Marine Indus. Constr. v. The United States

• Decision Date: 17 February 2022
• Docket Number: 15-1189
• Parties: MARINE INDUSTRIAL CONSTRUCTION, LLC, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

MARINE INDUSTRIAL CONSTRUCTION, LLC, Plaintiff,
v.
THE UNITED STATES, Defendant.

No. 15-1189

United States Court of Federal Claims

February 17, 2022

Summary Judgment; Termination for Default; Termination for Convenience; Conversion; Excusable Delay; Differing Site Condition; Superior Knowledge; Dredging; Reprocurement Costs; Liquidated Damages; Compensable Delay; Notice; Waiver

Joseph A. Yazbeck, Jr., with whom was David H. Bowser, Jordan Ramis PC, all of Lake Oswego, Oregon, for plaintiff.

Jimmy S. McBirney, Trial Attorney, with whom were Douglas K. Mickle, Assistant Director, Robert E. Kirschman, Jr., Director, Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, all of Washington, D.C., and Anna D. Ross, Assistant District Counsel, U.S. Army Corps of Engineers, of Seattle, Washington, for defendant.

OPINION AND ORDER

RYAN T. HOLTE, JUDGE

A Perfect Storm

The skies unrest when the government tests performance-based solicitations, A wary dredger would fare far better if it worked with fewer hesitations, Fighting the elements, with debris and sediments, onward the task did drag, Before they knew it, the fish window, they blew it, so up they raised the white flag, Motions were filed, allegations compiled, but material facts are disputed, To trial we go so the parties may show if this perfect storm has concluded.^[1]

Marine Industrial Construction, LLC ("MIC" or "plaintiff"), accuses the government of breach of implied warranty and wrongful termination for default of a waterway dredging contract

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awarded for $1, 290, 250. The government counterclaims for costs related to the termination of the contract totaling $1, 031, 751.50, plus interest. The Court bifurcated the motions contained within the cross-motions for summary judgment to first address four issues relating to the timeliness of evidentiary objections, exhibit authentication, designating a witness as an expert, and the admissibility of certain statements. The Court decided those four issues on 29 December 2020, conducted a site visit on 4 October 2021, and held oral argument on the remaining issues on 5 October 2021. This Order decides all remaining issues contained within the cross-motions for summary judgment. For the following reasons, the Court grants in part and denies in part plaintiff's motion for summary judgment and grants in part and denies in part the government's cross-motion for summary judgment.

I. Factual History^[2]

A. A Perfect Storm Brews

On 25 July 2014, the U.S. Army Corp of Engineers ("USACE" or "the government") issued Solicitation W912DW-14-B-0008 ("the solicitation"), for hydraulic dredging at the Quillayute River Waterway in La Push, Washington ("the waterway"). Def.-Counterclaimant's Opp'n to Pl.'s Mot. for Summ. J. and Cross-Mot. for Summ. J. ("Def.'s Cross-MSJ") at 3, ECF No. 83 (citing App. to Def.'s Cross-MSJ ("Def.'s Cross-MSJ App.") at 131-280 (Contract, FY14 Maintenance Dredging Quillayute River Waterway, La Push, Washington, Contract Number W192DW-14-C-0024)). The solicitation warned against dangerous weather conditions and some debris in the dredging area. Id. at 3-5 (citing Def.'s Cross-MSJ App. at 165, 193, 263, 273, 282 (the solicitation)). The solicitation urged bidders to perform a site visit to inspect "the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site." Id. at 5 (citing Def.'s Cross-MSJ App. at 165 (the solicitation)). The solicitation informed prospective bidders the government had no knowledge of "artificial obstructions" that would require "additional equipment for economical removal." Decl. of David H. Bowser in Supp. of Pl.'s Mots. for Summ. J. ("Bowser Decl.") Ex. K at 1, ECF No. 80-10 (2014 solicitation).

The government procures dredging services of the waterway typically every two to three years. Cross-MSJ Oral Arg. Tr. ("Tr.") at 20:24-21:8, ECF No. 121. In 2014, however, the solicitation for these services was markedly different from past years. See Ex. K (comparison of solicitations from 2014, 2011, 2009, 2007, 2003, and 2002). The government moved "from a design-based specification to a more performance-based specification." Tr. at 197:19-198:25 (government counsel explaining the changes in 2014). The government "streamlined" the solicitation by removing certain disclaimers and requirements to bid on the contract. Id.; Def.'s Cross-MSJ at 42. In particular, the government removed warnings of sunken boats, fishnets, steel trolling wire, and machinery-all likely to cause frequent downtime. Compare Ex. K at 1- 2 (2014 solicitation), with id. at 9-10 (2011 solicitation), and id. at 13 (2009 solicitation). The government also removed precipitation information for the area and warnings about the resultant

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"fast currents" carrying "[l]arge logs and trees" likely to arise "with little warning" and cause damage to equipment. Id. Additionally, the government added a boat basin to the scope of the solicitation-a portion of the waterway that had not been dredged in full since 1982. Bowser Decl. Ex. J at 73, ECF No. 80-9 (the resolicitation stating, "[p]ortions of the marina boat basin have not been dredged since 1982.").

Plaintiff submitted the lowest bid on 25 August 2014. Def.'s Cross-MSJ at 7. Plaintiff has over 60 years of experience dredging ports, rivers, and waterways, averaging 200, 000 cubic yards dredged annually. Decl. of Joseph Bernert in Supp. of Pl.'s Mots. for Summ. J. ("Bernert Decl.") Ex. H at 63-64, ECF No. 81-1 (plaintiff's interrogatory response). On numerous government dredging contracts, plaintiff received an "excellent" contract performance rating. Id. at 64. Plaintiff owns all its dredging equipment, including pumps, augers, and clamshells. Tr. at 12:10-13:2 (plaintiff's counsel explaining MIC does not have to rent equipment). Despite plaintiff's experience as a veteran dredging contractor, plaintiff did not perform a site visit to inspect surface and subsurface materials prior to submitting its bid, although this was its "usual practice." Def.'s Cross-MSJ at 5 (citing Def.'s Cross-MSJ App. at 405 (deposition of MIC employee Michael Eakin at 29:9-11 (excerpts) (stating "nobody from MIC did a site visit prior" to plaintiff submitting its bid)), 356-57 (deposition of MIC co-owner Joseph Bernert at 22:22- 23:9 (excerpts) (confirming plaintiff's "usual practice" is to "walk a job"))); Tr. at 10:15-19 (plaintiff's counsel explaining plaintiff possessed "internal knowledge" of the site from a job years prior). Plaintiff also did not review bidder inquiries in the solicitation, although it usually did so. Def.'s Cross-MSJ at 6 (citing Def.'s Cross-MSJ App. at 314-16 (deposition of MIC employee Michael Harrison at 121:19-123:12 (excerpts) (testifying reviewing the bidder inquiries "most likely" would have "impacted [his] decision to either make the bid or how much [he] bid")), 359 (deposition of MIC co-owner Joseph Bernert at 25:2-13 (excerpts) (testifying plaintiff would "usually look at bidder inquiries that come in during the solicitation"))).

Plaintiff's low bid won the solicitation; the government sent plaintiff a letter requesting it confirm its bid in writing. Id. at 7-8 (citing Def.'s Cross-MSJ App. at 1-130 (contract), 449 (USACE letter to MIC seeking verification of bid (advising plaintiff its bid was "31% below the Independent Government Estimate (IGE) and significantly lower than all other bids," asking it to "verify its bid in writing," to check for errors, and describing debris)). Plaintiff moved ahead without adjusting its submission. Id. at 9 (citing Def.'s Cross-MSJ App. at 295 (deposition of MIC employee Michael Harrison at 66:6-17 (excerpts)), 397 (deposition of MIC President David Bernert at 36:11-37:3 (excerpts)), 410 (deposition of MIC employee Michael Eakin at 40:9-14 (excerpts))). The government awarded plaintiff the contract on 12 September 2014. Id. (citing Def.'s Cross-MSJ App. at 413 (deposition of MIC employee Michael Eakin (excerpts))).

B. The Perfect Storm Strikes

The USACE held a preconstruction conference with plaintiff on 24 September 2014, at which the USACE issued a notice to proceed. Id. at 10; Tr. at 116:3-7 (government counsel indicating work conditions in the fall are better than winter). The notice to proceed triggered a fourteen-day deadline for plaintiff to provide certain required pre-dredging submittals to the USACE and a 150-day deadline to complete the project. Def.'s Cross-MSJ at 10 (citing Def.'s Cross-MSJ App. at 39, 75-77 (contract)). Plaintiff did not provide its final submittal until 10

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November 2014, more than one month after the 8 October 2014 deadline. Id. at 12-13 (citing Def.'s Cross-MSJ App. at 423-24 (deposition of MIC employee Michael Eakin at 72:20-73:21 (excerpts)), 525 (FY2014 Dredging Project Submittal Register), 464 (USACE email to plaintiff on 14 October 2014, "we really need to see the remaining submittals soon"), 466 (USACE email to plaintiff on 17 October 2014, "We have not received your submittals (14 days from NTP has long past) . . . . We have not heard from you regarding these submittals . . . . The weather and marine conditions will continue to get worse as time slips by . . . .")). The USACE approved plaintiff to begin dredging the same day, 10 November 2014, Def.'s Cross-MSJ App. at 525; then on 18 November 2014, plaintiff began dredging the water way. Tr. at 63:18-25 (plaintiff's counsel explaining MIC began dredging the outer channel before encountering weather conditions that made dredging the outer channel not ideal).

Following this delayed start, plaintiff immediately experienced further delays to its dredging. On 19 November 2014, plaintiff encountered its first storm event causing six days of delay to its operation. Pl.'s Suppl. Brief in Supp. of...