# In the United States Court of Federal Claims

No. 14

- 166C (Filed: May 21, 2020 ) FOR PUBLICATION

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* ANCHORAGE, A MUNICIPAL * Motion for Summary Judgment; CORPORATION , * Trial; Contract Formation; Consideration; * Genuine Issues of Material Fact Remain Plaintiff, *

*

v. *

* THE UNITED STATES, *

* Defendant. *

*

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OPINION AND ORDER

DAMICH, Senior Ju dge

Anchorage, A Municipal Corporation (“Anchorage”) determined that the facilities at the Port of Anchorage were deteriorating and outdated. Not having the expertise to undertake any project on its own, Anchorage entered into a n “innovative partnership ” with the Department of Transportation, Maritime Administration, (“MARAD”) through t wo agreements‒ a 2003 Memorandum of Understanding (“2003 MOU”) and a 2011 Memorandum of Agreement (“2011 MOA”) (cumulatively “the Agreements”)

. Anchorage is no w before this Court alleging a breach of contract by the United States (“the Government”) for losses it sustained under the A greements . ECF No. 1.

In lieu of an Answer, the Government filed a m otion to d ismiss the c omplaint. ECF No. 10. In its motion, t he Government argued that the Agreements were not money mandating, but instead cooperative agreements

, th us, outside this Court’s jurisdiction. ECF No. 10 at 15

- 19. It further argued that the 2003 MOU was not backed by the presumption of money damages, therefore, also outside this Court ’s jurisdiction. Id

. With regard to the 2011 MOA, the Government argued that the duties alleged l y breached

— settlement with its prime contractor

—
were no t created by the Agreement because the 2011 MOA expired on May 31, 201 2

. Id . at 19

- 34. After full briefing and oral argument, the Court denie d

- in

- part and granted

- in

- part the Gove r nmen t’s m otion. I n denying the motion the Court held: (1) the Court has jurisdiction to hear Anchorage’s breach of contrac t claims because the 2003 MOU and 2011 MOA could be fairly interpreted as contemplating money damages ; and (2) Anchorage adequately pleaded2 sufficient facts to maintain an action for breach of contract

. ECF No . 22. However, the Court dismissed A nchorage ’s third

- party beneficiary claim. Id

.
Thereafter, the Government filed its Answer. ECF No. 23. Discovery ensued and was completed on July 15, 2019. ECF No. 89. Pursuant to the scheduling order, the Government filed its motion for summary ju dgment on July 6, 2019

, revisiting its argument raised a t the motion to dismiss stage. T he Government again argued that Anchorage could not prove its breach of contract claims because Anchorage could not establish that a commercial contractual obligation e xisted

. ECF No. 90 at 2. The Government further argue d that the 2003 MOU was not supported by consideration. Id

. at 21

. With regard to the 2011 MOA, the Government ar gu e d that no i m plied

- in

- fact agreement existed to extend the parties’ obligations under the 2011 MOA. Id

. at 29

. Anchorage filed its response in opposition on July 26, 2019, ECF No. 98, and the Government filed its r eply on August 20, 20 1 9. ECF No. 100. In its reply, th e Government raised a new issue

– that not only did the G overnment recei ve authority from Congress to administer funds, but it also received authority fr o m Congress to administer contracts and provide F eder a l project oversight. Id . at 1. This

, according to the Government

, render ed the 2003 MOU void. Id

. Anchorage then filed a motion to strike new arguments raised for the first time in defendant’s reply memorandum, or in the alternative, leave to file a sur

- reply. ECF No. 101. The Court denied Anchorage’s motion to strike and granted Anchorage’s motion to file a

sur

- reply. ECF No. 103. Anchorage timely filed its sur

- reply on September 18, 2019. ECF No. 104.

On October 10, 2019, the Court held a status conferenc e informing the parties that the issues raised in the Government’s motion for summary judgment required a “mini

- trial” to determine the factual disputed issue of consideration. ECF No. 106. T he Court was “ exclusively interested in the financial arrangeme nt for consideration purposes between Anchorage and the Government , money or otherwise. ” ECF No. 133 at 2

. Trial was held on February 18

- 19, 2020, in San Francisco, California

. However, p rior to trial, the parties filed a stipulation. The stipulation stated that: “ MARAD received a total of $163,400,000 from Anchorage for administration on the Project. ” ECF No. 118 ¶ 9. T his alone, would lead the Court to find consideration

— that A nchorage paid money for services

— which it does. Additionally, a t t rial, t he evidence showed that Anchorage’s money was spent by MARAD to provide services, contrary to the Government’s assertion that it was not. T he evidence also showed that the Governmen t received non

- monetary consideration as well. Thus, the Court finds that there was consideration for the Agreements and, therefore, the Agreements are valid

, binding contracts. The Court further holds that there remain disputed material issues of fact. For these reasons and the f or the reasons set forth below

, the Court DENIES Defendant’s Motion for Summary Judgment.3 I. Background

In 1999, the Port of Anchorage 1 received a Master Plan , commissioned by the Municipality of Anchorage, outlining the steps the Port needed to take to replace deteriorated facilities and meet increasing demands. P X1

. 2 The Master Plan was commissioned to guide the Port’s growth for the next 20 years. Trial Tr. at 268:16

- 17

. As part of t he Master Plan , the Plan recommended a “north access route to Anchorage military bases” in order to accommodate munitions shipments. P X1 at ES

- 3. The Port serves as the entry point for military operation at the Joi nt Base E lmendorf Richardson. Id

. In May 2001, William Sheffield, former Governor of Alaska, was appointed as Port Director. ECF No. 60 at 6. Gov. Sheffield was responsible for executing the Master Plan. Id

. Gov. Sheffield hired lobbyists to help obtain Federal appropriations. ECF No. 90 at 7.

The Port of Anchorage Intermodal Project (“Project”) was to be a multi

- year infrastructure project that would replace deteriorated and outdated facilities at the Port. ECF No. 97 at 2. In 2001, Anchorage began pursuing federal agencies to help with the Project. Id

. at 4. After discussions with various agencies, Anchorage and MARAD ultimately entered into an agreement. Id

. In furtherance of this partnership, t he U.S. Government enacted legislation authorizing federal funds for the Project an d non

- federal 3 share funds to MARAD. Id

. Cheryl Coppe was hired as executive administrator for the Project

, ECF No. 90 at 7; Tr ial Tr

. at 266, and “ was pivotal in the formation of the ‘ innovative partnership

. ’” ECF N0. 90 at 7

. Ms. Coppe drafted the 2003 MOU, which was ratified by the Anchorage Municipal Assembly , on June 24, 2003, after s ignature s by both Anchorage and MARAD , in M ar ch 2003. 4 ECF No. 98 at 7 ; Trial Tr. at 291:12

- 17

. In relevant part, Section IV of the 2003 MOU set fo rth Anchorage’s responsibilities which included:

P rovide overall program requirements and direct ion of Port Expansion to MARAD.

. . .

1 The Port of Anchorage is a department within the Municipality of Anchorage

. ECF No. 97 at 2 fn.2
2 “P X__ ” refers to Plaintiff’s exhibits a dmitted at trial.
3 F ederal funds included funds from the Department of Defense, Federal Transportation Administration and Federal Highway Administration

. Trial Tr. at 166

- 169.
4 The ratification of the 2003 MOU came after MARAD had already hired I ntegrated Concepts and Research Corporation ( “ I CRC ” ) for the design and construction of the Project

. The ratification, according to Ms. Coppe

, was just “pro forma

. ” Trial Tr. at 304 :15

- 18. The Court agrees. The evidence showed that MARAD and Anchorage were moving forward as if the MOU had be en ratified.4 Review all plans, specifications, and status reports submitted by the primary contractor before submission to MARAD for inclusion in its permanent federal project file.

. . . Authorize all Port Expansion funding maintained by MARAD for federal pr o ject oversight, program management, study, environmental analysis , engineering, design constr uction or rehabilitation as necessary.

Section V of the 2003 MOU set forth MARAD’s responsibilities, which included:

Provide specialized technical expertise and input as appropriate to Port Expansion tasks and activities. Administrative costs to be used for MARAD participat i on under this project will be 3% of funding received.

. . .

O bligate and disburse funding for Port Expansion oversight, program management, study, environmental analysis, engineering, design, construction, or rehabilitation pursuant to Port Expansion requirements consist ent with contract requirements. PX 9

. To aid in the construction of the Project, in 2003, MARAD entered into a n Indefinite Delivery/Indefinite Quantity (“IDIQ”) contract with Integrated Concepts and Research Corporation ( “ICRC”) for the design and construction of the P ro ject. 5 Pl. App. at 612

. 6 ICRC qualified as an 8(a) small business under the Small Business Administration’s (“SBA”) 8(a) program. ECF No. 90 at 10

- 11. In 2008, MARAD and ICRC again executed a contract “to continue performance of design

- build and Project management related services for the Project.” Id.

MARAD selected the open cell sheet pile structure to construct the Project . Pl. App. at 1168. Construction beg a n, but then in 2010

, all construction stopped due to damaged sheet piles. 7 ECF No. 97 at 16.

5 Originally, MARAD entered into a contract with Koni a g Services, Inc., an Alaskan Nati ve Corporation, but shortly after execution of the contract, MARAD determined KSI was not equipped to perfo rm so MARAD agreed to novate the contract to ICRC. For continuity, the Court will use ICRC in place of KSI at all times.
6 “Pl. App. __” refers to P laintiff’s appendix to its motion in opposition, ECF No. 97.

7 The Court viewed the site on August 1, 2019. The Court saw the significant damage to the sheet piles that had been removed as well as the buckling of the sheet piles that remained creating an unfinished pier wa ll. The Court also observed sink holes that were a result of the buckling sheet piles.5 In November 2011, the parties renegotiate d the agreement wi th MARAD , resulting in the 2011 Memorandum of Agreement. Trial Tr. at 211

- 212 ; PX24. The 2011 MO A redefined the roles and responsibilities of Anchorage and MARAD, outlined authorities, and assured accountability for the Project. PX24. It created a Port Oversight and Management Organization (“POMO”) to “provide overall executive leadership, vision, policy, strategic objectives, and priorities for the project.” Id

. The POMO was made up of a committee of decision makers from both Anchorage and MARAD, who would hold frequent meetings to address issues related to the Port construction. ECF No. 97 at 17. The 2011 MOA continued the language from the 2003 MOU : “ the parties will transfer to MARAD on a quarterly basis 3% of all funding received under this project to cover MARAD’s cost s and added: “ related to the project until May 3, 2012. ” Trial T r

. at 216 ; PX 24.

After the MOA was executed

, funds were transferred to MARAD. Trial Tr. 219:5

- 7. In practice, MARAD would request money and Anchorage, in turn, would pay. T rial Tr. at 219

- 20 ; 352

- 53. The 2011 MOA also stated that MARAD was “[p]ursuant to Contract Disputes Act, 41 U.S.C. §§ 7001

- 7013 [sic], to administer claims submitted by MARAD con tractors and coordinate and cooperate with MOA/POA in affirmative and defense claims consistent with federal contract law. ” P X 24

. The 2011 Agreement remained in effect until its expiration on May 31, 2012.

On December 28, 2011, ICRC brought two claims under the Contract Disputes Act of 1978 to the Civilian Board of Contract Appeals. Pl. App. at 1426

- 1459. MARAD settled with ICRC in the amount of approximately $11,300 ,000.00. Id . at 1460

- 63.

II. Statutory Framework

MARAD received authority from Congress to implement the P roject through the Tran sportation Equity Act for the 21st Century (“TEA

- 21”), enacted June 9, 1998, as Public Law 105

- 178. The legislation authorized funds for the project:

(3) Intermodal center authorizations.

– Notwithstanding any other provision of law, each of the following projects are eligible for funding under section 5309(m)(1)(C) of title 49, United States Code:

. . . (F) Port of Anchorage Intermodal passenger and freight facility.

See Section 30 30(d)(3) of the Transportation Equity Act for the 21st Century (Public Law 105

- 178) as amended by Section 345(2)(F), Title III, Division I, of the Consolidated Appropriations Resolution, 2003 (Feb. 20, 2003) (“TEA

- 21”)

.
On that same date, MARAD receive d appropriated funds through the passage of the Consolidated Appropriations Resolution which stated :6 SEC. 626. Any amounts previously appropriated for the Port of Anchorage for an intermodal marine facility and access thereto shall be transferred to and administered by the Administrator for the Maritime Administration including non

- Federal contribution s . Such amounts shall be subject only to conditions and requirements required by the Maritime Administration.

Consolidated Appropriations Resolution, 20 03, Pub. L. N o . 108

- 7 §§ 345, 626, 117 Stat. 11, 106, 418 (Feb. 20, 2003).

A subsequent appropriation was further made in 2005, under the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A legacy for Users (“SAFETEA

- LU”), Pub. L. No. 109

- 59 § 10205, 119 Stat. 1144 , 1934 (Aug. 10, 2005).

The funds transferred to MARAD to date total approximately $ 306 ,000,000. ECF No. 118 at 2 ; Trial Tr. at 8:8. O f this amount $139,000,000 were federal funds and $163,400,000

were funds from Anchorage. ECF No. 118 at 2 ; Trial Tr. at 8:17. T here is no dispute that $1 63,400,000 was transferred by Anchorage to MARAD through the U.S. Treasury. Id

.

III. Trial Testimony and Discussion

The Government raises three theories as to why judgment should be granted in its favor. First, t he Government argues that the 2003 MOU was not a contract to hire MARAD because A nchorage c ould not prove that it paid a 3% fee to hire MARAD to provide services. Tr ial Tr

. at 8

. Instead, the Government argues that the entire amount of $163,400,000 was used under the federal procurem ent contract by MARAD to pay ICRC for construction costs and that all administrative costs came from federal appropriated money

, only . Trial Tr

. at 19

- 20. Second,
t he Government advances that the military road was merely an ancillary benefit , not consid eration

. Tr ial Tr

. 23

- 24

. And third, the Go vernment a dvances the argument that Congress only authorized MARAD to administer the funds for the project

, and, in addition, raises its new argument

— that t he origination of the partnership was Congress, not Anchorage

, therefore the MOUs are void

. Tr ial Tr

. at 375.

At trial, the Court heard testimony regarding the financial arrangements between MARAD and Anchorage. It also heard argument on the Government’s contention that MARAD was only on the Project to administer the money

— nothing else. The Government presented its case with two witnesses, David Bohnet and Alexander Caine. Anchorage called three witnesses

– Colonel George Vakalis, Cheryl Coppe, and Lucinda Mahoney. After hearing the testimony and reviewing the evidence, the Court finds that t he evidence is clea r

— there was consideration and the 2003 MOU and 2011 MOA are valid and binding contracts.

A. Formation of a Contract

In order to prove that Anchorage “hired” MARAD to “provide its expertise to design, construct, oversee and manage the [Project]” compl. ¶ 5, Anchorage must prove the elements of contract formation for that alleged duty

. Specifically, Anchorage must prove : (1) offer, (2) acceptance, (3) actual authority, and (4) consideration. Massie v. United States , 166 F.3d 1184,7 1188 (Fed. Cir. 1999). The Government does not take issue with the first three elements. Instead, and as stated earlier , the Government contends that consideration is lacking. Consideration i s a bargained for exchange between parties to an agreement and may consist of promise or performance. Restatement (Second) of Contracts Sections 71,72 (1981). At its most basic, consideration is a promise for a promise. Consideration a lso means mutuality of obligation

. Total Medical Mgmt. v. United States, 104 F.3 d 1314 (Fed. Cir. 1997 )

.

1. Anchorage Paid At Least 3% T o MARAD

The Government argues that the 2003 MOU was not a contract to “ hire ” MARAD because Anchorage could not prove that it paid a 3% fee to hire MARAD to provide administrative costs. ECF No. 90 at 23. Instead, the Government argues that MARAD spent all of Anchorage’s funds to pay ICRC for construction costs, only. The Federa l money, according to the Government, was used to cover MARAD’ s administrative costs, not Anchorage’s money. Trial Tr. at 19

- 20. To prove this contention, the Government called David Bohnet

, a MARAD employee . Mr. Bohnet began working as a federal employ ee in September of 2012, and at that time, he had 30 grants that he was responsible for managing, including this Project. Tr ial Tr . at 37 , 92 , 109

. As part of his responsibilities, and in preparation of trial, Mr. Bohnet was tasked with preparing spreadsheets tallying all the funds appropriated, transferred, and expended in connection with the project. 8 Tr ial Tr

. 40 ; see DX39 , DX 40, and DX 41. 9 The f irst round of spreadsheets was compiled in April 2016. Tr ial Tr . at 44: 5. However, prior to this trial, Mr. Bohnet updated the spreadsheets in December 2019, well after the close of discovery. Tr ial Tr

. a t 56:20. The updates, according to Mr. Bohnet, were necessary for accuracy purposes to show that all monies had been spent. Trial T r

. at 44

.
On direct examination, Mr. Bohnet gave an in

- depth review of his reports. DX39, titled “Anchorage Fund Summary,” deta iled all the expenditures for administrative purposes and construction purposes as well as the individual task orders on the job. Tr ial Tr . at 42

- 43. Tab 2 of DX 39 contained a second summary of expenditure s , updated in December 2019, to show the payment of a settlement. Tr ial Tr . at 44

- 45. DX 40, was a summary of Anchorage’s administrative expenses. In h is updated version, Mr. Bohnet removed certain calculations regarding salaries. Tr ial Tr . at 47 :4

- 10. DX41 was titled the “Delphi Report Compilation. ” Tr ial Tr . at 47

. Delphi was the invoicing system MARAD use d for all its expenditures. Tr ial Tr

. at 48:24

- 25. This report tallied purchase order summary and accounts payable reports. Tr ial Tr

. at 49

- 51

. The Delphi Report identified the funding source

— that is

— where the funds came from to pay for the administrative and construction costs. Tr ial Tr . at 51

- 52

. Funds were provided by the Department of Defense, Federal Highway Administration, Federal Trans it Administration, Port of Anchorage and the state municipality of Alaska. Tr ial Tr

. at 52. This report, DX 41, was used to compile DX39. Tr ial T r

. at 58: 12

- 14.

The purpose of the spreadsheets was to show where every dollar, federal and nonfederal,

w as expended

, and in particular to show that all of Anchorage’s money was spent on

8 In making h is spreadsheets, Mr. Bohnet considered the state and municipal dollars the same. Trial Tr. at 114:8

- 20.
9 “DX__” refers to Defendant’s exhibits admitted at trial8 construction costs, not administrative costs

. At his deposition, Mr. Bohnet defined administrative costs as anything not construction related. Trial Tr. at 99:7

- 11. At trial, Mr. Bohnet expanded his definition to “other elements . . . that are not nails and hammers.” Trial Tr. at 99:12

- 15. He did not elaborate other than tha t statement. Significant to th is issue was Mr. Bohnet’s testimony regarding DX41. This report, the Delphi Report which tallied all the expenditures, was the evidence Mr. Bohnet relied upon when asked by counsel on direct examination : “Do you know how muc h o f the nonfederal money was spent on construction ? ” allowing him to state : “All of it.” Tr. Transcript at 60:5

- 7

. R elying on DX 40, Mr. Bohnet testified when as ked: “Were any of MARAD’s admi nistrative cost s in DX40 paid o u t of the nonfederal contribution?” he repl ied : “ No. ” Tr. Transcript at 61 : 4

- 6. Mr. Caine, Budget Director of MARAD , echoed this sentiment. Trial Tr. at 147:12

- 14. (“On the nonfederal side, there was no

– no administrative charges to the nonfederal source funds.” )

. Mr. Caine also reviewed Mr. Bohnet’ s spreadsheets and found them t o be accurate

. Trial Tr. at 132

- 33. In concluding his testimony, M r. Bohnet reaffirmed t hat his reports showed that Anchorage did not pay MARAD any money for administrative costs. Tr ial Tr. 87:14

- 16. Instead, according to Mr. Bohnet, his reports showed that Anchorage’ s money was predominately spent on the ICRC contract. Tr ial Tr. at 86:17

- 19.

It became clear, however

, on cross

- examination

, that the spreadsheets told a different story. For instance, in DX39 certain task orders that were not construction costs were paid for by Anchorage. A suitability study was paid for by Anchorage in the amount of approximately $3.4 million . Trial Tr. at 97:6

- 18
, DX39.97

- 39.107. Although the cost was placed under construction costs in the Delphi Report, Mr. Bohnet could not say whether or not it was a construction cost or administrative cost. Trial Tr. at 99:1 4

- 20

. In fact, he didn’t know what the costs were at all. Trial Tr. 99:14

- 16. In the same spreadsheet, DX39, there was a line item for a DCAA audit

, conducted by the defense auditing agency

, in the amount of $118,280 and paid for by Anchorage . Trial Tr. at 100 :6

- 28. Mr. Bohnet could not explain what the expenditure was for

, yet he put it in the construction cost ledger portion of his spreadsheet. Trial Tr. at 101:3

- 5. Another line item was for $199,769.46 labeled 2DFAS Elmendorf. Trial Tr. at 101:8

- 21. That too was paid by Anchorage and Mr. Bohnet could not again ascertain as to whether it was for administrative or construction costs. Id . The spreadsheet also showed that money was paid to the Department of Justice in 2013 and 2014 in the amount of $267,224

. Trial Tr. at 102:5

- 18. When pressed, Mr. Bohnet admitted that the costs associated with this line item were “presumably for legal expenses. ” Trial Tr. at 10 3 :8

- 10. Yet
, he still labeled the costs as construction costs. DX39 further showed that Anchorage paid for two settlements in the amounts of $ 1.6 million and $ 11.2 million. Tri al Tr. at 105:8

- 25. What DX39 did not show, and Mr. Bohnet admitted

, w ere any task orders showing that Anchorage paid ICRC. Trial Tr. at 107

- 08. In fact, Mr. Bohnet testified that MARAD paid all the invoices that came in from ICRC. Id

. With regard to DX40, Mr. Bohnet ’s new 2019 version related to changes regarding salaries. Trial Tr. at 108. In the updated 2019 report

, that line item

— salaries

— was removed at the direction of counsel. Trial Tr. at 109:3

- 6. In the 2016 report, MARAD carried a line item for full

- time e mployee s alaries

— $3.2 million

— from 2007 through 2019 . DX40.2 (Administrative Contractors). And interestingly, Mr. Caine testified that it was very important for the Government to accurately reconcile its spending on a monthly basis. Trial Tr. at 159. Yet, w hen questioned with regard to missing salaries from the spreadsheets he was not able to9 say why the salaries were removed. S ee Trial Tr. 154

- 166. In fact, Mr. Caine’s testimony revealed that he only looked at the spreadsheets to make sure that ther e were no undelivered orders and to reconcile the amounts. Trial Tr. at 16 6 :6

- 16.

T he evidence clearly showed mutuality of obligation. There is no dispute that Anchorage transferred $163 million to MARAD. That transfer was made in exchange for services that MARAD offered to provide to the project. Mr. Bohnet’s testimony proves that MARAD spent its money on administrative costs. The rep orts showed that MARAD took over $14 million out of Anchorage’s funds and used it to pay for things like legal fees, the settlement of claims that were filed against the M ARAD , for DCAA audits and salaries

— which clearly fall within the guise of administrat ive expenses

. The administrative expense incurred by MARAD and paid for out of Anchorage’s money was well in excess of 3 % of $163 million. Therefore, the Court finds that there was consideration for both Agreements. Even so, the Court will address the nonmonetary benefits as well.

2. There W as Also Nonmonetary Consideration

The Government did not put any evidence on to rebut the military benefit piece of this Project but instead argue d that maybe there were military benefits, but if there were, they were only paid for out of federal dollars. Trial Tr. at 23

- 24. However, there was no proof at trial supporting this claim. Instead, Anchorage’s witness, Col

. Vakalis, testified as to the m ilitary benefits received by the Government

. Ms. Coppe also testified as to the military’s involvement

.

Col. Vakalis was employed by Anchorage from 1994

- 2000. Trial Tr. 191:17

- 23. He was the operation s manager from 1994

- 1998 and municipal manager fro m 1998

- 2000. Trial Tr. 192:5

- 10. He was responsible for overseeing Port operations. Trial Tr. at 193:1

- 24. He left in 2000 and returned to the Port as municipal manager from 2009

- 2015 with basically the same responsibili ti es. Trial Tr. at 194:3

- 25. P rior to his military retirement, Col. V akalis w a s garrison commande r for three army posts in Alaska, including Elmendorf Air Force Base. Trial Tr. at 196:21

- 24.

Col

. Vakalis testified that the P roject was built to satisfy infrastructure needs the milit ary h ad expressed all the way back to 1994. Trial Tr. at 192:5

- 7. It was part of the 1999 Master Plan. Trial Tr. at 195:22

- 23. He further testified about the need to have these infrastructure improvements to facilitate deployments back when he was the garrison commander. Trial Tr. at 198

- 201. In his capacity as municipal manager coupled with his history as garrison commander, Col. Vakalis testified that the $163 million a long with the federal money was intended to build a dual

- use facility for the people of the state of Alaska and for the military. Trial Tr. 207

- 208. This was a huge project, and Col Vakalis testified that when Anchorage paid $163 million they were paying for an entire project, not just pieces of a project. Id

. Ms. Coppe also testified that she drafted a “Purpose and Need Statement” in April 2002, which discussed the proposed Port expansion as being critical to the military’s rapid deployment capabilities

. Trial Tr. 274:9

- 24; PX4. This was sent to MARAD before the 2003 MOU was signed. Trial Tr. 274

- 75.10 Additionally, MARAD, all the way up until July of 2019

, posted these military benefits on its website. Trial Tr. at 203

- 08; PX48. Specifically, it bo asted :

• The project has added a new direct road access between the Port and Elmendorf Air Force Base to facilitate quick deployments of military forces through the port and negating the need to use the public highway system, thereby transiting between secu re facilities.

• The direct road access to E l men d or f AFB has also allowed for the mini ng of fill material on Elmendor f property which is being used in creating the new Port faci lit y. The minin g of this fill materi al is also reduction a flight path hazard at the end o f t h e North

- S o ut h Runway on Elm en dorf providing a win

- win solution for both the Port and E l mendorf.

• The pr o ject adds new staging area s for military deployment and provides dual

- use facilit ies which c a n be used by the Po rt for ma intenan c e activit ies or by the milit a ry as hangars for helicopters new staging areas for military deployments and dual

- use facilities which can be used for mil itary hangars for helicopters.

PX48 at 2. Col. Vakalis testified that the road was actually constructed and is currently being used. Trial Tr. at 205:24. He further testified that the staging area was constru ct ed and also b eing used. Trial Tr. at 207:8

- 13.

Mr. Bohnet acknowledged that he has construction experience through his work as g rants management specialist and admitted that construction project s require project management. Trial Tr. at 94. T he evidence showed that the program management costs which were required to supervise and manage the construction work at this project were paid for out of Anchorage’s
money. See DX39, Tab TO 0112 (“Task Order”). This Task Order related to Project Management Office. Tria l Tr. 254:13

- 15. Col. Vakalis testified that one would need project management to build staging areas, direct access road and to reduce the flight path hazard. Trial Tr. at 255:11. And the Task Order clearly showed that Anchorage’s funds were used to pay for this. Trial Tr. 256:8

- 13 . Thus, t he evidence showed that the military gained direct benefits as a result o f the Agreement s; therefore

, the Court finds that there was nonmonetary consideration as well.

Because the C ourt finds that there was consid eration

— both monetary and nonmonetary

— the Court finds that the Agreements are binding and valid contract s.11 B. The Agreements Are Not Void 10

The Government argues that the three obligations found in the Agreements that are alleged to have been breached were created by law rather than throug h the execution of the Agreements

. This, according to the Government, relieves MARAD of the obligations, promises, and duties it made to Ancho rage through the Agreements, thus making the Agreements void. The Government argues that the legislation

— TEA

- 21 and the C onsolidated Appropriations Resolution in 2003

— did three things: (1) i t gave MARAD the directive from Congress to administer the Port P roject; (2) i t gave MARAD the ability, which it didn't have

, to spend Anchorage’s money which was what Anchorage used to induce Congress to put the Federal agency in charge of th e Project ; and (3) the statute gave MARAD the ability to put conditions and requirements on it. See generally ECF No. 100 ; see also Trial Tr. at 14

- 15

. The Court disagrees with all of the se arguments.

Neither party disagrees that Anchorage, through Gov. Sheffield, hired lobbyists to pursue Federal funding to assist with the Project

. 11 Neither party disagrees that Congress enabl ed MARAD to rece ive authority to carry out the P roject. T he disagreement becomes what authority was given to MARAD

. In other words, did MARAD receive general authority to administer the project or did Congress specify how MARAD was to administer the project, leaving no room for contractual obligations to arise between MARAD and MOU?

In looking at the history of the relevant legislation regarding the Project, the Court discerns nothing other than the normal process of authorizing an agency to do something and then appropriating the money to do it.

Specifically, MARAD received authority from Congress to carry out the Project through TEA

- 21. Originally, TEA

- 21 authorized federal surface transportation programs for highways, highway safety, and transit for the 6

- year period 1998

- 2003. But t hen, i n 2003, TEA

- 21 was amended to authorize funds specifically for the Project:

(3) Intermodal center authorizations

. -- Notwithstanding any o ther provision of law, each of the following projects are eligible for funding under section 5309(m)(1)(C) of title 49, United States Code:

. . . (F) Port of Anchorage Intermodal passenger and freight facility.

10 In its reply brief, the Government changes its theory. It is well settled that reply bri efs are only for the purpose of replying to a plaintiff’s brief

, not, as here, to put forth new theories of the case. The Court allowed the brief and allowed Anchorage to file a sur

- reply. However, the Government is warned not to do this in the future

. 11 The Go vernment seems to argue that the lobbying efforts “induced” the Congress to
enact the appropriations statute and that that inducement voids the Agreements. ECF No. 90 at 6

- 11; Trial Tr. 12

- 14, 375

- 376. This argument is without merit. An chorage hired lobbyists in order to secure the legislation. The Congress then passed t he appropriations statute . This is a common every day activity within the Congress. A nd the appropriations statute is just that

— an appropriations statute giving money to a Federal agency to carry out the P roject.12 Thus, the 2003 amendment to TEA

- 21 specifica lly provided MARAD authority to carry out the Project

.
Then, o nce MARAD had authority to carry out the Project, MARAD received appropriated funds to carry out the authority granted to it by TEA

- 21 through the following:

SEC. 626. Any amounts previously appropriated for the Port of Anchorage for an intermodal marine facility and access thereto shall be transferred to and administered by the Administrator for the Maritime Administration including non

- Federal contributions. Such amounts shall be subject only to conditions and requirements required by the Maritime Administration.

Consolidated Appropriations Resolution 2003, Pub. L. No. 108

- 7 §§ 345, 626, 117 Stat. 11, 106, 418 (Feb. 20, 2003). 12

Somehow, the Government converts the general statutory language to administer the Project into a directive to enter into a contract with ICRC:

The appropriate interpretation of the statute is that Congress authorized MARAD to administer the ICRC contract to complete the Project and to disburse all Project funds to that contract. The “administer” language is th e operative grant of authority; the “conditions and requirement” language merely supported the grant of authority. If Congress had not intended for MARAD to administer a Federal contract to complete the Project, there would have been no reason to afford the agency the ability to have non

Fe deral contributions transferred to it so that those funds could be disbursed to the ICRC contract along with the appropriations.

ECF No. 100 at 4 (emphasis added).

T he Government confuses “authorization” and “appropriation” by interpreting the
appropr iations language as its “ grant of a u thority .” However, t he grant of authority came from TEA

- 21

— the authorization statute , not the appropriati ons statute. And i t is clear that the appropriations statute is silent with regard to how MARAD should administer the Project. Indeed, with regard to administration of the Project, the appropriations statute states that “any amounts previously appropriated . . . shall be transferred to and administered by [MARAD].” The statute is clear: it is speaking to any amou nts of funds that had previously appropriated for the Project be transferred to and administered by MARAD. The only limitation on how MARAD should administer the Project is that: “Such amount shall be subject only to conditions and requirements required b y the Maritime Administration.” Thus, the Court is perplexed as to how the Government can read the statute to require MARAD to administer the ICRC contract. 13

12 SAFETEA

- LU was a subsequent appropriation in 2005

. 13 Intertwined in this argument is that the statute also mandated that MARAD chose ICRC because it was an 8(a) small business . This argument must fail for the same reasons.13 The Government further tries to use the appropriations bill language to suggest that this

was a congressional grant of authority. Specifically, the Government equates “ administer funds” with “administer contracts.” The C ourt is not persuaded . Authority, as a prerequisite to an appropriation, means “legal authority to carry out a program.” See The Government Contracts Reference Book (Nash, Schooner et al., 4th ed. 2013) (citations omitted). In con trast , an appropriation is “[a] n act of Congress permitting federal agencies to incur “ obligations

. ” See The Government Contracts Reference Book (Nash, Schooner et al., 4th ed. 2013)

. “ An obligation is a definite commitment by the government to spend appropriated funds

. A binding contract is an obligation. ” Id

. And “ a ppropriated funds” is defined as “funds made available by Congress for specifi ed purposes, including formation of contracts.” Id. If the Court were to accept the Government’s argument, govern ment contracting would not exist because all obligations would be owed to Congress, not the agency

. The directive to administer funds means those funds that are avai lable for obligation

, thereby carrying out what the appropriations statute is meant to d o. By interpreting the directive “to admin is ter funds to mean “administer contracts,” MAR AD would render obsolete all duties contained i n government contracts. Instead, “ administer funds ” in an appropriations statute grants the authority to an agency to incur obligations by the formation of contracts. It does not tell the agency how or where t o enter into those contracts. And in this ca se, MARAD entered in the Agreements with A nchorage and contracted with ICRC.

Here, it is clear, the appropriations statute by its very definition

, permits an agency to incur obligations through binding agreements. And MARAD carried out this authority to obligate appropriated fun ds through the execution of the Agreements

. And finally, t he Government argues that the “clearest proof that MARAD’s obligat ions

wer e created by la w , not contract, is the fact that MARAD executed the Federal procurement
contrac t with ICRC and admi ni ster ed the appropriations with Federal oversight before the 2003 MOU was execu te d. ” ECF No. 100 at 6. However, at trial, Ms. Coppe testified that the ratification of the 2003 MOU was just “pro forma.” Trial Tr. at 304:15

- 18. The Court agrees. The evidence showed that MARAD and Anchorage were moving forward as if the MOU had been ratified. For instance, the Government admits that “[o]nce Congress authorized MARAD to ‘administer’ the funds for the Project, Anchorage and MARAD worked out the details of their ‘innovative partnership’

. . . . ” ECF N o. 90 at 1 2 . Ms. Coppe worked with Gene Simmons, the Contracting Officer for MARAD on the par ticulars. Id . She then sent a draft MOU to MARAD on March 1, 2003, to which MARAD provided no significant edits. Id . Thereafter, on March 14, 2003, MARAD signed the 2003 MOU. JX2; PX9. Then two months after MARAD’s signature on the 2003 MOU, MARAD entered into the procurement contract , o n May 30, 2003. PX 1 2. T he 2003 MOU was ratified less than one month later, on June 24, 2003. JX2. The Government also admits “Anchorage, MARAD, and ICRC worked collectively to advance the Project from 2003 to 201 2.” ECF No. 90 at 15. Thus, it is clear that the parties were moving forward as if the ratification had occurred and that the ratification was indeed just “pro forma.”14 IV. Summary Judgment

In evaluating a summary judgment motion, the Court draws justifiable inferences in favor of the non

- moving party. See Tolan v. Cotton , 572 U.S. 650, 657 (2014). Summary judgment is properly granted only where there is no genuine issue of material fact an d the movant is entitled to judgment as a matter of law. RCFC 56(a); Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). A material fact is one which will affect the outcome of the case. Anderson v. Liberty Lobby

, Inc., 477 U.S. 242, 248 (1986). In deciding a motion for summary judgment, the Court does not resolve factual disputes, but ascertains whether material disputes of fact are present. Id . at 250.

A. The Government Was Authorized to Receive the 3% Fee

T he Government advances the argument, in its motion for summary judgment, that “MARAD had no authority to either charge fees or retain any amounts collected consistent with the rule against augmentation of appropriations.” ECF No. 90 at 24. The Government cites to Federal fiscal law principles, including the U.S. Constitution, the Miscellaneous Receipts statute (31 U.S.C. § 3302), the GAO Redbook, and two Comptroller General opinions. However, the cited material is only instructive on what the Government is required to do internally when handling appropriated funds.

First, the Government asserts that under U.S. Constitution Article I, § 9, Cl. 7, provides that Treasury money may not be drawn unless the legislature passes an appropriation. However, Cong ress did pass an appropriation. See 2003 Pub. L. No. 108 7, 117 Stat. 11, 106, §626 (February 20, 2003). Indeed, the appropriated funds were to be used on the Project and to be administered by MARAD. Id . Nowhere in the statute does Congress prohibit MARAD from charging a 3% fee. Instead, the appropriation specifically grants MARAD the authority to put conditions and requirements on any amount of money previously appropriated for the Project including non

- Federal contribution. Id . Those conditions and requirements resulted in the 2003 MOU. And that agreement provided for the 3% fee to be paid as consideration for MARAD’s services. Congress did not prohibit this action.

Second, the Government asserts the Miscellaneous Receipts statute (31 U.S.C. §3302) precludes MARAD from retaining funds from Anchorage. Yet, the statute merely provides that officials and agents of the Government must promptly deposit money they receive into the Treasury, and does not prohibit the 3% fee.

Third, the Governme nt argues that MARAD lacked the authority to retain any of the Federally

- appropriated project funds for agency use. ECF No. 90 at 24. Relying on the GAO Redbook’s rule against augmentation, the Government argues that agencies may not “transfer funds betw een appropriations without specific authority.” ECF No. 90 at 24 citing Principles of Federal Appropriations Law (GAO Redbook) (4th Edition, 2016 Revision) at 6

- 162

- 6

- 170. However, augmentation is not at issue. And, nowhere in the legislation did Congr ess prohibit MARAD from accepting a fee.

Fourth, and lastly, the cited GAO opinions are not dispositive as well as Anchorage correctly points out:15 because (1) GAO opinions and decisions on appropriations law are internal to the Government and provide direction to agency and government officials involving the use of, and accountability for, public funds, and do not affect agreements between the Govern ment and a private party; (2) the cited opinions do not state that a contract lacks consideration because it violates the Miscellaneous receipts statute; and (3) the cited opinions involve Government agencies attempting to augment, obligate, and increase f unding and appropriations and/or allocate funding to other needs without prior legislative approval, which is not the case here. The money was approved by Congress for the Project and was used for the Project, including the expenses incurred by MARAD in ad ministering the work.

ECF No. 97 at 28.

Therefore, for the reasons set forth above, the Court holds that MARAD was authorized to receive the 3% administrative fee.

B. Remaining Genuine Issues o f Material Fact

Th e remain ing disputed issues of material fact are as follows.

• It is clear from the 2003 MOU that MARAD had a duty to oversee, de sign and construct the Project . However, it is the Government’s contention that Anchorage was in total control of the project. See ECF No. 90 at 14

- 16. Anchorage, disagrees, and as such, the question as to whether Anchorage had control of the Project and was the ultimate decision

- m aker remains a disputed issue of material fact.

• W hether MARAD’s 2012 settlement with ICRC was a breach of the implied covenant of good faith and fair dealing because the 2011 MOU had expired, and no implied

- in

- fact contract was created remains a disputed issue of material fact.

V. CONCLUSION

For the reasons set forth above, the Court finds the 2003 MOU and 2011 MOA binding and valid contracts. The Court further holds that the Agreements are not void and that MARAD was authorized to receive the 3% fee. However, there remain genuine issues of material fact as enumerated above. For these reasons, the Court DENIES Defendant’s motion for summary judgment.

The Court sets a telephonic status conference for Tuesday, June 2, 2020 at 2:00 p.m. EDT to discuss the trial schedule.

IT IS SO ORDERED.16 s/ Edward J. Damich EDWARD J. DAMICH Senior Judge