Court Opinion

ID: 2673231
Source: CourtListenerOpinion
Date Created: 2014-05-10 02:56:57.882341+00
Date Added: 2024-06-11T13:06:45.972646
License: Public Domain

In the United States Court of Federal Claims
                                      No. 10-444C
                                 (Filed April 16, 2014)

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                        *
AFFILIATED CONSTRUCTION *                      RCFC 12(b)(6) motion for partial
GROUP, INC.,            *                      dismissal; Contract Disputes Act;
                        *                      firm-fixed-price contract, 48 C.F.R.
             Plaintiff, *                      § 16.202-1; no adjustments for cost
                        *                      experience; new claim based on
         v.             *                      different operative facts.
                        *
THE UNITED STATES,      *
                        *
             Defendant. *
                        *
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      Palmer Hoovestal, Helena, Montana, for plaintiff.

       Kenneth D. Woodrow and Michael S. Macko, Commercial Litigation Branch,
Civil Division, Department of Justice, with whom were Tony West, Assistant
Attorney General, Jeanne E. Davidson, Director, and Kirk T. Manhardt, Assistant
Director, all of Washington, D.C., for defendant.

                    MEMORANDUM OPINION AND ORDER

       Plaintiff Affiliated Construction Group, Inc. (ACG or Affiliated) alleges that
the government breached a construction contract and that it is entitled to an
equitable adjustment for increased costs and delays due to changes ordered by
defendant. Compl. ¶ 2. The government has moved to dismiss two of Affiliated’s
claims under Rule 12(b)(6) of the Rules of the United States Court of Federal
Claims (RCFC), arguing that plaintiff has failed to state claims upon which relief
can be granted. Affiliated concedes that one claim should be dismissed, but defends
the other. As discussed below, in opposing the motion for partial dismissal the
plaintiff has advanced a version of a claim that departs from that presented to the
contracting officer and would thus be outside our subject-matter jurisdiction under
the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101–7109 . Since the claim
presented would not entitle plaintiff to relief, and its alternative version is not ripe
for our review, the Court GRANTS the government’s motion to dismiss two of the
claims in the complaint.
                                I. BACKGROUND 1

       Affiliated contracted to perform construction work for the Department of
Defense at Ft. Meade, Maryland, under a design-build, fixed-price contract to
renovate a 4,800 square-foot, power-distribution room. Compl. ¶¶ 1, 9–11, 13. The
renovations included walls and finishes, lighting, air conditioners, piping, new
power distribution/UPS (uninterrupted power source) systems and batteries, a new
fire alarm system, and upgrades to the existing sprinkler system. Id. ¶ 10. Plaintiff
alleged that because of changes in both the design requirements and in the work,
ACG had to perform “a substantially different project than was originally
contracted,” which caused it to incur additional expenses. Id. ¶ 2. Plaintiff filed
with the contracting officer a certified claim for an equitable adjustment, and, after
the government denied the request, then filed a lawsuit under the CDA in our court.
Id. ¶¶ 5, 7. Plaintiff requests judgment against the government in the amount of
$644,629 and a 136-day extension of the contract duration. Id. ¶ 3.

       The government initially filed a motion for partial dismissal of Affiliated’s
complaint for failure to state claims upon which relief can be granted. The claim
that remains at issue concerns the cost of additional fire-mitigation items. 2 See
Def.’s Mot. for Partial Dismissal (Def.’s Mot) at 1, 4. Plaintiff seeks reimbursement
for costs of $50,199 and a seven-day extension of contract time for having to install
increased quantities of smoke dampers, access doors, registers, grills, and diffusers
beyond what it had estimated when pricing its bid. Compl. ¶¶ 36–38. In its bid,
plaintiff had estimated that it would need to install six smoke dampers; twenty-
three registers, grills, and diffusers; seventeen access doors; and eleven fire
dampers. Id. ¶ 36. After ACG began the renovations, the required quantities
increased to thirty-four smoke dampers; thirty-one registers, grills, and diffusers;
and thirty-eight access doors, while the quantity of fire dampers decreased to four.
Id. The government contended that this claim should be dismissed for failure to
state a claim upon which relief can be granted because ACG entered into a firm-
fixed-price contract for design/build services, and thus under 48 C.F.R. § 16.202-1,
plaintiff assumed the “maximum risk” and full responsibility for all costs, including
unexpected expenses if it underestimated the cost of the project. Def.’s Mot. at 4–8
(quoting 48 C.F.R. § 16.202-1).

      Regarding the fire-mitigation equipment, the complaint alleges:

1 The allegations in the complaint are taken as true for purposes of the
government’s motion to dismiss.

2  The government also moved to dismiss ACG’s claim for $3,446 lost production
time due to snow. Def.’s Mot. at 1, 4, 8 (citing Compl. ¶¶ 44–45). Plaintiff has
conceded that this is not recoverable under the contract, and accordingly that claim
is DISMISSED. See Tr. (April 14, 2011) (Tr.) at 9–10, 27.
                                         -2-
      These quantities represent a substantial increase in costs. ACG could
      not have anticipated the final quantities of the equipment and
      materials required for this project without the drawings during the
      bidding phase. The final quantities were based on code requirements
      and as such were not the design team's requirements. The quantities
      that were included in the original pricing allowed for a reasonable
      number of each item for this type of room. It was impossible to
      determine the amount of existing ducts and equipment that traversed
      and transversed this space prior to a complete and thorough site
      survey. The additional quantities represent a large difference in costs
      to the Project.

Compl. ¶ 37.

       In its motion to dismiss, the government argued that plaintiff’s contention
amounted to a claim that plaintiff had underestimated the costs of performance,
and in a firm-fixed-price contract the risk of such error was borne by the contractor.
Def.’s Mot. at 4–8. In its initial response, and at oral argument, plaintiff’s position
was that the increase in the quantity of fire-mitigation devices was caused by the
changes the government ordered in the UPS system from the 35 percent submission
to the 75 percent submission, and thus the government was responsible for the
increase in the costs. Pl.’s Br. in Opp’n to Mot. (Pl.’s Br.) at 4–9; Tr. 13–17.

       During the hearing, the Court instructed plaintiff to file a supplemental brief
addressing how the code requirements linked the UPS changes to the additional
fire-mitigation equipment, and whether the contracting officer had the opportunity
to consider that claim. Tr. at 24–26, 37; Order, ECF No. 13. In its supplemental
brief, ACG stated that “[c]ontrary to what was previously argued in open court, it
was not the UPS change that affected the increased fire smoke damper quantities.”
Pl.’s Supp’l Br. at 1. Plaintiff now argued that the reason for the increased
quantities was that the existing duct work did not meet the code requirements, and
therefore, ACG had had to upgrade the room to make it code-compliant. Id. at 1–2.
Plaintiff further contended that because neither the use nor the square footage of
the area changed during renovation, it was reasonable for it to assume that the
existing ducts would already be code-compliant. Id. at 2, 5, 7. Affiliated argued
that it “could not have anticipated” the lack of compliance, and the unexpected need
to upgrade constituted a change for which ACG can claim an equitable adjustment.
Id. at 7. Regarding the question of jurisdiction, plaintiff argued that because the
claim presented to the contracting officer stated that the increased quantities were
due to code requirements rather than design changes, the contracting officer had
been given an opportunity to consider the basis of plaintiff’s claim. Id. at 2, 4, 6. In
response, the government argues that the ground articulated in ACG’s
supplemental paper constitutes a new claim within the meaning of the CDA, and

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would thus be beyond our jurisdiction. 3 Resp. to Pl.’s Supp’l Br. (Def.’s Supp’l Br.)
at 8–12.

                                  II. DISCUSSION

A. Legal Standards – Jurisdiction and the CDA

       Whether a federal court has jurisdiction to decide the merits of a case is a
threshold matter. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998).
Subject-matter jurisdiction may be raised at any time by a party, by the court on its
own initiative, or on appeal. Capron v. Van Noorden, 6 U.S. (2 Cranch) 126, 127
(1804); Folden v. United States, 379 F.3d 1344, 1354 (Fed. Cir. 2004); James v.
United States, 86 Fed. Cl. 391, 394 (2009). When considering whether to dismiss a
complaint, in whole or in part, for lack of jurisdiction, the court must presume the
truth of all undisputed factual allegations and construe all reasonable inferences in
favor of the non-movant. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Pixton v. B &
B Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002); Forest Glen Properties, LLC v.
United States, 79 Fed. Cl. 669, 676 (2007).

       Under the CDA, “[e]ach claim by a contractor against the Federal
Government relating to a contract shall be submitted to the contracting officer for a
decision.” 41 U.S.C. § 7103(a)(1) (2012). A contracting officer’s final decision on a
valid claim is a jurisdictional prerequisite to the litigation of claims under the CDA
in this court. England v. Swanson Grp., Inc., v. United States, 353 F.3d 1375, 1379
(Fed. Cir. 2004). The CDA does not require the use of any particular form or words
for a writing to constitute a claim. Engineered Demolition, Inc. v. United States, 70
Fed. Cl. 580, 587 (2006) (citing Contract Cleaning Maint., Inc. v. United States, 811
F.2d 586, 592 (Fed. Cir. 1987)). “All that is required is that the contractor submit in
writing to the contracting officer a clear and unequivocal statement that gives the
contracting officer adequate notice of the basis and amount of the claim.” Scott
Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003) (quoting Contract
Cleaning Maint, 811 F.2d at 592). The purpose of this requirement is resolution at
the contracting officer level, an objective that would be hindered if the claim heard
in court is substantially different from the one presented to the contracting officer.
See M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1331 (Fed. Cir.
2010).

3  The government also argued that plaintiff had waived this new ground for
opposing its motion by failing to offer it in the initial response to the motion to
dismiss. Def.’s Supp’l Br. at 3–5. In view of the fact that the government had the
opportunity to respond to it, and considering that the plaintiff’s new ground
appeared in a Court-ordered supplemental brief, the Court will not treat it as
waived. See Stamps.com Inc. v. Endicia, Inc., 437 F. App'x 897, 909 (Fed. Cir. 2011)
(citing Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, 1013 (9th Cir. 2007)).

                                          -4-
        This requirement, necessarily, also prohibits contractors from raising any
new claims in court which were not first presented to the contracting officer. Santa
Fe Eng’rs, Inc., v. United States, 818 F.2d 856, 858 (Fed. Cir. 1987); see also Scott
Timber, 333 F.3d at 1365 (“An action brought before the Court of Federal Claims
under the CDA must be ‘based on the same claim previously presented to and
denied by the contracting officer.’”) (quoting Cerberonics, Inc. v. United States, 13
Cl. Ct. 415, 417 (1987)). To determine whether a contractor’s claim in court
constitutes a “new claim,” the court must assess “whether the new issue is based on
the same set of operative facts” as the claim submitted to the contracting officer.
Foley Co. v. United States, 26 Cl. Ct. 936, 940 (1992), aff’d, 11 F.3d 1032 (Fed. Cir.
1993). In making such a determination, “[i]f the court will have to review the same
or related evidence to make its decision, then only one claim exists,” but if the claim
presented to the contracting officer requires examination of “a different or unrelated
set of operative facts,” then the claims are separate. Kinetic Builder’s, Inc. v. Peters,
226 F.3d 1307, 1312 (Fed. Cir. 2000) (quoting omitted). When the claims differ in
the underlying factual basis for relief, and when the claims require different kinds
of proof, they are different claims for purposes of the CDA. Placeway Constr. Corp.
v. United States, 920 F.2d 903, 909 (Fed. Cir. 1990); AAB Joint Venture v. United
States, 75 Fed. Cl. 414, 422–23 (2007).

       In assessing the operative facts of the claim, the critical test for jurisdiction is
“whether the scheme of adjudication prescribed by the CDA is undermined . . . by
circumventing the statutory role of the contracting officer to receive and pass
judgment on the contractor’s entire claim.” Cerberonics, 13 Cl. Ct. at 418; see also
Croman Corp. v. United States, 44 Fed. Cl. 796, 801 (1999); ThermoCor, Inc. v.
United States, 35 Fed. Cl. 480, 489 (1996). In other words, the claim before the
court cannot be said to arise from the same operative facts unless it is clear that the
claim presented to the contracting officer was specific enough to give the officer
notice of the basis of the claim and allow him to make an informed judgment about
it. Dodson Livestock Co. v. United States, 42 Fed. Cl. 455, 462 (Fed. Cl. 1998); see
also Laidlaw Envtl. Servs. (GS) Inc., 43 Fed. Cl. 44, 51 (1999) (finding the
contracting officer did not have adequate notice because the claim before the court
was “at substantial variance to the issues presented to the contracting officer”).

       Two claims are the same if they “arise from the same operative facts, [and]
claim essentially the same relief,” even if they “assert differing legal theories for
that recovery.” Scott Timber, 333 F.3d at 1365. Thus, in Scott Timber, even though
plaintiff “posed slightly different legal theories” in support of its CDA claim than
had been offered in the submission to the contracting officer, the Federal Circuit
nevertheless determined that the Court of Federal Claims had “correctly found that
it had jurisdiction” over a claim which arose from the same set of operative facts as
the claim presented below. Id. at 1365–66.

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B. Is Plaintiff Presenting a New Claim for an Equitable Adjustment?

    The claim submitted to the contracting officer concerning the additional fire-
mitigation devices is almost identical to that contained in the complaint filed in our
court. The contracting officer was told:

      ACG could not have anticipated the final quantities of the equipment
      and materials required for this project without the drawings during the
      bidding phase. The final quantities were based on code requirements
      and as such were not the design team's requirements. The quantities
      that were included in the original pricing allowed for a reasonable
      number of each item for this type of room. It was impossible to
      determine the amount of existing ducts and equipment that traversed
      and transversed this space prior to a complete and thorough site
      survey. The additional quantities represent a large difference in costs
      to the Project.

Pl.’s Supp’l Br. Ex. B, at 16–17 (emphasis added). 4

    The contracting officer rejected this claim due to the firm-fixed-price nature of
the contract, also noting “that fire damper quantities were not formally established
or set by the Government” and that he “found no evidence that the requirement had
changed.” Pl.’s Supp’l Br. Ex. A, at 11. After ACG brought this same claim in our
court, see Compl. ¶ 37, defendant understandably moved for its dismissal, as the
claim seemed to be based on actions of the plaintiff and not the government ---
namely, ACG’s underestimation of the number of items it needed to furnish to meet
code requirements. See Def.’s Mot. at 5–7. As explained above, ACG initially (and
mistakenly) tried to link the increase in these items to the alleged change in UPS
requirements, and belatedly changed course to argue that the increased amounts of
smoke dampers, registers, grill diffusers, and access doors were due to the existing
duct work not already meeting code standards. See Pl.’s Supp’l Br. at 1–2, 5–7.

    The question for the Court is whether this articulation of the claim differs
sufficiently from that presented to the contracting officer such that it must be
considered a new claim for CDA purposes. Although it is a very close question, the
Court concludes that it does. Affiliated contends that the reason an equitable
adjustment is warranted is that it reasonably assumed that an information
technology equipment area it was to renovate already met code standards

4 In citing the plaintiff’s exhibits, the Court will follow the convention of referencing
the internal page numbers of the excerpted documents contained in each.
                                          -6-
concerning the required automatic fire and smoke dampers in the air ducts. 5 The
key operative facts relating to this claim --- other than whether ACG was on notice
that the existing area was not code compliant --- are whether the existing duct work
contained an inadequate number of dampers and related equipment to meet the
applicable code, and whether the increased numbers of these items that ACG
installed were due to these preexisting deficiencies.

     The problem facing ACG is that the claim as presented to the contracting officer
and repeated in the complaint does not state that the room was unexpectedly found
to violate code requirements. See Pl.’s Supp’l Br. Ex. B, at 16–17; Compl. ¶ 37.
While plaintiff alleged that “final quantities were based on code requirements and
as such were not the design team’s requirements,” Pl.’s Supp’l Br. Ex. B, at 16, this
was not placed in the context of the site’s failure to comply with code requirements.
Instead, ACG was complaining that “without the drawings” and “prior to a complete
and thorough site survey” it was not in a position to know “the amount of existing
ducts and equipment.” Id. at 16–17. Affiliated explained that its bid was based on
“a reasonable number of each item for this type of room,” id., but failed to elaborate
that this number was based on an assumption that an area that was already used
to house information technology equipment would have already contained a certain
amount of these items to comply with the National Fire Protection Association code.
The claim as presented instead concerned the reasonableness of ACG’s estimate of
the amount of items needed compared to what was actually needed. Thus, the
reference to code requirements appeared to mean that ACG had underestimated the
volume of ducts and thus miscalculated the amount of fire-mitigation devices it
needed to install to meet code standards for the renovation work --- there is no
language to indicate that the existing ducts and equipment were insufficient to
comply with the code.

    One may, of course, infer from the language of the claim that ACG was really
contending that the conditions of the site differed from those assumed in the
contract. Perhaps the strongest motivation for drawing such an inference is that
the claim, as written, does not seem to have anything to do with changes in the
work ordered by the government, and would otherwise make no sense. But the
Court is not aware of any doctrine requiring contracting officers to interpret claims
in such a manner, and in any event this exercise would seem to confirm that the
claim as presented failed to provide a “clear and unequivocal statement” that
disclosed the “basis . . . of the claim.” Scott Timber Co., 333 F.3d at 1365. 6

5 Under the presumptions of regularity and of good faith conduct that must be
extended to the government, see Tecom, Inc. v. United States, 66 Fed. Cl. 736, 757–
69 (2005), this would seem to be a proper basis for a claim.

6  Indeed, as noted above, it was not so clear that plaintiff’s counsel himself could
recognize this basis for the claim when ACG initially opposed the government’s
                                         -7-
Moreover, plaintiff has not identified any language in the certified claim or in the
complaint that would indicate that the basis for the claim concerning the fire-
mitigation devices was the changed conditions portion of the changes clauses in the
contract. See App. to Def.’s Mot. at 8; id. at 58 (incorporating by reference 48 C.F.R.
§ 52.243-05). 7 Yet that appears to be what plaintiff is suggesting, in arguing that
the quantity of items priced in its bid “was based upon the belief that the existing
conditions were already code compliant.” See Pl.’s Supp’l Br. at 2. Even considering
the claim, as presently articulated, to be based on differing site conditions than
were assumed, the Court is persuaded that such claims are not merely different
legal theories, but are predicated on different operative facts, compared to other
grounds for an equitable adjustment. See, e.g., Kiewit Constr. Co. v. United States,
56 Fed. Cl. 414, 419–20 (distinguishing a defective specifications claim); Foley Co.,
26 Fed. Cl. at 939–40 (contrasting changes, differing site conditions, and variation
in estimated quantities clauses).

    In sum, ACG’s new articulation of its claim concerning the fire-mitigation
devices is not just a change in legal theories, but is based on different operative
facts from those associated with the claim as presented to the contracting officer.
This articulation would thus be a new claim that has not yet been considered by the
contracting officer, and accordingly cannot come within our subject-matter
jurisdiction. 8 The claim presented to the contracting officer, and contained in the
complaint, concerns a risk that must be borne by the contractor in a firm-fixed-price
contract, see 48 C.F.R. § 16.202-1, and thus cannot be the basis for relief in our
court. The government’s motion to dismiss the claim concerning fire-mitigation
devices is GRANTED.

motion. See Pl.’s Br. at 4-6, 9-10.

7 This portion of the clauses entitles a contractor to an equitable adjustment for
increases of costs or time due to “subsurface or latent physical conditions differing
materially from those indicated in this contract or unknown physical conditions at
the site,” App. to Def.’s Mot. at 8 (¶ G.8, § 352.236-9003(b)), provided the proper
notice was given or waived, id. (§ 352.236-9003(c)). See also 48 C.F.R. § 52.243-5(b)-
(d).

8 Though the time to bring a new differing conditions claim before the contracting
officer would have expired, see 41 U.S.C. § 7103(a)(4)(A), the Court notes that the
CDA’s statute of limitations is subject to tolling, see Arctic Slope Native Ass'n, Ltd.
v. Sebelius, 583 F.3d 785, 798 (Fed. Cir. 2009), and may well have stopped running
once the claim was articulated in this lawsuit.

                                          -8-
                               III. CONCLUSION

       For the reasons stated above, the defendant’s Motion for Partial Dismissal is
GRANTED. The claims concerning lost production time due to snow days, Compl.
¶¶ 44-45, and the increased amount of fire-prevention equipment, id. ¶¶ 36–38, are
not claims upon which relief can be granted and are accordingly DISMISSED
under RCFC 12(b)(6). The parties shall file a Joint Status Report within fourteen
days of the date of this order, proposing a schedule for further proceedings.

IT IS SO ORDERED.

                                       s/ Victor J. Wolski
                                       VICTOR J. WOLSKI
                                       Judge

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