Free Published Opinion/Order - District Court of Federal Claims - federal

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In the United States Court of Federal Claims
No. 04-635C (Filed: May 21, 2008) ********************* METRIC CONSTRUCTION CO., INC., Plaintiff, v. UNITED STATES, Defendant. *********************
Steven D. Meacham, Peel Brimley LLP, Seattle, WA, for plaintiff. Robert C. Bigler, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant in post-trial briefing. With him on the briefs were Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Deborah A. Bynum, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C. For defendant at trial was Brian S. Smith, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington D.C.

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Post-trial decision in suit for equitable adjustments and damages respecting military construction contracts; changed conditions; waiver and release; defective specifications; constructive changes to contract

OPINION AND ORDER LETTOW, Judge. In this contract case, plaintiff Metric Construction Co., Inc. ("Metric") seeks equitable adjustments and damages respecting two related construction contracts awarded to Metric by the U.S. Department of the Navy ("government" or "Navy") for work on San Nicolas Island, California, one of the Channel Islands located approximately 70 miles off the coast of California. The contracts concerned roadways and a Navy airfield on the island. Metric's claims primarily 1

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turn on the Navy's post-contractual installation of facilities on the island that allegedly hindered Metric's landing of construction materials, but they also involve alleged defective specifications for asphalt at two particular locations on the airfield runway, failure by the Navy to provide contractually promised special components for the runway, and a requirement that Metric cleanup and remove soils contaminated through no fault of Metric. Metric initially sought a total of $7,906,092.74 in damages, although that amount was later reduced by certain concessions made thereafter. The court conducted a nine-day trial, first in Seattle, Washington, and then Washington, D.C., with an intervening site visit to the naval installations at Point Mugu, California and on San Nicolas Island. FACTS1 A. San Nicolas Island Relatively small and isolated, San Nicolas Island is notable for its restrictive geography, topography, and usage.2 The island is home to a Naval Air Weapons Station associated with the Navy Air Stations at Point Mugu and China Lake and is also used as a site to train naval aviators for landings on aircraft carriers. The Navy controls access to the island. Roughly seven miles long and three miles wide (over twenty square miles in area), the interior of the island is gently rolling, with steep cliffs and gullies descending to the ocean. See generally National Park Service Pamphlet, www.nps.gov/chis/forkids/upload/sannicolas2006website.pdf (last visited May 20, 2008). Significant populations of seabirds nest in the cliffs; northern elephant seals, harbor seals, and California sea lions populate the beaches. Id. (A contour map of the island is appended to this opinion.) The most prominent man-made feature is a runway over 10,000 feet in length with an arresting gear at each end to simulate landing conditions on a Navy carrier. Rainfall is sparse, and the island is covered with desert vegetation. Archeological sites derived from its preexisting native population dot the island. San Nicolas Island often faces high winds, and the surrounding ocean has strong currents and can have large ocean swells. No sheltered harbor or dock is present. All deliveries to the island must be made by either plane or oceangoing barge suited to land on one of two exposed beaches. After completion of the contracts at issue in this case, the government constructed a barge-landing pier on one of the beaches to improve access to the island for delivery of materials and supplies.

This recitation of facts constitutes the court's principal findings of fact in accord with RCFC 52(a). Other findings of fact and rulings on questions of mixed fact and law are set out in the analysis. Historically, the island was home to the "Lone Woman of San Nicolas Island," who was left behind when the rest of the native islanders moved to the mainland relatively late in the Spanish Colonial era. This tale was the basis for the award-winning children's book, Island of the Blue Dolphins, by Scott O'Dell. 2
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B. The Contracts Metric's work as a contractor on the island first began in 1992. Tr. 880:4-6 (Test. of Thomas P. Miller, President, Metric Construction).3 In August 1994, Metric was awarded Contract No. N62474-94-C-6807 (the "airfield contract"), entitled Repair Airfield Pavement at the Naval Air Weapons Station on San Nicolas Island, California. PX 2 (Airfield Solicitation, Offer, and Award). This contract called for Metric to make improvements and repairs to the Navy's airfield runway on the island. In September 1998, Contract No. N68711-98-C-5553 (the "roadway contract") was awarded to Metric, entitled Roadway and Storm Drainage Repair Effort at San Nicolas Island, California. DX 1008 (Roadway and Airfield Contract Provisions) at 35360. The plans and specifications for both projects were prepared by the Navy, which administered the projects. PX 1 (Airfield Repair Plans); PX 2 (Airfield Solicitation, Offer, and Award); DX 1001 (Expert Report of Patti Jones, an expert retained by the government (Aug. 28, 2006)) ("Jones Report") at 142-43 (Modification P00001 of Roadway Contract); DX 1008 (Roadway and Airfield Contract Provisions) at 353-60. Both contracts required Metric to ship materials, equipment, and machinery to the island by ocean-going barge. DX 1008 (Roadway and Airfield Contract Provisions) at 102. The roadway and airfield contracts adopted Section 01600, Special Clauses Applying Only to Work on San Nicolas Island ("Special Clauses"), to govern procedures for landing materials and operations, including special provisions for use of the beaches and for environmental protection. See DX 1008 (Roadway and Airfield Contract Provisions) at 356. The contract explicitly provided that "the delivery of materials to San Nicolas Island is often the critical activity (longest duration)" affecting performance. Id. § 1011.1.5.1.2, at 43. The materials required for the airfield and roadway contracts included considerable amounts of aggregate, cement, asphalt, sand, gravel, and other construction materials that had to be moved to the island. Metric also had to install construction facilities such as an asphalt plant on the island. DX 1008 (Roadway and Airfield Contract Provisions) at 151-52. For deliveries of materials and equipment to the island, the contracts designated two barge landing sites: Sissy Cove and Daytona Beach. DX 1008 (Roadway and Airfield Contract Provisions) at 104-05. Because landings had to be made on one of these two exposed beaches, adverse weather conditions could prevent deliveries for periods of time. See DX 1008 (Roadway and Airfield Contract Provisions) at 104; Tr. 76:1 to 79:17 (Test. of George Kostelny, former Metric Superintendent of San Nicolas Island projects) (stating that Metric used a weather consultant to forecast surf and winds but that occasionally unexpected conditions made it difficult or impossible for the barge to land even when the weather was expected to be

Citations to the trial transcript are to "Tr. __." Citations to the closing argument transcript are to "Cl. Tr. __." Plaintiff's exhibits are denoted as "PX __," and defendant's exhibits are identified as "DX __." Plaintiff's demonstrative exhibits are cited as "PDX __," and defendant's demonstrative exhibits are denoted as "DDX __." 3

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favorable). Because of the challenges of landing barges at the beach-landing sites, the Special Clauses addressed aborted or impossible barge landings: If the Contractor's attempt to land his barge is not successful due to weather and/or high surf conditions ­ or ­ if data [are] available which proves that barge landing is impossible, then sufficient justification may exist for a no cost time extension. DX 1008 (Roadway and Airfield Contract Provisions) at 104 (emphasis added). The number of successful landings varied from year to year based upon the conditions encountered. Tr. 912:621 (Miller). Because of the island's distance from the California coast, approximately a full day was required to complete a trip to the island from either Point Mugu, Point Hueneme (the Navy's chief Seabee base located near Point Mugu), or Terminal Island, where materials were loaded for delivery. Tr. 511:4 to 518:3, 761:8 to 763:1 (Test. of Elon Holmes, a project manager for Metric). The contracts also provided that the Navy had priority over Metric in using the beachlanding sites. DX 1008 (Roadway and Airfield Contract Provisions) at 104; Tr. 79:25 to 80:8 (Kostelny). C. Beach Landings When Metric submitted its bids for the projects, it based its costs on use of an oceangoing barge that it purchased in 1994 which was too large to land at Sissy Cove but had landed successfully at Daytona Beach during prior projects by Metric at San Nicolas Island. Tr. 456:316 (Holmes), 879:19 to 880:6, 902:10 to 904:5 (Miller); Pl.'s Post-Trial Br. at 1; see also Cl. Tr. 85:16-17. Only Daytona Beach was used by both the Navy and Metric for landings. Sissy Cove was not a viable option because it was small and narrow and its approaches were constricted by rocky outcrops and shallow depths. Tr. 70:3-20 (Kostelny), 480:5 to 483:13 (Holmes), 902:13 to 903:11 (Miller). Both the Navy and Metric used the same area of Daytona Beach for landings. To secure the barges at the particular landing site on the beach, the Navy had installed "deadmen," essentially anchored cables that were warped to the barges to prevent movement of the barges during landing operations. Tr. 73:2 to 75:4 (Kostelny). In addition, to assist egress from the barges at the site, the Navy or Metric would "build a ramp of sand and place temporary matting over the sand to allow vehicles to [travel] without getting stuck." DX 1008 (Roadway and Airfield Contract Provisions) at 104. For the Navy's own deliveries to the island, it used an ocean-going barge leased from Foss Marine that was constructed to transport rolling stock, i.e., vehicles which carried the materials being delivered, such as tankwagons of fuel. Tr. 87:6-7, 381:6-8 (Kostelny). In contrast, Metric's barge was constructed to carry loose bulk materials such as aggregate or sand that bucket loaders had to offload onto trucks upon arrival. Tr. 87:6-24 (Kostelny). Metric's barge was two to three times the size of the Navy's barge and had a significantly deeper draft when loaded. See Tr. 99:18 to 100:20, 305:2-13 (Kostelny); Cl. Tr. 10:17-19. 4

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Initially, Metric was able to make successful barge landings at Daytona Beach for both the airfield and roadway projects, delivering materials needed for the two projects. Tr. 483:6-13 (Holmes); Tr. 902:10 to 904:5 (Miller). On December 18, 1998, however, Metric's asphalt plant on the island caught on fire. Tr. 132:20 to 133:3 (Kostelny). At the time, the scheduled completion dates were May 14, 1999 for the airfield project and June 28, 1999 for the roadway project. Tr. 1304:21 to 1305:10 (Test. of Stuart Burnell, a construction expert for Metric, employed by Hainline & Associates); PX 5 (Schedule Analysis and DCAA Audit Review by Hainline & Associates (Oct. 5, 2005) ("Hainline Analysis")) at 3. Notwithstanding the fire, Metric continued to deliver materials to the island, making a delivery on December 22, 1998, and planning for a return trip after the Christmas and New Year's holidays, Tr. 503:25 to 504:17, 525:13 to 527:9 (Holmes), to stockpile materials on the island for completion of the projects. Tr. 313:7 to 328:9, 330:14 to 332:24 (Kostelny); 499:9-16 (Holmes). D. The Navy's Installation of the Pontoon Between December 23, 1998 and January 3, 1999, the government installed a bargelanding pontoon on Daytona Beach. Tr. 90:14-20 (Kostelny).4 The government informed Metric that the Navy no longer had a permit from the Corps of Engineers for landings on the beach and Metric had to use the pontoon to land its barge at Daytona Beach. Tr. 72:4-16, 92:19-22 (Kostelny), Tr. 471:13-25, 478:17 to 488:11 (Holmes). Immediately after the pontoon was installed, Metric canceled a barge landing that was scheduled for January 4, 1999, see DX 1001 (Expert Report of Patti Jones, an expert retained by the government (Aug. 28, 2006)) ("Jones Report") at 9. Metric notified the government by letter on January 5, 1999 that it had canceled this barge landing because Metric had been informed by the Navy's public works superintendent "that the design of the ramp on the Metric barge was incompatible with the new pontoon . . . which w[as] designed and placed to facilitate easier landings of the [smaller] Navy barge." PX 20 (Letter from Holmes to Resident Officer in Charge of Construction ("ROICC") (Jan. 5, 1999)); Tr. 461:16 to 463:14 (Holmes). Metric was warned "that if Metric elected to land their barge, and use the new pontoons, that they (Metric) would be responsible for any damage caused by that landing." PX 20 (Letter from Holmes to ROICC (Jan. 5, 1999)). One day later, on January 6, 1999, Metric notified the government that it was "ceas[ing] all operations . . . until . . . a suitable landing site is provided" and that Metric considered the installation of the pontoon to be a "compensable change of conditions as set forth in FAR [§] 52.236-2." PX 21 (Letter from

The government changed the landing method "as part of a continuing and evolving . . . effort to improve the facilities at [San Nicolas Island] and to reduce the environmental impact of barge landings at Daytona Beach" because the beach landing method "virtually always required the construction of large sand ramps and often involved disturbing protected sea mammals." Def.'s Post-Trial Br. at 6. The method of building ramps out of sand required permits from the Army Corps of Engineers under Section 404 of the Clean Water Act, 33 U.S.C. § 1344, and Section 10 of the Rivers and Harbors Act of 1899, 33 U.S.C. § 403. See PX 18 (E-mail from Steve Schwartz to Michael Sasscer (Mar. 20, 2000)). 5

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Holmes to ROICC (Jan. 6, 1999)). The government did not respond to either letter. Tr. 463:25 to 465:14 (Holmes). Thereafter, Metric attempted to land its barge using the pontoon with limited success. Metric was able to land its barge on the pontoon only under restrictive conditions because its barge's draft was deeper than that of the Navy's barge, requiring a 4.5 foot or higher tide which did not occur daily. Tr. 99:18 to 100:20 (Kostelny), 840:8 to 841:20 (Holmes).5 Even with a sufficiently high tide, there were occasions when Metric could not land because sand bars would build up in front of the pontoon, blocking the barge from landing. Tr. 93:5-24 (Kostelny), 466:23 to 468:22 (Holmes); PX 22 (Letter from Metric to ROICC (Feb. 11, 1999)).6 On February 11, 1999, Metric requested that the Navy "remove th[e] pontoon and return the beach to its original (pre-bid and post-award) configuration." PX 22 (Letter from Metric to ROICC (Feb. 11, 1999)). The Navy responded on February 12, 1999 that it was "in the process of discussing the issues" raised by Metric. PX 23 (Letter from Patricia Martonick, Director, Contracts, to Metric (Feb. 12, 1999)). Among other things, installation of the pontoon delayed the delivery of replacement parts for the asphalt batch plant to San Nicolas Island. Metric endeavored to deliver a load of construction material on February 4, 1999, but that landing was aborted because sand in front of the pontoon prevented Metric's barge from reaching the pontoon with the barge's ramp. PX 22 (Letter from Metric to ROICC); Tr. 532:10-25 (Holmes). Metric attempted to deliver a replacement asphalt plant tank and boiler on February 25, 1999, but the landing was aborted because the barge did not arrive in time for the high tide. Tr. 530:21 to 532:20 (Holmes); PX 7 (certified claims) at 71. An additional landing attempt was made on February 26, 1999, but this effort was also aborted due to a sand bar in front of the pontoon. Tr. 111:15-25, 114:13 to 115:2 (Kostelny), 530:21 to 531:6 (Holmes); PX 47 (Daily Reports to Inspector) at 3-4, 32; PX 97 (handwritten notes).7 The government thereafter agreed to deliver the tank on its barge, landing

As Mr. Holmes testified, The major differences between the Navy's barge and our barge was our barge traveled loaded, 800, seven, eight, nine hundred tons. The Navy's barge typically might have had two or three hundred tons. So . . . when we're drafting 8 to 10 feet they're drafting 2 feet. So that they can get . . . up to the pontoon sometimes easier than we could because we had more weight on board. Tr. 770:24 to 771:7 (Holmes). On some occasions when Metric could land its barge on the pontoon, the barge would "be `hung up' after unloading ­ stuck on the beach until the next high tide float[ed] it off." PX 22 (Letter from Metric to ROICC). Metric attempted another barge landing on March 30, 1999, and then again on March 31 1999, but was unsuccessful in each instance. DX 1001 (Jones Report) at 12. 6
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with the tank on March 31, 1999, and Metric delivered the boiler plus a cargo of 775 tons of rock dust on April 14, 1999. Tr. 143:7 to 145:7 (Kostelny); PX 7 (certified claims) at 72-73; PX 47 (Daily Reports to Inspector) at 38.8 Around May 3, 1999, the Navy installed deadmen further up the beach, making it possible for Metric to resume landing on the beach once authorized to do so. Tr. 120:11 to 121:19 (Kostelny); PX 107 (Handwritten notes regarding quality control meeting (May 4, 1999)) ("[D]eadm[e]n ha[ve] been installed by Public Works over the weekend.").9 Metric then received oral authorization to resume beach landings, Tr. 479:3-22, 844:16-19 (Holmes), but it was told that it could not build sand ramps to off-load materials. Tr. 82:5-8 (Kostelny). Additionally, the Navy asked Metric to attempt to use the pontoon for hot oil deliveries. PX 18 (E-mail from Schwartz to Sasscer (Mar. 20, 2000)). For the remainder of its contract performance, Metric conducted landings on Daytona Beach using the beach itself and not the pontoon. See Tr. 73:25 to 74:2, 312:7 to 313:6 (Kostelny). Metric would land its barge on the beach, offload the raw materials such as gravel and sand onto trucks, and then use loaders to pull the trucks through the beach sand onto the roadway where the trucks could move the loads to Metric's staging areas. Tr. 82:5-19 (Kostelny); DX 1001 (Jones Report) at 11.10 E. Completion of the Roadway and Runway Work Soon after Metric resumed its beach landings, piping and the other remaining components necessary for repairing the asphalt plant were delivered and the plant started up again on June 24,

In March 1999, Metric retained American Divers, Inc. to do a bathymetric study and determine whether an area near the pontoon was appropriate for beach landings by the barge. PX 24 (Letter from Ralph Tuckfield, American Divers to Metric (March 22, 1999)). American Divers concluded that the area was suitable: "the bottom conditions and topography indicate a consistent sloping sand bottom . . . . The inspected area appears clear of any obstruction or anomalies that might interfere with the barge landing operation." Id. at 12-2. Between January and April 1999, Metric succeeded in landing its barge six times. DX 1003 (Daily Reports) at 3991 (Feb. 2, 1999), 4020-21 (Jan. 14, 1999), 5823-24 (Apr. 14, 1999), 5883-84 (Feb. 16, 1999), 5887-88 (Feb. 12, 1999); PX 7 (certified claims) at 73 (Apr. 19, 1999); DX 1001 (Jones Report) at 10, 16; see also Tr. 313:7 to 328:9, 330:14 to 332:24, 336:7 to 338:22, 339:13 to 340:1 (Kostelny), 543:22 to 544:16, 823:23 to 824, 909:16 to 910:10, 1112:9 to 1113:2 (Miller). For safety purposes, Metric's barge ordinarily landed with the deadmen in place to tie off the barge to prevent it from drifting or from slewing from side to side. Tr. 73:2 to 74:2 (Kostelny). Metric made no barge landings in May. Its barge was being repaired on May 14 through 23, 1999 and on June 3, 1999. DX 1001 (Jones Report) at 14. It made its next landing on the island on June 17, 1999. Id. 7
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1999. PX 7 (certified claims) at 75; Tr. 550:12 to 551:13, 773:17-20 (Holmes); DX 1001 (Jones Report) at 15. However, shortly after the asphalt batch plant resumed operations, its motor burned out and needed replacing, possibly as a result of the island's fluctuating power supply. Tr. 147:19 to 149:3 (Kostelny). Metric replaced the motor and the asphalt plant returned to service on July 9, 1999. Tr. 132:20 to 133:11 (Kostelny); DX 1001 (Jones Report) at 17. During the period when the asphalt batch plant was not functioning, Metric did concrete work on the roadway project, emplacing V-ditches, and doing other concrete work on the runway that could be accomplished with the construction materials on hand. Tr. 332:25 to 333:12, 375:12 to 376:18, 377:9-18, 383:4-15 (Kostelny). Once the asphalt plant came back on-line, Metric proceeded to complete the paving of the airfield and then turned to paving the roadway. Cl. Tr. 109:16-21. On June 13, 2000, Metric and the Navy executed Modification No. P00001 to the roadway contract. DX 1001 (Jones Report) at 142-43 (Modification P00001 of Roadway Contract). This modification made various changes to contract requirements, including deleting all waterline work, deleting some V-ditch concrete work, and adding 1.4 miles of road resurfacing work. Id. at 143. The modification extended the period of performance for 384 calendar days from June 12, 1999 to June 30, 2000 "due to batch plant fire, weather, etc." Id. The modification contained a paragraph titled "Contractor's Statement of Release," which stated: Acceptance of this modification by the contractor constitutes an accord and satisfaction and represents payment in full for both time and money and for any and all costs, impact effect, and for delays and disruptions arising out of, or incidental to, the work as herein revised. Id. Although Metric had not yet made a claim for the pontoon delays at this time, both Metric and the contracting officer knew that such a claim would be filed. Mr. Miller testified that he was concerned about the uncertainty created by the use of the term "etc." in the recited reasons for the extension and about the fact that the release pertained to "the work as herein revised," and he called Ms. Martonick, the contracting officer, about the scope of the release. Tr. 964:8 to 969:10, 1152:3-18 (Miller). Ms. Martonick reportedly assured Mr. Miller that the modification would not affect Metric's right to damages caused by the installation of the pontoon and that Metric was not waiving or releasing the government from liability relating to a pontoon claim by signing Modification No. P00001. Id. Metric required 25 barge landings following the pontoon's installation to deliver all of the materials to complete the projects, Tr. 1114:15-18 (Miller); PX 5 (Hainline Analysis) at 6; DX 1001 (Jones Report) at 8, and it ultimately finished the airfield runway repair paving on December 23, 1999 and the roadway project paving on May 18, 2000. PX 7 (certified claims) at 67.11
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Metric made a total of 21 barge landings in 1999. Tr. 825:14-25 (Holmes); DDX 1018 (Jones demonstrative) at 16. The remaining landings were in 2000. Id. The last barge load of material for the airfield and runway projects, apart from work on the arresting gear added by a 8

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F. The Arresting-Gear Project On June 23, 2000, the Navy issued a request for proposal relating to work on the arresting gears at each end of the runway to Metric. PX 120 (Letter from Joe Ann Carrignan, Contracting Officer, Navy, to Metric (June 23, 2000)).12 The Navy proposed to issue a change to the airfield contract, calling for "[r]emov[al] and dispos[al] . . . off the island [of] the existing concrete and rails of the arresting gears (2 each)," and "[i]nstallation of] new concrete and rails for the arresting gear (2) in accordance with Drawing T04972 (Sheet C-1) with a Print Date of 06/21/00 and all the applicable provisions of the contract specification." Id.; Tr. 562:3-22 (Holmes). The letter also stated that "[i]f additional contract time will be required to accomplish the changed work, [Metric's] proposal should contain a substantiated time extension request." PX 120 (Letter from Carrignan to Metric). Metric submitted its proposal which included a projected cost of $637,924 for an additional 2.75 months for the additional work. PX 126 (Proposal for Contract Modification (July 14, 2000)) at 1-2; Tr. 565:13 to 566:14 (Holmes). The government lacked funding for the change and consequentially the parties engaged in "horse-trading" about funding. Tr. 1019:4-7 (Miller). The ultimate outcome of negotiations was the government's agreement to pay for materials requested by Metric in exchange for Metric's acceptance of $50,000 for the change order. Tr. 566:15 to 567:15 (Holmes), 1016:16 to 1019:7 (Miller), 1772:9 to 1773:25 (Test. of Carrignan, Contracting Officer). Modification No. P00017 was executed on August 4, 2000. PX 6 (Arresting Gear Concrete Replacement Study by Hainline & Associates (undated) ("Hainline Arresting Gear Analysis")) at 9-10 ("Arresting Gear Modification").13 Metric received a time extension under the modification, with work to be completed by November 2, 2000 in exchange for the additional payment of $50,000. Id. at 110 (Arresting Gear Modification). The modification also contained a "Contractor's Statement of Release," which was virtually identical to that contained in Modification No. P00001 for the roadway contract. Id.; see supra, at 8. Metric was directed to "demol[ish] . . . all existing concrete arresting gear material and replac[e] with new compacted base material, asphalt," pour new concrete pads with new steel beams embedded in the concrete, and install a three foot wide asphalt patch between the existing asphalt and the new concrete pads. PX 6 (Hainline Arresting Gear Analysis) at 11-13 (Arresting Gear Modification); PX 120 (Letter from Carrignan to Metric (June 23, 2000)).

later modification, was delivered on April 25, 2000. Tr. 1126:12-14 (Miller). An arresting gear is a system that allows a landing plane to drop a hook that catches a cable affixed to arrestor systems that apply strong braking force, slowing the plane rapidly in a short stopping distance. The land-based system at San Nicolas Island is used to train naval aviators prior to carrier deployment. Page two of the modification erroneously refers to P00016 rather than P00017. See PX 6 (Hainline Arresting Gear Analysis) at 9-10 (Arresting Gear Modification). 9
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Work on the arresting gear began in early September 2000. PX 6 (Hainline Arresting Gear Analysis) at 15. The asphalt work proved challenging for Metric. The arresting gear at the "30-end" was to be replaced first and then the "12-end" was to be done, such that continued daily landings of aircraft could occur at one end of the runway during the repair work at the other end. Tr. 155:16 to 156:2 (Kostelny); PX 129 (Modification of Airfield Contract) at 3. Metric first completed the concrete work on the 30-end and then undertook the asphalt work.14 The plans called for a "3'-0" wide AC Patch" between the existing asphalt runway and the newly placed arresting-gear concrete. PX 6 (Hainline Arresting Gear Analysis) at 13 (Arresting Gear Modification). The specifications included size requirements for the aggregate used in the asphalt mix. DX 1008 (Roadway and Airfield Contract Provisions) at 154-55. Metric notified the government during the change-order negotiations that because the plans called for a three foot wide "patch," the asphalt could not be laid with an asphalt paving machine and instead had to be hand placed as set forth in the specifications. Tr. 605:1 to 611:22 (Holmes); PX 126 (Proposal for Contract Modification (July 14, 2000)).15 Around November 27, 2000, Metric placed the three-foot asphalt patch for the 30-end using the hand-placement methods set forth under Specification Section 02511.3.2.3 and using the mix specified by the contract. Tr. 605:1 to 611:22 (Holmes), 1022:11 to 1023:2 (Miller). The government rejected the asphalt and directed Metric to remove and replace it, on the ground that excessive aggregate was exposed. Tr. 165:11-24, 167:4-19, 270:3-8 (Kostelny), 610:23 to 611:7 (Holmes). The government was concerned that loose rocks could dislodge from the asphalt and be caught up in an aircraft's jet engines. Tr. 2268:16 to 2669:17 (Test. of Mike Douglas, Navy field representative during Metric's San Nicolas Island projects). Metric disputed the claim that the exposed aggregate was "excessive" for hand-placed asphalt, Tr. 167:4 to 172:14 (Kostelny); see also DX 1008 (Roadway and Airfield Contract Provisions) at 148, but proposed to seal the exposed aggregate with TopGuard, a compound that had been used to seal exposed aggregate on other parts of the runway. Tr. 613:16 to 614:6 (Holmes); DX 1012

The concrete installation for the project gave rise to disputes about the propriety of the installation and the length of the embedded steel rails, but these issues were resolved in late November 2000 when Metric completed recommended repairs. PX 6 (Hainline Arresting Gear Analysis) at 15. Metric believes that the government contributed to a problem relating to the embedded steel beams because it provided a template for a nine foot eight inch beam but Change Order 17 specified that the new steel beams were to be ten feet long. When Metric followed the nine foot eight inch template, the government rejected the beams and required that they be extended to ten feet. Tr. 158:3 to 160:7 (Kostelny). However, "Metric is not seeking damages or delays for issues arising from the concrete or the embedded steel beams." Pl.'s Post-Trial Br. at 18. Rather, Metric's arresting gear claim relates to the asphalt installation and the rubber rails associated with the steel beams. Specification Section 02511.3.2.3 for Hand Spreading in Lieu of Machine Spreading states, "[i]n areas where the use of machine spreading is impractical, spread mixture by hand." DX 1008 (Roadway and Airfield Contract Provisions) at 160. 10
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(Additional Arresting Gear Modification) at 79-80; Tr. 174:19 to 175:16 (Kostelny); DX 1009 (San Nicolas Island Project Photographs) at 177. After initially rejecting this proposal, the government eventually allowed Metric to use TopGuard on the exposed aggregate. Tr. 172:15 to 176:20, 200:18 to 201:6 (Kostelny). However, the result remained unacceptable to the Navy. Metric and the Navy also had difficulty with the requirement of the modification that the surface between the asphalt and the concrete be "flush" to reduce the chance that tailhooks of landing airplanes would get caught on an uneven lip at the asphalt-concrete seam. PX 43 (Quality Control Meeting Notes) at 1. The Navy initially would not allow any deviation in elevation between the new asphalt and the concrete. Tr. 195:23 to 196:19 (Kostelny). Ultimately, after months of discussion, the government specified that the concrete had to be lower than the asphalt and that an acceptable tolerance would be 1/4 of an inch. Tr. 433:22 to 436:3 (Kostelny); PX 43 (Quality Control Meeting Notes) at 1. From late November 2000 to early August 2001, Metric removed and replaced the threefoot asphalt patch for the 30-end on three occasions. Tr. 177:18 to 181:25 (Kostelny); see also PX 6 (Hainline Arresting Gear Analysis) at 4; DX 1001 (Jones Report) at 34-38. Metric ultimately abandoned hand-placement methods and brought in a cold planer and removed the rejected asphalt and an adjacent portion of the runway to a width sufficient to allow use of a paving machine. Tr. 1027:2-12 (Miller); DX 1001 (Jones Report) at 39. Metric then placed the arresting gear "patch" using the paving machine, Tr. 181:10 to 183:4 (Kostelny), and the Navy accepted that reworked result for the 30-end arresting gear asphalt. Tr. 182:1 to 183:3 (Kostelny), 624:21 to 625:18 (Holmes); DX 1001 (Jones Report) at 40. Having learned from its experience on the 30-end, Metric had much less trouble completing the work on the 12-end. Rather than placing the concrete first, Metric initially placed the asphalt, sawcut a straight edge along the asphalt, installed an expansion joint against the sawcut asphalt edge, and then poured the concrete against the expansion joint material, all of which allowed Metric to place the asphalt by paving machine and thereafter pour the concrete at the same height as the asphalt. Tr. 188:10 to 198:6 (Kostelny), 626:24 to 630:21 (Holmes); PX 202 (Letter from Metric to Navy (Nov. 14, 2001)); PX 203 (Letter from Navy to Metric (Nov. 15, 2001)); DX 1009 (San Nicolas Island Project Photographs) at 79-80. The completion of the 30-end was also delayed due to installation of the "rubber rails."16 The government's request for proposal required Metric to remove and dispose of the existing concrete, beams, and rails, and install new concrete, beams, and rails. PX 120 (Letter from
16

"Rubber rails" provide pendant support for the arresting gear cable. Tr. 563:2-5 (Holmes), 1369:13-16 (Burnell). In reconstructing the arresting gear, Metric was not responsible for installing the cable and the arrestor systems that apply braking force. The arresting gear concrete was perpendicular to the length of the runway, or, in other words, ran across the width of the runway. The I-beams were perpendicular to the concrete, and thus ran parallel to the runway. The rubber rails sat atop the I-beams and therefore also parallel to the runway. Tr. 594:2-15 (Holmes). 11

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Carrignan to Metric (June 23, 2000)) (contractor to "remove and dispose" of the "existing concrete and rails of the arresting gears"). Metric was told that the government would provide Metric with the new rails to install. PX 120 (Letter from Carrignan to Metric) (contractor to "[i]nstall new concrete and rails"). The change order repeated these requirements, stating that Metric was to demolish "all existing concrete arresting gear material and replac[e] with new compacted base material, concrete, and to patch the asphalt as shown [in Drawing No. T04972]." PX 129 (Modification of Airfield Contract) at 3; PX 120 (Letter from Carrignan to Metric); PX 6 (Hainline Arresting Gear Analysis) at 13 (Arresting Gear Modification). Drawing No. T04972 noted that "New I beam to be drilled and tapped prior to installation. Government will furnish template for location of holes." PX 6 (Hainline Arresting Gear Analysis) at 13 (Arresting Gear Modification) (capitals omitted). During the course of its work, Metric removed the rubber rails as part of its demolition of the preexisting arresting gear, and as part of its new installation Metric embedded new steel beams that were longer than the original rubber rails. At that point, the government directed Metric to reinstall the rubber rails that had been removed during the demolition process, and Metric had to retap the new I beams so that the old rubber rails could be used on the new beams. Tr. 160:12 to 162:16 (Kostelny), 569:8 to 570:11 (Holmes). Metric was able to locate only seven of the ten original rubber rails. Tr. 161:9 to 162:16 (Kostelny), 569:16 to 571:11 (Holmes). Although the government now argues that its original and continuing intent was for the rubber rails to be saved and reinstalled, that claim is unavailing in light of the contractual provisions of the agreed modification. Moreover, during the course of the project, a Navy inspector informed Metric that the existing rubber rails were to be installed "if the other ones don't arrive." Tr. 163:1-22 (Kostelny); PX 47 (Daily Reports to Inspector) at 18. Work on the 30-end arresting gear except for the rubber rails was complete by August 14, 2001, except for minor corrective steps. Tr. 582:7-19 (Holmes); PX 337 (Letter from L. W. Serrano, Navy Project Engineer, to Metric (Sept. 5, 2001)). All work on the 30-end arresting gear was complete by August 27, 2001, except for installation of the rubber rails. PX 337 (Letter from Serrano to Metric) ("As of August 28, 2001, the cable support rails for this arresting gear are not installed yet."); DX 1001 (Jones Report) at 40 ("27-Aug-01 Arresting gear #3[0] ready for final"). However, it was not until November 8, 2001 that the government accepted the work at the 30-end, after Metric had obtained the three new rubber rails from the Navy and installed them at the 30-end. PX 339 (Letter from E. W. Ruckle, Resident Engineer in Charge of Construction to Metric (Nov. 13, 2001)). Metric was unable to move to work on the 12-end until the 30-end was finished. Metric completed work on the arresting gear at the 12-end on June 20, 2002. In sum, all of Metric's constructive-change claims respecting the arresting gears relates to the 30-end; none concerns the work at the 12-end. G. Demobilization San Nicolas Island is an environmentally sensitive area where, among other things, the breeding, birth, and nursing of several species of marine mammals are protected. DX 1008 12

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(Roadway and Airfield Contract Provisions) at 112. Shortly after entering into the airfield contract, Metric submitted an Environmental Protection Plan ("the Plan") to the Navy as part of its contractual obligations, and that Plan was approved after one set of revisions. Tr. 974:9 to 977:6 (Miller); PX 60 (Metric's Environmental Protection Plan); PX 61 (Metric's Revised Environmental Protection Plan). The Plan included a provision for clean-up of spills: Removal of hazardous waste from [g]overnment property will be by a hazardous waste transporter registered with the State of California. This includes transportation by barge. Used lubricants, excess fuels or construction materials, hazardous waste and contaminated soils will be carefully transported off the island per applicable CCR and CFR regulations. In the event of an accidental oil or hazardous material spill, the Contracting Officer will be notified and appropriate clean-up procedures implemented immediately. PX 61 (Metric's Revised Environmental Protection Plan) at 5. Neither the contract nor the approved Plan required Metric to prepare and submit for approval a separate, further plan to clean-up a particular spill or discharge. Metric spilled hazardous materials on occasion throughout the course of the project, performing clean-up with the government's knowledge and oversight. Tr. 216:6 to 218:10 (Kostelny). As Metric neared completion of the project, the government observed contaminated soils at various locations and requested Metric's response regarding its intended clean-up procedures. In May 2002, Metric informed the Navy that it intended to use the procedures set out in its Environmental Protection Plan that had been used previously when spills occurred. Tr. 970:20 to 971:18 (Miller); PX 61 (Metric's Revised Environmental Protection Plan); PX 225 (Facsimile from Miller to Martonick (May 17, 2002)). The government rejected Metric's approach, informing Metric that it must either receive approval for a newly submitted clean-up plan or hire an approved clean-up contractor to prepare a plan before it could proceed. Pl.'s PostTrial Br. at 25; Tr. 984:9 to 985:23 (Miller); PX 235 (Letter from Serrano to Holmes (June 12, 2002)) (listing environmental clean-up contractors recommended by the China Lake naval facility). Although Metric believed that it was under "no contractual requirement to hire an outside contractor to prepare a clean-up plan or to get government approval of the clean-up plan," Pl.'s Post-Trial Br. at 25, it submitted a number of proposals each of which the government rejected. Tr. 987:8 to 990:19 (Miller); PX 263 (Letter from Danny Morse, Contracting Officer to Metric (Nov. 7. 2002)). Metric then hired an outside contractor, IWS Environmental, to prepare a spill clean-up plan and remove contaminated material. Tr. 987:24 to 988:21 (Miller); PX 264 (Letter from Metric to Martonick (Nov. 7, 2002)). The government approved a plan prepared by IWS Environmental. PX 298 (Letter from Martonick to Metric (April 11, 2003)); Tr. 991:5 to 992:3 (Miller). After this planning hurdle had been cleared, a controversy arose when the Navy directed Metric to clean-up contaminated soil in the Sand Spit area, an area to which Metric was not originally assigned but had begun using in late 1998 after being awarded the roadway contract. 13

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Prior to Metric's access to the Sand Spit, the Navy and other contractors had used the area for many years. Prior to Metric's use, no inspection of the Sand Spit area was done, although other areas had been inspected for contamination prior to Metric gaining access. Tr. 980:8 to 983:23 (Miller). Metric used the Sand Spit as a storage area for construction materials and equipment, coincident with other contractors, and did not undertake any production operations there. Tr. 224:14 to 225:6 (Kostelny), 994:6 to 995:14, 972:4 to 973:23 (Miller). Among other things, Metric eventually used the Sand Spit area as a staging ground for storage of concrete and asphaltic material it had removed in completing the roadway and airfield projects. After some discussion, the Navy agreed that Metric could leave this material on San Nicolas Island if Metric milled the material such that it could be recycled by the Navy as road base in future construction projects. Tr. 240:9 to 241:18 (Kostelny), 1266:8-17 (Miller). Metric brought in a crusher and processed the material. Id. However, it was later determined that some of the resulting crushed aggregate piles were contaminated. Tr. 997:5 to 998:11 (Miller). Metric claims that apart from one identifiable area of contamination that Metric agreed to remove, Metric did not contaminate the crushed aggregate piles.17 The government required Metric to remove roughly half or two-thirds of the crushed aggregate piles as contaminated material. Tr. 1000:10 to 1002:16, 1266:19 to 1270:22 (Miller); DX 1001 (Jones Report) at 323.18 Mr. Steven Schwartz, the environmental protection specialist at San Nicolas Island, testified that the Sand Spit was an area used by a number of different people and groups. Tr. 1762:1-12 (Schwartz). The contamination found at the Sand Spit was in piles of asphalt and concrete grindings taken from various areas. Tr. 1763:17 to 1764:18 (Schwartz). Mr. Schwartz was unable to draw any conclusions as to how the ground-up asphalt and concrete became contaminated. Tr. 1764:19-22 (Schwartz). He surmised that the grindings were material transported by Metric to the Sand Spit and that it did not appear that the contamination occurred at that site but rather may have occurred elsewhere. Tr. 1765:4 to 1766:17 (Schwartz). The Navy based Metric's responsibility for the contamination on the fact that it had transported the material to the Sand Spit. Tr. 1768:2-8 (Schwartz). Metric cleaned up contamination found in the Sand Spit, notwithstanding its protestations that it was not at fault. Pl.'s Post-Trial Br. at 27.

The contamination which Metric acknowledges causing came from a loader that had a leak of hydraulic fluid. The spilled fluid was cleaned up and placed on a pile by an operator rather than placed in a bin for transport off-island. Metric agreed to clean up this material. Tr. 225:7 to 229:24 (Kostelny). At one point during the trial, the government appeared to be contending that crushed asphalt was a hazardous material ­ as an oily waste. Tr. 1269:9-20 (Miller) (cross-examination), 1278:21 to 1279:16 (counsel's explanation). That contention was not pursued in post-trial briefing. See Def.'s Post-Trial Br. at 11-12, 21-22. 14
18

17

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H. Procedural History Metric submitted claims to the Navy's Contracting Officer respecting the pontoon, PX 7 (four separate certified claims (Jan. 9, 2003)), PX 293 (Claim Letter from Metric to Navy (Apr. 4, 2003)), PX 294 (Claim Letter from Metric to Navy (Apr. 4, 2003)), PX 295 (Claim Letter from Metric to Navy (Apr. 4, 2003)), PX 296 (Claim Letter from Metric to Navy (Apr. 4, 2003)), arresting gear, PX 343 (Arresting Gear Certified Claim (June 17, 2003)), and contaminated soil. PX 330 (Letter from Metric to Navy regarding certified claim (Jan. 26, 2004)). Each was certified in accordance with the Contract Disputes Act, 41 U.S.C. §§ 601-613. Besides its direct expenses allegedly caused by changed conditions and added requirements, Metric sought to recover the "ownership costs" for its equipment during claimed periods of delay. These costs were calculated using the rates listed in the Dataquest Rental Rate Blue Book (the "Blue Book"), a publication used in the construction industry to determine equipment operating and standby rates. Audits of several of Metric's claims were performed by the Defense Contract Audit Agency ("DCAA"). However, no decision on any of Metric's claims was issued by the Contracting Officer within the time required by the Contract Disputes Act. See 41 U.S.C. § 605(c)(2) ("A contracting officer shall, within sixty days of receipt of a submitted certified claim over $100,000," either issue a final decision or notify the contractor of the date by which a decision will be issued.) Metric filed its complaint with this court on April 9, 2004. Extensive discovery in this action was accompanied by a further audit by DCAA. Trial was conducted from July 16 through 24, 2007 in Seattle, Washington, a site visit to San Nicolas Island was conducted on July 26, 2007, and trial concluded with testimony on July 31 and August 1, 2007 in Washington, D.C. Following post-trial briefs and a closing argument, the case has become ready for disposition. Jurisdiction Under the Tucker Act and the Contract Disputes Act, this court has subject matter jurisdiction over a claim that has been presented to a contracting officer if either (i) the contracting officer has entered a final decision denying the claim, or (ii) the contracting officer has failed to render a final decision on the claim in a timely manner. See 41 U.S.C. § 609(a)(1) ("[After a] decision of the contracting officer under section 605 of this title . . . , a contractor may bring an action on the claim directly to the United States Court of Federal Claims."); see also 28 U.S.C. § 1491(a)(2) ("The Court of Federal Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 10(a)(1) of the Contract Disputes Act [, 41 U.S.C. § 609(a)(1)]."); James M. Ellett Constr. Co. v. United States, 93 F.3d 1537, 1541-42 (Fed. Cir. 1996); Case, Inc. v. United States, 88 F.3d 1004, 1008-09 (Fed. Cir. 1996). In this instance, the contracting officer did not issue a final decision on Metric's claim within the time required by the CDA, and thus the claim is deemed denied. See 41 U.S.C. § 605(c)(5); United Partition Sys., Inc. v. United States, 59 Fed. Cl. 627, 634-35 (2004). Consequently, the court has jurisdiction over Metric's claims. 15

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Standards for Decision In all contracts, American common law "imposes upon each party a duty of good faith and fair dealing in its performance and in its enforcement." Restatement (Second) of Contracts § 205 (1981); see also Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). This duty among other things encompasses the "obligation `that neither party will do anything that will hinder or delay the other party in performance of the contract.'" Essex Electro Eng'rs v. Danzig, 224 F.3d 1283, 1291 (Fed. Cir. 2000) (quoting Luria Bros. v. United States, 369 F.2d 701, 708 (Ct. Cl. 1966)); see also Restatement (Second) of Contracts § 205 cmt. d. Breach of these common law duties can be the basis for claims of compensable delay and disruption, entitling the affected party to an equitable adjustment. See Aydin Corp. v. Widnall, 61 F.3d 1571, 1577 (Fed. Cir. 1995) ("Where it requires a constructive change in a contract, the [g]overnment must fairly compensate the contractor for the costs of the change.") (citing J. B. Williams Co. v. United States, 450 F.2d 1379, 1394 (Ct. Cl. 1971)); Ets-Hokin Corp. v. United States, 420 F.2d 716, 720 (Ct. Cl. 1970) ("[W]here . . . the contracting officer, without issuing a formal change order, requires the contractor to perform work or to utilize materials which the contractor regards as being beyond the requirements of the pertinent specifications and drawings, the contractor may elect to treat the contracting officer's directive as a constructive change order and prosecute a claim for an equitable adjustment."); Luria Bros., 369 F.2d at 708 (government's breach of implied obligation not to hinder or delay the contractor in performance gave rise to entitlement to recover damages).19
19

The theory of constructive change developed by judicial evolution. In cases where the contract work was actually changed but the procedures of a changes clause in the contract were not followed, early appeals boards found that a change had been "constructively" ordered. See John Cibinic, Jr., Ralph C. Nash, Jr. & James F. Nagle, Administration of Government Contracts, 427 (4th ed. 2006). As those analysts observed: Under common law contractual analysis, such fact patterns would more likely be placed under theories of implied contract or breach of contract, but the administrative procedures developed for the resolution of disputes in federal contracts prior to the Contracts Disputes Act of 1978 prevented the boards of contract appeals from using these theories. Hence, boards developed the alternate theory of constructive changes. Id. The doctrine of constructive change serves to (1) remediate contractor claims for extra work, and (2) permit contractors to perform disputed work without having to risk abandonment of their contracts to preserve their claims. The theory underlying the constructive change concept is that where the government "should have" issued a change order authorizing the extra work in the first place, the court or board [of contract appeals] may direct the government to do what "should have been done" by directing the government to issue a formal change order. The 16

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"An equitable adjustment encompasses the quantative difference between the reasonable cost of performance without the added, deleted, or substituted work and the reasonable costs of performance with the addition, deletion, or substitution." Miller Elev. Co. v. United States, 30 Fed. Cl. 662, 701 (1994) (citing J. L. Simmons Co. v. United States, 412 F.2d 1360, 1370 (Ct. Cl. 1969); Bruce Constr. Corp. v. United States, 324 F.2d 516, 519 (Ct. Cl. 1963)). The burden of proving the amount of an equitable adjustment rests with the party making the claim. See Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1392 (Fed. Cir. 1987). The proofs as to quantum need not be mathematically exact, but they should be sufficient to provide "a fair and reasonable approximation" of the damages. Electronic and Missile Facilities, Inc. v. United States, 416 F.2d 1345, 1358 (Ct. Cl. 1969); see also Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1302 (Fed. Cir. 2002). ANALYSIS A. Pontoon Claim 1. Changed condition. Metric contends that the Navy's installation of the pontoon at Daytona Beach constitutes a constructive change. Pl.'s Post-Trial Br. at 28. Five categories of constructive changes have been identified by commentators: "(I) disputes over contract interpretation during performance; (II) [g]overnment[al] interference or failure to cooperate; (III) defective specifications; (IV) misrepresentation and nondisclosure of superior knowledge; and (V) acceleration." Miller Elevator, 30 Fed. Cl. at 678 (citing Ralph C. Nash, Jr., Government Contract Changes 10-9 through 10-11 (2d ed. 1989)); Nash, Changes and Claims, in Construction Contracting, at 501, 534 (1991)). Metric's pontoon claims fall under the second type of constructive change listed above, i.e., one that rests on governmental interference.20 When applying the doctrine of constructive change in this context, courts "look to whether the government's fault has compelled the contractor to perform extra work." John Cibinic, Jr., Ralph C. Nash, Jr. & James F. Nagle, Administration of Government Contracts 460 (4th ed. 2006). "Whether the

doctrine in its modern guise is the embodiment of the ancient principle that "what should have been done will be done." Philip L. Bruner & Patrick J. O'Connor, Jr., Bruner and O'Connor on Construction Law § 4.25 (2002) (footnote omitted). The numerical designation of the categories of constructive changes recited in Miller Elevator is not reflected in the case law. For example, a differing site condition as stated in Federal Acquisition Regulation ("FAR") [48 C.F.R.] § 52.236-2, i.e., a "latent physical condition[] at the site which differ[s] materially from those indicated in this contract" is typically known as a Type I differing site condition, see H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1343 (Fed. Cir. 1998), although it would fall within the general category of defective specifications (category III in Miller Elevator). 17
20

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government has breached an implied duty to cooperate is determined by the reasonableness of its actions under the circumstances." Id. at 459. Before it can recover, the contractor must show that the government ordered and actually compelled it to perform the additional work, Len Co. & Assocs. v. United States, 385 F.2d 438, 443 (Ct. Cl. 1967), although the government's order need not be formal or in writing. Wm. A Smith Contracting Co. v. United States, 412 F.2d 1325, 1340 (Ct. Cl. 1969). The order or compulsion must have been given by or derived from a governmental official with requisite authority. Calfon Constr. Inc. v. United States, 18 Cl. Ct. 426, 434, (1989), aff'd, 923 F.2d 872 (Fed. Cir. 1990) (table). The government argues that this is purely a delay claim, not a constructive change, with the attendant consequence that Metric would not be allowed a profit on the costs of delay as it would be for a changed-condition claim. Def.'s Post-Trial Br. at 16 (citing S.S. Silberblatt, Inc. v. United States, 228 Ct. Cl. 729 (1981)); see also North Am. Constr. Corp. v. United States, 56 Fed. Cl. 73, 76 (2003) ("With respect to profit, there is typically no question that it is a normal part of an equitable adjustment."). Although witnesses at trial and plaintiff's briefs used the word "delay" when discussing the pontoon claim and the results of the pontoon installation, see Tr. 637:23-25 (Holmes), 1598:20-25 (Burnell); Pl.'s Post-Trial Reply at 14-17, these references do not make Metric's pontoon claim a delay claim. Rather, the scenario presented by Metric fits squarely within a governmental-interference type of constructive change. See Ets-Hokin Corp., 420 F.2d at 720. Metric bid for the work on San Nicolas Island and began its performance based upon the existing barge landing system at Daytona Beach. Tr. 456:3-16 (Holmes), 879:19 to 880:6, 902:10 to 904:5 (Miller).21 However, when the government later installed the pontoon landing system, Metric was directed by the government to land only on the pontoon. Tr. 72:4-16, 92:1922 (Kostelny), 471:13-25, 478:17 to 488:11 (Holmes). Because Metric's barge was different from the government's barge, landings by Metric on the pontoon proved to be difficult and at times impossible when the water depth at the end of the pontoon was not sufficient, whether due to lower tide or sand bars, to accommodate the deeper draft drawn by Metric's loaded barge. See supra, at 6. In short, Metric has proven that the Navy's installation of the pontoon on Daytona Beach, and its attendant requirement that Metric land its barge only on the pontoon and not on the beach constituted a constructive change to the roadway and airfield contracts that hindered Metric's performance.22

The contracts awarded to Metric incorporate by reference the standard Changes clause set forth at FAR § 52.243-4. See PX 2 (Airfield Solicitation, Offer, and Award); DX 1008 (Roadway and Airfield Contract Provisions). The Navy did not invoke that clause in connection with the installation of the pontoon. This is not to say that the Navy did not have good reasons for installing the pontoon. That installation eliminated any need to build temporary sand ramps on the beach and elided the necessity to maintain a permit from the Corps of Engineers to make barge landings on the beach. The pontoon also would reduce the amount of activity on the beach that might affect the 18
22

21

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The government counters that the contractual provisions regarding beach landings were "quite restrictive and Metric simply had no right to unfettered access to beach landings on Daytona Beach." Def.'s Post-Trial Br. at 16 (citing DX 1008 (Roadway and Airfield Contract Provisions) at 104-05). However, Metric is not relying on any right to "unfettered" access; rather, its pontoon claim rests on the method of access as recited in the contractual terms. The contractual restrictions related to the Navy's priority of use, the nature of the beach, and environmental conditions; nothing in the contract addressed a pontoon. Landing of bulk aggregate and other similar types of construction materials at Daytona Beach was essential to contract performance. Landing at Sissy Cove was a non-existent alternative, as access to that cove is quite restricted due to its small size, shallow waters, and rocky outcrops, as shown by the government's own non-use of the cove. The government further argues that "Metric's use of a specific barge, and Metric's previous experience conducting beach landings, were not contractually guaranteed to continue indefinitely in the manner that Metric preferred." Def.'s Post-Trial Reply at 9. That is true; there was no such guarantee. However, after the installation of the pontoon, the government directed Metric to use the pontoon for all landings at Daytona Beach. At the time that Metric was awarded the contract, beach landings at Daytona Beach were not just Metric's "preferred" landing method, rather they were the only type of landing by sea feasible on the island. The installation of the pontoon together with the government's insistence that Metric use the pontoon system rather than beach landings substantially hindered and restricted Metric's ability to land at San Nicolas Island and thus constituted a constructive change entitling Metric to an equitable adjustment. 2. Length of delay. The changed conditions caused by the government's installation of the pontoon at Daytona Beach caused Metric delays on both the roadway and airfield contracts. The extent of the delay was strongly contested at trial. The government first raises a mitigation defense, contending that Metric "had an obligation to mitigate its damages by renting a barge that was compatible with the pontoon" such as the barge rented from Foss Marine by the government, which could have been done "for a tenth of the costs it is now seeking." Def.'s Post-Trial Br. at 18-19 (citing Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005)). Conceptually, the government raises a valid point. Mitigation of damages should apply to an equitable adjustment just as it does to damages sought for a quotidian breach of contract. Equitable adjustment in the context of a governmental-hindrance constructive change constitutes a specialized remedy for what would otherwise be a breach of the implied covenant duty of good faith and fair dealing. See supra, at 16 & n.19. In this instance, once the pontoon was installed and Metric was directed to use it, Metric was under an obligation to mitigate its losses or damages. See Indiana Michigan,

populations of elephant seals and California sea lions that frequented the beach. 19

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422 F.3d at 1375 ("[O]nce a party has reason to know that performance by the other party will not be forthcoming [or, here, that performance will be hindered by actions of the other party], . . . he is expected to take such affirmative steps as are appropriate in the circumstances to avoid loss by making substitute arrangements or otherwise.") (quoting Restatement (Second) of Contracts § 350 cmt. b). In this respect, the government bears the burden of proof, i.e., to eliminate or reduce the claimant's damages, the government must show that the claimant's actions were unreasonable. See id. (A non-breaching party is "`not precluded from recovery to the extent that [it] has made reasonable but unsuccessful efforts to avoid loss'" (quoting Restatement (Second) of Contracts § 350(2))); see also T.C. Bateson Constr. Co. v. United States, 319 F.2d 135, 160 (Ct. Cl. 1963); Spodek v. United States, 73 Fed. Cl. 1, 19 (2006) ("[I]t is the breaching party's burden to prove that the actions taken in mitigation were not reasonable."). Metric resists the government's mitigation defense on several grounds. First, immediately after the Navy's installation of the pontoon, it sought permission to continue landing on the beach. PX 21 (Letter from Holmes to ROICC (Jan. 6, 1999)); see also PX 22 (Letter from Metric to ROICC (Feb. 11, 1999)). Five months later, that permission was granted, although Metric was no longer permitted to build sand ramps on the beach in connection with its beach landings. Tr. 82:5-8 (Kostelny). Moreover, Metric did use the pontoon for six landings, between January and April 1999, when the weather conditions, tides, and absence of sand build-up in front of the pontoon made such landings possible. See supra, at 7 n.9. In support of its position, the government points out that Mr. Miller testified at trial that "We could have hired Foss Marine," Def.'s Post-Trial Sur-Reply Br. at 1 (quoting Tr. 1173:4-8 (Miller)); however this statement was only in response to the ability to hire the Foss barge to move rolling stock, not bulk aggregate, to San Nicolas Island. Tr. 1173:4-8 (Miller). The facts presented at trial showed that Metric could not have effectively hired and used the barge that Navy leased from Foss Marine for two reasons. First, Metric's barge transported bulk material while the Navy's barge was built and operated only to move rolling stock. Tr. 87:6-7 (Kostelny). Metric required the ability to move bulk material in order to perform its work on the island. Second, the Foss Marine barge was under contract to the Navy and was used consistently by the Navy, Tr. 306:19 to 308:14 (Kostelny), and thus was largely unavailable for rent by Metric. Consequently, the facts indicate that the actions Metric took by way of mitigation were not unreasonable, and in this regard the government has failed to meet its burden of showing that an equitable adjustment for Metric should be eliminated or reduced on unreasonable-mitigation grounds. In its submissions to the Navy's contracting officer, Metric claimed that the installation of the pontoon caused a total of 368 days of delay: 25 days on the airfield runway project, 146 days on the roadway repair project, and 197 days concurrent for both projects. PX 7 (certified claims) at 67. Metric derived the delay periods by analyzing the number of barge-landable days between January 1, 1999 that were not used for that purpose, also taking into account the number of barge landings that were actually made during that period, and comparing the number of barge landings that were necessary to deliver the requisite materials. PX 7 (certified claims) at 70-75; Tr. 495:3 20

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to 499:16, 503:16 to 551:13 (Holmes). As noted previously, the Navy's contracting officer did not respond to Metric's claims.23 To prepare for trial, Metric