Perry-McCall Construction, Inc. v. United States

46 Fed. Cl. 664, 2000 U.S. Claims LEXIS 84, 2000 WL 558646
CourtUnited States Court of Federal Claims
DecidedMay 8, 2000
DocketNo. 97-414C
StatusPublished
Cited by11 cases

This text of 46 Fed. Cl. 664 (Perry-McCall Construction, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Perry-McCall Construction, Inc. v. United States, 46 Fed. Cl. 664, 2000 U.S. Claims LEXIS 84, 2000 WL 558646 (uscfc 2000).

Opinion

OPINION

FIRESTONE, Judge.

This matter is before the court on the parties’ cross motions for summary judgment. Plaintiff, Perry-McCall Construction, Inc. (“Perry-McCall”), brings this suit on behalf of its subcontractor, Qualico Steel Co. (“Qualico”), to recover from the government excess costs Qualico incurred in obtaining certain materials in connection with Perry-McCall’s contract with the Department of the Navy for construction of an airplane hangar and parking apron.

The threshold issue before the court is whether this case is barred by the Severn doctrine because, following initiation of this action, Qualico executed a general release that, on its face, exonerates Perry-McCall from any and all liability to Qualico in connection with the Navy contract. Under the Severin doctrine, a prime contractor may not sue the government for contract damages incurred by a subcontractor unless the prime contractor remains potentially liable to the subcontractor for those same damages. See Severin v. United States, 99 Ct.Cl. 435, 443, 1943 WL 4198 (1943). Alternatively, if the court finds that Severin does not bar this action, the court must decide the merits of the parties’ cross motions for summary judgment. For the reasons that follow, the court concludes that there are material facts in dispute with regard to both issues that preclude the court from granting summary judgment.

FACTUAL BACKGROUND

A. Facts Giving Rise to this Action

The following facts are not in dispute, except as noted. On September 23, 1994, Perry-McCall and the Department of the Navy entered into a $23,543,000 fixed-price contract for the construction of the P-3 Hangar and Parking Apron at the Naval Air Station in Jacksonville, Florida. In August 1994, Perry-McCall entered into a $5,302,000 subcontract with Qualico to provide the steel needed for the project. The contract identified certain design specifications for the steel tubing necessary to construct the hangar. In particular, the contract called for 20" x 20" x 5/8" square steel tube sections that satisfied ASTM A 500, Grade C standards.

According to Qualico’s president, John Downs, Qualico did not confirm the availability of the tubing before it submitted its subcontract bid. In his deposition, Mr. Downs testified that Qualico believed, based on the specification, that the required steel tubing would be commercially available. “[We took] the documents at their word that [the specified steel tubes] are available in a structural steel member manufactured by a tube mill.” Downs Depo. at 27 (June 23, 1999). Some time after submitting its bid, Mr. Downs located a manufacturer of steel tubing, Valmont Industries, Inc., but discovered that “[w]hile Valmont did manufacture 20" x 20" x 5/8" tubing, its 20" x 20" x 5/8" tubes were not of ASTM A 500, Grade C quality.” Downs Aff. ¶ 8 (Oct. 8, 1999). ASTM A 500, Grade C standards require a minimum tensile strength of 62,000 pounds per square [667]*667inch (“psi”) and a minimum yield strength of 50,000 psi. The Valmont steel tubing was identified as having a minimum of 58,000 psi tensile strength and 46,000 psi yield strength. See Facsimile from Valmont to Tim Griswold, Qualico Steel Co. (Sept. 1, 1994). Qualico contends that it looked elsewhere for tubing that conformed to the contract standards, but found that it was not available from any steel tubing manufacturer.

Upon concluding that no commercial manufacturer, including Valmont, fabricated the specified steel tubing, Qualico hired Ferrell Engineering, Inc. to assist it in developing alternatives that would satisfy the requirements of the contract. By letter dated October 28, 1994, “Ferrell informed the [Navy’s] architect, O’Kon & Company (“O’Kon”), that the requisite 20" x 20" x 5/8" steel tubing was not commercially available and accordingly requested a substitution” of wide flange steel members. Downs Aff. ¶ 10 (Oct. 8, 1999). O’Kon rejected the substitution and directed Qualico back to Valmont to obtain the steel tubing specified under the contract.

Shortly thereafter, Qualico wrote to O’Kon explaining that the specified tubing was not readily available from Valmont, but was a “custom-built, fabricated item.” Downs Depo. at 81. In addition, Qualico expressed concerns about the safety of any custom fabricated tubing, which would require welding several smaller sections of tube together to span the entire length of the hangar. As a consequence, Qualico was reluctant to use any of Valmont’s tubing for the project. According to Mr. Downs, the concern related to “how many splices that would be in a tension member that’s going to hold up trusses over millions of dollars of planes.” Id. In addition, Mr. Downs was also concerned that Valmont’s regular tubing product was not immediately available, but had a “sixteen week delivery time.” Id. at 29.

In an effort to resolve the steel issue, Qualico submitted a request for a “contract change” to Perry-McCall on November 3, 1994. See Letter from John Downs, Qualico Steel Co., to Wayne McCall, Perry-McCall Constr. (Nov. 3, 1994). Perry-McCall took Qualico’s request and filed a “variance request” with the Navy on November 17,1994, under the heading “Variance Request #4.” Variance # 4 requested substituting a configuration of two steel channels with cover plates in lieu of the required steel tubing. By letter dated December 14, 1994, Robert Weilacher, a structural engineer at O’Kon, informed Qualico and Perry-McCall that O’Kon would recommend that the substitution “should be pursued with a credit to the owner (U.S.Navy).” Letter from Robert Weilacher, O’Kon & Co., to Richard Bush, Qualico Steel Co. (Dec. 14, 1994). On December 16, 1994, Qualico proceeded with the substitution without waiting for final Navy-approval.

On February 16, 1995, O’Kon sent a letter to the Navy recommending Variance #4, stating that “the construction schedule should be unaffected by this change. The construction contract should decrease.” Letter from O’Kon & Co. to Dept, of the Navy, Attn: Larry Blackburn (Feb. 16, 1995). Navy Assistant Resident Engineer Philip R. Robbins approved the substitution and notified Perry-McCall by letter dated February 7, 1995. The letter states as follows: ‘Your Variance # 4 proposing to fabricate the specified structural tube shape from two channels and connecting splice plates is hereby approved. Since the specified cross section is apparently not available a modification to the Contract is not sought regarding this specification change.” Letter from Philip R. Robbins, Assistant Resident Engineer, Dept, of the Navy, to Perry-McCall Constr. (Feb. 7, 1995).

Although the contract does not address “variances,” it does have a provision entitled “Variations.” Under the Variations clause, variations from contract specifications are permitted if they are advantageous to the Government, but they must be completed at the cost of the contractor. Clause 1.3.4 of the contract, “Variations,” provides in relevant part:

When submitting a variation for approval, the Contractor warrants the following: ... 1.2.3.4 Contractor is Responsible The contractor shall take actions and bear the additional costs, including review costs by the Government, necessary due to the proposed variation.

[668]*668Although a contract modification was not sought, Qualico, in fact, experienced increased costs as a result of the substitution.

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Bluebook (online)
46 Fed. Cl. 664, 2000 U.S. Claims LEXIS 84, 2000 WL 558646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/perry-mccall-construction-inc-v-united-states-uscfc-2000.