FLUOR ENTERPRISES, INC. f/k/a Fluor Daniel, Inc., Plaintiff, v. The UNITED STATES, Defendant, 64 Fed. Cl. 461

OPINION AND ORDER BLOCK, Judge. I. Introduction This ease is one of first impression. It involves an action brought by the plaintiff, Fluor Daniel Enterprises, Inc. (“Fluor”), a government contractor, under the Contract Disputes Act. The challenge is to a government contracting officer’s “final decision” demanding repayment by Fluor of an alleged overpayment of fees which defendant claims exceeded the fees allowable under federal law.

Specifically, the contracting officer challenged that Fluor was paid $2,560,413 more for architectural and engineering (“A & E” or “design”) services rendered to the National Oceanographic and Atmospheric Administration (“NOAA”) than is allowed by 41 U.S.C. § 254(b). In fact,

section 254 is at the heart of this case and, therefore, much of the court’s analysis implicates issues of statutory construction and the application of the statute to the facts at hand. In pertinent part, § 254 provides that: (a) ... Except as provided in subsection (

b) of this section, contracts awarded after using procedures other than sealed-bid procedures may be of any type which in the opinion of the agency head will promote the best interests of the Government____ (b) ... [I]n the case of a cost-plus-a-fixed-fee contract ... a fee inclusive of the contractor’s costs and not in excess of 6 percent of the estimated cost, exclusive of fees, as determined by the agency head at the time of entering into the contract, of the project to which such fee is applicable is authorized in contracts for architectural or engineering services relating to any public works or utility project---- 41 U.S.C. § 254 (2000).

One unique facet of the architectural and engineering industry that has been codified by federal statute is that price competition between competing contractors is ethically inappropriate. In a cost-plus-fixed-fee scenario then, where the contractor is reimbursed for his actual costs and receives a negotiated fixed fee for services, the 6% fee limitation helps ensure the integrity of the contractor’s A & E costs because the maximum amount of reimbursable costs, plus the fixed-fee, is fixed prior to contract performance.

According to § 254(b), the fee limitation calculation must be based on an “estimate” of project costs “determined by the agency head at the time of entering into the contract.” Id. This does not mean that other forms of contracts for A & E services cannot be used (at times, simpler negotiated fixed price contracts are employed), but it is beyond doubt that the plain meaning of 41 U.S.C. § 254 triggers the imposition of § 254(b)’s fee limitation provision when cost-plus-fixed-fee contracts are used. The instant dispute stems from NOAA’s inability to estimate project costs before Fluor performed under the contract.

Because of a confluence of factors, it was not possible to develop a reasonable estimate at the statutorily mandated time. Chief among those factors was the fact that the scope of NOAA’s project was uncertain and Fluor was hired to perform an array of services, among which included tailoring the scope of NOAA’s project and, therefore, Fluor’s own undertaking.

These factors that prohibited a timely estimate were compounded by the fact that the parties had to employ a form of the cost-plus-fixed-fee contract — called a “level of effort” or “term” contract — that obligated Fluor to provide only a predetermined number of man-hours towards the project rather than completing the project itself. Despite this flaw, both parties performed under the contract, Fluor providing its services and NOAA paying for them. Nevertheless, nearly three years after performance concluded, the contracting officer sought to impose retroactively the statutory fee limitation.

Notwithstanding the absence of the timely estimate called for by § 254(b), NOAA calculated the amount of Fluor’s purported fee limitation (nearly ten years after the contract was negotiated) using a substitute for the estimate. That substitute was deemed to represent realistic project costs and comprised both actual construction costs and building estimates not determined until several years after the inception of the contract — and even then, the estimates were established not by NOAA, but by Fluor. It is the lawfulness of that action that led to this dispute.

Ultimately, defendant espouses an outcome in which § 254(

b) could be construed to allow the fee limitation to be calculated after the project was completed even though the statute literally requires that the fee limitation be predicated upon the initial estimate of the project’s cost. This proposed outcome seems both facially reasonable and consistent with one of Congress’s apparent goals in creating the fee limitation, which was to preserve a proportional relationship between the costs of design services and the cost of construction in a public works project.

In that sense, it would be terribly convenient for the court to simply adopt the defendant’s substitute and be done with this troubling case. Nevertheless, as Justice Cardozo long ago warned, judges are not free to roam the landscape of jurisprudence at will creating law to fit the facts. See B. Cardozo, The Nature of the Judicial Process 141 (1921). Defendant’s proposed outcome would work a mischief on the slight body of law dealing with this issue.

Not only would it be contrary to the explicit and unambiguous terms of § 254(b), but it would also ignore one of the safeguards in the statute to which Fluor was entitled — namely, knowledge of the upper limit of its allowable costs at the outset of the undertaking. Furthermore, adopting defendant’s

interpretation would create an inherent conflict of interest that is contrary to congressional intent. While estimates are usually nothing more than a convenient proxy for actual figures, in the context of A & E services (and the attendant fee limitation) the estimate required by the statute plays a unique and important role that is independent of any actual costs that may be ultimately incurred.

To be sure, in predicating the fee limitation for A & E services on a calculation involving-estimated project costs at the outset of the contract, Congress created a mechanism in which A & E contractors could prospectively monitor costs to ensure that those costs remained within the range of allowable, reimbursable costs.

Consequently, in such a mechanism it is especially important to base the fee limitation for A & E services on the estimated project costs rather than the actual project costs simply because actual project costs are not available until after construction is complete, long after an A & E contractor has performed his design services. Hence, there is a practical need for an initial, transparent calculation of the A & E contractor’s fee limitation, which an initial estimate allows.

Indeed the statutory scheme implicitly recognizes that in a cost-plus-fixed-fee contract, the benefits of using a preliminary estimate to calculate the fee limitation outweigh any potential inconsistencies between that estimate and later-determined actual costs. One such benefit is to curtail any perverse incentive an architect may have to design an unnecessarily costly project, which might otherwise arise if the fee limitation was pegged to the actual project costs.

In any event, relying on actual costs to determine what Fluor’s fee limitation was or might have been, as defendant suggests, is particularly troubling in this case. Doing so would ignore a key fact: Fluor’s undertaking and the scope of NOAA’s project was so open-ended and speculative that no reasonable estimate of project costs could have been calculated at the outset. In light of this, any after-the-fact calculation by the court of Fluor’s fee limitation is simply inappropriate both as a matter of fact and statutory construction.

Indeed, it would be inherently speculative to replace a prospective estimate of project costs that did not and could not exist “at the time of entering into the contract” with some other calculation. 41 U.S.C. § 254(b). Accordingly, because NOAA was unable to establish a timely project estimate as required by § 254(

b) for a variety of reasons, the court is compelled to conclude that NOAA’s procurement of A & E services, using the level-of-effort type contract adopted by the parties, was ultra vires under these circumstances. Fluor surprisingly argues to the contrary. Because the level-of-effort contract here mostly required work that did not involve A & E services, Fluor contends that the contract was lawful because in this circumstance the statute simply does not apply and there was therefore no need for a timely estimate. Consequently, to Fluor, any imposed fee limitation is inappropriate.

Fluor’s limited argument, however, must be rejected for the same reason given above: courts are not free to rewrite legislation; the plain meaning of § 254(

b) mandates the imposition of the fee limitation to any contract, or parts of contracts, which call for the types of design services contemplated by the statutory scheme. This case presents the court with a quandary. The intended contractual performance has already been completed and defendant has received all the benefits of Fluor’s performance. Under these circumstances, to what fee is Fluor entitled, given the 6% limitation of § 254(b)?

That decision here, of course, is made all the more troubling because even if it was possible to go back in time — worm hole or not — the nature of facts as they existed at the time the parties entered into this contract would render any “estimate,” and therefore any calculation of Fluor’s purported fee limitation, inherently speculative. Under these circumstances, the law of quantum meruit applies and entitles Fluor to compensation for its services under an implied contract theory. See Clark v. United States, 95 (Mem.) U.S. 539, 542-43, 24 L.Ed. 518 (1877).

Yet under quantum meruit, Fluor is only entitled to the reasonable value of those services. See Urban Data Sys., Inc. v. United States, 699 F.2d 1147, 1155 (Fed.Cir.1983); Yosemite Park and Curry Co. v. United States, 217 Ct.Cl. 360, 582 F.2d 552, 558 (1978). Any determination of the reasonableness of those payments, however, is a mixed issue of law and fact that must be preserved for later proceedings. Therefore, on the limited issue of the applicability of § 254(

b) to Fluor’s contract, plaintiffs motion for partial

summary judgment will be denied, defendant’s cross-motion will be granted, and the court will consider additional proceedings consistent with this opinion. II. Factual Background A. Fluor’s Undertaking In the mid-1980s, NOAA undertook a vast program to restructure and modernize the National Weather Service. See PL’s Resp. to Def.’s Proposed Findings of Uncontroverted Fact (“DPFUF”) at 2.

This program included the application of new technologies to better observe and process weather information, including implementation of the Next Generation Weather Radar (“NEXRAD”) program, which required construction of radar sites throughout the United States. Id. at 2-3. A key component of the modernization program included consolidating 249 weather offices into approximately 116 Weather Forecasting Offices (‘WFO”) that were to be located near the planned NEXRAD sites. Id. at 4.

In 1986, NOAA contracted with Fluor, a global provider of construction and engineering services, to provide comprehensive project planning and construction management services as part of the WFO modernization and consolidation plan. Pursuant to this contract, Fluor would oversee the construction and consolidation of the WFOs. The primary focus of Fluor’s undertaking was to adapt a hypothetical floor-plan that had been developed by another contractor for a model WFO facility, and systematically apply it to the 116-odd consolidated WFO sites. PL’s Mot. for Summ.

J. at 1-2; see Hearing Tr. at 21-25 (Oct. 28, 2004) (“Tr.”). The undertaking was later expanded to include construction and land acquisition for the NEXRAD project. PL’s Mot. for Summ. J. at 4. Fluor was thus responsible for designing a comprehensive plan that would systematically convert the pre-existing WFO floor-plan into actual facilities. See Tr. at 21. Fluor’s role in this process was expansive. It would help NOAA determine whether existing facilities needed to be renovated or new ones constructed from whole cloth.

It would evaluate the costs and benefits to NOAA of leasing certain facilities rather than owning them. It would also help identify the scope of individual construction and renovation projects, perform the architectural design work for some of those projects, and oversee the procurement of construction contractors. Once construction work began in earnest, Fluor would monitor the contractors to ensure that building progress complied with all plans and specifications.

It is, of course, that portion of the contract that called on Fluor to perform the architectural and engineering services that is at issue in this case. The initial agreement between Fluor and NOAA was a “letter contract” on July 29, 1986 that was regularly extended through May 30, 1987 as the parties continued to negotiate the parameters of the agreement. The letter contract was later “definitized,” resulting in a base period of performance through September 30, 1987 and government options to extend the contract for four additional one-year periods. DPFUF at 2.

After initial general project planning that lasted nearly two years, Fluor engaged in site specific design work on a site-by-site basis that was followed by actual construction work performed by other construction contractors and overseen by Fluor. Because of the broad, undefined nature of the work that the WFO modernization project would require, it was not feasible to structure Fluor’s contract as a fixed-price type contract, in which Fluor’s total compensation would be established up-front at the time of contracting.

Instead, a more flexible form of contract was needed to permit Fluor to oversee the entire project, because once Fluor’s project-planning was underway the scope of the overall project changed routinely. Therefore, Fluor’s contract was structured as a “cost-plus-fixed-fee” contract with services to be rendered on a “level of effort” basis. PL’s Mot. for Summ. J. at 1, 4. This provided maximum project flexibility without placing any of the risk of such flexibility, such as increased performance costs or scope of performance, on Fluor.

The cost-plus-fixed-fee classification describes the manner in which Fluor would be paid for its services: A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract.

This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs. 48 C.F.R. § 16.306(a). Essentially, the cost-plus-fixed-fee contract allows the contractor to be reimbursed for his allowable actual eosts and ensures that he receives a fee (the fixed-fee) in addition to those actual costs. This is in contrast to a fixed-price undertaking, in which the contractor receives a predetermined price for his services, regardless of the costs that are actually incurred.

A key difference between these two types of contracts is the allocation of risk. In a cost-plus-fixed-fee scenario, the contractor is typically well protected against unexpected increases in the cost of performance, because the government reimburses those costs. On the other hand, there is little incentive for the contractor to control or limit his actual costs for the same reason.

By contrast, in the fixed-price undertaking, the contractor benefits from keeping actual costs of performance low (thereby increasing his profit), but bears the risk of any increase in the cost of performance (which might erode profit, or turn the contract into a losing contract). See generally Cibinic & Nash, Formation of Government Contracts at 1079-81,1106-07. When the letter contract was definitized, the contracting officer issued a statement of “Determination and Findings.” This statement is required by § 254(

b) and the Federal Acquisition Regulations (“FAR”) as a condition to a cost-plus-fixed-fee procurement. Specifically, the regulations permit use of a cost-plus-fixed-fee contract only when “uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract” and “the level of effort [i.e., the amount or extent of work required] is unknown.” 48 C.F.R. §§ 16.301-2, 16.306(b)(1). Consistent with this requirement, NOAA’s contracting officer made a finding that: An adequate estimate cannot be established because of the nature of the work.

It is unknown what type of architectural or engineering tasks will be required or how many, depending on the number of sites. Because of the uncertainty of the volume of the work to be required, undertaking the work on fixed price bases is not advisable____Based on the preceding findings a fixed-price contract is impracticable and not in the best interest of the Government. Authority to utilize a cost type contract is granted. Pl.’s Mot. for Summ. J.App. 21, Ex. 1.

While the cost-plus-fixed-fee designation described how Fluor would be paid for its services, the “level-of-effort” designation described how much work Fluor was obligated to perform. There are two types of cost-plus-fixed-fee contracts, the “completion” form or the level-of-effort (or “term”) form. The completion form describes a typical contract in which the scope of work is stated as a definite goal, usually resulting in some end product (in this case, such a completed product might have been the completed building plans and schematics for a single WFO facility). See 48 C.F.R. § 16.306(d)(1).

By contrast, the FAR describes the level-of-effort (or “term”) form of contracting as an open-ended form of delivery that is a relative of the variable quantity contract: The term form describes the scope of work in general terms and obligates the contractor to devote a specified level of effort for a stated time period.

Under this form, if the performance is considered satisfactory by the Government, the fixed fee is payable at the expiration of the agreed-upon period, upon contractor statement that the level of effort specified in the contract has been expended in performing the contract work. 48 C.F.R. § 16.306(d)(2).

As a level of effort contractor, Fluor was obligated to expend a pre-determined number of hours towards the completion of designated projects, rather than complete enumerated tasks or projects. “In this type of contract, the contractor receives the compensation called for by the contract upon expenditure of the required hours of effort, regardless of whether the anticipated work is completed---- In these types of contracts, the Government is primarily buying hours of labor from a contractor.” Cibinic & Nash, Formation of Government Contracts at 1173.

NOAA and Fluor relied on regular “task orders” to refine the scope of Fluor’s contractual duties. The task order was a formal negotiated statement that identified in detail the type of work that Fluor was expected to perform in the corresponding task order period. It specified the level-of-effort output for that given period (ie., it indicated how many man-hours Fluor had to provide), specified the particular projects to which those man-hours should be deployed, and provided an estimate of what Fluor’s cost of performance would be for that period.

This estimate of performance costs established Fluor’s allowable costs that would be reimbursed by the government; it was a cost ceiling that Fluor could not exceed without approval of the contracting officer, except at its own risk. See 48 C.F.R. § 16.301-1. Based in part on the required level-of-effort and the estimated cost of performance, each task order also specified Fluor’s fixed-fee for that period.

The task orders, then, were the ongoing addenda to the original contract that regularly narrowed the scope of Fluor’s duties and deployed Fluor’s services; they were executed on forms designated “modifications” although both parties indicated that the task orders were not, in fact, modifications to the contract as a matter of law. See Tr. at 47-49, 61-62. The estimates included in the task orders were not, however, estimates of the “project costs” called for in § 254(b), but rather Fluor’s own cost of performance. The task order estimates were therefore entirely independent of the project cost estimates.

As a consequence of Fluor’s eost-plusfixed-fee, level-of-effort undertaking, Fluor was not obligated to expend any additional effort once its actual costs of performance under a given task order reached or exceeded the amount of the estimated cost of performance for that same task order period. Fluor would only be reimbursed for its allowable costs — those that were estimated to be the costs of performance at the outset of each task order. This principle is embodied in the FAR Limitation of Cost Clause, which was incorporated by reference into Fluor’s contract.

That clause states, in principle part: “The Contractor is not obligated to continue performance under this contract ... or otherwise incur costs in excess of the estimated cost specified in the [Task Order], until the Contracting Officer (

i) notifies the Contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract.” See 48 C.F.R. § 52.232-20 (Limitation of Cost); Compl. Ex. 9 at 37. On the other hand, if the contracting officer were to authorize additional costs, Fluor was not entitled to any increase in the predetermined fixed fee unless the contracting officer also authorized additional work not called for in the corresponding task order. Cibinic & Nash, Formation of Government Contracts at 1180.

In sum, NOAA and Fluor opted for a cost-plus-fixed-fee level-of-effort contract because the scope of services that Fluor would provide and the scope of the WFO modernization project were both broad and undefined. This form of contract selected for Fluor’s undertaking was a reflection of the fact that, at the outset of the contract, neither NOAA nor Fluor were able to identify just how expansive the WFO modernization project would be.

Consistent with Fluor’s broad role in the WFO modernization project, its contract with NOAA contemplated other professional services to accommodate that role besides just project planning services, including architectural and engineering services, construction management, and construction inspection services. Pl.’s Compl., Ex. 9 at 8. The A & E services to be performed under the contract were only part of all services Fluor was to perform; they were, however, not an insignificant component of the contract.

Fluor ultimately received $42,531,626 for all of its services, of which the contracting officer determined that $5,551,549 applied to A & E services. See Def.’s Resp. to Pl.’s Proposed Findings of Uncontroverted Fact (“PPFUF”) at 1. B. Fluor’s Design Services and the 6% Fee Limitation In terms of the WFO modernization objective, the consequence of NOAA entering into a long-term, open-ended contract were profound.

Since it was unclear how much construction (and design work) would be needed to achieve the objective, NOAA was unable to estimate the project costs of either individual WFO facilities or the entire WFO modernization project. Indeed — perhaps the single most important fact in this entire case — both parties concede that no such estimate was ever conducted by NOAA at the outset of this contract. See, e.g., Def.’s Resp. to PPFUF at 7-9; Def.’s Supp.

Brief at 2 (“The Government agrees that, at the time of contract award, there was no estimate of construction.”); Tr. at 69 (“[Establishing an estimate at the time of entering into the contract] couldn’t be done in this case.”) (statement of defendant’s counsel); Def.’s Reply to PL’s Resp. to Def.’s Mot. for Summ. J. at 12-13 (“Obviously, at the time Fluor entered the contract, there were no cost estimates.”).

Section 254(b), however, requires that such a project estimate in a cost-plus-fixed-fee contract must be “determined by the agency head at the time of entering into the contract.” This estimate is the predicate for the calculation of the 6% fee limitation on A & E services. 41 U.S.C. § 254(b). The contract itself and documents produced by NOAA memorializing the negotiations did not reference § 254(

b) or the 6% limitation on A & E fees. See Pl.’s Mot. for Summ. J. at 5. In October 1986, NOAA requested that the Department of Commerce Investigator General review Fluor’s pricing proposal, but neither that audit nor a subsequent review by the Defense Contract Audit Agency raised concerns about the 6% limitation on A & E fees. Id. at 6. An April 8, 1987 letter from Fluor to the contracting officer, however, indicated that the fee limitation was the subject of ongoing discussions between the parties.

The letter reveals that Fluor did not consider the contract appropriately subject to the limitation because of the parties’ inability to estimate project costs per § 254(b): If we could have estimated the cost of construction for each of the WFO’s, then we could have negotiated two fee structures — one for Architect-Engineer and one for Program, Project and Construction Management.

Assuming each WFO cost $500,000; that would be about $30,000 fee times say 90 (60-120) WFO’s or $2,700,000 fee for the Architect-Engineer services ____First, we could not estimate the cost back in July, 1986 and probably still cannot accurately. Therefore, we opted for a Level of Effort, Professional Services Contract. Pl.’s Mot. for Summ. J., App. 12.

The letter identifies two shortcomings in applying the 6% limitation at that time: (1) the parties were unable to estimate any costs for individual WFO projects because Fluor and NOAA had not yet determined what the scope of the building program would be, and (2) the parties could not determine the number of facilities for which Fluor would ultimately provide A & E design work under the contract.

In 1986-1987, the first two years of performance, Fluor’s A & E work was scant because most of the services rendered during that period involved project planning, as Fluor and NOAA explored the scope of the project; during this period, “substantive A & E design was not the focus of [Fluor’s] work.” Def.’s Cross Mot. for Summ. J., App. at 71 (Fluor Position Paper).

Fluor and the contracting officer agreed that during this time the contract would not be subject to the 6% limitation “because the cost of construction — [the] basis for calculation of the A & E fee limit — could not be estimated at that time due to the undefined nature of NOAA’s program and design requirements; and because [Fluor’s] scope of work included many services other than A & E design.” Id. at 17. “[N]either [Fluor] nor NOAA considered work under the Contract to come within the six per cent fee limitation during the early years, when program development, rather than A & E design, comprised virtually all of [Fluor’s] scope of work.” Id.

It wasn’t until 1988-89, about the third year of the contract, in which Fluor began to perform limited A & E services. Id. at 17. During the next two years, Fluor’s design responsibilities largely overlapped with its project planning and management responsibilities. Beginning in 1989 and into 1990, the Department of Commerce audited the WFO and NEXRAD programs. This audit raised concerns, seemingly for the first time, that Fluor’s design services should be subject to the § 254(

b) limitation. Pl.’s Mot. for Summ. J. at 7. This precipitated a meeting between Fluor and NOAA officials to discuss whether the statute, if applicable, affected any prior or prospective payments. Id.; DPFUF at 4. No contract modification was executed, but the parties did document an agreement regarding those design services they understood to be subject to the scope of the limitation, if the statute indeed applied to the contract. See Pl.’s Resp. to DPFUF at 17-20. The parties dispute whether at this time (or ever) they explicitly agreed that the limitation actually applied to the contract. Id.

By 1991 (Option Year Four), Fluor’s design effort was fully under way. Def.’s Cross Mot. for Summ. J., App. at 71 (Fluor Position Paper). That year marked a transition in Fluor’s performance, because program planning was by then “relatively complete” and Fluor focused substantially on design work. Id. at 72. In March 1992 Fluor generated the “1992 WFO Facilities Budget,” a document that summarized the costs for all 116 WFO facilities. See Pl.’s Mot. for Summ. J., App. 29.

For those facilities that had already been completed (construction included), the 1992 WFO Facilities Budget listed actual costs of the projects. Id.; Pl.’s Supp. Br. at 7-9 (identifying 22 facilities in the 1992 WFO Facilities Budget for which actual construction costs were used). For those WFO facilities whose design work was still pending, the Budget listed estimated costs of construction that Fluor had developed pursuant to clause 2.1.3 of its contract. See Compl., Ex. 9 at 10.

This 1992 WFO Facilities Budget is especially relevant to this case, because it ultimately became the substituted “estimate” upon which the contracting officer later calculated the quantum of Fluor’s fee limitation; it was used instead of the elusive phantom in this case, the “estimated cost ... as determined by the agency at the time of entering into the contract” required by § 254(b). In October 1992, Fluor’s initial contract (including option years and three additional extensions of several months each that are not explained in the record) expired.

The WFO modernization program, however, was a long-term project that was not yet complete by this time. DPFUF at 5. NOAA and Fluor would subsequently enter into two follow-on contracts in November 1992 and January 1994 to complete the program. Id. These contracts, however, are not at issue in the present dispute. C. The Contracting Officer’s Final Decision In August 1993, after the initial contract was completed, the Department of Commerce issued an interim audit report of the WFO and NEXRAD projects that was extremely critical of NOAA’s broad delegation of authority to Fluor. Pl.’s Mot. for Summ. J., App. 18.

This report also criticized NOAA for failing to apply the 6% fee limitation to Fluor’s contract. Id. at 4r-7. The final audit report issued two years later, in October 1995, calculated what the auditor concluded to be the maximum allowable fees for design services that Fluor was entitled to receive under the contract pursuant to § 254(b), based on the figures in the 1992 WFO Facilities Budget. Based on this calculation, the auditor determined that Fluor had received excessive payments for its services. Pl.’s Mot. for Summ. J. at 9-10.

In an August 1995 report, the “Summary of the Contracting Officer’s Analysis of Incurred Costs,” NOAA’s contracting officer (by this time, a different contracting officer than had handled the procurement of the contract back in 1986) indicated that she would follow the lead of the Department of Commerce’s audit and challenge certain payments made to Fluor as excessive in light of § 254(b). See Pl.’s Mot. for Summ. J., App. 10 at 10. The

summary indicated that the contracting officer would send Fluor a formal letter outlining her conclusion and computations, and then invite Fluor to negotiate or settle the matter. That letter and analysis followed on October 5, 1995, in which the contracting officer challenged $4,581,798 as excessive A & E payments. See Def.’s Cross Mot. for Summ. J., App. 2 at 9. The parties then tried to settle the matter through negotiations. Id. at 9-10. Thereafter, on April 13, 1999, the contracting officer issued the final decision on the matter.

The final decision embraced the methodologies of the Department of Commerce’s audit and calculated the putative fee limitation using the 1992 WFO Facilities Budget in lieu of the estimate called for by § 254(b). Def.’s Resp. to PPFUF at 12. Based on negotiations between 1996 and 1999, the contracting officer downsized the overpayment demand to $2,560,413. See Def.’s Cross Mot. for Summ. J., App. 2 at 11-12. On April 11, 2000, Fluor filed its complaint in this court, challenging the contracting officer’s final decision and seeking a judgment that Fluor is not liable for any overpayment in violation of § 264(b).

Compl. at 1, 33. Among other arguments, Fluor claimed that its contract was not subject to § 254(

b) and that the fee limitation should therefore not be applied in this case. On that limited issue, the parties filed cross-motions for

summary judgment. The court held a hearing on October 28, 2004 and later requested supplemental briefing from the parties on a number of issues. III. Discussion A. Jurisdiction and the Standard of Review This case is an action by a federal government contractor to dispute the contracting officer’s final decision brought pursuant to the Contract Disputes Act, 41 U.S.C. § 609(a)(1). The Tucker Act, 28 U.S.C. § 1491(a)(2), establishes this court’s jurisdiction over such cases. The court reviews the contracting officer’s decision de novo. 41 U.S.C. § 609(a)(1). The issues before the court are framed by the parties’ cross-motions for

summary judgment. Per Rule 56(

c) of the Rules of the Court of Federal Claims,

summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Celotex v. Catrett, All U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If both parties have moved for

summary judgment, the court is not relieved of its duty to evaluate the presence or absence of disputed material facts or the appropriateness of

summary judgment. “Simply because each party asserts a contradictory claim, it does not follow that ‘if one is rejected the other necessarily is justified.’” Scott Timber Co. v. United States, 64 Fed.Cl. 130 (2005) (quoting Gen. Elec. Co. v. United States, 60 Fed.Cl. 782, 789 (2004)). In this ease, the parties’ cross-motions are limited to whether Fluor’s contract is indeed subject to the strictures of § 254(b).

In the course of evaluating that issue, however, it is clear to the court that as a matter of statutory construction the inchoate issue of the legality and validity of the underlying contract must be resolved. While this sub-issue was not raised, nor addressed, by the parties in their respective motions for

summary judgment, the court did signal its concern and invited the parties to submit supplemental briefing on the issue. See October 29, 2005 Order at 1-2. In light of that opportunity to provide supplemental briefing, and given the relevant undisputed facts of this case, it is appropriate for the court to raise the issues of contract validity and legality sua sponte at this stage of proceedings. See generally Wright & Miller, Federal Practice and Procedure, Ch. 8, § 2720 (2004) (citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548). “The Supreme Court has recognized that ‘[trial] courts are widely acknowledged to possess the power to enter

summary judgments sua sponte, so long as the losing party was on notice that [it] had to come forward with all of [its] evidence.’ ” CW Gov’t Travel, Inc. v. United States, 63 Fed.Cl. 459 (2005) (quoting Celotex, 477 U.S. at 326, 106 S.Ct. 2548). B. Background of the Statutory Fee Limitation Provision As an initial matter, it is helpful to briefly frame the parties’ primary arguments in this case (these and other arguments will be examined in greater depth below). First, Fluor contends that § 254(

b) and the 6% fee limitation on A & E services was never intended to apply to the type of contract in the present ease. Fluor’s contract is, it argues, not a contract for A & E services but rather one for a broad range of professional services of which Fluor’s A & E services were only a minor part. According to Fluor, the 6% fee limitation was only intended by Congress to apply narrowly to those contracts that are exclusively for A & E services.

The government, of course, disputes Fluor’s contention and claims that the fee limitation applies to any contract that calls for the performance of A & E services regardless of the extent of those services relative to other non-A & E services provided under the same contract. The government, however, has another problem on its hands.

Despite the unambiguous language of § 254(b) (indicating that the 6% fee limitation shall be calculated based on “the estimated cost ... of the project” that is to be “determined by the agency head” at the point in the procurement process where the parties are “entering into the contract”) the government is trying to enforce a calculation of the 6% fee limitation based on the 1992 WFO Facilities Budget. The calculations in that Budget are troubling because it involved some actual costs, rather than estimates.

Indeed, even the “estimates” that comprised part of the 1992 WFO Facilities Budget are of concern because they were established by Fluor during the course of its performance and not by the “agency head at the time of entering into the contract,” as the statute requires. Clearly, then, these issues are ones of statutory

interpretation and application of law to fact. Accordingly, it is to the statute, itself, and then to its origin and history that the court now turns. 1. 41 U.S.C. § 254 For convenience sake it is worthwhile once again to summarize the relevant portions of the controlling statute, 41 U.S.C. § 254. This statute has two component subsections — (

a) and (b): (

a) Contracts awarded using procedures other than sealed-bid procedures Except as provided in subsection (

b) of this section, contracts awarded after using procedures other than sealed-bid procedures may be of any type which in the opinion of the agency head will promote the best interests of the Government____ (

b) Barred contracts; fee limitation; determination of use; advance notification The eost-plus-a-percentage-of-eost system of contracting shall not be used, and in the case of a cost-plus-a-fixed-fee contract the fee shall not exceed 10 percent of the estimated cost of the contract, exclusive of the fee, as determined by the agency head at the time of entering into such contract (except that a fee not in excess of 15 percent of such estimated cost is authorized in any such contract for experimental, developmental, or research work and that a fee inclusive of the contractor’s costs and not in excess of 6 percent of the estimated cost, exclusive of fees, as determined by the agency head at the time of entering into the contract, of the project to which such fee is applicable is authorized in contracts for architectural or engineering services relating to any public works or utility project).

Neither a cost nor a cost-plus-a-fixed-fee contract nor an incentive-type contract shall be used unless the agency head determines that such method of contracting is likely to be less costly than other methods or that it is impractical to secure property or services of the kind or quality required without the use of a cost or cost-plus-a-fixed-fee contract or an incentive-type contract____ 41 U.S.C. § 254 (1988). Subsection (

a) indicates that it applies to “contracts awarded after using procedures other than sealed-bid procedures.” 41 U.S.C. § 254(a) (emphasis added). In a procurement in which competitive price factors are not considered, which included every federal procurement of design services in 1986 when NOAA procured Fluor’s services (as will be explained shortly), procedures other than sealed-bid procedures (ie., negotiated procurements) must be used. See 41 U.S.C. § 253(a)(2). In those cases where sealed-bid procedures are not used, § 254(

a) generally grants broad contracting authority to the contracting officer to employ “any type” of contract that will be in “the best interest of the Government.” Thus, the scope of § 254(

a) is quite broad, but it is clear that this authority is not plenary. It is bounded in part by the conditions or restrictions set forth in subsection (b). Subsection (

b) prohibits the use of a cost-plus-percentage-of-cost contract. It also establishes fee limitations for a cost-plus-fixed-fee type contract (see

Part IIA above for a discussion of the cost-plus-fixed-fee type contract), two of which are relevant to the case at bar. The first is a general restriction for any cost-plus-fixed-fee contract and provides that the contractor’s fixed fee— the negotiated fee that the contractor receives for his services which does not increase or decrease with the rise or fall of actual reimbursable costs — may not exceed 10% of the estimated cost of that contractor’s contract. Id.

In other words, the contractor’s profit, which is set as a fixed-fee at the outset of the contract, may not be more than 10% of what the contracting officer has estimated to be the allowable reimbursable costs of that contract. The second restriction is the one that is critical to this case for it limits the fees that may be paid to a contractor under a cost-plus-fixed-fee contract for A & E services. These fees must not be greater than 6% of the “estimated cost [of the project], exclusive of fees, as determined by the agency head at the time of entering into the contract.” See § 254(b).

The “fee” that is subject to this 6% limitation is comprised of both the contractor’s reimbursable costs and his fixed-fee (or profit). Furthermore, the baseline against which the 6% limitation is calculated is the estimated cost of the entire project. These components of the 6% fee limitation are to be distinguished from the 10% limitation discussed above, which applies only to the contractor’s “fixed-fee” (and does not include his reimbursable costs) and is calculated based upon the estimated cost of the contractor’s own contractual performance (rather than the entire project).

Despite these distinctions, the two fee limitations are to be read in concert with one another. To illustrate these concepts, a hypothetical construction project is helpful. If the government were to procure A & E services for a building whose estimated total cost was $2 million (which would include materials and both design and construction services), then the 6% fee limitation applicable to A & E services under § 254(

b) would limit the A & E contractor’s allowable costs and fixed fee to no more than $120,000 (6% of $2 million is $120,000). However, if the estimated costs of the A & E contractor’s services — those actual costs for which the contractor would be reimbursed under the cost-plus-fixed-fee scenar io — were only $80,000, then the fixed fee that the contractor would receive could be no more than $8,000 because the 10% fee limitation applicable to all cost-plus-fixed-fee contracts under § 254(

b) would apply (10% of $80,000 is $8,000). Under that scenario, the A & E contractor’s total fee, including both his reimbursable costs and his fixed-fee, would be no more than $88,000. This total fee would not run afoul of the 6% fee limitation because it is less than $120,000. On the other hand, if the same A & E contractor’s estimated costs were not $80,000, but instead were $115,000, the maximum fixed-fee that the A & E contractor could receive would be $5,000.

Even though 10% of $115,000 (the reimbursable costs) is $11,500, the 6% fee limitation would restrict the A & E contractor to no more than $120,000 for both reimbursable costs and fixed-fee. See Compl., Ex. 2 (The Government Contractor, Briefing Papers, Architect-Engineer Contracts at 2-3 (Nov. 1963)). 2. The Origins of § 254(

b) Just how 41 U.S.C. § 254(

b) should be construed and applied in this case is the key that unlocks the juridical puzzle presented by the unique facts here. And exactly why the controversial fee limitation clause was inserted into 41 U.S.C. § 254(

b) is clarified by both the legislative history behind the act and the custom and practices of the architect and engineering professions, all of which work as a background that sheds some light on both the fee limitation provision and the entire statutory scheme. It is to this background that the court now turns. a. Early Iterations of the 6% Fee Limitation onA&E Services Prior to 1893, delivery of design and construction services in federal projects were intertwined. The builder developed whatever rudimentary designs he would rely upon. See John B.

Miller, Principles of Public and Private Infrastructure Delivery 115 (2000). It was only after professional disciplines emerged in the architectural and engineering industry, albeit in their infancy, that the advantages of a rigorous architectural and engineering training began to be recognized. Id. As a result, design work became segmented from the construction work, taking on an independent function of its own. In 1893, Congress first permitted the Secretary of the Treasury to seek the assistance of design professionals for public works projects. See Act of Feb. 20, 1893, 27 Stat. 468.

The trend towards segmentation of design from construction continued with the Public Buildings Act of 1926, which required federal employees to prepare plans and specifications prior to construction; that Act permitted the solicitation of private design professionals to “assist” the federal employees in their task. 44 Stat. 630 (1926).

Also in 1926, the Foreign Service Building Act granted the Secretary of State authority to hire private architects and engineers to independently provide the design services for new buildings or renovation projects as part of the Secretary’s supervision and preservation of American diplomatic and consular properties abroad. Pub.L. 69-186, 44 Stat. 403, 404 (1926).

Of particular note in this case, the Foreign Service Building Act of 1926 appears to be the first statute that adopted a fee limitation for design services, allowing design fees “not exceeding in any case 5 per centum of the cost of construction or remodeling of the properties in respect to which said special services are rendered.” Id. In 1939, separate Acts of Congress granted permission first to the Navy, and then to the Army, to procure architectural and engineering services from private firms on a cost-plus-fixed-fee basis and without advertising and competitive bidding. See

An Act to Authorize the Secretary of the Navy to Proceed With the Construction of Certain Public Works, and For Other Purposes, Pub.L. 76-43, 53 Stat. 590 (1939) (codified at 10 U.S.C. § 7212);

An Act to Facilitate Certain Construction Work for the Army, and For Other Purposes, Pub.L. 76-309, 53 Stat. 1239 (1939) (codified at 10 U.S.C. § 4540). Up until the 1984 Competition in Contracting Act there was a general requirement for formal advertising and competitive price-related bidding in all government procurements (that is, sealed-bids as opposed to negotiated procure-merits). However, the 1939 Acts carved out an exception to that general rule to facilitate the War Department’s expansion to outlying military stations beyond the continental United States. See generally Pub.

L 76-306 § 2, 53 Stat. at 1240 (permitting procurement for architectural and engineering services “without reference to the Classification Act of 1923 (42 Stat. 1488), as amended (5 U.S.C., ch 13), or to

section 3709 of the Revised Statutes of the United States (41 U.S.C. 5) [1939]”). The 1939 Acts were developed with two primary goals in mind: to reduce costs to the government and to permit greater pace of construction procurement. See generally H. Rep. 76-667 (1939). It appears that up until this time it was the practice of the military branches to procure design services based on competitive (i.e., sealed) bids that resulted in fixed-price type contracts, in which the winning contractor would name the price for the project that would include both his costs and his profit.

Addressing the potential for excessive prices, Congress noted inherent flaws in this practice of procuring fixed-price contracts after competitive bidding for the construction of new facilities at military bases far from the continental United States: The experience of the War Department has shown that it is impracticable to obtain competitive bids from reliable and experienced contractors on work at outlying stations except at substantially increased prices.

This arises from the fact that unusual hazards, the uncertainty of weather conditions, the distance from material and labor markets, and the cost of overcoming unforeseen construction difficulties all contribute to the element of uncertainty which requires that a prudent bidder include in his bid a very large item for contingencies. If these contingencies do not arise the Government will pay an excessive profit to the contractor. Id. at 2.

To remedy these flaws, Congress permitted the Navy and Army to employ cost-plus-fixed-fee contracts, instead of fixed-price contracts, for construction projects at outlying and overseas bases. Congress concluded that doing so would promote the “principle of noninsuranee,” since the government would only pay for those costs actually incurred by a contractor, rather than paying for contingencies that a contractor could possibly factor into his bid in a fixed-price contract. Id.

The building contractor’s fixed-fee under the cost-plus-fixed-fee contract authorized by Congress was limited to “10 per centum of the estimated cost of the contract, exclusive of the fee, as determined by the Secretary of War.” 53 Stat. 1239. That fixed-fee was to “be determined at or before the time such contract is made.” Id. However, “[f]or work within the continental limits of the United States, where it is practicable to obtain competitive bids and where the contingency item is not large, the usual procedure of competitive bidding is to be preferred.” H. Rep. 76-667 at 2.

For architectural and engineering services that would result in the “production and delivery of the designs, plans, drawings, and specifications required for the accomplishment of any public works project” the Secretary of War was authorized to contract with private firms and forego formal advertising and competitive bidding otherwise required by statute whenever such exception would be “advantageous to the national defense.” 53 Stat. 1240.

It was believed that the War Department’s reliance on its present, yet small, cadre of in-house architects and engineers was insufficient for the military’s growing construction demands and that “neither the personnel nor the space required for their work can be obtained quickly.” H. Rep. 76-667 at 2; see also H. Rep. No. 76-76 at 2-9 (1939); H. Doc. 76-65, Report on the Need of Additional Naval Bases to Defend the Coasts of the United States, Its Territories, and Possessions (Jan. 3, 1939).

Under appropriate circumstances the advertising (ie., the solicitation of competitive bids) requirement was eliminated because it was thought that this process would delay procurement unnecessarily and, perhaps more importantly, “because responding to advertising for professional services of this character is considered unethical.” H. Rep. 76-667 at 3.

The leading architectural and engineering professional organizations had been opposed to the government’s practice of soliciting competitive bids through the formal advertising procedures because that practice conflicted with professional standards established by those organizations. Id.

The solicitation of competitive bids from architects and engineers, in which price was an essential component of the selected contractor’s qualifications, was deemed “illogical.” Id. “Standard fees have been established by reputable professional societies for various kinds of engineering and architectural works, so that the question of the magnitude of the fee does not enter into the selection of an engineering or architectural firm. The question in each case should be decided upon the special qualifications of the firms under consideration.” Id.

Consequently, in the absence of price-related competition, Congress ensured price protection by implementing a maximum fee “set at 6 percent of the estimated cost of the project” on architectural or engineering services that were provided pursuant to the 1939 Acts. A Bill to Facilitate Certain Construction Work for the Army, and for Other Purposes: Hearing on S. 2562 Before the Senate Comm, on Military Affairs, 76th Cong. 13 (1939).

This fee limitation for military construction projects reflected what Congress noted was the industry standard for similar projects in the private sector, in which fees for architectural and engineering services tended to vary between four and six percent of the overall project costs. Id. b. Incorporation and Extension of the 6% Fee Limitation These 1939 wartime provisions were later incorporated into the Armed Services Procurement Act of 1947 (“the Procurement Act”). See

An Act to Facilitate Procurement of Supplies and Services by the Department of the Army and the Air Force, the Coast Guard, and the National Advisory Committee for Aeronautics, and for Other Purposes, 62 Stat. 21 (1948). The 1947 Procurement Act was an attempt to draw on the procurement lessons learned during wartime while also compiling procurement provisions that had accumulated over time. See S. Rep. No. 571 (1947).

Significantly, the Procurement Act retained the provisions of the 1939 Acts that permitted architectural and engineering services to be procured on a cost-plus-fixed-fee basis without regard to other statutes requiring advertising and price-related competitive bidding, and it preserved the 6% limitation on fees for such services. See 10 U.S.C. § 2306.

Even more significant in this case is that the Federal Property and Administrative Services Act of 1949 (“the Property Act”) extended the 6% fee limitation on A & E services to federal nonmilitary projects as part of an attempt to streamline government property management and procurement. See

An Act to Simplify the Procurement, Utilization, and Disposal of Government Property, to Reorganize Certain Agencies of the Government, and for Other Purposes, 63 Stat. 377 (1949). It is this portion of the Property Act of 1949 that is the progenitor of 41 U.S.C. § 254(b), the provision that is at the heart of this case.

The Property Act of 1949 adopted the approach taken by the earlier military procurement laws (the 1939 Acts) toward architectural and engineering services nearly verbatim, allowing federal agencies to procure those services on a cost-plus-fixed-fee basis without advertisement or price-related competitive bidding.

Of note, however, is that the language identifying those types of services that would be subject to the 6% fee limitation was changed from the “production and delivery of the designs, plans, drawings, and specifications” in the 1939 Acts to “architectural or engineering services” in the 1947 and 1949 Acts.

Additionally, the 1949 Act added language directing that the estimate on which the fee limitation is based be “determined ... at the time of entering into the contract.” By embracing the role of private design professionals in federal public works procurement, the Procurement Act of 1947 and the Property Act of 1949 hastened the complete separation of design from construction services. While these Acts permitted the procurement of design services according to the negotiated procedure without regard to price that the Acts espoused, that process was not required.

See 63 Stat. 393-94 (“[Pjurchases and contracts [for supplies and services] may be negotiated by the agency head without advertising if ... for personal or professional services.”). The approach that was permitted for procurement of design services was a carve-out or exception to the general rule requiring price-related competition. On the other hand, construction services were required to be procured through “advertising,” and not negotiation. Id. (“All purchases and contracts for supplies and services shall be made by advertising [unless an exception applies.]”).

The “advertising” requirement was synonymous with today’s notion of sealed bids. See 63 Stat. 395, § 303. This had the effect of separating the procurement of design and construction services (ie., they were not procured from the same contractor under the same procurement). Many agencies took advantage of the opportunity to select architects and engineers without regard to price, because it allowed the agencies to select the most highly-qualified contractors. c.

The Brooks Act Amendment to The Property Act of 1949 In 1972, the Property Act of 1949 was amended by the Brooks Architect-Engineers Act (“Brooks Act”), which clarified federal policy regarding the selection of A & E professionals. See Publ. L. No. 92-582, 86 Stat. 1278 (1972) (codified at 40 U.S.C. §§ 541-44 (1988)). The Brooks Act was a direct response to a request from the Comptroller General in 1967 to modify A & E procurement policy to include competitive pricing procedures in which the amount of the fee to be paid to an A & E contractor would factor into the selection process. See S.Rep.

No. 92-1219 (1972), reprinted in 1972 U.S.C.C.A.N. 4767, 4767. As an adjunct to the appeal for price competition, the Comptroller General requested that Congress repeal altogether the 6% limitation on A & E fees. Id. at 4768. The Comptroller General also suggested that the 6% fee limitation had been applied too broadly by various agencies and sought clarification of the scope of the fee limitation, should it be retained. See Pl.’s App. 20 at 1.

Rather than adopting the Comptroller General’s request to repeal the exception that permitted A & E services to be procured through negotiation instead of competitive bidding generally required, Congress in the Brooks Act committed the government to a new policy in which negotiated procurement of design services would not only be a preferred approach, but rather the exclusive approach.

Pursuant to the Brooks Act, all design services would be procured based solely on a contractor’s “demonstrated competence and qualification[s]” subject to the procuring agency’s negotiation of a “fair and reasonable price”: The Congress hereby declares it to be the policy of the Federal Government to publicly announce all requirements for architectural and engineering services, and to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices. 40 U.S.C. § 542 (1988).

In effect, the Brooks Act dramatically altered the scope of federal construction project delivery. While the Property Act of 1949 had allowed procurement of A & E services in this manner, the Brooks Act effectively required that all A & E services be procured through negotiated procurement procedures that focused not on price competition but rather the “demonstrated competence and qualification” of each bidder.

See 40 U.S.C. § 544 (1988) (“The agency head shall negotiate a contract with the highest qualified firm for architectural and engineering services at compensation which the agency head determines is fair and reasonable to the Government.”). No longer were federal agencies permitted to procure A & E services through sealed-bid procedures that involved price-related evaluation factors.

Accordingly, after the Brooks Act every contract for design services was procured through “procedures other than sealed-bid procedures,” see 41 U.S.C. § 254(a), and was therefore subject to the strictures of § 254 and, in the event of a cost-plus-fixed-fee contract, the 6% fee limitation. Furthermore, Congress explicitly declined to repeal the 6% fee limitation: The [Brooks Act of 1972] does not affect existing statutes which limit architect-engineer fees to 6 percent of the estimated construction cost.

The 6-percent limitation, when applied to the preparation of designs, plans, drawings, and specifications as Congress intended, is a valuable safeguard to the public---- [T]he 6-percent fee limitation is deemed to be an equitable ceiling.... The 6-percent limitation has been in existence since 1939 and is not changed by [this bill]. S.Rep. No. 92-1219, 1972 U.S.C.C.A.N. at 47678. Finally, one goal of Congress in the Brooks Act was to clarify the scope of which services were subject to the § 254(

b) fee limitation. The Brooks Act specifically defined “architectural and engineering services” (to which the § 254(

b) fee is applicable) to include “those professional services of an architectural or engineering nature as well as incidental services that members of these professions and those in their employ may logically or justifiably perform.” Pub.L. 92-582, 86 Stat. 1278, 1278-79 (1972) (codified at 40 U.S.C. § 541 (1988)).

The letter from the Comptroller General that precipitated the Brooks Act suggested that federal agencies had misinterpreted the extent of the services covered by the 6% fee limitation, in some instances applying the fee limitation to all “architectural and engineering services” rendered by a design contractor. Pl.’s App. 20 at 1 (Letter from Rep. Jack Brooks to the Comptroller General, Nov. 16,1967).

Representative Brooks’ response in 1967 (which preceded the subsequent Brooks Act) indicated that this broad application of the fee limitation was contrary to the spirit of prior codifications of the 6% limitation (the 1939 Acts) that served as the template for § 254(b). Id. at 2. The earlier forms of the limitation had confined the 6% limitation only to those fees incurred in the “production and delivery of the designs, plans, drawings, and specifications.” Id. According to Rep.

Brooks, the 1947 Procurement Act and 1949 Property Act, in switching the language describing the limitation’s scope from the “production and delivery of plans, designs, drawings, and specifications” to “architectural and engineering services” was nothing more than a simplification of the language that was not intended to alter the scope of the fee limitation. Any ambiguity was therefore clarified in the Brooks Act by defining the term “architectural and engineering services,” which was later clarified further by definition in the FAR. See 48 C.F.R. § 2.101. C.

Analysis With the provisions of § 254 and the history of the fee limitation laid out, it is appropriate to turn next to the parties individual arguments in this case in more detail. 1. Fluor’s Contract is One for “Architectural or Engineering Services” to Which § 254(

b) Applies As an initial matter, Fluor argues that its contract with NOAA should not be subject to any of the limitations in § 254(

b) applicable to contracts for A & E services because, according to Fluor, this contract was not a contract for A & E services. Largely an issue of semantics, Fluor maintains that “the six percent limitation on fees prescribed [in § 254(b) ] was intended to apply narrowly to contracts where A & E services represent the majority of the work required, and not to services contracts of the sort at issue here where only a minor portion of the required work constituted covered A & E services.” Pl.’s Mot. for Summ. J. at 14-15. Fluor’s argument is really one that implicates the “plain meaning” of the statute.

The court therefore begins its analysis, as it must, with the text of the statute itself because the plain language of a statute is controlling. See Shoshone Indian Tribe of the Wind River Reservation v. United States, 364 F.3d 1339, 1345 (Fed.Cir.2004); Int’l Bus. Machs. Corp. v. United States, 201 F.3d 1367, 1373 (Fed.Cir.2000). The court should look beyond the plain meaning of a statute only if the language is ambiguous or a literal

interpretation would frustrate the purpose behind the statute. See Bob Jones Univ. v. United States, 461 U.S. 574, 586, 103 S.Ct. 2017, 76 L.Ed.2d 157 (1983). However, “[wjhere the language is plain and admits of no more than one meaning the duty of

interpretation does not arise and the rules which are to aid doubtful meanings needs no discussion.” Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917). It is only when an ambiguity is inherent in the statute, where the words might be reasonably susceptible to multiple meanings, that the courts turn to other aids or rules of statutory construction to discern the meaning of the statute itself. See, e.g., Jowett, Inc. v. United States, 234 F.3d 1365, 1368 n. 2 (Fed. Cir.2000). Turning to the statute, then, § 254(

b) indicates that a fee not in excess of 6% of the estimated cost is “authorized in contracts for architectural or engineering services related to any public works.” § 254(b) (emphasis added). At least facially, there is nothing ambiguous about this language that might suggest that its applicability should only extend to contracts primarily or substantially for A & E services or, alternatively, that A & E services to be rendered as part of a broad professional services contract like Fluor’s might somehow be exempt from the statute’s purview.

Fluor advances a syllogism that Congress intended the 6% limitation to apply only to “contracts for architectural and engineering services,” with primary focus on the type of contract or manner in which the contract is classified rather than on the substantive services to be performed. According to Fluor, the statute “does not provide that the limitation applies to any contract that includes A & E services regardless of whether those services constitute only a minor portion of the work required.” Pl.’s Mot. for Summ. J. at 16.

Instead, so the syllogism goes, the statute was only intended to specifically apply to a contract that is properly characterized in its entirety (or, mostly) as an “A & E contract,” and therefore the statute does not apply to Fluor’s contract. In support of this argument, Fluor postulates that the legislative history of the 6% limitation contains “nothing that indicates a contrary intent.” Id. However, Fluor has been unable to present any affirmative support that would lead the court to recognize any ambiguity in the language of the statute.

Instead, Fluor points to the statutory progression of the 6% fee limitation, pointing out a legislative intent to circumscribe the types of services in a “eontract[ ] for architectural and engineering services” that are subject to the 6% limitation. Out of this sound

interpretation of the Brooks Act’s policies, Fluor tries to imply a parallel legislative intent to narrowly define the types of contracts subject to the limitation. The court rejects Fluor’s attempt to take a facially unambiguous statute and render it ambiguous through clever contrivances. In construing statutes, “it has been truly stated to be the duty of the court to effect the intention of the legislature; but this intention is to be searched for in the words the legislature has employed to convey it.” Schooner Paulina’s Cargo v. United States, 11 U.S. (7 Cranch) 52, 60, 3 L.Ed. 266 (1812).

Thus, the first step is to determine whether the applicable statutory provision possesses a plain and unambiguous meaning with regard to the particular issue in this case. Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). At least initially, then, it strikes the court as counter-intuitive to read § 254(

b) as Fluor would counsel — to imply a restriction on the types of contracts to which the statute applies — in the absence of specific language suggesting such a limitation. The facial reading of the statute seems to unambiguously require that, when architectural and engineering services are the subject of a contract, the fees for those services shall be subject to the statutory limitation. “Where there is no ambiguity in the words, there is no room for construction.

The case must be a strong one indeed, which would justify a court in departing from the plain meaning of words ... in search of an intention which the words themselves did not suggest.” United States v. Wiltberger, 18 U.S. (5 Wheat.) 76, 95-96, 5 L.Ed. 37 (1820) (Marshall, C.J.). Even assuming, arguendo, that the statute is ambiguous as applied to the facts of this case as Fluor argues, which might permit the court to look to tools of statutory construction to divine the purpose or intent of the statute, see, e.g., Crandon v.

United States, 494 U.S. 152, 158, 110 S.Ct. 997, 108 L.Ed.2d 132 (1990) (“In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy.”), there is no indication that the statutory history on which Fluor relies actually leads to the conclusion it espouses. As Fluor points out, the statutory progression of § 254(

b) does reveal Congress’ specific intent to narrowly construe the types of services that are subject to the 6% limitation in any given contract, but there is nothing in Congress’ approach that indicates its intent to only apply the 6% limitation in certain types of contracts (i.e., only those contracts primarily for A & E services). As noted above, the Brooks Act of 1972 clarified the scope of those services to which § 254(

b) applies. It specifically defined “architectural and engineering services” to include “those professional services of an architectural or engineering nature as well as incidental services that members of these professions and those in their employ may logically or justifiably perform.” Pub.L. 92-582, 86 Stat. 1278,1278-79 (1972) (codified at 40 U.S.C. § 541 (1988)).

This codification seems to be a direct response to the Comptroller General’s earlier suggestion that federal agencies had misinterpreted the extent of the services covered by the 6% limitation, in some instances applying the fee limitation to all “architectural and engineering services” rendered by a contractor notwithstanding the relationship of those services to the “production and delivery of the designs, plans, drawings and specifications” that had been emphasized in the 1939 Acts. PL’s App. 20 at 1. This

interpretation is reinforced in the Federal Acquisition Regulations. The applicable portions of the FAR that implement § 254(

b) do not limit the scope of applicability to contracts only for A & E services, which is the crux of Fluor’s argument, but rather require that the 6% limitation be applied to fees incurred for the performance of relevant services.

Section 15^104 (former § 15-904-4(c)(4)(i)(B)) prohibits a contracting officer from negotiating a fee that exceeds the statutory limit whenever it procures “architect-engineer services for public works or utilities.” The fees that are so limited are those attributable to the “production and delivery of designs, plans, drawings, and specifications.” 48 C.F.R. § 15.404-4(c)(4)(i)(B). This regulation does not refer to “contracts” for A & E services, nor does it in any way limit the 6% limitation to undertakings that are exclusively, or primarily, for A & E services.

Presumably, it is only the fees paid for the performance of actual design services, whether as part of a contract calling for only A & E services or as part of a contract calling for performance of a diverse range of services, that are subject to the 6% limitation of § 254(b). In other words, costs and fees incurred in providing non-A & E services under the contract escape the narrow 6% limitation. That

interpretation of the fee limitation— that it only applies to a limited range of services despite the variety of services called for in the contract — is consistent with opinions from administrative bodies that have interpreted the statute. The Comptroller General has expressed the opinion that “the codifications of the 1939 statutes apply to all types of contracts and that costs which do not relate to the preparation of designs, plans, drawings, and specifications may be regarded as not subject to the 6-percent limitation imposed by those statutes.” 46 Comp.

Gen. 556, 560 (Dec. 12, 1966) (emphasis added). “In light of the legislative history of the Brooks Act, we have held that the Act applies to the procurement of services which uniquely or to a substantial or dominant extent logically requires performance by a professionally licensed and qualified A-E firm.” In re Assoc. of Soil and Foundation Engs., 61 Comp. Gen. 377, 378 (May 6,1982).

Logically, if services that do not properly fall within the Brooks Act’s circumspection of “architectural or engineering services” or, even more apparent, are not architectural or engineering services at all, then the fees for those services are not rightly subject to the § 254(

b) fee limitation. However, the presence of such services — even if they represent a substantial or predominant portion of the contract — does not exempt from the fee limitation the fees for those services that are properly within the scope of the Brooks Act provisions. Ultimately, there does not appear to be support for Fluor’s position, other than a very strained reading of both the statute and its legislative history, that counters the natural reading of § 254(

b) and the provisions of the FAR that implement that section. These provisions, along with the statutory history, seem to universally apply the 6% limitation to a limited range of design services as defined in the Brooks Act and in 48 C.F.R. § 2.101. The implication of this narrow approach would permit Fluor to exempt all costs and fees incurred performing services that fall outside the scope of 48 C.F.R. § 2.101. However, it cannot similarly exempt fees incurred performing those design services that are properly within the scope of the statute and regulations merely because there were other diverse services performed under the same contract. There is simply no support for such a strained

interpretation of the law. See Wiltberger, 18 U.S. (5 Wheat.) at 95-96. 2. Fluor’s Contract Was Not a “Design-Build” Contract Next, in a related argument, Fluor contends that subjecting a contract of this type to the fee limitation in § 254(

b) would lead to an absurd result because it would be contrary to the industry practice of “design-build” development contracts in which the § 254(

b) fee limitation is not applied. Fluor accordingly argues that industry practice dictates that this contract be treated as a “design-build” contract, itself, and exempted from the fee limitation. See Pl.’s Supp. Br. at 16, 25 (“The U.S. Army Corps of Engineers, which has decades of experience implementing the statutory limitation set forth in 41 U.S.C. § 254(b), does not apply the 6 percent limitation to design-build contracts!”) (emphasis original); Pl.’s Resp. to Def.’s Cross-Mot. for Summ.

J. at 2 (“Rather, like design-build contracts commonly used by federal agencies with the most experience in government construction, it was a contract that related to construction of public works that contained some element of A & E services, but was not subject to the six percent limitation set forth in the statute.”), 6-7. As Fluor makes it seem, the fee limitation is not applied in design-build contracts simply because the design work is only a minor portion of the services to be rendered under those types of contract.

This argument, however, is wholly inaccurate and completely disregards the statutory and historical context in which the design-build delivery model emerged. As noted below, the reason that design-build contracts are not subject to the fee limitation of § 254(

b) is because they proceed under sealed-bid or competitive price procurement procedures, which are specifically excepted from the Brooks Act through supervening law. Accordingly, in a sealed bid the protections of the fee limitation are simply not necessary because price competition obviates the need for external price controls, such as the 6% fee limitation. Contrary to Fluor’s argument, whether the § 254(

b) fee limitation is applied in a design-build delivery has nothing to do with the relative quantum of design services to be performed under that contract. Since Fluor’s contract was procured not as a design-build contract, but rather after a negotiated award process as part of a “design-bid-build” delivery model, Fluor’s effort to analogize its contract to a design-build delivery model is misplaced. “Design-Bid-Build” and “Design-Build” are industry terms referring to the method by which infrastructure projects are procured.

Design-bid-build is a “segmented delivery strategy in which design is fully separated from construction.” John B. Miller, Principles of Public and Private Infrastructure Delivery at xxix (2000). In this model, the services of a design professional are procured first, and the building contractor is selected later, after the design work is completed.

Conversely, in the design-build model, both design and construction services are procured from a single entity (which might be a single construction firm with in-house design professionals or a team of construction and design professionals assembled for a project) in a single procurement process. As noted above, the only delivery model known prior to the late-nineteenth century in federal public works procurement was design-build because the concept of separating design services from construction services had not yet matured.

Slowly over the next half-century, the marriage of design and construction services began to erode as Congress first authorized, and then required preconstruction designs and specifications. See Act of Feb. 20, 1893, 27 Stat. 468; Public Buildings Act of 1926,44 Stat. 630. Following the Procurement Act of 1947 and Property Act of 1949, discussed above, construction services could only be procured through competitive bidding, but design services could be procured through the more flexible negotiated procurement.

This dichotomy resulted in more widespread use in the federal government of “design-bid-build” deliveries for public works as federal agencies took advantage of the opportunity to procure design services through negotiation. The Brooks Act of 1972 entrenched design-bid-build as the only viable delivery model in federal procurement because it effectively required that all design services be procured through negotiation without regard to price.

This requirement forced government agencies to always procure design and construction services separately, since by rule they had to proceed under different procurement paths — one by negotiation, the other by competitive bidding. In effect, the Brooks Act acted as a bar to design-build delivery: With design procured separately by statute, all federal agencies were still required to advertise for construction services under the basic procurement statutes: the [Procurement Act and the Property Act].

With the design professional already retained through a separate statutory procurement, none of the integrated project delivery methods [such as design-build] is possible in public infrastructure. The combination of the 1972 Brooks Act and the underlying 1947 and 1949 general procurement statutes operated as a statutory bar to Design-Build. Miller, Principles of Public and Private Infrastructure Delivery at 117. It also precluded the procurement of A & E services through sealed-bid procedures since price-related factors were not considered. See 41 U.S.C. § 253(a)(2)(A).

As a result, all contracts for A & E services fell within the scope of 41 U.

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