Court Opinion

ID: 2764938
Source: CourtListenerOpinion
Date Created: 2014-12-29 08:00:05.605797+00
Date Added: 2024-06-11T11:27:21.436699
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                )
                                            )
Alderman Building Company, Inc.             )      ASBCA No. 58082
                                            )
Under Contract No. N40085-09-D-5321         )

APPEARANCE FOR THE APPELLANT:                      Marilyn H. David, Esq.
                                                    Biloxi, MS

APPEARANCES FOR THE GOVERNMENT:                    Ronald J. Borro, Esq.
                                                    Navy Chief Trial Attorney
                                                   Genifer M. Tarkowski, Esq.
                                                    Trial Attorney

    OPINION BY ADMINISTRATIVE JUDGE YOUNGER ON APPELLANT'S
         MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
    (1) UNABSORBED OVERHEAD UNDER ALTERNATIVE TO EICHLEA Y
     FORMULA AND (2) STANDBY LABOR COSTS AND RESPONDENT'S
              CROSS-MOTION FOR SUMMARY JUDGMENT

       In this sponsored appeal regarding a contract for the renovation and interior
repair of a building, the contractor, Alderman Building Company, Inc. (Alderman), has
moved for partial summary judgment regarding pre-performance unabsorbed
overhead under an alternative method to the Eichleay formula, and regarding standby
labor costs. In response to the motion, the Navy has opposed and cross-moved for
summary judgment, generally contending that the facts do not bring the case within a
recognized exception to the Eichleay formula. We grant Alderman's motion in part
and deny the Navy's cross-motion.

               STATEMENT OF FACTS FOR PURPOSES OF THE MOTIONS

        1. By date of27 March 2009, the Navy awarded a Task Order for supplies or
services under Contract No. N40085-09-D-5321 to Alderman for renovations of the
interior, repairs to building systems, and incidental related work, on a building at
Camp Lejeune, North Carolina (R4, tab 1 at 1, 3 of 6). The Task Order provided that
"[t]he entire work ... shall be completed by 3/22/2010" (id. at 3 of 6).

       2. The contract contained various standard clauses, including Federal
Acquisition Regulation (FAR) 52.233-1, DISPUTES (JUL 2002); FAR 52.242-14,
SUSPENSION OF WORK (APR 1984); and FAR 52.243-4, CHANGES (JUN 2007) (R4,
tab 5.6 at 11 of31).
       3. By date of 8 April 2009, Alderman entered into a subcontract with Big
John's Electric Co., Inc. (Big John's), for labor, equipment, materials, and supplies for
specified portions of the interior repairs to the building (R4, tab 5.12 at 1). The
subcontract provided that "time is of the essence," and that Big John's was to "begin
work within seven (7) days after notification" by Alderman (id. at 2).

        4. Contract performance was characterized by repeated government-caused
delays in starting work. Alderman and Big John's were delayed because new facilities
for the existing tenants in the building were not available (R4, tab 6 at 1). There were
multiple delays to the project start date, as memorialized in the following exchanges:

Date                  Document                  Start Date          Record Citation
13 January 2009       Solicitation              10 calendar days    R4, tab 5.6 at 1 of31
                                               after contract
                                               award.
10 March 2009         Solicitation             "Work may not        R4, tab 1 at 10
                      Amendment                begin ... until 01
                      No. 0003                 June 2009."
27 May 2009           Email, OICC to           "Lets nlan on        R4, tab 5.13
                      Alderman Project         starting" in mid-
                      Manager                  July 2009 "time
                                               oeriod."*
19 June 2009          Email, OICC to           Afraid construction R4, tab 5.14
                      Alderman Project         may be pushed
                      Manager                  back to August
                                               2009.
1July2009             Email, OICC to           "Lets set the new    R4, tab 5.15
                      Alderman Project         start date at
                      Manager                   15 October" 2009. *
7 July 2009           CO Suspension             Suspension "until   R4, tab 5.16
                      Letter to Alderman       further notice."
9 July 2009           Email, Alderman          Project start date   R4,tab5.17
                      Project Manager to       "susnended until
                      Subcontractors           October" 2009. *
30 September 2009     Email, Alderman          "[N]ew start date    R4,tab5.18
                      Project Manager to       for the project is
                      Subcontractors           12/15/09."
18 November 2009      Email, OICC to           "We are still on for R4, tab 5.20
                      Alderman Project         15 December at this
                      Manager                  noint."*
8 December 2009       Email, OICC to           "[N]o earlier than   R4, tab 5.21
                      Alderman Project         the 1st of February
                      Manager                  [2010] for
                                               Starting."
                                           2
8 December 2009       Email, Alderman           "Project will not be    R4, tab 5.22
                      Project Manager to        starting now until
                      Subcontractors            February 1st [201 O],
                                                at the earliest."*
2 February 2010       Email, OICC to            Some tenants not        R4, tab 5.28
                      Alderman Project          moving out "until
                      Manager                   sometime, probably
                                                after the 9th";
                                                others will vacate
                                                on 8th.

*Underscoring in original.

        5. In his 7 July 2009 letter to Alderman, the contracting officer had advised
that, pursuant to the Suspension of Work clause (see statement 2), "you are hereby
directed to suspend all work under the referenced contract," with an exception not
relevant here, "until further notice." The contracting officer's cited reason was
"Government delays in vacating the premises." (R4, tab 5.16 at 2)

      6. Alderman eventually began contract performance on 19 February 2010
(Expert Report of Roger K. Seals (Seals rpt.) at 2). Big John's ultimately began
performance of its subcontract on the same date (R4, tab 5.38 at 2, tab 5.50 at 2) and
completed work on 28 October 2010 (Seals rpt., tab 40, 1st Affidavit of Michael
Dougherty (Dougherty aff.) ifif 4, 5).

      7. By letter to the contracting officer dated 18 August 2011, Alderman
submitted a claim for $20,518 on behalf of Big John's for government delay in starting
work (R4, tab 5).

        8. By date of 19 January 2012, the contracting officer denied the claim in its
entirety (R4, tab 6). Alderman thereafter brought this timely appeal.

      9. Alderman's lengthy complaint is in 15 counts. Styling the counts as
Alderman does, we summarize those alleging entitlement to Eichleay recovery and
standby as follows:

             (a) Count I: Ordered and Constructive Suspensions of Work. In general,
      Alderman alleges that the Navy "delayed the start of Big John's work, by
      delaying the Notice to Proceed and by successively revising the date the job site
      would be available and work could start" (compl. if 27). Alderman then makes
      particular allegations regarding the delays in the start date, and alleges that the
      delays were unreasonable, that they were due to the Navy's convenience, and
      alleges entitlement to extended and unabsorbed home office overhead costs on
      behalf of Big John's (id. ifif 28-46).

                                            3
              (c) Count III: Eichleay Claim and Prerequisites. In general, Alderman
       alleges that it meets the requirements for application of the Eichleay formula,
       "[e]ven with use of an alternate method of computation" (id. if 79).

Alderman also alleges entitlement to recovery of unabsorbed overhead using a
methodology other than the Eichleay formula, including the Changes clause (id.      if 125)
and quantum meruit (id. iii! 131-35).

        10. The Navy cites three email exchanges that are said to show that it did not
require Alderman to resume work immediately and at full speed (Respondent's Cross
Motion for Summary Judgment and Response in Opposition to Appellant's Motion for
Partial Summary Judgment Regarding (1) Unabsorbed Overhead Under Alternative to
Eichleay Formula and (2) Standby Labor Costs (gov't opp'n) at 9-10, 13). We find
that none are conclusive. The first cited exchange is dated 1 February 2010 between
Alderman, Big John's, and the Navy. It was, by its terms, technical in nature, initiated
by the subcontractor's expression of "a few concerns with a partial tum over of the
building" regarding "several circuits." (R4, tab 4.5) The second cited exchange is
between the OICC and Alderman on 28 January and 2 February 2010 regarding "New
Developments." It relates to arrangements to have "temp. power going before the start
date," to avoid consuming time on such arrangements when work ultimately
began. (R4, tab 4.6) The third cited exchange is between the OICC and Alderman on
1-2 February 2010 regarding the cost of doing inside work while the building was
partially occupied, as well as tracking "contractual impacts ... due to the government
delays [for] a revised cost proposal" (R4, tab 5.27).

        11. Alderman has tendered an expert report from Roger K. Seals, Ph.D, P.E.,
a retired professor of Civil and Environmental Engineering at Louisiana State
University, in support of its motion. He set forth an alternative methodology to the
Eichleay formula (Seals rpt. at 14-18).

        12. Alderman has also tendered the affidavit of Mr. Dougherty, Big John's
project manager, in support of its motion. Mr. Dougherty attests that "the project was
delayed 8 times from the original date of June 1, 2009 to February 19, 2010"
(Dougherty aff. if 6). With respect to the OICC's 27 May 2009 email regarding the
first post-award delay (see statement 4), he attested that the email resulted from
Alderman's request for clarification of the start date, but that the Navy "failed to give a
definite date for ending the delay" (Dougherty aff. if 11). Mr. Dougherty also stated
that "Big John's kept 2 workers on standby as floated or nonproductive labor during
the period from 3 June 2009 to 17 February 2010." These workers "would be a full
crew and would be able to commence work .. .immediately." (Id. iii! 31, 33)

                                             4
                                       DECISION

       A. Motion for Summary Judgment

        In its present motion, Alderman "seeks partial summary judgment that the Navy
delayed and suspended Big John's work from 1June2009 to 19 February 2010, for a
total of 263 days of delay" (Alderman's Motion for Partial Summary Judgment
Regarding ( 1) Unabsorbed Overhead Under Alternative to Eichleay Formula and
(2) Standby Labor Costs and Supporting Memorandum (mot.) at 5). Alderman
contends that the Navy's eight delays of Big John's start dates is uncontroverted, and
that such pre-performance delays are unreasonable and hence compensable under the
Suspension of Work clause in the prime contract (id. at 5-10). Alderman maintains that
alternative methods to the Eichleay formula may be used in "all government-caused
suspensions where contractor performance on-site has not yet begun," and that its
expert's proffered method, which is based upon direct labor costs incurred and
attributable to keeping forces on standby during the delay period, is an appropriate
alternative (id. at 12-28). See Eichleay Corp., ASBCA No. 5183, 60-2 BCA ~ 2688
at 13,568, ajf'd on reh 'g, 61-1 BCA ~ 2894 (detailing formula).

       B. Cross-Motion for Summary Judgment

        In opposing Alderman's motion, and cross-moving for summary judgment in its
own right, the Navy asserts that Alderman is not entitled to recover unabsorbed
overhead. The Navy maintains that the Eichleay formula is the exclusive means for
calculating unabsorbed overhead, except in the "narrowly tailored instance" of the
government's issuance of a termination for convenience before contract award (gov't
opp'n at 1). The Navy accordingly urges that Alderman "is not entitled to unabsorbed
overhead because the delay period occurred prior to contract performance and the
Respondent did not issue a contract termination for convenience" (id. at 5). The Navy
also argues that, even if Alderman fell within the "narrowly tailored instance" for
entitlement to unabsorbed overhead, it would still not satisfy the three prerequisites set
forth in Nicon, Inc. v. United States, 331 F.3d 878, 883 (Fed. Cir. 2003), of: a
government-caused delay of uncertain duration; an extension of time for performance
or additional costs because of a planned earlier completion; and being on standby and
unable to take on other work during the delay (gov't opp'n at 4-11). Finally, the Navy
insists that Alderman is not entitled to recover under the Suspension of Work clause,
chiefly because it cannot prove that "the alleged delay caused by Respondent was
unreasonable, [that] all or part of the contract was delayed and that [Alderman's] costs
of contract performance increased" (id. at 13).

       C. Disposition

     This is the second set of cross-motions for summary judgment in this appeal.
We have previously ruled on the first. Alderman Building Co., ASBCA No. 58082,

                                            5
13 BCA if 35,381. Of relevance to the present set of cross-motions, we denied the
Navy's motion to dismiss with respect to Count I of the complaint, in which Alderman
alleged ordered and constructive suspensions of work, as well as Count III, in which
Alderman alleged that it met the requirements for Eichleay recovery, and Count VII, in
which Alderman alleged a breach of warranty regarding the start date and site
availability. Id. at 173,615-16, 173,619-20.

        On summary judgment, "[o]ur task is not to resolve factual disputes, but to
ascertain whether material disputes of fact-triable issues-are present." Conner Bros.
Construction Co., ASBCA No. 54109, 04-2 BCA if 32,784 at 162,143, aff'd, Conner
Bros. Construction Co. v. Geren, 550 F.3d 1368 (Fed. Cir. 2008). As with the
previous cross-motions, we "evaluate each party's motion on its own merits." BMY, A
Division of Harsco Corp., ASBCA No. 38172, 93-2 BCA if 25,704 at 127,868. With
cross-motions, "[t]he fact that both parties have moved for summary judgment does
not mean that [we] must grant [summary] judgment as a matter of law for one side or
the other; summary judgment in favor of either party is not proper if disputes remain
as to material facts." Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391
(Fed. Cir. 1987). We resolve any doubt over factual issues, and draw all reasonable
inferences, in favor of whichever party is opposing the motion under consideration.
Id. at 1390-91.

       After careful consideration of the parties' respective motions, we deny
appellant's motion for partial summary judgment and deny respondent's cross-motion
for summary judgment. We reach this disposition for the reasons set forth below.

      First, we reject the proposition that Alderman is precluded from recovering
unabsorbed overhead under the Eichleay formula. The Navy explains its lead
argument by telling us that Nicon precludes any recovery of unabsorbed overhead
"because the delay period [here] occurred prior to contract performance and the
Respondent did not issue a contract termination for convenience" (gov't opp'n at 5).

       We cannot accept this proposition. It is true that, in Nicon, the court of appeals
held that unabsorbed overhead could not be recovered under the Eichleay formula for
a pre-performance delay. Nicon, 331 F.3d at 884-85. But the court in Nicon addressed
"a unique factual situation" in which a contractor sought unabsorbed overhead for the
delay period between contract award and a termination for convenience, where the
contractor "was never permitted to perform any aspect of the contract." Id. at 883.
The court acknowledged that "the Eichleay formula .. .is the exclusive formula for the
calculation of damages for unabsorbed overhead due to a period of government-caused
delay in situations which contract performance has begun." Id. at 888. But the court
stressed that its holding did not extend to cases in which "performance of the contract
does eventually occur or resume after the government-caused delay." Id. at 883. In
such cases, by contrast to the situation in Nicon, there are "actual 'contract billings'
[and] 'days of performance' to use in the formula." Id.

                                            6
       Inasmuch as Alderman did eventually perform its contract, and Big John's
eventually performed its subcontract (statement 6), we decline Alderman's invitation
to look to the Suspension of Work clause (see statements 2, 9), or to some other source
beyond the Eichleay formula (see statement 11), as the measure of recovery. Instead,
we must look to the Eichleay formula as "the exclusive formula for calculation of
damages for unabsorbed overhead due to government-caused delay in situations in
which contract performance has begun," Nicon, 331 F .3d at 888, assuming that
Alderman also meets the prerequisites to application of the formula.

       Second, we reject the Navy's argument that it is entitled to summary judgment
because Alderman also cannot establish the prerequisites to Eichleay recovery. At the
same time, we reject Alderman's argument that it is entitled to partial summary
judgment regarding those prerequisites.

       It is familiar that "[t]he three elements necessary to recover Eichleay damages
are: (1) a government-imposed delay occurred; (2) the government required the
contractor to 'stand by' during the delay; and (3) while 'standing by,' the contractor
was unable to take on additional [i.e., replacement] work." Satellite Elec. Co. v.
Dalton, 105 F.3d 1418, 1421 (Fed. Cir. 1997). We address each of these elements
below.

       1. Uncertain Duration

        The Navy argues that "[t]hroughout the delay period, Respondent provided
Appellant with future definite start dates," (gov't opp'n at 7), and hence the delays
were not of uncertain duration. See Interstate Gen. Gov 't Contractors, Inc. v. West,
12 F.3d 1053, 1056 (Fed. Cir. 1993) (reciting that "there must have been a
government-caused delay of uncertain duration"). The Navy also tells us, however,
that "[a]t minimum ... there is a material issue of fact in dispute over whether there was
an indefinite suspension" (gov't opp'n at 8). For its part, Alderman contends that
evidence in the record, as well as submissions with the motion, establish that "the
period of delay was indefinite" (Alderman's (1) Opposition to Navy's Cross-Motion
for Partial Summary Judgment; (2) Reply to Navy's Opposition to Alderman's Motion
for Partial Summary Judgment Regarding Eichleay Alternative & Standby Costs; and
(3) Supporting Memorandum (app. resp.) at 7).

        We reject the Navy's characterization of the record and grant partial summary
judgment to Alderman to the extent we find there were delays of uncertain duration.
In his suspension letter the contracting officer simply ordered a suspension "until
further notice" (statements 4, 5), not until a "future definite start date[]" (gov't opp'n
at 7). Other delays -those announced by the emails dated 27 May 2009, 19 June
2009, 9 July 2009, 8 December 2009 and 2 February 2010 (statement 4)- are
manifestly "ballpark" dates, lacking definiteness by their terms. Others - those

                                             7
announced in the emails dated 1 July 2009, 30 September 2009, 18 November 2009
and 8 December 2009 emails (id.) - provided dates certain which thereafter were not
implemented. We accordingly conclude that there is no triable issue that portions of
the total delay period were of uncertain duration.

       2. Standby

         The Navy argues that Alderman cannot demonstrate that it was on standby.
The Navy tells us that neither direct nor indirect evidence satisfies the formulation in
P.J Dick Inc. v. Principi, 324 F.3d 1364, 1371 (Fed. Cir. 2003), requiring proof that
"during [the] delay [the contractor] was required to be ready to resume work ... at full
speed as well as immediately" (gov't opp'n at 8-10). The Navy urges that three email
exchanges between Alderman, Big John's, and the Navy (see statement 10) establish
that it "never required [Alderman] to keep workers, including the subcontractors, idle
on-site during any delay period" (gov't opp'n at 10). The Navy then asserts that, "[a]t
minimum, the evidence demonstrates that there is a material issue of fact in dispute
with regard to ... Appellant's contention that they were on standby" (id.). For its
part, Alderman cites the Dougherty affidavit (statement 12) and the Seals report
(statement 11) to tell us that the standby evidence is uncontroverted in its favor (app.
resp. at 8).

        By pointing to three email exchanges, the Navy fails to demonstrate the absence
of a triable issue regarding standby. At the same time, the Dougherty affidavit and the
Seals report that Alderman relies upon show that it had employees on standby during
the delay period, but leaves open the question of whether they were "required to be
ready to resume work" by the Navy. P.J. Dick, 324 F.3d at 1371. We accordingly
conclude that there is a triable issue regarding standby.

       3. Inability to Take On Replacement Work

        The Navy argues that it "can demonstrate [that] Appellant did or could take on
replacement work" (gov't opp'n at 11). The Navy tells us that it has met its burden on
the issue "through facts submitted by Appellant that clearly demonstrate Appellant
mitigated its losses during the delay period" (id.). Nonetheless, the Navy also asserts
that the issue "remains contested between the parties and not ripe for summary
judgment" (id. at 12).

       For its part, Alderman contends that the Navy "did not revise each of its
successive start-dates until days before work was to start each time, and then moved
the revised start-date to only a few short days or weeks later," which interfered with
replacement work (mot. at 24-25). Alderman also argues that the replacement work
that Big John's did acquire was insufficient to replace the work lost due to
government-caused delays (id. at 25-26).

                                            8
       This issue is inappropriate for summary disposition. There are eight
suspensions at issue (statement 4). Determination of the merits of Alderman's
contention that the Navy revised the start-dates for each too soon to permit Alderman
to take on replacement work calls for evidence regarding each such date on a fully
developed record.

                                   CONCLUSION

       Appellant's motion for partial summary judgment is granted to the extent
indicated. Respondent's cross-motion for summary judgment is denied.

      Dated: 9 December 2014

                                                Administrative Judge
                                                Armed Services Board
                                                of Contract Appeals

I concur                                        I concur

d:~~                                                 ~
                                                RICHARD SHACKLEFORD
Administrative Judge                            Administrative Judge
Acting Chairman                                 Vice Chairman
Armed Services Board                            Armed Services Board
of Contract Appeals                             of Contract Appeals

      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 58082, Appeal of
Alderman Building Company, Inc., rendered in conformance with the Board's Charter.

      Dated:

                                                JEFFREY D. GARDIN
                                                Recorder, Armed Services
                                                Board of Contract Appeals

                                          9