ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeal of --

Electric Boat Corporation 

Under Contract No. N00024-03-C-2101 

APPEARANCES FOR THE APPELLANT: 

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APPEARANCES FOR THE GOVERNMENT: 

ASBCA No. 58672 

Stephen J. McBrady, Esq. 

Skye Mathieson, Esq. 

Michelle D. Coleman, Esq. 

Crowell & Moring LLP 

Washington, DC 

Craig D. Jensen, Esq. 

Navy Chief Trial Attorney 

Russell A. Shultis, Esq. 

David B. Stinson, Esq. 

David M. Marquez, Esq. 

Alana M. Sitterly, Esq. 

Trial Attorneys 

OPINION BY ADMINISTRATIVE JUDGE D'ALESSANDRIS 

ON THE GOVERNMENT'S MOTION FOR SUMMARY JUDGMENT 

REGARDING ENTITLEMENT 

Pending before the Board is the motion for summary judgment regarding 

entitlement filed by respondent, the Department of the Navy (government or Navy). 

The Navy seeks entry of summary judgment holding that appellant, Electric Boat 

Corporation (Electric Boat or EB), and its subcontractor Huntington Ingalls, Inc. (HII), 

cannot establish economic injury directly caused by a change in federal law, and 

requests dismissal of the appeal. 

On December 10, 2018, we granted, in part, the Navy's earlier-filed motion for 

summary judgment, dismissing Electric Boat's claim for its own costs based upon the 

statute of limitations, but denying the motion with regard to the costs of its 

subcontractor HII. Electric Boat Corporation, ASBCA No. 58672, slip op. 

(December 10, 2018). Thus, despite the fact that the vast majority of the parties' 

briefing pertains to Electric Boat's costs, only HII's costs are at issue in this opinion. 

For the reasons stated below, we deny the Navy's motion. 
STATEMENT OFF ACTS FOR PURPOSES OF THE MOTION 

This appeal pertains to Contract No. N00024-03-C-2101 (the contract) for the 

construction of six Block II Virginia Class submarines (R4, tab 52). Familiarity with 

our prior opinion is assumed, and only facts relevant to the current motion are included 

here. The contract was primarily firm-fixed-price, but with some cost-reimbursement 

line items. Construction of each submarine was a fixed-price line item with cost 

sharing of costs above or below the target cost. (R4, tab 52 at 280-96) The contract 

included Clause H-9, NAVSEA 5252.233-9103, DOCUMENTATION OF REQUESTS FOR 

EQUITABLE ADJUSTMENT (AT)-ALTERNATE I (APR 1999), which stated: 

(a) For the purposes of this requirement, the term "change" 

includes not only a change that is made pursuant to a 

written order designated as a "change order" but also (i) an 

engineering change proposed by the Government or the 

Contractor pursuant to the "Other Change Proposals" or 

other requirements of this contract and (ii) any act or 

omission to act on the part of the Government in respect of 

which a request is made for equitable adjustment under the 

"CHANGES" clause or any other article or requirement of 

this contract. 

(b) Whenever the Contractor requests or proposes an 

equitable adjustment of $100,000 or more per vessel in 

respect of a change made pursuant to a written order 

designated as a "change order" or in respect of a proposed 

engineering change and whenever the Contractor requests 

an equitable adjustment in any amount in respect of any 

other act or omission to act on the part of the Government, 

the proposal supporting such request shall include the 

following information for each individual item or element 

of the request: 

(3) Description of work which is substituted or 

added by the change. A list of identifiable components and 

equipment (not bulk materials or items) involved, should 

be included. Separate descriptions are to be furnished for 

design work and production work; 

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( 4) Description of interference and inefficiencies in 

performing the change; 

( c) Each proposal submitted in accordance with this 

requirement shall include a copy of the Contractor's ship's 

labor budget at the cost level in effect as of the date the 

event began, the cost incurred at the cost level as of the 

same date, and the proposed effect of the change at the cost 

class level. 

( d) It is recognized that individual claims for equitable 

adjustment may not include all of the factors listed in 

subparagraphs (b) ( 1) through (b) (8) above, or that the 

Contractor may not reasonably be able to furnish 

complete information on all of the factors listed in 

subparagraph (b) ( 1) through (b) (8) above. Accordingly, 

the Contractor is only required to set forth in its request for 

equitable adjustment information with respect to those 

factors which are relevant to the individual request for 

equitable adjustment, or in the level of detail which is 

reasonably available to the Contractor. 

( e) In addition to any information required under 

paragraph (b) above, each proposal submitted in support of 

a claim for equitable adjustment, under any requirement of 

this contract, in an amount which requires certified cost or 

pricing data, shall contain such cost or pricing data as the 

Contracting Officer shall require with respect to each 

individual claim item, and shall be in sufficient detail to 

permit the Contracting Officer to cross-reference the 

claimed increased costs, or delay in delivery, or both, as 

appropriate, with the information submitted pursuant to 

subparagraphs (b) ( 1) through (b) (8) hereof. 

(R4, tab 52 at 428-30) The contract does not contain FAR 52.243-6, CHANGE ORDER 

ACCOUNTING, permitting the contracting officer to require a contractor to maintain 

separate accounts "of all incurred segregable, direct costs (less allocable credits) of 

work, both changed and not changed, allocable to the change." 

As described in more detail in our previous opinion, the Occupational Health and 

Safety Administration (OSHA) promulgated a new regulation, referred to as Subpart P, 
Fire Protection in Shipyard Employment (29 C.F.R. § 1915.501 et seq.), that became 

effective on December 14, 2004 (Fire Protection in Shipyard Employment, Final Rule, 

69 Fed. Reg. 55,667-708, OSHA (Sept. 15, 2004)). Electric Boat contends that 

compliance with Subpart P, which modified the regulations requiring a fire watch during 

"hot work," increased its cost of performance by an amount sufficient to qualify for an 

adjustment, pursuant to Clause H-30 of the contract, to the firm-fixed-price contract line 

item for construction of the submarines. 

Relevant to this motion, on January 30, 2006, HII submitted its Estimate of 

Cost Summary to Electric Boat, setting forth its "[a]dditional costs associated with 

complying with the increased requirements invoked by OSHA 29 C.F.R. 1915 

SUBPART P" totaling $27,524,878 (gov't mot., ex. 17). HII's claimed amount was 

based on an estimate of 392,520 additional labor hours (id.). 

HII' s estimated cost impact was developed by determining which of its 

departments had a high percentage of fire watch qualified personnel (gov't mot., 

ex. 101 at 3172-73). HII used its Labor Resources Plan from 2005 as a baseline for 

labor to complete the submarines. HII then estimated, on a department-by-department 

basis, the percentage of fire watch work performed before the effective date of 

Subpart P and an estimate of the percentage increase in fire watch performed after the 

effective date of Subpart P, with the exception of one department that estimated a set 

number of fire watch hours per week for grinding, rather than welding, activity. (Id. 

at 3174, 3204) 

Mr. James Myers, HII's executive in charge of cost and financing issues 

provided deposition testimony to the effect that it would be impractical to separately 

account for OSHA Subpart P costs. Mr. Myers testified that even if it were possible to 

create a cost code for "fire watch" that would only include the direct labor of "an 

individual to stand guard with a fire extinguisher" this would not measure the 

"ancillary efforts associated with fire watch" and that measuring these costs would be 

"nearly impossible" and that such "discrete cost intelligence would have been 

marginal, very subjective at best." (App. opp'n, ex. 26 at 79, 87-88, 90-91) EB's 

expert in cost estimating, Mr. James P. O'Hare, provided his opinion that HII's 

estimating methodology for the Subpart P regulation was based on information from 

supervisors familiar with HII's practices before and after Subpart P and that this was 

"consistent with the practices of other shipyards for pricing REAs and changes" and 

that HII' s estimate "provides a sound basis for adjudicating" the claim pertaining to 

HII's costs (app. opp'n, ex. 42 at 12-13). 

The Navy prepared a Technical Advisory Report (TAR), dated September 9, 

2009, regarding HII's portion of the claim. The TAR recommended compensating HII 

for an increase of 13,548 direct labor hours (less than 5o/o of HII's claimed amount) as 

a result of Subpart P (app. opp'n, ex. 64 at 15295-300). In addition, Navy witnesses 

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testified at deposition that the OSHA Subpart P regulations caused an impact on EB 

and HII* (see, e.g., app. opp'n, ex. 19, Hill Dep. at 99 ("OSHA required some 

additional fire watch in the area of - say it was nothing else, grinding, there would 

have to be some additional man-hours, but I don't think anywhere near what they 

proposed."), see also ex. 56, Nixon Dep. at 66-67 (some impact), ex. 57, Brucker Dep. 

at 32, 35, 37, 105, 118 (some magnitude), ex. 58, Lussier Dep. at 93-94 (imposed 

some new requirements and credit given in analysis), ex. 59, Malone Dep. at 84 

(estimate 30% of proposed impact)). 

On December 19, 2012, EB filed a certified claim pursuant to the Contract 

Disputes Act, including both EB's and HII's claimed costs (R4, tab 71). The Navy 

denied the claim on February 27, 2013 (R4, tab 76), and this appeal followed. 

DECISION 

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 (1986). A material fact is one that may affect the 

outcome of the decision. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 

(1986). The moving party bears the burden of establishing the absence of any genuine 

issue of material fact, and all significant doubt over factual issues must be resolved in 

favor of the party opposing summary judgment. Mingus Constntctors, Inc. v. United 

States, 812 F.2d 1387, 1390-91 (Fed. Cir. 1987). Once the moving party has met its 

burden of establishing the absence of disputed material facts, then the non-moving 

party must set forth specific facts, not conclusory statements or bare assertions, to 

defeat the motion. Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 626-27 

(Fed. Cir. 1984). 

The Navy asserts that it is entitled to entry of summary judgment in its favor 

because HII had the ability to separately track its fire watch activities but failed to do 

so and thus HII fails to establish causation and does not provide a reliable basis for 

calculating damages (gov't mot. at 121). Electric Boat opposes the motion, asserting 

that material factual disputes regarding the ability of HII to separately track its costs, 

and disputes regarding causation and damages prevent entry of summary judgment 

(app. resp. at 20-26). We agree that material factual disputes prevent entry of 

summary judgment. 

The Navy first argues that EB has not established causation for HII's claimed 

costs. According to the Navy, the absence of actual cost data to support HII's claimed 

* It is not always clear from the deposition transcript excerpts whether the deponents 

are referring to EB, HII, or both in their statements. 

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costs transforms the claim to a total cost claim or jury verdict award, and these theories 

require heightened proof of causation (gov't mot. at 101). According to the Navy, the 

fact that EB and HII did not maintain records sufficient to directly measure the 

increased costs means that EB and HII must be asserting a total cost claim or be 

requesting a jury verdict award (gov't reply at 4). However, HII's costs are not in the 

form of a total cost claim or request for a jury verdict. HII is relying upon estimates 

by employees with personal knowledge of the events at issue (gov't mot., ex. 101 

at 3172-74). This is an estimate of actual costs, and is not a total cost claim or request 

for a jury verdict. A total cost method claim "seeks to recover the difference between 

the actual cost experienced and cost anticipated in the bid.'' See, e.g., Crown Laundry 

& Dry Cleaners, Inc., ASBCA No. 31900, 86-3 BCA ,r 19,112 at 96,610. A "jury 

verdict" award is an award of damages where the amount of recovery can only be 

approximated due to a justified inability to substantiate the amount of injury by direct 

and specific proof. See, e.g., Service Engineering Co., ASBCA No. 40274, 93-1 BCA 

,r 25,520 at 127,111 (quoting Joseph Pickard's Sons Co. v. United States, 532 F.2d 

739, 742 (Ct. Cl. 1976)). Thus, HII is asserting an actual cost claim, with the 

increased cost of performance measured by estimating the increase in fire watch work 

performed after the implementation of Subpart P, rather than by direct measurement 

(gov't mot., ex. 101 at 3172-74, 3204). To be sure, HII will need to demonstrate the 

accuracy of its calculations at a hearing on the merits; however, as discussed below, at 

the summary judgment stage, HII has demonstrated the existence of a material factual 

dispute. 

While the Navy asserts that EB has not established causation (gov't mot. 

at 102), EB has asserted facts sufficient to raise a factual issue. In fact, the Navy's 

own TAR concluded that HII had incurred increased labor hours due to the Subpart P 

regulation (app. opp'n, ex. 64). The Navy argues that its preliminary conclusions are 

not binding because the Board conducts a de nova review (gov't reply at 6 n.6). While 

the Navy's analysis is not binding on the Board, it is evidence that EB may cite to 

demonstrate the existence of a material factual dispute. Moreover, numerous Navy 

employees testified at their depositions that there was some impact to EB and HII as a 

result of the regulation, even though they believed the claim to be inflated (app. opp'n, 

exs. 19, 57-59). The Navy's citation to cases such as Southeastern Sen,ices, Inc., 

ASBCA No. 21278, 78-2 BCA ,r 13,239, for the proposition that appellant must 

establish causation before recovering under the jury verdict method ignores the fact 

that Southeastern Sen,ices was an opinion on the merits. The appellant in 

Southeastern Services was permitted to present evidence of causation and damages 

and the Board found that evidence lacking. However, the opinion does not stand for 

the proposition that an appellant cannot have an opportunity to present its evidence. 

The Court of Federal Claims' holding in Ravens Group, Inc. v. United States, 

112 Fed. Cl. 39 (2013), did dismiss a claim on summary judgment (gov't mot. at 104); 

however, in that case the court found that the plaintiff had not demonstrated clear 

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proof of injury. Ravens Group, 112 Fed. Cl. at 54-55. Although not binding on us in 

any event, the Ravens Group opinion actually supports denial of the government's 

motion. The plaintiffs contract provided for an adjustment to the contract if the 

plaintiff incurred costs over $15,000 per month responding to service calls, and based 

costs on labor hours. The plaintiff introduced evidence of an increase in the number of 

service calls, but did not present evidence of an increase in the number of labor hours 

because it had not recorded labor hours. The court granted summary judgment on the 

issue, holding that the plaintiff had not established injury. Id Notably, the court 

rejected the government's contention that the plaintiff could only establish injury 

through actual labor hours, holding that it "might be able to establish injury by 

demonstrating that the number of monthly labor hours spent on service calls-as 

calculated by R. S. Means or other commercially available estimating systems and 

based upon the daily work sheets-required compensation." Id at 55 n.16. Similarly, 

here HII has estimated its increased cost of performance compared to a base period 

before the implementation of Subpart P. The increase in estimated labor hours, 

combined with the Navy's TAR and the deposition testimony of Navy witnesses that 

there was an impact on the contractors is sufficient to create a factual issue that the 

regulatory change caused a change in HII's performance and that there was an increase 

in the cost of performance. Thus, we find that EB has established a material factual 

issue regarding causation preventing the entry of summary judgment. 

The Navy additionally argues that EB cannot use estimates to support its claim 

unless the contractor was unable to collect actual data due to circumstances beyond its 

control (gov't mot. at 112 ( citing Orlosky Inc. v. United States, 68 Fed. Cl. 296 

(2005))). According to the Navy, "the Board requires contractors to show that it 

would not be feasible to support a claim with actual cost data" (gov't mot. at 112). 

Additionally, the Navy cites to contract Clause H-9 which requires EB to document its 

requested adjustment with a "level of detail which is reasonably available to the 

Contractor" (gov't mot. at 113 (citing R4, tab 52 at 430, Clause H-9(d))). Here, EB 

presented deposition testimony and an expert report asserting that it was not feasible 

for it to use actual cost data (app. opp'n, ex. 26 at 79, 87-88, 90-91, ex. 42 at 12-13). 

Moreover, the contract did not contain FAR 52.243-6 that would have required EB to 

maintain such data. Again, we find that material factual issues prevent the entry of 

summary judgment in favor of the Navy. 

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CONCLUSION 

For the reasons stated above, the Navy's motion for summary judgment is denied. 

Dated: January 28, 2019 

I concur 

RICHARD SHACKLEFORD 

Administrative Judge 

Acting Chairman 

Armed Services Board 

of Contract Appeals 

DAVID D'ALESSANDRIS 

Administrative Judge 

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. 58672, Appeal of Electric 

Boat Corporation, rendered in conformance with the Board's Charter. 

Dated: 

8 

JEFFREY D. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals