The standard for summary judgment is well-settled in federal litigation: construing all facts in the light most favorable to the non-moving party, summary judgment is properly granted only when there are no genuine issues of material fact left to be decided at trial. Where there are no remaining disputes among the parties, or where the lingering disputes no longer impact the outcome of the case, then judgment as a matter of law is both expeditious and just.
The Armed Services Board of Contract Appeals (ASBCA) applies the same standard; however, summary judgment rules are not easily overlaid on top of the complicated interpretative rules governing Government contract litigation. The ASBCA gives guidance on the intersect of contract interpretation at summary judgment in Manhattan Hunt A Joint Venture, ASBCA No. 61477, 19-1 B.C.A. (CCH) ¶ 37386 (June 21, 2019).
The case arises from a contract governing new construction at Joint Base Andrews, Maryland, where the base’s water and sewage lines are privately owned by Terrapin Utility Services, Inc. (TUSI). During solicitation for bid proposals to build a new dental office and ambulatory center, the Navy hosted a special conference with potential bidders to address wet utilities.
The Navy even amended its Solicitation to state: “Any new facilities/system components expected to connect to TUSI’s systems and any modifications of or connections to the existing systems identified in the specifications and drawings, must be coordinated with TUSI prior to the contract start date.” Further amendments to the Navy’s Solicitation also clarified that any removal of or connection to existing wet utilities would be performed by TUSI, at the contractor’s expense.
Therefore, in order to allow the winning contractor and TUSI to negotiate costs in advance, the Solicitation listed the contract line item prices as “TBD” for all necessary wet utility services to be provided by TUSI. Specifically, in the line items, TUSI’s work covered “wet utilities to be removed and/or relocated, tie-ins, inspection of all wet utility construction and engineering design review of the construction documents.”
The contract did not explicitly address new construction of sewer and water lines, by TUSI or otherwise.
Manhattan Hunt A Joint Venture (MHJV) submitted its proposal and won the project in October 2012. But muddled interpretations of the contract price by the parties were immediate. In early 2013, MHJV submitted a Change Order Request proposing price adjustments to fill in the missing “TBD” line items to reflect the cost of MHJV’s own utility addition and removal services, as well as TUSI’s charges for oversight and inspection.
The Navy rejected the change, clarifying that all removal work must be performed by TUSI per the contract, and MHJV’s final bid included these prices. MHJV disagreed and resubmitted its request for price adjustment, seeking an increase for all utility removal services and oversight charges from TUSI.
In response, the Navy reluctantly agreed to modify the contract. The parties filled in the missing line items’ prices to meet the cost of TUSI’s services and increased the overall contract amount by more than $1.6 million dollars.
In late 2013, MHJV sought another contract adjustment for significant costs arising from TUSI’s addition of new wet utilities to the project. MHJV argued that the Solicitation did not address this work, and that its mistake in bid warranted reformation under FAR 14-407-4(b).
The Contracting Officer denied MHJV’s claim “in its entirety” on the ground that MHJV should have priced this work in its proposal (but failed to address directly the contractor’s plea for reformation). MHJV appealed the decision to the ASBCA, and the Navy moved for summary judgment.
The ASBCA adopted the Navy’s explanation of the disputed language, finding that MHJV’s interpretation was not within the “zone of reasonableness.” The Board explained that the MHJV’s omission of new utility construction from its final bid price was not supported by any language in the contract, nor could it be read harmoniously with any other contract provisions.
The Board found that both the contract and its amendments, when read as a whole, unambiguously distinguished between:
- (i) Construction of new water and sewage utility systems which contractors should have included in their bid price; and
- (ii) Work on existing infrastructure which was to be performed by the infrastructure owner and priced after award.
Accordingly, where the Board found the language of the contract unambiguous and not subject to two reasonable interpretations, there was no genuine dispute of material fact left to be decided at trial, and the issue of interpretation was resolved as a matter of law in the government’s favor.
Interestingly, MHJV’s simultaneous “mistake in bid” argument survived summary judgment because the Navy failed to adequately address it in the claim denial and subsequent motions briefing. The ASBCA noted that the “mistake/reformation claim is separate and distinct from the interpretation claim which is the subject of the motion,” leaving the contractor one last chance to demonstrate on appeal that its bidding error was so obvious that the Navy was on notice of the price terms blunder long before it ever received a change order.
There are several takeaways from this case.
First, although the contractor survived summary judgment because of a technical deficiency within the Contracting Officer’s Final Decision and motions practice, the Board did not hesitate to interpret the contract and render a decision on summary judgment without additional testimony at trial regarding the parties’ understanding and interpretation of the Solicitation language.
- This means contractors are well-advised to provide complete supporting documentation of the parties’ intent at contract formation as part of any certified claim, so that the Board can readily identify genuine issues of fact sufficient to deny Government motions for summary judgment.
Second, if a contractor believes that a Solicitation contains ambiguous or unclear terms—especially material terms addressing scope or price—then the ambiguity ought to be addressed with the Contracting Officer before proposal submission. This is the best way to resolve uncertainties without resorting to the disputes process and incurring significant potential liability.