N OTE : This disposition is nonprecedential. 

# United States **Court of Appeals**  **for the Federal Circuit**

______________________ CCI, INC., Appellant

v.

JOHN MCHUGH, Secretary of the Army , Appellee

______________________

2014

- 1470

______________________ Appeal from the Armed Services Board of Contract Appeals in No. 57316, Administrative Judge Cheryl L. Scott.

______________________

Decided: April 10, 2015

______________________

J AMES E. H OWARD , Davis Wright Tremaine LLP , Sea ttle, WA , ar gued for appellant. Also represented by L ISA M. M ARCHESE , T RAEGER M ACHETANZ , J ONATHAN A. D E M ELLA

.

J EFFREY A. R EGNER , Commercial Litigation Branch, Civil Division, United States Department of Justice, Washin gton, DC, argued for appellee. Also represented by J OYCE R. B RANDA , R OBERT E. K IRSCHMAN , J R

. , M ARTIN F. H OCKEY , J R

.

______________________CCI , INC

. v. ARMY 2

Before N EWMAN , R EYNA , and H UGHES , Circuit Judges.

H UGHES , Circuit Judge

. CCI appeals the Armed Services Boar d of Contract Appeals’ denial of its Type I claim for equitable relief under Differing Site Condition C lause FAR 52.236

- 2. The Board concluded that CCI had not proven any of the four elements necessary to establish a Type I equitable a djustment claim

. Accordingly, to prevail on appeal, CCI must show the Board erred on all four ele ments . Because

s ubstantial evidence support s the Board’s decision on at least two of these elements

— whether the site conditions were reasonably foreseeable to CCI and whether CCI relied on the alleged site representations —we find that CCI has not met this burden . Accordingly

, we affirm.

I On April 25, 2008, the Army issued a Request for Proposals (RFP) to plan, design, and construct an L

shaped pier and perform related work at Umm Qasr, the only deep

- water seaport in Iraq. The Army found that Umm Qasr was “a critical link towards the import of life

providing assistance being pro vided to the people of Iraq.” J.A . 4859.

Attached to the RFP was a 2007 engineering report from Andrea Engineering Tests Laboratory (the Andrea Report)

. The Andrea Report describes a field investig ation of an area including the Umm Qasr project site, and included results obtained from disturbed samples 1 , undi s1 Disturbed samples have been altered in a way that makes them unrepresentative of in

- situ conditions. They are frequently used to determine properties of the soil that are not dependent on in

- situ conditions, such as soil grain size.CCI , INC

. v. ARMY 3

turbed sam ples 2 , and a Standard Penetration Test 3

pe r formed on three boreholes

. In the “D iscussion of Results” section, the Andrea R eport includes several descriptions of the soil, such as :

• “The site subsoil consists mainly from two layers, the first layer of ver y soft, soft to medium gray sandy silty clay with amount of soluble salts and organic matter overlaying on a layer of medium, dense to very dense gray silty sand.” J.A. 4809.

• “[T]he site was within the ebb and tide zone of the sea. The saturated soil condition below the water table makes the problem of settlement significant

. . . .” Id.

• “The low bearing capacity of the soft clayey layer; could lead to excessive settlement to go out of co ntrol.” J.A. 4810.

• “[The] samplers that extruded from s helby tubes of the soft clayey layer . . . exudes between the fingers when squeezed in the fist so this could described as very soft to soft sandy clayey soil.” Id.

• “Investigation of the site area has produced ev idence of some kind of collapse due to the reaction be tween fundamental compounds of the soil (sandy

2 Undisturbed samples contain conditions close enough to the in

- situ conditions to be used to approximate in

- situ structural properties.

3 A Standard Penetration Test is a common test used to determine the geotechnical engineering properties of soil. It involves driving a thick

- walled hollow tube into the soil with a 140

- pound hammer and recording the blow

c ount

— the number of blows to the hammer necessary to increase the depth of the tube by a predetermined di stance.CCI , INC

. v. ARMY 4

clayey layer) with organic matter, this collapse is impact the settlement of shallow foundation about (2 – 5) %. ” J.A. 4810

– 11. Appendix B of the Andrea Report includes soil d escriptors and the blow count data obtained from the Standard Penetration Test. The parties agree that A ppendix B of the Andrea Report contains inconsistent information, because the soil descriptors indicate the soil is very soft to soft, but the blow coun t data indicate s the soil is harder.

Another attachment to the RFP is a U.S. Agency for International Development report entitled “Umm Qasr Port Asses s ment” (the USAID Report). The USAID Report was prepared as a “general assessment of fun ctions at the p ort and historical dredging operations at the port.” J.A. 18354. I t describes the history of dredging at the site , the need for continuous dredging at the site , and the locations of the dredged material disposal sites. The report also includes the follo wing site condition descri ption:

The streams are alluvial and the channels are a pparently composed primarily of sand and silt. Clay may be present, but no clay balls were seen in the dredged material disposal areas. There is a thin film of sun

- cracked silt or clay at some of the final settlement ponding areas. Boring information shows the materials encountered in the original “new” port excavation as silty sand with small fine gravel and clay. Infill sediments since then may be of a finer, more silty nature

. J.A. 4863.
After the RFP issued, CCI agreed to join two other companies, PolyEarth Construction, International LLC (PCI) and PND Engineers, Inc. (PND), in preparing a bid proposal for the Umm Qasr project. PND and PCI wereCCI , INC

. v. ARMY 5

responsible for the engineering and logistical aspects of the proposal, and CCI was responsible for the financial aspects of the proposal.
During the Umm Qasr bidding period, a number of questions were submitted to , and subsequently answered by, the Army

. Two are relevant to this appeal:
Question 11: Soil investigation not enough we need more point of locations.
Answer 11: The best soil investigation data avai lable to the government is provided in Appendix

- C Geotechnical Investigation of the SOW. The co ntractor should assume the data provided in A ppendix C is representative of the project site.
Question 42: Geotechnical Conditions: Will the government be providing any bidding assumptions associated with the existing geotechnical cond itions? For bidding purposes, should the contra ctor assume the three borings provided are representative of the entire site?

Answer 42: The contractor should assume the three borings provided are representative of the entire site for the purposes of developing a pr oposal. H owever, additional geotechnical info rmation may be required during the design phase of this project.

J.A

. 4833 ; J .A

. 4838

. In May 2008, CCI submitted an initial proposal for the Umm Qasr project. In August 2008, CCI submitted a revised proposal. On Sep tember 10, 2008, the Army awarded CCI the contract for the Umm Qasr project. The contract incorporated Differing Site Conditions Clause FAR 52.236 -2 and Site Investigations Affecting the Work Clause FAR 52.236 -3.CCI , INC

. v. ARMY 6

In 2009, CCI began construction on the U mm Qasr project

. CCI initially used land

- based construction met hods and encountered difficulties building a crane pad due to the soil conditions at the project site . It ultimately switc hed to marine

- based construction to complete the project

. In August 2009, CCI submitted a Type I request for equitable adjustment to the Army , alleging that it i ncurred additional costs as a result of soil conditions that were different than represented in the Andrea Report. The Army denied CCI’s claim, and CCI appealed to the Board. The Board also denied CCI’s claim. CCI appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(10).

II To receive an equitable adjustment for a Type I diffe ring site condition, a contractor must prove by a prepo nderance of the evidence that: (1) “ a reasonable contractor reviewing the contract documents as a whole would interpret them as making a representation abo ut the site conditions ” ; (2) “ the actual site conditions were not re asonably foreseeable t o the contractor, with the info rmation available to the particular contractor outside the contract documents ” ; (3) “ the contractor in fact relied on the contract representation ”; and (4) “ the conditions differed materially from those represented, and the c o ntractor suffered damages as a result. ” Int’l Tech. Corp. v. Winter , 523 F.3d 1341, 1348

– 49 (2008). W hether a re asonable contractor reading the contract documents as a whole would interpret them as making a site

- condition representation is a legal quest ion reviewed de novo. Id. at 1349. The other three elements are questions of fact reviewed for substantial evidence. Id. “Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” E.L. Ha mm & Assocs., Inc. v. England , 379 F.3d 1334, 1338 (Fed. Cir. 2004).CCI , INC

. v. ARMY 7

The Board held that CCI did not prove any of these four elements. Accordingly, to prevail on appeal , CCI must show that the Board erred on each of these four elements

. See Int’l Tech. C orp. , 523 F.3d 1348 –4 9. Because CCI has failed to show that the record does not provide substantial evidence to support the Board’s findings that (1) the site conditions were reasonably foreseeable to CCI or (2) CCI did not rely on the alleged site condition representations, CCI has not met this burden.

A
When determining whether site conditions were re asonably foreseeable to the contractor, b oth the contract and any other informatio n available to the contractor a re considered. Id. at 1349. Under this standard , s ubstantial evidence supports the Board’s finding.
Specifically, t he Andrea Report supports the finding that the soil conditions actually encountered were reaso nably foreseeable . It frequently describe s t he area as having soil settle ment issues and as containing soft to very soft soils. See, e.g. , J.A. 4809 (describing the first layer of the site subsoil as “very soft, soft to medium gray sandy silty clay”); id. (“The saturated soil condition below the wa ter table makes the problem of settlement significant

. . . . ”); J.A. 4810 (“The low bearing capacity of the soft clayey layer; could lead to excessive settlement to go out of control.”); id. (“[The] samplers that extruded from Shelby tubes of the soft cla yey layer .

. . exudes between the fingers when squeezed in the fist so this could d escribed as very soft to soft sandy clayey soil.”); J.A. 4810

– 11 ( “Investigation of the site area has produced evidence of some kind of collapse due to the reaction between fundamental compounds of the soil (sandy clayey layer) with organic matter

. . . . ”).
CCI asserts that because of the Army’s answer to Question 42

— that contractors “should assume the threeCCI , INC

. v. ARMY 8

borings provided are representative of the entire site”

— it

reaso nably relied solely on the borehole data in Appendix B of the Andrea Report. But even if this is correct, it does not show a lack of substantial evidence because the soil descriptors in Appendix B describe the soil near the project site at the relevant de pth as being “[v]ery soft to soft gray to dark gray silty CLAY.” J.A. 4818

– 19. CCI argues that because the blow count data in A ppendix B of the Andrea Report indicates a harder soil, and engineers view objective data

, such as blow count data

, as

more re liable than soil descriptors, the soil conditions it encountered were not reasonably foreseeable.

T he record shows that the inconsistencies in the A ndrea Report cause d engineers to be skeptical of its reli ability

. For example, the engineer CCI used to p repare its proposal, Mr. Nottingham

, admitted that the information in Appendix B of the Andrea Report is “not consistent.” J.A. 330

. The Army’ s expert
, Mr. Apted

, agreed and testified that “it should have been clear that the Andrea report was limited in extent and quality and there was a risk of more difficult conditions” and that

— given the amount of other data indicating softer soil conditions

— the blow count data is “clearly an anomalous set of data [.] ” J.A. 17468

– 69. According to Mr. Apted, the Andrea Report would have caused him to expect “ very soft clay.” J.A. 2904. Given this evidence, a reasonable mind could conclude that the soil conditions were reasonably forese eable to CCI.

T he USAID Report provide s additional support for the Board’s finding. It describes the need for continuous dredging near the site and the locations of the dredged material disposal sites. The Army’s expert

, Mr. Apted

, testified that

, given this report , “the risk of accumulation of silt and clay disposal arising [] from dredging could have reasonably be [en] foreseen as a signi fi cant risk.” J.A. 17469.CCI , INC

. v. ARMY 9

Moreover, CC I was already aware of the area’s dred ging issues before it read the USAID Report. Mr. Nunn , a civil and nuclear engineer and co

- founder of PCI involved in the Umm Qasr proposal and project

, worked near the project site before CCI submitted its proposal

. He was familiar with the area’s dredging issues and knew that a dredging contract or was on sit e, that “[t]hey were spen ding millions of dollars dredging the naval port [,] ” and that “the other piers were already clogged with siltation.” J.A. 420. In light of this evidence, we conclude that a reason able mind could agree with Mr. Apted that “the co nditions encountered could and should have been within the reasonable contemplation of CCI.” J.A. 17469. Accordin gly, we conclude that substantial evidence supports the Board’s finding that the soil conditions were reasonably foreseeable to CCI.

B

S ubstantial evidence also supports the Board’s finding that CCI did not prove that it relied on the alleged mi srepresentation. CCI admits that it viewed the Andrea Report as containing inconsistent information and being insufficient to determine whether th e project could be completed with land

- based construction

. This admission makes it un l ikely that CCI relied on the Andrea R eport
, and provides support for the Board’s finding.
Additionally, we agree with the Board that the pr oposal itself does not support CCI’s assertion that it relied on the Andrea Report. Nothing in the proposal identifies whether land or marine construction would be performed. Although Mr. Nottingham testified that he relied on the Andrea Report and that the cost estimate in the propo sal specifically factored in the cost of land

- based construction, this does not mean that the Board was required to accept his testimony . T he Board has “broad discretion in dete rmining credibility because he saw the witness and heardCCI , INC

. v. ARMY 10

the testimony.” J.C. Equip. Corp. v. England , 360 F.3d 1311, 1315 (Fed. Cir. 2004) (internal quotation omitted). Accordingly, “ [t] he Board’s determinations of witness credibility are virtually unreviewable.” Id. (internal quotation omitted) (alteration in original). Moreover, even if Mr. Nottingham ’s cost estimate shows that CCI

assume d the project could be completed using land

- based construction, it does not show that the Andrea Report was the basis for CCI’s assumption.
Additionally , the proposal actually provides support for the Board’s finding that CCI did not rely on the A ndrea Report. As CCI concedes, the Andrea Report and the proposal “depict different approximations of the depth at which sand and silt would be encountered.” Appellant’s Br. at 55. If CCI did in fact rely on the borehole log data from the Andrea Report to predict hard er soil conditions

, there is no plausible reason to believe it would not have also used the Andrea Report’s approximations for what depths sand and silt would be encountered.

In light of this evidence

, we hold that a reasonable mind could conclude that CCI did not rely on the Andrea Report in preparing its proposal.

III

Because we conclude that substantial evidence su pports the Board’s findings that (1) the site conditions were reasonably foreseeable to CCI and (2) CCI did not rely on the Andrea Report in preparing its proposal, we do not need to reach the other two elements of CCI’s equitable adjustment claim. Accordingly, we affirm the Board’s conclusi o n that CCI is not entitled to a Type I equitable adjustment.

AFFIRMED