ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of

-- ) ) South Bay Boiler Repair, Inc. ) ) Under ContractNo. N55236-09-D-0017 ) APPEARANCES FOR THE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA No. 59281

Robert L. Kenny, Esq.

Law Office ofRobert L. Kenny San Diego, CA James A. Kelley, Esq.

James A. Kelley & Associates Washington, DC Ronald J. Borro, Esq.

Navy ChiefTrial Attorney Ellen M. Evans, Esq.

SeniorTrial Attorney Rawn M. James, Esq. Matthew D. Bordelon, Esq.

Trial Attorneys OPINION BYADMINISTRATIVE JUDGE WOODROW INTRODUCTION The case involves an appeal from a contracting officer's final decision (COFD) denying the claim ofappellant, South Bay BoilerRepair, Inc. (SBBR), for alleged constructive changes and delays. The claim arises under a delivery order (DO) issued by the Navy under a firm-fixed-price, indefinite-delivery/indefinite-quantity contract for boatyard services. The DOwas for ship repair and preservation services, including the removal and application ofpaint and other coatings, on a small vessel identified as Landing Craft Utility (LCU) No. 1631. Appellant maintains thatthe ship repair contract failed to comply with 10 U.S.C. § 731 l(a)(l)because it did not adequately identify "thetypes and amounts ofhazardous wastes that are requiredto be removed by the contractor from the vessel." The parties electedto proceed without an evidentiary hearing, via Board Rule 11, with each side relying upon the Rule 4 file and its supplements and submitting opening and reply briefs in accordance with an agreed-upon schedule. Forthe reasons set forth below, we conclude thatthe plain language ofthe ship repair contract

- andspecifically therequirements ofDO 0007

- satisfiedthe requirements of 10 U.S.C. 

### §7311 and placed appellant on notice ofthe presence oftoxic heavy metals in the paint and coatings onboard LCU 163 1. We deny the appeal. FINDINGS OF FACT 

### I. The Parties and the Contract 1. Appellant SBBRis a small business ship repair contractor located in National City, California (app. supp. R4, tab 94, Bowen decl. 

### ii 1). 2. SBBR uses subcontractors to perform most ofthe preservation work required by a Navy ship repair contract. Preservation work involves removing existing coatings from the surfaces ofthe vessel and applying new coatings to the surfaces. Most preservation subcontractors use a sandblastingprocess to removethe majority of the existing coatings from the ship (app. supp. R4, tab 94, Bowendecl. 

### ii 4). 3. On 3 June 2009, the Navy's Southwest Regional Maintenance Centerin San Diego, California (SWRM orgovernment), awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity (IDIQ) ContractNo. N55236-09-D-OO17 for boatyard services to SBBR (the contract) (R4, tab 1at1-2of121). 4. On 6 September2012, the government issued Request for Proposal (RFP) No. 0168 for work described in contract line item numbers (CLINs) 0067, 0082, 0083, 0087, and 0088 for LCU 1631 (R4, tab 21 at 1of7). 5. At CLIN 0067, the RFP states: "Firm-FixedPrice. Prepare for and accomplish SpecificationPackage SSSD-504-12 for LCU 1631 [the specifications], attached." (R4, tab 21 at 1, 4) 6. While the RFP was pending, the government issued four pre-proposal amendments to RFP 0168 (R4, tabs 23-26). 7. Also while the RFP was pending, SBBRasked a question concerning the government's estimate ofhazardous waste set forth in paragraph 3.5 ofWork Item 077-01-001. SBBRasked: Since the requirements to accomplish removals differ greatly contractors utilize the government's quantities in generating their estimates ofremoval costs. Ifthe amounts exceedthe government's expectations and a mod is issued to coverthe additional disposal costs it is the contractor's

2. right to include additional expenses for labor, lab fees, analysis, etc. into the contract mod. Please advise. (App. supp. R4, tab 78) 8. AmendmentNo. 1, dated 13 September2012, contains, among otherthings, the government's response to the foregoing question posed by SBBR. Restated by the government, "QUESTION 1" reads as follows: ITEM NO. 077-01-001 (Hazardous Waste Produced on Naval Vessels): Hazardous waste item Para4.1 states: "Hazardous waste generated during the actual performance ofthis work may vary in type and amount from waste listed in 3.5 which may result in renegotiation for credit or increase pursuant to paragraph (b) of2:4." Ifthe amount ofhazardous waste exceeds the Government's expectations and a contract modification is issued to coverthe additional disposal costs, is it the contractors rightto include additional expenses for labor, lab fees, analysis, etc. into the contract modification? (R4, tab 23 at 2 of5) The Answer to Question 1in the amendment states: "Yes, Government uses historical data to estimate and provide the amount ofhazardous waste. Anythingbeyondthe amount listed will be negotiated and addressed by a contract modification." (Id.) The historical data was basedupon work on similar vessels, as verified by interviews with contractors and on a formula thatuses surface area datato predict blastresidue amounts (app. supp. R4, tab 98, King dep. at 46-47). 9. The governmentpermitted contractors to take paint chip samples before submitting their proposals (app. supp. R4, tab 98, King dep. at 107-08). 10. SBBR'sproject manager, DonaldBowen, inspected LCU 1631 before SBBR submitted its proposal RFP. He did not take samples ofthe coatings onthe vessel. (App. supp. R4, tab 143 at 1-2, 4) 11. Appellant admitted that it "based [its] hazardous paintremoval costs on the small quantities ofhazardous paint and paint chips [the government] included in Work Item 077-01-001" (app. br. at 108). 12. Appellant's estimator, Mr. Bowen, also acknowledges that mechanical cleaning processes (hammer, wire brush, needle guns) wouldproduce paint chips as a

3by-product, ratherthan spent abrasive material (app. supp. R4, tab 129, Bowen dep. at 70). 13. Mr. Bowen states that he was aware ofthe Navy's estimate of275 tons of spent abrasive blast material contaminated with a known hazardous waste, but that he did not expect to generate that much because appellant's subcontractor, Pacific Yacht Refitters, Inc. (PYR), would be using a different process to remove the paint (app. supp. R4, tab 129, Bowen dep. at 63-64). 14. Mr. Bowentestified that, because PYRwould be using steel grit, which could be recycled 300

- 500 times, the removal process would produce far less spent abrasive waste than the government's estimate of275 tons (app. supp. R4, tab 129, Bowen dep. at 66-68). 15. Appellant understood PYR's estimate to include the cost ofdisposing of any spent abrasive material generated during the contract (app. supp. R4, tab 133, Wilkerson dep. at 21-29). 16. On 25 September 2012, SBBR submitted aproposal in response to RFP No. 0168 with a firm-fixed price of$2,492,859 for CLIN 0067 (plus $2,080 for CLINs 0082 and 0083) for the work outlined in Specification Packages SSD-504-12 for LCU 1631 (R4, tab 27 at 4-5).* 17. SBBR'sproposal included a quote from its intended subcontractor, PYR, with $15,625.00 next to the description: "077-01-001 HAZARDOUS [WASTE] PRODUCED ON NAVAL VESSELS; CONTROL (SURFACE PREPARATION RELATED ONLY, DOES NOT INCLUDE LIQUID PAINT WASTE)" (R4, tab 27 at 24). 18. On 26 September 2012, the government accepted the proposal and awarded DO 0007 (consisting ofCLINs 0067, 0082, and 0083) to SBBR in the amount of $2,494,939 (R4, tab 28). 19. There were 14 modifications to DO 0007: 13 bilateral modifications and 1final, unilateral administrative modification (R4, tabs 29-42). 20. Three ofthe bilateral modifications providedtime extensions, resulting in a final contract completion date of25 October 2013 (R4, tabs 36, 39, 41).

• Several documents in the Rule 4 file contain more than one page number. We use the full number found at the middle ofthe bottom ofthe page.
4,21. Duringperformance, appellant generated 44,185 lbs. ofhazardous waste in 109 55-gallon drums (app. supp. R4, tab 67 at 31-37), an amount far less than the 275 tons estimatedby the government. 

### II. Relevant Contract Provisions 22. The contract containedthe standard Federal Acquisition Regulation (FAR) Changes clause, FAR 52.243-1, CHANGES

- FIXED-PRICE (AUG 1987)-AL TERNATE II (APR 1984)(R4,tab 1at110of121). 23. The contract also contained Changes clause NAVSEA 5252.233-9103, DOCUMENTATION OF REQUESTS FOREQUITABLE ADJUSTMENT (APR 1999), which provides, among otherthings, that a change includes "any act or omission to act on the part ofthe Government in respect ofwhich a request is made for equitable adjustment" (R4, tab 1at102of121). 24. Section C.6.2.c ofthe contract sets forth specific environmental and safety requirements applicable to the contractor, including the following requirements relating to paints and coatings on the vessel:

c. Consider all marine coatings to contain heavy metals (e.g. lead, cadmium orchromium), hexavalent chromium, crystalline silica and/or othertoxic or hazardous substances as defined in 29 CFR 1815.1000. Contractor shall make an initial determination ofpotential employee exposure to toxic or hazardous substances prior to removal ofexisting non-skid orcoatings. Laboratory analysis results ofbulknon-skid/paint samples shall be submitted to the CORas soon as possible upon receipt from the laboratory. (R4, tab 1 at 72of121)

25. The contract specifications contained six work items requiring appellantto remove existing coatings, preparethe craft's surfaces, and replace existing coatings as summarizedbelow: 123-11-001 Fuel Oil Tank; Inspect; 123-14-001 Potable WaterTank; inspect and preserve; 123-16-001 Ballast Tank; repair andpreserve; 631-11-001 Bilge; Preserve; 631-31-001 Steel Craft Preservation; accomplish; and



### 5643-00-001 InteriorPreservation; accomplish. (R4, tab 27 at 8-12) 26. NAVSEA Standard Item 009-32, "Cleaning and Painting Requirements; accomplish," dated 31 January 2011 (R4, tab 22 at 6), requires a contractorto make an initial determination ofpotential employee exposure to hazardous levels ofheavy metals before beginningpaint removal, and then incorporate the appropriate level of worker and environmental protections based on that determination. The version of NAVSEA Standard Item 009-32 that was in effect at the time and incorporated into the contractprovided in relevant part: 3.1.1 Considermarine paint/nonskidto contain heavy metals (e.g., lead, cadmium, orchromium), hexavalent chromium, crystalline silica and/or othertoxic orhazardous substances. 3.1.2 Accomplish safety precautions as specified in 2.2, 2.3, and the Work Item/task order during surface preparation and the application orremoval ofmarine paints. (R4, tab 8 at 2of81) 27. Each work item specifically referenced Standard Item 009-32 and required the contractorto "accomplish the requirements of009-32

...for new and disturbed surfaces" (R4, tab 22 at 2-4, 6-11, tab 29, ii 3.4, tab 31, ii 3.10, tab 34, ii 3.9, tab 37, ii3.ll,tab 163,ii3.6,tab 170,ii3.30,tab 183,ii3.6). 28. Standard Item 009-32 incorporates by reference the Occupational Safety and Health (OSHA) standards set forth at 29 C.F.R. 1915, Occupational Safety and Health Standards for ShipyardEmployment, Subparts C and Z (R4, tab 8 at 1 ). 29. Work Item 077-01-001 sets forth the specific requirements for managing and disposing ofhazardous waste generated in the preservation process: 3. REQUIREMENTS: 3.1 Manage and dispose ofall hazardous waste listed n 3.5 in accordance with 2.1 and 2.2. 3.1.1 When a Navy generatornumber is required by this Work Item, submitthe original of2.3 to

6

### the SUPERVISOR for assignment ofEnvironmental Protection Agency (EPA) or delegated state environmental agency identification number. 3.1.2 Manage and transport for Navy disposal, Navy-generated hazardous waste listed in 3.5 in accordance with 2.1 and 2.2, as designated by the SUPERVISOR. 3.1.2.1 Consider existing interior coatings to be removed by the invoking work items ofthis contract to contain lead, cadmium and chromium. 3.1.3 Submit one legible copy of2.3 signedby the owner oroperator ofthe disposal facility to the SUPERVISORwithin 48 hours ofreceipt from owner or operator ofdisposal facility. 3.2 Complete documentation required by 2.1 and 2.2, using EPA or delegated state environmental agency identification number in accordance with 2.4. 3.2.1 Documentation related to hazardous waste generated solely by the physical actions ofShip's Force orNavy employees (termed Navy-Generated Hazardous Waste) on board the vessel shall only bear a generator identification number issued to the Navy pursuantto applicable law. The contractor shall obtain SUPERVISOR'S concurrence with the categorization of the waste as Navy-generated before completion ofthe manifest. The manifest prepared shall be presented to the SUPERVISOR for completion afterthe hazardous waste has been identified. (R4, tab 22 at 16-17) 30. Work Item 077-01-001 describes the types ofhazardous waste expectedto be produced during performance: 3.5 Hazardous waste, as identified in 2.1, expected to be produced during performance ofthis Job Order.

7SpentAbrasive Blast Material (contaminated with a known hazardous waste): 275 tons

Paints (May include lead, cadmium, or chrome): 10 pounds

Paint Chips: 20 pounds (R4, tab 22 at 18-19) 31. Work Item 077-01-001 in the specifications provides the contractorwith the following references, applicable to the contractor's performance: 2. REFERENCES: 2.1 Resource Conservation and Recovery Act (RCRA)

2.2 Federal Hazardous Materials Transportation Act, 49

## u.s.c. [§] 5103 2.3 Applicable Hazardous Waste Manifest Form 2.4 10

## u.s.c. [§] 7311 (R4, tab 22 at 16) 32. Chapter 631 ofthe Preservation of Ships in Service manual, expressly referenced in Standard Item 009-32, directs contractors to: 631-2.4.5.1.1 Assumepaints being removed contain chromates and present an increased cancerrisk unless it can be demonstrated eitherby laboratory analysis or survey ofpaint application logs or specificationsthatthe existingpaint does not contain chromates (as chromium) in excess of50 parts per million (ppm) of0.005 weight

8percenttotal metal in the dry film. Multiple layers ofpaint must be individually verified as to their chromate content. (R4, tab 9 at 87-88) 33. With respect to lead, the manual states that at paragraph 631-2.4.5.2.1: "Paintbeing removed shall be considered to contain lead unless the procedures of paragraph 631-2.4.5.1.1 are used to demonstrate the level oflead is below 0.005 weight percent in the dry film" (R4, tab 9 at 88). 34. With respect to cadmium, the manual states that: 631-2.4.5.3.1 Cadmium exposure may occur during the application orremoval ofcoatings containing cadmium. In addition to its inclusion in paints, cadmium is frequently used for electroplating steel and aluminum parts. Therefore, precautions similarto those for lead and chromium removal shouldbe taken when preparing surfaces ofequipment which contain cadmium platedparts (e.g., fasteners, springs, electrical connectors, etc.). (R4, tab 9 at 88) 35. In a series ofmodifications, the period ofperformance was extended until 25 October 2013 (finding 20). 

### III. Nature ofthe Work 36. Marine coatings and industrial paints containheavy metals and hazardous substances. Abrasive blasting to remove marine coatings produces airborne particles that can harm workers (app. supp. R4, tabs 115-16). 37. OSHAregulations apply to industrial processes, such as the removal of paint and other coatings that may expose workers to hazardous concentrations of certain heavy metals above levels specified in the OSHA regulations. The OSHA regulations that apply to ship repair operations are set forth in 29 C.F.R., Part 1915. 38. OSHAregulations set forth action levels and higher "permissible exposure limits" (PELs) for exposure for toxic heavy metals, including lead, cadmium, and hexavalent chromium (app. supp. R4, tab 93 at 7 (Expert Report ofKevin Malott)); 

### see, e.g., 29 C.F.R. § 1915.1025, Lead in the Shipyard Industry; 29 C.F.R. § 1915.1027, Cadmium in the Shipyard Industry, and 29 C.F.R. § 1915.1026, Chromium (VI) in the Shipyard Industry.

9

### 39. When employee exposures exceed an action level for lead, cadmium or hexavalent chromium, OSHA regulations require an initial exposure determination, a medical surveillance program, periodic personal air sampling, and annual training on the hazards oflead exposure and the OSHA lead standard (app. supp. R4, tab 93 at 10). 40. The removal ofpaint containing toxic heavy metals in concentrations that result in exposure overthe OSHA hazard levels requires more extensive worker safety requirements than the safety requirements necessary for the removal ofpaintthat does not result in exposure over the OSHA hazard levels (app. supp. R4, tab 139, Greenfield dep. at 156-57). IV. Requests for Equitable Adjustment 

### 41. Appellant kept the government apprised ofits paint sampling results with its periodic submission ofInspection Deficiency Reports (IDRs) (R4, tabs 58-62). 42. The government did not respond substantivelyto IDRs 74, 86 or 98 (R4, tabs 58-60), but directed appellant to continue with the work and suggested that appellant submit a formal REA for any additional costs to which it believed it was entitled (R4, tab 94 at 32). 43. The government maintainedthat the cost ofremoving paint containing heavy metals was coveredby the terms ofthe contract and directed appellant to continue with the basic work items set forth in the contract (R4, tab 62). 44. On 16 July 2013, appellant submitted a request for equitable adjustment (REA), certified pursuant to DFARS 252.243-7002 in the amount of$361,604.00 for handling and disposal ofexcess hazardous wastes generated underthis DO (R4, tab 52 at 1-5). 45. The majority ofthe specific costs sought in the REA, as set forth in the change orderprice analysis (COPA) attached to the REA, were for labor costs for work by appellant's subcontractor, PYR, associated with mitigating employee exposure to airborne contaminants during the paintremoval process (R4, tab 52). 46. On 29 November 2013, appellant submitted an "amended REA/claim" for $947,811.00, which included $418,910.00 in costs relating to paintremoval and $369,183 in delay and disruption costs and other direct costs. Appellant's submission contained a ContractDisputes Act certification pursuant to FAR 33.207(c), Contractor Certification.

1047. On 31 January 2014, the government issued a COFD denying the claim. The COFD denied the claim on the primary grounds that: (1) the contract advised appellant to consider all marine coatings to contain heavy metals; (2) that the hazardous waste generated did not exceed the amount estimated in the 077 work item for disposal; and (3) thatthe government ultimately paidthe costs for disposal ofthe hazardous waste, not SBBRor its subcontractor (R4, tab 54 at 1-5). 48. On 13 February 2014, appellant, through counsel, revised its claim downward to $819,128.00, statingthat it had "removed or modified" elements ofits claim after reviewing its direct and indirect costs in light ofthe comments contained in the COFD (R4, tab 55 at 10). 49. On 28 April 2014, SBBR appealed from the COFD and the Board docketed the appeal as ASBCA No. 59281. On 1July 2014, SBBR filed its complaint. After conducting written discovery and taking depositions, the parties agreed to submitthe appeal on the record pursuantto Board Rule 11. DISCUSSION The central issue raised by appellant is whetherthe ship repaircontract

- and specifically the requirements ofDO0007

- satisfiedthe requirements of 10 U.S.C. § 7311. Section 7311 states, in relevantpart: § 7311. Repair ormaintenance ofnaval vessels: handling ofhazardous waste (a) CONTRACTUALPROVISIONS.-The Secretary ofthe Navy shall ensure that each contract entered into for work on a naval vessel (other than new construction) includes the following provisions: (1) IDENTIFICATION OF HAZARDOUS WASTES.-A provision in which the Navy identifies the types and amounts ofhazardous wastes that are required to be removedby the contractor from the vessel, orthat are expectedto be generated, during the performance of work under the contract, with such identification by the Navy to be in a form sufficientto enable the contractorto comply with Federal and State laws and regulations on the removal, handling, storage, transportation, ordisposal ofhazardous waste.

11Appellant contends that the statute imposes a duty on the government to "positively identify and quantify the hazardous paint on the LCU 1631 in a manner that allowed the contractorto plan**it~.** compliance with OSHA and otherregulations that apply when removing hazardous paint" (app. br. at 112). Appellant argues that the government's "reliance on standard contract work specifications telling the contractorto 'consider' all paint on the vessel to contain heavy metals" was insufficient to satisfy the government's disclosure obligations pursuantto 10 U.S.C. 

### § 7311 (id. at 6). Specifically, appellant contends thatthe government's reliance on Standard Item 009-32

- telling the contractorto "consider" all paint on the vessel is hazardous

- violates 10 U.S.C. §7311, because it fails to inform the contractor ofthe type and quantity ofpaint on the vessel that contained heavy metal contamination in excess of OSHA trigger levels (app. br. at 115). Moreover, Work Item 077-01-001 serves only to inform "the contractorthat all paint removed from the vessel must be disposed ofas hazardous waste" (id. at 111). It does not, according to appellant, identify and quantify the heavy metals in the existing paint "in a manner sufficientto enable [appellant] to comply with the worker safety and environmental protections [sic] regulations that apply to paintremoval operations" (id. at 98). In particular, appellant contends thatthe word "consider" means only that the contractor should determine whether or notthe paint might contain heavy metals, notthat the contractor should assume that all ofthe vessel's paint contains heavy metals (id. at 106). In appellant's view, because the Navy is in the bestposition to know whattype ofpaint is present on its ships, 10 U.S.C. 

### § 7311 imposes a duty ontheNavy to identify and quantify the existing hazardous paint on the vessel in a way that permits the contractorto estimatethe cost ofthe worker safety procedures requiredto remove the paint (app. br. at 105-06). We first determine the scope ofthe duty imposed by 10 U.S.C. 

### § 7311 and then determine whether the contract in this appeal satisfies that duty. 

### A. Scope ofStatutoryRequirement Set Forth in 10 U.S.C. 

### § 7311 The first step in statutory interpretation is to review the statutory language, which should be given its plain meaning absent clear indications to the contrary. See Lynteq, Inc. v. UnitedStates, 976 F.2d 693 (Fed. Cir. 1992); EFGAssociates, Inc., ASBCA No. 50546 etal., 01-1 BCA**~** 31,324. Ifthe language is clear and fits the case, the plain meaning ofthe statute generally will be regarded as conclusive. NorfolkDredging Co. v. UnitedStates, 375 F.3d 1106, 1110 (Fed. Cir. 2004) (citations omitted).

1210 U.S.C. § 731 l(a)(l) requires the Navy to identify "thetypes and amounts of hazardous wastes that are required to be removedby the contractor from the vessel, or that are expected to be generated, during the performance ofwork underthe contract" (emphasis added). By its terms, 10 U.S.C. 

### § 7311 applies to both the generation of hazardous waste and the disposal ofthat waste. The statutory language does not state that the Navy must quantify the "types and amounts" of paintcontaining hazardous substances, much less identify specific portions ofthe vessel where paint may contain hazardous substances. Instead, the statute focuses on the types and amounts ofhazardous waste. While it may be true that identifying hazardous paint may shed light on the quantity ofhazardous waste that is expected to be generated from removing thatpaint, the statute does not impose any specific method ofidentifying and quantifying the hazardous waste that is expected to be generated. Indeed, the government estimatedthe amount ofabrasive blastresidue based on the pasthistory ofsimilarvessels, as verified by interviews with contractors, and on a formula thatuses surface area datato predictblastresidue amounts (findings 8-9). Section 73 11 does not address worker safety requirements or the costs ofpaint removal. Instead, that cost is determined in the otherparts ofthe contractpertaining to the specific removal workto be undertaken (finding 25). In ourview, 10 U.S.C. § 7311 imposes on the Navy a duty to identify the type and quantity ofhazardous waste that is expected to be generated. Afterthat, the duty shifts to the contractorto properly price the activities involved in generating and disposing ofthat waste. 

### B. Whetherthe ContractSatisfied the Requirements of 10 U.S.C. 

### § 7311 Given this understanding ofthe scope ofthe statutory obligations of 10 U.S.C. § 7311, we next address whetherthe contract in this case satisfied those obligations. Again, we rely on the plain language ofthe contract's provisions. LAIServices, Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009) (holdingthat contract interpretation begins with examination ofthe plain language ofthe written agreement). Contract language is clear and unambiguous when there is only one reasonable interpretation consistent with the plain meaning. Id. In this case, two specific provisions ofthe contract, when considered together, satisfy the obligations of 10 U.S.C. § 7311. First, the contract contains specific estimates ofhazardous waste set forth in paragraph 3.5 ofWork Item 077-01-001, which states that the contractorwould generate up to 275 tons ofspent abrasive blast material, 10 lbs. ofpaint, and 20 lbs. ofpaint chips (finding 31). Second, the contract incorporates Standard Item 009-32, which expressly instructs the contractorto "[c]onsiderexisting interior coatings to be removed by the invoking work items ofthis contractto contain lead, cadmium and chromium" (finding 27). When these two

13provisions are consideredtogether, there is no ambiguity that the paintto be removed is likely to contain toxic heavy metals oflead, cadmium, and chromium. Given this unambiguous language, appellant should reasonably have concludedthat removal of thepaint wouldtrigger worker safety requirements for the removal oftoxic heavy metals. Appellant attempts to inject ambiguity into the contract by challengingthe common sense understanding ofthe word "consider" as it is used in Standard Item 009-32. In particular, appellant contends that the word "consider" means only that the contractor should determine whether or not the paint might containheavy metals, not that the contractor should assume that all ofthe vessel's paint contains heavy metals (app. hr. at 99-106). In ourview, there is no need to engage in a semantic debate regardingthe meaning ofthe word "consider." The phrase "[c]onsidermarine paint/nonskid to contain heavy metals" expressly places the contractor on notice that the vessel's coatings maycontain heavy metals (finding 26). We do not need to decide whether "consider" means that the contractor automatically should assume allpaints and coatings are contaminated with heavy metals. Becausethe contractplaces the contractor on notice that the vessel's coatings may contain heavy metals, it is incumbent on the contractorto estimate the cost ofperformance. The contractor can employ its own businessjudgmentto decide howbestto estimatethe cost of performance, for example, by taking paint samples, by assuming that all ofthe vessel's coatings are contaminatedwith heavy metals, orby accepting the risk that removing the paintwill notrequire costly workerprotectionrequirements. Instead ofbasing its estimate ofremoval costs on the quantity ofabrasive blast material, appellant admits that it "based [its] hazardous paintremoval costs on the small quantities ofhazardous paint and paint chips [the government] included in Work Item 077-01-00l" (finding 11). Appellant's estimator, Mr. Bowen, also acknowledges that mechanical cleaningprocesses (hammer, wire brush, needle guns) would produce paint chips as a by-product, rather than spent abrasive material (finding 13). Appellant states that it generated 44,185 lbs. ofhazardous waste in 109 55-gallon drums (finding 16), an amount far less than the 275 tons estimated by the government. Appellant attempts tojustify its position by drawing a comparison betweenthe 44,185 lbs. ofhazardous waste that it generated to the government's estimate of 10 lbs. ofpaints and 20 lbs. ofpaint chips, ratherthan comparing its 44,185 lbs. to government's estimate of275 tons ofhazardous waste. Appellant's estimator, 

### Mr. Bowen, admits that he was aware ofthe Navy's estimate of275 tons ofspent abrasive blast material contaminated with a known hazardous waste, butthathe did not expect to generate that much because PYRwould

14

### be using a different process to remove the paint (finding 14). He testified that, because PYRwould be using steel grit, which could be recycled 300

- 500 times, the removal process would produce far less spent abrasive waste than the government's estimate of 275 tons (finding 14). According to Mr. Wilkerson, SBBR's general manager, appellant understood PYR's estimate to include the cost ofdisposing ofany spent abrasive material generated during the contract (finding 15). Appellant offers little explanation for why it did not base its hazardous paint removal costs on the government's estimate of275 tons of"SpentAbrasive Blast Material (contaminated with a known hazardous waste)" (findings 14, 30). According to appellant, the government's estimate of275tons ofblastresidue was not specific enough for appellantto conclude that the blast residue would contain toxic heavy metals (lead, cadmium and chromium) as opposed to the less toxic contaminants of copper and zinc. Appellant explains that paragraph 3.5 ofWork Item 077-01-001 "did not inform PYRthat the paint it would blast offthe surfaces ofthe ship contained concentrations oflead, cadmium or chromium that would require abatement [involving OSHA workerprotections] during the removal process" (app. br. at 37). Apparently, this is because blastresidue typically is "contaminatedwith copper and zinc," materials "often used in the anti-fouling coatings and epoxies used on Navy vessels" (id. 

### at 36). Appellant maintains that copper and zinc make the blast residue hazardous for disposal purposes, but do not make it hazardous underthe OSHA regulations (id. 

### at 37). The government disagrees, contending that the minimum required worker protections are essentially identical for removing paint containing lead as for removing paint containing zinc (R4, tab 57 at 5). Regardless ofwhetherthis is true, it does not change the fact that appellant assumed thatthe bulk ofthe paint and coatings on board LCU 1631 would not require the same workerprotection requirements as required for toxic heavy metals. Appellant's explanation is particularlybewildering when both Section C.6.2.c ofthe contract and Standard Item 009-32 expressly instruct the contractorto "[c]onsiderexisting interior coatings to be removed by the invoking work items ofthis contract to contain lead, cadmium and chromium" (finding 27). In ourview, the propercomparison is to the estimate ofhazardous abrasive blast waste to be generated, not to specific quantities ofpaint chips orpaint waste. This view is consistentwith the statutory language. The fact that PYRwould be using recyclable steel grit instead of sand might reduce the ultimate quantity ofhazardous waste generated during paint removal, but should not change the need to provide for workerprotection during paint removal. Appellant's interpretation ofthe contract focuses on Standard Item 009-32 in isolation and fails to take into account how the provisions ofWork Item 077-01-001 and Standard Item 009-32 work together. This violates the core principle ofcontract interpretation that contract terms are interpreted and read as a whole, giving reasonable

15meaning to all ofthe contract's parts, and without leaving "aportion ofthe contract useless, inexplicable, void, or superfluous." 

### NVTTechnologies, Inc. v. UnitedStates, 370 F.3d 1153, 1159 (Fed. Cir. 2004). Moreover, appellant'sposition would shift the risk ofestimating the cost of performance to the government, rather than to the contractor. In a firm-fixed-price contract, the risk ofestimating the cost ofperformance falls squarely on the contractor and the contractor generally assumes the risk ofunexpected costs. FAR 16.202-1, Description; 

### Lakeshore Eng'gServs., Inc. v. UnitedStates, 748 F.3d 1341, 1347 (Fed. Cir. 2014) (holding that "[t]he essence ofa firm fixed-price contract is that the contractor, not the government, assumes the risk ofunexpected costs"). In this case, the contract provisions unambiguously place the contractor on notice that paint removal may require worker safety precautions associatedwith the presence ofheavy metals contamination. 

### C. Distinguishing Metal Trades and Southwest Marine Appellantrelies on 

### Metal Trades, Inc. v. UnitedStates, 810 F. Supp. 689 (D.S.C. 1992); and

### SouthwestMarine, Inc., ASBCANo. 46155, 96-2 BCA

### i! 28,292 to support its interpretation of 10 U.S.C. § 73 11. 

### Metal Trades is inapposite. In 

### Metal Trades, the court held thatthe government had violated§ 7311 by failing to quantify the amount ofhazardous asbestos waste expected to be generated during the ship repair contract. The court found unpersuasive the government's contention that a standard contractprovision

- providingthat the contractor is to "consider" all insulation to be asbestos-based material

- was sufficient to satisfy the duty establishedby § 7311. The courtreasoned that knowledge ofthe existence ofhazardous waste was not equivalentto knowledge ofthe amount of hazardous waste expected to be generated. 810 F. Supp. at 694. In 

### Metal Trades, the government made no effort to identify or quantify the asbestos in thejob order. Here, in contrast, the government expressly quantified the type (spent abrasive blast material) and quantity (275 tons) ofhazardous waste that it expectedto be generated. Moreover, in this case, the government does notrely solely on a standard contractprovision to comply with 10 U.S.C. §7311. Instead, it relies on an estimate ofthe type and quantity ofhazardous waste expected to be generated duringpaintremoval, in combination with a specific warning thatthe paintto be removed should be consideredto contain concentrations ofspecific toxic heavy metals. Appellant shouldreasonably have concludedthat removal ofthe paint would trigger worker safetyrequirements for handling these toxic heavy metals. Moreover, the court's holding in 

### Metal Trades does not impose any specific method ofidentifying and quantifying the hazardous waste that is expected to be

16generated

- it merely holds that the government must quantify the type and amount of waste it expects to be generated. Finally, the district court'sholding in Metal Trades is not binding precedent on this Board. This Board does not consider a district court decision to be precedent "binding" on it ifthe decision was issued in an appeal otherthan one currently before the Board. SWR, Inc., ASBCA No. 56708, 15-1,-r35,832 at 175,219-21 (addressing precedential effect offederal district court decision reversing a Board decision arising froin a maritime contractpursuant to 41 U.S.C. § 7102(d)); see also Marine Logistics, Inc. v. England, 265 F.3d 1322 (Fed. Cir. 2001) (holding that appeals arising out of maritime contracts mustbebrought in the federal district courts). The Board's decision in SouthwestMarine also fails to support appellant's position. SouthwestMarine is factually similarto this case, in that it involves the application of 10

# u.s.c. § 7311 to a ship repair contract. Like this case, the contractor contended that the Navy's reliance on a standard contract item failed to satisfy the requirement of 10 U.S.C. 

### § 7311 to "identifly] the types and amounts ofhazardous wastes that are required to be removed by the contractorfrom the vessel." These factual similarities, however, are not enoughto support appellant's interpretation of 10 U.S.C. 

### § 7311. The critical distinction betweenSouthwestMarine and this appeal is thatthe contractor in SouthwestMarine encountered a quantity of asbestos greatly in excess ofthe specific amount ofthe government's contractual estimate. In SouthwestMarine, the contractorremoved 166,210 lbs. ofasbestos from the vessel, more than an order ofmagnitude greaterthan the government's estimate of 10,000 lbs. Here, in contrast, appellant generated a much lower quantity ofhazardous waste than the government's contractual estimate. Appellant claims to have been surprised by the level ofeffort required to remove the paint on boardthe vessel, not by the quantity ofhazardous waste generated during the removal process. The contract in this appeal provided sufficient information for appellant to concludethat it would generate as much as 275 tons ofhazardous waste during paintremoval, and that removing the paint likely wouldrequire worker safety protections associated with the presence oftoxic heavy metals. 

### D. Extrinsic Evidence NotNecessary Appellant makes much ofthe fact that the Navy modified the language of Standard Item 009-32 in the year following appellant's contract (app. br. at 111 n.15). While it is true that the new language ofStandard Item 009-32 adds clarity by instructing the contractorto "consider" "abrasiveblasting media" to "containheavy metals and/or othertoxic orhazardous substances," the language ofStandard Item

17

### 009-32 that was included in appellant's contract is sufficiently clearto place appellant on notice that the "spent abrasive blast material (contaminated with a known hazardous waste)" would "contain lead, cadmium and chromium." Appellant also cites to the Navy'spast practice ofapproving change orders on other fixed-price paint removal contracts as evidence that Standard Item 009-32 should be interpreted narrowly (app. br. at 3). While the governments past practice might explain why appellant was willing to take the risk ofunderbidding the project ifit encountered significant quantities of"hot"paint, it does not influence our interpretation ofthe contract's plain language. Appellant also relies on evidence thatthe Navy changed its policy ofapproving change orders for hazardous paint removal during its consideration ofappellant's REA, contending that the Navy retroactively applied its new policy to appellant's REA (app. br. at 120). Extrinsic evidence ofsubsequent policy changes has no bearing on the interpretation ofthe plain language ofthe contract. Indeed, ifthe contract language is clear and unambiguous, the plain language controls and extrinsic evidence is not allowed to contradictthe plain language. CoastFederalBank, FSB 

### v. United States, 

### 323 F.3d 1035, 1040 (Fed. Cir. 2003); Certified Construction Company of Kentucky, LLC, 

### ASBCA No. 58782,**15-1BCA~36,068** 

### at 176,133. Moreover, extrinsic evidence cannot impart ambiguity into an otherwise unambiguous contract. Hunt Constr. Group, Inc. 

### v. UnitedStates, 

### 281F.3d1369, 1375 (Fed. Cir. 2002); Tomahawk Constr. Co., 

### ASBCA No. 41717, 93-3 BCA**~** 

### 26,219 at 130,486-87. E. Estoppel Argument 

### Appellant further contends that the government should be estopped from denying appellant's request for removal costs, because the government stated during the bid process that it wouldpay for the higher costs (app. br. at 122). A close review ofappellant's request for specific clarification and the government's response demonstrates thatthe government's response was consistent with the contractual language and did not amount to an agreement thatthe government would pay for removal costs beyond the contracted amount. With reference to the government's estimate ofhazardous waste set forth in paragraph 3.5 ofWork Item 077-01-001, the appellant asked: Since the requirements to accomplish removals differ greatly contractors utilize the government[']s quantities in generating their estimates ofremoval costs. If

### the amounts exceed the government[']s expectations and amod is issued to coverthe additional disposal costs it is

18

### (Finding 8) the contractor[']s right to include additional expenses for labor, lab fees, analysis etc. into the contract mod. Please advise.

In response, government stated that it "uses historical data to estimate and provide the amount ofhazardous waste. Anythingbeyond the amount listed will be negotiated and addressed by a contract modification." (Finding 8) This response is consistent with paragraph 4.1 ofWork Item 077-01-001, which states that, ifthe "[h]azardous waste generated during the actual performance ofthe work" varies in "type and amount from waste listed in 3.5," the government may renegotiate for credit or increase pursuant to Paragraph (b) of2.4 (id.). 

### Appellant's request for clarification was not limited to the removal costs associated only with the small quantities ofhazardous paint (10 lbs.) andpaint chips (20 lbs.) the government included in Work Item 077-01-001. Instead, its request focused on paragraph 3.5 generally. Therefore, it was logical to conclude, as the government did, that appellant's question addressed the government's estimate of 275 tons of"Spent Abrasive Blast Material (contaminated with a known Hazardous waste)" as well as its estimates ofhazardous paint waste and paint chips. Moreover, although appellant's request for clarification did address the "requirements to accomplish removals," it specifically did not mention or address OSHA requirements or otherparticularremoval costs. Accordingly, the government's response focused only upon its estimate ofhazardous waste to be generated during contract performance. Finally, in asking for clarification, appellant stated that "contractors utilize the government[']s quantities in generating their estimates ofremoval costs" (finding 7). This statement logically implies thatthe appellant would rely on the government's estimate of275 tons ofspent abrasive material in estimating appellant's removal costs. F. Constructive Change 

### Finally, we address whetherthe additional costs incurred during paint removal were the results ofa constructive change. The Changes clause ofthe contract provides that a change includes "any act or omission to act on the part ofthe Government in respect ofwhich a request is made for equitable adjustment" (finding 23). Under the contract's Changes clause, the government is liable for delay and increased costs when it demands work not required by the contract'splans and specifications. ECC, 

### International, ASBCA No. 55781, 13 BCA

### iJ 35,207 at 172,737. A constructive

19

### change is workperformed in response to an informal change order or due to the government's fault. Int'!Data Products Corp. v. UnitedStates, 

### 492 F.3d 1317, 1325 (Fed. Cir. 2007). For a contractorto recover for a change, the person acting for the government must possess authority to modify the contract. Winter v. Cath-dr/Balti Joint Venture, 

### 497 F.3d 1339, 1344 (Fed. Cir. 2007); Northrop Grumman Systems Corp. Space SystemsDiv., 

### ASBCA No. 54774, 10-2 BCA,34,517 at 170,242. Ifa contractorperforms workthat cannotbe characterized as additional work under the contract, it does not constitute a change. Int'!Data, 

### 492 F.3d at 1325. Appellant bears the burden ofproving the elements ofa change. Die-Matic Tool Co., 

### ASBCA No. 31185, 89-1BCA,21,342 at 107,603, ajf'd, 

### 889 F.2d 1100 (Fed. Cir. 1989) (table). Appellant has not demonstrated that the additional costs incurred by its subcontractor in complying with worker protection requirements during paintremoval were the result ofa constructive change. In particular, appellant has not provided evidence that the government compelled it to performwork that was not required by the terms ofthe contract. As we discussed above, the plain language ofthe contract indicates thatthe paint removal work

- and any necessary worker protection requirements

- were required by the terms ofthe contract. Instead, the evidence shows that appellant willingly performed the work under the assumption that the government would agree to an increase in the contractprice and that the government consistently maintained that the work was within the scope of the contract. Appellant kept the government apprised ofits paint samplingresults with its periodic submission ofInspection Deficiency Reports (IDRs) (finding 42). Relying on the Navy's "history ofpaying contractors additional money to remove paintbased on the concentrations ofheavy metals identified in paint sample analysis," appellant apparently assumed that the government would agree to an increase in the contract price to coverthe OSHArequirements for safely removing and handling the paint based on the IDRs (id.). 

### The government never substantively responded to IDRs 98, 86 or 74, but directed appellant to continue with the work and suggested that appellant submit a formal REA for any additional costs to which it believed it was entitled (finding 43). Moreover, in its responses to appellant's specific inquiries regarding reimbursement for additional paintremoval costs, the government consistently maintained thatthe cost ofremoving paint containing heavy metals was covered by the terms ofthe contract and directed appellantto continue with the basic work items set

20forth in the contract (finding 44). Therefore, appellant has not established that the government compelled it to perform additional workthat was not required by the terms ofthe contract. Dated: 19 January 2017

I concur



# _,/;:;?**L~~.~-./-~/./**,/.--

-**/~/~ :I~-**  ,,:

## MA~ N. STEMi£R7 Administrative Judge Acting Chairman Armed Services Board ofContractAppeals

# ~~~ Administrative Judge Armed Services Board ofContractAppeals I concur

# Rl~KLEFORD Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

I certifythatthe foregoing is atrue copy ofthe Opinion and Decision ofthe Armed Services Board ofContract Appeals in ASBCA No. 59281, Appeal ofSouth Bay BoilerRepair, Inc., rendered in conformance with the Board's Charter. Dated:

21 JEFFREY D. GARDIN Recorder, Armed Services Board ofContract Appeals