THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND

IS BEING PUBLICLY RELEASED IN ITS ENTIRETY ON MARCH 26, 2025

GRANTED: March 14, 2025

CBCA 7832(5692)-REM

EAGLE PEAK ROCK & PAVING, INC.,

Appellant,

v.

DEPARTMENT OF TRANSPORTATION,

Respondent.

Bennett J. Lee and Stephen L. Pessagno of Varela, Lee, Metz & Guarino, LLP, San

Francisco, CA; and David B. Wonderlick of Varela, Lee, Metz & Guarino, LLP, Tysons

Corner, VA, counsel for Appellant.

Rayann L. Speakman, Office of the Chief Counsel, Federal Highway Administration,

Department of Transportation, Vancouver, WA; and Milton Hsieh, Office of the Chief

Counsel, Federal Highway Administration, Department of Transportation, Ashburn, VA,

counsel for Respondent.

Before Board Judges RUSSELL, KULLBERG, and SULLIVAN.

RUSSELL, Board Judge.

This appeal is before the Board on remand from the United States Court of Appeals

for the Federal Circuit. See Department of Transportation v. Eagle Peak Rock & Paving,

Inc., 69 F.4th 1367 (Fed. Cir. 2023). The Department of Transportation, Federal Highway

Administration (FHWA or agency), awarded appellant, Eagle Peak Rock & Paving, Inc.

CBCA 7832(5692)-REM

2

(Eagle Peak), a contract to perform construction work in Yellowstone National Park. FHWA

terminated the contract for failure to prosecute the work with sufficient diligence to ensure

that the contract would be completed within the time period required by the contract.

The Board previously determined that the termination for default was improper and

converted it to one for convenience. The Federal Circuit vacated our decision, concluding

that we relied “heavily, though not exclusively, on [the Board’s] view of deficiencies in the

contracting officer’s reasoning” for default “rather than on de novo findings about what the

record developed in the Board proceeding showed about whether the standard for termination

for default was met.” Eagle Peak, 69 F.4th at 1371. The Federal Circuit remanded the case

“for the Board to adjudicate the case de novo on the record before it.” Id. Based on the

record, which included a two-week hearing, the Board determines that the termination for

default was improper and converts it to one for convenience.

Findings of Fact

I.

The Contract

A.

Project Scope and Completion Dates

On May 2, 2016, FHWA awarded Eagle Peak a contract to make improvements along

4.7 miles of Grand Loop Road in Yellowstone National Park, Wyoming, as well as nearby

parking areas, trails, and overlooks. Respondent’s Final Complete Rule 4 File, Exhibit

231-10 (stipulations), ¶¶ 1, 2.1 The project consisted of four primary worksites: (1) Grand

Loop Road (also sometimes referred to as the “Mainline”); (2) Inspiration Point; (3) Brink

of the Upper Falls; and (4) Uncle Tom’s Point. Exhibit 1 (contract) at 000002, 000009,

000020-48; Exhibit 3 at 001307, 001313. Inspiration Point, Brink of the Upper Falls, and

Uncle Tom’s Point are commonly referred to as the “Canyon Rim” sites or areas. Exhibit

3 at 001313. The project was scheduled for three construction seasons with an overall

completion date of October 5, 2018, and an interim completion date for the Inspiration Point

work of November 15, 2017. Exhibit 1 at 000082, 000218. The winter shutdowns were

scheduled from November 11, 2016, to April 16, 2017, and from November 15, 2017, to

April 15, 2018. Id. at 000217.

The original contract had an estimated value of $28,049,200.62. Exhibit 231-10, ¶ 3.

The original base contract was referred to as “Schedule B” and included work on Grand

1

All exhibits are found in FHWA’s Final Complete Rule 4 appeal file, unless

otherwise noted. FHWA used “tab” numbers to designate exhibits. The exhibit numbers

used herein correspond with the “tab” numbers used in the appeal file.

CBCA 7832(5692)-REM

3

Loop Road at Inspiration Point and on the Brink of the Upper Falls. Id. With respect to the

Brink of the Upper Falls, the Schedule B work included rehabilitation and reconstruction of

trails and overlooks at this location. Id.

The solicitation also required Eagle Peak to submit bids for certain options, namely

options W, X, Y, and Z, which involved additional parking lot, trail, and overlook work at

the Brink of the Upper Falls and Uncle Tom’s Point sites. Exhibit 231-10, ¶ 4. FHWA

exercised these options via a unilateral modification dated July 14, 2016. Id. The option

work totaled $6,536,810.50 and increased the estimated contract value to $34,586,011.12.

Id. Option W included work to reconstruct the entry drive and parking lot at the Brink of the

Upper Falls site. Options X, Y, and Z included work at the Uncle Tom’s Point site. Id. The

contract’s completion date remained October 5, 2018, regardless of which options were

awarded. Exhibit 1 at 000082. The contract contained a Default clause that required an

improper termination for default to be converted to one for convenience. Exhibit 1 at 000172

(citing 48 CFR 52.249-10 (1984) (Federal Acquisition Regulation (FAR) 52.249-10)).

B.

Specific Scheduling Constraints

In addition to the winter shutdown periods described above, the contract included the

scheduling constraints below.

1.

Clause Precluding Simultaneous Closure at Two Sites

The contract included a clause precluding the simultaneous closure of the Brink of the

Upper Falls and Uncle Tom’s Point sites:

Brink of the Upper Falls site (Base and Option W) and Uncle Tom’s Point site

(Options X, Y, and/or Z) cannot be closed simultaneously. Substantially

complete Brink of the Upper Falls site work or Uncle Tom’s Point site work

to the point of being acceptable for public use, and approved by the

[contracting officer (CO)], prior to initiating construction activities at the

remaining site.

Exhibit 1 at 000218 ([Special Contract Requirement (SCR)] 108.01(j)). “Substantial

completion” was defined in the contract to require safe use by the public:

The point at which the project is complete such that it can be safely and

effectively used by the public without further delays, disruption, or other

impediments. For conventional bridge and highway work, the point at which

bridge deck, parapet, pavement structure, shoulder, drainage, sidewalk, major

CBCA 7832(5692)-REM

4

demolition, roadway obliteration, permanent signing and markings, traffic

barrier, safety appurtenance, utility, and lighting work is complete.

Exhibit 2 at 000570 (FP-14, Standard Specifications for Construction of Roads and Bridges

on Federal Highway Projects).

2.

Waiting Period for Stone Masonry Work

As part of the contract, Eagle Peak was required to apply stone masonry to retaining

walls–a wire-faced Mechanically Stabilized Earth (MSE) retaining wall located at the Grand

Loop Road portion of the project and a Geosynthetic-faced MSE retaining wall located at the

Brink of the Upper Falls portion of the project. The contract required Eagle Peak to wait a

minimum of 180 days after construction of the walls to apply the stone masonry. Exhibit 1

at 000305-306; Exhibit 3 at 001594-96.

3.

Bird Migration/Nesting Provision

The contract included the following requirement as to the performance of clearing and

grubbing work at the Canyon Rim sites:

Do not cut trees; perform vegetation clearing, grubbing, or other site

preparation activities between May 1 and July 31 within the Canyon Rim

construction area from Chittenden Bridge to Inspiration Point unless approved

by the CO.

Exhibit 231-10, ¶ 14; Exhibit 1 at 000265 (SCR 201.03).

FHWA waived this provision in the 2016 season. Exhibit 153-15. The constraint was

never enforced. The constraint was also waived in the subsequent 2017 and 2018

constructions seasons of the completion contractor. Eagle Peak (EP) Exhibit 167-07;

Transcript, Vol. 3 at 785.

4.

Seeding and Mulching

The contract also stated that “seed will not be sown, by the Park Service before

September 15th or after June 15th[,]” Exhibit 1 at 000375 (SCR 625.03A), and required the

contractor to “[p]lace mulch over finished slopes to a loose depth of 1/2 inch[,]” id.

(SCR 625.08), and to “[p]lace mulch over areas seeded by the Park Service within two days

after the seed has been sown; and over other areas designated in the plans.” Id. The contract

also required placement of “mulch on slopes where topsoil has been applied, before winter

shutdown.” Id.

CBCA 7832(5692)-REM

5.

5

Tree Planting

The contract provided that “[p]lants shall only be planted in the months of April, May,

September and October of any given year.” Exhibit 1 at 000377 (SCR 626.03).

C.

Schedule Requirements

Pursuant to the contract, Eagle Peak was required to submit an initial construction

schedule (SCR 155.03), a baseline schedule (SCR 155.04), and an updated construction

schedule (SCR 155.05). Exhibit 1 at 000247. The approved initial construction schedule

would serve as the baseline for the first construction schedule update. Id.

The contract directed that the construction schedule be generated using the critical

path method (CPM) and include fifteen different elements (e.g., activity descriptions, original

and remaining durations for construction and non-construction activities, start and finish

dates, float, sequence and interdependence of activities, and a critical path). Exhibit 1 at

000248-49 (SCR 155.06). The critical path was defined as “the longest sequence of activities

in the schedule that determines the duration of the project[.]” Id. at 000249. “Float” was

described as a “shared commodity,” not for the exclusive use of either the contractor or the

Government. Id. Eagle Peak was also required to provide a written narrative that stated the

“basis and assumptions underlying the schedule” for nine elements, including: (1) “work to

be done within each activity including the type and quantity of equipment, labor and

materials to be used [on the project];” and (2) “planned production rates by pay item

quantities[,]” (e.g., cubic yards or cubic meters of roadway excavation per day). Id. at

000249-250. Eagle Peak was also required, in the narratives, to identify the vendor, supplier,

or subcontractor slated to perform an activity and supply the assumptions made in scheduling

the work. Id.

The contract incorporated FAR clause 52.236-15, “Schedules for Construction

Contracts,” which required that Eagle Peak provide the contracting officer (CO) with “a

practicable schedule” showing how it “propose[d] to perform the work, and the dates on

which [it] contemplate[d] starting and completing the several salient features of the work

(including acquiring materials, plant, and equipment).” Exhibit 1 at 000149 (quoting FAR

52.236-15(a)). Failure to comply with the requirements of FAR 52.236-15 could serve as

“grounds for a determination by the [CO] that the Contractor is not prosecuting [project]

work with sufficient diligence to ensure completion within the time specified in the contract.”

FAR 52.236-15(c).

CBCA 7832(5692)-REM

II.

6

The Parties’ Schedules

A.

Eagle Peak’s Baseline Schedules

1.

Initial Schedules and First Cure Notice

Shortly after contract award, on or around July 22, 2016, Eagle Peak submitted a

“preliminary schedule.” Exhibit 228-103 at 040942. FHWA questioned the omission of any

activities for the Brink of the Upper Falls and Uncle Tom’s Point sites. Id. On July 23,

2016, Eagle Peak inquired as to whether it could submit separate schedules for these sites to

which FHWA’s project engineer, on the same day, responded, “No. They need to be tied so

that a critical path can be shown as an overall project.” Id. Between August 1, 2016, and

August 30, 2016, Eagle Peak submitted three baseline schedules, each of which reflected a

contract completion date of October 5, 2018. Exhibit 231-10, ¶ 20; Exhibit 51R at 046539;

Exhibit 53 at 003861; Exhibit 59 at 003960. FHWA rejected these schedules based on,

among other reasons, missing work items, duplicate activity names, production rate issues,

missing constraints, and durations that did not match production rates. Exhibit 231-10, ¶ 20;

Exhibit 156-02; Exhibit 157-04.

On October 3, 2016, the CO issued a cure letter to Eagle Peak, stating that the lack of

a schedule complying with contract requirements was endangering timely performance:

I have reviewed the project records related to the performance to date,

specifically in relation to the schedule for the work. I am very concerned that

Eagle Peak is over four months past the notice to proceed date and it has yet

to submit a schedule for the project that is in compliance with the contract

requirements.

I have great concern that Eagle Peak is not prosecuting the work with

sufficient diligence to ensure completion [within] the time specified in the

contract. I believe Eagle Peak’s failure to submit a schedule is directly

affecting its progress of work on the contract.

You are hereby notified that the Government considers your lack of

submission of a schedule, which is in compliance with the contract

requirements, a condition that is endangering performance of the contract.

Therefore, unless this condition is cured within 10 days after receipt of this

notice, the Government may terminate for default under the terms of and

conditions of FAR Clause 52.249-10 Default (Fixed-Price Construction) (April

1984) of this contract. . . .

CBCA 7832(5692)-REM

7

Within ten days after receipt, Eagle Peak must provide a schedule in

conformance with FAR Clause 52.236-15 Schedules for Construction

Contracts and Section 155 of the contract.

Exhibit 158-07.

2.

October 13, 2016, Schedule and Agency Response

On October 13, 2016, Eagle Peak submitted another version of its baseline schedule,

including a narrative, referred to as revision 5. Exhibits 64-69. The schedule identified the

180-day settlement periods for the Mainline and the Brink of the Upper Falls. Exhibit 66 at

004164; Exhibit 68 at 004205. The narrative described work to be done within each project

activity, including the type and quantity of equipment, labor, and materials to be used, as

well as planned production rates by pay item quantities (e.g., cubic yards of roadway

excavation per day). Exhibit 64.

By letter dated November 4, 2016, the CO rejected the schedule, stating “[y]ou did

not cure the condition that I determined to be endangering the performance of the contract.”

Exhibit 159-07 at 010501. In the attached analysis, FHWA noted that Eagle Peak’s schedule

met twelve of the fifteen required elements and provided some, but not all, of the required

information for three others. Id. at 010502-506. For the narrative, FWHA noted that Eagle

Peak’s narrative contained the nine required elements but that “some item production rates

[we]re missing” and “some important schedule constraints” were missing, specifically noting

the bird migration constraints for blasting work. Id. at 010506-507.

Eagle Peak provided the testimony of Mr. Jason R. Nolting, its scheduling expert,

regarding the merit of FHWA’s objections to the October 13, 2016, schedule and whether

it should have been accepted.2 Mr. Nolting examined Eagle Peak’s schedules in a pragmatic,

mathematical way, essentially relying on information from the schedules readily available

to FHWA prior to the termination decision. Mr. Nolting noted that Eagle Peak’s October 13,

2016, baseline schedule contained 671 activities, 1108 logic ties, and four constraints for a

total of 1783 schedule entries. EP Exhibit 113-2 at EP0024653. Mr. Nolting categorized

FHWA’s fifty-three concerns as: (1) logic omissions, (2) production rate discrepancies, or

(3) missing activities/submittals. Id. He testified that none of these fifty-three items were

fatal flaws in the schedule. Transcript, Vol. 8 at 2615. Rather, Mr. Nolting found that this

baseline schedule with a total of 1783 schedule entries was more than 97% acceptable based

2

Both parties provided schedule expert testimony. E. Dean Hodge, P.E. was

the second of Eagle Peak’s experts and Stephen A. Weathers, P.E. served as FHWA’s expert.

CBCA 7832(5692)-REM

8

on the issues documented by FHWA in its November 4, 2016, notice. EP Exhibit 113-2 at

EP0024653.

According to Mr. Nolting, logic omissions stemmed from FHWA’s concerns that

“Eagle Peak had not inserted relationships or logic between certain activities that should have

been included.” EP Exhibit 113-2 at EP0024654. In total, there were ten such logic issues.

For example, “Eagle Peak had not inserted a predecessor/successor relationship between

several parking area/turnout area subgrade activities with the cold recycled asphalt base

and/or paving activities. . . .” Id. However, Mr. Nolting noted that “FHWA did not consider,

or at least communicate in the November 4, 2016 notice, whether the recommended changes

would have had any impact on the Project critical path or Contract fixed completion dates.”

Id. Mr. Nolting reviewed the logic omissions (e.g., missing tie between certain predecessor

construction work in a parking area and the subsequent asphalt work in that same area) and

determined that, given the projected dates for completion of the planned work to which the

logic omissions were tied, the addition of the missing logic “would not have affected the

overall critical path of the Project.” Id. at EP0024654-58.

Mr. Nolting also considered FHWA’s concern that Eagle Peak’s baseline schedule

identified “activities having durations that did not mathematically agree with estimated

[p]roject quantities and the production rates that Eagle Peak had provided the FHWA in

schedule narratives supporting baseline schedule submissions.” EP Exhibit 113-2 at

EP0024659. He noted that FHWA “identified . . . 20 of the 671 (3%) activities in the Eagle

Peak . . . baseline schedule durations [that] were not matching exactly to production rates[,]”

while pointing out that the contract, in fact, does not “require the contractor to match

durations with quantities and production rates.” Id. at EP0024660. Examining the twenty

activities, Mr. Nolting noted that (1) the average float on these activities was 71.9 days and

“most were significantly off the [p]roject critical path” and (2) seven (or 35%) of the

activities were recommendations to reduce the time being forecasted, which Mr. Nolting

opined “would improperly permit the FHWA to capture float in these activities in

contravention [of FHWA rules, which identify] float [as] a ‘shared commodity[.]’” Id. at

EP0024661. Mr. Nolting opined that FHWA failed to analyze whether these flaws affected

the critical path or the contract completion date. Id. at EP0024661-62.

As for the missing items of work, Mr. Nolting opined that three of the twenty-three

items identified as missing were related to non-construction submittals for hauling, accident

prevention, and water quality monitoring. EP Exhibit 113-2 at EP0024663. “While these

items may have been required under the Contract[,]” he did not believe that the items

“represent work likely to have any impact on the overall Project critical path or contract fixed

completion date.” Id. As for the remaining twenty construction items, he calculated the

value of these alleged missing items as approximately $591,272 of the $34,586,011 contract

CBCA 7832(5692)-REM

9

value. Id. Thus, based on dollar value, Eagle Peak’s schedule was more than 98%

compliant. Id.

Mr. Nolting additionally noted, about this schedule:

It is clear that Eagle Peak was forecasting its work in alignment with the

FHWA contractual intent to maintain public access to at least one side of the

canyon throughout the Project. It is also clear that due to the lengthy 180 day

settlement requirement for the MSE wall at [the Brink of the Upper Falls site],

Eagle Peak was assuming it would be permitted to complete final [Brink of the

Upper Falls] scopes of work (i.e., MSE wall facing) in 2018 along with work

at the [Uncle Tom’s Point] side. This assumption was again based on the

Eagle Peak interpretation of the Contract that it could work on both sides of

the canyon as long as the first side (in this instance [Brink of the Upper Falls])

was substantially complete and that Eagle Peak maintained access for

unimpeded public use at [this site] while completing the final aesthetic work

in 2018.

EP Exhibit 113-2 at EP0025675.

Importantly, according to Mr. Nolting, Eagle Peak’s schedule demonstrated that the

company had “an appreciation for the scope of the project,” “a significant appreciation for

the various elements within the contract,” and an appreciation for the project calendar.

Transcript, Vol. 8 at 2571. Mr. Nolting concluded that Eagle Peak’s baseline schedule

(revision 5), as submitted, could have been accepted or could have been accepted with notes.

Id. at 2572, 2614.

3.

November 23, 2016, Schedule

By letter dated November 23, 2016, Eagle Peak, submitted yet another baseline

schedule (Revision 7). Exhibit 159-20. In its letter, Eagle Peak stated, “[s]ince this schedule

is open to personal interpretation, we are more than happy to work with your representative

should they find any needed corrections. As we are in winter shutdown, we feel there is

sufficient time to accommodate any changes to this schedule.” Id. at 0100559. FHWA never

responded to this schedule submission. Transcript, Vol. 7 at 2286; Exhibit 161-21 at 011226.3

3

In exhibit 161-21, Eagle Peak identified the Revision 7 schedule as being

submitted on November 20, 2026. We believe this date to be written in error. The Revision

7 schedule was actually submitted on November 23, 2016. Exhibit 159-20; EP Exhibit 113-2

at EP0024646.

CBCA 7832(5692)-REM

4.

10

January 23, 2017, Schedule

On January 23, 2017, Eagle Peak submitted another baseline schedule. Exhibit

161-21. In its accompanying letter, Eagle Peak noted that FHWA never responded to the

company’s schedule submitted on November 23, 2016, adding that the schedule addressed

all concerns raised by FHWA in the agency’s letter dated November 4, 2016. Id. at 011226.

Eagle Peak also asserted that the “FHWA’s demands regarding the schedule have exceeded

–and in some cases, expressly contradicted–the requirements of the Contract.” Id. Eagle

Peak referenced SCR 155.06, governing construction schedule requirements, which,

according to Eagle Peak, only required that the schedule show the original and remaining

durations for construction activities, break construction activities into subtasks such that no

activity duration exceeds twenty working days, and break longer activities into two or more

activities distinguished by location or some other description. Id. at 011226-27. Eagle Peak

contended that its submitted schedules complied with this requirement but that FHWA was

imposing an additional demand that the durations of all of these activities correspond

precisely with the estimated production levels for the activities provided in the schedule

narrative:

Nothing in the Contract requires this. In cases in which Eagle Peak may have

indicated longer duration than the estimated productivity levels might suggest,

the insistence [by FHWA] upon shortening this duration contravenes the

contract requirement that “[f]loat is a shared commodity and is not for the

exclusive use of the Contractor or the Government. Either party has the full

use of float until it is depleted.” Relatedly, the non-critical nature of many of

these activities, and the substantial amounts of float associated with them – as

many as 208 days – renders any minor deviations from productivity estimates

the FHWA has cited completely irrelevant.

Id. at 011227.

Eagle Peak also took issue with FHWA’s concerns about how logic ties were

presented in the schedule. Eagle Peak noted that SCR 155.06 only required that Eagle Peak

“[s]how the sequence and interdependence of [project] activities” and that FHWA admitted

that Eagle Peak had done so. Exhibit 161-21 at 011227. The company added that FHWA

went on to cite minor logic errors as grounds for asserting that the schedule did not comply

with the contract and that the company had endeavored to correct the identified items. Id.

Eagle Peak argued that FHWA’s “demand for flawless logic ties” went beyond what would

be expected in the industry and that minor errors are inevitable but in no way would hinder

Eagle Peak’s prosecution of the work. Id. As further discussed below, Eagle Peak, in its

January 23, 2017, submission, detailed the resources that it planned to use “to complete the

[p]roject in accordance with” the contract schedules and requirements. Id. Eagle Peak also

CBCA 7832(5692)-REM

11

described what it characterized as “extensive errors and omissions in the Contract Documents

that [had] hindered [its] efforts to [that] date.” Id. at 011228. One such error related to an

elevation error in the Inspiration Point design. Id.

Via email, on January 24, 2017, FHWA’s CO responded to Eagle Peak’s January 23,

2017, submission, stating:

I am not sure where the confusion is coming from with regards to what I am

looking for. The cure notice asked you to provide me with a schedule in

conformance with FAR Clause 52.236-15 and Section 155 of the contract.

Eagle Peak, while it provided two schedules, did not provide one that was in

conformance with the FAR Clause and contract requirements. This is the last

time that I indicated I was looking for the baseline schedule – everything since

then has been an attempt to learn how Eagle Peak intends to complete the

work.

During our conversation on January 17, 2017[,] I indicated that I was

concerned that Eagle Peak was not going to complete the contract within the

fixed completion date. Eagle Peak insisted it could complete the contract

within the fixed completion date and asked for an opportunity to submit

another schedule that showed this. I was hesitant to accept yet another

schedule as Eagle Peak had not been able to submit an acceptable schedule for

the duration of the first season including in response to the cure notice.

However, I stated that I would accept a schedule that would show me how

Eagle Peak would complete the project. I specifically asked that if completion

by the fixed completion date was not realistic to provide me with a realistic

schedule.

What I got was a baseline schedule that had errors – that did not give me any

indication of how Eagle Peak intended to complete the project. When I asked

again last night, I was clear that I need to know how you intend to complete

the work in the two remaining seasons.

If you want me to consider Eagle Peak’s plans to complete this project, then

I need an updated schedule.

Exhibit 161-23 at 011265.

CBCA 7832(5692)-REM

5.

12

Eagle Peak’s “Recovery” Schedule Submission

a.

The Schedule

On or around January 25, 2017, Eagle Peak’s president submitted a “recovery

schedule,” attempting to respond to the CO’s concerns expressed in her email of January 24,

2017. Exhibit 161-31. In the letter accompanying the schedule, he stated:

I would like to further clarify Eagle Peak’s efforts to produce this schedule and

respond to the cure notice(s) issued by the Government. Regardless of

whether you characterize the November 4, 2016 letter as a second cure notice,

the fact remains that both this letter and the initial cure notice dated October

3, 2016 were directed solely at the baseline schedule, and the need for Eagle

Peak to develop a schedule “in conformance with the contract requirements.”

Id. at 011336. Additionally, in his letter, Eagle Peak’s president explained:

SCR 155.04 states “When the initial construction schedule is accepted by the

CO, set this as the baseline schedule for the construction schedule updates.”

Though we acknowledge your requests prior to yesterday for an updated

schedule indicating our plan to complete performance within the contract time,

we reasonably believed that any such updated schedule that was not predicated

on an approved baseline would not comply with the contract and thus would

not be acceptable. It was not until yesterday that you informed us that you

were prepared to dispense with the necessity of an approved baseline schedule

before addressing any updates thereto. Again, we were merely attempting to

develop the schedule “in conformance with the contract requirements.”

Id.

Eagle Peak also disputed FHWA’s contention that the baseline schedules that had

previously been submitted did not comply with the contract, asserting that, at the very least,

the errors had been corrected in the revised schedule submitted on November 23, 2016.

Exhibit 161-31 at 011337. Eagle Peak reiterated that although FHWA had asserted that the

November 23, 2016, schedule continued to have significant flaws, the company had not

received any formal notification to this effect. Id. Eagle Peak also offered additional details

regarding purported delays to the critical path discussed in its January 23, 2017, letter. Id.

at 011337-39.

The recovery schedule included a narrative report detailing specific project activities

and the work to be done, including the estimated number of days, to complete each activity.

CBCA 7832(5692)-REM

13

Exhibit 161-31. The report included detailed information on the equipment, materials, and

labor to be used for each activity. Id. The report also identified specific subcontractors who

would perform on the project and the availability of those subcontractors. Id. at 011356-57.

The report described proposed site mobilization efforts noting, for example, the type of

equipment that would be used to move equipment, where equipment would be stored, and

the locations of a concrete plant, an office, a testing lab (which would be moved during

winter shutdowns), trailers (which would also be moved during the winter shutdown), and

storage for materials. Id. at 011357. The report also noted that no work would be performed

during the winter shutdown periods from November 11, 2016, to April 16, 2017, and from

November 15, 2017, to April 15, 2018. Id. at 011358. The report identified a completion

date of October 5, 2018. Id.

There is no record evidencing that the CO or the project engineer reviewed the

narrative report that accompanied the recovery schedule prior to terminating Eagle Peak’s

contract. When asked if he had performed any analysis of the resources listed in the

narrative, FHWA’s project engineer stated that the CO had not asked him to do that analysis.

Transcript, Vol. 3 at 820. Similarly, the CO testified that she did not recall whether anyone

on her team had analyzed Eagle Peak’s production rates and resources and had provided their

findings to her. Transcript, Vol. 6 at 1764-65.

b.

Dispute Regarding Concurrent Work

FWHA’s project engineer did make adjustments to the recovery schedule in

accordance with FHWA’s interpretation of the contract clause precluding the simultaneous

closure of the Brink of the Upper Falls and Uncle Tom’s Point sites. Exhibit 1 at 218

(SCR 108.01(j)). FHWA interpreted this clause to mean that the work at the Brink of the

Upper Falls and Uncle Tom’s Point sites must have a finish/start relationship and, based

significantly on this view, adjusted Eagle Peak’s recovery schedule dated January 24, 2017,

such that the completion date for the project would be December 11, 2018, as opposed to

October 5, 2018, which was the completion date required by the contract. Exhibit 228-559

at 044628; Exhibit 1 at 000082. During the hearing, the CO testified that the clause required

Eagle Peak to finish work at one site before starting work at the next site:

. . . you do one site, you finish it, it’s substantially complete, its acceptable for

the public to come and use that site. It’s approved by the CO. Then you go

and do the other one. I mean the whole point of this was we wanted the public

to have full, safe access to one of the parking lots at all times.

Transcript, Vol. 6 at 1808. The CO testified that concurrent work was not allowed at the two

sites, see Transcript, Vol. 5 at 1503, 1535, but, the CO also testified to her understanding that

the clause meant that the parking lots for the two sites could not be closed at the same time.

CBCA 7832(5692)-REM

14

Transcript, Vol. 6 at 1808. Although each of Eagle Peak’s schedules submitted prior to the

recovery schedule showed overlapping work at the sites, FHWA first articulated this

interpretation of SCR 108.01(j) to Eagle Peak in the termination notice. Transcript, Vol. 3

at 817.

Prior to contract award, FHWA’s design consultant prepared preliminary project

schedules for Inspiration Point, Brink of the Upper Falls, and Uncle Tom’s Point, that

depicted stone masonry work along the Brink of the Upper Falls entry drive being performed

from June 5, 2017, through June 23, 2017, and activities for Uncle Tom’s Point within the

same time period. EP Exhibit 99-3-113 at EP0023046; Transcript, Vol. 3 at 749-50. Eagle

Peak’s president testified that the “concurrent” work in Eagle Peak’s January 25, 2017,

recovery schedule was similar to that provided in the schedule developed by FHWA’s design

consultant. Transcript, Vol. 7 at 2307; EP Exhibit 99-3-113 at EP0023046; EP Exhibit 113-2

at EP0024675-77; EP Exhibit EP0024681-82. As Mr. Nolting explained about the design

consultant’s schedules:

[T]he . . . schedules very clearly showed that certain finishes (including stone

masonry facing at the MSE wall likely as a result of the 180 day settlement

period) at the [Brink of the Upper Falls] site were planned to be completed in

2017 at the same time as the forecasted work at the [Uncle Tom’s Point] side

of the canyon. So here, the firm responsible for the drafting of the Contract

documents was interpreting the Contract in the way that Eagle Peak did and

specifically so long as [the Brink of the Upper Falls site] was substantially

complete in 2016, the contractor would be permitted to come back and

complete work at [this site] in 2017. C2G believes that this supports the Eagle

Peak position that work could be substantially complete at [the Brink of the

Upper Falls site] and allow work to be started on the [Uncle Tom’s Point] side

of the canyon prior to the installation of MSE wall facing at [the Brink of the

Upper Falls site] (among other minor finishes activities).

EP Exhibit113-2 at EP0024677.

Eagle Peak’s January 25, 2017, schedule submission showed that Eagle Peak would

wait the required 180 days for the retaining walls at the Mainline and Brink of the Upper

Falls. Exhibit 161-31 at 011361, 011365. Additionally, the schedule did not show any work

taking place concurrently at the parking lots for Brink of the Upper Falls and Uncle Tom’s

Point. Transcript, Vol. 5 at 1395.

CBCA 7832(5692)-REM

c.

15

Schedule Analysis

Mr. Nolting found that, in the recovery schedule, Eagle Peak corrected forty-seven

of the fifty-three “negligible impacts” highlighted by FHWA in its November 4, 2016, letter.

EP Exhibit 113-2 at EP0024668. He explained that the remaining six activities–three related

to production rates, two related to missing activities, and one deemed a logic

omission–“would have little to no effect on the schedule and . . . did not impact the critical

path of the Project or the fixed completion dates.” Id. at EP0024669-70. As for FHWA’s

assertions that certain activities were missing from the schedule, Mr. Nolting estimated their

value as $27,000 of the $34,586,011 contract value. Id. at EP0024669.

Mr. Weathers, FHWA’s expert, provided the following testimony on FHWA’s

January 25, 2017, schedule, specifically regarding the Mainline.

Q:

On . . . the 1/25/17 schedule by Eagle Peak, the work at the MSE wall

on the Mainline was not on the critical path of the project. Do you

agree with me.

A:

I do agree with you.

....

Q:

Your graphic shows Eagle Peak completing the MSE wall by June 20th

of 2017, correct?

A:

Based on Eagle Peak’s January 25th schedule.

Q:

. . . with the settling period on top of that, the stone-facing would be

completed by 5/21/2018, correct?

A:

Yes.

Q:

Five months before the October 2018 date.

A:

Yes.

Q:

And that’s part of what informs your opinion [based on what is]

depicted on Eagle Peak’s January 25, 2017 schedule [that the] MSE

wall and the Mainline [were] not on the project’s critical path.

....

CBCA 7832(5692)-REM

A:

16

Per that schedule it was not.

Transcript, Vol. 7 at 2037-39. Mr. Hodge, Eagle Peak’s second expert, testified “that the

Mainline could be completed by October 5, 2018” and that there was actually “float on the

Mainline.” Transcript, Vol. 9 at 2751.

B.

FHWA’s Schedule Rebuilds

In late November 2016, presumably based on Eagle Peak’s November 23, 2016,

baseline schedule submission, FHWA’s project engineer created “schedule rebuilds” for the

purpose of determining whether Eagle Peak could complete the remaining work on the

Yellowstone Project in the subsequent two construction seasons. The project engineer

provided the CO with rebuilds for the Inspiration Point, the Brink of the Upper Falls/Uncle

Tom’s Point sites, and the Mainline. Exhibit 159-30; Exhibit 159-31; Exhibit 160-01.

Mr. Nolting, Eagle Peak’s schedule expert, expressed surprise that FHWA’s schedule

analysis was separated into three separate files. Transcript, Vol. 8 at 2534. He stated that,

given the three separate schedule components, one would really not be able to see how they

“all fit together” for purposes of determining an overall completion date. Id. at 2538. He

opined that “[t]here is not an overall project impact or milestone that can be concluded.” Id.

at 2539.

The project engineer concluded that meeting the November 15, 2017, completion date

for Inspiration Point was “doable,” although he noted that “it may/will require weekend work

if there is any slippage or snow pack.” Exhibit 159-30 at 010871. He noted that there were

five pending contract modifications for Inspiration Point, two of which might affect the

critical path. Id. at 010870-71. These two pending contract modifications were:

•

More rockeries need to be added. This is a result of faulty topography

used in design. (May impact critical path)

....

•

Stone masonry, edging qty error. This will increase the qty. (May

impact critical path)

Exhibit 159-30 at 010870. Eagle Peak identified the same two issues in its letter to the CO

transmitting its January 23, 2017, schedule. Exhibit 161-21 at 011228-33.

For the Brink of the Upper Falls and Uncle Tom’s Point sites, the project engineer

predicted completion of work ranging from 44 days to 168 days after the date set out in the

contract. Exhibit 159-31 at 010874-875. He noted that Eagle Peak could “ramp up the

CBCA 7832(5692)-REM

17

manpower and increase production rates” to reduce this overage. Id. at 010875. For these

sites, he identified one pending contract modification related to “Additional Historical Wall

Repair” that might affect the critical path. Exhibit 159-31 at 010875.

As for the Mainline work, the project engineer noted that “[a]lthough the schedule has

gotten very tight, nothing has a negative total slack. And I didn’t have to change any

activities to night work of [sic] 7 day work weeks.” Exhibit 160-01 at 010892. He further

explained that “[m]ultiple activities will need to be concurrent and to maintain the production

rates shown, night work will be best for some of these items.” Id. For the Mainline, he noted

three pending contract modifications, all of which might affect the critical path (a change to

the roadway obliteration quantity, a sub-excavation addition, and a slope failure). Id. at

010892.

Although the migratory bird restriction was waived in 2016, the project engineer did

not adjust the rebuild schedule to show potential waiver of this provision in subsequent

seasons. Transcript, Vol. 3 at 814. The project engineer’s biggest adjustment, as relates to

the rebuild schedule, was based upon FHWA’s interpretation of SCR 108.01(j) (discussed

above) that all work at the Brink of the Upper Falls was required to be completed before

work beginning at Uncle Tom’s Point. Id. at 805-807. Based upon this adjustment, the

schedule showed that contract completion would be pushed out sixty-seven days. Exhibit

162-02 at 011387.

III.

Critical Path Issue (Weather)

In inspector notes and other documents, FHWA noted the following ten days of

weather events during the first construction period in 2016:

•

•

•

•

•

•

•

•

•

•

September 22: .68 inches of rain. Exhibit 230-06 at 25.

October 1: heavy rain was reported at the end of the work shift.

Exhibit 16 at 002628.

October 2: rain started at 10:00 am and was heavy at times. Exhibit 20

at 002860.

October 3: steady rain during the mid-afternoon. Exhibit 20 at 002861.

October 4: snow fell. Exhibit 30 at 003629.

October 5: snow falling “off and on” all day. Exhibit 14 at 002459.

October 6: significant snow on and off all day with some sections of

the project seeing three inches of snow. Id. at 002460-63.

October 14: intermittent rain in the morning with steady rain and wind

in the mid-afternoon. Exhibit 20 at 002870.

October 17: Intermittent snow, heavy at times. Exhibit 16 at 002637.

October 18: wet and snowy conditions. Exhibit 149-15 at 009542.

CBCA 7832(5692)-REM

18

In November 2016, an FHWA assistant project engineer, using Weather Underground

data, completed a statistical analysis of rainfall quantities for a 10-year period encompassing

October 2016. EP Exhibit 98-3-60 at EP0021926; EP Exhibit 98-3-61 at EP0022024. She

noted that anything over three standard deviations was significant and that October 2016,

which was at a standard deviation of 5.7 from the norm, was the only month that was

statistically significant. EP Exhibit 98-3-61 at EP0022024. In December 2016, a second

FHWA engineer, using National Weather Station data, determined a standard deviation from

the norm of 6.91. Id. (noting total rainfall of 6.58 inches in October 2016 with the ten-year

average being 1.67 inches).

Mr. Nolting testified that he used the National Oceanic and Atmospheric

Administration (NOAA) database to determine the average and days of precipitation for the

period 2006 to 2015. Transcript, Vol. 8 at 2496. He concluded that the weather in

September and October 2016 “drastically” exceeded the prior 10-year average giving him

“confidence that there had likely been an event that would [have entitled] Eagle Peak to an

excusable extension of the contract.” Id. at 2496-98; see also EP Exhibit 113-2 at

EP0024707. In Mr. Nolting’s opinion, the weather would have entitled Eagle Peak to an

adjustment of the fixed completion date from the original October 5, 2018, date to some date

in the future, estimated to be somewhere between October 15, 2018, and October 20, 2018.

Transcript, Vol. 8 at 2499.4

IV.

Eagle Peak’s Progress During the First Season

A.

The Work Locations

1.

Inspiration Point

Eagle Peak’s president testified about the status of construction at the conclusion of

the 2016 season. For Inspiration Point, he noted that Eagle Peak “didn’t have a design,” so

he was uncertain of the status of this part of the project. Transcript, Vol. 7 at 2269. As

indicated above, two possible modifications were pending for this site at the time of

termination that possibly affected the critical path–one indicating more rockeries were

needed as “a result of faulty topography used in design” and the second indicating additional

quantities were needed regarding stone masonry for the project. Exhibit 159-30 at 010870.

4

Mr. Nolting also opined that the CO’s demand for a schedule showing

completion within the original contract time, while fully aware of a two-week weather

impact, was a classic form of constructive acceleration. Transcript, Vol. 8 at 2691. “She had

[the] benefit of an excusable delay and yet was demanding on-time completion.” Id.

CBCA 7832(5692)-REM

19

Regardless of these issues, FHWA’s Inspiration Point rebuild showed that, after accounting

for Eagle Peak’s progress in 2016, the work at this site would be completed by the interim

milestone of November 15, 2017, with one day of float. Id. at 010871; Exhibit 1 at 000082,

000218.

2.

Mainline

a.

Mainline MSE Wall

Eagle Peak had not completed the MSE wall at the conclusion of the season, as

worked remained on Grizzly Cut and “a little bit of work left on the Apollinaris box culvert.”

Transcript, Vol. 7 at 2269. The parties dispute how much progress Eagle Peak made on the

wall during the first season. FHWA asserts that Eagle Peak had completed approximately

4418.8 square feet; Eagle Peak states that it had completed 5106.4 square feet. Transcript,

Vol. 9 at 2808-11. Nevertheless, as reflected in Eagle Peak’s recovery schedule, this wall

could have been completed in 2017, thereby allowing the wall to settle over the 2017/2018

shutdown, and the masonry stone facing could have been installed in 2018 with ample float

(five months) in the schedule for timely completion by the fixed completion date. Transcript,

Vol. 7 at 2037-38.

b.

Apollinaris Spring

The project included installation of a concrete box culvert near the Apollinaris Spring.

Exhibit 3 at 001365 (the “Apollinaris box culvert”); EP Exhibit 66. In a note dated

September 29, 2016, an FHWA inspector stated that, during excavation, Eagle Peak

encountered “many very large boulders, some of them three [or] four feet across.”

Exhibit 16 at 002625. Eagle Peak informed FHWA of this issue in a letter dated

September 30, 2016, stating that the company’s “excavation . . . revealed a sub grade that

contains large rock boulders that [Eagle Peak felt was] unsuitable for the placement of the

box culvert” and, in the same letter, recommended a solution to address the issue. Exhibit

157-26 at 010413. Eagle Peak flagged this issue again in its January 23, 2017, letter. Exhibit

161-34 at 011379. In his notes on Eagle Peak’s letter of January 23, 2017, FHWA’s project

engineer inaccurately stated that Eagle Peak had not provided prior notice of the boulders

encountered during excavation and that he did not recall any large rocks encountered during

excavation. Id.

The boring log data provided by FHWA did not indicate the presence of these

boulders; instead, the data describes soil consisting of “[s]ilty SAND with gravel . . .,

medium dense, gray-brown, wet, course grained sand.” Exhibit 4 at 001918; EP Exhibit 66.

Eagle Peak estimated a three-day impact associated with this issue due to the large boulders,

as well as cemented cobbles, impeding excavation efforts. Exhibit 161-31 at 011339.

CBCA 7832(5692)-REM

20

Notwithstanding the impact, Eagle Peak was able to complete a substantial amount of work

on the culvert. Eagle Peak “had a little bit of work left on the Apollinaris box culvert[,]” but

otherwise, the company was in “pretty good shape there to continue.” Transcript, Vol. 7

at 2269. In its recovery schedule, Eagle Peak anticipated completing this work by August 1,

2017, with 156 days of slack in advance of the completion date. Exhibit 161-31 at 011365.

3.

Brink of the Upper Falls and Uncle Tom’s Point Sites

Relating generally to the Brink of the Upper Falls and Uncle Tom Point sites, Eagle

Peak believed that the design and other issues could be fixed during the first winter shutdown

and that by adding additional resources (including new crews, additional supervisors, and

more equipment), Eagle Peak could complete the project on time and within specifications.

Transcript, Vol. 7 at 2285-86. As discussed below, certain of these issues reflect that

questions were pending in front of, or remained unresolved by, FHWA prior to termination.

One matter described below appears to reflect FHWA’s failure to respond to Eagle Peak’s

request for information in a timely manner.

a.

Micropile Work

Eagle Peak planned to complete the micropile work at the Brink of the Upper Falls

during the first season. To do this work, Eagle Peak intended using a ninety-ton crane to lift

its drill rig for work near the Historic Wall and to start work on the overlook at the edge of

the site. Transcript, Vol. 5 at 1378-79, Vol. 7 at 2114-15. The day before the

preconstruction conference (i.e., on or around May 23, 2016), Eagle Peak, along with its

subcontractor and FHWA, walked the area. Id., Transcript, Vol. 2 at 405-06. Given the

observed damage to the wall, Eagle Peak questioned whether the wall could sustain the

weight of the crane and asked FHWA to look into stability of the wall to make sure that use

of the crane would be safe. Transcript, Vol. 7 at 2114-15. On June 26, 2016, Eagle Peak

followed up with information on the two rigs that it was considering for the project.

EP Exhibit 156-18. On June 30, 2016, by email, FHWA’s project engineer forwarded this

information to the National Park Service (NPS) stating that “[a]s for [Brink of the Upper

Falls, Eagle Peak] want[s] to use the T.43. Not sure about where it will be parked. I think

I could request some additional information on staging, but this is a low priority at the

moment.” EP Exhibit 156-23 at EP0043778.

Although the project engineer’s email to the NPS indicated that he would follow up

with Eagle Peak for clarifying information, he never did. Transcript, Vol. 2 at 407. The

project engineer stated that he did not follow up because there was plenty of other work that

Eagle Peak could do and he was not clear on how Eagle Peak was going to use the crane and

where it would be placed. Id. at 407-8.

CBCA 7832(5692)-REM

21

In its January 23, 2017, letter to the CO regarding this issue, Eagle Peak stated:

We walked [the Brink of the Upper Falls] with [FHWA’s] Project Engineer the

day before the preconstruction conference. Our subcontractor was with us and

questioned the ability of the undermined retaining wall to support a 90 ton

crane, which would be required for the first order of work. The [P]roject

Engineer said he would get back to us. To this date we have not received a

response.

Exhibit 161-34 at 011379. The project engineer’s own notes on this specific passage of

Eagle Peak’s letter stated that “[w]e may have a redesign coming. Waiting on the [NPS] on

what they want to do with the historic wall. We have not started any work at this site, so

[not] sure what delays would have occurred.” Id.

b.

Micropile Quantities as Relates to the Brink of the Upper Falls;

Sunset Trail

In a December 7, 2016, email, FHWA’s project engineer recognized that an issue was

pending or needed to be resolved about the micropile quantities required for the work at the

sunset trail. Under the topic, “Clarification on Micropile Design,” and with a noted deadline

of December 30, 2016, the project engineer stated:

Currently the contract calls for embedment into bedrock. We only

allocate/estimate about 28' [linear feet] per pile in quantity. No bedrock shown

in Geotech report. Do we have guidance for this yet? . . . I’d like to get a

[contract modification] for this out soon, if needed.

EP Exhibit 162-6 at EP0045948.

Eagle Peak raised the issue with the micropile quantities in its January 23, 2017, letter

to the CO. Exhibit 161-34 at 011381. On this issue, the project engineer responded, “Yes

this is an issue that I’m very aware of. I have resolved with geotech and would like to issue

a [contract modification] before winter shutdown is over. No work has occurred here, so no

delays.” Id.

c.

Brink of the Upper Falls MSE Wall Work

On July 15, 2016, one day or so after the options award, Eagle Peak transmitted a

request for information to FHWA seeking curve information for the Brink of the Upper Falls

wall. EP Exhibit 157-30; Exhibit 8 at 002197. On July 27, 2016, Eagle Peak provided its

submittal for the Brink of the Upper Falls MSE wall explaining how the wall would be

CBCA 7832(5692)-REM

22

constructed. Exhibit 111-03. Almost two months later, on September 21, 2016, FHWA

approved the submittal. Id. at 005277.

B.

Percentage of Work Completed

In a January 31, 2017, memorandum to file, the CO initially found that, excluding

mobilization, Eagle Peak earned nine percent of the total contract value while using thirty

percent of the contract time. Exhibit 94 at 004536. In a subsequent report dated February 2,

2017, prepared for the surety, FHWA adjusted its assessment of the work completed based

on contract value to a little more than seventeen percent (including materials on hand and

mobilization efforts). EP Exhibit 113-2 at EP002471; EP Exhibit 113-3-2. Mr. Weathers,

FHWA’s expert, concluded that Eagle Peak had completed seventeen percent of the work

under the contract in the first season using a similar analysis to the one used by the FHWA

(i.e., looking at contract earnings and total value as factors in determining work completed).

Exhibit 186-001R at 046398 (“Eagle Peak completed $5,997,596.32 of contract work

(excluding contract retentions) which would equate to 17% of Eagle Peak’s base contract

value.”).

Mr. Nolting explained that simply breaking the project duration into thirds for a

three-year project and concluding that Eagle Peak should have completed thirty plus or

minus percent of work in the first of three seasons of the contract was “overly simplified.”

Transcript, Vol. 8 at 2596-97. He stated that the Government’s assessment (and, it seems

that of the Government’s expert) did not consider when significant scopes of work were

planned to occur. EP Exhibit 113-2 at EP0024712. Notably, the Government did not award

the options under the contract until more than two months after the signing of the contract.

Id. Mr. Nolting explained that this “fact alone would have likely necessitated some

adjustment to the progress the Government reasonably expected Eagle Peak to have made

related to the options.” Id. Mr. Nolting also noted that design and weather impacts were not

considered in the Government’s assessment of completed work, opining that these impacts

represented a “lost opportunity for Eagle Peak to perform work within the originally

contemplated durations.” Id. at EP0024715.

Adjusting for these impacts, Mr. Nolting concluded that “Eagle Peak was

approximately 26.5% complete with the work it planned to start in 2016 when considering

impacts caused by weather at the mainline and design issues at Inspiration Point.

Alternatively, Eagle Peak was approximately 3.5% short of accomplishing the Government’s

target of 30% for the first season.” EP Exhibit 113-2 at EP0024716.

Mr. Nolting explained that, on large construction projects like the one at issue in this

appeal, much of the contract value is on the “back end”–i.e., “the big materials, the cold

recycled asphalt base, the paving.” Transcript, Vol. 8 at 2596. For the Yellowstone project,

CBCA 7832(5692)-REM

23

those larger items were not scheduled until year three of the contract. Id. The canyon work

alone, which was never planned for the first year, was valued at $6.4 or $6.5 million, or

approximately 23% of the contract value. Id. at 2602.

V.

Increased Manpower Projections

In the letter submitting its November 23, 2026, schedule, Eagle Peak described its

plans for increased manpower in the next construction season:

Starting next year, we will be mobilizing additional crew members to work on

our project. We have completed a project in California that will make

available additional employees to work on this project. We also will gain

additional personnel from our Utah project that is nearing completion.

Our plan is to run two crews on the Grand Loop of the project, one day shift

and one night shift. Each of the crews will have a Superintendent to oversee

operations and monitor production. We will utilize the night shift and employ

a road closure at night to install culverts, installing culverts at night with the

road closure will allow the crews uninterrupted work conditions.

Day shift will be directed to the remainder of the work, clearing and grubbing,

excavations, grading, road construction, etc.

For the Canyon work, we will also utilize two crews, both crews will work

during daylight hours. Having two crews will facilitate a high production rate.

All the additional personnel are qualified and experienced workers. We

anticipate completing a majority of the project next year with the final year for

paving, completing masonry work, completing the canyon projects and

cleanup work.

We have contracted a highly qualified Mason. We are subcontracting the

masonry work to his company and he will complete the masonry work on

schedule. We have submitted his qualifications and since he is so highly

skilled, we foresee no obstacle pertaining to his acceptance.

We have our capable Timber crew accepted and ready to work.

...

CBCA 7832(5692)-REM

24

[Eagle Peak would prefer to] complete all required paper work through this

winter shut down so that we may be set to go right into the working phase of

the project at the beginning of next season. We are well aware of the contract,

its time requirements, design and specifications and believe there will be no

delay in starting back next season. We have established our vendors and

suppliers to provide the hardware required for the project. We believe we are

quite capable to complete this project on time and within specification.

Exhibit 159-20 at 010560-61.

As previously noted, FHWA never responded to Eagle Peak regarding the company’s

schedule submission of November 23, 2016. Exhibit 161-21 at 011226; Transcript, Vol. 7

at 2286.

In its January 23, 2017, letter providing another schedule, Eagle Peak reiterated that

it had the resources to complete the project, stating that the company had passed on bidding

on additional work for the 2017 season, even projects in close proximity to its base in

California, in anticipation of bringing all personnel and equipment to the Yellowstone

project. Exhibit 161-21 at 011227-28. Eagle Peak stated that this direction of personnel

would “triple the resources over last year [2016] and at least triple the production.” Id.

at 11228. The company added that any projection of the completion date, without accounting

for the additional resources, was inherently flawed, and, with these resources, the company

could readily accommodate the work remaining within the remaining contract period. Id.

VI.

Termination for Default

In a January 31, 2017, internal memorandum to the “Contract File,” the CO explained

her reasoning for the default termination. EP Exhibit 97-4-7. Based on the “schedule

rebuilds,” the CO concluded that Eagle Peak would not be able to complete Grand Loop

Road, the Brink of the Upper Falls, and Uncle Tom’s Point by the fixed completion date and

would be sixty-seven days late in completing the project. Id. at EP0020482. She concluded

that the only possible excusable delay would be due to weather but that, given the agency’s

assessment that Eagle Peak would be late by sixty-seven days, Eagle Peak still would not

timely complete the project even with an approximate two week impact extension due to

weather. Id. As for the percent of work completed, she concluded that “[e]xcluding

mobilization, [Eagle Peak] earned 9% of the total contract value while using 30% of the

contract time.” Id. at EP0020484. She noted that “[i]f another contractor was to take over

the project and finish it, it would not be able to meet the current fixed completion date . . .

[but she was] more confident that another contractor would be able to complete the work

under the contract sooner than if Eagle Peak continues to work.” Id. at EP0020483.

CBCA 7832(5692)-REM

25

By letter dated February 1, 2017, FHWA terminated Eagle Peak for default pursuant

to FAR 52.249-10. Exhibit 162-02. In the letter, FHWA stated:

This action is based on Eagle Peak’s failure to prosecute work with the

diligence that will insure its completion within the time specified within this

contract. I have reviewed Eagle Peak’s January 25, 2017 letter identifying

delays and have determined that there are no excusable delays that would

extend the fixed completion date of [the] contract.

I have also reviewed Eagle Peak’s updated schedule from January 25, 2017.

The schedule update contained several errors that required correction

(concurrent work on the Brink of Upper Falls and Uncle Tom’s Point sites and

MSE wall facing at the Brink of Upper Falls MSE wall shown before

completion of the MSE settlement period). After making these correction the

schedule update shows Eagle Peak completing 67 days past the fixed

completion date. In addition[,] the Government has created a baseline and

updated schedule and independently determined that Eagle Peak cannot meet

the fixed completion date.

Id. at 011387-88.

Discussion

I.

Standard of Review

A contractor’s action challenging a contracting officer’s decision under the Contract

Disputes Act “shall proceed de novo in accordance with the rules of the appropriate court [or

board].” 41 U.S.C. § 7104(b)(4) (2018). “Thus, once an action is brought following a

contracting officer’s decision, the parties start in court or before the board with a clean slate.”

Wilner v. United States, 24 F.3d 1397, 1402 (Fed. Cir. 1994) (citation omitted).

Contracting officers have broad discretion in deciding whether to terminate a contract

for default. Consolidated Industries, Inc. v. United States, 195 F.3d 1341, 1343 (Fed. Cir.

1999). However, “a default termination is a drastic sanction which should be imposed (or

sustained) only for good grounds and on solid evidence.” Lisbon Contractors, Inc. v. United

States, 828 F.2d 759, 765 (Fed. Cir. 1987) (internal citations omitted). When a contractor

appeals that termination decision, “the government . . . bear[s] the burden of proof with

respect to the issue of whether termination for default was justified.” Eagle Peak, 69 F.4th

at 1375 (citing Lisbon, 828 F.2d at 765). “In failure-to-make-progress cases [like the appeal

here], the government must establish that ‘the contracting officer’s decision to

terminate . . . was reasonable given the events that occurred before the termination decision

CBCA 7832(5692)-REM

26

was made.’” Id. (quoting Empire Energy Management Systems, Inc. v. Roche, 362 F.3d

1343, 1357-58 (Fed. Cir. 2004)). The Federal Circuit listed the factors that may be examined

in judging the reasonableness of the termination decision:

On the often-central issue of whether it was reasonable to view timely

completion as not reasonably likely, see Empire Energy, 362 F.3d at 1357-58;

Lisbon, 828 F.2d at 765, the tribunal must focus on “tangible, direct evidence

reflecting the impairment of timely completion,” McDonnell Douglas [Corp.

v. United States, 323 F.3d 1006, 1016 (Fed. Cir. 2003)]. In particular, the

Board must “decide the actual performance that the contract requires and the

amount of time remaining for performance” and “may also consider” factors

such as “the contracting officer’s testimony and contemporaneous

documents[,] . . . a comparison of the percentage of work completed and the

amount of time remaining under the contract, the contractor’s failure to meet

progress milestones, problems with subcontractors and suppliers, the

contractor’s financial situation, . . . a contractor’s performance history, and

other pertinent circumstances.” Id. at 1016-17 (citations omitted).

Eagle Peak, 69 F.4th at 1376. The Government does not satisfy its burden “by merely

showing that the contractor was behind schedule.” Lisbon, 828 U.S. at 765. Instead, based

upon the entirety of the record, the Board must determine whether the Government “proved

its side of the issue by at least the weight of the evidence. If the evidence on the issue is

evenly balanced, the party with the burden [here, the Government] loses.” Id. “The Board

will sustain a default termination only if the Government shows that the circumstances at the

time of the termination justified the decision, even if based on grounds unknown to the

contracting officer.” Adapt Consulting, LLC v. General Services Administration,

CBCA 7213, et al., 24-1 BCA ¶ 38,625, at 187,758. In failure-to-make progress cases, the

burden of showing that non-performance was excusable shifts to the contractor only after the

Government proves that its termination decision was reasonable in light of the circumstances

existing prior to termination. Eagle Peak, 69 F.4th at 1375.

II.

The Record Shows Timely Completion of the Contract Feasible

We examined Eagle Peak’s schedules, its progress through the first shutdown date,

and its planned manpower increases for the following year. Based upon that evidence, we

are satisfied that Eagle Peak could have met the contract completion date.

A.

The Schedules

The company’s schedules, particularly revision 5 (dated October 13, 2016) and the

recovery schedules (dated January 25, 2017), along with the accompanying narratives

CBCA 7832(5692)-REM

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describing in detail the resources that Eagle Peak planned to dedicate to the project, were

evidence that Eagle Peak was ready, willing, and capable of performing the project work in

the two remaining seasons of the contract. The function of the work schedule is “to show

that the contractor was ready, willing and able to make progress.” Discount Co. v. United

States, 554 F.2d 435, 441 (Ct. Cl. 1977). The “underlying intent and value” of the CPM

schedule allows for the evaluation of contract progress:

[T]he [CPM schedule] is an efficient way of organizing and scheduling a

complex project which consists of numerous interrelated separate small

projects. Each subproject is identified and classified as to the duration and

precedence of the work. . . . The data is then analyzed, usually by computer,

to determine the most efficient schedule for the entire project. Many

subprojects may be performed at any time within a given period without any

effect on the completion of the entire project. However, some items of work

are given no leeway and must be performed on schedule; otherwise, the entire

project will be delayed. These latter items of work are on the “critical path.”

A delay, or acceleration, of work along the critical path will affect the entire

project.

SAE/Americon-Mid Atlantic, Inc., GSBCA 12294, et al., 98-2 BCA ¶ 30,084, at 148,915

(quoting Haney v. United States, 676 F.2d 584, 595 (Ct. Cl. 1982)). The CPM schedule has

also been described as follows:

A contractor’s initial network analysis is not cast in bronze; it is constantly

changing; that is the advantage of the critical path method of scheduling

construction. The impact of each change, or delay, on the previously charted

sequences must be fitted into the network. The effect may be far-reaching.

Activities which were not critical prior to the new event may be rendered

critical; and conversely, formerly critical activities may develop float.

Whether the change or delay affects the critical path must be determined on

the basis of conditions existing immediately prior to its occurrence; not on how

it might have changed what someone planned (or should have planned) months

or years previously.

Norair Engineering Corp., ENGBCA 3804, et al., 90-1 BCA ¶ 22,327, at 112,205 (1989).

Eagle Peak’s schedules, although not perfect, provided the necessary details to show

(arguably beyond contract requirements) that it understood the required work and had a plan

to finish the project in the two remaining construction seasons. Further, in its narratives

accompanying the submitted schedules, Eagle Peak provided specific details on the resources

and plans it would use to complete the project by the contract deadline. Finally, FHWA did

CBCA 7832(5692)-REM

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not take issue with Eagle Peak’s ability to finish the work at Inspiration Point by the

mandatory interim completion date of November 15, 2017.

We examined the revision 5 schedule submitted on October 13, 2017, and the

recovery schedule submitted on January 26, 2017. We accept Mr. Nolting’s testimony that

the revision 5 schedule was a proper schedule, with minimal errors, which FWHA should

have accepted as the baseline schedule. Similarly, we find that Eagle Peak’s recovery

schedule was a proper schedule update that should have been accepted by FWHA. With

regard to the 180-day settlement period for the MSE walls, both revision 5 and the recovery

schedules showed that Eagle Peak planned to comply with this requirement. Here, consistent

with Lisbon, we find that Eagle Peak’s “failure to give all the requested details on [its]

revised schedule[s] was not in itself evidence of failure to make progress on the [Yellowstone

project] which would justify” a default termination. Lisbon, 828 F.2d at 767.

Eagle Peak’s schedule submissions and the facts of this appeal stand in stark contrast

to situations described in the cases upon which FHWA relies. In Discount Co. v. United

States, the Court of Claims found that, “weeks after [an] order to resume work had [been]

issued and a day after [a] 10-day cure notice had expired . . . [the contractor] had neither

begun more-than-piddling construction activities at the [project site], nor assured the

Government that it could meet the completion deadline.” 554 F.2d at 439. The court added

that the record showed that the default termination was not based on the contractor’s failure

to comply with the CO’s demand to provide a work schedule per se but “rather on the

over-all evidence of [the contractor’s] failure to prosecute diligently its work under the

contract.” Id. at 441. The Court noted that “[the contractor’s] failure to furnish such a

schedule . . . bolster[ed] the Government’s position that it was justifiably insecure about the

contract’s timely completion.” Id.

FHWA also relies upon the Board’s decision in Affiliated Western, Inc. v. Department

of Veterans Affairs, CBCA 4078, 17-1 BCA ¶ 36,808. In that case, the Board confirmed the

termination decision upon finding that the contractor: (1) failed to produce the updated and

detailed schedules required by contract specifications; (2) provided no information on how

it planned to obtain subcontractor services necessary for completion of certain project phases,

with only about two months remaining on a one-year contract; and (3) failed to demonstrate

that it was capable of paying and keeping its subcontractors. Id. at 179,402. In

1-A Construction & Fire, the Board found that the contractor had “plainly acknowledged its

inability to complete the contract by its deadline” through both its schedules (one described

as providing “very little detail” and a second described as providing “slightly more detail”)

and its extension requests. 1-A Construction & Fire, LLP v. Department of Agriculture,

CBCA 2693, 15-1 BCA ¶ 35,913, at 175,554-55. In contrast, we find that Eagle Peak’s

schedules comported with the contract schedule requirements and showed how Eagle Peak

would meet the required completion date.

CBCA 7832(5692)-REM

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In its post-hearing reply brief, FHWA asserts that Eagle Peak’s failure to comply with

the schedule requirements for the contract, as required by FAR 52.236-15, provides a

separate basis upon which to uphold the termination. FAR 52.236-15(c) (failure to comply

with the schedule requirements of the contracting officer are “grounds for a determination

by the Contracting Officer that the Contractor is not prosecuting the work with sufficient

diligence to ensure completion within the time specified in the contract.”). Based on the

facts and analysis as discussed, we find that Eagle Peak’s schedules comported with the

contract’s schedule requirements. Eagle Peak’s schedules showed how Eagle Peak proposed

to perform the work under the contract, and the dates for starting and completing the “salient

features of the work (including acquiring materials, plant, and equipment)[,]” as required by

the contract. Exhibit 1 at 000149. Thus, termination was not warranted on this basis.

B.

The Percentage of Work Completed by Eagle Peak

The evidence shows that Eagle Peak made sufficient progress on the project such that

the likelihood of timely completion of the project with two full construction seasons

remaining was not impaired. We are persuaded by Mr. Nolting’s quantitative assessment

that Eagle Peak had performed just over a quarter of the work of the contract during the first

construction season and, notably, that a significant portion of the contract value was on the

“back end,” reflecting activities not planned during the first year. Based on this persuasive

assessment, we cannot conclude that Eagle Peak’s progress during the first season was so

deficient as to impair timely completion of the project. See Fraya, S.E., ASBCA 52222, 02-2

BCA ¶ 31,975, at 157,949 (termination for failure to make progress upheld upon finding, in

part, that contractor had completed none of the work within the initial 40% of the contract

period.).

C.

Eagle Peak Planned Manpower Increases

We also find persuasive, and give significant weight to, the evidence showing Eagle

Peak’s plans to increase its manpower for the 2017 construction season. Contrary to the

CO’s determination that Eagle Peak failed to provide sufficient detail, we find that Eagle

Peak described concrete plans to increase staffing to accelerate its production during that

season. See, e.g., SAE/Americon-Mid Atlantic, Inc., 98-2 BCA at 149,917-19 (finding that

the contractor would be able to timely complete the contract with the addition of resources).

D.

Agency’s Schedules

We also find that the agency’s analysis based on the “schedule rebuilds” was flawed

because those schedules did not consider the project as a whole to determine an overall

completion date. Under the “schedule rebuilds,” the work was divided into the Grand Loop

Road, Inspiration Point, the Brink of the Upper Falls/Uncle Tom’s Point. FHWA, in doing

CBCA 7832(5692)-REM

30

three schedules instead of one, did not follow its own guidance or the parties’ contract when

creating these construction schedules. The agency did, however, satisfy itself that Eagle

Peak would be able to meet the interim completion date for Inspiration Point.

Additionally, the record also reflects that, prior to terminating Eagle Peak’s contract

for default, the agency internally identified, but failed to resolve, a significant number of

pending issues that could have impacted the critical path and completion dates, which, in

turn, could have extended the period of performance. For example, in creating the “schedule

rebuilds,” the project engineer identified several potential modifications to the contract, some

of which were described as items that might affect the critical path. Moreover, as the agency

acknowledged, Eagle Peak identified several outstanding design items prior to termination.

The design error with regard to the elevation of Inspiration Point, in particular, could have

delayed the project.

III.

Proper Interpretation of SCR 108.01(j) Supports a Finding of Timely Completion

A significant driver of the agency’s determination that Eagle Peak would complete

the schedule sixty-seven days late was the agency’s requirement that all work be completed

at one site before Eagle Peak began working at another site. We find this requirement to be

an incorrect interpretation of the contract requirement for “substantial completion.” Pursuant

to the terms of the contract, Eagle Peak could not schedule the work so that both sites would

be closed at the same time. Instead, Eagle Peak had to make sure one site was available for

public use before starting construction at the second site:

Brink of the Upper Falls site (Base and Option W) and Uncle Tom’s Point site

(Options X, Y, and/or Z) cannot be closed simultaneously. Substantially

complete Brink of the Upper Falls site work or Uncle Tom’s Point site work

to the point of being acceptable for public use, and approved by the CO, prior

to initiating construction activities at the remaining site.

Exhibit 1 at 000218. Keeping in mind that contract interpretation begins with the plain

language of the agreement, McAbee Construction, Inc. v. United States, 97 F.3d 1431, 1435

(Fed.Cir.1996), we reject the agency’s proffered interpretation that the requirement is that

all work be complete at one site before beginning work at a second site. The agency’s

interpretation reads out the word “substantial,” thereby violating a cardinal rule of contract

interpretation that all words must be given meaning. Gould, Inc. v. United States, 935 F.2d

1271, 1274 (Fed. Cir. 1991) (providing meaning to all parts of the contract is preferred over

one that leaves a portion of the contract useless, inexplicable, or void.). FHWA relies upon

the contract definition of “substantial completion” found in the agency’s FP-14, Standard

Specifications for Construction of Roads and Bridges on Federal Highway Projects: “The

point at which the project is complete such that it can be safely and effectively used by the

CBCA 7832(5692)-REM

31

public without further delays, disruption, or other impediments.” Exhibit 2 at 000570.

Contrary to FHWA’s view, this definition does not require that the work be complete at one

site before work can begin at another, only that the site be available for safe use by the

public.

Instead, we find that the constraint is properly interpreted to preclude the simultaneous

closure of the parking lots at the two sites but to permit limited overlapping work. If the

parking lot is open, the public can still use the site, but Eagle Peak is permitted to begin some

limited work upon substantially completing the other site. Further, this interpretation is

consistent with how FHWA’s design consultant saw work at the two sites proceeding. Eagle

Peak’s recovery schedule showed that it did not intend to work on the parking lots

simultaneously. With the correct understanding of this schedule constraint, Eagle Peak’s

schedules showed on-time completion.

IV.

Converting Termination for Default to One for Convenience

We find, based on the evidence, that the CO’s stated reasons for the termination for

default were “predicated on contract-related issues.” Eagle Peak, 69 F.4th at 1377.

However, considering the evidence in its totality, we also find that the CO’s decision to

terminate was not reasonable in light of the events occurring before termination. See Darwin

Construction Co. v. United States, 811 F.2d 593, 596 (Fed. Cir. 1987) (“[T]he default article

of the contract does not require the Government to terminate on a finding of default, but

merely gives the procuring agency the discretion to do so, and that discretion must be

reasonably exercised.”); ACM Construction and Marine Group, Inc. v. Department of

Transportation, CBCA 2245, et al., 14-1 BCA ¶ 35,537, at 174,150 (“[W]hen all of the

relevant facts and circumstances are considered, the overall decision to terminate the contract

for default must have been a reasonable exercise of discretion.”). Specifically, we find it was

not reasonable for FHWA to determine that there was no reasonable likelihood of timely

completion of the project at issue in this appeal. See Eagle Peak, 69 F.4th at 1375 (“[T]he

substantive contract standard, in its endangerment-of-timely-completion component, doubly

considers what is ‘reasonable’–whether it was ‘reasonable’ to find that there was no

‘reasonable likelihood’ of timely completion.”).

First, Eagle Peak’s schedules showed that it understood the required work and had a

plan to finish the project in the two remaining construction seasons. Second, in its narratives

accompanying the submitted schedules, Eagle Peak provided specific details on the resources

and plans it would use to complete the project by the contract deadline. Third, the evidence

shows that Eagle Peak made progress on the project at the Mainline such that the likelihood

of timely completion of the project with two full construction seasons remaining was not

impaired. See McDonnell Douglas Corp., 323 F.3d at 1016 (“Although the contracting

officer’s testimony and contemporaneous documents are relevant to [a default]

CBCA 7832(5692)-REM

32

determination, . . . the trial court may also consider other factors usually relied upon by

courts and contract boards, such as a comparison of the percentage of work completed and

the amount of time remaining under the contract[.]”). FHWA also did not take issue with

Eagle Peak’s ability to finish Inspiration Point by the mandatory interim completion date of

November 15, 2017. Finally, we are persuaded by Mr. Nolting’s quantitative assessment of

the work that Eagle Peak had performed in the first season. By contrast, we find the

agency’s proffered evidence based on the schedule rebuilds and its interpretation of SCR

108.01(j), as it relates to the work at the Brink of the Upper Falls and Uncle Tom’s Point

sites, unpersuasive. Further, the agency’s failure to resolve a significant number of pending

issues (with potential critical path and completion date impacts) prior to termination

undermines the credibility and integrity of the agency’s arguments on termination.

For reasons set forth above, the termination for default is converted to a termination

for the convenience of the Government. John Reiner & Co. v. United States, 325 F.2d 438,

442-45 (Ct. Cl. 1963).

Decision

The appeal is GRANTED.

Beverly M. Russell

BEVERLY M. RUSSELL

Board Judge

We concur:

H. Chuck Kullberg

H. CHUCK KULLBERG

Board Judge

Marian E. Sullivan

MARIAN E. SULLIVAN

Board Judge