SUSAN G. BRADEN, Judge.
On December 9, 2011, the court issued a Memorandum Opinion and Order determining that Metcalf Construction Company, Inc. ("Metcalf') failed to establish liability for all claims alleged in the November 10, 2009 Amended Complaint, but identified two events that constituted a breach of contract. See Metcalf Const. Co. v. United States, 102 Fed. Cl. 334, 348-55, 369-70 (2011). First, the Department of the Navy ("Navy") failed to provide Metcalf with consideration for the January 29, 2003 Modification P00001. Id. at 369-70. To compensate Metcalf, the court ruled that Metcalf was entitled to a 73-day extension. Id. at 370.
Thereafter, the court convened a conference in chambers with counsel of record, the client representative, and other entities with a financial interest in the case, in an attempt to reach a resolution regarding damages, without further adjudication. Since that effort was unsuccessful, the parties filed post-trial briefs on damages.
The adjusted price of the October 22, 2002 Contract between Metcalf and the Navy, including all modifications, was $49,947,872. See Metcalf, 102 Fed. Cl. at 338 (citing JX E32 at DEF0542523). To date, the Navy has paid Metcalf $49,050,899. 2/3/12 Pl. PT D Br. at 6 (citing Metcalf, 102 Fed. Cl. at 339); see also Jan. 4, 2010 Stip. ¶ 14. In light of the court's redetermination that Metcalf is due a 260-day extension (see supra note 4), the 136-day delay that is the basis for the Government's withholding is more than offset, and the $896,973 amount should be refunded to Metcalf. 2/3/12 Pl. PT D Br. at 3, 6-7.
The Government responds that Metcalf is not entitled to receive the $896,973 amount withheld and also owes an additional $2,673,507 for the Navy's counterclaim based on Metcalfs failure to complete the required work within the time specified by the October 22, 2002 Contract, as amended. 3/23/12 Gov't PT D Br. at 36. The court's finding that Metcalf is entitled to be "credited for an extension," does not mean that the October 22, 2002 Contract's completion date must be extended. 3/23/12 Gov't PT D Br. at 36. Specifically, as to the extension that the court determined was due Metcalf, because of the Navy's failure to provide consideration for Modification P00001, that extension was accounted for in other contract modifications extending the initial final completion date over a year, i.e., from June 27, 2005 to October 17, 2006. 3/23/12 Gov't PT D Br. at 36-37. As to the Navy's delay in investigating Metcalfs June 24, 2003 notice of a differing site condition, Metcalfs schedule shows that, as late as July 1, 2006, Metcalf projected a completion date of October 6, 2006. 3/23/12 Gov't PT D Br. at 27 (citing DX 2934A at 51-52). Since the court determined that post-January 2006 delays were not caused by the Navy, Metcalf is not entitled to the contract balance and remains liable for $2,673,507 in liquidated damages for its failure to complete the October 22, 2002 Contract on October 17, 2006. 3/23/12 Gov't PT D Br. at 37 (citing Metcalf, 102 Fed. Cl. at 370).
Metcalf replies that the Government seeks an unwarranted reconsideration of the court's determination that Metcalf is entitled to an extension that "subsumes" the 136-day delay on which the Government's November 30, 2009 Counterclaim for Liquidated Damages is based.
The court's December 9, 2011 Memorandum Opinion and Order did not adjudicate the Government's November 30, 2009 Counterclaim for Liquidated Damages. The court does so here.
Paragraph 1 D.2 of the October 22, 2002 Contract provides:
JX A1 at DEF0498371.
The trial record establishes that the parties mutually agreed that October 17, 2006 was the final adjusted completion date. JX E26 at DEF0064694. The record also establishes that Metcalf did not actually complete performance until March 2, 2007. PX 455. Therefore, the Navy is entitled to liquidated damages of $290 per unit for each day of delay, or $3,570,480. PX 455.
Accordingly, the court has determined that Metcalf is not entitled to the $896,973 withheld by the Navy, but that amount must be deducted from the $3,570,480 liquidated damages due. Therefore, Metcalf owes the Navy $2,673,507, in addition to interest, as provided in FAR 32.608-1,
The court determined that "on August 5, 2004, the date the Navy finally denied Metcalfs notice of a differing site condition, Metcalf was approximately 200 days behind schedule." Metcalf, 102 Fed. Cl. at 370, n.42 (citing PTX 779 at 17 (Stynchcomb)). Therefore, because of Metcalfs subsequent efforts to "catch up," Metcalf argues that it should be compensated for "additional direct costs incurred as a result of the Navy's failure to investigate in a timely manner, including both its net additional costs associated with the post-tension/slab[,] as well as other direct costs flowing from the breach." 2/3/12 Pl. PT D Br. at 10. In addition, the court determined that the Navy's "delay and Metcalfs effort to catch up resulted in Metcalf addressing the expansive soils situation by using a post-tension slab design that imposed significant costs on Metcalf, but were of greater benefit to the Navy than the plain concrete slabs typically used[.]" Metcalf, 102 Fed. Cl. at 370 n.42. Therefore, Metcalf is entitled to $2,936,180 in "direct costs,"
Although the court found the Navy's delay in addressing Metcalfs notice of a potential differing site condition imposed significant costs on Metcalf and that Metcalfs use of posttension slabs conferred a benefit to the Navy beyond what the October 22, 2002 Contract required, the court determined that Metcalf did not establish a differing site condition claim. 3/23/12 Gov't PT D Br. at 22-24 (citingMetcalf, 102 Fed. Cl. at 355, 371). As such, Metcalf is not entitled to additional direct costs voluntarily incurred by Metcalf, as opposed to those imposed by the Navy via changed specifications. 3/23/12 Gov't PT D Br. at 24 (citing J.D. Hedin Const. Co. v. United States, 347 F.2d 235, 245 (Ct. Cl. 1965). The Government further responds that Metcalf's reliance on United States v. Amdahl Corp., 786 F.2d 387 (Fed. Cir. 1986) is misplaced, because the United States Court of Appeals for the Federal Circuit subsequently stated that "Amdahl speaks to the situation in which the government receives the goods or services for which it contracted, but then seeks to avoid payment[.]" United Pacific Ins. Co. v. United States, 464 F.3d 1325, 1334 (Fed. Cir. 2006). In this case, however, the Navy contracted and paid for 212 housing units. The fact that Metcalf, after its own post-award soils test, elected to use a post-tension slab that cost more than the plain concrete slab itemized in Metcalfs July 26, 2002 bid price was not attributed to any Navy action. 3/23/12 Gov't PT D Br. at 26. Metcalf assumed this additional cost and therefore is not entitled to receive damages for this decision. 3/23/12 Gov't PT D Br. at 26. Unlike in Amdahl, the October 22, 2002 Contract in this case never was rendered invalid, and therefore there is no need to resort to equitable remedies. 3/23/12 Gov't PT D Br. at 26-27. Moreover, because the court determined that Metcalf failed to establish a differing site condition, Metcalf is not entitled to recover direct costs as damages nor equitable relief. 3/23/12 Gov't PT D Br. at 26-28.
Metcalf replies that it switched designs to make up for delays in the schedule caused by the Navy's failure promptly to investigate the notice of differing site condition — and that design change came at a significant cost to Metcalf, as recognized by the court. 3/30/12 Pl. PT D Reply at 4. At trial, Metcalf introduced evidence establishing that the net additional cost for the post-tension slab work was $2,936,180. 3/30/12 Pl. PT D Reply at 5 (citing JX L1 at DEF0325933 & n. 23; JX L4 at PX967840). As for the Government's challenge that Metcalf did not establish all the elements of a modified total cost claim, Metcalf counters it did so with its own damages expert. 3/30/12 Pl. PT D Reply at 7 (citing PX 778 (Krafft)).
Metcalf is not correct in asserting that its election to utilize post-tension slabs was required to address the delay caused by the Navy's failure promptly to investigate. That election was caused by Metcalfs failure to conduct an independent soil analysis and include the cost of post-tension slabs in its bid on the project. For this reason, the court finds that the Navy's violation of FAR 52.236-2(b) did not render the Navy responsible for all the costs—both direct and "escalation"—that Metcalf incurred unilaterally in deciding to use post-tension slabs to address the expansive soil condition.
Accordingly, Metcalf is not entitled to direct and "escalation" costs incurred in addressing the expansive soil condition.
As previously discussed, Metcalf corrected the court to clarify that Metcalf is entitled to a 260-day extension for the Navy's violation of FAR 52.236-2(b). 2/3/12 Pl. PT D Br. at 4, 9. Metcalf's "ground conditions" project rate was $4,018 per day. JX L3 at PX967792. Therefore, Metcalf argues that this rate should be multiplied by 260 days and a mark-up of 1.96% for overhead and 10% for profit should be added to yield delay damages of $1,171,671. 2/3/12 Pl. PT D Br. at 10 & Ex. 1.
The Government's response begins with a general exposition and then discusses three additional specific reasons why Metcalf is not entitled to delay damages. As to the general objections, the Government notes that the court did not award Metcalf delay damages, because Metcalf "abandoned its delay and impact claim" and the "only evidence presented at trial was for a modified total cost theory of damages." 3/23/12 Gov't PT D Br. at 5-6, 9. Therefore, the court's recognition that an extension was due does not necessarily entitle Metcalf to damages for compensable delay, as a matter of law. 3/23/12 Gov't PT D Br. at 11 (citing FAR 52.211-13).
In addition, Metcalf is also not entitled to delay damages, because: 1) Metcalfs January 30, 2004 schedule established, as of that date, no delay had occurred from any Navy action; 2) many of the days during the time period for which the court ruled Metcalf was entitled to a 306day extension were addressed by time extension contract modifications; and 3) there were "concurrent delays." 3/23/12 Gov't PT D Br. at 13. As a result, there was "no causal link between the [Navy's failure to investigate Metcalfs notice of a differing site condition] and the ultimate delay on the project." 3/23/12 Gov't PT D Br. at 13. In addition, while Metcalf failed to conduct a CPM analysis, the Government's damage expert confirmed that Metcalf is not entitled to any compensable delay, other than what it previously received. 3/23/12 Gov't PT D Br. at 13-14. The Government's detailed argument of these defenses follows.
The Government argues that the evidence establishes that, as of January 30, 2004, Metcalf anticipated an on-time project completion of April 13, 2005. 3/23/12 Gov't PT D Br. at 14 (citing DX 2934A at 45 (Weathers)). Nevertheless, the Navy granted Metcalf an extension of 92 additional days. DX 2934A at 47 (Weathers).
The chart below lists four bilateral modifications that the Navy granted Metcalf to address "issues and delays":
3/23/12 Gov't D Br. at 15-16. Consequently, as of May 28, 2004, Metcalf was "on or ahead of schedule." DX 2934A at 47.
Therefore, the Government takes issue with Metcalfs argument that it is entitled to compensable delay of 260 days for the Navy's violation of FAR 52.236-2(b), since Metcalf failed to satisfy its burden to establish that specific delay was the cause of Metcalf's failure to complete the project on October 17, 2006. 3/23/12 Gov't PT D Br. at 14-15. Moreover, any additional recovery by Metcalf for any "issues and delays" during this period would result in a "windfall," particularly since each of the aforementioned modifications included the following release:
3/23/12 Gov't PT D Br. at 16 (citing JX EX6; JX EX10; JX EX14; JX EX15).
As such, Metcalfs claim for delay compensation during the period July 19, 2003 through August 3, 2004, as a matter of law, is barred by accord and satisfaction. 3/23/12 Gov't PT D Br. at 16.
Next, the Government cites the testimony of its damages expert, to support the contention that any delay by the Navy during the period November 19, 2003-August 5, 2004 was "concurrent with contractor-caused delay." 3/23/12 Gov't PT D Br. at 18 (citing DX 2934A at 6 (Weathers)). First, the actions and inactions of Mr. Florez, Metcalf's Project Manager, leading to his July 16, 2004 termination, were an independent cause of Metcalf's delay and additional costs. 3/23/12 Gov't PT D Br. at 19 (citing DX 159 at PX014599, DX 160 at PX129971-72, DX 2675). In addition, the performance problems of one of Metcalf's subcontractors, Division 2 Construction, Inc. ("D2C"), caused delays during this same period. 3/23/12 Gov't PT D Br. at 19. Since the court determined that the Government denied the differing site conditions on August 5, 2004, and Metcalf terminated D2C in November 2004 for delays caused by D2C beginning in June 2004 (DX 139; DX 156), the "significant delays caused by D2C [were] concurrent with [the Navy's] actions with respect to investigation of the expansive soil issue making non-compensable the time during which the [c]ourt found that the Government failed to investigate the differing site condition." 3/23/12 Gov't PT D Br. at 19.
Metcalf argues that it is entitled to delay damages, based on a "general conditions" rate of $4,018 per day, i.e., the rate reported in the September 2, 2009 Amendment to Metcalfs March 30, 2007 Global Certified Claim. 2/3/12 Pl. PT D Br. at 7-10. The Government responds that Metcalf abandoned the $4,018 rate when it amended its Global Certified Claim again on November 9, 2009. 3/23/12 Gov't PT D Br. at 20 (citing JX L4). In addition, Metcalf failed to proffer any witness, including Metcalfs damages expert, to support this rate. 3/23/12 Gov't PT D Br. at 20. In addition, the Government points out two other problems with Metcalfs damage calculation. First, Metcalfs general overhead rate should be no more than 1.83%, based on the Government's expert testimony that Metcalf improperly included overhead for the entire year 2002, although the effective date of the contract was January 29, 2003. 3/23/12 Gov't PT D Br. at 21 (citing DX 2934A at 67 (Weathers)). Second, Metcalf requests a 10% profit, but FAR 52.242-14
Metcalf concedes that it "did not present evidence of compensable delay under the delay and impact theory that it had originally set forth in Count II of its Complaint ... to demonstrate the severe inequities of Metcalf pursuing its claims under the Contract versus a breach of contract theory." 3/30/12 Pl. PT D Reply at 7. Metcalf explains that it made that decision, as its damages expert explained, "because of the pervasive nature of the damages [Metcalf] suffered, the only practical method to calculate breach of contract damages was by the modified total cost method." 3/30/12 Pl. PT D Reply at 8 (quoting PX 778 at 2 (Krafft)). The Government, however, cites no decision requiring that a plaintiff must present evidence of compensable delay in a breach of contract claim and, in any event, Metcalfs delay damages are "easily quantifiable from the record." 3/30/12 Pl. PT D Reply at 8. In addition, apart from the fact that FAR 52.11-13, which the Government cites, does not deal with compensable delay damages, Metcalfs schedule is not relevant to whether the Navy's delay caused Metcalf injury, and the court made no findings that the Navy was entitled to an offset for "concurrent delays." 3/30/12 Pl. PT D Reply at 9-10.
The Government cites bilateral modifications issued between November 19, 2003 and August 5, 2004, i.e., A0003 (JX E6), A0007 (JX E10), A00011 (JX E14), and A00012 (JX E15), to evidence that Metcalf received additional time and compensation during that period and, therefore, is not entitled to delay damages. The release contained in the aforementioned bilateral modifications states that acceptance of a modification was "accord and satisfaction
The Government cites two incidents of "concurrent delay." 3/23/12 Gov't PT D Br. at 19 (citing Exhibit 21 to Government's damage expert report (Weathers) (DX 156; DX 159 at PX014599; DX 160 at PX129971-72; and DX 2675)). The court carefully has reviewed each of the internal Metcalf documents relied on by the Government to establish that Mr. Florez was responsible for delay prior to his July 16, 2004 termination. Only two even use the word "delay." See DX 159 at PX014599 (concluding that Mr. Florez's actions or non-actions "delayed the project by at least 3 months"); DX 2675 at PX967111 (citing "delay in the project"). The court, however, deems these statements to be unreliable, as they were made to create a record to support the termination of Mr. Florez, were not made contemporaneous with the alleged delay attributed to Mr. Florez, and, in any event, do not establish the fact of any delay. The court also carefully reviewed other Metcalf documents relied on by the Government to show that Metcalf's subcontractor D2C was responsible for delay from June 2004 to November 2004. 3/23/12 Gov't PT D Br. at 19 (citing Exhibit 140 to Government's damage expert report (Weathers) (DX 140; DX 156)). DX 140 is a letter from Mr. Metcalf to D2C complaining about performance and stating "your work in general and concrete work specifically will seriously impact the critical path and delay the completion of the project." DX 140 at 01519039 (emphasis added). This document, however, does not state that any delay actually occurred. DX 156 is a November 12, 2004 termination notice that states D2C did not cure several notices of breach. This document does not reference any delay. Consequently, the Government failed to establish any "concurrent delay" by this evidence.
Instead, the facts of this case present one of sequential delay, first starting with the Navy's delay in issuing a proper modification and notice to proceed. See Metcalf, 102 Fed. Cl. at 369-70. Next, the Navy failed promptly to investigate Metcalfs June 24, 2003 notice of a differing site condition. Id. at 353-55. None of the subsequent bilateral modifications cited by the Government provided Metcalf with any compensation for these contract breaches. Then, Metcalf incurred substantial delays in remediating the chlordane situation, despite being afforded an extension. Unfortunately, the court cannot award Metcalf damages for the 260-day period from November 19, 2003 to August 5, 2004 during which the Government failed to investigate or act on Metcalf's notice of a differing site condition, because post-January 2006 delays, primarily occasioned by the chlordane remediation, were responsible for Metcalf not completing the project on time. See Essex Electro Eng'rs Inc. v. Danzig, 224 F.3d 1283, 1295 (Fed. Cir. 2000) ("A government act that delays part of the contract performance does not delay `the general progress of the work' when the `prosecution of the work as a whole' would have been delayed regardless of the government's act." (quoting Coath & Goss, Inc. v. United States, 101 Ct. Cl. 702, 714-15 (1944))).
As for the 99 days of work that Metcalf missed, because of the circumstances surrounding Modification P00001, that amount of actual damages can be fairly ascertained from the trial record.
1/25/10 TR at 1429.
Therefore, the court has determined that Metcalf is entitled to $272,191.59, plus interest.
For the reasons discussed herein, Plaintiff is liable to the Navy for liquidated damages in the amount of $2,673,507, plus interest, to be offset by $272,191.59, plus interest that the Navy owes Metcalf for actual damages.
48 C.F.R. § 52.236-2(b) (2002).
48 C.F.R. § 32.608-1.
48 C.F.R. § 52.211-13.
48 C.F.R. § 52.242-14(b).
