Walsh Construction Co. v. United States, 132 Fed. Cl. 282

Background

The Army Corps awarded a construction contract (Aug. 17, 2012) requiring 272 drilled piers; Walsh subcontracted the drilling work to Ammero, which subcontracted to Goettle.
Goettle drilled shafts to CO-specified tip elevations; the Army Corps repeatedly recalculated/revised tip elevations and conducted multiple re-inspections, forcing 471 additional equipment moves and extra costs; to meet schedule Goettle increased equipment and labor.
During drilling five shafts (the “Five Problem Shafts”) encountered rock/voids/fractures causing collapses and extra remediation costs.
On Nov. 30, 2015 Walsh (for Goettle) submitted an REA seeking an equitable adjustment (~$8.76M), asserting (1) a differing site condition for the Five Problem Shafts and (2) reimbursement for disruption/delay caused by the Army Corps’ downhole inspections (presented as a differing site condition).
The CO issued a final decision (Apr. 18, 2016) denying the REA: found the Five Problem Shafts not materially different from contract, and held the inspection program was contract-required (not a differing site condition).
Plaintiffs sued in the Court of Federal Claims (July 2016; amended Feb. 13, 2017) asserting: Count One — additional costs from delay caused by downhole inspections; Count Two — breach of implied duty of good faith and fair dealing; Count Three — differing site condition for the Five Problem Shafts. The government moved to dismiss Counts One and Two for lack of jurisdiction or to merge counts.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Count One (additional costs from inspections/delay) was presented to the CO so CO decision prerequisite satisfied	The REA put the CO on notice of operative facts (multiple inspections caused equipment moves/delay and costs); CO addressed and denied inspection-related claims, so Count One arises from same operative facts	REA presented only differing site condition theory; plaintiffs are improperly recasting it as a delay/extra-costs claim and thus did not present this distinct theory to the CO	Court: Jurisdiction exists for Count One — it arises from same operative facts presented to the CO; not merged with Count Three
Whether Count Two (breach of implied duty of good faith/fair dealing) was presented to the CO	Plaintiffs say REA’s allegations of multiple inspections and resulting costs put the CO on notice of a breach-of-duty claim	Government says REA only sought equitable adjustment under differing site condition clause and did not give CO notice of a good-faith breach theory	Court: No jurisdiction over Count Two — REA did not provide clear notice of a breach-of-duty claim; Count Two dismissed for lack of jurisdiction but case stayed 3 months to permit submission to CO
Whether Count Three (differing site condition for Five Problem Shafts) was properly presented to CO	Plaintiffs: REA raised differing site condition for the Five Problem Shafts and sought adjustment	Government does not contest CO presentation; CO denied on merits	Court: Jurisdiction exists for Count Three — it was presented and denied by the CO
Whether Counts One and Three should be merged as same claim	Plaintiffs assert they are distinct (different facts and relief)	Government contends both were framed as differing site conditions and should be merged	Court: Declined to merge; Counts rest on different operative facts and seek different relief

Key Cases Cited

Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586 (Fed. Cir. 1987) (administrative CDA claim must give CO clear notice of basis and amount)
Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir. 2003) (CDA claim to CO need not use exact legal label; court may hear claims arising from same operative facts)
Reliance Ins. Co. v. United States, 931 F.2d 863 (Fed. Cir. 1991) (no jurisdiction where only equitable-adjustment claims submitted and breach-of-duty theory not presented to CO)
Randa/Madison Joint Venture III v. Dahlberg, 239 F.3d 1264 (Fed. Cir. 2001) (elements for differing site condition entitlement)
Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (standard for breach of implied duty of good faith and fair dealing)
Metcalf Const. Co. v. United States, 742 F.3d 984 (Fed. Cir. 2014) (duty of good faith and fair dealing implied in government contracts)
Bell/Heery v. United States, 739 F.3d 1324 (Fed. Cir. 2014) (breach occurs when government acts to reappropriate contractual benefits)