Free Memorandum - District Court of Federal Claims - federal

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************************************************************* UNITED STATES COURT OF FEDERAL CLAIMS ************************************************************* 02-796C (Judge Allegra) INFORMATION SYSTEMS & NETWORKS CORPORATION, Plaintiff, v. THE UNITED STATES, Defendant. ************************************************************* PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF INFORMATION SYSTEMS & NETWORKS CORPORATION'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNT I OF THE COMPLAINT FOR BREACH OF CONTRACT *************************************************************
Norman H. Singer, Esquire Benjamin M. Kahrl, Esquire (of counsel) Singer & Associates, P.C. 10411 Motor City Drive Suite 725 Bethesda, Maryland 20817 (301) 469-0400 Attorneys for Plaintiff

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TABLE OF CONTENTS

TABLE OF CITATIONS ................................................................................................. 3 QUESTION PRESENTED ................................................................................................ 4 STATEMENT OF THE CASE ........................................................................................ 5 A. Introduction ................................................................................................... 5 B. Factual Background ...................................................................................... 6 1. 2. 3. 4. The Contract..................................................................................... 6 The Engineering Change Proposal .................................................. 8 Termination of Contract for Convenience .................................... 10 Government Rescinds Settlement Agreement and Denies for That ECP is Enforceable ................................................................. 14 Funding .......................................................................................... 15

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ARGUMENT ............................................ ......................................................16 A . Summary Judgment Standard ..................................................................... 16 B. There is No Genuine Dispute That the Government Contracted For ISN's Work Pursuant to the ECP ................................................................ 17 1. Contractors may recover on a contract with the Government where the issuance of a final writing is a "mere formality" and the contract is "implied in fact." .................................................... 17 There is no genuine dispute that the parties had an enforceable contract implied-in-fact ................................................................. 21

2.

CONCLUSION ................................................................................................................. 23

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TABLE OF CITATIONS

CASE CITATIONS

Algonac Mfg. Co. v. United States, 192 Ct. Cl. 649, 428 F.2d 1241 (1970).............................................................................................

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ..................................... 17 Armco, Inc. v. Cyclops Corp., 791 F.2d 147 (Fed. Cir. 1986) ............................ 16 Baltimore and Ohio R.R. Co. v. United States, 261 U.S. 592 (1923)................... .. 19 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................ 17 Cities Service Gas Co. v. United States, 205 Ct. Cl. 16, 500 F.2d 448 (1974) .........19-20 Essex Electro Engineers, Inc., ASBCA 30118 et al., 88-1 BCA 20,440 (1987) ......18-19 J.S. Alberici Construction Co., Inc. v. General Svcs. Admin., GSBCA No. 12,386, 94-2 BCA ¶26,776 (1994) ...............................................18 Mingus Constructors, Inc. v. United States, 812 F.2d 1387 (Fed. Cir. 1987) ..............16 Narva Harris Constr. Corp. v. United States, 216 Ct. Cl. 238, 574 F.2d 508 (1978)................................................................................................20 PacOrd, Inc. v. United States, 139 F.3d 1320 (9th Cir.) ..................................20-21 Texas Instruments, Inc. v. United States, 922 F.2d 810 (Fed. Cir. 1990) ..................18

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS INFORMATION SYSTEMS & NETWORKS CORPORATION Plaintiff v. UNITED STATES OF AMERICA Defendant : : : : : : Case No. 02-796C : (Judge Allegra) : : :

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF INFORMATION SYSTEMS & NETWORKS CORPORATION'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNT I OF THE COMPLAINT FOR BREACH OF CONTRACT Plaintiff Information Systems and Networks Corporation ("ISN"), by counsel, submits this Memorandum of Points and Authorities in Support of its Motion For Partial Summary Judgment on Count I of the Complaint for Breach of Contract. I. QUESTION PRESENTED Is a government contractor entitled to summary judgment on the Government's liability for breach of a modification to a contract where: (a) the Government requested the modification; (b) the parties had a meeting of the minds as to the terms of the modification; (c) the Government indicated through the contracting officer's contract specialist and technical representative that the modification had been approved; (d) the Government issued additional funding for the work covered in the modification; and (e) the Government accepted work from the contractor pursuant to the terms of the modification?

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II.

STATEMENT OF THE CASE A. Introduction

This Motion is based upon overwhelming evidence gleaned from discovery demonstrating the existence of a binding modification to the contract at issue in this litigation. The underlying facts demonstrate the existence of an implied-in-fact contract to modify the existing contract between the parties in order to include work requested from ISN by the Government and documented in the formal engineering change proposal ("ECP") submitted by ISN. Implied-in-fact contracts have been routinely enforced against the Government under circumstances similar to those present in this case: Where the parties have come to the meeting of the minds as to the scope and amount of work, and where the actions of the parties confirm the existence of that contract. In such instances, the issuance of a formal writing is considered a mere formality, the absence of which cannot be used by the Government to escape the terms of the contract modification. In this case, ISN submitted the ECP at the Government's request. The Government's contracting specialist indicated that the ECP was approved. The Government's technical representatives approved the ECP, and indicated that the only remaining requirement was the Government's changes to its internal funding documents. The Government altered funding for the contract in order to fund the ECP. The Government was aware that ISN had commenced work on the ECP, supervised such work, and drafted a progress report regarding ISN's work on the ECP. In short, the parties had a binding agreement for the work contemplated in the ECP, and ISN is entitled to a judgment that the Government's decision to repudiate the ECP agreement constitutes a breach of its obligations to ISN under the ECP.

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B.

Factual Background 1. The Contract

The Navy awarded ISN a competitively bid contract (the "Contract") in 1994 to provide turnkey Automated Technical Control Systems ("ATCS") at designated Navy sites. (Crawford1 Dep. Tr. at 23-24); (Bergdahl2 Dep. Tr. at 13). The Contract was performed for the benefit of the Space and Naval Warfare Systems Command ("SPAWAR"). (Bergdahl Dep. Tr. at 115). SPAWAR is responsible for all Naval data communications at both ship and shore facilities, as well as the Navy's echelon command. (Bergdahl Dep. Tr. at 20). The firm fixed-price Contract required ISN to provide all material, labor and services necessary to engineer, install, test, and provide operational assistance and training and maintenance services for three ATCS turnkey facilities located at Naval Telecommunications Center ("NTCC") Hampton Roads, NTCC Camp H.M. Smith and NTCC Makalapa (Pearl Harbor). (Crawford Dep. Tr. at 24, 29). The Contract consisted of two lots: Lot I consisted of Hampton Roads, Camp Smith and Makalapa. Lot II consisted of Puerto Rico and Japan. (Crawford Dep. Tr. at 24). The Contract was separated into two lots to make Lot II an option to the Contract. (Crawford Dep. Tr. at 26-27). Funding for the ATC Contract from fiscal year 1994 through September 30, 1996 totaled $7.14 million. (Bergdahl Dep. Tr. at 95). Initial funding for Lot I of the Contract was $4,416,646. (Bergdahl Dep. Tr. at 91-92); (Crawford Dep. Tr. at 110). Attached as Exhibit 3 is a true and correct copy of the SPAWAR funding document allocating $4,416,646 to Lot I of the Contract. SPAWAR

1

The deposition transcript of Roscoe W. Crawford taken on October 18, 1999. Excerpts from Mr. Crawford's deposition transcript are attached hereto as Exhibit 1.
2

The deposition transcript of Jeffrey Bergdahl taken on October 29, 1999. Excerpts from Mr. Bergdahl's deposition transcript are attached as Exhibit 2.

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also was appropriated another $7 million in the ANCC/ATC3 procurement program for fiscal year 1996 ("FY '96"). (Bergdahl Dep. Tr. at 100, 101); (Exh. 3). As of October 1995, SPAWAR had received at least $2.5 million of the FY '96 ATC program appropriation. (Bergdahl Dep. Tr. at 101); (See Paragraph 4 of the SPAWAR funding document attached as Exhibit 4). The Navy Contracting Officer ("CO") on the ISN ATCS Contract was Roscoe Crawford. (Bergdahl Dep. Tr. at 15). As a Navy CO, Mr. Crawford is responsible for negotiating contracts for supplies and services with full authority to bind the Government. (Crawford Dep. Tr. at 12). Mr. Crawford also provides administration services on the contracts he awards, i.e., taking care of any problems that may arise after a contract is awarded, implementing contract change orders, modifications, changes in delivery, and changes in the period of contract performance. (Crawford Dep. Tr. at 12). The CO's technical representative ("COTR") on the ISN ATC Contract was Jeffrey Bergdahl. (Bergdahl Dep. Tr. at 14, 20). As a Navy COTR, Mr. Bergdahl was responsible for monitoring a contractor's performance, and any problems that the contractor encounters when performing a contract are reported by the COTR to the CO. (Crawford Dep. Tr. at 13). Mr. Bergdahl was selected as the COTR on the ISN ATC Contract because he was the SPAWAR employee that possessed the necessary technical background for the ATC Contract. (Bergdahl Dep. Tr. at 18-19). Lisa Murtha was the contract specialist assigned to the ISN ATC Contract. (Crawford Dep. Tr. at 64-65.) A contract specialist reports to a CO, and a CO normally assigns only one contract specialist to a government contract. (Crawford Dep. Tr. at 17). The contract specialist negotiates and administers contracts. (Crawford Dep. Tr. at 9). Changes to the terms and
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"ANCC" refers to a related contract for three automated control network centers.

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conditions of a contract came through the contract specialist and the CO. (Crawford Dep. Tr. at 13-14.) Ms. Murtha was the CO's representative to ISN "regarding any contractual matter that pertained to the case." (Crawford Dep. Tr. at 65). 2. The Engineering Change Proposal

Due to numerous revisions by the Government to the specification requirements and the ATCS site/facility and equipment configurations, the Navy requested that ISN submit an ECP to incorporate the directed changes into the Contract. (Bergdahl Dep. Tr. at 32, 35, 36, 47). The ECP principally involved equipment modifications at the Navy's Hampton Roads facility because the site configuration at Hampton Roads had changed. (Bergdahl Dep. Tr. at 47, 80). ISN submitted a final ECP in a letter to Bergdahl dated June 20, 1995. Attached to the ECP was (1) a cost breakdown differntiated by total cost, contract cost and ECP cost; (2) an equipment list for NTCC Hampton Roads; and (3) a revised schedule with a set of specific de livery dates for NTCC Hampton Roads. A true and correct copy of the ECP, with attachments, is attached as Exhibit 5. The Navy subsequently approved the ECP submitted by ISN, both verbally and in writing. (Bergdahl Dep. Tr. at 32, 34, 45, 81, 82, 83). In a letter to ISN dated June 26, 1995, the Navy's contract specialist working with Roscoe Crawford indicated her receipt of the ECP and that "[a] modification to the contract will be issued for the combination of both the formal acceptance of an ECP of all sites in Lot I and the revised delivery schedule for all sites in Lot I." A true and correct copy of the June 26, 1995 letter is attached as Exhibit 6. Ms. Murtha further explained in her letter to ISN, "I am your first line point of contact within this activity" and that all questions regarding the contract should be directed to her. (Exh. 6). SPAWAR confirmed its acceptance of ISN's ECP in writing by letter dated July 21, 1995. (Bergdahl Dep. Tr. at 81). A true and correct copy of a facsimile cover sheet from Jeffrey 8

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Bergdahl to Roscoe Crawford dated July 21, 1995, with an attached letter from the SPAWAR Commander to the Office in Charge at the Navy Fleet Industrial Supply Center ("FISC") dated July 20, 1995 is attached as Exhibit 7. ISN was also verbally informed that the ECP had been approved on or around July 21, 1995. (Bergdahl Dep. Tr. at 82). On or about August 31, 1995, ISN was again informed in writing that the ECP had been approved, and that SPAWAR had submitted all of the documentation to FISC, i.e., the contracting office. (Bergdahl Dep. Tr. at 83). A true and correct copy of a memorandum from Jeffrey Bergdahl to Bill Robertson dated August 31, 1995 is attached as Exhibit 8. SPAWAR further informed ISN that only the wording on the Contract funding document had to be changed, i.e., the funding document for the Lot II Puerto Rico ATC project would be changed to provide funding for ISN's ECP at Hampton Roads. (Bergdahl Dep. Tr. at 83-84). In August, 1995, the funding document for the Lot II Puerto Rico ATC project was amended to transfer the funds to the ISN ATC Contract to exercise the Hampton Roads ATC ECP. (Bergdahl Dep. Tr. at 87). The total funds transferred from the Lot II Puerto Rico ATC project to the Hampton Roads ATC project to fund the ECP was $789,319. (Bergdahl Dep. Tr. 88). A true and correct copy of the SPAWAR funding document received at NRCC on August 29, 1995 which transferred funds from the Puerto Rico project to the ISN ATC contract at Hampton Roads to exercise the ECP is attached as Exhibit 9. Based upon SPAWAR's approval of the ECP, and the necessity of implementing the ECP configuration to perform the contractual requirements, ISN proceeded to perform the required and directed changes. (Bergdahl Dep. Tr. at 34-35, 36, 38, 58, 104). SPAWAR provided

assistance to ISN with regard to ISN's ECP work. (Bergdahl Dep. Tr. at 58-60). Both SPAWAR and ISN assumed that the ECP would be formally approved by FISC. (Bergdahl Dep. Tr. at 105). 9

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FISC never issued a "formal" approval of the ECP by way of a signed, Standard Form 30 ("SF-30"). (Bergdahl Dep. Tr. at 42-43); (Crawford Dep. Tr. at 43). It is undisputed that upon receiving agreement to the ECP, ISN could commence work on the ECP prior to the issuance of an SF-30. (Bergdahl Dep. Tr. at 46). ISN was never told that it should not commence work pursuant to the ECP until the SF-30 was issued. (Bergdahl Dep. Tr. at 46). The CO, Crawford, later explained at deposition that the only reason an SF-30 was not issued was that the ECP did not contain a revised schedule for the contract for Lot I. (Crawford Dep. Tr. at 66.) However, a revised schedule was clearly referenced in and attached to the ECP. (Exh. 5). Murtha, the CO's representative, acknowledged receipt of the ECP, and had communicated in writing to ISN that a modification of the contract woul be issued for "the formal acceptance of an ECP for implementation of all sites in Lot I and the revised delivery schedule for all sites in Lot I." (Exh. 6) (emphasis added). Crawford oversees over 50 government contracts at a time. (Crawford Dep. Tr. at 18). On October 19, 1995, Mr. Bergdahl submitted a written evaluation regarding the ISN ATC project, and stated that "ISN is slightly behind the proposed schedule in their ECP, but still performing satisfactorily compared against that schedule." (Bergdahl Dep. Tr. at 102). A copy of Evaluation of Progress Payment No. 1319-03 submitted by Jeffrey Bergdahl on October 19, 1995 is attached as Exhibit 10. The total validated cost estimate for the ECP was $930,527.00. (Exh. 5). 3. Termination of Contract for Convenience

On or about December 6, 1995, SPAWAR and FISC held a meeting where the termination of SPAWAR's ATC Contract with ISN was discussed. (Bergdahl Dep. Tr. at 113, 114). SPAWAR did not want to terminate the Contract with ISN "that we worked so hard to get." (Bergdahl Dep. Tr. at 114, 116). During this meeting, it was discussed that SPAWAR 10

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(Jeffrey Bergdahl, the COTR) could not continue to state that ISN was performing satisfactorily on ISN's progress payments paperwork so that progress payments could be withheld from ISN. (Bergdahl Dep. Tr. at 116). A true and correct copy of notes taken at the December 6, 1995 meeting that are contained in the FISC file regarding the ISN ATC Contract is attached as Exhibit 11. The Navy terminated the Contract for the convenience of the Government effective March 15, 1996. (Compl. ¶ 11); (Answer ¶ 11). ISN submitted its certified, total cost basis, termination settlement proposal in the amount of $5,060,758 to the Government on June 6,1996 in accordance with FAR Part 49. (Compl. ¶ 11); (Answer ¶ 11). The settlement proposal costs included the costs incurred to perform the work described in the approved ECP, and, while the costs were segregated by item/job number in the accounting system, ISN did not identify the ECP costs as a separate claim within the termination settlement proposal. (Compl. ¶ 11); (Answer ¶ 11). The Defense Contract Audit Agency ("DCAA") conducted a cost audit of ISN's termination settlement proposal and questioned the allowability of $1,011,047.00 of the proposed termination costs, the majority of which constituted costs in excess of the Contract price and profit. (Compl. ¶ 12); (Answer ¶ 12). Based upon the audit, ISN received total payments of $4,049,532 on the ATC Contract. By letter dated August 8, 1997, Denise Jones, the termination contracting officer (TCO), then issued a unilateral determination which found that ISN was entitled to $4,049,532 under its termination settlement proposal. (Jones4 Dep. Tr. at 54). A true and correct copy of the letter dated August 8, 1997 from Denise M. Jones to Bobby Melvin is attached as Exhibit 13. Since
4

The deposition transcript of Denise Jones taken on October 22, 1999. Excerpts from Ms. Jones' deposition transcript are attached as Exhibit 12.

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ISN had already been paid $4,049,532, the TCO stated that ISN was entitled to nothing. The TCO further informed ISN that it could submit additional information to the TCO that could impact her decision. (Jones Dep. Tr. at 55). Thereafter, by letter dated September 5, 1997, ISN provided the TCO with supplemental information that supported ISN's entitlement to an additional $891,364 for work performed pursuant to the approved ECP.5 (Jones Dep. Tr. at 60). A true and correct copy of the letter dated September 5, 1997 from Robert M. Cozzie, Esq. to Denise M. Jones is attached as Exhibit 14. Upon receipt of ISN's supplemental information, the TCO by certified letter dated October 9, 1997, requested confirmation of the information from the CO. (Jones Dep. Tr. at 63, 65). A true and correct copy of the letter dated October 9, 1997 from Denise M. Jones to Roscoe Crawford is attached as Exhibit 15. Specifically, Ms. Jones requested: It is asked of your office to review the enclosed information and provide to our office any documentation that would support that the ECP was never approved, that ISN was told not to perform the work related to the ECP, Why (sic) the modification was not issued to incorporate the ECP, if the mod was issued provide us a copy, or give us the actual cost that was agreed upon for the ECP. Ms. Jones did not receive a response from CO Crawford to her October 9, 1997 letter. (Jones Dep. Tr. at 63, 66). Due to no response from the CO, Ms. Jones sent another letter to CO Crawford dated November 5, 1997. (Jones Dep. Tr. 66-69). A true and correct copy of the letter dated November 5, 1997 from Denise M. Jones to Roscoe Crawford is attached as Exhibit 16. In that letter, Ms. Jones stated: Several attempts have been made to get your office to provide information on subject termination. A certified letter was sent to you on October 9, 1997 requesting you provided (sic) information on subject termination. After getting no response from you, I
5

For the purposes of this Motion, ISN's damage entitlement under the ECP is not before the Court. However, the conduct of the defendant on the issue of settling the ECP demonstrates the parties' acceptance of the validity of the ECP agreement.

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phoned you on October 29, 1997 and we discussed the matter once again and at that time you informed me that you would setup a conference call for Friday October 31, 1997 with you, Jeff Bergdahl, and myself. Once again I did not hear from your office. On Monday, November 23, 1997, I phoned and got your voice mail. I left a message for you to call me, no response. I also left a message on Jeff Bergdahl's voice mail and there was no response from his office. This letter is to inform that based on the material provided to the TCO, The (sic) TCO is ready to make an offer to ISN for the settlement of the termination settlement proposal and the ECP in the amount of $4,940,725.00. This would require additional funding on the contract in the amount of $524,079.46. It is asked of your office to reply to this letter as to whether you agree or disagree. It is asked that you respond no later than COB November 7, 1997. If no response is received from your office by this date then TCO will proceed with settlement. (for emphasis) The TCO established the settlement figure of $4,940,725 based on the audit report and supplemental information contained in the September 5, 1997 letter from ISN. (Jones Dep. Tr. at 71). The TCO: (1) acknowledged that ISN was paid $4,049,532 on the ATC Contract; (2) acknowledged that ISN had submitted information supporting a final settlement of an additional $891,364; (3) recognized available funding of $4,416,646; and (4) further recognized an additional $524,079.46 in funding was needed to pay ISN the full $891,364. By letter dated November 13, 1997, the TCO offered ISN the sum of $891,364.00 in full and final settlement of ISN's claims under the terminated Contract.6 (Jones Dep. Tr. at 77). A true and correct copy of the letter dated November 13, 1997 from Denise M. Jones to Robert M. Cozzie is attached as Exhibit 17. In that letter Ms. Jones in part stated: Contingent upon funding from The Department of the Navy, Fleet and Industrial Supply Center Norfolk, Washington, DC the TCO makes the following offer to ISN for the settlement on subject contract: Actual Costs and Profit Total Previous Payment to ISN Settlement Expenses Net Settlement $4,909,211.00 (4,049,532.00) 31,685.00 891,364.00

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The defendant has never disputed the authority of the TCO to settle the ECP agreement. Thus, the TC also had the authority to agree to it in the first place.

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Once again this is contingent on funding from the Department of the Navy. If your are in agreement with the settlement please sign at the bottom of this letter and return to this office. (for emphasis) * * *

ISN agreed with the Navy's settlement offer, and accepted the offer by signing the letter and returning it to the TCO on November 14, 1997. (Jones Dep. Tr. at 86-89). A true and correct copy of ISN's acceptance of the November 13, 1997 settlement offer is attached as Exhibit 18. On November 18, 1997, the TCO sent another letter to CO Crawford advising him of the settlement offer and requesting additional funding in the amount of $524,079.46. (Jones Dep. Tr. 88-89). A true and correct copy of the letter dated November 18, 1997 from Denise M. Jones to Roscoe Crawford is attached as Exhibit 19. 4. Government Rescinds Settlement Agreement And Denies For First Time That ECP Is Enforceable.

On December 1, 1997, CO Crawford finally contacted the TCO regarding the ISN settlement. Mr. Crawford's reason for not contacting the TCO sooner was because he was on travel. (Crawford Dep. Tr. at 52). A true and correct copy of the December 1, 1997 letter from Roscoe Crawford to Denise M. Jones is attached as Exhibit 20. In that letter, CO Crawford stated: This office is in agreement with the original DCAA Audit Report No. 631197B17100001 and your August 8, 1997 letter determination that the net amount of $0 was due to ISN. ISN has provided your office with volumes of supposed justification for additional compensation based on supposed approval of an ECP. This ECP was not approved and no services/supplies were received as stated by ISN. The ISN request for payment is unwarranted and as a Contracting Officer, not approved by myself. * * * In summary, additional funding will not be provided. The ECP referred to by ISN was not approved. No further funding is approved.

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It is CO Crawford's position that his December 1, 1997 letter to the TCO was simply to provide her with the information regarding ISN that she had previously requested. (Crawford Dep. Tr. at 132). Crawford further states: She (TCO Jones) entered into the agreement. I finally got back to her after she had entered into the agreement, and I provided her with the information that she had been requesting from us all along. Based on that information, I guess she rescinded her offer. (Crawford Dep. Tr. at 132). Based on this information provided by CO Crawford, the TCO rescinded the written settlement offer accepted by ISN.7 (Jones Dep. Tr. at 109-110, 113). By letter dated December 9, 1997, TCO Jones informed ISN: In our referenced letter to your office you were advised that the offer was contingent on funding from The Department of the Navy, Fleet and Industrial Supply Center Norfolk, Washington, DC. Our office has been advised by FISC that "additional funding will not be provided. The ECP referred to by ISN was not approved. No further funding is approved." FAR 49.114 requires I solicit the opinion of the Contracting Officer on all unadjusted changes. FISC's determination is that no amount is due and no funding will be provided. Accordingly, it is my determination that the Gross Settlement for this termination will be $4,049,532.00. The amount due ISN is $0. . . A true and correct copy of the December 9, 1997 letter from Denise M. Jones to Robert Cozzie is attached as Exhibit 21. 5. Funding

At a minimum, it has never been disputed that the ISN ATC Contract was at least funded in the amount of $4,416,646. (Bergdahl Dep. Tr. at 91-92); (Crawford Dep. Tr. at 110); (Jones Dep. Tr. at 114). Therefore, at least $367,114 ($4,416,646 - $4,049,532) in ATC Contract funds exists to in part satisfy the $891,364 settlement. Funding for the ATC Contract from fiscal year 1994 through September 30, 1996 totaled $7.14 million. (Bergdahl Dep. Tr. at 95).
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To be clear, the settlement agreement was rescinded by the TCO because CO Crawford would not fund it. CO Crawford never claimed that TCO Jones had no authority to bind the defendant to the agreement, subject to funding.

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Furthermore, SPAWAR was appropriated another $7 million in the ANCC/ATC procurement program for fiscal year 1996. (Bergdahl Dep. Tr. at 100, 101); (see also the true and correct copy of a SPAWAR e-mail dated April 12, 1995 which states that "[w]e have about $7M in the ANCC/ATC procurement program in FY 96 which is less than 6 months away" -- attached as Exhibit 22). As of October 1995, SPAWAR had received at least $2.5 million of the FY '96 ATC program appropriation. (Bergdahl Dep. Tr. at 101). Paragraph 4 of the SPAWAR fiscal year 1996 funding document signed on October 2, 1995 in the amount of $2,469,000 shows that the funds were appropriated for a three- year period, through September 30, 1998. (Exh. 4). In August, 1995, the funding document for the Puerto Rico ATC project was amended to transfer the funds to the ISN ATC Contract to exercise the Hampton Roads ATC ECP. (Bergdahl Dep. Tr. at 87); (Ex. 9). The total funds transferred from the Puerto Rico ATC project to the Hampton Roads ATC project to fund the ECP was $789,319. (Bergdahl Dep. Tr. 88). Accordingly, almost $15 million in funds existed in which to either satisfy ISN's $891,364 settlement or pay the costs incurred under the ECP agreement. III. ARGUMENT A. Summary Judgment Standard

Summary judgment is appropriate where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. The burden is on the moving party to establish the absence of any genuine issue of material fact and all significant doubt over factual issues must be resolved in favor of the party opposing summary judgment. Mere denials or conclusory statements are not sufficient to defeat a motion for summary judgment. Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390-1391 (Fed. Cir. 1987); Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149 (Fed. Cir. 1986).

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"[T]he 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). "[T]he substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." A dispute about a fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. Moreover, when a party moves for summary judgment on an issue for which the other party bears the burden of proof, the moving party may obtain summary judgment by pointing out that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). As the Court explained, summary judgment may be entered against a party who fails to make a showing sufficient to establish an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Id. at 322-23. B. There Is No Genuine Dispute That The Government Contracted for ISN's Work Pursuant To The ECP. 1. Contractors may recover on a contract with the Government where the issuance of a final writing is a "mere formality"and the contract is impliedin-fact. ISN is entitled to judgment as a matter of law as to the Government's contractual liability for the costs associated with the ECP, as no formal writing was required by law. The Federal Circuit has observed in government contract disputes:

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"The law has long been that `[I]t makes no difference that the contract was not formally signed or the bond formally approved' for the Government to be bound by the terms of a contract. . . . `[F]ormal execution, as we have seen, [is] not essential to the consummation of contract.' . . . The absence of an SF-30 therefore does not exclude the possibility that a final binding agreement was reached." Texas Instruments, Inc. v. United States, 922 F.2d 810 (Fed. Cir. 1990) (citations omitted) (emphasis added). Several courts and administrative boards have upheld the enforceability of oral or written contracts or contract modifications in the absence of a signed SF-30. For example, the General Services Administration Board of Contract Appeals has ruled that where the standard form modification, SF-30, was only a "mere formality" and not a "condition precedent" to agreement, the failure to complete the written modification did not prevent the Board from finding that an enforceable modification had been created. See J.S. Alberici Construction Co., Inc. v. General Services Admin., GSBCA No. 12,386, 94-2 BCA ¶ 26,776 at 133,173 (1994). The GSBCA determined that the better view is that the completion of SF 30 was not a condition precedent to the appellant's entitlement to compensation. The parties agreed that the work was beyond that required by the contract. They agreed on a fair and reasonable price. Finally, they agreed on the number of extra sprinkler heads installed. Only the memorialization of their agreement remained to be completed. Id. As noted in the Alberici decision, a similar ruling was made in Essex Electro Engineers, Inc., ASBCA 30118 et al., 88-1 BCA 20,440 (1987). The parties in Essex had reached an oral agreement that had not been reduced to writing. Id. at 103,366. Price negotiation memoranda had been written which reflected "complete consideration of all issues and reflect[ed] the contractor's proposal, Government's negotiation objective" and the payment agreed upon. Id. at 103,364. Both parties at that point viewed the formal writing as a mere formality and not as a

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contingency. Id. at 103,364-65. In upholding the contractor's claim, the board stated that "failure to reduce the agreement to writing on the SF 30 form [sic] is not per se fatal to the enforceability of the agreement." Id. at 103,368. Federal courts interpreting the Contract Disputes Act have also enforced government contracts despite the absence of a signed writing from the CO. Such agreements are enforced if they satisfy the requirements of an implied-in-fact contract. It is well established that an implied-in-fact contract requires a meeting of the minds which is inferred from the conduct of the parties and, in light of surrounding circumstances, shows their tacit understanding and agreement. Algonac Mfg. Co. v. United States, 192 Ct. Cl. 649, 428 F.2d 1241, 1255 (1970). Such an implied contract requires the same elements as an express contract, i.e., an offer, acceptance and consideration. Baltimore and Ohio R.R. Co. v. United States, 261 U.S. 592, 597 (1923). A contractor recovered on an implied-in-fact contract in Cities Service Gas Co. v. United States, 205 Ct. Cl. 16, 500 F.2d 448 (1974). In that case, the plaintiff sold and delivered gas to two Army locations pursuant to two written agreements from 1928 to 1971. The plaintiff thereafter terminated both contracts, but the parties negotiated for continued sales and purchases despite disagreements over price. The plaintiff sent letters indicating that it would continue to sell and deliver gas to the locations despite the absence of a written contract. The Army not only agreed to accept the deliveries of gas, but insisted upon such deliveries in a letter stating, "You are hereby informed that the Army has no intention whatsoever to permit or consent to any reduction or abandonment of service by your company." The Army continued to pay for the gas, although a dispute arose over the amount due for gas. The court found that the facts established a "meeting of the minds" and "a clear case of a contract implied in fact." 205 Ct. Cl. at 24, 500 F.2d at 452. As a result, the court granted the 19

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contractor's motion for partial judgment on the issue of liability, and held that the contractor was entitled to recover for the value of all of the gas provided on a quantum meruit basis. 205 Ct. Cl. at 32, 500 F.2d at 457. A similar result is found in Narva Harris Constr. Corp. v. United States, 216 Ct. Cl. 238, 574 F.2d 508, 510-11 (1978). In Narva Harris, a government representative encouraged a contractor to submit an unrealistically low bid in order to get a project started. 574 F.2d at 509. The government representative assured the contractor that the cost figures would be adjusted later to reflect the actual cost. Id. Based upon these assurances, the contractor proceeded with the work. Id. After the contractor completed the work, the government failed to adjust the cost figures as promised. Id. at 510. The contractor sued the government, which defended on the basis that the contract to adjust the cost figures was not in writing. Id. The Court of Claims held, "The failure, for whatever reason, of an attempt at an express contract be it written or oral, is not enough, in itself, to deprive a party of a recovery for breach where sufficient additional facts exist for the court to infer the `meeting of the mind' necessary to separate an implied-in-fact from a pure implied-in-law contract." Id. at 511. The Court of Claims further concluded that the plaintiff could recover if it could "prove facts, in addition to the alleged express oral contract, from which a contract may be inferred . . . ." Id. at 512. The decision in Narva Harris was recently relied upon in PacOrd, Inc. v. United States, 139 F.3d 1320 (9th Cir. 1998). In PacOrd, the plaintiff sued a government contractor ("A&E") and the Government for the costs of ship repair work it had done for the Navy as a subcontractor. Id. at 1321. After awarding a master contract to A&E, the Navy became concerned that A&E would have difficulty getting subcontractors because A&E had a past history of not paying them. Id. An authorized contracting officer from the Navy told the plaintiff that if it would subcontract with A&E on the project, the Navy would require A&E to establish an escrow account for the 20

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payment of subcontractors in order to guarantee that the plaintiff would get paid. Id. After the plaintiff contracted with A&E and completed its work, A&E failed to pay plaintiff despite the payments A&E received from the Navy. Id. The plaintiff sued A&E and the government, alleging in part that the government had entered an oral guaranty contract in order to secure plaintiff's services as a subcontractor. Id. at 1322. The Ninth Circuit held that an implied-in-fact contract is an exception to the requirement in FAR 2.101 (48 C.F.R. § 2.101) that contracts with the government be in writing. Id. Relying on the decision in Narva Harris, the Ninth Circuit noted that in both cases the government had made assurances in order to secure performance from the contractor, and that in both instances the contractor "proceeded and completed its work in reliance on the government's assurances." Id. at 1323. As a result, the Ninth Circuit determined that the plaintiff could recover if it proved an implied-in-fact contract at trial. Id. 2. There is no genuine dispute that the parties had an enforceable contract implied-in-fact. There is no genuine issue of material fact that the Government approved the ECP, notwithstanding the lack of an executed SF-30. The Government communicated its acceptance of the ECP immediately through the CO's contract specialist, Lisa Murtha. The ECP was further accepted by Bergdahl, who told ISN that the ECP had been "technically approved" and that all that remained for completion of the ECP was the Governments own internal changes to funding documents. Crawford admitted that the Government intended to contract for the ECP, and that the only reason that the SF-30 was not issued was due to the lack of a revised schedule. But it isundisputed that a revised schedule was attached to the ECP, and that ISN was not told to submit a different schedule or to not commence work on the ECP.

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ISN commenced work pursuant to the ECP in reliance on the communications from Bergadahl and Murhta, and Bergdahl monitored and approved such work. The scope of work was definitively laid out in the ECP, including the work to be completed and total costs associated with that work. The CO's first formal rejection of the ECP did not even take place until December 1, 1997 ­ almost 2 ½ years after the ECP was (1) requested, (2) approved orally and in writing by Government representatives of the CO, annd (3) worked on by ISN. Crawford was silent on the ECP despite many requests for a formal response from other officers of the Government. Crawford testified that ISN failed to provide a revised schedule for the ECP ­ an assertion contradicted by the ECP itself. Crawford also testified wrongfully testfied that SPAWAR never approved the ECP. (Crawford Dep. Tr. at 36-37). This assertion is plainly contradicted by the correspondence from SPAWAR indicating its complete approval of the ECP (Exhs. 7 and 8), as well as the testimony of Bergdahl, the COTR. Moreover, SPAWAR ameded its funding documents specifically to arrange for funding of the work cited in the ECP. (Exhx. 4 and 9). There is no genuine issue of material fact that the Government reached an agreement with ISN for the work described in the ECP, and that ISN has not been fully-compensated for its work once the Government terminated the contract for convenience.. The parties treated the issuance of the SF-30 as a mere formality. The contracting parties had a meeting of the minds on the work to be done, and acted according to their mutual understanding. The case law governing this dispute simply does not allow the Government to deny a contract years after it was entered into on the basis of a technical formality due to the Government's own inaction.

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IV.

CONCLUSION Because there is no genuine issue of material fact regarding the existence of the Navy's

contract with ISN for the work indicated in the ECP, and the Government's breach of that contract, ISN requests that this Court enter partial summary judgment in favor of ISN on the issue of the Government's liability for the ECP. ISN will then hereafter be required at trial to prove its damages resulting from the breach.

Respectfully submitted,

.

__s/ Norman H. Singer_______________________ NORMAN H. SINGER, ESQ. BENJAMIN M. KAHRL, ESQ. (of counsel) Singer & Associates, P.C. 10411 Motor City Drive Suite 725 Bethesda, Maryland 20817 (301) 469-0400 Counsel for Plaintiff

October 23, 2003

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