Court Opinion

ID: 4418878
Source: CourtListenerOpinion
Date Created: 2019-07-22 18:00:06.361398+00
Date Added: 2024-06-11T12:54:30.963796
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeals of --                                  )
                                               )
BRDC, a Joint Venture                          )      ASBCA Nos. 60130, 60668, 61611
                                               )
Under Contract No. N69450-10-C-1262            )

APPEARANCE FOR THE APPELLANT:                         Michael T. Ambroso, Esq.
                                                       DCK Worldwide, LLC
                                                       Pittsburgh, PA

APPEARANCES FOR THE GOVERNMENT:                       Craig D. Jensen, Esq.
                                                       Navy Chief Trial Attorney
                                                      Matthew D. Bordelon, Esq.
                                                      Russell A. Shultis, Esq.
                                                       Trial Attorneys

                OPINION BY ADMINISTRATIVE JUDGE MCILMAIL

        In this construction matter, appellant seeks additional compensation for
concrete, aggregates, and concrete testing, and for sand for masonry and stucco. The
parties decided to submit this case on the record pursuant to Board Rule 11. Only
entitlement is before us.

                                  FINDINGS OF FACT

       Appellant is a joint venture consisting ofDCK Worldwide, LLC, and Burns and
Roe Services Corporation (BRSC) (R4, tab 73.2 at 7061-62). On June 3, 2010, the
government contracted with appellant for the construction of family housing units, and
the renovation of a fitness center, at Naval Base Guantanamo Bay (GTMO), and to
begin work within 10 calendar days after receiving the award (rev. R4, tab 6 at 109-91,
1096).

     In June 2009, prior to contract award, the solicitation provided, by way of
Amendment 0013:

                The following clarification is provided regarding the
                pricing of concrete for this project:

                The Government cannot guarantee the pricing of concrete,
                aggregate or concrete testing at Guantanamo Bay after
                30 November 2010 when the contract pricing under
                 BRSC' s existing contract expires. Offeror 's [sic] should
                 do their best to realistically estimate what this cost may be
                 after 1 December 2010 [emphasis added].

                 The successful offeror will be required to purchase
                 concrete, aggregate and concrete testing services from the
                 follow on supplier after 1 December 2010. The
                 Government does guarantee that the price provided to the
                 successful offeror will be no more than the best price
                 available to the Government under the successor contract
                 which will replace this contract in December of 2010.

                 The successful Contractor will be allowed to request an
                 equitable adjustment to the contract after award to adjust
                 their price if the price for concrete, aggregate and concrete
                 testing varies more than 10% as of 1 December 2010 from
                 the estimated price. This adjustment may be an increase if
                 the price for these commodities in the Government's
                 contract goes up, or a reduction in price if the
                 Government's price is less. An adjustment will only be
                 made if the Government's price varies more than 10% in
                 either direction (up or down) from the Contractor's
                 estimated price. The Contractor will be required to
                 substantiate (provide supporting documentation) their
                 request for adjustment.

    (Rev. R4, tab 3 at 2270-71) (secondary emphasis omitted)

          Section 1.3.23 of the contract, Concrete Batch Plant, provides:

                 A concrete batch plant is located on Naval Base
                 Guantanamo Bay [GTMO]. Up to 5,000
                 cubic yards of concrete can be purchased for specific
                 projects at GTMO ....

                 The government cannot guarantee the pricing of the
                 concrete, aggregate or concrete testing at Guantanamo Bay
                 after 30 November 2010 when the contract pricing under
                 BRSC's existing contract expires. Offeror's [sic] will be
                 required to purchase concrete, aggregate and concrete
                 testing services from the follow on supplier after
                 1 December 2010. The Government does guarantee that
                 the price provided to the successful offeror will be no more

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              than the best price available to the Government under the
              successor contract which will replace this contract in
              December of 2010.

             The successful Contractor will be allowed to request an
             equitable adjustment to the contract after award to adjust
             their price if the price for concrete, aggregate and concrete
             testing varies more than 10% as of 1 December 2010 from
             the estimated price. This adjustment may be an increase if
             the price for these commodities in the Government's
             Contract goes up or a reduction in price if the
             Government's price is less. An adjustment will only be
             made if the Government's price varies more than 10% in
             either direction (up or down) from Contractor's estimate
             price. The Contractor will be required to substantiate
             (provide supporting documentation) their request for
             adjustment.

(R4, tab 56 at 4475) (emphasis added)

      The contract also provided, at section 1.3 .4.1, Availability and Cost of
Government Materials and Services:

             ... The cost of Government materials, equipment, and
             services reflected in this specification are subject to
             fluctuation, revision, and adjustment.... [S]hould the actual
             rate required to be paid by the Contractor vary by more
             than 15 percent from that specified, the contract price will
             be adjusted to reflect the amount by which the rate actually
             paid varies by more than 15 percent from that specified.

(Id. at 4467) (emphasis added) Finally, in January 2010, prior to awarding the
contract, the government answered this way to a bidder's question:

             Question RFI 0017-14: Previously, Amendment 0008 had
             a price listing titled Attachment J-1, Exhibit Line Item
             Numbers. Does this still apply? Does it need to be
             reissued? Please advise.

             Answer RFI 0017-14: The proposer shall use the J-1
             provided in amendment 001 7.

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(Rev. R4, tab 3 at 2121, 2125) Attachment J-1 to Amendment 0017 lists prices for
concrete, aggregate, and concrete testing (R4, tab 3 at 2121, 2152-53). Appellant
relied upon and incorporated the Attachment J-1 unit prices to calculate its anticipated
costs for concrete, aggregates, and testing (app. R4, supp. A-1 at 3110 & attachs. 5, 7;
A-2 at 3 1 11 & attachs. 5, 7; gov't br. at 9). BRSC held the contract to operate the
concrete batch plant at GTMO from December 1, 2005 through November 30, 2010
(R4, tab 76 at 2966-75). On December 1, 2010, Bums and Roe Enterprises, Inc., was
awarded the follow-on contract to operate the plant from December 1, 2010 through
November 30, 2015 (app. R4, supp. A-3, attach. 2).

        In March 2013, appellant requested a $2,364,246 increase in the contract price,
citing section 1.3.23 (R4, tab 36 at 1283-84). The government, also citing
section 1.3.23, responded by unilaterally modifying the contract to add $909,920.13 to
the contract price (R4, tab 31 at 1187, 1190), as the government now explains (by way
of a proposed finding of fact), '"to compensate [appellant] for concrete price costs
increases exceeding 10 percent of the J-1 concrete prices that [appellant] cited" (gov't
br. at 7121).

                                       DECISION

ASBCA Nos. 60130 & 61611

       The government says that appellant cannot rely on the J-1 price list as its
"estimated price" for purposes of section 1.3.23 (see gov't br. at 9).* Section 1.3.23
provides that '"[t]he successful Contractor will be allowed to request an equitable
adjustment to the contract after award to adjust their price if the price for concrete,
aggregate and concrete testing varies more than 10% as of 1 December 2010 from the
estimated price." (R4, tab 56 at 44 75) A concurrent interpretation by the parties of
contract terms prior to a dispute is entitled to great, if not controlling, weight. Ver-Val
Enterprises, Inc., ASBCA No. 43766, 95-1BCA127,334 at 136,232. Prior to this
dispute, the government at least implicitly agreed with appellant that J-1 prices could
be used as the estimated price benchmark for purposes of section 1.3 .23: appellant
requested a contract price adjustment to take into account an increase above J-1 prices,
and the government increased the contract price. The government now explains (by
way of a proposed finding of fact) that the increase in the contract price was '"to
compensate [appellant] for concrete price costs increases exceeding 10 percent of the
J-1 concrete prices that [appellant] cited" (gov't br. at 7121 (emphasis added)).

* Appellant asserts as entitlement issues whether it may recover overhead and profit
      (app. br.at81 l(b)). We regard those as quantum issues. See Missouri
      Department ofSocial Services, ASBCA No. 61121, 19-1 BCA 137,240
      at 181,278-79.

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            Although appellant's argument relies upon that government action, the
    government's argument fails to address its import (app. br. at 5-6118, 15-16; gov't
    br. at 8-21). Rather, the government relies heavily on the provision in Amendment
    0013 to the solicitation that "Offeror's should do their best to realistically estimate
    what this cost may be after 1 December 2010" (gov't br. at 13-15), but, as appellant
    points out and the government appears only to acknowledge (reply at 3-4; gov't br.
    at 14 n.8), that provision is not in section 1.3.23 of the contract itself. Moreover, as
    appellant also points out but the government ignores (app. br. at 3; gov't br. at 8-21),
    when a bidder asked whether "a price listing titled Attachment J-1" still applied, the
    government said bidders "should use the J-1." Appellant did so, to estimate its prices.
    For all these reasons, appellant may base a request for a section 1.3.23 price increase
    upon an increase above the Attachment J-1 prices.

            The only issue remaining in ASBCA Nos. 60130 and 61611 is whether, with
    prices having increased more than 10% above its estimated prices, appellant is entitled
    to the first 10% of that increase. The answer is yes. We interpret the contract as a
    whole, to give reasonable meaning to all its parts and avoid conflict or surplusage of
    its provisions. Granite Construction Co. v. United States, 962 F .2d 998, 1003
    (Fed. Cir. 1992). Unlike section 1.3.4.1 of the contract, which expressly limits an
    adjustment to the contract price "to reflect the amount by which the rate actually
    paid varies by more than 15 percent from that specified," (R4, tab 56 at 4467)
    section 1.3.23 provides no such limitation. Consequently, appellant's recovery
    includes the first 10% of the increase above its estimated price. See KiSKA
    Construction Corp.-USA & Kajima Engineering & Construction, Inc., JV, ASBCA
    Nos. 54163, 54614, 09-1BCA134,089 at 168,564 (awarding entire amount of
    quantity increase pursuant to clause providing that equitable adjustment be based upon
    "any increase .. .in costs due solely to the variation above 115 percent...ofthe estimated
    quantity") (alteration in original) ajf'd, 736 F. Supp. 2d 171, 192 (D.D.C. 2010), aff'd,
    443 F. App'x 561 (D.C. Cir. 2011). Accordingly, appellant is entitled to additional
    compensation in ASBCA Nos. 60130 and 61611.

    ASBCA No. 60688

           Appellant says that the term "aggregate" in section 1.3 .23 includes "masonry
    and stucco sand," and therefore that the contact required it to obtain masonry and
    stucco sand from the GTMO concrete batch plant, despite an unavailability of sand
    suitable for masonry and stucco at the plant that resulted in an increase in its costs
    (app. br. at 18-21; reply at 9). We need not decide whether the term "aggregate" in
    section 1.3.23 includes such "masonry and stucco sand." A contractor is not entitled
    to recover for a defect in a government contract where the contractor was or should
    have been aware of the defect before entering the contract. See E.L. Hamm &
    Associates, Inc. v. England, 379 F.3d 1334, 1339, 1341-42 (Fed. Cir. 2004). BRSC
    was both the GTMO concrete batch contractor and part of appellant's joint venture
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when appellant entered the contract on June 3, 2010 (to begin work by June 13, 2010)
(R4, tab 76 at 2966-75), and therefore was or should have been aware whether sand
suitable for masonry and stucco was available at the GTMO concrete batch plant at
that time, regardless of whether such sand would also be available after BRSC stopped
operating that plant on November 30, 2010. Appellant does not say that between
June 3 and November 30, 2010 (that is, between when appellant entered the contract
and BRSC stopped operating the plant), sand suitable for masonry and stucco was
available at the plant, such that the unavailability of suitable sand arose only after
BRSC stopped operating the plant, introducing a contract defect that did not exist
when appellant entered the contract. Consequently, if the contract requires the
contractor to obtain masonry and stucco sand from the GTMO concrete batch plant,
and if sand suitable for masonry and stucco was not available at that plant, that was a
contract defect of which appellant was or should have been aware before entering the
contract, and for which it may not recover. Accordingly, appellant is not entitled to
additional compensation in ASBCA No. 60668.

                                   CONCLUSION

       ASBCA Nos. 6013 0 & 61611 are sustained and returned to the parties for the
negotiation of quantum. ASBCA No. 60668 is denied.

      Dated: July 8, 2019

                                                 fIMOTHY P:MG         IL
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur                                          I concur

JOID-{J. THiASHER                                OWEN C. WILSON
Administrative Judge                             Administrative Judge
Chairman                                         Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals

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      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 60130, 60668, 61611,
Appeals ofBRDC, a Joint Venture, rendered in conformance with the Board's Charter.

      Dated:

                                                PAULLA K. GATES-LEWIS
                                                Recorder, Armed Services
                                                Board of Contract Appeals

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