Rda Construction Corp. v. United States

In the United States Court of Federal Claims

No. 11-555 C

Filed: July 27, 2017

**************************************** Accord and Satisfaction;

* Breach of Contract;

* Cardinal Change;

* Contract Disputes Act (“CDA”),

* 41 U.S.C. §§ 7101–7109;

* False Claims Act (“FCA”),

RDA CONSTRUCTION CORP., * 31 U.S.C. §§ 3729–3733;

* Federal Acquisition Regulations (“FAR”)

* 52.233-1 (Disputes), 52.236-2

* (Differing Cite Conditions), 52.236-3

Plaintiff, * (Site Investigation and Conditions

* Affecting Work), 52.236-13(Accident

v. * Prevention), 252.236-7001(Contract

* Drawings and Specifications), 52.249-

THE UNITED STATES, * 10 (Default on Fixed-Price

* Construction Contract);

* Rule of the United States Court of

* Federal Claims (“RCFC”) 12(b)(1);

Defendant. * Special Plea in Fraud, 28 U.S.C. § 2514;

* Tucker Act Jurisdiction over Contract

* Disputes, 28 U.S.C. § 1491(a)(2);

* United States Court of Federal Claims’

* Jurisdiction to Adjudicate Government

* Set-Offs, 28 U.S.C. §§ 1503, 2508.

*

****************************************

Cornelius J. O’Brien, Eckert Seamans Cherin & Mellott, LLC, Pittsburgh, Pennsylvania, Counsel

for Plaintiff.

Daniel B. Volk, United States Department of Justice, Washington, D.C., Counsel for the

Government.

POST TRIAL MEMORANDUM OPINION AND FINAL ORDER

This post trial liability decision adjudicates a protracted dispute between RDA

Construction Corp. (“RDA”) and the United States Department of the Navy, Naval Facilities

Engineering Command (“the NAVFAC”), arising from an October 13, 2009 Contract, requiring

RDA to demolish, remove, and construct a wharf at the Naval Station in Newport, Rhode Island

(“Newport Naval Station”).

To facilitate review of this Post Trial Liability Memorandum Opinion And Order, the court

has provided the following outline:

I.  RELEVANT FACTUAL BACKGROUND.

A.  The Deteriorating And Dangerous Conditions At The Newport Naval Station Wharf.

B.  On May 18, 2009, The Naval Facilities Command Issued Solicitation No. N40085-

09-B-7002.

C.  On June 4, 2009 and June 11, 2009, The Naval Facilities Command Conducted Two

Site Visits Of The Newport Naval Station Wharf.

D.  On June 30, 2009, RDA Construction Corp. Submitted A Bid.

E.  On October 13, 2009, RDA Construction Corp. Signed Contract No. N40085-09-B-

7002.

F.  On November 18, 2009, The Appledore Report Was Disclosed To RDA Construction

Corp.

G.  On April 21, 2010, RDA Construction Corp. Filed A Certified Claim.

H.  On May 17, 2010, The Naval Facilities Command Approved RDA Construction

Corp.’s Baseline Schedule.

I.  On August 31, 2010, RDA Construction Corp.’s April 21, 2010 Certified Claim Was

Denied.

J.  On September 20, 2010, RDA Construction Corp. Informed The Naval Facilities

Command That Underground Obstructions Were Encountered, So Work Stopped.

K.  On March 10, 2011, The Naval Facilities Command Instructed RDA To Submit A

Cost Proposal To Remove The Obstructions And Continue Work.

L.  In Late March 2011, RDA Construction Corp.’s Quality Control Manager And Site

Safety Health Officer Quit.

M.  On June 7, 2011 And August 19, 2011, The Naval Facilities Command Issued

Contract Modifications 4 and 5 To The October 13, 2009 Contract.

N.  On August 31, 2011, RDA Construction Corp. Filed A Complaint In The United

States Court Of Federal Claims.

O.  On September 14, 2011, RDA Construction Corp. Experienced A Third Accident At

The Project Site.

P.  From March 20, 2012 To November 8, 2012, The Naval Facilities Command Issued

Contract Modifications 6–12.

Q.  On February 21, 2013, The Naval Facility Command Terminated The October 13,

2009 Contract.

2

R.  On July 3, 2013, RDA Construction Corp. Filed A Second Certified Claim.

S.  On April 15, 2015, The Naval Facility Command’s Contracting Officer Determined

That RDA Construction Corp. Was Liable For Liquidated Damages.

II.  PROCEDURAL HISTORY.

III.  DISCUSSION.

A.  Jurisdiction.

1.  Whether The Claims Alleged In The May 7, 2015 Second Amended Complaint

Arise Under The Contract Disputes Act.

2.  Whether The Claims Alleged In The May 7, 2015 Second Amended Complaint

Were Submitted To The Contracting Officer For A Final Decision.

a.  Regarding Counts I–IV.

b.  Regarding Counts V–IX.

c.  Regarding Damages.

B.  Standing.

C.  The Claims Alleged In RDA Construction Corp.’s May 7, 2015 Second Amended

Complaint.

1.  Count I: Whether The Naval Facilities Command Had A Duty To Disclose The

Appledore Report And The Fay, Spofford & Thorndike Report.

a.  Plaintiff’s Argument.

b.  The Government’s Response.

c.  Plaintiff’s Reply.

d.  The Court’s Resolution.

2.  Count II: Whether RDA Construction Corp. Is Entitled To An Equitable

Adjustment Under The October 13, 2009 Contract’s Differing Site Conditions

Clause.

a.  Plaintiff’s Argument.

b.  The Government’s Response.

c.  The Court’s Resolution.

3.  Counts III And IV: Whether The Naval Facilities Command Misrepresented

The Condition Of The Wharf And The Purpose Of The October 13, 2009

Contract.

a.  Plaintiff’s Argument.

b.  The Government’s Response.

3

c.  The Court’s Resolution.

4.  Count V: Whether The Naval Facilities Command’s November 7, 2012

Directive Was A Cardinal Change To The October 13, 2009 Contract.

a.  Plaintiff’s Argument.

b.  The Government’s Response.

c.  The Court’s Resolution.

5.  Counts VI, VII and VIII: Whether The NAVFAC Violated The Duty Of Good

Faith And Fair Dealing.

a.  Plaintiff’s Argument.

b.  The Government’s Response.

c.  The Court’s Resolution.

i.  Regarding Price And Schedule Changes To The October 13, 2009

Contact, Because Of The NAVFAC’s Failure To Disclose The

Appledore Report And FST Report.

ii.  Regarding Rescinding Approval Of RDA Construction Corp.’s

Baseline Schedule.

iii.  Regarding Extraction Of The Broken H-Pile Sections.

iv.  Regarding Obstruction Drilling.

v.  Regarding Work Suspension After The September 14, 2011 Safety

Mishap.

vi.  Regarding Approval Of RDA Construction Corp.’s Quality Control

Manager And Site Safety And Health Officer.

vii.  Regarding The Re-Inspection Of The Manitowoc 4100 Crane.

6.  Count IX: Whether RDA Construction Corp. Was Entitled To An Extension Of

The Contract Completion Date For Excusable Delays.

IV.  DISCUSSION OF THE COUNTERCLAIMS ALLEGED IN THE GOVERNMENT’S

JUNE 12, 2015 ANSWER.

A.  Jurisdiction.

B.  Standing.

C.  Counterclaim I: Whether The Naval Facilities Command Is Entitled To Recover

Liquidated Damages For The Cost Of Completing The October 13, 2009 Contract.

1.  The Government’s Argument.

2.  Plaintiff’s Response.

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3.  The Government’s Reply.

4.  The Court’s Resolution.

a.  Whether RDA Was Entitled To An Extension Of The Contract

Completion Date.

b.  Whether The Naval Facilities Command’s February 21, 2013 Termination

Of The October 13, 2009 Contract For Default Should Be Converted Into

A Termination For Convenience.

i.  Whether The February 21, 2013 Notice Of Termination Was “Fair

And Impartial,” Pursuant To 48 C.F.R. § 1.602-2.

ii.  Whether The Naval Facilities Command Established That RDA

Construction Was In Default As Of The Termination Date.

iii.  Whether The Naval Facilities Command Breached The October 13,

2009 Contract Thereby Relieving RDA Construction Corp. Of Any

Consequences Stemming From The February 21, 2013 Default

Termination.

c.  The Quantum Of Liquidated Damages That The Naval Facilities

Command Is Entitled To Recover.

D.  Counterclaim II: Whether RDA Construction Corp. Is Liable For Damages Under

The Contract Dispute Act’s Anti-Fraud Provision, 41 U.S.C. § 7103(c)(2).

1.  The Government’s Argument.

2.  Plaintiff’s Response.

3.  The Court’s Resolution.

a.  Whether RDA Construction Corp.’s Crane Re-Inspection Claim Was

“Baseless.”

b.  Whether RDA Construction Corp.’s Crane Re-Inspection Claim Was

“Indefensibly Inflated.”

c.  Whether RDA Construction Corp.’s Crane Re-Inspection Claim Was

“Premised On Affirmative Misrepresentations Of Fact.”

E.  Counterclaim III: Whether RDA Construction Corp. Forfeited All Claims Against

The United States Under The Special Plea In Fraud Statute, 28 U.S.C. § 2514.

F.  Counterclaim IV: Whether RDA Construction Corp. Violated The False Claims Act.

1.  The Government’s Argument.

2.  Plaintiff’s Response.

3.  The Court’s Resolution.

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a.  Whether RDA Construction Corp. Falsely Certified That Its Deck

Removal Work Complied With The October 13, 2009 Contract.

b.  Whether RDA Construction Corp. Falsely Certified That Its Rock Fill

Removal Work Complied With The October 13, 2009 Contract.

i.  Regarding Rock Fill Removal.

ii.  Regarding The Hydrographic Survey.

c.  Whether RDA Construction Corp. Falsely Certified That It Made Timely

Payments To Its Subcontractors.

d.  Whether RDA Construction Corp.’s July 3, 2013 Certified Claim For

Costs Incurred To Re-Inspect The Manitowoc 4100 Crane Was Baseless,

Inflated And Premised On Factual Misrepresentations.

V.  CONCLUSION.

* * *

I. RELEVANT FACTUAL BACKGROUND.1

A. The Deteriorating And Dangerous Conditions At The Newport Naval Station

Wharf.

In 1958, the NAVFAC built a steel-reinforced concrete structure, known as the “marginal

wharf” (“wharf”), and a metal-sheet pile bulkhead2 along 850 feet of Narragansett Bay shoreline,

located between Piers 1 and 2 of the Newport Naval Station. PX 12 at 1–2.

1

The facts discussed herein were derived from evidence adduced at a trial held on

November 16–19, 2015 and December 7–10, 2015 in Boston, Massachusetts and in January 4–6,

2016 and July 11, 2016 in Washington, D.C. (TR at 1–2854). The witnesses for each party are

identified in Court Exhibit A. During trial, the parties also introduced 1,463 exhibits into evidence.

(PX 1–262; DX 1–759).

2

A “bulkhead” is “a retaining wall along a waterfront.” Bulkhead, MERRIAM-WEBSTER’S

ONLINE DICTIONARY, https://www.merriam-webster.com/dictionary/bulkhead (last visited March

22, 2017).

6

DX 7 at 7.

As depicted below, the bulkhead is a seawall comprised of metal sheet-piles that were

secured by steel rods anchored into concrete structures beneath the sea floor.

PX 12 at 3.

The wharf is a concrete structure, supported by 248 steel H-piles.3 DX 1 at 82–91. As

illustrated below, each pile was encased in a concrete “jacket” from the top to below the waterline.

3

A “H-pile” is a steel beam with an “H”-shaped cross section and is driven into the earth

by a pile driver. See H-Pile, MERRIAM-WEBSTER’S ONLINE DICTIONARY, https://www.merriam-

webster.com/dictionary/H%E2%80%93pile (last visited March 22, 2017).

7

PX 12 at 4; DX 1 at 82–91.

In April 2005, Appledore Marine Engineering, Inc. issued a report that was commissioned

by the NAVFAC, titled: “Underwater Facilities Inspection And Assessment of the Newport Naval

Station” (“the Appledore Report”). PX 12. The Appledore Report found “approximately ten

percent of the concrete piles [supporting the wharf were] missing their fiberglass shell forms with

failed or partially failed concrete encasement exposing the reinforcing steel and encased steel H-

pile.” PX 12 at 15–16. The Appledore Report advised the NAVFAC that

[b]elow the concrete jackets, the steel H-piles typically [had] advanced

deterioration with significant loss of cross-sectional area. A Level I inspection of

[all] the piles identified piles with buckled flanges,4 knife-edging and surface

pitting.5 Several piles exhibit[ed] complete deterioration of the flanges . . . . Based

on the degree of deterioration found during the Level I inspection, a special in-

depth Level II inspection was conducted on all 248 steel H-piles including the

removal of marine growth and steel thickness measurements.

PX 12 at 16.

The Appledore Report also found that the state of deteriorated H-piles “could only be

observed during [an] underwater inspection” and was widespread i.e., forty-six percent of the H-

piles could not safely carry any vehicular loads. PX 12 at 21, 25. Significantly, “these piles [were]

4

A “flange” is “a rib or rim for strength, for guiding, or for attachment to another object.”

Flange, MERRIAM-WEBSTER’S ONLINE DICTIONARY, https://www.merriam-webster.com/

dictionary/flange (last visited March 22, 2017).

5

“Pitting corrosion is a localized form of corrosion by which cavities or ‘holes’ are

produced in the material. Pitting . . . is more difficult to detect, predict and design against [than

uniform corrosion].” Pitting Corrosion, NATIONAL ASSOCIATION OF CORROSION ENGINEERS

CORROSION BASICS, https://www.nace.org/Pitting-Corrosion/ (last visited March 22, 2017).

8

overstressed beyond their allowable load capacities simply from the weight of the [wharf.]” PX

12 at 24. As a result, “catastrophic collapse [was] possible.” PX 12 at 25.

In addition, the Appledore Report found that the metal-sheet pile bulkhead exhibited

“advanced deterioration and defects.” PX 12 at 12. Where the bulkhead was accessible for

inspection, there were “large corrosion holes . . . allowing backfill to wash through the bulkhead”

and “[i]t [was] likely [that] portions of the bulkhead obscured from view . . . [had] similar advanced

deterioration.” PX 12 at 12. The earth fill retained by the bulkhead between Piers 1 and 2 also

had a large sinkhole up to eight feet wide and seven feet deep, and “sinkholes occur[ed] along the

entire length of the . . . bulkhead.” PX 12 at 14.

On August 29, 2008, Fay, Spofford & Thorndike, LLC (“FST”) conducted a second

evaluation of the wharf for the NAVFAC (“the FST Report”). PX 19. The FST Report was not

an independent evaluation, but primarily was based on information contained in the Appledore

Report. PX 19 at 3. The FST Report found that the “overall condition of the wharf superstructure

[was] good to fair.” PX 19 at 2. But, the FST Report “recommended that the wharf not be used

during construction.” PX 19 at 1.

B. On May 18, 2009, The Naval Facilities Command Issued Solicitation No.

N40085-09-B-7002.

On May 18, 2009, the NAVFAC issued Solicitation No. N40085-09-B-7002 (“the

Solicitation”) to restore the Newport Naval Station by:

 demolishing the wharf and metal-sheet pile bulkhead between Piers 1 and 2 of the

Newport Naval Station;6

 removing underwater rock and sediment along the project site;

 constructing a new metal-sheet bulkhead; and

 constructing a parking area, storm drainage and other infrastructure, required to

support ship berthing.

DX 1 at 9.

6

The Solicitation required complete removal of the existing H-piles supporting the wharf

and bulkhead. DX 1 at 82 (Demolition Note 3: “REMOVE PILES IN THEIR ENTIRETY”); PX

12 at 3 (picture). In addition, bidders were instructed that during demolition, “[d]ebris shall not

be allowed to fall into the water. Debris that does fall into the water shall be removed by the end

of the work day.” DX 1 at 82.

9

The Solicitation included a set of drawings and specifications; bidders were required to

conform contract work to the instructions listed in those documents.7 DX 1 at 35–36. The

Solicitation warned potential bidders that

[o]missions from the drawings or specifications or the misdescription of details of

work that are manifestly necessary to carry out the intent of the drawings and

specifications, or that are customarily performed, shall not relieve the Contractor

from performing such omitted or misdescribed details of the work. The Contractor

shall perform such details as if fully and correctly set forth and described in the

drawings and specifications.

DX 1 at 36 (emphasis added) (quoting 48 C.F.R. 252.236-7001(d)).

The Solicitation also incorporated Federal Acquisition Regulation (“FAR”) 52.236-3(a),8

requiring that potential bidders conduct their own investigations of site conditions. DX 1 at 14.

7

The Solicitation included thirty-eight technical drawings and specifications: (1) Title

Sheet; (2) Locus Plan; (3) Design Loads; (4) Limit of Work Plan; (5) Demolition & Removals; (6)

Existing Site Conditions Notes; (7) Existing Site Conditions; (8) Existing Site Conditions; (9)

Existing Site Conditions; (10) Existing Site Conditions; (11) Existing Site Conditions; (12)

Existing Site Conditions; (13) Hydrographic Survey Plan; (14) Soil Erosion & Sediment Control

Plan; (15) Soil Erosion & Sediment Control Details; (16) Boring Location Plan & Logs;

(17) Demolition Plan & Sections; (18) Rock Fill Removal Plan; (19) Demolition Details; (20) Site

Grading, Paving & Draining Plan; (21) Sanitary Sewer Plan & Details; (22) Water Plan & Details;

(23) Storm Sewer Plan & Details; (24) General Plan, Legend & Notes; (25) Bulkhead Plan; (26)

Sheet Pile Plan & Elevation; (27) Sheet Pile Plan & Elevation; (28) Bulkhead Details; (29)

Bulkhead Details; (30) Bulkhead Details; (31) Concrete Details; (32) Manhole Details; (33) Anode

Location Plan; (34) Electrical Site Plan; (35) Bonding Locations & Details; (36) Reference

Drawing; (37) Reference Drawing; and (38) Reference Drawing. DX 1 at 36.

8

FAR 52.236-3(a) provides that

[t]he Contractor acknowledges that it has taken steps reasonably necessary to

ascertain the nature and location of the 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

Government, as well as from the drawings and specifications made a part of this

contract. Any failure of the Contractor to take the actions described and

10

In addition, the Solicitation contained a release of liability for “any conclusions or

interpretations” arising from the information provided by the NAVFAC. DX 14 at 1. This

release included FAR 52.236-3(b) warning potential bidders that

[t]he Government assumes no responsibility for any conclusions or interpretations

made by the Contractor based on the information made available by the

Government. Nor does the Government assume responsibility for any

understanding reached or representation made concerning conditions which can

affect the work by any of its officers or agents before the execution of this contract,

unless that understanding or representation is expressly stated in this contract.

48 C.F.R. 52.236-3(b).

Neither the Appledore Report nor the FST Report nor their findings were provided by the

NAVFAC to potential bidders.

C. On June 4, 2009 and June 11, 2009, The Naval Facilities Command Conducted

Two Site Visits Of The Newport Naval Station Wharf.

On June 4, 2009 and June 11, 2009, the NAVFAC allowed prospective bidders to

investigate site conditions. DX 1 at 517, 520. At the beginning of each visit, Travis J. Germano,

a NAVFAC Construction Manager, provided bidders with a brief safety presentation and then took

them to the site. TR at 2223 (Germano). Prospective bidders were encouraged to walk the entire

length between Piers 1 and 2 and investigate the wharf’s conditions carefully. TR at 2225

(Germano). They also were instructed to submit any questions in writing, so that everyone would

have access to the same information. TR at 2223 (Germano).

At the site, hazardous conditions around the wharf were marked by yellow sawhorses,

orange construction fencing, and/or concrete barriers. TR at 2226 (Germano).

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 Government.

48 C.F.R. 52.236-3(a).

11

DX 742.10 (photograph of the wharf taken on May 19, 2008, prior to the June 4 and June 11,

2009 site visits and RDA’s commencement of performance on February 5, 2010).

DX 742.25 (photograph of the wharf taken on December 8, 2009, after the June 4 and June 11,

2009 site visits, but prior to RDA’s commencement of performance on February 5, 2010).

Exposed steel was visible where the wharf’s concrete structure showed deterioration. TR

at 2226 (Germano).

12

DX 742.18 (photograph of deteriorated H-piles taken on November 29, 2009, after the June 4 and

June 11, 2009 site visits, but prior to RDA’s commencement of performance on February 5, 2010).

DX at 742.17 (photograph of deteriorated H-piles taken on November 29, 2009, after the June 4

and June 11, 2009 site visits, but prior to RDA’s commencement of performance on February 5,

2010).

In addition, there were large sinkholes located along seventy-five percent of the bulkhead.

TR at 2224–25 (Germano). Several bidders climbed into these sinkholes to inspect the existing

seawall and conditions underneath the wharf. TR at 2224–25 (Germano).

13

DX 742.7 (photograph of sinkhole taken on May 19, 2008, prior to the June 4 and June 11, 2009

site visits and RDA’s commencement of performance on February 5, 2010).

An Estimator for RDA testified that he inspected the entire project site and paid special

attention to the condition of the concrete deck and H-piles. TR at 79–80, 127–28 (Wood). But,

RDA did not submit any questions to the NAVFAC, because RDA wanted to keep its bidding

strategy secret. TR at 1474 (“We didn’t ask any questions because you are trying to keep your

competitive advantage and your thought process to yourself. You are not trying to let everybody

know what you are thinking.” (Kelley)).

D. On June 30, 2009, RDA Construction Corp. Submitted A Bid.

On June 30, 2009, RDA submitted a bid for $7,162,524. DX 18 at 1. On July 7, 2009, the

NAVFAC informed RDA that it was “the apparent low bidder” and requested that RDA provide:

a. Identification of the Contractor’s personnel and management to be used on this

contract.

b. The Contractor’s technical and management plans for performing required services.

c. Description of Contractor’s facilities and equipment.

d. Summary of the Contractor’s experience in performing work of the type required

by this specification.

14

e. Current financial statements and data, including financial institution, point of

contact, and phone number.

f. Other work presently under contract.

g. Prior contracts for similar work, and the names, addresses and telephone numbers

of individuals with the organization issuing the contract who may be contacted for

information concerning the Contractor’s performance.

DX 22 at 1–2.

On July 9, 2009, the NAVFAC informed RDA that its bid price “was substantially lower

than the Government estimate” and requested that RDA “review [its] bid worksheets for . . .

possible errors or omissions, assure [itself] that [it] fully underst[ood] the scope of work, and that

[it] . . . include[d] . . . reasonable amounts to accomplish [the] work [required by the Solicitation].”

DX 22 at 2. If RDA considered its bid price to be correct, RDA was instructed to provide a written

confirmation of the price and a statement to the NAVFAC “waiv[ing] any and all claims of a bid

mistake after award of the contract.” DX 22 at 2. After reviewing its bid, RDA informed the

NAVFAC that “no clerical mistake was made in our calculations” and “[RDA] will honor the bid

price and will not file any claims because of a bid mistake[.]” DX 22 at 3.

On July 13, 2009, RDA also provided the NAVFAC with Technical And Management

Plans stating that

RDA plans on performing the work both from the land site and the waterside. The

demolition of the deck and beams will be done from the land while the removal of

the piles will be done from the water. For the driving of the sheets and the

installation of the king piles, RDA plans to do this from the land with a barge in

front of the work to assist in the performance. The diving crew will work off of

floats in front of their work. All deliveries of materials will be done from land.

RDA will self perform most of the work, but will hire qualified subcontractors for

the specialty work, i.e. soil anchor, paving, etc. RDA will complete this project

well ahead of 18 months as allowed in the contract.

DX 23 at 20.

E. On October 13, 2009, RDA Construction Corp. Signed Contract No. N40085-

09-B-7002.

On September 30, 2009, the NAVFAC awarded Contract No. N40085-09-C-7002 (“the

Contract”) to RDA. DX 1 at 536–37. On October 13, 2009, RDA signed the Contract. DX 1 at

537. On October 15, 2009, the NAVFAC issued a Notice To Proceed. DX 29 at 1 (“[T]his letter

constitutes your authority to commence work at the job site subject to the terms and conditions of

the contract concerning other submittals required prior to commencing work.”). Pursuant to the

October 13, 2009 Contract, RDA was to “complete [contract performance] within 555 days after

receiving notice to proceed,” i.e., the completion date was set as June 26, 2011. DX 1 at 1.

15

F. On November 18, 2009, The Appledore Report Was Disclosed To RDA

Construction Corp.

On November 12, 2009, RDA met with Mr. Germano, the NAVFAC’s Construction

Manager, at a pre-construction conference. DX 36 at 1; DX 37 at 2. Afterwards, Michael Hartman,

RDA’s Project Manager, and Mr. Germano toured the project site. TR at 188 (Hartman); TR at

2253 (Germano). During the tour, Mr. Hartman informed Mr. Germano that RDA planned to

demolish the wharf, using two excavators that would be placed side-by-side on the wharf and

gradually work backwards from one end to the other, ripping up the concrete structure and

removing piles as they moved along. TR at 188 (Hartman). Mr. Hartman also stated that RDA

would leave a narrow strip on the outboard side of the wharf where the soil anchoring equipment

would be placed while the new bulkhead was installed. TR at 2253 (Germano). At trial, Mr.

Germano testified that he was “shocked” by RDA’s demolition plan, because the “wharf [was]

condemned.” TR 2254 (Germano).

On November 18, 2009, Mr. Germano provided RDA with the Appledore Report and

restated his reservations about RDA’s demolition plan: “[F]rom [a] quick review of the document

and drawings, [he] would significantly question the capacity of the [marginal] wharf” and “[f]rom

a safety perspective, [he did] not believe [RDA would] be allowed to place any equipment or

vehicles on the wharf.” PX 28 at 1.

On November 20, 2009, RDA informed Mr. Germano that it reviewed the Appledore

Report and was concerned that the wharf apparently was not capable of supporting a live load—a

fact not mentioned in the Solicitation. PX 29. RDA explained that

[i]n preparation of [its] bid[,] [RDA] included means and methods to utilize

portions of the existing structure as a work platform for the initial selective

demolition of the wharf structure, rip rap removal, subsequent drilling of the earth

anchors and final demolition of the structure. Each of these work activities included

staging equipment off the existing wharf not marine access from barge mounted

equipment. The instability of the wharf will cause both time and cost impacts.

PX 29.

On December 9, 2009, the NAVFAC became concerned that the conditions described in

the Appledore Report would adversely affect the cost of completing the wharf and requested that

RDA provide the following information:

 Please explain in some detail exactly how you intended to utilize the existing wharf

in performing the contract work. For example, what portions of the wharf did you

intend to demolish at various times, what equipment did you intend to stage on the

remaining portions of the wharf, and how did you intend to use that equipment to

advance the project?

 Please provide a plan view drawing noting the type of equipment, locating their

position & reach capability. Please provide a profile view drawing for both the

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rock removal work and soil anchor work locating equipment position, available

angle of drilling, and reach capability.

 Please provide your best current estimate of the cost and time impacts you will

incur if you are required to utilize barges and temporary structures to perform the

contract work. Please briefly explain how you arrived at your figures.

DX 54 at 1.

The NAVFAC also warned RDA that the December 9, 2009 letter should not be interpreted

as accepting RDA’s characterization that the Solicitation and/or contract specifications and

drawings were not complete. DX 54 at 2.

On December 20, 2009, RDA responded to the NAVFAC’s December 9, 2009 letter,

explaining that its “As-Bid Plan” was to use the existing wharf as a staging platform for a two-step

demolition process. DX 62 at 3. During the first step, RDA planned to demolish the inboard side

of the wharf. DX 62 at 3. This work would be performed from the wharf, by moving the

demolition equipment backward from one end to the other. DX 62 at 3. Noncritical sections of

the inboard wharf would be left intact to provide access to the outboard side. DX 62 at 3. Then,

RDA would place a drill rig on the outboard portion of the wharf to complete the earth anchor

installations required for the new bulkhead. DX 62 at 3. After installation of the earth anchors,

RDA would demolish the outboard wharf. DX 62 at 3–4. But, in light of the Appledore Report,

the wharf could no longer be used as a platform for demolition or construction staging. DX 62 at

4. Therefore, that work would have to be performed from barge-mounted equipment and/or

platforms supported by temporary piles. DX 62 at 4. And, because these structural problems were

not disclosed in the Solicitation or during the site visit, RDA would need to spend an additional

$1,209,905.62 to complete performance. DX 62 at 4–5; but see PX 35 at 1–2 (subcontractor

estimate advising RDA that if the wharf demolition was performed from barges, it would cost

RDA an additional $797,400).

On December 23, 2009, RDA submitted a Baseline Network Analysis Schedule (“baseline

schedule”) to the NAVFAC, compiled from its as-bid plan. DX 65 at 1; TR at 229–32 (Hartman).

Pursuant to the October 13, 2009 Contract, “[s]ubmittal and acceptance of the [baseline schedule]

and accurate updated schedules accompanying [RDA’s] pay requests [were] both conditions

precedent to [the NAVFAC] processing pay request.” DX 1 at 144.

On February 2, 2010, the NAVFAC informed RDA that the December 23, 2009 baseline

schedule was not acceptable, because “it [did] not accurately represent the actual ‘work process

logic,’ that is, performing the work from barge mounted equipment, in which the project will be

completed.” DX 87 at 1. The NAVFAC also advised RDA that the February 2, 2010 letter would

“serve as confirmation to our several phone conversations that all submitted baseline [schedules]

to date were not approved.” DX 87 at 1. That same day, RDA submitted a revised baseline

schedule. PX 58 at 1.

On February 5, 2010, the NAVFAC repeated that “the multiple baseline schedules

previously submitted . . . [were] not acceptable” (DX 95 at 1), but conditionally approved RDA’s

February 2, 2010 baseline schedule for the limited purpose of allowing work to begin. PX 58 at 1.

17

The NAVFAC advised RDA that “invoicing will not be permitted until [the NAVFAC]

complete[d] a full review of [the] schedule and accept[ed] it.” PX 58 at 1.

On February 8, 2010, the NAVFAC informed RDA that

[t]he [NAVFAC] is in the process of reviewing the information RDA . . . has

provided regarding its planned method of performance of the P-469 Waterfront

Improvement contract when it submitted its bid. The information consists of

[RDA’s December 20, 2009] letter . . . and marked up drawings CD-101 and CD-

501 (which include narrative inserted by RDA discussing your proposed methods).

While we have not completed our review of this information, two of our subject

matter experts have expressed strong reservations regarding whether your proposed

methods were feasible even if the wharf were structurally sound[.]

While the Navy hopes to complete its analysis of this issue in the near future and

determine whether RDA is entitled to any adjustment to the contract price for

adjusting its method of performance, our analysis does not excuse RDA from

starting performance. As you are aware, your contract contains FAR Clause

52.233-1, “Disputes.” 9

DX 98 at 1.

On April 1, 2010, the NAVFAC informed RDA that the July 3, 2010 revised baseline

schedule contained thirty-four deficiencies and returned it to RDA for revisions consistent with

the NAVFAC’s comments. DX 111 at 1.

On April 21, 2010, RDA submitted another revised schedule that the NAVFAC also

rejected, listing eighteen deficiencies that RDA was required to address before the baseline

schedule could be approved. DX 121 at 2.

G. On April 21, 2010, RDA Construction Corp. Filed A Certified Claim.

On April 21, 2010, RDA filed a certified a claim, requesting that the NAVFAC adjust the

contract price by $1,948,053.86 to reflect the additional costs that RDA would incur to perform

demolition of the wharf and construction of a new bulkhead from barge-mounted equipment. DX

118 at 1, 4.

H. On May 17, 2010, The Naval Facilities Command Approved RDA

Construction Corp.’s Baseline Schedule.

On April 28, 2010, RDA submitted another baseline schedule for the NAVFAC’s approval.

DX 130 at 1. On May 13, 2010, the NAVFAC rejected the April 21, 2010 submission, because it

did not include work that the October 13, 2009 Contract required. DX 130 at 1–3. The next day,

9

FAR 52.233-1(i) states that “[t]he Contractor shall proceed diligently with performance

of [the relevant] contract, pending final resolution of any request for relief, claim, appeal, or action

arising under the contract, and comply with any decision of the [CO].” 48 C.F.R. 52.233-1(i).

18

RDA submitted a new revised baseline schedule, addressing the deficiencies listed in the

NAVFAC’s May 13, 2010 rejection. DX 134 at 1. On May 17, 2010, the NAVFAC finally

approved RDA’s baseline schedule. DX 134 at 1.

I. On August 31, 2010, RDA Construction Corp.’s April 21, 2010 Certified Claim

Was Denied.

On June 17, 2010, the NAVFAC advised RDA that the Defense Contract Audit Agency

(“DCAA”) was performing an audit of RDA’s April 21, 2010 Certified Claim and a final decision

would be issued on, or before, August 31, 2010. DX 151. On August 11, 2010, RDA was warned

that the NAVFAC would deny RDA’s certified claim, if RDA continued to fail to provide the

information requested by DCAA to complete the audit. DX 170 at 2. RDA, however, still did not

provide the requested documents. TR at 522 (Hartman).

On August 31, 2010, the NAVFAC CO issued a decision recognizing that the NAVFAC

failed to disclose the Appledore Report during the bidding process, but nevertheless denied RDA’s

certified claim, because a “reasonable contractor” who attended the June 4, 2009 and/or June 11,

2009 site visits should have concluded that the wharf was in such poor condition that it could not

be used as a platform for demolition and construction: “[I]t was also unreasonable for RDA to

assume that the wharf was structurally sound in light of the fact that the entire purpose of the

contract was to demolish the structure and build a new one.” DX 193 at 3.

The NAVFAC CO added that

RDA has not demonstrated its claimed damages with sufficient specificity to justify

any payment. The Government has made several requests that RDA provide

calculations showing that the wharf could have accommodated RDA’s proposed

methods, such as supporting the weight and lateral forces of construction

equipment, if it were in good condition, but RDA has never provided any such

information.

DX 193 at 3–4.

J. On September 20, 2010, RDA Construction Corp. Informed The Naval

Facilities Command That Underground Obstructions Were Encountered, So

Work Stopped.

The October 13, 2009 Contract required RDA to replace the bulkhead between Pier 1 and

Pier 2 of the Newport Naval Station. DX 1 at 9. The bulkhead was composed of king piles (i.e.,

support beams installed intermittently along the structure) and sheet piles (i.e., a wall of

interlocking metal sheets that mount onto the king piles). DX 1 at 100; PX 12 at 3. To replace the

bulkhead at Newport Naval Station, RDA was required to extract the existing king and sheet piles

and install new ones. DX 729 at 6 (Helmes Direct).

RDA began to renovate the bulkhead from the south-end. TR at 298–99 (Hartman). On

August 23, 2010, however, RDA informed the NAVFAC that an underground obstruction

prevented RDA from installing additional sheet piles at the south bulkhead and requested direction

19

on how to proceed. DX 206 at 1. On September 20, 2010, RDA requested an equitable adjustment

stating that the obstruction encountered was a differing site condition.10

The NAVFAC did not immediately respond to RDA’s September 20, 2010 letter. As a

result, RDA stopped working on the southern bulkhead and began to remove the sheet piles in the

center bulkhead. TR at 302 (Hartman). But, it was not long before RDA encountered other

difficulties at that location. On December 14, 2010, RDA notified the NAVFAC that “[t]he sheets

[at the center bulkhead were] in such a deteriorated condition [that] they [could not] withstand the

extraction process and pull[ed] apart.” DX 237 at 2. RDA also reported that it would “track all

associated costs to perform this changed condition, and forward same to [the NAVFAC] for

review.” DX 237 at 2.

On January 7, 2011, RDA complained that the NAVFAC failed to acknowledge its

December 14, 2010 letter and warned that “[a]ll work associated with the Center Bulkhead will be

shutdown until the [NAVFAC] responds in writing as required by the [October 13, 2009

Contract].” DX 244 at 1. Nevertheless, RDA proceeded to work on the north bulkhead. TR at

339 (Hartman). On March 9, 2011, RDA informed the NAVFAC that it hit a second obstruction

while installing sheet pile at the north bulkhead and requested to meet with the NAVFAC to discuss

possible solutions. DX 283 at 2. RDA also advised the NAVFAC that “[w]e are now at a position

where no work can proceed on either the South, Center or North Bulkheads without direction. We

laid off all of the workers on site today and will return once we come to a mutual understanding

on how to proceed.” DX 283 at 2.

10

The October 13, 2009 Contract incorporated a “differing site conditions” clause, that

stated:

(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 the 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, performing 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.

48 C.F.R. § 52.236-2(a)–(b).

20

K. On March 10, 2011, The Naval Facilities Command Instructed RDA To

Submit A Cost Proposal To Remove The Obstructions And Continue Work.

On March 10, 2011, RDA was advised that

[t]he [NAVFAC] received [RDA’s] cost proposal on 17 February 2011 regarding

removal of the obstructions. Additional back-up information was requested from

RDA on 4 March 2011[.] . . . [RDA’s] proposal cannot be analyzed until this

information is received.

RDA is claiming that they are unable to remove the existing sheet piles . . . [.] As

stated on drawing CD-501, Note 1, ‘if sheets cannot be extracted, cut sheet along

knuckle from top of sheet to ground line, then continue to extract using a vibratory

hammer.’ During a site visit on 8 March, the [NAVFAC] observed that while trying

to remove the existing sheets, RDA did not cut to the ground line but rather to the

waterline. For this reason, the [NAVFAC] disagrees that RDA has encountered a

differing site condition.

Please be advised that RDA is currently in default of the contract. If RDA disagrees

with the [NAVFAC’s] response to these issues, RDA’s remedy is to utilize the

[CDA], which is incorporated into the contract via FAR 52.233-1. Pursuant to that

clause, ‘the contractor shall proceed diligently with performance of this contract . .

. and comply with any decision of the [CO],’ even though it is pursuing claims

under the [CDA]. . . . Any future abandonment of the project by RDA will be

considered a material breach[.]

DX 274 at 1–2.

On March 11, 2011, RDA responded that its work force would return to the site on March

14, 2011, but the decision to stop work “should not be construed as Project abandonment[,] but

rather a short period of time to coordinate and plan for the most recent developments experience

on the Project.” DX 276 at 1.

On March 16, 2011, RDA informed the NAVFAC of another obstruction at the north

bulkhead that was encountered, renewed complaints that obstructions at the bulkhead were

differing site conditions, and requested a meeting to discuss “various options and hopefully come

to terms with a solution.” DX 283 at 3.

L. In Late March 2011, RDA Construction Corp.’s Quality Control Manager

And Site Safety Health Officer Quit.

In late March 2011, RDA’s Site Safety Health Officer (“SSHO”) and Quality Control

Manager (“QC”) quit after RDA experienced two accidents on site. DX 174; DX 262; TR at 1180–

81 (Mr. Rachupka), 1368 (Kelley). Thereafter, from March 31–May 5, 2011, RDA sent numerous

letters to the NAVFAC requesting that Ray Morisette, Peter Meomartino, Lynda Amarantes,

Michael Rand, and Richard DiRamio be approved as QCs and SSHOs. DX 307–13, 316, 319–20,

322–26. On May 9, 2011, the NAVFAC approved Mr. Morrissette to serve both as the QC and

21

SSHO, but denied RDA’s other proposed personnel, because their “resumes and certificates” did

not meet contract requirements. DX 327 at 1.

M. On June 7, 2011 And August 19, 2011, The Naval Facilities Command Issued

Contract Modifications 4 and 5 To The October 13, 2009 Contract.

On April 4, 2011, the NAVFAC requested that RDA submit a cost proposal for “a

pneumatic percussive air-track drill rig to penetrate through the reported obstructions [at the south

bulkhead and north bulkhead],” but cautioned that “this is an inquiry only and is not to be construed

as authority to proceed with the work.” DX 293 at 1. On April 12, 2011, RDA provided the

NAVFAC with that proposal. DX 298 at 1. On April 14, 2011, the NAVFAC asked for more

information and “to provide an approximate number of days [RDA] thought it might take to drill

through the obstructions so [the NAVFAC could] put an estimated number of days in the

modification[.]” DX 299 at 1. On April 22, 2011, RDA provided that information. DX 304 at 1.

On June 7, 2011, the NAVFAC executed Modification 411 as an equitable adjustment to

the October 13, 2009 Contract, “to incorporate changes required by obstructions encountered

during installation of sheet piles.” DX 1 at 587. Modification 4 required RDA to drill through the

obstructions at the south and north bulkheads, extended the contract completion date by forty-four

days, i.e., from June 26 to August 9, 2011, and increased the contract price by $290,180. DX 1 at

588. Modification 4 also required that “[a]cceptance of this modification by the Contractor

constitutes an accord and satisfaction and represents payment in full for both time and money and

for any and all costs, impact effect, and for delays and disruptions arising out of, or incidental to,

the work as herein revised.” DX 1 at 588 (emphasis added).12

On June 28, 2011, Ray Morrissette had a heart attack. DX 347 at 1; PX 138 at 1; TR at

659 (Wallis), 1157–58 (Rachupka), 1373 (Kelley). Because the October 13, 2009 Contract

required RDA to “[p]rovide a Site Safety and Health Officer (SSHO) at the work site at all times,”

RDA had to stop work, pending Ray Morrissette’s recovery or the appointment of another SSHO.

DX 1 at 192; DX 347 at 1; DX 350 at 1. On June 29, 2011, RDA re-proposed Lynda Amarantes

11

Modifications 1–3 made administrative changes to the October 13, 2009 Contract. On

November 4, 2009, the NAVFAC executed Modification 1 designating the Facilities Engineering

Acquisition Division team at Newport Naval Station as the Administrative Contracting Officer

and set the liquidated damages amount at $3,531.56 for each calendar day of delay until the work

is completed. DX 1 at 581. On January 27, 2010, the NAVFAC executed Modification 2

providing that payment to RDA would be made by the Defense Finance and Accounting Service.

DX 1 at 583. On April 15, 2010, Modification 3 changed the contract completion date from April

11, 2011 to June 26, 2011, “due to [an] Option exercised at time of award (which allowed for an

additional 65 days for contract completion if exercised).” DX 1 at 586.

12

The effect of the accord and satisfaction clause was to absolve the NAVFAC from any

liability relating to the non-disclosure of the Appledore Report and the FST Report prior to

executing the October 13,2 009 Contract, including RDA’s April 21, 2010 Certified Claim.

22

for the QC and SSHO positions. DX 345 at 1; DX 346 at 1. On June 30, 2011, RDA also re-

proposed Michael Rand for the QC position. DX 348 at 1.

On July 13, 2011, the NAVFAC responded that Lynda Amarantes was not qualified to

serve as a QC or SSHO. DX 356 at 1. On July 27, 2011, RDA advised the NAVFAC that Ray

Morrissette was “cleared by his cardiologist to return to work,” but was required to “attend [a

cardiac rehabilitation program] on Mondays, Wednesdays, [and] Fridays.” DX 366 at 1. RDA

proposed that Michael Rand act as QC and SSHO, when Ray Morrissette was absent. DX 366

at 1.

On August 9, 2011, RDA informed the NAVFAC that it began drilling through the

obstructions on July 17, 2011, but work was still in progress. DX 372 at 1. The August 9, 2011

letter also advised that

[t]o date [RDA has] experienced conditions which were not anticipated in the scope

of additional work. Several iterations of obstruction drilling, attempted driving of

permanent sheets and then more drilling has occurred several times. Unanticipated

additional obstruction drilling at the Center Bulkhead . . . , extraction of existing

sheet pile at the North Bulkhead . . . causing adjacent King Piles to move outboard.

In general RDA has worked out of planned sequence causing our Obstruction Drill

Crew and Pile Driving Crew to experience inefficiencies in production.

DX 372 at 1.

On August 19, 2011, the NAVFAC issued Modification 5 to the October 13, 2009 Contract,

extending the contract end-date from August 9 to August 16, 2011, and increased the contract price

by $41,055. DX 1 at 592. Modification 5 also included an accord and satisfaction clause. DX 1

at 592.

N. On August 31, 2011, RDA Construction Corp. Filed A Complaint In The

United States Court Of Federal Claims.

On August 31, 2011, RDA filed a Complaint in the United States Court of Federal Claims,

alleging that: (1) the Government violated its duty to disclose material information regarding the

nature of the work required by the October 13, 2009 Contract; (2) under the differing site

conditions clause of the October 13, 2009 Contract, RDA is entitled to recover costs attributable

to site conditions that differed materially from the conditions disclosed in the contract documents;

and (3) the NAVFAC affirmatively and intentionally misrepresented the conditions of the wharf.

ECF No. 1, 8/31/11 Compl. at ¶¶ 49–50, 52–53, 55–56 (“8/31/11 Compl.”). On that same day,

RDA Construction Corp. v. United States, No. 11-555, was assigned to the Honorable Francis M.

Allegra. ECF No. 3.

O. On September 14, 2011, RDA Construction Corp. Experienced A Third

Accident At The Project Site.

On September 14, 2011, RDA had an accident at the Newport Naval Station involving a

Manitowoc 4100W crane, but no one was injured. DX 398 at 1. On September 27, 2011, RDA

was informed that its safety record was unacceptable, because “neither the SSHO/QC Manager

23

nor the Superintendent [was] on site when the accident occurred.” DX 413 at 1. The NAVFAC

also warned RDA that

[i]f the Government observes any unsafe conditions at the project site in the future,

or if any future incidents occur, we plan to vigorously enforce the contract’s

remedies for such matters. Specifically, the contract permits the Government to

stop all work on the project until all safety concerns have been remedied. Under

the contract, such a stoppage would not entitle RDA to any type of monetary

adjustment nor any extension of the contract’s completion date. The contract

specifications also permit the Government to demand the removal of your

superintendent and/or SSHO due to their failure to enforce safety requirements and

stop all work until suitable replacements are identified and onsite. And, if such

stoppages result in RDA failing to make sufficient progress on the contract, the

Government will be entitled to terminate the contract for default.

DX 413 at 1–2.

On September 28, 2011, RDA responded that it did not “take the events surrounding the

incident on September 14, 2011 lightly and intend[ed] to address the situation . . . to the

[NAVFAC’s] satisfaction.” DX 415 at 1. To that end, RDA proposed “an internal review of the

contract requirements regarding the SSHO” and promised that “[t]he approved SSHO or his

approved designee will be on site during all work activities,” “[p]rior to a scheduled absence by

the SSHO upcoming safety and QC inspections will be completed,” and “[i]f there are any QC

and/or safety requirements that have to be addressed or if there are multiple work activities being

performed during the SSHO’s absence then RDA’s President, Gene Kelley will provide the

additional oversight.” DX 415 at 2.

On October 11, 2011, RDA proposed that Mark Wallis be approved as the alternate SSHO

so that he could serve as SSHO, when Ray Morrissette was not present at the project site. DX 426

at 1. On October 19, 2011, RDA also submitted Mark Wallis as an alternate QC. DX 436 at 1.

On January 19, 2012, the NAVFAC rejected RDA’s proposal to use Mark Wallis as a QC, because

of

certain prior actions he has taken that have demonstrated a total disregard for

necessary safety and environmental concerns. For example, Wallis recently

ignored Navy guidance by failing to use any preventive measures to prevent or

mitigate a release of fuel during the recovery operation of the sunken push boat [on

January 12, 2012]. Although the need for such measures was explicitly discussed

during the critical lift meeting on [January 11, 2012] and mentioned again prior to

the critical lift on [January 12, 2012], RDA did not exercise necessary steps to

prevent or contain a spill.

As a result of RDA’s failure, a fuel spill occurred during the lift and Naval Station

Newport had to report a second release of fuel from RDA’s boat into Narragansett

Bay to the RI Department of Environmental Management and US Coast Guard.

This recent spill was the second release of fuel into Narragansett Bay by RDA in

the past month (first release occurred on [December 29, 2011] when attempting to

24

recover the sunken push boat). Despite having experienced the prior spill, and

despite the Navy’s guidance to RDA to have spill kits available to respond if

additional fuel was released into the water, RDA did not utilize any preventive

measures prior to lifting the boat from the water. The Navy finds this lack of care

on the part of RDA and Wallis to be completely unacceptable.

DX 485 at 1–2. The NAVFAC also denied RDA’s request to use Mark Wallis as an SSHO. DX

486 at 1.

On January 20, 2012, RDA proposed Peter Brewer to replace Ray Morrissette as the SSHO.

DX 487 at 1. On January 24, 2012, RDA requested that the NAVFAC reconsider Mark Wallis as

RDA’s QC. DX 489 at 1. On January 27, 2012, the NAVFAC approved Peter Brewer as RDA’s

SSHO, but again rejected Mark Wallis, insisting that “a different, qualified individual [] fill the

QC position before [RDA could] resume work on the project.” DX 491 at 1. On the same day,

RDA requested approval of Gerald Smith as QC. DX 493 at 1. On February 13, 2012, the

NAVFAC approved Gerald Smith as RDA’s QC. PX 156 at 2.

P. From March 20, 2012 To November 8, 2012, The Naval Facilities Command

Issued Contract Modifications 6–12.

On March 20, 2012, the NAVFAC executed Modification 6, granting RDA a $34,401

equitable adjustment to remove the H-piles, sheet piles, and creosoted timber that were not shown

on the contract drawings and extended the contract completion date from August 16, 2011 to

August 17, 2011. DX 1 at 594. Modification 6 also contained an accord and satisfaction clause.

DX 1 at 594.

On April 13, 2012, the NAVFAC issued Modification 7, requiring RDA to perform

additional drilling through the obstructions at the south bulkhead with a construction monitor

onsite to observe the drilling operations. DX 1 at 597. The contract completion date also was

extended by seventy-one days, i.e., from August 17, 2011 to October 27, 2011, and the total cost

of the contract was increased by $63,959.23. DX 1 at 597.

On June 6, 2012, the NAVFAC executed Modification 8, extending the contract

completion date to November 13, 2011 and the total cost by $95,314, to add a corrosion protection

system on the tie rods for the deck fitting bases and attach all landside anodes to new sheet piles.

Modification 8 also included an accord and satisfaction clause. DX 1 at 601.

On August 17, 2012, the NAVFAC issued Modification 9, extending the contract

completion date to February 14, 2012 and increasing the contract price by $351,423, for additional

drilling through the obstructions at the south and north bulkheads. DX 1 at 604.

On September 4, 2012, the NAVFAC published Modification 10, granting RDA a $69,280

equitable adjustment for the time, labor, material and equipment costs that RDA incurred to drill

through the obstructions at the south bulkhead. DX 1 at 607–08. Modification 10 also extended

the contract completion date to June 15, 2012 for delays when RDA did not have an approved

SSHO and QC. DX 1 at 608.

25

On September 19, 2012, the NAVFAC executed Modification 11, decreasing the contract

completion date to June 12, 2012 and deducting $2,504 from the contract price, because RDA used

a method to drill through the obstructions at the north bulkhead that was less expensive than

originally anticipated. DX 1 at 611–12.

On November 8, 2012, the NAVFAC executed Modification 12, extending the contract

completion day to October 5, 2012, and increasing the contract price by $299,165, for additional

work required to drill through obstructions at the north bulkhead. DX 1 at 614–15.

Q. On February 21, 2013, The Naval Facility Command Terminated The October

13, 2009 Contract.

On November 7, 2012, the NAVFAC directed RDA to remove several piles from the bay

floor that broke below the mud-line. DX 626 at 1. On January 18, 2013, RDA complained that

the NAVFAC’s repeated failure to adjust the October 13, 2009 Contract for unforeseen conditions

and November 7, 2012 directive constituted a cardinal change. DX 626 at 2. Therefore, RDA

refused to comply with the NAVFAC’s instructions. DX 626 at 2.

On November 28, 2012, J. P. Riley Crane Consultants (“J.P. Riley”), an independent crane

inspector, conducted an annual inspection of the Manitowoc 4100W crane and presented RDA

with a Crane Inspection Certificate, but also issued a Deficiency Report citing five items that

needed repair. DX 677 at 3, 6. RDA was instructed to sign the Deficiency Report and return it to

J.P. Riley, ten days after the repairs were made. DX 677 at 6. On December 13, 2012, an RDA

employee signed the Report. DX 677 at 6.

On January 9, 2013, RDA provided the NAVFAC with the November 28, 2012 Crane

Inspection Certificate and signed Deficiency Report. DX 677 at 17. But, on January 10, 2013, a

NAVFAC official sent an e-mail to RDA stating there was no “mention when the crane was re-

inspected by J[.]P[.] Riley confirming the adequacy of repairs so that it could be placed back into

service.” DX 677 at 18. The email also stated that, according to the United States Army Corps of

Engineer Safety And Health Requirements Manual EM 385-1-1 (2008) (the “EM 385-1-1”): “a

written report is required confirming the adequacy of repairs.” DX 677 at 18. Subsequently, the

NAVFAC and RDA argued about whether the EM 385-1-1 required J.P. Riley to re-inspect the

crane after the repairs were completed, or if an RDA mechanic could perform the re-inspection.

DX 677 at 17–27.

On January 14, 2013, the NAVFAC issued a letter, pursuant to FAR 52.236–13,13

directing RDA “to have the Manitowoc 4100 crane inspected by an independent, third-party that

13

In demolition contracts, FAR 52.236–13 provides that “the Contractor shall comply with

all pertinent provisions of the latest version of U.S. Army Corps of Engineers Safety and Health

Requirements Manual, EM 385–1–1, in effect on the date of the solicitation,” and

[if the] Contracting Officer becomes aware of any noncompliance with these

requirements or any condition which poses a serious or imminent danger to the

health or safety of the public or Government personnel, the Contracting Officer

shall notify the Contractor orally, with written confirmation, and request

26

specializes in performing crane inspection” and stating that “RDA is not permitted to use the

Manitowoc 4100 crane . . . until such an independent inspection has been completed.” DX 677 at

28. The letter also instructed that the NAVFAC personnel were to be present for the re-inspection.

DX 677 at 28.

On January 16, 2013, J.P. Riley re-inspected the crane in the presence of Craig Rachupka,

NAVFAC’s Construction/Project Manager. DX 625 at 1. At the re-inspection, RDA agreed to

make the necessary repairs and submit to a third re-inspection. DX 625 at 2. The NAVFAC also

instructed RDA to keep the crane out of service until that time. DX 677 at 60. Afterward, RDA

sent the NAVFAC additional letters about whether FAR 52.236–13 and the EM 385-1-1 gave the

NAVFAC authority to keep RDA’s Manitowoc 4100 crane out of service. DX 677 at 60, 104,

106, 118–121.

On January 31, 2013, the NAVFAC instructed RDA to show cause why the October 13,

2009 Contract should not be terminated for default, pursuant to FAR 52.249-10,14 because

immediate initiation of corrective action . . . . If the Contractor fails or refuses to

promptly take corrective action, the Contracting Officer may issue an order

stopping all or part of the work until satisfactory corrective action has been taken.

The Contractor shall not be entitled to any equitable adjustment of the contract

price or extension of the performance schedule on any stop work order issued

under this clause.

48 C.F.R. § 52.236–13 (c), (d).

14

FAR 52.249-10 states, in relevant part,

(a) If the Contractor refuses or fails to prosecute the work or any separable part,

with the diligence that will insure its completion within the time specified in this

contract including any extension, or fails to complete the work within this time, the

Government may, by written notice to the Contractor, terminate the right to proceed

with the work (or the separable part of the work) that has been delayed. In this

event, the Government may take over the work and complete it by contract or

otherwise, and may take possession of and use any materials, appliances, and plant

on the work site necessary for completing the work. The Contractor and its sureties

shall be liable for any damage to the Government resulting from the Contractor’s

refusal or failure to complete the work within the specified time, whether or not the

Contractor’s right to proceed with the work is terminated. This liability includes

any increased costs incurred by the Government in completing the work.

(b) The Contractor’s right to proceed shall not be terminated nor the Contractor

charged with damages under this clause, if—

(1) The delay in completing the work arises from unforeseeable causes beyond

the control and without the fault or negligence of the Contractor.

48 C.F.R. 52.249-10.

27

the contract’s [amended] completion date passed almost four months ago, on 5

October 2012. Since that date, the Navy ha[d] refrained from terminating RDA . . .

under the default clause in hopes that RDA would make significant progress

towards completion, thereby mitigating its potential damages.

RDA’s continued failure to make progress towards completion of this project,

however, require[d] the Navy to reconsider its position regarding termination.

RDA . . . made only limited progress on any contract work for over a month and at

least two of its major pieces of equipment . . . [were] currently broken, [creating]

significant concerns regarding RDA’s ability, and desire, to achieve progress in the

future. RDA . . . also . . . repudiated its duty to perform . . . the extraction of H-

piles broken during earlier removal attempts.

DX 636 at 1.

On February 1, 2013, RDA insisted that “progress ha[d] been limited due to obstructions,

and the [G]overnment’s failure to act in good faith and to utilize the partnering agreement to get

this project done.” DX 637 at 1.

On February 21, 2013, a NAVFAC CO terminated the October 13, 2009 Contract for

default, citing RDA’s failure to perform the necessary contract work and complete the project in a

timely manner. DX 650 at 1. In addition, RDA was advised that the NAVFAC intended to issue

a contract modification assessing liquidated damages against RDA. DX 650 at 3. On that date,

the NAVFAC also contacted RDA’s surety, Great American Insurance Company (“GAIC”),

demanding that GAIC complete the October 13, 2009 Contract. DX 653 at 1, 11. Subsequently,

GAIC conducted two underwater surveys of the project site. DX 689; DX 698. Both surveys

showed that RDA left substantial amounts of debris around the footprint of the demolished wharf.

DX 689 at 1; DX 698 at 4.

As a result, on March 18, 2013, RDA filed a Certified Claim stating:

[p]lease find attached our costs associated with your direction to re-inspect the

Manitowoc 4100W crane . . . . As RDA believes that NAVFAC direction to re-

inspect the crane to be unreasonable and exceed contract requirements we are

hereby filing our Notification of Claim.

DX 677 at 114–15.

R. On July 3, 2013, RDA Construction Corp. Filed A Second Certified Claim.

On July 3, 2013, RDA filed a second certified claim alleging that the NAVFAC: delayed

contract performance (DX 691 at 19–29); failed to award RDA time extensions for delays caused

by the NAVFAC (DX 691 at 21); unilaterally modified the October 13, 2009 Contract (DX 691 at

21–25); and wrongfully terminated the October 13, 2009 Contract (DX 691 at 30). This conduct

breached the October 13, 2009 Contract and entitled RDA to recover $1,625,258 in unanticipated

costs and $718,059 in lost profits. DX 691 at 9, 30–31. The July 3, 2013 Certified Claim also

alleged that RDA was not liable for liquidated damages, but entitled to recover $294,705 that the

NAVFAC wrongfully withheld from RDA. DX 691 at 13, 31.

28

On September 26, 2013, the NAVFAC CO determined that RDA’s July 3, 2013 Certified

Claim failed to identify a specific basis for each of the claimed items and was invalid. DX 695 at

2. The CO also determined that, even if the July 3, 2013 Certified Claim was valid, the NAVFAC

was only liable for PCO 46, “Revised Base Access Requirements.” DX 695 at 2. In a separate

letter, also dated September 26, 2013, the NAVFAC CO decided that RDA was entitled to

$11,162.99, because the NAVFAC changed policies regarding base access, causing RDA to incur

the cost of “new access badges for its employees[.]” DX 696 at 1.

On December 20, 2013, the NAVFAC entered into a Tender Agreement with RDA’s

surety, GAIC. DX 700. Under the Agreement, GAIC tendered Haskell Company (“Haskell”) to

complete the October 13, 2009 Contract for $4,707,353. DX 700 at 4. The NAVFAC would pay

Haskell the remaining contract balance of $1,932,415.76 and GAIC would cover the remaining

$2,774,937.24. DX 700 at 4.

On March 4, 2014, Haskell and the NAVFAC executed a contract for completion of the

remaining work under RDA’s October 13, 2009 Contract. DX 702 at 2. Haskell’s March 4, 2014

Contract had a completion date of November 30, 2014. DX 702 at 6.

S. On April 15, 2015, The Naval Facility Command’s Contracting Officer

Determined That RDA Construction Corp. Was Liable For Liquidated

Damages.

On April 15, 2015, the NAVFAC CO also determined that RDA was liable for $2,581,161

in liquidated damages. DX 711 at 1. The CO, however, credited RDA $11,162.99 for PCO 46

and $294,705 for outstanding compensation that the NAVFAC withheld from RDA as partial

payment of the assessed liquidated damages. DX 711 at 1. As a result, the CO determined that

RDA owed the NAVFAC $2,275,293.01 in liquidated damages. DX 711 at 1.

II. PROCEDURAL HISTORY.

After three years of discovery before Judge Allegra, on May 7, 2015, RDA filed a Second

Amended Complaint (“5/7/15 Sec. Am. Compl. at ¶¶ 1–134”), alleging that:

(1) the NAVFAC breached its duty to disclose material information regarding the

extreme deterioration of the Wharf, that was known by the NAVFAC and

unavailable to RDA (“Count I”);

(2) RDA encountered latent site conditions that materially differed from the conditions

described in the Contract (“Count II”);

(3) the NAVFAC knew that the site conditions materially differed from the condition

described in the Contract, but negligently and/or intentionally withheld that

information (“Count III”);

(4) the NAVFAC affirmatively misrepresented the purpose of the Contract and the

actual conditions of the Wharf (“Count IV”);

(5) the NAVFAC breached the Contract (“Count V”);

29

(6) the CO’s administration of contract work was arbitrary and capricious (“Count

VI”);

(7) the NAVFAC acted “willfully, intentionally, and in bad faith,” when it withheld

decisions, created obstructions, failed to timely approve requests for information

and changes, and wrongfully terminated the Contract (“Count VII”);

(8) the NAVFAC breached the Covenant of Good Faith and Fair Dealing (“Count

VIII”); and

(9) the CO’s determination that the NAVFAC was entitled to liquidated damages for

delays caused by RDA and to retain $294,705 in partial payment thereof, was

“improper, unjustifiable, unsupported by the contract documents, and in bad faith”

(“Count IX”).

ECF No. 44, 5/7/15 Sec. Am. Compl. at ¶¶ 95–96, 98–99, 101–04, 106–07, 109–14, 116–18, 120–

22, 124–27, 129–34.

On June 12, 2015, the Government filed an Answer to RDA’s May 7, 2015 Second

Amended Complaint (“6/12/15 Gov’t Answer”) asserting three affirmative defenses: (1) part, or

all, of RDA’s claims are barred by release, waiver, accord and satisfaction, or estoppel; (2) RDA

assumed the risk that its site investigation, as well as its chosen means and methods during

performance, would be inadequate; and (3) to the extent RDA is entitled to any recovery, it must

be offset by amounts that RDA owes the NAVFAC. ECF No. 46, 6/12/15 Gov’t Answer at ¶¶

136–38.

In addition, the June 12, 2015 Answer contained four counterclaims, alleging that the

Government is entitled to:

(1) $2,275,293.01 in liquidated damages, because RDA failed to finish performance of

the October 13, 2009 Contract by the completion date (“Counterclaim I”);

(2) $82,974.70, under the CDA’s anti-fraud provision, 41 U.S.C. § 7103(c)(2), because

RDA misrepresented facts related to items claimed in the July 3, 2013 Certified

Claim (“Counterclaim II”);

(3) forfeiture of RDA’s July 3, 2013 Certified Claim, pursuant to 28 U.S.C. § 2514,

because that claim contained false statements (“Counterclaim III”); and

(4) $231,000, under the False Claims Act, 31 U.S.C. §§ 3729–3733, because RDA

knowingly submitted twenty invoices to the NAVFAC that contained false

representations (Counterclaim IV”).

6/12/15 Gov’t Answer ¶¶ 174–90.

* * *

30

On June 23, 2015, this case was reassigned to the undersigned judge. ECF Nos. 47–48.

On July 14, 2015, the court issued an Order, setting the deadline for RDA’s Answer to the

Government’s June 2, 2015 Counterclaims for July 24, 2015. ECF No. 50. In addition, the court

set a trial date to be held in Boston, Massachusetts commencing on November 16, 2015. ECF

No. 50.

On July 24, 2015, RDA filed an Answer to the counterclaims alleged in the Government’s

June 12, 2015 Answer (“7/24/15 Pl. Answer”), asserting ten affirmative defenses:

(1) The Government’s counterclaims fail to state a claim upon which relief can be

granted (“Affirmative Defense I”);

(2) the Government is estopped from recovering damages from RDA (“Affirmative

Defense II”);

(3) the Government’s counterclaims are barred by the principle of waiver

(“Affirmative Defense III”);

(4) the Government’s counterclaims are barred by the doctrine of unclean hands

(“Affirmative Defense IV”);

(5) the Government’s counterclaims are based on statements or conduct that the

NAVFAC approved or ratified (“Affirmative Defense V”);

(6) to the extent that any of the circumstances alleged by the Government occurred, the

Government is barred from recovery, because these facts were caused by the

NAVFAC (“Affirmative Defense VI”);

(7) the NAVFAC did not rely upon the misrepresentations alleged in the Government’s

counterclaims (“Affirmative Defense VII”);

(8) the Government did not plead any fraud counterclaim with specificity, as required

by law (“Affirmative Defense VIII”);

(9) the Government’s counterclaims are barred, because RDA did not knowingly

submit any false claims to the NAVFAC for payment or approval (“Affirmative

Defense IX”); and

(10) the Government’s counterclaims are barred, because RDA never made an

actionable misrepresentation, nor did it knowingly make any false statement, record

or other representation material to any claim (“Affirmative Defense X”).

ECF No. 51, 7/24/15 Pl. Answer at 6–8.

In addition, RDA “reserve[d] the right to prove such other and further affirmative defenses

as are disclosed in discovery . . . and through evidence offered at the trial of this action.” 7/24/15

Pl. Answer at 8.

31

On September 21, 2015, the parties filed a Joint Status Report requesting a pretrial

schedule. ECF No. 53. On September 29, 2015, the parties filed their respective Preliminary

Witness Lists. ECF Nos. 54–55. On October 7, 2015, the court issued a Scheduling Order, setting

an Initial Pretrial Conference for October 21, 2015. ECF No. 58.

On October 16, 2015, the Government filed a Motion To Dismiss (“Gov’t Mot.”), pursuant

to Rule of the United States Court of Federal Claims (“RCFC”) 12(b)(1), arguing that, under the

Contract Disputes Act, 41 U.S.C. §§ 7101–09, the court does not have jurisdiction to adjudicate

claims alleged in the May 7, 2015 Second Amended Complaint, because it did not identify the

relief sought by RDA. ECF No. 59. Specifically, paragraph ninety-two of the Second Amended

Complaint (ECF No. 59 at 6–7) includes six items that RDA failed to submit to the NAVFAC CO

in a certified claim or that contradicted the RDA’s certified claim. ECF No. 59 at 7–9.

On November 3, 2015, the Government filed a Witness List. ECF No. 60. On November

4, 2015, RDA filed a Witness List. ECF No. 61. That same day, the court issued a Pre-Trial

Scheduling Order, stating that the court would resume trial from November 16, 2015 to November

19, 2015. ECF No. 62. On November 10, 2015, the parties filed their respective Exhibit Lists.

ECF Nos. 63–67. On November 11, 2015, RDA filed a Response to the Government’s October

16, 2015 Motion To Dismiss (“Pl. Resp.”), arguing that the court has jurisdiction to adjudicate all

the claims alleged in the May 7, 2015 Second Amended Complaint, because RDA submitted each

of these claims to the NAVFAC CO prior to filing the May 7, 2015 Second Amended Complaint

in the United States Court of Federal Claims. ECF No. 68, Pl. Resp. at 1. On November 12, 2015,

the court issued an Order denying the October 16, 2015 Motion To Dismiss, pending trial. ECF

No. 69. The same day, the Government filed a Pre-Trial Brief. ECF No. 70. On November 15,

2015, RDA filed a Revised Exhibit List. ECF No. 71.

On November 16–19, 2015, the court presided over trial in Boston, Massachusetts (TR at

1–1141). ECF Nos. 73, 75, 77, 79. On December 4, 2015, RDA filed a Consent Motion For Leave

To File Deposition Transcripts Of Jonathan Peters And Marc Nicolazzo that the court granted.

ECF Nos. 80. On December 5, 2015, RDA filed the deposition testimony of Jonathan Peters and

Marc Nicolazzo. ECF Nos. 81–84. On December 7–10, 2015 the court resumed trial in Boston,

Massachusetts (TR at 1142–2470). ECF Nos. 87, 89, 91, 93. The court also instructed the

Government to produce several documents for which the Government claimed privilege for in

camera review. TR at 1257. On December 17, 2015, the Government filed a Notice Of In Camera

Submission. ECF No. 85. On January 4–6, 2016, the court resumed trial in Washington, D.C.

ECF Nos. 97, 99, 101; TR at 2471–2759.

On March 4, 2016, the parties filed a Joint Status Report. ECF No. 102. Therein, RDA

explained that, during trial, the Government raised concerns that some of RDA’s damages claims

were not supported by financial records. ECF No. 102 at 1. In response, RDA engaged an

accountant to analyze company records and prepare an expert report on RDA’s damages. ECF

No. 102 at 1. RDA requested that the court schedule a hearing to conclude the trial and allow

RDA leave to file a Third Amended Complaint. ECF No. 102 at 2–3. The Government agreed

that the court should schedule a date to conclude the trial, but opposed RDA’s motion. ECF No.

102 at 3–4. On March 16, 2016, the court issued an Order, instructing the parties that trial would

resume on July 11–12, 2016. ECF No. 103. On July 8, 2016, RDA filed a Motion To Bifurcate.

ECF No. 104. On July 11, 2016, trial resumed in Washington D.C. ECF No. 108, (TR at 2760–

32

854). At that time, the court instructed the parties to draft a proposed scheduling order to conclude

the case. TR at 2852. On July 12, 2016, the court denied RDA’s July 8, 2016 Motion To Bifurcate.

On July 18, 2016, the court issued a Scheduling Order, instructing RDA to provide the

Government with an expert report from RDA’s accountant, Michael Brander, by July 30, 2016.

ECF No. 106. In addition, the court instructed the parties to file a Joint Status Report, proposing

a schedule for further proceedings, by August 12, 2016. ECF No. 106.

On August 12, 2016, the parties filed a Joint Status Report, in which they proposed

different schedules. ECF No. 109. RDA proposed that the court re-open discovery on damages;

the Government requested that the court conclude the trial and issue a post-trial briefing schedule.

ECF No. 109 at 1–2, 4.

On August 16, 2016, the court convened a Status Conference, wherein the court stated that,

“in light of the parties’ disputed issues [over damages,] . . . the Court has decided to . . . bifurcate

[this case] and [first] issue a liability decision.” ECF No. 113, 8/16/2016 TR at 11. On August

19, 2016, the parties filed a Joint Status Report, representing that

the parties agree that the most efficient way to proceed at this point will be to

bifurcate plaintiff’s damages case and proceed with briefing as to liability regarding

plaintiff’s claims. This briefing would also include post-trial briefing on

defendant’s counterclaims, for which there is no need for bifurcation, such that

briefing on defendant’s counterclaims would address both liability and quantum.

ECF No. 110. That same day, the court issued a Briefing Schedule, instructing the parties to submit

Post-Trial Briefs by October 5, 2016; any Post-Trial Response Briefs were due by November 4,

2016. ECF No. 111.

On October 18, 2016, RDA filed an Unopposed Motion To Modify The Briefing Schedule.

ECF No. 118. On October 19, 2016, the court granted the October 18, 2016 Motion. ECF No.

119. Pursuant to the modified briefing schedule, on November 8, 2016, the parties filed Post-Trial

Briefs (“Pl. PT Br.” and “Gov’t PT Br.”). ECF Nos. 120–21. On January 23, 2017, the parties

filed Post-Trial Response Briefs (“Pl. PT Resp.” and “Gov’t PT Resp.”). ECF Nos. 129–30.

On April 18, 2017, the court instructed the parties to file a Draft Order, identifying all of

the Exhibits and Demonstratives admitted into evidence in this case. On May 17, 2017, the parties

submitted the Draft Order, attached hereto as Court Exhibit A.

III. DISCUSSION.

A. Jurisdiction.

The Tucker Act authorizes the United States Court of Federal Claims with jurisdiction to

adjudicate any claim that: (1) arises under the Contract Disputes Act (“CDA”), 41 U.S.C. §§ 7101–

7109; and (2) has been submitted to the relevant CO for a final decision. See 28 U.S.C. 1491(a)(2)

(“The [United States] Court of Federal Claims shall have jurisdiction to render judgment upon any

claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41 . . .

on which a decision of the [CO] has been issued[.]”).

33

1. Whether The Claims Alleged In The May 7, 2015 Second Amended

Complaint Arise Under The Contract Disputes Act.

A claim “arises under” the CDA if it is based on

any express or implied contract . . . made by an executive agency for-- (1) the

procurement of services, other than real property in being; (2) the procurement of

services; (3) the procurement of construction, alteration, repair, or maintenance of

real property; or (4) the disposal of personal property.

41 U.S.C. § 7102(a).

The May 7, 2015 Second Amended Complaint alleges nine claims that are based on the

October 13, 2009 Contract between the NAVFAC and RDA to improve a wharf at Newport Naval

Station. Sec. Am. Compl. at ¶¶ 1–134. For this reason, the court has determined that the claims

alleged in the May 7, 2015 Second Amended Complaint arise under the CDA.

2. Whether The Claims Alleged In The May 7, 2015 Second Amended

Complaint Were Submitted To The Contracting Officer For A Final

Decision.

The CDA provides that “[e]ach claim by a contractor against the Federal Government

relating to a contract shall be submitted to the [CO] for a decision.” 41 U.S.C § 7103(a)(1)

(emphasis added). For this reason, the United States Court of Appeals for the Federal Circuit has

held that CDA “jurisdiction . . . requires both a valid claim and a [CO’s] final decision on that

claim.” M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1327 (Fed. Cir. 2010).

The CDA, however, does not define the term “claim.” Id at 1327. Therefore, the court

“look[s] to the FAR implementing the CDA for the definition [of that term].” Id. (citing

Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995) (en banc)). According to the FAR,

a “claim” is “a [non-routine,] 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 terms, or other relief arising under or relating to the contract.” 48 C.F.R.

§ 52.233-1.

A claim under the CDA also must contain “a clear and unequivocal statement that gives

the [CO] adequate notice of the basis and amount of the claim.” Contract Cleaning Maint., Inc. v.

United States, 811 F.2d 586, 592 (Fed. Cir. 1997). A claim also must “indicate to the [CO] that

the [plaintiff] is requesting a final decision.” See M. Maropakis Carpentry, 609 F.3d at 1327. In

addition,

[f]or claims of more than $100,000 made by a contractor, the contractor shall certify

that--

(A) the claim is made in good faith;

(B) the supporting data are accurate and complete to the best of the contractor’s

knowledge and belief;

34

(C) the amount requested accurately reflects the contract adjustment for which

the contractor believes the Federal Government is liable; and

(D) the certifier is authorized to certify the claim on behalf of the contractor.

41 U.S.C. § 7103(b)(1).

If a the plaintiff submits a valid CDA claim, the CO has sixty days to issue a decision or

notify the plaintiff of the time within which a decision will be issued. See 41 U.S.C. §§ 7103(f)(1)–

(2). The CO’s failure “to issue a decision on a claim within the required time period is deemed to

be a decision by the [CO] denying the claim and authoriz[ing] an appeal or action on the claim[.]”

41 U.S.C. § 7103(f)(5).

In addition, “[a]n action brought before the [United States] Court of Federal Claims under

the CDA must be ‘based on the same claim previously presented to and denied by the [CO].’”

Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed. Cir. 2003) (quoting Cerberonics,

Inc. v. United States, 13 Cl. Ct. 415, 417 (1987)). “This standard, however, does not require rigid

adherence to the exact language or structure of the original administrative CDA claim [when

different claims] arise from the same operative facts, [and] claim essentially the same relief, and

merely assert differing legal theories for that recovery.” Scott Timber, 333 F.3d at 1365.

a. Regarding Counts I–IV.

On April 21, 2010, prior to filing this lawsuit, RDA submitted a certified claim to the

NAVFAC CO requesting an equitable adjustment for costs that RDA did not anticipate, because

the NAVFAC failed to disclose the Appledore Report and FST Report. DX 118 at 1–3. The April

21, 2010 Certified Claim specified that the equitable adjustment was related to “the 2005 Marginal

Wharf Inspection Report,” i.e., the Appledore Report (DX 118 at 1), and provided a detailed

breakdown of the costs RDA sought to recover (DX 118 at 4–5), providing the NAVFAC CO

“adequate notice of the basis and amount of the claim.” Contract Cleaning, 811 F.2d at 592. On

August 31, 2010, the NAVFAC CO denied RDA’s April 21, 2010 Certified Claim.

Counts I–IV of the May 7, 2015 Second Amended Complaint allege that RDA is entitled

to damages for the NAVFAC’s failure to disclose that the Newport Naval Station wharf could not

support the weight of construction equipment under four different legal theories: (1) the NAVFAC

violated its duty to disclose “superior knowledge” regarding the wharf’s deteriorated condition;

(2) the October 13, 2009 Contract’s differing site conditions clause entitles RDA to an equitable

adjustment; (3) the NAVFAC affirmatively misrepresented the condition of the Newport Naval

Station wharf; and (4) the NAVFAC misrepresented the purpose of the project. 5/7/15 Sec. Am.

Compl. at ¶¶ 94–107.

The April 21, 2010 Certified Claim and Counts I–IV of the May 7, 2015 Second Amended

Complaint “assert differing legal theories for . . . recovery.” Scott Timber, 333 F.3d at 1365. But,

they “arise from the same operative facts, [and] claim essentially the same relief.” Id. Therefore,

Counts I–IV of the May 7, 2015 Second Amended Complaint are “based on the same claim

previously presented to and denied by the [CO].” Id.

35

For these reasons, the court has determined that it has jurisdiction to adjudicate Counts I–

IV of the May 7, 2015 Second Amended Complaint.

b. Regarding Counts V–IX.

On July 3, 2013, RDA submitted a second Certified Claim to the NAVFAC CO alleging

that the NAVFAC: delayed contract performance (DX 691 at 19–29); failed to award RDA time

extensions for delays caused by the NAVFAC (DX 691 at 21); unilaterally modified the October

13, 2009 Contract (DX 691 at 21–25); and wrongfully terminated the October 13, 2009 Contract

(DX 691 at 30). This conduct breached the October 13, 2009 Contract and entitled RDA to recover

$1,625,258 in unanticipated costs and $718,059 in lost profits. DX 691 at 9, 30–31. The July 3,

2013 Certified Claim also alleged that RDA was not liable for liquidated damages and owed

$294,705 that the NAVFAC withheld in partial payment of those liquidated damages. DX 691 at

13, 31. The court has determined that the July 3, 2013 Certified Claim properly was submitted to

the CO for a final decision and provided notice of the basis and amount of the claim alleged. See

Contract Cleaning, 811 F.2d at 592. On September 26, 2013, the CO denied the July 3, 2013

Certified Claim. DX 695.

Count V of the May 7, 2015 Second Amended Complaint alleges that the NAVFAC

breached the October 13, 2009 Contract by: causing unnecessary delays, imposing requirements

on RDA beyond the terms of the contract; failing to compensate RDA for the time and cost of

changes to the project; failing to conduct “partnering sessions,” and wrongfully terminating the

October 13, 2009 Contract. 5/7/15 Sec. Am. Compl. at ¶¶ 111–14. Based on the same operative

facts as Count V, Counts VI–IX allege that the NAVFAC’s administration and ultimate

termination of the October 13, 2009 Contract was arbitrary and capricious and violated the

NAVFAC’s duty of good faith and fair dealing. 5/7/15 Sec. Am. Compl. at ¶¶ 115–27.

The July 3, 2013 Certified Claim and Counts V–IX of the May 7, 2015 Second Amended

Complaint arise from the same operative facts and seek essentially the same relief. Therefore,

Counts V–IX are “based on the same claim[s] previously presented to and denied by the [CO].”

Scott Timber, 333 F.3d at 1365.

For these reasons, the court has determined that it has jurisdiction to adjudicate Counts V–

IX of the May 7, 2015 Second Amended Complaint.

c. Regarding Damages.

On October 16, 2015, the Government filed a Motion To Dismiss for lack of subject matter

jurisdiction, pursuant to RCFC 12(b)(1). Gov’t Mot. at 1. Therein, the Government argued that

paragraph ninety-two of the May 7, 2015 Second Amended Complaint contained a table,

identifying the components of RDA’s total damages, but RDA did not properly submit some of

those components to the NAVFAC CO. Gov’t Mot. at 7–9. On November 12, 2015, the court

denied the October 16, 2015 Motion To Dismiss, pending trial in this case. ECF No. 69.

On November 8, 2016, after trial concluded, the Government filed a Post Trial Brief

arguing that “[a]t trial, it remained RDA’s burden to prove that the [c]ourt ha[d] jurisdiction to

grant the relief [RDA] seeks in its [May 7, 2015] second amended complaint.” Gov’t PT Br. at

74; see also Fanning, Phillips, Molnar v. West, 160 F.3d 717, 720 (Fed. Cir. 1998) (“Federal courts

36

are not courts of general jurisdiction[.] We therefore have a special obligation to satisfy ourselves

of our own jurisdiction.” (internal citations omitted)).

The components listed in paragraph ninety-two of the May 7, 2015 Second Amended

Complaint are not separate claims; instead, they specify the amount of damages requested under

Counts I–VIII. Because the court has jurisdiction to adjudicate the subject matter of Counts I–

VIII, the court has determined that it also has jurisdiction to determine any damages arising from

those claims.

B. Standing.

The United States Supreme Court has held that “the question of standing is whether the

litigant is entitled to have the court decide the merits of the dispute or of particular issues.”

Warth v. Seldin, 422 U.S. 490, 498 (1975). Standing must be determined “as of the

commencement of suit[.]” Rothe Dev. Corp. v. Dep’t of Def., 413 F.3d 1327, 1334 (Fed. Cir. 2005)

(quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 570 n.5 (1992)). “The party invoking federal

jurisdiction bears the burden of establishing [standing].” Lujan, 504 U.S. at 560. The United States

Supreme Court held in Friends of the Earth, Inc. v. Laidlaw Envtl. Serv., Inc., 528 U.S. 167 (2000),

that to establish standing

a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and

particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the

injury is fairly traceable to the challenged action of the defendant; and (3) it is

likely, as opposed to merely speculative, that the injury will be redressed by a

favorable decision.

Id. 180–81.

In addition, “[t]o have standing to sue the sovereign on a contract claim, a plaintiff must

be in privity of contract with the United States.” Anderson v. United States, 344 F.3d 1343, 1351

(Fed. Cir. 2003). In other words, the contract in question must be between the plaintiff and the

Government. See Ransom v. United States, 900 F.2d 242, 244 (Fed. Cir. 1990) (“To maintain a

cause of action pursuant to the Tucker Act that is based on a contract, the contract must be between

the plaintiff and the [G]overnment.”).

The May 7, 2015 Second Amended Complaint alleges that RDA suffered monetary injury

that is concrete, particularized, and fairly traceable to the NAVFAC’s actions. And, any financial

injury established by RDA can be redressed by a monetary award. Moreover, it is undisputed that

RDA was a signatory and intended beneficiary of the October 13, 2009 Contract. 5/7/15 Sec. Am.

Compl. at ¶ 5 (“On or about September 14, 2009, RDA entered contract No. N40085-09-C-7002

P469 . . . with the Government[.]”); 6/12/15 Gov’t Answer at ¶ 5 (“Admits the allegations

contained in paragraph 5[.]”). Therefore, RDA is in privity of contract with the Government.

For these reasons, the court has determined that RDA has standing to seek an adjudication

of the claims alleged in the May 7, 2015 Second Amended Complaint.

37

C. The Claims Alleged In RDA Construction Corp.’s May 7, 2015 Second

Amended Complaint.

1. Count I: Whether The Naval Facilities Command Had A Duty To

Disclose The Appledore Report And The Fay, Spofford & Thorndike

Report.

a. Plaintiff’s Argument.

RDA argues that, under the “superior knowledge doctrine,” a contracting agency has an

“implied duty” to advise contractors of “otherwise unavailable information regarding some novel

matter affecting the contract that is vital to its performance.” Pl. PT Br. at 47 (quoting Scott Timber

Co., 692 F.3d at 1373). In this case, the NAVFAC violated the duty to disclose, because:

(1) the Appledore Report concluded that the wharf could not support the weight of

demolition equipment, a fact that would and did affect the cost and duration of

performance (Pl. PT Br. at 48);

(2) the NAVFAC was aware of the wharf’s deterioration and knew that this condition

could only be observed during an underwater inspection (Pl. PT Br. at 48–49);

(3) the Solicitation did not mention that the wharf, supporting H-piles and bulkhead

were in poor condition; instead the specification stated that RDA could locate

demolition equipment throughout the wharf (Pl. PT Br. at 49); and

(4) the NAVFAC did not advise RDA about the existence of the Appledore Report or

the FST Report or conclusions therein until after the parties had signed the October

13, 2009 Contract (Pl. PT Br. at 48).

In sum, the NAVFAC’s violation of the implied duty to disclose the Appledore Report and

FST Report was a material breach of the October 13, 2009 Contract that adversely affected RDA’s

ability to perform. Pl. PT Br. at 50. Therefore, the court should convert the NAVFAC’s February

21, 2013 decision to terminate the October 13, 2009 Contract for default to a termination for

convenience.

b. The Government’s Response.

The Government responds that it had no duty to disclose either the Appledore Report or

FST Report, nor did the Solicitation mislead RDA about the conditions of the Newport Naval

Station wharf and, in any event, RDA was on notice to inquire about those conditions. Gov’t PT

Br. at 76. The Solicitation informed RDA that, since the wharf was constructed in the 1950s RDA

was on notice that the wharf, “was likely not in good condition.” Gov’t PT Br. at 77. In addition,

structural problems were identified in Solicitation documents and apparent during the June 4, 2009

and June 11, 2009 site visits. Gov’t PT Br. at 77 (citing DX 729 at 5 (Helmes Direct) (“Contract

Drawings showing the existing bulkhead identify a number of sinkholes which clearly indicate an

unstable condition[.]”)). Moreover, during the bidding process, RDA did not ask the NAVFAC

any questions about the condition of the wharf. Gov’t PT Br. at 77 (citing TR at 1474 (Kelley)).

38

Nor did RDA perform an independent analysis of the wharf’s load capacity by a professional

engineer that would have revealed

(1) that the wharf deck slab would have been unable to safely accommodate the

loads of even a very lightweight excavator, (2) that the wharf structure would have

collapsed under its own weight once the restraint provided by the connection to the

landside was removed, and (3) that the existing steel sheet pile wall would have

failed as the rip rap was removed, which had to occur before the king piles for the

new bulkhead wall could be installed.

Gov’t PT Br. at 77–78 (citing DX 728 (Cohen Direct)).

More importantly, RDA’s plan to perform parts of the bulkhead construction from the

wharf was inconsistent with the Solicitation’s instruction that the wharf must be completely

demolished before work could commence on the bulkhead. Gov’t PT Br. at 78 (citing DX 1 at 83

(“CONCRETE APRON & PILES TO BE DEMOLISHED PRIOR TO REMOVAL OF ROCK

FILL.”); and DX 1 at 414 (“Any excavation [of rock fill] required within the area where sheet

pilings are to be installed shall be completed prior to placing sheet pilings.”)).

c. Plaintiff’s Reply.

RDA replies that the severe structural deterioration of the wharf and bulkhead were not

apparent during the June 4 and June 11, 2009 site visits. Pl. PT Resp. at 3–4. The wharf showed

some signs of wear-and-tear, but was well-preserved for its age. Pl. PT Resp. at 3.

In addition, RDA’s demolition plan was consistent with the Solicitation. Pl. PT Br. at 8.

Although the Solicitation required RDA to demolish sections of the wharf, before removing the

rip rap beneath, it did not necessarily require RDA to demolish the entire wharf before

commencing any rip rap removal. Pl. PT Resp. at 9. Moreover, the Solicitation did not expressly

prohibit RDA from placing equipment on the wharf. Pl. PT Resp. at 9. Therefore, RDA’s plan to

demolish the inboard portion of the wharf using equipment located on the wharf, did not conflict

with the Solicitation. Pl. PT Resp. at 9.

Furthermore, it is undisputed that the NAVFAC knew about the Appledore Report and FST

Report before issuing the Solicitation and understood their importance to the cost of the project.

Pl. PT Resp. at 8. But, the NAVFAC did not include or refer to either report or their findings in

the Solicitation. Pl. PT Resp. at 8. This was a conscious attempt to mislead prospective bidders.

Pl. PT Resp. at 10.

d. The Court’s Resolution.

It is well established that “the contractor in a fixed-price contract assumes the risk of

unexpected costs.” ITT Arctic Servs., Inc. v. United States, 524 F.2d 680, 691 (Ct. Cl. 1975); see

also Helene Curtis Indus., Inc. v. United States, 312 F.2d 774, 778 (Ct. Cl. 1963) (“Where the

Government . . . has no duty to disclose information, and does not improperly interfere with

performance, the fixed-price contractor of course bears the burden of unanticipated increases in

cost[.]”). Under the superior knowledge doctrine, however, the Government has “an implied duty

to disclose to a contractor otherwise unavailable information regarding some novel matter

39

affecting the contract that is vital to its performance.” Giesler v. United States, 232 F.3d 864, 876

(Fed. Cir. 2000).

A contracting agency violates the implied duty to disclose “superior knowledge” if:

(1) a contractor undertakes to perform [the contract] without vital knowledge of a

fact that affects performance costs or duration, (2) the government was aware the

contractor had no knowledge of and had no reason to obtain such information,

(3) any contract specification supplied misled the contractor or did not put it on

notice to inquire, and (4) the government failed to provide the relevant information.

Hercules Inc. v. United States, 24 F.3d 188, 196 (Fed. Cir. 1994). The plaintiff bears the burden

of establishing each element by “specific evidence.” See GAF Corp. v. United States, 932 F.2d

947, 949 (Fed. Cir. 1991).

Regarding the first and fourth elements, Mr. Hartman, RDA’s Project Manager, and Mr.

Wood, RDA’s Estimator, testified that RDA was unaware of any load restrictions on the wharf

until November 2009, approximately one month after the parties executed the October 13, 2009

Contract. TR at 106–07 (Wood); TR at 188–89 (Hartman). Mr. Germano, the NAVFAC

Construction Manager, confirmed that the NAVFAC did not disclose that the wharf was subject

to severe load restrictions until November 18, 2009. TR at 2256–60 (Germano). Therefore, the

court finds that RDA undertook to perform the October 13, 2009 Contract without “vital

knowledge” of a fact that affected performance costs and duration. See Hercules, 24 F.3d at 196

(element one). And, the NAVFAC failed to provide that information before contract formation.

See Hercules, 24 F.3d at 196 (element four).

Regarding the second element, RDA argues that bidders only could have learned of the

wharf’s load restriction from: (1) the Solicitation; or (2) the June 4 and June 11, 2009 site visits.

Pl. PT Resp. at 8. The NAVFAC knew that the Solicitation did not provide a load restriction for

the wharf. Pl. PT Br. at 48. The NAVFAC also knew that the deterioration jeopardizing the

wharf’s structural integrity “could only be observed during [an] underwater investigation.” Pl. PT

Br. at 48 (quoting PX 12 at 21 (Appledore Report)).

RDA’s argument assumes that bidders could only ascertain that the wharf was subject to a

load restriction by directly observing the wharf’s subsurface deterioration. But, this assumption is

rebutted by evidence showing that there were other indicia of the wharf’s limited load capacity

visible during the June 4 and June 11, 2009 site visits. For example, orange sawhorses and concrete

barriers lining the perimeter of the wharf indicated that vehicles could not drive there. In addition,

large sinkholes running along most of the wharf and bulkhead suggested that the land around the

wharf was not stable. DX 729 at 5, 8 (Helmes Direct).

40

DX 742.10 (photograph of the wharf taken on May 19, 2008, prior to the June 4 and June 11, 2009

site visits);

DX 742.15 (photograph of the wharf taken on June 20, 2008, prior to the June 4 and June 11, 2009

site visits);

41

DX 742.14 (photograph of sinkhole taken on May 30, 2008, prior to the June 4 and June 11, 2009

site visits); DX 742.6 (photograph of sinkhole taken on May 19, 2008).

Therefore, although the NAVFAC was aware that RDA had no knowledge of the

Appledore Report or the FST Reports prior to submitting a bid, the court finds that, from the

physical condition of the wharf visible on inspection, a contractor would have “reason to obtain

[additional] information,” such as an independent engineer report or an underwater investigation.

See Hercules, 24 F.3d at 196 (element two). Accordingly, RDA’s superior knowledge claim fails

under the second element.

Regarding the third element, RDA argues that the Solicitation affirmatively misrepresented

that the wharf could support the weight of cranes and excavators by instructing prospective

contractors to “[l]ocate demolition equipment throughout the structure and remove materials so as

to not impose excessive loads to framing.” DX 1 at 291. RDA interprets “demolition equipment”

to include heavy machines like cranes and excavators. Pl. PT Br. at 49. The Solicitation, however,

does not define that term. Instead, the Solicitation incorporates the American Society of Safety

Engineer’s 2006 Safety and Health Program Requirements for Demolition Operations (“ASSE

A10.6”) (DX 1 at 288), which states that the type of demolition equipment that each structure can

withstand should be determined by the contractor (ASSE A10.6 at §§ 4.1, 5.8).

The United States Court of Appeals for the Federal Circuit has held that “various contract

provisions must be read as part of an organic whole, according reasonable meaning to all of the

contract terms. Such interpretation must assure that no contract provision is made inconsistent,

superfluous, or redundant.” See Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 322

42

(Fed. Cir. 1997) (internal citations omitted). In this case, Section 4.1 of the ASSE A10.6, which

was part of the Solicitation, provides that “[p]rior to starting demolition operations, a written

engineering survey of the structure shall be made by a qualified person to determine the type and

condition of the framing, floors and walls so that action can be taken, if needed, to prevent

premature collapse of any portion of the structure.” ASSE A10.6 at § 4.1 (emphasis added).

Similarly, Section 5.8 of the ASSE A10.6 cautions that “[t]he use of equipment and storage of

materials and debris on any floor shall not exceed the allowable floor loads.” ASSE A10.6 at §

5.8 (emphasis added). Both of these industry standards require that bidders conduct engineering

due diligence to ensure the load capacity of the relevant structure before placing equipment there.

RDA also argues that the Solicitation’s failure to provide load restrictions for the wharf

misled prospective bidders to assume that the wharf was not subject to any significant restrictions

and could support the weight of heavy construction equipment. Pl. PT Br. at 48–49. Mr. Wood

testified that, if the Solicitation does not specify the load capacity of a certain structure, it is safe

to “use [that structure] for its intended purpose.” TR at 106 (Wood). Mr. Wood’s view, however,

was rebutted by the expert testimony of Philip Helmes, P.E., who observed that, when “[t]he

Contract Documents do not indicate or provide any safe load limits for the existing structure, . . .

a responsible contractor would be expected to seek additional information . . . prior to developing

a work method based on imposing significant loads on the wharf.” DX 729 at 6 (Helmes Direct).

Mr. Helmes also testified that without “a pre-bid engineer’s assessment . . ., the alleged assumption

that the bulkhead could support the load from RDA’s intended equipment had no basis and was a

poor assumption.” DX 729 at 6 (Helmes Direct). There is no evidence that any of the contractors

were precluded from having an independent professional engineer present during the site visits or

from conducting an underwater investigation. Therefore, the Solicitation’s instruction to “[l]ocate

demolition equipment throughout the structure” and the Solicitation’s failure to provide an express

load restriction for the wharf did not represent that the wharf could withstand heavy construction

equipment. See Hercules, 24 F.3d at 196 (element three).

But, even if the Solicitation could be construed as misleading bidders about the wharf’s

load capacity, RDA’s superior knowledge claim still fails under the third factor, because the

Solicitation provided bidders with specific notice to inquire about the wharf’s condition. DX 1 at

34 (incorporating 48 C.F.R. § 52.236-3(a)).15 RDA justifies the failure to conduct an independent

inspection, explaining that most of the deterioration affecting the wharf could not be observed

from the deck’s surface. TR at 189–90 (Hartman). FAR 52.236-3(a), however, requires bidders

to verify both the surface and subsurface condition of the wharf, relying on: “an inspection of the

site;” “all exploratory work done by the Government;” and “the drawings and specification made

15

FAR 52.236-3(a) requires that:

The Contractor . . . acknowledges that it has satisfied itself as to the character,

quality, and quantity of surface and subsurface materials . . . insofar as this

information is reasonably ascertainable from an inspection of the site, including all

exploratory work done by the Government, as well as from the drawings and

specifications made a part of this contract.

48 C.F.R. § 52.236-3(a) (emphases added).

43

a part of this contract.” 48 C.F.R. § 52.236-3(a). Therefore, RDA was on notice to inquire about

the subsurface conditions of the wharf that were not visible during its site visit. See Hercules, 24

F.3d at 196 (element three).

For these reasons, the court has determined that the NAVFAC did not have a duty to

disclose the Appledore Report and FST Report prior to accepting RDA’s bid and entering into the

October 13, 2009 Contract. Accordingly, Count I of the May 7, 2015 Second Amended Complaint

is dismissed.

2. Count II: Whether RDA Construction Corp. Is Entitled To An

Equitable Adjustment Under The October 13, 2009 Contract’s

Differing Site Conditions Clause.

a. Plaintiff’s Argument.

RDA argues that the actual deteriorating condition of the wharf and bulkhead was a “type

1” differing site condition,16 for which RDA is entitled to an equitable adjustment. RDA adds that

a reasonable person would interpret the Solicitation to allow a contractor to perform work from

the wharf and the land parallel to the wharf. Pl. PT Br. at 55. RDA’s Estimator testified that, if

there was a restriction on the wharf’s capacity there would be a corresponding note; if there was

no note, the structure was usable for its intended purpose. TR at 106 (Mr. Wood). RDA’s

Construction Manager also testified that, in his experience, load restrictions always are provided

to bidders. TR at 191–92, 209 (Hartman). In this case, the Solicitation expressly allowed bidders

to place demolition equipment on the wharf, but to “[l]ocate demolition equipment throughout the

structure.” DX 1 at 291. In addition, the Solicitation instructed bidders to assume that thirty holes

in the bulkhead would need repair. Pl. PT Br. at 55 (citing DX 1 at 107). But, RDA’s Engineering

Consultant testified that this amount of deterioration ordinarily would not prohibit a contractor

from demolishing the wharf from the landside of the bulkhead or from the wharf deck. TR at 827–

28 (Martel).

RDA adds that the actual condition of the existing bulkhead and wharf were not reasonably

foreseeable, based on the Solicitation and site visits. Pl. PT Br. at 55. RDA’s President, RDA’s

Estimator, and RDA’s Project Manager “testified credibly that the observable condition of the

wharf provided no indication that RDA would be unable to employ conventional means to

demolish and construct this project from the existing structure and from the landside of the

bulkhead.” Pl. PT Br. at 55.

In sum, RDA reasonably relied on the Solicitation’s representation about the wharf’s

condition. Pl. PT Br. at 55 (“RDA’s cost estimate, including its estimate as to the duration of the

work on this Project, were based on its thorough review of the contract documents and its visual

inspection of the facility.”). But, the actual conditions of the wharf and bulkhead differed

16

The October 13, 2009 Contract includes a “differing site conditions” clause. DX 1 at

545 (incorporating 48 C.F.R. § 52.236-2). “Type 1” differing site conditions are “[s]ubsurface or

latent physical conditions at the site which differ materially from those indicated in this

contract[.]” 48 C.F.R. § 52.236-2(a)(1) (emphasis added).

44

materially from the conditions represented in the Solicitation requiring RDA to shift operations to

the water and incur the cost of deploying a barge for the duration of the project. Pl. PT Br. at 56.

b. The Government’s Response.

The Government responds that RDA did not establish each element of its differing site

conditions claim. Gov’t PT Resp. at 17.

c. The Court’s Resolution.

To receive an equitable adjustment for a “type 1” differing site condition, a contractor must

establish that: (1) “a reasonable contractor reading the contract documents as a whole would

interpret them as making a representation about the site conditions;” (2) “the actual site conditions

were not reasonably foreseeable to the contractor, with the information available to the particular

contractor outside the contract documents;” (3) “the particular contractor in fact relied on the

contract representation;” and (4) “the conditions differed materially from those represented, and

the contractor suffered damages as a result.” Int’l Tech. Corp. v. Winter, 523 F.3d 1341, 1348–49

(Fed. Cir. 2008).

As to the first element, the United States Court of Appeals for the Federal Circuit has held

that there cannot be a differing site condition, “unless the contract [affirmatively] indicated what

that condition would be.” Comtrol, Inc. v. United States, 294 F.3d 1357, 1363 (Fed. Cir. 2002).

Whether the contract indicates a particular site condition is a question of contract interpretation,

requiring the court to “place itself into the shoes of a reasonable and prudent contractor and decide

how such a contractor would act in interpreting the contract documents.” H.B. Mac, Inc. v. United

States, 153 F.3d 1338, 1345 (Fed. Cir. 1998).

In this case, the Solicitation instructed the contractor to “[l]ocate demolition equipment

throughout the structure and remove materials so as to not impose excessive loads to framing.”

DX 1 at 291. RDA argues that this clause affirmatively represented that the wharf could support

the weight of heavy demolition equipment, such as cranes and excavators. But, other provisions

of the Solicitation clarified that the contractor was responsible for evaluating each structure to

determine what type of demolition equipment it could safely withstand. DX 1 at 288 (citing ASSE

A10.6 § 4.1 (“Prior to starting demolition operations, a written engineering survey of the structure

shall be made by a qualified person to determine the type and condition of the framing, floors and

walls so that action can be taken, if needed, to prevent premature collapse of any portion of the

structure.”) and ASSE A10.6 § 5.8 (“The use of equipment and storage of materials and debris on

any floor shall not exceed the allowable floor loads.”)). Therefore, the Solicitation did not

represent that the wharf could support the weight of any demolition equipment, only that the weight

needed to be balanced throughout the surface of the relevant structure and the concentration of

heavy equipment on one area of a particular structure could cause it to collapse.

Moreover, RDA argues that the Solicitation’s failure to provide a load restriction for the

wharf would lead a reasonable contractor to conclude that the wharf could bear the weight of heavy

construction equipment. Pl. PT Br. at 54–55. RDA’s Estimator testified that, in his experience,

“if there is a [load] restriction [associated with a structure], there would be a note [in the

Solicitation].” TR at 106 (Wood). The absence of a note led him to conclude that “[RDA] could

45

utilize the [wharf] to work off of.” TR at 107 (Wood). But, Mr. Wood’s testimony was

contradicted by RDA’s Project Manager, who testified that he did not draw any conclusion about

the absence of load restrictions on the wharf, until he read the Appledore Report. TR at 191

(Hartman). The Government also rebutted Mr. Wood with expert testimony that advised: “a

prudent contractor would have requested more information regarding the [wharf’s] Safe Load

Limit” and “[i]t was not reasonable for RDA to assume that the existing structure could support

heavy construction equipment.” DX 729 at 5 (Helmes Direct). DX 742.6 (photograph of sinkhole

taken on May 19, 2008, prior to the June 4 and June 11, 2009 site visits.)

In addition, the Solicitation required prospective bidders to satisfy themselves of “the

character, quality, and quantity of surface and subsurface materials . . . insofar as this information

was reasonably ascertainable from an inspection of the site[.]” DX 1 at 34 (incorporating 48 C.F.R.

§ 52.236-3(a)). Photographs of the wharf taken prior to RDA’s June 4 and June 11, 2009 site visits

show orange sawhorses and concrete barriers, cordoning off the wharf. DX 742.14 (photograph

of wharf taken on May 20, 2008, prior to the June 4 and June 11, 2009 site visits); DX 742.15

(photograph of wharf taken on June 20, 2008, prior to the June 4 and June 11, 2009 site visits). A

reasonable and prudent contractor could see that the wharf could not safely bear the weight of

vehicular traffic, much less heavy construction equipment, regardless of the Solicitation’s silence

about that issue. Therefore, a reasonable contractor would read the Solicitation, including

accompanying drawings, the ASSE A10.6 industry standards and observation of the wharf’s

condition during two site visits, to warrant further investigation into whether the wharf and

bulkhead could safely bear the weight of demolition equipment.

RDA counters that a reasonable contractor would interpret the Solicitation’s disclosure of

thirty holes in the bulkhead as a representation that the bulkhead and wharf had no other significant

deterioration. But, a statement that the bulkhead contained some deterioration did not

affirmatively represent that the bulkhead contained only that amount of deterioration. See, Int’l

Tech. Corp., 523 F.3d at 1350 (“[T]his court [has] held that contract documents stating ‘[h]ard

material . . . may be encountered’ did not represent that only hard material would be encountered.”

(quoting Comtrol, 294 F.3d at 1362)). Moreover, the Government’s construction project

development practices expert testified that the contract drawings “showing the existing bulkhead[,]

identify a number of sinkholes which clearly indicate an unstable condition[.]” DX 729 at 6

(Helmes Direct).

For these reasons, the court has determined that, as a matter of law, RDA is not entitled to

an equitable adjustment under the October 13, 2009 Contract’s differing site conditions clause.

See Comtrol, 294 F.3d at 1363 (“A contractor is not eligible for an equitable adjustment for a Type

I differing site condition unless the contract indicated what that condition would be.”).

In the alternative, RDA raises a “defective specification claim” under Count II. Pl PT Br.

at 56. But, the United States Court of Appeals for the Federal Circuit has held that:

Although differing site conditions and defective specifications claims are distinct

in theory, they collapse into a single claim . . . where the alleged defect in the

specification is the failure to disclose the alleged differing site condition. Where

the differing site conditions claim and the defective specifications claim are so

46

intertwined as to constitute a single claim, that claim will be governed by the

specific differing site conditions clause and the cases under that clause.

Comtrol, 294 F.3d at 1362 (emphases added).

In this case, RDA’s defective specification claim arises from the NAVFAC’s alleged

failure to disclose that the wharf could not support the weight of demolition equipment, i.e., the

same condition that RDA argues entitles it to an equitable adjustment under the October 13, 2009

Contract’s differing site conditions clause. Pl. PT Br. at 56–57. Therefore, RDA’s defective

specification and differing site conditions allegations constitute a single claim governed by the

October 13, 2009 Contract’s differing site conditions clause and precedent regarding the same.

Since the court has determined that RDA is not entitled to relief under the differing site conditions

theory, RDA also is not entitled to relief under a defective speculation theory. Accordingly,

Count II of the May 7, 2015 Second Amended Complaint is dismissed.

3. Counts III And IV: Whether The Naval Facilities Command

Misrepresented The Condition Of The Wharf And The Purpose Of The

October 13, 2009 Contract.

a. Plaintiff’s Argument.

Counts III and IV are a variation of Count II, the gravamen of which is that the Solicitation

affirmatively represented that the contractor could locate demolition equipment on the wharf. Pl.

PT Resp. at 11 (citing DX 1 at 291). In addition, the absence of a load restriction in the Solicitation,

indicated that the relevant structure could be used for its intended purpose. Pl. PT Resp. at 11

(citing TR at 104–07 (Mr. Wood)); TR at 191–92 (Hartman). Accordingly, RDA reasoned that

“[t]hese express representations, together with the NAVFAC’s failure to provide the Appledore

Report and the [FST Report], constitute clear misrepresentations of material fact regarding the

manner in which the work [was] to be performed and the condition of the wharf that RDA

reasonably relied upon in submitting its bid for this project.” Pl. PT Resp. at 11–12.

b. The Government’s Response.

The Government responds that the Solicitation did not misrepresent that the wharf could

bear the weight of demolition equipment. Gov’t PT Br. at 77. Nor has RDA proffered any pre-

award evidence to show that it intended to work from the wharf. Gov’t PT Br. at 76. Therefore,

even if the Solicitation misrepresented that the wharf could support demolition equipment, RDA

failed to demonstrate that it relied on any such misrepresentation. Gov’t PT Br. at 76. In fact, a

reasonable contractor would not have relied on a representation that a seventy year-old wharf, with

obvious signs of deterioration, could support the weight of heavy construction equipment, without

further investigation. Gov’t PT Br. at 77–79.

c. The Court’s Resolution.

The United States Court of Appeals for the Federal Circuit has held that, “for a contractor

to prevail on a claim of misrepresentation, the contractor must show that the Government made an

erroneous representation of a material fact that the contractor honestly and reasonably relied on to

the contractor’s detriment.” T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 729 (Fed. Cir.

47

1997). This is the same legal standard that applies to type 1 differing site conditions claims. See

Int’l Tech., 523 F.3d at 1348 (“A misstatement as to site conditions in a government contract can

support a claim for breach of contract. The same requirements apply whether the contractor asserts

such a common law breach claim or a Type I claim under the Differing Site Conditions clause[.]”).

Again, whether a Solicitation makes an erroneous representation is a question of contract

interpretation, requiring the court to “place itself into the shoes of a reasonable and prudent

contractor[.]” H.B. Mac, 153 F.3d at 1345.

In this case, RDA argues that the Solicitation misrepresented that the wharf could safely

bear the weight of demolition equipment, because it: (1) failed to disclose the Appledore Report

and FST Report prior to the contract award (Pl. PT Resp. at 11); (2) did not provide a load

restriction for the wharf or bulkhead (Pl. PT Resp. at 11); and (3) instructed contractors to “[l]ocate

demolition equipment throughout the structure” (Pl. PT Resp. at 11 (quoting DX 1 at 291)). As

discussed previously, the court finds that a reasonable and prudent contractor would not interpret

the Solicitation as a whole to affirmatively represent that the conditions of the wharf could support

demolition equipment.

For these reasons, the court has determined that RDA did not satisfy the requisite elements

of misrepresentation. Accordingly, Count III and Count IV of the May 7, 2015 Second Amended

Complaint are dismissed.

4. Count V: Whether The Naval Facilities Command’s November 7, 2012

Directive Was A Cardinal Change To The October 13, 2009 Contract.

a. Plaintiff’s Argument.

Count V alleges that the NAVFAC’s November 7, 2012 “directive” to extract broken H-

piles from beneath the sea floor was a cardinal change, because it substantially altered the

magnitude, cost, and type of work required by the October 13, 2009 Contract. Pl. PT Br. at 40–

41.

At the time of RDA’s bid, without the benefit of the Appledore Report, RDA planned to

use a vibratory hammer to shake and remove the H-piles in one piece from the sea floor. Pl. PT

Br. at 40. Because the H-piles were deteriorated beyond what was expected, all of the piles that

RDA attempted to remove broke. Pl. PT Br. at 41. After trial and error, RDA discovered a method

to extract the broken piles, but it was costlier than RDA originally anticipated for pile-removal.

Pl. PT Br. at 41. In fact, the company that assumed completion of the project estimated that

removing all of the broken H-piles would cost over $5 million. Pl. PT Br. at 41 (citing 11/05/15

Dep. of Jonathan Peters at 321, 323). In addition, the NAVFAC’s November 7, 2012 “directive”

would have extended the October 13, 2009 Contract’s duration by months, as established, since

Haskell worked to remove all of the H-piles “throughout 2014 and [October] 2015.” Pl. PT Br. at

42.

b. The Government’s Response.

The Government responds that the October 13, 2009 Contract required RDA to “remove

piles in their entirety.” DX 1 at 82. Although it became very expensive to remove the H-piles, the

added expense was RDA’s fault, because “RDA intentionally broke the piles off, having proposed

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and obtained approval for this . . . method in its demolition plan.” Gov’t PT Br. at 65 (citing DX

108 at 5) (emphasis added). Therefore, the NAVFAC’s November 7, 2012 directive did not

significantly change: (1) the magnitude of work to be performed; (2) the nature of the work

contemplated in the October 13, 2009 Contract; or (3) the cost of performance. And, the

November 7, 2012 directive did not constitute a cardinal change. Gov’t PT Br. at 66.

c. The Court’s Resolution.

As a matter of law, the cardinal change doctrine may be invoked where,

the [contracting agency] effects an alteration in the work so drastic that it effectively

requires the contractor to perform duties materially different from those originally

bargained for. By definition, then a cardinal change is so profound that it is not

redressable under the contract, and thus renders the government in breach.

Allied Materials & Equip. Co. v. United States, 569 F.2d 562, 563–64 (Ct. Cl. 1978) (emphasis

added).

As with other breach of contract claims, the cardinal change doctrine has a causation

requirement. See Rolin v. United States, 160 F. Supp. 264, 268 (Ct. Cl. 1958) (“[T]he

Government’s financial obligation to anyone who has furnished materials or services to the

Government under a contract is to be found within the four walls of the contract, unless the

Government has caused its contractor to incur unforeseen expenses in performing the contract.”

(emphasis added)). In other words, a plaintiff cannot prevail on a breach of contract claim, simply

because unforeseen circumstances changed the amount, or difficulty, of the contract work. See

United States v. Spearin, 248 U.S. 132, 135–36 (1918) (“Where one agrees to do, for a fixed sum,

a thing possible to be performed, he will not be excused or become entitled to additional

compensation, because unforeseen difficulties are encountered.” (internal citations omitted)).

Instead, the plaintiff must demonstrate that the Government caused the underlying change.

“[A] cardinal change is principally a question of fact[.]” Allied Materials, 569 F.2d at 565.

“Each case must be analyzed on its own facts and circumstances giving just consideration to the

magnitude and quality of the changes ordered and their cumulative effect upon the project as a

whole.” Gen. Dynamics Corp. v. United States, 585 F.2d 457, 462 (Ct. Cl. 1978). Since a cardinal

change constitutes a breach of contract, the plaintiff bears the burden of proof. See Stockton E.

Water Dist. v. United States, 583 F.3d 1344, 1360 (Fed. Cir. 2009).

The October 13, 2009 Contract expressly required RDA to “remove piles in their entirety.”

DX 1 at 82. The November 7, 2012 instruction did not change this requirement in any way, stating,

“[all] remaining H-piles . . . will have to be removed in their entirety[.]” PX 96 at 1. In other

words, the NAVFAC did not cause any change to the contract requirements. Nevertheless, RDA

insists that the NAVFAC’s November 7, 2012 directive constituted a cardinal change, because

RDA did not expect the piles to break during the extraction process. But, due to latent

deterioration, virtually all of the piles snapped below the sea floor. Pl. PT Br. 40–41. Removal of

the broken pile stubs required RDA to use extraction methods that were far more expensive than

it originally anticipated. Pl. PT Br. 41. Under these circumstances, the NAVFAC’s enforcement

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of the contractual requirement that all piles must be removed in their entirety was a cardinal

change. Pl. PT Br. at 40–42.

RDA’s cardinal change claim fails, because the record contradicts RDA’s assertion that it

did not expect the piles to break during the extraction process. On March 29, 2010, RDA submitted

a demolition plan to the NAVFAC advising that,

the combination pile cap and support pile will be extracted with the crane. . . . In

most cases under the load of the extraction process the pile will break between the

mud line and existing pile jacket due to advanced pile section loss[.] . . . The

resulting bottom pile section remaining will be extracted with the Manitowoc 4100

crane and a dive assist crew[.]

DX 108 at 4–5 (emphasis added). The March 29, 2010 plan was submitted before RDA began

pile removal. DX 1 at 287, 290 (stating that approval of the demolition plan was required prior to

beginning work). Therefore, the evidence shows that, prior to removing any piles, RDA knew that

its extraction method would cause most piles to break.

For these reasons, the court has determined that RDA did not prove that the NAVFAC

caused any change to the contract work or the circumstances affecting that work, let alone a

cardinal change that required RDA to perform duties materially different from those bargained for

by the parties. See Allied Materials, 569 F.2d at 563–64. Accordingly, Count V of the May 7,

2015 Second Amended Complaint is dismissed.

5. Counts VI, VII and VIII: Whether The NAVFAC Violated The Duty

Of Good Faith And Fair Dealing.

a. Plaintiff’s Argument.

RDA argues that the NAVFAC breached the duty of good faith and fair dealing by: (1) not

promptly and fairly adjusting the contract for changes in price and schedule, resulting from new

information contained in the Appledore Report and FST Report about the wharf’s ability to carry

demolition equipment; (2) rescinding the NAVFAC’s conditional approval of RDA’s baseline

schedule; (3) failing to provide instructions on how to remove the broken H-piles; (4) failing to

authorize drilling that was required to bypass unanticipated obstructions blocking all progress on

the project; (5) directing RDA to commence obstruction drilling before processing a contract

modification for that work, then failing to compensate RDA for the additional drilling work; (6)

directing RDA to remove all broken piles embedded in the sea floor, despite knowing that “such

work was not necessary, was impractical to perform, and would cause RDA to incur prohibitive

expense and further prolonged delay”; (7) shutting down the project in September 2011, based on

“exaggerated safety concerns and maintaining such [a] shutdown for an unreasonable long period

of time”; (8) failing to act on RDA’s SSHO and QC proposals for months and then denying those

proposals on “insubstantial or erroneous grounds”; and (9) demanding re-inspection of RDA’s

crane in January 2013, violating the October 13, 2009 Contract and prior practice. Pl. PT Br. at

58–61.

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b. The Government’s Response.

The Government responds that the NAVFAC properly did not adjust the contract for

changes in price and schedule, due to unanticipated site conditions. Moreover, the NAVFAC was

“overly generous” in granting RDA numerous modifications to the October 13, 2009 Contract and

any delay in granting such modifications is remediable under the Disputes Clause, not as a breach

of contract. Gov’t PT Resp. at 20.

Specifically, the NAVFAC did not breach the duty of good faith and fair dealing by

insisting that RDA’s baseline schedule include all of the contract work and enforcing the

contractual requirement that RDA remove all of the H-piles in their entirety. Gov’t PT Resp. at

2–9, 20.

Nor did the NAVFAC breach the duty of good faith and fair dealing when it allegedly

refused to instruct RDA on how to remove H-piles that broke beneath the mudline and failed to

authorize drilling to bypass obstructions at the south and north bulkheads in a timely manner, since

the October 13, 2009 Contract did not require the NAVFAC to provide instructions other than

those contained in the Solicitation and RDA was free to drill through obstructions, without any

NAVFAC authorization. Gov’t PT Resp. at 35.

Nor did the NAVFAC breach the duty of good faith and fair dealing by enforcing the

October 13, 2009 Contract’s safety requirements, particularly after RDA experienced a third

accident onsite. Gov’t PT Resp. at 21. In fact, the NAVFAC reasonably exercised its discretion

in rejecting several RDA candidates for the QC and SSHO positions who did not have the

necessary qualifications. Gov’t PT Resp. at 20, 25–29, 32–33, 43–44.

In addition, the NAVFAC’s decision to request a crane re-inspection in January 2013 was

consistent with the October 13, 2009 Contract and did not violate the duty of good faith and fair

dealing. Gov’t PT Resp. at 22.

c. The Court’s Resolution.

“Every contract imposes upon each party a duty of good faith and fair dealing in its

performance and enforcement.” Metcalf Const. Co. v. United States, 742 F.3d 984, 990 (Fed. Cir.

2014) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 205 (1981)(“RESTATEMENT”)) (internal

quotation marks omitted). “Failure to fulfill that duty constitutes a breach of contract[.]” Id.

(quoting RESTATEMENT § 235)). But, the duty of good faith and fair dealing does not “expand a

party’s contractual duties beyond those in the express contract or create duties inconsistent with

the contract’s provisions.” Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 831

(Fed. Cir. 2010). For this reason, “an act will not be found to violate the duty [of good faith and

fair dealing] . . . if such a finding would be at odds with the terms of the original bargain, whether

by altering the contract’s discernible allocation of risks and benefits or by conflicting with a

contract provision.” Metcalf, 742 F.3d at 991.

In essence, the covenant of good faith and fair dealing “imposes obligations on both

contracting parties that include the duty not to interfere with the other party’s performance and not

to act so as to destroy the reasonable expectations of the other party regarding the fruits of the

contract.” Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). The Government

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may breach this duty if it acts unreasonably under the circumstances. See C. Sanchez & Son, Inc. v.

United States, 6 F.3d 1539, 1542 (Fed. Cir. 1993) (“The government must avoid actions that

unreasonably cause delay[.]”); see also Commerce Int’l Co. v. United States, 338 F.2d 81, 86 (Ct.

Cl. 1964) (holding that actions that cause a “breach of [the] obligation of reasonable cooperation”

depend upon the “particular contract, its context, and its surrounding circumstances”).

i. Regarding Price And Schedule Changes To The October

13, 2009 Contact, Because Of The NAVFAC’s Failure To

Disclose The Appledore Report And FST Report.

First, RDA argues that the NAVFAC breached the duty of good faith and fair dealing when

it failed to “promptly and fairly adjust the contract for changes in price and schedule necessitated

by the belated disclosure of material information [in the Appledore Report and FST Report]

concerning actual Project conditions.” Pl. PT Br. at 58. But, as discussed in sections of this Post

Trial Memorandum Opinion and Final Order addressing Counts I–V, RDA was not entitled to an

equitable adjustment, because, as a matter of law, the NAVFAC did not have a duty to disclose

the Appledore Report and FST Report, and the Solicitation did not misrepresent the condition of

the wharf.

Therefore, the court has determined that the NAVFAC did not breach the duty of good

faith and fair dealing by refusing to adjust the October 13, 2009 Contract to compensate RDA for

price and schedule changes as a result of not disclosing the Appledore Report and FST Report

during the bidding process.

ii. Regarding Rescinding Approval Of RDA Construction

Corp.’s Baseline Schedule.

Second, RDA argues that the NAVFAC violated the covenant of good faith and fair dealing

by “[a]pproving RDA’s impacted schedule to permit work to begin[,] then rescinding such

schedule approvals upon which depended RDA’s ability to be timely paid for work commenced

in reliance thereon.” Pl. PT Br. at 59. The record shows that, on February 5, 2010, the NAVFAC

conditionally approved RDA’s baseline schedule for the limited purpose of allowing work to

begin. PX 58 at 1. But, there is no evidence that the February 5, 2010 conditional approval was

ever rescinded. In addition, the record evidence contradicts RDA’s assertion that, based on the

February 5, 2010 conditional approval, RDA reasonably expected to invoice the work it

performed. In fact, the February 5, 2010 conditional approval expressly stated that RDA could

begin work, but the NAVFAC would not process RDA’s invoices until the NAVFAC completed

a full review of RDA’s proposed baseline schedule. PX 58 at 1.

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PX 58 at 1.

It appears that RDA also contends that the NAVFAC breached its duty of good faith and

fair dealing by allowing work to begin on February 5, 2010, but delaying approval of the baseline

schedule necessary for payment until May 17, 2010, forcing RDA to work without payment for

three months. The record, however, shows that RDA was responsible for most of the delay:

 On April 1, 2010, the NAVFAC informed RDA that its proposed baseline schedule

contained thirty-four deficiencies. DX 111 at 2–3.

 On April 21, 2010, RDA submitted a revised baseline schedule. DX 121 at 1.

 On April 22, 2010, the NAVFAC rejected RDA’s revised baseline schedule,

because it contained many of the same deficiencies identified in the April 1, 2010

rejection and a few new deficiencies. DX 121 at 2.

 On April 28, 2017, RDA submitted a second revised baseline schedule. DX 130

at 1.

 On May 13, 2010, the NAVFAC rejected RDA’s second revised schedule, because

RDA still did not correct many of the deficiencies identified in the April 1, 2010

and April 21, 2010 rejections. DX 130 at 2–3.

 On May 14, 2010, RDA finally submitted a baseline schedule that addressed all of

the NAVFAC’s concerns. DX 134 at 1.

 Three days later, the NAVFAC approved the May 13, 2010 baseline schedule. DX

134 at 1.

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Therefore, the court has determined that the NAVFAC did not violate the duty of good

faith and fair dealing by rescinding the February 5, 2010 conditional approval of RDA’s baseline

schedule, nor did the NAVFAC cause any delay to the final approval of that schedule.

iii. Regarding Extraction Of The Broken H-Pile Sections.

Third, RDA argues that the NAVFAC violated the duty of good faith and fair dealing by

refusing to help RDA develop a plan for extracting the H-piles that broke off beneath the mudline

or, alternatively, waiving RDA’s obligation to remove the piles in their entirety. Pl. PT Br. at 59.

The October 13, 2009 Contract, however, expressly stated that RDA must formulate a plan to

“remove all piles in their entirety.” DX 1 at 82, 290. In other words, the October 13, 2009 Contract

allocated the risks associated with formulating and executing a pile removal plan to RDA. A

finding that the NAVFAC’s failure to help RDA develop a removal plan, or otherwise waive

RDA’s obligation to “remove all piles in their entirety[,]” breached the October 13, 2009 Contract

would force the NAVFAC to incur the costs of carrying out those activities. Accordingly, such a

determination would transfer to the NAVFAC risks that the October 13, 2009 Contract allocated

to RDA.

Therefore, the court has determined that the NAVFAC did not violate the duty of good

faith and fair dealing by refusing to waive the contractual requirement that RDA remove all of the

H-pile sections or to assist RDA in doing so.

iv. Regarding Obstruction Drilling.

Fourth, RDA argues that the NAVFAC violated the duty of good faith and fair dealing by

failing to timely authorize obstruction drilling at the bulkhead, causing the project to come to a

standstill. Pl. PT Br. at 59–60 (citing PX 83 at 2). RDA, however, fails to identify any contract

provision that required the NAVFAC to authorize such work.

Moreover, the record shows that this delay was caused by RDA’s refusal to drill through

the obstructions without first receiving an equitable adjustment. On March 9, 2011, RDA’s Project

Manager advised the NAVFAC that “RDA will not continue to perform work on [the bulkhead]

without . . . a Contract Modification.” DX 273 at 1. Similarly, on August 16, 2012, RDA’s

President informed the NAVFAC, “I believe that [i]t is in RDA’s and the Navy’s best interest to

hold off on the obstruction drilling . . . until we reach an agreement on a unilateral modification.”

DX 570 at 1. In short, RDA voluntarily stopped contract performance, hoping that the NAVFAC

would modify the contract price and schedule to account for obstructions at the bulkhead. RDA

pursued this strategy, despite the October 13, 2009 Contract’s instruction that “[a] 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[.]” DX 1 at 14 (incorporating 48 C.F.R.

§ 52.233-1(i)).

Conversely, RDA argues that the NAVFAC violated the duty of good faith and fair dealing

by “[d]irecting RDA to commence obstruction drilling in February 2012, in advance of processing

a contract modification, then failing to take any steps to compensate RDA for all such extra work

through termination the following February.” Pl. PT Br. at 60. But, RDA did not proffer any

evidence that the NAVFAC ordered RDA to commence obstruction drilling in February 2012. To

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the contrary, RDA appears to recognize that “[i]n February 2012 . . . RDA proceeded with the

second round of obstruction drilling in advance of receiving formal authorization.” Pl. PT Br. at

25 (emphasis added).17

17

During the trial of this case the court questioned Mr. Rachupka, the NAVFAC’s CO,

about a related issue: a May 10, 2012 request for equitable adjustment that remained pending for

ten months. TR at 2134–35 (Rachupka). Mr. Rachupka conceded that the NAVFAC’s delay was

unfair to RDA:

[THE COURT]: Was there an occasion where you had an outstanding change order

for ten months? . . .

[MR. RACHUPKA]: We did have, as I explained earlier this week in testimony,

the change order that is being questioned right now where there were inaccuracies

related to the amount of money being sought by RDA. If you remember our

conversation about the double dipping --

[THE COURT]: Right.

[MR. RACHUPKA]: -- that is specifically what Mr. O’Brien is referring to.

[THE COURT]: What I am saying is you didn’t get it resolved because you didn’t

get the information from RDA?

[MR. RACHUPKA]: As you have seen, there has been a myriad of issues. It’s one

of those things that we never got to sit down and address and work out.

[THE COURT]: In ten months?

[MR. RACHUPKA]: That is correct, Your Honor.

[THE COURT]: And was that because you didn’t try?

[MR. RACHUPKA]: I had, I had done -- I believe I did some evaluation but never

completed it.

[THE COURT]: I’m sorry?

[MR. RACHUPKA]: I probably did some evaluation as to the cost proposals but

never completed it.

[THE COURT]: Do you think that was fair to the contractor?

[MR. RACHUPKA]: I wouldn’t say it is fair but --

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Therefore, the court has determined that the NAVFAC did not violate the duty of good

faith and fair dealing by failing to award RDA an equitable adjustment prior to commencing

obstruction drilling in February 2012 or withholding payment for that work.

v. Regarding Work Suspension After The September 14,

2011 Safety Mishap.

Fifth, RDA argues that the NAVFAC violated the duty of good faith and fair dealing when

it suspended work, following an accident on September 14, 2011. Pl. PT Br. at 61. The September

14, 2011 accident was RDA’s third safety incident. DX 413 at 1. The first accident occurred on

August 10, 2010 and resulted in the injury of an RDA worker. DX 174 at 1. The second accident

took place on February 22, 2011, when a vibratory hammer hit an employee breaking several of

his ribs. DX 261 at 9. Moreover, RDA’s QC and SSHO (safety officers) were not at the project

site when the September 14, 2011 accident occurred. DX 413 at 1. In light of RDA’s repeated

failure to satisfy its contractual obligation to maintain a safe work site and have safety officers

supervise all work (DX 1 at 192), and the NAVFAC’s authority to stop work pending the

investigation of a safety incident (DX 1 at 193), the court finds that it was reasonable for the

NAVFAC to require a thorough investigation of the September 14, 2011 accident.

Therefore, the court has determined that the NAVFAC did not violate the duty of good

faith and fair dealing by suspending work to investigate why RDA repeatedly experienced

accidents that risked injury to individuals and damage to equipment at the Newport Naval Station.

vi. Regarding Approval Of RDA Construction Corp.’s

Quality Control Manager And Site Safety And Health

Officer.

Sixth, RDA argues that the NAVFAC violated the duty of good faith and fair dealing when

it failed to evaluate RDA’s QC and SSHO candidates in a timely manner and denied several of

those candidates on “insubstantial or erroneous grounds.” Pl. PT Br. at 60–61. These delays

forced RDA to stop work, because the October 13, 2009 Contract required RDA to “[p]rovide a

[SSHO] at the work site at all times.” DX 1 at 192. The record, however, shows that the NAVFAC

evaluated candidates in a reasonable time and promptly approved personnel that satisfied the

October 13, 2009 Contract’s experience and certification requirements. DX 1 at 192–93

(minimum qualifications for SSHO), 217–18 (minimum qualifications for QC). In fact, the

[THE COURT]: I didn’t hear you. Would you please stop doing that[?]

[MR. RACHUPKA]: So I would not say it is fair. No, I wouldn’t say that.

TR at 2134–35 (Rachupka).

RDA, however, did not argue that the NAVFAC’s failure to timely address the May 10,

2012 request violated the duty of good faith and fair dealing in the November 8, 2016 Post Trial

Brief. Therefore, the court does not address this issue. See Novosteel SA v. U.S., Bethlehem Steel

Corp., 284 F.3d 1261, 1274 (Fed. Cir. 2002) (holding that a party waives an argument when it fails

to raise that argument in its principal brief).

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NAVFAC approved Mr. Morrissette as QC and SSHO within five days (DX 327 at 1), Mr. Brewer

as SSHO in seven days (DX 491 at 1), and Mr. Smith as QC in eighteen days (PX 156 at 2).

To the extent that delays occurred in the approval of RDA’s candidates for the QC and

SSHO roles, the record shows that RDA repeatedly submitted candidates that did not meet the

contractual requirements for those roles. From March 31–May 2, 2011, RDA requested that the

NAVFAC approve Mr. Meomartino, Ms. Amarantes, Mr. Rand, and Mr. DiRamio as QCs and

SSHOs. DX 306–13, 316, 319–20. On May 9, 2011, the NAVFAC rejected all of these candidates,

because they did not have the experience and/or certifications required by the October 13, 2009

Contract. DX 327 at 1–13. After Mr. Morrissette, the QC and SSHO from May 9, 2011 to late

January 2012, had a heart attack on June 28, 2011, it became necessary for RDA to hire an

alternative QC and SSHO on site. Instead of proposing a new candidate, RDA requested that the

NAVFAC reconsider Ms. Amarantes and Mr. Rand. DX 345 at 1; DX 346 at 1; DX 348 at 1.

Because RDA did not indicate that either candidate had acquired the necessary experience and/or

certifications after they were first rejected, the NAVFAC rejected them a second time. DX 356

at 1 (rejecting Ms. Amarantes); DX 357 at 1 (rejecting Mr. Rand).

Moreover, the NAVFAC did not deny RDA’s QC and SSHO candidates on insubstantial

grounds. The October 13, 2009 Contract required QC candidates to have the following

qualifications:

a minimum of 10 years combined experience in the following positions: Project

Superintendent, QC Manager, Project Manager, Project Engineer or Construction

Manager on similar size and type construction contracts which included the major

trades that are part of this Contract. The individual must have at least two years

experience as a QC Manager. The individual must be familiar with the

requirements of, and have experience in the areas of hazard identification, safety

compliance, and sustainability.

In addition to the above experience and education requirements, the QC Manager

must have completed the course entitled “Construction Quality Management

(CQM) for Contractors.”

DX 1 at 217.

The October 13, 2009 Contract also required that SSHO have specific qualifications,

including:

[a] minimum of 10 years safety work of a progressive nature with at least 5 years

of experience on similar projects. 30-hour OSHA construction safety class or

equivalent within the last 5 years. An average of at least 24 hours of formal safety

training each year for the past 5 years with training for competent person status for

at least the following 4 areas of competency: Excavation; Hazardous energy; Health

hazard recognition, evaluation and control of chemical, physical and biological

agents; Personal protective equipment and clothing to include selection, use and

maintenance.

DX 1 at 192.

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The NAVFAC denied Mr. Meomartino as QC and SSHO, because his resume did not

indicate: (1) ten years of experience on projects of comparable size; (2) familiarization with United

States Army Corp of Engineers safety guidelines; (3) completion of the “Construction Qual

This text is long and has been trimmed here. Open the source document for the complete record.