U.S. ex rel. Durcholz v. Fkw Inc.

Decision Date25 February 1998
Docket NumberNo. EV 95-121 C B/H.,EV 95-121 C B/H.
Citation997 F.Supp. 1143
PartiesUNITED STATES of America, ex rel., Robert A. DURCHOLZ, and Durcholz Excavating and Construction, Inc., Plaintiffs, v. FKW INCORPORATED, Midwest Dredge & Excavating, Inc., Jeffrey J. Strange, and the United States of America, Defendants.
CourtU.S. District Court — Southern District of Indiana

Charles C. Griffith, Johnson Carroll & Griffith, P.C., Evansville, IN, John C. McDonald, Michael D. Tarullo, Schottenstein Zox & Dunn, Columbus, OH, for plaintiffs.

Robert F. Stayman, Ziemer Stayman Weitzel & Shoulders, Evansville, IN, James M. Peters, Monnet Hayes Bullis Thompson & Edwards, Oklahoma City, OK, Jeffrey B. Kolb, Emison Doolittle Kolb & Roellgen, Vincennes, IN, Bradley L. Williams, Ponce D. Tidwell, Ice Miller Donadio & Ryan, Indianapolis, IN, R. Joseph Sher, Senior Trial Counsel, Washington, DC, Marsha C. Massey, Assistant United States Attorney, Indianapolis, IN, Timothy F. Hyland, EFA Midwest, Great Lakes, IL, for defendant.


BARKER, Chief Judge.

This matter comes before the Court on (1) Plaintiffs' Motion to Vacate the Court's order substituting the United States for Defendant Jeffery J. Strange ("Strange") in Plaintiffs' tortious interference claim; (2) Strange's Motion to Dismiss Plaintiffs' tortious interference and False Claim Act ("FCA") claims as to him; (3) Defendant FKW Inc.'s ("FKW") Motion to Dismiss Plaintiffs' tortious interference and FCA claims as to it; and (4) Plaintiffs' Motion for Partial Summary Judgment on their FCA claims.1 For the following reasons, all of these motions are denied, with the exception of Strange's Motion to Dismiss Plaintiffs' tortious interference claim, which is denied as moot.2


This case arises out of events which occurred at the Crane Naval Surface Warfare Center ("Crane") in Crane, Indiana, in late 1994 and early 1995. At all material times, Strange was employed by the Navy at Crane as a civilian supervisory contract specialist in the office of the Officer in Charge of Construction ("OICC"). Strange Depo., vol. 1, at 22-24. Strange's immediate supervisors were Lieutenant DeWayne Roby ("Roby"), Assistant Officer in Charge of the OICC, and Commander Larry Laws ("Laws"), Officer in Charge of the OICC. Id., vol 2, at 170. FKW is a private construction company headquartered in Oklahoma City, Oklahoma and was employed as the Job Order Contract ("JOC") manager at Crane.4 Brian K. Frederick ("Frederick") was FKW's supervisor of operations at Crane in 1994 and 1995. Frederick Depo. at 16.

At issue in the instant case is a project at Crane to clear debris from two sedimentation ponds. The ponds, which were designed to prevent dirt and debris generated by explosives demolition from entering a nearby creek, had filled with sediment, threatening Crane's compliance with environmental regulations. Roby Aff. 8; Hunsicker E-Mail at Strange's Exhibit 4. In the summer of 1994, command personnel at Crane cited this issue as a matter of highest priority. Roby Aff. ¶ 10; Laws Aff. ¶ 31-32. Recognizing the need for an expedited effort to clear the ponds, a consensus developed among Crane officials that the project should be completed through FKW, instead of contracting it out separately. D. Smith Depo. at 77, 81; Roby Depo. at 46; Roby Aff. ¶ 28. It was also agreed that dredging should be used to complete the project because it was quicker than conventional excavation, which was the traditional alternative. Laws Aff. ¶ 41; Hill Aff. ¶¶ 5-7.

Strange was assigned to serve as the contracting officer on the sedimentation ponds project. Strange Depo., vol. 1, at 77. Soon thereafter he contacted the supervisor of the OICC, David Smith, Support Division Director for the Engineering Field Activity, to inquire into possible methods by which the work could be priced and contracted.5 Id., vol. 1, at 77-78; D. Smith Aff. ¶ 4. Although dredging was the method that the government preferred, using a non-prepriced item to support the delivery order would invariably slow the process. Laws Aff. ¶ 21. Smith advised Strange that the delivery order for the project could be issued as a "performance specification" as a way to price the project with conventional excavation ("conventional") line items listed in the UPB, even though the project would be performed by dredging.6 D. Smith Aff. ¶¶ 8. Indeed, if the delivery order were issued as a performance specification, Smith instructed Strange that he could use line items from the UPB which support any method of completing the project. Id. ¶¶ 8, 11.

In November 1994, Strange informally requested FKW to submit a proposal on the pond project. Strange Depo. at 134; Frederick Depo. at 27; Plaintiff's Exhibit 3. FKW determined that it would use a subcontractor to perform the project and, on November 28, 1994, Frederick requested bids on the project from potential subcontractors. Plaintiff's Exhibit 3; Frederick Depo. at 39. The request specified that the preferred method of performance was dredging, but Frederick later informed the potential subcontractors that they could submit bids based upon other methods as well. Frederick Depo. at 40; Bex Depo. at 115. FKW's request was transmitted to the potential subcontractors without Strange having seen it at the time. Strange Depo., vol. 1, at 153.

On December 9, 1994, Dale Bex, a civilian employee of the Department of the Navy Public Works Directorate, prepared a government cost estimate for the project in the amount of $373,644.09, which amount he based upon conventional line items from the UPB. Bex Depo. at 115. He based his estimate on the conventional line items because he understood that the delivery order would be issued as a performance specification, whereby any method that could complete the project might be used to price it, even if that method were not used. Id. at 115. Concurrently, also based upon conventional line items, FKW formulated its own estimate, which turned out to be virtually identical to the government estimate. Frederick Depo. at 58.

On December 11-12, 1994, FKW received bids for the project from various subcontractors, including:

                Contractor Amount of Bid
                (1) Durcholz                                 — $271,700
                (2) Hasenour & Sternberg                     — $297,000
                (3) Midwest Dredging & Excavation            — $369,800
                (4) Southwind                                — $528,448
                (5) Evergreen                                — $417,600

Frederick Depo. at 59-61. Frederick has testified that Durcholz planned to perform the project either by dredging or conventional excavation, Hasenour & Sternberg would do it by conventional excavating, and Midwest would do it by dredging. Id. at 190. At the time, Frederick believed that Strange and Bex knew that the Durcholz bid included dredging, but Strange, Bex and Roby have all testified that they believed Midwest was the lowest bidder for dredging and that Durcholz proposed only to use conventional excavation.7 Id. at 190-91; Strange Depo. at 176-78; Bex Depo. at 71, 112; Roby Depo. at 83. Frederick supplied Strange and Bex with the bid prices, but did not provide any indication of the methodology on which the bids were based. Strange Depo., vol. 1, at 169; Bex Depo. at 54, 59. Indeed, Strange even testified that Frederick told him that he was unsure what method Durcholz planned to use if awarded the project. Id. at 176. After being presented with the bid prices, Strange and Bex told Frederick that Midwest was the contractor that they wanted for the project.8 Frederick Depo. at 61. Despite what most of the relevant parties believed at the time, however, Durcholz had in fact submitted the lowest dredging bid on the pond project. Frederick Depo. 59-61.

On December 14, 1994, Strange issued a formal Request for Proposal to FKW without specifying the method by which the project was to be accomplished. Strange's Exhibit 7. Thereafter, on December 21, 1994, Frederick presented Midwest's plan for the project to, among others, Bex, Roby, and Strange, stating that FKW would base its proposal on the Midwest bid.9 Roby Aff. ¶ 43; Bex Depo. at 59. During the meeting, Roby was shown a sheet containing the bid prices without any indication of the method on which the bids were based. Id. at ¶ 44. He was then told, with no objection from Frederick, that the Durcholz and Hasenour & Sternberg bids were for conventional excavation, while the Midwest and Southwind bids were for dredging.10 Id. at ¶ 45; Roby Depo. at 76-84.

The next day, FKW submitted its formal written proposal for the project in the amount of $457,810. Strange's Exhibit 8. FKW priced its proposal by reference to attached conventional line items, but the figure was really based upon Midwest's bid.11 Strange Depo., vol. 2, at 208; FKW's Response Memorandum at 21. Because the proposal was higher than FKW's original estimate, which was calculated before receiving the subcontractor bids, the number of conventional line items had to be increased to make up for the increase in price. Frederick Depo. at 64. Following Strange's direction, FKW supported the increase in its proposal by adding a conventional line item for a road to be built from the ponds up to the containment site. Id. at 64. Since Midwest planned to use dredging, neither the road construction or the other convention line items would actually have to be performed. Id. at 64.

On December 22, 1994, a negotiation session was held between FKW's representatives, Frederick and his assistant, Jerry Stomp, and the government's representatives, Strange and Bex. Prior to the session, Bex determined that FKW's proposal was reasonable and, with Roby's approval, Strange and Bex adopted the proposal's figure as the government's...

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