Free Proposed Findings of Fact and Conclusions of Law - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

TETRA TECH EC, INC.,

) ) Plaintiff, ) ) v. ) ) UNITED STATES, ) ) Defendant. ) ____________________________________)

Fed. Cl. No. 06-146C (Judge Wheeler)

PLAINTIFF'S PROPOSED CONCLUSIONS OF LAW Pursuant to this Court's Order dated July 27, 2007, as amended on December 10, 2007, Plaintiff Tetra Tech EC, Inc. ("Tetra Tech") hereby submits its Proposed Conclusions of Law. I. BACKGROUND Contract No. DACA87-00-D-0039 is an Indefinite Delivery, Indefinite Quantity ("ID/IQ") contract under which the Government provided six contractors, including Tetra Tech, with the opportunity to compete for Task Orders to provide Ordnance and Explosives ("OE") services. These services included the investigation, excavation and removal of Unexploded Ordnance ("UXO") at former or active Department of Defense ("DOD") sites. In July 2001, the Government issued a solicitation for UXO clearance services at Fort George G. Meade, Maryland ("Fort Meade"). The solicitation required contractors to utilize geophysical techniques to detect anomalies, which are defined by the contract as subsurface features detected by a geophysical instrument. Tetra Tech's equipment creates a geophysical signature of items detected in the ground. If that signature (image) is similar to the geophysical signature of UXO items suspected to be buried in the area, then the contractor must excavate and dispose of the items. If an item proves to be an actual UXO, the contractor must detonate it in 1

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place. In short, anomalies that bear the geophysical "signatures" of UXO and UXO-like items must be excavated. The solicitation, as originally drafted, did not contain an estimate of the number of items which a contractor would have to excavate in order to remove all UXO and suspected UXO items.1 Consequently, several potential offerors submitted questions requesting guidance from the Government as to the number of UXO items to be removed. In August 2001, the Government represented to Tetra Tech and the other potential offerors that the successful offeror would be required "to recover all detectable UXO or UXO-like objects under the assumption that there will be approximately 20 such items per acre." (Emphasis added). The potential offerors were further instructed to base their bids on that assumption. Neither the base contract nor the Task Order defines "UXO-like." In both its initial and revised proposals, Tetra Tech stated its intention to use the technique of geophysical interpretation to identify UXO-like items. Tetra Tech expressly stated that its offer was based on excavating 20 UXO-like "anomalies" per acre, of which two may require detonation. Tetra Tech's understanding is consistent with the Scope of Work requirement that contractors excavate all "UXO and suspected UXO." (Emphasis added) The Government awarded Task Order 006 to Tetra Tech in September 2001. Tetra Tech was performing geophysical mapping, conducting excavations and reporting results under the Task Order in March 2003. In April 2003, Tetra Tech notified the Government that it was encountering and excavating unanticipated high levels of UXOs and UXO-like items. At a meeting on April 29, 2003, the Government ordered Tetra Tech to continue with performance of As it turned out, the Government had information in its possession which made it clear that the successful contractor would excavate substantially more than 20 UXO or UXO-like items per acre. The Government not only failed to disclose that information to the offerors, it declined to provide that information despite a specific request for the information from Tetra Tech. See Section III C, herein. 2
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its excavations, notwithstanding the unanticipated numbers of items that had to be excavated. The Government advised Tetra Tech that it would monitor the situation and determine whether the levels of UXOs and UXO-like items remained high after Tetra Tech completed the excavations. The Government's representative stated at the meeting that if Tetra Tech was required to excavate more than 20 UXO or UXO like items per acre, the Government would equitably adjust Task Order 006 to compensate Tetra Tech for the additional work. Tetra Tech's actual excavations exceeded by about 300 percent the 20 UXO and UXOlike items per acre that the Government represented that offerors would encounter. For this reason, Tetra Tech submitted Requests for Equitable Adjustment ("REAs") and eventually a Contract Disputes Act claim for the additional cost of excavating the unanticipated levels of UXO and UXO-like items per acre. The amount of Tetra Tech's claim was $1,188,422. The Contracting Officer issued a final decision which recognized that Tetra Tech was entitled to an equitable adjustment, but limited the amount of the equitable adjustment to $341,482. Tetra Tech filed its Complaint in this Court in February 2006. II. SUMMARY OF THE CONTENTIONS OF THE PARTIES The principal issue in this case is the meaning of the term "UXO-like" in the context of this contract. Tetra Tech relies on the contract, the parties' course of conduct, and standard industry practice to define that term. Tetra Tech utilized its specialized equipment to discover the geophysical signature of items buried in the ground. Tetra Tech's geophysicists then compared that geophysical signature with the geophysical signature of the UXO items which the Government had identified as existing in a particular area. If the geophysical signatures were consistent, Tetra Tech considered the item to be UXO-like and excavated it. Simply stated, it is Tetra Tech's view that the

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determination of whether a buried item is UXO-like is based upon the geophysical image of the item, and that determination is necessarily made before the item is excavated. Tetra Tech's position is consistent with its experience on other Government contracts, including contracts with same contracting agency, and with standard industry practice. Tetra Tech is entitled to an equitable adjustment pursuant to the Changes clause or, alternatively, recovery of breach of contract damages as a result of the Government's requirement that Tetra Tech excavate more than 20 UXO and UXO-like items per acre. Alternatively, Tetra Tech is entitled to an equitable adjustment to the Task Order price due to the Government's failure to disclose its superior knowledge. The Government takes a different view. The Contracting Officer and the Government's Rule 30(b)(6) witnesses agreed that Tetra Tech was entitled to an equitable adjustment for additional excavations, but would limit the recoverable amount. The Government's position is that the geophysical image of the buried item should be ignored and Tetra Tech's equitable adjustment should be determined by whether an item is deemed to be UXO-like after it is removed from the ground, based on measurements made in the field and recorded in a database. The Government argues that an item can only be UXO-like if the database indicates that it has all three of the physical characteristics (length, width and weight) of the UXO items expected to be found in a particular area. III. CONCLUSIONS OF LAW A. Tetra Tech's Interpretation Is the Only Reasonable Interpretation of UXO-Like The United States Court of Federal Claims applies the following standard to the interpretation of contract language: The language of a contract must be afforded the meaning derived from the contract by a reasonably intelligent person acquainted with the contemporary circumstances. This 4

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frequently entails placing ourselves "into the shoes of a `reasonable and prudent' construction contractor" when we consider the language of the contract and attempt to divine its meaning. The unexpressed, subjective unilateral intent of one party is insufficient to bind the other contracting party, especially when the latter reasonably believes otherwise. Firestone Tire & Rubber Co. v. United States, 444 F.2d 547, 551 (Ct. Cl. 1971) (citations omitted); Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751 (Fed. Cir. 1999); Tecom, Inc. v. United States, 66 Fed. Cl. 736, 748 (2005); Capital Properties, Inc. v. United States, 56 Fed. Cl. 427, 431 (2003). In this case, the Government explicitly represented that Tetra Tech should base its bid on the requirement to "recover all detectable UXO or UXO-like objects under the assumption that there will be 20 such items per acre." Tetra Tech understood that "UXO-like" referred to geophysical anomalies with a geophysical signature that is consistent with the buried UXO items in a particular area. Tetra Tech submits that its interpretation of the contract's requirements is the only meaning that a reasonable, prudent contractor familiar with UXO removal would give the term UXO-like in the context of the Fort Meade contract. Tetra Tech's position also is supported by the following: · · Prior to the dispute (pre and post award), both parties understood that Tetra Tech would identify UXO-like items by their geophysical signatures. Both the Government's past practice and the custom and trade practice are inconsistent with the view that UXO-like is determined by taking physical measurements after the buried item is excavated. The Government is bound by its representation to Tetra Tech to excavate 20 UXO or UXO-like items per acre. Tetra Tech's interpretation is explicitly stated in its proposal for Task Order 006 and in its Work Plan, which was submitted to the Government and approved, and which is incorporated into the contract. The Government is bound by the parties' contemporaneous interpretation of 20 UXO or UXO-like anomalies per acre under bilateral Modification 03 to the contract. 5

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·

Subsequent contracts by the same contracting agency now specifically provide that OE contractors are not entitled to an equitable adjustment for unexpected excavations of UXO and other anomalies. Alternatively, under the rule of contra proferentem, the Court should adopt Tetra Tech's interpretation.

·

Each of these issues is discussed below. 1. The Government's contemporaneous interpretation of UXO-like It is well established that the contemporaneous interpretation of the parties during contract performance and before the interpretation of the contract becomes a subject of controversy, is of great, if not controlling, weight. Government Travel, Inc. v. United States, 61 Fed. Cl. 559, 571 (2004); Max Drill, Inc. v. United States, 427 F.2d 1233, 1240 (Ct. Cl. 1970). In this case, the Government's actions and inactions show that it interpreted the term "UXOlike" in the same manner as Tetra Tech did. This is clearly evidenced by the parties' course of conduct. First, the base contract and the SOW make it clear that contractors should use geophysical techniques to identify potential UXO items. In its proposal, Tetra Tech clearly explained that its excavation decisions were to be based upon the geophysical signature of an item.2 The Government's Post Negotiation Memorandum observed that Tetra Tech's proposal demonstrated a "clear understanding of the SOW." Second, Tetra Tech's Work Plan explained that Tetra Tech would determine UXO-like items based upon the buried items' geophysical signatures and made it clear that Tetra Tech planned to excavate "20 anomalies per acre." The Government approved Tetra Tech's Work Plan without qualification.
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The Government's chief geophysicist, testifying as a 30(b) (6) witness, repeatedly defined a "UXOlike item" as an item determined by geophysical processes before excavation. 6

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Third, during the performance of Task Order 006, Tetra Tech posted on a secure website accessible to the Government real time data and information that clearly explained the discrimination criteria Tetra Tech was applying in deciding which items to excavate, as well as the items that were actually being excavated. The Government was clearly aware of Tetra Tech's interpretation of UXO-like and never objected, until after the present dispute arose. Fourth, Modification 03 was a bilateral modification that compensated Tetra Tech for additional excavation on 82 of the 309 acres covered by Task Order 006. The parties agreed that Modification 03 compensated Tetra Tech for increasing the number of excavations from 20 anomalies per acre to 25 per acre on those 82 acres. This demonstrates that both Tetra Tech and the Government understood that the Task Order, as originally executed, anticipated the removal of 20 items per acre. 2. Government is bound by its representation to Tetra Tech to excavate 20 UXO or UXO-like items per acre In response to questions from potential offerors, on August 23, 2001, the Government issued a clarification to the solicitation stating that a "Contractor should base their bid on... [the requirement]...to recover all detectable UXO or UXO-like objects under the assumption that there will be approximately 20 such items per acre." (Emphasis added). The base contract similarly states that an "anomaly" is a "subsurface feature detected by a geophysical instrument." (Emphasis added). Tetra Tech's proposal, its Work Plan and all of the contemporaneous data made it clear that Tetra Tech based its bid upon the excavation of 20 items per acre. It is well established that bidders are entitled to rely on Government answers to pre-bid questions. Otherwise, "[q]uestions would be useless, for answers would be without force, and the amounts of bids would soon show the results." Sylvania Electric Products, Inc. v. United States, 458 F.2d 994, 1008 (Ct. Cl.1972). 7

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The Government's pre-bid representations "should be taken into account in ascertaining the parties' joint intent." Macke Co. v. United States, 467 F.2d 1323, 1326 (Ct. Cl. 1972). Further, when a prospective bidder relies to its detriment on pre-bid statements by a Government representative, "this is an appropriate case for applying the doctrine of equitable estoppel." Manloading & Management Associates, Inc. v. United States, 461 F.2d 1299, 1303 (Ct. Cl. 1972). 3. The Government's interpretation is contrary to its own past practices The Government contends that Tetra Tech's recovery for unanticipated high levels of UXO-like items is determined by whether the physical item after excavation is a UXO or UXOlike item based on the failure criteria set forth at Scope of Work 3.7.6. However, failure

criteria are supposed to be used only to challenge a contractor's decision not to excavate an item or to fault a contractor for failing to detect an item that should have been excavated. Failure criteria, by definition, cannot be employed to determine whether an item should be excavated in the field. In actual practice, geophysical instruments identify objects by their geophysical signatures. For a contractor to decide what to excavate on the basis of failure criteria would require clairvoyance. Tetra Tech has performed several prior contracts and many Task Orders (with the same agency) which included an estimate of the number of UXO-like items per acre. When Tetra Tech reported that it encountered more UXO-like anomalies than the per acre estimate, the Government would request a geophysical map of the grid(s). If the geophysical map showed an overage in UXO-like anomalies, Tetra Tech and the Government would negotiate an equitable adjustment. The Government did not examine the physical items represented on these geophysical maps, and the Government did not use failure criteria to establish the number of

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UXO-like items encountered. Unbeknownst to Tetra Tech, the Government apparently regarded the Fort Meade contract with Tetra Tech as a transition contract to performance-based contracting, in which physical characteristics would be the basis for payment and contractors would be unable to base their bids on specific numbers of excavations, as Tetra Tech did in the present case. It is well established that the parties' course of conduct under previous contracts with similar provisions is persuasive evidence of the parties' intent. Metropolitan Area Transit, Inc. v. Nicholson, 463 F.3d 1256, 1260 (Fed. Cir. 2006); Allied Paint Mfg. Co., Inc. v. U. S., 470 F.2d 556, 564 (Ct. Cl. 1972) ("Where the meaning of a contract's provision is ambiguous, performance of the parties under previous contracts containing the same type of provision is strong evidence of the parties' interpretation.") Here, the parties' course of conduct under prior contracts shows their reliance on geophysical analysis to determine UXO-like items and the Government's willingness to compensate Tetra Tech when actual excavations exceeded anticipated excavations. 4. The Government's position is contrary to the standard practices in the Ordnance and Explosives industry It is appropriate to refer to industry custom and trade practice to determine the meaning of a technical term, such as UXO-like. Hunt Constr. Group, Inc. v. United States, 281 F.3d 1369, 1373 (Fed. Cir. 2002); Jowett, Inc. v. United States, 234 F.3d 1365, 1368 (Fed. Cir. 2000); and Metric Constructors, Inc. v. NASA, 169 F.3d 747, 752 (Fed. Cir.1999). There is a standard practice in the OE industry for identifying an UXO-like item. If the contractor is using geophysical equipment, as Tetra Tech did here, the standard practice is as follows. The contractor first examines the geophysical signature of an item. If that signature is consistent with the signature of the UXO, then the item is UXO-like. In other words, a UXO-like 9

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item is an item which responds to the detection instrument as an UXO would. The number of UXO-like items in a specific area can be reduced by the use of discrimination criteria. In this case, Tetra Tech advised the Government of the discrimination criteria it applied and the Government never objected, except that in a few cases the Government directed Tetra Tech to excavate even more items. Tetra Tech's interpretation of the term "UXO-like" is clearly consistent with the OE industry's standard practice. Significantly, the Government's past practices are also consistent with industry practice. 5. The Government's interpretation is not reasonable The Government contends that an item is UXO-like, only when it has the physical characteristics (length, width, weight) of the UXO likely found in that area. The Government decides whether an item is UXO-like after it is removed from ground, based upon measurements taken in the field and then recorded in a database. The Government's position is unreasonable for the following reasons: · The Government's Rule 30(b) (6) witness testified that field measurements are inherently unreliable. No tape measures or scales are utilized in the field. Rather, rough estimates of size and weight are generated, using items like dollar bills, coins, shoes, etc. The Government's interpretation is contrary to standard practices in the OE industry. The Government's interpretation is contrary to its prior practices on this and other UXO removal contracts. There is no existing technology which would permit a contractor to determine if an item is UXO-like (as determined by the Government), based upon an analysis of geophysical information. Clearly, a reasonable contractor familiar with the contemporaneous industry standards would not interpret the contract as the Government does. 6. Under the rule of Contra Preferentem, the Court should adopt Tetra 10

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Tech's interpretation To the extent the term "UXO-like" item is ambiguous, the contract must be interpreted against the Government, because Tetra Tech's interpretation is reasonable and the Government is the author of the contractual provisions. Travelers Cas. and Sur. Co. of America v. United States, 75 Fed. Cl. 696, 711 (2007); Sofarelli Assocs. v. United States, 1 Cl. Ct. 241 (1982), appeal dismissed as untimely, 716 F.2d 1395 (Fed. Cir.1983). The Court of Claims stated the rationale for the rule of contra preferentem in Sturm v. United States, 421 F.2d 723, 727 (Ct. Cl. 1970): [Contra preferentem] puts the risk of ambiguity, lack of clarity, and absence of proper warning on the drafting party which could have forestalled the controversy; it pushes the drafters toward improving contractual forms; and it saves contractors from hidden traps not of their own making. Under the circumstances, Tetra Tech's interpretation is reasonable. The Task Order required that Tetra Tech excavate all "potential UXO and UXO-like items" that are "reasonably detectable" and to bid the job based on the "assumption that there will be approximately 20 such items per acre". Tetra Tech understood this to mean 20 UXO and UXO-like anomalies, i.e., detectable UXO-like items as determined through geophysical interpretation. The Government was well aware of Tetra Tech's understanding. The prior course of conduct of the parties and the industry custom and trade practices also support Tetra Tech's interpretation that what is an "UXO-like" item is determined based on geophysical interpretation. The Government's position that the determination should be based on examination of the physical item actually excavated, regardless of the geophysical signature, is contrary to the contract provisions, contemporaneous actions of the parties, prior course of dealing of the parties and customary practices in the industry.

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B. Tetra Tech is entitled to an equitable adjustment under the Changes clause A contractor is entitled to an equitable adjustment based on a constructive change where, as here, the contract incorporates the Changes Clause and the Government requires the contractor to perform work beyond the contract requirements. See CEMS, Inc. v. United States, 59 Fed.Cl. 168, 203 (2003); Miller Elevator Co., Inc. v. U.S., 30 Fed.Cl. 662, 678 (1994); George Solitt Construction Co. v. United States, 64 Fed. Cl. 229, 278 (2005) ("The court agrees with the contracting officer's contemporaneous determination that the Navy was liable for an equitable adjustment for the additional fill work in Building 122 bathrooms, under either the Changes clause or the Differing Site Conditions clause."); and ThermCor, Inc. v. United States., 35 Fed. Cl. 480, 492 (1996) ("Plaintiff asserts that if it is not entitled to an equitable adjustment under the VEQ clause or under the cardinal change rule, it is entitled to one under the Changes clause. The contract required ThermCor to excavate and treat soils within an excavation template described in the plans and specifications. Post-excavation testing, however, allegedly identified contaminated soils beyond the original limits of the template. Plaintiff contends that the Corps' directives to excavate and treat substantial quantities of soil beyond the template justifies an equitable adjustment to the contract price under the Changes clause, equal to the actual costs of performance. ... Where overruns result from the contracting officer's decision to expand the limits of the work, a contractor is entitled to an equitable adjustment under the Changes clause rather than the VEQ clause."). The Government cannot argue that the Changes clause does not afford Tetra Tech a vehicle for relief, because that clause was precisely the same vehicle for providing an equitable adjustment for increased anomaly excavations under Modification 03. As discussed above, the entire purpose of Modification 03 was to compensate Tetra Tech for the increase from 20

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excavations under the original contract to 25 excavations on 82 acres at the site. Modification 03 was specifically issued "pursuant to the authority of FAR 52.243-1," i.e., the Changes clause. Tetra Tech similarly seeks an equitable adjustment under FAR 52.243-1 for increased excavations over and above the 20 excavations upon which the contract was based.3 To summarize, the contract directed Tetra Tech to submit a price based the assumption that Tetra Tech would excavate 20 UXO and UXO-like items per acre. In April 2003, Tetra Tech advised the Government that it was encountering three times as many UXO-like items. The Government ordered Tetra Tech to continue to excavate the items, and Tetra Tech did so in accordance with the same discrimination criteria that Tetra Tech had previously disclosed to the Government. Accordingly, Tetra Tech is entitled to be compensated under the Changes clause or, alternatively, for its breach of contract damages. C. The Government breached its duty to disclose vital superior knowledge The superior knowledge doctrine is applicable "where (1) a contractor undertakes to perform without vital knowledge of a fact that affects performance costs or duration, (2) the government was aware the contractor had no knowledge of and had no reason to obtain such information, (3) any contract specification supplied misled the contractor, or did not put it on notice to inquire, and (4) the government failed to provide the relevant information." Hercules Inc. v. United States, 24 F.3d 188, 196 (Fed. Cir. 1994), aff'd on other grounds, 516 U.S. 417, 116 S. Ct. 981, 134 L. Ed. 2d 47 (1996). Thus, "[i]f the government possesses special knowledge which is vital to the performance of a contract but which is unknown and not reasonably available to a bidder who is thereby misled, the government must disclose its superior knowledge
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Notably, in part because of its experience on the present Fort Meade contract, the Army Corps of Engineers now includes in its OE contracts provisions that explicitly purport to preclude a contractor from making a claim for an equitable adjustment based upon additional excavations of UXO "and/or other anomalies." 13

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or be held liable for breach of contract." J.F. Shea Co., Inc. v. United States, 4 Cl. Ct. 46, 53 (1983) (failure to disclose more recent geologic reports). See also, Federal Group, Inc. v. United States, 67 Fed. Cl. 87, 100 (2005); Miller Elevator Co., Inc. v. U.S., 30 Fed. Cl. 662, 678 (1994) and Helene Curtis v. United States, 312 F.2d 774 (Ct. Cl. 1963). During the proposal phase, the Government withheld vital information from Tetra Tech and the other offerors, as follows: · Despite Tetra Tech's request, the Government failed to provide offerors with the "Final Report, FGGM Ordnance Survey 7600 Acre Parcel, December 1995" which covered the 309 acres originally to be cleared under Task Order 006. This report states that the Fort Meade site included high impact areas, i.e., areas where a lot of ordnance had landed, and a lot of UXOs and expended ordnance were on the surface or within 6 inches of the surface. The Government knew which areas were clean and which were very dirty at the site. After review of both initial and revised proposals the Government knew that the five participating offerors, including Tetra Tech, did not know about and/or otherwise take into account these conditions in preparing their proposals. The Government based its Independent Government Estimate on excavating 40 anomalies per acre "based on an average anomaly count per acre experienced on similar sites," but told the five competing offerors to assume 20 anomalies per acre. The Government did not permit contractors to conduct any UXO-related activities during the pre-proposal site visit, i.e., contractors could not perform geophysical surveys or conduct excavations. In summary, the Government had information in its possession that made it clear that the successful contractor would excavate substantially more than 20 UXO-like items per acre. The Government knew that this information directly affected the contractor's cost of performance. During the proposal evaluation process, the Government knew that the offerors did not have this information. Yet, the Government failed to provide the information to the offerors. Accordingly, due to the Government's failure to provide this information, Tetra Tech is entitled to be compensated for excavating more than 20 UXO-like items per acre.

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III.

CONCLUSION Tetra Tech is entitled to an equitable adjustment in the Task Order price for excavating

UXO-like items in excess of 20 per acre. The Government's position that UXO-like items should be identified based on the physical characteristics of the item after it has been dug is unreasonable, and is inconsistent with the terms of the Task Order, with the prior course of conduct between the parties, and standard trade practice in the OE industry. Tetra Tech's position is also supported by the rule of contra proferentem. Alternatively, Tetra Tech is entitled to an equitable adjustment in the Task Order price or breach of contract damages arising from the Government's failure to disclose vital superior knowledge.

Respectfully submitted, TETRA TECH EC, INC.

Date: December 18, 2007

By:

s/ William W. Thompson, Jr.____ William W. Thompson, Jr. Robert D. Banfield PECKAR & ABRAMSON, PC 1133 21st Street, N.W., Suite 500 Washington, D.C. 20036 (202) 293-8815 Telephone (202) 293-7794 Facsimile Attorneys for Tetra Tech EC, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on this 18th day of December 2007, a copy of the foregoing PLAINTIFF'S PROPOSED CONCLUSIONS OF LAW was filed electronically. I understand that notice of this filing will be sent to all parties of record by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ William W. Thompson, Jr. __

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