# In the U nited S tates C ourt of F ederal C laims

No. 09

- 86 5 C

(Filed: April 3 , 2013)

__________

LAKESHORE ENGINEERING SERVICES, INC.,

Plaintiff,

v.

THE UNITED STATES,

Defendant. *

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* Contract case; Motion for summary judgment;
ID / IQ contract

, with f

ixed

- price task orders ; Use of price book with bidder’ s coefficient; Army neither contracted nor warranted that prices in price book accurately reflected local prices; Instructions for using price book included in solicitation by necessary implication; Risk of price understatement on
contractor ; No breach of th e covenant of good faith and fair dealing; No mutual mistake or unilateral mistake; Reformation denied; Equitable adjustment denied.

__________

OPINION

__________
Phillip B. Abernethy

, Butler

, Snow, O’Mara, Stevens and Cannada, PLLC, Ridgeland

, MS , fo r plaintiff.

Jane C. Dempsey

, C ivil Division, United States Depart ment of Justice, with whom was Acting Assistant Attorney General Stuart F. Delery , for defendant.

ALLEGRA, Judge:

This contract case is before the court on defendant’s motion for summary judgment. Lakeshore Engineering Services, Inc. (Lakeshore or plaintiff) was awarded a n Indefinite

Delivery/Indefinite Quantity contract to provide , via job orders, constructions services to the
U.S. Army (the Army ) at Fort Rucker, Alabama (Fort Ru cker) . The Solicitation for this contract anticipated that the price of task orders would be set by multiplying the prices in a specified pricing book by a bidder ’s coefficient . Lakeshore claims that it was misled by the Solicitation
in to believ ing that the prices in the pricing book accurately reflected local prices at Fort Rucker. It asserts that, instead, those prices significantly understated the costs of certain materials and
that the various adjustment clauses in the contract failed to account for these differences. It
claims that it is entitled to an equitable adjustment essentially equal to the difference between its- 2

-

actual costs and the prices set under the contract. Finding that neither th e terms of the contract

, nor any implied warranties or covenants provide a basis for such an adjustment, the court hereby GRANTS defendant’s motion for summary judgment and orders this case dismissed.

I. BACKGROUND

In December 2006, the Army issued S olicitation Number W911SE

- 07

- R

- 007

- 002 (the Solicitation) for a n indefinite delivery/indefinite quantity

, fixed price

, job

- order contract (the Contract) for repair, maintenance

, and construction services in support of the Directorate of
Public Works located at Fort R ucker . The job was to be conducted over one base year and four

one

- year option s , for a total of five years

. The contractor was to provide “ all materials, supplies, job site supervision, labor, construction equipment, required safety equipment, barricades both lighted and unlighted, except that specified as Government

- furnished, to repair, construct real property facilities and provide related work as specified , at Fort Rucker, AL, and satellite installations.” The Solicitation indicated that the guarante ed minimum quantity of work under
the C ontract for task orders would be $300,000.

The S olicitation in formed that the pricing portion of offers would take the form of three
coefficient s

– one each for work during normal hours on pre

- priced items ; overtime work on pre

priced items; and non

- pre

- priced items

. For the pre

- priced items, the coefficient was to be “multiplied by the unit prices listed in a Universal Unit Price Book (UUPB) to price a job or project on individual job orders. According to the Solicitation, the coefficient was: “a numerical factor that represents costs (generally indirect costs) not considered to be included in the [UUPB] prices, e.g., general and administrative and other overhead costs, insurance costs, bonding and
altern ative payment protection costs, protective clothing, equipment rental, and contractor’s profit.” The Solicitation said the offeror’s coefficient should account for a wide variety of risks of doing business

, 1 adding at a later point, the coefficient “shall contain all allowable contractor costs, including contingencies and profit.” 2 It further state d that the “offeror’s coefficient shall

1 These included, but were not limited to, the following: contractor’s overhead and profit; insurance; bonding; taxes ; licenses and fees; waste and excess materials; mobilization; compliance with environmental and safety laws; project management; and a va riety of other
overhead items.

2 In this regard, the Solicitation further stated:
Examples of such costs are: gross receipts taxes, payroll taxes (FICA, workmen ’ s compensation, state and federal unemployment taxes for direct payroll employees,

etc. ), superintendents ’ salaries, builders ’ risk insurance, initial contract startup mobilization, demobilization expenses, and bond premiums. Offered coefficient shall also contain various overhead expenses, including, project estimating, site office overhead, field office building, furniture, equipment, on

- site office staff salaries, vehicle and construction equipment maintenance, office administrative- 3

-

contain all costs other than the pre

- priced unit prices, as no allowance will be made after award.” 3 The Solicitation, however, allowed for adjustments in the coefficient for the option

years , to be based on the Engineering News Record building Cost Index (BCI), i n accordance with the Economic Price Adjustment Clause, A rmy Federal Acquisition Regulation Supplement (AFARS) 5152.237

- 9000. 4

The Solici tation designated the Gordian Group Construction T ask Catalog (the Gordian Catalog) and PROGEN Online as the UUPB and accompanying software, respectively, to be “used by the contractor in development of price proposals for individual Task Orders

. ” According to the S olicitation’s technical specification, “[t]he UUPB, modified for Fort Rucker, contains pricing information (i.e., Government Estimate) for the description of work to be accomplished and for the unit s of meas ure specified .” This segment further indicated that the “UUPB consists of Divisions 1 through 16 that are applicable to Divisions 1 through 16 of the
Job Order Contract Technical Specification s .” It additionally specified that the “UUPB modified
for Fort Rucker contains unit pricing data to be used by the Contractor in development of price proposals for each work order, ” adding that “[t]he pricing data is presented as basic items and as price adjustment modifiers to the basic item.”

expenses, and a proportional share of home office overhead. The coefficient shall also include all insurance, special clothing for workers, traffic barricades, additional supervision, as well as, pape r work fees associated with a particular delivery order, for example, asbestos removal plan, lead abatement plan, consultant fees, all on and off site storage, etc.

3 The Solicitation indicated that items not listed in the UUPB (denominated “ n on p re

p r i ced ” or NPP ) were to be “proposed in bare cost only (material, equipment and labor) multip l ied by the quantity and the non pre

- priced coefficient to arrive at the total price for the
NPP .” The coefficient for the NPP was to “include all items associated with performing the non

prepriced tasks other than bare costs .”

4 Th is clause describes the process for adjusting the coefficient for option yea r s thusly:

An econo mic adjustment will be applied to the contract coefficient(s) addressing changes in the cost of labor, equipment and material in the Unit Price Book (UPB) (this includes consideration of Davis Bacon issues). This allows for
economic increase or decrease o f the prices in the UPB and serves to adjust line item prices by the percentage increase or decrease of the economic trend in the
construction market. The economic price adjustment will be based on the Building Cost Index (BCI) found in the Market Trend pages of the Engineering
News Record (ENR). The economic adjustment is not applied to the cost items comprising the coefficient. No upward adjustment shall apply to task orders awarded prior to the effective date of the adjustment, regardless of the date of
commencement of work thereunder.- 4

-

The Solicitatio n specified how the contractor, in the technical portion of its proposal

, was to demonstrate technical acceptability, including bonding capabilities, as well as provide information on contract management, technical staff ability, and comprehension of requi rements. The last of these was to take the form of a detailed cost proposal based on information contain ed in a sample scope of work, including an explanation and breakdown of line items used from the
UUPB and of any non

- prepriced item included in the sam ple proposal. Offerors were also to provide information on relevant experience and past performance. The Army was to consider a ll
of this information in evaluatin g the technical portion of the offers. The evaluation segment of
the Solicitation further described the steps the Army would use to evaluate the offerors’ price proposal s , principally focusing on how the pre

- priced coefficient would be examined

. For this purpose, the Solicitation made vari ous assumptions, e.g. , that $4 million would be the not ional requirement for the base year, 5 that certain amounts of work would be performed in other than normal working hours, etc. The Solicitation indicated that “award will be made to the lowest priced offeror who is technically acceptable.”

The Solici tation had five attachments, including “ATCH 2

– Progen Unit Price Book (UPB), Divisions 1 through 16.” The se d ivisions of the Gordian Book , which covered a wide range of construction activities, 6 w ere attached to the S olicitation in the form of two volum es. Each volume opened with a table of contents, both of which listed an introductory section numbered “0000

, ” en titled “Using The Construction Task Catalog.” Th is introductory section, repeated in each of the two volumes attached to the Solicitation , ex plained that “this catalog was created specifically for Fort Rucker, Alabama, and published in December 2006,” and the unit prices included labor costs, equipment costs, and material costs. The section listed costs that the unit prices did not encompass a nd which, therefore, were to be included in the contractors’
coefficient

. 7 This description wa s similar, but not identical , to that in the Solicitation itself

. Specifically, the book’s discussion of business risk stated that the coefficient should include “business risks such as the risk of a lower than expected volume of work, smaller than anticipated Job Orders, poor Subcontractor performance, and inflation or material cost
fluctuations

. ”

5 Regarding the $4 million, the Solicitation was quick to add that “[t]his figure is for prepriced coefficient evaluation only and may not reflect the actual dollar amount of projects delivered during the contract per iod.”

6 Among the areas covered w ere site work , concrete, masonry, metals, wood and plastic, thermal and moisture protection, doors and windows, finishes, specialties , equipment, furnishings, special construction, conveying systems, mechanical

, and electr ical. Within each of these chapters, there were hundreds and, in some instances, thousands of items.

7 The section referred to the coefficient as an “Adjustment Factor.”- 5

-

T his same section of the Gordian Book w arned that :

C ontractors may find differences in labor, equipment material costs due to certain
economic factors. Variations in labor cost can also result from labor efficiency, labor restrictions, working conditions and local work rules. Variations in material

costs can also result from the quantity of material purchased, the existing relationship with suppliers, and because the materials have been discontinued or
have become obsolete.

Based on these caveats, th e section proceeded to state that: “[ w] hile diligen t effort is made to provide accurate and reliable up

- to

- date pricing, it is the responsibility of the Contractor to verify the unit prices and to modify their Adjustment Factors accordingly.” Like the Solicitation, the Gordian Book provided that the list of costs to be included in the coefficient was “not exhaustive” and that “no additional payments of any kind whatsoever will be made ,” adding again that “[a] ll costs not included in the unit prices must be part of the Adjustment Factors.” 8

In March, 2007, Lakeshore submitted its offer to the Army, with a coefficient of 1.28 for normal working hours , 1.46 for overtime working hours, and 1.22 for non pre

- priced items . In its offer, Lakeshore indicated that it “agrees with all terms, condition s, and provisions included in this solicitation.” It represented that it was, at that time, the prime contractor on five similar
contracts, and had, in the prior five years, completed more than 1,500 task orders valued at more than $100 million. In its pricing proposal, Lakeshore explained the breakdown of its coefficient. In a segment entitled “Our Perception of Unit Pric e Book (UPB), it represented

–

We have thoroughly reviewed the UPB and compared major line items with our actual cost experi ence on past projects. Overall the UPB prices are less than our actual past cost experience.

In a segment entitled “Development of Coefficient and Basis of Cost,” Lakeshore further
indicated that

–

In order to develop the coefficient, we decided to per form a sample analysis of the cost factors for a known past renovation project. We provided the scope of work to our major subcontractors and obtained their prices. Similarly, our in

- house
estimat or prepared an estimate based on Unit Price Book.

8 Although Section 00 was not specifically referenced in the Solicitation, the sect ions
that are referenced therein make references to this section. For example, o n the opening page of Section 01, the book include s a note defining “ r eimbursable Fees

, ” which states that they

“ include but are not limited to permits, special inspections, s pecial insurance, additional warranties, etc. , which are not included in a task or an Adjustment Factor as explained in the Contract or The Construction Task Catalog®.”- 6

-

Lakesho re provided an exhibit summarizing the results of this internal exercise, which examined,
inter alia , the ‘“sensitivity’ of the coefficient if workload varies.” It represented that the weighted average of coefficient s under this exercise was 1.295, leadi ng it to propose a coefficient of 1.28 for normal working hours at Fort R u cker. T he proposal contained a similar set of representations regarding plaintiff’s study of overtime hours, leading it to propose a coefficient
of 1.46 for overtime hours at Fort R ucker.

On April 26, 2007, the Army awarded the C ontract to Lakeshore. The C ontract included all terms, conditions and provisions set forth in the S olicitation. In the base year, Lakeshore performed 79 construction delivery orders, the first of which w as issued on July 25, 2007

. For each of these orders, the parti es followed the same process: t he Army requested Lakeshore to submit a detailed cost estimate for the proposed work based upon the unit prices in the Gordian Book. After receipt of those est imates, the Army compared them to its own cost estimate and the parties then conducted negotiations regarding what was needed to complete the work. The parties then executed a delivery order, each of which provided “a Firm Fixed

- Price for the performance of the work described

, ” as specified in the C ontract.

On April 27, 2008, the Army awarded the first option year to Lakeshore. Pursuant to the economic price adjustment clause, the coefficient factors w ere adjusted upward by four percent,
such that the coefficient factor for normal working hours became 1.32 . During that contract year, Lakeshore p erformed 74 construction delivery orders

. Each of these orders were generated using the process described above.

On March 10 , 2009, plaintiff filed a claim for equitable adjustment with the contracting officer (CO) pursuant to the Contract Disputes Act of 1978 (the CDA), 41 U.S.C. § 601, et seq.
, seeking recovery of $1,996,152.40 for losses it incurred performing in the base year and first option year

. The claim alleged that Lakeshore had lost “a tremendous amount of money because it was compelled to perform under the [Contract] utilizing the Gordian UPB pricing schedule.” On June 25, 2009, the CO issued a final decision denying recovery. On December 15, 2 009, plaintiff f iled its complaint in this court , which was amended on April 19, 2011. Defendant filed
it s motion for summary judgment on January 13, 2012. Briefing and oral argument on that motion have been completed.

II. DISCUSSION

We begin with c ommon ground. Summary judgment is appropriate when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter
of law. See RCFC 56; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247

- 48 (1986). Disputes

o ver facts that are not outcome

- determinative will not preclude the entry of summary judgment.
Id

. at 248. However, summary judgment will not be granted if “the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party.” Id. ; see also Matsushita Electric Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986); Becho, Inc. v. United States , 47 Fed. Cl. 595, 599 (2000).- 7

-

When making a summary judgment determination, the court is not to weigh the evidence, but to “determine whether there is a genuine issue for trial.” Anderson , 477 U.S. at 249; see also Agosto v. INS , 436 U.S. 748, 756 (1978) (“a [trial] court generally cannot grant summary judgment based on its assessment of the credibility of the evidence presented”); Am. Ins. Co. v. United States , 62 Fe d. Cl. 151, 154 (2004). The court must determine whether the evidence presents a disagreement sufficient to require fact finding, or, conversely, is so one

- sided that one party must prevail as a matter of law. Anderson , 477 U.S. at 251

- 52; see also Ricci v. DeStefano

, 557 U.S. 557, 586 (2009) (“‘Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.’” (quoting Matsushita

, 475 U.S. at 587)). Where there is a genuine di spute, all facts must be construed, and all inferences drawn from the evidence must be viewed, in the light most favorable to the party opposing the motion. Matsushita , 475 U.S. at 587

- 88 (citing United States v. Diebold, Inc. , 369 U.S. 654, 655 (1962)); see also Stovall v. United States , 94 Fed. Cl. 336, 344 (2010); L.P. Consulting Grp., Inc. v. United States , 66 Fed. Cl. 238, 240 (2005).

Lakeshore a rgues t hat the United States breached the C ontract and its implied duty of good faith and fair dealing by : ( i ) not utilizing a price index that fairly and accurately reflected local rates for labor, materials, and equipment; ( ii ) not allowing adjustment s to that index for “extraordinary inflationary circumstances; ” and ( iii ) not adjusting the first option

- year coefficient in a way that complied with the contract’s requirements. Plaintiff further alleges that the United
States breached an implied warranty that the C ontract specifications would be free from error by using the U U PB. Finally, plaintiff argues that either the parties entered into the C ontract as a result of mutual mistake of fact

– a mistaken belief that the U U PB was accurate for Fort Rucker

– or that Lakeshore entered into the C ontract as a result of this mistake, and that the government
knew or should have known of Lakeshore’s mistake. The court will consider these claims
seriatim

.

M ost of plaintiff’s pricing claims begin

– and end

– with the provisions of the C ontract. To determine what that agreement reveals, w e begin, as we must, wi th the C ontract ’ s plain language. Banknote Corp. of Am. v. United State s , 365 F.3d 1345, 1 353 (Fed. Cir. 2004) ; see also Coast Fed. Bank, FSB v. United States , 323 F.3d 1035, 1038 (Fed. Cir. 2003) (en banc). “If the provisions of the [contract] are clear and unambiguous,” the Federal Circuit has stated, “they must be given their plain and ordinary meaning; we may not resort to extrinsic evidence to interpret them.” Banknote Corp. , 365 F.3d at 1353. In addition, a contract should be interpreted
in a mann er that harmonizes and gives reasonable meaning to all its parts. Id

. “Provisions of a contract must be so construed as to effectuate its spirit and purpose.” Gould, Inc. v. United
States , 935 F.2d 1271, 1274 (Fed. Cir. 1991); see also Metric Constructors, Inc. v. NASA , 169 F.3d 747, 752 (Fed. Cir. 1999). An interpretation that gives a reasonable meaning to all provisions of a contract thus is preferable to one that leaves a portion of it useless or inexplicable. Gould, Inc. , 935 F.2d at 1274 ; see also Fulcra Worldwide, LLC v. United States

, 97 Fed. Cl. 523, 537

- 38 (2011); Linc Gov ’ t Servs., LLC v. United States , 96 Fed. Cl. 672, 707

- 08 (2010). Context thus defines the meaning of any given term or provision in a government- 8

-

contract

. Id. at 7 08 (citing Metric Constructors , 169 F.3d at 752); see also Fulcra Worldwide , 97
Fed. Cl. at 537

- 38.

In various ways, Lakeshore complains that the Army utiliz ed a pricing book that did not reflect local prices , particularly after Hurricane Katrina. Howev er, Lakeshore cannot point to anything in the S olicitation or resulting contract that indicates that the Army ever assumed the obligation to provide offerors with accurate local prices

, or t he economic consequences i f one or more prices in the guide proved inaccurate

. The C ontract made clear that the coefficient was to reflect “risks of doing business” and that this figure “shall contain all costs other than the pre

priced unit prices, as no allowance will be made after award.” Moreover, the Gordian Book used
under the C ontract flatly warned prospective offerors that whil e Gordian used “diligent effort

. . . to provide accurate and reliable up

- to

- date pricing, it is the responsibility of the Contractor to verify the unit prices and to modify their Adjustme nt Factors accordingly. ” That same book
further cautioned that the coefficient should include business risks such as “inflation or material cost fluctuations.” Plainly, these provisions should have put plaintiff on notice that it, and not the Army, bore the risk that the prices in the Gordian Book might be too low

– a possibility that plaintiff could have account ed for by examining the prices in the book and setting its coefficient appropriately

.

Lakeshore , for its part, stresses that the caveats regarding the accuracy of the prices made in the Gordian Book were in an introductory segment to that publication that was not specifically incorporated into the Solicitation. P laintiff, of course , is right that the Solicitation explicitly
refer s to all o f the c hapters in th e Gordian B ook save the introductory chapter that describes how
to use the book ( Chapter 00 00 ) , w ithin w hich are the various caveats regarding th e accuracy of the prices listed in the book . The court, however, does not believe this mak es a difference here
for several reasons.

First, it is reasonable to believe that when the Solicitation incorporated by reference the other chapters in the Gordian Book, it incorporated

, by necessary implication

, the instructions in the introduction rega rding how to use th ose chapters

. Those instructions were extensive and essential to the use of the book, provid ing detailed information regarding : (i) what was and was
not included in various unit prices; (ii) the extent to which the unit prices included

, inter alia

, delivery, movement of material, imported materials ( e.g. , sand and soil ), fasteners, and testing and calibration; and (i ii ) what was and was not covered in terms of demolition costs. The instructions also provided a detailed explanation of what was covered by the coefficient

, in terms
of business costs and construction

- related cost ; it was within this segment, under the title of “Price Variations,” that readers would find the passages warning about the accuracy of price
information and the n eed for contractors to verify the prices contained in the book . Lastly, the introduction provided a series of “General Interpretations” to be applied in using the prices in the catalog , including instructions on how to calculate quantity discounts; how to choose between alternative tasks to accomplish the same purpose; how to deal with situations in which the catalog specified materials or equipment by reference to specific manufacturers or vendors; how
to construe the various specifications for tasks; and how to apply the units of measure employed throughout the book. All told, these instructions went on for eight detailed pages , making it- 9

-

inconceivable that anyone c ould appropriately or effectively use the Gordian Book without
refer ring repeatedly back t o these provisions.

Given the organization of the Gordian Book, the court must conclude that in incorporating the chapters containing the pricing information, the Solicitation necessarily incorporated the instructions needed to interpret that information. See Lusk v. Lyon Metal
Prods

. , 247 S.W.2d 617, 621

- 22 ( Mo. 1952) (contract incorporated by necessity portions of pricing manual that were needed to effectuate the provisions of the manual that were specifically
referenced in th e contract) ; see also Johnston Bros v. Village of Coopersville , 246 N.W. 551, 552 (Mich. 1932) (contract included unreferenced, but attached

, printed matter regarding pump warranties because “[t]he contract without such matter is incomplete”)

. T he instruc tions to the
Gordian Book could not be clearer in indicating that “it is the responsibility of the Contractor to verify the unit prices and to modify their Adjustment Factors accordingly.” Plainly

, p laintiff
understood this. I n its pricing proposal, it r epresented that it had “thoroughly reviewed the UPB and compared major line items with [its] actual cost experience on past projects” an d had determined that “ [ o ] verall the UPB prices are less than our actual past cost experience.” It further averred t hat, i n developing its coefficient s , it had “perform [ed] a sample analysis of the cost factors for a known past renovation project” and “provide d the scope of work to [its] major
subcontractors and obtain ed their prices.” Indeed, in deposition testimony

, one of Lakeshore’s
officials admitted that he had conducted a side

- by

- side comparison of the 2005 and 2006
Gordian Books. While the record suggests that some of the representations made by plaintiff in its proposal may have been puffery , it remains clear that plaintiff understood that there was a relationship between the accuracy of the prices in the Gordian Book and what it should bid in
terms of a coefficient. It should not be heard to argue otherwise now, after

- the

- fact, when it is
convenient to do so

. 9

Pl aintiff’s vaunted attempt s to place the risk of pricing errors entirely on the shoulders of
the Army cannot be reconciled with several of the C ontract’s provisions. The first, of course, are
th os e indicating that this was a fixed

- price contract , including one provision that, in describing how task orders would be issued, explicitly stated “[t]he Task Order is a Firm Fixed

- Price for the performance of the work described.” Consistent with this intent, the C ontract does not contain any of the Fede ral Acquisition Regulation provisions that typically would be used by a

9 Plaintiff complains that it “would have been impossible to verify the unit prices” in the Gordian Book, noting that it did not know what the future task orders would be and thus did not
have time to review all 70,000 unit prices listed in the book. But, plaintiff, of course, did attempt to verify the prices it believed were most important to its success under the C ontract . As was
said in ConocoPhillips v. United States , 501 F.3d 1374, 1379 (Fed. Cir. 2007), in which the plaintiff complained that the con tract contained an index for fuel that did not reflect market prices: “[i] f the plaintiffs had felt that a different method of adjusting market prices would be more appropriate and if the issue was sufficiently important to them, they could have objected to the use of the [index]; if the government had insisted on using the [index], they could have declined to enter into the contracts.”- 10

-

contract ing officer to analyz e the allowable costs under a cost

- reimbursement arrangement

. See

, e.g. , 48 C.F.R. §§ 16.307 (cost

- reimbursement contracts); 52

. 216

- 7 (allowable cost and payment clause). W ithout such guidance, plaintiff simply would have this court award it the difference between what it expended and what it charged under the C ontract

– effectively guaranteeing it a profit, albeit without any mention of correlating a djust ment s for instances in which the price in
the Gordian Book exceeded plaintiff’s actual cost. There is no reason to believe that the
C ontract was intended to “bind the government to such a one

- sided arrangement.” ConocoPhillips , 501 F.3d at 1379. Second, the C ontrac t quite explicit ly indicat es that the
coefficient wa s designed to deal with a variety of business risks

. 10 It provided a formula for adjusting the coefficient to deal with changes in the cost of equipment, labor

, and materials , and

stres sed that no other “allowance will be made after award.” These provisions are consistent
with a fixed

- price contract, under which the contractor “assumes the risk of unexpected costs.”
ITT Arctic Servs. v. United States , 524 F.2d 680, 691 (Ct. Cl. 1975); see also Yankee Atomic
Elec. Co. v. United States , 112 F.3d 1569, 1579 (Fed. Cir. 1997)

, cert. denied

, 524 U.S. 951 (1998)

. All these provisions would be rendered surplusage if, beyond the compensation specified in the C ontract , the contractor w ere entitled to a n adjustment to account for costs in excess of the prices listed in the Gordian Book. T hese provisions , rather, made clear that
Lakeshore bore the risk of cost increases or unanticipated inflation

, which it was to consider in setting its coe fficient. 11 This court will not imply into the contract provisions that contradict those actually contained therein. See Gardiner, Kamya & Assoc s . v. Jackson , 467 F.3d 1348, 1353 (Fed. Cir. 2006) ( requiring the court to “interpret [a contract ] as a whole and ‘in a manner
which . . . avoids conflict ’ ”); United Int’l Investigative Serv. v. United States , 109 F.3d 734, 737 (Fed. Cir. 1997)

.

Nor can plaintiff reach the same point , economically

- speaking, by asserting instead that
defendant , by failing to adjust the prices, breached the covenant of good faith and fair dealing. Having explicitly agreed to the provisions in the C ontract dealing with pricing, plaintiff cannot

now contend that defendant violated the covenant of good faith and fair d ealing merely by

e nforcing the same. To be sure, a breach of th e good faith covenant can be established by a showing that defendant “specifically designed to reappro p riate the benefits [that] the other party expected to obtain from the transaction, thereb y abrogating the government’s obligations under the contract.” Precision Pine & T imber, Inc. v. United States , 596 F.3d 817, 829 (Fed. Cir. 2010), cert. denied , 131 S. Ct. 997 (2011); see also Centex Corp. v. United States , 395 F.3d 1283, 1304 (Fed. Cir. 2005). While plaintiff may show a breach of the covenant without

10 Plaintiff would limit these business risks to those specifically listed in the Solicitation
and notes that the list ed risks did not include the risk that the prices in the 2006 Gordian Book

were wrong . However, the Solicitation indicated that the risks to be factored into the bidder’s coefficient included, but were “not . . . limited to” the business risks listed.

11 Notably, some contracts contain adjustment provisions for unanticipated inflation.
See

, e.g. , Brunswick Corp. v. United States , 951 F.2d 334, 335 (Fed. Cir. 1991). Unfortunately for plaintiff, t his one did not.- 11

-

demonstrating a corresponding violation of the underlying agreement, 12 it cannot do so without some evidence that defendant acted ‘“to destroy the reasonable expectations of the other party

r egarding the fruits of the contract.”’ Info. Sys. & Network s, 81 Fed. Cl. at 740 (quoting Centex

, 395 F.3d at 1304); see also Mkt

. St. Assocs., L.P. v. Frey , 941 F.2d 588, 594 (7 th Cir. 1991) (Posner, J.) (indicating that a breach of the covenant occurs w hen there has been “sharp dealing”); Dobyns v. United States , 91 Fed. Cl. 412, 421 (2010). Here, there is no such evidence

– unless one accepts plaintiff’s argument that bad faith is exhibited by defendant’s failure to grant plaintiff the equitable adjustment in question. This court, however, is not prepared to turn the covenant analysis into a s yllogism , in which a breach of the covenant occurs a ny time the government refuses to make whole a c ontractor that perform s a contract at a loss. 13

Contrary to plaintiff’s claims, there is no indication that the Army breached the C ontract in failing to adjust plaintiff’s coefficient. The FAR explains that “[a] fixed

- price contract with economic price adjustment provides for upward and downward revision of the stated contract price upon the occurrence of specified contingencies.” 48 C.F.R. § 16.203

- 1(a) ; see also Dick Pacific/GHEMM, JV ex rel. W.A. Botting Co. v. United States , 87 Fed. Cl. 113, 124 (2 009)

. For this purpose , the C ontract incorporates A FAR S 5152.237

- 9000

, which provides that the economic price adjustment of the coefficient “will be based on the Building Cost Index (BCI)
f o und in the Market Trend pages of the Engineering News R e cord (ENR ). ” Plaintiff provides no evidence that this clause was applied improperly here. Rather, its claim on this count is yet another variation on the theme that defendant should have adjusted the contract prices to reflect plaintiff’s actual costs. The FAR, indeed, contains economic

- price

- adjustment clause s that

12 See Centex Corp. , 395 F.3d at 1304; Jay Cashman, Inc. v. United States , 88 Fed. Cl. 297, 308 (2009); Info. Sys. & Networks Corp. v. United States , 81 Fed. Cl. 740, 750

- 51 (2008), aff'd

, 356 Fed. Appx. 410 (Fed. Cir. 2009); N

. Star Alaska Hous

. Corp. v. United States , 76 Fed. Cl. 158, 188 (2 007).

13 Plaintiff relies upon the warranty of specifications doctrine established in United States v. Spearin , 248 U.S. 132, 136 (1918), to contend that the Army “warranted that the non

negotiable UPB, which was part of the Contract and specifications req uired under the Solicitation, fairly and accurately reflected local rates for labor, materials, and equipment.” Spearin “sets forth the rule that a contractor bound to build according to government plans and specifications is not responsible for the conse quences of defects in those plans and

spec i fications.” Holmes v. United States , 657 F.3d 1303, 1315 (Fed. Cir. 2011). That doctrine, however, is limited to situations in which “the contractor is bound to build according to plans and specifications prepar ed by the owner.” Spearin , 248 U.S. at 136; see also Hercules, Inc. v.
United States , 24 F.3d 188, 197 (Fed. Cir. 1994)

, aff’d , 516 U.S. 417 (1996)

. Th at is not the case
here. Th e doctrine

, moreover , does not apply where the contract’s design specifications are fine
and it is possible to perform the task identified

– “[w]here one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation, because unfore seen difficulties are encountered.” Spearin , 248 U.S. at 136. That
is the case here.- 12

-

would have approximated that result

, see, e.g. , 48 C.F.R. § 52.216

- 4. But, contrary to plaintiff’s claim, th ose clause s w ere not included in th e C ontract.

L a stly , plaintiff seeks re formation of the C ontract based on a mutual mistake or a unilateral mistake

. This claim too must be rejected.

In order to make out a claim for mutual mistake

, the party advocating reformation must prove four elements: (i) the parties to the contract we re mistaken in their belief regarding a fact; (ii ) that mistaken belief constituted a basic assumption underlying the contract; (iii) the mistake had a material effect on the bargain; and (iv) the contract did not put the risk of the mistake on the party s eeking reformation. See Bank of Guam v. United States , 578 F.3d 1318, 1329

- 30 (Fed. Cir. 2009)

, cert. denied , 130 S. Ct. 3468 (2010); Dairyland Power Coop. v. United States , 16 F.3d 1197, 1202 (Fed. Cir. 1994) (citing Atlas Corp. v. United States , 895 F.2d 745, 750 (Fed.
Cir. 1 990), cert. denied , 498 U.S. 811 (1990)). As these factors reflect, reformation for mutual
mistake is available “‘when the parties, having reached an agreement and having attempted to reduce it to writing, fail to express it corr ectly in the writing.’” Ind

. Ins. Co. v. Pana Cmty. Unit Sch. Dist. No. 8 , 314 F.3d 895, 903

- 04 (7th Cir. 200 2 ) (quoting Restatement (Second) of Contracts, § 155 cmt. a (1981))

. 14 Generally, the elements of a claim for reformation must be

prove n by clear and convincing evidence. See

, e.g. , Phi l. Sugar Estates , 247 U.S. at 391 (stating that reformation will not be granted “unless the proof of mutual mistake be of the clearest and most satisfactory character”); see also 27 Williston on Contracts § 70 : 54 (4th ed.) (stating that “the preferred way of appraising the quantum of proof” in reformation cases “is to state quite simply that the evidence must be clear and convincing” ) ; Restatement (Second) of Contracts § 155 cmt. c (1981).

Plaintiff has failed to produce evidence to support several of its claims on this theory. For one thing, it has failed to support its assertion t hat there was any mistake of fact here

, i.e. , “a
belief that is not in accord with the facts

. ” Atlas , 895 F.2d at 750; see also S hort Bros., PLC v.
United States , 65 Fed. Cl. 695, 796 (2005). Principally , the record lack s support for plaintiff’s claim that, in any comprehensive way , the prices in the Gordian Book failed to reflect local prices

. On this count , plaintiff primarily r elies on the fact that its costs exceeded those in the Gordian Book, but this is proof neither that its costs were reasonable n or that there was any systematic problem with the prices in the b ook. Rather, while the record suggests that some prices in the b ook may have been be low market

, plaintiff has provided no evidence, one way or the other, as to the accuracy of the wide majority of the prices in that book

– having some degree of inaccuracy is not unusual when it comes to contracts of this sort, which n ecessarily anticipate some time delay between the issuance of a price guide and the performance of a particular task

14 See also Phi l. Sugar Estates Dev. Co. v. Gov’t of Phil

. Islands , 247 U.S. 385, 389 (1918) (“[i]t is well settled that courts of equity will reform a writte n contract where, owing to mutual mistake, the language used therein did not fully or accurately express the agreement and intention of the parties”); Nat’l Austl

. Bank v. United States , 452 F.3d 1321, 1329 (Fed. Cir.
2 00 6).- 13

-

order

. Certainly, plaintiff has failed to provide any proof that the Gordian Book systematically
understated the costs of labor, equipment and materials a t the time the C ontract was issued. 15 Indeed, the record reveals that plaintiff realized a profit in performing a large number of the task orders, suggesting that the prices as to the items , equipment and services associated with t hose
orde rs were not below market

.

Likewise , plaintiff has failed to support its claim that the Army mistakenly believed that Gordian had updated their book, when it had not. In fact, the Gordian firm did update the ir book
in 2006 , but focused only on what it called “material price indicators” and did not review all 70,000 prices therein

. Moreover, to the extent that there were some prices in the Gordian Book that were low, the record contains admissions by plaintiff’s officers that Lakeshore knew this
was the case before it submitted its offer . Indeed, it appears that, prior to submitting that offer, plaintiff had : (i) been in contact with the prior contractor on this contract , who had likewise complained about the prices in the Gordian Book being low ; and (ii) compared on a “side

- by

side basis” the 2005 version of the Gordian Book with the 2006 version

. 16

15 Plaintiff submitted an affid avit by one of its vice presidents claiming that the “prices in the Gordian Book were not accurate nor reflective of local prices for labor, materials

, and equipment costs. ” The only specific information provided with this affidavit (principally dealing with increases in the price of steel), however, deals with price increases that occurred after the
contract was issued. Moreover, plaintiff’s damages expert ma d e clear at hi s deposition that he made no comparison s of this sort, but rather simply assumed that plaintiff was entitled to the
difference in the costs it incurred versus those reflected in the Gordian Book.

16 In his deposition testimony, one of Lakeshore’s officials indicated that before Lakeshore made its offer, a supervisor asked him to compare the 2005 version of the Gordian Book that the prior contractor had used on an earlier contract with the 2006 version of the Book:

Q. : So [the supervisor] basically told you that the 2005 UPB book was low?

A.: No, he didn’t say it was low, he said that the other contractor was having difficulties executing the project, apparently, because of the spike in
materials.
So what he basically asked me to do was [to ] get ahol d of Gordian Group to see if we can purchase the book that th at contractor had, and I said yeah. So we bought it . . . and just looked page by page. Okay, here’s a price, did they do anything in the book? Did any of the unit prices go up?

Q.: Did th ey?- 14

-

E ven if Lakeshore’s proof is sufficient to create a genuine issue of material fact as to the existence of this mistake, it has failed to pro vide meaningful proof as to the remaining three prongs of the mutual mistake standard. Contrary to its claims, t here is no indication that the
C ontract presumed that all the prices in the Gordian Book were accurate. Rather, as discussed above, the C ontra ct placed on the contractor the risk that certain prices in that book might not be

accurate

– a risk that was to be managed either in the calculation of the coefficient or, presumably, in assessing the desired profitability o n the C ontract as a whole

. 17 I n its bid proposal, plaintiff provided every indication that it understood this and had taken steps to assess the accuracy of the Gordian Book and approximate its impact. That those efforts were misrepresented or incomplete

– or that the particular tasks a ssigned to plaintiff proved , for some reason, to be unprofitable

– is no basis for allowing plaintiff to reform the entire contract into
which it freely entered. F inally, it should not be overlooked that this fixed

- price contract clearly placed the risk o f any mistake regarding increased performance costs on the party seeking the reformation, i.e. , plaintiff. See Lindsay v. United States , 41 Fed. Cl. 388, 391 (1998) (no reformation where solicitation placed burden on contractors to verify estimates of work) ; Foley
Co. v. United States , 36 Fed. Cl. 788, 790 (1996) (no reformation where solicitation placed burden on contractors to verify whether project was exempt from state sale tax) ; see also

A.: Some did, some didn’t.

Q

. : And did you create spreadsheets or documents

–

A

. : It was more just

–

Q.:

– regarding your analysis?

A.:

– on screen, looking at the two UPB’s side

- by

- side and just some hand notes on some general stuff. Looked like copper went up five percent or something. It was very generic.

The official further testified that before plaintiff submitted its offer, he “compared the UPB major items that you would typically use in vertical construction ,” focusing, in pa rt, on actual cost experience on past projects.

17 Plaintiff attempts to pile a Pelion of conjecture upon an Ossa of speculation in relying on several emails it claims demonstrate that Army officials thought all the prices in the Gordian Book had been updated. These emails primarily involve an internal debate about whether to use the price book/coefficient approach . Nothing in this parol evidence has the effect of modifying
the plain terms of the contract o r the warnings in the Gordian Book

, which , for the reasons discussed above, the court believes must be viewed as part of the Solicitation.- 15

-

McNamara Const. of Manitoba, Ltd. v. United States , 509 F.2d 1166, 1168

- 69 (Ct. Cl. 1975). 18 Accordingly, plaintiff does not meet any of the prongs of the mutual mistake analysis and its claim in that regard must fail, as a matter of law.

To make a successful claim of unilateral mistake, Lakeshore must prov e : ( i ) that the error is of the type that is compensable ; and ( ii ) that the contracting officer knew or should have known of the contractor’s unilateral mistake a t the time the bid was accepted. Bromley Contracting Co. v. United States , 794 F.2d 669 , 671

- 72 (Fed. Cir. 1986). Compensable claims include any “‘clear cut clerical or arithmetical error, or misreading of the specifications.’” Id

. at 672 (quoting Ruggiero v. United States , 420 F.2d 709, 713 (Ct. Cl. 1970)); see also Aydin Corp.

v. United States , 669 F.2d 681, 686 (Ct. Cl. 1982). The Federal Circuit has clearly stated, however, that mistakes in judgment on the part of the contractor are not the type s of mistake s that are compensable. Liebherr Crane Corp. v. United States , 810 F.2d 1153, 1 157 (Fed. Cir. 1987); Bromley , 794 F.2d at 672; United States v. Hamilton Enter s. , Inc. , 711 F.2d 1038, 1048 (Fed. Cir. 1983). And that , in the court’s view, is precisely what we have here. See Humlen v.
United States , 49 Fed. Cl. 497, 505 (2001); Edwards v. United States , 19 Cl. Ct. 663, 67 5

- 76 (1990); Carrier Corp. v. United States , 6 Cl. Ct. 169, 175 (1984)

.

III. CONCLUSION

The court will not gild the lily. Based on the foregoing, the court GRANTS defendant’s motion for summary judgment. The Clerk is hereby ordered to dismiss plaintiff’s complaint.

IT IS SO ORDERED.

s/Francis M. Allegra Francis M. Allegra Judge

18 While plaintiff does not invoke the doctrine specifically, it appears that some of its
claims are based on what is known as the “superior knowledge doctrine.” That doctrine “is a narrow exception to the general rule that contractors in a firm, fixed

- price contract assume the risk of increased performance costs.” P&K Contracting, Inc. v. United States , 108 Fed. Cl. 380, 395 (2012). The doctrine applies where the contractor:
(1) undert[ook] to perform without vital knowledge of a fact that affects performance costs or direction, (2) the government was aware the contractor had no knowledge of and had no reason to obt ain 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.

GAF Corp. v. United States , 932 F.2d 947, 949 (Fed. Cir. 1991)

, cert. denied

, 502 U.S. 1071 (1992) (citation omitted). But, the facts in this case make clear that plaintiff has not met this
threshold.