Court Opinion

ID: 6337285
Source: CourtListenerOpinion
Date Created: 2022-05-03 14:00:41.771643+00
Date Added: 2024-06-11T09:25:06.131372
License: Public Domain

Case: 21-1803     Document: 50    Page: 1   Filed: 05/02/2022

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

                GSC CONSTRUCTION, INC.,
                       Appellant

                             v.

                SECRETARY OF THE ARMY,
                          Appellee
                   ______________________

                         2021-1803
                   ______________________

     Appeal from the Armed Services Board of Contract Ap-
 peals in Nos. 59402, 59601, Administrative Judge John J.
 Thrasher, Administrative Judge Michael N. O'Connell, Ad-
 ministrative Judge Timothy Paul McIlmail.
                  ______________________

                    Decided: May 2, 2022
                   ______________________

    PATRICK BERNARD KERNAN, Kernan and Associates
 Law Group, Washington, DC, argued for appellant.

     ASHLEY AKERS, Commercial Litigation Branch, Civil
 Division, United States Department of Justice, Washing-
 ton, DC, argued for appellee. Also represented by, BRIAN
 M. BOYNTON, WILLIAM JAMES GRIMALDI, MARTIN F.
 HOCKEY, JR., PATRICIA M. MCCARTHY; LAUREN M.
Case: 21-1803     Document: 50      Page: 2     Filed: 05/02/2022

 2          GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY

 WILLIAMS, Office of Counsel, United States Army Corps of
 Engineers, Tulsa, OK.
                 ______________________

      Before LOURIE, PROST, and CHEN, Circuit Judges.
 LOURIE, Circuit Judge.
      GSC Construction, Inc. contracted with the United
 States Army Corps of Engineers (“the Army”) to build two
 warehouses. After GSC failed to meet several deadlines,
 the Army terminated the contract for default. GSC ap-
 pealed to the Armed Services Board of Contract Appeals
 (“the Board”). The Board denied GSC’s appeal. Appeals of
 GSC Constr., Inc., ASBCA Nos. 59402, 59601, 21-1 B.C.A.
 (CCH) ¶ 37751 (A.S.B.C.A. Nov. 24, 2020), J.A. 1–80 (“De-
 cision”). We affirm the Board’s decision for the reasons ex-
 plained below.
                         BACKGROUND
     GSC is a contractor that specializes in building mili-
 tary structures. See Appellant’s Br. 3–4. In 2011, the
 Army awarded GSC a contract to build two warehouses
 (“the SSA Warehouses”). Decision, slip op. at 2. Under the
 contract, GSC was required to start construction on Sep-
 tember 26, 2012, and finish by February 3, 2014. Id.
     After beginning construction, GSC encountered several
 obstacles that prevented it from completing the project.
 Two of those obstacles are particularly relevant to this ap-
 peal.
      First, GSC began a dispute with the Army over the con-
 tract’s scope. The dispute occurred when GSC selected a
 “waffle mat” foundation, which required removal of exist-
 ing soil and replacement with “select fill.” Id., slip op. at 6.
 Despite selecting a waffle mat foundation, GSC did not re-
 move and replace the soil; in its view, another contractor—
 Harper Construction, Inc.—was responsible for that task.
 Id., slip op. at 7. At that time, Harper was working on a
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 GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY           3

 separate project (“the TEMF Project”) in the same location.
 For the TEMF Project, Harper was required to demolish
 and construct several other buildings. Id., slip op. at 4. To
 ensure proper coordination between the two projects, the
 Army provided GSC with the contract specifications for the
 TEMF project “for information” purposes only. Id., slip op.
 at 6–7; J.A. 4194.
     After several months of discussion, the contracting of-
 ficer formally directed GSC to remove and replace the soil,
 explaining that it was not Harper’s responsibility. Deci-
 sion, slip op. at 8. In support of his determination, the con-
 tracting officer pointed to § 6.3.1.1(e) of GSC’s contract,
 which provides that GSC is “responsible for any specific
 site preparation required to accommodate the foundation
 design.” Id., slip op. at 5–8; J.A. 5202. In response, GSC
 agreed to begin the work under protest. Once GSC began
 excavating, however, it found the soil to be “heavy” and
 “very wet,” which would require it to perform additional,
 specialized work. Decision, slip op. at 8. Ultimately, Har-
 per, which had specialized equipment to address that issue,
 stepped in to remove and replace the soil. Id.
      Second, GSC encountered issues when designing the
 cold-formed metal framing for the exterior walls. To design
 that framing, GSC was required to comply with the Unified
 Facilities Criteria (“UFC”) 4-010-01, which establish the
 “[Department of Defense] Minimum Antiterrorism Stand-
 ards for Buildings.” Id., slip op. at 12. As relevant here,
 there are different versions of the UFC: the 2007 version
 and the 2012 version. The 2012 UFC is more stringent
 than the 2007 UFC. Id., slip op. at 13. The Army notified
 GSC that it should design the framing in accordance with
 the 2007 UFC. Id. Despite that guidance, GSC mistakenly
 used the more stringent 2012 UFC when creating its shop
 drawings for the framing. Id. GSC’s quality control man-
 ager did not notice that mistake. Id. GSC then submitted
 its drawings to the Army. Id. The Army also did not detect
 GSC’s mistake. Rather, it observed that GSC prepared the
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 4          GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY

 drawings using the 2012 UFC and reviewed them under
 that standard. Id. Subsequently, the Army rejected sev-
 eral of GSC’s drawings for failing to meet the 2012 UFC.
 Id. Both parties agree that, had the Army caught GSC’s
 mistake and applied the less stringent 2007 UFC, it would
 have approved the drawings weeks earlier. Id.
      Because of the soil dispute and the UFC oversight, GSC
 fell significantly behind schedule. Accordingly, on Janu-
 ary 16, 2014, the contracting officer issued a notice to GSC
 stating that GSC was 145 days behind schedule and that
 the Army was considering terminating the contract for de-
 fault. J.A. 8408. The notice also stated that the Army did
 not “condone any delinquency” or “waive any rights [it] has
 under the contract.” Id. GSC responded that it was “con-
 fident” that it could complete the project by June 9, 2014.
 J.A. 8404. GSC, however, continued to fall behind sched-
 ule. As a result, on April 28, 2014, the contracting officer
 issued a second notice, again stating that GSC had failed
 to make sufficient progress, that the Army was considering
 terminating the contract, and that the Army does not for-
 feit any rights under the contract. J.A. 8398–99. GSC, in
 turn, responded that it “firmly believe[d]” it could complete
 the work by August 30, 2014. J.A. 8389. But again, GSC
 continued to fall behind schedule. Finally, on June 18,
 2014, the contracting officer terminated GSC’s contract
 with the Army for default. Decision, slip op. at 3.
     GSC appealed the contracting officer’s decision to the
 Board. According to GSC, it was entitled to a 321-day ex-
 tension because of the soil removal dispute and the UFC
 oversight (among other allegedly excusable delays). Id.
 GSC also argued that it was entitled to $328,293.82 in
 damages and a conversion of the termination for default to
 one for the “convenience of the government.” Id.
      The Board denied GSC’s appeal from the contracting
 officer’s decision. First, the Board held that the Army had
 met its initial burden of proving that the termination for
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 GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY            5

 default was justified. Id., slip op. at 24. The Board noted
 that the contract’s completion date was February 3, 2014,
 and that GSC, indisputably, “did not complete the work” by
 that date. Id., slip op. at 2, 24.
      Next, the Board held that GSC failed to show it was
 entitled to a 321-day extension as a result of the delays.
 With respect to the soil removal dispute, the Board deter-
 mined that, under the contract, GSC was required to per-
 form the work rather than Harper. Id., slip op. at 25–27.
 In particular, the Board pointed to § 6.3.1.1(e) of the con-
 tract, which states that GSC is “responsible for any specific
 site preparation required to accommodate the foundation
 design.” Id., slip op. at 5, 25; J.A. 5202. With respect to
 the UFC version oversight, the Board found that, under the
 contract, it was GSC’s responsibility to ensure that it used
 the correct UFC version. Id., slip op. at 27–28. In support
 of its determination, the Board pointed to § 1.7 of the con-
 tract, which states that GSC “shall be responsible for . . .
 the coordination of all designs.” Id., slip op. at 28; J.A.
 3349.
     Finally, the Board rejected GSC’s argument that, be-
 cause the Army initially provided GSC with additional
 time to complete the project, it forfeited any right to enforce
 the original completion date. Decision, slip op. at 29–30.
 Judge McIlmail concurred, stating that GSC admitted its
 own subcontractors caused the delays. Id., slip op. at 68.
    GSC appealed to this court. We have jurisdiction pur-
 suant to 28 U.S.C. § 1295(a)(10).
                          DISCUSSION
     Our review of the Board’s decision is limited by statute.
 Kellogg Brown & Root Servs., Inc. v. Sec’y of the Army, 973
 F.3d 1366, 1370 (Fed. Cir. 2020) (citing 41 U.S.C. § 7107).
 We review the Board’s legal conclusions de novo. Id. “In-
 terpretation of a government contract is [a] question of law,
 which we also review de novo.” Elec. Boat Corp. v. Sec’y of
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 6          GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY

 the Navy, 958 F.3d 1372, 1375 (Fed. Cir. 2020) (citing For-
 man v. United States, 329 F.3d 837, 841 (Fed. Cir. 2003)).
 “Though not binding on [this] [c]ourt, we give the Board’s
 legal conclusions careful consideration in view of the
 Board’s considerable experience in construing government
 contracts.” Id. (citing Gates v. Raytheon Co., 584 F.3d 1062,
 1067 (Fed. Cir. 2009)). We may only set aside the Board’s
 factual findings if they are “(A) fraudulent, arbitrary, ca-
 pricious; (B) so grossly erroneous as to necessarily imply
 bad faith; or (C) not supported by substantial evidence.”
 Kellogg Brown, 973 F.3d at 1370 (quoting 41 U.S.C.
 § 7107(b)).
     To terminate a contract for default, a contracting of-
 ficer must have a “reasonable belief” that “there [is] no rea-
 sonable likelihood that the contractor could perform the
 entire contract effort within the time remaining for con-
 tract performance.” McDonnell Douglas Corp. v. United
 States, 323 F.3d 1006, 1016 (Fed. Cir. 2003) (quoting Lis-
 bon Contractors, Inc. v. United States, 828 F.2d 759, 765
 (Fed. Cir. 1987)); Federal Acquisition Regulation (“FAR”)
 52.249-10. As a defense to a termination for default, a con-
 tractor may assert that the government committed a prior
 material breach, thus excusing the contractor’s nonperfor-
 mance. See, e.g., Securiforce Int’l Am., LLC v. United
 States, 879 F.3d 1354, 1362–63 (Fed. Cir. 2018) (citing La-
 guna Constr. Co. v. Carter, 828 F.3d 1364, 1369 (Fed. Cir.
 2016)). Alternatively, the contractor may assert that it was
 entitled to a time extension based on a delay that resulted
 from “unforeseeable causes beyond [its] control and with-
 out [its] fault or negligence.” Sauer Inc. v. Danzig, 224 F.3d
 1340, 1345 (Fed. Cir. 2000) (quoting FAR 52.249-10(b)(1));
 J.A. 3326.
     GSC primarily makes three arguments on appeal.
 First, GSC argues that the Army breached the contract by
 requiring it to remove and replace the soil rather than Har-
 per. Second, GSC argues that it was entitled to a time ex-
 tension because the Army evaluated its drawings under
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 GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY           7

 the wrong UFC version. 1 Third, GSC argues that the Army
 forfeited its right to enforce the contract’s February 3,
 2014, completion date. We address each argument in turn.
                               I
      GSC first argues that the Army materially breached
 the contract by requiring it to remove and replace the soil
 for the SSA Warehouse site. According to GSC, under the
 terms of its contract, it was not responsible for that task—
 Harper was. Because of that breach, GSC asserts that its
 nonperformance was excusable. In support of its argu-
 ment, GSC points to Appendix RR of its contract, which
 states that “[Harper] shall provide the pad site for [GSC]
 complete within the calendar days indicated after [the no-
 tice to proceed].” J.A. 5844. In other words, GSC interprets
 the word “complete” to mean that Harper was responsible
 for all tasks, including the soil work.
     The Army responds that it did not materially breach
 the contract. According to the Army, various other provi-
 sions of the contract, including § 6.3.1.1(e) (further dis-
 cussed below) expressly require GSC to remove and replace
 the soil.
     We agree with the Army. Here, the dispute boils down
 to whether GSC or Harper was responsible for removing
 the soil and replacing it with fill. As is clear from the con-
 tract, GSC was responsible.
     First, several sections of GSC’s contract expressly state
 that GSC must remove and replace the soil. For example,
 GSC’s own proposal (incorporated into the contract), states

     1  GSC alternatively argued that it was entitled to a
 time extension because of several other delays, including
 missing hairpins and an electrical design revision. The
 Board denied GSC’s arguments concerning those delays,
 and GSC does not challenge those denials on appeal.
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 8          GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY

 that GSC will “[r]emove and replace . . . unsuitable fill . . .
 and replace it with select structural fill.” J.A. 3671; Deci-
 sion, slip op. at 25–26. Similarly, § 6.3.1.2 states that
 “[t]ime and weather conditions may affect the actual con-
 dition of the building site(s); therefore [GSC] shall . . . be
 solely responsible for . . . any excavation (if necessary) [and]
 placement of select fill (if necessary).” J.A. 5202 (emphases
 added); Decision, slip op. at 26. Additionally, § 6.3.1.1(e)
 states that GSC “is responsible for any specific site prepa-
 ration required to accommodate the foundation design”
 that it “prepared or proposed,” J.A. 5202 (emphases added),
 which here, indisputably, included removing the soil and
 replacing it with fill. Decision, slip op. at 25.
     Second, GSC’s argument regarding Appendix RR of its
 contract is unpersuasive. GSC insists that Harper was re-
 sponsible for the soil work, referencing the provision that
 “[Harper] shall provide the pad site for [GSC] complete.”
 J.A. 5844. But GSC’s interpretation fails to give “reasona-
 ble meaning to all parts of the contract.” LAI Servs., Inc.
 v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009) (quoting Her-
 cules, Inc. v. United States, 292 F.3d 1378, 1381 (Fed.
 Cir. 2002)). Specifically, the word “complete” must be read
 in the context of the other provisions discussed above,
 which place the responsibility of the soil work for the SSA
 Warehouse site on GSC. If we were to construe the word
 “complete” as GSC does, to encompass Harper’s assigned
 work and GSC’s assigned work, that would render the re-
 maining contract provisions meaningless.
      GSC alternatively argues that other evidence, outside
 of its contract, proves that Harper was responsible for the
 soil work. In particular, GSC points to Harper’s TEMF con-
 tract specifications. GSC recognizes that it is not a party
 to that contract. Still, it contends that § 3.2.1 of Harper’s
 contract is relevant to this dispute because the Army ini-
 tially attached it to GSC’s task order. Section 3.2.1 states
 that Harper must “[o]verexcavate 8 feet below existing
 grade of existing soil and replace with inert fill.” J.A. 4322.
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 GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY          9

 According to GSC, that provision makes Harper “obvi-
 ous[ly]” responsible for the soil work. Appellant’s Br. 15.
     We are unpersuaded by GSC’s argument. True, Har-
 per’s contract specifications required Harper to “[o]verex-
 cavate” the “existing soil and replace with inert fill.” J.A.
 4322. But GSC neglects to mention a key fact: Harper was
 working on a separate project concerning the construction
 of separate buildings, i.e., the TEMF Project. The Army
 provided GSC with Harper’s contract specifications for co-
 ordination purposes only, not to define the scope of GSC’s
 obligations. Decision, slip op. at 7; J.A. 4194. Indeed, the
 Army marked Harper’s contract with the following:
 “PROVIDED FOR INFORMATION ONLY – NOT IN
 CONTRACT.” J.A. 4194. Within that context, it would be
 “an unwarranted leap to read the provision as requiring
 Harper to remove and replace soil” for the SSA Warehouse
 site, a task already expressly assigned to GSC under its
 own contract. Decision, slip op. at 26. Like the Board, we
 construe that provision as referring to the soil work for
 other buildings—those that the Army specifically assigned
 to Harper under Harper’s contract. Id. In summary, we
 reject GSC’s argument that another party’s contract re-
 lieved it of its responsibility to remove and replace soil.
                               II
     GSC next argues that the Board erred in denying its
 claim for a time extension for the UFC oversight. Accord-
 ing to GSC, it was entitled to a time extension because the
 Army negligently evaluated its drawings under the wrong
 UFC version (2012 instead of 2007). GSC further contends
 that, had the Army used the correct UFC version, it would
 have accepted GSC’s drawings several weeks earlier.
     We disagree with GSC’s argument. Although GSC
 places much blame on the Army, it neglects to explain its
 own role in causing the delay. As the Board explained, be-
 fore construction began, the Army correctly notified GSC
 that it must use the 2007 UFC for its drawings. Decision,
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 10         GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY

 slip op. at 13. Despite that notification, GSC “inexplicably”
 used the wrong version—the 2012 UFC. Id. The Army
 failed to correct that error. Id. But the Army’s oversight,
 although unfortunate, did not entitle GSC to a time exten-
 sion. As the Board observed, under the contract, GSC was
 responsible for coordinating the design work. Id., slip op.
 at 28. For example, FAR 52.236-21(e), incorporated into
 the contract, states that “[a]pproval by the Contracting Of-
 ficer shall not relieve [GSC] from responsibility for any er-
 rors.” J.A. 3325 (incorporating FAR 52.236-21(e)). It
 further states that GSC “shall coordinate all such draw-
 ings, and review them for accuracy, completeness, and com-
 pliance with contract requirements.” Id. Similarly, § 1.7
 of the contract states that GSC “shall be responsible for . .
 . the coordination of all designs” and that GSC shall “cor-
 rect or revise any errors or deficiency in its designs, draw-
 ings, [and] specifications.” J.A. 3349. Here, GSC violated
 its contract obligations when it failed to ensure that it used
 the correct UFC version. And, as is clear from the record,
 that mistake by GSC set off the chain of events causing the
 delay.
     GSC does not dispute that, under the contract, it was
 responsible for design coordination. Nor does it point to
 any error in the Board’s analysis. Rather, it simply disa-
 grees with the outcome. But mere disagreement is insuffi-
 cient for reversal of the Board’s decision. Accordingly,
 GSC’s argument is unpersuasive. 2
                              III
     Finally, GSC argues that the Board erred in holding
 that the Army did not forfeit the contract’s completion date.

      2  GSC also appears to argue that the Army’s failure
 to apply the correct UFC version violated the duty of good
 faith and fair dealing. We reject GSC’s argument for the
 same reasons.
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 GSC CONSTRUCTION, INC.   v. SECRETARY OF THE ARMY          11

 According to GSC, because the Army initially provided it
 with additional time to complete the project, it necessarily
 forfeited any right to enforce the February 3, 2014, comple-
 tion date.
     We disagree with GSC’s argument. As the Board ex-
 plained, although the Army permitted GSC to work past
 the original completion date, it expressly and repeatedly
 stated, that it did not “condone any delinquency” or forfeit
 any rights under the contract. J.A. 8398; J.A. 8408; Deci-
 sion, slip op. at 29–30. Indeed, the contracting officer “ad-
 vised GSC that he regarded the February 3, 2014,
 completion date to be in effect,” and while he “gave GSC
 another chance to complete by June 9, 2014 . . . GSC failed
 to take advantage of the reprieve, resulting in [the] termi-
 nation.” Decision, slip op. at 30. Given the Army’s repeated
 reservation of its rights during construction, we fail to see
 how the Board erred in holding that there was no forfei-
 ture. GSC’s argument is thus unpersuasive.
     In summary, we reject GSC’s arguments that (1) the
 Army materially breached the contract by requiring GSC
 to perform the soil work; (2) GSC was entitled to a time
 extension because of the UFC oversight; and (3) the Army
 forfeited its right to enforce the contract’s completion date.
                          CONCLUSION
      We have considered GSC’s remaining arguments but
 find them unpersuasive. For the foregoing reasons, the de-
 cision of the Board is affirmed.
                          AFFIRMED