Nearly twenty years ago the legislature created an administrative procedure to resolve extra work claims by contractors working for State Agencies. Under that procedure, a contractor whose claim was denied by the agency was given the option of avoiding the expense and delay inherent in a lawsuit by claiming an administrative appeal before the Division of Hearing Officers, later Division of Administrative Law Appeals (DALA). By statute, such appeal was to take the form of an adjudicatory hearing before a hearing officer experienced in construction law. Hearings were to be governed by administrative procedure, and decisions were required no later than 120 days after the conclusion of hearings.
Recently there have been suggestions that the scope of administrative appeals be expanded. In the face of this proposed expansion, it is fair to ask how the current administrative claims resolution procedure has worked for contractors. One way of evaluating the effectiveness of this appeal procedure is by reviewing results over a substantial period of time.
Fortunately, the statute establishing this administrative claims procedure requires DALA to make public an annual report showing its disposition of construction claims. Unfortunately, the results shown by these reports of disposed administrative appeals over the past ten years are not encouraging for contractors.
During the ten year period, between 1989 and 1998, there have been 424 contract claims appeals which were filed and resolved through this administrative process. Of that number, DALA found in favor of contractor-claimants on only 29 claims; and of these 29, few were allowed in the amount sought. Two hundred and twenty-one appeals were reported as denied, dismissed or withdrawn. The remaining 174 cases were reported settled.
As dismal as this overall success rate is for contractors, the trend in recent years is worse. In 1998, there were a total of 49 appeals reported closed by DALA. Not a single contractor claim was allowed during the entire year.
In 1997, forty seven appeals were reported closed, with but one claim allowed. These statistics suggest one of two possibilities: Either contractors are appealing unmeritorious extra work claims on a regular basis, or DALA is exhibiting a bias in favor of State Agencies. Contractors intent on pursuing claims for extra work would appear to have a much greater prospect for recovery in Court before a judge and jury, than in an administrative proceeding presided over by DALA.
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