asbca|The Public Warehousing Company, ASBCA No. 56022 (2015) -- eLawyers

Judges: Ting
Filed: Aug. 05, 2015
Latest Update: Mar. 02, 2020
Summary: , Storage issues continue to hamper the tum around time at some locations. By email on 24 February 2005, PWC's Contract Administration Officer, sent CO Ford an advance copy of a claim 8 for additional transportation fees, associated with trucks that had returned from Iraq to PWC after 29 days.

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- )
)
The Public Warehousing Company ) ASBCA No. 56022
)
Under Contract Nos. SP0300-03-D-3061 )
SPM300-05-D-3119 )

APPEARANCES FOR THE APPELLANT: Michael R. Charness, Esq.
Adrianne L. Goins, Esq.
Bryan T. Bunting, Esq.
Erin N. Rankin, Esq.
Vinson & Elkins LLP
Washington, DC

APPEARANCES FOR THE GOVERNMENT: Daniel K. Poling, Esq.
DLA Chief Trial Attorney
Kristin K. Bray, Esq.
Senior Trial Attorney
Elizabeth Amato-Radley, Esq.
Trial Attorney
DLA Troop Support
Philadelphia, PA

OPINION BY ADMINISTRATIVE JUDGE TING

The Public Warehousing Company (PWC) contracted with Defense Supply
Center Philadelphia (DSCP) to supply and deliver food to government customers at
various locations inside Iraq's Operational Deployment Zone. PWC submitted a
$12.49 million claim, subsequently increased to $13.37 million, said to have resulted
from some of its delivery trucks being held in Iraq for various reasons for over 29 days
before returning to Kuwait. The contracting officer (CO) denied the claim on the
bases that PWC agreed to the 29-day cap when it executed Modification No. P00027
(Mod. 27) and PWC failed to demonstrate that the transportation fees it received up to
the 29-day cap - established at twice the average truck return duration - were unfair,
unreasonable or inequitable. PWC timely appealed the CO's decision. The parties
presented only entitlement issues for decision. We have jurisdiction under the
Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109.
FINDINGS OF FACT

1. PWC, now known as Agility, is a public company organized under the laws
of Kuwait. DSCP, now known as DLA Troop Support, is a sub-agency of the Defense
Logistics Agency (DLA), an agency within the Department of Defense (DoD). DSCP
supports U.S. military personnel by providing them with food, clothing and medicines,
among other supplies. 1

2. The Subsistence Prime Vendor (SPY) Program is a regionally based
program under which DSCP contracts with commercial enterprises to supply and
distribute food to government customers (tr. 2/20).

3. On 10 May 2002, DSCP issued Solicitation No. SP0300-02-R-4003 for an
Indefinite-Delivery/Indefinite-Quantity (IDIQ) commercial item type contract to
provide food and non-food products to the military and other DLA customers in three
overseas zones (OCONUS): Zone I-Northern Europe, Zone II-Southern Europe and
Zone III-Middle East (R4, tab 1 at 1, 7). Offerors were requested to submit pricing for
all core items in the applicable zone based on this pricing formula: Unit Price =
Delivered Price+ Fixed Distribution Price (or Fee) (id. at 11).

4. On 30 May 2003, DSCP awarded Contract No. SP0300-03-D-3061
(Contract 3061 or PVl contract) to PWC. The contract, in the estimated award
amount of$22,391,904.00, was for PWC to provide "Full Line Food and Non-Food
Distribution" for authorized customers in the Middle East Zone (Kuwait & Qatar) for
one year, starting from the date of the first order. (R4, tab 10 at 1) The contract
allowed the CO to extend its term for "four (4) additional one-year period(s) by written
notice" (id. at 19).

5. In connection with the pricing formula (Unit Price= Delivered Price+ Fixed
Distribution Price), Contract 3061 defined "Unit Price" as "the total price (in U.S.
currency) that is charged to DSCP per unit for a product delivered to the Government."
"Delivered Price" for CONUS purchases is defined as "the manufacturer/supplier's
actual invoice price (in U.S. currency) to deliver product to the Prime Vendor's
CONUS distribution point." The "Delivered Price" for OCONUS purchases is defined
as "the manufacturer/supplier's actual invoice price (in U.S. currency) to deliver
product to the Prime Vendor's OCONUS distribution point." The "Distribution Price"
is defined as "a firm fixed price, offered as a dollar amount, which represents all
elements of the unit price, other than the delivered price." The contract pricing
provision states that the distribution price "typically consists of the Prime Vendor's
projected general and administrative expenses, overhead, profit, packaging costs,

1
See our previous decision - The Public Warehousing Co., ASBCA No. 56022, 11-2
BCA if 34,788 at 171,219.

2
transportation cost from the Prime Vendor's OCONUS distribution facility(s) to the
final delivery point or any other projected expenses associated with the distribution
function." (R4, tab 10 at 3, 4) This appeal concerns the distribution price component
of the pricing formula as subsequently modified by the parties.

Mod. 1

6. The parties entered into bilateral Modification No. POOOO 1 (Mod. 1) in
June 2003. C.T. Switzer, PWC's General Manager (GM Switzer) signed for PWC,
and Thomas E. Haley (CO Haley) signed for DSCP. Mod. 1 was effective as of
27 June 2003. (R4, tab 11 at 1) It implemented the Operational Deployment Zone
provision referenced in the solicitation and incorporated as a part of Contract 3061. It
established "separate ordering and delivery requirements for Operation Iraqi Freedom
(OIF) Initiatives in the country of Iraq area of operations." (Id. at 3)

7. Paragraph 2 of Mod. 1 estimated that there would initially be approximately
24 Army and 3 Air Force delivery sites in Iraq. It estimated that requirements under
the contract could increase by as much as 1,200% over the original estimated contract
dollar amount. Paragraph 2 also projected that "[t]he round-trip from this PWC
distribution platform in Salat, Kuwait could vary from one (1) day for the closest
proximity customers to seven (7) days for the farthest proximity customers." The
paragraph required PWC delivery trucks "travel as part of a U.S. military escorted
convoy" and stated that "[t]his operational process could be subject to change should
the zone achieve a more stable environment and transition." (R4, tab 11 at 3)

8. Paragraph 4 of Mod. 1 provided, in part, that "[t]rucks will return to PWC
upon completion of unloading, and trucks will not be used at the sites for storage
purposes" (R4, tab 11 at 4 ). PWC would later contend that this provision was never
changed and remained as a part of DSCP's contractual obligations.

9. Paragraph 6 of Mod. 1 provided:

Except as provided herein, the Government does not
assume any liability for any loss incurred by the Prime
Vendor in the performance of this Iraq Deployment Zone,
including but not limited to, loss of vehicles, personnel, or
product. Furthermore, the Government is not liable for any
loss resulting from any delays in assembling or deploying

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the aforementioned military escorted convoy provided to
the Prime Vendor by the Government.

(R4, tab 11 at 6)

10. Anticipating that the distribution prices might have to be adjusted in a war
zone, paragraphs 7 and 8 of Mod. 1 provided:

7. If additional deployment zone fees are warranted
above those distribution prices awarded, these fees will be
negotiated at a later date.

8. The Government reserves the right to re-negotiate
trucking transport fees, once stabilization and transition
has occurred in Iraq, resulting in U.S. military convoys to
be no longer necessary.

(R4, tab 11 at 7)

Mod.2

11. PWC's GM Switzer and CO Haley signed Modification No. P00002
(Mod. 2) on 7 and 9 July 2003 respectively. Mod. 2, effective 1 July 2003,
established, among other things, "the mutually agreed upon pricing structure for ... the
Iraq Deployment Zone, to include additional transport costs to be paid by the
Government, above the awarded distribution ... fee structure." The additional transport
costs associated with deliveries to the Iraq deployment zone agreed upon were to be
determined as follows:

Refrigerated Truck Transport to Iraq from PWC
- 3 day round trip minimum $2050.00 per truck
- Additional days over (3) $645.00 per truck per day

Dry Truck Transport to Iraq from PWC
- 3 day round trip minimum $1600.00 per truck
- Additional days over (3) $475.00 per truck per day

(R4, tab 12 at 1-3)

12. Mod. 2 provided that for both refrigerated trucks (reefers) and dry trucks,
"[d]ays will be charged based upon time of reporting ofloading until truck(s) return(s)
to PWC distribution facility in Kuwait" (R4, tab 12 at 3). There was no maximum or
cap on the additional transport fees payable under Mod. 2. Thus, if a truck did not

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return for an extended period of time that truck's per day fee would keep accumulating
without limitation. A price analysis in the record indicates that DSCP determined that
the $645.00 per day for a reefer and the $475.00 per day for a dry truck returning after
the 3-day round trip were reasonable (app. supp. R4, tab 731).

Ramp-Up Period

13. Delivery of food into Iraq did not take place right after award of
Contract 3061 in May 2003. For a contract of "this magnitude" and "outside the
United States," there was a "ramp up period" before "physical distribution [could]
actually take place" (tr. 2/22). The troops initially relied on operational rations such as
meals-ready-to-eat (MREs). Later, the troops were supplemented with "fruits and
vegetables or energy bars or energy drinks." The Army then transitioned into "a
cafeteria type ... food from the prime vendor" sourced from the United States. Initially,
PWC was delivering rations, and it gradually transitioned into delivering other types of
food. (Tr. 2/24) After what was described as a "crawl/walk/run" type of tempo,
delivery into Iraq began "later in the calendar year" (tr. 2/23).

14. When PWC began deliveries during the ramp-up period, it had numerous
problems: PWC had no in-transit visibility of its trucks; the military did not have
enough storage facilities to store offloaded food from the trucks thus delaying their
return; PWC's drivers were not in place when the convoys were ready to leave; and
there were truck breakdowns, accidents, and sniper activities that delayed deliveries
and returns. (Tr. 1/35-36)

The Hub and Spoke System

15. Iraq is about two-thirds the size of the State of Texas (tr. 4/97). For
military supply purposes, it was traversable only by major roads (tr. 6/32-33). Going
north from Kuwait into Iraq, the Army established a "hub and spoke" system. A hub
contained "a large concentration of logistics people and units" and dining facilities
(DFACs). A spoke site was a "customer site" or a forward operating base (FOB)
supported by a hub. (Tr. 6/135-37, 4/40) Spoke sites had mobile kitchen trailers
(MKTs) (tr. 1/96).

16. Proceeding north from Navistar in Kuwait into Iraq, the Army established
hubs at Cedar, Scania, BIAP (Baghdad International Airport), Taji, Anaconda and
Speicher. Major hubs such as BIAP supported as many as 27 spoke sites. Smaller
hubs such as Cedar and Taji supported two spoke sites. (App. supp. R4, tab 509;
tr. 6/13, 8110-11)

17. Before entering a hub, PWC's trucks would be inspected (tr. 6/50). The
trucks would then go into a "control area." From there, trucks were moved by

5
ordering customers, under escort, to their destinations (DF A Cs or MK.Ts) to unload.
Upon unloading, the customers would return the trucks, again under escort, to the hub
where they would wait for a convoy to return to Kuwait. (Tr. 6/27, 50, 100-01)

18. During the war, the Marines' area of responsibility (AOR) included
western Iraq, the Al-Asad area, and the border areas with Jordan and Syria (tr. 7/40).
At the Marine FOBs, conditions were "very austere." There were no "fixed feeding
facilities," and the MK.Ts had no refrigeration. At these sites, the soldiers would keep
the refrigerated trucks for storage for milk and fresh fruits and vegetables. (Tr. 6/148)
In addition, Marines were given the authority to control movement of trucks into and
out of their AOR. Marine officers "made the call" on when to use "combat assets" to
escort PWC trucks to and from the hub. (Tr. 61156-57)

Convoy and Escort Delays

19. In addition to truck returns being delayed by storage issues, truck returns
could be affected by convoy and escort delays. Convoys were controlled by the
Military Control Teams or Military Control Battalions of the Multi-National
Forces-Iraq (MNF-I) (tr. 2/28). Military escorts consisted of "armored vehicle[s] with
heavy machine guns and communications and control equipment." PWC trucks were
not allowed to move without escort. (Tr. 61101)

20. Truck movements were dictated by a movement order or a FRAG0. 2
FRAGOs were signed daily by the general in charge. They contained instructions on
what routes were opened, what roads to take, and when convoys could be on the roads.
(Tr. 61139) Convoys travelled within a "movement window," a period of time
generally four or five hours at night during which military commanders determined
convoys could be on the roads (tr. 6/104)

21. Convoy movements were planned through nightly meetings at the Joint
Distribution Board (JDB) and through morning meetings at the Joint Coordination and
Logistics Board (JCLB) (tr. 6/52). The planning sessions involved commodity
managers of every class of supply: food, fuel, ammunition, construction and medical
supplies. Based upon which commodities were running low, the Army determined
"who moved what each night." (Tr. 6/114-15)

22. On any given day during late 2004 into 2005, there were roughly 1,200 to
1,300 PWC trucks in Iraq (tr. 4/11 ). Loaded food trucks leaving PWC facilities would
go to Navistar in Kuwait to travel as a part of a military escorted convoy. After trucks
crossed the border into Iraq, they would go to Cedar, the first hub. If a truck's

2
A FRAGO is a "Fragmentary Order," an order affecting a piece, or fragment, of a
previously issued Operations Order (app. br., ex.Bat 3).

6
destination was further north, it would proceed from hub to hub until it reached its
destination hub. (Tr. 8111-12)

23. When PWC trucks traveled on Iraq's main supply routes (MSRs), they
were under the Army's control (tr. 6/53). When trucks reached a destination hub, they
were sent to a staging area where they would wait for customer escorts to the ordering
DFACs and the MK.Ts. The customers at the destinations controlled offloading of the
trucks. (Tr. 6/54) After trucks were offloaded, empty trucks would be escorted back
from the DFACs and MK.Ts to the hub for their return to Kuwait (tr. 6/55).

24. According to LTC (retired) Mary Ann O'Connor, who was the Chief of
Operations, Transportation and Logistics for the 1st Corps Support Command, from
October 2004 to November 2005 (tr. 6/96), combat operations could affect the priority
of truck movements. If there were combat operations south of Baghdad, they could
affect the truck movement scheduled for BIAP and beyond (tr. 6/117-18). And, when
trucks did not move one night, trucks scheduled for the next day would be "backed up"
(tr. 6/118). In addition, trucks did not move without "a helicopter with a lifesaving
crew" or without JSTARS ("a flying ... emergency ops center") coverage (tr. 6/119-20,
7/35).

25. The Army was under a standing order from the commanding officer to
move trucks from hub to hub within 48 hours. Thus, trucks were moved within the
first two nights after they arrived at a hub. Trucks that took longer than two nights to
depart would be reported at nightly briefings. (Tr. 6/141) The evidence indicates, and
we find, that hub-to-hub truck movements were seldom delayed beyond 72 hours
(tr. 6/142).

26. Darrell Gifford was PWC's network administrator responsible for installing
and maintaining PWC's MircoTransport System (tr. 4/18), a web-based real-time truck
tracking software solution at every hub in Iraq (tr. 4/16, 20). According to Gifford, all
trucks travelling into Iraq "should be able to get to destination and back in 10 days."
Trips over 10 days would be considered "outside of the norm." (Tr. 4/68)

27. Gifford testified that from time to time, food trucks would be delayed from
hub-to-hub by sandstorms 3, national events (e.g., elections) or IED (improvised
explosive device) attacks. These delays on the MSRs or alternate MSRs would last "a
day or so." (Tr. 4171-73) He testified convoy movement was generally reliable both
northbound into Iraq from Kuwait and southbound from Iraq into Kuwait (tr. 4/74).

3
The MSRs would be shut down during sandstorms, known as "shamals," because
they would present "whiteout conditions" with poor visibility. Sandstorms
would last "a day or two." (Tr. 6/43, 7/33)

7
On the other hand, escorts from the hubs to the outlying military units and from those
units back to the hubs were "more sporadic" (tr. 4/75).

Storage-Related Delays

28. Not all hubs and DFACs had the same food storage capacity. The Marine
MK.Ts out in the remote areas had very little storage capacity. (Tr. 3/22) The majority
of the storage issues - estimated at 80% to 90% - occurred in the Marine Expedition
Force (MEF) area to the west of BIAP (tr. 4/95-96). Reefers would be delayed at the
outlying sites because they were used for storage (tr. 4178). According to
Sabrina Viruet, who worked for PWC from August 2004 to October 2010 as a truck
coordinator and a liaison officer (tr. 817-8), "[s]ometimes trucks wouldn't come back"
from outlying sites because the military did not have enough reefers, and were using
"non-moving container[ s]" of the reefers for storage, or the military did not have
enough storage "so they would hold the trucks for storage" (tr. 8/32).

29. Customers at the outlying sites would also wait to escort trucks from the
hubs because they lacked storage. With no capacity to store food, the soldiers did not
want to be responsible for the drivers and the food trucks waiting to be unloaded.
(Tr. 4176-77) According to Viruet, the Marines caused "the biggest delay" because
they were on combat missions and could not come to the hubs to get the food trucks.
She testified "sometimes we had trucks sitting in the yard with food for 10 days
waiting for them." (Tr. 8/30-31) While escorts could delay a truck's return "a week or
two," major delays occurred when a truck was used for storage (tr. 4/80).

Truck Delays Due to Redirection

30. Redirection of food trucks occurred because a DFAC or MKT
over-ordered, and because of the "fluidity of the war zone" requiring soldiers to move
from place to place (tr. 3/31 ). When a DF AC over-ordered, the food would be
redirected, with permission of the Army's theater food advisor, to a larger site so that
the food could be used quickly (tr. 7/52). While redirecting food trucks was not a
daily occurrence, it did occur frequently (tr. 3/30).

31. PWC would get "very upset" when its trucks were redirected (tr. 3/37).
When a redirected truck had to go to another hub, it had to travel in a convoy, adding
more time and paperwork (tr. 7/53, 56). Redirection delayed a truck's return making it
unavailable for the next mission (tr. 3/38, 7/56). Contracting officer representative
Paul A. Burkett (COR Burkett) testified the redirection issue eventually "went away"
(tr. 3/38), and he authorized payment for redirections if they fell within the 29-day cap
(tr. 3/39) which was later imposed by Mod. 27 (see findings 57-71, infra).

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Mod. 19 - Operation Prime Mover

32. To "optimize throughput," a six-day order cycle was developed. After an
electronic order was received on day one, PWC would verify the order with the
ordering customer on day two. By day three, PWC would know how many trucks
would be needed to deliver the order. The trucks would be loaded on day four and
staged on day five. Since PWC's trucks were required to travel in a military convoy,
they would depart based upon their assigned priority and when the convoy was
ordered to leave. (Tr. 2/26-28)

33. At some point, the Coalition Joint Task Force 7 (CJTF7) made a request for
PWC to locate transport liaison officers (TLOs) at the hubs. In response to DSCP's
request, PWC's GM Switzer by email on 29 March 2004 submitted a plan entitled
"Operation Prime Mover." (Ex. G-1005) As reflected by its mission statement,
Operation Prime Mover was designed "[t]o facilitate the Subsistence Prime Vendor
mission by strengthening the PWC transport and distribution network throughout Iraq
through the deployment of PWC [TLOs] at key transit points ('Hubs') together with
the necessary life support facilities and equipment required to achieve mission
objectives" (id. at 7). The plan showed PWC's initial TLOs deployment would cover
five hubs: Scania, BIAP, Taji, Anaconda, and Speicher (id.). PWC estimated that an
annual budget of $6.5 million would be necessary to fund the program (id. at 3).

34. Since the TLOs were to be stationed at the hubs and had communication
capabilities, they were able to report truck movements from hub-to-hub (tr. 2/68).
Because TLOs were not located with the Marines, however, information from the
Marine sites "was a lot more sketchy than at the main hubs" (tr. 3/29).

35. On 10 May 2004, DSCP issued unilateral and undefinitized Modification
No. P00019 (Mod. 19) to implement Operation Prime Mover. Under Mod. 19, PWC
was required to deploy a maximum team of 25 TLOs to eight hub sites: Anaconda,
BIAP, Camp Cedar, Navistar, Ridgeway, Scania, Speicher and Taji. The TLO's
responsibilities were to (a) promote smooth throughput of PWC vehicles to the
delivery drop points or Military Dining Facilities; (b) improve round trip transit time
of PWC trucks; (c) provide 24 x 7 on-site point of contact for SPY transport
operations; (d) improve fleet and asset shipment visibility and trace ability;
(e) expedite response to breakdowns and incidents and facilitate rapid recovery of
assets and personnel, and (f) enhance customer service within the Iraq SPY Program.
(Supp. R4, tab 153 at 1-2)

Subsistence Prime Vendor Summit

36. The logistic coordination issues such as trucks being held for storage led
MNF-I to convene a meeting of all key parties, including PWC, "to come together and

9
work as a team ... to help out PWC ... [to] manage[] their distribution assets" (tr. 2/29).
A "Subsistence Prime Vendor Summit" (Summit) to discuss logistics was convened
from 17 to 19 May 2004 at Camp Arifjan in Kuwait (supp. R4, tab 190 at 3; tr. 2/165).
In addition to PWC personnel including GM Switzer, representatives from DSCP,
Army Center for Excellence from Fort Lee, Virginia, Army Central Command
Forward (CENTCOM) in Kuwait, Defense Contract Management Agency (DCMA)
and the LOGCAP 4 contractor who ran the DF A Cs were at the Summit (tr. 2/30-31 ).

37. At the time the Summit was held, PWC still "did not have ... personnel at
those hubs to manage inside Iraq." PWC's trucks were still being delayed by
sandstorms and other weather issues, truck breakdowns, drivers not being available,
and insufficient storage facilities at various sites. (Tr. 2/35)

38. At the Summit, PWC's message was "we need help ... [in] getting our assets
back" (tr. 2/31). A PowerPoint presentation prepared by DSCP (dated 10 May 2004)
stated that one of the Class I challenges was a "Lack of Refrigerated Storage
throughout Iraq" (app. supp. R4, tab 620 at 3). The presentation contained the
following "Problem Statement":

Insufficient permanent/semi-permanent refrigerated
storage capacity exists at both Dining Facilities (DFACs)
and Field Feeding (MKT) locations throughout AOR. This
results in:
1. Subsistence Prime Vendor (SPV) owned/leased
transportation assets held "on customer site'',
incurring temporary holding charges and
significant costs.

2. Minimized distribution efficiencies; limited# of
SPV delivery assets available.

3. Addition of significant risk to food safety and
spoilage[.]

(Id. at 4)

39. A DSCP PowerPoint presentation at the Summit entitled "Costs Incurred
Due to PWC Reefer Detention," showed that, while its expectation was that average
truck "tum-around" time for Iraq was 7 days (3 up, 1 on-station, 3 back), the "[a]ctual
'turnaround time,"' based on November 2003 to March 2004 data was averaging
15 days. The same presentation showed that the Army was paying $4.6 million in

4
LOGCAP means Logistics Civil Augmentation Program.

10
average monthly detention costs for the SPY Program; and that costs were forecasted
to increase to $12.2 million at full SPY by June 2004. (App. supp. R4, tab 620 at 5)
In its '"Detention' versus Buy" analysis, DSCP estimated that "adequate refrigeration
storage could be purchased and installed in 180 days for $52.4 M" (id. at 9).

40. As a result of the Summit, LTG Thomas F. Metz at the Multi-National
Corps-Iraq Headquarters in Baghdad drafted a "Policy for Subsistence Prime Vendor
Distribution" (policy memorandum) on 29 June 2004. This policy memorandum
established the following procedures for PWC trucks to return in 48 hours:

(a) The PWC [TLO] at each hub will notify the
DF AC/escort unit at destination within 6 hours of
convoy arrival at hub.

(b) MSCs will send escorts to the hub (staging area)
within 12 hours of notification to escort subsistence
trucks to the designated DF AC.

(d) Upon completion of downloading subsistence
trucks, units will escort PWC assets back to the
staging area within 6 hours for retrograde back to
PWC headquarters in Kuwait.

(App. supp. R4, tab 506 at GOV1293-l)

41. The copy ofLTG Metz's policy memorandum in the record was not signed.
The record is not clear as to whether the policy memorandum was actually issued.
(Tr. 2/167) The Army was responsible for procuring the needed storage units
(tr. 11137). As our findings to follow will make clear, despite the goals set out in the
policy memorandum, the Army was unable to deliver the necessary storage units in a
timely manner. Consequently, the procedures set out in the policy memorandum were
not always followed.

42. Army CPT Chris Sinclair's 21 July 2004 email reported to his superiors
and GM Switzer that "[c]urrently there are 35 PWC trucks in the yard waiting to be
down loaded," and "DFACs are holding onto the [reefers] from anywhere between two
to four weeks." He also reported there was a problem with PWC's vehicle
maintenance, and it was "not uncommon for either the trucks or the [reefers] to
breakdown while enroute or while there at Al Asad." (App. supp. R4, tab 507)

11
43. After visiting the MEF (Marine) area, CPT Sinclair reported to his
superiors and GM Switzer on 31 July 2004 that he observed "over seventy [PWC]
assets at Al Asad either waiting to be down loaded or waiting to be returned to
Kuwait." His email went on to say "The MEF area has a lack of cold storage ... which
contributes to the length of time the [reefers] spend at these sites." He said he believed
"PWC's mission in the MEF area will grow and the need for a T.O. [transportation
officer] team will also increase." (App. supp. R4, tab 510 at 4335)

Unlimited Truck Charges Under Mod. 2

44. Data kept by DSCP indicates that from November 2003 to March 2004,
when Mod. 2 was in effect, the average turnaround time for dry trucks was between
7 to 12 days and the average turnaround time for reefers was between 13 to 24 days.
The average turnaround time for all trucks was between 10 to 21 days. (Ex. G-1000;
tr. 1/52-53)

45. A spreadsheet in the record showed 1,000 trucks were deployed into Iraq
from 1-15 June 2004. One reefer departed PWC's facility on 5 January 2004 but did
not return until 6 June 2004. In that case, PWC charged, and the government paid, a
minimum 3-day charge of $2,050 and an extra 151-day charge of $97 ,395 for a total
charge of $99,445. (Ex. G-1001at1) Other examples on the same spreadsheet
showed PWC charged $82,030, $65,905, and $63,325 for similarly situated reefers
(id.). DSCP offered the spreadsheet to show what CO Linda L. Ford (CO Ford) was
concerned about when she entered into negotiations with GM Switzer to restructure
the Mod. 2 distribution fee (tr. 1/47-48).

46. CO Ford testified when Mod. 2 was written, "there was no anticipation that
truck trips would take that long" and "having a contract written where you'll pay $645
a day, every day that the truck [was] out [would] end up paying ... for the truck." She
testified that she decided to put a cap on the number of days that the government
would pay for a truck trip in the upcoming negotiations with PWC because the
government was not "in the business of paying for a truck," but "in the business of
paying for deliveries." (Tr. 1/54-55)

Negotiations Preceding Execution of Mod. 27

47. As reflected by GM Switzer's and CO Ford's email exchanges, discussions
relating to an adjustment to the distribution fee began in August 2004. On 11 August
2004, GM Switzer sent CO Ford by email PWC's budget and pricing proposal relating
to the "Iraq Transport Operations and Squad Leader Initiative." GM Switzer stated in
his email "With regard to the adjustment of distribution fee to accommodate the rise in

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the cost of the TO & SL missions we have run our analysis and arrived at a proposed
blanket increase of 58% to the distribution fee." His email went on to say,

As our mission objectives are achieved we will [have] a
reduction in transit times and consequently less trucks in
the IZ. The savings to DSCP derived from a faster tum
time and less assets in theatre will easily cover the cost of
this mission. Couple this consideration with other less
tangible benefits such as less people in theatre, reduced
demand on life support, reduced demand on security
resources.

(App. supp. R4, tab 523 at 5190-91)

48. The Transport Operations and Squad Leader Initiative or Program (TO &
SL Program) was designed to improve PWC's logistics. Unlike the TLOs who
coordinated truck movements from the hubs, SLs traveled with the convoys. They
coordinated with TLOs and went to outlying areas if driver issues needed to be
resolved or delivery notes needed to be signed. (Tr. 4/92-93, 8/59) A part of the
negotiations in what would become Mod. 27 involved adding TLOs and SLs to the
new distribution fee structure. CO Ford testified "there was no way I could pay for a
transportation officer [TLO] and squad leader program without putting a cap" on the
open-ended fees PWC was charging under Mod. 2 (tr. 11110).

49. In response to GM Switzer's proposal, CO Ford's 8 September 2004 email
attached an "interim mod authorizing the additional TLO personnel numbers," and
advised that "[c]ustomer approval on the SL initiative remains pending." CO Ford's
email then went on to say "As we discussed earlier, I also placed a cap on the number
of allowable [days for] fees and restructured the transportation fees to better fit the
current Iraq operation without making changes to the fee." CO Ford then told
GM Switzer "Your comments/suggestions in regard to this language are welcome."
(App. supp. R4, tab 523 at 5190)

50. GM Switzer's 9 September 2004 email to CO Ford expressed surprise that
the SL program had not yet been approved and asked if PWC should stop because it
had "already spent a lot of money to get this started." He then said "The rest of the
Mod's intention is basically OK with us as we discussed over the phone. This
structure will force more discipline into the system which our T[L ]Os and SLs will be
enforcing." With respect to Paragraph 3 of the proposed modification, GM Switzer
commented that it would be "a major administrative burden for the Military, PWC,
and DSCP to track, especially since there is still limited discipline in the IZ [Iraq
Zone] with events happening all the time that are out of our control to manage even
with the TO program." He then said "I can see the cap in place with documentation

13
required for any trucks exceeding the cap. But to do this for your established
minimums when they are all doing it and our round-trip average is around 18 days,
will be extremely burdensome at this time." (App. supp. R4, tab 523 at 5189)

51. From this email reply, we find GM Switzer understood the consequences of
establishing a cap on the transportation fee structure proposed by CO Ford. We find
that if GM Switzer disagreed with the concept of a cap, he would have voiced his
objection just as he questioned the practicality of requiring documentation for the
established minimum truck trip fees CO Ford included in her proposed mod. Instead,
he stated "The rest of the Mod's intention is basically OK with us as we discussed over
the phone" (app. supp. R4, tab 523 at 5189).

52. CO Ford's 9 September 2004 email reply confirmed a teleconference that
morning in which GM Switzer was advised that DSCP was "still seeking to obtain the
required authorization" for the SL program. CO Ford advised GM Switzer that she
had "no objection to separating the TO and SL budgets in an attempt to speed up the
process." CO Ford went on to say that GM Switzer's comments on documentation for
trucks subject to round trip minimums were well taken, and she had made changes
accordingly. (App. supp. R4, tab 523 at 5188)

53. GM Switzer's email to CO Ford the following day, IO September 2004,
stated "The changes to the Mod are appreciated and I think they are workable. Unless
anyone else has an issue, I will have this signed and to you by tomorrow. When will
the new fee structure begin?" (App. supp. R4, tab 523 at 5188) In noticing details like
when the new free structure would begin, we find GM Switzer as someone who would
unlikely leave issues unresolved which could present problems later on.

54. GM Switzer's 14 September 2004 email to CO Ford reminded her that
PWC needed a start date for the new rates for billing purposes. In the same email,
GM Switzer expressed "real reservations about the maximum cap being unqualified."
He said beginning 1 September 2004, PWC would report all vehicles out 22 days as
potentially exceeding the 29-day cap. To protect PWC, he asked ifDSCP and the
government would support PWC's demand to return its trucks that had not completed
their missions. He indicated that PWC would "prefer to have the ability to submit
exceptions to the 29 day rule ifthe situation is unavoidable despite our best efforts to
prevent it." His email said that he looked forward to CO Ford's comment "so that we
can proceed with signing the Mod." (App. supp. R4, tab 527 at 342-43)

55. We find GM Switzer understood before he signed Mod. 27, that the 29-day
cap CO Ford established was unqualified or without exception as to the causes of
delay. We find that GM Switzer indicated a preference for an ability to submit
exceptions to the 29-day cap but did not insist upon that ability as a deal breaker.

14
56. As reflected in CO Ford's 15 September 2004 email reply the next day, she
had a discussion with GM Switzer "earlier" that day. The record does not reveal what
was discussed. As a result of that discussion, CO Ford's email attached a copy of a
"revised mod" that established 16 September 2004 as the start date for the new
transportation fees. The revised mod did not remove the 29-day cap. CO Ford's email
said, however, "exceptions to the 29 day rule will only be considered in the form of a
claim." The email revised the minimum number ofTLOs to perform on a 24 hour/7
day per week schedule from 72 to 81. CO Ford's email told GM Switzer to "Please
sign and return the attached mod or advise if additional changes are required." (App.
supp. R4, tab 527 at 342) (Emphasis added)

Mod. 27 as Signed by the Parties

57. GM Switzer did not advise any additional changes were required; he signed
Mod. 27 on 19 September 2004. CO Ford signed Mod. 27 the next day on
20 September 2004. Block 3 of the modification indicated 16 September 2004 as the
effective date. Block 14 of the modification stated "Except as provided herein, all
terms and conditions of the [Contract] as heretofore changed, remains unchanged and
in full force and effect." (R4, tab 13)

58. As signed by the GM Switzer on behalf of PWC and CO Ford on behalf of
DSCP, Mod. 27 provided:

1. The requirement for PWC to deploy a maximum team
of 25 Transportation Liaison Officer's (TLO's) into
the Iraq Theater was added to the PWC contract
number SP0300-03-D-3061 via Contract
Modification POOO 19 dated to be effective on 10 May
2004. This contract modification P00027 establishes
an increased requirement for the maximum number of
TLO team members from 25 to 94. As a minimum,
81 TLO's are required to perform on a 24 hour, 7
days per week schedule.

2. Transportation fees paid by the Government, above
the awarded distribution category fee structure, were
established for the Iraq Deployment Zone via
Contract Modification P00002, dated to be effective
on 01 July 2003. This contract modification P00027
restructures the transportation fees for the Iraq
Deployment Zone to better fit the current deployment
zone structure without modifying the fee and
establishes a maximum number of days applicable for

15
the transportation fees as follows. The start date for
the following rates is September 16, 2004. The rates
shall apply to all PWC trucks that depart from Kuwait
to Iraq on or after September 16, 2004.

a. Truck Transport to Iraq "South" (South of
Scania) from PWC Kuwait:
- 4 day round trip minimum
- $2,695.00 per refrigerated truck
- $2,075.00 per dry truck
b. Truck Transport to Iraq "Central" (between
Scania & Anaconda) from PWC Kuwait:
- 5 day round trip minimum
- $3,340.00 per refrigerated truck
- $2,550.00 per dry truck
c. Truck Transport to Iraq "North" (North of
Anaconda) from PWC Kuwait:
- 10 day round trip minimum
- $6,565.00 per refrigerated truck
- $4,925.00 per dry truck
d. Additional days beyond the established
mm1mum:
- $645.00 per refrigerated truck per day
- $475.00 per dry truck per day
e. The maximum number of allowable trip days is
29. The Government will not pay
transportation fees beyond this established
maximum. The maximum number of days
shall apply to all PWC trucks that depart from
Kuwait to Iraq on or after September 16, 2004.

3. The "additional days beyond the established
minimum" fees are only applicable ifthe delay is
customer caused; i.e. Hub, DF AC or MKT not having
the capability to off load and return the truck.

4. All invoices must be verified and certified by the
DSCP Contracting Officer Representati[ ve ],
Administrative Contracting Officer or Contracting
Officer.

(R4, tab 13) (Emphasis added)

16
59. We find the transportation fee structure established by agreement of the
parties and effective 1 July 2003 in Mod. 2 was replaced by a different fee structure in
bilateral Mod. 27 effective 16 September 2004.

60. Unlike Mod. 2, Mod. 27 divided truck transportation into Iraq into three
separate zones: South, Central and North. Also unlike Mod. 2, Mod. 27 established a
different round trip minimum fee for refrigerated and dry trucks for each zone: For
trucks going into South Iraq, Mod. 27 allowed a 4-day round trip minimum fee at
$2,695.00 per refrigerated truck and $2,075.00 per dry truck (R4, tab 13, ii 2.a.); for
trucks going into Central Iraq, Mod. 27 allowed a 5-day round trip minimum fee at
$3,340.00 per refrigerated truck and $2,550.00 per dry truck (R4, tab 13, ii 2.b.); and
for truck going into North Iraq, Mod. 27 allowed a 10-day round trip minimum fee at
$6,565.00 per refrigerated truck and $4,925.00 per dry truck (R4, tab 13, ii 2.c.).

61. Mod. 27 did not change the Mod. 2 rate of $645.00 per refrigerated truck
per day for additional days a truck was out beyond the minimum round trip days (R4,
tab 13, ii 2.d.). Similarly, Mod. 27 did not change the Mod. 2 rate of $475.00 per dry
truck per day for additional days that truck was out beyond the minimum round trip
days (id.). Unlike Mod. 2, which allowed the $645.00 per day per refrigerated truck
and the $475.00 per day per dry truck to accumulate without limitation, Mod. 27
established a 29-day cap for trip days allowable: Paragraph 2.e. of Mod. 27 stated:
"The maximum number of allowable trip days is 29. The Government will not pay
transportation fees beyond this established maximum." Notably absent from Mod. 27
was any mention of any exceptions to the 29-day cap.

Application of the 29-Day Rule

62. Under Mod. 27, for example, a reefer going to South Iraq would be paid a
4-day round trip minimum of $2,695.00 even ifthat truck returned in two days. If that
reefer returned to Kuwait in 60 days, and it was delayed at a DF AC for 42 days due to
lack of storage at that site, PWC would be paid $16,125.00 ($645.00 x 25 days
(29 days -4 days)) plus the $2,695.00 or a total of$18,820.

63. Similarly, a reefer going to Central Iraq would be paid a 5-day round trip
minimum of $3,340.00. If that reefer returned to Kuwait in 35 days, and it was
delayed at a DF AC for 30 days due to lack of storage at that site, PWC would be paid
$15,480.00 ($645.00 x 24 days (29 days - 5 days)) plus the $3,340.00 or a total of
$18,820.00.

64. Likewise, a dry truck going to North Iraq would be paid a 10-day round trip
minimum of $4,925.00. If that dry truck returned to Kuwait in 50 days because it was
redirected to another site and was delayed for 30 days, PWC would be paid $9,025.00
($475.00 x 19 days (29 days - 10 days)) plus the $4,925.00 or a total of $13,950.00.

17
65. With the 29-day cap, we find Mod. 27 essentially converted Mod. 2's
open-ended distribution fee structure of $645.00 per reefer per day and $475.00 per
dry truck per day for additional days beyond the established minimum into a fixed
liability transportation fee structure not to exceed $18,820.00 per reefer and
$13,950.00 per dry truck.

Rationale for the 29-Day Cap

66. Because GM Switzer was located in Kuwait in 2004, and CO Ford was
located at DSCP in Philadelphia, negotiations between them on the terms of Mod. 27
were conducted by email and telephone (tr. 11115). Thus, testimony and the words
used in the emails are important in understanding the parties' intent. In this case,
CO Ford testified and explained her understanding of Mod. 27, and she was
extensively cross-examined by PWC counsel. GM Switzer did not testify. 5
Consequently, without his testimony we are left with no explanation of why he signed
Mod. 27 with a 29-day cap which he understood to be "unqualified," and which did
not include what he had "real reservations about" when he was given the opportunity
to "advise if additional changes are required" (findings 54, 56).

67. CO Ford explained at the hearing that even though the number of trucks out
for over 29 days was insignificant, some trucks could be out for long periods of time
and "it didn't make sense to pay $99,000 for a truck trip, given that we were paying
PWC to place people [TLOs and SLs] in the field and to minimize truck trip time"
(tr. 1/112). She explained that given the average truck trip time was 15 days
(tr. 11115), establishing a 29-day cap meant the government was "paying for all of the
risks associated with the contract" up to 29 days (tr. 11112).

68. CO Ford testified that paragraph 2.e. of Mod. 27 established "the absolute
maximum that we would pay for a truck trip for any one individual truck" and that
"amounted to about $18,000 or a little over $18,000 at the max" 6 (tr. 1156). She
testified the 29-day would apply regardless of "the cause of delay," even if a DF AC
held a truck for storage (tr. 1/57, 59) or a truck's return was delayed by military escort
(tr. 1157).

69. The fact that CO Ford established a 29-day cap - almost double the 15-day
average truck return time experienced at the time - suggests that both parties

5
On advice of his own counsel, GM Switzer chose not to testify in this appeal (see
DLA letter of 27 May 2014 ). PWC did not list or call GM Switzer as its
witness.
6
CO Ford was apparently referring to a reefer. A dry truck would have a different
maximum amount (see finding 64 ).

18
understood the cap was intended to shift the risks of an open-ended fee structure under
Mod. 2 to a shared risk fee structure under Mod. 27. PWC was not unfamiliar with
contingencies operating in a war zone. The bulk of the people it hired at its leadership
levels in transportation and other areas were retired military. GM Switzer was a
retired Navy officer. (Tr. 3/34)

70. Apparently in one of their conversations, GM Switzer had suggested
eliminating the 29-day cap. CO Ford testified that she "pretty much rejected .. .lifting
the 29-day cap." She acknowledged she told GM Switzer that she "would consider
exceptions to the 29 days in the form of a claim." (Tr. 1/90) When pressed on
cross-examination whether that statement meant PWC would be allowed to submit
claims in excess of the 29 days, CO Ford testified it was "our understanding ... at the
time or my understanding ... at the time" that she would consider granting relief where,
for example, all of the trucks "were out over 29 days. And for some reason [PWC
was] going to be out of business beyond his losses." She explained she could not let
that happen because "[o]ur primary goal in the war zone was to make sure that we fed
the troops ... [and] if PWC went out of business, we would have had a difficult time
doing that." As for submitting a claim for relief, CO Ford testified it was her
understanding that "[a] contractor is always entitled to submit a claim if he doesn't
think he's been [treated] equitably or something was unfair or unjust or inequitable."
(Tr. 1191)

71. Although at times less than precise in her language, we find overall what
CO Ford was saying was the 29-day cap - being at about twice the average 15-day
truck return time experienced at the time -was more than generous. We find she
offered to leave the door open for claims in the event the 29-day cap caused PWC such
economic hardship to the point where its ability to continue performance under the
contract was threatened.

Aftermath of Mod. 27

72. On 23 October 2004, PWC's senior transport manager,
Mark B. Fredenburgh (Fredenburgh) sent an email to CO Ford and others in DSCP,
attaching a weekly over 10-day report. The email reported "As you can see from the
pivot table, many vehicles remain at DF A Cs. Most of those at the hubs are returning.
Storage issues continue to hamper the tum around time at some locations." (App.
supp. R4, tab 546 at 86)

73. Following up, GM Switzer's 24 October 2004 email to CO Ford and others
at DSCP said:

After reviewing this [weekly over 10-day] report, we do
have the makings of a problem with the new Transport

19
Mod that limits our billing for only 29 days. What are we
suppose to do with the 105 vehicles now over 29 days?
This really adds up as well as the 57 that are right behind
in the 22-29 category. There are a lot of issues driving this
but most of them are out of our control even with the TOs.
I still believe Squad Leaders would help expedite trucks
being held, but again, that is only part of the solution. We
need action up in Iraq to expedite the movement [from] the
customer side.

(App. supp. R4, tab 546 at 86)

74. We find GM Switzer's acknowledgment that Mod. 27 limited PWC's
billing "for only 29 days," and that Mod. 27 "have the makings of a problem" reflected
his understanding at the time that Mod. 27 provided no relief just because trucks did
not return in 29 days. If GM Switzer had understood CO Ford to have agreed to
provide relief for any customer-caused delays beyond 29 days, he would not have
asked "What are we suppose to do with the 105 vehicles now over 29 days?"
(Finding 73)

75. PWC's Fredenburgh provided CO Ford another 10-day report by email on
9 November 2004. This email quantified the financial impact of the 29-day cap. He
reported that financial impact to PWC equated to $743,685 as of8 November 2004.
He reported that 48 trucks had returned past the 29-day mark equating to 274
non-billable truck days and 95 trucks departed after 15 September 2004 had not
returned equating to 879 non-billable truck days. The email stated "As these trucks
return, claims will be filed for the days exceeding the maximum." Fredenburgh asked
DSCP to provide information relating to the storage capacity and meals served per day
at each DF AC and MKT site so that PWC "could help provide specifics on where
more storage is needed." (App. supp. R4, tab 559; tr. 1/95-96)

76. Fredenburgh's 16 November 2004 email reported to CO Ford that the
financial impact of the 29-day cap continued to grow. He reported that "[c]losed
missions over 29 days equate to 77 vehicles with 515 days over in non-billable days
($332,175)" and "[e]xisting in mission trucks over 29 days is 138 vehicles for 1481
non-billable days ($955,245)." The email stated that "[w]ithin 2 months this is now
above the $1 [m]illion mark" and asked "How can we address this?" The email
blamed the over 29-day mission to "instances on over ordering," to "DF AC storage
issues effecting [sic] the downloading of vehicles, DFAC's taking our trailers for
storage, MSR closes, etc." (App. supp. R4, tab 562; tr. 1/96-97)

77. When the storage capacity of a DFAC was "maxed out," the Army would
"eat through a truck" meaning the DF A Cs would "grab food off the truck and just build

20
menus off ofwhat they pull off the truck" (tr. 7/23). In addition to the lack of storage
capacity at various locations, over ordering food also contributed to delays in truck
returns (tr. 7112). The record shows MNC-I representative David L. Zimmerman's
12 November 2004 email to the Army's Theater Food Advisor, P. Peleti, complaining
that Taji DFAC's ordering "appears to be out of control and they have too many trucks
at their location ... still!!" Peleti's 12 November 2004 email to the customer service
representative at Taji stated "Need your help on getting these folks on ground to free up
these PWC trucks and stop holding them hostage. Also if they need to minimize their
order then we need to know." (App. supp. R4, tab 560)

78. Fredenburgh's 29 November 2004 email to CO Ford complained that food
was being redirected due to lack of storage and over-ordering. The email cited
instances where trucks were sitting at DFACs for 30 days or more and then being
redirected with partial contents. The email stated "Days accumulated in total has now
climbed above the $2.3 [m]illion mark for closed and in-mission vehicles." His email
went on to say "I believe the intent of Mod 29 [sic] was to ensure PWC was managing
their transportation effectively .... I do not believe the intention of the mod was to
penalize PWC for areas beyond our control. What can we do about this situation?"
(App. supp. R4, tab 566)

79. In the meantime, in preparation for the upcoming expiration of Contract
3061, DSCP's Peggy Grady advised GM Switzer in her 3 December 2004 email that a
contract modification would be issued to extend the contract for six months. The
email stated that "The contract modification will incorporate all current and modified
actions in effect at time of signing." Grady's email requested that "the contract
extension not be held up due to PWC's concern on the recent TO mod that limited the
transport [fees] to 29 days," and stated that "[a]n alternate proposal may be submitted
separately at any time." (App. supp. R4, tab 571 at 15733-34)

80. In response, GM Switzer's 8 December 2004 email stated:

We are willing to accept the contract extension. However,
at this time I cannot take lightly the effects of Mod 27's
limitation on the transport charges. Unfortunately, the
Theater has taken a tum for the worse and despite all our
extra visibility and management, we are not able to move
our trucks through the mission in a timely manner. The
military control of our trucks and the situation has caused
substantial delays where the possibility and reality of
having our trucks on mission for over 29 days is more of
the norm, not an infrequent exception. We do not have the
ultimate control of our trucks.

21
Although DSCP has indicated they would be willing to
accept a claim or maybe a request for equitable adjustment
for compensating for the delays, this is no guarantee of
being paid or ifpaid, what delays will be involved.

I would therefore like this matter be reviewed and
discussed ASAP with a view towards resolving our
situation here.

(App. supp. R4, tab 571) We find GM Switzer understood that CO Ford's willingness
to consider granting a claim was a matter of discretion given the right circumstances
and not a matter of contract right.

81. A 6 January 2005 email from an MNF-I representative Zimmerman to
CO Ford and others reported that the company awarded the contract to provide cold
storage units for the MKT sites had fallen behind in production. Instead of delivering
50 cold storage units on 28 December 2004, it would now ship 100 units on
10 February 2005. (App. supp. R4, tab 577) CO Ford acknowledged that until the
MKTs received their cold storage units, they had to use reefers for storage (tr. 11108).
We find that having sufficient storage units remained a problem nearly eight months
after the SPY Summit.

82. In response to CO Ford's 13 January 2005 inquiry on whether PWC would
accept a modification to extend Contract 3061 for 8 additional months, GM Switzer's
reply of the same day said he had "no problem with extending the contract at the same
terms." His email, however, wanted CO Ford to rescind the 29-day cap:

My only request was that the 29 day transport limitation
rule for Iraq be rescinded. We have almost done as much
as we can with our TO and Squad Leader Programs to
provide visibility and local management of the trucks in
Iraq. However there are still delays that are virtually out of
our control and are driven by either the military mission,
situation, or other controlling parties' inefficiencies and yet
PWC is penalized for doing the work .

.. . However, making us go through the claims process that
will either be rejected or cause us significant delays in
receiving compensation places us in a[ n] inappropriate
situation of either ignoring (even if we can) the military
request and situation or absorbing costs that are not under
our control. Unfortunately this has not been isolated
incidents but occur on a regular and frequent case.

22
Additionally with the projected road closures and new
DFA Cs opening, the situation will likely get worse than
get better.

(App. supp. R4, tab 580 at 15731-32) Based on this email, we find GM Switzer
understood the 29-day cap shifted the risk of truck delays, for whatever reason, beyond
29 days to PWC.

83. CO Ford's 13 January 2005 email declined to rescind Mod. 27 but urged
PWC to submit an alternate proposal "based on actual cost and historical truck tum
around time frames." She explained why the 29-day cap was established in the first
place:

When mod 27 was written, it was my understanding that
we were in agreement that a transport limitation rule was
absolutely necessary given the history of delayed truck
movement and the establishment of a transportation officer
program.. . . We considered the average tum around time
per truck at 18 days and agreed that only a small
percentage of trucks remained out more than 29 days. To
date, these figures have not significantly changed.
Furthermore, it was not reasonable that PWC
transportation costs continued at a rate of $645 per day for
an infinite number of days. Therefore, we can not simply
rescind mod 27 without doing some additional analysis.

(App. supp. R4, tab 580 at 15731)

84. Because he did not testify, there is no rebuttal to CO Ford's statement,
made during the course of performance to the effect that the parties "were in
agreement that a transport limitation rule was absolutely necessary." That CO Ford
urged PWC to submit an alternate proposal "based on actual cost and historical truck
tum around time frames," and her comment that she could not "simply rescind mod 27
without doing some additional analysis" support a finding that, as far as CO Ford was
concerned, "exceptions to the 29 rule" would only be considered if it put PWC in an
economic hardship situation. (Finding 83)

85. PWC's daily INTSUM 7 for 20 January 2005, four months after Mod. 27
was signed, reported that PWC had 1,232 trucks in the Iraq Zone (IZ), and that
"[m]ovement across the theater, for the most part, is happening .... but the single
biggest issue in the IZ right now is storage at the DFACs" (app. supp. R4, tab 587).

7
An INTSUM was a snapshot of truck movements at all hub locations (tr. 7/37).

23
PWC's daily INTSUM for 26 January 2005 reported that "Anaconda is continuing to
struggle getting trucks back from the DFACs due to a lack of cold ground storage,"
and the "single biggest issue" at BIAP AOR "is storage capacity at the DFA Cs, which
is causing trucks to be held" (app. supp. R4, tab 590 at 644).

86. Despite CO Ford's refusal to rescind Mod. 27, PWC entered into a bridge
contract with DSCP. The bridge contract (Contract No. SPM300-05-D-3119 or PV
Bridge contract), in the estimated value exceeding $1 billion, was a follow-on contract
to Contract 3061. It was executed as Modification No. P00036 (Mod. 36) to Contract
3061 and it was for the period 16 February 2005 through 15 December 2005. The
bridge contract provided that "[a]ll other terms and conditions of the 3061 contract
remain unchanged and are hereby incorporated into contract SPM300-05-D-3119."
(App. supp. R4, tab 156) Thus, knowing CO Ford's interpretation of Mod. 27 -that
PWC assumed all risks of delay over 29 days - PWC agreed to extend Contract 3061
for I 0 more months.

87. Trucks would be reported as in a "black" status when they remained at a
hub for more than 72 hours (3 days), or at a DFAC for more than 96 hours (4 days), or
at a MEF site for more than 120 hours (5 days) (app. supp. R4, tab 648; tr. 21173, 175).
PWC's daily INTSUM for 24 February 2005, five months after Mod. 27 was signed,
reported the number of trucks across the IZ had spiked considerably, with 463 trucks
in the "black," and with the majority of those resulting from "lack of storage at the
MEF sites." It was reported that of all the trucks in a "black" status, only 1% were
related to escort issues. (App. supp. R4, tab 601 at 824)

Submission of Over 29-Day Claims

88. By email on 24 February 2005, PWC's Contract Administration Officer
sent CO Ford an advance copy of a "claim" 8 for additional transportation fees
associated with trucks that had returned from Iraq to PWC after 29 days. The claim
was in the amount of$2,951,335.00 and covered the period from 16 September 2004
to 31 December 2004. (App. supp. R4, tab 604)

89. Confused by PWC's submission, COR Burkett, who usually verified
PWC's requests for payment before sending them to the CO, emailed CO Ford on
24 February 2005 and stated that he had not seen the supporting documentation for the
truck trips claimed (app. supp. R4, tab 606 at 2492-0002).

8
This was not a formal CDA claim. The word "claim" was used to denote that the
submission was based on CO Ford's email agreement to consider "Exceptions
to the 29 day rule .. .in the form of a claim."

24
90. CO Ford's 24 February 2005 email explained to COR Burkett that what
PWC had submitted was not based on a contract right: "Claims are different from
invoices in that PWC has no written contractual right to payment; therefore, your
verification and signature is not required up front." CO Ford's email explained
"Basically, PWC is instructed to submit claims directly to this office for review and
decision." She went on to explain that having paid dearly for the TO & SL Program,
any relief must be supported by PW C's "cost":

Based on limited review, I can tell you right now that I'm
not in favor of paying for this. We paid PWC 8.7 million
for these 467 trucks and they want another 2.9 million. I
will be requesting more cost verification data. Cost data
that may not have been available before, should be
available now. I'm also struggling with the idea of paying
15.7 million for a TO program and negotiating another 6.6
million for a SL program if we can't clearly see greater
command and control of truck days out.

(App. supp. R4, tab 606 at 2492-0002)

91. When asked on cross-examination why she asked for cost data if
transportation fees were capped at 29 days, CO Ford explained that she wanted to
"[review] the reasonableness of [PWC's] request," and "[i]f PWC could prove that
mod 27 was completely unreasonable, or unfair, or inequitable, then I would have
considered paying the claim." She testified that she requested PWC's cost data
because knowing how much it cost PWC to perform the trucking service would show
ifPWC was losing money. (Tr. 11130-31)

92. COR Burkett testified that most of the time, trucks would return in seven to
nine days, and it was his practice to "approve payment up to 29 days" when the trucks
returned (tr. 3/41-42). He testified in approving invoices up to 29 days, he would err
on the side of PWC even in instances of unsigned delivery documents (tr. 3/53). He
acknowledged most of the time delays such as convoy/escort delays, redirections, and
using trucks for storage, were customer-caused (tr. 3/54). He testified when PWC
argued "they should be paid for every day the truck was up in Iraq" due to
contingencies beyond its control, CO Ford would point to the 29-day cap and said
"Paul, this is what the contract states. This is what we both agreed on, so this
[29 days] is what will be paid." (Tr. 3/43) There is no evidence that COR Burkett
approved any over 29-day truck trips.

93. CO Ford's testimony at the hearing was consistent with her interpretation
of Mod. 27 during contract performance: (1) Having agreed to pay for the TO & SL
Program, and having established the 29-day cap far above the 15-day average truck

25
return time, PWC was expected under the terms of Mod. 27 to assume the risk of all
truck return delays over 29 days; and (2) Exceptions to the 29-day rule would be
considered, under the right circumstances and supported by cost data, so that PWC's
continued performance under the contract in keeping the troops fed would not be
interrupted.

94. By email dated 8 March 2005, PWC's senior contract manager,
Randolph Sawyer, advised CO Ford that PWC was gathering supporting data for
additional trucks returned over 29 days from Iraq for January and February of 2005,
and would submit an additional claim. Sawyer's email advised that PWC had decided
to change its invoicing procedure and stated:

We will start invoicing on the 29th day for trucks that
departed after 16 September 2005 [sic] and are still
remaining in Iraq (Mod. P00027). Once the truck
returns ... we expect to submit a claim for the additional
days over 29. We will not wait until the asset returns
before we submit an initial invoice.

(App. supp. R4, tab 616 at 6556) CO Ford advised Sawyer by email on 9 March 2005
that "DSCP will not accept invoices for trucks that have not returned to Kuwait as part
of the normal invoicing procedure" 9 (id. at 6555). Sawyer's 28 March 2005 email
stated that PWC believed the additional costs claimed were justified because "the
customer IS holding our trucks as storage. This is in direct violation of the terms of
POOOO 1, paragraph 4, which states, 'Trucks will return to PWC upon completion of
unloading, and trucks will not be used at the sites for storage purposes.'" (Id. at 6554)

95. In response to CO Ford's 13 January 2005 invitation to submit a proposal
as an alternative to Mod. 27, PWC's 14 March 2005 email forwarded a proposal from
GM Switzer. The proposal asked that Mod. 27's 29-day cap be lifted. Based on its
finding that the cost to overhaul a storage unit after sitting idle was $6,800.00,
GM Switzer proposed a charge of $6,800.00 to recoup this additional cost when
"PWC's trucks are used for storage purposes." Alternatively, if DSCP chose to set "a
max allowable trip ceiling," GM Switzer proposed "a demurrage fee of $500 per day
per reefer" where its asset was used for storage. (App. supp. R4, tab 610
at 2513-2514_0002)

96. CO Ford rejected GM Switzer's proposal (tr. 11161). She testified she told
PWC she would not lift the cap because the data she had showed "the average trip
times were going down" (tr. 11154). She explained when Mod. 27 was put in place,

9
CO Ford took this position presumably because loss of vehicle was PWC's risk
(finding 6, Mod. 1, if 6).

26
"we never thought that [truck trips exceeding 29 days] would be eliminated totally."
She testified PWC might have a case for relief "if all the truck trips ended up being
more than 29 days ... because it was different from the data that we had before we ... put
mod 27 in place." (Tr. 1/155-56)

97. Following through on his 8 March 2005 email, Sawyer submitted PWC's
second claim on 25 May 2005. 10 This claim, in the amount of$4,161,020, was for
PWC trucks out over the 29 days during the months of January and February of 2005.
(App. supp. R4, tab 717 at 15740)

98. Mr. Matthew Paice, PWC's invoicing supervisor, advised CO Ford by
email on 7 August 2005 that he had taken over responsibility for the "MOD27 over
29 days claims." Instead of sending "mountains of paperwork," Paice asked CO Ford
what he needed to submit for claims that differed from normal billings. (App. supp.
R4, tab 677 at 2500_ 0002) This was the same issue that confused COR Burkett.

99. CO Ford's 16 August 2005 email reply to Paice stated:

Send me the mountains of paperwork. Claims must be
fully supportable, we can not accept random samples of
support documentation for claims. Please be sure that your
paper trail is clear and concise. You must show that each
delay was in fact customer caused.

Ifwe can agree that there was delay and the delay was
customer caused, we will still need to negotiate an amount
due, if any. As I have mentioned several times before, it
would be helpful for PWC to submit actual demurrage
cost data. For example, your first claim implies that the
Gov't owes PWC $2.9M on 467 deliveries. However, we
have already paid $8.7M for those deliveries. Where is the
actual cost data to support an additional payment of
$2.9M? Did your cost actually exceed $8.7M for the 467
deliveries? If so, by how much?

(App. supp. R4, tab 677 at 2500) (Emphasis added)

100. Had CO Ford agreed to pay $645.00 per reefer and $475.00 per dry truck
as exceptions to the 29-day cap for each day these trucks were out over 29 days

10
Like PWC's 24 February 2005 (first) claim, this was not a CDA claim. The word
"claim" was used to denote that it was based upon CO Ford's email agreement
to consider "[ e]xceptions to the 29 day rule ... in the form of a claim."

27
beyond PWC's control, she would not have asked PWC for "actual demurrage cost
data," "actual cost data," and whether PW C's "cost actually exceed[ ed]" the
$8.7 million paid. The fact that CO Ford repeatedly asked for cost data supports a
finding that, in her mind: ( 1) PWC had not demonstrated that, while some trucks were
delayed for over 29 days, the 29-day cap for all trucks was unfair, unreasonable, or
inequitable; and (2) PWC had not demonstrated that it had reached a point where its
ability to continue performance under Contract 3061 was threatened. We find
CO Ford was consistent in her interpretation of the circumstances under which
exceptions to the 29-day rule would be considered. PWC presented no contrary
interpretation from GM Switzer.

101. The position CO Ford took in 200 5 was reinforced by her testimony at the
hearing. CO Ford testified that in addressing PWC's over 29-day claim, she applied a
two-part test. Part I was to determine if all of the delays claimed related to the storage
issue. Assuming Part I was satisfied, Part II was to determine from PWC's cost data
that the costs PWC incurred showed that capping truck fees at 29 days was not
"realistic." She testified it would not be enough for PWC to show it was less
profitable because of the truck delays. (Tr. 1/181-83) She testified that from the
documents PWC submitted, she could not determine that all of the delays claimed
"were related to the storage issue" 11 (tr. 1/181), and PWC provided "no data ... to
support that it [the 29-day cap] wasn't equitable" (tr. 11183).

102. On 26 October 2005, PWC submitted a third "claim" 12 for over 29-day
truck trips for the month of March 2005 (app. supp. R4, tabs 703, 704). This claim
was in the amount of$1,138,370 (app. supp. R4, tab 717).

103. CO Ford's 17 November 2005 email advised PWC that "it is our intent to
deny the 'over 29 day' claims for inadequate support .... Our final decision will be
communicated no later than 9 Dec 05. PWC may submit additional information for
DSCP review prior to the anticipated decision date." (App. supp. R4, tab 708 at 1972)

104. In January 2006, PWC began performance under a new Prime Vendor
Contract (Contract No. SPM300-05-D-3128) (Contract 3128 or PV2 Contract). Under
Contract 3128, DSCP and PWC agreed to a wholly different fee structure for trucks
going into Iraq. The events underlying the claims in this appeal occurred during
Contract 3061 (PVl Contract) and Contract 3119 (PV Bridge). That period began on

11
Contract 3061 assigned certain risks to PWC such as loss of vehicles and delays in
assembling or deploying military escorted convoys (see finding 9).
12
Like PWC's 24 February 2005 (first) and 25 May 2005 (second) claims, the word
"claim" was used to denote that it was based upon CO Ford's agreement to
consider "[e]xceptions to the 29 day rule .. .in the form of a claim."

28
the effective date of Mod. 27, 16 September 2004, and ended 15 December 2005, the
expiration date of Contract 3119. 13

Events Leading to PWC's Submission of its Request for Equitable Adjustment
CREAs) and Certified Claim

105. The events leading to PWC' s submission of its REA and certified claim
were the subject of a Board decision denying DSCP's motion to dismiss for lack of
jurisdiction. See Public Warehousing Company, ASBCA No. 56022, 11-2 BCA
ii 34,788. For continuity and consistency, we restate or summarize, as necessary, the
relevant findings in that decision.

106. After Contract 3061 expired, PWC reminded DSCP by letter dated
18 December 2005 "there is an additional $13 .1 [million] outstanding from the trucks
that returned after 29 days, being pursued as an REA." PWC's letter said it would be
submitting an REA on a portion of the Mod. 27 amounts with supporting documents
later that month. 11-2 BCA ii 34,788 at 171,224, finding 28.

107. On 20 December 2005, PWC submitted an REA with Attachments A through
F. The REA was signed by PWC's Assistant General Manager Stephen J. Lubrano. The
government contended that it never received attachments A through F. 11-2 BCA
ii 34, 788 at 171,224, finding 29.
108. On 24 May 2006, following an inquiry from Paice, CO Ford sent him an
email asking him to send a copy of the certified REA letters associated with the trucks
that were out over 29 days or a summary sheet of the submission. Paice replied on
29 May 2006 with a copy of the REA letter and copies of Attachments B, C, D, and E.
Attachments A and F were not included with the email. 11-2 BCA ii 34, 788
at 171,224, finding 30.

109. Not having heard from CO Ford, Paice emailed her on 28 August 2006.
The email stated:

On March 10, 2006, the Government verified receipt of a
"hard" copy "Request for Equitable Adjustment (REA),
October 2004 - September 2005, Submissions I, II & III"
submitted to your office, concerning the retention of PWC
assets past the 29-day contractual window. In addition, per
the Government's request on May 24, 2006, PWC

13
See Public Warehousing Company, K.S.C., ASBCA No. 56116, 08-1 BCA
ii 33,787 at 167,223, ii 2; (see also app. br. at 11).

29
submitted a "soft" copy, via email, of the certified REA on
May 29, 2006.

Paice asked the CO to "provide a date for a response to and resolution of these pending
amounts." 11-2 BCA ii 34,788 at 171,224-25, finding 31.

110. On 21 December 2006, PWC submitted a two-page certified claim to
CO Ford. The claim letter stated: "On December 20, 2005, PWC submitted a certified
Request for Equitable Adjustment (REA), for which the company has received
additional information request but no written disposition on the REA." The claim
sought payment in the amount of $12,490,060.00. It attached "the documentation
submitted in the earlier REA (specifically, Submissions I, II, and III on 20 December
2005), with the inclusion of the newly added Submission IV, for the costs incurred by
PWC due to the Government's utilization of PWC truck asset past the 29 day
maximum." In referencing and attaching them, we find that PWC had incorporated
and made its 12-page 20 December 2005 REA and attachments a part of its certified
claim. The claim, certified by PWC's Senior Contract Manager, James A. Kibbee, Jr.,
was based on the legal theory of unjust enrichment:

Pursuant to Common Law, and under the definition of
"unjust enrichment", the Government has gained a
windfall (receives additional services) at the expense of
PWC. As a legal doctrine, it states that the party who has
thus gained must return the property (restitution) to its
rightful owner, even though the property was not obtained
illegally ....

In invoking the legal theory of unjust enrichment, the claim letter went through a
five-step question and answer analysis of the theory's legal elements. 14 11-2 BCA
ii 34,788 at 171,225, finding 32.
111. The REA included a 12-page narrative and referenced Attachments A
through F. Attachment A was said to provide "The breakdown of costs." Attachments
B, C, and D contained spreadsheets listing its trucks returning after 29 days during the
period October through December 2004 (Submission I), January through February
2005 (Submission II), and March through September 2005 (Submission III).
Attachment E provided a summary for Attachments B, C, and D. Attachments B, C,
and D spreadsheets show how PWC arrived at the amount it claimed for each truck
trip into Iraq. Attachment F was said to show "a matrix of events during the time
period in question ... depicting road closure dates, escort issues, elections etc, which

14
The five-step analysis was apparently undertaken pursuant to a website on the subject
of unjust enrichment. See http://en.wikipedia.org/wiki/Unjust_enrichment.

30
when viewed in conjunction with the dates these trucks were deployed explain a
portion of the additional days." 11-2 BCA ii 34,788 at 171,225, finding 33.

112. PWC also forwarded separately other supporting documents including
(1) Delivery Notes which indicate "when the truck has entered the camp, when it has
been downloaded, and when it leaves, along with any comments or notes made,"
(2) MicroTransport Reports which provide trip length data and Transport Officer
comments along the journey, (3) Convoy Reports which report on cargo departure
time, destination, and (4) Squad Leader Reports which provide information from
"eyes-on personnel." These documents occupy the bulk of the ten-volume Rule 4 file.
11-2 BCA ii 34,788 at 171,225, finding 34.

113. PWC's REA said there were "many reasons" why its trucks failed to
return from Iraq "within the stipulated times as stated in the contract" including these
six bullet point reasons listed on page 3 of the REA:

• Lack of convoy escorts

• Road closures

• Lack of storage

• Vehicles being used for missions by the Military

• Vehicles being used by other contractors

• PWC assets being utilized for recovery or other delivery
m1ss10ns.

11-2 BCA ii 34,788 at 171,225, finding 35.

114. CO Ford denied PWC's claim by decision dated 9 April 2007 for the
following reasons:

Bilateral Modification P00027, effective September 16,
2004, established a maximum number of days applicable
for Iraq transport fees. It states "The maximum number of
allowable trip days is 29. The Government will not pay
transportation fees beyond this established maximum."
The 29 day cap on the truck transport fee was established
in reference to the Transportation Officers (TO) program
objectives and responsibilities, awareness of the detention
situation in Iraq, and the 14 day average truck transport

31
time. PWC was aware of this at the time it executed
P00027 and agreed to the 29 day cap. Furthermore, while
the subject claim acknowledges that distribution fees were
already paid for each of the stated deliveries, it offers no
evidence to substantiate that the amount paid was unfair,
unreasonable, or inequitable. The distribution fees paid for
each of the deliveries stated in the claim were fair,
reasonable, equitable, and in line with the intent of
P00027. As such, PWC is not entitled to an equitable
adjustment.

11-2 BCA if 34,788 at 171,226, finding 37.

115. PWC through its vice president and general counsel, appealed the CO
decision by notice dated 29 May 2007. The Board docketed the appeal on 1 June
2007. 11-2 BCA if 34, 788 at 171,226, finding 3 8.

116. The total number of trucks, truck days, and the amounts PWC claimed for
each of the four periods are summarized in the table below:

Time Period No. of Trucks Truck Days Claimed Amount
Submission I (Oct - Dec 2004) 426 4,412 $ 2,798,650.00
Submission II (Jan - Feb 2005) 367 4,801 $ 3,085,425.00
Submission III (Mar - Sept 2005) 859 9,461 $ 6,084,155.00
Submission IV (Oct 2005 - Feb 2006) 129 818 $ 521,830.00
TOTAL 1,781 19,492 $12,490,060.00

(R4, tab 14, attach. E) PWC derived the amount claimed for each period by
multiplying the total number of truck days over the 29-day cap by the appropriate
$645.00 or $475.00 per truck per day rates beyond the established minimum rates set
out in if 2.d. of Mod. 27. In doing so, it disregarded the 29-day cap established in
paragraph 2.e. of Mod. 27.

Prior Litigation

117. On 8 October 2010, the government moved to dismiss PWC's appeal, and in
the alternative, for summary judgment. The government contended that an unjust
enrichment claim required the absence of a valid contract, and since there was an express
contract - Contract 3061 and Contract 3119 (Mod. 27) - addressing directly transport
fees up to and exceeding 29 days, there could not be a separate "implied-in-law" contract
covering the same subject. The government contended that "[t]he only legal basis
presented by PWC for its claim and appeal is unjust enrichment," and since unjust
enrichment is "premised on the existence of a contract implied by law," and since the

32
Board had no jurisdiction over implied-in-law contracts, the Board "lacks jurisdiction
over PWC's appeal." 11-2 BCA ~ 34,788 at 171,226, finding 41. In moving for
summary judgment, the government contended that the appeal turned on the
interpretation of Mod. 27 which "clearly addressed the Government's liability for
transportation fees in Iraq," and which "clearly established a maximum liability for each
trip." 11-2 BCA ~ 34,788 at 171,226, finding 42.

118. In response, PWC moved to amend its complaint. Its motion was
accompanied by its first amended complaint. PWC urged the Board to grant its
motion because amending its complaint "does not change the essential nature or
operative facts of the Claim," "would further frame and join the issues," and "would
be fair to both parties." In moving to amend its complaint, PWC did not challenge the
government's position on unjust enrichment. Nor did it address the government's
motion for summary judgment. The introductory paragraph of its first amended
complaint said: "Amending the Complaint will also moot portions of the
Government's Motion to Dismiss and in the Alternative for Summary Judgment."
11-2 BCA ~ 34,788 at 171,226, finding 43.

119. The government's 7 December 2010 response opposed PWC's motion to
amend. The government asserted that PWC sought to amend its complaint by adding
"new legal theories based on new factual allegations," and that PWC's "new
counts ... exceed the scope of the claim submitted to the contracting officer." 11-2
BCA ~ 34,788 at 171,227, finding 45.

120. The government's motion for summary judgment was based on contract
interpretation. Pointing exclusively to Mod. 27 and its language, the government
maintained that "Bilateral Modification P00027 could not state more clearly that PWC
is entitled to a maximum of 29 days of fees for trips into Iraq." In moving to amend its
complaint, PWC stated if we were to grant its motion to amend to change its legal
theory of recovery, the government's summary judgment motion could be rendered
moot. PWC said that government counsel agreed that PWC's response to the
summary judgment motion should be deferred pending resolution of the government's
motion to dismiss. With the parties' agreement, we decided that the government's
motion for summary judgment was not ready for decision at that point. 11-2 BCA
~ 34,788 at 171,230.

121. In a decision issued on 22 June 2011, we agreed with the government that
our jurisdiction does not extend to contracts implied-in-law or unjust enrichment. We
denied the government's motion to dismiss for lack of jurisdiction and granted PWC's
motion to amend its complaint on the basis that we have jurisdiction to resolve
contract disputes:

33
Because the operative facts underlying the legal
theories PWC presented in its first amended complaint are
derived from common or related operative facts which
were the subject of numerous e-mails between PWC and
the CO and because these same operative facts were
presented to the CO as bullet points in its REA attached to
and made a part of the certified claim, we conclude that the
first amended complaint did not advance new claims not
previously presented to the CO.

11-2 BCA ~ 34,788 at 171,230. The government filed its amended answer to PWC's
first amended complaint on 6 September 2011. It did not renew it motion for summary
judgment.

Representative Truck Trips Presented at the Hearing

122. By letter dated 26 January 2012, PWC counsel sent DSCP counsel a
53-page revised spreadsheet of over 29-day truck trips subject to the Mod. 27 appeal.
The letter said the spreadsheet provided previously missing information, corrected
incorrect information, removed truck trips no longer being pursued, and added truck
trips for which supporting documentation had now been found. The revised
spreadsheet included 1,750 truck trips totaling $13,367,540 in claims. (Gov't supp.
R4, tab 165 at 55) For purposes of the hearing, the parties agreed on 50 truck trips as
representative of the 1, 750 over 29-day truck trips claimed. 15 Summarizing its
trip-by-trip presentation at the hearing, PWC's post-hearing brief contends that, of the
50 samples, it is entitled to 641 of the 645, or over 99.38%, of the over 29-day truck
days claimed (app. br., ex. A).

DECISION

Relying upon the language in paragraph 4 of Mod. 1 - "Trucks will return to
PWC upon completion of unloading, and trucks will not be used at the sites for storage
purposes" - PWC contends this "dual obligation" was not "eliminated or modified by
any subsequent contract modifications" (app. br. at 31-32). PWC contends that "[t]he
Government breached the express terms of the Contract by failing to 'return [trucks] to
PWC upon completion of unloading' and by using the trucks 'at the sites for storage
purposes"' (id. at 30).

15
Pursuant to the Board's 14 January 2014 letter, PWC's letter of 18 February 2014
advised the parties had stipulated that "the 50 truck trips in the sample set to be
litigated are representative of the 1, 750 truck trips in the Claim giving rise to
this Appeal."

34
PWC contends next that "[t]he Government's use of PW C's trucks as storage
and instructions to re-direct deliveries to alternate locations caused PWC's trucks to be
delayed in returning to its facility in Kuwait, sometimes over 29 days." It contends
these actions were constructive changes to the contract for which it is entitled to
compensation. (App. br. at 40)

PWC also contends that the government breached its implied duty to cooperate
in failing to "address its severe lack of refrigerated storage capacity in Iraq." PWC
said that before agreeing to the 29-day limitation, it expressed "real reservations about
the cap being unqualified," and it "reasonably expected that, in agreeing to Mod. 27, it
did not assume the risk that it would be required to provide temporary storage units -
its trucks - to the Government without compensation," when CO Ford agreed to
consider "exceptions to the 29 day rule." (App. br. at 41-42)

We need not decide whether the government constructively changed contract
performance or whether it breached its implied duty of cooperation. At its core,
whether the government breached the contract comes down to contract interpretation.

Paragraph 4 o(Mod. 1 was Modified by Paragraphs 2 and 3 o(Mod. 27

PWC contends that the government's "absolute maximum" interpretation of
Mod. 27's 29-day cap with no exceptions would "render inoperative and meaningless
Mod 1's express prohibition on the Government's use of PWC's trucks for storage,"
and would similarly "render meaningless the requirement in Mod 1 that the
Government shall 'return [PWC's trucks] to PWC upon completion of unloading"'
(app. br. at 46-47). PWC asks us to reject the government's post-dispute contention
that the parties understood Mod. 1 "deleted" or "voided" the storage prohibition of
Mod. 27 (app. br. at 53). PWC contends that, "[b]y its terms, Mod 27 did not revoke
any of the terms in Mod 1" but states instead that "[a]ll terms and conditions of the
documents referenced in [the Contract] as heretofore changed remain unchanged in
full force and effect" (app. br. at 53-54).

DSCP counters that Mod. 1, ~ 4, "did not create a contractual obligation that the
government would not use trucks for storage." It argues that "[t]o the extent Mod 1
did contain such a requirement, it was constructively changed prior to the signing of
bilateral Mod 27, and hence has no applicability to truck trips under ... Mod 27 or this
appeal because it no longer existed when Mod 27 was signed." (Gov't br. at 122)
DSCP's constructive change argument is said to be based upon CO Ford's knowledge,
approval, and ratification that "PWC's trucks were routinely used for storage" as soon
as PWC began delivering food into Iraq in early 2004 and well before Mod. 27 was
issued. According to DSCP, ~ 4 of Mod. 1 "was a nullity long before Mod 27 was
issued," because it was constructively changed "during the performance of Mod 2" (id.
at 121).

35
It is undisputed that~ 4 of Mod. 1 states that "[t]rucks will return to PWC upon
completion of unloading, and trucks will not be used at the sites for storage purposes"
(finding 8). These commitments, however, were modified by Mod. 27 which
GM Switzer signed. Paragraph 3 in conjunction with ~ 2 of Mod. 27 specifically
allowed the use of PWC trucks for storage: Paragraph 2.e. of Mod. 27 allowed the
payment of transportation fees beyond the minimums established in~ 2.a. (to Iraq
"South"),~ 2.b. (to Iraq "Central") and~ 2.c. (to Iraq "North") up to a maximum of
29 days. Paragraph 3 of Mod. 27 provides that "[t]he 'additional days beyond the
established minimum' fees are only applicable if the delay is customer caused."
"Customer caused" delay is defined as "Hub, DF AC or MKT not having the capability
to off load and return the truck." (Finding 58) As the facts of this case made clear, the
lack of capacity to off load and return trucks were quintessentially storage-related
issues, we conclude that~ 2 and~ 3 of Mod. 27, when read together, modified~ 4 of
Mod. l's requirements to return trucks upon completing of unloading and not to use
them at the sites for storage.

Additionally, PWC's interpretation would ignore the provision in Mod. 27
which states "Except as provided herein, all terms and conditions of the document
referenced in [the Contract] as heretofore changed, remains unchanged and in full
force and effect" (finding 57) (emphasis added). Paragraphs 2 and 3 of Mod. 27 are
the exceptions "provided herein." Paragraph 3 allows the payment of transportation
fees beyond the established minimums up to 29 days; it allows such payment only if
the delays are customer caused. "Customer caused" delay is defined as "Hub, DFAC
or MKT not having the capability to off load and return the truck." Inability to off
load and to return trucks were storage-related issues. (Finding 58)

When interpreting a contract, the contract must be considered as a whole and
interpreted so as to harmonize and give reasonable meaning to all of its parts. NVT
Technologies, Inc. v. United States,

370 F.3d 1153

, 1159 (Fed. Cir. 2004). Moreover,
an interpretation that gives meaning to all parts of the contract is to be preferred over
one that leaves a portion of the contract useless, inexplicable, void, or superfluous.
Gould, Inc. v. United States,

935 F.2d 1271

, 1274 (Fed. Cir. 1991). We cannot
harmonize~ 4 of Mod. 1 with~~ 2 and 3 of Mod. 27, if, as PWC contends,~ 4 of
Mod. 1 remained unmodified requiring all trucks, without exception, to be returned
upon unloading and not used for storage. That would leave~~ 2 and 3 of Mod. 27 in
the same contract useless and inexplicable. On the other hand,~ 4 of Mod. 1 can be
harmonized with~~ 2 and 3 of Mod. 27 allowing trucks to be kept and used for storage
with payment of $645.00 (per reefer) and $475 (per dry truck) per day for "[a]dditional
days beyond the established minimum fees" specified in~~ 2.a., 2.b., and 2.c. up to a
maximum of29 days as prescribed in~ 2.e., if~ 4 of Mod 1 is interpreted to have been
modified by~~ 2 and 3 of Mod 27. (Finding 58)



                                           36
       GM Switzer Agreed to the 29-Dav Cap As an Absolute Maximum Allowable
for Transportation Fees When He Signed Mod. 27

        Learning from the open-ended payment structure under Mod. 2, CO Ford
proposed "a cap on the number of allowable [days for] fees" when she renegotiated the
transport fee structure with GM Switzer in September 2004 (finding 49). GM Switzer
initially did not have a problem with the concept of a cap and was ready to sign a new
modification (findings 50, 53). In his 14 September 2004 email to CO Ford, however,
GM Switzer expressed "real reservations about the maximum cap being unqualified"
and indicated that PWC would "prefer to have the ability to submit exceptions to the
29 day rule if the situation is unavoidable despite our best efforts to prevent it"
(finding 54).

       CO Ford and GM Switzer had a discussion the following day, 15 September
2004. As a result of that discussion, CO Ford forwarded a "revised mod" that·
established 16 September 2004 as the start date for the new transportation fees. The
revised mod did not remove the 29-day cap. CO Ford's email transmitting the revised
mod said "exceptions to the 29 day rule will only be considered in the form of a
claim." The email told GM Switzer to "Please sign and return the attached mod or
advise if additional changes are required." (Finding 56) (Emphasis added)

        Given the opportunity to make additional changes, GM Switzer did not take
that opportunity. Instead, the Mod. 27 that he signed on 19 September 2004, four days
later, included the provision at ii 2.e. that stated "The maximum number of allowable
trip days is 29. The Government will not pay transportation fees beyond this
established maximum." (Findings 57, 58) (Emphasis added) We found that
GM Switzer understood before he signed Mod. 27 that the 29-day cap CO Ford
proposed was, in his word, "unqualified" (findings 54, 55). Because GM Switzer
understood the 29-day limitation was "unqualified," he necessarily understood that all
risks associated with delays caused by lack of adequate storage and redirection,
convoy and escort, weather and road closures, incurred by PWC beyond 29 days were
its risks and would not be compensated by the government. Moreover, if GM Switzer
was under the impression that by agreeing to consider exceptions to the 29-day cap,
CO Ford had abandoned her idea of establishing a cap altogether - the position that his
company, PWC, is now taking in advancing its claim - that impression simply did not
square with the prohibition plainly stated in ii 2.e. of Mod. 27. That GM Switzer did
not believe CO Ford would abandon the 29-day cap and chose to go along with the
29-day cap was, to us, the more likely scenario. By not insisting that any exceptions
he envisioned to be included as a part of Mod. 27, we conclude that GM Switzer
agreed to the terms of Mod. 27 as written when he signed it.

       It is well settled that a person's signature on a written instrument signifies
assent to the terms of that document. Alaska American Lumber Co. v. United States,


                                          37

25 Cl. Ct. 518

, 529 (1992). Long ago, the Supreme Court stated: "[i]t will not do for a
man to enter into a contract, and, when called upon to respond to its obligations, to say
that he did not read it when he signed it, or did not know what it contained." Upton v.
Tribilcock,

91 U.S. 45

, 50 (1885).

       GM Switzer Knew and There(ore PWC is Bound bv CO Ford's Interpretation
of the 29-Dav Rule

        It is also a rule of contract interpretation that "[i]f one party to a contract knows
the meaning that the other intended to convey by his words, then he is bound by that
meaning." Cresswell v. United States,

146 Ct. Cl. 119

, 127 (1959); Perry and Wallis,
Inc. v. United States,

427 F.2d 722

, 725 (Ct. Cl. 1970); United Technologies Corp.,
Pratt & Whitney Group, Government Engines and Space Propulsion, ASBCA
Nos. 46880, 46881, 97-1BCA,-\28,818 at 143,800 (Navy personnel assured contractor
that use of the word "intends" was purely for the purpose of overcoming an internal
legal objection and was not meant to diminish the Navy's guarantee that contractor
would be awarded 30% of the engine procurement over five years.).

In this case, even though CO Ford said in her 15 September 2004 email that
"exceptions to the 29 day rule will only be considered in the form of a claim"
(finding 56), GM Switzer knew that did not mean that the government would pay for
all over 29-day truck delays as PWC is now contending. We know this because after
reviewing PWC's weekly over-10 day report, GM Switzer emailed CO Ford on
24 October 2004, a month after Mod. 27 was signed, and commented "we do have the
makings of a problem with the new Transport Mod that limits our billing for only
29 days." He asked "What are we suppose to do with the 105 vehicles now over
29 days?" (Finding 73)

We found GM Switzer's acknowledgment that Mod. 27 limited PWC's billing
"for only 29 days," and that Mod. 27 "[had] the makings of a problem" reflected his
understanding at the time that Mod. 27 provided no relief for trucks that did not return
in 29 days. If GM Switzer had understood that CO Ford had agreed to provide relief
for any customer-caused delays beyond 29 days, he would not have asked "What are
we suppose to do with the 105 vehicles now over 29 days?" (Finding 74)

In December 2004, DSCP approached GM Switzer about extending
Contract 3061 (finding 79). Based on GM Switzer's 8 December 2004 response that
"this is no guarantee of being paid" under the 29-day rule, we found that he understood
CO Ford's willingness to consider granting a claim was a matter of discretion given
the right circumstances and not a matter of contract right (finding 80).

In response to CO Ford's 13 January 2005 email, GM Switzer's reply of the
same day said he had "no problem with extending the contract at the same terms" but

38
asked that "the 29 day transport limitation rule for Iraq be rescinded" (finding 82).
Despite CO Ford's refusal to rescind the 29-day rule, PWC agreed to extend Contract
3061from16 February through 15 December 2005 by way of a bridge contract
(Contract 3119 or PV Bridge contract) on the same contract terms. Thus, knowing
CO Ford's interpretation of Mod. 27 - that PWC assumed all risks of delay over
29 days - PWC nonetheless agreed to extend Contract 3061 for 10 more months.
(Finding 86) In terms of PWC's certified claim, the PV Bridge contract covered the
last two weeks of Submission II (Jan - Feb 2005), all of Submission III (Mar - Sept
2005) and all of Submission IV (Oct 2005 - Feb 2006) (finding 117).

Because GM Switzer knew how CO Ford was applying the 29-day rule before
he signed Mod. 27 and before he agreed to extend Contract 3061, we hold that PWC,
is bound by CO Ford's interpretation.

CO Ford's Pre-Dispute Interpretations were Consistent that PWC's Claims
did not Qualify as Exceptions to the 29-Day Rule

PWC argues that we "should give the parties' pre-dispute interpretation of the
Contract great weight" (app. br. at 47). PWC asks us not to "ignore the overwhelming
course-of-performance evidence, and accept the CO's uncorroborated, self-serving
testimony that the 29-day cap was an 'absolute maximum' with no exceptions" (app.
br. at 53).

In support, PWC said that COR Burkett testified that during performance of
Mod. 27 "he understood that DSCP interpreted the 29-day cap to permit exceptions."
His understanding was said to have been derived from conversations with CO Ford.
(App. br. at 49)

According to PWC, when it submitted its first claim based on exceptions to the
29-day rule, on 24 February 2005, neither CO Ford nor anyone at DSCP reacted with
surprise or took the "hard-line stance" that Mod. 27 "imposed an 'absolute cap"' (app.
br. at 50); instead, CO Ford asked DSCP contract specialist to review and analyze
whether storage caused the excess trip days (app. br. at 51). PWC says when it
submitted its second claim based on exceptions to the 29-day rule, on 25 May 2005,
CO Ford did not flatly reject the claim but agreed to continue discussion (app. br.
at 51 ). PWC tells us that, in September 2005, over a year after Mod. 27 was executed,
CO Ford in an internal email stated "[m]y intent was to deny both claims based on lack
of supporting cost data." PWC contends that CO Ford did not base her intent to deny
PWC's claims "on the 29-day cap." (App. br. at 51) PWC tells us when it filed its
third claim based on exception to the 29-day rule on 26 October 2005, CO Ford
advised "it is [DSCP's] intent to deny the 'over 29-day' claim for inadequate support
documentation" and "did not rely on any 'absolute maximum'" (app. br. at 52).

39
It has long been recognized that in contract interpretation disputes, "the greatest
help comes, not from the bare text of the original contract, but from external
indications of the parties' joint understanding, contemporaneously and later, of what
the contract imported." Another way of putting this legal concept is "how the parties
act under the arrangement, before the advent of controversy, is often more revealing
than the dry language of the written agreement by itself." Macke Company v. United
States,

467 F.2d 1323

, 1325 (Ct. Cl. 1972); Alvin, Ltd. v. United States Postal Service,

816 F.2d 1562

, 1566 (Fed. Cir. 1987) ("One may not ignore the interpretation and
performance of a contract, whether termed 'mistake' or not, before a dispute arises.");
WDC West Carthage Associates v. United States,

324 F.3d 1359

, 1363 (Fed. Cir.
2003); Chase & Rice, Inc. v. United States,

354 F.2d 318

, 321 (Ct. Cl. 1965) (stating
that interpretation of contract by the parties before contract becomes the subject of
controversy is deemed to be of great, if not controlling weight).

        Like many who were not directly involved with the negotiations of Mod. 27,
COR Burkett was initially confused about the submission of PWC's 24 February 2005
(first) over 29-day claim (finding 89). It did not take long for CO Ford to explain to
COR Burkett that PWC had "no written contractual right to payment" and PWC's
claim was "different from invoices" it submitted for truck trips within the 29-day cap
(findings 90, 92). The fact that CO Ford told COR Burkett that she "will be requesting
more cost verification data" on PWC's 24 February 2005 claim (finding 90) indicates
that she did not agree to allow payment of over 29-day truck trips simply because they
were beyond PWC's control. There is no evidence that CO Burkett approved any
over-29 day truck trips (finding 92).

       When GM Switzer asked CO Ford in January 2005 to rescind the 29-day rule in
connection with extending Contract 3061 (finding 82), CO Ford replied she could not
"simply rescind mod 27 without doing some additional analysis" because the average
turnaround time considered in imposing the 29-day cap had "not significantly
changed." She urged GM Switzer to submit an alternate proposal "based on actual
cost and historical truck tum around time frames." (Finding 83) CO Ford's refusal to
rescind the 29-day rule without additional analysis and her request for an alternate
proposal "based on actual cost" do not support a conclusion that she agreed with
PWC's interpretation that all over 29-day truck trips qualified as "exceptions" to the
29-day rule.

       The evidence shows when GM Switzer submitted PWC's alternate proposal on
14 March 2005 (finding 95), CO Ford rejected the proposal because her data showed
"the average trip times were going down" (finding 96). Average truck trip data would
have been irrelevant to CO Ford if she had interpreted her agreement with GM Switzer
to allow payment of over 29-day truck trips as exceptions to the 29-day rule.




                                            40
       When Paice took over responsibility for PWC's over 29-day claims, he emailed
CO Ford on 7 August 2005 and asked what he needed to submit for over 29-day
claims that differed from normal billing (finding 98). CO Ford's 16 August 2005
email asked Paice to send "mountains of paperwork" to show that the delays claimed
were "in fact customer caused." More importantly, CO Ford asked for "actual
demurrage cost data," and "actual cost data" in support of the $2.9 million claimed in
addition to the $8.7 million paid. (Finding 99)

        Had CO Ford agreed to pay $645.00 per reefer and $475.00 per dry truck as
exceptions to the 29-day cap for each day these trucks were out over 29 days beyond
PWC's control, she would not have asked PWC for "actual demurrage cost data,"
"actual cost data" and whether PWC's "cost actually exceeded" the $8.7 million paid.
We found the fact that CO Ford repeatedly asked for cost data reflected her
understanding or interpretation that to qualify as exceptions to the 29-day rule, PWC
must demonstrate by cost data that ( 1) the generous 29-day cap for all trucks was
unfair, unreasonable, or inequitable and (2) it had reached a point where its ability to
continue performance under Contract 3061 was threatened. We found CO Ford was
consistent in her position on the circumstances under which exceptions to the 29-day
rule would be considered. (Finding 100)

       Contrary to PWC's contentions, we conclude CO Ford consistently took the
position during the course of performance that PWC's over 29-day claims did not
qualify as "exceptions" to the 29-day rule.

                                    CONCLUSION

       Because PWC agreed to the terms of Mod. 27 providing that the government
would not pay transportation fees beyond 29 trip days, because PWC has failed to
prove that the government interpreted Mod. 27 inconsistently, and because PWC failed
to prove that its claims qualified as exceptions to the 29-day cap, we deny the appeal.

      Dated: 5 August 2015
                                          '
                                                   PETER D. TING
                                                   Administrative Judge
                                                   Armed Services Board
                                                   of Contract Appeals

(Signatures continued)




                                              41
I concur                                          I concur


~~-wf;f---
MARKN.~ER J <'if ,~
                                                      AK--
                                                 RICHARD SHACKLEFORD
Administrative Judge                             Administrative Judge
Acting Chairman                                  Vice Chairman
Armed Services Board                             Armed Services Board
of Contract Appeals                              of Contract Appeals


       I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 56022, Appeal of The
Public Warehousing Company, rendered in conformance with the Board's Charter.

       Dated:



                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals




                                           42

Source: CourtListener

The Public Warehousing Company, ASBCA No. 56022 (2015)

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