RENDA MARINE, INC., Plaintiff, v. The UNITED STATES, Defendant, 66 Fed. Cl. 639

OPINION HEWITT, Judge. This case is before the court following trial on claims by plaintiff Renda Marine, Inc. (Renda, RMI or plaintiff) that it encountered six Type I differing site conditions, one Type II differing site condition, and one constructive contract modification during the course of its performance of Contract No. DACW64-99-C-0001, known as the Upper Bayou Project Contract (Upper Bayou Contract or Contract). See Complaint (Compl.) n 10-11, 20-31, 54-61, 75-79, 84-88, 91-95, 102-15, 122-37, 148-83.

The Upper Bayou Contract involved dredging a portion of the Houston-Galveston Navigation Channel (the Channel) and constructing perimeter levees and other structures at a disposal area known as Lost Lake to contain material to be dredged under the Contract and material to be later dredged under other contracts. See generally Joint Exhibit (JX) 2 (Contract Specifications for Dredging Upper Bayou (Specs.)); JX 5 (Contract Plans and Drawings (Drawings)); see also Transcript of Trial (Tr.) at 3098:15-21, 3171:5-8 (C.

Michael McClenan, Administrative Contracting Officer) (explaining that the levees were designed to contain material dredged under contracts issued for 50 years following the Upper Bayou Contract); cf. id. at 4150:18-25 (J. Timothy Few, civil engineer) (explaining that the designs of “all of the placement areas” in the 45-Foot Project were predicated on a “50-year dredge material management plan”). Plaintiff seeks $10,842,811 in damages.

Post-Trial Brief by Plaintiff, Ren-da Marine, Inc. (Pl.’s Br.) at 2, 98; cf Tr. at 2456:10-11 (plaintiffs damages expert, Robert McCullough); Plaintiffs Exhibit (PX) 1863A (Summary of Plaintiffs Claims by Mr. McCullough) (Revised McCullough Rep.) at 1. I. Introduction Between February 28 and April 7, 2005, the court conducted nineteen days of trial, during which it heard the testimony of twenty-two live witnesses and admitted more than five hundred exhibits into evidence.

In addition to the record amassed during trial, the court has reviewed deposition testimony from twelve witnesses, see generally JX 94A-JX 106B, and has had the opportunity to consider extensive post-trial briefing filed by the parties, see generally PL’s Br.; Defendant’s Posh-Trial Brief (Def.’s Br.); Reply Brief by Plaintiff, Renda Marine, Inc. (PL’s Reply); and Defendant’s Reply to Plaintiffs Post-Tidal Brief (Def.’s Reply). The court found the testimony of all of the witnesses before it to be given earnestly and in good faith. However, plaintiffs witness Mr.

Bowman at times appeared so committed to establishing plaintiffs trial positions that his testimony was more than once at odds with deposition testimony that proved unhelpful to plaintiff’s case at trial. For example, in an effort to establish that plaintiffs pre-bid site investigation was both reasonable and through, Mr. Bowman testified at trial that plaintiffs pre-bid investigation of the Channel and the Lost Lake Placement Area lasted “two days and one night,” Tr. at 552:6-7 (Bowman). During cross-examination, defendant’s counsel reminded Mr.

Bowman of his deposition testimony that the investigation lasted only “one afternoon and one evening.” Tr. at 1501:10-12 (Def.’s Counsel) (quoting JX 99A (Bowman Dep.) at 37:14-15). When confronted with his deposition, Mr. Bowman did not contradict his earner testimony and conceded that a significant portion of this brief investigation took place “after dark.” See generally id. at 1500:13— 1501:20 (colloquy between Mr. Bowman and def.’s counsel).

Similarly, in an effort to discredit the representations in plaintiff’s Inspection Reports of Dredging concerning the character of materials encountered by plaintiffs dredge, Mr. Bowman testified that “it would not be obvious,” whether the material flowing through the dredge pipe consisted of sands, clay or other material. See Tr. at 1533:18-1534:12 (colloquy between Bowman and def.’s counsel).

When confronted with his deposition testimony that “it was real obvious [to the person monitoring the discharge pipe] when we were in the good clays, and it was obvious when we were in the sands, and it was obvious when were in what you call the maintenance material, which was the silt and clay,” id. at 1535:2-5 (Def.’s counsel) (quoting JX 99A (Bowman Dep.) at 145:10-14), Mr. Bowman did not attempt to correct or explain his earlier statements. Two of the major participants in the relevant events were not called as witnesses at trial. Plaintiffs did not call as a witness Eddie Fisher, its former Vice President.

Defendant had taken the precaution of designating Mr. Fisher’s deposition as a trial exhibit. The court has found the deposition to be a useful resource with respect to plaintiffs preparation of its bid, an important aspect of a differing site condition claim. Defendant did not call as a witness Erik Russek, Project Engineer with the Corps. Plaintiff had not taken the precaution of designating Mr. Rus-sek’s deposition as a trial exhibit. Plaintiff argues that defendant’s failure to call Mr. Russek “warrants a negative inference.” PL’s Reply at 14.

The proof of a differing site conditions claim, however, is focused on the actions of the plaintiff. The court does not see how the absence of a government witness could be deployed to assist plaintiff in carrying its burden of proof. II. Applicable Legal Standards A.

Standard of Review The “Disputes” clause in the Upper Bayou Contract, see generally JX 1 (Solicitation) at 91 (incorporating FAR § 52-233-1 (“Disputes”) (Oct.1995) as a standard clause), provides that disputes arising under the Contract are to be governed by the Contract Disputes Act of 1978(CDA), as amended, see generally 41 U.S.C. §§ 601-613 (2000). The CDA imposes two “jurisdictional prerequisites,” which must be met before a contractor may pursue a claim in this court. E.g., England v. The Swanson Group, Inc., 353 F.3d 1375, 1379 (Fed.Cir.2004); Bath Iron Works Corp. v.

United States, 20 F.3d 1567, 1578-79 (Fed.Cir.1994); Sharman Co. v. United States, 2 F.3d 1564, 1568-69 (Fed.Cir.1993), overruled in part on other grounds by Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed.Cir.1995). First, “[a]ll claims by a contractor against the government relating to a contract ... [must] be in writing and ... be submitted to the contracting officer for a decision.” 41 U.S.C. § 605(a). Second, “[t]he contracting officer [must] issue [a final] decision[ ] in writing, and ... furnish a copy of the decision to the contractor.” Id.

A contractor that satisfies the jurisdictional prerequisites and is dissatisfied with the contracting officer’s decision may appeal that decision to the Court of Federal Claims “within twelve months from the date of the receipt by the contractor of the decision.” 41 U.S.C. § 609(a)(3). “In [such] ... proceedings ... ‘the facts, as well as the law, are decided de novo by the ... court.’ ” Mega Constr. Co. v. United States, 29 Fed.Cl. 396, 414 (1993) (quoting Seaboard Lumber Co. v.

United States, 903 F.2d 1560, 1562 (Fed.Cir. 1990)) (final alteration in original); see also 41 U.S.C. § 609(a)(1), (3) (providing that, “in lieu of appealing the decision of a contracting officer ... to an agency board, a contractor may bring an action directly on the claim in the United States Court of Federal Claims,” within twelve months, and that such a “claim ... shall proceed de novo in accordance with the rules of the appropriate court”). “Th[e] court is not bound by either the findings of fact or the conclusions [of law] of the [contracting officer].” Lathan Co. v.

United States, 20 Cl.Ct. 122, 125 (1990); accord 41 U.S.C. § 605(a) (“Specific findings of fact[,] ... if made [by the contracting officer], shall not be binding in any subsequent proceeding.”); see also Rice Co., 03-188-1 B.C.A. (CCH) (Ag. B.C.A. June 13, 2005) (“[D]e novo review precludes reliance on the presumed correctness of a [contracting officer’s] ... deeision[,] and once an action is brought[,] ... the parties start in court ... with a clean slate.”). B.

Plaintiff’s Burden “[W]here an appeal is taken to a board or court, the contracting officer’s award” of time or money under the differing site conditions clause “is not to be treated as if it were the unappealed determination of a lower tribunal which is owed special deference or acceptance on appeal.” Assurance Co. v.

United States, 813 F.2d 1202, 1206 (Fed.Cir.1987); accord Mega Constr., 29 Fed.Cl. at 414 (“The administrative award of time or money ... is not to be treated as if it were the unappealed determination of a lower court or a board of contract appeals that might be owed some sort of special deference on appeal.”). Because “the findings of fact in th[e] [contracting officer’s] decision are not binding on the parties ... [or] entitled to any deference[,]” the contractor bears the burden of proving by preponderant evidence “the fundamental facts of liability and damages de novo.” Wilner v.

United States, 24 F.3d 1397, 1401 (Fed.Cir.1994) (citing Servidone Constr. Corp. v. United States, 931 F.2d 860, 861 (Fed.Cir.1991), William F. Klingensmith, Inc. v. United States, 731 F.2d 805, 809 (Fed.Cir.1984), and Blinderman Constr. Co. v. United States, 695 F.2d 552, 559 (Fed.Cir. 1982)); see also id. at 1401 (“[W]hen the claim being asserted by the contractor is based upon alleged 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.”).

Further, “a contractor is not entitled to the benefit of any presumption arising from the contracting officer’s decision. De novo review precludes reliance upon the presumed correctness of the [prior] decision.” Id. (citing Renegotiation Bd. v. Bannercraft Clothing Co., 415 U.S. 1, 23, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974)).

The Federal Circuit has made clear that this court’s de novo review extends not only to “final” decisions issued by contracting officers in response to contractor claims, but also to “interim” decisions by contractmg officers, such as contract modifications, issued in response to contractor claims: Congress made it clear in the CDA that any findings by a contractmg officer in a final decision are not binding in any subsequent proceeding.

Although, by its terms, the CDA only applies to contracting officers’ final decisions, in light of the policies underlying the CDA, we see no basis for drawing a distinction between an interim and a final decision of a contracting officer. Apart from finality, the interim decision ... is indistinguishable from a final decision. England v. Sherman R. Smoot Corp., 388 F.3d 844, 856 (Fed.Cir.2004).

Because interim decisions are subject to the same de novo review as a contracting officer’s final decisions, see id., a contractor who undertakes an appeal of an interim award of partial relief must relitigate the entire claim-not only the portion of that claim that was denied by the contractmg officer, see Transamerica Ins. Corp. v. United States, 28 Fed.Cl. 418, 423 (1993) (“[P]laintiff asks the court to deem plaintiffs request denied only as to the amount of the equitable relief adjustment. The court cannot engage in such piecemeal analysis.

The modification is a unitary document upon which plaintiff sued.”) (footnote omitted); accord Rice Co., 03-188-1 B.C.A. (“[T]he parties start in court ... with a clean slate.”) (interpreting and applying Smoot). Thus, where a contracting officer has awarded partial relief to a contractor through modifications awarding extra compensation or performance time, a contractor appealing the claim which gave rise to that modification does not raise a rebuttable presumption that the government was responsible for the circumstances that resulted in the relief previously granted by the contracting officer.

See George Sollitt, 64 Fed.Cl. at 245 (“[T]he Federal Circuit interprets the CDA as removing any rebuttable presumption of validity for either interim or final ... decisions by the contracting officer.”) (citing Smoot, 388 F.3d at 854). It follows that, where a contracting officer has not timely issued a final decision on a contractor’s certified claim, the effect of that “deemed denial,” see 41 U.S.C. § 605(c)(2), (5), is to “negate the ... existence” of a previously-issued contract modification. Transamerica, 28 Fed.Cl. at 423 n. 4.

Because “the modification [is] a nullity, ... plaintiff would be forced to litigate entitlement to the entire equitable adjustment amount.” Id,.; see also Appeal of M. A Mor-tenson Co., 94-31 A.S.B.C.A. (CCH) (June 27, 2005) (“An interim decision such as [a contract modification] does not bind the government on appeal.”) (citing Smoot, 388 F.3d at 856). C. Defendant’s Duties Under each contract it enters, the government has implied duties of good faith and fair dealing. See e.g., Centex Corp. v.

United States, 395 F.3d 1283, 1306 (Fed.Cir. 2005) (recognizing “an implied covenant ... of good faith and fair dealing”); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1340 (Fed.Cir.2000) (among government’s contractual obligations are the implied duties of good faith and fair dealing). As this court recently observed in Short Bros., PLC v. United States: The implied duties of good faith and fair dealing “must attach to a specific substantive obligation, mutually assented to by the parties.” Alaska v. United States, 35 Fed.

Cl. 685, 704 (1996), aff'd, 119 F.3d 16 (Fed.Cir.1997) (Table)____[T]he implied duties of good faith and fair dealing “do[] not form the basis for wholly new contract terms, particularly terms which would be inconsistent with the express terms of the agreement.” Jarvis v. United States, 43 Fed.Cl. 529, 534 (1999).

In order to prove a claim based on the Government’s breach of its implied obligation of good faith and fair dealing, the contractor must rebut a “presumption of regularity ... that public officers perform their duties correctly, fairly, in good faith and in accordance with law and governing regulations[.]” Schism v. United States, 316 F.3d 1259, 1302 (Fed.Cir.2002). The presumption of good faith “is valid and binding unless ‘well-nigh irrefragable proof rebuts or overcomes it.’” Id. (quoting Alaska Airlines, Inc. v. Johnson, 8 F.3d 791, 795 (Fed.Cir.1993)); Torncello v.

United States, 231 Ct.Cl. 20, 681 F.2d 756, 770 (1982) (stating that “the government, unlike private parties, is assumed always to act in good faith, subject only to an extremely difficult showing by the plaintiff to the contrary”). Plaintiffs burden is “intended to be very difficult,” requiring clear and convincing proof that the Government specifically intended to injure plaintiff. Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed.Cir.2002). For example, “ ‘[s]ubterfuges and evasions violate the obligation of good faith.’ ” Malone v.

United States, 849 F.2d 1441, 1445 (Fed.Cir.1988) (quoting Restatement § 205 cmt. d). The aspect of the covenant of good faith and fair dealing that calls for non-interference is sometimes referred to as a duty to cooperate. Compare Centex Corp., 395 F.3d at 1304 (stating that the covenant of good faith and fair dealing “imposes obligations ... that include the duty not to interfere with the other party’s performance”), with, e.g., Olympus Corp. v.

United States, 98 F.3d 1314, 1318 (Fed.Cir.1996) (“Interference by the government with a contractor’s access to the work site may constitute a breach of the government’s duty to cooperate.”). A breach of the duty to cooperate is actually a breach of the covenant of good faith and fair dealing. See Malone, 849 F.2d at 1445 (citing Restatement § 241(

e) for proposition that “lack of diligence and interference with or failure to cooperate in the other party’s performance” violates obligation of good faith). Failure to cooperate can give rise to a claim for breach of contract, see Malone, 849 F.2d at 1445-46, but such a claim must be discussed in the particular circumstances of the case, see Milmark Servs., Inc. v. United States, 731 F.2d 855, 859-60 (Fed.Cir.1984).

In terms of “hindering performance,” the implied duty not to hinder performance prohibits the Government, as with any other party to a contract, from “doing anything to prevent performance thereof by the [contractor] or that will hinder or delay him in its performance.” Lewis-Nicholson, Inc. v. United States, 213 Ct.Cl. 192, 550 F.2d 26, 32 (1977). “Not only must the Government not breach this implied provision, the Government ‘must do whatever is necessary to enable the contractor to perform.’ ” Id. at 32. Thus, the Government can violate the duty to cooperate by causing a delay in the contractor’s performance.

Id. 65 Fed.Cl. 695, 799-800 (2005). The Court of Claims has long recognized that an “implied duty of cooperation and noninterference ... is inherent in any contract.” S.A. Healy Co. v. United States, 216 Ct.Cl. 172, 576 F.2d 299, 306 (1978); see also Whittaker Elec. Sys. v. Dalton, 124 F.3d 1443, 1447 (Fed.Cir.1997) (government has an implied duty to cooperate with a contractor during contract performance). Concomitant with those duties, the government has an implied obligation not to hinder a contractor in its performance of a government contract. C. Sanchez & Son, Inc. v.

United States, 6 F.3d 1539, 1542 (Fed.Cir.1993) (“The government must avoid actions that unreasonably cause delay or hindrance to contract performance.”); Malone v. United States, 849 F.2d 1441, 1445 (Fed.Cir.1988); Blackstone Consulting, Inc. v. United States, 65 Fed.Cl. 463, 471 (2005); PCL Constr. Servs., Inc. v.

United States, 47 Fed.Cl. 745, 801 (2000) (pointing out that a contractor is “entitled to both an extension of time within which to perform[] and recovery of excess costs associated with [a] delay” only if the government is the sole cause of the delay) (internal quotation and citations omitted); Peter Kiewit Sons’ Co. v. United States, 138 Ct.Cl. 668, 151 F.Supp. 726, 731 (1957) (discussing government’s implied duty not to willfully or negligently interfere with a contractor’s performance).

If a breach of these implied duties “causes harm to [a contractor], the government may be found liable for damages.” Trinity River Lumber Co. v. United States, 66 Fed.Cl. 98, 111 (2005) (discussing cases in which the court found that government-caused delay “by unreasonably prolonging timber contract suspensions or by unreasonably provoking the suspension of a contract” constituted a breach of the implied duties to cooperate and not to hinder). D.

Elements of a Claim for Type I Differing Site Conditions Six of the eight claims for which liability was litigated at trial allege that plaintiff encountered Type I differing site conditions during its performance of the Upper Bayou Contract. See Transcript of Pretrial Conference (Pretrial Tr.) at 271:13-15 (statement by plaintiffs counsel that “[t]he H[]L[&]P Tower claim is really a changed condition”); Pl.’s Br. at 1 (“Renda’s claims [with two exceptions] principally arose from type I differing site conditions.”).

The Differing Site Conditions clause, see JX 1 (Solicitation) at 94, upon which plaintiff bases its claims provides that a contractor is entitled to an equitable adjustment of the contract price and/or the time required for performance for, inter alia, “subsurface or latent physical conditions at the site which differ materially from those indicated in this contract,” FAR § 52.236-2(a)(1) (footnote added).

The purpose of the clause is to shift the risk of adverse subsurface or latent physical conditions from the contractor, who normally bears such risk under a fixed-price contract, to the government ... [and] to take at least some of the gamble on subsurface conditions out of bidding. Bidders need not weigh the cost and ease of making their own borings against the risk of encountering an adverse subsurface, and they need not consider how large a contingency should be added to the bid to cover the risk. They will have no windfalls and no disasters.

The government benefits from more accurate bidding, without inflation for risks which may not eventuate. It pays for difficult subsurface work only when it is encountered and was not indicated in the logs. Olympus Corp. v. United States, 98 F.3d 1314, 1316-17 (Fed.Cir.1996) (citing, inter alia, Foster Constr. C.A. & Williams Bros. Co. v. United States, 193 Ct.Cl. 587, 435 F.2d 873, 887 (1970)); see also H.B. Mac, Inc. v.

United States, 153 F.3d 1338, 1343 (Fed.Cir. 1998) (“The purpose of the Differing Site Conditions clause is to allow contractors to submit more accurate bids by eliminating the need for contractors to inflate their bids to account for contingencies that may not occur.”). However, the clause is not intended to “shift the risk of all unanticipated adverse site conditions from the contractor to the government. Rather, the government bears only those risks that encourage ‘more accurate bidding.’” Olympus, 98 F.3d at 1317 (quoting Foster, 435 F.2d at 887).

To prevail on each of its Type I differing site conditions claims, plaintiff must prove, by preponderant evidence, not only that plaintiff notified the contracting officer of each alleged differing site condition, but also that plaintiff satisfies all six elements of a Type I differing site conditions claim for each alleged condition. 1.

The Notice Requirement When proving that it encountered a Type I differing site condition, a contractor must establish as a threshold matter that it “promptly, and before the conditions are disturbed, g[a]ve a written notice to the Contracting Officer” of the alleged differing site condition. FAR § 52.236-2(a). Notwithstanding the language in the FAR, the requirement that notice be “in writing,” has been relaxed by the courts. “[N]otice need not be in any particular form[.

It] may ... be oral and given to the contracting officer’s representative ... [and] may even be waived if the court finds that defendant had actual or constructive notice of the conditions encountered.” Dawco Constr., Inc. v. United States, 18 Cl.Ct. 682, 693 (1989) (citations omitted), rev’d in part on other grounds, 930 F.2d 872 (Fed.Cir.1991); see also Engineered Maint. Servs., Inc. v. United States, 55 Fed.

Cl. 637, 641 (2003) (“[N]otice need not be in any particular form ... (despite the FAR requirement of a writing) so long as it is sufficient to generally inform the Government of the facts surrounding the claim.”). When proceeding on a theory that the government had actual or constructive notice of a differing site condition, the contractor “may recover if [it proves that] defendant [was] not prejudiced by the lack of [written or oral] notice.” Dawco, 18 Cl.Ct. at 693.

The government may defeat recovery by proving that “it was prejudiced or disadvantaged by plaintiffs failure to give notice,” id., and may satisfy this burden by establishing that “the passage of time obscured the elements of proof or [that] defendant could have minimized the extra work and attendant costs had notice been given,” id. (citing Schnip Bldg. Co. v.

United States, 227 Ct.Cl. 148, 645 F.2d 950, 959 (1981) (“[P]laintiffs[ ] failure to render the notice ... and its completion of the [contract work] prior to submitting its claim prevented the Government from ascertaining whether the ... problems resulted from a subsurface condition that was unexpected or from [plaintiffs own] use of an improper ... procedure .... The lack of a timely notice was prejudicial to the Government because it effectively prevented any verification of [plaintiffs] claim and also the employment of alternate remedial procedures.”) (internal quotations omitted)).

Regardless of the form of the notice, a plaintiff-contractor bears the burden of proving that the contracting officer was timely informed of the alleged differing site condition. E.g., Schnip, 645 F.2d 950 at 953-59; Dawco, 18 Cl.Ct. at 693. “[0]nce [such] notice is given it need not be given again when the same conditions recur on the site.” Dawco, 18 Cl.Ct. at 693 (citing Allied Contractors, Inc. v.

United States, 149 Ct.Cl. 671, 277 F.2d 464, 466 (1960)) (“[The contractor] filed a written notice originally[,] and ... [need] not ... file an additional claim for excess cost every time a new rock [is] discovered.”). 2.

The “Indispensable Elements” of a Type I Differing Site Condition Claim In addition to making a threshold showing of timely and proper notice, a contractor seeking to “establish entitlement to an equitable adjustment by reason of a Type 1 differing site condition ... must prove, by a preponderance of the evidence, ‘that the conditions indicated in the contract differ materially from those [the contractor] encountered] during performance.’ ” H.B. Mac, 153 F.3d at 1345 (quoting in part Stuyvesant Dredging Co. v.

United States, 834 F.2d 1576, 1581 (Fed.Cir.1987)) (quotations omitted); see also Randa/Madison Joint Venture III v. Dahlberg, 239 F.3d 1264, 1274 (Fed.Cir.2001) (same). To determine whether plaintiff has met this burden, “the court must place itself into the shoes of a ‘reasonable and prudent’ contractor,” P.J. Maffei Bldg. Wrecking Corp. v. United States, 732 F.2d 913, 917 (Fed.Cir.1984), “and ascertain whether the conditions actually encountered were reasonably unforeseeable on the basis of all the information available to the contractor at the time of bidding,” Spirit Leveling Contractors v.

United States, 19 Cl.Ct. 84, 94 (1989).

When applying this standard, courts require that the contractor establish by preponderant evidence “six indispensable elements ... for each [differing site condition] claim”: (1) that the contract affirmatively indicated subsurface conditions upon which the contractor’s claims are based; (2) that the plaintiff acted as a reasonably prudent contractor in interpreting the contract documents; (3) that the contractor reasonably relied on the indications of subsurface conditions in the contract; (4) that the subsurface conditions actually encountered differed materially from subsurface conditions indicated in the contract; (5) that the subsurface conditions encountered were reasonably unforeseeable; and (6) that the contractor’s claimed excess costs were solely attributable to the materially different subsurface conditions.

Weeks Dredging & Contracting Inc. v. United States, 13 Cl.Ct. 193, 218 (1987). Thus, a contractor must prove more than a mere difference between the information in the bid documents and the conditions encountered at the contract site. The reasonableness of the contractor’s conduct prior to submission of its bid and during performance and the absence of a contributing or concurrent cause of the contractor’s alleged damages must be proven as well. a.

Contract Must Affirmatively Represent the Subsurface Conditions A contractor’s eligibility for an equitable adjustment for a Type I differing site condition depends on the subsurface conditions indicated in the contract and other bid documents. See Control, Inc. v. United States, 294 F.3d 1357, 1363 (Fed.Cir.2002) (“A contractor is not eligible for an equitable adjustment for a Type I differing site condition unless the contract indicated what that condition would be.”); Lathan Co. v.

United States, 20 Cl.Ct. 122, 126 (1990) (“If the contract is silent on the conditions of the site, plaintiff has no Type I claim.”) (citing Foster, 435 F.2d at 881). The “bid information or contract documents” must include reasonably plain or positive indications ... that [the] subsurface conditions would be otherwise than actually found in contract performance, or to view the other side of the coin, that there were such indications which induced reasonable rebanee by the successful bidder that subsurface conditions would be more favorable than those encountered. Pac. Alaska Contractors, Inc. v.

United States, 193 Ct.Cl. 850, 436 F.2d 461, 469 (1971). Although a Type I differing site condition cannot exist where “the plans and specifications do not ‘show1 or ‘indicate’ anything about the alleged unforeseen condition, i.e., if they say ‘nothing one way or the other about [the subsurface condition],’ ” United Contractors v. United States, 177 Ct.Cl. 151, 368 F.2d 585, 595 (1966) (quoting Ragonese v. United States, 128 Ct.Cl. 156, 120 F.Supp. 768, 769 (1954)); Neal & Co. v.

United States, 36 Fed.Cl. 600, 617 (1996) (“[W]here the contract is silent, a claim cannot arise.”); Weeks, 13 Cl.Ct. at 219 (“Where the contract contains no affirmative (positive or negative) representations of the subsurface conditions ... the government has no liability.”), “ ‘contract “indieation[s]” need not be explicit or specific’ so long as they provide sufficient grounds by which the contractor can justify his ‘expectation of latent conditions materially different from those encountered.’ ” Neal, 36 Fed.Cl. at 617 (quoting P.J.

Maffei, 732 F.2d at 916); accord Foster, 435 F.2d at 875 (“[A]ll that is required is that there be enough of an indication on the face of the contract documents for a bidder reasonably not to expect ‘subsurface or latent physical conditions at the site differing materially from those indicated in this contract.’ ”). What is “indicated” by contract documents “is a matter of contract

interpretation and thus presents a question of law” to be decided by the court. P.J. Maffei, 732 F.2d at 916; accord Foster, 435 F.2d at 880 (“The issue of the indications in the contract is one of law for decision by the tribunal, not an issue of fact to be proven by a preponderance of expert testimony!!]”). To determine what is “indicated,” a “proper technique of contract

interpretation is for the court to place itself into the shoes of a reasonable and prudent contractor and decide how such a contractor would act in interpreting the contract documents.” Randa/Mddison, 239 F.3d at 1274 (quoting P.J. Maffei 732 F.2d at 917) (internal quotations omitted). The term ‘“[c]ontract documents’ can be interpreted with considerable breadth to include not only the bidding documents ([i]nvitation for bids, drawings, specifications and other documents physically furnished to bidders)!]] but [also] documents and materials mentioned in the bidding documents,” McCormick Constr. Co. v.

United States, 18 Cl.Ct. 259, 263 (1989), aff'd 907 F.2d 159 (Fed.Cir. 1990) (Table), as well as minutes of pre-bid conferences and summaries of those minutes, if distributed to bidders, see Appeal of Goss Fire Prot., Inc., 97-1 B.C.A. (CCH) 1128,853, 1997 WL 126571 (Dep’t of Transp. B.C.A. Mar. 19,1997). b. Contractor’s

Interpretation of Contract Documents Must be Reasonable It is not enough that the contract documents affirmatively indicated the subsurface conditions upon which the contractor’s claims are based. A contractor “is presumed to have the general skills of a reasonable contractor,” Neal, 36 Fed.Cl. at 620, and must have acted as a “reasonable contractor” or “reasonable bidder,” when interpreting those documents and forming its bid. See P.J. Maffei 732 F.2d at 917; Youngdale & Sons Constr. Co. v. United States, 27 Fed.Cl. 516, 533 (1993).

A contractor “ ‘does not bear the burden of interpreting [the] contract [documents] correctly, only of interpreting [them] reasonably.’” Mega Constr., 29 Fed.Cl. at 457 (quoting Salem Eng’g & Constr. Corp. v. United States, 2 Cl.Ct. 803, 807 (1983) (citing Max Drill, Inc. v. United States, 192 Ct.Cl. 608, 427 F.2d 1233, 1245 (1970))). For example, the contractor “is bound to inquire into obvious omissions or inconsistencies in the contract documents, and a contractor’s

interpretation cannot be reasonable ‘if the ambiguity is obvious’ ” Id. (quoting Jamsar, Inc. v. United States, 194 Ct.Cl. 819, 442 F.2d 930, 934 (1971), and citing Salem, 2 Cl.Ct. at 807). Where a contractor fails to seek clarification prior to bidding, the contractor assumes the risk of unexpected costs flowing from a patent defect in the contract. E.g., Delcon Constr. Corp. v. United States, 27 Fed.Cl. 634, 638 (1993) (“Had [the contractor] inquired in writing or sought clarification from the contracting officer, this misunderstanding, and this litigation, could have been avoided.”).

This duty to inquire is particularly robust where, as here, the contract contains an “omissions and misdescriptions” clause. FAR § 252.236-7001(d) (Aug.2000); see JX 2 (Specs.) at 4, 111(d). Such a clause “cautions bidders that information contained in the contract documents may not accurately depict encountered conditions,” Conner Bros. Constr. Co. v. United States, 65 Fed.Cl. 657, 678 (2005), and “places the burden on the contractor to correctly [perform] ‘manifestly necessary’ work ... despite omissions or mistakes in contract drawings,” George Sollitt Constr. Co. v.

United States, 64 Fed.Cl. 229, 302 (2005). “Although not expected to anticipate the worst-case scenario, [a contractor] is responsible for evaluating the available information and reasonably extracting from such information subsurface conditions.” Fru-Con Const. Corp. v. United States, 44 Fed.Cl. 298, 309 (1999); see, e.g., Neal, 36 Fed.Cl. at 621 (“A reasonable site inspection would have disclosed the presence of [subsurface water seepage,] and a reasonable ... contractor would have understood its implications.”). For a contractor’s pre-bid

interpretation to be “reasonable,” the contractor is expected to have done more than merely read the bid documents and visit the contract site. A reasonable contractor is expected to draw upon previous experience in the industry and/or region. E.g., id. (“[W]ater seepage is a ‘common [problem] in Alaska:’ Plaintiff was an Alaska contractor, and it had done work before on Kodiak Island.

There is even less reason, therefore, to treat the minimal contract indications as an indication to an experienced Alaskan contractor that there would be no subsurface water seepage.”) (citation omitted) (second alteration in original). A reasonable contractor also may be held responsible for information revealed at the government’s pre-bid conference for prospective bidders. E.g., In the Appeal of Twigg Corp., 92-2 B.C.A. (CCH) 1125,011, 1992 WL 76105 (N.A.S.A.B.C.A. Apr.17, 1992).

Although a contractor’s failure to attend a pre-bid conference is not presumptively unreasonable, see, e.g., Appeal of Goss Fire Prot., Inc., 97-1 B.C.A. (CCH) H 28,853 (noting that the contractor’s “failure to attend the prebid conference [is not by itself] an impediment to recovery, since it had no legal obligation to attend the conference.”), a contractor that “decide[s] not to attend ... thereby risk[s] that it w[ill] not receive or understand information that could be material to its bid,” In the Appeal of Twigg Corp., 92-2 B.C.A. (CCH) 1125,011. Thus, a contractor’s reasonable

interpretation of the contract documents is undertaken not in a vacuum, but in conjunction with information that should be known by a reasonable contractor in the field and could be learned from carefully reading the contract documents and conducting a reasonable inspection of the site. See Neal,. 36 Fed.Cl. at 621. “‘It is a rule that a contractor who knows or should have known the facts of the conditions at the site is estopped to claim a changed condition.

Where he knows or has opportunity to learn the facts, he is unable to prove ... that he was misled by the contract.’ ” Spirit Leveling, 19 Cl.Ct. at 95 (quoting Vann v. United States, 190 Ct.Cl. 546, 420 F.2d 968, 982 (1970) and citing Stuyvesant, 11 Cl.Ct. at 859). However, contractors are not expected to know that which only an expert could derive from those materials. See Kaiser Indus. Corp. v. United States, 169 Ct.Cl. 310, 340 F.2d 322, 330 (1965). Nor are they charged with knowledge of geological conditions not discoverable during a visual inspection of the site. See Foster, 435 F.2d at 887-88.

Further, a contractor is not required “to conduct [costly and perhaps impossible] geological or other technical investigations” to supplement the bid documents, Foster, 435 F.2d at 888, but will be held responsible for all “direct or indirect representations as to subsurface ... conditions on the site.” Neal, 36 Fed.Cl. at 617. Where the bid documents contain or refer bidders to boring logs, the contractor is “held to the standard of a reasonably prudent contractor in deciphering the meaning of such logs.” Youngdale, 27 Fed.Cl. at 534.

Renda avers that it is reasonable for a contractor to take at face value the representations contained in soil borings because borings are “ ‘recognized to be the “most reliable and ... most specific indicator” of subsurface conditions.’ ” PL’s Reply at 18 (quoting Foster, 435 F.2d at 888 (quoting United Contractors, 368 F.2d at 598)). The court agrees with plaintiff that soil borings are so recognized, but notes two limitations to plaintiffs contention.

First, the court notes that, under certain circumstances, a contractor’s “reliance on the Corps’[ ] out-of-date borings, and [the contractor’s] conclusion that those borings represented the conditions which [the contractor] would face years later, [would] not [be] reasonable and prudent,” in the context of other information available to the contractor prior to its bid. Hardwick Bros. Co., II v. United States, 36 Fed.Cl. 347, 379 (1996), aff'd 168 F.3d 1322 (Table) (Fed.Cir.1998), cert. denied, 526 U.S. 1111, 119 S.Ct. 1754, 143 L.Ed.2d 787 (1999).

Second, the court notes that the information conveyed by boring logs is quite limited. Borings may properly be viewed as contract “indications relating] to the character and nature of each of the anticipated subsurface materials ... (i.e., sands, clays, fines, gravel, eutaw, etc.),” but may not reasonably be viewed as indications of “the specific quantity of each such material.” Weeks, 13 Cl.Ct. at 220.

As the court in Weeks explained: [A] reasonable and prudent contractor would conclude, based on the contract boring logs, that the government was positively representing the overall character of the type of materials to be expected and, within certain reasonable limits, where such materials would be found within the contract area ....

It is not at all clear from the contract documents how [a] plaintiff [could] vault[] from the clear and unambiguous language depicting only the character ... of each material in the several boring logs, to a claim that the government was simultaneously warranting the approximate, if not the precise, quantum of each category of subsurface materials by those same character descriptions____ [T]he only clear and unambiguous quantity estimate we find contained in the contract is the gross estimated total quantity of all subsurface materials to be excavated in the aggregate.

Moreover, what each boring log indicated ... as to the location of the various materials ... between the several logs and throughout the project area, is relatively even less precise. Id. at 220-21; accord Stuyvesant, 834 F.2d at 1581 (noting that “[government estimates are not warranties,” and finding that a contract “provision setfting] forth the ‘total estimated quantity of material necessary to be removed from the prescribed [area]’ ... do[es] not rise even to the level of [an] estimate[ ].”).

Thus, a contractor’s claim that subsurface conditions between borings differed in location and quantity from the contractor’s pre-bid extrapolations of subsurface conditions from the boring logs does not provide a reasonable basis for a Type I differing site conditions claim. Weeks, 13 Cl.Ct. at 221. Though derived from the boring logs, such extrapolations are not themselves affirmative indications of the subsurface conditions, but rather “hospitable assumptions, which, while necessary for the bid to proceed, are nonetheless entirely of the contractor’s own making.” Id.

Because boring extrapolations from Corps logs represent the contractor’s “perception of what the government was representing to be the materials throughout the entire project site,” id. at 222, rather than a contract representation, contractors may not rely on their own perceptions as a basis for a Type I differing site conditions claim, a contractor who does so assumes the risk of miscalculation and error. See id. at 219 (“[T]he assumption of a perceived fact which prove[s] erroneous ... is [unfortunately] a risk for which only the contractor must assume responsibility.”) Id. at 219.

In sum, “[a][g]overnment contractor, regardless of its size, locality, or experience, is [obligated] to understand the complexities and consequences of its undertaking,” Tony Downs Foods Co. v. United States, 209 Ct.Cl. 31, 530 F.2d 367, 374 (1976), and “to study all aspects, of the contract ... before submitting its bid,” Wickham Contracting, Inc. v. United States, 212 Ct.Cl. 318, 546 F.2d 395, 398 (1976); cf. Dale Ingram, Inc. v. United States, 201 Ct.Cl. 56, 475 F.2d 1177, 1184 (1973) (“[A] contractor who submits his bid without reading all of the specifications does so at his peril.”).

If, under the circumstances, a contractor’s bid “was beneath industry standards,” or the “Corps’[ ] own reasonable estimate,” a court may conclude that the “bid was unreasonably low and not that of a reasonably prudent contractor.” Hardwick, 36 Fed.Cl. at 379-80; see also id. at 380 (“[B]ased upon a detailed review of plaintiffs actions and assumptions regarding the Plans and the job site, which included its undue reliance upon the Corps’ borings, its failure to review the field books[,] ... its superficial and inadequate investigation of local conditions, its failure to anticipate ... the possibility of ... severe weather conditions at the site and, in general, its misconstruction of the Plans, the court concludes that under all circumstances here present, plaintiffs bid was below industry standards.”). c.

Contractor Must Reasonably Rely on Contract Indications of Subsurface Conditions “[A] crucial element of ... a differing site conditions claim ... is reliance. To prevail on a differing site conditions claim, the contractor must show reliance on the representations in the contract.” Comtrol, 294 F.3d at 1363-64 (citing H.B. Mac, 153 F.3d at 1345 (“[T]o establish entitlement to an equitable adjustment by reason of a Type I differing site condition: ... [t]he contractor ... must show that it reasonably relied upon its

interpretation of the contract and contract-related documents.”)(alterations in original)). Similarly, “where a contractor seeks an equitable adjustment based on a theory of defective specifications, there can be no recovery unless the contractor was actually misled by the erroneous statements m the specifications. There can be no recovery if there was no reliance.” Comtrol, 294 F.3d at 1363. In either case, a contractor must prove that, when “interpreting the bid data ... it [not only] examined the contract documents and reasonably interpreted them, but [also] ... that it relied on its

interpretation when calculating its bid.” Neal, 36 Fed Cl. at 617 (internal quotation and citation omitted). Further, the contractor’s reliance must be reasonable and undertaken in good faith. “A Type I differing site conditions claim is intended to compensate a contractor that, in good faith, relies upon the available information to its detriment.” Fru-Con, 43 Fed.Cl. at 321. Conversely, the contractor may not “rely on contract indications of the subsurface only [if] relatively simple inquiries might have revealed contrary conditions.” Foster, 435 F.2d at 888. d.

There Must Be a Material Difference Between Indicated and Encountered Conditions For a contractor’s Type I differing site conditions claim to succeed, the subsurface conditions actually encountered by the contractor at the contract site must have differed materially from the subsurface conditions indicated by the contract documents for the same site area. Youngdale, 27 Fed.Cl. at 535. Proof of a material difference requires “a comparison of the subsurface conditions, both estimated and actual, contained within the precise work site as defined in the parties’ contract.” Weeks, 13 Cl.Ct. at 228 (emphasis omitted).

What conditions actually were encountered by the contractor is a question of fact. See Arundel Corp. v. United States, 207 Ct.Cl. 84, 515 F.2d 1116, 1123 (1975). “Evidence as to a material difference most commonly illustrates that a larger amount of work than initially contemplated or that an alternative method of workmanship must be implemented in order to complete the contractual agreement.” McCormick, 18 Cl.Ct. at 263.

However, “[c]laims alleging differences in anticipated quantity of [subsurface] materials, rather than differences in the character and nature [of materials], do not constitute a typical differing site condition claim,” Spirit Leveling, 19 Cl.Ct. at 94; accord Appeal of Gulf Coast Trailing Co., 96-1 B.C.A. (CCH) 1128,217, 1996 WL 75769 (Eng’rs B.C.A. Feb 16, 1996) (“The contract contained a specific ... representation that debris was a principal material to be dredged, and Gulf Coast should have anticipated significant quantities of debris.

Nor did Gulf Coast establish that the quantity of debris it encountered was unusual or that the quantity dredged would not normally have been expected for this area.”). e. Actual Subsurface Conditions Must Be Reasonably Unforeseeable It is not enough that the contractor encountered subsurface conditions that differed materially from those represented in the contract documents — the actual subsurface conditions encountered must have been reasonably unforeseeable based upon all information available to the contractor at the time it prepared and submitted its bid.

Stuyvesant, 834 F.2d at 1581; United Contractors, 368 F.2d at 594. “In essence, the underlying issue in a Type I claim is whether the contractor could reasonably have anticipated the conditions encountered from a knowledgeable

interpretation of the contract documents, his inspection of the site, and his general experience of a contractor.” Erickson-Shaver Contracting Corp. v. United States, 9 Cl.Ct. 302, 304 (1985).

Where, as here, a contract contains the standard “Site Investigation and Conditions Affecting the Work” clause, FAR § 52.236-3 (Apr.1984), see JX 1 (Solicitation) at 95, which provides in relevant part that “[t]he Contractor acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its cost,” id., the contractor is “charged with knowledge of the conditions that a pre-bid site visit would have revealed,” H.B.

Mac, 153 F.3d at 1346; accord Ambrose-Augusterfer Corp. v. United States, 184 Ct.Cl. 18, 394 F.2d 536, 546 (1968) (“The settled rule in cases of this type is that a contractor is bound by what it would have discovered if it had adequately investigated the site.”); S.S. Mullen, Inc. v. United States, 182 Ct.Cl. 1, 389 F.2d 390, 393 (1968) (“[T]here was a standard ‘Site Investigation’ article. As the contractor, so far as appears, made no actual site investigation[,] ... it is bound by what it would have discovered if it had investigated.”).

However, “the duty to make an inspection of the site does not ... put[ ] the contractor at peril to discover hidden subsurface conditions or those beyond the limits of an inspection appropriate to the time available.” Foster, 435 F.2d at 888. f.

Contractor’s Claimed Excess Costs Must be Solely Attributable to the Materially Different Subsurface Condition Even if a contractor establishes the five elements discussed above, it cannot recover damages unless it proves by a preponderance of the evidence that its increased performance costs “were solely attributable to the materially different subsurface conditions.” Dawco, 18 Cl.Ct. at 688 (citing P.J.

Maffei, 732 F.2d at 916 (citations omitted)); see also Spirit Leveling, 19 Cl.Ct. at 94 (“[T]he contractor must demonstrate that the excess costs are attributed entirely to the materially different subsurface conditions.”). For example, “expenses which a contractor would have been required to expend anyway had no [differing site condition] occurred are not recoverable as part of an equitable adjustment.” Dale Ingram, 475 F.2d at 1185.

Further, “[concurrent causes of excess cost, such as costs resulting from the contractor’s own mistakes,” or the mistakes of others, “must be carefully distinguished by the court.” John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of Government Contracts 511 (3d ed.1995) (citing Weeks, 13 Cl.Ct. at 193). The court “must be careful to focus only on those damages directly attributable to the alleged differing site condition, and not on those damages for which concurrent causes, stemming from the plaintiffs own making, are equally to blame.” Weeks, 13 Cl.Ct. at 240.

Because the causation analysis pertains as much to a contractor’s liability as it does to damages, causation cannot be proven merely by pointing to testimony by a damages expert or to statements in that expert’s report. Rather, “[i]t is for the plaintiff to show, by probative evidence, which separate causes by the government result in which identifiable periods of delay, before it can be said that plaintiff has carried its burden with respect to causation.” Weeks, 13 Cl.Ct. at 240. Without such a showing, plaintiff cannot recover. III.

Background to the Claims The court presents the following facts to put into context the Upper Bayou Contract and the circumstances that preceded the award of the Contract to plaintiff. Additional facts specific to each claim will be introduced as necessary in the sections that follow. A. The Upper Bayou Contract The Upper Bayou Contract (Contract) was the second in a series of eight dredging contracts awarded by the United States Corps of Engineers, Galveston District (Corps, government, or defendant). See Tr. at 3092:18-20 (C.

Michael McClenan, Administrative Contracting Officer for the Upper Bayou Project); Defendant’s Exhibit (DX) 309 (map of the Channel identifying the reach of the channel to be dredged under each contract).

Referred to collectively as the “45-foot Project,” Tr. at 3087:5-7 (McClenan), three objectives of the contracts were (1) to “provide[ ] for cheaper transportation[,] ... allowing deeper dra[ught] vessels to use the channel” by widening the bottom of the Channel; (2) to “improve[ ] ... safety” by increasing the channel’s depth to - 45 feet Mean Low Tide (MLT); and (3) to “provide[ ] environmental enhancement.” Id. at 3087:15-19 (McClenan).

Consistent with these objectives, the Upper Bayou Contract involved dredging a reach of the Channel, placing the dredge spoils at the Lost Lake Placement Area disposal site (Lost Lake), and mechanically and hydraulically raising the levees containing the dredge spoils at Lost Lake to +30 feet MLT. See generally JX 2 (Specs.). On January 26, 1998, the Corps issued the pre-solicitation notice for the Upper Bayou Contract, see DX 19 (Connole Report) at 1207 (copy of pre-solicitation announcement posted on the Commerce Business Daily Online website, http://cbdnet.access.gpo.gov/).

The Corps issued the Solicitation for the Upper Bayou Contract on June 16, 1998. See JX 1 (Solicitation) at 1. On June 23,1998, the Corps’ design team hosted a pre-bid conference with prospective contractors to answer questions about the Contract plans and specifications. See JX 3 (Am. 1 to Solicitation) at 4. Following the conference, Amendment 1 to the Solicitation was issued on July 7, 1998. Id. at 1. Bids were due on July 17, 1998. See id at 2, U1.

The Contract required the contractor to complete performance “not later than 446 calendar days after the date of receipt by it of the Notice to Proceed.” Id. at 2, H l(b)(2)(amending JX 2 (Specs.) at 14, IT 1). 1. Dredging Specifications The Specifications required the contractor to dredge a 20,606.58-foot (approximately 3.9-mile) reach of the Channel between Station (Sta.) 470 + 00 and Sta. 684+ 06.58, increasing the width of the Channel bottom and deepening the Channel to -47 feet MLT. JX 2 (Specs.) at 107, 11 l.l.l.

When excavating in the Channel, the contractor was required “to provide ... final side and end slopes” in the Channel’s dredge template of three horizontal to one vertical (3H:1V). Id. at 118,11113.5.2, 3.5.4. Under the Contract, “[t]he total amount of material removed and to be paid for [was] measured by the cubic yard in-place.” Id. at 111, 111.13.1; cf. JX 1 (Solicitation) at 3 (Bidding Schedule, Item No. 0008) (providing that the contractor would be paid for dredging work by the cubic yard).

This measurement was determined by comparing the volume of material recorded in before-dredging (BD) surveys of a given dredging prism with the volume of material recorded in after-dredging (AD) surveys of the same prism. See JX 2 (Specs.) at 111, 111.13.1. For purposes of accepting and paying for dredging work under the Contract, the reach of the Channel subject to the Contract was divided into nine sections. See id. at 114-15, 113.3; JX 5 (Contract Drawings (Drawings)) at 2-3 (Dredging Plans).

In addition to authorizing payment for material dredged to the required depth of -47 feet MLT, the Contract stated that it took into account “inaccuracies of the dredging process” by paying the contractor the contractual unit price for one foot of “allowable overdepth,” defined as material excavated “below required depth.” JX 2 (Specs.) at 117-18, 11113.5.1, 3.5.4. However, “[m]aterial taken from beyond the limits” of the one-foot allowable overdepth would “be deducted from the total amount dredged as excessive overdepth dredging,” and would not be paid for. Id. at 118, U 3.5.3.

Similarly, the Specifications cautioned that no additional compensation would be paid for material dredged outside the required side and end slopes. Id.; see also id. at 118, 113.5.2 (“Material actually removed from within limits as approved, to provide for final side and end slopes ..., but not in excess of the amounts originally above these limiting side and end slopes will be estimated and paid for.”).

The Contract Drawings also contained a note stating that “[t]he Contractor shall be required to use caution when dredging the side slopes in the channel from Sta. 470 + 00 to Sta. 473 + 00, from Sta. 514 + 00 to Sta. 537 + 00, and from Sta. 610 + 00 to Sta. 625 + 00. See Specifications.” JX 5 (Drawings) at 2, n. 4. The referenced Specifications repeated this instruction and explained that [e]xcessive cutting outside the side slope lines and grades in these reaches of the Channel may cause damage to existing structures along the Channel.

If the Contracting Officer determines that excessive cutting of the side slopes in these reaches causes failure of existing structures, the Contractor shall be responsible for restoring the structures to their pre-dredging condition. Therefore, the Contractor may consider shaping the top of the cut in these reaches by using the dredge cutter head or mechanical equipment. JX 2 (Specs.) at 118, K 3.5.2. The Specifications provided some information concerning the soils and debris that might be encountered during dredging.

The “Character of Materials” clause stated that “[explorations, including core borings, to determine the character of materials to be removed have been made by the Government.” Id. at 110, 111.11. The results of the soil borings, which had been taken at various times between 1961 and 1997, were included with the Solicitation. See generally JX 5 (Drawings) at 19-22 (Logs of Channel Bor-ings); cf. id. at 23-27 (Logs of Lost Lake Borings).

However, the Contract Drawings contained a note advising the contractor that “dredging ha[d] occurred” after surveys of Lost Lake were taken in April and December of 1997, see id. at 14 n. 2; accord JX 98A (Fisher Dep.) at 226:14-17 (stating that the Channel was “maintenance [dredged by the Corps] ... every two years,”); Tr. at 846:11-14 (Bowman testifying that, at the time plaintiff prepared its bid, it understood that “all but ... about 1700 or 1800 feet of the 22[,000 to] 23,000 feet of [the Channel] had been maintenance dredged within the last 3 years.”), and the Specifications stated that “[t]he Contractor [was] ... expected to examine the site of the work and make its own determination as to the character of the materials to be dredged.” JX 2 (Specs.) at 110, 111.11.

The “Character of Materials” clause advised that “[o]ther materials such as scrap, rope, wire cable, snags, and stumps may be encountered within the specified limits of required dredging and overdepth dredging. No separa[t]e payment will be made for removal and placement of this debris.” Id. at 110, H 1.11.1.

The Specifications contained guidelines for locating and handling debris: Prior to dredging, the Contractor shall carefully inspect the entire area to be dredged, from estimated top of cut to top of cut, by whatever means the Contractor deems suitable to locate any debris which may interfere with dredging---- During the progress of the work, the Contractor shall not deposit worn out discharge pipe, wire rope, scrap metal, timbers, or other such rubbish or obstructive material in the Placement Areas, or along the banks of the navigable waters.

Such material, together with scrap, rope, wire cable, piles, pipe, or other obstructive material which may be encountered during the dredging operations, shall be placed by the Contractor at approved locations. Id. at 117,113.4.42. “The total estimated quantity of [non-debris] material ... to be removed from the required dredging prism, exclusive of allowable overdepth ... [was] 3,105,500 cubic yards [in-]place measurement.” Id. at 113, U 3.1.1. According to the Specifications, there was a total estimated pay quantity of 3,483,700 cubic yards of material to be dredged, including allowable overdepth.

Id. at 114-15, H 3.3. In addition, the Specifications provided that “Misplaced [e]xcavated Material,” defined as “[e]xcavated material that is deposited in places other than those designated or approved” would “not be paid for, and the Contractor may be required to remove such misplaced excavated material and deposit it where directed at [the] Contractor’s expense.” Id. at 116,113.4.4.I. 2. Levee Specifications The Contract specified that material dredged from the Channel was to be transported by pipeline and placed at Lost Lake, a 670-acre disposal site for dredged material.

See IX 2 (Specs.) at 61 (Attach.A), 111.1. Located at approximately Sta. 480 + 00, “[t]he [Lost Lake] Placement Area drains into the Upper Bayou of the Houston Ship Channel which flows into Galveston Bay.” Id. at 61, H 1.4. At the time the Contract was drafted, there was an existing containment levee around the approximately four-mile perimeter of Lost Lake. See JX 5 (Drawings) at 14.

The Contract required a new perimeter levee to be constructed inside the existing levee using both mechanical and hydraulic construction methods, see id. at 14, nn. 8-9, and directed that the new levee would “be raised to a minimum crest elevation of + 30 feet MLT, with crest width of at least 10 feet, and side slopes no steeper than lV[ertical]:3H[orizontal],” id. at 14, n. 7. A note on the Contract Drawings advised prospective bidders that “[t]he foundation of the [entire] levee is very soft to soft dredged material, and sand placed in past dredging maintenance cycles.

It is anticipated that very soft to soft foundation material will be displaced by the new levee material.” Id. at 14, n. 10; cf. id', at 23-27 (Logs of Lost Lake Borings); accord id. at 17 (Section and Plan at New Drop-Outlet Structure) n. 1 (“Construct levee

section to a minimum elev[ation] + 19 [feet] and place surcharge f[i]ll in order to displace the soft foundation.”). The relationship between the soft foundations and the design of the levees was apparently discussed several times during the pre-bid conference. See generally JX 3 (Am. 1 of Solicitation) (publishing “[questions by [prospective [b]idders and [a]nswers by the Galveston District Design Team” from the pre-bid conference).

For example, in response to the comment that “[e]xisting levees in hydraulic constructed levee reach should be raised pri- or to dredging in order to maintain the required 2 — ft[.] of freeboard,” id. at 6, the Corps responded: The designers believe a more flexible approach is possible, where the hydraulic dredging can occur to place .material to raise the levees while containing the produced fines inside the existing placement area. This will be the most efficient way to displace the soft levee foundation material beneath the new levee alignment. Id.

Similarly, in response to the question, “Why is the levee alignment so far from the perimeter where the foundation is crummy? It makes it harder to build on weaker ground. What’s the purpose of leaving a hundred feet ... on the outside where the base is the best?,” id. at 7, the Corps replied: The intent of the design is to use the new work material to enhance the long term stability of the levees. For this reason, the designers intend the new work material to be used to displace the very soft foundation material adjacent to the interior of the existing levees, and for the raised levee

section to be constructed on this material. Id. (footnote added). a. Mechanical Levee Construction The Specifications contained an “Order of Work” provision for “Retaining Levees,” see JX 2 (Specs.) at 100, H 1.4.3, providing that all mechanical levee construction was to be “fully complete ... prior to beginning work on placement of the Hydraulically Constructed Levees,” id. H 1.4.3(1).

This provision specified that the contractor was to construct a new drop-outlet structure at the northeast corner of Lost Lake, modify the existing drop-outlet structure at the northwest corner of Lost Lake, and mechanically construct the portions of the levee located on the south side of Lost Lake and near both Drop-Outlet structures prior to placing the hydraulically-constructed part of the new perimeter levee (hydraulic levee) on the west, east and north sides of Lost Lake. Id.; see also JX 5 (Drawings) at 14 nn. 8-9.

The 6,900 feet of mechanically-constructed levee (mechanical levee) were to be built using material “obtained from ... designated borrow areas” at Lost Lake. JX 2 (Specs.) at 102,113.1.1; see also JX 5 (Drawings) at 14 & n. 8 (showing two borrow areas on the south side of Lost Lake). This material was to “be excavated using draglines, backhoes, dozers, or other suitable equipment, [and] transported to the levee site.” JX 2 (Specs.) at 102, H 3.1.1.

The mechanical levees were to be raised by layering 18-inch thick “lifts” of material prior to compaction by a “crawler-type tractor,” id., except in areas having standing water or soft foundations, where “borrow materials [had to] be placed in a single lift (layer) as required to support hauling and compacting equipment,” id. at 102-OS, 113.1.1. When mechanically constructing the sections of levee located near the new Drop-Outlet structure, the contractor was instructed to “[Construct [the] levee

section to a minimum elev[ation of] +19 [feet] and place surcharge f[i]ll in order to displace the soft foundation.” JX 5 (Drawings) at 17 n. 1 (Section and Plan at New Drop-Outlet Structure). The Contract anticipated that 381,300 cubic yards of fill material would be required to raise the 6,900 feet of mechanical levee to + 30 feet MLT. See JX 1 at 3 (Bidding

Schedule Item No. 0002). The total cubic yardage of material used by the contractor to construct the mechanical levees would be calculated by comparing pre- and post-construction “cross sections taken at the borrow area[s]” from which the fill was excavated. JX 2 (Specs.) at 101, 111.5.1. The Corps would pay for mechanical levee construction by the cubic yard excavated, at the unit price per cubic yard bid by the contractor. Id. at 101, V 1.6.1. b.

Hydraulic Levee Construction After the mechanical levees were completed, levees on the west, east and north sides of Lost Lake were to be raised by hydraulically placing “medium to hard clays and sands, as described on the Logs of Borings, ... obtained from the required dredging.” Id. at 102, 112.2.1; see also id. at 103, H 3.1.4 (“Suitable materials obtained from the required dredging shall be used for placement of the Hydraulically Constructed Levees.”).

The Corps’ levee design team believed that dredging would yield “sufficient new work material ... to construct the levees hydraulically where indicated, even allowing for the soft foundations, without having to mine.” JX 3 (Am. 1 to Solicitation) at 5 (answering questions from the pre-bid conference).

Accordingly, the Contract provided that, “[i]f, upon completion of required dredging ... sufficient suitable materials [were] not available to complete the Hydraulically Constructed Levees to the lines and grades specified, the Contractor [would] be required to complete the [h]ydraulic[ ] ... [l]evees with suitable materials obtained from mining below the Channel template.” JX 2 (Specs.) at 103, 113.1.4.

According to the designers, “[a]n area for mining was established only in the event that the Contractor chose to place the material in such a way as to exhaust the available pay new work material before levee raising was complete.” JX 3 (Am. 1 to Solicitation) at 5. However, mining would “not be measured for payment.” JX 2 (Specs.) at 101, H 1.5.3. The Specifications set out a two-step process for constructing the hydraulic levees.

First, before raising any portion of the hydraulic levee to the required height of +30 feet MLT, the contractor was to “place [the][h]ydraulically [constructed [l]evees ... until the entire perimeter levee has been completed to Elevation +20 feet [MLT].” JX 2 at 100 (Specs.), It 1.4.3(2), as modified by JX 3 at 2 (Ami 1 to Solicitation), 11 (l)(b)(9). To raise the hydraulic levee to +20 feet MLT, “[t]he Contractor [was required] evenly [to] distribute sufficient hydraulic material at all locations along the levee so that the final new levee

section [could] be constructed to the minimum lines and grades.” JX 2 (Specs.) at 103,113.1.2. Second, after the entire hydraulic levee had been constructed to at least +20 feet MLT, the contractor was permitted to raise the levee to +30 feet MLT mechanically, by “excavat[ing] material from the adjacent existing levee” and using that material to shape the new levee to the lines and grades specified in the Contract. Id. at 103, IT 3.1.2; cf.

JX 3 (Am. 1 to Solicitation) at 2, H l(b)(10) (“The [e]ontractor shall not be permitted to grade the area outside the slope of the newly constructed levee until the entire perimeter levee has been completed to Elevation +20 feet MLT.”); JX 2 (Specs.) at 103, 113.1.5 (“Material shall not be removed from the existing levee until the new levee crest exceeds Elevation +20 feet Mean Low Tide around the entire Placement Area.”). “During the shaping process, the material shall be placed using the same lift thickness and compaction requirements as those required for the Mechanically Constructed Levees.” Id. at 103, H 3.1.2.

The hydraulic levee was to be measured and paid by the “linear foot of levee constructed to the minimum lines and grades shown” in the Drawings, based upon the unit price per linear foot bid by the contractor. JX 2 (Specs.) at 101, HH 1.5.2, 1.6.2; see also JX 1 at 3 (Bidding

Schedule Item No. 0006 (“Hydraulically Constructed Levees”)). The Solicitation included drawings of fourteen levee cross-sections, see generally JX 5 (Drawings) at 15-16. The Drawings each show a

section of levee with a minimum height of +30 feet MLT, a minimum crest of ten feet and a minimum slope to drain ratio of 3H:1Y. Id. 3.

FAR Clauses The Upper Bayou Contract contained a number of standard Federal Acquisition Regulation (FAR) clauses, see generally JX 1 at 5-131, including the “Disputes” clause, FAR 52.233-1 (Oct.1995), see id. at 91; the “Differing Site Conditions” clause, FAR § 52.236-2 (Apr.1984), see id. at 94; the “Site Investigation and Conditions Affecting the Work” clause, FAR § 52.236-3 (Apr.1984), see id. at 95; the “Suspension of Work” clause, FAR § 52.242-14 (Apr.1984), see id. at 104; and the “Changes” clause, FAR § 52.243-^4 (Aug.1987), see id. at 104^05.

The Contract also contained several “Special Clauses,” see generally JX 2 (Specs.) at 3-12, including an “omissions and misdescrip-tions clause,” see FAR 252.236-7001(d), which stated: Omissions from the drawings or specifications or the misdescription of details of work which are manifestly necessary to carry out the intent of the drawings and specifications, or which are customarily performed, shall not relieve the Contractor from performing such omitted or misdes-cribed details of work, but shall be performed as if fully and correctly set forth and described in the drawings and specifications.

JX 2 (Specs) at 4,111(d). Also among the “Special Clauses” in the Contract was a “Physical Data” clause, see FAR § 52.236-4 (Apr.1984), which provided that [d]ata and information furnished or referred to [in the Specifications] is for the Contractor’s information. The Government shall not be responsible for the

interpretation of or conclusion drawn from the data or information by the Contractor. (

a) The indications of physical conditions on the drawings and in the specifications are the result of site investigations by surveys and subsurface bor-ings. JX 2 (Specs.) at 6,112. B. The Award of the Upper Bayou Contract 1. Renda Marine, Inc. Plaintiff Renda Marine, Inc. is a marine dredging contractor. Compl. at 2, 111.

Re-ted to grade the area outside the slope of the newly constructed levee until the entire perimeter levee has been completed to Elevation +20 feet MLT.” JX 3 at 2, H l(b)(10). ferred to as the “marine division” of Oscar Renda Contracting, Inc. (ORCI), see, e.g., JX 100A (Dep. of Burson Warren, Equipment Manager for RMI, in Renda Marine Inc. v. Dredging Supply Company, No. H-00-1721 (S.D.Tex.) (RMI v.

DSC)) (Warren DSC Dep.), at 17:14-15; Renda was formed in May 1998, see Tr. at 1479:5-7 (Bowman), after ORCI successfully completed a construction contract for the ‘White Rock Lake” project, see, e.g., JX 98A (Fisher Dep.) at 55:1-5, which involved “dredg[ing] sediment that had accumulated in a lake ... in the middle of Dallas, and pumping the material by slurry to a placement area quite some distance away,” id. at 55:2-5. Prior to the White Rock Lake project, ORCI never had owned or operated a hydraulic cutterhead suction dredge, which was the type of equipment required to perform the White Rock Lake contract.

See JX 97A (Warren DSC Dep.) at 13:9-14:1. Accordingly, ORCI subcontracted the hydraulic cutter-head dredging work to Soli-Flo, a subsidiary of the Fluor Daniel construction company. See JX 98A (Fisher Dep.) at 50:25-51:27. During the performance of the White Rock lake contract, ORCI “purchased the assets and contract obligations of Soli-Flo,” id. at 57:2-3, and “completed the project using the Dredge White Rock,” id. at 57:20-21. After ORCI purchased the assets of Soli-Flo, Mr.

Fisher, who had been Soli-Flo’s “project manager for the White Rock Lake project,” id at 51:20-21, assumed the role of project manager for ORCI’s dredging operations, “supervising all of the production of the dredge and most of the work with the slurry transport system.” Id. at 57:24-58:10. In the spring of 1998, see id. at 58:12-17, Mr. Fisher entered into discussions with Rudy J. Renda and Steven Bowman “about plans for the Dredge White Rock and related equipment following completion of the White Rock Lake project.” JX 98A (Fisher Dep.) at 63:7-10. During these discussions Messrs.

Renda, Bowman and Fisher decided “to form a marine group and bid and acquire[ ] several jobs in the South Texas area.” Tr. at 326:22-25 (Bowman). Messrs. Fisher, Bowman and Rudy J. Ren-da served as vice presidents for Renda Marine from its inception, and each was responsible for a different aspect of the business. Eddie Fisher “ran the marine division.” Id. at 16:8-9. Steve Bowman assumed responsibility for the daily administration of Renda’s marine contracts the day after Mr. Fisher resigned in July 2000.

See Tr. at 1483:19-25 (Bowman). “Eddie Fisher resigned from Renda Marine, Inc. on July 30, 2000.” Tr. at 1483:19-21 (Bowman). During his deposition, Mr. Fisher acknowledged that he had “ ‘resigned [his] position ... as vice president of Renda Marine, Inc., due to differences in management philosophies with the owners and directors of the company.’” JX 98A (Fisher Dep.) at 347:25-348:3 (Fisher acknowledging statement of defendant’s counsel) (quoting an email from Fisher to defendant’s contracting officer). When asked to explain these “differences,” Mr.

Fisher testified: The differences that I had that led me to resign were we had to choose when we were with Renda Marine of going down two directions. The Corps was not welcoming us at all to the district and were fighting us tooth and nail on being able to settle even the littlest of claims, and we had to choose whether we were going to try to go attack — building alliances with other dredging contractors within the district that were already accepted by the Corps, or whether we were going to continue ... fighting with claims and battles.

I was pushing more of a position that we needed to build some alliances with other firms and try to get on the good side of the Corps because we weren’t getting anywhere with the claims. They were fighting us tooth and nail. And I thought we were at a crossroads in the Upper Bayou Project, and it was kind of a point of no return where we would be doing claims forever. Id. at 348:18-349:11. When confronted with his deposition from the RMI v. DSC litigation, Mr.

Fisher admitted that several disagreements with plaintiffs management concerned plaintiffs claims under the Upper Bayou Contract: Q: I’m reading from your deposition in the litigation between Renda Marine and Dredging Supply Company ---- Question: “Why did you leave Renda Marine?” Answer: “I had some philosophical differences with management.” Question: “And what was that?” Answer: “It was really two areas. One of the areas is that I disagreed with how some of the issues with the Corps and the claims were being pursued.

And another area was just management style and practice.” Question: “____What was the problem with the claims with the Corps?” Answer: “We had a large claim with the Bolivar Marsh job, which was, in my opinion, a very soundly based claim, and I proceeded with that and brought in consultants and we settled that — that issue. But I had disagreements primarily with Oscar Renda about some of the claims for the Upper Bayou Project.” Question: “And what were those?” Answer: “They had to do with the type of material that was being pumped to the hydraulic levees.

Really a lot of issues, a lot of different issues.” Question: “I’m afraid we’re going to have to get into them. Can you be a little more specific?” Answer: “It was — on the Upper Bayou Project, Oscar had wanted to file requests for equitable adjustments on some areas that I believed were contractual responsibilities, such as — ” Question: “Under the primary contract?” Answer: “Under the primary contract.

And they had to do with ... [t]he type of material that was available for building the levees, the amount of trash and debris that was in the cut were two of the specific items, and there were also issues at the mouth of the Colorado.” Q: Do you recall being asked those questions and giving those responses at your deposition in the Dredging Supply Litigation? A: Yes. Mr. Erikson: Would you like to review your deposition? A: No. Id. at 350:24-352:24. Defendant’s counsel pressed Mr. Fisher for the details of his disagreements with plaintiffs management concerning the Upper Bayou Contract. Mr.

Fisher testified that he could not remember the basis for the dispute concerning the hydraulically-placed levees, id. at 353:6-7, but did recall other specific disputes: I remember that one of the disagreements that I did have with Oscar [Renda] was about some of the trash, especially by the ferry landing, that I thought that that was minor and that we should probably try to negotiate our way out of that one. And he wanted to include everything in it, and I wasn’t in complete agreement with that. Id. at 853:11-17. When asked to clarify the phrase, “include everything in it,” id. at 353:18-19, Mr.

Fisher continued: Again, it was ... a philosophical difference. [Oscar Renda] perceived that the Corps was not going to be negotiable on any of these items and that we just needed to start building to include them in a claim, and I felt that we needed to work harder to try to get the Corps to make adjustments in change orders. Id. at 353:20-354:1. According to Mr.

Fisher, when Renda was formed in May 1998, the three vice presidents pursued a two-pronged “business plan” for the new company: First, Renda would continue to profit from its existing dredge, the White Rock, by bidding on “[s]pecial-tyHtype contracts ... similar to ... the White Rock Lake project ... where a portable dredge [like the White Rock] would be needed,” id. at 68:15-18, as well as smaller “maintenance dredging contracts along the intercoastal waterway,” id. at 69:2-3.

The second prong of Renda’s business plan was to break into the lucrative maintenance dredging market because “[m]ost of the dredging [work] ... that’s [sponsored] ... private[ly] and by the Corps of Engineers is maintenance dredging----So it would naturally fall that most of the [available contract] work would be maintenance work.” JX 98B (Fisher Dep.) at 69:14-18. For years, Mr.

Fisher had “watched all of the bids that came out of the Corps districts, especially Galveston, New Orleans, and Fort Worth,” and he was aware that the Corps soon would be soliciting bids for the dredging contracts under the 45-Foot Project, including the Upper Bayou Contract. See JX 98A (Fisher Dep.) at 70:7-13. Mr.

Fisher testified that, in his view, the 45-Foot Project offered a unique business opportunity for the new dredging concern: What I had discussed with Steve Bowman and Rudy [Renda] was that I thought, with the widening and deepening of the Houston Ship Channel, that there would be a market for a dredge with a ladder pump to do maintenance dredging once Houston got to be 45 feet____And when it got deep into 45 feet, some of the conventional dredges would have a hard time providing the maintenance work at that depth.

DX 19 (Connole Rep.) at 1208 (2/1/2001 Fisher Dep. at 12:20-13:4); see also JX 98A (Fisher Dep.) at 356:23-357:7 (statement of defendant’s counsel quoting same); id. at 358:1 (Fisher acknowledging the above-quoted testimony). Mr. Fisher offered recommendations concerning the size and components required of an additional dredge for the performance of deep maintenance work, and became the dredge supplier’s contact at Renda Marine ... [to whom DSC] went to to answer all ... questions.” See JX 103A (Wetta Dep.) at 29:19-23. Mr.

Fisher testified that, although one of plaintiffs early goals was provide maintenance dredging services to the Corps after the Channel was dredged to a depth of 45 feet, plaintiff did not plan to bid on the new work dredging contracts that would soon be solicited pursuant to the 45-Foot Project: “I recognized [at the time] that [the Upper Bayou Project] was a very ... difficult project^] ... [I]t wasn’t something that I had originally had in the business plan in my mind for us to do.” DX 19 (Connole Rep.) at 1233 (2/1/2001 Fisher Dep. at 18:7-9).

At some point, however, plaintiff modified both its business plan and the design for its new dredge, and decided to bid on the Upper Bayou Contract. 2. Plaintiffs Pre-Bid Site Investigation The Upper Ba

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