Short Bros. PLC v. United States

OPINION

CHRISTINE O.C. MILLER, Judge.

This case involves the acquisition for the U.S. Army National Guard of a commercial aircraft converted to a military aircraft, the C-2BB +, under a sole-source fixed-price contract. The finished product is quite the success; the C-23B+ is in service today, and some of the military aircraft are with our nation’s servicemembers in Iraq. The success did not come without cost. Defendant agreed to pay approximately $150 million for twenty-eight aircraft. Plaintiff sued in the United States Court of Federal Claims to recover cost overruns that, as of trial, plaintiff calculated at $58.9 million.

Trial demonstrated that plaintiff, a sophisticated original manufacturer and maintenance provider of aircraft, undertook a major modification effort that it had never performed before, underestimated the effort that the scope of work required, grossly underestimated hours and costs, and was hobbled by its production subcontractor. For its part, the military underestimated the effort that the scope of work required and exhibited questionable candor concerning the risks and costs that plaintiff faced.

Plaintiff produced and delivered twenty-eight aircraft based on what turned out to be a wholly inadequate government-approved proposal. Although the proposal period represented a singularly bilateral coordination effort on the part of the contractor and the military, plaintiff recorded, for the conversion alone, direct labor hours of 1,124,603 against the 253,531 estimated hours that formed the basis of its proposal. Where the fault for this discrepancy lay is the issue before the court.

PROCEDURAL HISTORY

Short Brothers, PLC (“plaintiff’), filed this lawsuit against the United States in the United States Court of Federal Claims on November 25, 1998. Short Brothers, PLC v. United States, No. 98-894C. The complaint sought relief on the following nine counts: two counts for illegal fixed-price contract; impossibility; commercial impracticability; failure to disclose superior knowledge; mutual mistake; defective government-furnished property; breach of implied duties of good faith, cooperation, and fairness; and unjust enrichment. The United States answered, and after completion of two years’ discovery, defendant moved for summary judgment on March 13, 2001. Briefing on defendant’s motion was completed in September 2001, and, after a ruling had not issued by October 2002, the parties filed motions for leave to file supplemental authority. The supplemental briefing was added to the record as of February 26, 2003, and the case was reassigned to the undersigned on March 10, 2004. As of that date, the summary judgment motion still was pending.

On March 18, 2004, an order entered that granted in part and denied in part defendant’s motion for summary judgment and scheduled trial. Short Brothers, PLC v. United States, No. 98-894C (Fed.Cl. Mar.18, 2004) (unpubl.) (the “Summary Judgment Order”). Surviving the Summary Judgment Order were plaintiffs claims for commercial impracticability, failure to disclose superior knowledge, mutual mistake, and defective government-furnished property. Plaintiffs *696 claims for illegal contract and impossibility were adjudicated in defendant’s favor. The parties proceeded to trial beginning in January 2005. 1

OVERVIEW OF THE PROCUREMENT

In 1993 the United States Government, through the U.S. Army Aviation and Troop Command (“ATCOM”), entered into Contract *697 No. DAAJ09-93-C-0656 with plaintiff for the procurement of twenty military aircraft with an option for an additional ten; U.S. Army National Guard (the “Guard”) was the customer. The aircraft was to be known as the C-23B + , 2 a modified version of older, commercial aircraft previously manufactured by plaintiff known as the SD3-60. While a C-23B + aircraft had never been manufactured prior to this contract, its procurement stemmed from the Guard’s need for an additional number of aircraft that plaintiff, the original equipment manufacturer, had discontinued, known as the C-23B, or C-23B Sherpa. The C-23B + , or the C-23B+ Sherpa, was to augment the Guard’s fleet of sixteen C-23B’s; its mission was to perform a medical evacuation role in support of the Army National Guard Aviation Classification Repair Activity Deport System and Theater Defense Force Airlift requirements. The C-23B+ also had to be capable of airdropping cargo and paratroopers.

The critical procurement events, to be described in detail, begin not with the issuance of the Request for Proposal (the “RFP”), but with the parties’ development of the Statement of Work (the “SOW”), a document incorporated into the contract that set forth the requirements for contract performance. SOW development occurred predominantly during 1992.

The Government issued the RFP on January 13, 1993, which was to be sole-sourced through plaintiff. Plaintiff submitted its first formal proposal on February 22, 1993, and, after a series of audits and revisions, submitted final updates on May 24, 1993. The parties conducted contract negotiations during August 1993, and the Government awarded Contract No. DAAJ09-93-C-0656 to plaintiff on September 30,1993.

The contract called for major modification work 3 to the second-hand SD3-60 aircraft, which, as part of its work under the contract, plaintiff would select and induct into the program. The conversion of the commercial SD3-60 aircraft, an analog to the C-23B, into a military C-23B+ encompassed discrete tasks required to meet the performance specifications set forth in the contract, including, but not limited to, the following major items: remove the tail of the SD3-60 and replace with a new twin fin tail with a rear ramp; remove a 36-inch section of the fuselage to shorten the aircraft, rejoin the sections and replace all electrical systems; install improved avionics systems; modify the cockpit; install new seats and cargo equipment; add a role beam to support a paratrooper- and cargo handling- air drop performance specification; and install thirty-seven items of new electronics.

The converted aircraft would replicate most, if not all, of the functions of the C-23B, other than performance. The Guard did not require a typical 30-year life of an airplane, flying at 2,500 hours. As described by Ian Heaton, plaintiff’s Director of New Pro-grammes, who was involved in developing the milestones for the project, “[W]e were trying to produce both a lookalike and an operationally similar airplane so that a crewman could step ... into a C-23B + from a C-23B and effectively not really notice the difference.” Deposition of Ian Heaton, Aug. 1-2, 2000, at 34 (“Heaton I”). “The [SD]3-60 to C-23B conversion required the supplying' of what was essentially 20% or whatever of a new aircraft that we had manufactured before into an old airplane[.]” Id. at 42.

*698 FACTS

I. BACKGROUND

1. Plaintiff and its businesses

Short Brothers, PLC (“plaintiff’), is a Public Limited Company organized and existing under the laws of Northern Ireland, with its principal place of business in Belfast, Northern Ireland. It is a subsidiary of Bombardier Aerospace (“Bombardier”), which acquired plaintiff in 1989, after which plaintiff took on the name Bombardier Shorts. Prior to the Bombardier acquisition, plaintiff was a government-owned aerospace company. Bombardier is based in Montreal, Canada; its plants are Canadair in Montreal; de Ha-villand Inc. (“de Havilland”) in Toronto; the Canadian plants in Toronto; and Bombardier Shorts (plaintiff) in Belfast, Ireland.

As a result of the acquisition, plaintiffs Belfast headquarters (referred to at times as “Belfast”) was reorganized into three business units: the aerospace or aircraft unit, the nacelles unit, and the fabrications unit. Bombardier also invested approximately half a billion U.S. dollars into plaintiff, including 200 million pounds to develop plaintiffs fabrications business unit. The fabrications business unit consisted of four sites in Belfast: the sheet metal manufacturing site, the composites manufacturing site, the metal bond manufacturing site, and the machining manufacturing site. Plaintiff since has developed into a successful manufacturing company, winning the best-manufacturer award in 2000 for the entire United Kingdom.

In 1991 plaintiff was organized into the following principal departments: Product and Logistics Support Department (“PALS”), part of the Support Services Division; Operations; Engineering; Procurement; Sales and Marketing; Finance; Human Resources; Commercial; and Commercial/Contracts.

Plaintiffs subsidiary, Short Brothers (USA), Inc. (“Shorts Inc.”), a United States trading company based out of Washington, D.C., was engaged primarily in marketing, but also played a role on leasing and support for plaintiffs commercial aircraft. A. Oakley Brooks, Jr., was in charge of the sales arm, Shorts Inc.

2. Plaintiffs prior production

Prior to 1992 plaintiff was primarily a commercial aircraft manufacturer, although it had ventured into several military programs, involving contracts with various governments. It manufactured the Tucano War-craft, which was a training military aircraft purchased by the United Kingdom Ministry of Defense and delivered to the Royal Air Force in England; the Tucano also was sold to the Kenyan Air Force and the Kuwaiti Air Force.

Of primary relevance to this case, plaintiff also manufactured the SD3-series aircraft, which included five variants from the initial design and production of the Skyvan aircraft. Plaintiff manufactured the SC-7 Skyvan aircraft in the 1960s for commercial freight or passenger purposes, which accommodated nineteen seats. From the Skyvan aircraft, plaintiff developed the SD3-30 in 1974. The twin fin tailed SD3-30 was a thirty- or thirty-three-seat commuter aircraft. In the 1980s the SD3-30 design evolved into three newly developed aircraft: the SD3-60, the UTT, and the C-23A.

The SD3-60 was a thirty-six-seat aircraft tailored specifically to the commuter market. It had larger engines than the SD3-30, and its fuselage, or the body of the aircraft, exceeded the SD3-30 by 36 inches. The tail of the SD3-60 was a single fin. Both the SD3-30 and SD3-60 were among the first aircraft in the industry to have a full standup galley, overhead baggage lockers, and a lavatory. The UTT was a utility tactical transport aircraft with some paratroop capability that was developed for military purposes. Few were actually built, some of which went to the United States Army; one went to Venezuela.

In 1985, after the manufacture of the SD3-60 and the UTT, plaintiff designed and manufactured the C-23A. This aircraft design was also developed from the design of the SD3-30, with smaller engines than the SD3-60. Plaintiff built the C-23A for the United States Air Force for use in Europe as a freighter. The C-23A had an outward-opening ramp door for cargo loading and no windows. Plaintiff produced eighteen of the *699 C-23As, and the Air Force deployed them at Zweibrucken Air Base, Germany, and in England. When Zweibrucken Air Base closed, the C-23As were redistributed to the Guard and the U.S. Forest Service, while some remained with the Air Force.

Based on the design of these three aircraft, the SD3-30, the UTT, and the C-23A, plaintiff in 1990 designed and manufactured a more advanced military aircraft known as the C-23B Sherpa. While derived from the designs of the earlier SD3-series aircraft, the C-23B, like the others, was not a modified aircraft, but was newly designed and manufactured, referred to as a “production aircraft.” The C-23B was based primarily on the structure of the SD3-60, although its fuselage was shorter than that of the SD3-30 and it had twin fins for a tail, like the SD3-30. Its engines were larger, and it had a new rear ramp door that opened both inward and outward, which allowed for paratrooper capability or dropping of other payloads during flight. The C-23B, manufactured under the auspices of the United States Army Aviation Systems Command (“AVSCOM”), 4 predecessor to ATCOM — for the Guard, was the last aircraft to come off plaintiffs Belfast production line, and it was put directly in service during Operation Desert Storm.

Although plaintiff was primarily a new aircraft manufacturer, it maintained ongoing relationships with its customers to support the aircraft in-service. Plaintiff tasked three groups of engineers with engineering support. First, field engineers were sent to work with the customers on any of their needs that might arise. Second, Belfast maintained a set of core engineers who were available to answer questions any of the aircraft operators might have. Third, an engineering group was responsible for producing and maintaining technical publications and manuals for the aircraft.

As an aircraft manufacturer, plaintiff also had responsibilities for its product for many years of its service life. When issues or undetected and unforeseen problems emerged after delivery, plaintiff would issue “service bulletins” to instruct aircraft operators on a particular modification to the aircraft. A standard service bulletin would include detailed instructions, a set of parts (or “kits”), and any needed design information that an operator would use to conduct a repair or a modification.

Plaintiff also undertook contracts to perform maintenance and discrete modification or refurbishment 5 tasks to its aircraft already in service. For example, plaintiff performed maintenance work and modification incorporation on the C-23A for the United States Air Force at Zweibrucken Air Base, Germany. Plaintiff also provided on-site and technical support for its Tucano aircraft post-delivery. Plaintiff maintained the aircraft, provided engineering support, and even performed some modification work. “One of the biggest” was performed for ATCOM on the C-23B during approximately 1992. Transcript of Proceedings, Short Brothers, PLC v. United States, No. 98-894C (Fed.Cl. Jan. 10—Feb.25, 2005), at 1057 (“Tr.”). As John C. Nesbitt, an experienced Program Manager for plaintiff, recalled, this involved the fitting of a flight mechanic’s station in the aircraft.

The upkeep of the SD3-series aircraft after manufacture during the early 1980s was carried out at several locations around the world, but the primary North American site for modification/refurbishment work for the SD3-series aircraft was Fields in Calgary. Even the United States Army used Fields in Calgary to put on sendee bulletins for four particular SD3-30 aircraft prior to 1992 that the Army had acquired from the Federal Aviation Administration (the “FAA”) (having seized the aircraft from a bankrupt Golden West).

Plaintiff maintained its own fleet of SD3-series aircraft, which its subsidiary Shorts Inc. leased out to other operators. During the early 1990s, plaintiff and Shorts Inc. *700 began using an American aircraft facility to conduct repair maintenance and overhaul activities. This facility and company, known as West Virginia Air Center (‘WVAC” or “Air Center”), was at the time a new facility but soon to become a major player in the contract at issue in this case.

3. West Virginia Air Center

Trial was as much about the evolution of the major subcontractor as it was about the odyssey of a government contract.

Located at Benedum Airport in Bridgeport, West Virginia, WVAC, a Bombardier-owned aircraft maintenance facility, is in full operational status. It performs maintenance and repair work on plaintiffs fleet of aircraft, and also holds large contracts for similar work for several major commercial airliners, including Delta Air Lines, Inc., and Northwest Airlines/KLM. WVAC recently expanded and now has a similar air center in Tucson, Arizona.

WVAC was conceived around 1990, but not as a Bombardier off-shoot. Instead, two wealthy families of entrepreneurs, the Comp-tons and the Koukolis, sought to create an air maintenance facility. Kenneth S. Brundle, then plaintiffs Vice President of Manufacturing who would go on to become Executive Vice President, Aerospace Divisions, Bombardier Aerospace Group, in Montreal, Canada, and finally Vice Chairman of plaintiff in Belfast, attended meetings with the Comp-tons and the Koukolis during the 1990 time frame to discuss the families’ concept of creating a SD3-30 and SD3-60 maintenance base. The end result of these meetings was WVAC.

WVAC was one of few facilities in the United States large enough to accommodate a full modification line, which requires a facility with sufficient hangar space for simultaneous work on multiple aircraft, as well as storage space and a paint facility. At the time WVAC was housed in a 145,000-square foot maintenance support center with two large maintenance bays, two paint bays, and various departments.

WVAC was destined to become the prime subcontractor responsible for performing the modification activity because the funding limitations for the C-23B+ project were to require the modifications to be “performed in the United States under a license agreement with the original manufacturer[.]” Department of Defense (“DoD”) Appropriations Act, 1992, Pub.L. No. 102-172, § 8105 , 105 Stat. 1150 , 1198 (1991). The statute thus mandated that the production facility be located in the United States. Plaintiff considered WVAC as the best choice to perform the modifications based on WVAC’s prior experience with the SD3-series aircraft. WVAC also shared a runway with a Guard C-23B detachment and was located near the C-23B Logistics Support Office. Diarmuid B. Ma-guire, plaintiffs Commercial Manager, who negotiated the contract with ATCOM, related: “[Wjhen ATCOM, in the January ’92 program review, outlined the timetable for completion of negotiations, they were notified that we had an existing teaming agreement in place with WVAC and it was our intention to base the work there.”

4. WVAC’s prior work

From its inception WVAC was a commercial house dealing with FAA procedures and doing FAA-related civil work. WVAC performed repair, maintenance, overhaul, and modification work for plaintiffs own fleet of SD3-30s and SD3-60s during the early 1990s. Work at WVAC included maintenance checks, also known as letter checks.

At an airliner's request, WVAC would be hired to place the aircraft on the shop floor and complete an inspection to the customer’s requests. The extent of the inspection, and thus the amount of work required, would depend on the level requested by the owner. Letter inspections went from a relatively simple “A check” up to a “D check,” which essentially required a complete strip down of the entire aircraft. WVAC also was involved in maintenance checks for aircraft that were owned by leasing companies. Prior to releasing an aircraft, a leasing company often would send the aircraft out for inspection to a facility such as WVAC to insure that it was in good condition. Both kinds of maintenance cheeks did not involve solely inspections. Any problems found would require *701 repair, and customers often would request that WVAC carry out tailored modifications to the aircraft or install service bulletins.

At the time of negotiations concerning the procurement of the aircraft involved in this case, WVAC had been the most recently utilized maintenance facility for plaintiff’s own fleet of SD3-30s and SD3-60s.

5. The prior contract between plaintiff and ATCOM for the C-2SB

Plaintiffs prior significant dealings with ATCOM involved the C-23A and C-23B aircraft. A twin fin tailed military aircraft with some paratrooper capability, the C-23B was developed specifically for ATCOM.

Ultimately, ATCOM became the only customer for the C-23B, which could not justify a full production line. Plaintiff decided to close production of the C-23B as of 1992. ATCOM initiated meetings with plaintiff in early 1991 for the purpose of continuing the supply to the Guard.

II. C-2SB + PROJECT DEVELOPMENT

1. Origin of the project

Although the formal RFP for this contract issued in January 1993, it did not trigger negotiations between plaintiff and ATCOM. In fact, by January 1993, both parties had developed a specific focus on a future project. Understandably, witness recollection of the events that transpired in 1990 or earlier, some fifteen years before trial, occasionally was nonspecific. With that caveat, it is known that the seeds of the Government’s interest in this project trace to some early point during 1990, when the Guard determined that it wanted continued delivery of aircraft with performance capabilities that met or exceeded those of the C-23B.

While the Guard was establishing its own need for additional aircraft, plaintiff was in the process of closing down its Belfast aircraft production lines. However, it was not until production had ceased on the C-23B aircraft, hangars reallocated, and tools dismantled that ATCOM formally approached Mr. Brundle — then Vice President of Manufacturing for plaintiff — to inquire whether plaintiff could restart production on the C-23B aircraft. 6 Mr. Brundle informed AT-COM that production to meet the Guard’s needs was not sufficient to justify a full production line. ATCOM responded by asking plaintiff to meet in early 1991 with an alternative means for fulfilling ATCOM’s requirement of ten additional C-23 aircraft.

The evidence concerning plaintiffs motivations for attempting to meet ATCOM’s additional requirements did not reflect much consistency. Messrs. Nesbitt and Brundle painted a picture of a somewhat disinterested reaction to ATCOM’s initial prodding, by explaining that plaintiffs core business no longer was aircraft manufacturing. Instead, plaintiff was becoming more involved with Bombardier programs and generally operating as an aerostructures facility; it did not expect further business from the C-23 program, nor would the C-23B project be a long-term business relationship with the U.S. Government. Undertaking a new C-23B project therefore was, according to Mr. Brundle, not considered a strategic business decision. On the other hand, Harry Stripe, a design engineer for plaintiff who in the early 1990s was Head of SD3 and Special Project Design, and who was responsible for the design, structural change, furnishing changes, and ground equipment for the project, indicated the opposite — that plaintiff not only wanted the military to require more C-23 aircraft, but that plaintiff in fact hoped that the military would request a sufficient quantity to render restarting of the production line a viable option. Deposition of Harry Stripe, Aug. 11, 2000,1181.

The C-23B contract with ATCOM, while handled directly between ATCOM and Belfast, involved, to a large degree, sales work and liaison activity by plaintiffs American-based subsidiary, Shorts Inc. Both the President of Shorts Inc., Mr. Brooks, and C.S. Compagna, Shorts Inc.’s Program Manager *702 for Military Aircraft, were key players in the negotiations for the development of the C-23B+ contract. They dealt directly with representatives of ATCOM, and, of course, Shorts Belfast. Mr. Brooks’s role also included lobbying efforts to Congress and the DoD for the purpose of obtaining business opportunities for plaintiff, although the extent of these lobbying efforts was not established during trial.

Whatever inconsistent opinions characterize Belfast, Shorts Inc., the American subsidiary, definitely had a fixed objective. Mr. Brooks was anxious for the business. He had a business relationship with WVAC. Shorts Inc. held meetings with WVAC early in 1991, including a June 11, 1991 program review. The United States subsidiary was also pitching the C-23B + project to Belfast, and its aspirations and evaluations of additional work for the United States Government were aligned accordingly. Shorts Inc. and/or Belfast produced a preliminary business plan in January 1991, reflecting nothing but positive business implications for developing plaintiffs U.S. contracts. The preliminary business plan indicated that such work would also be aligned with plaintiffs goals with WVAC, its “U.S. partner.” In at least a broad sense, the evidence showed that Shorts Inc. initiated marketing for future United States military procurements in the early 1990s. WVAC, too, was involved early on. According to Mr. Heaton, a “letter of understanding” existed between plaintiff and WVAC that committed plaintiff to use WVAC if plaintiff obtained the contract for the C-23B +, provided that WVAC elected to go forward. Heaton I Dep. at 44.

However plaintiffs varied motivations became catalogued into actual production planning, it is clear that by June 1990, plaintiff had developed a concept and even priced a rough order of magnitude for the project. This occurred prior to the issuance of the Request for Proposal and before Congress had stipulated the requirements for the procurement. 7

2. Development of the Statement of Work

What began as a concept developed into an outline of the required work, the SOW ultimately became part of the contract delineating the specifications of the project. It drove the subcontractors’ proposals. It formed the skeleton for all pricing estimates. It went through numerous iterations throughout pre-contract negotiations. And while the SOW was only the first of at least three levels of progressive detail describing the actual work, 8 it was the starting point for concept, design, and performance. Its purpose, as understood by both ATCOM and plaintiff from the beginning, was accurately to describe the work that would be contemplated in performance. ATCOM’s Business Clear- *703 anee Memorandum, dated August 3, 1993, viewed the SOW rather as a “detailed” plan for work, such that “uncertainties can be identified and estimates of their cost impact can be made.” The SOW, however, did not describe how the work was to be performed; rather, as Kevin Crawley, an organizer who headed up the Shorts Belfast team participating in SOW discussions testified, it described what work was to be done. Deposition of Kevin Crawley, July 26, 2000, IT 108.

The SOW would provide the list of tasks that the contractor would be required to perform in order to successfully convert the donor aircraft into the C-23B + product. It was not by any means a one-sided creation, nor was it a ready-to-go request for proposal with a pre-packaged list of tasks for the contractor to propose to. Instead, it was the product of two objectives: the Guard’s need for additional aircraft, and plaintiffs willingness to do business with ATCOM — that is, develop a plan to meet the Guard’s needs without using a new-manufacture program. The only option on the table for plaintiff was to take existing aircraft and modify them into whatever the Guard wanted.

Plaintiffs conceptual work and rough order of magnitude pricing, including preliminary design work, were underway throughout 1990 and 1991, during which period the content of the SOW was anything but certain. Some discussion occurred about a SOW in 1991 involving both parties, 9 but this was premature to the actual SOW deliberations, which occurred in 1992.

Development of the SOW formally began with ATCOM’s authorship of the first draft SOW in January 1992, which it supplied to plaintiff. It was a document of seven pages, and ATCOM produced it shortly after writing a January 3, 1992 memorandum to the Guard requesting responses to various questions related to the what the Guard sought in terms of performance specifications, such as the number of years of-service expected of the aircraft and any differences in performance capabilities. ATCOM was proceeding from a comparison between what the Guard already had procured, the C-23B aircraft, and what the Guard expected from the C-23B + . ATCOM also knew, however, that it would be unable to prepare the final SOW because, as Contracting Officer Steven S. Mead noted in a November 18, 1992 Memorandum for Record, “the Government lacked technical data with which to prepare a[SOW], and the Government needed to enter into a dialog with industry to get this information.”

With a draft SOW in hand, plaintiff and ATCOM proceeded with several meetings, some in St. Louis and others in Belfast, during which the SOW was developed through a series of drafts. In addition to plaintiff and ATCOM, WVAC representatives attended not so much as contributors, but more as observers. That is not to suggest WVAC had no involvement in the development of the SOW. The elements of the SOW were broken down by plaintiff into the Work Breakdown Structure (the ‘WBS”), which was the listing of tasks to meet the SOW. Mr. Heaton said that WVAC had become “heavily involved” in producing the WBS for over a year before he stepped into the project. Heaton I Dep. at 40.

While ATCOM took the lead and authorship during the development of the SOW, plaintiff was the “principal contributor,” according to Mr. Heaton. Heaton II Dep. at 210. They worked together, jointly, on all aspects, freely passing information back and forth and participating equally on all issues. Paul E. Lutz, ATCOM’s admittedly inexperienced engineer who participated in drafting *704 the SOW, testified that the SOW was ultimately a “government document,” Tr. at 4243-44, although he described the process and the participants, as follows: “Shorts, the Guard, and I’ll say AVSCOM, because that would include program office, contracting office and engineering, we all participated in the drafting of the [SOW]. In fact, wé freely passed back and forth information to try to create the [SOW].” Tr. at 4242. When asked what aspects plaintiff helped draft, he responded, ‘With respect to what I helped draft, which would be more than the technical aspects, because there were other aspects, Shorts and ourselves and the Guard, we all participated generally equally on all of the issues.” Id.

The basic structure of these meetings, and the interim work, involved plaintiffs recommending changes to the content of the SOW. ATCOM had ultimate responsibility for the SOW and, based on its decisions, would revise the SOW accordingly. For example, the January 1992 draft SOW was based on the conversion of the SD3-30 aircraft. 10 Because the Guard and ATCOM did not approve it, a June 24, 1992 revision substituted the SD3-60 aircraft. 11 This was a particularly contentious switch, one that did not have the support of all of plaintiffs team because it fundamentally altered the nature of the tasks required for the modification.

As of that date, plaintiff had developed its work concepts and rough order of magnitude based on the SD3-30, in part because it was less costly. During spring 1992, however, with SOW development in progress, plaintiff learned that the Guard was seeking an aircraft that would have equal to or greater performance capability than the C-23B. AT-COM asked plaintiff to provide a comparison of a converted SD3-30 and a converted SD3-60.

Plaintiff responded by providing ATCOM a “first ■ cut” of the SD3-60 modification on May 19,1992. This was based in accordance with a design engineering department assessment of the comparative viability of the SD3-60 and SD3-30 for the project, as documented by plaintiffs March 9,1992 Strategic Planning Committee C-23C Project Review. This Project Review notes that the C-23B aircraft were produced from the SD3-60, not the SD3-30, and that “from structural design viewpoint pre-owned 360s [SD3-60s] offer best solution for conversion to C-23B configuration.” It also lists the modifications required.

Dissent among plaintiffs team to change to the SD3-60 in part stemmed from the known fact that converting the SD3-60, as opposed to the SD3-30, was more costly. 12 Mr. Heaton viewed the switch as a “change of directionf,]” Heaton I Dep. at 34, and believed that plaintiff was too far along using the SD3-30s. He also expressed some irritation with governmental wavering: Plaintiff was required to “keep chasing the Government to define what they wanted,” because the “Government was struggling to give us a performance definition of what was wanted[.]” Id. at 99-100 .

Ultimately, ATCOM decided to use the SD3-60, instead of the SD3-30, because the SD3-60s more closely matched the performance capability of the Guard’s C-23B aircraft fleet, commonality with which was desired *705 and, in fact, required by the DoD Appropriations Act, 1992 § 8105, 105 Stat. at 1198-99.

While it was ATCOM that mandated the use of the SD3-60, the decision was guided by plaintiff 13 because, after all, it was plaintiffs own comparison conclusions that were the basis of the decision. 14

SOW development foreshadowed an issue, a particularly prophetic one, that arose regarding the June 24,1992 draft SOW’s use of the term “remanufacture” in the scope of work clause. The topic came up at a June 29, 1992 meeting during which the parties discussed the June version of the SOW. Plaintiff questioned ATCOM about the scope clause, which at that time described the project as requiring “remanufacturing” of the donor aircraft, because plaintiff believed that the term misidentified the extent of the task:

[I]n our understanding the word “manufacture” or “remanufacture” meant taking raw material and developing an object from raw material, or taking an existing object, completely disassembling it and performing new operations with it before putting it back together again. At the time of the [SOW] discussions we did not conceive that the task to be undertaken was as big as disassembling the whole aircraft. It was a much simpler task.

Crawley Dep. ¶ 119. 15

Notes of the meeting of June 29, 1992, reflect that Mr. Mead, the contracting officer in charge of acquisition, did not want the end product to reflect new aircraft, and ATCOM agreed to use the term “reconfigure.” Mr. Crawley is synopsized as stating that he was “uncomfortable” with the term “remanufac-ture” because “English Law’s definition of remanufacture suggests a full manufacturing process.”

Resolution of these issues, along with many others, informed the revised July 10, 1992 draft SOW. Further meetings on the SOW occurred in August 1992, with revisions of the SOW issued in September and November 1992. The November 1992 version of the SOW essentially was the same as the final SOW, incorporated as part of the contract— subject to minor revisions until contract award.

3. The Work Breakdown Structure

Although the SOW expressed the parties’ joint views as to what work would be required for the C-23B+ undertaking, it did not achieve a level of detail necessary to enable plaintiff to price the work. A description was required of the individual tasks necessary to accomplish what was set out in the SOW. The Work Breakdown Structure (the ‘WBS”) filled this need. It listed all tasks necessary to meet the SOW work elements. Mr. Maguire, plaintiffs Designated Commercial Manager responsible for finalizing the proposals incorporating the subcontracts and negotiating with ATCOM, envisioned that the WBS would “enable a price negotiation to be concluded [that] would result in a fair and reasonable price to the contractor^]” Tr. at 600.

*706 Like the SOW, ATCOM had a role in its development. Unlike the SOW, however, this was a proposer’s document. As Stephen G.D. McCoy, a thirty-year Belfast employee who originally was detailed to serve as General Manager of WVAC for the C-23B + project and who still serves as WVAC’s General Manager today, explained: “[T]he [SOW] is actually a very high level organization, and the WBS then starts breaking it down into much lower levels of detail.” Tr. at 1781. Mr. McCoy testified that “the WBS was the basis for the proposal, the contract negotiations, and ultimately contract award.” Tr. at 1783. The Government already had expressed what it wanted to procure. It was now plaintiff’s turn to propose a technical, detailed plan of how the work should be performed. Accordingly, the Government assumed the role of auditor.

Each WBS took one particular provision in the SOW and extrapolated the necessary tasks to accomplish it. The WBS was a massive undertaking, and it was organized into a list of discrete tasks. Each task was assigned a WBS number. Ml of the WBS’s, or WBS items, had individual WBS numbers; the final WBS was actually a list of numerous WBS’s.

To illustrate, the SOW identifies section 3.2.5.11 as “Aircraft Modification,” which obviously relates to the bulk of the task. It is divided into subsection 3.2.5.11.1, “External/Structural Modifications,” and subsection 3.2.5.11.2, “Internal Modifications.” The SOW further divides both subsections into multiple subsections that identify various parts of the aircraft and describe, generally, the work required. As an example, section 3.2.5.11.1(c) provides: “Forward Fuselage: Remove a 36 inch section from the forward fuselage between flight deck and wing to achieve C-23B fuselage geometry. The contractor shall perform all actions required to rejoin the aircraft to include: sheet metal, structural, wiring, control systems and all other affected systems.”

Correspondingly, the WBS was organized into four sections, one of which, WBS Item 2.0, addressed “Design/Manufacture/Modifi-eations” Multiple WBS’s reference the corresponding SOW subsection. For SOW § 3.2.5.11.2, WBS Item 2.1.1 applies, which is broken down into 2.1.1.1, .2, .3, etc., with descriptions such as Detail Parts Manufacture, Refurbish and Modify Floor, Design, Electrical, etc. These headings specify the technical information found in the WBS; actual task descriptions of how to accomplish the tasks identified in the WBS are found in plaintiffs proposal, not in the WBS.

The final WBS, part of plaintiffs proposal, also assigned responsibility for each particular WBS item, either to plaintiff, WVAC, or another subcontractor. The level of detail contained in the WBS was important, as it not only described how plaintiff would complete the project, but it also allowed both plaintiff and WVAC to cost each particular item.

Just as the SOW was a government-authored document in which plaintiff participated, the WBS was a plaintiff-authored document developed by plaintiff and its principal subcontractors. ATCOM reviewed the WBS and agreed that the WBS was appropriate. From this point, plaintiff provided the WBS to the individual subcontractors for them to develop their bids.

At this early date, the WBS was not intended to be complete, as each subcontractor added to or enhanced its respective portions of the WBS throughout its proposal development, taking the WBS down to even greater detail. A subcontractor basically supplied details in its respective portion of the WBS in conjunction with input from plaintiff. Just as the role the WBS played in terms of what performance and cost would entail could not be overstated, so, too, the role of the subcontractors’ input could not be overstated. By “filling the gaps” of the WBS, the subcontractors were making crucial decisions on the contours of performance with consequences in the millions of dollars.

WVAC’s role in developing the portion of the WBS that it would be required to complete was significant, but the primary creator was plaintiff. Plaintiff provided an initial WBS with the major structural elements, and WVAC, in turn, was responsible for the de *707 tail task descriptions. 16 WVAC worked closely with Belfast in order to do so, including sending personnel to Belfast. Stephen C.W. Bowyer, WVAC’s Chief Engineer, traveled to Belfast to observe the actual aircraft, take photographs, and obtain technical information about the aircraft from plaintiff, the Original Equipment Manufacturer (the “OEM”). In addition to developing detail task descriptions, WVAC also could request additional WBS items if WVAC found them to be necessary. Mr. Bowyer recalled having at least weekly communications with plaintiff as the WBS was developed.

Mr. Bowyer said the WBS was a “living document” undergoing changes throughout its creation. Tr. at 2152. Accordingly, it was reviewed on numerous occasions, and not just by plaintiff. ATCOM also had a role in its development, but its role — after approval of the initial WBS — was part of the proposal review process rather than actual participation in WBS development. Mr. McCoy recalled seven versions prior to contract award.

4. Over and Aboves

Although the SOW and the WBS described the work contemplated by the parties as necessary to modify the SD3-60 aircraft into the C-23B+ aircraft, it was always understood that not every aspect of the work could be anticipated. The SD3-60s used for the modification were older aircraft. The mandatory procedures for selecting the candidate aircraft were a quality control mechanism to help reduce the potential for unexpected repair work. Those procedures required plaintiff to conduct a pre-purchase inspection, which would enable plaintiff to choose only the best quality aircraft for the modification program.

Like any inspection, however, the extent to which problems could be revealed depended on the extent of the inspection. The pre-purchase inspection was never intended to be as comprehensive as the post-award tear down inspection. The tear down inspection would enable plaintiff physically to take apart various structures on the aircraft to discover latent problems. A tear down inspection could not be completed until after an aircraft was chosen, approved, purchased, and moved to WVAC, because, prior thereto, the candidate aircraft did not belong to either the Government or plaintiff. Instead, plaintiff would be choosing SD3-60 aircraft owned by other airline companies, which were not amenable to allowing plaintiff free license to tear apart their aircraft. The pre-purchase inspection, therefore, was a more limited process.

A certain amount of cost uncertainty could not be alleviated by the built-in quality procedures of the pre-purchase inspection, but the requisite tear down inspection — an activity that occurred after the aircraft purchase— was intended to identify all required repairs, including those that were not revealed through the pre-purchase inspection. As such repairs would be necessary for certification and air-worthiness, funding had to be available, and thus came the concept of “over and above.”

The Over and Aboves (the “0 & As”) were to become a separately funded part of the contract to cover the costs for these unanticipated repairs, 17 which would be subject to ATCOM’s approval on a case-by-case basis. Although neither party expected a large amount of 0 & As, plaintiff had a standing objection, throughout the proposal period and up until award, about the use of a ceiling price for the 0 & As.

Mr. Mead memorialized his early thoughts on 0 & As into a November 18, 1992 Memorandum for Record reflecting “Contracting Officer’s Determinations, Solicitation *708 DAAJ09-92-R-0819, C-28C Remanufac-ture[,]” as follows:

[Contract Line Item Number (“CLIN”) ] 0001, which is for SD3-60 aircraft purchase, will be reimbursed at cost. The Government estimates 30 percent of contract dollars will go to the SD3-60 purchase. The contractor will be reimbursed strictly at the bill of sale price after he has purchased the SD3-60 aircraft. In accordance with FAR [§ ] 16.301-3, the Government has determined:

a. The contractor’s accounting system is adequate for determining costs applicable to this contract____

b. Appropriate Government surveillance during performance will provide reasonable assurance that efficient methods and effective cost controls are used by requiring and approving an on-site, pre-purchase inspection before the contractor purchases the SD3-60.

The over and above work, CLIN 0003, will have time-and-material like features because it is not possible at the time of award to estimate accurately the extent of the repair work or to anticipate costs with any reasonable degree of confidence. The Government estimates over and above modifications will be 20 percent of contract dollar's. For this reason, the PCO [Procurement Contracting Officer] has determined an over and above CLIN with time- and-material like features is the only suitable choice. (FAR [§ ] 16.601(C))[.] This CLIN will also have a funding limitation.

5. Plaintiffs approach to its proposal

Plaintiff formally responded to the January 13, 1993 Request for Proposal on February 22, 1993 (later updated May 24, 1993) with a two-part proposal: part 1, plaintiffs technical response, and part 2, the cost proposal. The technical proposal described how the work would be performed by each major participant and how plaintiff would manage the task. It also included, as an attachment, the WBS, which corresponded to the elements of the solicitation SOW and listed which participant had responsibility for each particular WBS item.

The cost proposal included separated submissions from the main subcontractors, including WVAC and de Havilland, 18 along with a summary of all costs. It was lengthier than the technical proposal because it included detailed cosVpricing estimates for each WBS item where practicable; lesser WBS items were incorporated into larger ones for purposes of the cost proposal. The bulk of the cost proposal included itemized cost printouts per WBS item, including labor and material, and further subdivision, profit, and G & A. It also included project team costs, including wages and travel.

As noted above, characterizing the issuance of the formal RFP in January 1993 as the beginning of plaintiffs proposal efforts would be misleading. Plaintiff was substantially involved in formulating its proposal through its collaboration on the SOW and the WBS. It becomes more of an exercise in semantics to identify a particular date on which SOW or WBS development became a “proposal development.” The lobbying efforts by Shorts Inc., led by Mr. Brooks, the early relationship with WVAC, and the rough order of magnitude work in Belfast — all proceeding in the early 1990s in conjunction with the SOW and WBS efforts — further cloud a distinction.

1) Plaintiffs pre-proposal strategy

Outside of plaintiffs involvement in the creation of the SOW and the WBS, plaintiffs role in its proposal development was primarily managerial. Because WVAC would perform all the actual work on the donor aircraft, plaintiff and WVAC generated a steady flow of written communication and dialogue before and after the January 1993 RFP.

WVAC’s involvement as the U.S. production facility traces at least to June 1990. The January 9, 1991 C-23C Preliminary Business Plan states that WVAC “[has] been involved *709 in the planning for the [C-23B + ] since June, 1990[,] and to date ha[s] invested considerable time and money in development of the program. A preliminary Work Breakdown Structure has been defined by WVAC in accordance with the Type Specification.” The individual key to plaintiffs relationship with WVAC was Mr. Brooks of Shorts Inc., who took the lead. By a letter dated December 23, 1991, Mr. Brooks corresponded with Jeffrey K. Compton, WVAC’s President, about establishing a “teaming agreement” with WVAC by January 1992, an arrangement that the Preliminary Business Plan had contemplated in 1990. The “teaming agreement” between plaintiff and WVAC was a letter of understanding, and it established an “exclusivity arrangement,” which, as discussed above, required plaintiff to use WVAC if plaintiff received the contemplated contract.

After WVAC representatives visited Belfast, plaintiff sent Cathryn Crone Gilmore, Contract Manager — responsible for scheduling and otherwise accomplishing the tasks set out by the production engineers (called methods engineers) — and Alan Coey, the Belfast Contract Manager for the C-23B + , to visit WVAC on November 19 and 20,1990. WVAC at that time was just beginning its business and still recruiting labor. As recorded by a draft visit report, DX 1044, plaintiff recognized that WVAC’s youth created a risk, but Ms. Gilmore and Mr. Coey concluded that this involved merely the issue of ‘“when’ will they be ready rather than ‘will’ they ever be ready.” They agreed at that time that plaintiff would be required to provide on-site personnel, including methods and production staff, and recognized the need for further discussions regarding the assignment of responsibility:

The question of who is responsible for what will require further discussion as WVAC wanted Service Bulletins plus kits 19 and they would do all the work on the aircraft. [Plaintiff] advised that they could not agree to this as it would be our intention to do all the “engineering” work only and maybe supply the Inward/Outward Passenger Doors, Rear Ramp Door complete and [ ] Engines[.]

Mr. Heaton, who had overall responsibility for assessing WVAC, was fully cognizant of these risks. He admitted that, “had the contract work that subsequently was placed [at WVAC] been required to be placed [initially,] the work would not have gone in.” Heaton I Dep. at 51. Plaintiff was impressed that WVAC hired R. Darryl Devitt as the Chief Operating Officer, who had worked at Fields of Canada, a company that had performed “significant modification” on plaintiffs aircraft. Id. at 105. The background and justification of other personnel at WVAC, including David P. Long, who became President of WVAC, and Mr. Bowyer, caused plaintiff to conclude that while WVAC was inexperienced, it was managed competently. 20

Although Mr. Heaton did not have detailed knowledge of the ongoing SOW deliberations, he considered that effort to be performed at Belfast, not the SOW per se, would define WVAC’s tasks: an “interpretation of [plaintiffs] designers, production engineers ... of what would be necessary to achieve the end objective of the SOW, ...” Heaton I Dep. at 64. And that implied “significant engineering work.” Id. at 32; see also id. at 18.

The Preliminary Business Plan dated January 9, 1991, generated when the project contemplated conversion of SD3-30s, for which WVAC had performed maintenance, acknowledged that WVAC was “recently opened” as an “FAA certified overhaul and repair center.” The risk involved in manufacturing was assessed as moderate, based upon “potentially excessive learning curves *710 and by virtue of the startup nature of WVAC.”

Once the teaming agreement with WVAC was in place, and in light of plaintiffs cognizance of the risks associated with WVAC, plaintiff during 1992 made a series of visits to WVAC. WVAC hosted one of these meetings in March 1992. Representing WVAC were Mr. Long, WVAC Program Manager; Mr. Devitt, WVAC’s Vice President and General Manager; and Mr. Compton, WVAC’s President. Representing Shorts Inc. were Mr. Brooks and Michael S. Halligan, Program Manager for the C-23B +; and representing Belfast was Mr. Heaton, the Director of New Programmes who was in charge of evaluating WVAC. The presentation included estimates and a schedule, showing anticipated contract award on May 1,1993. Aircraft delivery was to be made between February 1995 and November 1996 based on that award date.

During mid-to-late 1992 while SOW deliberations were ongoing in St. Louis and Belfast, plaintiff began actively to assist WVAC with its own proposal. Mr. Bowyer, WVAC’s Chief Engineer, during the pre-proposal period of 1992, met often with plaintiffs personnel, both in Belfast and at WVAC. Plaintiff sent technical specialists on several occasions during 1992 to WVAC to help Mr. Bowyer with preparing WVAC’s proposal. Plaintiff also provided WVAC with other sources of information, such as engineering drawings, technical manuals, and the Illustrated Parts Catalog (the “IPC”) for both the C-23B and the SD3-60 aircraft — the two predecessor aircraft. 21 WVAC also spoke with plaintiffs design engineers, such as Mr. Stripe and “Bobby” Downie — an infamous name as events unfolded — but the information obtained consisted of only the word pictures from the prehminary concept phase, high-level design engineering ideas.

Plaintiff also invited Mr. Bowyer to visit Belfast in September and October 1992, when he met Messrs. Stripe and Downie of the Design Engineering Department; Patrick N. Cowan, Manager, Design Liason Team; and George Cather, Director of Engineering, Belfast. These coordinated efforts implicated technical and important engineering decisions about, for example, where to cut the aircraft to remove 36 inches of the fuselage. These decisions were WVAC’s to make, as part of what would become its proposal, but they were taken with full knowledge and approval by plaintiff.

Mr. Bowyer sent an October 1, 1992 fax to Mr. Long, then serving as plaintiffs C-23B + Project Manager, to update him on WVAC’s planning efforts since his trip to Belfast. Mr. Bowyer wrote that he was “happy to report” reductions in manpower estimates, through reassessments of learning curve estimates — the implication of which will be discussed — and a decision to flatten the learning curve at the tenth aircraft:

This model is based on our management’s experience in other heavy structural mod programs. Such behaviour is typical for small production runs in a modification environment. This is because there are fewer increasing economies of scale with this sort of project than for the large new production programs that the learning curve theory is based on.

During November 1992 plaintiff sent a team to WVAC for another pre-proposal meeting held from November 21-24, 1992. WVAC had been working extensively on its proposal, and plaintiff wanted to review the proposal thoroughly against a draft RFP in order to ensure that WVAC would be ready to respond when the formal RFP was issued in January 1993.

2) Plaintiffs approach to design engineering, methods engineering and scheduling

All pre-proposal activities (all work done up until the issuance of the formal RFP in January 1993), are crucial to plaintiffs approach to its proposal because they inform the three pertinent aspects of the proposal: (1) the design engineering — what plaintiff was going to do; (2) the methods engineering — how plaintiff was going to do it; and (3) the scheduling — when it would be done.

*711 i. Design engineering

One critical aspect of plaintiffs proposal is that the SOW provided that the contractor would do the design engineering work. Thus, once the contract was awarded, plaintiff would produce what are referred to as “detail design drawings,” the ultimate product of a design engineer, which would detail the modifications. Two types of detail design drawings were involved: One is a detail drawing that shows a part; the other is a general assembly that shows that part being assembled.

While plaintiff was not funded to do any detail design drawings prior to award, some design engineering activities were completed before September 30, 1993. Plaintiff had to generate design concepts in order to formulate realistic technical and price proposals. Plaintiffs design engineers worked from an early stage on what plaintiff calls “concept designs.” The concept design stage involves informal work by design engineers, whose output usually included verbal descriptions of anticipated design drawings and “word pictures,” as termed by John W. Ballard, Senior Industrial Engineer for plaintiff, who was the principal Methods (production) Engineer on the project. This is not detail design work; plaintiff did not produce detail design drawings prior to award.

The reliability of design work at this stage was low, because design engineers were conceptualizing without vital engineering information necessary to produce actual detail design drawings. Mr. Maguire, plaintiffs Commercial Manager who finalized the proposal with WVAC and negotiated with AT-COM, explained the role of the design process during contract performance. Work on a detail design drawing does not commence until after a contract is awarded.

Mr. Stripe was in charge of structural design for the C-23B + project. He related that the actual design began with “scheming” of a local area that would be impacted — for example, the fuselage — and then the designer would extract the major assemblies, go on to the subassemblies, and do the details. Stripe Dep. 11136. The specific local areas would be assigned to different designers. The drawings for this project took approximately forty weeks and work issued incrementally. Mr. Stripe reported to Tom Mansfield, the Engineering Project Manager, who was responsible for drawing up the design engineering budget. Mr. Mansfield described the pre-contract design work as an “assessment of task[,] ... a written description of the structural changes, ... a few sketches done, how we felt we would tackle the job.” Deposition of Tom Mansfield, Aug. 3, 2000, at 10. “Proper engineering drawings” were produced only after contract award. Id. at 23. More significantly, he testified: “The C-23B + , particularly on the structural engineering, we did have what we called a small design build team which were actually planners in the office, so that they knew what was going on and gave advice on the practicality of what the design engineering people were proposing.” Id. at 12-13.

A detail design drawing cannot be released until review by the Stress Engineering Department. Stress engineers perform stress calculations, which take the modifications proposed by a detail design drawing and calculate the distribution of loads on the structure of the aircraft. According to Mr. Nesbitt, Stress Engineering is one of several departments providing input into the creation of detail design drawings; others included weights, aerodynamics, and Methods Engineering. All departments would sign off on the drawings.

During the early stages of the pre-proposal period, plaintiff involved design engineers to do “feasibility studies.” Tr. at 932. These studies, in turn, assisted ATCOM in the creation of the SOW. Design engineers provided the Strategic Planning Committee with the comparative assessments of using the SD3-30 and SD3-60 aircraft for the conversion. Such feasibility studies were well within the concept design phase.

Not only was plaintiff not funded to include the detail design activities incident to submitting its proposals, but another aspect of the preaward period implicitly impacted the nature of plaintiffs limited, first-stage conceptual design engineering.. Plaintiff had experience with modifying its own aircraft, although plaintiffs witnesses were quick to *712 qualify the modifications as minor. Design Engineer Stripe made the point: “Short Brothers are basically producers of new aircraft. It didn’t have a mod. squad or whatever for refurbishment on that type of scale.” Stripe Dep. II 111. Throughout the pre-pro-posal period, and even during the actual proposal process, plaintiff planned to subcontract the design engineering activities to what was referred to as a “design house.” The Strategic Planning Committee meeting on March 9, 1992, during which the SD3-30 — -versus—SD3-60 discussion occurred, also addressed the issue of resources for the project. At that time plaintiff concluded that it would not be able to complete the design activity because those resources would be diverted to working on a Lear jet program discussed by Mr. Maguire. The Lear program date eventually slipped, but it had been expected to conflict with the C-23B+ program.

Because of the limited resources available for design work, plaintiff developed a SOW for the design house. This SOW would have required the design house to do all “design and development of all the modifications” required for the conversion, but plaintiff would have maintained “overall control of that design even though it was being operated by a subcontractor.” Crawley Dep. ¶¶ 261, 263. It contemplated a Special or Supplementary Type Certificate (“STC”) approach, which is used extensively in the United States and is a method of obtaining certification for a modified aircraft or for a modification to an aircraft. Id. ¶ 279; Heaton I Dep. at 18-19. The scope provision of this SOW provided, in pertinent part:

This [SOW] covers the provision of engineering and design services required of the contractor on behalf of [plaintiff].

The scope of this SOW is to prepare a design and engineering package to modify the aircraft at a designated plant in the USA; to certify the modified aircraft to FAR Part 25/FAR Part 36 through a supplemental type certificate process; and to provide any necessary on site engineering design support throughout the life of the manufacturing/modification programme.

While several subcontractors were under consideration, WVAC expressed interest in undertaking this work, but not until after September 1992. Apparently, WVAC — and this occurred well into work on the WBS— was proposing to be the design house and submitted a preliminary proposal to plaintiff by fax on November 13,1992.

Although the date on which plaintiff decided to do the design work in-house is not certain, WVAC was in limbo on its design house proposal until after it submitted its formal technical and cost proposal for its other work in April 1993. Ultimately, plaintiff abandoned using a design house to produce the detail design work for several reasons, including a general dissatisfaction with the potential subcontractors’ capability of meeting the exact design criteria. According to Mr. Heaton, using an “out-house” would be more costly. Heaton I Dep. at 28. And, then, plaintiff had to keep its own team of skilled designers engaged or risk losing them to competition. Plaintiff already had established a good working relationship with the FAA and the Civil Aviation Authority (the U.K.’s equivalent to the FAA) to obtain necessary certification; delegating control over the certification process to a design house was perceived as more risky. Finally, plaintiff did not have the constraints on its resources as it initially had thought because the Leer jet program was moved. For these reasons, during early 1993, plaintiff opted against a design house.

ii. Methods engineering

Methods engineering is an umbrella term, and different organizations use it differently. Mr. McCoy provided a general explanation of the process. In general, it refers to planning. A methods engineer takes the detail design drawings, and the notes on those drawings, and translates that product into instructions for the mechanics on the shop floor or the fabrication workers creating a particular part. Many organizations also consider scheduling among the responsibilities of their methods engineering department; some have separate scheduling departments. However the methods engineering is organized, its use in the industry *713 is crucial; Mr. Ballard, a justifiably proud methods engineer, declared that “[mjethods engineering is vital to the aerospace industry. It’s the basis of which the aerospace industry conducts its business.” Tr. at 2411.

While methods engineering is an integral part of any type of manufacturing or modification of an aircraft or part, the question of who discharges the responsibility depends entirely on the project. Moreover, different types of projects are undertaken in the aerospace industry, the nature of which would imply to a proposing contractor various levels of methods requirements. At the level of least involvement, a standard service bulletin usually would require the department that actually will incorporate the service bulletin into the aircraft to expect to have all methods engineering set out as part of the engineering package. Thus, a service bulletin would be used if, for example, an aircraft manufacturer conducting a service inspection discovers a particular problem with a part on the aircraft. The manufacturer might develop a service bulletin to fix the problem, which would include all the engineering — design, methods, and even the parts — required to accomplish the particular solution, and then send out these service bulletins to the users of the aircraft. A contractor performing service bulletin work therefore would not include significant methods planning in its cost proposal on this type of pre-packaged work.

The other extreme would be a new manufacture. After the design engineering drawings were issued, the contractor would anticipate the need for resources to create all of the instructions for the actual shop-floor mechanics to complete each task. Plaintiff, as an aircraft manufacturer, had a system in place for its methods engineers. They would create Engineering Process Records (“EPRs”), which were the actual instruction sheets with a list of parts and any information that a mechanic might need; 22 the more EPRs, the larger the project. WVAC’s version of an EPR was called a Work Procedure Sheet (‘WPS”), and plaintiff adopted the term “WPS” to avoid confusion in this project.

The methods engineering product anticipated in this project was to be the final and lowest level of detailed task descriptions. From the more general to the most specific levels were the SOW, the WBS, and finally the WPS’s. A methods engineer’s role did not end after creation of a WPS. Methods personnel were also required on the shop floor during performance. They would interface with the mechanics, address problems, revise WPS’s, and improve tooling.

As the detail design phase of the project was to proceed after award, plaintiff did not perform any methods engineering during the pre-proposal and proposal periods. Just like the detail design work, however, methods engineers were involved during proposal development, and the extent of their involvement became a major issue at trial.

It is plaintiff’s general business practice to assign methods engineers with significant responsibility in preparing a bid. The construction of the overall Bill of Materials (the “BOM”) (including each material item that was used on the contract), task planning, quantifying the project in terms of hours, critical path, labor profiles, shop floor plan layout, tooling, amount of methods engineering support required during performance, and production cycle are all under purview of methods engineers.

Methods Engineering had input into plaintiffs development of the SOW and plaintiffs work on the WBS. Methods engineers assessed the feasibility of what was being proposed by design engineers doing concept-phase work.

Plaintiffs plan to use a design house impacted the input provided by Methods Engineering during the pre-proposal stage. Although the witnesses referred to farming out the design work only, the term is somewhat misleading because it implies that the design house did only that — the design. The documents are more descriptive: The design house SOW refers to its scope as requiring *714 the preparation of both “a design and engineering package.” Furthermore, WVAC’s November 13, 1992 fax to plaintiff with its proposal to serve as the design house states that it would create an “engineering program office” devoted to this work, and “[production planning and scheduling would be an important part of the program office effort. 2 planners would work on this full time.” Production planning and scheduling are not activities of a design engineer, but, rather, come under methods engineering. While WVAC was not selected as the design house, WVAC did include some methods engineering in its proposal for all the other work.

iii. Scheduling

A fundamental aspect of government procurement contracts is the delivery requirements. The scheduling of the tasks required to complete the project normally serves to meet these delivery requirements, and this contract was no exception. Plaintiff approached its proposal by creating a schedule listing aircraft delivery dates to meet what all of its witnesses insisted were ATCOM’s requirements. In fact, the evidence supports a finding that the period for completion of ten aircraft — variously thirty or thirty-five months — was a working assumption from the outset of plaintiffs interest in pursuing a contract award for the project — well before production ceased on the C-23B. A March 7, 1991 presentation at WVAC for plaintiff (George Cather, General Manager, Engineering and Consumer Support; Mr. Coey, Contract Manager; and Mr. Maguire, Commercial Manager, Aircraft Division) reflects completion of ten aircraft in a thirty-month period, with aircraft 1 starting six months ahead of aircraft 2, allowing eleven months to complete aircraft 1. The evidence revealed that plaintiff wanted to continue production to meet the Guard’s requirements, although it could not justify continued manufacture. As Mr. Stripe put it:

We had designed and built the B and we hoped very much that U.S. military would take more Bs because we thought it was a very good aircraft, but my understanding is that they were not prepared to order sufficient number to render it viable to put it back into production. So there were discussions at the time as to if it was possible to supply an equivalent aircraft using or adapting existing aircraft.

Stripe Dep. H 81.

When plaintiff assessed scheduling, it had to take into account all requirements of the project, meaning that it was required to estimate the necessary time for producing the detail design drawings, inducting donor aircraft, implementing methods engineering 0ie., WPS production), performing the actual conversion, and testing all aircraft for flight worthiness. Plaintiff had to consider the floor plan, the number of aircraft that could be worked on at WVAC, the type of work that could be accomplished at any given time, part procurement, etc. These are all inputs into the critical path, which Mr. McCoy defined, in the context of this project, as “the quickest time in duration that any company could perform the remanufacture of 28 SD3-60’s into 28 C-23B+ aircraft.” Tr. at 1840.

Because WVAC was to submit a proposal for the modification work, primary responsibility for creating a schedule to meet delivery requirements fell to WVAC, as will be discussed.

3) Plaintiffs proposal period strategy

Formally, plaintiff formed a proposal team by December 1992, but the record shows that this allocation occurred after Mr. Mead, the ATCOM Contracting Officer, had outlined the contours of the contract to plaintiff in January 1992. The events that led up to the formation of the team are part of the pre-proposal period. This encompassed a significant amount of work well before the issuance of the January 1993 RFP, all of which was driven by ATCOM’s procurement time parameters. 23

The proposal team consisted of key individuals representing all functional disciplines whose input was necessary to develop the *715 technical and cost proposals: the Design Engineering Department, the Methods Engineering Department, Operations, the Program Office, PALS, and Commercial Estimating. Mr. Maguire was the designated Commercial Manager responsible for finalizing plaintiffs proposal and the subcontractors’ proposals, who had overall responsibility for the team. Mr. McCoy served as coordinator. Mr. Heaton, the Director of New Programmes, assisted generally in procuring the contract. Ivan Patterson represented the Methods Engineering Department; Mr. Mansfield, Design Engineering; and Morris Forrester, Commercial Estimating. The proposal team met on a daily basis after issuance of the RFP.

On December 23, 1992, WVAC submitted to plaintiff its first draft proposal, and immediately correspondence was exchanged between WVAC and plaintiff addressing issues pointed out by plaintiff. With draft proposals from WVAC and de Havilland in hand, and the formal RFP issued, the more formal proposal work begin after January 1993.

Plaintiff distributed WVAC’s proposal to all functional disciplines for evaluation, and Messrs. Maguire and Forrester traveled to WVAC to perform an audit. Plaintiffs Vice President for Aircraft, Mr. Brundle deemed the proposal “very impressive” at the time. Tr. at 4018. However, one issue that plaintiff identified at the outset was that it could not identify exactly where WVAC’s methods engineering costs were allocated. WVAC responded by telling Belfast that its methods planning was included as an overhead charge. Plaintiff asked that WVAC separate out the cost, so that it would pass ATCOM’s auditing, to take place in the near future.

More generally, plaintiff had reviewed the proposal and found some areas where it considered that WVAC proposed too many labor hours, while other areas included insufficient hours. The notes of a wrap-up meeting, dated February 25, 1993, illustrate which particular WBS item had too many or too few hours, in addition to other comments on the WVAC proposal. In response to these comments, WVAC revised its proposal throughout the first part of 1993, until it reached final form. The cost proposal was dated April 2,1993, and the technical proposal was dated April 4,1993.

Mr. McCoy drafted a report on a trip visit to WVAC and de Havilland from February 22 — March 3, 1993. This report, dated March 8, 1993, listed what Mr. McCoy recorded as areas that “need[ed] to be addressed.” His concerns included the first article plan, which Mr. McCoy felt was “resource driven as opposed to schedule [driven],” a lack of detailed production planning, “shallow” quality assurance, “very weak” process planning, and a total lack of any stores procedures. 24 He concluded that “WVAC, as yet, has not displayed an acceptable level of competence required to manage a project such as the [C-23B + ].”

Plaintiff was also assisting WVAC in preparing for its presentations to ATCOM. On March 2, 1993, Mr. Heaton faxed to WVAC an agenda for an ATCOM. Mr. Heaton advised WVAC that “[t]he strong points that must and can be won are schedule reliability and quality of the facility.” Mr. Heaton wanted WVAC to explain to ATCOM why plaintiff chose WVAC, and he listed several reasons, including “great facility — the best;” the extensive planning WVAC did for the SD3-30; “Shorts took the decision on WVAC a year ago — needed involvement of the end player throughout;” “WVAC willing to invest in making the operation truly effective;” “politics, say it but don’t dwell on it;” and an expectation that “WVAC will be a major force in the regionals[.]” 25

Plaintiff internally conducted a thorough risk assessment of the WVAC proposal. Risk is discussed in a preliminary C-23C Finance Committee Pack, sent by Mr. Ma-guire for review by the Finance Committee *716 on February 3, 1993, which presented the risk level on various items, including: engineering — moderate, manufacturing — moderate, procurement — low, aircraft purchase — • low, and 0 & A activity — low/moderate. The following is an excerpt from the engineering and manufacturing risk evaluations:

[ENGINEERING:] The design task to eo[n]vert a SD360 to a C-23C is straight forward. Prior to official release of the solicitation, ATCOM with Shorts assistance have established a[SOW] and thus the requirement is well understood. However, because pre-owned aircraft will be used with possible high life components and differing design standards the task is more difficult____ The ability to use low usage aircraft with a high design standard will significantly reduce our risk.

Shorts resource capability to design/production engineer for a major modification program will affect the level of risk. The more we can utilise experienced Shorts personnel the lower the risk.

[MANUFACTURING:] WVAC — is particularly inexperienced, in what will be the largest modification program for this young company established only 4 years ago. To minimise the risk Shorts will place suitable experienced personnel at the sub-eontractor[’]s facilities to provide immediate on site support.

As to “Contract Definitization,” this Finance Committee Pack advised a low risk rating, noting specifically that “as this is an uncompetitive contract with no commitment taken by Shorts until definitization is complete, we have no obligation to accept unreasonable risk.”

With the final WVAC proposal in hand, plaintiff formally submitted its revised proposal to ATCOM on May 24, 1993. That prompted the should-cost audits by ATCOM, which will be discussed. However, an important internal development had taken place. Plaintiff had made a shift of responsibility over the project. Up until April 1993, engineers and other personnel were loaned to the business development team, the proposal team, and a dedicated pre-proposal team to work on the C-23B + project. As documented by a memorandum dated April 7, 1993, plaintiff held an “away day” on March 30, 1993, an off-site business retreat, and formally allocated responsibility for the project to the PALS division, whose representatives in attendance included John C. Nesbitt, a 33-year veteran with plaintiff, who was the C-23B+ Program Manager from June 1993-October 1998, and who eventually took over the project as General Manager at WVAC from October 1994 to December 1995.

Witnesses could not recall when exactly plaintiff determined to assign this project to PALS, but the decision was consistent with plaintiffs understanding of the contract’s scope during this period. PALS was the support organization for all of plaintiff’s other commercial aircraft programs, and thus it was considered the obvious choice for a modification/refurbishment project. The C-23B + could have been placed in the Operations Division, which, according to Mr. Ma-guire, would have been more suited for a remanufacturing effort as the expertise of Operations “would be more akin to an operations environment.” Tr. at 670.

In July 1993 plaintiff sent to WVAC Mr. McCoy — plaintiffs principal witness at trial — who served as General Manager at WVAC from August 1993 until Mr. Nesbitt assumed that position, and who was elevated to Operations Manager from November 1994 through June 1996, and Mr. Ballard, the experienced methods engineer with extensive knowledge covering the production of all SD3-series aircraft, including the SD3-60 and the C-23B. Mr. McCoy received a full presentation from WVAC on the proposal, including review of the WBS and the SOW. He toured the facility, assessed the size and skill level of the labor force, and left with a conclusion that WVAC was capable of meeting the scope of work as laid out in the WBS and the SOW. (At that point, WVAC still was performing maintenance on SD3-30 and SD3-60 aircraft at the facility.) Mr. Ballard observed what he described as a “well-motivated” workforce. Tr. at 2468. He also met Phil Pulliam, a methods engineer at WVAC, whom Mr. Ballard found experienced and competent. Mr. Ballard did some troubleshooting and offered advice to WVAC on *717 issues like potential problems with lack of storage. When he returned to WVAC in November 1993, Mr. Ballard learned that many of his suggestions had been followed.

Mr. Ballard, however, did not review the proposal during the July 1993 visit; he understood that review had been performed at Belfast. He also did not check with the design engineers to see if the proposal was consistent with their preliminary concepts, which was not within his purview. Although WVAC did inform Mr. Ballard that it included two planners, the matter was not discussed in depth. Mr. Ballard was not there to, as he put it, “instruct them on how to do their own work. My role was to give them advice and support and information on the aircraft.” Tr. at 2702. Furthermore, Mr. Ballard, like WVAC, had the impression at the time that Belfast would issue service bulletins. How the design engineering was to be executed and transferred to WVAC was not something that he monitored because it “was not [his] role at the time.” Id. at 2713.

Plaintiffs proposal development process included independent review of the proposal team by “the Red Team,” appointed by Mr. Brundle. The next level of review was plaintiffs Finance Committee and finally Bombardier. The Red Team review took place during January 1993, prior to WVAC’s submission of a final draft of its proposal in April. Russell W. MeFadden, General Manager of Composites for Bombardier and former Director of Manufacturing Engineering, who sat on the Red Team, had reviewed the WBS prior to the Red Team evaluation, and attended the proposal review meeting. The Red Team approved the proposal with a risk rating of lower to moderate, which, Mr. MeFadden testified was because “[i]t was considered at that time as a relatively straightforward modification program.” Tr. at 3382.

6. WVAC’s approach to its proposal

WVAC’s proposal team included Mr. Dev-itt, the General Manager of the facility, responsible for the overall proposal; Greg Baer, Manager, Special Projects; and Mr. Bowyer. Mr. Bowyer, WVAC’s Chief Engineer, did much of the work in drafting WVAC’s proposal, with the assistance provided by plaintiff discussed above. He worked most closely, however, with Mr. Long, plaintiffs North American Coordinator and C-23B+ Project Manager, who became President of WVAC.

WVAC’s proposal itself, like plaintiffs, consisted of cost and technical proposals. It was unusually detailed, and WVAC had several reasons for creating such a comprehensive proposal, according to Mr. Bowyer. First, the size of the project was large for WVAC, so, without experience in a project of this magnitude, WVAC was forced to estimate the cost in order properly to submit a competent proposal. Second, WVAC knew from the beginning that it would be audited by both plaintiff and ATCOM, so it wanted to have as much backup data as possible. Third, WVAC wanted to record the mutually understood scope of work in order to provide grounds for negotiation should the scope of work change.

WVAC used the Symix System (“Symix”), which tracks labor and material transactions, to produce its cost proposal. WVAC personnel coded particular tasks and input labor hour estimates into the computer program, which produced the tabulation and presentation. Based on an estimated standards handbook, WVAC assigned hours for a particular task, which was quite detailed, down to the level of the time required to do riveting.

In order to secure a subcontract, WVAC had to assure both plaintiff and ATCOM that WVAC’s relative inexperience with a project of this scale could be overcome. WVAC, which already had various FAA-quality procedures in place, was required to develop procedures sufficient to comply with applicable Military Specifications, including, for example, quality requirements and manuals for handling government-furnished equipment. Also, because the job was going to be so large, WVAC had to expand its stock room 26 and hire more personnel.

*718 The early 1990s was not only the time period during which WVAC was building to prepare for this contract; it was also the beginning of the organization. WVAC had hired outside consultants to develop five- and ten-year plans for the company, with a particular emphasis on ramping up to prepare for a government contract. To that end, The Federal Market Group, a consultant organization, in association with Toothman Rice and Company, WVAC’s accountants, prepared a document dated September 1992 entitled “Executive Summary.” This consultant report states that “[t]here are currently two major initiatives that can ‘make or break’ WVAC; the Shorts C-23C program and the California Microwave DAS11-7 program. WVAC cannot perform profitably on either contract at this point.” The report recommends hiring an Operations Manager, Sales Manager, Program/Project Manager(s), Contract Administrator, and Government Cost Accounting specialist. It identifies several key needs within internal support systems necessary to obtain a government contract, including planning, cost accounting, purchasing, quality control, and configuration management. Notably, the report indicates that the planning function and configuration management did not exist. WVAC retained William Pentz, who had extensive experience in military contracting, first as a consultant, then as a WVAC employee, to review its proposal on the C-23B + project.

Early on, WVAC communicated primarily with Shorts Inc. regarding the program, including the goal of obtaining a commitment from plaintiff that it would receive the work. With that philosophy, WVAC also was keen on making quality presentations to plaintiff in order to procure the subcontract. For example, a November 10, 1990 memorandum from Mr. Long (who then was in Belfast) to Mr. Devitt preceded a trip of Belfast representatives to WVAC. Mr. Long wrote, “Although the trip plans are not yet firm I think we should begin planning a GOOD demonstration of the WVAC potential for these visitors.” He suggests presentation of “any other data that show WVAC is ready willing and able to gear up for a program of this size.” The presentation should also, according to Mr. Long’s memorandum, contain a “[djemonstration of a commitment (even if not yet fully made) by WVAC to provide whatever resources are necessary to make the proposed project successful.” 27

Throughout the period leading up to award, WVAC, with Mr. Bowyer as point man, was in ongoing communication with plaintiff about technical information needed to define the tasks required to complete the work set out in the WBS. Mr. Bowyer was the technical person, a highly qualified FAA “designated engineering representative” or DER, licensed to sign off on work for the FAA. His input was on structural aspects; Mr. Baer, WVAC’s Manager of Special Projects, handled avionics and costs. However, in preparing WVAC’s bid, Mr. Pentz, WVAC’s consultant on the proposal, testified that WVAC had neither the drawing package on the aircraft that was being modified — the SD3-60 — nor the drawing package on the final product — the C-23B + . Mr. Pentz saw his role as helping “these people [WVAC] do what they want to do. They’ve already made a commitment to bid on it, they were hell bent to do it[.]” Deposition of William H. Pentz, July 6, 2000, at 45. Contrary to Mr. Pentz’ testimony, Mr. Bowyer believed that, in addition to visits from Belfast personnel to help with proposal preparation, WVAC “had a lot of technical information,” from IPCs for both aircraft, as well as maintenance manuals, and verbal or written “word pictures” from Shorts personnel — what he referred to as “task description or a difference description.” Tr. at 2121-22. Nonetheless, Mr. *719 Bowyer understood the concepts to be “pretty preliminary.” Tr. at 2123.

The fact that the design engineering drawings would not be issued until after contract award presented risks to WVAC, and Messrs. Pentz and Bowyer acknowledged risks concerning “things that might not even be [in the proposal].” Tr. at 2339-40. Instead, because they knew that plaintiff would be conducting a detailed review of WVAC’s proposal, Mi'. Bowyer took comfort that plaintiff would ensure that congruency existed between WVAC’s proposal and what the design engineers planned on doing. With this assumption, Mr. Bowyer never contacted personally plaintiffs Design Engineering and Production departments after WVAC submitted its proposal to confirm that plaintiff had undertaken the review.

Notwithstanding the relationship between WVAC and personnel in Shorts Inc., WVAC was still its own company, and, while WVAC worked closely with plaintiff generally, plaintiff was in charge. For example, Mr. Nesbitt wrote to Mr. Pentz on June 30, 1993, regarding the issue of program reporting and visibility. Mr. Nesbitt, as plaintiffs Program Manager, wanted to ensure proper visibility of performance, but WVAC tugged somewhat on the issue because it did not believe that it should have to do any program reporting to the prime beyond which the contract required. They reached a compromise agreement.

1) Methods engineering

Plaintiffs plan on using a design house to do the design work had an impact on WVAC’s proposal development. As discussed above, WVAC had submitted its own proposal to become the design house in November 1992. Mr. Compton, whose name appears as the author of the November 13, 1992 cover fax attached to WVAC’s preliminary proposal, 28 noted that both production planning and scheduling would be a part of the design house proposal.

The extent of production planning, and what everyone understood the term “production planning” to mean, goes to the heart of the dispute over methods engineering. Mr. Bowyer prepared the quotation/estimate attached to the November 13,1992 fax describing WVAC’s design house proposal. It defines the work scope as “engineering design,” which is further defined as “a design package [to] define the complete modification.” The proposal then identifies what the drawings will describe, and it also identifies that an STC process for obtaining certification would be used. WVAC anticipated that it also would produce “[planning and work order release [and] control.” The rough order of measure (the “ROM”) pricing includes a cost for “Manufacturing planning and schedule tracking.” It describes the pricing totality as “[t]his is a ROM cost estimate for design, certification and planning[.]” Mr. Bowyer prepared the attached schedule.

The inclusion of production planning in WVAC’s design house proposal creates some ambiguity as to the nature of the production planning intended to be part of WVAC’s proposal for the actual conversion. It was clear from early on that plaintiff intended WVAC to include production planning in its main proposal, as, for example, the minutes of the November 21 through 24, 1992 C-23B + pre-proposal meeting at WVAC noted: WVAC would be tasked “to develop the production processes.”

Mr. Bowyer, the witness most involved on WVAC’s behalf with its proposal, testified that the concept of production planning and processes in the WVAC main proposal was not the same as that in the WVAC design house proposal. Instead, he understood that WVAC was responsible, under the main proposal, to do lower level production planning, which means that WVAC expected plaintiff to provide all the higher level production planning.

Q. Well, to the best of your recollection, did WVAC intend to do the methods engineering for the modification work in November 1992?

A. Well, let me talk about that. The answer to that is a little complicated, okay. We talk about methods engineers, we talk about planners, we use those terms more *720 or less interchangeably. But like any other specialty, there’s grades of people. There are what I would call production planners or planning clerks, who would be down on the shop floor issuing paperwork to record work being accomplished and generally keeping track of the schedule, or is the airplane build at the place where it needs to be. And from that, there’s a whole continuum of people that you could perhaps call methods engineers, up to the level of an expert like Mr. Ballard. I think its’s fair to say that what was in the WVAC proposal that we called planners was people at the lower level of that, who would be basically taking defined, a defined engineering task, attaching whatever paperwork was necessary to track it in the shop, and then moving it on out to the shop and keeping track of the schedule.

Tr. at 2323-24.

Mr. Bowyer also explained that what he expected from plaintiff in terms of the design package would be “rework drawings, which would provide an adequate description of the changes that needed to be made and not acquire a large amount of methods engineers to reinterpret the drawings in order to be able to write a[WPS].” Tr. at 2368-69. In contrast, the design house proposal contemplated that WVAC would be responsible for the higher level production planning.

When asked about where methods engineering appeared in the WVAC proposal, Mr. Bowyer identified only one person in the cost proposal submitted to plaintiff who was responsible for this type of planning, the “government program planner,” who would not be a methods engineer:

Q. [W]hat was your understanding at the time that you prepared the proposal of what the duties of the government program planner would be?

A. He would be an individual on the shop floor who would be, as part of his duties, he wasn’t going to be totally dedicated to the C-23, at least in 1994. He was going to be in charge of coordinating the paperwork that’s flowing on the floor, coordinating the schedule tracking and releasing paperwork that is of a pretty simple nature, in terms of records paperwork.

Q. So he’s coordinating paperwork in at the time that you prepared the WVAC proposal. Did you expect the government program planner to draft statements of tasks for the workers to perform?

A. If so, they would be simple statements of tasks, such as perform the work shown on drawing so-and-so and then record the performance here.

Q. So when you prepared the WVAC cost proposal, you did not intend the government program planner to be a methods engineer, is that fair?

A. That’s correct.

Tr. at 2327-28. 29

Plaintiff, however, understood that the WVAC proposal did include methods engineering; Mr. MeFadden explained: “[W]e knew that WVAC were responsible for the methods engineering at WVAC because it wasn’t in Shorts’ portion of the contract.” Tr. at 3547. Mr. Maguire, plaintiffs Commercial Manager, who finalized the proposals from WVAC, recalled conversing with WVAC after receiving its cost proposal to ensure that WVAC included methods engineering. WVAC was using an external accountant to advise WVAC on its cost collection system. Mr. Maguire testified that WVAC had placed methods engineering in an overhead account and that Mr. Bowyer informed him that the government program planner was WVAC’s methods engineer. 30 Tr. at 766.

These issues were revisited throughout 1993 and, indeed, up to contract award. Plaintiff sent personnel to WVAC for a meeting on February 9 and 10, 1993, that addressed the issue of unidentified work — work *721 not identified in the SOW or the WBS. WVAC was aware that it was dealing with older aircraft, and thus it communicated to Mr. Heaton that it would only do the work that it described. It is not clear how that issue was resolved, because an April 7, 1993 fax from Mr. Heaton to Mr. Pentz at WVAC refers to the February visit and the discussion on “unidentified work and where this responsibility and costs should fall.” Mr. Heaton stated that plaintiff would not accept WVAC’s position that plaintiff was to provide additional funding and that WVAC had no responsibility for sustaining the costs.

The dispute over “unidentified work” was part of a larger dispute that began to form after WVAC submitted its final April 2, 1993 proposal. Mr. Bowyer was shocked to learn that plaintiff was going to do the design work itself — that all the design activity would remain with Mr. Stripe’s group in Belfast and not be done in North America. Mr. Bowyer described this switch as “the tide has changed,” and it created a concern because WVAC’s proposal did not allow for a liaison for communications on design. Tr. at 2377. The notes of an internal meeting on May 12, 1993, held by WVAC, reflect WVAC’s position:

WVAC will stand fast on Revision # 3 of our Cost Proposal. At the time of Revision # 3, it was WVAC’s impression that the design and engineering portion of the Program would be carried out at WVAC’s facility. WVAC does not include any substantial time for engineering personnel to be in Belfast.

These notes also indicate that “[plaintiff] does not acknowledge the program has changed since original proposal was submitted, they do however acknowledge ‘real’ verbal changes have been made, but no formal written changes have been requested.”

This concern seemed to prompt yet another, even more disconcerting, concern, with WVAC’s growing realization that it was going to be responsible for more methods planning than originally anticipated. These concerns were alive even in July 1993, two months before contract award. WVAC held a “Production Planning Meeting” on July 20, 1993, the notes questioning: “1. Will mod. design include proper considerations for WVAC capabilities? 2. Will timely design information be available to support process engineering/planning?”

2) Scheduling

The testimony of the Mr. Mead, the AT-COM contracting officer in charge of acquisition, was disappointing. His recall was poor. The court did not find credible his recollection that plaintiff set what Mr. Bowyer referred to as the “aggressive” delivery schedule, Tr. at 2328 — to wit, delivery of twenty-eight aircraft within a thirty-six-month period — October 1993 to October 1996. The court has found that the schedule was contemplated so early in the pre-proposal process that it would belie the joint efforts to continue virtually uninterrupted delivery of the C-23B to say, on the other hand, that ATCOM dictated it. However, projected availability of funds always drove the schedule. The evidence is unequivocal that plaintiff proposed to meet it and assign most of the responsibility for scheduling to the subcontractor that would be doing the actual modifications, WVAC.

To create a schedule that involved a major modification effort on aircraft, WVAC had to appreciate and integrate two concepts common in the industry. The first is the learning curve theory, and the second is a “first article plan.”

The aerospace industry understands that the time to complete the first aircraft is greater than the time to complete the last aircraft. This premise generates the concept of the “learning curve,” which itself is based on the premise that production workers will learn how to do the work progressively more efficiently, thereby decreasing the amount of time to produce each successive unit.

A learning curve is the graphical depiction of a mathematical formula used to plot the time to complete any given unit of production based on what is input into the formula. Along the X-axis of the graph are the units of production, starting from unit 1, and along the Y-axis is the time required for production. This presents as an inverse exponential graph, where the amount of time to complete *722 each successive unit of production decreases at a particular rate, generally leveling off at some point. In theory, learning can continue forever, but often a learning curve will contemplate that at some point, all learning will be achieved. This point, where the slope of the curve is zero, is the “set-point.”

The set-point equates to the minimum time, under optimal conditions, for the laborers to make one unit. An early set-point, such as a set-point of ten units (also referred to as T-10), signifies that ten units of production would be completed before all learning would be achieved. Conversely, a set-point of 100 units, or T-100, would mean that it would not be until the 100th unit of production that all learning finally would be realized.

The learning curve also takes into account the rate of learning. If the rate of learning will not change, the slope of the learning curve is linear: Each successive unit of production reduces its durational needs by the same amount. More common, learning curve theory contemplates that more learning would occur at the beginning than closer to the set-point. Thus, the difference in time required to produce unit 1 versus unit 2 would be more than that for units 2 to 3, decreasing 3 to 4, etc., until the set-point is achieved. In this scenario the time per unit would decrease exponentially. The rate of learning is expressed in terms of percentages: A higher percentage equates to slower learning.

Learning curve analysis was central to WVAC’s pricing of the project, according to Mr. Bowyer. It generated the production schedule per aircraft, the first of which was called the “first article.” The first article is a particularly important aspect of scheduling, because, like the learning curve, it is an expression of the concept that the first unit of production has special meaning. Devising a first article schedule means creating the schedule of events, or tasks, necessary to complete the first aircraft — -the first article.

A particular type of first article plan useful when the manufacturing or production process is inherently unknowable until it is attempted is referred to as a development program using a prototype. This program is frequently a precursor contract to a follow-on contract that embodies all the relevant information to produce, schedule, and cost the new or remanufactured aircraft, according to Allen C. Haggerty, plaintiffs expert in aircraft manufacturing, an aeronautical engineer and former aerospace executive at Boeing and McDonnell Douglas.

Although witnesses did not recall specific discussion about the use of a prototype, the March 1992 presentation, held at WVAC includes a preliminary schedule, based on the SD3-30 and an award date of May 1993, with a notation of “11 Months Prototype Development.” Plaintiff certainly was familiar with the use of a prototype; it used a prototype on the Tucano program.

Both WVAC and plaintiff scheduled a first article plan. Built into a contract schedule with a first article typically is a lead aircraft that is completed, tested, and approved before production commences on the second. However, although the first article plan anticipated more time to complete the modification work on the first aircraft, by the time work would be completed on aircraft 1, it contemplated that work would have already begun on aircraft 2, according to Mr. Nesbitt, whom plaintiff substituted as General Manager at WVAC. This was not a true first article plan, in his opinion. Mr. Maguire testified that the delivery schedule precluded the use of “the opportunity to have a separate first article aetivity[.]” Tr. at 646.

WVAC was obliged to propose to plaintiff a schedule that would meet ATCOM’s delivery requirements. WVAC early on worked on putting together a schedule for its production. The March 7, 1991 presentation hosted by WVAC, with Belfast participating, included a proposed schedule. Through 1991 and 1992, the schedule was revised until it was finally incorporated into WVAC’s actual draft proposals.

Mr. Bowyer worked extensively on creating the proposed schedules. He did so in conjunction with plaintiff, just as he collaborated on the technical requirements of the proposal. To do so, he applied the learning curve theory. Because he was not knowledgeable on this subject, Mr. Bowyer pre *723 pared himself for the task by researching the issue. 31 He recalled finding approximately two articles on the subject. He also sought out people at Belfast to assist him. Learning curve was discussed by all members of WVAC’s management team. He recommended, and WVAC ultimately chose, an 80% learning curve with a set-point at aircraft 10, T-10. Mr. Bowyer took the recommendation of Mr. Devitt, Vice President and General Manager of WVAC — Mr. Devitt having overall responsibility for WVAC’s proposal. The latter’s view was that “you don’t learn anything after the first half of the project because, when you’re winding things up, other things happen.” Tr. at 2226.

WVAC plugged in its standard-hour estimates, including the kind of manpower expected, at T-10 to create the learning curve, which established estimates for how much time would be required to complete each aircraft. A set point of 10 with a learning curve of 80% is not the industry standard, which usually utilizes 100 as the set point, according to Mr. Haggerty. Utilizing a T-10 had the effect of building most of the costs into the first 10 units. As the project was not envisioned as a full production run, WVAC did not utilize a set point that allowed for learning over a longer period of time. From these estimates WVAC created a schedule of work on each aircraft, which was incorporated into its proposal submitted to plaintiff, and which, in turn, was proposed to ATCOM in plaintiffs final proposal. WVAC received input from plaintiffs February 1993 evaluation of WVAC’s use of labor hour estimates, material costs, and various other parts of the proposal, which WVAC incorporated. WVAC was now prepared for the government should-cost audits.

The amount of labor also impacts scheduling. The concept of the “build rate” reflects that a faster build rate has more manpower. The build rate was another variable in WVAC’s proposal, along with its assessment of the number of laborers needed at any given point, which included judging how many laborers could work on the aircraft at one point and what work could be performed simultaneously.

Of course, the higher the build-rate, the more manpower, the faster the scheduling, but that all had to be balanced with WVAC’s labor capabilities. Scheduling became a matter of negotiation between plaintiff and WVAC. Plaintiff did push WVAC to propose a faster delivery schedule.

WVAC’s responses to plaintiffs inquires are illustrated by a fax from Mr. Compton to Mr. McCoy dated January 19, 1993. Mr. Compton wrote:

Acceptance of Shorts proposed 1.54 aircraft per month delivery rate is not feasible for the following reasons:

1. A period exists in Short[s’] schedule where more aircraft are in work at a given time than we have space for. A maximum of seven (7) aircraft can be worked simultaneously in the allocated space....

3. A consistent dispersement of manpower throughout the C23 program is essential in order to keep WVAC’s costs in line. If WVAC adapts [sic] Shorts proposed delivery schedule, there will be excessive fluctuations in the number of personnel required to accomplish the program.

With respect to WVAC’s application of the learning curve, plaintiff noted in a May 27, 1993 letter to ATCOM that “WVAC application of labour learning, whilst a different philosophy to that used by Shorts, is considered reasonable and reflects the differences between a manufacturer and a modification centre.” The “different philosophy” manifested in WVAC’s estimates to establish the number of standard hours required to complete aircraft 10 (the set-point), as plaintiff was aware that its system for estimating manpower was different than that used by WVAC.

7. ATCOM’s approach to the proposal

ATCOM played an important role beyond developing the SOW and before conducting *724 audits of the proposals during 1993 prior to award.

1) Pre-proposal activity

In conjunction with SOW work beginning, at least officially, in 1992, steps were taken during that time to obtain authorization for the program. ATCOM approved the Acquisition Plan on April 21, 1992. The Acquisition Plan describes the project, as follows: “The [20 C-23] aircraft will be re-manufactured using SD3-30 aircraft from contractor and U.S. Army inventory.” It also illustrates ATCOM’s assessment of risk at the time, prior to the change to the SD3-60 and prior to the plaintiff-induced discussion regarding the use of the term “remanufacturing” in the developing SOW.

ATCOM’s initial assessment of the risk overall was “moderate.” Technical risk was considered “moderate” because “the aircraft is a re-manufacturing of a production aircraft with no new, unusually stringent, or critical technology requirements.” The technical risk assessment also included the following: “Changes in the scope of effort may occur during production necessitated by trade-off analysis based on cost of changing the configuration of an existing aircraft versus user requirements.” Schedule risk was high because of plaintiffs “previous production history and the fact that the contractor has never engaged in a remanufaeturing effort of this scale.” ATCOM concluded that “[h]igh risk on production schedule is currently acceptable due to current development of planning and force structure required to support the operation of the C-23C fleet. As delivery timeframe nears, the risk should be reduced to moderate then low.” At the beginning of SOW deliberations in January 1992, Contracting Officer Mead outlined to plaintiff the contract structure, establishing that it would proceed as a firm fixed-price contract. The Acquisition Plan posed a startling delivery schedule of one aircraft per month over two fiscal years ending in 1995.

The meeting of project personnel from plaintiff and ATCOM on June 29, 1992, discussed above, recorded Mr. Crawley’s strong objection concerning the use of “remanufac-ture” to describe the project. Even though ATCOM removed the term from the SOW at plaintiffs insistence, ATCOM continued to use the term to describe the project internally. For example, ATCOM submitted a “Request for Approval of the Justification for Other Than Full and Open Competition for Twenty C-23C Aircraft Remanufaetured from the Shorts SD3-60 Aircraft” on September 10, 1992. Plaintiff did not have access to this document.

The court could cite other documents manifesting ATCOM’s interchangeable use of “re-manufacture” and “modification.” The evidence, however, does not warrant a finding that ATCOM disassembled as to the true nature of the work required. ATCOM, just like plaintiff, was aware that elements of the project were not addressed adequately in WVAC’s proposal as put forward by plaintiff, and in plaintiffs proposal as a whole.

While the 1992 SOW deliberations chiefly involved plaintiff and ATCOM, ATCOM had a relationship with WVAC. Lt. Col. Oliver, Product Manager, Fixed Wing Utility Aircraft, who was ATCOM’s Project Manager on the C-23B +, visited WVAC on October 6, 1992. WVAC made a presentation, introducing Lt. Col. Oliver to the WVAC personnel and describing the basic work contemplated for the C-23B+ project at WVAC. Shortly thereafter, WVAC hosted ATCOM at its facility on November 17, 1992, for the purpose of reviewing WVAC’s capabilities. WVAC presented itself as a repair and overhaul modification center.

Major Ron Klein of ATCOM wrote a memorandum to Lt. Col. Oliver on the November 17, 1992 trip to WVAC. He also faxed this trip report to WVAC’s Mr. Long. He described several findings related to WVAC’s state of preparation. Cognizant that “[t]he WVAC is a new operationf,]” Major Klein concluded in this report that WVAC’s “situation is appropriate[,]” and he had “few doubts that they will have all the pieces in place by September.” He did, however, detail what “pieces” he thought needed work. These included, in part, the following deficiencies: WVAC’s sheet metal area, which existed but was not staffed and was nonoperational; WVAC’s part-ordering system needed alteration; no Material Review Board pro- *725 eedure, “nor any procedure to address nonconforming material[;]” no quality or government-approved accounting system; and no parts tracking system “to maintain control of parts removed from an aircraft or parts due in to [an] aircraft.” Major Klein also observed:

As a company, they do not have experience modifying an aircraft to this extent. Neither do they have experience with a production type (i.e. established tasks on repetitive aircraft). On Service Life Extension Programs (SLEP) and major modification programs contractors (and CCAD) routinely rely on cannibalization to meet schedule. This invariably means the last aircraft in the program are delivered late. WVAC has no experience in this type of program and hence, may not be aware of this kind of typical error in managing this program.

He also commented that “[t]here is little doubt that WVAC has the floor space or equipment ... to complete the modification.” He anticipated several issues related to aircraft parts as well:

They do not have a parts tracking system (software or paper) to maintain control of parts removed from an aircraft or parts due in to an aircraft. The modification program will require a significant effort in this area. They will need a tracking system and storage (e.g. cages, carts, bins) to accommodate the parts removed from an aircraft during the months that it will be disassembled, stripped, reassembled, painted, etc.

One day after that presentation, Mi’. Mead wrote a memorandum captioned “Contracting Officer’s Determinations, Solicitation DAAJ09-92-R-0819, C-23C Remanufae-ture.” Mr. Mead approved of the CLIN structure as the least costly because it isolated, or broke out into a separate pricing structure, aircraft purchases and 0 & As in order to assure reimbursement costs for the former and a ceiling on the latter. He also approved of the use of a fixed-price contract: “[T]he Government intends to have FFP CLINS because performance risk by the incumbent contractor is considered moderate and cost can be predicted with a reasonable degree of certainty based on a definitive [SOW].” AT-COM had undertaken some cost estimating of its own at that time and noted in a December 29, 1992 memorandum to management that it established a negotiated price of $6.1 million per aircraft, well in advance of proposal submission.

2) Proposal period activity

ATCOM’s involvement with both plaintiffs and WVAC’s proposals accelerated during 1993. ATCOM received plaintiffs draft proposal, which incorporated WVAC’s draft proposal, during the first few months of 1993. Its plan, as outlined by a May 20, 1993 ATCOM internal memorandum, was to review the proposal and pose questions to plaintiff, in addition to conducting a standard should-cost audit.

The series of questions began on March 19,1993, when Mr. Mead wrote to Mr. Coey, Belfast Contract Manager, with “the first in a series of questions/comments on the subject proposal.” It included over thirty questions and comments to various sections of plaintiffs proposal. ATCOM issued a total of six sets of queries. The second set of queries, dated April 5,1993, included several questions about plaintiffs — meaning WVAC’s — application of learning: “Describe how your labor learning of 85 percent is comparable to K-l through K-16[;]” “[demonstrate where your average learning factors come from. Why do your learning rates change if production between 1-27 is uninterrupted? ... What objective basis did you see for 4.5 percent escalation?” These questions stemmed from ATCOM’s disagreement with how plaintiff applied its learning. AT-COM concurred with the use of the learning curve in general, but judged that plaintiff attributed excessive learning.

These questions continued up until contract negotiations. A set of queries issued on June 2, 1993, states ATCOM’s objection to the number of engineers that Belfast was going to provide on-sight at WVAC:

1 person at [de Havilland] and 6 persons at WVAC. In fact, this is a reasonable number of persons to be on site thru the 1st article. After the 1st article the number should be reduced to almost no persons *726 authorized on site long term TDY____ Only 1 engineer should be authorized after 1st article. Additional engineering support could come from stateside and that’s what should be authorized for cost purposes.

ATCOM concurred with having one person at WVAC as production engineer, one as tooling engineer, two as production supervisors, and one for quality assurance. ATCOM also objected to the proposed number of trips from Belfast to West Virginia: “Recommend only official business return flights be allowed a maximum of one per year per person.” Mr. Mead duly forwarded plaintiffs responses to technical personnel at ATCOM.

ATCOM conducted a should-cost audit of the proposal through joint efforts of AT-COM, Defense Contract Management Area Office (“DCMAO”) Pittsburgh and Defense Contract Audit Agency (“DCAA”)-Mid Ohio Branch. As ATCOM documented in a May 28, 1993 internal memorandum, the purpose of the cost review was “to identify uneconomic or inefficient practices so that a fair and reasonable estimate can be established on what the contract should-cost the Government in a more efficient environment as a basis for negotiation.” The purpose of the technical review was “to ensure that the scope of effort and range of technical analysis expected are clearly understood.” The memorandum states that “[t]he technical elements for review covered the areas of production scheduling, inventory, aircraft storage/maintenance, engineering, assembly, inspections, and flight testing.”

DCMAO Pittsburgh personnel conducted a technical analysis of WVAC’s proposal by using “contractor supplied information” and a tour of the WVAC facility on April 29 — 30, 1993. DCMAO issued a May 14,1993 memorandum documenting the technical analysis. This memorandum described the project, in part, as follows:

The [SOW] • • • established the contractor requirements for procurement, refurbishment and modification of Shorts SD3-60 commercial aircraft, into C-23B+ aircraft ____This SOW includes the design, development, and manufacture of modifications and installations of those modifications to convert the SD3-60 aircraft into C-23B+ aircraft. WVAC’s proposal is comprised of two volumes, Volume I— Technical Proposal and Volume II — -Cost Proposal. Volume I of the proposal describes the work that WVAC understands will be necessary to convert an SD3-60 aircraft to a C-23. Volume II, the Cost Proposal, is also based on this understanding. Short Brothers, as Prime Contractor to ATCOM, has primary responsibility for the design effort.... WVAC is primarily involved in the inspection, refurbishment, modification, assembly, painting and flight test support of the supplied GFE Aircraft.

DCMAO concluded that “[t]he contractor’s proposed direct materials were found to be applicable and allocable to the refurbishment/modification____Based on a review of the SOW, WBS, and WVAC’s estimating techniques, no exceptions are recommended to the non-recurring time.” DCMAO did take exception to WVAC’s learning curve methodology and ultimately recommended a reduction of total hours by 11%. While DCMAO found WVAC’s baseline 8,028 hours reasonable, it criticized WVAC’s 80% curve at T-10, citing WVAC’s use of the only model available to it “since most of their efforts are expended on small or one time jobs.” DCMAO disagreed with WVAC’s “proposed cessation of learning at Unit # 10[,]” and, instead, proposed an 85% learning curve from units 1 — 20, with 8,028 hours at unit 10, and a 90% learning curve for units 21 — 30. This analysis was predicated on “refurbishment” and “modification” of the aircraft.

Mr. Maguire recalled that “the [Government was very complimentary on the standard of the WVAC proposal and on how detailed and comprehensive it was[.]” Tr. at 724-25. Mr. Mead gave plaintiff a “heads up” on various issues that would need to be addressed before the parties could go to price negotiations. Mr. Mead’s undated notes, JX 183, see also Tr. at 726, show that he was “generally satisfied [with the] hours estimate” for design engineering and “[structural drawing office has good definition,” although he had some concerns, e.g., that plaintiffs proposal had a “lack of top level participation except financial.”

*727 ATCOM thereafter traveled to Belfast with a should-cost team from May 4 — 7,1993. Preliminarily, Mr. Mead wrote Mr. Maguire on April 13, 1998, explaining that “[djuring this visit we expect to gain a comprehensive understanding of the Shorts PLC proposal and [de Havilland] subcontract.” That letter also identified approximately ten government personnel who would attend, including five personnel on the technical review. That visit concluded with an exit briefing by Mr. Mead to Mr. Maguire and others that stated “a duplicity of functions” appeared in the proposal. Tr. at 722. ATCOM wanted plaintiff to reduce the support that it was proposing to provide to WVAC for almost every discipline.

The DCMAO tour of the WVAC facility and the ATCOM visit to Belfast were followed by another visit to WVAC by Mr. Mead and other Army officials on May 18-19, 1993. Although the technical analysis had been performed earlier, this May 18-19 visit represented the official should-cost meeting, and it included the cost review performed by ATCOM and DCAA representatives. Mr. Mead presented to WVAC the findings of DCMAO’s analysis, documenting his conclusions in a May 20, 1993 memorandum to Lt. Col. Oliver, wherein he stated that “Government consensus of the Should Cost review indicated that WVAC[’s] proposal and state of preparation was straight forward and very acceptable.”

Major Klein, who attended the should-cost audit of WVAC, wrote separately in a May 20, 1993 memorandum documenting the May 18 to 19 trip report to WVAC. Similar to Mr. Mead, Major Klein concluded that “[ojverall, WVAC has made significant progress since the visit of 17 Nov 1992. My assessment is that they are on schedule or ahead of where they need to be to implement this conversion program.” He does mention ATCOM’s concerns, including part tracking systems and manpower. David Hackney, another government representative in attendance, wrote on May 12, 1993, that “[plaintiffs] learning philosophy and WVAC’s learning philosophy don’t seem to totally match up.” 32

An ongoing exchange of questions and answers between ATCOM and plaintiff regarding various issues in plaintiffs proposal continued through June 1993. In particular, ATCOM’s recurrent concern about the duplication of functions and level of support to WVAC, and overall dissatisfaction with plaintiffs earlier answers, prompted Mr. Maguire to correspond with Mr. Mead by letter dated June 18, 1993. Mr. Maguire described the various responsibilities of individuals, including detailed descriptions about “production supervisors” and the “production engineer and tooling engineer.” Overall, plaintiff intended such personnel to provide WVAC with the benefit of engineers with prior experience on the C-23B, to liaise with Belfast’s design team, to support and ensure efficiency with respect to production processes, and to “minimise to the fullest extent possible production and schedule impacts arising from uncommon damage conditions and immediately corrective action if concessions are required. Check for acceptability or its [ejffect of deviation on next assembly.”

Following the should-cost audit, ATCOM geared up for contract negotiations by conducting several preaward surveys. On June 21,1993, DCMAO visited WVAC to conduct a preaward survey for quality assurance. The survey, signed that day, recommended award and stated, in part, the following:

[WVAC] is a mid-size company that specializes in the maintenance and overhaul of small commercial aircraft for several major airlines____During our preaward survey visit an American Airlines Shorts 360 was in the process of having general maintenance and painting done on it. The eom- *728 pany has an experienced and well trained workforce with all of the necessary inspection and test equipment____The company anticipates hiring additional personnel to attain peak production. [WVAC] has a quality control manual ... [that needs] further additions and revisions ... to bring [WVAC] into full compliance____ [WVAC] is aware of the deficiencies and has formally committed to resolve the subject areas prior to the first article and production____

NOTE: In as much as WVAC would be acting as a subcontractor, this survey is based on the tasks outlined in WVAC technical proposal to Short PLC[.]

The preaward survey of WVAC’s financial capability, signed June 29, 1993, also recommends complete award. It does note that “[WVAC] is at risk financially[,]” but recommends award contingent on WVAC receiving an extension of its line of credit. 33

On June 23, 1993, ATCOM recommended complete award with WVAC based on the technical preaward survey. This preaward survey concluded, as follows:

The offeror understand the requirements, specifications, and drawings. The offeror has sufficient technical management personnel on board to perform on the proposed contract. The offeror has the technical knowledge in specialized areas. After reviewing the resumes, of they key personnel, and visually observing operations in the production and planning areas, the key personnel at [WVAC] display the technical capability to perform on and meet the requirements of the proposed contract solicitation.

The offeror has demonstrated complete knowledge of the solicitation requirements and has a realistic plan to perform all the required work.

The June 23, 1993 preaward production survey recommends approval, as well, after an on-site visit by DCMAO conducted on June 21, 1993. DCMAO’s preaward survey describes the solicitation requirement as one “for procurement, refurbishment and modification[.]” Further, DCMAO explained that “[t]he general types of production processes involved are, inspection, paint, interior refurbishment, maintenance, avionics and sheet metal replacement and repair.” DCMAO was highly complimentary of WVAC and the technical proposal, providing positive assessments on all aspects of the WVAC technical proposal, including management structure and personnel. DCMAO declared that “[n]o additional plant facilities, production equipment, or rearrangement will be required by the offeror to perform on the proposed solicitation. The space available for offices, engineering, manufacturing, inspection, storage and shipping [is] considered adequate.”

Regarding the delivery schedule, the June 23, 1993 preaward production survey stated:

The offeror’s milestone chart ... is satisfactory to permit delivery of the aircraft within the required time. The proposed contract delivery requirements will not have any significant impact on the contractor’s current or future delivery schedules---- However, there are two major elements that could have significant impact on the proposed delivery schedule. The over and above proposals, and disposal and or removal of the old tail section. Following the tear down inspection, over and above proposals are to be negotiated on a ease by ease basis between the contractor and the Administrative Contracting Officer .... Therefore, if there is a delay in the deciding on whether to perform or not to perform on the over and above proposals ...; the proposed delivery schedules will not be met.

DCMAO also noted that “[t]he offeror, has not produced the identical item (under Government Contract) but the offeror has produced similar items requiring the same manufacturing processes and procedures for commercial customers.”

Despite these preaward surveys recommending approval of the plaintiff and WVAC proposals, ATCOM had significant concerns. Regarding methods engineering, or produc *729 tion engineering, ATCOM’s engineering specialists stated in a memorandum dated June 23,1993, as follows:

The PED [Production Engineering Design] hours for Project Liason (2500 hrs) and Shop Support for 17 Aircraft (7400 hrs) are unjustified by [plaintiff]. The back-up data supplied by [plaintiff] is based on guestimates of manufacturing work hours being accomplished by [de Ha-villand] and WVAC and then multiplied by a guesstimate (%) of Shorts in-house time. The guestimate working hours do not follow an 85% learning curve as do all other manufacturing hours in the proposal. The Shorts percentage of PED work is also based on the manufacturing hours being done at Short Brothers. The total PED hours proposed for this contract is nearly one-half of the hours proposed for each of the full production C-23B contracts (18,330 vs. 42,953). In our estimation, the PED hours for “Shop Support for 17 Aircraft” should be reduced by an additional 2000 hours. This would represent a more reasonable percentage of time for PED hours on the first four aircraft.

ATCOM completed the preaward survey of WVAC, and Mr. Mead mailed a one-page letter on July 19, 1993 to plaintiff with only two comments. One comment alerted plaintiff that WVAC’s quality control manual needed revision in order to be brought to full compliance with the military specifications. The other comment noted the need for WVAC to obtain approval on its request for an extension of credit.

With all of this information, Mr. Mead produced ATCOM’s Business Clearance Memorandum (the “BCM”) on August 3, 1993. He described the background, as follows: “In 1992, Shorts ceased production of the C-23B aircraft and the Shorts’ commercial airliner from which it derives. To meet the statutory requirements above, the proposed quantity of aircraft will be remanufac-tured from used commercial aircraft.” The BCM explains that, in terms of contract price, the contract assures that “the Government doesn’t pay more for a remanufactured C-23B + aircraft than what a new one would be worth[.]”

The risk assessment reflects Mr. Mead’s opinion: “The Contracting Officer judges that the total technical, cost and schedule risk for the C-23B + aircraft remanufactur-ing program is moderate to high.” He discussed three types of risk:

(1) The technical risk is high because: (a) Shorts has never established an aircraft remanufacturing program of any kind (Shorts has always manufactured new aircraft); (b) WVAC, is financially unstable, has only been in business since Jul 91, has never done business with the Government, does not possess the range and depth of experienced personnel necessary to perform the program and thus is a high risk aspect of contract performance; and (c) a very high level of manufacturing tolerance must be maintained to separate the aircraft into four sections and reassemble it from three sections.

(2) The cost risk is low. Most of the cost is FFP [firm fixed-price]. The cost of commercial aircraft, although reimbursable, is predictable based on prevailing market conditions. Although the contract contains over-and-above provisions, the contractor assumes the total cost risk at a negotiated aircraft ceiling price level.

(3) Schedule risk is judged to be high. Shorts has a poor history of on-time delivery. Because neither the prime nor its subcontractor has experience scheduling a remanufacturing program of this scope, the proposed schedule is unreliable.

The BCM evaluates the amount of risk to plaintiff as “slightly more risk to the contractor than that encountered during a normal production run for new aircraft.”

Mr. Mead’s conclusions, as expressed in the BCM and only made known to plaintiff through a subsequent Freedom of Information Act request, stand in stark contrast with how he and other ATCOM personnel described the project to plaintiff throughout this period. The testimony is consistent and the documentary evidence uniformly demonstrates that ATCOM never stated or implied to plaintiff a level of risk that was “moderate to high.” Indeed, Mr. Brundle, the top official of plaintiff, testified to plaintiffs team’s “grave disquiet” with the unshared informa *730 tion; the team “read some of the information with a sense of outrage.” Tr. at 3955. Instead, ATCOM throughout had reassured plaintiff that the task was a straightforward modification/refurbishment job. The feedback from the audits and numerous visits to WVAC was positive, and any unresolved concerns that ATCOM may have harbored did not impede contract award. Mr. Brundle was only one of many witnesses who held the belief that the project was “relatively simple straight-forward modification work.” Tr. at 3957. Had plaintiff been aware that ATCOM contemplated a remanufacture, these witnesses were emphatic that plaintiff would not have proceeded. As Mr. Brundle explained, “Remanufaeturing is not a U.K. terminology or indeed terminology that Shorts would have been familiar with.” Tr. at 3956-57.

Particularly galling to plaintiff was Mr. Mead’s assessment of the cost per aircraft memorialized in his BCM. Chiding plaintiff for “grossly over-estimat[ing]” the necessary level and duration of on-site support from Belfast, he stated that the Government’s recommended position was $5,570,000.00 per aircraft based on thirty aircraft (compared to $6,562,460.00, the cost to manufacture a new C-23B and $6,170,249.00, plaintiffs proposed cost).

8. Contract negotiations

The parties conducted contract negotiations from August 10 to September 9, 1993. Through the price negotiations, Mr. Mead indicated to plaintiff that its proposal had very low risk. His negotiation strategy notes, dated August 7, 1993, stated “so much fat in proposal that 15% profit is ridiculous/[plaintiff] has no cost risk[.]” Although he also noted in this document that “WVAC is high risk to program[,]” he did not communicate that evaluation to plaintiff during contract negotiations.

In fact, ATCOM strived to reduce the labor hours in plaintiffs proposal. As Mr. Mead noted in an August 21, 1993 internal memorandum, “[plaintiff] has too many labor hours/10.5% more than [it] normally gets[.]” Plaintiff was hesitant during negotiations because, as the August 21, 1993 memorandum reflects, “[plaintiff] won’t accept program risk[.]” Plaintiff’s witnesses were adamant on .that point, and the record bears them out.

Plaintiffs May 24, 1993 revised proposal included an amount of $184 million for thirty aircraft, total, including the ten option aircraft (the option for eight was exercised). Negotiations produced agreement on September 1, 1993. On September 30,1993, the Government awarded plaintiff contract No. DAAJ09-93-C-0656 in the amount of $143.6 million for up to thirty aircraft. 34

9. The contract

The contract awarded on September 30, 1993, was a procurement contract for twenty C-23B + aircraft, with an option for an additional ten aircraft. It had combined fixed-price, cost-reimbursement, and time-and-material features. Firm fixed prices predominated (69.2% of the total contract price).

The contract required plaintiff to purchase the candidate aircraft after a pre-purchase inspection; complete the modification work, testing, and certification; and deliver the aircraft to the Government. The structure of the contract includes seven separate Contract Line Item Numbers (“CLINs”). CLINs 1 through 3 are the most important. CLIN 1 covers the acquisition of the aircraft; CLIN 2, the modification activity; and CLIN 3 is the O & As.

CLIN 1 allocates a ceiling price of $1.1 million per aircraft purchase on a cost-reimbursable basis. The modification activity, CLIN 2, was a firm fixed-price amount. CLIN 3, for O & As, provides a funding limit on any approved O & A required per aircraft. However, any amount less than the $1.1 million applied to an aircraft purchase would be added to the O & A account.

To purchase the aircraft, under CLIN 1, which was defined by section 3.1 of the SOW, plaintiff was to create a list of candidate SD3-60s, conduct a pre-purchase inspection, and submit a pre-purchase report to the Government for approval. Once approved, plaintiff was required to transport the aircraft to *731 WVAC, at which point title would transfer to the Government.

CLIN 2 is described in section 3.2 of the SOW: “C-23B+ Aircraft Modification/Configuration and Qualification/Certifieation.” It requires plaintiff to perform a tear down inspection of each aircraft after acceptance into the program, which was intended for determination of “the level of effort required to refurbish the aircraft” and “form the basis for determining the level of repair effort ... required for each C-23B+ aircraft.” SOW § 3.2.1(a). Relatively minor repairs identified and covered by section 3.2.5.13.1 35 were to be included in a firm fixed-price proposal per aircraft for approval. Needed repairs identified during the tear down inspection, but not covered by section 3.2.5.13.1, were to be included separately as part of the 0 & A category covered by CLIN 3. SOW § 3.3(a). CLIN 3 requires plaintiff to submit a separate 0 & A proposal for approval. Id.

Plaintiff was to complete the modification, repair, and testing required to do the actual conversion from the SD3-60 aircraft to the C-23B+ as defined in the SOW. The rear fuselage was to be completely removed behind the passenger cabin and replaced with a new aft fuselage. De Havilland was the subcontractor responsible for manufacturing the new rear fuselage. The forward fuselage had to be shortened, which involved cutting the aircraft in half at a point, somewhere between the flight deck and wing, to be determined by plaintiff. Thirty-six inches of the fuselage then had to be removed, and the aircraft was to be rejoined. With regard to the two most major modifications — replacing the rear fuselage with a new one and shortening the fuselage, the contract required plaintiff to “modify all original aircraft systems ... affected by removal of the 36 inch forward fuselage section” and to “remove all original aircraft systems components ... required to permit the removal of the original rear fuselage and installation of the new rear fuselage[.]” SOW § 3.2.5.11.2(g)(1) & (2).

The aircraft needed a modified or new fuel tank to match the fuel capacity of the C-23B. The avionics systems must meet new specifications, so too did the main instrument panel, which had to be entirely replaced. A new set rail and modified cabin furnishings similar to the C-23B were to be provided, as well as a role beam that would be used for the cargo drop and paratrooper drop. The engines also had to be modified — both the SD3-60 and the C-23B have two propeller turbine engines.

After modification and repair, plaintiff had to conduct a “Fatigue Analysis,” which “shall show (based upon past aircraft usage history) that the life of the aircraft and critical components shall exceed a minimum of 12,000 flight hours.” SOW § 3.2.5.3(c). The fatigue analysis was accomplished in reference to the mission profile of the C-23B +, which SOW section 3.2.5.3(c) described as: cargo— 79%, passenger — 15%, paradrop/cargo drop — 5%, and ferry role — 1%.

The schedule of activities was set out in plaintiffs technical proposal and approved by ATCOM during the audits.

III. CONTRACT PERFORMANCE

After contract award on September 30, 1993, the performance phase of this contract commenced. Including the option that was exercised for an additional eight aircraft, plaintiff should have completed delivery of all twenty-eight C-23B+ aircraft, pursuant to contract, by November 1997, according to the BCM. Completion, however, did not occur until September 1998. The parties intended that the SOW, including the WBS and the delivery schedules, describe exactly what was to occur during that time period. What actually transpired was far different.

1. Activities prior to the arrival of aircraft 1

Issuance of the Notice To Proceed triggered the start on October 1, 1993, of plaintiff’s “first article plan,” which was a schedule incorporated in plaintiffs technical proposal. Although the “first article” refers to aircraft 1, the actual modifications *732 could not be performed until plaintiff produced the engineering drawings; thus, the first-article schedule encompassed the onetime, “non-recurrent” design engineering activities.

In addition to the production of design engineering drawings, other non-recurrent activities were capable of being performed before initiation of actual aircraft modification work. Many of these activities, although not requiring an aircraft in the hangar, were dependent on the content of the design engineering drawings. Tooling, for example— the design and manufacture or procurement of the tools necessary to work on the aircraft — primarily could be accomplished only after the design engineers determined what the modification would entail. Activities such as the creation of the BOM, and to some extent parts procurement, were other non-recurrent activities. Plaintiff utilized, initially, its existing parts supply personnel in PALS, the department that had been supporting aircraft all over the world for some time.

The first article schedule also identifies methods engineering as a non-recurring activity. Although the creation of the WPS’s— instructions to laborers on the shop floor— was intended to be predominantly a nonrecurring activity, plaintiff never expected that the WPS’s, once created, would be cast into stone. By a process called “redlining,” to be discussed, WPSs could be changed at any time during the life of the contract. According to Mr. Ballard, by the time the first article was created, it was contemplated that any changes to the WPSs would be mere “fine-tuning.” Tr. at 2523.

Insofar as these activities were tailored to the actual modification activity, plaintiffs output was WVAC-bound. But plaintiff, during this time period, also would discharge support responsibilities with respect to its other subcontractors, principally, de Havil-land, which was supplying the rear fuselage, tailplane, and fins.

1) Detail design engineering dramngs

After award plaintiff immediately formed a design team to create the detail design drawings. Although the detail design drawing process was scheduled to take approximately ten months, Mr. Stripe recalled that the work took approximately forty weeks. Stripe Dep. IT 130. While the design activities did not formally commence until after contract award, design engineers were involved during the proposal phase of the project, which, as described above as the “concept” stage, was the first of the following four-stage process: (1) concept design; (2) design definition; (3) design scheme; and (4) production or detailed design.

Patrick N. Cowan, a design engineer, who assisted Mr. Stripe on some of the initial design and became Engineering Manager at WVAC, characterized the design definition phase, which commenced immediately upon award, as the “sizing” of the task, in terms of, for example, material thicknesses and quantities, types of materials, and number of attachments to structural joints. Tr. at 2941-M2. According to Mr. Cowan, the definition phase is “a high-level assessment of what the engineering requirements are ... [and] would also define a route to certification probably.” Tr. at 2942. Stress engineers would produce some initial load assessments during the definition phase, and the stress reports would be developed throughout the rest of the phase. The involvement of stress engineers, and particularly the analysis that they undertook during this phase, significantly distinguishes the definition work from the preliminary concept phase — to wit, no stress analysis occurred until the second stage.

With the definition stage complete, engineers would work on the schemes. The scheming stage started with design engineers’ layouts of what they envisioned as the design for the particular part or assembly. The schemes then would be sent to stress engineers for their input, which included load analysis and, for example, checking to see if the material was sufficiently thick. The schemes would go back and forth between plaintiffs design engineering department and stress engineering department, forming what Mr. Cowan called an “iterative loop.” Tr. at 2942.

*733 After receiving approval from stress engineers, the schemes would be moved into production detail design work, where a team of engineers would take the schemes and create the final detail engineering drawings. During this final phase, in addition to the detail design drawings, engineers would complete stress reports, certification documents, test reports, instructions on how to test the equipment, and other final output documents.

These phases of the design engineering work occurred immediately after award in October 1998 through approximately July 1994. Once completed, plaintiff sent the detailed design drawings to WVAC, thus allowing WVAC to tackle the massive planning tasks that could not be completed until receipt of detail design drawings. WVAC’s planning, however, was ongoing during early 1994 and thereafter, because plaintiff released detail design drawings incrementally, rather than withholding them until total package completion.

Although the modification activity, and the planning for it, took place at WVAC, Belfast’s planners used the detail design drawings, because plaintiffs contractual responsibilities included parts procurement. Accordingly, once methods engineers in Belfast received the detail design drawings, which identified needed parts for procurement, the procurement team would set about ordering parts, prioritizing those with long lead-times, i.e., those parts requiring longer periods of time to procure. The Tool Design Group also would receive the design engineering drawings, develop designs for any new tools needed, and direct the manufacture or purchasing of those tools.

2) Pre-purchase inspection

While this engineering was ongoing, and while plaintiff began to procure parts for its subcontractors, plaintiff also compiled the list of candidate SD3-60 aircraft, created the pre-purchase inspection checklist, and began to conduct inspections of candidate aircraft pursuant to contract. The pre-purchase inspection was developed by Shorts Inc., based on its end-of-lease inspections of SD3-series aircraft, with which Shorts Inc. had experience.

Mr. Nesbitt, who was destined to become General Manager of WVAC in October 1994, described how the pre-purchase inspection was performed. It involved personnel from both plaintiff, including Shorts Inc. and AT-COM. Generally, ATCOM had one or two representatives at the site where the pre-purchase inspection occurred. The contract stipulated that ATCOM would sign off on each pre-purchase inspection; its approval signified that the inspection was performed in accordance with the pre-purchase inspection specification and that ATCOM concurred with the findings of the inspection.

Pursuant to contract, plaintiff set about finding SD3-60 aircraft on the market and obtained permission from the owners to inspect the aircraft. These inspections were limited in duration and were not thorough, because the owners, competitors of plaintiff, were in charge. With the aircraft in service, most of the pre-purchase inspections took place at night, when the airliner could ground the plane. Mr. Nesbitt recounted that plaintiff usually would have only one or two days with the aircraft.

The inspection involved both a physical— meaning visual — inspection of the aircraft and a review or audit of the available aircraft records on, for example, engine maintenance, etc. As Messrs. Nesbitt and McCoy explained, those maintenance and service records informed plaintiff as to whether the engines or other parts required overhaul, whether they would be coming up for replacement, when the last maintenance cheek was performed, and what was known about the history of the aircraft, e.g., where the aircraft previously had been flown, to track its past. This information was intended to guide plaintiff with respect to the extent of repair or maintenance work needed on each aircraft. From it, plaintiff produced estimates on the amount of 0 & A and labor costs.

The visual inspection also was intended to assist plaintiff in ascertaining the repair required of each donor aircraft, but because plaintiff was conducting inspections on aircraft then in service, the visual inspection was limited and could only give plaintiff “a *734 rough idea of the state of the aireraft[,]” according to Mr. Nesbitt. Tr. at 1094. Although plaintiff examined as much of each aircraft as conditions permitted, the operators prohibited plaintiffs inspectors from removing major systems to determine the existence of any latent problems, such as corrosion underneath or inside certain structures. For example, plaintiff might remove a floor or ceiling panel, but could not remove the skin of the aircraft to observe any damage only visible underneath.

The pre-purchase inspections began in December 1993, and the last inducted aircraft was inspected in April 1997. They were conducted throughout the United States, the United Kingdom, Canada, Sweden, and Guernsey (in the Channel Islands). CLIN 1 allotted a ceiling price of $1.3 million per aircraft, an amount that increased to $1.325 and later $1.35 million. Of the total twenty-eight aircraft, all but three were purchased below the ceiling price, with excess funds— ultimately transferred to CLIN 3 — affording plaintiff some additional funding in amounts that ranged from $19,000.00 to $419,543.00 to mitigate the contract ceiling. Plaintiff inspected thirty-six aircraft, eight of which were not inducted into the program. Mr. McCoy recalled that ATCOM only exercised its right to decline an aircraft once.

3) Preparations for arrival of aircraft 1

With the detail design drawings and pre-purchase inspections underway, plaintiff focused more attention on WVAC in late 1993. Mr. Ballard, the experienced methods engineer who had visited WVAC previously in July 1993 in connection with proposal preparation, was on site at WVAC from November 14 to December 10, 1993, to assist WVAC’s planning and preparation for the arrival of aircraft 1. He described his role, more specifically, as helping WVAC implement a five-stage build sequence that he proposed, liaising with Belfast, and providing any information that WVAC needed. Mr. Ballard’s assistance was chiefly directed to methods planning.

Mr. Ballard virtually apprenticed WVAC’s two sub-contracted methods engineers, Phil Pulliam, who joined WVAC in July 1993, and Lee Martin, a new hire. Although Mr. Ballard’s mission involved methods planning, because detail design drawings had not been delivered, only limited planning could take place; WVAC certainly could not create any WPS’s. Mr. Ballard familiarized WVAC’s planners with plaintiffs drawing system and walked them through plaintiffs drawings for the C-23B + derivative aircraft, including the C-23B, the SD3-30, the SD3-60, and the UTT. As Mr. Ballard testified, “I had to explain the history of the aircraft and how the drawing system evolved through that, so that they would have an understanding of how the drawing system worked.” Tr. at 2475. The methods engineers at WVAC had IPCs for the C23-B and SD3-60 aircraft (the IPC for the C-23B + would not be available until after the completion of the detail design drawings), as well as the maintenance manuals for these aircraft.

In addition, Mr. Ballard and others at WVAC had access to several SD3-60 commuter aircraft then undergoing maintenance at WVAC, as well as a C-23B aircraft located in an adjacent hangar. Mr. Ballard and the WVAC planners were able to inspect the structure of the SD3-60 aircraft, .with some furnishings and floor panels removed, which, as Mr. Ballard testified, enabled WVAC to “get some view into the inside of the aircraft and make some determination of what was behind the furnishing panels and give some explanation to planners of what they were going to have to do.” Tr. at 2477. As for the C-23B, the Guard owned that aircraft and allowed plaintiff to view, but not access, it. Nevertheless, Mr. Ballard testified that “it was useful ... to demonstrate the differences between the SD3-60 and the C-23B.” Id.

Although WVAC did not have the detail design drawings, the manuals and the viewing of aircraft enabled Mr. Ballard to guide Messrs. Pulliam and Martin on some high level planning with respect to both technical decisions and a build sequence. The technical decisions included what Mr. Ballard described as the “obvious.” Tr. at 2478. Mr. Ballard directed that the wings, the engines, the propellers, and the undercarriage would all have to be removed. In addition, all the *735 internal furnishings, including the seating, the wall furnishing panels, ceiling panels, and floor panels had to come off. WVAC had to open up all access panels. WVAC was able to begin planning for these initial tear down activities because, individually, these were mostly normal maintenance procedures described in the SD3-60 maintenance manuals. WVAC could not plan for the entire tear down because, according to Mr. Ballard, “it would not be until you had an aircraft in your hands and physically carried out the task that you would ... really be able to establish what was required.” Tr. at 2490. 36

With respect to the actual modifications, planning was limited because the design engineering in Belfast was still in the scheming phase. However, certain modifications were what Mr. Ballard termed “stand-alone mods,” which he believed could be planned directly from the engineering during the conversion to the C-23B + , such as the role-beam installation and the oxygen system. Tr. at 2483. According to Mr. Ballard, it was thought at the time that, once the SD3-60 aircraft was reconfigured to a C-23B (on its way to becoming the B+), the stand-alone mods could be carried across to the C-23B + with some minor refinement, or “tweaking.” Tr. at 2484.

Mr. Ballard and WVAC’s methods planners agreed that the planning for these stand-alone mods could be accomplished with existing EPRs (Engineering Process Records — Belfast’s term for the WPS) that were used to manufacture the C-23B and the SD3-60. Mr. Ballard described the benefit of using the existing EPRs in his trip report, dated January 25,1994:

By identifying and comparing the SD360 and C23B E.P.R.’S and kits that installed the systems in the aircraft during production at Belfast, the parts required to convert the aircraft can be quickly identified. This makes the planning exercise relatively simple, and the existing C-23B E.P.R.’s can be modified to restore the systems and structure using the C23B parts, after the forward and aft joints have been completed. This information is not presently available at WVAC, but would be of major benefit to them when they start to plan this phase of the programme.

With regard to the significant modification that required actually cutting the aircraft in half and removing 36 inches of fuselage, Mr. Ballard was able to propose how WVAC would accomplish the cut, the import of which Mr. Ballard described in his January 25,1994 trip report:

We were however able to represent the proposed cut lines on a SD360 aircraft in the hangar. This gave a great deal of clarity to the structural work that had to be done and when I gave some of the senior company engineers a “tour” of the aircraft, explaining in some detail the work that was required, particularly in the roof section ..., I was conscious of their unease with the estimate they had for labour hours to convert each aircraft. When the design package is complete the availability of aircraft at the Air Centre should help the planning task.

At trial Mr. Ballard reflected that his November 1993 trip represented the first time that plaintiff and WVAC took a serious look, see Tr. at 2723, at work required to perform the cut and the amount of systems that were affected or had to be removed by the cut:

In 1993, when I was there at that time, we were able to view some of the SD3-60 aircraft and SD3-30 aircraft that were in the hangar at the time. I believe at that time, when we started to look in-depth of what we intended, or what was going to be required to remove from the aircraft, that there was an awareness that there was slightly more to this than what WVAC had anticipated, in terms of removing systems and so forth.

Tr. at 2721-22.

In addition to these more technical decisions, albeit preliminary, Mr. Ballard was able to assist WVAC in creating a build sequence. He compared the WBS with “refurbishing work” that he had performed as a *736 Technical Officer for the Royal Navy and suggested to WVAC’s planners that they utilize a five-stage build sequence, similar to his prior experience, which contemplated: (1) opening the aircraft, the tear down; (2) performing the structural changes to the aircraft; (3) adding new structures to the aircraft to support new systems; (4) putting the new systems in the aircraft; and (5) functioning the aircraft. 37 This five-stage build process was a high level network describing the work flow, but it was not a true critical path schedule.

Mr. Ballard determined that this type of refurbishment or modification style production sequence would be most suitable for the program. He did recognize, however, that normal refurbishment-type programs involve a “static build,” meaning the aircraft would not be moved to another working area from stage to stage. For the C-23B + conversion, the aircraft had to move because it was required to pass through a jig, which is a large structure that holds the aircraft in place and controls its shape, while the cut is made. Each aircraft would then be moved out of the jig so another aircraft could take its place. While this movement distinguished the process from a more typical, static refurbishment job, Mr. Ballard took care in his testimony to explain that the approach did not reflect a manufacturing assembly line, which he likened to a build moving on a drumbeat. Apart from the movement through the jig, this job, according to Mr. Ballard, was basically still a static build.

Mr. Ballard’s January 25, 1994 trip report includes negative comments. These reflected, in part, some concern about WVAC’s floor plan. He noted that WVAC intended to allocate one half of the hangar space to the project and that “[gjiven that two large assembly jigs had to be facilitated within this area, and any cranage requirements had to be met with the use of a mobile unit, we had, and expressed grave concerns about the practicalities of such a plan.” Mr. Ballard also observed that between his trip to WVAC pre-proposal in July 1993 and the November 1993 trip, “little work had been done on the project” because Mr. Pulliam was the only methods engineer at WVAC, and he had been working on several projects:

I have no doubts that given the proper resources, the Air Centre will be capable of completing the programme, but I would be of the opinion that with the exception of the two engineers Phil Pulliam and Lee Martin and also the Proramme Manager Bill Pentz, who showed a keen interest in the project, there were few others who appeared to appreciate the size of the task that lay ahead of them.

Concurrent with Mr. Ballard’s November 1993 visit, WVAC was taking additional steps to prepare for the arrival of aircraft 1. To meet the goal, WVAC conducted an in-house audit of its operating systems and procedures and hired three additional engineers. Mr. Pentz, the WVAC Program Manager, wrote to Mr. Nesbitt on December 6, 1993, informing him that these engineers were to “perform the process planning for the C-23B+ program.” WVAC also began to increase its labor hiring, and it implemented that plan during the later months of 1993. In addition, WVAC was preparing the shop floor for the incoming aircraft. WVAC’s goal was to complete the production planning for as many of the tasks as possible by using various documents from Belfast.

Although WVAC preparations were ongoing, problems at both WVAC and in Belfast emerged during the period between Mr. Ballard’s November 1993 visit and the arrival of the first aircraft.

WVAC was concerned about the quality of the SD3-60 and C-23B drawings and manuals necessary to assist WVAC in its planning while it waited for the detail design drawings of the C-23B +. The notes of a January 19, 1994 meeting held at WVAC indicate quality problems: The drawings from the SD3-60 and SD3-30, which were intended to assist WVAC with the planning, were “either of poor quality or missing.” In addition, the notes indicate that WVAC had not, as of January 1994, received the maintenance manuals for the SD3-60 and C-23B aircraft. (Mr. Ballard explained that the problem was a sufficient number of copies.) Nevertheless, *737 WVAC was pushing forward, hoping to achieve a detailed a first article plan by January 28,1994.

In addition to some problems stemming from what plaintiff was providing WVAC, WVAC was having its own problems. Mr. Pentz wrote to Mr. Nesbitt on January 14, 1994, updating plaintiff with the status of WVAC’s preparation: “Implementation of the direct labor hiring plan is starting slower than planned ____ The lag in hiring stems from WVAC’s inability to effectively process and assimilate the new hires. These short comings are being corrected.”

2. Arrival of aircraft 1

WVAC received aircraft 1 into its facility in late January 1994. Although Belfast had not issued the detail design drawings for the modifications, nor was it scheduled to by that time, WVAC could — at least in theory — immediately begin the first stage of the sequence,

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