Court Opinion

ID: 4166884
Source: CourtListenerOpinion
Date Created: 2017-05-08 17:00:08.987037+00
Date Added: 2024-06-11T14:38:24.665197
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                 )
                                            )
Swinerton Builders Northwest                )     . ASBCA No. 57329
                                            )
Under Contract No. NAF26-04-C-0025          )

APPEARANCES FOR THE APPELLANT:                     Durward E. Timmons, Esq.
                                                   Milton L. Smith, Esq.
                                                   Ryan J. Klein, Esq.
                                                    Sherman & Howard L.L.C.
                                                    Colorado Springs, CO

                                                   Arnold R. Hedeen, Esq.
                                                    Hedeen & Caditz, PLLC
                                                    Seattle, WA

APPEARANCES FOR THE ARMY LODGING FUND:
                                   Raymond M. Saunders, Esq.
                                    Army Chief Trial Attorney
                                   LTC Lawrence P. Gilbert, JA
                                   Robert T. Wu, Esq.
                                   MAJ John C. Dohn II, JA
                                   Erica S. Beardsley, Esq.
                                    Trial Attorneys 1

              OPINION BY ADMINISTRATIVE JUDGE DICKINSON

     This appeal arises from a contract awarded by CFSC 2 on behalf of respondent
Army Lodging Fund (AL, ALF or Fund), a Nonappropriated Fund Instrumentality
(NAFI), to Swinerton Builders Northwest (appellant or SBN) to build a 185-room

1
  Mr. Wu and MAJ Dohn represented the Fund at the hearing and Ms. Beardsley
       represented the Fund at the time the briefs were filed.
2 The U.S. Army Family and Morale, Welfare and Recreation Command, known at all

       times relevant to the matters before us as the U.S. Army Community and
       Family Support Center (CFSC), is a field operating activity of the U.S. Army
       and the organization responsible for contracting on behalf of the Army Lodging
       Fund (answer~~ 2, 3).
lodging facility at Fort Lewis, Washington. 3 Only entitlement is before us for
decision. 4

                                   JURISDICTION

       It is undisputed that CFSC has never issued a contracting officer's final
decision addressing SBN's 2005 and 2008 Requests for Equitable Adjustment (REAs)
or SBN' s 3 June 2010 certified claim. It is further undisputed that SBN appealed to
the Board from a deemed denial on 18 August 2010.

       Under the Disputes clause of the NAF contract at issue, the Board has
jurisdiction over an appeal from the denial of a claim arising under the contract
(finding 25). The contract's Disputes clause, however, does not contain a provision
for an appeal from a deemed denial of a contractor's claim. Under certain
circumstances we have taken jurisdiction in the absence of a final decision under a
NAF contract.

             It is well established that the purpose of the Disputes
             clause is to provide the parties with a rapid and
             inexpensive means of resolving disputes between the
             parties. Mite Corporation, ASBCA No. 18534, 73-2 BCA
             ,10,312.

                     Prior to the CDA's enactment and under contracts
             where the CDA does not apply, we have taken jurisdiction
             over disputes that have existed for lengthy periods without
             a final decision. See Mite Corp., supra; Atlantis
             Construction Corp., ASBCA No[s]. 44044, 44860, 96-1
             BCA, 28,045. As the Board explained in Mite Corp.,
             supra, at 48,687, failure or r~fusal by the CO to issue a
             final decision within a reasonable time constitutes a final
             decision [denying the appeal and] giving jurisdiction to the
             Board.

Charitable Bingo Associates, Inc., d/b/a Mr. Bingo, ASBCA No. 53249, 01-2 BCA, 31,478.

       The situation before us is even more compelling than the one the Board
addressed in Charitable Bingo. From the 3 June 2010 submission of SBN's claim to
the September 2012 hearing, not only did CFSC not issue a contracting officer's final

3 Fort Lewis and McChord AFB were combined and became Joint Base Lewis-McChord as
       of 1 October 2010. http://www.military.com/base-guide/joint-base-lewis-mcchord.
4 The number of days of any delay are considered to be part of entitlement (tr. 119).

                                           2
decision, but the contracting officer never formally acknowledged receipt of SBN's
6,800-page claim, nor did he ever meaningfully respond to the many pleas from SBN
and its counsel in letters and phone calls seeking a response to the claim. We find
CFSC's near-complete failure of response to SBN's claim in more than two years to
constitute a refusal to issue a final decision which, if not deemed to be a denial of
SBN' s claim, would effectively deprive SBN of its right of appeal under the contract's
Disputes clause (see finding 25). We, therefore, hold that we have jurisdiction over
this appeal from a deemed denial. 5

                                FINDINGS OF FACT

A. Background and Pre-Contract Matters

        1. Appellant SBN is a corporation organized and existing under the laws of the
State of Delaware and has its principal place of business in San Francisco, California.
The company was originally started as a small construction business in 1888 and at the
time they were awarded the contract which is the subject of this appeal they were
performing over a billion dollars in construction business per year. (R4, tab 3 at
1964 6, tab 127 at 2873; tr. 1121-22, 45, 5/173)

        2. Under a pre-existing indefinite-delivery, indefinite quantity (IDIQ) contract
between CFSC and ORB 7, ORB was tasked with providing a 10% concept design for
the F ~rt Lewis Lodge design-build project that included a site plan drawing, followed
by ORB' s drafting of the Request for Proposals (RFPs), within which the 10% concept
design and site plan drawing were incorporated. John Patterson, 8 ORB's Vice

5 Neither party alleges that our jurisdiction is based on the Contract Disputes Act
       (CDA). Since we have held that we have jurisdiction pursuant to the Disputes
       clause of the contract and the basis of our jurisdiction is not material to our
       consideration of the entitlement issues presented, we do not address the issue of
       CDA jurisdiction.
6 Page number references are to the consecutively-numbered pages unless specified

       otherwise.
7
  ORB was an architectural firm on contract to CFSC to prepare the RFP for the Lodge
       project and to be CFSC's on-site representative during contract performance
       (tr. 2/102-03, 120, 8/39-40, 42, 9/30-33, 10/12-13, 15-16). ORB, in tum,
       contracted with BCE Engineers (BCE) to review the mechanical design,
       starting with the 35% design review (tr. 21120, 123, 9/39-40, 46).
8 Mr. Patterson has 23 years of active military duty, reaching the rank ofChiefMSgt,

       and had been a military project manager/designer) (tr. 10/6-11, 123-24). He is
       not a licensed professional engineer (tr. 10111-12), however, he has worked
       very closely with Fort Lewis since 1984 on "engineering and construction

                                           3
President and military projects manager, was the individual responsible for drafting the
RFP. (Tr. 10/14, 18, 27; see also R4, tabs 171, 1001 (SOW for AIE preparation of
RFP)) Mr. Patterson specifically developed RFP Sections C-1 through C-5 and
portions of Sections J and L, leaving other sections unchanged as "standard language"
(tr. 10/19-28, 136-47, 168). He testified that he was particularly concerned with the
"site layout plan, utility plan" (tr. 10/19).

       1.     Request for Proposals

        3. On 20 October 2003, the Fund issued RFP No. NAF26-04-R-0004 for the
design and construction of a four-story, 100,500 square foot, 185-room Army lodging
facility (Lodge) at Fort Lewis, Washington (R4, tabs 2, 169 at 3122, 3353, tab 1012).
The RFP included the following language:

              No appropriated funds of the United States will become
              due or be paid to the Contractor or Concessionaire by
              reason of this contract. This contract is governed
              exclusively by the provisions of Army Regulation 215-4}91

(R4, tab 2 at 866) The RFP identified contracting officer (CO) Bartholomew, who was
assigned to the CFSC, NAF Contracting Directorate (CFSD-NC), and stated that CFSC
was located in Alexandria, Virginia. SBN's Montoya testified that he scheduled many
meetings with CO Bartholomew, "but I never had meetings" (tr. 3/183). It is a matter of
record that CO Bartholomew's office (as well as that of COR Dyer) was located in
Alexandria, Virginia, and the project was under construction in Tacoma, Washington.
Further, the record is replete with instances of CO Bartholomew participating in meetings
and other conversations by phone, as well as some face-to-face meetings. Both parties
dealt with the challenges of being on opposite coasts. (Ex. A-9; see, e.g., tr. 3/201, 204,
256-57, 4/108-09, 111) The RFP further advised as to CO Bartholomew's authority
under any resultant contract:

             The Contracting Officer is the only person authorized to
             approve changes to any of the requirements under this
             contract, and notwithstanding any provision contained
             elsewhere in this contract, said authority remains solely

      projects, primarily maintenance and repair projects on existing facilities,
      renovations, small additions perhaps, but all disciplines and all cost brackets."
9
  SBN's counsel used a copy of AR 215-4 during cross-examination of CO Wallace
      but did not offer the document into the record. After the testimony, appellant's
      counsel asked that the Board take judicial notice of the current version of AR
      215-4; without objection from government counsel, the request was granted
      (tr. 12/216).

                                           4
              with the Contracting Officer. In the event the Contractor
              effects any change at the direction of any person other than
              the Contracting Officer, the change will be considered to
              have been without authority and no adjustment will be
              made in the contract price to cover any increase in changes
              incurred as a result thereof.

(R4, tab 2 at 954; see also R4, tab 2 at 1034, 1036, 1043; tr. 12/156) CO Bartholomew
was not called to testify at the hearing by either party.

       4. The Fund's Project Manager for the Lodge project, as well as being identified
as the contracting officer's representative (COR) in the RFP, was Drew Dyer. COR Dyer
has a degree in civil engineering (1976) and has been a licensed professional engineer
since 1989. He has extensive construction project management experience from 1978
through the time of his hearing testimony in 2012, including being the manager of the
engineering branch of the Washington (DC) Airport Authority responsible for Dulles
International Airport and Washington National Airport (now Washington Reagan
Airport) as well as several smaller airports in Texas and Florida. From 1998-2001 he was
employed by CFSC as one of 3 project managers, together with 2 COs to manage
14 Navy NAF design-build projects around the world. Since 2001 he has been employed
by CFSC to manage Army Lodging NAF projects around the world. He was involved
with the project now at issue at Fort Lewis beginning in 2003 during development of the
RFP. (Tr. 8/13-33, 52, 9/8-11, 77-81, 12/175-76) As the COR, he was a technical
advisor to the CO (tr. 12/157, 175).

        5. Both CO Bartholomew and COR Dyer were CFSC employees and were
based in Alexandria, Virginia, however, their jobs required frequent travel to various
project locations. Their visits to the jobsite at issue in this appeal were infrequent and
their involvement in the matters now before us was primarily by phone, email and letter
(tr. 1/114-15, 181-82, 2/107, 115, 7/269-70, 271-74, 9/8-10, 81-8, 105-08, 116-17,
131-32, 134, 10/153, 11117, 39, 63-65, 96, 101-02, 103-05, 12/25-26, 66; ex. A-9).

        6. ORB's Monson was hired to be CFSC's representative at the jobsite (see
finding 2) and was described as CFSC's "eyes and ears." Mr. Monson was retired
from the Corps of Engineers where he had worked from 1973-2001 and had been
involved in construction projects, including some for CFSC. He is a licensed architect
in the state of Washington (tr. 11/6, 33-37). Mr. Monson attended "99%" of the
project meetings but had no contractual authority. (Tr. 1/180-83, 233-34, 2/107,
115-16, 4/108-09, 5/10, 39, 7/270-72, 9179, 86-89, 10/114, 119, 121-22, 11/6-7, 21,
38-44, 46, 100-02, 106, 12/156) His first involvement with the project was in October
2004 (tr. 11/6, 9), and his primary duties were to observe the construction activities on
a daily basis and be the on-site point of contact for SBN's quality control personnel
(tr. 1117; see also finding 18, § 3.14). Mr. Monson was also responsible to review

                                            5
SBN' s pay applications for the purpose of coming to agreement as to the percentage of
project completion and to sign them before SBN submitted them to CFSC (R4,
tab 1215 at 2327-28; tr. 11117-19, 52-55, 69-70, 93-94). He left the project in January
2007 (tr. 11/9).

       7. RFP SECTION C-1, GUIDANCE TO CONTRACTORS, PROJECT
INFORMATION, included the following information pertinent to the matters now
before us:

                1.2 Project Description: The project includes all design and
                    construction necessary to construct a new 185-Room Lodging
                    Facility. The project includes all demolition, site grading and
                    preparation, site utilities and improvements and construction
                    necessary to provide a complete and useable facility.

                1.3 Scope of Work:

                    A. Lodging Facility:
                       1. Design and construct a new Lodging Facility that will
                          include 185 guest rooms, lobby and registration areas,
                          breakfast room, fitness room, administrative offices,
                          public toilets, guest laundries and vending areas, support
                          storage and maintenance areas, an in-house laundry, a
                          delivery dock, parking for 100 vehicles, and
                          miscellaneous ancillary support areas.
                       2. The work includes coordinating with the installation of
                          Government Furnished Government Installed (GFGI)
                          equipment, finishes and furnishings.

                    B. Design Work:
                       1. Conceptual architectural and site plan drawings are
                          included in this Request for Proposal (RFP). The design
                          solution represented by the RFP concept level
                          drawings[ 10l is acceptable to the Government. However,
                          innovative, creative, or cost-saving proposals that meet
                          or exceed the RFP-specified requirements are
                          encouraged and will be rated accordingly. Offerors who
                          choose to submit alternate building or site
                          configurations must meet all requirements in the
                          RFP.

10
     The RFP contained 10% concept design and drawings (finding 2).

                                            6
2. The following is a list of mandatory features for the
   design of the facility in addition to other criteria required
   in the RFP:

   d. Maximum building height is 4-stories. Maximum
      ridge height is 55 feet.

   f. Guest Room floor plan, layout and sizes shall be in
      accordance with the concept guest room drawings
      provided in the RFP. Mechanical chases, plumbing
      chases, etc. are to be integrated without reducing
      net areas shown or specified.

3. The conceptual plans provided in the RFP represent the
   Government's effort to communicate one possible
   design solution that meets the Owner's requirements.
   These plans are acceptable to the Government but
   Offerors may submit alternate plans that they believe
   maximize the benefit to the Government. Those Offerors
   who decide to use the Government's layout are still
   required to submit these layouts as part of their proposal.
   The successful Offeror shall execute the design using the
   layouts approved by the Government. PDF files of the
   RFP concept drawings will be made available for the
   Offerors' use in preparing their proposals. A CADD file
   is available for the Site Utilities Plan.
4. The requirements in the RFP are minimum standards
   and may be exceeded by the Offerors. Deviations from
   these technical or functional requirements shall be
   clearly identified for Government review and may be
   approved if considered by the Government to be in
   its best interest.
5. The extent of development of these documents in no
   way relieves the successful Offeror from his
   responsibility of completing the design, construction
   documentation and construction of the facility in

                     7
                           conformance with applicable criteria, codes and
                           standards.
                        6. The Contractor will be required to meet with the
                           Government during the design phase of the project
                           (Design Kick-off Meeting and Submittal Review
                           Meetings, etc.). Discussions and reviews during the
                           meetings will further refine the accepted design solution.
                           The Contractor should anticipate adjustments to the
                           conceptual layouts during the design process.
                        7. See Section Hof the RFP for Design Submittal
                           Requirements and Design Meeting Requirements after
                           award.

                     C. Concept Room Construction:
                        I. Design and construct a temporary water resistant
                           mock-up concept room[llJ for each guest room type to
                           demonstrate the intended construction and layout,
                           including any variations in room size/configuration
                           caused by seismic/structural bracing, columns, etc. The
                           mock-ups shall be located on the project site where
                           directed by the Owner. The mock-ups shall consist of
                           floors, walls and ceilings of the intended construction
                           and include representations of windows, doors,
                           kitchenette equipment, casework, specialties, fixtures,
                           lighting, switches, outlets, grilles, registers, thermostats
                           and sprinkler heads. Sample plumbing fixtures, outlets,
                           grilles, registers, thermostats, kitchenette equipment and
                           sprinkler heads shall be in place but need not be
                           operational. Mock-furnish each concept room mock-up
                           in accordance with FF&E list in Section J.
                        2. Mock-up concept room construction can begin after the
                           Project Kick-Off Meeting. The Contractor shall provide
                           for a Government walkthrough of rough construction
                           (framing, drywall, no finishes) to coincide with the 35%
                           Design Review Meeting. A final Government
                           walk-through of the completed concept room Mock-ups
                           shall be scheduled by the Contractor at an appropriate
                           time to allow for design corrections and adjustments
                           prior to submission of the final design. All changes to
                           design during the design process must be physically

11
     SBN understood that the mock-up concept rooms were to be temporary structures
        external to the lodge it was building (app. br. at 147-48).

                                             8
                         presented in mock-ups prior to submission of final
                         design. The Contractor shall be responsible for removing
                         the mock-ups after completion of new building
                         construction. Contractor may re-use salvageable FF&E,
                         plumbing fixtures and kitchen unit in the construction.
                      3. Final Concept RoomC 121: The Contractor shall provide
                         one fully finished, fully furnished (including GFCI and
                         CFCI items) guest room of each type during
                         construction phase for final approval of finishes and
                         workmanship, before the remaining rooms are finished.
                         This milestone item will be shown in the Project
                         Construction Schedule at a point in the construction
                         progress as mutually agreed upon. These rooms will be
                         approved by the Government before remaining final
                         finishes are begun.

              1.4    Special Conditions:

                     A. This project will be awarded as a "design/build" project.
                        The Design/Build Contractor entity will bear full
                        responsibility for development of the final facility
                        architectural/engineering designs and of the construction
                        of a complete and usable facility. The Design/Build
                        Contractor's architect/engineer will be "the
                        Architect/Engineer of Record" and as such, will bear
                        full responsibility for the design and construction
                        Quality Assurance. Construction may be authorized
                        prior to completion of design on project segments
                        provided that the Contracting Officer considers that
                        design of the segment of construction to be started is
                        sufficient to permit the construction start.[ 13] Changes
                        during construction due to design changes that were
                        not requested by the Government will be the
                        responsibility of the Design/Build Contractor, including
                        situations where the Contracting Officer permits
                        construction of segments prior to the completion of
                        design.                         •

12
   SBN understood that the Final Concept Rooms were to be internal to the lodge it
       was building (app. br. at 147-48).
13
   We interpret this sentence as permitting the issuance by the CO of Limited Notices
       to Proceed (LNTP) for various portions of the project (see also finding 20).

                                           9
                    C. The Contractor shall engage registered architects and
                       professional engineers licensed in the State of Washington
                       and LEED certified to design the facilities and oversee the
                       design and construction work. See Section H for
                       sustainable design evaluation requirements.

             1.5    Construction Scheduling:

                    A. Offerors shall submit a Project Schedule as part of their
                       response to this Request for Proposal in accordance with
                       the requirements of Section L. The schedule shall include
                       the anticipated monthly adverse weather days indicated in
                       Section H.

(R4, tab 2 at 867-71) (Emphasis added)

       8. RFP SECTION C-1, GUIDANCE TO CONTRACTORS, GENERAL
INFORMATION, included the following information pertinent to the matters now
before us:

             2.2   Definitions: Throughout this [RFP], certain terms,
                   abbreviations and acronyms are used. The definitions for
                   these items are as follows:

                   B. AL: Army Lodging activity
                   C. Contracting Officer: A person with the authority to enter
                      into, administer, and/or terminate contracts on behalf of
                      the Non-Appropriated Fund Instrumentality which is party
                      to this contract and make related determinations and
                      findings. The term includes certain authorized
                      representative[ s] of the Contracting Officer acting within
                      the limits of their authority as delegated by the
                      Contracting Officer.

                                         10
                        E. COR (Contracting Officer's Representative): The on-site
                           representative of the Contracting Officer with authority to
                           act for the Contracting Officer in areas specified by letter
                           of designation.

                        H. DOIM: Directorate of Information Management at Ft.
                           Lewis, Washington.
                        GP 41 DPW: Directorate of Public Works at Ft. Lewis,
                           Washington. [l 5J
                        HP 41 FDS: Facility Data Sheet(s).
                        I. FF&E: Furnishings, Fixtures and Equipment
                        J. The Fund: The Non-Appropriated Fund Instrumentality of
                           the U.S. Army, also referred to as NAF or NAFI that is a
                           party to this contract.
                        K. Government: The term will generally refer to the NAFI or
                           Fund. The use of the term "Government" shall not be
                           construed to infer that appropriated funds of the United
                           States are involved in this project. No appropriated funds
                           of the United States shall become due, or be paid, to the
                           Contractor by reason of this contract.

                       0. Installation: Ft. Lewis, Washington.
                       P. NAFI: Same as "The Fund"

                       R. Owner: Same as "The Fund".
                       S. Post: Ft. Lewis, Washington

14
     The duplication of the definition references "G" and "H" is in the original document.
15
     DPW was responsible for the maintenance of the Fort Lewis infrastructure
         (buildings, roads, etc.) and was ''the keeper of the utility maps, the as-built
         records of all the facilities" at Fort Lewis. A division of DPW coordinated the
         locating and marking of existing utilities by base personnel before it issued
         digging permits. (Tr. 9/14-15, 24-25)

                                             11
                        V. User/Using Agency: The AL activity at the installation
                           that will be the ultimate user activity when the facility is
                           completed· £161

                 2.4   Validity of Information Provided:

                       A. A topographic drawing of the site showing locatjons of
                           various utility lines has been incorporated as an
                           attachment to this RFP under Section J. The information
                           regarding underground utility lines was obtained from
                           DPW. This information is provided for the Contractor's
                           convenience. It is not a part of the contract and is not a
                          warranty of actual conditions. Basic information maps and
                          any other data obtained from DPW or other installation or
                          other Government sources are provided for information
                          only, and must be verified by site investigation. The
                          Government will not be responsible for erroneous data if
                          the errors can be reasonably detected through site
                          investigation.
                       B. While the sizes and materials included on the utility maps
                          are generally accurate, the exact location of underground
                          systems cannot be guaranteed and must be verified by the
                          Offeror through site investigation prior to submitting an
                          offer.
                       C. No site-specific soil investigation of the site has been
                          conducted by the Government. The information included
                          in Section J is of a general nature and is included only for
                          general guidance. This document is not part of the
                          Contract Documents and is not a warranty of subsurface
                          conditions. The Government does not assume
                          responsibility for subsurface conditions. The selected
                          Contractor shall conduct his own soil investigation to
                          establish the design criteria for foundations and
                          pavements.

16
     See definition 2.2B quoted just above, where "AL" is Army Lodging, the entity for
         whom the Fort Lewis Lodge was being constructed (R4, tab 2 at 860). The
         Army Lodging Fund was the source of nonappropriated funds used to fund the
         project now at issue. COR Dyer was responsible for managing the Army
         Lodging funds associated with this project (tr. 8/30-31, 52, 9/26-30, 117-18).

                                             12
      D. The Offeror may at his own expense, provide other
         investigations, surveys, etc. that are necessary to prepare a
         proposal, complete the design, and/or construct the
         project. Any such site investigation activities shall be
         coordinated with appropriate installation personnel. Prior
         to contract award, all inquiries shall be made of the
         Contracting Officer only.

2.5   Information Verification:

      A. Offerors shall examine the site and determine for
         themselves the existing conditions and general character
         of the site. Claims for additional costs due to conditions
         that could have been verified by site investigation will not
         be permitted.
      B. The Offeror shall be responsible to determine that all of
         the existing service utilities are of sufficient capacity to
         accommodate all of the design loads for this total facility.
         Should the Offeror determine that one or more of the
         existing service utilities are not adequate to accommodate
         the design loads for this total facility, then the Offeror
         shall submit with his initial and any subsequent proposal,
         the requirements, design data and the price for increasing
         the capacity of each existing service utility system or for
         providing a new service utility system. Design loads for
         this facility shall be calculated in accordance with the
         criteria specified in this Request for Proposals with the
         most stringent criteria governing. The Offeror shall be
         responsible for verification and field location of any and
         all information provided in the RFP and on any attached
         or enclosed drawings or other documents. The capacity
         information provided is for reference only.
      C. Independent consultation with the AL and the installation
         concerning the project requirements is prohibited since
         evaluation of proposals will be based on requirements
         stated in the Request for Proposals. Verification of data
         can be obtained by contacting the Contracting Officer.
      D. Questions regarding design, coordination, or interpretation
         of RFP requirements during the proposal phase shall be
         directed to the Contracting Officer.
      E. The Contracting Officer will hold a Pre-Proposal meeting
         and site visit at Fort Lewis (See Section L, Pre-Proposal
         Conference). Any subsequent requests for site visits will

                            13
                        be directed to and coordinated with the Contracting
                        Officer.

(R4, tab 2 at 871-73; tr. 10/28-33, 157-59)

       9. RFP SECTION C-1, GUIDANCE TO CONTRACTORS, SITE
INFORMATION, included the following information pertinent to the matters now
before us:

             3.1    Property:

                    A. The project will be located on US Army land, Ft.
                       Lewis, Washington.
                    B. The existing site was originally developed as an
                       area for administrative buildings. These
                       buildings and their foundations have been or will
                       be demolished by DPW, but the underground
                       utilities were not removed. It is believed that all
                       former water and sewer lines have been capped
                       and abandoned.
                    C. Easements have not been recorded for the
                       utilities located throughout the site.

             3 .2   Utilities:

                    D. Electricity: There is an existing 13.8KV, 3-phase
                       primary electrical distribution line on the
                       perimeter of this site. Coordinate the services
                       drop location with DPW during design and
                       construction. An existing underground feeder
                       line and pad-mount transformer exists on the site
                       and may have to be rerouted/relocated
                       depending on the final site plan arrangement.
                    E. Telephone: Telephone wiring will be run into
                       and through a Communications Manhole
                       adjacent to the site. An existing ductbank travels
                       west from this manhole to Bldg 2003, DOIM
                       main switch building. Coordinate installation of
                       new twisted pair bundle in this ductbank back to

                                          14
                        2003. The Contractor will make cross-
                        connections at 2003 under DOIM
                        supervision/direction. Coordinate all
                        requirements with Post DOIM during design and
                        construction.
                     F. Natural Gas: Natural Gas is available at the site.
                        Puget Sound Energy (PSE) owns the lines.
                        Coordinate connection points and construction
                        requirements with DPW and PSE during design
                        and construction.

(R4, tab 2 at 873-74; tr. 10/33-35)

      10. RFP SECTION C-1, GUIDANCE TO CONTRACTORS, PRODUCTS
AND SUBSTITUTIONS, included the following information pertinent to the matters
now before us: '

                     A. Products are generally specified by ASTM or
                        other referenced standards and/or by
                        manufacturer's name, model number, or trade
                        name. When specified only by referenced
                        standard, the Offeror may submit for approval
                        any product meeting this standard by any
                        manufacturer.
                     B. Products listed by manufacturer's name, model
                        number, or trade name generally are for design
                        guidance criteria. The Offeror has the option of
                        providing the listed product or submitting an
                        equal substitute (see 5.2 below) product for
                        approval by the Contracting Officer.
                        1. If a product is listed with the annotation "no
                           substitution", the Government has
                           determined that the particular product is the
                           only one that will satisfy the project
                           requirements, and no substitute product will
                           be acceptable.

             5.2    Substitution:

                    A. A product proposed as an "equal" shall be such
                       that all its salient characteristics conform to
                       those of the listed brand name product. These
                       salient characteristics may include, but are not

                                          15
                        limited to: design, function, size, quality,
                        durability, color, style, texture, and other
                        attributes which, given the nature of the project,
                        may significantly affect its acceptability as a
                        substitute for the listed product. The
                        Contracting Officer will make the final
                        determination as to whether a proposed
                        substitute product is equal and/or acceptable.
                    B. Offerors who propose to provide substitute
                        products shall submit an itemized list of all
                        proposed substitutions with their proposal. This
                        list shall include the name of the listed product,
                       the name and model of the proposed
                        substitution, and the name and address of its
                       manufacturer, and the quantity involved. With
                       this list, provide the following for each proposed
                       substitute item, as applicable:
                        1. Catalog cuts completely describing the
                            product and its physical characteristics.
                       2. Performance and test data and specifications.
                       3. Color and/or pattern selections.
                       4. Recommended uses.
                       5. Installation recommendations.
                       6. Maintenance instructions.
                       7. Copy of warranty.
                    C. If no proposed substitutions are included with
                       the proposal the Offeror shall provide the
                       products listed in the RFP.

(R4, tab 2 at 876) (Emphasis added)

       11. RFP SECTION C-1, GUIDANCE TO CONTRACTORS,
ATTACHMENTS, included the following information pertinent to the matters now
before us:

             6.1   The following documents are included as
                   attachments to this RFP under Section "J" and shall
                   be considered a part of the requirements for design
                   and construction of the facility:

                   J-1    Low Voltage Schematic Drawings
                   J-2    Geotechnical Information
                   J-3    Installation Design Guide (IDG)

                                          16
                        J-4    Fort Lewis Design StandardsC 171
                        J-5    Fort Lewis Guide Specification 01410
                        J-6    Galaxy System Equipment
                        J-7    UFC-4-010-01 DoD Antiterrorism Standards
                               for Buildings
                        J-8    UFC 3-600-01 Fire Protection Engineering
                               for Facilities
                        J-9    Construction Sign Specifications
                        J-10   Drawings
                               Utilities Plan
                               Suggested Site Plan
                               Suggested Main Floor Plan
                               Suggested Upper Floor Plan
                               [Guest Room Layout PlansC 181
                     J-11      Breakfast Service Area Requirements
                     J-12      Department of Labor Wage Determination
                     J-13      Prefabricated Dwyer Kitchen Units
                               Guidelines
                     J-14      FF and E I Lists and Product Data

(R4, tab 2 at 876-77)

      12. RFP SECTION C-2, CODES AND STANDARDS, included the following
information pertinent to the matters now before us:

              1.1    The project shall be designed and constructed in
                     accordance with the applicable codes, standards,
                     design parameters or regulations noted in this
                     section or other sections of the [RFP]. In case of
                     conflict between codes, standards, or regulations,
                     the Fort Lewis Installation Design Standards shall
                     apply.

17
   The Fort Lewis Design Standards were drafted by ORB's Patterson in 1995-96
       under an IDIQ contract between ORB and DPW (tr. 10/143-46).
18
   This drawing is listed and included in Section J-10 of the contract but is not included
       in this list in the contract. We presume that its omission here was unintentional
       and is immaterial to the matters before us.

                                           17
               2. I      General: Design and construction shall be in
                         accordance with the most stringent requirements of
                         the following codes, standards, and regulations:

                         A. Fort Lewis, WA Installation Design Guide
                            (IDG)

                        B. Fort Lewis, Washington Public Works Design
                           Standards

(R4, tab 2 at 878)

       I3. RFP SECTION C-3, FUNCTIONAL REQUIREMENTS, included the
following information pertinent to the matters now before us:

              I.I       Scope:

                        A. This section includes descriptions of the basic
                           functional and operational requirements for the
                           Lodging Facility.

                        fl. The requirements included herein provide
                            general guidance and minimum standards for the
                            overall operational features desired by the
                            Government. The Offeror should develop a
                            design for the new Lodging Facility that meets
                            or exceeds these requirements.

              5.        LODGING FACILITY I BUILDING

              5.I       General

                        C. The Guest Rooms shall be designed and
                           constructed as indicated in RFP documents.

(R4, tab 2 at 885-89)

      I4. RFP SECTION C-4, DESIGN REQUIREMENTS, included the following
information pertinent to the matters now before us:

                                            I8
 1     GENERAL

 1.1   The requirements included in this Section establish
       the basic parameters for design of the various .
       project elements. Additional requirements related to
       construction activities and products are included in
       Sections C-1, C-3 and C-5. Codes and standards are
       referenced in C-2.

 1.2   The Contractor shall design all necessary
       architectural, civil, structural, mechanical, and
       electrical systems in accordance with the
       requirements and parameters established in this
       [RFP].

1.4    See the Fort Lewis Design Standards in Section J
       for minimum design standards. Where design
       standards specified herein are in conflict with the
       [IDG], the IDG shall apply.

4.     ARCHITECTURAL DESIGN

4.1    General:

       A. This Lodging Facility shall be composed of one
          building, designated #2107, only except that the
          Grounds Maintenance Storage Building,
          designated #2108, shall be a separate
          stand-alone building.

       G. The maximum height of the building shall not
          exceed 4 stories or 55 feet.

8.     HEATING VENTILATION & AIR
       CONDITIONING (HVAC) DESIGN

                             19
              8.3    HVAC Systems:

                     A. General: The HVAC system shall attain the
                        following main objectives: Occupant Comfort;
                        Indoor Air Quality; Acceptable Noise Levels;
                        Energy Efficiency, Reliable Operation; Ease of
                        Maintenance; and Prevention of humidity
                        problems within the building envelope. The
                        Contractor shall develop a HVAC system from
                        the following:
                        1. Self contained {PTAC)P 91through the wall
                            air to air heat pumps for all guest rooms and
                            any public spaces with exterior exposures,
                           unless otherwise indicated in FDS: The
                           DOIM Comm Room will be conditioned
                           using an independent, wall mounted PTAC
                           unit with independent controls. Other spaces
                           to be air conditioned shall be part of a VA V
                           system utilizing constant volume fan
                           powered terminal bo·xes, air cooled chiller
                           and hot water boiler for primary air
                           handler and re-heat at the terminal unit.
                           Code-required outside air ventilation and
                           make up air shall be provided [to] the
                           primary air handling unit using chilled water
                           cooling and hot water heating to precondition
                           all outside air before delivery through
                           ductwork to each space. The outside air
                           handling unit shall have the outside air intake
                           at least 10 feet above grade. The central
                           AHur2o1 shall be provided with minimum
                           30% efficiency prefilters followed by 65%
                           efficiency filters. PTAC units to be provided
                           with throw- away filters.

19
   A photograph of a PTAC unit (inside wall and outside wall) can be found in the
        record at Ex. A-3 at EK-36.
20
   Air handling unit (tr. 1/80).

                                          20
                    D. Controls: The HVAC system shall be controlled
                       by a DDC system that complies with the Fort
                       Lewis Design Standard DDC Design Guide
                       Specification (See Section J). Each AHU and
                       terminal unit shall have a Lon WORKS or
                       BACnet DDC controller connected to a Tridium
                       JACE[21 1 controller. The JACE controller shall
                       be connected to the building LAN (Ethernet
                       Cat 5) and routed to a desk-top computer, with
                       Tridium Niagra Web Supervisor and Workplace
                       Pro, installed in the mechanical room. The
                       maintenance staff shall have access to the
                       system through any computer connected to the
                       Network via use of a web browser that is
                       password protected.

                    E. . .. An existing ONITY "Senercomm" InnPulse
                       On-line system will be relocated from the
                       Check-in point in existing Building 2111 to the
                       new facility. Senercomm "SensorstatDDC"[221
                       programmable digital thermostats or equal will
                       be provided in new guest rooms. Connect all
                       new room thermostats and Bldg 2111 thermostat
                       system to the relocated InnPulse Server, update
                       software/system as required .... Coordinate with
                       comm./data requirements and electrical
                       capacities.

(R4, tab 2 at 890-902; tr. 11126-28, 4/8, 29-30, 30-32, 8/36-37, 12/67-74) ORB's
Patterson, who drafted this section of the RFP, testified that:

             The majority of the lodge is made up of individual guest
             rooms served by individual terminal units, or AC units.
             The intent of [8 .3 .A. I] was to heat and cool the remaining
             back [of] house and front of house spaces such as the front
             lobby, desk, back of house areas, breakfast bar, etcetera,
             etcetera, etcetera, with a single system with a central boiler

21
   A photograph of the JACE controller and the ONITY room-control system is in the
       record at Ex. A-3 at EK-41 (top).
22
   A photograph of such a thermostat with an occupancy sensor is in the record at
       Ex. A-3 at EK-37 (top).

                                          21
              and chiller fed by I an[] air handler I suppose, and fed by
              terminal boxes within each space .... A VA V system.

              Fort Lewis specifically, and other military installations in
              general, have limited staffs when it comes to maintenance.
              The Fort Lewis HVAC shop currently only has about three
              or four people. At that time, there were maybe 10 or 12.
              They demand, if you will, they require a single central
              maintainable boiler and chiller ....

              So, the basic intent of those sentences was to provide a
              mechanical room with a boiler chiller that could be easily
              visited by DPW maintenance personnel for filter changes,
              strainer cleaning, etcetera, etcetera, in one location. And
              then, the remainder of the system would be a variable air
              volume, VAV, unit type system, that would feed
              conditioned air to the remaining public spaces.

              Fort Lewis was built and rebuilt starting in 191 7 to present
              day. If you look at the older systems on Fort Lewis, they
              are oil fired furnaces with perimeter heat. There are HVAC
              systems. The one common thread, with the exception of
              some Army Air Force exchange facilities that operate
              under different rules and do their own maintenance, the
              one common thread is that all of these facilities have a
              central furnace or heating source with either a hydronic
              loop or a VAV system or whatever.

                      There are several quasi-commercial facilities on
              Fort Lewis that are operated by the Army Air Force
              exchange service, the commissary services, etcetera, and
              they do have some package units, storefront type rooftop
              units on them. But, the overall norm is the central boiler
              chiller system.

(Tr. 10/35-39) With respect to ,-r,-r 8.3.D-E, ORB's Patterson testified that:

                                            22
 I incorporated that language. Paragraph D, the basic
 description of the required DDC system, was essentially
 dictated or written by the Fort Lewis public works controls
 shop, so that the system would be compatible with the Fort
 Lewis net for design or for digital systems. The Paragraph
 E, guest room thermostats, is a unique paragraph to
 lodging facilities, in that Army lodging uses an ONITY
 [S]ensorStat, what they call an [I]nnPULSE[] system, to
 further control guest room heating and cooling.

        That was essentially provided by Army lodging, and
tweaked a little bit, if you'll note the last sentence,
"Connect new room thermostats and Building 2111." It is
site specific in that respect, but it is more or less a standard
paragraph for lodging facilities.

        So, depending on the definition of draft, I did not
draft those two paragraphs, I incorporated them. But, I
modified them to show the Fort Lewis condition on the
existing head end equipment.

        The intent at the time that this document was
generated, was that the I Building 2111 was where the
existing lodge check-in desk was located and etcetera, and
it was where the Onity head end equipment was located.
So, the intent of this was that when the new lodge was
built, the check-in desk and the associated equipment
would be moved into the new facility, but the head end
equipment that had been relocated was still required to talk
to the thermostats in Building 2111. The intent was that
2111 would continue to operate next to the new lodge.

[Paragraph D] was included at the request of the Fort
Lewis DDC shop, John Timmers and Dale Brigham, as
being a requirement to ensure that the new lodge would
talk to their base DDC system.

                             23
             [The Fort Lewis DDC system] is a [Tridium]-based digital
             control system that allows John Timmers and/or his people
             to be able to nionitor what's going on from a remote
             location, a laptop, with various aspects of the installed
             system in any building. Ideally they would be also able to
             control from a remote location. I'm not sure how well that
             worked out, or is working out ....

(Tr. 10/39-41; see also tr. 12/61-62) BCE's Heiberg testified:

             [T]he common areas and the central mechanical systems
             are turned over to Public Works for ongoing maintenance,
             and as a result, they need to see what's happening with
             them so that integration is real important. It's like the
             building has two different control systems; this one goes to
             Public Works, they take care of it; the other Onity control
             units, the PTACs, that's something that MWR or MCOM
             takes care of. So that's where that whole standard
             reference document of what the Tridium is and how it
             needs to work and what the requirements are and that was
             our main concern about that, and there was some concerns
             on the Onity side, but that was-this is the one that many
             contractors, very large contractors have failed to do out at
             Fort Lewis, so there's a-it's a difficult process, and we
             wanted to make sure that this one would have a reasonable
             chance of success.

(Tr. 111140-41) With respect to the basewide system at Fort Lewis, Heiberg testified:

             It is a large network that is controlled primarily out of
             Building 2012, with a series of PCs that are managed by
             the Public Works that communicate with the various
             buildings. Some they don't communicate at all with, all the
             newer ones do. It's a base standard in progress, if you will.
             They've been building on it for 10 or 15 years, and
             probably prior to this project, it was probably less than 10
             years old at the time of this project. Tridium using an open
             protocol network for controllers, they would accept
             BACnet or Lonworks based controllers; that was the thing
             back then. BACnet wasn't developed as much as Lon was,
             so that there's a lot more buildings using Lonworks out on

                                          24
             the base. It's just a way to integrate it in, and then Tridium
             and JACE was a very flexible graphics program that
             brought this information in to PCs and allowed them to
             customize access into each building with floor plans and
             graphics and so forth. And each time a building was being
             planned out at Fort Lewis, it would be, the controls
             companies would be referred to a standard by which to
             bring this new building into the base standard.

              They were very particular about a R2 version of software
              that they were running at the time. Tridium R2, very large
             program from a software standpoint, not super expensive,
             but nevertheless anybody doing work out there would need
             to buy a software package to license that site and bring it
             into the network. R2 was a version; they subsequently
             came out with an AX, which is more of a fragmented
             version. I don't get into a lot of details of the capabilities
             and differences between the software, but the R2 was more
             of a legacy type of control system. By that, kind of the big
             offering from the Tridium people. If you had R2, you
             could be at Building 2012 and look at a building XYZ on
             base, and download software all the way down to an
             individual room's heat pump. So you had from the top
             down, you had full capability of programming down to the
             last device.
                     The AX system broke that apart and said okay,
             you'll need another little controller or software version to
             write to the little heat pump or an intermediate global
             controller. It wasn't logging on from the top and going all
             the way down; you had to get a laptop out and fire up other
             software to do local programming.

(Tr. 111141-43)

       17. RFP SECTION C-5, OUTLINE SPECIFICATIONS, included the
following information pertinent to the matters now before us:

             1      GENERAL

             I. I   Purpose:

                                          25
      A. Unless otherwise indicated, the
         Offeror/Contractor has the option of selecting all
         materials, systems, and equipment for use in the
         project. The technical requirements included in
         these Outline Specifications establish the
         minimum acceptable standards for the various
         products that may be used in the project. The
         Fort Lewis Public Works Design Standards (See
         Section J) also specify minimum acceptable
         standards and criteria for certain materials and
         systems for use on Fort Lewis. In the event of a
         conflict between these outline specifications and
         the Fort Lewis Design Standards the most
         stringent interpretation will apply.

      B. Unless otherwise indicated, the inclusion of an
         item in these specifications does not require that
         the item be included in the project. In similar
         fashion, the omission of an item from these
         standards does not indicate that the item cannot
         or should not be included in the project.

      C. See Section C-1, paragraph 5, "PRODUCTS
         AND SUBSTITUTIONS" for guidance
         regarding substitutions.

1.2   Work Included in This Contract:

      A. The work includes design and construction of all
         architectural, civil, structural, mechanical,
         electrical, plumbing and fire protection items
         required to provide a complete facility that can
         be used satisfactorily for its intended purpose
         without excessive maintenance or operational
         costs.

2.    SITE WORK

2.1   Selective Demolition:

                           26
                        C. Utilities: Maintain existing utilities that are to
                           remain in service and protect them against
                           damage during demolition operations ....
                           Utilities that are not in service and are not in
                           conflict with new construction may be left in
                           place. Contractor shall be responsible for
                           removing capped utilities that are in conflict.

                2.4     Site Development:

                        A. Surveys and Layout of Work

                           3. The Contractor shall coordinate with DPW to
                              locate and mark underground utilities.

                15.     MECHANICAL

                15.1    General:

                        G. The contractor shall have the responsibility to coordinate
                           Mechanical equipment as it interfaces internally with
                           DDC controls and externally with Division 16[231.

                15 .4   HVAC Equipment

                        A. General: All HVAC equipment and systems shall be of
                           good quality, easy to maintain and conform to the
                           standards listed below where applicable. HVAC
                           equipment shall be controlled and monitored by the DDC
                           system as referenced herein. Where possible provide

23
     We understand "Division 16" to be commonly used prior to 2004 in the construction
        industry to refer to "Electrical" work.

                                              27
           HVAC equipment that has a direct interface with the
           existing Post system. If equipment is provid.ed that
           does not have a direct interface then the contractor is
           required to provide the equipment for interface to
           perform the necessary control functions as called out
           in paragraph on Automatic Temperature Controls.

       B. Chiller: Air-cooled heat rejection for equipment shall be
          Trane, McQuay, or Carrier.

       C. Air-Handling Units: Horizontal.. ..

       D. PTAC Heat pumps: Air-cooled. Through the wall at Guest
          Rooms, wall-mount at Comm. Room. Complete with
          compressor, fan, coils, and controls to make a compiete
          and operable system. Outside air intakes shall not be
          provided at individual PTACS. Contractor shall select
          PTAC heat pumps based on quality and maintainability.
          Acceptable products include GE I Zoneline and McQuay I
          ComfortPac.

       E. Unitary Heating Equipment: Individual heaters for
          ancillary areas shall be hot water.

15.6   Automatic Temperature Controls: Controls shall be stand-
       alone DDC and compatible with the Fort Lewis EMS
       "Tridium" system. The system will be connected to the
       Post-wide EMS system at a later date. The DDC system
       shall monitor HVAC equipment as defined in the
       paragraph herein. See Design Requirements in Section C3
       & C4 for additional information regarding the control
       system. The DDC control system shall monitor, report
       and/or alarm the following HVAC functions and any
       other points required to control, operate and maintain the
       critical areas of the facility.

                           28
F. Direct Digital Control (DDC) Points List: The following
   is a list of the minimum required DDC points:
   1. Air Handling Units (AHU)

   4. PTAC Heat Pump Units

   5. Fans (other than AHU system fans)

   6. Terminal Units

   7. Boiler System

   8. Chiller System

G. The DDC system shall provide automatic control of the
   common area HVAC system. This includes the AHU's
   their zone terminal units and associated exhaust fans
   and heating/cooling equipment.
   1. In addition, provide for DDC control of individual
      PTAC heat pump units. This shall be a sub-DDC
      system designed specifically for the hospitality
      industry (ONITY "SenerComm" SensorstatDDC or
      equal), yet compatible with Tritium EMS for future
      connection to the Post system. Contractor shall be
      required to provide information about the DDC
      system submitted including: history, capabilities,
      compatibilities, useful life, maintenance costs,
      experience and reliability for use in this PT AC I
      heat pump application. The intent is to

                      29
                           control/adjust each guest PTAC from a central
                           control point using the ONITY "lnnPulse" on-line
                           monitoring/reporting system at the front desk, in
                           addition to providing occupied/unoccupied sensing
                           and setbacks and allowing the individual guest to
                           control/adjust at the guest room.

(R4, tab 2 at 908-09, 932, 934-41) (Emphasis added)

       18. RFP SECTION H-3, CONTRACT QUALITY CONTROL/QUALITY
ASSURANCE, included the following information pertinent to the matters now
before us:

             3. I   Definitions:

                    A. Contractor Quality Management System
                       (CQMS): The means by which the contractor
                       assures himself that his design and construction
                       comply with the requirements of the contract.

                    B. Contractor Quality Control (QC): The
                       Contractor's inspection, examination and control
                       of his own, his suppliers', and his
                       subcontractors' work and activities to ensure
                       compliance with contract requirements.

                    C. Contractor Quality Assurance (QA): The means
                       by which the Contractor fulfills his
                       responsibility for assuring that the QC system is
                       functioning effectively.

            3.2     General: The Contractor shall establish and
                    maintain an effective [CQMS] in compliance with
                    contract clauses, professionally accepted design and
                    professionally accepted inspection of construction
                    practices and as herein provided. The CQMS
                    consists of plans, procedures, and organization
                    necessary to provide a design and materials,
                    equipment, workmanship, fabrication, construction
                    and operations which comply with contract intent
                    and specific requirements. The system shall cover
                    both design services and construction operations,
                    both on site and off site, and shall be keyed to the

                                         30
       proposed design and construction sequence. The
       Contractor will designate a Professional Architect
       or Engineer (AIE), registered in the State where
       the work is being performed, as the responsible
       CQMS authority. Different professionals may be
       appointed for the separate design and construction
       phases ....

3.7    Quality Control Organization:

       A. Design: Design quality control shall be the
          responsibility of the Architect/Engineer who will
          seal all drawings and specifications as the
          "Architect/Engineer of Record." The Design
          Professional (Architect/Engineer of Record)
          responsible for the design of any project element
          shall also be the final approval authority for
          shop drawings and any other tests and submittals
          effecting [sic] the final design of that element. ...
          The Architect/Engineer of Record shall certify in
          writing to the Contracting Officer that the
          required design quality reviews have been
          completed and that to the best of his knowledge
          and belief the design meets the requirements of
          the RFP. The Architect/Engineer of Record shall
          review and approve (seal) all engineering
          calculations and designs unless otherwise
          approved by the Contracting Officer.

3.14   Government Quality Assurance: The Government's
       quality assurance activities will consist of
       construction project observation, review of CQC
       activities and records, and discussions of area where
       contract deviations appear evident.

3-14.1 Request for deviations shall be presented in a RFI
       format to the Architect of Record for approval.
       Subsequent to approval by the Architect of Record a

                             31
                     copy of the request for deviation shall be submitted
                     to the contracting officer for review and acceptance.

(R4, tab 2 at 955-56, 960) (Emphasis added)

       19. RFP SECTION H-10, RESPONSIBILITIES OF THE CONTRACTOR,
included the following information pertinent to the matters now before us:

             I 0-1   This project will be awarded as a "design/build"
                     project. The design/build Contractor entity shall
                     bear full responsibility for development of the final
                     designs and construction of a complete and usable
                     facility. The design/build Contractor's architect (or
                     engineer) shall be the "Architect (or Engineer) of
                     Record" and as such, shall bear full responsibility
                     for the design.

             10-2 The successful Offeror shall proceed to finalize the
                  proposed design upon issuance of the Notice to
                  Proceed for Design by the Contracting Officer, after
                  Award of the contract.

             I 0-3   Unless otherwise permitted by the Contracting
                     Officer in writing, the Contractor shall engage
                     professional architects and engineers registered in
                     the state the work is being performed (for each
                     discipline) to oversee all aspects of the design and
                     construction work as set forth herein. The proposal
                     submittal materials shall indicate the proposed
                     designer's qualifications and design competence
                     relative to the project. At final submission,
                     construction drawings shall be signed and bear the
                     designer's professional seal.

             10-4 The Architect (or Engineer) of Record is required to
                  become thoroughly familiar with the site through
                  site visits ....

             10-5 Neither the NAFI's review, approval or acceptance
                  of, nor payment for, any of the services required
                  under this contract shall be construed to operate as a
                  waiver of any rights under this contract, and the
                  Contractor shall be and remain liable to the NAFI in

                                          32
                     accordance with applicable law for all damages to
                     the NAFI caused by the Contractor's negligent acts
                     or omissions in connection with designs, drawings
                     and specifications furnished under this contract.

(R4, tab 2 at 965)

      20. RFP SECTION H-15, CONTRACTOR DESIGN SUBMITTAL AND
DESIGN MEETING REQUIREMENTS AFTER AWARD, included the following
information pertinent to the matters now before us:

                     A. Pre-Design Conference: Within 14 calendar days
                        after Design NTP, prior to commencing work,
                        the Contractor shall meet with Government
                        representatives at Ft. Lewis for a two-day
                        predesign conference.

                        The Contracting Officer will review
                        administrative and technical requirements for the
                        contract during the pre-design conference ....

                        The Contractor shall keep and distribute
                        conference meeting minutes to attendees.

                     B. Design Submittals:

                        The Contractor shall make four design
                        submittals for this project in addition to any
                        required by the Contracting Officer for fast track
                        approval. The first submittal will be at the 35%
                        design stage, the second at the 65% stage, the
                        third at the 95% stage, and the fourth at the
                        100% stage. Each submittal will incorporate all
                        comments made regarding the previous
                        submittal. The Contracting Officer will review
                        designs for compliance with contract
                        requirements but not for design validity. The
                        Contractor remains fully responsible for the
                        design. Any portions of the overall design
                        submitted must be sufficient in detail to permit
                        professional evaluation as to the extent that the
                        elements to be constructed meet contract
                        requirements. Design submittals will include, at

                                          33
   the appropriate level (35%, 65%, 95%, or 100%
   design submittals), the items noted herein.

C. Review Meetings:

   After Government review of each design
   submittal has been completed, meet with the
   Contracting Officer at Ft. Lewis, Washington for
   a I /day conference to discuss review comments
   and the Design/Build Team's responses for the
   specific design submittal. The responses to
   review comments shall be submitted to the
   Government in writing one week after receipt by
   Contractor.

D. General Design Data:

   I. Design analysis and calculations. (The Fund
      will review the design analysis or
      calculations to assure they have been
      accomplished). The Design Analysis shall
      include as minimum:
   2. A description of the general parameters,
      functional and technical requirements, and
      objectives and provisions of the design shall
      be described. A summary of economic
      factors influencing the design choice of
      systems used in the project will be provided
      along with an indication of how initial and
      life cycle costs were considered.
   3. Design calculations and supporting
      documentation shall be done to support
      design considerations .... Calculations and
      data for the following shall be included in the
      analysis:
      a. Civil Site Design/Site Utility Design
      b. Structural Design/Foundation Design
      c. Building Code/Life Safety Analysis
      d. Mechanical Systems Design
      [e.] Electrical Systems Design
   4. Design drawings showing the name of the
      Contractor's Architect/Engineer of Record.
      Drawings shall be prepared on acceptable

                     34
    Mylar drafting material and shall include a
    minimum:
    a. Drawing scales: ... .
    b. Utility Drawings ... .
    c. Site Landscaping plans ....
    d. Building plans: Floor plans for the
       Lodging Facility building(s) showing
       overall dimensions, room dimensions,
       typical layouts, plumbing fixtures, door
       swings, location of electrical lights,
       switches, outlets, fans, etc., heating and
       air conditioning diagrammatic layout,
       building and food service equipment, and
       the calculated gross and net floor area ....
   e. Structural drawings ....
   f. Mechanical drawings shall include, in
       addition to layout drawings for all
       systems, single line diagrams of each type
       of piping and duct system. Type and
       capacity of all mechanical equipment
       shall be clearly indicated including
       necessary schedules listing operating
       data.
   g. Electrical Drawings and Criteria: ....
5. Specifications: The technical provisions
   shall be in sufficient detail so that, when used
   with the applicable construction drawings,
   construction can be completed without
   additional specifications except as necessary
   to deal with unforeseen conditions or to
   accomplish changes made during
   construction. The specifications may require
   furnishing additional information such as
   shop drawings, manufacturers' literature,
   certificates of compliance, material samples,
   and guarantees to assure that the work can be
   completed and conforms with the contract
   requirements and that supervision of the
   project can be maintained.

                  35
F. If the Contractor elects to obtain additional
   topographic surveys or soil investigations
   beyond those furnished with the RFP, this data
   shall be submitted for review with the other
   design data.
   1. Topographic survey shall include contour
       lines of sufficient frequency for development
       of construction plans. Horizontal and vertical
       control shall be shown.
   2. Soil investigations shall include any boring
       logs, testing results, or design analyses
       performed by the Contractor.

H. Design reviews will be held at Ft. Lewis,
   Washington. The [CO] will review the
   Contractor's submittal for compliance with the
   contract requirements and the proposal on which
   the award was based. If the submittal is not
   approved, the Contractor shall make the
   necessary corrections or revisions and submit a
   completed corrected design not later than
   fourteen ( 14) calendar days after being returned
   by the [CO]. No additional time extensions will
   be granted for the processing of re-submittals.
   The Contractor shall make a minimum of four
   (4) design submittals in addition to any others
   required for fast track approval (i.e. limited
   Notice to Proceed) or for correction,
   clarification, etc. The first scheduled submittal
   shall be at 35 percent design completion and the
   second scheduled submittal shall be at 65
   percent completion.
   1. Minimum requirements for 35% design
       submittal:
       a. All drawings and items required by
           paragraph H-15 [D.] (General Design
           Data) developed to approximately 35
           percent completion.
       b. Specifications: table of contents and draft
           outline specifications.

                     36
    c. List of all requested substitutions for
        review and approval.
    d. Design analysis developed to the extent
        required to support the design or that
        portion of architectural, civil, utility
        distribution, structural, electrical, and
        mechanical systems included in this
        submittal.
   e. Additional soils report and topographic
        survey if completed or required.
2. Minimum Requirements for 65% design
   submittal:
   a. All drawings and items required by
       paragraph H-15 [D.] (General Design
        Data) developed to approximately 65
       percent completion, except that all Civil
        and Structural foundation drawings shall
        be developed to approximately 100
       percent completion. Fully developed
        civil/site plans including required SWPPP
       and storm water management plans will
       be required before consideration of
       advanced (or limited) Notice to Proceed
       (LNTP).
   b. Completed specifications for site work,
       site utilities, and a draft of the
       specifications for the remaining work,
       including index, general conditions, and
       technical sections.
   c. Design analysis developed to the extent
       required to support the design or that
       portion of architectural, civil, utility
       distribution, structural, electrical, and
       mechanical systems inc1uded in this
       submittal.
3. Minimum Requirements for 95% design
   submittal:
   a. All drawings and items required above
       completely developed.
   b. Completed specifications. Interior signage
       specification shall include a professional
       ''wayfinding" plan for approval.
   c. Completed designs analysis.

                  37
                           d. Equipment Schedules: Based on the
                              results of calculations, provide a complete
                              list of the material and equipment
                              proposed for the building including
                              heating, plumbing and cooling with the
                              manufacturers published cataloged
                              product installation specifications and
                              roughing-in data.
                           e. Shop drawing submittal register.
                        4. Minimum Requirements for 100% submittal:
                           a. All drawings and items required above,
                              completely developed and incorporating
                              all comments and revisions from the 95%
                              review.

(R4, tab 2 at 966-70)

    21. RFP SECTION H-21, CONTRACTOR-PREPARED PROGRESS
SCHEDULE, included the following information pertinent to the matters now before us:

                    In accordance with the Contract Clause I-48,
                    "Schedules for Construction Contracts," the
                    Contractor shall submit as part of the initial design
                    submittal, a critical path progress schedule showing
                    the manner in which he intends to prosecute the
                    work. Preparation and updating of the schedule
                    shall be as follow[s]:

             21-1   The progress schedule shall be prepared in the form
                    of time-scaled (Gannt Chart) summary network
                    diagram graphically indicating the sequence
                    proposed to accomplish each work operation and
                    appropriate inter-dependencies between the various
                    activities. The chart shall show the starting and
                    completion dates of all activities on a linear
                    horizontal time scale beginning with the dates of
                    Notice to Proceed for Design and indicating
                    calendar days to completion. Each significant
                    activity in both design and construction phases of
                    the project shall be represented and a cost for the
                    activity indicated. The sum of the activity costs
                    shall total to the contract amount for the project.
                    The Contractor shall indicate on the chart the

                                          38
                        important work activities that are critical to the
                        timely overall completion of the project. Key dates
                        for important features or portions of work features
                        are milestone dates and shall be indicated on the
                        chart. Based on this chart, the Contractor shall
                        prepare an earnings-time curve (''S" curve) showing
                        the rate of progress in terms of money and percent
                        completion. Schedule progress may not include the
                        value of materials or equipment delivered to the job
                        site but not yet incorporated into the work. This
                        schedule shall be the medium through which the
                        timelessness [sic] of the Contractor's construction
                        effort is appraised, and periodic payment estimates
                        are processed pursuant to the Contract Clauses.

              21-4 .1 Failure by the Contractor to maintain adequate
                      progress in accordance with the progress schedule
                      may result in withholding of progress payments, as
                      determined by the Contracting Officer.

(R4, tab 2 at 972-73)

      22. Section I of the RFP included contract clauses specific to Nonappropriated
Fund (NAF) construction. Section 1-2, NONAPPROPRIATED FUND
INSTRUMENTALITY (FEB 1997), included the following information pertinent to
the matters now before us:

             The Nonappropriated Fund Instrumentality (NAFI) which
             is party to this contract is a nonappropriated fund
             instrumentality of the Department of the Army. NO
             APPROPRIATED FUNDS OF THE UNITED STATES
             SHALL BECOME DUE OR BE PAID THR
             CONTRACTOR BY REASON OF THIS CONTRACT.
             This contract is NOT subject to The Contract Disputes Act
             of 1978.

(R4, tab 2 at 975) In addition, Army Regulation (AR) 215-1, Military Morale,
Welfare, and Recreation Programs and Nonappropriated Fund Instrumentalities,§ II,
Terms, defines a nonappropriated fund instrumentality (NAFI) as:

                                             39
             A U.S. Government organization and fiscal entity that
             performs essential Government functions. It is not a
             Federal Agency. It acts in its own name to provide, or
             assist other DOD organizations in providing MWR and
             other programs for military personnel, their Families, and
             authorized civilians. It is established and maintained
             individually or jointly by two or more DOD components.
             As a fiscal entity, it maintains custody of and control over
             its NAFs, equipment, facilities, land, and other assets. It is
             responsible for the prudent administration, safeguarding,
             preservation, and maintenance of those APF resources
             made available to carry out its function. With its NAFs, it
             contributes to the MWR programs of other authorized
             organizational entities, when so authorized. It is not
             incorporated under the laws of any State or the District of
             Columbia, but has the legal status of an instrumentality of
             the United States. NAFis are not "persons" subject to
             federal trade and antitrust laws, and they are not subject to
             State regulation or control in the absence of specific
             authorization in a Federal statute.

AR 215-1 defines nonappropriated funds (NAFs) as:

             Cash and other assets derived from sources other than
             Congressional appropriations, primarily the sale of goods
             and services to DOD personnel and the Family members
             are used by the NAFI to support or provide authorized
             programs. NAFs are Government funds used for the
             collective benefit of those who generate them. These funds
             are separate and apart from funds that are recorded in the
             books of the Treasurer of the United States.

"There are no tax dollars involved in this project. All the funding comes from
Soldier's dollars generated from other Lodging stays." (R4, tab 127 at 2872;
tr. 12/148-50)

       23. The RFP included Section I-4, CHANGES-CONSTRUCTION (FEB
1997) (R4, tab 2 at 975-76); RFP Section I-21, PROMPT PAYMENT FOR
CONSTRUCTION CONTRACTS (FEB 1997) (id. at 987-95).

       24. RFP Section I-20, PAYMENTS UNDER FIXED-PRICE
CONSTRUCTION CONTRACTS (FEB 1997), included the following information
pertinent to the matters now before us:

                                           40
                     (c) If the Contracting Officer finds that satisfactory
             progress was achieved during any period for which a
             progress payment is to be made, the Contracting Officer
             shall authorize payment to be made in full. However, if
             satisfactory progress has not been made, the Contracting
             Officer may retain a maximum of 10 percent of the amount
             of the payment until satisfactory progress is achieved.
             When the work is substantially complete the Contracting
             Officer may retain from previously withheld funds and
             future progress payments that amount the Contracting
             Officer considers adequate for protection of the NAFI and
             shall release to the Contractor all the remaining withheld
             funds. Also, on completion and acceptance of each
             separate building, public work or other division of the
             contract, for which the price is stated separately in the
             contract, payment shall be made for the completed work
             without retention of a percentage.

(R4, tab 2 at 986-87)

      25. RFP Section I-25, DISPUTES (FEB 1997), stated:

                    (a) This contract is subject to the rules and
             regulations promulgated by the Secretary of Defense and
             Secretary of the Army for NAF contracting.

                   (b) The contract is not subject to the Contract
             Disputes Act of 1978 (41 U.S.C. 601-613).

                    (c) All disputes arising under or relating to this
             contract shall be resolved under this clause.

                     (d) "Claims," as used in this clause, means a
             written demand or written assertion by one of the
             contracting parties seeking, as a matter of right, the
             payment of money in a sum certain, the adjustment or
             interpretation of contract forms, or other relief arising
             under or relating to this contract. A claim arising under a
             contract, unlike a claim relating to that contract, is a claim
             that can be resolved under a contract clause that provides
             for the relief sought by the claimant. A voucher, invoice, or
             other routine request for payment that is not in dispute

                                          41
when submitted is not a claim under this clause. The
submission may be converted to a claim under this clause,
by complying with the submission requirements of this
clause if it is disputed either as to liability or amount or is
not acted upon in a reasonable time.

       (e) ( 1) A claim by the Contractor shall be made in
writing and submitted to the Contracting Officer for a
written decision. A claim by the NAFI against the
Contractor shall be subject to a written decision by the
Contracting Officer.

            (2) For Contractor claims exceeding $50,000,
                the Contractor shall submit with the claim a
                certification that-

                (i) The claim is made in good faith;
                (ii) Supporting data are accurate and
                      complete to the best of the Contractor's
                      knowledge and belief; and
                (iii) The amount requested accurately .
                      reflects the contract adjustment for
                      which the contractor believes the NAFI
                      is liable.

       (f) ... For Contractor-certified claims over $50,000,
the Contracting Officer must, within 60 days, decide the
claim or notify the Contractor of the date by which the
decision will be made.

        (g) The Contracting Officer's decision shall be
final unless the contractor appeals as provided in paragraph
(h) of this clause.

       (h) The Contract[ing] Officer's final decision may
be appealed by submitting a written appeal to the Armed
Services Board of Contract Appeals within 90 days of
receipt of the Contracting Officer's final decision.
Decisions of the Armed Services Board of Contract
Appeals are final and are not subject to further appeal.

                              42
                     (i) The Contractor shall proceed diligently with
              performance of this contract, pending final resolution of
              any request for relief, claim, appeal, or action arising under
              the contract, and comply with any decision of the
              Contracting Officer.

(R4, tab 2 at 996-97)

      26. RFP Section I-35, REMOVAL OF CONTRACTOR'S EMPLOYEES
(FEB 1997), provided:

             The Contractor agrees to utilize only experienced,
             responsive and capable people in the performance of the
             work. The Contracting Officer may require that the
             Contractor remove employees who endanger persons or
             property, or whose continued employment under this
             contract is inconsistent with the interest of military security.

(R4, tab 2 at 1001)

        27. RFP Section I-40, DIFFERING SITE CONDITIONS (FEB 1997), included
the following information pertinent to the matters now before us:

                     (a) The contractor shall promptly, and before the
             conditions are disturbed, give a written notice to the
             Contracting Officer of ( 1) subsurface or latent physical
             conditions at the site which differ materially from those
             indicated in this contract, or (2) unknown physical
             conditions at the site of an unusual nature, which differ
             materially from those ordinarily encountered and generally
             recognized as inhering in work of the character provided
             for in this contract.

                    (b) The Contracting Officer shall investigate the site
             conditions, promptly after receiving the notice. If the
             conditions do materially so differ and cause an increase or
             decrease in the Contractor's cost of, or the time required for,
             performance of any part of the work under this contract,
             whether or not changed as a result of the conditions, an
             equitable adjustment shall be made under this clause and the
             contract modified in writing accordingly.

(R4, tab 2 at 1002-03)

                                           43
     28. RFP Section 1-41, SITE INVESTIGATION AND CONDITIONS
AFFECTING THE WORK (FEB 1997), included the following:

                      (a) The contractor acknowledges that it has taken
              steps reasonably necessary to ascertain the nature and
              location of work, and that it has investigated and satisfied
              itself as to the general and local conditions which can
              affect the work, or its cost, including but not limited to ( 1)
              conditions bearing upon transportation, disposal, handling,
             and storage of materials; (2) the availability of labor,
             water, electric power, and roads; (3) uncertainties of
             weather, river stages, tides or similar physical conditions at
             the site; (4) the conformation and conditions of the ground;
             and (5) the character of equipment and facilities needed
             preliminary to and during work performance. The
             Contractor also acknowledges that it has satisfied itself as
             to the character, quality and quantity of surface and
             subsurface materials or obstacles to be encountered insofar
             as this information is reasonably ascertainable from an
             inspection of the site, including all exploratory work done
             by the NAFI, as well as from drawings and specifications
             made a part of this contract. Any failure of the Contractor
             to take the actions described and acknowledged in this
             paragraph will not relieve the Contractor from
             responsibility for estimating properly the difficulty and
             cost of successfully performing the work, or for proceeding
             to successfully perform the work without additional
             expense to the NAFI.

(R4, tab 2 at 1003)

       29. RFP Section 1-44, SUSPENSION OF WORK (FEB 1997), included the
following information pertinent to the matters now before us:

                     (a) The Contracting Officer may order the
             Contractor in writing to suspend, delay, or interrupt all or
             any part of the work of this contract for the period of time
             that the Contracting Officer determines appropriate for the
             convenience of the NAFI.

                     (b) If the performance of all or any part of the work
             is, for an unreasonable period of time, suspended, delayed,

                                           44
              or interrupted ( 1) by an act of the Contracting Officer in
              the administration of this contract, or (2) by the
              Contracting Officer's failure to act within the time
              specified in this contract (or within a reasonable time if not
              specified) an adjustment shall be made for any increase in
              the cost of performance of this contract (excluding profit)
              necessarily caused by such unreasonable suspension,
              delay, or interruption and the contract modified in writing
              accordingly. However, no adjustment shall be made under
              this clause for any suspension, delay, or interruption to the
              extent that performance would have been so suspended,
              delayed or interrupted by any other cause, including the
              fault or negligence of the Contractor, or for which an
              equitable adjustment is provided for or excluded under any
              other term or condition of this contract.

                       (c) A claim under this clause shall not be allowed
              ( 1) for any costs incurred more than 20 days before the
              Contractor shall have notified the Contracting Officer in
              writing of the act or failure to act involved (but this
              requirement shall not apply as to a claim resulting from a
              suspension order), and (2) unless the claim, in an amount
              stated, is asserted in writing as soon as practicable after the
              termination of the suspension, delay, or interruption, but
              not later than the date [of] the final payment under the
              contract.

(R4, tab 2 at 1004)

       30. RFP Section I-51, LIQUIDATED DAMAGES I CONSTRUCTION (FEB
1997), provided that:

                    (a) If the Contractor fails to complete the work
             within the time specified in the contract, or any extension,
             the Contractor shall pay to the NAFI as liquidated
             damages, the sum of $1,500.00 for each day of delay.

(R4, tab 2 at 1006) We have found no evidence that the government assessed any
liquidated damages under this contract.

       31. RFP Section I-56, SUPERINTENDENCE BY CONTRACTOR(FEB
1997), included the following information pertinent to the matters now before us:

                                            45
              At all times during the performance of this contract and
              until the work is completed and accepted, the Contractor
              shall directly superintend the work or assign and have on
              the work [site] a competent superintendent who is
              satisfactory to the Contracting Officer and has authority to
              act for the Contractor.

(R4, tab 2 at 1012)

        32. RFP Section L set forth the requirements for the initial design proposals.
In particular, Section L-20-1 required:

             A.       The following technical data shall be submitted as
                      part of the technical proposal. Appropriate parts of
                      the accepted proposal will be incorporated into the
                      contract. Offerors are advised that the required data
                      listed below will be utilized for technical review and
                      evaluation. Requirements, codes, standards and
                   any other information contained or specified in
                   SECTION C and elsewhere in this RFP will be
                   assumed to be included and to be a part of the
                   Offeror[']s proposal. It need not be repeated
                   therein. All alternates shall be specifically addressed
                   and expanded upon in the proposal. The criteria
                   specified in this RFP are binding contract criteria and
                   in cases of any conflict, subsequent to award, between
                   RFP criteria and Contractors['] submittals, the RFP
                   criteria shall govern unless there is a written
                   agreement between the Contracting Officer and
                   the Contractor waiving the specific requirement or
                   accepting a specific condition pertaining to the
                   offer.

             C.   Proposals will be evaluated for conformance to the
                  minimum criteria in the RFP and for quality scoring.
                  While the intent is to keep pre-award design effort to
                  a minimum, proposals must provide enough design
                  for the evaluation team to determine whether the
                  proposed design meets the functional requirements
                  for operational use during the anticipated life of the
                  facility and to show engineering sufficiency and

                                             46
                     soundness and the degree to which the proposal may
                     exceed the minimum requirements. It must also form
                     sufficient basis for developing a fair and reasonable
                     price proposal.

                D.   In general, the proposal will be considered technically
                     responsive if it includes the following:

                     (f)   HVAC System:
                           (i) Provide a brief narrative description of
                                proposed system design and why the
                                particular system was selected. Address
                                thermal envelope design and operating
                                characteristics of the HVAC system and the
                                control system for guest rooms and other
                                areas.
                           (ii) Basic mechanical plan: Indicate on the
                                architectural drawings major equipment
                                locations and sizes.

                           (v) Provide catalog cuts of proposed chillers,
                                boilers, cooling towers, heat pumps and
                                guest room units as applicable.
                           (vi) DDC Controls: Provide narrative         "
                               description of intended EMS Control
                               system and catalog cuts of equipment to
                               be provided.

(R4, tab 2 at 1036-39; tr. 12/132-37) (Emphasis added) CO Wallace24, the original
author ofL-20-1 A. and C., testified that:

                What we're basically telling the contractors is we've
                basically given you what our minimum requirements are
                and offerors may or may not be, depending on the other
                portions of the RFP, may be allowed to submit
                alternatives, alternative systems, alternative equipment,
                but that they have to specify that equipment separately in
                writing to the contracting officer. And the contracting

24
     (See finding 262)

                                            47
             officer has to incorporate that deviation in writing into
             the contract.

(Tr. 12/134-35)

      33. RFP Section M, EVALUATION FACTORS FOR AWARD, provided:

             M-1. PROPOSAL EVALUATION AND SELECTION
             PROCESS:

                    a. A technical evaluation team will be established
            to evaluate each offer (proposal) in response to this
            Solicitation (RFP). The technical portion (Volume I I Parts
            1, 2, and 3) of each offer will be evaluated independently
            and objectively by the evaluation team (See M-2 below for
            the factors).

                   b. Volume II, the Pricing and Financial offers will
            be evaluated separately by the Contracting Officer.

                    c. Award will be based on an integrated assessment
            of the evaluation factors. The Contracting Officer will
            award the contract to that offeror that is the most
            advantageous and offers the best value to the NAFI, price
            and other factors considered.

            M-2. EVALUATION OF OFFERS: All offers
            (proposals) will be evaluated by the following factors.
            Price evaluation, M-2a is as important as all the factors
            under M-2b combined. Under Technical Evaluation
            (M-2b), Factor a is of the greatest importance. Factor bis
            less important than Factor a and slightly more important
            than Factor c. Factor c is less important than Factors a orb.
            See Section L-20 for descriptions and required submittals.

            M-2b. TECHNICAL EVALUATION:

                   Factor a.     Vol 1 I Part 1 I Functional and
                                 Aesthetic Design

                                         48
                        Factor b.    Vol 1 I Part 2 I Project Management
                                     Plan

                        Factor c.    Vol l I Part 3 I Team Qualifications
                                     and Experience

(R4, tab 2 at 1044)

       34. A Pre-Proposal Conference and site visit was held on 30 October 2003 (R4,
tab 2 at 1045-51; tr. 1149-52, 2/9-10, 36-38, 43-48, 7/228-33, 255-57, 286-87, 290-92,
298-99, 8/44, 9/172). A second site visit took place on 18 December 2003 (R4,
tab 1012; tr. 1152-53).

         35. SBN's Henrickson testified that:

                [Botting]C25 l ask[ed] for a[ n] amendment to submit
                alternate systems, because we couldn't meet the price with
                the boiler and chillers.

                     And it didn't fit the design. And we got the
                amendment that allowed for alternate systems.

(Tr. 1/131-32) He then clarified that he did not know whose question about alternative
systems resulted in the issuance of Amendment 5 (finding 36; tr. 11132). Botting's
Burrus testified that, if Amendment 5 had not been issued, Botting would have
proposed the RFP-required boiler/chiller system with the alternate system as a separate
line item (tr. 4/39-41 ).

       36. RFP Amendment No. 00005 dated 22 December 2003 included the
following information pertinent to the matters before us:

                7      NOTE: There is a pad-mount transformer on the
                site which will be removed by DPW with demolition of the
                two wood buildings on site. Removal of existing wood
                poles, OH electrical lines, and the transformer pad will be
                accomplished by the Contractor. There is also an
                underground secondary electrical feeder, communications
                conduits and water lines running through the site which
                will have to be rerouted around the building footprint as
                required. Existing water laterals, sanitary and storm sewers
                no longer in use may be removed and capped.

25
     (See finding 44)

                                            49
              These questions and answers supersede or update any other
              stated requirements. Please note some questions/answers
              are similar.

              Q13 Section C-4 item 8.3.A.l The 3rd sentence mentions
              fan powered terminal units. Are non-fan powered units
              acceptable?

              Al3 Alternative systems may be submitted by Offerors
              for consideration.

              Q34 Can the ceilings in the corridors be chanted to lay-in
              acoustical to facilitate the install of the systems, example
              fire alarm, telephone, computer, etc ....

              A34 Corridors may be lay-in acoustical but must meet
              minimum height requirements ....

(R4, tab 2 at 1052, 1055, 1062, 1063, tabs 176, 177; tr. 1/54, 8/38-43) Amendment
No. 00005 also included the requirement that corridor ceilings be a minimum of 8 feet,
4 inches high (R4, tab 2 at 1093).

      37. RFP Amendment No. 00006 dated 20 January 2004 included the following
information:

              1.      Outside air shall be supplied to the guest suites by a
                      separate HVAC system. Outside air intakes shall not
                      be provided at individual PTAC units (See Section
                      C-5 Page 32).

(R4, tab 2 at 1126)

      38. RFP Amendment No. 00007 dated 21January2004 included the following
information:

                                             50
                    1. There have been a number of requests for
              clarification of air intake and centralized air distribution
              system requirements since the question and answer
              (Q/A #61) in Amendment #005, and the clarification in
              Amendment #0006. The new lodge requires a central air
              distribution system, to distribute fresh air to the rooms.
              Individual PTAC units in the rooms are not to be used for
              make up or outside air intake, as stated in Section
              C-5.15.4d.

(R4, tab 2 at 1129, tab 178) This verbatim language was reiterated in RFP Amendment
No. 00009 dated 9 March 2004 (R4, tab 2 at 1129).

       39. Volume II of the RFP contained SECTION J, a compilation of various
drawings and documents including the following which are pertinent to the matters
before us:

              J-2    Geotechnical, Site Information

              J-3    Installation Design Guide (Excerpts)

              J-4    Fort Lewis Design Standards (Excerpts)

              J-10 · Drawings I Separate Attachment
                              • Utilities Plan
                              • Suggested Site Plan
                              • Suggested Main Floor Plan
                              • Suggested Upper Floor Plan
                              • Guest Room Layout Plans

(R4, tab 2 at 1145-53 (J-2), 1154-1355 (J-3), 1356-1508 (J-4), 1721-26 (J-10))

       40. The J-2, Geotechnical, Site Information, document contained a narrative
description of the various existing utilities in the project area as well as what was
required to be provided under any resulting contract (R4, tab 2 at 1145-53).
Specifically, ORB's Patterson, who drafted the RFP (finding 2), testified:

                    [I essentially wrote paragraph C-1, 2.4.A. which]
             describes the topographic drawing, which I did include
             under Section J. It's a compilation of known information

                                          51
              that was developed from [DPW] showing the location of
              known utility lines ....

                      Within public works, there is a record drawing room
              with a huge amount of old, as-built drawings, utility
              layouts, topographic maps, etcetera, going back to 1917.
              And essentially, I went through all known information on
              that site and the utilities on that site.

                     I spoke to the superintendents of the various utility
              shops, water and waste, electric shop, both interior and
              exterior electric shops, etcetera, and did what I call some
              brain picking, and that drawing, which was included in
              Section J represented my best effort to I compiling
              everything that was known on that site from the as-built
              records.

(Tr. 10/28-29; see also tr. 10/43, 129-31; R4, tab 1000)

     41. Among the J-10 drawings included in the RFP (R4, tab 2 at 1721-26 (Vol.
4of22); findings 11, 39) was the utilities plan. ORB's Patterson testified:

             Drawing number one, the utilities plan, was drafted by me
             based on available information. Item two and three and
             four, the suggested site plan, main floor plan, and upper
             floor plan, was drawn by ORB, me, and that is the 10
             percent concept design of one suggested solution that I
             alluded to earlier....

                   Drawing five is standard guest room layouts that
             were provided by Army lodging.

                    [J-10] is a site and utility plan of the construction
             site and surrounding area, showing all known utilities and
             features as developed from available utilities drawings at
             public works. It's a compilation of several different base
             sheets that were provided by public works, and
             communications line as provided by DOIM .... [Data was
             obtained from] public works, water waste utilities

                                           52
              department, electric shop, and the DOIM, the directorate of
              information management, with respect to communications
              lines, so two different agencies on Fort Lewis.

(Tr. 10/43-46; see also tr. 9/18-21, 48-49, 70-72)

       2. SBN's Proposal

       42. On 27 January 2004, SBN submitted a proposal in response to the RFP.
The proposal included both a pricing proposal and a technical proposal and had 16-17
parts contained in two binders (R4, tabs 3, 4; tr. 1154-57; app. br. at 15). The entire
narrative describing the proposed HVAC system was:

             The proposed HVAC system includes multiple high
             efficiency packaged terminal heat pumps (PTAC) units
             serving the guest rooms. Studio rooms will have one
             PTAC unit and one-bedroom guest rooms will have two
             PTAC units. One unit will be located in the bedroom and
             the other in the living area. Tempered ventilation air is
             ducted to each guest room space from a central packaged
             rooftop 100% outside air make-up unit with cooling and
             gas heat.

             The lobby and administrative areas are served from a
             packaged variable volume rooftop unit located on the top-
             level roof well. Air is distributed to fan powered terminal
             units with electric heat to provide energy efficient comfort
             zonmg.

             A split system cooling only unit provides cooling for the
             data room.

             The laundry area is served from a packaged rooftop unit
             with adequate make-up air to offset the laundry exhaust.
             This unit has gas fired heating and is located on the lower
             level roof.

             The maintenance, storage, and receiving office are served
             by a packaged rooftop unit with gas heating. This unit is
             located on the lower level roof.

             A central exhaust fan (located on the top level roof well)
             serves the guest room toilets and provides potential for

                                          53
             energy recovery to the guest room ventilation system thru
             an air-to-air heat exchanger.

             Other exhaust systems will serve guest laundry room,
             management toilets, support area toilets, janitor, large
             laundry, and elevator machine rooms.

(R4, tab 3 at 1849; tr. 3/59-60, 79-80) Nowhere in the narrative did SBN or Botting
state that they were proposing an HVAC/mechanical system for the common areas that
was not the boiler/chiller system required by the RFP, but was a deviation or alternate
system.

      43. Eight years later at the hearing, Jensen/Fey's Fritzmeier testified that:

             Our collective experience found that installing a boiler-
             chiller in a facility like this was really kind of a step back
             in terms of quality. It was not something that is routinely
             done in hotel facilities, hospitality facilities of that type.

                     And we looked at projects that we had done in the
             hospitality range that were comparable and the kind of
             systems that were used. And basically they're package
             systems. That's what's pretty routinely done in quality
             hotel facilities because they have advantages to tlie client,
             not only in terms of overall maintenance beyond the
             chiller, a boiler-chiller installation which has I with a
             boiler-chiller facility you have to have redundancy because
             if the boiler-chiller goes down, you have no way of
             maintaining any of the facility at a proper temperature.

                     When you're doing package units, you maybe have
             to close down a portion of the facility because it will be
             uncomfortable, but you still have the majority of the
             facility available for your clients. So we generally find that
             to be a really strong driver in how you design the
             mechanical system for these buildings. That's something
             that we also routinely did in all of our other projects of all
             qualities.

                    [The building is] a fixed size. So in order for us to
             be able to provide some of the extra amenities [like a

                                           54
              breakfast room], we had to be very efficient in terms of our
              use of space.

                     The boiler-chiller system didn't allow us to do that.
              The package units really did allow us to do that, to give,
              we thought, not only a better project in terms of
              contemporary design and maintainability, but it also
              allowed us to give those amenities that we felt so strongly
              about.

(Tr. 7/234-37) SBN did not include any of this information in either its initial proposal
or its Best and Final Offer (BAFO) (see finding 50).

      44. SBN' s proposal identified the following entities as among their proposed
subcontractors for the Lodge project:

       Architect                   Jensen/Fey Architecture & Planning [Jensen/Fey]
       Civil & Structural          DCI Engineers, Inc. [DCI]
       Mechanical Design           W.A. Botting, Inc. [Botting or WAB]
       Electrical Design           SME Inc. of Seattle [SME]

(R4, tab 3 at 1963, 2070) Jensen/Fey had designed over 60 hotels and motels in the
seven years prior to SBN's proposal (R4, tab 3 at 1966). SBN's proposal identified
Jensen/Fey employees Charles Fritzmeier (Architect of Record), Kurt Jensen (Chief of
Construction Quality Management System (CQMS)), Shauna Spencer (Chief of
Construction Quality Control (CQC)), and Dan Rasmusson (Chief of Design Quality
Control (DQC)). (R4, tab 3 at 1980-81, 1992-94; R4, tab 5 at 2287). SBN's proposal
also identified the following SBN project management employees:

      Principal-in-Charge          Keith Henrickson
      Project Executive            Eric Holopainen
      Project Manager              Chris Bischoff
      Superintendent               Tom Zeman

(R4, tab 3 at 2070)

       45. The initial Evaluation of Proposals took place 28-30 January 2004 at
Fort Lewis by a Technical Evaluation Board (TEB) made up of the following
individuals:

      R. Drew Dyer, P.E.    CFSC, Project Manager, moderator, non-scoring
      Steve Coulson         CFSC, Lodging Program Manager, evaluator, scoring
      Denis Senftner        Northwest Region, MWR Director, evaluator, scoring

                                           55
       Cindy Moinette[261 Ft. Lewis, Assistant Lodging Manager, evaluator, scoring
       John PattersonP.EP71ORB Organization, RFP AE firm, evaluator, scoring
       Eve Hebb            CFSC, Interior Designer, evaluator, scoring
       Gary Stedman[2 s1   Ft. Lewis, DPW, evaluator, scoring

(R4, tabs 183, 1012, 1014; tr. 8/43-44, 48-54, 76, 9/38-39, 51-61, 66-69, 10/48-67,
 12/11-13, 25, 38-39, 107-10) After receiving in-person instructions from
CO Bartholomew, a total of9 proposals were evaluated over 2Yz days, with
approximately two hours spent with each proposal (tr. 10/55-56). SBN's proposal was
ranked fifth on the total score. One weakness listed about SBN' s proposal was "Lack
of clarity on mechanical systems; where located?" SBN was given the lowest score of
all 9 proposals (a score of26 out of a possible 40) for "Building Design (Structural,
HVAC, Mechanical, Plumbing, Electrical, Telecommunications, Force Protection)"
but was scored second out of9 for "Project Management Plan" and "D/B Team
Qualifications/Experience." (R4, tabs 198, 199) Unlike SBN's proposal that
contained a short, general description of its HVAC/mechanical design and nothing on
the subject ofDDC design, several of the other proposals received in response to the
RFP included lengthy, detailed descriptions of their proposed HVAC/mechanical
designs, including DDC design information (see, e.g., supp. R4, tab 181 at 9960-66,
tab 182 at 9978-97, tab 192 at 10045-47, tab 193 at 10058-59).

       46. On 29 January 2004 SBN provided the following clarifications to CO Bartholomew
in response to the CO's questions:

              Question #2. From first glance there does not appear
              that there [is a] boiler room on the first floor. Is this
              correct?

              Response to Question #2: .... The boiler room is located
              adjacent to Maintenance Room J 70A. The boilers are not

26
   Cindy Moinette became the Lodging General Manager in 2005 and was responsible
      . for managing approximately 930 rooms at Fort Lewis, McChord AFB and
        Yakima Training Center on behalf of Army Lodging, the owner of the new
        Lodge built under the contract now at issue (tr. 12/9, 11). Ms. Moinette was the
        POC for post passes (R4, tab 25 at 2409; tr. 12/26-27).
27
   The typewritten "P.E." was crossed out and a handwritten "INCORRECT" was
        annotated (R4, tab 1014). Mr. Patterson testified that he does not have an
        engineering degree and has no engineering certifications (tr. 10/11-12, 132-34).
        His primary experience is in architecture and construction (tr. 101133).
28
   Gary Stedman has been in the Planning Division of Fort Lewis DPW since the
        mid-1990s; for 10-12 years prior to that he was in the Environmental Division
        ofDPW at Fort Lewis (tr. 12/94).

                                          56
             detailed on the architectural plans. They are shown in
             Room l 70A at this time on the mechanical drawings. The
             intent is to have a room adjacent to Room 170A dedicated
             to the boilers.

             Question #4. We did not find Maintenance
             Specifications and other narratives but we assume that
             you will be fully compliant with all technical
             requirements of the RFP.

             Response to Question #4: Yes, per our revised pricing
             schedule attached we are fully compliant with the technical
             requirements ofthe RFP. None of the VE alternates
             [attached at SBN0032320] need to be incorporatedfor full
             compliance.

             Question #5. Will you meet all applicable required
             codes for the design and construction of this project?

             Response to Question #5: Yes, we will meet all applicable
             required codes for the design and construction ofthis
             project.

             Question #6: Are you compliant with the square foot
             requirements of the RFP?

             Response to Question #6: Yes, per Drawing A.2.1 area
             analysis, the total square footage ofthe project as
             proposed is 100, 700 square feet.

(R4, tab 1013; tr. 1/73-77, 80-82, 1/133-34)

        47. Both ORB's Patterson in his preparation of the RFP and SBN's Architect
of Record, Jensen/Fey, reasonably assumed that, since the DOIM ductwork was
installed by base personnel, the Fort Lewis standard of 3 feet of cover had been
accomplished (R4, tabs 184, 185; tr. 7/294-95).

      48. A telephone conference was conducted on 5 March 2004 in which
CO Bartholomew participated with SBN's Henrickson and Bischoff and Jensen/Fey's
Jensen and Fritzmeier. Jensen/Fey's notes from the call included:

                                         57
1. $1.5m has been added to the project budget.

2. Our proposal must be at $17,361,000 or less.

6. Fo[u]r additional changes have been made and are
outlined in the Amendment:

       b. Structure can be located over utilities.

7. Our Proposal was ''technically acceptable" and "fully
acceptable".

11. The exterior architecture design and narrative was
considered excellent.

12. The interior narrative was considered good.

15. The plans were well detailed.

16. The schedule was realistic.

18. Significant hospitality experience was outstanding.

19. Personnel were outstanding.

24. The specification maintenance plan needs to be
included.

                             58
              27. There needs to be a force protection narrative.

              33. Mechanical room appears undersized.

             3 5. The mechanical system needs to be clarified
             (narrative).

(R4, tab 1017; tr. 7/238-42) The copy of the notes in the record include handwritten
marginalia added by an unidentified author sometime between 5-12 March 2004.
Items 24, 27 and 35 were identified as items for Botting (WAB). In particular, Item 35
was annotated by circling the word "narrative" and placing a star above the circle as
well as a handwritten note in the margin stating: "WAB REVISIT I ADJUST FOR
REVISIONS." (R4, tabs 186, 1017; tr. 1/80) Over eight years later Jensen/Fey's
Fritzmeier testified that:

             I think one of the other things that since it was something
             that we were particularly concerned about because we
             thought it was a real benefit and I'm pretty sure Keith
             [Henrickson] is the one who brought it up was the
             mechanical system. And the response from [CO
             Bartholomew] was as long as you're meeting the
             performance requirements of the RFP, we can make it
             work. And there may have been some additional discussion
             about well, this mechanical system allows us to do other
             things and there are some financial aspects that come into
             play if we can provide this system and so on and so forth.

(Tr. 7/241) None of this information was included in the notes of the 2004 conference
call. Contrary to Mr. Fritzmeier's testimony, SBN's Henrickson testified:

                    Q       ... Was there a discussion of the HVAC
             alternative proposal during this conversation?

                    A      Not that I'm aware of.

                   Q      What did the mechanical, ... Item Number
             35, what do you recall about that issue?

                                          59
                      A      They just wanted us to clarify. We had
              already stated that was a package, but they wanted more
              clarification.

(Tr. 1/82) Henrickson further testified that there is no documentation to memorialize
Fritzmeier's alleged discussion and there is nothing in the record to show that later,
when the 35% HVAC/mechanical design was objected to (finding 60), SBN ever
argued that the now-alleged discussion of the HVAC/mechanical system with the CO
had taken place (tr. 11144-46). We, therefore, give little weight to Mr. Fritzmeier's
non-contemporaneous testimony.

       49. On 9 March 2004 CO Bartholomew requested BAFOs:

             2. As a result of the technical evaluations and the resulting
             discussions with offerors, all offerors are hereby provided
             the opportunity to submit a [BAFO] to clarify, correct,
             update or revise offers to comply with the RFP
             requirements, including all amendments. Only changes to
             the prior technical submissions are required.

             6. No further changes to the solicitation (RFP) shall be
             made without the expressed [sic] written approval of the
             [CO]. ...

(R4, tab 188) The only change to the RFP referred to in paragraph 6 that is pertinent
to the matters before us was memorialized in RFP Amendment No. 00009 dated
9 March 2004 and dealt with the DOIM ductbank (R4, tab 2 at 1129).

        50. On 23 March 2004, SBN submitted its one-volume BAFO (R4, tab 5; app.
br. at 23). SBN's BAFO identified 17 items that had been revised since SBN's initial
27 January 2004 proposal (R4, tab 5 at 2227-28; tr. 1/83-85). The BAFO included an
"expanded, added and clarified" HVAC System Description (R4, tab 5 at 2229). The
entire text of the HVAC System Description in the BAFO was:

                 •   The proposed HVAC system includes a total of
                     (260) high efficiency packaged terminal heat pumps
                     (PTAC) units serving the guest rooms. Studio units
                     will have one PTAC heat pump and one-bedroom
                     guest rooms will have two PTAC heat pumps. One
                     heat pump will be located in the bedroom and the
                     other in the living area.

                                          60
                    •   Tempered ventilation air is ducted to each guest
                        room space from central packaged 100% outside air
                        make-up units with cooling and gas heat[29l located
                        on grade.

                    •   The lobby and administrative areas are served from
                        a packaged variable volume unit located on grade as
                        indicated on the mechanical concept drawings. Air
                        is distributed to fan powered terminal units with
                        electric heat[29l to provide energy efficient comfort
                        zonmg.

                    •   A split system air conditioning unit provides
                        cooling for the data room.

                    •   The laundry area is served from a packaged air
                        conditioning unit with adequate make-up air to
                        offset the laundry exhaust. This unit has gas fired
                        heating and. is located on the ground level.

                    •   The maintenance, storage, and receiving office are
                        served by a packaged rooftop unit with gas
                        heating. [291 This unit is located on the lower level
                        roof.

                    •   Two central exhaust fans (located in the attic space)
                        with exhaust duct extending to exhaust grilles in
                        each guest room toilet.

                    •   Other exhaust systems will serve guest laundry
                        room, management toilets, support area toilets,
                        janitor, large laundry, and elevator machine rooms.

(R4, tab 5 at 2257; tr. 3/79-80, 100-13) SBN's expert witness Kommers testified that
"packaged" to a mechanical engineer/contractor means "self-contained" (tr. 3/34-38,
59-60; see also, tr. 3/72). However, Kommers also agreed that there are "packaged"
boilers and "packaged" chillers and "packaged" boiler/chiller systems (tr. 3/40-41,
44-46, 52, 8/155-156; see also R4, tab 349 at 11151 (packaged terminal heat pump

29
     We find that the use of the words "gas" and/or "electric" does not indicate the
         presence or absence of a boiler in the design for these areas.

                                              61
units can be used with a boiler/chiller system)). Butting's Burns testified that his
design did not include a boiler/chiller system for the non-guest-room areas specified in
the RFP because:

              [I]t was about 10 percent of the system's capacity, was
              what was the issue. It wasn't that it was the majority. You
              know, the majority of the equipment was packaged
              terminal heat pump equipment [for the guest rooms].

                      What we were proposing was additional packaged
              equipment, mainly driven by the geometry of the building,
              being kind of a long spread out building, because there is a
              lot of cost involved in having to run piping between those,
              and there is no I there was no piping involved in this 90
              percent of the capacity, anyhow.

(Tr. 3/92-93; see also tr. 4/8-9, 36)

       51. By letter dated 26 March 2004, SBN assured the Fund that:
             Our proposal complies with the RFP and if awarded a
             contract we ensure material compliance with the RFP
             requirements. We have reviewed and verified our pricing
             and it is acceptable for the basis of a firm fixed price
             contract if awarded this project.

(R4, tab 1 at 5, tab 200; tr. 1189-90) Again, SBN made no mention of its inclusion of
an alternative HVAC/mechanical design in its BAFO. SBN provided the following
clarifications, among others, in response to questions from the Fund:

              Question #4: We note that your proposal is silent in
              several key areas where the RFP called for specific work.
              We assume this silence is because you inten[ d] to provide
              the required work/equipment and are not proposing
              alternatives that would have required
              submittals/catalogue/cut sheets. Is this correct:
              Response to Question #[4]: Yes_X_ No_ _

(R4, tab 1 at 6, tab 200; tr. 1186-89 ("you're just submitting on a very preliminary
design ... we hadn't even determined a lot of the items that we're going to use yet ....
It's that early in the design .... We didn't put in cut sheets"), tr. 11104 ("You're
designing as you're building."), tr. 11123-124)

                                            62
       52. The technical evaluation ofBAFOs took place in April 2004 (R4, tab 169
at 3221-25, 1018-19; tr. 8/56-64, 9/61-66, 64, 69, 10/67-91, 12/110-12; see also R4,
tabs 198, 199). ORB's Patterson testified that, at the time he reviewed SBN's BAFO:

             I did not have that concern [about whether or not SBN' s
             BAFO included a boiler/chiller system] because [SBN]
             expressed a willingness to redesign the system to move the
             air handling units off the roof down to the main floor, and
             did not say that they were not providing a boiler chiller, so
             I assumed they were. My concerns were alleviated at that
             point.

(Tr. 10/166, 177-78)

             I did not recognize that a packaged VAV system meant
             that the heat and cooling source were built in part and
             parcel with the air handler. I didn't realize what that was,
             and there was no indication in the proposal that this was an
             exception to the RFP requirement for a central boiler and
             chiller.

             There is no note that the equipment listed is a variation
             from the boiler chiller, central boiler chiller. There is,
             however, now in hindsight, indication that packaged
             cooling and heating units were being called out in various
             spaces. It's not uncommon to get incomplete mechanical
             equipment schedules on a 10 percent [de]sign], so that may
             not have rung a bell without a note saying, "This is a
             variation."

             Depending on the submittal and the contractor, proposals
             can be incomplete in some areas, complete in others. You
             will routinely see contractors pulling together their
             submittals from all of their various subs at the last minute
             to get them to the room on time.
                     Some routinely I or not routinely I some,
             occasionally, are incomplete. So, the fact that I didn't see a
             central chiller on this schedule doesn't in itself indicate we

                                          63
                weren't getting one without a note saying, "You're not
                getting one," if that makes any sense.

                [If I had recognized that SBN was submitting an alternate
                system] [t]hat would have been commented on or
                annotated on my score sheet, my review sheet. I actually
                bumped them up on mechanical systems. If I had thought
                they were proposing any sort of an unsatisfactory
                alternative mechanically, I would have lowered their score,
                perhaps even zeroed it.

(Tr. 10/96-100)

B. Contract Award

        53. On 11 May 2004, the Fund awarded design/build Contract No. NAF26-04-C-0025
in the firm-fixed-price amount of$17,359,397 to SBN. 30 The notification letter to SBN
advised that an Award Meeting/Pre-Design/Build Conference was scheduled for 20 May
2004. Receipt of the letter was acknowledged by SBN's Henrickson on 27 May 2004.
(R4, tabs 1, 6, 203-04) CO Bartholomew authorized a Limited Notice to Proceed (LNTP) for
35% design effective 21May2004 (R4, tabs 7, 203, 1021). The contract expressly
incorporated the following by reference:

                       (1) Request for Proposal (RFP) NAF26-04-R-0004,
                as revised by Amendments 0001, 0002, 0003, 0004, 0005,
                0006, 0007, 0008, 0009, including all attachments,
                specifications, drawings and enclosures thereto.

                       (2) Contractor's Offer, dated 27 January 2004,
                including all attachments, drawings and enclosures thereto.

                       (3) Contractor's BAFO offer, dated 23 March
                2004, including all attachments, drawings, BAFO Pricing,
                and enclosures thereto, which take precedence over the
                27 January 2004 Offer.

30   Other copies of the DA FORM 4069-R, SOLICITATION, OFFER, AND AWARD
         (Nonappropriated Funds), contained in the record, Rule 4, tabs 204, 1021, are
         identical to Rule 4, tab 1 at 1, except that the signature of CO Bartholomew is
         inexplicably dated 12 May 2004.

                                            64
                       (4) Contractor's Price Clarification that the optional
               grounds maintenance building, with a value of$96,386.00,
               is included in their base bid [design and construction], and
               Other Clarifications, dated 26 March 2004, (1 Page).

                     (5) Contractor's Pricing Verification and Statement
               of Material Compliance, dated 26 March 2004 ( 1 Page).

                      (6) Contractor's Final Bid Extension and
               Clarifications, dated May 6, 2004 (2 Pages).

                    (7) Contract Number NAFBAl-04-C-0025, DA
              Form 4069-R Solicitation, Offer and Award
              (Nonappropriated Funds), dated 23 March 2004, signed by
              Keith Henrickson, Sr. V.P., Division Manager, Swinerton
              Builders, and signed by the Contracting Officer, D.F.
              Bartholomew, Jr., on 11May2004.

(R4, tab 1 at 2) The contract further specified the Order of Precedence that, in the
event of any inconsistencies between the contract and SBN' s proposal, the terms and
conditions of the contract would prevail (id.).

       54. The contract contained the following schedule for design and
construction:

              Total number of calendar days after Notice to Proceed for         145 Days
              Design (Does not include Government Review Time)

              35% Design Completion and Submittal                               1.l_Days

              65% Design Completion and Submittal                               49 Days

              95% Design Completion and Submittal                               ll._Days

               100% Design Completion and Submittal                             35 Days

              Total Number of Calendar days for Construction after              425 Days
              Limited Notice to Proceed for Construction

(R4, tab 1 at 8)

       55. SBN hired Mr. Roberts as its Senior Project Manager in June 2004 and
assigned Tom Zeman as its on-site superintendent (tr. 1191, 178-80, 2/96-103, 117,

                                            65
173). At the time of his testimony Mr. Roberts had been in construction for 40 y~ars,
20 of which had been as a project manager for various construction companies
(tr. 2/89-90, 92-96).

C. Performance

       56. After the contract had been awarded to SBN, ORB's contract with CFSC
was modified to include ORB's review of SBN's various design submittals. ORB
formed a team to perform the design reviews that included BCE to review mechanical
and electrical designs, AHBL Engineers to review structural and civil designs and
ORB to review the architectural design and "overall" issues. (Tr. 10/100-01, 111148)
Patterson selected BCE on the basis of his 28 years of working with them on several
hundred projects (tr. 10/101-02, 140-43).

                       Q:     When you engaged BCE to perform the
                scope of work we just discussed, did you know that they
                had participated as members of off1 erors] who offered
                proposals on this project?

                       A:        I saw at the [TEB], and it took me by
                surprise, ... that BCE was on one of the teams. I couldn't
                tell you which team that was. As I say, BCE is a multi-
                discipline, fairly large firm. There are 54 or 55 people.
                They routinely propose on design-build work with a lot of
                contractors. They don't clear that with me first. They don't
                work for me, so. They were, in fact, apparently on one of
                the proposals as the MEPP 1l

                       Q:     When you engaged BCE to perform the
                design submittal review scope of work, did you have any
                concerns as to their objectivity in conducting those
                reviews?

                      A:     Absolutely no, no.

                       Q:     In your review ofBCE's work on the
                project, did you see any evidence of bias or impaired
                objectivity?

31
     "MEP" is an acronym for "Mechanical, Electrical and Plumbing" (tr. 13/15).

                                            66
                     A:     No, sir. They are professional engineers, and
              professional in every sense of the word. That would not
              have entered into it.

(Tr. 10/102-03; see also tr. 111131-32)

        57. BCE's work was primarily in the areas of mechanical and electrical
engineering and, at the time of its involvement in the project now at issue, its work
consisted of approximately 50% public schools work and 50% military projects at
Fort Lewis and McChord AFB (tr. 11/112-14, 150). The ORB contract tasked BCE to
perform a peer review of SBN' s various design submittals with particular attention to
be paid to the mechanical, electrical, plumbing and fire protection portions of the
submittals (tr. 111116-17). Among the specific BCE employees that performed
services under ORB' s contract with BCE were Randy Heiberg32 , principal in the firm,
and John Justice 33 , referred to variously as a junior engineer or a production engineer
(tr. 111114-17, 129-31, 174-76). Mr. Heiberg testified that he was aware of the project
before the ORB contract for design review but he wasn't directly involved prior to
SBN's 35% design submittal (tr. 111114-16, 130-31, 150-51, 161; see also finding 59).
Mr. Justice was also first involved in the project now at issue after SBN's 35% design
submittal (tr. 111172-73, 185-88). SBN alleges that BCE was a direct competitor of
Botting at the time of proposal submissions and that ORB's employmentofBCE to
conduct the peer review of SBN/Botting's HVAC/mechanical design submittals
created a potential for bias. SBN admits it has no proof of actual bias. (R4, tab 169 at
3355; tr. 7/243-244; finding 66) After careful examination of the record before us, we
find no evidence that the actions, opinions and recommendations of BCE were based
on anything other than its professional consideration of the factual information
presented to it.

       1. 35% Design

      58. SBN's 35% Design was submitted to the Fund on 10 June 2004, which was
acknowledged by COR Dyer as being on schedule and a review meeting was
scheduled for 8 July 2004 (R4, tabs 8, 9; tr. 9/41-46, 12/14-17).

32
   Mr. Heiberg, with BCE since 1992, has experience as an electrical engineer,
       mechanical electrical consultant, construction management, mechanical HVAC
       contracting, and automation controls (tr. 111108-11).
33
   Mr. Justice is a mechanical engineer who worked for Boeing from 1996-1999 and
       had been with BCE since 1999. He was licensed as a Professional Engineer in
       2006. (Tr. 111169-72)

                                           67
        59. At the time of the 35% design review, BCE's Binh (or Ben) Nguyen was
the BCE project lead and point of contact. Mr. Heiberg was brought onto the project
at this point to assist and eventually replace Mr. Nguyen as the project lead:

             [M]y role responsibility was to ensure when submittals
             came in that they were organized. We'd get a set of plans,
             we'd have to pull the set of plans, reduce-pull the
             plumbing out, pull the HVAC drawings out and distribute
             it to the people who had time and expertise to do the
             review. So once I collected all the reviews, organized them
             into the forms that ORB had given us to use, and return
             those comments to them.

(Tr. 111117-18; see also tr. 111164) Mr. Nguyen left BCE between the 35% and 65%
design submittals (tr. 111119).

       60. The Fund provided ten pages of detailed review comments to SBN on
1 July 2004. Comments M2 and M6, respectively, stated:

             Note the ventilation air for the guest rooms; and heating,
             ventilation, and air conditioning of all other spaces is to be
             provided by primary air handlers utilizing chilled and hot
             water coils per the RFP. The design does not indicate this
             type of system.

             The fan powered terminal unit schedule shows units with
             electric coils. Per the RFP these units are to be provided
             with hot water coils for reheat.

(R4, tabs 10 at 2314, tabs 207, 210) On 5-6 July 2004 the Fund provided more than
ten additional pages of detailed comments to SBN, including:

             65% design submittal is due Fri., 27 August. Design
             review meeting will be on/about Tues., Sept.21. It is our
             goal to issue a [LNTP] for construction to allow
             mobilization and site work (civil, utility, foundation, and
             structural activities) upon completion of that meeting and
             acceptance of the exterior structural mock-up rooms. With
             the same Limited NTP, we'd like to release Swinerton to
             order long lead items (HVAC units, elevators, etc.). In
             order to provide the a [sic] Limited NTP, the 65% design

                                          68
              submittal shall contain civil, structural, and long lead items
              to be 100% designed and with the engineer of record's
              professional seal and signature.

(R4, tab 11 at 2328, tab 12)

      61. SBN's responses to the Fund's review comments M2 and M6 (finding 60)
were understood to be:

              [B]asically, "WILL COMPLY" or "AGREE" except:

             [The response to M2] was: "Primary air handling units
             provide centralized ventilation system with direct
             expansion cooling, and combination of natural gas, electric
             and heat pump system for heating based on most energy
             efficient application"

             [The response to M6] was: "Based on our energy analysis,
             electric heating was selected based on lowest energy
             cost.["]

(R4, tab 14 at 2352) This is the first evidence we find in the record of SBN providing
any explanation for its submission of an alternative design.

       62. A list of decisions made and action items identified at the 8 July 2004 35%
design review meeting was prepared by the Fund's Dyer and provided to Fund and
SBN personnel. The following listed items are pertinent to the matters before us:

             20.    Swinerton to utilize Ft. Lewis standard construction
                    specifications whenever possible (posted on the
                    FL W IDG web site).

             24.    Corridor ceiling heights are shown 8'-4". There may
                    be cases where corridor ceiling heights are adjusted
                    downward to account for piping and ductwork. In
                    those cases, CFSC will be advised beforehand.
                    Swinerton will not design or construct any
                    corridor ceiling heights less than 8'-0".

                                           69
              27.    [SBN] to provide justification for HVAC systems
                     proposed for use or change to comply with RFP.

              If I have overlooked or mis-stated something important,
              please let me know.

(R4, tabs 13, 211-14, 1024; tr. 7/275-77)

      63. By email dated 13 July 2004, Dyer forwarded to SBN and its Architect of
Record the "thoughts of the peer review engineers" concerning SBN's responses to
comments M2 and M6 regarding the mechanical system design.

              The system proposed does not meet the RFP requirements.
              If the contractor's design was based on the most energy
              efficient application, in our opinion the contractor needs to
              prove to the team that the original RFP allows the
              contractor to follow "that path" instead of designing per
              the RFP requirement.

             Secondly the contractor needs to prove that his design in
             fact is the MOST energy efficient design with the lowest
             energy AND OPERATING cost. We need to have the
             contractor include all calculations in the package for our
             review at 65% (If, and only if, the "more energy efficient
             mech system" is allowed and approved by AL.)

(R4, tab 14 at 2351, tabs 216-17) In a second email to the same recipients less than an
hour later, Dyer expressed his concerns after receiving much more detailed input from
BCE's Heiberg (R4, tab 15 at 2353-55, tab 217; tr. 111164-68) on the subject of SBN's
proposed mechanical system:

             Here's the other msg. I promised to forward ... this one is
             from a senior principal of BCE Engineers (subcontract to
             ORB) ... his views are "eye-opening" for me especially
             when he says you are asking us to accept a heating and
             cooling system that costs less initially, costs more to
             operate & maintain annually, and has a shorter life.
             Doesn't sound like something we really want to consider
             on our long term investment. As the choice of HVAC
             systems has space planning and structural considerations, I
             agree with Mr. Heiberg that you need to provide the type
             of system defined in the RFP or else defend your choice
             and convince Mr. Heiberg that his analysis on the negative

                                            70
              attributes was in error. This could possibly be resolved
              with a conference call. Let me know your course of action
              ASAP.

(R4, tab 15 at 2353, tab 217)

     64. On 14 July 2004 a phone conversation between Botting and SBN was
memorialized in handwritten notes by SBN that:

             [Batting's] Burns called: says what we have at 35% is
             what we proposed. It's true that it isn't in complete RFP
             compliance but we have always been up front with that
             and they accepted our proposal and design with the system
             that Randy Heiberg of BCE is now criticizing. Burns will
             work up a positive response and get us a draft by this
             Friday explaining [the] way this system is a good one, how
             the owner already [received] the value in the pricing and
             what they will do to make some more RFP accomodations
             [sic].

(R4, tabs 219, 1025) (Emphasis added) Contrary to SBN's statement that it had
"always been up front with that," we have found that none of SBN's proposals, its
BAFO or later discussions and assurances had identified to CFSC that SBN intended
to provide something other than what the RFP required (see findings 42, 48, 50-51).

       65. On 28 July 2004 COR Dyer requested CO Bartholomew's assistance in
resolving the mechanical system design issues:

             Bart, need your help to correct the mechanical approach to
             heating and cooling the common spaces in the new
             Lodging facility at Ft. Lewis. This has been discussed in
             detail since we had the 35% design review meeting July 8.
             ORB prepared the technical sections of the RFP.
             Mr. Patterson described a particular approach to heating
             and cooling the common spaces that helps the Base meet
             their sustainability goals and objectives. I have discussed
             this issue with DPW and am convinced that we need to
             have [SBN] change their approach immediately. Pis.
             instruct [SBN] that they must design and provide the
             mechanical systems described in the RFP (Sections C-4,
             8.3, 8.4, & 8.5 and C-5, 15.4, 15.5, 15.6, & 15.7).

                                         71
             Space planning issues are still in motion. I met with [SBN]
             today in their main office, Bellevue, WA. We discussed
             DOIM room sizing, housekeeping rooms sizes, a 2nd guest
             laundry, and consolidating the administration spaces. I will
             be expecting a series of sketches soon showing how all of
             this can be accomplished and meet the functional and
             operational objectives of AL.

(R4, tabs 16, 1027)

       66. SBN's Roberts prepared a Summary Report dated 29 July 2004 in which he
agreed that the HVAC/mechanical system in SBN' s proposal was an alternate design not
in compliance with the RFP but also took the position that providing the RFP-required
boiler/chiller HVAC/mechanical system for the non-guestroom areas was a change to
the contract:

             Subject: 35% Mechanical Review Comments for Air
             Conditioning in the Common Areas

             At this time, the design for the common areas of the
             building uses a warm air heating system. That system
             does not comply with the original RFP for the project.
             The COR is recommending to the Contracting Officer that
             he issue direction to [SBN] to provide a mechanical air
             conditioning system for the common areas of the building
             that uses boilers, chillers and fan powered terminal units as
             called for in the RFP.

             Subsequent research shows that the mechanical system
             Botting showed in the 35% design was the same system
             [included] in the technical proposal submission on January
             27, 2004 .... It is correct that this system does not meet
             the specific requirements of the original issued RFP.

             Comments by BCE Engineers after the 35% design review
             meeting continued to make the point that the proposed
             mechanical systems do not meet the RFP. More
             importantly, the comments state that the proposed system
             will consume more electrical energy and fuel than the

                                          72
centralized system called for in the RFP, that the
maintenance costs will be higher and that the equipment
life of the proposed system will be shorter.

W.A. Botting countered that their system was at least as
efficient as the system called for in the RFP, that the
energy costs were comparable, and that the equipment life
was also comparable. In addition, there is a very desirable
redundant capability in their system, that does not exist in
the RFP system. Upon receiving BCE' s review comments,
Tim Bums of W.A. Botting, re-evaluated their system, and
re-checked their previous calculations. Tim determined
that the system Botting proposed has an energy
performance capability that is as good as the RFP system,
and is probably a little better. The equipment life of their
system is in the 10 to 15 year range, which is essentially
the same as the RFP equipment. In addition, the fact that
they do not rely on a chiller or boiler that is common to all
systems, gives them a redundant capability of several
systems that have an overlap, which gives their proposed
system a desirable capability that the RFP system does not.

At a meeting at [SBN]'s office on 28 July 2004, a
telephone conference was held between Randy [Heiberg]
of BCE Engineers, Tim Bums, ofW.A. Botting,
Drew Dyer of Army CFSC, and Bill Roberts of[SBN].
Mr. [Heiberg] stated that he had been charged with
reviewing the system for compliance with the RFP and had
found that it did not comply. He stated that he would need
new criteria to evaluate what was proposed by [SBN],
because the system did not comply with any of the Fort's
design standards. He stated that the mechanical system in
every building on Fort Lewis uses a boiler, or was hooked
to a campus steam system. He stated that the design
standards for Fort Lewis do not allow any system that does
not employ a boiler.

Looking at the Fort Lewis design standards that are on line,
we found a division 15566 listed that is titled "Warm Air
Heating System." This system does not require a boiler.
Mr. [Heiberg] may not have been aware of this section

                             73
when he made the statement that the Fort Lewis design
standards do not allow any system that does not employ a
boiler, because this appears to be a relatively new section,
as it is dated 14 November 2003. Nevertheless, it appears
that the Fort Lewis design standards do allow air
conditioning systems that do not employ a boiler.
According to Tim Bums ofW.A. Botting, a warm air
heating system is what they proposed.

It came to [SBN] 's attention after this meeting that BCE
Engineers, who were doing the peer review of [SBN] 's
mechanical design, had been the mechanical design
member of one of the other design/build teams that had
offered on the project. It seems inappropriate for a designer
who was unsuccessful in its attempt to be awarded this
project with its design to then be one of the peer reviewers
of the successful designer.

Mr. Dyer returned to the Fort after the meeting and
conference call on 7/28/04 and met with the [DPW]
managers, who informed him that they were not interested
in having the system proposed by the [SBN]/Botting team.
Mr. Dyer then called Bill Roberts and informed him that he
was trying to contact the Contracting Officer,
Mr. Bartholomew, and tell him that he needed to provide
written direction to [SBN] to comply with the RFP for the
mechanical systems, and to disregard the amendment #5
direction in the event that [SBN] thought that direction
allowed them to vary from the RFP system.

Subsequent investigation into how the mechanical
design became what it became, shows that Botting was
using boilers and chillers in its design through
November 19, 2003, but on January 5, 2004, the boilers
and chillers were no longer in the design. It is still not
clear what happened between 11/19/03 and 1/05/04 that
caused the system to change. There is some speculation
that when the silver LEEDs requirement was dropped,
the system change was made, but that can't be proven
at this point.

                             74
              This research produces a number of questions:

              Why did Botting change the system from RFP compliant to
              what they submitted?
                     Tim Burns did not know as of 11:30 A.M, 7129104.
              He is researching.

              Does the fact that the Fort Lewis design standards allow a
              warm air heating system give Botting the latitude to use
              such a system?
                     Yes. It is a Fort Lewis design standard, and an
              alternate system.

             If the Owner insists on changing the system to one with
             chillers and boilers like the RFP, what would it cost?
                    Afirst pass for mechanical came up with an
             estimate of $246,200.00. There would be additional costs
             for electrical andfinish systems to conceal all the
             additional piping such a system would require. An initial
             rough guess estimate is approximately $400, 000. 00.

             If the Owner insists on changing the system to one with
             chillers and boilers like the RFP, what other costs and
             impacts would be encountered beyond mechanical?
                     Electrical, Sprinklers, Building Height, Ceilings,
             Delay?

             If the Owner insists on changing the system to one with
             chillers and boilers like the RFP, should that be the subject
             of an equitable adjustment to the Contract?
                     That is reasonable.

(R4, tab 17 at 2377-80, tabs 222-23, 275; tr. 1/99-100, 2/123-25; see also R4, tab 323)
(Emphasis added)

      67. On 30 July 2004 Botting responded to SBN's Roberts' request for
information about the proposed alternative system:

             We believe that our proposed system meets the RFP
             objectives. The RFP allows for packaged air cooled DX
             systems to serve the guest rooms as well as other spaces.

                                          15
              Our proposed system will provide better indoor air quality,
              noise levels and energy efficiency in these other spaces by
              means of packaged dx units with better air filtration
              potential. Our proposed system does not compromise
              LEED certification and contributes to the cost efficiency in
              meeting project budgets.

             We are more than willing to entertain other system
             approaches. The cost of going to a chilled water I hot water
             heating system is being priced up and should be available
             this afternoon.

(R4, tab 224) Later the same day Botting provided an estimated cost of providing "a
chilled water I hot water heating system" to be $246,200 and also noted that doing so
would create a "serious problem" with "pipe congestion in the 1st floor ceiling" (R4,
tab 225; tr. 2/127-28).

       68. SBN's Henrickson forwarded Robert's summary report (finding 66) to
CO Bartholomew several days before they planned to meet on 4 August 2004 to
discuss the matter (R4, tab 17 at 2371; tr. 1/100). We find nothing in the voluminous
record before us to document that a meeting actually took place on 4 August 2004.

       69. A meeting was scheduled for 16 August 2004 at which SBN/Botting was to
make its case for its proposed alternative mechanical design to Fort Lewis DPW
personnel and with COR Dyer attending via teleconference (R4, tab 17 at 2375,
tab 227). A presentation was made at the meeting by Botting for which the following
information was contained in a handout:

             1. Purpose to explain WA Botting heating system design,
                function, maintenance and equipment choices.

             2. Tim Burns: PE Received Engineering degree from
                University of Washington ....

             3. 90% of building heated by self-contained heat pump[]
                units with ventilation air supplied by unitary units. 10%
                of building heated by other types of heat. (Lobby,
                Maintenance, Laundry.[)]

             4. Basis of design.

                                          76
                 a.    Reasonable Energy usage and L[EED] certification
                 b.    Allowed by Fort Lewis design standards
                 c.    WA Botting energy study graph charts
                 d.    Ease of Maintenance. Replacement parts available
                       at local supply houses
                 e.    Redundant equipment
                 f.    Life expectancy between small unitary units, splits
                       and large chillers/boilers. Compressors would be the
                       same as contained in small air cooled chillers.
                 g.    Info from Washington Air Reps
                 h.    Other ideas that WA Botting rejected. Why a chiller
                       and boiler plant was not a reasonable choice for this
                       project.

(R4, tab 1030; tr. 3/92-96 (the total of the areas served by the alternate design was about
11 % of the total building)) The record contains notes from the 16 August 2004 Mechanical
HVAC Design Review Meeting; the author of the notes is not specified but, based upon the
content of the notes we find that the notes were authored by SBN's Roberts:

             Attendees:
             Tim Burns                     [Botting]
             Dave Fillo                    [Botting]
             Michael Hawkins               Washington Air Reps
             Matt Adkins                   Washington Air Reps
             Gary Stedman                  Fort Lewis Public Works [DPW]
             Bernadette Rose               Fort Lewis Public Works [DPW]
             Dale Brigham                  Fort Lewis Public Works [DPW]
             ?                             Fort Lewis Public Works [DPW]
             John Patterson                The ORB Organization
             Randy Heiberg                 BCE Engineers
             Drew Dyer                     Army CFSC (via telephone)
             Bill Roberts                  [SBN]

             Points:

                 1. Dale Brigham is the person for DPW who has to
                    buy in to the system that the building will receive.
                 2. Prior to the meeting, Dale Brigham had never seen
                    the drawings or mechanical narrative for the project.
                    Other people in Public Works had previously
                    reviewed the drawings, without significant
                    comment, but Dale had not.

                                            77
3. As a rule, Dale prefers boilers and chillers to
    packaged units.
4. Washington Air Reps and [Botting] pointed out that
   the small areas of this building that could get boiler
    and chiller systems, would only call for very small
   boiler and chiller equipment, not the large plant type
    facilities that would normally serve an entire
   building. 90% of this building is served by warm air
   heating systems in the form of PTAC units and
   packaged DX systems as allowed by the RFP.
5. Brigham and Patterson acknowledged that warm air
   heating systems are allowed by the Fort Lewis
   Standards.
6. Brigham acknowledged that there were numerous
   buildings on Fort Lewis that were heated by warm
   air heating systems instead of boiler systems and
   one of his greatest concerns with those buildings
   was that the warm air equipment that had been
   provided for them was from the low end of the
   quality spectrum. Air Reps stated that the
   equipment that was being proposed for this building
   was of greater quality than that. On scale of 1 to [5],
   with 5 being the best, the equipment proposed for
   this project is in the 3 to 4 range.
7. [Botting] pointed out that the piping that a
   boiler/chiller system would require would be a
   problem because the ceiling spaces where such
   piping would be housed was already full. This
   would require us to split up an already small
   boiler/chiller system into two to four even smaller
   systems, which would probably not give the Owner
   the kind of system that was desirable, however, it
   would be in strict compliance with the RFP.
8. [Botting] confirmed that the building[']s DDC
   system will monitor the equipment, whether it is
   packaged units, terminal units, or boiler/chiller
   units.

10. Brigham opined that the equipment that was being
    manufactured today is not as sturdy as the
    equipment that was manufactured 20 or more years

                         78
     in the past, however, he acknowledged that his
     observation applies to boilers and chillers just as
     much as it does to any other piece of mechanical
     equipment.
 11. Botting stated that the system it has proposed for
     the building makes the most sense because it allows
     redundancy, has many advantages over a
     boiler/chiller operation, such as lower maintenance
     and operations costs and a comparable equipment
     life expectancy.
 12. Brigham asked to see the most advanced drawings
     that were available showing the piping, and to see
     product data of the equipment that was being
     proposed for installation in the building, so he could
     see if he could find a comfort level with the
     proposed system. It was agreed that Botting and Air
     Reps would compile that information and get the
     entire package to Mr. Brigham by Friday,
     20 August 2004 .
.13. Mr. Brigham agreed to expedite his review of the
     proposed system for acceptability and to provide his
     answer in the shortest possible time.

Summary:
  • Fort Lewis standards allow warm air heating
     systems.
  • The RFP through its amendments allowed
    alternate systems to the boiler/chillerNAV
    initially called for in the RFP.
  • Batting's proposed system is a warm air heating
    system.
  • Batting's proposed system is in material
    compliance with the modified RFP.
  • If the DPW does not want to allow Batting's
    proposed system, and insists on the boiler/chiller
    direction, the boiler/chiller system provided will
    be a split system with several small
    boiler/chillers dotted throughout the building,
    unless DPW provides more specific direction.
    That system may not be desireable [sic] to DPW
    either, but it will comply with the RFP, so is
    allowable.

                          79
                     •   If the Owner wishes any system other than that
                         proposed by Botting, they need to provide
                         direction in writing of what system they want,
                         and provide an equitable adjustment for the cost
                         and time that a change like that will produce.

(R4, tabs 230, 232; tr. 2/132-33; see also R4, tabs 231, 233 at 10261; tr. 2/133)

       70. In an 18 August 2004 email SBN's Roberts gave the following direction
regarding SBN's preparation of its 65% design due on 27 August 2004:

             Just a reminder to everyone that we have our last design
             coordination meeting before the 65% submittal, tomorrow
             at 2:00 P.M. here at [SBN]'s Bellevue office. Everyone
             should have their specifications figured out by this
             meeting. Civil has completed their 100% design and it has
             been submitted. Remember that at 65% the structural
             and any mechanical or electrical underground, and
             architectural site is to be at 100%. The plan is to
             assemble everything at Jensen/Fey's office on the 26th and
             ship it out at the end of the day so that the Owner receives
             it on the 27th. [SBN] needs time to review everything for
             budget, constructability and coordination before assembly,
             to give us a window to make revisions, so we really need
             the different packages to be ready and in to us by Monday,
             the 23rd.

(R4, tab 234) (Emphasis added) SBN's Roberts further expressed to Jensen/Fey his
understanding that, as of23 August 2004, the government had not approved Botting's
proposed alternative HVAC/mechanical design but that SBN was still going to include
the alternative design, not the RFP-required design, in its 65% design submission (R4,
tab 235; tr. 2/133-35).

       71. On 24 August 2004 Automated Controls, Botting's DDC subcontractor,
submitted its input for the 65% design (R4, tab 236). Automated Controls is a dealer
for Johnson Controls equipment in the Pacific Northwest (tr. 7/168-69, 11/139-40).

             We're a system integrator. So as a control contractor, when
             we come into a project, we're pulling chillers, boilers, air
             handlers, cooling towers, you have all these different
             systems, some with different protocols and we all marry
             them all into one system. That's how we kind of define it

                                           80
                 as the brain of a building and we make them all work, talk
                 to each other.

(Tr. 7/170)
                       Q:     And do you recall that the specification, the
                 RFP called out a specific thermostat type?

                       A:     It called out Onity or equal as the base
                 system associated with I it's all one for us. It's just all one
                 system.

                        Q:     What was your belief about what the product
                 information that you talked to, the Johnson Controls
                 product, what was your belief about whether that was an
                 equal to the Onity?

                         A:      It was definitely I hotel system, just like in
                              4
                 this hotel,[3 1they have a hotel system that I I mean they're
                 an equal system. So the intent was that we would bring
                 ours and do a comparison of theirs. Once we walked
                 around the facility, they showed us into the rooms. They
                 showed us their thermostats. They went and showed us the
                 front end of their system and they said it's Onity. And then
                 we all sat down to review okay, how are we going to look
                 at this project as a design-build. We quickly knew that the
                 or equal side of that was not an option. They wanted Onity.
                 They made it really clear to us they wanted Onity. I don't
                 even know ifl got my [Johnson Controls] product
                 submittal out of my bag to even show them at that point in
                 time.

                      Q:      What was the cost of the Onity products
                 compared to the JCI equal product?

                         A:     It's substantially more. I think they looked at
                 it as a proprietary system. It was only one option. And so it
                 was roughly $50,000 plus.

                        Q:     So that was an impact to you?

                        A:     That was an impact to WA Botting.

34
     The hearing in this appeal was held in a hotel in Seattle.

                                               81
                        Q:     And so what did you do after that? After you
                told it had to be Onity?

                      A:      We followed the submittal process and
                submitted on _the or equal.

                       Q:     Why did you do that?

                       A:     We wanted it to be documented that they
                weren't accepting the or equal from the project, so there
                would be a justification for the costs associated with going
                to the Onity.

(Tr. 7/177-79; see also R4, tab 1074; tr. 7/179-84, 205-06) The contract reserved to
the CO the decision as to whether a proposed "equal" product was acceptable
(finding 10).

      72. On 24 August 2004 SBN requested permission to mobilize to the jobsite
the week of 13 September 2004 (R4, tab 21 ). The CO and Dyer were concerned that it
might not be wise to grant a LNTP for mobilization before the HVAC/mechanical
system design issues were resolved (R4, tabs 20-21, 242).

        73. On 25 August 2004 SBN's Roberts expressed concern to Jensen/Fey about
the state of the specifications to be submitted with the 65% design:

                I'm really concerned about the specifications. Starting with
                the index, it is still full of items that the 35% review
                commented on and doesn't reflect all of the sections
                submitted by DCI, Patriot Fire, and SME, or has sections
                mentioned for SME that they didn't submit. Other
                specification comments from the past are not addressed
                either, nor are the sections that I listed in the index I made
                up over a month ago.

                [Roberts then listed 32 specification sections and identified
                the work needed to be performed in each.]

                It would be pretty embarrassing to submit these specs
                without these revisions being made. In fact, we won't.

(R4, tab 237)

                                             82
        74. On 26 August 2004 DPW's Brigham rejected Botting's proposed
alternative HVAC/mechanical design, directing that the system specified in the RFP be
provided (R4, tabs 238, 241, 1031, 1033). On the same date SBN's Roberts.forwarded
that information to Jensen/Fey and Botting:

              At this time, Mr. Dyer (and unofficially) [ORB's]
              John Patterson, think that what you have proposed makes
              sense, and that providing boilers and chillers for 10% of
              the building isn't such a great idea, however, that does not
              mean that reason will ultimately prevail. I have suggested
              to Mr. Dyer that he ask John Patterson to provide a
              statement that your system makes more sense than that
              described in the RFP, or is at least as good, because
              Patterson's opinions are very highly respected by the
              Fort Lewis engineers. That is asking a lot of Patterson,
              since he wrote the RFP, but he may be willing to do that.

              I don't know which way this will go but I suggest that you
              get all of the material together that you e-mailed
              Mr. Brigham, (plans, product data, equipment cuts, energy
              studies, etc.), in hard copy form, and anything else you
              think could help if we were to get another opportunity to
              present on your system, (particularly some drawings of
              what they would see with boilers and chillers), and be
              ready to meet with Mr. Brigham's superiors should we get
              the opportunity.

(R4, tab 239; tr. 2/136-37) The rejection ofBotting's proposed design by The Fund
required Botting to:

              [R]edo our load calculations and the coordination for
              getting equipment room and routing for piping for the
              boiler and chiller and the air handlers and go through that
              whole coordination process, and it was ... not ... a simple
              task.

(Tr. 3/97) Jensen/Fey's Fritzmeier testified that:

              Well, it was a significant concern because it really
              impacted a number of things, not only the design work that
              had been done to date. Going back to a boiler-chiller
              system meant that we would essentially have to rearrange
              the entire building and eliminate some things to try to get it

                                           83
              to work. A lot of the amenities would go away [see
              finding 43]. And really, one of the other major concerns in
              terms of a boiler-chiller are not only the I well, the ducts
              and chases that need to be led all over the building, not
              only take up ceiling space, overhead space, but they also
              require penetrations through the floors that take up even
              more space. So we were not real happy to hear that that's
              the direction that things were going to go in.

(Tr. 7/245-46) We find that, by making the business decision to go forward with a
building design that incorporated Botting's proposed alternative HVAC/mechanical
system without first getting CO approval of that design in writing as required
(finding 32), SBN assumed the risk that the alternative design would not be approved
and that the building design would be required to accommodate the RFP-required
HVAC/mechanical system.

       2. 65% Design

       75. SBN submitted its 65% design to the Fund on 27 August 2004 (R4, tab 23
at 2397, tab 24 at 2405, tab 249).

       76. On 2 September 2004, after reviewing Botting's proposed alternative
HVAC/mechanical system again, DPW rejected the alternative design because it did
not include the boiler and chiller design required by the RFP (R4, tabs 22, 243, 1033).
COR Dyer notified SBN's Roberts and further stated:

             Personally, I disagree, but then again I am not the one who
             will be maintaining the system after construction is over.

             Pis. initiate design for a system as described in the RFP. I
             have instructed the Government's team of reviewers to
             terminate their review of the mechanical portion of the
             65% design package. Ifwe need to stop review of other
             disciplines as a result of this decision, pis. advise
             immediately. I have targeted 15 September to receive the
             review comments. As you know, we are hoping to meet for
             a design review meeting on/about 21 September.

(R4, tabs 22, 243 at 10356, tabs 247, 1033; tr. 8173-76) SBN's Roberts immediately
notified Botting:

                                          84
             Here is the final word from our client on the mechanical
             design for Army Lodging. Please expedite your resolution
             of this issue, and provide us a schedule for that resolution.

             Dave [Fillo], you mentioned a number of ideas that would
             provide a fairly low cost ($30K +/-)boiler/chiller solution
             for the areas that the RFP requires it in. How soon can a
             design be prepared to the 65% design level, so we can get
             it into the Army's hands for review? Please get back to me
             today with your plan, so I can let [COR Dyer] know what's
             up. Obviously we cannot let this delay the client's review
             of the 65% documents, so time is of the essence.

(R4, tab 243 at 10355, tab 1033) Botting replied:

             I will contact Tim [Bums] and have him start making
             changes. I will forward the cost impacts of the change. The
             ceiling space on the first floor will be subject that will need
             to be cordinated [sic] with electrical, fire protection,
             plumbing and heating. My plan is to install chill and heat
             lines down the hall but only for the office area. Size would
             be 2" and 1-2" plus pipe insulation.

(R4, tab 243 at 10355, tabs 246, 1033) SBN's Roberts responded:

             We will discuss cost impacts, as well as time impacts. It is
             our opinion that we were teamed with Botting to provide a
             design that meets the RFP for a specific cost that you
             previously quoted us. We expected each member of the
             team to accept the risk for their portion of the design, and
             we still do. First and foremost, we need an approved
             design. We couldn't even consider a discussion about
             costs, without first having an approved design.

(R4, tabs 244, 1033) Botting's Fillo provided the following background information
to other Botting personnel as well as comments with respect to the way forward:

             As you may be aware, for the last month Tim [Bums] and I
             have been dealing with the HVAC system at the Fort
             Lewis Lodge. Our March 31, 2004 proposal was based on
             using packaged air handler's [sic] and wall mounted heat
             pumps. 90% of the building is being heated and cooled by
             the guest room wall mounted heat pumps. The RFP called

                                           85
               fur a chiller/boiler system for the remaining 10% of the
               heating system. Some time last December the decision by
               [Botting] was made to use packaged units for this last 10%.
               This small remaining heating and cooling load was not a
               [sic] cost effective using a boiler/chiller system. Our
              proposal to [SBN] was specific in the use of wall mounted
              heat pumps in the guest rooms and packaged units for the
              office, lobby, laundry, maintenance guest room ventilation
               and storage rooms. [SBN] received the advantage in there
               [sic] proposal to the Army of this system. Since the first
              review, the Fort Lewis Maintenance department is adamant
              that the RFP calls for the boiler/chiller except in the guest
              rooms and that is what they want and are getting. The
              objection seems to be by the maintenance department only.
              Tim and I have come up with 3 alternate designs that
              would meet the language of the RFP but not a rational
              solution that is good for the government but does meet the
              RFP. All three of these solutions will involve additional
              cost to WAB that I feel we should be [sic] pass on to
              [SBN]. As you see from the E Mail train [sic] below
              [SBN] does not agree. Tim and I at this time are
              proceeding on these 3 alternative designs and I will put a
              number to them. I feel though we need to get a
              commitment from [SBN] that they bear some risk too in
              being the General contractor on the project and they took
              our very cost effective HVAC system to the table with the
              Army. I feel though we might have a weak hand. We
              don't have an email or document that points out that
              our proposal did not meet the RFP when we proposed
              it to them. WAB does not have e mails or documents
              that showed who made the decision to change to
              packaged units. If we go ahead and get a design done to
              the RFP and it is accepted do we have any bargaining
              advantage left? Our [sic] do we start talking then. I also
              need to address with them there [sic] design change from a
              steel constructed building to a post tension concrete
              building system. I feel that the post tension will add about
              6 hours per room. That is about 810 hours. [SBN]'s reason
              for going to post tension was the cost of steel has risen
              sharply. Post tension was a cost effective way for them to
            , build the building at there [sic] budget amount.

(R4, tab 244 at 10358, tabs 245, 625, 1033; tr. 3/118-21) (Emphasis added)

                                          86
       77. On 4 September 2004 COR Dyer provided SBN with the first comments on
"the 100% Civil package distributed in advance of the 65% design submittal" (R4,
tabs 23, 249). SBN's Roberts forwarded the comments to Jensen/Fey, expressing
embarrassment that the 65% design submittal was "not ready":

             These are the first comments. A large number of them
             indicate that we did not pay attention to the 35% submittal
             comments and basically were not ready with our 65%
             submittal. (Standardizing fonts margin, tabs ... , language
             not specific to this project, specs. Not relevant to this
             project, etc.) This is why we needed the submittal done
             with enough time left to review it and fix it before we
             submitted. Not only is this not encouraging, it is somewhat
             embarrassing. Do we need more manpower on this design?
             What do you propose to get this cleaned up? At this rate,
             the 65% review meeting will not go well, and we are not
             going to be in any condition to receive our LNTP or go out
             with bid packages.

(R4, tab 249) CFSC's suspense date for completion of its review of the 65%
submission was 15 September 2004 with the 65% design review meeting set for
21 September 2004 (R4, tab 24 at 2405).

        78. On 10 September 2004, SME advised SBN that it had not received the
electrical specifications for equipment and was, therefore, unable to make any
revisions to its portion of the 65% review (R4, tab 250).

       79. On 15 September 2004 SBN notified Dyer that plans and specifications for
an alternative mechanical re-design had been included in SBN's second 65% design
submittal (R4, tab 26). Botting's amended alternative design for the HVAC system
was comprised of 4 small boilers and 4 small chillers:

             [I]n order to maximize the efficiency of the building, rather
             than just providing one boiler-chiller, we'll provide
             multiple boiler-chillers throughout the building so that the
             impact on the architecture can be minimized so that we
             don't have to have huge openings of the floor and big ducts
             running under the ceiling. We can minimize the size.

(Tr. 7/246, 3/21-22 (multiple units required smaller pipes)) This alternative
HVAC/mechanical design was not approved, after which a third 65% design submittal
was prepared that included a single boiler-chiller system (tr. 7/246-49, 253-54;

                                          87
finding 87). The ongoing issue with Botting's alternative HVAC/mechanical system
design and its impact on the overall building design affected all of the other disciplines
and their designs:

                Well, there's actually quite a lot of work that goes into
                each one of those revisions because of their significant
                impact on every level. It's not just the architecture. It's all
                of the other disciplines that are impacted as well. Structural
                needs to do a revised design to accommodate changes in
                wall locations, ensure wall locations, and to make the
                structure work. Everybody needs to redo their calculations.
                The mechanical system needs to be redone. I mean
                electrical needs to be looked at, everything they're doing.
                So there's a significant impact. Every submittal, not to
                mention just needing to revise all the drawings beyond the
                engineering and architectural requirements, there's just
                revising, physically revising the drawings and doing
                another submittal and then sitting back and waiting for that
                submittal to be reviewed, responding to review
                comments .... So there is a lot of time involved.

(Tr. 7/249-50)

        80. On 21 September 2004 Dyer told SBN that, even though the Fund was
"reluctant to allow the start of mobilization U.ntil all aspects of the mechanical re-design
are understood and impacts defined," they could begin the process of having two
trailers moved from another jobsite to Fort Lewis (R4, tab 27; tr. 11172-73, 179-80; see
also R4, tab 1034; tr. 11176-78, 230-31).

       81. In the 22 September 2004 65% Design Review Comments, COR Dyer
included:

                "See a ceiling height of 7'-11" above the Lobby area?
                Thought we were not going below 8'-0"?

(R4, tab 1215 atFOIA35 -31)

      82. On 23 September 2004 BCE/ORB provided comments with respect to
SBN's mechanical system re-design (finding 79):

35
     (See findings 231-32)

                                              88
              As annotated throughout our review comments, many
              elements of the RFP submittal requirements were absent
              from the package and[,] as a result, our review is
              incomplete ....

             Because the missing information is such a critical element
             in the review of equipment selections, heating capacities,
             cooling capacities, energy performance and so forth, we
             are recommending that the submittal be returned "not
             approved" until the missing information can be provided
             and the review completed.

(R4, tabs 29, 30 at 2431-33; tr. 111118-25, 132-33, 176-80, 190; see also R4, tab 1037)

      83. The 65% Design Review Meeting took place on 28 September 2004. The
minutes of the meeting, prepared by SBN' s Roberts, included:

             Major issues, and points covered:

                 1. The mechanical re-design [#2] was not approved.
                    The Owner provided direction that the mechanical
                    system must be re-designed using a single boiler
                    and single chiller. The design is to be submitted to
                    the Owner for review on 7 October 2004. This is an
                    interim submission that will occur between the 65%
                    and 95% review submittals.
                 2. The Owner stated that the [LNTP] will not be issued
                    at this time. The Owner stated that the pre-
                    construction conference is scheduled for 13 October
                    2004, on Fort Lewis. Part of the purpose of that
                    meeting will be to determine when the [LNTP] will
                    be issued. A complete mechanical re-design along
                    with the architectural, structural and civil design to
                    accommodate it (see paragraph 1 above), will be
                    part of the requirement for the issuance of the
                    LNTP.

                 24. [CO] Bartholomew agreed to issue [SBN] the
                     authorization to mobilize to the site, set up its camp,
                     fence the perimeter, and perform minor operations
                     such as clear and grub, site demolition, silt fence

                                           89
                     installation, etc. The letter will be issued this
                     coming Friday, authorizing [SBN] to begin
                     mobilizing on Monday, 4 October 2004.

(R4, tab 253; see also R4, tab 323)

         84. Also on 28 September 2004 Botting stated its understanding of SBN's
agreement to meet the CFSC's requirements for the boiler/chiller system as well as
first floor ceiling height:

              The owner has insisted that a single heating and chilled
              water system is required. The domestic water heating
              system should be by itself. They asked [SBN] to provide
              extra height to the first floor ceiling space to accommodate
              the additional pipe count and sizes. [SBN] agreed. All
              required changes, calculation, [LEED] compliance
              summary, control system and sequence of operation, and
              details need to be submitted on October 4 at [SBN] to
              complete the 65% review process.

(R4, tab 252; see also R4, tab 1038) Botting's re-design drawings, dated
29 September 2004, included several showing corridor ceiling heights no greater than
8'-0" (R4, tab 254). At a mechanical re-design meeting at SBN on 30 September 2004:

              [P]rovisions [were made] for the single boiler and single
              chiller system and the piping required to make it work. The
              piping was accommodated by making all corridor ceilings
              no higher than 8'-0" and by raising the second floor by four
              inches, and taking two inches off of the distance between
              the third and fourth floors.

(R4, tab 323 at 10817; tr. 3/184-86)

       85. On 2 October 2004 SBN forwarded Subcontract Agreement No. 623902-0S
to Botting for signature (R4, tab 261).

       86. On 7 October 2004 SBN submitted its third 65% design that included
Botting's third HVAC/mechanical redesign utilizing the RFP-required single
boiler/chiller system for the common areas and on 8 October 2004 BCE's Heiberg
provided the following "short heads up comment" to CO Bartholomew and
CORDyer:

                                            90
             We actually received our set of re-submittals yesterday
             afternoon. We have begun our review and we are finding
             that [SBN]/Botting have made a substantial amount of
             design progress and improvements to the mechanical
             design. I doubt if we will have more than one page of
             comments .... No controls information has been
             provided though. Hopefully they are working on that
             submittal. There could be some issues that will need to get
             worked with that discipline so the sooner we get started,
             the sooner we can finish.

             A couple of other items to think about in the meantime:

             1. I am going to recommend final or official approval of
             the 65% submittal ONLY after the missing controls
             submittal have been received and approved. There are two
             independent control systems in the project of which we
             have seen nothing yet on them. Controls are a very
             important element of the project. Their silence [in] this
             area makes me a little suspicious.

             I hope this helps. At least the mechanical systems are
             getting back on track.

(R4, tab 260; tr. 7/79-101, 147-48) (Emphasis added)

     87. On 11October2004 BCE/ORB completed their review of SBN's third
mechanical system re-design:

             Most of our concerns from the first 65% re-submittal have
             been addressed. The DDC system drawings, sequences,
             and specification, however, are still missing. We
             recommend the missing controls information be submitted
             for review before proceeding past 65%.

(R4, tab 30) (Emphasis added)

       88. The Pre-Construction Conference was held at Fort Lewis on 13 October
2004 (R4, tabs 31, 323 at 10817). At this meeting Botting' s third HVAC/mechanical
redesign submittal for a single boiler/chiller system for the common areas was

                                         91
determined to be acceptable to CFSC and SBN, as was Botting's promise that DDC
would be "fully addressed in the 95% submittal" (R4, tab 260).

        89. On 15 October 2004 SBN submitted its revised Quality Management Plan
in which it designated certain principals of Jensen/Fey Architects as its quality
management organization. SBN also advised that it had "added the services of WJA
Architects" to "beef up the QA/QC effort on the design side." (R4, tab 32;
tr. 1/116-17, 7/250-51)

       90. On 19 October 2004 SBN again sent a subcontract to WAB for signature
(R4, tab 323 at 10817; finding 85).

        91. On 22 October 2004 SBN forwarded to CFSC a letter from its electrical
subcontractor, SME, on the subject of an alleged differing site condition in the form of
existing transformer, vault and power lines running through the site. SME's Ellwood
testified that he walked the site prior to submitting a proposal for the electrical work to
SBN and at that time he had with him the RFP, including the drawing depicting the
existing site conditions (R4, tab 2 at 1722). He further testified that he observed
"[j]ust minor things." (Tr. 6/125-26, 186-91, 197-200) After contract award he again
walked the site and testified he found nothing inconsistent with the RFP site drawing
(tr. 6/192-96, 220-21; R4, tab 1034 at PH008) and requested contact information for
base and utility personnel for the purpose of establishing temporary power on the
jobsite (tr. 6/127, 196-97). During a meeting with a DPW employee, Mr. Ellwood
testified that he was told that the existing site drawing in the RFP was not current: .

              And then he, out of his records, pulled out a drawing to
              show me his drawing of the site that showed an additional
              primary line that came across the site in connection to a
              vault in the middle of the site that we were, on our
              drawing, to remove and abandon, and it couldn't be
              because it was a primary I he stated it was something
              added later. It was called a primary cross-connect and
              could not be removed but would have to be relocated.

(Tr. 6/129-131; see also tr. 6/198-200, 202) Upon inquiry from Judge Dickinson, it
was determined that the drawing described as being in Mr. Buck's possession and
allegedly shown to Mr. Ellwood has not been offered into the record as evidence by
either party. The RFP/contract identified a primary electrical distribution line on the
perimeter of the project site (finding 9) and a secondary electrical feeder that ran
through the project site that would have to be rerouted (finding 36). On the basis of
the opinion of ORB, the drafter of the RFP, that the RFP utility plan was not clear (R4,
tab 263) and that COR Dyer testified that he learned after contract award that the
information supplied by DPW for the RFP was not accurate (tr. 9/20-21, 73), we find

                                            92
that the RFP/contract did not adequately identify the primary electrical interconnect
(also referred to in the record as a cross-connect) that is now at issue.

       92. Contract Modification No. POOOOl, with an effective date of25 October
2004, authorized an LNTP for construction of foundations, slag, underground utilities
and the building structure and established a completion date of 23 December 2005
(R4, tabs 34, 323), 425 days after LNTP for construction (see finding 54). SBN's
Superintendent Zeman testified that it was not permitted to start any contract work,
including site investigation, until the LNTP for construction was received (tr. 11238).

       93. As of a meeting on 27 October 2004 between SBN and its subcontractors
regarding the 95% design, SBN acknowledged that all the guest room dimensions
were too small and that the ceiling heights in all the public corridors were at a
maximum height of 8'-0" (R4, tab 266).

       94. On 28 October 2004 ORB's Patterson advised CO Bartholomew that DPW
"will not allow the primary power interconnect to remain under the building, the
Contractor must relocate it around the building footprint per the RFP" (R4, tab 268;
see also finding 91).

        95. SBN's Superintendent Zeman and Mr. Gonzales (QC) were on the jobsite
full time starting on 29 October 2004 (R4, tab 268) and requested a Fort Lewis digging
permit. The digging permit was issued on 1November2004. (R4, tab 1042;
tr. 1/193-96,223-26)

       96. On 15 November 2004 it was reported that a gas line that had not been
marked by PW was ruptured while a tree was being removed. The gas company
repaired the ruptured line. (R4, tab 1044; tr. 11191-92, 196-98, 12/39-41)

       97. On 19 November 2004 SBN' s Roberts advised COR Dyer of a meeting
on-site the previous day:

             Tom Zeman and I met on site yesterday with
             CliffHawkswood, of Fort [Lewis] DOIM, and John
             Patterson of ORB to look at the options available to us to
             solve the problem created by the differing site conditions
             associated with the existing concrete encased
             communication ducts. Mr. Hawkswood approved our
             suggested method to "lower" the ducts so they would be
             well below our designed finish grades. Our preliminary
             ROM price to accomplish that change is $45,000~00. That
             price does not include the delays that this issue has and is

                                          93
                   creating for us. We cannot tabulate those costs until we
                   have the delay behind us.

                   Per John Patterson's suggestion, we will prepare a detailed
                   work plan describing how we will accomplish this work
                   for Mr. Hawkswood's review and comment, before any
                   work actually starts. We will, of course, need the proper
                   authorization under the change provisions of the Contract,
                   to proceed, so we ask that Mr. Bartholomew provide us
                   that authorization at earliest convenience.

                   We will also need to resolve the electric primary relocation
                   change, as the existing primary duct parallels the
                   communication ducts all the way through the site in the
                   north/south direction, and crosses the east/west
                   communication duct where it ties into the communications
                   manhole east of the proposed building location.
                   Consequently, the communication duct conflict cannot be
                   resolved unless the electric primary conflict is resolved at
                   the same time. At this time, we have no contractual
                   authorization to act on this changed condition, although we
                   provided timely notice of the problem to CFSC, with cost
                   and delay notices over a week ago.

(R4, tab 280; tr. 11244)

       98. SBN's hearing Exhibit A-7 presents a summary chart of the critical path
showing the contract work through which the critical path flowed, in what periods of
time the critical path changed and delays it claims to have experienced on the critical
path as follows:

                           Dates                            Work on the critical path
                                                            [alleged delays)

        Pre-Construction   May 2004 - 24 Oct 2004           Mechanical Design
                                                            [Mechanical Design]

        Period l           25 Oct 2004 - 28 Mar 2005        Grading and utilities, excavation, foundation, concrete
                                                            structure, roof systems, trade rough-in, activities leading
                                                            to gypsum wall board (GWB)
                                                            [DOIM and phone cable reroute]

        Period 2           29 Mar 2005 - I Aug 2005         Foundation, concrete structure, roofing systems, trade
                                                            rough-in, activities leading to GWB, completion of the
                                                            95% design, 100% design and mock-up room completion
                                                            [trickle vent proposal and overexcavation]

        Period 3           2 Aug 2005 - 6 Dec 2005          Framing completion, installation of roofing systems,
                                                            activities leading to GWB, completion of the 95% desiim,

                                                       94
                                                        100%design
                                                        [framing LNTP and DDC spec resolution]

        Period 4        7 Dec 2005-4 Jun 2006           Trade rough-in, activities leading to GWB, completion of
                                                        GWB, millwork, painting and finishes
                                                        [mock-up resolution and portion ofelectrical durations]

        Period 5        5 Jun 2006 - 26 Oct 2006        Completion ofGWB, millwork, painting and finishes
                                                        [mock-up, 100% design review]
        Period 6        27 Oct 2006 - 6 Feb 2007        Completion of interior finishes, punch list and inspections
                                                        fportion offront desk modifications]
        Period 7        7 Feb 2007 - 25 May 2007        Completion of interior finishes, punch list and
                                                        inspections, completion sign-off
                                                        fpre-final inspection, resequence punch list]

(Ex. A-7; app. br. at 279-81, App'x 3) Mr. Kerr, hired by SBN to review SBN's
schedule analysis, differed from SBN' s assessment of delay days by only one day
(tr. 7/9-10, 17-19, 32-39, 73-74; ex. A-1). The Fund's expert witness, Mr. Coffin,
agreed "in principal" with SBN's breakdown into the eight Periods and their durations
as listed above. Mr. Coffin did not agree with SBN's assignment of responsibility for
the various claimed delays. (Ex. G-5) We adopt neither SBN's nor Mr. Coffin's
assignment of responsibility for delays on the critical path in Exhibit A-7. We address
specific alleged delays and the responsibility for them in the various sections of our
decision below.

       99. The record contains SBN' s "Work Plan For Additional Work to Mediate
Differing Site Conditions at Army Lodging, Fort Lewis" dated 29 November 2004:

               Primary Electric Ducts:

               Existing Condition: An underground 15KV Primary
               Electrical duct bank was found to traverse the entire site
               from Pendleton Avenue to Utah A venue, parallel to Maple
               Road, approximately fifteen feet east of it. This duct bank
               has to be relocated from the area that the new building is to
               be constructed in, as it may not be located beneath the
               building, however, the Fort Lewis Public Works
               Department requires that the tie through from Pendleton
               Avenue to Utah Avenue that was not shown in the RFP
               documents must be maintained, so the primary cannot be
               cut off and abandoned, as was the Contractor's original
               plan.

                                                   95
To maintain the primary electric tie through, the existing
duct bank must be abandoned, and a new route must be
established. The new route for the primary electrical lines
will start at the point where the primary duct bank enters
the site on the south boundary at Pendleton Avenue. From
there it will be routed west, parallel to Pendleton A venue,
then tum north parallel to Seventh Street to Utah A venue,
where it will tum east parallel to Utah Avenue to an
existing handhold located approximately fifteen feet east of
Maple Road and twenty feet south of Utah Avenue.

Relocation of Gas Lines:

Existing Condition: There is buried existing 2" diameter
high pressure gas line in place located in the area that is 1
to 3 feet east of gth Street and extends the length of the site
from Pendleton Avenue to Utah Street. In the one place it
was exposed it was found to be buried approximately 22".
That places it at an elevation of +271.50' +/-.

This line passes through the area where we are installing
the stormtech system, and the invert elevation of the lowest
storm piping in that area is elevation +267.50'. If the gas
line were installed deeper, in its present, location, it would
need to be buried a minimum of seven feet deep.

In addition to the storm sewer system conflicts, the
existing water line that passes under the future building
pad must be relocated to the east of the proposed building
location. The gas line in its present location will have to be
crossed twice by this water line, but if the gas line is buried
seven feet deep, that should eliminate the problem of
elevation conflicts. If the gas line is rerouted to the east,
instead of buried deeper, that too, will prevent conflicts
with the rerouting of the water line.

Communication Duct Banks

                              96
Existing Condition: There arc two existing underground
concrete encased communications duct banks crossing the
building pad, one in a north/south direction at grid 13, and
another in an east/west direction, diagonally from grid E to
grid G. Both ducts tie into a concrete vault that is located
in the future drive/parking area, northeast of the new
building entry. A third underground concrete encased
communications duct ties into that vault as well. This duct
leaves the vault in a northerly direction and ties into
another underground vault at the north side of the property,
just south of Utah Avenue. The elevation of the top of the
concrete encasement of the ducts that pass under the
building pad, is +273' to +273.15" [sic]. The elevation of
the top of the communications vault in the future parking
area is +274.86'. The elevation of the new building first
floor slab on grade is +276.00'. The elevation of the bottom
of the concrete spread footings that the duct banks pass
under is +273.50'. The planned elevation of the future
parking lot where the existing communications vault is
located is +273.00' +/-.The elevation of the bottom of
swale where the duct passes through in the east/west
orientation is +270.75'. The invert elevation of the storm
line that the north/south oriented duct passes under is
+268.78'.

The Fort Lewis DOIM has approved lowering the
communication ducts and revising the vault in order to
allow the proposed new finish grades to work. They agreed
to allow a variance for cover over the duct banks from 36"
[to] 18" in planted areas, and to the thickness of the base
course and asphalt in the paved areas.

Removal of Telephone Lines

Existing Condition: Several underground telephone lines
have been identified by DPW on the site, and we have
been advised that EDP will remove them, however,
nothing has happened in the several weeks since we made
contact and were advised that DPW will. The lines pass
through the building pad in three locations, and their
operable status is not clear.

                            97
(R4, tabs 282, 1046; tr. 2/151-53) A meeting was held on 30 November 2004 to
discuss DSCs and mechanical changes (R4, tab 50 at 2516).

        100. By letter dated 30 November 2004 to SBN, Botting took the position that
its originally-proposed alternative HVAC/mechanical system for the non-guestroom
areas "met the requirements of the RFP," despite its earlier admissions to the contrary
(findings 64, 66, 76). Botting further stated that it should be compensated for the
additional cost of providing the RFP-required boiler/chiller system (R4, tabs 283-84;
tr. 3/121-23, 4111-12, 60-61). SBN immediately forwarded WAB's letter, stating that
SBN believed Botting's position "to be reasonable and to have merit" and further
requesting "proper direction in accordance with the provisions of the Contract,
specifically Article I-4, and I-23, for Botting to furnish the original mechanical system
they proposed for the project, or for a change order to provide the system that employs
the boiler/chiller assembly" (R4, tabs 285, 323).

        101. As of 1 December 2004 the Architect of Record had not reviewed the ID
drawings 36 nor integrated them into the architectural drawings and SBN had not
provided a complete set of 65% design documents (R4, tabs 40, 306). CFSC's
definition of an integrated design package was "all plans and specifications, developed
for the project to the 65% level, which includes of course, the 100% civil and
structural, that were the basis for the [LNTP], effective 25 October 2004" (R4, tab 41).

       102. On 2 December 2004 SBN's Roberts memorialized a meeting on-site the
previous day regarding a telephone line:       ·

               [Y]esterday we were informed by Mr. Clowers, of the Fort
               Lewis DOIM division, that the phone line that the locator
               had identified on the east end of the project, may not be
               abandoned and removed as we were previously told. That
               phone line is active, and provides phone service to the
               existing hotel that is located to the east of the site, to the
               l.G.'s office building on the north side of Utah Avenue,
               north of the site, to the Headquarters building on the south
               side of Pendleton A venue, south of the site, and to
               numerous other buildings in the area. Mr. Clowers guessed
               that the line was buried approximately three to four feet
               deep.

36   We have found nothing in the record that defines the acronym of"ID." The Fund's brief
        describes "ID drawings" as "interior architecture material" (gov't br. at 85).

                                            98
                The line is located under the east end of the new building,
                and passes through the loading dock area. That area is
                scheduled to receive some of the deeper footings on the
                project. We will be excavating five feet deep for the
                footings around the loading dock so these phone lines will
                need to be relocated for us to construct the building.

                We did contact [COR Dyer] and Mr. Bartholomew
                immediately, and the fact that both of you were available
                on post, was helpful for you to see first hand, yet another
                of the previously unidentified buried utility conditions that
                we have been encountering. This is your written notice of a
                changed condition, involving differing site conditions, that
                is delaying our ability to start the foundation, utility and
                underground work on the project. Please forward direction
                from the Contracting Officer at your earliest convenience
                as to how we are to proceed with this issue. At the present
                time, this is one more issue that is delaying our work on a
                day for day basis.

                This notice will be followed by an RFI to provide us a
                reference number.

(R4, tab 286)

      103. In an internal Fort Lewis communication dated 7 December 2004, DPW's
Stedman provided the following information regarding "Utility Issues":

                       We held a meeting to discuss the utility issues with
                the New Army Lodge. Present were Colonel Perrenot
                (presiding), Ronald Schmidt (DCA Director),
                Cliff Hawkswood (DOIM), Steve Hart (SJA Civil Law),
                Paula Wofford (Deputy DPW), Steve Glover (Chief
                Planning Division), Jim Benson (Acting Chief Work
                Management), and Gary Stedman (PW Planning).

                       Natural Gas Line: At issue here is who pays for
                relocating the natural gas line that was not identified in the
                Digging Permit. Since Fort Lewis does not own the gas ·
                system, this is an issue between CFSC and the gas
                company.

                                              99
                      The gas line was identified in the RFP (see page 3
              Section J-2 (c)[)]. "Gas: An underground gas line appears
              to run through the center of the site east to west. Size and
              capacity are unknown at this time. The local Utility is
              Puget Sound Energy."

                      Underground electric line: The issue is what must
              be done with the underground electric line. CFSC has
              proposed two suggested courses of action: ( 1) change the
              line from underground to above ground. No. An overhead
              line cannot be secured. (2) build the lodge over the
              underground line. No. PW does not want the building built
              over the underground line.

                      This underground line was identified in the RFP as
              an underground eclectic [sic] line that would be relocated.
              (See Site Plan, Utility Plan drawings, Section J-10). [SBN]
              was aware of the line and the requirement to relocate the
              line in the RFP. The contractor is responsible for relocating
              and paying for the relocation.

                      Underground Communications Ducts: The issue is
             what to do with the DOIM communications ducts on the
             Army Lodge site. Initially DOIM agreed to have the ducts
             lowered in place (not a desirable situation, but
             acceptable), if it could be done without damaging the
             conduits and cables. Lowering the ducts was acceptable
             until it was determined the site preparation would remove
             so much surface material that existing man holes would be
             left more than 18 inches above the surface, and the
             comm[ unication] ducts too near the surface. Also, when
             DOIM approved lowering in place, it was not known that
             the ducts would be under planned water detention
             systems. Communications ducts cannot be routed under
             water detention systems. The contractor will have to
             relocate the DOIM communication ducts, cables and
             manhole.

(R4, tab 1048; tr. 12/123-24)

                                          100
        104. As of 8 December 2004 SBN's sitework, utility and excavation
subcontractor notified SBN that it was unable to proceed with its work due to "many
underground obstacles discovered on site" identified as "electrical primary ducts, the
communication ducts, the phone lines, and the gas line." SBN's Roberts did not pass
this information on to CO Bartholomew and COR Dyer until 23 December 2004 in an
email in which he further stated:

              Olympic Construction is ready to return to work with only
              one days [sic] notice, so once direction is provided, we will
              be able to respond immediately.

(R4, tab 309; see also Bd. ex. B-2; tr. 13/5-7)

        105. The CO stated it was difficult to keep the various design submissions
straight because SBN submitted documents "in pieces" and that none of the 35% or
65% comments had been tracked by SBN (R4, tab 42; see also finding 107). When
SBN's Roberts indicated that the "old 65% drawings have been developed to the 95%
point," CO Bartholomew on 9 December 2004 explained the design submittal process
as follows:

              [Y]ou may not understand that contract deliverables are
              just that. There have been extensive delays experienced
              because we did not get the deliverables as required by the
              contract. Quality Control is unacceptable. I trust there are
              65% electronic drawings being retained since they will
              likely be the basis for offsets if we continue to have
              difficulty getting what we contracted for.

              We want integrated 65% drawings submitted as required
              by the contract. If they are now at 95% integrated, submit
              what you will as the requirement for the 65% integrated
              drawings. We will then comment on what was to be an
              integrated 65% submission so you can then formally issue
              the 95% with our complete comments on the 65%.

(R4, tab 43; see also R4, tab 287)

       106. On 10 December 2004 ORB's Monson reported to COR Dyer and
CO Bartholomew a variety of government responses to the "underground" issues
previously reported by SBN. He also reported that:

                                           101
              Gonzales is keeping a record of all RFl's and is tracking
              the questions and the answers; and is keeping a hard copy
              in his office of all RFI' s ....

              Gonzales is making daily reports and is filing them in his
              office. He is up to 9 December 04 on his copies. They are
              averaging 2-3 laborers out here on a daily basis. One of
              these belongs to [SBN] and the other two are either
              Olympia Construction or SME. Narratives are stating land
              stripping and grubbing; and waiting on utility
              resolution ... nothing more.

              Gonzales will have his submittal register in place and up to
              date, on information he knows about, by the end of the day
              or Monday the 13th of December. I told him lightning will
              strike him and he will die ifhe doesn't. He is tracking the
              submittal from the time the construction folks give it to
              him until he receives a reviewed answer from the
              appropriate designer or government entity.

             Aside from this ... nothing has happened on this site aside
             from minor stripping and tree removal. This has been
             going on since before Thanksgiving when the first utility
             issue surfaced.

(R4, tab 288; tr. 11161, 65-66, 95-96) ORB's Monson testified that Jensen/Fey, as
Architect of Record, initiated RFis which were then routed through him for
distribution within the government; he had no authority to resolve any of the RFis
(tr. 11116-17, 46-48, 98, 12/156).

        107. As of 15 December 2004 a re-submission of SBN's original 65%
HVAC/mechanical design continued to create confusion as to whether SBN's
mechanical" design included the RFP-required boiler/chiller system (R4, tabs 44, 292).
SBN's Roberts claimed that SBN had been directed by CFSC to resubmit the original
65% design that included Botting's alternative HVAC/mechanical design (R4, tabs 45,
292, 1051 ). We find no evidence in the record of such a direction. After continued
discussion between SBN, CFSC and Jensen/Fey (R4, tabs 45, 296), CO Bartholomew
stated:

             We are not asking for anything other than an integrated
             65% document that was used for the LNTP for

                                          102
              construction. We must have it to deal with any proposed
              design changes and deal with the site issues we have on
              our plate at present.

(R4, tab 296) On 21December2004 SBN's Roberts agreed to submit an integrated
65% design that included the RFP-required boiler/chiller design as well as interior
design (R4, tabs 46-49, 301). CO Bartholomew responded:

              I cannot understand why this is such a big deal and so hard
              to do. We have an almost $18M project that we issued an
              LNTP for based on multiple submissions and then have
              great difficulty getting it in one set for a baseline
              document. It also seems to be very difficult to track and
              incorporate the comments we made at each iteration and
              with the interims.

(R4, tab 301; see also R4, tab 311at10775-77) SBN's architect expressed its
understanding of what was required (R4, tab 303; see also R4, tab 311 at 10775).

        108. As of20 December 2004, two months after SBN had twice sent a
subcontract to Botting for signature on 2 October and 19 October 2004 (R4, tab 323 at
10817; findings 85, 90), there was still no signed subcontract agreement between SBN
and Botting and Botting was delinquent in providing its input for the 95% mechanical
design submittal (R4, tabs 294, 295; tr. 2/145). Also as of 20 December 2004 Botting
stated that "to continue in the construction phase of the project [it would] need a
contract with a contract value that reflects the equitable adjustment detailed in our
November 30th letter" and that failure to do so would impact Botting's submission of
95% design documents (R4, tabs 297, 1052; tr. 3/122-23). In a 17 December 2004
internal email Botting stated that:

             Part of our leverage with the 95% docs is to stop the
             coordination process in its tracks and start effecting [sic]
             the ability of others to proceed with the project.

(R4, tab 1052; tr. 3/123-24, 4/36-37, 55)

       109. On Monday, 20 December 2004, CFSC received RFI #17 (gas line) and
RFI #18 (phone line), both dated Thursday, 16 December 2004, and RFI #19
(communication lines), dated 20 December 2004 (R4, tabs 299-300, 310). Just one
day later, on 21 December 2004 SBN' s Roberts notified SBN management personnel
about delays associated with differing site conditions reported in RFI ##15-19:

                                            103
                To give you some time frames for the delays we are
                experiencing, on October 22, 2004, we provided our first
                notice about differing site conditions and delay. That
                notice was for the electric primary problem and was
                actually submitted 3 days prior to the government issue of
                the LNTP. We have furnished notice after notice, since
                then, about all five[ 371 differing site conditions, via emails,
                RFI' s, updated schedules, superintendent and CQC daily
                reports, and meeting minutes. The most recent string of
                notices were via RFI's 15, 16, 17, & 18, submitted on
                12/16, and RFI 19, submitted yesterday. Each of those 5
                RFI' s tracks one of the 5 differing site conditions issues,
                and reiterates the day for day delay we are experiencing as
                a result of them. We also distributed the meeting notes
                from the December 15th progress meeting yesterday, that
                speaks of the delays in several places. We distributed our
                updated CPM schedule at the 12/15 progress meeting,
                which showed the delays, which we discussed at that time,
                and noted in the meeting notes.

                Our files are bulging with notices. As yet, we have no
                direction on any of it, nor have we seen DPW out here
                doing something about the things that they could do
                something about, like moving the phone lines that run
                through our loading dock area, or relocating the gas line
                that runs through our storm detention area. Why we are not
                getting direction and why DPW is not taking care of some
                of these issues is anybody's guess. In the meantime, we are
                sitting here on an unbuildable and unacceptable site,
                undergoing a day for day delay.

(R4, tab 304) The following information about the alleged differing site conditions
was included in the 5 January 2005 Progress meeting minutes (R4, tab 318):

              Description                RFI distr.date    Other information
RFI #15       Primary electrical duct    16Dec04           1Dec04 DPW involved; RFI
                                                           "confirmed delay"; discussed at

37
     SBN seeks compensation in this appeal for four alleged differing site conditions (see
        Section II below). The fifth alleged differing site condition was the potential
        for water lines to contain transite pipe at the point of connection. It was later
        determined that transite pipe was not encountered and is not now before us for
        consideration (R4, tab 460).

                                              104
                                                    5Jan05 progress meeting
RFI #16   Transite pipe             17Dec04         1Dec04 DPW involved; RFI
                                                    "confirmed delay"; discussed at
                                                    5Jan05 progress meeting
RFI #17   Gas line                  16Dec04         1Dec04 DPW involved (gas line
                                                    owned by the gas company); RFI
                                                    "confirmed delay"; discussed at
                                                    5Jan05 progress meeting
RFI #18   Phone line                17Dec04         1Dec04 DOIM involved; RFI
                                                    "confirmed delay"; discussed at
                                                    5Jan05 progress meeting
RFI #19   Communications ducts 20Dec04              1Dec04 DPW involved; RFI
                                                    "confirmed delay"; discussed at
                                                    5Jan05 progress meeting

      110. By email dated 22 December 2004, COR Dyer suspended review of
SBN's 65% design submittal (see finding 107):

            Most of you by now realize that the recently received
            integrated 65% design submittal is NOT integrated at all.
            It does not include the mechanical system of a centralized
            boiler and chiller required by the RFP and Ft. Lewis DPW.
            Therefore, you can immediately suspend any review
            you're doing, until [CO Bartholomew] and I are satisfied
            that we finally receive a truly integrated 65% design
            submittal upon which the [LNTP] was issued. We are
            currently in discussions with [SBN] as to what should be
            included in a totally integrated design package, as they are
            having internal difficulties with understanding what they
            need to provide us before they are allowed to move
            forward to 95%.

           I apologize for [SBN]' s incompetence on the design
           process. Their Project Manager is totally inept and I am the
           first to say he needs to be removed from his '1itled"
           position on this project. I personally don't see how we can
           move this vital project forward with him at [SBN]'s helm.
           The time and energy we've wasted so far would be
           frightening to calculate! Once we clarify with [SBN] what
           is required, and receive a time of distribution, you'll be
           notified as always. It's ridiculous to think we've reached
           this point with a group that was well regarded and had
           attained acclaim on other projects.

                                        105
(R4, tab 306)

       111. After several disagreements between CFSC and SBN's Roberts about the
proper procedure for the processing ofRFis (R4, tabs 50, 307-08), CO Bartholomew,
on 27 December 2004, sent the following email to SBN' s Henrickson:

                 Our relationship is in serious jeopardy. We will in no way
                 accept Mr. Roberts' statements below about RFI's and may
                 ask you to have him removed from the project. He has
                 been an impediment at most turns and will not pick up the
                 phone and call instead of this childish behavior. Swinerton
                 Corporate should be advised that our holdings of your
                 stock is [sic] dropping like a rock into an abyss. I may have
                 to make a formal notification that I do not want to make.

                The issue with RFI' s is we want them fully researched and
                submitted/sealed/approved by the AIE of Record I who is
                the Chief [of] your Quality Control Management System I
                not Bill Roberts. Your on-site QC for construction has also
                been of concern. We have a multi-faceted customer who
                accepts/rejects any design changes that [COR Dyer] and I
                consult/review. Ifwe had a set of consolidated and agreed
                upon 65% drawings, much of this would not be taking
                place.

(R4, tab 50 at 2515, tab 312)

       112. The 65% design package submitted by SBN on or about 30 December
2004 contained only drawings and was not a "complete package of drawings,
specifications and design analysis/calc[ulations] showing the accepted design as of
65%" (R4, tabs 313, 318 at 10804).

       113. Progress Meeting #3 was held on 5 January 2005, the minutes of which
were prepared by SBN and included the following: SBN was awaiting direction from
CFSC regarding differing site conditions (finding 109); the project completion date on
the project schedule had been updated to 7 March 2006 or 10 March 2006 38 ; and, the
RFI review process was explained (R4, tabs 318, 1055).

38
     Both dates are contained in the minutes without explanation as to the conflict.

                                             106
       114. A "Site Issues" meeting was held on 10 January 2005 at the jobsite and
was attended by CO Bartholomew, representatives from ORB, SBN, Jensen/Fey and
SME, among others. The minutes of the meeting, prepared by SBN, included:

             1-01. Update From the Friday 117/05 Meeting between
                   CFSC and the Fort I 1111/05 I Bart Bartholomew
                   with CFSC provide[ d] an overview of discussion
                   from the Friday 1/7/05 meeting between CFSC and
                   Fort Officials. The following was provided:

                    1.) Bart indicated that the gas line would probably
                    be lowered. Direction may be given to [SBN] to
                    proceed with this work as an added scope to the
                    contract. [SBN] awaits a Change Directive from
                    CF[SC] on this issue.

                    2.) Bart indicated that the phone lines will probably
                    also be lowered. [SBN] addressed that the phone
                    lines may not be lowered, as they are under a
                    footing. Further determination may be necessary for
                    this issue. A Change Directive may be given to
                    [SBN] for this work as well. [SBN] awaits direction
                    from CFSC on this issue.

                   3.) Bart indicated that Keith Henrickson of [SBN]
                   and himself had previous discussions regarding the
                   existing electrical duct bank. It was discussed that
                   the Contractor is responsible for the portion of the
                   reroute, which is shown on the SME electrical
                   drawings, however the additional rerouting will be
                   added scope per a Change Directive from CFSC.
                   SME Electric was in attendance to confirm this
                   understanding, and SME will provide the design for
                   the reroute from their new transformer vault to the
                   connection at Utah Street. CFSC is to include this
                   direction in a Change Directive.

                   5.) Bart indicated that rerouting the DOIM lines
                   would probably delay the project at least 60 days
                   and will have considerable cost impacts. In an effort
                   to reduce these impacts, CFSC wants to present a

                                         107
                       civil re-design to Fort Officials for consideration.
                       Bart indicated that a new meeting with the Garrison
                       Commander has been set up for next Thursday,
                       1/13/05 at 2:00 P.M., to review such plans. See 1-02
                       below for details about this exercise. Action: CFSC

                1-02. Civil Re-design Directive: 1/7/05 I Bart
                      Bartholomew of CFSC has requested a civil
                      re-design of the site to accommodate the existing
                      DOIM ducts and vault. It was discussed that
                      changing grades, drainage and some of the parking
                      and driveway layouts may be necessary for this
                      design change. Bart has requested that such
                      re-design be provided within 48 hours of this
                      meeting and made it clear that this exercise is
                      additional work to the contract, which everyone will
                      be reimbursed for. It was requested that the design
                      be available for Bart's review by the end of the day
                      on Wednesday, 1112/05 (design to be delivered to
                      Bart's hotel). After reviewing this possibility at the
                      meeting, Darren Simpson ofDCI Engineers
                      indicated that they could probably come up with a
                      re-design within this time frame. In order to do this,
                      Darren has requested that top and bottom elevations
                      of the duct bank be provided for this exercise.
                      [SBN] will contact the earthwork Subcontractor
                      immediately to start the necessary potholing£391.
                      Once the potholes are dug, the Surveyor will
                      determine elevation at the given locations. At the
                      end of the meeting DCI, ORB and [SBN] reviewed
                      the site and identified the areas where elevations
                      will be provided [see, R4, tab 1056]. It is noted that
                      Olympic Construction was on site to start digging
                      within Yi hour of this request and the Surveyor was
                      tentatively scheduled for 1111/05 A.M. to verify
                      elevations. Action: [SBN], DCI Engineers

                1-03. Electrical Duct Rerouting: 117/05 I Bart confirmed
                      that the existing electrical primary power duct bank

39
     "Potholing" was described by SBN's Superintendent as hand excavation by shovel;
         "[g]ingerly trying to expose lines [horizontally and vertically] so you don't
         damage anything" (tr. 1/198-200).

                                            108
      will be rerouted, as necessary, to allow for the
      construction of the new building. It was confirmed
      by CFSC, [SBN] and SME[], that there is a split
      responsibility for this rerouting. The Contractor is
      responsible for the portion of the rerouting that is
      included in the SME[] design drawings and CFSC is
      responsible for the additional rerouting to make the
      interconnection from Pendleton A venue to Utah
      Street. The additional rerouting includes the portion
      of the duct bank from SME's transformer vault
      around to the Utah A venue side of the site. SME
      will provide a drawing showing the new
      interconnect arrangement. CFSC has a Contractor to
      do the work. The additional scope for [SBN] will be
      included in a Change Directive from CF[SC]. Pat
      Ellwood of SME[] suggested that relocating the
      existing cross-connect vault would save some
      money. Action: CFSC/SME

1-04. Building Foundations: 117/05 I [SBN] indicated
      that, at this point, it is not known if the building
      foundations will have to be put in deeper than
      shown on the current design. A Geotech report for
      the site has been developed to assist in determining
      this. If copies of this report are needed for design
      purposes, it is available from [SBN]. The answer to
      RFI # 1, that provided the design for structural
      reinforced concrete bridges over the DOIM lines
      that are located directly under grid 13 was reviewed.
      That additional work will need to be included in the
      forthcoming change directive from CFSC as well.

1-05. 65°/o Submittal Specifications: 117/05 I There was
      discussions confirming the contents of the 65%
      submittal specifications. Bart Bartholomew of
      CFSC confirmed that the 65% specification should
      include the boiler/chiller, since that system will be
      used in the new building. Bart confirmed that
      having the boiler/chiller system included in the 65%
      submittal does not give away any of the
      Contractor[']s rights in regard to the Boiler/Chiller
      Request for Equitable Adjustment, which is
      currently being reviewed by CFSC.

                           109
(R4, tab 1057; tr. 6/217-20) A follow-up meeting was held on 13 January 2005 at the
jobsite (R4, tab 1061; tr. 11106-08).

        115. As of 14 January 2005 SBN expected direction from the Fund on the differing
site conditions within a week. It was also reported that Botting was still refusing to sign a
subcontract, refusing to provide any input for the 95% design and refusing to provide
submittals until SBN "guarantees them payment" for providing a boiler/chiller system,
whether or not CFSC agrees to compensate SBN. (R4, tabs 322, 1062)

        116. In internal CFSC, AL and DPW emails dated 18-21January2005 there is
recognition of the incurrence of additional costs and delays to performance due to
differing site conditions; the only question was which organization's funds should be
used to pay for the work.

              [P]ayment for relocation of utilities misrepresented on the
              installation site plans provided in support of the Fort Lewis
              Lodging new construction project.

                    Our folks/construction contractor have identified a
             redesign solution that will overcome the need to relocate
             the DOIM telecommunications trunks running through the
             proposed lodging parking area. This will result in an
             approximately $40K cost to the project for redesign and
             site work. It does however make moot the vast majority of
             the cost previously identified in utilities relocation that had
             been identified as necessary.

                     Two other utilities remain outstanding. One is a
             communications line (600 pair telephone) and the other is a
             2" gas line. The gas and communication lines are directly
             impeding our contractor's ability to proceed with
             excavation work I estimated cost to relocate
             comm[unication] and gas lines is $25K. Current cost of the
             delay associated with the inability of our contractor to
             proceed is $1 OOK I some portion of this is associated with
             the time to identify the redesign solution to the DOIM
             telecommunications trunks. A separate issue (also not
             previously identified) costing about $90K is associated
             with an identified requirement to re-route and connect an
             electrical feeder (cross connect that goes around the site).

                                          110
                        We have no choice but to absorb the redesign/site
                work (associated w/DOIM trunks) increase of $40K as a
                project cost. Similarly we are stuck with funding the delay
                costs of $1 OOK (associated with work stoppage due to all
                the unidentified/misrepresented utilities). However, as we
                discussed it seems unreasonable for the project to bear the
                total $115K cost associated with the previously
                unidentified/misrepresented communication and gas lines
                as well as to fund any requirement for back-up power tie in
                to another building when such was not represented in the
                plans the installation provided as a departure point for our
                contractor's design effort.

(R4, tab 1064)

       117. In the 19 January 2005 Progress Meeting #4 meeting notes, it was reported
by SBN that it was still waiting for direction from CFSC as to the differing site
conditions and that it had been delayed in proceeding with work on the project since
1 November 2004 as a result; SBN also noted that it was still waiting for a response from
CFSC to Botting's 30 November 2004 request for additional compensation for providing
the RFP-required boiler/chiller system (R4, tab 324; see also R4, tab 55).

       118. On or about 24 January 2005 Botting submitted to SBN an REA:

                In accordance with the contract and because of the
                showing it has made herein, Botting hereby requests that
                an Equitable Adjustment to its subcontract be issued in the
                amount of$579,681 for designing and installing a
                boiler/chiller system. As noted above, this request includes
                only the direct costs of engineering, labor, material,
                equipment, subcontractors, other direct job costs and
                markup. We have not included any indirect costs,
                inefficiency costs or extended duration costs.

(R4, tab 333)

        119. On 26 January 2005 SBN's Roberts submitted three REAs to CFSC: an
REA for Differing Site Conditions (REA 031 ); REA for Differing Site Conditions
Delay (REA 035); and, REA for Mechanical System Upgrade (REA 014) (R4, tab 341;
tr. 1/103, 2/162-65, 3/147-49).

                                            111
               a. REA 031 requested direct costs associated with twelve enumerated
differing site conditions in the amount of$406,751 plus 32 calendar days (R4,
tabs 335, 339). On 8 February 2005 SBN submitted a revised REA 031 (finding 124).

              b. REA 035 for delay costs claimed to be due to alleged differing site
conditions in the amount of$259,617.00 and 92 calendar days:

             The progress of the work on site was stopped on
             1November2004, by the differing site conditions we
             encountered. The consequence of the delay has been no
             progress with any of the work on the project critical path,
             yet we have experienced extended general conditions
             expenses for each day of the delay for maintaining an on
             site staff to assist CFSC in solving the site problems, and
             to perform other administrative and managerial duties
             required by the Contract. The unfortunate aside of this
             delay is that we must request a time extension and an
             equitable adjustment for the costs that we have incurred
             as a result of it. At this time, if we were to receive a
             change order for the additional work to correct the site
             problems by the end of this week, we anticipate the delay
             to extend through Monday, 31 January 2005, which
             would be a total delay of 92 calendar days. Our extended
             general conditions have been reduced to a minimum
             during the delay period, which has kept our costs per
             calendar day down to $2,387.51 (including mark up).
             Other costs we have incurred are for the on site CQCC,
             standby time and some fixed costs for Olympic
             Construction, and a few cost increases that we have been
             apprised of by a few subs or suppliers. There are more
             escalation costs, and we will submit them separately,
             once we have the complete picture of them. We have
             enclosed a summary sheet that itemizes the known costs
             for this issue through 31 January 2005, along with a
             detailed breakdown of how we arrived at our extended
             general conditions number. The total cost that we request
             for the equitable adjustment to our Contract, ifthe delay
             were to stop and allow us to start the corrective site work
             on 1 February 2005, is $259,617.00, and 92 calendar
             days. Please cause a change order to be issued for that
             amount, or an adjusted amount if the delay continues past
             1 February, to compensate [SBN] for the delay.

                                         112
             Once the delay has ended, we will be able to determine
             what other impacts our subcontractors and suppliers have
             incurred due to the delay. We are particularly concerned
             about price increases, as we have received several notices
             lately regarding such increases. We will keep you apprised
             of those costs, as we receive them, and compile a
             comprehensive package of them for CFSC to provide in a
             future change order.

(R4, tabs 334, 338)

             c. REA 014 for the provision of what it characterized as a "mechanical
system upgrade to a boiler/chiller central HVAC system ... as requested by Fort Lewis
DPW and Army CFSC" in the amount of $807 ,454.00 with no time extension:

             This is the mechanical system that is represented in the
             7 October 2004, interim mechanical system design
             documents. If this upgraded system is desired for this
             project, we will require an equitable adjustment to our
             Contract for the additive amount of... $807,454.00 .... The
             change has been priced using additional manpower on
             straight time to compress the work into the same time
             frame as the originally proposed system, therefore, no time·
             extension will be required to perform the additional work
             required by this change. We do, however, reserve our
             rights to a time extensions [sic] and impact costs for this
             issue, should additional future changes create impacts that
             are not ascertainable from this single change. Our detailed
             costs estimate and backup documentation is enclosed for
             your review.

             Due to the significant cost of this change, we will require a
             change order to our Contract in order to proceed with this
             additional work. We also request an expedited answer to
             this issue, as we must change the documents and revert to
             the originally proposed design if CFSC decides that they
             do not want to make the change to the upgraded system.
             Due to the fact that this issue has been before the
             Contracting Officer for more than 60 days, we ask that the
             expedited response to this [REA] be provided no later than
             10 February 2005, which is 10 working days from this
             submission. If a change order is not received by that date,
             we must proceed with the work required to revise the

                                         113
              documents to the originally proposed design, and move
              forward from there, in order to mitigate delays and
              minimize additional costs. Please be advised that if we do
              not receive a change order for the upgraded system, we
              will require an equitable adjustment in the $100,000.00
              range to revert to the originally proposed system, and to
              cover all of the additional costs for the multiple designs,
              and multiple design submissions that we have provided
              over the past several months, at CFSC's direction.

(R4, tabs 336, 337, 340)

        120. The date of 27 January 2005 was set for the final design review meeting
of the 65% design (R4, tab 53).

        121. On 31January2005 SBN's Roberts notified COR Dyer that Gonzales had
resigned and would be replaced by David Lee (R4, tab 67). COR Dyer "demand[ed]"
that he be afforded a one-on-one discussion with any new candidate because of the
"many issues with the Quality Control program" (R4, tab 56).

       122. In a letter dated 3 February 2005 directly to CO Bartholomew, Botting
offered the foliowing items to CFSC as additional inducements for acceptance of
Batting's originally proposed alternative HVAC/mechanical design:

              Because we are confident that the packaged DX .option is
              the best solution for the Fort Lewis Lodge, we are offering
              comprehensive warranties and service on the system,
              excluding the PTAC's. This includes a 5-year warranty on
              the compressors, a 25-year warranty on the stainless steel
              heat exchangers, substantial owner training, and 1-year
              preventative maintenance service by [Botting] qualified
              personnel on the packaged units.

              Additional services available include:
                        • Preventative maintenance for PTACs
                        • Enhanced maintenance training materials
                           (CD/DVD format, etc.)

(Supp. R4, tabs 346, 349) We find no evidence that the offered items were included in
any of Batting's previous proposals or designs and Batting's letter did not indicate that
it sought additional compensation for the provision of the offered items. We find that
the amended alternative HVAC/mechanical design offered by Botting on 3 February
2005 was different from Batting's original alternative HVAC/mechanical design

                                           114
included by SBN in its proposals. In handwritten notes dated 3 February 2005,
Botting stated:

                - Include 1 yr Preventative Maint.
                   - Packaged DX System
                   - PTAC's
                   - ethef
                - Forward Engineer Stamp & Narrative that we
                  stand behind system & offer 1 yr Preventative
                  Maintenance+ 5 yr comp. warranty and SS HE
                  w/ 25 yr warranty

(Supp. R4, tab 340) CO Bartholomew40 also made handwritten notes on 3 February
2005:

                Urgent - [fax number omitted]
                     Please pass to [Botting's] Tim Burns

                powder coat on cover
                see stainless heat exch - not aluminized
                modulating burner
                ddc - Ion works included in unit (Honeywell)
                maintenance per maintenance schedule
                       on presentation package
                1 year warranty begins after acceptance
                supply all maintenance records to
                       P.W. Fort Lewis
                Final annual maintenance
                       completed prior to turning
                       over at end of 1st year.

                [signature]                 3 FEB 05

                cc: [SBN]

(Supp. R4, tabs 346, 348) CO Bartholomew requested additional information from
Botting on the proposed AAON RM Series packaged units, the modulating burner for
the make-up air units, the controller for the burners and the "compatibility for open
protocol controls (i.e. Lonmark). The Fort uses Honeywell XL-10 for small air

40   After comparing the signature on these notes to the CO's signature on numerous
         documents throughout the record, we find that the signature on these notes is
         that of CO Bartholomew.

                                            115
conditioners and XL-15 for larger AHU's etc." (R4, tab 347) On 4 February 2005
Botting forwarded to CO Bartholomew eleven ( 11) pages of information in response to
questions about AAON packaged units (R4, tab 350).

      123. By letter dated 8 February 2005 CO Bartholomew advised Botting of
concerns about its DDC proposal, stating:

             The Ft. Lewis specific question/concern is: "Is the system
             Lonworks based and Lonmark [sic] registered and can the
             contractor use Honeywell series XL 10 and XL 15 for the
             controllers?" It will be a big deal to the Ft. Lewis folks if
             these specific controllers and EMCS communications
             protocol are not provided.

             The other minor issue is to provide some specific AAON
             installations near Ft. Lewis where the base technical folks
             may go and see the packaged DX system. A few sites are
             all that is necessary since your letter indicates there are
             hundreds of installations in the region.

(R4, tabs 352, 354)

     124. Also on 8 February 2005 SBN submitted a revised REA 031, reducing the
amount sought as compensation for differing site conditions to $254,728.00:

             In preparing this proposal, we based our pricing on the
             assumption that it would take an additional four weeks to
             complete the site work to the point that we could restart
             our previous construction schedule, plus we included an
             additional three days time extension for the work to bridge
             the DOIM ducts under the structural columns at grid 13.
             We have now eliminated the phone line relocation and gas
             line relocation from our proposal, as CFSC requested, for
             others to perform the work, and have reorganized the
             electrical interconnect work per CFSC's request. This does
             create a greater potential for disruption of our work
             schedule by CFSC, therefore CFSC will need to pay close
             attention to expediting the work to meet our time line. All
             time extensions discussed herein are expressed in calendar
             days. The four week time extension assumption will be
             modified once we have received a written change order
             with direction to proceed with the changed work, and have
             been able to determine the total scope of the change and

                                          116
the time required to complete it, and the completion of the
Work undertaken by CFSC is analyzed.

 Another issue raised by CFSC at our 2 February meeting
 was the responsibility they felt [SBN] had for survey and
 potholing of the site to prevent or mitigate site problems
 due to unknown and differing site conditions. The reality is
 that there is no way that any Contractor could do the
 exploratory work CFSC believes should have been done
 before turning in their respective proposal. One reason is
that the Contract does not allow any work to be done on
 site, excavation included, until a site specific SWPP and
the EPP are submitted and approved by the Fort, and a
digging permit is obtained. On Fort Lewis, the digging
permit is the vehicle for obtaining utility locates, and only
after those locates have been done, may any excavation be
performed on a site. In addition, a Contract must exist for
the Fort Lewis DPW to review SWPP and EPP
submissions and issue a digging permit. Further, prior to
the issuance of a Contract for the project, we were not
provided a survey of the existing site, beyond the very
limited 11" X 17" drawings that were provided with the
RFP and accounted for in our proposal. It wasn't until
several weeks after the Contract was executed, before we
were provided a survey by the base. Unfortunately that
survey failed to locate the communications lines, phone
lines, gas lines, and electrical primary lines that have
created the majority of the problems we have encountered
thus far. We did confirm that the elevations of the
topography that the survey provided were reasonably
close, which is what then enabled us to determine that all
of the existing lines except the phone lines, were installed
much shallower than Fort Lewis and other code standards
required, thus creating numerous problems for our site
grading solutions and our structural foundation work at
grid 13 and elsewhere. None of that information was
available to us until long after the Contract was signed,
therefore, there was no opportunity for us, or any other
Contractor, to include the cost for dealing with these
differing site conditions in our design/build offer. That is
why the Contract contains clause 1-40, Differing Site

                            117
Conditions, which provides the means to address the items
that we are now aware of since the inception of our
agreement.

Package Number la: Electrical Primary Work, No
Cost.

This item involves only Contract work, which involves
intercepting the existing l 5KV electric primary at
Pendleton Avenue, and extending it around the comer to a
point west of the building parallel to 7th Street, from which,
it will feed a new interconnect vault, provided by others,
and not in this contract. From the interconnect vault we
will feed a new transformer vault, that is part of our
contract work, that will service the new building. There is
no additional work involved in this item, but the
interconnect vault that CF SC shall have furnished and
installed by others, will now be installed in a location that
will cause our power feed to our new transformer vault to
be disrupted, therefore, the interconnect vault must be
installed before we can start our electrical power work.
Our electrical power work must be among the first work
items to start, as soon as we are authorized to proceed with
this change. We will also remove the existing wire from
the existing primary power duct bank at Pendleton A venue
to the existing interconnect vault located in the center of
the site. We will do no work at the existing interconnect
vault or to the existing primary duct bank and wiring from
the interconnect vault to the north of it. SME will not
remove the existing transformer vault that is located in this
vicinity and reuse it as the transformer vault from which to
feed the new lodge. A new vault will be provided for that
purpose, and the existing vault will be demolished in place.
The additional costs involved with this item for the
electrical design work that were authorized by [CO]
Bartholomew at our on site civil and electrical redesign
meeting on 10 January 2005, have been applied to the costs
for the interconnect work that is outlined under package
number 11. We have been advised that DPW will pay for
the interconnect work, and that ORB is presently
coordinating the scope and payment issues with them.

                             118
SME Electric has provided a detailed scope and price for
the interconnect work, and we have no problem with SME
contracting direct with DPW. We are standing by to help
facilitate getting the work done.

Package Number lb: Interconnect Vault Option,
Electrical Primary Work, No Direct Cost from (SBN] if
the work is Contracted directly with SME Electric. If
Contracted directly with SME Electric, their quote for
the work is $4,615. 72.

This is an alternate that SME Electric has offered to
prevent the interconnect vault work from impacting the
electrical primary installation Contract work and probably
the project schedule. Under this arrangement, SME will
remove and relocate the existing electrical interconnect
vault to integrate with their electrical primary installation.
Their complete scope of work for this change is outlined in
the backup information attached for this package.

Package Number 2: Phone Cable Reroute, No Direct
Cost if Performed by a Contractor other than [SBN].
$12,694.26 if performed by [SBN].

In accordance with CFSC's direction at our meeting on
2 February 2005, the work to reroute the existing 600 pair'
direct bury cable that presently exists below the building
footings at grid 25, and in the loading dock area will be
performed by others of CFSC's choosing. Our previous
proposal for this change included layout and survey of the
reroute to miss all of our utilities and footings, including
grade hop duties to ensure that the relocated work would
be installed at the correct depth to not adversely effect [sic]
any new utility installation in addition to the costs for
Cannon Construction to do the cable reroute. CFSC will
now be responsible for the survey, layout, grade hop,
safety, insurance and supervision of this work. Please be
advised that the cable material for this work may be a long
lead item, and that the work is projected to take
approximately one week to complete, so the coordination
of this work with [SBN]'s work is critical to prevent
delays, impacts and disruptions to [SBN]' s Contract and
Change Order work. The building footings at the east end

                             119
of the building, around the loading dock and mechanical
room area cannot be started until this phone cable reroute
work is completed. [SBN] has provided a price of
$12,694.00 if CFSC decides they want [SBN] to do the
work.

Package Number 4: Reroute Gas Line, No Direct Cost
if Performed by a Contractor other than [SBN].
$23, 793.31 if Performed by [SBN].

In accordance with CFSC's direction at our meeting on
2 February 2005, the work to reroute the existing live 2"
gas line that is presently buried 22" deep, and traversing
the site parallel to gth [S]treet, approximately two feet east
of the road will be the responsibility of CFSC. This line
must be relocated as the gas company will not allow itto
be buried any deeper than four feet, and they will not allow
it to be buried under pavement or site structures, such as
our "stormtech" storm drainage structure or the truck
access road leading to the loading dock. The gas company
provided a time and material estimate to do this work,
which they estimate to contain 650 lineal feet of new gas
line. This will reroute the gas line around the new grounds
maintenance building. The gas line subcontractor has
stated that it may take three or more weeks to start the
work, from the time they receive the executed paperwork
to proceed, so we require CFSC to expedite this work to
prevent it from impacting [SBN] 's Contract work. [SBN]
has provided a price of $23,793.00 if CFSC decides they
want [SBN] to do the work.

Package Number 5: DOIM DuctNault/Site Grading
Changes, $121,447.49.

This change covers the work to perform the revisions to
the site grading and drainage per the revised civil drawings
dated 1/19/05, delta 1. The additional costs in this change
for potholing and quantity survey work have already been
incurred by the Contractor to arrive at the design solutions
for this issue. The costs for this change have been revised
because the previous proposal from our earthwork and

                             120
utility subcontractor did not contain sales tax on materials.
The costs included in this proposal only cover the delta
between what was previously shown for the site grading
and drainage, and what the engineering changes changed
the system to, with 75% of the costs of the change paying
for the additional fill to comply with the new grading
elevations. The Contractor's responsibility for removing
and replacing unsuitable soil encountered in the areas of
the changed work has not changed. If such soil conditions
are encountered, they will be removed and replaced at no
additional cost to the Owner, before the additional fill that
is part of this change is placed.

Package Number 6: RFI #1, Foundation Work to
Bridge Comm. Ducts at Grid 13, $17,597.00.

We have reduced the pricing for this change from
$22, 197 .00 to $17 ,597 .00 by changing the time extension
required to three days instead of four, and by streamlining
some of the work items. This change covers the design and
construction costs for the structural foundation work at
grid 13, where the communications duct passes directly
underneath the four reinforced concrete spread footings
and support columns, in accordance with the instructions
provided by the structural engineer in RFI # 1. Analysis of
this change concluded that a three calendar day time
extension would also be necessitated by this change, and
the costs for that time extension are included in this
proposal as well. The additional costs in this change for
survey work and design engineering have already been
incurred by the Contractor to arrive at the design solutions
for this issue. This change is the result of differing site
conditions, and is a compensable change under Contract
clause 1-40.

Package Number 7: Civil and Structural Engineering
Design, $15, 759.00.

We have reduced the pricing for this change from
$16,673.00 to $15,759.00 by reducing some of the
markups. This change pays the civil and structural
engineers for the additional design work they provided to
engineer a solution to the differing site issues, particularly

                             121
as they relate to leaving the existing communications ducts
in place. All of the costs for this change have already been
incurred by the Contractor as this effort is what provided
the design solutions for the DOIM duct and vault
corrective site grading and drainage work.

Package Number 11: Electrical Primary Interconnect,
Phase 2, No Direct Cost from [SBN] if the work is
Contracted directly with SME Electric. If Contracted
directly with SME Electric, their quote for the work is
$83,313.37 and needs to be combined with Package
Number lb, for a complete electrical interconnect
system.

This item covers the electrical work required to provide the
interconnect from the relocated interconnect vault that is
included in the electrical phase 1b work, and will be
located west of the new lodge, next to 7th Street, then
underground to the existing handhold located on site, south
of Utah A venue, and then north, across Utah Avenue
through the existing underground conduits and then up the
existing power pole to the connection point at the top of
the pole. It is important that all parties understand that once
the electrical phase 1 work is started, the interconnect
between the system on Pendleton Avenue and the system
on Utah A venue will be out of commission and will not be
back in commission until the phase 2 work is completed.
DPW has indicated that they do not want the interconnect
to be out of commission any more than two weeks,
however, if the phase 1 work is authorized by change
order, and the phase 2 work is not, the interconnect may be
out of commission for a very long time. We understand
that ORB is presently coordinating this with DPW, with
the intention of having SME Electric do this work for
DPW. We are available to assist ORB and DPW as
necessary.

Package Number 12: [SBN]'s Extended General
Conditions for Time to Perform the Corrective Work,
$66,850.00.

                             122
              This item addresses only [SBN]'s extended general
              conditions for 28 calendar days for the additional time that
              it is presently thought that it will take to perform the
              additional work to correct the site issues to the extent that
              the work will be back to the point that it was when the.
              work was stopped due to the differing site conditions. The
              additional costs for the CQCC is included in item 8, with
              the architectural added costs for the change, and another 4
              calendar days time extension with the extended general
              conditions is included in item 6, for bridging the DOIM
              lines per RFI # 1. The entire time extension requested for
              this change is 32 calendar days, 28 for the time to complete
              the corrective site work, and four for the time to complete
              the RFI #1 additional work. We do, however, qualify this
              proposal, as we do not know the entire scope of work that
              will be authorized by the change order for this work,
              defining the total scope, we will be able to schedule the
              work accurately, and an adjustment in the time and costs
              must be made at that time, to either add or credit more time
              and cost, as the schedule dictates.

(R4, tabs 351, 353; tr. 2/78-86, 164)

       125. On 9 February 2005 SBN notified CO Bartholomew that DPW personnel
arrived on the jobsite:

              Disconnecting and removing wire from the existing
              underground primary power interconnect that crosses the
              site, however, we were not informed that they were
              coming, nor do we know in any detail, what it is they are
              planning on doing. (They asked us to lay their work out for
              them, but we don't know what their work is, nor are we
              receiving any compensation to supervise or lay out their
              work.)

(R4, tab 1069) CO Bartholomew agreed with SBN that nothing should be done
without proper coordination (R4, tab 1069).

       126. By email dated 11February2005 CO Bartholomew advised SBN to
"Please Start Your Engines!" and that the following work was authorized:

             1. Effective ... (14 February 2005), [SBN] is authorized to
             begin all electrical site reroute work and will coordinate

                                          123
                other electrical work by the garrison DPW as appropriate.
                Any legitimate additional change costs for this piece of
                work shall be negotiated but the work is directed.

                2. The contractor is authorized and directed to perform the
                600 pair telephone cable reroute at a cost Not to Exceed
                $12,694.26.

                3. The contractor is authorized to perform the transit[ e]
                pipe taps, by a licensed asbestos abatement contractor, as
                proposed, for the firm fixed price of $1,922.00.

                4. The contractor is authorized and directed to perform the
                gas line reroute for a Not To Exceed cost of$23,793.00.
                Contractor is asked to coordinate this reroute to the extent
                necessary to avoid impacted site features and the new
                building. Request that unnecessarily longer reroutes by the
                gas utility subcontractor be strongly discouraged and
                coordinated with our on-site representative Mr. Bob
                Monson and/or John Patterson.

                All other requests for changes and adjustments are under
                review. Other directives and change agreements will be
                under separate cover.

                As soon as we receive a response from [Botting] on my
                8 February 2005 letter on the building mechanical HVAC
                system controls and locations of local AAON installations,
                I will be prepared to accept the proposed systems at no
                additional costs.

(R4, tabs 32041 , 355, 1070) CO Bartholomew also formally accepted SBN's 65%
design submission and authorized a Notice to Proceed with the 95% design. SBN's
Roberts thanked CO Bartholomew for the direction and responded: "This is good
news! All we need now is a decision on the mechanical system to know which
direction to take." (R4, tabs 58-59)

      127. On 11February2005 Botting again provided to CO Bartholomew the
information about the AAON packaged units previously provided on 4 February 2005

41
     This copy of the document includes a handwritten notation (author unidentified)
         with an arrow pointing to the underlined words "no additional costs" and "No,
         $200,000 +/-" (R4, tab 320).

                                            124
(finding 122), but it did not provide the requested information about the DDC controls
(R4, tab 57).

       128. By letter dated 14 February 2005 Automated Controls provided the
following information about the DDC design to Botting:

              Base Mechanical System:

              A LonWORKS registered supervisory controller that is
              tied into Johnson Controls Field Controllers. The
              supervisory controller (NAE) is a WEB based controller
              that will allow the maintenance staff to have access to the
              system through any computer connected to the network via
              use of a web browser that is password protected. The NAE
              supervisory controller also has the capability to be
              networked into the FT. Lewis EMS system for future
              connection to the post system.

              The DDC system will provide automatic control of the
              common area HVAC system[.] This includes the AHU's,
              their zone terminal units, exhaust fans and heating/cooling
              equipment.

              Hotel Room System:

             Will provide DDC control of individual PTAC heat pump
             units. System is a sub-DDC system designed specifically
             for the hospitality industry (Johnson Controls, Modular
             Room Control (MRC) system), which we can provide
             information about history, capabilities, compatibilities, and
             useful life. Each guest PTAC can be controlled/adjusted
             from a central control point in the hotel system. On-line
             monitoring/reporting can also be done from the front desk,
             in addition to providing occupied/unoccupied sensing and
             setbacks and allowing the individual guest to control/adjust
             at the guest room.

(R4, tab 1072; tr. 71171-72)

       129. Contract Modification No. P00002, with an effective date of 14 February
2005, was issued to memorialize the parties' agreement to the following work:

                                         125
             Following our many meetings and discussions the past
             several weeks, the garrison/contractor electrical/other
             issues coordination meeting Drew [Dyer] and I participated
             in via teleconference earlier today, and a just concluded
             meeting with the Chief, Army Lodging, the following
             work is hereby authorized.

             1.     Effective this date (14 February 2005), Swinerton is
             authorized to begin all electrical site reroute work and will
             coordinate other electrical work by the garrison DPW as
             appropriate. Any legitimate additional change costs for this
             piece of work shall be negotiated but the work is directed.

             2.     The contractor is authorized and directed to perform
             the 600 pair telephone cable reroute at a cost Not to
             Exceed $12,694.26.

             3.     The contractor is authorized to perform the transite
             pipe taps, by a licensed asbestos abatement contractor, as
             proposed, for the firm fixed price of $1,922.00.

             4.      The contractor is authorized and directed to·perform
             the gas line reroute for a Not to Exceed cost of$23,793.00.
             Contractor is asked to coordinate this reroute to the extent
             necessary to avoid impacted site features and the new
             building. Request that unnecessarily longer reroutes by the
             gas utility subcontractor be strongly discouraged and
             coordinated with our on-site representative Mr. Bob
             Monson and/or John Patterson.

             All other requests for changes and adjustments are under
             review. Other directives and change agreements will be
             under separate cover.

             As soon as we receive a response from W.A. Botting on
             my 8 February 2005 letter on the building mechanical
             HVAC system controls and locations of local AAON
             installations, I will be prepared to accept the proposed
             systems at no additional costs.

(R4, tab 60 at 2546) Sometime in early February 2005 CFSC accepted Botting's
3 February 2005 amended alternative HVAC/mechanical design using AAON
packaged units as well as the negotiated modulating burners, powder coating and the

                                         126
additional maintenance, warranty and training (R4, tab 390, ~ 2-04; see also
findings 160, 164, 174). CO Bartholomew's acceptance of the amended alternate
HVAC/mechanical system necessitated the submission of a fourth HVAC redesign to
be included in SBN's 95% design submission:

                     We will have to change the building back to the
              way it was originally designed, with the exception of the
              distance between floors that we changed to accom[m]odate
              the piping that the boiler/chiller system required. We will
              leave the floor heights as they presently are. We will not
              change them.

(R4, tab 359) Jensen/Fey's Fritzmeier testified that:

              It was not particularly easy because a lot of things had
              already been set in motion in terms of other design,
              disciplines clarifying their systems, particularly structural,
              a lot of architectural design had been done around the
              layout that was required to meet the requirements of that
              last 65 percent design submittal. So going back to the
              package units, there were things that were set in place that
              needed to be accommodated with a change in the
              mechanical system.

(Tr. 7/254)

         130. On 16 February 2005 Automated Controls, Botting's DDC subcontractor,
informed Botting that, even though Botting had not provided it with a copy of the RFP
as it related to the DDC, it had provided Botting with an amount to include in
Botting's HVAC/mechanical proposal to SBN for the entire DDC system
(tr. 7/180-181, 197-201). However, after later being provided the RFP design
requirements, Automated Controls admitted to Botting that it had made incorrect
assumptions:

              Project History:

                 •   We quoted our standard DDC system .. .including
                     [thermo]stats for the rooms but not a hotel system as
                     called out in the design build spec. We were not
                     given the design spec ....

                 •   Dave [Fillo] and I met to figure out how to cover
                     the cost of the flat spec' ed Onity Hotel System

                                           127
                        (terms in spec also list "or equal" but after meeting
                        with the Lodge personnel and review the existing
                        facility they will be going with Onity).

                    •   Dave and I submitted on the JC1£421 Hotel System
                        (equal) with the intent it would be rejected and then
                        we would request a scope change to cover the cost
                        of the Onity Hotel System.

                 This is a government spec and a tough one to work around.

(R4, tab 1074; tr. 7/177-84 (even Automated Controls' proposed price to Botting for a
non-hotel system was understated by $10-20,000.00), tr. 71197-201)

       131. On 17 February 2005 COR Dyer forwarded to the CO, DPW and
ORB/BCE responses received from SBN/Botting regarding "the last 2 open issues
with the mechanical design" which dealt with DDC design. DPW's response was:

                The submitted variance on the DDC Controls is
                COMPLETELY UNSATISFACTORY! DPW, Fort Lewis
                position is non-concur. The language in the RFP &
                contract spec, as well as the Fort Lewis Design Standards
                require all DDC Controls to utilize LonWorks or Bacnet
                protocol devices directly integrated into a Honeywell or
                Tridium JACE (Java Application Control Engine), which
                is a (NAC) network area controller, communicating on the
                Ethernet protocol over Fort Lewis LAN/WAN
                infrastructure for remote control and monitoring. This
                project specifies a computer workstation to be located in
                the mechanical room, with Tridium Web
                Supervisor/Workplace pro engineering software installed,
                configured and programmed for schedule, energy, log,
                alarm and database services from a single seat. The use of
                alternative control solutions is not in compliance with our
                standards or vision and will not simply "tie-in" to the base
                EMCS. Our specified system has been refined to provide
                reliable and intuitive Graphical user interfaces that do not
                require software and is accessible with a standard web
                browser. There is also a misunderstanding that Johnson
                Controls, i.e. DX-9100 are our standard. This is false. The

42
     We understand this, within the context of the entire record, to be a reference to
        Johnson Controls.

                                             128
            DX-9100 actually does not meet our spec as the
            communications protocol is proprietary N2 Comm.

(R4, tab 61) BCE's Heiberg responded:

            I hope I am not the only one that is uncomfortable with
            what is transpiring here but it seems like there is no end to
            the liberties they are planning [to] take with the RFP.

            Dale Brighams' request that the Lonworks controllers
            being furnished for the project be the Honeywell XLlO and
            XL 15 controllers seemed like a minor request in light of
            the elimination of the central boiler and chilled water
            system. Based on the [Botting] and Automated BCS
            letters, it appears they intend to use another Lonworks
            certified product instead. Related to this also, is the use of
            Non-Lon based controllers such as the AHU and UNT
            controllers. They typically use the Johnson "N2" bus over
            which they communicate with the DX9100. It appears that
            they are creatively navigating through the specs by putting
            a complicated DDC network configuration together. This
            is worrisome and may result in certain capabilities being
            lost in the shuffle. Features like being able to download a
            new program to a controller from Dale's workstation
            resulting in having to send a tech to the site with a laptop
            to reprogram a piece of equipment. Dale will probably
            want WAB to submit a network riser diagram and
            component data sheets on network equipment before being
            allowed to continue.

            Technically speaking: The Johnson Controls NAE web
            controller, in my opinion, is not equal to the Tridium JACE
            controller connected to a workstation running Tridium
            Niagra We[b] Supervisor and Workplace Pro. In fact, the
            way I read the RFP, this is a proprietary specification. The
            words ["] or equal" do not exist in this spec section.

            The 14 FEB letter from Automated goes on to explain
            future capability of being connected to the network and
            post system when according the RFP, it is a requirement of
            the project. The capabilities of the Tridium Niagra Web

                                        129
             Supervisor supports the feature of downloading new DDC
             programs to an individual controller, using the WEB.

             To not provide this exact system and features constitutes
             non-conformance with the RFP.

            The substitution of the Onity system with the Johnson
            MRC system raises several concerns. Is it really equal?
            Will integration of both the old and new buildings into one
            front end systems [sic] be possible? There is just not
            enough information on Johnson's solution for the
            hospitality industry. I think you are on the right path in
            having someone look into a detailed comparison of the two
            systems. I have my doubts that there is a true equal to the
            Onity system. In the following excerpt taken from the RFP,
            it is essentially a proprietary system specification as the
            contractor must "connect all new room thermostats and
            Bldg 2111 thermostat system to the relocated InnPulse
            Server, update software system as required." This is a
            performance specification that requires uniformity between
            the two building control systems that can only be provided
            with a proprietary Onity solution.

(R4, tab 62) John Patterson (ORB) responded:

            Just spoke to Tod Smith ofONITY ... and he attempted to
            clarify his system to me.
            The short version is that the Johnson MRC digital
            thermostats proposed will not work with the ONITY
            InnPulse system. ONITY builds all their own hubs, etc.
            From my limited understanding their system runs on an
            RS45 protocol (Sensorstat DDC2) and the Johnson MRC
            stats require a LonWorks BACNET protocol to
            communicate. The ONITY system is proprietary. The new
            room controllers to be provided under the Contract must
            talk to the ONITY system which is to be relocated from
            2111 to the new front desk, we can't have two systems.
            There does not appear to be an "or equal" to the required
            t[hermo]stat.
            The RFP language is pretty specific as to what the room
            control system must do, the Contractor needs to comply
            with the RFP.

                                        130
(R4, tab 63) Botting's Burrus testified that no one at Botting did an independent
review of Automated Controls' proposed DDC submission; they trusted that
Automated Controls was proposing a system compliant with the RFP (tr. 4/45-51).

      132. On 24 February 2005 COR Dyer sent the following email to SBN's
Henrickson and Montoya, with a copy to CO Bartholomew:

             Ron [Montoya], I (we) need your help to find out what's
             going on with your subcontractor, WA Botting. It is quite
             simple. Either you provide us the mechanical controls
             described in the RFP, or not. It is NOT a negotiable item.
             Bart and I have gone to the mat with DPW to allow the
             use of Botting's packaged HVAC units. The conditions
             we were given to allow that are satisfied, except for the
             controls issue. I don't seem to understand why the
             reluctance on this?? If you think another meeting with
             DPW is in the cards, you're mistaken. [SBN] has been
             directed to start work anew, and from all reports, nothing
             has happened except for some coordination to relocate the
             gas and comm[unication] line. Your credibility is (to use
             Mr. Bartholomew's word) in the crapper. I could use a few
             other choice words ... you're making yourself known at the
             Base in a most negative way! We are going to have an
             uphill struggle to transfer this project to them at the end!!
             I'm tired of Hard. Let's get beyond the controls issue,
             establish a date to receive the 95% design, and please get
             busy constructing the building!

(R4, tab 64) (Emphasis added)

       133. On 24 February 2005 SBN's Roberts prepared a summary report on a
variety of issues. With respect to alleged differing site conditions, he reported:

             1. Electrical Primary Interconnect, Phase 1: Fort Lewis
             DPW elected to do this work, as well as the work listed for
             item number 11. They started working on it on 9 February
             2005 and look like they are going to finish the work today.
             [SBN] received direction from CFSC (Bartholomew) on
             2/11105 for the performance of this work. [SBN]
             coordinated the work with DPW, and provided layout and
             other miscellaneous services to DPW. There are no
             additional costs to the Owner for [SBN's part in this issue,

                                         131
however, CFSC still needs to provide [SBNJ a change
order for this item.

2. Phone Cable Reroute: On 2/11105, CFSC
(Bartholomew) provided [SBN] direction to proceed with
this work for a not to exceed price of $12,694.26. [SBN]
immediately ordered Cannon Construction to order the
material and schedule the work. [SBN] has issued a
subcontract to Cannon, the material is tentatively
scheduled to arrive on site Monday, 28 February 2005.
Cannon is obtaining their digging permit today, and the
work will begin as soon as the material arrives. The work
will take approximately 5 days to complete. CFSC needs
to provide [SBNJ a change order for this item.

4. Gas Line Reroute: On 2/11105, CFSC (Bartholomew)
provided [SBN] direction to proceed with this work for a
not to exceed price of $23,793.00. [SBN] immediately
contacted Pilchuck Mechanical, the Gas Company's
Contractor and ordered the work. [SBN] has issued a
subcontract to Pilchuck, and Pilchuck is in the process of
preparing design drawings for their crew, and for obtaining
their digging permit. Pilchuck anticipates starting the work
next week or the following week. The work will take four
to five days to complete. CFSC needs to provide [SBNJ a
change order for this item.

5. DOIM DuctNault/Site Grading Changes: Revised
pricing for this change was submitted on 2/08/05, for
$121,44 7.49. These costs are for the actual performance of
the earthwork and storm utility work that was changed by
the civil engineer to solve the problem of the location and
elevation of the DOIM ducts and vault. On 2111105 CFSC
(Bartholomew) provided instructions that all other
changes, (presumably those not covered under items 1
through 4, above), were under review and that other
directives and change agreements would be under separate
cover. At this time, there has been no directive or change
agreement issued by CFSC authorizing this changed
work to proceed.

                            132
  6. RFI #1 DOIM Line Bridges @ Grid 13: Revised
  pricing for this change was submitted on 2/08/05, for
  $17,597.00. These costs are for the additional work
  required to bridge the DOIM ducts that pass under four
  column footings at gridline 13, that the Contractor could
  not have know[ n] of when designing the building. On
  2/11105 CFSC (Bartholomew) provided instructions that
  all other changes, (presumably those not covered under
· items 1 through 4, above), were under review and that
  other directives and change agreements would be under
  separate cover. At this time, there has been no directive or
  change agreement issued by CFSC authorizing this
  changed work to proceed.

11. Electrical Primary Interconnect, Phase 2: Fort
Lewis DPW elected to do this work, as well as the work
listed for item number 1. They started working on it on
9 February 2005 and look like they are going to finish the
work today. [SBN] received direction from CFSC
(Bartholomew) on 2111105 for the performance of this
work. [SBN] coordinated the work with DPW, and
provided layout and other miscellaneous services to DPW.
There are no additional costs to the Owner for [SBN' s part
in this issue, however, CFSC still needs to provide {SBNJ
a change order for this item.

12. General Contractor's Time Extension for the Time
to Perform the Differing Site Conditions Corrective
Work: Pricing for this change was submitted on 1/26/05,
and resubmitted on 2/08/05, for $66,850.00. These costs
address only [SBN] 's extended general conditions costs for
an estimated 28 calendar days for the time estimated to
perform the additional work necessitated by the differing
site conditions changes. As is the case with the CQCC,
which we discussed under item 8 9above0, due to the fact
that a small part of the changed work was authorized, but
that a large part of it has not been authorized, it is likely
that 28 days are no longer enough to cover the additional
time required for the Contractor's General Conditions, and
this item will need to be increased. On 2111105 CFSC
(Bartholomew) provided instructions that all other

                             133
            changes, (presumably those not covered under items 1
            through 4, above), were under review and that other
            directives and change agreements would be under separate
            cover. At this time, there has been no directive or change
            agreement issued by CFSC authorizing payment for this
            change.

With respect to the HVAC/mechanical system and DDC design, he reported:

            On 2111105, CFSC (Bartholomew) advised that once a
            response was received from W.A. Botting to a controls
            question and to a AAON equipment installation location
            question, he would be prepared to accept the proposed
            systems at no additional costs .... Due to all of the
            additional work that CFSC had required [SBN] and its
            designers to do to change to the boiler/chiller upgrade, it
            was not possible to provide the [AAON] system at no
            additional cost, since the additional costs [in the
            $100,000.00 range] had already been incurred.

            On 2116105, W.A. Botting's response to the two remaining
            questions regarding the mechanical system was forwarded
            to CFSC from [SBN]. That information was forwarded to
            DPW by Drew Dyer on 2/17/05 with a comment that once
            [CFSC] receives DPW's concurrence, [CFSC] will modify
            [SBN]'s contract allowing installation of the AAON
            equipment. The comments provided to Botting's controls
            response by ORB, DPW, and BCE, on 2/18/05, did not
            approve Botting's controls system, and [CFSC] has not
            notified [SBN] that the AAON equipment is to be
            installed. Since the controls system is a separate system
            from the AAON equipment, the AAON equipment could
            be approved immediately, while clarification of the
            controls system is being provided. It makes no difference
            to the controls system whether the mechanical equipment
            is boiler/chiller or DX-AAON units. Selection of the
            mechanical system needs to be made as soon as possible so
            the design work can proceed.

            On 2123105, Botting agreed that the controls system they
            were proposing had been selected by approaching the RFP
            as a performance specification, (based on project budget
            issues), not a proprietary one. Botting understands what

                                        134
                the RFP is calling for, and they will provide it, if they
                have to. They would like to present their case for an
                alternate system, and if after they are given a fair hearing
                by DPW, the Tridium JACE and Onity system are
                determined to be the only acceptable system, Botting
                will provide it. That being said, [SBN] still needs direction
                from [CFSC] on which mechanical system the project is
                going to go with.

(R4, tab 1076)

       134. On 25 February 2005 CO Bartholomew and SBN's Montoya discussed
what the CO characterized as "Bill Roberts ... continues to be the communication
problem" (R4, tab 1077). After the call, Montoya sent the following email to the CO
(with a copy to COR Dyer, SBN's Henrickson and ORB's Monson):

                I appreciate the insight you have given me on the project.
                As we discussed, we believe it would be in our best
                interest if I became your main point of contact. As I said
                earlier, I might not have an immediate answer for you but I
                will gather the information and provide same as best and as
                timely as I can.

                We agree that we need to resolve these items once and for
                all so we can move forward with construction and not
                continue to "carry this baggage" any longer. The process
                you described with regards to the handling of these items
                also seems reasonable. Therefore, we will prepare a
                summary of the items under separate cover and address
                how they will be resolved .... We understand that the
                information we provided previously was merely an
                estimate and that CFSC would prefer to reimburse us for
                the actual costs incurred. We will prepare the information
                in such a manner that will facilitate a coc43 1 being issued to
                us, which will allow us to authorize our
                designers/subcontractors to commence with the Work
                immediately.

(R4, tab 1078)

43
     We understand this, in this instance, to be an acronym for "change order."

                                             135
     135. On 2 March 2005 COR Dyer provided the following information to
CO Bartholomew:

            Here's what I can address from the March 1 telephone
            conversation with Mr. Montoya:

             1.     Mr. Montoya affirmed that the HVAC mechanical
            equipment controls will comply with the RFP and be
            compatible with the Ft. Lewis DPW computer and
            interface programs. This was the last condition yet to be
            satisfied by [SBN] and their mechanical subcontractor for
            the AAON packaged mechanical equipment. Therefore, all
            8 conditions imposed by DPW to gain their approval of
            [SBN]'s approach to heating and cooling the common
            spaces has been satisfied. Pis. direct [SBN] to move
            forward on the now accepted mechanical design, using
            AAON [HVAC] equipment, manufactured exclusively for
            the FLW Lodge. No other manufacturer's equipment will
            be accepted or approved for substitution.

           2.     [SBN] should now direct the Architect and
           Engineers to prepare and deliver us a 95% design. There
           are no other outstanding issues (to my knowledge)
           precluding the 95% design moving forward post haste. Pis.
           have [SBN] provide me a proposed submittal date for
           planning purposes.

           3.      [SBN] is delinquent of initiating any site work
           associated with their electrical work and the redesign work
           necessitated because of the telecommunications duct
           banks. I hereby ask you once again direct [SBN] to man
           the site and get busy on their underground electrical, work
           associated with the redesign of the parking lot, porte
           cochere, drainage, etc., and laying out the work for
           foundation excavations (the foundations were released
           with the limited NTP, effective 25 October, 2004 ) .... All
           site work shall commence in earnest as I thought we had
           done with your previous directive (effective 14 February).
           Since [SBN] has trouble with using email for contract
           direction, I suppose a "hard" modification is in order. Pis.
           include in the mod a negotiated settlement for the design
           effort already expended to leave the DOIM duct banks in

                                       136
               place. I want to pay for those services rendered. In my
               view, the +$15k for that task is not unreasonable.

               Ron and I agreed to begin the effort of resolving the delay
               and contract time issues soon. I will be coordinating a
               West coast visit with you and Ron in an effort to get this
               accomplished. The black cloud over this project has got to
               be removed; reaching a settlement on the delay and time
               extension will (I believe) remove most of the cloud.

(R4, tab 66)

       136. On 2 March 2005 SBN's Project Manager Roberts' base pass was
rescinded (R4, tab 169 at 3269-70; tr. 2/160, 3/151-52, 8/88, 9/98-101, 134-36,
11/21-23).

               It was totally out of the blue actually. Cindy Moinette from
               the hotel and Bob Monson came over to our trailer, and
               this was on the 1st ofMarch. And Cindy explained that she
               had gotten a call or an email or something from Drew Dyer
               telling her to go pull my pass and have me get off the
               base .... Tom Zeman and Tim Hanson were there.

               I told her and Monson that I wouldn't turn over anything
               until I had an opportunity to talk to my office .... Well, I
               talked to my office and the next day Cindy came over and
               said that Dyer was apoplectic about the whole thing and
               was going to call the MPs and have me arrested and
               escorted off the base. She was pretty upset, so I just gave
               her my pass.

               [After they took the badge] I met with my team,
               Tim Hanson and Tom Zeman and I would meet almost
               every other day for coffee in the morning in a restaurant
               off base. And just talk about what we were going to do that
               day.
                      And subcontractor meetings that we had previously
               had onsite, Botting had an office with a meeting room in

                                            137
             downtown Tacoma that they let us use. So we would have
             subcontractor meetings there.
                    [SBN] had another project at Tacoma Community
             College and they had a meeting room so we could have
             meetings there. But it became just too cumbersome.
                    I mean we actually had to have subcontractors from
             the project, off the project half an hour away to have
             meetings and go back. And it just kind [of] watered down
             everything. So pretty much, it was pretty unworkable so I
             found another job ... [in] mid-May ....

(Tr. 21166-69) SBN's Roberts and Montoya both testified that they have never gotten
an explanation from CFSC as to why Roberts' badge was rescinded (tr. 2/168, 171-72,
3/154, 155, 158). Ms. Moinette also testified that COR Dyer never gave her a reason
for taking Mr. Roberts' base pass (tr. 12/27, 42). Upon an invitation from Judge
Dickinson to expand on this subject, Montoya testified that:

                    The only thing that I could discern from my
            observation of the interaction between the two, is that there
            was a very strong personality conflict[] between the two,
            and I don't know, it was two personalities that they
            couldn't get to mesh.
                    [Roberts] didn't really have many issues with other
            people, but he did rub [Dyer] the wrong way, but I didn't
            know what the hot buttons were of [Dyer], that [Roberts]
            was hitting.
                   I couldn't see them, but I knew [Dyer] would
            always get upset, and on occasion, [Dyer] would get upset
            with me, personally, as well, very upset, and to the point
            where he would raise his voice and argue with me, but I
            didn't argue back.
                   Once he realized I wouldn't engage, he would
            apologize to me, and his voice would calm down and we
            could continue on with the discussion, and I would just let
            him vent.
                   So, I don't know if I knew how to manage his
            personality a little bit different, but even what I said at a
            point sometimes, pushed his buttons, but I guess because
            of the way I dealt with him, and did not get excited about
            his disposition, I guess that seemed to be the way to
            manage [Dyer].

                                        138
                    Q [Judge Dickinson]:         So, I understand you to
             say that the issues that you were aware of, you viewed as
             personality conflict and not anything more that you could
             point to, specific situation or something?

                     A:     I didn't see anything where [Roberts] had
             done anything to antagonize the relationship, in any
             manner, where he produced anything that was antagonistic
             or made accusations to [Dyer] or anything like that.
                     But there always seemed to be tension between the
             two. A lot of times, even when [Dyer] would first enter a
             room with us, and even just being myself, there always
             seemed to be tension, and I don't know what brought that
             on, that tension.
                     Eventually, I learned how to deal with [Dyer] and
             could try to get him to calm down, and I think he got more
             comfortable with me, that I was wanting to listen, to see
             what he was saying, and that he would approach me a little
             bit, more relaxed, but if I said, and I couldn't tell you what
             the trigger word was, but if I said something at certain
             times, he would go off on the deep end and get upset and
             start yelling and arguing and I'd just let him vent it out and
             then, pull the phone away from my ear a little bit, and then
             when he got calmed down, I said, "All right, are you
             read[y] to get back to the conversation," and more often
             than not, he would apologize for his outburst and say,
             "Yes, let's talk about it.["]

(Tr. 3/158-60; see also tr. 3/171-73) COR Dyer testified:

                   Q:     What did you hope to achieve with
             Mr. Roberts being removed from the project?

                    A:     I wanted personally, to achieve a more
             favorable working relation environment so that we could
             get the project done on time and with quality, and
             preferably within our budgetary range. That was my goal.

                    Q:     And did that occur?

                                          139
                       A:      It, ... wound up not occurring. But the folks
                who came in after Mr. Roberts' departure were more
                inclined to understand the design-build process and
                became very focused and work~d things the right way.
                       Mr. [LaSharr] came in, was a very determined
                individual, to try to set the course, chart the course a
                different direction. But we certainly didn't meet our
                schedule. The budget, I think we got real close to the top
                end of the contingency and, but I think it was a more
                positive step than have to deal with Mr. Roberts for the
                balance.

(Tr. 8/88-89)

         137. On 8 March 2005 CO Bartholomew provided the following direction by
email:

                The 95 percent design shall be completed with all due
                haste. All issues shall be coordinated directly with [COR]
                Dyer.

                Proceed with all redesigned site work. Costs will be
                negotiated or reimbursed based on actual costs.

                The mechanical system proposed and accepted at no
                additional costs shall be used in construction.

                Proceed with all appropriate construction. This is a blanket
                directive.

                No changes have been denied- only costs and entitlements
                requested deferred until we can meet face-to-face.

                Coordinate all work with Bob Monson on site and
                communicate everything with [COR] Dyer.

                I did not intend to leave anything out of this directive.
                Proceed post haste and let's get this new Army Lodge built
                as a Team!

(R4, tab 169 at 3512)

                                             140
       138. On 10 March 2005 SBN's Roberts advised COR Dyer and
CO Bartholomew that the telephone line reroute work would require additional time
and cost because it was discovered that it was not direct-buried but encased in steel
pipe (R4, tab 357).

        139. In emails dated 9-10 March 2005 COR Dyer advised SBN' s Montoya that
he did not recognize Roberts as SBN's Project Manager (R4, tab 169 at 3272,
tabs 357, 1079-80; tr. 31155-58, 10/117-19). There is no evidence that SBN objected
or otherwise challenged CFSC, in writing or otherwise, on the subject of rescinding its
Project Manager's base pass (tr. 11111-12, 212-14). ORB's Monson, CFSC's on-site
representative (finding 6) testified that he did not notice any difference in SBN's work
on the project as a result of Roberts absence because work at the jobsite was not that
far along and there wasn't much work to be impacted (tr. 11123, 28-29, 80-81).
Nevertheless, SBN now claims that the removal of Roberts from the jobsite had a
"[t]remendous impact on SBN:

              [W]e lost all that history. We had moral[e] issues. Our
              subcontractors all of a sudden, they get very upset when
              you change person[nel] in the middle of a job. Especially a
              job that's got a few pending issues like this one. Our
              superintendent ended up quitting over this [see,
              finding 157]. So it was a tremendous impact to the
              company, to the project.

              [On a normal project, it would typically take] [t]hree or
              four months minimum [to get a new project manager and
              new superintendent up and running. And this] was not [a
              normal project].

(Tr. 11113; see also tr. 11215-16, 220-21, 239)

       140. As of 17 March 2005 SBN's architect expressed concern about the status
of the mechanical system to be used in the 95% design submission (R4, tab 362 at
11250). SBN's Roberts replied that:

              The mechanical redesign is still a question mark, as
              [Botting has] not committed to a date, and their proposal to
              change the make up air system [see, finding 145] could
              slow up structural and/or architectural design, along with
              the mechanical design.

(R4, tab 362 at 11249; see also R4, tab 71 at 2577-78, tabs 363, 365-66)

                                          141
      141. On 21March2005 after being informed by ORB's Patterson that SBN's
Roberts was at the jobsite that day (R4, tabs 1082-83; tr. 10/120-21), CO Bartholomew
informed Patterson and COR Dyer by email that:

              I will send an e-mail to appropriate authorities that
              identifies Mr. Roberts as an objectionable employee and
              possible security threat to Ft. Lewis and seek to have him
              denied access. He can appeal and I will be happy to
              respond to the Garrison and/or Corps Commander. They
              will have to take responsibility for him if he is
              subsequently allowed access to the installation.

(R4, tabs 368, 1083-84; tr. 9190-92; see also tr. 10/123-27) COR Dyer responded,
with copies to Monson, Patterson, Cindy Moinette and DPW's Stedman:

             I have informed [CO Bartholomew] of Mr. Roberts'
             blatant disregard of his disbarment from the Installation of
             Ft. Lewis. He and the person who allowed him access
             today are in big trouble. How he got on the jobsite today is
             beyond me. Anyway, ifhe shows up again, pis. summon
             the military police discreetly and explain that an
             objectionable person who is a security threat has been seen
             on site and must be immediately escorted off the premises.
             I am not going to put up with this, nor should anyone
             associated with the project.

(R4, tabs 369, 1084; tr. 9/91-94, 98-100) When referred to contract clause I-35
(finding 26), COR Dyer testified that:

                    I believe that Mr. Roberts did not fulfill sentence
                    number one, experienced, responsive and capable.

                    Q:     And Mr. Roberts was never provided any
             reason in writing whatsoever that he was inexperienced,
             irresponsible or incapable of performing the project. Isn't
             that correct?

                     A:    I do not know. I am not the contracting
             officer.

                   Q:      Okay. And you testified a moment ago that
             you didn't believe and didn't agree with [CO]

                                         142
              Bartholomew's characterization of Mr. Roberts as being a
              national security threat, correct?

                     A:     I do not believe he was a security threat, no.

(Tr. 9/97-98; see also tr. 9/134-36)

       142. On 22 March 2005 Ms. Moinette expressed concern to Steve Coulson,
Chief of Army Lodging Operations:

              I am very concerned about the issues we have with
              [SBN] and moving forward with the new lodge. I do
              not want this project cancelled I Ft Lewis Soldiers and
              families need the additional lodging. This is the focus
              we all should be working to achieve. Mr. Roberts,
              Project Manager for [SBN] has caused many delays
              and problems with the project. Drew wants him off the
              job and is supported by Bart. [SBN] need[ s] to make
              this happen. I have pulled Bill Robert[ s]' s pass and
              auto sticker and he still managed to get on post and the
              job site yesterday. I feel Bill should respect Drew's
              action of having his pass pulled until the meeting
              scheduled 18 Mar with Bart, Drew and [SBN].
              Hopefully some decisions will be made and finalized. I
              do not believe Bill Roberts is a security risk I but he
              has certainly caused problems for Drew and the project
              moving forward.

(R4, tabs 370, 1085) Coulson responded:

              The [SBN] [REA] meeting that was scheduled for next
              week is contractual negotiation that has no bearing on the
              work which was directed to begin on 14 Feb 05; if you're
              not seeing significant evidence of site clearing, survey
              stakes, excavation and utilities re-route, please inform
              Drew ASAP. Our Contracting Officer, Bart, requested
              postponement of the [REA] review meeting due to both
              personal and professional obligations that must be
              addressed 28-31 March. I'm anticipating receipt of the
              95% design NL T 1 April and would expect a side bar for
              contract resolution during an on-site review sometime the
              week of25 April 05. The Project Manager personnel issue

                                          143
                was resolved in Jan 05; however, it appears as though Bart
                needs to issue a written directive.

(Id.)

       143. As of 22 March 2005 the gas line subcontractor advised that it was still
waiting for a digging permit from Fort Lewis (R4, tab 367).

       144. On 25 March 2005 ORB's Monson forwarded the following information
to Dyer, Patterson, Bartholomew, Stedman and Moinette:

                Drew ... as you requested of me I talked to Gary Stedman
                whom in tum talked to a Larry Freeman, Head of Physical
                Security Fort Lewis, yesterday; and this is what
                Mr. Freeman told Gary:

                An individual having access to Fort Lewis can only be
                barred entry due to the committment [sic] of a crime or
                other violation. (I nor Gary know what "other violation"
                entails.) According to Mr. Freeman, the original sponsor
                (Cindy) [Moinette] can remove or take possession of an
                individual's ID pass card and vehicle sticker so he cannot
                obtain entry. If he gets another pass through other
                temporary means then the original sponsor can have the
                MP' s come and take his ID and vehicle passes again and
                escort him off the base .... According to Mr. Freeman, the
                "list of undesirables" at the main gate guard house is for
                those individuals that have committed a crime or "other
                violation".

(R4, tabs 372, 1095; tr. 9/101-03)

        145. On 30 March 2005 SBN "showed up with ... a proposal for 'trickle vents'
rather than tempered forced air ventilation" (R4, tabs 69-70, 1088). 44 Botting
represented to SBN that the trickle vent system met both code requirements and RFP
requirements (R4, tab 70 at 2573, tab 1092). Botting's Bums testified that the trickle
vents were proposed with ''the intent ... to simplify the system ... , eliminating a couple
of fan systems and all the duct work that had to compete for space going down the
corridors" (tr. 3/97-98; see also tr. 4/13, 37-39, 52-54, 68, 7/258-60). SBN's Montoya

44
     SBN had already expressed its belief several weeks earlier that this proposal could
        further delay "structural and/or architectural design, along with the mechanical
        design" (finding 140).

                                            144
forwarded the proposal, requesting that it be approved so it could be included in
SBN's 95% design submission (R4, tab 70 at 2572, tab 1092; see also R4, tab 375;
tr. 3/175-80, 51126-27). The ORB/BCE team provided same-day input to COR Dyer,
the bottom-line of which was that, while the trickle vents may meet code requirements,
they did not meet the RFP requirements to provide "forced, tempered makeup air" as
well as positive pressure ("overpressure") makeup air in the guest rooms which was
considered important (R4, tabs 69, 1088).

       146. On 6 April 2005 Jensen/Fey notified ORB's Monson that it had requested
layout information for electrical, interior equipment and furnishings from CFSC in
November 2004 and, to date, had not received the information which was essential to
ordering long lead time items (R4, tabs 1096-97). Monson followed up with CFSC on
13 May 2005 (R4, tab 1108).

       147. SBN's proposal to use a trickle vent system was rejected on 7 April 2005:

             Your idea was reviewed by ORB and Ft. Lewis [DPW].
             Both groups came up with basically the same comments.
             The simple vent does not provide what is specified in the
             RFP, that a constant volume of air is introduced to the
             guest rooms creating a positive pressure. Other reasons
             include:

             a.      Concern about moisture being introduced into the
             room through the vent and wall structure. Could cause
             conditions to promote mold growth.
             b.      In the winter, the vent will present an avenue for the
             introduction of cold air directly into the room, making it
             uncomfortable for occupants.
             c.      Concern about wind and traffic noise introduced
             into the rooms. Also, the amount of fresh air introduced
             will vary during high or gusty winds.
             d.      While the idea does meet code, we think it is a
             cheaper solution. If you really wanted to sell the solution,
             an equitable credit should be offered. Depending upon the
             amount of the credit, we could then go about solving the
             perceptions of the above potential issues.

             Any overtures to discuss this further shall be directed to
             me.

(R4, tab 70 at 2574, tab 379; tr. 3/180-82, 4/14-15, 41-45, 51127-28, 9/177-78) SBN's
Montoya agreed on cross-examination that a trickle vent system "is not a central

                                          145
ventilation system" (tr. 3/252). SBN's expert witness, Mr. Kommers, agreed
(tr. 3/23-245, 27-29, 63, 65-70).

       148. On 13 April 2005 Botting advised that, without the trickle vents it had
proposed, the HVAC system did not meet the required DoD Antiterrorism standards
and further:

              We will continue to move forward with the trickle vent
              concept as it would be irresponsible to proceed in any
              other manner. As previously stated, we have an obligation
              to provide a mechanical design that complies with the DoD
              standards that are intended to keep the occupants safe from
              terrorist activities.

(R4, tabs 389, 1090; tr. 4/15-18)

       149. Items of note discussed at the 13 April 2005 Progress Meeting #7 were:

             Old Business

              1-03. Existing Telephone Lines: 4/13/05 I This work has
                    been completed, as directed by CFSC. It is noted
                    that it was necessary to work an overtime night shift
                    in order to complete this work due to an additional
                    unforeseen condition associated with the existing
                    telephone line. Upon excavation of the existing line,
                    it was discovered that the line was not direct bury
                    cable, but instead was encased in steel pipe. This
                    changes the scope of work, as it will now involves
                    [sic] a cable changeover after hours (at night). This
                    work involves cutting the pipe, removing it and
                    disposing it. Upon discovery of this unforeseen
                    condition, SB[N] notified CFSC about the
                    additional work. They were notified that the costs
                    associated with the work would be $2,200. In a
                    good faith effort to get the work finished, SB'[N]
                    proceeded with the added scope. SB[N] expects full
                    compensation for the additional costs ($2,200 in
                    addition to the previously submitted amount of
                    $12,700). SB[N] still awaits a change order from
                    CFSC for this work ....

                                         146
1-04. Primary Electrical Duct Location: 4/13/05 I The
      primary electrical relocation has been completed.
      This item will be removed from the notes ....

1-05. Existing Unmarked Gas Line Relocation: 4/13/05
      I This work has been completed, as directed by
      CFSC. SB[N] still awaits a change order for this
      work. ...

1-06. Existing Communication Ducts: 4/13/05 I SB[N]
      still awaits a change order for this work. It is noted
      that some of this work has proceeded (i.e. work
      associated with RFI # 1 for duct bridging) and
      SB[N] expects full compensation for the added
      work. ... The CFSC position of this request is that
      is non-compensable.

1-09. Schedule Update: 4/13/05 I The current overall
      schedule update, as well as the 4-week look-ahead
      schedules were distributed for review and
      discussion. It was discussed that the Substantial
      Completion date on the current schedule update is
      May 4, 2006. It was also discussed that all of the
      schedule impacts are being tracked on the schedule.
      It was noted that there will be impacts to the
      schedule with regards to the underground
      conduit/piping if the Owner does not provide the
      required information necessary to complete the
      design. Pending information has been submitted in
      RFI's #35 and #40. CFSC has not made any
      contractual changes to reflect a revised contract
      completion date. Therefore no impacts are
      capable of being tracked. Owner has requested
      full-size, scaled, clean, design plans to be able to
      answer the questions posed on the RFl's.

2-04. Boiler/Chiller Design Change: 4/13/05 I CFSC
      has indicated that the original proposed system
      would be used on the project. However CFSC has
      not acknowledged or accepted the additional costs

                            141
                       associated with the boiler/chiller design, and then
                       the redesign back to the original system. SB [N] still
                       awaits a change order from CFSC for this
                       additional work. CFSC position on this is that all
                       costs incurred to comply with RFP are
                       non-compensable.

                2-07. 95%, Design Submittal: 4/13/05 I It was discussed
                      that once the Trickle Vent System has been
                      reviewed and accepted by CFSC, the 95% submittal
                      date can be established. SB[N] will advise of this
                      date when it is established. CFSC has rejected the
                      trickle vent system.

                5-01. Resolution and Change Orders: 4/13/05 I It is
                      SB[N]'s understanding that Drew Dyer and/or Bart
                      Bartholemew [sic] of CFSC will be in town
                      sometime the week of 4/25/05. At this time there
                      will be a meeting to discuss and resolve all of the
                      outstanding change order issues. It is noted that
                      most change order issues have been outstanding for
                      several months. CFSC has not even issued change·
                      orders for the items and costs they accepted and
                      gave direction on almost three months ago. Change
                      Orders must be issued so the appropriate parties can
                      be paid for all of their additional efforts. Mr.
                      Bartholomew has the action on items he directed.
                      He is not attending this week's progress meeting.
                      All other outstanding changes or alleged changes
                      will be negotiated at a yet unscheduled date.

                The next Progress Meeting will occur April 28, 2005 ....

                Notes prepared by [SBN's] Tim Hanson
                CFSC comments prepared by Drew Dyer

(R4, tab 390)

                                            148
       150. The parties continued to discuss the issue of trickle vents (R4, tabs 391,
1092; tr. 3/179-80). COR Dyer denied the use of trickle vents "once and for all"
and SBN' s Montoya responded that SBN planned to go forward with them in its
design (R4, tabs 396, 1094). As of 19 April 2005 SBN's design was not yet
complete and Botting was still asking about areas/items to discuss/redesign (R4,
tabs 393-95).

        151. On 22 April 2005 SBN's Roberts reported to SBN's Montoya, Hanson
and Zeman that on-site subcontractors were reporting "a significant amount of
overexcavation for our footings" (i.e. more than six feet deep) and that SBN should
report it to CFSC as a differing site condition:

             I would do that, but the ridiculous conditions we are
             working under on this project because of CFSC's
             improper actions in regard to my pass and position,
             prevent me from doing what needs to be done. So, I will
             provide you with the information you need to start the
             ball. Unfortunately, this information is second and third
             hand, because I have not been able to personally observe
             the conditions, determine the quantities involved, or
             discuss the issues first hand with the majority of the
             participants.

             Fortunately, for both [SBN] and the Owner, depending on
             who pays for it, the geotechnical engineer has determined
             that the existing unsuitable material that has to be
             overexcavated, is only unsuitable because it is loose, so
             that same material can be placed back in the overexcavated
             footings and compacted to 95% density. This reduces the
             need for imported structural fill.

             We are encountering buried piping that was not shown on
             the information furnished us by the Owner or marked by
             locates done for the digging permits, and that the trench
             lines that those pipes were buried in are filled with
             unsuitable material that we have to, at a minimum, remove
             and either replace or recompact to achieve suitable density

                                          149
             for bearing. That too, is a differing site condition that
             should be held to the Owner's account.

(R4, tab 169 at 3766-67, tabs 397-99, 1093)

         152. On 23 April 2005 both CO Bartholomew and COR Dyer advised SBN
that its Quality Control Management program managed by Jensen/Fey was not being
implemented as required by the contract (R4, tab 1098).

      153. On 25 April 2005 ORB's Monson provided input to CFSC for a response
to SBN about over-excavation:

             Disagree with the term "significant" and" ... most of the
             excavations .... " One has to look at the overall project to be
             able to define the extent of "over excavations". At the date
             of this RFI [#42 (22 April 2005)] it is true the Division
             One contractor is experiencing excavations below the 6
             foot line along Grid lines Q and R from column line 24 to
             approximately 14. It is expected that this will hold to be
             true along the entire[ty] of Grids Q and R.

             "Over excavations" must be evaluated on the basis of all
             footing excavations, when completed, for this project.

(R4, tab 1099)

        154. As of27 April 2005, SBN was aware that Botting's last-minute proposal
to use trickle vents was holding up completion of the 95% design submittal:

             I have now seen three written rejections from Drew Dyer
             of the trickle vent system, and nothing from Botting for us
             to relay to Drew, that offers the credit he has requested.
             I'm not sure that Botting understands that until it is
             determined which way we are going, i.e., trickle vent, or
             ducted make up air, we cannot complete our 95% design
             submittal. This is the only item that we need resolution on
             to release everyone on the design, and we cannot release
             them without this decision. The trickle vent decision
             affects the building footprint at all four floors and the
             roof. It affects the electrical design, and the fire
             sprinkler piping. It affects partition types and chase
             locations on all four floors. No one can make the changes
             to the drawings that are necessary to accomodate [sic] the

                                          150
                trickel [sic] vent, until we know which system we are
                using. It is the single largest issue on the project, and
                has been for a month now. [Botting's] Burrus will not
                return my calls or my emails. We have written direction
                from the Owenr [sic] to provide the gas pack system we
                originally proposed, with ducted make up air to the guest
                rooms. If you can't get Burrus to respond with a credit so
                we can get approval from Drew for the trickle vent, then
                we are going to have to tell all the designers to proceed to
                95% with the original system. The issuance of the 95%,
                submittal is critical to getting this job bought out, and
                to preventing it from stopping because we don't have
                the subs and materials to continue the work beyond the
                structural phase.

(R4, tabs 403, 1094) (Emphasis added) Botting did not believe a credit was warranted
(R4, tab 404), and on 29 April 2005, Botting again expressed its intention to include
the trickle vent design in the 95% design submission despite the express disapproval of
it by COR Dyer (R4, tab 405):

                Ron Montoya is working behind the scenes with Bart and
                Drew to get them to accept a credit and the trickle vent
                concept. I am somewhat hopeful that there will not be
                another resubmission of the design. If the Trickle vent is
                rejected, there will be an REA submitted to capture our
                additional costs as well as other members of the design
                team.

(R4, tab 406)

        155. SBN's Roberts prepared a Project Progress Report dated 2 May 2005 that
included the following information pertinent to the matters before us. SBN's project
staff and the percentage of time each was assigned by SBN to the project was listed as:

                Project Manager:    Bill Roberts              100 Off Site
                Superintendent:     Tom Zeman                 100
                Asst. Project Mgrs: Tim Hanson                50

                Is staff adequate for this project? .... No    Ifno, explain:

                The staff would probably be adequate if we had all of the
                staff working full time on this project, and working
                together. Presently, we still have Tim Hanson, the

                                              151
             Assistant Project Manager, working part time on this
             project, and part time on his previous project. He is needed
             full time on this project. We also have the team split up
             because the Project Manager has illegally been denied
             access to the base, and that problem has not been rectified.

(R4, tab 409 at 21498-99, tab 1103 at 21498-99) Under the heading of Construction
the following Challenges were listed:

             This is a design/build hotel for the U.S. Army on Fort
             Lewis Army Post, Fort Lewis, Pierce County, Washington.
             It is a 100, 100 square foot, four story building, that will be
             constructed on a 6.19 acre site, on the fort. The building
             footprint is approximately 29,600 square feet. There are
             185 guest rooms in the building, with a front
             desk/lobby/breakfast area on the first floor, housekeeping,
             laundry, and administrative office support areas included.
             Site development includes 110 parking spaces, covered
             entry walks, storm water detention systems and
             landscaping. The exterior of the building is a mixture of
             CMU, brick veneer and stucco, with windows in every
             room and a storefront entry and breakfast area. The roof is
             a red standing seam metal roof that matches the other roof
             structures in the vicinity.

             Ran into some over excavation issues due to encountering
             a certain amount of unsuitable existing soils. The over
             excavation is impacting the schedule by a few days. Will
             have to try to gain it back, as we were into the delay before
             we realized it, and then it was over before we could try to
             counter it with additional equipment. The unsuitable soil is
             a condition that the documents warned could be
             encountered with the exception of areas where we
             encountered buried debris, and trash. Those areas represent
             areas that will require a change order from the Owner for
             additional excavation, removal, disposal and replacement
             with suitable material, however, they are not significant,
             from what I have been told.

                                          152
The architect is still preparing the 95% design for this
work at this time. The design process has been agonizingly
slow, as the architect does not appear to be the caliber that
is needed to do this level of design work. This process
should finally be completed in the next couple of weeks.

The Electrical primary site work is complete, a temporary
transformer is being energized, and the electrical
underground work is underway. The missing information
from the Owner has impacted underground electrical work
the most, but the electrician is roughing in according to his
best guess, and that will have to be sufficient.

The Owner directed us to proceed with the installation of
the mechanical system that was originally proposed by our
mechanical design/build partner. Our mechanical partner
has proposed one variation to the original system, a trickle
vent outside· air system for the guest rooms. The Owner has
rejected that proposal in writing three times now, however,
mechanical insists that it complies with the RFP and that
the original system it proposed, and the Anny insists on
having, does not. The largest issue here does not seem to
be the functionality of the trickle vent system, as much as
the amount of credit that will be offered to provide it.
[SBN] has directed all of the design team to proceed to the
95% design submittal, utilizing the trickle vent system, and
be ready to submit the design by 19 May 2005, at the
latest. Due to the fact that the building construction is
progressing, ifthe Owner rejects the 95% submittal
because of the trickle vent system, it will be too late to
revert to the original ducted system without suffering
severe cost and schedule problems.

Construction re-started on the 28th of March 2005. To date,
no change orders have been received for the additional
costs, delays and impacts for the delay, differing site
conditions, and additional design due to the mechanical

                             153
             system issues. The work that has been re-started is only the
             work that we were to proceed with previously under the
             [LNTP] issued 25 October 2004. The total REA for all of
             these issues is $1,288,211.00, and includes 152 calendar
             days of time extension. The Owner was scheduled to
             review and negotiate the many issues that make up this
             REA at the end of March, and then at the end of April, but
             has not done so yet. The idea of traveling back to Virginia
             to meet with the Owner to negotiate the REA is being
             considered, for the third week in May.

             The Owner has still not reinstated the project manager's
             pass, and the combination of no change orders from the
             Owner, showing good faith on its part, and no backing
             from [SBN's] management to support its project manager
             has created a morale problem on the job. The subs and
             staff are concerned that if [SBN] will not support its
             project manager, that it won't support them if and when
             they need it either. It is an extreme hardship to try to
             manage a project that you are not allowed to visit, more
             [sic] less work on.

(R4, tab 409 at 21497-98, tab 1103 at 21497-98) On the subject of"potential cost
and/or schedule impact issues" SBN reported:

             We have a problem here. Up to the first of March, the
             Owner had been notified of all potential cost and or
             schedule impact issues, however, on 1 March the Owner
             decided to shoot the messenger and took our project
             manager's pass to get on site away. We heard it was
             because our project manager asked the Owner a question
             about when we would receive direction regarding the
             mechanical system issue. This creates a concern that
             providing the Owner notification of changes and impacts
             may cause additional retribution on the Owner's part. Part
             of the Owner's action in taking our P .M.' s pass was to
             threaten to have the Military Police escort our P .M. off
             base, and to take all of our team's passes if our P .M. did
             not surrender his. The team is now concerned that
             providing contractual required notices may put another
             [SBN] team member in jeopardy of being removed from
             the base. This is an untenable situation, that has now
             existed for the entire month of March and April, without

                                         154
             resolution. No notices were provided during the past
             month.
                     The on site Quality Control representative, who is a
             licensed architect employed by the project architect, is the
             vehicle that is presently being utilized to at least give
             initial notice via RFI' s, of issues, as the Army has stated
             that the Q.C. must be the initiator of issues for them to
             recognize them. Unfortunately, this person has no real
             knowledge of contractual relationships, or notice
             requirements, so we have to tell him what to do from
             behind the scenes, which often leads to it not getting done
             timely, or correctly, or at all.

(R4, tab 409 at 21499-500, tab 1103 at 21499-500]; tr. 5/11-14) On the subject of
"Fee" it was reported:

             The project is still under design. The fee opportunities and
             the risks lie in the quality of the estimate, the frugality of
             the design and the success of the buyout. We have
             identified numerous budget shortfalls, and have determined
             that the project will lose a considerable amount of money.
             We are still exploring a kitchen unit substitution to plug
             some of the holes, even though the Owner has now
             rejected the substitute. In the rest of the buyout, we will be
             aggressive to see what opportunities we may uncover but
             the outlook is grim.

(R4, tab 409 at 21500, tab 1103 at 21500) It was also reported, with respect to the
project schedule:

             The project is not behind schedule at this time, and
             there are no critical schedule issues. We have submitted
             an REA for the issues and delay, and have requested a 152
             calendar day time extension and the extended general
             conditions direct costs associated with that delay. The
             resolution of the mechanical system that we are to provide
             has delayed the completion of the 95% design submittal,
             which has delayed the buyout of the project significantly.
             This is going to cause problems with procurement of
             materials to build into the work. Miscellaneous metal is of
             particular concern. at this time. The completion of the 95%
             design that is scheduled for just over two weeks from now,

                                          155
               will help this problem, but some impacts will result from
               it.

               Is there enough General Conditions to finish the job? ....
               No     If no, explain:
               The general conditions provided in the estimate are not
               sufficient for the project. The project team has submitted
               an estimate of what they believe to be sufficient, which is
               $500,000.00 +more than is presently in the budget.

(R4, tab 409 at 21501, tab 1103 at 21501) The following items were listed under the
heading "CHALLENGES I RISKS I ISSUES I OPPORTUNITES" [sic]:

                [Mechanical trickle vent outside air system] We are
               proceeding with the completion of the design utilizing the
               trickle vent system as it is purported to be superior to the
               previously proposed system, it complies with the RFP, and
               it complies with DOD force protection requirements ·where
               the previously proposed ducted system does not appear to.
               The Army has rejected the trickle vent system to date,
               however, they have not agreed to accept the responsibility
               for the ducted system's failure to comply with the force
               protection requirements of the Contract, either. We are
               gambling on the force protection issue, combined with the
               credit that the subcontractor is offering for the trickle vent
               to be sufficient for the Owner to ultimately accept the
               trickle vent. To date, the credit offer has not been sufficient
               for the Army to approve the trickle vent, and the Army has
               stated that ifthe 95% design is submitted with the trickle
               vent included, the entire submittal will be rejected. If that
               happens, the notice to proceed beyond the structural shell
               will not be issued, and the job will ultimately stop dead,
               waiting for a design resubmittal with different mechanical
               system, or some other approach, such as arbitration, to
               produce a solution that will cause the Army to issue the
               full NTP. The decision to switch to the trickle vent system
               as a design basis for the project, rather than propose it as a
               V.E.C451 issue, has now delayed the 95% design submittal

      45
           We understand this to refer to the term "Value Engineering."

                                            156
              by two months, so it is imperative that the Army accept the
              trickle vent design.

             [Concrete subcontractor issues] Our concrete formwork,
             rebar, place and finish subcontractor has recently absorbed
             some serious financial setbacks on other projects, and we
             are concerned that his financial health may be in jeopardy.
             We have given him instructions on how to proceed
             financially, and are getting the financial controls in place
             with which to monitor his financial health on the project.

(R4, tab 409 at 21501-02, tab 1103 at 21501-02) Under the heading "RECENT
ACCOMPLISHMENTS I MILESTONES" it was reported that:

             The mechanical design continued to delay the completion
             of our 95% design submittal for the entire month of April.
             We have now concluded how the mechanical design is to
             proceed and the entire design team has been released to
             complete the design work. The 95% design is now
             scheduled to be completed by 19 May 2005. The
             completion of that design will allow us to bid out the
             remainder of the project, and determine what the total cost
             and schedule picture will be.

(R4, tab 409 at 21502, tab 1103 at 21502) In the section of the report labeled
"RELATIONSHIPS" the following was reported:

             OWNER:
             What is the quality of the relationship with owner?
             Not Good
             Owner had our project manager's pass to enter the base
             and access the jobsite revoked. (No real explanation of this
             action has been received.) This is seriously impacting the
             project team's efficiency and productivity. Owner has not
             provided any change orders for additional work that they
             have directed us to perform, or agreed to a firm date and
             time to discuss and negotiate the REA issues.

             ARCHITECT:
             What is the quality of the relationship with architect?
             Good

                                         157
This is a design/build project so the architect in this
instance is a subcontractor to us. The significant issues we
have with the architect is keeping him on schedule, within
the budget, and providing quality control to the design.
This Architect is not sophisticated enough for projects of
this size and complexity, so getting an adequate
performance from him has proven to be impossible. We
have examined the option of replacing him on more than
one occasion, but have never been allowed to follow
through with that action, which is, in all likelihood [sic], a
serious mistake. [See, e.g., R4, tabs 414-15, 420-21,
423-26, 440, 482-83, 503, 593 at 5572]

 CONSTRUCTION MANAGER:
 What is quality of the relationship with construction
manager?
The Owner is the construction manager.
The construction manager has a volatile personality. He
has expelled our project manager from the base by having
his base pass revoked. The construction manager has not
provided any explanation for his action. This has created
huge morale problems with the job team, and the
subcontractors. Everyone feels they are working under a
cloud with the possibility of a hammer dropping on them
any time the Army's construction manager feels like it.
The negative ramifications of this could be significant, and
it has polarized the project. Now that the work has re-
started, the absence of the project manager from the jobsite
is causing considerable problems for the project due to the
absence of the on site decision making ability of the P .M.
This is an additional risk that is a major concern of the job
team, and a number of the subcontractors. The fact that the
job team and the subcontractor's [sic] have seen no action
on this issue from [SBN]'s management is further
deteriorating morale, and dividing the team.

PROJECT STAFF:
What is quality of the relationship with project staff?
Not Good
The staff has not heard any word from management on
how the expulsion of the P .M. is going to be handled, and
that it, in fact will not be tolerated. This issue has now
festered for two entire months, March and April. At this

                             158
             time, the staff feels that management is not backing them
             up. Management needs to address this issue, as it is
             seriously damaging the morale and commitment of the
             project team.

             SUBCONTRACTORS:
             What is the quality of the relationship with subcontractors?
             Very Good

(R4, tab 409 at 21502-03, tab 1103 at 21502-03)

       156. As of9 May 2005 SBN's Henrickson had advised CO Bartholomew that
Montoya had been promoted to Division Manager for Seattle and that Henrickson's
role would be "more regional from now on but I will be keeping my hand in the
contracts we have" (R4, tab 1100). CO Bartholomew replied:

             Congratulations to Ron [Montoya]; however, my
             suggestion was that even though he had little or no design
             build experience, he was a good communicator, non-
             confrontational, and was able to grasp what was needed
             light years before Bill Roberts and Bill's handling of the
             earlier design submissions for Ft. Lewis.

(R4, tab 1100)

       157. As of 20 May 2005 SBN Project Manager Roberts had resigned (R4,
tab 169 at 3123). Montoya testified about the impact on the project of Roberts'
resignation:

                     The project manager is the orchestrator of the entire
             project. So, he tries to keep everything functioning in
             harmony, which would be the subcontractors, the design
             team and the owner team, everything working in concert.
                     He typically holds the most knowledge on the
             project, and even no matter how much documentation you
             put in the project, there is still those nuances that he
             retains, whether it be personality styles, how to deal with
             certain individuals on the project team, what types of
             communication strategies work best with people, and also,
             one of the most important things, he has already built up
             trust with the team.
                     So you take that out of the project, now, everybody,
             not only our immediate project team, but subcontractors

                                         159
             alike, are trying to figure, okay, so, where are we going?
             Who is doing what, and more importantly, who is the next
             guy going to be coming in, and what is going to happen
             and what is he going to do? What is his style like? Do we
             know him? Do we not know him?
                     So, there is a lot of confusion that goes on, when a
             project manager leaves the project.

                   Q:     Did that same confusion occur ... when
             Mr. Roberts left [SBN]'s employment?

                     A:      Yes, absolutely, to the point that it caused
             some concern with the other two team members, Tim
             Hanson and Tom Zeman, as well, and I did get some phone
             calls.
                     Fortunately, I had some relationships in the past,
             working with some of the subcontractors, so, when they
             understood what was going on, they would call me
             personally saying, you know, what is going to happen, and
             I said, "I'm still involved with the project. We just got to
             work through it."
                     So, I tried to smooth everything out, as best as I
             could, but there is other subcontractors that I had never ·
             worked with on that project, as well.

(Tr. 3/163-64; see also tr. 3/235-39, 244-45, 6/121-24, 209-11, 239-47) SBN's Senior
Superintendent Zeman resigned effective 27 May 2005 "[due] to the recent resignation
of Bill Roberts and other issues at Ft. Lewis" (R4, tab 1207 at SUPP-130; tr. 11221,
31164-67, 6/122-24, 240-44). By 20 July 2005 SBN's Assistant Project Manager
Hanson, who had worked part time on this project, had also resigned (R4, tab 81;
finding 155; tr. 3/164-67). By email dated 23 May 2005 SBN's Chris Bischoff was
"tentatively" identified as SBN's new Project Manager (R4, tab 1102).

       158. As of24 May 2005, the Fund was still waiting for SBN to submit a 95%
design package (R4, tab 72 at 2583). CO Bartholomew responded to questions from
SBN and Jensen/Fey about the 95% design submittal:

             Why are you sending this to us in pieces and why are we
             just getting this request? We need a concerted effort on
             your part. The design time under the contract has long
             since passed and will be impacting the construction GC's
             which we will not cover.

                                         160
                To refresh everyone's memory of the contract:

                (Does not include govt review time):
                       35% design completion and submittal I 21 days
                      .65% design completion and submittal I 49 days
                       95% design completion and submittal I 12 days!!!!!
                       100% design completion and submittal I 35 days

                TOTAL DESIGN TIME WITHOUT GOVT REVIEW
                TIME: 145 DAYS

                The contract was awarded 11 May 2004 and design started
                shortly thereafter. I will dig out the contract files if needed,
                but let's all be sensitive to getting this thing moving.

(R4, tab 72 at 2581-82, tab 437 at 11397, tab 1104)

       159. By letter dated 27 May 2005 SBN's new Project Manager Bischoff
advised COR Dyer that SBN intended to submit for review and approval a
HVAC/mechanical system design that included PTAC outside air dampers instead of
the contract-required "forced, tempered makeup air" system (finding 145):

                We are confident this system will be [sic] meet the
                requirements of the project and eventually will be
                accepted. We will also be including this system in the 95%
                design package.

(R4, tab 436)

       160. On 1June2005 COR Dyer acknowledged receipt of"yet another change
in the mechanical system design approach" (R4, tab 72 at 2581, tab 437 at 11395, tab
1104) and advised SBN's Bischoff that:

                The 95% submittal is not a point to be introducing a new
                design approach. The time to discuss approaches to design
                is long over.

(R4, tab 72 at 2581, tab 1104) ORB's John Patterson also responded to SBN's
Montoya that:

                At this point your 95% design should depict the
                mechanical systems as approved back in February .... If
                you seriously want my assistance in staffing the PTAC

                                              161
              damper option I need information, similar in depth to the
              package you brought me regarding your trickle vent idea.

             It is between [SBN] and CFSC/Lodging what this does or
             doesn't do to your 95% schedule.

(R4, tabs 73, 438)

       161. By email dated 3 June 2005, CO Bartholomew advised SBN that:

             Drew just advised the 95% was to be shipped with
             mechanical changes. This is a CONTRACTING OFFICER
             DIRECTIVE: Do not distribute to any Army players or
             consultants. We will not review unless there is a
             considerable cost value to us to do so.

             You are otherwise directed to correct your drawings to
             include the mechanical system approved with the 65%. If
             you need to replace W.A. Botting, or anyone else, then you
             should do so. Our contract shall prevail.

(R4, tab 74 at 2588, tab 1107; tr. 5/20-21) SBN's Montoya replied:

             It was represented to us that a considerable cost savings
             would be around $100,000. We informed CFSC that we
             would be able to achieve that and address the other three
             items noted in the original response as well ....

             We will continue with the completion of the 95% drawings
             based on the foregoing that everyone we [sic] will be
             treated fairly. We are not asking any more from CFSC than
             what has been asked of us.

(R4, tab 74 at 2588) CO Bartholomew replied:

             You are missing a "O" on the number that I would consider
             a considerable cost savings. The additional maintenance
             and potential for mold with 7 CFM outside air, that cannot
             be electronically controlled by the required control system,
             would eat up $1 OOK in maintenance and extra room checks
             before we were much out of warranty. Cost savings to us
             are life cycle costs from every perspective.

                                         162
             I am the one that would ultimately determine what a
             considerable savings is. The back and forth with the
             mechanical system, the design rejections at the 35%, 65%,
             and now 95%, since last summer, will likely cost you over
             $200,000 in various costs including extra design, extended
             general conditions for the late delivery of the design
             documents, and other construction delays.

             We hope to get on with this soonest and save you money
             that you should not be expending!

(R4, tab 74 at 2587)

        162. On 8 June 2005 SBN's Montoya notified CO Bartholomew by phone of
significant SBN personnel changes for this project:

             Lots of changes this week at [SBN]. Keith Henrickson
             abruptly resigned and sold his house. There is to be a
             replacement for [Bischoff] as PM and there will be a new
             Super[ intendent].

(R4, tab 75) SBN's Montoya hired Rick LaSharr as Project Manager in June 2005 and
Scott Bowman as Superintendent in August 2005, with both of whom he had worked in
the past (tr. 3/167-70, 4/90-97, 5/9-10). LaSharr testified that when he came on as
SBN's new Project Manager, SBN's ability to "move forward with the project" was not
impacted by the absence of Roberts and Zeman (tr. 4/104). On 10 June 2005
CO Bartholomew sent the following email to J. Hoopes at SBN corporate offices:

             Subject: U.S. Army I Ft. Lewis, WA I 185 Room Army
             Lodge I Swinerton Months Behind Schedule in both
             Design and Construction

             We need your immediate help on an Army Lodge project
             awarded to [SBN] at Ft. Lewis, WA in May 2004.

             We have had multiple [SBN] PM's [sic], including the
             newest one showing up unannounced two days ago at a
             progress meeting, multiple QC managers, a new project
             exec, serious issues with the mechanical design and design
             quality control, the recent unannounced departure of the
             project Superintendent we had great respect for, and this

                                        163
             week's unannounced departure of Keith Henrickson, the
             one person we have had a strong relationship with at
             [SBN]. for a number of years. There is virtually no one now
             on the project with design-build experience. This must be
             corrected immediately.

             I have left you a lengthy message about our PM and I
             meeting with you next Thursday afternoon, in your San
             Francisco office, about this project, in advance of likely
             negative actions against your firm and bonding company.

(R4, tabs 76, 1107) CO Bartholomew also forwarded his email to Henrickson (who had
resigned from SBN) and Henrickson responded that he believed the CO was "taking the
correct approach" (R4, tab 76). In a later email on 14 June 2005, Henrickson also
suggested that the Fund get SBN president, Gordon Marks, involved (R4, tab 78).

      163. As of 11June2005 there still had not been agreement between CFSC and
SBN regarding the mechanical system design and the slab subcontractor was
concerned about proceeding with its work until the design was resolved (R4, tab 446).

       164. On 13 June 2005 COR Dyer replied to ORB's Monson's 13 May 2005
request regarding a CFSC response to Jensen/Fey's request for information
(finding 146):

             Bob, thanks for your interest in keeping the concrete work
             going in earnest. I went back and checked my electronic
             records. All I've rec'd from David [Lee] were the breakfast
             bar serving and prep area layouts, a couple of weeks after
             my last visit (April 28). I have seen no scaled,
             dimensioned, full size floor plans on the Lobby and
             administration areas. As was discussed during that
             progress meeting, the 95% design was going to be
             delivered by the middle ofMay ... now we're in the middle
             of June and NOTHING.

             Even if we have the documentation to provide [SBN] the
             answers that they need, I have expressed many times (and
             very clearly) that I am not going to staff each and every
             design issue separately until we get a fully integrated 95%
             design. [SBN] has had over 4 months since the mechanical
             design approach was accepted by all concerned to provide
             us the 95% design. If they find themselves not being able

                                         164
                to produce in the field under the Limited NTP, they have
                only themselves to blame. Any construction hold up is
                entirely the fault and blame of [SBN]. We, the Gov't, are
                not going to be caught up in designing by the seat of our
                pants.

(R4, tab 1108) Mr. Monson agreed with COR Dyer's approach (R4, tab 1109).

       165. On 15 June 2005 SBN notified the Fund of its staffing plan for the project:

                Senior Project Manager:      Rick LaSharr
                Interim Project Manager:     Chris Bischoff (see note below)
                Assistant Project Manager:   Tim Hanson
                Assistant Project Manager:   John Elswick
                Superintendent:              Pat Fry
                Safety:                      Christine Russell
                Scheduling:                  Jeff Pinter (Bellevue office)

                Chris Bischoff, as Interim Project Manager, will be
                involved through the 95% design approval, buyout, and a
                full transition to Rick LaSharr. He will be available beyond
                that to help when needed.

(R4, tab 79) Also on 15 June 2005 Botting acknowledged its receipt of the "directive
to proceed with a fully ducted system for each floor" (R4, tab 452; tr. 5/128).

       166. Progress Meeting #12 took place on 22 June 2005. Meeting notes were
prepared by SBN' s Hanson and included:

                1-05. Existing Unmarked Gas Line Relocation: 6/22/05
                      I A change modification has been issued by CFSC.
                      SB[N] has billed for this work and awaits payment
                      from CFSC. There are outstanding invoices due to
                      Subcontractors, which have been past due since
                      April. SB[N] will pay the Subs once the Funds are
                      received from CFSC ....

(R4, tab 460)

      3. 95% Design

      167. SBN's 95% design was submitted to CFSC on 14 July 2005 (R4, tab 479).
SBN's Montoya admitted the submission was incomplete (R4, tabs 80, 82; tr. 5/36) ..

                                             165
       168. By internal email dated 18 July 2005 Botting acknowledged that its DDC
design incorporated in the 95% design submission did not comply with the RFP:

             Our published specification in our 95% submittal does not
             match the RFP in any way shape or form! Our
             specification is a complete substitution geared around
             Johnson Controls and I don't think it is going to fly. I do
             not want to waste any time going down a dead end road,
             especially since we are out of time. The RFP clearly states
             that "An existing ONITY "Senercomm" InnPulse On-line
             System will be relocated from the existing building to the
             new facility. The entire facility operation is specified
             around ONITY. They are using ONITY electronic door
             locks and ONITY electronic controls to the room Safes. It
             only makes sense to me that the Programmable
             "Senercomm Sensor-stats" are used and not a substituted
             product. The owner probably will not consider a substitute
             and we will only lose more time.

             In addition, the specifications that we wrote don't cover
             the RFP Section "J-4". The specifications clearly state that
             the specified Tridium JACE network area controller will
             be provided for the network interface to provide global
             supervisory control functions. Our controls specification
             doesn't even address the requirement for network
             interface. It is clearly stated in the RFP that the Tridium
             JACE system will be provided and no other systems or
             gateway-based technologies will be acceptable. Johnson
             controls would need an interface panel to communicate
             with the Tridium processor and there is no way the Army
             will accept that. In my opinion, this is heading down a
             dead end road and I think we should proceed with
             Honeywell system from Sound Energy. I need your
             thoughts on this ASAP because I need the Controls guy
             onboard now!

(R4, tabs 480, 1114; tr. 4/52) SBN's expert witness, Mr. Kommers testified that the
Johnson Controls thermostats could not communicate with the existing ONITY
Senercomm InnPulse system (tr. 7/152-54, 161, 164-65 (bldg. 2111 ONITY which
was Unix-based couldn't communicate with Lonworks/BACnet protocol controllers
like the Johnson Controls thermostats), tr. 71154-57). Automated Controls' Magruder
described the lack of communication between the existing ONITY system and the

                                         166
proposed Johnson Controls thermostats by analogy to spoken languages, i.e. both
components spoke Spanish but one component spoke the Mexican Spanish dialect and
the other spoke the Castilian Spanish dialect (tr. 7/193-94).

      169. On 26 July 2005 BCE completed its review of SBN's 95% Design
Submittal:

            Because the list of comments is rather extensive, and their
            resolution will require inter-discipline coordination, we are
            recommending that the submittal be returned "not
            approved". Review comments that could possibly affect
            the sizing of major system components need to be
            addressed and the missing information needed for
            evaluation of the design, need to be submitted before the
            review can be completed.

            Major mechanical elements in question are:

                      •   The specification still reflects a 4-pipe fan
                          coil system with gas-fired boiler and
                          air-cooled chiller.
                      •   The ventilation airflow rates shown on the
                          plans do not meet ASHRAE standard
                          62-1999 (see attached .pdffile).
                      •   Design Analysis: Some major equipment
                          sizing calculations are missing. Sizing of the
                          domestic hot water heaters and storage, air
                          equipment external static pressure
                          calculations, etc. can't be confirmed.
                      •   EMCS information: No DDC system
                          drawings or diagrams have been provided.

            Major electrical elements are:

               •   Electrical load calculations must be coordinated
                   with revised mechanical equipment electrical
                   requirements.
               •   Emergency lighting system inverter system has not
                   been specified nor indicated on the drawings.
               •   The room panel risers need to be recalculated
                   showing actual mechanical loads and room
                   configurations.

                                        167
(R4, tabs 83, 485-86; tr. 111125-27, 180-85) BCE's Heiberg testified that:

              [T]here were specifications that were provided with this
             submittal; however, the specifications reflect a four-pipe
             fan coil system and gas fired boiler and air cooled chiller,
             which wasn't on that submittal.
                      So you had a Chevrolet here and you had a Ford
             that was shown on the drawings. The specs didn't match
             up with the drawings. The design analysis and major
             equipment siting calculations were missing. Domestic hot
             water heaters, ... but we still didn't have that roadmap to be
             able to confirm that they were on the right track, or at this
             point had a big enough room for the hot water storage
             system. ENCS information, no DDC system drawings or
             diagrams had been provided yet.
                      And we're getting to a point, and I think there's
             some notes here, load calculations must be revised with the
             mechanical contractor and designer. We're basically
             reviewing electrical drawings at the same time, and we're
             able to follow the electrical drawings fairly well, but we're
             getting towards the end here, and we haven't seen
             calculations, and at 95%, drawings should be really just
             pick up some typographical errors and whatever review
             comments and go to 100% and publish it, but they were
             still in a design development stage, it was obvious.
                      No one had thought through the controls yet, it was
             evidenced by their absence. We're still missing energy
             calculations to confirm that they're even going to meet the
             energy goals required by the RFP, and we're really
             concerned as to the impact on the electrical side of things
             because SME's 95% electrical design, at 95% is reasonable
             to assume that they've got all the loads that they need, and
             that they've taken every diversity factor to get that size of
             service down. A lot of times it starts big, and through the
             design process, it goes down and then dial it in. Well the
             mechanical equipment was still up in the air, and
             mechanical represents a very large portion of the electrical
             service requirements.
                      So we're going uh oh, you know, if they come back
             and put a bigger pump in and so forth, we're going that's
             going to upset the electrical design, and it's going to cause
             delays and problems with getting to issue for [the]
             construction set.

                                          168
             [W]e're still looking at specification sections that are
             blank, we're looking at no development or any content on
             the mechanical drawings that shows any-that anyone has
             given any thought to the DDC controls for the system.
             We're simply trying to bring it up; it's unusual not to have
             it to be in a 95%, and to have this information still missing.
             I guess at this point we're as concerned with that as we are
             with the electrical service being adequately sized when the
             mechanical equipment is still changing.

(Tr. 111127-29, 133)

       170. On 28 July 2005 Botting reported internally that it had awarded the DDC
work to Automated Controls and that a purchase order had been written for ONITY
components (R4, tab 487).

       171. On 5 August 2005, BCE provided the following "overview" of the 95%
review meeting held on 2 August 2005:

             Representatives for WA Botting, SME Electric, Patriot
             Fire and [SBN] were present at the meeting.

             The overall consensus was that the MEP documents, both
             specs, drawings, supporting calculations, need a lot of
             work. Mechanical and electrical design coordination needs
             to happen. [COR Dyer] verbalized his displeasure with the
             status of the 95 [%] design and that promises made at the
             65% (to get things coordinated and fixed by the 95%) were
             broken. [SBN] assigned a new PM to the Project and there
             was some visible optimism and hope that the lost ground
             will be made up between the 95% and 100% submittal.
             [SBN] is proceeding to the 100% with a whole lot of work
             to do. We can expect to see a lot of new material in the
             documents at the next submittal, which may generate a
             series of new comments. This will be especially true for
             the specs because they are were [sic] not in a reviewable
             state at the 95% submittal.

                                          169
               SME Electric was the only designer that had developed and
               distributed written responses to the electrical comments ....

               Mechanical:

               Botting accepted most of the comments.

               WAB to provide Onity controls and Tridium DDC Controls.

               WAB to fix full load electrical data with SME.

               Specifications will be fixed, UFGS guide specs will be
               used.

               [W]e can expect to review corrected submittal data in the
               next few weeks.

(R4, tabs 86, 497, 1122; tr. 111135-38) BCE's Heiberg testified that:

               I guess I'll summarize by saying the quality of the
               submittals were-the representative produc[t] where
               everybody, all the designers seemed to go do their own
               thing and then merge documents without any coordination.
               So they were poorly coordinated, they were behind
               schedule because it seems like systems were changing and
               sizing was changing, and I've never seen such a poor
               design submittal before.

               I would limit that to the mechanical. We had a few
               electrical issues, but for the most part, you could follow the
               design and it was where it needed to be at each particular
               phase of the design.

(Tr. 111138)

                                            170
        172. In an internal Botting email dated 9 August 2005, Botting's Wade Bailor
responded to an internal suggestion that the controls subcontractor edit Botting's specs
for the next submittal:

                [T]here is something seriously wrong with this picture!!!
                Automated [Controls] is not obligated to edit Botting's
                specification so that it complies with the RFP. We have
                and always have had an obligation to design the project to
                the RFP. Our engineering department didn't even write a
                Sequence of Operation and [if] they would have
                thoroughly explored the RFP requirements, we never
                would have written our specification around Johnson
                Controls. This is very frustrating!! I am not going to ask
                [Automated Controls] to write his own specification!

(R4, tab 498)

       173. SBN promised to submit for re-review the "mechanical items that are
missing/need revised" as well as associated electrical load calculations on 12 August
2005 (R4, tab 85 at 2679).

        174. On 15 August 2005 SBN met with ORB/BCE to provide its resubmittal
of the 95% design. With the concurrence of SBN's LaSharr, the resubmittal was
rejected. While SBN and its electrical subcontractor, SME, "made a good faith effort"
in the resubmittal, Botting's HVAC/mechanical design still had no DDC drawings and
the DDC specification was '~ery sketchy and incomplete overall":

                [Botting] admitted that they have some distance to go with
                DDC and controls in general and expected to have a more
                complete submittal "in two or three weeks". He stated that
                Botting had gotten a "late start" in changing over [to] the
                required control systems. Both [SBN' s LaSharr] and
                [ORB/BCE] told him that was unacceptable. [LaSharr] is
                working closely with Botting to generate an acceptable
                submittal.

(R4, tab 89 at 2688-89) COR Dyer expressed "shock[] that the Mechanical design
remains so disjointed" and disappointment that SBN did not review Botting's design
before incorporating it into SBN's submittal. As a result, COR Dyer recommended
that CO Bartholomew issue a cure notice:

                                           171
             [I]t is apparent that [SBN] has no clue how to get their
             mechanical subcontractor, Botting, to perform. [SBN] also
             has no clue on how to QC a deliverable .... We demand a
             full and complete 95% mechanical submittal. We have
             been asking for this since early February 2005. It has been
             SIX months! Nothing we've said or done has worked ....
             [SBN] has to understand that they are responsible for the
             DESIGN. Where was Jensen-Fey, the Architect of Record
             on this deliverable? Are they even involved?

(R4, tab 89 at 2688, tab 1120) In an internal email Botting's Bailor provided the
following input from the meeting with SBN and ORB of the same date:

             I transmitted the Re-submittal to [SBN] this morning and
             had a brief review meeting with ORB. It looks like we
             need to do a few more things before they will submit for
             official review. The following is a list of actions that need
             to be taken:

                 1. They are expecting a complete control system
                    design that is at least 95% as a standalone submittal.
                    They are furious that this is not farther along in the
                    process. I informed them that we will expedite a
                    "Sequence of Operation" for the BMS and the Onity
                    System and that's all we can give them this week. I
                    said that product data for the control devices will be
                    available next week but they probably want to look
                    at that in conjunction with the engineered drawings
                    and the engineered drawings won't be complete for
                    two or three weeks.

                    Status: I have Automated Controls dropping
                    everything they are working on to expedite a
                    sequence of operation. Brad said ifhe puts
                    everything else aside, he can get it to me by
                    Wednesday or Thursday.

                2. We need to clean up our DDC Temperature
                   Controls Specification 15900. The specification still
                   makes reference to the Onity "SennerComm"
                   System or equal. We need to get rid of the "or
                   equal". The specification still makes reference to the
                   MRC digital thermostat in several locations. This is

                                          172
                      a Johnson product and needs to be removed from
                      specification.

                 4. The Army will not accept notes on the equipment
                    schedule that describes the features of the AAON
                    Equipment. They are looking for an entire
                    specification that describes what they are getting
                    with each AC-Unit. The specification should
                    include makes, models, sizes, construction methods,
                    performance criteria, bells & whistles and so on!
                    They have the impression that all these
                    requirements were conveyed to us in a meeting
                    clear back in February[.]

                      Action: Botting to write a detailed specification for
                      the AC-Units that conforms to their expectations.

             [SBN's] Rick LaSharr made it very clear that this submittal
             is critical to the next partial notice to proceed.

(R4, tabs 501, 504)

      17 5. After email discussion of what was required for mechanical resubmission
to comply with the RFP (R4, tabs 90-91 ), COR Dyer forwarded ORB/BCE input to
SBN on 17 August2005:

             Rick [LaSharr], I see your message below on what's being
             planned for delivery tomorrow .... Unless you have all of
             the below information, don't bother submitting. The deal is
             all or NOTHING. No more piecemeal. We are supposed to
             see all major mechanical systems and components fully
             designed at 95%. Between 95-100[%], it should be just
             dotting i's and crossing t' s ....

             We normally don't do what we're doing with your
             designers ... pointing out EXACTLY what they should be
             doing! All one would have to do is to follow the comments
             to understand what is expected. I'm beginning to think
             your designers don't really understand what they're doing!
             That would be a worrisome sign for me, to say the least.

                                           173
             The folks I pay to perform peer review are not to design
             for you.

(R4, tabs 92, 507; tr. 8/82-83, 87) As of 18 August 2005, ORB/BCE was still
providing information to SBN and Botting to assist them in understanding their design
responsibilities (R4, tabs 93, 509). On 19 August 2005 SBN advised that it intended to
resubmit its 95% design on 25 August 2005 (R4, tabs 94, 508, 513). On 26 August
2005 SBN notified CO Bartholomew that the 95% design resubmittal from Botting
still "did not include the corrected DDC spec" (R4, tabs 513, 1123).

       176. ORB/BCE received the updated 95% design resubmittal from SBN on
Saturday, 27 August 2005. On Monday, 29 August 2005, ORB/BCE advised
CO Bartholomew and COR Dyer that:

             Again I find myself in the position of recommending
             refusal of[SBN's] latest 95% resubmittal. [ORB/BCE] are
             somewhat encouraged in that we are at least seeing some
             movement in the quantity of information provided by
             Botting, but we are STILL not seeing acceptable
             specifications. I don't know how much clearer we can
             make it, the designers need to go to the Fort Lewis Design
             Standards website, download all appropriate specifications
             and guidance for HVAC and DDC, and use them to create
             compliant specifications. The RFP and all review
             comments to date have been crystal clear on this issue.
             Neither Fort Lewis or BCE will accept anything less.

             I am also disappointed in the lack of review and QC
             performed by [SBN] and the QCM. [S]houldn't someone
             have insured compliance with our comments before we
             were asked to make a third review? We would appreciate
             some assurance from [SBN] that they have compared the
             next submittal with the requirements BEFORE we are
             asked to look at the 4th go-round.

(R4, tabs 95, 514, 1128) The next day COR Dyer advised CO Bartholomew of the
situation and how COR Dyer planned to address it:

             I'm going to call corporate headquarters in Los Angeles
             and attempt to get someone to listen to me. Rick LaSharr is
             unable to accomplish the task of providing the requisite
             95% design of the mechanical system and integrated
             controls. We have repeatedly tried to help these folks, to

                                         174
               no avail. After three strikes, I'm no longer going to waste
               [ORB/BCE's] time. I asked you to issue a design cure
               notice weeks ago, but you convinced me it would do no
               good. Fine, then I will find a way to get their attention, and
               but good!! Their invoice for August will be arriving any
               day now. I will sit on the entire sum until the requisite
               design is provided and accepted by the Fund. No further
               monies will be authorized from my hand.

               We have wasted many hours and dollars with our effort to
               help [SBN]. I'm through with help! [SBN] is capable of
               handling a job of this magnitude. They have unfortunately
               allowed themselves to be held hostage by a mechanical
               subcontractor who is totally incompetent and a non-team
               player.

(R4, tab 96)

       177. Handwritten notes on a hard copy of a 30 August 2005 email printed from
SBN' s Morris's email account included:

               W A Botting I 4 weeks after 95% review (3 submittals) all
                  rejected. Rick cannot make this happen
                  We cannot proceed w/100% until complete.
               Drew will not release pay to SB[N] until 100% complete.
                  will sit on next requisition

               Honeymoon is over w/ Rick I Mechanical is Issue I

(R4, tab 515; tr. 9/118-20)

       178. On 31August2005 Botting emailed SBN's LaSharr voicing Botting's
objection to the format in which it was being required to draft its HVAC/mechanical
specification and asking for direction from SBN (R4, tabs 516, 1128; see also R4,
tab 169 at 3894-943]; tr. 5/47-51, 71130-31, 191-93, 265-66, 111157-61). By letter
dated 6 September 2005 SBN responded:

               Please accept this letter as formal direction to immediately
               proceed with the completion of the mechanical design
               documents as outlined within e-mail correspondence, dated
               August 29, 2005 by John Patterson of ORB. This
               correspondence has been previously forwarded and is

                                           175
             herewith attached. It is the understanding of the Owner that
             the methods outlined in this e-mail are necessary for WA
             Botting to complete their design and allow for an
             expeditious review and approval of the mechanical design
             documents, and are furthermore clearly outlined in the RFP
             documents.

             Be advised that WA Botting's inability to obtain approval
             is currently impacting our schedule and has exposed [SBN]
             and others to potential non-recoverable costs. These
             impacts will be substantial if WA Botting does not obtain
             100% design approval, thus allowing [SBN] to receive a
             full notice to proceed with the Work. Please be aware that
             [SBN] will seek full recovery from WA Botting for all
             associated delays and impacts.

             Furthermore, be advised that the Owner has notified us that
             they will be withholding all payments due [SBN] and
             associated Subcontractors until this submission is
             approved.

             Please produce your re-submittal no later than
             September 9, 2005. A failure to complete all
             documentation as noted above may require that [SBN]
             direct all subcontractors to proceed with the work in
             advance of full approval from the Army to avoid further
             delays to the schedule. If this were to occur, [SBN] will
             seek full recovery from WA Botting for changes that may
             be necessary as a result of the final approval documents.

(R4, tab 520; tr. 9/118-20) Botting objected to SBN's direction (R4, tabs 523, 1124, 1128).

      179. On 8 September 2005 SBN's Chris Morris provided the following
information to COR Dyer:

             Thank you for the e-mail. WA Botting was directed to
             complete the design and specifications. The format for the
             submittal was to be as requested in the recent
             correspondence from your consultants on August 29 and
             the RFP. This will be complete by Friday, Sept 9, 2005.
             Rick [LaSharr] will review this information with
             Jensen-Fey and WA Botting to make sure it is complete
             prior to forwarding this to your group for review and

                                         176
             approval. Your assistance would be appreciated in the
             expediting of this approval. I know this has been
             frustrating and we should be coming to an end and moving
             to the next phase. Let us know if there is anything we can
             provide to assist with this process.

             Is it possible to get approval for the framing as an
             extension to our current limited notice to proceed to allow
             the work to progress? If so, what is the process[?]

(R4, tabs 97, 524) COR Dyer denied the issuance of another limited NTP and stated
that the full NTP for construction would be issued only upon satisfactory completion,
review and acceptance of SBN's 100% design (R4, tabs 97, 98; tr. 8/83-85).

         180. On 8 October 2005 COR Dyer provided to SBN the consolidated
comments on its 95% design resubmittal (R4, tab 99). As of 17 October 2005 SBN's
Montoya acknowledged that the mechanical portion of the 95% design resubmittal was
still not complete and agreed that its completion should take precedence over any
discussion of SBN's existing REA (R4, tabs 100-01). That same day SBN's LaSharr
provided SBN's responses to the 95% design comments by email and requested a
meeting to discuss them on 20 October 2005 (R4, tab 103). The review meeting was
set for 26 October 2005 at Fort Lewis with all parties present, including Botting's
DDC subcontractor, Automated Controls (R4, tab 103).

       181. By email dated 19 October 2005, SBN's LaSharr again requested a further
limited NTP, which was denied by CO Bartholomew:

             We do not concur with the issuance of any additional
             LNTP's until the mechanical and 95% design issues are
             settled. We have now been in design on this project almost
             17 months! The delays in design are affecting the
             government's ability to get this needed project completed
             for the Soldier's at Ft. Lewis!

             .... We also need to get on with the REA. Further delays in
             the design affect both of us and will impact the REA
             issues/their resolution.

(R4, tab 104 at 2739; tr. 5/41-42) As of20 October 2005 COR Dyer reported that "the
structure is almost done" yet SBN "has not received the Final NTP as the 100% design
has not been accomplished" (R4, tab 1130).

                                         177
       182. On 21 October 2005 SBN's Morris acknowledged that:

              The 95% approval is critical. We are all aware that the
              mechanical contractor has dragged this process out,
              however, the exterior skin and roofing completion is
              critical for the other elements of the work to proceed
              timely until the 95% documents are approved. By not
              approving this work we are being exposed to additional
              risk and costs that will only create problems and claims
              from the other subcontractors. This action seems punitive
              and does not support the future success we are both trying
              to achieve.

             Again, we are committed to moving forward to the
             successful completion of this project. We respectfully
             request that the elements of the work not effected [sic] by
             the mechanical design move forward so that we do not lose
             additional time on the project schedule.

(R4, tab 104 at 2737-38, tab 535) CO Bartholomew responded:

             I have empathy just as I hope you have empathy that our
             side has spent almost $200K extra dealing with the
             mechanical issues and have lost a year. We all need to
             focus. There is nothing punitive. Every project we do is
             executed almost the same way. Our side is at a greater risk
             if your mechanical guy plays more games. Only you can
             deal with that at this point. ... No one on our side wants to
             risk going forward without some better assurances that
             things are on track I which they have not been for a year on
             the design side.

(R4, tab 104 at 2737, tab 536)

       183. On 26 October 2005 the Fund authorized an additional LNTP as follows:

             This limited notice to proceed supplements the original
             notice to proceed to include the installation of the mock-up
             (rooms 139 and 141) complete, exterior facade, interior
             framing, electrical rough in, plumbing rough in, and Fire
             Protection rough in. LNTP also allows for installation of

                                         178
              pre-rock drywall at locations to allow for rough-in
              activities to proceed (typically above ceiling).

(R4, tab 105; tr. 5/42) The document was signed by CO Bartholomew and COR Dyer
and also contains the following handwritten language above CO Bartholomew's
signature:

              Authorized to proceed contractually with the above LNTP,
              subject to no HVAC authorization.

(R4, tabs 105, 1132; tr. 5172-73)

      184. On 27 October 2005 SBN's LaSharr notified SBN, Jensen/Fey and
subcontractor personnel that:

             In a somewhat surprise outcome, we have been able to
             obtain an additional [LNTP] from the Army. It was
             understood via our meeting with the Army on 10/25/05
             that they would not issue any [NTP] until resolution of the
             95% documents. Currently the issues remaining to resolve
             the 95% documents are associated with two RFl's that are
             being reviewed by [Botting] at this time [see, finding 186].
             It is our understanding, that upon resolution of those two
             RFI' s I we will be able to obtain an additional NTP
             associated with the HVAC work.

             At this time, all parties associated with the 100%
             documents, should complete their documents such that
             same can be reviewed by [SBN] and resubmitted to the
             Owner by 9 Nov 2005.

             Please advise of any questions.

             All parties, be advised that we are intending to start
             framing as soon as possible and will be having site
             meetings to discuss scheduling of the framing and
             plumbing, electrical and fire protection rough-in.

(R4, tabs 539, 1132) Botting took issue with SBN's position regarding the 26 October
2005 LNTP and what effect it had on Botting's work (R4, tabs 544, 1133). On
30 October 2005 there was an internal Botting meeting during which there was
discussion of Botting pulling out of the project (R4, tab 1131).

                                          179
        185. On 2 November 2005 COR Dyer confirmed that the 26 October 2005
LNTP signaled the approval of the 95% design "with the exception of the comments
reviewed on-site 8/1/05 and 8/2/05 and comments addressed on 10/26/05. Each of
these comments will be addressed within the final 100% documents." However, he
also reminded SBN' s LaSharr that the CO had not yet issued a NTP to produce the
100% design. "This will not be issued until the mechanical and controls issues raised
in last week's meeting are submitted and accepted by the owner's team." (R4,
tabs 107, 541-42)

      186. Also on 2 November 2005, SBN advised that:

             [W]e need to revise the suspense dates as outlined below:

             5.     WA Botting has taken exception to certain items in
             the RFP. We need to receive a consolidated list of these
             items for a determination if they are in or out of the
             contract. [SBN] to provide this list ASAP. Suspense:
             Friday, October 28. Revised suspense date Wednesday
             November9

             6.     Prepare RFI submitting a red-lined, edited, version
             of the Ft. Lewis DDC design specification, 15910 for
             preliminary acceptance. Suspense: November 2 Revised
             suspense date Wednesday, November 9

             7.      Prepare a 2nd RFI that describes the level of detail
             for the DDC graphics package to be provided per the RFP.
             Suspense: November 2 Revised suspense date Wednesday
             November9

(R4, tabs 106, 113 7) On 2 November 2005 CO Bartholomew responded:

             Please be advised that every day we are delayed over
             the mechanical system is a day we lose in getting the
             building built. For all, we are in our 17th month of
             design.

             We reserve all of our rights to compensation for the design
             delays and will likely have to involve our lawyers if this is
             not squared away soon.

                                          180
              We do not have a warm fuzzy with the mechanical systems
              and urge you to look at all your options as this may
              become an even costlier proposition for you.

(R4, tabs I08, I 137, I I43)

       I87. A 13 November 2005 internal Botting email stated:

              In an attempt to save the $85k we are spending on Onity
              controls, it was my intention to use the flawed controls
              specification to try and get out of buying the ONITY
              Controls and put them on the owner. After spending the
              afternoon going through all the correspondence from last
              year on this issue, it would be foolish for me to go down
              this path now. Ifwe attempted to take this position at the
              start of the project, we might have had a slim chance.
              However, the project record clearly indicates that we were
              planning on providing an alternate system from day one
              and we had several opportunities in the past to put this on
              the owner. We don't need to lose anymore credibility on
              this project.

(R4, tab I 136)

         I88. On 28 November 2005 SBN submitted a revised DDC specification which
it said included revisions to address the previous review comments (R4, tabs I09,
579). The revised DDC specification was reviewed by the next day and determined to
"look[] good." BCE recommended it be incorporated verbatim into the IOO% design
submittal. (R4, tab I I 0)

       I89. The CFSC inspection of the mock-up units took place on 13 December 2005
(R4, tabs 574, 576; tr. 5/54-6I, 85-87, I2/19-22, 47-48, 138-39). On I4 December 2005
SBN sent an email to CO Bartholomew regarding corridor ceiling heights:

              It is my understanding from conversations with [COR
              Dyer] on site yesterday, that the LNTP for the HVAC
              rough-in is currently being held up based on the corridor
              ceiling height being 8'-0" shown on the construction
              documents in lieu of the 8'-4" shown on the FDS sheets.
              Previously, it was my understanding that the issue was
              within the rooms and as you know we have acknowledged
              and revised those ceiling heights at the entries. We are
              currently reviewing the issue at the corridors and the

                                          I8I
                correspondence that has resulted in the ceiling heights
                being at 8'-0", upon determination of same we will advise.
                It should be noted that we are being impacted by being
                unable to proceed with the HVAC work at this time.

(R4, tab 570)

       190. As of no later than 15 December 2005 SBN was authorized to proceed
with 100% design documents. COR Dyer reiterated that the design documents were to
show '"all RFP ceiling heights being attained." (R4, tab 112)

       191. On 19 December 2005 comments from the mockup unit inspection were
collected and forwarded to SBN:

                No.                               REVIEW COMMENT
                          Extended
                            Stay
                 1                    SBNW admitted room was approx. 293 SF,
                                      below the 300 SF standard. The reason is
                                      apparently due to the shear wall adjacent to the
                                      adjoining ES room. SBN[] was requested to
                                      issue RFI informing Lodging how many rooms
                                      in the entire building fall below the standard.
                                      VERY IMPORTANT!

                      I   Family
                           Suite

                5         NOTE:       Provide RFI-Non-loading bearing steel studs
                                      installed 24" on center. RFP specifically calls
                                      for studs at 16" on center. SBN[] was
                                      advised until this is reviewed and acted
                                      upon, continuing the 24" on center was at
                                      their own risk.

                8         NOTE:       After the inspection, we returned to the
                                      conference trailer for further discussion.
                                      Items decided or actions to be taken include:
                                      1. Proceed to produce the 100% design. The
                                      mechanical controls spec. 15910, and graphics

                                           182
                                     I example were accepted by review team.

                                       3. Columns-Lodging doesn't want column
                                       protrusions in any room. Lodging's typical
                                       layout furniture plans show no bump-outs or
                                       other interferences that interferes with furniture
                                       placement. The word "flush" was used vs.
                                       "furr" when speaking about a wall. SBN[]
                                       agreed to "flush" out walls where the columns
                                       protruded 3-4" into the finished room, as long
                                       as Lodging agreed to the loss of SF. This was
                                       agreed. In every other room where a column
                                       can not be "flushed" with the wall, a Y4" scaled
                                       plan, on 8 Yi" x 11 ",will be provided. This will
                                       allow Nancy and Sheryl the opportunity to
                                       make furniture placement decisions on a
                                       room-by-room basis. Since the mockup room
                                       furniture requires immediate ordering to
                                       comply with SBN[] 's schedule, Lodging
                                       requests the plans on the non-standard
                                       configured rooms immediately! All rooms
                                       that are not "normal" per the RFP shall
                                     · have individual scaled plans produced
                                       immediately.

(R4, tab 576; tr. 5/61, 63-65) SBN's electrical subcontractor, SME, informed SBN of
how SME's work was impacted by SBN's unilateral decision to change the stud spacing:

                Truss design was not finished or approved at the time of
                the deck pours. Because of the lack of structural detail
                SME could not give consideration to the placement of
                structural studs and no verbal direction to do so was
                provided by either Jens en Fey or SB []N.

(R4, tab 784)

                We would have questioned the use of narrow studs because
                of the difficulty of install %"conduit in them. This
                problem also occurs wherever the conduit has to go around
                a comer as the radius of%" conduit does fitaround a
                narrow stud comer. This total of this issue about doubles

                                           183
             our labor costs for the guest rooms, which also impacts the
             schedule.

(R4, tab 591; see also R4, tab 578)

       192. On 20 December 2005 SBN forwarded to Botting the revised
specification for the DDC system that included annotations characterized as
"now ... accepted by the Owner. Please insure that same is incorporated into your
design." (R4, tab 579)

       193. By letter dated 22 December 2005 to CO Bartholomew, SBN stated its
position regarding the corridor ceiling heights and the delayed HVAC LNTP:

             As has been noted through various e-mail's [sic], it is
             understood that the [LNTP] for the HVAC has been held
             up due to the elevations within the corridors being 8'-0". It
             was originally understood that the HVAC LNTP would be
             released upon the resolution of the HVAC controls issue
             on two separate occasions. Currently the continued delay
             to release the HVAC LNTP is adversely affecting the
             project.

             In our follow up of the latest issue (i.e. 8'-4" on FDS sheets
             vs. 8[']-0" on the construction documents), it is apparent
             that this issue was specifically discussed at the 35% design
             review meetings. Reference the attached pdf document
             from the Army in which item #24 clearly indicates that a
             discussion was held and it was apparent that ceilings would
             have to be lowered and it was acknowledged that same
             would not be below 8'-0". In review of the 65%
             documents, it once again was specifically addressed again
             in notes dated 9/17 /2004/9/22/2004 [sic] from the Army
             where in item #44 (attached pdt) it is specifically noted
             regarding a 7'-11" ceiling height in the lobby and it was
             specifically understood that the heights would not go
             below 8'-0". In follow-up, the 65% interim documents
             clearly identified the ceiling heights to be at 8'-0" in the
             corridors.

             Based on the aforementioned, it was clear that all parties
             understood and agreed that the 8'-4" ceiling heights within
             the corridors were unachievable with the design
             requirements and this was accepted at the early stages of

                                          184
                the project which is evident by the documents provided by
                the Army. As noted in same I it is true that this item has
                not been changed via the change process, but it is clear that
                all parties were amiable to the revision. It is our belief that
                this revision at the 35% documents and 65% document
                review provide agreement with the revised ceiling
                elevations and allowed for the reduction in the ceiling
                height to 8'-0". As such, we request the release of the
                [LNTP] with the HVAC based on the prior agreement of
                the 8'-0" ceilings being acceptable.

(R4, tab 581; tr. 51147-50)

       194. On 22 December 2005 CO Bartholomew reminded SBN that:

                Your contract technically ends tomorrow and I have yet to
                see your schedule for project completion which I have
                repeatedly requested this fall. This is a contract
                requirement and I need this to issue an interim, non-
                compensable extension, until such time as we meet/resolve
                (hopefully in January 06) on your Request for Equitable
                Adjustment.

(R4, tab 113)

      195. On 23 December 2005 CO Bartholomew advised SBN that:

                I would have an incredibly hard time believing anyone on
                our end would permit a lowering of ceiling heights without
                a serious discussion and a significant credit. This issue has
                come up on a number of other projects in the past and is a
                Lodging "Hot Button". While the reduction of 4" may not
                have been picked up in our reviews, there has been no
                contractual action taken to lessen the contract requirement
                for ceiling heights in this building. I refer back to a letter
                that is part of the contract signed by an ind[iv]idual who
                signed the bid that [SBN] would be materially compliant
                with the RFP.

(R4, tabs 114, 586) A week later on 30 December 2005 the CO further advised SBN
on the subject of ceiling heights:

                                             185
              Lodging has advised the lowered ceiling height is not
              acceptable I period. You will have to address this prior to
              producing the 100% drawings I even if it delays them. You
              also need to address in RFI 's any areas you think you may
              not comply with RFP before expending time and resources
              (yours and ours).

(R4, tabs 114, 586; tr. 5174-75, 12/17-18)

       196. On 5 January 2006 COR Dyer advised that:

              The 100% design shall show all corridor ceiling heights at
              8'-4". Also, we are waiting to hear of how many rooms are
              being constructed under the programmed sq footage of 300
              and 450 respectively.

(R4, tab 590 at 11794; tr. 5/65-67)

      197. By letter dated 10 January 2006 to CO Bartholomew, SBN's Architect of
Record weighed in on the subject of corridor ceiling heights:

             We acknowledge receipt of your e-mail regarding the
             requirement for 8'-4" ceiling heights. It should be
             specifically noted that the 8'-0" ceiling heights were
             included in the 35% submittal documents and are very
             clearly shown in the 65% and 95% documents and were
             subsequently discussed during the review conferences with
             the Army Team at each phase. The agreement on this issue
             was relied upon to develop the progress drawings and
             therefore shown on the drawings and constructed in the
             field.

             In an effort to accommodate your latest request to revert
             back to the 8'-4" ceiling height, a design meeting was held
             at the site on January 5, 2006 to review options available.
             After numerous discussions and strategies we were unable
             to come up with any solutions to revert to the 8'-4" ceiling
             height (short of tearing the building down and starting
             over).

             Therefore, we believe that the 8'-0" ceiling heights
             aesthetically have no significant impact on the quality or

                                             186
              performance of the facility and shall remain as previously
              noted.

(R4, tab 599; tr. 7/278-79; see also tr. 5/53-54, 142-44, 7/236, 9/23)

       198. By letter dated 12 January 2006 SBN responded to CO Bartholomew:

              It is our position that the revision to the 8'-0" ceiling
              heights had previously been accepted through the design
              process, and now we are to understand same not to be the
              case. Therefore, it is requested that a change be issued to
              resolute [sic] the ceiling heights to 8'-0".

              [SBN] is currently delaying the submission of the 100%
              documents per your direction and upon resolution of this
              issue it is understood that we will be able to proceed with
              submission of the applicable documents. In addition, it is
              requested that the LNTP for the HVAC be released at this
              time.

(R4, tab 115 at 2815, tab 604) COR Dyer considered SBN's position unacceptable:

             The Architect has nothing to corroborate his story that the
             ceiling heights were discussed in each of the design
             meetings. As I stated in the MFR from the 35% design
             meeting, the ceilings in the corridors were shown at ... 8'-4"
             in the design. Therefore, Mr. F[r]itzmeier's assertion that
             the ceilings have always been shown at 8'-0" is false. My
             only suggestion at this point [is] to seek a form of
             compensation for the error and omission. I know this is a
             copout, but what other option do we have except to tear
             down the building and start again? What is really
             disturbing is that Lodging is being asked to accept
             something different than was specifically stated in their
             requirements (again). Why do we always have to bend
             over, especially when it's a clearly written requirement in
             the proposal that we send to hand selected design-builders?

(R4, tab 115 at 2813, tab 632)

                                          187
       199. On 20 January 2006 COR Dyer reported:

             [T]he need to go to Ft. Lewis is no more. We had hoped to
             have a 100% design review conference [on 30-31 January].
             Bart and I were also targeting that week to begin the effort
             to sort through the issues composing the REA. Since we're
             at an impasse with the corridor ceiling heights, I have
             asked Bart to intercede with the highest levels of [SBN]
             management in the corporate office in San Francisco. We
             are all tired of being asked to accept things outside the
             scope of the RFP. Once a contract is signed, the Contractor
             is contractually bound to follow the guidance in the RFP
             during the design. We are not responsible to double check
             every little thing when we perform the reviews. Any
             changes to the RFP must be incorporated by means of a
             contract modification.

             [SBN] has reached the end of the rope with me on both the
             Dugway and Lewis projects. I am currently sitting on $1M
             in pay requests and will not process until we reach
             acceptance on the outstanding issues at both projects ....
             [SBN]'s lack of management at both projects is costing the
             Army (Lodging) immeasurable amounts of lost time and
             money.

(R4, tab 1154; tr. 9/118-20) SBN's LaSharr testified that he was not aware of any
delays to project performance as a result of a delay in processing of SBN' s pay
applications (tr. 51151).

       200. On 23 January 2006 CO Bartholomew responded to SBN's LaSharr
regarding corridor ceiling heights:

             I would like to reiterate what has been passed on in other
             e-mails and telecons. Nothing in the meeting minutes
             authorized any reduction in ceiling heights. Mr. Dyer's
             comments were just that as a result of the meeting on what
             was said. There has been no authorization to lower ceiling
             heights and there would not be a relief from the contract
             requirements without consideration. We have had many
             instances of design variances which is [SBN]'s (the
             design-builder) responsibility.

                                         188
              We have lost almost a year directly related to the
              recalcitrance of your mechanical subcontractor to provide
              what was required by the contract.

              This project is perilously close to a situation that neither
              side will be pleased with.

(R4, tab 169 at 4333, tab 617; tr. 3/189-90) He also renewed a previous request to the
Chairman and CEO of SBN, Gordon Marks, to schedule a meeting about the project
(R4, tabs 117-18, 617). On 19 January 2006 the following summary was provided to
Mr. Marks by SBN's Morris in anticipation of a meeting with CO Bartholomew:

             Fort Lewis/ 185 Lodging Units, 4 stories:
             Original Completion Date: 12/24/05
             Current Estimated Completion Date: 9/07/06

             At this time we have (3) significant issues that are being
             discussed.

                     1. RFI Approval: They will not review or approve
                        RFI's, however, they will not accept the 100%
                        documents unless the RFI' s are included in the
                        documents.

                    2. Corridor Ceiling Heights: The RFP calls for
                       8'-4" ceilings in the corridors and during the
                       design development it was discussed that with
                       the concrete structure and the overall building
                       height limitations, this requirement could not be
                       achieved. We relied on the Army's agreement
                       (via e-mail at the 35% design comments) on the
                       8' ceiling heights during the design and the issue
                       has re-appeared. They expect a credit, or
                       consideration; we have informed Bart that there
                       was no cost savings to us to pass along.

                    3. Unit Square Footage: over 100 units do not
                       meet the RFP minimum requirements. The
                       dimension busts are taken off the CAD
                       drawings. We will be developing our letter to the

                                           189
                        Owner. Bart is not completely knowledgeable of
                        the magnitude of the issue at this time.

                       The impacts to the square footage were a result
                       of drawing completion and shear walls that were
                       added within the building space that affect the
                       net rentable area, design deficiencies with the
                       architect. There is some confusion as to how the
                       square footage was originally calculated; we are
                       in the process of figuring this out.

                         Units Summary Breakdown
                    Less          16 to 21 SF       4 Units
                    Less          10 to 12 SF       4 Units
                    Less          6 to 9 SF         56 Units
                    Less          I to 5 SF         56 Units
                    Gain          I to 5 SF         24 Units
                    Gain          6 to 9 SF         7 Units
                    Gain          12to14SF          3 Units
                    Gain          15 to20 SF        5 Units

             Total Square Units Impacted              159 Units
             Total Square Feet Lost                   345 Square Feet

(R4, tab 621) SBN's Montoya testified that the reduction in room square footage
occurred when SBN was required to "fur-out" walls to eliminate comer column offsets
in the rooms (tr. 3/186-88; see also finding 191).

     201. On or about 23 January 2006 CFSC provided comments on Botting's
DDC Controls submittal which included Johnson Controls products:

             I. GENERAL

                •   REVIEW COMMENTS: "The Controller
                    Products submitted for section 15910-2.1 "DDC
                    System" not applicable to this paragraph as the
                    submitted controllers do not constitute a "DDC
                    SYSTEM" under this contract.

                •   Furthermore, the products description and listed
                    specification section compliance reference do not
                    match in described details for that section,
                    paragraph and sub-paragraph. The listed controllers

                                         190
                        are inappropriate for the intended use on this project
                        and are conceptually inconsistent with the Fort
                        Lewis Design Standards Topology and System
                        Architecture which uses a standard PC Workstation
                        and Tridium Niagara R2 suite of software to
                        integrate field device controls to the enterprise level
                        platform Supervisory controllers within a
                        distributed control network.

                    •   It is evident by the conflict in literature and the
                        products listed in the submittal register that ... the
                        intended architecture is to provide a system that
                        does not provide a Web enabled Supervisory
                        Software Application on a Workstation PC Platform
                        as specified. The submitted Niagara AX software
                        model is not the same version or generation of
                        software solutions as the existing original Tridium
                        Niagara R2 framework provided by Vykon and can
                        [not46] provide the same functionality that is
                        bundled with Supervisor AX applications served to
                        a browser from an embedded JACE platform.

(R4, tab 618)

         4. 100% Design

       202. In a letter to CO Bartholomew dated 24 January 2006 on the subject of
"Ceiling Height/100% Documents," SBN's LaSharr stated:

                As [SBN] is eager to move the project forward, we will be
                offering a reasonable credit associated with revision of the
                ceiling heights. Please note that we make this offer even
                though we still believe that this issue has already been
                resolved through the design submittal process. In advance
                of this offer, we are enclosing 100% documents inclusive
                of all previous design review comments for your approval.
                It is critical that the Army accepts and reviews these
                documents immediately to mitigate the ongoing delays
                caused by the previous refusals to accept these documents.

46
     It is obvious to us from the context of the surrounding language that the author was
           communicating a lack of functionality as it applied to the proposed DDC design.

                                              191
              Furthermore, the project cannot continue absent the release
              of the limited notice to proceed for the HVAC with the
              design as submitted in the 95% documents along with the
              subsequent clarifications. We have currently reduced our
              forces and suspended work on all areas that are being
              affected by the failure to provide additional LNTP and
              failure to address RFI' s that are delaying the sequence of
              work (specifically 164, 168, 171, 172, 173, 174, 175, and
              177). Once we have received the additional [LNTP] and
              response to the critical RFI' s we will continue with that
              portion of Work and will advise of the impacts and costs
              associated thereto independent of the REA addressed
              above.

              We hereby request that you forward the appropriate
              [LNTP] for the HVAC scope of work and request an
              expedient review of the 100% documents such that a final
              notice to proceed can be issued in order to mitigate further
              impacts to all parties. This letter also serves as formal
              notification that the Army's failure to accept the 100%
              Documents for review and its failure to issue a [LNTP]
              with the HVAC scope of work has caused, and continues
              to cause, significant impacts to the Project Schedule and,
              potentially, the Project Cost. Consequently, [SBN] will
              continue to perform its contractual obligations pursuant to
              a full reservation of rights.

(R4, tab 1155)

        203. In emails dated 30 January 2006 SBN requested information from
CO Bartholomew regarding non-payment of its invoices, citing payment clauses in the
contract that provided for withholding only 10% retainage (finding 24).
CO Bartholomew responded that those clauses only apply when the work is
satisfactory (R4, tab 1157; see also finding 21 (clause H-21-4.1 provides that entire
payments can be withheld when there is unsatisfactory progress)).

        204. By letter dated 31 January 2006 SBN offered a $10,953 credit as
consideration for changing certain ceiling heights from 8'-4" to 8'-0" and an $8,492
credit as consideration for a net reduction of 198 square feet in the room areas in the

                                           192
entire project. 47 SBN also enclosed 100% design documents and requested an LNTP
for the HVAC work as well as the final NTP upon an "expedient review" of the 100%
design. (R4, tabs 118, 169 at 4018-31; tr. 3/191-93, 5176; see also R4, tab.169 at
3124) By letter dated 2 February 2006 SBN increased its offered consideration to a
total of$100,000 (R4, tabs 119, 642, 644; tr. 31194-96). CO Bartholomew responded
on 3 February 2006 that Army Lodging:

                Authorized [the CO] to accept the two variances for
                corridor ceiling heights, and room sizes only ... for no less
                than $200,000 .... Please be advised the number I was
                provided by lodging was a lot higher than $200,000, but I
                told them that termination and delay costs for
                reprocurement had to be factored into the equation.

(R4, tab 121at2852, tab 670; tr. 31197-98, 219; see also R4, tab 1158; tr. 3/190) SBN
accepted the Fund's counteroffer of$200,000 on 6 February 2006 to resolve the
corridor ceiling height and an unspecified number of guest room square footage
variances, as well as associated variances (i.e., light switch locations, ceiling fans, etc.)
(R4, tab 121 at 2851-52, tab 169 at 4339, tabs 645-650, 1159; tr. 3/198-02, 7/279).
CO Bartholomew later rejected the $200,000 amount (finding 206; tr. 3/202-204). The
parties continued to negotiate and reached a final settlement of the issues associated
with ceiling heights and room sizes in the amount of $500,000, reserving only the
issue of delay (finding 212). SBN's Montoya testified that it was CO Bartholomew's
near constant threat of termination for default that prompted SBN to agree to a credit
of $500,000 (tr. 3/204-20).

      205. On 10 February 2006 CO Bartholomew tasked ORB's Monson with
reviewing SBN's 100% drawings submitted on 31January2006 with respect to the
room square footage and ceiling height variances (finding 204):

                If the design is at fault, we can call Jensen Fey errors and
                omissions insurance. If constructability is different from
                the design we could terminate or reprocure some or all of
                the construction work deviations under the bonds and then
                also go after the E&O insurance under the A/E of Record's
                CQC responsibilities.

                Something will happen very soon as the contract ends
                21 February and will not be extended without imposing

47
     (See finding 209 (SBN and Jensen/Fey acknowledged that, of the 185 rooms in the
         project, 127 "vary from the RFP requirement. Of these 127 units, 60 are
         associated with square footage less then [sic] that required by the RFP. "))

                                             193
                liquidated damages and a high 6 or 7 figure consideration
                offering if it were to be considered.

(R4, tab 1160)

      206. Also on 10 February 2006, CO Bartholomew provided the following
information to SBN representatives and copied to CFSC, ORB and Army personnel in
two emails:

                The situation at Ft. Lewis is approaching a meltdown. In
                addition to at least 34 serious non-conforming rooms, low
                ceilings, and the latest list of other room problems, the
                following is now noted:

                We will not accept a $200,000 credit for all the room and
                ceiling deficiencies noted and had not previously
                considered the issues herein until reporting had verified
                actual conditions. You are strongly urged to review these
                matters as we are.

(R4, tab 1161)

       207. On 15 February 2006 SBN provided Botting and Jensen/Fey with its comments
regarding "noncompliance issues associated with the RFP" in Botting's mechanical
submittal (R4, tab 654). Also on 15 February 2006 there was an "Onity Meeting" attended
by SBN, SME, Botting and Fort Lewis Lodging personnel (R4, tab 655).

       208. On 16 February 2006 SBN acknowledged receipt of a 23 December 2005
email from CO Bartholomew granting a unilateral 60-day extension of the contract
performance period48 however, SBN objected to the 60 days as inadequate and
expressed its belief that any extension should also be compensable (R4, tab 125 at
2869). CO Bartholomew responded the same day:

                The 60 day noncompensable extension was granted since
                the Army Lodging Fund may be responsible for up to 60
                days due to some unforeseen site issues we encountered in
                the late fall of 2004. If it is determined that time is
                compensable, or any other additional time, it will be

48
     We do not find a copy of the 23 December 2005 email in the record, nor is there an
        explanation for why it took SBN nearly two months to acknowledge its receipt.

                                           194
              granted when we discuss your Request for Equitable
              adjustment and all of the delays and costs the Fund has
              experienced for deficient design and nonconforming
              construction.

(R4, tab 125 at 2867) Also on 16 '.February 2006, CO Bartholomew emailed SBN's
Sundgren:

              Ft. Lewis has had some serious delays, deviations and
              variances. As the contracting officer on that one, I am not
              sure of at this writing what we are going to do. That
              contract had a 60 day noncompensible extension until next
              Tuesday - after which liquidated damages are assessible if
              we go forward. We have been blindsided here oflate with
              all kinds of problems that should have been raised a year
              ago. We also, sadly, put up with 18 months of non-
              compliance on the mechanical design - and that is my fault
              because we relied on the trust [SBN] earned on [another]
              project. ...

(R4, tab 122 at 2855)

       209. On 17 February 2006 SBN and Jensen/Fey acknowledged that, of the 185
rooms in the project, 127 '"vary from the RFP requirement. Of these 127 units, 60 are
associated with square footage less then [sic] that required by the RFP" (R4, tabs 120,
123, at 2858-59, tab 124 at 2865-66, tab 126 at 2871, tab 127 at 2874, tabs 657-59,
1158). CO Bartholomew responded:

             Gentlemen: We cannot digest all of the impacts and
             information at this time. It appears that if we go forward,
             there will be a need for considerable consideration,
             possibly/probably on the order of$750,000 to $1 million,
             considering all issues, costs and delays.

             In the interim, I will authorize a 10 day non-compensible
             [sic] extension of the contract completion date, from
             21 February 2006 to 3 March 2006. We reserve all rights
             including the right to issue a Show Cause why we should
             continue and not Terminate for Default. I am copying both
             our Deputy General Counsel, and the Senior Contracts
             Attorney on this project.

(R4, tab 126 at 2870)

                                          195
       210. On 2 March 2006 SBN recorded the following in a handwritten document
identified as "Minutes of Mtg":

            SUMMARY

                -    AN AGREEMENT WAS REACHED AFTER SEVERAL
                     ROUNDS OF NEGOTIATION IN WHICH [SBN] AGREED
                     TO A $500,000 DEDUCTIVE CHANGE ORDER

               -     INCONSIDERATION THEREOF THE ARMY CFSC
                     ASSURES THAT

                     © NO LIQUIDATED DAMAGES WILL BE ASSESSED
                     THRO THE END OF [SBN]'S NEXT SCHEDULE UPDATE
                     WHICH WILL INCLUDE THE REVISED MOCK-UP
                     PROCESS AGREED UPON IN THIS MEETING

                     ~ THE MINOR DEVIATIONS WILL BE FLUSHED OUT
                     DURING THE REVISED MOCK-UP PROCESS AGREED
                     UPON IN THIS MEETING. A RESOLUTION WILL BE
                     AGREED UPON FOR EACH. ARMY LODGING WILL BE
                     INFORMED, PRIOR TO PUNCH LIST PROCEEDINGS,
                     THAT THE MINOR DEVIATIONS HA VE BEEN AGREED
                     UPON AND CONSIDERATION PROVIDED.

            THE REVISED MOCK-UP PROCESS AGREED UPON IN THE
            MEETING INCLUDES THE FOLLOWING STEPS:

            3/7/06     [SBN] WILL PROVIDE RESPONSES TO THE CFSC
                       MOCK-UP COMMENTS INCLUDING PROPOSED
                       SOLUTIONS

            3/14/06 CFSC WILL RESPOND TO THE ABOVE COMMENTS
                      AND PROPOSED SOLUTIONS.

            3/17 /06 [SBN] WILL ISSUE A REVISED PROJECT SCHEDULE
                      TO INCLUDE THE REVISED MOCK-UP PROCESS AND
                      THE IMPLEMENTATION OF THE SOLUTIONS TO THE
                      MINOR DEVIATIONS.

            3/21106 AN ON-SITE JOB WALK WILL BE HELD WITHIN
            THRU    THREE WEEKS OF 3/2 l/06 AT WHICH ALL ISSUES

                                      196
                4111106 WILL BE REVIEWED AND FINALLY RESOLVED.

                3131106 100% DRAWINGS WILL BE SUBMITTED
                          INTEGRATING THE RESOLUTIONS TO THE MINOR
                          DEVIATIONS.

(R4, tab 1168)

       211. CFSC conducted a second Mockup Rooms Inspection on 9 March 2006
(R4, tab 1169).

       212. On 30 March 2006 CO Bartholomew and SBN's regional director
Sundgren executed contract Modification No. P00003 which incorporated by reference
the parties' 23 March 2006 settlement agreement:

                a. Subject Contract is hereby modified to reduce the sum
                of the contract by $500,000.00 in accordance with the
                attached Settlement and Release Agreement, dated
                24 March 2006.£491A new completion date will be agreed
                to by the parties and codified in an appropriate
                modification to follow.

                b. Previous Contract Price               $17,397,806.26
                   Modification P0003                       (500,000.00)
                   New Contract Price Not to Exceed      $16,897 ,806.26

                c. All other terms and conditions of the aforementioned
                contract remain unchanged and in full force and effect.

(R4, tabs 68, 371) The attached Settlement and Release Agreement provided:

                C.      [SBN] and CFSC desire to fully compromise and
                settle all current disputes between them regarding certain
                Project design nonconformance issues relating to the
                Project, as more fully described below, without the
                admission of liability on the part of either [SBN] or CFSC.

49
     The actual date on the settlement agreement is 23 March 2006 (R4, tab 371; see also
         finding 210).

                                            197
1.      Settlement Amount. The Parties agree to a
settlement amount of... $500,000 .. .in full and complete
satisfaction of all known claims and disputes between
[SBN] and CFSC which are in any way related to the
Project which either Party may have as of the date of this
Settlement Agreement except as expressly reserved herein.
The Parties agree that the Contract price shall be reduced
in the amount of $500,000 upon execution of this
Settlement Agreement by both parties and issuance of an
appropriate modification to the Contract by the authorized
CFSC Contracting Officer.

2.      Release. Upon execution of an appropriate
modification to the Contract, the Parties, on behalf of
themselves and all of their respective predecessors,
successors, affiliates, administrators and assigns, hereby
release and forever discharge the other and each of their
respective officers, directors, employees, predecessors,
successors, affiliates, and assigns, of and from any and all
claims, liabilities and causes of action relating to those
issues identified in paragraph 3 of this Settlement
Agreement and subject to the reservation of rights in
paragraph 4. The claims released hereby are hereafter
referred to as the "Released Claims," and the Parties giving
a release hereunder are hereafter referred to as the
"Releasing Party(ies)." In addition to the foregoing, CFSC
expressly waives any right it has or may have to assess or
seek liquidated, direct or consequential damages related to
any actual or alleged deficiency under the Contract related
to the Released Claims.

3.     Released Claims. The following are the Released
Claims and are related to variations in the Contract's
requirements.

        A.     Ceiling Heights. CFSC accepts [SBN]'s
proposed ceiling heights as shown on the construction
documents (including construction drawings), including,
but not limited to, those ceiling heights within the corridors
of the Project which are reduced to eight feet (8'-0") and
the ceiling heights in G-28, G-39 and G-51 units which are
reduced from an eight feet, four inches (8'-4 ") requirement
to eight feet (8'-0").

                             198
                        B.      Square Footage. CFSC accepts [SBN]'s
                 revisions to all floor plan square footage and configuration
                 requirements for individual rooms in the Project whether
                 the proposed square footage and configuration is either
                 more than or less than the requirements of the Contract,
                 including necessary adjustments to individual room
                 components.

                        C.      Impacts Resulting From Ceiling Height or
                Square Footage. The Parties acknowledge that there are
                and may be direct or indirect impacts to the design of the
                Project resulting from the changes to Ceiling Heights
                and/or Square Footage as described herein. The Parties
                agree that reasonable changes in the configuration,
                variation and location of, by way of example, light
                switches, furniture, PTAC units, doorway entry widths,
                door swing direction, bedroom door configuration in
                family suites, closet widths, window blinds and draperies
                which are either directly or reasonably related to the
                changes to Ceiling Heights and/or Square Footage will be
                accepted if such changes meet all performance
                requirements of a facility of the type and size contemplated
                in the Contract, including, but not limited to those related
                to the Americans with Disabilit[ies] Act, safety and
                functionality. [5o1

                        D.     Memorialization of Changes. The Parties
                acknowledge that at the time of final acceptance of the
                Project there will be changes in the final product as a result
                of this Settlement Agreement. Accordingly, the changes to
                which the Parties agree shall be incorporated into the
                Construction Documents (100% Design Submissions) and
                will be accepted by the Army as a baseline for final
                acceptance of the facilities.

                4.     Reservation of Rights.

                     Except as expressly provided for in this Settlement
                Agreement, [SBN] and CFSC reserve all of their rights

50
     Ms. Moinette agreed that the reduction in the room sizes from the sizes required by
         the RFP presented no functional or visual impacts to lodging guests (tr. 12/44).

                                             199
                 under the Contract. Notwithstanding any provision of this
                 Settlement Agreement, [SBN] expressly reserves its rights
                 to assert a request for equitable adjustment and/or a claim
                 for time and associated cost impacts which result from or
                 are in any way related to the Contract. CFSC agrees,
                 pursuant to the Contract, to review and consider any
                 request for equitable adjustment and/or claims submitted
                 by [SBN].

                 6.      Covenant Not to Sue. The Releasing Parties agree
                 that they will not institute, cause to be instituted or
                 participate or cooperate in the institution of any claim,
                 action or litigation against any Released Party in which
                 liability is sought in any way to be predicated upon any of
                 the Released Claims.

                7.      No Admission of Liability. [SBN] and CFSC have
                entered into this Settlement Agreement solely for the
                purposes of avoiding the expense and inconvenience of
                contesting the claims, with potential subsequent litigation.
                By entering into this Settlement Agreement, neither [SBN]
                nor CFSC admits liability or wrongdoing of any kind, and
                in fact each continues to deny that it has engaged in any
                wrongful conduct or is in any way liable to the other
                concerning the Released Claims.

(R4, tabs 68, 371; see also finding 259) Reading the express terms of Modification
No. P00003 as a whole, and harmonizing its terms as much as possible51 , we find that
SBN agreed in Modification No. P00003 not to submit claims for anything other than
time and associated cost impacts where the subject of the claim was either a dispute in
existence prior to 23 March 2006 or was associated with the "Released Claims" of
ceiling heights, square footage and/or impacts resulting from them.

      213. On 4 April 2006 SME reported to SBN that SBN' s superintendent,
Bowman, "called the military police onto the site yesterday, directing them to speak
with our superintendent ... Padgett" when he refused to leave SBN's trailer until he got
an answer to his question (R4, tabs 703-04). The personality conflict between SBN's
Bowman and SME's Padgett continued through June 2006, when Mr. Padgett was

51
     LAI Services, Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009).

                                            200
asked to leave the 20 June 2006 subcontractor meeting (R4, tab 773), and July 2006
(R4, tabs 772, 778).

       214. On 5 April 2006 the CO asked when SBN would submit updated 100%
design documents that included the issues of door swings and light switches in 17
extended-stay rooms which he identified as "a Contracting Officer directive" (R4,
tabs 130, 707). SBN considered "these changes [to] fall within our recent settlement
agreement, Modification #3, paragraph C" and stated its intention to "submit an
appropriate change request" and to submit updated 100% design documents on
10 April 2006 (R4, tabs 130, 707). SBN confirmed that it had hired a third-party
inspector to review Botting's mechanical work and COR Dyer stated that he intended
to have ORB/BCE also provide "an extra measure of oversight" (R4, tab 707).       ·

     215. In a handwritten document dated 20 April 2006, signed by both
CO Bartholomew and SBN's LaSharr, it was agreed that:

              The NAFI hereby authorizes a mechanical Notice to
              Proceed for all mechanical/RVAC/Plumbing, subject to an
              RFI verification/acceptance of the RBI Boiler and
              restamped drawings, effective this date.

(R4, tab 1171; tr. 5/77-78)

       216. On 4 May 2006 SBN provided to its architect and subcontractors the
following schedule for "completion of 100% submittal documents (both drawings and
specifications":

              May 4 I May 8 Jensen Fey to forward updated
              backgrounds to all designers.
              May 4 I May 8 Designers to incorporate as-built
              conditions and RFI' s into documents (only RFI' s with
              Army CFSC Response)
              May 8 I May 12 Designers incorporate updated
              backgrounds and make adjustments to coordinate the
              documents. Drawings must be stamped by licensed
              engineer. Drawings must have updated title block with
              correct date of May 15, 2006, lOOo/o Submittal.

              May 15 All Designers to have updated, coordinated plans
              and specifications in our office for [SBN] review, printing,
              and distribution to the Army.

                                          201
                These dates cannot slip, as submittal of these
                coordinated documents is critical to the forward
                progression of this project.

(R4, tab 733; tr. 9/182-85)

       217. On 4 May 2006 SME identified numerous errors and conflicts in SBN' s
most recent project schedule:

                After reviewing the schedule from SBN[] it appears that
                who ever [sic] put this schedule together has not followed
                the agreements that have been previously made by Rick
                LaSharr and our team. The start and finish dates for each
                area according to the new schedule has overlapping
                occurances [sic] for every area. Also they are showing
                SME to go into the rooms 4 different times. Wall rough-in,
                ceiling rough-in, finish trims, and Dwyer install will need
                electrical connections made up. If we were to follow their
                current schedule we would need to double even our most
                recent manpower calculations. The schedule also has many
                occurances [sic] with trades stacked into rooms to do trim
                outs with very minimal days to do the work. The schedule
                also has areas of work that are already shown completed
                that we have not been able to work in i[.]e. the Lobby
                Area. The schedule does not show anytime allowed for
                walkway lighting or canopy lighting. This schedule does
                not match the 4-week look ahead schedule issued to the
                Subs. Bottom line is that this schedule has many conflicts
                and needs to be fixed.

                The substantial completions have moved ahead about 3
                months.

(R4, tab 732)

      218. As of the 18 May 2006 progress meeting COR Dyer reported:

                1. The 100% design will be finalized and distributed
                middle of next week (May 24 )....

                2. The next CFSC site visit is intended to "kill 2 birds with 1
                stone". Review/inspect the mockup rooms and conduct a
                100% design review meeting. IF [SBN] does provide the

                                            202
                design as stated by the above date, and IF [SBN] does
                complete the work for the 2 mockup rooms, the earliest that
                CFSC will make the site visit is the week of June 12 ....

                3. You said that I cancelled the May 29 on site review by
                CFSC. May 29 is a federal holiday, Memorial Day. The
                cancellation of the site visit discussed during our April
                visit is being done because the mockup rooms are not
                "guaranteed" to be finished by the scheduled date.
                Rick LaSharr told me/us in April that the mockup rooms
                would be completed by middle of next week. During
                yesterday's discussion, you admitted this was not possible.
                Therefore, the decision to cancel the site visit to review the
                mockup rooms had to be made.

(R4, tab 132)

      219. On 23 May 2006 COR Dyer advised that SBN had delayed the
submission of its 100% design documents further:

                Rick LaSharr, [SBN] Project Manager, informed me today
                that the 100% design is "potentially" not going to be
                shipped out this Friday, May 26. If so, this will not allow
                us 2 full weeks of review time prior to the week of
                June 12, which was supposed to be the week after the
                mockup rooms will be finished. As you know, we have
                cancelled next week's journey to Lewis because of carpet
                delivery issues, etc. [see e.g., R4, tabs 750, 755]. Unless
                everyone wants to go to Lewis in back-to-back weeks, I
                don't think it's wise to separate both functions.

(R4, tab 749) Also on 23 May 2006, SBN advised CO Bartholomew that the mockup
rooms would be complete by 12 June 2006 (R4, tab 751). CFSC experienced a "'travel
lockdown" that precluded travel by CO Bartholomew and COR Dyer from Virginia to
Fort Lewis for the scheduled walk-through of the mock-up rooms and the 100% design
review meeting during the week of 12 June 2006. COR Dyer notified SBN of the
lockdown and advised that the events scheduled for the week of 12 June 2006 would
be rescheduled as soon as the lockdown was lifted. (R4, tab 169 at 4046) The events
were rescheduled to take place on 11-12 July 2006 (id. at 4055).

       220. By letter dated 30 May 2006 SBN notified SME ""that the current schedule
is being driven by SME and is affecting the completion date of the project" (R4,
tab 757). On 31 May 2006 SBN forwarded CO Bartholomew's direction to install

                                             203
outlets beneath the PTCA units to SME. SME responded that "[r]edoing the 2
mockups is 1 thing, but we have already roughed-in 22 additional units and counting."
(R4, tab 759) SME estimated that the roughed-in outlets at 40 PTAC units would
require relocation (R4, tab 762).

       221. On 26 June 2006 SME notified SBN that SME could not complete its
scheduled rough-in work at nine (9) listed locations due primarily to incomplete work
by the framing subcontractor who assured SME "he would do what he could but at
some locations he was waiting for HVAC to be completed before he could continue
(R4, tab 769). On 2 August 2006 SME notified SBN that, per SBN's Schedule S46V,
its work was being delayed 16 days by lack of framing and "HVAC shaft duct work
not done" (R4, tab 782).

     222. On 11August2006 SBN provided to the CO SBN's responses to the
100% design review comments (R4, tab 133).

      223. On 9 October 2006 COR Dyer emailed the following to CO Bartholomew,
ORB/BCE representatives and Stedman regarding the importance of the mock-up rooms
and SBN' s quality control procedures:

             [Bob Monson,] I also want to speak to you about the
             schedule to have both mock-up rooms completely finished
             and truly becoming the standard for workmanship and
             quality. After the mess I saw, we must emphasize to [SBN]
             the importance of these two rooms, and how they indeed
             establish the level of quality and workmanship throughout
             the entire facility .... It may be beneficial to get the team
             assembled once more to have one final look at both rooms
             and stress to SBN[] how we plan on conducting our
             pre-final (shortly after Thanksgiving?) ....

             PS-Modification P00004 established a contract completion
             date of February 12, 2007. Just 4 months away? Bart, I
             asked Rick [LaSharr] to take one more "hard" look at his
             schedule and to once and for all determine his date. I have
             a sneaky suspicion that he'll be coming back to us asking
             for March 1 or March 15. Either date is fine with me. I just
             wanted [SBN] to understand that the QC pre-final
             inspection and correction of the Architect's/Engineer's of
             Record list(s) must be done within the contract time.
             Before [SBN] declares that they are ready for the

                                         204
                Government's pre-final, we' 11 have a signoff by the
                Architect and Engineer's [sic] that their punch lists have
                been satisfactorily completed in accordance with the
                Quality Control plan and workmanship and quality
                established in the Mock-up rooms.

(R4, tab 816)

       224. On 12 October 2006, several years into the contract, Jensen/Fey asked SBN
what Jensen/Fey's responsibility was as CCQC as it related to coordination with the
various subcontractors and inspection of their designs and installations (R4, tabs 819-20).

      225. By agreement dated 20 November 2006, and executed on 21 November
2006, SBN agreed to pay Botting against its claim as follows:

                       c. Any payment to [Botting] required above under
                Paragraph 2(b) is expressly conditioned and contingent
                upon the outcome of the litigation between [SBN] and
                Owner and [SBN] 's actual collection of sums from Owner
                for [Botting]'s Pass-Through Claim.

                        h. . .. [I]t is specifically agreed that [SBN] shall be
                liable to [Botting] only to the extent that the Owner is
                liable to [SBN] for such sums ....

(R4, tabs 842, 1180; tr. 4/64-66) Similar agreements were made with Paras (concrete
subcontractor) on 27-30 November 2006 (R4, tab 1181), Jensen/Fey on 1 December
2006 (R4, tab 1182), and SME on 1November2007 (R4, tab 1200).

        226. On 22 December 2006 CO Whitley issued a Letter of Concern to SBN
stating that SBN's 6 December 2006 project schedule showed a loss of production on
the critical path of 30 calendar days and requesting a ''viable Recovery Plan" within 5
days. SBN replied that it would respond after the holidays. (R4, tab 135)

        227. Modification No. P00005, dated 4 January 2007, provided notification
that, effective immediately, CO Whitley replaced CO Bartholomew as the assigned
contracting officer; the modification also formally accepted SBN' s 100% design and
issued a full NTP for construction of the project. There was no change to the project
completion date of 12 February 2007. (R4, tabs 136, 860; tr. 5/91, 95-100,
12/164-165; finding 223)

                                              205
      5. Project Completion

       228. As of 8 January 2007 Jensen/Fey had not provided updated Daily Reports to
ORB's Monson as requested; Monson advised that SBN's December 2006 pay request
for $870,000 would not be processed until the Daily Reports were received (R4,
tab 1183; tr. 9/118-20). Again on 18 January 2007, Monson reported that SBN had not
provided Daily Reports "since around the last part of October [2006]" (R4, tab 1185).

       229. The 17 January 2007 Progress Meeting #52 minutes contained the
following items pertinent to the service gate and intercom:

             Hydr[au]lic Gate
             1216106 Rick provided new proposed design to Drew
             [Dyer]. Drew was satisfied with the proposal, but
             requested a formal submittal. SBN[] will provide submittal
             information with pricing. SBN[] will provide cost/credit
             info associated with gate to CFSC by 12/13.
             12/14/06 SBN[] forwarded pricing info to CFSC.
             12120106 Sheryl requested a method for lodging personnel
             to open the gate w/o interaction with the front desk. This is
             not called for in the RFP. SBN[] will provide intercom
             submittal. Rick will provide associated pricing with
             intercom. The Delta Scientific gate and associated labor
             was deducted and the new gate and labor was added. The
             new gate will require additional electrical lines to power
             the second boom.
             12/27/06 CFSC to approve hydraulic gate.
             1/3/07 CFSC to approve hydraulic gate.
             1/17/07 Direction to proceed provided by [CO]
             Reginald [Whitley], but no modification bas been
             issued.

             Intercom/Extention of Phone System
             1216106 Drew requests copy of intercom submittal. There
             is a meeting at 9:00am on 12/7 with SME, Onity, Jensen
             Fey, and SBN[] to coordinate the operation of intercom,
             front doors, and hydraulic gates. SBN[] will forward
             intercom submittal to CFSC after 12/7 meeting.
             12/14/06 Rick to forward submittal.
             12120106 Intercom is not required to be separate from
             phone system per RFP. Duane consulted the DOIM

                                         206
                Communications officer and determined that the
                government does not prohibit the simultaneous use of their
                lines, but stipulates that the government will not be liable
                for any problems on lines connected to other systems.
                Intercom will be installed separate from government lines
                and Rick has forwarded associated costs to CFSC. Drew
                will recommend to [CO] Reginald [Whitley] that CFSC
                disapprove increase[ d] costs associated with separate
                intercom lines. Rick requests CFSC issue direction
                quickly.
                12/27/06 [CO] Reginald [Whitley] to provide direction.
                1/3/07 [CO] Reginald [Whitley] to provide direction.
                1117/07 Intercom will not be tied to phone system.
                Direction to proceed provided by [CO] Reginald
                [Whitley], but no modification has been issued.

(R4, tab 169 at 4101, 4109-10)

       230. As of 18 January 2007 Botting's DDC specification submittal still did not
meet all the RFP requirements as it was deficient in 29 specification sections (R4,
tabs 1186, 1187). The list of deficiencies was provided to SBN on 17 April 2007 (R4,
tab 1184 at 3125).

       231. On 25 January 2007 CO Whitley requested from ORB a copy in
electronic form of all documentation associated with this project in order to respond to
a FOIA request (R4, tab 1189; tr. 101109-12).

       232. In an Information Paper dated 2 February 2007, CO Bartholomew52
reported the following information to Army Lodging's Ms. Moinette:

                SUBJECT: Status ofNonappropriated Fund (NAF)
                Contract for New 185-Room Army Lodge at Ft. Lewis,
                WA

                1. Purpose: Advise CG ofNAF construction contract for
                the new Army Lodge at Ft. Lewis, WA

                2. Project Overview: A design-build contract was
                awarded in May 2004 to [SBN], Bellevue, WA, for

52   CO Bartholomew was no longer the assigned CO for the project as of 4 January
        2007 (finding 227), but was reassigned again effective 1 February 2007
        (finding 234).

                                            207
$17,359,397. Contractor design delays and subsequent
project delay resulted in a negotiated contract reduction
of $500,000 in March 2006. The project completion date
was extended to February 2007. Construction work is
good to very good.

3. Background.

       a. Project Scope. This Army Lodge project
includes the construction of a new 185-room Army
Lodge to be integrated into a three-building "campus".
The Contractor is responsible for both the design and
construction of the new building. Renovation of the
second existing building in this complex is under design
review and project development for award to another
contractor.

        b. Recent Changes. Two months of additional
delays have resulted in a further delay of the project
completion date from February 2007 to mid-April 2007. It
will take an additional 4 to 6 weeks to correct minor
deficiencies and load the furniture into the building.
Soldiers can begin to occupy the building in late May
2007. Routine change orders in progress will not further
delay the project.

       c. Pending Development Plans. The NAF
Contracting, Construction and Army Lodging staffs are
conducting weekly progress review meetings and
teleconferences to ensure all aspects of the project come
together for May 2007 occupancy.

4. Related Issues:

       a. Two of [SBN]'s subcontractors are seeking
additional money from the contractor. They have
submitted Freedom of Information (FOIA) requests to
FMWRC. Other issues in dispute with the Contractor are
currently under Contracting Officer review. These issues
will not delay project completion.

      b. The storage and staging for the furniture, fixtures
and equipment (FFE) for the new facility is being closely

                            208
              worked by the project team to ensure smooth transition and
              storage cost control.

(R4, tab 1191)

        233. On 13 February 2007 SME provided to SBN a list of its work items that
were unable to be completed by "the date of the owner punch (3/13/07)" due to work
still remaining to be done by other trades (R4, tab 873).

       234. Modification No. P00006, dated 16 February 2007, formally assigned
CO Bartholomew again to the Fort Lewis project, effective 1February2007 (R4,
tabs 137, 870; tr. 5195, 12/164-65). On 16 February 2007 he directed SBN to proceed
with "a complete Duress Alarm System" and providing a bead of clear caulk at
specified locations (R4, tabs 876-77).

        235. On 20 February 2007 CO Bartholomew signed Modification No. P00004
in the amount of $252, 154.20 as compensation for 13 items of previously directed
changed work; the modification also revised the contract completion date to
12 February 2007 (R4, tab 134). We have found no explanation in the record for why
the modification shows an effective date of 6 October 2006.

       236. Modification No. P00007, dated 23 February 2007, established final
pricing for the 13 items of work listed in Modification No. P00004 by decreasing the
contract price by $14,273.00 and extending the contract performance period 60 days
from 12 February 2007 to 13 April 2007 without additional compensation. The cover
page of the Modification included:

              The NAFI reserves the rights to determine if liquidated
              damages are assessible [sic] and the Contractor reserves
              their right to seek authorized or comepensible [sic] time.

(R4, tabs 138, 883) However, the detailed list included in the Modifications stated:

              14) Add 60 days to the contract completion date without
                  assessment of liquidated damages or additional
                  compensation. Both the NAFI and Contractor reserve
                  their rights to revisit this extension. The new contract
                  completion date is 13 April 2007.

(Id.)

      237. By letter dated 28 March 2007 the Architect of Record expressed its
determination that the project was substantially complete and requested a pre-final

                                          209
inspection be scheduled two weeks later (R4, tab 139; tr. 5/101-05, 7/279-82). The
next day SBN sent a letter to CO Bartholomew formally requesting a pre-final
inspection. CO Bartholomew scheduled the pre-final inspection to begin on or about
16 April 2007. (R4, tab 140; tr. 5/105-07)

       238. On 2 April 2007 SBN's LaSharr requested information from Botting
regarding the installed DDC controls which did not permit workstation access to the
building control system and "the LON cards that continue to be an issue" (R4, tab 1192).

       239. On 30 April 2007 it was discovered that SBN had not provided the DDC
software required by its own DDC specification dated 28 November 2005.
CO Bartholomew requested that SBN do so before requesting a final inspection. (R4,
tabs 141, 892) SBN responded that it had already requested that Botting do so (id.).
CO Bartholomew advised that a final inspection would not be scheduled until the
software was installed and tested. In addition:

             We also will need resolution of the punchlist for the
             interiors and any technical comments from our consultants
             revised. It is our intent to transmit our formal list within
             the next week.

(Id.)

       240. Modification No. P00008, dated 3 May 2007, increased the contract price
by $313,854 for 20 listed items of previously directed and changed work. The
Modification specifically reserved the Fund's right to consider assessment of
liquidated damages and reserved SBN' s right to seek an extension of the performance
period for any associated delays to the critical path. (R4, tabs 143, 895)

       241. On 8 May 2007 CFSC provided to SBN the Pre-Final Inspection punchlist
which was "only for the areas that could be inspected and did not include an exterior
inspection of the building" (R4, tab 144).

        242. A "DDC Conference Call" was held on 15 May 2007 which resulted in
the following:

             1. [SBN] will issue direction today to [Botting] to
             provide/install Workplace Pro and Lonmaker software[.]
             Automated Controls will install software [see also, R4,
             tab 205]. Lead time is short.
             2. The Notebook computer referenced in Spec 15910
             Section 2.1.5 .1 is not required.

                                         210
             3. [Botting] will provide to [SBN] by Friday a copy of all
             commissioning documentation, the T &B report, and a
             response to the Owner's DDC RFI.
             4. Automated Controls will provide by next Tuesday,
             5/22/07, all control parameters specified in Spec 15910
             Section 2.1.3.2 or a response clarifying why a specific
             parameter listed can not be provided.
             5. Following #4 (above), Randy Hieburg [sic] (BCE) will
             meet onsite with Automated Controls, [Botting], [SBN]
             and DPW. Automated will then demonstrate compliance
             with Spec 15910, including each available setpoint, etc.
             Randy Hieburg [sic] will then clarify, if necessary, what
             additional points are required to conform to Spec 15910.

(R4, tabs 145, 897, 1199) BCE's Heiberg testified that:

             [T]he system wasn't usable, there were some concerns that
             were raised by [DPW] ... and what we found was that the
             JACE, the system was extremely slow, there were points
             that hadn't been commissioned, so things weren't working,
             things weren't controlling. There were graphics that would
             cue up as you looked at a piece of equipment, but
             extremely slow, and there were operational issues with
             ventilation equipment, serving the ventilation air to all the
             rooms. They were cycling, burners were coming on and
             going full fire and then shutting off, and full fire and
             shutting off.
                    So temperature swings all over the place, and once
             we got into it in a few more details, we discovered that a
             single JACE panel had been installed, and all of the
             graphics-I mean a global controller has certain memory
             capabilities, it's not a big PC, and they had graphics
             resident on this while all of the controls for the building
             were being-so basically the architecture needed some
             tweaking in their design of their system. The graphics
             should have been, and were later moved to another
             controller so they weren't inhibited by serving up the
             graphics that the controller, the main controller, the main
             JACE was being used to control all the hard points and
             hardware, the control functionality of all of the equipment
             connected to it.

                                         211
                    There was another, I believe at some point, another
             controls contractor that came in and took care of some of
             those issues.

                     [A] global controller is the next step up in an
             architecture from a unitary controller. A heat pump serving
             this room would be a unitary controller. It would talk to the
             next level up, which would be a global controller .... Then
             that global controller would talk to 31 other global
             controllers if this was a huge complex .... And then you
             could go up to the next level to a piece of equipment. Well,
             they basically tried to put way too much equipment and
             graphics serving requirements on one global controller
             serving the whole building. So the design was somewhat
             flawed inasmuch as they taxed-I mean, it would
             eventually serve it up, but it made the system so slow that
             it wasn't usable ....
                     So while the machine is serving up graphics, it's
             trying to make computations to decide what to do with the
             heat pump that it's controlling also, ... , or some other
             piece of equipment. So it had to time share, it just simply
             had too many tasks to do.
                     [The issue was resolved when] [t]hey put in a
             server, a graphics server, site based to take care of all the
             graphics.

(Tr. 111144-46) Mr. Kommers, SBN's expert witness, testified that the slowness of
the system was because CFSC had required more than the RFP did in the way of
graphics and interface (tr. 13/78-79).

      243. The final 100% design drawings and specifications are dated 15 May
2007 (R4, tabs 1175-76).

        244. On 24 May 2007 SBN advised Botting that there were still errors in the
DDC computer system being able to communicate with the units. SBN also stated that
it had not received "the commissioning check list or response to the RFI as requested
numerous times." (R4, tab 900)

       245. On 24 May 2007 COR Dyer recommended to CO Bartholomew that the
project be "conditionally" accepted on 25 May 2007:

                                         212
            We provided [SBN] with copies of the final remaining
            items yesterday and today. [SBN] did an outstanding job of
            reducing the interior punch list from almost 4,000 to
            approx. 120 as the team ended day one of the final
            inspection. The leftover items were being corrected today
            and will continue tomorrow. There are a few items on
            order (mirrors, refrigerator doors, etc). I may be able to
            check off several more items before the day ends
            tomorrow.

            The quality and level of work is outstanding. The spirit of
            cooperation and upbeat attitude of everyone on the job was
            very refreshing considering recent projects.

(R4, tab 146) That same day, CO Bartholomew formally notified SBN's Montoya by
letter that:

                    The Army Lodging Final Inspection Team has been
            on-site this week evaluating the work [SBN] has done on
            the Pre-Final Punch List items, previously provided to
            [SBN], and other work not previously reviewed or
            inspected at the new Lodge. I am pleased to report the
            Team has been impressed with the work done to correct
            items on the Pre-Final Punch List. There has also been
            significant work done on the outside of the building. I also
            received other positive comments regarding [SBN' s]
            cooperation, positive attitude, and efforts to complete this
            project.

                   In view of the foregoing, the Fund will
            Conditionally Accept the new Ft. Lewis Lodge tomorrow,
            May 25, 2007. The one-year Warranty of Construction will
            then begin for all accepted work. The items reported to me
            that condition the building acceptance are:

            1.     Mechanical equipment, to include DDC's and
            Specification 15910. This includes receipt of all
            appropriate software licenses.

                  Tomorrow will also be established as the
            Conditional Beneficial Occupancy Date/Substantial

                                        213
              Completion Date (with conditions). Ft. Lewis Army
              Lodging will also take control of the building tomorrow.
              All card keys, and keys to locks accessing the building, are
              to be turned over to Ms. Cindy Moinette, Lodging
              Manager, or staff she specifically designates to receive
              them. Beginning tomorrow, all access to the building, by
              [SBN] and their subcontractors, to complete the work
              above and other punch list items, will be requested
              through, and controlled by, Ms. Moinette or her designated
              staff. Please ensure the Fund Project Manager, Mr. Drew
              Dyer, is copied on all written and e-mail communications.

                    A Final Inspection Punch List will be provided as
             soon as it is available. A stairwell and exterior punch list
             (essentially a Pre-Final Punch List for those areas), as
             received, will be provided to you today by e-mail. Please
             inform the Fund's Project Manager, and the undersigned,
             when all remaining items of work have been completed.

                    We appreciate your efforts to complete the
             remaining work, while we perform other work in the
             building, and trust it will be done as quickly as possible so
             that we may begin closing out the contract. We look
             forward to opening the new 185-room Army Lodge for
             Soldiers' use.

(R4, tab 147; tr. 5/107; see also R4, tabs 1193, 1207 at SUPP-118)

      246. Ms. Moinette testified that, as originally awarded, the project was
supposed to be complete within 18 months but that, as a result of the delayed
completion, Army Lodging suffered actual damages:

             [I]t was a big impact as far as sending bed nights off post,
             because we were so busy. Therefore, not only did we lose
             the income, also the travel account and expenses increased,
             because they had to pay downtown rates rather than our
             rates, which are normally 50 percent of per diem.
                     When I did a scale to see approximately how much
             actually [sic] revenue was lost, it was about 2.5 million
             dollars because of the late opening of the lodge. I mean,
             that's two summers that were critical.

                                          214
              [T]hen you run into that they have to have transportation.
              And having soldiers off post is very difficult if they are not
              entitled to have a rental car.
                      Some of them do not get authorized rental cars. So,
              therefore, it was an issue if your family is coming from
              Europe, they don't have transportation. So, that becomes a
              bigger issue that they have to take their family downtown
              without vehicles.

              I sent way over 120 some thousand bed nights off post in
              one year.

(Tr. 12/27-29) We find no evidence that liquidated damages were assessed against SBN.

       247. Almost three months after CFSC took beneficial occupancy of the Lodge
(finding 245), 13-15 August 2007 was set as the date for the demonstration and
acceptance of the DDC along with the provision of:

              [T]he final testing and balance report(s), commissioning
              and start-up reports, O&M manuals, record drawings, and
              all other appropriate documentation.

(R4, tab 905 at 12834) On 31 July 2007 CO Bartholomew expressed frustration to
SBN that "Botting is jerking you, and us, around and it needs to stop (R4, tab 905 at
12835). By return email dated 2 August 2007 SBN responded that:

             We have reviewed the submittal that we received from WA
             Botting and find same not to be complete. We met with
             them today, and they are going to review the issues with
             the controls contractor. We can send you what we have,
             and advise what is missing, but I know the preference is to
             get all the information.

              I am very aware that this is not what you wanted to hear.

(Id. at 12833) CO Bartholomew replied:

              Your assessment is correct! [COR Dyer] has set aside the
              13th and 15th of August for us to wrap this up. WE NEED
              TO DO IT THEN!

                                           215
             I will also be available during that time. It is imperative we
             get the documents and schedule the demonstrations those
             days. The hotel is opening and the installation has raised
             this and other issues.

             We have privity of contract with you. Please do what you
             need to do to make this work so we can energize our
             consultant(s) [ORB/BCE] to assist. I do not want this to get
             ugly after the building has turned out so well in almost all
             other respects.

(Id.)

     248. By 15 August 2007 the DDC software installation, testing and
documentation had still not been provided and SBN was concerned:

             [CO Bartholomew] called and he is threatening to call the
             bond on the Fort Lewis project today ifhe does not receive
             the software and response for the DDC. Problem is that the
             systems cannot be balanced and filters are clogged. Work
             is required. If they do not receive the software and a
             response to the warranty or problematic work today they
             will procure all necessary materials and services to
             complete the work and charge against our bond.

(R4, tabs 907, 1195)

       249. On 17 August 2007 SBN issued a "Notice to Cure Subcontractor Default"
to Botting:

             This letter serves as formal notification that W .A. Botting
             is in default of its contractual obligations with [SBN] on
             the above-referenced project. ... W.A. Botting is directed to
             immediately comply with all project requirements. As
             described in previous correspondence, W.A. Botting has
             materially breached the contract ....

             Per the Subcontract Terms and Conditions, W.A. Botting is
             liable for all costs, direct and indirect, related to the delays
             and disruptions caused by W.A. Botting's failure to

                                           216
              perform its contractual obligations. Such damages will
              include damages to the Owner, [SBN], as well as damages
              incurred by other subcontractors.

(R4, tab 908) The copies of the letter in the record show that it was sent to Botting by
certified mail and that the letter was stamped as received by Botting on 21 August
2007 (R4, tabs 908-09). However, Botting obviously received the letter before that
date because, on 20 August 2007, it made reference to the letter in its own "Notice to
Cure Subcontract Default" to Automated Controls (R4, tab 910).

        250. As of 28 August 2007 Botting had still not completed the DDC software
installation, testing and documentation required by Specification 15910 (R4, tabs 148-53,
903). COR Dyer expressed to SBN that, ifhe had known that this issue would still be
open, he would not have recommended that the Fund take possession of the building in
May (R4, tab 153; see finding 245). On 4 September 2007 CO Bartholomew issued a
"Requirement to Cure DDC Software Issues":

             Unfortunately things are not all in order and there are
             problems with the software system and its functionality as
             currently set up.

             [COR Dyer] has been communicating with our technical
             folks and John Timmers. I had a brieftelecom with the
             both of them this afternoon.

             According to John Timmers, the DPW authority at Ft.
             Lewis, changes made to the controls set points can be
             made on the Supervisor but nothing happens at the VAV.

             Additionally, there are problems with the AAON units
             function and variance of discharge from 85 degrees down
             to 55 degrees. There are issues with the sequence of
             operations and the modulating unit capability is apparently
             not working.

             This is an electronic notice to Cure this condition. It may
             be followed with a formal demand on the Performance
             Bond issuer that the DDC controls for the facility, accepted
             conditionally in May 2007, are not properly working.

             We have invested almost two years of time and untold
             hours and meetings dealing with these issues. Our meeting
             on 15 August 2007 led decision-makers on our side to

                                          217
               grant an extension to 24 August. Efforts were made by the
               [SBN] Team to get us the needed software licenses and
               O&M manuals that were way overdue. However, the DDC
               controls issue seems to be a continuing problems [sic] with
               the functionality and operation (or lack thereof) of the
               system.

               Please respond with the remediation plan to correct these
               issues by 1700PDT tomorrow, 5 Sep 17 or we will take
               any and all actions necessary to get this work corrected and
               charge back against any remaining monies yet to be paid or
               a demand on the bond issuer who has been copied.

(R4, tabs 154, 911) As of the next day, 5 September 2007, SBN stated that it
considered the DDC issue corrected and closed (R4, tab 157).

       251. The Grand Opening of the Rainier Inn took place on 13 September 2007
(R4, tabs 1197-98; tr. 5/108, 9/253-54, 12/31). In addition to the Rainier Inn
(designated as Building 2107), the Fort Lewis lodging complex included two
pre-existing lodging facilities of 80 rooms each (Buildings 2110 and 2111 ), as well as
a maintenance building (Building 2108) (tr. 12/53-54).

       252. Again, on 14 September 2007, CO Bartholomew advised SBN of"many
disturbing reports ... that the [DDC] situation is not fixed." After Botting advised on
18 September 2007 that it was taking control of the situation, CO Bartholomew replied
to SBN:

               I am at a total loss as to what the [Botting] e-mail below
               means. WA Botting has been responsible for the controls
               all along. For two years they have failed to hire a proven
               firm capable of installing and making the Tridium and
               related softwares [sic] HVAC interfaces/points work
               properly. The building was accepted conditionally in May
               and here we are the end of September. We met on site with
               two of the Bottings, TRSC531 and Automated Controls
               representatives and I gave your team a couple weeks to
               resolve. It has cost us thousands of extra dollars to have
               our consultants go in and look at what is going on I only to
               be told it is still not correct.

53
     TRS replaced Automated Controls and sometime between 8/15/07 and 9/26/07; the
        replacement contractor was an approved DDC contractor for Fort Lewis (R4,
        tabs 149, 160 at 3063, 3067).

                                           218
             If you do not choose to get new blood into this project
             immediately (by COB today), we will take all necessary
             actions to get the system fixed and charge back/call
             bonds/etc. I again reiterate that we have provided you the
             names of the three Tridium licensed firms that Ft. Lewis
             DPW has used successfully and you may obtain that
             information again from Mr. John Timmers.

(R4, tabs 158, 914; see also R4, tab 913)

       253. On 24 September 2007, when the DDC controls work in accordance with
Specification 15910 had still not been completed, CO Bartholomew directed that
software programming could continue but further directed that all "mechanically
oriented work" was not authorized until an appropriate "ACTION/REMEDIATION
PLAN" had been submitted by SBN and authorized by CFSC (R4, tab 160).

       254. As of 2 October 2007 SBN acknowledged that the DDC work by TRS
was not complete (R4, tab 160 at 3060). SBN advised COR Dyer that "a complete
functional test of the system" was scheduled for 15-16 October 2007 when COR Dyer
was at the project site (R4, tab 161at3078). The DDC installation and testing was
considered complete after the Thanksgiving holiday, however, as of 31 December
2007, the contract-required documentation was not complete. Nevertheless,
COR Dyer recommended to CO Bartholomew that the DDC system be accepted as of
1 December 2007. (R4, tab 162)

       255. On 25 February 2008 CO Bartholomew advised SBN that the DDC
documentation was considered complete and confirmed 1December2007 as the start
of the one year warranty for the DDC controls (R4, tab 163). CFSC acknowledged
receipt of mechanical system as-builts, including DDC, on 20 May 2008 (R4, tabs 166,
169 at 3129).

       256. SBN submitted an REA to CFSC on 2 April 2008 (R4, tab 1207 at
SUPP-121). We have not found a copy of this REA in the massive record before us,
presumably because it was subsumed in SBN's 2010 certified claim (finding 267). On
8 April 2008 CO Bartholomew acknowledged receipt of a four-volume REA from
SBN in the amount of$7,561,051.89:

             The claim is apparently based on "unnecessary delays to
             [SBN's] design and construction of the Project" and there
             are reservations for interest, attorneys [sic] fees and other
             unforseen [sic] costs. Please recall that we negotiated a
             $500,000 contract reduction, in lieu of termination for

                                            219
             default, in March 2006. We also did not accept the DDC
             system (digital mechanical system controls) until last
             month, retroactive to December 1, 2007. The controls were
             not completed correctly when we took the building in May
             2007 and had been both a design and construction
             discrepancy for several years.

             I will review the documentation in the next 24 hours and
             keep you informed.

(R4, tab 164) Later the same day, CO Bartholomew provided further input to SBN
regarding the REA:

             We have received [SBN's] [REA] and have it under
             review. I have copied our contract attorney, project
             manager, and Army Lodging program manager.

            Our review of your request will be detailed. Unfortunately,
            I am unaware of any [SBN] management still present in
            your office that was involved in 2003/2004 during the
            solicitation and award process. Those records/history
            shortly after award resulted in much of the [SBN]
            difficulties in the start of this project and the delays which
            ensued I including the failure by [SBN] to investigate the
            site properly until after the 35% design submission. This
            was further exacerbated by [SBN] assignment of the first
            project manager, new to [SBN] and with no design-build
            construction experience/capability, or understanding of the
            contract and process, and [SBN's] clear intent not to
            follow the contractual requirements for the Contractor
            Quality Control Management System that was to be
            headed by the Architect of Record. The Architect of
            Record repeatedly told us that they had not been hired to
            be responsible for the overall design management, which
            was confirmed by the former [SBN] executive who signed
            the contract (subsequently "released" by [SBN]).

            We acknowledge there are unpaid contract funds
            (retainage). We[] have repeatedly requested an invoice for
            $125,000 to release that portion of the retainage following
            final acceptance, retroactively, for the DDC

                                         220
             controls/system over 6 months after the conditional
             acceptance of the building, and after more than two years
             of back and forth on what was required by the Ft Lewis
             Installation Design Guide (and the Ft Lewis Department of
             Public Works). This lost two years is a critical path. We
             advised the remaining retainage would be released with
             receipt of as-builts and a close out invoice with a Release
             of Claims. The $125,000 will still be released with an
             invoice request in that amount.

(R4, tabs 165, 920)

      257. By email dated 23 June 2008, CO Bartholomew provided to SBN an
informal summary of his review of the "major issues" contained in SBN's April 2008
REA, specifically stating that it was not a contracting officer's final decision:

             I will call you Wednesday at a time you are available, to
             discuss how we can separate out these issues, plan to
             conduct telecom and/or face-to-face meetings, involve
             consultants as needed, and go over the documentation and
             process necessary prior to issuing a final decision. I expect
             that we will conduct a number of meetings and information
             exchanges before getting to a final decision on those items
             where there is not agreement. Once a final decision is
             issued by the contracting officer, it may be appealed to the
             [ASBCA].

             Again, I am open for additional discussions, clarifications
             and exchanges of information on what you have submitted.
             I do not believe we have acted unreasonably or required
             anything that unjustly enriched us at the expense of [SBN]
             or any of their subcontractors.

(R4, tabs 167, 922, 1201) CO Bartholomew later stated that his 23 June 2008 response
to SBN's REA was a "complete denial" but included the possibility of further
negotiation (finding 259).

      258. By email dated 10 July 2008, SBN's Montoya responded:

             I have reviewed your email and while this issue is
             significant, and the sums involved are as well, I am

                                         221
              suggesting the following steps be taken in order to resolve
              this between us.

              1.     We need to determine whether there are major
              disagreements on the relevant facts denoted in our REA.
              From the general nature of the response provided I am
              unsure. The response provided does not include any
              analysis for our review. Once each component in our REA
              is addressed we can move to the next step.

             2.     Once step 1 is completed we can identify the facts
             we agree/disagree on. For those items we agree on we can
             resolve the associated dollar amounts at this time.

             3.      For those items we disagree on we can review the
             facts together to better understand each other[']s position.
             If necessary we can each provide additional information to
             support our respective positions.

             4.    We negotiate a settlement based on the information
             reviewed in step 3.

             The process identified above may take 2 or 3 meetings at
             the most. I recommend we meet the week of28 July to
             accomplish Step 1 and Step 2. We can then meet the week
             of 18 August to address step 3 and 4. Let me know what
             date and location for each week works for you.

(R4, tab 168 at 3115-16, tab 923; tr. 3/221-25) CO Bartholomew responded that he was
out of the office on business through the first week in September, but he suggested a few
dates in August that could work for an initial meeting (R4, tab 168 at 3115, tab 923).

        259. In a "Pre-negotiation Meetings Plan" dated 1August2008, CO Bartholomew
stated the following:

             Background: The Ft Lewis Lodge (185 rooms) was
             competitively awarded under a design-build RFP to [SBN],
             Bellevue, WA for $17.36 Million in May 2004. [SBN]
             attempted to change the mechanical system design
             requirements from the outset and they were not accepted.
             [SBN] also completed the initial designs/3 5%/later designs
             without performing required site investigation/geotechnical
             exploration until later in the design process. This led to

                                         222
required design changes in the foundation system and site
elevations, among others, in December 2004, due to fiber
optic lines running immediately under the proposed
building layout along grid line 13. Subsequently, the entire
[SBN] management and project teams were
changed/replaced from late 2004 through 2005. This
included multiple project managers, quality control chiefs,
superintendents and upper management at the Bellevue,
WA regional office. Mechanical and design issues resulted
in protracted back-and-forth and extensive project delays.
In early 2006 it was proposed by the Construction
Directorate to terminate the contract for default. In
February 2006, the Contracting Officer alternatively
proposed seeking a bilateral contract reduction, in six
figures, in consideration of not terminating for default. In
March 2006, a $500,000 contract reduction was negotiated
in lieu of contract default. Counsel for both parties sought
to include reservations of all rights and they were
incorporated in the bilateral agreement. Part of the
agreement included accepting some non-standard rooms
and shortened ceilings.

The project was conditionally accepted in late May 2007.
The DDC controls system for the HVAC was not complete
and not accepted by the Contracting Officer. Many
changes were necessary and the system was not accepted
until early 2008, retroactive to December 1, 2007.

In April 2008, [SBN] submitted a large four (4) volume
REA totaling $7 .6 Million. On 23 June 2008, the
Contracting Officer issued a denial of the entire _REA.
However, the response did acknowledge the holding of
retainage and a previous decision of the Contracting
Officer to release $125,000 of the $251,000 retainage upon
receipt of an invoice for same. An invoice was received on
July 2008 and the $125,000 retainage was released via
wire transfer within a few days.

Other Comments: Manufacturing problems have been
encountered with the McQuay packaged terminal air
conditioning (PTAC) units provided by the contractor
(actually under a subcontract with W.A. Botting, the
mechanical subcontractor, who has a claim for seven

                            223
figures as part of the overall REA request). Approximately
half of the PTAC units require replacement and work is
underway under the Warranty of Construction contract
clause.

Contracting Officer Summary of Actions Taken:
Following a lengthy review of the REA documentation
[SBN] provided in four large volumes, a complete denial
was made 23 June 2008, but it did include the possibility
of additional consideration with a bifurcation of some
issues and additional documentation. The initial finding by
the Contracting Officer was not a final decision, and [h]as
not been reviewed by a staff attorney. In the denial, the
Contracting Officer anticipated a number of meetings and
information exchanges before getting to a final decision on
those items where there is not agreement.

[SBN] Request: Following the Contracting Officer's initial
denial of the REA, a dialogue was opened with the [SBN]
Vice President/Division Manager, Mr. Ron A. Montoya,
who oversaw the end of the project. He requested
face-to-face dialogue meetings that were agreed to by the
Contracting Officer. [SBN] requested the first of the
meetings to be held 19/20 August in Arvada, CO so that their
outside counsel, who participated in the bilateral agreement
in 2006, could participate and understand the process. The
first meeting will be to: 1) go over the original submission in
detail; 2) identify areas where additional consideration is
possible; 3) identify areas where a formal denial will
occur/where there is no agreement; 4) discuss the intent of
reservations taken with the agreement in march 2006; and 5)
discuss the bifurcation of certain issues that might result in
additional consideration (issues that [SBN] considers
continued after the March 2006 agreement).

Negotiation Plan: The plan would be to conduct two
face-to-face meetings followed by additional submissions,
if appropriate, by [SBN] and their subcontractors. The
initial meetings on 19/20 August 2008 are pre-decisional.
A second meeting will likely be scheduled in Seattle, late
September/October 2008, to take advantage of any

                            224
             required technical input/participation by: the Architect of
             Record, Jensen Fey Architects; W.A. Botting, mechanical
             systems subcontractor; SME Electric, electrical
             subcontractor; other subcontractors as appropriate; ORB
             Architects, NAFI consultant; BCE Engineers,
             subconsultant to ORB Architects; and Ft Lewis, WA DPW
             representatives who were involved in establishing the
             Installation Design Guide requirements for HVAC systems
             and the DDC tridium controls. A Final Decision of the
             Contracting Officer is not expected until at least November
             2008.

(R4, tab 1202)

       260. CO Bartholomew and SBN representatives participated in a "lengthy
conference call" on 19 August 2008 (R4, tab 170 at 1-3; tr. 3/221-25). The record contains
no evidence of any later discussions between CO Bartholomew and SBN representatives.

       261. CO Bartholomew retired at the end of December 2008 and, thereafter, did
not participate in any further discussion or resolution of SBN's 2008 REA (R4,
tabs 170, 1203, 1207 at SUPP-121; tr. 12/163, 190-93). SBN's Montoya left SBN's
employment on 1 January 2009 (tr. 3/220).

        262. In February 2009 CO John Wallace was assigned as the successor
contracting officer responsible for the contract matters now at issue (tr. 12/129-30).
He has been a senior contracting officer in the Major Projects Division for NAF
contracts since 1992. CO Bartholomew had been his supervisor from 2004-2007 but
they had no conversations about the specifics of the Fort Lewis lodging project before
or after CO Bartholomew's retirement. (Tr. 12/129, 140, 147-48, 156, 163, 169-74)
CO Wallace had previously been contracting officer, with COR Dyer as project
manager, on two Navy lodging projects and one Army lodging project (tr. 12/140-41,
213). At the time CO Wallace became involved with the project now at issue:

             Our office [CFSC] was in the middle of the BRAC
             relocation and the Army Lodging Organization was in the
             last phases of its relocation to San Antonio.
                    Their area on the fourth floor of our building, which
             we were part of, had been vacated. All their books and
             boxes and everything were packed up for shipment and
             were on their way to San Antonio.
                    When I was assigned as the contracting officer on
             the Fort Lewis Lodge, I was looking for contract

                                         225
             documents, I was looking for emails, I was looking for any
             documents I could get my hands on.
                    I was informed that some boxes had been I may
             have been shipped to San Antonio. I was informed that
             there may have been boxes that were shipped to self-
             storage. And I was informed that a lot of boxes had been
             shipped to archives and they couldn't tell me whether or
             not any of them were referencing this particular project.

                    Q:    At the time you came on the project in 2009,
             were there any contractual actions outstanding on the Fort
             Lewis Lodge contract?

                    A:      I wasn't sure, because I could not gather all
             the documents that I was looking for. I had read the [2008
             REA]. I had reviewed the documents that I had available to
            ·me. And at that point I said, well, there's something here,
             but I can't verify without documentation, and there were
             portions that we were looking for.
                    I had tasked our Information Management Office to
             provide me with all the emails that were in the archives or
             records from Mr. Bartholomew, from Mr. Dyer and from
             Army Lodging personnel that were involved in the project.
                    That took about four months to get collected.

(Tr. 12/141-43; see also tr. 12/162-63) Among the documents that CO Wallace could
not find was the official contract file:

                     I could not find all of the file. And that's what I was
             referring to as constantly looking for documents. The files
             were scattered all over the place.

                    [W]hen I was given the project, I was told there are
             three boxes in that file cabinet over there where all of [CO
             Bartholomew]' s files are.
                    I went there, went into [his] old office, laid them out
             on the table and looked at it and said, there's nothing here.
             I have to go back and start looking for all the missing
             packages.
                    There were sections of the RFP file that had been
             tom out, and I don't know why and I don't know how, of

                                          226
              the folder and kept together in a clip binder. There were
              other parts that were loose.
                      I have a feeling based on what I was looking at, at
              the time, is people started rummaging through the files as
              they were packing their files to go to San Antonio and
              there was a big mess in there.
                      And I spent I and I think I believe I spoke with you
              [referring to SBN' s counsel] on several occasions where I
              kept telling you I'm still looking for documents.

(Tr. 12/159-60, 162-64; tr. 12/167) Although CO Wallace had no first-hand
involvement in drafting the specific RFP for the Fort Lewis project, he had developed
and was the original author of certain "boilerplate requirements and language that was
incorporated into" Sections C, Hand L of that RFP (tr. 12/131, 170).

       263. Botting filed bankruptcy on 19 May 2009:
             Company incurred large losses and subsequent claims on
             several projects while managed without Peter Botting in
             period 2003-2006; resulted in "liquidity crisis"

(R4, tab 926 at 13238; tr. 4/74-75, 79-88 (Chapter 11 in 2009, later converted to
Chapter 7))

       264. On 26 July 2009, CO John Wallace informed SBN's counsel of his
intention to hire a schedule consultant to analyze SBN's delay claims. CO Wallace
expressed appreciation for SBN's patience:

             Based on the above, I do not anticipate completing my
             review and issuance of my decision until after the end of
             the fiscal year (09/30/09) .... How long thereafter will not
             be known until I get the analysis and report from the
             scheduling consultant. I regret any inconvenience this
             causes, but I will not issue a decision without knowing all
             the facts surrounding allegations from both sides ....

(R4, tab 1203) SBN's counsel sought a further status report from CO Wallace by
email on 23 September 2009 (R4, tab 1203).

       265. By email dated 6 January 2010 CO Wallace responded to a request for
update from SBN' s counsel, stating that he had been hospitalized and out of the office
for two weeks. CO Wallace also informed SBN' s counsel that the schedule consultant
had questions, the answers to which needed to be provided by SBN.

                                          227
              Upon receipt of [SBN] 's responses to these questions, I
              will forward to our consultant and schedule a meeting with
              them to discuss their overall assessment and report on the
              REA delay allegations. After that meeting, I anticipate
              being able to provide you and [SBN] a date certain of my
              decision on the REA.

(R4, tab 1204)

      266. On 17 February 2010, again in response to a request for update from
SBN' s counsel, CO Wallace informed counsel that:

              I was working with the schedule consultants and they were
              developing their questions and comments based on the
              [SBN] documents and available information. Some of the
              questions they asked were answerable based on information
              in my possession. I was attempting to provide the consultants
              with some key relevant documents (including emails) when
              my computer crashed on January 20th.

              Our IM folks were having a difficult time retrieving the
              e-files, documents and emails out of the old hard drive.
              After the recent historic snow storms in the DC area
              (Federal Govt closed for almost a week), I didn't get most
              of these items back on my new computer until February
              12th (some files appear[] to have been lost and hard copies
              are being tracked).

             I regret the delay ... it was unfortunate and untimely. As
             soon as I can assemble the rest of the hard documents, I
             will forward these documents to the consultant in order for
             them to refine their questions and re-submit them to me for
             forwarding to you and [SBN]. I will notify you when I plan
             to forward the consultant's questions related to [SBN]'s
             REA (Delay Allegations) as soon as possible.

(R4, tab 1205)

D. Certified Claim and Appeal

       267. On 7 June 2010, SBN formally withdrew its 2 April 2008 REA
(finding 256) and submitted to CFSC a disk containing its nearly 6,800-page certified
claim in the amount of$6,768,830.26:

                                          228
                     It has now been 26 months since [SBN] submitted
              its REA. There has been no substantive response from the
              Army, no attempt to discuss the specifics of the REA and
              no decision. As [SBN] has not received a final decision nor
              has the Army acted within a reasonable time, [SBN]
              believes the Army's lack of action implies a rejection of
              the REA. Accordingly, [SBN] considers the REA to be in
              dispute, and, as required by the Disputes clause, [SBN]
              hereby submits its certified claim ....

                    As stated in the Claim narrative, [SBN] demands a
             modification to the Contract in an amount of
             $6,765,830.26. The Claim, which is included in the
             enclosed CD, includes a narrative, schedule analysis and
             supporting documents. The Claim is substantially the same
             as the April 2, 2008, REA although the schedule analysis
             has been updated to include description of a number of
             delays and disruptions not included in the original REA.
             Since your earlier emails indicated that you and your
             scheduling consultants had reviewed the REA and should
             be familiar with it, we request a Contracting Officer's
             decision on the Claim within the required sixty (60) days.

                    We direct your attention to the circumstances
             surrounding the Army's removal of [SBN's] Project
             Manager early in the project. The Army's action adversely
             impacted [SBN's] ability to complete the project in a
             timely manner. We believe the documentation, including
             email, which is contemporaneous with the removal of our
             Project Manager demonstrates less than good faith on the
             part of certain Army personnel.

(R4, tab 170 at 9911-14, tabs 1206-07; tr. 5/203-04)

      268. The disk containing SBN's voluminous claim was delivered to CFSC
while CO Wallace was on extended official travel:

                     At the time the claim came in, I was actually on
             travel traveling through Korea, Alaska, Hawaii. And got
             back to my office and I got in about two and a half weeks
             after they told me the FedEx package was on my desk.

                                         229
                      I found the FedEx package, opened it up and read
              that it was a certified claim. And I started thumbing
              through the disk to see what the claim was all about.
                      It was an expansion of the initial REA, but I had to
              get hard copies made of it. And at that point, I notified
              Army Lodging that I needed to get printing of this
              document, because it was about 6,800 pages of documents.

                       Well, we were in the process of getting the
              documents printed and reviewed. And in the meantime, I
              was still traveling. I had 25 projects that I was working on
              at the time and still traveling around the country.
                       When I got back, the printed boxes were on my
              desk I or the printed copies were stacked on my desk and I
              began to go through them.£541
                       And at that point around early August I got a
              letter ... that there was an appeal before the Armed Services
              Board of Contract Appeals.
                       And I continued my review, but I was working on I
              towards a response, but was not ready to issue a final
              decision at that point.

(Tr. 12/143-45, 178-204) CO Wallace admitted he never formally acknowledged to
SBN receipt of the claim, stating "[i]t slipped through the cracks" (tr. 12/208-12).

       269. The claimed amount was broken down as follows:

                Contract balance                                    $110,650.00
                General Conditions                                $1,571,629.95
                Labor and Material Escalation                       $225,668.67
                Disputed Change Orders                           $348,836.07[551
                Subcontractor Claims                              $4,665,045 .57
                Liquidated Damages                                $(153,000.00)
                *Requested Contract Modification                  $6, 768,830.26
                Unabsorbed Home Office Overhead                     $328,020.44

54 The printed hard copy of SBN's certified claim in the record consists of 15 (fifteen)
        3-inch binders of paper and contains a half-page table of contents for sections
        of the claim (some containing thousands of pages) with no tabs to assist in
        finding documentation referenced in the narrative.
55 (See app. br. at 293; R4, tab 169 at 5182)

                                          230
                  *The Unabsorbed Home Office Overhead costs are additive to
                  the Requested Contract Modification requiring an adjustment
                  upon offer of settlement in order to avoid duplication of
                  requested overhead in line items above.

(R4, tab 169 at 3126) The claim summarizes the delays asserted by SBN as follows:

          •   Actual Delay I 518 Calendar Days [12/23/05-5/25/07]
          •   Compensable Delay I 393 Calendar Days
          •   Excusable Delay I 23 Calendar Days
          •   Non-excusable Delay I 102 Calendar Days [SBN responsible]
          •   Delay Mitigation I 37 Calendar Days

(R4, tab 169 at 3125)

      270. The Subcontractor Claims submitted to SBN and included within its own
claim were broken down as follows:

              Jensen Fey Architecture & Planning                    $477,918.00
              KHS&S                                                 $443,539.00
              Olympic Construction Sitework Contracting              $80,917.00
              Paras Concrete Contractors                             $57,383.00
              SME Electrical                                      $2,059,820.00
              W.A. Botting                                        $1,596,122.00
              Non-Compensable Delay Deductions                     -$482,343.63
              Change Order Request Deductions                      -$269,665.00
              Dama2es Disputed Chan2es                            $3,963,690.37
              Overhead/Fee Insurance                                $701,355.20
              Total Subs Claims                                   $4,665,045.57

(R4, tab 1207 at SUPP-160)

       271. CO Wallace failed to respond to SBN's Claim within sixty (60) days of
receipt (see finding 25, § (f)) and, to date, no contracting officer's final decision
(COFD) has been issued by CFSC. When asked at the hearing why no COFD was
prepared, CO Wallace testified:

              Once ... the lawyers got involved, I was not prepared to
              issue it, because there was still a lot of documentation that
              I did not have.

(Tr. 12/144-46)

                                           231
       272. SBN appealed to the Board from a deemed denial on 18 August 2010 (R4,
tab 1207 at SUPP-121; tr. 121145).

                                        DECISION

       The subject of this appeal is the design and construction by SBN of the Rainier
Lodge, a 185-room, four-story lodging facility at Fort Lewis, Washington. As the
voluminous record demonstrates, this was a project with all the attendant challenges
inherent in such a complex undertaking. SBN seeks compensation from the Fund in
the amount of $6,768,830.26. We address the disputed matters before us, as much as
possible, in the chronological order in which they occurred during contract
performance and in which they were presented in SBN's 3 June 2010 certified claim.

Preliminary Matters

       A. Conduct of CO and COR

       Before addressing the rest of SBN' s positions and arguments in this appeal, we
will address its allegation that the Fund administered this contract with an intention to
harm SBN (see, e.g., app. hr. at 306-07, 376; app. reply at 4-5). The Fund argues that.
CO Bartholomew and COR Dyer were not motivated by animosity or ill will, but were
merely resolute in fulfilling their obligations on behalf of the Fund to ensure that the
contract requirements were met (gov't hr. at 226-28). The extensive record in this
appeal is replete with expressions of frustration, pique, and even anger by
representatives of both parties to the contract, as well as their agents and
subcontractors. In any project the parties work in their respective best interests to
accomplish the common goal of a well-executed project. However, especially in a
project of the size and complexity of this one, the parties' interests can often appear to
be at odds. Finding common ground is essential but it often takes considerable
patience, professionalism and give-and-take. It is obvious that there are specific
instances in this record where the actions of one party/individual or another were ill-
advised or out of proportion to the triggering event(s). But in our analysis, we are
required to look at the totality of the circumstances and to consider specific alleged
examples in context and not in isolation.

       Both parties to a contract are subject to the implied duty of good faith and fair
dealing. Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). The
duty is breached by the Fund only upon proof by clear and convincing evidence of a
specific intent to injure SBN' s ability to obtain the benefit of the express terms of the
contract or by actions intended to delay or hamper SBN' s performance. Metcalf
Construction Co. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014); Puget Sound
Environmental Corp., ASBCA No. 58828, 16-1BCA~36,435. After careful

                                           232
consideration of the voluminous record in this appeal, there is no evidence that the
Fund intended to injure SBN or to delay or hamper its contract performance. Quite the
opposite, it is clear to us that CFSC's actions on behalf of the Fund were intended to
resolve delays and move the contract forward. When we consider the totality of the
actions and inactions of both parties and all the various actors, we do not find the
overall conduct of any of the parties over the course of the project to rise to the level of
clear and convincing evidence of bad faith or to provide a separate basis for
compensation. As was the case in The Clark Construction Group, Inc., JCL BCA
No. 2003-1, 05-1BCA,32,843 at 162,500-01 (citation omitted):

              [T]he record contains numerous examples of a lack of
              communication and cooperation between the parties, who
              often took extreme or untenable positions ... , which
              enhanced an adversarial and distrustful atmosphere ....
              While we are not prepared to conclude that either party
              acted in bad faith, the lack of mutual confidence and
              respect caused and exacerbated many of the disputes raised
              in this appeal.

We have considered SBN' s arguments alleging that the overall conduct of
CO Bartholomew and COR Dyer over the course of the entire contract performance
period constituted a breach of the implied duty of good faith and fair dealing and find
them unpersuasive. We have separately addressed below several specific instances of
the CO's and COR's conduct alleged by SBN to entitle it to damages.

       B. Delay Damages

        SBN has asserted claims for alleged excusable or compensable delays
associated with a number of the substantive claims addressed in the following sections
of this decision. A compensable delay is one for which both a time extension and
monetary relief are due and an excusable delay is one for which only a time extension
is due. ME.S., Inc., ASBCA No. 56149 et al., 12-1 BCA, 34,958 at 171,857 n.3. In
order to prove that it is entitled to delay damages in the form of time and/or money,
SBN must prove that the government was responsible for specific delays, overall
project completion was delayed as a result and the government-caused delays were not
concurrent with delays within SBN's control. Versar, Inc., ASBCA No. 56857 et al.,
12-1BCA,35,025 at 172,128. Normally only delays to work shown to be on the
critical path at the time of the alleged delay will cause a delay in overall project
completion. States Roofing Corp., ASBCA No. 54860 et al., 10-1BCAif34,356 at
169,661. Damage is also an element of entitlement and, while mathematical certainty

                                           233
is not required56 , some proof of damage is required. BAE Systems San Francisco Ship
Repair, ASBCA Nos. 58810, 59642, 16-1BCA~36,404 at 177,503; Lear Siegler
Services, Inc., ASBCA No. 57264, 12-2 BCA ~ 35,112 at 172,425. For each of SBN's
claims for delays we will apply these elements to the relevant facts.

I. HVAC/Mechanical Design

         The single largest and most pervasive dispute between the parties was also the
first to present itself. As SBN stated in its brief: "The mechanical design was an
important element of the overall Lodge design because it affected costs and impacted
many other disciplines including the architectural and electrical designs" (app. br. at
390). We first summarize the facts pertinent to the matter of SBN's
HVAC/mechanical design for the common areas which comprised 10-12% of the total
Lodge space designed to receive conditioned air (findings 69, 74, 76, 100).

      The original RFP was based on a 10% concept design and specifically
encouraged "innovative, creative, or cost-saving proposals that meet or exceed the
RFP-specified requirements" (findings 2, 7). Amendment No. P00005 reiterated that
encouragement when it stated that "[a]lternative systems may be submitted by
Offerors for consideration" (finding 36). However, Offerors were not given carte
blanche by either the original RFP or Amendment No. P00005:

                The requirements in the RFP are minimum standards and
                may be exceeded by the Offerors. Deviations from these
                technical or functional requirements shall be clearly
                identified for Government review and may be approved if
                considered by the Government to be in its best interest.

(Finding 7) (Emphasis added) In other words, any proposed deviations from RFP
requirements were required to be specifically called to the attention of the government
and identified as deviations that the government may, or may not, approve and
formally incorporate into any resulting contract (findings 32, 49).

        The RFP required that the HVAC designed for the Lodge was to use PTAC
units in the guestrooms and DOIM room and that the rest of the building (often
referred to by the parties as "common areas") with conditioned air (estimated to be
approximately 10-12% of the total conditioned space):

                [S]hall be part of a VA V system utilizing constant volume
                fan powered terminal boxes, air cooled chiller and hot

56
     Specific proof of the amount of monetary damages is a quantum issue which is not
         before us.

                                           234
             water boiler for primary air handler and re-heat at the
             terminal unit [see finding 17]. Code-required outside air
             ventilation and make up air shall be provided the primary
             air handling unit using chilled water cooling and hot water
             heating to precondition all outside air before delivery
             through ductwork to each space.

(Finding 14) RFP Section L-20-1 was explicit in its requirement that:

             Requirements, codes, standards and any other information
             contained or specified in SECTION C and elsewhere in
             this RFP will be assumed to be included and to be a part of
             the Offeror[']s proposal. It need not be repeated therein.
             All alternates shall be specifically addressed and expanded
             upon in the proposal. The criteria specified in this RFP are
             binding contract criteria and in cases of any conflict,
             subsequent to award, between RFP criteria and
             Contractors['] submittals, the RFP criteria shall govern
             unless there is a written agreement between the
             Contracting Officer and the Contractor waiving the
             specific requirement or accepting a specific condition
             pertaining to the offer.

             Proposals will be evaluated for conformance to the
             minimum criteria in the RFP and for quality scoring.

(Finding 32) In addition, in order to be considered technically responsive, the
proposal was required to include: (1) a narrative describing any alternative HVAC
system proposed; (2) why that particular system was selected for proposal; and, (3)
catalog cuts of the particular equipment proposed (finding 32).

        SBN's proposal included an alternative HVAC system instead of the
boiler/chiller system required by the RFP "because we couldn't meet the price with the
boiler and chillers. And it didn't fit [our] design." (Findings 35, 64, 74) However,
SBN's HVAC/mechanical proposal narrative, prepared by Botting, did not expressly
state that it included any alternatives or deviations from the RFP requirement for a
boiler/chiller system in the common areas, nor did it offer any narrative at all as to
why an alternate system was selected and there were no catalog cuts of the proposed
alternative equipment (findings 42, 76). As quoted just above, the RFP put SBN on
notice that, in the absence of a specifically identified alternative/deviation, the
proposal would be presumed to meet RFP minimum requirements (finding 32). SBN

                                         235
and Botting now admit that the proposed HVAC/mechanical system for the common
areas did not meet the RFP requirements (findings 64, 66, 76). However, SBN takes
the position in its claim that the use of the term "packaged" as descriptive of the
proposed system, together with the absence of the words "boiler" or "chiller," in the
proposal's brief narrative as it relates to the common areas, equipment list and
drawings was enough to put the government on notice that the proposal included a
deviation from the RFP (finding 64; app. br. at 391-92; app. reply at 26-29). We
disagree; the mere use or non-use of the words "packaged," "boiler," or "chiller" in the
HVAC/mechanical system narrative without an affirmative, clearly identified
statement that an alternative/deviation was proposed instead of the RFP-required
boiler/chiller system and why it was proposed, did not meet the RFP requirements for
the proposal of a deviation/alternative.

        SBN's proposal was one of nine submitted to the CFSC for review.
Approximately two hours were spent on the review of each entire proposal. SBN' s
proposal was so lacking in information regarding the HVAC/mechanical system
design that it was rated ninth out of the nine proposals and fifth out of nine overall
(finding 45). SBN argues that CFSC was negligent because the members of the
proposal review team did not include anyone who was experienced in the
HVAC/mechanical field and that, had the team included such a person, the team would
have been able to interpret SBN/Botting's design as an alternative/deviation from what
the RFP required (app. br. at 11-24; app. reply at 26-29). However, the RFP's
guidance to prospective contractors provided that "professional evaluation" would first
be part of the review process at the time of the 35% design review and made no such
statement about the makeup of the proposal review team (finding 20). We understand
the RFP requirement that alternatives/deviations were to be clearly identified and
explained in the narrative to provide a mechanism by which the proposal review team
would be alerted that something other than the RFP requirements were included and
that additional attention and/or expertise might be needed to review a proposed
alternative/deviation. In the absence of the RFP-required clear identification of an
alternative/deviation in SBN's HVAC/mechanical proposal, including the required
specific narrative, an explanation of why the alternative/deviation was proposed and
catalog cuts for proposed equipment, there was nothing to alert the proposal review
team that anything other than the RFP minimum requirements were proposed.

        We find that the government proposal review team followed the RFP guidance
(finding 32) and that, given the limited amount of time for review of each proposal and
in the absence of an express statement by SBN calling the government's attention to a
proposed deviation from, or alternative to, the RFP requirements, the proposal review
team was justified in assuming that SBN's mechanical/HVAC proposal met the RFP
requirements for a boiler/chiller system (see finding 32). SBN's failure to specifically
advise the government that its HVAC/mechanical proposal included a deviation from the
RFP requirements was repeated when, in response to questions from CO Bartholomew

                                         236
seeking clarification of its proposal, SBN again failed to identify the alternative design
and why it was proposed and merely stated that its proposal was "fully compliant with
the technical requirements of the RFP" (finding 46).

        Notes from a telephone conference on 5 March 2004 stated that CO Bartholomew
was still seeking clarification of the HVAC/mechanical portion of SBN' s proposal.
SBN' s Henrickson testified that he did not recall having a discussion about the
HVAC/mechanical proposal, rather, "[t]hey just wanted us to clarify. We had already
stated that was a package, but they wanted more clarification." (Finding 48)
Nevertheless, SBN now argues that during this telephone conversation, CO Bartholomew
acknowledged and approved SBN's alternate HVAC/mechanical design (app. br. at
393-94; app. reply at 53-54). We find absolutely no contemporaneous documentary
evidence in the extensive record before us of such a detailed discussion or agreement (see
finding 49) and note that in the entirety of the voluminous record before us there is
nothing to document that SBN ever even made an allegation of the existence of such an
agreement until it submitted its 2010 claim, six years after the alleged agreement and
several years after contract completion. SBN urges us to assume that such an agreement
was memorialized in CO Bartholomew's Determination and Finding for Award, a
document which is not in the record because the official contract file was never found
(app. reply at 53-54; see also findings 262, 266, 271). However, in the absence of the
document, it would be inappropriate to find that such an important agreement was, or was
not, in the document without further contemporaneous corroborating evidence. Rather,
given the importance of the HVAC/mechanical design and associated design and
performance issues and delays documented throughout the record, we find it hard to
believe that if, as SBN now claims, CO Bartholomew had approved of the alternate plan
prior to contract award, SBN would not have made its own detailed record of the alleged
agreement and raised it loudly and often with CFSC from 2004-2010. There is no
evidence that SBN did so. We, therefore, conclude that the hearing testimony, many
years after the fact, alleging the existence of such an agreement to be uncorroborated by
any detailed contemporaneous evidence and to have little credibility.

       In its 23 March 2004 BAFO, SBN's mechanical/RVAC proposal stated that:

                 •   The lobby and administrative areas are served from
                     a packaged variable volume unit located on grade as
                     indicated on the mechanical concept drawings. Air
                     is distributed to fan powered terminal units with
                     electric heat to provide energy efficient comfort
                     zomng.

(Finding 50) Again, there is nothing in this description specifically calling to the
Fund's attention that what is proposed is a deviation from, or alternative to, the
RFP-specified boiler/chiller system nor does the narrative state why an alternative is

                                          237
being proposed. Once again, SBN argues that the mere use of the term "packaged"
was sufficient to put the government on notice that the proposal included something
other than the RFP-specified boiler/chiller system and, once again, we disagree.
SBN' s own expert witness, Mr. Kommers, testified that there are such things as
packaged boiler and chiller systems and we have found that heat generation boilers are
commonly powered by gas or electric (finding 50). Once again, the mere presence or
absence of the words "packaged," "boiler," or "chiller" in SBN's BAFO was
insufficient to specifically identify and call attention to SBN' s inclusion of an
alternative HVAC/mechanical design and not the RFP-required boiler/chiller design.

       On 26 March 2004 SBN again assured CO Bartholomew that:

              Our proposal complies with the RFP and if awarded a
              contract we ensure material compliance with the RFP
              requirements. We have reviewed and verified our pricing
              and it is acceptable for the basis of a firm fixed price
              contract if awarded this project.

(Finding 51) Again SBN made no mention of its known proposed deviation from, or
alternative to, the RFP-required boiler/chiller system. The RFP specifically obligated
SBN to expressly identify any alternative/deviation (finding 32), and we cannot agree
with SBN that, upon its failure to make such a specific identification, the CFSC
proposal review team was required to hunt through SBN' s proposal to see if it could
unearth clues to such an alternative. The CFSC BAFO proposal review team again, in
compliance with the terms of the RFP and in the absence of a specific statement by
SBN that it was proposing an alternative/deviation, had no reason to believe SBN's
proposal included anything other than the RFP-specified boiler/chiller system
(findings 32, 52).

        The contract was awarded to SBN on 11 May 2004 and both the RFP and
SBN' s BAFO proposal were incorporated by reference. By its express terms, in the
case of a conflict between the contract and SB N's proposal, the contract "shall prevail"
unless there is a written agreement waiving the specific RFP requirement or accepting
a specific deviation from the RFP (finding 32). SBN argues that the mere act of
incorporation of SBN' s entire BAFO proposal into the contract was sufficient to meet
the contract requirement for a specific waiver by CO Bartholomew of the
RFP-required HVAC design for the common areas. (App. reply at 26-27) In order to
show waiver, SBN must show that CO Bartholomew expressly and knowingly
rescinded the Fund's contract right to require the specific RFP-required HVAC system
for the common areas. General Dynamics C4 Systems, Inc., ASBCA No. 54988, 09-2
BCA ,-r 34,150 at 168,818. In addition, the express terms of the contract require that
such a waiver be in writing (finding 53). We have found no evidence, nor has SBN
directed us to any, of such a written agreement at the time of contract award regarding

                                          238
a specific waiver of the RFP-required HVAC/mechanical system for the common
areas, nor have we found any evidence of the existence of a specific acceptance of
SBN's proposed alternate HVAC system for the common areas at the time of contract
award. (Finding 53) We, therefore, hold that SBN's alternative HVAC/mechanical
system design for the common areas was in conflict with the RFP-required
boiler/chiller design and that the conflict must be resolved in favor of the
RFP-required boiler/chiller design. CFSC was, therefore, justified in demanding that
SBN provide the boiler/chiller HVAC/mechanical system that was specified in the
RFP and resulting contract.

        SBN submitted the 35% ASBCA No. 58755,       15-1BCA~35,939     at 175,653-54.

                     A Type I differing site condition claim is dependent
             on what is "indicated" in the contract. Foster Constr. CA.
             and Williams Bros. Co. v. United States, 435 F.2d 873, 881
             (Ct. Cl. 1970) ("On the one hand, a contract silent on
             subsurface conditions cannot support a changed conditions
             claim .... On the other hand, nothing beyond contract
             indications need be proven."). A contractor cannot be
             eligible for an equitable adjustment for Type I changed
             conditions unless the contract indicated what those

                                         246
              conditions would supposedly be. P.J. Maffei Bldg.
              Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed.
              Cir. 1984); S.T.G. Construction Co. v. United States, 157
              Ct. Cl. 409, 414 (1962).

NDG Constructors, ASBCA No. 57328, 12-2 BCA ~ 35,138 at 172.503; see also C.R.
Pittman Construction Co., ASBCA No. 57387 et al., 15-1BCA~35,881at175,427.

         The first element of SBN' s burden of proof is met by the record evidence that
 the RFP provided express "indications" of existing utilities in a topographic drawing
 of the jobsite showing the locations of various existing underground utilities at the
time the RFP was issued (findings 8-9, 40-41). The second element requires that SBN
 show that, based upon the information reasonably available to it at the time of its
proposal, the actual conditions it encountered were unforeseeable. Prospective
contractors were cautioned to perform their own reasonable site investigations
(findings 8, 28, 40). The parties disagree as to what constituted "reasonable site
investigation." The Fund argues that SBN was unreasonable to rely on the RFP's
representations as to the location and characteristics of existing utilities and that SBN
should have performed its own pre-proposal subsurface investigations (gov't hr. at
269-275). SBN and its subcontractors maintain that a requirement for pre-proposal
subsurface investigation is unreasonable, given that they were not permitted to do any
digging until after issuance of an LNTP and a digging permit was granted by DPW
(see finding 17; app. hr. at 353-59). We agree with SBN. The record shows that SBN
and several of its subcontractors attended a pre-proposal site visit and compared what
they observed at the site with the representations of the utilities in the RFP
(findings 19, 34). Further subsurface investigation, such as would have revealed any
of the alleged differing site conditions before us, was not mentioned nor required by
the RFP and we find the Fund's argument in this regard unreasonable. We therefore
find that SBN has met its burden of proof with respect to the second element. On the
basis of the record before us, as well as our holdings with respect to elements one and
two, we also find that SBN has met its burden of proof as to the third element that it
reasonably relied upon its interpretation of the RFP and contract documents with
respect to existing utilities. The fourth element requires that SBN prove that it was
damaged as a result of the material variation between expected _and encountered
conditions. We will address below SBN' s claimed damages associated with each of
the individual differing site conditions claimed.

      SBN further argues that the Fund breached the doctrine of superior knowledge
because the Fund was allegedly in possession of more current utility drawings than
were provided to SBN (app. br. at 362-63). SBN did not assert a claim for superior
knowledge in its certified claim and it is, therefore, not properly before us.

                                          247
         On 25 October 2004 SBN was issued an LNTP for foundations, underground
utilities and the building structure (finding 92). SBN requested a digging permit on
29 October 2004 and the permit was issued on 1 November 2004 (finding 95). SBN
could not proceed to work on the jobsite until after issuance of the LNTP. SBN claims
that it was delayed from proceeding with work on the project starting 1 November
2004 (findings 117, 119). As of Progress Meeting #3, held on 5 January 2005, SBN
reported that it was waiting for direction from CFSC regarding alleged differing site
conditions identified in RFis 15-19 (finding 113; see also findings 104, 106). Each of
the alleged differing site conditions for which SBN now seeks compensation will be
addressed in detail separately below.

        On 26 January 2005 and 8 February 2005 SBN submitted REAs 031and035
seeking a total of$514,315.00 and a 127-day extension to the contract performance
period due to alleged differing site conditions and associated delays (findings 119,
124). On 23 December 2005 CO Bartholomew unilaterally granted a noncompensable
extension to the contract performance period for 60 days associated with "unforeseen
site issues we encountered in the fall of 2004''. (finding 208).

      A. DOIM Communication Duct Bank

        On an unidentified date prior to 19 November 2004, SBN's excavation
subcontractor encountered existing underground communication (DOIM) ductwork
that had less than the contract-specified 3-foot amount of cover (see finding 47).
There is evidence that SBN notified CFSC of the issue on or about 12 November 2004.
On 19 November 2004 SBN met on-site with representatives from Fort Lewis DOIM
and ORB. The DOIM representative "approved" SBN's proposed method to lower the
ducts "so they would be well below [SBN's] designed finish grades." SBN then
sought a change order from CO Bartholomew to accomplish the work, pointing out
that the DOIM communication duct issue needed to be resolved concurrent with
resolution of primary electrical ductwork issues discussed in more detail below.
(Finding 97)

       Another meeting was held on 30 November 2004 attended by a variety of
Fort Lewis DPW personnel and COR Dyer regarding "Utility Issues." It was
determined that lowering the DOIM ductwork was not compatible with the building
and site design and that the DOIM ducts, cables and manhole would have to be
relocated. (Finding 103) There is evidence that this information was conveyed to
SBN on 1December2004 (finding 109).

       On 20 December 2004 SBN submitted RFI # 19 to "confirm[] delay" associated
with the DOIM communication ductwork (finding 109). On 10 January 2005
CO Bartholomew attended a meeting at the jobsite. SBN's minutes of the meeting
reported that CO Bartholomew acknowledged that relocating the DOIM ductwork

                                         248
would "probably delay the project at least 60 days and will have considerable cost
impacts." CO Bartholomew then requested that SBN prepare a civil redesign of the
site that accommodated the existing DOIM ductwork and he acknowledged that this
was compensable extra-contractual work. It was his intention to then present the civil
redesign to DPW for consideration. It was agreed that SBN and its subcontractor
would provide the requested redesign. (Finding 114) As of 21 January 2005,
CO Bartholomew acknowledged responsibility for the DOIM ductwork redesign and
sought funds from DPW (finding 116). The civil redesign was dated 19 January 2005
and SBN' s 8 February 2005 REA 031 sought a total of $154,803 .49 for the redesign
and changed work as well as an extension to the contract performance period for
associated delays (finding 124 ).

        SBN now seeks a total amount of$106,369.94 for the direct costs and
associated critical path delays from 2 November 2004 through 29 March 2005 59
resulting from the DOIM ductwork differing site condition (ex. A-7; R4, tab 169 at
4994, 5182; app. br. at 291, 293-94, 296, 298, 359, 383, 384).

       As of the 13 April 2005 Progress Meeting #7, CFSC had still not issued a
change order for the DOIM ductwork and the meeting minutes stated that "The CFSC
position of this request is that [it] is non-compensable" (finding 149). The item still
remained open for resolution as of the 22 June 2005 Progress Meeting #12
(finding 166). Even though CO Bartholomew acknowledged responsibility in January
2005 (finding 116), the Fund takes the position in this appeal that SBN is not entitled
to compensation (gov't br. at 267-79). We agree in part.

       Under the terms of Modification No. P00003, SBN agreed that all disputes
existing prior to 23 March 2006, except those for time and associated costs, were
released (finding 212). The DOIM differing site condition existed prior to 23 March
2006 and SBN' s claim for the costs of performing the associated work were not reserved
in Modification No. P00003. The only claim reserved was for associated delays.

        With respect to delay damages, SBN claims that it is entitled to be compensated
for critical path delays associated with the DOIM ductwork from 2 November 2004
through 29 March 2005. The period of delay from 2 November 2004 through 8 March
2005 is concurrent with the SBN/Botting-caused HVAC/mechanical design delay on
the critical path (see Section I above). CO Bartholomew granted a non-compensable
60-day extension of the contract performance period due to SBN' s encountering a

59
     SBN states in its brief that the CFSC delay in providing direction regarding the
        DOIM ductbank ended on 8 March 2005 (app. br. at 384) and that the extra
        work was completed on 30 March 2005 (id. at 383). Its 2010 claim (R4,
        tab 169 at 4994) and Exhibit A-7, however, assert that all delay associated with
        the DOIM ductbank ended on 29 March 2005.

                                           249
variety of differing site conditions (finding 208). We find that SBN is entitled to be
compensated for the critical path delay period from 9-29 March 2005 (15 calendar
days) which was solely caused by the Fund. The amount of compensation for the
delay is a quantum issue which is not before us.

       B. Telephone Cable

       The RFP provided, with respect to telephone cables, that:

              E. Telephone: Telephone wiring will be run into and
                 through a Communications Manhole adjacent to the
                 site. An existing ductbank travels west from this
                 manhole to Bldg 2003, DOIM main switch building.
                 Coordinate installation of new twisted pair bundle in
                 this ductbank back to 2003. The Contractor will make
                 cross-connections at 2003 under DOIM
                 supervision/direction. Coordinate all requirements with
                 Post DOIM during design and construction.

(Finding 9)

        Sometime after 1November2004 (findings 116, 119), SBN encountered
underground telephone cables that "pass[ed] through the building pad in three locations"
and, as of 29 November 2004, had been advised that DPW would remove th.em
(finding 99). On 1 December 2004 SBN was informed that the underground telephone
line discovered at the east end of the project could not be abandoned and removed as
previously stated by DPW because that telephone line was active and provided phone
service to the existing hotel to the east of the jobsite. That line passed through the
loading dock area of the new Lodge design which had footings deeper than the
telephone cables' existing location. Both CO Bartholomew and COR Dyer were on-site
that day to observe the situation. The next day SBN provided formal written notice of a
differing site condition. (Finding 102) On 16 December 2004 SBN submitted RFI #18
seeking direction with regard to the active telephone cable (finding 109).

        As of21January2005, internal CFSC communications admitted liability for
the telephone cable issue; the only question seemed to be which government
organization's funds should be used for the payment (finding 116). On 11 February
2005 SBN thanked CO Bartholomew for his direction on that date for SBN to perform
the work of rerouting the active telephone cable for a price not to exceed $12,694.26
(findings 124, 126, 133). Contract Modification No. P00002, with an effective date of
14 February 2005, memorialized the parties' agreement (finding 129).

                                          250
       On 10 March 2005 SBN advised CFSC that the telephone cable reroute work would
require additional time and cost because it was discovered that it was not direct-buried but
encased in steel pipe (finding 138). As of the 13 April 2005 Progress Meeting, SBN
reported that the work was completed (finding 149). As of 22 June 2005 SBN reported that
CFSC had issued a change order for the work associated with rerouting the telephone cable
and that SBN was awaiting payment for the costs of the work (finding 166). In the absence
of evidence to the contrary, we find that SBN has been compensated for the cost of
performing the changed work associated with rerouting the telephone cable.

       SBN also seeks critical path delay damages for the period from 1 December 2004
when the live telephone cable was discovered through 29 March 2005 when the telephone
cable reroute was completed (app. hr. at 65, 359, 383-84). The period of delay from
1December2004 through 8 March 2005 is concurrent with the SBN/Botting-caused
HVAC/mechanical design delay on the critical path (see Section I above). The remaining
claimed period of delay is the same as the delay period sought by SBN for the DOIM
ductwork and for which we have found SBN to be entitled above. We therefore find that
SBN is not entitled to any further compensation for delay associated with the telephone
cable reroute.

      C. Primary Electrical Interconnect Cable

       The RFP provided the following regarding a primary underground electrical
distribution line:

               D. Electricity: There is an existing 13.8KV, 3-phase
                  primary electrical distribution line on the perimeter of
                  this site. Coordinate the services drop location with
                  DPW during design and construction. An existing
                  underground feeder line and pad-mount transformer
                  exists on the site and may have to be rerouted/relocated
                  depending on the final site plan arrangement.

(Finding 9) RFP Amendment No. 00005 included the following additional information:

               7       NOTE: There is a pad-mount transformer on the site
               which will be removed by DPW with demolition of the two
               wood buildings on site. Removal of existing wood poles, OH
               electrical lines, and the transformer pad will be accomplished
               by the Contractor. There is also an underground secondary
               electrical feeder ... running through the site which will have
               to be rerouted around the building footprint as required.

(Finding 36)

                                           251
       SBN' s electrical subcontractor, SME, testified that it conducted a pre-award site
walk during which it observed nothing materially different from what was represented
in the RFP. However, SME contends that, after contract award while meeting with
DPW for the purpose of establishing temporary power at the jobsite, certain DPW
personnel provided site-specific information that differed from what was included in
the RFP (finding 91). The record indicates that on 22 October 2004 SBN/SME
provided notice that they believed they had encountered a differing site condition with
respect to the underground primary electrical interconnect (finding 109). On
28 October 2004 ORB advised CO Bartholomew that DPW would not permit the
primary power interconnect to remain under the building and that SBN was required to
relocate it from under the building footprint (finding 94). On 29 November 2004 SBN
notified COR Dyer of SBN's plan for rerouting the primary electrical interconnect
(finding 99; see also finding 103). It was DPW's position that the work of relocating
the primary electric interconnect was required by the contract (finding 103). SBN also
notified CFSC that resolution of the DOIM ductwork is~me (see Section IIA above)
would need to be performed concurrent with the primary electrical interconnect work
(finding 97). SBN's RFI #15 requesting direction as to the primary electrical
interconnect was submitted on 16 December 2004 (finding 109).

        As of 10 January 2005, it was agreed between CFSC and SBN/SME that
responsibility for the work required to be performed with respect to the primary
electrical interconnect was "split" between them:

              1-03. Electrical Duct Rerouting: 117/05 I
                    [CO Bartholomew] confirmed that the existing
                    electrical primary power duct bank will be rerouted,
                    as necessary, to allow for the construction of the
                    new building. It was confirmed by CFSC, [SBN]
                    and SME[], that there is a split responsibility for
                    this rerouting. The Contractor is responsible for the
                    portion of the rerouting that is included in the
                    SME[] design drawings and CFSC is responsible for
                    the additional rerouting to make the interconnection
                    from Pendleton A venue to Utah Street. The
                    additional rerouting includes the portion of the duct
                    bank from SME' s transformer vault around to the
                    Utah Avenue side of the site. SME will provide a
                    drawing showing the new interconnect arrangement.
                    CFSC has a Contractor to do the work. The
                    additional scope for [SBN] will be included in a
                    Change Directive from CF[SC]. Pat Ellwood of
                    SME[] suggested that relocating the existing

                                          252
                     cross-connect vault would save some money.
                     Action: CFSC/SME

(Finding 114) On 8 February 2005 SBN provided details regarding the work
associated with the primary electrical interconnect and how responsibility for it was
split (finding 124). On 11February2005 CO Bartholomew directed that:

              1. Effective ... (14 February 2005), [SBN] is authorized to
              begin all electrical site reroute work and will coordinate
              other electrical work by the garrison DPW as appropriate.
              Any legitimate additional change costs for this piece of
              work shall be negotiated but the work is directed.

(Finding 126) On that same date SBN thanked CO Bartholomew for the direction and
advised that "DPW has already started the interconnect work" (id.). The parties'
agreement regarding the work was memorialized in Contract Modification No. P00002
(finding 129).

        On 24 February 2005 SBN reported that DPW had done all of the primary
electrical interconnect work but SBN still requested that CFSC issue a change order to
SBN on account of that work (finding 133).

        The record shows that the electrical reroute work was performed by DPW and
not SBN or SME. SBN now seeks compensation for alleged critical path delays
caused by the discovery of the primary electrical interconnect and the performance of
the associated rerouting work from 28 October 2004 through 24 February 2005 (app.
br. at 78, 359). Elsewhere in its brief SBN claims it experienced critical path delay
from 22 October 2004 through 11February2005 (id. at 384). We find that the
discovery of the primary electrical interconnect and the completion of the associated
work delayed the critical path from 22 October 2004 to 24 February 2005. The period
of delay from 2 November 2004 through 24 February 2005 is concurrent with the
SBN/Botting-caused HVAC/mechanical design delay on the critical path (see Section I
above). We therefore find that SBN is entitled to be compensated for the critical path
delay period from 22 October 2004 through 1November2004 (7 calendar days) which
was solely caused by the Fund. The amount of compensation due for the delay is a
quantum issue which is not before us.

      D. Natural Gas Line

      The RFP provided that:

             F.     Natural Gas: Natural Gas is available at the site.
                    Puget Sound Energy (PSE) owns the lines.

                                          253
                    Coordinate connection points and construction
                    requirements with DPW and PSE during design and
                    construction.

(Finding 9) On 15 November 2004 it was reported that a gas line that had not been
marked by DPW was ruptured while a tree was being removed; the gas company
repaired the ruptured line (finding 96).

       As of 29 November 2004 SBN had identified that the existing underground gas
lines would have to be relocated because they were in the area where the storm sewer
system was to be installed (finding 99). Internal DPW communication on 7 December
2004 concerned the issue of who would pay for relocating the natural gas line that had
not been identified in the digging permit (finding 103).

       SBN's RFI #17, dated 16 December 2004, sought direction from the
government with regard to the natural gas line (finding 109). In the minutes of a
10 January 2005 "Site Issues" meeting, SBN noted that:

                    1.) [CO Bartholomew] indicated that the gas line
                    would probably be lowered. Direction may be given
                    to [SBN] to proceed with this work as an added
                    scope to the contract. [SBN] awaits a Change
                    Directive from CF[SC] on this issue.

(Finding 114) As of21January2005, CO Bartholomew described the situation and
sought funds from DPW:

             The gas [line is] directly impeding our contractor's ability
             to proceed with excavation work I estimated cost to
             relocate comm[unication] and gas lines is $25K. Current
             cost of the delay associated with the inability of our
             contractor to proceed is $1 OOK I some portion of this is
             associated with the time to identify the redesign solution to
             the DOIM telecommunications trunks ....

                    We have no choice but to absorb the redesign/site
             work (associated w/DOIM trunks) increase of $40K as a
             project cost. Similarly we are stuck with funding the delay
             costs of$100K (associated with work stoppage due to all
             the unidentified/misrepresented utilities). However, as we
             discussed it seems unreasonable for the project to bear the

                                         254
             total $I I 5K cost associated with the previously
             unidentified/misrepresented communication and gas lines
             as well as to fund any requirement for back-up power tie in
             to another building when such was not represented in the
             plans the installation provided as a departure point for our
             contractor's design effort.

(Finding 116) By email dated 11February2005 CO Bartholomew authorized SBN to
perform the work associated with the natural gas line:

             4. The contractor is authorized and directed to perform the
             gas line reroute for a Not To Exceed cost of$23,793.00.
             Contractor is asked to coordinate this reroute to the extent
             necessary to avoid impacted site features and the new
             building. Request that unnecessarily longer reroutes by the
             gas utility subcontractor be strongly discouraged
             and coordinated with our on-site representative
             Mr. Bob Monson and/or John Patterson.

(Finding 126; see also finding 124) This exact language was included in Contract
Modification No. P00002 (finding 129). As of24 February 2005 SBN reported that it
had contacted a subcontractor to perform the work (finding 133). SBN's gas line
subcontractor reported that, as of 22 March 2005, it was still waiting for a digging
permit from Fort Lewis (finding 143). SBN reported that the work was complete in
the minutes of the 13 April 2005 Progress Meeting but that SBN was still waiting for a
change order from CFSC (finding 149). In the minutes of the 22 June 2005 Progress
Meeting SBN reported that CFSC had issued a contract modification and SBN had
submitted an invoice to be paid for the work associated with the rerouting of the gas
line (finding 166). In the absence of evidence to the contrary, we find that SBN has
been compensated for the cost of performing the changed work associated with the
natural gas line.

        SBN now seeks compensation for critical path delays to excavation work from
15 November 2004 through 7 April 2005 caused by encountering a natural gas line not
marked by the gas company (app. br. at 71, 359, 384). We find that the discovery of
the unmarked natural gas line and the completion of the associated work delayed the
critical path from 15 November 2004 through 7 April 2005. The period of delay from
15 November 2004 through 8 March 2005 is concurrent with the SBN/Botting-caused
HVAC/mechanical design delay on the critical path (see Section I above). The period
of delay from 9-29 March 2005 is concurrent with the delay already granted for the
DOIM ductwork (see Section I above). We therefore find that SBN is entitled to be
compensated for the critical path delay period from 30 March 2005 through 7 April

                                         255
2005 (7 calendar days) which was solely caused by parties outside SBN's control. The
amount of compensation due for the delay is a quantum issue which is not before us.

       E. Over-Excavation

        On 22 April 2005 SBN's Project Manager Roberts reported internally that its
on-site subcontractors were encountering "a significant amount of overexcavation for
our footings" (i.e., more than six feet deep) and requested that CFSC be given notice
of a differing site condition:

              Fortunately, for both [SBN] and the Owner, depending on
              who pays for it, the geotechnical engineer has determined
              that the existing unsuitable material that has to be
              overexcavated, is only unsuitable because it is loose, so
              that same material can be placed back in the overexcavated
              footings and compacted to 95% density. This reduces the
              need for imported structural fill.

(Finding 151) As of2 May 2005 Project Manager Roberts reported that the areas
involved were "not significant" and the whole issue from beginning to end
encompassed "a few days" (finding 155). Despite the contemporaneous report of its
own Project Manager, SBN now argues that it suffered a critical path delay to the
foundation construction from 25 April 2005 through 9 June 2005 as a result of various
differing site conditions (app. hr. at 102-03, 360). We have addressed SBN's
allegations of critical path delays for all alleged differing site conditions other than
overexcavation above. We find no support for SBN's allegation of critical path delay
due to overexcavation and deny entitlement.

III. Removal of SBN's Project Manager

       It is undisputed that SBN's Project Manager Roberts was barred from the
jobsite by CFSC and Army Lodging. SBN argues that there was no contractual
provision that permitted the government to do so and that this impermissible action
had a detrimental effect on SBN's ability to perform under the contract (app. br. at
84-101, 309, 341; app. reply at 29-32; finding 139).

       The contract provided that:

             The Contractor agrees to utilize only experienced,
             responsive and capable people in the performance of the
             work. The Contracting Officer may require that the
             Contractor remove employees who endanger persons or
             property, or whose continued employment under this

                                          256
                contract is inconsistent with the interest of military
                security.

(Finding 26) In addition, the contract required SBN to have on the jobsite at all times
during contract performance:

                [A] competent superintendent who is satisfactory to the
                Contracting Officer and has authority to act for the
                Contractor.

(Finding 31) The contract is silent as to a remedy available to CFSC in the case of a
failure by SBN to comply with the requirement.

         In June 2004, the month after contract award, SBN hired Mr. Roberts and
assigned him as its Senior Project Manager, responsible for SBN's on-site
performance of the project now at issue (finding 55). The first mention we find in the
record of government dissatisfaction with Project Manager Roberts is in an email
dated 22 December 2004 in which COR Dyer referred to Roberts as "inept" and stated
that .he thought Roberts should be removed from his position (finding 110; see also
findings 141, 156). Five days later on 27 December 2004, CO Bartholomew advised
SBN's Henrickson that:

                Our relationship is in serious jeopardy. We will in no way
                accept Mr. Roberts' statements ... about RFI's and may ask
                you to have him removed from the project. He has been an
                impediment at most turns and will not pick up the phone
                and call instead of this childish behavior. Swinerton
                Corporate should be advised that our holdings of your
                stock is [sic] dropping like a rock into an abyss. I may have
                to make a formal notification that I do not want to make.

(Finding 111)

       On 25 February 2005 CO Bartholomew and SBN's Montoya discussed during a
telephone call what the CO characterized as "Bill Roberts ... continues to be the
communication problem." After the call, Montoya sent the following email to the CO
and copied COR Dyer, SBN's Henrickson and ORB's Monson:

                I appreciate the insight you have given me on the project.
                As we discussed, we believe it would be in our best
                interest if I became your main point of contact. As I said
                earlier, I might not have an immediate answer for you but I

                                             257
              will gather the information and provide same as best and as
              timely as I can.

              We agree that we need to resolve these items once and for
              all so we can move forward with construction and not
              continue to "carry this baggage" any longer. The process
              you described with regards to the handling of these items
              also seems reasonable.

(Finding 134) We understand Mr. Montoya's 25 February 2005 communication to
express SBN's agreement with the CO that it was in neither party's best interest for
Project Manager Roberts to remain SBN' s primary contact with respect to the project.

       As of 2 March 2005 Project Manager Roberts' base pass was rescinded by
Army Lodging's Moinette, who was the official sponsor of all the passes associated
with the project. Project Manager Roberts testified that he did not tum over his pass
on 1March2005 when Ms. Moinette first requested it, but did so the following day.
Ms. Moinette and SBN' s Montoya and Roberts all testified that they were never given
a reason by CO Bartholomew or COR Dyer for why Project Manager Roberts' pass
was directed to be rescinded. Both SBN' s Montoya and COR Dyer testified that it
boiled down to a personality conflict between Project Manager Roberts and
COR Dyer. Thereafter, Project Manager Roberts conducted project business and met
with SBN and subcontractor personnel off-site. (Finding 136) CFSC, however,
declined to acknowledge Mr. Roberts as SBN's Project Manager as of9-10 March
2005 (finding 139).

       Project Manager Roberts testified that he got a day pass to get on base several
times and was reported to be on thejobsite on 21March2005 (finding 141).
CO Bartholomew's response was:

             I will send an e-mail to appropriate authorities that
             identifies Mr. Roberts as an objectionable employee and
             possible security threat to Ft. Lewis and seek to have him
             denied access. He can appeal and I will be happy to
             respond to the Garrison and/or Corps Commander. They
             will have to take responsibility for him ifhe is
             subsequently allowed access to the installation.

(Id.) We find no evidence in the record to support a characterization of Project Manager
Roberts as a security threat (findings 141-42). On 22 March 2005 Mr. Coulson, Chief of
Army Lodging Operations, stated that "[t]he Project Manager personnel issue was
resolved in Jan 05" (finding 142). We find no other mention of a "Project Manager
personnel issue" in the record before us so we are unable to determine whether facts

                                          258
surrounding it were, or could have been, the basis for the rescission of Project Manager
Roberts' base pass. According to Mr. Freeman, the Head of Physical Security Fort Lewis,
on or about 25 March 2005:

              An individual having access to Fort Lewis can only be
              barred entry due to the committment [sic] of a crime or
              other violation .... [T]he original sponsor ... can remove or
              take possession of an individual's ID pass card and vehicle
              sticker so he cannot obtain entry. If he gets another pass
              through other temporary means then the original sponsor
              can have the MP's come and take his ID and vehicle passes
              again and escort him off the base .... [T]he "list of
              undesirables" at the main gate guard house is for those
              individuals that have committed a crime or "other
              violation".

(Finding 144)

        As of2 May 2005 Project Manager Roberts reported that the project was not
behind schedule (finding 155). Project Manager Roberts resigned on or about 20 May
2005 and Senior Superintendent Zeman resigned effective 27 May 2005. SBN's
Montoya hired new Project Manager LaSharr, who started in June 2005 and remained
on the project through its completion, as well as new Superintendent Bowman who
started work on the project in August 2005. Project Manager LaSharr testified that,
when he came on as SBN's new Project Manager, SBN's ability to "move forward
with the project" was not impacted by the absence of Roberts and Zeman.
(Finding 162) We find Mr. LaSharr's testimony to be credible as he was SBN's
on-site project manager responsible for the project's progress.

       While Project Manager Roberts complained to SBN's upper management about
the rescission of his base pass (findings 151, 155), we find absolutely nothing in the
record to show that SBN' s management registered any contemporaneous disagreement
or displeasure with CFSC about the matter (finding 139) until the submission of its
REA in 2008 and its certified claim in 2010 (finding 267), both of which were
submitted years after contract completion and Mr. Roberts' resignation. We note that,
in addition to an absence of any record of contemporaneous complaint or objection to
Mr. Roberts' removal, in June 2005 SBN also made a number of its own upper
management and project management changes that, according to CO Bartholomew,
resulted in a dearth of design-build experience on the project (findings 162, 165).

       SBN argues that it is entitled to compensation on the basis of several theories of
recovery related to the Fund's actions or inactions with respect to the rescission of
Project Manager Roberts' base pass.

                                          259
       A. Breach of the Implied Duty of Good Faith and Fair Dealing

        SBN argues that the Fund breached its implied duty of good faith and fair
dealing by rescinding the base pass of SBN's on-site Project Manager Roberts (app.
br. at 309-16). It is well established that the implied duty of good faith and fair
dealing applies to the government as it does to every other party to a contract and:

              [R]equires a party to refrain from interfering with the other
              party's performance and from acting to destroy the
              reasonable expectations of the other party regarding the
              fruits of the contract.

SupplyCore, Inc., ASBCA No. 58676,      16-1BCA~36,262       at 176,907.

        The only contract provision for the removal of contractor personnel from the
jobsite was on the basis that they were a danger to persons or property or they were a
security risk/threat (finding 26). We find no credible evidence that Mr. Roberts was a
danger to persons or property, nor that he was a security risk or threat. CFSC has
never provided a reason to SBN, nor even internally within the government, for
Mr. Roberts' removal. The Fund argues that Mr. Roberts was objectionable because
he did not meet the contract requirements of "experienced, responsive and capable"
(gov't br. at 208-31; findings 26, 141) It is a matter of record that Project Manager
Roberts was inconsistent in holding Botting responsible to provide the contractually-
required HVAC/mechanical design and in holding Jensen/Fey responsible for its
contractual design and quality control obligations as Architect of Record, both of
which resulted in design and contract performance delays and inefficiencies for other
subcontractors (findings 18, 73, 77, 89, 101, 111, 105, 106, 111, 115, 119, 133, 140,
152, 155, 217, 221). SBN also created its own causes of delay and inefficiency on the
part of its subcontractors by changing the building design from a steel structure to a
post tension concrete structure (finding 76) and by directing that its framing
subcontractor install studs 24" on center instead of the designed 16" on center
(finding 191). However, the contract does not provide to the government a unilateral
remedy in the form of removal of an individual from the project for such management
shortcomings. The record contains evidence of a personality conflict between
Mr. Roberts and COR Dyer (and perhaps CO Bartholomew), but we find that is also
not enough to justify his removal in the absence of a contract provision that authorizes
such a removal.

       We have held that the government does not have the right to remove
subcontractor personnel without obligating the government to compensate the prime
contractor for additional costs incurred to perform the contract work as a result of the

                                           260
removal. Advanced Engineering & Planning Corp., ASBCA Nos. 53366, 54044, 05-1
BCA ~ 32,806 at 162,320.

              There is no greater interference with the manner and
              method of performance, short of termination of the work
              itself, than the ordered replacement of the craftsmen
              originally chosen to do the work.

Liles Constr. Co. v. United States, 455 F.2d 527, 531-33 (Ct. Cl. 1972). The Court in
Liles further held that such a change in the method or manner of performance was a
compensable change entitling the contractor to recover excess costs proven to have
resulted from the government's direction of removal. We find CFSC's removal of
Mr. Roberts by rescinding his base pass and refusing to acknowledge him as the prime
contractor's Project Manager to be improper in the absence of an express right to such
a removal under the contract.

         SBN now claims that Mr. Roberts' removal resulted in damages in the form of
"immediate and long-term impacts" in an unspecified amount of time or money (app.
br. at 309, 314-16). The record before us is devoid of even a single contemporaneous
letter, email or telephone call from SBN management or corporate offices expressing
concern about, or even requesting an explanation of, CFSC's removal of Mr. Roberts
from the jobsite. In fact, there is evidence that SBN's corporate management agreed
that the removal of Mr. Roberts was "reasonable" and that Mr. Montoya, not
Mr. Roberts, was the more appropriate person to be CFSC's primary SBN contact
(finding 134). There is also no contemporaneous communication from SBN, other
than the writings of the aggrieved Mr. Roberts, that SBN experienced any financial or
other impact at the time. In fact, Mr. Roberts' replacement, Project Manager LaSharr,
testified that he did not believe the project experienced any impact as a result of
Mr. Roberts' removal from the project (finding 162).

      Nevertheless, SBN now seeks damages in the form of "interest, attorney's fees
and costs" in an unspecified amount as a result of the alleged breach (app. br. at 341).

                     On a purely hypothetical basis, one can conclude
              that surely there must have been some impact on
              appellant's operations .... But, we do not operate on the
              basis of pure theory. We are more pragmatic than that.
              We want some proof of an effect and proof as to any extra
              costs which may have been incurred.

Space Age Engineering, Inc., ASBCA No. 25761 et al., 86-1 BCA ~ 18,611 at 93,472.
Proof of the element of damages, while not necessary to a mathematical certainty, is
necessary to a finding of entitlement on the basis of the alleged breach of the implied

                                          261
duty. BAE Systems San Francisco Ship Repair, 16-1 BCA ~ 36,404 at 177,503; Military
Aircraft Parts, ASBCA No. 60009, 16-1BCA~36,388 at 177,410. Where, as here, no
amount of damages has even been alleged to have resulted from Mr. Roberts' removal,
much less proven, SBN has failed to establish a necessary element of its alleged breach
and, on that basis, we deny entitlement on the basis of the rescission of Project Manager
Roberts' base pass.

       B. Breach of Contract

       SBN also seeks unspecified damages allegedly incurred as a result of the
rescinding of Mr. Roberts' base pass under the theory of breach of contract (app. br. at
341). We deny entitlement for the same reasons stated above.

IV. Trickle Vents and 95% Review Process

         The RFP required the following for outside air ventilation to guestrooms:

             Code-required outside air ventilation and make up air shall
             be provided the primary air handling unit using chilled
             water cooling and hot water heating to precondition all
             outside air before delivery through ductwork to each space.
             The outside air handling unit shall have the outside air
             intake at least I 0 feet above grade. The central AHU shall
             be provided with minimum 30% efficiency prefilters
             followed by 65% efficiency filters.

(Finding 14) RFP Amendment No. 00005, dated 22 December 2003, reiterated the
encouragement contained in the original RFP (finding 7) for the submission of alternative
systems for consideration (finding 36). RFP Amendment No. 00006 provided that:

              1.   Outside air shall be supplied to the guest suites by a
                   separate HVAC system. Outside air intakes shall not
                   be provided at individual PTAC units (See Section
                   C-5 Page 32).

(Finding 37) RFP Amendment No. 00007 further clarified the requirement for outside
air ventilation to the guestrooms:

                   1. There have been a number of requests for
             clarification of air intake and centralized air distribution
             system requirements since the question and answer
             (Q/A #61) in Amendment #005, and the clarification in

                                          262
              Amendment #0006. The new lodge requires a central air
              distribution system, to distribute fresh air to the rooms.
              Individual PTAC units in the rooms are not to be used for
              make up or outside air intake, as stated in Section
              C-5.15.4d.

(Finding 38) This verbatim language was reiterated in RFP Amendment No. 00009,
dated 9 March 2004 (id.).

           Over one year later, on 30 March 2005, SBN/Botting proposed for the first
time, in its 95% design submission, the use of passive trickle vents instead of the
contract-required tempered forced air ventilation. There is testimony that the trickle
vents were proposed in an effort to "simplify the system" and to save money.
(Finding 145) The trickle vent proposal was rejected by CFSC on 7 April 2005 as not
in compliance with the contract requirements for tempered forced air ventilation
(findings 147, 149). On 13 April 2005 Botting replied that, despite CFSC's rejection
of its proposed alternative, it was going forward with the trickle vents because without
them, it opined, its HVAC system did not meet the required DoD Antiterrorism
standards (findings 148: 150, 155). We note that, ifBotting's stated position was true,
then the HVAC system it had proposed at the 35% and 65% design phases was also
not in compliance with contract requirements and, if it was as important a
consideration as SBN/Botting now claims, the fact that neither Botting nor SBN nor
Jensen/Fey recognized the deficiency in their HVAC design for over a year is
inexcusable.

          By 27 April 2005, less than 30 days after SBN's trickle vent proposal, CFSC
had rejected the trickle vent proposal in writing three times while holding out the
possibility of approving the proposal if a credit acceptable to CFSC was offered.
Nevertheless, Botting was still pressing for approval of the trickle vents without
offering any credit, obviously not wanting to share the alleged cost savings of the
trickle vents with the Fund (findings 154-55). SBN recognized that the trickle vent
issue was delaying its ability to complete its 95% design submission:

             I'm not sure that Botting understands that until it is
             determined which way we are going, i.e., trickle vent, or
             ducted make up air, we cannot complete our 95% design
             submittal. This is the only item that we need resolutiol'_l on
             to release everyone on the design, and we cannot release
             them without this decision. The trickle vent decision
             affects the building footprint at all four floors and the roof.
             It affects the electrical design, and the fire sprinkler piping.
             It affects partition types and chase locations on all four
             floors. No one can make the changes to the drawings that

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              are necessary to accomodate [sic] the trickel [sic] vent,
              until we know which system we are using. It is the single
              largest issue on the project, and has been for a month now.
              [Botting's] Burrus will not return my calls or my emails.
              We have written direction from the Owenr [sic] to provide
              the gas pack system we originally proposed, with ducted
              make up air to the guest rooms. If you can't get Burrus to
              respond with a credit so we can get approval from Drew
              for the trickle vent, then we are going to have to tell all the
              designers to proceed to 95% with the original system. The
              issuance of the 95% submittal is critical to getting this job
              bought out, and to preventing it from stopping because we
              don't have the subs and materials to continue the work
              beyond the structural phase.

(Finding 154) On 29 April 2005, Botting again expressed its intention to include the
trickle vent design in the 95% design submission despite CFSC's express disapproval
(id.). As of 2 May 2005, even though it agreed that the trickle vent system did not
meet contract requirements (finding 147), SBN also expressed its intention to include
the unapproved trickle vents in its 95% design submission and its intention to force the
government to accept the proposal:

             Due to the fact that the building construction is
             progressing, if the Owner rejects the 95% submittal
             because of the trickle vent system, it will be too late to
             revert to the original ducted system without suffering
             severe cost and schedule problems.

             We are gambling on the force protection issue, combined
             with the credit that the subcontractor is offering for the
             trickle vent to be sufficient for the Owner to ultimately
             accept the trickle vent. To date, the credit offer has not
             been sufficient for the Army to approve the trickle vent,
             and the Army has stated that ifthe 95% design is submitted
             with the trickle vent included, the entire submittal will be
             rejected. If that happens, the notice to proceed beyond the
             structural shell will not be issued, and the job will
             ultimately stop dead, waiting for a design resubmittal with
             different mechanical system, or some other approach, such
             as arbitration, to produce a solution that will cause the
             Army to issue the full NTP. The decision to switch to the

                                           264
              trickle vent system as a design basis for the project, rather
              than propose it as a V.E. issue, has now delayed the 95%
              design submittal by two months, so it is imperative that the
              Army accept the trickle vent design.

(Finding 155) By letter dated 27 May 2005 SBN proposed including PTAC air dampers
instead of trickle vents in its HVAC/mechanical system design (finding 159-60). On
3 June 2005 CO Bartholomew responded that, unless SBN/Botting provided a significant
6-7 figure credit, they were directed to incorporate into the 95% design submittal the
3 February 2005 amended HVAC/mechanical design that included the contract-required
outside air system for the guestrooms (finding 161). As of 11June2005 there was still
no agreement with respect to the guestroom outside air system, causing the overall design
to be in limbo and subcontractors to be concerned about moving forward without an
approved design (finding 163). On 15 June 2005 Botting acknowledged its receipt of
SBN' s directive to proceed with its 3 February 2005 design that included a "fully ducted
system for each floor" and did not include trickle vents (finding 165).

       SBN admits that:

              The CO had a right to refuse this value engineering
              proposal or to impose conditions such as a reasonable
              credit. The CO was not required to accept the trickle vent
              proposal.

(App. br. at 404) What SBN complains of is what it characterizes as the CO
encouraging SBN/Botting to continue to pursue the trickle vents rather than
disapproving it outright when it was proposed (id. at 404). The record, however,
shows us that the trickle vent proposal was disapproved in writing three times within
less than 30 days of its submission (findings 147, 149) and that it was SBN/Botting
who nevertheless persisted in pursuing the use of the trickle vents despite the express
written disapprovals (findings 148, 150, 154-55). It was only after SBN/Botting
prolonged the discussion over trickle vents for nearly two months, from their initial
disapproval on 8 April 2005 to 3 June 2005, that CO Bartholomew suggested a 6-7
figure credit (finding 161). Nevertheless, Botting persisted in its pursuit of the use of
the trickle vents until, on 15 June 2005, it was directed by SBN to proceed with its
approved 3 February 2005 amended design that included a "fully ducted system for
each floor" (finding 165). As a result of Botting's persistence in pursuing its trickle
vent and PTAC damper proposals long after they were rejected by CFSC, SBN's 95%
design submission was delayed until 14 July 2005 (findings 165, 167; app. br. at 405).
Even then, SBN's Montoya admitted that the 95% submission on 14 July 2005 was
incomplete (findings 167). In fact, SBN's 95% design submission was not complete
for many months (see Section V below).

                                           265
       SBN further states that it is not seeking compensation for alleged delays
associated with SBN/Botting's trickle vent proposal:

                      Although [SBN] is not claiming time or money for
              delays related to the trickle vent option, the back-and-forth,
              which lasted about two months, is relevant to evaluating
              delays to the 95% design submittal, which was ready on
              June 3, 2005. Absent the Fund's encouragement of [SBN]
              and WAB to continue pursuit of the trickle vent option, the
              95% design submission and review could have occurred
              earlier. Had the Fund said initially that a seven figure
              credit would be required for the trickle vent option, or
              unequivocally denied the proposal, the time involved in the
              back-and-forth would have been saved. Furthermore,
              absent the earlier [alleged] design changes related to the
              HVAC system, the outside air proposals never would have
              occurred or certainly would have occurred at a much
              earlier date.

                     The Fund's handling of the trickle vent proposal
              was a violation of its duty to cooperate and the Fund is
              responsible for associated damages. Those damages are
              difficult to measure, but are part of the overall cumulative
              impact experienced by [SBN].

(App. br. at 405; see also app. br. at 109) We disagree. As summarized above, the
record demonstrates that SBN/Botting caused the delay associated with the 11th hour
trickle vent proposal and that SBN was fully aware that the trickle vent delay was
delaying the 95% design submission. The record also shows that, even after the trickle
vent delay was resolved, the 95% design submission was not complete.

      On the basis of the foregoing, we deny SBN' s claim that the Fund is
responsible for any delays or impacts associated with the trickle vent proposal and the
delayed submission of the 95% design.

V. Framing LNTP and Direct Digital Controls (DDC) Design

       Prior to construction of the new Lodge (Building 2107) which is the subject of
this appeal, the existing Fort Lewis Lodge (Building 2111) had a check-in desk and
ONITY equipment (thermostats, key control and safes). Once the new Lodge was
constructed, the RFP required relocation of the check-in desk and associated
equipment to the new Lodge, but the relocated equipment in the new Lodge was still
required to control the thermostats in Building 2111, the existing Lodge. The ONITY

                                          266
equipment relocated to the new Lodge was required to communicate with the
base-wide Tridium-based DDC system that controlled HVAC systems base-wide60 at
Fort Lewis from a series of PCs or laptops located in DPW. There were two
independent ONITY control systems at Fort Lewis. DPW was responsible for ongoing
maintenance of the common areas and central mechanical systems at Fort Lewis and
managed one ONITY system. The second ONITY system that controlled guestroom
PTAC units was managed by MWR. Tridium R2 was the legacy version of the open
protocol network for BACnet or Lonworks based controllers used by Fort Lewis and
JACE was a graphics program "that brought this information in to PCs and allowed
them to customize access into each building with floor plans and graphics." Tridium
AX was a newer, different protocol that did not interface with the existing Tridium R2
protocol used by Fort Lewis. (Findings 14-17)

       RFP Section C-1 required that SBN/Botting's proposed HVAC system be
controlled by the specified DDC system:

                      D. Controls: The HVAC system shall be controlled
                         by a DDC system that complies with the Fort
                         Lewis Design Standard DDC Design Guide
                         Specification (See Section J). Each AHU and
                         terminal unit shall have a Lon WORKS or
                         BACnet DDC controller connected to a Tridium
                         JACE controller. The JACE controller shall be
                         connected to the building LAN (Ethernet Cat 5)
                         and routed to a desk-top computer, with Tridium
                         Niagra Web Supervisor and Workplace Pro,
                         installed in the mechanical room. The
                         maintenance staff shall have access to the
                         system through any computer connected to the
                         Network via use of a web browser that is
                         password protected.

                      E. . .. An existing ONITY "Senercomm" lnnPulse
                         On-line system will be relocated from the
                         Check-in point in existing Building 2111 to the
                         new facility. Senercomm "SensorstatDDC"
                         programmable digital thermostats or equal will
                         be provided in new guest rooms. Connect all

60   Over the course of 10-15 years, Fort Lewis had been including DDC systems with new
        HVAC systems when installed so they would communicate with the base-wide
        DDC system; older HVAC systems did not communicate with the base-wide DDC
         system (finding 14).

                                          267
                        new room thermostats and Bldg 2111 thermostat
                        system to the relocated lnnPulse Server, update
                        software/system as required .... Coordinate with
                        comm./data requirements and electrical
                        capacities.

(Finding 14) This section of the RFP also required that, if SBN/Botting's proposal did
not include identified substitutions, they were required to "provide the products listed
in the RFP" (finding 10).

       RFP Section C-5 required, with respect to DDC:

              15.    MECHANICAL

              15.1   General:

                     G. The contractor shall have the responsibility to coordinate
                        Mechanical equipment as it interfaces internally with
                        DDC controls and externally with Division 16.

              15.6   Automatic Temperature Controls: Controls shall be
                     stand-alone DDC and compatible with the Fort Lewis EMS
                     "Tridium" system. The system will be connected to the
                     Post-wide EMS system at a later date. The DDC system shall
                     monitor HVAC equipment as defined in the paragraph herein.
                     See Design Requirements in Section C3 & C4 for additional
                     information regarding the control system. The DDC control
                     system shall monitor, report and/or alarm the following
                     HVAC functions and any other points required to control,
                     operate and maintain the critical areas of the facility.

                     F. Direct Digital Control (DDC) Points List: The following
                        is a list of the minimum required DDC points:
                        1. Air Handling Units (AHU)

                                          268
                  4. PTAC Heat Pump Units

                  5. Fans (other than AHU system fans)

                  6. Terminal Units

                  7. Boiler System

                  8. Chiller System

               G. The DDC system shall provide automatic control of the
                  common area HVAC system. This includes the AHU' s
                  their zone terminal units and associated exhaust fans and
                  heating/cooling equipment.
                  1. In addition, provide for DDC control of individual
                      PTAC heat pump units. This shall be a sub-DDC
                      system designed specifically for the hospitality
                      industry (ONITY "SenerComm" SensorstatDDC or
                     equal), yet compatible with Tridium EMS for future
                     connection to the Post system. Contractor shall be
                     required to provide information about the DDC system
                     submitted including: history, capabilities,
                     compatibilities, useful life, maintenance costs,
                     experience and reliability for use in this PTAC I heat
                     pump application. The intent is to control/adjust each
                     guest PTAC from a central control point using the
                     ONITY "InnPulse" on-line monitoring/reporting
                     system at the front desk, in addition to providing
                     occupied/unoccupied sensing and setbacks and
                     allowing the individual guest to control/adjust at the
                     guest room.

(Finding 17)

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         RFP Section L required that SBN's proposal include:

                       (t)   HVAC System:

                             (vi) DDC Controls: Provide narrative
                                  description of intended EMS Control
                                  system and catalog cuts of equipment to be
                                  provided.

(Finding 32) Contrary to the RFP requirements, neither SBN's original proposal nor its
BAFO included any DDC information (finding 82). SBN did confirm to CO Bartholomew,
however, that it intended to be fully compliant with the RFP's requirements (finding 9).
Likewise, none of SBN's 35% or multiple 65% design submittals included any information
at all, compliant or not compliant, about what it specifically intended to provide to meet the
RFP's DDC requirements (findings 86-87). SBN's 95% design submittal was the first one
to include any DDC information (findings 88, 128) and SBN admitted that the submitted
information was incomplete (finding 167).

      Botting's DDC subcontractor, Automated Controls, was a dealer for Johnson
Controls equipment and a system integrator that took:

                [C]hillers, boilers, air handlers, cooling towers, ... all these
                different systems, some with different protocols and we
                marry them all into one system .... [W]e kind of define it as
                the brain of a building and we make them all work, talk to
                each other.

(Finding 71) Automated Controls admitted that, in the pre-award proposal phase, it
was not provided a design specification by Botting61 but it nevertheless provided
Botting with an amount of$10-20,000.00 to include in Botting's HVAC proposal to
SBN for the entire DDC system (finding 130). Later, after being provided the RFP
design requirements, Automated Controls admitted to Botting that it had made
incorrect assumptions:

                Project History:

                   •    We quoted our standard DDC system .. .including
                        [thermo ]stats for the rooms but not a hotel system as

61
     We understand this to mean that Botting did not provide a copy of the RFP as it
        related to the DDC.

                                             270
                     called out in the design build spec. We were not
                     given the design spec .... [their budget up front to
                     Botting before Botting provided the design spec did
                     not include a hotel system that now they see is what
                     is required (tr. 71180-181, 197-201)]

                 •   [Botting's] Dave [Fillo] and I met to figure out how
                     to cover the cost of the flat spec' ed Onity Hotel
                     System (terms in spec also list "or equal" but after
                     meeting with the Lodge personnel and review the
                     existing facility they will be going with Onity).

                 •   Dave and I submitted on the JCI Hotel System
                     (equal) with the intent it would be rejected and then
                     we would request a scope change to cover the cost
                     of the Onity Hotel System.

                   This is a government specification and a tough one
             to work around

(Finding 130) Automated Controls estimated that providing the contract-specified
DDC system would cost $50,000.00 more than the amount it had provided to Botting
for inclusion in the proposal (finding 71).

       The president of Automated Controls testified that the RFP "called out Onity or
equal as the base system ... [i]t'sjust all one system" (finding 71). However, our review of
the RFP reveals that it actually only provided for the possibility of an "or equal" as it
pertained to the thermostats. The RFP was otherwise very clear that the Fort Lewis system
was ONITY and that the other components of the system were required to interface with
the existing Fort Lewis ONITY system. (Findings 14, 17, 131)

       Regardless of the RFP requirement for interface ofDDC components with the
existing Fort Lewis ONITY system, Automated Controls intended to:

             [B]ring [a Johnson Controls system] and do a comparison
             of [the Fort Lewis system]. Once we walked around the
             [existing lodging] facility, they showed us into the rooms.
             They showed us their thermostats. They went and showed
             us the front end of their system and they said it's Onity.
             And then we all sat down to review okay, how are we
             going to look at this project as a design-build. We quickly
             knew that the or equal side of that was not an option.
             They wanted Onity. They made it really clear to us they

                                          271
              wanted Onity. I don't even know ifl got my product
              submittal out of my bag to even show them at that point in
              time.

(Finding 71) (Emphasis added) Even though Automated Controls admits it knew that
Fort Lewis wanted an ONITY system, it still proposed a Johnson Controls system at a price
that it knew was approximately $50,000 less than the ONITY system would cost (id.).

                     Q:     Why did you do that?

                     A:     We wanted it to be documented that they
              weren't accepting the or equal from the project, so there
              would be a justification for the costs associated with going
              to the Onity.

(Findings 71) As we held above, the RFP permitted submission of an ''or equal"
product for the thermostats only, not the entire DDC system. And Botting did not do
an independent review of Automated Controls DDC submission before including it in
their proposal to SBN (finding 131 ).

        In early February 2005, CFSC, DPW and Army Lodging agreed to accept
SBN/Botting's 3 February 2005 amended alternative HVAC/mechanical system
design (see Section I above) so long as two conditions were met, one of which was
that the DDC system provided by SBN/Botting/Automated Controls met the
RFP/contract specifications (findings 132, 135, 164). As of the end of February 2005,
DPW had made clear that it would not accept a DDC system that was not compliant
with the RFP/contract (finding 132) and SBN was reporting that "Botting understands
what the RFP is calling for, and they will provide it, if they have to" (findings 133,
135) (emphasis added).

       On 14 July 2005 SBN submitted an admittedly incomplete 95% design to CFSC
(finding 167; see also Section IV above). Despite SBN's promise that the DDC system
provided would meet the RFP/contract requirements, Botting's DDC design
incorporated into SBN's 95% design submission was not in compliance "in any way
shape or form!" and did not contain any of the required drawings or diagrams
(findings 168-69, 171-72). SBN promised to resubmit the "mechanical items that are
missing/need revised" on 12 August 2005 (finding 173). As of 15 August 2005 SBN
agreed to the rejection of the resubmittal, which it had not reviewed before submitting,
because it still had no DDC drawings and the DDC specification was "very sketchy and
incomplete overall." Botting acknowledged that SBN had made clear that the DDC
submittal was "critical" to the issuance of the next LNTP. (Finding 174) As of
29 August 2005, SBN/Botting's re-submittal was still not complete (findings 175-78).

                                          272
By letter dated 6 September 2005, SBN directed Botting to immediately complete the
mechanical design documents for re-submittal no later than 9 September 2005 and that:

             Be advised that WA Botting's inability to obtain approval
             is currently imp~cting our schedule and has exposed [SBN]
             and others to potential non-recoverable costs. These
             impacts will be substantial if WA Botting does not obtain
             100% design approval, thus allowing [SBN] to receive a
             full notice to proceed with the Work. Please be aware that
             [SBN] will seek full recovery from WA Botting for all
             associated delays and impacts.

             Furthermore, be advised that the Owner has notified us that
             they will be withholding all payments due [SBN] and
             associated Subcontractors until this submission is
             approved.

             Please produce your re-submittal no later than
             September 9, 2005. A failure to complete all
             documentation as noted above may require that [SBN]
             direct all subcontractors to proceed with the work in
             advance of full approval from the Army to avoid further
             delays to the schedule. If this were to occur, [SBN] will
             seek full recovery from WA Botting for changes that may
             be necessary as a result of the final approval documents.

(Finding 178; see also finding 179) As of 26 October 2005, almost two months later,
SBN agreed that its 95% submission was still not complete (findings 180-82). On
26 October 2005 CO Bartholomew authorized an additional LNTP, "subject to no
HVAC authorization" (findings 183-85). In an internal Botting email, dated
13 November 2005, the DDC design was apparently still not finalized:

             In an attempt to save the $85k we are spending on Onity
             controls, it was my intention to use the flawed controls
             specification to try and get out of buying the ONITY
             Controls and put them on the owner. After spending the
             afternoon going through all the correspondence from last
             year on this issue, it would be foolish for me to go down
             this path now. If we attempted to take this position at the
             start of the project, we might have had a slim chance.
             However, the project record clearly indicates that we were
             planning on providing an alternate system from day one
             and we had several opportunities in the past to put this on

                                         273
             the owner. We don't need to lose anymore [sic] credibility
             on this project.

(Finding 187) On 28 November 2005 SBN/Botting submitted a revised DDC
specification (finding 188; see also finding 192). No later than 15 December 2005,
SBN was authorized to proceed with 100% design (finding 190). In the 23 January
2006 comments to the 100% design submittal, the reviewers stated that the proposed
DDC design still did not comply with the RFP:

                •   Furthermore, the products description and listed
                    specification section compliance reference do not
                    match in described details for that section,
                    paragraph and sub-paragraph. The listed controllers
                    are inappropriate for the intended use on this project
                    and are conceptually inconsistent with the Fort
                    Lewis Design Standards Topology and System
                    Architecture which uses a standard PC Workstation
                    and Tridium Niagara R2 suite of software to
                    integrate field device controls to the enterprise level
                    platform Supervisory controllers within a
                    distributed control network.

                •   It is evident by the conflict in literature and the
                    products listed in the submittal register that ... the
                    intended architecture is to provide a system that
                    does not provide a Web enabled Supervisory
                    Software Application on a Workstation PC Platform
                    as specified. The submitted Niagara AX software
                    model is not the same version or generation of
                    software solutions as the existing original Tridium
                    Niagara R2 framework provided by Vykon and can
                    [not] provide the same functionality that is bundled
                    with Supervisor AX applications served to a
                    browser from an embedded JACE platform.

(Finding 201) On 15 February 2006 SBN provided Botting with its own comments
regarding RFP noncompliance issues in Botting's mechanical design. On that same
date there was an "Onity meeting" attended by SBN/Botting and Fort Lewis personnel.
(Finding 207) SBN expressed its intention to submit the 100% design on 10 April
2006 (finding 214). On 20 April 2006 CO Bartholomew authorized an HVAC LNTP
(finding 215). Thereafter, SBN extended the 100% design submission date almost
another month to 15 May 2006 (finding 216). SBN did not submit the 100% design
until sometime between 26 May 2006 and 11August2006 (findings 216, 218-19,

                                         274
222). On 4 January 2007, CFSC accepted the 100% design and issued a full NTP for
construction of the project (finding 227).

       As it turned out, the existing ONITY equipment could not be relocated to the
new Lodge because the distance between the existing and new Lodge buildings made
interconnectivity difficult and because the new ONITY equipment installed in the new
Lodge (thermostats, key control and safes) could not communicate with the existing
ONITY system (finding 16). The cost of providing a new ONITY InnPulse Server
(app. hr. at 127), as well as equipment SBN claims it was required to provide that was
not specified in the contract (id. at 133-37) is included in SBN's claim.

        Throughout April and May 2007 there were multiple issues with the DDC
system installed not being in compliance with SBN/Botting's own design and
specifications to the point that it was "unusable" (findings 238-39, 242, 244). CFSC
conditionally accepted the new Lodge effective 25 May 2007, subject to, among other
listed items, the completion of the DDC system, including all required software
licenses (finding 245). The DDC system was set for completion, demonstration and
acceptance on 13-15 August 2007 (finding 247). However, by 15 August 2007, the
DDC software installation, testing and documentation had still not been provided by
Botting/Automated Controls (finding 248). On 17 August 2007 SBN issued a cure
notice to Botting on the basis of the stated default of not meeting its contractual
obligations and Botting had, in tum, issued a cure notice to Automated Controls
several days later (finding 249). When the DDC open issues had still not been
resolved by 28 August 2007, CO Bartholomew issued a cure notice to SBN requiring
the matter to be resolved by 5 September 2007 (finding 250). The ceremony opening
the new Lodge took place on 13 September 2007 (finding 251). However, as of
14 September 2007, it was determined that the DDC issues still had not been
corrected; SBN, even after Botting had replaced Automated Controls with TRS,
acknowledged that, as of2 October 2007, the DDC work was not complete. In fact,
the work was not considered complete and accepted by CO Bartholomew until
1 December 2007 and the final documentation was not provided and considered
complete until 25 February 2008 (findings 252-55). On 20 May 2008, the Fund
acknowledged receipt of as-builts (finding 255).

      SBN argues that it is entitled to compensation on the basis of several theories of
recovery related to the Fund's actions or inactions with respect to the DDC design.

       A. Breach of the Implied Duty of Good Faith and Fair Dealing

       It is SBN's position that the Fund breached the implied duty of good faith and fair
dealing when it refused to issue the LNTP for framing based on then-existing issues
involving the DDC portion of the HVAC/mechanical design (app. hr. at 335-37). SBN

                                          275
argues that the DDC issues were unrelated to the framing LNTP and that the delay in
issuing the LNTP pushed the framing work into the rainy winter months (id. at 336-37).

        SBN has not asserted a claim for any amount of damages as a result of the
alleged breach. Proof of the element of damages, while not necessary to a
mathematical certainty, is necessary to a finding of entitlement on the basis of the
alleged breach of the implied duty. BAE Systems San Francisco Ship Repair, 16-1
BCA ~ 36,404 at 177,503; Military Aircraft Parts, 16-1 BCA ~ 36,388 at 177,410.
Where, as here, damages have not even been alleged, much less proven, SBN has
failed to establish a necessary element of its alleged breach and, on that basis, we deny
entitlement.

       B. Delay

       SBN argues that CFSC's failure to issue a timely LNTP for framing on the
basis of the non-compliant DDC design delayed work on the critical path from
17 August 2005 through 30 October 2005 (app. hr. at 119, 385-86; ex. A-7). SBN
further argues that DDC design issues, for which it alleges SBN and CFSC share
responsibility, delayed work on the critical path from 2 August 2005 through
6 December 2005 (app. hr. at 119, 385; ex. A-7). On the basis of the foregoing, we
find that SBN was solely responsible for critical path delay caused by the failure of the
DDC design to comply with the contract requirements from 2 August 2005 through
6 December 2005 and CFSC was solely responsible for critical path delay from
17 August 2005 through 30 October 2005 due to its failure to issue a framing LNTP.
As SBN's caused delay is fully concurrent with CFSC's caused delay, we find that
SBN is not entitled to delay damages.

VI. Ceiling Heights, Room Sizes and Mechanical LNTP

        As we held above, the parties agreed in Modification No. P00003 that no claim
based upon ceiling heights, square footage or associated impacts could be brought
after 23 March 2006 except as reserved in paragraph 4 of the modification. The only
claims reserved were those for ''time and associated cost impacts" (finding 212). We
therefore reject SBN's claim for damages due to a breach of the implied duty of good
faith and fair dealing on the basis of the ceiling height and square footage issues. We
will limit our discussion here to SBN' s claim for delay damages which was reserved in
Modification No. P00003.

      The RFP required that "Offerors who choose to submit alternate building or site
configurations must meet all requirements in the RFP" (finding 7) which included:

             Guest Room floor plan, layout and sizes shall be in
             accordance with the concept guest room drawings provided

                                          276
              in the RFP. Mechanical chases, plumbing chases, etc. are
              to be integrated without reducing net areas shown or
              specified.

(Id.; see also finding 13) RFP Amendment No. 00005, Question and Answer 34,
reiterated the RFP's requirement that corridor ceilings were to be a minimum of 8'4"
(finding 36). On 29 January 2004 SBN assured CO Bartholomew that SBN's proposal
was compliant with the square foot requirements of the RFP (finding 46).

       As of the 8 July 2004 35% design review meeting, it was noted by COR Dyer that:

              24.    Corridor ceiling heights are shown 8'-4". There may
                     be cases where corridor ceiling heights are adjusted
                     downward to account for piping and ductwork. In
                     thos.e cases, CFSC will be advised beforehand.
                     Swinerton will not design or construct any corridor
                     ceiling heights less than 8'-0".

(Finding 62) (Emphasis added) SBN's 65% mechanical design, as a result of
including the RFP-required boiler/chiller and its associated piping, also included:

              The piping was accommodated by making all corridor
              ceilings no higher than 8'-0"and by raising the second floor
              by four inches, and taking two inches off of the distance
              between the third and fourth floors.

(Finding 84) In the 22 September 2004 65% Design Review Comments, COR Dyer
made a reference to an understanding that ceilings would be no lower than 8'-0" but
there is no indication that the referenced understanding extended beyond the single
item to which he made the comment (finding 81). By the time SBN and its
subcontractors met on 27 October 2004 to discuss the 95% design, SBN acknowledged
that all the guest room dimensions were too small and that the ceiling heights in all the
public corridors were at a maximum height of 8'-0" (finding 93).

       If, as argued by SBN/Botting, it changed its designed ceiling heights to 8'0" to
accommodate the piping necessary for the boiler/chiller system, it follows that
SBN/Botting's original design that included a not-yet-approved alternative design
included the required 8'4" ceiling heights. In early February 2005 CO Bartholomew
approved Botting's 3 February 2005 amended alternative design which no longer
needed the space for the piping associated with the boiler/chiller (see Section I above).
SBN, however, made the unilateral decision not to change the building design back to
the 8'4" corridor ceilings because the designs of SBN and its subcontractors had
already been changed to accommodate the 8'0" ceiling heights and SBN sought to

                                          277
mitigate the impact of the HVAC design delays on the designs of SBN and its other
subcontractors (findings 129, 197).

    On 14 December 2005 SBN contacted CO Bartholomew about the LNTP for
HVAC rough-in being held up due to corridor ceiling heights less than 8'4":

                Previously, it was my understanding that the issue was
                within the rooms and as you know we have
                acknowledged and revised those ceiling heights at the
                entries. We are currently reviewing the issue at the
                corridors and the correspondence that has resulted in the
                ceiling heights being at 8'-0" upon determination of same
                we will advise. It should be noted that we are being
                impacted by being unable to proceed with the HVAC
                work at this time.

(Finding 189) As of 15 December 2005 COR Dyer stated that SBN's 100% design
documents were to show "all RFP ceiling heights being attained" (finding 190). The
19 December 2005 mock-up room inspection comments noted that:

                SBNW admitted [the extended stay (ES)] room was
                approx. 293 SF, below the 300 SF standard. The reason is
                apparently due to the shear wall adjacent to the adjoining
                ES room. SBN[] was requested to issue RFI informing
                Lodging how many rooms in the entire building fall
                below the standard. VERY IMPORTANT!

(Finding 191)

       By letter dated 22 December 2005, SBN advised CO Bartholomew that the lack
of a LNTP for HVAC rough-in was "adversely affecting the project" and that:

             [I]t was clear that all parties understood and agreed that
             the 8'-4" ceiling heights within the corridors were
             unachievable with the [boiler/chiller] design
             requirements and this was accepted at the early stages
             of the project which is evident by the documents
             provided by the Army. As noted in same I it is true that
             this item has not been changed via the change process,
             but it is clear that all parties were amiable to the
             revision. It is our belief that this revision at the 35%
             documents and 65% document review provide
             agreement with the revised ceiling elevations and

                                           278
             allowed for the reduction in the ceiling height to 8'-0".
             As such, we request the release of the [LNTP] with the
             HVAC based on the prior agreement of the 8'-0"
             ceilings being acceptable.

(Finding 193) CO Bartholomew responded the next day:

             I would have an incredibly hard time believing anyone on
             our end would permit a lowering of ceiling heights without
             a serious discussion and a significant credit. This issue has
             come up on a number of other projects in the past and is a
             Lodging ''Hot Button". While the reduction of 4" may not
             have been picked up in our reviews, there has been no
             contractual action taken to lessen the contract requirement
             for ceiling heights in this building. I refer back to a letter
             that is part of the contract signed by an ind[iv]idual who
             signed the bid that [SBN] would be materially compliant
             with the RFP.

(Finding 195) A week later, CO Bartholomew again stated that there had been no
contractual action to reduce the required ceiling heights from 8'4" to 8'0" and that the
RFP-required ceiling heights must be included in the 100% design submission "even if it
delays [the submission]" (finding 195). This direction was reiterated by CO Bartholomew
and COR Dyer on 5 January 2006 (finding 196). By letter dated 10 January 2006, The
Architect of Record, Jensen/Fey, weighed in on the subject of ceiling heights:

             We acknowledge receipt of your e-mail regarding the
             requirement for 8'-4"ceiling heights. It should be
             specifically noted that the 8'-0" ceiling heights were
             included in the 35% submittal documents and are very
             clearly shown in the 65% and 95% documents and were
             subsequently discussed during the review conferences with
             the Army Team at each phase. The agreement on this issue
             was relied upon to develop the progress drawings and
             therefore shown on the drawings and constructed in the
             field.

             In an effort to accommodate your latest request to revert
             back to the 8'-4" ceiling height, a design meeting was held
             at the site on January 5, 2006 to review options available.
             After numerous discussions and strategies we were unable
             to come up with any solutions to revert to the 8'-4" ceiling

                                         279
              height (short of tearing the building down and starting
              over).

              Therefore, we believe that the 8'-0" ceiling heights
              aesthetically have no significant impact on the quality or
              performance of the facility and shall remain as previously
              noted.

(Finding 197) COR Dyer denied the allegation that the 8'0" ceilings had been
discussed and resolved during the 35%, 65% and 95% design review meetings,
however:

             My only suggestion at this point [is] to seek a form of
             compensation for the error and omission. I know this is a
             copout, but what other option do we have except to tear
             down the building and start again? What is really
             disturbing is that Lodging is being asked to accept
             something different than was specifically stated in their
             requirements (again). Why do we always have to bend
             over, especially when it's a clearly written requirement in
             the proposal that we send to hand selected design-builders?

(Finding 198) CO Bartholomew agreed that there had been no contractual action to
change the contract requirement for ceiling heights at a minimum of 8'4" and that he
would not approve any deviation without consideration in the form of a credit from
SBN (finding 200).

       As of 19 January 2006 SBN admitted that 159 of the 185 guestrooms did not
meet the contractual square footage requirements:

                    3. Unit Square Footage: over 100 units do not
                       meet the RFP minimum requirements. The
                       dimension busts are taken off the CAD
                       drawings. We will be developing our letter to the
                       Owner. Bart is not completely knowledgeable of
                       the magnitude of the issue at this time.

                       The impacts to the square footage were a result
                       of drawing completion and shear walls that were
                       added within the building space that affect the
                       net rentable area, design deficiencies with the
                       architect. There is some confusion as to how the

                                         280
                          square footage was originally calculated; we are
                          in the process of figuring this out.

                          ums
                            "t summary B re akd own
                      Less           16 to 21 SF        4 Units
                      Less           10 to 12 SF        4 Units
                      Less           6 to 9 SF          56 Units
                      Less           1to5 SF            56 Units
                      Gain           1 to 5 SF          24 Units
                      Gain           6 to 9 SF          7 Units
                      Gain           12 to 14 SF        3 Units
                      Gain           15 to 20 SF        5 Units

                Total Square Units Impacted              159 Units
                Total Square Feet Lost                   345 Square Feet

(Finding 200)

        By letter dated 31 January 2006 SBN offered a $10,953 credit as consideration
for changing certain ceiling heights from 8'-4" to 8'-0" and an $8,492 credit as
consideration for a net reduction of 198 square feet in the room areas in the entire
project. They also enclosed 100% design documents and requested an LNTP for the
HVAC work as well as the final NTP upon an "expedient review" of the 100% design.
(Findings 202, 204) Several days later SBN increased the offered credit to $100,000
for both the ceiling height and room square footage issues (finding 204).
CO Bartholomew responded that he and Army Lodging would accept no less than a
$200,000 credit. SBN agreed to the amount of $200,000 but stated that it would be a
credit to cover the ceiling heights, room square footages, as well as associated
variances such as light switch locations, ceiling fan locations, etc. A contract
modification was never issued memorializing the credit of $200,000 and its basis. The
parties continued to negotiate and CO Bartholomew:

                Authorize[ d] a 10 day non-compensible [sic] extension of
                the contract completion date, from 21February2006 to
                3 March 2006. We reserve all rights including the right to
                issue a Show Cause why we should continue and not
                Terminate for Default.

(Finding 209)

        On 2 March 2006 SBN recorded the following in a handwritten document
identified as "Minutes of Mtg":

                                           281
SUMMARY

   -     AN AGREEMENT WAS REACHED AFTER SEVERAL
         ROUNDS OF NEGOTIATION IN WHICH (SBN] AGREED
         TO A $500,000 DEDUCTIVE CHANGE ORDER

   -     INCONSIDERATION THEREOF THE ARMY CFSC
         ASSURES THAT

         CD No LIQUIDATED DAMAGES WILL BE ASSESSED
         THRU THE END OF [SBN]'S NEXT SCHEDULE UPDATE
         WHICH WILL INCLUDE THE REVISED MOCK-UP
         PROCESS AGREED UPON IN THIS MEETING

         Cl) THE MINOR DEVIATIONS WILL BE FLUSHED OUT
         DURING THE REVISED MOCK-UP PROCESS AGREED
         UPON IN THIS MEETING. A RESOLUTION WILL BE
         AGREED UPON FOR EACH. ARMY LODGING WILL BE
         INFORMED, PRIOR TO PUNCH LIST PROCEEDINGS,
         THAT THE MINOR DEVIATIONS HA VE BEEN AGREED
         UPON AND CONSIDERATION PROVIDED.

THE REVISED MOCK-UP PROCESS AGREED UPON IN THE
MEETING INCLUDES THE FOLLOWING STEPS:

3/7106     [SBN] WILL PROVIDE RESPONSES TO THE CFSC
           MOCK-UP COMMENTS INCLUDING PROPOSED
           SOLUTIONS

3/14/06 CFSC WILL RESPOND TO THE ABOVE COMMENTS
           AND PROPOSED SOLUTIONS.

3/17/06 (SBN] WILL ISSUE A REVISED PROJECT SCHEDULE
          TO INCLUDE THE REVISED MOCK-UP PROCESS AND
          THE IMPLEMENTATION OF THE SOLUTIONS TO THE
          MINOR DEVIATIONS.

3/21/06 AN ON-SITE JOB WALK WILL BE HELD WITHIN
THRU    THREE WEEKS OF 3/21/06 AT WHICH ALL ISSUES
4/11/06 WILL BE REVIEWED AND FINALLY RESOLVED.

                          282
                 3/31/06 100% ORA WINGS WILL BE SUBMITTED
                          INTEGRATING THE RESOLUTIONS TO THE MINOR
                          DEVIATIONS.

(Finding 210) In these contemporaneous notes of the agreement memorialized in
Modification No. P00003, SBN makes no mention or other indication that it
considered the negotiated amount to be what it now claims was "excessive" and
"extortionate" (app. hr. at 316; app. reply at 22; gov't br. at 181-82). Nor do we find
any other contemporaneous support for this allegation. Bilateral Contract
Modification No. P00003, in the amount of a $500,000 credit, was executed on
30 March 2006 (findings 204, 210, 212).

         SBN argues that it is entitled to compensation for delays to the critical path
from 14 December 2005 to the 20 April 2006 issuance of the mechanical LNTP
(finding 215; app. br. at 175). The alleged period of delay occurred during Period 4 in
which trade rough-in was on the critical path (finding 98; app. br. at 281; ex. A-7). 62
We find no evidence that the contract requirements for ceiling height and room square
footage were ever formally modified. The parties disagree as to whether there was an
informal agreement to accept corridor ceiling heights at 8'-0", however, we have
found no evidence of any agreement by CFSC to accept room square footage changes
prior to the agreement memorialized in Modification No. P00003. SBN admits that, as
of 14 December 2005, it was aware ofCFSC's concerns about nonconforming room
sizes (app. hr. at 175). We find that the changes in the room square footages as
constructed occurred because of the design confusion resulting from the
HVAC/mechanical design issues early in the contract (see Section I above) and the
out-of-sequence work and re-work required of SBN and the other subcontractors
(findings 63, 66, 67, 69, 74, 76, 79, 84, 129, 140, 161, 178, 182, 217, 221). As of
19 January 2006 SBN acknowledged that 159 of the 185 guestrooms "do not meet the
RFP minimum requirements," with some rooms being larger and some smaller and
that CO Bartholomew "is not completely knowledgeable of the magnitude of the issue
at this time" (finding 200). About a week later, SBN offered a credit as consideration
for CFSC's acceptance of the non-conforming room sizes. The parties reached
agreement on the amount of the consideration on 2 March 2006, which was then
memorialized in Modification No. P00003 dated 30 March 2006. (Finding 212)

       We find that SBN was solely responsible for the critical path delay due to
nonconforming room sizes from 14 December 2005 to the 2 March 2006 agreement on
consideration. We find that SBN is entitled to be compensated for the critical path

62
     Curiously, SBN does not show this alleged delay to the critical path on Exhibit A-7,
         nor does it discuss this alleged delay in its critical path delay narrative. This
         omission, however, does not negate SBN's arguments regarding the delay
         elsewhere in its brief.

                                            283
delay period from 3 March 2006 through the 26 April 2006 issuance of the mechanical
LNTP (39 calendar days) which was solely caused by CFSC and the claim for which
was expressly reserved in Modification No. P00003. The amount of compensation due
for the delay is a quantum issue which is not before us.

VII. Mock-up Rooms and 100% Design

        The contract required the construction of external (outside the building)
stand-alone mock-up concept rooms for each of the two guestroom types on the
project site. The mock-up rooms were to be subject to a "walkthrough of rough
construction" by CFSC at the time of the 35% Design Review Meeting. The final
walkthrough of the completed mock-up rooms was to take place "at an appropriate
time to allow for design corrections and adjustments prior to submission of the final
design." The contract also required the completion of two Final Concept Rooms
inside the building. (Finding 7) Throughout the record both parties refer to both the
external mock-up rooms and the internal Final Concept Rooms as the mock-up rooms.

        In CFSC's detailed 35% review comments, it was stated that it was CFSC's
intention to accept completed mock-up rooms on or about 21 September 2004 after the
65% design review meeting (finding 60). On or about 22 September 2004, in the
context of 65% design review comments, it was noted that the external mock-up rooms
were no longer to be constructed; however, there is no record of a contract
modification to delete this work or to give the Fund a credit for the deleted work. The
first CFSC inspection of the two internal Final Concept Rooms (referred to by the
parties as mock-up rooms) took place on 13 December 2005 (finding 189). The
19 December 2005 inspection comments (finding 191) raised the issue of room sizes
and several other issues addressed in Section VI above. SBN's 100% design was
submitted on 31January2006 (finding 204). A second CFSC inspection of the Final
Concept Rooms (mock-up rooms) was conducted on 9 March 2006 (finding 211).

       As of 30 March 2006 the parties had resolved their differences over ceiling
heights and room square footage and the express terms of Modification No. P00003
specified that the results of their agreement were to be incorporated into a 100%
design resubmission (findings 205, 212, 214). As of23 May 2006 SBN had still not
submitted its 100% design to CFSC and was not sure it would meet its promised
submission date of26 May 2006 (findings 216, 218-19). The 100% design was
submitted sometime between 26 May 2006 and the week of 12 June 2006, the week
scheduled for the 100% design review and a walk-through of the internal mock-up
rooms (findings 218, 219). Sometime around 7 June 2006 CFSC experienced a travel
lockdown and was unable to travel from Virginia to Fort Lewis during the week of
12 June 2006. When the travel lockdown was lifted, the 100% design review and the
walk-through of the mock-up rooms was rescheduled for 11-12 July 2006.
(Finding 219) As of 9 October 2006, the quality of the Final Concept Rooms

                                         284
(mock-up rooms) was still an issue and a post-Thanksgiving inspection was suggested
(finding 223).

      SBN argues that it is entitled to compensation on the basis of several theories of
recovery related to the Fund's actions or inactions with respect to the mock-up rooms.

       A. Breach of the Implied Duty of Good Faith and Fair Dealing

        SBN argues that CFSC breached the implied duty of good faith and fair dealing
by intentionally failing to respond to numerous RFis associated with the mock-up
rooms (app. br. at 337-40). However, SBN has not asserted a claim for any amount of
damages in the form of either time or money as a result of the alleged breach. Proof of
the element of damages, while not necessary to a mathematical certainty, is necessary
to a finding of entitlement on the basis of the alleged breach of the implied duty. BAE
Systems San Francisco Ship Repair, 16-1 BCA ~ 36,404 at 177,503; Military Aircraft
Parts, 16-1BCA~36,388 at 177,410. Where, as here, damages have not even been
alleged, much less proven, SBN has failed to establish a necessary element of its
alleged breach and, on that basis, we deny entitlement.

       B. Constructive Changes

        There is no dispute that the mock-up room process was changed when the
requirement for the exterior mock-up rooms was deleted. Even though work was
deleted without deleting a commensurate amount of money from the contract amount .
as a credit to the Fund, SBN alleges that it and its subcontractors performed extra work
and incurred additional costs during the claimed period from 6 January 2006 through
9 May 2006 due to the Fund's deletion of the external mock-up rooms over a year
earlier in September 2004 (app. br. at 148-49, 154, 374-76; app. reply at 49). It is
clear to us from our examination of the extensive record in this appeal that SBN and its
subcontractors did indeed perform additional and out-of-sequence work because of the
extensive delays and design confusion associated with the nonconforming HVAC
design and later DDC design (see Sections I , IV and V above). SBN has failed to
show that it incurred specific costs and/or experienced specific delays directly as a
result of the deletion of the external mock-up rooms. We, therefore, deny entitlement.

                                         285
       C. Delay

       SBN argues that it experienced a constructive suspension of work on the critical
path from 7 June 2006 through 12 July 2006, the time between CFSC's notification to
SBN of a travel lockdown that precluded its ability to travel to Fort Lewis during the
week of 12 June 2006 and the rescheduled dates of 11-12 July 2006 for the 100%
Design Review Meeting and the walk-through of the mock up rooms (app. br. at 178,
386-88). SBN further claims:

              The delay to the Mock-Up and 100% design review
              impacted the Project critical path. Absent prior delay and
              disruption to the design and Mock-Up process (see
              sections on The 95% Design Review Process, Direct
              Digital Controls and Initial Mock-Up Room Process) these
              activities would not have been on the critical path at this
              time. Because of those prior delays, however, the 100%
              design review and Mock-Up completion were critical and
              the Fund is responsible for the delay ....

(App. br. at 178)

        We found above in Section IV that SBN was responsible for the critical path
delay to the 95% design review process. We found in Section V that, while the Fund
was responsible for critical path delay from 17 August 2005 through 30 October 2005
due to its failure to issue a framing LNTP, that delay was concurrent with the critical
path delay caused by the failure of the DDC design to comply with the contract
requirements from 2 August 2005 through 6 December 2005 for which SBN was
solely responsible and, as a result, we found that SBN is not entitled to delay damages.
If we were to follow SBN' s reasoning in its brief, those delays, for which we have
found SBN responsible, were what caused the mock-up room walk-through and 100%
design review to be on the critical path and that would also be SBN' s responsibility.

        In addition, the delay period claimed by SBN is the period between the
originally-scheduled events to take place during the week of 12 June 2006 and when
they actually took place on 11-12 July 2006 due to the CFSC travel lockdown. There
is no evidence of when the lockdown actually ended, nor have we found any evidence
of discussions between the parties about whether the rescheduled dates were a function
of the availability of SBN participants, CFSC participants or a combination of both.
As a result, we have no basis upon which to find that the period of time upon which
SBN bases its claim was unreasonable under the circumstances. We, therefore, deny
SBN's claim for delay damages associated with the reschedule of the mock-up room
walk-through and the 100% design review.

                                          286
VIII. Final and Other Direct Changes

        SBN argues that it is entitled to compensation under the contract's Changes
clause for the following directed changes to its work. SBN argues in the alternative
that, should we not find the following to have been direct changes, they were
constructive changes. SBN also seeks delay damages associated with the alleged
changed work as specified below. (App. br. at 364-74, 376-78; app. reply at 47-48)

         A. Changed Work

                 1. Final Changes
                       a. Front Desk Modifications-Casework
                       b. Front Desk Modifications-Camera monitoring
                       c. Front Desk Modifications-Alarm system
                       d. Irrigation System
                       e. Building Corbels
                       f. Service Gate and Intercom

        Five of the six (6) claimed Final Changes were included in unilateral
Modification No. P00008 (finding 240), however, SBN argues that Modification
No. P00008 did not compensate it at all for the costs associated with the service gate
and intercom. With respect to the other five (5) claimed components of Final
Changes, SBN claims that the work was directed by CO Bartholomew and agrees that
Modification No. P00008 partially compensated it, however, the compensation was for
less than the amount of the increased costs it incurred in performing the work. SBN
now seeks $4,697 .00 for the service gate and intercom63 plus an additional amount for
the other five listed Final Changes which it characterizes as "disputed mark-up only"
(app. br. at 178-86, 291, 293, 364-66; R4, tab 169 at 5182).

        With respect to the first five claimed Final Changes (all but the service gate and
intercom), the Fund agrees that they were changed work and SBN is entitled to
compensation for that work. The Fund, however, argues that SBN was fully
compensated in Modification No. P00008 for its increased costs (gov't br. at 280; app.
br. at 365-66). The additional amounts now sought by SBN for disputed mark-up are
questions of quantum and the proof thereof which is not now before us.

       The Fund argues that it denied change order requests for work associated with the
service gate and intercom (gov't br. at 280, 285), however, the Progress Meeting
minutes of 17 January 2007 show that CO Whitley authorized both changes during the

63
     SBN seeks the difference in the cost of the revised service gate and intercom that
        was installed ($17,226.00) and the originally designed service gate
        ($12,529.00) (app. br. at 186, 291, 293).

                                            287
meeting (finding 229). From 4-31 January 2007 CO Whitley was the person with
authority to bind the Fund (findings 227, 234). On this basis, we find SBN entitled to be
compensated for the service gate and intercom work authorized by CO Whitley. The
amount of the compensation is a question of quantum and quantum is not before us.

              2. Furring Out Walls

       SBN argues that the Fund directed that one wall in Rooms 215, 315, 216, 316,
256, 236 and 336 was to be furred out between columns (app. hr. at 291, 366, 376-77).
SBN claims the work was completed and now seeks compensation for the work in the
amount of $3,414.00 (app. br. at 291, 293; R4, tab 169 at 5182, 05234-36). The Fund
responds that this work was associated with the square footage issues which were
specifically released by SBN in Modification No. P00003 (gov't hr. at 283-85; see
also Section VII above). We agree and deny entitlement.

              3. Revisions to Administration Rooms

       SBN claims that the Fund directed certain design revisions to the administration
rooms in the new Lodge and that the work was completed on 14 September 2006.
SBN now seeks compensation for the work in the amount of$6,539.50. (App. br. at
291, 293, 366-67, 377; R4, tab 169 at 5182) The Fund's briefs do not dispute this
portion of SBN' s claim. We therefore find SBN entitled to be compensated for the
claimed work. The amount of the compensation is a quantum matter which is not now
before us.

             4. Revise Rubber Stair Treads and Risers

        SBN claims that the Fund directed it to install rubber stair treads and risers
instead of the contract-required VCT resilient flooring and that the work was
completed 10-13 March 2007. SBN now seeks compensation for the work in the
amount of $9,838.30. (App. hr. at 292-93, 367, 377; R4, tab 169 at 5182). The Fund's
briefs do not dispute this portion of SBN' s claim. We therefore find SBN entitled to
be compensated for the claimed work. The amount of the compensation is a quantum
matter which is not now before us.

             5. Relocation of Electrical Boxes

        SBN claims that the Fund's direction to install outlets directly below the PTAC
units (finding 220) was a change to the contract requirements and that the work was
completed. SBN now seeks compensation for the work in the amount of$17,823.00.
(App. br. at 292-93, 367, 377-378; R4, tab 169 at 5182) The Fund's briefs do not
dispute this portion of SBN' s claim. We therefore find SBN entitled to be paid for the

                                          288
claimed work. The amount of the payment is a quantum matter which is not now
before us.

              6. Installing Laundry Floor Drain

        SBN claims that the Fund's direction to add a floor drain in the main laundry
room (Room G-40) was a change to contract requirements. SBN seeks compensation
for the work in the amount of $3,861. 00. (App. br. at 292-93, 367, 377; R4, tab 169 at
5182). The Fund's briefs do not dispute this portion of SBN's claim. We therefore
find SBN entitled to be paid for the claimed work. The amount of the payment is a
quantum matter which is not now before us.

              7. Installing Change and Soap Vending Machines

        SBN claims that the Fund changed the contract requirement for the change and
soap vending machines from government-furnished/government-installed equipment
to government-furnished/contractor installed equipment. SBN now seeks
compensation in the amount of $1, 191.00 for its installation of the equipment. (App.
br. at 293, 367-68, 378; R4, tab 169 at 5182). The Fund's briefs do not dispute this
portion of SBN's claim. We therefore find SBN entitled to be paid for the claimed
work. The amount of the payment is a quantum matter which is not now before us.

              8. Other Direct Changes

                    a.   COR 26: Furnish freezer & refrigerator
                    b.   COR 27: Add vanity base cabinets
                    c.   COR 31: Revise break room configuration
                    d.   COR 32: Remediate P-lam at mock-ups
                    e.   COR 35: Extension at refrigerators
                    f.   COR 42: Supply & install mangler
                    g.   COR 46: Washer & Dryer pricing
                    h.   COR 52: Revise carpet layout

        With respect to the eight (8) claimed components of Other Direct Changes,
SBN seeks the total amount of $4,766.77 for which it was not compensated in
Modification No. P00008 and which it characterizes as "disputed mark-up only" (app.
br. at 290, 293, 368, 378; R4, tab 169 at 5182). There are no claims for delay damages
associated with the Other Direct Changes. The Fund's briefs do not dispute this
portion of SBN' s claim. We therefore find SBN entitled to be paid for the claimed
work. The amount of the payment is a quantum matter which is not now before us.

                                         289
       B. Delay

        SBN seeks critical path delay damages from 17 January 2007 through 26 March
2007 due to front desk changed work (app. hr. at 179-81). The front desk work was on
the critical path until the end of Period 6 which was 6 February 2007 (finding 98). As
we discussed above, the Fund has agreed that it directed the front desk changed work
and that it is responsible for the costs associated with performance of the work. With
respect to the claimed delay damages associated with the front desk changed work, the
Fund's position is that SBN has already been compensated for the delay in the
modification issued for the changed work (ex. G-5 at 8). It is well established that a
contractor is presumed, in the absence of a specific reservation in the modification, to
have included in its cost proposal for extra work an amount to compensate it for the
time required to complete the changed work. R. W Contracting, Inc., ASBCA
No. 24627, 84-2 BCA ~ 17,302; CBC Enterprises, Inc. v. United States, 24 Cl. Ct. 187
(1991). However, in Modification No. P00008 the parties specifically reserved SBN's
right to seek additional time. This is consistent with CFSC's position throughout the
record that discussions of time and delays would be addressed at the end of the project
in discussion of SBN's REA/claim, which, as we address in Section XI below, never
happened. We therefore find SBN entitled to compensation for critical path delay
from 17 January 2007 through 6 February 2007 (15 calendar days) associated with the
front desk changed work.

       SBN further claims that it experienced additional delays due to other changed
work that it admits were not on the critical path (app. hr. at 183-84, 186). As these
delays were not on the critical path, they are not compensable.

IX. Pre-final Inspection

        The contract required that SBN' s design team, led by its Architect of Record,
Jensen/Fey (finding 19), was to inspect the entire project and determine when it was
ready for a pre-final inspection. Once SBN received the determination from
Jensen/Fey, it was to notify the CO in writing that it was ready for a pre-final
inspection. (R4, tab 1 at 97) SBN argues that the parties had agreed to conduct a
pre-final inspection during the week of 12 March 2007 (app. hr. at 187-88). However,
as of 13 February 2007, SME reported to SBN that it would be unable to be ready for a
pre-final inspection by mid-March 2007 due to work still remaining to be done by
other trades (finding 233).

       The first notification by Jensen/Fey of a determination that the project was
ready for a pre-final inspection was by letter dated 28 March 2007 sent to COR Dyer,
and followed up the following day by a letter from SBN to CO Bartholomew formally
requesting a pre-final inspection. CO Bartholomew scheduled the pre-final inspection

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to begin on or about 16 April 2007. (Finding 237) The pre-final inspection took place
17-19 April 2007 (app. br. at 188).

        SBN claims that the cancellation of an alleged 12 March 2007 pre-fmal inspection
for the convenience of CO Bartholomew constituted a constructive suspension of work
on the critical path from 9 March 2007 through 17 April 2007 (app. br. at 186-89,
388-89). The record, however, demonstrates: (1) that SME, SBN's electrical
subcontractor, advised SBN that it did not believe it could be ready for a mid-March 2007
pre-final inspection and (2) we find no evidence that Jensen/Fey, as head of the design
team, had provided the required formal notification that it had inspected the entire project
and determined it to be ready for a pre-final inspection, a contractually-required
prerequisite to SBN's formally requesting a pre-final inspection. On the basis of the
foregoing, we find SBN solely responsible for the claimed delay and deny entitlement to
delay damages claimed with respect to the pre-final inspection.

X. Failure to Process Pay Applications and Unpaid Contract Balance

        SBN argues that CFSC's failure to timely process its December 2005 pay
application (findings 199, 203) was a breach of contract entitling it to damages
incurred as a result of the nonpayment (app. br. at 341-43; app. reply at 41-42). SBN
alleges that the failure of CFSC to timely process its December 2005 payment
application "caused cash flow problems for [SBN] and its subcontractors (app. br. at
343). However, we have found no evidence in the record of when the December 2005
pay application was actually paid. SBN's arguments on this subject do not mention
when actual payment occurred and we find no contemporaneous documentation to
indicate that payment of the December 2005 pay application was made more than a
reasonable period of time after its submission. Contrary to SBN' s arguments
regarding alleged impacts of untimely payment of the December 2005 pay application,
SBN's LaSharr, its Project Manager from June 2005 through project completion,
testified that he was not aware of any delays to project performance as a result of
delays in the processing of SBN's pay applications (finding 199). The Fund argues
that payment of SBN's December 2005 pay application was merely delayed and that a
delay in payment does not constitute a breach of contract (gov't br. at 263-264). See
Highland Al Hujaz Co., ASBCA No. 58243, 16-1BCA~36,336. Given the absence
of evidence of when actual payment occurred, we have no basis upon which to
determine that any delay in payment was unreasonable. We therefore deny SBN' s
claim for breach damages on the basis of a delay in payment of its December 2005 pay
application for lack of proof.

       SBN further claims that CFSC breached the contract by not paying SBN the
unpaid contract balance of $110,650.00 comprised of unpaid portions of Pay
Applications 19, 26, 27 and 29 (findings 259, 269; app. br. at 286-87, 411). SBN further
argues that there should be no right of setoff for "any potential liquidated damages to

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which the Fund may assert entitlement" because there has been no SBN breach (app. br.
at 287, 411). We find no evidence in the record that the Fund has assessed any liquidated
damages. The Fund argues that this was not part of SBN' s claim submitted to the CO
and is therefore not properly before the Board (gov't br. at 264). The Fund is incorrect,
as this was very clearly set out in SBN's 2010 claim (finding 269). In the alternative, the
Fund argues that the amount claimed was properly withheld from payments as retainage
(finding 24) and that the Fund attempted to resolve the matter with SBN in August 2008,
without success (gov't br. at 264). We find no basis for the Fund's nonpayment of
retainage as promised by CO Bartholomew:

                We advised the remaining retainage would be released
                with receipt of as-builts and a close out invoice with a
                Release of Claims.

(Findings 256) We therefore find that SBN is entitled to be paid the amount of the
contract balance which was withheld as retainage. The amount to be paid is a matter
of quantum which is not presently before us.

XI. Failure to Issue a Contracting Officer's Final Decision

        On 26 January 2005 SBN's Roberts submitted three REAs to CFSC
(findings 119, 124 ). From time to time thereafter the parties referred to the REAs but
both parties apparently deemed it more important to first address jobsite issues current
at the time (see, e.g., findings 135, 180-81, 199).

        On 2 April 2008, approximately six months after the Lodge was opened for use
(finding 251), SBN submitted an REA that included and updated all issues for which
SBN sought equitable adjustment (finding 256; app. br. at 329). CO Bartholomew
responded to the REA on 23 June 2008, specifically declining to issue a COFD, and
inviting further negotiation if it was desired by SBN (finding 257). SBN accepted the
invitation to continue negotiations (findings 258). Thereafter, the parties engaged in
continued discussions until CO Bartholomew retired at the end of December 2008
(findings 259-61; app. br. at 329). 64

       In February 2009 CO Wallace was assigned as the contracting officer responsible
for matters relating to the contract now at issue. At the time of his assignment, CFSC
was in the middle of a BRAC relocation and Army Lodging was completing its relocation

64
     SBN argues that the failure of the Fund to call CO Bartholomew as a witness at the
        hearing put SBN at a disadvantage (app. reply at 4), however, SBN knew
        CO Bartholomew was not on the Fund's witness list and yet SBN failed to
        request a subpoena to compel his testimony when it requested subpoenas for
        four other Fund witnesses.

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to San Antonio, Texas. As a result of these relocations, CO Wallace had difficulty
locating documents, including the official contract file, related to the Lodge project.
CO Wallace advised SBN and its counsel of the difficulties in locating documents, as
well as his intention to procure expert assistance in analysis of SBN' s claimed delays.
SBN's counsel sought updates from CO Wallace throughout 2009 and into 2010.
(Findings 262, 264-66)

       On 7 June 2010 SBN formally withdrew its 2 April 2008 REA and submitted to
CFSC a disk containing a nearly 6,800-page certified claim which is the subject of the
appeal now before us. SBN described its certified claim as including a narrative,
schedule analysis and supporting documents and "is substantially the same as the
April 2, 2008, REA although the schedule analysis has been updated to include
description of a number of delays and disruptions not included in the original REA."
(Findings 267, 269, 270) Before CO Wallace could review SBN's claim, it had to be
converted from the submitted disk to a hard copy consisting of fifteen (15) 3-inch
binders. A hard copy is in the record; the table of contents does not include page
numbers and the various sections of the voluminous claim are not divided by tabs or
otherwise identified within the voluminous document. CO Wallace never formally
acknowledged receipt of SBN's claim. (Finding 268) CO Wallace failed to respond
to SBN' s claim within 60 days of receipt, never provided SBN with a date by which a
COFD would be issued and neither CO Wallace nor any other contracting officer for
CFSC has ever issued a COFD (finding 271). SBN appealed from a "deemed denial"
on 18 August 2010 (finding 272).

       A. Breach of the Implied Duty of Good Faith and Fair Dealing

        A CFSC CO has a duty to make a reasonable attempt to negotiate disputes that
arise between a contractor and the Fund. In the absence of a successful settlement, the CO
is then required to issue a COFD. AR 215-4, § 6-11. (Finding 25) There is no dispute
that, after CO Bartholomew's retirement at the end of December 2008, no CFSC CO
continued negotiations with SBN on the subject of its 2 April 2008 REA, no CFSC CO
attempted any negotiations with SBN on the subject of its 7 June 2010 certified claim, and
no CFSC CO has ever issued a COFD on the subject of the 2010 claim.

       SBN argues that CFSC's failure to negotiate and failure to issue a COFD are a
breach of the Fund's implied duty of good faith and fair dealing (app. hr. at 329-35;
app. reply at 35-37). We would agree that SBN has shown that the Fund had a duty to
issue a COFD and that it failed to perform that duty. However, SBN has not asserted a
claim for any identified amount of damages resulting from the failure to issue a
COFD. Proof of the element of damages, while not necessary to a mathematical
certainty, is necessary to a finding of entitlement on the basis of the alleged breach of
the implied duty. BAE Systems San Francisco Ship Repair, 16-1 BCA ~ 36,404 at
177,503; Military Aircraft Parts, 16-1BCA~36,388 at 177,410. Where, as here,

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damages have not even been alleged, much less proven, SBN has failed to establish a
necessary element of its alleged breach and, on that basis, we deny entitlement.

       B. Breach of Contract

        On the basis of the same facts underlying its assertion of breach of the implied
duty of good faith and fair dealing, SBN argues that the Fund has also materially
breached the contract by failing to negotiate its various REAs and certified claim and
also failing to issue a COFD (app. br. at 344-347; app. reply at 42). SBN further
argues that:

               As to the element of damages, the Fund's complete
               inaction on [SBN]'s 2005 REAs, 2008 REA, and Certified
               Claim damaged [SBN] due to the lack of payment for ( 1)
               unpaid contract balance ... , (2) change orders ... , (3)
               additional costs associated with general conditions,
               unabsorbed home office overhead, and labor and material
               escalation ... , and (4) amounts payable to subcontractors.

(App. br. at 34 7)

        The four alleged damage components listed by SBN are addressed elsewhere in
this decision as follows: (1) is addressed in Section X; (2) is addressed in Section VIII;
(3) is understood to be a quantum issue associated with various delays claimed by SBN
and addressed throughout this decision; and (4) is addressed in Section XII. SBN also
seeks interest, attorney's fees, and costs in unspecified amounts that it argues are to be
resolved during the quantum phase of this appeal (app. br. at 347-49). We have found
SBN entitled to compensation for certain changed work, delays and unpaid contract
balance in other sections of this decision. SBN is not entitled to compensation for those
items again here. To the extent SBN claims additional compensation on the basis of the
failure of CFSC to issue a COFD, it has failed to allege additional amounts of damage
specifically caused by the absence of a COFD. As we held above, proof of damages is a
necessary element of breach of contract and where such damages have not been alleged,
much less proven, SBN has failed to establish a necessary element of its alleged breach.
On that basis, we deny entitlement.

XII. Subcontractor Claims to SBN

       SBN's claimed amount of $6,768,830.26 includes $3,963,690.37 for claims
against SBN by its subcontractors, plus $701,355.20 added by SBN for "Overhead/Fee
Insurance" for a total claimed by SBN for subcontractor claims against it of
$4,665,045.57 (findings 269-70). Throughout its briefs SBN refers to the
subcontractor claims submitted to it as "pass through claims" (see, e.g., finding 225).

                                          294
We are not bound by SBN' s choice of words. The only party with privity of contract
with the Fund is SBN and SBN has confirmed that it is the only party before us in this
appeal (tr. 1/5-6, 7, 3/5; Bd. corr. 6 September 2012). The subcontractor claims
against SBN were not sponsored nor prosecuted before us as separate claims, but were
included by SBN within its own claim, with SBN's mark-ups added, as evidence of
damages allegedly suffered by SBN (app. br. at 286, 294-305; see also findings 225,
270). We have addressed SBN's claimed theories of recovery between it and the
Fund. In accordance with SBN's agreements with its subcontractors (see finding 225),
to the extent that we have found SBN entitled to compensation for any portion of its
claim against the Fund, it is up to SBN to resolve any associated claims between itself
and its subcontractors.

                                      CONCLUSION

       All arguments made by the parties which are not specifically addressed in this
decision have been carefully considered and found not to be persuasive. The
following is a summary of claim items for which we have found SBN to be entitled to
compensation:

       Service Gate and Intercom
       Revisions to administration rooms
                 rubber stair treads and risers
       RP.1   '.~tP       electrical boxes
                laundry floor drain
                change and soap vending machines
               direct changes
       Unpaid contract balance

       Delay damages as follows:
               DOIM ductwork                             15 calendar days
               Primary electrical interconnect            7 calendar days
               Natural gas line                           7 calendar days
               Mechanical LNTP                           39 calendar days
               Front desk changed work                   15 calendar days
                                  TOTAL DELAY            83 calendar days

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We sustain SBN' s appeal to the extent of the above listed claim items. SBN' s appeal
in all other respects is denied. We remand the appeal to the parties for negotiation of
quantum in accordance with the above.

       Dated: 24 April 2017

                                                ~x~
                                                 DIANA S.DICKINSON
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

I concur                                         I concur

~#--
Administrative Judge
                                                 RICHARD SHACKLEFORD
                                                 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. 57329, Appeal of
Swinerton Builders Northwest, rendered in conformance with the Board's Charter.

       Dated:

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

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