# Oasis International Waters, Inc. v. United States

> United States Court of Federal Claims · December 1, 2017

URL: https://www.frixlaw.com/law-library/cases/4225597

## Case

- **Court:** United States Court of Federal Claims
- **Decided:** December 1, 2017
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Marian Blank Horn
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4225597

## Opinion text

In the United States Court of Federal Claims
No. 10-707C
Filed: April 7, 2017
Reissued: December 1, 20171
* * * * * * * * * * * * * * * *
OASIS INTERNATIONAL WATERS, *
INC., *
*
Plaintiff, * Trial; Contract Interpretation;
v. * Duress; Fraud; Special Plea in
* Fraud; False Claims Act; Anti-
UNITED STATES, * Fraud Provision of the
* Contract Disputes Act.
Defendant. *
*
* * * * * * * * * * * * * * *

OPINION

Laurence Schor, Asmar, Schor & McKenna, PLLC, Washington, D.C., for plaintiff.
With him were Susan L. Schor, Dennis C. Ehlers, David A. Edelstein, Robert D. Pratt,
and Allison G. Geewax, Asmar, Schor & McKenna, PLLC, Washington, D.C.

James P. Connor, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington, D.C., for defendant. With him
were Tanya B. Koenig, Trial Attorney, Commercial Litigation Branch, Stephen C. Tosini,
Senior Trial Counsel, Douglas K. Mickle, Assistant Director, Commercial Litigation
Branch, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Chad A.
Readler, Acting Assistant Attorney General, Civil Division, Department of Justice.

HORN, J.

Plaintiff, Oasis International Waters, Inc. (Oasis), is a contractor that performed a
bottled water contract with the United States military in Iraq during the Iraq War. Oasis is
a Nevada corporation for which the principal place of business is in Utah. After the end of
contract performance, plaintiff filed a certified claim with the contracting officer, which was
denied in its entirety. Plaintiff thereafter filed a complaint in the United States Court of
Federal Claims, and, subsequently, defendant filed fraud counterclaims against plaintiff.

1 The court issued a series of opinions in the above captioned case on August 31, 2016,
April 7, 2017, and November 21, 2017. In response to the court’s November 21, 2017
Order, the parties agreed that all three opinions could be issued without redactions. After
reviewing the opinions, the court agrees with the parties and the original opinions are
hereby unsealed and reissued without redaction.
A trial was held regarding plaintiff’s breach of contract claims, as well as defendant’s fraud
counterclaims. As indicated below, in an earlier opinion in the case, the court, with the
exception of one claim which the court deferred, and which is addressed below, denied
defendant’s counterclaims for the Special Plea in Fraud, False Claims Act, and the anti-
fraud provision of the Contract Disputes Act.

FINDINGS OF FACT

As stipulated by the parties, “[a]fter the start of the Iraq War but prior to the award
of the contract at issue in this case, the Army procured all of its Iraq bottled water
requirements from Turkey, Kuwait, and Jordan and shipped it by truck into Iraq and to the
various U.S. military bases in Iraq.” United States Air Force Colonel Renee M.
Richardson, who served as one of the contracting officers on the contract at issue in this
case from May 2006 until October 2006,2 explained at trial that “[t]he previous approach
was bringing bottled water in from Turkey, Jordan, and Kuwait, of course, which put
soldiers on the road for the transportation.” As noted in the Statement of Work for the
solicitation at issue in this case, Solicitation No. W27P4A-05-R-0002 (the solicitation):

Up to the present time bottled water has been purchased from sources
outside of Iraq. This practice necessitates large numbers of convoys and
escorts to transport the bottled water from Kuwait, Jordan, and Turkey.
Producing bottled water locally would significantly reduce the number of
convoys required to transport water as well as reduce the likelihood of battle
related injuries.

The parties also stipulated that:

On or about March 2, 2005, Maj. Vazquez, a contracting officer with Joint
Contracting Command-Iraq (JCC-I, later Joint Contracting Command-Iraq
Afghanistan – JCC-I/A), serving at Camp Victory, issued a Request for
Information (RFI) “to get information on contractors capable of providing the
following capabilities for construction of re-locatable water purifying and
bottling facilities for distribution at several locations in Iraq. Locations will be
identified at a later date and time. These facilities are to produce clean
drinkable bottled water per all USDA and FDA standards and requirements.”

The RFI generated interest from 71 vendors, and, on April 3, 2005, the government
posted Solicitation No. W27P4A-05-R-0002.3 Proposals were due by May 3, 2005, and
the government received 22 bids in response to the solicitation, and answered 145
questions. A sample of the questions and answers reveals that the bidders had questions
about the pricing, capabilities, the land to be provided in Iraq and the obligations of the
government. For example, one part of question 33 stated: “Is our offer to give the cost per
2In 2006, Colonel Richardson was a Lieutenant Colonel. When she testified at trial, she
was a full Colonel. The court refers to her as Colonel Richardson in this opinion.
3 The government issued 11 amendments to the solicitation.

2
liter with the personnel built in, seperate [sic] to the cost of the plant and equipment?” The
government replied: “All Costs per liter are to be included.” Likewise, question 40 asked:
“Start up Cost: Since the bid is predicated upon the deliverables per litre bottle of water,
can we assume that all costs(inc personnel and equipment deployment to site) incurred
between contract award and water production will fall upon the successful bidder?” The
government replied: “Yes. It is up to you how you determine the cost per litre taking into
account all costs associated with this endeavor.”

There were a number of questions regarding the obligations of the government.
Question 2 asked, “[i]f projected demand falls short, what are the minimum volume
requirements? Is there a required minimum quantity the Government will procure?” The
government responded: “There are no minimums. The minimum is zero.” Additionally,
question 35, referring to question and answer 2, asked:

The answer to Question #2 states that there are no minimum purchase
quantities. This decision places an unreasonable amount of financial risk on
the contractor, and will likely severely limit the competition for this RFP
[Request for Proposals]. Request that the Government guarantee minimum
purchase quantities base [sic] on the estimated quantities that appear in the
RFP.

The government responded:

The levels of liters required are in the range. This is roughly the production
per day. You might have a day where your levels are lower, however, the
Government contract is a Firm Fixed Price not Indefinite Delivery / Indefinite
Quantity. The Government is entering into a one year contract with three
option years. The only thing that could prevent the basic year from occurring
is a Government decision to Terminate for Convenience or default of the
contractor to perform to the requirements and the Government would then
Terminate for Default.

One bidder questioned the potential for installment payments, asking: “Would the
Government authorize progress or installment payments recognizing 1) the significant
capital investment with establishing new capability and, 2) the ability to credit progress
payments with actual deliveries?” to which the government responded that: “The first
payment will be made once the contractor has the first plant operational and has had an
approved first article test accepted without conditions.”

In response to question 44, the government indicated “[t]he Government will
provide as flat land as possible,” and regarding site conditions, the government indicated
in the answer to question 89, the government stated that “[s]ite prep should be minimal.
The water source has been identified and deemed to have sufficient amounts by the
government to support the operation.” The government also noted in answer to question
89, however, “[i]t is up to you what you do in order to meet the Government’s requirements
and timeframe for delivery.”

3
One of the 22 bids was submitted by American AquaSource, Inc. (American
AquaSource), and signed by Max Wyeth, President of American AquaSource. Attached
to the American AquaSource proposal was a spreadsheet showing the volumes of
production and an estimate for when each site would begin water production. American
AquaSource’s bid assumed a price of $3.50 per case of water, or a total of
$50,225,000.00, based on the production of 14,350,000 cases.4 At trial, Max Wyeth
explained that he calculated the $50.225 million figure “using our average forecast of
demand, we came up with a case number that would be produced per year, and multiplied
that by the case cost.”5

Major Mauricio Vazquez, who issued the RFI and answered the questions posed
by the potential offerors, contacted Max Wyeth to clarify the proposal and to submit a
“total cost per year for all four years and the Grand total.” Max Wyeth provided Major
Vazquez with a base year price of $50,225,000.00 and three option year prices of
$186,000,000.00, totaling $608,225,000.00. Max Wyeth confirmed in his correspondence
“that the 3.50 price is the only price, regardless of the winter/summer/surge period, for all
years within the contract.” After negotiations between Max Wyeth and Major Vazquez, in
which Major Vazquez asked Max Wyeth to reconsider the option year prices, on May 11,
2005, Max Wyeth submitted an amendment to the American AquaSource proposal, which
included a revised “Summary of Pricing Schedule” with a proposed base year price of
$50,225,000.00 and three option year prices of $112,000,000.00, for a total contract price
of $386,225,000.00. The parties have stipulated that, “[o]ther than AquaSource’s
proposed price, all other offerors whose proposals were found technically acceptable
offered prices in excess of $1 Billion.”6 Major Vazquez awarded contract no. W27P4A-

4 The court notes, however, for the basis of the estimate in the American AquaSource
proposal, American AquaSource assumed annual production of 384 million bottles or 32
million cases of water.
5 Counsel for defendant confirmed during Max Wyeth’s testimony:

Q. So, just so the record is clear, the $50.225 [million] in your proposal is based
upon $3.50 per case?

A. Yes.
6 The government’s own Independent Government Cost Estimate, estimated a total base
year cost of $149,145,842.23, or almost three times American AquaSource’s proposal for
the base year, to construct and operate the eight water bottling facilities in Iraq. Morrell
International, Inc., a corporation, whose Chief Executive Officer was Phil Morrell, also
submitted a separate proposal which provided for a base year price of $899,725,000.00,
option year prices of $831,287,500.00 per year, for a contract total of $3,393,587,500.00.
Phil Morrell, who later became the president of Oasis, the successor contractor to
American AquaSource, testified at trial, however, that his bid was a “bad bid,” and that he
had intended to bid at $5.50 per case of bottled water. Phil Morrell indicated that the

4
05-C-0002 (the contract) to American AquaSource on May 25, 2005. The contract called
for base year price of $50,225,000.00 and three option year prices of $112,000,000.00
each, for a total contract price of $386,225,000.00.7 Major Vazquez signed the contract
on behalf of the government and Max Wyeth signed on behalf of American AquaSource.

After the contract was awarded to American AquaSource, Paul Morrell contacted
Max Wyeth, and subsequently, in June 2005, Max Wyeth exchanged several emails with
Phil Morrell and Dan Petsche, then the Vice President for Contracts and Compliance for
Al-Morrell Development discussing the bottled water project.8 Paul Morrell testified that
“[o]ur original intent with American AquaSource was to sell our assets to him, as it
appeared that he didn't have the resources and the funding to acquire our assets, much
less build the factories. It morphed or migrated into a partnership between Max and Phil
and myself.” Paul Morrell explained that, initially:

Al-Morrell Development was essentially the performance arm of the
operation. We built the facilities. We financed them. All the employees were
employed by Al-Morrell Development. It was basically the part of the
organizations that really did all the performance. . . . Max's responsibility
was to provide water bottling expertise, because Phil and I were -- had
never built a water bottling plant prior to this.

The original arrangement changed, because as Paul Morrell testified:

Initially, Mr. Wyeth told us that he had the financing lined up, and he just
needed time. He didn't have time, because the first facility had to be up --
we're talking July, and we had basically 90 days to get the first facility up.
So, we really didn't have time. . . . So, our understanding was he would
continue to try to bring his financing option to the table, get money in the
bank. In the meantime, Phil and I would self-fund this first plant so that we
could meet the contractual deadlines. Over the course of the fall, it became
clear that Mr. Wyeth's options were not going to come to fruition, and AMD
[Al-Morrell Development] -- initially it was a parallel track. We were trying to
obtain financing on behalf of AMD while we were waiting for his financing to

request “needed to be right around $5.50 per case,” for “somewhere around the 32 million
cases per year.”
7The cover page to the contract listed the estimated dollar amount as “$386,225,000.00.”
At trial, Major Vazquez testified that this amount was in error and that the amount should
have been $50,225,000.00. Subsequently, on July 15, 2005, United States Air Force
Major Marc A. Lopez, who served as the contracting officer on the contract from June
2005 until September 2005, executed modification P00002 on behalf of the government,
which changed the dollar amount from “$386,225,000.00” to “50,225,000 (NTE),”
because “[o]nly the base year award should have been documented in the contract.”
8Max Wyeth testified that at the time he signed this contract he had no relationship with
Al-Morrell Development, Paul Morrell, Phil Morrell, or Paul Jeffries.

5
come into place. Ultimately his financing failed, and the AMD financing did
come into place late in the year or early the next year.

Therefore, in July 2005, Phil Morrell, Al-Morrell Development, Max Wyeth, and American
AquaSource entered into a joint development and pre-incorporation agreement to form a
new corporation to fulfill the contract, with the agreement reflecting that the purpose of
American AquaSource’s contract was to “build up to six (6)[9] water bottling plants in the
country of Iraq.” Initially, the corporation was called Iraqua, Inc., but later changed its
name, on July 15, 2005, to Oasis.10 Subsequently, in the fall of 2005, Phil Morrell, Al-
Morrell Development, Max Wyeth, and American AquaSource signed an addendum to
the joint development and pre-incorporation agreement, assigning American
AquaSource’s contract to Oasis. The addendum required Max Wyeth, of American
AquaSource, to execute a novation agreement. The novation agreement was to be a
modification to the contract, and ultimately was modification P00005, discussed below.
On December 5, 2005,11 “American Aqua Source, Inc.,” “Oasis International Water, Inc.,”
and the “United States of America” “enter[ed] into this Novation Agreement. . . as of
August 1, 2005.” Max Wyeth, then-president of Oasis and American AquaSource, signed
the modification on behalf of Oasis on December 2, 2005 and Colonel Brandon Montler
signed for the military on December 5, 2005.12 The modification stated that the “purpose
of this modification” was to reflect the novation agreement transferring all rights and
responsibilities of the bottled water contract from American AquaSource to Oasis. The
modification also stated that, “[a]ll other terms and conditions of the contract remain
unchanged.”

Paul Morrell was the Chief Executive Officer of Al-Morrell Development from
August 15, 2005 through January 2006, and, thereafter, he served as President of Al-
Morrell Development. Paul Morrell also was the Chief Executive Officer of Oasis from
9 As explained below, although the contract, as executed, required eight water bottling
plants, the contract was modified by modification P00001 to require only six water bottling
plants.
10 Paul Morrell testified that “Oasis was originally called Iraqua. Everybody loved that
name except the bankers. The bankers wouldn't allow us [to] own a bank account with
that name Iraqua on it, literally, so we changed the name to Oasis.” Paul Morrell testified
that “Phil [Morrell] and Max [Wyeth] were owners in Oasis, and Phil and I were owners in
Al-Morrell Development, but we made a very -- Phil and I made a very practical decision
that if we were going to invest our funds into the business, that our company was going
to own the assets.”
11In 2005, Colonel Montler was a Major. When he testified at trial, he was a Colonel. The
court refers to him as Colonel Montler in this opinion.
12 At the time of the novation, Max Wyeth testified he was “out of the loop” and his interest
in Oasis was eventually bought out by the Phil Morrell and Paul Morrell. Max Wyeth also
was not involved in the completion of the bottled water plants. Oasis accepted Max
Wyeth’s resignation as president of Oasis on January 5, 2006.

6
August 15, 2005 through January 2006, and, thereafter, served as President of Oasis.
Phil Morrell was Chairman of Oasis from July 2005 through December 2012. Paul Jeffries
served as both the Chief Executive Officer and Chief Financial Officer of Al-Morrell
Development and Oasis. Paul Jeffries served as Chief Financial Officer of Al-Morrell
Development and Oasis from June 2005 through January 2006, and, subsequently,
served as Chief Executive Officer of Al-Morrell Development and Oasis from January
2006 through 2010. Paul Jeffries was replaced as Chief Financial Officer of Al-Morrell
Development and Oasis by Neil Vos, who served as Chief Financial Officer from February
16, 2006 until June 2011. As noted above, Dan Petsche was the Vice President for
Contracts and Compliance for Al-Morrell Development during initial discussions about the
contract with Max Wyeth, and he also was the Vice President for Contracts and
Compliance for Oasis from 2005 through October 31, 2011. At all times, Paul Morrell and
Phil Morrell13 had a controlling interest in Oasis, and after Max Wyeth was bought out and
resigned as president, Paul Morrell and Phil Morrell controlled 100% of Oasis.

The Contract

As noted above, Major Vazquez awarded contract no. W27P4A-05-C-0002 to
American AquaSource on May 25, 2005. Item no. 0001 of the contract was “NON-
PERSONAL SERVICS [sic]” (capitalization in original) and indicated:

The Contractor shall provide all labor, tools, supervision, personnel,
equipment, transportation, materials, facilities, and other essentials
necessary to perform and sustain 8 separate and independent purified
bottle water plants according to the 20 Mar 05 Statement of Objectives
(SOO). Period of Performance: 25 May 05 through 24 May 06.

The unit price was listed as “$3.50/case” for all amounts of water produced. Following the
item no. 0001 were three items for the three option years, item no. 1001, item no. 2001,
and item no. 3001, changing only the period of performance.14 After item nos. 0001, 1001,
2001, and 3001, there was a summary of the pricing schedule which stated:

SUMMARY OF PRICES FOR BASE YEAR AND THREE OPTION YEARS

TOTAL BASE YEAR $50,225,000.00

FIRST OPTION YEAR $112,000,000.00

SECOND OPTION YEAR $112,000,000.00

THIRD OPTION YEAR $112,000,000.00
13 Phil Morrell and Paul Morrell are brothers.
14 The similarity of the three options years after the base year is reflected in the
typographic error of “NON-PERSONAL SERVICS” in each of the three option years.
(capitalization in original).

7
GRAND TOTAL (Base Year and Three Option Years) $386,225,000.00

(capitalization and emphasis in original). The period of performance was listed in the
contract as:

BASIC PERIOD 25 May 2005 - 24 May 2006
OPTION PERIOD I 25 May 2006 - 24 May 2007
OPTION PERIOD II 25 May 2007 - 24 May 2008
OPTION PERIOD III 25 May 2008 - 24 May 2009

(capitalization in original). The statement of objectives for the “purified bottled water
services” contract explained:

The purpose of this contract is to provide re-locatable purified bottled water
capabilities at various locations throughout Iraq Area of Operations (AO).
Contractor shall produce the amounts of bottled water as outlined in Figure
1. Contractor shall ensure bottled water capability is able to relocate upon
notification by the Contracting Officer (CO) due to military operational
requirements. Bottled water capabilities shall be established in the order as
listed in Figure 1. Actual locations will be given to the contractor that wins
award. The contractor shall provide all the mechanical equipment required
to produce and prepare for shipment the required amounts of bottled water.
The first bottled water site shall be operational 120 days after the contract
is awarded. This includes military inspection and acceptance. After contract
award, additional bottled water sites shall be established within the
remainder of days from contract award. A full 365 days from contract award,
all sites will be fully operational.

Figure 1, referenced in the statement of objectives, identified the production requirements
at each of the bottled water facilities at different points in the year.

LOCATION TOTAL PRODUCTION REQUIREMENT/DAY in 1K
Liters (winter/summer/surge)

Location 1 75-100K liters / 101-150K liters / 151-200K liters

Location 2 65-100K liters / 101-135K liters / 136-170K liters

Location 3 35-55K liters / 56-75K liters / 76-100K liters

Location 4 60-110K liters / 111-160K liters / 161-210K liters

Location 5 60-110K liters / 111-160K liters / 161-210K liters

Location 6 200-300K liters / 301-400K liters / 401-450K liters

8
Location 7 80-120K liters / 121-160K liters / 161-200K liters

Location 8 75-110K liters / 111-150K liters / 151-190K liters

(capitalization in original). Figure 1 contemplated three different quantity production
requirements: winter, summer, and “surge.” Colonel Richardson testified, explaining the
different requirements, as follows:

[D]uring the winter, the weather was a lot more reasonable in Iraq; the highs
were around the eighties, nineties. In the summer, temperatures got up to
135 degrees, requiring soldiers to drink more just to stay cool and to stay
hydrated. During surge, what that's really talking to is battle operations. Our
soldiers wind up wearing 60, 70, 80 pounds' worth of gear and then going
out into . . . tanks, which causes them to sweat and causes them to need
more water.

The tasks section of the contract instructed, in part: “The contractor shall provide
re-locatable purified water bottling capability for producing and packaging required
amounts of one liter bottles of water per day as outlined in Figure 1,” “Contractor shall
provide, operate, maintain, and repair all the mechanical equipment required to
accomplish the Government's objectives,” “Contractor shall ensure bottled water meets
or exceeds all US Government quality standards,” and “Contractor shall operate the
purified bottled water capabilities with enough personnel to meet the Government's
requirements.” Regarding payment to the contractor, the invoicing section of the contract
stated:

Invoicing shall occur monthly. The contractor shall invoice to the Contracting
Officer Representative (COR), by the 5th of each month, for the total of all
liters in [sic] produced, per location, for the entire previous month. The
CORs will prepare the DD250s and will submit them with the contractor's
invoice to the Contracting Officer (CO), no later than the 10th of each month.

Bottled Water Facilities

Although the contract, as awarded, required eight bottled water facilities, on May
26, 2005, as noted above, the day after contract award, United States Air Force
Lieutenant Marion Knapp executed a no-cost modification P00001 on behalf of the
government reducing the required number of water bottling facilities from eight to six. The
six bottled water facilities were: LSA Anaconda (Anaconda), Camp Victory, Al Asad
Airbase, Qayyarrah West (Q-West), Speicher, and Camp Taqaddum (TQ). On May 25,
2005, Major Vazquez indicated in an email to Lieutenant Knapp and Captain Patrick
Sturgill, who served as a “liaison” between the contractor and the military, that land would
be provided to the contractor no later than 30 days after contract award, “to ensure no
delay is imposed by the Government to the Contractor.” Although the answer to question

9
number 44 regarding the solicitation indicated that “[s]ite prep should be minimal,”
defendant had to provide site preparation at every location except Al Asad.15

Anaconda, the first bottled water facility, was contractually required to be
operational by September 22, 2005. Major Lopez executed modification P00004 on
September 18, 2005, on behalf of the government, granting a 12-day extension of the
requirement for Anaconda’s certification until October 4, 2005. Although Anaconda began
producing water on October 10, 2005, Anaconda was not audited and certified operational
until December 14, 2005, after producing almost 2 million liters of water.

Camp Victory, the second bottled water facility, was initially required to be
operational by May 24, 2006. The military authorized land for Camp Victory on September
4, 2005. Camp Victory was certified operational on April 7, 2006, and began producing
bottled water on April 12, 2006. Al Asad, the third bottled water facility, was initially
required to be operational by May 24, 2006. The military authorized land for Al Asad on
August 22, 2005. The contractual deadline to complete Al Asad was extended to June
30, 2006, and Al Asad was certified operational on July 24, 2006.

Q-West, the fourth bottled water facility, was initially required to be operational by
May 24, 2006. The military authorized land for Q-West on September 11, 2005, but on
December 19, 2005, the military directed and authorized land at a different location for
the Q-West plant. The contractual deadline to complete Q-West was extended to June
30, 2006, and Q-West was certified operational on July 9, 2006. Plaintiff indicated it
encountered challenges with the water source at Q-West. Alan Morrell16 testified that “we
opened Q-West and started drawing from that irrigation line, we started getting turbid
water, water so turbid that it was filled with mud and sand. And at that time, it was so
significant that we couldn’t purify it.” As a result, “what it did is it . . . immediately fouled
all of our [equipment] -- we didn't have an ultra filtration system there because it didn't call
for one.” Moreover, the “ROWPU [Reverse Osmosis Water Purification Unit] was
immediately filled with mud, and fouled. And each set of those membranes is $26,000.
And they were ruined. And we couldn't keep them clean and operational enough to
operate and make water there as a result.” In order to fix the problem, Alan Morrell
testified that Oasis “purchased a Pall Aria from northern New York and we also took an

15 In the case of Al Asad, plaintiff claims that: “Defendant refused to provide site prep at
Al Asad, Oasis was forced in December 2005 to hire its own subcontractor to prep the
site, which included filling borrow pits dug by the military, at a cost of $224,100,” and
further spent “$158,110 to abate the flooding and repair the damage caused to the site,”
as a result of the work done by another government contractor, Kellogg, Brown & Root,
at an adjacent site.
16 As noted above, Alan Morrell “was an Oasis consultant from late June 2005 through
October 2005. Specifically, he was the Oasis Contract and Compliance Administrator
from October 2005 through March 2007. He was Director of Contracts and Compliance
from March 2007 through November 2008. He was Project Management Director from
November 2008 through December 2009.”

10
additional ROWPU system that we had used at Balad [Anaconda] and recommissioned
it, repiped and replumbed the lines at Q-West and solved the problem.”

Speicher, the fifth bottled water facility, was initially required to be operational by
May 24, 2006. The military authorized land for Speicher on August 13, 2005. The
contractual deadline to complete Speicher was extended twice, finally to June 30, 2006,
and Speicher was certified operational on June 20, 2006, and began producing bottled
water on June 24, 2006. Initially, Oasis believed they would receive water provided by the
government via a ROWPU. Alan Morrell testified, however, that “we opened the factory,
we start producing, and within 48 hours, KBR [Kellogg Brown & Root] came in and just
railed on us for consuming their ROWPU'd water. And they got -- they got their KBR
COTR or contractor officer's representative for that site involved and they shut down our
water.” As a result, Alan Morrell testified that:

They’re [Oasis’ contracting officer and COSCOM (United States Corps
Support Command)] beating us up for delivering quantities, but they're
refusing to give us the water they're required to provide us. So, we're dealing
with that at Speicher, and we're dealing with a lack of water delivery at Q-
West to a level we can produce there, too, and we're all running for a
completed amount of or quantity of water, but we can't get to it.

As a solution, Oasis purchased from an American company a “BEV 9 reverse osmosis
system, and in the spring of 2007, installed it, commissioned it, and began to draw well
water.”

Camp Taqaddum, or TQ, the sixth bottled water facility, was initially required to be
operational by May 24, 2006. Although the military initially authorized the land for TQ on
August 24, 2005, the military directed Oasis to use land at different locations twice, the
second time in March 2006. The contractual deadline to complete TQ was twice
extended, to June 30, 2006, and then to October 15, 2006. The site preparation for TQ
was completed by July 2, 2006, and on August 11, 2006, Colonel Richardson gave
approval for Oasis to construct the plant at TQ. TQ was completed on October 23, 2006,
and despite Oasis requesting 40.5 days of excusable delay on September 25, 2006,
United States Air Force Lieutenant Colonel Joel R. Fortenberry, who served as the
contracting officer on the contract from October 2006 until early 2007, executed
modification P00013 on behalf of the government, granting plaintiff only eight days of
excusable delay for TQ. TQ was certified operational on October 25, 2006.

Relevant Modifications

During contract performance there were a series of relevant modifications to the
contract.17 As noted above, after contract award, modification P00001 reduced the
number of bottled water facilities from eight to six, and on July 15, 2005, Major Lopez
executed modification P00002 on behalf of the government, which changed the dollar
17As the parties have stipulated, 13 relevant modification were issued after the contract
was executed.

11
amount from “386,225,000 (estimated)” to “50,225,000 (NTE).” Subsequently, on August
9, 2005, Major Lopez and Max Wyeth executed modification P00003, which added a
“NTE,” or not to exceed limitation on the quantity of water produced at each plant, and
did not require the government to purchase any minimum number of cases produced by
the contractor. Pursuant to modification P00003, the not to exceed “case quantity was a
total of 14,350,000 cases of water,” and, as modified in modification P00002, the not to
exceed price was $50,225,000.00. As explained above, modification P00004 granted a
twelve day extension of the requirement for the certification of the Anaconda bottled water
plant, and modification P00005 was the novation agreement.

Modification P00006

Prior to the execution of modification P00006, on March 27, 2006, United States
Air Force Lieutenant Colonel James E. Davis,18 who served as the contracting officer on
the contract from September 2005 until January 2006, sent Oasis a letter titled
“Preliminary Notice of Government Intent to Exercise Option CLINs 1001-5, Contract
W27P4A-05-C-0002 for $112M,” which stated: “The Government must withhold its intent
to exercise the option,” which meant the contract would come to an end. The letter
informed Oasis that “[t]he contracting office does not have assurance of adequate
funding.”19 On April 3, 2006, Paul Jefferies sent Lieutenant Colonel Davis a draft proposal,
which would form the basis of modification P00006, and included a way to include a base
year amount of 14,350,000 cases of bottled water at $3.50 per case for a total of
$50,225,000.00.

Modification P00006, which was executed on April 14, 2006 by Lieutenant Colonel
Davis and Phil Morrell, extended the base year of the contract from May 24, 2006 to
August 15, 2006, and required that the bottled water capability be established at the six
sites by June 30, 2006. Modification P00006 extended the contractual deadline for bottled
water plants to be operational to June 30, 2006. According to modification P00006, the
bottled water plants were to be operational in the following order: (1) Anaconda, (2) Camp
Victory, (3) Speicher, (4) Q-West, (5) TQ, and (6) Al Asad.20 Modification P00006 also
required the production of 14.35 million cases of water during the base period of the
contract, and removed the “not to exceed” requirements established in modification

18In 2005 and 2006, Lieutenant Colonel Davis was a Major. When he testified at trial, he
was a Lieutenant Colonel. The court refers to him as Lieutenant Colonel Davis in this
opinion, unless quoting from a document.
19 Phil Morrell testified that “I told them [the government] that would be a really bad thing
to get a letter like that, because that letter would put us in default with our banker. And
that letter did put us in default with our banker, and it cost us $3 million to pull our -- our
contract out of default.” Phil Morrell also testified that Oasis had “already been told that
by Colonel Hay, that they [the government] didn’t have the funding to continue on this.”
20 At the time modification P00006 was executed, Anaconda and Camp Victory were
already operational.

12
P00003. Finally, the option years were realigned to match the extension of the base year,
so the first option period would run from August 16, 2006 until January 15, 2007, the
second option period would run from January 16, 2007 until January 15, 2008, and the
third option period would run from January 16, 2008 until January 15, 2009. Modification
P00006 also added a fourth option period that would run from January 16, 2009 until
August 16, 2009. The amount of water in the base period, the first option period, and the
newly added fourth option period were different than the second and third option years.
After modification P00006 to the contract, the periods of performance, quantities of water,
and amounts due Oasis were:21

ITEM NO. SCHEDULE OF SUPPLIES/ QTY UNIT UNIT AMOUNT
SERVICES PRICE
0001 Purified bottled water (12 / 1 Liter CASE $3.50
bottles per case)
1001 BASE Period 14,350,000 $50,225,000.00
24 May 2005 to 15 August 2006
2001 OPTION ONE 14,285,715 $50,000,000.00
16 August 2006 to 15 January 2007
3001 OPTION TWO 32,000,000 $112,000,000.00
16 January 2007 to 15 January 2008
4001 OPTION THREE 32,000,000 $112,000,000.00
16 January 2008 to 15 January 2009
5001 OPTION FOUR 17,714,286 $62,000,000.00
16 January 2009 to 16 August 2009

(capitalization in original).

Modification P00011

As noted above, United States Air Force Colonel Richardson served as the contracting
officer on the contract from May 2006 until October 2006. By June 2006, Oasis personnel,
including Paul Morrell, Phil Morrell, Alan Morrell, Paul Jeffries and Dan Petsche had
begun negotiations with Colonel Richardson to further modify the contract. Both parties
had financial challenges, defendant obtaining the funding to exercise the first option, and
plaintiff, which would be in default with its lenders if the contract was terminated for
convenience.22 Internally, Oasis considered the following proposal, as noted in an August
1, 2006 email from Paul Morrell:

I’ve tried a lot of complicated algorithms to try to make a solution that is
equitable to both the Military and US. I’ve concluded that the most equitable
approach for everyone is the following: We gat [sic] paid a flat
$112,000,000/year just as the contract states or $9,333,333/month (5/6 th of

21 Colonel Richardson testified that the modifications “changed the end date of option four
from 16 August 2009 to 16 July 2009. So, it actually decreased the period of performance
for the contractor.”
22According to plaintiff’s post-trial brief, “[d]uring the P00011 discussions, Oasis had an
outstanding debt of over $70 million.”

13
that until TQ comes online). We agree to deliver up to 32,000,000 cases per
year in aggregate with an annual reconciliation if the actual deliveries
exceed that amount.

The parties discussed several options for how to proceed moving forward, and
ultimately, on August 8, 2006, Oasis, at Colonel Richardson’s request, provided her a
draft proposal, which was consistent with the internal Oasis proposal.23 The draft
proposal24 indicated two options:25

23Paul Jefferies testified at trial that “we were still being asked for significant concessions,
beyond what was outlined that I've tried to outline here. . . . I mean to the tune of $30
million of concessions yet beyond what's on this page.” Paul Jefferies also indicated that:

We didn't really make an offer. The negotiations began with Paul [Morrell]
and I sitting in a room with [Colonel] Renee [Richardson], and I believe her
assistant was there, and they told us that they were being pushed a
particular direction, that she would need concessions from us to pay out the
balance of the funds owed or she would have to move in this other direction.
24 Alan Morrell who earlier had testified about the water issues at the various plants
indicated that regarding the lack of water at Speicher, “on modification P00011, because
this was such a hot issue, again, part of the negotiation was a concession that we would
sort this problem out,” and Oasis “bought another BEV 9 reverse osmosis system.” Alan
Morrell also testified that “[p]art of the concessions that were demanded from us in
P00011 were two site improvements to solve water issues. One was Speicher, and the
other was Q-West.”
25The first option contemplated modifying the contract to not build TQ, but the parties
decided to build the TQ plant.

14
On August 12, 2006, Paul Morrell and Colonel Richardson executed modification P00011,
which was generally consistent with the Option II in the draft proposal and established a
payment structure by which Oasis would be paid $9,333,333.33 per month, independent
of any amount of water, moving forward in the option periods. Modification P00011 also
modified the fourth option period, ending on July 16, 2009.

The modification explained:

The purpose of this modification is to do the following:

1. Provide a revised CLIN structure to reflect monthly pricing based upon
water production capability.

2. Replace the Contract Statement of Objectives, with Performance Work
Statement, dated 12 August 2006, provided as Attachment 1 to this
modification.

15
3. Incorporate the contractor's Quality Assurance Plan into the contract
provided as Attachment 2 to this modification.

4. Incorporate the List of Critical Equipment into the contract, provided as
Attachment 3 to this modification.

5. Insert Special Clause, titled “Equipment Leased by the Government”, into
the Contract.

6. Insert clause DFARS 252.232-7007, “Limitation of Government's
Obligation” (May 2006) into the Contract.

7. Replace Contract Section J, List of Documents, Exhibits and Other
Attachments.

8. Decrease the contract amount by $11,604,166.45 from $386,225,000.00
to $374,620,833.55.

9. Decrease the contract funded amount by $5,604,166.35 from
$100,225,000.00 to $94,620,833.65.

10. Change the end date of Option 4 from 16 August 2009 to 16 July 2009.

On August 15, 2006, as part of modification P00011, Oasis submitted a final
invoice to close out the base year in the amount of $24,542,387.00. The total amount of
water produced in the base year was 8,705,992 cases, which translated to
$30,470,972.00 at $3.50 per case. In addition, from the time the contract was awarded to
the end of the base year, Oasis submitted nine invoices for payment at $3.50 per case,
totaling approximately $23 million, which the government paid.26

26 As reflected in the joint stipulations, and as agreed to by the parties regarding invoices
for the base year of the contract: On December 31, 2005, Oasis submitted an invoice to
the Government for 293,160 cases of water from Anaconda at 3.50 per case, for a total
of $1,026,060.00. On January 31, 2006, Oasis submitted an invoice for 356,400 cases of
water from Anaconda at $3.50 per case for a total of $1,247,400.00, and on February 28,
2006, Oasis submitted an invoice for 508,680 cases of water from Anaconda at $3.50 a
case, for a total of $1,780,380.00. On March 31, 2006, Oasis submitted an invoice for
664,320 cases of water from Anaconda at $3.50 per case, for a total of $2,325,120.00.
One month later, on April 30, 2006, Oasis submitted an invoice for 910,020 cases of water
from Anaconda and Camp Victory at $3.50 a case, for a total of $3,185,070.00. On May
31, 2006, Oasis submitted an invoice for 1,126,920 cases of water from Anaconda and
Camp Victory at $3.50 a case, for a total of $3,944,220.00. On June 15, 2006, Oasis
submitted an invoice for 1,381,140 cases of water from Anaconda and Camp Victory at
$3.50 a case, for a total of $4,833,990.00. On July 1, 2006, Oasis submitted an invoice
for 297,540 cases of water from Anaconda and Speicher at $3.50 a case, for a total of
$1,041,390.00. Finally, on July 31, 2006, Oasis submitted an invoice for 1,150,900 cases

16
The contract ended on July 16, 2009, and Oasis performed on the contract until
that date. Subsequently, Oasis and the government entered into a separate, follow-on
contract regarding bottled water in Iraq. The issues in this opinion relate solely to the base
year of the original contract.

Certified Claim

Prior to the filing of the certified claim, Phil Morrell sent an email to Paul Morrell
and Paul Jeffries on August 4, 2006, with his thoughts on the contract, as follows:

Capabilities for Time Period not Quantity

 Funding was received for purchase of water, but it [sic] the contract
was a capabilities contract
 Should have 2 Contracts
o Capabilities Contract
o Product Procurement Contract
 Funding was received for Contact# _____
 Contract#____ is a capabilities contract not a procurement contract
 $50 million on the table is for capability not water procurement

The general assumption from everybody is that the price of water in the
CLIN is somehow associated with the price of capabilities.

(emphasis in original). At trial, Phil Morrell explained his view of the contract:

When I studied the contract, including when I talked to -- told Max [Wyeth]
that he could get a progress payment, which I did tell Max, way back in the
early days, probably a week into the -- two weeks into the contract, that he
could get a progress payment. Based on all the historic contracting that I
had done, and the way that I submitted my bid, the anticipation that was
there would be, you know, progress payment capabilities, or -- in the
contract. So, looking at Max’s bid, he had put $58 million in for what
appeared to be the construction capabilities, and then out of the $58 million,
based on -- and I read this somewhere, I think it was in the FAR firm fixed
price area -- it says that you -- if it’s for equipment, then you have to deduct
the salvage value of the equipment, and then you could bill for whatever
that was. So, that -- I didn’t actually sit down and do the numbers because
that’s just not what I do, but I – I suggested that we bill against the $52.25
million or $50.225 million as capabilities.

of water from Anaconda, Q-West, Speicher, and Camp Victory, for a total of
$4,028,150.00.

17
Paul Morrell stated at trial that he agreed with Phil Morrell about the contract being
a capabilities contract after executing modification P00011. Regarding Colonel
Richardson’s correspondence, he testified

she's commenting on the proposal . . . specifically, the 9.33 million per
month for capabilities going forward, and she's saying she thinks that's a
reasonable approach, but this is one of the first times where I hear a contract
officer say the same thing that Phil has been saying for most of the year,
that this is a water production capability contract. And Colonel Richardson
goes on, through the -- post-P00011, and she's very clear that it's a water
production capability contract and it has been all along. They've just been
administering it as if it weren't.

On June 20, 2008, Paul Morrell signed the certified claim, and on July 4, 2008,
Oasis submitted its certified claim to the government. At the beginning of the certified
claim, Paul Morrell, as President of Oasis, stated: “I certify that the claims stated herein
are made in good faith; that the supporting data are accurate and complete to the best of
my knowledge and belief; that the amount requested accurately reflects the Contract
adjustment for which the contractor believes the Government is liable.” Paul Morrell also
submitted a sworn affidavit27 in support of Oasis’ certified claim at the time he submitted
the certified claim, in which he stated:

During the period May 2005 to the present, I was responsible for the day-
to-day management of Contract W27P4A-05-C-0002 (the “Contract”) and
had responsibility for all aspects of Oasis' performance of the Contract I also
had overall responsibility for the cost and accounting issues involving Oasis'
performance of the Contract. This Affidavit is based on my first-hand
knowledge, the collective corporate knowledge of Oasis and the corporate
records of Oasis maintained in the ordinary course of business.

The certified claim identified eight claims for which plaintiff sought payment: Claim
1 was a “Claim for all bottled water supplied in the Contract base year, as extended to
August 15, 2006, excluding bottled water supplied from Camp Anaconda through May,
2006 (5,605,020 cases of bottled water),” for which plaintiff sought $19,617,570.00. Claim
2 was a “Claim for penalty wrongfully assessed for failure to open Camp TQ on time,”
which plaintiff ascribed “solely as a result of Government-caused delays and disruptions,”
for which plaintiff sought $2,270,833.00. The certified claim indicated that Claim 3 was a
“Claim for reduction in Contract consideration for first option period (August 15, 2006
through January 15, 2007) resulting from P00011,” for which plaintiff sought
$3,333,333.00. Claim 4 was a “Claim for water bottling capabilities services provided
through extension of Contract base year,” and plaintiff valued Claim 4 at $11,175,063.00.
Claim 5 sought $808,423.00 as a “Claim for cost of site improvements required,”
specifically at Anaconda, Camp Victory, Al Asad, and TQ. Claim 6 was a “Claim for cost

27 In addition to Paul Morrell, Neil Vos, the then-Chief Financial Officer of Oasis, Lawrence
Schwartz, a certified public accountant, and Alan Morrell also submitted sworn affidavits
in support of the certified claim.

18
of water supply improvements at Camp Speicher and Camp Qwest,” for which plaintiff
sought $600,000.00. Claim 7 was a “Claim for other penalties assessed re: Government
delays of TQ opening,” related to the “44 days of TQ AQL[28] penalties erroneously
assessed to Oasis due to Government-caused delays in establishing TQ in the first Option
Period” and was valued by plaintiff at $2,053,333.00. The plaintiff’s certified claim
reflected a total amount claimed for the first seven claims of “$39,858,555.” Below the
total for the first seven claims, plaintiff’s certified claim indicated: “Alternative additional
claim for water supplied from Camp Anaconda during initial Contract base year ending
May 2006, 3,100,972 cases of bottled water: $10,853,402.” The certified claim indicated
the plaintiff’s view that:

The Contract is not a model of clarity. The amount payable in the Contract
base year is a firm, fixed-price amount of $50,225,000. . . . However, the
Contract, as written, does not require delivery of any bottled water in the
Contract base year. In the Contract base year, Oasis was entitled to a firm,
fixed-fee payment of $50,225,000. The Contract provides that the entire
payment is for water purification and water-bottling capabilities. Under the
Contract, bottled water was a separately priced commodity to be paid for by
the Government at the price of $3.50 per case under a separate CLN.

(internal citations omitted).

The certified claim was passed between, and considered by, a number of
contracting officers and personnel, including United States Navy Lieutenant Commander
Klingenberg, who was the contracting officer when Oasis submitted its certified claim on
July 4, 2008, United States Air Force Major Jamie Rhone, who served as the contracting
officer from July 2008 until January 2009, and Dean Carsello, a Joint Contracting
Command Iraq Afghanistan (JCC-I/A) policy analyst, who was involved in reviewing the
claim in 2008 and 2009. United States Air Force Lieutenant Colonel Kevin Hobbs29 denied
Oasis’ certified claim in its entirety when he issued the Contracting Officer’s Final Decision
on October 18, 2009.

On October 18, 2010, plaintiff filed its complaint in the United States Court of
Federal Claims. Plaintiff’s complaint alleged eight counts, and the complaint mostly tracks
the claims raised in the certified claim, with the same dollar amounts, albeit framed as
breaches of contract in the complaint. The first count, “Breach of Contract, and Breach
of the Duty of Good Faith and Fair Dealing, for Failure to Pay for water TakenFrom
[sic] Sites other than LSA Anaconda” seeks damages in the amount of
$19,617,570.00, plus interest. (emphasis in original). The second count, “Breach of
Contract For Improper Assessment of a Liquidated Damages Penalty Against Oasis
for Failing to Have All Six Facilities Open by the End of the Base Year, or
Alternatively, for Reducing the Base Year Contract Price Without Consideration,”

28 The parties have stipulated that “AQL” is an acronym for Acceptable Quality Level.
29 In 2009, Lieutenant Colonel Hobbs was a Major. When he testified at trial, he was a
Lieutenant Colonel. The court refers to him as Lieutenant Colonel Hobbs in this opinion.

19
seeks damages in the amount of $2,270,833.00, plus interest. (emphasis in original). The
third count, “Breach of Contract For Improper Reduction of the Option Period One
Price Without Consideration” seeks damages in the amount of $3,333,333.00, plus
interest. (emphasis in original). The fourth count of the complaint, “Breach of Contract
Resulting from Government Acts and Omissions Impacting and Damaging Oasis
During the Base Year, as Extended” seeks damages in the amount of $11,175,063.00,
plus interest. (emphasis in original). The fifth count, “Breach of Contract Resulting
From Government Failure to Provide Suitable Construction Sites,” seeks damages
in the amount of $808,423.00, plus interest. (emphasis in original). Oasis’ sixth count,
“Breach of Contract and/or Constructive Change for Failure to Provide Suitable
Water at the Purification Facilities as Required by the Contract” seeks $600,000.00,
plus interest. (emphasis in original). The seventh count of the complaint, “Breach of
Contract For Unjustified Imposition of Penalties for Late Opening of TQ and/or
Wrongful Reduction in Contract Price,” seeks $2,053,333.20 plus interest. (emphasis
in original). Finally, the eighth count of the complaint, “Breach of Contract, and Breach
of the Duty of Good Faith and Fair Dealing, for Failure to Pay for Water TakenFrom
[sic] Site LSA Anaconda,” seeks damages in the amount of $10,853,402.00, plus
interest. (emphasis in original).

Defendant filed an answer to Oasis’ complaint on February 15, 2011, and, more
than a year later, on April 12, 2012, filed a motion to amend the pleadings to include fraud
counterclaims. Oasis responded to the amended answer and counterclaims on May 10,
2012, however, on June 6, 2014, defendant moved to, again, amend its pleadings and
filed a second amended answer and counterclaim. In the interim, during highly contested,
and at times uncooperative, discovery the parties filed numerous motions related to
discovery, the production of documents, how documents were maintained, how
documents were to be produced, and in what format, and who would bear the costs,
spoliation, whether or not various privileges applied to various documents, as well as
motions to compel, motions to strike, and motions to quash. The court held numerous
status conferences and hearings to try and resolve the various disputes between the
parties, issued numerous orders, including publishing one substantive, lengthy opinion
on attorney-client privilege and work product prior to trial. See Oasis Int’l Waters, Inc. v.
United States, 110 Fed. Cl. 87 (2013).

The parties also filed motions for summary judgment and motions in limine in
advance of the trial, and after trial, filed a series of lengthy post-trial briefing materials.
The effect of the discovery disputes, and difficult relationships, resulted in discovery
deadlines being repeatedly pushed back, and trial dates repeatedly postponed.
Ultimately, a six week trial was held. Initially, the court issued an opinion regarding the
fraud counterclaims raised by defendant. The court determined that, Paul Morrell, as
signatory to the certified claim, did not have the intent to commit fraud and genuinely
believed in his interpretation of the contract regarding what payments Oasis was entitled
to recover under the contract. The court also found that neither Paul Morrell, nor plaintiff,
acted recklessly when submitting plaintiff’s claims. Therefore, with the exception of Claim
2, which the court deferred, and addresses below, the court denied defendant’s
counterclaims for the Special Plea in Fraud, False Claims Act, and the anti-fraud provision

20
of the Contract Disputes Act. This opinion addresses the issues of contract interpretation,
duress, and defendant’s remaining fraud counterclaim. The court will separately address
plaintiff’s allegation of spoliation and damages, if any.

DISCUSSION

Contract Interpretation

Initially, plaintiff argues that “[t]he Contract was a firm-fixed-price (FFP) services
contract for water bottling ‘capability,’ pursuant to which Oasis was entitled to
$50,225,000 in the Base Year in exchange for 12 months of performance, irrespective of
the amount of water produced by Oasis and/or purchased by Defendant.” Plaintiff also
contends that “[u]nder the Contract, Oasis was to be paid $3.50 per case of
extracontractual water.” By contrast, defendant claims that “[t]he contract’s payment
terms of $3.50 per case are clear and unambiguous.” Defendant argues that “the Court
should enforce those terms and rule that the contract does not require the Government
to pay Oasis separately for the cost to build the bottled-water facilities,” and pay only
$3.50 a case for the water produced.

“Contract interpretation starts with the language of the contract.” SUFI Network
Servs., Inc. v. United States, 785 F.3d 585, 593 (Fed. Cir. 2015); see also Precision Pine
& Timber, Inc. v. United States, 596 F.3d 817, 824 (Fed. Cir. 2010), cert. denied, 562 U.S.
1178 (2011); Bell/Heery v. United States, 739 F.3d 1324, 1331 (Fed. Cir.), reh’g and reh’g
en banc denied (Fed. Cir. 2014); LAI Servs., Inc. v. Gates, 573 F.3d 1306, 1314 (Fed.
Cir.), reh’g denied (Fed. Cir. 2009); Barron Bancshares, Inc. v. United States, 366 F.3d
1360, 1375 (Fed. Cir. 2004); Foley Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir.
1993); Nw. Title Agency, Inc. v. United States, 126 Fed. Cl. 55, 57-58 (2016) (citing Foley
Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir. 1993)) (“The starting point for any
contract interpretation is the plain language of the agreement.”); Beard v. United States,
125 Fed. Cl. 148, 158 (2016); Eden Isle Marina, Inc. v. United States, 113 Fed. Cl. 372,
483–84 (2013).

“‘“In contract interpretation, the plain and unambiguous meaning of a written
agreement controls.’”” Arko Exec. Servs., Inc. v. United States, 553 F.3d 1375, 1379 (Fed.
Cir. 2009) (quoting Hercules Inc. v. United States, 292 F.3d 1378, 1380–81 (Fed. Cir.),
reh’g and reh’g en banc denied (Fed. Cir. 2002) (quoting Craft Mach. Works, Inc. v. United
States, 926 F.2d 1110, 1113 (Fed. Cir. 1991))). “Terms must be given their plain meaning
if the language of the contract is clear and unambiguous.” SUFI Network Servs., Inc. v.
United States, 785 F.3d 585, 593 (Fed. Cir. 2015) (citing Coast Fed. Bank, FSB v. United
States, 323 F.3d 1035, 1038 (Fed. Cir. 2003)); see also Canpro Investments Ltd. v. United
States, 130 Fed. Cl. 320, 347 (2017); Beard v. United States, 125 Fed. Cl. at 158 (“If the
contract language is unambiguous, then it must be given its plain and ordinary
meaning . . . .”). The United States Court of Appeals for the Federal Circuit stated in
Massie v. United States:

In interpreting a contract, “[w]e begin with the plain language.” “We give the
words of the agreement their ordinary meaning unless the parties mutually

21
intended and agreed to an alternative meaning.” In addition, “[w]e must
interpret the contract in a manner that gives meaning to all of its provisions
and makes sense.’”

Massie v. United States, 166 F.3d 1184, 1189 (Fed. Cir. 1999) (quoting McAbee Constr.,
Inc. v. United States, 97 F.3d 1431, 1435, reh’g denied and en banc suggestion declined
(Fed. Cir. 1996); (internal citations omitted)); Jowett, Inc. v. United States, 234 F.3d 1365,
1368 (Fed. Cir. 2000) (quoting McAbee Constr., Inc. v. United States, 97 F.3d at 1435
and Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed. Cir. 1998)); Harris v.
Dep’t of Veterans Affairs, 142 F.3d at 1467; see also Coast Professional, Inc. v. United
States, 828 F.3d 1349, 1354 (Fed. Cir. 2016); Shell Oil Co. v. United States, 751 F.3d
1282, 1305 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2014) (noting that a contract must
be interpreted in context, giving meaning to the document as a whole) (citing NVT Techs.,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004); Metric Constructors, Inc. v.
Nat’l Aeronautics & Space Admin., 169 F.3d 747, 752 (Fed. Cir. 1999)); McHugh v. DLT
Solutions, Inc., 618 F.3d 1375, 1380 (Fed. Cir. 2010); Giove v. Dep’t of Transp., 230 F.3d
1333, 1340–41 (Fed. Cir. 2000) (“In addition, we must interpret the contract in a manner
that gives meaning to all of its provisions and makes sense. Further, business contracts
must be construed with business sense, as they naturally would be understood by
intelligent men of affairs.”) (citations omitted); Gould, Inc. v. United States, 935 F.2d 1271,
1274 (Fed. Cir. 1991) (indicating that a preferable interpretation of a contract is one that
gives meaning to all parts of the contract rather than one that leaves a portion of the
contract “useless, inexplicable, void, or superfluous”). A Judge of the United States Court
of Federal Claims has explained:

“The words of a contract are deemed to have their ordinary meaning
appropriate to the subject matter, unless a special or unusual meaning of a
particular term or usage was intended, and was so understood by the
parties.” Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 322
(Fed. Cir. 1997). “Under general rules of contract law we are to interpret
provisions of a contract so as to make them consistent.” Abraham v.
Rockwell Int'l Corp., 326 F.3d 1242, 1251 (Fed. Cir. 2003). “[A]n agreement
is not to be read in a way that places its provisions in conflict, when it is
reasonable to read the provisions in harmony. . . . [T]he provisions must be
read together in order to implement the substance and purpose of the entire
agreement.” Air–Sea Forwarders, Inc. v. United States, 166 F.3d 1170,
1172 (Fed. Cir. 1999). “A reasonable interpretation must assure that no
contract provision is made inconsistent, superfluous, or redundant.” Medlin
Const. Group, Ltd. v. Harvey, 449 F.3d 1195, 1200 (Fed. Cir. 2006) (internal
quotation marks omitted).

Dynetics, Inc. v. United States, 121 Fed. Cl. 492, 512 (2015); see also Marquardt Co. v.
United States, 101 Fed. Cl. 265, 269 (2011) (“In interpreting contractual language, the
court must give reasonable meaning to all parts of the contract and avoid rendering
portions of the contract meaningless.” (citation omitted)).

22
The Federal Circuit also has indicated that “‘[t]he contract must be construed to
effectuate its spirit and purpose giving reasonable meaning to all parts of the contract.’”
Arko Exec. Servs., Inc. v. United States, 553 F.3d at 1379 (quoting Hercules Inc. v. United
States, 292 F.3d 1378, 1380–81 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.
2002)); see also LAI Servs., Inc. v. Gates, 573 F.3d at 1314; Gardiner, Kamya & Assocs.,
P.C. v. Jackson, 467 F.3d 1348, 1353 (Fed. Cir. 2006) (citations omitted); Medlin Constr.
Grp., Ltd. v. Harvey, 449 F.3d 1195, 1200 (Fed. Cir. 2006) (reviewing the contract as a
whole to determine the meaning of relevant provisions); Hunt Constr. Grp., Inc. v. United
States, 281 F.3d 1369, 1372 (Fed. Cir. 2002) (“We begin with the plain language when
interpreting a contract . . . . The contract must be considered as a whole and interpreted
to effectuate its spirit and purpose, giving reasonable meaning to all parts.” (citations
omitted)); Beard v. United States, 125 Fed. Cl. at 158 (quoting Pac. Gas & Elec. Co. v.
United States, 536 F.3d 1282, 1288 (Fed. Cir. 2008)) (“In construing the meaning of a
contractual provision, the court does not interpret the disputed term or phrase in isolation,
but “construes contract terms in the context of the entire contract, avoiding any meaning
that renders some part of the contract inoperative.”).

It has been “‘a fundamental precept of common law that the intention of the parties
to a contract controls its interpretation.’” Tri-Star Elecs. Int'l, Inc. v. Preci-Dip Durtal SA,
619 F.3d 1364, 1367 (Fed. Cir. 2010) (quoting Beta Sys., Inc. v. United States, 838 F.2d
1179, 1185 (Fed. Cir. 1988) (quoting Firestone Tire & Rubber Co. v. United States, 195
Ct. Cl. 21, 30, 444 F.2d 547, 551 (1971))); Alvin, Ltd. v. United States Postal Serv., 816
F.2d 1562, 1565 (Fed. Cir. 1987) (“In the case of contracts, the avowed purpose and
primary function of the court is the ascertainment of the intent of the parties.”); see also
Flexfab, LLC v. United States, 424 F.3d 1254, 1262 (Fed. Cir. 2005) (“[I]ntent is
determined by looking to the contract and, if necessary, other objective evidence. In the
absence of clear guidance from the contract language, the requisite intent on the part of
the government can be inferred from the actions of the contracting officer. . . .”); see also
Canpro Investments Ltd. v. United States, 130 Fed. Cl. at 347 (“Contract interpretation
requires determining the intention of the parties.”).

The contract, as awarded, indicated:

The Contractor shall provide all labor, tools, supervision, personnel,
equipment, transportation, materials, facilities, and other essentials
necessary to perform and sustain 8[30] separate and independent purified
bottle water plants according to the 20 Mar 05 Statement of Objectives
(SOO). Period of Performance: 25 May 05 through 24 May 06.

The statement of objectives for the “purified bottled water services” contract explained:
“Bottled water capabilities shall be established in the order as listed in Figure 1. Actual
locations will be given to the contractor that wins award. The contractor shall provide all
the mechanical equipment required to produce and prepare for shipment the required
amounts of bottled water.” Figure 1, referenced in the statement of objectives, identified

30As noted above, modification P00001, issued on May 26, 2005, reduced the required
number of water bottling facilities from eight to six.

23
the production requirements at each of the bottled water facilities at different points in the
year, ranging from requiring a minimum of 75,000 liters of water a day during winter at
location 3, to the maximum requirement of 210,000 liters of water during surge at locations
5 and 6. The summary of prices for the base year and the three options years stated that
total base year price was $50,225,000.00, and the unit price was listed as “$3.50/case”
for all amounts of water produced. As awarded, the base year of the contract was May
25, 2005 to May 24, 2006. Regarding payment, the contract provided that “[i]nvoicing
shall occur monthly. The contractor shall invoice to the Contracting Officer Representative
(COR), by the 5th of each month, for the total of all liters in [sic] produced, per location,
for the entire previous month.”

The parties view the contract differently, although both parties assert that the
contract is unambiguous. Plaintiff claims that “Oasis’ reading is supported by the plain
meaning of the contract, which must control if the contract is unambiguous,” and the
defendant argues that “[t]he Contract’s payment terms of $3.50 per case are clear and
unambiguous.” As noted above, plaintiff argues that “[t]he Contract was a firm-fixed-price
(FFP) services contract for water bottling ‘capability,’ pursuant to which Oasis was entitled
to $50,225,000 in the Base Year in exchange for 12 months of performance, irrespective
of the amount of water produced by Oasis and/or purchased by Defendant.” Plaintiff also
argues that the contract permitted “the Government to take – at no additional cost –
bottled water from Oasis within specified quantity ranges and time periods. All water taken
outside those ranges or periods (‘extra-contractual water’) was to be paid for separately
at $3.50 per case.” Defendant, however, contends that “the contract is clear and
unambiguous that the Government’s only payment obligation under the bottled-water
contract was to pay $3.50 per case for up to 14,350,000 cases of water.”

The court agrees with plaintiff that the contract is a firm fixed price contract. As
indicated by plaintiff, included in the list of clauses incorporated into the contract is FAR
52.216-1, and the text of the bottled water contract states: “52.216-1 Type of Contract.
(Apr 1984) The Government contemplates award of a Firm Fixed Priced contract resulting
from this solicitation.” (emphasis in original). Moreover, as noted below, in the questions
and answers related to the solicitation, which were subsequently incorporated into the
contract, the government explained that “the Government contract is a Firm Fixed Price
not Indefinite Delivery / Indefinite Quantity.” At trial, Major Vazquez testified that he wrote
the answer to this question, and had the following exchange with plaintiff’s counsel:

[Q.] And you wrote that the contract was a firm fixed price, right?

A. Yes.

Q. Did you believe that to be correct at the time?

A. Yes.

Q. Do you believe that to be correct now?

A. Yes.

24
The FAR addresses “Firm-Fixed-Price Contracts” at 48 C.F.R. § 16.202-1, and provides:

A firm-fixed-price contract provides for a price that is not subject to any
adjustment on the basis of the contractor's cost experience in performing
the contract. This contract type places upon the contractor maximum risk
and full responsibility for all costs and resulting profit or loss. It provides
maximum incentive for the contractor to control costs and perform
effectively and imposes a minimum administrative burden upon the
contracting parties. The contracting officer may use a firm-fixed-price
contract in conjunction with an award-fee incentive (see 16.404) and
performance or delivery incentives (see 16.402–2 and 16.402–3) when the
award fee or incentive is based solely on factors other than cost. The
contract type remains firm-fixed-price when used with these incentives.

48 C.F.R. 16.202-1 (2017);31 see also Zafer Taahhut Insaat ve Ticaret A.S. v. United
States, 833 F.3d 1356, 1361 (Fed. Cir. 2016) (quoting 48 C.F.R. § 16.202-1) (“‘A firm-
fixed price contract provides for a price that is not subject to any adjustment on the basis
of the contractor's cost experience in performing,’ 48 C.F.R. § 16.202–1, and generally
sets forth a fixed scope of work.”). As indicated by the Federal Circuit, “[t]he essence of
a firm fixed-price contract is that the contractor, not the government, assumes the risk of
unexpected costs.” Lakeshore Eng’g Servs., Inc. v. United States, 748 F.3d 1341, 1347
(Fed. Cir. 2014). Defendant points to two exchanges of trial testimony demonstrating the
knowing risk that plaintiff was taking, first, defendant’s counsel had the following
exchange with Phil Morrell regarding setting up Oasis to perform the contract:

Q. So, it was a big risk you were taking, right?

A. Yes.

Q. And you're a big risk-taker, aren’t you?

A. Yes.

Likewise, defendant’s counsel had the following exchange with Paul Jeffries about the
inherent risk in the contract:

Q. So, essentially Oasis was taking a risk of taking a loss in the first year
with the opportunity to make significant profits in the following two years,
correct?

A. That’s correct.

31Although the court cites to the 2017 version of the Code of Federal Regulations, this
provision is consistent with the provision in effect during the contract award and
performance.

25
Q. That was the bargain that Oasis entered into, right?

A. That’s correct. Substantial risk for substantial gain.

It is noteworthy that throughout the first year of the contract, plaintiff submitted nine
invoices for various quantities of cases of water, which were paid.

Turning to the terms of the contract, defendant contends that “the Government’s
only payment obligation under the bottled-water contract was to pay $3.50 per case for
up to 14,350,000 cases of water.” Plaintiff argues that “Defendant’s interpretation of the
Contract – which was enforced on Oasis during the Base Year – required Oasis to spend
$70 million to establish the capability to bottle water in the middle of a warzone, with no
guarantee that Defendant would pay Oasis even one (1) dollar.” Plaintiff contends that
“Defendant received the benefit of being able to purchase water locally at a fraction of the
cost it had been paying previously, and Oasis received the benefit of . . . maybe selling
water to Defendant if Defendant wanted to buy water. Such an interpretation offers no
consideration to Oasis, and is illegal.” The plaintiff also claims that “Defendant is arguing,
without actually saying it, that the Contract was an IDIQ, with no minimum, something
that the FAR specifically prohibits.” The court disagrees with plaintiff’s characterization.
As defendant noted, the military provided the land, the fuel, the water, and plaintiff
received the benefit of ownership of the bottled water facilities. Plaintiff also was
compensated for water produced, which is consistent with the contract. Furthermore,
defendant has not argued that the contract was an indefinite delivery/indefinite quantity
contract. Regarding contract development, Major Vazquez testified on cross-examination
that “[t]he way we developed this contract was we wanted to have fixed prices throughout
the life of the contract, whether it be the base year or any option years. And we looked at
it at, as awarded, 0.292 cents per bottle that we requested.” Plaintiff’s counsel followed
up this statement by Major Vazquez by asking “[s]o, the fixed price was the per liter price,”
to which Major Vazquez answered: “The unit price, yes, sir.” Defendant points out that
“Oasis ignores the contract’s plain terms and the testimony of both contract signatories.
In doing so, Oasis concludes that the contract’s plain terms and the testimony of both
contract signatories do not matter because ‘this Contract [is] a ‘firm-fixed-price’ contract.’”

Moreover, Major Vazquez statement of the cost under the contract as 0.292 cents
per bottle is consistent with the four CLINs of the contract representing the base year and
the three options years. As noted above, each of four CLINs (0001, 1001, 2001, 3001),
provided that “[t]he Contractor shall provide all labor, tools, supervision, personnel,
equipment, transportation, materials, facilities, and other essentials necessary to perform
and sustain 8 separate and independent purified bottle water plants according to the 20
Mar 05 Statement of Objectives (SOO). Period of Performance. . . .” Each CLIN
representing a contract year had subCLINs for each of the bottle water plants, with
quantity, unit, and unit prices. For example, the base year of the contract provides:

26
27
Each subCLIN refers to the “SOO” or the statement of objectives for the “purified bottled
water services” contract, which explained:

The purpose of this contract is to provide re-locatable purified bottled water
capabilities at various locations throughout Iraq Area of Operations (AO).
Contractor shall produce the amounts of bottled water as outlined in Figure
1. Contractor shall ensure bottled water capability is able to relocate upon
notification by the Contracting Officer (CO) due to military operational
requirements. Bottled water capabilities shall be established in the order as
listed in Figure 1. Actual locations will be given to the contractor that wins
award. The contractor shall provide all the mechanical equipment required
to produce and prepare for shipment the required amounts of bottled water.
The first bottled water site shall be operational 120 days after the contract
is awarded. This includes military inspection and acceptance. After contract
award, additional bottled water sites shall be established within the
remainder of days from contract award. A full 365 days from contract award,
all sites will be fully operational.

Figure 1, referenced in the statement of objectives, identified the production requirements
at each of the bottled water facilities at different points in the year.

LOCATION TOTAL PRODUCTION REQUIREMENT/DAY in 1K
Liters (winter/summer/surge)

Location 1 75-100K liters / 101-150K liters / 151-200K liters

Location 2 65-100K liters / 101-135K liters / 136-170K liters

Location 3 35-55K liters / 56-75K liters / 76-100K liters

Location 4 60-110K liters / 111-160K liters / 161-210K liters

Location 5 60-110K liters / 111-160K liters / 161-210K liters

Location 6 200-300K liters / 301-400K liters / 401-450K liters

Location 7 80-120K liters / 121-160K liters / 161-200K liters

Location 8 75-110K liters / 111-150K liters / 151-190K liters

(capitalization in original).

Although the amount of water requested by the government would vary by the time
of the year and the bottled water facility, pursuant to each of the CLINs, the unit, and the

28
unit price was always consistent, “12/case” “Liter” “$3.50/case (.292 ea),” the contractor
would be paid same way. The contract provided that “[t]he contractor shall invoice to the
Contracting Officer Representative (COR), by the 5th of each month, for the total of all
liters in [sic] produced, per location, for the entire previous month.”

Reading the CLINs, statement of objectives, and Figure 1 together, the contractor
was obligated to produce the bottled water as outlined in Figure 1, and, after invoicing the
government for the water produced in each location, would be compensated at the rate
of $3.50 per case. Although plaintiff argues that “Oasis’ reading is supported by the plain
meaning of the contract, which must control if the contract is unambiguous,” plaintiff also
argues that that defendant’s argument for Oasis to be paid $3.50 a case is wrong given
that the pages of the contract with the CLIN “are obviously incomplete” because “[t]he
entire right column (‘Amount’) on every page is blank. Second, most of the parts of pages
3-6 that are filled out are filled out incoherently.” (internal citations omitted). Plaintiff
contends that:

Assuming Defendant’s theory is correct, the “QTY” column would list a
number, the “UNIT” column would say “cases” or “liters,” the “UNIT PRICE”
column would be “$3.50/case” or “.292/liter” (but not both), and the
“AMOUNT” column would list the product of multiplying the number in the
“QTY” column by the price in the “UNIT PRICE” column. That did not occur.

(capitalization in original). The court does not share plaintiff’s concern about the
organization of the CLIN structure. The unit price of “$3.50/case” or “.292/liter” is not
confusing, as the unit is identified as a liter of water, and the unit price is consistent –
either $.292 per liter or $3.50 per case - and as the CLINs also identify the quantity as
12/case. Multiplying 12 times .292, results in $3.50. The court finds the contract as drafted
and executed obligates the government to pay under the contract for the bottled water at
a rate of $3.50/case.

Furthermore, the plaintiff’s contention that the CLIN structure is “obviously
incomplete” because the amount is left blank on every page, is not persuasive. As noted
above, in interpreting the contract, the court considers the CLINs, Statement of
Objectives, and Figure 1 together. The amount is left blank because the amount required
by the government varied during the year. As indicated in the findings of fact Figure 1
contemplated three different production requirements: winter, summer, and “surge.”
Colonel Richardson testified, explaining the different requirements, as follows:

[D]uring the winter, the weather was a lot more reasonable in Iraq; the highs
were around the eighties, nineties. In the summer, temperatures got up to
135 degrees, requiring soldiers to drink more just to stay cool and to stay
hydrated. During surge, what that's really talking to is battle operations. Our
soldiers wind up wearing 60, 70, 80 pounds' worth of gear and then going
out into . . . tanks, which causes them to sweat and causes them to need
more water.

29
As there was not a consistent, specific amount of bottled water for delivery required under
the contract, it was not only logical to leave the amount blank on the CLIN structure, but
proper.
Plaintiff also argues that, regardless of any amounts of water to be paid at $3.50
per case, Oasis was entitled to the “$50,225,000 firm-fixed-price Base Year Contract price
for establishing the capability to produce water in Iraq regardless of how much water it
produced.” Plaintiff further contends that “[t]he Contract was a firm fixed price (FFP)
services contract for water bottling ‘capability,’ pursuant to which Oasis was entitled to
$50,225,000 in the Base Year in exchange for 12 months of performance, irrespective of
the amount of water produced by Oasis and/or purchased by the Government.” Plaintiff
points to the statement of objectives, which as indicated above, begins: “The purpose of
this contract is to provide re-locatable purified bottled water capabilities at various
locations throughout Iraq Area of Operations (AO).” Plaintiff argues that “[t]he text of the
Contract also shows that Oasis was being paid for a service (the establishment and
maintaining of purified bottled water capability in Iraq), not a commodity (the water itself).”
Plaintiff also cites to the language of the contract which states: “The contractor shall
ensure purified bottled water capability is able to relocate upon notification by the CO”
and “[t]he contractor shall provide own [sic] power generation to operate the bottled
water capability.” (emphasis added by plaintiff). It is apparent to the court that the
language of the contract refers to capability in order to enable the production of water to
be sold to the government. The sentence immediately following “[t]he purpose of this
contract is to provide re-locatable purified bottled water capabilities at various locations
throughout Iraq Area of Operations (AO),” is “Contractor shall produce the amounts of
bottled water as outlined in Figure 1.” As explained above, Figure 1 identified the
production requirements at each of the bottled water facilities at different points in the
year. The CLIN structure also was based on production of water, with each of the
subCLINs identifying the quantity, unit, and unit prices for the production.

Moreover, the statement of objectives required the “first bottled water site shall be
operational 120 days after the contract is awarded.” Defendant argues Oasis “cannot
explain why a contractor would not produce water in the base year when the first bottled-
water plant was required to be completed no later than September 2005, mid-way through
the base year.” Plaintiff argues that “[t]here is no discernable reason for why the Contract
Period for Anaconda (CLIN 0001) would end on day 120 if there was any expectation that
bottled water would be produced there during the base year,” and “[b]ecause Oasis’
performance period at the first site ended on day 120, the Contract had no requirement
for Oasis to actually operate Anaconda during the Base Year and produce bottled water.”
Plaintiff contends that the contract was designed to bring the first plant “on line on day
120, stop work there, and focus on establishing the capability at the remaining five (5)
locations.” Plaintiff overlooks the requirements of the CLINs, and even for the first plant
with the 120 day operational requirement, there still is listed a range of production with
the amounts listed in terms of cases of water and the rate of payment. The statement of
objectives first referencing the 120 day operational requirement also points to
Figure 1 which as repeatedly referenced above, listed the “TOTAL PRODUCTION
REQUIREMENT/DAY” for each plant for the various time frames (winter/summer/surge),
including for the first bottled water plant. (capitalization in original). Moreover, plaintiff’s

30
reference to the 120 day period of performance refers to the “Deliveries or Performance”
section of the contract, but as defendant argues, this “section does not relate to delivery
of plants (as Oasis suggests), but to delivery of water.” The schedule for delivery
information includes the heading “SHIP TO ADDRESS,” which only makes sense for the
delivery of water, and not the bottled water plants themselves. (capitalization in original).
Moreover, the quantity is listed as “N/A,” and if plaintiff was correct that the delivery would
simply be the capability, the court questions why the number would not simply be one.
Finally, both the CLINs and the “Deliveries or Performance” make no changes from year
to year of the contract, between the base year and the option years,32 and if the nature of
the contract was intended to be so different, capability in the base year, and production
of water in the remaining years, the court cannot understand why the structure, pricing,
and quantities would be consistent from year to year. The court agrees with defendant
that the “Deliveries or Performance” refers to delivery of water.33

The parties further disagree about the purpose of the contract. Plaintiff argues that

prior to the Oasis Contract, Defendant was able to fulfill its water needs, but
there was significant risk due to the need to bring the water into Iraq via
truck convoy. Defendant’s actions leading up to this Contract make clear
that the primary purpose of the Contract was to develop the capability to
produce purified bottled water at U.S.-controlled locations in Iraq to avoid
these risks.

(internal citation and footnote omitted). Defendant responds that plaintiff is taking an
“illogical position” to argue that establishing the capability would reduce the number of
convoys. The court notes that Statement of Work for the solicitation stated that:

Up to the present time bottled water has been purchased from sources
outside of Iraq. This practice necessitates large numbers of convoys and
escorts to transport the bottled water from Kuwait, Jordan, and Turkey.
Producing bottled water locally would significantly reduce the number of
convoys required to transport water as well as reduce the likelihood of battle
related injuries.

The court interprets the purpose of the contract as “[p]roducing bottled water,” which not
only requires the capability to produce, but also the production of, the required bottled
water. Only by producing water, would the demand for water from neighboring counties
be diminished.

The court also notes that the payment terms of the contract required an invoice
“each month, for the total of all liters in [sic] produced, per location, for the entire previous

32 The only exception is the contract period for the first bottled water facility is 120 days
for the base year and 365 days for each of the option years.
33 As discussed below, modification P00003 changed the “SHIP TO ADDRESS” location
for the “Deliveries or Performance” from destination to origin. (capitalization in original).

31
month,” which is inconsistent with a payment of $50,225,000 for producing only the water
production capability. The mechanism for payment to the plaintiff was to invoice the
government for the bottled water actually produced in each given month is also
inconsistent with plaintiff’s articulated understanding of completing the first bottled water
plant, because plaintiff argued above, there was no “expectation that bottled water would
be produced there during the base year.”

Finally, the court turns to the questions and answers during the solicitation
process. As the questions and answers during the solicitation process were subsequently
incorporated into the contract, the court considers the questions and answers to reach a
determination on contract interpretation. Both parties cite to the questions and answers
during the solicitation process as further evidence for their respective contract
interpretation position. Plaintiff contends that “[t]he answers to solicitation questions,
incorporated into the Contract, further support Oasis’ contention that payment was not
contingent on the production of any water.” As it relates to the payment terms of the
contract, plaintiff first cites to question 9 from the questions and answers in response to
the request for information from potential offerors, which asked, “[w]hat would be your
proposed payment terms?” with the government answering: “Monthly. Firm Fixed Price
Contract.”34 Defendant argues that:

This response does not support Oasis’s contract interpretation for a number
of reasons, First, Oasis itself understood that the firm-fixed-price in the
contract was the unit price, $3.50 per case. Oasis’s contract interpretation
makes even less sense when one considers the response stated that the
contractor would be paid “monthly.” Oasis never explains how a contractor
could be paid for a water production capability on a “monthly” basis, when
Oasis argues that it was entitled to a one-time $50.225 million “for the
capability alone.”

As explained immediately above, the contract provided regarding payment terms that
“[i]nvoicing shall occur monthly,” which would have allowed for monthly payment for water
produced. There is no payment mechanism in the contract for a flat $50,225,000.00
amount for establishing capability, or any indication in the contract of a payment
mechanism for how plaintiff was to be compensated if, on the final day of the base year,
plaintiff only had established the capability for all of the bottled-water facilities, and had
not produced any water. As the defendant argues, “Oasis also never explains how it could
be entitled to progress payments for the facilities themselves, when (1) the contract never
mentions progress payments of any kind, (2) the military provided the land, (3) the military
provided the fuel, (4) the military provided the water, and Oasis owned the facilities.”
Absent a reference in the contract for an alternative method to compensate plaintiff, and
consistent with the questions and answers regarding monthly invoicing, question 9 from

34 The court notes that the plaintiff cites to question 9 from the questions and answers in
response to the request for information for support for its view of the contract as firm fixed
price contract, but, as indicated above, the court already has concluded that the contract
was a firm fixed price contract.

32
the questions and answers relating to the monthly payment for water supports
defendant’s interpretation of the contract.

Plaintiff also cites to the questions and answers in response to Solicitation No.
W27P4A-05-R-0002, and plaintiff argues, regarding question 11b, “the Military told
offerors that they would receive payment ‘once the contractor has the first plant
operational and has an approved first article test accepted without conditions.’ There was
no condition that any amount of water be delivered prior to payment.” As defendant,
correctly notes, however, “[t]he question-and-answer cited by Oasis [question 11b] says
that ‘first payment’ will be made when the military ‘accept[s]’ water ‘without conditions.’ In
other words, the military would pay the per-liter price for that water, not $50.225 million
simply because the contractor produced one case of water.” (emphasis added by
defendant, internal citations omitted). Additionally, the court notes, the original question
asked in question 11b was regarding installment payments, as one bidder questioned the
potential for installment payments: “Would the Government authorize progress or
installment payments recognizing 1) the significant capital investment with establishing
new capability and, 2) the ability to credit progress payments with actual deliveries?” to
which the government responded that: “The first payment will be made once the
contractor has the first plant operational and has had an approved first article test
accepted without conditions.”

Regarding support for its capability argument, plaintiff also points to question and
answer 4. Question 4 states: “RFP requires 1st production capability 120 days ARO. Is it
correct to interpret this to mean the capability for the entire 1st base requirements,
including surge potential?” which the government answers: “120 days after contract
award, the plant must be capable of producing up to that capacity.” The court notes that
defendant does not challenge that 120 days after award the first plant had to be
operational, or that under the contract the remaining bottled water facilities were to be
established “within the remainder of days from contract award,” but cites to the
requirement of capability at 120 days to undermine plaintiff’s theory of the contract,
arguing that Oasis “cannot explain why a contractor would not produce water in the base
year when the first bottled-water plant was required to be completed no later than
September 2005, mid-way through the base year.” Indeed, nothing about the
government’s answer indicates that plaintiff was only to establish the capability, nor would
it explain why the base year of the contract would be for a calendar year, but only require
the first bottled water facility to operational within 120 days and then not require any water
produced, especially because, as explained above, Figure 1 sets out a range of
production requirements for each of the bottled water facilities at different times of the
year, spanning more than 120 days. The reason plaintiff appears to have cited the
question and answer 4 would be that it uses the word “capability.”

Plaintiff also focuses on the related questions 2 and 35 to demonstrate that the
government was not required to purchase any water, as well as “that the contractor was
still guaranteed payment after completing the first plant without a requirement for
producing water.” Question 2 asked, “[i]f projected demand falls short, what are the
minimum volume requirements? Is there a required minimum quantity the Government

33
will procure?” The government responded: “There are no minimums. The minimum is
zero.” Additionally, question 35, referring to question and answer 2, asked:

The answer to Question #2 states that there are no minimum purchase
quantities. This decision places an unreasonable amount of financial risk on
the contractor, and will likely severely limit the competition for this RFP
[Request for Proposals]. Request that the Government guarantee minimum
purchase quantities base [sic] on the estimated quantities that appear in the
RFP.

The government responded:

The levels of liters required are in the range. This is roughly the production
per day. You might have a day where your levels are lower, however, the
Government contract is a Firm Fixed Price not Indefinite Delivery / Indefinite
Quantity. The Government is entering into a one year contract with three
option years. The only thing that could prevent the basic year from occurring
is a Government decision to Terminate for Convenience or default of the
contractor to perform to the requirements and the Government would then
Terminate for Default.

It is notable that the government did not respond that the government was
guaranteeing the contractor a payment upon completion of any, or all, of the bottled water
facilities, and then, in addition, payment for production of water. Such a statement would
be inconsistent with the government’s stated position during contract performance and in
litigation that the government was only paying for the production of bottled water. Indeed,
this is defendant’s view of the questions and answers, as defendant claims, “[t]he
military’s answers to bidder questions, for which the contract awardee acknowledged
receipt and which Oasis’s chairman maintained a well-annotated copy, further confirms
the clear and unambiguous terms of the contract.”35

Defendant cites to question 33 to claim “[t]he military’s responses to bidder
questions stated that all bidders were required to propose a per-liter price inclusive of all
costs, including the cost to construct and operate the bottled-water facilities.” Indeed, one
potential offeror asked in one part of question 33: “Is our offer to give the cost per liter
with the personnel built in, seperate [sic] to the cost of the plant and equipment?” The
government replied: “All Costs per liter are to be included.” Likewise, question 40 asked:
“Start up Cost: Since the bid is predicated upon the deliverables per litre bottle of water,
can we assume that all costs(inc personnel and equipment deployment to site) incurred
between contract award and water production will fall upon the successful bidder?” The

35 Regarding question 35, specifically, defendant argues that, “this question-and-answer
does not remotely support Oasis’s position that it was entitled to $50.225 million without
producing any water,” and the import of the government’s answer is that “the military may
order no water on one particular day, but the military would generally order (and pay for)
water within the water production ranges set forth in Figure 1 of the solicitation (and
ultimately the contract).”

34
government replied: “Yes. It is up to you how you determine the cost per litre taking into
account all costs associated with this endeavor.” The government could have indicated
that a stand-alone payment demonstrating capability should be taken into account for
pricing purposes, but the government’s answer points to the contractor only being paid
for delivery of water. The defendant also points to the government’s answer to question
47, which explained after completion, “the bottled-water plants would be the property of
the contractor, not the Government,” to argue that the government would not receive the
benefit of the facilities if it paid $50,225,000.00 to Oasis to demonstrate the capability to
produce bottled water, and then, to additionally compensate Oasis for actually producing
the bottles of water.

In sum, the court believes that the answers provided by the government during the
solicitation process, which were incorporated into the contract, demonstrate the
correctness of the defendant’s position that the government’s obligation under the
contract was solely to pay for water produced and delivered and does not demonstrate
that the intent of the base year of the contract was to compensate Oasis $50,225,000.00
for demonstrating the capability to produce bottled water, and then, to additionally
compensate the contractor for producing the requested bottles of water. Therefore, the
court believes that the terms of the contract are unambiguous that the contract only
obligated the government to pay plaintiff for cases of water. See Arko Exec. Servs. v.
United Sates, 553 F.3d at 1379.

Although the court believes the terms are not ambiguous, and, as noted above,
the parties both assert that the terms of the contract are clear, out of an abundance of
caution the court examines the intentions of the parties when they executed the contract.
Defendant argues that “[e]ven if the Court concludes that the contract is ambiguous, there
is a mountain of extrinsic evidence confirming that the contract permitted a base year
payment of $3.50 per case only, and not $50.225 million, plus $3.50 per case, as Oasis
now contends.” Plaintiff argues that “[i]n the event that the Court finds the contract to be
ambiguous on these basic terms, the extrinsic evidence also supports Oasis’
understanding.”

As explained by the United States Court of Appeals for the Federal Circuit, “[w]hen
the contract's language is unambiguous it must be given its ‘plain and ordinary’ meaning
and the court may not look to extrinsic evidence to interpret its provisions.” TEG–
Paradigm Envtl., Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006); Barron
Bancshares, Inc. v. United States, 366 F.3d 1360, 1375 (Fed. Cir. 2004) (“If the terms of
a contract are clear and unambiguous, they must be given their plain meaning—extrinsic
evidence is inadmissible to interpret them.”); see also Precision Pine & Timber, Inc. v.
United States, 596 F.3d at 824. In TEG–Paradigm, the Federal Circuit also noted that
“[a]lthough extrinsic evidence may not be used to interpret an unambiguous contract
provision, we have looked to it to confirm that the parties intended for the term to have its
plain and ordinary meaning.” TEG–Paradigm Envtl., Inc. v. United States, 465 F.3d at
1338; see also Shell Oil Co. v. United States, 751 F.3d at 1296. By contrast, “[w]hen a
provision in a contract is susceptible to more than one reasonable interpretation, it is
ambiguous, and we may then resort to extrinsic evidence to resolve the ambiguity. We
utilize extrinsic evidence to derive a construction that effectuates the parties' intent at the

35
time they executed the contract.” TEG–Paradigm Envtl., Inc. v. United States, 465 F.3d
at 1338 (citations omitted).

“Generally, the plain language of a contract controls; however, language that is
reasonably susceptible to more than one interpretation, where ‘each [interpretation] . . .
is found to be consistent with the contract language,’ may be considered ambiguous.”
Marquardt Co. v. United States, 101 Fed. Cl. at 268 (quoting Cmty. Heating & Plumbing
Co. v. Kelso, 987 F.2d 1575, 1579 (Fed. Cir. 1993)); see also Metric Constructors, Inc. v.
Nat’l Aeronautics & Space Admin., 169 F.3d at 751 (“When a contract is susceptible to
more than one reasonable interpretation, it contains an ambiguity.”). The United States
Court of Appeals for the Federal Circuit has stated that, “[t]o show an ambiguity [in
contract language,] it is not enough that the parties differ in their respective interpretations
of a contract term.” NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir.
2004); see also Bell/Heery v. United States, 106 Fed. Cl. 300, 309 (2012), aff’d, 739 F.3d
1324, reh’g and reh’g en banc denied (Fed. Cir. 2014). In order to demonstrate ambiguity,
the interpretations offered by both parties “must fall within a ‘zone of reasonableness.’”
Id. (quoting Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d at
751). The Federal Circuit elaborated: “To incorporate extrinsic material, a contract must
use language that leaves no relevant ‘ambiguity about the identity of the document being
referenced, nor any reasonable doubt about the fact that the referenced document is
being incorporated into the contract.’” Lakeshore Eng’g Servs., Inc. v. United States, 748
F.3d at 1347 (quoting Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d
1339, 1344 (Fed. Cir. 2008)).

Because an ambiguous or uncertain writing sometimes only can be understood
upon consideration of the surrounding circumstances, courts may rely on extrinsic
evidence to interpret an ambiguous contract clause. See Cruz-Martinez v. Dep’t of
Homeland Sec., 410 F.3d 1366, 1371 (Fed. Cir. 2005) (“‘[M]eaning can almost never be
plain except in a context.’” (quoting Restatement (Second) of Contracts § 212, cmt. b
(1981))); Barron Bancshares, Inc. v. United States, 366 F.3d at 1375 (holding that
extrinsic evidence is permissible to interpret an ambiguous contract); Sylvania Elec.
Prods., Inc. v. United States, 126, 458 F.2d 994, 1005, 198 Ct. Cl. 106 (1972); Mata v.
United States, 114 Fed. Cl. 736, 746 (2014) (“If a contract is ambiguous, the court may
rely on extrinsic evidence to discern the parties’ intent.”); Commonwealth Edison Co. v.
United States, 56 Fed. Cl. 652, 662 (2003). “Courts may not resort to extrinsic evidence
‘to create an ambiguity where a contract was not reasonably susceptible of differing
interpretations at the time of contracting.’” Shell Oil Co. v. United States, 751 F.3d at 1304
(quoting Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d at 752).
There are limitations, however, on the use of extrinsic evidence. Extrinsic evidence “may
not be used ‘to justify reading a term into an agreement that is not found there.’” Warren
v. Office of Pers. Mgmt., 407 F.3d 1309, 1314 (Fed. Cir. 2005) (quoting Fox v. Office of
Pers. Mgmt., 100 F.3d 141, 145 (Fed. Cir. 1996)); see also Holland v. United States, 621
F.3d 1366, 1378 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.), cert. denied, 565
U.S. 928 (2011). “Only in the event of an ambiguity may [the court] examine extrinsic or
parol evidence.” Bell BCI Co. v. United States, 570 F.3d 1337, 1341 (Fed. Cir.), reh’g and
reh’g en banc denied (Fed. Cir. 2009); McAbee Constr., Inc. v. United States, 97 F.3d at
1434 (“[E]xtrinsic evidence . . . should not be used to introduce an ambiguity where none

36
exists." (quoting Interwest Constr. v. Brown, 29 F.3d 611, 615 (Fed. Cir. 1994)); K-Con
Bldg. Sys., Inc. v. United States, 107 Fed. Cl. 571, 600 (2012). “The parol evidence rule
provides a further limitation on the use of extrinsic evidence in interpreting contracts.
Under the parol evidence rule, extrinsic evidence pre-dating a written agreement may not
be used ‘to add to or otherwise modify the terms of a written agreement in instances
where the written agreement has been adopted by the parties as an expression of their
final understanding.’” TEG-Paradigm Envtl., Inc. v. United States, 465 F.3d at 1338-39
(quoting Barron Bancshares, Inc. v. United States, 366 F.3d at 1375). The court,
therefore, first must ascertain whether the language at issue was ambiguous. See NVT
Techs., Inc. v. United States, 54 Fed. Cl. 330, 335 (2002) (finding that the threshold
question is whether the document in question contains ambiguous language), aff’d, 370
F.3d 1153 (Fed. Cir. 2004); Bell BCI Co. v. United States, 570 F.3d at 1341. As noted by
the Federal Circuit, “[w]hen faced with an ambiguous contract, we ‘construe its language
to effect the parties' intent at the time they executed the [contract].’” Metropolitan Area
Transit, Inc. v. Nicholson, 463 F.3d 1256, 1260 (Fed. Cir. 2006) (quoting Dureiko v. United
States, 209 F.3d 1345, 1358 (Fed. Cir. 2000)).

The court first turns to the testimony of the signatories to the contract to examine
the parties’ intentions of the payment terms of the contract. Max Wyeth, the president of
American AquaSource when it was awarded the original contract and the original
signatory to the contract, testified that he based the $50,225,000.00 figure in the base
year by “using our average forecast of demand, we came up with a case number that
would be produced per year, and multiplied that by the case cost,” which was “[t]he
number of cases times $3.50.” Max Wyeth further testified that the $50,225,000.00 was
a “gross revenue figure,” calculated on the cases to be produced and sold at $3.50 per
case. The American AquaSource proposal included spreadsheets showing the volumes
of production and an estimate for when each site would begin water production, the bid
assumed a price of $3.50 per case of water, or a total of $50,225,000.00, based on the
production of 14,350,000 cases.36 At trial, Max Wyeth explained how he understood the
contractor was to be compensated under the contract:

Q. And when you signed the contract, what was your understanding as to
how the contractor would be paid under this contract?

A. On a monthly basis for the amount of water delivered.

Q. At what price?

A. $3.50 a case.

Q. Did you believe under this contract that the Government was required to
pay for the costs to construct facilities and $3.50 per case?

36The court notes the original basis of estimate in the American AquaSource proposal
assumed annual production of 384 million bottles or 32 million cases of water.

37
A. No.

Counsel for defendant emphasized during Max Wyeth’s testimony: “So, just so the record
is clear, the $50.225 million in your proposal is based upon $3.50 per case?” to which
Max Wyeth replied: “Yes.” Again, during his testimony, Max Wyeth had the following
exchange with defendant’s counsel:

[Q.] [W]hat was the contractual unit price under the agreement?

A. The unit price was 0.292 per liter or $3.50 a case of 12.

Q. And was that consistent with your understanding of how you would be
paid under the contract as the contractor?

A. Yes.

Q. And was that the totality of what you would be paid under the contract
was $3.50 per case?

A. Yes.

Q. Do you believe you had a meeting of the minds with Major Vazquez
regarding the payment terms of the contract?

A. Yes.

Q. What do you believe that meeting of the minds was with respect to the
payment terms?

A. Simply that the water produced and delivered would be paid for in the
following month.

Q. And what is the per case price for all of the base year and all of the option
years?

A. $3.50 a case.

Major Vazquez, the signatory on behalf of the government, in response to the
question: “What was your understanding of the contract price per case for the base year?”
testified that “[i]t was $3.50 per case.” Major Vazquez also responded to defendant’s
counsel’s question: “Based on your understanding, would the Government pay $50.225
million for the facilities and then an additional $3.50 a case for every case of water
produced?” “No.” Regarding the pricing schedule, defendant’s counsel and Major
Vazquez had the following exchange:

[Q.] The total base year is how much?

38
A. $50,225,000.

Q. And I know I've kind of asked you before, but who came up with that
number?

A. Mr. Wyeth.

Q. And how was the Government going to pay AquaSource in the base year
of the contract if AquaSource were to win the award?

A. We would pay them like any other of the vendors that proposed. Once
the first article passed and production began, we would pay based off the
invoice, the number of liters that were requested and were received by the
Government in that previous month.

Q. Would the Government pay $50.225 million to the successful awardee
just to make the facilities operational?

A. No, they would not.

Major Vazquez also answered defendant’s counsel’s question: “Do you believe you had
a meeting of the minds with Mr. Wyeth on this contract?” “Yes, I do.”37 The court notes

37Despite both of their sworn testimony at trial, plaintiff argues that Major Vazquez and
Max Wyeth “did not have a meeting of the minds,” contending that “[w]hile Maj. Vazquez
and Max Wyeth may have both espoused the same contractual interpretation at trial, their
testimony was inconsistent with their contemporaneous actions and was unreliable at
best.” For example, plaintiff, citing to the trial transcript, states:

Maj. Vazquez’s testimony at trial also was evasive when he was questioned
regarding the actions he took that were inconsistent with his testimony:

Q. So, this contract, as awarded, was it a firm fixed price contract?

A. It was a fixed price contract.

Q. Was it a firm fixed price contract?

A. I believe I just answered that. It was a fixed price contract.

This is the sort of testimony individuals offer when they are trying to be tricky
and avoid being completely forthright. Moreover, his testimony was wrong,
as a “fixed price” contract is not the same as a “firm fixed price” contract.

(emphasis in trial transcript added by plaintiff; citation omitted). The court believes plaintiff
is parsing words and reading far too much into Major Vazquez’s answers at trial.
Furthermore, the court has agreed with plaintiff that the contract was firm fixed price

39
that in its previous decision on the fraud counterclaims, the court indicated regarding Max
Wyeth’s testimony that:

Oasis did not exist as a corporation when Mr. Wyeth was awarded the
contract on behalf of American AquaSource. Mr. Wyeth testified that when
he signed the American AquaSource contract he had no relationship with
Al-Morrell Development or with Paul Morrell or Phil Morrell. Given the
evolution of the contract, including fundamental changes to the contract,
especially after modifications P00006 and P00011, the reduction from the
number of bottled water plants from eight to six, and on site difficulties
encountered during contract performance, the court does not afford Max
Wyeth’s views as to whether or not Oasis submitted a fraudulent claim in
the 2008 certified claim much weight

Max Wyeth’s testimony, however, is relevant to the contract, as awarded, when reaching
a determination on contract interpretation. Max Wyeth was the architect of the proposed
and accepted pricing schedule, the $50,225,000.00 base year amount and how the
contract would be paid. Although he left Oasis in 2005, and did not have much awareness
of the certified claim process, or even modification P00006 and modification P00011, he
was involved in and aware of the formation of the contract and the documents he signed.
Max Wyeth’s testimony, and the contemporaneous documentation, therefore, are
relevant and court affords his views on the contract formation due consideration. As
indicated by a Judge of the United States Court of Federal Claims, looking to the purpose
of contract interpretation is “to determine the intent of the parties at the time that the
contract was made; this controls the contract’s interpretation.” Ahrens v. United States,
62 Fed. Cl. 664, 669 (2004) (citing Safeco Credit v. United States, 44 Fed. Cl. 406, 419
(1999)). Given Max Wyeth’s and Major Vazquez’s testimony, the court believes the above
discussion supports the court’s conclusion that the contract obligated the government to
pay plaintiff $3.50 for each case of water, and not $50,225,000.00 to establish the
capability to produce water, as well as $3.50 a case of water.

Much of the documentation the parties point to as extrinsic evidence occurred later
in time than the date of the execution of the contract.38 Indeed, numerous exhibits cited
to by the parties relate to events after the execution of modification P00006 and
modification P00011, which as the court noted in the earlier opinion, “dramatically
reshaped the terms of the contract.” Although plaintiff claims that “P00011 and the
Contracting Officer’s Memorandum for Record completely support Oasis’ contract
position,” information on the conduct of the parties after the execution of the modifications
offers the court less guidance as to the intent of the parties at the time the contract was
executed and, in fact, could give a misleading impression. Likewise, the plaintiff’s

contract. Plaintiff also asserts, without support, that “Max Wyeth’s lack of basic
government contracts knowledge is a fatal flaw to Defendant’s argument.”
38 Of note is Phil Morrell’s August 4, 2006 email to Paul Morrell and Paul Jeffries regarding

his view of the contact, referenced above, which stated in part, “Funding was received for
purchase of water, but it [sic] the contract was a capabilities contract,” and
“Contract#____ is a capabilities contract not a procurement contract.”

40
argument that “[t]he Final Decision on Oasis’ claim, signed by then-Contracting Officer
Maj. Kevin Hobbs, fully supports Oasis’ position,” is similarly unhelpful, as it was issued
on October 18, 2009, more than four years after the contract was executed, and more
than three years after modification P00011 was executed.39

The court, however, does briefly address two documents from July 2005, first,
plaintiff’s July 2005 memorandum to investors. Defendant argues that “[s]tarting in July
2005 and continuing throughout the base year of the contract, Oasis routinely projected
its revenues from the bottled-water contract,” and “[i]n each such case, Oasis projected
revenue at $3.50 per case only, and never projected any revenue for the cost to build the
facilities or to make the facilities operational.” In response, plaintiff claims that “Oasis’
revenue projections were almost exclusively a representation of what it was told the
Contract entitled it to receive in payment. The early AAS [American AquaSource] and
Iraqua spreadsheets, which were created by Max Wyeth, were widely inaccurate and
were inconsistent with Defendant’s theory of the Contract.”

The court notes that in July 2005 memorandum, under the heading “revenue
projections” “[t]he company projects revenues to be $50 million in the total base year,
$112 million in the first option year, and $112 million a year in the subsequent 2nd and 3rd
option years, for a total of $386 million in sales revenues over 4 years.” Unless the plaintiff
anticipated delivering zero water to the government in the base year, it appears the
plaintiff communicated to its investors it would be paid for cases of water produced totaling
$50 million. Likewise, the “project costs & details” states:

The engagement calls for the supply of all labor, tools, supervision,
personnel, equipment, transportation, materials, facilities, and other
essentials necessary to perform and sustain 8 separate and independent
purified bottle water plants according to the 20 Mar 05 Statement of

39 Moreover, the court finds many of the later in time arguments red herrings, and in some
cases, misrepresentations. For example, plaintiff contends that, regarding the contracting
officer’s final decision, “Lt. Col. Hobbs rejected Defendant’s fabricated interpretation of
the Contract, as demonstrated by the fact that the term ‘$3.50’ is not mentioned once in
the final decision.” The court notes, however, that the contracting officer’s final decision
denied plaintiff’s claims in full, and regarding the contracting officer’s final decision’s view
of the contract, the decision states, in part:

One can only conclude that while the Government was not obligated to
purchase any water during the base year, the intent was clearly to purchase
at least some water from any of the sites if it was available. It must also be
assumed, because the Government did not create a separate CLIN for the
construction of the bottled water facilities itself, that it was the Governments
[sic] intent for the $50,225,000 to cover the cost of constructing all of the
bottled water facilities and the water itself.

41
Objectives (SOO) at a price of $3.50 per liter bottle, with a period of
performance from May 2005 through May 2009.

No mention is made of a $50,225,000.00 payment to plaintiff in addition to the $3.50
figure. Additionally, a July 2005 email from Phil Morel to Max Wyeth, with copies to,
among others, Paul Morrell, included a spreadsheet which was a four year projection,
and included a projection for case per year and the gross revenues, and each case
assumed 12 liters of water at $3.50 per case. For the first year, the projections assume
14,500,000 cases of water, the projected revenue was $50,750,000.00, and for the
remaining years, the projections assume 32,500,000 cases of water and projected
revenues of $113,750,000.00 40 The “cost of goods” for the first year assumes a total of
174,000,000 bottles, or 12 bottles per case, times 32,500,000 cases, and total costs of
goods of $12,118,520.00. The projections, subtract the total costs of goods of
$12,118,520.00 from the projected revenue of $50,750,000.00 for a gross profit of
$38,631,480.00. Although plaintiff argues that “[t]hese statements are descriptive of how
the company was operating, which is the primary driving purpose of an investment
document,” and posits, “[m]oreover, the early statements were done at a time when Oasis
had not really gotten into the Contract in detail and seen the myriad of issues the Contract
had,” nowhere in the detailed projections is a there a line item for an additional
$50,225,000.00 payment to the contractor, lending further support for the court’s
conclusion that the contract was structured for the government to pay plaintiff $3.50 a
case of water, and not $50,225,000.00 to establish the capability to produce water as well
as $3.50 a case of water.

The court also takes note of modification P00003, executed by Major Lopez and
Max Wyeth on August 9, 2005, close in time to the July 2005 documents discussed
immediately above. Modification P00003, added a “not to exceed” limitation on the
quantity of water produced at each plant, and did not require the government to purchase
any minimum number of cases produced by the contractor. Pursuant to modification
P00003, the “not to exceed” “case quantity was a total of 14,350,000 cases of water,”
and, as modified in modification P00002, the “not to exceed” price was $50,225,000.00.41
The court notes that dividing the “50,225,000 (NTE),” added in modification P00002 by
the not to exceed 14,350,000 cases of water added to contract by modification P00003,
reflects $3.50 a case, consistent with the defendant’s view of contract interpretation. This

40As the projections assumed 14,500,000 cases of water for the first year and 32,500,000
cases of water for the remaining years, the projected revenues are slightly higher than
the amounts listed in the contract which assumed production of 14,350,000 cases of
water in the base year and 32,000,000 cases of water for the remaining years after
modification P00003 was executed.
41 As indicated above, the cover page to the contract stated the dollar amount as
“386,225,000 (estimated).” At trial, Major Vazquez testified that this was amount was in
error and that the amount should have been $50,225,000.00, and, on July 15, 2005, Major
Lopez executed modification P00002 on behalf of the government, which changed the
dollar amount from “$386,225,000 (estimated)” to “50,225,000 (NTE),” because “[o]nly
the base year award should have been documented in the contract.”

42
is also consistent with the projections referenced above, and nowhere is there support of
plaintiff view that plaintiff could receive the “50,225,000 (NTE)”

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4225597. Public record. Not legal advice.