Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS TETRA TECH EC, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 06-146C (Judge Wheeler)

DEFENDANT'S OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT Defendant, the United States, pursuant to Rule 56 of the Rules of the United States Court of Federal Claims ("RCFC"), respectfully submits this brief in opposition to plaintiff's motion for summary judgment. In support of this brief, we rely upon the amended complaint, our response to plaintiff's proposed findings of uncontroverted fact, and, in part, upon plaintiff's proposed findings of uncontroverted fact.1 STATEMENT OF THE CASE I. Nature of the Case Plaintiff, Tetra Tech EC, Inc. ("Tetra Tech") seeks damages pursuant to multiple theories of liability (breach of contract, constructive change, breach of implied contract, equitable estoppel, and mutual mistake) in connection with a contract issued by the United States Army Corps of Engineers ("Corps" or "agency") for the removal of unexploded ordnance ("UXO") from land at Fort Meade, Maryland.

Plaintiff did not file proposed findings of uncontroverted fact in a separate document, as required by RCFC 56(h). For purposes of this brief, we will treat the "Statement of Undisputed Facts" at pp. 2-10 of plaintiff's brief as plaintiff's proposed findings of uncontroverted fact ("PPFUF").

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II.

Statement of Facts We respectfully refer the Court to our proposed findings of uncontroverted fact and our

response to plaintiff's proposed findings of uncontroverted fact. We offer the following summary of the relevant facts. The Corps awarded Contract No. DACA87-00-D-0039 to Tetra Tech (formerly known as Foster Wheeler Environmental Corporation) on September 28, 2001. PPFUF ¶ 1. The contract called for Tetra Tech to locate, identify, and dispose of UXO and suspected UXO from a 309acre site at Fort Meade, Maryland. PPFUF ¶ 1. The amount of the original task order award was $2,777,814.20. PPFUF ¶ 1. The contract was modified four times, which brought the total contract price to $3,074,731.29. Defendant's Proposed Findings of Uncontroverted Fact ("DPFUF") ¶ 1. In a letter dated September 6, 2005, Tetra Tech submitted a certified claim to the agency's contracting officer in the amount of $1,188,422.62, plus interest. PPFUF ¶ 2. The claim consisted of four parts: (1) $1,119,723.25 for clearance of UXO in excess of 21 UXO-like anomalies per acre; (2) $26,695.24 for increased level of effort by a senior geophysicist; (3) $26,695.24 for increased level of effort to investigate 37mm projectiles in Range 1; and (4) $15,308.88 for costs resulting from extreme weather delays. DPFUF ¶ 2. Contracting officer Lydia Tadesse issued a final decision on November 30, 2005. PPFUF ¶ 3. In her summary of the claim, she noted that the primary asserted basis of the claim was Tetra Tech's purported belief that the number of anomalies it was actually required to excavate was more than 400 percent above the number it had expected to excavate when the contract was awarded. DPFUF ¶ 3. 2

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The contracting officer made several findings of fact. She found that during the proposal phase, prospective bidders submitted numerous questions that were answered by the Corps. One of the questions was whether the contractor would be expected "to dig all potential UXO items" or only those with certain characteristics. The Corps responded: "All potential UXO items." DPFUF ¶ 4. Another question was whether the Corps would provide an anomaly-per-acre assumption for the project. The Corps answered: "The Contractor should assume 20 UXO/OE items per acre." DPFUF ¶ 5. A follow-up question asked if this meant that bidders should assume that 20 anomalies per acre would, upon excavation, be identified as UXO/OE2 and require disposal. The Corps answered, "Yes." DPFUF ¶ 6. Arguably the most important question was: "What estimated number of anomalies per 100 foot square grid, or other unit area, should contractors use to estimate anomaly reacquisition and remediation efforts?" The Corps initially answered: "The Contractor should assume 200 anomalies per acre, and 20 UXO/OE items per acre." DPFUF ¶ 7. The Corps later supplemented this answer with a clarification: Clarification to bidding based on excavating 200 anomalies per acre: A quantity of 200 anomalies per acre was included in previous correspondence. This suggests that the requirement is for (309 acres x 200 anomalies =) 61,800 excavations. That is not the intent or objective. The requirement is to remove all reasonably detectable UXO and UXO-like items. Based on [the Corps'] knowledge of the site and to provide an even basis for Proposal preparation purposes, the Contractor should assume there exists in the ground (below the surface) approximately 20 UXO or UXOlike items per acre. If the Contractor's false alarm ratio is, say 9:1, then 200 excavations would be required to recover 20 UXO or UXO-like items. The 200 per acre number is simply an illustration of the design process we would use to plan this activity. The
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"OE" refers to ordnance and explosives. 3

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Contractor's false alarm ratio may be lower or higher. Each Contractor should base their bid on their own process and cost to recover all detectable UXO or UXO-like objects under the assumption that there will be approximately 20 such items per acre. DPFUF ¶ 8. The contracting officer found that Tetra Tech's proposal, which stated that Tetra Tech expected to excavate 20 anomalies per acre, indicated confidence in investigating anomalies such that Tetra Tech expected few, if any, false positives or false alarms. The contracting officer also identified several problems with Tetra Tech's performance of the contract. Those problems included the following: · Tetra Tech's geophysicist apparently chose not to apply all of the applicable criteria (size, mass, and composition) to an anomaly before identifying the anomaly as one that required excavation. As a result, Tetra Tech excavated an excess number of false alarms or false positives. · Although the contract and Tetra Tech's work plan required ongoing comparisons of actual and predicted results, Tetra Tech apparently waited until excavations were complete before it compared predicted results with actual results. · Tetra Tech's decision to dig over 24,000 anomalies (102 anomalies per acre), without incorporating the required feed back process, was a corporate decision. "The fact that this resulted in an extremely large set of anomalies to dig was [Tetra Tech's] risk, not a differing site condition." DPFUF ¶ 9.

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Notwithstanding the numerous problems with Tetra Tech's work, the contracting officer stated in her decision that, "in an effort to reach a resolution," she would allow "some compensation" for UXO clearance and the other portions of the claim. As stated in the final decision: A. Clearance of UXO greater than 21 UXO-like anomalies per acre. Of the $1,119,723.25 claimed, I find that you are entitled to $309,045.23. B. Increased level of effort for senior geophysicist. Of the $26,695.24 claimed, I find that you are entitled to zero dollars. C. Increased level of effort for 37mm in Range 1. Of the $26,695.24 claimed, I find that you are entitled to $19,333.00. D. Lost days associated with extreme weather. Of the $15,308.88 claimed, I find that you are entitled to $13,104.00. DPFUF ¶ 10. LAW AND ARGUMENT I. Standard Of Review For Summary Judgment Under RCFC 56 It is proper for this Court to grant summary judgment only when there is no genuine issue as to any material fact, and the moving party is entitled to judgment in its favor as a matter of law. RCFC 56 provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." RCFC 56(c) states that in order for a motion for summary judgment to be granted, the moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Summary

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judgment will not be granted if "the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When making a summary judgment determination, the Court's function is not to weigh the evidence, but to determine whether there is a genuine issue for trial. Id. at 249; see also Cloutier v. United States, 19 Cl. Ct. 326, 328 (1990), aff'd, 937 F.2d 622 (Fed. Cir. 1991). The Court must determine whether the evidence presents a disagreement sufficient to require submission to fact finding, or whether it is so one-sided that one party must prevail as a matter of law. Anderson, 477 U.S. at 250-52. When the record could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial, and the motion must be granted. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). If, however, the non-moving party produces sufficient evidence to raise a question as to the outcome of the case, then the motion for summary judgment should be denied. Composite Laminates, Inc. v. United States, 27 Fed. Cl. 310, 315 (1992). Any doubt over factual issues must be resolved in favor of the party opposing summary judgment, to whom the benefit of all presumptions and inferences runs. Matsushita Elec. Indus. Co., 475 U.S. at 587. II. Tetra Tech Has Not Established Liability Although Tetra Tech, as the plaintiff, has the burden of proving that the Government is liable for damages, Tetra Tech makes no serious effort at establishing liability in its brief. In fact, Tetra Tech does not even identify, let alone prove, a viable theory of liability. Tetra Tech's motion states that it is seeking summary judgment "with regard to Count VI" of the amended complaint. Pl. Mot. at 1. Count Six of the amended complaint is titled 6

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"Adoption Of Government's Methodology In Calculating Amount Of Recovery." As the title makes clear, Count Six alleges a theory of damages, not a theory of liability. Count Six implicitly assumes that the Government is liable for damages, then purports to correct "the amount which Tetra Tech is entitled to recover on its claim." Am. Compl ¶ 50. In order to recover any damages in this action, Tetra Tech must first establish the Government's liability pursuant to one of the theories of liability alleged in the complaint: breach of contract (Count One), constructive changes (Count Two), breach of implied contract (Count Three), equitable estoppel (Count Four), or mutual mistake (Count Five). Tetra Tech's motion does not discuss any of these theories of liability. Indeed, it is unclear which of these theories, if any, Tetra Tech is relying upon to establish that the Government is liable for damages. Tetra Tech appears instead to proceed upon the assumption that the Government's liability was established by the contracting officer's final decision, such that the only issue remaining is whether the contracting officer correctly computed damages. Tetra Tech's apparent assumption that it may rely upon the favorable portion of the contracting officer's final decision (the partial award) while ignoring the unfavorable portions (such as the finding that there was no differing site condition) is mistaken. The entirety of Tetra Tech's claim and the Government's defenses must be tried de novo by this Court. This case is governed by the Contract Disputes Act of 1978, as amended, 41 U.S.C. §§ 601-13 (CDA).3 The CDA provides that if a contractor brings a claim in this Court, then the action "shall proceed de novo in accordance with the rules of [this] court." 41 U.S.C.

Tetra Tech acknowledges in its complaint that it submitted its claim to the contracting officer pursuant to the CDA. Am. Compl. ¶ 4. 7

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§ 609(a)(3). In a series of three decisions, the United States Court of Appeals for the Federal Circuit has held that the contracting officer's findings are not entitled to any deference when a claim is brought in this Court. The first of these decisions was Assurance Co. v. United States, 813 F.2d 1202 (Fed. Cir. 1987). In that case, the contractor had requested an equitable adjustment to a construction contract, and the contracting officer made a small award to the contractor. Id. at 1204. The contractor appealed to the Armed Services Board of Contract Appeals ("ASBCA"), which negated one portion of the contracting officer's award, and reduced the other portion of the award. Id. The Federal Circuit held that the ASBCA possessed the authority to nullify or reduce the contracting officer's award. Id. at 1206. The court of appeals noted that prior to enactment of the CDA, the United States Court of Claims had held that an appeal to a contracts board "`vacated' the contracting officer's decision and entitled the contractor to a de novo hearing before, and de novo decision by, the board." Id. (citing Southwest Welding & Mfg. Co. v. United States, 413 F.2d 1167, 1184-85 (Ct. Cl. 1969)). The Federal Circuit construed the CDA as incorporating this rule, so that "where an appeal is taken to a board or court, the contracting officer's award is not to be treated as if it were the unappealed determination of a lower tribunal which is owed special deference or acceptance on appeal." 813 F.2d at 1206. Accordingly, the Federal Circuit upheld the ASBCA's decision that had reduced the award made by the contracting officer. In Wilner v. United States, 24 F.3d 1397 (Fed. Cir. 1994) (en banc), the Federal Circuit held that CDA claims brought in this Court, like CDA claims appealed to a board, must be 8

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decided de novo. In Wilner, a contractor claimed that it was entitled to 447 days of compensable delay. Id. at 1398. The contracting officer sustained the claim in part, finding that the contractor was entitled to 260 days of compensable delay. Id. Dissatisfied with that result, the contractor brought an action in this Court, seeking an award for the full 447 days. Id. The Government contended at trial that the contractor was not entitled to any delay compensation. Id. The trial court found that the contractor had only proved entitlement to 91 days of compensable delay, but nonetheless awarded compensation for 259 of the 260 days found compensable by the contracting officer. Id. at 1399. The trial court reasoned that the failure of proof at trial was an insufficient basis to reject the contracting officer's findings in favor of the contractor. Id. Upon appeal in Wilner, the Federal Circuit vacated the trial court's decision and remanded with instructions to decide the claim based upon the evidence introduced at trial. Id. at 1403. The Federal Circuit explained: The plain language of the CDA and our decision in Assurance also make it clear that, in court litigation, a contractor is not entitled to the benefit of any presumption arising from the contracting officer's decision. De novo review precludes reliance upon the presumed correctness of the decision. See Renegotiation Bd. v. Bannercraft Clothing Co., 415 U.S. 1, 23, 94 S. Ct. 1028, 1040, 39 L. Ed.2d 123 (1974) (de novo proceeding is "unfettered by any prejudice from 1402 the agency proceeding and free from any claim that the [prior] determination is supported by substantial evidence"). Thus, once an action is brought following a contracting officer's decision, the parties start in court or before the board with a clean slate. Id. at 1401-02. The Federal Circuit found that the trial court had erred by relying upon the contracting officer's findings even though the contractor had failed to meet its burden of proof at trial. In addition, the Federal Circuit expressly overruled a pre-CDA case, J.D. Hedin Constr.

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Co. v. United States, 347 F.2d 235 (Ct. Cl. 1965), "to the extent that it stands for the proposition that a contracting officer's decision constitutes a strong presumption or an evidentiary admission of the extent of the government's liability, albeit subject to rebuttal." Wilner at 1402-03. The Federal Circuit reaffirmed this rule once again in England v. Sherman R. Smoot Corp., 388 F.3d 844 (Fed. Cir. 2004). In that case, a contractor requested an equitable adjustment for 53 days of compensable delay, and also requested that the contract completion date be extended by 51 days. Id. at 846. The contracting officer found that only 21 of the 53 days were compensable, but nonetheless agreed to extend the date for contract completion by 51 days. Id. The contractor appealed to the ASBCA, which concluded that the Government was responsible for 51 days of compensable delay. Id. at 848. The ASBCA reasoned that because the contracting officer had agreed to extend the completion date by 51 days, the contractor was entitled to a rebuttable presumption that the delay had been caused by the Government. Id. Because the Government did not rebut the presumption in proceedings before the board, the ASBCA ruled in favor of the contractor. Id. The Federal Circuit vacated the ASBCA's decision, and remanded with instructions to determine the merits of the claim without any presumption arising from the decision of the contracting officer. Id. at 857. After discussing 41 U.S.C. § 609(a)(3), Assurance, and Wilner, the Federal Circuit emphatically restated the long-standing rule: "Congress made it clear in the CDA that any findings of fact by a contracting officer in a final decision are not binding in any subsequent proceeding." Id. at 856.

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Consistent with the CDA, Assurance, Wilner, and England, this Court has refused to defer to findings made in a contracting officer's final decision. For example, in Transamerica Corp., Inc. v. United States, 28 Fed. Cl. 418 (1993), this Court rejected a contractor's effort to appeal only the damages portion of a contracting officer's decision. In that case, the contracting officer had submitted a claim for an equitable adjustment in the amount of $265,549.89, but the contracting officer awarded only $179,530.25. Id. at 420. The contractor brought an action in this Court for the remainder, and asked the Court to deem its claim to the contracting officer to have been "denied only as to the amount of the equitable adjustment." Id. at 423. The Court held it could not engage in such a "piecemeal analysis" because "[t]he modification is a unitary document upon which the plaintiff sued in the Claims Court." Id. at 423. Instead, the Court held that it was required to review de novo the contracting officer's entire decision. Id. at 424. Similarly, this Court held in Renda Marine, Inc. v. United States, 66 Fed. Cl. 639 (2005), that trial de novo in this Court will result in a reduction of the contracting officer's award if the plaintiff fails to carry its burden at trial. In Renda Marine, the contracting officer had granted several of the plaintiff's requests for equitable adjustments based upon differing site conditions. Id. at 721. The Court correctly evaluated all of the plaintiff's claims de novo, without any presumption that the contracting officer's findings were correct. Id. at 647 (discussing 41 U.S.C. § 609(a)(3), Assurance, England, and Transamerica). After trying the case, the Court found that the contractor was not entitled to the partial relief that the contracting officer had granted, let alone the additional relief it had sought in this Court. Id. at 721. In this case, contrary to the above authorities, Tetra Tech seemingly urges that: (1) the contracting officer's award of partial relief is binding upon the Government in this action; (2) the 11

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Court may adjudicate a claim for additional damages without adjudicating liability de novo; and (3) the contracting officer's findings that were adverse to Tetra Tech should be given no consideration whatsoever. Tetra Tech's position is contrary to the well-settled law discussed above. In particular, this case is indistinguishable from Transamerica, where the plaintiff also attempted to limit the issue before the Court to whether the contracting officer had properly calculated damages. As in Transamerica, the contracting officer's partial award does not establish liability in this Court. Because the contracting officer's decision is a "unitary document," a plaintiff may not litigate its claim "piecemeal" by treating the decision as correct and binding with respect to liability, but flawed and challengeable with respect to damages. 28 Fed. Cl. at 423. By filing in this Court, Tetra Tech committed itself to establishing both liability and damages de novo. 41 U.S.C. § 609(a)(3). Because Tetra Tech's motion and brief do not identify, let alone prove, a theory of liability, the Court should deny the motion for summary judgment. No Government witness has testified that Tetra Tech is entitled to be paid more than the amount proposed in the contracting officer's final decision. PPFUF Ex. 1 at 9. Tetra Tech contends that the contracting officer made a "fundamental error in her calculation of the amount of the equitable adjustment." Pl. Br. at 14. Tetra Tech has not cited any evidence that the contracting officer's calculation was erroneous. Tetra Tech relies upon the deposition testimony of three agency witnesses: Lydia Tadesse, Brendan Slater, and Jason Adams. None of these witnesses testified that Tetra Tech is entitled to an award in excess of the amount proposed in the final decision. Lydia Tadesse stood 12

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by her final decision: she testified that "I do agree with what you see here [in the final decision]." Tadesse Tr. at 41, cited in PPFUF No. 7. Mr. Slater and Mr. Adams performed various recalculations using assumptions provided by Tetra Tech's counsel, but did not testify that the original calculations were erroneous. Neither Ms. Tadesse, nor Mr. Slater, nor Mr. Adams testified or opined that the Government is in any way obligated to pay Tetra Tech an amount larger than the amount proposed in the contracting officer's final decision. Therefore, Tetra Tech has failed to establish the Government's liability, which remains a genuine issue to be tried in this case. CONCLUSION For the foregoing reasons, the Court should deny plaintiff's motion for summary judgment. Respectfully submitted, PETER D. KEISLER Assistant Attorney General JEANNE E. DAVIDSON Director s/ Steven J. Gillingham STEVEN J. GILLINGHAM Assistant Director

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s/ Roger A. Hipp ROGER A. HIPP Trial Attorney Commercial Litigation Branch Civil Division U.S. Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 307-0277 Fax: (202) 307-0972 November 5, 2007 Attorneys for Defendant

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CERTIFICATE OF SERVICE I hereby certify that on this 5th day of November, 2007, a copy of the foregoing "DEFENDANT'S OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT" 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/ Roger A. Hipp