Free Stipulation - District Court of Federal Claims - federal

Case 1:06-cv-00113-MBH

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DEPARTMENT OF THE NAVY COMMANDER, REGION NAVY NORTHEAST COMMUNITY (QOL) SUPPORT PROGRAM (N7) 1ASIMONPIETR! DRIVE NEWPORT. R102841
IN REPLY REFER TO:

11103 Ser N72A/090

From: To:

Commander, Navy Region Northeast (N7) Commanding Officer, Engineering Field I0 Industrial Highway~ Mail Stop i0, CONTRACT N62470-02-C-0095, ANCHORAGE

Activity Northeast, Lester, PA 19113 HOUSING REPAIR

Subj:

i. Request work on subject contract cease immediately° Programmatic changes to the concept plan for privatization of family housing have identified a need for the underlying land at Anchorage; therefore, the existing Anchorage housing units will need to be demolished° New construction at the Anchorage site will provide housing units that meet the latest requirements and criteria. 2o Even though subject renovation project is almost half completed, the remaining funds can be usec more wisely elsewhere. Request this contract be closed out while recouping as much money as possible, by obtain±ng credits for materials already purchased. 3. Navy Region Northeast point of contact at COMM (401) 841-6974 (DSN 948). is Mr. Alan Shannon

y dzrec~on Copy:to: COMLANTFLT N722

(N469)

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environmemtel oomsultamts, inc.

July 10, 2003

Nolan Redding, LTJG, CEC, USNR ROICC Newport Office 1 Simonpietri Drive Newport, RI 02841 Ref: AnchorageHousing Close out Proposal Dear Lt. Redding, We in receipt of your letter dated July 7, requesting a copy of our Close out are Proposalby July 11. Ourconsultant is still in the process of assisting in the completionof that proposal, however,we are planning a trip to Newport within the next week, or so, and wouldlike to schedule a time to meet and discuss the proposal with you. If you could suggest several dates that mightworkbest for you, I'll work on coordinating that meeting. As a follow up to your conversation with Ed, our demolition estimator is on his wayto Newport that wecan provide a cost estimate so for your review. Sincerely,

Bruce Newman Director of Operations

greentree mews 0 IBOO north route 73, suite12 ¯ marlton, nj 0805[B , I]EI5B] EIBEI-IEt553 o [fax] [EI5EI] 7EI7-Et303 o web address www.oakgroup.net

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environmenl~el coneul~anl~8, Ino,

August 13, 2003

Nolan Redding, LTJG, .CEC, USNR ROICC Newport Office 1 Simonpietri Drive Newport, RI 02841 Ref: Newport Anchorage Housing Termination for Convenience Dear Lt,Redding, Atter performingan extensive review of Ourdirect labor, overhead, G& A and material costs for the above-referenced project the following presents an overviewof our Proposal for Close-out of this Contract. It is clear froma study of OAK's past, as well as current, sales history that the suddendecision to prematurely terminate this Contract will have significant adverse economicimpact on OAK. " Clearly the documentsreviewed demonstrate no readily available workthat will ameliorate or evenmitigate the impactof losing what historically is 50% yearly sales. of WeWould also like to emphasizethat OAK spent considerable time and .effort to try and has replace this lost business and ameliorate the impact of this Terminationfor Convenience, not only for us but for the Navyas well. OAK also invested large amountsof time and exhausted every effort in an attempt to return unusedmaterials to vendors. Therefore our efforts in seeking equitable adjustmentfor the contract termination revolve predominantlyaround establishing a compensatorypercentage for G & A and profit..But not only for the under absorbed G & A, but also for the G & A absorption for this unforeseen and abrupt termination, of nearly on half of the years revenue. Clearly, at this time, there is little OAK do can to rectify substantive unabsorbed overhead expensesin the comingfive.months. The overhead has been discounted as far as possibl'e without producingsubst .~tive harmto the corporation's asset value. OAK previously supplied the Navyan estimate Of overhead in our schedule of values (Noted has below). Thenoted percentiles are predicated on full contract sales:

greentree mews ¯ 600 north route 73 o suite 12 o marlton, nj 08053 I [856] 988-9553 , [fax] [856] 797-9303 o web address, www.oakgroup.net

-/

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Scope Item Mechanical Ro( Alterations
....

Materiah Overhead Labor , (17%) $479,728 $275,175 , , ,
,,. . ,, .

Profit,,(8,%) $38,378 ...... $22,.014' $..64,0.52

Bonding

;

--

$81,5.79 $48,4..80 ....

$59~,686 $345,669 $1;000,80.5

NewDeck Stail Bathrooms .........

$800;644 , $136;109 $65,840
,

Front Entrance Door FrOnt Porch Columns (4-6 coimams typical Replace~ightiv~ and Smoke Detector
....

$11,193

$5,267
,,

$82,300, ,

$101,413
,,

$17,240 .....
¯, ,

..... $,8,113

$126,766

....

$114.,.010

$19,,382 ,,,
, ,

$9,121
, ,

$142,512

Sliding Kitchen Doors

$85,090

$14,465 : $328;448..

$6,807
¯,

..S106,363

As noted previously the 17%overhead, utilized in the original cost negotiations with the Navy,. wouldhave been an adequate percentage if the Newportsales had been placed, and adequate time allowedfor follow up sales to be booked.Clearly, until the contractis resolved no further bondinghas been afforded OAK, limiting our ability to even seek substantive work. Without the projected nearly 1.4 million in sales (as of the end of October)it appears G& Awill revert historical percentiles for operating expensesgeneratedover the past three years. The following plate enumerates past overhead (Indirect & G & A) from OAK corporate statements and generates an average percentage for operating and indirect costs of 28.62%. Date Sales .Indirect .. G.& A 2001 3,173,374 776,050 259,971 2002 3,471,327 618,319 127,019

22.15% 6.47%

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¯,

To computewhat will be the eventual overheadpercentile resulting from this termination, we have chosen the following formula whichanalyzes, utilizing historical pricing data, the appropriate G &A for a project that wasthe largest in the corporation's history, waslargely fast track and, as a consequence,whichrequired substantively moreattention as a result of changes, re-determination and ultimately termination. In an effort to computethe overhead for an impacted contract the Board of Reviewand Arbitrations accepts the Eichleay Formula,whichessentially says that the ratio of a contract sales, to the sales of the corporation overall, during the performanceperiod,is equal to the ratio of G&A for that project as compared G&A the corporation overall. to for TheEichleay computationfor Anchorage negotiated, but noting the ultimate loss of sales, is as as follows: Project start date Original~project completiondate Completion Date Workon Site Delay duration OAK estimated sales for this period (2002-2003) Sales Newportcontract value Newportestimated %of sales Estimated Corporate G & A for the project performance duration (618,319 indirect + 127,019 G & A)/365 x 304 Anticipated G & A apportioned for the project (620,775 x 71%) 9/30/2002 9/30/2003 7/31/2003 -61 $3,471,327 $2,453,163 71% $620,775 $440,75O

Predicted on this Eichleay G & Aallocation we are submitting the following cost computationfor your review: Performance Costs Contract Expense Eichleay Apportioned G & A SubTotal Profit @8% TOTAL

1,083,836 440,750 1,524,586 86,707 1,611,293

Note that this is not a forward-looking impactfor levels of under absorption that might linger due to the mannerin which this termination was implemented. For reference it is noted that this total expensesto date does not include administrative expenses.

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Utilizing the Eichleay Formula, OAK should be entitled to invoice $1,611,293.00. To date, we have billed the Navy$1,190,718.00. Therefore, OAK due $420,575.00, which represents the is difference betweenthe actual invoiced amountand the entitlement according to Eiehleay. It should also be noted that the following items need to be addressed during the course of our upcomingdiscussions: 38 custom-manufactured patio doors which have not been delivered, but for which the manufacture has invoiced. Restockingcharge for.returned kitchen cabinets Costs incurred for proposal generation Additional sub-contractor costs and potential cancellation claims Storagetrailer costs Of paramountimportance to OAK our desire to continue a close workingrelationship with is the Navyand our sincere regret that this termination, beyondanyone'scontrol, had to occur, especially since the project was moving along so smoothly. Our wish is for a fair and equitable closure to this Contract so that wemayall move forward together. We look forward to discussions about our Proposal and to resolving these issues as soon as possible.

Sincerely

Bruce Newman Director of Operations cc: E. Eichen

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environmemtal oomsuItamts, 30 September,2003 Ms. Denise Abraham Contracts Officer NAVFAC Contracts Building 1, Sinionpietri Drive Newport, R102841-1712 Re: N62472-02-C-0095 Via: email and U.S. Mail

Dear-Denise, Per myconversations and email communicationswith Ltjg Redding, I am writing with regards to obtaining release of our performancebond for the above referenced project. As the result of the Termination for Convenience,performance on this contract was effectively ended. As such no further need for a performance bond would be indicated. A bond of this size ($2.5MM) represents a good portion of our bonding capacity. Its release wouldallow us further opportunity to pursue work whichmay.help mitigate the effect of the T for C. I would,therefore, respectfully request the release of the bondat your earliest convenience.Please feel free to contact me if I can provide any further information. Thankyou very muchfor your assistance in this matter. Sincerely, oak environmental consultants, inc. '~2~ EduardEi.6hen,:... J. ClH Eduard J. Eichen, CIH EJE/esa

..

68 witherspoon

street,

suite

1.07,

princeton,

nj 08542 ~ [609)

988-9553 ~ (fax)

753-71

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DEPARTNIENT THENAVY OF
NORTHERN DIVISION NA\~AL FACiUTIES ENGINEERING COMMAND OFF~.CERIN CHARGE CONTACTS OF RESIDENTOFFICERiN CHARGE CONS.TRUCT~ON OF NAVAl. ACTIV, ITtES NARBAGANSETT AREA SAY ONESIMONPIETR1 DRIVE

4330 ROlCC/L3412 October 22, 2003 Mr. EdwardEichen OakEnvironmental Consultants, Inc. 600 N. Route 73 Suite 12 Mariton, NJ 08060 DearMr. Eichen: SUBJECT: CONTRACT N62472-02-C-0095, ANCHORAGE HOUSINGREPAIR PROJECT AT THE NAVALSTATION, NEWPORT, RI Your performance the subject contract wassuspended of pursuant to contract clause FAR 52.242-14, Suspension Work(APR1984) by enclosure (1) through May01, 2004. of Youweredirected to stop all on-site workexceptthat whichis necessary correct all to safety deficiencies, prevent damage existing government to property, andsecureexisting housingunits andproject materials. When boilers wereinstalled in the units last winter, weather not permit roof work the did andrepair of penetrations. The6" exhauststack wastemporarily connected two existing 4" to exhauststacks. This is considered safety deficiency by the NavalStation boiler inspector a and mustbe corrected immediately. Youere d}re-c~ed tocomplete scope workfor all installed boilers as identified in the th~s of contract documents 28 November by 2003. If there are any questions, please do not hesitate to contact K. Sampson 401-841-1764 at or LT Nolan Reddingat 401-841-1763.

~c

ncerely' ion~s~ Abraham ntracting Officer

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environmental oonsult~nts 0

th, 2003 October 24 Ms. Denise Abraham Contracting Officer Officer in Chargeof Contracts Naval Activities Narragansett Bay Area OneSimonpietri Drive Newport, RI 02841-1 712 Via: E-mail and U. S. Mail Re: Newpor~ Anchor Housing Dear Ms. Abraham,
th, 2003, in order to assist the Navyin meeting As YoU. are aware, on August 13 Federal funding deadlines, OAK Environmental Consultants, Inc. (OAK), expedited compilation of remaining costs to effectively terminate incomplete portions of the Anchorage Housing project, Newport,

An approximate three months prior, on May 2nd, 2003, OAK had received a notice of Suspension:of Work, from the Navy, which required OAK mitigate any future to expenses~ where possible, and compile the aforementioned termination for convenience proposal. That proposal notedthat approximately 55%of the contract had been completed, but that the. majority of the contract.performance duration (Orig. Contr. Compl.Date 7/31/03) had been exhausted. In fact, the administration necessary to close out the project and attempt meaningful negotiations eclipsed the July 31 st date and on site and home office administrative expensescontinue as of this date; ever increasing the equitable indebtedness to OAK. " As a percentage of OAK'srevenue base, the remaining performance balance.and its eventual suspension,has had cdtical/drastic..impact on our corporation"s ability to forward work or increase-bonded work. This .bonded amount, equates to an inordinate portion of-our revenue based on historical numbers, Without removal of this bond obligation, .increased bonding, whenavailable, requires unanticipated expensesand incurred damages and for an 8(a) firm, becomes more difficult.to obtain, Clearly this delay by the Navyto determinetheir future course, relative to this co.ntract, has substa.nlaly hindered our firm and resulted in loss of significant sales~ Predicated on an estimated bondobligation that is.nearly 40%of historical
..

greentree .mews- 600 north route 73; suite 12 ~ marlton, nj 08053

.

(856~ 988-.9553, (fax)(856) 797-93Q3 address, o web vv,,w,,;oakgroup.nel . . ¯

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sa~es ongoing overhead expenses for the corporation are experiencing as muchas 40%Under-absorption. As noted in our August 13th, 2003 submission, my subsequent ~etter of September 30, 2003 and numerousconversations, regardless of the Navy's analysis of closing expenses,it is the resolution of this bonded obligation that is a priority to OAK. This has been related to the Navyin both written and verbal communications:It should also be noted that there maybe additional expensesincurred in extending this bond beyond the initial November 5, 2003 commitmentdate which can and should be 1 avoided. Wehave offered to supply a smaller bond to potentially cover the minimal tasking (<$40,000.00) which could not be completed due to weather if the Navy feels this is necessaryand have received no responseto this or any other related inquiry. in the course of attempting to secure a release of our bond, we learned recently that the Navy, who has not responded in the interim months to our proposal, maynot terminate the contract. The possibility of the project resumingwill not be without substantive expenseand ~endsconcern as to financial impact(s) on a small business such as our own. Ultimately, if we cannot bring this project to an immediateconclusion we are deeply concernedas to the irrevocable financial damage will have on our firm, with it possible damages that maydwarf the current request if we do not address same immediately. The fact that three more months of both on site and homeoffice administration costs have been experienced since our close out calculation, while our firm has been encumbered garnering newsales, sets forth a self evident in portrait of escalating expensesfor longer than anticipated periods of time. While we are extremely hopeful of an amicable resolution to this matter, any further delay mayrequire to us rescind the current estimate of damages and request that the project files be madeavailable to us under the Freedom Information Act of (FOIA) in order to proceedon a different course. Given that expensescontinue to mountdaily we respectfully request either an immediateresponse, or processing of our FOIArequest for production all project related documentsincluding but not limited to, a~l Email, Correspondence, .Reports, Calculations, Schedules, Spreadsheets and Minutes regarding the Anchorage Housing project. Again, we are extremely hopeful of an amicable and expeditious resolution this matter and are prepared to continue to extend a good faith effort to bring this to fruition. to

2
greentreemews 600north route 73, suite 12 ¯ .marlton, nj 08053 ¯ (856) 988-9553 (fax) (856) 797-9303 webaddresswww.oakgroup.net ', o

..

00008±

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Thank you for your assistancein this matter. Respectfully, OAKENVIRONMENTAL CONSULTANTS, ~NC.

Eduard Eichen, J.
Eduard Eichen,C~H J. EJE/esa

Digital/signedEduard by J. Ek::hen, CIH DN: cn=Eduard J. Elchen, CIH,o=OAK EnV.'onmedal Coe~uffants, c=US Inc., Dele: 2003.11.05 ~4:43:'13 .05'00'

3 o greentreemews 600north route 73, suite ,12 '~ marlton: nj 08053 (856) 988-9553 (fax) (856) 797~9303 web addresswww.oakgroup.net " o

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Page I of 1

Erom: Ed Eichen Sent: Wednesday, November 2003 2:55 PM 05, Te: 'Abraham, Denise' Co: BruceNewman; 'Damian Cassin' Subject: Anchorage BondsandSuspention DearDenise, I tdedcalling youthis week, was but unable reach to you.I am wdting a followup to our closeout proposal as and subsequent letter of 30 Sept.askingthat the Navy release bond. hadnot heardback thought would our I and I contact again.Having projecthanging thereand particular, tying upour bonding you this out in capacity, greatly is impacting business. releaseof our bond our A would endanger Navy, not the would mitigatecostsfor closeout and further harm ourfirm. Please call or contact and me to let me let know Navy's the position. Many Thanks, Ed

8/29/2005

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4330 RO~CC/L3446 December 2003 2, Mr. EdwardEichen OakEnvironmental Consultants, inc. 600 N. Route 73 Suite 12 Madton, NJ 08060 DearMr. Eichen: SUBJECT: CONTRACT N62472-02-C-0095, ANCHORAGE HOUSINGREPAIR PROJECT AT THE NAVAL STATION, NEWPORT, RI Your performance the subject contract wassuspended of pursuant to contract clause FAR 52.242-14, Suspension Work(APR of 1984) by enclosure (1) through May01, 2004. Youweredirected to stop all on-site workexceptthat whichis necessary correct all to safety deficiencies, prevent damage existing government to property, and secureexisting housingunits andproject materials. When boilers wereinstalled in the units last winter, weatherdid not permit roof work the and repair of penetrations. The6" exhauststack wastemporarily connected two existing 4" to exhauststacks. This is considered safety deficiency by the NavalStation boiler inspector a and mustbe corrected immediately. ROICC letter 2412, dated 22 October2003wasissued as direction to completethis scope of workfor all installed boilers as identified in the contract documents 28 November by 2003. As of 2 December 2003, work has not begunand the cold weatheris imminently uponus. Pleaseprovide the scheduleyou plan to follow to completethis work by 4 December 2003. if there are any questions, please do not hesitate to contact K. Sampson 401-841-1764 at or LT Nolan Reddingat 401-841-1763.. Sincerely, !/'~ / /~ "

¯ ~eniseA r a Contracting Offi~r

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OO00~S

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WOR~ Pg=RFORM~ TODAY

W~SIL4Z.ARDOU~ MA1"ERIALtW,~TE ItEI2.A,~D

IHTO "[H~ ~

~ N¢~ LL~T SAFETY ACTION~ ~ TODAY/SAPETY ~NS CONDUCTED

~

(~)

SH~-'I" I

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CONT]RACTO~g PRODUCTION REPORT

/:

tOTAL WORK HOUI~ ON X)B ~['~

CUMULATIVE TOTAL OF WORK HOURS FROM PREVIOU~ R/~ORT 3 ~__,,. TOTAL WORK HOURSHt_O~

CONSTRUCTIQN PLANTEQUIPMENT JOB srrfi AND ON Sc~du~

TODAY. INDIC.ATE HOURS USED~ SCHEDULE ACllVEY NUMBER.

REMARKS

/,a .~ o3 o.
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BILLWALTHR~

~[~NO

TO~AL ~0RKHO~P~ ~B SITE Olq TH~ DAT~, IN~L CON~r ~ CURffJI~TIVE TOTAL WORK OF HOURS FROM

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~ORKPERFORMED TODAY

SHEET OFI I

0000~~

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JOB SAFETY

TOTAL WORK~ ON ~OB ~ DAT~ ~ CON'T ~TiVE TOTAL OF WORK ~OI~RS~RO~ PIOUSREPORT ~OTAL WOIU~ ~UP,~ FROM

CCNSTRUCT]ON AND PLANT EQUIPMENT JOBSITE TODAY. C~N INDICATE HOUR~ U$ED AND SCHEDULE ACTNIT~ NUMBER. Schedule

SHEET 1 1OF

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CO~'RAC'f NO N62472-02-C-0095 OAK ENVIRONMENTAL CONSULTANTS

REPORT'NO

WORK PERFOR~]ED TODAY

Schedule REMARKS

429~/1(g/t~

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co~cr~o H62472~2-~D95

~(~o~,~ Ho~-n,~ t'~'~.T, ~ ~An~

REPOKT NO. 7

OAK t~LIRONIv~MTAL CONSULTANTS

BK,L WALTF_2~

4296/I (~8)

SHEET I I OF

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CONTract NO N62472-02-C-0095 ~ONTRA~ ~ ~v~ OAK ENVIRONMENTAL CONSULTANTS

HR~

TOTALWORK HOURS THISDAT~ ]]qcL CON'r ,3H]~

D~

I~OUR~ FR~ ~R~VIOU~ RF2ORT

~o

CONSTRUCTION AND PLANT EQU|Pf~ENT JOB ON sri~TODAY.

42~n

~

SHEETOF1 1

0000 ~ ~