Zafer Taahhut Insaat Ve Ticaret, A.S. v. United States
120 Fed. Cl. 604
Fed. Cl.2015Background
- Zafer, a Turkish construction firm, contracted with the U.S. Army Corps of Engineers (firm fixed-price) to build a facility at Bagram; contract included FOB: Destination and standard FAR clauses allocating transport risk to the contractor.
- Pakistan closed its Karachi-Afghanistan land border after a U.S./NATO incident; closure lasted 219 days (only 12 days of closure after site was made available by the Government).
- Zafer incurred increased transportation, storage, demurrage, and port-costs and sought an equitable adjustment of $769,748.81 and time extension; the contracting officer granted extra time but denied money, concluding Zafer bore shipping risk and made a business decision to ship via Karachi.
- Zafer sued in the Court of Federal Claims after its final decision was issued; the Government moved to dismiss or for summary judgment; Zafer moved to supplement the record with news clippings and to consolidate with another Zafer case.
- The court treated the matter as a summary judgment action, held the BOA/risk allocation (FOB Destination and FAR clauses) placed transport/cost risk on Zafer, found no government-caused compensable delay or constructive change, denied duty-to-cooperate and evidentiary arguments, granted summary judgment for the Government, and denied Zafer’s motions to supplement and consolidate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach / compensation for increased transport/storage costs | Zafer: border closure increased costs; Government should pay equitable adjustment | Government: contract (FOB Destination, FAR) allocates transport/storage/demurrage risk to contractor | Court: Zafer bears the risk; no breach; no equitable adjustment granted |
| Constructive change / constructive acceleration | Zafer: Government constructively changed contract by requiring performance despite excusable delay and by negotiating with Pakistan | Government: it did not order a different shipping method or improperly deny time; Pakistan closed border (not U.S.); time extension was granted | Court: no constructive change; Zafer failed to prove elements (e.g., government-ordered acceleration) |
| Breach of duty to cooperate | Zafer: Government failed to independently and fairly consider its equitable adjustment claim and interfered with shipping through negotiations | Government: acted reasonably, provided time extension, did not guarantee Karachi route nor cause Pakistani actions | Court: no breach of duty to cooperate; presumption of government good faith stands |
| Motions to supplement record and consolidate cases | Zafer: news articles show Karachi route was contemplated; consolidation promotes efficiency | Government: articles are hearsay/parol evidence; other case differs in contract/issues | Court: denied supplementation (hearsay/parol rule) and denied consolidation (cases not similar enough; discovery stages differ) |
Key Cases Cited
- Engage Learning, Inc. v. Salazar, 660 F.3d 1346 (Fed. Cir. 2011) (summary-judgment treatment when parties rely on materials outside complaint)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for genuine dispute of material fact on summary judgment)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant may show absence of evidence to carry summary judgment burden)
- Fraser Constr. Co. v. United States, 384 F.3d 1354 (Fed. Cir. 2004) (elements for constructive acceleration claim)
- Agility Def. & Gov’t Servs., Inc. v. United States, 115 Fed. Cl. 247 (Fed. Cl. 2014) (firm fixed-price contract risk allocation principle)
- Edge Constr. Co. v. United States, 95 Fed. Cl. 407 (Fed. Cl. 2010) (contractor not entitled to compensation for excusable delays not caused by the government)