Free Response to Supplemental Brief - District Court of Federal Claims - federal

Case 1:07-cv-00143-MMS

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS SKANSKA USA BUILDING, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 07-143C Judge Sweeney

DEFENDANT'S RESPONSE TO PLAINTIFF'S SUPPLEMENTAL BRIEFING ON THE DEPOSITION OF PHILIP CRAWFORD Pursuant to this Court's order of March 3, 2008, defendant respectfully responds to plaintiff Skanska USA Building, Inc.'s ("Skanska") supplemental summary judgment briefing regarding the deposition of Philip Crawford. Despite the fact that this Court's order unequivocally stated that the supplemental briefing permitted in this case was to be "based on the information learned in [Mr. Crawford's] deposition," Order, Mar. 3, 2008, plaintiff devotes half of its brief to rearguing parts of its case that have nothing to do with Mr. Crawford's testimony, even going so far as to provide a graphic representation of those arguments in an "Issues Progression Flowchart." In light of plaintiff's attempt to revisit matters already briefed in their entirety, we must also preface our remarks upon Mr. Crawford's testimony with yet another explanation as to why plaintiff's arguments, and, indeed, its entire theory of the case, are fundamentally and fatally flawed. In our briefs, we have shown that Skanska signed a contract with the Government under which it knowingly assumed responsibility for transporting project soils on-base or off-base, yet consciously underbid the job, excluding all transportation costs from its bid in the hope that it might fortuitously make up for the omission in the course of the work by taking possession of the 1

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Government's soil and reselling it to a third party. We have also shown that, because Skanska had no contractual right either to the title to or revenue from, the project soils on which it hoped to rely to make up for the shortfall, it has no contractual basis for requiring the Government to pay it for the value of the project soils that it was unable to realize. Moreover, we demonstrated that, to the extent that any change to Skanska's hauling responsibilities resulted from the Government's direction to Skanska to transport project soils to Landfill #2, that change both relieved Skanska of its contractual obligations to haul those soils a greater distance, i.e., to a location off Fort Lewis, and actually decreased the hauling costs that Skanska would have included in its bid but for its intentional underbid. In the alternative, we established, based upon contractual provisions not relied upon by the contract administrator at the time that it directed Skanska to transport project soils to Landfill #2, but relied upon by the contracting officer in her decision on Skanska's claim, that the Government was, in fact, always empowered under the terms of its contract with Skanska to direct Skanska to transport project soils to Landfill #2, or to any other location on Fort Lewis, such that a direction to Skanska to do so worked no change to its contractual obligations, and foreclosed any recovery under a differing site condition theory or theory of constructive change. The recent deposition testimony of Phillip Crawford, offered in support of the Government's alternative theory, is fatal to plaintiff's case. At the time of the events giving rise to this litigation, Mr. Crawford was Chief of the Fort Lewis Environmental Compliance Branch, a division of Fort Lewis Public Works that provides Public Works's Engineering & Contract Management Division ("ECMD") with technical expertise on environmental compliance. See Crawford Dep. at 4-5, 46-47, 50-51, attached hereto as Exhibit A. Mr. Crawford was also

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responsible for handling issues involving lead-based paint jointly with Fort Lewis's Resource Conservation and Recovery Act Program Manager. Id. at 8, 10-11. For these reasons, and, as previously set forth in a declaration supplied to the Court with the Government's moving papers, Mr. Crawford is, therefore, qualified to speak on behalf of Fort Lewis Public Works as to the environmental considerations that bear on this case. A78. As discussed at length in prior briefing, Section 01410-3.5.2 of Skanska's contract with the Government provides that "[c]lean fill materials shall be disposed of on Fort Lewis at a site as directed by [Public Works], Engineering & Contract Management Division [ECMD]." A5. In this case, Mr. Crawford concluded on behalf of Fort Lewis Public Works that the soils at issue here constituted clean fill, A78-79, advising personnel from the Army Corps of Engineers and Fort Lewis Public Works in an April 2004 email that the project soils now at issue in this litigation were "minimally contaminated with traces of lead in paint chip form. It is, for all intents and purposes, clean fill." A33 (emphasis supplied); see also Crawford Dep. at 25. Mr. Crawford explained in detail during his deposition that the term "clean fill" is understood to be "technically, anything that falls below . . . regulatory limits, and therefore, has no restrictions on its use . . . ." Crawford Dep. at 12-13. Directly undermining plaintiff's claim that the project soils could not have been considered "clean fill" because they contain the metallic element lead, Mr. Crawford explained that soil may contain detectable levels of metals and still constitute clean fill, unless the level of metal in the soil reaches regulatory action levels. Id. at 51-52. With respect to the soils tested from the FY03 Whole Barracks Renewal Project, Mr. Crawford recalled that, of the approximately 25 samples taken, "one of them was above what we would call the TSCA levels. That is, above 250 parts per million, which is a cleanup action

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level. However, the laws that govern those cleanups would look at the entire body of results. Rather than just the one outlier, which was probably a paint chip. And so taken as a whole, yes, [the soils] were below regulatory thresholds." Id. at 14. As such, "that body of soil was okay to use without restriction, from a regulatory perspective." Id. However, given the knowledge that the project soils contained lead-based paint, "some caution, some care would normally be taken . . . in where you might spread or use these, simply because of a conservative approach. Not because of a regulatory requirement." Id. at 13; see also id. at 49 ("I suspect the Corps was simply being conservative, because there was detected lead in there."). As previously discussed in our briefs, Section 01410-3.5.2 vested in the Government sole discretion to determine in the first instance what constituted fill that was clean enough for use by the Government. A49, A60, A65.1 Mr. Crawford's testimony, his declaration, and his emails at the time of the events complained of confirm that, regardless of the contract provision relied upon by the contract administrator as authority for requiring Skanska to transport project soils to Landfill #2, A40, Fort Lewis Public Works did, in fact, make the contemporaneous determination that project soils constituted clean fill that could be put to use on Fort Lewis, and specifically that they could serve a beneficial use at Landfill #2. See A33, A78-79; Crawford Dep. at 16 ("[W]hen my staff reported to me these results, my conclusion was this was good stuff. This is fine. It can go anywhere. I concluded that at the time."); Crawford Dep. at 43

Although plaintiff has not specifically raised this point in its supplemental briefing, it bears noting by way of explanation that, to the extent that the individuals who tested the soil stockpile on behalf of the Army Corps of Engineers recommended more conservative use restrictions on the project soils than did Fort Lewis Public Works, under Section 01410-3.5.2 of the contract, Fort Lewis Public Works was responsible for determining how the stockpile should be characterized for beneficial use on base. 4

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("There were . . . low spots [at Landfill #2] that were caused by the excavation activities, and putting the soil out there was kind of a beneficial use for the stuff."). Moreover, the fact that the soils in question were actually suitable for unrestricted use negates any possibility that the fact that they contained lead constituted a differing site condition as plaintiff claims. The determination of whether excess soils from the project site were clean enough to fulfill the Government's needs pursuant to 01410-3.5.2 is one that is solely for the Government to make, and is not subject to unilateral veto, or even challenge by, the contractor. See Smelser v. United States, 53 Fed. Cl. 530, 551-52 (2002). Because there is conclusive proof both that the Government, in fact, made such a contemporaneous determination, and that the soils were placed at a site on Fort Lewis subject to a Government directive, that should be the end of the matter. In an attempt to avoid the obvious application of Section 01410-3.5.2 to this case and salvage its claim, plaintiff first complains that Mr. Crawford does not work directly for Fort Lewis Public Works, Engineering and Contract Management Division, and that Skanska's contract with the Government requires some sort of formal directive from that division of Public Works in order to for Section 01410-3.5.2 to have any effect. Pl.'s Supp. Br. at 4-5. These arguments have no merit. First, and most significantly, Section 01410-3.5.2 creates no enforceable interest in the contractor. Indeed, because the Army Corps of Engineers alone is empowered under the contract to issue directives to its contractors, Section 01410-3.5.2 does nothing more than identify for the contracting parties that it is the Department of Public Works on behalf of the Fort Lewis installation that will have both the interest in, and control over, opportunities for the disposition of soils on the base. Put more concretely, Skanska could never resist or nullify a Corps directive

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requiring it to deposit clean fill at a location on Fort Lewis on grounds that the Fort Lewis Public Works ECMD had not been involved with the Corps's decisionmaking process, and that the Corps had not, therefore, complied with its own internal guidance. As such, whether or not the Corps strictly complied with its own housekeeping rules is irrelevant to the question of whether Section 01410-3.5.2 is properly now invoked by the Corps in this case. Cf., e.g., Amer. Tel. & Tel. Co. v. United States, 48 Fed. Cl. 156, 160 (Fed. Cir. 2000) (failure to abide by governing statute constituted "simply . . . `governmental non-compliance with internal review and reporting procedures.' Thus, the government's omission was simply a failure to abide by housekeeping rules, and no actionable claim can arise."); ConocoPhillips v. United States, 73 Fed. Cl. 46, 52 (Fed. Cl. 2006) (similar). As it is, for purposes of the instant case, the fact that the Environmental Compliance Division of Fort Lewis Public Works, as opposed to the Fort Lewis Public Works ECMD specifically, may have made the determination that the project soils constituted clean fill that could be put to beneficial use at Landfill #2 is a distinction without a difference. As Mr. Crawford testified, it is his division, the Environmental Compliance Branch of Fort Lewis Public Works, upon which ECMD depends for guidance and technical expertise upon environmental matters. Crawford Dep. at 50-51 ("[ECMD] would come to us with questions about what needs to be done in a contract to ensure that we're compliant with . . . regulations"). Because the Corps (1) received the same guidance from Mr. Crawford's Environmental Compliance Branch that ECMD would have provided, and (2) issued an appropriate directive to the contractor on behalf of the Government in this case, Section 01410-3.5.2 constitutes a valid basis upon which summary judgment may be granted in this case in the Government's favor.

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Plaintiff next argues, in practical effect, that the Government erred in determining that the soils at issue constituted clean fill. Rather than pointing to any regulatory, legal, or even objective reason why this is so, plaintiff baldly asserts that Mr. Crawford, as Chief of Fort Lewis's Environmental Compliance Branch, is somehow unqualified even to comment on issues involving lead-based paint, in spite of the fact that he is the supervisory employee to whom the Army has entrusted responsibility for "water, air, fuels . . . and TSCA, Toxic Substance Control Act, which is asbestos and lead based paint," and has both a working knowledge of lead paint issues, and access to experts for complex questions involving that issue. Crawford Dep. at 7.2 Moreover, and in the face of unequivocal testimony by Mr. Crawford that it was "almost inconceivable" that he did not receive the soil characterization report from his staff back in 2004, Crawford Dep. at 24-25, plaintiff claims that Mr. Crawford never saw the soil report until the day before his deposition, and that the Court cannot, therefore, trust his conclusion that the project soils were clean fill. All of plaintiff's complaints about Mr. Crawford are, however, totally irrelevant. First, only the Government can decide what fill is clean enough for its needs, and, its decision in that regard is unreviewable. See Smelser, 53 Fed. Cl. at 551-52. In this case, there is no question that Fort Lewis Public Works determined that the project soils at issue here were clean enough to be put to beneficial use at Landfill #2. As such, the Government was empowered under Section 01410-3.5.2 of its contract with Skanska to direct Skanska to transport

The bald suggestions that the Chief of Fort Lewis's Environmental Compliance Branch is not competent to make a determination that soils containing lead-based paint are clean enough from a regulatory perspective for the Army's own uses unless he is an expert in lead based paint, has some unspecified formal training in hazardous waste, and conducts some sort of undefined personal investigation into such matters, see Pl.'s Supp. Br. at 6-7, are absurd on their face. 7

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those soils to a location on Fort Lewis, i.e., Landfill #2. Second, for all of its complaints about Mr. Crawford, plaintiff apparently accepts Mr. Crawford's explanation that clean fill is a term of art encompassing "anything that falls below . . . regulatory limits and therefore, has no restrictions on its use . . . ." i.e., anything below cleanup action levels. See Crawford Dep. at 12-14. Significantly, the same soil characterization report that plaintiff claims that Mr. Crawford did not adequately review states that "[d]ata results show that the stockpiled soil is mostly free of lead contamination, but does contain some concentrations exceeding Washington State MCTA Method A Unrestricted Use Criteria . . . [but] the soil does not appear to be a `dangerous waste' according to WAC 173-303 and does not need to be handled as such." A26. Thus, the very report that plaintiff contends Mr. Crawford did not adequately consider makes clear that the project soils in this case fall within the accepted definition of clean fill. As such, the Government was empowered under Section 01410-3.5.2 to direct Skanska to haul those materials to Landfill #2, and its directive in that regard worked no change to Skanska's pre-existing hauling obligations. CONCLUSION For the foregoing reasons, the United States respectfully requests that summary judgment be granted against Skanska and on behalf of the United States in this case, and that the complaint be dismissed.

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Respectfully submitted, GREGORY G. KATSAS Acting Assistant Attorney General JEANNE E. DAVIDSON Director s/ K. Dintzer for s/ M. Hockey MARTIN F. HOCKEY, JR. Assistant Director s/ A. Bondurant Eley A. BONDURANT ELEY Trial Counsel Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 616-8254 Facsimile: (202) 514-8624 Attorneys for Defendant May 12, 2008

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CERTIFICATE OF SERVICE I hereby certify that on this 12th day of May, 2008, a copy of the foregoing "Defendant's Response To Plaintiff's Supplemental Briefing On The Deposition Of Philip Crawford " was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ A. Bondurant Eley

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