CROSS-MOTIONS FOR SUMMARY RELIEF DENIED:

CROSS-MOTIONS FOR SUMMARY RELIEF DENIED:

July 9, 2018

CBCA 5272

UNITED FACILITY SERVICES CORPORATION

dba EASTCO BUILDING SERVICES,

Appellant,

v.

GENERAL SERVICES ADMINISTRATION,

Respondent.

Todd J. Canni of Pillsbury Winthrop Shaw Pittman, LLP, Washington, DC; Michael

R. Rizzo of Pillsbury Winthrop Shaw Pittman, LLP, Los Angeles, CA; and Alexander B.

Ginsberg of Pillsbury Winthrop Shaw Pittman, LLP, McLean, VA, counsel for Appellant.

Catherine Crow and Kristi Singleton, Office of General Counsel, General Services

Administration, Washington, DC, counsel for Respondent.

Before Board Judges SHERIDAN, ZISCHKAU, and LESTER.

LESTER, Board Judge.

Pending before the Board are the parties’ cross-motions for summary relief, filed

March 9 and 30, 2018. In the first-filed motion, respondent, the General Services

Administration (GSA), asks us to find that, even though an equipment inventory list that

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2

GSA included in a solicitation for facilities maintenance failed to identify all of the

equipment that would have to be serviced under the anticipated contract, GSA is not

responsible for any unanticipated performance costs that the contract awardee incurred

because two provisions in the resulting contract – a clause requiring the contractor to make

a pre-bid site visit and inspection, and a disclaimer indicating that the list may contain some

errors – placed upon the contractor the risk of any defects in the equipment list. Conversely,

in the second motion, appellant, United Facility Services Corporation doing business as (dba)

Eastco Building Services (Eastco), asks that we find GSA’s inclusion of the equipment list

in the solicitation to constitute a warranty regarding the facility’s equipment quantities that

overrides the contract’s disclaimer and pre-bid site visit obligations.

Both parties have gone too far in attempting to excuse their own pre-award contract

development failures. Under a proper interpretation of the contract, GSA is liable for

increased costs that Eastco incurred for having to service unlisted equipment that Eastco

could not reasonably have identified during its site visit. Nevertheless, because GSA

expressly identified in the solicitation the possibility of some errors in the equipment list,

Eastco cannot recover damages for maintaining unlisted equipment that it could or should

reasonably have identified during a proper site visit. For the reasons discussed below, we

deny both parties’ motions for summary relief, and we also address the parties’ questions

about the type of proof that Eastco must provide to quantify any damages.

Statement of Uncontested Facts

1.

Prior to December 2011, GSA awarded a contract (no. GS-21F-0129W) under

the Federal Supply Schedule (FSS) for facilities maintenance and management

(schedule-03FAC) to Eastco Building Services, Inc., an entity which later became United

Facility Services Corporation dba Eastco Building Services.

2.

On or about December 17, 2011, GSA issued solicitation no.

GS-04P-12-EW-A-0043 (solicitation) to schedule-03FAC holders. Through the solicitation,

GSA sought firm-fixed-price quotations for a blanket purchase agreement (BPA) for

operations and maintenance services at three federal buildings in Miami, Florida. Under task

orders issued pursuant to the BPA, the awardee would be required to “provide management,

supervision, labor, materials, equipment, and supplies and [would] be responsible for the

efficient, effective, economical, and satisfactory operation, scheduled and unscheduled

maintenance, and repair of equipment and systems located within the property line” of the

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three buildings. Appeal File, Exhibit 3 at 19.1 Pursuant to section C-10 of the solicitation,

the contract awardee would be “responsible for maintaining and updating the inventory of

building equipment, to include nomenclature, part number, serial number, manufacturer

name, component name and other data of value for maintaining the equipment, or defined

as attributes in the required [computerized management maintenance system (CMMS)].” Id.

at 38.

3.

In section J.3 of the solicitation, GSA included a written equipment inventory

list for three federal buildings. This inventory list was drafted by the incumbent contractor

who was performing operations and maintenance at the buildings, although that fact is not

identified in the solicitation. The equipment list for one of the three federal buildings to be

serviced included the floor number, room number, and room name for each piece of

equipment listed. Exhibit 2 at 1-72. The list for the second building identified the floor

numbers, but not room numbers, for the identified equipment. Id. at 84-94. The list for the

third building did not identify floor or room information for any listed equipment. Id. at

73-83.

4.

A “note” within section J.3 of the solicitation contained the following language

about the offeror’s ability to rely on the inventory list when developing its offer:

Note: The contractor, at the time the contractor is developing an offer in

anticipation of the contract, is responsible for assessing the facility equipment

inventory, condition of the equipment and systems, and effort needed to

operate and maintain all the equipment and systems. The contractor is solely

responsible for assessing the cost and effort needed to meet contract

requirements. Equipment inventory and any other maintenance records

provided for review of offerors are provided in good faith for informational

purposes only, but may contain some errors. The contract price will NOT be

adjusted on the basis of errors in any government information reviewed by the

contractor when preparing the offer.

Exhibit 3 at 115 (emphasis added).

5.

The solicitation also provided that the “General Services Administration will

utilize the [Building Owners and Managers Association International (BOMA)] Experience

Exchange Report (BEER) and/or Logistics Management Institute (LMI) Benchmark Data

and Regional market analysis to determine a reasonable per square foot cost for these

1

All exhibits referenced in this decision are found in the appeal file.

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services,” Exhibit 3 at 17, although neither the BEER nor the LMI market analysis were

attached to the solicitation.

6.

The solicitation contained the “Site Visit” clause set forth at Federal

Acquisition Regulation (FAR) 52.237-1 (48 CFR 52.237-1 (2011)), which includes the

following language:

Offerors or quoters are urged and expected to inspect the site where services

are to be performed and to satisfy themselves regarding all general and local

conditions that may affect the cost of contract performance, to the extent that

the information is reasonably obtainable. In no event shall failure to inspect

the site constitute grounds for a claim after contract award.

Exhibit 3 at 185.

7.

On or about January 11, 2012, the bidders, including Eastco, participated in site

visits to the federal buildings prior to submitting bids. Tours were given of the main

machinery rooms (chillers and compressors), generator rooms, fire panel rooms, roofs,

switchgear rooms, fire pump rooms, and three or four air handler rooms in each building,

which were to serve as examples of what was in the building. The tours included open

courtrooms and general offices, but did not include rooms where court was in session.

During the tours, GSA did not open enclosed ceilings for viewings, but the record does not

tell us whether Eastco or other offerors requested, but were denied, above-ceiling access

during the visit. Eastco did not complain about the length or scope of the site visit before

submitting its offer.

8.

During the solicitation process, some offerors raised questions during the

question and answer (Q&A) period about the solicitation’s inventory list. GSA responded

to Question 11, which included a comment (by an offeror other than Eastco) about alleged

visibly obvious defects in the equipment inventory list, as follows:

[Question:] Can GSA provide a copy of the building equipment inventories

for each facility in Excel format? After touring the facilities during the

pre-proposal meeting it is visibly obvious the inventories in the solicitation

package are not accurate. Can GSA provide Excel format inventories that are

more reflective of the systems presently in the facilities? [Answer:] The

inventories provided in the presolicitation meeting and solicitation are all that

are available. An Excel format was provided.

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Exhibit 8 at 4 (emphasis added). GSA responded to Question 82, another question related

to the inventory list, as follows:

[Question:] Reference the inventory for FL0010ZZ. Please provide quantities

for the listed items. [Answer:] Each line entry in the attachment that was

provided is a quantity of one unless noted.

Id. at 11. The Q&As were incorporated into the solicitation by modification effective

January 18, 2012.

9.

month.

On February 8, 2012, Eastco submitted a firm-fixed-price bid of $68,945 per

10.

On or about November 1, 2012, GSA notified Eastco that it had been selected

for the award of the BPA, with an initial term of December 1, 2012, to November 30, 2013,

plus four option years running through November 30, 2017. On or about November 30,

2012, GSA awarded to Eastco a task order (no. GS-04P-12-EW-A-0007) for one year of the

work covered by the BPA, with a right to exercise up to four one-year options.

11.

Immediately after contract performance began, Eastco, as required by section

C-10 of its contract, conducted a full survey of the three buildings and discovered that the

amount of inventory present at the building differed from the inventory amounts listed in the

solicitation. Through an email message on March 27, 2013, Eastco notified GSA of the

inventory that it had discovered at each of the buildings and provided GSA with an Excel

spreadsheet containing what it considered to be a list of the complete inventories for each of

the three buildings. Exhibit 21. Eastco alleges that it found thousands of additional

inventory pieces that were not captured on the solicitation’s inventory list, although GSA

suggests that many of the additional items identified are merely subcomponents of previously

listed pieces of equipment without which the listed equipment could not function.

12.

Eastco did not immediately seek additional compensation for maintaining what

it contends are additional pieces of equipment unidentified in the solicitation.

13.

On or about August 28, 2015, GSA chose not to exercise the third and fourth

option years under the BPA and task order.

14.

On December 28, 2015, Eastco submitted to GSA a certified claim seeking a

contract adjustment of $758,536.72 for servicing what Eastco alleged to be a substantially

larger inventory of equipment in the buildings than it had anticipated based upon the

information provided in the solicitation.

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15.

On February 16, 2016, the GSA contracting officer issued a decision denying

Eastco’s claim. Eastco filed an appeal of the contracting officer’s decision with the Board,

which was docketed on April 8, 2016.

16.

On October 11, 2016, Eastco filed a four-count amended complaint alleging

entitlement to an equitable adjustment for a constructive change caused by the solicitation’s

“outdated,” “erroneous,” and “materially inaccurate” equipment inventory list. GSA filed

its answer on November 11, 2016, denying that it had breached Eastco’s contract or that

Eastco was entitled to any equitable adjustment or monetary damages.

17.

Subsequently, GSA filed a motion to dismiss this appeal for lack of

jurisdiction, which the Board denied by decision dated March 2, 2017. See Eastco Building

Services v. General Services Administration, CBCA 5272, 17-1 BCA ¶ 36,670. The parties

undertook discovery and then, on November 8, 2017, asked the Board to suspend

proceedings to allow the parties to discuss the possibility of an amicable resolution, a request

that the Board granted.

18.

On February 6, 2018, the parties reported that they could benefit in their

settlement negotiations from the Board’s resolution of two dispositive legal issues, which

they wanted to present through cross-motions for summary relief: (1) whether the language

in section J.3 indicating that the “Equipment Inventory List” might contain “some errors,”

along with the solicitation requirement that Eastco undertake a pre-bid site visit, effectively

barred a claim based upon errors in the inventory list; and (2) if not, whether Eastco can

calculate damages by utilizing published guidebooks to estimate labor hours associated with

the additional maintenance work. At the parties’ request, the Board instituted an expedited

briefing schedule. The parties have completed summary relief briefing, each seeking

judgment in its favor on the contract interpretation issue, and each party has filed a statement

of uncontroverted facts and responded to the opposing party’s proposed facts.

19.

GSA asserts that, despite discovery requests seeking payroll records or other

proof of alleged damages, Eastco has not produced any documentation showing that it

actually spent more money to service the alleged additional inventory than it anticipated

when it submitted its bid. Respondent’s Statement of Uncontested Facts ¶¶ 14, 15. GSA

further alleges that Eastco’s damages calculation is based solely on what Eastco now states

it would have bid if the inventory list had been more complete. Id. Eastco disputes GSA’s

allegations, asserting that it has “used an acceptable and highly credible method of estimating

the increased costs that resulted from GSA’s inaccurate inventory listing,” calculating its

claimed damages “by identifying the number of additional pieces of equipment it found at

the buildings and us[ing] the GSA guidebook to calculate the additional maintenance

required for each piece of equipment.” Appellant’s Statement of Genuine Issues ¶ 15.

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Discussion

Standard of Review

“Resolving a dispute on a motion for summary relief is appropriate when the moving

party is entitled to judgment as a matter of law, based on undisputed material facts.” Ahtna

Environmental, Inc. v. Department of Transportation, CBCA 5456, 17-1 BCA ¶ 36,600, at

178,303 (2016) (quoting Au’ Authum Ki, Inc. v. Department of Energy, CBCA 2505, 14-1

BCA ¶ 35,727, at 174,890). “‘The moving party bears the burden of demonstrating the

absence of genuine issues of material fact,’ and ‘[a]ll justifiable inferences must be drawn

in favor of the non-movant.’” Id. (quoting General Heating & Air Conditioning, Inc. v.

General Services Administration, CBCA 1242, 09-2 BCA ¶ 34,256, at 169,264). “A fact is

considered to be material if it will affect the Board’s decision, and an issue is genuine if

enough evidence exists such that the fact could reasonably be decided in favor of the

non-movant after a hearing.” Id. (quoting General Heating, 09-2 BCA at 169,264). “When

both parties have moved for summary relief, as here, each party’s motion will be evaluated

on its own merits and all justifiable inferences will be resolved against the party whose

motion is under consideration.” SBBI, Inc. v. International Boundary & Water Commission,

CBCA 4994, 17-1 BCA ¶ 36,722, at 178,813-14.

The Parties’ Competing Pre-Bid Obligations

I.

Eastco’s Site Visit Obligations

Under its contract, Eastco had an obligation to conduct a pre-bid site visit and to

account for any issues that, as an experienced contractor, it reasonably should have identified

through that visit. The contract at issue here contains a standard “Site Visit” clause, which

expressly notifies offerors that, prior to submitting an offer, they are “expected to inspect the

site where services are to be performed and to satisfy themselves regarding all general and

local conditions that may affect the cost of contract performance, to the extent that the

information is reasonably obtainable.” 48 CFR 52.237-1.

“[A] primary purpose of the site inspection [is] to ascertain what obstacles there would

be toward the performance of the contract” and to place upon the contractor the burden of

identifying them. Ambrose-Augusterfer Corp. v. United States, 394 F.2d 536, 546 (Ct. Cl.

1968). Pursuant to such a clause, the contractor “is charged with the knowledge that a

reasonable site investigation would impart to a reasonably prudent contractor knowledgeable

in the basic nature of the work to be performed.” Steenberg Construction Co., IBCA 520-1065, 72-1 BCA ¶ 9459, at 44,013; see H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1346

(Fed. Cir. 1998) (“It is well-settled that a contractor is charged with knowledge of the

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conditions that a pre-bid site visit would have revealed.”). During such a visit, the contractor

“must observe what it had reasonable opportunity for knowing, and is presumed to know

those things which reasonable diligence would bring to its attention.” W.G. Cornell Co. of

Washington, Inc., GSBCA 597, 1963 WL 802 (Jan. 31, 1963). An adequate site investigation

includes asking questions about relevant matters not otherwise disclosed or conducting more

thorough inspections if, through its initial investigation, the contractor uncovers clues that

its original assumptions about the site’s conditions are suspect. Midwest Environmental

Control, Inc., LBCA 93-BCA-12, 98-2 BCA ¶ 30,058, at 148,697-99 (1996); Vitro Corp. of

America, IBCA 376, 67-2 BCA ¶ 6536, at 30,368. If the contractor fails properly to fulfill

its site visit obligations and on-site conditions differ from what it expected, “the contractor

has no claim [against the Government] if the missing information would have been obtained

through the inquiries contemplated by the [clause].” Hunt & Willett, Inc. v. United States,

351 F.2d 980, 985 (Ct. Cl. 1964).

Nevertheless, “[a] site visit does not exist in a vacuum.” Pacific Western

Construction, Inc., DOT CAB 1084, 83-1 BCA ¶ 16,337, at 81,199. A contractor can be

barred from an equitable adjustment for conditions that differ from those described in the

contract only if it “knew, or reasonably should have known[,] of the existence of the

condition prior to bidding.” Metal Trades, Inc., ASBCA 41583, 94-2 BCA ¶ 26,611, at

132,395 (1993). “[T]here are often limitations on what can be learned” during such a visit,

Triad Mechanical, Inc., IBCA 3393, et al., 97-1 BCA ¶ 28,771, at 143,573, and bidders are

not obligated “to discover hidden . . . conditions unavailable to any reasonable pre-award

inspection.” Elliott Construction Co., ASBCA 23483, et al., 81-2 BCA ¶ 15,222, at 75,389;

see Lee R. Smith, ASBCA 11135, 66-2 BCA ¶ 5857, at 27,181 (contractor cannot be charged

“with knowledge of conditions at the site that could not be discovered by a visual

examination of the site”). Further, if the Government denies or limits access to portions or

all of the site during a site visit, or otherwise prevents a complete site inspection, that

limitation affects the extent to which conditions at the site are viewed as “reasonably

discoverable.” Boland & Martin, Inc., ASBCA 8503, 1963 BCA ¶ 3705, at 18,514; see

Weston Solutions, Inc., PSBCA 5407, 09-1 BCA ¶ 34,106, at 168,649; Hercules

Construction Co., VABCA 2508, 88-2 BCA ¶ 20,527, at 103,772-73.

The determination of whether a site visit was reasonable is typically an inherently

fact-based determination that depends upon the circumstances. Key, Inc., IBCA 690-12-67,

68-2 BCA ¶ 7385, at 34,353.

There is no dispute that, in this case, an Eastco representative undertook a site visit.

The record does not indicate, however, what the scope of that visit was, what the

representative did during the visit, or whether and the extent to which the representative

attempted to verify the quantity and types of equipment in the three facilities to be maintained

CBCA 5272

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under the contract. Eastco argues, though, that any site visit requirements were essentially

negated with regard to the equipment inventory because Eastco was entitled to rely upon

GSA’s representations in the solicitation listing that inventory. We discuss GSA’s

representations and their effect upon Eastco’s site visit obligations below.

II.

GSA’s Representations and Disclaimers

In its solicitation, GSA listed the inventory of equipment in the three federal buildings

to be maintained, but indicated that the contract awardee was responsible for assessing the

facility equipment inventory, that GSA’s list was “for information purposes only,” that the

list might contain “some errors,” and that, in any event, GSA would not be responsible

through contract price adjustments for “errors in any government information reviewed by

the contractor when preparing the offer.” Eastco argues that, by including the inventory list

in the solicitation and contract, GSA made a representation as to the equipment in the

buildings, which limited Eastco’s site inspection obligations, and that GSA is liable for

mistakes in that list. GSA, conversely, argues that it disclaimed any responsibility for the

accuracy of the list and effectively shifted all risks associated with ascertaining what

equipment was in the buildings to Eastco.

To be sure, if GSA made representations in its solicitation about the facilities to be

maintained, it had a responsiblity to ensure that those representations were accurate.

“A contractor can recover damages under a contract for misrepresentation by the Government

in the contract documents.” T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 728 (Fed.

Cir. 1997). “Misrepresentation occurs when the government misleads a contractor by a

negligently untrue representation of fact, or fails to disclose information it has a duty to

disclose.” D.F.K. Enterprises, Inc. v. United States, 45 Fed. Cl. 280, 285 (1999) (quoting

Meyers Cos. v. United States, 41 Fed. Cl. 303, 311 (1998)). The Government will be liable

if the contractor “show[s] that the Government made an erroneous representation of a

material fact that the contractor honestly and reasonably relied on to the contractor’s

detriment.” T Brown Constructors, 132 F.3d at 729; see Roseburg Lumber Co. v. Madigan,

978 F.2d 660, 667 (Fed. Cir. 1992) (Government is liable for misrepresentation in contract

documents if “the party seeking relief both relied upon such misrepresentation, and was

damaged thereby”). It matters not whether the Government’s misrepresentation was innocent

or intentional: it is the misrepresentation’s effect upon the innocent contractor that

establishes the Government’s liability. Roseburg Lumber, 978 F.2d at 667; MorrisonKnudsen Co. v. United States, 345 F.2d 535, 539 (Ct. Cl. 1965); D.F.K. Enterprises, 45 Fed.

Cl. at 285-86.

Nevertheless, “[a] contractor cannot be eligible for an equitable adjustment for

changed conditions unless the contract indicated what those conditions would supposedly

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be.” Stuyvesant Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed. Cir. 1987)

(quoting P.J. Maffei Building Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed. Cir.

1984)). “Determining whether a contract contained indications of,” or an affirmative

representation about, “a particular site condition ‘is a matter of contract interpretation,’” and

“a proper technique of contract interpretation is for the [tribunal] to place itself into the shoes

of a reasonable and prudent contractor and decide how such a contractor would act in

interpreting the contract documents.” H.B. Mac, 153 F.3d at 1345 (quoting P.J. Maffei, 732

F.2d at 916). Further, even if the Government makes an affirmative misrepresentation,

“[r]eliance is unreasonable when a contractor has reason to doubt the accuracy of [the]

representation, such as knowledge of a flaw in the information underlying the

representation.” International Technology Corp. v. Winter, 523 F.3d 1341, 1352 (Fed. Cir.

2008). In addition, “[a] contractor cannot call himself misled unless he has consulted the

relevant Government information to which he is directed by the contract, specifications, and

invitation to bid.” Security National Bank of Kansas City v. United States, 397 F.2d 984, 989

(Ct. Cl. 1968).

In the circumstances in this appeal, GSA obviously made representations about the

equipment inventory in the three buildings by affirmatively listing it. The issue here is not

whether representations were made, but the extent to which GSA’s disclaimers rendered

Eastco’s reliance upon those representations unreasonable and shifted to the contractor the

risk of inaccuracies.

In evaluating GSA’s disclaimers, we recognize that “broad exculpatory clauses in

contracts are generally disfavored,” D.F.K. Enterprises, 45 Fed. Cl. at 289, and longstanding

precedent warns us to be wary of automatically accepting and enforcing exculpatory

language. More than a hundred years ago, the Supreme Court in Hollerbach v. United States,

233 U.S. 165 (1914), considered a contract in which the Government had affirmatively

represented in one clause that a dam was backed under the surface by approximately fifty feet

of broken stone, sawdust, and sediment, but had stated in two other clauses that quantities

given were “approximate only,” that the contractor could make no claim based upon any

excess or deficiency in the Government’s representations, and that the contractor was

expected to visit the site and make its own estimates regarding conditions, other

contingencies, and the nature of the work. During performance, the contractor discovered

that the dam was backed not with fifty feet of broken stone and sawdust, but with five feet

of a soft and slushy sediment and, below that, 4.3 feet of sound logs filled with stones. The

Court of Claims initially absolved the Government of liability for its misdescription of the

dam backing based upon the disclaimer and site investigation clauses, but the Supreme Court

disagreed. It found that, because “the specifications spoke with certainty as to a part of the

conditions to be encountered by the claimants,” it “assured [the contractor] of the character

of the material” in a manner upon which the contractor was entitled to rely when formulating

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its offer. Id. at 172. Although the Court recognized that the contract included generalized

disclaimer and site investigation clauses, it found them insufficient to eradicate the

Government’s affirmative positive statement about those conditions:

We think it would be going quite too far to interpret the general language of

the other paragraphs as requiring independent investigation of facts which the

specifications furnished by the government as a basis of the contract left in no

doubt. If the government wished to leave the matter open to the independent

investigation of the claimants, it might easily have omitted the specification as

to the character of the filling back of the dam. In its positive assertion of the

nature of this much of the work it made a representation upon which the

claimants had a right to rely without an investigation to prove its falsity.

Id.

Subsequently, in United States v. Atlantic Dredging Co., 253 U.S. 1 (1920), the Court

considered the effect of an even more caveated Government disclosure and more affirmative

disclaimer about site conditions. There, the contract indicated that “[t]he material to be

removed [through excavation in the Delaware River] is believed to be mainly mud, or mud

with an admixture of fine sand,” but that “[b]idders were expected to examine the work,

however, and decide for themselves as to its character and to make their bids accordingly, as

the United States does not guarantee the accuracy of this description.” Id. at 2 (emphasis

added). Although the riverbed material was ultimately found to differ from what the contract

identified, the Government argued that the contractor could not assert a viable

misrepresentation claim because the Government had made its representation in good faith,

had disclaimed any guarantee, and had admonished bidders to make their own evaluations.

The Court found, though, that the contractor acted responsibly in relying on the

representation because, despite the disclaimer, the representation “was accompanied by the

expression of belief, and conduct which was, in effect, a repetition and confirmation of the

belief” and because the Government, reporting that its belief was based upon test boring

reports that were not made available to the contractor, “gave assurance that [its belief] had

a reliable foundation.” Id. at 11. In such circumstances, the Court held, “[t]he company . . .

was justified in acting upon it,” and the Government was liable for its misrepresentation. Id.

Taking these precedents into consideration, courts have held that, for public policy

reasons, broad exculpatory clauses will not always “be given their full literal reach, and ‘do

not relieve the [Government] of liability for changed conditions as the broad language

thereof would seem to indicate.’” United Contractors v. United States, 368 F.2d 585, 598

(Ct. Cl. 1966) (quoting Fehlhaber Corp. v. United States, 151 F. Supp. 817, 825 (Ct. Cl.

1957)). The Government will not necessarily be “relieved from liability by general

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contractual provisions requiring the bidder to investigate the site or satisfy himself of

conditions, or stating that the United States does not guarantee the statements of fact in the

specifications, etc.” Flippin Materials Co. v. United States, 312 F.2d 408, 413 (Ct. Cl.

1963); see Levering & Garrigues Co. v. United States, 73 Ct. Cl. 566, 574-75 (1932)

(specification provision stating that Government “does not guarantee the information given

to be correct” and “does not assume any risk or responsibility in connection therewith” did

not relieve the Government from damages arising out of misrepresentations as to latent

conditions at the site).

Yet, despite this line of precedent, tribunals often enforce exculpatory disclaimer

clauses in government contracts without limitation. In P.J. Maffei Building Wrecking Corp.

v. United States, 732 F.2d 913 (Fed. Cir. 1984), for example, the contract referred bidders

to a state agency office at which drawings of some of the existing conditions at a site of a

building that was to be demolished were available, but it specifically disclaimed the quality,

completeness, accuracy, or availability of those drawings. After incorrectly overestimating

the amount of steel that would be available for salvage based upon those drawings, the

contractor sought an equitable adjustment based upon the loss of salvage value arising from

the incorrect representations on the drawings. The Federal Circuit rejected that request,

enforcing the contract’s specific disclaimers about the drawings and the information

contained therein as written:

From this vantage point of the “reasonable contractor” or “reasonable bidder,”

we see that IFB provision 1.2 can be interpreted only as an effort by the

Government to direct prospective contractors to information which might

prove helpful in formulating their bids, but not as proffering any specific

information bearing directly on the steel conditions to be found. . . . [T]he

clause expressly stated that the drawings were “for information only,” that they

would “not be part of the contract documents,” and that their “quantity,

quality, completeness, accuracy and availability . . . [were] not guaranteed.”

(Emphasis added.) The Government’s warning regarding availability provided

a particularly clear signal to prospective contractors that the Government did

not intend them to rely on the structural drawings, since it could not even

guarantee that they would be able to view any or all of these drawings.

Id. at 917. The appellate court distinguished the situation in P.J. Maffei from prior decisions

holding the Government responsible for misrepresentations despite exculpatory clauses,

stating that the prior cases had involved efforts to use “general exculpatory clauses” to

excuse “explicit or implicit representation[s]” that typically related to a “latent condition.”

Id. at 918-19; see Webco Lumber, Inc. v. United States, 677 F.2d 860, 863-64 (Ct. Cl. 1982);

Gregory Lumber Co., 11 Cl. Ct. 489, 500-01 (1986), aff’d, 831 F.2d 305 (Fed. Cir. 1987);

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Peter Kiewit Sons’ Co./J.F. Shea Co. (Joint Venture), ENG BCA 4861, et al., 85-2 BCA

¶ 18,082, at 90,776; Wiggins Electric Co., DOT CAB 1102, 80-2 BCA ¶ 14,758, at 72,854;

Commercial Construction Corp., ASBCA 24087, 80-1 BCA ¶ 14,312, at 70,532-33.

Comparing various decisions that have enforced exculpatory disclaimers with those

that have not, it is difficult to identify a definitive dividing line between enforceability and

unenforceability, but it is clear that we cannot simply ignore exclupatory clauses. Except to

the extent that an exculpatory clause violates public policy (such as when the Government

attempts to preclude liability for its own willful misconduct), “it cannot [be] and is not denied

that the law allows the Government to . . . disclaim[] any warranty by clear and unambiguous

language.” Rixon Electronics, Inc. v. United States, 536 F.2d 1345, 1351 (Ct. Cl. 1976); see

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

Contracts 319 (5th ed. 2016) (“If an exculpatory clause is not against public policy and is

clearly worded to indicate to the contractor that the government does not expressly or

impliedly warrant the accuracy or usefulness of information or material that it furnishes, it

will be enforced.”). Reviewing various past decisions, it appears that the following factors

play the most critical role in determining whether and to what extent a tribunal will enforce

an exculpatory disclaimer:

First, “[e]xculpatory clauses are narrowly construed because they are drafted by the

government and shift to the contractor risks that would otherwise be borne by the

government.” John Cibinic, Jr., James F. Nagle & Ralph C. Nash, Jr., supra, at 317; see

Morrison-Knudsen Co. v. United States, 397 F.2d 826, 829 (Ct. Cl. 1968); Thompson Ramo

Wooldridge Inc. v. United States, 361 F.2d 222, 228-30 (Ct. Cl. 1966); Radionics Inc.,

ASBCA 22727, 81-1 BCA ¶ 15,011, at 74,278; Bromley Contracting Co., ASBCA 14884,

et al., 72-1 BCA ¶ 9252, at 42,902 (1971).

Second, the clearer the disclaimer language, and the more narrowly and specifically

tailored to specific pieces of information or to specific site conditions it is, the more likely

it is to be held effective and enforceable as written. See Rixon Electronics, 536 F.2d at 1351

(“So the question boils down to this: is the disclaimer clear enough, alone or as aided by

[additional warnings during the bidding process]?”). While “general disclaimers requiring

the contractor to check plans and determine project requirements” are unlikely to shift

responsibility for a contractual misrepresentation from the Government to the contractor,

“express and specific disclaimers” are significantly more likely to shift responsibility. White

v. Edsall Construction Co., 296 F.3d 1081, 1085 (Fed. Cir. 2002).

Third, exculpatory language disclaiming representations about latent conditions that

a contractor would be unable to detect through a reasonable site inspection is less likely to

be enforced than a disclaimer relating to information that a contractor, with some reasonable

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effort, ought to be able to verify or about which the contractor could make its own

independent reliable assessment. See Morrison-Knudsen, 345 F.2d at 539 (“A significant

factor in this connection was the circumstance that the physical conditions dealt with in the

defendant’s untrue representations,” which had been caveated by disclaimers, “were hidden

in the subsurface, and the plaintiff could not determine the truth or falsity of the

representations by mere observation.”); Fehlhaber Corp., 151 F. Supp. at 825 (“[B]ecause

of the inability of the plaintiff to bore, analyze the borings, and to compute, prepare, and

submit its bid within the short time allotted, plaintiff is not bound by the caveatory and

exculpatory provisions of the contract and specifications and, conversely, those provisions

do not relieve the [Government] of liability for changed conditions as the broad language

thereof would seem to indicate.”).

Fourth, disclaimers are more likely to be found ineffective if the Government

possesses “the only information by which the [offerors] might have learned the truth” and

the agency “denie[s] the [offerors] access to data prior to entering into the contract.” Doherty

v. United States, 222 Ct. Cl. 511, 512 (1979) (discussing decision of trial court

commissioner); see Hercules Construction, 88-2 BCA at 103,772-73; Boland & Martin, 1963

BCA at 18,514.

III.

Reconciling The Parties’ Competing Obligations

Where do the parties’ competing obligations leave the parties in this appeal? With

regard to GSA, we cannot grant its request that we summarily find no liability on its part for

defects in the inventory list. Typically, the question of whether a contractor reasonably relied

on a contract representation is a question of fact. International Technology, 523 F.3d at

1352. In making such a determination, the Board must “place itself ‘into the shoes of a

reasonable and prudent contractor’ and decide how such a contractor would act in appellant’s

situation.” P.J. Maffei, 732 F.2d at 917 (quoting H.N. Bailey & Associates v. United States,

449 F.2d 387, 390 (Ct. Cl. 1971)).

Here, the exculpatory language that GSA used – that the equipment inventory list

“may contain some errors” and that there would be no contract price adjustment for any such

errors – is not a broad or general disclaimer, but specifically references the equipment

inventory list, falling within one of the factors supporting enforceability. Nevertheless, the

clause states only that there may be “some” errors in the list, which, reasonably construed,

does not suggest the massive difference in equipment quantities that Eastco alleges actually

existed. As one of our predecessor boards indicated in Central Mechanical, Inc., DOT CAB

1234, 83-2 BCA ¶ 16,642, at 82,757 (citing cases), language of this nature in a disclaimer

suggests “minor discrepancies” rather than the major inaccuracies alleged. Although GSA

has indicated that many items within Eastco’s long list of unlisted equipment are actually

CBCA 5272

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subcomponents of identified equipment, which a contractor knowledgeable about the type

of work anticipated under this contract would reasonably have expected, we have no basis

upon which to evaluate GSA’s assertion on the current record. We can find only that, to the

extent that there were massive quantities of equipment not listed in GSA’s inventory list, the

“some errors” disclaimer would not be sufficient wholly to shift liability to Eastco.

That being said, we cannot ignore Eastco’s site investigation obligations or summarily

grant relief in Eastco’s favor on its entitlement to damages for any inaccuracies in the

equipment inventory list. Eastco suggests that, because GSA made affirmative

representations in the solicitation allegedly listing all equipment, Eastco was entitled to rely

on that list without verifying it through a site visit. It is true that, “where the Government

makes positive statements in the specifications or drawings for the guidance of bidders, . . .

a contractor has a right to rely on them regardless of contractual provisions requiring the

contractor to make investigations.” Arcole Midwest Co. v. United States, 113 F. Supp. 278,

280 (Ct. Cl. 1953). Yet, that rule does not eliminate a contractor’s obligation to look for, or

notice, obvious defects in the Government’s representation, particularly when the

representation at issue makes clear that the information provided may contain errors and does

not involve latent conditions. It is the contractor’s burden to establish that “a reasonable site

visit would not have disclosed actual conditions” or “revealed the discrepancies” between

actual conditions and the Government’s disclosure. Schmalz Construction, Ltd., AGBCA

86-207-1, et al., 91-3 BCA ¶ 24,183, at 120,952. To the extent that Eastco, through its site

visit, identified or reasonably should have identified defects in the Government-provided

equipment inventory list, it could not put its head in the sand and ignore those defects. See

Daymar, Inc., DOT CAB 77-13, 78-1 BCA ¶ 12,903, at 62,854 (“a bidder may not

legitimately induce his own state of ignorance by not making an investigation to learn the

conditions at the site”); Vitro Corp., 67-2 BCA at 30,367 (contractor cannot overlook

potential issues if it had pre-award clues that its assumptions were incorrect).

Unlike situations involving government representations about subsurface conditions

at a site, it would seem that there should have been at least some ability by Eastco to confirm

the number and types of equipment in the buildings that it was going to have to service. In

fact, in this case, one of the pre-bid Q&As, Question 11, which was made part of the

solicitation, expressly reflected another offeror’s comment that, “after touring the facility

during the pre-proposal meeting[,] it was visibly obvious the inventory in the solicitation

package was not accurate.” Exhibit 8 at 4. Reading the solicitation as a whole, see SMS

Data Products Group, Inc. v. Defense Logistics Agency, GSBCA 13413-P, 96-1 BCA

¶ 28,015, at 139,895 (1995), Eastco could not ignore that warning about “some errors” in

GSA’s equipment list, it had an obligation to be cognizant of possible defects in that list as

it conducted its site visit, and it cannot obtain any adjustment for unlisted equipment that it

discovered, or should have discovered, through such an investigation. See Swepco Corp.,

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ASBCA 25118, 81-2 BCA ¶ 15,262, at 75,578 (“[T]he appellant is charged with the

knowledge it could have obtained from a reasonable site investigation, which knowledge

placed appellant on notice of the risk it would assume in omitting the additional work from

its bid estimate.”).

Nevertheless, the “Site Visit” clause does not automatically shift to Eastco the entirety

of risk of defects in GSA’s inventory, at least where, as here, the language used in the

agency’s disclaimer was ineffective wholly to shift all risk of a misrepresentation to the

contractor. To the extent that discrepancies were not “readily observable” from a reasonable

and prudent site visit, GSA cannot impose liability for its own mistakes on Eastco. If GSA

limited the scope of Eastco’s site visit (something that is unclear from the record here, even

though GSA acknowledges that it did not open ceilings for visitors), that limitation could

affect the scope of Eastco’s risk assumption if it impacted Eastco’s discovery of errors. See

Hercules Construction, 88-2 BCA at 103,772-73; Boland & Martin, 1963 BCA at 18,514.

Further, even if Eastco, as an experienced contractor, reasonably should have been able to

identify some mistakes in the list during a site visit, it does not mean that Eastco

automatically signed up for other errors that were not reasonably ascertainable through such

a visit. See Parsons of California, ASBCA 20867, 82-1 BCA ¶ 15,659, at 77,416

(contractor’s discovery prior to bidding of minor deficiencies in drawings did not establish

that contractor should have known of massive number of drawing defects). Although the

record here establishes that Eastco sent a representative for a site visit, it contains no

evidence about the representative’s efforts during that visit or the reasonableness of those

efforts in the circumstances. Nothing in the record tells us whether extra equipment was

unseen (either because it was above ceilings or in rooms not open to visitors), the extent to

which GSA encouraged offerors to investigate all floors and rooms of the three buildings,

the extent to which offerors sought but were denied access to unvisited areas, whether Eastco

should have noticed extra equipment in rooms that it actually visited, or whether an

experienced contractor reasonably should have anticipated the extra but unidentified

equipment.

Based upon the undeveloped record on factual issues, we cannot grant either party

summary relief on the contract interpretation issues.

Damages

GSA asks that, if we do not enter summary relief in its favor on the contract

interpretation issue, we reject Eastco’s theory of calculating damages for the alleged

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constructive change at issue here. As Eastco explains it, its equitable adjustment request

depends upon its estimates of what the extra work should have cost.2

“It is incumbent on the plaintiff, before it can recover, to establish by proof what it

actually cost to do the work over and above what it would have cost had the . . . conditions

at the site been such as the plaintiff had a right, from the representations made by the

defendant, to assume they were.” Levering & Garrigues, 73 Ct. Cl. at 575. Normally, we

would expect this proof to consist of actual contemporaneous data – accounting and payroll

records, daily reports of contract activity, time records, and the like – supporting what the

contractor believes constituted extra work beyond the scope of its contract. See, e.g., Hof

Construction, Inc. v. General Services Administration, GSBCA 13317, et al., 96-2 BCA

¶ 28,406, at 141,849; Production Corp., DOT BCA 2424, 92-2 BCA ¶ 24,796, at 123,695.

As the Federal Circuit recognized in Dawco Construction, Inc., v. United States, 930 F.2d

872 (Fed. Cir. 1991), overruled on other grounds by Reflectone, Inc. v. Dalton, 60 Fed. 3d

1572 (Fed. Cir. 1995), actual cost data is the preferred means of proving increased costs

because it “provides the [tribunal], or contracting officer, with documented underlying

expenses, ensuring that the final amount of the equitable adjustment will be just that –

equitable – and not a windfall for either the government or the contractor.” Id. at 882.

Eastco argues that, in lieu of actual cost data, a contractor can support an equitable

adjustment request with “gut-feel” estimates. Appellant’s Motion at 8 (citing, among others,

Trustees of Devonshire West Realty Trust, GSBCA 9650, 90-2 BCA ¶ 22,875). It is true that,

in certain circumstances “[w]here a contractor does not accumulate cost data and cannot

identify its actual costs attributable to changes, estimates may be used to quantify the

increased costs a contractor incurred.” Reliable Contracting Group, LLC v. Department of

Veterans Affairs, CBCA 1539, 11-2 BCA ¶ 34,882, at 171,563 (quoting Environmental

Safety Consultants, Inc., ASBCA 53485, 05-1 BCA ¶ 32,903, at 163,019). Yet, the Federal

Circuit in Dawco Construction recognized that an award of damages based upon cost

estimates – or, as the appellate court described it, the “guesstimate” of how much the

contractor actually spent in response to a change – is permissible only “where the claimant

can demonstrate a justifiable inability to substantiate the amount of his resultant injury by

direct and specific proof.” Dawco Construction, 930 F.2d at 881 (quoting Joseph Pickard’s

Sons Co. v. United States, 532 F.2d 739, 742 (Ct. Cl. 1976)). As discussed in Dawco, once

a contractor is aware that it has a potential claim against the Government or that it is having

2

GSA argues that Eastco is essentially seeking reformation of its contract price,

claiming damages based upon “its own speculation regarding how it would have bid if the

Solicitation contained different information.” Respondent’s Motion at 6. Eastco disavows

that it is seeking reformation, making it unnecessary for us to address that theory of damages.

CBCA 5272

18

to perform extra or changed work, it has an obligation to create and maintain

contemporaneous records tracking and showing its increased costs and/or segregating

increased costs from costs for unchanged work. See id. at 881 (awareness of a change

“should signal to the prudent contractor that it must maintain records detailing any additional

work, just as should the encountering of differing site conditions”). Inability to justify the

absence of contemporaneous records can preclude or diminish a contractor’s recovery. Id.

at 881-82; see Douglas P. Fleming, LLC v. Department of Veterans Affairs, CBCA 3655, et

al., 16-1 BCA ¶ 36,509, at 177,880 (denying recovery of increased painting costs not

segregrated in records during performance because, “[w]here [the contractor] could have

measured the actual painting performed, we are not inclined to use estimates.”); Production

Corp., 92-2 BCA at 123,696 (denying damages award for lack of actual cost data).

The Board has considerable discretion in determining the extent to which a contractor

has supported, or is justifiably unable to support, its cost claim with direct cost data. See

Clark Construction Group, Inc., VABCA 5674R, 00-2 BCA ¶ 30,997, at 153,046 (“By

definition, a ‘jury verdict’ entails substantial discretion and subjective judgment by the

Board.”). In situations like the one here, where costs may have been incurred to maintain all

equipment in the buildings – both that which was anticipated and the additional equipment

– through a specific group of employees, there may very well be a need to rely to some

degree on estimates, or to supplement hard cost data with reliable estimating guides, to

identify the extent to which, because of a constructive change, costs were increased beyond

those reasonably expected. See Romac, Inc., DOT BCA 4028, 01-2 BCA ¶ 31,552, at

155,842 (indicating that, to prove damages, contractor should have made efforts to segregate

costs related to added work from its actual total costs); Clark Construction Group, Inc.,

VABCA 5674, 00-1 BCA ¶ 30,870, at 152,419 (recognizing “the impossibility of the precise

quantification of impact or inefficiency costs”); Service Engineering Co., ASBCA 40274,

93-1 BCA ¶ 25,520, at 127,112 (1992) (complexity of changes in work justifiably precluded

contemporaneous segregation of costs). Yet, even in such circumstances, cost estimates need

to have some demonstrated correlation with, and tie to, the actual costs that the contractor

incurred in performing the changed work. See Thomas & Sons Building Contractors, Inc.,

DOT BCA 3013, 01-1 BCA ¶ 31,386, at 155,006 (if “actual [cost] data is unavailable,

estimates may be used where . . . accompanied by detailed substantiating data”); Akcon, Inc.,

ENG BCA 5593, 90-3 BCA ¶ 23,250, at 116,663 (“The proper measure of an equitable

adjustment is the cost impact on this Appellant, not a theoretical test.”); Bregman

Construction Corp., ASBCA 15020, 72-1 BCA ¶ 9411, at 43,716 (estimates must “be

reconciled with the actual cost and quantity figures in evidence”).

Eastco is using estimates derived from what it alleges are well-accepted industry cost

estimating manuals to establish how much it should have cost to maintain each piece of

unlisted equipment. Even if that might be a good starting point in proving damages, Eastco

CBCA 5272

19

would still need to tie those estimates to records of its actual incurred costs. Although a

proper equitable adjustment based upon estimates “should be founded upon reasonable

statistical methods or estimating techniques,” it must also “have a demonstrable nexus to

actual costs incurred.” Hemphill Contracting Co., ENG BCA 5698, et al., 94-1 BCA

¶ 26,491, at 131,872 (1993). In no event can a contractor use cost estimating to recover a

“should have cost” amount that exceeds what the contractor actually spent. See Dawco

Construction, 930 F.2d at 882 (damage award cannot result in “unjustified windfalls”);

Beyley Construction Group Corp., ASBCA 55692, 08-2 BCA ¶ 33,999, at 168,141 (denying

damages because contractor failed to prove costs claimed were incurred). It is the

proponent’s burden to demonstrate the basis and accuracy of any estimates and the nexus to

demonstrated costs. Hemphill Contracting, 94-1 BCA at 131,872. To the extent that there

are problems with or questions about the estimates, the contractor bears the risk of downward

adjustments or of no recovery at all.

In their cross-motions, neither GSA nor Eastco presents us with Eastco’s actual cost

support. Accordingly, we cannot know the extent to which Eastco’s inability to present

actual cost data is justifiable or if its cost estimates, developed by reference to trade manuals,

are appropriate. To the extent that either party wants summary disposition of the proffered

support for specific costs, it will have to put information into the record in support of its

argument.

Decision

For the foregoing reasons, the parties’ cross-motions for summary relief are DENIED.

Harold D. Lester, Jr.

HAROLD D. LESTER, JR.

Board Judge

We concur:

Patricia J. Sheridan

Jonathan D. Zischkau

PATRICIA J. SHERIDAN

Board Judge

JONATHAN D. ZISCHKAU

Board Judge