CBCA 3246 DISMISSED FOR LACK OF JURISDICTION;

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CBCA 4356 GRANTED-IN-PART and

DISMISSED-IN-PART FOR LACK OF JURISDICTION: August 17, 2016

CBCA 3246, 4356

REGENCY CONSTRUCTION, INC.,

Appellant,

DEPARTMENT OF AGRICULTURE,

Respondent.

S. Leo Arnold and Matthew W. Willis of Ashley, Ashley & Arnold, Dyersburg, TN,

counsel for Appellant.

Danny L. Woodyard, Office of the General Counsel, Department of Agriculture, Little

Rock, AR, counsel for Respondent.

Before Board Judges SOMERS, VERGILIO, and SULLIVAN.

SULLIVAN, Board Judge.

Appellant, Regency Construction, Inc. (Regency), appeals two decisions of the

contracting officer for respondent, Department of Agriculture, Natural Resources

Conservation Service (NRCS), denying its claim for additional costs of performance on the

task order for canal excavation services in St. Bernard Parish, Louisiana. The appeal of the

first decision, issued by the contracting officer on November 15, 2012, on Regency’s

uncertified claim, was docketed as CBCA 3246. The appeal of the second decision, issued

CBCA 3246, 4356

by the contracting officer on November 25, 2014, after Regency certified its claim, was

docketed as CBCA 4356.

In its claim, Regency sought $292,403, as the costs arising from four different issues

that occurred during performance: (1) delays caused by the continued presence of another

contractor at the site, despite the agency’s representation that the other contractor would be

finished prior to the start of task order performance; (2) delays in survey work caused by the

NRCS; (3) costs incurred to remove additional material that entered the canal when the sides

of the canal would not maintain the slope that NRCS mandated; and (4) delays Regency

experienced looking for gas pipelines that did not exist. In its appeals, Regency also seeks

the costs paid to a consultant who assisted with contract administration related to these

problems, although these costs were not discussed in its claim to the contracting officer.

The Board convened a hearing in this matter in New Orleans, Louisiana, on

December 9-12, 2014. Two fact witnesses testified in support of Regency’s claims: Mr.

John Smith, the president and owner of Down To Earth Contracting (DTEC), which was the

subcontractor to Regency for the task order at issue in this appeal; and Mr. Paul Kosbab, the

president and owner of Regency. Mr. Kosbab has been performing excavation and other

storm-related clean-up projects for NRCS since 1989. Transcript at 493-94. Regency also

presented the testimony of two experts: Dr. Berkeley Traughber, geotechnical expert; and

Mr. William Connole, cost and pricing and delay analysis expert.

Three witnesses testified on behalf of the agency: Mr. Brad Sticker, Ms. Cherie

LeFleur, and Mr. Dale Garber. Mr. Sticker is no longer employed by the agency but had held

the title State Conservation Engineer and served as one of the managers of the NRCS

emergency operations center (EOC) in Louisiana during the pendency of the task order.

Transcript at 844-45. That office was responsible for the projects in Louisiana after

Hurricane Katrina. Id. Ms. LeFleur is an environmental engineer with the agency and also

served as a manager of the EOC. Id. at 765. Ms. LeFleur designed the project. Id. at 777.

Mr. Garber is an engineer with NRCS, and served as the contracting officer’s technical

representative (COTR) on the task order for approximately two weeks at the beginning of

January 2008. Id. at 946.

After review of the record, testimony, and pleadings of the parties, we reach the

following conclusions: (1) Regency’s first appeal must be dismissed for lack of jurisdiction

because it was from a contracting officer’s decision on an uncertified claim which was in an

amount greater than $100,000; (2) Regency is entitled to its direct costs of delays attributable

to the continued presence of the sewer contractor and NRCS’s failure to meet its obligations

for the survey work to be performed; (3) Regency cannot establish that the additional

material it removed from the canal was attributable to either a differing site condition or a

CBCA 3246, 4356

defective specification and, therefore, has no basis for recovery of the associated additional

costs; (4) Regency also cannot establish that it incurred additional costs as a result of the

drawings that depicted non-existent gas pipelines; and (5) the Board lacks jurisdiction to

consider Regency’s claim for contract administration costs because these costs were not in

the claim presented to the contracting officer. As a result of these rulings, we grant

Regency’s second appeal in part and award Regency $26,657.50, and interest as allowed by

the Contract Disputes Act (CDA), 41 U.S.C. § 7109 (2012).

Findings of Fact

The Contract and Task Order

Contract Terms

On May 14, 2007, NRCS awarded to Regency an indefinite delivery indefinite

quantity contract to perform channel excavation and sediment removal work in Louisiana.

Exhibit A at 1-2.1 Pursuant to the statement of work, Regency was to “provide all materials,

equipment, tools, supplies, labor, and required licenses necessary to excavate sediment and

remove debris and ultimately dispose of said sediment and debris as described below at

locations to be defined in individual task orders within the State of Louisiana.” Id. at 36.

NRCS let this contract and others like it to assist local entities in efforts to restore the

watershed following Hurricane Katrina. See Transcript at 845-46.

The contract described the nature of the sediment removal activities that would be

required on individual task orders:

1.1.1. SEDIMENT REMOVAL DESCRIPTION. It is anticipated that the

type of material to be excavated will consist of mineral and organic soil, marsh

root balls and decaying and herbaceous vegetation. The material may have

settled to the bottom of the channel or it may be suspended within the water

column of the channel. Excavation will be performed to the lines and grades

indicated in the plans for the specific task order.

“Exhibit” refers to exhibits provided in respondent’s appeal file. “Appellant’s

Exhibit” refers to exhibits provided in appellant’s supplement to the appeal file.

“Supplemental Exhibit” refers to exhibits provided in the respondent’s supplemental appeal

file.

CBCA 3246, 4356

Id. at 36. The contract also described the various locations for which task orders might be

issued:

1.1.2. LOCATION DESCRIPTION. The sediment removal will be located in

drainage channels. These channels may be natural, man made, or natural

channels that have been previously manipulated. The channels will vary in

size from small intermittent channels to large perennial bayous or pumped

channels. Sediment removal may require specialized equipment such as

excavation equipment capable of floating or mounted on portable barges.

Exhibit A at 36-37. The contract did not contain any further description of the composition

of the banks of the channels that would require excavating.

The contract incorporated by reference four clauses that are relevant to resolving this

appeal. The first clause is 48 CFR 52.236-3 (2007) (FAR 52.236-3), Site Investigation and

Conditions Affecting Work. Exhibit A at 21. Pursuant to this clause, the Government

disclaims any responsibility for any representation made unless that information is expressly

made part of the contract:

Nor does the Government assume responsibility for any understanding reached

or representation made concerning conditions which can affect the work by

any of its officers or agents before the execution of this contract, unless that

understanding or representation is expressly stated in this contract.

FAR 52.236-3.

The second clause is FAR 52.236-2, Differing Site Conditions, which provides that

the contractor shall provide written notice of conditions that differ materially from those

indicated in the contract, and the contracting officer shall investigate those conditions

promptly. Exhibit A at 21. “If the conditions do materially so differ and cause an increase

or decrease in the Contractor’s cost of, or the time required for, performing any part of the

work under this contract, whether or not changed as a result of the conditions, an equitable

adjustment shall be made under this clause and the contract modified in writing accordingly.”

FAR 52.236-2(b).

The third clause is FAR 52.242-14, Suspension of Work, which provides for payment

of “any increase in the cost of performance of [the] contract (excluding profit)” that results

from a period of “unreasonable suspension, delay or interruption” caused by the act or

omission of the contracting officer. Exhibit A at 9.

CBCA 3246, 4356

Finally, the fourth clause is FAR 52.243-4, Changes, which permits the contracting

officer to make changes to the scope of work, including the specifications, but provides that

the contracting officer shall make an equitable adjustment for any change that causes an

increase or decrease in the contractor’s cost. Exhibit A at 21. The clause further provides

that, “[i]n the case of defective specifications for which the Government is responsible, the

equitable adjustment shall include any increased cost reasonably incurred by the Contractor

in attempting to comply with the defective specifications.” FAR 52.243-4(d).

Task Order Request for Quotations

On October 17, 2007, NRCS issued an invitation for quotations to Regency and other

contract holders for sediment removal on 40 Arpent Canal, Reaches 3 and 4.2 The estimated

price was $1 to $5 million and the performance time was eighty-one days. Exhibit B at 62.

The channel to be excavated ran beside the Lake Borgne Levee and one of the sides of the

channel was the constructed levee wall. Id. at 136. The other side of the channel bordered

a residential neighborhood. Transcript at 796; Supplemental Exhibit 67 at 422-425.

The terms of the task order provided details as to the scope of the project and

requirements for the contractor to follow.

Existing conditions. The task order described the existing conditions for the area to

be excavated as:

2.3 EXISTING CONDITIONS

The area in which construction will take place is an existing earthen channel

that has been obstructed with hurricane deposited debris and sediment.

The receiving water for any runoff from this project site is the 40 Arpent Canal

which is pumped into the Bayou Bienvenue and Bayou Dupree sump areas

which drain by gravity into Lake Borgne.

The NRCS Runoff Curve Number [RCN] for the construction site prior to

construction is estimated at 77 for brush, weed, and grass mix on a hydrologic

group D soil in fair condition. After construction the RCN is estimated to be

73 for brush, weed, and grass mix on hydrologic group D soils.

A reach is a section of a canal. Transcript at 793.

CBCA 3246, 4356

Exhibit B at 90-91. The task order did not provide any further information regarding the

composition of the banks of the channel to be excavated.

Access to levee. The contractor was directed to contact the parish engineer for the

Borgne Levee District to obtain permission and approval to access the channel from public

property. Exhibit B at 79.

Survey requirements. The contractor was required to perform all survey work on the

project necessary for “performing quantity surveys, measurements and computations for

progress payments,” and for “performing original (initial) and final surveys for determination

of final quantities.” Exhibit B at 115. NRCS was responsible for setting the hubs or primary

control marks from which the surveys would be taken:

The baselines and bench marks for primary control, necessary to establish lines

and grades needed for construction, are shown on the drawings and have been

located on the job site.

Exhibit B at 115, 117. NRCS reserved the right to observe the survey work if it chose to do

so:

The Contractor shall notify the NRCS at least 48 hours in advance of any

pending original, progress or final surveys to be performed by the Contractor.

NRCS may, at its discretion, provide a survey observer to accompany the

Contractor’s survey crew or conduct additional quality control surveys as

necessary.

Id. at 119.

Excavation specification. The contract directed where the contractor was to excavate,

but did not dictate the means of performance:

Channels shall be excavated as closely as practicable to the lines, grades, and

cross-sections shown on the plans, considering the character of the material

and the excavation methods employed. The excavated surfaces shall be

reasonably smooth. In no case shall the excavated cross-sectional area of the

channel be less than the specified area.

Exhibit B at 126.

CBCA 3246, 4356

Payment terms. The contract provided that the contractor would be paid on a unit

price basis for the volume of material excavated within the limits of the neat lines and grades

depicted on the drawings:

For items of channel excavation, for which specific unit prices are established

in the contract, the volume of excavation will be measured within the specified

limits and computed to the nearest cubic yard by the method of average crosssectional end areas. Regardless of the quantities excavated, the measurement

for payment will be made to the specified pay limits.

Exhibit B at 126, 129. The contract further provided that no payment would be made for

excavation beyond the neat lines and grades shown on the drawings. Exhibit B at 127;

Transcript at 914-15.

Drawings. The set of drawings provided with the solicitation and made part of the

contract showed with two lines the “proposed channel bottom” and the “existing channel

bottom.” At some points, the existing channel bottom was noted as above the proposed

channel bottom, but at other points, it was denoted as below the proposed bottom. Exhibit

B at 136. The drawings showed that most of the material to be excavated was on the nonlevee side of the channel. See, e.g., id. at 139.

Ms. LeFleur, in designing the project, relied, in part, upon boring samples that were

taken prior to the project to determine the depth of the sediment that needed to be removed.

Transcript at 783. These samples were summarized on a spreadsheet, that shows that the

samples were described as “clay” or “muck” and one entry noting “silt.” Supplemental

Exhibit 9 at 136-37. However, the column to indicate the percentage of clay in the samples

is left blank and Ms. LeFleur did not testify that there was any testing performed to determine

the percentage of clay in the boring samples.3 These logs were not part of the invitation for

quotations or the resulting task order. See Exhibit B. NRCS also conducted design surveys

to develop cross-sections of the channel to compute the amount of material that was to be

removed. Transcript at 783-84. These amounts were described as “estimated” on the

drawings that accompanied the task order solicitation. Exhibit B at 135.

Ms. LaFleur testified that the point of the soil borings was to determine the

depth of the sediments that needed to be excavated. Transcript at 789. Ms. LaFleur

explained, “[S]ince we were only going to be removing the sediment and debris that resulted

from the storm, there is no need to perform any other soil borings on the project.” Id. at 792.

Both parties hired firms during the pendency of the appeal to conduct laboratory tests on soil

samples to determine the composition of the soils.

CBCA 3246, 4356

Ms. LeFleur determined that the sides of the channel should be excavated to a slope

of 4:1, meaning 4 horizontal to 1 vertical. Transcript at 790. She made this determination

based upon the slope of the channel

walls above the water line and the reports that the channel walls had been very stable since

the channel was constructed. Id. at 790, 823-24. NRCS did not perform any evaluation of

the slope stability and the levee district never expressed concerns about slope stability or the

need to repair the slopes. Id. at 791-92, 823.

Although the design required a 4:1 slope upon completion, the drawings described the

lower part of the slope as constructed and warned that the actual bottom width may vary from

what was estimated on the drawings depending upon these slopes:

The channel bottom widths shown on the x-sections are estimated. Actual

bottom widths will vary based on site conditions. Top of bank and existing

slopes above elevation -7.0 shall remain. Constructed slopes near the channel

bottom shall be excavated at a 4 horizontal to 1 vertical (4H:1V) slope side

until planned bottom grade is reached. The actual channel bottom width will

be the distance remaining between the two sideslopes at the planned bottom

elevation and may not be the original estimated bottom width shown on xsections.

Exhibit B at 137. NRCS was not dictating the bottom width; instead, the agency wanted the

contractor to obtain the requested depth of fourteen feet and a four-to-one slope on the

channel sides. Transcript at 827-28. The planned bottom grade was fourteen feet, as

requested by the project sponsor. Id. at 828.

Utilities. In numerous places, the contract warned the contractor of the need to take

care around utilities that may be encountered while excavating. Exhibit B at 73, 79. The

contract further required the contractor to protect any buried conduits. Id. at 127. The

contract also directed the contractor to contact Louisiana One Call, the underground utilities

marking service, prior to excavation and to provide a copy of the call ticket to NRCS. Id. at

79, 136. The drawings depicted gas pipelines on Reach 4. Id. at 136.

CBCA 3246, 4356

Site Visit and Invitation Amendment

On October 23, 2007, NRCS conducted a site visit for the project. Exhibit B at 63.

Mr. Kosbab and Mr. Smith attended the site visit. Id. at 70; Transcript at 32-34.4 During the

site visit, they observed that a contractor was installing a new sewer line on the side of the

channel from which a contractor would have to conduct excavation activities. Transcript at

34, 499. Neither Mr. Smith nor Mr. Kosbab testified as to what they learned about the

expected composition of the channel banks during the site visit or subsequent visits to the

site. See id. at 33-34, 497-500.

Following that site visit, NRCS issued an amendment to the invitation that answered

questions from that visit. Exhibit B at 63-64. In this amendment, NRCS acknowledged the

new sewer line that was being installed at the site and represented that the work on that pipe

would be finished in time to start the project:

4. The attendees asked numerous questions about the projects. A list of

questions, with the NRCS response, is listed below. All answers become part

of the solicitation and any resultant contracts.

The following questions were asked at the site showing:

NRCS Comment. Made contractors aware of the newly installed sewer forced

main pipeline along 40 Arpent, reaches 2, 3 & 4 and informed them that they

must take the necessary precautions to prevent damage to pipeline.

Question. Will the pipeline job that is being installed on the work limits along

40 Arpent reaches 2, 3 and 4 be completed in time to start this job?

Answer. Yes! Pipeline contractor indicated to sponsor that their work should

be completed within three (3) weeks from 10/22/2007. However, this could

be impacted by the large amount of rainfall that fell 10/22/2007.

NRCS notes that Mr. Smith did not sign the sign-in sheet for the site visit and

provided no other “documentation that would confirm his attendance.” Respondent’s Brief

at 2. Mr. Smith testified as to sufficient details regarding the site visit, including where it

started and who else was in attendance, that the Board finds he attended the site visit. See

Transcript at 32-34. As Mr. Smith explained, he was not the prime contractor for the project,

so he did not feel that it was necessary to sign the sign-in sheet for the site visit. Id. at 32.

CBCA 3246, 4356

Question. Has the pipeline been pressure tested.

Answer. No!

....

NRCS Comment. Contractors must contact Lake Borgne Levee District before

approaching access to the levee right-of-way.

Exhibit B at 64-65.5 Mr. Kosbab relied upon this representation when he prepared Regency’s

quote of $852,995. Transcript at 502; Exhibit B at 61.

Task Order Award

On October 31, 2007, NRCS awarded the task order for 40 Arpent, reaches 3 and 4,

to Regency. Exhibit B at 58. On the same day, NRCS also issued task orders to Regency for

sediment excavation on Back Levee, reaches 1 and 2. See Transcript at 497. Regency hired

DTEC as its subcontractor for the 40 Arpent project. See id. at 507.

II.

Incidents Arising During Task Order Performance

Delays Due to Continued Presence of the Sewer Contractor

By email message dated December 1, 2007, Regency received the notice to proceed

on December 3, 2007. Exhibit D at 165. On December 3, Mr. Smith began mobilization at

the end of Legend Street, a place where he could bring in his large heavy equipment without

interference from power lines and other wires. Transcript at 45. When Mr. Smith arrived,

he found that the sewer contractor was still on-site. Id. at 44-46. DTEC could not begin

work because the sewer contractor was still working where DTEC needed to send its

excavator down the non-levee side of the channel. Id. at 59; see also Supplemental Exhibit

67 at 430, 431 (pictures of exposed sewer pipes taken on December 7). When he submitted

his bid to Mr. Kosbab, Mr. Smith had planned for three days of mobilization activities,

including equipment unloading and training activities. Transcript at 350-51.

In its initial brief, NRCS asserts without citation that this answer was provided

by the Levee District. Respondent’s Brief at 41. There is no support for this contention in

the record; however, what is relevant is that the amendment itself was issued by NRCS.

CBCA 3246, 4356

The testimony and documentary evidence establish that the sewer contractor continued

to work on the site for several weeks after the mobilization date along the same side of the

canal from which DTEC planned to operate. Beginning on December 5 through December

18, 2007, Mr. Smith noted every day in his job diary that the sewer pipeline contractor

continued to work on-site. Appellant’s Exhibit 1 at 51-63.6 Mr. Smith also noted that the

pipeline contractor had left the “ground rough and holding water. Need to [bulldoze area]

to let dry or will have water backing into property.” Id. at 51. DTEC had to wait until the

sewer contractor was out of the way to mobilize fully because the channel was so wide it

required two excavators to operate–one from a barge on the water and another on the shore.

Transcript at 509-10.

On December 11, 2007, NRCS met with representatives of the levee district to discuss

the situation. At this meeting, the levee district represented that the sewer contractor would

be finished by December 14, 2007. Exhibit E at 167. According to the agency memorandum

regarding this meeting, Mr. Smith was also informed that he could go in a different direction

along the canal to begin work. Id. Mr. Smith testified that he informed everyone at the

meeting that he could not move his equipment past the sewer contractor’s equipment and,

although the sewer contractor promised to move its equipment, it never did. Transcript at

210; see also id. at 51. According to Mr. Smith’s job diary and the one entry from the

COTR’s job diary during the period, problems with the sewer contractor continued through

December 21, 2007. Appellant’s Exhibit 1 at 66; Exhibit J at 248. In addition to mobilizing,

Mr. Smith and his crew spent time filling in the holes left by the sewer contractor on the top

of the bank of the canal. Appellant’s Exhibit 1 at 66; Supplemental Exhibit 67 at 438-39.

Mr. Smith did not mobilize his crew and many of his pieces of equipment until later

in December. See Transcript at 57. Mr. Smith testified that he “wasn’t going to bring people

in there, pay them wages for sitting around and not doing anything.” Transcript at 197-98;

see also id. at 204. According to the records provided in support of the claim, Mr. Smith did

not have any excavator operators on-site until December 17, 2007. Appellant’s Exhibit 1 at

341. On December 19, 2007, Mr. Smith noted in his job diary that the pipeline contractor

Respondent elicited testimony from both Mr. Smith and Mr. Kosbab that raised

concerns regarding the accuracy of the quality control reports submitted by Regency for the

project. See, e.g., Transcript at 261-62, 576-77. Based upon this testimony, the Board has

not relied upon these records in its consideration of the record. In contrast, Mr. Smith

testified as to how he prepared his job diary entries. Id. at 43. Respondent included a copy

of Mr. Smith’s job diary as an exhibit in the supplemental appeal file. Supplemental Exhibit

2. Therefore, the Board considers Mr. Smith’s job diary as well as the job diaries prepared

by the agency inspectors and the COTRs in its evaluation of the record.

CBCA 3246, 4356

was finished on reach 3 and that he was able to send his equipment to begin working.

Appellant’s Exhibit 1 at 64. However, at the end of the day, the equipment fell into a hole

left by the pipeline contractor. Id.

Delays of Survey Work

December 3, 2007

Regency identifies two different days on which the work of its surveyors was delayed

by NRCS. Appellant’s Brief at 15. The first occurred on December 3, 2007, the day DTEC

began mobilizing and the surveyors arrived to do the initial surveys. Dredging could not

begin until the surveys had been completed. Transcript at 514-15. NRCS represented at the

preconstruction meeting that the hubs from which to take the surveys would be set before

DTEC mobilized. Id. at 512, 514. But, when the surveyors arrived, they discovered that the

hubs were not set and they had to wait five hours until the NRCS surveyors began to set the

hubs. Id. According to the invoice submitted by the survey firm, there were “no NRCS

[survey hubs] in Reach 3 & 4; Was able to begin at 12 noon after NRCS survey crew

stakeout began.” Appellant’s Exhibit 1 at 395; see also id. at 49 (Mr. Smith’s job diary entry

notes surveyors were delayed waiting for NRCS surveyors). In his entry for the same day,

the inspector notes that the surveyors contacted him for the phone number for the levee

district to open the gates and that Mr. Smith had reported that the surveyors had been delayed

by the locked gates and were waiting for the NRCS inspectors. Exhibit K at 285. Mr.

Kosbab testified that waiting for the levee representative to unlock the gate would only

require five minutes. Transcript at 512.

January 11, 2008

The second day of surveyor delay occurred on January 11, 2008. According to the

COTR diary entry for January 9, 2008, NRCS agreed to be present when the surveyors did

their next survey. Exhibit J at 252. According to the invoices submitted by the survey firm,

on January 10, 2008, the surveyors held a meeting with NRCS and DTEC to discuss the final

cross-section method. Appellant’s Exhibit 1 at 401. The next day, January 11, 2008, the

surveyors waited three and one-half hours for the NRCS surveyors to arrive and set up. Id.

at 402. Per Mr. Smith’s job diary, the NRCS survey crew did not arrive at the site until 1

p.m. and was not set up until almost 3 p.m. Id. at 89; Exhibit J at 254.

CBCA 3246, 4356

Additional Quantities Excavated Due to Alleged Failure of Canal Slopes

Regency’s Reports of Sloughing and Additional Quantities

The largest element of Regency’s claim is for the costs of excavating additional

quantities due to the alleged slope failure in the canal. Mr. Smith testified that, as the project

got underway in earnest, his quality control measurements showed that the canal was filling

in:

I’d go back into the same area that I had checked the previous day and I would

then continue down through. And one of the problems I started seeing was

that I was not getting the same reading as I got the previous day. So –

I wasn’t getting the same depth-of-cut reading.

It showed that it became shallower. Our digging depth became shallower.

Transcript at 80. Mr. Smith testified that he called Mr. Kosbab to report the problems he was

having with the channel filling in:

I informed him that we were excavating an area, we were checking it, it was

correct. We’d come back a day or two later, and it was already filled back in

with more material.

Id. at 108. Mr. Smith’s testimony accords with his contemporaneous job diary. Appellant’s

Exhibit 1 at 72-74. On January 3, 2008, Mr. Smith noted that the slope of the non-levee side

is “steep (1-2).” Id. at 79; Transcript at 115. On January 4, 2008, Mr. Smith noted that he

spoke to the COTR about the problem with measuring and silting and asked him to see for

himself. Appellant’s Exhibit 1 at 80; Transcript at 109-10. The problem continued on

January 8, when Mr. Smith noted that the inspector told him that the COTR would be at the

site to join Mr. Smith in the boat to survey. Appellant’s Exhibit 1 at 84; Transcript at 114.

The NRCS inspector also recorded Mr. Smith’s concerns in his job diary. Exhibit K at 313,

315.

Mr. Kosbab first reported these problems to Mr. Garber, who was serving as the

COTR, on January 2, 2008. Exhibit J at 249; Transcript at 525. In response to Mr. Kosbab’s

report, Mr. Garber wrote in the COTR job diary, “[W]e were discussing our options and it

was up to him if he wanted to bring extra equipment. I told him that we would like to meet

with his surveyor and agree on how the sections would be taken through the slush until we

would meet some resistance.” Exhibit J at 249. Mr. Kosbab also asked that NRCS pay for

CBCA 3246, 4356

a surveyor to remain at the site throughout the project so that “the surveyor [could] take

sections immediately after excavating.” Id. Mr. Garber answered that he did not know

whether NRCS would pay for this effort. Id. Mr. Kosbab testified that he had pulled the

original plans for the canal, which showed that the canal was originally dredged with a drag

line, at a slope of one-to-one or one-to-one-and-a-half, steeper than the slope indicated in the

drawings for the task order. Transcript at 530, 549.

Agency representatives met with Mr. Kosbab and Mr. Smith on January 10, 2008, to

discuss a new survey method for both Back Levee 1 and 2 and 40 Arpent. Exhibit J at 253;

Transcript at 911-12. Mr. Kosbab testified that the new survey method was necessary to be

able to measure better the material that was sloughing from the sides of the canals on both

projects. Transcript at 538. NRCS acknowledges that a meeting was held to discuss changes

to survey methods for both projects, but disputes the change was needed because of a

sloughing problem on 40 Arpent. Id. at 809. Ms. LeFleur did acknowledge, however, that

the survey method was changed after Regency complained of sloughing on Back Levee 1 and

2. Id. at 810-11.

Experience on Back Levee 1 and 2

Witnesses for both parties testified as to sloughing or slope failure that occurred on

the Back Levee 1 and 2 project that Regency performed contemporaneously with the 40

Arpent project. Transcript at 525-26. Regency requested a modification on Back Levee 1

and 2 because it was experiencing sloughing in areas that had been excavated. Id. at 806.

Ms. LeFleur testified that NRCS took surveys to verify that this sloughing or additional

material was being deposited, stating, “[W]e did confirm that in fact there was material that

was settling into the bottom of the channel.” Id. at 807. Mr. Sticker testified as to the same

problem. Id. at 892. And, Mr. Sticker confirmed, “[w]hen you had evidence of sloughing,

you paid it? A: Yes.” Id. at 895. In contrast, on 40 Arpent, Mr. Sticker explained,

“[W]ithout your field personnel telling you that material was moving, the NRCS didn’t do

any other surveys? A: No, we did not.” Id. at 894-95.

According to a memorandum provided by the agency, in evaluating this problem,

NRCS determined that the sloughing problem on Back Levee 1 and 2 was caused by the fact

that the original sides of the channel were excavated to a steeper grade than 4:1, so that they

would not hold this slope specified by NRCS. Supplemental Exhibits 39, 40. As a result,

extra material was falling into the excavated area, which Regency then had to excavate.

NRCS determined that the problem was not occurring because of Regency’s means and

methods. NRCS agreed to modify the contract for Back Levee 1 and 2 to calculate payment

to the actual excavation lines, rather than just to the neat lines, while maintaining the lower

limits at the planned bottom elevation of the channel. Id.

CBCA 3246, 4356

Regency’s Request for Modification of the 40 Arpent Task Order

On March 7, 2008, when Regency received the proposed modifications for the Back

Levee 1 and 2 project, Mr. Kosbab inquired as to the status of the modification for 40 Arpent,

believing that NRCS had also agreed to pay for sloughing on that project as well. Exhibit F

at 183; Transcript at 545. The contracting specialist responded to Mr. Kosbab’s inquiry that

the 40 Arpent task order would not be modified in a similar manner “because there is no

reason to believe the material is moving.” Exhibit F at 183.

At the time of Mr. Kosbab’s inquiry, Ms. LeFleur reported to the contracting officer

that “[a]t no time during the construction did John Smith mention to the COTR that he

thought the material from the side slopes was moving down the slope. The only time he

mentioned anything was to [the inspector] regarding a ‘trench’ along the south slope. He

didn’t want to be accused of overexcavating in that area.” Exhibit F at 186. Ms. LeFleur

advised that “a modification for additional payment due to the contractor’s method of

performing the work is not warranted.” Id.7

By letter dated April 2, 2008, Mr. Kosbab requested that the task order be modified

to pay him for the “measured quantities above the bottom grade.” Exhibit F at 188. Mr.

Kosbab explained that he was experiencing the same sloughing of the side slopes as he

experienced on Back Levee 1 and 2 because, as shown on prior drawings of the canal, the

“existing side slopes on 40 Arpent [were] steeper (1.5 to 1) than the 4 to 1 slopes required

in my contract.” Id.

Mr. Sticker, the NRCS official who evaluated Regency’s request for the same

modification on 40 Arpent, testified about two complaints from Regency about 40 Arpent

– extra material moving into the canal from side channels and sections of the canal that had

not been excavated and slope failure. Transcript at 887. Mr. Sticker confirmed that,

although Regency had noted the same problems with slope stability on the 40 Arpent project,

In her testimony at the hearing, Ms. LeFleur distinguished between sapping or

slope failure and the sloughing that Regency experienced on Back Levee 1 and 2. Transcript

at 841. Although Ms. LeFleur testified that NRCS would often verify claims of sloughing

by performing its own surveys, id. at 832, she acknowledged that no surveys were performed

on the 40 Arpent project in response to Regency’s complaints of sloughing. Id. at 811. Ms.

LeFleur also seemed confused as to the timing of Regency’s complaints about sloughing on

40 Arpent, testifying that Regency had not complained of sloughing on 40 Arpent at the time

the meeting was held on January 10, 2008, to discuss survey methods. Id. at 812.

CBCA 3246, 4356

NRCS had not conducted surveys. Id. at 894-95. Instead, NRCS relied upon the reports of

field personnel that DTEC was overexcavating. Id. at 894.8

In his recommendation to deny the requested modification, Mr. Sticker acknowledged

that the previous as-built drawings for the canal showed slopes that were steeper than 4:1.

Exhibit F at 190-91. However, Mr. Sticker rejected this explanation because the surveys for

the completed work on Reaches 1 and 2 of the same canal indicated that “4:1 slopes were

obtained in most locations.” Exhibit F at 191.

On April 10, 2008, the parties executed modification 0002 to the contract to increase

the quantity of excavation due to overruns caused by a variation in estimated quantities.

Exhibit B at 148. This modification did not resolve the larger issue of additional quantities

due to alleged slope failure.9

NRCS, in response to Regency’s claims, asserts that the problems Regency

experienced were due to overexcavating by DTEC. Despite these concerns, Mr. Garber

acknowledged that he did not find any instances of overexcavating when he took soundings

himself in the channel. Transcript at 979, 981-82. Similarly, Mr. Sticker testified that he was

told by agency personnel that DTEC was overexcavating but did not provide any details as

to who told him that DTEC was overexcavating. Id. at 894; Exhibit F at 191. Mr. Smith

marked the booms of his excavators in one-foot increments to ensure that the operators knew

how far they could lower the booms and not excavate past the desired depth. Transcript at

82-85; Supplemental Exhibit 67 at 479-80 (picture showing markings on boom). Although

it is not necessary to resolve the claims presented by Regency, the Board finds that the record

does not support a finding that DTEC was overexcavating.

The version of the modification in the record contained release language

regarding the sloughing issue. Exhibit B at 149. Although NRCS raised the issue of the

release language in cross-examination of Mr. Kosbab, NRCS does not argue in post-trial

briefing that Regency has released its claim for additional quantities due to sloughing.

Moreover, NRCS did not plead the affirmative defenses of release or waiver in its answer

to Regency’s complaint. Answer; see A-Son’s Construction, Inc. v. Department of Housing

and Urban Development, CBCA 3491, 15-1 BCA ¶ 36,089, at 176,207 (“Failure to plead an

affirmative defense in a timely manner can result in the defense’s waiver.”). The Board finds

that this language was not in the version signed by Mr. Kosbab. His testimony on this point

was credible and is supported by the record. Transcript at 557; Exhibit H at 199-200.

CBCA 3246, 4356

Delays Due to Non-existent Gas Pipelines

Both prior to mobilization and during contract performance, Mr. Smith contacted

Louisiana One Call and asked that the pipelines be marked. Transcript at 226; see also

Exhibit K at 285. When no utilities were marked, Mr. Smith spent nine days trying to locate

the utility lines by walking the site and asking utility and Lake Borgne Levee representatives

where the lines might be located. Transcript at 126-27; Appellant’s Exhibit 1 at 107-17. Mr.

Smith found numerous flags on the site, but none of them marked by Louisiana One Call as

the gas pipelines depicted on the drawings. Transcript at 149-50. Mr. Smith used every

measure at his disposal to find the lines because it would be dangerous if his crew hit a

pipeline and it exploded. Transcript at 128. The government inspector also documented Mr.

Smith’s efforts to locate the pipelines and took pictures showing numerous flags and other

markings at the site. Exhibit K at 341, 343, 346, 351-52; Supplemental Exhibit 67 at 447-53.

DTEC did not stop working when Mr. Smith was unable to find the pipelines.

Instead, Mr. Smith marked where the plans indicated that they would be and directed his

crew to skip over that area and continue excavating Reach 4. Transcript at 128-29. His crew

finished work on Reach 4 before the pipeline issue was resolved, so he directed his crew to

use the excavator to straighten up the area where the excavated material was placed, referred

to as the spoils area, work that Regency was obligated to perform on the contract. Transcript

at 129; Appellant’s Exhibit 1 at 116; Exhibit B at 128. When the excavator was off-loaded

from the barge, it became stuck in one of the holes left by the sewer contractor. Transcript

at 129-30; Appellant’s Exhibit 1 at 117; Exhibit K at 347-49; Supplemental Exhibit 67 at

462. Mr. Smith’s job diary indicates that the pipeline issue was resolved on February 9,

2008, when he was told for the first time that the pipelines were located on Reach 1, not

Reach 4, as indicated on the drawings. Appellant’s Exhibit 1 at 118.10 DTEC did not free

the excavator until February 11, 2008. Id. at 120. In the period between January 29 and

February 12, 2008, the inspector did not note any idle time for contractor personnel due to

the gas pipelines. Exhibit K at 341-52. With modification 0001 to the task order, NRCS

issued a revised drawing that deleted the references to the utility lines. Exhibit B at 143-47.11

In his entry for February 9, 2008, Mr. Smith wrote: “now I’m being told that

pipeline crossing is on map for Reach 1.” Appellant’s Exhibit 1 at 118. In his testimony, Mr.

Smith attributed this statement to the inspector. Transcript at 136.

The modification states that “[b]oth parties agree that there is no cost change

in relation to this mod.” Exhibit B at 144. Although counsel for NRCS questioned Mr.

Kosbab about this language during the hearing, Transcript at 611-13, NRCS has not argued

in post-hearing briefing that Regency waived or released its claims arising from this mistake

in the contract drawings and, as noted above, the agency did not assert waiver or release as

CBCA 3246, 4356

III.

Regency’s Claim

Procedural History

Request for Equitable Adjustment

By letter dated February 26, 2008, Regency submitted a request for equitable

adjustment (REA) in the amount of $281,650, seeking the costs of the sewer contractor

delays, the survey expenses, the costs of searching for non-existent pipelines, and the cost

to excavate additional quantities. Exhibit F at 168. In its REA, Regency did not mention any

contract administration costs that it was incurring for compiling these costs or preparing the

submission to the agency for the purposes of negotiation. Id. at 168-81.

On March 13, 2008, Mr. Kosbab sent a letter to the contracting officer, asking again

to be paid for the sloughing problem at 40 Arpent.12 Exhibit F at 185. In his letter, he stated

that it was his understanding that the channel had been cut with a drag line to a steeper slope

than that sought by NRCS. For that reason, the sides would not hold when Regency

excavated them. Id. Regency reiterated this request for payment in a letter dated April 2,

2008. Id. at 188.

The contracting officer responded to Regency’s April 2, 2008, correspondence on

May 6, 2008. Exhibit F at 193-94. In that letter, the contracting officer acknowledges that

Regency had provided as-built drawings for the channel that showed some of the slopes on

the south side of the channel were excavated to a slope steeper than 4:1 both in the areas that

Regency was contracted to excavate and Reaches 1 and 2. Id. at 194. But, the contracting

officer noted, the surveys for the completed work on reaches 1 and 2 indicate that 4:1 slopes

were obtained in “most locations.” Id. The contracting officer then noted that “[t]he

allowance for this item on another contract (Reaches 1 and 2) is not applicable in this

instance as the site conditions on Reaches 1 and 2 were significantly different than the

conditions present at 40 Arpent Canal.” Id. The contracting officer acknowledged

Regency’s further complaint that material from the side canals had seeped into its area of

excavation and Regency had to remove this material as well. Id. The contracting officer

noted, however, “[W]e have no means to quantify the extent of material that may have

an affirmative defense in its answer. The Board considers any argument regarding release

or waiver of this aspect of the claim to be abandoned by the agency.

The COTR had issued a certificate of completion of the contract on March 12,

2008. Exhibit G at 196.

CBCA 3246, 4356

entered the work limits of this contract since no survey data exists of the lateral prior to the

start of work.” Id.

Agency Response to Regency’s REA

Regency’s REA appears to have languished with the agency for a period of years. By

letter dated June 18, 2010, Mr. Kosbab asked for a meeting to discuss his outstanding REA.

Exhibit I at 216. On July 26, 2011, the agency asked Mr. Kosbab to submit a final invoice

on the contract so that the contract could be closed out. Id. at 217. In response, Mr. Kosbab

reminded the agency of his pending REA and his request for a meeting. Id. at 218.

Finally, on January 30, 2012, NRCS sent Regency a letter responding to the REA.

Exhibit I at 223-24. In this response, NRCS rejected Regency’s request for costs caused by

interference by the sewer contractor, additional survey expenses, and the costs attributable

to the non-existent pipelines. Id. NRCS stood by its May 2008 determination that it would

not pay for the claimed additional material, but the agency did adjust the amounts to be

dredged based upon the before-dredging surveys performed by Regency’s surveyors.

According to the NRCS response, those surveys showed the actual quantity of material to be

removed was 66,468 cubic yards, rather than the originally estimated quantity of 63,612

cubic yards. The difference in these amounts, 2856 cubic yards, multiplied by $11.50 per

cubic yard, equals $32,844, an amount that the contractor was “due and owing.” Id. at 224.

Although NRCS, in later correspondence, described this response as a contracting officer’s

final decision, the response did not set forth Regency’s appeal rights. Id.

Further Exchange on Regency’s REA

By letter dated November 7, 2012, Regency responded to NRCS’s January 2012 letter,

seeking to provide additional information regarding the matters presented in the REA.

Exhibit I at 225. Regarding the issue of sloughing, Regency provided a list of eight other

contracts that Regency had performed for NRCS on which NRCS had paid Regency for

additional slide material. Id. at 227. Regency noted that all of these contracts were in New

Orleans East or St. Bernard Parish, the same area as the 40 Arpent project. Regency further

noted that the Back Levee 1 and 2 projects were “immediately adjacent to 40 Arpent and

New Orleans East Canals.” Id.

By letter dated November 15, 2012, NRCS advised that it had already responded to

the issues raised by Regency’s letter in a contracting officer’s final decision, dated January

2012. Exhibit I at 237-38. NRCS stated that there would be no further negotiation on the

issues presented. Id. NRCS then reiterated its position from the January 2012 letter and set

forth Regency’s appeal rights. Id. at 238.

CBCA 3246, 4356

Regency’s Certification of its Claim

By letter dated January 16, 2013, to the contracting officer, Regency advised that the

agency’s issuance of a contracting officer’s final decision had been premature because

Regency had not certified its claim, which it did in the letter. Exhibit I at 239-41. On

January 17, 2013, the contracting officer received the certification of the claim. Exhibit I at

242. With its certification, Regency reiterated the same issues that had been the subject of

its REA and did not mention the contract administration costs. Id. On February 13, 2013,

without waiting for the contracting officer to issue a new final decision, Regency filed its

appeal with the Board. This appeal was docketed as CBCA 3246. On March 14, 2013,

Regency filed its complaint with the Board, but did not mention its contract administration

costs in its complaint.

November 2014 Contracting Officer’s Decision

On the eve of the hearing, the Board convened a conference call with the parties to

advise them of a potential jurisdictional defect arising from Regency’s certification in

January 2013 and appeal immediately thereafter. To remedy this potential defect, the

contracting officer issued another decision on November 25, 2014, regarding Regency’s

claim.

The substance of this decision was the same as the November 15, 2012, decision

except for the determination of the additional quantities excavated. In the previous decision,

the contracting officer had determined that Regency was owed $32,844 for 2,856 additional

cubic yards excavated (total of 66,468 cubic yards excavated). In the 2014 decision, the

contracting officer determined that the total amount excavated was 63,612 cubic yards, based

upon the as-built drawings for the project, and that Regency was not owed any money

because it had been paid for this amount.

In supplemental briefing, the parties sought to explain the basis for the original and

revised calculations. The data reviewed by the contracting officer was survey data prepared

by Regency’s surveyor. The basis for the November 2012 calculation was data generated in

February 2008, during contract performance. Appellant’s Exhibit 19 at 622, 629;

Supplemental Exhibit 37. The basis for the November 2014 calculation was the survey data

produced in March 2008, which was the basis for the final payment on the contract. Exhibit

O at 592-93.

CBCA 3246, 4356

On December 3, 2014, Regency filed an appeal of this second decision (docketed as

CBCA 4356) and moved to consolidate this second appeal with its existing appeal.13 The

Board granted this motion to consolidate on December 5, 2014.

Elements of Regency’s Claim

Claimed Direct Costs

For each of the alleged delays or changes Regency experienced on the contract,

Regency presents direct costs calculated by one of its experts, Mr. Connole. NRCS offered

no expert testimony in response to Mr. Connole, and the agency’s criticisms of Mr.

Connole’s analysis in briefing focus upon the calculation of the direct costs or the underlying

issues of liability and causation. See Respondent’s Brief at 29-36.

Sewer contractor delays. Regency seeks $66,899 for the costs of the delay attributable

to the continued presence of the sewer contractor, which includes $29,022 in costs of standby

time for DTEC equipment and $1453 in direct labor costs. Mr. Connole lists seven pieces

of equipment that were on standby while DTEC was waiting to begin work at the site,

December 3-18, 2007. To calculate idle equipment costs, Mr. Connole relied upon a

published rate schedule because Mr. Smith did not have actual cost data for his equipment.

Transcript at 665. Mr. Connole chose to use the Rental Rate Blue Book Manual for

Construction, because Mr. Smith had equipment of varying ages that he both owned and

rented on the job. Id. at 666; Appellant’s Exhibit 1 at 288-99. In this book, Mr. Connole

identified the hourly rental rate for a particular piece of equipment and subtracted the

estimated hourly operating costs, to derive the hourly standby rate for the equipment. Mr.

Connole did not use the adjustments set forth in the book for age of equipment and locality,

Transcript at 724-25, but testified that the rates he found on invoices for some equipment

matched the rates in the book, id. at 725, and equipment rates in Louisiana were high after

Hurricane Katrina, id. at 756. The portions of the book included in the record do not indicate

whether the rates include overhead and profit for the equipment and there was no testimony

on this point.

To identify the days the equipment was idle at the site, Mr. Connole used the quality

control reports that are in the appeal file but that the Board has not considered. The Board

finds that Mr. Smith’s job diary entries provide the same information regarding the

equipment on site and support the claim assembled by Mr. Connole. Appellant’s Exhibit 1

The original appeal was transferred to the undersigned as presiding judge on

November 26, 2014.

CBCA 3246, 4356

at 51-63.14 Multiplying the number of days of delay that each piece of equipment was on-site

by the rental rate for that equipment, the total costs of equipment standby time for Regency

is $21,214.00.15 Mr. Connole also calculated the costs of operating hours for two pieces of

equipment (a long-stick excavator and a bulldozer), but because these costs were incurred

outside the period of delay attributable to the presence of the sewer contractor, Regency is

not entitled to recover these costs.

For labor costs, Mr. Connole used DTEC’s payroll records. Appellant’s Exhibit 1 at

341-80. The direct labor costs incurred prior to December 19 that Regency has claimed total

$888.50. Id. at 388. Mr. Connole also calculated the cost of Mr. Smith’s time attributable

to each of the claimed delays by deriving an hourly rate from Mr. Smith’s prior year income.

There is one discrepancy between Mr. Connole’s spreadsheet and Mr. Smith’s

job diary entries. Compare Appellant’s Exhibit 1 at 381-84 (spreadsheet prepared by Mr.

Connole) with id. at 51-63. According to Mr. Smith’s job diary, the second barge was not

on-site until December 7, 2007, reducing the number of days that it was on standby to ten.

Id. at 53. The Board has adjusted the calculation to account for this discrepancy.

This table sets forth Mr. Connole’s calculations with the discrepancies corrected.

Equipment

Rate

Hours (days)

CAT 325 DL Long Reach

Excavator

72.98

96 (12)

7006.08

CAT 325 CL Long Reach

Excavator

58.58

96 (12)

5623.68

JD 650G Bulldozer

28.30

88 (11)

2490.40

Barge

30.65

96 (12)

2942.40

Barge

30.65

72(9)

2206.80

Peterbuilt lowboy

7.70

96(12)

739.20

Crewboat

3.21

64(8)

205.44

Equipment Costs

Labor Costs

Total

Claimed

Cost

$21,214.00

888.50

$22,102.50

CBCA 3246, 4356

Transcript at 670. The amount for this period of delay was $3450. Appellant’s Exhibit 1 at

385.

Survey delays. Regency seeks $3401 as the costs of the additional survey expense.

Appellant’s Brief at 20. According to the invoices from the survey firm submitted with the

claim, the surveyors waited a total of eight and a half hours for NRCS to either install the

hubs or witness the survey. Appellant’s Exhibit 1 at 394, 400; Exhibit 1 at 28. The survey

crew of three was billed at an hourly rate of $130 per hour, for a total cost of $1105 for the

eight-and-a-half hours of delay. Appellant’s Exhibit 1 at 394, 400.

Regency also seeks to recover the per diem costs for the survey crew for these days,

but has not established that it would not have been charged for these days without the NRCS

delays. Regency also seeks the cost of Mr. Smith’s time on these days, but did not provide

any evidence that the delay for the surveyors also consumed Mr. Smith’s time on the job. In

fact, Mr. Smith testified that he spent December 3, 2007, mobilizing to the site and that he

“was not really . . . involved in the survey stuff.” Transcript at 44, 46. Mr. Smith’s job diary

entries for these days indicate he was busy working on other aspects of the project.

Appellant’s Exhibit 1 at 49, 89.

Costs of excavating additional material. Regency seeks to recover $134,159 in

additional costs that it incurred to excavate material as a result of the failure of the slopes of

the channel. Appellant’s Brief at 20. As a measure of the sloughing or slope failure,

Regency seeks payment for all the material that it excavated from the channel above the

bottom depth, including the material outside the specified neat lines of the channel. To

determine the cost of excavating the additional material, Mr. Connole calculated an

excavation cost per cubic yard. Appellant’s Exhibit 1 at 392. He then multiplied the

additional quantity excavated by this cost to derive the $134,159 claimed by Regency. Id.

at 27.

Costs attributable to non-existent pipelines. Regency seeks $44,199 as the costs of

delay attributable to the delays experienced while waiting for resolution of the issue of nonexistent gas pipelines. Appellant’s Exhibit 1 at 389-91. Mr. Connole calculated the labor

and equipment costs of four days of delay while the issue was being resolved and the

excavator was stuck in a hole on the bank. Id.

Contract administration costs. Regency seeks $10,900.16 as contract administration

costs, the costs of Mr. Connole’s time assisting Regency in the preparation of

communications with the agency regarding these issues. Appellant’s Exhibit 1 at 35. These

costs were incurred between April 2008 and December 2012 and are supported by invoices

from Mr. Connole. Id. at 36-44.

CBCA 3246, 4356

Mark-ups to Direct Costs

To each of these direct cost amounts, Mr. Connole applied burdens for profit,

overhead, and bonding percentages that he derived from DTEC’s or Regency’s books and

records.

Overhead. DTEC’s general and administrative (G&A) costs were DTEC’s home

office, and G&A expense from DTEC’s tax returns. Transcript at 671. After deducting costs

that were not allowable, Mr. Connole divided the total expenses by the cost of the contracts

Mr. Smith performed in 2007 and 2008, which resulted in the figure of 31%. Id. at 671-73.

For Regency, Mr. Connole calculated both a field office overhead rate of 1.95% and

a home office overhead rate of 10.34%. To calculate the field office overhead, Mr. Connole

summed all of the field overhead costs for Regency for the 40 Arpent project, which totaled

$13,227. He then divided that total by the direct subcontract costs, which were $676,579,

and derived a percentage of 1.95%. Appellant’s Exhibit 1 at 255. With regard to home

office overhead, Mr. Connole calculated the G&A expenses incurred by Regency in 2007 and

2008 and divided the cost of revenues earned by that figure to derive the percentage of

10.34%. Id. at 259. Regency provided no testimony or other evidence regarding an inability

to obtain other work while it was delayed on aspects of the project.

Profit. Mr. Connole derived the profit rates for DTEC and Regency from the previous

years’ tax returns. Mr. Connole calculated profit for DTEC to be nine percent, rounded up

because ten percent is considered to be a “reasonable profit”, and for Regency to be twenty

percent, which was Regency’s “experience rate for that time period.” Transcript at 673,

678-79; Appellant’s Exhibit 1 at 281.

Bonding cost. Mr. Connole calculated Regency’s bonding cost percentage to be

1.375% based upon the bond costs paid on the original task order amount. Transcript at 67980; Appellant’s Exhibit 1 at 283. In support of Mr. Connole’s calculations, Mr. Kosbab

testified that he obtained bonding for the original task order amount of $852,995. Transcript

at 563. Mr. Kosbab did not testify that he obtained any additional bonding for the increased

costs on the project, and the documents relied upon by Mr. Connole do not suggest that

Regency incurred additional bonding costs.

CBCA 3246, 4356

Appellant’s Geotechnical Expert, Dr. Traughber

Dr. Ewing Berkley Traughber, Regency’s expert in geotechnical engineering, testified

as to the reasons why additional material appeared in the canal after excavation.16 Transcript

at 371-72. Dr. Traughber opined that the additional material appeared in the canal because

there was “progressive sapping of silty soils.” Id. at 412. His opinion was based upon the

results of testing of soil samples collected by another firm hired by Regency and his own

experience. Id. at 412-13.

Discussion

Jurisdictional Issues Presented by Regency’s Appeals

The Board Has Jurisdiction to Hear Only the Second Appeal

Regency’s appeals present three jurisdictional issues. Pursuant to the CDA, 41 U.S.C.

§§ 7107-7109 (2012), the Board hears appeals of contracting officers’ final decisions. To

obtain a final decision, the CDA requires a contractor to submit a written claim and for

claims exceeding $100,000, to certify the claim. 41 U.S.C. § 7103(a), (b). A contracting

officer’s decision rendered on an uncertified appeal is a “nullity” and the Board lacks

jurisdiction to consider the appeal. Paul E. Lehman, Inc. v. United States, 673 F.2d 352, 355

(Ct. Cl. 1982); EHR Doctors, Inc. v. Social Security Administration, CBCA 3426, 13 BCA

¶ 35,371, at 173,572. The “contractor cannot retroactively meet this requirement–for the

purpose of direct judicial review–by certifying the claim after the final decision of the

contracting officer.” Skelly & Loy v. United States, 685 F.2d 414, 416 (Ct. Cl. 1982) (citing

W.H. Moseley Co. v. United States, 677 F.2d 850, 852 (Ct. Cl. 1982)). Despite the change

in the CDA regarding an improperly certified claim, 41 U.S.C. § 7103(b)(3), these cases

continue to apply to a claim which has not been certified.

As outlined above, Regency did not certify its claim until after it received the

contracting officer’s purported decision dated November 2012, and then proceeded to file

On the eve of trial, Regency filed a motion to exclude the report and testimony

of a geotechnical expert proffered by NRCS because the agency was untimely in identifying

the expert witness and providing the expert report. On December 3, 2014, the Board

summarily granted Regency’s motion in a pre-trial order and promised that a separate order

explaining the basis for the decision would be issued in the future. That order is issued today

under separate cover. NRCS was not permitted to present the expert or his opinions at the

hearing in this matter, and the expert’s report was stricken from the record.

CBCA 3246, 4356

its first appeal without waiting for a decision on that certified claim. Because the

certification must precede the contracting officer’s decision, Regency’s first appeal did not

comply with the statutory requirements and is dismissed for lack of jurisdiction. However,

when the contracting officer issued a final decision in November 2014 and Regency

appealed, all jurisdictional deficiencies were resolved. The Board possesses jurisdiction to

resolve Regency’s second appeal.

Regency’s Claim for Additional Amounts Based upon the Contracting

Officer’s Earlier Decision Fails

NRCS took the opportunity, when it issued the contracting officer’s second decision,

to correct what it perceived to be an error in calculating the amount owed to Regency for

amounts excavated. As discussed above, in the November 2012 decision, the contracting

officer stated that, based upon the before-dredge surveys provided by Regency, there was an

additional amount to be excavated (2856 cubic yards) and Regency was owed an additional

$32,844. In the November 2014 decision, the contracting officer revised these amounts

based upon later survey data provided by Regency and found that Regency already had been

paid for all amounts excavated pursuant to the task order (63,612 cubic yards). Regency,

with its second appeal, seeks to recover the amount identified in the contracting officer’s first

decision.

Regency asks that the agency be bound by the contracting officer’s prior

determination, which was based upon an earlier set of survey data. As explained, the

November 2012 decision cannot be considered a contracting officer’s final decision because

Regency had not certified its claim. Even if that decision were a final decision, that

determination is not binding upon the agency because, once appealed, that decision is

reviewed de novo by the Board. Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994)

(“contractor is not entitled to the benefit of any presumption arising from the contracting

officer’s decision”). The fact that NRCS changed its calculation of the quantity of material

dredged between the two decisions issued by the contracting officer does not provide a

separate basis for recovery of damages for Regency.

The Board Lacks Jurisdiction to Consider Regency’s Claim for Contract

Administration Costs

With the final element of its claim, Regency seeks $10,900 in costs it incurred for Mr.

Connole to prepare correspondence and other materials in support of the continuing

negotiations with the agency related to its request for equitable adjustment. Appellant’s Brief

at 28. Regency contends that it may recover these costs incurred prior to the date it submitted

its certified claim to the contracting officer on January 16, 2013. Id. at 29. NRCS counters

CBCA 3246, 4356

that Regency cannot recover these costs because they were unallowable claim preparation

costs and Regency failed to include these costs in its claim to the contracting officer.

Respondent’s Brief at 59.

We need not decide whether these costs are properly considered contract

administration costs because we find that we lack jurisdiction to decide that issue. As noted,

the CDA requires that claims against the Government must first be presented to the

contracting officer. 41 U.S.C. § 7103(a)(1). The Board’s jurisdiction arises from the

contracting officer’s final decision on those claims. McAllen Hospitals LP v. Department

of Veterans Affairs, CBCA 2774, et al., 14-1 BCA ¶ 35,758, at 174,971. A purpose of these

requirements is to ensure that a contractor provides “a clear and unequivocal statement that

gives the contracting officer adequate notice of the basis and amount of the claim.” Contract

Cleaning Maintenance, Inc. v. United States, 811 F.2d 586, 592 (Fed. Cir. 1987). If a claim

is not presented to the contracting officer, the Board lacks jurisdiction to consider it in an

appeal. McAllen Hospitals, 14-1 BCA at 174,971 (citing EHR Doctors, Inc. v. Social

Security Administration, CBCA 3522, 14-1 BCA ¶ 35,630, at 174,492).

NRCS is correct that Regency has failed to present its claim for contract

administration costs to the contracting officer. Beginning with the submission of its REA

in February 2008, Regency did not mention this additional category of costs. Regency, in its

briefing, does not dispute this point. Instead, Regency asserts that its request for these costs

“is part of the quantum associated with the changes experienced on the project.” Appellant’s

Reply at 17. This assertion is not sufficient to provide the Board with jurisdiction.

A contractor may change the amount of its claim on appeal, but it must show that the

“claims originally presented to the contracting officer can reasonably be viewed as

encompassing the matters” raised before the Board. EHR Doctors, 14-1 BCA at 174,492.

A contractor may recover professional and consultant service costs incurred by a contractor

“when reasonable in relation to the services rendered and when not contingent upon recovery

of the costs from the Government.” FAR 31.205-33(b). However, a contractor seeking

recovery of such costs must provide “[i]nvoices or billings submitted by consultants,

including sufficient detail as to the time expended and nature of the actual services

provided.” FAR 31.205-33(f)(2). Even in the cases cited by Regency regarding the

recoverability of these costs, the contract administration costs were submitted as part of a

claim to the contracting officer before being appealed. Tip Top Construction, Inc. v.

Donahoe, 695 F.3d 1276, 1279-80 (Fed. Cir. 2012); Bill Strong Enterprises, Inc. v. Shannon,

49 F.3d 1541, 1543 (Fed. Cir. 1995) (contracting officer denied recovery of consulting fees).

These provisions make it clear that a claim for consultant costs incurred as part of

contract administration must still be presented to the contracting officer prior to appeal to the

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Board. Because Regency failed to mention these costs in its communications with the

contracting officer regarding its claims, the contracting officer had no basis on which to

evaluate Regency’s claim for these costs. The caselaw requires that the contracting officer

be provided with this opportunity. Because Regency failed to provide this opportunity, the

Board is without jurisdiction to consider Regency’s claim for these costs.

II.

Regency May Recover for the Delays Caused by the Continued Presence of the Sewer

Contractor

The Language in the Amendment Constituted a Warranty

Regency alleges that DTEC’s mobilization was delayed by the continued presence and

work of the sewer contractor.17 Appellant’s Brief at 5-7. NRCS responds that Regency was

not delayed by the sewer contractor; DTEC simply was not ready to mobilize. Respondent’s

Brief at 43-44. NRCS also contends that DTEC could have mobilized in a different location.

Id. at 45-46.

We find that Regency and its subcontractor DTEC were delayed by the continued

presence of the sewer contractor at the site after the date DTEC was to mobilize until

December 19, 2007, when DTEC was able to begin moving its equipment into position. The

Board credits Mr. Smith’s testimony that he did not have operators on-site until

December 17, 2007, in an effort to mitigate his damages. Moreover, NRCS’s supposition

that the excavation work could proceed while the sewer work continued ignores the

amendment issued by NRCS that specified that the sewer contractor would finish work

before this job began.

The issue to be resolved is whether NRCS is liable for that delay. Regency asserts

that NRCS is liable because the agency warranted with the amendment that the sewer

contractor would be finished before work began. Appellant’s Brief at 23-24. NRCS

responds that the agency was not responsible for the work of the sewer contractor and the

Prior to starting work, Regency continued its efforts to ascertain whether the

sewer contractor would be finished prior to its project starting. These efforts included

contacting the Parish inspector both before the pre-construction meeting, Transcript at 507,

and at the pre-construction meeting. Id. at 504-05. Based upon these further representations,

it was decided that Regency would begin work at 40 Arpent on December 3, 2007. Id. at

504; Exhibit D at 159. Prior to requesting the formal notice to proceed, Mr. Kosbab with one

of the agency COTRs contacted the Parish again to confirm that the sewer contractor would

be finished before December 3. Transcript at 506; Supplemental Exhibit 26.

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statement in the amendment to the invitation for quotations did not constitute a guarantee.

Respondent’s Brief at 42, 45.

Generally, the Government is not responsible for delays caused by third parties, even

other contractors on its own site, unless the Government affirmatively indicates that site will

be ready and available. Fort Sill Associates v. United States, 183 Ct. Cl. 301, 309 (1968)

(“[I]n the absence of an express warranty, or its own fault, the Government is not liable for

failing to make the work site available to a contractor at a specified time due to delays

experienced by another independent contractor.”). For the Government to be liable for the

delays, the contract must contain specific language that constitutes a warranty by the

Government that the site will be available. Ben C. Gerwick, Inc. v. United States, 285 F.2d

432, 436 (Ct. Cl. 1961) (“[u]nless the Government expressly covenants to make the site

available at a particular time, plaintiff has the burden of proving that the United States was

in some way at fault because the site did not become available to it at an earlier date.”).

The contract included the Site Investigation and Conditions Affecting Work clause,

FAR 52.236-3, which specifically disclaimed any representations made unless those

representations specifically were included in the contract. But then the amendment with the

answers to the site visit questions specifically stated that the answers were made part of the

contract. Goss Fire Protection, Inc., DOT BCA 2782, 97-1 BCA ¶ 28,853, at 143,954

(language indicating that prebid conference minutes were part of the contract overcame

contrary exculpatory language). The representation that the sewer contractor would be

finished before work began was part of the contract.

To establish that the representation constitutes a warranty, Regency must show that

“(1) the Government assured the [appellant] of the existence of a fact, (2) the Government

intended that appellant be relieved of the duty to ascertain the existence of the fact for itself,

and (3) the Government’s assurance of that fact proved untrue.” Oman-Fischbach

International (JV) v. Pirie, 276 F.3d 1380, 1384 (Fed. Cir. 2002) (quoting Kolar, Inc. v.

United States, 650 F.2d 256, 258 (Ct. Cl. 1981)). “A warranty . . . is intended precisely to

relieve the promisee of any duty to ascertain the facts for himself.” Id. at 1383 (quoting Dale

Construction Co. v. United States, 168 Ct. Cl. 692, 699 (1964)). With its statement, the

agency intended to assure Regency and other contractors that the sewer contractor would be

finished before work on the task order began. That was not information that they could

ascertain on their own at the time of bidding and the agency’s statement proved to be untrue.

The statement also constituted a warranty.

Regency’s actions after it was awarded the task order do not eliminate the nature of

the agency’s representations as a warranty. Although Mr. Kosbab checked with the levee

district to confirm the status of the sewer contractor’s progress after task order award, he did

CBCA 3246, 4356

not learn anything different from what the agency had represented in the solicitation

amendment–the sewer contractor would be finished. Based upon its warranty that the site

would be available, the agency is responsible for the costs that Regency incurred due to the

continued presence of the sewer contractor.

The Suspension of Work clause permits a contractor to recover costs incurred as the

result of unreasonable delays in performance of the contract. Triax-Pacific v. Stone, 958

F.2d 351, 354 (Fed. Cir. 1992). Such delays can include actions or inactions by the

contracting officer in administration of the contract. Tidewater Contractors, Inc. v.

Department of Transportation, CBCA 50, 07-1 BCA ¶ 33,525, at 166,103 (failure to issue

timely notice to proceed). However, for recovery to be possible, the delays caused by the

contracting officer must be the “sole proximate cause” for the costs incurred. Triax-Pacific,

958 F2d. at 354 (citing Merritt-Chapman & Scott Corp. v. United States, 528 F.2d 1392,

1397 (Ct. Cl. 1976)). “What is a reasonable period of time for the Government to do a

particular act under the contract is entirely dependent upon the circumstances of the

particular case.” Tidewater Contractors, Inc., 07-1 BCA at 166,103 (citing Speciality

Assembling & Packing Co. v. United States, 355 F.2d 554, 565 (Ct. Cl. 1966)).

NRCS warranted that the site would be available before the task order began and

directed Regency to proceed even though the sewer contractor had not cleared the site.

Regency was required to complete the project in eighty-one days and Mr. Smith remained

on site during the delay based upon repeated, inaccurate representations as to when the sewer

contractor would be finished. The Board finds that the continued delay of sixteen days when

Mr. Smith was ready to begin was unreasonable.

Regency May Recover Some of its Delay Costs

NRCS challenges various aspects of Mr. Connole’s opinions and calculation of

damages. Three criticisms apply to the calculation of the period of delay attributable to the

sewer contractor: (1) Mr. Connole used the error-filled quality control reports as the basis for

his analysis (Respondent’s Brief at 31); (2) Mr. Connole did not adjust the rates for the

equipment to factor in age and locality based upon the guidance in the Rental Rate Blue

Book (id. at 29-30); and (3) Mr. Connole improperly charged the full ownership rate for the

equipment, although “it is customary to only use one-half the ownership rate with no

operating costs” when equipment is on standby (id. at 33).

NRCS’s challenges do not defeat Regency’s claim for the standby equipment costs,

but do require adjustments to the calculations Regency provided. While Mr. Connole did use

the error-filled quality control reports as the basis for his analysis, Mr. Smith’s job diaries

provide support for the equipment being on standby during the period. While Mr. Connole

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did not adjust the rates for the equipment based upon age and locality, NRCS has not

explained how it believes this would have affected the claimed costs. As Mr. Smith and Mr.

Connole testified, equipment was difficult to obtain in this period following Hurricane

Katrina, and any adjustment made by Mr. Connole could have increased the rates. Finally,

NRCS is incorrect that Mr. Connole did not adjust the rates to remove operating costs. Mr.

Connole removed the estimated operating costs from the hourly rental rate and used the

resulting figure to calculate the standby cost for each piece of equipment. Regency may

recover $25,552.50 as the increased cost resulting from the sewer contractor delay.

Regency may not recover any of the overhead or other costs that Mr. Connole

calculated because Regency made no showing that these costs increased as a result of the

delay. FAR 52.242-14 (contractor may recover “any increase in the cost of performance []

necessarily caused by the unreasonable suspension”). Instead, Mr. Connole simply derived

a percentage for each of these costs and applied them to the direct costs, without establishing

that the costs actually increased. Also, it is not clear from the record whether the equipment

rates used to calculate the direct costs of delay already include these overhead costs. See

Tom Shaw, Inc., DOT BCA 2106, et al., 90-1 BCA ¶ 22,580, at 113,339 (contractor cannot

recover overhead and profit if equipment rates used in claim include these amounts).

Moreover, for its home office overhead costs, Regency provided no evidence that it was on

standby during this period or any period during the contract. P.J. Dick Inc. v. Principi, 324

F.3d 1364, 1372-73 (Fed. Cir. 2003) (contractor must show work is delayed and required to

be on standby to recover home office overhead). Similarly, Regency did not establish that

it incurred additional bonding costs attributable to these costs. Tromel Construction Corp.,

PSBCA 6303, et al., 13 BCA ¶ 35,346, at 173,493. Finally, neither firm may recover the

calculated additional profit because the Suspension of Work clause precludes the recovery

of profit. FAR 52.242-14.

III.

Regency May Recover its Additional Survey Expenses

The Board finds that NRCS delayed the work of Regency’s surveyors on December

3, 2007, and January 11, 2008. The contract required NRCS to set the hubs for the use by

surveyors. Exhibit B at 115, 117. NRCS does not dispute that the hubs were not set prior

to contract mobilization. Instead, NRCS suggests that the delay on December 3, 2007, was

attributable solely to the fact that the levee gate was locked. Respondent’s Brief at 25. As

support, NRCS cites the testimony of Mr. Smith, in which he was asked to agree with this

report from the inspector’s job diary entry. Id. (citing Transcript at 294-96). The problem

with the cited testimony is that Mr. Smith was asked solely about the statement about the

locked gates and not about the remainder of the job diary entry in which he attributed the

delay to waiting for the NRCS inspectors to set the hubs. Compare Transcript at 294-96 with

Exhibit K at 285. Mr. Smith’s testimony is supported by the invoice from the surveyors,

CBCA 3246, 4356

noting that they were delayed while waiting for NRCS to set the hubs. Based upon this

evidence, the Board finds that Regency’s surveyors were delayed on December 3, 2007,

waiting for NRCS to set the hubs and that this delay was unreasonable given the agency’s

clear contractual obligation to set the hubs prior to the start of performance.

The contract also permitted NRCS to witness any surveys and required the contractor

to provide forty-eight hours’ notice of surveys. Exhibit B at 119. NRCS does not dispute

that its surveyors were late on January 11, 2008, but asserts that the agency should not be

charged with the tardiness because Regency or DTEC failed to provide the required fortyeight hours’ notice of the survey. Respondent’s Brief at 26. As support, NRCS cites the

entry in the inspector’s job diary for January 11, 2008, which noted a conversation between

DTEC and the inspector that NRCS should not be responsible for the delay because the

contractor only provided twenty-four hours’ notice. Id. (citing Exhibit K at 324). NRCS also

suggests that NRCS was not obligated to be at the survey. Respondent’s Brief at 26. But,

as the COTR diary indicates, NRCS agreed to be at the January 11 survey and made that

agreement on January 9, more than forty-eight hours before the survey. Given NRCS’s

commitment to be present, the delay of three-and-one-half hours was unreasonable.

Regency may recover the direct cost of the survey crew’s time of $1105. Regency

may not recover the surveyors’ per diem costs because it has not established that these costs

increased as a result of the hours of delay. In addition, Regency has not established that the

delay for the surveyors also delayed Mr. Smith. Finally, Regency has not established that the

increased surveyor costs also caused an increase in any of the overhead costs that it applies

as a percentage of the direct costs.

IV.

Regency May Not Recover the Costs of the “Additional” Quantities that It Excavated

Regency Has Failed to Establish a Differing Site Condition

Regency offers two theories as to what caused the slope failure and two theories of

recovery. The first, based upon Dr. Traughber’s testimony regarding the composition of the

soil in the canal slopes, is that the slope failure constitutes a Type I differing site condition.

Appellant’s Brief at 12. To prove a type I differing site condition, Regency must establish

the following elements:

[1] “that the conditions ‘indicated’ in the contract differ materially from those

it encounters during performance” [, 2] [t]he conditions encountered must

have been reasonably unforeseeable based on all the information available to

the contractor at the time of bidding[, and 3] that it reasonably relied upon its

interpretation of the contract and contract-related documents and that it was

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damaged as a result of the material variation between the expected and the

encountered conditions.

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

omitted).

Regency’s claim fails on the first element. Neither the contract nor the task order

contained any representations regarding the type of soil in the slopes of the canal banks. The

contract stated that task orders could be issued for work on a variety of different types of

slopes and the task order was silent as to the composition of the canal slopes. Neither Mr.

Kosbab nor Mr. Smith testified as to what soil composition they expected to encounter based

upon the contract documents or their site visits. It does not appear that the boring logs that

Ms. LeFleur used to determine the depth of the excavation were provided as part of the task

order solicitation. “A contractor cannot be eligible for an equitable adjustment for a Type

I differing site condition unless the contract indicated what that condition would be.” H.B.

Mac, Inc. v. United States, 153 F.3d 1338, 1345 (Fed. Cir. 1998) (citing P.J. Maffei Building

Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed. Cir. 1984)). Without any

representation as to what the slopes were comprised of, Regency cannot recover additional

funds based upon a claim of differing site conditions.

The Slope Specification Was Not a Design Specification

Regency also asserts that the requirement to excavate to a slope of 4:1 constituted a

defective specification because the slopes failed and would not maintain the required slope

during excavation. Appellant’s Brief at 25. As a result of this slope failure, Regency was

required to excavate quantities that it did not anticipate. Id. Regency offered testimony

regarding its experience with Back Levee 1 and 2 as support for its claim. Id. at 12, 25.

NRCS attributes Regency’s difficulties to overexcavating and asserts that there is no survey

data to support Regency’s claim of sloughing, unlike on Back Levee 1 and 2. Respondent’s

Brief at 19.

In examining Regency’s defective specification claim, the Board must first decide

whether the requirement to excavate the slopes to 4:1 was a design specification or a

performance specification. A design specification “detail[s] the actual method of

performance,” whereas a performance specification “merely set[s] forth an objective without

specifying the method of obtaining the objective.” White v. Edsall Construction Co., 296

F.3d 1081, 1084 (Fed. Cir. 2002). “When the Government provides a contractor with design

specifications, such that the contractor is bound by contract to build according to the

specifications, the contract carries an implied warranty that the specifications are free from

design defects.” Id. (citing United States v. Spearin, 248 U.S. 132, 136 (1918)). However,

CBCA 3246, 4356

the warranty against defects in the design only attaches to design specifications. Broce

Construction Co. v. Department of Transportation, DOT BCA 4464, 07-1 BCA ¶ 33,457,

at 165,867 (2006) (“No warranty applies to performance specifications.”).

The requirement to excavate the slopes to 4:1 was a performance specification, part

of the final requirements for the shape of the canal after excavation. NRCS wanted a canal

that was fourteen feet deep with a slope of 4:1, and that is what the task order required

Regency to deliver. NRCS did not dictate how Regency was to obtain this dimension, just

that the canal have this dimension when Regency finished its work. Stuyvesant Dredging,

834 F.2d at 1582 (contract terms that dictated the dimensions of the dredged channel were

performance, not design, specifications).

Moreover, Regency has not alleged that it could not or did not obtain the required

slope for the channel. Instead, Regency alleges that it was more difficult because the slope

of the channel when it was originally cut was steeper. The difficulty Regency encountered

does not mandate additional compensation. “Where one agrees to do, for a fixed sum, a thing

possible to be performed, he will not be excused or become entitled to additional

compensation, because unforeseen difficulties are encountered.” Spearin, 248 U.S. at 136.

Regency cannot recover its additional costs based upon the difficulty of meeting the

performance specification in the task order.

The Experience on Back Levee 1 and 2 Does Not Provide a Basis for

Recovery

Finally, although not explicitly stated, it appears that Regency seeks recovery based

upon a course of dealing theory rooted in the parties’ resolution of similar problems on Back

Levee 1 and 2. “A course of dealing is defined as ‘a sequence of previous conduct between

the parties to an agreement which is fairly to be regarded as establishing a common basis of

understanding for interpreting their expressions and other conduct.’” Underground

Construction Co. v. United States, 16 Cl. Ct. 60, 66 (1988) (quoting Restatement (Second)

of Contracts § 223 (1981)). Parties’ prior course of dealing may be examined by the Board

to determine whether past conduct can inform the interpretation or understanding of a

contract term or provision in dispute. Tibshraeny Brothers Construction, Inc. v. United

States, 6 Cl. Ct. 463, 470 (1984) (citing L.W. Foster Sportswear Co. v. United States, 405

F.2d 1285, 1290 (Ct. Cl. 1969)). “The emphasis is on a sequence of events; a single

transaction cannot constitute a course of dealing.” DeLeon Industries, LLC v. Department

of Veterans Affairs, CBCA 986, 12-1 BCA ¶ 34,904, at 171,630 (2011) (quoting

Underground Construction, 16 Cl. Ct. at 67). Moreover, the course of dealing must pre-date

the agreement in question. Tibshraeny Brothers, 6 Cl. Ct. at 470 (“look to the past conduct

of the parties”).

CBCA 3246, 4356

The agency’s willingness to modify the method of payment when Regency

experienced the same difficulties on a different task order does not provide a basis for

recovery in this case. Here, there is no contract provision that is ambiguous or subject to

interpretation. Both parties clearly understood that the channel slopes were to be excavated

to a 4:1 slope. Moreover, there is no course of dealing; Regency points to a single event,

namely the agency’s response to the same difficulties on another task order, at the same time

as Regency was experiencing problems at 40 Arpent. The conduct on Back Levee 1 and 2

was contemporaneous with the conduct on 40 Arpent and cannot provide the basis for relief

as a course of dealing.

Regency Has Not Established Costs Attributable to the Non-Existent Gas Lines

Regency asserts that its work was disrupted while Mr. Smith looked for the gas

pipelines that were indicated on the contract drawings for Reach 4 and claims four days of

delay attributable to this issue. Appellant’s Brief at 24; Exhibit 1 at 389. NRCS does not

dispute that the drawings contained an error, but asserts that the error did not increase the

cost of Regency’s performance. Respondent’s Brief at 47, 49. According to NRCS, Regency

was able to skip over where the pipelines were depicted on the drawings and continue work

the entire time. Id. at 49.

Regency’s claim for the costs attributable to the erroneous depiction of gas lines on

the drawings is analyzed pursuant to the Changes clause, which provides that the contracting

officer is permitted at any time to make changes in the specifications or drawings for the

contract. FAR 52.243-4(a)(1). “If any change under this clause cause an increase or

decrease in the Contractor’s cost of, or the time required for, the performance of any part of

the work under this contract, whether or not changed by any such order, the Contracting

Officer shall make an equitable adjustment and modify the contract in writing.” FAR

52.243-4(d). “An equitable adjustment encompasses the quantitative difference between the

reasonable cost of performance without the added, deleted, or substituted work, and the

reasonable costs of performance with the addition, deletion, or substitution.” Nu-Way

Concrete Co. v. Department of Homeland Security, CBCA 1411, 11-1 BCA ¶ 34,636, at

170,698 (2010) (citing J.L. Simmons Co. v. United States, 412 F.2d 1360, 1370 (Ct. Cl.

1969)). A contractor’s failure to demonstrate any increase in cost will defeat a claim for an

equitable adjustment. See HomeSource Real Estate Asset Services, Inc. v. Department of

Housing & Urban Development, CBCA 859, 10-2 BCA ¶ 34,553, at 170,406; Trojan

Building Maintenance, Inc., VABCA 968, 71-1 BCA ¶ 8792, at 40,851.

Regency has failed to demonstrate that its costs of performance increased as a result

of this change. DTEC did not stop work while Mr. Smith was looking for the non-existent

pipelines. Mr. Smith spent a significant amount of time looking for the pipelines, but Mr.

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Smith’s time is not a direct cost to DTEC or Regency. DTEC and Regency have not alleged

that Mr. Smith should or could have been performing some other task while he was looking

for the pipelines. Similarly, the fact that the excavator became stuck when Mr. Smith

decided to pull the excavator off the barge to assist with smoothing the spoil on the bank was

not a cost attributable to this issue because DTEC and Regency were obligated to smooth the

spoil as part of the contract. The fact that DTEC decided to perform that work while waiting

for an answer on the pipelines does not make the resulting costs attributable to the nonexistent pipelines. Although the change in sequencing work (with equipment and men

skipping over an area only to return later for performance) could engender compensable

additional costs, Regency has not established that the cost of DTEC’s work was increased

by change in the drawings to remove the non-existent pipelines.

Decision

CBCA 3246 is DISMISSED FOR LACK OF JURISDICTION. CBCA 4356 is

GRANTED IN PART and DISMISSED IN PART FOR LACK OF JURISDICTION.

Regency may recover $25,552.50 for the delays attributable to the continued presence of the

sewer contractor and $1105 for the survey costs attributable to NRCS delays, for a total of

$26,657.50, with interest to run from January 17, 2013, pursuant to 41 U.S.C. § 7109.

____________________________

MARIAN E. SULLIVAN

Board Judge

We concur:

_____________________________

JERI KAYLENE SOMERS

Board Judge

_____________________________

JOSEPH A. VERGILIO

Board Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.