GEORGE SOLLITT CONSTRUCTION CO., Plaintiff, v. The UNITED STATES, Defendant, 64 Fed. Cl. 229

OPINION BUSH, Judge. This construction contract dispute is before the court following a trial in August 2003. Pre- and post-trial briefs have been filed by the parties. An extensive record of the trial is embodied in the transcript (Tr.), joint exhibits (JE), government exhibits (GE), and Sollitt exhibits (SE). The fact witnesses for both parties were helpful and for the most

part credible, and the expert witnesses contributed them insights into construction delay estimates. This opinion resolves all outstanding issues in this case. BACKGROUND I. Factual Background On February 27, 1995, the United States Department of the Navy (Navy) awarded George Sollitt Construction Company (Sollitt) contract N62467-94-C-0971 for the renovation of two existing buildings (Buildings 122 and 2B), an addition to Building 122 to house a “ship’s trainer,” and new construction of a Pump House and two “Range Buildings,” all at the Naval Training Center, Great Lakes, Illinois (NTC).

The contract work, valued at $15,450,000 and scheduled to begin on March 14, 1995, was to be conducted in three phases. Phase I of the contract required Sollitt to complete the renovation of Building 122, build an addition to that building, (Area C, housing the ship’s trainer) and construct two Range Buddings by February 7, 1996. Phase II of the contract involved the renovation of Building 2B, and also included the cost of a new Pump House for the installation of fire protection pumping equipment. Phase II was to be completed by May 31,1996.

Phase III of the contract required Sollitt to complete site work and landscaping, including installation of new concrete paving, curbs, sidewalks, steps, ramps and utility connections. Phase III was also to be completed by May 31, 1996. This project was part of the Base Realignment and Closure (BRAC) process, mandated by Congress. The buildings being constructed or renovated at NTC would replace existing training schools at other Navy facilities that were scheduled for closing, or in certain eases, had already started the decommissioning process.

According to the Navy’s intended construction timeline, after Sollitt had completed the construction and renovation at NTC, a Navy follow-on contractor was scheduled to install specialized Navy equipment for the schools. This follow-on installation had to be accomplished prior to a “ready for training” date set by the closing of current schools. The Navy’s follow-on contractor had a window of time scheduled for this project.

If construction was delayed, the Navy’s follow-on contractor would not be available to install equipment, due to other commitments, and the scheduled instruction would be interrupted and delayed. The parties entered into a partnering agreement, which included a provision for regular communication about construction problems and their solutions. Notwithstanding the importance of timely completion, the construction phases were not completed on time.

A variety of monetary disputes arose between the Navy and Sollitt during the course of construction, and Sollitt submitted a claim for equitable adjustment of the contract to the contracting officer on October 3, 1997. The contracting officer issued a final decision on December 21, 1998, and the Navy issued its final modification of the contract, Modification P00055, on April 28, 1999. On December 6, 1999, Sollitt filed its complaint in this court.

An audit of Sollitt’s claim was performed by the Defense Contract Audit Agency (DCAA audit), which found that “the claim is an acceptable basis for negotiation of a fair and reasonable settlement amount.” JE 231. However, no settlement was achieved and trial was held in August 2003. II. Legal Issues A. Index of Legal Issues Presented by the Counts Sollitt’s claims have been grouped into nineteen counts. Several of these counts are further divided into subparts related to specific contract work items. In this

section of the opinion, the court first provides an index of the legal issues found in the contested counts of Sollitt’s complaint. The court then reviews the legal standards which apply to these issues. In the following

section of the opinion, the court proceeds count by count (and subpart by subpart) to apply the pertinent legal standard to each claim presented in this case and to award Sollitt damages where they are due. 1.

Compensable Delay Compensable delay is the main issue in three counts of Sollitt’s complaint: Count I asks primarily for extended overhead costs because of an allegedly justified equitable extension of the contract completion dates for Phases II and III of construction; Count II asks for increased labor costs because Phases I, II and III of construction were allegedly delayed by the Navy past the contract completion date and new and higher labor rates applied thereafter; and, Count IV asks for the extra costs of winter work allegedly caused by Navy delays. 2.

Excusable Delay Excusable Delay is the other issue set forth by plaintiff in Count I: Sollitt alleges that the Navy delayed construction and thus that the $235,200 in liquidated damages assessed by the Navy should be returned to Sollitt. 3. Proof of Equitable Adjustment Claims Proof of equitable adjustment claims for work added to or deducted from the contract is the issue asserted in Counts V through XV. 4. Navy’s Discretionary Power to Grant or Deny Performance Awards The scope of the Navy’s discretionary power to grant or deny performance awards underlies Count XVIII. 5.

Prompt Payment Act and Interest Whether the Prompt Payment Act applies to provide interest on Sollitt’s claims underlies Count XVI, a request for interest on Navy-deducted amounts from progress payments on Sollitt’s monthly invoices, and Count XIX, a general request for interest on all claimed damages awarded to Sollitt in this suit. Both parties agree that the Contract Disputes Act, 41 U.S.C. §§ 601-613 (2000) (CDA) provision of interest applies to claims upon which Sollitt prevails. B. Overview of Legal Issues 1. Compensable Delay a.

Government liability for an equitable adjustment may lie when the government has caused delay to the contractor’s performance Under the standard Suspension of Work clause found in government fixed-price construction contracts, 48 C.F.R. § 52.242-14 '(2004), the United States may be liable for causing delays to contract work. If the contractor suffers increased costs because of government action or inaction which effectively suspends the contractor’s progress on contract work, this clause may provide a remedy. E.g., Merritt-Chapman & Scott Corp. v. United States, 192 Ct.Cl. 848, 429 F.2d 431, 443-44 (1970).

Liability is just one element of proof that is required for a successful equitable adjustment claim, however. The Federal Circuit has stated that three elements are required to justify an equitable adjustment to a contract: “liability, causation, and resultant injury.” Servidone Constr. Corp. v. United States, 931 F.2d 860, 861 (Fed.Cir.1991) (citing Wunderlich Contracting Co. v. United States, 173 Ct.Cl. 180, 351 F.2d 956, 968 (1965)). b.

Government liability is limited to its unreasonable delays For the government to be found liable for an action or inaction that delays contract work, the delay in question must be unreasonable. See John A Johnson & Sons, Inc. v. United States, 180 Ct.Cl. 969, 986, 1967 WL 8810 (1967) {Johnson & Sons) (approving and quoting the principle stated in the decision below that an equitable adjustment is warranted when “ ‘the resulting [government-caused] interruption or delay is for an unreasonable length of time causing additional expense or loss to a contractor’ ”).

Only unreasonable government delays are compensable because there are “some situations in which the government has a reasonable time to make changes before it becomes hable for delay.” Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1289 (Fed.Cir. 2000). The Suspension of Work clause employs the term unreasonable to describe compensable delays: (

b) If the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted (1) by

an act of the Contracting Officer in the administration of this contract, or (2) by the Contracting Officer’s failure to act within the time specified in this contract (or within a reasonable time if not specified), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay, or interruption, and the contract modified in writing accordingly.

However, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the Contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract. 48 C.F.R. § 52.212-12(b) (1994); 48 C.F.R. § 52.242-14(b) (2004). Whether a government-caused delay is reasonable or unreasonable depends on the particular circumstances of the case. P.R. Burke Corp. v.

United States, 277 F.3d 1346, 1360 (Fed.Cir.2002). “What is a reasonable period of time for the government to do a particular act under the contract is entirely dependent upon the circumstances of the particular case.” Tri-Cor, Inc. v. United States, 198 Ct.Cl. 187, 458 F.2d 112, 131 (1972) (citing Specialty Assembling & Packing Co. v. United States, 174 Ct.Cl. 153, 355 F.2d 554, 565 (1966)). Delays due to defective contract specifications, however, are per se unreasonable. Essex Electro, 224 F.3d at 1289. c.

Government action or inaction must be the sole proximate cause of the delay For the government to be found to have caused compensable delay, the general rule is that the government must have been “the sole proximate cause of the contractor’s additional loss, and the contractor would not have been delayed for any other reason during that period.” Triax-Pacific v. Stone, 958 F.2d 351, 354 (Fed.Cir.1992) (citing Merritt-Chapman & Scott Corp. v. United States, 208 Ct.Cl. 639, 528 F.2d 1392, 1397 (1976)).

The “sole proximate cause” concept is also found in the text of the Suspension of Work clause: However, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the Contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract. 48 C.F.R. § 52.212-12(b) (1994); 48 C.F.R. § 52.242-14(b) (2004).

Thus, even if the government has caused an unreasonable delay to contract work, that delay will not be compensable if the contractor, or some other factor not chargeable to the government, has caused a delay concurrent with the government-caused delay. In Triax-Pacific, for example, the Federal Circuit held that because the plaintiff had also caused delay to contract performance, it was not entitled to an equitable adjustment for government-caused delays under the Suspension of Work clause. 958 F.2d at 354. d.

The burden of proof for compensable delay is borne by the contractor When an equitable adjustment is being sought for government-caused delay, “the contractor has the burden of proving the extent of the delay, that the delay was proximately caused by government action, and that the delay harmed the contractor.” Wilner v. United States, 24 F.3d 1397, 1401 (Fed.Cir.1994) (en banc).

In some cases, this burden may be met if the contractor proves four elements: the government’s delay was of unreasonable length, the government was the proximate cause of the contractor’s delayed performance, the contractor was injured, and there was no concurrent delay on the part of the contractor. P.J. Dick Inc. v. Principi, 324 F.3d 1364, 1374-75 (Fed.Cir. 2003); CEMS, Inc. v. United States, 59 Fed.Cl. 168, 230 (2003). Justification of an equitable adjustment for delay-related damages is more complex, however, when both parties have contributed to delays affecting the project. e.

The contractor bears the burden of separating and apportioning concurrent delays The general rule barring recovery for government-caused unreasonable delay when there has been concurrent delay caused by the contractor does permit recovery, however, when “ ‘clear apportionment’ ” of the delay attributable to each party has been established. E.g., T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 734 (Fed.Cir.1997) (quoting Coath & Goss, Inc. v. United States, 101 Ct.Cl. 702, 715, 1944 WL 3694 (1944)).

Because the equitable adjustment claim for compensable delay is the contractor’s claim, the burden is on the contractor to apportion the delay between the parties. E.g., William F. Klingensmith, Inc. v. United States, 731 F.2d 805, 809 (Fed.Cir.1984). “Generally, courts will deny recovery where the delays are ‘concurrent or intertwined’ and the contractor has not met its burden of separating its delays from those chargeable to the Government.” Blinderman Constr. Co. v. United States, 695 F.2d 552, 559 (Fed.Cir.1982). f.

The contractor must prove the extent of the government-caused delay, and its increased costs, to prove its injury To prove the “resultant injury” to the contractor from government-caused unreasonable delay, Servidone, 931 F.2d at 861, the contractor must prove the extent of the delay attributable to the government, see Wilner, 24 F.3d at 1401 (stating that “the contractor has the burden of proving the extent of the delay”), and that the delay caused the contractor to incur additional costs, see Johnson & Sons, 180 Ct.Cl. at 986 (identifying compensable delay as “‘causing additional expense or loss to a contractor’ ”); see also Wilner, 24 F.3d at 1401 (stating that the contractor must prove “that the delay harmed the contractor”).

There are two types of additional costs alleged in Sollitt’s delay-based claims here: additional costs related to the expense of performing certain contract work in winter (Count IV) and additional costs caused by the delayed completion of the project past a projected completion date (Counts I and II). g. The increased costs of winter construction may be compensable Construction during winter months may be more expensive than the same work performed during temperate weather. The Court of Claims commented that some winter construction “necessarily entail[s] considerable unusual expense.” Owen v.

United States, 44 Ct.Cl. 440, 445, 1908 WL 758 (1909). This court and its predecessor courts have sometimes found compensable delays where government-caused unreasonable delays pushed construction activities into the winter months, when these activities were originally scheduled for a different time of year. See, e.g., J.D. Hedin Constr. Co. v.

United States, 171 Ct.Cl. 70, 347 F.2d 235, 256 (1965) (awarding monies for “additional temporary heating during the construction in the winters”); Owen, 44 Ct.Cl. at 445-46 (awarding monies to compensate for the “considerable loss” incurred due to winter work); Young dale & Sons Constr. Co. v. United States, 27 Fed.Cl. 516, 547, 557 (1993) (awarding monies for the labor inefficiencies of winter weather work); Am. Line Builders, Inc. v. United States, 26 Cl.Ct. 1155, 1211-12 (1992) (awarding monies for the additional costs for winter work).

The court may deny an equitable adjustment, however, if the contractor fails to prove that, but for the government delay, the contract work would have been completed before the onset of the winter weather. See, e.g., Kit-San-Azusa, J.V. v. United States, 32 Fed.Cl. 647, 656 (1995) (denying recovery for this reason, among others). h.

The increased costs of winter work may be apportioned for concurrent delays Apportionment of additional costs encountered by working in the winter months, when there have been concurrent delays caused by the government and the contractor, is appropriate, and may be achieved by awarding a proportion of winter-related costs based on a mathematical formula derived from the amount of delay attributable to each party. The Court of Claims applied such a formula in Luria Bros. & Co. v.

United States, 177 Ct.Cl. 676, 369 F.2d 701 (1966): Since there was an overrun on the contract performance time of 518 days, of which 420 days have been found to be chargeable to the defendant as unreasonable, some pro-ration of the cost to the plaintiff of such delay is indicated. Accordingly, 81 percent of the plaintiff’s cost of delay is chargeable to the defendant. Id. at 740. In that case, the contractor was awarded monies for “protection” of exterior masonry done in the winter, including “salt, hay, tarpaulins, salamanders and labor.” Id. at 741.

The court applied an eighty-one percent proration to all of the contractor’s delay-related costs, including winter protection of exterior masonry and loss of labor productivity when performing winter work. Id. at 744-46.

A few years later, the Court of Claims again contemplated an apportionment of winter construction costs, when it remanded a case to a contract appeals panel to determine “whether any part of the delay in enclosing the building was due to the fault of the Government, and if so, how much [of the additional costs for winter labor] is compensable under the Suspension of Work clause.” Chaney & James Constr. Co. v. United States, 190 Ct.Cl. 699, 421 F.2d 728, 739 (1970).

Thus, in the case of concurrent delays that push construction work into the winter months, the contractor may receive an equitable adjustment for the increased costs of winter work, if the delays can be apportioned on the record before the court. i.

When establishing the extent of government-caused delay to project completion, the contractor bears the burden of proving critical path delays In order to prevail on its claims for the additional costs incurred because of the late completion of a fixed-price government construction contract, “the contractor must show that the government’s actions affected activities on the critical path of the contractor’s performance of the contract.” Kinetic Builder’s Inc. v. Peters, 226 F.3d 1307, 1317 (Fed.Cir.2000) (citing Essex Electro, 224 F.3d at 1295-96 and Sauer Inc. v.

Danzig, 224 F.3d 1340, 1345-46 (Fed.Cir.2000)). “‘The reason that the determination of the critical path is crucial to the calculation of delay damages is that only construction work on the critical path had an impact upon the time in which the project was completed.’ ” Wilner, 24 F.3d at 1399 n. 5 (quoting G.M. Shupe, Inc. v. United States, 5 Cl.Ct. 662, 728 (1984)). “One established way to document delay is through the use of Critical Path Method (CPM) schedules and an analysis of the effects, if any, of government-caused events upon the critical path of the project.” PCL Constr. Servs., Inc. v.

United States, 47 Fed.Cl. 745, 801 (2000). A government delay which affects only those activities not on the critical path does not the delay the completion of the project. As the Claims Court stated in G.M. Shupe: If work on the critical path was delayed, then the eventual completion date of the project was delayed. Delay involving work not on the critical path generally had no impact on the eventual completion date of the project. 5 Cl.Ct. at 728.

It is the contractor’s burden to establish the critical path of the project in order to justify an equitable adjustment based on an extension of the completion date of the project. See CEMS, Inc., 59 Fed.Cl. at 233 (denying recovery because the plaintiff had not met this burden).

In PCL, this court denied recovery for government-caused delay because the contractor “never provided [the government] or this court with a critical path analysis of the alleged government-caused hindrance and its effect upon the critical path of this project” and concluded that the contractor “did not demonstrate that its project delay was caused exclusively or even predominantly by the government.” 47 Fed.Cl. at 802, 804. “[W]hen the contract utilizes CPM scheduling, the contractor must prove that the critical path of work was prolonged in order to prove a delay in project completion.” Hoffman Constr.

Co. of Or. v. United States, 40 Fed.Cl. 184, 197-98 (1998), aff'd in part, rev’d in part on other grounds, 178 F.3d 1313 (Fed.Cir.1999). j. Because the critical path changes over time, critical path

schedule updates are needed to analyze delays The critical path of construction activities may change as a project is actually built, and “activities that were not on the original critical path subsequently may be added.” Sterling Millwrights, Inc. v. United States, 26 Cl.Ct. 49, 75 (1992). Accurate CPM

schedule updates are required during the course of construction to reflect delays and shifts in the critical path, “[I]f the CPM is to be used to evaluate delay on the project, it must be kept current and must reflect delays as they occur.” Fortec Constructors v. United States, 8 Cl.Ct. 490, 505 (1985), aff'd, 804 F.2d 141 (Fed.Cir.1986). Accurate CPM

schedule updates produced during actual construction are better evidence of the critical path than the baseline CPM

schedule provided at the beginning of the project. As this court acknowledged in Blinderman Constr. Co. v. United States, 39 Fed.Cl. 529 (1997), “accurate, informed assessments of the effect of delays upon critical path activities are possible only if up-to-date CPM schedules are faithfully maintained throughout the course of construction.” Id. at 585. k.

The contractor bears the burden of apportioning concurrent critical path delays If the evidence shows that the contractor, along with the government, caused concurrent delay to the critical path of a project, the contractor must apportion the delays affecting the completion of the project to be able to recover delay damages. Blinderman, 695 F.2d at 559; Avedon Corp. v. United States, 15 Cl.Ct. 648, 653 (1988). “Courts will deny recovery where the delays are concurrent and the contractor has not established its delay apart from that attributable to the government.” Klingensmith, 731 F.2d at 809.

Because concurrent delays which do not affect the critical path of contract work do not delay project completion, an accurate critical path analysis is essential to the determination of whether concurrent delays have caused delay damages related to the delayed completion of a complex construction project. If government-caused delays “did not interfere with the project’s critical path,” no costs related to delayed completion of the project are owed to the contractor. Kelso v. Kirk Bros. Mech. Contractors, Inc., 16 F.3d 1173, 1177 (Fed.Cir. 1994).

To recover for the delayed completion of the project, “[n]ot only must plaintiff disentangle its delays from those allegedly caused by the government, but the delays must have affected activities on the critical path.” Mega Constr. Co. v. United States, 29 Fed.Cl. 396, 424 (1993) (citation omitted). l.

One type of injury to the contractor from government-caused delays to the completion of a project is that of wage increases which would not have occurred during the planned time of performance There are two types of alleged additional costs caused by the delayed completion of this project past its original completion date. In Count II, the additional costs claimed by Sollitt due to the delayed completion of the project are labor costs which escalated after the projected completion date of the project. This type of additional expense may sometimes be recovered as delay damages.

In Luria Bros., the Court of Claims awarded a proportion of the wage increases paid by the contractor after the projected completion date of the project. 177 Ct.Cl. at 743, 746. Similarly, in J.D. Hedin, the Court of Claims held that a contractor could recover delay damages, because, “[a]s a result of the government-caused delays heretofore described, the project was shifted into a period of higher wages for laborers.” 347 F.2d at 256.

The contractor must prove the extent of the delay, Wilner, 24 F.3d at 1401, and the amount of the harm caused by that delay, Servidone, 931 F.2d at 861, to recover on its equitable adjustment claim for increased labor costs. m. The contractor must prove the amount of home office and field office overhead that is related to the government-caused delay of project completion In Count I, Sollitt claims extended home office and field office overhead related to the delayed completion of Phases II and III of the project. Extended home office overhead costs are a type of delay damages that may sometimes be recovered.

As the Federal Circuit stated in West v. All State Boiler, Inc., 146 F.3d 1368 (Fed.Cir.1998) (All State Boiler): Where the government suspends performance of a contract, the contractor’s indirect costs, such as home office [overhead], often accrue beyond the amount originally allocated to that particular contract. These additional indirect costs may thus be “unabsorbed.” The Court of Claims consistently allowed a contractor to recover not only additional direct costs that accrue to a contract where completion of performance is delayed by the government, but also any unabsorbed, indirect costs that result.

Id. at 1372 (citing Fred R. Comb Co. v. United States, 103 Ct.Cl. 174, 184, 1945 WL 4033 (1945)). Extended field office overhead also may sometimes be recovered as delay damages. In Luria Bros., for example, the Court of Claims awarded a proportion of the field supervision costs incurred by the contractor after the projected completion date of the project. 177 Ct.Cl. at 741, 746. n.

When the parties stipulate to the daily costs of home office and field office overhead, the contractor must prove the extent of the government-caused delay but is relieved of some other elements of proof of its increased costs When the daily costs of field office and home office overhead have been stipulated, as is the case here, SE 2007 at 1, the award of extended overhead costs may be derived from the sum of the proven government-caused unreasonable delays which slowed the completion of the project.

In All State Boiler, the Federal Circuit affirmed a VABCA decision that awarded delay damages derived from a finding of twenty-two days of government-caused delay and an auditor’s figure of a home office overhead daily rate of $718. 146 F.3d at 1371, 1382. The daily home office overhead costs were simply multiplied by the number of delay days which were chargeable to the government. Id. In eases of concurrent delay to the critical path, the calculation would also include apportionment of the delays to arrive at a percentage of extended overhead costs for which the government would be liable.

Luria Bros., 177 Ct.Cl. at 740, 746. o. When multiple delays by one party are concurrent with each other, that party’s delays must be analyzed to ensure that the overall effect of these multiple delays is correctly attributed to that party One final complication with concurrent delays is the inquiry into whether one party’s multiple delays are concurrent with each other in addition to being concurrent with the other party’s delays. By necessarily focusing only on critical path activities that are delayed, the court makes this inquiry somewhat simpler.

Among all critical path delays, the court first examines the proven delays caused by only one party to make sure that the delay days which are concurrent with each other are not counted more than once. As the Federal Circuit explained in Essex Electro, the “overall effect” of one party’s delays must be measured against the overall delay caused by the other party and that this is done by correctly accounting for each party’s delays which “might have been concurrent with each other.” 224 F.3d at 1296.

Then, the court apportions the overall critical path concurrent delays from each party to determine the contractor’s entitlement to an equitable adjustment. The Federal Circuit decided that this approach of comparing one party’s overall delays with the other party’s overall delays is more reliable than checking each delay from one party against a possible concurrent delay from the other party for a series of subtotal periods of entitlement. Id.

To assist in the complex analysis, when multiple delays by one party are alleged to have impacted the critical path, accurate and updated CPM (critical path method) schedules are essential tools in the court’s concurrent delay analysis. As this court stated in Blindemian, “the only way to accurately assess the effect of the delays alleged ... on the ... project’s progress is to contrast updated CPM schedules prepared immediately before and immediately after each purported delay.” 39 Fed. Cl. at 585. 2. Excusable Delay a.

The government has the initial burden of showing late completion, and the contractor then has the burden to show that the delay was excusable In the context of litigating liquidated damages assessed by the government in a construction contract, the government first must meet its initial burden of showing that “the contract performance requirements were not substantially completed by the contract completion date and that the period for which the assessment was made was proper.” PCL Constr. Servs., Inc. v.

United States, 53 Fed.Cl. 479, 484 (2002) (internal quotation and citation omitted), aff'd, 96 Fed.Appx. 672 (Fed.Cir.2004). Once the government has met that burden, the burden then shifts to the contractor “to show that any delays were excusable and that it should be relieved of all or part of the assessment.” Id. (internal quotation and citation omitted).

One type of excusable delay occurs when the government has delayed the project work, forcing the contractor to miss the contract completion deadline. “ ‘[W]here a contractor is prevented from executing his contract according to its terms, he is relieved from the obligations of the contract [as to the time of completion] and from paying liquidated damages.’ ” Schmoll v. United States, 91 Ct.Cl. 1, 28, 1940 WL 4133 (1940) (quoting Levering & Garrigues Co. v. United States, 73 Ct.Cl. 566, 578, 1932 WL 2094 (1932)).

When the alleged excuse for the delay is action or inaction by the government, there is some controversy as to whether any government delay to contract completion, if proved, completely voids a contract’s liquidated damages provision, or whether apportionment of liquidated damages is possible where there has been concurrent delay by both parties. Compare R.P. Wallace, Inc. v. United States, 63 Fed.

Cl. 402, 413 (2004) (stating that the apportionment of liquidated damages is permissible) with PCL, 53 Fed.Cl. at 486 (stating that “[t]he status of the rule against apportionment [of liquidated damages when the government has contributed to the delay of contract performance] in the ... Federal Circuit is unsettled”). b.

When the government has caused part of the delay to project completion, liquidated damages are either waived or the liquidated damages may be apportioned The rule against apportionment of liquidated damages when the government has contributed to the delay in contract completion was clearly stated in United States v.

United Eng’g & Constructing Co., 234 U.S. 236, 49 Ct.Cl. 689, 34 S.Ct. 843, 58 L.Ed. 1294 (1914): We think the better rule is that when the contractor has agreed to do a piece of work within a given time, and the parties have stipulated fixed sum as liquidated damages, not wholly disproportionate to the loss for each day’s delay, in order to enforce such payment the other party must not prevent performance of the contract within the stipulated time; and that where such is the case, and thereafter the work is completed, though delayed by the fault of the contractor, the rule of the original contract cannot be insisted upon, and liquidated damages measured thereby are waived.

Id. at 242, 34 S.Ct. 843. The Court of Claims employed the rule against apportionment of liquidated damages in Acme Process Equip. Co. v. United States, 171 Ct.Cl. 324, 347 F.2d 509 (1965), rev’d on other grounds, 385 U.S. 138, 87 S.Ct. 350, 17 L.Ed.2d 249 (1966).

In that case, the Court of Claims held that “the defendant merely loses its right to insist on an artificial measure of damages agreed on by the parties for the situation in which the contractor alone is responsible for the delay,” because a “plaintiff is entitled to recover on its claim for remission of liquidated damages [when] the delays on which the assessment was based were caused by the Government as well as by [the plaintiff]”. Id. at 534.

The rule against apportionment has been extensively followed by this court’s predecessors (the United States Court of Claims and the United States Claims Court) and some boards of contract appeals, see PCL, 53 Fed.Cl. at 485 (listing cases), but the rule has been criticized and ignored in other cases, see, e.g., R.P. Wallace, 63 Fed.Cl. at 410-13; see also PCL, 53 Fed.Cl. at 485-86 (listing eases). The rule against apportionment of liquidated damages appears to have been ignored in many recent boards of contract appeals decisions. See, e.g., William F.

Klingensmith, Inc., ASBCA No. 52028, 03-1 B.C.A. (CCH) 1132, 072 (Nov. 15, 2002); Karcher Envtl., Inc., PSBCA Nos. 4085, 4093, 4282, 02-1 B.C.A. (CCH) ¶31,787, 2002 WL 246774 (Feb. 21, 2002). The Federal Circuit did not apply the rule against apportionment of liquidated damages in a recent decision, but did not comment on its nonobservance of the rule. Sauer, 224 F.3d at 1347. In Sauer, the Federal Circuit upheld an ASBCA decision which remitted only a portion of the assessed liquidated damages when both the contractor and the government delayed contract work completion. Id.

Thus, the Sauer court approved of an apportionment of liquidated damages. Id. This court has also apportioned liquidated damages where concurrent government and contractor delays affected contract completion, without commenting on the rule against apportionment. See Neal & Co. v. United States, 36 Fed.Cl. 600, 647, 649 (1996) (referring to “over-withheld liquidated damages” and returning only a portion of these).

Recently, this court, in a thorough analysis of the possibility of apportioning liquidated damages when the government has contributed to the delay of contract completion, followed Sauer and cited a number of decisions applying the rule from Robinson v. United States, 261 U.S. 486, 43 S.Ct. 420, 67 L.Ed. 760 (1923), which allowed the apportionment of liquidated damages. R.P. Wallace, 63 Fed.Cl. at 410-13. In light of the extensive discussions in PCL and R.P.

Wallace of the rule against apportionment and the conflicting rule allowing apportionment of liquidated damages, and in the absence of a precedential decision resolving the apparent conflict between these two analyses of controlling precedent on this issue, the court here will examine the facts of this case under both the rule that forbids apportionment and the rule that permits apportionment of liquidated damages.

Because the result in this case happens to be the same under either rule, the court here does not need to further address the status of the rule against apportionment of liquidated damages in this circuit. 3. Proof of Equitable Adjustment Claims a. Liability and damages are reviewed de novo When prosecuting an equitable adjustment claim in this court, a “contractor has the burden of proving the fundamental facts of liability and damages de novo.” Wilner, 24 F.3d at 1401 (citing Servidone, 931 F.2d at 861).

Under the Changes clause of this fixed-price construction contract, 48 C.F.R. § 52.243-4(d) (1994), the government is liable when changes to contract work increased the contractor’s costs: If any change under this clause causes an increase or decrease in the Contractor’s cost of, or the time required for, the performance of any part of the work under this contract, whether or not changed by any [change] order, the Contracting Officer shall make an equitable adjustment and modify the contract in writing. Id.

Because the court’s determination of the government’s liability under the Changes clause is de novo under the Contracts Disputes Act, 41 U.S.C. §§ 605(a), 609(a)(3) (2000), final liability decisions by the contracting officer are not accorded a rebuttable presumption of validity. England v. Sherman R. Smoot Corp., 388 F.3d 844, 854 (2004) (Smoot).

In Smoot, the Federal Circuit also announced that it “see[s] no basis for drawing a distinction between an interim and a final decision of a contracting officer,” because “Congress made it clear in the CDA that any findings of fact by a contracting officer are not binding in any subsequent proceeding.” Id. Thus, the Federal Circuit interprets the CDA as removing any rebuttable presumption of validity for either interim or final liability decisions by the contracting officer. Id.

The court will consider the contracting officer’s findings of liability as some evidence of a contemporaneous consideration of liability, but will give these interim or final decisions no deference. b. The contractor must prove that its actual incurred costs for the changed work were reasonable Once the contractor has proved the government’s liability for the costs of added or changed contract work, the actual costs incurred by the contractor will provide the measure of the equitable adjustment to the contract price, if those incurred costs are reasonable. Bruce Constr. Corp. v.

United States, 163 Ct.Cl. 97, 324 F.2d 516, 518-19 (Ct.Cl.1963) (Bruce Construction). Although a contractor’s incurred costs were once considered to have a presumption of reasonableness when determining the amount of an equitable adjustment, Bruce Construction, 324 F.2d at 519, this presumption has been eroded by a 1987 amendment to FAR 31.201-3, codified at 48 C.F.R. § 31.201-3(a) (2004). This regulation states that “[n]o presumption of reasonableness shall be attached to the incurrence of costs by a contractor.” Id.

The effect of the revisions to FAR 31.201-3 on the presumption of reasonableness established by Bruce Construction has been recognized by many authorities. See, e.g., Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co., 175 F.3d 1221, 1244 n. 30 (10th Cir.1999) (listing cases). Some authorities go as far as to say that “[since] the revision of FAR 31.201-3 on July 30, 1987, no presumption of reasonableness is attached to the incurrence of costs by a contractor ....” Herman B. Taylor Constr. Co., GSBCA No. 12915, 96-2 B.C.A. (CCH) 1128, 547, 1996 WL 498543 (Aug. 27, 1996) (citation omitted); see also 6 Philip L.

Bruner & Patrick J. O’Connor, Bruner & O’Connor on Construction Law § 19:50, at 186 n. 4 (2002) (stating that the presumption of reasonableness established by Bruce Construction “has been negated by” FAR 31.201-3). This court, however, has not entirely discarded the presumption of reasonableness established by Bruce Construction. In R.P. Richards Constr. Co. v. United States, 51 Fed.Cl. 116 (2001), for example, this court asserted that “there is a presumption that [the contractor’s] actual costs paid are reasonable.” Id. at 125 (citing N. Slope Technical Ltd. v. United States, 14 Cl.Ct. 242, 264-65 (1988)).

Yet, only a year earlier, this could; applied the reasonableness test of FAR 31.201-3, rather than the Bruce Construction presumption, when the FAR provision was applicable to the contract at issue. Info. Sys. & Networks Corp. v. United States, 48 Fed. Cl. 265 (2000) (Information Systems). The court in Information Systems noted that the proper test for reasonableness was found in FAR 31.201-3, because “FAR

Part 31, Contract Cost Principles and Procedures, Sub-part 31.2, Contracts With Commercial Organizations, establishes a set of principles and provisions for the reimbursement of costs for contractors performing the type of contract at issue in this case.” Id. at 268. Thus, in this court, a reasonable reading of the easelaw is that no presumption of reasonableness applies if FAR 31.201-3 governs the contract at issue, but the Bruce Construction presumption of reasonableness would apply to the contractor’s incurred costs for changed or added work if FAR 31.201-3 were not applicable.

Department of Defense contracts have for some time incorporated the Contract Cost Principles by reference, including the reasonableness test of FAR 31.201-3, through the language of DFARS 252.243-7001, codified at 48 C.F.R. § 252.243-7001 (2004). John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of Government Contracts 686 (3d edition 1995). It is undisputed that the contract in this case included DFARS 252.243-7001 (1994). Def.’s Mem. at 5.

Therefore, FAR 31.201-3 provides the standard of reasonableness for Sollitt’s costs incurred due to added or changed contract work, and no presumption of reasonableness applies: Determining reasonableness. (

a) A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Reasonableness of specific costs must be examined with particular care in connection with firms or their separate divisions that may not be subject to effective competitive restraints. No presumption of reasonableness shall be attached to the incurrence of costs by a contractor. If an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer’s representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable. (

b) What is reasonable depends upon a variety of considerations and circumstances, including—

(1) Whether it is the type of cost generally recognized as ordinary and necessary for the conduct of the contractor’s business or the contract performance;

(2) Generally accepted sound business practices, arm’s length bargaining, and Federal and State laws and regulations;

(3) The contractor’s responsibilities to the Government, other customers, the owners of the business, employees, and the public at large; and

(4) Any significant deviations from the contractor’s established practices. 48 C.F.R. § 31.201-3 (1994). For the purposes of determining the amount of equitable adjustment damages due Sollitt for changes to contract work, this contract provision clearly places the burden of proving the reasonableness of incurred costs on Sollitt, once those costs have been challenged by the government. Id. c.

The government bears the burden of proving the cost of deleted contract work However, when the government has deleted work and/or costs from a fixed-price construction contract, the government, not the contractor, bears the burden of proving the amount of any downward equitable adjustment to the contract price: [T]he Government has the burden of proving how much of a downward equitable adjustment in price should be made on account of the deletion of [certain specified materials].

Just as the contractor has that task when an upward adjustment is sought under the Changes clause, so the defendant has the laboring oar, and bears the risk of failure of proof, when a decrease is at issue. Nager Elec. Co. v. United States, 194 Ct.Cl. 835, 442 F.2d 936, 946 (1971). Both parties must prove their equitable adjustment claims by a preponderance of the evidence. Teledyne McCormick-Selph v. United States, 218 Ct.Cl. 513, 588 F.2d 808, 810 (1978). 4. Government Discretion Regarding Performance Awards on Public Contracts a.

This court has jurisdiction over disputes concerning performance awards Government contracts in the mid-1990s included language attempting to “[e]xpressly exclude[ ] from the operation of the Disputes clause any disagreement by the contractor concerning the amount of the [performance] award fee,” e.g., 48 C.F.R. § 16.405(e)(3) (1994), and thus purported to exempt government decisions regarding performance awards from the Contract Disputes Act.

These clauses, insofar as they were intended to defeat jurisdiction in the Court of Federal Claims or before boards of contract appeals over disputes concerning performance awards, were voided by the Federal Circuit in Bumside-Ott Aviation Training Ctr. v. Dalton, 107 F.3d 854 (Fed.Cir.1997). The Federal Circuit voided the “jurisdiction defeating mechanism” of these clauses because “the CDA trumps a contract provision inserted by the parties that purports to divest the Board of jurisdiction” over performance award disputes. Id. at 858-59.

Thus, this court does have jurisdiction over disputes concerning performance awards, notwithstanding any contract language to the contrary. Cf. Westinghouse Hanford Co. v. United States, 47 Fed.Cl. 665, 666, 667 n. 1 (2000) (citing Bumside-Ott and voiding a jurisdiction defeating provision concerning disputes over “incentive fee[s]”). However, the scope of this court’s review of performance award decisions is a more nuanced issue. b.

If unilateral discretion is granted to the government, performance award decisions are reviewed for arbitrary or capricious abuse of that discretion In Bumside-Ott, the Federal Circuit reviewed a clause concerning performance awards which stated: “ ‘The Award Fee decision is a unilateral determination made by the [Fee Determining Official or FDO] and is not subject to the “DISPUTES” Clause of the contract.’” 107 F.3d at 858 (quoting the contract at issue). The Bum-side-Ott court held that the term “granting unilateral discretion to the FDO” was valid, but that the jurisdictional bar was void. Id. at 858.

The Department of Defense recognized the distinction made by the Bumside-Ott decision, and revised contracting regulations accordingly. Review of Award Fee Determinations (Burnside-Ott), 64 Fed.Reg. 72,448 (Dec. 27, 1999). The regulatory change “amend[ed] FAR 16.405-2(

a) by deleting the statement that [the] award-fee determinations are not subject to the disputes clause of the contract and inserting a statement that such determinations and the methodology for determining award fee are unilateral decisions made solely at the discretion of the Government”. The current version of this regulation states: The amount of the award fee to be paid is determined by the Government’s judgmental evaluation of the contractor’s performance in terms of the criteria stated in the contract.

This determination and the methodology for determining the award fee are unilateral decisions made solely at the discretion of the Government. 48 C.F.R. § 16.405-2(a) (2004). In Burnside-Ott, the unilateral discretion afforded the government by the above-cited contract clause limited review of the award to determining whether “the discretion employed in making the decision [wa]s abused, for example, if the decision was arbitrary or capricious.” 107 F.3d at 860.

So, if the contract language supports a finding that unilateral discretion has been granted to the government to determine the amount of a performance award, this court is limited to reviewing whether the government’s award decision was arbitrary or capricious. The Bumside-Ott holding was applied in a decision of this court concerning another type of discretionary fee awarded by the government to contractors — Value Engineering Change Proposals, or VECPs— where a contractor may receive awards for cost saving proposals. RCS Enters., Inc. v.

United States, 53 Fed.Cl. 303, 309 (2002) (RCS II) (stating that this court did have jurisdiction to hear disputes over VECPs); RCS Enters., Inc. v. United States, 46 Fed. Cl. 509, 515-18 (2000) (RCS I) (discussing the implications of Bumside-Ott for this court’s review of VECP refusals by the government). In ROS II, this court held that, in a dispute over the government’s refusal to pay for a VECP, “the court could review the contracting officer’s decision to determine whether it was contrary to law or an abuse of discretion.” 53 Fed.Cl. at 309.

Although the merits of the discretionary decision to accept a VECP were beyond review, this court and boards of contract appeals “ ‘have power to consider whether the agency acted illegally or followed improper procedures.’ ” Id. (quoting NI Indus., Inc. v. United States, 841 F.2d 1104, 1106 n. 1 (Fed.Cir.1988)). The scope of this court’s review of performance award determinations is similar — testing for arbitrariness and capriciousness as measured by law and the procedures set out in the contract.

This was the review described in Bumside-Ott, where the Federal Circuit found no conflict between the government’s method of determining the award fee in that case and “any part of the contract,” and held that the government did not act “arbitrarily or capriciously.” 107 F.3d at 860. 5. Applicability of Prompt Payment Act Interest The Prompt Payment Act, 31 U.S.C. §§ 3901-3907 (2000), provides an interest penalty to businesses for “delivered item[s] of property or service [not paid for by the federal government] by the required payment date.” Id. § 3902(a).

However, when a payment amount is disputed, contractors are limited to the interest offered by the Contract Disputes Act, 41 U.S.C. §§ 601-613 (2000): Relationship to other laws (

c) Except as provided in

section 3904 of this title, this

chapter does not require an interest penalty on a payment that is not made because of a dispute between the head of an agency and a business concern over the amount of payment or compliance with the contract. A claim related to the dispute, and interest payable for the period during which the dispute is being resolved, is subject to the Contract Disputes Act of 1978 (41 U.S.C. [§ ]601 et seq.). 31 U.S.C. § 3907. Thus, the interest penalty provided by the Prompt Payment Act is not available to a contractor for payments for which the government has disputed its liability. E.g., Gutz v.

United States, 45 Fed.Cl. 291, 298 (1999). DISCUSSION OF EACH COUNT I. Count I: Delay-related extended overhead costs and liquidated damages Before addressing the specific allegations in Count I, the court must address the overall state of the evidence which was presented in support of the delay claims in this case. Sollitt was required by the contract to deliver a baseline construction

schedule to the Navy fifteen days after the award date, and to provide monthly updates to that

schedule throughout the duration of the project. See SE 2017 ¶¶ 1.3, 1.5 (Contract Specification

Section 01310 including CPM

schedule requirements); JE 10 (FAR 52.236-15 construction

schedule requirement); GE 1015 at 4 ¶6 (March 24, 1996 Pre-Construction Meeting minutes discussing the CPM

schedule submission requirements); Tr. at 2405-05 (Lt. Odorizzi) (confirming that CPM schedules, both baseline and updated, were required by the contract). Phase I construction had the earlier completion date, February 7, 1996, and had one critical path of activities; Phases II and III shared the same, later completion date, May 31, 1996, and formed a second critical path of activities. Agreed Facts ¶15; Sollitt Br. at 15. Thus, there were two sets of CPM baseline schedules to be updated monthly. See Tr. at 405 (Mr.

Strong) (stating that “there [we]re two separate schedules for those jobs [Building 122 and Building 2B]”). Sollitt was late in providing the two baseline CPM schedules which were due in mid-March 1995, Tr. at 405 (Mr. Strong) (estimating that the CPM baseline

schedule for Phase I was submitted in June 1995 and that the CPM baseline

schedule for Phases II and III was submitted in July 1995), and for some months at the beginning and end of the project Sollitt never provided monthly CPM

schedule updates, Agreed Facts ¶¶ 24 — 25 (stating that Phase I CPM

schedule updates were provided July 1995 through March 1996, inclusive, and that Phases II and III CPM

schedule updates were provided for August 1995 through June 1996, inclusive). The absence of CPM

schedule updates for the start-up and completion phases of the project necessarily makes the proof of delay damages more difficult. See Tr. at 2274-76 (Mr. Tip-ton) (acknowledging that the normal analysis of delay involves a review of CPM updates at the end of the project, which permits a measurement of the actual delay experienced by the impacted activities at the end of the critical path). Even the CPM

schedule updates that are in the record are not always useful. Some of the CPM

schedule updates lack specific information about the start and end dates of certain work activities on the critical path, because these activities were reported only as to their percentage of completion. Tr. at 2061-62 (Mr. Tipton). This is not standard industry practice, id., and makes the determination of amount of delay attributable to a particular event difficult, see Tr. at 1464-67 (Mr. Zielinski) (admitting that it was impossible to derive certain critical path activity dates from his CPM

schedule updates). Even when specific critical path activity dates could be gleaned from the CPM

schedule updates, these dates were inaccurate in several instances. Tr. at 1467 (Mr. Zielinski), 2314 (Mr. Tipton), 3162 (Mr. Dorn). These problems with the CPM

schedule updates added to the difficulty of the delay damages analysis. Sollitt’s expert, Mr. Tipton, relied upon both the baseline CPM

schedule and the CPM

schedule updates in his estimates of delays caused by the Navy to the critical path of the project. JE 233 at 14-16, 20-21; JE 235 at 1. Sollitt asks the court to “credit” these analyses, see Sollitt Br. at 42 (stating that the court “should give credit to [the] Tipton analyses”), despite data problems the court has noted related to the missing, non-specific or inaccurate CPM

schedule updates, because it alleges that the Navy “(restricted] ... Sollitt’s ability to accurately update the schedules”), Sollitt Reply at 3. Sollitt expended considerable effort at trial and in its post-trial brief attempting to prove this allegation, but the court remains unpersuaded that the Navy, either directly or indirectly, restricted Sollitt’s ability to report delays accurately in its monthly CPM updates. Sollitt first attempted to prove that the Navy forbade Sollitt from reporting delays on its CPM

schedule updates until time extensions for those delays had been granted. See Sollitt Reply at 3 (stating that Sollitt’s preparation of updated CPM schedules “was hampered by the Defendant’s refusal to permit Sollitt to include delaying events in the CPM schedules so as to accurately portray the status of the work”). There was no testimony recounting such a communication from the Navy to Sollitt. At most, Sollitt may have been constrained by contract requirements from adding new activities to the CPM

schedule updates without authorization from the Navy. Compare Tr. at 511 (Mr. Zielinski) (“The monthly updating, which was a contractual obligation, had to deal with just the activities that we had in the original schedule. I wasn’t allowed to introduce new activities on my own.”) with Tr. at 3169 (Mr. Dorn) (“If the [delaying] work or the modification or change order was such that you did not have a preexisting activity, I would add that activity and make the appropriate relationships, hit the Calculate button and look at the [projected] end date.

It either moves [extends the completion date of the project] or it doesn’t.”). But there was ample testimony showing that delays to critical path activities already on the

schedule are required to be, and by industry practice are, reported on monthly CPM

schedule updates. Tr. at 2070-73 (Mr. Tipton), 2750 (Lt. Odorizzi), 3163-70 (Mr. Dorn). Moreover, Sollitt’s expert admitted that it would be “unusual” for the government to forbid the entry of delays into a CPM

schedule update, that he had never encountered such a direction, and that a reasonable and prudent contractor would have documented that direction if that direction had been received. Tr. at 2279-80. There was no credible evidence that the Navy forbade Sollitt from accurately updating its CPM schedules to reflect delays. Sollitt’s remaining argument is that the Navy responded too slowly to its requests for time extensions related to delays chargeable to the Navy, and that it was this dilatory response which rendered the monthly CPM

schedule updates inaccurate. See Sollitt Br. at 43 (alleging that “[t]he Navy’s failure to timely address and acknowledge requests for time extensions made it impossible to prepare accurate CPM updates”). There is a fundamental flaw in the logic of this argument. The granting of a time extension has no effect on the critical path of a project, other than to extend the completion date required by the contract. See Tr. at 3227 (Mr. Dorn, when asked whether time extensions affected the critical path: “No. The critical path is the critical path.

It’s the longest sequence of activities from the beginning to the end.”); 3257 (Mr. Dorn, answering a question regarding the effect of time extensions on a contractor’s estimated durations for upcoming critical path activities entered into a CPM

schedule update: “None [, because these estimates are the contractor’s good faith and best estimates of actual durations required by the activities].”); see also Kora and Williams, Inc., DCCAB No. D-839, 1994 WL 750301, n. 83 and accompanying text (Mar. 7, 1994) (approving the contractor’s insertion of excusable delay events into its CPM

schedule revisions even though the government refused to acknowledge them or grant time extensions). The longest path of interrelated construction activities remains unchanged by a completion date time extension; it makes no difference whether the critical path is extending toward, for example, June 1 or July 1 of the following year. It is far more important to a critical path analysis to enter delays to individual construction activities on the updated CPM

schedule than to enter overall time extensions, because these individual delays may have consequences that shift the critical path from one set of activities to another. As the Claims Court noted in Fortec, “delay encountered in completion of a noncritieal item may make that item critical so that ‘every month, conceivably, the critical path would change,’ ____”8 Cl.Ct. at 505 (quoting testifying witness). When delays are entered into a CPM schedule, even without deserved time extensions, this court can analyze the effect of the delays on the critical path of the project.

Submitting monthly updated CPM schedules was a contract requirement. Sollitt may not excuse its failure to enter delaying events on the CPM

schedule updates because of the Navy’s alleged failure to grant timely extensions based on those delays. See supra note 14. If Sollitt’s updated CPM schedules are of limited use in meeting its burden of establishing the critical path of the project, Sollitt is now facing the consequences of its own performance of the contract requirement to provide updated CPM schedules. Finally, Sollitt offered two delay analyses, which may be characterized as alternative analyses.

Sollitt Br. at 44 (“Tipton’s alternate analyses provide the Court with reasonable bases for a determination that the Navy-caused delaying events negatively impacted the critical path and to what extent.”). The first analysis estimated delays to the critical path by inserting delaying events into Sollitt’s baseline CPM schedules. JE 233. The second analysis estimated delays to the critical path by inserting delaying events into the CPM

schedule updates closest in time to those events. JE 235. Sollitt’s expert stated that he believed that the first analysis was more accurate and preferable, although he also stated that either would be rehable. Tr. at 1815-16. Sollitt asserts that the first analysis is more rehable because the “Navy ... made it impossible to prepare accurate CPM updates.” Sollitt Br. at 43. The court has however, rejected the argument that the Navy prevented Sollitt from updating its CPM schedules accurately. See swpra.

The court must now decide which of the two analyses, “baseline” or “updated,” is more reliable based on their methodologies and underlying data. The better methodology for a critical path delay analysis is to use the updated CPM schedules, not the baseline

schedule prepared before construction began.

See Blinderman, 39 Fed.Cl. at 585 (stating that “the only way to accurately assess the effect of the delays alleged ... on the ... project’s progress is to contrast updated CPM schedules prepared immediately before and immediately after each purported delay”); Fortec, 8 Cl.Ct. at 505 (stating that “if the CPM is to be used to evaluate delay on the project, it must be kept current and must reflect delays as they occur”); Sollitt Br. at 44 (admitting that Sollitt prepared the updated analysis “in recognition of the widely accepted practice of using the updated schedules for the analys[i]s”); Tr. at 3164 (Mr.

Dorn) (stating that the “real danger if you use the baseline [is] that you’re going to achieve the wrong conclusion ..., in reality the baseline doesn’t reflect the status of the project at that time and where the delay occurred”). Despite the limitations in Sollitt’s updated CPM schedules that the court has noted, there was no evidence presented that indicated that these updated CPM schedules were less accurate than the baseline CPM schedules. Mr. Zielinski, the author of these CPM

schedule updates, gave credible testimony that he used these

schedule updates to communicate news of Sollitt’s progress on the project to the Navy and to subcontractors, Tr. at 1522, and that he believed he was inputting accurate information, Tr. at 1479. For these reasons, the court will favor Mr. Tipton’s second analysis, JE 235, the one which estimated each critical path delay by inserting a delaying event into the CPM

schedule update closest in time to the alleged delaying event, over his first analysis based on the baseline CPM schedule. A. Phase I Construction: Allegations that three circumstances chargeable to the Navy delayed project completion and that assessed liquidated damages were not valid Sollitt alleges that three circumstances chargeable to the Navy delayed the completion of Phase I (Building 122 Areas A & B, Building 122 Area C and the Signalman Range Buildings) construction. The delays are alleged to have been caused by:

(1) Navy post-award revisions to the ship’s trainer in Area C of Building 122; (2) changes to the electrical service for the chiller serving Building 122; and (3) changes and unforeseen conditions encountered when constructing the Signalman Range Buildings. Defendant argues that Sollitt has not proven that these three alleged circumstances caused the delayed completion of Phase I construction. Def.’s Br. at 17-21.

As additional support for its position, defendant argues that Sollitt delayed the completion of Phase I construction primarily because of its tardy procurement of windows, a glass curtain wall and structural steel. Tr. at 29-31. For the reasons discussed below, the court finds that there were concurrent critical path delays chargeable to the Navy and to Sollitt; that these delays cannot be apportioned; and that defendant’s assessment of liquidated damages for Phase I construction was not valid.

Sollitt contests two of the several beneficial occupancy dates (BODs) that the Navy reported for various buildings or exterior work at NTC, compare Sollitt Br. at 49 with SE 2015 (supporting table of data for July 6, 1999 payment to Sollitt).

The court endorses the Navy’s version of BODs as best supported by the evidence presented at trial, and finds that these dates mark substantial completion of portions of the contract work, see Tr. at 2905 (Lt.Odorizzi) (agreeing with Sollitt’s counsel’s statement that a beneficial occupancy date signified “a point in time when the contractor had completed the work to the point that the portion of the facility could be used”). Here in Table 1, the court reproduces pertinent data from the Navy’s 1999 payment document, all of which appears to the court to be reasonably supported by the evidence at trial. SE 2015.

The table incorporates the Navy’s final modifications to the contract completion dates (CCDs) which were originally set for the three phases of construction, so as to show all of the time extensions ultimately granted by the contracting officer. In addition, the table shows the modified basis for the Navy’s assessment of liquidated damages (LDs), a modification which, despite Sollitt’s protests that the modification was “cavalier, autocratic and capricious,” Sollitt Br. at 48, actually lessened the harshness of the original liquidated damages

schedule by breaking the construction phases and the daily charge for liquidated damages into smaller subparts so that, as these sub-parts of contract construction phases were completed ahead of others, at least some of the liquidated damages contemplated by the contract for that construction phase would not be assessed. It is unnecessary for the court to determine whether this unilateral modification of the liquidated damages formula was a valid modification of the contract — it is reproduced here for the limited purpose of describing how liquidated damages were assessed against Sollitt.

Table 1: Beneficial Occupancy Dates and Liquidated Damages (LDs) Assessed by the Navy Phase LD portion CCD-final BOD Days LDs $ LD $ Late per day total I (Bldg. 122 1/3 3/29/96 3/29/96 0 $3200 $ 0 Areas A & B)_ I (Bldg. 122 1/3 4/16/96 5/14/96 28 $3200 $ 29,867 Area

C) I (So. 1/6 3/29/96 5/6/96 38 $3200 $ 20,267 Range Bldg.)_ I (No. 1/6 3/29/96 6/11/96 74 $3200 $ 39,467 Range Bldg.)_ II (Bldg. 2/3 6/24/96 7/8/96 14 $3900 $ 36,400 2B 2nd & 3rd FI.) II (Bldg. 1/3 6/24/96 9/4/96 72 $3900 $ 93,600 2B 1st FI.)_ III (Ext. 1/1 6/18/96 9/4/96 78 $ 200 $ 15,600 work) Total liquidated damages assessed by Navy $235,200 The court relies on this data in its review of Sollitt’s claims. 1. Post-award revisions to the ship’s trainer in Area C of Building 122 One of the most complex portions of the contract work was building a “ship’s trainer” in Area C of Building 122.

JE 233 at 24. “This ship mock-up enables the Navy to train sailors on various shipboard functions!,] including life-safety, refueling at sea, line handling, docking, anchor handling, and ships systems such as lighting, the helm, etc.” JE 382 at 43. Many post-award revisions were made to the ship’s trainer, JE 233 at 24, a mock-up “made of metal studs/drywall/sheetmetal and associated equipment,” JE 382 at 44.

The court presents a brief chronology of these revisions and their implementation, as established at trial: August 19, 1995 — The Navy issued Amendment 14 which contained extensive changes to electrical service and structural steel. JE 126; JE 233 at 24; JE 382 at 47. November 20, 1995 — Sollitt replied with CX-40, a cost proposal for the changed work in Amendment 14. SE 108. November 20, 1995 — The Navy issued Amendment 18 which contained primarily some clarification of electrical service and the addition of some lights. JE 144; JE 382 at 47; Tr. at 3212-13 (Mr. Dorn).

January 25, 1996 — The Navy issued Amendment 19 which contained minor changes to electrical service and changes to the fire alarm system. JE 153; JE 382 at 47; Tr. at 530 (Mr. Zielinski). March 5, 1996 — The Navy issued Modification P00029 which authorized payment for changed work in Amendments 18 and 19. JE 62. March 14, 1996 — Sollitt sent to the Navy CX-174, a cost proposal for the changed work in Amendment 19. SE 165. March 21, 1996 — The Navy made a minor change to a line (rope) in Amendment 18, which would now be installed by the Navy, not by Sollitt. JE 167.

March 28, 1996 — Sollitt sent to the Navy CX-128, a cost proposal for the changed work in Amendment 18. SE 180. March 29, 1996 — The Navy issued Modification P00044 which authorized payment for the changed work in Amendment 14. JE 76. Sollitt maintains that the revisions to the ship’s trainer delayed critical activities of Phase I construction, and that fifty-nine calendar days of delay are chargeable to the Navy for this issue. JE 235 Issue 103; Tr. at 1760-61 (Mr. Tipton). Amendment 14 was the biggest change to the ship’s trainer, sent to Sollitt on August 29, 1995. JE 233 at 24.

The other two amendments clarified the work in Amendment 14 and made additional, but less extensive, changes than those included in Amendment 14. Id. The court notes that the last substantive revision to the ship’s trainer, Amendment 19, occurred on January 25, 1996. The Navy eventually extended the contract completion date for Area C from February 7, 1996 to April 16, 1996. SE 2015. The Navy accepted the ship’s trainer and Area C for occupancy on May 14, 1996. Id. The Navy charged Sollitt liquidated damages for twenty-eight days of delay for Area C. Id.

The court must examine the period from August 29, 1995 through May 14, 1996 and determine whether Sollitt’s analysis of critical path delays is supported by credible evidence of any delays chargeable to the Navy. Certainly, an extensive revision to a complex construction item, which itself had to be further amended over the course of several months, would appear to be a likely cause for delayed contract work. This was indeed proved at trial. See Tr. at 522-31 (credible testimony by Mr. Zielinski). However, Sollitt must further prove that the revisions to the ship’s trainer caused critical path delay.

Hoffman, 40 Fed.Cl. at 197-98 (stating that “when the contract utilizes CPM scheduling, the contractor must prove that the critical path of work was prolonged in order to prove a delay in project completion”). The court notes that Sollitt stopped providing CPM

schedule updates in March 1996. Thus, for the critical months of April and May 1996 there is no contemporaneous evidence of the final critical path activities for Area C. The parties’ experts provided the court with estimates of the critical path activities for these months, which differ greatly. See JE 233 Tab 2 at 25-26; JE 235 Issue 103; JE 382 at 48-49.

But both analyses made three logical ties between the ship’s trainer revisions and related follow-on activities that might be delayed, and these the court holds are credible conclusions: (1) changes in structural steel would affect the erection of metal stud walls in the ship’s trainer; (2) changes in electrical work would affect finish work in the ship’s trainer; and (3) changes in large equipment to be delivered would affect the ability to close in the glass curtain wall opening. See JE 233 Tab 2 at 25-26; JE 235 Issue 103; JE 382 at 48-49. The testimony of Mr. Zielinski and Lt.

Odorizzi supported these conclusions, although their opinions as to the delaying impact of the ship’s trainer revisions differed. The court finds that the changes to structural steel and the electrical revisions did delay the critical path of Area C by pushing out the completion date of Area C into May 1996. See JE 235 Issue 103 (showing stud framing in February and March 1996 and finish work activities occurring in March, April and May 1996); SE 193 (Sollitt April 18, 1996 letter giving detail of when stud framing and electrical revisions were implemented).

These delays were unreasonable and entirely chargeable to the Navy. Allegations of concurrent Sollitt delays cloud the issue of the close-in of the glass curtain wall of Area C and will be discussed infra. Because Mr. Tipton’s updated analysis finding critical path delays related to the ship’s trainer revisions was supported by factual evidence and was more credible than Mr. Dorn’s analysis, the court finds that twenty-eight calendar days of Area C critical path delay, all of the delay days for which liquidated damages were assessed against Sollitt, are chargeable to the Navy. 2.

Changes to the electrical service for the chiller serving Building 122 Sollitt claims that it encountered a Type I differing site condition when, after it had installed the chiller to serve Building 122, it discovered that the 600 amp electrical service its electricians had wired pursuant to the contract drawings was not sufficient to power the chiller it had installed. Sollitt argues that “the work required to change the electrical power to the chiller[ ] ... [caused] delay arising out of this set of circumstances and ...

Solitt is entitled to an equitable extension of time of sixty-three calendar days to May 27, 1996 with respect to Phase I of the Project.” Sollitt Br. 1170. It is not necessary, however, to decide whether any delays associated with power problems for the chiller were chargeable to the Navy, because it is obvious to the court that substantial completion of Phase I was not delayed by the rewiring of the chiller’s electrical service. The Navy accepted all of Building 122 for occupancy before any of the rewiring of the chiller occurred.

The BOD for Areas A and B of Building 122 was March 29, 1996, and for Area C of Building 122 the BOD was May 14, 1996. SE 2015. Sollitt claims that the rewiring of the chiller occurred from May 21 through May 27, 1996, Tr. at 1774 (Mr. Tip-ton), and these dates are supported by invoices from Sollitt’s electrical subcontractor, JE 235 Tab 6.

Because no liquidated damages were assessed for Building 122 after the substantial completion date for this building of May 14, 1996, SE 2015, the alleged delay, occurring afterward, had no impact on the critical path of Phase I construction or on the assessment of liquidated damages for Building 122. Mr. Tipton, when confronted with this flaw in his critical path analysis, admitted that he had relied on the last CPM update in March 1996 and that there were no CPM updates for April or May 1996 to provide him with more accurate data concerning substantial completion of Building 122. Tr. at 1842-44.

This may explain his inaccurate conclusion that the substantial completion of Building 122 occurred on May 27, 1996. JE 235 Issue 105. No critical path delays for the rewiring of the chiller are chargeable to the Navy. 3. Changes and unforeseen conditions encountered when constructing the Signalman Range Buildings Sollitt claims it experienced eighteen calendar days of critical path delay to Phase I construction due to changes and unforeseen conditions encountered when constructing the Signalman Range Buildings [Range Buildings]. Sollitt Br. ¶89.

Although Sollitt alleged that the Navy was responsible for several delays to the Range Buildings, including differing soil conditions and the diversion of work from the Range Buildings to the Pump House, id. at 24-27, Sollitt’s expert estimated that any critical path delays were due to revisions to the flagpoles destined to be installed in front of each of the facing buildings. See JE 233 Tab 2 at 32 (“In the final analysis, it was the flagpole that governed in the overall delay to these buildings.”); Tr. at 1786 (Mr.

Tipton) (averring that “by virtue of the flag pole,” the Range Buildings were on the critical path for Phase I construction). Mr. Tipton also concluded that the flagpoles were not holding up any other construction activity except substantial completion. See Tr. at 1782 (stating that “there was no follow-on [activity delayed by the flagpoles], so the completion of the flag pole would have been substantial completion of the range buildings”).

The evidence before the court supports the following chronology concerning the flagpole revisions: August 28,1995 — Sollitt submitted RFI 73 to the Navy, to determine the “exact location of flag poles for each booth [Range Building].” SE 65. October 5, 1995 — The Navy responded and attached drawings of revisions to the flagpoles themselves, with detailed wind tolerances. Id. October 25, 1995 — Sollitt secured prices for the revised flagpoles. JE 235 Issue 107. January 19, 1996 — Sollitt submitted cost proposal CX 88, requesting $1907 for the revised flagpoles. SE 134.

March 7, 1996 — Sollitt and the Navy negotiated amounts for various CXs and the Navy circulated Modification P00033 which included $1899 for CX 88. However, negotiations failed and Modification P00033 was not signed. JE 66; SE 213 (letter from Lt. Odorizzi discussing the disagreement over time extensions that prevented Sollitt from signing P00033). April 3,1996 — Flagpoles were delivered to NTC. JE 235 Issue 207. April 12,1996 — Flagpoles were installed in front of the Range Buildings. Id.

April 29, 1996 — Sollitt’s flagpole supplier informed Sollitt that the flagpoles delivered to NTC could not be fixed on-site to meet the Navy’s revised requirements and had to be returned and modified and that this would take at least three days. SE 201. May 2, 1996 — The Navy informed Sollitt by letter that the flagpoles delivered to NTC and installed in front of the Range Buildings were inadequate and had to be corrected or replaced. SE 213. May 3, 1996 — Sollitt directed its flag supplier to retrieve and fix the flagpoles.

May 6, 1996 — The Navy accepted the South Range Building for occupancy (beneficial occupancy date, or BOD). SE 2015. May 15, 1996 — Sollitt stated in a letter to the Navy that the flagpole procurement was done by Sollitt in good faith, but noted that the “wind loading[ ] criteria” specified in the October 5, 1995 RFI response constituted added work not yet incorporated into the contract. SE 231 at 1. The letter also indicated that the delivered flagpoles were “in accordance with” the original contract criteria and the approved submittals. Id. at 2.

Sollitt’s letter stated that the October 5,1995 revisions were “not part of our contract responsibility.” Id. at 1. May 20, 1996 — The Navy issued Modification P00044, a unilateral contract modification which approved $1899 for the flagpole revisions. JE 76. June 11, 1996 — The Navy accepted the North Range Building for occupancy (beneficial occupancy date, or BOD). SE 2015. April 11, 1997 — Sollitt submitted CX 243 for flagpole revisions, claiming $4965 “to complete extra work associated with flag pole revisions after installation of specified flag poles.” SE 359. Mr.

Tipton’s updated analysis of critical path delays related to the flagpole revisions, when tested against this chronology, makes no sense. His conclusion is that April 12, 1996, the date the flagpoles were installed, marked substantial completion of the Range Buildings. Tr. at 1782. April 12, 1996 does not correspond with the beneficial occupancy date of either the South Range Building or the North Range Building, which were accepted on May 6 and June 11, 1996, respectively. And if the flagpoles were indeed markers of substantial completion for these buildings, as Mr.

Tipton urges, the rejection of the installed flagpoles in May 1996 would indicate that substantial completion of the Range Buildings must have occurred subsequent to the modification of the flagpoles, which occurred sometime after May 3, 1996, not on April 12,1996. Another problem with Mr.

Tipton’s critical path analysis for the flagpole revision is that it reports every delaying activity attributable to the Navy, such as “RFI # 73 Response [29 days]” and “Navy reviews CX 88 [39 days],” but it neglects to acknowledge a delay for “Sollitt prepares CX 88,” which would account for approximately eighty-six days of delay, from October 25, 1995 to January 19, 1996. Even if the court were to accept Mr.

Tipton’s contention that the flagpoles were on the critical path for completion of the Range Buildings, his analysis does not accurately describe the delaying activities which would be chargeable to both parties. Further discussion of Mr. Tipton’s critical path analysis of construction of the Range Buildings is unwarranted, because his analysis of this issue lacks a logical foundation from which accurate estimates of critical path delays could be derived. Sollitt has not met its burden to prove that at least some critical p

[…]