ST. BERNARD PARISH GOVERNMENT, Plaintiff, v. The UNITED STATES, Defendant.
No. 15-637C
United States Court of Federal Claims.
Filed: October 18, 2017
134 Fed. Cl. 730
DAMICH, Senior Judge.
Motion to Dismiss; RCFC 12(b)(1); Emergency Watershed Protection Program 7 C.F.R §§ 624.1-624.11; Federal Grant and Cooperative Agreement Act 31 U.S.C. §§ 6301 et seq.; Anchorage v. United States, 119 Fed. Cl. 709 (2015); Rick‘s Mushroom v. United States, 521 F.3d 1338 (Fed. Cir. 2008); Hurricane Katrina; Consideration; Cooperative Agreement; Direct Benefit; Subject Matter Jurisdiction
| Area of Operation | Direct Labor Cost | Subcontractor Cost | Total |
|---|---|---|---|
| Iraq | $1,099,284.52 | $75,815.72 | $1,175,100.24 |
| Kuwait | $1,127,994.83 | $2,419,599.85 | $3,547,594.68 |
| Afghanistan | $209,423.97 | $0.00 | $209,423.97 |
| Total: | $4,932,118.89 | ||
Pl.‘s Br. at 9. Agility likewise provides the Court with a similar breakdown for its post-March 2009 claim, after both parties bilaterally agreed to modify the Contract:
| Area of Operation | Labor Amount | Materials Amount | Total |
|---|---|---|---|
| Iraq | $352,746.48 | $0.00 | $352,746.48 |
| Kuwait | $816,091.65 | $373,467.37 | $1,189,559.02 |
| Afghanistan | $431,914.81 | $0.00 | $431,914.81 |
| Total: | $1,974,220.31 | ||
Id. at 11. These additional costs have been segregated from Agility‘s original staffing model and are supported by staff rosters, employee offer letters, employee timesheets, subcontractor timesheets and subcontractor invoices, all of which were submitted into the evidentiary record at trial. See PX 113 at 1190-614; PX 114 at 69-105, 153-573, 590-670, 676-1027; Pl.‘s Br. at 13-15. Such support is sufficient to satisfy the actual cost method. See UMC Elecs. Co. v. United States, 43 Fed. Cl. 776, 817-18 (1999). The above computations are also reasonable, as the pre-March 2009 costs reflect relatively low rates for additional labor, see PX 114 at 678-709, and the post-March 2009 costs reflect the “time and material” rates agreed to by the parties after modifying the Contract. See PX 113 at 1031-43; Frady, Tr. 386.
These additional costs accurately reflect the excess work Agility performed on the Contract as a result of DRMS’ negligent estimates. As such, the Court finds that Agility has met its burden of proving reasonable damages using the actual cost method and is therefore entitled to a total equitable adjustment of $6,906,339.20, plus interest.
Conclusion
For the foregoing reasons, the Court finds that Agility is entitled to an equitable adjustment of $4,932,118.89 for its pre-March 2009 claim and $1,974,220.31 for its post-March 2009 claim, for a total damages award of $6,906,339.20, plus interest. The Court awards Agility interest from January 31, 2012 for its pre-March 2009 claim and from February 6, 2012 for its post-March 2009 claim.3 The interest computation shall be based on the applicable method under the Contract Disputes Act (“CDA“),
IT IS SO ORDERED.
Reta E. Bezak, Trial Attorney, Chad A. Readler, Acting Assistant Attorney General, Robert E Kirschman, Jr., Director, Kenneth M. Dintzer, Deputy Director, United States Department of Justice, Civil Division, Commercial Litigation Branch, Washington, DC, for Defendant.
DAMICH, Senior Judge.
On June 30, 2017, the United States (the “Government“), acting through the Natural Resources Conservation Service (“NRCS“), filed a motion to dismiss or, in the alternative, for summary judgment. On the same day, St. Bernard Parish (“the Parish“) filed a motion for partial summary judgment. In its complaint and motion, the Parish alleges that the Government breached an agreement with the Parish by not paying it all the money it was due for the removal of sediment in the Bayou Terre Aux Beoufs in the aftermath of Hurricane Katrina. The Government moves to dismiss this action for lack of jurisdiction because the agreement at issue is not a contract but rather a “Cooperative Agreement” or because the agreement lacked consideration on the part of the Government. Both motions are fully briefed and the matter is ripe for review.
For the reasons discussed below, the Court GRANTS the Government‘s motion to dismiss.
I. Statement of Facts
a. The Cooperative Agreement
On April 17, 2009, NRCS and the Parish entered into a “Cooperative Agreement Locally Led Contracting,” Agreement Number 68-7217-09-0014. See generally A1-A18.1 This agreement provided that under the provisions of the Emergency Watershed Protection (“EWP“) Program the “NRCS is authorized to assist the Sponsor in relieving hazards created by natural disasters that cause sudden impairment in a watershed” and stated that the parties “agree to install emergency watershed protection measures to relieve hazards and damages created by Hurricane Katrina.” A1.
The EWP Program authorizes the Secretary of Agriculture “to undertake such emergency measures for run-off retardation and soil-erosion prevention as may be needed to safeguard lives and property from floods ... or any other natural element or force has caused a sudden impairment of that watershed.”
Under the agreement, removal work would be performed in sixteen watershed areas, among them the Bayou Terre Aux Beoufs, which is the subject of this lawsuit.2 A1. The Cooperative Agreement also stated that the parties agreed that the “described work is to be constructed at an estimated cost not to exceed $4,318,509.05” for the sixteen watersheds. A1. The estimated cost to remove the debris in the Bayou Terre Aux Beoufs watershed was $3,562,180.00. A1.
The Cooperative Agreement provided that the Parish was obligated, inter alia, to contract for the watershed improvements, pay the contractors, and take responsible measures necessary to dispose of any and all contractual disputes, claims, and litigation resulting from the projects listed in the cooperative agreement. A2-4.
b. St. Bernard Parish Contracts With Omni.
In March 2010, the Parish and Omni Pinnacle, LLC (“Omni“) entered into a contract in which Omni was to remove the sediment in the Bayou Terre Aux Beoufs. See generally A21-289. Under this contract, the Parish agreed to pay Omni $4,290,300.00 for the debris removal. A22. Although under the terms of the Cooperative Agreement, the NRCS would reimburse the Parish for the approved expenses incurred by the Parish for the watershed improvements made by Omni under the contract the NRCS was not a party to this contract. A22.
The contract between Omni and the Parish stated that the work to be performed by Omni would be paid on a stated price per cubic yard basis. The original Omni contract estimated that 119,580 cubic yards of sediment would be removed. A38. However, after Omni completed its pre-construction survey, the quantity of sediment was reduced by 59 percent, to only 49,888.69 cubic yards. A296.
Omni completed the Bayou Terre Aux Beoufs removal project in September 2010 and submitted an invoice to the Parish in the amount of $4,746,469.65. A292. In April 2011, this amount was reduced to $4,642,580.58. A309.
c. The Final Contract Amount
On January 5, 2011, Vicki Supler, an NRCS Grants and Agreements Specialist and NRCS‘s designated liaison for the Cooperative Agreement, contacted All South Consulting Engineers (“All South“), a company that the Parish contracted to manage and inspect the Bayou Terre Aux Beoufs project. A346. Ms. Supler noted that “the contractor completed the final ‘as-built’ surveys which showed that 49,888.69 [cubic yards] of sediment had been excavated.” A295. Ms. Supler then explained that consistent with the contract specifications, “the only quantity the NRCS will allow payment for is the 49,888.69 [cubic yards].” A295.
Since the final quantity of removed sediment represented a 59 percent decrease in the original estimate, the NRCS applied a 59 percent increase in the bid price per cubic yard. A296. After making this calculation, the NRCS determined that the “allowable costs the NRCS will make reimbursable to the parish for the works of improvement on this project” was $2,849,305.60. A296.
All South also reviewed Omni‘s invoice and noted certain concerns, especially with the legality of Omni and the Parish agreeing to continue with the project after discovering the quantity discrepancies (the 59 percent reduction in sediment removal), and how Omni‘s invoiced price included a markup of 10 percent for profit and 15 percent for overhead. A298. However, All South recommended payment to Omni in the amount of $1,758,548.94. A301. The Parish authorized the payment to Omni in that amount and then sought reimbursement from NRCS. A303. On July 13, 2011, NRCS approved the reimbursement to the Parish and the payment was processed through the Department of Treasury.3 A320.
On January 17, 2014, Omni and the Parish entered into a change order that adjusted the contract price to $3,243,996.37. A335. Subsequently, the Parish stated that under the change order and Louisiana law, it was obligated to pay the full amount of the revised contract. A344. Therefore, the Parish authorized payment of $1,463,447.43, which equaled the remaining balance owed to Omni minus $22,000.00 in liquidated damages.4 A344, 347.
In May 2014, the NRCS asked the Parish for additional information. A360-70. Specifically, NRCS requested documentation of, inter alia, the revised unit prices, the claim that the actual time of the project did not change, the necessity of additional excavation, and calculations used to devise the new pricing. A360-61.
In August 2014, the Parish responded and maintained that it did not need to provide further documentation, because the requisite documents were already provided. A371. After reviewing the Parish receipts, on September 29, 2014, NRCS authorized payment to the Parish in the amount of $1,107,581.22, which reduced the claim by $355,866.52. A378. The Parish did not provide anything further to the NRCS and this suit followed.
II. Standard of Review Under RCFC 12(b)(1) and RCFC 12(b)(6)
Subject matter jurisdiction is a threshold requirement that must be determined for a court to hear the case. RCFC 12(b)(1). See also Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338, 1348 (Fed. Cir. 2010). When considering a motion to dismiss, the Court considers the facts alleged in the complaint to be true. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988). However, the plaintiff bears the burden of establishing subject matter jurisdiction by preponderant evidence. Taylor v. United States, 303 F.3d 1357, 1359 (Fed. Cir. 2002). If the court finds that at any time it lacks subject matter jurisdiction, it must dismiss the action. RCFC 12(h)(3). Also, if a plaintiff fails to state a claim upon which relief can be granted, under RCFC 12(b)(6), the complaint must be dismissed. Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002) (stating that a complaint must be dismissed “when the facts asserted by the claimant do not entitle him to a legal remedy.“).
III. Discussion
a. The Cooperative Agreement Does Not Contemplate Money Damages.
Pursuant to the Tucker Act, the Court of Federal Claims possesses jurisdiction over express or implied contracts with the United States,
Here, the Parish is arguing that the agreement is an express contract with the NRCS and, therefore, money damages are implied in the agreement per Holmes. Pl.s’ Resp. at 8-11. Consequently, under the motion to dismiss standard, this Court must presume that this express contract carries with it a presumption of money damages (and thus Tucker Act jurisdiction). The Government must show that the agreement somehow rebuts this presumption.
The Government contends that the agreement with the Parish should be considered a cooperative agreement under the Federal Grant and Cooperative Agreement Act (“FGCAA“). Def.‘s Mot. to Dismiss at 17. The Government argues based on the precedent set forth in Rick‘s Mushroom Serv. v. United States, 76 Fed. Cl. 250 (2007), aff‘d, 521 F.3d 1338 (Fed. Cir. 2008), cooperative agreements, unlike procurement contracts, are not presumed to provide money damages.
According to
In this case, the Court is persuaded that the agreement at issue is considered a cooperative agreement and, therefore, the Parish lacks jurisdiction in this Court. The Cooperative Agreement provided that the Parish would pay the contractors as per its contract for the watershed improvements in accordance with the NRCS specifications and in return the Parish would be entitled to the “actual cost” reimbursement of the project subject to NRCS approval. This agreement does not “acquir[e] (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government.”
This holding is consistent with Anchorage v. United States. First, unlike the contracts at issue in Anchorage, the agreement between the Government and the Parish is labeled “Cooperative Agreement.” A1. Second, there is no claim here, as there was in Anchorage, that the agency did not follow its own specific process for entering into a cooperative agreement. Anchorage, 119 Fed. Cl. at 714. Third—and most important—the Anchorage contracts provided for a payment by the municipality of Anchorage to the government agency in exchange for the agency‘s “specialized technical expertise and input” and for a direct benefit for the government, namely, a service fee, enhancement of access to a nearby military base and areas and facilities for its use. Anchorage, 119 Fed. Cl. at 713-15. As this Court concluded in Anchorage, the agreements in that case went “well beyond transferring ‘a thing of value’ to a local government” and “the value that the Government was to receive [went] well beyond mere incidental benefit.” Anchorage, 119 Fed. Cl. at 713.
In addition, the Court notes that the Parish has not pointed to any specific provision in the agreement contemplating money damages for breach by the NRCS. To the contrary, the agreement provides that the Parish shall “hold and save NRCS free from any and all claims or action whatsoever resulting from the obligations undertaken by the Sponsor under this agreement or resulting from the work provided in this agreement.” A4. In essence, the agreement language expressly bars exactly what the Parish is attempting to do in this action.
b. The Cooperative Agreement Does Not Provide A Direct Benefit to the Government.
To establish an enforceable contract with the Government, the Parish must demonstrate: a mutual intent to contract, an exchange of consideration, lack of ambiguity in offer and acceptance, and actual authority on the part of the government representative to bind the government in contract. City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990). “In the context of government contracts ... consideration must render a benefit to the government, and not merely a detriment to the contractor.” Metzger, Shadyac & Schwarz v. United States, 12 Cl. Ct. 602, 605 (1987) (citations omitted).
Here, because the NRCS did not receive a direct benefit, the agreement is not an enforceable contract in this Court. Per the agreement, the Parish would carry out the necessary debris removal by contracting it out, and the NRCS would reimburse it for the actual costs. According to the Parish, the benefit flowing to the Government was the restoration of a natural resource and a reduction in the amount of emergency funds that the Government would spend in future flooding emergencies. Pl.‘s Reply at 2-3. But this is not the kind of direct benefit that one sees in Anchorage, one that would support the finding of an exchange between the Parish and the Government. In Anchorage, in addition to money, the city received the expertise of a government agency, and the government received direct, tangible benefits—a service fee, a road, and facilities. Here, the Government receives a generalized benefit, a cleared waterway that would reduce the damage from future flooding. In Anchorage the government got a new and better port, but this would not have been enough to find an express contract. This kind of generalized benefit is the hallmark of a money grant from the government to a locality for a worthy project that would have an incidental benefit to the government. Furthermore, pursuing the Parish‘s argument to its logical conclusion, every cooperative agreement would become a contract since cooperative agreements often result in the government paying for some kind of beneficial improvement. The crucial distinction is between an incidental and a direct benefit.
The entire purpose of a cooperative agreement is to transfer a thing of value to the local government from the executive agency.
IV. Conclusion
For all the reasons stated above, the Court concludes that the agreement between the Parish and NRCS is a Cooperative Agreement. Accordingly, the Court holds that the agreement cannot be fairly interpreted as contemplating money damages, thus precluding the Court‘s jurisdiction under the Tucker Act. In addition, even if this Court construed the agreement to contemplate money damages, no direct benefit flowed to the Government, thus failing to establish the consideration necessary to form an enforceable contract against the NRCS. As this Court lacks jurisdiction, the summary judgment motions need not be addressed.
Therefore, the Court GRANTS the government‘s motion to dismiss for lack of jurisdiction. The Clerk is directed to enter judgment accordingly.
IT IS SO ORDERED.
CLINICOMP INTERNATIONAL, INC., Plaintiff, v. The UNITED STATES, Defendant, v. Cerner Corporation, Defendant-Intervenor.
No. 17-1115C
United States Court of Federal Claims.
Filed Under Seal: October 18, 2017
Reissued for Publication: October 30, 2017*
* This Memorandum Opinion and Order was originally filed under seal on October 18, 2017 (docket entry no. 52). The parties were given an opportunity to advise the Court of their views with respect to what information, if any, should be redacted from the Memorandum Opinion and Order. The parties filed a joint status report on October 27, 2017 (docket entry no. 60) proposing certain redactions which the Court has adopted. And so, the Court is reissuing its Memorandum Opinion and Order dated October 18, 2017, with the agreed upon redactions indicated by three consecutive asterisks within brackets ([***]).