads of 150 to 250 feet, 310 were downgraded due to hydrostatic test failures at the design head. February 7, 1973 manager for the period January to July of 1965, testified that the process of making NCP pipes was new, and was more complicated and more sophisticated than the process of making RCP pipes (Tr. 924). At the time of his replacement as production manager by Mr. Herrera in July of 1965, Mr. Murray wrote a memorandum detailing the difficulties in producing NCP pipes and recommending that all NCP pipes with heads above 150 foot be subcontracted or "farmed out" (note 19, supra). Mr. Murray was of the opinion that Cen-Vi-Ro could not produce the high head NCP pipe economically and that substitute pipe could be purchased from other sources at a lower cost (Tr. 932). As we have already noted, Cen-Vi-Ro subcontracted the manufacture of a large quantity of pipe to GiffordHill-American, substituting pretensioned concrete pipe for NCP (Exhs. 25 and 81F). The May 13 Letter and The May 15, 1965, Inventory Mr. C. O. Crane, the project construction engineer for the Bureau, hereinafter "project engineer," testified that he became concerned about the large number of pipes with flaking interiors and other defects manufactured by Cen-Vi-Ro in the early months of 1965 (Tr. 1994, 1995). He stated he considered that a state of emergency was developing and that he requested Mr. Frank Rippon of the Chief Engineer's Office to visit the project and, inter alia, review pipe manufacturing problems.22 Mr. Rippon's visit to the Cen-Vi-Ro plant was followed by that of Mr. R. C. Borden, Bureau liaison engineer, during the period April 20-23, 1965. Mr. Borden testified that upon his return to Denver a determination was made to furnish guidelines to the project as to the scope of permissible repairs, such as the size of fallouts and rock pockets which could be repaired.23 Under date of May 13, 1965, the project engineer 24 addressed a letto Cen-Vi-Ro, reading as ter 25 22 Tr. 1998. Mr. Rippon made a visit to the Cen-Vi-Ro plant during the period March 1517, 1965 (Travel Report, dated September 13, 1965, Exh. 138). He concluded that pipe manufacturing problems were attributable to a lack of quality control and that a detailed investigation was required in order to determine proper corrective measures. 23 Tr. 1707. These determinations and others were furnished the project by a telegram from the Chief Engineer dated May 12, 1965. The telegram is referred to in Mr. Borden's Travel Reports, dated May 18, and June 9, 1965 (Exhs. 20 and 23), and has been furnished pursuant to the Board's call of August 18, 1971. 24 Mr. Crane, as justification for the letter, testified that while it appeared now that the quality of the pipe was improving, there was no way of telling whether the defect rate of pipes produced in the last two weeks of April had improved (Tr. 2001, 2071), as alleged by Cen-Vi-Ro (Exh. 5L, pp. 4 and 7; Production Quality Graph). We have considerable difficulty accepting this testimony since it apparently rests on the assumption that CenVi-Ro had thousands of pipes in inventory which had been neither inspected nor tested by the Bureau. As we find infra (note 59), this assumption is not in accordance with the facts. The Bureau apparently had no difficulty in concluding that a good grade of pipe was being produced after May 10, 1965 (see page 9 of Special Report, dated May 21, 1965, Exh. 83). 20 Exh. 5E; Exh. 5N, pp. 12 and 13. An identical letter was addressed to R. H. Fulton under Specifications DC-6130 (Exh. 81C). The importance of the Canadian River Project Aqueduct and the exacting performance that will be required in delivery of municipal water on a continuing and uninterrupted basis make it imperative that only first quality pipe be used in its construction. Your Plainview plant, manufacturing pipe for this Project, has continued daily since work was initiated to produce some questionable and unacceptable pipe with many sections leaking so badly they have failed to pass the hydrostatic tests. The specifications, by reference to the concrete manual, state that repairs to concrete pipe shall not be permitted when imperfections or damages are the result of continuing failure of the contractor to eliminate cause (sic) of imperfections or damages. You are expected, under your contract, to exercise quality control in the manufacturing processes and to exercise care in handling of pipe at all times to produce a quality product. Since corrective measures to eliminate causes of imperfections have not been accomplished at this date, and since pipe units which leak under hydrostatic tests continue to be produced, I find it necessary to invoke the following requirements: 1. Pipe sections with large fallouts on the interior surfaces will be rejected, and only those pipe with fallouts of approximately one square foot or less are acceptable for repair. 2. All pipe with scaling or loose and concrete that will result in poor bond between the concrete and the steel will not be permitted. 5. All pipe having transverse (circumferential) cracks that extend through wall of pipe will be rejected. The possibility of these cracks opening further due to beam action from handling and backfill loads is too great to allow use of such pipe. 6. Pipe cracked longitudinally for substantially the full length will be rejected. All pipe containing shorter longitudinal cracks must be hydrostatically tested. Pipe failing to withstand the required test pressure for 20 minutes without leakage or showing evidence of extension of cracks under pressure will be rejected. 7. Failure to observe specifications requirements in respect to saturated steam curing will be cause for rejection of all pipe in the steam curing chamber. 8. Any other defects shall be judged conformably with above. 9. All permissible repairs will be made promptly and within a few days after the pipe is manufactured. The above requirements apply to pipe that has been manufactured and/or repaired as well as newly manufactured pipe. The letter was hand-carried to Cen-Vi-Ro by Mr. Vern Grantham, assistant project engineer, on May 13, 1965.26 On May 14, 1965, an in weak interior surface material will be spection of pipes in the yard, includ rejected. 3. Experience has been that extensive repair to bells and spigots has impaired the function of joints. Pipe having imperfections or damaged areas that extend over six inches of gasket area in the bell or four inches in the spigot will be rejected. Any repairs to gasket areas shall be made against precise forms and dimensions accurately checked to assure that pipe is installed with joints within the approved tolerances. 4. Extensive repairs to rock pockets in bells and lack of consolidation of the ing pipes previously accepted, in accordance with criteria in the May 13 letter was begun (Tr. 1519; Inspectors Daily Report, dated 20 Tr. 2003. However, the criteria for repair of fallouts (only those of one square foot or less were repairable) and rocky bells (only those of 6-inches or less in gasket areas were repairable) were applied prior to the May 13 letter (Inspectors Daily Report, dated April 30, 1965). See also Tentative Instructions to Concrete Inspectors, dated May 7, 1965, furnished in response to the Board's call of August 18, 1971. February 7, 1973 May 13, 1965). This inspection will be referred to as the "May 15 inventory." At this time there were between 12,000 and 13,000 pipes in the yard for the two contracts (Tr. 846, 1515, 1516, 1714). The inventory of pipes under DC-6000 was completed prior to May 21, 1965 (page 3 of Special Report, note 24, supra). However, see tabulation entitled "Change of Inventory Status as of 5-16-65" attached to memorandum, dated May 27, 1965.27 During this inventory, 2,877 pipes (54- through 72-inch) were rejected under DC-6000, and 337 pipes (18- through 27-inch) were rejected under DC-6130.28 On May 24, 1965, the resident engineer issued a memorandum (Exh. 5N, p. 17) which stated: In accordance with requirements set forth in letter dated May 13, 1965, from Project Construction Engineer to CenVi-Ro of Texas, Inc., and R. H. Fulton, Contractor, the following will govern the acceptance of pipe after hydrostatic tests: 1. Pipe cracked longitudinally for substantially less than the pipe length " must 29 27 Exh. 22. The tabulation bears the initials "LWL," presumably Leigh W. Lloyd of CenVi-Ro, and the date "May 25, 1965." 28 Tabulation, dated April 18, 1967, Exh. 60, and undated tabulation, Exh. 94. The total of 2,877 pipes rejected under DC-6000 does not include 404 pipes marked for special hydro on that date (tabulation dated May 25, 1965, note 27, supra). The tabulation dated April 18, 1967, states "Supersedes previous tabulations." 29 "Substantially less than the pipe length" does not appear to have been clearly defined until the chief plant inspector's memorandum of March 31, 1966 (Exh. 5N, pp. 32, 33) which appears to be limited to reclaims and which after referring to Cen-Vi-Ro's contention that pipes which dripped on the test stand would heal within seven days and to an amendment to Subparagraph 67.j. (2) effected by the Chief be hydrostatic (sic) tested before any repairs are made to the crack. Pipe failing to withstand the required test pressure for 20 minutes without leakage or showing evidence of extension of cracks will be rejected. Pipe passing the required test pressure will be accepted without additional repairs. 2. Short longitudinal cracks which were repaired prior to May 13, 1965, and not hydrostatic (sic) tested, may be hydrostatic tested without additional repair work. The pipe will be rejected if it fails to pass the required test. 3. Circumferential cracks which appear only on outside of pipe should be hydrostatic (sic) tested before repairs, to determine if crack extends through the pipe wall. The pipe will be rejected if it fails to pass the required test. Pipe that pass the test without leakage or extension of the crack may be accepted without repairs. 4. Grout leakage at seams may be repaired before tests are made if cracks are not evident after all defective concrete is removed. The repaired pipe will be rejected if it fails to pass the required test. 5. Drummy areas of poor consolidation similar to those appearing at gyro ring areas may be repaired prior to testing only if the drummy concrete can be removed by shallow excavation. All other pipe showing evidence of poor consolidation of concrete will be tested without re Engineer's letter of January 20, 1965, provides in pertinent part as follows: "The following defects are a basis for rejection regardless of whether it (sic) leaks or not: "1. Pipe with longitudinal cracks over 2 the length of pipe. "2. Pipe with more than 1 crack if cracks are over 4' in length. "3. Shorter longit. cracks which extend under pressure. "4. Completely unconsolidated gyro areas. "5. Cir. cracks in spigot or barrel which appear on inside and outside of pipe wall. "6. Pipe with more than 2 core holes repaired. Pipe with 2 repaired core holes are acceptable if they pass hydro provided cores are not within 6 feet of each other." |