Magnus Pacific Corporation v. United States

In the United States Court of Federal Claims

No. 13-859 C

(Filed August 31, 2017)

* * * * * * * * * * * * * * Trial; Maropakis Jurisdictional

MAGNUS PACIFIC CORP., * Issue; Claim to Resolve

* Quantum of Credit Due Agency

Plaintiff, * for Change in Slope of Levee;

* Constructive Change to Contract

v. * for Replacement of Existing

* Riprap on Levee; Defective

THE UNITED STATES, * Plans and Specifications Claim

* for Additional Embankment Fill

Defendant. * Placed on Levee.

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

Daniel L. Baxter, Sacramento, CA, for plaintiff.

A. Bondurant Eley, United States Department of Justice, with whom were

Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Robert E.

Kirschman, Jr., Director, Martin F. Hockey, Jr., Deputy Director, Reta E. Bezak

and Vito S. Solitro, Trial Attorneys, Washington, DC, for defendant.

________________________

OPINION

________________________

Bush, Senior Judge.

This post-trial opinion resolves all of the claims and requests for relief

presented in this suit by Magnus Pacific Corporation (Magnus or Magnus Pacific)

which spring from the restoration of a levee in Texas for the United States Section

of the International Boundary and Water Commission (IBWC).1 The IBWC is a

federal agency collaborating with its Mexican counterpart in the implementation

of border and water treaties between the two countries. The contract between

Magnus and the IBWC was awarded in December 2010; the disputes in this case

focus on levee restoration work on the Rio Grande performed by Magnus from

April 2011 through May 2012.

On the same topic as one of plaintiff’s claims related to the levee, the

government has asserted a counterclaim seeking to justify funds owed Magnus

under the contract but retained by the IBWC. The amount in controversy for all of

plaintiff’s claims is almost four million dollars, plus interest; the contract’s fixed

price, subsequent to modifications agreed to by the parties, was approximately

twelve million dollars. As discussed in detail below, plaintiff prevails on its

claims to a great extent.

BACKGROUND2

I. The Contract Claims

This is a suit brought under the Contract Disputes Act of 1978, 41 U.S.C.

§§ 7101-7109 (2012) (CDA). Am. Compl. ¶¶ 15, 20; Def.’s Br. at 58; Pl.’s Reply

at 29-30. The parties agree that in 2010, pursuant to a sealed bid, fixed price

procurement, plaintiff and the IBWC entered into a “lump-sum” contract whereby

Magnus would perform restoration work on a levee near Presidio, Texas. The

largest claim in this suit is plaintiff’s “embankment fill” claim, which asserts that

Magnus was obliged to import and place on the levee greater amounts of fill than a

1

/ Magnus has a new corporate identity: Great Lakes Environmental & Infrastructure.

During trial and post-trial briefing the parties continued to use the old corporate name of Magnus

Pacific to identify plaintiff, as will the court in this opinion.

2

/ The court adopts the parties’ style of citation for trial transcript pages. The witness’s

last name precedes the transcript citation. For example Owaidat Tr. 111-13 identifies both the

page numbers of the cited transcript as well as the fact that Mr. Louay Owaidat provided the cited

testimony. A list of witnesses whose trial testimony is cited herein is provided at the end of the

background section of this opinion.

2

reasonable bidder responding to the solicitation would have expected.3 Plaintiff’s

second-largest claim, the “riprap claim,” is that the contract, as amended, required

that Magnus place imported riprap armoring on various sections of the levee, but

the IBWC also obliged Magnus to do additional, out-of-scope riprap work.4

Plaintiff’s third and smallest claim is an appeal of the contracting officer’s final

decision which sought to justify the retainage of contract payments by the IBWC

in the amount of $466,092, a retainage of contract funds related to a disputed

credit owed the government for a mid-project change to the levee design. This

final dispute, which may best be described as the “slope change credit claim,” is

the subject of both plaintiff’s claim and the government’s counterclaim.5 The

court provides a very brief, general description of each dispute below, but reserves

a more detailed narrative of pertinent facts for the specific analysis section of this

opinion devoted to each of plaintiff’s claims.

A. Embankment Fill

Magnus’s embankment fill claim, adjusted during trial because certain

computation errors were conceded by plaintiff, is for an equitable adjustment of

the contract price in the amount of $2,851,788. Of this sum, the embankment fill

“overruns” are divided into two main categories: (1) fill required at the

construction locations where deep “slurry walls,” i.e., barriers to groundwater

movement buried in trenches sixty feet deep, were installed at the side of the

levee, and (2) fill required, more generally, along most of the levee because

Magnus was obliged to excavate existing levee material to a lower depth than

expected. Of these two embankment fill claim components, the generalized

deeper excavation of existing levee materials portion of the claim greatly exceeds

3

/ “Embankment fill is earthen material used to assist in supporting the impermeability of

a levee.” Am. Compl. at 2 n.1.

4

/ “Riprap is rock or similar material used to armor shorelines, streambeds, and levees.”

Id.

5

/ As discussed in greater detail below, plaintiff’s request for relief in its amended

complaint regarding the slope change credit is not a contractor “claim” but Magnus’s response to

a government “claim,” in the context of this court’s CDA jurisdiction. For ease of reference,

however, the court will nonetheless refer to the slope change credit claim as plaintiff’s claim, in

that it is a claim set forth in the amended complaint which references a specific amount of money

retained by the government and owed to plaintiff.

3

the portion of the claim related to the excess fill required at the slurry wall

construction locations. See Joint Exhibit (JX) 2, at 1-2.

B. Riprap

Magnus’s riprap claim, adjusted during trial because certain computation

errors were conceded by plaintiff, is for an equitable adjustment of the contract

price in the amount of $597,075. In support of this claim, Magnus contends that

three separate and distinct amounts of riprap were placed on the levee. First, the

contract at the time of award called for a certain amount of new riprap to be placed

on the levee, approximately 17,500 cubic yards (CY). JX 24, at 1. Second, when

the levee project was extensively modified by bilateral modifications triggered by

what the parties refer to as the “matrix” document,6 an additional amount of new

riprap, approximately 9750 CY, was ordered to be placed on the levee. Id.

Neither of these riprap amounts in the contract included, however, the replacement

of certain existing, unsatisfactory riprap which could not be re-used on the levee.

It is this final category of riprap work, 8101 CY of new riprap to replace existing

riprap, that is the basis of Magnus’s riprap claim. Id.

C. Slope Change Credit Dispute

Well after the matrix and related contract modifications provided the parties

with a revised statement of work for the project, another major change to the

contract occurred in late February 2012. JX 104. For a significant portion of the

length of the levee, the footprint of the proposed restored levee exceeded, on the

landside of the levee, the space provided by pertinent property boundaries. The

parties were obliged to reduce the levee’s footprint by making the landside slope

of the levee in those areas steeper and more narrow. Although the volume of the

6

/ The matrix was set forth in a memorandum issued by the IBWC after performance of

the contract had begun. JX 6. This document contains a table of data identifying additional work

required at specific portions of the levee. Each of the table entries addresses the work required

for a specific portion of the levee; the location of that section is delineated by “station” markers.

The stations marked every hundred feet of levee (along with a fifty-foot marker between

successive stations). For example, Station (STA) 65 was one hundred feet upstream from STA

66, and STA 65 + 50 was fifty feet upstream from STA 66. Work, except for the slurry wall

construction, generally proceeded along the levee in a “downstream, up station” manner,

beginning at STA 1 and ending approximately at STA 312. Sallas Tr. at 1709, 1714.

4

levee would thus be reduced, the credit owed the government due to this contract

change was not resolved amicably.

For the slope change credit, the IBWC retained $466,092 in contract

payments owed Magnus under the contract. Magnus argues that the slope change

credit should be $35,036, whereas the government’s position, modified during

trial, is that the IBWC is entitled to a slope change credit of $383,893. In its

amended complaint, Magnus seeks a disbursement of the retained funds in the

amount of $431,056 (subtracting a $35,036 slope change credit from $466,092

retained by the IBWC). In its counterclaim, the government seeks a ruling which

endorses a slope change credit of $383,893, so that the IBWC would only refund

to Magnus a modest amount ($82,199, subtracting a $383,893 slope change credit

from $466,092) of the retainage.

II. Overview of the Levee Restoration Project

A. The IBWC Managers of the Project Lacked Specialized Levee

Expertise

It became clear at trial that levee restoration projects are somewhat

specialized projects that benefit from specialized experience. The IBWC

employees assigned to the project at issue in this case, referred to as the Lower

Presidio Levee, were not well-versed in the technical requirements of levee

restoration. The contracting officer, Mr. Frank Delgado, testified that he had no

technical expertise in levee restoration or construction. Delgado Tr. at 474-75.

The contracting officer’s representative, who served as the IBWC’s technical

expert on this project, Mr. Frank Duran, had just begun work with the IBWC in

2010, and was in the process of obtaining his professional engineer’s license as

this project was underway. Duran Tr. at 917. He testified that the Lower Presidio

Levee project was his first levee project (along with a neighboring levee project at

about the same time). Id. at 723.

To support Mr. Delgado and Mr. Duran, the IBWC engaged a contractor to

manage restoration at the levee, Mr. Matthew Moore. His role was described as

construction inspector and construction manager. Moore Tr. at 1135, 1282. Mr.

Moore had worked on one prior levee project, which was another IBWC levee. Id.

at 1281-82. Prior to the Lower Presidio Levee, however, Mr. Moore had never

5

worked on a levee that involved slurry walls (which, in this project, were sunk

sixty feet below the levee to impede groundwater movement). Id. at 1386. Mr.

Moore improved his knowledge of slurry wall construction by questioning

Magnus employees, reading publications written by Mr. Louay Owaidat,

Magnus’s president, conducting internet research and consulting with a colleague

at his firm. Id.

B. The Levee’s Designer Also Lacked Specialized Levee Expertise,

and Suffered Cognitive Impairments During His Tenure at IBWC

Mr. Donald Atwood was the IBWC engineer who designed the Lower

Presidio Levee restoration project. He was not called to testify at trial based on

counsel’s concern that his presence at trial would be a hardship. According to

counsel, Mr. Atwood’s presence at trial would have constituted either a medical

hardship, a financial hardship, or both. Tr. at 449. Portions of Mr. Atwood’s 2015

deposition transcript became part of the trial record by joint request of counsel.

Joint Status Report of May 19, 2016, at 4 (ECF No. 64).

In 2006, Mr. Atwood suffered a traumatic brain injury from a car accident

and, from his perspective, subsequent cognitive problems eventually led to Mr.

Atwood being fired by the IBWC. Atwood Dep. Tr. at 7. The brain injury left Mr.

Atwood with “serious memory problems” and difficulties with concentration. Id.

at 7, 12. He was hired by the IBWC in 2009 and did not fully reveal the extent of

his cognitive impairments. Id. at 11. Mr. Atwood stated that his cognitive

impairments worsened over time. Id. In 2015 Mr. Atwood stated that he had been

fired from his last three jobs and that he was not the engineer or designer that he

used to be. Id. at 10-13.

Mr. Atwood came to the IBWC from a career in residential development,

for the most part designing single-family home subdivisions. Id. at 16, 18. Prior

to joining the IBWC, Mr. Atwood had never designed a levee. Id. at 22. His

design of the Lower Presidio Levee was his second levee design, after completing

the neighboring, upstream levee design just a short time before. Id. at 23. Mr.

Atwood based these two levee designs on other IBWC designs from previously

completed projects. Id. at 75-79.

After a review of all of the portions of Mr. Atwood’s deposition that were

6

presented at trial, much of it on videotape, the court concludes that Mr. Atwood’s

design of the Lower Presidio Levee was severely affected by his lack of

experience in levee construction and restoration, as well as by the cognitive

difficulties he was suffering from his brain injury. Mr. Atwood’s testimony

showed that he was learning levee design on the job, and was trying, apparently

with some difficulty, to bridge the gap from his prior experience to the specialized

tasks of levee restoration project design. See id. at 23 (stating that restoring an

“existing levee [to a] proposed [levee is] the same as designing a road with the

earthwork]”). Further, Mr. Atwood’s testimony showed that his cognitive

problems affected his work at the IBWC. Id. at 10, 12-14. Although Mr. Atwood

testified that he was able to compensate for his cognitive problems by sitting

quietly and concentrating on his work, id. at 47, his design work for this project

involved site visits and communications with IBWC staff and contractors, as well,

id. at 38, 42, 56-57, 65. Mr. Atwood clearly stated that after his car accident he

could no longer think on his feet, id. at 12, a cognitive impairment that would

necessarily have affected his design work for the IBWC. Thus, it is not surprising

that the levee design produced by Mr. Atwood that was included in the solicitation

for the Lower Presidio Levee caused problems down the line for both Magnus and

the IBWC.

The Lower Presidio Levee restoration project would renovate

approximately 5.88 miles of levee. JX 1, at 1. According to Mr. Atwood, the

design of the project took approximately six months, perhaps a bit more, to be

completed. Atwood Dep. Tr. at 54. Mr. Atwood also calculated the difference

between the volume of the existing levee and the volume of the renovated levee, a

calculation which established cost estimates for the materials expected to be used

on the project. Id. at 62-66. Mr. Atwood acknowledged, however, that his design

was not always accurate in its depiction of the existing levee. Id. at 39, 41, 57-59.

According to plaintiff’s expert, Mr. George Sills, a levee restoration designer

typically has years to develop the renovated levee’s design and agency staff also

typically have a year to write the specifications for the project. Sills Tr. at 2539-

40. At trial Mr. Sills characterized the plans and specifications for the Lower

Presidio Levee as perhaps the worst he had seen during the decades he had worked

on and/or evaluated levee projects, both for the United States Army Corps of

Engineers and in private practice. Id. at 2425.

C. Solicitation and Significant Amendments Sow Confusion

7

The IBWC issued its solicitation for the project on November 17, 2010. JX

1, at 40. The IBWC publicized the project, which was a small business set-aside,

with an estimated price from $10 million to $15 million. Id. at 1. Significant

amendments to the solicitation included a statement that estimates of the quantities

of materials required for project completion were for “informational purposes

only.” Id. at 40 (Amendment 001, issued November 19, 2010), 73 (same).

Bidders were required to attend a site visit before their bids would be considered.

Id. at 29, 64.

A number of significant solicitation amendments were issued during the

eight-day period from December 8 through December 15, 2010. For example, the

entire set of specifications for the project was revised and fully replaced on

December 8, 2010 by a 281-page document. Id. at 44; JX 23. These significant

solicitation amendments also included four sets of the IBWC’s answers to bidder

questions, updated as bidders found incorrect or confusing provisions in the

solicitation package. JX 1, at 52-54, 64-68, 73-74, 80.

Many of the IBWC’s answers to bidder questions encompassed fundamental

changes to the project and revised or replaced contract language. For example, as

of December 7, 2010, bidders still had not received access to electronic files

pertinent to the levee design, nor had they received geo-technical information as to

subsurface conditions, even though bids were due two weeks later. Id. at 52. The

IBWC promised that these files would be available shortly. Id. The geo-technical

report made available to bidders on December 9, 2010 consisted of approximately

170 pages. Id. at 55; JX 139, at 557-729.

The court highlights here some of the IBWC’s answers to bidder questions

to give concrete examples of the types of changes to contract work that bidders

encountered from December 8, 2010 through December 15, 2010. On December

8, 2010, the IBWC slashed the estimate of imported riprap to be placed on the

levee almost in half, from 32,000 CY to 17,500 CY. JX 1, at 53. On December 11

and December 14, 2010, specifications for two types of structures on the levee

were changed. Id. at 65, 73. On December 15, 2010, payment for the slurry walls

was changed from a price per unit foot to lump sum. Id. at 80. From the time the

last of these significant changes were made to the solicitation, bidders had

approximately one week to finalize their bids. At one point, the IBWC

encouraged bidders to conduct their own surveys of the existing levee, rather than

8

rely on the information provided by the IBWC. Id. at 66. Bids were originally

required to be submitted by December 21, 2010, but the deadline was ultimately

extended to December 23, 2010. Id. at 75.

Plaintiff’s expert, Mr. George Sills, testified that the IBWC’s solicitation

package was totally inadequate to support a fixed-price bidding process. Sills Tr.

at 2425. According to Mr. Sills, first, the solicitation lacked essential data. Id.

Second, the levee design set forth in the plans and specifications did not reflect the

conditions on the existing levee. Id. Third, the IBWC’s answers to bidder

questions showed that the agency did not really understand the project, or, at the

very least, could not clearly convey its understanding of the project to bidders. Id.

at 2455, 2465-66. Fourth, Mr. Sills testified that a bidder could not have been

expected to repeatedly pose a question for which the agency had already provided

an answer, even if the answer did not resolve every inherent ambiguity in the

topic, because the time to prepare bids was limited. Id. at 2518-19. Finally, Mr.

Sills believed that the IBWC should not have expected bidders to expend their

own funds to perform additional surveys of the existing levee so that their bids

could be founded on better data than the inaccurate or insufficient data provided in

the solicitation. Id. at 2469-70; JX 98, at 3.

The court must agree with Mr. Sills that the level of error and missing

information in the solicitation documents, and the sweeping last minute changes to

the solicitation that were made during the bidding process, were problematic.

Even the government’s expert, Mr. Lee Wooten, acknowledged that the original

levee design documents included in the solicitation were flawed and provided

insufficient guidance for levee restoration. Wooten Tr. at 1904-05. Despite the

shifting sands of information contained in the solicitation package, Magnus

submitted a bid of $8,395,995 which was accepted by the IBWC on December 30,

2010. Jt. Stip. of July 28, 2016, at 1 (ECF No. 95).

D. Even Before the Solicitation was Awarded to Magnus, the

Contracting Officer’s Representative for the Project Was Aware

of Defects in the Levee’s Design

Mr. Frank Duran, who fulfilled the role of contracting officer’s technical

representative on the levee project, testified that he and the IBWC knew that the

original designs for the project were “terrible” even before the contract was

9

awarded to Magnus. Duran Tr. at 1039. According to Mr. Duran, the great

majority of the defects in the design were in the drawings which described the

construction of the levee and which depicted, erroneously, the status of the

existing levee. Id. at 1044. Mr. Duran also testified that the IBWC’s estimate of

what the project would cost was just as flawed as the design documents provided

to Magnus.7 Id. at 731.

E. Early Work on the Levee Impeded by Defective Levee Plans and

Specifications

Magnus began excavation work on the existing levee on April 18, 2011. Jt.

Stip. of August 30, 2016, at 1 (ECF No. 109). However, by this time the IBWC

had confirmed that the levee design was deeply flawed. See JX 6, at 1 (IBWC

memorandum citing “numerous design deficiencies” reflecting conflicts between

the “current plan versus existing site conditions”). Indeed, Mr. Duran testified that

he recommended to the contracting officer that the IBWC terminate the contract

for the convenience of the government rather than proceed with the construction

of a levee that could not be built as designed.8 Duran Tr. at 724-26. The IBWC

asked Mr. Duran to ameliorate the design deficiencies himself but he refused,

citing concerns about associating his professional license with this particular

design at such a late stage of the design’s development. Id. at 1039-40. The

IBWC’s “initial plan,” therefore, was to terminate the levee project contract for the

convenience of the government. Nunez Tr. at 1121. The IBWC met with Magnus

to discuss an alternative, which would be for Magnus to create better construction

drawings based on a new, accurate survey of the existing levee. JX 7. In Mr.

Duran’s words, Magnus “wanted to help the IBWC out,” rather than lose the job if

the contract was terminated for the convenience of the government. Duran Tr. at

924.

F. The IBWC’s “Matrix” Request for Additional Contract Work to

Complete the Levee Restoration

7

/ Once he got a closer look at the levee, Mr. Duran estimated, very roughly, that

Magnus’s bid of $8,395,995 would need to be doubled to account for additional, unexpected

work required on the levee. Duran Tr. at 737.

8

/ Even in 2016, Mr. Duran’s opinion that the levee contract should have been terminated

for the convenience of the government was unchanged. Duran Tr. at 726.

10

On April 18, 2011, the contracting officer issued a memorandum to

Magnus, the “matrix” document, which set forth a detailed list of work items that

would need to be completed to fully restore the existing levee. JX 6. A first step

would be for Magnus to obtain a complete and accurate survey of the existing

levee, with the actual location, width and height of the existing levee for 5.88

miles to be determined by a professional surveyor. JX 4, at 4-5. Subsequently,

Magnus would prepare detailed cost estimates for the additional work required.

JX 7, at 10-13; JX 11, at 1.

The notes for a meeting between Magnus and the IBWC held on April 21,

2011 show that the IBWC initially expected, or at least preferred, that the

additional work set forth in the matrix would not increase the contract price by

more than 25%. JX 7, at 1. In other words, the IBWC’s expectation at the start of

these contract modification negotiations was that the contract price would rise

from $8,395,995 but would remain less than $10,495,000. Nonetheless, the levee

restoration contract was modified in September 2011, in response to the matrix, so

that the modified contract price rose to $11,518,798. JX 4; JX 27; JX 108.

G. No Redesign of the Levee by Magnus

One of the disputed issues in this case is whether the changes to the contract

embodied in the matrix and related contract modifications (Modifications 001,

002, and 003) ordered Magnus to redesign the project. Defendant argues that

Magnus took on the responsibility for fixing the defective design of the levee, both

with a redesign and with its pricing of the work set forth in the matrix. Assuming

that such a redesign of the levee occurred, the government’s position is that

Magnus must now bear the risk of any cost overruns that were inherent in

Magnus’s overall redesign of the levee set forth in those contract modifications,

because those contract modifications were fixed-price. In other words, in the

government’s view, because Magnus redesigned the project and agreed to a fixed-

price modification of the contract, the IBWC is now insulated from any

responsibility for cost overruns.

Not surprisingly, plaintiff’s position is significantly different and relies on

three principal facts. First, while Magnus obtained an accurate survey of the

existing levee and prepared new construction cross-sections based on that survey,

these were simply tasks that helped Magnus implement the IBWC’s original,

11

flawed design for the levee, not a new Magnus-authored levee redesign.9 Second,

even though the matrix and related contract modifications added work to the base

contract, cost overruns in embankment fill were the result of flaws in the original

levee design, plans and specifications. Third, plaintiff contends that the contract

modifications related to riprap that flowed from the matrix negotiations included a

deferred determination of the quantity of additional riprap that might be needed to

replace existing riprap on the levee.

The preponderant weight of the evidence presented at trial, primarily

testimony discussing contemporaneous documentation of the period of

negotiations triggered by the matrix, shows that Magnus did not contract to

perform a redesign of the Lower Presidio Levee. Sallas Tr. at 1662-64; Owaidat

Tr. at 2313-27. Further, Mr. Owaidat testified that Magnus is not, and was not in

2011, a levee design firm and could not have offered to redesign the levee for the

IBWC. Owaidat Tr. at 2312, 2318-19, 2328. Although the IBWC witnesses,

particularly Mr. Frank Duran, insisted that Magnus redesigned the levee, Duran

Tr. at 731-34; Nunez Tr. at 1129-31, there is not a shred of documentary evidence

which supports that contention. The court, having weighed the evidence provided

by contemporaneous documents and witness testimony, concludes that Magnus

did not offer and did not contract to redesign the Lower Presidio Levee. Because

Magnus did not redesign the levee, the IBWC’s attempt to shift responsibility onto

Magnus for a faulty redesign of the levee is without merit.

H. Renovation of the Levee, from April 18, 2011 through May 16,

2012, Was Satisfactorily Completed, but the Embankment Fill

and Riprap Disputes Soured the Working Relationship Between

the Parties

The IBWC accepted, without change, Magnus’s proposals for the matrix-

related work on the levee. By all accounts, the IBWC was satisfied with Magnus’s

renovation of the levee. Delgado Tr. at 677; Nunez Tr. at 1127; Moore Tr. at

1271. In the third quarter of 2011, however, Magnus began to communicate to the

IBWC that it was experiencing cost overruns in the amount of embankment fill

9

/ Cross-section drawings, created for each fifty-foot station marker along the levee,

depict the existing and as-built contours of the levee at each of those points along the levee. See

supra note 6.

12

that was required to complete the levee. Owaidat Tr. at 124-25; Diettert Tr. at

358-61; Delgado Tr. at 573-74; Moore Tr. at 1245; Sallas Tr. at 1635-37. Magnus

also eventually informed the IBWC that additional riprap was placed on the levee

which was not included in the specific amounts required by the base contract or in

the matrix-based contract modifications. JX 80. Rather than negotiate the

amounts of any equitable adjustments to the contract owed Magnus, the IBWC

simply denied Magnus’s claims related to these cost overruns in their entirety. A

separate dispute regarding a credit owed the IBWC for an extensive landside slope

change to the levee also could not be resolved amicably. See supra. This

litigation followed.

III. Procedural History

Magnus filed its complaint in this court on October 31, 2013, appealing the

contracting officer’s denials of both the embankment fill claim and the riprap

claim. On January 13, 2014 the contracting officer issued a final decision holding

that the IBWC was entitled to retain $466,092 of contract payments due Magnus

in order to provide a credit to the IBWC to account for reduced quantities of

imported embankment fill occasioned by slope changes to portions of the levee.

JX 33. Magnus accordingly amended its complaint on January 29, 2014 to add an

appeal of the contracting officer’s final decision on the slope change credit issue.

The parties then conducted discovery on the issues raised in plaintiff’s amended

complaint.

As this case moved toward the trial preparation phase, the court considered

two important motions brought by the government. In one motion, the

government sought leave of the court to amend its answer to the amended

complaint in order to bring a counterclaim addressing the slope change credit

dispute. ECF No. 70. In the other motion, the government sought to narrow the

admissible scope of plaintiff’s expert opinions and testimony regarding the host of

problems caused by the levee’s inadequate design. ECF No. 69. The government

prevailed, in large part, on both of its motions.

The court issued separate opinions on the government’s motions which

significantly narrowed the scope of trial proceedings. The first opinion recognized

this court’s jurisdiction under the CDA to resolve the government’s counterclaim

on the slope change credit issue. Magnus Pac. Corp. v. United States, No.

13

13-859C, 2016 WL 3776889 (Fed. Cl. July 13, 2016) (Magnus I).

Notwithstanding its delay of more than two years, the government was permitted

to assert its counterclaim for a slope change credit, but only in the amount of the

contracting officer’s retainage of $466,092, not more. See id.

The court’s second ruling examined the expert opinion topics proposed by

plaintiff and evaluated the relevance of those topics for the resolution of plaintiff’s

riprap and embankment fill claims.10 Magnus Pac. Corp. v. United States, No.

13-859C, 2016 WL 3960447 (Fed. Cl. July 21, 2016) (Magnus II). Magnus II also

discussed the court’s jurisdiction under the CDA, and determined that the court

had jurisdiction to consider three theories of entitlement for plaintiff’s riprap and

embankment fill claims: Type I Differing Site Conditions; Defective Plans and

Specifications; and Constructive Change. 2016 WL 3960447, at *3-7. There were

no other evidentiary challenges brought to the court’s attention through the formal

process established by the court’s pretrial orders. ECF Nos. 53, 57, 62. A pre-trial

conference was held in Washington, DC on July 7, 2016.

Trial was held in Sacramento, California from August 8, 2016 through

August 11, 2016, and trial continued in Austin, Texas from September 12 through

September 22, 2016. The court has before it the trial transcript, trial exhibits, and

the parties’ post-trial briefs (Pl.’s Br. (ECF No. 135), Pl.’s Br. Supp. (ECF No.

136), Def.’s Br. (ECF No. 140), Def.’s Reply (ECF No. 144), and Pl.’s Reply

(ECF No. 145)). In this opinion, the court cites the testimony of the following trial

witnesses:

Louay Owaidat, Magnus Pacific president;

Bruce Diettert, Magnus Pacific chief financial officer;

Jeffrey Sallas, Magnus Pacific regional manager;

10

/ Defendant’s motion in limine did not target Mr. George Sills’ Expert Rebuttal Report,

which addressed, albeit very briefly, plaintiff’s slope change credit claim. Tr. at 2421. Because

none of the expert opinions at issue in the government’s motion in limine addressed the slope

change credit dispute, the court’s ruling on the motion in limine had no effect on the permissible

scope of expert trial testimony regarding plaintiff’s slope change credit claim or the

government’s counterclaim on that same issue. Magnus Pac. Corp. v. United States, No.

13-859C, 2016 WL 3960447, at *1 (Fed. Cl. July 21, 2016) (Magnus II).

14

Rodney Louviere, Magnus Pacific project manager;

Chris Douglas, Magnus Pacific project engineer;

Champ Clark, Magnus Pacific quality assurance officer;

Edison Stevens, senior soils testing technician for Fugro Consultants,

a Magnus subcontractor;

Frank Delgado, IBWC contracting officer;

Jose Nunez, IBWC Engineering Services Division chief;

Frank Duran, IBWC contracting officer’s technical

representative;

Matthew Moore, employee of subcontractor URS, who

served as IBWC’s construction manager/construction

inspector;

George Sills, plaintiff’s expert; and

R. Lee Wooten, defendant’s expert.

DISCUSSION

The court’s analysis of the trial evidence is divided into five topical

sections, in the following order: witness credibility, the slope change credit

dispute, the riprap claim, the embankment fill claim, and interest due plaintiff

under the CDA.

I. Witness Credibility

As a general matter, both parties’ witnesses were credible, except for the

witnesses discussed separately below. Mr. Louay Owaidat, the president of

Magnus, was, in particular, both well-informed and credible; in addition, his grasp

15

of the issues in dispute in this litigation was unmatched by any other witness. An

important difference must also be drawn between the witnesses for Magnus and

those for the IBWC – much more extensive levee restoration experience going into

this project was to be found among the contractor’s personnel. Similarly, the

principal expert testifying for Magnus, Mr. George Sills, was better-versed in

levee projects than was Mr. Lee Wooten, the government’s expert. Wooten Tr. at

2123; Sills Tr. at 2376-78. Thus, for most of the disputed questions of fact aired at

trial, plaintiff’s witnesses were more credible and showed greater expertise as to

levee restoration work.

A. Mr. Frank Delgado

Mr. Delgado, the IBWC’s contracting officer, was generally not a credible

witness. He was combative when asked follow-up questions regarding testimony

he had given moments earlier, and retreated from his testimony concerning

“staffing shortages” at the IBWC when plaintiff’s counsel attempted to confirm

that such shortages did indeed exist. E.g, Delgado Tr. at 460-62. In general, Mr.

Delgado’s testimony appeared to be crafted to avoid any possible inference that he

or the IBWC was at fault, to even the slightest degree, for the excess costs

incurred by Magnus during the levee restoration project. Mr. Delgado, who is

now retired, also had very little specific or detailed memory of events, and instead,

quite often relied on a somewhat generalized, impressionistic recollection of the

disputes between the IBWC and Magnus. See, e.g., Delgado Tr. at 684-85 (“I’m

not precise on this. . . . My recall is not there.”).

In addition, Mr. Delgado’s trial testimony presented, on multiple topics, a

different version of events, more favorable to the IBWC’s position, than the

version of events he provided during a deposition taken by Mr. Baxter. E.g.,

Delgado Tr. at 469-73; 490-92, 509-11; 622-24; 638-39; 641-43, 672-74. The

accumulation of these inconsistencies in testimony detracted from Mr. Delgado’s

credibility. Mr. Delgado’s testimony also showed that at the time he denied

Magnus Pacific’s largest claim, he was influenced by rumors at the IBWC,

unfounded rumors discredited at trial, that Magnus had falsified some of the

records that substantiated the quantities of embankment fill required to complete

the restoration of the levee. See id. at 628-30, 649-54. In general, Mr. Delgado’s

testimony evinced a bitterness toward Magnus and a continuing suspicion as to the

factual bases of Magnus Pacific’s claims, attitudes which appeared to be grounded

16

more in personal animus than in an objective review of the work performed by

Magnus to restore the levee. Cf., e.g., id. at 677-78 (begrudgingly conceding that

Magnus had “properly constructed” the restored levee). Overall, the court was not

convinced that Mr. Delgado’s testimony at trial was accurate or credible.

B. Mr. Frank Duran

Although Mr. Frank Duran, the contracting officer’s representative for the

IBWC, retained vivid impressions of the levee restoration project, his testimony

was inconsistent as to project work and communications between the IBWC and

Magnus. For example, Mr. Duran stated that Magnus personnel were clearly

warned, in writing, that their revised cost estimates for contract completion were

too low, but he later testified, unconvincingly, that only an ambiguous instruction

to “double check your numbers” had been provided in writing. Duran Tr. at 737-

42. Mr. Duran, as he recounted these communications, had a very loose estimate

as to the number of such warnings that were provided to Magnus, ranging from

two or three instances, to “several times.” Id.

Only one letter on the topic of Magnus’s cost proposals was identified at

trial, however. Further, this IBWC letter, specifically relied upon by Mr. Duran as

an example of the warnings provided Magnus, contained no warning to Magnus

that its proposed costs in response to the matrix were too low. JX 11. Indeed, it

would be difficult to ascertain from this letter that Magnus was being asked to

“double check” its quantity estimates. Id. Mr. Duran did not improve his

credibility by testifying that he “believed” a “second round” of comments had

been sent to Magnus; no second letter or email was ever identified among the trial

exhibits. Duran Tr. at 928, 1028-29.

The “warning letter” testimony was just the tip of the iceberg for Mr.

Duran’s credibility problems. He explained that a portion of his deposition

testimony was inaccurate because he had misunderstood the question posed to

him. Duran Tr. at 730. On the stand, Mr. Duran initially refused to concede that

as of March 2013 the IBWC had taken a firm position that Magnus’s embankment

fill claim would be denied in its entirety, but, after hearing his deposition

testimony to the contrary, changed his trial testimony on that point. Id. at 755-57.

From these and other aspects of Mr. Duran’s testimony, the court viewed Mr.

Duran’s testimony as having a high probability of containing inaccuracies and an

17

excessive amount of “spin.”11

Like Mr. Delgado, Mr. Duran’s testimony at trial seemed to be fueled in part

by a desire to justify his decision to recommend against any payment to Magnus

for its claims. For example, Mr. Duran used a number of targeted, narrow

questions from plaintiff’s counsel as opportunities to complain generally that

Magnus’s claims lacked supporting data and consistency. Duran Tr. at 758-59,

762, 774, 833. There were also a number of occasions when Mr. Duran’s

deposition testimony, which generally tended to be less hostile to Magnus’s

version of events, impeached statements he made at trial that were highly critical

of Magnus’s claims. See id. at 815-16, 841-42, 888-89, 894-96. Mr. Duran’s

testimony, as a general matter, lacked credibility because Mr. Duran appeared to

be slanting his testimony at trial quite clearly in support of his decisions to reject

any possible validity of Magnus’s claims.

The portion of Mr. Duran’s testimony that most clearly demonstrates his

lack of credibility was his discussion of a letter sent by the IBWC to Magnus

requesting cost proposals to complete the restoration work on the levee. This

letter, dated July 1, 2011, is straightforward in its request for detailed cost

proposals. JX 11, at 1. There is not, however, a single sentence in this letter

which implies that Magnus’s cost proposals that had been advanced in previous

discussions were too low. The only specific mention of a cost concern is an

upward limitation on price for additional work on Reach 1, the upstream portion

of the levee. Id.; see also JX 7, at 1 (similarly noting an upward limitation set by

the IBWC for the cost of work contemplated by the matrix). Nonetheless, Mr.

Duran insisted at trial that the warning contained in the text of this letter was that

Magnus needed to double-check its figures because the IBWC was concerned that

Magnus’s cost proposals were too low. There is no such warning in the text of the

July 1, 2011 letter and Mr. Duran’s interpretation of the plain text of that letter

11

/ Mr. Duran, when confronted with documents in the record such as letters or emails,

repeatedly relied on undocumented phone conversations in an attempt to lend credence to his

testimony regarding the content of communications between Magnus and the IBWC. See, e.g.,

Duran Tr. at 737-41, 802, 883-84, 896-97, 1035-37, 1106. Based on Mr. Duran’s demeanor at

trial, and testimony from other witnesses which contradicted his statements, see, e.g., Sallas Tr.

at 1622-23; Owaidat Tr. at 2340-41, the court considers Mr. Duran’s testimony as to the alleged

content of these phone calls to be unreliable, at best.

18

was neither logical nor credible.12 Duran Tr. at 802-03, 1020-28. Judging both

the content of Mr. Duran’s testimony and his demeanor as a witness, the court

finds that his testimony was largely not credible.

C. Mr. Matthew Moore

Mr. Moore, the contractor who performed contract inspection and

management services for the IBWC on the levee, was engaging and affable when

questioned at trial. His testimony, however, tended to wander through a fog of

ambiguity and confusion, and was quite often difficult to follow. Here is an

example of one of his answers on the stand, when Mr. Moore was questioned

whether he ever had difficulty with or asked Magnus to revise any of the daily

construction reports submitted to him:

It seems like in the beginning, there was several working

with Rodney that I was asked – I asked him – not I was

asked – I was asked to include more information or if

there was a specific conversation during the day that I

didn’t notice was on theirs which happens once in a blue

moon for them to, hey, could you include that this

conversation took place or – in their daily report as

opposed to I would – what was your statement? – having

difficulty – having difficulty with their reports, so – but –

Moore Tr. at 1139. Mr. Moore then clarified, with the assistance of counsel, that

there were very few instances when he asked Magnus to revise a daily report. Id.

at 1140.

Clarification of Mr. Moore’s confusing statements was elusive, however,

when he could not remember what steps he had taken to arrive at certain opinions.

For example, Mr. Moore came to believe, it appears, that the contract documents

12

/ By way of contrast, Mr. Sallas, Magnus’s regional project manager, confirmed that

this letter, when read according a plain meaning to its terms, contained no warning that Magnus’s

cost estimates were too low. Sallas Tr. at 1620-22. Mr. Owaidat testified that he, too, disagreed

with Mr. Duran, and demonstrated that Mr. Duran’s proposed interpretation of the letter was not

supported by any portion of the plain text of that document. Owaidat Tr. at 2331-38.

19

did not represent that the existing levee material was suitable to be re-used as

embankment fill placed on the levee for levee restoration. Moore Tr. at 1158. At

his deposition, Mr. Moore testified that he did not review contract documents for

the specific purpose of forming that opinion. Id. at 1157. At trial, he changed his

testimony to state that he had reviewed contract documents for that purpose. Id. at

1155.

Exactly how that review of contract documents by Mr. Moore might have

occurred was never clear, as shown by the following testimony given at trial by

Mr. Moore:

I believe once I received the plans and specs, I looked at

it, and I don’t remember finding information in there that

stated that the existing material could be reused.

....

I believe at some point I would have looked through

those, looking for does – is there statements that or some

– something that would show that the existing material is

there.

....

[Do you have a specific recollection . . . ?]

Not specific. I believe I would have in the beginning.

Or – or when someone asked can we reuse this as – a

blanket.

....

I believe in the beginning when Magnus started work

that I would have dove into it deeper to look to say is

there something out there that says the material’s

probably generally good and – and base – do – or do we

really need testing on everything, which we would

anyway per plans and specs. But what do we think we’re

looking at here.

[But you believe you would have, but you don’t have any

specific recollection . . . .]

Correct.

Moore Tr. at 1155-59. In the end, it is unclear whether the deposition testimony

20

stating that Mr. Moore did not review contract documents to form his opinion, or

his trial testimony stating that he believed he would have reviewed contract

documents to form his opinion, better reflects what actually happened. Mr.

Moore’s testimony contained persistent and significant ambiguities of this type.

Mr. Moore also confessed, repeatedly, that his memory of events on this

levee was not sufficient to answer specific questions. See, e.g., Moore Tr. at 1141,

1148, 1154-55, 1158, 1172-73, 1192, 1320. In addition, like Mr. Delgado and Mr.

Duran, there were several instances where his deposition testimony and trial

testimony did not match. See id. at 1157-58, 1161-64, 1167-68, 1237-38. The

court viewed Mr. Moore’s testimony as less credible than most of the other

witness testimony at trial because of the amount of confusion, problems with

recall, and inconsistencies with prior deposition testimony he exhibited on the

stand.

To give a final example of Mr. Moore’s lack of credibility, Mr. Moore was

asked how he arrived at a particular conclusion in his technical analysis rejecting

the entirety of Magnus’s riprap claim. Even after a review of every relevant trial

exhibit, Mr. Moore could not say with any certainty why his analysis stated that

Magnus had not reviewed two important types of information when Magnus

estimated the work and expense required to complete all of the riprap work on the

levee. Moore Tr. at 1192-93. In essence, Mr. Moore’s trial testimony on this

topic shed absolutely no light on a key dispute in Magnus’s riprap claim. Mr.

Moore, who was the only representative of the IBWC with a daily presence on the

levee, was too befuddled by the passage of time, in most instances, to provide

credible testimony as to the factual underpinnings and merits of plaintiff’s claims

in this suit.

II. Slope Change for Levee Modifies Contract

On February 27, 2012 in Modification 004, the IBWC unilaterally modified

the contract to change the landside slope of the levee from a wider, gentler 3:1

ratio to a slimmer, steeper 2.5:1 ratio from STAs 172 to 263. JX 104, at 1. This

change would cause a reduction of embankment fill in the body of the levee

because it reduced the volume of the levee on the landside between these stations.

Accordingly, the parties entered into negotiations as to the reduction in the fixed

contract price that would reflect Magnus’s reduced costs. Id. According to the

21

exhibits related to this change and undisputed witness testimony provided at trial,

the levee slope change was required because several portions of the levee design

encroached on existing fixed objects, such as utility poles and drains, or right-of-

way and easement boundaries; therefore, the agency discovered that the levee

landside edge needed to be moved inward from what was originally shown in its

design for the project. See, e.g., JX 29; JX 32; JX 33; JX 72; JX 104; Owaidat Tr.

at 134, 156-57; Duran Tr. at 875-76.

The scope of the slope changes to the levee eventually expanded to include

a number of portions of the levee beyond those contemplated in Modification 004.

The stations ultimately affected by the slope change included STAs 61 to 68, 97 to

113, 153 to 157, and 176 to 260. JX 29; JX 32; JX 72. That is approximately one-

third of the length of the levee that was affected by inaccurate information in the

levee design provided to Magnus by the IBWC at the outset. See JX 72 (Duran

Memorandum of March 8, 2013) (noting that “right of way constraints would not

allow for the originally designed levee footprint”). Some additional work, work-

flow inefficiencies, delays and additional construction costs flowed from the levee

slope change. JX 32; Owaidat Tr. at 154-58. Although Magnus provided the

IBWC with a detailed description of the impacts of the levee slope change on

Magnus’s levee restoration work, and a cost proposal which reflected those

impacts, the IBWC never asked for more specific supporting data and never

performed an analysis which would serve to rebut the amount of the increased

costs of slope change-related work contained in Magnus’s final slope change

credit proposal.

The parties were not able to achieve consensus as to the amount of the credit

due the IBWC for the slope change pursuant to Modification 004. JX 30; JX 103.

On January 13, 2014, the contracting officer issued his final decision on the

dispute, holding that Magnus owed the IBWC $466,092 for the slope change. JX

33. The contract was never modified to incorporate that decision. As a practical

matter, the IBWC continues to retain $466,092 that is owed, under the terms of the

contract, to Magnus. In this court, Magnus seeks to invalidate the agency’s

retention of those funds in large part, although Magnus’s claim acknowledges that

Magnus owes the IBWC $35,036 for a slope change credit for reduced

embankment fill costs. Accordingly, in this suit Magnus seeks $431,056 related to

the slope change dispute (subtracting $35,036 from $466,092 retained by the

22

IBWC). The government counterclaims for a slope change credit of $383,893.13

Def.’s Br. at 59. The government concedes only that Magnus is due a “modest

refund” from the funds retained by the government related to the slope change

credit dispute, id. at 1, apparently in the amount of $82,199 (subtracting $383,893

from the retained amount of $466,092).

A. Maropakis Challenge to Plaintiff’s Slope Change Credit Claim

Before resolving the merits of the slope change credit dispute, the court

must address the government’s jurisdictional challenge to plaintiff’s claim

challenging the IBWC’s retainage of $466,092. The government grounds its

argument in an overly broad interpretation of the holding of M. Maropakis

Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir. 2010) (Maropakis).

Def.’s Br. at 58; Def.’s Reply at 29. Although the government correctly quotes the

holding in that case, defendant ignores a number of decisions which have

interpreted Maropakis more narrowly than the sweeping interpretation of

Maropakis advanced by the government in this litigation. Further, Maropakis is

easily distinguishable from the case at bar. Finally, an earlier precedential

decision of the United States Court of Appeals for the Federal Circuit appears to

support a jurisdictional ruling in plaintiff’s favor for its slope change credit claim,

unless Maropakis forecloses reliance on this precedent.

One bedrock principle of CDA caselaw is that CDA claims must first be

presented to a contracting officer for a final decision before they are litigated in

this court. E.g., England v. Swanson Group, Inc., 353 F.3d 1375, 1379 (Fed. Cir.

2004) (citing James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541-42

(Fed. Cir. 1996)). Some CDA claims, however, are government claims which

have been the subject of a contracting officer’s final decision adverse to a

contractor. These government CDA claims which have met the CDA’s

presentment requirement provide jurisdiction in this court for the contractor’s

appeal of the adverse contracting officer’s decision, even if the contractor has not

submitted its own claim on that topic to the contracting officer. See, e.g., Garrett

v. Gen. Elec. Co., 987 F.2d 747, 749 (Fed. Cir. 1993) (“The [CDA] . . . provides

13

/ Although the government’s amended answer included a counterclaim on this issue for

$466,092, ECF No. 91, at 11, the government’s expert revised this figure to $383,893 based upon

trial testimony which changed his analysis. Def.’s Br. at 43.

23

that a contractor may appeal a Government claim to the appropriate board without

submitting a claim of its own to the CO.”). Nonetheless, although contractor

appeals of adverse contracting officer decisions are within the CDA jurisdiction of

the court in this manner, the contractor’s appeal is typically limited in scope

because it is not founded on the contractor’s own claim which received its own

contracting officer’s decision. See Maropakis, 609 F.3d at 1330 (noting that this

court had jurisdiction over a contractor’s “claim relating to liquidated damages,”

but ruling that certain defenses to the government’s assessment of liquidated

damages were beyond the scope of the contractor’s appeal).

The question here is whether Magnus, in its slope change credit claim, fails

to satisfy the jurisdictional test expressed in Maropakis: “[A] contractor seeking

an adjustment of contract terms must meet the jurisdictional requirements and

procedural prerequisites of the CDA, whether asserting the claim as an affirmative

claim against the government or as a defense to a government action.” 609 F.3d at

1331. Another expression of this jurisdictional principle is found in the previous

paragraph of Maropakis: “[E]ven when used as a defense to a government claim,

a contractor’s claim for contract modification must adhere to the jurisdictional

requirements of the CDA.” Id. (citations omitted). The precise “contract

modification” or “adjustment of contract terms” proposed by the plaintiff in

Maropakis was an extension of the contract’s completion date to account for

allegedly excusable delay and to prevent the enforcement of a liquidated damages

provision by the government. Id. at 1329-30. The jurisdictional flaw identified in

Maropakis was that the plaintiff failed to file a certified claim with the contracting

officer requesting an extension of the contract completion date before

commencing litigation in this court. Id. at 1329-32.

The plaintiff in this case argues, correctly, that Magnus’s slope change

credit claim is, at heart, a claim for the payment to Magnus of the contract price,

not an attempt to modify the contract or adjust its terms. Pl.’s Reply at 29.

Plaintiff’s slope change credit claim does not seek an addition to the contract

price, or any other adjustment of contract terms in favor of Magnus. Magnus’s

slope change credit claim is jurisdictionally sound because it appeals the

contracting officer’s final decision which determined that Magnus owed the IBWC

$466,092 for the slope change. Garrett, 987 F.2d at 749.

Whereas Magnus’s slope change credit claim merely requests that it be paid

24

most of the amount remaining in the contract price, the government’s counterclaim

seeks to adjust the contract price, significantly downward, by $383,893, or, in

other words, to significantly adjust the contract terms in the government’s favor in

the amount of $383,893. In the court’s view, therefore, plaintiff’s slope change

credit claim is not a claim that fits within the category of contractor claims and

defenses that seek a contract modification and that are subject to the jurisdictional

prerequisites announced in Maropakis. Thus, Magnus need not have submitted a

certified claim to the contracting officer before litigating the slope change credit

dispute in this court.14

The breadth of the jurisdictional ruling in Maropakis has been repeatedly

examined and applied by this court and the boards of contract appeals. The

critical inquiry in these decisions is whether the contractor’s claims or defenses

seek, in the CDA forum, to modify or adjust contract terms. If the claim or

defense, unlike the claim and defense in Maropakis, does not seek to adjust or

modify contract terms, the jurisdictional prerequisite described in Maropakis is not

applicable. See, e.g., Total Eng’g, Inc. v. United States, 120 Fed. Cl. 10, 15 (2015)

(“Unlike the contractor in Maropakis, Total is not seeking an adjustment of

contract terms, but is simply defending against a Government claim . . . .”);

Sikorsky Aircraft Corp. v. United States, 102 Fed. Cl. 38, 48 n.14 (2011) (limiting

the scope of Maropakis’s jurisdictional ruling, when considering a jurisdictional

challenge to the defenses raised by the plaintiff in that case, to “counterclaim

defenses that seek contract modification”); Jane Mobley Assocs., CBCA 2878,

16-1 B.C.A. ¶ 36209 (Jan. 5, 2016) (finding that Maropakis did not apply where

the contractor was merely interposing factual allegations regarding the payment

terms of the contract, and did “not seek an adjustment of contract terms or other

entitlement under the contract”); Nat’l Fruit Prod. Co., CBCA 2445, 12-1 B.C.A.

¶ 34979 (Mar. 26, 2012) (finding jurisdiction over a contractor’s defense to a

liquidated damages claim by the government because the contractor was “not

seeking a compensable change or a contract modification”).

14

/ Although the government implies that Magnus should have certified a claim regarding

the slope change credit dispute and submitted it to the contracting officer before lodging such a

claim in this suit, Def.’s Br. at 43, defendant does not discuss the CDA’s certification

requirements in its brief. Because the court finds that Magnus was not required to file a claim

regarding the disputed slope change credit with the contracting officer before litigating its claim

before this court, there is no need to decide whether such a CDA claim, if filed, would have

required certification.

25

Here, the court follows this line of persuasive authority and determines that

the holding in Maropakis does not deprive this court of jurisdiction over Magnus’s

slope change credit claim.15 The slope change credit claim does not seek to adjust

contract terms and, thus, did not require that Magnus file a claim with the

contracting officer before litigating the slope change dispute in this forum. Cf.

Jane Mobley, 16-1 B.C.A. ¶ 36209 (holding that factual defenses asserting a

breach of the implied duty of good faith and fair dealing, which seek to ensure that

a contractor reaps the contemplated value of the contract, are not claims subject to

the claim submission prerequisites described in Maropakis). Magnus’s slope

change credit claim merely interposes factual allegations that contradict the

IBWC’s proposed $466,092 decrease in the contract price. Maropakis does not

raise a jurisdictional bar to Magnus’s arguments in this regard.

The differences between Maropakis and this case are too numerous to each

merit discussion, but the contrasts discussed here easily distinguish Maropakis

from the case at bar. First, the contracting officer in this case did not issue his

final decision on the slope change credit dispute until after Magnus had filed suit

in this court. Magnus was thus forced to amend its complaint to appeal that

decision. In Maropakis, the contracting officer’s final decision on liquidated

damages was issued before the plaintiff filed suit in this court, 609 F.3d at 1326, a

sequence of events that put the Maropakis litigation in a markedly different

procedural posture.

Second, the Maropakis plaintiff never provided the contracting officer with

notice as to its exact claim and defenses on the subject of its delayed contract

performance. Id. at 1328-29. Here, the contracting officer received a detailed

letter from Magnus which set forth the exact dollar amount of the proposed slope

change credit due the government, so that the contract price could be revised

accordingly. JX 32. The contracting officer, despite receiving the letter in July of

15

/ The Federal Circuit recently distinguished a government affirmative defense, over

which the board of contract appeals exercised jurisdiction, from the defense raised by the

plaintiff in Maropakis, where CDA jurisdiction was found to be lacking. See Laguna Constr.

Co. v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 2016). The Laguna panel specifically noted that

the plaintiff in Maropakis sought to “modify the contract time” for performance without first

submitting a claim to the contracting officer seeking such a contract modification. Id. Although

cursory, the distinction drawn in Laguna is not unlike the distinction drawn by this court and the

boards of contract appeals in the decisions cited supra.

26

2013, never responded or inquired as to the figures contained in this letter, and

instead issued a final decision on the slope change credit dispute in January of

2014. The notice requirement of the CDA that was an important factor in the

Maropakis decision is not present in this case.

As a third distinction, the Maropakis plaintiff was dilatory in

communicating with the contracting officer, i.e., not responding for over ten

months to an offer by the government to consider additional information regarding

performance delays. 609 F.3d at 1326. In this case, the party that refused to

communicate its views as to the disputed slope change credit was the IBWC, not

Magnus. This is especially egregious behavior considering that Modification 004,

unilaterally imposed by the IBWC, was necessitated by the defective design

provided to Magnus by the IBWC, and considering the fact that Modification 004

required the parties to negotiate a credit to account for the change to the contract.

JX 104, at 1. Whereas in Maropakis the plaintiff was attempting to litigate its way

out of a contract dispute that it had managed very badly, here Magnus is simply

responding to a unilaterally imposed retainage that represents the government’s

attempt to unilaterally modify the contract in its favor.

The claim in this case is the polar opposite of the claim and defense asserted

by the plaintiff in Maropakis. Further, as previously discussed, the cases are also

readily distinguishable on their facts. There are procedural differences between

these two cases, as well. Given the dissimilarities between the jurisdictional

problem resolved by the Federal Circuit in Maropakis and the jurisdictional

posture of this case, the court finds further support for its view that Magnus was

not obliged to have submitted a claim to the contracting officer before appealing

the contracting officer’s final decision on the slope change credit dispute in this

forum.

Finally, the court must note the factual similarity between this case and

Placeway Construction Corp. v. United States, 920 F.2d 903 (Fed. Cir. 1990).

Placeway Construction Corporation (Placeway) completed a government

construction contract and the government retained approximately $300,000

because of damages the government might experience, although not determined at

the time, because of delays in contract performance. Id. at 905. Jurisdiction

would only lie in this court for plaintiff’s claim for the full contract price if the

contracting officer had issued a final decision on the retainage (described, in that

27

litigation, as a set-off). Id. at 906. The Federal Circuit, construing the actions of

the contracting officer to constitute a final decision on the government claim,

allowed Placeway’s claim to proceed. Id. at 907. In the words of the court:

Accordingly, we conclude that the CO made a final

decision on the government claim alleging damages

because of Placeway’s delay in contract performance.

The decision is no less final because it failed to include

boilerplate language usually present for the protection of

the contractor. Moreover, the CO’s decision was adverse

to Placeway and thus it could properly appeal to the

Claims Court. As a final decision on a government

claim, the Claims Court has jurisdiction, even though

[Placeway’s] claim was not certified.

Id.

Magnus is in almost exactly the same position. It appeals the final decision

of the CO (which included a notice of appeal rights) on the slope change credit

and seeks payment of retained funds. The IBWC’s decision was adverse to

Magnus, and plaintiff has appealed that decision to this court. Given the

distinctions between this case and Maropakis, and the parallels between this case

and Placeway, there is at least a colorable argument that the jurisdictional ruling in

Placeway applies to the case at bar.

It is true, however, that there is language in Maropakis which may

undermine the applicability of Placeway to circumstances such as these. For

example, the court states that: “The Court of Federal Claims correctly found that

Placeway had no bearing on the CDA’s requirements for contractor claims.”

Maropakis, 609 F.3d at 1330 (citation omitted). In addition, the Maropakis panel

stated that in Placeway, “we did not address whether the Claims Court had

jurisdiction over any of Placeway’s defenses.” Id. But there is also language in an

adjacent sentence in Maropakis which restricts that panel’s discussion of the

jurisdictional barrier to claims seeking contract modifications:

Several other Court of Federal Claims cases have

directly addressed this issue and have all concluded that

28

even when used as a defense to a government claim, a

contractor’s claim for contract modification must adhere

to the jurisdictional requirements of the CDA.

Id. at 1330-31 (emphasis added) (citations omitted). It is impossible to tell from

the text of the Maropakis opinion the precedential weight the Placeway decision

provides in this case. The court, unable to discern whether the jurisdictional

holding in Placeway can be reconciled with Maropakis in the circumstances of

this case, does not rely on Placeway for its decision here.16

Having considered relevant, and even potentially relevant precedent, the

court concludes that Magnus’s slope change credit claim is not barred by

Maropakis or the CDA’s jurisdictional prerequisites discussed therein.

Jurisdiction lies both for plaintiff’s claim in this regard and the government’s

counterclaim on the same topic. The court turns now to the merits of the parties’

arguments regarding the slope change credit.

B. Disputed Slope Change Credit Claim and Related Government

Counterclaim

The dispute over the slope change credit can be resolved by answering four

straightforward questions. First, did the figure proposed by Magnus in August

2012 for the slope change credit reflect the actual cost savings Magnus realized

from the IBWC’s correction of its defective design? Second, should Mr.

Wooten’s analysis of the cubic yard cost of embankment fill govern the

16

/ If the holdings in Maropakis and Placeway were truly irreconcilable as applied to the

facts of this case, i.e., a contractor claim which does not seek a contract modification, Placeway

would control:

Where conflicting statements such as these appear in our

precedent, the panel is obligated to review the cases and reconcile

or explain the statements, if possible. If not reconcilable and if not

merely conflicting dicta, the panel is obligated to follow the earlier

case law which is the binding precedent.

Johnston v. IVAC Corp., 885 F.2d 1574, 1579 (Fed. Cir. 1989) (citing Newell Cos. v. Kenney

Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988)).

29

calculation of the amount of cost savings realized by Magnus because of the

changed contract work? Third, did Magnus provide adequate information to the

IBWC in support of its slope change credit proposal? Fourth, does $35,036

represent the credit due the government under the portion of Modification 004 that

changed the landside slope of certain sections of the levee? When these four

questions are answered based on the preponderance of evidence in the trial record,

it is clear that plaintiff’s position on the slope change credit prevails.

1. Magnus Did Not Realize $466,092 in Cost Savings from the

Slope Change

Magnus performed an analysis of the agency’s slope change to the levee

which calculated the requisite reduction in the amount of imported embankment

fill on the affected sections of the levee. JX 29, at 1. This proposed reduction in

fill volume, 23,841 CY, was communicated to the IBWC on August 16, 2012. Id.

The method used to calculate the slope change fill reduction amount was the

“average end-area method.” Both this method, and the figure of 23,841 CY, were

accepted by the IBWC as accurate. Duran Tr. at 878, 1005-06.

Magnus’s initial slope change credit proposal was for $466,092, derived

from a $23/CY multiplier for a 23,841 CY reduction in imported embankment fill.

JX 29, at 1. This slope change credit proposal of $466,092, however, was not an

isolated, independent negotiation between Magnus and the IBWC – the slope

change credit negotiation was integrated into more extensive negotiations

regarding the unexpected amount of embankment fill that Magnus was required to

import onto the levee. Contemporaneous documentation shows that Magnus

considered these negotiations to be inter-connected, and the preponderance of

witness testimony also showed that Magnus was pursuing a global settlement of

the finalized contract price at this time.17

17

/ Even Mr. Duran, who repeatedly averred that the IBWC was not trying to achieve a

global settlement but was treating each contract modification separately, acknowledged that the

IBWC’s acceptance of Magnus’s initial slope change credit proposal was not overly concerned

with the exact dollar amount of the credit because other, larger contract disputes needed to be

resolved at this time. See Duran Tr. at 1006 (stating that he accepted the $466,092 credit

proposal from Magnus, in part, because at the time “we had too many bigger fish to fry than

this”).

30

In a letter sent to the IBWC on July 26, 2012, for example, Magnus

provided the component amounts, per levee sections, which added up to the total

figure of 23,841 CY for the slope change fill reduction, but also noted that there

were “approximately 100,000 CY” of embankment fill overages that were also at

play during this time. JX 28, at 2. Indeed, Magnus requested in this July 26, 2012

letter that progress payments for embankment fill for June and July 2012 ignore

the slope change credit amount, because of the “overruns” in embankment fill

which would be negotiated through Magnus’s embankment fill claim. Id.

Similarly, in Magnus’s August 16, 2012 slope change credit proposal, the proposal

noted that the slope change credit embankment fill reduction amount was

accounted for in the total imported embankment amounts that would justify

Magnus’s embankment fill claim. JX 29, at 2. This correspondence is strong

evidence that Magnus’s initial slope change credit proposal was merely one facet

of Magnus’s negotiations regarding the actual costs of restoring the levee.

Witness testimony at trial also establishes that, as of the summer of 2012

and into the early months of 2013, Magnus viewed its slope change credit

proposal as one part of the dialogue between Magnus and the IBWC regarding the

correct amount of payment Magnus should receive for its restoration work on the

levee. Owaidat Tr. at 136-37, 140; Duran Tr. at 878-79, 883. Testimony

commenting on emails sent in early 2013 also shows that Magnus viewed the

slope change credit to be part and parcel of the ongoing negotiations related to

Magnus’s claims for additional embankment fill and riprap quantities. See JX 49;

JX 50; JX 51; JX 73; Owaidat Tr. at 138-40, 143-44, 146; Duran Tr. at 882. In

April of 2013, however, the negotiations for the settlement of the embankment fill

and riprap claims, along with the slope change credit, took a turn for the worse.

Simply put, the IBWC decided to take its slope change credit while staying silent

as to whether Magnus’s larger claims would be granted or denied.

On April 8, 2013, instead of comprehensively addressing the outstanding

embankment fill and riprap claims along with the slope change credit, the IBWC

announced it was owed a slope change credit of $466,092 and submitted a contract

modification for this government credit to Magnus for signature well before any

decision issued on much larger Magnus claims for embankment fill and riprap

overruns. JX 30. The IBWC had been sitting on the embankment fill and riprap

claims for about six months at this point, with no requests for additional

information from Magnus relevant to those claims. JX 2; JX 25. Mr. Owaidat

31

stated that he felt “stabbed . . . in the heart” when he received this proposed

contract modification giving the IBWC $466,092; he felt that the IBWC had

turned aside from any good faith negotiation of Magnus’s claims and was simply

going to “take [Magnus] to the cleaners.” Owaidat Tr. at 148.

Because Mr. Owaidat refused to sign this proposed modification,

Modification 006, as a stand-alone contract modification, and because many

disputes had yet to be reconciled, the government issued Modification 006 and

Modification 007 on the same day, April 26, 2013, first subtracting $466,092 and

then adding $466,092 back into the contract price.18 JX 30; JX 103. Modification

007 acknowledged that $466,092 was being added back into the contract price

because Magnus “wants to wait on a mutual agreement for this $466,092 credit

until after the Contracting Officer issues a final decision on a pending Contractor

claim for other embankment material.” JX 103.

The contracting officer denied Magnus’s embankment fill and riprap claims

in their entirety on June 3, 2013 and June 11, 2013, respectively. JX 20; JX 26.

There is no evidence that any negotiation of these claims was initiated by the

IBWC after these claims were received from Magnus in the fall of 2012. There is

also no evidence that the IBWC entered into negotiations with Magnus regarding

the embankment fill claim, the riprap claim, or the slope change credit after

Modification 007 issued, leaving the slope change credit open for further

negotiation. Even after Magnus submitted a revised slope change credit proposal

on July 19, 2013, JX 32, the IBWC continued to avoid any negotiation of the slope

change credit amount.

As Mr. Owaidat explained at trial, the initial slope change credit proposal

from Magnus did not represent the actual cost savings to Magnus from the slope

change which corrected the levee footprint in the IBWC’s original defective levee

design. It was simply a piece of a larger negotiation. There was additional work

caused by the slope change, and “[a]ll that cost that [Magnus] incurred was not

included in that . . . initial [$]466,000 credit.” Owaidat Tr. at 150. According to

Mr. Owaidat, the global settlement Magnus hoped to achieve allowed them to “eat

that $466,000,” because Magnus expected that the IBWC would, in return, pay

18

/ Mr. Owaidat signed the modifications on April 25, 2013, whereas Mr. Delgado signed

the modifications on April 26, 2013.

32

Magnus the amount “owed for riprap and the embankment [fill], too.” Id. When

the global settlement failed, Magnus reviewed its costs for implementing the slope

change and reduced the multiplier for each cubic yard of imported fill from

$23/CY to $1.25/CY in its proposed slope change credit. JX 32, at 3. The

reduction of the quantity of imported embankment fill associated with the slope

change, 23,841 CY, remained the same.

The court finds Mr. Owaidat’s testimony which explained the difference

between plaintiff’s initial credit proposal and its second credit proposal to be

persuasive. The original $466,092 figure did not truly reflect the cost savings that

Magnus experienced when it implemented the IBWC’s request that the defective

levee design be corrected to a landside ratio of 2.5:1 for approximately one-third

of the length of the levee project. Thus, the court must weigh the parties’ evidence

of the actual cost and actual savings flowing from the slope change to Magnus. It

is clear to the court that the use of a multiplier of $23/CY for the reduction of

23,841 CY of imported embankment fill, when the landside slope of the levee was

changed, does not account for the actual costs to Magnus of the changed work.

2. Mr. Wooten’s Analysis Ignores Additional Costs of Work

Performed by Magnus to Implement the Slope Change

At trial, the government’s expert, Mr. Wooten, explained why he believed

$23/CY to be the most accurate measure of Magnus’s savings due to the levee

slope change in Modification 004.19 Wooten Tr. at 2111-13. In accordance with

the court’s understanding of Mr. Wooten’s expert opinion on this issue, there

appear to be three underpinnings to that opinion. First, $23/CY was, in Mr.

Wooten’s opinion, well established as an accurate measure of Magnus’s typical

cost of imported embankment fill. Id. Second, Mr. Wooten found that Magnus’s

description of the incurred costs of changing the levee slope to be less than

“compelling” because of the level of documentation that was provided. Id. at

2113. Finally, Mr. Wooten opined, in just a few words, that the cost impact of the

19

/ Mr. Wooten also disagreed with Magnus as to the reduction in embankment fill

caused by the slope change. Whereas Magnus calculated that there would be a reduction of

23,841 CY, Mr. Wooten’s analysis posited that there would be a reduction of only 16,691 CY.

Wooten Tr. at 2111. The cubic yards reduction calculated by Mr. Wooten is not especially

relevant, in light of the court’s analysis of the $23/CY multiplier dispute, and will not be

discussed further in this opinion.

33

work that Magnus had to perform to change the levee’s footprint would be no

more than the cost to place the original amount of embankment fill. Id. at 2112.

The court notes that Mr. Wooten’s analysis suffers from two fundamental

flaws. First, as stated in his expert report, Mr. Wooten’s confidence in the $23/CY

figure is based solely on the fact that it is “consistent” with unit costs in Magnus’s

change order requests and in Magnus’s levee proposals. JX 139, at 40. In other

words, Mr. Wooten adopts $23/CY as the multiplier for the slope change credit

simply because in other contexts that is the cost that Magnus charges, or attempts

to charge, the project owner. However, as Mr. Owaidat explained at trial, the

components of the cost of placing one cubic yard of imported embankment fill on

the levee, captured in the $23/CY multiplier, are not necessarily the same as the

realized cost savings of not placing one cubic yard of imported embankment fill

upon the levee. Owaidat Tr. at 159-60, 315-16, 353.

The court found Mr. Owaidat’s testimony in this regard much more on

point, and more persuasive. Mr. Wooten’s testimony on this topic was superficial

and his impression that ‘pre-slope change required work’ and ‘post-slope change

required work’ would more or less be equal in cost appeared to be an unexplained

assumption rather than the product of experience in levee construction. Weighing

the testimony provided by Mr. Owaidat and Mr. Wooten, the court found Mr.

Owaidat to be more persuasive and more credible. The court finds that $23/CY

was not a proper multiplier to account for the cost savings to Magnus of the slope

change.

Second, and more importantly, Mr. Wooten conceded that his analysis of the

slope change credit dispute did not depend at all on the description of the

inefficiencies and additional costs provided by Magnus in its second credit

proposal, JX 32. Wooten Tr. at 2265-70. In other words, when Mr. Wooten

analyzed the slope change and the effect of the slope change on costs Magnus

experienced in the affected sections of the levee, he attached no specific cost

impact to any of the increased costs detailed in Magnus’s letter of July 19, 2013.

See JX 32. Mr. Wooten’s expert opinion in this case assumed that the slope

change impacts on Magnus’s restoration work had zero cost, and that the $23/CY

figure needed no downward adjustment to account for additional work or

inefficiencies. Wooten Tr. at 2265-67 (stating that the construction of a 200-foot

transition section on the recently-constructed levee would have been “paid” by the

34

$23/CY multiplier incorporated in his analysis). Mr. Wooten’s testimony in this

regard was not persuasive because it ignored effects of the slope change that other

witnesses appropriately took into account.

Mr. Owaidat testified that the inefficiencies and additional work occasioned

by the slope change significantly reduced the cost savings that Magnus might have

otherwise realized from a reduction in the quantity of the embankment fill required

for the levee. Owaidat Tr. at 153-58. Mr. Owaidat stated that each of the

increased costs mentioned in JX 32 was supported by project documents. Id. at

154. Mr. Sills, plaintiff’s expert, testified that design changes such as the slope

change from 3:1 to 2.5:1 on the landside of the affected sections of the levee

would be expected to create inefficiencies and additional costs due to a more

complex sequence of construction activities. Sills Tr. at 2495-2500. Because Mr.

Wooten’s analysis ignored the cost impacts of a levee slope change affecting

approximately one-third of the levee, his contention that the $23/CY multiplier

adequately captured the cost savings that Magnus would reap from the slope

change must be rejected.

3. Magnus Provided Adequate Information to Support its

Second Credit Proposal and Was Not Asked for Additional

Information

In its July 19, 2013 letter, Magnus provided a detailed analysis of the cost

impacts of the slope change on the levee restoration project. JX 32. This analysis

was divided into four separate discussions of distinct sections of the levee where

the slope change not only reduced imported embankment fill quantities but also

engendered numerous changes to the expected flow of work in these sections. At

trial, Mr. Owaidat expounded on several of the cost impacts that were described in

this letter. His testimony in this regard was credible and was entirely unrebutted

by testimony from the government’s witnesses. Owaidat Tr. at 153-58, 316-22,

353. The court notes that Magnus’s second credit proposal was more detailed than

its first credit proposal, a proposal for the slope change credit which was accepted

by the IBWC and incorporated by modification of the contract, JX 30, in the exact

dollar amount proposed by Magnus. Compare JX 32 with JX 29.

As a proposal for the negotiation of the slope change credit, the court finds

no deficiencies or inadequacies in Magnus’s proposed slope change credit of

35

$35,036. The government argues, however, that plaintiff cannot prevail in the

slope change credit dispute because Magnus’s credit proposal lacked a detailed

quantification of each of the cost impacts described in its July 19, 2013 letter.

Def.’s Br. at 59 (asserting that Magnus’s credit proposal was not adequately

quantified and instead was simply Mr. Owaidat’s “subjective view of the

equities” of the slope change necessitated by the IBWC’s defective levee design).

The government’s position on this issue is not supported by the trial record.

The only party to the contract that proposed a detailed, quantified slope

change credit proposal was Magnus. There was no rebuttal or detailed counter-

proposal from the IBWC, nor was there any attempt by the IBWC to request

supporting documentation from Magnus to further quantify Magnus’s $35,036

credit proposal. Indeed, every witness at trial stated that there was no evidence

that the IBWC attempted to negotiate the slope change credit amount once

Magnus submitted its credit proposal on July 19, 2013, despite the requirement in

Modification 004 that the parties negotiate the amount of the credit. JX 104, at 1.

Magnus fulfilled its obligations under the contract with its proposal for a slope

change credit of $35,036.

4. The $35,036 Slope Change Credit Has Been Proved to a

Reasonable Certainty

As discussed supra, the court finds that a multiplier of $23/CY was not a

representative figure that could be used to calculate the slope change credit. When

that $23/CY multiplier is eliminated, the government has no counter-argument to

the analysis presented in Magnus’s July 19, 2013 letter which proposed a slope

change credit of $35,036. Nor is there anything in the trial record which shows

that the IBWC performed an analysis of the cost impacts of the slope change that

gave any weight to the inefficiencies and additional costs that Magnus

experienced due to the slope change.

Thus, the only viable analysis of the slope change credit before the court is

the one presented in JX 32 and the testimony of Mr. Owaidat and Mr. Sills which

buttressed that analysis. The court is persuaded that JX 32 contains credible

information and a calculation of the slope change credit that accurately reflect the

impacts of the slope change on Magnus’s restoration work on the levee. The

preponderance of the evidence, both documentary and as provided in oral

36

testimony, shows that the government is due $35,036 as a credit for the slope

change. The court finds that “substantial evidence” supports the figure of $35,036

for the slope change credit, and that Magnus has proved its claim to a “reasonable

certainty.” Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 832-33

(Fed. Cir. 2010) (Precision Pine).

5. Judgment for Plaintiff on the Slope Change Credit but No

Interest under the CDA

Applying the $35,036 slope change credit to the retained sum of $466,092,

the IBWC must release the balance of the retainage to Magnus, in the sum of

$431,056. Thus, the contract balance, in the amount $431,056, is due Magnus and

the government takes nothing on its counterclaim for a $383,893 slope change

credit. However, because Magnus only appealed a government claim for the slope

change credit and did not submit a claim of its own on this topic to the contracting

officer, no interest under the CDA can be awarded Magnus for the judgment

amount of $431,056 related to the slope change credit. E.g., Sun Eagle Corp. v.

United States, 23 Cl. Ct. 465, 482 (1991); Z.A.N. Co. v. United States, 6 Cl. Ct.

298, 304 n.13 (1984); Ruhnau Evans Ruhnau Assocs. v. United States, 3 Cl. Ct.

217, 218 (1983); Southwest Marine, Inc., DOTCAB No. 1666, 96-1 B.C.A.

¶ 28212 (Feb. 15, 1996). In other words, the CDA awards interest on successful

contractor claims denied by a contracting officer, not on successful appeals of

government claims. See 41 U.S.C. § 7109 (noting that interest begins to run “for

the period beginning with the date the contracting officer receives the contractor’s

claim”) (emphasis added).

III. Riprap Claim

The levee restoration contract between the IBWC and Magnus, as modified,

was not a typical sealed-bid government contract for a construction project. As

noted supra, parts of the solicitation, and then the contract, were pieced together

from prior IBWC levees by an inexperienced designer suffering from a serious

cognitive impairment. The contract incorporated inaccurate information regarding

the existing levee, and inadequate information, both as to the estimated quantities

of materials that would be needed to complete the restoration, and as to subsurface

conditions. The solicitation package was hastily and radically amended just a few

days before bids were due. The IBWC awarded the contract, despite its

37

knowledge that this contract was based on a solicitation which was an inadequate

foundation upon which a reasonable, informed bid could be prepared, and even

though serious defects in the levee design materials were known to the agency at

that time.

As the IBWC began to supervise the levee restoration project in 2011,

termination of the contract was recommended by the technical experts at the

IBWC as the most reasonable course of action, given the deficiencies in the

materials prepared for this project. Duran Tr. at 724-26. In retrospect, Magnus’s

president stated that he regrets having bid on the project. Owaidat Tr. at 2359.

Magnus overcame significant deficiencies in the levee design to successfully

restore the levee, and, in return, the IBWC refused to negotiate any equitable

adjustment for cost overruns that Magnus experienced in the quantities of riprap

and embankment fill placed on the levee. See Owaidat Tr. at 148 (stating that the

IBWC “used [Magnus] to solve all the problems, to fix all [the IBWC’s] design

defects, get the levee job done, and now [the IBWC was] going to take [Magnus]

to the cleaners”). There were so many problems in the administration of this

contract that it is difficult to select the legal theory which most aptly addresses

plaintiff’s requests for equitable adjustments for cost overruns in embankment fill

and riprap.

For the riprap claim, most of the parties’ focus is on the changes made to the

contract in response to the matrix document. At that point in the project, faced

with a seriously flawed contract which was recommended for termination, the

IBWC’s contracting officer chose to accept Magnus’s offer to bring the levee

restoration project to a successful conclusion. In doing so, negotiations were

entered into that involved the following benchmarks: (1) the matrix document,

generated by the IBWC, indicating that additional work needed to be performed to

complete the project; (2) a new survey which informed Magnus and the IBWC as

to the contours of the existing levee; (3) cost proposals from Magnus as to

embankment fill and riprap work required by the matrix; and (4) questions from

the IBWC and answers from Magnus as to any remaining grey areas that needed to

be addressed as the project was being reconstituted through Modifications 001,

002 and 003.

Although the parties have considered whether the riprap claim could be

analyzed and resolved by other legal theories, the court limits its analysis to the

38

one legal theory which appears most pertinent – the constructive change doctrine.

The riprap dispute is fundamentally a question of how the levee restoration

contract was changed by the parties in response to the matrix and the new survey

of the existing levee. In choosing the rubric, constructive change, the court

acknowledges that plaintiff’s riprap claim is not a typical constructive change

claim. Therein, a contractor alleges that an agency official, not the contracting

officer, orders additional, out-of-scope work during the course of contract

performance, but the contracting officer does not account for that additional work

in the formal modifications (and price) of the contract. See, e.g., Design & Prod.,

Inc. v. United States, 18 Cl. Ct. 168, 205-08 (1989) (considering but rejecting a

claim for work outside the scope of the contract that was requested during the

course of performance by someone other than the contracting officer). The

constructive change claim for additional riprap in this case, in contrast, demands a

close examination of the meaning and scope of Modifications 001 and 003. This

is a rather unusual type of constructive change claim, for which no analogous

precedent has been cited by the parties.20

A. Constructive Change Doctrine

Some constructive change claims are, at bottom, disputes over the scope of

the work specified in the contract documents. See, e.g., Miller Elevator Co. v.

United States, 30 Fed. Cl. 662, 678 (1994) (describing these constructive change

claims as “disputes over contract interpretation during performance”) (citations

omitted). The contractor typically argues that it has performed work outside the

scope of the contract terms, at the request of the government, and that the contract

20

/ Plaintiff merely cited a passage from a case which generally sets forth the elements of

a constructive change claim. Pl.’s Br. at 57 (citing Winter v. Cath-dr/Balti Joint Venture, 497

F.3d 1339, 1344 (Fed. Cir. 2007)). Defendant’s post-trial brief totally ignored constructive

change caselaw, which is somewhat surprising given that the constructive change theory of

recovery for plaintiff’s riprap claim was explicitly addressed in Magnus II. 2016 WL 3960447,

at *6-7. In defendant’s reply brief, the government cites one case discussing the constructive

change doctrine in support of its arguments regarding plaintiff’s embankment fill claim, Def.’s

Reply at 9 (citing Calfon Constr. Inc. v. United States, 17 Cl. Ct. 171, 177 (1989)), and another

case discussing the constructive change theory in support of the government’s arguments against

plaintiff’s riprap claim, id. at 28 (citing Info. Sys. & Networks, Corp. v. United States, 81 Fed. Cl.

740, 747 (2008)). The facts in the cases cited by the parties are not analogous to the facts

underlying Magnus’s riprap claim, and are of little to no use in the analysis required here.

39

price must be augmented by an equitable adjustment. See, e.g., Metric Constr. Co.

v. United States, 81 Fed. Cl. 804, 826-27 (2008) (finding merit in a claim for an

equitable adjustment where additional work, outside the scope of the contract, was

performed by the contractor). A successful constructive change claim of this type

must show that the work performed was outside of the scope of the contract and

that the government caused the work to be performed:

A constructive change entails two base components, the

change component and the order or fault component.

The “change” component describes work outside of the

scope of the contract, while the “order/fault” component

describes the reason that the contractor performed the

work. Thus, if the Government either expressly or

impliedly ordered work outside the scope of the contract,

or if the Government otherwise caused the contractor to

incur additional work, a constructive change arises for

that work performed outside of the scope of the contract.

Miller Elevator, 30 Fed. Cl. at 678 (citations omitted); see Int’l Data Prods. Corp.

v. United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007) (“A constructive change

occurs where a contractor performs work beyond the contract requirements

without a formal order, either by an informal order or due to the fault of the

Government.” (citing Miller Elevator, 30 Fed. Cl. at 678)). The court begins its

analysis of plaintiff’s riprap claim by first examining the “change element,” before

turning to the “government order/fault element.”

B. Change Element

There appears to be little dispute that the contract signed by the parties in

December of 2010 called for the importation of a certain amount of new riprap for

the restoration of the levee, and the placement of this new riprap in specified

sections of the levee. See JX 1, at 53. The estimate for this riprap was for 17,500

CY, based on four specific areas of riprap of varying size (from 26,116 square feet

to 98,864 square feet) multiplied by a depth of 1.5 feet. Id. The “typical cross-

section” contract drawings only identify two areas of riprap placement on the

riverside of the levee, from STAs 117 to 123, and from STAs 157 to 176. JX 109,

at 36. The contract plans show two additional “new” riprap placement areas, from

40

STAs 69 to 89, and from STAs 186 to 206. Id. at 15-17, 25-27. Thus, reading

these contract documents together, Magnus was required to import new riprap and

place four sections of new riprap on the levee, from STAs 69 to 89, 117 to 123,

157 to 176, and 186 to 206. This is the original contract riprap work, which is not

included in Magnus’s riprap claim, because there were virtually no cost overruns

in this category of riprap work. See JX 24, at 1, 17.

Once the IBWC decided that the contract needed to be revised pursuant to a

new survey of the existing levee, the matrix document informed Magnus that it

would be required to “remove and replace existing riprap” per the contract’s

“typical cross-sections,” JX 6, at 2, and then purported to identify, in tabular form,

the sections of the levee which required this additional “riprap replacement” work,

id. at 2-4. The matrix document acknowledged, however, that its tabular list of

“riprap replacement” sections overlapped with the original “new riprap” work

sections set forth in the original contract. See id. at 2 (“Some areas identified in

the table are duplicates of areas already designated as needing [riprap] work.”).

Thus, the table of riprap sections identified in the matrix was a mix of original

contract work and additional matrix-related work, with no readily-discernible

demarcation between original and additional riprap work. The matrix also

contained the instruction that “[e]xisting riprap must meet the required

specifications to be used on the levee.” Id. Reading all of the instructions

regarding riprap in the matrix together, along with the original contract’s “new

riprap” placement instructions, as well as the contract plans’ depictions of the

locations of new and existing riprap on the levee, the court construes the matrix to

constitute a pathway for Magnus to re-assess the riprap work required to complete

the levee restoration, and to make a cost proposal as to work it would perform in

addition to the “new riprap” work included in its fixed-price proposal accepted by

the IBWC in December 2010.

To ground its analysis of plaintiff’s riprap claim in an adequate factual

foundation, the court first reviews the contemporary documentary evidence

provided by the contract plans and the table of levee sections in the matrix, as well

as the summary of levee riprap work presented in plaintiff’s riprap claim. These

documents provide a station by station factual foundation for the parties’

arguments. The court will then discuss the matrix-related negotiations entered

into by the parties, which include both the cost proposals proffered by Magnus,

and Magnus’s answers to the IBWC’s questions about those proposals. This

41

documentary evidence supports plaintiff’s view that there were three categories of

riprap work performed by Magnus: the original “new riprap” work; the additional

riprap work offered by Magnus in response to the matrix; and a third category of

existing riprap replacement work, the quantity of which would be determined on a

case-by-case basis. Witness testimony at trial, while not at all uniform on this

issue, also supports plaintiff’s view of this dispute.

1. Contract Documents Showing Existing and New Riprap

Locations

The court experienced some difficulties with its inquiry into the contract

documents that establish the factual foundation for plaintiff’s riprap claim. First,

as noted supra, there is an almost universal acknowledgment that the plans for the

levee were significantly flawed. Second, neither party elicited witness testimony

as to the content and meaning of the levee plans. Third, the reproduction of the

levee plans in the trial exhibits is difficult to read.21 Nonetheless, because the

parties hotly dispute the changes to the riprap work triggered by the matrix, the

court will attempt to discern what information the levee plans provided regarding

the locations of existing riprap, and the locations for new riprap, on the levee.

As noted above, the contract plans showed that new riprap would be placed

from STAs 69 to 89, 117 to 123, 157 to 176, and 186 to 206. Existing riprap

appears to be shown in the contract plans from STAs 123 to 126, 176 to 186, and

206 to 223. JX 109, at 20, 24-25, 27-28. Thus, the court concludes that there

were three sections of existing riprap, STAs 123 to 126, 176 to 186, and 206 to

223, that appear to be the subject of the matrix and its discussion of the removal

and replacement of existing riprap. JX 6, at 2. The court observes, however, that

these sections of the levee identified on the plans might not have perfectly

captured the locations of existing riprap on the levee that were encountered by

Magnus’s crews.

2. Matrix Table of Riprap Work Contrasted with Existing

and New Riprap Locations Shown on the Contract Plans

21

/ For example, the legend for the plans contained two separate design symbols for the

graphic representation of “existing rip-rap” and for “proposed rip-rap,” but these two symbols, as

copied for the trial exhibits, are indistinguishable. JX 109, at 2.

42

When the table of riprap locations in the matrix is compared with all of the

existing and new riprap locations in the contract plans, the matrix is largely, but

not perfectly, consistent with the contract plans as to riprap work locations on the

levee. The levee from STAs 69 to 89 is again listed as a riprap area, for example,

but a new portion of the levee, from STAs 89 to 117, which according to the

contract plans had neither new nor existing riprap, was now designated as

requiring riprap work. JX 6, at 2-3. This portion of the levee can only be

described as “additional riprap” work not contemplated in the original contract.

There is one other portion of the levee that had neither existing nor new

riprap on the contract plans, from STAs 126 to 145, which, pursuant to its listing

in the matrix, also must be considered to have required “additional riprap” work.

JX 6, at 3. Thus, the matrix addressed two additional portions of the levee (STAs

89 to 117 and 126 to 145) as requiring riprap work, under the rubric of replacing

existing riprap, even though the contract plans showed no existing riprap in these

locations. A separate category of riprap work – removing and replacing existing

riprap – can also be viewed as having been included within the matrix table in

those locations where existing riprap was indicated on the contract plans: STAs

123 to 126, 176 to 186, and 206 to 223. The court notes that the riprap work

location information contained in the matrix was hardly a model of clarity because

three different types of riprap work were lumped together, with no apparent

division between them (new riprap, replacement of existing riprap, and additional

riprap in areas where the contract plans indicated there was no existing riprap).

3. The Three Categories of Riprap Work in the Matrix are

Reproduced in Plaintiff’s Riprap Claim Table

When Magnus submitted its riprap claim to the contracting officer, its table

of riprap work locations was divided into three categories of riprap work, much as

the table in the matrix contained three categories of riprap work. JX 24, at 17.

For the original contract work, the “new riprap” placement contemplated in

Magnus’s fixed-price bid, the locations exactly match the locations in the contract

plans and in the matrix: STAs 69 to 89, 117 to 123, 157 to 176, and 186 to 206.

Id. For “additional riprap” work included in the matrix, specifically the riprap

work where neither new nor existing riprap was shown on the contract plans,

Magnus’s locations match, within a few stations, the locations shown in the

43

matrix: STAs 89 to 117 and 126 to 145.22 Id. This category of riprap work is

described by Magnus as the work proposed by Magnus in response to the matrix

that was captured in its cost proposal incorporated, at least in part, in

Modifications 001 and 003. Id. Finally, the table of riprap work in Magnus’s

riprap claim contains a third category of riprap work, the “Replace Existing

Riprap” category, whose locations match, within a couple of stations, the locations

of existing riprap shown on the contract plans and in the matrix: STAs 123 to 126,

176 to 186, and 206 to 223.23

To perhaps oversimplify the dispute, plaintiff’s position is that its cost

proposal in response to the matrix set forth the volume of riprap needed for the

work required from STAs 89 to 117 and 126 to 145, the “additional riprap”

locations not present in the original contract documents. From this perspective,

the existing riprap replacement work for STAs 123 to 126, 176 to 186, and 206 to

223, where existing riprap was shown on the contract plans, was a separate

category of riprap work which the price adjustments of Modifications 001 and 003

did not include. The government’s position appears to be that the base contract

and Modifications 001 and 003 included all of the riprap work required to

complete the levee – the “new riprap,” the “additional riprap” work and the

existing riprap replacement work. See Def.’s Br. at 53, 56 (arguing that the base

contract and the matrix negotiations required Magnus to include in its lump sum

cost proposal the price that would complete the “removal and replacement of

existing riprap” on the levee). The court turns to its review of the evidence

submitted at trial which goes to the agreement of the parties regarding the

replacement of existing riprap on the levee.

4. Magnus’s Riprap Cost Proposal

After Magnus obtained the new survey of the levee, it submitted a riprap

cost proposal to the IBWC. Magnus’s initial riprap proposal in response to the

matrix estimated the quantity of additional riprap to be 9570 CY, at a cost of

$75/CY, for a total riprap price of $717,750 for Modifications 001 and 003. JX

22

/ According to the table in Magnus’s riprap claim, one portion of this additional riprap

work was performed from STAs 126 to 138, not from STAs 126 to 145.

23

/ According to the table in Magnus’s riprap claim, one portion of this riprap

replacement work was performed from STAs 206 to 225, not from STAs 206 to 223.

44

10, at 1. The IBWC required the proposal to be split into two parts, apparently for

budgetary purposes, so that the riprap costs could be divided into Reach 1

(upstream) and Reach 2 (downstream) on the levee. JX 11, at 1. Magnus

performed this division of its riprap cost proposal, but the total quantity of riprap,

and the total cost of the riprap placement, remained the same. Id. at 2-3.

The court observes that Magnus’s riprap cost proposal, in its estimate of the

quantity of additional riprap required, was quite modest, when compared to the

17,500 CY estimate of riprap needed for the original, “new riprap” contract work.

For purposes of illustration, if the court were to compare the approximate number

of stations involved in original riprap work (65), with the number of stations

involved in both “additional riprap” work as well as existing riprap replacement

work (more than 70), one might have surmised that Magnus’s cost proposal for

Modifications 001 and 003 would have been for more than 17,500 CY, not 9570

CY, if the government’s view of the comprehensiveness of Magnus’s riprap cost

proposal were correct. But if Magnus was estimating, as plaintiff contends, just

the cost of “additional riprap” in its cost proposal, which involved approximately

40 stations, the 9570 CY figure is much closer to the percentage of 17,500 CY

required for only the additional riprap work.24 Based on the quantities of riprap

estimated by Magnus in its cost proposal for Modifications 001 and 003,

plaintiff’s view of the limited nature of Magnus’s riprap cost proposal is more

plausible.

5. Magnus’s Answers to the IBWC’s Questions

An integral part of Magnus’s riprap cost proposal was its answer to the

IBWC’s question as to a grey area in the project going forward: “How will

additional materials be addressed?” JX 11, at 4. Before analyzing this crucial

issue, the court notes, first, that this grey area, as regards riprap, had its genesis in

the defective contract documents produced by the IBWC. The additional survey

of the levee and the matrix negotiations could easily have been avoided if the

IBWC had produced an adequate design from which the levee could have been

24

/ The 40/65 ratio, when applied to 17,500 CY, is 10,769 CY. After the levee was

completed, the quantity of “additional riprap” placed on the levee was measured by Magnus to be

10,715 CY, exceeding Magnus’s lower projection of 9570 CY by an amount that Magnus did not

include in its riprap claim. JX 24, at 1, 17.

45

built in the first instance.

Instead, the parties met to discuss the problems with the IBWC’s design, as

described supra, and agreed to negotiate additional work to restore the levee

properly. As part of this negotiation, the meeting notes from April 21, 2011 show

that the IBWC was tasked with “differentiat[ing] between work that was included

with[in] the current scope [of the contract] and the additional proposed work

shown in the [matrix document].” JX 7, at 3. There is no evidence that any such

differentiation of old vs. supplemental work was ever provided to Magnus by the

IBWC. Moore Tr. at 1175-76; Sallas Tr. at 1626-27. On these facts, the IBWC

utterly failed to provide any guidance to Magnus as to the distinction between

original riprap work on the levee, and the two categories of supplemental riprap

work (“additional riprap” and existing riprap replacement). Thus, not only had the

IBWC created the situation requiring negotiations for supplemental riprap work on

the levee, it further compounded the problem by failing to differentiate between

original and supplemental riprap work to assist in those negotiations.

Having been cast into this informational vacuum, Magnus prepared a riprap

cost proposal for an additional 9570 CY of riprap protection on the levee. In

response, the IBWC noted the fact that a new survey of the existing levee had been

conducted and had several comments and concerns about Magnus’s cost proposal

in response to the matrix document. JX 11, at 1. The full text of the most relevant

question for the riprap dispute is as follows:

How will additional materials be addressed? Import vs

reuse of existing material on site that meets project

specifications. (Please explain how credit to IBWC for

the existing rip rap will be provided)

Id.

It is important to note that the IBWC had not, as promised, provided any

guidance to Magnus as to the differentiation between original contract riprap work

and matrix-related riprap work. Magnus replied:

The existing riprap will be handled on a case by case

basis, due to the fact that it has not been confirmed

46

whether a portion or all of the riprap will meet the

project specifications. Should the existing riprap meet

the project specifications the material will need to be

processed, screened, sized, and replaced on the slopes as

specified within the contract documents. Additionally,

waste, debris, and unsuitable materials will have to be

removed from the site to the []IBWC designated

location. Upon determining the cost to process the

existing materials as noted (but not limited to), the cost

for importing riprap will be deducted from the applicable

unit price.

JX 12, at 3.

The IBWC’s question, and the answer provided by Magnus to that question,

are not, when viewed in isolation, crystal clear. The evidence shows, however,

that Magnus had already submitted its riprap cost proposal for 9570 CY. JX 10, at

1. In that context, it is most logical to assume that the IBWC, in its response to

Magnus’s proposal, was seeking assurance as to “additional materials,” JX 11, at

1, beyond 9570 CY of riprap. Magnus’s answer to that question was that “existing

riprap will be handled on a case by case basis.” JX 12, at 3. In the court’s view,

the documentary evidence strongly supports the logical inference that Magnus was

suggesting that the parties defer the pricing of the third category of riprap work,

i.e., the replacement of existing riprap, until a station-by-station evaluation of the

existing riprap could determine whether some of this existing riprap could be re-

used.

6. The IBWC Received Supporting Documentation for

Magnus’s Riprap Cost Proposal Which Addressed

“Additional Riprap” Areas, not Existing Riprap Areas

By all accounts, the IBWC never sought clarification of Magnus’s proposal

for a “case by case” treatment of the replacement of existing riprap. Nonetheless,

after receiving Magnus’s cost proposal for $717,750 and the clarification that

existing riprap replacement quantities would be addressed on a case-by-case basis,

the IBWC solicited and received a station-by-station breakdown of Magnus’s

proposed volume of 9570 CY of riprap to be placed on the levee as a result of the

47

matrix negotiations. This volume breakdown table, JX 13, confirms that Magnus

included in its cost proposal the “additional riprap” areas, not the existing riprap

areas, on the levee. Magnus’s volume breakdown table addressed the costs of the

placement of riprap only where the levee design plans showed no existing riprap,

i.e., from STAs 89 to 117 and 126 to 145. JX 13, at 3-5.

The extensive areas of existing riprap shown on the levee design plans, i.e.,

STAs 123 to 126, 176 to 186, and 206 to 223, were not included in Magnus’s

riprap cost proposal.25 Thus, all of the contemporaneous documentation provided

to the IBWC by Magnus during the matrix negotiations informed the IBWC that

Magnus was not including a price for the replacement of existing riprap in its cost

proposal of $717,750. In the context of the IBWC’s failure to differentiate

between original and matrix-related riprap work, and considering that Magnus had

presented the IBWC with a detailed riprap cost proposal whose sole focus was on

the areas of the levee that were shown on the contract plans as having no existing

riprap, the replacement of existing riprap was proposed by Magnus to be resolved

on an ongoing, case-by-case basis, with a price to be determined at a later date. If

there was any lack of clarity as to this proposal regarding the case-by-case

determination of the costs of replacing existing riprap, it was clearly the fault of

the IBWC. Magnus had addressed the topic in its written communications, but

Magnus’s communications elicited no questions or comments, written or oral,

from the IBWC.

7. Witness Testimony as to the Negotiation of Existing Riprap

Replacement Work

The court relies primarily on the documentary evidence of the matrix

negotiations to discern the scope of the riprap work included in and paid for by

Modifications 001 and 003. Witnesses for plaintiff and witnesses for defendant

were somewhat divided on their interpretations of the phrase “existing riprap will

be handled on a case by case basis.” JX 12, at 3. Mr. Duran testified that he

25

/ Two or three additional stations, STAs 224 to 226, were included in Magnus’s riprap

cost proposal which were later also included, mistakenly, in Magnus’s riprap claim under the

“Replace Existing Riprap” category. JX 13, at 6; JX 24, at 17; Douglas Tr. at 433-35. The

double-counting of these stations has been removed from Magnus’s finalized riprap claim.

Sallas Tr. at 1695-98; Pl.’s Br. at 21.

48

understood the “case by case” clarification provided by Magnus to refer solely to

the size of a credit to be offered to the IBWC as existing riprap was re-used in the

restored levee. Duran Tr. at 995-96. Mr. Moore also stated that he thought the

topic of this clarification involved a credit to the IBWC, but his recollection of the

surrounding circumstances was rather vague. Moore Tr. at 1195-1203. Mr.

Moore did agree with plaintiff’s counsel, however, that the “case by case”

proposal from Magnus was “pretty clear.” Id. at 1204. Mr. Delgado stated firmly

that Modifications 001 and 003 were lump-sum and did not include a “case by

case” component for the replacement of existing riprap, but Mr. Delgado also

conceded that he understood Magnus’s clarification to include a request for

increased payments to Magnus if the existing riprap proved to be unfit for re-use

on the levee. Delgado Tr. at 492, 518, 687.

There is no real dispute that the existing riprap on the levee was of poor

quality. Duran Tr. at 845-46; Sallas Tr. at 1659-60; Def.’s Reply at 27. The

amount of re-usable riprap was not easily determined, however. A preponderance

of trial evidence showed that both the depth of the layer of existing riprap, and the

fitness of existing riprap stone for re-use, were difficult to estimate until the

existing riprap was excavated and tested. Moore Tr. at 1148, 1178; Sallas Tr. at

1658-59; Louviere Tr. at 1752. Mr. Sallas persuasively explained that handling

the existing riprap re-use quantities on a case-by-case basis was the only rational

way for Magnus to respond to the IBWC’s request for a riprap cost proposal.26

Sallas Tr. at 1679-80. Mr. Sallas also testified that the task of estimating the

existing riprap replacement work was affected by Magnus’s understanding of

riprap locations on the levee; “typical cross-sections” describing the proper

construction of riprap armoring; and the IBWC’s failure to differentiate between

original riprap work and the riprap work added by the matrix. Id. at 1626-30.

8. Existing Riprap Replacement Work Outside of Scope of

Base Contract and Unpriced in Modifications 001 and 003

Based on the documentary evidence of the matrix negotiations, as well as

26

/ The IBWC’s solicitation also discussed existing riprap in one of its answers to bidder

questions, and noted that certain decisions about riprap work would be finalized during the

course of performance: “Observation of uniformity of the existing riprap as well as full coverage

shall be determined out in the field.” JX 1, at 65.

49

witness testimony on the subject of determining existing riprap replacement

quantities on a case-by-case basis, the court agrees with Mr. Sallas that existing

riprap replacement work was “above and beyond the matrix” work added to the

contract in Modifications 001 and 003. Sallas Tr. at 1630. The court also has

found that the original contract riprap placement work was limited to four specific

sections of the levee where new riprap was to be placed. Plaintiff’s riprap claim,

which is for 8101 CY of riprap needed to replace existing riprap on the levee, is

therefore for work which constitutes a change to the contract in terms of the

constructive change doctrine.27

The government’s defense to plaintiff’s riprap claim depends on at least

two false assumptions. First, defendant states that the replacement of all existing

riprap, if unusable, was included in the original contract’s lump-sum price. Def.’s

Br. at 52. But the solicitation, as amended by the IBWC’s answers to bidder

questions, does not support this interpretation of the contract. Estimated quantities

of imported riprap were drastically reduced to avoid the inclusion of existing

riprap volumes in the bidder’s calculations. JX 1, at 53. The contract plans show

four sections of new riprap placement, which match the indications on the relevant

“typical cross-sections” for riprap placement under the original contract. JX 109,

at 15-17, 19-20, 23-27, 36. Although the government contends otherwise, the

original contract’s riprap work was for these four sections of “new riprap”

placement.28 Cf. Def.’s Reply at 24 (conceding that the 17,500 CY riprap estimate

in the amended solicitation was for new riprap only).

27

/ It is somewhat ironic that the IBWC’s original estimate in the solicitation for the

riprap quantities required for this project, 32,000 CY, was far more accurate than the revised

estimate later provided to bidders. JX 109, at 8. The 32,000 CY figure was slashed almost in

half to eliminate possible double-counting of existing riprap. JX 1, at 53. Bidders were warned

that the revised riprap estimate could be off by as much as twenty percent. JX 1, at 67. If the

IBWC’s original riprap estimate, 32,000 CY, is increased by twenty percent, that figure is 38,400

CY. Magnus states that it placed a total amount of 36,378 CY of riprap on the levee, well within

a twenty percent variance from the original riprap estimate in the solicitation. JX 24, at 17.

28

/ When all of the answers to bidder questions regarding riprap are considered, along

with the levee plans and typical cross-sections, a rational bidder would have known that some

variation from the 17,500 CY estimate was possible, but the riprap quantities in the base contract

were to be placed on the “new riprap” sections of the levee. JX 1, at 53, 65, 67; JX 109, at 10-

36.

50

The government’s second false assumption is that the base contract and

Modifications 001 and 003 included a requirement that Magnus place the

“additional riprap” quantities on the levee (9570 CY for the portions of the levee

where no existing or new riprap was shown on the levee’s plans), as well as riprap

required to replace existing riprap (8101 CY). See Def.’s Reply at 28 (stating that

“the removal and replacement of existing riprap was required by the contract

documents and subsequent modifications”). This assumption is ill-founded

because Magnus’s cost proposal did not include the replacement of existing riprap.

Modifications 001 and 003 did not pay Magnus to replace the existing riprap on

the levee.29 Because Magnus performed work outside the scope of the contract

when it replaced existing riprap, the court turns now to the order/fault element of

the constructive change doctrine.

C. Government Order/Fault Element

Once a plaintiff shows that it has performed work outside the scope of the

contract, the constructive change doctrine next requires the plaintiff to

demonstrate that the work was performed because of an order or fault of the

government, rather than simply as the result of a voluntary choice of the

contractor. See, e.g., Chris Berg, Inc. v. United States, 455 F.2d 1037, 1050 (Ct.

Cl. 1972) (noting that for the constructive change doctrine to apply, the contractor

must not have volunteered the work outside the scope of the contract) (citation

omitted). Here, there is no evidence that Magnus spontaneously volunteered to

place 8101 CY of riprap onto the levee. The only question is whether Magnus was

ordered to replace the existing riprap on the levee, or whether Magnus removed

and replaced the existing riprap due to the fault of the government. In the

somewhat odd circumstances of this levee restoration project, both government

orders and government fault are at play in Magnus’s replacement of existing riprap

on the levee.

It is clear from witness testimony that the IBWC’s contracting officer’s

29

/ The text of the riprap work outlined in Modifications 001 and 003 contains no

statement that all riprap work required on the levee was encompassed in these modifications.

Nor do these modifications state that existing riprap would be replaced. The described work

simply states that Magnus was “to provide and place Riprap” on both the upstream and

downstream reaches of the levee. JX 4, at 4; JX 27, at 4.

51

representative, Mr. Duran, directed Magnus to remove and replace unsatisfactory

existing riprap on the levee. Duran Tr. at 854-56. It is also clear that the

contracting officer ratified these directives, allegedly because Mr. Delgado

presumed that this work was included in the lump-sum price negotiated for the

restored levee.30 See JX 26, at 2 (describing the riprap work performed by Magnus

as “required work”); Delgado Tr. at 687 (“Give us the riprap for a lump sum price.

You’re responsible under the lump sum to do all the riprap.”). Where a

contracting officer has actual authority to bind the government, as Mr. Delgado

had here, and ratifies an order to proceed with work outside the scope of a

contract, the constructive change doctrine applies. E.g., Harbert/Lummus

Agrifuels Projects v. United States, 142 F.3d 1429, 1433 (Fed. Cir. 1998) (citing

United States v. Beebe, 180 U.S. 343, 354 (1901)); Dan Rice Constr. Co. v. United

States, 36 Fed. Cl. 1, 3 (1996) (citations omitted). Because Mr. Delgado ratified

Mr. Duran’s directives to Magnus to remove and replace unsatisfactory existing

riprap in STAs 123 to 126, 176 to 186, and 206 to 223, this constructive change

entitles Magnus to an equitable adjustment of the contract price.

An equitable adjustment may also be founded on the fault of the

government which constructively changed a project to include work outside of the

contract’s scope. See, e.g., Zafer Taahhut Insaat ve Ticaret A.S., 833 F.3d 1356,

1364 (Fed. Cir. 2016) (stating that “a constructive change may result through the

fault of the government that warrants an equitable adjustment to the contract”

(citing NavCom Def. Elecs., Inc. v. England, 53 F. App’x 897, 900 (Fed. Cir.

2002))). Here, there was ample government fault, beginning with the IBWC’s

defective design of the levee and the issuance of the solicitation despite the

IBWC’s knowledge of the levee design defects; continuing with the IBWC’s

failure to differentiate between base contract and matrix riprap work; and

culminating in the IBWC’s failure to respond to or comment on Magnus’s clear

intent to only include within Modifications 001 and 003 the “additional riprap”

sections of the levee, and not the “existing riprap” sections of the levee. The

IBWC simply accepted Magnus’s cost proposal for supplemental riprap

placement, and its request for an addition of $717,750 to the contract price for

9570 CY of “additional riprap,” and ignored the fact that a substantial quantity of

riprap work was not included in these two contract modifications.

30

/ There is no documentary evidence as to the contracting officer’s contemporaneous

understanding of the scope of Modifications 001 and 003.

52

Among these aforementioned contract administration errors, the most

egregious are: (1) the IBWC chose to ignore documentary evidence showing that

the replacement of existing riprap was not included in Modifications 001 and 003;

and (2) the IBWC chose to ignore Magnus’s proposal that levee restoration would

proceed with the understanding that existing riprap replacement would be priced

on a “case by case” basis. JX 12, at 3. The fault for the constructive change to the

contract, which resulted in the procurement and placement of 8101 CY of riprap,

lies clearly with the IBWC, not Magnus. Under the government fault prong of the

constructive change doctrine, therefore, Magnus is entitled to an equitable

adjustment to the contract price.

Defendant argues that plaintiff’s riprap claim must fail. First, the

government contends that if the contract terms as to the replacement of existing

riprap were ambiguous, Magnus’s riprap claim could not succeed. Def.’s Br. at

54-56. In the court’s view, however, there was no ambiguity as to the scope of

riprap work included in Modifications 001 and 003, or in Magnus’s proposal that

existing riprap replacement could not be priced until that riprap was excavated and

tested. Ambiguity only exists where there are two reasonable interpretations of

contract terms. E.g., Metric Constructors, Inc. v. Nat’l Aeronautics & Space

Admin., 169 F.3d 747, 751 (Fed. Cir. 1999). Here, Modifications 001 and 003 did

not pay for the replacement of existing riprap, and a constructive change occurred

when Magnus was obliged to perform work outside of the scope of the contract.

Defendant also argues that any deferral of the pricing for the replacement of

existing riprap would be an illusory and unenforceable contract. Def.’s Br. at

56-57; Def.’s Reply at 29. Whatever the merits of this legal theory as a general

rule, it has no applicability here.31 The IBWC ordered Magnus to replace existing

riprap, which was a constructive change because that work was not included in the

base contract or Modifications 001 and 003. Further, Magnus performed the

existing riprap replacement work, which was outside of the scope of the contract,

due to the fault of the government in its administration of the contract. These

underpinnings for Magnus’s riprap claim for an equitable adjustment to the

31

/ The court notes that under this theory defendant’s counterclaim would be founded on

an “illusory and unenforceable” contract, Def.’s Reply at 29, because it is founded on a contract

modification which stated that a credit would be negotiated, at a later date, for the slope design

change. JX 104, at 1.

53

contract price do not depend on an illusory or unenforceable contract.

D. Quantum of Riprap Claim Equitable Adjustment Proved to a

Reasonable Certainty

Magnus requests $597,075 for an equitable adjustment to the contract price

for riprap work that was not included in either the base contract or Modifications

001 and 003. Pl.’s Br. at 57. This figure is supported by contemporaneous

documentation of the matrix negotiations, see JX 6; JX 7; JX 10; JX 11; JX 12; JX

13, the calculations and testimony of Magnus employees Owaidat, Sallas,

Douglas, Louviere and Clark regarding the replacement of existing riprap, as well

as the documentation provided to the IBWC at the end of the levee project, see JX

24; JX 25; JX 154. As noted supra, the locations of the existing riprap on the

levee design documents are consistent with the locations along the levee where

Magnus asserts it placed 8101 CY of supplemental riprap. The volume quantities

for the riprap claim, which are then multiplied by the price of $75/CY, are

adequately supported by documentary evidence and witness testimony. Even Mr.

Wooten, the government’s expert, acknowledged that Magnus’s calculations of the

quantity of riprap required for the full replacement of existing riprap on the levee

were sound, at least from a mathematical standpoint. Wooten Tr. at 2104-06; JX

139, at 37.

The only remaining dispute for the riprap claim, then, is the question of

whether the re-use of some amount of the existing riprap on the levee merits a

reduction in the total amount of the equitable adjustment due Magnus, and, if so,

the size of such a reduction. The estimates of existing riprap re-use provided by

trial witnesses vary widely, from “insignificant amounts” that were not worth

tracking, Sallas Tr. at 1674-75, to as much as upwards of fifty percent re-use,

Moore Tr. at 1209-11. Mr. Duran, when asked to guess, suggested that about

thirty percent of the existing riprap was re-used, but confessed that his guess was

not based on any hard data. Duran Tr. at 997.

One of the problems with the testimony regarding existing riprap re-use is

that the IBWC representatives appeared to be guessing at the extent of such re-use;

Mr. Duran and Mr. Moore were of the opinion that Magnus had placed re-used

riprap below ground in the underground portion of the riprap armoring, the “toe-

down.” Duran Tr. at 997; Moore Tr. at 1210. Of course, once the levee was

54

completed, the riprap in the toe-down was hidden from view. Sallas Tr. at 1729.

The conviction held by Mr. Moore and Mr. Duran that a substantial amount of re-

used existing riprap was buried in the toe-down, in the court’s view, reflects a

tendency on the part of the IBWC representatives to suspect, without a factual

basis, that Magnus inflated its claimed cost overruns.32 Given the credibility

problems of these two witnesses, and the countervailing testimony of more

persuasive Magnus employees, the court finds that an insignificant amount of

existing riprap was re-used on the levee, whether in the toe-down or above ground.

See Sallas Tr. at 1728 (stating that Magnus used a “very little bit [of the existing

riprap] in the [toe-down]”).

If the re-use of this small amount of existing riprap in the toe-down or

elsewhere had produced cost savings for Magnus, the court would agree with

defendant that some “accounting” of re-use should have been applied to the

amount set forth in Magnus’s riprap claim. Def.’s Br. at 57. In the abstract, Mr.

Moore testified that it should be less expensive, typically, to re-use, rather than

import, riprap. Moore Tr. at 1211. Here, however, there is overwhelming support

for the view that the riprap on the levee was of poor quality. Def.’s Reply at 27;

Pl.’s Br. at 9, 17-18 & n.4.

According to Mr. Sallas, the witness who provided the most detailed and

persuasive testimony regarding riprap work on the levee, the existing, poor quality

riprap was extremely expensive to process into a small amount of re-usable riprap.

Sallas Tr. at 1674-79, 1727-28. Thus, there were no net cost savings to Magnus

associated with the insignificant amount of existing riprap re-used on the levee.

Based on the testimony of the most persuasive witness on the subject of existing

riprap re-use, the court concludes that no reduction of Magnus’s claim for an

equitable adjustment is appropriate. The court finds that the quantum of Magnus’s

riprap claim, $597,075, has been proved to a “reasonable certainty.” Precision

Pine, 596 F.3d at 832.

32

/ Over the course of the trial, the court heard testimony about IBWC suspicions

regarding Magnus’s supporting documentation for its cost overrun claims. These included the

suspected falsification of truckload tickets to measure embankment fill volumes and the

suspected falsification of a surveyor’s stamp on documents submitted to the IBWC. These

suspicions were refuted by persuasive testimony provided at trial.

55

IV. Embankment Fill Claim

Magnus’s embankment fill claim is its largest and most complex claim.

Unlike the riprap claim, where the parties primarily focused on the matrix and the

changes brought to the project through the matrix negotiations, here the primary

focus is on the original solicitation and contract documents and how a reasonable

levee contractor should have interpreted those documents. Certainly the matrix

negotiations and subsequent contract modifications also play a part in the

embankment fill dispute, but that role is a secondary one. Because the

embankment fill claim is dominated by concerns as to the content and

interpretation of the original contract documents, the court believes the most

appropriate legal framework for this dispute is the defective plans and

specifications framework. The court need not reach, therefore, the parties’

arguments as to the elements of a Type I Differing Site Conditions claim or a

constructive change claim as these doctrines might apply to Magnus’s

embankment fill claim. See Magnus II, 2016 WL 3960447, at *3-5 (finding that

three legal theories, Type I Differing Site Conditions, defective

plans/specifications, and constructive change, were potential supports for

plaintiff’s embankment fill claim).

The court’s analysis of the embankment fill dispute will include the

following topics, in this order: (A) elements of a defective plans/specifications

claim; (B) governing regulations under the Federal Acquisition Regulation (FAR)

that were included in the contract; (C) embankment fill terminology and

techniques; (D) interpretation of contract documents; (E) slurry wall construction;

(F) matrix negotiations and embankment fill contract modifications; (G)

unexpectedly deep excavation of the levee; and, (H) quantum of any equitable

adjustment due Magnus. Before turning to these topics, the court sketches the

broad outlines of the embankment fill dispute.

The embankment fill cost overruns that Magnus experienced can be traced

to Magnus’s assumption that most of the existing levee material could either be

left in place or used again once it had been removed, to permit certain levee

restoration tasks, and re-compacted. See JX 11, at 4 (“Our current assumption is

that the existing levee meets the project requirements for embankment fill.”). The

dispute between the parties is whether Magnus’s assumption was reasonable,

given the content of the contract documents provided in the solicitation and

56

solicitation amendments. According to plaintiff, the bidding documents warned

that a relatively small amount of the levee, the topmost portion of the levee slope

where erosion had occurred, was just as likely to not meet specifications as to meet

specifications, and a prudent bidder could not assume that any of this layer of

material could be re-used. Plaintiff asserts, and the evidence supports this

assertion, that Magnus never expected this top layer of the levee slope to be re-

usable in its cost proposals, and never included this material as a cost category in

its embankment fill claim. Defendant’s arguments, on the other hand, suggest that

any and all risk of having to excavate deeper than the top layer of the levee slope

and to remove and replace additional amounts of the levee fill was a risk borne

solely by the bidder. See Def.’s Br. at 46 (stating that the contract documents

indicated that “any existing levee materials removed from the levee would have to

meet specifications before being replaced”) (emphasis added); Def.’s Reply at 8

(stating that “contractors [were] on notice that not all existing soils could be re-

used”).

In the court’s view, it defies logic to expect bidders on this project to inflate

the embankment fill quantities in their proposals to cover every conceivable

excavation depth on the levee. The government’s interpretation of the solicitation

is fundamentally at odds with a rational sealed bid, fixed-price procurement –

there was no real competition if the bids submitted for the Lower Presidio Levee

restoration project had no logical relationship to the actual amount of work

required to complete the levee. See, e.g., Glenn Def. Marine (Asia) PTE Ltd. v.

United States, 97 Fed. Cl. 568, 578 (2011) (“As a general rule, offerors must be

given sufficient detail in [a solicitation] to allow them to compete intelligently and

on a relatively equal basis. When a solicitation lacks sufficient detail and permits

each offeror to define the specification for itself, and to the extent they do so

differently, the offerors are not competing on an equal basis.”) (internal quotations

and citation omitted). Sealed fixed-price bidding for levee restoration or

construction, in the court’s view, requires rational quantity estimates provided by

the agency to bidders, or, at the very least, an accurate description of contract

work from which a bidder might calculate the approximate quantity of fill required

to prepare a rational bid and to complete the project. In this case, as discussed

below, the IBWC provided neither accurate estimates of the fill required to restore

the levee, nor accurate plans and specifications for the contract work. In such

circumstances, an equitable adjustment of the contract price must be granted to the

contractor.

57

A. Elements of a Defective Plans and Specifications Claim

There are a number of articulations of the elements of a defective plans and

specifications claim. The overall rationale for an equitable adjustment of this type

is that the contractor experienced additional costs in completing the project which

were caused by its reliance on defective specifications or plans. See, e.g., Cable &

Computer Tech., Inc., ASBCA No. 47420, 03-1 B.C.A. ¶ 32237 (Mar. 27, 2003)

(“We conclude that the specifications upon which [the contractor] was to perform

were defective to the extent discussed above and that [the contractor] is entitled to

recover its added costs in attempting to perform the contract requirements.”);

Gracon Corp., IBCA No. 2271, 89-1 B.C.A. ¶ 21232 (Oct. 18, 1988) (“[W]e

conclude that [the agency’s] defective specifications were the cause of the

additional work claimed. In such instances, the Court of Claims has recognized

the doctrine of constructive change in order to compensate contractors for

increased costs of performance resulting from defective specifications.” (citing

generally to Hol Gar Mfg. Corp. v. United States, 360 F.2d 634 (Ct. Cl. 1966)).

The Federal Circuit has enumerated the elements of proof for the defective plans

and specifications inquiry:

[W]here a contractor-claimant seeks to recover an

equitable adjustment for additional work performed on

account of a defective specification, the

contractor-claimant must show that it was misled by the

defect. To demonstrate that it was misled, the

contractor-claimant must show both that it relied on the

defect and that the defect was not an obvious omission,

inconsistency or discrepancy of significance, – in other

words, a patent defect – that would have made such

reliance unreasonable.

E.L. Hamm & Assocs., Inc. v. England, 379 F.3d 1334, 1339 (Fed. Cir. 2004).

These basic principles and elements of proof guide the court’s resolution of

plaintiff’s embankment fill claim.

As the court noted in Magnus II, there is a potential for factual overlap

between a differing site conditions claim and a defective plans and specifications

58

claim, especially where an earthwork project is involved. 2016 WL 3960447, at

*4. The court also noted that a defective specifications claim would not lie if its

sole basis was the misrepresentation of subsurface conditions, because in that

circumstance the differing site conditions framework would provide the only

remedy to the contractor. Id. at *4 n.3 (citing Comtrol, Inc. v. United States, 294

F.3d 1357, 1362 (Fed. Cir. 2002)). Here, plaintiff’s defective plans and

specifications claim for cost overruns in embankment fill is grounded in a wide

variety of defects in the levee’s design documents, not, solely, the solicitation’s

indications of subsurface conditions at the levee. For that reason, Magnus’s

defective plans and specifications claim is sufficiently distinct from any claim it

might bring under a differing site conditions theory, and thus the defective plans

and specifications claim may proceed in this court on its own basis.

Lastly, the court notes that there is another line of precedent which

examines defects in contract documents which mislead and cause unexpected

increases in the contractor’s costs, and this line of precedent might be considered

to identify a special subset of defective plans and specifications cases. These are

the ‘inaccurate estimate’ cases, of which there are many types. Most pertinent

here are cases where inaccurate estimates in a solicitation have misled a bidder

into submitting an excessively low bid. See, e.g., C. L. Michner, Inc. v. United

States, No. 280-77, 1979 WL 16464, at *23 (Ct. Cl. Feb. 27, 1979) (holding that

the plaintiff was misled in calculating its fixed-price bid by an agency estimate of

contract work that undercounted the acreage to be cleared by 490 acres)

(Michner), aff’d, 618 F.2d 121 (Ct. Cl. 1979) (table); cf. Everett Plywood & Door

Corp. v. United States, 419 F.2d 425, 433 (Ct. Cl. 1969) (holding that the

government’s inaccurate estimate of the quantity of timber available for harvest

caused a substantial loss to the contractor). The general principle of recovery in

these cases is that the financial impact of a specification rendered defective by an

inaccurate government estimate should fall on the government, not the contractor.

See, e.g., Everett Plywood, 419 F.2d at 433 (stating that “a positive statement of

facts in specifications, upon which the contractor is entitled to rely, is binding

upon the government, and upon it rather than upon the claimant must fall the loss

resulting from a misstatement of such facts”) (citation omitted). The court will

also apply this line of defective plans and specifications precedent to Magnus’s

embankment fill claim.

B. Regulations under the Federal Acquisition Regulation (FAR)

59

As a threshold matter, the parties disagree as to which “order of precedence”

clause governs any conflicts between the written specifications and the

plans/drawings included in the solicitation and subsequently in the contract.

Plaintiff would give precedence to 48 C.F.R. § 52.214-29 (2016), whereas

defendant relies on a different FAR provision, 48 C.F.R. § 52.236-21, Alt 1

(2016). Both of these FAR provisions are included by reference in the contract.

JX 1, at 20, 23.

The government’s argument is correct. See Def.’s Reply at 4-5 (explaining

why plaintiff’s citation to FAR 52.214-29 is inapposite when resolving conflicts

between specifications and contract drawings and plans). The guiding principle

for the resolution of conflicts between written specifications and the plans and

drawings in this case is stated succinctly in FAR 52.236-21, Alt 1: “In case of

difference between drawings and specifications, the specifications shall govern.”

Id. This statement of the law reflects the FAR provision in the contract which

most directly addresses this specific issue, titled “Specifications and Drawings for

Construction,” id., and long-standing principles of government contract law, see,

e.g., Michner, 1979 WL 16464, at *21 (noting that in the absence of a specific

order of precedence clause, specifications trump drawings as a matter of law). For

this reason, in case of direct conflict between the specifications and the plans and

drawings in the levee restoration contract, the specifications control.

C. Terminology and Techniques Pertinent to Magnus’s

Embankment Fill Claim

There are two specialized construction practices at issue in Magnus’s

embankment fill claim: (1) slurry wall construction; and, (2) the addition of

embankment fill to restore an existing levee. The quantities of embankment fill

cost overruns for these two activities are separately addressed in the claim

submitted by Magnus to the contracting officer. JX 2, at 1-2. Trial witnesses and

contract documents explained these construction practices; the evidence,

summarized below, provides a background for the parties’ dispute as to the merits

of plaintiff’s embankment fill claim.

1. Slurry Wall Construction

The slurry wall, sometimes referred to as the slurry trench, is a barrier to

60

groundwater movement sunk below the riverside edge of this levee. Each slurry

wall is three feet thick and penetrates sixty feet below ground level. This

underground “wall” is constructed using a mixture (slurry) of water and bentonite

(a clay powder resistant to the passage of water), combined with soil. The slurry

wall is referred to in the contract specifications as the “Soil-Bentonite (S-B) Slurry

Trench.” JX 23, at 170. As described in the contract specifications, “[t]he slurry

trench is a three (3) foot minimum width trench excavated through the existing

ground or prepared working surface using the slurry method of excavation and

backfilled with S-B backfill material, to form a low permeability cutoff wall.” Id.

at 171.

There were three slurry walls constructed along the levee. The dispute

regarding the construction of the slurry walls centers on the excavation performed

by Magnus to create each slurry wall workpad, the work area where its excavator

operated to construct the slurry wall. After each slurry wall was completed,

Magnus would then restore the riverside of the levee to replace the excavated

material and to complete the embankment fill placement on the restored levee

slope in those slurry wall areas.

There is no real dispute that a large machine was required to excavate the

slurry trench to a depth of sixty feet and to construct the slurry wall by placing the

S-B backfill material into the trench. Nor is there any dispute that Magnus, well-

versed in slurry wall construction, chose an appropriate machine for this task. The

dispute is focused on the extent of levee excavation performed by Magnus to

create the slurry wall workpad to accommodate its machine, and Magnus’s

assumption that the excavated levee material could be re-used, once it was

returned to the levee and re-compacted.

Both the specifications and contract drawings showed that some amount of

levee slope excavation was required for the slurry wall workpad. JX 23, at 177

(“For construction of the slurry trench, the existing levee embankment needs to be

excavated along the riverside of the levee . . . .”); JX 109, at 36 (“Typical Section

with Slurry Trench”). Once the slurry wall had been constructed, the levee slope

excavation for the slurry wall workpad area would require the placement of

embankment fill onto the existing, excavated levee surface. JX 23, at 177. As

discussed below, the preparation of existing levee surfaces to receive additional

embankment fill required the construction of a “series of keys and benches.” Id.

61

2. Benching of the Existing Levee to Receive Embankment Fill

The levee restoration project required the addition of embankment fill to the

existing levee, in a quantity estimated in the solicitation to be 120,000 CY of

imported embankment fill spread over approximately 5.88 miles of levee. JX 1, at

1; JX 109, at 8. As a preliminary step, the existing, eroded surface of the levee

would be “cleared and grubbed,” to remove plants, roots, and other non-soil

materials. JX 23, at 219. This could be accomplished by scraping away such

materials with a ripping tool or an angled blade attached to a small bulldozer.

Clark Tr. at 1822-23.

Once the levee surface contained only soil, the contractor would cut into the

levee and create a series of stair-step horizontal planes going along the contour of

the levee’s slopes – these flat planes are called “benches,” and the process of

cutting benches into the levee was referred to as “benching the levee.” The

witnesses at trial often referred to the excavated wedges of material removed from

the slope of the levee as “triangles,” because these cuts into the levee slope create

the triangular empty spaces above each stair-step bench, from the perspective of a

cross-section of the levee. The earthen material in the triangles removed from the

levee was referred to as “benching material.”

In the contract specifications, these triangular cuts into the levee are referred

to as “keys.” The benching process, which prepares the levee to receive imported

embankment fill, can also be referred to as “keying” into the levee of the

embankment fill. The purpose of this “series of keys and benches” is to prevent

the newly compacted additional fill on the levee from sliding down the existing

levee’s slope. See JX 23, at 219 (“The keys and benches reduce the risk of

formation of a preferential failure surface at the old/new fill interface.”). In

layman’s terms, the stair-step pattern of keys and benches ‘locks’ the new

embankment fill to the surface of the existing levee so that the constructed levee’s

total mass of embankment fill is more stable. The stair-step pattern of keys and

benches was sometimes referred to at trial as the “bench line” or “benching line.”

Once the keys and benches had been cut into the existing levee, Magnus

was required by the contract to obtain confirmation from Mr. Moore that the

surface of the existing levee was satisfactory to receive the additional fill. JX 23,

at 220 (“Fill shall not be placed on the embankment foundation until the area to

62

receive the fill has been inspected and compliance-confirmed by the [Contracting

Officer’s Representative].”). If the embankment foundation33 was approved, the

surface would be moisture-conditioned and compacted, and additional

embankment fill would be placed on the levee and compacted to the degree

specified by the contract. Id. Magnus, as required by the contract, tested the

newly placed embankment fill at regular intervals to ensure that the soil qualities

of the embankment fill met specifications. In contrast, the contract contained no

specification as to existing fill soil testing, and, similarly, contained no testing

frequency schedule for the soil testing of existing fill. Wooten Tr. at 2289; see

also Moore Tr. at 1325-26 (stating that the embankment foundation did not need

to meet the specifications for embankment fill).

The essence of plaintiff’s embankment fill claim, other than in the slurry

wall workpad areas, is that Magnus was obliged to bench the levee at a deeper

level than was depicted in the defective plans and specifications included in the

solicitation. Mr. Owaidat referred to this frustrating cost overrun as “chasing that

bench [deeper and deeper].” Owaidat Tr. at 124. Magnus had expected that the

benching material would likely be unsuitable for re-use, but had not expected that

additional layers of unsuitable material would be excavated and removed from the

site, and, similarly, had not expected that these discarded materials would need to

be replaced with imported fill. In cross-section, the cost overrun area was

approximately the zone between the expected, higher bench line, and the deeper,

33

/ There were a variety of terms employed to describe this surface of the existing levee

accepting additional fill. Witnesses often referred to the embankment foundation, and to the

material in the existing levee in general, as subgrade. There was some confusion, however, as to

whether the term “subgrade” should refer, instead, to material at or below ground-level, i.e., at or

below the level upon which the existing levee had itself been placed. Moore Tr. at 1398-1401;

Wooten Tr. at 2014. To maintain clarity, the court refers to the surface receiving additional

embankment fill as the embankment foundation, and to the existing levee material at this

foundation l

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