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Bell BCI Co. v. United States

June 25, 2009


Appeal from the United States Court of Federal Claims in 03-CV-1613, Judge Thomas C. Wheeler.

The opinion of the court was delivered by: Prost, Circuit Judge.

Published opinion

Before NEWMAN, RADER, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Circuit Judge NEWMAN.

Bell BCI Company ("Bell") and the National Institutes of Health ("NIH") entered into Contract No. 263-98-C-0102 on March 26, 1998. The fixed-price contract originally required Bell to construct a new five-story laboratory building by June 29, 2000. After several significant changes to the contract, Bell substantially completed a six-story laboratory building on February 8, 2002. After the government denied Bell's claim for equitable adjustment, Bell sued the government for breach of contract and requested that the United States Court of Federal Claims review several of the contracting officer's ("CO's") decisions. The court ultimately found for Bell in all regards. Bell BCI Co. v. United States, 81 Fed. Cl. 617 (2008). The government now appeals the decision in its entirety. For the reasons set forth below, we affirm-in-part, vacate-in-part, and remand.


In 1998, the government decided to construct a new building on the NIH campus in Bethesda, Maryland. The government awarded the contract to Bell, even though Bell was not the lowest bidder. The contract included language from the Federal Acquisition Regulations ("FAR"), 48 C.F.R. § 52.243-4(d), which expressly allows for equitable adjustment:

If any change under this clause causes an increase or decrease in the Contractor's cost of, or the time required for, the performance of any part of the work under this contract, whether or not changed by any such order, the Contracting Officer shall make an equitable adjustment and modify the contract in writing.

Bell was to complete the five-story building by June 29, 2000. It began construction on April 1, 1998, and proceeded on schedule until December 1998. At that time, the government realized it had a budget surplus and decided to add another floor (a "new" fourth floor) to the building. To govern the contractual changes, the parties entered into Modification 93 ("Mod 93") on October 2, 2000. Mod 93 included a price increase to pay for the new floor, and gave a revised project completion date. Bell agreed to meet fourteen "substantial completion" milestones during the construction period, and the parties agreed upon liquidated damages of $266 per day of delay. Paragraph 4 of Mod 93 says that the modification will increase the contract amount by $2,296,963 . . . as full and equitable adjustment for the remaining direct and indirect costs of the Floor 4 Fit-out (EWO 240-R1) and full and equitable adjustment for all delays resulting from any and all Government changes transmitted to the Contractor on or before August 31, 2000.

Paragraph 8 of Mod 93 reads:

The modification agreed to herein is a fair and equitable adjustment for the Contractor's direct and indirect costs. This modification provides full compensation for the changed work, including both Contract cost and Contract time. The Contractor hereby releases the Government from any and all liability under the Contract for further equitable adjustment attributable to the Modification.

The language in paragraph 8 was repeated in a number of subsequent modifications.

After the parties adopted Mod 93, Mr. Temme (who worked for NIH's construction quality manager) and Mr. Kutlak (the CO's technical representative) informed NIH personnel that NIH should refrain from making additional changes to the project. Bell BCI, 81 Fed. Cl. at 623. Nonetheless, the government issued 113 additional modifications, which incorporated 216 Extra Work Orders ("EWOs"). An additional fifty-eight issued EWOs were never incorporated into any modification. Bell ultimately missed thirteen of the fourteen milestone dates set forth in Mod 93. Shortly after Bell completed construction, it submitted a Request for Equitable Adjustment to the CO. The CO denied the claim, and instead asserted claims against Bell for liquidated damages, credits due the government, the cost of retests, and estimated costs for "outstanding major deficiencies." Id. at 624.

At that point, Bell filed suit in the Court of Federal Claims. Both parties filed cross-motions for summary judgment, which the court denied. Bell BCI Co. v. United States, 72 Fed. Cl. 164, 170 (2006). The court granted the government's motion to dismiss Bell's promissory estoppel claim. Id. at 167--68. After trial, the court found in favor of Bell. Bell BCI, 81 Fed. Cl. at 617. In total, the court awarded Bell $6,200,672, which breaks down as follows: (1) $2,058,456 in labor inefficiency costs attributable to the cumulative impact of the changes; (2) $1,602,053 for the delays of remaining on the project after April 30, 2001; (3) $366,051 as a 10% profit on the delay and labor inefficiency costs; (4) $563,125 as the unpaid balance of the contract price; and (5) $1,610,987 for unresolved changes covered by the fifty-eight EWOs not incorporated into any modification. Id. at 619. The court also rejected NIH's claim to liquidated damages, id. at 640, and sustained subcontractor Stromberg Metal's cumulative impact claim, id. at 641. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(3).


The trial court's findings of fact are reviewed under the "clearly erroneous" standard, while its legal holdings are reviewed de novo. Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1292 (Fed. Cir. 2002). Credibility and intent determinations are questions of fact. Comm. Contractors, Inc. v. United States, 154 F.3d 1357, 1369 (Fed. Cir. 1998); Dureiko v. United States, 209 F.3d 1345, 1356 (Fed. Cir. 2000). Contract interpretation is a question of law. Lucent Techs., Inc. v. Gateway, Inc., 543 F.3d 710, 717 (Fed. Cir. 2008).

Different standards of review are applicable to different aspects of a damages award. "[T]he clear error standard governs a trial court's findings about the general type of damages to be awarded (e.g., lost profits), their appropriateness (e.g., foreseeability), and rates used to calculate them (e.g., discount rate, reasonable royalty). The abuse of discretion standard applies to decisions about methodology for calculating rates and amounts." Home Sav. of Am. v. United States, 399 F.3d 1341, 1347 (Fed. Cir. 2005). The evidentiary basis for a court's ruling on damages need only be "sufficient to enable a court or jury to make a fair and reasonable approximation," and as long as a party can clearly establish a reasonable probability of damage, "uncertainty as to the amount will not preclude recovery." Seaboard Lumber, 308 F.3d at 1302 (quoting Specialty Assembling & Packing Co. v. United States, 355 F.2d 554, 572 (Ct. Cl. 1966) and AceFed. Reporters, Inc. v. Barram, 226 F.3d 1329, 1333 (Fed. Cir. 2000) (quotation marks omitted)).

A. Cumulative Impact

The first issue on appeal is whether the release language in paragraph 8 of Mod 93, repeated in later modifications, covers Bell's cumulative impact claims. Paragraph 8 says that the modification "provides full compensation for the changed work" and that Bell "hereby releases the Government from any and all liability ...

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