Hawaiian Dredging Construction Company, Inc. v. United States ( 2023 )

In the United States Court of Federal Claims
HAWAIIAN DREDGING
CONSTRUCTION COMPANY, INC,
Plaintiff, No. 22-339
(Filed: February 14, 2023)
v.
THE UNITED STATES,
Defendant.
Michael Charles Zisa, Washington, DC, for Plaintiff.
Jimmy S. McBirney, Civil Division, United States Department of Justice, Washington, DC, for
Defendant.
OPINION AND ORDER
LERNER, Judge.
This is a case under the Contract Disputes Act (“CDA”), 41 U.S.C. § 7101, involving a
firm fixed-price, design-build contract (the “Contract”) between Plaintiff Hawaiian Dredging and
Construction Company (“HDCC”) and the United States Department of Transportation, acting
through the Federal Highway Administration, Central Federal Lands Highway Division
(“CFLHD” or the “Agency”). HDCC seeks review of the contracting officer’s final decision
(“COFD”) denying its claim for an equitable adjustment. It believes that it is entitled to an
equitable adjustment to the Contract “to compensate HDCC for delays and increased costs
incurred as a result of changes in the work.” Am. Compl. ¶ 30, ECF No. 14.
The Government moves to dismiss the Amended Complaint under Rule 12(b)(6) of the
United States Court of Federal Claims (“RCFC”). It argues that Plaintiff fails to state a claim
upon which relief may be granted because it “bore the risk of increased costs” under the
Contract, and “does not plausibly allege any directed or constructive contract changes, or that
HDCC performed any uncompensated work outside the scope of its contractually mandated
responsibilities.” Def.’s Mot. to Dismiss (“Def.’s Mot.”) at 1, ECF No. 15.
For the reasons set forth below, the Motion to Dismiss is GRANTED, and the case is
DISMISSED without prejudice.
I. Factual Background1
A. The Project
HDCC was the general contractor for the Lahaina Bypass 1B-2 design-build construction
project in Lahaina, Maui, Hawaii (the “Project” or “Lahaina Bypass”). Am. Compl. ¶ 4. This
was a fixed-unit-price, design-build highway project in the amount of $38,671,000. Id. The goal
of the Project was to relocate the terminus of the Lahaina Bypass to stop shoreline erosion,
coastal hazards, and traffic congestion on the Honoapiilani Highway. Id. at ¶ 6. The Project
anticipated extending the existing road on both sides, constructing an overpass and box culverts,
grading for drainage, and installing road and bridge safety features. Id. at ¶ 7. To do this work,
HDCC alleges it required final Rights of Way (“ROWs”) from landowners near the highway,
relocation of overhead utilities, and local, state, and federal permits. Id. at ¶¶ 8–9. On May 25,
2018, the Project opened to the public, and by July 24, 2018, HDCC’s Contract work was
substantially complete. Id. at ¶ 10.
B. The Solicitation and Competition
On October 1, 2015, CFLHD, in partnership with the Hawaii Department of
Transportation (“HDOT”), issued a Request for Qualifications (“RFQ”) seeking potential
contractors to participate in the pre-qualification phase of the Project. Def.’s App. at 166–68,
ECF No. 15-1. Plaintiff alleges that CFLHD “represented that it would acquire the necessary
ROWs prior to issuance of the [notice to proceed].” Pl.’s Resp. to Mot. to Dismiss (“Pl.’s
Resp.”) at 10, ECF No. 18 (citing Pl.’s Ex. A at 5-6, ECF No. 14-1); see also Am. Compl. ¶ 35.
Plaintiff quotes from the RFQ:
There are two (2) right-of-way acquisitions required within the limits of this
project; one private landowner and Maui County (sic). The right-of-way
acquisition is expected to be completed prior to the issuance of the RFP [Request
for Proposals].
Pl.’s Ex. A at 2 (quoting Def.’s App. at 167) (emphasis removed).
On December 7, 2015, HDCC was short-listed to participate in Phase Two of the
solicitation. Id. On December 18, 2015, CFLHD, in partnership with HDOT, issued a Request
for Proposals (“RFP” or “Solicitation”). Id. The “Government Furnished Information” section
of the RFP stated:
1
This section does not set forth factual findings. Rather, it describes the case in terms of the
facts alleged in the Amended Complaint, which must be taken as true, with all reasonable
inferences construed in Plaintiff’s favor on a motion to dismiss. See Erickson v. Pardus, 551
U.S. 89, 93–94 (2007).
2
Due to their size these files will be placed on CD and sent to each firm.
o Right of Way Dedication of Deed documentation
o Final Environmental Assessment/finding of No Significant Impact
o Survey Data
o Alternative No. 3 Profile
Id.; Pl.’s Ex. 1 at A-11, ECF No. 28-1 (RFP). The RFP also required that:
(1) Each proposal include “the plan and profile of the roadway alignment, including
typical sections” and the “proposed alignment and maintenance limits as it relates to
available right-of-way”; and
(2) The Contractor locate and identify all utilities within the project area and “cooperate
with utility owners to expedite the relocation and adjustment of their utilities to
minimize interruption of service, duplication of work, and delays if relocations or
adjustments are needed” and “prepare utility agreements for [CFLHD], to be executed
by HDOT.”
Pl.’s Resp. at 4 (quoting Pl.’s Ex. A at 3) (cleaned up); see also Pl.’s Ex. 1 at A-14, E-11 (RFP).
HDCC alleges that the Alternative No. 3 Profile was a “map depicting a roadway alignment
which had been previously prepared for, and included as part of, HDOT’s Final Environmental
Assessment/Finding of No Impact . . . covering the Project.” Pl.’s Ex. A. at 2.
On April 26, 2016, HDCC submitted its Price Proposal and a Technical Proposal. Pl.’s
Ex. A at 3. HDCC alleges that its Technical Proposal “included a detailed roadway plan and
repeatedly and unequivocally stated that the basis for the proposed roadway alignment was
Alternative No. 3 as described in the Finding of No Impact furnished by CFLHD at the time of
issuance of the RFP.” Id. at 3 (cleaned up). Plaintiff states that when it submitted its bid, it
believed that CFLHD had already secured the required ROW documents and permits—or would
at least do so prior to issuing the notice to proceed—and that neither the Government nor HDCC
were required to obtain grading permits from the County of Maui. Pl.’s Ex. A at 6. In fact, these
requirements were not completed until after contract performance commenced. Id.
C. The Contract
On June 3, 2016, CFLHD awarded HDCC the Contract. Pl.’s Ex. A at 3. CFLHD issued
notice to proceed on June 29, 2016. Id. The Contract incorporated Federal Acquisition (“FAR”)
52.236-7, Permits and Responsibilities, which states:
3
The Contractor shall, without additional expense to the Government, be
responsible for obtaining any necessary licenses and permits, and for complying
with any Federal, State, and municipal laws, codes, and regulations applicable to
the performance of the work.
Def.’s App. at 38 (Contract). The Contract contemplated that the Government would execute
final ROWs, but also required HDCC to “[p]repare right of way plans and any legal descriptions
documents to facilitate the final acquisition of the design and permanent right of way to
accommodate the maintenance and operation of the facility by . . . HDOT”; “[p]repare the
documents according to HDOT standards and specifications”; and “[o]btain any required title
work and field work to complete a boundary study if required by HDOT.” Id. at 96 (Contract
clause 111.11, Right of Way). The Contract also required the contractor to “prepare utility
agreements for CFLHD, to be executed by HDOT,” and “[c]ooperate with utility owners to
expedite the relocation or adjustment of their utilities to minimize interruption of service,
duplication of work, and delays if relocations or adjustments are needed.” Id. at 80 (Contract
clause 107.02, Protection and Restoration of Property and Landscape).
D. The CDA Claim
On July 17, 2020, HDCC filed a CDA claim requesting an equitable adjustment for
various delays and increased costs during its Contract performance. Pl.’s Ex. A at 1–15. HDCC
alleges that the Government’s failure to secure the ROWs in a timely manner caused delays in
obtaining Clean Water Act permits and relocating utilities. Id. at 5–7, 9–12. HDCC also alleged
that it suffered delays and increased costs due to differences between the final ROWs and the
preliminary ROW documents provided in the Solicitation. Id. at 7–9. Finally, it argued that it
experienced excusable delays between Substantial Completion and Final Completion of the
Project because the Government ordered changes and additions to the Contract work relating to a
retaining wall owned by Maui Electric Company (“MECO wall”), grading work fronting “the
Castleton Property” on Kai Hele Ku Street, and a retaining wall on a different part of the
Castleton Property. Id. at 12–13. According to HDCC, these various delays, in turn, led to
critical path delay on the Project. Am. Compl. ¶¶ 21, 23.2 On March 30, 2021, the contracting
officer issued its COFD denying HDCC’s CDA claim.3 Am. Compl. ¶ 16.
2
“Critical path” refers to work items in a construction schedule which, if delayed, will cause
delay in reaching Substantial Completion of the project.
3
The CDA claim also requested a twelve-day extension of time and remission of liquidated
damages for the Agency’s delay in issuing the Notice to Proceed. See Pl.’s Ex. A at 4–5. The
COFD granted this request but denied all other claims. Pl.’s Ex. B at 23–24, ECF No. 14-2.
4
E. Procedural History
On March 29, 2022, Plaintiff filed its Complaint in this Court, followed on July 22, 2022,
by its First Amended Complaint. Plaintiff requests an equitable adjustment, monetary damages,
and time extensions for changed work and breach of contract. It seeks a range of damages and
specific costs totaling $6,576,968; 190 compensable and excusable days of delay; 482 days of
excusable delay; interest; and attorneys’ fees and costs. Am. Compl. ¶ at 11.
II. Jurisdiction
The Tucker Act grants this Court “jurisdiction to render judgment upon any claim by or
against, or dispute with, a contractor arising under” the CDA. 28 U.S.C. § 1491(a)(2); see also
41 U.S.C. § 7102(a) (providing that the CDA applies to “any express or implied
contract . . . made by an executive agency for . . . the procurement of services”). “If a plaintiff
meets the jurisdictional requirements of the Tucker Act, the plaintiff also must demonstrate
compliance with the mandatory requirements of the [CDA].” Crewzers Fire Crew Transp., Inc.
v. United States, 111 Fed. Cl. 148, 153 (2013), aff’d, 741 F.3d 1380 (Fed. Cir. 2014). The CDA
requires that a contractor bring an action in federal court “within 12 months from the date of
receipt of a contracting officer’s decision.” 41 U.S.C. § 7104(b)(3). Further, this Court’s
jurisdiction over a CDA claim “requires both a valid claim and a contracting officer’s final
decision on that claim.” M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1327
(Fed. Cir. 2010). The Court has jurisdiction over Plaintiff’s Amended Complaint under the
Tucker Act and CDA because the case arises from a contract between HDCC and the United
States, there was a valid claim and COFD, and Plaintiff filed its Complaint in this Court within
12 months of receiving the COFD.
III. Discussion
The Amended Complaint alleges that the Contract’s Changes clause entitles Plaintiff to
an equitable adjustment (Count I) and damages for breach of contract (Count II). Read together,
the Amended Complaint and CDA Claim constitute several distinct claims which Plaintiff argues
entitle it to relief.4 Plaintiff only relies on the Changes clause as grounds for either an equitable
adjustment or the basis for breach of contract. See Am. Compl. ¶¶ 18–20, 30. It also alleges that
the Government breached its implied duty of good faith and fair dealing. Pl.’s Ex. A at 13–14.
In claiming breach of contract, the Amended Complaint does not specify any other contract
provision, express or implied warranty, or law that the Government allegedly breached or
violated. Instead, it broadly asserts that “[t]he Final Decision is in breach of the Contract, breach
of CFL[HD]’s express and implied warranties to HDCC, and in violation of the FAR and other
4
The Amended Complaint originally incorporated the CDA Claim’s request for a 12-day
extension of time and remission of liquidated damages for the Agency’s delay in issuing the
notice to proceed. See Am. Compl. ¶¶ 32, 36; Pl.’s Ex. A at 4–5. The COFD granted this
request, Pl.’s Ex. B at 23–24, and Plaintiff clarified in its supplemental brief that this claim is not
at issue, Pl.’s Supp. Br. at 4, ECF No. 28.
5
applicable law.” Am. Compl. ¶ 20. And it largely relies on an attachment to the Complaint for
the substantive details of its claim. Am. Compl. ¶¶ 15, 30; Pl.’s Ex. A.
The Government requests that the Court dismiss Plaintiff’s Amended Complaint pursuant
to RCFC 12(b)(6). See Def.’s Mot. at 1. It argues that the Amended Complaint fails to state a
claim upon which relief may be granted because HDCC bore the risk for increased contract costs
as a matter of law under this fixed-price contract, Plaintiff does not plausibly allege any directed
or constructive changes to the Contract, and no other Contract provision justifies relief. For the
reasons set forth below, this Court agrees.
A. Legal Background
1. Standard of Review
To survive a motion to dismiss, a plaintiff must “plead[] factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007); Erickson v. Pardus, 551 U.S. at 93–94.
2. Firm Fixed-Price Contracts
At its center, this case involves responsibilities and liabilities under a firm-fixed price
design-build contract. Am. Compl. ¶ 4; Def.’s App. at 13, 170, 218. It is a “well-settled rule that
in a fixed-price contract, the contractor bears the risk that its actual cost of performance might
exceed the contract price.” Agility Def. & Gov’t Servs., Inc. v. United States, 115 Fed. Cl. 247,
249 (2014). Firm fixed-price contracts “provide[] for a price that is not subject to any
adjustment on the basis of the contractor’s cost experience in performing the contract.” FAR
16.202-1. “Because fixed-price contracts do not contain a method for varying the price of the
contract in the event of unforeseen circumstances, they assign the risk to the contractor that the
actual cost of performance will be higher than the price of the contract.” Dalton v. Cessna
Aircraft Co., 98 F.3d 1298, 1305 (Fed. Cir. 1996).
Plaintiff assumed the risk of delays, increased costs, and the assessment of liquidated
damages associated with the failure to timely complete contract performance. Absent plausible
factual allegations indicating the Government changed the Contract requirements—or that
Plaintiff is entitled to compensation under another specified contract provision—HDCC cannot
obtain an equitable adjustment to recover these losses as a matter of law. See Zafer Taahhut
Insaat ve Ticaret A.S. v. United States, 833 F.3d 1356, 1361 (Fed. Cir. 2016).
3. Equitable Adjustments Under the Changes Clause
Under the Contract’s Changes clause, a contractor can obtain an equitable adjustment for
an “increase or decrease in the Contractor’s cost of, or the time required for, the performance of
any part of the work under [the] contract” when the Government orders a change to the work.
FAR 52.243-4(d). In general, to receive an equitable adjustment under the Changes clause, a
6
plaintiff must “demonstrate first that any increased costs arose from conditions differing
materially from those indicated in the bid documents, and that such conditions were reasonably
unforeseeable in the light of all the information available to the contractor.” Sterling
Millwrights, Inc. v. United States, 26 Cl. Ct. 49, 72 (1992) (citations omitted). A plaintiff “must
also show that its contract costs actually increased, and that the cost increases were the direct and
necessary result of the change.” Id.Typically, “[i]n order for the Changes clause to apply, there must have been a change in
the form of a ‘written or oral order . . . from the Contracting Officer that causes a change.’”
Bell/Heery v. United States, 739 F.3d 1324, 1334 (Fed. Cir. 2014) (quoting FAR 52.243-4).
Here, the Amended Complaint does not plausibly allege that the Government made any written
or oral order for changes to the work. Rather, Plaintiff seeks relief under the constructive change
doctrine. See Pl.’s Resp. at 9; Pl.’s Ex. A at 9 n.10. “A constructive change occurs where a
contractor performs work beyond the contract requirements without a formal order, either by an
informal order or due to the fault of the Government.” Int’l Data Prods. Corp. v. United States,
492 F.3d 1317, 1325 (Fed. Cir. 2007); see also Bell/Heery, 739 F.3d at 1335; Zafer Taahhut, 833
F.3d at 1361 (quoting NavCom Def. Elecs., Inc. v. England, 53 Fed. App’x 897, 900 (Fed. Cir.
2002)).
Many of Plaintiff’s claims depend upon the theory of constructive acceleration.
Constructive acceleration is a type of constructive change that “arises when the government
requires the contractor to adhere to the original performance deadline set forth in the contract
even though the contract provides the contractor with periods of excusable delay that entitle the
contractor to a longer performance period.” Fraser Const. Co. v. United States, 384 F.3d 1354,
1361 (Fed. Cir. 2004). A contractor must show, among other things, that it “encountered a delay
that is excusable under the contract.” Id. at 1361. An excusable delay “‘arises from
unforeseeable causes beyond the control and without the fault or negligence of the Contractor,’
including ‘acts of the Government in either its sovereign or contractual capacity.’” E.g. Nova
Grp./Tutor-Saliba v. United States, 159 Fed. Cl. 1, 53 (2022) (quoting FAR 52.249-10(b)(1)).
Notwithstanding the excuse, a plaintiff must “prove that it took reasonable action to perform the
contract.” Int’l Elecs. Corp. v. United States, 646 F.2d 496, 510 (Ct. Cl. 1981) (citing United
States v. Brooks-Callaway Co., 318 U.S. 120 (1943)).
4. Breach of Contract
Plaintiff contends that the Government breached the Changes clause when the contracting
officer denied its CDA claim for an equitable adjustment. See Am. Compl. ¶¶ 18–20. “A breach
of contract claim requires two components: (1) an obligation or duty arising out of the contract
and (2) factual allegations sufficient to support the conclusion that there has been a breach of the
identified contractual duty.” Bell/Heery, 739 F.3d at 1330. On a motion to dismiss, this Court
interprets a contract’s provisions to determine whether the factual allegations in the complaint, if
true, would establish a breach of contract. Id.; see also S. Cal. Edison v. United States, 58 Fed.
Cl. 313, 321 (2003) (“Contract interpretation is a matter of law and thus may be addressed by the
Court in resolving a motion to dismiss.”). When interpreting a contract, this Court gives clear
and unambiguous contract terms their plain and ordinary meaning and construes the contract “in
7
a manner that gives meaning to all of its provisions and makes sense.” McAbee Constr., Inc. v.
United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996).
5. Implied Duty of Good Faith and Fair Dealing
In part, Plaintiff supports its claims under the Changes clause in Count I—in particular,
the “government fault” element—and its breach of contract claims in Count II with allegations
that the Government breached the implied duty of good faith and fair dealing by causing
unreasonable delay. See Pl.’s Ex. A at 13–14. As the United States Court of Appeals for the
Federal Circuit explains, “[t]he covenant [of good faith and fair dealing] imposes obligations on
both contracting parties that include the duty not to interfere with the other party’s performance
and not to act so as to destroy the reasonable expectations of the other party.” Centex Corp. v.
United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005). Both the “duty not to hinder and the duty
to cooperate are aspects of the implied duty of good faith and fair dealing.” Precision Pine &
Timber, Inc. v. United States, 596 F.3d 817, 820 n.1 (Fed. Cir. 2010). “What is promised or
disclaimed in a contract helps define what constitutes ‘lack of diligence and interference with or
failure to cooperate in the other party’s performance.’” Solaria Corp. v. United States, 123 Fed.
Cl. 105, 119–20 (2015) (quoting Metcalf Constr. Co., Inc. v. United States, 742 F.3d 984, 991
(Fed. Cir. 2014)).
B. Analysis
The Amended Complaint fails to state a claim that the Government required HDCC to
perform work outside of its contractual requirements. The setbacks HDCC alleges it
encountered during contract performance—problems with the timing and content of finalized
ROWs, obtaining necessary permits, relocating utilities, and negotiating work on several
retaining walls—were both HDCC’s sole responsibility under the firm fixed-price Contract and
reasonably foreseeable. HDCC does not allege that the Government directed it to obtain permits
or gather ROWs that were not contemplated by the Contract. Nor does it allege that it incurred
overtime premiums caused by accelerating construction. Moreover, nothing in the Amended
Complaint implies that representatives of CFLHD or HDOT acted unfairly or bad faith.
Accordingly, the Amended Complaint must be dismissed.
1. Claims for Delays in Securing the Final Rights of Way and for
Changes to the Rights of Way
Plaintiff gives myriad reasons it believes the Government was responsible for the delays
and increased costs HDCC experienced during contract performance:
 “The Government failed to secure the necessary ROWs prior to issuing the notice to
proceed, “which delayed final road design, preparation and execution of appropriate
8
Rights of Entry agreements and commencement of construction activities” Pl.’s Resp. at
6 (citing Pl.’s Ex. A at 5–6).
 The Government’s failure to timely secure the ROWs “result[ed] in changes to the
permitting requirements/standards from those reasonabl[y] anticipated by HDCC at the
time of bidding which in turn caused delays and increased costs associated with the
permitting process.” Pl.’s Resp. at 6 (citing Pl.’s Ex. A at 9–10).
 In addition to failing to secure ROWs in a timely manner, “[t]he Government made
changes to ROWs upon which HDCC based its bid which resulted in delays and
additional design and other compensable costs.” Pl.’s Resp. at 6 (citing Pl.’s Ex. A at 7–
9).
The Court construes these claims as constructive change arguments, as the Amended
Complaint does not allege that the Government gave a written or oral change order that caused
delay or changed the ROW specifications. See Agility Def., 115 Fed. Cl. at 251. These
allegations fail to state a claim upon which relief may be granted under the Changes clause.
Plaintiff does not allege facts that demonstrate either that HDCC performed work outside of the
contract requirements or that HDCC experienced unforeseeable, excusable delay caused by the
Government’s acts or omissions.
HDCC vaguely asserts that CFLHD and HDOT made “verbal and written
representations” during the procurement process that the Agency would secure title to ROWs
prior to issuing the notice to proceed. Pl.’s Ex. A at 6. It relies on language in the October 1,
2015 RFQ, which stated that “[t]he right-of-way acquisition is expected to be complete prior to
the issuance of the RFP.” Def.’s App. at 167; Pl.’s Resp. at 3; Pl’s Ex. A at 2. However, the
RFP issued on December 18, 2015, informed bidders that the Contract would require the
contractor to “[p]repare right of way plans and any legal descriptions documents to facilitate the
final acquisition of the design and permanent right of way to accommodate the maintenance and
operation of the facility by . . . HDOT”; “[p]repare the documents according to HDOT standards
and specifications”; and “[o]btain any required title work and field work to complete a boundary
study if required by HDOT.” Pl.’s Ex. 1 at E-27, ECF No. 28-1. By including this language in
the RFP, it was clear the Government had not yet secured final ROWs. Similarly, the RFP
contemplated that final ROWs would not be obtained until after the contract award, as the
contractor’s assistance was required to facilitate ROW design and acquisition.
While the Contract assigns the Government responsibility to obtain title to ROWs, it does
not specify a date by which the Government was required to do so. See Pl.’s Ex. A at 5–6. Thus,
HDCC is wrong to allege that the Government caused unforeseeable, and therefore excusable,
delays in contravention of its express duties under the Contract. Because the Contract required
HDCC’s participation in securing ROWs, it was entirely foreseeable that the Government would
not have finalized ROWs prior to awarding the Contract or issuing the notice to proceed. Pl.’s
Ex. 1 at E-27; Def.’s App. at 96. This was a firm fixed-price, design-build contract that
9
unambiguously included ROW design and facilitation services as part of the contractor’s scope
of work. Thus, HDCC bore the risk of increased costs and delays related to designing ROWs,
securing ROWs, and adjusting construction designs based on preliminary ROW approximations
in order to fit final ROWs. Pl.’s Ex. 1 at E-27; Def.’s App. at 96.
Plaintiff also fails to allege facts that the Government’s acts or omissions caused the
delays, thereby violating the implied duty of good faith and fair dealing. See Pl.’s Ex. A at 14.
Nor does it offer facts showing that the Government engaged in a “lack of diligence and
interference with or failure to cooperate in [HDCC’s] performance” to suggest that the
Government was responsible for the delays. Metcalf, 742 F.3d at 991. HDCC makes only
conclusory assertions that the Government caused various delays. Without more, these
allegations are insufficient for this Court to find that the Agency’s acts or omissions were in bad
faith. Figueroa v. United States, 57 Fed. Cl. 488, 497 (2003), aff’d, 466 F.3d 1023 (Fed. Cir.
2006) (“[L]egal conclusions, deductions, or opinions couched as factual allegations are not given
a presumption of truthfulness.” (quoting Blaze Constr., Inc. v. United States, 27 Fed. Cl. 646,
650 (1993)) (cleaned up)).
Moreover, Plaintiff cites inapposite cases to support its claim that it is entitled to an
equitable adjustment where the Government issued late ROWs. In these cases, courts found
contractors entitled to an equitable adjustment because the government failed to furnish ROWs
by an explicit deadline. See Am. Line Builders, Inc. v. United States, 26 Cl. Ct. 1155, 1163, 1205
(1992) (finding entitlement where the government missed an agreed-upon deadline to provide
ROWs); see also Appeal of Erickson Air Crane Co. of Washington, Inc., EBCA No. 50-6, 83-1
B.C.A. (CCH) ¶ 16145, 1983 WL 9353 (E.B.C.A. Sept. 30, 2982) (involving a contract that also
specified a deadline for the government to provide the ROW). Here, however, the parties never
agreed upon a specific date. Moreover, the Government did not represent that the ROW
documents provided in the RFP—the Declaration of Future Dedication Commitment and
Alternative No. 3 Profile—were final ROWs. See Pl.’s Ex. 1 at E-27 (RFP clause 111.11);
Def.’s App. at 96 (Contract clause 111.11); see also Pl.’s Ex. A at 6 n.7 (when asked at the Q&A
stage of the procurement process whether “all right-of-way acquisition has been obtained,” the
Agency referred bidders to the Contract language regarding “ROW engineering required by
contractor” and stated that the “[f]uture dedication allows construction to commence
concurrently”).
HDCC also blames the delays and increased costs to obtain Clean Water Act Section 404
permits (“404 permits”) on the Government’s alleged failure to timely secure final ROWs. Pl.’s
Ex. A at 9. Specifically, HDCC alleges that it was not able to submit its 404-permit application
in line with its preferred schedule because the permit application required details that could only
be found in the final ROWs. Id. Before HDCC was able to obtain the ROWs and submit its
permit application, the local regulations governing the 404-permit requirements expired and new,
more stringent regulations were put in place. Id. at 10. HDCC claims that it suffered delays and
increased costs to comply with the heightened permitting requirements, which it would not have
experienced had it been able to submit its permit application under the old regulations. Id.10
Under the Contract’s Permits and Responsibilities clause, HDCC was, “without
additional expense to the Government, . . . responsible for obtaining any necessary licenses and
permits, and for complying with any Federal, State, and municipal laws, codes, and regulations
applicable to the performance of the work.” FAR 52.236-7. While this clause “can be
constrained by other contractual provisions that specifically limit the scope of the contractor’s
obligations for permitting requirements,” see Bell/Heery, 739 F.3d at 1331, Plaintiff would need
to plausibly allege that the late ROWs changed the Contract or resulted in excusable delay. It
fails to do so. Thus, the Changes clause does not relieve HDCC of its obligations under the
Permits and Responsibilities clause.
Additionally, Plaintiff does not credibly allege that the contract requirements or site
conditions were materially different from the ROW information in the RFP. See Sterling
Millwrights, 26 Cl. Ct. at 72. It is clear that these were not the final ROWs. See Pl.’s Ex. 1 at E-
27 (RFP clause 111.11); Def.’s App. at 96 (Contract clause 111.11); see also Pl.’s Ex. A at 6 n.7.
The need to adjust the ROW design to fit within the final ROW was foreseeable under the RFP’s
and Contract’s requirements for ROW design and facilitation services. Sterling Millwrights, 26
Cl. Ct. at 72 (providing that an equitable adjustment for differing site conditions requires the
materially different conditions to be reasonably unforeseeable); Pl.’s Ex. 1 at E-24 (RFP clause
111.05. Geometric Requirements); E-27 (RFP clause 111.11); Def.’s App. at 93 (Contract clause
111.05. Geometric Requirements), 96 (Contract clause 111.11).
In its CDA claim, Plaintiff invokes the Spearin doctrine, under which a contractor is
entitled to compensation and additional time for changes caused by defective plans or
specifications. United States v. Spearin, 248 U.S. 132 (1918). That doctrine concerns the
“implied warranty that if the specifications are followed an acceptable result will be produced,”
which arises only in cases where “a government contract contains detailed design specifications,
as opposed to performance specifications.” Rick’s Mushroom Serv., Inc. v. United States, 521
F.3d 1338, 1344 (Fed. Cir. 2008). Here, the Spearin doctrine does not apply because the instant
design-build contract contains only performance specifications. See Def.’s App.; Pl.’s Ex. B at
52. In sum, Plaintiff has not identified any legal or factual basis that entitles it to recover on its
ROW claims.
2. Utility Relocation Delay Claim
Plaintiff asserts that the Contract required the Government “to timely execute and enforce
its agreements with public utility companies” to relocate utilities, and its failure to do so
“resulted in delays in HDCC’s completion [of] the final roadway configurations at the Southern
Terminal and Hokiokio and additional costs entitling HDCC to an excusable and compensable
time extension and additional costs.” Pl.’s Resp. at 6 (citing Pl.’s Ex. B at 40–49). Plaintiff
alleges that it notified the utility company that owned telephone lines at the Project’s Southern
Terminus that its poles and overhead lines had to be relocated by October 2017. Pl.’s Ex. A at
11. Plaintiff also allegedly notified the utility companies that owned conflicting utilities at the
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Hokiokio Street portion of the Project that their poles and overhead lines had to be relocated no
later than August 4, 2017. Id. at 12. However, the Southern Terminus utility was not relocated
until May 11, 2018, and the Hokiokio Street utilities were not relocated until July 11, 2018. Id.
The Amended Complaint fails to state a claim under the Changes clause for recovery of
increased costs due to delays in these utility relocations. It does not allege facts demonstrating
that these delays were excusable due to the Government’s acts or omissions in violation of the
contract’s express terms or the implied duty of good faith and fair dealing. HDCC points to no
contractual provision or authority obligating the Government to compel third-party utility
companies to complete utility relocations within HDCC’s preferred schedule. The Contract
required the contractor to “prepare utility agreements for CFLHD, to be executed by HDOT,” but
made no assurances that CFLHD or HDOT would ensure the utility companies’ adherence to
HDCC’s schedule. Def.’s App. at 80 (Contract clause 107.02, Protection and Restoration of
Property and Landscape). The Contract specifies that HDCC was responsible for
“[c]ooperat[ing] with utility owners to expedite the relocation or adjustment of their utilities to
minimize interruption of service, duplication of work, and delays if relocations or adjustments
are needed.” Id. The firm fixed-price nature of the Contract assigned HDCC the risk of utility
relocation delays. Thus, Plaintiff’s claim must fail.
3. Maui Electric Company Wall and Castleton Wall Excusable Delay
Claim (Time Only)
HDCC’s final claim is a request for excusable days of delay and remission of liquidated
damages, but not increased costs. Pl.’s Resp. at 20; Pl.’s Ex. A at 12–13. It alleges that “the
Government caused delays associated with changes to the work involving the Maui electrical and
Kai Hele Ku [Castleton] retaining walls.” Pl.’s Resp. at 6; see also Pl.’s Ex. A at 12–13.
Specifically, HDCC asserts:
[W]hile the Project achieved actual Substantial Completion on July 24, 2018, there
remained two forms of wall work associated with neighboring properties. The first
was for the Castleton property which the Government was negotiating with the
neighboring landowner over its request for a different, terraced [wall] to its property
[as opposed to the graded slopes HDCC had already completed under the Contract].
The second were Government requested changes to the MECO [Maui Electric
Company] wall work for another adjacent property. HDCC priced both of these
changes to the wall work to be performed at the same time, but the Government
delayed and kept HDCC on standby for 482 days and then it instructed HDCC not
to perform the Castleton [terrace] wall work [because it decided to give that work
to another contractor], and HDCC was forced to perform the Government’s changes
to the MECO wall work without an approved change order.
Pl.’s Resp. at 15; see also Pl.’s Ex. A at 12–13. It is unclear—and the parties disagree about—
whether the MECO wall work was part of HDCC’s original scope of work. Compare Pl.’s Ex. C
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at 49 with Pl.’s Ex. B at 72. Consequently, they disagree as to whether HDCC’s need to make
changes to the MECO wall after Substantial Completion constituted a change to the Contract
requirements. Compare Pl.’s Ex. C at 49 with Pl.’s Ex. B at 72. Neither party cites to any RFP
or contract provision to support its position on what work relating to the MECO wall was
included in the base Contract.5
HDCC argues that the MECO wall work changed the contract requirements because
“only grading [for the MECO utility boxes] was included in the base Contract,” but “[t]he
approved grading change to the Castleton driveway [associated with the terraced wall
construction] required construction of a block wall at the utility boxes per MECO requirements.”
Pl.’s Ex. C at 62. Based on this assumption, HDCC argues that it “could not proceed with the
changed work without a contract modification” and “[t]he reason the MECO wall was delayed
was because CFL[HD] would not provide an approved change modification to proceed.” Id.
HDCC further explains that the “additional wall work at the MECO location . . . used the same
block as the proposed [Castleton terraced] wall construction,” and it believed both of these work
items “would be covered under the same contract modification.” Pl.’s Ex. C at 63. Therefore,
HDCC decided to complete this work simultaneously. Id. It states that “[w]hile awaiting
direction from CFL[HD],” a survey revealed an issue with a different retaining wall on another
part of the Castleton property and HDCC began “work[ing] on a minor redesign” to increase the
wall height. See id. It chose to complete the work to increase the height of the other Castleton
retaining wall “in conjunction with the pending Contract Modification [i.e. MECO wall and
Castleton terraced wall] work.” Id.
Because HDCC had various work—and additional anticipated work—to complete in
close geographic proximity, “HDCC recommended, and CFL[HD] accepted that this remaining
base work be delayed:” (1) “[s]o that all work is completed at the same time, or pacing the work
to complete when the change order work finishes”; (2) “[t]o efficiently use [HDCC’s]
resources”; and (3) “[t]o manage and reduce the cost of equipment mobilization and use.” Pl.’s
Ex. C at 63. HDCC states that this arrangement “was an economic decision that was beneficial
to both HDCC and CFL.” Id.
The COFD claims that the MECO wall “was part of HDCC’s original scope of work and
was entirely unrelated to the Castleton Terrace Wall issue, other than the fact that the MECO
wall was in the same vicinity as the Castleton Terrace Wall. HDCC’s failure to complete the
MECO Wall work is unrelated to the Castleton Terrace Wall, which both parties had agreed was
added work.” Pl.’s Ex. B at 67. The COFD further explains that the work to increase the other
5
It is unclear whether Plaintiff’s claim for excusable delay encompasses a claim that the MECO
wall work was changed work, either under a traditional or constructive change analysis.
However, the Court interprets Plaintiff’s claim for time only as a claim for excusable days
associated with its negotiation of the various wall work items with the Agency. Because Plaintiff
does not appear to request compensation for the “additional” or “changed” work to the MECO or
Castleton walls, the Court does not address whether the MECO wall work was, or was not, a
base Contract requirement.
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Castleton retaining wall’s height after HDCC discovered issues with the wall during a survey
was original Contract work. Id. The Agency argues that “HDCC did not diligently pursue this
work to complete the original Contract requirements. . . . This delay in completing Contract
requirements is concurrent with the MECO Wall delay.” Id. The Government contends that
Plaintiff’s “unilateral” decision to delay both the base Contract work and the added work “while
waiting to see if it would obtain a separate contract to also complete” the Castleton terraced wall
was a “business decision.” Def.’s Reply at 9. Thus, it concludes that “HDCC cannot state a
claim for relief against the Government as a result of HDCC’s own business decision.” Id.
HDCC does not plead sufficient facts to demonstrate excusable delay. The alleged facts,
even when taken as true, indicate that HDCC intentionally contributed to the delay and that
HDCC did not continue to perform the contract despite its pending disputes with the Agency as
required under the Contract’s Disputes clause. Pl.’s Ex. C at 52–54; FAR 52.233-1, Disputes
(July 2002) – Alternate I (Dec. 1991) (“The Contractor shall proceed diligently with performance
of this contract, pending final resolution of any request for relief, claim, appeal, or action rising
under or relating to the contract, and comply with any decision of the Contracting Officer.”); see
also Int’l Elec. Corp., 646 F.2d at 510; Nova Grp./Tutor-Saliba, 159 Fed. Cl. at 53. HDCC
indicates that it submitted multiple proposals and requests for contract modification orders,
equitable adjustments, and excusable delay associated with the various wall work issues. Pl.’s
Ex. C at 52–54. However, it admits that it chose to delay performance of certain items
dependent upon resolution of these requests to the Agency, or in order to benefit itself and the
Agency economically. See Pl.’s Ex. C at 52. HDCC had control over the schedule in this
design-build Contract. Finally, it fails to allege facts suggesting that the Government acted in
bad faith in taking time to make decisions regarding the additional Castleton wall work or to
resolve HDCC’s various requests.
IV. Conclusion
As explained above, Plaintiff has failed to plausibly allege that there were Government
directed changes to the Contract. What HDCC interprets as changes are, in fact, obstacles that
arose during contract performance which deviated from assumptions HDCC held at the time of
its bid. Under the Contract, HDCC was solely responsible for the costs associated with
addressing these obstacles. Therefore, the Amended Complaint does not state a claim for an
equitable adjustment under the Changes clause (Count I) or for breach of the Changes clause
(Count II). The Amended Complaint also fails to plausibly allege facts demonstrating that the
underlying Government acts and omissions that led to the alleged changes were in bad faith.
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Accordingly, the Government’s Motion to Dismiss the Amended Complaint is
GRANTED, and the case is DISMISSED without prejudice. The Clerk of the Court is
directed to enter judgment accordingly.
IT IS SO ORDERED.
s/ Carolyn N. Lerner
CAROLYN N. LERNER
Judge
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