Marine Hydraulics International, LLC
Docket: ASBCA 62817
Decision date: 2024-04-16

ARMED SERVICES BOARD OF CONTRACT APPEALS 
 
OPINION BY ADMINISTRATIVE JUDGE SWEET 
 
This appeal involves a delivery order for repair work on the USS WHIDBEY 
ISLAND.  The delivery order included a Liability and Insurance Clause, under which 
the government assumed the risk of damage to the vessel, material, and equipment 
unless, that damage was due to the defective workmanship of the appellant Marine 
Hydraulics International, LLC (Marine).  While performing testing, Marine left a 
wood-wedge in a gearcase.  When the government turned the engine, pre-acceptance, 
to allow for other work, the gears shredded the wood-wedge into wood-debris.  The 
government required Marine to remove the wood-debris, and refused to cover the costs 
of that work.  Marine filed a claim, which the contracting officer denied. 
 
On appeal of that claim, Marine argues that the government’s refusal to pay the 
costs of removing the wood-debris violated the Liability and Insurance Clause, and 
constituted a constructive change.  Marine moves for summary judgment on the 
Liability and Insurance Clause basis of the claim.  The government cross-moves for 
summary judgment on both bases of the claim.  We grant the government’s motion for 
summary judgment—and deny Marine’s motion—because there is no genuine issue of 
material fact but that the costs of removing the wood-debris were due to Marine’s 
defective workmanship of leaving the wood-wedge in the gearcase. 
Appeal of - )  
 )  
Marine Hydraulics International, LLC ) ASBCA No. 62817 
 )  
Under Contract No. N00024-16-D-4412 )  
   
APPEARANCE FOR THE APPELLANT: James A. Kelley, Esq. 
    James A. Kelley & Associates 
    Washington, DC 
 
APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq. 
    Navy Chief Trial Attorney 
 Devin A. Wolak, Esq. 
  Navy Trial Attorney 
 
Kiley A. Holshey, Esq. 
Bradley S. Garner, Esq. 
  Navy Trial Attorneys 
    Norfolk, VA 
   

2 
 
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION 
 
1.  On February 17, 2016, the United States Navy’s Mid-Atlantic Regional 
Maintenance Center (government) awarded Marine Contract No. N00024-16-D-4412 
(Contract), an indefinite delivery, indefinite quantity contract to perform complex ship 
repairs on amphibious vessels at Norfolk, Virginia (R4, tab 4 at 155-242).  The 
Contract contained three relevant clauses.  First, it included a Defense Federal 
Acquisition Regulation 252.217-7012 Clause, LIABILITY AND INSURANCE 
(AUG 2003).  Under the Liability and Insurance Clause, the “Government assumes the 
risks of loss of and damage to” the vessel, material, and equipment (id. at 239).  
However, the Liability and Insurance Clause contained an exception to that 
government assumption of risk where the damage was “due to . . . [d]efective 
workmanship performed by the Contractor . . .” (the Exception) (id.).  Second, the 
Contract stated that: 
 
If, prior to delivery, the Government finds any material or 
workmanship is defective or not in accordance with the job 
order, in addition to its rights under the Guarantees clause 
of the Master Agreement, the Government may reject the 
defective or nonconforming material or workmanship and 
require the Contractor to correct or replace it at the 
Contractor’s expense. 
 
(Id. at 236).  Finally, the Contract incorporated by reference Federal Acquisition 
Regulation 52.243-1, CHANGES—FIXED PRICE (AUG 1987), which required the 
contracting officer to provide an equitable adjustment for any changes to the Contract 
(R4, tab 4 at 221; 48 C.F.R. § 52.243-1). 
 
2.  On June 15, 2017, the government issued Delivery Order N50054-17-F-L000 
(Delivery Order) to Marine for repairs on the USS WHIDBEY ISLAND (R4, tab 8 
at 4,822-65).  The Delivery Order stated that Marine would perform repair work 
pursuant to Work Item 233-11-012, Number 1A Main Propulsion Diesel Engine 
Camshaft Bearing Inspect (id. at 4,841; R4, tab 6 at 317).  Among other things, Work 
Item 233-11-012 required Marine to clean, inspect, and measure each camshaft thrust 
and flex drive gear (ASOUMF ¶ 13; GRASOUMF ¶ 13; R4, tab 6 at 599).
1  In order to 
conduct that inspection, Marine had to take “backlash measurements and readings” 
(ASOUMF ¶ 14; GRASOUMF ¶ 14). 
 
 
1 “ASOUMF” refers to the appellant’s statement of undisputed material fact.  
“GRASOUMF” refers to the government’s response to the ASOUMF.  
“GSOUMF” refers to the government’s statement of undisputed material fact. 

3 
 
3.  Between October 2017 and April 2019, Marine undertook repairs to the 
Number 1A Main Propulsion Diesel Engine (ASOUMF ¶ 12; GRASOUMF ¶ 12). 
 
4.  On May 11, 2019, Marine successfully took the backlash readings for the 
camshaft and flex drive inspection.  Government representatives were present during 
the readings.  (ASOUMF ¶¶ 15-16; GRASOUMF ¶¶ 15-16)  During the readings, 
Marine placed a wood-wedge covered with orange tape between the gear-casing and 
the 105-tooth gear.  That wedge pushed and held the 105-tooth gear in place so that 
Marine could move the 36-tooth gear and take readings.  This was an industry-
standard, government-accepted method of taking the readings.  (ASOUMF ¶ 14; 
GRASOUMF ¶ 14; GSOUMF Ex. A (Hillman Decl.) ¶ 6) 
 
5.  After the testing, Marine closed the gearcase (ASOUMF ¶ 17; GRASOUMF ¶ 
17).  All government personnel had left before Marine closed the gearcase (GSOUMF 
Ex. A (Hillman Decl.) ¶ 5).  Marine failed to remove the wood-wedge before closing 
the gearcase (ASOUMF ¶ 17; GRASOUMF ¶ 17, GSOUMF Ex. A (Hillman Decl.) ¶ 
6; id. ex. B (Ceglio Depo.) 84-85; R4, tab 25 at 5,273). 
 
6.  During subsequent repair work, the United States Navy Ship’s Force—which 
was responsible for operating the USS WHIDBEY ISLAND—rotated the engine 
(ASOUMF ¶¶ 18-20, 29; GRASOUMF ¶¶ 18-20, 29; GSOUMF Ex. A (Hillman 
Decl.) ¶ 8). 
 
7.  Daniel Hillman—the government’s Fleet Diesel Engine Inspector— declares 
that to turn the engine, an operator merely pushes a button on an electric motor and 
that the operator would not notice resistance from the wood-wedge.  Further, 
Mr. Hillman testified that the mechanical advantage of the gear train was enormous, 
given that the engine was 28 feet long, 12 feet wide, 9 feet tall, and weighed over 
200,000 pounds (GSOUMF Ex. A (Hillman Decl.) ¶¶ 8, 10).  According to Edmund 
Brisson—Marine’s Diesel Division Manager—an operator turning the engine would 
have noticed resistance from the wood-wedge (app. mot. Ex. 9 (Brisson Decl.) ¶¶ 1, 6; 
app. reply Ex. 1 (Brisson Decl.) ¶ 5). 
 
8.  Mr. Hillman also declares that the Ship’s Force may turn the engine without 
limit (GSOUMF Ex. A (Hillman Decl.) ¶ 11).  Mr. Brisson declares that the Ship’s 
Force was not authorized to turn the engine without a backlash measurement (app. 
mot. Ex. 9 (Brisson Decl.) at ¶ 7). 
 
9.  After turning the engine, the government determined it could not locate a copy 
of the backlash readings.  Thus, the government decided to retake the backlash reading 
itself.  (ASOUMF ¶ 22; GRASOUMF ¶ 22; GSOUMF Ex. A (Hillman Decl.) ¶ 9)  
When the government opened the gearcase to retake the backlash reading, it observed 
wood-debris and orange tape in the gearbox (ASOUMF ¶ 24; GRASOUMF ¶ 24).  

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Mr. Hillman declares that “[b]ased upon where the debris was found, the wedge that 
[Marine] left in the [gear] must have come loose and passed through the gear train 
between the 105 tooth gear and the idler” (GSOUMF Ex. A (Hillman Decl.) ¶ 6).  
There is no contradictory evidence. 
 
10.  The government directed Marine to perform a complete lube oil flush of the 
engine, remove the contamination from the gear-train by mechanically cleaning the 
gear-train and gearcase, and replace the lube oil filters and oil.  Marine performed the 
work.  The government did not compensate Marine for that work.  (ASOUMF  ¶¶ 27, 
31-32; GRASOUMF ¶¶ 27, 31-32; R4, tab 23 at 5,267) 
 
11.  On November 25, 2020, Marine submitted a certified claim (ASOUMF ¶ 2; 
GRASOUMF ¶ 2). 
 
12.  On January 15, 2021, the contracting officer issued a final decision denying 
the claim (ASOUMF ¶ 3; GRASOUMF ¶ 3). 
 
13.  This appeal followed. 
 
DECISION 
 
The government is entitled to judgment as a matter of law on Marine’s claims 
based upon the Liability and Insurance Clause and a purported constructive change. 
 
I. Summary Judgment Standard 
 
 We will grant summary judgment only if there is no genuine issue as to any 
material fact, and the moving party is entitled to judgment as a matter of law.  Celotex 
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).  All significant doubt over factual 
issues must be resolved in favor of the party opposing summary judgment.  Mingus 
Constructors, Inc. v. United States, 812 F.2d 1387, 1390-91 (Fed. Cir. 1987).  In 
deciding summary judgment motions, we do not resolve controversies, weigh 
evidence, or make credibility determinations.  Anderson v. Liberty Lobby, Inc., 
477 U.S. 242, 255 (1986).  Moreover, we draw all reasonable inferences in favor of the 
non-movant.  Id.  A genuine issue of material fact arises when the non-movant 
presents sufficient evidence upon which a reasonable fact-finder, drawing the requisite 
inferences and applying the applicable evidentiary standard, could decide the issue in 
favor of the non-movant.  C Sanchez & Son, Inc. v. United States, 6 F.3d 1539, 1541 
(Fed. Cir. 1993). 
 

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II. Liability and Insurance Clause  
 
 There is no genuine issue of material fact suggesting that the government 
breached the Liability and Insurance Clause.  The elements of a breach of contract 
claim are:  (1) a valid contract between the parties; (2) an obligation or duty on the part 
of the government arising out of the contract; (3) a breach of that duty; and (4) 
damages caused by the breach.  Lockheed Martin Integrated Sys., Inc., ASBCA 
Nos. 59508, 59509, 17-1 BCA ¶ 36,597 at 178,284.  Our analysis of the obligations 
and duties of the parties requires us to interpret the contract.  In interpreting a contract, 
“clear and unambiguous [contract provisions] must be given their plain and ordinary 
meaning[.]”  Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1040 (Fed. Cir. 
2003) (en banc).  “An ambiguity exists when a contract is susceptible to more than one 
reasonable interpretation.”  E.L. Hamm & Assoc., Inc. v. England, 379 F.3d 1334, 
1342 (Fed. Cir. 2004).
2  “[T]he language of a contract must be given that meaning that 
would be derived from the contract by a reasonably intelligent person acquainted with 
the contemporaneous circumstances.”  Hol-Gar Mfg. Corp. v. United States, 351 F.2d 
972, 975 (Ct. Cl. 1965). 
 
 The Liability and Insurance Clause—which Marine claims the government 
breached (app. reply at 2)—stated that the “Government assumes the risks of loss of 
and damage to” the vessel, materials, or equipment, except for loss and damage “due 
to . . . [d]efective workmanship performed by the Contractor” (SOF ¶ 1).  The term 
“due to” in insurance clauses such as the one at issue here means the cause-in-fact and 
proximate cause.  Winter v. Bath Iron Works Corp., 503 F.3d 1346, 1351 (Fed. Cir. 
2007), on remand ASBCA No. 54544, 08-2 BCA ¶ 33,936 at 167,935, recon. denied 
09-1 BCA ¶ 34,085.  Cause-in-fact, or actual cause, means that an act or omission is 
the but for cause of a result.  Proximate cause means a sufficiently close connection 
between the act or omission and the result to impose legal responsibility for the result.  
Carter v. McDonough, 46 F.4th 1356, 1356-61 (Fed. Cir. 2022); Ollis v. Shulkin, 857 
F.3d 1338, 1343-44 (Fed. Cir. 2017). 
 
 Here, there is no genuine issue of material fact but that the wood-debris 
damage
3 to the vessel, materials, or equipment was due to Marine’s defective 
 
2 Because the claims in this appeal ultimately are government claims that Marine’s 
performance was deficient, it is the government’s burden of proof on each 
claim.  Mitchell Enters., ASBCA No. 53202 et al., 06-1 BCA ¶ 33,277 
at 164,962. 
3  In the alternative, the government argues that it did not breach the Liability and 
Insurance Clause because that clause only applies to loss or damage and there is 
no genuine issue of material fact suggesting that there was loss or damage since 
the cleaning does not count as such (gov’t mot. 5-6).  Though we are skeptical 
of this argument, and it appears to us that there is likely a genuine issue of 

6 
 
workmanship because it is undisputable that Marine’s failure to remove the wood-
wedge was the cause-in-fact and proximate cause of the wood-debris damage.  There 
is no genuine issue of material fact but that, but for Marine’s failure to remove the 
wood-wedge from the gearcase, the gears would not have shredded the wood-wedge 
into the wood-debris that damaged the vessel, materials, or equipment.  Moreover, 
given the close causal connection between Marine leaving the wood-wedge in the 
gearcase and the gears shredding the wood-wedge to the damaging wood-debris, there 
is no genuine issue of material fact but that there was a sufficiently close connection to 
impose legal responsibility for the wood-debris damage on Marine.  (SOF ¶¶ 5-6, 9); 
see also Lake Union Drydock Co., DOTCAB No. 73-39, 75-1 BCA ¶ 11,134 (DOT 
BCA) (holding that a contractor’s leaving a rag in an engine turbine caused damage to 
the turbine, entitling the government to charge the contractor for the costs incurred 
repairing that damage). 
 
 Marine argues that the government caused the wood-debris damage for three 
reasons.  First, Marine argues that government personnel observing the initial backlash 
measurement did not discover that Marine failed to remove the wood-wedge from the 
gearcase (app. mot. at 12).  However, Marine has failed to raise a genuine issue of 
material fact suggesting that the government observers were present when Marine 
closed the gearcase (SOF ¶ 5).  In any event, “[w]here the contract places on the 
contractor the burden of compliance, the presence or absence of a Government 
inspector does not shift responsibility for the sufficiency of the work from the 
appellant to the government.”  CBRE Heery, Inc., ASBCA No. 62420, 21-1 BCA ¶ 
37,927 at 184,200 (quoting Panhandle Grading & Paving, Inc., ASBCA No. 38539, 
90-1 BCA ¶ 22,561 at 113,225).4  Here, it was Marine’s responsibility to carry out the 
testing in a workmanlike manner (SOF ¶¶ 1-2).  Therefore, even if the government 
 
material fact as to whether at least some of the work directed by the 
government—such as replacing the lube oil filters and oil -- constituted 
repairing damage to the vessel, materials, or equipment, we do not decide it 
today. 
 
4 Marine relies upon Lake Union, 75-1 BCA ¶ 11,134 (DOT BCA) to argue that the 
government is responsible for pre-acceptance damage caused by a contractor’s 
defective workmanship if the government failed to detect that defective 
workmanship (app. reply at 4).  However, Lake Union merely held that the 
government detected a contractor’s defective workmanship.  75-1 BCA ¶ 
11,134.  It did not hold that a failure to detect a contractor’s defective 
workmanship shifts responsibility for pre-acceptance damage caused by that 
defect to the government.  Id.  Even if it had, Lake Union Drydock, being from 
a different Board of Contract Appeals, is not binding upon this Board, and we 
would have to decline to follow it to the extent it was inconsistent with CBRE 
Heery and Panhandle Grading & Paving.   

7 
 
observers had witnessed Marine leaving the wood-wedge in the gearcase, that would 
not shift responsibility to the government for Marine’s failure to remove the wood-
wedge. 
 
 Second, Marine argues that the government caused the wood-debris damage 
because it failed to take backlash measurements—which would have revealed the 
wood-wedge—before turning the engine (app. mot. at 12-13).  However, there is no 
dispute that it was Marine’s responsibility to take the backlash measurement, and 
Marine had taken backlash measurements before the government turned the engine 
(indeed, it was Marine’s performance of this backlash measurement, in which it left 
the wood-wedge in the gearcase, that led to the damage in the first place) (SOF ¶¶ 2, 4, 
6).  In any event, “[i]nspections are for the benefit of [the government], not the 
contractor, and the failure of [the government] to provide for an inspection does not 
relieve the contractor of its responsibilities under the contract.”  Penguin Indus., Inc. v. 
United States, 530 F.2d 934, 936-37 (Ct. Cl. 1976).  As a result, the government’s 
failure to take a backlash measurement before turning the engine did not relieve 
Marine of its responsibility to perform the backlash measurement in a workmanlike 
manner. 
 
 Finally, Marine argues that the government caused the wood-debris damage 
because the wood-wedge would not have been shredded if the government had stopped 
turning the engine upon encountering resistance (app. mot. at 12-13).  Even assuming 
without deciding that Mr. Brisson’s declaration raises a genuine issue of material fact 
as to whether the government could have avoided the wood-debris damage if it had 
stopped the engine turning once it encountered resistance, that would not raise a 
genuine issue of material fact suggesting that the Exception did not apply.  Where a 
contractor’s defective workmanship is a proximate cause of damage to a vessel, 
materials, or equipment, that damage is due to the defective workmanship—and thus 
exceptions to insurance clauses like the Exception apply—even if another cause 
contributed to the damage, at least when the other cause is not intervening and 
independent of the defective workmanship.  Bath Iron Works, 09-1 BCA ¶  34,085 
at 168,521 (holding that damage was due to defective workmanship—and thus fell 
within an insurance clause exception—when the contractor improperly flushed piping, 
even though the high levels of chlorides, sediment, and microbes in the water 
contributed to the damage, because the high levels of chlorides, sediment, and 
microbes in the water were not an intervening and independent cause).
5  Here, there is 
 
5 Because we conclude that the failure to stop the engine was not an independent 
cause, we decline to reach the issue left open by Bath Iron Works of whether 
the damage is due to defective workmanship where defective workmanship is a 
proximate cause and there is an intervening and independent converging cause.  
09-1 BCA ¶ 34,085 at 168,521; see also Burlington N., Inc., ASBCA 

8 
 
no genuine issue of material fact suggesting that the government’s failure to stop 
turning the engine caused the wood-wedge shredding, independent of Marine’s 
defective workmanship of leaving the wood-wedge in the gear case.  On the contrary, 
just as the exposure of the pipes to water with the high levels of chlorides, sediment, 
and microbes in Bath Iron Works depended upon the contractor improperly flushed 
piping, 09-1 BCA ¶  34,085 at 168,521, the government’s failure to stop turning the 
engine shredding the wood-wedge depended upon Marine’s defective workmanship of 
leaving the wood-wedge in the gearcase in the first place (SOF ¶¶ 5-7).  Because the 
government’s failure to stop turning the engine was not a cause of the wood-wedge 
shredding damage independent of the defective workmanship, the wood-wedge 
damage was due to the defective workmanship, regardless of whether the 
government’s failure to stop turning the engine also caused the damage. 
 
III. Constructive Change 
 
There is no genuine issue of material fact suggesting that the government 
constructively changed the contract either.  There is a constructive change when:  (1) 
an official compels a contractor to perform work not required under the terms of the 
contract; (2) the official directing the change had contractual authority to alter the 
contractor’s duties unilaterally; (3) the official enlarged the contractor’s performance 
requirements; and (4) the added work was not volunteered, but resulted from the 
official’s direction.  Alfair Dev. Co., ASBCA Nos. 53119, 53120, 05-2 BCA ¶ 32,990 
at 163,515. 
 
 Here, there is no genuine issue of material fact suggesting that an official 
compelled Marine to perform work not required under the terms of the contract or 
enlarged Marine’s performance requirements.  The Contract stated that: 
 
If, prior to delivery, the Government finds any material or 
workmanship is defective or not in accordance with the job 
order, in addition to its rights under the Guarantees clause 
of the Master Agreement, the Government may reject the 
defective or nonconforming material or workmanship and 
require the Contractor to correct or replace it at the 
Contractor’s expense. 
 
(SOF ¶ 1).  As discussed in greater detail above, there is no genuine issue of material 
fact but that Marine’s workmanship was defective because it is undisputed that Marine 
left the wood-wedge in the gearcase (SOF ¶ 5).  Therefore, there is no genuine issue of 
 
No. 19262, 75-2 BCA ¶ 11,526 (recognizing that there may be multiple 
proximate causes of a result). 

9 
 
material fact but that the Contract permitted the government to require Marine to 
correct the defect by removing the wood-debris at Marine’s expense pre-delivery. 
 
CONCLUSION 
 
For the foregoing reasons, we grant the government’s motion for summary 
judgment and deny Marine’s motion for summary judgment.  This appeal is denied. 
 
 Dated:  April 16, 2024 
 
 
 
 
 
 
 
 
 
 
 
JAMES R. SWEET 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
 
 
 
JOHN J. THRASHER 
Administrative Judge 
Chairman 
Armed Services Board 
of Contract Appeals 
 I concur 
 
 
 
 J. REID PROUTY 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
 
 
 I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA No. 62817,
 Appeal of Marine 
Hydraulics International, LLC, rendered in conformance with the Board’s Charter. 
 
 Dated:  April 16, 2024 
 
 
 
 
 
 
 
PAULLA K. GATES-LEWIS 
Recorder, Armed Services 
Board of Contract Appeals