# Town of North Bonneville v. United States

> United States Court of Claims · February 20, 1987 · 11 Cl. Ct. 694

URL: https://www.frixlaw.com/law-library/cases/6825848

## Case

- **Full name:** TOWN OF NORTH BONNEVILLE, WASHINGTON v. United States
- **Court:** United States Court of Claims
- **Decided:** February 20, 1987
- **Citations:** 11 Cl. Ct. 694; 1987 U.S. Claims LEXIS 34
- **Precedential status:** Published
- **Opinion:** Opinion of the court by Harkins
- **Judges:** Harkins
- **Cited by:** 5 later opinions in the Frix Law Library

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## Opinion text

OPINION
HARKINS, Senior Judge:
Plaintiff, Town of North Bonneville (Town), filed its petition in the United States Court of Claims on October 20,1980, to claim damages for breach of contractual arrangements alleged to have been made during the course of relocation of the Town that was necessitated by construction of a second powerhouse at Bonneville Dam. 1 Plaintiffs petition alleged six breaches of contract and claimed damages of $14,550,-000. Defendant filed an answer on March 12, 1981, a first amended answer on April 8, 1981, and a counterclaim on November 19, 1982. Defendant’s counterclaim included a comprehensive restatement of facts; it listed four causes of action and claims that totaled $13,400,000. The case was transferred to the United States Claims Court on October 1, 1982, pursuant to section 403(d) of the Federal Courts Improvement Act of 1982. 2
Some of the liability issues were decided in plaintiff’s favor on cross-motions for summary judgment in a Memorandum of Decision, filed May 11, 1984. 3 At that time, it was determined that a Memorandum of Agreement dated May 23,1975, and a Contract for Relocation, dated August 19, 1975, were included in the class of contracts subject to the jurisdiction conferred on this court in 28 U.S.C. § 1491 (a)(1) (1982). It also was determined that defendant’s repudiation, by October 13, 1976, of the provisions of those agreements relative to conveyance of certain parcels of land for the optimum town on the ground that the Town lacked authority to so contract, was without arguable foundation after a December 18, 1980, decision of the Supreme Court of Washington, and a February 17, 1981, decision by the Ninth Circuit adverse to defendant. 4 After the January 1, 1984, termination date for the United States to retain an interest in real property acquired for the new town site, the refusal of the Corps to convey was found to be a breach of the Relocation Contract. Damages, if any, for such breach were left for subsequent proceedings.
After the May 11, 1984, ruling on cross-motions for summary judgment, numerous liability issues remained on plaintiff’s claims, and defendant’s counterclaim raised significantly different liability issues. Further, the parties’ concepts of the principles appropriate in this case for allocation of damages differed widely. Pretrial preparation, because of the parties inability to agree as to the basic factual structure of the relocation commitments, was difficult, and for the most part was unsatisfactory as a procedure to isolate and clarify disputed contentions of fact and law. Each party procured the services of a number of expert consultants and obtained reports that focused preselected facts on the topic *696 or subject assigned for investigation. In pretrial, counsel were able to stipulate as to only 11 facts. Plaintiff, on 35 pages, identified more than 330 separate factual issues to be tried; defendant, on 36 pages, identified more than 200 separate factual issues to be tried.
During the period June 4 through June 28, 1985, 19 days of trial were held. Plaintiff’s remaining liability issues and all of its damages issues were heard first. Liability issues and damages issues on defendant’s counterclaim were heard following plaintiff’s presentation. During the trial counsel were able to enlarge the stipulation to 98 facts. 5
In posttrial briefing, plaintiff requested 178 findings of fact, on 71 pages; defendant requested 328 findings of fact, on 54 pages, and both parties substantially restated their claims. Plaintiff now seeks damages for five categories of claims in total amount of $28,436,238.32. Under its counterclaim, defendant now seeks damages in five categories of claims that total $4,874,639.45.
The legal issues in this case arise in an unusual context. Although the claims essentially are for breach of contract, the contracting parties are governmental organizations and the Town’s relocation is collateral to the United States’ assertion of the sovereign power of eminent domain under the Bonneville Project Act. 6 Special legislation was obtained to supplement the authority of the Corps of Engineers to assist relocation of the Town in connection with construction of a second powerhouse at Bonneville Dam. 7 This special legislation (referred to as Section 83 or the McCormack legislation) specifically authorized the Secretary of the Army to relocate the Town of North Bonneville, Washington, to a new town site. As part of such relocation, the Secretary of the Army, acting through the Chief of Engineers, was authorized to cooperate in the planning of a new town with Federal and non-Federal interests, to acquire land necessary for the new town, and to convey title to that land to individuals, businesses, and other entities, including the Town. The special legislation authorized relocation of municipal facilities that were additional to, or constructed to higher standards than, those permitted under the substitute facilities rule applicable to eminent domain proceedings, provided appropriate non-Federal interests furnished binding contractual commitments to cover the additional costs.
The breach of contract issues also are exceptional because of the negotiating stance available to representatives of the parties because of their governmental interests. This public body relationship resulted in procedures atypical in government contracts, and produced a series of written instruments that embodied a sequence of understandings that were dependant upon prior actions. Changes due to future developments were implicit, agreements were expected to be amended and further agreements were expected to be reached at a later date.
FACTS
Background information on the parties and the relocation project is provided in the May 11, 1984, Memorandum of Decision on the cross-motions for summary judgment. 8 The findings of fact set forth separately in *697 a subsequent section of this opinion include in Part I a chronology in detail of the facts involved in the parties’ dealings to August 24, 1976, during the planning and design stages of relocation. Part II of the findings includes selected facts applicable to damages claims during the construction phase. Except as appropriate for continuity, information in the findings of fact is not repeated in other sections of this opinion.
Bonneville Dam, on the Columbia River, was completed in 1943. The northern half of the spillway is located in the State of Washington; the southern half of the spillway, the first powerhouse, and other facilities, are located on the Oregon side of the river. The Town of North Bonneville developed with the construction of the Bonneville Dam, and until 1975 its center was located adjacent to the dam on the Washington side of the river.
The Corps of Engineers constructed Bonneville Dam, and operates and maintains its facilities. In 1965, the Bonneville Power Administration, which markets electrical power generated by the dam, requested the Corps of Engineers to construct a second powerhouse. The site ultimately selected was on the Washington side.
In this case, defendant acted through the Corps’ Portland District office, supervised by the District Engineer, who also acted in the capacity of contracting officer for the second powerhouse project. The Portland District Engineer reported to the North Pacific Division, which was supervised by the Division Engineer. Both the District office and the Division office were located in Portland, Oregon. The chain of authority and responsibility continued to the Office of the Chief Engineer (OGE) and the Secretary of the Army, located in Washington, D.C.
The Town of North Bonneville, as a municipality, acted through its mayor and Town council. On relocation matters, the mayor and council were advised by the Town’s Planning Commission, managed by Pollard Dickson, and by the Town attorney, who before September 1974, was J. Richard Aramburu, and thereafter was James J. Mason. Pollard Dickson organized the Town’s planning staff in 1973. His title initially was Planning Program Manager, subsequently it became Planning Director, and, ultimately, Director of Community Development. Pollard Dickson dominated the Town’s relocation efforts and its dealings with the Corps. With the advice and support of the Town attorney, the Town’s planning organization was able to secure unparalleled concessions from the Corps.
Relocation of the Town divides into three phases: planning, design, and construction. These activities occurred during the period August 24, 1971, when the Town was advised it had been selected as the site for the second powerhouse, to November 15, 1978, when the Town work north of the relocated highway and railroad was completed, except for some finishing details. In end result, the major objectives of both parties were realized. The Corps’ objective to complete the second powerhouse and have power-on-line by May 1, 1981, was attained. The Town has been removed from the powerhouse site and the United States has demolished substantially all of the streets, public buildings and other municipal facilities in the Town as it existed prior to 1975. The Town, in fact, has been relocated, and the new facilities are substantially superior to the facilities that existed in the old Town.
ANALYSIS
General
On August 24, 1971, the Corps advised the Town that the United States intended to acquire approximately 95 percent of the area then occupied by the Town, and that the powerhouse project would result in removal of substantially all of the residences, businesses and municipal facilities in the Town. The area within the then Town limits encompassed approximately 225 acres. After the August 24,1971, meeting, the Town’s officials advised the Corps that the residents desired to be relocated as a community.
*698 Relocation of the Town was one element of the overall project to construct the second powerhouse, and the Town’s relocation had to be coordinated with other project work. This work included: (1) relocation of the highway and railroad for access to the new powerhouse as well as the new town; (2) construction of a haul road to move excavated material to disposal points; (3) excavation for powerhouse construction; and (4) construction of a seepage cutoff wall to encircle the powerhouse project site.
In 1972, the Corps, in Design Memorandum No. 4 (DM 4), planned to have relocation of the Town substantially completed prior to starting excavation of the second powerhouse. Under the Corps’ DM 4 schedule, the Town’s relocation planning phase would be completed during the period April through August 1973; the design phase would be completed by the end of January 1974; and dwelling construction in the new town site would be during the period March 1974 through November 1975. The cutoff wall for the powerhouse was to be constructed during the period November 1975, through June 1977. Excavation for the powerhouse was to start in May 1977 and construction of the powerhouse was to commence in June 1978.
During performance, however, the objective to complete relocation before major powerhouse construction work began was not realized. The planning and design phases for Town relocation extended from July 26, 1974, when the contract for services was executed, to August 24, 1976, when the construction contract was awarded. During this period, the schedules that applied to the relocation work by mutual agreement or by the force of circumstance were changed substantially. Further, in actual performance, the completion dates as planned and agreed upon were not attained.
The as-performed schedule shows planning phase work extended from November 19, 1974, through April 28, 1975. Work in the design phase commenced on October 13, 1975, and plans and specifications were delivered on May 3, 1976. Municipal facilities were constructed during the period August 24, 1976, through April 1, 1978, at which time there was beneficial occupancy of the town hall, fire station and sewage treatment plant. Town construction north of the relocated highway and railroad was started on July 25, 1978, substantially completed by November 15, 1978, and completed by August 24, 1979. Dwelling construction occurred from September 1977 through December 1979. Construction of the seepage cutoff wall for the powerhouse started on August 24, 1974, and was completed on August 15, 1977. Excavation for the powerhouse started March 31, 1977, and was completed July 10, 1978.
The cost to relocate the Town increased substantially over estimates made in the planning and design phases. In August 1972, the Corps’ DM 4 estimated the Town’s relocation would cost $1,307,000. In 1973, in testimony before the House Public Works Committee, on a bill to provide financial assistance for the Town’s relocation, the Town’s representatives estimated that the planning, acquisition, and move would be in the neighborhood of $1.5 million. In June 1975, the planning effort reflected in DM 8 put the total estimated cost for the relocation at $14,164,500. As of June 30,1979, the Corps’ records show a total of $33,117,000 had been expended to relocate the Town. Related government expenses, including operating and maintenance costs, as of the time of trial, brings the total to over $36 million for the United States to relocate the Town.
Construction of the second powerhouse reflects comparable inflation in cost over estimates. Plaintiff points out that the Corps’ contract with its general contractor for main powerhouse construction, GrovesKiewit-Granite (GKG), was in the amount of $245,332,602. During the period of performance, adjustments increased the contract price to $305,133,253, a 24.4 percent increase.
Constraints
Analysis of the constraints under which representatives of the Town and the Corps *699 operated is needed for perspective on the course of negotiations that occurred during the relocation process. The Corps in its dealings with the Town was dominated by its objective to complete construction of the second powerhouse and to have power produced on line by May 1, 1981. The Corps had given such assurance in order to obtain congressional approval and funding for the project, and was in no position to jeopardize support for the project from power users in the northwest and the Washington and Oregon congressional delegations. The Corps’ representatives were especially sensitive to lawsuits, or threats of lawsuits, where injunctions or delays likely would prevent timely completion of the second powerhouse.
Another constraint on the Corps’ representatives involved limitations imposed by statute, regulation and case law applicable to exercise of the sovereign power of eminent domain. The Corps’ authority to acquire a site for the second powerhouse is contained in the Bonneville Project Act. The Corps’ authority under the Act includes the ability to furnish substitute facilities to compensate municipalities when public facilities are taken. 9 The substitute facilities rule, however, does not provide an adequate basis for the Corps to furnish financial assistance to plan and design a new site, or to construct new municipal facilities based on projected expansion in a relocated town.
The Corps’ regulations that applied to the Town’s relocation were designed to give effect to a decision of the 10th Circuit, and to correct actions that had been criticized by the Comptroller General. 10 The 10th Circuit, in the New Woodville case 11 decided that where the Government acquired an entire city, which dissolved and a new town was incorporated, and only about 50 of the 300 residents moved to the new town, the new town was not entitled to compensation for the costs of its streets, sidewalks or alleys. The court reasoned that the old town had ceased to exist, so there was no obligation to provide substitute ways, and there was no monetary loss to be compensated. The court specifically found that the new town was not a relocation of the old city, which would have posed a different problem.
In 1968, the Comptroller General had criticized the Corps for use of arbitrary expansion allowances in relocation agreements that compensated replacement of municipal facilities. In a report to Congress, the Comptroller General stated that payment allowing for any contingency in determining the extent of replacement facilities constitutes compensation for indirect and speculative damages, which is prohibited by law. The Comptroller General recommended specific measures for the Army to improve its procedures for determining the compensation to be paid to municipalities for the relocation of facilities necessitated by Federal water projects. 12
The Corps’ regulations, effective January I, 1969, provided guidelines for application of the substitute facilities rule. Section 73-601 affirmed that at that time neither Federal statutes nor Federal court decisions authorized the Secretary of the Army to pay the costs of physically relocating a town. Where project requirements dictate acquisition of private property within a project, the Government could participate in financing the cost of comparable streets and utilities in a new town in the event the governing body of the town, and its citizens, decide that a new town will, in fact, be established in lieu of the old town. If no new town is to be established, however, the regulation provides that the Government has no legal authority to pay other than nominal consideration for the streets and utility system in the old town.
Regulation ER 1180-1-1, Part 6 prescribed procedures in detail to be followed *700 by the Districts. These procedures included:
—A determination that a portion of the town not taken by the project is incapable of absorbing the residents and businesses of the town located in the project taking area. When the capacity of the unaffected areas of the town are substantial but not equal to the occupied properties, a poll was to be made of the affected residents to determine their intention to relocate in the community. —Any decision to relocate was to be made solely by the town, the town was required to formulate its own plans to relocate, and it was to select and acquire the new town site.
—The Corps’ design memorandum was to state the population of the affected town and population trends apart from project induced growth. The design memorandum was to include statistical data on affected residential and business units, residents to be reestablished, and existing municipal facilities. No allowance or payment would be made for facilities in excess of those determined to be necessary to move.
Another limitation on the Corps’ flexibility in relocation of the Town was imposed by section 122 of the River and Harbor Flood Control Act of 1970. This section directed the Secretary of the Army acting through the Chief of Engineers to promulgate guidelines designed to assure that possible adverse economic, social, and environmental effects relating to any proposed project have been fully considered in developing such project. Section 122 required consideration of the following: (1) air, noise and water pollution; (2) destruction or disruption of man-made and natural resources, esthetic values, community cohesion and the availability of public facilities and services; (3) adverse employment effects and tax and property value losses; (4) injurious displacement of people, businesses and farms; and (5) disruption of desirable community and regional growth. 13
On September 28, 1972, the Corps published guidelines to implement Section 122 and to supplement the requirements of the National Environmental Policy Act of 1969. 14 The guidelines were designed to ensure that all adverse and beneficial effects are considered fully in planning Corps projects. As an integral part of the planning process, the Corps was directed to make an effect (impact) assessment. The effect assessment was defined as an “iterative process” that included: identification of anticipated effects, quantitative and qualitative description and display of the effects, evaluation whether adverse or beneficial, and consideration of measures to mitigate adverse effects. The guidelines summarized the sequence of steps to be made in effect assessment as follows:
1. Assemble a profile of existing conditions in the planning area;
2. Extend the profile to make projections of “without project” conditions through the expected life of the project;
3. Make “with project” projections, identifying causative factors and tracing their effects for each alternative;
4. Identify significant effects;
5. Describe and display each significant effect;
6. Evaluate adverse and beneficial effects;
7. Consider project modifications where adverse effects are significant;
8. Seek assessment feedback from other sources;
(Steps 1 through 8 are common to each iteration of the effect assessment process).
9. Use effect assessment in making recommendations;
10. Prepare a Statement of Findings;
11. Use effect assessment in preparing the Environmental Impact Statement.
The content of the material to be included in these steps was discussed in detail in *701 the guidelines. The discussion relative to step No. 8 emphasized the need for “continuous feedback from a variety of information sources.” The Districts were encouraged to have informal exchanges with Federal, state and private groups and individuals at the beginning of the investigation. More formal discussions were to occur in the course of initial formulation and late stage public meetings.
The major problems that confronted the Town in its efforts to obtain relocation benefits involved the small size of its population and its limited financial resources. The number of residents and businesses desiring relocation was marginal, under the Corps’ standards, to qualify for replacement facilities. The Town could not afford to plan its own relocation or to acquire a new town site. After 1972, the Town had to find a way to have its planning expenses, including its planning staff, financed by the Corps. After Section 83 was enacted, the question of the Town’s ability to make the necessary financial commitments became a continuing problem to the parties.
In 1971, income to the Town from property taxes was approximately $5,700, and the total revenue from all sources was approximately $126,000. During the planning phase the Town searched for ways to raise revenues. On May 21, 1974, it enacted a tax (B & O tax) on the privilege to engage in business in the Town. The B & O tax was designed specifically to apply to contractors of the United States that were engaged to construct the second powerhouse and to relocate the Town. The B & O tax was a new source of income, and commencing in 1975, it was a source of substantial funds. During the period 1975 —1982, the B & O tax produced revenues to the Town that totaled $2,011,212.33. Town Population
In 1940, the Town reached a maximum population of 640 as a result of construction work on the Dam. In the 1970 census, the population had fallen to 459. Without the prospect of a second powerhouse, and possible Town relocation, it is probable that the Town within the original corporate limits would have experienced a stable community population of from 550 to 650, and that the entire community area would have a population of from 750 to 850. When the Town was told in 1971, that it would be the site for the second powerhouse, its population was 470, and when the area outside the corporate limits is included, its population was estimated at 650 persons.
The planning phase of the relocation was accomplished by a team of architect/engineers selected by the Town’s planning staff. Projections by the planning groups as to the number of residents that would relocate, and the future growth of the Town’s population as a result of the impact of the construction of the second powerhouse, were overly optimistic.
In March 1974, a survey by the GMA Research Corporation determined that there were 182 housing units in the old town that were occupied by 444 persons. In December 1974, a survey by Williams & Mocine determined that 46 percent of the existing households were planning to relocate; 21 percent did not plan to relocate; and 32 percent were uncertain. The planning groups estimated that 60 to 70 percent of the residents would relocate to the new town. This estimate produced a relocation of existing residents at a total of approximately 350 to 400. On the basis of this estimate, the Corps agreed with the Town that the initial town should contain 210 residential lots, and not to exceed 50 business lots.
Throughout the planning phase, the Town planning staff insisted on the concept of planning for an optimum town. The optimum town concept was used to provide basic information necessary to determine the character, size, and location of the new town. Optimum town lands, for planning purposes, were to be lands sufficient to accommodate the existing population, and the growth of that population to 1,500 persons. The Town’s planning groups assumed a 100-year period for the Town’s population to reach the 1,500 person optimum size.
*702 The population of North Bonneville, as April 1975, compared with the actual popuprojected by Keyser/Marston Associates in lation in fact realized, is as follows:
Year Projected Population Actual Population
1975 550 to 600 477
1976 600 to 650 387
1977 650 to 750 327
1978 750 to 850 312
1979 900 to 1,000 412
1980 800 to 900 432
1981 700 to 900 424
1982 700 to 900 418
1983 800 to 1,000 427
As built, the relocated Town consists of 196 new residential lots, 88 of which were vacant as of August 1984, and 11 residential lots from the old town’s West End, which were upgraded. There are 50 commercial lots, 42 of which were vacant as of August 1984, and four industrial lots, two of which were vacant as of August 1984.
Defendant’s expert reported that, according to Corps documents, 165 residential lots were claimed by eligible residents; of those, 88 were sold by the residents. As of October 14, 1980, 61 families, or approximately 158 persons of the Town’s original population, actually relocated to the new town.
Authority
Section 83 supplements the authority conferred in the Bonneville Project Act and is the primary authority for the Corps to contract for the Town’s relocation. Section 83 authorizes the Secretary of the Army, acting through the Corps:
(1) to contract with the Town to reimburse it for the cost of planning for a new town;
(2) to acquire lands necessary for the new town;
(3) to convey title to lands acquired for the new town to individuals, business or other entities, and to the Town;
(4) to construct a central sewage collection and treatment facility;
(5) to construct other necessary municipal facilities as substitute facilities, which were to serve reasonably as well as those in the existing town;
(6) to construct municipal facilities at higher standards as may be necessary to comply with applicable Federal and state laws;
(7) to construct additional municipal facilities, or to utilize higher standards than required for compliance with applicable Federal and state laws, only at the expense of appropriate non-Federal interests;
(8) to obtain from non-Federal interests, before any real property is acquired for the new town site, “binding contractual commitments” that all lots in the new town site either would be occupied when available, would be replacements for open space and vacant lots in the existing town, or would be purchased by non-Federal interests “at the fair market value.”
The obligations of the parties on the claims in this case are to be derived from the provisions of Section 83. The clarifying language that was included in the reports of the Appropriation Committees for the FY 76 appropriations was not intended to amend Section 83 or to enlarge the authority of the Corps. Both parties sought a statement of congressional intent that would clarify the issues that had arisen with respect to the Corps’ authority, and both agreed that insertion of language in the Appropriation Committees’ reports would be adequate, without an amendment of Section 83. With the requisite clarifying *703 language in the Appropriation Committees’ reports, enactment by Congress of appropriations for FY 76 satisfied the condition precedent in Article XIV of the August 19, 1975, Relocation Contract.
Agreements
The Corps used the authority conferred by Section 83 to enter a number of contracts with the Town and with other contractors. The Town secured a bargaining advantage at the beginning of the contractual relationship. In its contracts with the Town, the Corps consented to deletion of the customary disputes clause procedure, and failed to provide a substitute mechanism to resolve disputes during on-going contract performance. During negotiations on the first agreement, a vehicle to reimburse the Town for its planning expenditures, the Town would not agree to inclusion of the standard disputes clause. As alternatives, the Town proposed either an arbitration clause, or the omission of any clause related to disputes or arbitration. The Corps acquiesced and agreed to eliminate both a disputes clause or an arbitration clause. As a result, when the District Engineer could not settle an issue with the Town, and the Town was dissatisfied with the administrative decision at the Division or OCE levels, disputes could only be resolved by litigation. Neither party wanted, and outside forces would not tolerate, litigation to stop either the powerhouse project or the Town’s relocation. As a result, decisions on hard issues frequently were deferred, approvals were given on condition, and ambiguous instruments were signed with reservations.
Pursuant to the authority conferred by Section 83, the Corps entered or authorized the series of written instruments that define the planning, design and construction phases of the Town’s relocation. These written instruments were made in the following sequence:
1. July 26, 1974—Contract for Services between the Corps and the Town to reimburse the Town for its planning costs and for the Town to employ an architect/engineer (A/E) to produce planning documents;
2. October 9, 1974—Scope and Statement of Work for the A/E planning contract, agreed to by the Corps and the Town;
3. October 14, 1974—the Services Contract between the Corps and the Town was amended to provide that replaced municipal facilities would have the capacity to serve the same number of users as those in the existing town;
4. November 19, 1974—the Corps approved the A/E planning contract between the Town and Royston, Hanamoto, Beck & Abey (RHBA) as contractor to produce the draft design feature memorandum (DFDM), environmental assessment report (EAR) and a comprehensive plan; subcontractors included: Williams & Mocine; Kirk/Wallace and McKinley; Daniel, Mann, Johnson, Mendenhall/Hilton (DMJM/Hilton); Dames & Moore; and Keyser/Marston Associates;
5. May 23, 1975—Memorandum of Agreement between the Corps and the Town to resolve all points of nonagreement between the parties as of that date, to remove the threat of litigation, and to provide a procedure for continuation of the planning process and design process;
6. August 19, 1975—a Contract for Relocation between the Corps and the Town, an integrated agreement that memorializes prior agreements between the parties and is an attempt to define the rights of the parties in further design and construction phases in the Town’s relocation;
7. October 7, 1975—Scope and Statement of Work for the A/E design contract agreed to by the Town and the Corps;
8. October 10, 1975—A/E design contract between the Corps and DMJM/Hilton; subcontractors included RHBA;
9. August 24, 1976, Construction Contract between the Corps and Valley Inland Pacific Company (VIPCO).
Other Corps contracts for the second powerhouse project included work that related to the Town’s relocation. These contracts were:
*704 1. September 7, 1974—August 1977— seepage cutoff wall construction; ICOS Corporation and BenCor-Petrifond, a joint venture;
2. June 1, 1976—August 19, 1978—fill placement, grading, highway relocation, and railway relocation; Harry Claterbos Co.;
3. September 19, 1975—October 6, 1976 —clear, grub and fill, construct temporary bridge, R.A. Heintz Const. Co.;
4. April 14, 1977—August 1, 1978-powerhouse excavation and spoil berms;
S.J. Groves Const. Co. (SJG); and
5. July 25, 1978—August 24, 1979— general contractor for main powerhouse contract—town construction north of relocated highway and railway; Groves-KiewitGranite (GKG).
Although these written instruments were executed sequentially, in numerous instances they involved concurrent negotiations during the time after Section 83 became law on March 7, 1974, to the time the A/E design contract was signed on October 10, 1975. Negotiations for the July 26, 1974, Services Contract, involved many provisions that later appeared in the October 9, 1974, scope and statement of work for the A/E planning contract; numerous provisions of the May 23,1975, Memorandum of Agreement were carried verbatim into the August 19, 1975, Relocation Contract. Drafting of the Relocation Contract was sufficiently completed in July 1975, to permit the Corps’ audit report on the Town’s capability to be delivered to the contracting officer on August 1, 1975. Negotiations for the October 7, 1975, scope and statement of work for the A/E design contract were in progress during July and August, prior to execution of the Relocation Contract.
One effect of these concurrent negotiations is a failure of any particular agreement in the sequence to be a self-contained statement of contractual obligations as of the time it was executed. Another effect is a failure of a later signed agreement to include changes that had been accepted during drafting of a different instrument.
Early in the negotiations, the Town secured actual or effective control of the relocation contract arrangements. Before enactment of Section 83, the Town on February 11, 1974, sought an official policy declaration from the Corps that the planning phase and the physical new town design would be under the “singular control” of the Town council. On April 23,1974, the Portland District notified the Town that it would begin to prepare the scope of work for the A/E planning contract, to be let for the first phase of the relocation work. On April 24, 1974, the Town complained to the Washington State Governor that the Corps insisted on doing all of the planning on relocation of the Town through its own contracting arrangements, and requested the Governor’s direct intervention on behalf of the Town. On May 2, 1974, Washington State officials convened the meeting the Town had requested. The Portland District at that time still recommended a contract structure that gave it control of the planning and design contracts. During further negotiations, however, the District Engineer agreed that the planning phase work would be done by an A/E firm under a contract made and administered by the Town. The services contract on July 26, 1974, specifically authorized the Town to employ the services of a planning consultant, subject to the approval of the contracting officer, to produce the DFDM, EAR, and comprehensive plan.
Experience with RHBA’s work under the Town’s contract administration convinced the Corps that the Town should not be the contracting party for the A/E design work. The Corps sought support in Congress, and at a May 20, 1975, meeting in Washington, D.C., the Town was told by Representative McCormack and congressional staff members that it could not direct the design contract or name the A/E design contractor. Accordingly, a main feature in both the May 23, 1975, Memorandum of Agreement, and the August 19, 1975, Relocation Contract, was a definition of the relationship of the parties which specifically provided that the Portland District Engineer *705 would be the contracting officer and administer the design contract.
Notwithstanding this change in contract administration, the Town was able to continue to dominate the design phase, and its position during the construction phase was not seriously impaired. The Memorandum of Agreement and the Relocation Contract specified that the Town’s participation in the design process would include the right to have the scope and statement of work for the design A/E contract be derived mutually, and to be subject to the Town’s written approval; any member of the Joint Board of Review could require the design contractor to furnish a written explanation of any proposed deviation from the standards and criteria in DM 8; the plans and specifications prepared by the A/E design contractor would be subject to the Town’s approval prior to advertising; and any change order was to be subject to prior approval by the Town. Article 5 of the scope and statement of work for the design contract continued the arrangement that any member of the Joint Board of Review could require the design contractor to furnish a written explanation of any deviation from DM 8 standards and criteria, and their application. Article 12, Section 10, excepted from Joint Board review deviations from DM 8 general concepts on nine subjects.
DFDM—DM 8
DM 8 occupies an anomalous position in the contractual arrangements. The Corps’ regulations require a design memorandum for the Town’s relocation. The DFDM prepared by the Town under the A/E planning contract, however, failed to meet the Corps’ requirements for a design memorandum, and its provisions were never accepted by the Corps other than as a general statement of guidelines desired by the Town for the preparation of plans and specifications. The Town delivered preliminary drafts of the DFDM on April 25,1975, with a notice that changes to embody provisions wanted by the Corps would not be tolerated. On May 7, 1975, the Corps determined that the DFDM contained 75 deficiencies, numerous sections should be rewritten and some sections were either grossly misleading or were erroneous. These and other policy differences, however, were deferred for subsequent resolution. The DFDM was used by the Corps as a statement of what the Town saw as a desirable development, and as a document that was adequate to discharge the Town’s obligation under the July 26, 1974, services contract. Both parties agreed that the DFDM did not, and that the DM 8 did not, describe the Corps’ obligations.
In subsequent agreements, however, DM 8 was incorporated by reference and used for purposes that creates ambiguities as to its actual status. The Corps obviously used DM 8 to satisfy the requirement that a design memorandum be prepared before proceeding to the design phase of relocation. The Town views DM 8 as containing planning standards and design features that became part of the contractual agreements that render the Corps liable in damages.
Negotiating Stance
Negotiations during the planning and design phases were impaired by a failure to cooperate toward the relocation objective each party wanted. From the beginning the negotiations were characterized by adversary tactics that are remarkable in the application of outside considerations unrelated to the merits of the particular issue then in negotiation. The tactics employed by the parties went far beyond any legitimate concept of “hard bargaining”. Early in its dealings with the Corps, the Town sought and obtained bargaining concessions by threats to sue, by filing for injunctions to stop work on the powerhouse project, and by applying political pressure from state and Federal elected officials whose support was essential to the Corps.
These tactics became a routine part of the Town’s negotiating posture. The Corps’ anxiety to meet the May 1, 1981, power-on-line deadline produced a Pavlovian response to the Town’s tactics. For its part, the Corps also employed, although less successfully, political pressure, and *706 threats of suit to force de-annexation of'the powerhouse site, reconsideration of the B & 0 tax, and of the scope of Section 83. The Corps also threatened to delay the construction phase, and to withhold approval of the Town’s annexation of lands necessary for the initial town, until the Town agreed to the Corps’ de-annexation and B & 0 tax demands.
The parties’ extensive use of these tactics, which in the circumstances were extreme, poisoned the negotiating process, and amounted to conduct sufficiently oppressive to raise questions of good faith and ethics. In the period February 11, 1974, through September 28, 1976, the Town injected threats to sue into the negotiations on eight occasions, and filed six law suits to reinforce its negotiating position. During the period December 31, 1975, through June 29, 1976, the Corps threatened to sue, or stimulated Skamania County to sue, on four occasions, and by September 20, 1977, the Corps had caused three cases to be filed against the Town. In this court, plaintiff’s October 20, 1980, complaint, seeking damages for anticipatory breach, and defendant’s November 19, 1982, counterclaim were filed in the context of ongoing negotiations between the Town and the Corps on relocation matters.
The Town’s use of a law suit or the threat of a law suit was a tactic that was instrumental in the Town’s obtaining important concessions from the Corps. These included:
—acceptance of Pollard Dickson’s concept of an appropriate planning process and the resultant application in the planning and design phase of procedures neither understood by Corps personnel nor accepted as procedures required by the Corps guidelines to effectuate Section 122 of the National Environmental Policy Act of 1969.
—the Corps’ agreement, reflected in the October 14, 1974, amendment to the services contract, that the new municipal facilities would have the same capacity as the facilities in the existing town, rather than a capacity measured by the number of persons who actually relocated.
—the Corps’ acceptance of the Town’s draft of the scope and statement of work for the A/E planning contract;
—the Corps’ recognition of the Town’s position on standards, site selection, and use of the workshop process;
—the Corps’ agreement that the “clarifying language” in the Appropriation Committees’ reports would permit:
1. land to be conveyed to citizens at the fair market value of unimproved land, without enhancement of value for the new municipal facilities.
2. up to 125 acres of open land within the initial town for common use areas could be conveyed without cost;
3. use of standards and criteria recognized by “technical groups” and good industry practice, in the absence of Federal or State required standards;
4. replacement for community service facilities available in existing elementary school if it is not relocated.
—The Corps’ use of the DFDM as an adequate delivery under the services contract, and useable as DM 8 without a delineation of its function as to the extent of the Government’s obligations in the design phase.
The Corps’ misuse of negotiating tactics was not successful to bring about de-annexation of the powerhouse site or to restrict the use of the B & 0 tax only to Government contractors engaged in the Town’s relocation. The site of the second powerhouse is owned and operated by the United States; the Town, however, has not disincorporated the site.
The Town council also employed its municipal powers to harass the Corps during the negotiation of relocation disputes. In 1976, when excavation and site preparation for the second powerhouse were underway, the Town declared a state of emergency in regard to the health, safety and welfare of its citizens to aid negotiations relative to the delivery of a plat to the Town and the refusal of the Corps to participate in the *707 acquisition and transfer of optimum town lands. This state of emergency, declared on September 28, 1976, was to remain in effect until those and other matters were resolved.
In addition, on September 28, 1976, the Town council adopted emergency ordinance No. 317, which declared that any breach of contract by any public agency that materially effects the Town’s ability to conduct good government would constitute an emergency. On October 19, 1976, the council adopted a noise control ordinance to control all sound and vibration that effected any residential, commercial, or industrial property within the Town limits, and concurrently denied permit applications relative to excavation for the seepage cutoff wall that had been submitted and tabled on October 1, 1976. Motions for a preliminary injunction to enjoin the enforcement of ordinance Nos. 317 and 320 were withdrawn on December 15, 1976, on stipulation of the parties on mutually acceptable arrangements for their enforcement. Subsequently, in March 1977, in connection with negotiations for the commencement of deeding lots to residents and for variances under the noise ordinance, the Town gave written notice that the noise ordinance would be enforced against all Corps contractors, subcontractors and employees. In April and May 1976, the Town council postponed action on, or denied, Corps contractors permits for street closures and utility modifications.
The Town council employed its municipal powers to impede negotiations by changing the negotiating authority of its representatives. These changes reflect either a failure by the Town to understand the Corps’ contract administration procedures, or they represent further attempts at harassment. On April 28, 1976, after the Portland District had rejected some of the Town’s requests for reimbursement of relocation expenses, the Town by formal action rescinded the authority of its staff to negotiate resolution of relocation problems and required all negotiations to be with the Town council, at the regular Tuesday meetings, on written proposals submitted at a prior council meeting. The District Engineer, as contracting officer, was directed to personally represent the Corps at the regular council meetings until there was a final resolution of six items then in dispute. At a regular meeting on May 25, 1976, the District representative was required to address each of the six subjects in connection with a request for a writ of entry permit for construction of temporary water storage tanks. In July 1977, the council by resolution designated a single individual, the Town’s planning director, Pollard Dickson, to represent the Town on all Relocation Contract matters. On July 22, 1977, Mr. Dickson met with the contracting officer and the North Pacific Division Engineer and requested that all such matters be negotiated personally and exclusively between the Division Engineer and the Town’s representative. The scope of the contracting officer’s authority was reiterated and the Division Engineer denied the request formally on August 5, 1977.
Mistrust between the parties caused by their adversary negotiating tactics was compounded by actions the other believed were particularly reprehensible. The Corps believed that the Town’s enactment of the B & 0 tax, and the retention of its corporate limits around the powerhouse site, were applications of opportunistic trickery that were contrary to what the Corps believed Congress and the parties intended when Section 83 was enacted. The Town believed that the Corps’ attachment to the Relocation Contract of an Exhibit A that was different from that agreed upon in May 1975 during negotiations for the Memorandum of Agreement was a deliberate attempt by the Corps to avoid its obligations for the initial town, and that it was an attempt to undermine the Town’s position on the B & 0 tax.
The B & 0 tax was enacted by the Town council on May 21,1975, at a time when the mayor and the planning director were in Washington negotiating for the May 23, 1975, Memorandum of Agreement. The Portland District representatives and OCE’s representatives in the Washington *708 negotiations were not told about the B & 0 tax. Portland District personnel who attended Town council meetings, however, knew as early as April 22, 1975, that a B & 0 tax was contemplated, and the Corps’ claim that it was surprised by the tax is not credible. The Corps’ auditors and the Portland District counsel used revenue made available from the B & 0 tax to support their conclusions and recommendations that the Town had the capability to make the binding financial commitment required by Section 83. Notwithstanding the Corps’ doubts about the possible illegality of the B & 0 tax, the Relocation Contract was signed when the Corps was completely informed about the tax. In fact, the tax afforded the Town the revenue base that the Corps needed to execute the Relocation Contract and to go forward with the relocation without delay.
The Portland District was advised on August 5, 1975, that the Town planned to retain its city limits around the new powerhouse after the Town had relocated. When the Corps executed the Relocation Contract, therefore, it was fully informed about both the B & 0 tax and the Town’s position on the de-annexation issue. The Corps’ decision to go forward at that time, indeed, relied upon the Town’s imposition of the B & 0 tax as to those Corps contractors that were doing the relocation work. The Corps objected to the tax because of the added costs involved when the Town applied it to the Corps’ contractors for work that was done on the powerhouse. The Corps’ objection to the B & 0 tax, essentially, was an attempt to support its position on the de-annexation issue. The Town’s objection as to the erroneous Exhibit A, likewise, was an attempt to support its position on the B & 0 tax and de-annexation. When the dispute on Exhibit A arose, the parties’ disagreement as to those issues was paramount.
The Portland District’s substitution of an Exhibit A to the Relocation Contract that was limited to the areas the auditors had used to compute the Town’s financial capability to make the required binding contractual commitment illustrates how fluid the initial town concept was when the Memorandum of Agreement and the Relocation Contract were executed. The boundaries that the initial town ultimately would take were unknown on May 23, 1975, and on August 19, 1975, and no final agreement could or was made on those dates. Although a new Exhibit A was agreed upon on October 6, 1975, and formally attached to the Relocation Contract by amendment on December 17, 1975, the initial town boundary in fact subsequently was changed, at the Town’s request, in numerous particulars. On April 13, 1976, the Town council agreed to revisions on Exhibit A in which lands not to be purchased were crossed out, to clarify which lands the Corps was authorized to purchase. On April 20,1976, the Town attorney reminded the contracting officer that the Relocation Contract authorized Exhibit A to be modified by written agreement of the parties and that the Town was preparing a revision. The Town submitted a new revision on June 10, 1976. Additional planning resulted in changes that were not resolved until March 8, 1977. Exhibit A did not depict a final initial town boundary that both parties accepted until June 28, 1977, when it was made part of the Relocation Contract by amendment.
Effects
The lack of a procedure to resolve disputes, and the parties mutual mistrust, produced written instruments that do not reflect the intent of the parties at the time they were executed. Nor do the instruments memorialize the status of the planning and design phases as of the time they were executed. The written instruments were executed with the knowledge that some matters were not resolved and that each party had reserved powers to change what had been agreed upon. The parties’ attitudes throughout were “to agree now” and resolve differences later.
The planning process devised by Pollard Dickson and incorporated in written instruments executed by the Corps, particularly the scopes and statements of work for the A/E planning contract and the A/E design *709 contract, created procedures of monstrous proportions and complexity. These documents illustrate a situation where planning devices, which were built upon guidelines suggested in the Corps regulations, were exaggerated to such extremes that even the very large, multidisciplined, international design firms could not deliver in the time allocated. The effectiveness of the numerous workshops in illustrating the intuitive judgments desired by the Town’s planning director is not apparent on the record. It is clear, however, this contractually imposed planning process required enormous volumes of time and effort that strained the capacities of the A/E organizations that constituted the planning and design teams. One result was that, in order to maintain the artificial schedules, work that should have been completed in the planning phase had to be carried over into the design phase, and questions about plans and specifications that should have been disposed of before the construction phase, required rework and change during construction.
An example of this problem, and the deferral of disputes to subsequent decision, is illustrated in the attempts to reach agreement on the proper time to advertise an invitation for bids on the plans and specifications for the construction contract. The Town gave its conditional approval to DMJM/Hilton’s plans and specifications on June 3, 1976. On June 8, 1976, at a time when its conditions required seven pages on 12 major categories to set forth, the Town notified the Corps that its approval satisfied the requirements of the Relocation Contract, and the IFB could be advertised. On June 22, 1976, the Corps responded with a listing of 13 items of non-concurrence. On June 25, 1976, the Town responded, and listed six items that remained in disagreement. These conditions were not resolved before the plans and specifications were advertised. The plans and specifications that were the product of the design phase and approved for advertising contained a large number of design errors. The findings detail the nature and extent of design deficiencies that were uncovered by December 6, 1976, and which had to be corrected in the construction phase.
The May 23, 1975, Memorandum of Agreement and the August 19, 1975, Relocation Contract spell out numerous items on which the parties agreed. Neither of these documents, however, constitutes final agreements on the items of the specific claims for which damages now are sought. The parties, through these agreements, obviously are in a contractual posture and are bound by the terms of their agreements. The problem is to trace through the maze of changes and deferred decisions so as to determine the extent of agreement and resulting liability for damages as to particular items in the respective claims.
The Memorandum of Agreement essentially provided a procedure for going forward with the planning and design phases. The Memorandum of Agreement does not carry with it a final agreement as to the specific items that were identified nor of the actions that resulted from the procedures. When the Relocation Contract was signed there was as yet no agreement on the scope and statement of work to be used in the design contract. That document was left by the parties to be mutually derived in the future. The selection of the design team was deferred to future action.
In large part, the Relocation Contract carried forward verbatim the provisions and procedures of the Memorandum of Agreement, and those procedures and provisions were subject to further changes in the negotiations for a scope and statement of work for the A/E design contract. In this process, by the end of the construction phase, some issues which had been deferred for subsequent action and resolution, never were the subject of final agreement by the parties. The failure of the parties to reach an agreement on the construction of a community center is an example of a failure in the sequence of prior understandings to result in a final link in the chain of promises that would render defendant liable for damages for breach of contract.
*710
Community Center
Plaintiff traces an obligation to construct a community center: (1) from the authority in Section 83; (2) through provisions in the Memorandum of Agreement and its Enclosure No. 1, and the clarifying language in the Appropriation Committees’ reports; (3) through DM 8, Vol. 1, pp. 3-26, and 5-31; (4) through the Relocation Contract, Exhibit G, Item 14; and (5) through the scope and statement of work for the A/E design contract, Article 12, Section d(l), and Article 12, Section 7.
In all of these references, inclusion of a community center building in the final design was contingent on a decision by others of whether or not the existing school would be relocated. The parties throughout agreed that final design obligations on a community center could only arise after the contracting officer directed it be produced. In the planning process, both parties were in agreement that a community center was an essential community social facility and that it was desirable that the Corps should provide replacement facilities for those formerly available in the school.
In December 1975, the parties deferred further design because of continuing uncertainty as to whether the school district would relocate the existing school. DMJM/Hilton, in the design phase, through the A/E firm of Kirk/Wallace and McKinley, completed the community center only through preliminary design. On November 10, 1977, the school district accepted cash payment rather than relocation by way of replacement facilities.
On March 15, 1978, the Town requested the Corps to initiate a design for a community center, and suggested a format for a mutually agreed scope and statement of work. On June 20, 1978, the Town attorney requested the Portland District to schedule a design workshop under the Relocation Contract for the community center. The District provided to the Town a draft scope of work for the design of a community center that was based upon the work previously done in the RHBA planning contract and the A/E design contract. On June 27, 1978, the Town notified the District Engineer that the District’s proposed scope of work was unsatisfactory, and that the Town would respond with a redraft of a scope of work for the community center. The Town proposed to concentrate on the workshop and conceptual design of the space, its specific location, and relationship to other public structures. On June 30, 1978, the District advised the Town that DMJM/Hilton had conducted a workshop and design briefing on the community center, and that no additional workshops would be held unless the Town paid for them.
On July 7, 1978, the District Engineer responded to the Town’s June 27, 1978, notice and stated that the design contract scope of work provided for final design of the community center and that the planning and preliminary design had been completed by DMJM/Hilton. He stated that the work by DMJM/Hilton already had involved workshops, conceptual design of the space and the building’s specific location and relationship to other public structures, and if the Town wanted additional workshops it would have to pay in advance for all associated costs. The District Engineer reminded the Town that all direct reimbursements to the Town had ceased as of June 30, 1978, and stated the Corps would not negotiate a lump sum amount for additional work to arrive at an approved scope of work for a community center.
The parties could not reach agreement on completing the design for the new community center. On November 28, 1978, the District Engineer requested authorization to negotiate a cash payment to the Town of $370,000 to avoid the complications that would arise in attempting to design a community center that would meet the Town’s desires and to satisfy the Government’s contract obligation under the clarifying language. The District Engineer was of the opinion that the new town could not be considered relocated until the Town either had a community center, or the school board decided to provide a new school in the town.
*711 The issue was not resolved and ultimately the Town independently hired McKinley Architects to complete a preliminary design for the community center based upon a scope of work that the Town had prepared. McKinley Architects’ report is dated August 16, 1979.
On November 23, 1979, the Corps reviewed the matter and communicated its position to the Town. The Corps’ position included:
a. Preliminary plans provided for a community center with maximum gross area of 5,169 square feet, depending on options selected, and no outside play area or gymnasium. The document “North Bonneville New Town Design Municipal Building Design Analysis, Rationale and Standards, and Criteria for Design Development” dated 24 November 1975 and prepared under the design contract by Kirk, Wallace, McKinley, AIA and Associates, established the extent of the above-mentioned Government’s obligations relating to the community center facilities, and this office indicated its acceptance of those obligations to your office by letter dated 28 April 1978.
b. Any modifications in the design of the community center desired by North Bonneville, which increase space and/or costs beyond the previously agreed upon Government obligations, would be betterments which require betterments cost payments by the City following terms under the relocation contract.
* * * * * *
d. The Government is obligated to provide replacement community facilities through the provision of a community center only when the City of North Bonneville has accepted all municipal facilities in total and assuming there is no school facility in North Bonneville.
e. The offer for a cash settlement in the amount of $385,000 in lieu of construction and based on January 1979 prices is still viable for replacement of the subject facilities____
The parties were not able to negotiate a settlement of the community center issue, and they were not able to reach a final agreement that was sufficiently definitive to impose an obligation on the United States to respond in damages for a failure to construct the center. The unsuccessful negotiations for a settlement, and defendant’s offer of compromise, do not establish the existence of an agreement for which defendant is liable. 15 At trial the Town’s planning director testified that no agreement had been reached on a scope of work for final design of the community center.
The Town presented at trial the McKinley Report and the testimony of its author, David McKinley. This evidence went solely to the issue of damages claimed by the Town. The Town did not present evidence that established liability for breach of contract as to this issue.
During trial, on defendant’s motion, as to the community center issue, a ruling was made that the Town had not established on the record a contractual obligation that could be the basis for damages, and this claim was dismissed. In posttrial briefing, the Town requests that the ruling made at trial be set aside and the record reopened for the defense to cross-examine Mr. McKinley and present additional evidence with regard to the community center claim. The ruling at trial was correct as to this claim and there is no necessity to set it aside. Additional evidence from defendant on this issue would not establish the obligation plaintiff failed to prove.
The community center issue is precisely the kind of dispute that should have been settled prior to trial. Both parties recognize the merit in a community center facility as part of the Town’s relocation. The negotiating stance of the parties, however, including the reliance on extraneous political influences and resort to litigation as the final determinant, produced such extreme *712 intransigence that reasonable compromise could not be reached. In the circumstances of this litigation, the rules of contract construction regarding indefinite agreements have no place. 16 The cases cited and relied upon by plaintiff are based on facts that are not apposite to the Town’s community center claim. As counsel were warned at trial, resort to litigation on a claim that in all reason should be settled exposes the client to the contingency of total loss if in the final reckoning there is a failure in the evidence to establish liability. That result confronts the Town on its community center claim.
Optimum Town
In the initial stages of the planning phase, the phrase “optimum town” was a generalized concept that was identified with the selection of a relocation site from among the several sites available in the reconnaissance area. This generalized concept was used by the Town when it presented its optimum town site location at the public meeting on January 10, 1974, and was so used by the District in the April 9, 1974, Supplement No. 2 to DM 4.
As the planning phase progressed, the phrase acquired a different, restricted meaning. In the July 26,1974, contract for services, the specifications relative to the Comprehensive Plan stated the Plan would be based upon the development of an “Optimum Town” and the term was defined as a town with a central business district (CBD), with a population and economic base capable of supporting essential community services, providing adequate land for economic growth through a balance of land uses and meeting the requirements of a viable neighborhood unit. By the time the August 19, 1975, Relocation Contract was signed, the “optimum town” was the geographical area that encompassed and lay outside the boundaries of the “initial town.”
The Corps viewed the initial town as the area sized to contain the 210 residential lots and 50 business lots needed to relocate the Town’s 1974 population. The description of the physical boundaries of the initial town was not settled by the parties until June 28, 1977. Most of the initial town area was inside the second powerhouse project area. Part of the initial town area, however, was outside the project area and, to complete the Town’s relocation, had to be acquired by the Corps under Section 83 authority. Most of the optimum town area was outside the powerhouse project area. The Corps’ acquisition of property outside the project area for the optimum town and for the initial town was subject to the firm financial commitment requirements of Section 83.
The Corps’ analysis of the Town’s financial capability to go forward with relocation was based on the requirements of a move to the initial town. OCE was uncertain of its authority under Section 83 to purchase land outside the powerhouse project area that was not needed for the initial town relocation. Such purchases, for the optimum town, would involve the extension of Federal credit to acquire nonproject lands for resale for private development. The A/E design contract provided that DMJM/Hilton’s work would be confined to the initial town area, and to such work outside the initial town boundary as necessary to complete the design of the initial town.
On October 22, 1975, the Town filed a law suit in the Western District of Washington to enforce provisions of the Memorandum of Agreement relevant to annexation of Government lands needed for relocation. In December 1975, negotiations for the Corps’ consent for the Town to annex Government lands became deadlocked with negotiations for the Town to withdraw boundaries from around the second powerhouse site. On January 23, 1976, the District Engineer instructed the Portland District staff to assume for planning purposes that the initial town would be built and that optimum town land purchase was doubtful. *713 The District Engineer recognized that this decision would require violation of the Corps’ real estate acquisition procedures. Only the portion of the Pierce property needed to complete the initial town, for example, would be acquired, even though the price to acquire it piecemeal would be far more expensive than to acquire it in toto for the optimum town. The successor District Engineer on March 5, 1976, confirmed and continued the instructions to plan only for an initial town.
The Corps’ January 1976 decision to proceed only with plans and design for the initial town was reasonable in the light of the status of negotiations at that time. OCE was uncertain whether Section 83 permitted the Town to retain jurisdiction over the second powerhouse area after the initial town area was occupied. Lands acquired by the Corps for the new town could not be conveyed to the Town in the absence of a capacity to make the firm financial commitment required by Section 83 and the Corps’ planning had been based on application of the B & 0 tax only to contractors engaged in relocation work. Legal justification for acquisition of lands for the optimum town was clouded as to (1) whether Section 83 provided authority, (2) the Town’s authority to participate directly in acquisition of land for expansion, and (3) possible violations of the Town’s debt ceiling under Washington State law.
On June 17, 1976, the Town formally requested acquisition of lands for the optimum town of three parcels, identified as A, B and C. Parcel A was an area on the Pierce Ranch that fell outside the initial town on currently designated project lands. Parcels B and C were located within the powerhouse project lands. This request was denied by the District Engineer, on June 23, 1976, at a Town council meeting, and formally by letter on June 28, 1976.
Although the Corps’ decision to proceed only as to the initial town was reasonable when made in January 1976, the Corps’ continuing refusal to deal with the optimum town lands issue at later times was not reasonable and was unjustified. OCE, on June 4, 1976, decided not to seek a declaratory judgment as to the scope of Section 83 for reasons that included (1) the determination that the B & 0 tax was nondiscriminatory and not precluded by any contractual provision, and (2) the Relocation Contract was valid insofar as the Town’s financial capacity was concerned. On May 17, 1977, the District Engineer advised the Town that the Government would have no additional project requirements for Parcels B and C following completion of the second powerhouse construction, and would not object to their disposal. After the decision by the Supreme Court of Washington on December 18, 1980, and by the Ninth Circuit on February 17,1981, the Corps’ argument that the Town lacked authority to contract for optimum town land was without arguable foundation.
Subsequent developments have rendered Parcel A unavailable. Negotiations between the Town and the District have enlarged Parcels B and C to provide substitute land for Parcel A. The obligation of the Corps as to optimum town lands in the Relocation Contract, as modified by these subsequent events, at least as applied to the lands in Parcels B and C which are within the boundaries of the second powerhouse project, continue. The Corps’ refusal to go forward with this obligation renders it liable to the Town in damages for breach of contract.
Experts
Trials concerned with breach of construction contracts that involve governmental units frequently become battles between experts. In this case, both parties rely heavily on the testimony and reports of expert witnesses; plaintiff qualified nine expert witnesses, defendant qualified three. 17
*714 Plaintiffs expert witnesses included representatives of two firms that had subcontracted work from RHBA in the A/E planning contract, and a representative of the Pittsburgh Testing Laboratory, which had performed tests for the Town in 1979. The reports of these witnesses were prepared prior to the filing of this case on October 20, 1980. The reports of plaintiffs remaining experts, and of all of defendant’s experts, were prepared during the latter part of 1984, specifically to address the issues raised in plaintiff’s complaint and defendant’s counterclaim.
The testimony of the experts, for the most part, consisted of a recapitulation of information which was contained in their reports, as clarified during their pretrial depositions. The reports of the expert witnesses were found to be of limited utility, in part because the tasks assigned and guidance given to the experts by the parties included assumptions that precluded an objective or complete analysis. The main source of deficiency, however, was the erection of elaborate analyses on a foundation factually incorrect or incomplete. The delay analysis by the experts for each party included lists of documents that identified specific communications and events that could be verified objectively. Other than the actual completion date for the Claterbos contract, and the dates the SJG excavation contract and new town construction were substantially complete, however, there was little coincidence of items in the two lists. Further, the intermediate and ultimate factual conclusions in the experts’ chains of analysis that were derived from the listed items were distorted by judgment factors. On examination of supporting references, the intermediate and ultimate factual conclusions were found to be argumentative and erroneous. The narrative statements by the experts, and the findings of fact requested by the parties, were grounded on these derived intermediate and ultimate factual conclusions. Each party, therefore, rejected the great bulk of the findings of fact requested by their opponent.
As a result of deficiencies in the experts’ reports and in counsels’ posttrial submissions, statements of facts recited in the narrative portions of the reports could not be relied upon. The necessity to eliminate the experts’ judgmental gloss required the unusually detailed and comprehensive chronology of the relocation’s planning and design phases that are included in the findings of fact that are set forth below in this opinion.
Plaintiffs Experts
Plaintiff’s expert witnesses and a summary of their final conclusions are set forth below.
1. Robert Ironside is a partner in Williams & Mocine, a city and regional planning firm, that participated in the planning phase as a subcontractor to RHBA. Williams & Mocine conducted a survey of the old town in December 1974, and prepared the report captioned: Replacement Necessary for Social Viability: Essential Community Services, dated March 20, 1975, and revised March 24, 1975. This report is incorporated as Appendix J in the DFDM (DM 8). Mr. Ironside evaluated community needs from citizen input obtained through the 1974 survey and in workshop interactions under the RHBA contract. The Williams & Mocine survey, and discussions with Town officials and residents, was the basis for the conclusions that the optimum town size should be 1,500 persons, that the initial town size should be 600 persons, and that the list of essential community services in Appendix J, including a community center, were those needed for the economic and social viability of the initial town.
Mr. Ironside's testimony explained the interrelationship in the preparation of the DFDM (DM 8), the EAR and the Comprehensive Plan. He testified that, in the planning phase, no specific study had been made to measure any impact the threat of relocation may have had on old town residents or families. His testimony shows that the initial town and optimum town population estimates, for planning purposes, were not projections from the actual conditions and business potentials of the *715 old town. Rather, these estimates were a product of the inspired intuitive planning associated with gestation of the Comprehensive Plan for the new town. Concurrent development of the DPDM, EAR and Comprehensive Plan, with the requirement in the Scope and Statement of Work for the RHBA planning contract that the studies and investigations were to be made to such depth as necessary to satisfy the requirement of all three documents, resulted in a merger of these documents. These documents were the product of the RHBA contract, and marked the completion of the planning phase. Community services essential for an ideal Comprehensive Plan became design objectives and design determinants in DM 8. Mitigation measures to cope with unavoidable adverse effects to municipal income, in the impact assessment made for the EAR, became necessities for economic viability in the Comprehensive Plan that were used to justify imposition of a B & 0 tax and retention of Town boundaries that gave the Town jurisdiction over the site of the second powerhouse.
2. Steven S. Pinnell is a civil engineer and principal in Pinnell Engineering, a firm of consulting engineers and construction managers. He provided the Town’s explanation for the cause and extent of delay in relocation by means of a comparison of the planned schedule in the Relocation contract with the “as built” conditions in the construction phase. This information was presented through an exhibit that graphically portrayed: (1) a planned Relocation Contract schedule, (2) a planned DMJM/Hilton design schedule, (3) a planned DMJM/Hilton construction CPM (critical path method) schedule, and (4) “as built” schedules under the VIPCO, Claterbos, Heintz, SJG and GKG contracts. The exhibit shows there was a 4-month delay in the start of construction, and 9 months delay in completion of VIPCO construction. The exhibit information was amplified in a report by Pinnell Engineering, dated December 27, 1984, captioned: Analysis of Delay.
Pinnell Engineering’s assignment was to analyze the planned DMJM/Hilton construction CPM schedule, report in a formal written opinion as to its practicality, and to give a formal conclusion as to the Corps’ ability to meet the beneficial occupancy date of November 1, 1976, and the final completion date of March 1, 1977, in the Relocation Contract. This assignment included preparation of the “as built” schedule and a statement of reasons and responsibility for any delay.
The starting point for his analysis was the Relocation Contract, and the analysis assumes that the schedule in the Relocation Contract, as the foundation for all subsequent schedules, should have been maintained. The list of documents used in the narrative portions of the report starts with a document dated November 21, 1974, and ends with a document dated February 17, 1983. No attempt was made to analyze the impact of delays in the planning phase, and no use was made of documents that originated prior to November 21, 1974.
The expert was of the opinion that the beneficial occupancy date of November 1, 1976, was feasible and that full beneficial occupancy of the CBD, residential building sites and municipal facilities was possible by March 1, 1977, if substantial expediting efforts were made to maintain the schedule. The report concludes, on the basis of application of Mr. Pinnell’s judgment factor, that the Corps deliberately delayed advertising from May 18 to June 25, 1976, (39 days) and that the delay in advertising was a major factor in the 1-year delay to town construction.
Pinnell Engineering’s treatment of concurrent delays, in the application of the judgment factor, leads to questionable allocations. The report states that in the design phase the Corps deliberately delayed advertising for the construction contract for 39 days. There was a 21-day concurrent delay, from May 14 to June 8, 1976, however, for the Town to approve the plans and specifications. On the ground that the Corps should have provided early review copies to the Town by May 5, 1976, and *716 thus could have permitted advertising by May 24, 1976, the report concludes that the Corps is responsible for a 32-day delay from completion of design until advertising for construction.
A summary of delays found in the Pinnell Engineering report follows:
Total Days Due to Delay Corps
(a) Delays from execution of Relocation Contract to notice to proceed for construction 121 62
(b) Construction delays - VIPCO Contract
(1) Some lots available on schedule 0
(2) East of Hamilton Creek 172 172
(3) West of Hamilton Creek 82 82
(4) Municipal Buildings 82 82
(5) Paving & Striping 36 36
(6) Plant Establishment 263 263
(7) Town Bridge 90 90
The Corps was found to be either responsible for or accountable because it failed to compensate by acceleration of VIPCO’s work, for all of the delays in construction.
(c) Claterbos Construction - Delays overcome by $1 million acceleration so VIPCO not affected 0
(d) SJG - town construction 0 0
(e) GKG - delays occurred, but town work was completed on November 15, 1978 0
3. Clayton Sandstrom, real estate appraiser and analyst, performed the appraisals of Parcels A, B and C that are described in a report submitted December 26, 1974, by the Aztec Appraisal Corporation. Parcels A, B and C were outside the plat boundaries of the initial town and within the optimum town boundaries. •
The appraisal included comparable sales, and considered new town development and construction after August 1977. At that time, lots were offered by the Corps to original old town residents, and the Town received all unsold lots, which, primarily in the fall of 1978, it sold or leased.
Present trends in the Town were considered, taking into account the anticipated land uses as described by Town officials, primarily the Town’s planning director. Parcels A, B and C were appraised as if filled and graded according to the fill and grading plan described in the Relocation Contract, and in the scope and statement of work for the A/E design contract.
Fair market value of Parcels A, B and C was developed through the consideration of two scenarios: (1) Giving full credence to the Town’s plans with respect to a commercial greenhouse operation and the development of a 250-room convention resort hotel, and (2) Convention hotel not in being, but the subject properties available for development by entrepreneurs with no specific defined use in mind.
Scenario No. 1 was not completed.
Fair market value, based on the highest and best use as prescribed in the Town’s zoning ordinance, for scenario No. 2, was:
Acres Value
Parcel A 257.40 ¥ 706,000
Parcel B 62.93 469,300
Parcel C 25.50 1,355,600
4. Nancy E. Guitteau, economist, presented an analysis of potential losses to the Town because of its failure to become the economically and socially viable community as planned in DM 8. The analysis of fiscal impact is described in the report *717 captioned: Assessment of Fiscal Damages, dated December 1984, by the firm of Leland & Hobson, urban land economists and development consultants. The projections were based on application of the techniques used in the field of economics. The expert was not experienced in, and the report does not purport to utilize, principles that apply to computation of damages for breach of contract.
The report proceeds from the conclusion that the Corps had breached the Relocation Contract. This conclusion, and its articulation were given to Leland & Hobson by the Town’s planning director. The major breaches of contract by the Corps, which set the parameters of the report, as given to the expert by the Town’s planning director, were:
1. Delay in completion of site work of initial town lands, preventing an orderly and timely relocation process;
2. Refusal to sell the optimum town lands by the agreed upon date;
3. Failure to place fill on optimum town lands appropriate for development as contemplated by DM 8 and agreements.
The conclusions in the expert’s report as to lost municipal revenues are erected on the assigned task defined by the Town. The utility of the report is dependent upon the validity of the assumed breaches.
Essentially, the report is an extension of the economic and fiscal impact assessments performed by Keyser/Marston Associates, incorporated in DM 8, Appendix D. Leland & Hobson did not analyze DM 8, the scope and statement of work for the construction contracts, or the as-built conditions, to determine whether the fill had been placed as contracted for by the parties.
The report concludes that the Corps’ alleged contract breaches produced an inability in the Town to take advantage of economic development opportunities on the initial town lands during the powerhouse construction period, or on optimum town lands, and stymied population growth necessary to reach the critical mass of 1,500 persons as planned by Keyser/Marston in DM 8, Appendix D. The report assumes that the failure to make Parcel B of the optimum town lands available prevented fruition of an opportunity based on a proposal in March 1981, for a 250-room hotel and resort development on Hamilton Island. Another lost opportunity assumed in the report was the inability to construct a geothermal heating system in the Town, which could have attracted greenhouses for the floral and nursery industry.
The fiscal impact and damages due to these lost economic development opportunities were calculated in a methodology that used two scenarios: (1) Existing conditions—Town continues to exist in condition resulting from alleged breaches of contract; (2) Town founded and developed as envisioned by the economic development presented in DM 8. The calculation used a projection period of 50 years beginning in 1977. The statement of assumptions for scenario No. 1 included: (1) data for the period 1977-83 are actual figures provided by Town, and (2) optimum town lands are never conveyed, and no other additional land is available for development. The statement of assumptions for scenario No. 2 included: (1) relocated population from the old town is assumed to be the 420 persons projected in DM 8, (2) the resort hotel on Hamilton Island would begin operations in 1987, and (3) the Town population would have grown 15 percent between 1977-80, 2.5 percent from 1982-85, and 5 percent from 1986-90.
In scenario No. 1, the report projected Town revenues from $54,800 in 1977, to $152,900 by 1990, and to $459,100 in 2025. In scenario No. 2, Town revenues projected were $70,000 in 1977, $648,200 in 1990, and $1,982,700 in 2025. The calculation of revenue loss was the difference between revenue produced in scenario No. 1 and scenario No. 2. This amount was considered to be damages due to the alleged breaches of contract. The revenue loss from 1977 to 2027, after adjustments for inflation and discounts for future years, was projected and used as the measure of damages. This calculation is given in the following table:
*718 CALCULATION OF DAMAGES DUE TO PROJECTED REVENUE LOSS TOWN OF NORTH BONNEVILLE
(In Thousands of Dollars)
Period Total Loss*
1977-1982 $ 467.5
1983-1985 273.2
1986-1990 1,428.4
1991-2000 4.207.6
2001-2010 4.297.6
2011-2020 4,262.0
2021-2027 2,485.9
$17,422.2
* Constant 1984 Dollars
In a supplemental report, Leland & Hob-son made another calculation of damages. In this calculation, the assumptions were revised to provide that the delays in making lots available for development in the new town resulted in loss of population and commercial base. The population was considered to peak in 1980 at 432 persons, to drop in 1983 to 427, grow to 566 in 1990, and to 1,187 by year 2020. It was assumed the Parcels B and C of optimum town lands are conveyed through sale to the Town by the Corps; and that they are in suitable condition to be developed. Parcel A, originally planned for development of 100 single-family lots on 257 acres, was assumed not to be conveyed. No direct fiscal impacts from loss of revenue was ascribed to the loss of Parcel A. Other assumptions remained the same, and the methodology applied to scenarios No. 1 and No. 2 remained the same. Damages due to projected revenue loss, based on the revised assumptions, were calculated. This calculation is shown in the following table:
DAMAGES DUE TO PROJECTED REVENUE LOSS
(In Thousands of Dollars)
Period Total Loss*
1977-1982 $ 467.5
1983-1985 240.0
1986-1990 385.6
1991-2000 815.5
2001-2010 835.9
2011-2020 748.0
$ 3,492.5
* Constant 1984 Dollars
5. Robert W. Glaeser, professional land surveyor, conducted surveys and inspections on five topics, defined by the Town. The results are reported in a “Final Inspection Report” dated July 20, 1984, prepared by Minister and Glaeser Surveying, Inc. The report contains five major sections.
The first section is a review of the specific items dealing with the survey, monumentation, and lot staking for the Plat of Relocated North Bonneville and the First, Second, Third, Fourth, and Fifth Additions to these plats.
*719 The second section describes the survey of tracts of land owned by the Town, referred to as parcels 2801 and 2810. It includes an estimate of the cost to perform a boundary survey of the “optimum town” lands.
The third section reviews the findings of surveys to determine the location and encroachments of certain municipal buildings and water lines on dedicated public lands, municipal lots, or privately owned lands.
The fourth section shows the results of field inspections of selected points along the paved pathways within the Town.
The fifth section deals with the volume of material contained within various spoils areas located in the vicinity of the Town, the topography of these spoils areas, and tabulated data that compared the actual volume of material which has been deposited to the designed volume on the new town plan dated November 30,1975, delivered by DMJM/Hilton, and grading plans produced by DMJM/Hilton.
Cost estimates were as follows:
Section 1 Reset Plat Boundary Monuments Reset lot comers $ 9,790.00 9.670.00
Section 2 Survey - Parcels No. 2801 and 2810, Survey and Monumentation - Optimum Town Lands 8.180.00
Section 3 Location of Municipal water line and buildings - alignment to lot lines and easements 1,360.00
Section 4 Field Inspection in April 1984 showed water ponding and a failure to comply with specifications no estimate
Section 5 Comparability analyses of volumes of material in spoils areas were computed from original ground topography, “as designed” fill plans of DMJM/Hilton and “as built” ground data obtained from a contour map prepared for Town by David C. Smith and Associates, dated July 1981. The areas involved were Parcels A, B and C as described in the Town’s June 17, 1976, request for optimum town land.
The relationship of “as designed” volumes to “as built” volumes in spoils areas A, B, E and C, in millions of cubic yards, was tabulated as follows:
AREA “AS DESIGNED” “AS BUILT” DIFFERENCE
A 9.81 14.42 +4.61
B&E 2.61 1.48 -1.13
C 2.04 1.44 -0.60
TOTAL 14.46 17.34 +2.88
6. James A. Gilmer, civil engineer, performed an analysis with respect to the “as constructed” drawings supplied to the Town by the Corps, and made a field inspection of the storm drainage system. The drawings examined were the plans for street, storm drainage and pathway design, street profiles, storm drainage profiles, and plans, profiles and details for sanitary sewers and water distribution. The Final Report on these activities is dated October 5, 1984.
The report concludes that the “as constructed” drawings supplied to the Town do not satisfy the requirements of state law for certification and are not consistent with good practice. The field inspection is reported as revealing certain areas do not have existing underground storm drainage systems, and estimates of costs were prepared for construction on the basis of plans cited in the Relocation Contract. The field inspection identified missing concrete curbs and gutters. Pathways were inspected *720 against the construction technical specification in the VIPCO contract, Section 2C, Site Grading, Subsection 3.5, paragraph 3.5.3. The Town chose and excavated 35 locations, which were inspected by James Gilmer and Robert Glaeser. The pathways were found to have areas of ponding, poor drainage, broken pavements, and skin-patched areas. The report recommends a 1.5 inch overlay on the paths and adaptation to revise the drainage adjacent to pathway system, with new top soil, seeding and drainage piping.
The summary of costs for the corrections recommended were:
SUMMARY OF COSTS
Item Amount
1) Proposal to provide complete set of “As-Builts” 90.865.00
2) Proposal to provide grading and drainage for the pathways 17.980.00
3) Potential Liabilities: (future costs)
Back hoe to locate utilities 16,000.00
Relocate Service Laterals 82.500.00
4) Storm Drainage:
Area-1 311.060.00
Area-2 284.180.00
Area-3 182.450.00
5) Construct Concrete Curbs and Gutters 215.300.00
6) Pathway Improvements
A.C. Overlay 117.825.00
New Pathways 27.195.00
Drainage Improvements 70,000.00
7) Water System Improvements:
10-inch 50.415.00
14-inch 34.610.00
Fire Hydrants 18.400.00
TOTAL ESTIMATED COST $1,518,780.00
Mr. Gilmer made a field examination of the Central Business District (CBD) on June 29 and December 5, 1984, and submitted an addendum No. 1 to the report on December 28, 1984. The addendum submits cost estimates to replace small water meter boxes with larger commercial boxes, to seal approximately 90 percent of the sanitary sewer manholes to stop infiltration, to repair a section of the main sewer line that had a 5" sag, and for other work. The summary of the estimated costs to do this work was:
Item Amount
1) Water Meter Box Replacement 4.940.00
2) Sanitary Sewer Collection System:
Manhole Sealing 32.200.00
Main Line Repair 6.800.00
3) Hamilton Creek Erosion Protection 72.540.00
4) Water Service Line Replacement:
Water Services
A.C. Overlay 59.570.00
TOTAL ESTIMATED COST $157,490.00
*721 7. Donald R. Scott, manager, Pittsburgh Testing Laboratory, performed density tests and sieve analysis tests on March 14, 15 and 16, 1979, in 24 test holes dug in locations in the Town selected by the Town’s planning staff. Reports on both tests were delivered to the Town on May 17, 1979.
The report on density tests (report No. 3) included the observations that the “top soil” material was not consistent, but was composed of varying amounts of sand, gravel, cobbles, silt and some clay; that most test areas were a silty sand, or sandy silt with gravels and cobbles throughout; and that “top soil” material in the test holes usually consisted of two or three layers of material, differing in composition and density. Holes No. 12, No. 20 through No. 24 were in areas too rocky to make density tests. At trial, plaintiff did not pursue whether the density tests disclosed information relevant to a claim for damages.
The soil sieve analysis tests (report No. 4) were made on materials taken from 0 to 2 feet depths, which the Town said was to be top soil. The sieve analysis was to determine compliance with the specification that top soil would contain no more than 10 percent larger than No. 4 sieve size materials. Report No. 4 presented percentages passing by weight at each of the 24 holes tested. The report shows that the following holes had the indicated percentage passing through No. 4 sieve size:
Hole No. Percent Passing
5 89.4
12 76.7
18 69.5
20 82.3
21 86.6
The report shows that the remaining 19 holes complied with the No. 4 sieve requirement.
Plaintiff on November 30, 1978, received a report from the North Bonneville Conservation District about a soil sieve analysis completed by the USDA, Soil Conservation Service, at the request of the Conservation District. Twenty-four hold sites were selected randomly in areas having fill at a depth that exceeded 4 feet. The 24 samples were analyzed for percentages retained on a No. 4 sieve. The report shows 9 samples retained 10 percent or less. The remaining 15 samples did not meet the No. 4 sieve specification.
8. David A. McKinley, architect, pursuant to a contract with the Town, prepared a report that included a final planning and preliminary design for a Town community center. The report, dated August 16,1979, was signed by McKinley Architects. The report was prepared after the school district had decided not to relocate a school in the new town, and after the Town and the Corps had reached an impasse on completion of a final design. The McKinley Architects’ report was based upon a scope and statement of work dated May 1979, which was prepared by the Town specifically for the completion of the final planning and preliminary design only. It was not reviewed or approved by the Corps.
The report outlined two programs: Concept 1, as set forth by the Scope of Work, and Concept 2, according to standards and criteria recognized by professional technical groups, custom and good practice and representing wise use of resources in space allocation and design. The standard was set forth in the Relocation Contract. A cost estimate was prepared on Concept No. 2, as follows:
1. General Architectural and
Structural $ 390,817
2. Mechanical 134,490
3. Electrical (9925 sq. ft. @$6.75/sq. ft.) 66,994
Subtotal #1 $ 592,301
4. Site Development 180,535
*722 5. Irrigation and Drainage 38,400
6. Site Athletic Equipment (Backstops & Goalposts) 7,000
7. Furnishings Allowance (Folding
Chairs & Tables) 5,000 8. Kitchen Equipment 12,000
Subtotal #2 $ 835,236
Sales Tax 41,762
TOTAL $ 876,999
Architectural/Consultant Fees (8% of Subtotal # 2) 66,819
Landscape Allowance (includes fees) 55,000
GRAND TOTAL (August 1979) $ 998,818
For projected one year inflation of construction costs, add 15%: 149,823
GRAND TOTAL $1,148,641
Plaintiff’s posttrial brief contends that as of October 1982, inflation adjustments raised the cost of design and construction of the community center to $1,549,002, in August 1983 to $1,626,452, and in August 1984, to $1,707,775.
Defendant’s Experts
Defendant’s experts were Donald E. Fillis, Executive Civil Engineer with R.W. Beck and Associates, Michael R. Schmidt, Executive Economist with R.W. Beck and Associates and Albert J. Hebrank, land surveyor, and proprietor of Hebrank & Associates. A report prepared for the Department of Justice by R.W. Beck and Associates, dated December 31, 1984, was filed as part of the experts’ presentation. Mr. Schmidt testified with respect to Section I, Economic Analysis of the Relocation. Mr. Hebrank testified about Section III, Platting. Mr. Fillis’ testimony was concerned with Section II, Schedules; Section IV, Construction Deficiencies; Section V, Improvements; and Section VI, Impacts.
The economic analysis made by defendant’s expert in Section I contained a number of key conclusions, including:
—The Town is located in an area with a relatively stagnant or declining economic base of forest products and recreation-associated business;
—Prior to 1971, there was no “threat” of relocation, and the second powerhouse had no adverse impact on economic development of the Town prior to that time.
—The population of the old town primarily consisted of people at a relatively low socio-economic level; it is likely that less than half could afford to live in the new town.
—Economic realities of from going from substandard housing in the old town to above standard housing in the new town precluded most of the population from relocating. Income levels of residents of the old town, even when supplemented with relocation payments from the United States, precluded the majority of the residents from relocating to the new town.
—Keyser/Marston reported in March 1975, that the average household could not afford a home costing more than $17,000. In August 1984, real estate was not moving in the Town. Lots were priced from $4,500 to $12,000, and an “average” house sold in the &,000—$55,-000 range. The character of the Town in terms of value and population changed dramatically.
—The Corps spent approximately $36 million dollars in planning and building the new town’s public facilities. In addition, the Corps paid over $3 million relocation assistance and over $6 million for the homes, land and businesses in the old town. The grand total was over $45,-800,000, or approximately $95,000 for every inhabitant of the Town in 1971.
—In 1984, 35 percent of the residential lots and 96 percent of the commercial lots in the initial town were vacant. This indicates that the Town did not have a need for optimum town lands during the period 1976-1984.
—The new town was planned for a population of 1500. This population level is unlikely to be reached in the foreseeable future.
Defendant’s Expert Witness Report, in Section II, Schedules, lists a chronology of events that was developed for the purpose of analyzing impacts of delays caused by the Town in the relocation. The chronology covers the period August 24, 1971, to May 1, 1981. The listing is selective and the descriptions for the most part identify events subject to objective verification. The conclusions in Section II involve as *723 sumption and argument that are outside the chronology, and conclusions include the application of judgmental factors to the events listed in the chronology. This impairs the validity of the intermediate and conclusory facts in defendant’s chain of reasoning and argument that are derived from the chronology.
By application of estimated completion times developed in the DM 4 schedule, to the actual completion dates, defendant’s delay analysis finds there was a delay of 30 months in relocating the Town, and a delay of 28 months in construction of the highway and railway relocations. These delays the report asserts were caused by the Town. Other conclusions in Section II were:
—The Town was responsible for 24 days delay in the submittal of the DFDM.
—The Town was responsible for 4 weeks delay in the approval of the scope of work for the A/E design contract.
—Changes requested by the Town in determining the final layout of the CBD, the town hall design, town bridge and town entrance resulted in 20 days delay in completion of the plans and specifications and 49 days delay in the completion of the design of the town bridge.
—The Town is responsible for a 10-week delay in the completion of the plans and specifications developed by DMJM/Hilton.
—Non-issuance of permits delayed SJG 79 days and delayed BenCor 14 days.
Section VI, Impacts, of the report uses the information gathered in Section II to conclude that a total of 7 months was added to the schedule developed by RHBA for DM 8, of which 4.5 months are attributed solely to actions of the Town. This was broken down: (1) 3 weeks RHBA contract; (2) 10 weeks DMJM/Hilton contract; and (3) 5 weeks during the interim periods between the RHBA and DMJM/Hilton contracts and the DMJM/Hilton and VIPCO contracts. No delay was found to be caused by the sole action of the Corps.
Defendant’s expert on platting, and report Section III, Platting, assumed that Washington State law applied to the platting of the relocated Town. Definitions of the terms “preliminary site plan”, “preliminary town plat” and “final town plat” used in the Relocation Contract and the A/E design contract were examined under Washington State, Skamania County, and Town platting laws and ordinances.
The report states that the Relocation Contract called for the “final preliminary site plan and a town plat” to be completed by December 9, 1975, and, in the A/E design contract, the “preliminary town plat” was scheduled to be submitted on December 24, 1975. The final town plat was scheduled for January 23, 1976. Mr. Hebrank examined correspondence and workshop documents to determine that DMJM/Hilton submitted the preliminary town plat to the Corps on December 30, 1975, and the final plat was submitted on January 29, 1976. The Town received the “final preliminary site plan” on December 1 and 2 at Workshop No. 2, and the Town had a “city plat” for use at a council meeting on December 16, 1975.
The report concluded that none of the required documents were submitted more than 1 week beyond the due date in the respective contracts, and that they had been submitted in a reasonably timely manner. Delays occurred, however, in reviewing and processing the plats. The report concluded that had the Town chosen to accept the Plat of Relocated Town of North Bonneville originally processed by Skamania County, the additional 6 months spent processing the major portion of the plats would have been saved.
With respect to the diagram attached to the Town council minutes of January 18, 1977, that estimated a total elapsed time of 37 days from preliminary plat submittal to recording of the final Plat of Relocated North Bonneville, the report concludes that the Town schedule was not practical. The Town schedule assumed approval with no conditions, did not provide for approval from outside agencies, made no provision *724 for checking by the town engineer and subsequent revision, and did not speak to review and approval of improvement plans. Actual processing shows that the plat was approved with conditions, including conditions of plat improvements, technical changes were requested by the town engineer and were made, and the process took 6 months.
In the Impact section, the report noted that deeding of lots in the new town was controlled by the platting and concluded that the Town’s control of all review and approval of plats made it responsible for 8 months delay. No delay, in the platting process was found to be caused by the Corps.
Section IV, Construction Deficiencies, dealt with items identified in plaintiff’s response on April 30, 1982, to defendant’s interrogatories. Mr. Fillis examined at the site the identified work items for conformance to plans and specifications. The items examined and damages calculated because of nonconformance to plans and specifications are shown on the following chart:
Item Damages
(a) Top soil none
(b) Storm Drain and Drainage Systems none
(c) Landscaping none
(d) Pathways some
(e) Streets and Access Roads none
(f) Curbs and Gutters none
(g) Street lights none
(h) Rip-rap on Hamilton Creek some (approx. $10,000)
Section V, Improvements, defines improvements as facilities constructed in the new town that either were not existing in the old town or were expanded over those in the old town. The report’s definition of improvements is not the same as the term “betterments” as defined in the Relocation Contract. The report concludes:
In summary, the new town as constructed in comparison to the old town as it existed prior to the construction of the Second Powerhouse is superior in facilities and quality. Further, the quality of living has been greatly enhanced by the construction of a larger park, 5 acres vs. 0.5 acre, playground and basketball court, bike paths (34,000 feet ±), noise attenuation berms, 125 acres of open area, sewage treatment plant, improved streets and town layout. All of the foregoing were constructed at no cost to the Town. In conclusion, the Town has benefited substantially from the relocation authorization and in no case have the newly constructed-facilities been found to be inferior to what existed prior to the construction of the Second Powerhouse.
Section VI, Impacts, reviewed the material in Sections II and III, and concluded the delays in the schedule of work and platting caused the construction of the Town to be completed in the fall rather than spring of 1977 and deeding of lots to occur in mid-1977 rather than late in 1976. Because these delays caused rescheduling of construction contracts and the need for additional contracts, a considerable increase in costs was incurred by the Corps.
Section VI contained a table: Monetary Impact Summary. This table shows a zero monetary impact on the Town and a total impact on the Government of $5,153,507.99. At trial, a revised table: Monetary Impact Summary, was presented to reduce amounts the Government claimed for delays to the BenCor and SJG contracts, and for other claims. No change was made in the monetary impact on the Town. The revised total impact on the Government is $3,726,898.40. Mr. Fillis’ revised Monetary Impact Summary is:
*725 I. On the Town:
1. Delays in Schedule .....................................$ 0
2. Delays in Platting ..................................... 0
3. Loss of Revenue ....................................... 0
4. Construction Deficiencies ............................... 0
5. Conveyance of Optimum Town Lands ................... 0
TOTAL 0
II. On the Government:
1. Changes in Design ..................................... 99,554.16
2. Area of Early Occupancy .............................. 335,485.00
3. Rescheduling of Town Fill ............................. 1,000,000.00 *
4. Delay to Cut Off Wall Construction .................... 71,000.00 *
5. Delays to Second Powerhouse Construction ............. 146,500.00
6. Legal Fees For Construction Permits ................... 4,600.00 *
7. Old Town Facilities Change Orders ..................... 45,875.13 *
8. Interim Resident and Business Contracts ................ 423,767.24 *
9. B&O Tax .............................................. 1,600,116.87
TOTAL ..........................................$3,726,898.40
* changed from amounts in Report Section VI
DISPOSITION
The claims alleged in plaintiffs complaint on October 20,1980, and the counterclaim defendant filed on November 19, 1982, differed substantially, both in total amounts claimed and in subject matter, from the statements of claims filed on June 4, 1985, after pretrial preparation, and the statements filed in posttrial briefing. These changes reinforce the conclusion that the complaint and counterclaim when initially filed were efforts to use court process to harass and to influence negotiations. The parties’ claims are resolved on the basis of the description and argument presented in the posttrial papers.
Plaintiffs claims
1. Direct Damages Plaintiff asserts it is entitled to direct damages for the Corps’ failure to convey Parcels A, B and C as requested on June 17, 1976. The direct damages claimed are computed on the basis of the difference between the relocation contract price and the fair market value of the parcels. 18 The amount claimed is:
Parcel A $ 706,000.00
Parcels B & C 472,671.00
$1,178,671.00
To value damages relative to Parcel A, plaintiff used the fair market value computed by its real estate appraisal expert, without adjustment, because defendant had no acquisition cost since it had acquired the land as a donation on December 31, 1983. Damages for Parcels B and C were computed on the basis of the difference between the Corps’ acquisition cost and fair market values for the parcels as computed by plaintiff’s expert.
The appraisal of Parcels A, B and C by plaintiff’s expert does not establish the fair market value of the parcels in the condition they were in at the time the appraisal was made. The appraisal was made on the assumption that the parcels had been filled in accordance with a grading plan that differed from fill conditions at the site. Another assumption was that present trends in the Town accorded with the anticipated land uses described by the Town’s planning *726 director. The appraisal also was prejudiced by consideration under two scenarios, both of which assumed conditions favored by enthusiastic enterpreneurs.
As of August 19, 1975, when the Relocation Contract was signed, the parties had not identified particular parcels to be acquired and used for optimum town purposes, and the Corps had not agreed to provide any specific optimum town lands. The parties recognized that many subsequent actions would be taken before particular lands would be identified, a price established, and even more steps would be required before any obligation to deliver could result in a liability for damages for breach.
None of the land described in plaintiff’s June 17, 1976, request was acquired for optimum town purposes. Parcel A was wetlands in 1975 and was acquired in 1983 subject to continued use in that condition. Parcels B and C were acquired for spoil disposal in construction of the powerhouse, and were used for that purpose until July 10, 1978, and were used by the Corps until completion of powerhouse construction in 1981.
Parcel A now is unavailable for optimum town use. The Town has agreed to accommodate the wildlife refuge, and to accept a substitution of other land for Parcel A. The new descriptions for Parcels B and C provide for substitute lands for Parcel A, and they describe land that differs from the land appraised by plaintiff’s expert.
The Corps contends the acquisition cost of Parcels B and C is $191,100.74, and that price conforms with the value of unimproved land in the Relocation Contract. In the absence of a valid appraisal that establishes a different price, plaintiff is entitled to recover direct damages for nonconveyance of Parcels B and C in the amount of $191,100.74.
2. Consequential Damages Plaintiff also claims it is entitled to consequential damages for contract breach based on intentional delay in completing the Town’s relocation, and for nonconveyance of optimum town lands without sufficient legal justification. This claim contains the following elements:
a) Loss of Municipal Revenues from Taxes; (Real Estate, B & 0, Sales) 1977-1985 $ 707,500.00
b) Present Value of Probable Future Losses 2,785,000.00
c) Lost Revenue Caused by Lack of Optimum Town Lands 17,422,000.00
TOTAL $20,914,500.00
When a breach of contract is proven, damages may include compensation for pecuniary loss, such as profits that could have been realized but for the breach, that are a consequence of the breach. The recovery of consequential damages, however, requires proof that such consequence was foreseeable in the normal course of events, that the loss in fact would have occurred, and the amount of the loss is susceptible to reasonable ascertainment. 19 Losses that are speculative or uncertain, however, may not be recovered as a consequence of a breach of contract. 20
Both parties agree that the design phase and the construction phase of the Town’s relocation were not completed in accordance with the target dates in the Relocation Contract. Beneficial occupancy of municipal facilities/utilities was targeted at November 1, 1976, and the target date for completion of all work on municipal facilities/utilities was March 1,1977. Plans and specifications for the construction contract were not advertised until July 25,1976, the construction phase under the VIPCO .contract did not start until August 24, 1976, and beneficial occupancy of part of the municipal facilities was not accomplished *727 until April 1, 1978. GKG’s Town work north of the highway was not substantially completed until November 15, 1978, or fully completed until August 24, 1979.
The Relocation Contract required the parties to exert their best efforts to adhere to the scheduled target dates. The schedules in the Relocation Contract subsequently were modified in the scope and statement of work for the design contract, in DMJM/Hilton’s CPM construction schedule, and in VIPCO’s planned CPM schedule. The Town signed off on the changes in the VIPCO CPM schedule and approved the changes in plans and specifications made during the construction phase. The Town’s approval of the change orders in the construction contracts carried with it approval of the related revisions of contract time. As modified by time extensions, VIPCO’s work was performed on schedule. In these circumstances, it is questionable whether technically there was any delay in the construction phase, and even less that there were delays that would render the Corps liable for damages for breach of contract.
Plaintiff’s claims are based on Corps performance relative to consent to annexation and platting, land acquisition, contract review and award, and deeding of lots to relocating individuals. Defendant’s delay claims are based on plaintiff’s performance relative to completion of the planning phase, approval of the scope and statement of work for the A/E design contract, changes requested by the Town in determining the final layout and design of the new town, approval of plans and specifications developed by DMJM/Hilton, and in reviewing and processing the plats.
The findings of fact show that each party bears a heavy responsibility for loss of time that culminated during the construction phase, and for not realizing the schedules that were planned in DM 4, DM 8 and the Relocation Contract. The fault gestated in the planning phase and in the initial contract negotiations. Both parties share a mutual responsibility that precludes either from eligibility for delay damages.
Plaintiff’s claim for consequential damages includes the assertion that the failure to convey optimum town lands prevented the Town from becoming economically and socially viable. As a result, plaintiff claims the Corps is responsible, and defendant is liable, for potential revenues that the Town lost because it could not take advantage of economic development opportunities. The calculations for these damages, prepared by the Town’s expert economists, included two erroneous assumptions provided by the Town’s planning director: (1) that the refusal to sell the optimum town lands by July 1977 was a breach of contract, and (2) that the reason the Town had failed to prosper during and after relocation was caused by (a) delays that were the responsibility of the Corps and by (b) the refusal to sell the optimum town land by July 1977.
The expert’s report as to lost opportunities relied upon and extended the planning concepts that are embodied in DM 8. These concepts, at best, were the product of the overly optimistic enthusiasm of professional planners and developers. In any event, the assumptions in DM 8 as to desirable goals do not define agreed upon criteria against which a failure of residents to relocate, or a failure of a 250 room hotel and resort development to proceed, are to be measured.
The Town’s failure to prosper during and after completion of the relocation phase was not caused by delay due solely to actions of the Corps, or to a failure to deliver lands for the optimum town. Throughout the planning phase there was concern about the capability of residents and businesses to relocate. Early surveys indicated that some of the residents had no desire to relocate and there was uncertainty as to their ability economically to relocate. The future projections of population growth were blue sky assumptions, unlikely to be realized, even in the 100-year span postulated.
To show that economic and revenue consequences were foreseen, plaintiff relies upon work done by the parties under the requirement for impact assessments in Sec *728 tion 122 of Pub.L. No. 91-611 and ER 1105-2-105 in the planning of a Corps project. This argument confuses the purpose of these planning prerequisites, and plaintiffs reliance is misplaced. The regulations require consideration of the factors listed as a prelude to decision on an overall project. Comprehensive analysis of minutiae of each element of a project, so as to give contractual overtones to ballpark estimates, are not an intended product of the requirement for an impact assessment.
Plaintiffs claim for consequential damages fails to satisfy the requirement of foreseeability. It also fails to meet the requirement that the fact of damage must be proven. The calculations of plaintiffs economic expert contain erroneous assumptions and at best the results are simply speculation. They do not establish any amount of consequential damages that would be acceptable. Plaintiff may not recover on this claim.
In connection with its direct damages claim for failure to convey optimum town lands, and its consequential damages claim for intentional delays, plaintiff seeks attorney and expert fees under the common law theory for acts in bad faith, vexations, wanton or for oppressive reasons. Recovery is sought under the Equal Access to Justice Act amendment, 28 U.S.C. § 2412 (b) (1982), that made the United States liable to the same extent that any other party would be liable under common law. The “bad faith” exception is a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6825848. Public record. Not legal advice.