Free Reply to Response to Motion - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

__________________________________________ BLUE LAKE FOREST PRODUCTS, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) )

No. 01-570C (Judge Williams)

__________________________________________ TIMBER PRODUCTS COMPANY, Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) )

No. 01-627C (Judge Williams)

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CLR TIMBER HOLDINGS, INC., Plaintiff, v. THE UNITED STATES, Defendant.

) ) ) ) ) ) ) ) ) ) )

No. 04-501C (Judge Williams)

PLAINTIFFS' REPLY IN SUPPORT OF PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT

Gary G. Stevens SALTMAN & STEVENS, P.C. 1801 K Street, N.W. Suite M-110 Washington, D.C. 20006 (202) 452-2140 Counsel for Plaintiffs OF COUNSEL: Ruth G. Tiger Eric J. Pohlner SALTMAN & STEVENS, P.C. 1801 K Street, N.W. Suite M-110 Washington, D.C. 20006 (202) 452-2140 Dated: June 27, 2008

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TABLE OF CONTENTS PAGE Table of Authorities ....................................................................................................................... iii I. The Court Should Grant Plaintiffs' Motion For Partial Summary Judgment On Liability .........................................................................................................1 A. Contract Clause C(T)6.01 Does Not Exculpate The FS From Liability Where Conduct Within Its Control Caused The Issuance Of The Court Order That Resulted In The FS's Suspensions of Performance On Plaintiffs' Contracts.............................................2 The FS Assumed The Risk Of Liability For The Suspensions Of Performance It Caused........................................................................................5 The Spearin Doctrine Applies To FS Timber Contracts........................................10 1. Plaintiffs' Timber Sale Contracts Contain Design Specifications Regarding How Ground-Disturbing Operations Are To Be Accomplished ........................................................15 a. Examples Of Some Of The Design Specifications In FS Timber Sale Contracts ..................................16 FS Timber Sale Contractors Do Not Have Discretion To Disregard FS Design Specifications .......................19 Even If Plaintiffs Had Some Limited Discretion Under The Contracts, This Would Not Be Dispositive Of The Issue Of Whether The FS Breached Its Implied Warranty Of Specifications .........................23

B.

C.

b.

c.

2.

The FS Breached Its Implied Warranty Of Specifications Because It Did Not Know Whether Its Specifications Could Be Successfully Carried Out As Written (And Whether It Could Permit Performance Based On Those Specifications)............................................................................................24

D.

The FS's Suspensions Breached The Contracts Because The FS Failed To Disclose The Vital Information That The Sales Were On ONRC Action's Secret "At-Risk" Lists And Were Specifically Threatened By The ONRC Action Litigation........................................................28 i

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E.

Summary Judgment On Liability For Plaintiffs On The Issue Of Whether The FS Breached Its Duties To Cooperate And Not To Hinder Is Appropriate ............................................................................................35 1. In Scott Timber, The Federal Circuit Did Not Rule That Whether The FS Caused A Timber Sale Suspension Is Always Inappropriate For Summary Judgment On Liability ....................36 The Uncontroverted Facts Establish That The FS Caused The Suspension Of Plaintiffs' Contracts Because It Awarded Those Contracts And Authorized Ground-Disturbing Activities Without First Conducting The Required Surveys .....................39 Defendant Has Not Controverted The Basic Facts Which Establish That The FS's Interpretation "NEPA Decision Equals Implementation" And Its Red Tree Vole Directive Were Arbitrary, Capricious And Unreasonable And That The FS Should Have Performed The Required Surveys Before Awarding Plaintiffs' Contracts And GroundDisturbing Activities Were Authorized .....................................................51 There Are No Genuine Issues Of Material Fact Precluding A Finding By This Court That The FS's Red Tree Vole Directive Was In Direct Conflict With The Plain Language Of The NFP ROD And That The FS's Proceeding On The Basis Of It Wrongfully Caused The Suspension Of Performance On Plaintiffs' Contracts ...............................57

2.

3.

4.

F.

The Fact That The FS's Suspension Of Performance On Plaintiffs' Contracts Was Caused By Its Pre-Award Actions And Inactions Does Not Absolve The FS Of Liability .................................................................61 The Contracts Were Not Void Ab Initio................................................................63 Timber Products' Alternative Claim For Compensation Under Contract Clause C6.01 Is Properly Before This Court And Timber Products Is Entitled to Partial Summary Judgment On The Issue Of The FS's Liability To It For Additional Operating Costs Incurred As A Direct Result Of The FS's Suspension Of The Jack Heli Timber Sale............................................................................................66

G. H.

II.

The Court Should Deny Defendant's Motion For Summary Judgment ............................68

CONCLUSION..............................................................................................................................69 ii

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TABLE OF AUTHORITIES CASES PAGE

Al Johnson Constr. Co. v. United States, 854 F.2d 467 (Fed. Cir. 1988)............................................................................................11 American Telephone & Telegraph v. United States, 177 F.3d 1368 (Fed. Cir. 1999)....................................................................................65, 66 Beauchamp Constr. Co., Inc. v. United States, 14 Cl. Ct. 430 (1988) .........................................................................................................27 Blake Constr. Co., Inc. v. United States, 987 F.2d 743 (Fed. Cir. 1993)......................................................................................15, 23 Bloedel Donovan Lumber Mills v. United States, 74 F. Supp. 470 (Ct. Cl. 1947)...........................................................................................14 Blue Lake Forest Products, Inc. v. United States, 75 Fed. Cl. 779 (2007) .......................................................................................................37 Castle Constr. Co., ASBCA No. 28509, 84-1 BCA ¶ 17,045 (1984) ...............................................................26 Cedar Lumber, Inc. v. United States, 5 Cl. Ct. 539 (1984) .......................................................................................................3, 32 Chaney and James Constr. Co. v. United States, 421 F.2d 728 (Ct. Cl. 1970) .........................................................................................25, 27 C.J. Betters Corp. v. United States, 25 Cl. Ct. 674 (1992) ...................................................................................................3, 4, 5 David Nassif Assocs. v. United States, 644 F.2d 4 (Ct. Cl. 1981) ...................................................................................................62 Dep't of Natural Resources and Conservation of Montana v. United States, 1 Cl. Ct. 727 (1983) .............................................................................................................3 Everett Plywood Corp. v. United States, 651 F.3d 723 (Ct. Cl. 1981) .................................................................................5, 6, 13, 25

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George A. Fuller Co. v. United States, 69 F. Supp. 409 (Ct. Cl. 1947).............................................................................................2 Helene Curtis Industries, Inc. v. United States, 312 F.2d 774 (Ct. Cl. 1963) .........................................................................................31, 61 Hercules, Inc. v. United States, 516 U.S. 417 (1996).....................................................................................................12, 13 H.N. Wood Products, Inc. v. United States, 59 Fed. Cl. 479 (2003) .................................................................................................38, 63 Huber, Hunt & Nichols, Inc., GSBCA No. Gs-09B-C-7004-SF, 75-2 BCA ¶ 11,457 (1975)..........................................26 J.A. Jones Const. Co. v. United States, 390 F.2d 886 (Ct. Cl. 1968) ...................................................................................31, 33, 61 James Stewart & Co. v. United States, 105 Ct. Cl. 284 (1946) .........................................................................................................3 J. L. Simmons Co., Inc. v. United States, 412 F.2d 1360 (Ct. Cl. 1969) .............................................................................................15 John Reiner and Co. v. United States, 325 F.2d 438 (Ct. Cl. 1963) ...............................................................................................64 Laburnum Constr. Co. v. United States, 325 F.2d 451 (Ct. Cl. 1963) ...............................................................................................27 Lowenschuss v. Kane, 520 F.2d 255 (2nd Cir. 1975)................................................................................................4 Luria Bros. & Co., Inc. v. United States, 369 F.2d 710 (Ct. Cl. 1966) ...............................................................................................27 New Valley Corp. v. United States, 119 F.3d 1576 (Fed. Cir. 1997)............................................................................................3 North Murphy Timber Sale, 146 IBLA 305, 1998 WL 951006 (Nov. 20, 1998) ...............................................51, 52, 54 Oregon Natural Resources Council Action v. United States Forest Service, 59 F. Supp. 2d 1085 (W.D. Wash. 1999)................................................................... passim iv

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Ozark Dam Constructors v. United States, 127 F. Supp. 187 (Ct. Cl. 1955)...........................................................................................5 Precision Pine & Timber Co., Inc. v. United States, 50 Fed. Cl. 34 (2001) ................................................................................................. passim Precision Pine & Timber Co., Inc. v. United States, 81 Fed. Cl. 235 (2007) .......................................................................................................68 R.E.D.M. Corp. v. United States, 428 F.2d 1304 (Ct. Cl. 1970) .............................................................................................15 Rick's Mushroom Service, Inc. v. United States, 521 F.3d 1338 (Fed. Cir. 2008)....................................................................................11, 12 Roseburg Lumber Co. v. Madigan, 978 F.2d 660 (Fed. Cir. 1992)............................................................................................32 Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003).................................................................................. passim Seaboard Lumber Co. v. United States, 903 F.2d 1560 (Fed. Cir. 1990)........................................................................................5, 6 Seaboard Lumber Co. v. United States, 48 Fed. Cl. 814 (2001) .........................................................................................................6 Seaboard Lumber Co. v. United States, 41 Fed. Cl. 401 (1998) .........................................................................................................7 Sergent Mechanical Systems, Inc. v. United States, 34 Fed. Cl. 505 (1995) .................................................................................................25, 27 Southwest Forest Industries, AGBCA No. 79-178-3, 81-1 BCA ¶ 14,877 (1981) ....................................................13, 14 Superior Timber Co., Inc., IBCA No. 3459, 97-1 BCA ¶ 28,736 (1996) ...............................................................24, 37 TECOM, Inc. v. United States, 66 Fed. Cl. 736 (2005) .......................................................................................................38 Trilon Education Corp. v. United States, 578 F.2d 1356 (Ct. Cl. 1979) .......................................................................................64, 65 v

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Trinity River Lumber Co. v. United States, 66 Fed. Cl. 98 (2005) ...................................................................................................38, 63 Webco Lumber, Inc. v. United States, 677 F.2d 860 (Ct. Cl. 1982) ...............................................................................................32

STATUTES AND REGULATIONS 16 U.S.C. § 472a(a)........................................................................................................................16 16 U.S.C. § 475..............................................................................................................................15 16 U.S.C. § 528..............................................................................................................................16 16 U.S.C. § 1600 et seq.......................................................................................................... passim 42 U.S.C. § 4321 et seq..........................................................................................26, 59, 60, 61, 64

MISCELLANEOUS J. Cibinic, R. Nash, J. Nagle, ADMINISTRATION OF GOVERNMENT CONTRACTS (4th ed. 1995) ...............................................................................................................15, 27 Forest Service Manual § 2403.5 (eff. 8/8/96, amend 96-4) ....................................................................................16

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I.

The Court Should Grant Plaintiffs' Motion For Partial Summary Judgment On Liability Contrary to defendant's assertions, the key question in this case is not whether clause

C(T)6.01 gives the Forest Service ("FS") suspension authority. Rather, the question before the Court is whether clause C(T)6.01 limits the FS's liability in the circumstances of this particular case. Precision Pine & Timber Co., Inc. v. United States, 50 Fed. Cl. 35 (2001), Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003), and all of the subsequent relevant authority that address the question of FS liability for its suspension of performance on timber sales recognize that this is the appropriate inquiry and uniformly conclude that the limitation of liability contained in clause C(T)6.01 can be defeated in appropriate circumstances. The uncontroverted facts of this case present the requisite appropriate circumstances for the Court to conclude that clause C(T)6.01 does not limit the FS's liability for its suspension of performance on the Happy Thin, Jack Heli and Too Wild timber sale contracts.

The uncontroverted facts of this case demonstrate that the FS's actions and inactions caused the suspension of operations on the sales and breached plaintiffs' contracts because (1) there was no open legal question regarding the Northwest Forest Plan (`NFP") requirement for Category 2 surveys for ground-disturbing activities that would take place after October 1, 1998 (2) the FS proceeded to award the contracts without having performed the Category 2 surveys and (3) the court in Oregon Natural Resources Council Action v. United States Forest Service ("ONRC Action"), 59 F. Supp. 2d 1085 (W.D. Wash. 1999), enjoined the FS from allowing contract performance.

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Plaintiffs have demonstrated entitlement to partial summary judgment as a matter of law under each of its theories of liability individually and under all of the theories collectively. Defendant has not pointed to any genuine issues of material fact that would preclude the Court from granting plaintiffs' motion. The Court should grant plaintiffs' motion for partial summary judgment on liability.

A.

Contract Clause C(T)6.01 Does Not Exculpate The FS From Liability Where Conduct Within Its Control Caused The Issuance Of The Court Order That Resulted In The FS's Suspensions Of Performance On Plaintiffs' Contracts

Defendant does not acknowledge, much less discuss, the governing authority in this Circuit cited by plaintiffs which establishes that the government cannot escape contractual liability where conduct within its control has caused delay to contract performance and there is no clause in the contract that clearly and expressly exculpates it from liability for such delaycausing conduct. E.g., George A. Fuller Co. v. United States, 69 F. Supp. 409, 412 (Ct. Cl. 1947) ("it has never been doubted that the Government is liable for delays caused by it, in the absence of a clause in the contract expressly exempting it from liability therefor"); Plaintiffs' Memorandum in Support of Plaintiffs' Motion for Summary Judgment [hereinafter "Pl. Br."] at 21-22.

The Court need not find that the FS's conduct was unreasonable in order to conclude that the language of clause C(T)6.01 fails to exculpate the government for delay caused by conduct within its control. Precision Pine, 50 Fed. Cl. at 58 ("If the [FS] sought to exculpate itself from delays or misrepresentations caused by conduct within the Government's own control, there

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would need to be a clear expression of that intent in [clause C(T)6.01]. . . . However, nowhere in [clause C(T)6.01] is such language to be found"). See C.J. Betters Corp. v. United States, 25 Cl. Ct. 674, 677 (1992) ("the efficacy of a limitation of liability clause does not extend to those situations where the breach arises out of events within the Government's control"); Cedar Lumber, Inc. v. United States, 5 Cl. Ct. 539, 552 (1984) (citing Dep't of Natural Resources and Conservation of Montana v. United States, 1 Cl. Ct. 727, 734 (1983)) ("When the government intends to disclaim liability for breach of contract, it must employ clear and express language to effectuate its intent"); see also Precision Pine, 50 Fed. Cl. at 66 ("exculpatory provisions are also construed `narrowly and strictly'") (citing New Valley Corp. v. United States, 119 F.3d 1576, 1584 (Fed. Cir. 1997)).1 "Barring an exculpatory clause which clearly and expressly states otherwise, this Circuit has consistently held that delays caused by the government breach of duty not to hinder the contracts." Precision Pine, 50 Fed. Cl. at 59 (citing James Stewart & Co. v. United States, 105 Ct. Cl. 284, 328 (1946)).

Contrary to defendant's contention, plaintiffs do not assert that Precision Pine held that clause C(T)6.01 is generally "invalid" as a limited liability clause. See Defendant's Opposition to Plaintiffs' Cross-Motion for Summary Judgment [hereinafter "Def. Opp."] at 34-35. Indeed, plaintiffs' previous briefs discussed several examples of situations where clause C(T)6.01 functions as a limited liability clause. Pl. Br. at 21 n.5; Plaintiffs' Opposition to Defendant's Motion for Summary Judgment [hereinafter "Pl. Opp."] at 4-5. Thus, clause C(T)6.01 is not rendered void or meaningless by interpreting it as inapplicable to limit the FS's liability where conduct within the government's control caused the court order to issue which required the FS to suspend the contracts or render the clause "nugatory." See Def. Opp. at 16. Precision Pine expressly rejected this argument. 50 Fed. Cl. at 61. Similarly, in Scott Timber and the subsequent timber sale suspension cases before this Court and the Department of Agriculture Board of Contract Appeals ("AGBCA"), this argument was rejected at least implicitly when the matters were remanded for trial. Moreover, even if ruling that the loss limitation language of C(T)6.01 was ineffective where FS fault caused the suspension of plaintiffs' contracts would render C(T)6.01 nugatory, that is the correct result under established law. The FS assumes the risk of any failure to draft an effective exculpatory clause. 3

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The FS did not employ "clear and express language" in clause C(T)6.01 to exempt itself from liability for conduct within its own control that breaches the contract by rendering the FS unable to meet its fundamental contractual obligation to make the timber available for plaintiffs to harvest. The failure of the FS to comply with the clear Category 2 survey requirements of the NFP before awarding the contracts to plaintiffs caused the FS to have to suspend performance on plaintiffs' contracts after award so that it could conduct the surveys (before allowing grounddisturbing activity). Clause C(T)6.01 does not exculpate the FS from liability for causing an injunction which in turn necessitated the FS's suspension of contract performance.

The conclusion that the FS should be held liable in the circumstances of this case is not a novel proposition of law. It is entirely consistent with the cases that have held that while issuance of a court order prohibiting performance of a contract generally excuses performance on the grounds of impossibility, that precept is inapplicable where, as here, the actions of one of the parties was the basis for the injunction. See, e.g., Lowenschuss v. Kane, 520 F.2d 255, 265 (2nd Cir. 1975).

Although it fails to even acknowledge most of the case law on exculpatory clauses relied on by plaintiffs, defendant does seek to distinguish C.J. Betters by suggesting that the case is limited to situations where there is a breach of an express warranty. Def. Opp. at 34. Defendant ignores the Precision Pine Court's cogent analysis and application of the well-established rule in the Federal Circuit that is articulated in C.J. Betters. See 50 Fed. Cl. at 59 ("the efficacy of a limitation on liability clause does not extend to those situations where the breach, whether total

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or partial, arises out of events within the Government's control"); see also Ozark Dam Constructors v. United States, 127 F. Supp. 187, 191 (Ct. Cl. 1955) ("the nonliability provision in the contract, when fairly interpreted in the light of public policy, and of the rational intention of the parties, did not provide for immunity from liability" when the government was almost willfully negligent in failing to make deliveries of cement on time; government knew that railroad strike was probable but took no steps to arrange for alternative transportation until after strike had begun). Defendant also ignores the fact that Ozark Dam, a decision rendered by this Court's appellate authority that was relied on in C.J. Betters, did not involve an express warranty. The Court should reject the narrow reading of C.J. Betters urged by defendant and should conclude that under the law of this Circuit clause C(T)6.01 does not exculpate the FS from delays caused by conduct within the government's own control.

B.

The FS Assumed The Risk Of Liability For The Suspensions Of Performance It Caused

Instead of responding to plaintiffs' contention that the FS assumed the risk of liability because it did not include a provision in the contracts clearly and explicitly exculpating itself of such liability, defendant makes irrelevant attacks on plaintiffs' reliance on Court of Claims precedent holding that FS timber sale contracts are contracts of adhesion, Everett Plywood Corp. v. United States, 651 F.3d 723, 730 (Ct. Cl. 1981), without even citing or attempting to distinguish that binding case law. See Def. Opp. at 32, 35.2 Apparently, defendant's only

Defendant cites Seaboard Lumber Co. v. United States, 903 F.2d 1560, 1565-66 (Fed. Cir. 1990), for the proposition that "[c]ontracts offered on a take-it-or-leave-it basis are not automatically adhesion contracts." Def. Opp. at 35. Seaboard argued that its waiver of the right to have the government establish its breach claim in an Article III court before a jury was not 5

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response to plaintiffs' argument that the FS assumed the risk of liability for any of its own acts or failures to act that precluded it from performing is that timber sale contracts are not contracts of adhesion because "the timber industry" provided input to the agency in the development of both the standard form FS timber sale contract and various contract clauses.

In support of its apparent effort to convince the Court that the contracts are not take-it-orleave-it contracts of adhesion, defendant presents a litany of allegations that the amorphous "timber industry" "assisted in drafting these timber sale contracts." Def. Opp. at 35 (heading); id. (industry played an "integral role . . . in drafting these timber sale contracts, including C6.01"). Without citing Everett Plywood, defendant apparently asks the Court to make a finding inconsistent with that precedent on the grounds that "the timber industry" had the opportunity to and did provide input to the FS in the government's development of its standard timber sale contract clauses. Despite any input provided by the "timber industry," FS timber sale contracts are take-it-or-leave-it contracts of adhesion drafted by the government. E.g., Everett Plywood, 651 F.2d at 730 ("bidders had to accept the contract terms the government wrote into the invitation [for bids], only the price being open for the bidder to specify"); Seaboard Lumber Co. v. United States, 48 Fed. Cl. 814, 816 (2001) ("Interested parties are invited to bid based on the information provided in the prospectus and the bidder's own examination of the site. The terms voluntary because government contracts are inherently adhesion contracts. The Federal Circuit rejected Seaboard's argument: "The bare fact that the contracts in question are `take it or leave it' offers by the government is not controlling on the dispute resolution provisions' validity, as we read the precedent." 903 F.2d at 1564. Seaboard Lumber did not reject or even discuss the proposition that a FS timber sale contract should be construed narrowly against the government as the drafter of the contract. Seaboard Lumber held only that the contractual waiver of a trial before an Article III court was fully enforceable, notwithstanding that timber sale contracts are "take-it-or-leave-it" contracts. 6

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laid out in the prospectus are not open to negotiations"); Seaboard Lumber Co. v. United States, 41 Fed. Cl. 401, 408 (1998) ("contract terms laid out in the prospectus and those in the final contract are not open to negotiation"); Precision Pine, 50 Fed. Cl. at 66. Of course, the contracts at issue in this case are between Blue Lake, Timber Products, and CLR and the FS. The "timber industry" is not a party to any of the contracts. Nor has defendant proffered evidence that any of the plaintiffs authorized the "timber industry" to negotiate with the FS on their behalf or that plaintiffs were members of any timber industry association(s) that even provided input to the FS when it was drafting the standard form contract.

For purposes of plaintiffs' motion for partial summary judgment, plaintiffs assume that all of defendant's factual allegations regarding the participation of "the timber industry" in the development of the FS's standard form contracts are true. However, taking those allegations as true does not lead to the conclusion that contract clause C(T)6.01 somehow exculpates the FS from liability. As discussed above, exculpatory language is read narrowly and must be clear in order for the government to avoid liability for conduct within its control that causes the suspension of performance of a contract. This is true regardless of whether "the timber industry" was allowed to provide input to the FS regarding clause C(T)6.01. Even assuming that the contracts are not contracts of adhesion as argued by defendant, contract clause C(T)6.01 does not meet the standard in this Circuit for a clause that limits the FS's liability for causing suspension of contract performance.3

Defendant's effort to recast plaintiffs' argument as a contra proferentem argument misses the mark. Ambiguity and contra proferentem are not at issue in this case. Clause C(T)6.01 does not exculpate the FS from liability for conduct within its control that caused the 7

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In any event, defendant's factual allegations regarding the participation by "the timber industry" in the development of the FS's standard timber sale contract clauses before the contracts in this case were awarded4 demonstrate at most that "the timber industry" submitted comments on the FS timber sale contract forms and clauses and changes the FS proposed to make to those forms and clauses but the FS retained complete discretion as to whether to accept or reject any of the input provided by industry. See, e.g., Appendix to Defendant's Addendum to Proposed Findings of Uncontroverted Fact [hereinafter "Def. App."] 164 (Fitzgerald Decl. ¶ 7 (FS meets with the timber industry and seeks comment concerning revisions to the standard form timber sale contract); ¶¶ 8-9 (FS sought input from industry; industry provided numerous comments on clause C(T)6.01 which FS had drafted)); Def. App. 165 (Fitzgerald Decl. ¶ 11 (industry commented on early version of clause C(T)6.01 which FS had drafted)); 166-67 (Fitzgerald Decl. ¶ 14 (FS accepted comments from industry on revisions to contract drafted by FS and made "appropriate" changes)); Def. App. 186-190 (FS does not agree with most of industry proposals for changes to timber sale contract); Def. App. 191-194 (FS considers industry proposals but decides which it will accept or reject); Def. App. 212 (FS disregards industry wants and needs when developing contract provisions).

suspensions of performance of plaintiffs' contracts because the clause does not explicitly say so, as is required by the law. The Court should ignore defendant's allegations regarding any input provided by "the timber industry" which occurred after the contracts at issue in this case were prepared and awarded. Defendant's Proposed Findings of Uncontroverted Fact [hereinafter "DPFUF"] ¶¶ 42, 47, 48. These allegations have no possible relevance to the issues in this case regarding contracts that were awarded in July 1999 at the latest, the terms of which were drafted some time before then, and suspended beginning in August 1999. 8
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Defendant's arguments also fail to refute the undeniable fact that, like any other government contract for which bids are sought on a formally advertised basis, the FS timber sale contracts at issue in this case were offered for sale and awarded to the plaintiffs on a "take-it-orleave-it" basis. For all of its focus on the "timber industry," defendant has put forth not one piece of evidence that demonstrates that plaintiffs had the ability to negotiate the addition, deletion or modification of any term in their standard form contracts. The FS advertised the sales and specified the terms on which it would entertain bids and plaintiffs had no opportunity to negotiate or affect any term of the resulting contracts other than the price. That "the timber industry" provided comments to the FS on the standard form timber sale contract and on particular clauses, similar to the manner in which the procurement community provides comment and input to the FAR Council regarding standard form procurement contracts and particular clauses, does not somehow transform a standard form government contract from one drafted by the government to one "negotiated" by both contracting parties.

There is a clear difference between contracts in the private sector where a potential contractor can negotiate about almost anything and a contract based on a government issued invitation for bids like the FS timber sale contract, in which the government specifies in detail how the work is to be accomplished.5 To the extent relevant, the FS timber sale contract is much closer to the latter, i.e., the FS specifies what is to be done and generally the means by which it is

The FS decides unilaterally what contract form to use and what B(T) and C(T) clauses to include in individual timber sale contracts. The FS also decides unilaterally whether and when to use clauses in its contracts that deviate from the norm. FS timber sale contracts are not negotiated contracts. 9

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to be accomplished and the contractor bids a price to do the work, in this case to pay for the timber. That "the timber industry" like other industries exercises its rights to comment on proposed contract language, meets with agency representatives, and argues for changes to the language proposed by the government for use in standard form advertised government contracts does not somehow transform the contracts into negotiated contracts or eliminate precedential rulings of this Court's appellate authority regarding the take-it-or-leave-it nature of FS timber sale contracts. The Court should reject defendant's apparent effort to deflect the focus in this case from the well-established authority of this Court and its appellate authority regarding the requirement for clear exculpatory language in government contracts in general, and timber sale contracts in particular, where the government seeks to exculpate itself from liability for its own conduct which in turn necessitates its suspension of contract performance.

C.

The Spearin Doctrine Applies To FS Timber Contracts

Defendant argues that the Spearin doctrine "only applies to cases involving construction contracts or contracts for the procurement, by the government, of goods and services." Def. Opp. at 39. The authorities cited by defendant do not support this contention. To the contrary, the case law demonstrates that the Spearin doctrine applies to all government contracts including FS timber sale contracts. The FS's failure to ensure that its design specifications had been prepared in full conformity with its obligations under the NFP when it awarded the contracts to plaintiffs resulted directly in the breach of plaintiffs' contracts when the FS had to suspend performance on the contracts in order to conduct the required surveys.

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The Spearin doctrine applies to any contract where the government furnishes the contractor with design specifications. Defendant cites a number of cases in which the Spearin doctrine has been applied by the courts to contracts for the procurement of goods and services by the government, in addition to its well-established application to construction contracts. See Def. Opp. at 39-40. From these cases, defendant somehow leaps to the erroneous conclusion that the doctrine applies only in the context of construction or procurement. None of the cases on which defendant relies establish that the doctrine is so limited.6

In particular, defendant cites Rick's Mushroom Service, Inc. v. United States, 521 F.3d 1338 (Fed. Cir. 2008), for the proposition that the Spearin doctrine "applies only to cases involving construction contracts or contracts for the procurement, by the government, of goods and services." Def. Opp. at 39. Rick's Mushroom involved a cooperative, cost-sharing agreement in which the government provided specifications for the handling of organic waste created as a by-product of mushroom farming. Neighboring landowners brought suit against Rick's in federal district court, alleging that the improper handling of the waste on Rick's property had resulted in run-off and nitrogen pollution of neighboring lands and waters. The district court ruled that Rick's had violated the Clean Water Act and county environmental requirements and enjoined Rick's operations. Rick's took remedial actions to mitigate the runoff and settled the environmental suit brought by the neighboring landowners for $950,000. 521 F.3d at 1341. Thereafter, Rick's filed a Contract Disputes Act ("CDA") claim against the
6

The Spearin doctrine is not limited to construction contracts. E.g., Al Johnson Constr. Co. v. United States, 854 F.2d 467, 568 (Fed. Cir. 1988) ("the Spearin doctrine is much alive today, and we have recently had occasion to extend and apply it in a case other than a construction contract dispute"). 11

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government alleging, among other things, breach of contract due to defective specifications and a claim for equitable indemnification based on an implied-in-fact warranty arising under the Spearin doctrine. Id. at 1342.

The trial court and the Federal Circuit on appeal dismissed both of these claims on jurisdictional grounds, never reaching the merits of the claims. Id. at 1342, 1343-44. The Federal Circuit ruled that there was no jurisdiction over Rick's breach of contract claim because the cost-sharing agreement between Rick's and the government was not subject to the CDA and did not contain any money-mandating provisions necessary to establish Tucker Act jurisdiction.7 Id. at 1343-44. Additionally, the Federal Circuit concluded that both it and the trial court lacked jurisdiction over Rick's Spearin warranty claim because that claim suffered from the same jurisdictional defects as Rick's general breach of contract claim. Id. at 1344. The Federal Circuit also noted that Supreme Court precedent foreclosed Rick's Spearin claim for indemnification because a Spearin warranty "does not extend as far as third-party claims." Id. at 1345 (citing Hercules, Inc. v. United States, 516 U.S. 417, 424-25 (1996)). The court, however, did expressly recognize that the Spearin doctrine could apply outside the procurement contract context. 521 F.3d at 1345.

Although government specifications are often supplied (and litigated) in the context of procurement contracts, many of which involve construction, this does not mean that the Spearin
7

The court explained that there was no jurisdiction because "the agreement did not provide for transfer of goods or services, there was no evidence of a buyer-seller relationship, and the government did not receive a direct benefit from the operation of [Rick's] facility." 521 F.3d at 1344. 12

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doctrine is inapplicable in other contractual settings where the government has provided specifications in its contracts. As the Supreme Court has held: "When the Government provides specifications directing how a contract is to be performed, the Government warrants that the contractor will be able to perform the contract satisfactorily if it follows the specifications." Hercules, 516 U.S. at 425. Thus, the key issue for the application of Spearin is the existence of government specifications in a contract, not the nature of the contract under consideration. In this regard, as demonstrated in plaintiffs' opening brief, tribunals have consistently recognized that detailed specifications cover all aspects of FS timber sale contract operations. See Pl. Br. at 26-27.

In addition to the above, defendant ignores the fact that several cases have applied the logic and reasoning of Spearin in the context of FS timber sale contracts. In Everett Plywood, the court observed that the FS had designed the logging roads and concluded that it had therefore assumed the risk that construction of the roads in conformity with the specifications would cause environmental damages. 651 F.2d at 731. In Southwest Forest Industries, AGBCA No. 79-1783, 81-1 BCA ¶ 14,877 (1981), the AGBCA found that a Spearin-type warranty analysis applied to FS timber sale road specifications. The specifications required the contractor to use a "grid rolling" methodology to remove rock from a designated pit. The contractor believed that this specification was defective and the FS permitted the contractor to use crushed rock in lieu of grid-rolled rock, which was a more expensive manner of performance, but declined to agree to a design change to increase the rock cost as requested by the contractor. In examining the question, the Board used a Spearin analysis and stated: "Where the Government dictates a

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particular method of contractor performance, it implies the method will produce satisfactory results." Id. at 73,568. The Board, however, was not persuaded that the grid-rolling method would produce unsatisfactory results and concluded that the contractor had not proved that the specification was defective.

That the logic and reasoning of Spearin applies to the design specifications included in FS timber sale contracts in the same manner that it applies to the design specifications included in all government contracts can be seen in other cases. See Bloedel Donovan Lumber Mills v. United States, 74 F. Supp. 470 (Ct. Cl. 1947) (timber sale contract gave FS the right to specify the time and manner for burning slash (logging debris); FS liable because compliance by contractor with specified time and manner dictated by the FS resulted in wildfire that destroyed logs and equipment of contractor); Precision Pine, 50 Fed. Cl. at 67 ("The Defendant's contention that its interpretation of the contract should prevail because courts generally uphold the autonomous rights of parties to contract rings hollow in the face of precedent in which the Government is liable for cases where a contractor cannot perform according to governmentdrafted specifications because the specifications themselves are defective").

The Spearin doctrine simply does not apply only within the context of construction and procurement contracts.

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1.

Plaintiffs' Timber Sale Contracts Contain Design Specifications Regarding How Ground-Disturbing Operations Are To Be Accomplished

Defendant contends that the FS's timber sale contracts contain only performance specifications, not design specifications and therefore that the Spearin doctrine does not apply. Def. Opp. at 41. The distinction between "design specifications" and "performance specifications" can be stated succinctly: "Performance specifications detail the performance characteristics of the end product and are distinguished from design specifications, which dictate contractor performance." J. Cibinic, R. Nash, J. Nagle, ADMINISTRATION OF GOVERNMENT CONTRACTS at 285 (4th ed. 1995); accord Blake Constr. Co., Inc. v. United States, 987 F.2d 743, 745 (Fed. Cir. 1993) (performance specifications "set forth an objective or standard to be achieved, and the successful bidder is expected to exercise his ingenuity in achieving that objective or standard of performance, selecting the means and assuming a corresponding responsibility for that selection") (quoting J. L. Simmons Co., Inc. v. United States, 412 F.2d 1360, 1363 (Ct. Cl. 1969)); R.E.D.M. Corp. v. United States, 428 F.2d 1304, 1310 (Ct. Cl. 1970) (performance specifications are found where a "contractor is simply told to achieve a given result and essentially left to his own devises as to how to do so") (citation omitted).

A FS timber sale contract is part of a statutorily mandated program developed over more than a century to improve timber stand productivity across the National Forest System, manage fire, conserve fish and wildlife habitat, develop a road system (with its attendant increase in access to the forest for recreational purposes), regulate water flows and improve many other resources. See Organic Administration Act, 16 U.S.C. § 475; Multiple-Use Sustained-Yield Act,

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16 U.S.C. § 528; National Forest Management Act ("NFMA"), 16 U.S.C. § 1600 et seq.; 16 U.S.C. § 472a(a); 36 C.F.R. § 223.1; Plaintiffs' Appendix [hereinafter "Pl. App."] Tab 19 (FS Manual ("FSM") § 2403.5 (eff. 8/8/96, amend 96-4)). Indeed, the FS's contracts at issue in this case, which are approximately 100 pages each, specify in detail precisely how and when the standing timber is to be accessed, felled (i.e., cut) and removed from federal lands. See generally Pl. App. Tabs 93, 111, 124.

a.

Examples Of Some Of The Design Specifications In FS Timber Sale Contracts

The contracts include detailed design specifications governing the ground-disturbing activities which the contracts authorize. For example, in standard "B" clauses located at B(T)6.1 through B(T)6.9 in each of the contracts, the FS dictates many fundamental aspects of when and how the contractor must conduct its harvesting operations. This includes specifying the equipment that can be used to fell timber, Pl. App. Tabs 93 at A-643, 111 at A-833, 124 at A1021 (B(T)6.41); the manner in which the fallen timber is "bucked" or cut to size, id.; the height of the stumps remaining after the timber has been felled, id. (B(T)6.412); the methods of skidding and yarding the felled timber to the landing and the equipment that may be used for skidding and yarding, id. (B(T)6.42); and the size and location of landings, id. (B(T)6.422).

Corresponding "C" clauses (C(T)6.0 - C(T)6.84) contain even more detailed requirements with which harvesting and other operations under the contract must comply. E.g., Pl. App. Tab 111 at A-875 (C(T)6.315# - "Sale Operation Schedule") (specifying additional restrictions on the timing of certain contract operations and the equipment that can be used); Pl. 16

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App. Tab 111 at A-879 to 80 (CT6.41# - "Special Felling Objectives") (specifying, unit-by-unit, the methods and equipment the contractor can use when felling timber; FS approval required for any deviation from the methods and equipment specified); see also Pl. App. Tab 111 at A-880 to 81 (CT6.42# - Special Yarding/Skidding Methods") (specifying the methods and equipment the contractor can use when yarding and skidding timber in the various units of the sale area; FS approval required for any deviation from the yarding and skidding equipment and methods specified).

Perhaps no place in the FS's timber sale contract are the existence of design specifications more apparent that in clause CT6.422 - "Constructed Landings." In clause CT6.422, the FS requires that "Purchaser shall construct landings in accordance with plans and specifications attached hereto." Pl. App. Tab 111 at A-881 (emphasis supplied).

The FS also controls restoration of the sale area following harvest. In clause CT6.6# "Erosion Control And Soil Treatment By Purchaser," the FS specifies the means by which the contractor is to prevent erosion and restore the sale area, identifies the areas where mechanized equipment may be used for these tasks, and even provides a detailed description of the type and quality of grass seed, fertilizer, mulch and straw to be used. Pl. App. Tab 111 at A-882 to 83. In the same way, the FS controls the disposal of "slash," i.e., "cull logs, blasted or pushed out stumps, chunks, broken tops, limbs, branches, rotten wood, damaged brush, damaged or destroyed reproduction, saplings or poles," remaining upon the completion of harvesting in a given area of the sale Pl. App. Tab 111 at A-884 (CT6.7 - "Slash Disposal"); Pl. App. Tab 111

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at A-884 to 85 (CT6.74 - "Slash Treatment Requirements"); and Pl. App. Tabs 93 at A-662 to 65 and 124 at A-1044 to 46 (C(T)6.7# - "Slash Disposal").

A visible representation of some of the specifications detailed in the contracts is found in the sale area and slash disposal maps. E.g., Pl. App. Tab 111 at A-803 to 20. The Too Wild contract alone contains 17 pages of maps pinpointing areas to protect pursuant to clause CT6.25#, stream courses protected pursuant to clause BT6.5, areas where CLR is to leave dead timber on the ground, areas where CLR is to leave dead timber standing, areas where skyline yarding is acceptable and areas where tractor skidding is acceptable, among others. Id.

Additional specifications included in the contracts dictate the manner in which grounddisturbing road construction activities are to be conducted on the timber sale area. See contracts at B(T)5.1-B(T)5.5 and C(T)5.1-C(T)5.254. Pl. App. Tabs 93 at A-630 to 32, A-649 to 55, 111 at A-829 to 31, A-850 to 57, 124 at A-1017 to 19. Among other things, these include specifications dictating in substantial detail exactly where and what kind of road is to be constructed as part of the timber sale contract. Finally, each of plaintiffs' contracts contains Limited Operating Periods specifically to restrict the times during which the contractors may operate on the sales. See Pl. App. Tabs 93 at A-660 (C6.313#), 111 at A-875 (CT6.315#), 124 at A-1038 (CT6.313#). These specifications are for the protection of various species of wildlife and plants for whom active operations during certain times of the year (typically breeding seasons) may be harmful.

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Simply put, the FS's contracts specify in exacting detail how all aspects of grounddisturbing activities are to be accomplished. Whether the FS could permit the contract to be performed depended on it having complied with all aspects of the NFP including performing the Category 2 surveys before establishing the contract specifications. Upon completion of the Category 2 surveys during the suspensions which breached plaintiffs' contracts, the FS had to reassess the efficacy of each such specification in light of the survey findings.

b.

FS Timber Sale Contractors Do Not Have Discretion To Disregard FS Design Specifications

The above notwithstanding, defendant argues that the contracts provide the contractor with "discretion" to deviate from the specifications and that the specifications do not rise to the level of design specifications subject to the Spearin doctrine. Def. Opp. at 41-42. Defendant is incorrect. The "deviations" it identifies that are permitted by the contract merely allow alternative performance subject to FS review and approval.8 For example, defendant cites the contractors' ability to submit "their own plan of operations" as evidence of plaintiffs' discretion under their contracts. Def. Opp. at 41 (citing DPFUF ¶ 49), which in turns cites to clause C(T)6.3 - "Operations." However, clause C(T)6.3 provides: "Forest Service written approval of the plan of operations is a prerequisite to commencement of Purchaser's Operations." Def. App. 268, 273.9 Thus, a contractor's obligation to submit a plan of operations for FS approval lends

8 9

The same can be said of virtually every design specification.

Defendant's reliance on clause C(T)6.41# - "Special Felling Objectives" is similarly misplaced because, as defendant's discussion of the clause reveals, FS review and approval are required for any deviation from the methods or equipment specified in the clause. Def. Opp. at 43 (citing DPFUF ¶ 50). 19

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no support whatsoever to defendant's contention that a contractor may conduct its operations as it sees fit and deviate at will from the contractual specifications provided by the FS. To the contrary, the clause specifically cited by defendant (C(T)6.3) demonstrates that the contractor may not commence operations until the FS has first approved the submitted plan.

Next, defendant selectively quotes clause C6.42# - "Special Yarding/Skidding Methods" for the proposition that the contractor has discretionary control over the work because the clause allows the use of "methods or equipment other than those specified. . . ." Def. Opp. at 42 (ellipsis in original). Defendant's assertion is extremely misleading. The sentence in question actually provides: "Methods or equipment other than those specified may be approved. Def. App. 275 (emphasis added). Here, again, because the "deviation" from a specification requires FS approval, the contractor has no independent discretion to deviate from the FS's specifications.

Defendant engages in the same sort of misleading argument with respect to clause C(T)5.411 - "Dust Abatement for Temporary Roads" when it claims that the clause "lets the purchaser chose the material used for dust abatement." Def. Opp. at 42 (citing DPFUF ¶ 50). The clause actually provides: "Purchaser may chose the material used in dust abatement. When anything other than water is to be used, such material must be approved in writing by the Forest Service." Def. App. 270 (emphasis added). Thus, the contractor's "choice" is limited to either using water as specified by the FS or obtaining FS approval to use some other means of abating dust. Notwithstanding the FS's selective and misleading quotation of the clause, the "choice" of

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using water as specified by the FS or obtaining FS approval to use some other means does not provide the contractor any independent discretion or control over how to perform.

Defendant also claims to rely on clause C(T)5.414 of the Happy Thin Heli contract which pertains to snow removal. Def. Opp. at 42. However, this clause provides precisely how the contractor is to conduct snow plowing, depending on the size of the road being plowed; it requires that the contractor protect the road surface (or repair it if the surface is damaged) and mandates that the contractor remove and pile the snow in such a way as to prevent damage by erosion to surrounding resources. Again, this clause does not provide the purchaser with discretion over how to accomplish snow removal.10

Least credible of all is defendant's claim that clause C(T)6.411 provides the contractor with discretion to cut timber as it sees fit because the clause does not require directional felling "when in the faller's judgment it is unsafe to do so and the tree shall be left standing." Def. Opp. at 42 (citing DPFUF ¶ 50). The proviso of C(T)6.411, however, is little more than a corollary to the general contract requirement that "Purchaser's operations shall be conducted in a workmanlike and orderly manner." Pl. App. Tabs 93 at A-634, 111 at A-832, 124 at A-1020 (B(T)6.3). In short, having the "discretion" to follow the FS's falling specifications in all

That the Happy Thin contract permits, but does not require, snow removal is simply a recognition that during some of the normal operating season, i.e., May 1 to October 15 Pl. App. Tab 124 at A-1005 (AT 1.7), there is likely to be no snow to remove. The point remains that once the contractor undertakes snow removal, the clause specifies the manner in which it must be accomplished. 21

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circumstances unless doing so will put the contractor's equipment and/or the lives of the logging crew at risk is really no discretion at all.

Virtually all of the above-described specifications regulate ground-disturbing activities on plaintiffs' timber sales. The presence of the red tree vole or any of the 71 Category 2 invertebrate species which might have been located by the required surveys could have required changes in these specifications to ensure adequate protection for habitat or the species themselves. Without the surveys there would be no way of knowing what parts of the sale areas, what logging systems, what road construction or maintenance programs specified in the contract would have to be modified in order to comply with NFP wildlife or plant requirements. Thus, there is a direct link between the suspension of plaintiffs' contracts in order to conduct Category 2 surveys and the foregoing contract specifications, all of which had to be reassessed in light of the survey results.

In sum, FS timber contracts contain numerous design specifications, which, like both typical construction and supply contracts, set out in exacting detail when the contractor may access the work site and how the contractor must conduct the work. Just like a more traditional government contractor, a FS timber sale contractor is not free to disregard the specifications and perform the contract in any manner it chooses. Defendant fails to identify a single instance of true discretion vested in the contractor, despite the fact that the three contracts at issue contain a combined 347 pages of provisions. That the FS remains free to agree to an alternative means of performance or even to waive its original design specifications does not change the fact that,

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absent more, the specifications are binding on the contractor and the contractor cannot deviate from them unilaterally.

c.

Even If Plaintiffs Had Some Limited Discretion Under The Contracts, This Would Not Be Dispositive Of The Issue Of Whether The FS Breached Its Implied Warranty Of Specifications

Even assuming that plaintiffs were afforded limited discretion under some aspects of the FS timber sale contracts specifications (something that defendant has not demonstrated), as the Federal Circuit has held, the issue would still be whether plaintiffs were afforded the opportunity to go forward with contract performance as anticipated or whether the defective design specifications impeded performance of the contracts: It is not only possible, but likely that a contractor will be granted at least limited discretion to find the best way to achieve goals within the design parameters set by a contract. See, e.g., Penguin Indus., Inc. v. United States, 209 Ct .Cl. 121, 530 F.2d 934, 937 (1976). "On occasion the labels `design specification' and `performance specification' have been used to connote the degree to which the government has prescribed certain details of performance on which the contractor could rely. However, those labels do not independently create, limit, or remove a contractor's obligations." Zinger Constr. Co. v. United States, 807 F.2d 979, 981 (Fed. Cir. 1986) (citations omitted). These labels merely help the court discuss the discretionary elements of a contract. It is the obligations imposed by the specification which determine the extent to which it is "performance" or "design," not the other way around. The real issue is not whether the drawings and diagrammatic notes in their entirety should be labeled design specifications or performance specifications, but how much discretion the specifications gave [the contractor]. . . . Blake Constr., 987 F.2d at 747 (although contract gave contractor discretion as to precise location to place power lines overhead, the contract did not confer any discretion to place power lines under ground). As discussed in the next section, the crucial point here is that when the contracts were awarded, the FS simply did not know whether or not its design specifications as 23

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written could be performed in accordance with the NFP Record of Decision ("ROD") because it had not conducted the necessary surveys for Category 2 species.

2.

The FS Breached Its Implied Warranty Of Specifications Because It Did Not Know Whether Its Specifications Could Be Successfully Carried Out As Written (And Whether It Could Permit Performance Based On Those Specifications)

Defendant argues that plaintiffs' contention that the government breached the implied warranty of specifications must fail because "the proximate cause of the suspensions and any resulting delay was the court order [in ONRC Action]," not any deficiency of the specifications outlined in the contracts. Def. Opp. at 43. What defendant fails to recognize is that where, as here, a court concludes that the FS cannot allow ground-disturbing activities on the contracts to proceed because the FS had failed to conduct the required Category 2 surveys, all of the contract specifications governing ground-disturbing activities have been rendered defective because a contractor cannot proceed with contract performance in accordance with them.11 These circumstances are not substantively different from the more common situation where individual specifications which the government has provided a contractor are functionally defective and unperformable. In both instances, the government's failure to issue useable specifications has caused the performance of the contract to stop.

Defendant contends that "but for the court order suspending work on the timber sales" contract performance could have proceeded in accordance with the contract specifications. Def. Opp. at 43. Contrary to defendant's contention, the court order did not "suspend [] work on the timber sales." The court order enjoined the FS from allowing work on the timber sales to proceed. The FS complied with the court order by suspending performance of the contracts. Work could not have proceeded in accordance with the contract specifications until the FS lifted the suspensions. See Superior Timber Co., Inc., IBCA No. 3459, 97-1 BCA ¶ 28,736 (1996), at 143,436 (court orders were only the secondary causes of timber sale contract suspension). 24

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The FS prepared all of the specifications pertaining to ground-disturbing activities, and was not only in the best position to determine whether or not those specifications were in conformity with its own obligations under the NFP so that they could be carried out as written but it was the only one that could make such a determination. See Everett Plywood, 651 F.3d at 731. Nevertheless, at the time of award the FS had no idea whether or not the contract could be performed as written because it had not conducted the requisite Category 2 surveys. As in Everett Plywood, the risk is on the government that environmental damage might occur if its specifications are followed. Concomitantly, if a contractor is delayed because the specifications contained in the contract cannot be followed when the contractor wants to commence performance (and the government must suspend performance until it conducts additional investigations to comply with its forest plan obligations and verifies that the specifications are appropriate), it is the government that is liable for the damages sustained by its contractor. See Sergent Mechanical Systems, Inc. v. United States, 34 Fed. Cl. 505, 526 (1995) ("The case law has held that any delay is per se unreasonable for the purpose of applying the standard suspension clause if the delay is caused by a deficient specification in the contract") (citing Chaney and James Constr. Co. v. United States, 421 F.2d 728, 731 (Ct. Cl. 1970)).

In Precision Pine, Chief Judge Damich ruled: Similarly, another fundamental expectation of a contractor at the time of the bargain, relevant to this case, is that when the Government discloses certain restrictions placed on the performance of the contracts . . . the Government had a reasonable basis for its disclosure. Such a fundamental expectation is analogous to the rule in which the Government's liability for a breach of warranty cannot be limited by clear exculpatory language when the breach arises out of events within the Government's control.

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50 Fed. Cl. at 65. Although this discussion was made within the context of an express warranty, the same fundamental expectation of a contractor applies where, as here, the government specified the means by which the timber was to be accessed, felled and removed from the sale area, but had no adequate basis to believe that the specifications were viable because it had not done the requisite Category 2 surveys. Thus, the specifications were defective and inadequate for their purpose because the FS simply did not know whether the specifications could be performed consistent with the NFP. See id. at 70 ("The misrepresentation contained in the warranty was that the [FS] had no reasonable basis to know whether its warranty was true. . . .").12 For this reason, the FS is liable for the impact that any delay (whether reasonable as to causation or not) had on its contractors.

Several o