Lcc-Mzt Team IV v. United States

In the United States Court of Federal Claims

No. 16-1406C

Filed: April 23, 2021

Redacted Version Issued for Publication: August 26, 20211

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LCC-MZT TEAM IV, *

*

Plaintiff, *

v. *

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UNITED STATES, *

*

Defendant. *

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

Katherine M. Knudsen, Procopio, San Diego, California for plaintiff. With her was

Craig A. Ramseyer, Procopio, San Diego, California.

Erin K. Murdock-Park, Trial Attorney, Commercial Litigation Branch, Civil

Division, United States Department of Justice, Washington, D.C., for defendant. With her

were Kelly Krystyniak, Margaret J. Jantzen, and Sonia Orfield, Trial Attorneys,

Commercial Litigation Branch, L. Misha Preheim, Assistant Director, Commercial

Litigation Branch, Martin F. Hockey, Jr., Acting Director, Commercial Litigation Branch,

and Brian Boynton, Acting Assistant Attorney General, Civil Division, Department of

Justice.

OPINION

HORN, J.

At issue in the above-captioned case are numerous disputes arising out of a

construction contract between LCC-MZT Team IV (LCC-MZT), also known as Larkor

Construction/Macro-Z-Technology Team IV Joint Venture, and the United States Naval

Facilities Engineering Command Northwest (NAVFAC). In the above-captioned case,

plaintiff LCC-MZT filed a complaint in the United States Court of Federal Claims on

October 26, 2016. Subsequently, plaintiff filed an amended complaint, followed by a

second amended complaint in which plaintiff identifies fifteen claims which were

submitted to the NAVFAC contracting officer for a final decision. Plaintiff’s second

1

This Opinion was issued under seal on April 23, 2021. The parties were asked to

propose redactions prior to public release of the Opinion. This Opinion is issued with the

redactions that the parties proposed in response to the court’s request. Words which are

redacted are reflected with the notation: “[redacted].”

amended complaint seeks an amount “in excess of $4,130,905.12” in damages in this

court, “together with interest thereon pursuant to the Contract Disputes Act.” Thereafter,

defendant filed an answer to plaintiff’s second amended complaint. Following the second

amended complaint and answer, and, after extensive discovery, the court held a lengthy

trial, after which the parties filed post-trial briefs and the court held closing argument.

FINDINGS OF FACT

LCC-MZT was a joint venture consisting of Larkor Construction Company, Inc.

(LCC) and Macro-Z-Technology Company (MZT). The parties stipulated that MZT is a

general contractor specializing in facilities construction and civil construction. Bryan

Zatica testified at the trial in the above-captioned case that he incorporated MZT and that

he was the president and owner of MZT at the time of contract performance and the trial.

Bryan Zatica testified that MZT entered into the Small Business Administration’s (SBA’s)

section 8(a) program in 1999 or 2000, and that MZT graduated from the SBA’s 8(a)

program in 2008 or 2009. Bryan Zatica testified that he and LCC’s principal, Larry Landa,

“grew up together.” On June 8, 2011, LCC and MZT entered into a joint venture

agreement forming the LCC-MZT joint venture. The LCC-MZT joint venture was a joint

venture under SBA’s section 8(a) mentor-protégé joint venture program. LCC was a

section 8(a) contractor and a protégé, and MZT was a former section 8(a) contractor and

was the mentor in the LCC-MZT joint venture. According to Bryan Zatica’s testimony at

trial, the LCC-MZT joint venture was formed with the intention of submitting a bid in

response to a solicitation issued by NAVFAC related to a construction project at Naval

Base Kitsap Bangor in Silverdale, Washington. Mr. Zatica testified that, prior to LCC-

MZT’s work on the construction project, MZT had completed “five or six projects” on Naval

Base Kitsap Bangor since 2004, with a total revenue of approximately $35,000,000.00.

One of the projects at Naval Base Kitsap Bangor that MZT had worked on was a project

referred to as P-971, which Mr. Zatica testified commenced in 2004 and, similar to the

project at issue in the above-captioned case, also involved construction of a concrete

building.

The Contract and the Contract’s Specifications

NAVFAC awarded Contract No. N4425-12-C-3007 (the Contract) to LCC-MZT,

which had had a value of $10,590,000.00 and had been set-aside for section 8(a)

contractors. The scope of work in the Contract involved the construction of the P-913

Explosive Handling Wharf Security Force Facility (P-913) at Naval Base Kitsap Bangor in

Silverdale, Washington. The parties have stipulated that the P-913 project “entailed the

construction of a building structure, which included a concrete foundation and floor slab,

concrete exterior walls, and a reinforced concrete roof. The building was constructed of

reinforced concrete.” Bryan Zatica testified at trial that LCC-MZT submitted the lowest

price bid in connection with the P-913 project at Naval Base Kitsap Bangor.2

2

According to the parties’ joint stipulation of facts, about eight months after award of the

Contract, a California State court ordered that Kenneth Baker of Hill International be

appointed as receiver of the LCC-MZT joint venture. Bryan Zatica testified that “Mr. Baker

2

As issued on January 31, 2012, the Contract stated that LCC-MZT was to begin

performance of the P-913 project within fifteen days of award, and that work under the

Contract was required to be complete within 555 calendar days of award, which produced

an original contract completion date of August 8, 2013. The Contract also incorporated

clauses from the Federal Acquisition Regulation (FAR), including FAR clause 52.211-12,

titled “LIQUIDATED DAMAGES--CONSTRUCTION (SEP 2000).” (capitalization in

original). Pursuant to FAR clause 52.211-12, which was included in the Contract, LCC-

MZT was responsible for compensating the government $4,285.00 for each calendar day

of delay until the contract work was completed.

The Contract’s Specifications was a 1600-plus page document, prepared by

design company, URS Corporation, which detailed the work to be completed on the P-

913 project, and the manner in which the work was to be completed. The Contract’s

Specifications required that a secure parking garage be included within the structure LCC-

MZT was to construct. The Contract’s Specifications stated that “[s]pecial construction

features include seismic reinforcement, a reinforced roof to support automatic weapons

mounts, a loading dock and environmental protection measures.” Additionally, the

Contract’s Specifications stated that the Explosive Handling Wharf “will remain in

operation during the entire construction period” of the P-913 project, and that “work under

this contract requires special attention to the scheduling and conduct of the work in

connection with existing operations.” The parties stipulated that the site for the P-913

facility LCC-MZT would be constructing was located within a “high security area” on Naval

Base Kitsap Bangor, and “[t]he days when the convoys moving [redacted] would impact

work were referred to as ‘Red Days.’” During the trial, NAVFAC construction manager for

the Contract, Justin Nodolf, testified that the “local user” of the P-913 building was the

United States Strategic Weapons Facility Pacific (SWFPAC). Mr. Nodolf stated that

SWFPAC was “in charge of, effectively, the assets located on the base in terms of

maintaining and delivering the product down to the boat. However, they actually report

directly to Strategic Systems Programs, SSP, who’s ultimately the end client on this

project.”

Section 1.16 of the Contract required “LEVEL A PARTNERING,” which required

“[k]ey personnel” from LCC-MZT and NAVFAC to periodically meet in-person at an off-

site location with a facilitator “in an effort to achieve a quality project done right the first

time, within budget, on schedule, and without any safety mishaps.” (capitalization in

original). The parties have stipulated that Dorriah Rogers of Paradyne Consulting served

as the facilitator for the Level A Partnering meetings.

Section 01 14 00 of the Contract’s Specifications was titled “WORK

was a court-appointed receiver for MZT and Larkor to ensure that when the Navy did pay

us that the money went appropriately to the vendors and suppliers and not to one

company or the other.” Mr. Zatica asserted that LCC “could not fund their portion of the

joint venture. They were having financial issues. And for that reason, the Navy wanted to

exclude them from the joint venture. And in doing so, this gave the Navy the avenue to

be able to pay the bills with a clear mind.”

3

RESTRICTIONS.” (capitalization in original). Paragraph 1.3.2 in section 01 14 00 defined

the Contract’s “[r]egular core working hours” as an eight-and-a-half-hour period “between

7:00 a.m. and 5:00 p.m., Monday through Friday, excluding Government holidays.”

Pursuant to paragraph 1.3.3 in section 01 14 00, if LCC-MZT wished to work outside of

regular working hours, LCC-MZT needed to apply for approval from the contracting officer

fifteen days before such work. Paragraph 1.2.1 in section 01 14 00 states:

(1) 10 work days a month will be impacted by convoys and operations at

the Explosive Handling Wharf Area. The impacted work days may not be

consecutive. A schedule reflecting open or available timeframes will be

provided to the Contractor after award, and monthly during the project. An

updated schedule will be provided five (5) days prior to the beginning of

each month for the following month. Urgent operation requirements will

require adjustments to the schedule. Changes resulting in less than 48

hours notice [sic] will be considered a changed condition.

(2) Notification, 10 days in advance of activities that will need to access the

Waterfront Restricted Area (Explosive Handling Wharf Entry Control Point

at [redacted]) will need to be coordinated with the Contracting Officer and

SWFPAC Facilities.

[Redacted]; the contractor shall stop all exterior work and move to their

personnel out of visual range of [redacted] Road. There will be

approximately 300 convoys during this project.

During times of convoys past the construction site the contractor will be

directed, by the Contracting Officer or designate, to a muster [sic] his forces

so that they will not be in visual contact with the convoy. Contractor shall

provide an area, or means to prevent observation of the convoy. Contractor

shall submit a View Obstruction Plan for Contracting Officer approval.

(3) [Redacted] Road will not be accessible during convoys or operations at

EHW. No Equipment or material deliveries will be allowed. Contractor will

be restricted to the Construction Enclave during convoys and Operations at

EHW. Access to the project site will be through the [redacted] Road Trail

from [redacted] Road, material and equipment must be staged in the

Construction Enclave or be brought in through the [redacted] Road Trail.

Contractor parking will be relocated to a site within 5 miles of the project

site. Exact location will be provided by the Contracting Officer. Contractor

will be responsible for shuttling workers from this parking area.

a. All Zones:

(1) Direct access must be maintained to all facilities, roads, and

structures at all times. As a minimum, a least one road (no less than

15’) shall be provided for vehicle access to facilities or roads.

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Separate pedestrian access must be maintained.

(capitalization in original).

Section 01 32 17.00 20 of the Contract’s Specifications was titled “NETWORK

ANALYSIS SCHEDULES (NAS),” and states:

The schedule is a tool to manage the project, both for Contractor and

Government activities. The Contractor shall use the Critical Path Method

(CPM) and the Precedence Diagram Method (PDM) to satisfy time and cost

applications. It will also be used to report progress and evaluate time

extensions. It will provide the basis for progress payments.

(capitalization in original). Paragraph 1.3.1 in Section 01 32 17.00 20 of the Contract’s

Specifications states that “[s]ubmittal and acceptance of the Baseline Network Analysis

Schedule and accurate updated schedules accompanying the pay requests are both

conditions precedent to processing pay requests.” (capitalization in original). Paragraph

1.7.6 in section 01 32 17.00 20 states that “the submission of an error free, acceptable

updated schedule to the Government is a condition precedent to the processing of the

Contractor’s pay request.” (capitalization in original). The parties stipulated that Casey

Caughie worked as NAVFAC’s schedule analyst under the Contract.

Paragraph 1.6.2.5 in section 01 32 17.00 20, titled “Anticipated Weather Delays,”

states that schedules were to be constructed to allow for “normal adverse weather

conditions,” and provides that a “schedule of monthly anticipated adverse weather delays

shall be represented by programming the Weather Calendar(s) to include non-work days

occurring within work weeks and are in addition to the non-work days associated with

Federal Holidays, and/or security delays.” (capitalization in original). Paragraph 1.6.2.5 in

section 01 32 17.00 20 provides a number of anticipated days to be impacted by adverse

weather for each month, based on whether the contractor is working a five-day work

week, a six-day work week, or a seven-day work week.

Paragraph 1.6.2.6 in section 01 32 17.00 20 of the Contract’s Specifications, titled

“Anticipated Operation-Restricted Delays,” provides:

The Contractor shall use the requirements listed in Specification Section 01

14 00 “Work Restrictions” following schedule of anticipated monthly non-

work days due to operations as the basis for establishing a [sic] “Operation-

Restricted Delay Calendar” showing the number of anticipated non-

workdays for each month due to operations, exercises and and [sic] are in

addition to non-work days associated with weekends, Federal Holidays,

and/or weather delays unless otherwise approved by the Contracting

Officer.

Schedule activity duration(s) shall be formulated with allowance for required

adverse operational restrictions. Any activity duration, which could be

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impacted by prescribed operational restrictions (security drills, alerts,

exercises or missile movements, etc.), due to the time period that the

Contractor has scheduled the work, shall include an adjustment to include

the anticipated operation-restricted delay. The number of anticipated

adverse delays allocated to an activity will be reflected in the activity’s

calendar.

A lost workday due to security, convoy, and/or operational restriction delay,

is defined as scheduled workday activity(s) in which the contractor’s

workforce cannot work 50 percent or more of the day on the impacted

activity(s). The contractor shall immediately notify the Contracting Officer

when a lost workday due to restricted conditions has occurred and shall

identify the activity(s) impacted; the operational-restricted condition

encountered and the reason for resultant activity(s) impacted. The

contractor shall record on Quality Control and Production Daily Reports the

occurrence; the adverse restricted condition encountered, and reason for

resultant activity(s) impacted.

(capitalization in original).

Section 01 50 01 of the Contract’s Specifications, titled “PROCUREMENT AND

INSTALLATIONS OF FURNITURE, FIXTURES AND EQUIPMENT,” provides at

paragraph 1.1 that LCC-MZT “shall provide the procurement and installation of all

Furnishings, Fixtures, and Equipment (FF&E) exactly as designed and specified or

approved equal by the Government, URS, and it’s subcontractor 3B Designs during the

design phase of this project.” (capitalization in original). Paragraph 1.2.1 in section 01 50

01 of the Contract’s Specifications states that the FF&E package was to be a “planned

modification,” and that “[u]pon receipt of required funding, the Prime Contractor shall be

authorized by the Contracting Officer, as a planned modification to the construction

contract, to procure and install all Final FF&E using Federal Government price schedules

(NAVSUP BPAs and/or GSA).” (capitalization in original). Paragraph 1.2 states that the

FF&E package awarded was to include “shipping, freight, handling, installation, and the

contractor’s FF&E Handling and Administration Rate (HAR) percentage as applied to the

final FF&E total cost.” (capitalization in original). Regarding the Handling and

Administration Rate, paragraph 1.2.1 states:

The HAR [Handling and Administration Rate] includes all of the Prime

Contractor’s effort related to storage, coordination, handling, administration

of subcontractors, and all other associated costs and profit for the

procurement of FF&E. The Prime Contractor will propose in the contract

solicitation the FF&E HAR. The prime Contractor’s proposed HAR may not

exceed 5 percent of the total FF&E costs, as noted on the bid schedule.

(capitalization in original). Regarding “PROCUREMENT AND INSTALLATION” of the

FF&E package, paragraph 1.3 in Section 01 50 01 of the Contract’s Specifications states:

6

The Contractor shall coordinate the building completion date with the

installation dealer(s) specified in the FF&E Package.

The FF&E package provided to the Prime Contractor at the modification

award shall reflect current pricing certified by the manufacturers and the

Interior Designer of Record, NAVFAC NW. Pricing will be guaranteed, but

the Prime Contractor shall be responsible for verifying the pricing prior to

the award of the modification.

The Prime Contractor shall anticipate possible manufacturer price

increases if order placement is delayed. It is recommended to order the

FF&E product once the planned modification is awarded and funds are

received to avoid incurring additional costs. Delayed production and

delivery dates can be noted at the time of order placement to coincide with

building completion dates. Any costs incurred due to manufacturer price

increases will be the burden of the Prime Contractor.

(capitalization in original).

Ordering of the FF&E Package

On July 3, 2012, NAVFAC contracting officer Mona Carlson unilaterally issued

Modification No. A00002 (Modification 2) to the Contract. Modification 2 increased the

value of the Contract by $514,026.25 to compensate LCC-MZT for the costs, but not for

time, associated with providing and installing the FF&E package set forth in Modification

2, which included items such as beds, rifle cabinets, treadmills, squat racks, microwaves,

and televisions. Attached to Modification 2 is a document titled “FINAL COST ESTIMATE

SUMMARY - revised,” which included a line-item breakdown of the $514,026.25

awarded to LCC-MZT through Modification 2. (capitalization and emphasis in original).

The breakdown included the prices for all of the FF&E items to be purchased, including

a subtotal of $226,882.00 for items manufactured by Turnbull, and a subtotal of

$106,335.74 for all other items. An amount of $95,882.00 was added to the Turnbull items

for “Installation,” and an amount of $21,267.15 was added to the remaining items for

“Delivery and Installation.” (capitalization and emphasis in original). An amount of

$39,181.92 was added for “WA State Sales/Use Tax” at 8.7%, and an amount of

$24,477.44 was added for “Contractor’s HAR” at 5%. (capitalization in original). A

separate document attached to Modification 2 titled “STEEL BERTH AND LOCKER

QUOTE,” indicates that the prices for the items manufactured by Turnbull were taken from

a quote dated August 15, 2011, but Modification 2 does not indicate from what date the

remaining items in the FF&E package were quoted. (capitalization and emphasis in

original).

According to Bryan Zatica’s testimony, NAVFAC issued Modification 2 when LCC-

MZT “roughly” was mobilizing to the project site. Bryan Zatica testified that “typically”

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[y]ou want to do it [the FF&E] at the very end. You want to have them come

in -- and unfortunately they don’t show up like a desk. They show up with

pieces and parts, screws and nuts and all that stuff. So you want to make

sure that the place is cleaned, ready, install the FF&E, wipe it down, walk

out the door.

Jim Mortensen, one of LCC-MZT’s project manager during the Contract, testified that in

February 2013, he attempted to “request proposals for the FF&E package only to have

the suppliers tell me that we weren’t authorized to purchase.” Thereafter, LCC-MZT

requested authorization from NAVFAC to purchase from the sources in the FF&E

package. On February 21, 2013, Mona Carlson sent LCC-MZT a letter stating that LCC-

MZT was “hereby authorized to utilize General Services Administration (GSA) supply

sources for the purchase of furniture, fixtures, and equipment (FF&E) under the subject

contract.”

Pre-Work Delays

As stated above, NAVFAC awarded the Contract to LCC-MZT on January 31,

2012, and performance under the Contract was required to begin within fifteen days of

Contract award. Also as stated above, work under the Contract was required to be

completed within 555 calendar days of award, resulting in an original contract completion

date of August 8, 2013. Award of the Contract to LCC-MZT, however, was protested at

the United States Government Accountability Office (GAO), which the parties stipulated

“delayed the commencement of the Project” by thirty-five days to March 7, 2012. On July

23, 2012, after LCC-MZT had mobilized to the site, Bryan Zatica and Mona Carlson

bilaterally executed Modification No. A00003 (Modification 3) to the Contract, which, as a

result of the protest at the GAO, extended the Contract’s completion date by thirty-five

days to September 12, 2013, at no cost to the government. Although the GAO protest

challenging the award of the Contract to LCC-MZT was filed in January 2012 and

complete by March 7, 2012, the parties did not bilaterally execute Modification 3

extending the completion date of the Contract by thirty-five days until July 23, 2012.

Undisclosed Electrical Duct Bank and Water Line

At trial, Bryan Zatica testified that, under the Contract, LCC-MZT was to first “go in

and to clear several acres, heavily wooded area, and recut the slope and open it up so

that the building, itself, could have a larger footprint to sit in with parking and -- and the

building.” According to LCC-MZT’s Contractor Production Report No. 025, LCC-MZT

started clearing and logging the construction site on July 16, 2012. Bryan Zatica testified

that, after LCC-MZT had cleared the construction site, LCC-MZT “potholed,”3 during

3

Mr. Zatica described the term “potholed” as:

That’s just a term of where you take a backhoe or a vacuum truck, and you

have a location of where the utility is, and then from there you carefully

excavate to find out if it’s in that location. Sometimes they’re six feet off in

8

which LCC-MZT discovered a duct bank and a water line. Scott Wakefield, the owner of

one of LCC-MZT’s subcontractors under the Contract, PSW Electric, Inc. (PSW Electric),

testified at trial that PSW Electric first began working as a subcontractor when LCC-MZT

was mobilizing to the construction site. Regarding the duct bank LCC-MZT discovered

when potholing, Mr. Wakefield stated that the issues with the duct bank included:

[W]here to relocate it. How to relocate it. Is it an existing -- we -- we had no

idea what was even in the duct bank. So was it something that was

abandoned in place that could be, or was it something we had to reroute

because it went through the building footprint and the elevation of it was

different? Was it something that we could abandon in place or that we had

to reroute or -- and what did they need rerouted?

On August 1, 2012, LCC-MZT submitted a request for information (RFI) No. 28 to

NAVFAC. In RFI No. 28, LCC-MZT stated that when LCC-MZT was potholing, it

“discovered that the main 24” water line and electrical/communication duct bank (concrete

encased) running through the project site is inconsistent with the drawing for the project.”

LCC-MZT asserted that the water line and duct bank “will be exposed on western slope

of project due to excavation required to construct the new structure and exterior provided

by the contract,” and that the duct bank would interfere with the southwest corner of the

project’s foundation. In RFI No. 28, LCC-MZT also stated that LCC-MZT’s performance

already had been impacted by the undisclosed water line and duct bank and requested

that NAVFAC provide direction or information regarding how LCC-MZT should proceed.

On August 10, 2012, NAVFAC responded to LCC-MZT’s RFI No. 28, in which NAVFAC

instructed LCC-MZT to “relocate conflicting utilities as necessary to complete all” work

under the Contract.

On August 14, 2012, LCC-MZT submitted RFI No. 32 to NAVFAC, in which LCC-

MZT requested drawings “with full specifications from your designer of record” regarding

relocation of the water line and duct bank. NAVFAC responded and provided the drawings

on August 20, 2012. According to Bryan Zatica’s testimony at trial, the drawings required

LCC-MZT to “add additional communication lines and duct bank lines into the new

rerouted area.” Regarding the relocation of the water line and duct bank, Mr. Zatica

testified:

We had to purchase not only the pipe but the -- the additional excavation.

We were geared up to do a building. All of a sudden we’re a utility contractor

for major water lines. We had to import material. We had to export material.

We had to use different personnel that understood the situation.

Mr. Zatica testified that LCC-MZT was not paid in advance for relocating the water line

and duct bank, and that LCC-MZT “finance[d] this work for the Navy.”

one direction or the other, or, in this case, the duct bank and the water line

were not in the elevation of what they were supposed to be.

9

Also on August 14, 2012, LCC-MZT’s project manager at the time, James

Thompson, sent a letter to NAVFAC contracting officer Mona Carlson requesting an

equitable adjustment due to differing site conditions. In the August 14, 2012 letter, James

Thompson stated that, on July 26, 2012, LCC-MZT was potholing the construction site

and discovered that an electrical duct bank would interfere with the building’s foundation.

Mr. Thompson stated that, “[a]lso, it was discovered that the waterline and electrical, fire

alarm and communication duct bank where [sic] at an elevation that they would be

exposed when the site was brought to grade as shown on the plans.” Mr. Thompson

indicated that LCC-MZT had informed NAVFAC of the site issues by telephone on July

24, 2012, and that LCC-MZT had sent a request for information to NAVFAC on July 27,

2012. According to Mr. Thompson’s August 14, 2012 letter, LCC-MZT had been delayed

in its performance and was going to incur additional costs. Mr. Thompson requested that

“a Change Order be set up to account” for LCC-MZT’s additional costs, as well as the

delay.

That same day, August 14, 2012, NAVFAC contracting officer Mona Carlson sent

a letter to LCC-MZT responding to James Thompson’s August 14, 2012 letter. In Mona

Carlson’s August 14, 2012 letter, Ms. Carlson stated that, after reviewing Mr. Thompson’s

letter and LCC-MZT’s RFI No. 28, she found that there was a differing site condition

related to the “additional work to mitigate utility line interference,” and that LCC-MZT was

entitled to an equitable adjustment for impacted costs and time. Mona Carlson’s August

14, 2012 letter provided:

Please submit your Request for Equitable Adjustment (REA) and schedule

fragnet[4] for the impacts in a timely manner for final resolution. Ensure you

include as a minimum:

(1) An original cost estimate or basis for establishment of the original

budgeted estimate for this activity. The estimate should be in sufficient detail

to identify material, labor, equipment, subcontracts, and associated costs

(overhead) for the original planned activity.

(2) The actual impact costs, including labor, material, equipment, and time

associated with any additional work. The estimate should be in sufficient

detail to identify material, labor, equipment, subcontracts, and associated

costs (overhead) for the impacts related to the activity. As an equitable

adjustment, only actual impacts will be reimbursed.

4

Defendant’s expert during the trial, Stephen Weathers, testified that a fragnet was “a

mini set of schedule activities that would model the impact of a delay event,” and that

“[y]ou would take that subset of activities, put that into the schedule, run the schedule,

and see what the corresponding impact on this – on the project completion would be.”

Plaintiff’s expert, William Manginelli, explained that a fragnet was “a set of activities and

interconnected logic that would be then inserted into a schedule.”

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(3) Proposed schedule fragnet, in accordance with Section 01 32 17.00 20,

that identifies the new activity associated with this change and how it

impacts the schedule. The fragnet should be based on the current,

approved schedule.

For tracking purposes, PC [Proposed Change] 0004 has been established.

Please note that failure to provide a proposal and resolve this issue in a

timely manner will not constitute a Government caused delay. Notify the

undersigned if it is determined that there is no impact and the PC will be

closed.

Mona Carlson’s August 14, 2012 letter also stated that, “[i]n accordance with FAR 52.233-

1 DISPUTES, pending final resolution of any request for relief, claim, appeal, or action

arising under the contract you are directed to proceed diligently with the performance of

the contract.” (capitalization in original).

On August 27, 2012, NAVFAC contracting officer Mona Carlson sent the first of

four contract progress notices to LCC-MZT, in which NAVFAC asserted that LCC-MZT’s

Network Analysis Schedule update for July 2012 indicated a contract completion date

fifty-six calendar days beyond the current completion date of September 12, 2013.

Despite Ms. Carlson’s August 14, 2012 letter to LCC-MZT which acknowledged that LCC-

MZT was “entitled to an equitable adjustment” related to the undisclosed duct bank and

water line, the August 27, 2012 letter stated:

Currently the Government is unaware of any contributing events

(outstanding issues) or other contractual conditions causing a delay in

completing the work from unforeseeable causes beyond the control and

without the fault or negligence of the Contactor. If you feel that a contract

time extension is justified for which you believe the Government is liable,

Submit a Request for Equitable Adjustment (REA), as appropriate with the

specific reference to the incident, basis for change, FAR clause under which

you are seeking contractual relief, and contractual deficiencies and

circumstances surrounding the situation for which you believe the

Government is liable. The Contracting Officer can then review, determine

merit of your claim, and provide contractual direction.

Mona Carlson instructed LCC-MZT in the August 27, 2012 letter to take “all actions

necessary, at no additional cost to the Government,” to complete the project by the

contract completion date of September 12, 2013.

On September 6, 2012, LCC-MZT project manager James Thompson sent a letter

to Mona Carlson asserting that LCC-MZT could not provide the requested updated

schedule and that the “major contributing factor to continued process on the previously

scheduled critical path activities is the relocation of the existing utility lines which do not

allow MZT-LCC to progress in an efficient and safe manner.” James Thompson stated

that LCC-MZT would be meeting with its experts the following week to discuss costs and

11

impacts associated with relocating the duct bank and water line, and that, thereafter, LCC-

MZT would schedule a meeting with NAVFAC.

On September 10, 2012, Mona Carlson sent a second contract progress notice to

LCC-MZT asserting that LCC-MZT’s September 6, 2012 letter was “non-responsive and

in direct violation of the Contracting Officer’s direction.” Ms. Carlson’s second contract

progress notice stated:

The Government’s findings were based on your Network Analysis Schedule

(NAS) update for July 2012 which reflects a completion date 56-calendar

days beyond the CCD [Contract Completion Date] of September 12, 2013.

At that time, the schedule reflects no activities for which the Government is

liable. It is the Government’s position that you are not progressing the work

with due diligence. In your response, you claim that the delays are related

to “utility line interferences” which was identified as an impact on, and

responded to on the same day, August 14, 2012. There is insufficient data

in your schedule and response to reflect how this activity impacted the

schedule which reflects a late completion. Furthermore, the Contracting

Officer acknowledged merit (Serial No. 0010 dated August 14, 2012) to your

claim of this unforeseen condition, requested an REA, and directed you to

proceed with the work in accordance with FAR 52.233-1 Disputes. You

should have proceeded with the work immediately, and as stated in the

Contracting Officer’s letter, updated the schedule to accurately record the

impacts to the established schedule activities. While the repairs may be on­

going, the schedule can be progressed properly to reflect this impact and

an updated NAS provided as directed. Failure to accomplish this task or

maintain the NAS is non-compliant with the terms and conditions set for [sic]

in Section 01 32 17.00 and causes the Government concern regarding your

scheduler’s qualifications.

(capitalization in original). Mona Carlson asserted that failure to provide an updated

Network Analysis Schedule would result in removal of LCC-MZT’s scheduler and, if

appropriate, LCC-MZT’s project manager. At trial, Bryan Zatica testified that LCC-MZT

completed relocation of the water line and duct bank in November 2012. LCC-MZT’s

January 18, 2013 request for equitable adjustment, which is discussed below, states that

LCC-MZT had finished relocating the water line and duct bank on November 9, 2012.

On January 10, 2013, Mona Carlson sent LCC-MZT a third contract progress

notice, in which Ms. Carlson stated that LCC-MZT had failed to provide a proposal to

resolve PC 0004 concerning the differing site conditions, which Mona Carlson had

established in her August 14, 2012 letter to LCC-MZT. According to the January 10, 2013,

third contract progress notice, LCC-MZT also had “failed to submit monthly Network

Analysis Schedule (NAS) updates for October 2012 through December 2012,” and LCC-

MZT’s most recent monthly schedule update, which had been submitted for September

2012, indicated a completion date eighty-eight days beyond the then-established contract

completion date of September 12, 2013. Mona Carlson instructed LCC-MZT to submit an

12

updated Network Analysis Schedule, as well as a schedule recovery plan, within fourteen

days of her January 10, 2013, third contract progress notice. Mona Carlson also sent a

copy of the third contract progress notice to Western Surety Company5 and stated in the

third contract progress notice that “[g]iven the Government’s ongoing concern regarding

your contract progress, your surety has been included on the distribution of this

notification.”

On January 18, 2013, LCC-MZT sent a letter requesting an equitable adjustment

to NAVFAC, which requested an adjustment of $999,701.00 to the Contract and asserted

that the differing site conditions impacted the project’s critical path by 107 calendar days.

LCC-MZT’s January 18, 2013 letter stated that LCC-MZT’s request for $999,701.00 did

not include costs regarding the following seven categories of alleged impacts: (1)

“Impacts to base bid work;” (2) “Schedule recovery;” (3) “Inefficiencies to pour, strip and

backfill the wall of the Retaining Wall;” (4) “Inefficiencies to pour the building footing, walls

and roof;” (5) “Additional Erosion Control/Water Protection after November 9th [2012];”

(6) “Haul-off and Stockpile Excavated Material;” and (7) “Protection of Excavated

Material.” LCC-MZT’s January 18, 2013 letter also stated:

This differing site condition precluded LCC-MZT Team IV from completing

work that was extremely weather sensitive prior to the wet season as

originally planned. This work includes but is not limited to site grading,

excavation, backfill, forming and pouring the building footings. These

additional costs will be submitted with the Recovery Schedule.

Regarding NAVFAC’s response to LCC-MZT’s request for equitable adjustment

for the differing site conditions, Bryan Zatica and plaintiff’s counsel Craig Ramseyer had

the following colloquy:

5

On cross-examination, plaintiff’s counsel Craig Ramseyer and NAVFAC contracting

officer Mona Carlson had the following colloquy regarding Western Surety Company:

Mr. Ramseyer: Who is Western Surety?

Ms. Carlson: They held the bond on this contract. . . .

Mr. Ramseyer: When you say they held the bond, they were the

performance bond surety for the joint venture; is that right?

Ms. Carlson: I believe so, yes.

Mr. Ramseyer: And those bonds are turned in to the government at the

beginning of the project?

Ms. Carlson: Yes.

13

Mr. Ramseyer: In response to this letter that’s identified almost a million

dollars in costs but said that there are other impacts and other costs that

are not included within the number, do you recall how NAVFAC responded

to that?

Mr. Zatica: Yeah. They responded back and said that they would not issue

a change order with those items excluded that we were talking about.

They come [sic] back to us and said that they wanted us to put together an

all-inclusive change order for all of the impacts that we could foresee on the

project, past and present.

Mr. Ramseyer: Now, in this -- and at some point in time, then -- well, let me

back up. As of the point of January [2013], did you even know all the costs

of the impact?

Mr. Zatica: No, we did not.

Mr. Ramseyer: They were still accumulating?

Mr. Zatica: Correct.

Mr. Ramseyer: Meanwhile, were you still continuing to hear from NAVFAC

with regard to the schedule?

Mr. Zatica: Schedule and nonpayment. So we didn’t get paid for this work.

On April 12, 2013, NAVFAC contracting officer Mona Carlson sent LCC-MZT a

fourth contract progress notice, in which NAVFAC stated that LCC-MZT had failed to

adequately address NAVFAC’s concerns regarding contract progress. NAVFAC asserted

that, “since our last notice additional delays have been incurred for which no evidence of

Government liability has been presented.” NAVFAC also asserted that LCC-MZT had

failed to provide a revised price proposal or time impact analysis related to PC 0004,

involving the differing site conditions. In the April 12, 2013 fourth contract progress notice,

NAVFAC contracting officer Mona Carlson stated:

While PC 0004 remains in dispute, based on the information presented to

date the Government is willing to assume liability anywhere from zero (0) to

60 calendar days of the claimed time impact. Based on the Government’s

current position, allowing for an adjustment of 60 calendar days, the

adjusted CCD would be November 11, 2013. Based upon your 0213 NAS

[Network Analysis Schedule] update, you would still need to recover

approximately 115 calendar days.

(capitalization in original).

14

In the April 12, 2013 fourth contract progress notice, Mona Carlson further stated:

ln accordance with FAR 52.236-15 SCHEDULES FOR CONSTRUCTION

CONTRACTS, citing from paragraph (b), “If in the opinion of the Contracting

Officer, the Contractor falls behind the approved schedule, the Contractor

shall take steps necessary to improve its progress, including those that may

be required by the Contracting Officer, without additional cost to the

Government”. Accordingly, you are hereby directed as follows:

• Increase the number of crews. Based on Government’s observations

there are insufficient crews on site to accomplish the required work.

Multiple crews for welding, reinforcing steel, building forms, etc.

Identify sufficient work force (crew members) for upcoming activities

such as mechanical and electrical.

• Increase the number of shifts or alter work schedules to allow for

longer production days.

• Establish a secondary production area as necessary to pre-fabricate

forms, reinforced steel meshes/cages, etc. The Government has

identified a site on base for your use.

• Increase work days to seven (7) calendar days per week.

Provide a plan detailing implementation of these requirements no later than

April 19, 2013. You will need to recover approximately 16-20 days per

month to demonstrate satisfactory progress.

(capitalization and emphasis in original). NAVFAC asserted that failure to demonstrate

progress on the construction project could result in the removal of LCC-MZT’s project

manager and superintendent and could result in LCC-MZT being terminated for default.

A copy of the fourth contract progress notice also was sent to Western Surety Company.

On April 17, 2013, LCC-MZT sent a request for equitable adjustment to Mona

Carlson related to PC 0004, which involved the differing site conditions regarding the

electrical duct bank and water line. In the April 17, 2013 request for equitable adjustment,

LCC-MZT requested costs of $4,831,573.00. John King, who, at the time of the P-913

project, was an employee of LCC-MZT’s subcontractor, Mirack Construction, and who,

the parties jointly stipulated, served as a scheduler, claims consultant, and interim project

manager during the Contract, testified that he assisted in preparing the request for

equitable adjustment related to PC 0004. John King further testified that the request for

equitable adjustment related to PC 0004 “was the additional pricing that NAVFAC

requested from us for PC 0004 to price all the forward impacts from the unforeseen

utilities.” John King also testified that NAVFAC had requested the additional information

in NAVFAC’s serial letters to LCC-MZT.

15

One day later, on April 18, 2013, LCC-MZT and NAVFAC engaged in a partnering

meeting moderated by Dorriah Rogers. Jodus Hortin, who the parties jointly stipulated

was a NAVFAC contract specialist, and who subsequently acted as a NAVFAC

contracting officer,6 also was present at the April 18, 2013 partnering meeting and testified

regarding LCC-MZT’s submission of the request for equitable adjustment related to PC

0004. At the trial, Mr. Hortin stated that, prior to the April 18, 2013 partnering meeting, he

had started to review a copy of the request for equitable adjustment related to PC 0004

“at his desk” with Justin Nodolf, NAVFAC’s construction manager for the Contract.

Although Mr. Hortin described the review as a “cursory review,” he testified that he “had

an opportunity to review the contents.” During his testimony,7 Mr. Nodolf approximated

that normally “[i]t would take us several months just to get through it to a point where we

could at least establish an initial government position to be able to enter negotiations.”

During the trial, NAVFAC contracting officer Mona Carlson testified that the purpose of

the April 18, 2013 partnering meeting was to discuss issues between NAVFAC and LCC-

MZT, “but a $4.8 million technical proposal would require an extensive review. We

couldn’t do it in a partnering meeting. That wasn’t the purpose of a partnering meeting.”

Bryan Zatica testified that it would “[n]ot necessarily” be unusual to discuss costs in a

request for equitable adjustment at a partnering meeting, and “that’s why we presented

it, so we could all sit down.” Justin Nodolf testified that he was involved with the

negotiation regarding PC 0004 at the April 18, 2013 partnering meeting and the

subsequently executed modification, which is discussed below. At the beginning of the

April 18, 2013 partnering meeting, LCC-MZT provided a hardcopy of its request for

equitable adjustment related to PC 0004 to NAVFAC. Regarding the submission of the

hardcopy at the April 18, 2013 partnering meeting, plaintiff’s counsel Mr. Ramseyer and

Mr. Nodolf had the following colloquy:

Mr. Ramseyer: Okay. And what do you recall about receiving LCC-MZT’s

binder of support for its claim?

Mr. Nodolf: So what I recall was it was in pretty poor taste to -- to put this

giant binders [sic] of all this information and then have a -- like, $4.8 million

total there right at the very beginning of the partnering session. I mean, it

was -- you know, we had no time to look at this thing. It was just all of a

sudden here’s this -- this giant binder of all this material, and -- and here’s

a huge number.

6

Jodus Hortin graduated from the University of Utah in 2005 with a Bachelor of Science

degree in economics and graduated from the Naval Postgraduate School with a Master

of Science degree in contract management in 2016, after the P-913 project was complete.

In 2009, Mr. Hortin joined NAVFAC as an intern in what Mr. Hortin referred to as a “three-

year developmental program,” during which time Mr. Hortin was assigned to construction

projects from February 2010 to April 2011.

7

Although on direct examination by the government, Justin Nodolf was responsive to

questions posed by government counsel, during cross-examination by plaintiff’s counsel,

Mr. Nodolf seemed on more than a few occasions not to remember the answers to

plaintiff’s counsel’s questions.

16

Mr. Ramseyer: And what -- about the size of the binder, was it like one of

the binders in front of you or was it more than that?

Mr. Nodolf: From what I recall, I -- it was a large binder. I don’t recall the full

size or even if it was even multiple binders. But it was a -- it was a lot of

information.

Mr. Nodolf stated that, after receiving the hardcopy, the NAVFAC representatives “got up

and left” because “[w]e had no time to review this.” According to John King, LCC-MZT’s

scheduler at the time of the April 18, 2013 partnering meeting, after providing NAFVAC

with a hardcopy of the request for equitable adjustment related to PC 0004, the NAVFAC

representatives became “upset” and “Ms. Carlson got up and left the room, and then the

facilitator [Dorriah Rogers] went after her and took the rest of the people and they

gathered in another room to conference.” Mr. Zatica also testified that LCC-MZT’s

delivering of the hardcopy of the request for equitable adjustment related to PC 0004

“upset” the NAVFAC representatives.

Bryan Zatica stated that, after leaving the room in which the partnering meeting

was occurring, NAVFAC met in a separate room in the same building as the partnering

meeting. Mr. Zatica testified that, over the course of several hours, Dorriah Rogers went

back and forth between the room the LCC-MZT representatives were in and the room

with NAVFAC representatives. The following discussion between plaintiff’s counsel Craig

Ramseyer, and Mr. Zatica occurred:

Mr. Ramseyer: So as I understand your testimony they never came back --

NAVFAC never came back into your room. Is that right?

Mr. Zatica: No, they did actually come back later in the day. They come [sic]

back and made an offer for the differing site conditions and said, we’re going

to give you a million five [$1,500,000.00]. You got 24 hours to take it or leave

it.

Mr. Ramseyer: And who made that statement?

Mr. Zatica: Mona Carlson.

Mr. Ramseyer: Did they tell you how they calculated a million five?

Mr. Zatica: No.

Mr. Ramseyer: And in saying take it or leave it, did Ms. Carlson advise you

that she was -- she was leaving the country?

Mr. Zatica: She’d mentioned that she was going to Naples, Italy, for 30 days

and nothing would happen. If we did not accept it within 24 hours, we were

out of luck.

17

Mr. Ramseyer: So go back to that time frame, April 18th [2013], yourself.

Where were you financially?

Mr. Zatica: I was in trouble. I had almost maxed out my line of credit. I could

not max it out -- in essence it was maxed out because we’d get paid on a

receivable basis for our line of credit, and we have to pay back what we

borrow every 90 days. So we had to leave a buffer, which would be free to

the bank, so that we could continue to pay down and borrow back, and we

were maxed out at that point.

Mr. Ramseyer: So I understand it, you had a line of credit. There has to be

a certain amount left on that so the bank can come in and take their interest

payment off of that?

Mr. Zatica: That, and it shows that we’re being paid so that we can pay down

what we borrowed in the previous months.

Mr. Ramseyer: Okay. So you’ve got that situation. You told us before you’d

been paid in December with liquidated damages taken out, correct?

Mr. Zatica: Correct.

Mr. Ramseyer: And subsequent payments, you had not been paid on the

DSC [differing site conditions] obviously at all, correct?

Mr. Zatica: No, we had not.

Mr. Ramseyer: And so you were upside down on the project, correct?

Mr. Zatica: Huge. Yes, very much so.

Mr. Ramseyer: All right. So how badly did Macro-Z-Technology need cash

at the time?

Mr. Zatica: We needed it or we were going out of business, period.

Mr. Ramseyer: If you did not accept the offer, did you feel that you would

end up having to shut down the operations?

Mr. Zatica: Yeah, we would have to close. I mean, it was an inordinate

amount of stress in the fact that, you know, I’ve got a house that’s on the

line with the surety. The bank has my assets tied up. I have employees that

have been with me 25 years. I’ve got to tell them that we’re going out of

business. You know, I’ve got children. I mean, it’s not fun.

18

Mr. Ramseyer: What about -- and you had no working capital from Larkor,

correct?

Mr. Zatica: Nothing.

Mr. Ramseyer: All right. So given the 24-hour dictate, what did you do?

Mr. Zatica: Well, I was getting on a plane the next day, and it would have

been past 24 hours, so the next day I accepted it.

Mr. King of LCC-MZT also testified regarding NAVFAC’s April 18, 2013 offer,

stating that NAVFAC “didn’t ever offer to discuss it with us. They gave us 24 hours to sign

the change order.” Mr. King asserted that, as of April 2013, LCC-MZT may have had to

go out of business if LCC-MZT did not receive a “cash infusion.” Mr. King stated that he

considered NAVFAC’s offer to be a “take-it-or-leave-it offer” and that the “comment was

made that, you know, they would get us the written change order within a week, and it

had to be signed prior to her [Mona Carlson] leaving town” because “she was the only

one that could sign it.” According to the testimony of NAVFAC’s then construction

manager Justin Nodolf, however, two individuals, Mona Carlson and Lieutenant

Commander Wood, both of whom were present at the April 18, 2013 partnering meeting,

could have signed a modification with a value of $1,500,000.00. Justin Nodolf asserted

that “[b]oth Lieutenant Commander Wood and -- and Mona Carlson would have been

warranted to that level.” Jodus Hortin and plaintiff’s counsel Craig Ramseyer also

discussed Mona Carlson’s unavailability to sign a contract modification, as follows:

Mr. Ramseyer: And do you recall statements being made that, “Hey, Mona

Carlson is leaving. So if you don’t accept this by tomorrow, basically, it’s off

the table and it’s going to take a lot longer to go through the process of

trying to get this thing resolved”?

Mr. Hortin: That was only emphasized with regard to someone else. Some

other warrant contracting officer would be inheriting this issue to see it

toward -- to -- to resolution and would be handling it differently. This was

her offer, her ability to resolve it within the time frame that she had before

she left the country.

NAVFAC contracting officer Mona Carlson also testified that she made an offer of

$1,500,000.00 during the April 18, 2013 partnering meeting, although Ms. Carlson could

not recall whether she said the offer was “take-it-or-leave-it.” Ms. Carlson stated that it

was a “possibility” that she said LCC-MZT needed to decide whether to accept the

$1,500,000.00 offer within twenty-four hours. Ms. Carlson further testified that “[w]e

offered the contractor a settlement, and he accepted it. The negotiations were over.”

According to Ms. Carlson, her trip to Naples, Italy, was not thirty days long and she did

not “believe” that she left for Naples until May 1, 2013.

19

At trial, Justin Nodolf and Jodus Hortin testified about how the government

calculated its $1,500,000.00 offer to LCC-MZT. Mr. Nodolf stated:

So we were working basically the original proposal they gave us back in

January.[8] We’d gone through portions of it at that point. We had determined

it was anywhere between 6– to 700,000 on direct costs. And so when Mona

[Carlson] asked me, she said, how much -- how much should we offer

them? And I said, well, it’s like 6– to 700,000 direct costs. So she said, great.

Should we just double it and round up? And that’s where we came to the

1.5.

(alteration added). According to NAVFAC contract specialist Jodus Hortin:

[I]t [the $1,500,000.00 offer] was a combination of the total costs presented,

the original REA and our review of it, and the technical review and

understanding of remaining activities. . . .

Our position was the culmination of the seven or eight months it took to get

a complete REA, our handling of the project site, our receipt of QC [quality

control] daily reports, schedules. We didn’t just review this issue and

develop a position in the span of one business day. We were actively

working towards it for months.

Mr. Hortin also testified:

It’s [$1,500,000.00] a number that was derived at from a very high level, not

into specific line items in a robust cost estimate with all kinds of data. We

didn’t have the time to do that. We didn’t have the ability to do that. The 1.5

number was derived with all those other considerations in mind.

Mr. Hortin testified that he “remember[ed] the consensus being that we couldn’t properly

substantiate entitlement for anything higher than” $1,500,00.00. Mr. Hortin further

asserted:

If the 1.5 million wouldn’t have been accepted, we would have entertained

a more thorough comprehensive cost analysis in relation to the other

information we requested and not received, further pursued how much of

the work was compensable and -- and how much of the time extension was

owned by the government. The 1.5 offer was presented in lieu of the

additional time needed to perform that more granular line item robust

assessment, and there was no guarantee that the ultimate outcome of an

8

As stated above, on January 18, 2013, LCC-MZT sent NAVFAC a request for an

equitable adjustment of $999,701.00 related to the differing site conditions of the water

line and electrical duct bank, which excluded the seven categories of costs from the

January 18, 2013 request for equitable adjustment.

20

REA would have been higher or lower. The 1.5 was the offer to settle the

issue given the time constraints that we were in and the other

circumstances.

On April 19, 2013, Bryan Zatica sent an e-mail message to Dorriah Rogers, stating:

I called and left a message on Mona’s office phone that MZT accepts the

Navy’s offer 1.5 million dollars and the date of SCD [substantial completion

date] of November 15, 2013. I also request that the REA for the incorrect

electrical scale be processed. Note this REA has been in since March.

Thanks again and we look forward to moving forward and completing the

project on time.

During her testimony at trial, Mona Carlson asserted that she would not have “defaulted”

or “terminated” LCC-MZT if LCC-MZT had not accepted NAVFAC’s $1,500,000.00 offer.

Mr. Zatica also stated that he did not believe that LCC-MZT would have been terminated

if LCC-MZT had declined to accept NAVFAC’s offer of $1,500,000.00.

On May 1, 2013, John King sent an e-mail message to Dorriah Rogers requesting

that changes be made to the draft modification involving LCC-MZT’s acceptance of

NAVFAC’s $1,500,000.00 offer. Mr. King’s proposed changes to the modification are

indicated below in the portions struck and in italics:

The following items are applicable to this modification:

(1) The subject contract is hereby modified to compensate the Contractor

for all additional labor, material, equipment, and associated costs regarding

a differing site condition resulting from utility line interferences as further

defined in the Contractor’s Request for Equitable Adjustment (REA) (Serial

Letter No. 0005) dated August 14, 2012, the Government’s response (Serial

Letter No. 0010) dated August 14, 2012, the Contractor’s amended REA

(Serial Letter No. 0024) dated April 17, 2013, and the settlement reached

April 19, 2013, summarized as follows. These documents are hereby

incorporated by reference. This settlement accounts for all associated

impacts including re-sequencing, acceleration, seasonal impacts, changes

to means and methods, et cetera, necessary to provide for substantial

completion, as further defined in paragraph (2) below. Neither party’s rights

for contractual relief for future impacts/situations are waived by this

settlement. Contractual relief for impacts/situations outside the scope for

relocating the existing utilities defined by PCO 0004 are not waived by either

party by this settlement.

PC 0004 ~ REA – Utility Line Interference Increase: $1,500,000

(alterations and emphasis in original).

21

On May 2, 2013, Mona Carlson signed Modification No. A00009 (Modification 9)

to the Contract. Modification 9 also was signed by Kenneth Baker of Hill International,

who, as discussed above, was the court-appointed receiver of the LCC-MZT joint venture.

Modification 9 was entered into under the “AUTHORITY” of the Changes Clause, FAR

clause 52.243-4. (capitalization in original). Modification 9 states:

The subject contract is hereby modified to compensate the Contractor for

all additional labor, material, equipment, and associated costs regarding a

differing site condition resulting from utility line interferences as further

defined in the Contractor’s Request for Equitable Adjustment (REA) (Serial

Letter No. 0005) dated August 14, 2012, the Government’s response (Serial

Letter No. 0010) dated August 14, 2012, the Contractor’s amended REA

(Serial Letter No 0024) dated April 17, 2013, and the settlement reached

April 19, 2013, summarized as follows. These documents are hereby

incorporated by reference. This settlement accounts for all associated

impacts including re-sequencing, acceleration, seasonal impacts, changes

to means and methods, et cetera, necessary to provide for substantial

completion as further defined in paragraph 2 below. Neither party’s rights

for contractual relief for future impacts/situations are waived by this

settlement.

PC 0004 ~ REA – Utility Line Interference Increase: $1,500,000

(capitalization and emphasis in original). The language in Modification 9 did not

incorporate the changes proposed by John King. Regarding an extension of time,

Modification 9 states:

(2) Extension of time is required by reason of this modification. As per the

agreement for PC 0004 (REA Utility Line Interference), the contract is

modified as follows:

(a) Substantial Completion Date (SCD) of NOVEMBER 15, 2013, as further

defined in 5252.211-9301 ~ Phased Construction Schedule, is hereby

established. Liquidated damages, as further defined in 52.211-12, have

been adjusted accordingly to provide for completion as agreed.

(b) The Contract Completion Date (CCD), as further defined in 5252.211-

9301 ~ Phased Construction Schedule, is hereby extended by 125 calendar

days to JANUARY 15, 2014. Liquidated damages, as further defined in

52.211-12, have been adjusted accordingly to provide for completion as

agreed.

(emphasis and capitalization in original). Modification 9 further states:

(3) Acceptance of this modification by the contractor constitutes an accord

and satisfaction and represents payment in full (for both time and money)

22

and for any and all costs, impact effect, and for delays and disruptions

arising out of or incidental to the work as herein revised.

Modification 9 also amended the application of certain FAR clauses in the

Contract. The application of FAR clause 52.211-12 in the Contract was amended as

follows:

Modification 9 also inserted clause 5252.211-9301 of the Navy Facilities Acquisitions

Standards (NFAS),9 titled “PHASED CONSTRUCTION SCHEDULE (SEP 1996),” into

the Contract. (capitalization in original). Clause 5252.211-9301 in Modification 9 states,

“[w]ithin the overall project schedule, commence and complete the work in phases.

Complete each phase of the work within the number of calendar days stated in the

following schedule.” The schedule in clause 5252.211-9301 provides:

9

Clause 1.101 of the NFAS states that the purpose of the NFAS is to “provide general

guidance to field Contracting Officers in the execution of their delegated authority,” and

that the NFAS “implements or supplements the Federal Acquisition Regulation (FAR),

Defense Federal Acquisition Regulation Supplement (DFARS) and the Navy Marine

Corps Acquisition Regulations Supplement (NMCARS). It is not a stand-alone document,

but must be read together with the FAR, DFARS, and NMCARS.” See NAVAL

FACILITIES ACQUISITION STANDARDS (NFAS) 2018 EDITION, available at

https://www.navfac.navy.mil/content/dam/navfac/Small%20Business/PDFs/Contracting_

with_NAVFAC/sb_navfac_naval_facilities_acq_standard_oct_2018_change1_aug2019.

pdf. (last visited Apr. 23, 2021).

23

(capitalization in original).

Concrete Pours

Following the execution of Modification 9, LCC-MZT continued its work on the P-

913 project. In order to place the concrete roof of the building LCC-MZT was constructing,

LCC-MZT intended to perform two concrete pours. Ultimately, the first pour occurred on

August 28, 2013, and the second pour occurred on September 4, 2013. On August 27,

2013, representatives from LCC-MZT, including Robert Berger and Jeremy Wastweet,

met with representatives from NAVFAC, including Dan Van Natta and Justin Nodolf, to

discuss the concrete pour scheduled to occur on August 28, 2013. In the parties’ joint

stipulation of facts, the parties stipulate that Mr. Berger was LCC-MZT’s quality control

manager from “the beginning of the Project until approximately September 19, 2013,”10

that Mr. Wastweet “was LCC-MZT’s Superintendent from the beginning of the Project until

approximately September 19, 2013,” and that, thereafter, Mr. Wastweet was LCC-MZT’s

foreman. The parties also stipulate that Dan Van Natta was NAVFAC’s engineering

technician for the work on the P-913 project.

According to a Contractor Quality Control Report dated August 27, 2013, during

the August 27, 2013 meeting, Dan Van Natta indicated that he believed that LCC-MZT’s

proposed plan of spacing the concrete trucks out by approximately ten minutes could

result in concrete trucks timing out. Mr. Van Natta also asked LCC-MZT about cleaning

out the beam pockets before pouring concrete, to which LCC-MZT representatives

indicated it “has had crew cleaning forms for the past week and are going over deck

again.” Regarding LCC-MZT’s cleaning of the beam pockets, Jeremy Wastweet testified

at trial that, to clean the beam pockets, “[t]here were multiple techniques where we were

using compressed air, vacuum cleaners, magnets, grab sticks if you will, multiple things

10

Although Robert Berger was an employee of LCC-MZT, Mr. Berger testified that “my

job is to make sure the done -- the work is done per the plans, per the specs, and per the

drawings. I’m essentially a third-party-type employee.”

24

we were using in an attempt to get all that material out of there.” According to a Contractor

Production Report dated August 26, 2013, LCC-MZT expended forty billable hours on

“clean[ing] up tie wire, sun flower seeds and debris caused by the rebar operation on the

roof.”11 Dan Van Natta also testified at trial that LCC-MZT “had some people actively

working to clean” the beam pockets.

Robert Berger and Dan Van Natta both were on site during the first concrete roof

pour on August 28, 2013. Mr. Berger testified that, originally, LCC-MZT had planned on

having two pump trucks on site for the August 28, 2013 roof pour. Mr. Berger asserted

that it was not necessary to have two pump trucks for the August 28, 2013 concrete pour,

but that having two pump trucks on site would have allowed LCC-MZT to “get the pour

done quicker.” According to Mr. Berger, one of the two pump trucks canceled on the

morning of the August 28, 2013 roof pour. Robert Berger also stated that “I didn’t have

any concern about having one pump truck” and that “I felt that we were still in a good spot

to place the roof, so I allowed him to place.” Mr. Berger asserted that “[o]ne pump truck

allowed for continuous pour of the concrete.”

The single pump truck that was to “place” the concrete, however, was delayed at

a gate when the pump truck was attempting to access the Naval Base Kitsap Banger on

the morning of August 28, 2013. Regarding the cause of the pump truck’s delay at the

gate, Robert Berger testified:

I believe it was because nobody informed the -- and I’m -- nobody informed

the security people that we needed to come through early. There was a -- if

I remember correctly, there was a -- they only open the commercial gate at

a certain time. We made arrangements with Dan Van Natta, I believe, to

ensure that that truck would get through early when -- when it arrived.

Security wouldn’t let it through.

The pump truck subsequently proceeded through the security gate, although Mr. Berger

testified that the delay “caused our concrete trucks to get backed up and out of sequence.”

Mr. Berger also testified about his role in the August 28, 2013 roof pour, stating: “I was

moving between both areas, where the concrete trucks were being tested and up above

to monitor and make sure all the inspectors were doing what needed to be done and

monitoring the entire project.” The “inspectors” referenced in Mr. Berger’s testimony

include a company referred to as MTC, which was a third-party inspector brought in to

test the concrete that was being placed on August 28, 2013.

In his testimony, Mr. Van Natta stated that the August 28, 2013 roof pour was

11

Subsequently, according to a Contractor Production Report dated September 3, 2013,

LCC-MZT expended 50 billable hours to “[f]inish cleaning up tie wire, sun flower seeds

and debris caused by the rebar operation on the roof in preparation to place concrete

tomorrow.” The September 3, 2013 cleaning occurred after the first roof pour on August

28, 2013, but before the second roof pour on September 4, 2013.

25

outside of only one truck showing up, initially uneventful. They -- the

contractor had the workers ready up on the roof. The pump truck arrived

on-site and -- and had set up. They started placing concrete. And instead

of filling the beam pockets -- excuse me -- they were putting some material

in beam pockets and then moving in kind of like from the south to the north

and then coming back to the area where they had first started.

Mr. Van Natta further testified:

[T]the concern on this day especially was that the concrete that they had

placed initially in the southern part of the building had started to set up

already. So that when they went to the north and came back and tried to

deposit new concrete or additional concrete on top of that first layer, that

layer had set up to the point where we weren’t going to get consolidation of

the first and second layers of concrete.

During cross-examination of Mr. Van Natta, the following discussion between plaintiff’s

attorney Craig Ramseyer and Mr. Van Natta occurred:

Mr. Ramseyer: When placing concrete, it’s typically placed in what would

be called a lift, correct?

Mr. Van Natta: Yes.

Mr. Ramseyer: So just as an example, if we’re pouring 36 inches or three-

feet deep slab or some other pavement or something, that’s not all poured

at the same time 36 inches. They do it in smaller lifts, correct?

Mr. Van Natta: Correct.

Mr. Ramseyer: For instance, that lift may be 12 inches, and they may do

three lifts to meet the standard of the 36 inches?

Mr. Van Natta: Whatever was called out in the specs or with ACI [American

Concrete Institute].

Mr. Ramseyer: All right. And so what happened here that you referred to

was that the hose man had the hose over his shoulder. He’s filling up that

beam pocket to the approximate size of that first lift called for in the specs,

true?

Mr. Van Natta: I think that was their intent, yes.

26

Mr. Ramseyer: All right. And then they would come back with a second lift.

Hose man coming back through -- after they vibrated[12] that first lift, the

hose man’s coming back through with the concrete for a second lift, correct?

Mr. Van Natta: What I remember on that day was that they had put a first

lift in a couple of the beam pockets, and then they started moving to the

north. By the time they got back to put that second lift in is where the

problems began.

Mr. Ramseyer: All right. That’s what you perceive to be the problems,

correct?

Mr. Van Natta: Yes.

In his testimony, Dan Van Natta asserted that “[m]y concern was that there was

going to be a cold joint[13] there because there was no way to tie the two layers together.”

After observing what Mr. Van Natta believed to be a cold joint, Mr. Van Natta spoke with

Robert Berger about the alleged cold joint. According to Robert Berger’s testimony:

He [Mr. Van Natta] called me up. I was working -- to me it was more

important to get to my concrete back on -- on -- in sync because of the pump

truck problems and that so we had -- we could continue and everything. He

called me up and he said, “You need to stop this placement. You’re going

to have a cold joint.” Which anybody -- it flabbergasted me because, if I did

stop the pour, there would be a cold joint. He was concerned about a cold

joint, but he wanted me to stop the placement. I told him that if he wanted

me to stop the placement, give it to me in writing. He did not.

12

According to the testimony of Robert Berger a “vibrator is a -- it’s got a long tube. It’s

got a vibrator in it and it’s got a head on it that vibrates, and you put that down into the

concrete so that it consolidates the concrete around the rebar and gets the air out and all

that.”

13

According to the testimony of Bryan Zatica:

[A] cold joint is considered when the concrete becomes more of a solid than

it is plastic. And so when the concrete’s coming out of the hose, it’s

considered plastic. It’s not like water, but it’s -- it's somewhat of a fluid for

the lack of a better word. And when you vibrate it and it’s plastic, it all

meshes as one.

If you get a cold joint where you have a break in trucks or something

happens -- I don’t know -- then the concrete that you’ve placed will tend to

become more solid. And when you put plastic against it, they too won’t

mesh. It kind of gets what they call a -- a cold joint between the two.

27

Mr. Van Natta, however, recounted the August 28, 2013 pour differently, testifying in an

exchange with defendant’s counsel Erin Murdock-Park, as follows:

Ms. Murdock-Park: What did you express to Mr. Berger with respect to your

concerns?

Mr. Van Natta: I said -- I -- I told him, “Hey, your guys cannot” -- “We’re

going to have cold joint here because they can’t -- with the vibrator, they

can’t tie these two layers together because the first layer had set up.” And

he just -- he kind of looked at me, and I said, “See.” And I picked up my

heel, and I kind of showed him. I dug it in. And it was -- wasn’t even moving.

It had started to set up.

Ms. Murdock-Park: And what do you recall about his response?

Mr. Van Natta: Honestly, I -- I don’t recall him having a lot of feedback. I

think he was -- I think he was just as shocked as anybody that that was

happening.

Ms. Murdock-Park: Did you tell him to stop the roof pour?

Mr. Van Natta: I don’t recall telling him that, no.

Ms. Murdock-Park: Would that be something that you think that you would

have done?

Mr. Van Natta: I don’t have the authority to -- to stop a concrete placement

like that unless there was a safety issue so egregious that somebody was

going to get hurt or -- or worse, yes, then I would have -- then I would have

stopped whatever activity there was.

Justin Nodolf also testified that he believed there was a cold joint forming during the

August 28, 2013 roof pour and that the “the concrete itself was flashing early, and so it

was stiffening. It was hardening up too quick.”

On August 30, 2013, NAVFAC issued Non-Compliance Notice No. 0003 to LCC-

MZT. In Non-Compliance Notice No. 0003, NAVFAC stated that, “[o]n 28 August 2013,

NAVFAC NW [Northwest] representative was onsite to inspect the concrete placement of

the structural roof slab and observed fresh concrete being placed over hardened non-

plastic concrete.” NAVFAC in Non-Compliance No. 0003 instructed that any non-

compliant work was to be repaired to the satisfaction of NAVFAC.

In defendant’s post-trial brief, defendant states that “[t]he second roof pour, which

occurred on September 4, 2013, notably did not experience these same problems.” Bryan

Zatica testified that there was “not really” any issues with the September 4, 2013 roof

pour and that the September 4, 2013 roof pour “I know went fairly smoothly.” In plaintiff’s

28

post-trial brief, plaintiff asserts that “[i]t was only after the forms began to be removed from

the underside of the deck and beams that issues arose,” which plaintiff in its post-trial

brief contends “engendered unwarranted hysteria from NAVFAC.”

On September 16, 2013, LCC-MZT began removing forms from the concrete on

the P-913 building. Dan Van Natta stated:

I remember looking up and seeing some dark areas in the south bay where

you could see that that was the -- the grinding, the slag material.[14] I had a

stick, and I reached up and I poked up at the ceiling with the stick, and all

of this debris came down on top of me.

In plaintiff’s post-trial brief, plaintiff contends that “Mr. Van Natta’s testimony that after the

formwork was removed, he stuck something into the bottom of the roof deck and material

fell on him,” was a “gross exaggeration. There is no documentary or photographic

evidence of the same.” Mr. Van Natta asserted that he also saw “bug holes” and “huge

rock pockets and exposed bar in some areas.” NAVFAC’s then supervisory civil engineer,

Mark Aguilar, testified that he was on the P-913 site when the forms were removed from

the concrete and that “[w]e saw some rock pockets, some exposed rebar, some cold

joints.”

A number of photographs of the concrete after the forms had been removed were

shown during trial, including the following photographs:

14

Mr. Van Natta defined slag as “a by-product of welding operations when the welder

removes the electrode from -- or strikes the electrode and then removes it, you get a piece

that kind of glows ember red for a few seconds and then falls on the ground.”

29

30

The above pictures are illustrative of some of the larger voids and rock pockets on the

building’s roof and beams. As indicated in the chart in Exponent Failure Analysis

Associates’ (Exponent) November 8, 2013 report, discussed in more detail below, the

entirety of the roof and beams did not have such issues. Rather, there appear to have

been only certain areas of the roof which experienced issues with voids and rock pockets.

At the trial, plaintiff’s attorney Craig Ramseyer and Robert Berger had the following

discussion regarding how concrete is poured into beams:

Mr. Ramseyer: Now, do you have a recollection of how deep the concrete

was being poured on the roof?

Mr. Berger: The roof, itself, was, I believe, eight inches. I’m guessing. The

beams, there were beams that ran in there, and they were, I want to say

foot and a half, 18 inches, 24 inches by probably 18 inches wide.

Mr. Ramseyer: They’re pretty deep?

Mr. Berger: Yes.

Mr. Ramseyer: Are you able to see the consolidation at the bottom of the

form in those -- what did you just call them, the columns or the --

Mr. Berger: No.

Mr. Ramseyer: Okay. And nobody would be able to. Is that a fair statement?

31

Mr. Berger: No.

Mr. Ramseyer: So in watching the consolidation, what is it that you are

observing to ensure the best possible consolidation?

Mr. Berger: The guy that does the vibrating is probably one of the most

important on the team because if you vibrate too much, then it forces all the

rock to the bottom of the forms. If you don’t vibrate enough, you can get air

pockets or it might not get the concrete down into the beam or to the bottom

of the beam.

And it happens. Almost any concrete pour you will find a rock pocket -- for

different sizes. Could be cosmetic. Beams are very hard. On this project it

was very difficult because the aggregate size was not really conducive to

the mass of rebar that was in there, so it was difficult to get the stinger,

which we call the vibrator down into it. We -- if I remember correctly, we

requested that we be allowed to change the mix design to allow this

concrete to better consolidate around the beams, and that was turned down.

Dan Van Natta, NAVFAC’s engineering technician, also indicated in his testimony that “it

would be very tough” to pour the concrete mix into certain areas of the rebar.

Additionally, Mr. Ramseyer asked NAVFAC supervisory engineer Mark Aguilar

about pouring concrete into the beams, as follows:

Mr. Ramseyer: Sir, was the concrete in the beam pockets placed in lifts?

Mr. Aguilar: Yes.

Mr. Ramseyer: And so is there a way, as that hose man is filling up those

beam pockets and the guy with the vibrator is vibrating it, to kind of see

through the concrete that’s been placed in that first lift and ensure to

yourself that it’s getting all the way through the rebar right smack dab up

against the forms?

Mr. Aguilar: You’re asking me if I can see through concrete?

Mr. Ramseyer: That’s exactly what I’m asking you.

Mr. Aguilar: So the answer to that question is no.

32

Mr. Ramseyer: Okay. So since you can’t see through the concrete, is it fair

to assume that neither Mr. Poor[15] nor Mr. Berger could see through

concrete?

Mr. Aguilar: Correct.

On September 17, 2013, LCC-MZT’s project manager at the time, Jim Mortensen,

sent an e-mail message to John King and Bryan Zatica, in which Mr. Mortensen stated

that “[t]hey started removing the forms yesterday and it appears we have some issues

regarding rock pockets, concrete not forming around the beams, open rebar at the bottom

of the beams, etc.” Also, Mr. Mortensen stated that “[t]his may require us to put together

a structural repair plan which may require a structural engineer – just thinking ahead.”

During the trial, Bryan Zatica, after having been shown one of the above photographs on

cross-examination, was asked whether the concrete in the photograph was “sufficient to

withstand and meet the specifications that were set forth in the contract?” to which Mr.

Zatica replied, “[a]fter you chip it out and dry pack it, yes.” Robert Berger, who, as

indicated above, was LCC-MZT’s quality control manager until approximately September

19, 2013, also testified that the concrete as originally poured would have to be repaired

in order to meet contract specifications by utilizing a “common” technique “in concrete

construction” called “sack and patch.” NAVFAC’s supervisory civil engineer Mark Aguilar

also indicated that he believed the concrete could have been repaired. NAVFAC’s then

construction manager Justin Nodolf, however, testified that an individual named “Mr.

Starkel,” who “led the structural department of our NAVFAC Northwest,” believed that the

concrete could not be repaired to meet contract specifications and that the entire P-913

building needed to be torn down. Mr. Nodolf also testified that Lt. Commander Garret,

who, by September 16, 2013, had replaced Lt. Commander Wood on the P-913 project,

“was afraid to even go in the building.” Mr. Nodolf testified that he was not afraid to go

into the building and that “[w]e started shoring up, so I assumed it was supported with the

shoring.”

On September 19, 2013, NAFVAC contracting officer Mona Carlson issued a Stop

Work Order to LCC-MZT, in which Ms. Carlson stated that, during a site inspection

following the removal of the forms from the concrete, the government found “[v]isual

deficiencies including air pockets, exposed rebar, cold joints, and delaminating concrete.”

Ms. Carlson contended that the deficiencies rendered LCC-MZT’s work on the concrete

roof non-compliant with the specifications in the Contract. Ms. Carlson further stated:

The Government finds that the structural integrity of the facility may have

been compromised. ln accordance with FAR 52.246-12 INSPECTION OF

CONSTRUCTION, you are hereby directed to stop all work pertaining to

structural concrete as further defined by Specification Sections 03 30 00

and 03 37 13 pending resolution of all the quality performance issues.

15

Bryan Zatica testified that Patrick Poor was an assistant quality control manager for

LCC-MZT on the P-913 project.

33

(capitalization in original). Ms. Carlson directed that LCC-MZT “provide an independent

third party,” which was required to be a government-approved, licensed, structural

engineer, “to facilitate additional inspection and analysis of the structural roof slab,”

including a “report attesting to the structural capability of the roof slab.” Additionally, Ms.

Carlson instructed LCC-MZT to remove its superintendent, Jeremy Wastweet, and quality

control manager, Robert Berger, from the project. In the Stop Work Order, Ms. Carlson

stated, “[p]ending receipt of this direction, satisfactory corrective actions, and lifting of this

stop work order, minor concrete work will be approved on a case-by-case basis with a

detailed work plan for Government review and approval.”

That same day, on September 19, 2013, LCC-MZT submitted a letter in response

to NAVFAC’s Stop Work Order, in which LCC-MZT stated that it “is also concerned and

will take all necessary steps required to repair as required.” LCC-MZT stated that it

“agrees with the Government that measures to fully-determine the extent of damage and

identify corrective actions are warranted. LCC-MZT will provide an independent third party

to facilitate additional inspection and analysis of the Roof Slab Structural Concrete

Placement #1.” (capitalization in original). LCC-MZT, however, stated that it “takes

exceptions to the Government’s directions to stop all work pertaining to placement of

structural concrete, the Government’s findings and subsequent request to remove key

personnel from the project.”16

At the trial, John King testified that “[w]e had a pour scheduled for two days after

we got this letter, and they stopped us.” During the period in which the Stop Work Order

was in effect, however, John King testified that NAVFAC did approve and permit some

concrete work to take place, including “shotcrete work,”17 as well as “some cast-in-place

concrete work too.” On September 27, 2013, NAVFAC issued a letter permitting LCC-

MZT “to proceed with shotcrete activities pertaining to the loading dock walls, sally ports,

and transformer walls.”

Steven Jirsa, who testified at the trial that he was licensed as a professional

engineer in the State of California and that he has a Master of Science in structural

engineering from the University of California, Berkley, testified that LCC-MZT retained the

firm he was working for at the time, Exponent, in connection with the P-913 project at

Naval Base Kitsap Bangor. Mr. Jirsa stated that Exponent’s “scope of the retention was

essentially to identify any conditions related to the concrete roof structure.” On October

9, 2013, Exponent provided a recommended plan to test the concrete roof, determine the

extent of the defects, and develop a repair plan. Exponent’s recommended plan stated:

16

Robert Berger was removed from the project on approximately September 19, 2013.

Jeremy Wastweet’s position was changed from superintendent to foreman on

approximately September 18, 2013.

17

At the trial, Mr. Zatica described shotcrete as “a method of placing concrete where

basically you have a very high-pressure compressor that combines air with the concrete.

So they merge together in a valve system, and then the air blows the concrete into the

form and around the rebar.”

34

[W]e recommend a combination of destructive and nondestructive testing

to determine if voids extend into the concrete beyond what are visible from

surface defects. Nondestructive testing (NDT) techniques will be used to

evaluate subsurface concrete in the region of the surface defects.

Afterward, selected coring[18] or chipping will be used to evaluate the

accuracy of the NDT.

(capitalization in original). On October 10, 2013, Exponent sent a letter to Bryan Zatica,

which was forwarded to NAVFAC. In the October 10, 2013 letter, Exponent stated that,

“[b]ased on our initial surface observations, made October 2 through 4, 2013, the

observed areas of poorly consolidated concrete of the roof structure can be removed and

repaired to meet the intended structural design and capacity requirements of the facility,

without requiring the overall removal/replacement of the roof structure.”

In defendant’s post-trial brief, defendant asserts that “[b]y November 8, 2013,

Exponent had completed its investigation, although LCC-MZT did not provide a report to

NAVFAC until November 21, 2013.” In its report, dated November 8, 2013, which was

titled “Roof Deck Cast-In-Place Concrete Evaluation,” Exponent stated that it had

performed destructive testing, as well as non-destructive testing, on the concrete roof.

Exponent further stated in the November 8, 2013 report:

Based on our investigation, repair of the roof structure can be performed

that will restore the full structural capacity of the P-913 concrete roof deck

allowing the roof to meet its intended purpose and comply with all code

requirements or other regulations laws and ordinances pertaining to this

Facility. This repair can be performed from the underside of the roof deck

to allow continuation of work on top of the roof. Exponent is working with

repair material suppliers to develop appropriate repair details and

procedures to meet the above objectives.

Exponent included a chart in its November 8, 2013 report which indicated the

“[a]pproximate locations of poorly-consolidated concrete,” including “cavit[ies],”

“honeycombing,” “rock pockets,” and “debris/slag.” In a letter dated November 20, 2013,

Exponent provided its repair plan for structural and non-structural repairs. Thereafter,

NAFVAC received Exponent’s report, and the parties have jointly stipulated that NAFVAC

lifted the restrictions in the September 19, 2013 Stop Work Order on November 26, 2013.

According to Exponent’s final report, which is dated August 18, 2014, repairs to

the concrete roof were complete in March 2014. On December 9, 2013, LCC-MZT’s

subcontractor, Contech Services (Contech), mobilized to the site and began making

repairs to the concrete roof. According to a memorandum for record attached to a July 3,

2014 e-mail message sent by LCC-MZT project manager Jim Mortensen to John King,

18

At the trial, NAVFAC contracting officer Mona Carlson described coring as “[a]ctually

taking a round cylin- -- removal of some to determine where the rebar is and the strength

of the contract -- concrete.”

35

Bryan Zatica, and one other unidentified individual in January 2014, Steve Jirsa of

Exponent tested Contech’s repair work. Mr. Jirsa determined that Contech’s repair work

“all had to be removed” and replaced because “pumped grout patch material was found

to have bubbled at the bonding between the substrate at the beam repairs.” The

memorandum for record states that Steve Jirsa held an on-site meeting on February 13,

2014, during which Mr. Jirsa requested that all repairs be made “by hand patch.” The

memorandum for record states that Contech completed all of the repairs by “hand patch”

on March 13, 2014. According to the memorandum of record, “[i]t is therefore the

conclusion of MZT that the product performed and the failure was a result of installation

procedures by Contech.”

Thereafter, Exponent produced a report that was dated May 8, 2014. In response

to Exponent’s May 8, 2014 report, NAVFAC provided comments to the May 8, 2014

report, to which Steve Jirsa of Exponent testified he remembered he had responded.

Subsequently, Exponent produced another version of its report dated July 18, 2014. On

July 28, 2014, Jim Mortensen of LCC-MZT sent an e-mail message to Steve Jirsa stating:

Bryan and I reviewed the report and are concerned that if we turn it in as

writing [sic] it will not support the actual conditions and repairs made at the

site. As you are aware we worked with the insurance company to try and

get this as a claim which did not have positive results. This would have had

no impact to the government, but was not successful. We now have to

recover the costs for testing based on the Stop Work notice to get the Navy

to pay for the required testing: nothing outside of the visible damaged was

found by either nondestructive or destructive testing. The stop work and the

FAR clauses clearly indicate that if testing does not disclose any failure or

defective work, then the government is required to pay for testing and the

time extension

The remaining issues are based on specific terms used in the reports that

may lead someone to an inaccurate conclusion. Both your firms [sic]

observations and MTC reports are fully documented to show field work was

monitored. When you put “To the best of our knowledge” could lead to a

conclusion that not all areas were monitored. Also there are some terms

that would lead someone to believe damage was more than what it was and

should be removed. Lastly, the issue was poorly consolidated concrete not

poor concrete as eluded to in the report.

(capitalization in original).

In an attachment to his July 28, 2014 e-mail message to Steve Jirsa, Jim

Mortensen requested the following changes:

36

(alterations in original). Steve Jirsa responded in a July 29, 2014 e-mail message to Jim

Mortensen, stating that he would look at the edits and get back to Mr. Mortensen.

At trial, Steve Jirsa was asked whether he agreed with Mr. Mortensen’s proposed

changes, to which Steve Jirsa responded: “I think in general, yes.” Steve Jirsa testified

that he could not remember whether Exponent made the changes proposed by Jim

Mortensen. Mr. Jirsa, however, indicated that one “could tell which changes were made

by comparing your August 2014 report to the July 2014 report.” In Exponent’s August 18,

2014 final report, the clause in the above-quoted text stating: “and these conditions

typically did not extend beyond areas of visible surface manifestation,” is removed, the

words “poor quality” are changed to “poorly-consolidated,” and the word “extensive” is

removed. The sentence: “To the best of our knowledge, the structural repairs of the P-

913 roof deck are now complete and have been implemented in accordance with our

recommendations,” was removed and reworded as: “All of the work observed by

Exponent was implemented in accordance with our recommendations; all reports to

Exponent by personnel responsible for daily monitoring indicate that the structural repairs

37

of the P-913 roof deck are now complete and have been implemented in accordance with

our recommendations.”

Grounding and Energization of the P-913 Building

Plaintiff contends that NAVFAC caused LCC-MZT to experience issues in

connection with getting the P-913 building grounded and energized which delayed LCC-

MZT’s completion of the project. Concerning grounding, LCC-MZT employee Jeremy

Wastweet testified that LCC-MZT was unable to “drive the ground rods into the ground to

the specified depth.” Mr. Wastweet stated that a grounding rod was “a five-eighths

diameter copper-coated round steel rod” that is inserted into the ground with “either a

hammer or a small roto hammer.” Although Mr. Wastweet stated that “[w]e used the

standard methods and then also explored multiple other techniques to try to get them

driven into the ground,” Mr. Wastweet testified that the LCC-MZT team was unable to get

the grounding rods to the specified depth because “[t]he ground was really hard.” After

discussing the grounding rod issues with NAVFAC, Mr. Wastweet stated that the

grounding rod depth “never did actually meet the requirements of the specification, but

the last fix that we applied were ground wells, drilled in ground wells.” According to Mr.

Wastweet, a ground well is “essentially instead of physically driving the ground rod into

ground, you drill a hole in it to give it a path to go into new ground.” Mr. Wastweet indicated

that the ground rod was then inserted into the ground well, and that the ground well was

filled with a material called “Vermiculite.”

During the trial, Scott Wakefield, the owner and founder of PSW Electric, testified

that PSW Electric worked as an electrical subcontractor “do[ing] the entire scope for the

project” under the Contract involving the P-913 project. Mr. Wakefield testified that there

were “grounding issues” with “several grounding systems on the project,” including the

“lightning protection system, the fence system, and then there were requirements for

separate ground rod resistances and separate bonding resistances.” Regarding the

lightning protection system, Mr. Wakefield asserted that the “issue was that the design of

the lightning protection system was not recognized by UL [Underwriters Laboratories], so

they could not certify it.” According to Mr. Wakefield:

It was an issue with the level of the resistance to meet the specified

resistance. So when we tested the ground system, the specification would

specify whether it had to be five ohms[19] or 25 ohms, and they consistently

came out 30, 75, 90 -- way higher than what was specified.

Mr. Wakefield further testified:

The -- there were several RFIs [Requests for Information] regarding the

design of the lightning protection system simply because it was a unique

system. Most -- most lightning protection systems have air terminals on the

19

Jeremy Wastweet testified that an ohm is a “unit of measure resistance” of “electrical

charges.”

38

roof to attract the lightning and safely bring it to ground. This particular

system, which I have never encountered and obviously neither has UL, did

not have those in place, and this particular design used what they call a

Faraday cage, which is designed to carry the voltage around the building

envelope.

We had several concerns on the design of it, so we wrote RFIs regarding

those.

And there were several questions because the specifications were vague

regarding how to properly ground this system.

Mr. Wakefield testified that “[m]y understanding of a Faraday cage is that it is a system

that is designed to essentially build a cage around a structure or a person. And it safely

takes the electrical voltage and current around rather than a direct hit within the envelope.”

Mr. Wakefield further testified that the ohm requirement of twenty-five ohms in

LCC-MZT’s Contract was not achievable. Mr. Wakefield stated that he had achieved

twenty-five ohms on other projects, but he was unable to achieve the twenty-five ohms

specifications on the P-913 project because “[t]he best I could guess is soil conditions of

the site.” According to the testimony of Mr. Wakefield, NAFVAC issued a variance and

changed the twenty-five ohms requirement to thirty ohms, which PSW Electric was able

to satisfy. Jeremy Wastweet also testified that NAVFAC changed the twenty-five ohms

requirement in LCC-MZT’s Contract to thirty ohms. Mr. Wakefield asserted that it took

“close to a year” from the time PSW Electric began its grounding efforts to when PSW

Electric was permitted to energize the building.

During his testimony, when asked whether PSW Electric could energize the

building prior to completion of grounding, Scott Wakefield responded “[a]bsolutely not”

because the “specifications required that the grounding resistances be met before the

building could be energized.” Mr. Wakefield indicated that the grounding needed to be

complete before energization because “too high of a resistance could result in an

electrical shock to the personnel within the building.” During his testimony, Scott

Wakefield and plaintiff’s attorney Katherine Knudsen, had the following discussion:

Ms. Knudsen: Between -- we know the time frame, about a year I believe

you testified, for getting the grounding done to the energization. Did that

delay the completion of your work based on what you originally scheduled?

Mr. Wakefield: Through all the grounding systems, it delayed it a little, yes.

Ms. Knudsen: Okay. Did the inability to energize the building earlier -- did

that impact any other work that you had to do?

Mr. Wakefield: It did.

39

Ms. Knudsen: What work?

Mr. Wakefield: Final energizing of the secondary distribution system panels

and transformers and lighting and all of the subsystems to be able to test

them and -- and for final testing of the systems.

During cross-examination of Scott Wakefield, Department of Justice attorney Kelly

Krystyniak questioned Mr. Wakefield about grounding and energization:

Ms. Krystyniak: So you also testified that specifications of the contract

required the building be grounded before it’s energized. Do you recall that

testimony?

Mr. Wakefield: I do.

Ms. Krystyniak: Okay. But it’s not the case that you can’t work on the

grounding system of the building and the energization at the same time,

correct?

Mr. Wakefield: Define “work on.”

Ms. Krystyniak: Sure. Did you complete everything that you needed to do in

order to energize the building -- just had to turn on the switch -- before you

started working on the grounding system?

Mr. Wakefield: No.

Ms. Krystyniak: No. Those two paths are going on at the same time,

correct?

Mr. Wakefield: Correct.

Ms. Krystyniak: Okay. And so, in fact, you might be able to energize the

building before grounding is completed, but you also might not be able to,

right?

Mr. Wakefield: You absolutely cannot.

Ms. Krystyniak: Both have to be done at the same time, right?

Mr. Wakefield: Both have to be complete before you can energize.

Ms. Krystyniak: Okay. Complete and done I understand are kind of terms of

art. So the work has to be complete before you are able to energize, but the

work to prepare for energization is going on at the same time as the work

to prepare for grounding?

40

Mr. Wakefield: Correct.

On August 17, 2016, after the Contract was completed and the August 1, 2016

contracting officer’s final decision, then-contracting officer Dana Bolte unilaterally issued

Modification No. A00024 (Modification 24) to the Contract regarding the grounding issues

LCC-MZT had experienced during construction. Modification 24 states that it incorporates

Chief of the NAVFAC Contracting Office Eileen Mitchell’s August 1, 2016 final decision,

and provided:

(2) An extension of time is required by reason of this modification. The

contract is modified as follows:

a. The Substantial Completion Date (SCD), as further defined

in 5252.211-9301 ~ Phased Construction Schedule, is hereby

extended by one-hundred-thirty-five (135) calendar days to

April 30, 2014. Liquidated damages, as further defined in

52.211-12, remain unchanged.

b. The Contract Completion Date (CCD), as further defined in

5252.211-9301 ~ Phased Construction Schedule, is hereby

extended by one-hundred-thirty-five (135) calendar days to

July 1, 2014. Liquidated damages, as further defined in

52.211-12, remain unchanged.

Modification 24 continued:

(3) The Government and contractor were unable to reach a final agreement

in regard to cost and time associated with PC 0056 above. Accordingly, a

unilateral definitized modification is hereby issued to provide an equitable

adjustment based on the Chief Contracting Officer’s Final Decision

regarding reasonable costs.

(4) Requests for additional compensation for this changed work shall be in

accordance with FAR 52.233-1 DISPUTES (JUL 2002).

(capitalization in original). Modification 24 also increased the value of the Contract by

$48,533.74.20 As discussed below, there is a dispute between the parties, including their

experts, as to whether the ground issues and energization issues addressed above were

on the P-913 project’s critical path.

20

NAVFAC determined that LCC-MZT had substantially completed the work on June 11,

2014 and had completed the Contract on March 5, 2015.

41

Red Days and Weather

The Contract’s Specifications state that “10 work days a month will be impacted by

convoys and operations at the Explosive Handling Wharf Area,” and that “[redacted] Road

will not be accessible during convoys or operations at EHW.” NAVFAC Contract specialist

Jodus Hortin testified at trial that “Red days refer to days in which naval operations and

convoy movements could be anticipated. They refer to various work restrictions that

impact our construction activities at Naval Base Kitsap Bangor.” While looking at a map

of the area around the P-913 project site, NAVFAC construction manager Justin Nodolf

testified:

So during a red day itself, we have to secure [redacted] Road and do

[redacted]; there’s nothing that would be of concern. And at that point, there

are [redacted] that would be deployed along -- I believe this is -- I can’t

remember what the name is. Basically coming up from the Marginal Wharf

there, there’s a road that kind of runs an east-to-west location. There you

go. [Redacted]. That’s right. That’s [redacted] Road that joins [redacted]

Road to [redacted] Road. . . .

And approximately in the middle of this is where the first set of bollards are

deployed and a sentry is placed. And then if you go ahead and back out

from there. So in addition to that, so that secures [redacted] Road. The

residual of [redacted] heading in this direction’s already been secured.

There’s another set of pop-up barriers that are deployed closer to the OA

gate to make sure there’s no through access. The OA gate is located

approximately at B2 where there’s kind of a purple-looking mark. It might

even say “Operation Area Access.” The text is kind of hard to -- OA Gate,

correct. So there’s another [redacted] there to make sure that nobody can

go down the road. And back out.

So at that point, access onto [redacted] Road is then completely secured.

And then -- then at that point they can do convoy movements down

[redacted] Road. They would enter through [redacted] gate, which is located

immediately adjacent to the P-913 location, which is -- I believe there’s a

call-out that shows the P-913 construction site, which is located adjacent to

the Explosive Handling Wharf. Kind of where the yellow road and the red

road meet is approximately where that site is located at. . . .

[S]o it [redacted] will come down [redacted] Road. It will -- will transit all the

way down [redacted] Road. They’ll enter in the waterfront restricted area, of

which that is a [redacted] zone. [Redacted]. And they also have special

operating procedures when they have boats “in the barn,” is what we like to

call it when we have a submarine sitting within the wharf itself. And that’s, I

think, commonly referred as [redacted] Road, which is sitting down there

along the waterfront. At that point then the convoy will then enter in the

Explosive Handling Wharf and do whatever operation they need to do.

42

Robert Berger, who worked as LCC-MZT’s quality control manager until

September 2013, testified that he was familiar with Red Days and that Red Days were

“when we got sequestered in the trailer and couldn’t work, and sometimes got left there

and forgot about.” Jeremy Wastweet, who was LCC-MZT’s superintendent until

approximately September 19, 2013, and, subsequently, foreman, also testified about

being sequestered on Red Days. Mr. Wastweet and plaintiff’s counsel Craig Ramseyer

had the following discussion at the trial about being sequestered on Red Days:

Mr. Ramseyer: So before the building had a roof on it, walls on it, basically

dried in, how was your -- how were the workers on the site sequestered?

Mr. Wastweet: We were sequestered into our job trailer that had the

windows blacked out and there was a guard that watched to make sure that

we didn’t look out the windows or exit the building.

Mr. Ramseyer: Were the guards armed?

Mr. Wastweet: Yes.

Mr. Ramseyer: And was there a standard period of time for which you were

sequestered?

Mr. Wastweet: No.

Mr. Ramseyer: Could you ever plan on how long you were going to be

sequestered when you got notice of a red day?

Mr. Wastweet: No.

Mr. Ramseyer: And were these guards military guards or rent-a-cops or

both or what?

Mr. Wastweet: It was a combination of both.

Mr. Ramseyer: So sometimes there’d be Marines there?

Mr. Wastweet: Yes.

Mr. Ramseyer: Other times private security?

Mr. Wastweet: Yes.

Mr. Ramseyer: So when you were sequestered, did you ever get forgotten?

Mr. Wastweet: A few times.

43

Mr. Ramseyer: Give me an example of what would occur under those

circumstances.

Mr. Wastweet: We would -- since we couldn’t leave our job trailer, it’s hard

to know exactly what was going on. So the first few times we just stayed in

there until they decided or remembered about us and decided to let us out.

Once we identified that there was an issue, then we would call Dan Van

Natta and let him know that we were in there for an abnormally long amount

of time.

Mr. Ramseyer: When you talk about abnormally long, how long would you

be in there in these instances when you were forgotten?

Mr. Wastweet: Five to six hours.

Mr. Ramseyer: Were you able to accomplish any work?

Mr. Wastweet: No, not when you’re sitting in a job trailer.

Mr. Ramseyer: And then once -- once the building progressed and -- well,

let me back up.

Before that building progressed, you had a tent over the site, correct?

Mr. Wastweet: Yes.

Bryan Zatica testified that LCC-MZT also experienced inclement weather during

the fall of 2012. In order to proceed with work during inclement weather, Mr. Zatica stated

that LCC-MZT “suggested putting in basically, for the lack of right terms, a circus tent of

24,000 square feet” to cover the entire building envelope. During the trial, plaintiff’s

attorney Craig Ramseyer and Mr. Zatica had the following colloquy about the suggestion:

Mr. Ramseyer: And to whom did you make this suggestion?

Mr. Zatica: We made it to NAVFAC.

Mr. Ramseyer: And do you recall who in particular?

Mr. Zatica: Actually, I think the whole group because I think we suggested

it in a partnering meeting.

Mr. Ramseyer: And then what was the immediate response to that?

Mr. Zatica: Laughter.

44

Mr. Ramseyer: From NAVFAC?

Mr. Zatica: Yes.

Mr. Ramseyer: Eventually did you continue to push this idea?

Mr. Zatica: Well, we were continually being tasked with thinking outside the

box so that we can pick up time: How are we going to do it? You know, they

kept saying it was our issue. So in our mind we felt that was the best way

to conceal yourself from the weather. And at the time we thought it would

also help us in regard to the asset moves. But they did actually -- we

submitted it, and they actually did approve it.

(capitalization in original). Prior to NAVFAC’s approval of the tent, Mr. Zatica stated that

LCC-MZT was required to provide NAVFAC with “the makeup of the tent and an

engineering calculation.” In its post-trial brief, plaintiff asserts that while the tent was

“important in allowing the foundations to be built with minimal weather interference,” “the

tight proximity of workers within the tent, and the need to carefully work so as not to

damage the tent with heavy equipment such as excavators, led to a loss of productivity.”

Jeremy Wastweet testified that, even when the tent was in place, workers were required

to be sequestered in trailers during Red Day movements. Mr. Wastweet further testified

on direct examination from Mr. Ramseyer:

Mr. Ramseyer: Now, when the building had the tent over the site, were you

allowed to sequester somewhere within the tent?

Mr. Wastweet: No. I believe we were in the trailer.

Mr. Ramseyer: You got sent back to the -- to the trailer out of the tent?

Mr. Wastweet: Yes.

Mr. Ramseyer: And so at what point in time -- well, strike that.

Was there ever a point in time when you were allowed to sequester

somewhere other than this construction trailer?

Mr. Wastweet: We -- once the building vertical walls were complete, we

were able to sequester inside the building.

Mr. Ramseyer: All right. And by the way, sir, when you -- when you would

be asked to sequester in the trailer, talking about two or three guys or you

talking about more workers?

Mr. Wastweet: More than that.

Mr. Ramseyer: What was the maximum that you can recall being in there?

45

Mr. Wastweet: 12.

Mr. Ramseyer: Okay. And so once the walls were up on the building, was

there a location where you would be put under guard again?

Mr. Wastweet: Yes. We had to be in visual sight. Everyone had to be in

visual sight of the guard.

Mr. Ramseyer: So they were all gathered in one, let’s say, corner or interior

room?

Mr. Wastweet: Yes.

Mr. Ramseyer: Was that people who were -- include people who were

working on the exterior of the building at the time?

Mr. Wastweet: Yes.

Mr. Ramseyer: Did it also include people who were working on the interior

of the building?

Mr. Wastweet: Yes.

Mr. Ramseyer: So project came to a stop when you were sequestered even

when the walls were up; is that right?

Mr. Wastweet: Yes.

LCC-MZT project manager Jim Mortensen also described being sequestered as being “in

a room with a bunch of construction workers” and stated that “it’s pretty tough put -- at

one time we had 20 guys in a small job trailer.”

During his testimony, Justin Nodolf stated that LCC-MZT was permitted to work

during anticipated Red Days, but not during movements, provided LCC-MZT had a

NAVFAC approved view obstruction plan. In a June 19, 2012 e-mail message to Daniel

Braden of SWFPAC, Mr. Nodolf stated that he had attached a “draft view obstruction plan

for P-913,” to which Mr. Braden responded that he “need[ed] more information.” In a

November 16, 2012 e-mail message, Mr. Braden approved LCC-MZT’s view obstruction

plan and “authorized” LCC-MZT to work on anticipated Red Days. Mr. Nodolf testified that

he did not recall any other view obstruction plans submitted by LCC-MZT between June

2012 and November 2012. Prior to approval of a view obstruction plan, according to Justin

Nodolf, LCC-MZT “couldn’t work on red days at all. They didn’t have a view obstruction

plan. So -- so on those days they would just stop work and -- and not work on those --

those days.”

46

According to Jeremy Wastweet, the anticipated Red Day calendars that NAVFAC

provided to LCC-MZT were not accurate, nor a “valuable planning tool” because “[t]hey

changed on a -- on a regular basis and typically short notice as well.” Mr. Wastweet

asserted that, on average, changes to the anticipated Red Day calendar were made

within twenty-four to forty-eight hours. Jim Mortensen described Red Days as a “moving

target.” Regarding the impact of the changes in anticipated Red Days, Jeremy Wastweet

and plaintiff’s attorney Craig Ramseyer engaged in the following discussion:

Mr. Ramseyer: [W]hen you would receive notice, let’s say 24 hours, what

did you do if you had deliveries scheduled for that next day that you were

getting 24 hours’ notice of a red day?

Mr. Wastweet: You had to make calls immediately and get them

rescheduled for the -- the next time that they were available.

Mr. Ramseyer: You ever have instances where you couldn’t get ahold of

suppliers?

Mr. Wastweet: Yes.

Mr. Ramseyer: What would happen then?

Mr. Wastweet: They would attempt to deliver it and be turned away.

Mr. Ramseyer: And so as these changes occurred, what did -- what did it

do to your ability to schedule the work?

Mr. Wastweet: Made it extremely difficult to plan something and stick to your

plan.

Mr. Ramseyer: And in connection with certain deliveries, let’s say concrete,

if you had a day change very quickly to a red day and you had scheduled a

concrete pour, couldn’t you just reschedule that concrete pour for the

following day and get back on schedule?

Mr. Wastweet: No.

Mr. Ramseyer: Why not?

Mr. Wastweet: Usually our pours were fairly large. So it would take the

majority of the capacity of Hard Rock Ready-Mix. So when you change a

pour like that, it’s usually a week to two weeks out before you can

reschedule it.

Mr. Ramseyer: So you would lose a week to two weeks on a concrete pour

if you got late notice of a red day?

47

Mr. Wastweet: Yes.

Mr. Ramseyer: And what did that do to your ability to meet schedule?

Mr. Wastweet: Made it difficult to meet.

Mr. Ramseyer: And did these red-day changes occur throughout the

project?

Mr. Wastweet: Yes.

Mr. Ramseyer: When you would set up a concrete pour, for instance, how

far in advance were you typically setting up that concrete pour, planning

that concrete pour?

Mr. Wastweet: At least two weeks in advance to be able to get the service

that we needed.

LCC-MZT’s Mr. Mortensen also testified regarding the impacts of receiving short

notice regarding anticipated Red Days, stating:

I thought about this the other day as I was putting a construction schedule

together. Shifting days is not an easy thing to do for a superintendent. You

get subcontractors, you get material suppliers, you get everybody lined up,

and all of a sudden now you’re going to tell them they can’t do it on this day.

So everybody gears up and makes that change. And then you turn around

and say, Okay, wait a minute. Now you’re going to be allowed to do it so we

need you back on Tuesday, but Thursday we’re going to have an

interruption.

Robert Berger, LCC-MZT’s quality control manager until approximately September 19,

2013, testified:

[Y]ou know, we didn’t know when red days would change. So I’d have

inspectors scheduled to come in and do some work, and then all of a sudden

we’d find out that today’s a red day. Two days before it wasn’t a red day, or

the day before it wasn’t a red day. And then all of a sudden it’s a red day,

so we’d have to reschedule everybody. And it got hectic.

Moreover, according to Mr. Berger, if an inspection had to be rescheduled, “[m]ost of the

time” Mr. Berger was unable to move the “next phase of work until it’s been inspected.”

On August 14, 2013, NAVFAC and LCC-MZT had a partnering meeting during

which the impacts of Red Days were discussed. On August 30, 2013, LCC-MZT and

NAVFAC bilaterally executed Modification No. A00010 (Modification 10) to the Contract.

48

Modification 10 compensated LCC-MZT, among other things,21 “for all additional labor

material and associated costs regarding impacts associated with operation-restricted

delays (Red Days) that were incurred June 14, 2013 through August 14, 2013.”

Modification 10 also changed the completion dates by modifying the Contract, as follows:

Extension of time is required by reason of this modification. As per the

agreement for PC 0019 (REA – Red Day Impacts), the contract is modified

as follows:

(a) The Substantial Completion Date (SCD), as further defined in 5252.211-

9301 ~ Phased Construction Schedule, is hereby extended by 31 calendar

days to DECEMBER 16, 2013. Liquidated damages, as further defined in

52.211-12, remain unchanged.

(b) The Contract Completion Date, as further defined in 5252.211-9301 ~

Phased Construction Schedule, is hereby extended by 32 calendar days to

FEBRUARY 16, 2014. Liquidated damages, as further defined in 52.211-

12, remain unchanged.

(capitalization and emphasis in original). During his testimony, LCC-MZT project manager

Jim Mortensen indicated that LCC-MZT and NAVFAC agreed that Red Days not

addressed in Modification 10, such as Red Days occurring in the future, would be

analyzed on a case-by-case basis. On August 26, 2013, Mr. Mortensen sent an e-mail

message to the NAVFAC team, which stated:

Mr. Hortin,

We have a question regarding the future RED DAY impacts that we are to

incorporate into the project schedule: it is our understanding that we have

basically two (2) SCD [Substantial Completion Date] dates. The first is the

hard date based on the impacts to August 14, 2013 and the second is the

moving date based on the future RED DAY’s. Our agreement at the

partnering session was determined to be 22 RED DAYS to December 16,

2013 which moves the SCD to January 7, 2014. The question is how will

this language be incorporated into the modification [10] - right now we don’t

see any of this included in the language of the amendment which provides

for the extended SCD.

(capitalization in original). That same day, contracting officer Mona Carlson responded,

stating:

Mr. Mortensen ~ This is a multiple phase situation. The modification with

your for [sic] signature addresses the impacts from previous red day

Modification 10 increased the value of the Contract by $32,095.00 to compensate LCC-

21

MZT for costs associated with groundwater controls on the construction project site.

49

impacts. It brings us to closure on previous days and reflects an extension

to the SCD [Substantial Completion Date] and CCD [Contract Completion

Date] (linked by 60 days). December 16, 2013 was longer than the actual

days, but agreed to by both parties[.]

As part of the agreement we agreed to incorporate into the schedule “future”

impacts associated with the actual red day calendar. These impacts may or

may not be realized and will most likely change so no extension will be

granted or addressed at this time. . . . The partnering notes reflect an

agreement that if we can meet the “future” impact date without further delay,

the Government will extend the SCD and CCD accordingly without further

penalty of LDs. If this date is not met, we will have to revisit the cause as to

why not. Accordingly, monthly partnering sessions were established to

better handle the dates on a more frequent basis. Bottom line, we cannot

address the future impacts as they have not been realized yet.

Is that any more clear?

(capitalization in original). In response, Mr. Mortensen stated that “[w]e concur with the

below recap of the agreement and understand that future impacts will be handled when/if

realized. We just needed to ensure the agreement was captured accurately so Mr. Baker

who was not at the meeting, can sign the document.”

Electrical Duct Bank Scaling Issue

LCC-MZT also experienced an issue with another electrical duct bank on the P-

913 project in which the duct bank which was actually installed was double the size of

what was indicated on the design plans. This issue was separate from the issues LCC-

MZT experienced with respect to the undisclosed water line and the other electrical duct

bank, discussed above. Scott Wakefield, the owner of LCC-MZT’s subcontractor, PSW

Electric, testified with regard to this issue on direct examination by plaintiff’s counsel, Mr.

Ramseyer, as follows:

Mr. Ramseyer: So was there an issue with a scale sizing of an electrical

duct bank on the project?

Mr. Wakefield: There was.

Mr. Ramseyer: And what was that issue?

Mr. Wakefield: The issue was that the scale was half of what was actual on

the – was half on the drawings of what was actually in the field.

Mr. Ramseyer: And did that impact your ability to do you contract work?

50

Mr. Wakefield: Well, it did in the fact that we were seeking approval of the

change while performing the work, yes.

LCC-MZT’s project manager Jim Mortensen testified that “the construction schedule

identified the length and time that it would take to put in the duct bank, and the first

notification on the production reports was September 17th of 2012, and the last duct bank

was put in May 23rd, 2014.” Plaintiff did not produce any documents at trial which were

contemporaneous with when this electrical duct bank scaling issue was occurring on the

project, however, in one of plaintiff’s May 26, 2017 requests for a contracting officer’s final

decision, which are discussed below, plaintiff provided additional background on the

electrical duct bank scaling issue, stating:

LCC-MZT originally submitted RFI - 0056 on September 24, 2012 notifying

the Government that while performing site measurements for layout of the

site electrical duct banks that the scale on the Electrical Site Drawings ES-

101, ES-111 and ES-121 appear to be incorrect and the scale appears to

be approximately fifty percent (50%) of the scale that was measured in the

field. The Government responded on October 2, 2012 and agreed that the

scale shown on the drawings was incorrect. The Government instructed

LCC-MZT to change the scale . . . .

LCC-MZT requested in Serial Letter 0015 (Tab B) a Proposed Change (PC)

be issued for the additional costs associated with the additional duct banks

required by the change of the scale on the drawings dated March 5, 2013.

The Government did not acknowledge receipt until March 11, 2013. The

Government responded in Serial Letter 0039 dated April 30, 2013 (Tab C)

that the Government finds the response to RFI 056 did not constitute a

change to the contract requirements . . . .

The May 26, 2017 request for a contracting officer’s final decision further explains that

after additional correspondence between LCC-MZT and NAVFAC, “[t]he Government

reversed its original position of ‘no merit’ and found ‘partial merit,’” and that “[t]he

Government issued PC 0021 for tracking purposes.” (capitalization and emphasis in

original). The May 26, 2017 request for contracting officer’s final decision continues:

LCC-MZT took exception to the Government’s response in Serial Letter

0063 of only “Partial Merit” and the costs associated with our Electrical

Subcontractor (PSW Electric) was the only impact due to the incorrect

electrical scale. PSW installed the conduit associated with this work and

LCC-MZT with the help of other subcontractors excavated the trench,

placed the rebar, concrete encased and backfilled the additional lineal

footage of the added duct banks. The work was interrupted throughout the

process by red days, red day schedule changes, impacts from weather due

to PC-0004 contract extension, and impacts due to the restricted site. The

proposal submitted for PC 0021 was $464,587.00.

51

(capitalization and emphasis in original). LCC-MZT’s May 26, 2017 request for a

contracting officer’s final decision explains that, after further correspondence between the

parties, “[t]he Government sent LCC-MZT an offer to settle on January 5, 2016 for

$325,608.00” for PC 0021, and that “LCC-MZT accepted the Government’s offer for PC

0021 - Electrical Scale Change on February 5, 2016.”

On May 20, 2016, the parties bilaterally executed Modification 20, which increased

the Contract $322,905.00 in relation to “PC 0021 ~ REA RFI 056 Electrical Drawing

Scales.” (capitalization and emphasis in original). Modification 20 stated the following:

The following items are applicable to this modification:

(1) The subject contract is hereby modified to compensate the Contractor

for all additional labor, material, equipment, and associated costs due to the

incorrectly labeled electrical drawing scales as further defined in the

Contractor’s Request for Equitable Adjustment (REA) (Serial Letter No.

0015 dated March 5, 2013 and Serial Letter No. 0026 dated May 17, 2013),

as negotiated on May 18, 2016. These documents are hereby incorporated

by reference.

PC 0021 ~ REA RFI 056 Electrical Drawing Scales

Increase: $322,905.00

(2) Extension of time is not required by reason of this modification. All other

terms and conditions remain unchanged.

(3) Acceptance of this modification by the contractor constitutes an accord

and satisfaction and represents payment in full (for both time and money)

and for any and all costs, impact effect, and for delays and disruptions

arising out of, or incidental to, the work as herein revised. As a result, the

total amount of the contract is hereby increased as follows:

Previous Contract Total: $12,906,657.25

New Contract Total: $13,229,562.25

Modification A00020 Total: $322,905.00

(capitalization and emphasis in original).

Substantial Completion, Contract Completion, Certified Claims, and Final Decisions

The parties have jointly stipulated that NAVFAC determined that LCC-MZT’s work

under the Contract on the P-913 project was substantially complete on June 11, 2014. In

a letter dated July 28, 2014 sent by NAVFAC to LCC-MZT, Dana Bolte, who was, at that

time, serving as a NAVFAC contracting officer, stated:

52

In accordance with FAR 52.246-12 INSPECTION OF CONSTRUCTION,

the Government has taken possession of all facilities within the scope of P-

913 under the subject contract. After multiple Completion Inspections as

described in paragraph 116 of Specification Section 01 45 0000 20,

Substantial Completion was established on June 11, 2014. Outstanding

deficiencies continue to be reviewed and/or resolved during the ongoing

weekly Red Zone Meetings each Monday morning.

(capitalization in original). During the trial, Mr. Bolte testified

after we do beneficial occupancy, we turn it over -- the facility to the

customer. There’s normally a punch list with small items that need to be

completed. It doesn’t prevent the customer from using the facility, but

they’re still required to be completed per the contract. For example, painting,

touchup, small repairs here and there.

In an e-mail message dated December 21, 2015, Mr. Bolte identified March 5, 2015 as

the date on which LCC-MZT had achieved contract completion on the P-913 project. At

the trial, Dana Bolte stated that “then there was a long delay in there, as you can see, till

March 5th, 2015. We were waiting on manuals and certificates, administrative-type

things.” Thus, NAVFAC established a substantial completion date of June 11, 2014 and

a contract completion date of March 5, 2015.

By letter dated May 8, 2015, LCC-MZT submitted requests for equitable

adjustments (REAs) for “REAS Nos. 1 thru 40” to NAVFAC and requested payment of

$5,990,372.39. (capitalization in original). On May 28, 2015, LCC-MZT submitted its first

of three requests for a contracting officer’s final decision. LCC-MZT’s May 28, 2015

request for a contracting officer’s final decision consisted of thirteen claims: REAs 17, 27,

29, and 32 through 40, as well as PC 0025. REAs 17, 27, 29, and 32 through 40, and PC

0025. Specifically, LCC-MZT’s May 28, 2015 request for a contracting officer’s final

decision requested:

• In REA 17, LCC-MZT requested an adjustment to the Contract in the amount of

$99,254.00 for price increases related to the government’s FF&E package.

• In REA 27, LCC-MZT requested an adjustment to the Contract in the amount of

$134,214.00 for direct costs associated with Red Day disruptions.

• In REA 29, LCC-MZT requested an adjustment to the Contract in the amount of

$252,609.00 for testing costs related to the September 19, 2013 Stop Work Order,

as well as a time extension of twenty-seven days.

• In REA 32, LCC-MZT requested an adjustment to the Contract in the amount of

$956,578.00 for additional field overhead.

53

• In REA 33, LCC-MZT requested an adjustment to the Contract in the amount of

$336,743.00 for loss of production due to stacking of trades, out of sequence work,

and damage to different trades.

• In REA 34, LCC-MZT requested an adjustment “per the Eichleay Method” to the

Contract in the amount of $574,497.03 for extended home office overhead.

• In REA 35, LCC-MZT requested an adjustment to the Contract in the amount of

$91,714.53 for interest LCC-MZT incurred for non-payment of progress payments.

• In REA 36, LCC-MZT requested an adjustment to the Contract in the amount of

$196,134.00 due to LCC-MZT’s hiring of a schedule and claims consultant needed

to prepare time impact analyses and REAs.

• In REA 37, LCC-MZT requested an adjustment to the Contract in the amount of

$11,657.00 for additional fees LCC-MZT was required to pay the court-appointed

receiver, which LCC-MZT asserted was caused by the government’s delay.

• In REA 38, LCC-MZT requested an adjustment to the Contract in the amount of

$293,522.56 for increased change order markup.

• In REA 39, LCC-MZT requested an adjustment to the Contract in the amount of

$15,245.00 for attorney fees incurred by LCC-MZT as a result “of the

Government’s unwillingness to negotiate fairly on the impacts incurred by LCC-

MZT.”

• In REA 40, LCC-MZT requested an adjustment the Contract in the amount of

$504,170.00 for additional costs LCC-MZT allegedly incurred in connection with

PC 0004.

• PC 0025 was titled “Grounding Issue Additional Cost” and sought $29,706.00.

Subsequently, as discussed below, REAs 31 and 41 were submitted for a contracting

officer’s final decision later in two separate letters on May 26, 2017.

At the trial, NAVFAC contracting officer Dana Bolte testified that NAVFAC

requested that the Defense Contract Audit Agency (DCAA) “audit” LCC-MZT’s REAs,

which Mr. Bolte stated NAVFAC “normally” did “with claims, especially big claims.” Rozell

Drake, who testified that she was an auditor with the DCAA, and had been for the last

thirty years, and that she was assigned to examine LCC-MZT’s REAs from “maybe” July

to October 2015. Ms. Drake, who appeared to be a competent and intelligent individual,

however, stated that she only “[v]aguely” remembered what her assignment with LCC-

MZT entailed, stating, “I think it was -- it was, like, an equitable adjustment, I think. I’m

guessing.”22 Ms. Drake also stated that she met with John King, who served as LCC-

22

During Rozell Drake’s direct testimony, conducted by plaintiff’s counsel Katherine

54

MZT’s scheduler, claims consultant, and interim project manager during the P-913

project, although Ms. Drake could not remember the amount of times she met with Mr.

King. Ms. Drake did remember that she met with Mr. King more than two times, but could

not remember if she met with Mr. King more than six times stating, “I don’t know. I don’t -

- I don’t know. I don’t remember. Maybe six times.”

On October 5, 2015, John King sent Bryan Zatica an e-mail message, attached to

which was “a recap of the findings from the DCAA auditors.” John King attached the

following chart to his October 5, 2015 e-mail message:

While looking at his October 5, 2015 e-mail message during the trial, John King testified

that he forwarded the information in his October 5, 2015 e-mail message to Bryan Zatica

to show Mr. Zatica “[j]ust where the differences were found between her [Rozell Drake’s]

review and our accounting system” and “to show him where we had -- we didn’t agree

with what the review was showing from our original REA, just so he’d have an idea.”

Knudsen, Ms. Drake often quibbled with Ms. Knudsen over the definition of the terms

used in Ms. Knudsen’s questions.

55

In a memorandum dated December 31, 2015 and addressed to NAVFAC, DCAA

stated that it agreed to NAVFAC’s request for DCAA “to perform an examination of LCC-

MZT’s price adjustment claim to determine if proposed amounts comply with FAR 52.233-

1” for LCC-MZT’s REAs 32, 33, and 34. In its May 5, 2016 audit report, DCAA stated that

it questioned all of the costs claimed in REAs 32, 33, and 34 because the “claimed costs

are unrelated to the Government-caused delays ($1,772,386) and errors were found in

the claimed costs in REAs 32 and 33 ($95,432). Additionally, we identified $184,293 of

the direct labor costs in REA 32 that were claimed more than once in the total price

adjustment claim.”

On August 1, 2016, Eileen Mitchell, Chief of the NAVFAC Contracting Office,

issued a contracting officer’s final decision denying LCC-MZT’s May 28, 2015 certified

claim for 17, 27, 29, and 32 through 40. Eileen Mitchell’s August 1, 2016 final decision,

however, stated that the “Administrative Contracting Officer determined merit for the

differing site condition associated with PC 0025” and provided LCC-MZT $28,438.37, plus

interest, and 135 days of non-compensable delay.

On August 10, 2016, contracting officer Dana Bolte sent a letter to LCC-MZT

stating that the “Government agrees to release all potential LD’s [liquidated damages] for

Phase B equaling $157,384.” (capitalization and emphasis in original). Dana Bolte’s

August 10, 2016 letter, however, stated that potential liquidated damages for Phase A

remained applicable. At trial, Mr. Bolte testified that Phase B liquidated damages were

released to LCC-MZT, but he indicated that Phase A liquidated damages were not

released to LCC-MZT. John King also testified at trial regarding liquidated damages and

asserted that NAVFAC has retained $185,346.00 in liquidated damages. As stated above,

Modification 9 to the Contract established that Phase A liquidated damages were relevant

to the Substantial Completion Date under the Contract, while Phase B liquidated

damages were relevant to the Contract Completion Date under the Contract.

In a letter dated May 26, 2017, LCC-MZT submitted its second of three requests

for a contracting officer’s final decision, for REA 31 to then-NAVFAC contracting officer

Terry Holmberg. In REA 31, LCC-MZT requested an adjustment of $503,023.00 to the

Contract because the government allegedly directed LCC-MZT to accelerate

performance. In a second letter also dated May 26, 2017, LCC-MZT submitted its third

and final request for a contracting officer’s final decision, for REA 41. In REA 41, LCC-

MZT requested an adjustment of $131,828.00 to the Contract for additional costs incurred

related to the electrical duct bank scaling issue. On November 17, 2017, NAVFAC Chief

of the Contracting Office, Eileen Mitchell, denied both LCC-MZT’s second request for a

contracting officer’s final decision and LCC-MZT’s third request for a contracting officer’s

final decision in full.

56

DISCUSSION

In the above-captioned case, LCC-MZT requested and received contracting officer

final decisions on the following fourteen REAs, as well as PC 002523:

Claim Number Claim Title Amount Requested

1 REA 17 “FF&E Cost Variance” $99,254.00

2 REA 27 “Red Day Disruptions” $134,214.00

3 REA 29 “Roof Stop Work” $252,609.00

4 REA 31 “Acceleration” $503,023.00

5 REA 32 “Additional Field Overhead” $956,578.00

6 REA 33 “Loss of Production for $336,743.00

Stacking of Trades, Out of

Sequence Work, Trade

Damage”

7 REA 34 “Extended Home Office $574,497.03

Overhead”

8 REA 35 “Interest Expense for Non- $91,714.53

Payment”

9 REA 36 “Schedule & Claims Consultant $196,134.00

Fees”

10 REA 37 “Additional Receiver Fees” $11,657.00

11 REA 38 “Additional Profit” $293,522.56

12 REA 39 “Attorney Fees” $15,245.00

13 REA 40 “Additional Costs Associated $504,170.00

with PC 0004”

14 REA 41 “Electrical Duct Bank” $131,828.00

15 PC 0025 “Grounding Issue Additional $29,706.00

Cost”

23

As discussed above, Chief of NAVFAC Contracting Office Eileen Mitchell’s August 1,

2016 final decision stated that the “Administrative Contracting Officer determined merit

for the differing site condition associated with PC 0025,” which was related to the

grounding specification issues on the P-913 project, and provided LCC-MZT $28,438.37,

plus interest, and 135 days of non-compensable delay. Modification 24, which was issued

on August 17, 2016, stated that it “incorporated by reference” Chief of NAVFAC

Contracting Office Eileen Mitchell’s August 1, 2016 final decision. Despite having been

awarded $28,438.37 plus interest for PC 0025 in Modification 24, the total amount

requested in plaintiff’s second amended complaint still includes the full $29,706.00

previously awarded for PC 0025. As will be discussed below, however, aside from arguing

that the delay from the grounding issue affected LCC-MZT’s ability to complete the P-913

project in the time required, asserting that NAVFAC was solely responsible for such delay,

and scattering such delay-related costs associated with the grounding delay throughout

LCC-MZT’s various other REAs, LCC-MZT does not specifically elaborate on any

additional entitlement grounds specifically for PC 0025. For these reasons, the court does

not address PC 0025 in a stand-alone section as it does for the remainder of plaintiff’s

REAs.

57

Whether plaintiff is entitled to relief based on the claims outlined above requires

the court to interpret the Contract between LCC-MZT and NAVFAC and the modifications

thereto. “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 Premier Office

Complex of Parma, LLC v. United States, 916 F.3d 1006, 1011 (Fed. Cir. 2019) (citing

NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004)); 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); HCIC Enters., LLC v. United States, 147 Fed. Cl. 118, 124 (2020); 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.”), aff’d, 855 F.3d 1344 (Fed. Cir.

2017); 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 at 593 (citing Coast Fed. Bank, FSB v. United States, 323 F.3d

1035, 1038 (Fed. Cir. 2003)); see also Canpro Invs. Ltd. v. United States, 130 Fed. Cl.

320, 347, recons. denied, 131 Fed. Cl. 528 (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

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 (Fed. Cir.), 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 Prof’l, 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); McHugh v. DLT Sols., Inc.,

618 F.3d 1375, 1380 (Fed. Cir. 2010); Giove v. Dep’t of Transp., 230 F.3d 1333, 1340-41

58

(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.

Grp., 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)).

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 at 1380-81); 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 at 1200; 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 (“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.’” (quoting Pac.

Gas & Elec. Co. v. United States, 536 F.3d 1282, 1288 (Fed. Cir. 2008))).

59

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, 444

F.2d 547, 551, 195 Ct. Cl. 21, 30 (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 . . . .”); LaBatte

v. United States, 142 Fed. Cl. 425, 433 (2019) (citations omitted); Canpro Invs. Ltd. v.

United States, 130 Fed. Cl. at 347 (“Contract interpretation requires determining the

intention of the parties.”).

REA 27 – Red Day Disruptions

REA 27 sought an adjustment to the Contract in the amount of $134,214.00 and

asserts that the “inability of the government to accurately provide a schedule at the

beginning of the project or at the beginning of each month constitutes a contract change

for time and costs” under the Changes clause, FAR § 52.243-4 (2012). In plaintiff’s post-

trial brief, plaintiff asserts that in REA 27, LCC-MZT “seeks its labor costs in the amount

of $134,214 for the time workers were actually sequestered in the enclave.” According to

plaintiff, Modification 10 pertains only to Red Days occurring before August 14, 2013, and

LCC-MZT is entitled to time and costs for Red Days occurring “from August 15, 2013 to

the end of the Project,” which plaintiff contends occurred when LCC-MZT achieved

substantial completion on May 30, 2014. Plaintiff argues that “Red Days” were to be

defined in the Specifications as “non-work days.” Defendant, however, asserts that the

Contract’s Specifications state that LCC-MZT should anticipate ten Red Days per month,

and that only April 2014 had more than ten anticipated Red Days. Defendant also argues

that “LCC-MZT was already awarded all red days after December 16, 2014,” as thirty Red

Days appear to have been considered in Modification 24, which gave a 135-calendar day

time extension of the Contract’s Substantial Completion Date from December 16, 2013

to April 30, 2014. Defendant argues “LCC-MZT’s red day claim also ignores the Contract

specifications requiring that, for red days in excess of ten per month, it had to demonstrate

that, on any particular red day, 50 percent or more of its work was impacted. Only then

could it receive excusable—never compensable—delay.” (internal references omitted).

As noted above, paragraph 1.2.1 of section 01 14 00 in the Contract’s

Specifications states:

(1) 10 work days a month will be impacted by convoys and operations at

the Explosive Handling Wharf Area. The impacted work days may not be

consecutive. A schedule reflecting open or available timeframes will be

provided to the Contractor after award, and monthly during the project. An

updated schedule will be provided five (5) days prior to the beginning of

60

each month for the following month. Urgent operation requirements will

require adjustments to the schedule. Changes resulting in less than 48

hours notice will be considered a changed condition.

(2) Notification, 10 days in advance of activities that will need to access the

Waterfront Restricted Area (Explosive Handling Wharf Entry Control Point

at [redacted]) will need to be coordinated with the Contracting Officer and

SWFPAC Facilities.

[Redacted]; the contractor shall stop all exterior work and move to their

personnel out of visual range of [redacted] Road. There will be

approximately 300 convoys during this project.

During times of convoys past the construction site [sic] the contractor will

be directed, by the Contracting Officer or designate, to a muster [sic] his

forces so that they will not be in visual contact with the convoy. Contractor

shall provide an area, or means to prevent observation of the convoy.

Contractor shall submit a View Obstruction Plan for Contracting Officer

approval.

(3) [Redacted] Road will not be accessible during convoys or operations at

EHW. No Equipment or material deliveries will be allowed. Contractor will

be restricted to the Construction Enclave during convoys and Operations at

EHW. Access to the project site will be through the [redacted] Road Trail

from [redacted] Road, material and equipment must be staged in the

Construction Enclave or be brought in through the [redacted] Road Trail.

Contractor parking will be relocated to a site within 5 miles of the project

site. Exact location will be provided by the Contracting Officer. Contractor

will be responsible for shuttling workers from this parking area.

a. All Zones:

(1) Direct access must be maintained to all facilities, roads, and

structures at all

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