Phillips & Jordan, Incorporated v. United States

In the Cited States Court of Federal Claims

No. 15-1301

Filed: February 28, 2022

PHILLIPS & JORDAN, INC.,

Plaintiff,

v.

THE UNITED STATES,

Defendant.

James W. Copeland, Copeland Law Firm, LLC, Atlanta, Georgia, for Plaintiff.

Jimmy S. McBirney, Ashley Akers, Trial Attorneys, Claudia Burke, Assistant Director, Patricia

M. McCarthy, Commercial Litigation Branch, Brian M. Boynton, Acting Assistant Attorney

General, Civil Division, U.S. Department of Justice, Washington, D.C., Amber Jackson, U.S.

Army Corps of Engineers, for Defendant.

POST-TRIAL OPINION AND ORDER

TAPP, Judge.

This South Florida construction contract case involves two differing site condition claims

and a subcontractor’s entitlement to damages. Although Phillips & Jordan, Inc. brings this

action, the real party in interest is its subcontractor, Optimum Services, Inc. (‘OSI’). At trial,

though OSI attempted to prove a differing site condition with respect to the soil content, OSI

failed to establish several elements of that claim, principally whether the contract represented

that the contractor would encounter a particular percentage of shell content. OSI also attempted

to prove that it remains undercompensated for a differing site condition the United States

previously acknowledged. However, OSI failed to establish uncompensated liability. Even if it

had, OSI’s method of calculating damages is overly speculative.

I. Background

On July 14, 2011, the United States Army Corps of Engineers (“Army Corps”) awarded

Phillips & Jordan, Inc. a $32.4 million contract to construct the first phase of the C-44

' Because this is a subrogated claim, the Court often uses “Plaintiff” where the distinction is

immaterial and the respective companies’ names where more clarity is necessary.

Reservoir/Stormwater Treatment Area Project in Martin County, Florida. (Joint Stipulations of

Fact (“JSOF”) at § 2, ECF No. 87; PX014.005, .213; PX016).

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Phillips & Jordan, Inc. v. United States, 15-1301 Trial Exhibit: PX015.002

Several months later, Phillips & Jordan subcontracted intake canal excavation,

embankment, and demolition work to OSI. That subcontract was worth $5,515,769.86. (JSOF at

4 3). Excavation and embankment were part of the prime contract, contract line-item number

(“CLIN”) 0005. (PX014.007).

Approximately a year and a half later, the Army Corps revised the scope of its contract

with Phillips & Jordan to address shortages of material in the intake canal and requested that

Phillips & Jordan revise its pricing to accommodate those revisions to CLIN 0005. (JSOF at § 4).

Accordingly, Phillips & Jordan submitted a Request for Equitable Adjustment (“REA”) totaling

$5,461,937.87—1most of which ($4,784,584.79) would be passed through to OSI. (/d. at § 5).

Just a few days later, Phillips & Jordan submitted a second response to the Army Corps’

scope revision, separate and distinct from its first REA, requesting an additional $4,961,623.29

for “Total Additional Cost[s] Due to Defective Spec[ifications]: Intake Canal Material

Shortage.” (/d. at § 6). That second proposed scope revision would be largely passed through to

OSI after Phillips & Jordan retained roughly $700,000 for its overhead and profit markup. (/d.).

In January 2014, the Army Corps and Phillips & Jordan bilaterally executed Contract

Modification P00022, increasing the total contract price by $4,857,756.55 and extending the

project completion date by 114 calendar days in response to, and as a final resolution of, Phillips

& Jordan’s second response to the revised contract scope. (/d. at § 7). Contract Modification

P00022 stated that the contract price increase and time extension “reflects all credits due the

Government and all debits due the Contractor,” and that the adjustment “constitutes

compensation in full on behalf of the Contractor and its Subcontractors and Suppliers for all

costs and markups directly or indirectly attributable for the change ordered, for all delays related

thereto, for all extended overhead costs, and for performance of the change within the time frame

stated[.]” Ud.; PX243). Contract Modification P00022 caveated that it did “not include costs

associated with the contractor’s pending REA, submitted under Serial Letter H-0076, [Phillips &

Jordan’s first REA response].” (JSOF at 7 7; PX243).

In June 2014, Phillips & Jordan converted its first REA into a pass-through certified

claim from OSI to the Army Corps. (JSOF at J 8). That certified claim sought $4,784,584.79 in

compensation to be passed through to OSI and $21,577.88 in bonding costs to Phillips & Jordan.

(/d.). That pass-through claim amount, $4,784,584.79, matches exactly the amount OSI sought to

receive through Phillips & Jordan’s first REA. (See id. at | 5). On July 25, 2013, the Army Corps

accepted Phillips & Jordan’s performance as complete. (/d. at § 9). Several months later, the

Army Corps denied Phillips & Jordan’s certified claim. (/d. at J 10).

Two years later, in October 2016, Phillips & Jordan revised, certified, and submitted its

claim to include OSI’s certified modified total costs calculations, that time seeking

$4,653,512.68. (Vd. at § 11). If the Army Corps approved that certified claim, Phillips & Jordan

intended to pass through $4,066,298.51 to OSI. (JSOF at ¥ 11). Phillips & Jordan now asks the

Court to review the Army Corps’ original denial of Phillips & Jordan’s certified claim, as

amended in October 2016. Ud. at J 12).

Plaintiff’ s four-count Complaint primarily raises two issues. First, Plaintiff contends that

the soils it encountered on the site differed from the soils that the contract specified Plaintiff

would encounter. (2d Am. Compl. at J 34-50, ECF No. 32). Plaintiff seeks damages for that

difference, and couches that claim as a differing site condition, or alternatively, a defective

specification. (/d.). Second, Plaintiff asserted that there was a material imbalance between

excavation and embankment material quantities. /d. at J 14-33). In other words, the quantity of

soil Plaintiff was required to excavate from the canal was insufficient to construct the

embankment to the contract’s specifications. Plaintiff asserts entitlement to damages related to

the imbalance, which Plaintiff characterizes as due to a differing site condition, or alternatively, a

defective specification.’ (/d.).

Beginning August 16, 2021, the Court conducted a seven-day trial on these issues in

West Palm Beach, Florida. During trial, the Court heard testimony from nine witnesses,

including Daniel Eastman (the President of OSI), two former vice presidents of Phillips &

Jordan, three Army Corps employees, an employee from OSI, and two expert witnesses.’ At the

conclusion of the trial, on August 24, the parties agreed to simultaneously submit post-trial briefs

* Plaintiffs defective specification claims are based on an alleged breach of implied warranty of

adequate design.

> A transcript of the trial is docketed at ECF Nos. 123-29. The Court will reference the witness’s

name in trial citations to reflect their time on the stand (e.g., “(Eastman, TR at 164)”), but

quotations may reflect questions or statements of counsel where appropriate. Discussions

between attorneys and the Court will be noted as a “Colloquy.”

“not later than close of business 40 days following the production of the [trial] transcript.”

(Colloquy, TR at 1273:20-22).

After some unexpected delay, the transcript was filed in the Court’s CM/ECF filing

system on September 27, 2021. Shortly thereafter, citing the unexpected delay, as well as

personal and professional conflicts, the United States requested an enlargement of the deadline to

file post-trial briefs from November 8 to November 29. (ECF No. 131). The Court granted that

extension over Plaintiff's objections. (Oct. 5, 2021 docket Order). Before noon on November 29,

Plaintiff requested a “48-hour enlargement” of the deadline to December 1, 2021, stating

Plaintiff's counsel needed only “48 more hours, to tie up loose ends, finish filling in pinpoint

citations and cross references, and proofread and check the stated figures.” (ECF No. 132). The

Court granted that extension, ordering that post-trial briefs “shall be filed no later than 12/1/2021

at 4:00 PM (ET).” (Nov. 29, 2021 docket Order). Plaintiff failed to comply with that Order,

filing its brief after the 4:00 PM deadline. Plaintiff then requested an enlargement, stating that

“Plaintiff's counsel was not aware of the 4 PM deadline” and only became aware after counsel

for the United States reminded him after the deadline had passed. (Mot. for Enlargement of

Time, ECF No. 135). The Court grants Plaintiff's motion. After allowing more than 90 days for

post-trial briefing, this case is now ripe for decision. (See Def.’s Post-Trial Brief, ECF No. 133;

Pl.’s Post-Trial Brief, ECF No. 134).

Il. Findings of Fact

In 2011, the Army Corps issued Solicitation No. W912EP-11-R-0008—a request for

proposals for the C-44 Reservoir Project (“the Project”). (PX014 (Solicitation and

specifications)). The solicitation required excavation of the intake canal and embankment filling

under CLIN 0005AA and O005AB, respectively. (PX014.007). The specifications stated that “the

Intake Canal may be excavated without dewatering[,]” but if the contractor chose to dewater, the

surface of the water in the excavated portion could not extend below an elevation of 12 feet.

(PX014.442). In placing embankment fill, the specifications demanded that the moisture content

of the fill be limited and uniform. (PX014.443). The solicitation advised that excavated material

might need to be reworked, and material that was too wet “shall be spread on the embankment or

borrow area and permitted to dry, assisted by disking or harrowing, if necessary,” until the

moisture content requirements were achieved. (/d.).

Plaintiff's first set of claims depends on the content of the soil OSI encountered on the

project site. Plaintiff asserts the soil OSI encountered differed from what the Army Corps

represented in contract specifications, increasing OSI’s performance costs and entitling it to

damages. Plaintiff's second set of claims depends on an imbalance between the quantity of

material OSI excavated from the canal and the quantity of material necessary to build the

embankment. Plaintiff asserts that the imbalance led to increased equipment and labor costs for

which the Army Corps has not fully compensated OSI. Although somewhat interrelated, the

Court addresses these issues in turn.

A. Soil Content at the Project Site

One of the primary questions in this case is whether the soil Plaintiff encountered differed

from the soil it expected to encounter based on a reasonable interpretation of the contract. That

is, whether the absence of “shelly sand” on the project site was a differing site condition.

Plaintiff alleges they had expected to encounter what it characterized as “shelly sand,” or sand

with 30-40% shell by weight, which would drain more efficiently than the soils they

encountered. But “shelly sand” is not a term of art defined in the contract. The solicitation

identified and generally described two types of soil contractors might encounter on the project

site. “Type 1” soils:

[A]re encountered at or near the existing ground surface and typically extend

to depths of 12 feet below ground surface. They are commonly light to dark

brown, or tan in color. These soils shall be used as compacted fill for

embankments, access roads, backfill around structures, and other general fill

areas.

(PX014.438). “Type 2” soils:

[C]onsist of tan, light grey or gray shelly sand material. Soil Type 2 material

is typically encountered beneath the Soil Type 1 strata where the subsurface

profile is undisturbed. Soil Type 2 material may be used within fill areas

provided the Type 2 soils are a minimum of 3 feet from finished grade.

(/d.). The solicitation provided that the contractor may use Type | and Type 2 soils from canal

excavation as fill in the embankment provided those soils otherwise met the contract

specifications, including moisture content. (PX014.439). The solicitation also provided an

additional detailed description of the content of those soils.

Soil Type 1:

Soil Type 1 soils used as fill shall consist of soils classified as SM, SC,

SPSM, or SP-SC in accordance with ASTM D 2487, or as approved by

the Contracting Officer. These soils are generally light to dark brown,

tan, or rust in color.

Soil Type 1 soils shall have fines content (i.e., percent passing the U.S.

No. 200 mesh sieve - ASTM D 1140) of seven percent or greater. If

localized deposits of borrow soils having less than seven percent fines

are encountered, they may be homogenously blended with other borrow

soils to obtain a mixture having greater than seven percent fines and

subsequently used as fill.

Soil Type 1 soils shall have an organics content (ASTM D 2974) less

than two percent, with no roots greater than % inch in diameter and

longer than 12 IN.

Soil Type 1 soils used as fill shall be free from trash, clods and rock

pieces greater than 3 inches in maximum dimension.

Soil Type 2:

Soil Type 2 shall consist of shelly sand material, which is typically

encountered beneath the Soil Type 1 strata where the subsurface profile

is undisturbed.

Soil Type 2 soils used as fill shall consist of soils classified as SP, SP-

SM, and SM in accordance with ASTM D 2487, or as approved by the

Contracting Officer. These soils are generally tan, light gray or gray in

color.

Soil Type 2 soils shall have an organics content (ASTM D 2974) less

than two percent, with no roots greater than % inch in diameter and

longer than 12 IN.

Soil Type 2 soils used as fill shall be free from trash, clods and rock

pieces greater than 3 inches in maximum dimension.

(PX014.440-41). These hyper-technical definitions reference the American Society for Testing

and Materials D2487 Unified Soil Classification System in explaining fines and organics content

in soil. (See PX033 (ASTM D2487-06E1 provided a “system for classifying mineral and organo-

mineral soils for engineering purposes[.]’’)):

(lly D247 - 06"

TABLE 1 Soil Classification Chart

Soll Classification

Criteria for Assigning Group Symbots and Group Nemes Using Laboratory Tests* Group

Grou a

symbol Group Name’

COARSE-GRAINED SOILS Gravels Chen Gravels . Cu=dandi=to=3" cw Wall-graded gravel"

. (More than 60 % (Less than 6 % fines”)

More than 60% Of noarsa fraction retained an Gud andor 1» Co» a? GP Poorly graded gravet"

retalned on No. 200 slave No. 4 sieve)

Gravels wit Fines. . Fines Classity as ML or MH

(More than 12% fines")

fm

=

Sitty gravat

Fines cassity as CLor CH ec Clayey gravel

Sands Clean Sands Cu=Gandi~Oo= 3? SW Wall-graded sand!

(50% or more of coarse (Less than 6 % fines") = Ta a 7 Say are ana

mation pa: Cu<6 andor 1>Cc>2 s Poorly graded sand’

No. 4 sieve) Sands win Fines =| Fines classity as ML or MH 5M Silty sand"

(More than 12 %6 Tne") Eres clasetty as CLorCH BC Clayey sang

FINE-GRAINED SOILS Sits and Clays inorganic Pl» 7 and pilots on or above “Am ine” cL Laan clay

50% or more Liquid limit Pl <4 o9 plots below “AT ina’ ML suet ae

passes the No. less Tan 50

200 see organi: Uquid imit— oven cried — — OL

Dqucimt —notaned “!*

Sits and Clays inorganic PI plots on or above “AT ling CH Fat ciey a"

Liquid limit Pl plots below “AT ling MH Elestic: sata?

80 oF more

organic Uquid imt— oven died | __ OH Ormanic chey tar

Dqudimt —notaned **! Organic ell! aa

HIGHLY ORGANIC SOILS Primarily organic matier, dark In color, and organic odor PT Peat

“ Based on the matertal pasaing the 34m. (76-mm) sieve.

12 contained conbles or boulders, or both, add “with coboles or boulders, or both" to group name.

fines require dual symipots:

revel wih ellt

evel with clay

gravel with itt

GP-GC poony graded gravel with clay

DeoD,, Co = (OmF / DX Ooo

oun

12% fines require dual symbots:

well graded sand with slit

wel-graiied sand wit clay

Ged sand with -slft

ree, 60il IB 2 CL-ML, sity clay.

200, add “Win sanch or “with gravel,” whichever Is predominant.

0, predominantly sand, add “sand to group name.

plus No. 200, predominantly gravel, add “gravelly” to group name.

"it soll contains 1

‘it soll contains =

“it soll contains =

“B= 4 and plot

Pl <4 or plots b

Pl plots on or ein AT Ine.

=P plots below “

Phillips & Jordan, Inc. v. United States, 15-1301 Trial Exhibit: PX033.002

ASTM also provides that the group names and symbols may be used to describe other

materials, such as shale, claystone, shells, etc. (PX033.009). That information may also be

included in the description. However, the soil classification system still applies based on particle

size and plasticity characteristics. (/d.). For example, the classification system provides that

material with 65% broken shells, 31% sand, and 4% fines would be classified as “Poorly Graded

Gravel with Sand (GP).” The prefixes and suffixes of the abbreviated soil classification symbols

do not include “with shell” or “shelly.” (PX033.011). Thus while “shell” can be used to describe

the nature of the material, describing soil as “shelly” does not inform the particle content or the

classification of the soil.

The solicitation spells out exactly what is considered to be Type 2 soil according to its

ASTM classification: “Soil Type 2 soils used as fill shall consist of soils classified as SP, SP-

SM, and SM in accordance with ASTM D 2487, or as approved by the Contracting Officer.”

(PX014.440-41). “SP” refers to “poorly graded sand,” “SM” refers to “silty sand,” and “SP-SM”

refers to “poorly graded sand” with some silt content. (PX033). Each of those classifications

refers to a specific range of “fines” within the material, referenced in the fourth column from the

left. @d.). The fines and particle content of soil determines the degree to which the soil drains or

holds moisture, and the effort required to achieve compaction of the embankment to the contract

specifications. (Eastman, TR at 235:20—236:7, 409:14—18; Riley, TR at 969:23—970:24; Orr, TR

at 509:12—24). “Shelly sand” is not a term defined by either the ASTM or the contract

specifications.

Moreover, the Army Corps provided detailed information about the soil content at and

around the project site. In 2005 and 2006, the Army Corps conducted seventeen soil borings

along the canal. (PX015).* Drawing No. C1001 identifies the locations where the Army Corps

took each of the borings. (PX015.039). Other related drawings include a summary of the soil

analysis performed on the seventeen borings.° (PX015.040—42 (Drawing Nos. C1002, C1003, &

C1004)). Those drawings, including the summarized soil analysis, were included as part of the

solicitation and the contract. (PX014.176).

The Army Corps also created a site characterization report with more detailed soil

analysis for the three borings drilled in 2005. (PX002). The solicitation and contract referenced a

second site characterization report—the “C-44 Geotechnical and Geologic Site Characterization

Report (posted as a separate document)” as “available for inspection[.]” (PX014.213 (the “Final

Site Characterization Report’)). That Final Site Characterization Report contained all the

information from the 2005 borings report (PX002) plus aggregated data from the fourteen

borings taken in 2006. (PX007 (Final Site Characterization Report)). The Final Site

Characterization Report generally characterized the subsurface soil content. (PX007.197—200).

Generally, it stated that there were three informal units of soil leveled under the project site. (/d.).

“Unit A” material was described as “predominantly brown to gray sand and silty sand[.]’”

(PX007.197). Just below that, “Unit B” material was described as “predominantly gray clayey

* Although PX015 is marked as “PX 14,” the parties referenced and introduced this document as

Plaintiff's Exhibit 15. (Colloquy, TR at 174:11—22).

> The summaries contained in the drawings are known as “stick logs.”

sand[.]” (d.). And just below that, “Unit C” was described as “largely a mixture of gray fine

sand and/or silty sand with variable shell content, with some intervals being mostly shell, and

with some cemented fragments and limestone.” (/d.). The Final Site Characterization Report

went on to emphasize that the concentration of shell varied by location and cited to the boring

logs for further information. (PX007.198). The Final Site Characterization Report was referenced

as a part of the specifications in the solicitation and contract. (PX014.213). In summary, the

drawings and summaries, as well as detailed data from all seventeen borings, were either

included or referenced as part of the contract specifications. (See PX207). None used the

colloquial “shelly sand.” (See also PX15.040).

Daniel Eastman, the President of OSI, reviewed the drawings while preparing OSI’s

prime bid for the contract. (Eastman, TR at 347:7-349:5). Prior to bidding, Mr. Eastman

understood the drawings as demonstrating that seventeen soil borings were taken along the

project site. 7d. at 348:17-349:5, 352:16—22). Mr. Eastman does not recall requesting the

detailed boring logs from the bores referenced in the drawings prior to bidding, despite knowing

those logs were available. (/d. at 355:5—15).

B. Prime and Subcontract Bids for Excavation and Embankment

Phillips & Jordan prevailed over thirteen other bidders to receive the Army Corps’ $32.4

million prime contract for the project. (PX276). OSI also submitted a bid for the prime contract.

(PX276.006). In preparing its prime contract bid, Phillips & Jordan had planned to self-perform

the excavation and embankment work in CLIN 0005. (DX007). Phillips & Jordan’s prime bid for

CLIN 0005 contemplated performing excavation at $2.00 per cubic yard and embankment at

$1.80 per cubic yard—totals of $4,456,000 and $3,544,200 respectively. (PX276.003). OSI’s

prime bid for CLIN 0005 contemplated performing excavation at $2.50 per cubic yard and

embankment at $1.57 per cubic yard—totals of $5,570,000 and $3,091,330 respectively.

(PX276.005).

The United States’ expert, Stephen Weathers, analyzed the fourteen prime bids

contractors submitted for excavation and embankment.° (Weathers, TR at 1066:9-1067:8). The

average bid for CLIN 0005 contemplated $4.41 per cubic yard for excavation and $2.68 per

cubic yard for embankment. (/d. at 1067:14—1068:19). Mr. Weathers credibly concluded that, in

comparing the average bid to OSI’s bid, OSI’s prime bid was “unreasonably low[.]” (d. at

1068:15-19).

After Phillips & Jordan was awarded the prime contract, it solicited bids to subcontract,

among other things, the excavation and embankment work in CLIN 0005. (See PX038; DX002).

OSI bid to perform CLIN 0005 under a subcontract with Phillips & Jordan, contemplating

° Mr. Weathers is a licensed Professional Engineer. (Weathers, TR at 1033:9-25). As a civilian

in the United States Navy, he administered and managed construction contracts before his

consulting career. (/d. at 1031:15—1033:8). He has extensive experience analyzing modified total

cost claims and has testified as an expert witness ten times. (/d. at 1034:10—24). The Court

certified Mr. Weathers as an expert in construction damages including modified total cost

analysis. Ud. at 1035:15—18, 1055:25—1056:25).

performing excavation at $1.86 per cubic yard and embankment at $0.56 per cubic yard.

(PX038.016). OSI’s subcontract proposal was dramatically and unreasonably lower than its

prime contract bid for the same scope of work. (Compare PX276.005 ($2.50 for excavation and

$1.57 for embankment) with PX038.016 ($1.86 for excavation and $0.56 for embankment)).

Phillips & Jordan accepted OSI’s subcontract bid, resulting “in a significant buy-out savings” to

Phillips & Jordan because it had contracted with the Army Corps to perform this work at a

higher cost per cubic yard. (DX007). OSI’s subcontract bid was also conspicuously lower than

other subcontract cost proposals. For example, Devland Site, Inc., an experienced construction

firm, offered to perform the subcontracted work at $3.00 per cubic yard of excavation and $3.25

per cubic yard of embankment. (DX002.002). Chandler Construction and Development Inc.

offered to perform the subcontracted work at $1.94 per cubic yard of excavation and $1.92 per

cubic yard of embankment. (DX002.006).

One explanation for OSI’s significantly discounted cost proposals is the assumptions OSI

made with respect to the content of the soil it expected to encounter. For example, despite the

project specifications requiring excavation “in the wet”—1.e., excavation of soil that was

saturated with water—OSI’s proposals contemplated only needing to handle material once,

failing to anticipate that any drying would be necessary. (Eastman, TR at 408:18—24, 409:10-

13). However, the soil OSI excavated held excessive moisture so, using heavy equipment, OSI

spread the soil and aerated it by using a disk, thereby reducing the moisture content. (/d. at

247:11—248:13). If the soil had not contained excessive moisture, OSI could have loaded it

directly after excavation into dump trucks and then compacted it with a bulldozer at its final

destination. (/d.). Put differently, because of the high moisture content, OSI had to handle the

soil twice—once during excavation from the canal to where it was spread to dry, then a second

time to its final destination on the embankment. (/d. at 410:8—411:9). This double action greatly

increased OSI’s actual costs relative to its expected costs. (/d. at 248:11-13).

OSI was aware that the contract specifications contemplated that disking might be

necessary to achieve the required moisture content. (/d. at 411:12-414:8; see also PX014.443).

However, Mr. Eastman characterized that part of the specifications as “boilerplate.” (Eastman,

TR at 411:12—414:8). Based on Mr. Eastman’s mistaken understanding and expectations

regarding the content of the soil OSI would encounter, he did not expect disking to be necessary

to achieve the required moisture content. (/d.). In contrast, at least one other bidder contemplated

the need to handle the material twice. Ceres Environmental Services, Inc. (“Ceres”), a competitor

of OSI and Phillips & Jordan, emailed Phillips & Jordan after Ceres’s prime contractor bid

debriefing regarding the discrepancy between the two companies’ costs proposals in CLIN 0005.

(DX012; Orr, TR at 525:1-530:17).’ Ceres noted that its bid and Phillips & Jordan’s were nearly

identical, except with respect to CLIN 0005, for which Ceres bid higher on the expectation that

Ceres would have to handle the material twice to disk and dry it. (Orr, TR at 525:18-527:19).

Phillips & Jordan characterized this as “useful info,” but discounted it due to other assumptions

Ceres had made about dewatering before excavation and the fact that Ceres was a competitor.

7 DX012 was only partially admitted. Mr. Weathers’ resume and emails from Ceres to Phillips &

Jordan, forwarded internally, were both admitted. (See Colloquy, TR at 1033:11-15, 524:20-23).

(Id. at 525:1-530:17). Ceres’s prime bid—$4.70 for excavation and $3.15 for embankment—was

higher than the average bid. (PX276.001).

OSI’s expectations and assumptions regarding its bid pricing were almost solely based on

its interpretation of the term “shelly sand” mentioned in the contract specifications, but not

within the bore sample reports or the Unified Soil Classification System referenced in the

specifications. (Eastman, TR at 341:20-343:3). OSI expected, based on its own interpretation of

the contract specifications, that it would encounter sand with 30-40% shell content by weight.

(/d. at 342:5—17). OSI’s assumptions and interpretation of the non-specific term “shelly sand”

were informed by Mr. Eastman’s experience with a separate project in the same general

geographical area—a private project known as “B-Lake”—completed several years before the C-

44 Reservoir project began. (/d. at 406:18-—407:6). Notably, the B-Lake project differed in

several respects; chiefly, it involved excavating wet material and creating a soil material

stockpile after some dewatering. (/d. at 407:7-408:10). The objective was to deepen a lake and

preserve the excavated material for use on other projects. (/d. at 181:13-183:4). OSI

characterized the material it excavated for the B-Lake project as “shelly sand,” though it is

unclear whether OSI or any other party performed soil analysis for B-Lake. (/d. at 181:10-—

182:2). As the United States was not involved in the B-Lake project, it did not characterize the

soil for that project as “shelly sand” or otherwise. The B-Lake project did not involve

construction of an embankment or moisture control specifications for the excavated material.

(See Eastman, TR at 195:1—5 (“[I]t’s a stockpile, which means it doesn’t get compacted.

[There’s] no quality control, no densities [requirement], nothing like that. [The soil is] just

pushed into a pile.”)). OSI performed excavation on the B-Lake project at $0.50 per cubic yard.

(PX028). OSI also performed loading, hauling, and stockpiling at $1.95 per cubic yard. (PX027;

Eastman, TR at 194:9-195:5). OSI performed the B-Lake project on a $3.3 million contract,

grossing nearly $900,000 in profit. (Eastman, TR at 200:40—20). OSI’s successful performance

on the B-Lake project just a few miles away influenced its analysis of the C-44 Reservoir Project

insofar as OSI expected that the material would be similar.

C. Material Imbalance

Plaintiff's second set of claims depends on its assertion that it was undercompensated for

a material fill imbalance differing site condition. Approximately nine months after retaining OSI

on the subcontract, Phillips & Jordan notified the Army Corps of an alleged differing site

condition and defective specification due to “a shortage of fill material generated from the Intake

Canal Excavation[.]” (PX127). The Army Corps investigated Phillips & Jordan’s claim and

confirmed the material imbalance. (PX323). In January 2014, the Army Corps issued a Price

Negotiation Memorandum confirming the imbalance and entered a negotiated settlement with

Phillips & Jordan, extending the time for performance by 114 days and compensating Phillips &

Jordan. (PX323.002). The Price Negotiation Memorandum acknowledged that after over a year

and a half of protracted negotiations, costs of overhead and out of sequence work had

compounded. (/d.). However, the settlement addressed “all known cost elements associated with

[the material imbalance] except for alleged costs incurred by the contractor prior to the

Government recognizing the issue and Requesting a Proposal for the Changed Work.” (/d.). The

Army Corps had previously, in September 2012, acknowledged the issue. (PX323.005). The

Army Corps memorandum reflected that another REA remained pending on that matter.

(PX323.002).

10

On January 27, 2014, the Army Corps and Phillips & Jordan (represented by Lin Riley)

executed Contract Modification P00022, increasing the contract amount by $4,857,756.55.

(PX243.002). Some of the compensation from Contract Modification P00022 was passed

through Phillips & Jordan to OSI as the subcontractor. (/d.). The parties understood that the

adjustments to time and price reflected “all credits due the Government and all debits due

[Phillips & Jordan].” (PX243.003). It constituted “compensation in full on behalf of the Contract

and its Subcontractors and Suppliers for all costs and markups directly or indirectly attributable

for the change ordered, for all delays related thereto, for all extended overhead costs, and for

performance of the change within the time frame stated.” (/d.). Again, the modification

acknowledged that another REA (Serial Letter H-0076) remained pending, and the modification

did not include costs associated with that REA. (/d.).

Serial Letter H-0076 forms the basis of Plaintiffs claims with respect to the allegedly

uncompensated material imbalance. The origin of that letter relates to what the Court previously

discussed as Phillips & Jordan’s first REA in response to the Army Corps’ contract scope

modification, totaling $5,461,937.87—most of which would be passed through to OSI. (See

JSOF J 4-5). OSI submitted that REA to Phillips & Jordan (PX217) and, on June 17, 2014,

Phillips & Jordan certified it as a pass-through claim and submitted it to the Army Corps.

(PX219; PX248). Phillips & Jordan’s certified claim sought $4,806, 162.67 on behalf of OSI,

alleging that the contract specified that canal excavation resulted in a shortfall of 700,000 cubic

yards of material necessary to build the embankment. (PX252.001). Phillips & Jordan sought

cost impacts OSI allegedly incurred due to increased haul distances and OSI’s costs to stockpile

and move Type | material “out of sequence,” both compounded by the need to move more

material than the contract specified. /d.; PX217.006 ef seq.).

One of the main issues underlying OSI’s assertions in Phillips & Jordan’s claim is OSI’s

allocation of “Type 1” and “Type 2” soils excavated from the canal. Type 1 soils were

“encountered at or near the existing ground surface” and extended down approximately twelve

feet. (PX014.438—439). Type 2 soils were typically encountered “beneath the Soil Type 1

strata[.]” U/d.). The contract specified that the contractor may, but was not required to, use both

Type 1 and Type 2 soils to fill the embankment, so long as at least the top three feet of the

embankment was Type | soil. (/d.). Therefore, importantly, the embankment could be

constructed entirely of Type 1 soil according to the contract specifications. Alternatively, the

contractor could utilize Type 2 soils for fill, then “cap” the top three feet of the embankment with

Type 1 soils. OSI chose the latter option. (Eastman, TR at 273:5— 274:6). OSI began excavating

the Type 2 soils adjacent to the embankment area, a haul distance of approximately 500 feet,

while setting aside the Type 1 surface soil to use on the top three feet of the embankment. (/d. at

274:2—13). OSI started on the south end of the canal and worked in 1000-foot sections, moving

north. (PX252.002).

However, OSI quickly ran out of Type 2 soil adjacent to the embankment area in-

progress and began excavating sections further and further north to retrieve Type 2 soil to fill the

embankment. (/d. at 274:14—-275:8). Therefore, OSI’s haul trucks had to travel ever-increasing

distances (eventually up to 6000 feet) to place the excavated Type 2 material in the embankment.

(/d.). Placing the Type 1 surface soil aside caused OSI to have to work out of sequence,

increasing equipment costs while leaving more of the project area exposed to weather;

11

furthermore, the increased haul distances meant increased costs to maintain haul roads. (/d. at

275:13—276:8).

The Court understands OSI’s strategy to have inadvertently created a (fatally flawed)

excavation scheme requiring ever-further excavation of Type 2 soil. The acknowledged material

shortage compounded OSI’s predicament because, as each section of excavation yielded less

material than necessary to complete the adjacent embankment, OSI was forced to incorporate

more and more sections of excavation to complete a single section of embankment. The ultimate

downfall of the strategy was accelerated by OSI’s choice to set aside the Type 1 soil for use as

the embankment cap, reducing the amount of embankment material OSI yielded in each section

of excavation.

The Army Corps Contracting Officer denied Phillips & Jordan’s pass-through claim in

Serial Letter H-0076 on October 31, 2014. (PX252). The Contracting Officer reasoned that, since

the embankment could have been constructed entirely of Type 1 material, a shortage of Type 2

material did not lend merit to a defective specification claim. (PX252.009). In other words, if the

contractor was not required to use Type 2 material, there was no reason to mine Type 2 material

increasingly further north and, therefore, OSI had no basis to claim cost impacts as a result of

those self-imposed longer haul distances. (PX252.003, .009). The Contracting Officer also stated

that OSI’s claim—that because of the material shortage/imbalance there was not sufficient

material to build the embankment to the required elevations—“was in fact a true statement and . .

. was resolved via [M]odification P00022[.]” (PX252.009).

As it turns out, after receiving additional compensation under Modification P00022,

Phillips & Jordan withheld from OSI part of the amount for which Phillips & Jordan billed the

Army Corps for excavation and embankment under CLIN 0005. (Riley, TR at 946:23—950:8).°

Despite OSI performing CLIN 0005 excavation and embankment work under a subcontract with

Phillips & Jordan, Phillips & Jordan retained part of the Army Corps’ compensation for that

work resulting in an increase to Phillips & Jordan’s profit margin on this contract. Ud. at 953:19-

21). Furthermore, until OSI’s retention of Lin Riley, a former Phillips & Jordan employee, as an

expert witness, Mr. Riley’s opinion was that Phillips & Jordan “was successful in securing

additional funds to cover the cost for all of the issues which resulted in additional work and the

extension of the project complete date.” (/d. at 929:6—930:24; PX294.002). At trial, Mr. Riley

attributed that prior opinion to a “mistake.” (Riley, TR at 929: 14-24).

D. Changes to Claimed Damages

Plaintiff changed its damages theory before, during, and after trial. Plaintiff filed this

action on November 2, 2015, originally seeking $4,806, 162.67 in damages—an amount

® Lin Riley is a former Vice President of Phillips & Jordan and was the Project Executive for the

C-44 Reservoir Project. (PX294). He was tendered by Plaintiff as both a fact and an expert

witness, though at times the defining line between those two roles became unclear. The Court

accepted Mr. Riley as an expert on several distinct issues and excluded him on others. (Colloquy,

TR at 580:11—585:20).

12

consistent with Phillips & Jordan’s certified claim. (Compare Compl., ECF No. 1 with

PX252.001). With leave of Court, Plaintiff amended its complaint to seek $4,653,512.68 in

damages instead. (2d Am. Compl. at 1). At trial, OSI no longer believed that amount to be

accurate. (Eastman, TR at 396:18—25). Plaintiff's own expert regarding damages, Paul Britton,

could not recall the number of times Plaintiff had changed its damages calculation. (Britton, TR

at 74:7—22).° Mr. Britton was not involved in calculating the damages Plaintiff presented in its

pre-trial brief which, again, differed from the previous calculations. (/d. at 75:16—-76:2).

Plaintiff's Pre-Trial Brief calculated damages as “at least $2,505,000” for Phillips & Jordan, for

which it intended to pass “at least $2,188,901” through to OSI (PI.’s Pre-Trial Brief at 15, ECF

No. 121 (emphasis in original)). To summarize, disregarding the multiple iterations in damages

calculations prior to trial, Plaintiff posited at the beginning of trial that its damages were

approximately $2.1 million less than when it filed its Amended Complaint and approximately

$2.3 million less than the claim presented to the Army Corps.

At trial, Plaintiff’s damages calculations shifted yet again (interestingly enough) during

Plaintiff’ s cross-examination of the United States’ damages expert. (Weathers, TR at 1238:13-—

1245:18). The damages calculation Plaintiff seemed to arrive at during trial was $2,720,174,

exclusive of markups for Phillips & Jordan. (/d. at 1245:9-17). Finally, in its Post-Trial Brief,

Plaintiff requested $2,461,977 for Phillips & Jordan. (Pl.’s Post-Trial Brief at 40). However, this

amount purports to be the sum of OSI’s alleged damages—$2, 179,083—and Phillips & Jordan’s

“markups”—$3 14,456—but it is not. (/d.). That arithmetic is inexplicably erroneous, and

therefore, Plaintiff's ultimate damages figure is erroneous.

Mr. Eastman, president of OSI, was unable to quantify OSI’s damages at trial. (Eastman,

TR at 417:14—420:2). Mr. Weathers, the United States’ expert on damages, testified that in

preparing his expert opinion that OSI’s cost calculations were not reasonable, he had received “at

least eight iterations to the claim . . . each with different flaws and oversights.” (Weathers, TR at

1131:1-14). He also testified that he had not seen a damages model “that [was] based upon

reasonable assumptions that are supported by the project record.” (/d.). Mr. Weathers helpfully

presented several different scenarios, using average bids for both the prime contract and the

subcontract as benchmark “reasonable” bid prices.'° His methodology essentially compared

OSI’s claim, as presented, to hypothetical scenarios in which OSI had submitted a “reasonable

bid” in line with the average bidder. (/d. at 1248:8—1251:60). Mr. Weathers also used both

Phillips and Jordan’s and OSI’s prime bids as a benchmark “reasonable bid.” (/d. at 1250:9-20).

Each of these iterations, comparing OSI’s actual claim to its hypothetical claim had it submitted

a reasonable bid, resulted in a negative damages number. (/d. at 1250:9—20, 1251:8-15, 1258:9-

22, 1260:24—-1261:11).

” Plaintiff tendered Mr. Britton as an expert on “the reasonableness of [OSI’s] . . . subcontract

estimate.” (Colloquy, TR at 64:21—65:8).

10 As described previously, the average prime bid for CLIN 0005 contemplated $4.41 per cubic

yard for excavation and $2.68 per cubic yard for embankment. (Weathers, TR at 1067:14—

1068:19).

13

Ill. Conclusions of Law

Before addressing the merits of OSI’s claim, emphasis on the Court’s rules is warranted.

The briefing requirements of the Court are not onerous. Generally, RCFC 5.4 outlines the

minimal requirements, 1.e., “[a] brief or memorandum must be compact, concise, logically

arranged, and free of burdensome, irrelevant, immaterial, and scandalous matter.” The same rule

generally requires inclusion of a table of contents, a table of cited legal authorities, a statement of

the questions presented, a statement of the case, and a clear statement of the arguments. These

nominal requirements promote the goals announced in RCFC 1: “to secure the just, and

inexpensive determination of every action and proceeding.”

Of equal import, briefing should inform the Court of the relevant issues, applicable law,

and the facts or expert opinions deemed necessary to effectively enlighten and persuade the

Court. While no brief (or court opinion for that matter) is without error, casual disregard or

wholesale non-compliance with the rules places the authoring party at unnecessary risk. Often,

minor errors are easily overlooked. A reviewing court can easily discern a party’s arguments and

the facts within the evidentiary record which support those arguments. But the significance of

sufficient citation to the evidentiary record cannot be overstated. Failure to accurately cite to

case law and the record invokes the oft-repeated adage: “[j Judges are not like pigs, hunting for

truffles buried in briefs.” United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991). In rare

cases, briefing deficiencies significantly impair the Court’s role in conducting extensive

consideration of the issues.

When confronted with briefing issues, a court may resort to one of three approaches. The

first approach is by far the most common. A court may ignore the deficiency entirely. Am. Farm

Lines v. Black Ball Freight Serv., 397 U.S. 532, 539 (1970) (“[I]t 1s always within the discretion

of a court or an administrative agency to relax or modify its procedural rules adopted for the

orderly transaction of business before it when in a given case the ends of justice require it.”); but

see D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1152 (Fed. Cir. 1983) (“Strict

compliance with local procedural rules is, of course, always desirable.”). Given that most errors

are minor and do not impair the Court’s ability to identify issues and the portions of the record

that either support or undercut proposed factual findings, this approach is normally the best, most

efficient option. Chief among its attributes, by avoiding unnecessary delay, consideration of the

merits with disregard for negligible briefing deficiencies speeds disposition of the issues. This is

particularly true where the Court is sitting as a trier of fact and is somewhat dependent on its own

recollection of trial events.

Alternatively, a court may refuse to accept a deficient brief, order the brief corrected, and

defer consideration of the merits until the filing of a compliant brief. Uniloc 2017 LLC v. Apple,

Inc., 964 F.3d 1351, 1363 (Fed. Cir. 2020) (“A [trial] court does not abuse its discretion simply

because it elects to strictly enforce its local procedural rules.”). This option is also attractive: it

reinforces the importance of compliance with the Court’s rules, and when the deficiency can be

quickly corrected (e.g., omission of a table of authorities), does not unnecessarily prolong

consideration of the issues.

In extreme cases, a court may instead impose the harshest sanction, striking entirely the

offending brief or dismissing the offending party’s claim. RCFC 5.4(a)(1) (‘The court may

14

disregard a brief or memorandum that fails to comply with this rule.”); RCFC 41(b) (If the

plaintiff fails to prosecute or to comply with these rules or a court order, the court may dismiss

[with prejudice] on its own motion[.]”).

Here, Plaintiff's non-compliance with baseline rules and established norms are not of the

normally-encountered de minimis variety.!' Before accepting Plaintiffs memoranda as tendered,

the Court considered each of the alternatives described above. Striking the deficient brief without

leave to file an amended corrected brief would be entirely too severe especially given that the

Court can still, despite the deficiencies, identify the thrust of the arguments. Striking the

offending brief with leave to refile is also inappropriate. Post-trial briefing exceeded 90 days.

And as the Court has noted previously, this litigation has been plagued by delay. Prior to the

post-trial extensions mentioned above, in six years of litigation, the Court has granted more than

20 extensions or enlargements of time at the parties’ request. Given the types and numerosity of

deficiencies that appear in the briefing, the Court has little confidence that anything short of an

extended enlargement to permit the filing of a correct, adequately formatted, and supported brief

would be sufficient. By accepting the brief, and addressing the merits of the claims, the Court

again emphasizes the unnecessary risk attendant to disregard of the rules: even where a court

accepts a deficient brief, presentation of a flawed or imperfect evidentiary record deprives the

brief of much of its persuasive potential. Cf Bishop v. Smith, 112 F. Supp. 3d 1231, 1247 (N.D.

Okla. 2015) (recognizing that, when courts consider an attorney’s entitlement to fees, “[a]ccurate

numbering, citations” and organization are important components of a lawyer’s brief, and when

defects “lead[] a court astray, [it] sets a tone of carelessness” and impacts credibility.); see also

Alexander v. F.BJ., 186 F.R.D. 188, 191 (D.D.C. 1999) (“Attorneys do their own clients a

disservice—by losing credibility with the court—when they fail to accurately represent facts and

then base their legal arguments on these inaccuracies.”).

Turning now to the merits, the Court notes that: “[a]lthough differing site conditions and

defective specifications claims are distinct in theory, they collapse into a single claim under facts

such as these, where the alleged defect in the specification is the failure to disclose the alleged

'! The Court’s rules require, among other things, a table of authorities, a statement of the

questions presented, an argument which references the points of law and fact, and the authorities

relied upon. RCFC 5.4(a)(2). In this instance, Plaintiffs Post-Trial Brief Table of Authorities

consists of seven case citations, each supposedly appearing on the first page of the memorandum

when none of those cases appear on page one. Citations to the cases and other authorities

appearing in the remaining 39 pages of the memorandum are completely absent from the Table

of Authorities. Of the case citations which do appear within the text of the memorandum, eight

lack completed citations. (See e.g., Pl.’s Post-Trial Brief at 33 (“Ace, 70 Fed. Cl. at citing

?”)). The brief omits over 100 record cites (see, e.g., Pl.’s Post-Trial Brief at 4.17 (Orr,

__;Riley__,tr.__.”)). This deficiency challenges the Court to create a sufficient evidentiary

record to support the arguments presented. Again, that is not the Court’s role. Moreover, though

the underlying claims involve significant sums which would be paid by taxpayers, Plaintiff's

brief contains multiple erroneous mathematical calculations, though admittedly some are merely

transpositional. (See, e.g., Pl.’s Post-Trial Brief at 26 (J 104 erroneously asserting that

$12,118,896 minus $9,915,898 equals $2,203,088), 28 (J 109 erroneously asserting that

$12,118,896 minus $9,939,903 equals $2,179,083)).

tr.

2

15

differing site condition.” Comtrol, Inc. v. United States, 294 F.3d 1357, 1362 (Fed. Cir. 2002).

Here, the facts of Plaintiffs claims are so intertwined that the Court looks to the differing site

conditions clause of the contract and the case law under that clause. See Meridian Eng’g Co. v.

United States, 885 F.3d 1351, 1361 (Fed. Cir. 2018).

A contractor bringing a differing site condition claim must prove, by a preponderance of

the evidence, four elements. Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir.

2007) (“The contractor must then prove by a preponderance of the evidence that the conditions

encountered during the contract performance differed materially from the conditions indicated in

the contract”). First, the plaintiff “must prove that a reasonable contractor reading the contract

documents as a whole would interpret them as making a representation as to the site conditions.”

Int'l Tech. Corp. v. Winter, 523 F.3d 1341, 1348 (Fed. Cir. 2008). “Second, the contractor must

prove that the actual site conditions were not reasonably foreseeable to the contractor, with the

information available to the particular contractor outside the contract documents|[.]” /d. at 1349.

The second element is one of the contractor’s “reasonable reliance” on its own interpretation of

the contract terms. Renda Marine, Inc., 509 F.3d at 1376 (“[T]he contractor must demonstrate

that the conditions encountered were not reasonably foreseeable in light of all information

available to the contractor when bidding, that the contractor reasonably relied upon its original

interpretation of the contract[.]”). “Third, the contractor must prove that the particular contractor

in fact relied on the contract representation.” Winter, 523 F.3d at 1349. “Fourth, the contractor

must prove that the conditions differed materially from those represented and that the contractor

suffered damages as a result[.]” /d. The first element involves a question of law; the remaining

three elements involve questions of fact. /d.

A. Plaintiff failed to demonstrate the presence of a differing site condition with respect

to the soil content.

Plaintiff contends that the contract specifications represented that, in performing wet

excavation of the soil strata below an elevation of twelve feet, the contractor would encounter

Type 2 soil. (PI.’s Post-Trial Brief at 12). That is indisputably true. (PX014.438-39, .440-441).

Plaintiff also argues that a reasonable person reading the contract documents would interpret the

soil identified as “Type 2” to mean “shelly sand,” defined as material with 50% sand and 30%

shell by weight. (/d. at 13). The Court disagrees.

The contract specifications made very explicit representations as to the content of the soil

material contractors could expect to encounter. While the specifications did use the word “shelly

sand” to describe the soil generally, the specifications offered precise definitions of what it

meant by “Type 2 Soil.” That distinction is critical. The specification provided a definition that

referenced the Unified Soil Classification System standards. (PX014.440-41). Despite Plaintiffs

urging that the Unified Soil Classification System “has the effect” of defining shelly sand (Pl.’s

Brief at 13), it does no such thing. As previously explained, the prefixes and suffixes of the

abbreviated soil classification symbols do not include “with shell” or “shelly.” (PX033.011).

Thus while “shell” can be used to describe the nature of the material, describing soil as “shelly”

does not inform the particle content or the classification of the soil and thus the term “shelly

sand” has no technical definition under the referenced classification system.

16

Moreover, the contract explicitly defined Type 2 soil and its consistency. The

specifications stated: “Type 2 soils used as fill shall consist of soils classified as SP, SP-SM, and

SM in accordance with ASTM D 2487, or as approved by the Contracting Officer.”

(PX014.440-41). SP, SP-SM, and SM are specifications for soil material that precisely describe

the particle and fines content that contractors could expect in the soil. /d.; PX033.002). Even if

“shelly sand” generally described the Type 2 soil content, the more specific definitions—SP, SP-

SM, and SM—control. See Hometown Financial, Inc. v. U.S., 409 F.3d 1360, 1369 (Fed. Cir.

2005) (“Our precedent establishes as a principle of contract interpretation that a specific contract

provision will control over a general contract provision.”).

Finally, and perhaps most convincingly, the contract specification provided actual soil

analysis from which contractors could set their expectations for the project. (PX015; PX014.176;

PX002; PX007). The Final Site Characterization Report, referenced as part of the project, did not

provide a representation of shell content with respect to Type 2 material. (PX007). It simply

stated that concentration of shell varied by location and directed contractors to examine the

borings and the analysis of the soil. (PX007.197—198). Mr. Eastman reviewed the drawings that

contained this information and understood where to find the detailed soil analysis but did not

review that analysis prior to bidding. (Eastman, TR at 347:7-349:5, 348:17-349:5, 352:16—22,

355:5—15). Failure to do so is significant. Instead of relying on the soil analysis from the Project

site, Mr. Eastman relied on his experience with the B-Lake project. Ud. at 406:18-407:6). As

described above, that project was materially different from the C-44 Reservoir Project. Any

reliance on the B-Lake project and the soil encountered there was objectively unreasonable given

that the contract specifications included more relevant information and a detailed soil analysis.

Plaintiff's assumption, that the site conditions for the C-44 Reservoir Project would be similar to

B-Lake, was not the product of detailed comparative analysis, it was simply a miscalculation for

which Plaintiff bears responsibility. See Weeks Dredging & Contracting, Inc. v. United States, 13

Cl. Ct. 193, 219 (1987), aff'd, 861 F.2d 728 (Fed. Cir. 1988) (while a miscalculation, “i.e., the

assumption of a perceived fact which proved erroneous[,]| [is] unfortunate, nevertheless, it is a

risk for which only the contractor must assume responsibility.”).

Consequently, the Court concludes that Plaintiff cannot succeed on its differing site

condition claim with respect to the soil content because it cannot prove either of the first two

elements of such a claim. First, a reasonable contractor, looking at the contract specifications for

Type 2 soil, would not read that specification as providing a representation that contractors could

expect to encounter 30% shell content by weight. Second, Plaintiff cannot show reasonable

reliance on its own interpretation of the contract specifications with respect to soil content. The

actual soil analysis of the C-44 Reservoir Project site was included with the specifications.

Plaintiff simply miscalculated by either discounting or ignoring the soil analysis contained or

referenced in the contract in favor of its own unscientific perceptions developed through

experience on another project. Any reliance on the conditions at B-Lake was unreasonable given

the information Plaintiff had at its disposal. These first two elements are indispensable to a

differing site condition claim; therefore, the Court need not examine the remaining elements. The

United States is entitled to judgment on Plaintiff's Second Amended Complaint Counts HI and

IV.

17

B. Plaintiff has failed to demonstrate entitlement to damages with respect to the material

imbalance.

Plaintiff also alleges a differing site condition and defective specification with respect to

a material fill imbalance. (2d Am. Compl. at J 14-33). The United States concedes the

existence of a differing site condition with respect to that imbalance. (See, e.g., Def.’s Post-Trial

Brief at 16). However, the United States maintains that the imbalance was previously

acknowledged by the Army Corps and Plaintiff was fully compensated for that imbalance in

Contract Modification P00022. (/d.). Plaintiff urges that Modification P00022 provided

incomplete relief for costs OSI incurred due to increased haul distances, out of sequence work,

and other related activities. (Pl.’s Post-Trial Brief at 9-10). Although the United States has

acknowledged the differing site condition, Plaintiffs claim must still fail because it does not

demonstrate entitlement to additional compensation. See Winter, 523 F.3d at 1349 (“the

contractor must prove that the conditions differed materially from those represented and that the

contractor suffered damages as a result[.|”) (emphasis added). Because Plaintiff cannot show

additional damages, the United States is entitled to judgment.

Although the Court sympathizes with Plaintiff's plight with respect to the interrelated

problems of a recognized material fill imbalance and the cost of increased haul distances, out of

sequence work, and other costs, the Court has no basis to determine that the Army Corps bears

responsibility for those expenses. Plaintiff chose a method of building the embankment that was

certainly allowed but proved to be inefficient. (Eastman, TR at 273:5— 274:6, 274:2-13). The

terms of the contract did not require Plaintiff to fill the embankment with any Type 2 material at

all. (PX014.438-439). The only contractual requirement was that the top three feet of the

embankment consist of Type 1 material. (/d.). The entire embankment could have been

constructed with Type 1 material. Had Plaintiff constructed the embankment using all Type 1

material, it is speculative whether OSI would have run out of Type 1 material suitable for the

embankment cap. Indeed, the material imbalance was the impetus for Contract Modification

P00022. (PX252.009). However, Plaintiffs chosen method for recording costs makes it

impossible for the Court to determine whether that modification offered complete compensation

for the imbalance. It is equally uncertain whether Plaintiff would have needed to locate

additional Type 1 material elsewhere, and whether costs associated with that pursuit would have

been compensable as a differing site condition. After all, Phillips & Jordan failed to pass through

to OSI some of the compensation the Army Corps paid it for CLIN 0005 work. (Riley, TR at

953:19-21).

But the plaintiff bears the burden of showing the differing site condition and resulting

damages. Renda Marine, Inc., 509 F.3d at 1376. The Court must be afforded a sufficient basis to

find that, more likely than not, Plaintiff incurred costs for which Modification P00022 provided

incomplete relief. See id.; see also Cavalier Clothes, Inc. v. United States, 51 Fed. Cl. 399, 424

(2001) (rejecting plaintiff's claim that included costs associated with a previous contract

modification and observing that “it [was] impossible to quantify accurately the amount of costs”

appropriately apportionable between the contract modification and the plaintiffs additional

claim.); cf Willems Indus., Inc. v. United States, 155 Ct. Cl. 360, 376 (1961) (a claimant

pursuing damages for a breach of contract bears the burden to prove the fact and amount of loss

“with sufficient certainty so that the determination . . . will be more than mere speculation”).

When the plaintiff gives the Court “no sound reason for believing it has been undercompensated”

18

there is no basis to award damages. WRB Corp. v. United States, 183 Ct. Cl. 409 425 (1968).

Plaintiff has failed to carry its burden here, and thus the Court directs judgment in favor of the

United States on Plaintiff's Second Amended Complaint Counts I and II.

C. Plaintiff has failed to demonstrate entitlement to recovery under its damages theories.

The fourth element of both a differing site condition and defective specification claim is

proof of damages. Winter, 523 F.3d at 1348; Comtrol, Inc., 294 F.3d at 1362 (“Where the

differing site conditions claim and the defective specifications claim are so intertwined as to

constitute a single claim, that claim will be governed by the specific differing site conditions

clause and the cases under that clause.”). Here, Plaintiff has chosen to pursue damages under the

modified total cost theory.

A modified total cost claim is a disfavored theory of damages. See H. John Homan Co. v.

United States, 418 F.2d 522, 528 (Fed. Cir. 1969) (“It is true that the total cost theory of proving

damages in a contract case is not generally favored.”). Under the modified total cost method,

“the contractor must show: (1) the impracticability of proving actual losses directly; (2) the

reasonableness of its bid; (3) the reasonableness of its actual costs; and (4) lack of responsibility

for the added costs.” Servidone Const. Corp. v. United States, 931 F.2d 860, 861 (Fed. Cir.

1991). If Plaintiff’s proof fails on any one of these elements, the Court can modify the test to

adjust damages downward to account for the lack of proof on that element. Youngdale & Sons

Const. Co. v. United States, 27 Fed. Cl. 516, 541 (1993) (‘The modified total cost method is

simply she total cost method modified or adjusted for any deficiencies in the plaintiff's proof in

satisfying the four requirements of said method.”) (emphasis in original). Plaintiff still bears the

burden to prove damages for the adjusted amount. Propellex Corp. v. Brownlee, 342 F.3d 1335,

1339 (Fed. Cir. 2003) (“[U]nder its modified total cost method claim, [plaintiff] still had the

burden of proving the four requirements for a total cost recovery set forth above. The modified

method simply was a way of easing that burden somewhat.”); see also WRB Corp., 183 Ct. Cl. at

426 (the total cost “theory has never been favored by the court and has been tolerated only when

no other mode was available and when the reliability of the supporting evidence was fully

substantiated.”) (emphasis added).

Even if Plaintiff had shown the United States was liable for damages under one of its

differing site condition theories, which it has not, Plaintiff would have to clear additional hurdles

to present its theory of damages as a modified total cost claim. Most substantially, Plaintiff

cannot show entitlement to damages even by substituting its bid price for a reasonable one or that

it is not responsible for the additional costs it incurred.

i. Reasonableness of Plaintiff’s bid

A plaintiff seeking to recover on a modified total cost claim must demonstrate the

reasonableness of its bid so as “not [to] get the benefit of its own failure to anticipate” the

conditions it encountered. Servidone Const. Corp. v. United States, 19 Cl. Ct. 346, 384-85

(1990), aff'd, 931 F.2d 860 (Fed. Cir. 1991). The average bid is often the most appropriate

method by which the Court can evaluate what a reasonable bid would have been. Youngdale &

Sons Const. Co., 27 Fed. Cl. at 543. At trial, the United States offered several examples of

reasonable bid estimates, all much higher than OSI’s subcontract bid. Using any of those

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averages as a Starting point for Plaintiffs modified total cost claim, Plaintiff's damages are a

negative number. A negative number indicates that had Plaintiff bid a “reasonable” amount, it

would have secured more than enough compensation to cover the costs it is now claiming.

(Weathers, TR at 1126:15—23). Additionally, even substituting Phillips & Jordan’s bid and

assuming it was “reasonable” despite being lower than these averages, OSI cannot prove

entitlement to damages.

OSI’s subcontract bid for CLIN 0005 was unreasonable using any of the four

comparative analyses provided at trial. First, OSP’s subcontract bid price was higher than the

average of the fourteen prime bids and the Independent Government Estimate. (/d. at 1067:14—

1068:19). OSI’s subcontract bid for excavation and embankment was $1.86 and $0.56,

respectively. (/d.). The average bid price was $4.41 and $2.68, respectively. (/d.). OSI underbid

the average prime bid by more than half on each line item, an unreasonably low price.

Second, compared to its own prime contract bid, OSI’s subcontract bid was unreasonably

low. OSI bid $2.50 for excavation and $1.57 for embankment work on the prime contract—

increases of approximately 34% and 180%, respectively, from its subcontract bid. (/d. at

1068:20—1069:19). OSI offered that this discrepancy was due to the artificial inflation of its

prime bid to take advantage of preferable price terms afforded because of OSI’s Small Business

Association classification. (Eastman, TR at 463:15—465:16). However, OSI’s invocation of its

10% price advantage does not adequately explain the discrepancy. (Weathers, TR at 1164:15—

1165:13). OSI failed to justify its massive reduction to its subcontract bid for the same scope

work for which it had submitted a prime bid, and the Court finds the subcontract bid

unreasonably low by comparison.

Third, the average of the two other subcontract bids for CLIN 0005 was $2.47 for

excavation and $2.13 for embankment. (/d. at 1069:20-1071:20). OSI’s subcontract bids for both

those line items are approximately 25% and 74% lower, respectively—an unreasonable discount.

(/d.). Fourth and finally, even including Phillips & Jordan’s bid in the average of subcontractor

bids, OSI bid for the subcontract at a steep discount—19.5% discount for excavation, and 72%

discount for embankment. (/d. at 1071:21—1072:16). That discount is, again, unreasonable.

In fact, even had OSI performed the work at Phillips & Jordan’s bid price—which is even

lower than the averages mentioned previously and therefore a more conservative benchmark in

OSI’s favor—OSI cannot show any damages. (Weathers, TR at 1115:1—1126:23 (substituting

Phillips & Jordan’s bid price, OSI’s damages would be negative $731,917)). In summary, OSI’s

subcontract bid was unreasonably low. And, even if the Court had found the United States liable

and used a reasonable bid estimate most favorable to OSI, OSI could not establish damages

under its modified total cost theory.

ii. Plaintiffs responsibility for additional costs

The fourth element a plaintiff must prove to recover on a modified total cost theory 1s its

lack of responsibility for its added costs. Youngdale & Sons Const. Co., 27 Fed. Cl. at 546.

“Where both parties contribute to [added costs] neither can recover damage, unless there is in the

proof a clear apportionment of the . . . expense attributable to each party.” Coath & Goss v.

United States, 101 Ct. Cl. 702, 714-15 (1944). The portion of damages attributable to the

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government must be proven with such certainty that the Court can make a “reasonably correct

approximation.” Wunderlich Contracting Co. v. United States, 173 Ct. Cl. 180, 199 (1965). Here

Plaintiff cannot show with any reasonable certainty or approximation the portion of costs for

which the Army Corps is responsible. Even if it could prove liability, Plaintiff would fail on this

element of its modified total cost claim.

2

First, OSI failed to account for several significant expenses included in its cost claim;

those costs were either by omitted from its bid price or were outside the scope of the claim.

(Weathers, TR at 1093:18—1100:9). Those expenses include a global positioning system

($325,370.40), labor supervision costs ($161,355.61), equipment costs ($459,496.46), among

others. (/d.). OSI acknowledged and later removed some of these erroneous costs from its claim,

but other mistakes remained in the claim presented at trial. (Eastman, TR at 431:18-454:9

($14,819.52 for water trucks; $58,346.45 for a tractor, etc.)). In all, OSI’s claim at trial still

contained approximately $459,500 worth of identified errors before OSI’s profit markups.

(Weathers, TR at 1097:17—1101:16).

Second, and more significantly, OSI failed to account for its own responsibility in

employing the strategy that substantially contributed to the costs of longer haul distances and out

of sequence work. As previously discussed, OSI elected to excavate and set aside Type 1 soil for

its exclusive use to cap the top three feet of the embankment. (Eastman, TR at 273:5— 274:6). It

could have used Type | soil as fill, but OSI chose not to. (See PX014.438—439). As it depleted

the Type 2 soil available for use as embankment fill, OSI continued to set aside Type 1 while

excavating further and further distances from the embankment work-in-progress. (Eastman, TR

at 274:14—275:8). OSI failed to segregate costs related to the compensation it was provided

under Contract Modification P00022 from the additional costs it alleges to have incurred.

Therefore, Plaintiff has failed to establish that it lacks responsibility for the additional costs.

Additionally, as a last resort, Plaintiff urges the Court to utilize the “jury verdict” method

of awarding damages. (PI.’s Post-Trial Brief at 40). The heavily disfavored “jury verdict”

method requires “clear proof” of injury, and sufficient evidence to make a “fair and reasonable

approximation” of damages. WRB Corp., 183 Ct. Cl. at 425; Ravens Grp., Inc. v. United States,

112 Fed. Cl. 39 (2013) (the jury verdict method is disfavored, and acceptable “only when more

exact methods are inapplicable.”). Plaintiff has not demonstrated clear proof of injury, nor has it

provided sufficient evidence of resultant damages. Even assuming the government’s liability

(which, again, is far from established), were the Court to attempt to account for the defects

identified above, any damages figure the Court would assess would amount to little more than a

wild guess. Guesswork and speculation are inappropriate bases for calculating a damages award.

Thompson v. Haynes, 305 F.3d 1369, 1382 (Fed. Cir. 2002) (damages awards must be more than

“merely speculative.”). Indeed, it is unclear whether OSI even knows what amount of damages

would compensate it for any alleged harms as evidenced by the numerous changes OSI has made

to its claim before, during, and after trial, and the mathematical errors in its post-trial briefing.

Plaintiff has not established entitlement to damages with any reasonable certainty and has not

provided the Court with any basis to award damages that amounts to more than an arbitrary

figure pulled from thin air.

In conclusion, Plaintiff cannot establish two crucial elements of a modified total cost

claim. The four elements are conjunctive, and thus Plaintiff’s failure would be fatal to its claim

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even if it had established the United States’ liability for damages. Propellex Corp., 342 F.3d at

1339 (“[U]nder [a] modified total cost method claim, plaintiff still ha[s] the burden of proving

the four requirements for a total cost recovery set forth above.”). Likewise, Plaintiffs claim for

damages under the “jury verdict” method is overly speculative at best. Therefore, even assuming

for the sake of argument that the United States bears some responsibility, the Court could not

award damages under the theories Plaintiff has advanced, and the United States would be entitled

to judgment.

IV. Decision and Order of Judgment

For the reasons discussed, Plaintiff cannot establish a differing site condition with respect

to soil content and has not established that Contract Modification P00022 provided incomplete

relief for the differing site condition with respect to material imbalance. Additionally, even if

Plaintiff had established liability with respect to either claim, Plaintiff has failed to sufficiently

establish entitlement to a quantum of damages that is based on anything more than mere

speculation. Therefore, the Court finds and concludes that the United States is entitled to

judgment. The Clerk is DIRECTED to enter judgment for the United States pursuant to RCFC

54. Each party shall bear its own costs.

IT IS SO ORDERED.

David A. Tapp

AVID A. TAPP, Judge

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