Free Order on Motion for Summary Judgment on the Admin. Record - District Court of Federal Claims - federal

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In the United States Court of Federal Claims
No. 01-642 C (Filed: November 28, 2007) ************************************* GASA, INC., * * Plaintiff, * * v. * * THE UNITED STATES, * * Defendant. * *************************************

Motion for Summary Judgment; RCFC 56; Dredging; Contract Interpretation; Delay Damages; Existence, Extent, and Reasonableness of Delay; Injury; Concurrent Delay; Disposal of Solid Waste; In-River Placement of Dredged Material

Eric G. Soller, Pittsburgh, Pennsylvania, for plaintiff. David B. Stinson, United States Department of Justice, Washington, DC, for defendant. OPINION AND ORDER SWEENEY, Judge Presently before the court are Defendant's Motion for Summary Judgment and Defendant's Renewed Motion for Summary Judgment, both filed pursuant to Rule 56 of the Rules of the United States Court of Federal Claims ("RCFC"). In this case, plaintiff contracted with the United States Army Corps of Engineers ("Corps") to dredge certain areas of the Monongahela River. Plaintiff now seeks delay damages, compensation for the dredging and placement of certain river material, and the return of withheld liquidated damages. Because the court finds genuine issues of material fact with respect to plaintiff's delay claim, the court grants in part and denies in part defendant's motions.

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I. BACKGROUND A. Factual History1 1. Contract Solicitation and Award On March 20, 2000, the Corps' Pittsburgh District issued a sealed bid solicitation for the dredging of Braddock Locks and Dam Pool 3 Navigation Channel in the Monongahela River ("the Project"). DPFUF ¶ 1. The Project consisted of dredging the river, disposal of some of the dredged material at an approved, off-site landfill, and placement of the remaining dredged material back in the river at a different location ("in-river placement"). Id. ¶ 2. The solicitation specifically identified four areas of the river to be dredged as well as the cubic yards of material associated with each area: STA 906+30 to STA 922+20 ("in-river placement area"), 71,195 cubic yards; STA 897+27 to STA 906+30 ("MU-102"), 65,455 cubic yards; STA 582+78 to STA 574+06 ("MU-59"), 27,045 cubic yards; and STA 11+46 to STA 18+66 ("MU-3"), 6,090 cubic yards. Id. ¶ 3. Only the material dredged from the in-river placement area was to be placed back in the river; the remaining material was to be disposed off-site.2 Id. The anticipated total amount of dredged material was 169,785 cubic yards. Id. ¶ 4. The solicitation indicated that most of the contract earnings would be based on the quantity of material dredged and disposed of, except for

The facts set forth below do not constitute findings of fact by the court. The facts are derived from the following documents, and, unless otherwise indicated, are undisputed or clearly supported by the record: Appendix to Defendant's Motion for Summary Judgment ("Def.'s App."); Defendant's Proposed Findings of Uncontroverted Fact, as continued in Defendant's Proposed Findings of Uncontroverted Fact Submitted in Conjunction With Defendant's Response to Plaintiff's Third Amended Complaint and Renewed Motion for Summary Judgment ("DPFUF"); Appendix to Plaintiff's Brief in Opposition to Defendant's Motion for Summary Judgment, as continued in the Supplemental Appendix to Plaintiff's Brief in Opposition to Defendant's Motion for Summary Judgment ("Pl.'s App."); Plaintiff's Proposed Findings of Uncontroverted Fact ("PPFUF"); Plaintiff's Response to Defendant's Proposed Findings of Uncontroverted Fact, as continued in Plaintiff's Response to Defendant's Proposed Findings of Uncontroverted Fact Submitted in Conjunction With Defendant's Response to Plaintiff's Third Amended Complaint and Renewed Motion for Summary Judgment ("Pl.'s Resp."); Defendant's Response to Plaintiff's Proposed Findings of Uncontroverted Fact ("Def.'s Resp."); Appendix to Defendant's Reply Brief ("Def.'s Reply App."); and Appendix to Defendant's Response to Plaintiff's Third Amended Complaint and Renewed Motion for Summary Judgment ("Def.'s Supp'l App."). Prior to bid solicitation, the Corps arranged for the testing of the sediment from the river bottom. Def.'s App. 139. For testing purposes, "the river was divided into `Management Units'. As a result of the [testing], three of these Management Units were identified which require special handling and disposal," and were therefore not candidates for in-river placement. Id. at 139-40. The three Management Units were MU-3, MU-59, and MU-102. Id. at 139. -22

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the reimbursement for payment and performance bonds and the costs of mobilization and demobilization. Def.'s App. 21. The solicitation also indicated that contract performance was to begin within ten days of the Notice to Proceed ("NTP") and completed within 180 days of the NTP. Id. at 19. The contract was to be a continuing contract, meaning that "[t]he payment of some portion of the contract price [was] dependent upon reservations of funds from future appropriations . . . ." Id. at 59 (containing the Continuing Contracts clause). In the solicitation, the Corps allocated $5,200,000.00 for the contract for the current fiscal year and indicated that it "expected that Congress will make appropriations for future fiscal years from which additional funds . . . will be reserved for this contract." Id. Plaintiff GASA, Inc. responded to the solicitation by submitting a bid for the Project. DPFUF ¶ 5. The Corps opened the bids, which encompassed both basic contract items and awardable option items,3 on April 20, 2000. Id. Plaintiff was the lowest qualified bidder, with a total bid of $7,668,958.45, which included a bid for the basic contract items of $6,410,559.55.4 Id. ¶¶ 5-6. The Corps determined that plaintiff's bid was fair and reasonable. PPFUF ¶ 6. On May 25, 2000, after the Corps opened the bids but before the Corps recommended the award of the contract, R. Scott Smiley, District Engineer for the Corps' Pittsburgh District, DPFUF ¶ 47, wrote the following in an e-mail message to various Corps employees associated with the Project: Although we have authority to proceed with the award of the dredging Pool 3 contract, the funds associated with it are not here. [The] approximate $16M or so in additional funds that HQTRS and LRD have committed to is anticipated to come in monthly dribbles, based upon (mistakenly, I believe) on expenditures.5 I am proposing that we [award] the Pool 3 Dredging contract with the following language in the actual award letter. If this language passes muster with you, George, I am proposing that existing contracts be modified to deobligate only what we need thru June, and that we similarly tell each of the contractors that we

The option items, which were never awarded, DPFUF ¶ 10, consisted of dredging, inriver placement, and solid waste disposal of material located in the hydraulic floodway, id. ¶ 3. Plaintiff's bid for the basic contract items included $47,721.00 for reimbursement for the payment and performance bonds and $250,000.00 for mobilization and demobilization. Def.'s App. 21. "LRD" refers to the Corps' Great Lakes and Ohio River Division. PPFUF ¶ 20; Def.'s Resp. ¶ 20. -35 4

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will be obligating funds for the balance of the FY on a monthly basis at the beginning of each month.6 Hank and Jess, by COB tomorrow I need [a] schedule, by month, of when and how much we will need for the remainde[r] of the FY. Mike, similarly, I need this on Johnstown. Jim and Ralph, as I see it, we need to have funds obligated at least one month before the expenditure occurs, i.e., if we anticipate a contractor doing $1M in placement in July, we better have [$]1M obligated on 1 July or the RE has allowed the contractor to proceed with work for which he has not made funds available, which is, as I see it, a CFO violation. Def.'s App. 180 (footnotes added). Seven days later, on June 1, 2000, a contract specialist for the Corps, Michele R. Hutfles, recommended that the contract be awarded to plaintiff. Id. at 176. By letter dated June 6, 2000, Ronald Dunnington, the contracting officer, informed plaintiff that it had been awarded the contract in the amount of $6,410,559.55. Id. at 177. Enclosed with the notification letter was "a fully executed copy" of the contract and the payment and performance bonds. Id. The letter instructed plaintiff, per the terms of the contract, DPFUF ¶ 12, to "return the bonds to this office within ten days." Def.'s App. 177. Additionally, the letter indicated that, "[u]pon return to this office of the bonds, properly executed, Notice to Proceed will be issued." PPFUF ¶ 9. The contract did not contain a specific date on or by which the Corps was required to issue the NTP. DPFUF ¶ 14. The June 6, 2000 notification letter also informed plaintiff of a contract modification, providing: Reference is made to Page 00800-13, Paragraph 52.2320-4501, "Continuing Contracts", which states that the sum $5,200,000.00 is available for payments to the Contractor during the current fiscal year. The amount of funds available has been decreased and the amount is amended to read $100,000.00. Modification No. P00001 is enclosed reflecting this change. Id. ¶ 11. Modification P00001 contained the following explanation of the change: To most effectively utilize the funds available on the overall Locks and Dams 2, 3 and 4, Monongahela River project, it is necessary that funds be obligated for contract payment purposes on a monthly basis for the remainder of the fiscal year.
6

The fiscal year, often abbreviated as "FY" in the record, runs from October 1 through September 30. Def.'s App. 249; Def.'s Resp. ¶ 47. -4-

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Accordingly, the amount of funds stated in the above-mentioned paragraph is decreased to $100,000.00. Additional funds will be obligated around 1 July and subsequently in early August and September consistent with what we anticipate you will earn in each of those months. Id. At no time prior to June 6, 2000, did the Corps advise plaintiff that "funding issues" might delay the issuance of the NTP. PPFUF ¶ 11. 2. Events Occurring Between Contract Award and the Notice to Proceed On June 14, 2000, plaintiff submitted its performance and payment bonds to the Corps. DPFUF ¶ 13. The Corps received the bonds on June 15, 2000, but rejected the bonds and returned them to plaintiff for correction the next day. Id. Plaintiff resubmitted the bonds on June 21, 2000, and on the following day, the Corps approved the resubmitted bonds. Id. The Corps and plaintiff then engaged in a postaward, preconstruction conference on June 23, 2000. Id. ¶ 27. At the conference, the Corps informed plaintiff that it anticipated that the NTP would issue during the week of June 26, 2000. Id. In addition, the minutes of the conference, forwarded to plaintiff by Joseph F. Thomas, the authorized representative of the contracting officer,7 indicate that representatives of the Corps, including Mr. Thomas, informed plaintiff that, "[i]n order for work to start, you will need an Accident Prevention Plan. This is 1 of the big 3 that needs to be submitted prior to the start of work." Def.'s App. 212, 222. The minutes also identify the Environmental Protection Plan as "the 2nd of the big 3" and the Quality Control Plan as "the final item of the big 3." Id. at 223. At the conference, plaintiff informed the Corps that it had not entered into any subcontracts nor had it chosen an offloading site.8 DPFUF ¶ 67. However, plaintiff did indicate that it was "negotiating [with] several permitted sites" at which to dispose of the dredged material.9 Def.'s App. 223. In addition, plaintiff requested a list

The Corps appointed Mr. Thomas to the position of authorized representative of the contracting officer on June 6, 2000. DPFUF ¶ 25. Mr. Thomas was authorized to "take any or all actions in connection with the administration of the captioned contract" that the contracting officer was entitled to take, "exclusive of the authority to execute or agree to any contract modification . . . ." Def.'s App. 203. In fact, as late as August 18, 2000, plaintiff had not submitted an approved "Permitted Marine Facility" for river access and offloading operations. DPFUF ¶ 68. But see Pl.'s Resp. ¶ 68 (noting that the action of others prevented it from submitting such a plan). Then, on August 30, 2000, plaintiff switched water offloading sites and therefore was required to submit the permits and license information of the new facility to the Corps. DPFUF ¶ 71. The contract required that any "solid waste disposal facility" used by plaintiff be "properly permitted by the Commonwealth of Pennsylvania, Department of Environmental -59 8

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of hydrographic surveyors who could perform the required predredging surveys. DPFUF ¶ 29. The Corps provided plaintiff with a list of surveyors in a letter dated June 27, 2000. Id. ¶¶ 29, 60. According to Benito Moscatiello, plaintiff's owner and president, id. ¶ 7, plaintiff began working on the required submittals right after the preconstruction conference, id. ¶ 33. As just alluded to, the contract required that prior to commencing dredging in a particular area, plaintiff had to perform a hydrographic survey of that area. Pl.'s App. 355. Thus, "[s]hortly after contract award," plaintiff solicited and received proposals or bids from hydrographic survey firms to provide the required surveying services. DPFUF ¶ 59. In the twomonth period between contract award and the issuance of the NTP, plaintiff received at least four proposals. Id. In the meantime, Ms. Hutfles drafted a memorandum concerning the Corps' issuance of the NTP that bore the date June 16, 2000. PPFUF ¶ 13. Presumably, the June 16, 2000 date is erroneous, given that the memorandum purported to address events that occurred up to and including June 26, 2000. Def.'s App. 210. The memorandum provided, in its entirety: 1. Subject contract was awarded on 6 June 2000[.] Performance and Payment Bonds were received on 15 June 2000 and were returned to the Contractor for correction on 16 June 2000. Corrected bonds were received on 21 June 2000. 2. Per Jeff Fritz, Project Manager, on 21 June 2000, we were to hold up on NTP because the House marked up the 2001 budget and there was not as much money in the Lower Mon[ongahela] than what was anticipated. Per Hank Edwardo, Program Manager, on 22 June 2000, he was notified informally that the Senate might not mark up the budget until after 4 July 2000 and we may have to hold up NTP until after that. 3. Per Hank Edwardo, on 26 June 2000, he requested that we issue the NTP. I asked if we had funds and his response was that Les Dixon, Scott Smiley and h[e] met and everyone is aware of our need to continue to fund Braddock as well as this dredging job. We will continue to seek money from HQ and they have promised that they will seek the funds to complete these jobs. They are also aware of the commitment made with the state (PA) to use the dredged material for in-river placement on the Allegheny River. 4. Based on the above information, NTP was issued on 26 June 2000.

Protection . . . for the disposal of municipal, residual, or construction/demolition waste." Def.'s App. 128. -6-

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Id. Contrary to the memorandum's representation, the Corps did not issue the NTP on June 26, 2000. PPFUF ¶ 16. On June 28, 2000, Henry A. Edwardo sent an e-mail message to Mr. Dunnington and Ms. Hutfles concerning the Corps' contract with plaintiff. Pl.'s App. 49-50. Courtesy copies of the e-mail message were sent to nine other individuals, including Michael DeStefano, the acting contracting officer,10 and Mr. Thomas. Id. at 49; PPFUF ¶ 18. The e-mail message provided: Based on a reevaluation of the cross-LRD impacts of the House markup and passage in the House yesterday of its version of the appropriations bill, discussions with DINAMO and other insights in to the Senate appropriations picture, I have less confidence that sufficient monies will be available to sustain the District and the Braddock Dam contract next year. I am therefore in concurrence with the opinions of Jeff Fritz, Ralph Henry and Joe Thomas that we should terminate the GASA contract. Currently, Jones/Traylor is on a course to slip significant work into FY 2001; Alan Stone (Locks 4 approach dikes) also appears on a course to do the same. GASA would, in all probability, earn most of its $7M next year. Without a significant plus-up by the Senate (not expected), HQ will be hard-pressed to reprogram enough money to Lower Mon[ongahela], given the hits taken by Olmsted and other nav projects in the House Bill. All this together says, "terminate GASA" and use what limited money we can count on to pay salaries and Jones/Traylor. While this termination is a disappointment and distasteful to me, I have lost confidence in manna from heaven. Future Pool 3 dredging work will be pursued under an IDIQ contract to better allow the district to respond to the highs and lows of the appropriations process and CG execution Corps-wide. It is therefore requested that CT terminate the subject contract. The $100,000 obligated for this contract should be sufficient to cover the termination costs. Pl.'s App. 49-50. Later that day, Mr. Thomas responded, "I also support this fine decision." PPFUF ¶ 18. The next day, Mr. DeStefano responded, "The sooner the better for all parties." Id. Thus, later on June 28, 2000, Mr. Dunnington, at the direction of Mr. Edwardo, orally informed plaintiff that the Corps was going to terminate the contract "due to a concern with

Mr. DeStefano permanently assumed the position of contracting officer on August 1, 2000. Pl.'s App. 414. -7-

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being able to have sufficient funds next year." Id. ¶ 19. Upon being advised of Mr. Edwardo's directive to Mr. Dunnington, the LRD directed Mr. Edwardo to reverse the telephone call to plaintiff and to delay any further action. Id. ¶ 20. Thus, that same day, Mr. Edwardo sent the following e-mail message to Mr. Dunnington: Ron, LRD asked me to "undo" the telcon to GASA; they want some more time to figure out what to do; they [questioned] if we had authority to terminate (I said CT never raised this as an issue); they also want to discuss the funding issue with HQ some more; [T]hey suggest you tell GASA that we are reevaluating the whole program and although uncertain as of now, we have not made a final decision on terminating their contract; we expect a decision on the NTP by next week; [S]orry for the flip-flop[.] Def.'s App. 237. Mr. Edwardo also telephoned plaintiff that day to advise that the termination orally provided by Mr. Dunnington was done at his direction and that his decision was "illadvised, that we were reevaluati[ng] next year's funding scenario and to ignore the verbal termination." PPFUF ¶ 21. Around this time,11 an unsigned e-mail message was printed by Mr. Thomas, which contained the following statement concerning the Corps' contract with plaintiff: "We do not have an NTP. Say a[n] NTP on 5 July. This guy is [shaky]. If he gets going, he might start to earn $$$ 15 August. My range of earning for FY 2000 is $0 to $750K." Pl.'s App. 53. Another two weeks passed without the Corps issuing the NTP. In a July 11, 2000 letter to the Corps, plaintiff wrote: We have submitted all documents per your letter dated June 6, 2000 and hope that everything is in order as we have not heard from anyone in the Department office to the contrary.12 A Post Award Conference/Pre-Construction Conference was held and conducted by Mr. Joe Thomas in your field office on June 23, 2000 and

The e-mail message was undated. Pl.'s App. 53. However, the printed message contained a handwritten note by Mr. Thomas that was dated June 29, 2000. PPFUF ¶ 27. In addition to directing the submission of the payment and performance bonds, the June 6, 2000 letter outlined the contract's insurance requirements. Def.'s App. 177. Plaintiff submitted acceptable payment and performance bonds on June 21, 2000, and its certificate of insurance on June 27, 2000. DPFUF ¶ 13. -812

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accordingly we have been relentlessly active with the preparatory work to commence dredging. For example, we have secured and mobilized the necessary navigational equipment and cranes to the Project. The cranes are currently being assembled at Century Steel Erectors at Dravosburg, PA and installed on barges. Also we are preparing the required submittals to forward to Mr. Joe Thomas. Kindly notify us as to when we may expect your issuance of Notice to Proceed (NTP), as we wish avoiding working in the river in the month of November thus avoiding winter months. Def.'s App. 239 (footnote added). The Corps had not indicated to plaintiff any problems with the documents submitted as of July 11, 2000. PPFUF ¶ 28. Plaintiff followed through with the representations contained in its July 11, 2000 letter and proceeded to submit to the Corps some of the documents required by the contract. On July 11, 2000, plaintiff submitted a Quality Control Plan. Def.'s App. 278. Then, on July 12, 2000, plaintiff submitted a Propelling Unit Agreement. DPFUF ¶ 35. Plaintiff's Propelling Unit Agreement indicated that it had chartered two units "for the duration of the Project" and that "[a]ll pilots will be US Coast Guard First Class Licensed." Def.'s App. 242. Plaintiff appended the licenses of three pilots to the Propelling Unit Agreement. Id. at 243-45. Next, on July 13, 2000, the Corps received plaintiff's initial Accident Prevention Plan, DPFUF ¶ 55, and Work Plan for the Disposal of Materials, Def.'s App. 369A. Then, on July 14, 2000, plaintiff submitted its initial Operations Plan to the Corps. Def.'s Reply App. 20-21. About ten days later, on July 24, 2000, plaintiff submitted a Permitted Solid Waste Disposal Facility Agreement. Def.'s App. 373. Another document that plaintiff submitted to the Corps during this time period was a construction progress schedule. Plaintiff submitted the schedule, in bar chart format, on July 15, 2000. DPFUF ¶ 22. The schedule indicated that plaintiff expected the NTP to be issued on July 17, 2000, that it would begin dredging on July 24, 2000, and that dredging would be completed by September 30, 2000. Id. ¶ 23. The schedule did not include any time for the submittal process because Mr. Moscatiello anticipated completing the process in June 2000, before plaintiff began work on the Project. Id. ¶ 33. The Corps commented on this for-informationonly submittal on July 31, 2000, Def.'s App. 192, and noted: "Bid Items #4, 5 & 6­In accordance with [the contract,] only one `acceptance section' is to be completed and accepted before proceeding to the next `acceptance section'. Your schedule currently shows all of the work being performed at the same time which is not in contract compliance." Id. at 193. On July 27, 2000, a meeting was held at plaintiff's office that was attended by Mr. Dunnington, Mr. Edwardo, and James Edinger, P.E., a Corps engineer. PPFUF ¶ 31. Mr.

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Edwardo explained to plaintiff the current lack of funding for the Project. Def.'s App. 246. The Corps presented two options: (1) termination of the contract for the convenience of the government or (2) with plaintiff's permission, issuing the NTP in late fiscal year 2001, with plaintiff performing most of the work in fiscal year 2002.13 DPFUF ¶ 36. Plaintiff suggested a third option to the Corps, proposing that the Corps issue the NTP and allow work on the Project to begin immediately if Congress made funds available for the Project. Id. ¶ 37. Mr. Moscatiello offered to seek congressional intervention and requested a week to do so. Id. The meeting concluded with the attendees' acknowledgment that obtaining the funds would be the best outcome. Id. On July 31, 2000, plaintiff sent another letter to the Corps that stated: "As discussed today, we are incurring expenses of $500,000.00 per month awaiting the Notice to Proceed. We were assured the notice was immediately forthcoming in June. To suspend or terminate the contract at this time will cost in excess of $3,000,000.00 due to equipment leasing commitments."14 Id. ¶ 38. Plaintiff requested that "we proceed immediately per paragraph 52.2320-4501 with payment to be made as funded with interest as provided in the paragraph."15 Id. ¶ 41. Plaintiff also requested that the Corps issue the NTP. PPFUF ¶ 33. However, at this time, the Corps had not made a decision regarding the issuance of the NTP. Id. Despite the Corps' indecision regarding issuing the NTP, it continued to proceed under the terms of the contract. The Corps rejected plaintiff's Propelling Unit Agreement on July 31, 2000, because (1) it did not provide that the vessels would be on site as required by the contract, DPFUF ¶ 42; (2) the Corps believed that only one of the three pilots identified by plaintiff had a first class license, Def.'s App. 241; and (3) the Corps believed that the three pilots licenses were inapplicable to the Monongahela River, id. The same date, the Corps also rejected plaintiff's Permitted Solid Waste Disposal Facility Agreement, noting that "[t]he agreement does not indicate compliance with federal, state and local laws & regulations." Id. at 373. Two days later, on August 2, 2000, the Corps rejected plaintiff's initial Accident Prevention Plan. DPFUF ¶ 55.

As noted above, the fiscal year runs from October 1 through September 30. Def.'s App. 249; Def.'s Resp. ¶ 47. Thus, fiscal year 2001 ran from October 1, 2000, through September 30, 2001. Def.'s App. 249; Def.'s Resp. ¶ 47. Similarly, fiscal year 2002 ran from October 1, 2001, through September 30, 2002. Mr. Moscatiello subsequently indicated that he did not remember who told him that the issuance of the NTP "was immediately forthcoming in June," but was certain that it was not Mr. Thomas. DPFUF ¶ 39. Mr. Moscatiello also indicated, after-the-fact, that the $500,000.00 figure for incurred monthly expenses was a "ballpark figure" and that the $3,000,000.00 figure for contract termination or suspension costs also was a "ballpark figure" that included "anticipated profits and expense incurred at that point" and "loss of opportunities." Id. ¶ 40.
15 14

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The contract provision referred to by plaintiff is the Continuing Contracts clause. -10-

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On August 3, 2000, Mr. DeStefano responded to plaintiff's July 11, 2000, and July 31, 2000 letters.16 PPFUF ¶ 34. He indicated that the NTP "cannot be issued at this time due to insufficient funds." DPFUF ¶ 43. Mr. DeStefano also stated that plaintiff's proposal to proceed immediately with the Project was not acceptable to the Corps because it would be a violation of the Antideficiency Act. Id. He then indicated that the Corps had received "approval from a higher authority" to perform the Project at a later date when funds became available. PPFUF ¶ 34. Mr. DeStefano noted: "In awarding this contract on June 8, 2000 [sic], we had anticipated that funds would be available for this contract in fiscal years 2000 and 2001." Id. ¶ 35. Because funding for those years was questionable, he offered plaintiff the option of suspending the issuance of the NTP "until October 1, 2001 when it is anticipated that funds will become available." DPFUF ¶ 43. In conjunction with the suspension of the NTP, Mr. DeStefano offered an extension of the contract completion date until September 30, 2002.17 PPFUF ¶ 36. With regard to this option: "In accordance with Contract Clause 52.242-14 Suspension of Work[,] `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 interruption, and the contract modified in writing accordingly.'"18 DPFUF ¶ 43. Mr. DeStefano also offered plaintiff another option­the opportunity to request a termination of the contract­and requested that plaintiff notify the Corps if it chose this option by August 9, 2000. Id. ¶ 44. He concluded: In either case, contract modification or termination, GASA, Inc. shall be reimbursed for all proper and reasonable contract expenses incurred since contract award in preparing to receive a Notice to Proceed. . . . Please be advised that you should immediately cease all contract effort. . . . If your response is not received

The parties submitted two versions of Mr. DeStefano's August 3, 2000 letter­ defendant's version was signed and plaintiff's version was unsigned. The letters contain substantive differences. See Def.'s App. 249-50; Pl.'s App. 58-59. Despite the differences between the two versions, the parties did not dispute each other's versions of the letter. Thus, both versions of the letter are quoted, depending on which party proposed the uncontroverted fact. Differences are explained in footnotes. The version of the letter submitted by defendant instead provides that "[t]he contract completion date will be determined after the Notice to Proceed has been issued." Def.'s App. 249. The version of the letter submitted by plaintiff does not contain this sentence. Pl.'s App. 58. Instead, plaintiff's submitted version provides that "[t]he government would be open to negotiate all reasonable price adjustments due to such a modification." Id. -1118 17

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by COB on August 9, 2000, the contract will be terminated for the convenience of the government.19 Pl.'s App. 59 (footnote added). On the same date as this letter, the Corps rejected plaintiff's Quality Control Plan, Def.'s App. 278; Operations Plan, Def.'s Reply App. 20; and Work Plan for the Disposal of Materials, Def.'s App. 369A. Meanwhile, on August 4, 2000, the Pennsylvania Department of Environmental Protection ("DEP") wrote a letter to plaintiff in follow-up to a July 26, 2000 meeting concerning plaintiff's water management plan for the Project. Id. at 369C-369D. The DEP wrote: "Subsequent to our meeting, the Corps informed us that this project (the dredging of the small quantity of uncontaminated and contaminated material from Pool 3) will be delayed for one year." Id. at 369C. The DEP also advised plaintiff that its plan to treat and discharge wastewater contradicted the Corps' specification because the Corps' "specification did not allow for treatment and discharge of the wastewater generated during this project," and that the "issue must be resolved." Id. On August 7, 2000, in response to the Corps' August 3, 2000 letter, plaintiff agreed to a meeting to discuss its options. Id. at 251. Accordingly, plaintiff and the Corps met on August 8, 2000. DPFUF ¶ 45. At the meeting, Mr. Moscatiello reiterated his statement that plaintiff had incurred $3,000,000.00 in costs to date and asserted that he expected to obtain between $5,000,000.00 and $6,000,000.00 if plaintiff successfully sued the Corps. Id. Plaintiff then wrote a letter to the Corps on August 10, 2000, which stated: Thank you for setting up the Meeting on Tuesday, August 8, 2000, at your office. I believe the discussions relative to the above captioned project were enlightening. However, I respectfully remind you, that to terminate this Contract would be catastrophic to us and not convenient for the Army Corps of Engineers, because, as we discussed, the total amount of the Contract would be [expended] in any event, only reduced by a minimal amount for labor, trucking and disposal fee
19

Alternatively, defendant's submitted version of the letter provides:

In either case, delaying the Notice to Proceed or termination, GASA, [I]nc. shall be reimbursed in accordance with the applicable Contract Clause. Please be advised that you should immediately cease all work under this contract. If your response is not received by COB on August 11, 2000, the contract will be terminated for the convenience of the government in accordance with Contract Clause 52.249-2 Alt I. Def.'s App. 250. -12-

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of approximately 100,000 cubic yards of contaminated material to a permitted landfill. Accordingly, to re-divert funds to perform this project would be the only just thing to do and in the best interest of all concerned. I hope that after you reflect on this most important matter anything other than issuing a Notice to Proceed would be irresponsible. Id. ¶ 46. While the Corps was communicating with plaintiff, it also was engaged in internal discussions. On August 9, 2000, Mr. Smiley sent an e-mail message to other Corps personnel, which provided, in part: As you are aware, this contract has been awarded, a pre-construction conference has been held, and the contractor has submitted his bonds. The Government has subsequently delayed the issuance of the NTP due to funding uncertainty, both in this FY and in FY01. . . . To me, the resolution of this matter is a classic no-brainer. Rather than pay possibly $1.5M to terminate the contract and get nothing, except a long legal battle and tons of bad press for awarding a contract we had no funds for and had to ultimately terminate, I would propose that we issue the NTP. Where do we find the money[?] In earlier drills, we had [whittled] the funding needs on the Lower Mon[ongahela] project down to $6M. Yesterday, after a review by Hank, I alerted Dan Spellman that we were cutting our needs back to $3.5M, which included nothing for this contract. CD has estimated that [GASA] has the capacity to earn $1.5-$2M this FY, and the balance, [$4M], depending on whether we award the awardable option next FY. (Internally, we are having some discussion about deleting a portion of the work at some future date.) I am proposing that Dan increase the Lower Mon[ongahela] needs list for FY00 to $5M, [] which is still less than the $9M we were at two days ago, and on this assurance, I will reallocate some funds I currently have set aside for the Braddock Dam contract to this effort and issue NTP to [GASA]. Since I realize that nobody will commit to any FY00 funds now, I would propose that we fund this work as a priority item out of the FY01 work allowance we ultimately receive. I fully believe that we are going to have insufficient funds available next year under any scenario to pay the $40M in anticipated earnings on the Braddock [D]am contract. I also fully believe that, in a $1.2B CG program, that somehow $10-15M will be identified and reprogrammed to the Lower Mon[ongahela]

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project to avoid having to suspend the contract, especially after we have successfully floated the segment into place. Talk about partnering. Anyway, these are the facts and my recommended solution. Comments? Concurrence? Dan, what['s] your vibe from Mulger? Can he get us the $5M we need this year to make this happen[?] Def.'s App. 256. Despite Mr. DeStefano's assertion in his August 3, 2000 letter to plaintiff that the Corps would terminate the contract for the convenience of the government on either August 9 or August 11, 2000, the Corps did not do so. PPFUF ¶ 38. Instead, on August 11, 2000, Mr. DeStefano wrote a memorandum providing: "Issue NTP Monday 8/14/00 after hear results of Col[onel Ridenour's] Note to Gen[eral] Griffin." Pl.'s App. 67. As referenced in Mr. DeStefano's memorandum, Colonel David R. Ridenour sent an email message to Brigadier General Robert Griffin of the LRD on August 11, 2000. DPFUF ¶ 48. Colonel Ridenour wrote: In an Email I forwarded to you on 28 July 2000, I stated that we proposed to delay start of our $7+ million stretch contract to dredge pool 3 on the Lower Mon[ongahela]. However, subsequent to discussion with the contractor, we have concluded that it is in the best interest of USACE to proceed with this contract. We have involved the subject contractor in discussions on potential actions to delay or terminate the contract. We estimate that termination or delay will have a price tag in excess of $1.5 million. This is a significant loss on a construction contract with a base cost estimate of $6.4 million and an awardable option of $1.3 million. In addition, I would anticipate litigation with any proposal to terminate. Rob Vining and Les Dixon have discussed this situation and have concluded that the "smart and best" course of action is to issue a notice to proceed on this contract. My PRB is in full concurrence with this action. On Monday, we plan to issue an NTP and will continue to work closely with your staff with respect to pursuit of CG funds. If additional funds cannot be found, this work will be funded directly from the Lower Mon[ongahela] Navigation Project and other contract work slowed or delayed. PPFUF ¶ 44.

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Mr. Edwardo forwarded a copy of Colonel Ridenour's August 11, 2000 e-mail message to Mr. DeStefano and Mr. Edinger on August 14, 2000, noting: "FYI, this is what Col[onel] Ridenour sent [General] Griffin on Friday; Scott advises us to wait until late this morning to gauge LRD's reaction before proceeding with the NTP." Pl.'s App. 68. Sometime that same day, Mr. DeStefano advised plaintiff by telephone that according to Mr. Smiley, $1.5 to $2 million would be available for the Project and the NTP would be sent to plaintiff via facsimile later that day. PPFUF ¶ 46. As Mr. DeStefano represented, on August 14, 2000, the Corps issued the NTP and transmitted a copy to plaintiff via facsimile. DPFUF ¶ 49. Thus, pursuant to the terms of the contract, the completion date for the Project was established as February 10, 2001. Id. ¶ 83. As of August 14, 2000, plaintiff had not completed mobilization and acquisition or rental of equipment and material for the dredging operations. Id. ¶ 70. In addition, plaintiff, according to its quality control manager, still was attempting to secure a hydrographic surveying firm. Id. ¶ 61. Plaintiff had not hired any of the firms that had submitted bids as of August 14, 2000. Id. ¶ 59. 3. Events Occurring Between the Notice to Proceed and the Commencement of Dredging Operations As previously noted, the contract required that plaintiff begin performance within ten days after receiving the NTP. Def.'s App. 19. The parties exchanged letters on August 15, 2000. Plaintiff's letter to the Corps acknowledged receipt of the NTP, and provided: In order to further minimize delays, we have employed the services of Mr. Joseph P. Burke to expedite the submittals and resubmittals as required. We would appreciate your cooperation with Mr. Burke in the review and resubmission process to the extent that he may be involved personally, at your office, to clarify interpretations, modify submittals or otherwise be provided insight as to corrective action that may be required. Please note that the submittal register on a diskette has not yet been provided as outlined in [the contract]. Id. at 261. The Corps' letter to plaintiff similarly addressed plaintiff's submittals. DPFUF ¶ 51. The Corps identified ten different submittals that were either never submitted or in need of resubmission. Id. The list included the "big 3" submittals required prior to the commencement of dredging operations: the Environmental Protection Plan, the Quality Control Plan, and the

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Accident Prevention Plan. Id. Also on August 15, 2000, the DEP advised the Corps of the issues surrounding plaintiff's plan to treat and dispose wastewater.20 Id. ¶ 75. Plaintiff and the Corps met on August 17, 2000, and discussed plaintiff's previouslyrejected Propelling Unit Agreement. Id. ¶¶ 52-53. That same day, plaintiff submitted another Propelling Unit Agreement. Def.'s App. 266. The resubmitted Propelling Unit Agreement differed from the original in two ways. First, the resubmitted Propelling Unit Agreement added the following sentence: "Both units will be on site full time." Id. at 267. Second, the resubmitted Propelling Unit Agreement informed the Corps that the pilot licenses that plaintiff had previously submitted were fully compliant with the United States Coast Guard's requirements. Id. The Corps eventually approved plaintiff's Propelling Unit Agreement, but there is conflicting information as to which Propelling Unit Agreement the Corps approved­the original or the resubmitted agreement. On one hand, Mr. Thomas approved the resubmitted Propelling Unit Agreement on August 24, 2000. Id. at 266. On the other hand, the Corps informed plaintiff, in an August 25, 2000 letter, that the original Propelling Unit Agreement, submitted on July 12, 2000, was changed from "disapproved" to "Satisfactory." DPFUF ¶ 53; see also Pl.'s App. 564-65 (containing Mr. Thomas's subsequent statement that he intended to approve the originally submitted Propelling Unit Agreement). On August 18, 2000, plaintiff submitted its first post-NTP Operations Plan. DPFUF ¶ 76. The plan anticipated the dredging of 1,100 cubic yards of material per crane per day. Id. The plan also reflected plaintiff's expectation that the Project would take about two months, beginning in September and ending in November. Id. To achieve this schedule, plaintiff requested permission in the Operations Plan to dredge simultaneously the in-river placement area and MU-102.21 PPFUF ¶ 59. The Corps continued to analyze how much funding the Project would require and when the funding would be required. Mr. Thomas, in an August 21, 2000 e-mail message to Mr. Edwardo and Ralph T. Henry,22 wrote: I have reviewed the current status of the contract and find the following. GASA has four cranes[:] two to dredge and two to empty. The two to dredge will control productivity at a rate of say 1000 cy per day per rig. So we have the capability to manage probably 2000 cy per day min. The total contract is say

As late as August 25, 2000, plaintiff had not yet located a sewer authority to handle the decanted water from the Project. DPFUF ¶ 69. However, on September 27, 2000, plaintiff entered into an agreement with a water disposal facility. Id. ¶ 73. As noted above, plaintiff had previously proposed simultaneous dredging in its initial construction progress schedule submitted on July 15, 2000. Def.'s App. 192-93.
22 21

20

At that time, Mr. Henry was a Contract Administrator. Def.'s App. 254. -16-

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170,000 (without the options) divided by 2000 gives 85 work days of dredging. [A]t 6 days dredging per [week] and a start of 1 Sept our finish would be about 1 Dec or earlier pending no adverse weather. This brings me to the question of money[:] what do we have and how much so we do not put ourselves in the position of this guy just going on and dredging earning money beyond our means to pay. Up front we need about $300K for bends mob etc. If you say we have $2Million this leaves $1.7 mill to dredge. $1.521 does the non regulated materials dredge and place or 72,000cy or about 40 calendar days of work or completion about 5 Oct. Thus we have nothing for the MU units. Bottom line[:] how much money guaranteed do we have so that a schedule can be made on the project AND we do not spen[d] money I do not have[?] Show me the money. Pl.'s App. 98. The message was forwarded to Mr. Smiley, id., who, in an August 23, 2000 email message to Mr. Edinger, Mr. Henry, and Mr. Edwardo, responded: Please interpret Joe Thomas's message for me. I recently got an additional $2M on Lower Mon[ongahela] and am attempting to get another $3M by 11 Sep. I thought we had decided that CD would tell [GASA] that we would fund him to the tune of $1.5M this FY, and that the balance would be made available out of next FY's appropriation. If we do get the $3M, and we can accrue more on the [GASA] contract this FY, we should certainly do so. PPFUF ¶ 57. Mr. Edwardo forwarded Mr. Smiley's response to Mr. Thomas, who in turn wrote the following to Mr. Edwardo: "I will explain tomorrow." Pl.'s App. 98. Mr. Thomas's explanation, if it occurred, is not contained in the record. Meanwhile, on August 22, 2000, plaintiff received a proposal and quotation for the required hydrographic surveying from Woolpert LLP Surveying ("Woolpert"), the fifth surveying firm to submit a proposal to plaintiff. DPFUF ¶ 62. Plaintiff and Woolpert subsequently reached an agreement regarding Woolpert's provision of hydrographic surveying services on August 28, 2000, id., and plaintiff submitted its Qualifications of Hydrographic Surveying Firm on August 30, 2000, Pl.'s App. 395, 397-98. Then, on August 25, 2000, plaintiff resubmitted its Accident Prevention Plan, which the Corps rejected for the second time on August 30, 2000. Def.'s App. 272.23 On August 29, 2000, plaintiff contracted to have its three barge-mounted cranes inspected, tested, and certified. DPFUF ¶ 74. Subsequently, on September 5, 2000, the crane inspector reported to plaintiff that the crane matting was improperly installed. Id. The crane certificates were eventually signed on September 7-8, 2000. Id.

This page of defendant's appendix contains the handwritten notes of an unidentified person. Plaintiff does not appear to contest the information included on this page. -17-

23

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Two communications concerning plaintiff's submittals also occurred on August 29, 2000. First, on that date, plaintiff submitted an Environmental Protection Plan. PPFUF ¶ 102. Thus, between July 11, 2000, and August 29, 2000, plaintiff submitted to the Corps at least one of each of the "big 3" submittals. Id. ¶ 100. Also on August 29, 2000, the Corps responded to plaintiff's August 18, 2000 Operations Plan, stating that the plan was "satisfactory" but that plaintiff's "request for a variance of the dredging procedure . . . is not approved at this time." Def.'s App. 384. The attached comment noted: The Operation Plan is satisfactory except as follows: We cannot allow for simultaneous dredging of clean fill and Management Unit (MU) No. 102. We would entertain an option of simultaneous dredging of the clean fill and MU No. 59 or MU No. 3 if you can demonstrate your methods for dredging the MU material per contract spec. Please advise us if you desire this alternative. Id. at 385. Plaintiff met with the Corps to discuss simultaneous dredging on August 31, 2000, and memorialized the meeting in a September 1, 2000 letter: Our schedule and bid are based on the use of four cranes to complete this project. If we are not allowed to work all of the large areas at the same time, we will not utilize our equipment efficiently. We had planned to work four cranes, two digging and two placing in the in-river area for one or two weeks, then move two cranes to the contaminated areas, and continue the in river placement with the other two. If we must work the MU 102 area last, two cranes would be the maximum we could use without blocking the channel to barge traffic. Also if we have to work more than two cranes in contaminated material we would not be able to handle the unloading at the dock facility or the waste handling area because we cannot stock[]pile the material. This would increase the job length and increase our cost. The second point we discussed was the option area adjacent to the in-river placement dredge area. The option areas are directly abutting the dredge area and there will be spillage of option fill into the area dredged for in river placement. Pl.'s App. 106. While the parties were discussing plaintiff's proposed simultaneous dredging, the Corps, on August 30, 2000, rejected plaintiff's Environmental Protection Plan. PPFUF ¶ 102. In a letter of the same date, the Corps informed plaintiff: Please be advised that I have tried to make the submission of the required Big "3", (Environmental Protection Plan, Quality Control Plan, and Accident -18-

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Prevention Plan) as easy as possible by meeting with you, furnishing examples to you, and discussing various items on the phone with you. However, as of 30 August 2000, your Quality Control Plan is still rejected, your Environmental Protection Plan is still rejected, and your Accident Prevention Plan is rejected. Please be advised until such time that you submit these plans that meet the contract, no dredging will be allowed to commence. DPFUF ¶ 54. However, the next day, the Corps approved plaintiff's Quality Control Plan, with comments, which plaintiff had submitted on August 30, 2000. Pl.'s App. 384, 393. The Corps tentatively approved plaintiff's Qualifications of Hydrographic Surveying Firm on September 1, 2000, with certain comments and caveats. Id. at 395. Specifically, the Corps indicated that plaintiff's "initial plan appears to be satisfactory" but requested that plaintiff be able to address certain issues at a preparatory survey meeting.24 Id. at 396. Plaintiff's surveying firm, Woolpert, was expected to begin survey work on September 5, 2000, and the preparatory survey meeting was held that day. DPFUF ¶ 64. At the meeting, Tim McCarley, the Corps' survey quality control representative, reported: "[T]he equipment being used was not survey grade equipment. We also agreed that the crew did not have the required or proper knowledge to be able to complete a hydrographic survey." Id. The next day, Mr. McCarley visited the Project site and noted the following: "The manual repeatedly referred to the fathometer as a `Fish Finder.' . . . The method of editing the data, as described to the QA inspector, was absolutely unacceptable. After discussing the above with the Survey Contractor, Woolpert LLP decided to remove their crew from the job." Id.; Def.'s App. 344. Thus, on September 7, 2000, plaintiff obtained another proposal for the surveying work from Michael Baker Jr., Inc. ("Michael Baker"). DPFUF ¶ 65. Plaintiff hired Michael Baker and the firm began survey work on September 11, 2000. Id. Plaintiff subsequently submitted the Qualifications of Hydrographic Surveying Firm and the Surveying Quality Control Plan on September 19, 2000. Pl.'s App. 404-05. Michael Baker completed the predredging survey on September 20, 2000. DPFUF ¶ 65. That same day, the Corps accepted plaintiff's Qualifications of Hydrographic Surveying Firm "depending upon demonstrated ability in the field," Pl.'s App. 404, and rejected plaintiff's Surveying Quality Control Plan, id. at 405. However, with respect to the latter submittal, the Corps indicated that government acceptance was "dependant upon demonstrated ability in the field." Id. Mr. Moscatiello later conceded that plaintiff, and not the Corps, was responsible for the problems surrounding the predredging survey. Def.'s App. 475. While proceeding with the predredging survey, plaintiff submitted another Environmental Protection Plan on September 8, 2000, id. at 277; an addendum to its Quality Control Plan responding to the Corps' comments on September 8, 2000, Pl.'s App. 399; and another Accident
24

Because the Corps referred to a "plan" and not just Woolpert's qualifications, it is unclear whether the parties considered this submittal to include a Surveying Quality Control Plan. -19-

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Prevention Plan on September 11, 2000, Def.'s App. 272. The Corps also took action on September 11, 2000, by approving plaintiff's resubmitted Environmental Protection Plan and Accident Prevention Plan, id. at 272, 277, as well as plaintiff's addendum to its Quality Control Plan, Pl.'s App. 384, 399. Plaintiff also submitted another Operations Plan on September 11, 2000, which reaffirmed the schedule set forth in its August 18, 2000 Operations Plan. DPFUF ¶ 76. Plaintiff then submitted an updated Operations Plan on September 14, 2000. Id. ¶¶ 66, 76; Def.'s App. 352-54. The updated Operations Plan reflected an anticipated three-month completion schedule, beginning in mid-September and ending in mid-December. DPFUF ¶¶ 66, 76. Plaintiff continued to plan on a dredging rate of 1,100 cubic yards of material per crane per day. Id. ¶ 76. Plaintiff additionally submitted its initial invoice to the Corps­Pay Estimate Number 1­on September 13, 2000, seeking payment in the amount of $197,721.00. Def.'s Supp'l App. 2. Plaintiff's invoice indicated that the total amount comprised of $150,000.00 for mobilization costs and $47,721.00 for payment and performance bond reimbursement. DPFUF ¶ 126. In support of Pay Estimate Number 1, plaintiff submitted "invoices from, or evidence of payment to," Tonomo Marine, Inc., McDonough Marine Service, and E & K Equipment, Inc. Id. ¶ 130. The day prior to plaintiff's payment request, the Corps, via a September 12, 2000 contract modification, had obligated an additional $1,500,000.00 to the contract. Pl.'s App. 415. The Corps approved and processed plaintiff's payment request on September 20, 2000. DPFUF ¶ 126. Then, the next day, the Corps deobligated $1,200,000.00 from the contract, leaving a total obligation of $400,000.00 for the current fiscal year. Pl.'s App. 416. The Corps did not obligate any additional funds to the contract until the next fiscal year. Id. at 417. 4. Events Occurring During and Immediately Following Plaintiff's Commencement of Dredging Operations Plaintiff began dredging operations on September 21, 2000.25 DPFUF ¶ 65. That day, Mr. Burke met with Mr. Thomas and discussed the disposal of solid waste from the in-river placement area. In a September 26, 2000 letter, plaintiff stated its position on the disposal issue: In our preliminary meeting [on] September 21, 2000 you directed me to separate and alternately dispose of rubble, logs & timbers, tires and other rubber products, scrap metal items, railroad ties, wire, large chunks of concrete, boulders, and other non-floatable debris, from the dredged materials removed from the Monongahela River between sta. 906+30 to sta. 922+20. You directed that we
25

It appears that plaintiff began dredging in the area identified as the in-river placement area. See, e.g., Def.'s App. 397 (indicating that plaintiff was engaged in dredging and in-river disposal on October 2, 2000); Def.'s Supp'l App. 116 (indicating that for the period from September 1, 2000, through October 24, 2000, plaintiff requested payment for dredging of STA 906+30 to STA 922+20, and no other areas). But see Def.'s App. 351 (indicating that plaintiff began dredging on September 21, 2000, in MU-102). -20-

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take this material to our permitted waste facility at Waste Management Inc. The contract states that materials in this area are to be transported and disposed of as specified in paragraph "IN RIVER PLACEMENT OF DREDGED MATERIALS[.]" We are proceeding with your directive and separating all materials. However the Management of GASA Inc. believes that all materials dredged from the In River Placement Section of this project should be placed back in the river and designated "Unclassified[.]" We will continue to perform as directed; however[,] we feel that additional compensation should be discussed[.] Pl.'s App. 144. The Corps responded in a September 28, 2000 letter: In accordance with [the contract], all solid wastes recovered from the dredging operations from any area are to be extracted from the dredged material, set aside, and disposed of in a permitted solid waste disposal facility permitted to receive the particular material. . . . In accordance with the contract, it is not permissible to designate all nonregulated materials dredged "unclassified" and placed back into the river. Furthermore, no additional compensation to perform the work to be within Contract compliance will be discussed. Follow the Contract. Id. at 145. Plaintiff was undeterred by the Corps' letter and, on November 16, 2000, requested reimbursement from the Corps for the disposal of this solid waste in the amount of $29,305.70. Id. at 147. Unfortunately for plaintiff, the Corps was not satisfied with plaintiff's contract compliance. In a letter dated October 2, 2000, Mr. Thomas notified plaintiff of the following: In accordance with [the contract], and the non-regulated dredging preparatory meeting held on 21 September 2000, daily surveying Quality Control Reports are to be submitted attached to your daily Quality Control Reports. These daily surveying QC Reports have never been received in this office. This is to notify you that you are not in contract compliance. Please be advised that until such time that all of the proper documentation is being submitted as agreed upon, no dredging of regulated materials will be allowed to commence.26
26

As noted above, the material in three of the four areas plaintiff was required to dredge­MU-3, MU-59, and MU-102­required special handling and disposal. According to -21-

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Id. at 99 (footnote added). In another letter of the same date, Mr. Thomas notified plaintiff of the following: In accordance with [the contract,] all survey results including quantity calculations, cross-sections and drawings, field notes, notebooks, Fathometer scrolls, electronic files, and all other records relating to the survey or layout of work are to be submitted. None of this information has been submitted as of yet, approximately two weeks after the surveys have been completed. This is to notify you that you are not in contract compliance. Please be advised that until such time that all of the proper documentation is being submitted as agreed upon, no dredging of regulated materials will be allowed to commence. Id. at 100. Despite these issues, plaintiff continued to pursue simultaneous dredging. In an October 5, 2000 letter, plaintiff addressed its sequence of work: Sequence of Work: To further clarify previous submittals, upon demonstration to your satisfaction of water disposal and barge unloading procedures, we intend to move two (2) of our four (4) dredge barges into M.U. 102, to start dredging operations. The aforementioned test is scheduled for Friday, October 13, 2000, as you agreed with our Joe Burke. Sequentially, we intend to dredge M.U. 102, M.U. 59 and M.U. 3 simultaneously with the in-river placement dredging. This sequencing is imperative to best suit the construction schedule and avoid winter months, particularly in the view that the Notice To Proceed was issued approximately two (2) months after the Award. Id. at 108; see also Def.'s Reply App. 36-37 (containing plaintiff's September 22, 2000 addendum to its Operations Plan, which indicates plaintiff's intent to demonstrate its "procedure for handling the water contained in the dredge material" pursuant to the contract). Mr. Thomas reported on plaintiff's demonstration of its offloading procedures in an October 24, 2000 letter: In accordance with [the contract], the contractor was to demonstrate his method of collecting and controlling water from the barges prior to beginning the regulated material dredging. The field demonstration began on Friday, October 13th and concluded on Friday, October 20th. The demonstration was not totally successful in that various problems existed such as grounding the material barge, lack of internal dike system within new water barge, transportation problems, etc. ...

defendant, the material in MU-3, MU-59, and MU-102 was "regulated material." See Def.'s Resp. ¶¶ 79-80. -22-

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.... In summary, dredging of the Management Unit cannot commence until you: a. Have a "totally" successful field demonstration of your procedures for dredging the Management Units. b. You have held a Preparatory Inspection after the successful field demonstration. c. You furnish us various contract submittals; namely, a list of certified water tight barges. Pl.'s App. 101-02; see also id. (enumerating several other problems with the demonstration). About three weeks later, in a letter dated November 16, 2000, plaintiff expressed additional concern to Mr. Thomas regarding simultaneous dredging: We were informed we would be permitted to simultaneously dredge inriver placement from 906 - 922 and MU areas once we demonstrated our ability to comply with the contract specification for proper containment of the materials. We are now informed you are additionally requiring the previous dredging to be accepted as well which is not relevant to the removal of the contaminated materials. This additional requirement will have an impact of further unnecessarily delaying the project.27 Unless this matter is reconsidered and we are permitted to proceed immediately, as agreed in August, we will expect to be properly compensated for the resulting delay. Id. at 110 (footnote added). In another letter dated November 16, 2000, plaintiff requested reimbursement for its disposal of solid waste from the in-river placement area in the amount of $29,305.70. PPFUF ¶ 110. The Corps did not reimburse plaintiff. Id. Around the same time, plaintiff submitted its second invoice to the Corps. The Corps received Pay Estimate Number 2 on November 13, 2000. Def.'s Supp'l App. 115. Plaintiff's request included a certification that subcontractor Massimo Corporation ("Massimo") earned
27

The record does not appear to pinpoint the exact date when plaintiff was permitted to begin simultaneous dredging. See, e.g., Def.'s Supp'l App. 125 (indicating that plaintiff requested payment for dredging both the in-river placement area and MU-59 for the period from November 21, 2000, through December 31, 2000). -23-

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$143,321.04 between September 1, 2000, and October 24, 2000. Id. at 120. The Corps paid plaintiff $344,653.64 pursuant to Pay Estimate Number 2. Id. at 115. Also during this time, the Corps proposed altering the method of disposing the material dredged from MU-102. In a November 13, 2000 letter signed by Mr. Thomas, the Corps requested that plaintiff "submit a proposal for eliminating the permitted solid waste disposal for MU 102 area and replacing it with in-river placement of all quantities dredged from MU 102." PPFUF ¶ 66. Plaintiff's proposal was to be submitted to the Corps within ten days and to conform to the contract clause titled "MODIFICATION OF PROPOSAL-PRICE BREAKDOWNS."28 Pl.'s App. 111-12. In response, on November 15, 2000, plaintiff wrote to Mr. Thomas: The estimated cost of the NEW IN-RIVER PLACEMENT would exceed our actual cost for the disposal of the material removed from Sta. 897+27 to Sta. 906+30 (MU-102). Therefore, if your sole purpose is to save money, this change would not be "in the best interest of the DEPARTMENT OF THE ARMY". However, if the purpose of this change is requested by you for reasons other than the aforementioned, please let us know and we will be glad to quote you additional costs. Id. at 113. Mr. Thomas, in turn, responded to plaintiff in a November 16, 2000 letter: The change was issued (based on a review of your bid items) to save money and to create for you efficiency in your work efforts. In my letter I requested your proposal containing your detail breakdown of the costs of this work. I requested the details within 10 days. Since GASA "will be glad to quote you additional costs[,]" it is apparent you can present to me your price proposal by 20 November 2000 at my office at 9:30 am.29 I have set aside this time for you to present to me your "written" proposal. I will have present at this meeting the Contracting Officer so we may rectify our impasse. Id. at 114 (footnote added). Plaintiff again responded by letter dated November 16, 2000, this time to Mr. DeStefano:

According to the contract, the actual title of the clause is "Modification ProposalsPrice Breakdown." Def.'s App. 24. No explanation was provided by the Corps for why the meeting was scheduled prior to the expiration of the ten-day period originally allowed by the Corps in its November 13, 2000 letter. -2429

28

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As you are aware[,] GASA, Inc. is poised to commence dredging of contaminated materials from MU-102 . . . pursuant to the terms and conditions of [the] Contract .... We have been informed by Mr. Thomas, as your representative, that the material in this location is not contaminated and is to be dredged as noncontaminated material and now placed in the river. In furtherance of that complete rewrite of the contract, he hand delivered [the request for a price proposal]. While we question Mr. Thomas'[s] contractual authority to personally make such a directive, we assume he has asserted the position of the Contracting Officer.30