Free Stipulation - District Court of Federal Claims - federal

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 1 of 12

IN THE UNITED STATES COURT OF FEDERAL CLAIMS
OAK ENVIRONMENTAL CONSULTANTS, INC.,
Plaintiff,
v.
)

)
) ) ) )

)

No. 06-113C (Judge Horn)

THE UNITED STATES,
Defendant.

)
)

)

Joint Stipulations of Fact
1. Contract No. N62472-02-C-0095, for the "Anchorage Housing

Repair Project at the Naval Station, Newport, RI," was awarded to Oak

Environmental Consultants, Inc. ("OAK") on September 30,2002, in the
amount of$2,453,I63. AI.
2. The contract was awarded by the Naval Facilities Engineering

Command in Lester, Pennsylvania. AI.
3. The original contract completion date for the project was one

year after award, or September, 302003. AI.
4. The contract was for the purpose of providing labor, supervision,

tools, material, equipment, and transportation to perform necessary replacements and repairs of various types to the Anchorage Housing Units at

the Naval Station, Newport, Rhode Island. AI.

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 2 of 12

5. Contract modifications POOOOI-P00004 were issued between

January 29,2003 and December 12,2003. A23-38.

6. OAK fuished payment and performance bonds as required by
the terms of

the contract. A39-48.

7. The contract incorporated the Notice of Bonding Requirements

clause, FAR 5252.228-9305 (Dec 2000). This clause, which is set fort in its
entirety in the contract, states in pertinent par as follows:
Within 15 days after receipt of award, the bidder/offeror to whom the award is made shall furnish the following bond(s) each with
satisfactory security;

A Performance Bond (Standard Form 25). The performance
bond shall be in a penal sum equal to 100% of the contract price.

A Payment Bond (Standard Form 25A). The payment bond shall be in a penal sum equal to 100% of the contract price.

AI8-19.

8. The performance bond, Form 25, states in pertinent part as
follows:

CONDITIONS:

The principal has entered into the contract identified above.
THEREFORE

The above obligation is void if the Principal (a) (1) Performs and fulfills all the undertakings, covenants, terms, conditions, and agreements of the contract during the original
2

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 3 of 12

term of the contract and any extensions thereof that are
granted by the Governent. . ., and (2) performs and fulfills all

the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of the contract that hereafter are made.
A42
9. The contract incorporated by reference the Suspension of Work

clause. AIO. This clause, FAR 52.242-14, states in pertinent part as follows:
SUSPENSION OF WORK (APR 1984)

The Contracting Officer may order the Contractor, in writing, to suspend, delay, or interrpt all or any part of the work of this contract for the period of time that the Contracting Officer determines appropriate for the convenience of the Governent. If the performance of all or any part of the work is, for an
unreasonable period of time, suspended, delayed, or interrpted

(1) by an act of the Contracting Officer in the administration of this contract, or (2) by the Contracting Officer's failure to act within the time specified in this contract (or within a reasonable time if not specified), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay,
or interrption, and the contract modified in writing accordingly.

A49-50.

10. On May 2, 2003, the Resident Officer in Charge of
Constrction in Newport, Rhode Island, who is the contracting officer

overseeing the Newport, Rhode Island field office, sent a letter to OAK,

suspending performance of the contract. The letter states, in pertinent
part, as follows:

3

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 4 of 12

Your performance of the subject contract is hereby suspended pursuant to contract clause FAR 52.242-14, Suspension of Work
(APR 1984) effective immediately though May 01,2004.

You are to stop all on-site work except that which is necessary to correct all safety deficiencies; prevent damage to existing
governent propert, and secure existing housing units and

project materials. . . .

In addition, please provide a proposal for the deletion of all the remaining work under this contract to this office.

A5I.
11. The Navy took this action due to a pending privatization of

the base housing at Newport, Rhode Island, which the Navy anticipated
would involve demolishing the existing housing and building new

housing, thus ending the need for repairs to the existing housing. A52.
12. In a memorandum dated May 27,2003, the Commander,

Navy Region Norteast, directed the Commanding Officer, Engineering

Field Activity Norteast, which was in charge ofthe Anchorage Housing
contract, to close out the contract for the existing Anchorage Housing and confirmed that pending privatization had eliminated the need for the

existing housing, and the existing housing was to be demolished. A52.
13. The Navy followed its initial request to OAK for a close-

out proposal by letter on July 7,2003, requesting that OAK provide a

close-out proposal by July 11,2003. See A53.

4

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 5 of 12

14. On 10 July 2003, OAK responded to the July 7, 2003

request for a close out proposal, stating that OAK was stil in the process
of completing the proposal, but would be happy to meet with the Navy to

discuss the proposal the following week. A53.
15. On August 13,2003, OAK submitted its proposal to close

out the contract to the Navy. A54-57.

16. OAK's close out proposal included both costs which have
been resolved by the parties and a request by OAK for Eichleay damages.
A54-57.
17.

The issue of alleged Eichleay damages has not been

resolved.
18. On September 30,2003, OAK wrote to the contracting

officer in Newport requesting "release" of its performance bond under

the contract in order to pursue other work. A58.
19. In a letter dated October 22,2003, the contracting officer

notified OAK that, pursuant to the suspension of work order dated May
2,2003, Oak had been directed "to stop all on-site work except that

which is necessar to correct all safety deficiencies, prevent damage to
existing governent propert, and secure existing housing units and

project materials." A59.

5

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 6 of 12

20. When boilers were installed in the units the previous

winter, weather did not permit roof work and repair of penetrations, so
the six-inch exhaust stack was temporarily connected to two existing

four-inch exhaust stacks. A59.
2I. In a letter dated October 22,2003, the Contracting Officer

stated that the temporary connection of

the six-inch exhaust stack to two

existing four inch stacks was "considered a safety deficiency by the

Naval Station boiler inspector that had to be corrected immediately."
A59.
22. OAK was directed to complete this scope of

work for all

installed boilers as identified in the contract documents by November 28,
2003. A59.

23. On October 24,2003, OAK wrote to the contracting

officer stating that the "administration" involved in closing out the

project and "attempting meaningful negotiations" had gone beyond the
July 31, 2003 original contract completion date, and that "onsite and
home office administrative expenses (were continuing) as of this date;

ever increasing the equitable indebtedness to OAK." A60-62.
24. The original contract completion date actually was
the contract.

September 30,2003, one year after award of

6

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 7 of 12

25. OAK stated that, "(a)s a percentage of

Oak's revenue base,

the remaining performance balance and its eventual suspension has had a critical/drastic impact on our corporation's ability to forward work or

increase bonded work" and that it was a "resolution of this bonded

obligation that is a priority to OAK." A60-6I.

26. OAK stated that it had learned recently that the Navy
might not terminate the contract. A60-62.
27. On November 5, 2005, OAK emailed the contracting

officer to follow up regarding the OAK close out proposal and restating

its position that the Navy should "release" the bond. A63.

28. OAK stated in its email that it was being impacted because
its bonding capacity was tied up by the Anchorage Housing contract.
A63.

29. On December 2,2003, the contracting officer sent OAK a

second letter regarding the temporary connection of the boilers. A64.

30. The letter stated:
Your performance of the subject contract was suspended
pursuant to contract clause FAR 52.242-14, Suspension of

Work

(APR 1984) by enclosure 1 through May 01,2004.
You were directed to stop all on-site work except that which is
necessar to correct all safety deficiencies, prevent damage to
existing governent propert, and secure existing housing units

and project materials.
7

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 8 of 12

When the boilers were installed in the units last winter, weather
did not permit roof work and repair of penetrations. The 6"

exhaust stack was temporarily connected to two existing 4"
exhaust stacks. This is considered a safety deficiency by the

Naval Station boiler inspector and must be corrected immediately.

(A) letter. . . dated 22 October 2003 was issued as direction to complete this scope of work for all installed boilers as identified in the contract documents by 28 November 2003. As of2 December 2003, work has not begun and the cold weather is imminently upon us. Please provide the schedule you plan to follow to complete this work by 4 December 2003.
A64.

31. OAK performed requested work on the boiler connections
from December 19 through December 23,2003, and from February 9
through February 1

3, 2004. A65-75.

32. On December 4, 2003, OAK submitted an invoice and

invoice report and requested that the Navy pay OAK the corrected

balance due. A76-86.
33. On December 8,2003, OAK provided the Navy with

additional information regarding costs. A87-112.
34. On February 9,2004 and March 8, 2004, the Navy

certified two additional invoices for payment after the suspension. AII318.

8

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 9 of 12

35. Invoice 5, dated December 31,2003, and certified for

payment by the Navy on February 9,2004, was paid in the amount of
$24,407.21, which consisted of approximately $18,377 for partial

completion of the boiler connection work, and approximately $6,030 for
adjustments of 24 other items, based upon a re-review of percents
complete. AI13-15, 118.
36. Invoice 6, dated Februar 24, 2004, and certified for

payment by the Navy on March 8, 2004, was paid in the amount of
$19,193.41, which consisted entirely of the balance for the remainder of
the boiler connection work. A 116-17, 118.
37. The contract was terminated in whole for the

Governent's convenience under clause FAR 52.249-2, on December 12

2003. A31-36.

38. Also on December 12,2003, the Engineering Field

Activity Northeast, which oversees the Newport, Rhode Island office,

sent a letter to OAK more fully describing what is involved in a
termination for convenience and what steps should be taken by the
contractor. Al

19-22.

39. The letter was executed by a contracting officer from the
Engineering Field Activity, Norteast.

9

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 10 of 12

40. This letter included an acknowledgement form which was

signed by OAK on March 11,2004. AI23-24.
41. Modification P00004 to the contract, with an effective date

of August 32005, was a bilateral modification signed by both parties.
A37-38.
42. In this modification the parties agreed to a settlement of

Termination for Convenience costs in the amount of$326,659. A37-38.
43. The paries agreed in the modification that the contractor

reserved its right to file a request for equitable adjustment, or a claim, for

home office overhead pursuant to the Eichleay formula. A37-38.
44. On August 26, 2005 OAK filed a claim for $344,395.92

for Eichleay damages measured from May 2,2003, through May 17,

2004. AI27-29.
45. The Navy did not issue a final decision within 60 days of

the time OAK filed its claim.

46. OAK filed a complaint upon the basis of a deemed denial
on Februar 14,2006.

10

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 11 of 12

Respectfully submitted,

/L 1/, I?
Michael H. Payne, Esquire Payne Hackenbracht & Sullivan 220 Commerce Dr., Suite 100 Fort Washington, PA 19034
Tel: 215-542-2777 Fax: 215-542-2779

email: mhpCfphslegal.com
Attorney for Oak Environmental
Consultants, Inc.
Dated: September 22, 2006

11

Case 1:06-cv-00113-MBH

Document 18

Filed 09/22/2006

Page 12 of 12

Peter D. Keisler Assistant Attorney General
David M. Cohen Director

s/ Steven J. Gillingham STEVEN J. GILLINGHAM Assistant Director
s/Richard P. Schroeder

RICHARD P. SCHROEDER Trial Attorney Commercial Litigation Branch Civil Division U.S. Department of Justice
Attn: Classification Unit

Eighth Floor 1100 L Street, N.W. Washington, D.C. 20530 Tel: 202-35e-7961 Fax: 202-353-7988 email: richard.schroederCfusdoj .gov Attorneys for Defendant
Dated: September 22, 2006

12