Civil Works Contracting www.civilworkscontracting.

com
3329-C Wrightsville Ave.
Wilmington, NC 28403
Phone: (910) 859-8574
Fax: (910) 769-2845

SBA Certified HUBZone Firm

___________________________________________________________________________________________________

October 30, 2017

Town of Carolina Beach

C/o SEPI Engineering & Construction, Inc.
Attn: Greg Thompson, PE, PLS, Site/Civil Development Manager
5030 New Center Drive, Suite B
Wilmington, NC 28403

RE: Town of Carolina Beach Lake Maintenance

SEPI Project #SC16.016 [Comply with Contract Notice Provisions-SEPI and Town]

Dear Greg:

On February 9, 2017, Civil Works Contracting LLC (CWC) was awarded the above referenced Contract.

A fundamental condition of the Contract was that spoils from the dredging operation would be deposited
on real property leased to the Town of Carolina Beach (Town) from the federal government, specifically Sunny
Point. Upon results of the federal government performing an inspection of the leased property, Sunny Point
discovered spoils were being deposited on the real property leased to the Town. These spoils were deposited by
CWC in accordance with the projects construction documents; however, not in accordance with the agreement
between the Town and Sunny Point. Therefore, the federal government ordered that the disposal site no longer
be used. Consequently, on August 29, 2017 the Town issued a notice to CWC to suspend ALL work.

Based on meetings directly following the letter of suspension with the Town and CWC, the Town
explained the areas of placement were provided by the engineer in the bid documents and CWC had placed all of
the spoils within the designed areas. The issue resulted from a communication error between the Town and
Sunny Point based on previous plans of spoil deposits being placed in a decommissioned EQ basin. When the
Town moved the disposal areas after recommissioning the EQ basin they failed to notify Sunny Point of the
change in disposal areas.

The very next day, August 30, 2017 the Town partially reversed itself and instructed CWC to continue
work on excavations to and around the storm water piping at the east end of the lake with any spoils to be place
in a temporary coffer dam in the lake. The August 30 notice and events surrounding it, gave no notice or
indication to CWC that it should demobilize. To the contrary, indications were that work would resume in the not
to distance future, and a certain amount of work was ordered to be performed. For this reason, CWC did not
demobilize and its equipment stood ready to begin work anew and to do the work ordered. The additional work
was in fact performed.

On September 5, 2017, the Town Manager sent an email to CWC providing written documentation that
CWC would be compensated for the work requested of dredging to and around the Ocean Outfall Pipe once a
suitable disposal site is found. The dredged material was to be placed in an existing coffer dam created next to
the playground. CWC was forced to suspend this activity after 4 hours due to lack of storage for this dredged
material.

On September 14, 2017, CWC was requested to meet at a proposed dump site located on the mainland
in the area of Appomattox Dr. CWC attended the meeting along with the land owner representatives and the
Town Manager from Carolina Beach. During this meeting, we discussed the areas and haul routes. The meeting
concluded with the land owner agreeing to complete up fits to make the area accessible. The land owner also
agreed to process the required permit additions. Following the onsite meeting CWC met with the Town Manager
to discuss the logistics required to make the area work and CWC was requested to provide price changes for the
additional hauling.
 On September 20, 2017, CWC attended a scheduled meeting to provide pricing changes for the
additional hauling of the dredge material to the new disposal site. After discussion during the meeting the Town
Manager proposed to provide the Town Council with a plan to haul the dredged material to the new disposal site
at the increased price and staying within the contract amount by lowering the quantities. This was presented
during the following Council meeting and after discussions by council it was agreed to. CWC was notified of the
agreement and was scheduled to mobilize to the new disposal site to start preparations. CWC was then notified
that the Town had an issue with permitting the new site and mobilization would be delayed.

On October 13, 2017, CWC was requested for a meeting at the Town Hall. This meeting was to inform
CWC that the proposed disposal area would not accept the dredged material due to the high levels of Arsenic
found after environmental testing was completed. The levels were found to be outside the parameters for use in
residential areas.

Meetings and communications continued with the Town after the two August letters were issued to and
including October 17, 2017 when the Town again issued a full suspension notice. During these meetings CWC
discussed with the Town and its engineer the scope of the two inconsistent letters, attempting to clarify the
requirements being imposed on CWC. After discussion and in cooperation with the Town and the Engineer, CWC
submitted its costs incurred due to the issuance of the two suspension letters on October 9, 2017 for review.

The October 17, 2017, notice instructed CWC to demobilize from the project site and remove all
equipment and appurtenances which may potentially generate a claim of additional cost to the owner during this
time of suspension. Notably, this later instruction was evidently precipitated by CWC having submitted its updated
proposal for compensation on October 17, 2017 for its equipment sitting idle after the issuance of the August
letters. The Town did not give any indication of the length of the suspension in its October 17, 2017 notice. In a
conversation on the morning of October 18, 2017, the Town advised it did not want CWC to complete stabilization
or cleanup.

On October 18, 2017 CWC, notified the Town in response that in accordance with its notice CWC would
formulate a plan for demobilization. CWC also reminded the Town of Article 14.3.2 of the Contract requiring the
Contract Sum and Time to be adjusted for increases in the cost and time caused by suspensions and that these
costs would include the costs associated with the required demobilization; as well as the cost of remobilization
when CWC is instructed to return to work. Further, the Contract time will need to be extended for the duration of
the suspension, as well as the additional time that will now be required to re-mobilize. Any increases in CWCs
costs as a result of the delay will also need to be quantified.

The Town Engineer responded by letter of October 22, 2017, stating no duration or change of scope has
been defined with regard to the Suspension and as a result no task or responsibilities have been requested of
CWC to be performed which deviate or exceed the defined scope within the current contract documents. The
letter continues Activities associated with the Suspension Notice, such as demobilization, are covered by the
contract pay items within the contract. Any future discussions and negotiations that may be necessary to address
contractual modification for Contract Sum and Time will be held at such time that the Town defines a schedule
and scope for resuming project activities. Ironically, after stating there is no change in scope, the letter then
instructs CWC to:

secure the construction area around the Lake and the spoil area located at the
Towns treatment Plant, in such a manner that will not present an immediate
danger to Public Health and Safety or to the operations at the treatment plant. In
these areas, excavations will be suitably filled and compacted and graded slopes
will be modified to a stable configuration ensure that spontaneous collapse or
failure will not occur. Additionally, silt fencing and other existing erosion control
measures are to receive maintenance and or replacement as necessary to insure
these devices are in proper working order. In the event that areas within the
project area cannot be stabilized and left in a secure manner, other means can be
installed such as security fencing and erosion control BMPs. Application
of these alternates will be approved on a case by case bases and will only be
allowed if accepted by the Town of Carolina Beach. The Town, and or SEPI
Engineering, will provide inspection and approval of these areas prior to
completion of the demobilization activities.

Respectfully, the Contract expressly provides for the Contractor to recover costs and time in the event of
a Suspension. Granted, all time related costs and time extensions cannot be determined until the suspension is
lifted or the contract terminated. However, performing work that would only need to be performed because of the
imposition of the Suspension are beyond and outside the scope of the original Contract price and CWC needs to
be compensated for these.
These items include: securing the construction area around the Lake and the spoil area; filling excavation and
modifying grades and slopes; maintaining or replacing silt fence and erosion control measures. In regard to
demobilization costs, this is a true additional cost associated with the Suspension provided the Suspension is
ultimately lifted. In the normal scheme of the Contract, CWC would mobilize once and demobilize once. Because
of the Suspension and order to demobilize, CWC will now be required to mobilize twice and demobilize twice.
These costs are recoverable.

Turning to the notice given on August 30, 2017, partially suspending work CWC had no reason to
demobilize given the expectation that the cause for suspension would be promptly resolved. Until such time as a
final and full suspension notice was given on October 17, 2017, CWCs equipment stood ready to perform the
Contract work, and in fact performed work. CWC is entitled to recover for the costs and delays during the partial
suspension period under Article 14.3.2.

CWC is willing to agree to reserve its claim for demobilization and remobilization, as well as time delay
items until the final scope of the suspension is determined. However, at this time CWC claims it is entitled to
recover payments for equipment ordered to stay on site and ready to begin operations during the negotiations for
additional disposal areas. CWC has included the sum of $102,126.76 from August 30, 2017 October 9, 2017
and $19,041.09 from October 10, 2017 October 17, 2017.

In the Towns response of October 22, 2017, it contends CWCs request for cost in connection with the
late August suspension notices was untimely and therefore denied. This is not the case. CWCs costs are a
matter of right under Article 14.3.2 based on the Towns express exercise of its suspension rights under the
Contract. The right to these costs is not the same as a claim resulting from a change in scope or time caused by
items discovered by the contractor. In any event, and claim regarding timeliness has been waived by the Towns
conduct or the Town is sopped to assert such a defense.

Until a new disposal site for the spoils is identified, it cannot be determined whether there is such change
in scope to require an overall adjustment of the Contract Price, in addition to suspension costs and time changes.
Clearly the proximity of the disposal site to the lake is a material contract condition. CWC reserves the right to
make such a claim but hereby gives notice of such intent.

Finally, we await a copy of the survey, which per the last correspondence was conducted on October 11,
2017.

We are more than willing to work with the Town and its engineer to get this project complete for the
benefit of the citizens of Carolina Beach and believe we have been more than cooperative. CWC simply needs to
be fairly compensated for our services.

Sincerely,

Jacob Barton
Jacob Barton
Vice President- Operations
Civil Works Contracting

cc: Gilbert Laite III, Esq.- Williams Mullen

cc: Chris Scerri- CWC
cc: Jeff Cole- CWC
cc: Michael Cramer- Town Manager, Carolina Beach
cc: file