Oman-Fishbach International v. Pirie

• Decision Date: 18 January 2002
• Docket Number: OMAN-FISCHBACH
• Citation: 276 F.3d 1380
• Parties: (Fed. Cir. 2002) INTERNATIONAL (JV), Appellant, v. Robert Pirie, SECRETARY OF THE NAVY, Appellee. 01-1075 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1380

276 F.3d 1380 (Fed. Cir. 2002)

OMAN-FISCHBACH INTERNATIONAL (JV), Appellant, v. Robert Pirie, SECRETARY OF THE NAVY, Appellee.

01-1075

United States Court of Appeals for the Federal Circuit

DECIDED: January 18, 2002

Appealed from: Armed Services Board of Contract Appeals

Jeffrey M. Young, Moore & Van Allen PLLC, of Raleigh, North Carolina, argued for appellant. With him on the brief was William H. Gammon.

Harold D. Lester, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for appellee. With him on the brief were Stuart E. Schiffer, Acting Assistant Attorney General; and David M. Cohen, Director. Of counsel on the brief was Robert C. Ashpole, Navy Litigation Office, Office of the General Counsel, Department of the Navy, of Washington, DC.

Before MAYER, Chief Judge, CLEVENGER and LINN, Circuit Judges.

MAYER, Chief Judge.

Oman-Fischbach International appeals the decisions of the Armed Services Board of Contract Appeals, ASBCA Nos. 41474 (May 15, 1991) and 44195 (July 12, 2000), denying its application for an equitable adjustment for additional costs incurred under its contract with the United States Navy. Because the board properly interpreted the contract, we affirm.

Background

The United States Navy, Atlantic Division, Naval Facilities Engineering Command awarded Oman a firm fixed-price contract for the construction of fuel tank facilities at Lajes Air Base, Terceira Island, Azores. Prior to bidding, an Oman representative attended a pre-bid site visit on Terceira Island, as suggested by the Navy. During the site visit all prospective bidders were taken on a bus tour that included stops at the location of the tank farm where construction was to take place and other remote locations on the Lajes Base. The bus tour did not travel to all of the waste disposal sites designated in the contract.

The contract required Oman to haul rubbish and debris resulting from its construction work to a base waste disposal site, and required compliance with disposal site regulations. Specification section 02200, paragraph 3.5.3.1 of the contract pertinent to these requirements states:

Except for soil impregnated with lead, the Contracting Officer shall direct the Contractor to dispose of waste materials to one of the following sites indicated on drawing C-2:

1) North end of abandon[ed] runway 29

2) North west end of active runway 34

3) South of the south tank farm, in the lowland (marsh) area.

Minimal grading and leveling shall be preformed [sic] at each site, as directed by the Contracting Officer.

Oman began work in 1985, and until August of 1987 it was able to use either the waste disposal site south of the south tank farm or other locations not delineated in the contract that were advantageous in both time and cost. In September of 1987, however, these waste sites had reached full capacity and Oman informed the Navy that it would begin using the disposal site at the north end of abandoned runway 29. On the first scheduled day of use, the disposal site at runway 29 was inaccessible because the Portuguese Armed Forces had locked the gate that allowed access to the disposal site through the Lajes Base. The contracting officer then instructed Oman to use the disposal site at the northwest end of active runway 34 via a route around the Lajes Base.

As a result of using the route around the Lajes Base, Oman incurred increased waste transportation costs. It submitted a price proposal for an equitable adjustment in the amount of $897,500. Through a series of reports, the Defense Contract Audit Agency questioned $431,185 of the requested equitable adjustment. The Navy then informed Oman that its price proposal was not in accordance with the Contract Disputes Act because it did not: (1) refer to the proposal as a claim; (2) request a final decision; and (3) reference the Disputes Clause of the contract. Oman filed a notice of appeal based upon the "deemed denial" of its price proposal. The board dismissed this appeal, ASBCA No. 41474 (May 15, 1991), and the Navy subsequently issued bilateral Modification P00052, to settle a subcontractor's claim and unilateral Modification P00053, in the amount of $215,271.20, to compensate Oman. Oman resubmitted its request for an equitable adjustment in the amount of $531,907 (reflecting the adjustment for the amount awarded in Modification P00053). The contracting officer issued a final decision denying Oman's claim but reaffirmed the amount awarded in Modification P00053. Oman appealed the contracting officer's decision to the board.

The board upheld the contracting officer's decision that Oman was not entitled to an equitable adjustment other than what was awarded in Modification P00053. It held that Oman failed to show that the Navy had affirmatively assumed, by implicit or explicit warranty, the risk of increased costs due to a sovereign act of a government not a party to the contract.

Discussion

We will not disturb the factual findings of the board unless they are fraudulent, arbitrary, capricious, so grossly erroneous as to necessarily imply bad faith, or unsupported by substantial evidence. 41 U.S.C. 609(b) (1994); McClure Elec. Constructors, Inc. v. Dalton, 132 F.3d 709, 710 (Fed. Cir. 1997). On questions of law, this court reviews the board's decisions de novo. 41 U.S.C. 609(b) (1994); W. Coast Gen. Corp. v. Dalton, 39 F.3d 312, 314 (Fed. Cir. 1994). Notwithstanding this lack of deference on questions of law, we accord the board's legal determinations careful consideration because of its experience in construing government contracts. See Ingalls Shipbuilding, Inc. v. Dalton, 119 F.3d 972, 975 (Fed. Cir. 1997); W. Coast, 39 F.3d at 314.

Oman challenges the board's conclusion that there was no warranty of access to the haul route through the Lajes base. In support of its position, Oman argues that paragraph 3.5.3.1 of the contract was silent as to the haul route for access to the waste disposal sites at the north end of abandoned runway 29 and at the northwest end of active runway 34. It further contends that this contractual silence coupled with the government's representations during the pre-bid site visit created an implied warranty of access through the Lajes Base to the waste disposal sites at runways 29 and 34. Oman concedes that the contracting officer had sole discretion under the contract to determine which of the three waste disposal sites were to be used by it; however, because of the warranty of access created by the government, the contracting officer could not order a haul route other than the one through the Lajes Base.

The Navy responds that no implied warranty was created because the express language of the contract carries no clear and direct affirmative promise from which a warranty or guarantee can be inferred. The Navy points out that the contract does not identify the particular haul route to be used in getting to the contract's identified waste disposal sites. Moreover, the "Site Investigation and Conditions Affecting The Work," 48 C.F.R. 52.236-3 (April 1984), and "Conditions Affecting The Work" clauses, expressly placed the burden on Oman to ascertain the nature and location of the work. The Navy also argues that Oman improperly seeks to rely upon parol evidence to create a contractual warranty.

"[A] warranty is an assurance by one party to an agreement of the existence of a fact upon which the other party may rely;...