Free Motion for Summary Judgment - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

AMERICAN ORDNANCE LLC, Plaintiff, vs. UNITED STATES, Defendant. Case No. 07-867C Judge Wheeler

PLAINTIFF AMERICAN ORDNANCE LLC'S MOTION FOR SUMMARY JUDGMENT

Of Counsel: Timothy R. Odil McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Facsimile: (303) 634-4400 E-mail: [email protected]

Steven M. Masiello McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Facsimile: (303) 634-4400 E-mail: [email protected] ATTORNEY FOR PLAINTIFF, AMERICAN ORDNANCE LLC

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES ..................................................................................................... iii TABLE OF CONTENTS OF APPENDIX TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT............................................................................................ vii I. INTRODUCTION .............................................................................................................. 1 A. B. II. Summary of the Facts.......................................................................................... 2 The Uncontroverted Facts Require Entry of Summary Judgment for AO ............. 7

STANDARD OF REVIEW ................................................................................................ 8

III. TITLE TO THE LINE 3A EQUIPMENT IS VESTED IN AO BECAUSE THE M795 CONTRACT REQUIRES IT ................................................................................ 9 A. The Plain Language of the M795 Contract Requires That AO Retains Title to the Line 3A Equipment.................................................................................... 9 1. The M795 Contract's FFP Property Clause Mandates That Title Vest in the Government Only for Property the Contract Requires AO to Acquire and Deliver to the Government....................................... 10 a. The Plain and Ordinary Meaning of the Phrase "Acquired . . . for the Government" Establishes That the Government Is Vested Title Only in Items Required for Delivery Under FFP Contracts.................................................... 11 The FAR Council Has Definitively Verified AO's Interpretation of "Acquired . . . for the Government".................. 14 AO's Interpretation of "Acquired . . . for the Government" Gives Meaning to All Terms of the M795 Contract and Avoids Creating Internal Conflict ............................................... 15

b. c.

2.

The Government Deliberately Structured the M795 Contract to Require That AO Take Title to the Line 3A Equipment.......................... 17 a. The Parties Specifically Removed from the M795 Contract's Scope of Work a Paragraph That Required AO's Acquisition of the Line 3A Equipment for the Government and Conferred Title Upon the Government ................................. 17

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TABLE OF CONTENTS (cont.) Page b. The Parties Specifically Removed from the M795 Contract a Separate SubCLIN That Once Required AO To Deliver the Line 3A Equipment to the Government................................. 18

3.

The M795 Contract Would Have Been Structured Differently If the Parties Had Intended That the Government Take Title to the Line 3A Equipment................................................................................ 20

B. C.

The Parties' Contemporaneous and Subsequent Conduct Confirms the Plain Language of the M795 Contract................................................................ 23 All Extrinsic Evidence Supports the Parties' Intent That AO Would Own the Equipment ................................................................................................... 25 1. The Parties' Negotiation Correspondence and Actions Conclusively Demonstrate That the Government Required That AO Agree to Take Title to the Line 3A Equipment as a Condition of Being Awarded the M795 Contract.................................................... 26 The Government Acknowledged AO's Ownership of the Line 3A Equipment After Execution of the M795 Contract.................................. 30

2.

IV. THE GOVERNMENT'S CLAIM OF OWNERSHIP OF THE LINE 3A EQUIPMENT IS BARRED BY THE STATUTE OF LIMITATIONS.......................... 31 A. B. The Contract Disputes Act Six-Year Statute of Limitations Applies to the Government's Claim Under the M795 Contract................................................. 32 The Government's Claim of Ownership of the Line 3A Equipment Accrued Under the M795 Contract When the M795 Contract Was Executed on August 15, 1996 ............................................................................ 33 1. 2. V. The Events That Fix Liability Occurred at the Time the M795 Contract Was Executed.......................................................................... 34 The Government Was on Notice That It Had a Potential Claim as of August 20, 1996................................................................................. 35

CONCLUSION ................................................................................................................ 38

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TABLE OF AUTHORITIES Page Cases Aluminum Co. of Am. v. United States, 2 Cl. Ct. 771 (1983)...................................................... 23 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)................................................................. 9 Arko Executive Servs., Inc. v. United States, 78 Fed. Cl. 420 (2007) ......................................... 11 Axion Corp. v. United States, 68 Fed. Cl. 468 (2005).......................................................... 33, 34 Bataco Indus., Inc. v. United States, 29 Fed. Cl. 318 (1993)...................................................... 16 Blinderman Constr. Co. v. United States, 695 F.2d 552 (Fed. Cir. 1982)................................... 23 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................ 8 Coastal Gov't Servs., Inc., ASBCA No. 50283, 01-1 B.C.A. ¶ 31,353 ...................................... 23 Corning Glass Works v. Brennan, 417 U.S. 188 (1974) ............................................................ 10 Fireguard Sprinkler Sys., Inc. v. Scottsdale Ins. Co., 864 F.2d 648 (9th Cir. 1988) ................... 18 First Nationwide Bank v. United States, 48 Fed. Cl. 248 (2000)................................................ 25 Forsyth v. Barr, 19 F.3d 1527 (5th Cir. 1994)............................................................................. 9 Fortec Constructors v. United States, 760 F.2d 1288 (Fed. Cir. 1985) ................................ 10, 16 Gray Pers., Inc., ASBCA No. 54652, 06-2 B.C.A. ¶ 33,378 ............................................... 34, 35 In re Am. Pouch Foods, Inc., 769 F.2d 1190 (7th Cir. 1985) ..................................................... 15 Johnson Controls World Servs., Inc. v. United States, 48 Fed. Cl. 479 (2001)........................... 23 Julius Goldman's Egg City v. United States, 697 F.2d 1051 (Fed. Cir. 1983).............................. 9 Kearfott Guidance & Navigation Corp., ASBCA No. 45536, 01-2 B.C.A. ¶ 31,496 ................. 10 Macke Co. v. United States, 467 F.2d 1323 (Ct. Cl. 1972) .................................................. 23, 30 Marine Midland Bank v. United States, 687 F.2d 395 (Ct. Cl. 1982)......................................... 15 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ................................ 8, 9 McAbee Constr., Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996)....................................... 25

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TABLE OF AUTHORITIES (cont.) Page Means v. N. Cheyenne Tribal Court, 154 F.3d 941 (9th Cir. 1998)............................................ 14 Motorola, Inc. v. West, 125 F.3d 1470 (Fed. Cir. 1997) ............................................................ 33 Northrop Grumman Corp. v. County of Los Angeles, 36 Cal. Rptr. 3d 71 (Cal. Ct. App. 2005). 16 PCL Constr. Servs., Inc. v. United States, 47 Fed. Cl. 745 (2000) ............................................. 16 Perry-McCall Constr., Inc. v. United States, 46 Fed. Cl. 664 (2000)......................................... 25 Royal Indem. Co. v. John F. Cawrse Lumber Co., 245 F. Supp. 707 (D. Or. 1965) ................... 18 SAB Constr., Inc. v. United States, 66 Fed. Cl. 77 (2005).......................................................... 34 San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557 (Fed. Cir. 1997) ........ 35 Sankey v. United States, 22 Cl. Ct. 743 (1991).......................................................................... 36 Sarang Corp. v. United States, 76 Fed. Cl. 560 (2007).............................................................. 32 Saul Subsidiary II Ltd. P'ship v. Barram, 189 F.3d 1324 (Fed. Cir. 1999) ................................ 23 Shell Petroleum, Inc. v. United States, 182 F.3d 212 (3d Cir. 1999) .......................................... 10 Tilley Constructors & Eng'rs, Inc. v. United States, 15 Cl. Ct. 559 (1988)................................ 23 United Int'l Investigative Serv. v. United States, 109 F.3d 734 (Fed. Cir. 1997) ........................ 11 United States v. Diaz, 245 F.3d 294 (3rd Cir. 2001).................................................................. 14 United States v. Enas, 255 F.3d 662 (9th Cir. 2001).................................................................. 14 United States v. Goines, 357 F.3d 469 (4th Cir. 2004) .............................................................. 14 United States v. Hartec Enter., Inc., 967 F.2d 130 (5th Cir. 1992) ............................................ 15 United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983)................................... 16 United States v. Robie, 166 F.3d 444 (2d Cir. 1999) ................................................................. 15 Statutes Contract Disputes Act of 1978, 41 U.S.C. § 605(a)........................................................32, 33, 38

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TABLE OF AUTHORITIES (cont.) Page Other Authorities Restatement (Second) of Contracts § 202 (1981)....................................................................... 10 Restatement (Second) of Contracts § 212 (1981)....................................................................... 23 Rules United States Court of Federal Claims Rule 56 ....................................................................... 1, 8 United States Court of Federal Claims Rule 57 ........................................................................... 1 Regulations 48 C.F.R. § 16.202-1 ................................................................................................................ 13 48 C.F.R. § 2.101 ..................................................................................................................... 32 48 C.F.R. § 33.201 ................................................................................................................... 34 48 C.F.R. § 33.206 ................................................................................................................... 33 48 C.F.R. § 43.103(a) ............................................................................................................... 22 48 C.F.R. § 45.102 ............................................................................................................. 11, 20 48 C.F.R. § 45.104 ................................................................................................................... 25 48 C.F.R. § 45.301 ................................................................................................................... 20 48 C.F.R. § 45.302-6(d)............................................................................................................ 21 48 C.F.R. § 45.402 ................................................................................................................... 11 48 C.F.R. § 45.402(a) ............................................................................................................... 14 48 C.F.R. § 45.505 ................................................................................................................... 24 48 C.F.R. § 52.232-16 .............................................................................................................. 15 48 C.F.R. § 52.232-16(d)(1) ..................................................................................................... 15 48 C.F.R. § 52.232-16(d)(6) ..................................................................................................... 15 48 C.F.R. § 52.245-1(e)(2)(ii) ................................................................................................... 14

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TABLE OF AUTHORITIES (cont.) Page 48 C.F.R. § 52.245-10 ........................................................................................................ 20, 21 48 C.F.R. § 52.245-11 .............................................................................................................. 21 48 C.F.R. § 52.245-2(c) ...................................................................................................... 11, 12 48 C.F.R. § 52.245-2(c)(3)................................................................................................ 4, 8, 10 48 C.F.R. § 52.245-5(c) ............................................................................................................ 12 48 C.F.R. § 52.245-7 ................................................................................................................ 21

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TABLE OF CONTENTS OF APPENDIX TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT American Ordnance LLC v. United States, Case No. 07-867C Exhibit No. 1. 2. 3. Description Page No.

Declaration of Marilyn S. Daniel .................................................................. 1 Declaration of Daniel W. Darley................................................................. 11 Department of Defense Manual for the Performance of Contract Property Administration, dated December, 1991 (DoD 4161.2-M)......................................................................................... 17 Request for Proposal ("RFP") ­ Solicitation Offer and Award for DAAE30-96-R-0004, dated October 11, 1995 ............................................ 26 Memorandum, dated November 2, 1995, re: Army Authority to Issue Letter Contract................................................... 180 Letter Contract DAAE30-96-C-0013, dated December 12, 1995 (the "Letter Contract") ............................................................... 181 Fax Transmission, dated March 14, 1996, Negotiation Timeline/Action Items .............................................................................. 190 Letter Contract Amendment P00001, dated April 30, 1996 ....................... 192 Fax Transmission, dated May 16, 1996, forwarding Draft Facilitization Scope of Work ........................................................... 195 Letter, dated May 16, 1996, from David M. Banashefski ("Banashefski") to Mason & Hanger Corporation ("MHC") re: CLIN 0001AA..................................................................................... 198 Memorandum, dated May 17, 1996, from Jeff Hibler ("Hibler") to Banashefski re: MHC Position on ARDEC Offer for Facilitization for the M795......................................................... 200 E-mail, dated May 17, 1996, from D. Reed ("Reed") to Internal MHC re: M795 Proposal/Negotiations ..................................... 207 Fax Transmission, dated May 28, 1996, re: Internal MHC Discussion of draft Facilitization Statement of Work ...................... 209

4. 5. 6. 7. 8. 9. 10.

11.

12. 13.

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Exhibit No. 14.

Description

Page No.

Letter, dated May 30, 1996, from Valerie E. Colello, ARDEC CO, to Marilyn Daniel of MHC re: Statement Of Work Language Exclusion........................................................................ 215 Memorandum, dated June 3, 1996, from Hibler to Steve Talmadge ("Talmadge") re: Additional Issues for Discussion ................... 221 Letter, dated June 5, 1996, from Colonel James Unterseher ("Unterseher") re: M795 Contract Negotiations ........................................ 222 Memorandum, dated June 6, 1996, from Hibler to Internal MHC re: June 6, 1996 Telephone Conference with Banashefski and Talmadge ....................................................................... 224 Memorandum June 10, 1996, re: Internal MHC Discussion of Negotiation Status ................................................................................ 230 Memorandum, dated June 10, 1996, from Hibler to Talmadge re: Action Items from Telephone Call of June 6, 1996 ............................................................................................. 234 Fax transmission, dated June 14, 1996, from Mike Devine to Darl Heffelbower ("Heffelbower") re: Omitted Topics in Heffelbower June 12, 1996 Letter ......................................................... 236 Letter, dated June 18, 1996, from Heffelbower to Unterseher re: MHC Agreement to Accept Title to Line 3A Equipment...................... 238 Memorandum, dated June 18, 1996, from Hibler to Talmadge re: Action Items for M795 Negotiations ................................... 241 Fax Transmission, dated June 20, 1996, from Talmadge to MHC forwarding Government's Revision of CLIN Structure ................... 243 Meeting Summary, dated June 21, 1996, re: "Open Issues" as of June 25, 1996 ................................................................................... 245 Memorandum, dated June 29, 1996, from Hibler to Internal MHC re: Continuation of M795 Negotiations ........................................... 247 Memorandum, dated July 9, 1996, from Hibler to Internal MHC re: Record of Telephone Conversation with Banashefski ...................................................................................... 251

15. 16. 17.

18. 19.

20.

21. 22. 23. 24. 25. 26.

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Exhibit No. 27. 28. 29. 30. 31.

Description

Page No.

Memorandum, dated July 10, 1996, from Hibler to Internal MHC re: Telephone Conversation with Banashefski................................. 252 Letter, dated July 17, 1996, from Hibler to Banashefski re: Confirmation of Price Agreement ........................................................ 254 Memorandum, dated August 13, 1996, from Hibler to Talmadge re: Comments on Draft M795 Contract..................................... 255 Memorandum, dated August 14, 1996, from Hibler to Internal MHC re: M795 Contract Final Execution ................................................. 257 Definitized Contract, Modification PZ0001 to Contract No. DAAE30-96-C-0013, dated August 15, 1996 (the "M795 Contract")................................................................................................. 258 Letter, dated August 19, 1996, from Hibler to Banashefski re: Liquidation of CLIN 0001AA and 0001AB ......................................... 339 Memorandum, dated August 20, 1996, from Fred Taylor ("Taylor") (ACO) to Banashefski re: MHC Ownership of Line 3A Equipment .............................................................................. 340 September 4, 1996 E-mail from ACO Taylor to current ACO Nelson re: Possible Future Request that MHC Return Title to Line 3A Equipment to the Government ........................................ 342 Memorandum, dated October 7, 1996, from Banashefski to Taylor re: Receipt of August 20, 1996 Letter ........................................ 343 Email, dated February 28, 1997 Internal MHC re: Slippage in Government's Material Delivery and Possible Earlier Payment ................................................................................................... 344 Letter, dated March 3, 1997, from J.R. Lohmann to Talmadge re: Payment of Facilitization at FAT under CLIN 0001AA instead of CLIN 0001AB.................................................. 346 Modification P00003 to M795 Contract, dated March 13, 1997 ........................................................................................ 348 Letter, dated October 21, 1997, from Talmadge to MHC Directing MHC to Submit Invoice for CLIN 0001AA............................... 352

32. 33.

34.

35. 36.

37.

38. 39.

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Exhibit No. 40. 41. 42. 43. 44. 45. 46. 47.

Description

Page No.

Invoice and form DD250, dated October 24, 1997, for Payment of CLIN 0001AA ....................................................................... 353 Memorandum, dated February 13, 1998, re: Facilities Use Sole Source Justification and Approval..................................................... 355 Letter, dated August 12, 1999, from Frank Evans, DCAA, to Mickey Burkett ("Burkett") re: DCAA Review..................................... 373 Letter, dated September 14, 1999, from Burkett to DCAA re: DCAA Review .................................................................................... 376 Letter, dated November 15, 1999, from Frank Evans, DCAA, to Mickey Burkett re: Response to AO re: DCAA Review ........................ 384 E-mail, dated July 13, 2000, Internal Government re: Line 3A Equipment that American Ordnance Owns.................................. 387 Contracting Officer's Final Decision letter, dated September 26, 2007 .................................................................................. 396 Letter, dated October 26, 2007, from Charles Smith to Kristen Barnard re: Directive to American Ordnance to Retag Property and to Change Records ..................................................... 405 Trudy Hallgren presentation entitled: Acquisition Strategy for Milan and Iowa Army Ammunition Plants .......................................... 406 Federal Acquisition Regulation ("FAR") Provisions (Jan. 1, 1996) FAR § 2.101 ............................................................................................. 408 FAR § 16.202-1........................................................................................ 412 FAR § 33.201 ........................................................................................... 413 FAR § 33.206 ........................................................................................... 415 FAR § 45.102 ........................................................................................... 416 FAR § 45.104 ........................................................................................... 418 FAR § 45.301 ........................................................................................... 420

48. 49.

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Exhibit No.

Description Federal Acquisition Regulation ("FAR") Provisions (Jan. 1, 1996) (continued)

Page No.

FAR § 45.302-6........................................................................................ 422 FAR § 45.402 ........................................................................................... 423 FAR § 45.505 ........................................................................................... 424 FAR § 52.232-16...................................................................................... 425 FAR § 52.245-2........................................................................................ 430 FAR § 52.245-5........................................................................................ 436 FAR § 52.245-7........................................................................................ 441 FAR § 52.245-10...................................................................................... 445 FAR § 52.254-11...................................................................................... 448 50. Defendant's Response to Plaintiff's First Set of Interrogatories, First Request for Production of Documents, and First Requests for Admissions ............................................................ 452 Property Audit Report dated November 10, 1999...................................... 464 Talmadge Deposition Transcript ............................................................... 469 Colello Deposition Transcript ................................................................... 475 James Nelson Deposition Transcript ......................................................... 484 Michael Walker Deposition Transcript ..................................................... 493 Banashefski Deposition Transcript............................................................ 497

51. 52. 53. 54. 55. 56.

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Pursuant to Rules 56 and 57 of the Rules of the United States Court of Federal Claims ("R.C.F.C."), Plaintiff, American Ordnance LLC ("AO"), respectfully submits its Motion for Summary Judgment (the "Motion") on its Complaint seeking declaratory judgment. As

established below, AO is entitled to declaratory judgment that AO owns the equipment comprising Production Line 3A (the "Line 3A Equipment") at the Iowa Army Ammunition Plant ("IAAAP") in Middletown, Iowa.

I.

INTRODUCTION Eleven years after requiring that AO take title to the Line 3A Equipment as a condition to

being awarded an ammunition production contract, the government informed AO that the government now claims ownership of the Line 3A Equipment so that it can offer the equipment as government furnished property to bidders in a current solicitation effort. In 1996, the

government directed AO to take title to the Line 3A Equipment, along with assigning AO the obligations and risks associated with such ownership, and the government structured the resulting contract to achieve that result. The government is not now permitted unilaterally to claim title to the Line 3A Equipment. The government's claim contradicts the plain language of the parties' contract, directly opposes eleven years of the parties' conduct regarding the Line 3A Equipment, and repudiates the parties' expressed intent in executing the contract. Even if the government's claim of ownership were meritorious, which it is not, the claim was asserted eleven years after the claim accrued, and is therefore barred by the applicable six-year statute of limitations. Both the law and basic fairness require that the Court hold the government to the bargain it struck eleven years ago by declaring that AO still owns the Line 3A Equipment, as it always has, despite the government's recent claim to the contrary.

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A.

Summary of the Facts1

AO, or its predecessors-in-interest, have operated IAAAP for the United States Army (the "government" or the "Army") since 1951.2 Pl. Facts, ¶ 1. IAAAP is operated as a governmentowned contractor-operated ("GOCO") facility for production of ammunition items such as warheads and large-caliber ammunition. Id., ¶ 3. Prior to the early 1990s, AO operated IAAAP under cost-plus-fixed-fee contract arrangements. Id., ¶ 5. In the early 1990s, however, the government began to replace its prior contracting arrangements with "facilities use" contract arrangements, under which it is anticipated that contractors may make private investments and improvements in the facility and related personal property. Id., ¶ 6. Under facilities use

contracts, the government and other third-parties enter into separate contracts for the production of supplies at GOCO facilities such as IAAAP. Id., ¶ 7. The government entered into two facilities use contracts with AO, one in 1993 (Contract No. DAAH09-94-E-0005), and another in 1998 (Contract No. DAAA09-98-E-0003). Id. (Together, AO and the government are referred to as the "parties.") AO currently operates and maintains IAAAP and another production facility, the Milan Army Ammunition Plant ("MLAAP"), pursuant to such facilities use contracts. Id. As contemplated under facilities use arrangements, the government entered into separate contracts with AO for the production of ammunition. On December 12, 1995, the government
1

AO sets forth the uncontroverted facts relevant to this matter in its Proposed Findings of Uncontroverted Fact ("Pl. Facts") filed herewith. R.C.F.C. 56(h)(1). AO relies upon the Plaintiff's Facts as the basis of its Motion. AO additionally references herein the Exhibits Contained in its Appendix in Support of its Motion ("Pl. App.").
2

AO was formed in 1998 as a joint venture of its predecessors in interest, Mason & Hanger Corporation ("MHC") and General Dynamics Ordnance Systems, Inc. ("GDOS"). Pl. Facts, ¶ 1. References in this Brief to "AO" include its predecessors-in-interest.

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issued "Letter Contract" No. DAAE30-96-C-0013 to AO for the production of supplies; specifically, production of 155mm M795 Projectiles (the "Letter Contract"). Id., ¶ 11. On August 15, 1996, the parties reached agreement regarding the terms and final price and executed (i.e., "definitized") the firm, fixed-price ("FFP") contract for production of M795 Projectiles in Modification No. PZ0001 (the "M795 Contract"). Id., ¶ 34. During the negotiation period of the M795 Contract, AO informed the government that it would "facilitize," or procure, whatever equipment was necessary to create a production line to produce M795 Projectiles, i.e., the Line 3A Equipment. Id., ¶¶ 26-27. Also during the negotiation period, the government told AO that the government would not take title to, or be responsible for, the equipment AO procured to manufacture M795 Projectiles, including Line 3A Equipment. Id., ¶¶ 18, 19, 21, 23. The government Contracting Officer ("CO") responsible for negotiating the M795 Contract, David Banashefski ("Banashefski"), specifically directed AO that: It is important that the parties fully understand that this requirement is a production contract for the LAP [Load, Assemble, and Pack] of M795 projectiles and is not a facilities contract. Any facilities being procured are being done solely to meet the required LAP capacity for the M795 projectile. As such, the Government will not have title to the equipment and therefore, will not be responsible for maintenance of the same. Id., ¶ 19; Ex. 10, p. 199, May 16, 1996 Letter from Banashefski (emphasis in original). CO Valerie Colello ("Colello") further confirmed that: This is a production requirement . . . and is not in any way a facilitization contract . . . . [I]n order to alleviate any further misunderstandings regarding the facilitization efforts, the resultant contract will not have a separate CLIN for the facilitization costs, but rather such costs will be included with the LAP production CLIN for the basic quantity. . . . [T]here will be no separate line item for any facilitization efforts which [AO] would have to accomplish in order to meet the required basic/option delivery requirements of the contract.

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Pl. Facts, ¶ 23; Ex. p. 215, 218, May 30, 1996 Letter from Colello (emphasis in original). Collello further confirmed that the government was examining AO's price for facilitization for evaluation purposes only: In the [M795] RFP, the Government had asked the contractor to separately break out the costs for any necessary facilitization efforts for evaluation purposes only. Id. Based upon the government's direction, the parties agreed that AO would not be required to acquire the Line 3A Equipment for the government as a deliverable under the M795 Contract, and, thus, the government would not take title to the Line 3A Equipment. Pl. Facts, ¶ 29. Specifically, the parties included the standard FAR government property clause for FFP contracts (the "FFP Property Clause"), which provides that title to property acquired under a FFP-type contract only vests in the government for property acquired by the contractor for the government. Id., ¶ 35. The FFP Property Clause provides: Title to each item of facilities...acquired by the Contractor for the Government under this contract shall pass to and vest in the Government when its use in performing this contract commences or when the Government has paid for it, whichever is earlier, whether or not title previously vested in the Government. Ex. 31, p. 325; see also 48 C.F.R. § 52.245-2(c)(3) (1996) (emphasis added).3 The parties purposely structured the M795 Contract to conform to the parties' intent and the terms of the FFP Property Clause, removing any requirement from the M795 Contract that AO acquire property for the government and deleting specific contract clauses that would have conveyed title to the government of the Line 3A Equipment. Pl. Facts, ¶¶ 37, 39, 40. Indeed, the parties

3

Cited non-current provisions of the FAR are provided in the Appendix at Ex. 49, p. 408-451.

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deleted all provisions of the Letter Contract that would have required AO to acquire the Line 3A Equipment for the government, including a separate Contract Line Item Number ("CLIN") for facilitization, and its associated Statement of Work ("SOW") paragraph. Id. The parties' conduct following execution of the M795 Contract confirmed the contractual intent and AO's ownership of the Line 3A Equipment. Five days after the execution of the M795 Contract, the Administrative Contracting Officer ("ACO") at IAAAP, Fred W. Taylor ("Taylor"), one of the ACOs responsible for the administration of the M795 Contract, issued a memorandum confirming that AO was not required to acquire the Line 3A Equipment for the government, that the Line 3A Equipment would not be deliverable under the M795 Contract, and that the government would not take title to the equipment. Id., ¶ 59. A month later, CO Banashefski confirmed ACO Taylor's understanding of the parties' agreement, discussing with Taylor the possibility of approaching AO at some future time to ask AO to consider returning title to the Line 3A Equipment to the government the next time a facilities contract was negotiated. Id., ¶ 60. On March 3, 1997, AO requested a contract modification that would shift a portion of its price for delivery of 1000 each, M795 Projectiles (SubCLIN 0001AB), described to relate to facilitization, and amortized over and meant to be paid at the time of delivery of this first production lot of M795 Projectiles, to the earlier First Article Test ("FAT") quantity of M795 Projectiles (SubCLIN 0001AA). This request was made to permit AO to receive timely payment from the government, despite the slippage of the government's schedule for the provisioning of certain government furnished materials needed to produce the M795 Projectiles (the "March 3, 1997 Request"). Id., ¶ 67. The parties executed Modification P00003 ("P00003") to the M795 Contract on March 13, 1997, to address MHC's March 3, 1997 Request. Id., ¶ 68. P00003

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moved the portion of the M795 Projectiles' price from SubCLIN 0001AB to SubCLIN 0001AA, but had no other effect on the M795 Contract. Id., ¶ 69. On October 21, 1997, the government directed AO to submit an invoice to the government for payment of the FAT quantity price for SubCLIN 0001AA, and AO submitted its Invoice and form DD250 for payment and liquidation of SubCLIN 0001AA. Id., ¶¶ 70-71. In 1998, an IAAAP CO recognized AO's ownership of Line 3A Equipment in describing AO's ownership of property at IAAAP. Id., ¶ 73. In 1999, a Defense Contract Audit Agency ("DCAA") audit of AO's cost accounting practices regarding the M795 Contract concluded that AO owned the Line 3A Equipment, and that DCAA would not pursue any further investigation of AO's accounting for the Line 3A Equipment. Id., ¶¶ 74-76. In addition, following execution of the M795 Contract, and continuing without interruption through September 2007, AO conspicuously tagged the Line 3A Equipment as AO-owned property (rather than governmentowned property), and AO recorded the Line 3A Equipment as AO-owned property. Id., ¶¶ 7983. Indeed, AO's exercise of possession, ownership, and control of the Line 3A Equipment since the inception of the M795 Contract was "obvious" to the government ACO responsible for the administration of the M795 Contract at IAAAP. Id., ¶ 86. Prior to May 2007, no

government review or annual audit of AO's recording and tagging of Line 3A Equipment as AOowned property ever identified such recording or tagging as erroneous. Id., ¶¶ 87-88. In August 2007, the Army initiated a competitive procurement for a follow-on contract for operation and maintenance ("O&M") of IAAAP and MLAAP. Id., ¶ 92. On February 21, 2008, the Army issued Request for Proposal ("RFP") No. W52P1J-06-R-0201. Id., ¶ 93. The Army contemplates in the current RFP, and thereby compels offerors to assume as part of their proposals, that the Line 3A Equipment will be government-furnished property that any new

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contractor could use for its own production activities. Id. The estimated date of award of the new O&M contract is September 2008. Only in its written final decision issued September 26, 2007 (the "Final Decision"), after eleven uninterrupted years of AO's possession, ownership, and control of the Line 3A Equipment, did the Army ever assert its claim of ownership. The Army ordered AO to re-tag the Line 3A Equipment as government-owned property, and to change its records to reflect government ownership, in preparation for the Army's competitive procurement for a follow-on O&M contract for IAAAP. Id., ¶ 94. On October 30, 2007, AO complied with the Army's directive to re-tag the Line 3A Equipment and to change its records to reflect government ownership of the Line 3A Equipment. Id., ¶ 95. AO did not agree with the Army's directive, however, and thus, AO reserved its right to dispute the government's ownership claim. On December 10, 2007, AO filed its Complaint in this matter seeking a declaratory judgment that AO holds title to the Line 3A Equipment, and that the government's claim is barred by the applicable statute of limitations.

B.

The Uncontroverted Facts Require Entry of Summary Judgment for AO

As shown below, AO is entitled to summary judgment because the uncontroverted facts establish that, as a matter of law, AO owns the Line 3A Equipment. The plain language of the M795 Contract confirms that the contract is deliberately structured to require that AO take title to the Line 3A Equipment. The government purposely tailored the M795 Contract's existing CLIN structure to remove the Line 3A Equipment as a deliverable, eliminated the pre-established provision of the SOW that would have required AO's acquisition of the Line 3A Equipment for the government as part of the contract work requirement, and included or excluded other clauses based upon the understanding of AO's ownership of the Line 3A Equipment. The M795

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Contract expressly requires only AO's delivery of M795 Projectiles. Accordingly, the M795 Contract's plain language establishes that the Line 3A Equipment was not acquired by AO for the government. The Line 3A Equipment is AO property. 48 C.F.R. § 52.245-2(c)(3) (1996). Moreover, the contemporaneous and subsequent conduct of the parties confirms the plain language of the contract. AO conspicuously tagged and recorded the Line 3A Equipment as AOowned property for nearly eleven years, with full knowledge of the government, and without government dispute. Even if the M795 Contract is found to be ambiguous, however, all extrinsic evidence supports AO's ownership of the Line 3A Equipment. During negotiations of the M795 Contract, the government repeatedly expressed its intent that AO take title to the Line 3A Equipment, but it demanded contractor ownership as a prerequisite to awarding the M795 Contract to AO. The government's intent that AO take title to the Line 3A Equipment is set forth in a number of written communications, dated before and after the execution of the M795 Contract. Finally, even if the government's claim of ownership of the Line 3A Equipment could be supported, which it cannot, the claim is barred by the applicable statute of limitations because the claim was raised for the first time eleven years after the government first knew that AO took title in the Line 3A Equipment, and that AO was treating the equipment as AO-owned property rather than as government-owned property.

II.

STANDARD OF REVIEW Summary judgment is appropriate where there is no genuine issue of material fact and a

party is entitled to judgment as a matter of law. R.C.F.C. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986), cert. denied, 484 U.S. 1066 (1988); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986), cert. denied, 481 U.S. 1029 (1987). "By its

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very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). Once the moving party has carried its burden under R.C.F.C. 56(c), the non-moving party must do more than merely show that there is some metaphysical doubt as to the material facts. Matsushita, 475 U.S. at 586. To meet this burden, the nonmovant must "identify specific evidence in the record and articulate the `precise manner' in which that evidence supported their claim." Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994), cert. denied, 513 U.S. 871 (1994).

III.

TITLE TO THE LINE 3A EQUIPMENT IS VESTED IN AO BECAUSE THE M795 CONTRACT REQUIRES IT The M795 Contract was deliberately drafted and structured to achieve the parties' desired

goal ­ AO ownership of the Line 3A Equipment. After execution of the M795 Contract, both the government and AO treated the Line 3A Equipment as AO-owned property. Prior to the

execution of the M795 Contract, the parties both expressed their understanding of the government's intent that AO would take title to the Line 3A Equipment. As established below, the M795 Contract requires that AO is vested title in the Line 3A Equipment.

A.

The Plain Language of the M795 Contract Requires That AO Retains Title to the Line 3A Equipment

To understand the parties' intent from the plain language of a contract, the Court should consider the contract language in its entirety. Thus, "[p]rovisions of a contract must be so construed as to effectuate [the] spirit and purpose [of the contract] . . . and interpreted so as to harmonize and give meaning to all of its provisions." Julius Goldman's Egg City v. United States, 697 F.2d 1051, 1057-58 (Fed. Cir. 1983). To that end, an interpretation that gives

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meaning to the entire agreement will be favored over one that renders a portion of the agreement meaningless. Fortec Constructors v. United States, 760 F.2d 1288, 1292 (Fed. Cir. 1985). Moreover, in interpreting contractual agreements, the words used therein should be read consistent with their common meaning or, if technical, consistent with their technical definition, unless the agreement defines otherwise. Restatement (Second) of Contracts § 202 (1981); see Kearfott Guidance & Navigation Corp., ASBCA No. 45536, 01-2 B.C.A. ¶ 31,496, at 155,555 (citing Corning Glass Works v. Brennan, 417 U.S. 188, 201-02 (1974) and Shell Petroleum, Inc. v. United States, 182 F.3d 212, 217 (3d Cir. 1999)). The plain language of the M795 Contract establishes that the parties intended for AO to own the Line 3A Equipment. 1. The M795 Contract's FFP Property Clause Mandates That Title Vest in the Government Only for Property the Contract Requires AO to Acquire and Deliver to the Government

The M795 Contract contains the standard FFP Property Clause, FAR § 52.245-2, which provides, in relevant part, that "[t]itle to each item of facilities and special test equipment acquired by the Contractor for the Government under this contract shall pass to and vest in the Government." See M795 Contract, Part II, Section I.8 (emphasis added); see also 48 C.F.R. § 52.245-2(c)(3) (1996). The phrase "acquired . . . for the [g]overnment" is central to the proper interpretation of the M795 Contract, as well as the determination of whether title to the Line 3A Equipment was to transfer to the government. The plain and ordinary meaning of the phrase "acquired . . . for the government," together with the government's own guidance regarding the FFP Property Clause, supports AO's interpretation of the M795 Contract's relevant provision. Further, the FAR Council has verified the long-established understanding that the phrase "acquired . . . for the government" results in title transferring to the government under a FFP contract only for those items specifically identified as a deliverable end item. See 48 C.F.R.

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§ 45.402 (2008). The relationship between different provisions in the FAR as it existed at the time of contracting establishes that "for the government" relates to and requires title transfer only for those items specifically provided for in the contract or the accompanying SOW. Accordingly, the M795 Contract's FFP Property Clause mandates that, for title to transfer to the government, the FFP contract must require the contractor to acquire something and deliver it to the government. a. The Plain and Ordinary Meaning of the Phrase "Acquired . . . for the Government" Establishes That the Government Is Vested Title Only in Items Required for Delivery Under FFP Contracts

The Court "must interpret a contract as a whole and `in a manner which gives reasonable meaning to all of its parts and avoids conflict or surplusage of its provisions.'" Arko Executive Servs., Inc. v. United States, 78 Fed. Cl. 420, 424 (2007) (citing United Int'l Investigative Serv. v. United States, 109 F.3d 734, 737 (Fed. Cir. 1997). This interpretive principle applies "with particular force in the context of the FAR, which, after all, is designed to provide a set of integrated procurement rules." Arko Executive Servs., Inc., 78 Fed. Cl. at 424. FAR Part 45 provides the relevant context for government property matters, including the FFP Property Clause. FAR Subpart 45.1 dictates that contractors under FFP contracts ordinarily are required to furnish "all property necessary to perform Government contracts . . . ." 48 C.F.R. § 45.102 (2008). This means that upon completion of performance of all the obligations of a FFP contract, title to all property which had not been delivered to, and accepted by the government, or which had not been incorporated in supplies delivered to and accepted by the government, remains vested in the contractor. See 48 C.F.R. § 52.245-2(c). Logically, unless a contractor is permitted to retain title to its property that it uses in performance of a FFP contract, the Page 11

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government would gradually acquire all property of its contractors performing FFP contracts. Consequently, title to contractor-acquired property under FFP contracts will result in the government owning such property only if the contract contains a special term or separate CLIN directing the contractor to acquire and to deliver to the government the relevant property. This fundamental background for understanding of the FFP Property Clause is firmly established, and is a view shared by the government. The Department of Defense ("DoD") guidance, dated December 1991, entitled "DoD Manual for the Performance of Contract Property Administration" ("DoD 4161.2-M"), explains the government's rights in title to contractor-acquired property under FFP contracts, as follows: Cost-type and time-and-materials contracts allow the contractor to acquire material for the Government as a direct charge to the contract. Title vests with the Government through the provisions of the Government property clause FAR 52.245-5(c). Fixed-price type contracts may provide for the contractor to acquire material for the Government as a direct charge to the contract when specifically listed as a line item in the contract. Title vests with the Government through the provisions of the Government property clause FAR 52.245-2(c). The method the contractor selects to acquire material for the Government is based upon several factors (determination of items needed, schedules of production or delivery, source identification, and quantities required). DoD 4161.2-M, ¶ C3.5.1.2.2.1. (emphasis added).4 Accordingly, the government has long-

recognized that the FFP Property Clause requires that title transfer to the government only for those items specifically listed in a line item of the Contract for the contractor to acquire and deliver to the government.

4

Cited provisions of DoD 4161.2-M are included as an Exhibit in Plaintiff's Appendix in Support of Plaintiff's Motion for Summary Judgment ("Ex."), Ex. 3, p. 17.

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The plain and ordinary meaning of the operative title-vesting phrase "acquired...for the government" of the FFP Property Clause supports this shared interpretation that an FFP contract must specifically require the contractor's acquisition and delivery of property to the government for title transfer to occur. Where a contractor simply acquires and uses a piece of facilities or equipment in connection with its production of some product or service delivered to the government, the contractor is not "acquiring" the facilities or equipment "for the government." DoD 4161.2-M, ¶ C3.5.1.2.2.1. Rather, as here, the contractor is acquiring the facility or

equipment for itself ­ to provide the product or service to the government that is the subject matter of the contract. Finding that the FFP Property Clause phrase "acquired . . . for the government" means that title transfers to the government only for those items specifically required to be acquired and delivered by the contractor is consistent with the principles set forth in the FAR describing FFP contracts. A fixed price contract "places upon the contractor maximum risk and full

responsibility for all costs and resulting profit and loss." 48 C.F.R. § 16.202-1 (2008). Thus, a FFP contract anticipates a situation where a contractor is responsible for performing the contract, including acquiring and maintaining whatever equipment and property is necessary to perform the contract for the fixed price. The government, on the other hand, assumes no such risk in a FFP contract and receives the items specifically set forth in the contract. To allow the

government to assume title to property such as the Line 3A Equipment ­ equipment that it did not purchase or maintain, for which it bore no risk beyond its mere payment of the fixed-price for the delivery of the M795 Projectiles, and which was not included in the Contract as a deliverable ­ is contrary to the plain and ordinary meaning of the FFP Property Clause in the context of the principles set forth in the FAR governing fixed-price contracts.

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b.

The FAR Council Has Definitively Verified Interpretation of "Acquired . . . for the Government"

AO's

The drafters of the FAR have settled any doubt concerning the proper interpretation of the phrase "acquired . . . for the government." In the context of fixed price contracts, the titlevesting requirements of the phrase mean that title transfers only for those items specifically identified as a deliverable end item. See 48 C.F.R. § 45.402(a) (2008). The FAR was amended, effective June 14, 2007, to state with respect to the title-vesting language of the relevant FAR property clause that: Under fixed price type contracts, the contractor retains title to all property acquired by the contractor for use on the contract, except for property identified as a deliverable end item. 48 C.F.R. § 45.402(a) (2008). Importantly, the FAR currently maintains in the standard property clause the very same prescriptive title-vesting language found in the M795 Contract's FFP Property Clause, stating that under fixed price type contracts, title passes to the government only for facilities "acquired by the Contractor for the Government." 1(e)(2)(ii) (2008).5 See 48 C.F.R. § 52.245-

The legal effect of the applicable FAR title-vesting language for FFP

contracts remains unchanged, but the FAR Council has now definitively verified the language to conform to the established understanding and practical operation of the provision.
5

Because the amendment clarified, rather that substantively changed, the existing regulation, the amendment may be relied upon by the Court to provide interpretive guidance as to the underlying regulation. See Means v. N. Cheyenne Tribal Court, 154 F.3d 941, 951 (9th Cir. 1998) (a clarification is a statement "of what [Congress] believed the law already was"), overruled on other grounds by United States v. Enas, 255 F.3d 662 (9th Cir. 2001); see also United States v. Goines, 357 F.3d 469, 474 (4th Cir. 2004) (clarifying amendment changes nothing concerning the legal effect of the regulation, but merely clarifies what the enacting body deems the regulation to have already meant). If the amendment overrules a prior judicial construction of the guidelines, it is substantive; if it confirms a prior reading of the guidelines and does not disturb prior precedent, it is clarifying. United States v. Diaz, 245 F.3d 294, 303 (3rd Cir. 2001).

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c.

AO's Interpretation of "Acquired . . . for the Government" Gives Meaning to All Terms of the M795 Contract and Avoids Creating Internal Conflict

The progress payments clause contained in the M795 Contract, 48 C.F.R. § 52.232-16 (1996) (the "Progress Payments Clause"), is the mechanism used to finance the contractor's performance of an FFP contract. Pl. Facts, ¶ 50; Ex. 31, p. 300. "Progress payments" financing requires that, as a security, the government will temporarily hold title to any items acquired by the contractor for which progress payments are paid. Id. at § 52.232-16(d)(1) ) and (6) ). Once such progress payments are "liquidated," or repaid to the government as a result of a credit applied to the government's payment of the fixed-price for completed performance, the Progress Payments Clause requires that the government return title to the contractor for any items not "delivered to, and accepted by, the Government," or "incorporated in supplies delivered to, and accepted by the Government . . . ." Id. at § 52.232-16(d)(6). Thus, the Progress Payments Clause explicitly confirms, and is harmonious with, AO's position that title to property that a contractor acquires under a FFP contract, but is not required to deliver to the government, is contractor property. To interpret the FFP Property Clause in some other manner would result in an irreconcilable conflict, rendering the relevant Progress Payments Clause title-vesting language without effect. The temporary title obtained by the government pursuant to the Progress

Payments Clause are analogous to a security interest such as a lien. See, e.g., Marine Midland Bank v. United States, 687 F.2d 395, 403-04 (Ct. Cl. 1982); United States v. Robie, 166 F.3d 444, 453 (2d Cir. 1999); United States v. Hartec Enter., Inc., 967 F.2d 130, 133 (5th Cir. 1992). Other courts have held that the Army actually takes title during this period. See, e.g., In re Am. Pouch Foods, Inc., 769 F.2d 1190, 1196 (7th Cir. 1985); Northrop Grumman Corp. v. County of

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Los Angeles, 36 Cal. Rptr. 3d 71, 76-78 (Cal. Ct. App. 2005).

In either case, if AO's

interpretation of "acquired . . . for the government" is not accepted in favor of some improperly broad interpretation advanced by the government, title to all property acquired by AO for performance of the Contract, including items subject to progress payments, would permanently transfer to the government. Such an overly broad interpretation of the meaning of the term "acquired . . . for the government" would grant the government title to items not required specifically to be delivered under an FFP Contract, and would render the Progress Payments Clause's title transfer language inoperative surplusage. The Court must "construe contract language so as to give consistent meaning to all of the terms of a contract." See Bataco Indus., Inc. v. United States, 29 Fed. Cl. 318, 325 (1993); see also Fortec Constructors, 760 F.2d at 1292 (interpretation that gives meaning to all parts of the contract is preferred to one that leaves portions of the contract meaningless); PCL Constr. Servs., Inc. v. United States, 47 Fed. Cl. 745, 784 (2000) (same). No contract provision should "be construed as being in conflict with another [provision] unless no other reasonable interpretation is possible." See United States v. Johnson Controls, Inc., 713 F.2d 1541, 1555 (Fed. Cir. 1983). To accept any government position that asserts a meaning of the phrase "acquired . . . for the government" that would grant title to the government in property acquired by AO for performance of the M795 Contract, the Court would be required to read portions of the Progress Payments Clause out of the M795 Contract. In contrast, AO's interpretation gives meaning to all terms, and is harmonious with, the title-vesting language of the M795 Contract's Progress Payments Clause. Thus, the M795 Contract's FFP Property Clause mandates AO's ownership of all property that AO was not required under the M795 Contract to acquire and deliver to the government.

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2.

The Government Deliberately Structured the M795 Contract to Require That AO Take Title to the Line 3A Equipment

The M795 Contract requires that the deliverables pursuant to the contract are 155mm M795 Projectiles, together with their associated obturators, supplemental charges, liner cups, and spacers. Pl. Facts, ¶ 36; M795 Contract, Ex. 31, p. 271, § C.3.1.1. The M795 Contract provides only that "[t]he contractor shall Load, Assemble, and Pack (LAP) a quantity of 79,468 each M795 projectiles . . . ." Id. Comparison of the plain language of the entire contract ­ both the Letter Contract and the definitized M795 Contract ­ reveals that the M795 Contract's language was purposely and significantly revised to remove any requirement that AO acquire the Line 3A Equipment for the government within the meaning of the M795 Contract's relevant FFP Property Clause. a. The Parties Specifically Removed from the M795 Contract's Scope of Work a Paragraph That Required AO's Acquisition of the Line 3A Equipment for the Government and Conferred Title Upon the Government

The RFP that resulted in the M795 Contract, identified as DAAE30-96-R-0004 (the "M795 RFP"), contains paragraph C.3.9, which specifically required that the contractor acquire equipment for the government that would become government property: C.3.9, Equipment ­ Equipment purchased/fabricated by the contractor under this procurement shall be property of the U.S. government. A partial list of equipment includes: Preheat Ovens, Grid Melter, Melt Kettles, Pour Machines, Controlled Cooling Apparatus, and Post Cyclic Conditioners. Pl. Facts, ¶ 10; Ex. 4, p. 34, M795 RFP. Paragraph C.3.9 was incorporated into the Letter Contract. Pl. Facts, ¶ 12 ("Incorporated herein and made part hereof is Section C of the

solicitation DAAE30-96-R-0004.").

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During negotiations of the M795 Contract, to achieve the government's directive that AO take title to the Line 3A Equipment, paragraph C.3.9 was specifically deleted from the definitized M795 Contract. Pl. Facts, ¶ 37. The plain language of the M795 Contract, which deletes the only contractual provision that would support the government's claim of title to the Line 3A Equipment, confirms that AO was not required to acquire the Line 3A Equipment for the government, and, instead, that the parties structured the M795 Contract to leave AO free to acquire whatever equipment it needed for its own production purposes to perform the contract and take title to such Line 3A Equipment. Fireguard Sprinkler Sys., Inc. v. Scottsdale Ins. Co., 864 F.2d 648, 651 (9th Cir. 1988) ("Words deleted from a contract may be the strongest evidence of the intention of the parties"); Royal Indem. Co. v. John F. Cawrse Lumber Co., 245 F. Supp. 707, 711 (D. Or. 1965) (deletion of the only language that specifically dealt with a subject is "of more than ordinary significance" when attempting to discovery the parties' intent). The parties' action to delete a specific paragraph from the Letter Contract that would require AO to acquire the Line 3A Equipment for the government, and convey title to the government, establishes the parties' intent to remove the effect of the deleted paragraph, and instead require AO to take title to the Line 3A Equipment. b. The Parties Specifically Removed from the M795 Contract a Separate SubCLIN That Once Required AO To Deliver the Line 3A Equipment to the Government

The Letter Contract contains a specific SubCLIN requiring delivery to the government of "slow cool equipment," pursuant to SOW paragraph C.3.9: Deliveries are to be made in accordance with the following schedule:

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Line Item 0001AA

Description Design, Fabricate and Install Slow Cool Equipment

Quantity 1 lot

[Date] 21 Months [after award]

Pl. Facts, ¶ 13; Ex. 6, p. 189. SubCLIN 0001AA in the Letter Contract required AO to acquire the "Slow Cool Equipment" for the government. As with SOW paragraph C.3.9, however, the parties completely removed from the definitized M795 Contract the Letter Contract's SubCLIN 0001AA. Pl. Facts, ¶ 39. The M795 Contract replaced the Letter Contract's CLIN structure with a new CLIN structure that included only M795 Projectiles as deliverables. Id., ¶ 40. Under the CLIN structure of the M795 Contract, AO was required to deliver one First Article Test ("FAT") lot quantity of M795 Projectiles pursuant to SubCLIN 0001AA. Id., ¶ 41. AO was also required to deliver 1,000 each M795 Projectiles pursuant to SubCLIN 0001AB, and 76,968 M795 Projectiles pursuant to SubCLIN 0001AC. Id., ¶ 42. SubCLIN 0001AB provides "descriptive data" stating that "this subclin includes 1,000 each M795 Projectiles at a total price of $173,920 and $9,310,071 in facilitization costs." Id., ¶ 43. The Continuation Sheet contained in the M795 Contract provides further description, stating that the supplies and services required by SubCLIN 0001AB are "Load, Assemble, and Package M795 Projectiles in accordance with TDP [Technical Data Package] and Statement of Work Section C." Id., ¶ 44. The quantity required for delivery relating to SubCLIN 0001AB is "1,000 units," ­ a quantity which exclusively refers to units of M795 projectiles, not Line 3A Equipment. Id., ¶ 45. A note states that "[t]his subclin includes the costs for 1,000 ea M795 Projectiles (1,000 units x $173.92 = $173,920) as well as $9,310,071 in costs associated with special tooling, equipment, and facilitization efforts required by the

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contractor to perform the M795 LAP Contract." Id., ¶ 46.6 No delivery of Line 3A Equipment is specified in the M795 Contract's CLIN structure. Id., ¶ 47. The M795 Contract's SOW

confirms this result by requiring only that "[t]he contractor shall deliver M795 projectiles as delineated in section F of this contract," id., M795 Contract, Ex. 31, p. 271, § C.3.1, and by purposely excluding the preexisting paragraph C.3.9. 3. The M795 Contract Would Have Been Structured Differently If the Parties Had Intended That the Government Take Title to the Line 3A Equipment

The M7