Cross-Motions for Summary Judgment; Burdens; Request for Equitable Adjustment; Authority to Modify Contract; Mutual Mistake; Risk of Increased Costs; Implied Warranty of Adequate Specifications; Superior Knowledge; Equitable Estoppel; Implied Covenant of Good Faith and Fair Dealing.
OPINION AND ORDER
Introduction
Reference is made to the factual background and procedural history of this litigation which involves a claim for $245,525.00 arising from a contract awarded by the Department of the Army (Army) for the renovation of the Indoor Marksmanship Center (IMC) at the United States Military Academy at West Point (West Point) detailed in the court’s prior Opinion denying defendant’s initial Motion for Summary Judgment. P & K Contracting, Inc. v. United States, No. 09-399C,
Thereafter, plaintiff filed an Amended Complaint which restated its claim for breach of contract due to superior knowledge and added a claim of mutual mistake. (ECF No. 37.) Defendant filed an Amended Answer (ECF No. 38) and a second Motion for Summary Judgment (Def.’s Mot.). (ECF No. 44.) Plaintiff filed a Memorandum of
For the following reasons, defendant’s second Motion for Summary Judgment is granted and plaintiffs Cross-Motion is denied.
Background
As outlined in the court’s initial Opinion, the Army contracted for the renovation of the IMC building which had been damaged by fire. The target system for the pistol and rifle ranges in the IMC building would be acquired by the West Point Association of Graduates (AOG), a private alumni organization located at West Point, and then gifted to West Point. (Def.’s Mot., Conklin Dep. ¶ 2, A87, ECF No. 44-1; Pl.’s Mem., Saunders Dep. 18-19, 42-44, ECF No. 52-1.) West Point chose the engineering firm STV, Inc. to design the IMC renovation. (Def.’s Mot., Conklin Dec. ¶ 6, A88 ECF No. 44-1; Shah Dep. 40, A227, ECF No. 44-2.) The initial design work was apparently funded by AOG so they would have something to show potential donors. (Pl.’s Mem., Saunders Dep. 61-62, ECF No. 52-1; Parts I & II, Ex. 2, ECF Nos. 53-1, 54-1.) STVs design included drawings which specified the heating, ventilation, and air conditioning (HVAC) system to be installed for the ranges. (Pl.’s Mot., Saunders Dep. 64-65, ECF No. 52-1.) A shooting range HVAC system must provide enough air velocity to clear fumes, including gun powder and lead residue from the discharge of weapons, without causing air movement which could disturb the targets. (Id. at 67, 75, 76; Def.’s Mot., Shah Dep. 19-20, 33, 109, A222, A225, A244, ECF No. 44-2.)
In selecting the company to provide the target systems LTC Earl Duston Saunders, Ret., an AOG employee and Director of Annual Giving and then Chief of Alumni Support Operations, also a volunteer coach of the West Point Cadet Pistol Team
For the IMC building renovation, on July 11, 2000, the Army, acting through West Point, issued Solicitation No. DAAG 60-00-R-0005 seeking offers for a firm, fixed price contract. (Def.’s Mot., Conklin Dec. ¶ 2, A87, Ex. 1, A92-157, ECF No. 44.) The Solicitation provided that “[t]he offeror agrees to perform the work required at the prices specified below in strict accordance with the terms of this solicitation.” (Id. at A93.) The STV design drawings for HVAC were included in the Solicitation which also provided that, “THE CONTRACTOR SHALL SUBCONTRACT THE HVAC SYSTEM WITH RANGETECH OR CASWELL AND SHALL SUBMIT PROOF OF THIS RELATIONSHIP WITH ITS OFFER.” (Id. at A142.) Also, the “HVAC system shall be installed by an approved HVAC Subcontractor. Approved HVAC Subcontractors are: Rangeteeh, xlL and Caswell International (Detroit Armor) MN.” (Id. at A115.)
LTC Saunders showed Rangeteeh and Caswell the STV drawings during his discussions with them concerning the target systems AOG would acquire. (Pl.’s Mem., Saunders Dep. 64, ECF No. 52-1.) Both firms told LTC Saunders that the STV HVAC design was inadequate. (Id. at 64, 73, 93.)
Tracy:
Can’t give you a detailed reply at the moment but your request for additional info was discussed at a meeting we had yesterday. Someone, probably Don Deyo, will be getting back to you soon with the info you requested.
The Target System contract will be with the AOG, not West Point. We will contract directly with Caswell Detroit Armor or Rangeteeh.
The contract for the remainder of the project will be a government contract.
The general contractor will be required to use either Caswell Detroit Armor or Rangeteeh for the Ventilation System portion of the government contract. If you feel that your own system, not the one designed by STV, is superior and/or cheaper, a modification to the contract will be made and you may install your proprietary system.
I will handle all aspects of negotiating the contract for the targeting system. Any questions you have concerning the ventilation system should be directed to Denise Conklin, 914-93 8-5102. She works in the Directorate of Contracting here at West Point.
Duston
(Am. Compl., Ex. B, ECF No. 37-1.) As foundational to recovery, with reference to the ventilation system for the shooting ranges, which was not included in AOG’s purchase, but, as designed by STV, was encompassed in the separate Army contract for the IMC renovation, plaintiff relies on Saunders’ statement that Caswell may substitute its own system rather than STVs, if Caswell felt its design was “superior and/or cheaper.”
In preparing a response to the July 11, 2000 Solicitation, plaintiff obtained proposals from Rangeteeh and Gleason & Elfering (G & E) for the HVAC system. (Def.’s Mot., Shah Dep. 23, 30, A223, A225, ECF No. 44-2.) During this time Caswell used G & E exclusively as its contractor for ventilation equipment. (Pl.’s Mem., Deyo Dep., Ex. 18 2, ECF No. 51-7.) Caswell and Rangeteeh were ventilation contractors; neither performed heating and air conditioning work. (Def.’s Mot., Shah Dep. 28, A224, ECF No. 44-2.) Accordingly, for the heating and air conditioning, plaintiff obtained a proposal from HVAK. (Id.) G & E’s September 1, 2000 proposal to plaintiff for the HVAC portion of the contract was $570,000 and warned that it might not have complied with the Solicitation specifications
West Point received four offers. (Pl.’s Mem., Saunders Dep. Ex. 5 at 1, ECF No. 55-1.) The Source Selection Decision concluded that “P & K’s offer represents the best overall value to the Government,” (id. at 6), and awarded the contract to plaintiff on
Following are the major subcontractors we propose to use for this project.
1)HVAC Work - a Range International eorp. [sic] or Caswell Detroit Armor company depending on who fits best to perform the work from availability of manpower for schedule completion and chemistry of personalities involved in the project.
(Def.’s Mot., Conklin Dec. Ex. 2, A159, ECF No. 44-1 (emphasis in original).)
Thereafter, plaintiff entered into a $570,000 subcontract with G & E for HVAC and a subcontract to HVAK Mechanical for HVAC work that G & E excluded from its subcontract. (Def.’s Mot., Shah Dep. 31-32, 39, A225, A227, ECF No. 44-2; Am. Compl., Ex. E, ECF No. 37-1.) After the award of the subcontract to G & E, Michael Bott, G & E’s project manager, and a professional engineer traveled from G & E’s location in Mun-delein, Illinois, to the IMC site where they spent three or four days. (Def.’s Mot., Shah Dep. 32, A225, ECF No. 44-2.) Mr. Bott and his staff coordinated with Mr. Anant Shah of HVAK Mechanical, took measurements, developed drawings and prepared a package for plaintiff to submit to STV. (Id. at 33, AR 225, 39-41, AR 227; Pl.’s Mem., Deyo Dep. Ex. 11, ECF No. 51-2.) When the package was submitted to STV, STV objected to the G & E design that differed from the STV design for HVAC in the IMC eon-tract. (Def.’s Mot., Shah Dep. 45, A228, ECF No. 44-1.)
On December 14, 2000, plaintiff sent Request for Information (RFI No. 6 (Mechanical)) to Denise Conklin, the West Point contact for the IMC contract, comprising the following text:
As discussed in the site meeting on December 04, 2000, our mechanical subcontractor has some serious concerns for [sic] ventilation system for the project. They fill [sic] that the system needs to be redesigned. Our subcontractor has redesigned the system at no cost to the government. The following criteria were considered
1) Original design does not meet NIASH [sic] 76-130 code
2) Equipment are [sic] under designed due to the above fact
3) Original design does not create any negative pressure
4) Concern that contract drawing calls for very little static pressure and system cannot function
As requested by you they have sent these revised drawings to STV, Inc. via e-mail on 12/7/00. To date we have not received response to this issue. Several of our submittals are held up due to this and will cause delays in completion of the project. Please look in to the matter and do needful to expedite [sic] the resolution. Attached is a copy of letter dated 12/01 /00 from G & E, which was given to you in the meeting for your ready reference.
(Am. Compl., Ex. F, ECF No. 37.)
On December 29, 2000, Ms. Conklin responded:
Below is the Government response to your request for information number 6.
1. Please supply specific information regarding the subcontractor’s claim that the*386 STV design does not meet NIOSH4 76-130. Copies of NIOSH 76-130, calculations, ventilation methods etc. need to be provided in order for the design to be properly reviewed.
2. Provide justification for larger ducts.
3. The design does not account for structural steel interferences and will result in duct modifications during installation, which will adversely affect the performance of the entire system.
4. The high duet velocities and high static pressure will create noise problems.
5. Your design does not address added heat load requirements from the additional air infiltration requirements.
6. Your design does not allow for filter and coil maintenance.
7. Your design does not utilize exhaust stacks thereby increasing the possibility of air contamination.
8. Your design has exhaust ducts below the bottom cord of the existing trusses without baffle protection.
9. Your design is rejected based on the above facts. However the Government is concerned with the subcontractor’s statements regarding the design but you need to provide all the facts to support that claim.
If you have any questions and or comments, please contact Denise Conklin at (845) 938-5102.
(Id., Ex. H.)
In response, on January 3, 2001, plaintiff forwarded to Ms. Conklin a letter from G & E detailing seven problems with the STV design. (Pl.’s Mem., Deyo Dep. 16, ECF No. 51-5.) On January 19, 2001, Tracy Newton from Caswell e-mailed LTC Saunders with a brief update on the target systems work and to discuss “disturbing news” obtained when discussing the project with Michael Bott of G & E that the STV engineers were “not approving our equipment selection & arrangement.” Mr. Newton stated that his “point is that [Caswell] wants to be sure that West Point gets the range they deserve and if the ventilation system does not function properly, I do not want that problem somehow tied to [Caswell] equipment.” (Pl.’s Mem., Deyo Dep., Ex. 18 at 2, ECF No. 51-7.) Mr. Newton also noted that, while the ventilation portion of the project was funded separately from the target system, he felt LTC Saunders should be aware of what transpired and “perhaps get involved with this.” (Id. at 3.)
G & E/Caswell informed plaintiff that they declined to install the STV designed ventilation system specified in the IMC contract out of concern that it would not work, and since they installed ranges worldwide, they did not want to ruin their reputation. (Def.’s Mot., Shah Dep. 51, A230, ECF No. 44-2.) G & E withdrew from its subcontract with plaintiff. (Id. at 58, A232.)
On February 1, 2001, West Point instructed plaintiff to comply with STV’s HVAC specifications in the contract, but eliminated the requirement to use either Caswell or Rangeteeh. (Id., Conklin Dec., Ex. 6, A211, ECF No. 44-2.)
Plaintiff then sought a substitute subcontractor and received two proposals. The lower proposal, submitted by HVAK Mechanical, of $783,500.00, exceeded the withdrawn G & E subcontract price of $570,000.00 by $213,500. (Am. Comp., Ex. M, ECF No. 37-1.) Plaintiff selected HVAK and HVAK installed the contractual STV HVAC design. (Def.’s Mot., Shah Dep. 59, 66, A232, A234, ECF No. 44-2.) After the project was completed, range users noticed that air flow from the HVAC system caused targets to sway. (Id., Conklin Dec. ¶ 16, A89, ECF No. 44; Pl.’s Mem., Saunders Dep. 75, ECF No. 52-1; Def.’s Mot., Shah Dep. 109, A244, ECF No. 44-2.) To correct this problem, on September 8, 2003, West Point issued Modification No. 15 to plaintiffs contract which provided an additional $50,667.76 for the demolition of existing diffusers and “[r]einstallation of properly engineered laminar
Plaintiffs rationale for its $245,525.00 claim is that, in reliance on the LTC Saunders’ e-mail, G & E’s price was for a less expensive redesigned HVAC system.
Notwithstanding that plaintiffs prospects for establishing a viable superior knowledge, equitable estoppel, or breach of the covenant of good faith and fair dealing claim for its $245,525 in increased HVAC cost asserted in its original Complaint (ECF No. 1) were problematical, the court declined to grant defendant’s initial Motion for Summary Judgment concluding that if the following four elements were present, a claim of mutual mistake might exist:
(1) the parties to the contract were mistaken in their belief regarding a fact;
(2) that mistaken belief constituted a basic assumption underlying the contract;
(3) the mistake had a material effect on the bargain; and
(4) the contract did not put the risk of the mistake on the party seeking reformation.
Atlas Corp. v. United States,895 F.2d 745 , 750 (Fed.Cir.1990).
By retaining STV to design the HVAC system included in the specifications for the IMC renovation, and at the same time mandating that the firm awarded the contract subcontract the HVAC portion to Caswell or Rangetech, the basic underlying assumption was that Caswell or Range-tech, recognized international shooting range construction experts, would subcontract to install the STV-designed HVAC system as specified. Plaintiff, in obtaining its HVAC price quote from a firm associated with Caswell, also assumed that G & E/Caswell would install the STV-designed system. In fact, G & E/Caswell would not install the STV-designed HVAC system and this basic, factual assumption underlying the contract was mistaken.
When, to safeguard its international business reputation and not for financial reasons, G & E/Caswell refused to install the STV system it considered to be inadequate, West Point had to delete the contractual mandate requiring subcontracting with Caswell or Rangetech and plaintiff had to abandon its reliance on G & E/Cas-well and obtain a substitute HVAC subcontractor at additional cost to install the STV system which, in fact, did prove to be inadequate in operation.
P & K Contracting, Inc.,
Finding the facts sufficiently analogous to those in National Presto Industries, Inc. v. United States,
Subsequent discovery included the deposition of Michael Bott, who prepared G & E’s subcontract proposal, and the conclusion of the deposition of Denise ConMin.
No additional material facts were tendered that anyone with authority to bind the government either agreed that the HVAC specifications in the Solicitation could be altered or amended, or ratified or consented to such an accommodation.
While the mutual mistake the court referenced in its prior Order was a shared assumption that either of the two approved HVAC subcontractors would install the STV-designed HVAC system, which turned out not to be correct, the “mutual” mistake asserted in plaintiffs Amended Complaint and Motion for Summary Judgment is different.
48. Due to a mutual mistake, P & K’s successful bid incorporated an approved subcontractor’s bid premised on the representation that, with respect to the required HVAC unit, a “proprietary system” was approved prior to the entry of the Contract. (See ¶ 8, supra).
(Am. Compl. 6, ECF No. 37.)
The referenced Paragraph 8 provides:
8. Mr. Saunders also said to Mortimer (a Caswell representative) that if Caswell wanted to install its proprietary system in lieu of the system specified in the contract documents, then: “a modification to the contract will be made and you may install your proprietary system.”
(Id. at 2 (parenthetical supplied; emphasis in original).)
In an attempt to reconcile this divergence, plaintiffs Opposition to the government’s renewed Motion for Summary Judgment candidly characterizes its position as dependant on LTC Saunders’ e-mail; specifically, whether, presuming it contained a promise to modify a future contract to permit deviation from its specifications, West Point was bound by, or ratified, that promise. The Opposition states:
As stated by the Court, the Plaintiff and Defendant entered into the Contract with the mutual understanding that G & E would install the system designed by STV. Further, the parties believed that Gleason’s bid was premised on the STV, as opposed to a proprietary, design. This is evidenced by P & K’s lack of knowledge concerning the E-Mail and the SSB’s finding that P & K’s bid was sufficient. The Government ultimately received the STV designed system, albeit at a higher cost than set forth in P & K’s initial bid. However, as established above P & K’s initial bid factored in an artificially low cost. That the STV system proved to be flawed and the Government paid for its repair has no bearing on the fact that P & K was caused to expend additional funds in order to provide the STV designed system as opposed to the system Gleason proposed. The Government is only being asked to pay for what it now claims P & K was initially obligated to provide, the STV system.
Here there is no dispute that the Government intended to pay for the HVAC system and that the system it demanded was that designed by STC [sic], P & K’s bid was premised on Gleason’s subcontract proposal and therefore artificially low as it was premised on the E-Mail’s assertion that a proprietary system could be installed. Mr. Bott confirmed that had the STV system been bid, the price would have been higher by approximately $200,000. Stated differently, had the E-Mail never been sent, the issues presented in this case would never have arisen. The Court correctly stated that the issues presented herein are analogous to those in Nat’l Presto Indus, supra. Therefore, the Court should grant P & K’s cross-motion concerning mutual mistake.
Assuming arguendo that LTC Saunders’ e-mail statement constitutes an unconditional amendment to the Solicitation, as a matter of law under the undisputed material facts presented, LTC Saunders lacked actual or implied authority to so act. Accordingly, defendant’s second Motion for Summary Judgment is due to be granted and plaintiffs Cross-Motion due to be denied.
Summary Judgment Standards
Summary judgment is appropriate when there are no genuine disputes over material facts and the moving party is entitled to prevail as a matter of law. RCFC 56(a). See Mingus Constructors, Inc. v. United States,
Burden
In opposition to defendant’s second Motion for Summary Judgment and in support of its own, plaintiff contends that defendant failed to establish that the individuals plaintiff relied on for promises, as a matter of law, under the facts tendered, did not have authority to agree to amend the contract to allow the installation of an HVAC system other than as contractually required, or to ratify such a promise. Defendant disagrees, countering that its burden is merely to point out the lack of material evidence to support plaintiffs ease and that it is incumbent on plaintiff to tender facts that, if proven, would establish a mutual mistake or a binding promise by West Point to modify the contract.
Clearly, plaintiff has the burden to establish that the contract is other than what it says it is, and its defensive observation that defendant did not establish that plaintiff cannot prove its ease is simply wrong. Crown Operations, Int’l v. Solutia, Inc.,
Discussion
This was a fixed priced contract.
Authority
Although plaintiff presents several theories of recovery, authority to agree to modify the contract specifications is a prerequisite to most if not all of those theories.
In responding to defendant’s Motion and in support of its own, plaintiff must establish as undisputed that either LTC Saunders or Mr. Deyo had actual or implied authority to agree to modify the contract, or plaintiff must tender genuine issues of material fact that would, as a matter of law, support that conclusion. Plaintiff wrongly assumes apparent authority is sufficient. “Where a party contracts with the government, apparent authority of the government’s agent to modify the contract is not sufficient, an agent must have actual authority to bind the government.” Winter v. Cath-dr/Balti Joint Venture,
Circumscribed limits of express, or actual authority in government contracts are well established. Id. (citing regulations generally limiting such authority to contracting officers). As was “very clear” in Winter, the contractor’s reliance on authority of the contracting officer’s representative or project engineer did not supply required authority because delegated authority was limited and “did not include the authority to make contract modifications, nor could it have.” Id. at 1345 (citing 48 C.F.R. § 201.602-2 (1998) prohibiting “delegated authority to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract”). Also, the contract proscribed such express authority. “The contract is clear, only the CO had the authority to make modifications.” Id. at 1346. Plaintiffs contract contains the same restriction. “Changes in the scope of work or any increase or decrease in scope of work shall be made only be [sic] the Contracting Officer by a properly executed modification.” (Def.’s Mot., A189, ECF No. 44-1.) Indeed, plaintiff admits that LTC Saunders, the author of the e-mail upon which plaintiff relies, did not have the authority to modify the contract. (Def.’s Mot., PL’s Resps., Req. Ad-mis. 6, A79, ECF No. 44-1.) Accordingly, under the undisputed material facts, no agreement was made to modify the contract specifications as G & E did in its proposal to plaintiff.
Likewise, no facts are tendered that anyone with authority under the contract ratified any representation in LTC Saunders’ e-mail. “Ratification requires knowledge of material facts involving the unauthorized act and approval of the activity by one with authority.” Winter,
Similarly, plaintiffs institutional ratification claim is legally deficient. Plaintiff cites a ease involving an alleged reward agreement with a confidential informant, SGS-92-X003 v. United States, 74 Fed.Cl.
Plaintiff contends that implied authority (which assertedly exists as to these individuals in these circumstances) is sufficient to bind the government, citing H. Landau & Co. v. United States,
Plaintiffs reliance on implied authority and on H. Landau & Co. v. United States,
Authority to bind the government may be implied when it is an integral part of the duties assigned to the particular government employee. See H. Landau & Co. v. United States,886 F.2d 322 , 324 (Fed.Cir.1989) (internal citations omitted). In Landau, we held that a government employee possessing both the authority to ensure that a contractor acquired the raw materials needed to fulfill a contract and the authority to draw checks on the government bank account may have also had the “implicit authority” to guarantee payment to the contractor’s supplier of raw materials. Id. Landau, however, is inapposite to this case. Here, the [Resident Officer in Charge of Construction] could not have had the implicit authority to authorize contract modifications because the contract language and the government regulation it incorporates by reference explicitly state that only the contracting officer had the authority to modify the contract. Modifying the contract could not be “considered to be an integral part of [project manager’s] duties” when the contract explicitly and exclusively assigns this duty to the CO. Id. We cannot conclude that [the government’s project manager] had implied authority to direct changes in the contract in contravention of the unambiguous contract language.
As binding precedent, Winter as a matter of law, disposes of plaintiffs reliance on implicit authority. See also Salles v. United States,
Also, the CO’s failure to assign a contracting officer’s representative (COR) cited by plaintiff as adding validity to its position that other than the CO had requisite authority, lacks relevance. As in Winter, while the contract required a COR, the COR’s authority was limited and specifically excluded modifying the scope of work, reserving that authority exclusively to the CO.
Mutual Mistake
“Generally, a contractor may obtain reformation or rescission of the contract only if the contractor establishes that its bid error resulted from a ‘clear cut clerical or arithmetical error, or a misreading of the specifications.’” Giesler v. United States,
Defendant reiterates the court’s original description of a possible mutual mistake being the assumption by both West Point and plaintiff that either Caswell or Rangetech would install the STV-designed HVAC system.
That however, as previously noted, is not the mistake pled in plaintiffs Amended Complaint, which continues its original theory that the “mistake” “shared” by both plaintiff and West Point was that G & E, plaintiffs subcontractor, based its subcontract on the Solicitation specifications. West Point in awarding the contract had no knowledge that plaintiffs bid which used G & E’s subcon
Moreover, questions of authority aside, LTC Saunders’ e-mail speaks of future events - amendment of the contract - which cannot form the basis of mutual mistake.
Additionally, many of plaintiffs cited authorities are not pertinent. In discussing National Presto, plaintiff would extend its reasoning and result to the ease sub judice, citing George Sollitt Construction Co. v. United States,
Risk of increased costs
Mutual mistake and authority to amend contract specifications aside, the undisputed material facts are that plaintiff submitted a bid price that included G & E’s subcontract bid that unbeknownst to the government, did not comply with the government contract specifications, and was therefore at an “artificially” low price. Nevertheless, the government contends that, as a matter of law, in this fixed price contract plaintiff bore that risk and attendant financial consequences. United States v. Spearin,
That the contract was fixed price does not end the inquiry and does not eliminate all possible recovery plaintiff counters, citing National Presto Industries, Inc. v. United States,
Under the undisputed material facts, mutual mistake is not present here and the risk of loss rule applies, precluding recovery by plaintiff.
Implied warranty—adequate specifications
Plaintiff adds that the Spearin doctrine defendant cites for its position that plaintiff bore the risk of a non-compliant subcontract, also imposes on West Point an implied warranty that if the contract specifications are followed, the result will be acceptable, a warranty that was breached here plaintiff concludes, contending that the HVAC system as designed and required by the contract was defective; accordingly, plaintiff is entitled to recover costs proximately flowing from the breach, here the additional $245,525.00 cost for a substitute contractor to build per the original STV specifications. Franklin Pavkov Constr. Co. v. Roche,
Responding, defendant notes that the design issues that G & E identified in discussions with West Point and STV representatives were lead poisoning and air pressure issues not the post-construction excess airflow problem remedied by contract modification followed by full payment to plaintiff. Accordingly, there were no additional consequential costs for this “defect.” While lead poisoning and air pressure were the design defects G & E asserted, neither West Point nor STV coneuri’ed, and importantly, this issue did not cause any increased costs to plaintiff. Accordingly, there was no defect in the contract specifications that was not remedied by a contract modification for which plaintiff was fully paid.
Superior Knowledge
The superior knowledge doctrine is a narrow exception to the general rule that contractors in a firm, fixed-price contract assume the risk of increased performance costs. Helene Curtis Indus., Inc. v. United States,
(1) undert[ook] to perform without vital knowledge of a fact that affects performance costs or direction, (2) the government was aware the contractor had no knowledge of and had no reason to obtain such information, (3) any contract specification supplied misled the contractor, or did not put it on notice to inquire, and (4) the government failed to provide the relevant information.
GAF Corp. v. United States,
In denying plaintiffs initial motion for summary judgment, the court noted that, plaintiffs ability to establish a viable “superi- or knowledge” claim was problematic because neither plaintiff nor G & E obtained any assurances from any person having authority to bind the government that the contractual HVAC design would be modified. See Johnson Mgmt. Group CFC, Inc. v. Martinez,
In its Amended Complaint (ECF No. 37), plaintiffs superior knowledge claim is that its bid was made without knowledge that subcontractor G & E’s quote, incorporated into plaintiffs bid, was based on the representation by LTC Saunders that the contract specifications would be modified by amendment to allow for G & E’s own HVAC design. No authority is cited that an e-mail authored by one who cannot bind the government and not sent to the contracting officer can result in “superior” knowledge in any event, particularly when plaintiff was given express notification in the subcontract bid that it may not comply with the specifications.
Plaintiff is responsible for verifying that its subcontractor’s proposal complied with the specifications of the Solicitation, and failure to do so does not implicate superior knowledge. Giesler,
Equitable Estoppel
The elements of equitable estop-pel are: “ ‘(1) misleading conduct, which may include not only statements and actions but silence and inaction, leading another to reasonably infer that rights will not be asserted against it; (2) reliance upon this conduct; and (3) due to this reliance, material prejudice if the delayed assertion of such rights is permitted.’” Mabus v. Gen. Dynamics C4 Sys., Inc.,
Finally, reference to 48 C.F.R. § 5.101, which requires dissemination of procurement information, does not create a cause of action for plaintiff. Only if the e-mail was a promise to amend the Solicitation specifications, and written or ratified by one with authority, might the cited regulation have pertinence.
Covenant Of Good Faith And Fair Dealing
The implied covenant of good faith and fair dealing “requires a party to not interfere with another party’s rights under the contract.” Precision Pine & Timber, Inc. v. United States,
Although the court’s prior Order concluded any viable action on this ground was problematic, to the extent further disposition is required, defendant reiterates that nothing West Point did or failed to do hindered contract performance, and insistence that plaintiff perform per the contract specifications, on the facts tendered here, simply did not violate either the contract or this implied covenant.
Plaintiff contends that West Point’s demand that plaintiff perform specifications that were faulty; knowledge of asserted design defects via G & E engineer Michael Bott and initial expression of interest in the defects asserted; request for additional information (which was provided); reiterated insistence on compliance with the STV specifications; and removal of the requirement for installation by one of the two approved subcontractors, all preclude entry of summary judgment. Concluding that “the government’s insistence that [plaintiff] install a system it knew or should have known to be incomplete and improper is inherently unreasonable and it follows that the government cannot succeed on its motion for summary judgment in this instance.” (PL’s Mem. 32, EOF No. 47.) Plaintiffs reliance on Ms. Conklin as confirming that the STV design was a failure is not helpful in this regard. The flaws mentioned by Ms. Conklin were the airflow issues solved by the diffusers installed under a contract amendment for which plaintiff was fully paid.
No authority has been provided that would relieve plaintiff from its failure to fully read G & E’s proposal or its contention that it had no reason to suspect that it would receive a non-compliant bid as only two approved subcontractors who had an opportunity to review the specifications were considered. It did so at its own peril. By requiring use of either Rangeteeh or Cas-well, the government did not represent that “the named sources are ready, willing and able to do the work contemplated by the contract.” Franklin E. Penny Co. v. United States,
Returning to plaintiffs characterization of the gravamen of its case, no material facts have been tendered that LTC Saunders had any authority to bind the United States to modify the contract, nor did Mr. Deyo have authority to ratify. Accordingly, LTC Saunders’ e-mail which apparently caused G & E to submit an artificially low HVAC price to plaintiff has no legal significance and cannot serve as the bedrock of plaintiffs case.
Moreover, the court’s conclusions herein follow careful consideration of the questions plaintiff presented at the beginning of its Memorandum of Law in Opposition to Defendant’s Second Motion for Summary Judgment and in Support of Plaintiffs Cross-Motion for Summary Judgment (ECF No. 47).
The court has reviewed all other arguments raised by plaintiff and finds they would not alter the result reached here. As a matter of law under the material facts for which there is no genuine dispute, no valid causes of action are stated. Plaintiff failed to set forth genuine issues of material fact that could result in actual or implied authority of LTC Saunders or Mr. Deyo to promise the contract amendment underlying the equitable adjustment plaintiff seeks. Material facts presented and tendered do not constitute mutual mistake. No viable recovery based on defective plans or specifications is pled; no viable claim for superior knowledge, equitable estoppel, violation of FAR § 5.101, or breach of the covenant of good faith and fair dealing is stated.
Accordingly, it is hereby ORDERED that:
(1) Defendant’s Second Motion for Summary Judgment (ECF No. 44) is GRANTED;
(2) Plaintiffs Cross-Motion for Summary Judgment (ECF No. 47) is DENIED; and
(3) The Clerk is directed to enter judgment for defendant.
Notes
. LTC Saunders had a military and an AOG email address. (Def.’s Mem., Resps. Req. Ad-mis.l, A78.)
. Presumably, G & E's disclosure that its proposal to plaintiff may not have complied with the specifications of the Solicitation was prompted by, or related to, LTC Saunders' e-mail.
. Plaintiff’s August 24, 2000 letter to Denise Conklin also enclosed past performance information missing from its proposal. (Def.'s Mot. Conklin Dec. Ex. 2, A159, ECF No. 44-1.) The Source Selection Board (SSB) reviewed the four bids received and in its findings stated: "[p]lease note that all offers were required to include proof of its contractual relationship with one of the following: Caswell or Rangetech. All of the of-ferors complied with this requirement.” (PL's Mem., Saunders Dep. Ex. 5, ECF No. 55-1.) Although defendant asserts that plaintiff’s bid was non-compliant because it failed to utilize an approved HVAC subcontractor, and plaintiff counters that G & E was an affiliate or agent of Caswell, it is not necessary to address this matter further.
. NIOSH stands for the National Institute for Occupational Safety and Health. See http:// www.cdc.gov/niosh (last visited December 3, 2012).
. Ms. Conklin’s Declaration uses the term "laminate.” (Def's Mem., Conklin Dec.i 17, A89, ECF No. 44-1.)
. Neither party questions whether G & E’s system was "proprietary” (the term used in LTC Saunder's e-mail), or redesigned (as noted in G & E’s proposal), or if any distinction has relevance.
. Denise Conklin, the West Point contracting specialist on this project, became a contracting officer (CO) in 2009. (Def.’s Mot., Conklin Dec. ¶ 1, A87, ECF No. 44-1.)
. In his deposition Mr. Bott testified that he had STV’s design at the time he prepared G & E’s proposal to plaintiff. (Pl.’s Mem., Bott Dep. 25-26, ECF No. 47-3; Def.'s Mot., Shah Dep. 37-39, A226-27, ECF No. 44-2.) Mr. Bott also testified that he informed Mr. Shah before he (Bott) submitted G & E’s proposal to plaintiff, that STV’s design did not meet Department of Defense (DOD) standards, and that G & E’s proposal was for a different design. (Pl.’s Mem., Bott Dep. 27-28, ECF No. 47-3.) In his deposition, Mr. Shah disagreed. (Def.’s Mot., Shah Dep. 37-39, A226-27, ECF No. 44-2.)
. Plaintiff admits that the Solicitation "anticipated” a fixed-price contract, but that the ”[c]on-tract itself appears silent on this point.” (Pl.’s Mem. 21, n.12, ECF No. 47.) The contract was for a fixed price of $3,366,878.75. (Def.’s Mot., A162, ECF No. 44.)
. 52.034-4002 CONTRACTING OFFICER’S REPRESENTATIVE (COR)
(a) The Government shall designate an individual as the COR, who shall be responsible for*392 monitoring the performance of routine work and project work by the contractor as to conformance with the Special Conditions, Technical Specifications, Bid Schedules, and Plans of the Contract. He shall have the authority to call attention to discrepancies between the contractor’s performance and the specifications, and to request the contractor to take immediate actions as may be required for unplanned work. The individual appointed as the COR will be specifically designated by a letter from the Contracting Officer and a copy of the letter will be furnished to the contractor, (a) The COR shall represent the Contracting Officer only as specified in the Letter Delegation of Authority. The COR is not authorized to issue change orders, contract supplements or direct any contract performance requiring contractual modification or adjustment. Changes in the scope of work or any increase or decrease in scope of work shall be made only by the Contracting Officer by a properly executed modification. He is responsible for initial approval of the contractor’s invoices, based on the contractor’s compliance with the conditions of this contract.
(Def.’s Mot., Conklin Dec. Ex. 3, A1 89, ECF No. 44-1 (emphasis supplied).)
. Although arguments of the parties as well as the court’s analysis focus on questions of authority, even if authority were found, LTC Saunders’ e-mail is far from unequivocal, speaking of substitution of specifications if Caswell "feels" its design is superior - an undefined standard. The e-mail then points out that except for the target system, the project would be a government contract, and that questions about the ventilation system should be referred to Ms. Conklin at the West Point Directorate of Contracting, making reliance on LTC Saunders’ statement for any agreement to alter specifications, questionable.
. The Solicitation was dated July 11, 2000, the e-mail July 13, 2000 and the contract award on or about September 28, 2000. (Def.’s Mot., A92, A13, A162, ECF No. 44-1.)
. Dugan Construction Co. v. New Jersey Turnpike Authority,