Aldridge Electric v. Illinois Department of Transportation

OPINION

Sprague, C.J. [*221]

Claimant, Aldridge Electric filed this Complaint against Respondent, Illinois Department of Transportation on March 5, 2003, alleging two counts of breach of contract related to Electrical Maintenance Contract 60608. In Count I, Claimant seeks $1,419,210 in damages, alleging that Respondent's negligent estimate in the bidding documents constituted a misrepresentation it relied on when making its bid. In Count II, Claimant seeks $559,363 in damages and alleges that Respondent breached its implied duty not to hinder performance when it unreasonably hindered and delayed in releasing authorization for performance of certain nonroutine work items under the contract. A three day trial was heard before a Commissioner beginning on February 7, 2011.

FACTUAL BACKGROUND

On August 18, 1998 the Illinois Department of Transportation (IDOT) made available the bidding documents for the District 1 Electrical Maintenance Contract 60608 (EMC 60608).

Work under EMC 60608 was to begin at 12 a.m. on January 1, 1999 and end on December 31, 1999. IDOT had the option to renew it for another year, which in this case it did. EMC 60608 covered several counties and required that the contractor maintain the following IDOT electrical systems: lighting, pump stations, traffic signals, the surveillance system, weigh stations, special systems (including the reversible lane controls) and miscellaneous systems, such as ice beacons, navigational lighting systems, and camera systems.

EMC 60608 was subsequently awarded to Aldridge with its bid of $15,392,513.87. This bid was $120,000 less than that of Meade Electric, the only other bidder on this EMC.

According to Michael Calihan, Aldridge Project Manager for EMC 60608, and current Aldridge Director of Training and Employment, Aldridge had been bidding on IDOT's EMC since 1985, and it was awarded the EMC in '86, '91, '92, '93, and '94. Calihan stated that during the '85-'01 [*222] period, with the exception of maybe one year, Meade Electric was the only other company that bid on the District 1 EMC. Michael Knutson, currently Vice President of Infrastructure at Meade Electric testified that in the last 60 years Meade had been awarded the District 1 EMC about 53 times. Knutson, a Meade employee for thirty-two years, was a Contract Manager for Meade in 1999 and had held that position since 1995.

EMC 60608 was broken down into routine and non-routine maintenance of the previously mentioned electrical systems. Non-routine work was the less significant portion of EMC 60608. Before non-routine work could be performed, IDOT would have to authorize it.

IDOT would release its authorization letters on the EMC MS database, which the contractors were required to check every day for IDOT authorization postings. Martin Anderson, IDOT Bureau Chief of Electrical Operations since 1990 (now retired), stated that the decisions regarding when to authorize the non-routine work were, among other things, based on budgetary considerations and required field reports submitted by the contractor.

Once the non-routine work was authorized, Aldridge was then required to submit its plans for completing the work to IDOT for approval. This was a back and forth process between the contractor and IDOT and could take several months. Although Aldridge was not allowed to start performing the non-routine work until IDOT approved the plans, it was allowed to purchase the material and equipment necessary for the project.

Calihan indicated that the routine maintenance portion of the EMC was really the meat of the contract and required many fixed costs such as workshop facilities, warehouses, manpower required to administer the contract, communications equipment, a 24 hour dispatch center, and specialized fleet of maintenance vehicles. Calihan stated that routine maintenance of the five different types of traffic signals (T1-T5) constituted the bulk of the EMC contract. It [*223] accounted for 65% of the total bid price for the contract, with the T1 signals constituting about 60% of the total bid price, and signals T2-T5 making up the other 5%.

Calihan described that in a typical T1 traffic signal location, at the intersection of two or more roads, there would be a control cabinet with electronic equipment in it; mast arm mounted signals that go over the road; post mounted signals that sit on the side of the road; various types of detectors in the pavement, or external to the pavement, to count the cars; lighting; and signs, among other things.

Calihan stated that prior to 1999, IDOT paid the contractor for T1 signal maintenance on a unit-price basis, and that in all EMC's prior to 1999 each of these various components of a T1 location was designated as a different unit for which the contractor had to submit a unit bid price. For example, there would be one unit bid price for control cabinets, another unit bid price for mast arm mounted signals, and so on and so forth. For each of these different T1 location components/units, the contractor was paid at the end of the month for the total amount of units it maintained. This was known as a "pieces and parts" contract. With EMC 60608, however, IDOT switched over to a new payment scheme and designated an entire T1 location as a single unit. Thus, under EMC 60608, the contractor was to be paid based on the total number of T1 locations it maintained instead of the various components at each of those locations.

Calihan stated that when Aldridge first got the bidding documents in August 1998, the listing in Volume 3 stated that there were 1,965 T1 locations, and section 15.19 indicated that this was a good estimate. Later, on September 4, 1998, IDOT provided an addendum to the bid documents indicating that there were 2,183 estimated T1 locations. Aldridge used this 2,183 estimate in calculating the bid price for traffic signal locations and made a bid of $354.29/T1 location. Both, former IDOT Bureau Chief Martin Anderson and Doris Leonard, an IDOT [*224] Contract technician for 18 years, agreed that 2,183 was the number Aldridge should have used in calculating its bid.

Various portions of the contract (to be discussed in detail below) stated that 2,183 was an estimate, subject to variation for reasons such as construction, maintenance transfers, new installations, and maintenance agreement revisions and removals and that Claimant would only receive compensation for the actual number of locations it maintained in a given month.

Calihan testified that Aldridge did not attempt to verify this estimate by physically counting T1 signal locations because they only had a month to prepare the bid, and that was not enough time. Further, Calihan indicated that, based on Aldridge's prior dealings with IDOT, there would have been no need to doubt its estimate and try verifying it. Knutson from Meade Electric testified that Meade - who had the EMC for 53 out of the last 60 years - never sent anyone out to verify the traffic signal estimates specified in the bidding documents.

Knutson concurred that, historically, IDOT's numbers were accurate and that he never had any reason to believe otherwise. When bidding on EMC 60608, Meade Electric never verified the EMC Maintenance System database (EMC MS) to see if the 2,183 estimate compared with numbers in the database, even though Meade had access to the EMC MS since it was still working on the EMC prior to 60608. Knutson stated that although there was going to be variation between the 2,183 estimate and how many signals would actually be on maintenance, he never doubted that an IDOT location was identified correctly. He took the 2,183 estimate to mean that if all the T1 locations were on maintenance, there would be 2,183 locations.

Calihan noted that in Aldridge's previous dealings with IDOT, the actual units were usually 2 to 3 percent more than the estimate supplied in the bidding documents because of [*225] growth toward the end of the contract. Conversely, Knutson stated that the actual quantities Meade got paid for were usually 10% less than the estimated quantities in the bidding documents. However, based on Claimant's Routine Maintenance Payments Analysis Chart, introduced at trial as Claimant's Tr. Exh. 12, it is apparent that in the four years (95-98) prior to EMC 60608, when Meade had the EMC, the actual units Meade was paid for were greater than the estimates in the bidding documents.

When the contract began on January 1, 1999, Aldridge was responsible for completing, by February 1, a form IDOT District One inventory for each traffic signal location it maintained.

Aldridge was responsible for inputting that data into the IDOT Electrical Maintenance Contract Management System (EMC MS) database by March 1. Despite this, Calihan stated that Aldridge was not responsible for counting the locations it was to get paid for. He explained, that in the past, IDOT would always provide them with a "base number" (which was very close to the bidding estimate) and then as signals went on and off throughout the contract, adjustments would be made to that base number.

With respect to the T1 locations, Calihan stated that Aldridge was paid based on the bid amount (2,183) up until March. He noted that soon after the contract started in January, David Ziesemer, then head of IDOT Bureau of Traffic, stated that he wanted to investigate whether 2,183 locations was accurate. Calihan offered the services of his Dispatch Supervisor, James Jennings, and three months later, IDOT discovered errors in the database. Jennings, now a Facilities Manager at Aldridge, stated that he spent several days a week during the three month period in Ziesemer's office going over maps of the intersections, IDOT records and files, and the EMC MS database. In April IDOT paid Aldridge based on a new base of 2,066 locations and [*226] retroactively applied that base number to reduce the payments that Aldridge received from January through March.

By May 1999, IDOT realized there were some more errors in the database and changed the base to 2,017 locations. Starting June 1999, IDOT started paying Aldridge $66,463/month less based on the new figure of 2,017 T1 traffic signal locations. During the course of the contract, IDOT also recouped the $274,913 it overpaid Aldridge for the months of January through May.

Even though Aldridge was getting paid less because there were less T1 traffic signal locations, Aldridge was still obligated to continue with the fixed cost requirements under the contract. The only provision that afforded Aldridge any relief with respect to fixed costs was the one allowing for reduction of patrolmen. Aldridge submitted a request for three less patrolmen in April, and eventually, in September 1999 IDOT allowed Aldridge to have two less traffic signal patrolmen, thereby reducing Aldridge's fixed cost obligations.

With respect to the non-routine portion of this contract, IDOT did not authorize almost half the non-routine work for 1999 until the last four months of that year. Consequently, about a third of the non-routine work authorized in 1999 carried over to 2000. According to Claimant, this backlog, along with IDOT releasing 26% of the non-routine work for 2000 in the last three months of that year, resulted in a substantial carryover of non-routine work into 2001 that Claimant had to finish after the contract term was over in 2000.

In Count I of this Complaint, Claimant alleges that IDOT is liable for damages stemming from its negligent estimate regarding T1 locations in the routine maintenance portion of this contract because had Claimant known there would be 166 less T1 locations, it would have bid higher than $354.29/unit. In Count II, Claimant asserts Respondent is liable for damages due to [*227] its unreasonable delays in authorizing non-routine work. Because of these delays, a significant amount of work spilled over into 2001, and Claimant incurred extra labor related costs to perform this work after the two-year contract period.

Respondent asserts that it is not liable for the variance between the actual T1 locations Claimant maintained and the 2,183 estimate provided in the bidding documents. It argues that the specifications in the bidding documents and the certifications that Claimant was required to make in its bid proposal all unambiguously state that estimates provided in the bidding documents were not certain and were subject to change, and that Claimant would only get paid for the actual number of locations serviced. Respondent further asserts that Claimant knew that the actual number of locations was lower than in the estimate because of certain documents made available to Claimant before it was awarded the contract, and after it was awarded the contract but before the Contract term started.

COUNT I

Analysis

In Count I of its Complaint Claimant posits four different theories of recovery, all of which essentially state that IDOT is liable for a breach of contract because the negligent preparation of its 2,183 T1 signal estimate constituted a material misrepresentation that Claimant relied on to its financial detriment when calculating the unit bid price for T1 locations in EMC 60608.

The government impliedly warrants the accuracy of matters set forth in contract documents. D.F.K. Enterprises, Inc. v. U.S., 45 Fed.Cl. 280, 285 (1999). Thus, the government is liable to contractors for breach of contract where the State-prepared specifications contain material misrepresentations on which the contractor relied. See Talsma Builders, Inc. v. State [*228] (1976), 31 Ill.Ct.Cl. 143, 145-46. For a contractor to prevail in such an action he must establish:

1. the State's plans and specifications contained a material misrepresentation; 2. the contractor relied on that misrepresentation; and 3. the contractor's reliance on said misrepresentation caused him financial harm. See Id.

In a breach of contract context a misrepresentation occurs when the government misleads a contractor by a negligently untrue representation of fact or fails to disclose information it has a duty to disclose. Meyers Companies, Inc. v. U.S., 41 Fed.Cl. 303, 311 (1998). A misrepresentation is "material" if the plaintiff would have acted differently had he been aware of it, or if it concerned the type of information upon which he would be expected to rely when making his decision to act. Miller v. William Chevrolet/GEO, Inc., 326 Ill. App. 3d 642, 650, 762 N.E.2d 1, 8 (1st Dist., 2001).

Thus, our first determination is whether IDOT's 2,183 estimate constituted a misrepresentation.

1. Material Misrepresentation

In the case at bar, Claimant asserts that it was misled by Respondent's negligently prepared, untrue "good estimate" of 2,183 T1 traffic locations. Further, Claimant notes that T1 traffic signals are a significant portion of the routine maintenance component of this contract, noting that in the four years prior when Meade Electric had the District 1 EMC, it was paid an average of $8.2 million per year for traffic signal maintenance versus less than an average of $1.8 million per year for the other routine pay items.

Although estimates are not warranties or guarantees, the government is under a duty to fashion material estimates in government prepared specifications with reasonable care. See Celeron Gathering Corp. v. U.S., 34 Fed.Cl. 745, 752 (1996). Reasonable care does not require [*229] the government to be clairvoyant, but the government is obliged to base its estimate on all relevant information that is reasonably available to it. Hi-Shear Technology Corp. v. U.S., 53 Fed.Cl. 420, 430 (2002). Since the government is in the best position to acquire information about its internal operations and needs, its duty to provide a reasonable estimate requires more when additional information is available upon reasonable investigation. Educators Associates, Inc. v. U.S., 41 Fed.Cl. 811, 816-17 (1998).

Martin Anderson stated that Dave Ziesemer, head of the Bureau of Traffic, came up with the original estimate of 1,965 T1 locations but did not know how he came up with that number.

Anderson further testified that the estimate was changed in the September 4 addendum because on September 3, Ziesemer sent a speed memo indicating that he wanted to change the 1,965 number to 2,183. Anderson did not know why Ziesemer wanted to change the number, but stated that he recalled talk about changing the number to reflect growth projections. Anderson did not know how growth was calculated into that number. Leonard's testimony further indicated that no one verified whether the old 1,965 estimate was accurate before changing it to 2,183.

According to Calihan, Aldridge did not think that this new estimate was made to account for growth in the system over the life of the contract because 218 additional locations in the span of two years was more growth than Aldridge had ever seen in the years that it had this EMC. Instead, Aldridge assumed that the new estimate was a correction and reflected the most accurate estimate available. Meade's Knutson stated that he had originally thought IDOT had accounted for growth in the new estimate, but after looking at the various charts and documents at trial, he no longer thought so.

[*230] When IDOT finally did embark on ascertaining the actual number of T1 locations, it did so after the contract term started, and it took about three months. Jennings and Ziesemer, along with IDOT's employee Obed Ortiz, conducted the audit by comparing the EMC MS database with the documents that were a part of EMC 60608, and IDOT's files, notes, and maps with the various intersections noted on them. IDOT'S audit determined that there were 2,066 T1 locations, and IDOT started paying Aldridge based on this newly determined number of locations and also retroactively reduced its prior payments to Aldridge based on this number.

The database errors were mainly due to duplication of locations: specifically, if the intersection contained roads that were referred to by more than one name, the intersection showed up on the EMC MS database as multiple locations because it was entered into the EMC MS database under each of those different road names. A few months after the audit, IDOT discovered even more errors in the EMC MS database and this time concluded there were actually 2,017 T1 locations - 166 less T1 locations than the 2,183 estimate that Claimant was told to use in the bidding documents.

Respondent does not have the burden of establishing the reasonableness of its procedure in obtaining its estimate until Claimant has first met its burden of persuasion. See Crown Laundry and Dry Cleaners, Inc. v. U.S., 29 Fed.Cl. 506, 520 (1993). But here, Claimant was merely asking what the procedure for obtaining the estimate was, and no one testifying for the Respondent even knew how the initial 1,965 T1 estimate was obtained by Ziesemer, or how and why the new, subsequent 2,183 T1 estimate was obtained by him. Given that EMC 60608 was the first time that IDOT was paying contractors based on T1 locations instead of parts, it is hard to understand why the Bureau administering the contract would not be more involved in ensuring the accuracy of the estimate -especially since routine maintenance of T1 signals in the [*231] past accounted for a significant portion of the payments that IDOT made to the contractor.

Further, when IDOT/Ziesemer did try verifying the actual number of locations, they used IDOT's maps and files, and records in the EMC MS database - the same information that IDOT would have had access to before the contract was entered into.

Based on all the above, we find IDOT was negligent in providing its estimate regarding T1 locations to Claimant because it failed to reasonably verify and produce its estimates using information that was readily available to it at the time it made the estimate. Thus, we find that IDOT's estimate of 2,183 T1 locations was a misrepresentation because IDOT misled Aldridge by requiring it to use in its bid calculations the incorrect 2,183 estimate it negligently provided.

We now turn to whether this misrepresentation was material. Aldridge explains that routine T1 traffic signal maintenance was the largest portion of EMC 60608. Pursuant to Article 5.3.1., there were lots of fixed costs associated with the routine maintenance portion of the contract that would have remained basically the same whether there were 2,183 T1 locations or 2,017 T1. Thus, had Respondent not misrepresented there were 2,183 T1 locations, and instead provided an accurate estimate of 2,017 locations, Aldridge would have given a higher bid than $349.29/unit. Had Aldridge known that there were closer to 2,017 T1 locations, it would never have entered into a contract where it received $354.29/unit. Thus, we find that IDOT's negligent estimate of 2,183 T1 locations was a material misrepresentation.

Regardless, Respondent points to the following provisions to argue that it is not liable for any damages arising from variation between actual quantities and the estimates in the bidding documents:

15:19 of the bidding specifications states:

Volume 3 of this contract contains a July 1998 listing of the State of Illinois

maintained signal locations in District 1 including a listing of the type and [*232]

number of signal appurtenances (equipment at each). The number of locations is

constantly changing due to construction, maintenance transfers, new installations,

maintenance agreement revisions and removals. The number and type of

equipment is listed to provide the Contract with a good estimate of the inventory,

but the listing shall be considered to be only an estimate and the Department

should not be held accountable for any errors in this listing.

Article 5.4.3 of EMC 60608 states:

Quantities included for bidding are only estimates and actual quantities may vary.

The pace of construction activities within the District as well as a number of other

unpredictable factors will cause variances from these indicated quantities, both

for routine maintenance pay items as well as non-routine pay items. The

Contractor's unit prices are expected to be realistic and no additional

compensation will be allowed to due to a variance in quantities;...The Contractor

is cautioned against unbalanced bidding and is directed to Article 102.08(c) of the

Standard Specifications.

Respondent argues that these provisions clearly establish that when bidders were to make bids based on an estimate of 2,183 locations, they were to take into consideration that this number would vary from the actual amount of locations they would service, and more importantly bidders would not receive further compensation for the variances between the estimated 2,183 locations and the actual locations serviced.

Irrespective of IDOT's disclaimers however, even where a contract disclaims all warranties or guarantees with respect to an estimate, the government is under a duty to fashion material estimates with reasonable care. Celeron Gathering Corp. v. U.S. at 752 (1996).

Disclaimers of estimate afford a flexibility sufficient to accommodate actual deviations from the estimate, but the latitude that it affords may not properly be used to excuse the estimator from using relevant information that is reasonably available to him. See Chemical Technology, Inc. v.

U. S., 227 Ct.Cl. 120, 645 F.2d 934, 948 (1981). IDOT's disclaimers cannot shield it from the liability it incurred by breaching its duty to fashion estimates with reasonable care when it negligently misrepresented 2,183 as a good estimate of T1 locations.

[*233] In addition to these provisions in the specifications, Respondent also points to certain certifications that bidders, once they were actually ready to submit a bid, were to file along with their bid proposals. Anderson (the IDOT Bureau Chief of Electrical Operations during EMC 60608) stated at trial that these paragraphs emphasize that the schedule of prices to which the contractor bids are estimates and the contractor is not guaranteed to be paid those numbers; the contractor will only be paid for actual quantities; and the contractor declares that he understands that to be the case and that he waives rights to claim anything that he misunderstood what these requirements were, and that he has visited the location, is familiar with the surroundings, and the conditions for the contract.

However, again, the provisions of a contract directing contractors to visit the site and inform themselves of the actual conditions will not relieve the government from liability due to defects in the plans and specifications. Arcole Const. Co. v. State (1941), 11 Ill.Ct.Cl. 423, 434- 35. Where the defect is a misrepresentation of a material fact, like in the case at bar, independent investigation of T1 locations is beyond the scope of the language in these certifications because the government provided a positive representation, a self-proclaimed "good estimate", of 2,183 T1 locations that Claimant had a right to rely on without an investigation to prove its falsity. See id.

Further, even when IDOT finally attempted to determine the actual number of T1 locations in January-March/April, it did not go out into the field and try physically counting actual locations; it compared its records, files, intersection maps, and EMC MS. Thus, it is [*234] doubtful that an actual site location count would have been helpful - especially since Calihan would not know how the intersections were classified in the EMC MS database.5

Having found that IDOT's estimate of 2,183 T1 locations was a material misrepresentation, we now turn to whether Claimant relied on the material misrepresentation.

2. Contractor's reliance on the misrepresentation

Based on the testimonies of Knutson and Calihan, it is apparent that neither Aldridge nor Meade felt the need to verify the 2,138 estimate because they had never needed to verify any of IDOT's estimates in the past. They trusted IDOT because it had always provided good estimates, and had no reason to doubt that the 2,183 estimate would be accurate - especially since IDOT provided the 2,183 estimate as an update on the previous 1,965 "good estimate." Claimant then relied on this 2,183 estimate/material misrepresentation to calculate its unit bid price for T1 (or traffic signal) locations.

Nonetheless, Respondent argues that even if its estimate was negligent, Aldridge should have known that it was wrong after reviewing the September 8, 1998 Addendum, "Sample Routine Maintenance Quantities." The addendum listed the various quantities of parts or components that IDOT paid Meade for maintaining during January 1998 to June 1998. Since Meade's 1998 EMC was a "pieces and parts" contract, T1 traffic signal locations were not listed.

However, Knutson stated that there was a direct correlation between the number of E5 and E15 controllers that Meade was paid for and the number of T1 locations, because there was usually only one controller per intersection. Calihan, however stated that the relationship was not that simple because sometimes if intersections were close enough to each other, one controller would service multiple intersections.

Calihan testified, for example, that sometimes one controller controlled several intersections that were next to one another - he stated that he did not know whether that would be considered 1 T1 location even though each intersection had its own traffic lights.

[*235] At trial, Knutson was asked to add up the E5 and E15 totals in the September 8 Addendum, and he came up with a total of about 1,930. This was 87 locations less than the 2,017 estimate IDOT eventually determined. Knutson seems to suggest that this difference is attributable to the signals that were "off” during that period. But it is uncertain how much of these variances are due to "off” signals or, as Calihan suggested, multiple intersections being controlled by the same controller.

We do not find that the number of E5 and E15 controllers would have apprised Aldridge that the 2,183 estimate was wrong - especially since Aldridge had just received an addendum four days before providing a new 2,138 estimate of T1 signals to bid, and Aldridge justifiably understood that to be a corrected, more accurate revision of the prior estimate of 1,965. Further, Knutson was uncertain whether Meade itself had even counted the E5 and E15 totals when bidding EMC 60608, and there is no evidence that IDOT ever added or considered the total amount of controllers when making its T1 signal estimate.

Respondent also argues that, even aside from the September 8 Addendum, Aldridge still knew, or should have known, that its estimate was wrong because of the patrol routes Aldridge was required to provide at the November 24, 1998 pre-construction meeting. Patrol routes indicated the different traffic signal intersections that were to be maintained among the signal patrolmen. Calihan testified that since Aldridge did not have any patrolmen at that time, and Meade was then performing work under the previous EMC, Aldridge asked for, and was given, Meade's patrol route sheets. Calihan elaborated that there was a good chance the routes would stay the same anyway, because traffic signal work was so specialized that both companies would usually have to hire the same patrolmen for the District 1 EMC. IDOT introduced a chart made [*236] by Leonard, in which Leonard had calculated that Meade's patrol route indicated that there were 2,047 T1 signal locations.

Calihan testified that Aldridge never counted the number of traffic locations on Meade's patrol route sheets because the documents were lengthy - over 100 pages long - and contained more than just lists of T1 traffic signal locations. Further, Calihan stated that the patrol route sheets were not submitted for the purpose of verifying traffic signal locations, but to match up signal patrolmen with routes that were close to where they lived to minimize travel time.

Knutson also testified that the patrol route sheets were not intended to be used for determining or counting traffic signal locations and that Meade never used them for that purpose. Further, both Leonard and Anderson stated that no one from IDOT counted traffic signal locations on Meade's patrol route sheets that Aldridge submitted at the pre-construction meeting. IDOT did not count the locations on the patrol route sheets until after Aldridge tried obtaining relief from IDOT under its available administrative remedies.

Notably, the patrol route sheets were presented on November 24, 1998 - about two months after Aldridge had already made its bid, and about a month after it had been awarded the contract. Regardless of whether Aldridge would have been able to somehow renegotiate its unit bid price after being awarded the contract or that maybe Aldridge had these documents when it made the bid, we find that Aldridge was justified in disregarding any T1 location information in the patrol route sheets. The patrol route sheets were used as a tool to logistically allocate personnel for traffic signal maintenance, and, in addition to Aldridge, neither Meade nor IDOT used them for the purpose of counting or determining T1 locations.

3. Economic Damages due to reliance [*237]

Here Aldridge relied on Respondent's negligent estimate when Aldridge calculated its $354.29/unit bid because it based its estimated revenue on maintenance of 2,183 T1 signals per month, or 26,196 T1 signal location maintenances a year. Had IDOT provided its lower, correct estimate of 2,017 that it established once the contract had already started, Aldridge would have expected revenue based on 24,204 T1 maintenances a year and bid a higher unit price for T1 signals since the fixed costs associated with routine T1 signal maintenance would not have been correspondingly lower. Thus, we find that Aldridge has proved that IDOT's estimate of 2,183 T1 signals constituted a material misrepresentation on which it relied, and due to its reliance Aldridge suffered economic damages. We now turn to determining the damages Aldridge suffered.

Damages

"The general rule in common law breach of contract cases is to award damages sufficient to place the injured party in as good a position as he or she would have been had the breaching party fully performed." San Carlos Irrigation & Drainage Dist. v. U.S., Ill F.3d 1557, 1562-63 (Fed.Cir.1997). Thus, "[a] plaintiff must show that but for the breach, the damages alleged would not have been suffered." Id. Moreover, the damages must have been foreseeable at the time the parties entered the contract, which requires that they "be the natural and proximate result of the breach." Locke v. U.S., 151 Ct.Cl. 262, 283 F.2d 521, 526 (1960).

Lost profits are a recognized measure of damages where their loss is the proximate result of the breach and the fact that there would have been a profit is definitely established, and there is some basis on which a reasonable estimate of the amount of the profit can be made. Id.

In a number of complex contract cases, however, exact computation of damages may prove to be extremely difficult. Therefore, courts have held that, "[t]he ascertainment of [*238] damages, or of an equitable adjustment, is not an exact science, and where responsibility for damage is clear, it is not essential that the amount thereof be ascertainable with absolute exactness or mathematical precision." Elec. and Missile Facilities, Inc. v. U.S., 189 Ct.Cl. 237, 416 F.2d 1345, 1358 (1969). The plaintiff can meet its burden of proving damages if it "furnishes the court with a reasonable basis for computation, even though the result is only approximate." Hi-Shear Technology Corp. v. US, 53 Fed.Cl. 420, 436-37 (2002).

Here, because the costs pertaining to the T1 signals were fixed, Aldridge's costs would have been the same whether it maintained 2,017 locations or it maintained 2,183 locations.

After accounting for its fixed costs, Aldridge took the profit margin it wanted and divided it by the number of T1 signals that Respondent told it to bid, 2,183. Had Respondent provided the correct estimate of 2,017 T1 locations, Aldridge would have divided that same profit margin by 2,017 instead of 2,183 and come up with a higher unit-price. Put another way, to maintain the profit margin it wanted when it submitted its unit-price bid for an estimated 2,183 T1 signals, Aldridge would have bid a higher-unit price. The error in the estimate caused Aldridge to essentially lose profits by causing Aldridge to provide a lower unit price.

Aldridge had decided on a profit margin that required it generate $9,280,980 in revenue a year on T1 signals. To determine its unit/bid price it would have to then divide that amount by the amount of units it expected to be paid for servicing during that year. Since IDOT's estimates for T1 signal units in the past had actually been slightly understated, Claimant expected that it would service at least the estimated 2,183 locations and based its unit bid price on the assumption that 2,183 actual units would be serviced a month. Accordingly its estimated yearly revenue for T1 signals was $9,280,980 for each of the two years it had EMC 60608.

[*239] However, because the estimate was off by 166 locations, there was a significant variation in the actual T1 signal locations that Aldridge maintained and was paid for: in 1999 Aldridge received $8,536,988 for routine T1 signal maintenance, and in 2000 it received $8,598,264. The total of the differences between what Aldridge expected and what it received for each year ($743,993 and $682,717) is $1,426,710. Aldridge argues that it is entitled to $1,149,210 in damages ($1,426,710 minus $277,500 for reduction of two patrolmen in September 1999).

Notably, Respondent offers no argument regarding how damages should be calculated. Nor does it offer any argument as to the reasonableness of how Claimant calculated its bid for T1 signals under the contract.

Given evidence that IDOT's estimates regarding T1 signal quantities in the past were greater than the estimates in the bidding documents, we find it reasonable for Claimant to calculate its unit/bid price based on an expected revenue from servicing the 2,183 T1 locations a month. Further, we are satisfied that had Claimant been provided the correct estimate, it would have applied the same rationale and submitted a higher unit/bid price that would have allowed it to recover $1,426,710 in revenue. Thus, the amount seems appropriate to put Claimant in the position it would have been had the breach not occurred.

Accordingly, the Court finds for Claimant on Count I of its Complaint and further finds that Claimant has proven damages in the amount of $1,149,210 for Count I.

COUNT II

Relevant Additional Facts

At a pre-construction meeting in December 1998, Claimant told Respondent that it was ready to start with the non-routine work and that IDOT should issue as many of the authorizations as it could as soon as the contract started. However, IDOT did not authorize [*240] about half of the $3.3 million worth of non-routine work for 1999 until the last four months of that year. Calihan testified that given the lengthy process for approving the contractor's plans once the non-routine work was authorized, IDOT's failure to issue authorizations sooner resulted in a backlog in 2000. About $1.275 million of non-routine work from 1999 carried over to 2000.

Calihan stated that in late 1999, Aldridge discussed its issues with IDOT's delay in authorizing non-routine work and that IDOT agreed to release 75% of the remaining non-routine work by March of 2000. However, by the end of March 2000 IDOT only released about 43% of the remaining work, and around October it authorized $940,000 of non-routine work that constituted 26% of the total non-routine work for that year.

Although Anderson did not recall any specific discussions about percentages of nonroutine work to be released in 2000, he stated that Aldridge had expressed its concerns that nonroutine work be authorized sooner in 2000. Anderson testified that IDOT appreciated Claimant's position and told it that it would take Claimant's position into consideration to the extent it could in determining when non-routine work was authorized. But no guarantee was made either orally or in writing that in 2000, IDOT would authorize certain percentages of non-routine work by a certain time period. There is no written contract modification regarding this matter.

Calihan stated that because of IDOT's delayed authorizations Aldrich had to perform a significant amount of non-routine work after the two year contract period was over. According to Calihan, this created additional costs for Aldridge since it had to bring in additional management and forces from outside to help finish the work, and once the work carried over past the two-year period into 2001, it became even more difficult to perform the work because the electrical workers working on EMC 60608 switched over to working for Meade when it got the EMC in 2001. He explained that the electrical work on this EMC is so specialized that the same [*241] electrical workers working would usually work on the EMC regardless of which company held the contract.

Knutson testified that non-routine work usually goes over the two year period because the non-routine authorizations toward the end of the year take a while to complete. He stated that, although sometimes the work spilling over into another year could carry Meade through a period when they needed work, the non-routine work would typically not be profitable because the work would carry over a prolonged period of time, over the span of several periodic union wage increases. Knutson characterized the non-routine portion of the contract as the riskiest, because the contractor has no control over whether it will get to perform the work on which it is bidding.

Calihan agreed that EMC 60608 did not require IDOT to authorize non-routine work within a certain period of time. However, he stated that IDOT nonetheless had an implied duty to release the work within a reasonable period of time. He also stated that under the "strict letter of the contract" IDOT could issue as many non-routine work authorizations as late in the year as it wanted. However, again, he stated that under an implied duty IDOT could not do this because it would not be fair. He further agreed that under EMC 60608, IDOT did not even have to release the authorized work at all.

Analysis

The implied duty to cooperate and the implied duty not to hinder performance of contracts (both being subspecies of the implied duty of good faith) are present in all government contracts. Precision Pine & Timber, Inc. v. U.S., 50 Fed.Cl. 35, 58 -59 (2001). The government can be liable for breach of this duty if it delays a contractor in performing work required to receive compensation under the contract. Consumers Const. Co. v. Cook County, 1 Ill. App. 3d [*242] 1087, 1094, 275 N.E.2d 696, 700 (1st Dist, 1971). However, potential loss from delay is inherent in any construction project, so if all the provisions of the agreement provide no apparent reasonable basis for the complainant to expect that the work could be done by a fixed period, then respondent is not liable for the damages alleged due to its delay. J. F. Edwards Const. Co.

v. Illinois State Toll Highway Authority, 34 Ill. App. 3d 929, 930-32, 340 N.E.2d 572, 574 (3d Dist, 1975).

To prove that respondent breached its implied duty to cooperate and not to hinder performance of contracts, a claimant must establish the following: 1. the delay was for an unreasonable length of time; 2. the delay was proximately caused by the respondent's actions; 3.

the delay resulted in some injury to the contractor; and 4. that the government was the sole proximate cause of the delay. Fru-Con Corp. v. State (1996), 50 Ill.Ct.Cl. 50, 67.

Here, it is undisputed that EMC 60608 did not require IDOT to authorize non-routine work within a certain period of time, or for that matter, require that IDOT authorize any nonroutine work at all. Nonetheless, Claimant states that IDOT unreasonably delayed its authorizations of non-routine work under the contract. Merriam Webster's Dictionary defines "delay" as: "to put off; postpone." IDOT could not put off or postpone an event for which there was no anticipated date, or even time period.

Claimant is not aided by its assertion that in late 1999, IDOT verbally agreed to release 75% of the remaining non-routine work by March 2000. No specific percentages or time tables were set forth in writing and no contract modifications were made legally binding IDOT to authorize the non-routine work in accordance with Claimant's expressed desires.

Even if IDOT's behavior regarding the non-routine-work authorizations somehow amounted to delays, Claimant still cannot recover because it fails to show how these delays were [*243] unreasonable. Claimant seems to argue that the large amount of non-routine work released in the last three months of the contract was unreasonable because in the past very little work spilled over after the contract term.

Regardless of whether EMC 60608 was the first EMC with such a large spillover after the contract term, the release of the authorizations was not unreasonable if the contract permitted IDOT to issue the authorizations when it did. See Precision Pine & Timber, Inc. v. U.S., 596 F.3d 817, 831 (Fed.Cir.2010) (stating that the implied duty of good faith and fair dealing cannot expand a party's contractual duties beyond those in the express contract or create duties inconsistent with the contract's provisions.) Calihan even conceded at trial that under the "letter of the contract" IDOT could issue as many authorizations whenever it wanted. Regardless of how much work spilled over in the past, IDOT was within its contractual rights to issue the nonroutine work authorizations when it did. For all the above-mentioned reasons we find that Claimant has failed to establish that IDOT's issuance of non-routine work authorizations constituted a delay for an unreasonable period of time.

We further find that, even aside from the issue of unreasonable delay, Respondent is not liable to Claimant for damages because EMC 60608 provided no reasonable basis for Claimant to expect that the work could be done by a fixed period of time. As stated earlier, Claimant was fully aware that under EMC 60608, IDOT could issue the authorizations at any time, and notwithstanding Claimant's assertions that IDOT agreed to release 75% of the work by March 2000, IDOT was under no obligation as to how much work it authorized during any given period of the contract. As Claimant itself notes in its post-trial brief, Knutson stated at the trial nonroutine maintenance was often not profitable and always the riskiest portion of the contract [*244] because the contractor never knew when and if the work would be authorized. Accordingly, Count II of Claimant's Complaint is hereby denied.

Therefore,

1. The Court finds in favor of Claimant for Count I of its Complaint in

the amount of $1,149,210.

2. Count II of Claimant's Complaint is hereby denied.

However, the question of entering an award remains before the Court. This Count cannot enter an award unless sufficient funds lapsed in the appropriations designated to pay for these services. As explained in Graham, O'Shea and Hyde v. State, 44 Ill.Ct.Cl. 175,177 (1992) and the cases cited therein:

In breach of contract claims, whether the claims are before us on their

merits or for approval of a settlement, it is this Court's policy to limit awards so as not to

exceed the amount of funds, appropriated and lapsed, with which payment could have

been made. To do otherwise, i.e., to award money for debt incurred beyond the sum

allotted by the General Assembly, would be tantamount to making a deficiency

appropriation. The appropriation of State funds for governmental operations is the

constitutional prerogative of the General Assembly. It is this Court's duty to uphold that

process and advise the General Assembly.

Therefore, before entering an award for Claimant or making a recommendation to the General Assembly, the Court needs additional information. It is hereby ordered that Respondent shall file, within 21 days of the filing of the Opinion, a report authored by the Illinois Department of Transportation which includes fiscal information regarding the amount of funds that lapsed in the appropriations designated to pay for the underlying services related to this case, so the Court can determine the amount that can be awarded.