CONTACTS 
0201 - Dep Natrl Rscrs & Consvn           406 444 6699 fax 6721
020101 - Ms. Sarah Ann Bond, Esquire
020102 - Department Counsel =406 444 6660; Legal Division
0202 - Dep Natrl Rscrs & Consvn           406 444 6699 fax 6721
020201 - Mr. Wayne Wetzel
020202 - Director's Office
0203 - Dep Natrl Rscrs & Consvn           406 444 6699 fax 6721
020301 - Mr. Jack Zanto
020302 - Data Processing Bureau Computer Engineer =406 444 6715
020303 - Centralized Services Division

SUBJECTS
Broadwater Project
Welch Assignments,
Management Assistance Broadwater Contract
Strategy on Evaluating all Claims
Jeff Ghilardi
DNRC Legal - general views (meetings)
SDS as part of job record
Ideas, Methods, Evaluation

0910 -    ..
0911 - Summary/Objective
0912 -
091201 - Broadwater Management and Claims Strategy
091202 -
091203 -    Advised Wayne that Sarah asked me to call her this morning about
091204 -    the Welch Assignment situation.  I will talk to her about it and
091205 -    asked Wayne that he try to talk to her later today so we can decide
091206 -    this issue.
091207 -
091208 -
091209 - Voith's Tender
091210 -
091211 - Today, I reviewed DNRC's analysis dated May 4, 1992 of Voith's
091212 - "Tender" to DNRC, ref DIP 1.
091213 -
091214 -    My initial reaction is that Voith's offers are inadequate in
091215 -    seeking additional compensation to repair the defective speed
091216 -    increaser, without offering any justification.  Voith has not yet
091217 -    been directed by the Engineer to fix the plant and has not yet been
091218 -    faced with a notice to terminate.
091219 -
091220 -             Their offer seems intended to move the parties away from
091221 -             the terms of the contract in so Voith can later claim the
091222 -             contract was abandoned and therefore should not govern
091223 -             DNRC's entitlement to recover on its claims.
091224 -
091225 -         Ordinarily a contractor should only be paid on the basis of
091226 -         performance.  If Voith cannot finance its own corrections,
091227 -         how will it pay for an award to DNRC in an arbitration, as
091228 -         contemplated by Voith's offer.
091229 -
091230 -         An arbitration will require at least 6 months and probably
091231 -         several years to settle.
091232 -
091233 -         The purpose of a bond is insurance to obtain performance.
091234 -
091235 -         The money being sought by Voith is not nearly enough to fix
091236 -         the plant (what about the punch list stuff, which will
091237 -         approach $.5M plus).  DNRC will pay out money and still not
091238 -         get ultimate performance.
091239 -
091240 -
091241 -    Has DNRC researched its entitlement under Voith's performance bond
091242 -    and concluded there is a reason for providing additional payment to
091243 -    Voith in order to induce them to perform?  Has Voith brought some
091244 -    evidence forward that shows DNRC is liable to Voith for extra
091245 -    compensation to fix the defective speed increaser and other plant
091246 -    punch list items?
091247 -
091248 -    Voith has shown no ability to perform to date; what evidence is
091249 -    there that if DNRC accepts any of these offers that Voith will
091250 -    perform now?
091251 -
091252 -
091253 -
0913 -
0914 -
0915 - 0823 called Sarah
0916 -
091601 - Faye answered.  She said Sarah is at the copy machine.  Faye will let
091602 - her know I called.
091603 -
091604 -     Objective
091605 -
091606 -     Review issues at ref SDS 2 line 091258 and above.
091607 -
091608 -     Do they want claims preparation per ref DIP 1 line 56?
091609 -
091610 -
091611 -
091612 -
091613 -
0917 -
0918 -
0919 - 1240 called Wayne
0920 -
092001 - Legal Strategy
092002 -
092003 - He said Power has requested a statement of legal "strategy" from DNRC
092004 - relative to issuing a directive to Voith to perform.  Wayne has asked
092005 - Sarah to prepare a memo on it which she worked on over the weekend.
092006 -
092007 - He said Sarah was concerned that the issues are "...too fact
092008 - specific," but that she could do a generic memorandum opinion on
092009 - strategy.  This position seems unclear in light the project record
092010 - with respect to the parties duties and rights (however, it would help
092011 - to have some "Engineer's Determinations" on Voith's performance, per
092012 - analysis below).  Wayne indicated he asked Sarah to produce what she
092013 - feels is an appropriate analysis.
092014 -
092015 -     Legal Specialist
092016 -
092017 -     I explained that developing a legal strategy memo is a very
092018 -     difficult assignment that will require several iterations, and
092019 -     suggested that DNRC be sensitive to the possibility that support
092020 -     may be needed on this task.
092021 -
092022 -
092023 - Temporary Sun Pinion Gear
092024 -
092025 - Wayne indicated Power has issued a directive to Voith to install a
092026 - temporary "sun pinion" gear until the speed increaser is fixed, but
092027 - the directive does not have any interim target dates.
092028 -
092029 - DNRC is doing this to "mitigate" damages relative to the risk of a
092030 - failed speed increaser.
092031 -
092032 -     Target Dates
092033 -
092034 -     I encouraged DNRC to give Voith some specific milestones for Voith
092035 -     to reach in the near term to demonstrate good faith performance.
092036 -     Voith should be required to change PM's, list project personnel
092037 -     and submit a CPM within 2 weeks (similar to what was done with
092038 -     Tudor's termination scenerio).
092039 -
092040 -     Thereafter, Voith must show compliance with CPM completion dates.
092041 -
092042 -     Other Vendors
092043 -
092044 -     If DNRC is going to pay out more money, consideration should be
092045 -     given to taking over the work, so Voith does not spend the funds
092046 -     on other things and to insure a competent result.
092047 -
092048 -
092049 -  ..
092050 - Power Waiting on DNRC
092051 -
092052 - Wayne advised that Power has indicated it cannot direct Voith to
092053 - perform the contract until Sarah produces a legal strategy.
092054 -
092055 -     Engineer's Determination
092056 -
092057 -     Called Wayne back.  He did not have time to discuss this in depth,
092058 -     but I mentioned that Power's representation to DNRC that Power
092059 -     cannot issue Engineer's Determinations until Sarah completes a
092060 -     legal strategy, requires careful analysis.
092061 -
092062 -     I explained that generally this is incorrect.  Legal strategy
092063 -     evolves in large part from facts.  The Engineer determines facts.
092064 -     Thus, some measure of concurrent effort by the Engineer to deter-
092065 -     mine the following factual issues would support the analysis of
092066 -     legal strategy:
092067 -
092068 -         Pending Issues
092069 -
092070 -         1.  Did Voith comply with the contract submittal requirements
092071 -             and were deviations accepted as contract changes orders,
092072 -             or merely overlooked by Tudor.
092073 -
092074 -                  If Tudor changed the requirements, when, by what
092075 -                  instrument and authority and for what consideration?
092076 -
092077 -         2.  Is the contract substantially complete, incomplete or
092078 -             complete and as a result which presumed damages provisions
092079 -             apply?
092080 -
092081 -                  Did Tudor change the requirements for contract
092082 -                  completion, and if so when, by what instrument and
092083 -                  authority and for what consideration?
092084 -
092085 -         3.  Do Voith's recent SI submittals meet the contract.
092086 -
092087 -         4.  Has Voith has made adequate progress in performing the
092088 -             work?
092089 -
092090 -         5.  Is any of the work is defective?
092091 -
092092 -         6.  What is the current contract amount, as amended.
092093 -
092094 -
092095 -
092096 - I recommended that DNRC consider asking the Engineer to determine the
092097 - above issues and others related to Voith's performance of its contract
092098 - obligations, since ultimate findings of fact will be influenced by the
092099 - Engineer's determinations.  Expert claims analysis may be needed for
092100 - the Engineer to make the above determinations.
092101 -
092102 -
092103 -
092104 - Bonding Company/Termination
092105 -
092106 - Wayne indicated that DNRC has not contacted Voith's bonding company,
092107 - however they have provided copies of some correspondence on pertinant
092108 - issues.
092109 -
092110 - Wayne recalled that Sletten's bonding company was not helpful during
092111 - the period when DNRC was considering terminating Sletten.
092112 -
092113 -     I explained the bonding company and contractor must both be served
092114 -     a demand for performance in order to find out what they will do.
092115 -     Suggested someone call the bonding company to alert them that DNRC
092116 -     is serious and give them an opportunity to encourage Voith to
092117 -     perform.
092118 -
092119 -     This another area where outside counsel could be helpful in
092120 -     advising DNRC.
092121 -
092122 -
092123 -
0922 -
0923 -
0924 -      Sarah called back
0925 -
092501 -
092502 -
092503 -
092504 -
092505 -
092506 -
092507 -
0926 -

SUBJECTS
Broadwater Project
Loan to DNRC to Evaluate SDS, 920304
Develop & Maintain Hardware System
SDS support for DNRC (network)

1207 - Summary/Objective
1208 -
120801 - Fixing CPU #6 Tape Drive
120802 -
120803 - Advised we need to get Jack or Mike to call Everex today and see if
120804 - they can do some diagnostics over the phone.  Wayne asked me to call
120805 - Jack and coordinate with him.
120806 -
120807 -
120808 -
1209 -
1210 -
1211 - 0905 called Jack
1212 -
121201 - He is out until 1020 their time, or in about 10 minutes.  Left
121202 - message for Jack to call back.
121203 -
121204 -
121205 -
1213 -
1214 -
1215 - 1020 Jack called back
1216 -
121601 - He said he spoke to Wayne and advised him that his work schedule is
121602 - tied up for 2 weeks on installing a network system.  He cannot work
121603 - on either the tape drive matter or set the irq for the modem.
121604 -
121605 -
121606 -
1217 -