Premier Office Complex of Parma, LLC v. United States

• Decision Date: 19 February 2019
• Docket Number: 2018-1231
• Citation: 916 F.3d 1006
• Parties: PREMIER OFFICE COMPLEX OF PARMA, LLC, Plaintiff-Appellant v. UNITED STATES, Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

916 F.3d 1006

PREMIER OFFICE COMPLEX OF PARMA, LLC, Plaintiff-Appellant

v.UNITED STATES, Defendant-Appellee

2018-1231

United States Court of Appeals, Federal Circuit.

Decided: February 19, 2019

Peter J. Georgiton, Dinsmore & Shohl, LLP, Columbus, OH, argued for plaintiff-appellant. Also represented by Peter W. Hahn.

Anna Bondurant Eley, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Kenneth Dintzer, Robert Edward Kirschman, Jr., Joseph H. Hunt.

Before Newman, Wallach, and Stoll, Circuit Judges.

Stoll, Circuit Judge.

Premier Office Complex of Parma, LLC ("Premier") appeals the decision of the United States Court of Federal Claims granting the government's motion for summary judgment and denying Premier's cross-motion for summary judgment of liability. The contract between Premier and the government unambiguously requires Premier to provide a facility conforming to Level II security requirements as set forth under Interagency Security Committee ("ISC") standards. Premier's work in constructing such a facility thus falls within the scope of work of the contract. We affirm.

BACKGROUND

In 2007, the Department of Veterans Affairs ("VA") sought to lease space in Parma, Ohio for use as a VA out-patient clinic ("Parma Clinic"). It issued a pre-solicitation Expressions of Interest memorandum, which stated that the lease would be for approximately 62,000–74,000 square feet of space and that "[t]he selected building must comply with the Interagency Security Committee Security Design Criteria for New Federal Office Buildings and Major Modernization Projects as well as other security guidelines, which will be provided during the solicitation for offers process." J.A. 41.

The VA subsequently issued Solicitation for Offers No. VA-101-08-RP-0034 ("SFO") detailing the lease requirements for the Parma Clinic. Section 4.2.7 of the SFO discusses the physical security requirements of the space and is reproduced below:

4.2.7 Physical Security Requirements

Lessor shall provide the following physical security measures or features for the spaces or areas as listed below:

1. The Government will determine security standards for facilities and agency space requirements. Security standards will be assessed based upon tenant agency mix, size of space requirement, number of employees, use of the space, location of the facility, configuration of the site and lot, and public access into and around the facility. The Government will designate a security level from Level I to Level IV for each space requirement. The Contracting Officer (or the Contracting Officer's designated representative) will provide the security level designation as part of the space requirement. A copy of the Government's security standards is available at www.oca.gsa.gov. A single use building over 70,000 square feet will be a Level III Security Requirement .

J.A. 92–93 (emphasis added). Section 4.2.7 also contains a Physical Security Table, which labels seven spaces within the building with their own applicable security requirements. J.A. 93.

During a pre-bid meeting, a bidder asked for clarification on whether the SFO's Level III security requirement was actually a Level II requirement. On June 3, 2008, the VA issued Amendment #1 to the SFO to clarify this issue and others. Amendment #1 states in part:

4. Security Level—Clarify whether the project requires Level 2 or 3 security.

Based upon ISC Standards, the project would be a Level 2, based on 11–150 personnel and a size of 2,500 to 80,000 rentable square feet.

J.A. 192. Amendment #1 did not define "ISC Standards" or reference any documents containing the ISC standards. On June 10, 2008, Premier signed an acknowledgement of receipt of Amendment #1. J.A. 193.

In response to the SFO as amended, Premier submitted a proposed design narrative for the Parma Clinic. The design narrative described the site development, building, and building systems proposed by Premier, and also considered "at a conceptual level," issues such as configuration, structural systems, and interior design. J.A. 198. The design narrative did not address the physical security requirements described in Amendment #1. See generally J.A. 198–209.

On November 12, 2008, Premier and the VA entered into Lease No. VA-101-08-RP-0034 (the "Lease"), under which Premier was to provide "[a] fully built out space as described, all services, maintenance, operations, alterations and other considerations as set forth in Solicitation for Offers No. VA-101-08-RP-0034 and all amendments ." J.A. 46 (emphasis added). The Lease incorporated and attached the SFO, Amendments #1–3 to the SFO, Premier's response to the SFO and Amendments #1–3, and Premier's proposed building plan. J.A. 47.

On March 3, 2010—nearly one and a half years after execution of the Lease—the VA wrote a memorandum to Premier inquiring about "several areas of concern" that the VA had regarding Premier's first design submittal. J.A. 359. The memorandum asked "[h]ow will the Interagency Security Committee (ISC) Security Design Criteria be addressed such as progressive collapse? Refer to SFO section 4.2.7 and amendment #1." J.A. 360. In a separate communication, the VA advised Premier to obtain access to the ISC standards and explained that "the project needs to be designed according to the ISC." J.A. 362.

On March 9, 2010, Premier wrote to ISC to request access to the standards. The ISC denied Premier's request the following day and informed Premier that release of ISC documents "may only be made to Federal, state, or local government entities," and that the documents had to be requested by a federal contracting officer who has a "need to know" the information. J.A. 363. The VA obtained copies of three ISC documents and, on March 16, 2010, electronically sent them to Premier, noting that the documents are what Premier "will need for the VA security issues." J.A. 217. The three ISC documents were: (1) ISC Security Design Criteria for New Federal Office Buildings and Major Modernization Projects; (2) ISC Security Standards for Leased Space; and (3) Facility Security Level Determinations for Federal Facilities, An ISC Standard. J.A. 217, 219, 321, 338.

Shortly after the VA sent the ISC documents to Premier, some confusion ensued as to which security standard applied to the Parma Clinic facility. Reversing course on previous communications, the VA instructed Premier to disregard the ISC requirements in the SFO and to incorporate only the requirements as indicated in the latest VA Physical Security Guide. See J.A. 365–66. On March 26, 2010, the VA electronically sent to Premier a copy of the VA Life-Safety Protected Design Guide, which it noted "is more straight forward than the ISC and should have been included in the SFO." J.A. 367. On April 2, 2010, the VA reiterated in a memorandum that the facility should be designed "according to the VA Life-Safety Protected Design Manual." J.A. 370. Several months later, however, the VA again changed its position. Specifically, on July 26, 2010, the VA wrote to Premier advising that "[t]he ISC is the design standard, and the facility should be designed with that criteria." J.A. 372.

On October 26, 2010, Premier sought clarification on whether the ISC Level II requirements applied to the entire facility. See J.A. 378. Premier's stated understanding was that only the individual spaces listed in Section 4.2.7's Physical Security Table needed to comply with the ISC. Premier noted that there would be significant additional costs associated with applying the ISC standard to spaces beyond those listed in the Physical Security Table and asked if the VA intended to pay for the additional costs. See J.A. 378. The VA responded on October 29, 2010, instructing Premier that the project "must conform to the ISC Level II Security Requirement at no additional cost to the government." J.A. 379. It noted that the ISC standard was "available upon request prior to bid," and that "it pertains to an entire building not individual rooms." J.A. 379. Although Premier disagreed with this position, it eventually designed and constructed the building in accordance with the ISC standards. See Premier Office Complex of Parma, LLC v. United States , 134 Fed.Cl. 83, 86 (2017) (" Decision ") (citing Complaint ¶ 18, Premier Office Complex of Parma, LLC v. United States , 134 Fed.Cl. 83 (2017) (" Complaint ")).

On February 14, 2011, Premier wrote to the VA asking for a determination regarding the Parma Clinic's physical security requirements. On November 1, 2011, Premier's counsel sent a letter to the VA requesting $ 964,356.40 for additional costs incurred by Premier as a result of the VA's alleged changes to the lease. See J.A. 382. According to Premier, the VA's addition of the ISC security requirements "substantially increased" Premier's costs to design and construct the Parma Clinic. J.A. 382. On December 5, 2011, the VA issued a final determination and denied Premier's request for payment. It explained that "the building security requirements were clearly spelled out within the SFO in section 4.2.7 and then clearly confirmed in Amendment #1 prior to the Lessor providing a bid and receiving the award." J.A. 395. On February 11, 2014, Premier's counsel submitted a certified claim for payment to which the VA did not respond. On December 22, 2014, Premier filed the current lawsuit in the Court of Federal Claims, alleging that the VA breached the Lease by directing Premier to perform work outside the scope of the contract and refusing to compensate Premier for the extra costs. See Complaint ¶¶ 5–7.

On cross motions for summary judgment, the Court of Federal Claims ruled that the Lease as a whole "provided that ISC Standard Level II applied to the entire facility." Decision , 134 Fed.Cl. at 90. It determined that while Section 4.2.7 itself was latently ambiguous, Amendment #1 resolved the ambiguity as it "clearly requires...