ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeal of --

Lee's Ford Dock, Inc. 

Under Contract No. DACW62-1-00-0105 

APPEARANCES FOR THE APPELLANT: 

APPEARANCES FOR THE GOVERNMENT: 

) 

) 

) 

) 

) 

ASBCA No. 59041 

Alan I. Saltman, Esq. 

Evangelin L. Nichols, Esq. 

Smith, Currie & Hancock LLP 

Washington, DC 

Karl F. Dix, Jr., Esq. 

Smith, Currie & Hancock LLP 

Atlanta, GA 

Thomas H. Gourlay, Jr., Esq. 

Engineer Chief Trial Attorney 

Thomas M. Browder III, Esq. 

Engineer Trial Attorney 

U.S. Army Engineer District, 

Nashville 

OPINION BY ADMINISTRATIVE JUDGE CLARKE ON THE 

GOVERNMENT'S MOTION TO DISMISS 

The United States Army Corps of Engineers (COE) moves to dismiss this appeal , 

alleging that Lee's Ford Dock, Inc. (Lee's Ford) raised a new claim for the first time on 

appeal, failed to certify the new claim, and filed the claim more than six years after 

accrual. We have jurisdiction pursuant to the Disputes clause of the lease at issue and the 

Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. We grant the motion on 

the first basis. 

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION1 

1. The COE and Lee's Ford entered into Lease No. DACW62-1-00-0105 on 

29 August 2000 for a commercial concession (marina) at Wolf Creek Dam-Lake 

Cumberland project, Kentucky, commencing on 1 September 2000 and lasting 

1 The COE's motion includes numerous other facts relating to bankruptcy and other 

matters that are not relevant to the central issue in the motion for the Board to 

decide. 
25 years (R4, tab 3 at 1, 17). Paragraph 32 of the lease, the Disputes clause, stated 

that, except as provided in the CDA, all disputes arising under or related to the lease 

were to be resolved under this clause and the provisions of the CDA. The Disputes 

clause provided that claims were to be submitted to the district engineer. The district 

engineer's decision was to be final unless the lessee appealed as provided in the CDA. 

See 41 U.S.C. § 7104. Claims over $100,000 required certification. (Id. at 14-15) 

2. The lease provided that the United States had the right "to manipulate the 

level of the lake or pool in any manner whatsoever ... and the lessee shall have no claim 

for damages on account thereof against the United States" (R4, tab 3 at 6). On 

19 January 2007 the COE decided that the dam was at high risk of failure and 

emergency measures were necessary "to reduce imminent risk of human life, health, 

property, and severe economic loss" (R4, tab 15 at 1). The COE concluded that it 

would incrementally lower the "pool" to elevation 680 to achieve maximum risk 

reduction while continuing hydropower and water supply operations (id.). 

3. On 12 July 2007, as a result of lowering the water level in the "pool," the 

COE reduced rent payments to one dollar for the period 1 July 2007 through 30 June 

2008 (R4, tab 7). Regular rents were reinstated on 1 July 2008 (gov't mot. at 4, ~ 15). 

4. On 18 January 2013, Lee's Ford's attorney emailed a claim to the COE's 

district engineer and on 19 January 2013 a copy of the claim was placed in the 

U.S. mail (gov't mot. at 4, ~ 18; app. opp'n at 2, ~ 18). The claim includes the 

following: 

As discussed below, Lee's Ford asserts that the very 

purpose of the Lease contract has been frustrated by the 

now six-year drawdown of Lake Cumberland caused by 

the Corps' decision to lower the Lake on January 19, 2007. 

As a result, Lee's Ford demands that the Lease contract be 

reformed in one or more of the following ways to 

compensate Lee's Ford for the damages it has incurred due 

to the drawdown: (a) rent owed by Lee's Ford to the 

Corps under the Lease should be fully abated until such 

time as the abated rent equals at least $4,000,000.00, which 

is the amount of Lee's Ford's disaster loan debt to the 

U.S. Small Business Administration ("SBA"); (b) the 

Corps will pay the SBA the sum of $4,000,000.00, plus all 

accrued interest and loan fees, in satisfaction of Lee's 

Ford's disaster loan debt to neutralize the detrimental 

effect that the frustrated contract continues to have on 

Lee's Ford; and/or (c) the Corps will commit to working 

with the SBA to develop a federal government policy that 

2 
would allow the SBA to hold the disaster loan debt fully 

satisfied by offsetting Lee's Ford's damages arising out of 

its frustrated Lease against its disaster loan debt under the 

unitary creditor doctrine. 

B. THE LOWERING OF LAKE CUMBERLAND 

As you are aware, Lake Cumberland is dammed by Wolf 

Creek Dam. On January 19, 2007, L TC Steven J. Roemhildt 

and Brigadier General Bruce A. Berwick signed the 

Memorandum for Record on the subject of "Wolf Creek Dam 

Interim Risk Reduction Measures" (the "January 19th Memo"), 

which discussed concerns with the possible failure of 

Wolf Creek Dam and the need to repair it. The January 19th 

Memo concluded that the Lake must be substantially lowered 

in order to accomplish the necessary repairs. Recognizing the 

impacts of the lowering on the Lake region, the Memo 

provided that "[p ]lans are being developed to mitigate to the 

maximum extent possible those impacts." Memo, p. 14. The 

Memo also included a commitment that the "Nashville District 

[of the Corps] will work with Lake Cumberland stakeholders to 

minimize to the extent practicable the impact to recreation," 

which was said to include the "relocation of marinas" and the 

"relaxation of user fees." Id. at 15. On January 22, 2007, the 

Corps began to lower the Lake water levels by a total of 

43 feet. 

As the District Engineer for the Nashville District of the 

Corps, Lee's Ford is submitting this letter to you to 

formally assert its "claim" against the Corps and to 

demand reformation of the frustrated Lease contract in 

such a manner as to compensate Lee's Ford for the 

damages it has incurred as a result of the drawdown 

through payment, the adjustment of Lease terms, and/or 

similar relief relating to the Lease .... 

As the lessee under the Lease, Lee's Ford expected to 

have a certain water level at its dock and the business 

3 
traffic that has historically followed that water level. 

While the Lease does contemplate that the Corps has the 

right "to manipulate the level of the lake or pool," the 

parties could not have envisioned at the time that they 

entered into the Lease that the Lake would be drawn down 

to such an extreme degree for such a long period of time, 

as the Lake has only been lowered to 680' once in its more 

than fifty year history. Instead, all that the parties could 

have anticipated was perhaps a short-term drawn [sic] 

down for repairs to the Dam - not a seven-year term of 

drastically lowered levels that required Lee's Ford to 

relocate its entire dock system within the leased area. 

[Footnotes omitted] 

(R4, tab 8 at 1, 2, 5) The claim included other facts relating to SBA involvement 

(id. at 2) and COE actions following the lowering of the lake (id. at 3). 

5. By a 26 August 2013 final decision, signed by both the district engineer and 

the contracting officer (CO), sent by certified mail, the COE denied the claim (R4, tab 

2). Lee's Ford received the final decision on 29 August 2013 (Bd. corr. file). On 

27 November 2013, Lee's Ford timely appealed the final decision to the Board 

(R4, tab 1 at 1). Lee's Ford's complaint, filed with its appeal, included one count, 

Breach of Contract-Nondisclosure of Superior Knowledge, and itemized alleged 

breach damages of $5,755,212. 

6. On 2 December 2013, the Board docketed the appeal as ASBCA No. 59041. 

7. On 5 February 2014, the COE filed its motion to "dismiss appellant's 

complaint," which it referred to in the body of the motion as one to dismiss the appeal. 

We treat the motion as one to strike the complaint. The COE contends that the claim 

for "nondisclosure of superior knowledge was raised for the first time on appeal" and 

was "never presented to the [CO] for decision as required by the CDA." (Gov't mot. 

at 7, ~~ 34, 35) 

8. On 21March2014, Lee's Ford filed its opposition to the COE's motion. On 

29 April 2014, the COE notified the Board that it had decided not to file a reply to the 

opposition. 

4 
DECISION 

Initial Jurisdictional Considerations 

The leases's Disputes clause invokes the CDA. Parties cannot, by contractual 

agreement, confer CDA jurisdiction upon the Board if CDA jurisdiction does not 

otherwise exist. See Florida Power & Light Co. v. United States, 307 F.3d 1364, 1371 

(Fed. Cir. 2002); Patriot Pride Jewelry, LLC, ASBCA No. 58953, 2014 ASBCA Lexis 

at *15 (9 June 2014). However, the Board has jurisdiction to entertain this appeal 

under the Disputes clause alone, which incorporates procedures for appeal to the 

Board. See, e.g., Donald M Lake, dlbla Shady Cove Resort & Marina, ASBCA 

No. 54422, 05-1BCA~32,920. We also have jurisdiction under the CDA because a 

lease involves the disposal of personal property within the CD A's coverage. 

41 U.S.C. § 7102(a)(4); Arnold V. Hedberg, ASBCA Nos. 31747, 31748, 90-1 BCA 

~ 22,577; accord New London Development Corp., ASBCA No. 54535, 05-2 BCA 

~ 33,018; see also Forman v. United States, 767 F.2d 875 (Fed. Cir. 1985). 

Jurisdictional Dispute at Issue 

Both parties correctly recognize that whether the complaint asserts a new claim 

or not depends, in part, on if it relies on the same "operative facts" cited in the claim. 

The alleged new claim in this case is failure to disclose superior knowledge. 

The elements of proof of superior knowledge are: 

( 1) a contractor undertakes to perform without vital 

knowledge of a fact that affects performance costs or 

duration, (2) the government was aware the contractor had 

no knowledge of and had no reason to obtain such 

information, (3) any contract specification supplied misled 

the contractor or did not put it on notice to inquire, and ( 4) 

the government failed to provide the relevant information. 

Scott Timber Co. v. United States, 692 F.3d 1365, 1373 (Fed. Cir. 2012). As reflected 

in these elements of proof, the "operative facts'' alleged in the claim must somehow 

communicate to the CO a disparity in knowledge between the parties at contract award 

of which the government was aware. The theory of superior knowledge is unique in 

that it normally relies on "operative facts" in existence before award. Grumman 

Aerospace Corp. v. Wynne, 497 F.3d 1350, 1357 (Fed. Cir. 2007) (addressing Board's 

determinations about the contractor's knowledge during "pre-award period" and "vital 

knowledge or the opportunity to obtain that knowledge before contract entry" 

(emphasis added); Bannum, Inc. v. United States, 80 Fed. Cl. 239, 247 (2008) (A 

superior knowledge claim ordinarily relates to knowledge regarding contractual 

5 
specifications that the government failed to impart to a contractor prior to the 

contractor's agreement to undertake performance of a contract); Renda Marine, Inc. 

v. United States, 66 Fed. Cl. 639, 721 (2005) ('"When analyzing a claim that the 

government breached its duty to disclose superior knowledge, "(t]he court ... must focus 

its inquiry on the government's knowledge at the time of contracting and its 

relationship to the contractor's lack of knowledge)"' (citations omitted). It is the 

pre-award disparity in knowledge that distinguishes the operative facts pertinent to 

superior knowledge allegations from those of other cases of action. 

In Todd Pacific Shipyards Corp., ASBCA No. 55126, 06-2 BCA ii 33,421, cited 

by appellant, the contract involved work related to maintenance of U.S. Navy vessels. 

In order to perform the contract Todd had to maintain a large dry dock. After award 

the Navy transferred several of the vessels and decommissioned another resulting in 

less work for Todd. Todd's 18 June 2004 certified claim referred to its 5 March 2004 

"Drydock No. 3 Settlement Proposal" that alleged the following operative facts: 

Todd stated that, upon concluding contract negotiations in 

June, 2001, it had undertaken a five-year repair and 

maintenance project to ensure that dry dock No. 3 would 

remain certified and ready to support all scheduled and 

potential <lockings covered by the contract. It alleged that, 

since nearly all of its non-Navy customers could be 

accommodated on a mid-sized dry dock, its continuing 

need for a dock as large as dry dock No. 3 was driven by 

this AOE contract and the Navy's representations and 

commitments as to the future work. It alleged that the 

project cost was $16 million; it was clearly understood that 

the Navy would pay for the dry dock costs through direct 

charges or as unrecovered costs included in overhead; and 

Todd had engaged in the project because of the Navy's 

representations and commitments and the $8.9 million in 

support Todd expected from it. However, after signing the 

contract, the Navy decided to transfer two vessels 

elsewhere and to decommission the U.S.S. Sacramento 

early. Todd alleged that it and the Navy had been 

discussing the need to change Todd's dry dock No. 3 cost 

recovery methodology for three years, and that the Navy's 

decisions had damaged it. 

Todd, 06-2 BCA ii 33,421 at 165,684. After the claim, final decision and appeal, Todd 

filed a complaint with seven counts, one of which was superior knowledge that had not 

been asserted in the claim. We held: 

6 
Although many of appellant's legal theories of recovery 

remained the same, it expanded upon them in the 

complaint to articulate such theories as breach of contract 

and superior knowledge. However, appellant essentially 

alleged the operative facts necessary to those theories in its 

28 March 2005 claim, in the 18 June 2004 claim 

referenced therein, and in the 5 March 2004 submission to 

which the 18 June claim, in tum, referred. 

Todd, 06-2 BCA ~ 33,421 at 165,688. It is significant that the operative facts stated in 

the 5 March 2004 settlement proposal included Navy pre-award "representations and 

commitments" concerning the amount of work to be performed under the contract. 

We found that these facts were sufficient to support the added legal theory of superior 

knowledge. 

We see a different result in Advanced Technologies & Testing Laboratories, Inc., 

ASBCA No. 55805, 08-2 BCA ~ 33,950 (ATTL), which involved a 21September2002 

COE delivery order contract with a small business for sampling and testing dredged 

material. After award A TTL submitted its "initial demonstration of capability data" and 

"standard operating procedures" on 21 February 2003, 5 September 2003, 30 December 

2003, and 18 June 2004 to the Environmental Protection Agency (EPA) for approval. On 

12 August 2004 the EPA found the last submission deficient, as it had all of the previous 

submissions. As a result, the COE decided not to order more than the contract's 

minimum quantity of $5,000 worth of work. ATTL submitted a claim alleging 

constructive change based on a 29 October 2002 letter and the EPA's "improper" 

rejection of its submissions. During discovery ATTL obtained a memorandum written by 

Ms. Beth Nash on 4 December 2001, before contract award, which stated the contract 

should not be a Small Business set-aside, because the contract required a high degree of 

precision and would be difficult for a small business to perform. A TTL also obtained a 

December 2001 memorandum written by Mr. John Hartmann agreeing with Ms. Nash. 

A TTL moved to amend its complaint to allege a superior knowledge cause of action. The 

Board held, "[a]ppellant's original claim alleged operative facts limited to two theories of 

recovery - the government changed the contract and the EPA review of appellant's 

submittals was faulty." Advanced Technologies, 08-2 BCA ~ 33,950 at 167,975. The 

Board held, "[ w ]e do not have jurisdiction to the extent that the underlying bases for the 

superior knowledge and commercial impracticability theories are the information in the 

Discovery Documents (i.e., a small business would find it difficult to complete the 

contract)". Id. The operative facts in the claim related to a 29 October 2002 letter and 

EPA rejections of ATTL's submissions on 21February2003, 5 September 2003, 

30 December 2003, and 18 June 2004. It is significant that all of the operative facts 

alleged in the claim were well after the 21 September 2002 award of the contract. Again, 

the theory of superior knowledge requires an allegation of operative facts occurring in the 

pre-award period. 

7 
Shams Engineering & Contracting Co. and Ramli Co., ASBCA Nos. 50618, 

50619, 98-2 BCA ii 30,019, involved a United States Agency for International 

Development (USAID) contract to construct residential buildings in Gaza. Shams 

submitted claims alleging "unfair settlement of claims submitted to USAID," "extra 

difficulties which cost us more than ABB SUSA on purchasing materials from Israel 

because of the [border] closure" and "delay of paying the amount of Claims on time 

'interest' as per FAR (Clause 52.233-1)." Shams, 98-2 BCA ii 30,019 at 148,523. 

Appellant appealed the final decision denying the claims and then moved to amend its 

complaint to add six counts. Count 2 was breach of the duty to disclose superior 

knowledge. The Board held: 

In Count 2, appellants contend that USAID 

breached its duty to disclose information vital for 

appellants' performance under the contracts, and that it 

knew or should have known that appellants did not possess 

the information. That information allegedly included 

(a) the volatile political and economic conditions in the 

region, which USAID should have anticipated, (b) the 

terms of the contract written in a language understandable 

to appellants and the physical inclusion of FAR provisions 

rather than their incorporation by reference into the 

contract, and ( c) the business and accounting standards to 

which USAID would hold appellants. Those contentions 

are essentially different than those presented to the 

contracting officer in appellants' claims seeking equitable 

adjustments. With respect to Count 2, appellants' motion 

to amend is denied. 

Shams, 98-2 BCA ii 30,019 at 148,526. As before, it is significant that none of the 

operative facts cited in the claim involved facts reflecting a disparity of knowledge 

between the government and the contractors before award. 

Court of Federal Claims cases in this area are also instructive. For example, in 

Laidlaw Environmental Services (GS), Inc. v. United States, 43 Fed. Cl. 44 (1999), which 

involved a waste disposal (magnesium batteries) contract, the parties filed cross-motions for 

summary judgment and the government filed a motion to dismiss for lack of jurisdiction. 

The motion to dismiss alleged that Laidlaw raised three theories of entitlement in its 

complaint that were not presented in its claim to the CO, including superior knowledge: 

As noted supra, the complaint in this court asserts three 

basic theories of liability, i.e., i) breach of contract, ii) 

constructive change, and iii) failure to disclose superior 

8 
knowledge. In contrast, the claim previously filed before 

the contracting officer asserted, in essence, that-i) CLIN 

0502 cannot be used on the contract because it is for state 

regulated batteries only; ii) the tests indicating the toxicity 

of magnesium batteries are disputable; iii) magnesium 

batteries are not regulated in North Carolina; iv) the use of 

CLIN 0502 in the contract was erroneous; and v) such use 

constituted a change in the contract. 

Laidlaw, 43 Fed. Cl. at 50. The operative facts supporting the claim were: 

i) The state of North Carolina does not regulate 

magnesium batteries so that the use of CLIN 0502 was 

erroneous; 

ii) The basis of the tests finding the magnesium batteries to 

be hazardous is disputable; 

iii) The government changed the terms of the contract 

when it informed Laidlaw it would use CLIN 0500 or 

CLIN 0502 in delivery orders because magnesium 

batteries exhibited '"toxicity characteristics for 

chromium" making them a RCRA regulated waste; 

iv) CLIN 0502 cannot be used on the contract because it is for 

state regulated batteries only and magnesium batteries are 

not regulated in North Carolina; and 

v) A new "'RCRA" CLIN with a unit price based on 

supportable data must be added to the contract. 

Laidlaw, 43 Fed. Cl. at 48. Focusing on the superior knowledge theory, the court held: 

The nature of this last claim is an assertion regarding what 

the government and Laidlaw knew in regard to the toxicity 

of magnesium batteries, and when they knew it. While 

such a claim before the contracting officer need not be 

legally precise, if the general nature of this claim had been 

presented to the contracting officer, we would expect a 

statement in Laidlaw's claim to the effect that Laidlaw was 

unaware of the government studies finding that 

magnesium batteries were hazardous under the RCRA; that 

the government did not inform Laidlaw of the results of 

such studies; and that Laidlaw was damaged by this lack 

of, or withheld, knowledge. This claim is thus a new claim, 

and a variance, based on "operative facts'' beyond those 

9 
presented for the contracting officer's final decision and 

must, therefore, be dismissed. 

Laidlaw, 43 Fed. Cl. at 50. Significantly, it was the lack of operative facts reflecting 

that Laidlaw was "unaware" of information the government was aware of that caused 

the court to dismiss. The court commented, "[ n ]o reasonable person could have 

inferred, from reading Laidlaw's claim before the contracting officer, that Laidlaw was 

alleging that the government had superior information that Laidlaw did not possess, 

which it had a duty to disclose." Id. at 51. 

The common thread in these and other superior knowledge cases is their 

analysis of whether the operative facts in a claim to the CO communicated the 

disparity of knowledge between the contractor and the government before contract 

award. If they did, there is jurisdiction to consider the claim, if not, there is no 

jurisdiction. That is the standard we apply to Lee's Ford. The legal theories asserted 

in the claim are "frustration of purpose" and "reformation" (SOF ii 4). The claim cites 

the following material operative facts 2

: 

• On 19 January 2007 a decision was made to lower 

the water level in the lake. 

• Lee's Ford expected to have "a certain water level 

at its dock and the business traffic that has 

historically followed that water level." 

• The parties could not have envisioned at the time 

they entered into the Lease that the Lake would be 

drawn down to such an extreme degree for such a 

long period of time, as the Lake has only been 

lowered to 680' once in its more than fifty year 

history. 

(SOF ii 4) The last two bullets relate to pre-award knowledge. 

The parties entered into the lease on 29 August 2000 (SOF ii 1 ). The decision to 

lower the water level was made over six years after the lease was executed3 (SOF ii 2). 

While two of the operative facts in the claim deal with the parties' knowledge at award 

of the lease, they do not reflect the disparity of knowledge between the parties required 

to support a superior knowledge theory. Indeed, Lee's Ford's assertion that the parties 

could not have envisioned at the time they entered into the Lease that the lake would be 

2 The facts presented in the claim relating to the SBA and the Corps' mitigation 

efforts are not material to superior knowledge. 

3 We do not consider the fact that ownership of Lee's Ford changed in 2003 to be 

significant (R4, tab 4). 

10 
drawn down to such an extreme degree for such a long period of time communicates a 

common understanding that is inconsistent with the disparity of knowledge required for 

superior knowledge. We disagree with the implication in appellant's brief that it alleged 

facts supporting superior knowledge, "[f]irst, the claim letter certainly indicates that, 

prior to lease execution, the Corps did not provide Lee's Ford with any information 

about defects with the Wolf Creek Dam that were likely to result in major 

reconstruction." (App. br. at 15) Of critical importance is the complete absence of any 

assertion that the COE had information that appellant did not. 

There is nothing in Lee's Ford's operative facts alleged in the claim that arguably 

supports the theory of superior knowledge. As in Laidlaw, no reasonable person could 

have inferred, from reading Lee's Ford's claim, that it was alleging the government had 

pre-award superior information that Lee's Ford did not possess. Accordingly, the 

complaint incorporated into the appeal constitutes a new claim that has not been 

presented to a CO for decision as required by the CDA, 41 U.S.C. § 7103(a)(l), we do 

not have jurisdiction to consider it, and we strike it. 

Since we do not have jurisdiction over the superior knowledge count, we do not 

address the government's other two issues, failure to certify and timeliness. 

CONCLUSION 

For the reasons stated above, we strike the complaint as it relates to the theory 

of superior knowledge without prejudice to the filing of a proper claim with the CO. 4 

The appeal, however, remains within the jurisdiction of the Board and Lee's Ford may 

amend its complaint to assert theories supported by the operative facts stated in the 

claim. 

Dated: 23 July 2014 

Administr, tive Judge 

Armed Services Board 

of Contract Appeals 

4 Since this claim is not before us we express no opinion on any possible untimeliness 

of the filing of the claim, should such occur. 

11 
(Signatures continued) 

I concur 

Administrative Judge 

Acting Chairman 

Armed Services Board 

of Contract Appeals 

I concur 

c 

aministrative Judge 

Acting 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. 59041, Appeal of 

Lee's Ford Dock, Inc., rendered in conformance with the Board's Charter. 

Dated: 

12 

JEFFREY D. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals