Court Opinion

ID: 209517
Source: CourtListenerOpinion
Date Created: 2011-03-13 07:54:27+00
Date Added: 2024-06-11T17:27:56.713439
License: Public Domain

NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit
                                       2008-1183

                          FLATHEAD CONTRACTORS, LLC,

                                                       Appellant,

                                            v.

                    Ed Schafer, SECRETARY OF AGRICULTURE,

                                                       Appellee.

       Joseph A. Yazbeck, Jr., Yazbeck, Cloran & Hanson, LLC, of Portland, Oregon for
appellant. Of counsel was David H. Bower.

       David S. Silverbrand, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for appellee. With him on the
brief were Gregory G. Katsas, Assistant Attorney General, Jeanne E. Davidson,
Director, and Martin F. Hockey, Jr., Assistant Director.

Appealed from: United States Civilian Board of Contract Appeals

Administrative Judge Howard A. Pollack
                         NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit
                                       2008-1183

                           FLATHEAD CONTRACTORS, LLC,

                                                             Appellant,

                                            v.

                       Ed Schafer, SECRETARY OF AGRICULTURE,

                                                             Appellee.

       Appeal from the United States Civilian Board of Contract Appeals in
       no. 118-R, Administrative Judge Howard A. Pollack.
                          ____________________________

                            DECIDED: November 10, 2008
                           ____________________________

Before LOURIE, RADER, and PROST, Circuit Judges.

LOURIE, Circuit Judge.

                                       DECISION

       Flathead Contractors, LLC appeals from a final decision of the United States

Civilian Board of Contract Appeals (“Board”). Flathead Contractors, LLC, v. Dept. of

Agriculture, C.B.C.A. 118-R (April 20, 2007).     Because the Board did not err in its

decision, we affirm.

                                     BACKGROUND

       Flathead Contractors entered into Contract No. 50-04R3-4-0002, Touchet

Paving/Road 64, with the Department of Agriculture.         The contract called for the

reconstruction of 7.23 miles of a double-lane road on Forrest Road 6400 near Umatilla
National Forest in Washington State.         Under the terms of the contract, Flathead

Contractors agreed to place retaining rock and Grading A material along the side of

approximately one-half mile of the road. The contract stipulated that appellants would

be paid $16.67 per cubic yard of Grading A material laid.

      During excavation, rock was found on site that was appropriate for use as

retaining material, in lieu of Grading A material.      Flathead Contractors proposed

substituting the local rock in place of the Grading A material, and the Contracting

Officer’s Representative approved that request.

      During construction, the dimensions of the retaining wall were modified and

Flathead Contractors felt that additional material would have to be used to complete the

road. It requested an increase in the amount of Grading A material allowed under the

contract. The Contracting Officer denied the request on November 24, 2004, finding

that a “change in work,” as defined in the contract, had not occurred and that the

contract did not provide for payment unless the change in quantity exceeded 15

percent. Flathead Contractors appealed the denial to the Board.

      On April 20, 2007, the Board reversed the Contracting Officer’s decision. The

Board found that a change in work had occurred and that Flathead Contractors was

entitled to compensation for the additional material used. The Board found that 26

additional cubic yards of Grading A material and 505 additional cubic yards of the

replacement material had been used in fulfilling the change in the contractual design.

As to the amount due Flathead Contractors, the Board awarded different rates of

payment for work performed using Grading A material and work performed using the

replacement material. For the additional Grading A material used, the Board used the

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unit price specified in the contract, $16.67 per cubic yard. For the excavated rock used

in lieu of Grading A material, the Board established a price of $10.13 per cubic yard.

The difference in price reflected the Board’s finding that the use of the excavated rock

entailed lower preparation costs than the use of Grading A material.

       On October 2, 2007, the Board denied both parties’ motions for reconsideration.

Flathead Contractors timely appealed to this court. We have jurisdiction pursuant to 41

U.S.C. § 607(1)(A).

                                      DISCUSSION

       Our review of Board decisions is governed by 41 U.S.C. § 609(b).               Legal

conclusions of the Board are neither final nor conclusive and we review such

conclusions de novo. Id.; United States v. Dekonty Corp., 922 F.2d 826, 827 (Fed. Cir.

1991). Contract interpretation is an issue of law that we review de novo. R.B. Wright

Constr. Co. v. United States, 919 F.2d 1569, 1571 (Fed. Cir. 1990); 41 U.S.C. § 609(b).

Notwithstanding this lack of deference, we carefully consider the Board’s expertise in

interpreting government contracts. Erickson Air Crane Co. v. United States, 731 F.2d

810, 814 (Fed. Cir. 1984).     We can only overturn a Board’s factual findings if “the

decision is fraudulent, or arbitrary, or capricious, or so grossly erroneous as to

necessarily imply bad faith, or if such decision is not supported by substantial evidence.”

41 U.S.C. § 609(b).

       On appeal, Flathead Contractors argues that Specification 105.05(a) of the

contract controls the price to be paid for the additional material used in construction of

the road. According to Flathead, that price is the full contractual unit price for Grading A

material: $16.67 per cubic yard.

2008-1183
                                         -3-
       The government responds that Specification 105.05(a) only applies to the

contractually stipulated amount of Grading A or substitute material. The government

contends that Specification 105.05(a) has no affect on, and does not stipulate a price

for, the use of materials in excess of contractual amounts. The government claims that

the Board was correct in establishing an equitable price for the replacement materials in

accordance with the change in the contract work.

       We agree with the government that the Board did not err in its decision to

establish an equitable rate for the use of the replacement materials. The dispute in this

case is resolved by arriving at the proper interpretation of Specification 105.05(a) of the

contract. Appellants would have this court read that specification to require payment of

the full contract unit price for the use of substituted material, whereas the government

claims that the contract is silent as to the price to be paid for such use and that the

Board was entitled to determine suitable payment for the substituted material.

        Specification 105.05(a) reads as follows:

       (a) With the written approval of the CO, suitable stone, gravel, sand and
           other material found in the excavation can be used in the project.
           Payment will be made both for the excavation of such materials at the
           corresponding contract unit price and for pay items for which
           excavated material is used.            Replace, without additional
           compensation, sufficient suitable materials to complete the portion of
           the work that was originally contemplated to be constructed with such
           material.

(emphasis added).

      Flathead Contractors urges this court to interpret the second sentence of

Specification 105.05(a) as applying the contract unit price of $16.67 per cubic yard to

the use of the excavated material for “pay items.” We disagree with that interpretation.

The second sentence clearly differentiates between the “excavation of such materials,”

2008-1183
                                        -4-
for which the contract unit price applies, and “pay items for which excavated material is

used,” for which no unit price is specified. The Specification requires “payment” for

substituted material used for “pay items,” but it does not provide the rate at which such

items are to be compensated. Had the parties intended to pay the contract unit price for

both excavation and “pay items,” the phrase “at the corresponding contract unit price”

would have been placed at the end of the sentence. That is not how the contract was

written. Therefore, the text of Specification 105.05(a) is silent as to the price to be paid

for “pay items” for which the excavated material was substituted.

       The context in which the specification at issue is used in the contract provides

further support for our holding. The contract contains a line item for rock excavation,

and a line item for Grading A material. The use of distinct line items for excavation and

Grading A material demonstrates that the drafting parties anticipated separate payment

schemes for the excavation and the use of the substituted material. Appellant has been

paid for its excavation efforts according to the line item in the contract, as Specification

105.05(a) requires. Appellant is not entitled to the contractual unit price for the “pay

items” for which the excavated materials were used.

       As for the Board’s decision to award $10.13 per cubic yard for use of the

excavated material, that award was based on the Board’s findings of lower material

costs for the excavation materials than for the Grading A material. Such findings are

findings of fact, over which we have limited review. Indeed, Flathead Contractors does

not dispute those findings on appeal. We therefore affirm the Board’s award.

                                       AFFIRMED

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