LCC-MZT Team IV v. United States

• Decision Date: 23 April 2021
• Docket Number: 16-1406C
• Parties: LCC-MZT TEAM IV, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

LCC-MZT TEAM IV, Plaintiff,
v.
UNITED STATES, Defendant.

No. 16-1406C

United States Court of Federal Claims

April 23, 2021

Redacted Version Issued for Publication: August 26, 2021 ^[1]

Katherine M. Knudsen, Procopio, San Diego, California for plaintiff. With her was Craig A. Ramseyer, Procopio, San Diego, California.

Erin K. Murdock-Park, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With her were Kelly Krystyniak, Margaret J. Jantzen, and Sonia Orfield, Trial Attorneys, Commercial Litigation Branch, L. Misha Preheim, Assistant Director, Commercial Litigation Branch, Martin F. Hockey, Jr., Acting Director, Commercial Litigation Branch, and Brian Boynton, Acting Assistant Attorney General, Civil Division, Department of Justice.

OPINION

MARIAN BLANK HORN, JUDGE

At issue in the above-captioned case are numerous disputes arising out of a construction contract between LCC-MZT Team IV (LCC-MZT), also known as Larkor Construction/Macro-Z-Technology Team IV Joint Venture, and the United States Naval Facilities Engineering Command Northwest (NAVFAC). In the above-captioned case, plaintiff LCC-MZT filed a complaint in the United States Court of Federal Claims on October 26, 2016. Subsequently, plaintiff filed an amended complaint, followed by a second amended complaint in which plaintiff identifies fifteen claims which were submitted to the NAVFAC contracting officer for a final decision. Plaintiff's second amended complaint seeks an amount "in excess of $4, 130, 905.12" in damages in this court, "together with interest thereon pursuant to the Contract Disputes Act." Thereafter, defendant filed an answer to plaintiff's second amended complaint. Following the second amended complaint and answer, and, after extensive discovery, the court held a lengthy trial, after which the parties filed post-trial briefs and the court held closing argument.

FINDINGS OF FACT

LCC-MZT was a joint venture consisting of Larkor Construction Company, Inc. (LCC) and Macro-Z-Technology Company (MZT). The parties stipulated that MZT is a general contractor specializing in facilities construction and civil construction. Bryan Zatica testified at the trial in the above-captioned case that he incorporated MZT and that he was the president and owner of MZT at the time of contract performance and the trial. Bryan Zatica testified that MZT entered into the Small Business Administration's (SBA's) section 8(a) program in 1999 or 2000, and that MZT graduated from the SBA's 8(a) program in 2008 or 2009. Bryan Zatica testified that he and LCC's principal, Larry Landa, "grew up together." On June 8, 2011, LCC and MZT entered into a joint venture agreement forming the LCC-MZT joint venture. The LCC-MZT joint venture was a joint venture under SBA's section 8(a) mentor-protégé joint venture program. LCC was a section 8(a) contractor and a protégé, and MZT was a former section 8(a) contractor and was the mentor in the LCC-MZT joint venture. According to Bryan Zatica's testimony at trial, the LCC-MZT joint venture was formed with the intention of submitting a bid in response to a solicitation issued by NAVFAC related to a construction project at Naval Base Kitsap Bangor in Silverdale, Washington. Mr. Zatica testified that, prior to LCC-MZT's work on the construction project, MZT had completed "five or six projects" on Naval Base Kitsap Bangor since 2004, with a total revenue of approximately $35, 000, 000.00. One of the projects at Naval Base Kitsap Bangor that MZT had worked on was a project referred to as P-971, which Mr. Zatica testified commenced in 2004 and, similar to the project at issue in the above-captioned case, also involved construction of a concrete building.

The Contract and the Contract's Specifications

NAVFAC awarded Contract No. N4425-12-C-3007 (the Contract) to LCC-MZT, which had had a value of $10, 590, 000.00 and had been set-aside for section 8(a) contractors. The scope of work in the Contract involved the construction of the P-913 Explosive Handling Wharf Security Force Facility (P-913) at Naval Base Kitsap Bangor in Silverdale, Washington. The parties have stipulated that the P-913 project "entailed the construction of a building structure, which included a concrete foundation and floor slab, concrete exterior walls, and a reinforced concrete roof. The building was constructed of reinforced concrete." Bryan Zatica testified at trial that LCC-MZT submitted the lowest price bid in connection with the P-913 project at Naval Base Kitsap Bangor.^[2]

As issued on January 31, 2012, the Contract stated that LCC-MZT was to begin performance of the P-913 project within fifteen days of award, and that work under the Contract was required to be complete within 555 calendar days of award, which produced an original contract completion date of August 8, 2013. The Contract also incorporated clauses from the Federal Acquisition Regulation (FAR), including FAR clause 52.211-12, titled "LIQUIDATED DAMAGES--CONSTRUCTION (SEP 2000)." (capitalization in original). Pursuant to FAR clause 52.211-12, which was included in the Contract, LCC-MZT was responsible for compensating the government $4, 285.00 for each calendar day of delay until the contract work was completed.

The Contract's Specifications was a 1600-plus page document, prepared by design company, URS Corporation, which detailed the work to be completed on the P-913 project, and the manner in which the work was to be completed. The Contract's Specifications required that a secure parking garage be included within the structure LCC-MZT was to construct. The Contract's Specifications stated that "[s]pecial construction features include seismic reinforcement, a reinforced roof to support automatic weapons mounts, a loading dock and environmental protection measures." Additionally, the Contract's Specifications stated that the Explosive Handling Wharf "will remain in operation during the entire construction period" of the P-913 project, and that "work under this contract requires special attention to the scheduling and conduct of the work in connection with existing operations." The parties stipulated that the site for the P-913 facility LCC-MZT would be constructing was located within a "high security area" on Naval Base Kitsap Bangor, and "[t]he days when the convoys moving [redacted] would impact work were referred to as 'Red Days.'" During the trial, NAVFAC construction manager for the Contract, Justin Nodolf, testified that the "local user" of the P-913 building was the United States Strategic Weapons Facility Pacific (SWFPAC). Mr. Nodolf stated that SWFPAC was "in charge of, effectively, the assets located on the base in terms of maintaining and delivering the product down to the boat. However, they actually report directly to Strategic Systems Programs, SSP, who's ultimately the end client on this project."

Section 1.16 of the Contract required "LEVEL A PARTNERING," which required "[k]ey personnel" from LCC-MZT and NAVFAC to periodically meet in-person at an off-site location with a facilitator "in an effort to achieve a quality project done right the first time, within budget, on schedule, and without any safety mishaps." (capitalization in original). The parties have stipulated that Dorriah Rogers of Paradyne Consulting served as the facilitator for the Level A Partnering meetings.

Section 0114 00 of the Contract's Specifications was titled "WORK RESTRICTIONS." (capitalization in original). Paragraph 1.3.2 in section 0114 00 defined the Contract's "[r]egular core working hours" as an eight-and-a-half-hour period "between 7:00 a.m. and 5:00 p.m., Monday through Friday, excluding Government holidays." Pursuant to paragraph 1.3.3 in section 0114 00, if LCC-MZT wished to work outside of regular working hours, LCC-MZT needed to apply for approval from the contracting officer fifteen days before such work. Paragraph 1.2.1 in section 0114 00 states:

(1)10 work days a month will be impacted by convoys and operations at the Explosive Handling Wharf Area. The impacted work days may not be consecutive. A schedule reflecting open or available timeframes will be provided to the Contractor after award, and monthly during the project. An updated schedule will be provided five (5) days prior to the beginning of each month for the following month. Urgent operation requirements will require adjustments to the schedule. Changes resulting in less than 48 hours notice [sic] will be considered a changed condition

(2) Notification, 10 days in advance of activities that will need to access the Waterfront Restricted Area (Explosive Handling Wharf Entry Control Point at [redacted]) will need to be coordinated with the Contracting Officer and SWFPAC Facilities

[Redacted]; the contractor shall stop all exterior work and move to their personnel out of visual range of [redacted] Road. There will be approximately 300 convoys during this project

During times of convoys past the construction site the contractor will be directed, by the Contracting Officer or designate, to a muster [sic] his forces so that they will not be in visual contact with the convoy. Contractor shall provide an area, or means to prevent observation of the convoy. Contractor shall submit a View Obstruction Plan for Contracting Officer approval

(3) [Redacted] Road will not be accessible during convoys or operations at EHW. No Equipment or material deliveries will be allowed. Contractor will be restricted to the Construction Enclave during convoys and Operations at EHW. Access to the project site will be through the [redacted] Road Trail from [redacted] Road, material and equipment must be staged in the Construction Enclave or be brought in through the [redacted] Road Trail. Contractor parking will be relocated to a site within 5 miles of the project site. Exact location will be

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