AECOM Technical Services Inc. v. Mallinckrodt LLC

117 F. Supp. 3d 98, 2015 U.S. Dist. LEXIS 101069, 2015 WL 4610404
CourtDistrict Court, D. Massachusetts
DecidedAugust 3, 2015
DocketConsolidated Civil Action No. 12-11382-PBS; Civil Action No. 12-11420-PBS
StatusPublished
Cited by9 cases

This text of 117 F. Supp. 3d 98 (AECOM Technical Services Inc. v. Mallinckrodt LLC) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AECOM Technical Services Inc. v. Mallinckrodt LLC, 117 F. Supp. 3d 98, 2015 U.S. Dist. LEXIS 101069, 2015 WL 4610404 (D. Mass. 2015).

Opinion

MEMORANDUM AND ORDER

Saris, Chief Judge.

Mallinckrodt LLC (Mallinckrodt) hired AECOM Technical Services, Inc. (AE-COM) to excavate and provide decontamination services at the site of a former columbium-tantalum (C-T) plant licensed by the Nuclear Regulatory Commission. The parties agreed that the “Target Price” for the project was $3.7 million. But after [102]*102paying $12.8 million, Mallinckrodt terminated AECOM and hired another company to finish the job. AECOM and Mallinck-rodt have now come to court to deal with the fallout from their breakup. Among other things, they accuse each other of breach of contract, bad faith, and-unfair and deceptive business practices. Following discovery, the parties filed cross-motions for summary judgment.' (Docket Nos. 85, 89). For the following reasons, the Court ALLOWS IN PART AND DENIES IN PART AECOM’s motion for summary judgment (Docket No. 85), and ALLOWS IN PART AND DENIES IN PART Mallinckrodt’s motion for summary judgment (Docket No. 89).

I. STATEMENT OF UNDISPUTED FACTS

A. AECOM’s Bid Proposal

Mallinckrodt formerly operated a plant in St. Louis, Missouri that extracted co-lumbium and tantalum compounds from ores. In 2009, Mallinckrodt sought a contractor to decommission the facility. Phase, I of the plan-demolishing the plant-was complete. Now Mallinckrodt was seeking a contractor to execute Phase II, which involved decommissioning the facility’s floor slabs, foundations, sewers, pavement,. sediment basins, and land. Mal-linckrodt included a copy of the Phase II plan in its Request for Proposal, which described Mallinckrodt’s efforts to measure the level of radioactivity at the site. Based on these efforts, -the Phase II plan estimated that , there was potentially 129,-000 cubic feet of subsurface radioactive waste to be decontaminated or removed. (Docket Nos. 88-7:25, 88-12:28).

AECOM emerged as a candidate for the project and entered into negotiations with Mallinckrodt. On one occasion, AECOM asked: - •

You previously indicated that the volume and footprint of the contamination is considerably larger that [sic] outlined in the decommissioning plan. Should [AE-COM] address the additional cost and schedule impacts to project logistics, schedule and price?

(Docket No. 94-5:3). Mallinckrodt responded:

As with any remediation job, you can do . all the pre-characterization you want but will never exactly know how big the éxcavation will be until you put a shovel in the ground. The scope of the work 4s to excavate until cleanup criteria is met. The area identified in the Phase II plan was estimated based on the pre-charac-terization data and should not be considered the limits of excavation - or scope. For the-.purpose of preparing the.Final Status Survey as required by- the [Nuclear Regulatory Commission] the entire area of the CT processing buildings will need to be addressed in some matter whether it be removing concrete pads and foundations or excavating contaminated soils.

(Docket No. 94-5:3).

After a competitive bidding process, Mallinckrodt selected AECOM’s bid proposal. AECOM stated that it would employ the “most cost-effective methods” to complete the project. For example, AE-COM proposed to use “real-time instrumentation” such as GPS-correlated gamma survey equipment, and high resolution gamma spectrometers to detect the relative levels of radiation coming from different parts of the site. Using this data, AECOM stated that, it would be able to calculate and compare the cost of decontamination versus bulk disposal for any given aréa. AECOM referred to this approach as a “surgical” technique to decrease the volume of material that would [103]*103be excavated and shipped off-site for disposal, thereby minimizing costs.

With respect to pricing, AECOM’s bid proposal stated that the project involved several logistical and operational challenges including: (1) unknown quantities of materials, radioactivity levels of materials, and the cost-benefit of segregation and decontamination; and (2) unknown subsurface conditions that may impact excavation techniques and excavation production. Given these unique variables, AECOM explained that the project was not conducive to a Lump Sum or Unit Rate pricing structure because of how “site unknowns” might potentially affect the project. Instead, AECOM proposed' a “Partnered Payment Structure” that included a Target Cost of $2.7 million and a fee based on the difference between actual costs and the Target Cost. According to AECOM, the Target Cost was based, on the estimates in Mallinckrodt’s Phase II plan.

The parties entered into two contract documents, a Master Environmental Services Agreement and a First Amendment. In relevant part, the Master Environmental Services Agreement stated in a section titled “BILLING AND PAYMENT/MECHANIC’S LIENS”:

[Mallinckrodt] shall not be obligated to pay to [AECOM] any amount in excess of the Contract Price for a project. However, if requested by [AECOM], [Mallinckrodt] may approve by way of a written Change Directive an increase to the Contract Price or Budget from time to time and in [Mallinckrodt’s] sole discretion.

(Docket No. 88 — 18:5). The First Amendment further stated in a section titled “Compensation”:

AECOM shall be reimbursed for actual costs incurred with incentives ... The contract shall be based .on the Target Price described in Section 5.2 of this Amendment. This Target Price shall be based on AECOM’s Costs plus the incentive fees described in Section 5.5 and 5.6
Target Price: The Target Price for this Project is $3,700,000. This price includes. all Costs associated with conducting all activities described in the Contract Documents
Adjustments to the.Target Price: The Target Price will only be adjusted if there is a significant unforeseen event, material, or site condition which is outside of the scope of the work described in any and/or all Contract Documents. Any such Adjustment must be agreed to in writing by both parties
Target Volume: The parties recognize that efficient soil management and environmental practices will minimize the volume of soil that must be disposed of off-site. Based on pre-excavation characterization and volumetric estimates by [Mallinckrodt], a Target Volume of 3,419 tons of regulated soils from Plant 5 for removal has been established.
Incentive Project Fee: The Incentive Project Fee will be based on the difference between the Target Price and the total project. Costs. Should the total Cost of the Project be less than the Target Price ... [Mallinckrodt] and AE-COM will share’ equally the savings ... Should the total costs of the Project exceed 94% of the Target Price, AE-COM will be reimbursed a minimum of Cost plus three percent (3%) or the Incentive Project Fee described in this section, whichever is the greater amount;

(Docket No. 88-22:7-8).

B. Delays and AECOM’s Requests for Additional Funding

AECOM began working, at the site towards the end , of 2010, but issues regard[104]*104ing the magnitude and cost of the project soon came to the surface.

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117 F. Supp. 3d 98, 2015 U.S. Dist. LEXIS 101069, 2015 WL 4610404, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aecom-technical-services-inc-v-mallinckrodt-llc-mad-2015.