Court Opinion

ID: 4471973
Source: CourtListenerOpinion
Date Created: 2020-01-13 21:01:27.101921+00
Date Added: 2024-06-11T15:03:22.408170
License: Public Domain

In the United States Court of Federal Claims
                                Nos. 15-582C & 16-1300C
                                   CONSOLIDATED
                                 (Filed: January 13, 2020)

                                          )
 INTERIMAGE, INC.,                        )
                                          )      Cross-Motions for Summary
                       Plaintiff,         )      Judgment; RCFC 56; Disputed Issues
                                          )      of Fact; Unforeseen Costs; Cost Plus
 v.                                       )      Percentage of Cost; Fixed Fee
                                          )      Equitable Reduction
 THE UNITED STATES,                       )
                                          )
                      Defendant.          )
                                          )

Jerry Stouck, Washington, DC, for plaintiff.

Sheryl L. Floyd, Commercial Litigation Branch, Civil Division, United States Department
of Justice, Washington, DC, with whom were Joseph H. Hunt, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, and Kenneth M. Dintzer, Deputy Director.

      OPINION DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT

FIRESTONE, Senior Judge.

       Pending before the court in these consolidated cases are the parties’ cross-motions

for summary judgment. Plaintiff InterImage, Inc. (InterImage) seeks to recover $453,548

from the United States, claiming that it is owed more than it was paid for work under

Navy Contract No. N001-05-D-0058 (Contract). Defendant United States (the

government) seeks to recover $86,061 from InterImage, claiming that it overpaid

InterImage for work under the Contract. For the reasons discussed below, the parties’

cross-motions for summary judgment are DENIED.
I.     BACKGROUND

       A.     Original Contract and Prior Decision

       The background of this dispute is set out in InterImage, Inc. v. United States, 133

Fed. Cl. 355 (2017). As discussed in that opinion, the Contract at issue was awarded to

InterImage on September 27, 2005, by the Norfolk Contracts Department (now known as

the Fleet Logistics Center Norfolk), on behalf of the Naval Criminal Investigative

Services (the Navy) to provide full-life-cycle software development services for a new

Criminal Incident and Case Management System. Id. at 358. The Contract included 11

delivery orders. Id. at 362. InterImage received approximately $20 million on the

Contract. Id. at 364. In January 2013, InterImage submitted a final invoice for an

additional $990,000. Id. The Navy paid InterImage approximately $295,000 of the final

$990,000 claimed. Id. The government was unable to make additional payments because

funding for the contract had been de-obligated and the government needed to find

funding from another source. Id.

       In August 2015, InterImage submitted a certified claim for $695,684.48 to a

contracting officer with the Defense Contract Management Agency (DCMA). Id. at 365.

On February 3, 2016, the contracting officer issued a final decision finding that

InterImage was due an additional $660,023.72 plus interest on the Contract. Id. While

endeavoring to find additional funds to pay InterImage, a successor DCMA contracting

officer, with the assistance of an auditor from the Defense Contract Audit Agency

(DCAA), determined that her predecessor’s February 2016 final decision was incorrect.

Id. at 366. The new contracting officer and auditor determined that InterImage was

                                             2
overpaid on the Contract and not entitled to any additional payment. Id. at 367. They also

determined that InterImage was seeking payments in excess of the ceiling amounts in the

individual delivery orders issued under the Contract and was not entitled to additional

payments on this ground as well. Id. at 366-67.

       On October 7, 2016, InterImage filed a four-count complaint seeking payment

based on the February 2016 contracting officer’s final decision. InterImage then filed a

motion for partial summary judgment on Count I, its breach of contract claim, on

November 4, 2016.1 Id. at 366. In July 2018, the court denied InterImage’s motion for

summary judgment. Id. at 357, 371. The court determined that InterImage was only owed

additional money from the government if it could establish that the amount sought was

both owed to InterImage and did not exceed the funding ceilings in the 11 delivery orders

issued by the Navy under the Contract. Id. at 369-71.

       B.     Subsequent Revised Claim

       In response to the court’s opinion and at the court’s request, in March 2018, Ms.

Steele, InterImage’s Founder, President and Chief Executive Officer, submitted a

declaration setting forth a revised claim that was different from InterImage’s 2015

certified claim. See Def.’s App. 402, ECF No. 100-25. Ms. Steele, on behalf of

InterImage, now claims that the government owes InterImage $453,548. See Pl.’s Cross-

1
 On December 13, 2016, the government filed a motion to dismiss Counts II, III, and IV of the
complaint for lack of jurisdiction or failure to state a claim. On January 4, 2017, the court
granted InterImage’s unopposed motion to stay briefing on the government’s motion to dismiss
until resolution of InterImage’s motion for summary judgment on Count I of the complaint.

                                              3
Mot. at 1, ECF No. 108; Pl.’s Reply at 1, ECF No. 117. InterImage is now seeking

summary judgment based on its revised allocation of costs to delivery orders as set forth

in Ms. Steele’s 2018 declaration and later 2019 declarations.2 See Pl.’s Cross-Mot. at 14-

18.

       The government’s motion for summary judgment, seeking $86,061 from

InterImage, is based on the DCAA’s subsequent review of InterImage’s August 18, 2015

certified claim together with a review of InterImage’s revised March 2018 claim and the

invoices and data on disbursements made to InterImage. See Def.’s Mot. at 8-13. The

government asserts in its filings in support of its motion for summary judgment that the

DCAA has reviewed Ms. Steele’s revised and corrected allocations of costs to delivery

orders together with the supporting documents she provided and has found that Ms.

Steele’s revised allocation of costs to delivery orders is not supported. See, e.g., Def.’s

Surreply at 4, ECF No. 129. Oral argument on the parties’ cross-motions for summary

judgment was held on December 9, 2019.

II.    STANDARD OF REVIEW

       Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

2
  InterImage in its July 19, 2019 reply to the government’s opposition to InterImage’s motion for
summary judgment endeavored to address the DCAA’s criticisms of InterImage’s revised
allocation of its costs to delivery orders with a new declaration from Ms. Steele. In her July 2019
declaration, Ms. Steele corrected certain mistakes she acknowledged were found in her initial
revised allocation. The court allowed the government to file a surreply to InterImage’s reply
brief so that the government could address Ms. Steele’s July 19, 2019 declaration.

                                                 4
there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Rule 56(c) of the Rules of the Court of Federal Claims

(RCFC); see Anderson v. Liberty Lobby, Inc, 477 U.S. 242, 247 (1986); Mingus

Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987). It is a “salutary

method of disposition designed ‘to secure the just, speedy, and inexpensive determination

of every action.’” Sweats Fashions, Inc. v. Pannill Knitting Co., Inc., 833 F.2d 1560,

1562 (Fed. Cir. 1987) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)). The

moving party bears the burden of demonstrating “that there is an absence of evidence to

support the nonmoving party’s case.” Sweats Fashions, 833 F.2d at 1563 (quoting

Celotex Corp., 477 U.S. at 325). Where the non-moving party makes a sufficient showing

as to the existence of a genuine issue of fact for which the moving party bears the burden

of proof, summary judgment is not appropriate. Celotex Corp., 477 U.S. at 322-23.

III.   DISCUSSION

       A.     Disputed Issues of Fact Preclude Summary Judgment for Delivery
              Orders 1 and 2

       InterImage claims in its motion for summary judgment that it is entitled to an

additional $208,454 on Delivery Order 1 and an additional $15,047 on Delivery Order 2

for cost overruns. Pl.’s Cross-Mot. at 23, 30. InterImage argues that although the amounts

it is seeking exceed the amounts authorized by the modified Delivery Orders, InterImage

could not have foreseen these cost overruns when the Orders were modified. Relying on

General Electric Co. v. United States, 440 F.2d 420, 424 (Ct. Cl. 1971), InterImage

argues that it may be paid on these cost overruns because InterImage, “through no fault or

                                              5
inadequacy of its own, had no notice itself of the overrun until well after completion of

its performance.”3 Specifically, InterImage argues that it is entitled to be reimbursed for

the amounts sought because “InterImage’s actual indirect overhead rates as settled after

the 2012 DCAA audit significantly exceeded InterImage’s provisional overhead rates

used in the invoices InterImage submitted . . . .” Pl.’s Cross-Mot. at 26 (emphasis in

original). InterImage thus argues it could not have foreseen the costs that exceeded the

amounts authorized by the Delivery Orders at the time of performance. Id. at 29-30.

InterImage also argues that it relied on the representations of the government that the

amendments to Delivery Orders 1 and 2 would have no impact on the availability of

funds. Id. at 29.

       The government contends that InterImage’s motion for payment under Delivery

Orders 1 and 2 must be denied because the Contract incorporated FAR § 52.232-20,

Limitation of Cost,4 FAR § 52.232-22, Limitation of Funds,5 and NAVSUP § 5252.232-

3
 The court in General Electric held that a contracting officer can allow additional costs incurred
by a contractor even where the contractor does not provide proper notice where (1) the limitation
of cost clause states “[i]f at any time the contractor has reason to believe” a cost overrun is
imminent, the contractor must provide notice and (2) at no time during performance did the
contractor have reason to know of its overrun. 440 F.2d at 423-25.
4
 As relevant here, FAR § 52.232-20(b) provides that “[t]he Contractor shall notify the
Contracting Officer in writing whenever it has reason to believe that” there will be a cost
overrun.
5
 FAR § 52.232-22(c) states in relevant part that the “Contractor shall notify the Contracting
Officer in writing whenever it has reason to believe that the costs it expects to incur under this
contract in the next 60 days, when added to all costs previously incurred, will exceed 75 percent
of (1) the total amount so far allotted to the contract by the Government . . . .”

                                                 6
9400, Limitation of Liability – Incremental Funding6 provisions. See Def.’s App. 30, 38,

ECF No. 100-2. Applying these three provisions, the government argues that InterImage

needed to track and notify the contracting officer in writing and in a timely fashion in

order to claim any cost overruns, but InterImage did not do so. Def.’s Resp. & Reply at 6-

9, ECF No. 114. The government thus contends that InterImage is not legally entitled to

any payments beyond those it received for Delivery Order 1 and Delivery Order 2, as

modified. See, e.g., Def.’s Mot. at 13-14; Def.’s Resp. & Reply at 9-15; Def.’s Surreply

at 14-21. While the government concedes that Delivery Order 1 did not expressly include

FAR § 52.232-22 or NAVSUP § 5252.232-9400 and Delivery Order 2 did not expressly

include FAR § 52.232-22, the government argues that the application of these provisions

flow down from the base Contract to the delivery orders and that Delivery Order 1 did

not include NAVSUP § 5252.232-9400 because that delivery order was fully funded

when it was issued. Def.’s Mot. at 14; Def.’s Resp. & Reply at 10 n.4.

       The government also disputes InterImage’s assertions regarding the differences

between its final and provisional rates. See Def.’s Surreply at 18-20. The government

contends that the cost overruns InterImage is seeking are not attributable to a change

between the provisional and final indirect rates because the final indirect rates were not

higher than the provisional rates InterImage charged the government. See Def.’s Resp. &

6
  NAVSUP § 5252.232-9400 provides that the contract would be incrementally funded up to a
certain limit, inclusive of fee, and that the government had no legal liability beyond that funding
limit unless additional funds were made available and incorporated as a modification into the
contract. InterImage, 133 Fed. Cl. at 359. That provision also noted that individual delivery
orders may be incrementally funded and would provide the “necessary information.” Def.’s App.
30, ECF No. 100-2.

                                                 7
Reply at 12-15. Instead, the government argues, the cost overruns InterImage seeks for

Delivery Orders 1 and 2 could only be attributable to InterImage’s failure to properly

account for all of its costs at the time they were incurred. The government argues that

InterImage had a duty (1) to maintain its accounting system to ensure timely knowledge

of cost overruns before the costs are incurred, and (2) “to evaluate properly the financial

data that the accounting system generates.” See Def.’s Surreply at 15-16 (citing Advanced

Materials, Inc. v. Perry, 108 F.3d 307, 311 (Fed. Cir. 1997)). The government contends

that InterImage failed to address overruns in a timely manner because InterImage had the

opportunity to confirm that it had received reimbursement for all the costs it had incurred

under Delivery Order 1 and 2 prior to signing modifications which reduced the funding

for those delivery orders. See Def.’s Surreply at 16. According to the government,

because InterImage was or should have been aware of all the direct and indirect costs it

had incurred prior to signing the funding reductions in Modification 3 to Delivery Order

1 and Modification 7 to Delivery Order 2, InterImage is not entitled to any additional

payment and cannot rely on General Electric Co. v. United States.

       InterImage replies that General Electric is still applicable because DCAA used a

different base for calculating the final indirect rates than InterImage had used to calculate

its provisional rates, and that the attributable cost difference was unknowable. Pl.’s Reply

at 15-17. The government in its surreply responds that as a factual matter InterImage’s

argument about the different bases is unsupported. See Def.’s Surreply at 19-20.

       The court has considered the parties’ motions and accompanying declarations. As

an initial matter, InterImage’s argument that it may seek repayment for any cost overruns

                                              8
on Delivery Order 1 because Delivery Order 1 does not expressly contain clauses limiting

the government’s liability is unsupported. See Pl.’s Reply at 14. This court has previously

held that FAR § 52.216-18 “was incorporated into the base contract” and provides that

“[a]ll delivery orders or task orders are subject to the terms and conditions of this

contract.” InterImage, 133 Fed. Cl. at 370 (internal quotation omitted). The base Contract

includes the limitations of funds, cost, and liability clauses relied on by the government,

which are therefore incorporated into the delivery orders. See id. at 358-59. In fact, the

court relied on these base-Contract clauses, in part, when it previously determined that

“the funding limitations in the delivery orders govern the amount that InterImage can be

paid.” Id. at 369-370. Thus, to the extent InterImage is arguing that because some of

these clauses were not expressly included in Delivery Order 1 the funding limitation in

that Delivery Order does not apply, that argument is rejected.

       InterImage further argues that even if the limitations clauses apply, the unpaid

costs it seeks were unforeseen, and it is still entitled to payment under General Electric.

See Pl.’s Reply at 18. As discussed above, the court in General Electric held that a

contracting officer can allow additional costs incurred by a contractor even where the

contractor does not provide proper notice where (1) the limitation of cost clause states

“[i]f at any time the contractor has reason to believe” a cost overrun is imminent, the

contractor must provide notice and (2) at no time during performance did the contractor

have reason to know of its overrun. 440 F.2d at 423-25. Here, the FAR clauses

incorporated into the Contract provide that a contractor must give notice of cost overruns

if the contractor has “reason to believe” that it will incur these overruns. See Def.’s App.

                                              9
38 (incorporating FAR § 52.232-20 and FAR § 52.232-22); InterImage, 133 Fed. Cl. at

358. Thus, whether InterImage can recover the costs it seeks depends on whether it had

reason to believe that a cost overrun would occur during performance. See Gen. Elec.,

420 F.2d at 425; Advanced Materials, 108 F.3d at 311-12.

       The court concludes that there are disputed issues of fact regarding whether

InterImage’s sought costs were unforeseen, which preclude summary judgment on

InterImage’s claim for additional payment under Delivery Orders 1 and 2. InterImage

argues that its costs were unforeseen because DCAA used a different base in calculating

final costs, and that it relied on representations by the government that the amendments to

the Delivery Orders would not affect the availability of funds. See Pl.’s Reply at 14-18.

The government presents facts to show that InterImage and the Navy applied the final

rates to the same base and that any shortfall is due to InterImage’s failure to adequately

account for all its indirect costs. See Def.’s Surreply at 17-21. The dispute between the

parties involves genuine issues of material fact that cannot be resolved on summary

judgment. Accordingly, the parties’ motions for summary judgment for Delivery Orders

1 and 2 must be denied.

       B.     Disputed Issues of Fact Preclude Summary Judgment for Delivery
              Order 10

       InterImage further argues that it is entitled to the full fee authorized under

Delivery Order 10, for an additional $50,561. The relevant language from Delivery Order

10, the “payment of fixed fee” clause, states: “The fixed fee for work performed under

this contract is $178,366.86 provided that approximately 23,814 hours of technical effort

                                             10
are employed by the contractor in performance of this contract. If substantially fewer than

23,814 hours of said services are so employed, the fixed fee shall be equitably reduced to

reflect the reduction of work.” Def.’s App. 322, ECF No. 100-15. The Navy’s contracting

officer assigned to this contract, Mr. Excell, states that InterImage is not entitled to the

full fee because InterImage performed only 54 percent of the total 23,814 hours ordered

under Delivery Order 10. See Def.’s Resp. & Reply at 27-28.

       It is true, as InterImage argues, that in its prior summary judgment decision the

court stated that whether InterImage is entitled to its full fee will depend on whether the

amounts owed fit within the ceilings authorized under each delivery order. Pl.’s Cross-

Mot. at 37 (citing InterImage, 133 Fed. Cl. at 370-71). The amount InterImage seeks is

within the ceiling amount of Delivery Order 10. Id. However, the payment of fixed fee

clause in Delivery Order 10 states that if InterImage works “substantially fewer than

23,814 hours”, the fixed fee “shall be equitably reduced.” Def.’s App. 322. InterImage

argues that these terms do not apply to it because the contracting officer no longer has

authority to make an equitable adjustment. See Pl.’s Reply at 19-20. InterImage further

contends that the payment of fixed fee clause in Delivery Order 10 applies to the contract

as a whole, and that the total amount of hours InterImage devoted to the contract closely

approximate the total hours specified in the final contract amendment. See Pl.’s Cross-

Mot. at 40.

       The court agrees with the government that the terms of Delivery Order 10 apply to

the additional fee that InterImage seeks under that Delivery Order. Although the court

previously held that “[w]hether InterImage is owed any additional fixed fee will turn on

                                              11
whether the fee it argues it is owed fits within the funding ceilings in the delivery orders,”

the court’s decision did not preclude the application of other terms of the delivery orders

to limit the amount of fee that InterImage is owed. InterImage, 133 Fed. Cl. at 371.

InterImage’s arguments to the contrary lack merit. The case InterImage cites to argue that

an equitable reduction can no longer be made notes that once a claim is in litigation, a

contracting officer is divested of authority to issue a final decision on a claim. See Pl.’s

Reply at 20 (citing Universal Shelters of Am., Inc. v. United States, 87 Fed. Cl. 127, 147

(2009)). However, no party disputes that this court has jurisdiction to determine what, if

any, amounts of money InterImage is owed based on the terms of the Contract and the

delivery orders, and that review is de novo. See InterImage, 133 Fed. Cl. at 368; Omran

Holding Grp., Inc. v. United States, 134 Fed. Cl. 561, 564 (2017).

       The court also rejects InterImage’s contention that the payment of fixed fee clause

in Delivery Order 10 applies to the contract as a whole. Although that clause does use the

word “contract,” Def.’s App. 322 (“[t]he fixed fee for work performed under this

contract” (emphasis added)), rather than “delivery order,” it is clear that the limitations of

funding and hours described in the provision apply to that Delivery Order. The provision

describes a fee of $178,366.86 for approximately 23,814 hours of technical effort. Id. In

contrast, InterImage has represented that it spent over 200,000 hours on the contract as a

whole. See ECF No. 61 at 27; July 19, 2019 Steele Decl. ¶ 31. In addition, similar

provisions have been included in other delivery orders under the Contract. See, e.g.,

Def.’s App. 229-30. The court therefore concludes that the payment of fixed fee clause in

                                              12
Delivery Order 10, which provides for the equitable reduction, applies to the fee

InterImage seeks.

       However, whether the 12,883 hours InterImage devoted to Delivery Order 10 are

“substantially fewer” to mandate a reduction in the fixed fee is a question of fact that is

disputed by the parties. See Def.’s Resp. & Reply at 27-28; Tr. 46:17-20 (plaintiff

arguing that substantially fewer “is in the eye of the beholder”). The parties’ motions for

summary judgment regarding Delivery Order 10 are therefore denied.

       C.     Disputed Issues of Fact Preclude Summary Judgment for Delivery
              Order 5

       The government refuses to pay InterImage the $5,812 fixed fee on Delivery Order

5 because that payment would amount to a cost plus percentage of cost contract payment

contrary to law. See Def.’s Mot. at 17-18.7 InterImage argues that the cost plus

percentage of cost contracts bar is inapplicable because Modification 4 to Delivery Order

5 increased the fixed fee in Delivery Order 5 to $11,855.84 to cover both labor and

hardware and software cost, and thus the fixed fee was no longer calculated as a

percentage of the hardware and software to be purchased under that Delivery Order. Id.

       The government responds that Delivery Order 5, properly interpreted, is a cost

plus percentage of cost contract because it provides payment for hardware and software

items at 3.5% of the actual cost. Def.’s Resp. & Reply at 18. The government further

7
  While the government has already paid $3,456 of the $5,812 under Delivery Order 5, the
government claims that InterImage owes the government the $3,456. See Pl.’s Reply at 18.
Therefore, while InterImage claims that the government owes it $2,354, $5,812 is in dispute in
total. Id.

                                               13
argues that Modification 4’s inclusion of an additional $6,073.80 fixed fee for labor hours

under Delivery Order 5 (for a total fixed fee of $11,885.84) does not change the fact that

the total fixed fee for the hardware and software items was $5,812.04, improperly

measured as a percentage of hardware and software costs. Id. at 19.

       It is well-established by statute and case law that cost plus percentage of cost type

contracts are prohibited. See e.g., Urban Data Sys., Inc. v. United States, 699 F.2d 1147,

1150 (Fed. Cir. 1983); Information Sys. & Networks Corp. v. United States, 64 Fed. Cl.

599, 608 (2005) (“The cost-plus-percentage-of-cost type contract is prohibited by 10

U.S.C. § 2306.”); see also FAR § 16.102(c) (“The cost-plus-a-percentage-of-cost system

of contracting shall not be used . . . .”). A cost plus percentage of cost type contract is one

that provides a fee as a specified percentage of the contractor’s cost of accomplishing the

work to be performed.

       The question before the court is whether the hardware and software “fixed fee” in

Delivery Order 5, as amended by Modification 4, amounted to a cost plus percentage of

cost contract. The provision in Modification 4 states:

       For the Hardware / Software Items under the contract . . . the following fixed fee
       amounts and rates shall apply. Although the maximum fixed fee on these
       SubCLINs is established in the contract, the fixed fee will be applied as a
       percentage of the cost of these hardware / software items according to the rates set
       forth below, and not exceeding the maximum fixed fee of the contract:

                      Fixed Fee            Fixed Fee Rate
                      $5,812.04            3.5%

Def.’s App. 228-29.

                                              14
       InterImage argues that the “fixed fee” for Delivery Order 5 is $11,886, without

regard to the 3.5% fixed fee rate for hardware/software items. Pl.’s Reply at 22.

InterImage contends that, while the $5,812.04 fixed fee amount is 3.5% of the stated

estimated maximum cost of $166,058 for hardware/software under Delivery Order 5,

contemporaneous contracting documents establish that InterImage actually spent less

than the estimated maximum on hardware and software. Id.; Jan. 30, 2019 Steele Decl. ¶

41. According to InterImage, this confirms that the 3.5% formula had “no bearing on the

$11,886 fixed fee amount” under Delivery Order 5. Pl.’s Reply at 22. The government

argues that the provision at issue establishes that the fixed fee associated with

hardware/software costs was dependent on actual costs of the hardware and software.

Def.’s Resp. & Reply at 18-19; Def.’s Mot. at 17-18. Thus, the government contends, the

$5,812 portion of the $11,866 fixed fee associated with hardware/software costs is an

impermissible cost plus percentage of cost provision.

       The court finds that the terms of Modification 4 are sufficiently ambiguous such

that the parties’ dispute constitutes a genuine issue of material fact. It is unclear, based on

the terms of Modification 4, whether the fixed fee provision for hardware/software costs

simply sets a fixed fee ceiling of $5,812.04 regardless of costs incurred, Def.’s App. 229

(“not exceeding the maximum fixed fee of the contract”), or impermissibly provided for a

cost plus percentage of cost formula where the $5,812.04 serves as a floor, id. (“the fixed

fee will be applied as a percentage of the cost of these hardware / software items

according to the rates set forth below”). Moreover, the parties rely, in part, on the

declarations of Ms. Steele and a DCAA auditor, Ms. Meredith Caskey, in advancing their

                                              15
interpretations of Delivery Order 5, suggesting that this matter is not amenable to

summary resolution. See Beta Sys., Inc. v. United States, 838 F.2d 1179, 1183 (Fed. Cir.

1988) (“To the extent that the contract terms are ambiguous, requiring weighing of

external evidence, the matter is not amenable to summary resolution.”). Thus, summary

judgment regarding Delivery Order 5 must be denied. The court, however, agrees with

the government that if the court rules that the fixed fee provision is not barred by the cost

plus percentage of cost prohibition and instead provides a fixed fee ceiling, InterImage is

entitled to a fee recovery of no more than 3.5% of the total cost of the hardware and

software items purchased under Delivery Order 5, up to the ceiling of $5,812.04. Def.’s

Resp. & Reply at 18 n.8.

       D.     Disputed Issues of Fact Preclude Summary Regarding the Allocation of
              Costs to Delivery Orders

       As discussed above, the court has before it several declarations from Ms. Steele

and Ms. Caskey together with many pages of supporting documentation. The declarations

make clear that Ms. Steele’s allocation of costs from certain delivery orders to others is

disputed by the government and that the government supports its objections to Ms.

Steele’s allocation of costs to delivery orders with many examples of allocation

discrepancies from InterImage’s own documents. The court has reviewed these disputes

and concludes that they amount to material issues of fact which preclude the court from

granting summary judgment to InterImage based on Ms. Steele’s reallocation of costs to

individual delivery orders. These disputes also preclude the court from granting the

government’s motion for summary judgment on its claim that it overpaid InterImage.

                                             16
Whether InterImage is entitled to additional payments based on Ms. Steele’s allocation of

costs to open delivery orders or owes the government money will have to be resolved at

trial.

IV.      CONCLUSION

         For the above-stated reasons, the court DENIES the parties’ cross-motions for

summary judgment. The court will issue a separate order proposing an expedited pretrial

schedule and trial for the remaining issues in this case. Given the protracted nature of this

litigation, the parties should plan on no more than a three-day trial to occur the last week

of April 2020.

         IT IS SO ORDERED.

                                                           s/Nancy B. Firestone
                                                           NANCY B. FIRESTONE
                                                           Senior Judge

                                             17