KiewitPhelps ( 2019 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of-- )
)
KiewitPhelps ) ASBCA No. 61197)
Under Contract No. W9128F-12-C-0023 )
APPEARANCES FOR THE APPELLANT: Vivian Katsantonis, Esq.
Christopher M. Harris, Esq.
Watt, Tieder, Hoffar & Fitzgerald, L.L.P.
McLean, VA
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.
Engineer Chief Trial Attorney
Thomas J. Ingram, Esq.
Engineer Trial Attorney
U.S. Army Engineer District, Omaha
OPINION BY ADMINISTRATIVE JUDGE CLARKE
This appeal arises from the contract to construct a five-level, one millio.n square
foot facility to replace the U.S. Strategic Command (STRATCOM) complex at Offutt
Air Force Base (OAFB) near Omaha, Nebraska. Specifically, this appeal deals with a
dispute over wallboard (gypsum board) finishing requirements throughout the buildings.
We have jurisdiction pursuant to the Contract Disputes Act of 1978 (CDA), 41 U.S.C.
§§ 7101-7109. We sustain the appeal.
FINDINGS OF FACT
Finishing vs. Finishes
1. Mr. Douglass is an operations manager for Hensel Phelps, one of the joint
venture partners Kiewit and Hensel Phelps making up KiewitPhelps (KP). He had
overall responsibility for this project. (Tr. 1/51-53) Mr. Douglass explained that
drywall finishing is "used synonymously with the terminology of how you apply joint
tape and drywall compound to the drywall to prepare it for decoration." He
distinguished "drywall finishing" from "finishes" that are typically paint, wall
covering or anything that would architecturally treat the wall surface. (Tr. 1/63)
Mr. Douglass explained there are six levels of drywall finishing starting with zero
which is blank drywall, Level 1 which is "fire-taping" up to Level 5 which is the
highest level with the most applications of joint compound. Each successive level
builds on the previous level of joint taping and the application of joint compound.
There are seven levels of "finishes" for different kinds of paint, wall coverings,· wood
panels, etc. (Tr. 1/64-65, 69) This similar terminology for different products can
cause confusion as can be seen in the bidder inquiry discussed below.
Pre-Award Bidder Inquiry
2. Bidder Inquiry No. 4179969 was submitted on September 14, 2011, and read
"Spec section 09 29 00 identifies various drywall finish levels (Level 1-7). Please
identify where each finish level is to be applied." The government response was:
Provide Level 4 throughout facility unless noted
otherwise. Provide Level 5 at the following locations:
Primary Corridors (adjacent to: elevators, restrooms, break
areas, atrium, auditorium, directorate areas), Walls with
wood trim and/or panels, Walls and/or ceilings with direct
sunlight [o]n surface. Walls with applied solid surfaces.
These areas will be clarified in an upcoming amendment.
(Supp. R4, tab 3; app. supp. R4, tab 34 at 2-3) Mr. Hailey is an architect working for
architectural firm HOR on the STRATCOM replacement facility project since 2008
(tr. 2/204). Mr. Hailey wrote the government response to Bidder Inquiry No. 4179969
(tr. 2/222-24). Mr. Hailey explained that Levels 1-7 are paint levels not drywall finish
levels and the inquiry cited the wrong specification "should be 0990, not 0929"
(tr. 2/225-26, 271). His response told the bidders where to put the paint in terms of
drywall finish (tr. 2/271, 273-74).
3. In her final decision, contracting officer (CO) Young stated, "The contract
provisions dealing with drywall finishes, though atypical, are clear and unambiguous,
and generated no bidder inquiries" (R4, disc I, tab 1 at 11 ).
KP 's Drywall Subcontractor Bids & Trade Practice
4. KP's drywall subcontractor, Cleveland Construction, Inc. (CCI), did not bid
finishing to Level 4 above ceilings and below floors (tr. 1/223; app. supp. R4, tab 19
at 1). In addition to CCI, three other drywall subcontractors submitted bids to KP for
drywall work. Each bidder interpreted the drywall specifications the same as CCI that
Level 4/5 finish was required for exposed walls and fire-taping or Level 1 finishing
was required above ceilings (tr. 1/79-82). Allied Construction Services, Inc., wrote
"Exposed drywall finished to G.A. level 4" and "Rated drywall above the ceiling
finished to G.A. level 1" (app. supp. R4, tab 23 at 2). Midwest Drywall Co., Inc.,
wrote "Level 4 and 5 finishes at exposed drywall, fire-tape above ceilings" (app. supp.
R4, tab 24 at 2). Stowell Co., Inc., wrote "Level 4 finish, typical on all exposed walls
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and ceilings, level 1 above ceiling on rated walls. Level 5 finish per Addendum."
(App. supp. R4, tab 25 at 1)
5. Mr. Stayer has been employed by CCI for 38 years and is now CCI's vice president
of the interior division (tr. 1/256). He testified that the industry standard practice is to
apply Level 1 (fire-taping) finish above ceilings and below floors and Level 4 or 5
where decoration is to be applied (tr. 1/256-57).
Contract Award
6. On August 16, 2012, the United States Army Corps of Engineers (USACE)
awarded KP Contract No. W9128F-12-C-0023 for $524,445,324 to construct the
STRATCOM replacement facility at OAFB (R4, disc 1, tab 3b). Part of the contract
involved finishing gypsum wallboard (drywall). The drywall work was subcontracted
to CCI for approximately $16 million. (Tr. 1/79, 218-19)
Sensitive Compartmented Information Facility (SCIF) - DCID 6/9
7. HDR Architecture (HDR) was the designer of the project. HDR prepared
the drawings and produced the contract specifications. (Tr. 2/159-60, 204) The
STRATCOM facility included SCIF space. Mr. Hailey and HDR utilized DCID 6/9 to
satisfy the SCIF requirements and that included requiring only Levels 4 and 5 drywall
finish (tr. 2/210). Mr. Hailey placed Note 10 on Architectural Drawing A-702A,
Interior Wall Type Details, that read, "SCIF- IAW DIRECTOR OF CENTRAL
INTELLIGENCE DIRECTIVE NO. 6/9, NOV. 2002" (DCID 6/9) (R4, disc 3, tab 2c,
vol. 3 at 379). Concerning drywall construction DCID 6/9 provides:
4.2 SCIF Criteria For Permanent Dry Wall Construction
Walls, floor and ceiling will be permanently constructed
and attached to each other. To provide visual evidence of
attempted entry, all construction, to include above the false
ceiling and below a raised floor, must be done in such a
manner as to provide visual evidence of unauthorized
penetration.
(App. supp. R4, tab 71 at 15) DCID 6/9 does not specify how the contractor should
achieve the finish to "provide visual evidence of unauthorized penetration" (tr. 2/230-31).
Mr. Hailey testified that Mr. DeRuiter was STRATCOM's security manager (tr. 2/206).
Mr. DeRuiter wanted painted walls to be painted true floor to true ceiling (tr. 2/245).
Mr. Hailey testified that he relied on Mr. DeRuiter's interpretation of what DCID 6/9
required on SCIF walls (tr. 2/245, 247).
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8. Mr. Flere was the contracting officer's representative (COR) and quality
assurance lead for the supervisory civil engineer on the STRATCOM project. He has
been on the project since its inception. (Tr. 3/5-6; app. supp. R4, tab 76) COR Flere
testified that DeID 6/9 did not require higher finish levels above ceilings and below
floors (tr. 3/45). He has never seen Level 4 finish required above ceilings and below
floors (tr. 3/46).
Sensitive Compartmented Information Facility (SCJF) -!CD 705 & JCS 705-1
9. The contract specifications included section 01 32 52. 02 24, Special Security.
This section incorporated ICD 705 (May 2010) Intelligence Community Directive
Number 705 - Sensitive Compartmented Information Facilities and ICS 705-1
(September 2010) Intelligence Community Standard Number 705-1 - Physical and
Technical Security Standards for Sensitive Compartmented Information Facilities by
reference (R4, disc 2, tab 2b at 301 ). 1 ICD 705 rescinds DCID 6/9 including its manual
and annexes (ICD 705 at 1). IeD 705 and IeS 705-1 each provide security standards for
SCIFs (ICD 705 at I; app. supp. R4, tab 72 at 1). Section 01 32 52. 02 24, subparagraph
I.IO.I read:
I.IO.I SeIF Finish Work Inspections
Government [construction surveillance technicians] CST' s
will be observing all aspects of construction as it progresses.
The CST's will observe all finish work within the SCIF
areas, in accordance with ICD 705 and ICS 705-1. This
includes the installation of drywall, flooring, ceiling,
lighting, doors, cabinetry, painting, carpeting and all other
finish work inside the SCIF areas. All wall, ceiling, and
floor spaces within SCIF areas must be inspected by the
CST' s before closure of the space.
(R4, disc 2, tab 2b at 312-13)
10. ICD 705 does not include any direction relating to the wall finishes. ICS
705-1 includes the following:
G. Physical and Technical Security Standards
1. Physical Security for SCIFs
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res 705-1 is in the record (app. supp. R4, tab 72), ICD 705 is not. The Board
requested that the parties submit ICD 705 and res 705-1 to the Board for
inclusion in the record.
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a. Perimeter
(3) Walls, floor and ceiling shall be permanently
and solidly constructed and attached to each other. Raised
floors and false ceilings shall not be used to anchor wall
support materials. All construction, to include above false
ceilings and below a raised floor, shall be constructed to
provide visual evidence of unauthorized penetration.
(6) Details for construction of the perimeter to
meet standards shall be provided within the JC Tech Spec
for SCIFs. £21
(App. supp. R4, tab 72 at 4) ICS 705-1 does not specify how the contractor should
achieve the finish to "provide visual evidence of unauthorized penetration."
Specification Section 09 90 00 Paints and Coatings
11. The contract's Technical Specifications included Division 09 - Finishes,
section 09 90 00, Paints and Coatings, that identifies locations where painting is
excluded:
1.10.2 Painting Excluded
Do not paint the following unless indicated otherwise.
a. Surfaces concealed and made inaccessible by
panelboards, fixed ductwork, machinery, and
equipment fixed in place.
2
The record includes IC Tech Spec - for ICD/ICS 705 dated September 28, 2017
(app. supp. R4, tab 73). Chapter 3, Fixed Facility SCIF Construction,
paragraph C., Perimeter Wall Construction Criteria, subparagraphs 2., 3.d)(5),
3.e)( 6) each read "Entire wall assembly shall be finished· and painted from true
floor to true ceiling" (app. supp. R4, tab 73 at 22-23). This document is dated
after award of the contract on August 16, 2012. We cannot say there was an
earlier version applicable to this contract and therefore we do not deal with the
IC Tech Spec in this decision.
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li b. Surfaces in concealed spaces. Concealed spaces
are defined as enclosed spaces above suspended
ceilings, furred spaces, attic spaces, crawl
spaces, elevator shafts and chases.
(R4, disc 2, tab 2b at 2451, 2458)
Specification Section 09 29 00 Gypsum Board
12. Division 09 - Finishes, section 09 29 00, Gypsum Board, included, among
other topics, the installation and finishing of gypsum wallboard (app. supp. R4, tab 1).
This specification incorporates by reference ASTM C 840 (2008) Application and
Finishing of Gypsum Board (id. at 3, 20-21), and GA 216 (2010) Application and
Finishing of Gypsum Panel Products (id. at 4).
13. Section 09 29 00, paragraph 3.11, Wallboard Finishing, subparagraphs
3.11.1, .2 and .3 read:
3.11.1 General
1. Treat gypsum board joints, interior angles,
edge trim, control joints, penetrations, fastener
heads, surface defects, and elsewhere as required to
prepare gypsum board surfaces for decoration.
2. Promptly remove residual joint compound
from adjacent surfaces.
3.11.2 Pre-Fill
Pre-fill open joints and voids, rounded or beveled edges
and damages surface areas.
3.11.3 Application
Apply joint tape over gypsum board joints, except those
with trim having flanges not intended for tape.
(App. supp. R4, tab 1 at 19-20)
14. Section 09 29 00, paragraph 3.11, Wallboard Finishing, subparagraph
3.11.6 reads:
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3.11.6 Apply Joint Compound and Tape in
accordance with fire-rated design
1. Apply joint treatment compound in
accordance with manufacturer's directions.
2. Fill joints, screw heads, and internal comers
with compound.
3. Extend joint system vertically from floor to
extent described as follows:
a. Fire Walls, Barriers, and Partitions: Extend
to full height of wall.
b. Smoke Barriers and Partitions: Extend to full
height of wall.
c. Interior face of exterior wall (non-rated):
Extend to full height of wall.
d. Other interior partitions (non-rated): Extend
to 6 inch above ceiling.
4. Refer to Drawings for indication of partition
heights.
(App. supp. R4, tab 1 at 20) Mr. Knight is Chief, Contract Administration Branch,
Omaha District, USACE (tr. 2/164). He was also an administrative contracting officer
(ACO) on the STRATCOM contract starting in late 2017 (tr. 2/176). ACO Knight
testified that paragraph 3.11.6 provides for "level 1 fire-taping" (tr. 2/198).
Mr. Douglass explained a Level 1 finish is "fire-taping" which is not used for
decoration (tr. 1/69, 101 ). Mr. Hailey wrote section 3 .11.6.3 .d (tr. 2/215). He testified
that section 3.11.6 "has nothing to do with the [drywall] finish level" it deals with fire
rating (tr. 2/219).
15. Section 09 29 00, paragraph 3 .11, Wallboard Finishing, subparagraph
3.11.7 reads:
3.11.7 Level 4 Finish
1. Comply with ASTM C 840.
2. After drying, sand or otherwise smooth final
coat of compound as needed to eliminate high spots
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or excess compound to leave smooth, even, and level
surface.
3. Draw down final coat of compound to a
smooth even plane.
4. Locations:
a. Wallboard scheduled to be finished
with Level 1 (flat) paint, textured coating, or
wallcovering.
b. Where above listed surfaces are to be
finished with textured decorative treatments,
wall covering, paneling, or wall guard.
c. All remaining locations, unless noted
otherwise.
(App. supp. R4, tab 1 at 20) Mr. Hailey wrote subparagraph 3.11.7.4.c. and testified
that "All remaining locations, unless noted otherwise" was intended to make it clear
that Level 4 finish was to be applied everywhere in the buildings including above
ceilings and below floors (tr. 2/119, 252, 268). During cross-examination, Mr. Hailey
was asked why in subparagraph 3 .11. 7.4.c. he did not specifically state Level 4 finish
above ceilings and below floors. He testified "I didn't want to call it out." He was
asked why but his explanation was confusing. (Tr. 2/258-59)
16. Section 09 29 00, paragraph 3 .11, Wallboard Finishing, subparagraph
3.11.8 specifies similar requirements for Level 5 finish adding "Trowel skim coat of
joint compound leaving a thin film covering the entire surface" (app. supp. R4, tab 1
at 21 ). Level 5 also listed applications and locations:
4. Applications:
a. Wall board scheduled to be finished with
Level 2 (velvet), Level 3 (eggshell), Level 4 (satin),
Level 5 (semi-gloss), Level 6 (gloss), Level 7 (high
gloss), epoxy paint, or high build glazed coating.
b. Surfaces using MRB or other wallboard
types with a glass mat facer on finished side.
[Am4]
c. Locations:
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1) Primary corridors adjacent to: Elevators,
Restroom, Break Areas, Atrium, Auditorium,
and Directorate Areas.
2) Walls with wood trim and/or wood panels.
3) Walls and/or ceilings with direct sunlight
on surface.
4) Walls with applied solid surfaces.
[Am 4*]
(R4, disc 2, tab 2b at 2335)
ASTMC840
17. ASTM C 840, Standard Specification for Application and Finishing of
Gypsum Board, defines finishing as "the preparation of gypsum board surfaces to
receive the field application of decoration" (R4, disc 1, tab 3c. at 2, ,r 3.2.9). Finished
wallboard is defined as, "wallboard that has had the joints taped, has had the joints,
fastener heads, and flanges of accessories concealed with joint compound, and has been
sanded to prepare the surface to receive job applied decoration" (R4, disc 1, tab 3c. at 2,
,r 3.2.8). Decoration is defined as, "paint (including primers), texture, coatings, and
coverings such as wallpaper and sheet plastic materials designed to conceal or protect
the surface of the gypsum board (see Appendix X3)" (R4, disc 1, tab 3c at 2, ,r 3.2.3).
18. ASTM C 840 paragraph 22, Finishing of Gypsum Wallboard, subparagraph
22.6, Levels of Finish, starts with Note 15 that states the level of finish can vary with
the location in the structure, and "[t]he relationship of levels of finishing with location
and intended decoration is described in Appendix X8." Subparagraph 22.6 defines six
levels of finish identified as Othrough 5. (R4, disc 1, tab 3c. at 14) Level O requires
no taping, no joint compound, essentially no finishing. Finish Levels I - 5 primarily
deal with finishing joints and covering fastener heads and accessories. The primary
difference between finish levels is the number of coats of joint compound applied.
Level I requires that "all joints and interior angles shall have tape embedded in joint
compound." Level 2 requires Level I finish with one coat of joint compound over
fastener heads and accessories. Level 3 requires finish Level 2 with one additional
coat of joint compound over joints, interior angles, and two coats over fastener heads
and accessories. (Id.) Level 4 requires the following:
22.6.5 Level 4:
22.6.5.1 All joints and interior angles shall have
tape embedded in joint compound and shall be
immediately wiped with a joint knife or trowel leaving a
thin coating of joint compound over all joints and interior
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angles as described for Level 2.£31 Two separate coats of
joint compound shall be applied over all flat joints. One
separate coat of joint compound shall be applied over
interior angles. Fastener heads and accessories shall be
covered with three separate coats of joint compound. All
joint compounds shall be smooth and free of tool marks
and ridges (see 22.4.1).
(R4, disc 1, tab 3c at 14) ASTM C 840, 22.6.6 Level 5, 22.6.6.1 is the same as finish
Level 4 except adding, "A thin skim coat of joint compound shall be trowel-applied to
the entire surface" (id.).
19. ASTM C 840, 23 Decoration, paragraph 23.1 reads, "Surfaces finished to
Levels 3, 4, or 5 shall be covered with a drywall primer compatible with the final
decoration prior to the application of the final decoration" (R4, disc 1, tab 3c at 14 ).
Mr. Douglass testified that drywall primer was a type of paint (tr. 1/99).
20. ASTM C 840, Appendix4 X8 specifies where the six levels of gypsum
wallboard finish are typically used. Level 1 is "Frequently used in plenum areas above
ceilings, in attics, in areas where the assembly would generally be concealed." Level 2
is used "in garages, warehouse storage, or other similar areas where surface appearance
is not of primary concern." Level 3 is "Used in appearance areas that are to receive
heavy texture (spray or hand applied) finishes before final painting." Level 4 "should
be used where wall coverings, flat paints, or light textures are specified." Level 5 is the
"highest quality finish" and is "required where gloss, semi-gloss, or enamel flat paints
are specified." (R4, disc 1, tab 3c at 17-18)
Gypsum Association (GA) 216 & 214
21. GA 216 (2010), Application and Finishing of Gypsum Panel Products (app.
supp. R4, tab 2 at 1, 17, 19), incorporates GA 214, Recommended Levels of Gypsum
Board Finish (R4, disc 1, tab 3f at 2-3). Both GA 216 and GA 214 specify the same
3
We are not sure why the reference to Level 2 because this sentence is identical to that
in the first sentence of Level 2 (R4, disc 1, tab 3c at 14).
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The Appendixes introduction reads, "These Appendixes give general information and
also suggestions for inclusions to be made elsewhere by the specifier. They are
not part of this specification." (R4, disc 1 tab 3c at 15) However, Appendix X8
is referred to in paragraph 22.6 Levels of Finish, Note 15, "The relationship of
levels of finishing with location and intended decoration is described in
Appendix X8" (id. at 14). Therefore, we consider Appendix X8 as part of the
specification in this contract.
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levels of finish and typical use as specified in specification section 09 29 00 and
ASTM C 840 discussed above.
Construction Preparatory Meeting
22. A construction preparatory meeting was held on October 3, 2014, dealing
with "Non-Structural Framing and Drywall" (tr. 1/179-80, 191; app. supp. R4, tab 69
at 1). Mr. Wright, Mr. Mark Halbleib, CCI project manager, and various representatives
from USACE quality assurance (QA) attended. These USACE attendees were all
involved in drywall inspections. (Id.) During the meeting the plans/specifications
relevant to performance were discussed (tr. 1/ 181-82). The Meeting Agenda included
Means and Methods relating to drywall:
Contractor Description of Work and Installation Sequence
09 29 00 Gypsum Board & Insulation
• 1. Wall close in inspection must be
complete
• 2. One side the Drywall to 6" above ceiling
line[ 5l
• 3. Install Insulation
• 4. Install drywall on other side
• 5. Tape joints above ceiling
• 6. Full tape and sanding of joints per wall
schedule
(App. supp. R4, tab 69 at 3) Mr. Wright explained that paragraph 5, "Tape joints above
ceiling" was fire-taping the joints only (tr. 1/186). Paragraph 6, "Full tape and sanding
of joints per wall schedule" refers to the visible wall space in the rooms (tr. 1/186-87).
Mr. Wright explained that sequencing the work was critical and that all of the drywall
work had to be completed and inspected before the overhead MEP 6 can be installed
(tr. 1/184-85, 197).
5 Number 2 caught our eye, but KP did not introduce testimony to explain the 6 inches
so we conclude it must not be relevant to the height of drywall finish involved
in this appeal.
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"MEP" is not defined in the record but we understand it to refer to the mechanical
electrical, and plumbing equipment installed above the ceiling.
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23. The Room Finish Schedule includes the wall finish schedule (north, east,
south, west) and ceiling material and height. The codes identify what finish 7 (paint) goes
on the walls and the ceiling height is ten feet. (R4, disc 2, tab 2b at 2257-99; tr. 1/187-88)
There is nothing in the "wall schedule" that specifies any decoration (paint) above the
ceilings (tr. 1/188-90). During the meeting the USACE QA inspectors did not raise the
subject of Level 4 finishing above ceilings (tr.1/191 ).
The Contracting Officer's Representative (COR)
24. Paragraph 2.a. of COR Flere's designation letter required him to:
Verify that the contractor performs the technical
requirements of the contract in accordance with the
contract terms, conditions and specifications. Specific
emphasis should be placed on the quality provisions, for
both adherence to the contract provisions and to the
contractor's own quality control program.
(App. supp. R4, tab 76 at 1)
Modification Nos. ROOJ82, R00225 & R0021 I - Credits for Lowering Ceilings
25. Modification No. R00225 8, dated May 28, 2015, changed the "LL2" ceiling
height (app. supp. R4, tab 51 at 1, 3-4). KP negotiated a price reduction for drywall
finishing Uoint compound, joint tape) for lowering the ceiling (id. at 46). Modification
No. R00182, 9 dated August 6, 2015, changed the ceiling height at "LLl ofMSB." The
ceiling was lowered from 10 feet to 9 feet, 4 inches. (App. supp. R4, tab 45 at 1, 4)
The Prenegotiation Objective Memorandum (POM) documents that USACE intended
to ask CCI "to include a credit for wall board finishes (Level 4 or Level 5) and
painting, as a result of the majority of corridor ceilings being 8-inches lower" (id.
at 119). Unilateral Modification No. R0021 l, dated February 3, 2016, lowered ceiling
heights in "Ll-L3" (app. supp. R4, tab 50 at 1, 3, 17).
26. Mr. Douglass testified that in the modifications lowering ceiling heights the
government required credits for less Level 4 finish work which KP included in the
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Finish on the wall schedule does not refer to drywall finish (tr. 1/189).
8
Although the cover sheet identifies Modification No. R00225, the SF-30 identifies
Modification No. A00342 (app. supp. R4, tab 51 at 1, 3-4). The difference is
not explained in the record.
9
Although the cover sheet identifies Modification No. ROO 182, the SF-30 identifies
Modification No. A00387 (app. supp. R4, tab 45 at 1, 3). The difference is not
explained in the record.
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modifications. He believes this is consistent with KP's interpretation that Level 4 finish is
not required in concealed spaces. (Tr. 1/121-22) Mr. Fulks was project manager for CCI
from the very beginning ofCCI's contract (tr. 1/217-19). He negotiated the modifications
lowering ceiling heights that reduced the amount of decoration (paint) and increased the
amount of fire-taping/Level 1 finish above the ceilings (tr. 1/226-28). USACE requested
that CCI give a credit as a result of these changes because it would have less Level 4
drywall finishing to do and a credit was included in Modification No. R00182 (tr. 1/233,
235-44). The same was true for Modification Nos. R00225 and R00211 (tr. 1/248-51 ).
Mr. Fulks testified that based on the modifications lowering the ceiling height and
USACE's demands for credits that USACE understood that only fire-taping (Level 1)
finish was required above ceilings and Level 4 was required below ceilings (tr. 1/248).
27. CO Young testified about the modifications lowering the ceilings. She knew that
CCI provided credits for less drywall finishing and painting (app. supp. R4, tab 45 at 93-94,
119, tab 106; tr. 2/93-97, 107). CO Young agreed that asking for a credit was inconsistent
with her current position that Level 4 finishing was required above ceilings and below floors
(tr. 2/86-89, 99-100). CO Young testified that she now believes the credits should not have
been taken (tr. 2/113, 115-16).
Mock-Up Room
28. KP constructed a mock-up room that served as the standard for work on the
project going forward (tr. 1/208). The room was pre-inspected by KP and its relevant
subcontractors during early February 2016 and inspected by USACE on February 8, 2016 10
(tr. 1/211; app. supp. R4, tab 16 at 1). The inspection sheet was signed off by Mr. Truitt,
USACE inspector, indicating approval on February 18, 2016 (tr. 1/211-12; app. supp. R4,
tab 16 at 1). USACE did not require Level 4 finish above ceilings in the mock-up room
(tr. 1/209-12; app. supp. R4, tab 16 at 24).
Inspections before June 2016
29. COR Flere testified that due to initial quality problems, USACE conducted
100% inspection of the wall partitions (tr. 3/35). If the USACE inspector found that
the work was not being performed consistent with the specifications the contractor
doing the work would be informed (tr. 3/37). COR Flere agreed that before June 2016,
USACE inspectors believed that what CCI was doing above ceilings and below floors
was acceptable (tr. 3/43). KP, CCI and USACE inspectors shared the same
understanding that Level 4 finishing was not required above ceilings and below floors
up until June 2016 (tr. 3/45). The wallboard work had to be inspected and approved
before MEP could start to be installed above the ceiling level (tr. 3/43).
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There is no explanation in the record of why the mock-up room was constructed in
early 2016 when drywall work started in late 2014 (tr. 1/176-77).
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30. Mr. Wright was an area supervisor for Hensel Phelps on the STRATCOM
project. He was responsible for all safety, quality, construction-related scheduling,
logistic and daily problem solving. He would attend USACE inspections during the
project. (Tr. 1/176) Drywall inspections started in October/November 2014 and
Mr. Wright oversaw CCI the drywall contractor's work (tr. 1/176-77). He recalled
government inspectors were on the project every day (id.). The drywall work had to be
inspected and approved before the installation of the mechanical systems above the
architectural ceilings and below raised floors (tr. 1/76-77, 191-92; app. supp. R4, tab 69
at 14 ). The wall inspections were very thorough and there is no way an inspector could
mistake fire-taping for a Level 4 drywall finish (tr. 1/198). Before June 2016, USACE
inspectors did not bring up the issue of Level 4 finish above ceilings and below floors
(tr. 1/198-99, 213-15).
31. Mr. Fulks was on site four days a week (tr. 1/219-20). Mr. Fulks testified
that the Level 4 drywall finish issue did not arise until June 2016 (tr. 1/221-22). Prior to
that time CCI was providing a Level 1 finish, which was fire-taping, above ceilings
(tr. 1/222-23, 227). USACE conducted 100% inspection of drywall and never raised the
Level 4 finish requirement before June 2016 (tr. 1/224-26).
32. Mr. Stayer testified that CCI initially applied a Level I finish above ceilings
and below floors and Level 4 or 5 between the floors and ceilings (tr. 1/259). Mr. Stayer
discussed a photograph USACE put in its Rule 4. The picture shows a wall with Level 4
finish on vertical joints up to a horizontal line and Level I finish on the horizontal joint
and vertical joints above. As Mr. Stayer explained, the difference between Level 4 and
Level I is obvious. (Tr. 1/267-68; supp. R4, tab I supp. photos, lb)
33. LTC Sexton was assigned as deputy commander for the STRATCOM project
in May 2016 (tr. 1/143-45). LTC Sexton testified that when he arrived in May 2016 a
"significant portion" of the overhead utilities and under floor "stuff' was installed when
he first became aware of the dispute over wallboard finish above ceilings and below floors
(tr. 1/152). The wallboard finish in those areas had been inspected by the government and
approved (tr. 1/153-54).
Quality Assurance Deficiency Notice No. QA-00291
34. Mr. Craig Schatz is a government inspector responsible for SCIF partition
approval (tr. 1/70-71). He was the first one to raise the issue, in June 2016, of Level 4
wallboard finish above ceilings and below floors (id.). Mr. Douglass was not aware of
any other inspectors raising the issue before Mr. Schatz raised it (tr. 1/78-79). Before
Mr. Schatz raised the issue of extending Level 4 finish to concealed spaces, fire-taping
had been applied for approximately a year and a half(tr. 1/74-75). CO Young
understood that the drywall finishing issue was first raised by Mr. Schatz, USACE
security inspector, in relation to SCIF areas (tr. 2/117-18).
14
35. In about June 2016 COR Flere's staff told him they believed there was a
problem with finishes in the buildings. He read specification section 09 29 00,
paragraph 3 .11. 7 Level 4 Finish, and without prompting from his staff he read 3 .11. 7
to require "Level 4 finish on all the walls in the building." (Tr. 3/6-7) COR Flere
asked the project architects, HDR, if that was what they intended and HDR came back
several days later and said "yes" (tr. 3/7). At that point COR Flere determined that a
QA deficiency should be issued (tr. 3/8). Prior to June 2016 drywall finishes had not
been an issue (tr. 3/12).
36. On June 15, 2016, USACE issued deficiency notice, QA Deficiency
No. QA-00291, stating that the Level 4 finish required above ceilings and below floors
was not being applied (R4, disc 1, tab 3h). It is roughly 20 feet floor to floor with 9 to
10 feet of architectural wall height and 10 feet of concealed wall below the floors and
above the ceilings (tr. 1/73).
Direction to Provide Level 4 Above Ceilings and Below Floors
37. During a June 21, 2016, meeting between KP and the USACE, COR Flere
agreed to reduce the finish level to "2.5 to 3 above ceilings and below floors" (app.
supp. R4, tab 19 at 2). After the meeting COR Flere sent KP an email, notifying KP
that the USACE area engineer and resident engineer would not allow the lesser finish.
KP was required by the contract to provide Level 4 finish above the ceilings and below
raised floors. (Id.)
38. LTC Sexton testified that he discussed the June 21, 2016 meeting and the
email with Mr. Rasmussen, COR Flere and Mr. Morrissey and stated:
It was a - - it was a litigation management decision,
because in their experience and their opinion was that if we
deviate from that sentence in the specifications that says
'all other areas shall be Level 4' and we accept something
else, then that validates KP's position to come after - - to
submit for an extra charge to go up from a Level 1 is what
they believe they should do in those areas.
(Tr. 1/159-60) COR Flere also recalled that this decision was due to litigation strategy
(tr. 3/49).
39. By email dated June 22, 2016, to CCI, KP passed on USACE's direction to
provide a Level 4 finish above ceilings and below raised floors (app. supp. R4, tab 19 at 1).
40. By email dated June 23, 2016, to LTC Sexton, Mr. Douglass attached
documents relevant to KP's interpretation of the Level 4 finish requirement (app. supp.
15
R4, tab 80 at 1-9). Mr. Douglass testified that he felt KP and CCI were interpreting the
contract correctly and he wanted to give LTC Sexton supporting material (tr. 1/87-89).
Referring to section 09 29 00, paragraph 3.11.7.4.c., "All remaining locations, unless
noted otherwise" as a "catch all" statement, Mr. Douglass wrote, "I believe the 'catch all'
in the specification was intended to ensure all areas exposed to public view would have a
minimum of a L4 finish" (app. supp. R4, tab 80 at 1; tr. 1/87-89). Mr. Douglass repeated
this interpretation during his testimony at the hearing (tr. 1/109-10). LTC Sexton
responded on June 23, 2016, with "I believe this supports your argument completely"
(app. supp. R4, tab 80 at 1). At the hearing, LTC Sexton testified that he believed KP's
interpretation of the wallboard specifications was reasonable (tr. 1/155).
41. COR Flere testified about a picture showing the drywall in a room where
mechanical/electrical equipment, sprinkler pipe and HVAC ducting had been installed
above the ceiling but the drop ceiling had not been installed so the equipment was
visible. The area above the ceiling was full of equipment. (Supp. R4, tab 1 supp.
photos, la) Four more pictures showed drywall in rooms with very congested
equipment above ceiling level. It was obvious that the drywall finishing below the
ceiling was much different than that above. (Id. at 1b, c, d, e) COR Flere testified that
they told KP that in areas where there was so much congestion, such as this area, that
it did not need to bring it up to a higher Level 3 finish above the ceiling, what was
there was okay for security accreditation (tr. 3/18). However, where the drywall above
the ceiling level was accessible, they required KP to go back and meet a Level 3 or
"three-plus" finish (tr. 3/22-24). COR Flere testified that he was attempting to
mitigate the damage caused by requiring KP to go back and upgrade the finish above
ceiling level where equipment had been installed (tr. 3/24).
42. Mr. Stayer testified that after USACE's direction to apply a Level 4 finish
above ceilings and below floors CCI complied and "it was a tremendous cost to our
bottom line" (tr. 1/260). The work was made much more difficult because by the time
of the direction much of the mechanical/electrical equipment had been installed above
the ceilings and below the floors (tr. 1/261-63).
CCI Alleges Change
43. By email dated June 27, 2016, to KP, CCI took the position that USACE's
direction concerning Level 4 finish was a change to the contract:
It is CCl's position that the level 4 finish that USACE is
requesting is a change to the contract documents and
therefore compensable. CCI never bid finishing to a
level 4 below floors, and above ceilings. IfKP/USACE is
requesting CCI take immediate action to perform this
change in scope, then everyone needs to understand that by
16
doing so there are cost associated with this direction. CCI
will start rounding up labor all across the country and
preparing EAL lists and housing accommodations per this
request. At a later point USACE comes back and agrees
this is a change and chooses not to move forward, there
will still be cost associated with this direction. At this
point and time with how the Omaha and surrounding labor
markets are not able to provide resources to perform this
work, CCI will have to bring in finishers at a significantly
higher rate[] and to get manpower to come to Omaha. In
projecting costs to achieve this added scope of work from
USACE a R.O.M could reach as high as 5 million dollars
to perform this work.
It is CCI's position that USACE knew and understand the
standards of the finishing in the contract below floors and
above ceilings when negotiating RFP's which set the
standard of what was acceptable. During many
negotiations USACE set the standard of finishing to be 6"
above ceilings in writing and when ceiling heights changes
RFP's 182,225, 211 USACE requested credits for the
reduced finishing above ceilings. Please see the attached
document showing in writing the government's position on
finishing above ceilings.
(App. supp. R4, tab 19 at 1) The referenced attachment includes a USACE comment to
CR 182 including "Update 3/9/2015: It is understood that finishing of walls would
extend maybe 6' above the ceiling height, so originally the wall finishes probably would
have run up to about 10.5', now would go to about 9'-10"" (id. at 3).
Tentative Agreement
44. By email dated July 6, 2016, from LTC Sexton to KP, LTC Sexton agreed
that what KP was providing was acceptable:
I'm sending a note to verify the conversation we had today
regarding the level of drywall finish below the floor and
above the ceiling for the STRATCOM project. We agree
that what you've provided to date is adequate for our
owner's security concerns. Having the drywall screws
covered with drywall mud or spackle compound, and
having the joints covered with tape is adequate above
ceilings and below raised floors. We mutually agree
17
USACE will not request or pursue a credit from a level 4
finish. and Kiewitphelps will not request an additional
payment for this interpretation of the contract.
(R4, disc 1, tab 6) KP's Mr. Douglass, responded to LTC Sexton on the same day
stating:
I am in agreement with you on the requirements outlined
below for the level of finish required above ceilings and
below floors. Additionally, KP will not pursue additional
costs to perform this level of finish. We agree this is the
required level of finish at both rated partitions and SCIF
partitions (above ceilings and below floors) for the
project.I 11 I
Thank you for helping the team to solve this disagreement.
(R4, disc 1, tab 7)
45. Mr. Douglass testified that LTC Sexton later called him and told him that
their agreement had been overruled and would not be honored. KP was told to do
Level 4 everywhere and KP directed CCI to comply. {Tr. 1/129-30) LTC Sexton
similarly testified that the tentative agreement he entered into was not supported by
USACE ACO Rasmussen and USACE (tr. 1/168-69).
46. By letter to ACO Rasmussen, dated August 1, 2016, KP provided notice
that it considered USACE's direction to provide a Level 3 finish 12 at wallboard areas
not to be prepared for decoration, i.e., full wall height above ceilings and below raised
floors, as a change to the contract (R4, disc 1, tab 10 at 1). KP stated that it was
proceeding in accordance with the direction. KP offered a "rough order of magnitude"
for the cost of the change as $ l .2M - $ l .5M. (Id.) By email also dated August 1,
2016, KP directed CCI to proceed applying a Level 3 finish to wallboard above
ceilings and below raised floors {app. supp. R4, tab 20 at 1, 4).
11
There appears to be a disconnect between L TC Sexton's letter that refers to finishing
"wallboard above ceilings and below raised floors" and KP's response that
refers to finishing "at both rated partitions and SCIF partitions ( above ceilings
and below floors)."
12
USACE reduced the finish requirement from Level 4 in Deficiency No. QA-00291 to
Level 3.
18
USACE's Position
4 7. ACO Rasmussen responded to the notice of change on October 24, 2016,
explaining why the USACE disagreed with the alleged change:
Specification section 09 29 00 Gypsum Wallboard,
paragraph "3.11.7 Level 4 Finish", Item 4 Location
provides all locations that a level 4 finish is required in the
facility with Item C. stating specifically "c. All remaining
locations, unless noted otherwise." Specification section
09 29 00 Gypsum Wallboard, paragraph "3.11.7 Level 4
Finish", Item I, [o]nly tells the contractor how the level of
finish is to be achieved per industry standard. Finally,
specification section 09 29 00 Gypsum Wallboard,
paragraph "3.11.6 Apply Joint Compound and Tape in
accordance with fire-rated design" directs the contractor on
how much wall must be fire taped and mudded but the
level of finish is still directed per specification paragraph
3.11.7 Level 4 Finish.
(R4, disc 1, tab 13) ACO Rasmussen noted that the USACE agreed to accept Level 3
finish in lieu of Level 4 (id.).
Certified Claim
48. On November 17, 2016, KP submitted a certified claim for an "estimated
increase" of $5,469,225 as a result of the direction for it to apply "a high level of
drywall finish above the ceilings and below the raised floors" (R4, disc 1, tab 14 at 1).
KP requested a prompt CO's final decision (id.).
Final Decision
49. Ms. Young was assigned as a CO on the STRATCOM project in January 2016
(tr. 2/6). In November 2016, CO Young received KP's claim for the drywall work and
assembled a team to review it (tr. 2/14, 16; R4, disc 1, tab 14). CO Young understood that
it was security concerns that caused concerns over finish levels (tr. 2/26-27). CO Young
agreed that to require a Level 4 finish above ceilings and below floors is "atypical" from
what is specified in ASTM C 840 (tr. 2/55-56). CO Young agrees that USACE's
interpretation that Level 4 finish is required above ceilings and below floors conflicts with
ASTM C 840 and paragraphs 3.11.1 and 3.11.7.1 (tr. 2/57-58). Even so, on March 14,
2017, CO Young issued a final decision denying KP's claim (R4, disc 1, tab 1). CO Young
affirmed her statement in her final decision that "Although inspections have been ongoing
since April 2015 and the first deficiency was recorded on 15 June 2016, the fact that
19
neither party recognized deficiencies in the wallboard finishes for more than a year does
not change the requirements of the contract" (tr. 2/73, 76; R4, disc 1 tab 1 at 12).
Appeal
50. On June 2, 2017, KP timely filed its notice of appeal and complaint with
the Board. On June 6, 2017, the Board docketed the appeal as ASBCA No. 61197.
DECISION
Contentions of the Parties
This case has a lot of moving parts as evidenced by the somewhat complicated
findings of fact but it is essentially about the correct interpretation of one sentence - "All
remaining locations, unless noted otherwise" at Division 09 - Finishes, section 09 29 00
Gypsum Board, paragraph 3.11 Wallboard Finishes, subparagraph 3.11.7, Level 4 Finish,
subparagraph 4. Locations, subparagraph c. (finding 15).
KP contends that subparagraph 3.11.7.4.c. should be read to be consistent with
subparagraphs 3.11.7.4.a. and b. that specify locations to be decorated which are exposed,
not concealed, surfaces (app. br. at 71). According to KP, "All remaining locations"
means locations to be decorated that are not identified in subparagraphs a. and b.
KP argues this is the only interpretation that is consistent with all of the specifications,
modifications, trade practice and course of dealing. One ofKP's alternative theories, 13 is
that its interpretation should prevail based on "risk allocation principles" or contra
proferentem. (App. reply br. at 86-89)
USACE contends that the "plain and unambiguous meaning of a written
agreement controls" (gov't br. at 9), that the contract only allows finish Levels 4 and 5
and paragraph 3.11.7.4.c. unambiguously requires finish Level 4 everywhere in the
buildings, including above ceilings and below raised floors (gov't hr. at 9-12).
According to USA CE, "All remaining locations" means just that, all locations whether
exposed or concealed.
Contract interpretation begins with examination of the plain language of the
written agreement. LAI Services, Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009).
The terms are given their plain and ordinary meaning; if the contract language is clear
and unambiguous, the plain language controls and extrinsic evidence is not allowed to
contradict the plain language. Coast Federal Bank, FSB v. United States, 323 F.3d
1035, 1040 (Fed. Cir. 2003). The contract terms are interpreted and read as a whole,
giving reasonable meaning to all of its parts, and without leaving a "portion of the
13
We do not address all ofKP's numerous alternative theories.
20
contract useless, inexplicable, void, or superfluous." NVT Technologies, Inc. v. United
States, 370 F.3d 1153, 1159 (Fed. Cir. 2004). If the terms in question are determined
to support more than one interpretation, the contract language may be deemed
ambiguous. Id. at 1159. However, "[t]o show an ambiguity it is not enough that the
parties differ in their respective interpretations of a contract term. Rather, both
interpretations must fall within a 'zone of reasonableness."' Id. (citing Metric
Constructors, Inc. v. NASA, 169 F.3d 747, 751 (Fed. Cir. 1999)).
HDR Intended Level 4 Finish be Applied Above Ceilings and Below Floors
Mr. Hailey was the architect at HDR who drafted 3.11.7.4.c. (findings 2, 15).
He testified that the STRATCOM project was designed around DCID 6/9 security
requirements (finding 7). DCID 6/9 requires wall construction that would allow for
visual detection of wall penetrations but does not specify how to achieve that
requirement 14 (id.). He testified that "All remaining locations, unless noted otherwise"
was intended to make it clear that Level 4 finish was to be applied everywhere in the
buildings including above ceilings and below floors (finding 15). We conclude that
Mr. Hailey intended to impose a Level 4 finish everywhere, including concealed
locations, to satisfy DCID 6/9. Mr. Hailey's testimony was both credible and
unrebutted. USA CE has proven that its architect drafted 3 .11. 7.4.c. intending that it
communicate that a Level 4 finish be applied everywhere including above ceilings and
below floors. That is not to say that said intent was clearly communicated. At the
hearing, Mr. Hailey was asked why in 3.11.7.4.c. he did not specifically state Level 4
finish shall be applied above ceilings and below floors. He responded, "I didn't want
to call it out." He was asked why but his explanation was confusing. (Finding 15)
There is no evidence in the record that Mr. Hailey, HDR or USACE
communicated to KP or CCI, in any way, the intent behind the language of 3.11.7.4.c.
before June 15, 2016, when USA CE issued quality assurance deficiency notice, QA
Deficiency No. QA-00291 (finding 36). Therefore, USACE cannot, and does not,
argue that KP/CCI entered into the contract knowing that USACE's interpretation of
the drywall specifications differed from KP's/CCI's. C.S. McCrossan Construction,
Inc., ASBCA No. 49647, 00-1 BCA ,i 30,661 at 151,380 (If one party entered into a
contract knowing that the other party's interpretation differed from its own, that party
is bound by the contrary interpretation.).
14
Mr. Hailey apparently was not aware that specification section O1 32 52 02 24
incorporated ICD 705 and ICS 705-1 into the contract. ICD 705 rescinds DCID
6/9 but ICS 705-1 includes the same requirement that wall construction provide
for visual detection of wall penetrations. (Findings 9-10)
21
Bidder Inquiry No. 4179969
The government's response to bidder inquiries can be very important in
interpreting a contract. Recently we held that the government's response to bidder
inquiries can be used to evaluate the reasonableness of the parties' interpretation of the
contract. Parsons Evergreene, LLC, ASBCA No. 58634, 18-1 BCA ,r 37,137 at 180,793.
However, in Parsons the questions and answers were clear and repeated multiple times.
In this case Bidder Inquiry No. 4179969 was confusing. It read, "Spec section 09 29 00
identifies various drywall finish levels (Level 1-7). Please identify where each finish
level is to be applied." (Finding 2) It mixed the seven levels of paint finish with the
drywall specification section 09 29 00. Mr. Hailey answered the inquiry telling the
bidder where to put paint in terms of drywall finish. (Id.) Neither party considered
Bidder Inquiry No. 4179969 particularly important. In her final decision, CO Young
stated there were no bidder inquiries involving drywall finish (finding 3). Under these
circumstances we hold that Bidder Inquiry No. 4179969 plays no role in interpreting this
contract. 15
Specification Paragraph 3.11. 6 is a Wallboard Finish Requirement
USACE contends that paragraph 3 .11.6 is not a wallboard finish requirement
(gov't br. at 13-14). USACE argues that since paragraph 3.11.6 and a Level 1 finish
are different, paragraph 3.11.6 cannot be a finish requirement (id. at 14). This is
important to USACE's argument because it contends that the only wallboard finishes
allowed in the contract are Levels 4 and 5 (id. at 3).
Paragraph 3 .11.6 requires that joint compound and tape be applied in
accordance with fire-rated design and that "joints, screw heads, and internal comers"
be filled with compound (finding 14). Level 1 finish requires that ''joints and interior
angles shall have tape embedded in joint compound" (finding 18). We do not see how
the addition of filling screw heads disqualifies paragraph 3 .11.6 from being a Level 1
finish. After all, wallboard finishing involves nothing more than the application of
wallboard tape and compound 16 (findings 1, 13, 18). Paragraph 3.11.6 is part of
section 3.11 Wallboard Finishing, which we interpret includes 3.11.6 as a finishing
requirement (finding 14). Only one witness, Mr. Hailey, testified that paragraph
3 .11.6 had nothing to do with drywall finish (id.). Numerous other witnesses,
Mr. Douglass, Mr. Stayer, ACO Knight, Mr. Wright, and Mr. Fulks, testified that
fire-taping was synonymous with a Level 1 finish (findings 1, 5, 14, 22, 26, 31).
The evidence overwhelmingly supports our conclusion that fire-taping is a Level 1
15
The inquiry presented a perfect opportunity for Mr. Hailey be more specific about
where he intended Level 4 finish to be applied.
16
We recognize that not all fire-taped joints will receive decoration.
22
finish and paragraph 3.11.6 is a finish requirement. The contract therefore provides
for Levels 1, 4 and 5 wallboard finishes and fire-taping is a Level 1 finish.
KP 's Interpretation of 3.11. 7. 4. c. is Reasonable
For an interpretation to be reasonable, it need not be the best interpretation; it
need only be within the "zone of reasonableness." States Roofing Corp. v. Winter, 587
F.3d 1364, 1369 (Fed. Cir. 2009). The record is replete with evidence that KP's
interpretation is well within the zone of reasonableness, if not the best interpretation.
We will briefly go through the support for our conclusion.
As we have determined that the fire-taping required by paragraph 3 .11.6 is a
Level 1 finish, USA CE' s argument that only Levels 4 and 5 finishes are allowed by
the contract is incorrect. This supports KP's/CCI's interpretation.
There are the specifications that state a Level 4 finish is typically used for
exposed walls that are to be decorated with paint, etc. (findings 18-21 ). The painting
specification states that concealed surfaces will not be painted ( finding 11 ).
Trade practice may be useful in interpreting a contract. Teg-Paradigm
Environmental, Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006). In this
case trade practice is evidenced by the subcontract bids that priced fire-taping above
walls and below floors (finding 4). Mr. Stayer's testimony that fire-taping above
ceilings and below floors is consistent with trade practice is credible and unrebutted
(finding 5).
There was the October 3, 2014 pre-construction meeting dealing with
"Non-Structural Framing and Drywall" (finding 22). In the meeting it was agreed that
fire-taping was all that was required above ceilings and below floors (id.).
There is the year and a half course of dealing with USACE. We have relied
upon course of dealing to interpret contracts. Lear Siegler Services, Inc., ASBCA
No. 54449, 05-1 BCA ,i 32,937 at 163,174 ("Consideration of a prior course of dealing
between the parties can be appropriate to aid in the interpretation of contract
language.") (citation omitted), rev 'don other grounds, Lear Siegler Services, Inc. v.
Rumsfeld, 457 F.3d 1262 (Fed. Cir. 2006); see C.R. Pittman Constr. Co., ASBCA
No. 54901, 08-1 BCA ,i 33,777 at 167,178. Both parties agree that for the first year
and a half USA CE and KP/CCI interpreted the wall finish requirements the same.
USACE inspectors conducted detailed inspections and routinely accepted fire-taping
of joints above ceilings and below floors (findings 34, 49).
There are the three modifications lowering ceiling heights where USACE
requested and received cost reductions for the reduction in higher level finishing and
23
painting occasioned by the change (findings 25-26). Even CO Young agreed that if
Level 4 finish was required above ceilings and below floors, the cost reductions would
not have been appropriate (finding 27). These modifications evidence USACE's initial
understanding that Level 4 finish was not required above ceilings and below floors.
There is the mock-up room where Level 4 finish was not shown above ceilings
and below floors (finding 28). The purpose of the mock-up room was to establish the
construction and quality standard that both USA CE and KP agreed to (id.).
All of this evidence supports our conclusion that KP's/CCI's interpretation of
"All remaining locations, unless noted otherwise" was within the zone of
reasonableness.
The Government's Interpretation of 3.11. 7.4.c. is also Reasonable
We found above that Mr. Hailey intended "All remaining locations" to require a
Level 4 finish everywhere, including concealed locations. We are troubled by
Mr. Hailey's testimony that he wasn't more specific because he "didn't want to call it out"
(finding 15). We do not understand Mr. Hailey's reluctance to be more specific; his
language could have easily been much clearer in expressing his intent. This entire
situation could have been avoided ifhe had simply stated that a Level 4 finish must be
applied from true floor to true ceiling including above architectural ceilings and below
raised floors. Nevertheless, we conclude that "All remaining locations" can be interpreted
as USACE argues. USACE's interpretation is within the zone of reasonableness.
Subparagraph 3.11. 7.4.c. is Ambiguous
Because both KP's/CCI's and USACE's interpretations are reasonable, we
conclude that subparagraph 3.11.7.4.c. is ambiguous. Language is legally ambiguous if
there are two reasonable interpretations. NVT Technologies, 3 70 F .3d at 1159; MA.
Mortenson Co., ASBCA No. 50383, 00-2 BCA, 30,936 at 152,705. Having found the
language ambiguous, parol evidence may be used to clear up the ambiguity.
Teg-Paradigm, 465 F.3d at 1338-39 (Although the parol evidence rule bars the use of
extrinsic evidence to supplement or modify a written agreement, the rule does not bar the
use of extrinsic evidence to interpret the terms of a contract when the plain and ordinary
meaning is not clear from the contract itself.). The only extrinsic evidence of the
intended interpretation of 3 .11. 7.4.c. is Mr. Hailey's testimony that he intended
3.11.7.4.c. to require Level 4 finish on all walls including above ceilings and below floors
(finding 15). However, Mr. Hailey's interpretation was never communicated to KP/CCI
and cannot now clear up the ambiguity. Thefaf Al-Rafidain Contracting Co., ASBCA
No. 59014, 14-1 BCA, 35,573 at 174,333-34 (A party's uncommunicated interpretation
of a contract provision does not bind the other contracting party.).
24
The Ambiguity is Latent and Contra Proferentem Applies
Without extrinsic evidence to help clear up the ambiguity, the Board must
determine if the ambiguity is latent or patent- a question of law. States Roofing, 587
F.3d at 1368. If the ambiguity is patent, a duty to inquire arises on the part of the
non-drafter:
If the ambiguity is patent, it triggers a duty to inquire. A
patent ambiguity is one that is "obvious, gross, [or]
glaring, so that plaintiff contractor had a duty to inquire
about it at the start." H&M Moving, Inc. v. United States,
204 Ct. Cl. 696, 499 F .2d 660, 671 ( 1974 ). If an ambiguity
is obvious and a bidder fails to inquire with regard to the
provision, his interpretation will fail. Triax Pac., Inc. v.
West, 130 F.3d 1469, 1475 (Fed. Cir. 1997).
NVT Technologies, 370 F.3d at 1162.
It is difficult to prove patent ambiguity:
As we have stated, '"[t]he doctrine of patent
ambiguity is an exception to the general rule of contra
proferentem, which courts use to construe ambiguities
against the drafter."' Blue & Gold Fleet, L.P. v. United
States, 492 F .3d 1308, 1313 (Fed. Cir. 2007) ( quoting E.L.
Hamm & Assocs. Inc. v. England, 379 F.3d 1334, 1342
(Fed. Cir. 2004)). For that reason, the bar to proving
patent ambiguity is high, and the inconsistency must be so
"obvious, gross, [or] glaring, so that plaintiff contractor
had a duty to inquire about it at the start." NVT Techs.,
370 F.3d at 1162 (internal quotation marks omitted,
alteration in original).
LAI Services, 573 F.3d at 1315-16; see also Triax Pacific, 130 F.3d at 1475.
In this case virtually no one raised any questions about the interpretation of "All
remaining locations" for a year and a half during which time USACE accepted fire-taping
above ceilings and below floors (findings 34, 49). This is proof that the ambiguity was
not patent and KP/CCI had no duty to inquire. Accordingly, the ambiguity was latent:
As precedent explains, there must be a glaring conflict or
obvious error in order to impose the consequences of
misunderstanding on the contractor. See HPIIGSA 3C,
25
LLC v. Perry, 364 F.3d 1327, 1334 (Fed. Cir. 2004)
("Where an ambiguity is not sufficiently glaring to trigger
the patent ambiguity exception, it is deemed latent and the
general rule of contra proferentem applies."); Blount Bros.
Const. Co. v. United States, 171 Ct. Cl. 478, 346 F.2d 962,
973 (1965) ("[Contractors] are not expected to exercise
clairvoyance in spotting hidden ambiguities in the bid
documents, and they are protected if they innocently
construe in their own favor an ambiguity equally
susceptible to another construction, for ... the basic precept
is that ambiguities in contracts drawn by the Government
are construed against the drafter.").
States Roofing, 587 F.3d at 1372. It is not enough to prove latent ambiguity, the
contractor must also prove reliance on the latent defect to prevail:
If the ambiguity is not patent, but latent, we construe it
against the drafter under the rule of contra proferentem.
Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751
(Fed. Cir. 1999). For the rule to apply, however, the
nondrafting party must prove that it relied on its
interpretation during bidding. Fruin-Colnon Corp. v.
United States, 912 F.2d 1426, 1430 (Fed. Cir. 1990).
Weis Builders, Inc., ASBCA No. 56306, 10-1 BCA ,r 34,369 at 169,722. Again, a year
and a half of performance and acceptance of fire-taping proves that KP/CCI relied on its
interpretation of the ambiguous language. We therefore apply contra proferentem and
construe the ambiguous language "All remaining locations" against the drafter USACE.
26
CONCLUSION
For the reasons stated above we sustain the appeal and return the matter of
quantum to the parties.
Dated: April 24, 2019
Adminis ative Judge
Armed Services Board
of Contract Appeals
I concur
RICHARD SHACKLEFORD OWEN C. WILSON
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 61197, Appeal of
KiewitPhelps, rendered in conformance with the Board's Charter.
Dated:
JEFFREY D. GARDIN
R.ecorder,Armed Services
Board of Contract Appeals
27