In the United States Court of Federal Claims

No. 17-464C

(Filed: January 28, 2020)

* * * * * * * * * * * * * * * * * * * * * * * * * *

VIRGINIA ELECTRIC AND POWER 

COMPANY d/b/a DOMINION 

ENERGY VIRGINIA,

Plaintiff,

v.

THE UNITED STATES,

Defendant.

* * * * * * * * * * * * * * * * * * * * * * * * * *

Alan M. Freeman, Washington, DC, for plaintiff. Albert B. Krachman 

and Jaret N. Gronczewski, of counsel.

Barbara E. Thomas, Senior Trial Counsel, United States Department 

of Justice, Civil Division, Commercial Litigation Branch, Washington, DC, 

with whom were Joseph H. Hunt, Assistant Attorney General, Robert E. 

Kirschman, Jr., Director, Patricia M. McCarthy, Assistant Director, for 

defendant. Erika L. Whelan Retta, Trial Attorney, Air Force Legal 

Operations Agency, of counsel.

OPINION

BRUGGINK, Judge.

Plaintiff claims that the United States owes Virginia Electric and 

Power Company, doing business as Dominion Energy Virginia 

(“Dominion”), the cost of upgrading the metering, lighting, and distribution 

of the electrical system at Fort Monroe, a military base in the Commonwealth 

of Virginia. The United States, acting through the Defense Energy Support 

Center, entered into a 50-year contract with Dominion in 2004 for utility 

services (“the Utility Services Contract”) and contemporaneously, but 

separately, sold Dominion the electrical system at Fort Monroe. On 

September 15, 2011, the Army terminated for convenience the Utility 

Contracts; termination for 

convenience; allowable 

costs; FAR 52.249-2

(1996); FAR 31.205-42(b)

(2018); summary 

judgment; upgrade costs; 

utilities.
2

Services Contract. Subsequently, the United States and Dominion settled 

certain cost claims relating to the termination and entered into a separate 

contract for Dominion to supply electricity and certain utility services at Fort 

Monroe. The only outstanding question is whether the United States is liable, 

under the terminated line item of the Utility Services Contract, for potential 

future upgrade costs, i.e., costs not incurred prior to termination.

Plaintiff asserts that the United States terminating the Utility Services 

Contract unavoidably triggered an obligation for plaintiff, which continues 

to own the electrical system, to bring the system up to higher standards than 

those that would have applied if the Utility Services Contract had continued. 

It points to its obligations under state law and corporate policies.

Pending are the parties’ cross-motions for summary judgment. 

Plaintiff moved for summary judgment as to liability on its Counts I, II, and 

IV; its motion is silent on Count III. Defendant cross-moved for summary 

judgment on Counts I, II, and IV and moved for summary judgment on Count 

III. Plaintiff requested summary judgment on Count III in a footnote of its 

response brief. Defendant also moved for summary judgment on an equitable 

adjustment theory raised for the first time in plaintiff’s motion. The motions 

are fully briefed. The Fort Monroe Authority, represented by Virginia’s 

Office of the Attorney General, submitted an amicus brief in support of 

plaintiff’s position. The court held oral argument on December 11, 2019. For 

the reasons set out herein, we deny plaintiff’s motion for summary judgment 

and grant the government’s motion. 

BACKGROUND

In the late 1990s, Congress authorized the Secretaries of the Military 

Departments to privatize utility systems on military bases as a cost-saving 

mechanism. The statute authorized the departments to “convey a utility 

system, or part of a utility system, under the jurisdiction of the Secretary to 

a municipal, private, regional, district, or cooperative utility company or 

other entity.” 10 U.S.C. § 2688(a) (2018). 

The Secretary of Defense later issued a directive to the Military 

Departments “to privatize all utility systems, except where needed for unique 

security reasons or when privatization is uneconomical.” Def.’s App. 7. 

Privatization meant “the total divestiture of a utility system through the 

transfer and conveyance of the installation’s utility infrastructure assets in 

conjunction with and for the purpose of the conveyee providing utility 
3

distribution services on a long-term basis.” Id. The directive thus outlined 

two goals: (1) divest the United States of utility systems and (2) secure utility 

services.1

To implement this directive, in 2001, the Defense Energy Support 

Center issued a solicitation seeking “offerors to assume ownership, operation 

and maintenance of the utility infrastructures” at four Army bases: Fort 

Monroe, Fort Eustis, Fort Story, and Fort Lee.2 Id. at 11. Fort Monroe, which 

is in Hampton, Virginia, and at the time encompassed 568 acres, is the base 

at issue here. The available utility infrastructures at Fort Monroe were 

electric, natural gas, water, and wastewater.3 The solicitation outlined two 

different transactions: (1) purchase of utility systems and (2) a 50-year Utility 

Services Contract. 

Dominion offered to buy the electrical systems and supply utility 

services at Fort Monroe, Fort Eustis, and Fort Story. Dominion offered two 

alternatives for its provision of service. First, it offered a “regulated

proposal” under which the United States would pay for bringing the electrical 

system up to certain modern standards imposed on Dominion’s other 

customers. Alternatively, it offered an “unregulated proposal” under which 

“[t]he electric system components were not required to meet – and they did 

not meet – the same regulated standards applicable to comparable systems 

serving regulated customers in other parts of Dominion’s Virginia service 

territory.” Pl.’s Mot. Summ. J. 1; Am. Compl. ¶ 15 (“In a nutshell, before the 

contract termination, the Fort Monroe utility system was exempt from 

meeting regulated standard.”).

The Defense Energy Support Center awarded Dominion a contract for 

utility services on the electrical systems at those three bases on June 24, 2004. 

The Preamble summarized the Utility Services Contract as follows:

[Dominion] shall assume ownership, operation and 

maintenance of the electric distribution systems at Fort Eustis, 

 1 Utility services meant operation and maintenance of the system rather than 

supplying the commodity, such as electricity. 

2 The solicitation did not seek proposals for the sale of electricity. 

3 The Army owned and operated the electrical system at Fort Monroe, while

Dominion supplied electricity under a separate, unrelated contract. Dominion 

supplied electricity to “[a] single 13.2-kV Virginia Power delivery point . . . 

near the center of the installation,” which the Army’s electrical system then 

distributed throughout the base. Def.’s App. 136.
4

Fort Story, and Fort Monroe, Virginia. [Dominion] shall 

furnish all necessary labor, management, supervision, permits, 

equipment, supplies, materials, transportation, and any other 

incidental services required for the complete ownership, 

operation, maintenance, repair, upgrade, and improvement of 

the utility system. These services shall be provided in 

accordance with all terms, conditions, and special contract 

requirements, specifications, attachments, and drawings 

contained explicitly in this contract or incorporated by 

reference.

Def.’s App. 99. The Preamble incorporated a version of Dominion’s proposal 

into the Utility Services Contract. Of importance here, the incorporated 

proposal was the “unregulated” proposal, which meant that the United States 

accepted the proposal that did not require Dominion to upgrade the system 

to modern standards for its metering, lighting, or distribution, among other 

things. 

The Utility Services Contract did not convey the electrical system to 

Dominion. Rather, the Utility Services Contract provided at section C.2.2: 

“The conveyance of the utility system is authorized by and conducted under 

10 USC § 2688. The conveyance of the utility system is not an acquisition 

and therefore is not subject to the FAR and its supplements.” Id. at 20. 

Section C.5.1 explained: 

Prior to the transfer of title, such facilities shall continue to be 

owned by the Government. Transfer of title shall be 

accomplished by Easement. The Easement shall provide the 

complete list of all assets to be sold. . . . The parties shall 

prepare and execute such additional documents as may be 

necessary to implement the ownership transfer.

Id. at 25. In other words, transfer of ownership of the infrastructure, although 

related to the Utility Services Contract, was accomplished separately.

After entering the Utility Services Contract, the parties executed the 

Bill of Sale, Easement, and Promissory Note. The Bill of Sale, executed on 

February 16, 2005, stated: 

The United States of America . . . sells, transfers and 

conveys to the Virginia Electric and Power Company dba 

Dominion Virginia Power, . . . the property described below: 
5

All those certain facilities and equipment, including, but 

not limited to, substations, switching stations, transformers, 

exterior lighting, overhead electrical lines, and underground 

electrical lines, comprising the Fort Monroe, Virginia electrical 

system, all or part of which is more particularly described on 

Exhibit “A”, attached hereto and made a part of this Bill of 

Sale. 

This sale is subject to the following provisions: 

1. The terms and conditions found in the Utility Distribution 

Contract No. SP0600-04-C-8253 and Department of the Army 

Easement No. DACA65-2-05-34 being agreements between 

the Government and the Grantee; 

2. The Government covenants that it has good and valid title to 

the facilities and equipment being conveyed by this Bill of 

Sale, . . . and 

3. The Government makes no warranty with regards to the 

condition of the facilities and equipment. 

Id. at 149 (emphasis omitted).

The Easement, also executed on February 16, 2005, provided in 

pertinent part: 

The Secretary of the Army, under and by virtue of the 

authority vested in the Secretary by Title 10, United States 

Code, Section 2688 and Title 10, United States Code, Section 

2668, having found that the granting of this easement is not 

incompatible with the public interest, hereby grants to: 

Virginia Electric and Power Company dba Dominion Virginia 

Power, hereinafter referred to as the Grantee, an easement for 

construction, operation, maintenance, repair and replacement 

of electric utility system, including all right, title and interest 

in and to all appurtenances located thereon, hereinafter referred 

to as the facilities, over, across, in and upon lands of the United 

States as identified in Exhibit(s) “A” and “B”, hereinafter 

referred to as the premises, and which are attached hereto and 

made a part hereof. This easement is issued in conjunction with 

Utility Distribution Contract No. SP0600-04-C-82S3 
6

hereinafter referred to as the contract, between the Government 

and the Grantee. 

This easement is granted subject to the following 

conditions.

1. Term[:] This easement is hereby granted for a term of fifty 

(50) years, beginning December 1, 2004, and ending 

November 30, 2054. 

2. Contract-Easement Relationship[:] This easement and the 

contract shall not merge, but the terms and conditions of each 

shall survive the execution and delivery of this easement and 

any subsequent recordation thereof. In the event the terms and 

conditions of this easement conflict with the terms and 

conditions of the contract, the terms and conditions of the 

contract shall prevail. . . . 

3. Transfer of Ownership 

a. The Fort Monroe Military Installation’s Electrical 

System consists of, but is not limited to: 

1. Approximately 586 street lights/poles 

2. Approximately 106,428 linear feet of underground electric lines 

3. Approximately 2,227 kilo volts transformers 

(including 139 underground structures/manholes, 20 miles of underground lines and 107 

underground transformers

4. One-(1) 300 KV Sub/Switch Station Building 

which includes 9 switching cabinets 

b. The ownership of the Fort Monroe Military 

Installation’s electrical system is hereby transferred by 

the Government and accepted by the Grantee. 

Id. at 150-65 (emphasis omitted). The practical effect of these documents 

was to convey the electrical system to Dominion and grant Dominion a 50-

year right of access to the Fort Monroe property.
7

In the third element of the transaction, Dominion executed a 

Promissory Note on February 28, 2005, promising to pay the Army 

$2,133,075.93 for the Fort Monroe electrical system. The parties 

incorporated the Bill of Sale, the Easement, and the Promissory Note into the 

Utility Services Contract through Modification 4 dated April 20, 2005. 

Finally, regarding ownership of the electrical system itself, the Utility 

Services Contract provided in paragraph 4 of the Preamble:

[A]t the end of the contract term [Dominion] may 

submit a claim for unrecovered investments. . . . The parties 

anticipate that at its expiration this contract may be renewed at 

mutually satisfactory terms. If the contract is renewed, no 

claim for unrecovered investments shall be allowed. If the 

contract is not renewed and [Dominion’s] claim for 

unrecovered investments is allowed, the Government may, at 

its sole option, reacquire the electric distribution system in its 

entirety for the amount of the unrecovered investment claim 

settlement without additional compensation. The reacquisition 

shall be effective upon payment of the unrecovered investment 

claim settlement. In the event the Government exercises its 

reacquisition option the electric system shall be tendered to the 

Government free of liens or encumbrances of any kind.

Id. at 99.

The Utility Services Contract had three line items, one for each 

military base: CLIN 1 Fort Eustis, CLIN 7 Fort Monroe, and CLIN 11 Fort 

Story. Each contract line item had two components: (1) the Fixed Monthly 

Charge for utility services and (2) the Monthly Credit as Payment for 

Purchase Price. The Fixed Monthly Charge represented what the United 

States would pay Dominion for two sub-components of utility services: (a) 

operations and maintenance and (b) renewals and replacements. The parties 

set the Fixed Monthly Charge for the first two years of the contract term, 

with later years subject to price redetermination. The parties could adjust the 

Fixed Monthly Charge for Capital Upgrades as set out in the contract. The 

Monthly Credit represented the monthly part of the $2 million purchase price 

that the United States would subtract from the Fixed Monthly Charge. CLIN 

7 set out the two components as follows:
8 

Id. at 103. 

Although the parties chose the “unregulated” option, the Utility 

Services Contract nevertheless provided in section C.11.1 that Dominion was 

“responsible for accomplishing all required upgrades and renewals and 

replacements to maintain and operate the utility system(s) in a safe, reliable 

condition, and to meet the requirements of this contract.” Id. at 118. Plaintiff 

specifically proposed a list of Initial Capital Upgrades in its Schedule B-2, 

which were “those repair, replacement, and improvement activities” that 

Dominion would complete to bring the system as purchased up to applicable 

regulatory and corporate standards; the Initial Capital Upgrade did not 

include the metering, lighting, and distribution at issue in this case. Id. 

Upgrades also included Future Capital Upgrades, namely “investments in the 

utility system resulting from changes in the requirements, laws or 

regulations.” Id. The contract defined renewals and replacements as 

“investments in the utility system to renew or replace system components 

that fail or reach the end of their useful life.” Id. 

The parties anticipated that Dominion would submit “an Annual 

Capital Upgrades and Renewals and Replacements Plan that identifies capital 

upgrades and major renewals and replacements the Contractor intends to 

accomplish.” Id. The Utility Services Contract further explained that the 

government reserved “the right to determine at its discretion, whether it will 

pay for any portion of proposed upgrades.” Id. at 118-19. The government 

would pay for approved upgrades when accomplished. The contract stated 
9

that the government would pay for the renewals and replacements named in 

Schedule B-2 and set out a process for approving future capital upgrades.

Not included in the upgrades and renewals proposed initially, plaintiff 

concedes, were the upgrade costs sought here. The claimed upgrade costs do 

not fall within the upgrade categories, plaintiff explained, because the 

government chose the “unregulated” contract approach when it entered into 

the Utility Services Contract. Moreover, even if the “unregulated” contract 

would have covered the anticipated work, the United States did not order the 

upgrades Dominion now claims under the contract and Dominion did not 

begin the disputed upgrade work during the contract performance period. 

Section I.2 incorporated “FAR 52.249-2 Termination for 

Convenience of the Government (Fixed Price) Sep 1996” into the Utility 

Services Contract. Id. at 47. That clause stated:

(a) The Government may terminate performance of work 

under this contract in whole or, from time to time, in part if the 

Contracting Officer determines that a termination is in the 

Government’s interest. The Contracting Officer shall terminate 

by delivering to the Contractor a Notice of Termination 

specifying the extent of termination and the effective date. . . . 

(e) After termination, the Contractor shall submit a final 

termination settlement proposal to the Contracting Officer . . . 

(f) Subject to paragraph (e) of this clause, the Contractor and 

the Contracting Officer may agree upon the whole or any part 

of the amount to be paid or remaining to be paid . . .

(g) If the Contractor and the Contracting Officer fail to agree 

on the whole amount to be paid because of the termination of 

work, the Contracting Officer shall pay the Contractor the 

amounts determined by the Contracting Officer as follows . . .:

(1) The contract price for completed supplies or services 

accepted by the Government . . . not previously paid for, 

adjusted for any saving of freight and other charges.

(2) The total of—

(i) The costs incurred in the performance of the work 

terminated, including initial costs and preparatory expense 
10

allocable thereto, but excluding any costs attributable to 

supplies or services paid or to be paid under subparagraph 

(g)(1) of this clause;

(ii) The cost of settling and paying termination settlement 

proposals under terminated subcontracts that are properly 

chargeable to the terminated portion of the contract if not 

included in subdivision (g)(2)(i) of this clause; and

(iii) A sum, as profit on subdivision (g)(2)(i) of this clause . . . 

(3) The reasonable costs of settlement of the work terminated, 

including— (i) Accounting, legal, clerical, and other expenses 

reasonably necessary for the preparation of termination 

settlement proposals and supporting data; (ii) The termination 

and settlement of subcontracts (excluding the amounts of such 

settlements); and (iii) Storage, transportation, and other costs 

incurred, reasonably necessary for the preservation, protection, 

or disposition of the termination inventory. . . .

(i) The cost principles and procedures of Part 31 of the Federal 

Acquisition Regulation . . . shall govern all costs claimed, 

agreed to, or determined under this clause. . . .

(l) If the termination is partial, the Contractor may file a 

proposal with the Contracting Officer for an equitable 

adjustment of the price(s) of the continued portion of the 

contract. . . . Any proposal by the Contractor for an equitable 

adjustment under this clause shall be requested within 90 days 

from the effective date of termination unless extended in 

writing by the Contracting Officer. . . .

FAR 52.249-2.

The United States did not give Dominion the opportunity to perform 

under the Utility Services Contract for fifty years. Instead, in 2005, Congress 

selected Fort Monroe for closure under the Defense Base Closure and 

Realignment Act of 1990, Pub. L. No. 101-510, as amended by later statutes. 

Am. Compl. ¶ 12. From 2005 to 2011, the United States and the

Commonwealth of Virginia laid the groundwork for what would happen to 

the Fort Monroe property once it was no longer a United States military base. 
11

Virginia is a player here, because the Commonwealth, in two deeds 

dated 1838 and 1936, conveyed about 285 acres of the property occupied by 

Fort Monroe to the United States. The deeds stated that title to the property 

would revert to Virginia if the United States ceased using the property for 

“fortification or national defense.” Def.’s App. 483. Virginia had also 

conveyed another part of the Fort Monroe property to the United States, and 

although Virginia did not hold the same reversionary interest in that property, 

the United States and Virginia negotiated a transfer of that property back to 

the Commonwealth as well. The United States and Virginia negotiated these 

transfers of property after Congress selected Fort Monroe for closure. Over 

time, Virginia created an entity responsible for Virginia’s portion of the Fort 

Monroe property: The Fort Monroe Authority.

On January 27, 2011, the contracting officer sent Dominion a 

memorandum titled “Operation and Maintenance Contract SP0600-04-C8253 Partial Termination for Convenience of the Government.” Id. at 259. 

The memorandum stated: 

1. The Army, in compliance with Base Realignment and 

Closure [] Public Law, will close Fort Monroe on 15 

September 2011. By this date, Army missions will be 

relocated and property will transition to the Commonwealth 

of Virginia. In accordance with Federal Acquisition 

Regulation clause 52.249-2— Termination for 

Convenience of the Government (Fixed-Price), contract 

line item number 0007 for Privatization of Fort Monroe, 

Virginia Electric Distribution System is hereby terminated 

for convenience effective 15 September 2011. 

2. It is requested that you submit a termination settlement 

proposal no later than 28 March 2011. If you have any 

questions, please contact the undersigned at [contact 

information]. 

Id. 

Dominion informed the contracting officer that, in Dominion’s view, 

the partial termination for convenience notice was insufficient because “it 

did not clearly state the Government’s desire upon termination,” specifically 

whether the United States would exercise its option to reacquire the electrical 

system. Id. at 260. Following discussions with Dominion, on June 3, 2011, 

the Director of Business Operations, 633d Contracting Squadron, 
12

Department of the Air Force, sent Dominion a revised memorandum 

regarding the termination of Utility Services Contract CLIN 7. The first 

paragraph replicated the first paragraph of the original memorandum. The 

final paragraph again requested a termination settlement proposal, now by 

August 2, 2011. New paragraph two stated, 

The Army desires [Dominion] to continue ownership of the 

electrical distribution system at Fort Monroe after termination 

effective date. While the Army continues to own the 

property[,] it will continue to provide [Dominion] with a 

standard utility easement for future access to the distribution 

system. The Army believes these easements will be conveyed 

with the land and be further granted by the Fort Monroe 

Authority or any other future property owner as a requirement 

in the terms of the conveyance from the Army. 

Id. at 266. Dominion submitted its settlement proposal on August 2, 2011. 

On September 15, 2011, the Utility Services Contract CLIN 7 

terminated. As of September 15, 2011, Dominion owned the Fort Monroe 

electrical system, but Dominion no longer sold the United States utility 

services. The United States owned the real property at Fort Monroe. 

On October 24, 2011, Dominion and the Army Contracting Command 

at Rock Island executed an “Authorization for Electric Service” under a

preexisting Contract No. GS-00P-08-BSD-0560. That contract is an 

areawide public utility contract between the General Services Administration 

and Dominion, executed in 2008, which we will refer to as the Areawide 

Contract. Id. at 239-56, 274. The Areawide Contract is a “master contract” 

issued “to cover the utility service acquisitions of all Federal agencies in the 

franchised certificated service territory from [Dominion] for a period not to 

exceed ten (10) years.” Id. at 241. The Authorization stated that Dominion 

would provide “Continue[d] Service” and “Special Facilities” to Fort 

Monroe, effective September 15, 2011, and continuing “until notified by 

Customer.” Id. at 274. 

The Authorization stated that Dominion would provide electric 

“[s]ervice through one 7.5 mVA transformer to multiple delivery points with 

primary metering at 13.2 kV[] [i]nstead of[] [s]ervice through two 2800 kVa 

transformers . . . with totalized secondary metering.” Id. at 276-77. The 

Authorization also stated that the United States would pay Dominion a 
13

“monthly facilities charge” of $54,655.77 for providing those “facilities” and 

the government would pay Dominion an added amount each month for the 

electricity supplied and delivered to Fort Monroe. Id. at 279. This 

Authorization under the Areawide Contract filled the gap left by the 

terminated CLIN 7 of the Utility Services Contract by compensating 

Dominion for electricity plus certain utility services. The United States 

remained Dominion’s customer.

After the Utility Services Contract termination, Dominion and the 

government negotiated Dominion’s compensation for the termination 

through a series of amended termination settlement proposals, two certified 

claims, and an appeal to the Armed Services Board of Contract Appeals. The 

United States and Dominion settled Dominion’s claims for net unrecovered 

investments and settlement costs. The outstanding dispute between the 

parties relates solely to the cost for future upgrades to metering, lighting, and 

distribution on the Fort Monroe electrical system that Dominion believes it 

must complete due to the termination of the “unregulated” contract. 

The first transfer of real property from the United States back to 

Virginia did not occur until 2013. By a quitclaim deed transferring a part of 

the real property at Fort Monroe, the United States split ownership of the real 

property at Fort Monroe between the United States and Virginia. Since that 

time, the United States has transferred more Fort Monroe property to 

Virginia. Virginia has also conveyed some of the property back to the United 

States for use as a national monument. The United States and Virginia still 

split ownership of the property as of the date of oral argument. Dominion 

continues to own the Fort Monroe electrical system, and the United States 

remains the customer of record for Dominion’s purposes. 

Dominion takes the position that each of the foregoing events—the 

termination of CLIN 7, the United States’ failure to reacquire the electrical 

system, the United States exchanging property at Fort Monroe with Virginia, 

and the possibility of multiple future customers at Fort Monroe 

(governmental and non-governmental)—“caused Dominion to incur an 

obligation under its Tariff (and per its T&Cs) to modify the [metering, 

lighting, and distribution] to meet the same regulated standards applicable to 

comparable systems serving Dominion’s regulated rate base.” Pl.’s Mot. 

Summ. J. 9. To support this belief, plaintiff cites its obligation under Virginia 

state law to provide reasonably adequate services and just rates to its 

regulated rate base without preferential treatment as well as its internal 
14

corporate policies and broader industry standards. See, e.g., id. at 9, 12, 23, 

24. Notably, the United States, which remains Dominion’s customer at Fort 

Monroe, has not ordered such work under the existing federal Areawide 

Contract. Neither the parties’ briefing nor that of the amicus state that the 

Fort Monroe Authority or other Virginia authority has ordered this work. 

Dominion’s belief is that the upgrade work is an independent legal obligation 

arising out of its status as a regulated utility company in Virginia and out of 

its corporate policies.

Dominion and the Fort Monroe Authority have discussed a contract 

between Dominion and the Fort Monroe Authority for utility services and 

electricity at the Fort Monroe property; the goal is for the Fort Monroe 

Authority to replace the United States as Dominion’s contracting partner. 

Plaintiff is concerned, however, that any such future contract would not 

compensate Dominion for its perceived obligation to upgrade facilities. The 

Fort Monroe Authority is similarly concerned that Dominion will pass on the 

cost of any upgrade work to Virginia. Dominion and the Fort Monroe 

Authority’s negotiations have failed due to their belief that someone else, 

preferably the United States, must first commit to pay for upgraded metering, 

lighting, and distribution.

Defendant acknowledges that Dominion has chosen to spend 

$240,000 to begin upgrades. The parties agree that the government did not 

order the work nor did Dominion begin the work during performance of the 

contract at bar. Dominion concedes that it has not completed its projected

upgrades. It estimates that the total cost of the upgrades, including the 

amount already spent, will be approximately $13 million. Dominion filed suit 

in this court in 2017 seeking payment for the cost of upgrading the metering, 

lighting, and distribution at Fort Monroe.

DISCUSSION

To be clear at the outset, plaintiff is not making a claim for costs 

incurred during the performance of the Utility Services Contract or for costs 

already spent as part of the termination for convenience. Instead, plaintiff’s 

various arguments flow from two assumptions: (1) Had the United States 

allowed the Utility Services Contract to continue, plaintiff would not be 

obligated to upgrade the metering, lighting, and distribution, because the 

contract did not require those upgrades; alternatively, if those upgrades 

became necessary during the life of the contract, the contract set out a process 

for recouping that cost from the United States, a process no longer available 
15

to plaintiff. And (2) the United States, by terminating CLIN 7 of the Utility 

Services Contract, triggered an obligation—external to the Utility Services 

Contract, found in Virginia state law and plaintiff’s corporate policies—for 

Dominion to upgrade the metering, lighting, and distribution at Fort Monroe, 

foisting onto plaintiff costs that it had not planned to expend at Fort Monroe.

Plaintiff advances five theories of liability under which the United 

States must pay for the upgrades: (1) The upgrades are an allowable cost 

under FAR 31.205-42(b) caused by the termination for convenience of the 

Utility Services Contract. (2) The upgrade costs are fair compensation after 

a termination for convenience under FAR 49.201. (3) The termination for 

convenience of the Utility Services Contract was defective without such

payment. (4) Failing to pay for the upgrade costs constitutes a breach of the 

Utility Services Contract. Plaintiff’s motion for summary judgment also 

introduced a new theory that, (5) because the termination of the Utility 

Services Contract was partial, plaintiff is entitled to an equitable adjustment 

for its increased cost of performance under the other two contract line items. 

In Count I, plaintiff argues that the cost to upgrade the metering, 

lighting, and distribution will be attributable to the contract as unavoidably 

continuing after termination. It estimates the cost to be $13 million. Plaintiff 

relies on FAR 31.205-42(b) Costs Continuing After Termination:

Contract terminations generally give rise to the incurrence of 

costs or the need for special treatment of costs that would not 

have arisen had the contract not been terminated. The 

following cost principles peculiar to termination situations are 

to be used in conjunction with the other cost principles in 

subpart 31.2: . . .

(b) Costs continuing after termination. Despite all reasonable 

efforts by the contractor, costs which cannot be discontinued 

immediately after the effective date of termination are 

generally allowable. . . . 

Despite citing subsection -42(b), plaintiff does not argue that 

Dominion could not discontinue the upgrade work immediately after 

termination. In fact, plaintiff insists that, under the Utility Services Contract,

this specific upgrade work was not required, and it concedes that the work 

was not underway during the pre-termination period. Instead, plaintiff relies 

on the introductory language: “costs that would not have arisen had the 
16

contract not been terminated.” Id. Plaintiff contends that, had the United 

States not ended the contract some forty-three years early or had the United 

States reacquired the electrical system from plaintiff, Dominion would not 

face an obligation to upgrade the metering, lighting, and distribution. When 

the government terminated early, plaintiff argues, the termination subjected

Dominion to the broader requirements of state law and Dominion’s policies

to upgrade the system. Therefore, “but for” the termination, the upgrade costs 

would not have arisen. 

We address below the question whether plaintiff has established its 

critical assumption that termination altered its legal obligation to upgrade the 

Fort Monroe electrical system. For the moment, we will accept that 

assumption. Even accepting plaintiff’s “but for” argument, however, the 

fundamental problem is that these upgrade costs are unconnected to the work 

Dominion performed under the Utility Services Contract. They are not 

contract costs continuing after termination. They are costs that Dominion will 

incur, if at all, because of separate contracts or obligations. They have not 

been nor will they be performed in satisfaction of the terminated work. 

Plaintiff bought an outdated electrical system. The parties agreed at 

oral argument that plaintiff has owned the system since 2005 and that the 

termination did not interrupt that ownership. Dominion knew prior to 

purchase that the system did not meet Dominion’s “regulated standard”—

whether internally imposed or imposed by law—for a modern electrical 

system as far as metering, lighting, and distribution are concerned. Plaintiff 

paired that risky purchase with a services contract that it believed would last 

at least fifty years, hoping to spread out the cost of repairs over many 

decades. Yet the services contract that plaintiff agreed to did not provide 

Dominion with any guarantee that the United States would reacquire the 

system at the end of the contract term or upon termination and, critically, 

allowed the United States to end the utility services part of the bargain at its 

own convenience. Moreover, the Utility Services Contract did not bargain 

for, much less guarantee, that the United States would pay for such an 

upgrade prior to or after termination. 

The cases Dominion relies on highlight the difference between the 

costs arising after termination that are attributable to the contract and the 

costs Dominion seeks in this case. In Nolan Bros., Inc., v. United States, for 

instance, the contractor wore out the tires on its equipment performing an 

excavation contract. 194 Ct. Cl. 1, 22 (1971). The contractor claimed the 
17

price of new tires following the termination. The Court of Claims held, “The 

expense involved in replacing tires worn out as a result of [operating 

plaintiff’s equipment] on the job during the pre-termination period was 

[recoverable], irrespective of whether the actual replacement of such tires 

occurred during the pre-termination period or after the work under the 

contract was terminated.” Id. Dominion points to Nolan Brothers as an 

example of a recoverable cost that arose after termination. The difference 

between Nolan Brothers and Dominion’s claim, however, is that the Nolan 

Brothers contractor wore out its tires while performing the contract. The

Utility Services Contract did not include the costs that Dominion claims here, 

because, with the United States as its contracting partner on the 

“unregulated” contract, Dominion did not have its alleged legal obligation to 

upgrade the metering, lighting, and distribution. Plaintiff did not perform any

of the upgrade work, what little it has done so far, during contract 

performance. Dominion is thus not looking to replace something worn out in 

the performance of the contract but instead is looking to have a former 

customer pay for an upgrade that a later customer might demand. 

Plaintiff also cites White Buffalo Construction, Inc. v. United States, 

in which this court held that the United States must pay the contractor “fair 

compensation for any additional repairs occurring after termination that were 

necessitated by the contract work.” 52 Fed. Cl. 1, 11 (2002). In that case, the 

contractor used its equipment during performance of the contract. Here, 

Dominion concedes that the Utility Services Contract did not require

upgrading the metering, lighting, and distribution system and that it did not 

undertake the work during the performance period. 

Plaintiff’s focus on a single line in FAR 31.205-42, “costs that would 

not have arisen had the contract not been terminated,” is unpersuasive 

because section -42(b) clearly assumes a connection between the substance 

of the contract and the claimed cost. Furthermore, the termination clause,

FAR 52.249-2, lists categories of costs predicated on some connection 

between the performance of the contract and the cost arising or continuing 

after termination. For instance, the termination clause particularly lists “costs 

incurred in the performance of the work terminated” and “the reasonable 

costs of settlement of the work terminated,” such as costs necessary to 

preserve or dispose of termination inventory. FAR 52.249-2(g)(2)-(3). 

Plaintiff does not cite these categories or any other in the termination clause

in its complaint or briefing, perhaps because these categories also require

some nexus between the work anticipated under the contract and the costs 
18

plaintiff claims. The costs claimed here instead relate to work that Dominion 

may complete, on a system that Dominion owns, in performance of a future 

contract. 

Our foregoing assumption that the termination of CLIN 7 triggered a 

legal obligation for plaintiff to upgrade the metering, lighting, and 

distribution at Fort Monroe is, in any event, not established. Plaintiff 

contends that by terminating CLIN 7 without reacquiring the system, the 

United States ended the “unregulated” status of the Fort Monroe electrical 

system and thrust the system into Dominion’s regulated rate base. Plaintiff’s 

citations to state law and its corporate policies only generally discuss 

Dominion providing reasonably adequate service to similarly situated 

customers, however. As of September 15, 2011, and for at least two years 

thereafter, Fort Monroe remained federal property. The United States has at 

all points remained Dominion’s customer regarding electricity and utility 

services at Fort Monroe, first under the Utility Services Contract and now 

under the Areawide Contract. It is unclear how the services Dominion 

provides to the United States became automatically subject to the regulations 

governing Dominion’s broader rate base upon termination of CLIN 7. 

Plaintiff has not established a cause-and-effect relationship between the 

termination and plaintiff’s perceived obligation to perform upgrade work. 

In addition to the termination itself, plaintiff argues that splitting the 

real property ownership triggered a requirement found in its tariff (or 

elsewhere in state law or its corporate policies) to upgrade metering, lighting, 

and distribution. Splitting the property did not occur until at least two years 

after the termination, however. The termination of CLIN 7 and the transfer 

of property between the United States and Virginia were unrelated 

transactions. Plaintiff also argues that the change from a single-customer, 

contiguous federal property to a multi-customer property triggered its 

obligation to upgrade, even though plaintiff’s customer has remained the 

United States under the Areawide Contract. Its multi-customer problem is 

largely conjectural at this point. Moreover, as discussed at oral argument, the 

United States, as the customer under the Areawide Contract, has not ordered

this upgrade work. Any future upgrade work would be requested by the Fort 

Monroe Authority, a separate state government entity with which plaintiff 

may negotiate a contract in the future. 

None of plaintiff’s theories, taken together or separately, establish that 

plaintiff has an existing legal obligation to upgrade the metering, lighting, 
19

and distribution on the Fort Monroe electrical system. More importantly, 

even if such a requirement exists, plaintiff’s arguments do not tie that 

obligation to what the United States bargained for under Utility Services 

Contract CLIN 7 or to the termination itself. Because plaintiff cannot connect 

its anticipated upgrade work to the Utility Services Contract, the court denies 

plaintiff’s motion for summary judgment on Count I and grants the 

government’s cross-motion on that count.

Plaintiff also argues, in Count II, that it is only fair that defendant pay 

for the estimated cost to upgrade the metering, lighting, and distribution. 

Plaintiff relies on FAR 49.201(a), which states, “A settlement should 

compensate the contractor fairly for the work done and the preparations made 

for the terminated portions of the contract, including a reasonable allowance 

for profit.” Of course, the aim of a termination settlement is to compensate 

the contractor fairly, but FAR Part 49 does not offer a standalone category 

for the upgrade costs. As FAR 49.201(a) points out, the termination 

settlement connects to the work contemplated under the original contract or

to work triggered by termination. To the extent that plaintiff argues that it 

was unfair to terminate a contract that called for 50 years of performance, 

plaintiff has shown no basis in the contract for that argument, particularly in 

view of the termination for convenience clause. Plaintiff cannot shoehorn 

entitlement to costs for upgrading metering, lighting, and distribution that are 

disconnected from its work under the Utility Service Contract into this 

general FAR provision. We thus deny plaintiff’s motion for summary 

judgment on Count II and grant the government’s cross-motion.

In Count III, plaintiff alternatively seeks $13 million for upgrading 

the Fort Monroe electrical system on a theory of “Defective Termination.” 

Plaintiff theorizes that terminating the Utility Services Contract also 

terminated the Bill of Sale and that the United States unilaterally forced the 

electrical system on Dominion in the termination process. Dominion’s 

argument has no basis in fact or law. The termination notices were legally 

sufficient. Plaintiff conceded at oral argument that it has, at all relevant times, 

owned the electrical system, and it did not distinguish between pretermination and post-termination ownership. 

Even if plaintiff had not made this concession, nothing in the Utility 

Services Contract, the Bill of Sale, or the Easement suggest that a termination 

of the Utility Services Contract CLIN 7 also revoked or voided the property 

transfer from the United States to plaintiff. The contract explains that the 
20

electrical system sale is not an acquisition and is not subject to the FAR. The 

contract establishes that the United States owned the system until the parties 

executed the Easement, at which point plaintiff owned the system. Both the 

Bill of Sale and the Easement confirm that, upon execution of those 

documents, ownership of the system transferred to plaintiff. The fact that the 

Bill of Sale was “subject to” the contract does not suggest that termination 

of CLIN 7 unwound the sale of the electrical system to defendant; the 

contract provided an option for reacquisition that the government declined to 

exercise. Nothing in the Easement suggests that the termination of CLIN 7 

automatically revoked the conveyance or the access rights granted in that 

document either. The parties’ behavior in the termination settlement process 

reflected this reality: they decreased any settlement amount by the remaining 

purchase price. Dominion’s theory does not reflect the undisputed facts of its

transaction with the government nor does it seek relief consistent with its 

own theory. We therefore grant the government’s motion on Count III and 

deny plaintiff’s cross-motion.

In Count IV, plaintiff alternatively seeks $13 million for upgrading 

the Fort Monroe electrical system because defendant breached the contract 

by refusing to pay for the metering, lighting, and distribution costs during the 

termination settlement process. The contract allowed the government to 

terminate the contract for convenience. The termination clause set out the 

procedure for determining a settlement and incorporated the cost principles 

in FAR Part 31 to aid in determining the settlement amount. After the 

government notified Dominion of the upcoming termination through two 

termination notices, the government went through the termination settlement 

proposal process outlined in the termination clause. The government thus 

fulfilled its duties under the termination for convenience clause. The fact that 

the government disagreed with Dominion on what the government owes 

Dominion under that clause is not a breach of the Utility Services Contract. 

Because plaintiff has not identified a duty set out in the Utility Services 

Contract that the government breached, we deny plaintiff’s motion and grant 

the government’s cross-motion.

Finally, in its motion for summary judgment, plaintiff raised a novel 

theory of recovery, not found in its complaint (original or amended) or its 

claims presented to the contracting officer, that Dominion was entitled to an 

equitable adjustment for increased costs of performance based on the partial 

termination of the Utility Services Contract, specifically CLIN 7 Fort 

Monroe. See FAR 52.249-2(l). Plaintiff claims $13 million for metering, 
21

lighting, and distribution costs, this time as relief for increased costs of 

performance. In its cross-motion and response, defendant moved for the 

court to dismiss this claim, because plaintiff did not raise a claim for 

equitable adjustment before the contracting officer nor in its complaints. 

As an initial matter, plaintiff did not move to amend its complaint to 

raise this distinct claim prior to summary judgment. The court will not 

consider a claimed raised after ample time to amend the complaint and when 

defendant did not have an opportunity to prepare for the claim during 

discovery. Moreover, plaintiff did not submit a claim to the contracting 

officer for an equitable adjustment for increased costs of performance due to 

a partial termination under FAR 52.249-2(l). The court lacks jurisdiction to 

entertain a claim for costs that plaintiff did not raise to the contracting officer. 

41 U.S.C. §§ 7101-09, 7103 (2018). Plaintiff’s theory is new, as is the 

category of relief it seeks and the operative facts relating to costs increasing 

under the other two contract line items. See K-Con Bldg. Sys., Inc. v. United 

States, 778 F.3d 1000, 1005 (Fed. Cir. 2015). Thus, plaintiff’s new claim 

must be dismissed for lack of jurisdiction.

CONCLUSION

In sum, we deny plaintiff’s motion for summary judgment on Counts 

I, II, and IV. We grant the government’s cross-motion for summary judgment 

on Counts I, II, and IV. We also grant the government’s motion for summary 

judgment on Count III and deny plaintiff’s untimely request for summary 

judgment on that count. We dismiss the equitable adjustment claim, to the 

extent it can be characterized as such, raised in plaintiff’s motion for 

summary judgment. The Clerk is directed to enter judgment for defendant. 

No costs.

s/Eric G. Bruggink 

ERIC G. BRUGGINK

Senior Judge