Sauer Incorporated v. Richard J. Danzig, Secretary of the Navy

224 F.3d 1340, 2000 U.S. App. LEXIS 17449, 2000 WL 992200
CourtCourt of Appeals for the Federal Circuit
DecidedJuly 20, 2000
Docket99-1206
StatusPublished
Cited by75 cases

This text of 224 F.3d 1340 (Sauer Incorporated v. Richard J. Danzig, Secretary of the Navy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sauer Incorporated v. Richard J. Danzig, Secretary of the Navy, 224 F.3d 1340, 2000 U.S. App. LEXIS 17449, 2000 WL 992200 (Fed. Cir. 2000).

Opinion

BRYSON, Circuit Judge.

Sauer Inc. appeals the decision of the Armed Services Board of Contract Appeals denying its request for an equitable adjustment of a construction contract and for remission of liquidated damages imposed under the contract. We affirm the Board’s ruling as to all but one of the issues Sauer raises on appeal. On the remaining issue of Sauer’s entitlement to an adjustment for labor and equipment inefficiencies, we vacate and remand for further proceedings.

I

A

In February 1986, the government and Sauer entered into a fixed-price construction contract (the RIF Contract) for the completion of the interior of the Refit Industrial Facility (RIF) building at the Navy’s Kings Bay, Georgia, submarine base. Another contractor had constructed the shell of the building, and Sauer was to complete the inside wall and ceiling construction, build the concrete floor, and do the mechanical, electrical, plumbing, and *1342 painting work. The RIF Contract required work to commence on March 15, 1986, and to conclude by March 15, 1987. Liquidated damages for late completion were set at $1725 per day.

The contract contained the standard Federal Acquisition Regulation provision regarding other contracts being performed at or near the worksite, see 48 C.F.R. § 52.236-8, as well as other provisions relating to concurrent contractor activity at the work site. For example, the specification invited the contractor’s attention “to the fact that other contractors may be engaged in similar and supporting .work requiring close cooperation” and required the contractor to “cooperate and schedule his work to avoid conflict with and interruption of the work of others insofar as practicable.” The specification identified other work that could be under way during the performance of Sauer’s contract, including contracts to install cranes inside the RIF. With respect to the crane contracts, the specification required that “[a]c-cess to the building must be provided to the crane contractor throughout the construction period.” An installation schedule detañed when various phases of the crane construction were planned, including the rail work and the bridge, trolley, and electrical work on the cranes.

B

Although the contract’s crane-installation schedule indicated that all of the raü work would be completed by the end of 1986, the crane contractors had made very little progress by that time. Sauer’s contract manager on the site notified the Navy at that time that Sauer would require an equitable adjustment of the contract to include additional costs and an extension of time because of the presence of crane contractors in the RIF during Sauer’s finish work. An internal Navy memorandum generated following Sauer’s request for an adjustment took the position that the contract schedule for crane installation was not binding on the government, because the contract secured access to the RIF for crane contractors throughout Sauer’s performance period. In addition, the memorandum concluded that the interference between Sauer and the crane contractors would be minimal and that the concurrent work should not cause any delays to Sauer’s performance if Sauer cooperated with the crane contractors.

The Navy’s project engineer adopted the conclusions of the memorandum in his response to Sauer’s request. He instructed Sauer to adhere to its current schedule “as if no crane installations were planned” and noted that the crane contractors would be responsible for whatever damage they caused. The response also indicated that the previous absence of crane contractors in the RIF “should be considered a benefit” because Sauer had “not had to cooperate and coordinate with another extra contractor in the building” during the early stages of contract performance.

Sauer disagreed with the project engineer. Although Sauer acknowledged that the crane contractors needed to have access to the RIF throughout the contract period, it stated that it had assumed the government would adhere to the crane construction schedule and not allow that schedule to fall behind. Moreover, Sauer took the position that the contractual provision allowing the crane contractors access to the RIF did not give them unfettered freedom to work when and where they chose. Sauer maintained that interference costs, resulting from the out-of-sequence work that Sauer was required to do, were chargeable to the government.

The crane work inside the RIF began in early March 1987 and continued through the end of September 1987. During that period, two contractors were installing cranes, a third was correcting crane-rail work that a previous contractor had done improperly, and several other contractors were performing other work inside the facility. Sauer continued to complain to the Navy about interference, and the Navy continued to deny that the concurrent work of the other contractors was having any undue impact on Sauer’s performance.

*1343 In May 1987, the Navy notified Sauer that it planned to store a large crane in the RIF. Sauer responded by informing the Navy of the location within the building where the stored crane would cause the least interference with Sauer’s work. The Navy acknowledged Sauer’s communication and referred Sauer to the changes clause in the contract regarding any equitable adjustment that Sauer considered due because of the presence of the crane. Sauer suggested modifying the contract to add $12,673 and a six-day extension for the interference caused by the crane storage. The Navy offered an increase of $1547 and a one-day concurrent time extension as compensation to Sauer for the storage of the crane, but Sauer declined the offer and reserved its claim.

In July and September of 1987, Sauer took numerous photographs and prepared a videotape to show the conditions in the RIF. The photographs show other contractors working, other contractors’ equipment occupying space, and crane rails being stored. According to a Sauer employee, the exhibits document “difficult working conditions.”

Several contract modifications extended the contract completion date. The Board identified eight modifications that were issued between February 26 and July 22, 1987, the work for which was done between May 4 and September 10, 1987. Those modifications extended the contract completion date from April 4 to June 1, 1987.

Sauer failed to complete its performance by June 1, 1987, the modified completion date, but it continued to perform. Liquidated damages accrued at the contract-specified rate until June 10, 1987, when the Navy took possession of 20% of the RIF. From that date, liquidated damages accrued at 80% of the contract-specified rate. On July 17, 1987, the Navy occupied the entire facility and ceased assessing liquidated damages. The total of liquidated damages assessed between June 1 and July 17 was $66,585.

At the end of July 1987, the Navy sent Sauer a punch list of more than 2000 items that remained to be completed. A number of disputes between Sauer and the government arose during Sauer’s work on the punch-list items. Ultimately, the Navy ordered Sauer off the site and exercised its rights under the contract’s inspeetion-of-construction clause to engage another contractor and complete the punch-list work at Sauer’s expense.

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Bluebook (online)
224 F.3d 1340, 2000 U.S. App. LEXIS 17449, 2000 WL 992200, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sauer-incorporated-v-richard-j-danzig-secretary-of-the-navy-cafc-2000.