TECOM, INC, Plaintiff, v. The UNITED STATES, Defendant,, 66 Fed. Cl. 736

OPINION AND ORDER WOLSKI, Judge. This case concerns the respective responsibilities of a government contractor and the United States Department of the Air Force (“Air Force”) under a contract to service and maintain vehicles at an Air Force Base (AFB) complex.

The contractor, suing on behalf of a former subcontractor, argues that the Air Force breached a term of the contract requiring additional compensation for performing work deferred by the out-going contractor; that the extent of this deferred work constitutes a constructive change to the contract; that the Air Force breached implied duties to cooperate and not to hinder performance; and that the subcontractor was wrongfully terminated by the Air Force. The contractor has moved for partial

summary judgment on its three breach claims, and the Air Force has cross-moved for

summary judgment on all claims. For the reasons that follow, the Court grants

summary judgment in favor of the contractor on the Air Force’s liability for breach of contract, grants

summary judgment in favor of the Air Force on the wrongful termination claim, and denies the motions in all other respects. I. BACKGROUND A. Tecom’s Contract with the Air Force On October 21, 1996, plaintiff Tecom, Inc. was awarded contract number F05604-97-C-9001 (“the Contract”), to provide, among other things, vehicle maintenance services at Peterson AFB, Colorado, and satellite sites. Pl.’s Resp. Def.’s Proposed Findings H1; Contract, Pl.’s Ex. 1 at 2, 111.

Under the Contract, the out-going contractor, LB & B Associates, Inc. (“LB & B”), was to perform the maintenance duties during the phase-in month of November, 1996, as Tecom and its staff became familiar with these tasks. Contract, Pl.’s Ex. 1 at 2, 111; id. at 44-45. Tecom took over the maintenance responsibilities on December 1, 1996, for a term that would run through September 30, 1997, and could be renewed, at the Air Force’s option, for five additional one-year terms. See Contract,

Section F, Pl.’s Ex. 1 at 19. The vehicle maintenance portion of the Contract is at issue in this case. Under this “firm fixed price” contract, Tecom was to receive $76,282 per month during an initial, ten-month term, for maintaining a base fleet of 563 vehicles. Contract, PL’s Ex. 1 at 3, H 7AA; Technical Ex. (“TE”) 5e to Performance Work Statement (“PWS”), PL’s Ex. 5 at 155-95; Def.’s Resp. PL’s Proposed Findings H18.

Because the bulk of this fleet consisted of vehicles that are more complex to maintain than the typical car — such as dump trucks, ambulances, fire trucks, snow plows, pick-ups, vans, and the like — the measure of “vehicle equivalents” was employed to more accurately express the work burden. See PWS

Section C-2, H 2.2.54, PL’s Ex. 5 at 20. The base fleet totaled 1414 vehicle equivalents. TE 2b-l to PWS, PL’s Ex. 5 at 80-82; TE 5e to PWS, PL’s Ex. 5 at 195. The contractor was tasked to “provide maintenance capability sufficient to ensure” that two separate standards were met. PWS H 5, PL’s Ex. 5 at 28. For each category of vehicle, the percentage of vehicles that were out-of-commission at any one time could not exceed the vehicle out-of-commission (“VOC”) rate established for that category. See id.; PWS 115.2.2.1, PL’s Ex. 5 at 37; TE 1-7-TE 1-10 to PWS, PL’s Ex. 5 at 71-74.

For each type of vehicle, a certain number had to be in working order at all times, meeting the Minimum Essential Levels (“MELs”). PWS If 5, PL’s Ex. 5 at 28; PWS If 5.2.2.1, id. at 37; TE 9 to PWS, id. at 216-25. The Contract specified that “[t]he contractor shall work other than normal duty hours or be required to rent/lease vehicles at no additional cost to the Government to ensure VOC rates and MELs are met.” PWS 115, PL’s Ex. 5 at 28.

The contractor was required to “provide vehicle maintenance on a 24 hour basis when required to maintain no more than 10 percent of the total fleet vehicle out of commission (VOC) rates, and meet the MEL.” PWS If 5.2.1, PL’s Ex. 5 at 36. This lawsuit revolves primarily around a few provisions of the Contract.

The most important paragraph was the following, from the Transportation PWS: Delayed/Deferred Maintenance at Start of Contract: On the contract start date, the required maintenance actions will not exceed 25 labor hours per 100 vehicle equivalents and there will not be any overdue scheduled/preventive maintenance and special inspections/test. If either of these standards are exceeded, the incoming contractor shall reduce this backlog and will be compensated for this initial reduction IAW the over and above hourly rate and material costs as verified by invoices input into the OLVIMS.

The contractor shall have thirty (30) days to meet the performance requirements for these services. This compensation does not apply to the incumbent contractor. PWS 115.5.1, Pl.’s Ex. 5at43. The “OLVIMS” referenced by this provision was the Air Force’s On-line Vehicle Interactive Management System, a computer system used by the base to keep records, files, and reports on vehicle operations and maintenance. PWS 112.2.28, Pl.’s Ex. 5 at 18.

The Contract specified that the contractor “shall utilize the most up-to-date version of [OLVIMS] to collect, accumulate, and maintain monthly maintenance data ... [,] shall use and accurately maintain OLVIMS man-hour accounting system,” and “shall verify the accuracy of data input and make corrections and install new program updates prior to any product distribution.” PWS 115.2.3.1, Pl.’s Ex. 5 at 40. It also specified that the “contractor shall document all repair actions required on a work order,” PWS H5.2.2.5, Pl.’s Ex. 5 at 38, and this was among the information required to be entered into OL-VIMS.

Def.’s Resp. Pl.’s Proposed Findings fII12,14-15. The parties are in agreement that, given the total vehicle equivalents for the base fleet, “25 labor hours per 100 vehicle equivalents” translates into 355 labor hours. See Def.’s Resp. Pl.’s Proposed Findings H17. Thus, Tecom was to be specially compensated if more than 355 labor hours were needed to “reduce th[e] backlog” of “required maintenance actions” as of the Contract start date. This required maintenance is called “Delayed/Deferred Maintenance” in the subject line of the provision.

The Contract in turn defines “Delayed/Deferred Maintenance” as “[m]aintenance that can be delayed/deferred without damage to vehicle/equipment or compromise of safety standards or prevents the vehicle/equipment from being used for its designed function.” PWS H 2.2.15, Pl.’s Ex. 5 at 17. The parties focus on one additional provision in the Contract, detailing action that was to be taken by Tecom, LB & B, and the Air Force’s Functional Area Chief (“FAC”). See PWS If 2.1.13, PL’s Ex. 5 at 14 (defining FAC).

This provision, entitled “Vehicle Assessment,” stated: “At contract termination, the incumbent contractor, incoming contractor, and FAC shall jointly assess all vehicles to be transferred to the new contract or Government for quantity, condition, and maintenance status.” PWS H 5.5.2, PL’s Ex. 5 at 43. B. Tecom’s Amended Complaint Tecom filed a First Amended Complaint (“Complaint”) on January 30, 2003.

According to the allegations in the Complaint, the Air Force breached its obligations under the Contract in a variety of ways: by turning over to Tecom Government-Furnished Property (“GFP”) — namely, the fleet of vehicles— that was not in the condition the Contract warranted; by not compensating Tecom for the extra work and expenses required to restore the fleet to the proper condition; by preventing Tecom from discerning and recording the extent to which the fleet was sub-standard and required maintenance; and by retaliating against Teeom’s subcontractor in response to the latter’s efforts to secure reimbursement for the extra work needed to restore the fleet to its proper condition.

Tecom’s subcontractor for the vehicle operations and maintenance services portion of the Contract was the Baltimore, Maryland-based company Fleetpro, Inc. According to the Complaint, during the phase-in month of November, 1996, Fleetpro attempted to determine the condition of the Peterson AFB fleet. Fleetpro started with a random inspection of six vehicles, which revealed “numerous safety defects and maintenance defects that would lead to further damage ... indicating] substantial non-compliance with Air Force standards and requirements.” Complaint 1111.

These results were presented to the Air Force, which called together a “technical team” that was “directed ... along with incumbent personnel and Tecom/Fleet-pro” to jointly inspect the vehicle fleet. Id. The inspection of an additional 65 vehicles confirmed the existence of a large number of safety and other deficiencies requiring maintenance, deficiencies that were not reflected in the Air Force’s records at that time. Id. 1112. These 71 vehicles were jointly re-inspected at the request of executives from incumbent contractor LB & B, and their poor condition was confirmed.

Additional vehicles were inspected with similar results, and all told 213 of the fleet’s 563 vehicles were inspected. Id. H13. Based on these November inspections, it was estimated that some 65% of the vehicle fleet should have been “immediately ordered out of service due to safety defects alone.” The Air Force instead ordered the inspections to cease. Id.

Fleetpro determined that “more than 3,700 hours of maintenance were required” for just the sample of vehicles inspected, and that extrapolated over the entire fleet, “between 7,500 and 10,000 hours of maintenance” were required for the fleet to meet “the Air Force’s minimum serviceability standards.” Complaint If 16. The Air Force recognized the poor condition of the fleet upon contract turn-over, and waived some of the Contract requirements while Fleetpro worked to restore the fleet to the proper condition. Id. If 19.

The Air Force directed Tecom and Fleetpro to repair safety defects, but to release into service vehicles requiring the repair of non-safety defects. Id. 1120. After Tecom reported in mid-December, 1996, that more than six months and $676,000 would be needed to bring the fleet’s condition up to the minimum required standards, the Air Force issued a change order funding $52,414 worth of extra work to be performed over a two-week period. Id. 1122. This appeared to be the balance of discretionary funds available to the Air Force for such purposes. Id.

Fleetpro entered data on the 213 inspected vehicles into the OLVIMS database, recording the various maintenance defects identified. These required repairs were given an “L code” in the system “to indicate maintenance delayed due to lack of funds.” Complaint 1123. As additional defects in the fleet were discovered, this information was added to OLVIMS. In January, 1997, the Air Force directed Tecom and Fleetpro to delete from OLVIMS all of the required repairs that had been given the L code designation.

Fleetpro initially resisted this order as being contrary to Air Force regulations, specifically mandated by the Contract, concerning the maintenance of accurate property records. In response, the Contracting Officer apparently told Tecom that if Fleetpro did not cease complaining about the condition of the vehicle fleet, the Air Force would “write [Contract Discrepancy Reports] to kill Fleet-pro.” Id. H25. Fleetpro was also ordered not to comply with the Contract requirement that monthly OLVIMS reports be produced.

The OLVIMS data purge removed from the records the results of the vehicle inspections that had already been performed, necessitating that these vehicles be inspected again when brought into the shop on the regular schedule. Deficiencies that had already been identified worsened and caused additional damage to the vehicles in the interim. Complaint H 27. In January, 1997, Fleetpro developed its own computer program to keep track of the vehicle maintenance required and performed under the Contract.

After initially being authorized to implement the program, Fleet-pro was directed by the Air Force to shut it down in April, 1997, eliminating another source of data concerning the condition of the fleet and the costs expended to restore the fleet to the required standards. Complaint 1128. Fleetpro contends that the Air Force unjustly issued Contract Discrepancy Reports (“CDRs”) despite the Air Force’s waiver of certain Contract requirements due to the inherited condition of the vehicle fleet. Complaint 1129.

These CDRs were based on the alleged over-inspection of Fleetpro’s work by Quality Assurance Evaluators (“QAEs”) and were purportedly for the improper purposes of “threatenpng], intimidatfing], and caus[ing] financial harm” to Fleetpro. Id. Although Fleetpro was able to bring the previously sub-standard fleet up to “required standards of safety and serviceability by the end of May 1997,” the Air Force allegedly pressured Tecom to terminate the subcontractor. Id. H 30.

In addition to threats to terminate Tecom for default based on Fleet-pro’s performance, Tecom contends that the Air Force directed it “to cancel the subcontract with Fleetpro.” Id. Hlf 32-33. On June 2, 1997, Tecom terminated the subcontract with Fleetpro. Id. 117. Tecom brought five separate causes of action against the Air Force. The first claim is for an equitable adjustment, on the grounds that the poor condition of the vehicle fleet, and delay disruption caused by the Air Force, resulted in constructive changes to the Contract.

Tecom argues that additional work and costs were entailed in performing what amounted to a complete restoration of the fleet to meet the proper standards, which differs greatly from what would have been needed to perform normal maintenance of the fleet. See Complaint 111134-37. The second claim is for breach of contract, based on allegations that the Air Force did not pay additional compensation for an excess backlog of required maintenance, turned over a fleet of vehicles that failed to meet the Contract requirements, and contributed to vehicle abuse during the Contract’s term. See id. 111138-39.

The third claim is for breach of an implied duty of cooperation, on the basis that the Air Force ordered that vehicle inspections cease, that repairs be delayed, and that vehicle maintenance and defects information be deleted from computer databases; and that the Air Force improperly manipulated the CDR process. See id. 111140-42. The fourth claim is for breach of an implied duty not to hinder or interfere with contract performance.

This claim rests on, among other things, the allegations that the Air Force over-inspected Fleetpro’s work, “prohibit[ed] Fleetpro from obtaining customer feedback on services rendered,” and directed Fleetpro to stop keeping records that would demonstrate the amount of work required to restore the fleet to the proper condition. See id. HIT 43 — 45. The fifth cause of action is for wrongful termination for default, alleging that the Air Force improperly pressured Te-com to terminate Fleetpro. Id. 111146-47. C. The Motions for

Summary Judgment Tecom has moved for partial

summary judgment, on its second, third, and fourth causes of action. It argues that the Air Force breached paragraph 5.5.1 of the Transportation PWS, in failing to compensate it, at the over and above hourly rate plus payment for material costs, for reducing the excess maintenance backlog inherited at the Contract turn-over. It also argues that the various actions of the Air Force breached an implied duty to cooperate and an implied duty not to hinder performance.

Tecom further seeks a determination that an audit of its damages calculations performed by the Defense Contract Audit Agency precludes any dispute as to the facts supporting these damages. The Air Force has cross-moved, seeking the grant of

summary judgment on all five of Tecom’s causes of action. It argues that there was no excess backlog of maintenance work to be specially compensated under the Contract; that it fulfilled all duties, implied or express, that it owed Tecom; that Tecom and Fleetpro performed no work beyond what the Contract required; and that it was not responsible for the termination of Fleet-pro. II. DISCUSSION A. Applicable Legal Standards

Summary judgment is appropriate only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Rule 56(

c) of the Rules of the United States Court of Federal Claims (“RCFC”); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Sweats Fashions, Inc. v. Pannill Knitting Co., 833 F.2d 1560, 1562-63 (Fed.Cir.1987). Although the Court is considering motions for

summary judgment from both parties, it does not follow that one or the other must prevail at this stage of the litigation. The Federal Circuit has explained: The fact that both parties have moved for

summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other;

summary judgment in favor of either party is not proper if disputes remain as to material facts. Rather, the court must evaluate each party’s motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration. Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987) (citations omitted). Material facts are those “that might affect the outcome of the suit under the governing law.” Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505.

A dispute over facts is genuine “if the evidence is such that a reasonable [factfinder] could return a verdict for the nonmoving party.” Id. To demonstrate a genuine dispute over a material fact, the nonmoving party need not “produce evidence in a form that would be admissible at trial.” Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. The moving party, however, must file with the Court the documentary evidence, such as exhibits, that support its assertions that material facts are beyond genuine dispute, see RCFC 56(h), unless it is basing its motion for

summary judgment on the “absence of evidence to support the nonmoving party’s case.” Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548; see also Anchor Savings Bank, FSB v. United States, 59 Fed.Cl. 126, 140 (2003). Contract

interpretation is a question of law. Calif. Fed. Bank v. United States, 245 F.3d 1342, 1346 (Fed.Cir.2001); Fortec Constructors v. United States, 760 F.2d 1288, 1291 (Fed.Cir.1985); C. Sanchez and Son, Inc. v. United States, 6 F.3d 1539, 1544 (Fed.Cir.1993); Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1292 (Fed.Cir. 2002). Therefore, it is a proper subject for a motion for

summary judgment. A contract’s terms may, however, be ambiguous, necessitating a review of extrinsic evidence to determine the parties’ intent. Under such circumstances, if material facts are genuinely in dispute,

summary judgment may not be granted. See Beta Systems Inc. v. United States, 838 F.2d 1179, 1183 (Fed.Cir.1988) (reversing a grant of

summary judgment in view of extrinsic evidence of intent, which raised a question of material fact regarding contract

interpretation); Fort Vancouver Plywood Co. v. United States, 860 F.2d 409, 414 (Fed.Cir.1988) (“there may be fact questions to resolve in instances of ambiguous contracts”); McGrew Bros. Sawmill, Inc. v. United States, 224 Ct.Cl. 740, 743, 1980 WL 13236 (1980) (trial required because “the parties dispute most of the extrinsic facts”); 2 E. Allen Farnsworth, Farnsworth on Contracts § 7.12, at 307 n. 5 (3d ed.2004). B. Key Facts That Are Not in Dispute A review of the parties’ submissions reveals that there are numerous material facts that are not genuinely disputed.

This is somewhat obscured by the parties’ disagreements over whether the inspections of the fleet performed jointly by Fleetpro, LB & B, and the Air Force qualify as the joint “assessment” required by each contract, and whether the needed repairs identified by these inspections could be considered part of the “required” maintenance “backlog” that is specially compensable under the Contract. But these inspections did occur and did reveal that a large portion of the fleet required maintenance as of the December 1, 1996 turn-over of responsibilities to Tecom and Fleetpro. See Def.’s Resp.

Pl.’s Proposed Findings H1i 41, 46-47, 49-53, 62, 63, 65. During the transition month, on or about November 11, 1996, Fleetpro inspected six vehicles from the fleet. Pl.’s Ex. 10 at 11 (Def.’s Resp. to Req. Adm. H11). From November 13 to 16, an additional 65 vehicles were randomly inspected. These inspections were performed jointly by personnel from Fleetpro, LB & B, and the Air Force. Pl.’s Ex. 10 at 18 (Def.’s Resp. to Req. Adm. K18). These inspections also revealed a large number of repairs that were needed, including repairs of safety defects.

Major Mark Karzon, the Air Force’s Functional Area Chief (“FAC”) responsible for maintenance at the AFB complex, approved Fleet-pro’s request that work orders be entered into OLVIMS to reflect the discrepancies identified in these inspections. See Pl.’s Ex. 14 (Minutes of November 29, 1996 meeting taken by Contracting Officer Paul E. Banis Jr.). The outgoing contractor, LB & B, asked that the 71 vehicles be reinspected in the presence of officials from the company, and the poor condition of this sample of the fleet was confirmed. Id.

The Contracting Officer for the Air Force noted that “[i]t was determined that a good portion of the vehicles inspected had recently been in the shop for maintenance and returned to service with severe safety violations.” Id. The general manager of LB & B agreed with the results of these inspections, admitting that a number of needed repairs and severe safety defects were uncovered. Id.; see also Pl.’s Ex. 9 (Banis depo. tr. pp. 58-59); Def.’s Resp. Pl.’s Proposed Findings 1150. Joint inspections continued, until 236 vehicles had been inspected through November 26, 1996. See Pl.’s Ex. 19; Def.’s Resp.

PL’s Proposed Findings H 86. A brief explanation of the identities and roles of some of the Air Force employees involved in this case would aid the appreciation of some of the undisputed facts. Major Karzon was the FAC. Def.’s Resp. PL’s Proposed Findings U 32. Under the Contract, this position is described as the head “of any functional area where contract services manpower is used for some or all of the workload” and as “the government person with overall responsibility for providing the services.” PWS H 2.1.13, PL’s Ex. 5 at 14.

As noted above, the FAC was designated in the Contract as the Air Force employee responsible for participating in the joint “vehicle assessment” at the termination of LB & B’s contract. See PWS H 5.5.2, PL’s Ex. 5 at 43; PL’s Ex. 12 at 45 (LB & B Contract PWS H 5.5.2). The Contracting Officer for the Contract, Mr. Larry Ozburn, took leave of this position to work on the bid protest challenge to the award, and from roughly October 23, 1996 through December 24, 1996, these responsibilities were assumed by the Contracting Officer for the expiring LB & B contract, Master Sergeant Banis. See Def.’s Resp.

PL’s Proposed Findings 111178, 82-83; PL’s Ex. 6 (Ozburn depo. tr. p. 63). Ms. Bonnie Pavlik headed the Air Force unit administering the Contract. PL’s Ex. 6 (Oz-burn depo. tr. p. 25). Memoranda issued by Karzon and Pavlik demonstrate that at the time the inspections were being performed, the responsible Air Force personnel believed that the November inspections constituted the “assessment” required by the LB & B contract, and that the needed repairs revealed by these inspections were part of the “backlog” that is specially compensable. PL’s Exs. 15-18.

Major Kar-zon’s November 19, 1996 memorandum to his unit, with the subject “Delayed/Deferred Maintenance on Contract Start Date,” referenced the joint assessment responsibility, the 25 labor hours per 100 vehicle equivalents limit on “required maintenance actions,” and the responsibility to document repair actions on work orders and input them into OL-VIMS. Pl.’s Ex. 15. The memorandum also requested that “the incumbent contract [sic] be advised of his responsibilities.” Id. A “fax message” bearing that same date, addressed to LB & B, was signed by Pavlik, the head of the unit. Pl.’s Ex. 16.

This message quoted from the LB & B contract provisions requiring the joint assessment, mandating documentation of required repairs on work orders, and requiring that maintenance data be input into OLVIMS. Id. The final sentence read, “You are to comply with the terms and conditions of the contract.” Id. A November 22, 1996 memorandum from Major Karzon to his unit bore the subject “Contractor Non-performance, LB & B Associates.” Pl.’s Ex. 17. It began by referencing the LB & B Contract: “LAW PWS 5.5.2, the government preliminary assessment of 150 vehicles shows three significant findings.” Id.

Paragraph 5.5.2 of the PWS to LB & B’s contract, it bears repeating, was the “vehicle assessment” provision that stated, “[a]t contract termination, the incumbent contractor, incoming contractor, and FAC shall jointly assess all vehicles to be transferred to the new contract or Government for quantity, condition, and maintenance status.” Pl.’s Ex. 11 at G108970. The first “significant findin[g]” was that “the quality of maintenance is deficient by T.O. 36-1-23 standards,” due to “the significant amount of undocumented safety discrepancies found during the joint assessment.” Pl.’s Ex. 17 (emphasis added).

The second was the Air Force’s “estimate that the delayed maintenance backlog will exceed 25% of the total vehicle equivalents in OLVIM[S] by contract termination.” Id. (emphasis added). Third, “[t]he projected number of backlog hours shows that the quality control program was substandard.” Id. (emphasis added). The memorandum concluded: We estimate the contract backlog hours at new contract start to be substantial. If LB & B Associates does not step up to their responsibilities in the PWS and reduce the backlog hours, we estimate the cost to the government to be unacceptable.

We will forward actual backlog hours when they are compiled. Pl.’s Ex. 17 (emphases added); see also Pl.’s Ex. 53 (Karzon depo. tr. p. 114). Apparently in response to this memorandum, Pavlik signed a fax message to LB & B also dated November 22, 1996. Pl.’s Ex. 18. This message begins, “IAW PWS 5.5.2, the Government preliminary assessment of 150 vehicles shows three significant findings which are clearly in violation of the contract.” Id. (emphasis added).

Pavlik noted the “quality of maintenance is deficient” due to “the significant amount of undocumented safety discrepancies found during the joint assessment,” and “estimated that the delayed maintenance backlog will exceed 25% of the total vehicles equivalents in OLVIM[S] by contract expiration.” Id. Pavlik also echoed Karzon in noting “[t]he projected number of backlog hours shows that the quality control program was substandard,” and warned LB & B: “If you do not reduce the delayed maintenance backlog to the standards of the PWS, the Government intends to file a claim and withhold an appropriate amount.” Id.

On November 27, 1996, the acting Contracting Officer, Paul Banis, signed and transmitted to LB & B several CDRs — identified as being from Karzon, the FAC — which concerned the deficiencies revealed in these inspections. See Def.’s Resp. Pl.’s Proposed Findings 1156; Pl.’s Ex. 19. Contract Discrepancy Report number 002 stated the problem as follows: Based on the vehicle assessment that has been accomplished through 26 Nov 96 IAW PWS paragraph C-5.5.2, RS-20, Quality of maintenance is substandard to T.O. 36-1-23 as required by PWS paragraph C-5.2.2.1.

This is based on total estimated backlog hours and the high number of safety discrepancies identified. Of the 236 vehicles inspected, we estimate 2500-3000 backlog maintenance hours over and above the PWS allowance. Over 50% of these vehicles have open safety items. Most of these vehicles are still in operation. Request LB & B Associates immediately call in all vehicles with open safety items and correct immediately. In addition, action must be taken to perform maintenance IAW T.O. 36-1-23 and reduce the maintenance backlog to 25% of the total vehicle equivalents. Pl.’s Ex. 19 (emphases added).

Contract Discrepancy Report number 003 addressed the following issues: IAW PWS, paragraph C-5.2.1, the VOC is not acceptable as of COB 26 Nov 96. We do not anticipate acceptable VOC standards by month end without immediate action by LB & B Associates. The fleet VOC is 17% vs. 10% required; Group Code A is 19.2% vs. 7% required; Group Code C is 27.3% vs. 16% required; Group Code D is 11% vs. 10% required; Group Code P is 32% vs. 10% required; and Group Code F is 39%-vs. 12% required. Id.

Contract Discrepancy Report number 004 identified the backlog problem: IAW PWS RS-31, delayed maintenance backlog hours will exceed 25% of the total vehicle equivalents as of COB 26 Nov 96. Of the 236 vehicles inspected during the joint vehicle assessment we estimate between 2500-3000 backlog maintenance hours. When the rest of the fleet is inspected, the backlog hours could exceed 6000. Id. (emphasis added). Two other CDRs concerned the determination that, “[bjased on the joint vehicle assessment, over 50% of the inspected vehicles contained safety discrepancies.” Pl.’s Ex. 19 (CDRs numbered 005 and 006).

The Air Force called the inspections “assessments” in these CDRs, just as the memoranda from Banis and Pavlik clearly referred to these inspections as assessments. The Air Force acknowledged that as many as 6,000 hours of backlog maintenance may have been required for the fleet, based on the results of the inspections. During the transition month, LB & B was still the entity responsible for inputting data, such as needed work orders for repairs, into OLVIMS.

See Pl.’s Ex. 1 at 45 (Attachment 6 to Contract) (phase-in plan provides that “[cjurrent contractors operate system during month of November 1996 ... and process November account transfer documentation”). Fleetpro asked LB & B to enter the results of these joint inspections, but the incumbent declined to do so and forbade Fleetpro from utilizing OLVIMS. Pl.’s Ex. 20; Pl.’s Ex. 21 (Albaugh depo. tr. pp. 180-83). The CDRs issued to LB & B by Banis were later withdrawn on December 11, 1996, after Tecom assumed the contractual responsibilities of maintaining the fleet. See Pl.’s Resp. Def.’s Proposed Findings 1125.

That same day, Major Karzon wrote an internal Air Force memorandum that referenced “the issue of backlog maintenance hours found in the joint vehicle assessments.” Def.’s Resp. Pl.’s Proposed Findings H 97; Pl.’s Ex. 29. Another internal Air Force memorandum from Major Karzon’s unit, dated December 16, 1996, referenced “the joint vehicle assessment at contract phase-in.” Pl.’s Ex. 52. On December 18, 1996, Major Karzon wrote a memorandum in which he referred to the inspections of the fleet as an “assessment.” Pl.’s Ex. 31. Under the Contract

section governing payment for safety repairs, a modification was issued to pay Fleetpro for some of the repair work done on the inspected vehicles. Def.’s Resp. PL’s Proposed Findings U 87-88. Tecom drafted a “get well program” that estimated how much time and resources would be needed to restore the fleet to compliance with the Contract standards. Def.’s Resp. Pl.’s Proposed Findings 1IH 95-96. Tecom’s estimate at that time was that six months and in excess of $676,000 in parts and labor were needed to eliminate the backlog. Id,.; see also Pl.’s Ex. 28 (“Maintenance Backlog Reduction Costs”).

After being informed of the cost of the plan to repair the fleet, Air Force personnel met on January 8, 1997, to discuss Tecom’s request to be paid for making these repairs. The Air Force discussed using CDRs against Tecom in response: “If you have to ask for money for backlog, then we’re going to have to start taking deductions from them.” Def.’s Resp. Pl.’s Proposed Findings 11110; Pl.’s Ex. 32 (notes from Jan. 8, 1997 meeting). See also Pl.’s Ex. 61 (Gilchrist depo. tr. p. 180) (testifying that Karzon threatened, “we could kill Fleetpro with CDRs”).

The needed repairs identified by the inspections were entered into OLVIMS by Fleetpro. The Air Force directed that those not covered by the modification were to be given an “L code” indicating deferral due to lack of funds. Def.’s Resp. Pl.’s Proposed Findings HH 91, 93; see also Pl.’s Ex. 25 (Dec. 6,1996 Karzon memo.). These L-coded vehicles, which needed repairs that were apparently not safety-related, were ordered by the Air Force to “be placed into service and scheduled into the shop or repaired at the next scheduled maintenance interval.” Pl.’s Ex. 25; see also Def.’s Resp. Pl.’s Proposed Findings 1189.

The Air Force later 'ordered, in a memorandum dated January 24, 1997, that all of the L-coded data be deleted from OLVIMS. Pl.’s Ex. 22 (Ozburn memo.). At that date, however, the Air Force still was taking the position that inspections of vehicles were part of the vehicle assessment required by the Contract, as the memorandum stated that no more inspections were to be allowed because the assessment period was over. Id.

After initially authorizing Fleet-pro’s own WIP program for keeping records of repairs needed, see Pl.’s Ex. 2 at 5, 1112.b (contracting officer’s final decision), on April 4, 1997, the Air Force ordered that the WIP system be shut down. Id.; Pl.’s Ex. 50 (Karzon memo.). It then initiated a thorough inspection of every vehicle repaired by Fleetpro, checking for twice as many categories of deficiencies as previously done. Pl.’s Ex. 38 (Dodson depo. tr. p. 116). Air Force personnel ultimately told Tecom that its contract was in jeopardy if Fleetpro were not terminated. Def.’s Resp.

Pl.’s Proposed Findings HH129-31,133. By late May, the performance standards of the Contract were met by Fleetpro. Def.’s Resp. Pl.’s Proposed Findings II128. C. Principles of Contract

Interpretation As the causes of action in this case arise from a contract between the parties, prior to analyzing the particular claims before the Court it would be useful to first consider the principles courts must follow to interpret contracts. The purpose of interpreting a contract is, of course, to “accomplish the intentions of the parties.” In re Binghamton Bridge, 70 U.S. (3 Wall.) 51, 74, 18 L.Ed. 137 (1865); see also Intergraph Corp. v. Intel Corp., 241 F.3d 1353, 1354 (Fed.Cir.2001).

The Court will interpret a contract in such a way as to give meaning to all the provisions of the contract in light of the parties’ intent at the time they entered the agreement. A contract must be “interpreted so-as to harmonize and give meaning to all of its provisions, and [thus] an

interpretation which gives a reasonable meaning to all parts will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless, superfluous, or achieves a weird and whimsical result.” Arizona v. United States, 216 Ct.Cl. 221, 236, 575 F.2d 855 (1978); see also, e.g., Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed.Cir.1991); United States v. Johnson Controls, Inc., 713 F.2d 1541, 1555 (Fed.Cir.1983). The Court will first consider the plain language of the contract’s terms. See, e.g., Forman v.

United States, 329 F.3d 837, 842 (Fed.Cir.2003); Gould, Inc., 935 F.2d at 1274. If a contract term is clear and unambiguous, the Court will adopt its plain and ordinary meaning. See, e.g., Moran v. Prather, 90 U.S. 492, 499, 23 L.Ed. 121 (1874); McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed.Cir.1996); Elden v. United States, 223 Ct.Cl. 239, 617 F.2d 254, 260-61 (1980). “A contract term is unambiguous if there is only one reasonable

interpretation.” C. Sanchez & Son, 6 F.3d at 1544; see also Edward R. Marden Corp. v. United States, 803 F.2d 701, 705 (Fed.Cir. 1986). The plain meaning of a contract term is “the meaning derived from the contract by a reasonably intelligent person acquainted with the contemporary circumstances.” Firestone Tire & Rubber Co. v. United States, 195 Ct.Cl. 21, 444 F.2d 547, 551 (1971); see also Hol-Gar Mfg. Corp. v. United States, 169 Ct.Cl. 384, 351 F.2d 972, 975 (1965). If such a plain meaning exists, the Court would not normally consider extrinsic evidence concerning the meaning of unambiguous terms.

See Brawley v. United States, 96 U.S. 168, 173-174, 13 Ct.Cl. 521, 24 L.Ed. 622 (1878); Butz Eng’g Corp. v. United States, 204 Ct.Cl. 561, 499 F.2d 619, 628-629 (1974). Evidence of trade practice and custom, however, may be considered to explain even facially unambiguous terms “where a party makes a showing that it relied reasonably on a competing

interpretation of the words when it entered into the contract.” Metric Constructors, Inc. v. NASA, 169 F.3d 747, 752 (Fed.Cir.1999). If a contract term does not have a plain meaning, it is ambiguous, and the Court must then determine whether the ambiguity is patent or latent. L. Rosenman Corp. v. United States, 182 Ct.Cl. 586, 390 F.2d 711, 713 (1968). A patent ambiguity in a contract is one that is, on its face, glaring and obvious. This has been described as encompassing “an obvious omission, inconsistency, or discrepancy of significance,” Beacon Construction Co. of Mass. v.

United States, 161 Ct.Cl. 1, 314 F.2d 501, 504 (1963), or “an obvious error in drafting, a gross discrepancy, or an inadvertent but glaring gap,” WPC Enterprises, Inc. v. United States, 163 Ct.Cl. 1, 323 F.2d 874, 876 (1963). See also Interstate Gen. Gov’t Contractors, Inc. v. Stone, 980 F.2d 1433, 1435 (Fed.Cir.1992); Blount Bros. Constr. Co. v. United States, 171 Ct.Cl. 478, 346 F.2d 962, 972-73 (1965). The Court must determine whether a reasonable person would find the ambiguity to be patent and glaring, on an ad hoc basis. L. Rosenman Corp., 390 F.2d at 713; see also Newsom v.

United States, 230 Ct.Cl. 301, 676 F.2d 647, 650 (1982). A contractor may not rely on its own

interpretation of patent ambiguities, but instead has a duty to seek a clarification from the government before submitting its bid. See P.R. Burke Corp. v. United States, 277 F.3d 1346, 1355 (Fed.Cir.2002); Newsom, 676 F.2d at 650; Blount Bros., 346 F.2d at 973. A bidder who does not inquire into a patent ambiguity assumes the risk for any unanticipated costs incurred as a result. Jamsar, Inc. v. United States, 194 Ct.Cl. 819, 442 F.2d 930, 935 (1971); Dynamics Corp. v. United States, 10 Cl.Ct. 275, 280 (1986). If not found to be patent, then an ambiguity is latent. The Court will adopt a contractor’s reasonable

interpretation of a latent ambiguity under the contra proferentem rule — construing an ambiguity against the drafter. See Newsom, 676 F.2d at 649-50; Peter Kiewit Sons’ Co. v. United States, 109 Ct.Cl. 390, 418, 1947 WL 5089 (1947); United States v. Seckinger, 397 U.S. 203, 216, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970). If the contractor’s

interpretation of such a contract provision is determined to be reasonable, see P.R. Burke Corp., 277 F.3d at 1355-56, the contractor will prevail against the author of the contract. See, e.g., Underground Const. Co. v. United States, 16 Cl.Ct. 60, 69 (1988); Reliable Bldg. Maint. Co. v. United States, 31 Fed.Cl. 641, 644 (1994) (citing Newsom, 676 F.2d at 649). In order for this Court to determine whether the contractor’s

interpretation of the contract provision is reasonable, “the court must put itself in the place of a reasonable and prudent contractor.” Neal & Co. v. United States, 19 Cl.Ct. 463, 473 (1990), aff'd, 945 F.2d 385 (Fed.Cir.1991). The Court will employ the ordinary meaning of the words used in an agreement unless there is evidence that the parties meant otherwise — for instance, through the adoption of a special definition. See Hol-Gar Mfg., 351 F.2d at 976. In interpreting some words, however, “the context and intention [of the parties] are more meaningful than the dictionary definition.” Rice v.

United States, 192 Ct.Cl. 903, 428 F.2d 1311, 1314 (1970). Interpreting an ambiguous phrase in light of its context requires close study of the whole portion of the contract that concerns the term in question, see id., and the parties’ intentions may be revealed through extrinsic evidence. See, e.g., McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1434-35 (Fed.Cir.1996); Dureiko v. United States, 209 F.3d 1345, 1357 (Fed.Cir.2000); McGrew Bros. Sawmill, 224 Ct.Cl. at 743. Extrinsic evidence may include negotiations between the parties in advance of the agreement, Sylvania Elec. Prods., Inc. v.

United States, 198 Ct.Cl. 106, 458 F.2d 994, 1005 (1972), as well as the course of dealings between the parties after the agreement was entered into but before the current dispute arose. Coast-to-Coast Fin. Corp. v. United States, 45 Fed.Cl. 796, 801-02 (2000) (citing Max Drill, Inc. v. United States, 192 Ct.Cl. 608, 427 F.2d 1233, 1240 (1970)) (“The

interpretation of a contract by the parties to it before the contract becomes the subject of controversy is deemed by the courts to be of great, if not controlling weight.”); Jansen v. United States, 170 Ct. Cl. 346, 344 F.2d 363, 369 (1965) (“It is a canon of construction that the

interpretation placed by the parties upon a contract during its performance is demonstrative of their intention.”). III. ANALYSIS A. Tecom’s Motion for

Summary Judgment The Court will first consider Teeom’s motion (and the corresponding portions of the Air Force’s cross-motion). As mentioned above, Tecom has moved for judgment on Count II of its complaint, for breach of contract, and on Counts III and IV, for breach of warranties; and also has moved for partial

summary judgment concerning its damages. 1. Count II — Breach of Contract Tecom argues that under the Contract, it is entitled to special compensation for the repair of defects existing in the fleet as of the Contract start date, to the extent that more than 355 hours were needed to make these repairs.

This claim is based on the Contract provision entitled “Delayed/Deferred Maintenance at Start of Contract,” which reads in relevant part: On the contract start date, the required maintenance actions will not exceed 25 labor hours per 100 vehicle equivalents and there will not be any overdue scheduled/preventive maintenance and special inspections/test. If either of these standards are exceeded, the incoming contractor shall reduce this backlog and will be compensated for this initial reduction IAW the over and above hourly rate and material costs as verified by invoices input into the OLVTMS.

PWS U 5.5.1, PL’s Ex. 5 at 43. The parties agree that “25 labor hours per 100 vehicle equivalents,” given the size and composition of the fleet, equaled 355 labor hours. See Def.’s Resp. PL’s Proposed Findings 1117. It is also undeniable that the contract start date was December 1, 1996. See id. 112; PL’s Ex. 1 at 3, H 7; PL’s Ex. 1 at 45 (Attachment 6 to Contract).

The terms to be interpreted, then, are “Delayed/Deferred Maintenance,” “required maintenance actions,” and “backlog.” The last of these terms, “backlog,” is not defined in the Contract, but in the context it plainly means “the required maintenance actions” in excess of the 355 labor hours standard.

The term “this backlog” in the second sentence of the paragraph unambiguously refers to the subjects of the “standards” described in the first sentence. “Backlog” appears in one other provision of the Contract, PWS H 5.2.3.5.1: “The Contractor shall not allow total delayed hour backlog to exceed 25% of the total vehicle equivalents in OL-VIMS. Delayed code B, D, G, K, M and R will not be used in computing the total delayed backlog hours.” Pl.’s Ex. 5 at 40. Neither of the two provisions employing the term “backlog” cross-reference the other.

The phrase “the required maintenance actions” is similarly not given a special definition in the Contract. Since the Contract concerns the maintenance of the Peterson AFB Complex vehicle fleet, “required maintenance” most simply and naturally would mean the maintenance of the fleet’s vehicles that must be performed under the Contract. Nothing in or about the Contract suggests that the ordinary meaning of “required,” connoting that which is needed or which one is obligated to do, is not appropriate for our purposes. See McElroy v. B.F.

Goodrich Co., 73 F.3d 722, 726-27 (7th Cir.1996) (“the body of knowledge that goes by the name of ‘common sense’ is part of the context of interpreting most documents”). The portion of the Contract detailing the specific tasks to be performed by the contractor,

Section C-5 of the PWS, begins by stating, “[t]he contractor shall provide vehicle operations, maintenance and other services required by this PWS.” PWS 115, Pl.’s Ex. 5 at 28 (emphasis added). It goes on to describe the specific “Vehicle Maintenance” task as follows: “The contraetor shall be responsible for all parts and maintenance required to maintain the vehicle fleet, TE 5e, ... using standards established in T.O. 36-1-23 and applicable vehicle technical orders to ensure MELs of TE 9 and VOC rates established in TE 1 are met.” PWS H 5.2.2.1, Pl.’s Ex. 5 at 37 (emphasis added).

A number of other maintenance actions that the Contract required of Fleetpro were detailed, including engine compression tests, minor repairs needing no more than two hours of labor, painting, corrosion control treatment, upholstery repair, storage, and hazardous waste disposal. See PWS 11115.2.2.2-5.2.2.20, Pl.’s Ex. 5 at 37-40. The Contract also mandated: “The contractor shall document all repair actions required on a work order, AF Form 1823 or 1827 or computer generated equivalent, as appropriate.” PWS 115.2.2.5, Pl.’s Ex. 5 at 38.

As noted above, one additional term might be of relevance in interpreting the Contract provision concerning compensation for backlog reduction. This provision bears the title “Delayed/Deferred Maintenance at Start of Contract.” The portion of the Contract listing “technical

definitions peculiar to this PWS”, Pl.’s Ex. 5 at 16-20, contains a particular definition for “Delayed/Deferred Maintenance”: “Maintenance that can be delayed/deferred without damage to vehicle/equipment or compromise of safety standards or prevents the vehicle/equipment from being used for its designed function.” PWS 112.2.15, PL’s Ex. 5 at 17. This definition is not very helpful for our purposes, as it does not tell us how one determines if maintenance is delayed/deferred, but instead deals with what maintenance can be delayed/deferred.

Moreover, the inclusion of “Delayed/Deferred Maintenance” in the heading for PWS H 5.5.1 appears to be of little importance, as the Court notes that an identical provision, bearing even the same paragraph number, was included in LB & B’s contract, but under the different heading, “Overdue Maintenance at Start of Contract.” Pl.’s Ex. 12 at G108970, If 5.5.1. Since the substance of the two provisions was exactly identical, the interchangeable use of “overdue” and “delayed/deferred” demonstrates that the heading was not intended to modify the terms of the provision. Cf. Provident Life & Accid. Ins. Co. v.

Anderson, 166 F.2d 492, 495 (4th Cir. 1948) (“Resort may be had to the caption only to explain an ambiguity in the operative part of the clause, not to create an ambiguity where none exists.”). a. Required maintenance backlog. According to Tecom, “required maintenance actions” means just what it says: maintenance work that is required under the Contract. Tecom argues that paragraph 5.5.1 is unambiguous and provides that Te-com is to be reimbursed at the over and above rate, plus payment for material costs, for reducing the amount of repair work needed as of December 1,1996, down to 355 labor hours’ worth.

See Mem. Supp. Mot. for Partial Summ. J. (“Pl.’s Mem.”) at 7; Pl.’s Mem. Opp. Deft. Mot. Summ. J. & Reply at 3-5 (“PL’s Reply”); Tr. (April 30, 2004) at 18:12-17. Tecom interprets “required maintenance” to mean simply that which is required to be done under the Contract, primarily to meet the serviceability standards, maintain the Minimum Essential Levels and not exceed the vehicle out of commission rates. See PWS 1í 5.2.2.1, PL’s Ex. 5 at 37. The Air Force’s

interpretation of “required maintenance actions” is much more complicated, although it, too, contends that the relevant provisions of the Contract are clear and unambiguous. See Def.’s Opp. at 7, 9, 20-23. According to the Air Force, the “delayed/deferred” or “required maintenance” referenced in Transportation PWS paragraph 5.5.1 can only mean unperformed maintenance that has already been recorded in the OLVIMS database. Id. at 10. Under this

interpretation, it is the presence of an OLVIMS record indicating that work must be done that makes it so. Although this seems to place the cart before the horse — or, more accurately, narrows the definition of the animal so that the cart makes the horse — the Air Force labors to make this

interpretation fit the text of the Contract. It notes that Tecom was required to “utilize” OLVIMS “to collect, accumulate, and maintain monthly maintenance data,” PWS 1í 5.2.3.1, PL’s Ex. 5 at 40, and to submit to the Functional Area Chief “monthly analysis of performance, production and deficiencies” using OLVIMS, PWS H 5.2.3.4, PL’s Ex. 5 at 40. Air Force Manual 24-307, incorporated into the Contract, see PWS H 5.2.1, PL’s Ex. 5 at 36, contains a

chapter concerning “Maintenance Control and Analysis,” describing a management function or unit that “plans, schedules, monitors and analyzes the maintenance requirements on vehicles and is the focal point for the vehicle data collection system, OLVIMS.” AFMAN 24-307, II 2.1, PL’s Ex. 8 at 29. Based on this, the Air Force argues, “[t]hus, OLVIMS is the database which contains the information as to the quantity, condition and maintenance status of the vehicle fleet. To assess those aspects, one only has to review the database.” Def.’s Opp. at 14-15.

During oral argument, counsel for the Air Force also pointed to paragraph 5.2.3.5.1 of the Transportation PWS, discussed above, as demonstrating the connection between a maintenance backlog and OLVIMS. Tr. (April 30, 2004) at 86:1, 5-9. As its proof that the 355 hour limit on required maintenance was not exceeded, the Air Force cites an OLVIMS printout of a “delayed maintenance report” purporting to represent the status of the fleet as of December 2, 1996. Def.’s Opp. at 10 (citing Def.’s Proposed Findings 1126); see Def.’s App. at 77-81.

This report shows 600.7 delayed hours, which the Air Force maintains is less than 355 hours — presumably based on handwriting on the last page of the printout which suggests that five or six columns of hours (codes B, D, G, K, M, and possibly

P) should be excluded as “exception hours” according to “RS-19.” See Def.’s App. at 81. But if, as it appears, “RS-19” refers to the “Required Service” table in Technical Exhibit 1 to the Transportation PWS, see PL’s Ex. 5 at 70-76 (TE-1-6 through TE-1-12), then this anonymous handwriting does nothing to demonstrate that OLVIMS is the basis for the backlog computation under paragraph 5.5.1.

The Air Force seems to suggest that this handwritten notation links the two backlog provisions — the one at issue in this case, concerning backlog maintenance at the Contract start date (PWS 115.5.1), and the one that applies during the course of Tecom’s performance (PWS H 5.2.3.5.1). As noted above, the latter provides a computation of “delayed hour backlog” that is based on OL-VIMS and exempts certain codes (B, D, G, K, M and R). See PL’s Ex. 5 at 40.

The RS-19 entry in Technical Exhibit table, however, refers to Tecom’s obligation under a different paragraph: Transportation PWS paragraph 5.2.S.5, concerning when delayed maintenance is to be performed. See id. at 75 (TE-1-11). The RS-19 entry says nothing about the computation of delayed hour backlog, and says nothing about OLVIMS or about disregarding any maintenance codes. Id. Not only is there no “RS” entry concerning PWS 115.2.3.5.1. but there is none concerning the relevant paragraph for this lawsuit, PWS 115.5.1. See PL’s Ex. 5 at 70-76.

In any event, the Air Force argues that the “required maintenance actions” backlog provision, Transportation PWS II 5.5.1, must be interpreted in light of the provisions of the Contract requiring the use of OLVIMS to keep maintenance records. The difficulty with the Air Force’s

interpretation is that paragraph 5.5.1 does not contain any reference to OLVIMS records as the basis for any backlog calculation.

While it is true that Transportation PWS paragraph 5.2.3.5.1 provided that Tecom “shall not allow total delayed hour backlog to exceed 25% of the total vehicle equivalents in OLVIMS,” and stipulated that “[djelayed code B, D, G, K, M and R will not be used in computing the total delayed backlog hours,” PL’s Ex. 5 at 40, this obligation of Tecom during its performance of the contract has nothing to do with whether and to what extent “required maintenance actions” as of the contract start date exceeded 355 hours.

Although the text of paragraph 5.2.3.5.1 demonstrates that for purposes of that particular “delayed hour backlog” calculation OLVIMS was to be used, paragraph 5.5.1 is silent on the matter. If the Air Force intended the paragraph 5.2.3.5.1 computation to be followed in determining the backlog of “required maintenance actions,” it could easily have cross-referenced that provision. Instead, it employed the “25 labor hours per 100 vehicle equivalents” formulation, with no reference to OLVIMS records and no “exception” for any OLVIMS codes.

The omission of any reference to OLVIMS in calculating the “required maintenance actions” is all the more telling, when one considers that paragraph 5.5.1 does refer to OLVIMS for purposes of computing compensation to the incoming contractor: “the incoming contractor shall reduce this backlog and will be compensated for this initial reduction IAW the over and above hourly rate and material costs as verified by invoices input into the OLVIMS.” Pl.’s Ex. 5 at 43.

The parties agree that under the Contract, as well as under LB & B’s contract, the contractors were required to create work orders, recorded in OLVIMS, for all repairs that were required to maintain the fleet. See, e.g., Def.’s Resp. Pl.’s Proposed Findings UK 12,14-15, 25-28. The Contract and documents incorporated into it make several references to the obligation of contractors to input maintenance information into OLVIMS, including provisions the Air Force has not specifically identified.

For instance, Air Force Manual 24-307 contains a provision entitled “Work Order Control for Delayed Maintenance” that references the delayed maintenance codes of the OLVIMS, and the delayed work order generated through OL-VIMS, and notes that a maintenance control officer “uses the delayed maintenance report to verify shop backlog.” Pl.’s Ex. 8 at 31, HH 2.6.1 — 2.6.4. But what all of these references to OLVIMS show is that the Air Force was hardly shy about mentioning the computer system whenever it was necessary.

Its absence from the “required maintenance actions” calculation, which is found in a provision (PWS 115.5.1) that is nevertheless clear and unambiguous, can hardly be a mistake. The point of paragraph 5.5.1, after all, was to have the Air Force bear the risk of excessive maintenance work inherited by the incoming contractor.

Whether this work was listed in OLVIMS or not does not affect whether it needed to be done, and one can bet that if OLVIMS identified thousands of hours of backlog delayed maintenance that, in fact, had already been performed by LB & B, the Air Force would not be arguing that Tecom should be paid extra compensation for reducing this phantom backlog. In seeking to add words to paragraph 5.5.1 that are not there, the Air Force would place Tecom at the mercy of LB & B.

It argues that OLVIMS is the source for the backlog calculation, for all delayed maintenance would show up in OLVIMS if the outgoing contractor had met its contractual obligation. But the flaw in this argument is apparent when one considers that the Air Force also argues that the backlog at Tecom s contract start date should be calculated in the same manner as the 25 percent limit on backlog during LB & B’s contract performance — by using OLVIMS data but excluding certain delayed code categories. See Def.’s Opp. at 10 (citing Def.’s Proposed Findings II 26); Def.’s App. at 77-81.

If one assumes that all required maintenance will show up in OL-VIMS merely because the LB & B contract required it, then under the Air Force’s approach it should also follow that the delayed maintenance backlog can never exceed 25 percent — for the LB & B contract apparently required this, too. See Pl.’s Ex. 11 at G109007-08. This

interpretation of the Contract — rejected by the Court because it contradicts the plain language of PWS 115.5.1— thus also suffers from the vice of rendering paragraph 5.5.1 meaningless, in violation of basic contract

interpretation principles. See, e.g., Arizona, 216 Ct.Cl. at 236, 575 F.2d 855; Johnson Controls, 713 F.2d at 1555. And it would be irrational for this provision, which compensates an incoming contractor for rectifying the delinquency of the outgoing contractor, to be based solely on the records created by the outgoing contractor. The plain text does not itself produce such an irrationality, and it should not be contorted to achieve this result.

What makes the Air Force’s argument all the more unusual is that the November, 1996 joint inspections indisputably revealed the existence of at least “2500 to 3000 backlog maintenance hours over and above the PWS allowance.” Pl.’s Ex. 19 at G100029 (CDR number 002). Had LB & B entered the results of these joint inspections into the OLVIMS database at that time, then even under the Air Force’s current

interpretation of backlog, Tecom would be entitled to some special compensation under PWS 115.5.1. The Air Force curiously argues that this data could not have been entered into OLVIMS because the inspections were “wrongfully” done, Def.’s Reply at 8, “unauthorized,” id. at 8 n. 2, 9, an “improper means,” Tr. (April 30, 2004) at 98, and an “improper” attempt by Tecom to accelerate the recognition of repairs that should go undetected until the next scheduled shop appointment for each vehicle. Id. at 100.

The Air Force position is that it must close its eyes to any maintenance needs of the fleet that are identified in any manner other than during a regularly-scheduled inspection. See, e.g., Def.’s Opp. at 11; Def.’s Reply at 5-6. Thus, it goes to great lengths to proffer an

interpretation of the Contract that somehow forbids the inspection of vehicles during a joint assessment. Although this issue is of greater relevance to some of the other counts in Tecom’s amended complaint, the Court will discuss it here, since the Air Force’s argument pivots upon it. b. The joint vehicle assessment.

The Air Force, echoing the argument discussed above concerning the indispensability of OLVIMS records, contends, “taking the contract as a whole, reveals that the phrase ‘required maintenance actions’ means only those actions the need for which was uncovered in the ordinary course of performance of the outgoing contractor’s contract, but had yet to be taken by the outgoing contractor upon contract change over.” Def.’s Reply at 5.

Nothing in the Contract even so much as hints that the required maintenance backlog, or even the entry of OLVIMS records, is restricted to repairs “uncovered in the ordinary course of performance” of LB & B’s contract. Furthermore, both the LB & B contract and Tecom’s Contract contained this identical provision: 5.5.2 Vehicle Assessment. At contract termination, the incumbent contractor, incoming contractor, and FAC shall jointly assess all vehicles to be transferred to the new contract or Government for quantity, condition, and maintenance status. Pl.’s Ex. 5 at 43; PL’s Ex. 11 at G108970.

Thus, the Air Force, LB & B, and Tecom were all required to “jointly assess all vehicles” at contract termination. One would think that the repairs uncovered during this joint assessment would be “uncovered in the ordinary course of performance,” and thus would be compensable under the Air Force’s

interpretation of PWS 115.5.1. It bears repeating that the November, 1996 joint inspections were called the “joint assessment” by the Air Force when they were on-going and for the next month or two thereafter, see PL’s Exs. 15-19, 22, 29, 31, 52, and revealed thousands of hours of required maintenance, just prior to the termination of the LB & B contract. To avoid paying for these maintenance actions, the Air Force further refines its argument, so that “[rjequired maintenance actions are those discovered during a vehicle’s regularly scheduled maintenance service call.” Def.’s Reply at 3.

But since nothing in either contract restricts the required maintenance backlog (or for that matter the entry of OLVIMS records) to items identified during the aforementioned service calls, the Air Force is reduced to arguing that the November 1996 inspections were “improper,” “wrongfu[lj,” and “unauthorized.” See, e.g., Def.’s Reply at 8-9. The Air Force reasons that, while joint assessments might be in the ordinary course of performance, inspections cannot be a part of these assessments, and thus the November inspections were not in the ordinary course, and their fruits should be ignored.

The Court rejects this gloss on the Contract for a number of reasons. First, the Contract contains no language to support the claim that only repairs uncovered in the ordinary course of contract performance may count toward the backlog.

Second, the November inspections were done with Air Force participation, see, e.g., PL’s Ex. 14 (Contracting Officer’s minutes noting Air Force involvement in inspection of 71 vehicles, and stating that the FAC approved the entry of the results into OLVIMS); PL’s Exs. 17-18 (Air Force describes “the government preliminary assessment of 150 vehicles”), and could hardly be characterized as unauthorized or wrongful.

Regardless of whether the joint assessment provisions of the contract required the inspection of every vehicle, it is undisputed that as many as 236 were inspected prior to contract turn-over, and this was called an assessment at the time. Under any

interpretation of the Contract, this would be in the ordinary course of performance. The Air Force tries to avoid the undisputed facts by arguing, as a matter of law, that no matter what it called them at the time, the inspections could not have been the joint assessment mandated by the two contracts. It claims that “assessment,” which is not defined in the Contract, not only does not mean inspection, but cannot mean it. This argument rests on two legs: a dictionary definition of “assess,” and the presence of an inert definition for the term “joint serviceability inspection” in the Contract. This is contrary to common sense, as well as the dictionary

definitions to which the Air Force repairs. The Air Force cites a dictionary definition of assess as “to determine the importance, size, or value,” Def.’s Opp. at 13 (quoting Webster’s Collegiate Dictionary 69 (10th ed.)), and then jumps to the conclusion that only OLVIMS may be used in this process. Of course, the provision in the Contract calls for the parties to “jointly assess all vehicles ... for quantity, condition, and maintenance status.” PWS 115.5.2, Pl.’s Ex. 5 at 43. Why cannot one determine the condition or maintenance status of cars by inspecting them?

Certainly, there is nothing in the definition of assess, as commonly understood or from a dictionary, that precludes an inspection. Nor does the presence of a definition for a “joint serviceability inspection” rule out the possibility that an inspection may be encompassed within the meaning of the term assessment. The Transportation PWS defines “joint serviceability inspection” as an “[i]n-spection of vehicles/equipment/faeilities by Government and contractor representation to inventory and determine their serviceability and physical condition.” PWS 112.2.21, Pl.’s Ex. 5 at 17.

The Air Force argues that either this term or “assess” would be superfluous if it were accepted that one may inspect in the course of assessing. Def.’s Opp. at 18. This does not logically follow, of course, for “assess” may be broader than an inspection, and in any event the use of synonymous terms in different contract paragraphs does not render any of the terms meaningless. Moreover, the term “Joint Serviceability Inspection” appears nowhere else in the Contract but where it is defined, and thus under the Government’s approach could not help but be superfluous.

The Government cites the “detailed inspection requirements” for government-furnished equipment and government-furnished materials — presuming that these call for joint serviceability inspections — as further proof that the joint vehicle assessment is not an inspection. Def.’s Reply at 11. The problem with this argument is that, just like the vehicle assessment paragraph, the two paragraphs concerning an inventory of equipment and of materials do not once use the words “inspection” or “inspect,” let alone the term “joint serviceability inspection.” See PWS HH3.1.2.1, 3.1.3, Pl.’s Ex. 5 at 21-22.

The equipment provision requires a “joint inventory,” and explains that the “contractor and the government representative shall jointly determine the working order and condition of all equipment and document their findings.” PWS 113.1.2.1, Pl.’s Ex. 5 at 21-22. The materials provision requires that the “initial stock of materials provided shall be inventoried not later than 5 working days before contract start by the contractor and a government representative.” PWS 113.1.3, Pl.’s Ex. 5 at 22.

The fact that these paragraphs are longer (and hence more “detailed”) than the vehicle assessment one is hardly significant, particularly since the latter is of comparable length when the required maintenance backlog provision is also taken into account.

More to the point, if one were to argue that these other government-furnished properties are scrutinized by way of a “joint serviceability inspection,” because an “inventory” is taken, it follows that the joint vehicle assessment, too, is done via a “joint serviceability inspection” — which is used to “determine th[e] serviceability and physical condition” of “vehicles/equipment/facilities.” PWS U 2.2.21, Pl.’s Ex. 5 at 17. This makes even stronger the case that assessments include inspections, under the Contract.

It is not reasonable to interpret the Contract to forbid inspections from being a part of the joint vehicle assessment required by paragraph 5.5.2. And even were “assess” and “assessment” to be considered ambiguous merely because such household words were not accompanied by detailed

definitions in the Contract, the ambiguity would be latent, not patent. The use of these words does not create so glaring an ambiguity that clarification was required — to interpret “assess” to entail an inspection does not create any irreconcilable conflicts with other provisions of the Contract. See P.R. Burke Corp., 277 F.3d at 1355; Interstate General, 980 F.2d at 1435; Newsom, 676 F.2d at 650.

Moreover, in the scheme of things, the joint assessment is not even the primary concern of the Contract, which was to have Tecom maintain the vehicle fleet, but was an activity that only occurred at contract termination. Any ambiguity is thus latent, as different circumstances might have called for different

interpretations — for instance, had the initial inspections confirmed the information found in OLVIMS, it may well have been unreasonable for Tecom to demand any further joint inspections. And, as noted above, it cannot be denied that during the time of performance, the Air Force personnel responsible for both Tecom’s and LB & B’s contracts stated time and again that the inspections were the paragraph 5.5.2 assessments. See, e.g., Pl.’s Exs. 15-19, 22, 29, 31, 52. Such actions are given “great, if not controlling weight” in contract

interpretation. Coast-to-Coast, 45 Fed.Cl. at 801-02; see also Max Drill, 427 F.2d at 1240; Jansen, 344 F.2d at 369. The only reasonable conclusion is that the joint inspections constituted the joint “vehicle assessment” required by paragraph 5.5.2. c. The undisputed facts clearly establish liability. The rest of the Government’s attempts to overcome the plain and ordinary meaning of the relevant Contract provisions are also unconvincing.

The Air Force contends that to follow the special compensation requirement of paragraph 5.5.1, without adding the qualifier that required repairs were uncovered during regularly-scheduled maintenance and entered into OLVIMS, would have two negative consequences. First, if OLVIMS were not the source of the repair data, then “the Government would los[e] the ability to manage its maintenance budget.” Def.’s Opp. at 11.

But if the Air Force monitored more closely the activity of its contractor — inspecting its work as thoroughly as it did Fleet-pro’s, see Pl.’s Ex. 38 (Dodson depo. tr. p. 116) — then the maintenance backlog would have neither accumulated nor caught it unaware. The Air Force also argues that the compensation sought by Tecom is for work that could have been done when each vehicle came into the shop for regular maintenance, and thus would be a “double payment” under this fixed fee contract. Def.’s Opp. at 16.

The Air Force does not seem troubled by the possibility that the outgoing contractor was paid for work it failed to do, though. Both of these arguments, moreover, amount to a complaint that the Government does not like the express terms of the Contract it drafted. It chose not to include the qualifier that backlog repairs are only those previously recorded in OLVIMS; and these repairs cannot result in a “double payment” for the simple reason that paragraph 5.5.1 limits the amount of inherited repairs that were the responsibility of Tecom.

The Air Force further argues that, since non-safety repairs may be deferred, it should have been allowed to defer them under the Contract and thereby avoid paying Tecom under paragraph 5.5.1.- Def.’ Opp. at 21-23. But whether or not it could decide to further delay these repairs does not nullify the promise to pay special compensation to Tecom for making them.

Moreover, this argument ignores the limit on the amount of delayed repairs that is imposed under Transportation PWS paragraph 5.2.3.5.1, which ordered Te-com to “not allow total delayed hour backlog to exceed 25% of the total vehicle equivalents in OLVIMS.” PL’s Ex. 5 at 40. In sum, under the Contract, Tecom was promised special compensation for making any vehicle repairs the base fleet needed as of December 1,1996, to the extent that more than 355 labor hours would be expended. The undisputed facts demonstrate that labor hours far in excess of 355 were needed to make the inherited repairs.

See, e.g., PL’s Exs. 17-19. Tecom is entitled to

summary judgment as to the Government’s liability under the second cause of action in its Amended Complaint. Accordingly, the motion is GRANTED as to the breach of contract count, and the Government’s cross-motion is DENIED as to this count. Tecom may be compensated at “the over and above hourly rate” and for “material costs” incurred to reduce this backlog to 355 labor hours’ worth of repairs, regardless of whether the repairs were previously entered into OLVIMS and regardless of how they were detected. 2.

Counts III and IV — Breach of the Implied Duties to Cooperate and Not to Hinder Performance Tecom alleges in its Amended Complaint that the Air Force breached both the implied duty of cooperation and the duty not to hinder or interfere with performance. Complaint 111140-45. In moving for

summary judgment on these claims, Tecom argues that the duty of good faith and fair dealing has also been breached, PL’s Mem. at 29-34, and characterizes these as “three related, yet distinct implied duties,” which it groups under the rubric “contractual duties to work cooperatively.” Id. at 28. Although it takes the position that the first two duties listed above protect a contractor from acts that are merely unreasonable, id. at 29, Tecom argues that the Air Force’s conduct violates the sterner standard of bad faith. Id. at 30.

For its part, the government suggests that the presumptions of regularity and good faith conduct apply here, raising the plaintiffs eviden-tiary burden to clear and convincing proof of a breach of these duties. See Def.’s Opp. at 25. In order to rule on the parties’ motions for

summary judgment on these causes of action, the Court must first determine the standard of proof required — which may turn on whether proof of bad faith is a necessary element to demonstrate a breach of these duties. The inter-relationship of these three implied duties and the impact of the presumption of good faith conduct on proof of their violation must necessarily be determined before Tecom’s motion, and the Air Force’s cross-motion, can be considered. a. The presumptions of regularity and good faith conduct.

The presumptions that government officials perform their duties with regularity and in good faith are often-invoked, but never satisfactorily explained. At times, the concept is presented as being one, unitary presumption, see, e.g., Pauley Petroleum Inc. v. United States, 219 Ct.Cl. 24, 52, 591 F.2d 1308 (1979) (referencing “the presumption of government regularity and good faith”); Alaska Airlines v.

Johnson, 8 F.3d 791, 796 (Fed.Cir.1993) (using “regularity” and “good faith” interchangeably), while on occasion it is noted that “the presumption of regularity of government action [is] a related but different presumption” from that of “governmental good faith.” United States v. Roses Inc., 706 F.2d 1563, 1566-67 (Fed.Cir.1983).

i) The presumptions in the Supreme Court The broad concept is traceable to the early days of our Republic, and has its roots in English law. It first appears in Supreme Court jurisprudence, without attribution, in 1816: “It is a general principle to presume that public officers act correctly until the contrary be shown.” Ross v. Reed, 14 U.S. (1 Wheat.) 482, 486, 4 L.Ed. 141 (1816). Although Ross involved public officials — a land surveyor and commissioner issuing a grant— this evidentiary presumption was not limited to governmental actions.

As the Supreme Court, speaking through Justice Joseph Story, explained a decade later: By the general rules of evidence, presumptions are continually made in cases of private .persons of acts even of the most solemn nature, when those acts are the natural result or necessary accompaniment of other circumstances.... [T]he law ... presumes that every man, in his private and official character, does his duty, until the contrary is proved; it will presume that all things are rightly done, unless the circumstances of the case overturn this presumption, according to the maxim, om-nia presumuntur rite et solemnitur esse acta, donee probetur in contrarium.

Bank of the United States v. Dandridge, 25 U.S. (12 Wheat.) 64, 69-70, 6 L.Ed. 552 (1827) (footnote omitted). Thus, in Bank of the United States, it was held that a person who had openly served as cashier of a bank is presumed to have been appointed through the process required by act of Congress, although the bank’s board lacked written records to confirm this. Id. at 70. As the Court stated in brief, “the acts of artificial persons afford the same presumptions as the acts of natural persons. Each affords presumptions, from acts done, of what must have preceded them, as matters of right, or matters of duty.” Id.

The presumptions of regularity and good faith conduct appear to be the offspring of different, but related presumptions. One, a variant of “innocent until proven guilty,” is that “where a person is required to do

an act, the omission to do which would be criminal, his performance of that act will be intended until the contrary be shown.” The other is the familiar evidentiary treatment of matters performed in the regular course of business. See 1 Simon Greenleaf, A Treatise on the Law of Evidence 137-38 (John H. Wigmore ed., 16th ed. Little, Brown, & Co. 1899) (“The like presumption is also drawn from the usual course of men’s private offices and business, where the primary evidence of the fact is wanting.”).

Instead of “good faith,” the early cases express a presumption in terms of doing one’s “duty,” or acting “correctly.” See, e.g., Rankin v. Hoyt, 45 U.S. (4 How.) 327, 335, 11 L.Ed. 996 (1846); Ross, 14 U.S. at 486. The typical occasion for this presumption was when

an act of a public official required certain predicate acts (or facts) to be lawful. For instance, it was presumed that a customs collector ordered an appraisal of imported wool, Rankin, 45 U.S. at 335; that Union forces controlled the area for which a permit to buy cotton was issued, Butler v.

Maples, 76 U.S. (9 Wall.) 766, 777-78, 19 L.Ed. 822 (1869); that a seizure of property by request of the Attorney General was pursuant to a presidential order, The Confiscation Cases, 87 U.S. (20 Wall.) 92, 108-09, 22 L.Ed. 320 (1873); that a law which would deprive a commissioner of the power to issue title to land had not yet been promulgated and become effective in his portion of a Mexican state at the time the title was issued, Gonzales v. Ross, 120 U.S. 605, 615-16, 7 S.Ct. 705, 30 L.Ed. 801 (1887); that the President reviewed and approved the court martial records brought before him, United States v.

Page, 137 U.S. 673, 679-80, 26 Ct.Cl. 499, 11 S.Ct. 219, 34 L.Ed. 828 (1891); and that the required public notice had been given for a local election to approve the issuance of bonds, Knox County v. Ninth National Bank, 147 U.S. 91, 96-97, 13 S.Ct. 267, 37 L.Ed. 93 (1893). Good faith, in the sense of the proper motivation for these acts, was never really at issue; the judges were presuming that something happened, not why. In these early cases, the Supreme Court understood the presumption of regularity to be a mere evidentiary presumption and nothing more.

Thus, the presumption was only prima facie evidence, subject to rebuttal. See, e.g., Butler, 76 U.S. at 778 (“But a prima facie ease, with nothing to rebut it, is a case made out.”). The burden placed on the party seeking to rebut the presumption was nothing special. See, e.g., id. (noting “there was nothing to rebut the presumption of fact arising from the grant of the permit”); Nofire v.

United States, 164 U.S. 657, 660, 17 S.Ct. 212, 41 L.Ed. 588 (1897) (stating “one who claims that any such prerequisite did not exist must affirmatively show the fact”); Rankin, 45 U.S. at 335 (recognizing “the absence of testimony to the contrary”); United States v. Royer, 268 U.S. 394, 398, 61 Ct.Cl. 1030, 45 S.Ct. 519, 69 L.Ed. 1011 (1925) (same). Some confusion on this point might have been caused by a 1926 Supreme Court decision concerning a federal officer’s decision to dispose of alien property seized from an enemy nation.

The Supreme Court added the modifier “clear” to the maxim: “The presumption of regularity supports the official acts of public officers and, in the absence of clear evidence to the contrary, courts presume that they have properly discharged their official duties.” United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15, 47 S.Ct. 1, 71 L.Ed. 131 (1926) (emphasis added). The

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