Korte Construction Company

CourtArmed Services Board of Contract Appeals
DecidedOctober 26, 2023
Docket63148
StatusPublished

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Bluebook
Korte Construction Company, (asbca 2023).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) Korte Construction Company ) ASBCA No. 63148 ) Under Contract No. W912BV-19-C-0017 )

APPEARANCE FOR THE APPELLANT: Michael E. Wilson, Esq. Greenfelder, Hemker & Gale, P.C. St. Louis, MO

APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq. Engineer Chief Trial Attorney Lauren M. Williams, Esq. Thomas R. Alford, Esq. Engineer Trial Attorneys U.S. Army Engineer District, Tulsa

OPINION BY ADMINISTRATIVE JUDGE STINSON ON THE PARTIES’ MOTIONS FOR SUMMARY JUDGMENT

Appellant Korte Construction Company (Korte) appeals a contracting officer’s October 22, 2021, final decision denying Korte’s August 24, 2021, claim requesting the government rescind its unilateral contract modification assessing a credit of $493,639.43, in direct and indirect costs for a deductive change to contract work. We have jurisdiction pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. The parties submitted opposing motions for summary judgment, responsive and reply briefs, as well as exhibits to be considered in deciding this appeal. 1 For the reasons stated below, appellant’s motion for summary judgment is denied and the government’s motion for summary judgment is granted.

1 “App. mot.” refers to appellant’s March 20, 2023, motion for summary judgment; “gov’t mot.” refers to the government’s March 20, 2023, motion for summary judgment; “app. resp.” refers to appellant’s May 10, 2023, response to the government’s motion for summary judgment; “gov’t resp.” refers to the government’s May 10, 2023, response to appellant’s motion for summary judgment; “app. reply” refers to appellant’s June 9, 2023, reply brief; and “gov’t reply” refers to its June 9, 2023, reply in support of its motion for summary judgment. SYNOPSIS

This appeal presents the issue of whether the government is entitled to a credit under a deductive change request where the contractor alleges it did not include in its cost proposal amounts required to perform work that is the subject of the deductive change request. Korte offers evidence that its mechanical subcontractor, who submitted a bid for the work that was incorporated into the contractor’s cost proposal, determined that the work was not required under the contract, and, accordingly, did not price that work.

Korte now seeks to use as a shield the fact that, through incorporation of its subcontractor’s bid into its cost proposal, Korte’s contract price did not include the cost to perform work covered by the deductive change order and, as such, the government is not entitled to a credit for the work not performed. While it is true that, for certain purposes, a subcontractor’s interpretation will be imputed to a contractor if it proves that the subcontractor relied upon that interpretation in submitting its bid, the defect in Korte’s armor is that the contractor is not protected if the interpretation by the subcontractor is indefensible, and here, the evidence Korte offers in its motion for summary judgment establishes that its subcontractor recognized pre-award an ambiguity in the contract regarding whether the work was required to be performed but did not seek clarification regarding that work. Korte suggests that reference to the work in the solicitation was simply a scrivener’s error, one it admittedly had knowledge of during the solicitation process. However, Korte’s motion for summary judgment admits knowledge of an ambiguity in the solicitation, one which appellant was required to raise with the government pre-award but failed to do so.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS

The parties submitted a Joint Stipulation of Material Facts (JSMF) in support of their motions for summary judgment. Our statement of facts relies upon, and adopts, certain of the parties’ JSMF, as set forth below.

RFP Phase 1

1. On October 11, 2018, the government issued the Phase 1 Request for Proposals (RFP) for Solicitation No. W912BV-18-R-0047 (JSMF ¶ 1; R4, tab 3). The Phase 1 RFP sought design-build proposals for a new KC-46A Depot Fuel Hangar project at Tinker Air Force Base and contemplated award of a firm fixed-price contract as part of a two-phase competitive solicitation (JSMF ¶ 2; R4, tab 3 at COE R4 3- 0001).

2. The Phase 1 RFP included specification section 00 21 00, INSTRUCTIONS, CONDITIONS AND NOTICES TO OFFERORS (R4, tab 3 at COE R4 3 - 0004).

2 Paragraph 1.4, which provided information regarding offerors’ questions and comments, instructed that “[a]ll contractual matters, questions and or comments relative to these documents should be submitted via Bidder Inquiry in ProjNet” (id. at COE R4 3 - 0005).

3. The Phase 1 RFP included specification section 00 22 20, PHASE 2 DESIGN-BUILD SELECTION PROCEDURES AND BASIS OF AWARD (R4, tab 3 at COE R4 3 - 0036). Paragraph 3.8, TAB A – DEVIATIONS, EXCEPTIONS, AND ASSUMPTIONS, stated, in part:

Should the Offeror have any questions related to specific terms and conditions, these must be resolved prior to submission of the offer. Notwithstanding the above, if deviations and exceptions are included with the offer, the Offeror shall list and describe in detail the deviations and/or exceptions under Tab A.

(Id. at COE R4 3 - 0041) (underlining in original) 2

4. The Phase 1 RFP included specification section 01 10 05.00 setting forth a statement of work and mechanical requirements for the project (R4, tab 3 at COE R4 3 - 0187). Paragraph 4 of section 01 10 05.00 set forth specifications regarding heating, ventilation, and air conditioning systems (id. at COE R4 3 - 0193). Paragraph 4.4.4 set forth requirements for the “Air cooled chiller,” stating, “[t]he Tinker Air Force Base existing chilled water loop will be utilized to provide cooling to the facility” (id. at COE R4 3 - 0198). Paragraph 4.4.5 set forth specifications regarding the chilled water system (id.). Paragraph 4.5 set forth specifications regarding piping and paragraph 4.5.1 set forth specifications regarding chilled water piping (id. at COE R4 3 - 0199).

Korte’s Mechanical Engineer and Subcontractor

5. Charles E. Jarrell Contracting Company d/b/a Jarrell Mechanical (Jarrell or Jarrell Mechanical) was part of Korte’s design-build team for the Project and the mechanical subcontractor. Jarrell was “delegated the responsibility for preparing the drawings for Korte’s proposals for the Project to design team members” and as “the mechanical engineering firm of record, in this case, Jarrell, was responsible for determining whether chilled water piping was required.” (App. mot. at 2 (app. facts ¶ 3) (citing app. mot. ex., Feb. 23, 2023, D. Brauer dep. 35:14-17, 37:24-38:2, 51:19- 53:9, 75:22-76:5, 76:9-77:18 , 79:13-80:3)) (see also app. resp. ex., May 10, 2023,

2 The RFP Phase 2 specifications included a similar provision (JSMF ¶ 8; R4, tab 6 at COE 6 - 0013, 0020). 3 M. Jarrell decl. at 1) The government’s Statement of Genuine Issues of Material Fact responds to appellant’s Facts submission ¶ 3, denying the allegations and stating, “[p]aragraph 3 characterizes the responsibilities of Korte’s subcontractors with which the Government has no contractual relationship. In addition, this is not material for resolution of this Appeal” (gov’t resp. at 3). In the context of a motion for summary judgment, the government’s stated objection is wholly insufficient as a basis to properly challenge or controvert the facts set forth by appellant in paragraph 3.

6. Korte states that “[d]uring the Project solicitation stage, Jarrell Mechanical’s project team interpreted the solicitation documents including the concept drawings as not calling for any chilled water improvements” (app. May 10, 2023, Statement of Additional Material Facts ¶ 11) (citing app. mot.

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Korte Construction Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/korte-construction-company-asbca-2023.