# DENIED: September 25, 2007

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## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

DENIED: September 25, 2007

CBCA 54, 84

BAY SHIPBUILDING COMPANY,
Appellant,
v.
DEPARTMENT OF HOMELAND SECURITY,
Respondent.

Daniel J. Borowski, Litigation Counsel, Bay Shipbuilding Co., Manitowoc, WI,
counsel for Appellant.
Isaac Johnson, Jr., Office of Procurement Law, United States Coast Guard,
Department of Homeland Security, Washington, DC, counsel for Respondent.
Before Board Judges STERN, FENNESSY, and SOMERS.
SOMERS, Board Judge.
Bay Shipbuilding Co. (BSC) appeals the denial of two claims by the contracting
officer for the United States Coast Guard, Department of Homeland Security (USCG or
Coast Guard). In CBCA 84, BSC asserts that the Government is not entitled to damages of
$17,275.36 arising from BSC’s alleged breach of the contract. In CBCA 54, BSC seeks
$23,125 for costs incurred when it encountered excessive underwater hull paint during the
course of contract performance.
The parties have elected to submit the case for resolution on the written record without
a hearing. The written record includes the appeal files, the pleadings, and the submission by

CBCA 54, 84

2

both parties of multiple briefs with supporting affidavits, declarations, and documentary
evidence.
I.

CBCA 84: Repair or Replacement of Heat Exchanger Gasket Kits
Findings of Fact

On August 5, 2005, the Coast Guard awarded a fixed price contract to BSC for dry
dock repairs of the USCG Cutter (USCGC) Hollyhock. The contract required BSC to
perform routine maintenance on the cutter and to repair items as appropriate. The contract
expressly stated that the contractor must “furnish all necessary labor, material, services,
equipment, supplies, power, accessories, facilities, and such other things and services as are
necessary, except as otherwise specified to perform dry dock repairs and alterations to the
vessel.” Appeal File, CBCA 84, Exhibit 4 at 2. Among other things, the contract required
BSC to clean, inspect, repair, and reassemble heat exchanger gasket kits for the main diesel
engine jacket water heat exchangers (MDE heat exchangers). Specifically, the contract
stated as follows:
3.4 Cleaning requirements. The Contractor shall clean all
interior and exterior heat transfer surfaces to a state free of all
debris, scale and surface contaminants in accordance with the
heat exchanger manufacturer’s recommendations, and in
compliance with all federal, state and local environmental
regulations.
....
3.6 Reassembly. After all authorized repairs, the Contractor
shall reassemble each heat exchanger. Renew all software
(seals, gaskets, O-rings) and isolation fittings/mounts in
accordance with the manufacturer’s specifications. Renew
fasteners, hoses, thermostats and anodes as applicable. Apply
silicone rubber sealant conforming to CID A-A-59588 around
all fasteners, nozzles or gaskets that penetrate the hull.
Id., Exhibit 5 at 23.
Paragraph 3.1 of the General Requirements section of the contract required the
contractor to “conform to all requirements specified in Std Spec 0000_STD [the Coast Guard
Maintenance and Logistics Command Atlantic (MLCA) Standard Specification 0000_STD,

CBCA 54, 84

3

2004 Edition].” Appeal File, CBCA 84, Exhibit 5 at 2. The paragraph emphasized in bold
type the following:
NOTICE!
The requirements of paragraph 3.1 (General) applies to all work
under the scope of this contract, whether explicitly stated in
work items or not, and also to all other work subsequently
authorized by changes, modifications, or extensions to the
contract.
Id. at 2-3.
Standard Specification 0000_STD listed and defined various terms used in the work
items. Appeal File, CBCA 84, Exhibit 6C at 28. The word “renew” is defined as follows:
Permanently remove an item and install, in its place, a new and
unused item which is identical in material, form, fit, and
function; the new item must:
•

Have the same shape, size, dimensions, and other
physical parameters.

•

Have the same ability as the old item, to physically
interface or interconnect with or become an integral part
of another item.

•

Perform the same action or actions that the original item
was designed to perform.

Id. at 30.
Todd Thayse, the Director of Contract Services for BSC, prepared BSC’s bid for this
work item, which included 560 hours in labor and $31,000 in materials for a total bid of
$60,000. This amount did not include the cost of replacing the MDE heat exchanger gaskets.
Appellant’s Submission, Declaration of Todd Thayse (May 18, 2006) ¶ 46.
The contract required BSC to provide a technical representative authorized by the
manufacturer of the MDE heat exchanger system, Alfa Laval, to provide advice about the
manufacturer’s proprietary information pertinent to the system, to ensure compliance with

CBCA 54, 84

4

the manufacturer’s procedures and standards during disassembly, inspection, and reassembly,
and to assist with the proper cleaning, inspecting, and testing of the heat exchanger. Appeal
File, CBCA 84, Exhibit 5 at 24. As the contract required, BSC provided Corey O’Conner,
who was the manufacturer’s field technical representative. Mr. O’Conner inspected the
gaskets in the MDE heat exchangers and opined that the gaskets could be reused. Thayse
Declaration ¶¶ 49, 50.
Relying upon Mr. O’Conner’s statement that the gaskets could be reused, BSC
advised the Coast Guard in a condition found report (CFR) dated October 11, 2005, that the
manufacturer’s technical representative had visually inspected the heat exchanger. BSC
informed the Coast Guard of Mr. O’Conner’s recommendation that BSC clean the plates by
hand and then reassemble them by using existing materials unless the materials were
damaged. BSC stated that it would submit a second CFR if it determined that replacing the
gaskets would be necessary. Appeal File, CBCA 84, Exhibit 8C. BSC suggested that if it
determined that the gaskets would need to be replaced, it would seek to obtain new gaskets
from the Government. Id. BSC’s suggestion ignored the fact that the gaskets do not appear
on the list of government furnished equipment identified in the contract. Id., Exhibit 5 at x­
xiii.
Chief Warrant Officer (CWO) Derrick Johnson responded to the CFR by telling BSC
that paragraph 3.6 of the contract required BSC to renew, i.e., replace the existing materials.
CWO Johnson noted that paragraph 5.1.23 on page 30 of the standard specifications defined
the term “renew” as to “permanently remove an item and install, in its place, a new and
unused item which is identical in material, form, fit and function.” Appeal File, CBCA 84,
Exhibit 10, Declaration of Kathryn Stark, Contracting Officer (May 1, 2006) ¶ 15.
Accordingly, CWO Johnson rejected BSC’s contention that the contract permitted reuse of
the materials under any conditions. Id.
Over the course of the next two days, the contracting officer exchanged email
messages with BSC’s contract administrator about the dispute. Appeal File, CBCA 84,
Exhibit 10 at ¶¶ 16, 17, 19. BSC and the Coast Guard tried to resolve the issue during a
conference call on October 10. Id. at ¶ 20. The Government stated that paragraph 3.6
required the contractor to renew all software. Id. The contractor responded that it was
following the manufacturer’s recommendations for gasket replacement and that the
manufacturer did not recommend replacing them. Id. After the telephone conference, BSC
stopped work on the item. On that same day, BSC’s contract administrator, Julie Koch, sent
an e-mail message to the contracting officer, stating:
Bay Shipbuilding understands the Coast Guard’s interpretation
of para 3.6 as to the renewal of software, however, we feel that

CBCA 54, 84

5
we are in following [sic] with the manufacturer’s
recommendations for gasket replacement as stated in para. 3.7.
Work has stopped on this job and we cannot move forward until
this matter is settled.

Id., Exhibit 8K. The contracting officer disagreed with BSC’s characterization, responding
that “[w]ork has stopped on this work item because you refuse to comply with the contractual
requirements to replace the gaskets.” Id., Exhibit 8L.
Mr. Thayse wrote in an e-mail message dated October 13, 2005, that “as stated many
times in the last few days the work has stopped because your crew has refused to allow BSC
to proceed with the work items. . . .” Appeal File, CBCA 84, Exhibit 8M. The Coast Guard
responded by letter dated October 13, 2005, which stated in pertinent part:
Bay Shipbuilding has refused to complete Work item 3 . . . .
Specifically, Bay Shipbuilding has refused to purchase the
gaskets needed to complete the work item in accordance with
the specification.
....
Bay Shipbuilding must proceed with the performance of this
contract pending final resolution of any dispute arising under it.
Bay Shipbuilding otherwise will be liable for default of this
contract. Any delay in completion of this work item is the
responsibility of Bay Shipbuilding. The Coast Guard will
purchase the gaskets specified to be replaced in work item 3 in
order to ensure that this work item is completed in accordance
with the specification. However, the Coast Guard also reserves
the right to deduct the cost of the gaskets from the total contract
price as a requirement of your contract as awarded.
Id., Exhibit 8N. The Coast Guard purchased the gaskets for a cost of $17,275.26. Id.,
Exhibit 8O.
On October 13, 2005, Jack Dafgek, Alfa Laval’s Technical Support Manager, sent
BSC a letter in which he reiterated Mr. O’Conner’s opinion that the gaskets could be reused.
Appellant’s Submission at 21; Appellant’s Initial Position Statement, Exhibit P. BSC
provided a copy of the letter to the Coast Guard. Thayes Declaration ¶ 53.

CBCA 54, 84

6

On October 13, 2005, CWO Johnson issued a contract deficiency report for BSC’s
failure to have timely ordered the proper gaskets for the main diesel engine coolers. Appeal
File, CBCA 84, Exhibit 8E. In the portion of the form entitled “Contractor’s Response,” Ms.
Koch contended that BSC would have ordered the replacement gaskets if necessary. Id. On
October 14, 2005, BSC installed the gaskets for the MDE heat exchangers under the direction
of the Alfa Laval technical representative. Id. at ¶ 55.
By final decision dated October 28, 2005, the contracting officer stated:
Concerning work item 3 Clean, Inspect and Test Heat
Exchangers, by Contract Deficiency Report 003 dated October
13, 2005, Bay Shipbuilding refused to perform the work item as
written that specifically required at paragraph 3.6 to “renew all
software (seals, gaskets, O-rings). . .” By definition RENEW
means “. . . Permanently remove an item and install, in its place,
a new and unused item which is identical in material, form, fit
and function . . .” This definition is located in MLCA STD
000_STD 2004 Edition, General Requirements. Your refusal to
perform places your company in breach of the contract. The US
Coast Guard purchased the necessary gaskets at a cost of
$17,275.36. This cost is being taken from your funds otherwise
due your company under this contract.
Appeal File, CBCA 84, Exhibit 8P. BSC appealed the final decision by letter dated
November 9, 2005. Id., Exhibit 3.
Discussion
The question presented in this appeal is whether the Coast Guard has established that
it is entitled to damages of $17,275.36 for BSC’s alleged breach of contract. As a matter of
law, the Coast Guard bears the burden of proof for its claim. Whitesell-Green, Inc., ASBCA
53938, et al., 06-2 BCA ¶ 33,323 at 165,257 (citing Southwest Welding & Manufacturing Co.
v. United States, 413 F.2d 1167, 1176 n.7 (Ct. Cl. 1969); Insulation Specialities, Inc.,
ASBCA 52090, 03-2 BCA ¶ 32,361, at 160,100-01). As the Government is claiming that it
is entitled to collect damages from appellant, it must prove that it is entitled to assess
damages in the amount claimed. Id. This means that the Government must prove each
element by a preponderance of the evidence. Id. (citing 9 Wigmore, Evidence § 2485
(Chadbourn rev. 1981)).

CBCA 54, 84

7

The Coast Guard states that the contract expressly required BSC to “renew all
software (seals, gaskets, O-rings) and isolation fittings in accordance with the manufacturer’s
specifications.” The contract defined “renew” as to “permanently remove an item and install,
in its place a new and unused item which is identical in material, form, fit and function.”
Accordingly, the Coast Guard contends that the only option presented by the contract
required BSC to replace all software, including the gaskets.
BSC challenges the Government’s claim, contending that the contract did not require
the gaskets to be replaced except in accordance with the manufacturer’s specifications. BSC
states that it intended to replace the gaskets if advised to do so by the technical representative
from Alfa Laval. In that event, BSC intended to submit a CFR for the cost of replacing the
gaskets. BSC asserts that the technical representative permitted re-use of the existing
gaskets, and, accordingly, BSC was not required to replace the gaskets.
This dispute requires contract interpretation. The Board will interpret a contract in
such a way as to give words their plain and ordinary meaning. Id. at 747-48 (citing Moran
v. Prather, 90 U.S. 492, 499 (1874); Forman v. United States, 329 F.3d 837, 842 (Fed. Cir.
2003); McAbee Construction, Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996);
Elden v. United States, 617 F.2d 254, 260-61 (Ct. Cl. 1980)). A contract must be “interpreted
so as to harmonize and give meaning to all its provisions, and [thus] an interpretation which
gives a reasonable meaning to all parts is preferred to one which leaves a portion of it
useless, inexplicable, inoperative, void, insignificant, meaningless, superfluous, or achieves
a weird and whimsical result.” Arizona v. United States, 575 F2d 855, 863 (Ct. Cl. 1978);
see also, e.g., Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991); United
States v. Johnson Controls, Inc., 713 F.2d 1541, 1555 (Fed. Cir. 1983).
Here, the contract required BSC to “renew all software (seals, gaskets, O-rings) and
isolation fittings/mounts in accordance with the manufacturer’s specification.” “Renew” is
defined by the contract to mean to “permanently remove an item and install, in its place a
new and unused item which is identical in material, form, fit and function. . . .” The
definition of “renew” did not include anything that could be interpreted as permitting an item
to be “reused.” Thus, the plain language of the contract called for the contractor to
permanently remove all software and install, in its place, new and unused items identical to
those items replaced.
BSC’s argument that it could reuse the gaskets ignores the plain meaning of the
contract definition of “renew.” Consistent with the definition contained in the contract,
“renew” means to replace the item, not to repair or reuse. Thus, the only reasonable
interpretation is that the contract required BSC to replace the gaskets. The contract refers
to the manufacturer’s specifications for the purpose of requiring the contractor to follow the

CBCA 54, 84

8

manufacturer’s procedures and standards for reassembly. This interpretation is consistent
with the contract requirement that the contractor obtain the services of a technical
representative who is authorized to “assist with the proper cleaning, inspecting, and testing
of the heat exchanger, inspection and reassembly of the system.” Even if the manufacturer’s
technical representative concluded that the gasket could be reused, that conclusion does not
supercede the contractual requirement to replace, i.e., to renew, the gaskets.
In any event, even if the contractor disputed the Government’s interpretation of the
contract requirements, both the Contract Disputes Act (CDA) and the Disputes clause 1 of the
Federal Acquisition Regulation (FAR) provide that pending a final decision of an appeal,
action, or final settlement, a contractor shall proceed diligently with performance of the
contract in accordance with the contracting officer’s decision. 41 U.S.C. § 605(b) (2000);
48 CFR 52.233-1 (2004). In this case, we find that because the contract did require BSC to
replace the gaskets and BSC failed to purchase the gaskets necessary to fulfill the contract
requirements, the Government is entitled to be reimbursed for costs arising from BSC’s
failure to act. The Government has presented uncontroverted evidence that it purchased the
new gaskets for a total cost of $17,275.36. Therefore, we find that the Government is
entitled to be reimbursed for the cost of the gaskets, i.e., $17,275.36.
II.

CBCA 54: Hull Paint Thickness Claim
Findings of Fact

In 2002, the Coast Guard contracted with Marinette Marine Corporation (MMC) in
Marinette, Wisconsin, to build the USCG Hollyhock. Lt. Loring A. Small, a Coast Guard
engineer assigned to the Coast Guard Project Resident Office at MMC, conducted
inspections during ship construction and assisted the contracting officer with basic contract
administration. During the construction of the Hollyhock, Lt. Small observed that the paint
thickness on the underwater body exceeded the paint thickness recommended by the
construction contract and by the paint manufacturer’s application guidelines. Appeal File,
CBCA 54, Exhibit 27 at 3.
During a subsequent inspection of the underwater hull prior to delivery of the
Hollyhock to the Coast Guard, a diver’s inspection revealed that paint had fallen off,

1

Although the contract documents do not appear to contain a Disputes clause,
the clause is incorporated as a matter of law into the contract pursuant to the Christian
doctrine. See G.L. Christian & Associates v. United States, 312 F.2d 418, 426 (Ct. Cl. 1963).

CBCA 54, 84

9

exposing bare steel in places. Accordingly, MMC subcontracted with BSC to correct the
defective paint.2 Appeal File, CBCA 54, Exhibit 27 at 3.
BSC blasted the hull to remove all loose paint and then repainted the hull. BSC’s
paint foreman, Jack Schmidt, supervised the paint operation. The Coast Guard accepted
delivery of the Hollyhock on October 24, 2004. Appeal File, CBCA 54, Exhibit 25 at 5.
On June 9, 2005, in response to the Government’s solicitation of bids for drydock
repairs of the USCGC Hollyhock, BSC submitted a bid of $53,800 for Work Item 2. Appeal
File, CBCA 54, Exhibit 26 at 2. Work Item 2 of the contract required BSC to remove and
reapply the underwater body hull paint system of the USCGC Hollyhock. BSC’s bid
included the cost of sandblasting paint from the underwater body hull. Appellant’s
Submission, Declaration of Todd Thayse (November 10, 2006) ¶ 17. However, the contract
did not provide BSC with any information about the thickness of the paint to be removed, nor
did BSC inquire about it. Id. at ¶ 20.
On August 3, 2005, the contracting officer sent an e-mail message to BSC,
questioning the amount of BSC’s bid for Work Item 2 because the bid was substantially
lower than the Government’s estimate. BSC responded to the contracting officer’s inquiry
at 12:38 p.m. on that same day, August 3, and asked to review the Government’s estimates.
Appeal File, CBCA 54, Exhibit 4. By e-mail message sent at 1:57 p.m., the contracting
officer agreed to check on the item. Id., Exhibit 5. The contracting officer contacted BSC
by e-mail message at 3:51 p.m and told BSC that she had not yet received the information
for the government estimate. Ms. Koch responded by e-mail message at 4:02 p.m., stating:

Kathy, Underwater body detail – if you get it, fine, but let’s keep
the ball moving. We are ready to stand by the pricing submitted.
Id., Exhibit 6; Position Paper of Bay Shipbuilding Company in Support of its Claim for the
Cost of Removing Excess Paint From the Underwater Body Hull of the Hollyhock
(Appellant’s Position Paper), Exhibit B, Declaration of Julie Koch (November 9, 2006) ¶ 12.
The contracting officer did not provide BSC with any additional information about the
government’s estimate for Work Item 2.

2

The Manitowoc Company, Inc., owns both MMC and BSC. See Thayse
Declaration ¶ 8.

CBCA 54, 84

10

The contract included a provision entitled Site Visit (APR 1984), 48 CFR 52.237-1,
which stated:
Offerors or quoters are urged and expected to inspect the site
where services are to be performed and to satisfy themselves
regarding all general and local conditions that may affect the
cost of contract performance, to the extent that the information
is reasonably obtainable. In no event shall failure to inspect the
site constitute grounds for a claim after contract award.
Appeal File, CBCA 54, Exhibit 5 at 11. There is no evidence that BSC took the opportunity
to perform a site visit,3 request access to the ship, review the paint logs included in the
documents of the hull history, or ask about the thickness of the underwater body paint prior
to submitting its bid. Id., Exhibit 25, Declaration of Vanessa A. Nemara (November 27,
2006) ¶ 19; Exhibit 26, Declaration of Kathryn E. Stark (December 4, 2006) ¶ 6.
Once BSC confirmed its bid on Work Item 2, the Coast Guard awarded the contract
on August 9, 2005. On September 7, 2005, BSC reported to the Coast Guard that BSC had
discovered higher than standard coating on the underwater hull of the vessel. Appeal File,
CBCA 54, Exhibit 10; Thayse Declaration ¶ 30, Exhibit F. BSC noted that “especially high
readings” were found in the sea chests (boxes inside the hull that take cooling water) and
thruster tunnels (tunnels which help maneuver the vessel in port), which were part of the
underwater body hull. Thayse Declaration ¶ 30, Exhibit F. BSC sought additional
compensation for the cost of removing the excess paint.
CWO Johnson denied BSC’s request for additional compensation on September 7,
2005. Thayse Declaration ¶ 31, Exhibit G. CWO Johnson stated:
Bay Ship [Building] Company has been the only contractor to do
any Underwater Body Paint repair on the Hollyhock. If the
paint system has been applied not IAW [sic] they had some part
in the process. For this work item BSC had more information
than any other bidder, due to there [sic] past work. . . . Thruster
tunnels and sea chests were not part of the paint repair in Oct 03.
This area may need to be addressed.

3

BSC argues that it was not reasonable for the contractor to incur the costs of
traveling to the site for a site investigation, nor would a site investigation have necessarily
revealed the thickness of the paint on the underwater hull.

CBCA 54, 84

11

Appeal File, CBCA 54, Exhibit 11; Thayse Declaration ¶ 31, Exhibit G. CWO Johnson told
BSC to prepare another CFR about the excess paint on the sea chests and thruster tunnels.
Thayse Declaration ¶ 32, Exhibit H. Upon receipt, the Coast Guard approved an equitable
adjustment of $4801 for the additional costs of removing the paint millage from the sea
chests and thruster tunnels. Thayse Declaration ¶ 33, Exhibits H-J.
On December 7, 2005, BSC submitted a formal request for an equitable adjustment
for $23,125, the costs incurred in removing the excess paint from the remainder of the
underwater body hull. Appeal File, CBCA 54, Exhibit 34; Koch Declaration ¶ 30, Exhibit
J. The contracting officer denied the request by decision dated January 30, 2006, asserting
that BSC had superior knowledge of the thickness of the underwater hull paint based upon
the fact that BSC had applied the paint in question during construction of the USCGC
Hollyhock. Appeal File, CBCA 54, Exhibit 35; Koch Declaration ¶ 33, Exhibit K. The
contracting officer stated:
It is the Contracting Officer’s determination that the U.S. Coast
Guard is not responsible for compensating Bay Shipbuilding for
the removal of the underwater body hull paint beyond what was
paid as part of this contract. You can not [sic] create the
situation under one contract [the construction contract] and
obtain additional compensation under another for a situation that
you alone created.
Appeal File, CBCA 54, Exhibit 35. BSC appealed the contracting officer’s decision.
Discussion
BSC contends that it encountered difficulties in removing the paint from the
underwater body hull because the existing coat exceeded the amount of paint that BSC had
anticipated when it bid the project. BSC argues that the Government possessed superior
knowledge about the condition of the hull based upon the fact that the Government initially
questioned BSC’s estimate as being too low. BSC states that the extra costs involved in
removing excessive paint accounted for the difference between BSC’s estimate and the
Government’s. BSC argues that it had no reason to suspect that the underwater hull had
excessive paint and, therefore, did not account for the excessive thickness when it prepared
its bid. BSC claims that it incurred actual additional labor and material costs of $23,125 to
remove the additional millage from the underwater body hull.
BSC can establish entitlement to an equitable adjustment only if it can prove that the
Government had misrepresented the amount of paint present on the underwater hull or

CBCA 54, 84

12

possessed superior knowledge about the paint thickness. See Walker Boat Yard, Inc.,
DOTBCA 4133, 03-2 BCA ¶ 32,397, at 160,324 (citing United States v. Spearin, 248 U.S.
132, 136 (1918); Marine Industries Northwest, Inc., ASBCA 51942, 01-1 BCA ¶ 31,201,
at 154,043. As there is no evidence suggesting that the Government misrepresented the
condition of the hull, BSC’s argument must focus upon its contention that the Government
possessed superior knowledge about the underwater hull.
BSC has the burden of establishing that the Government possessed superior knowledge
about the condition of the underwater hull paint. AT&T Communications, Inc. v. Perry, 296
F.3d 1307, 1312 (Fed. Cir. 2002); Hercules, Inc. v. United States, 24 F.3d 188, 196 (Fed. Cir.
1994). The superior knowledge doctrine imposes an implied affirmative duty upon a
contracting agency “to disclose to a contractor otherwise unavailable information regarding
some novel matter affecting the contract that is vital to its performance.” Giesler v. United
States, 232 F.3d 864, 876 (Fed. Cir. 2000). When analyzing a claim that the Government
breached its duty to disclose superior knowledge, the Board “must focus its inquiry on the
government’s knowledge at the time of contracting and its relationship to the contractor’s lack
of knowledge.” L.W. Matteson, Inc. v. United States, 61 Fed. Cl. 296, 316 (2004); accord
Max Jordan Bauunternehmung v. United States, 10 Cl. Ct. 672, 679 (1986) (“The
government’s liability for failure to provide information arises from a conscious omission to
share superior knowledge it possesses in circumstances where it permits a contractor to pursue
a course of action known to be defective.”). Appellant has not met this burden because it has
failed to establish that the Government possessed knowledge that the contractor did not.
BSC presents declarations from various witnesses to show that the Coast Guard knew,
but failed to disclose to BSC, that the paint on the hull was excessively thick. On this point,
the Government does not dispute the fact that it knew about the condition of the paint when
it accepted the ship in 2004. Rather, although the Government does not necessarily agree that
the paint on the hull was excessively thick, the Government has submitted uncontroverted
Declarations showing that the contractor had the same information as did the Government
about the condition of the hull based upon the fact that BSC had been hired as the painting
subcontractor in 2003 and painted the hull. Specifically, Lt. Small stated that he worked at
the Coast Guard Project Resident Office at Marinette Marine Corporation (MMC) in
Marinette, Wisconsin, from July 2002 until May 2004, as the contracting officer’s technical
representative. During that time period, Lt. Small conducted inspections during the
construction of the USCGC Hollyhock and discovered the application of excessive paint on
the underwater hull. He reported this to the prime contractor, MMC, which subcontracted
with BSC to repaint the hull. The same BSC personnel, specifically BSC paint foreman Jack
Schmidt and BSC’s Julie Koch, worked on BSC’s subcontract to repaint the underwater hull
in 2003 and on the current contract.

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13

We conclude that appellant has failed to meet its burden of proving by a preponderance
of the evidence that the Government withheld superior knowledge. Both parties knew about
the thickness of the paint applied during the construction of the ship. Appellant has presented
no evidence to establish that the data available to each had changed based upon a subsequent
paint job or any other circumstance known only to the Government.
Moreover, the fact that the Government asked BSC to review its bid for the paint work
because it was substantially lower than the Government’s estimate should have put BSC on
notice that the its bid should be reexamined. However, when the Government did not respond
to BSC’s request for information regarding the Government’s estimate as quickly as BSC
wanted, BSC elected to confirm its bid without further investigation. This may have been
poor judgment by BSC, but it is not a ground for recovery. In any event, as stated above, BSC
knew or should have known the same information as the Government concerning the
underwater hull.
In addition to its argument that the Government possessed superior knowledge about
the condition of the paint, BSC contends that the Government’s arguments on appeal must be
rejected because they are different from the facts and conclusions set forth in the contracting
officer’s final decision quoted above. Appellant’s Reply Brief at 4 (“[T]he appeal should be
decided solely on the grounds set forth in the Contracting Officer’s final decision.”). BSC is
incorrect on this point. “[W]here an appeal is taken to a board or court, the contracting
officer’s award” of time or money “is not to be treated as if it were the unappealed
determination of a lower tribunal which is owed special deference or acceptance on appeal.”
Assurance Co. v. United States, 813 F.2d 1202, 1206 (Fed. Cir. 1987). Because the findings
of fact in the contracting officer’s final decision are not binding on the parties, the contractor
bears the burden of proving by preponderant evidence “the fundamental facts of liability and
damages de novo.” Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994)(en banc).
Further, “a contractor is not entitled to the benefit of any presumption arising from the
contracting officer’s decision. De novo review precludes reliance upon the presumed
correctness of the [prior] decision.” Id. (citing Renegotiation Board v. Bannercraft Clothing
Co., 415 U.S. 1, 23 (1974)). Therefore, the Board is not bound by the contracting officer’s
final decision in reaching its findings on appeal.
Decision
These appeals are DENIED. The Government’s claim for $17,275.36 in CBCA 84 is
granted. BSC’s claim for $23,125 in CBCA 54 is denied.
__________________________
JERI KAYLENE SOMERS
Board Judge

CBCA 54, 84

14

We concur:

____________________________
JAMES L. STERN
Board Judge

_______________________________
EILEEN P. FENNESSY
Board Judge

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Acbca%3Afb93cfafec15c47a. Public record. Not legal advice.