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Lakeshore Eng'g Servs. v. United States

United States Court of Appeals, Federal Circuit

April 11, 2014

UNITED STATES, Defendant-Appellee

Page 1342

Appeal from the United States Court of Federal Claims in No. 09-CV-0865, Judge Francis M. Allegra.

PHIL B. ABERNETHY, Butler, Snow, O'Mara, Stevens & Cannada, PLLC, of Rigdeland, Mississippi, argued for plaintiff-appellant. With him on the brief was LEANN W. NEALEY.

JANE C. DEMPSEY, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were STUART F. DELERY, Assistant Attorney General, JEANNE E. DAVIDSON, Director, and PATRICIA M. MCCARTHY, Assistant Director.

Before NEWMAN, PROST, and TARANTO, Circuit Judges.


Page 1343

Taranto, Circuit Judge .

Lakeshore appeals from a decision of the United States Court of Federal Claims granting summary judgment in favor of the government in a contract dispute. The court held that Lakeshore had not identified evidence that, even if credited, would allow it to prevail at a trial on its claims of breach of contract, breach of implied warranty, breach of the duty of good faith and fair dealing, and mutual mistake. We affirm.



In December 2006, the United States Army Contracting Agency solicited bids for a contract for repair, maintenance, and construction services at Fort Rucker, Alabama. The contract described in the solicitation would be indefinite as to delivery and quantity, i.e., as to what specific services would be provided and when. This form of contract gives the government purchasing flexibility when it does not believe that it can accurately estimate the quantity or timing of its requirements in advance. See 48 C.F.R. § 16.504(b). Once the contract is awarded, the government places separate job orders with the contractor for particular work, to be performed subject to pricing and other terms established in the contract. In the contract at issue in this appeal, the mechanism of pricing such jobs involves identification of costs for those jobs, including labor, equipment, and materials, and multiplication of such costs bye certain " coefficients" set in the contract.

As to the costs, the contract specifies that the calculation would use unit prices found in the " Universal Unit Price Book" (UUPB) for items listed in that book. The specific UUPB at issue consists of the Gordian Group Construction Task Catalog, " created specifically for Fort Rucker, Alabama, and published in December 2006," along with Progen® Online operating software. J.A. 350, 292. The solicitation explains that the UUPB, which states unit prices for labor, equipment, and materials, " contains pricing information (i.e., Government Estimate) . . . to be used by the Contractor in development of price proposals for each work order." J.A. 320.

As to the " coefficients" that would be multiplied by the costs, the solicitation states that bidders, in deciding what coefficients to offer, should set them to represent " costs (generally indirect costs) not considered to be included in the Universal Unit Price Book (UUPB) prices." J.A. 291. The solicitation explains that the coefficients must " contain all costs other than the prepriced unit prices, as no allowance [would] be made after award." J.A. 292. The solicitation enumerates several factors that had to be included in the offerors' coefficients, one of which is " [o]ther risks of doing business (i.e., risk of a lower than expected contract dollar value; risk of poor subcontractor performance and re-performance)." J.A. 292.

One focus of the parties' dispute here involves the particular language of the solicitation concerning the UUPB. In saying that " all work shall be accomplished in accordance with the following documents enclosed as attachments of this solicitation/contract," including the UUPB " modified for Fort Rucker," the solicitation states that " [t]he UUPB, consists of Divisions 1 through 16 [of the Task Catalog]

Page 1344

that are applicable to Divisions 1 through 16 of the Job Order Contract Technical Specifications." J.A. 320 (comma in original); see J.A. 284 (solicitation table of contents indicating that attachment 2 is the " Progen Unit price Book (UPB), Divisions 1 through 16" ). Although that language specifies only Divisions 1 through 16, the attachments to the solicitation include not only those Divisions but also the introductory section of the Task Catalog. J.A. 350-60. That section provides instructions about how to use the Task Catalog, how the prices in the book are calculated, what is and is not included in the published unit prices, and adjustment factors that a bidder should take into account in determining its coefficient, including " [b]usiness risks such as the risk of a lower than expected volume of work, smaller than anticipated Job Orders, poor Subcontractor performance, and inflation or material cost fluctuations." J.A. 355. The introduction specifically warns potential contractors that, " [w]hile diligent effort is made to provide accurate and reliable up-to-date pricing, it is the responsibility of the Contractor to verify the unit prices and to modify their Adjustment Factors accordingly." J.A. 356. The introduction further states that the list of adjustment factors is " not exhaustive," that " [n]o additional payments of any kind whatsoever will be made," and that " [a]ll costs not included in the unit prices must be part of the Adjustment Factors." J.A. 356-57.

Lakeshore responded to the solicitation and submitted a bid with a coefficient of 1.28 to be used for work done during normal working hours, 1.46 for overtime working hours, and 1.22 for line items not reflected in the UUPB. In the pricing portion of its proposal, which included the coefficients, Lakeshore represented that it had " thoroughly reviewed the [U]UPB and compared major line items with [its] actual cost experience on past projects." J.A. 843. An unquestioned premise of Lakeshore's argument in this case is that, at the time of the government's solicitation and Lakeshore's review in preparing its bid, it was well known that construction costs in the region of Fort Rucker had increased in the aftermath of Hurricane Katrina, which occurred in late summer 2005--fifteen months before the government solicited bids for the contract at issue here. See Oral Argument at 32:31-52; J.A. 389-90.

Lakeshore did at least two things to investigate the UUPB prices in order to decide how it should set its coefficients. It " perform[ed] a sample analysis of the cost factors for a known past renovation project" : it " provided the scope of work" on that project to its " major subcontractors and obtained their prices" for that work, then compared those prices with an estimate that it had prepared based on the UUPB. J.A. 843. It found that " [o]verall the [U]UPB prices [were] less than [its] actual past cost experience." J.A. 843. Lakeshore also contacted All Star, the previous contractor on the project. Lakeshore's understanding, based on its conversations with All Star, was that All Star believed that the prices in the UUPB did not reflect the increase in the cost of materials that had occurred during 2005 and were, in fact, too low. As a result of its investigation, Lakeshore concluded that the UUPB prices were too low, and to compensate for that underpricing, it included in its bid (as to normal working hours and overtime) coefficients that were six percent higher than its ordinary coefficients.

The Army awarded the contract to Lakeshore on April 26, 2007. The contract includes all terms, conditions, and provisions set forth in the solicitation. In the year following entry into the contract, Lakeshore began 78 ...

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