Rustler Construction, Inc. v. District of Columbia

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DISTRICT OF COLUMBIA COURT OF APPEALS

No. 16-AA-1155

RUSTLER CONSTRUCTION, INC., PETITIONER,

V.

DISTRICT OF COLUMBIA, RESPONDENT,

and

No. 17-AA-0092

DISTRICT OF COLUMBIA, PETITIONER,

V.

RUSTLER CONSTRUCTION, INC., RESPONDENT.

On Petitions for Review of an Order

of the District of Columbia Contract Appeals Board

(CAB D-1385)

(Argued April 30, 2019 Decided July 3, 2019)

Robert A. Klimek, Jr. for petitioner/cross-respondent.

James C. McKay, Jr., Senior Assistant Attorney General, with whom Karl A.

Racine, Attorney General for the District of Columbia, Loren L. AliKhan, Acting

Solicitor General at the time the brief was filed, and Stacy L. Anderson, Senior

Assistant Attorney General, were on the brief, for respondent/cross-petitioner.

Before FISHER, THOMPSON, and MCLEESE, Associate Judges.

2

FISHER, Associate Judge: Over fifteen years ago, Rustler Construction, Inc.

(“Rustler”) and the District of Columbia entered into a roadway improvement

contract. A series of issues arose which prompted Rustler to seek additional

compensation. The parties cross-petition for review of an order of the District of

Columbia Contract Appeals Board (“CAB”) which granted Rustler $155,481.70 on

its quantum claim. Finding neither petition persuasive, we affirm the CAB’s

decision.

I. Background

In 2002, the District of Columbia and Rustler entered into a $5,217,550

contract to reconstruct a section of Bladensburg Road, N.E., in Washington, D.C.

The contract was scheduled to be completed in 360 days and required Rustler to

rebuild approximately three-quarters of a mile of a high-traffic six-lane highway,

all while allowing four lanes of traffic to flow through the work area. Work was

broken down into five phases. In Phase I, Rustler would remove the existing

median and place temporary asphalt pavement in the area. In Phases II and III,

Rustler would replace the two outside lanes on either side of the highway. In

Phase IV, Rustler would reconstruct the inside lanes, replace the median, and

3

connect the lanes. In Phase V, which was later incorporated into Phase IV, Rustler

would remove barriers and prepare the road for traffic.

Construction on the roadway began in spring 2003. The first major problem

arose prior to the start of Phase II. The parties had agreed to maintain nine-foot,

four-inch travel lanes throughout construction. However, due to the District’s

“miscalculat[ions],” this agreed-upon lane width could not accommodate buses.

The District issued a stop-work order, halting the construction for twenty days. A

revised traffic plan widened the travel lanes to ten feet for bus-restricted lanes, and

to eleven feet for all other lanes. This new plan narrowed Rustler’s work area by

approximately six feet, eight inches. 1

The problems with this issue became apparent towards the end of the

contract. Reducing the work area impacted five Phase IV projects: (1) Rustler was

unable to use a boom truck to install granite curbs as originally planned and instead

needed to use a more laborious method; (2) Rustler was unable to use a concrete

paving machine and was required to lay pavement by hand; (3) removing

excavated material took longer than expected due to the restricted space in which

1

The District compensated Rustler $177,937 for the delay between April

23, 2003, and May 13, 2003. This period of delay is not relevant to the issues

presented.

4

Rustler was required to load the material onto its trucks; (4) Rustler could not use

the equipment it had planned on using to excavate around existing manholes, and

instead needed to place ramps over the manholes and to hand-grade the area

around the manholes once excavation was completed; (5) Rustler was required to

spend extra time cutting joint baskets to the proper length.

The second issue arose during Phase II. Part of Rustler’s duties involved

removing existing catch basins (storm drains) and installing new ones in their

place. During excavation, Rustler discovered that the catch basins were on top of

an active high-pressure gas line. Although Rustler had been aware from the start

of the contract that a gas line was in the vicinity, it did not know the exact location.

To remediate this problem, Rustler relocated the catch basins into the street and

returned at a later time to pour concrete around the basins. According to Rustler, it

took the District “a good two months” to instruct Rustler how to respond once the

issue was discovered.

The third issue involved Potomac Electric Power Company (“Pepco”)

manholes which were located along the strip of roadway reconstructed during

Phase III. The contract specifications stated that the forty-one manholes were

“abandoned,” so Rustler planned to pave over them. However, Rustler later

5

learned that the manholes were “live.” In order to keep them functional, Pepco

contractors were intermittently on the scene for some time. Rustler then paved

around the manholes rather than over them as it had planned.

The fourth issue arose between Phases III and IV. The contract required

Rustler to install a thin strip of asphalt between the new and existing roadbeds in

order to allow vehicles to transition smoothly from lane to lane. While creating

this roadway “tie-in,” the parties discovered a several-inch discrepancy between

the height of the existing roadway and the new one. The District instructed Rustler

to create a wider tie-in than was originally expected. Rustler had to cut down the

old roadway and install a much wider strip of asphalt between the lanes. The

District compensated “Rustler for the additional work and materials under existing

unit prices for the temporary asphalt,” but not for additional field overhead.

A. Rustler’s Equitable Adjustment Claim

Rustler filed a claim for equitable adjustment on November 19, 2009. After

the claim was deemed denied, Rustler appealed to the CAB. Rustler argued that it

was entitled to an equitable adjustment of $1,227,021.37 to cover the “additional

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costs in completing the work” as “a result of defective and changed specifications,

differing site conditions, and other extra contractual activities.”

1. The Entitlement Order

After a five-day hearing on the matter, the CAB issued an order determining

that Rustler was entitled to an equitable adjustment for all four of its claims.

Entitlement for three of Rustler’s claims—the Phase IV work area reduction,

Pepco manholes, and roadway tie-in—was based on defective specifications, while

entitlement for the catch basin claim was due to differing site conditions.

The CAB determined that Rustler relied on the District’s erroneous

specifications that: (1) the traffic during Phase IV would be maintained in four

nine-foot, four-inch lanes; (2) the Pepco manholes had been “abandoned”; and (3)

the temporary asphalt placed during the roadway tie-in would be no more than ten

inches wide. The District offered no evidence to suggest that Rustler was aware

that the specifications were defective. The CAB found that the location of the

high-pressure gas line was a differing site condition and, therefore, Rustler had

established entitlement for the catch basin claim.

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Rather than awarding damages, the CAB remanded the “matter to the parties

for further negotiation.”

2. The Quantum Order

Despite the CAB’s directive that the parties negotiate, the District held

firmly to its belief “that the quantum of damages that [Rustler was] entitled to

[was] zero.” Since the parties were unable to reach a settlement agreement, the

CAB issued a quantum order which awarded Rustler an equitable adjustment of

$155,481.70 plus interest. Rustler’s poor record keeping created a failure of proof

which greatly affected its recovery. As the CAB emphasized, Rustler did not break

down its costs by task, and neither actual costs nor cost estimates were available to

provide a reliable basis for calculating damages. Therefore, the CAB applied the

“jury verdict” method to determine an appropriate quantum award. It calculated

this value by looking at the daily rate for a full crew and multiplying that rate by

the estimated number of days it took to complete each additional task. All

quantum awards included an additional 20% for home office overhead and profit,

8

as well as 0.83% for bond costs.2 Notably, the CAB concluded that Rustler did not

prove overall delay because it failed “to present critical path or other credible

evidence on the extent of the delay to overall project completion.”

II. Analysis

A. Rustler’s Claims

The same flaw—poor record keeping—permeates all of Rustler’s claims.

Rustler was unable to recover under a theory of “overall delay” because it failed to

submit appropriate evidence to show the extent of delay to items on the critical

path. It likewise could not justify the total number of days it requested for

additional and out-of-sequence work because it did not keep records detailed

enough to prove its claim.

We give great deference to the CAB’s factual findings. See Tillery v.

District of Columbia Contract Appeals Bd., 912 A.2d 1169, 1175 (D.C. 2006).

“[T]he decision of the [CAB] on questions of fact shall be final and conclusive and

2

The awards Rustler requested for each of its four claims included 20.26%

home office overhead and 10% profit. However, the contract established a

maximum recovery of 20% for combined home office overhead and profit.

9

shall not be set aside unless the decision is fraudulent, arbitrary, capricious, or so

grossly erroneous as to necessarily imply bad faith, or if the decision is not

supported by substantial evidence.” D.C. Code § 2-360.07 (2012). We review

legal decisions de novo, but “we give careful consideration and great respect to

[the CAB’s] interpretation because legal interpretations by tribunals having

expertise are helpful even if not compelling.” Dano Res. Recovery, Inc. v. District

of Columbia, 620 A.2d 1346, 1351-52 (D.C. 1993) (quoting Fruin-Colnon Corp. v.

United States, 912 F.2d 1426, 1429 (Fed. Cir. 1990)).

For the reasons discussed below, we see no reason to overturn the CAB’s

determination.

1. Rustler’s Claim of Overall Delay

To begin, the CAB did not err in determining that Rustler failed to prove

overall project delay. Rustler essentially wanted to use the number of days by

which completion was delayed as a proxy for extra costs incurred. But, as the

CAB held, Rustler’s “failure to present critical path or other credible evidence on

the extent of the delay to overall project completion is fatal to its claimed project

10

delay even where [Rustler] may have shown that a specific construction activity

was delayed.”

Overall delay occurs when delay caused by the government affects projects

that are on the critical path. See George Sollitt Constr. Co. v. United States, 64

Fed. Cl. 229, 240 (2005). The United States Court of Federal Claims has defined

“the critical path” as “items of work [that] are given no leeway and must be

performed on schedule; otherwise, the entire project will be delayed.” Id. at 240

n.9 (quoting Haney v. United States, 676 F.2d 584, 595 (Ct. Cl. 1982)). While

there are many subprojects involved in any large contract, those that are not on the

critical path “may be performed at any time within a given period without any

effect on the completion of the entire project.” Id. (internal quotation marks

omitted). If the government causes a delay to the completion of items outside of

the critical path, a contractor may not recover based on a theory of overall delay,

although, as shown below, it may recover under a different theory of liability, such

as defective specifications or differing site conditions. See Mega Constr. Co. v.

United States, 29 Fed. Cl. 396, 433 (1993) (declining to award damages due to

delay because of a failure to establish a critical path, but considering the claims

under other theories of recovery). Damages for overall delay are recoverable only

if the claimant proves not only that the delayed tasks were on the critical path, but

11

also the extent to which those delays affected completion of the overall project.

See George Sollitt, 64 Fed. Cl. at 240. It is the contractor’s burden to establish the

critical path and prove that the delayed items were on that path. See id. Without

defining the critical path, a contractor is barred from recovery for overall delay.

See id.

The best way to establish the critical path is by presenting CPM schedules.3

See Appeal of Civil Constr., LLC, DCCAB No. D-1294 et al., 2013 WL 3573982,

62 D.C. Reg. 4422, 4439 (Mar. 14, 2013). As evidenced by the five change orders

that were issued throughout the contract, the critical path may evolve during the

course of a project. See George Sollitt, 64 Fed. Cl. at 240. Given the fluctuating

nature of the critical path, courts have held that “accurate, informed assessments of

the effect of delays upon critical path activities are possible only if up-to-date CPM

schedules are faithfully maintained throughout the course of construction.” See

Blinderman Constr. Co., Inc. v. United States, 39 Fed. Cl. 529, 585 (1997). It is a

well-accepted principle that contractors must modify and update the CPM

schedules when issues arise during the course of construction. See id. Indeed,

3

The acronym “CPM” stands for “critical path method,” and the CAB

refers to documents which contain updates to the critical path as CPM schedules.

12

Rustler was required by contract to frequently and regularly update the CPM

schedules.

Yet, Rustler failed to do so. It submitted only four CPM schedules

throughout the course of the contract, two of which were given to the District

before construction started. The only CPM schedules that Rustler produced after

construction began were insufficient to establish the effect any delay had on the

critical path. Rustler submitted one CPM schedule in May 2003, after the parties

resolved the Phase I issues, and the other in July 2004 which addressed Phases IV

and V. Although there were other issues that altered the time frame for completing

various projects, Rustler did not offer any other CPM schedules. Therefore, the

CAB correctly found that Rustler did not maintain up-to-date CPM schedules and

failed to delineate what items were on the critical path and what effect the

District’s mistakes had upon the schedule for completing those tasks. While this

deficiency in record keeping may not have prevented Rustler from proving its

entitlement to an equitable adjustment, we agree with the CAB that it did affect the

quantum award, as it was difficult to quantify the effect the defective specifications

and differing site conditions had on the critical path.

13

Without up-to-date CPM schedules, damages may sometimes be proven

through expert testimony. See Civil Constr., 62 D.C. Reg. at 4400. Rustler could

not establish damages for delay by this method either, as it did not present expert

testimony. Instead, it primarily relied on the testimony of Karen Salehi, the

company’s vice president who prepared the claim. Although Ms. Salehi had a

great deal of experience in managing a construction company, she “did not have a

background in engineering, did not consult with anyone who had a background in

scheduling, and did not confirm the number of delay days with an expert

consultant.” Rustler argues that her testimony was “the equivalent of expert

testimony,” but the CAB “specifically [did] not credit the conclusory testimony of

appellant’s vice president.” Rustler has not demonstrated a sufficient basis to

overturn the CAB’s decision to discredit Ms. Salehi’s uncorroborated and self-

serving statements. See Eagle Maint. Servs., Inc. v. District of Columbia Contract

Appeals Bd., 893 A.2d 569, 581 (D.C. 2006) (giving deference to the CAB’s

credibility determination).

Since Rustler could not show the extent of delay to the critical path, either

by presenting updated CPM schedules or expert testimony, it could not prove that

the prolonged completion of the contract amounted to overall delay. Accordingly,

we agree with the CAB that Rustler was not entitled to receive damages measured

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by delay or field overhead costs for any of its claims. See Kinetic Builder’s Inc. v.

Peters, 226 F.3d 1307, 1317-18 (Fed. Cir. 2000) (declining to award field overhead

costs when contractor failed to show that government’s actions affected the critical

path); see also Appeals of Tromel Constr. Corp., PSBCA No. 6303, 13 BCA ¶ 35,

346, 2013 WL 3227344 (June 27, 2013).

2. Award for Additional Tasks and Out-of-Sequence Work

Although Rustler did not establish overall delay, the CAB did award it

damages for a total of 28.5 days of additional tasks and out-of-sequence work. We

see no reason to disturb the CAB’s quantum order. While the CAB significantly

whittled down the award Rustler requested, its decision to do so was supported by

substantial evidence and was not arbitrary or capricious. Rustler was unable to

prove the amount of damages it claimed because it did not break down its costs by

task. See Blinderman, 39 Fed. Cl. at 537 (stating that the contractor must prove

liability, causation, and resultant injury by a preponderance of the evidence).

Faced with this problem, the CAB thoroughly scrutinized the records presented in

order to calculate the total award and offered a detailed justification for each of its

decisions.

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The CAB’s award is broken down as follows:

Phase IV Work Area Reduction Claim — Rustler initially claimed a total of

$751,158.74 for eighty-four days of work to complete additional tasks as a result of

the work area reduction. It requested forty-three days for the granite curb

placement, nineteen days for the concrete placement, seventeen days for the

excavation operation, three days to ramp the manholes, and two days to replace the

joint baskets. The CAB accepted Rustler’s approximation of days required for all

but two tasks. It reduced the number of days claimed for the granite curb

placement to twenty based on a review of crew reports and reduced the number of

days it took to excavate to sixteen days based on testimony that Rustler loaded 500

truckloads of material.

Despite accepting that Rustler was “entitled to costs it incurred” for these

additional tasks, the CAB awarded Rustler compensation for only twenty days.

We find no error here. The CAB explained that “the daily crew reports show that

various Phase IV tasks often overlapped and were being performed during the

same time period.” Adding the additional days together “would [therefore] result

in an inaccurate, overly generous estimate of additional work days.” The CAB

stated that, “[r]ather than adding each of these additional days together,” it would

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“permit recovery for full crew costs for the longest of the overlapping tasks, that is,

twenty days.” 4 The total award for this claim was $97,856.72. Given the CAB’s

detailed analysis, we affirm the award for this claim.

Pepco Manholes Claim — Rustler claimed $247,726.05 for forty days of

delay caused by having to work around Pepco contractors. The CAB found that

Rustler proved only that its work was disrupted by 6.5 days. Again, we conclude

that this decision was supported by substantial evidence. Although Pepco crews

were on site for several months, Rustler produced only eleven daily crew reports

for this period, none of which mentioned the extent to which Rustler’s work was

delayed by Pepco. To the contrary, the crew reports show that Rustler was able to

complete full days of work on every day except one. The first day Pepco’s

representatives were on scene, the majority of Rustler’s crew worked a half day or

4

Rustler claims, among other things, that the CAB “ignored” precedent that

places the burden of proving concurrent delay on the District. At oral argument,

Rustler appeared to contend that the CAB’s decision to limit the number of days it

awarded Rustler for this claim because many of its tasks overlapped was an

application of the doctrine of concurrent delay. That assertion is incorrect. The

term “concurrent delay” has a special meaning in government contract law and

refers to the delay that “occur[s] when two or more causes have a simultaneous

effect on contract performance.” John Cibinic, Jr., Ralph C. Nash, Jr. & James F.

Nagle, Administration of Government Contracts 569 (4th ed. 2006). In order for a

concurrent delay to exist, two parties, usually the government and the contractor,

must “simultaneously” contribute to the “period of delay.” R.P. Wallace, Inc. v.

United States, 63 Fed. Cl. 402, 410 (2004) (internal quotation marks omitted).

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less. The CAB therefore awarded Rustler a half day for the out-of-sequence work

based on the crew reports.

Because the crew reports did not offer enough support for Rustler’s claim,

Rustler also attempted to rely on letters it sent to the District regarding this issue.

We agree with the CAB that the majority of those letters were unpersuasive

because they did not provide details supporting the amount of time Rustler claimed

to have been delayed. However, the CAB relied on one letter which clearly stated

that Rustler was delayed in pouring concrete for six working days because of

Pepco’s crews. Accordingly, the CAB awarded Rustler $36,155.16 for this claim,

which included a total of 6.5 days for disrupted work. We do not disturb this

determination.

Roadway Tie-In Claim — Rustler claimed $67,999.69 in increased costs for

completing the roadway tie-in. The District had previously compensated Rustler

for crew costs for the tie-in work, so Rustler sought thirteen days of field overhead

and related costs. Because Rustler “failed to prove overall contract delay resulting

from the District’s defective specifications for the roadway tie-in,” the CAB

concluded that Rustler “failed to prove its quantum for this claim” and awarded it

18

nothing. See Kinetic Builder’s Inc., 226 F.3d at 1317-18. As discussed in greater

detail above, we agree.

Catch Basin Relocation Claim — Rustler claimed an equitable adjustment of

$160,136.89 which included seven days of crew time, twenty days of field

overhead allegedly accrued as a result of the District’s delay in issuing instructions

on how to proceed in relocating, and $8,550 for unused catch basin lids. The CAB

disagreed with Rustler’s calculation of damages and awarded Rustler two days of

crew time. This determination is well-supported by the record. The daily crew

reports Rustler submitted showed that Rustler poured concrete in front of the catch

basins on three days, rather than on seven days as Rustler claimed. Those reports

further showed that a full crew did not work on pouring concrete each day.

Accordingly, we affirm the CAB’s decision to award Rustler two days of crew

time. As discussed above, Rustler was unable to recover field overhead because it

did not prove overall contract delay. The CAB awarded Rustler a total of

$21,469.82 for this claim, which included $8,550 for unused catch basin tops.

We reject Rustler’s contention, discussed at length during oral argument,

that since it proved entitlement, it should receive at the quantum stage all of the

damages it requested. The regulations governing the CAB explicitly permit the

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CAB to “reserv[e] the determination of the amount of recovery . . . for another

proceeding.” 27 DCMR § 119.1. The entitlement order itself refutes Rustler’s

argument, as it did not purport to award any damages. Rather, it remanded the

matter “to the parties for a determination of quantum.”

Rustler also argues that the CAB should have applied a “lighter evidentiary

burden” at the quantum stage. Citing Civil Construction, 62 D.C. Reg. at 4443,

Rustler argues that it was only required to “prove the amount with sufficient

certainty such that the determination of the amount will be more than mere

speculation.” Rustler is mistaken. While it is true that “a claimant need not prove

his damages with absolute certainty or mathematical exactitude,” Blinderman, 39

Fed. Cl. at 542 (internal quotation marks omitted), this principle does not create a

lower burden of proof, see Mega Constr., 29 Fed. Cl. at 444. Instead, the same

preponderance of the evidence standard of proof that applies to an entitlement

showing “also applies to proof of the amount of [a contractor’s] increased costs.”

Id.; accord, Meridian Eng’g Co. v. United States, 130 Fed. Cl. 147, 165 (2016)

(“[T]he standard used to determine whether the burden of proof has been met is the

preponderance of the evidence test.”) (internal citation and quotation marks

omitted), rev’d on other grounds, 885 F.3d 1351 (Fed. Cir. 2018). The CAB

correctly applied this standard.

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B. The District’s Cross-Petition for Review

In its cross-petition, the District argues that the CAB’s use of the jury verdict

method to calculate damages was “unwarranted” for two reasons. First, it contends

that because Rustler did not “demonstrate[] a justifiable inability to produce”

evidence of its actual costs or cost estimates, the award should be vacated. Second,

it argues that the jury verdict method may only be used to resolve conflicting

testimony.

We recognize that there is some confusion about the jury verdict method and

its application. This court has issued only one opinion on this subject, see District

of Columbia v. Org. for Envtl. Growth, Inc., 700 A.2d 185, 203-04 (D.C. 1997)

(“OFEGRO”), so we first clarify that the term “jury verdict method” covers a

variety of techniques which allow contract appeals boards and courts “to fashion a

price adjustment that best compensates the contractor yet does not force the

government to pay an amount that is unfair in the circumstances.” John Cibinic,

Jr., Ralph C. Nash, Jr. & James F. Nagle, Administration of Government Contracts

709 (4th ed. 2006) (“Cibinic & Nash”).

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There are several cost-calculating techniques that fall under the umbrella of

the jury verdict method. See, e.g., Delco Elecs. Corp. v. United States, 17 Cl. Ct.

302, 328-33 (1989) (calculating damages by awarding a certain percentage of the

contractor’s claim); Freeman Gen., Inc. v. United States, 918 F.2d 188 (Fed. Cir.

1990) (calculating damages by using the government’s cost estimate). The “most

common” technique is for the adjudicating body “to make its own detailed

computation of the adjustment, based on all of the data provided by the parties.”

Cibinic & Nash at 710. This is the technique the CAB employed in this case, and

its methodology is explained in detail above.

Following federal precedent, we have held that the jury verdict method may

be used only when it is determined: “(1) that clear proof of injury exists; (2) that

there is no more reliable method of computing damages; and (3) that the evidence

is sufficient for a court to make a fair and reasonable approximation of the

damages.” OFEGRO, 700 A.2d at 204 (quoting WRB Corp. v. United States, 183

Ct. Cl. 409, 425 (1968)). All three conditions are present here. First, it is

undisputed that Rustler was required to perform numerous additional tasks due to

differing site conditions and the defective specifications provided by the District.

Given the scope of the additional work, it is self-evident that Rustler incurred some

amount of extra cost in completing the unplanned tasks. Second, because Rustler

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did not break down its costs by task, no more reliable method of proving damages

was available. Third, Rustler provided the Board with enough detailed records to

allow it to approximate damages in a fair and disciplined manner.

The District does not claim that Rustler failed to satisfy the basic

requirements enumerated above. Rather, it primarily argues that the jury verdict

method could not be used in this case because Rustler did not demonstrate that it

was “justifiably unable[] to provide actual cost data concerning the additional or

out-of-sequence work it performed.” It bases this argument on language from

OFEGRO and a Federal Circuit case, Dawco Construction, Inc. v. United States,

930 F.2d 872, 880-82 (Fed. Cir. 1991), overruled on other grounds by Reflectone,

Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995) (en banc).

While Dawco is not binding precedent, we think it important to discuss the

case in detail, as we often “look . . . to . . . decisions of [the Federal Circuit and the

United States Court of Federal Claims]” in government contracts cases. OFEGRO,

700 A.2d at 198. In Dawco, the Federal Circuit reversed the lower court’s use of

the jury verdict method, stating that the failure of the contractor to “establish that it

could not have identified to an acceptable degree of certainty its . . . costs

attributable to the differing site conditions . . . should have precluded the Claims

23

Court from adopting [the method].” 930 F.2d at 881. The court elaborated that the

contractor’s inability to give “any justification” for its failure to present precise

evidence also should have barred the use of the jury verdict method. Id. at 881-82.

Our similar comment in OFEGRO merely cited to Dawco and related federal

precedent. 700 A.2d at 204.

The District asserts that under OFEGRO and Dawco, the CAB is forbidden

to award Rustler any damages at all because Rustler did not break down its costs

by task and did not justify its failure to do so. We do not read the language in

Dawco as restrictively as the District does for several reasons. To begin, in Dawco

it was unclear whether the contractor had incurred any damages. 930 F.2d at 881.5

The court therefore expressed uncertainty about whether the contractor could even

satisfy the first prong of the three-part test for resorting to the jury verdict method.

Id. Rustler presents a much stronger case than the contractor in Dawco.

The Dawco court’s primary concern about use of the jury verdict method

was “the risk that unrealistic assumptions [would] be adopted and extrapolated”

that would “greatly multiply[] an award beyond reason.” Id. at 882. The lower

5

Similarly, in OFEGRO, we commented that “[a]ctual cost data are

particularly important in this case because the record does not clearly show that an

acceleration [of work] took place.” 700 A.2d at 204.

24

court in Dawco granted the contractor an equitable adjustment that was more than

the original price of the contract, resulting in an award that was “roughly twice as

much money for about half [the amount of work].” Id. Such concerns are not

present here.

In our opinion, an absolute ban on the use of the jury verdict method in cases

where a contractor has presented substantial evidence, but fails to present actual

costs or cost estimates broken down by task, is contrary to the purpose of equitable

adjustments. We therefore hold that a contractor’s failure to demonstrate that it

was unable to keep better records does not necessarily preclude use of the jury

verdict method. However, we do not retreat from our prior statements that the use

of the jury verdict method is disfavored. See OFEGRO, 700 A.2d at 203-04.

“A contractor must prove its costs using the best evidence available under

the circumstances.” Delco, 17 Cl. Ct. at 321. “Where actual cost data is not

available, estimates of the costs may be used.” Id. Nevertheless:

When a contractor has proven entitlement, but cannot

define his costs with exact data, courts and appeal boards

have been reluctant either to send the dispute back to the

Contracting Officer for determination of excess costs or

to send the contractor away empty handed when it is at

all possible to make a fair and reasonable approximation

of the extra costs. Under such circumstances, it is not

25

uncommon to resort to the ‘jury verdict’ method of

determining excess costs.

Appeal of Lawrence D. Krause, AGBCA 76-118-4, 82-2 BCA ¶ 16129, 1982 WL

7879 (Nov. 16, 1982). We do not believe this holding will discourage a contractor

from keeping appropriate, detailed records. After all, Rustler paid a hefty price for

its failure to keep better records.

Finally, we address the District’s argument that the CAB may only use the

jury verdict method to resolve conflicting testimony. While resolving conflicting

testimony may be a common purpose for using the method, it may be employed in

other circumstances as well. It may, for example, be used to calculate “the amount

of an adjustment when there are gaps in the evidence or the evidence is not

completely persuasive,” Cibinic & Nash at 707, as was the case here. Indeed, in

the same paragraph of OFEGRO where we talked about conflicting evidence, this

court acknowledged that the jury verdict method “may be used when the board is

not convinced by the contractor’s evidence of the precise amount owed, yet finds

that some extra costs were incurred.” 700 A.2d at 203.

26

IV. Conclusion

For the reasons stated, we affirm the CAB’s quantum award of $155,481.70,

with interest.