In the United States Court of Federal Claims

No. 09-865C

(Filed: April 3, 2013)

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LAKESHORE ENGINEERING 

SERVICES, INC.,

 Plaintiff,

v.

THE UNITED STATES,

Defendant.

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Contract case; Motion for summary judgment; 

ID/IQ contract, with fixed-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 the covenant of good 

faith and fair dealing; No mutual mistake or 

unilateral mistake; Reformation denied; 

Equitable adjustment denied.

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OPINION

__________

Phillip B. Abernethy, Butler, Snow, O’Mara, Stevens and Cannada, PLLC, Ridgeland, 

MS, for plaintiff.

Jane C. Dempsey, Civil Division, United States Department 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 an IndefiniteDelivery/Indefinite Quantity contract to provide, via job orders, constructions services to the 

U.S. Army (the Army) at Fort Rucker, Alabama (Fort Rucker). 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 

into believing 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 
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actual costs and the prices set under the contract. Finding that neither the 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 Solicitation Number W911SE-07-R-007-002 (the 

Solicitation) for an 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 Rucker. The job was to be conducted over one base year and four 

one-year options, 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 guaranteed minimum quantity of work under 

the Contract for task orders would be $300,000. 

The Solicitation informed that the pricing portion of offers would take the form of three 

coefficients – one each for work during normal hours on pre-priced items; overtime work on prepriced 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 

alternative 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 stated 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 variety 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 
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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), in accordance 

with the Economic Price Adjustment Clause, Army Federal Acquisition Regulation Supplement 

(AFARS) 5152.237-9000.4

The Solicitation designated the Gordian Group Construction Task 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 Solicitation’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 units of measure 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 Specifications.” 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, paperwork 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 “non prepriced” or NPP) were to be “proposed in bare cost only (material, equipment and labor) 

multiplied 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 nonprepriced tasks other than bare costs.” 

4

 This clause describes the process for adjusting the coefficient for option years thusly:

An economic 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 of 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.
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The Solicitation 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 requirements. 

The last of these was to take the form of a detailed cost proposal based on information contained

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 sample proposal. Offerors were also to 

provide information on relevant experience and past performance. The Army was to consider all 

of this information in evaluating 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 

proposals, principally focusing on how the pre-priced coefficient would be examined. For this 

purpose, the Solicitation made various assumptions, e.g., that $4 million would be the notional 

requirement for the base year,5that 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 Solicitation had five attachments, including “ATCH 2 – Progen Unit Price Book 

(UPB), Divisions 1 through 16.” These divisions of the Gordian Book, which covered a wide 

range of construction activities,6were attached to the Solicitation in the form of two volumes. 

Each volume opened with a table of contents, both of which listed an introductory section 

numbered “0000,” entitled “Using The Construction Task Catalog.” This introductory section, 

repeated in each of the two volumes attached to the Solicitation, explained 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 and which, therefore, were to be included in the contractors’ 

coefficient.

7

 This description was 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 period.”

6

 Among the areas covered were 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 electrical. 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.”
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This same section of the Gordian Book warned that:

Contractors 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, the section proceeded to state that: “[w]hile diligent 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, conditions, 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 Price Book (UPB), it represented –

We have thoroughly reviewed the UPB and compared major line items with our 

actual cost experience 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 perform 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 

estimator prepared an estimate based on Unit Price Book.

 

8

 Although Section 00 was not specifically referenced in the Solicitation, the sections 

that are referenced therein make references to this section. For example, on the opening page of 

Section 01, the book includes a note defining “reimbursable Fees,” which states that they 

“include but are not limited to permits, special inspections, special 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®.” 
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Lakeshore 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 coefficients under this exercise was 1.295, leading it to propose a coefficient 

of 1.28 for normal working hours at Fort Rucker. The 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 Rucker. 

On April 26, 2007, the Army awarded the Contract to Lakeshore. The Contract included 

all terms, conditions and provisions set forth in the Solicitation. In the base year, Lakeshore 

performed 79 construction delivery orders, the first of which was issued on July 25, 2007. For 

each of these orders, the parties followed the same process: the 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 estimates, 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 Contract.

On April 27, 2008, the Army awarded the first option year to Lakeshore. Pursuant to the 

economic price adjustment clause, the coefficient factors were adjusted upward by four percent, 

such that the coefficient factor for normal working hours became 1.32. During that contract 

year, Lakeshore performed 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, 2009, 

plaintiff filed its complaint in this court, which was amended on April 19, 2011. Defendant filed 

its motion for summary judgment on January 13, 2012. Briefing and oral argument on that 

motion have been completed.

II. DISCUSSION 

We begin with common 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 

over 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).
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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 Fed. 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 dispute, 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 argues that the United States breached the Contract 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 adjustments 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 Contract specifications would be free from error by 

using the UUPB. Finally, plaintiff argues that either the parties entered into the Contract as a 

result of mutual mistake of fact – a mistaken belief that the UUPB was accurate for Fort Rucker 

– or that Lakeshore entered into the Contract 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. 

Most of plaintiff’s pricing claims begin – and end – with the provisions of the Contract. 

To determine what that agreement reveals, we begin, as we must, with the Contract’s plain 

language. Banknote Corp. of Am. v. United States, 365 F.3d 1345, 1353 (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 manner 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 
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contract. Id. at 708 (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 utilized a pricing book that did not 

reflect local prices, particularly after Hurricane Katrina. However, Lakeshore cannot point to 

anything in the Solicitation or resulting contract that indicates that the Army ever assumed the 

obligation to provide offerors with accurate local prices, or the economic consequences if one or 

more prices in the guide proved inaccurate. The Contract made clear that the coefficient was to 

reflect “risks of doing business” and that this figure “shall contain all costs other than the prepriced unit prices, as no allowance will be made after award.” Moreover, the Gordian Book used 

under the Contract flatly warned prospective offerors that while 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 Adjustment 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 accounted 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. Plaintiff, of course, is right that the Solicitation explicitly 

refers to all of the chapters in the Gordian Book save the introductory chapter that describes how 

to use the book (Chapter 0000), within which are the various caveats regarding the accuracy of 

the prices listed in the book. The court, however, does not believe this makes 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 regarding how to use those chapters. Those instructions were extensive and 

essential to the use of the book, providing 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 (iii) 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 need 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 
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inconceivable that anyone could appropriately or effectively use the Gordian Book without

referring repeatedly back to 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 the 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”). The instructions 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, plaintiff 

understood this. In its pricing proposal, it represented that it had “thoroughly reviewed the UPB 

and compared major line items with [its] actual cost experience on past projects” and had 

determined that “[o]verall the UPB prices are less than our actual past cost experience.” It 

further averred that, in developing its coefficients, it had “perform[ed] a sample analysis of the 

cost factors for a known past renovation project” and “provided the scope of work to [its] major 

subcontractors and obtained 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

Plaintiff’s vaunted attempts to place the risk of pricing errors entirely on the shoulders of 

the Army cannot be reconciled with several of the Contract’s provisions. The first, of course, are 

those 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 Contract does not contain 

any of the Federal 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 Contract. As was 

said in ConocoPhillips v. United States, 501 F.3d 1374, 1379 (Fed. Cir. 2007), in which the 

plaintiff complained that the contract 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.” 
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contracting officer to analyze 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). Without such guidance, plaintiff simply would have this court award it the difference 

between what it expended and what it charged under the Contract – effectively guaranteeing it a 

profit, albeit without any mention of correlating adjustments for instances in which the price in 

the Gordian Book exceeded plaintiff’s actual cost. There is no reason to believe that the 

Contract was intended to “bind the government to such a one-sided arrangement.” 

ConocoPhillips, 501 F.3d at 1379. Second, the Contract quite explicitly indicates that the 

coefficient was 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 

stressed 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 Contract, the contractor were entitled to an adjustment to account for costs in 

excess of the prices listed in the Gordian Book. These provisions, rather, made clear that 

Lakeshore bore the risk of cost increases or unanticipated inflation, which it was to consider in 

setting its coefficient.11 This court will not imply into the contract provisions that contradict 

those actually contained therein. See Gardiner, Kamya & Assocs. 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 Contract dealing with pricing, plaintiff cannot

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

enforcing the same. To be sure, a breach of the good faith covenant can be established by a 

showing that defendant “specifically designed to reappropriate the benefits [that] the other party 

expected to obtain from the transaction, thereby abrogating the government’s obligations under 

the contract.” Precision Pine & Timber, 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 listed 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, this one did not.
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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 

regarding the fruits of the contract.”’ Info. Sys. & Networks, 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 (7th Cir. 1991) 

(Posner, J.) (indicating that a breach of the covenant occurs when 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 syllogism, in which a breach of the covenant occurs any time the 

government refuses to make whole a contractor that performs a contract at a loss.13 

Contrary to plaintiff’s claims, there is no indication that the Army breached the Contract 

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 (2009). For 

this purpose, the Contract incorporates AFARS 5152.237-9000, which provides that the 

economic price adjustment of the coefficient “will be based on the Building Cost Index (BCI) 

found in the Market Trend pages of the Engineering News Record (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 clauses 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 (2007).

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 nonnegotiable UPB, which was part of the Contract and specifications required 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 consequences of defects in those plans and 

specifications.” 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 prepared 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). That is not the case 

here. The 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 unforeseen 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, those clauses were not included in the Contract. 

Lastly, plaintiff seeks reformation of the Contract 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 were 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 seeking 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. 1990), 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 correctly in the writing.’” Ind. Ins. Co. v. Pana Cmty. Unit 

Sch. Dist. No. 8, 314 F.3d 895, 903-04 (7th Cir. 2002) (quoting Restatement (Second) of 

Contracts, § 155 cmt. a (1981)).

14

 Generally, the elements of a claim for reformation must be 

proven by clear and convincing evidence. See, e.g., Phil. 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 that 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 Short Bros., PLC v. 

United States, 65 Fed. Cl. 695, 796 (2005). Principally, the record lacks 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 relies on the fact that its costs exceeded those in the 

Gordian Book, but this is proof neither that its costs were reasonable nor that there was any 

systematic problem with the prices in the book. Rather, while the record suggests that some 

prices in the book may have been below 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 necessarily anticipate 

some time delay between the issuance of a price guide and the performance of a particular task 

 

14

 See also Phil. 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 written 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. 

2006).
- 13 -

order. Certainly, plaintiff has failed to provide any proof that the Gordian Book systematically 

understated the costs of labor, equipment and materials at the time the Contract 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 those 

orders 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 their 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-byside basis” the 2005 version of the Gordian Book with the 2006 version.

16

 

 

15

 Plaintiff submitted an affidavit 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 made clear at his deposition that he 

made no comparisons 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 ahold of Gordian Group 

to see if we can purchase the book that that 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 they?
- 14 -

Even 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 provide meaningful proof as to the remaining three 

prongs of the mutual mistake standard. Contrary to its claims, there is no indication that the 

Contract presumed that all the prices in the Gordian Book were accurate. Rather, as discussed 

above, the Contract 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 on the Contract as a whole.

17

 In 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 assigned 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. Finally, it should not be overlooked that this fixed-price contract clearly 

placed the risk of 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 part, 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 or 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 prove: (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 at 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 types of mistakes

that are compensable. Liebherr Crane Corp. v. United States, 810 F.2d 1153, 1157 (Fed. Cir. 

1987); Bromley, 794 F.2d at 672; United States v. Hamilton Enters., 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, 675-76

(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 obtain such information, (3) any contract 

specification supplied misled the contractor, or did not put it on notice to inquire, 

and (4) the government failed to provide the relevant information.

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.