Tidewater Contractors, Inc. v. United States
131 Fed. Cl. 372
| Fed. Cl. | 2017Background
- Tidewater Contractors contracted with FHWA in 2009 to pave 7.91 miles of road; the contract incorporated FAR, FP-03 (with SCRs), and required statistical acceptance of superpave pavement density using contractor cores and specified lab tests (AASHTO T166, T209) and QL‑PAY for verification/pay factors.
- Tidewater’s field lab tested 33 cores (June–Aug 2011) and submitted results; FHWA observed discrepancies, questioned pycnometer calibration and rice (T209) sampling, and elected to verify by testing government split samples and ultimately tested all remaining split cores.
- FHWA’s QL‑PAY analysis using FHWA Gmm/T209 values showed an unacceptable quality level and FHWA recommended a 0.75 pay factor; FHWA retained $374,273.73 pending resolution.
- Tidewater submitted a certified claim and then litigated; parties later allowed third‑party retesting (Carlson) and exchanged expert reports disagreeing whether differences arose from testing methodology or core degradation/handling.
- Court ordered summary judgment briefing; central legal question became whether FHWA’s Field Materials Manual (the Manual) was binding/incorporated or instead only reflective of common trade practice, and whether FHWA’s verification/testing conduct breached the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FHWA Field Materials Manual is a binding agency directive or part of the contract | Manual is binding (Hamlet): FHWA intended it to govern verification procedures and its mandatory language controls | Manual is advisory guidance; expressly disclaims enforceable rights and wasn’t promulgated via APA rulemaking | Manual is not a binding agency directive; disclaimers and lack of formal promulgation show FHWA did not intend it to be binding |
| Whether the Manual was incorporated into the contract by course of dealing | Parties routinely followed the Manual; therefore its procedures are part of the contract | No adequate evidence of repeated mutual practice; plaintiff’s evidence is only unilateral and insufficient | No incorporation by course of dealing: plaintiff failed to prove a bilateral, repeated course of dealing |
| Whether Manual can be used as evidence of common trade practice to supply missing verification procedures | Even if not binding, Manual reflects FHWA best practices and trade usage and may fill contract gaps | FHWA admits Manual describes best practices but says contract controls; trade practice cannot override clear contract terms | The Manual (Chapter 1) reflects common trade practice and can supplement ambiguous contract terms, but cannot contradict the contract |
| Whether FHWA’s verification testing (testing all 33 cores, procedures, timing, handling, rejection of recores) breached the contract | FHWA failed to follow Manual procedures (random sampling, QL‑PAY steps, notification, opportunity to witness, limited testing); mishandled/ delayed samples causing degradation; rejecting recores was improper | Contract expressly allowed government to inspect/test all work before final acceptance; FHWA was permitted to test all cores; plaintiff bore responsibility for QC; no evidence FHWA mishandled cores or that timing prejudiced Tidewater | FHWA acted within contract rights. No genuine issue of material fact: testing all cores, timing, procedures, alleged damage, and refusal of recores were immaterial or lawful under the contract. Summary judgment for defendant granted |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine‑issue/motion standard at summary judgment)
- Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574 (drawing inferences for nonmovant)
- Hamlet v. United States, 63 F.3d 1097 (Fed. Cir. 1995) (test for when agency manuals have force of law)
- Jay Cashman, Inc. v. United States, 88 Fed. Cl. 297 (agency manual treated as nonbinding guidance absent incorporation/promulgation)
- Metric Constructors, Inc. v. NASA, 169 F.3d 747 (Fed. Cir. 1999) (contract interpreted as a whole; extrinsic aids when ambiguous)