SELPA CONSTRUCTION & RENTAL EQUIPMENT CORP.

Under Contract No. 332495-00-B-0221

PSBCA Nos. 5039, 5142, 5145 and 5348

APPEARANCE FOR APPELLANT
Stuart A. Weinstein-Bacal, Esq.

APPEARANCE FOR RESPONDENT
Barbara H. Cioffi, Esq.

OPINION OF THE BOARD

            Respondent, United States Postal Service, awarded Appellant, Selpa Construction & Rental Equipment Corp., a contract to renovate and expand an existing building for use as a post office.  Appellant’s work was delayed by defective plans, differing site conditions, and changes, and, through bilateral modifications, the parties agreed to additional compensation and extended the contract performance period.  The project, although nearly complete, was not finished by the extended completion date, and Respondent terminated the contract for default.

            Appellant challenged the default termination and submitted a claim for extended overhead, which the contracting officer denied.  Appellant also submitted a claim for changed work not addressed in the modifications and for contract work it performed but for which it had not been paid prior to the termination.  The contracting officer partially denied and partially granted the claim, but paid the awarded amount and earned but unpaid contract funds for the last months of work to Appellant’s surety.  Appellant appealed the termination and the denials of its claims.

            A hearing was held in San Juan, Puerto Rico, and the parties filed post-hearing briefs and reply briefs.  Only entitlement is at issue (Order dated December 26, 2008).

FINDINGS OF FACT

            1.  On February 7, 2001, Respondent awarded Appellant contract 332495-00-B-0221 to renovate and expand a building in Fajardo, Puerto Rico for use as the Fajardo Main Post Office (Appeal File, Tabs (“AF”) 1, 2; Hearing Transcript, Pages (“Tr.”) 34, 126).  The contract price was $2,288,000, and the project was required to be completed within 270 days after Respondent issued a Notice to Proceed.  (AF 2 (Contract Clause C.4, Notice to Proceed and Commencement, Prosecution and Completion of Work (Clause B-34) (January 1997)), 13, 14; Stipulated Facts (“Stip.”) 3, 5, 12, 13; Tr. 26).

            2.  Pursuant to a contract with Respondent, the New Jersey office of the architectural firm URS Greiner Woodward Clyde (“URS”) had designed the project (AF 1, 2; Tr. 34, 126).  While preparing its plans and specifications, URS had a copy of the as-built drawings for the existing building, but those drawings were not included in the solicitation and were not otherwise provided to Appellant.  (Appellant’s Exhibits (“App. Exh.”) 16, 17; Tr. 523).

Contract Provisions

            3.  The contract did not require Appellant to submit a critical path analysis for project management but required it to submit construction progress charts reflecting the expected completion of discrete tasks (AF 2, Contract Clause C.9, Construction Progress Chart (Clause B-59) (January 1997)).

            4.  The contract established a procedure for Appellant to submit Requests for Interpretation where clarification of contract requirements was needed.  The specifications provided that the contracting officer would review such requests “with reasonable promptness” and notify the contractor of the decisions.  (AF 2, Contract Specification 01250.1.4).

            5.  Respondent could terminate the contract by written notice of default if Appellant failed to “[c]omplete the requirements of this contract within the time specified in the contract or any extension.”  (AF 2, Contract Clause H.6, Termination for Default (Clause B-13) (January 1997)).

            6.  Under the contract’s Excusable Delays clause, Appellant would not be in default because of its failure to perform in accordance with the contract’s terms “if the failure arises out of causes beyond the control and without the fault or negligence of [Appellant].”  Listed excusable causes included acts of the Postal Service in its contractual capacity and unusually severe weather.  (AF 2, Contract Clause C.3, Excusable Delays (Clause B-19) (January 1997)).

            7.  The contract provided for liquidated damages of $100 for each day by which Appellant exceeded the time provided in the contract for completion of the project (AF 2, Contract Clause C.12, Liquidated Damages (Clause 2-10) (January 1997)).

            8.  The Suspensions and Delays clause provided that if the work were suspended, delayed, or interrupted by an order or act of the contracting officer, or by a failure of the contracting officer to act within a reasonable time, “an adjustment will be made for any increase in the cost of performance of this contract caused by the delay or interruption (including the costs incurred during any suspension or interruption).”  An adjustment to the schedule would also be made if warranted.  No adjustment would be made under the clause, however, if performance would have been delayed or interrupted by other causes, or for which an adjustment was provided or excluded under any other term or condition of the contract.  (AF 2, Contract Clause C.2, Suspensions and Delays (Clause B-16) (January 1997)).

            9.  The Differing Site Conditions clause entitled Appellant to an equitable adjustment where its costs of and/or time required for performance were increased by differing site conditions.  Differing site conditions were (1) subsurface or latent physical conditions differing materially from those indicated in the contract or (2) unknown physical conditions differing materially from those ordinarily encountered in work of the character required by the contract.  (AF 2, Contract Clause G.2, Differing Site Conditions (Clause B-32) (January 1997)).

            10.  Appellant was also entitled to an equitable adjustment for increased costs or performance time caused by Respondent’s changes (including constructive changes) to the work (AF 2, Contract Clause G.5, Changes (Construction) (Clause B-37) (January 1997)).

            11.  The contract required Respondent to make at least monthly progress payments (subject to a 10% retainage) based on approved invoices from Appellant.  The contracting officer could withhold less or no retainage from progress payments once the project was 50% complete if Appellant were making satisfactory progress.  Furthermore, the contracting officer could release all or part of the retainage whenever the work was substantially complete if satisfied that the amount retained was adequate for the protection of the Postal Service.  (AF 2, Contract Clauses F.1, Invoices (Clause B-20) (January 1997), and F.2, Payment (Construction) (Clause B-45) (January 1997)).

            12.  The contract authorized Appellant to assign contract payments to a bank, provided that notice of the assignment and a copy of the assignment instrument were filed with the contracting officer and the surety.  (AF 2, Clause H.2, Assignment of Claims (Clause B-8) (January 1997)).

            13.  On November 17, 2000, Appellant assigned the contract payments to Scotiabank de Puerto Rico (“Scotiabank” or “bank”).  Respondent received a copy of the assignment on November 18, 2000.  Under the terms of the assignment, Scotiabank had the right to require that Respondent make contract payments directly to it.  (AF 12, 155, 158; Stip. 151; Tr. 259-261, 578).

            14.  As a condition of award of the contract, Appellant was required to provide payment and performance bonds (AF 2, Contract Clause A.2, Required Bond Amounts (Clause OB-201) Alternate IV (October 1997)).  Appellant obtained the required bonds through United Surety & Indemnity Company (“surety”) (App. Exh. 18; Stip. 35).

Contract Administration

            15.  Respondent’s project manager, who worked in its Facilities Service Office in Hoboken, New Jersey, was designated as the contracting officer’s representative (“COR”).  His duties included coordinating among the architect, Respondent and Appellant, and developing solutions to problems that arose.  He visited the project approximately monthly.  The COR had no authority to modify the contract as to price or time.  Respondent advised Appellant of the COR’s limited authority and specifically advised Appellant that only the contracting officer could modify the contract.  At the time of this project, the COR held the same position regarding eight to ten other postal construction projects.  (AF 2 (Contract Clause E.2, Contracting Officer’s Representative (COR) (Clause OB-21) Alternate IV (July 1997)), 13, 17, 18; Tr. 31-33, 123, 129, 187, 363, 373).

            16.  Respondent contracted with URS, the project designer (Finding 2), to assist in administration of Appellant’s contract.  URS’ responsibility included interpreting plans and specifications, designing changes, soliciting cost proposals for modifications, reviewing construction schedules and shop drawings, and preparing plans and specifications for contract modifications.  (AF 17).

            17.  Respondent engaged the Puerto Rico engineering firm of Erwin U. Rodriguez Associates (“Erwin”) to provide construction administration services (AF 6).  Appellant was required to contact Erwin for interpretation of construction plans, but Erwin had no authority to make changes to the project, and Appellant was aware of this limitation.  An Erwin representative held weekly construction project meetings at the site with Appellant’s representatives, prepared minutes of the meetings, and sent them to the COR.  Throughout the project, there were a number of changes among the personnel Erwin provided to monitor the project.  (AF 74, 77; Stip. 52, 95-97, 101, 102; Tr. 28-30, 119-121, 204-205, 364-365, 425-426, 468, 527, 679-682).

            18.  Erwin was also responsible for reviewing Appellant’s progress payment requests.  Appellant sent payment requests to Erwin for concurrence, and then Erwin forwarded each request to the COR.  On many occasions, the COR concluded that Appellant was not entitled to the full amount requested and made downward adjustments.  The COR’s adjusted figures were presented to the contracting officer for signature and were the basis of the progress payments Appellant received.  (AF 203; Minutes, Forms 4211B of various dates[1]; Tr. 688-689).

            19.  Under the contract, Appellant was required to provide competent supervision on site at all times by a superintendent “able to speak, read, and write English to the extent necessary to permit reasonable communications with Postal Service personnel.”  (AF 2, Contract Clauses G.10, Superintendence by Supplier (Clause B-43) (January 1997) and B.3, English Language Requirement of On-Site Superintendent (Clause OB-38) (June 1988)).  Appellant was also responsible for adequately supervising its subcontractors (AF 2, Contract Clause C.14, Superintendence of Subcontractors (Construction) (Clause FB-237) (January 1997); see, also, AF 2, Contract Specification 01310-1.2).

Project Commencement

            20.  Respondent issued the Notice to Proceed at a pre-construction conference held on February 14, 2001, establishing November 15, 2001, as the contract completion date (AF 15, 16; Stip. 14, 15).  Appellant began working on the site about a week after the pre-construction meeting (Tr. 468).

Drawing S1.01

            21.  The contract required Appellant to build a new wall along axis 1 as shown on the Foundation Plan (Contract Drawing S1.01), parallel to the wall of the existing building.  Shortly after beginning its work in that area, Appellant discovered that the locations of the columns and footings along axis 1 were incorrectly identified on the plans.  It raised this issue in the first construction meeting, held March 15, 2001, and the COR committed to provide a resolution.  On March 20, the COR requested that URS provide a solution (Stip. 38).  Until corrected, this discrepancy prevented work along the axis 1 wall, and precluded work on the floor in that area.  Dimension errors were also found in that drawing as it pertained to axis A, the front (left side on the plans) of the building.  (AF 19, 20; App. Exh. 27; Stip. 37, 38; Drawing S1.01; Tr. 474-476, 530-531, 535).

            22.  URS corrected the Foundation Plan (S1.01), and the corrected version was supplied to Appellant on April 2, 2001 (AF 20 (p. 7), 22, 23, 25, 30; Stip. 33, 34, 46, 88).  With the COR’s approval, Appellant had begun foundation work in a few areas before receiving the corrected Plan (AF 206 (p. 14)), but some of that work had to be demolished and redone once Appellant received the revised drawings (Tr. 576).  By May 17, 2001, Appellant had poured the foundations on axis 1 according to the revised plan (AF 309 (p. 3)).[2]

Unsuitable Soil (Modification 1)

            23.  The contract required construction of a dock ramp extending outward from the rear of the building as extended, at plan axis G, between axes 4 and 6 (the lower right side on the plans) (Drawings S1.01; DC1.00, Demolition Plan).

            24.  As Appellant began demolition of an existing concrete basketball court to install the ramp, it encountered unexpected, unsuitable soil that would not support construction of the ramp.  Appellant notified Respondent of the condition on or about March 22, 2001.  (AF 20, 24, 33, 214; Stip. 39, 40, 41; Tr. 130, 184, 476-477, 532-535).

            25.  Although some borings had been made at the site before the plans were prepared, none had been done in this area.  Once the unsuitable soil was discovered, Respondent determined that testing of the soils in the area was appropriate.  Through Erwin, Respondent solicited proposals for soils testing.  Appellant was told not to work in the ramp area.  (AF 20, 27, 206 (p. 21); Stip. 56, 57; Tr. 487).

            26.  On May 11, 2001, Appellant complained to Respondent that it was being prevented from working on footings while awaiting a solution to the soils problem (AF 31).

            27.  On or about May 11, 2001, Respondent received the soils engineer’s report and recommendation for remediating the unsuitable soils (AF 28, 30; App. Exh. 28).  Respondent supplied Appellant with a solution to the soils problem on June 13, 2001 (AF 28, 30, 36, 40; App. Exh. 28; Tr. 342), and Appellant submitted its price proposal for the corrective work on or about June 15, 2001 (AF 50 (p. 6)).

            28.  By this time, however, Respondent had exhausted its authorized funding for the project and could not commit to increasing the contract price by modification (and thereby increasing the total project cost) without approval from higher levels of authority within the Postal Service.  The COR began the process to obtain such approval, but the time necessary for doing so was uncertain and issuance of a modification authorizing correction of the unsuitable soil condition was delayed.  (AF 43, 47, 48, 69; Stip. 69, 70, 71; Tr. 16, 37-38, 157-158, 160-161, 424).

            29.  Additional funds were authorized on July 10, 2001 (AF 43; Stip. 66, 67), and on July 31, 2001, the COR sent Modification 1 for the soils work to Appellant for signature.  Appellant signed the Modification and returned it on August 3, 2001 (AF 50).

            30.  On September 4, 2001, the contracting officer signed Modification 1 to the contract requiring Appellant to excavate, remove and dispose of soft clay soil, install Geo-Mesh fabric and backfill with crushed stone and virgin fill.  The Modification increased the contract price by $99,341.44 and added 18 days to the construction period.  (AF 50, 51).  Appellant had submitted a cost estimate of $103,221.96 for the work (Stip. 63), but had included overhead at 15% whereas Respondent only allowed 10% for overhead as provided by the contract, thus accounting for the reduction of the amount requested.  Appellant’s proposal sought an 18-day time extension for the work.  (AF 50 (p. 6); Stip. 74-76; Tr. 50-52).  Also on September 4, the contracting officer sent Appellant formal notice to proceed with the work of Modification 1 and instructed Appellant to commence the work within 10 days after receipt of the notice (AF 50 (p. 2)).

Back Wall and Terrazzo Floor (Modification 2)

            31.  The contract required demolition of the back wall of the existing building to permit construction of an extension at the rear of the building.  In the course of removing the wall covering, Appellant discovered that there was no support for the roof at that end except for the wall itself.  Further demolition of the wall could have led to collapse of the roof.  Appellant notified Respondent of this condition before the construction meeting of March 29, 2001.  Respondent recognized the condition as a differing site condition under the contract.  (Minutes, March 29, 2001; AF 24; Stip. 42-45; Tr. 470-473, 536).

            32.  Appellant suggested shoring up the back wall so it could continue its work in the area, but Respondent rejected that proposal, and barred any work on the wall, and consequently on the rear building extension, until a solution to the back wall differing site condition was developed (AF 24, 26, 27, 40, 42; Stip. 47, 49, 53-55, 57; Tr. 134, 152-153, 553, 555).

            33.  On or about May 2, 2001, Appellant reported a difference of 3 or 4 inches in elevations of the floor in separate sections of the existing building (AF 27, 309; Minutes, May 10, 2001; Stip. 58; Tr. 153, 557).  Building up the lower floor with a concrete slab was the suggested solution, which also required removal of deteriorating terrazzo flooring (AF 309; Minutes, May 10, 2001; Tr. 557).

            34.  Until Respondent provided a solution to the floor problem, Appellant was prevented from working in the area near the front of the existing building (AF 31, 40, 42).

            35.  On or about May 17, 2001, Respondent provided Appellant with the structural plan for the back wall, and Appellant began preparing its cost proposal (Minutes, May 17, 2001).

            36.  As with the modification for the unsuitable soil, Respondent could not proceed to finalize a modification to address the back wall and the floor slab due to exhaustion of project funds.  Additional funds were authorized on July 10.  (Findings 28, 29).

            37.  On August 15, 2001, the COR orally authorized Appellant to begin demolition of the back wall and to begin work on the slab elevation solution.  Appellant stated its intention to proceed with the work based on this oral authorization.  (Minutes, August 15, 2001; AF 206 (p. 30); Tr. 160, 435, 543, 552).

            38.  At the end of August, Respondent sent Modification 2 to Appellant for signature.  The modification addressed the back wall problem by adding a roof joist at the rear of the existing building and also called for replacement of 6000 square feet of loose terrazzo flooring at the front of the building with a bonded concrete structural slab level with the remaining floor.  Appellant signed the modification on August 31, 2001.  (AF 52).

            39.  On September 4, 2001, the contracting officer signed Modification 2, increasing the contract price by $82,407.34 and extending the performance period by 64 days ($33,611.87 and 29 days for installing the joist, and $48,795.47 and 35 days for replacing the floor) (AF 52 (pp. 7, 8, 11, 12); Tr. 55-56).  These were the amounts and time extensions requested in Appellant’s proposal (AF 52 (pp. 7, 8, 11, 12); Stip. 80-84; Tr. 56).  The contracting officer’s September 4, 2001 notice to proceed regarding Modification 2 instructed Appellant to begin work within 10 days after receipt of the notice (AF 52 (p. 2)).

Early Project Delay[3]

            40.  Because of the combined and seriatim effects of defective Drawing S1.01, the unsuitable soil, and the back wall and floor problems (Findings 23-39), Appellant’s critical path progress on the project was severely disrupted between March and August of 2001 (AF 47; Stip. 49, 70; Tr. 38, 420, 472-480, 541, 752-761, 793-794).

            41.  Despite Appellant’s inability to progress until Respondent issued solutions to the above problems, Respondent asked Appellant not to demobilize (App. Exh. 40; Tr. 144-145, 196-197).  Appellant continued to perform non-critical work in order to keep its workers busy, fearing they would move to other available jobs if it laid them off (Tr. 560, 761, 793).  The tasks it could perform included preparation of submittals, forming and pouring concrete for manholes, excavating for water and sewer piping, excavation for some footings near the main entrance, and site cleaning.  (AF 33, 42, 218, 220, 224, 225, 227, 232, 243, 246, 251, 253; Minutes, April 5 through August 15, 2001; Tr. 144-145, 479, 481-485, 545-546, 761-762).

            42.  Appellant’s project billings during 2001, in the form of progress payment requests, were as follows:

March 2001                           $123,750.95

May 2001                               $120,641.32

June 2001                              $264,415.70

July 2001                                $114,300.36

August 2001                          $123,325.35

September 2001                   $117,814.78

October 2001                        $143,086.83

November 2001                                0

December 2001                    $143,359.14

(Minutes, “Appl for Pymt”, PS Forms 4211B dated March 19, June 4, June 25, July 18, August 27, September 21, October 24, December 3, December 12, 2001).

            43.  During the April 26, 2001 weekly meeting, Appellant’s principal mentioned that Appellant could foresee asking for an extension of time and overhead due to the delays encountered.  The Erwin representative told him to look at the contract for the procedure to make such claims.  (AF 206 (p. 18), 252; Tr. 180-181, 542-543, 657-658, 663-665).

            44.  Appellant experienced critical path project delay from March 15, 2001, through August 15, 2001, none of which was its fault (Findings 23-40).

First Cure Notice

            45.  On January 25, 2002, the contracting officer issued a cure notice letter, pointing out that the contract completion date of November 15, 2001, had passed yet the work was only about 55% complete.[4]  He required Appellant to respond by February 8, 2002, explaining the causes of the delay and why Appellant should not be declared in default.  He also asked Appellant to demonstrate how it intended to complete the project and to provide a projected completion date and schedule.  He instructed Appellant to submit a request for any extension of the contract completion date it considered warranted.  A copy  of the contracting officer’s letter was sent to Appellant’s surety.  (AF 70; Stip. 90, 91; Tr. 78-79, 193).

            46.  Appellant responded on February 5, 2002, asserting that its progress had been delayed through no fault of its own and that it was now making progress on the job.  Appellant noted that the contracting officer’s letter had ignored the time extensions already granted in Modifications 1 and 2.  Appellant identified the causes and extent of the delays as follows:

            1.  Unsuitable soil                              100 days

            2.  Back wall                                      100 days

            3.  Revisions to drawing S1.01       39 days

            4.  Floor slab                                      85 days

            5.  Weather (Rain)                             13 days

Appellant included official weather data and a schedule that provided for completion of the project by June 10, 2002.  (AF 71, 73; Tr. 148-152; Stip. 93).

            47.  The COR believed the specific delays claimed by Appellant had already been negotiated and addressed in Modifications 1 and 2.  Nevertheless, after reviewing Appellant’s response to the cure letter, the contracting officer permitted Appellant to continue performing.  (Tr. 80-83, 383).

Air Handlers (Modification 3)

            48.  On or about May 2, 2001, in conjunction with submittals for the HVAC system, it was discovered that the specified air handling units would not fit in the mechanical room as designed for the new building extension.  The COR undertook to resolve the issue by checking with the building designers, URS, but construction work in the mechanical room was delayed.  (AF 27, 31, 206 (p. 21); Tr. 564).

            49.  In the course of the discussions regarding the dimensions of the HVAC equipment, the equipment supplier recommended that the size of the condensers be increased from the 25-ton size specified to 30 tons (AF 34, 40, 42; Tr. 564).

            50.  Consideration of changes to the condenser size continued for more than a year, with Appellant submitting proposals and Erwin, URS, and the COR considering them and making recommendations.  Ultimately all agreed to increase the size of the condensing units.  (AF 69, 77, 78, 79, 80, 82, 83, 87; Stip. 104, 105; Tr. 58-60).

            51.  On August 21, 2002, the contracting officer executed bilateral Modification 3, previously executed by Appellant, which required increasing the size of the air conditioning condensing units, changing ducts, and constructing a concrete block wall between an existing perimeter wall and roof line.  The modification increased the contract price by $14,309.58 (the amount Appellant requested reduced by decreasing Appellant’s claimed commission on subcontractor work from about 20% to the contract-permitted commission of 10%) and the contract time by 35 days.  Appellant had asked for a 57-day extension, but the COR concluded some work of the modification could be done concurrently with other work.  (AF 112; Stip. 116-122; Tr. 60-61, 213-216).

Security Equipment (Modification 4)

            52.  On September 26, 2002, the contracting officer executed bilateral Modification 4, previously executed by Appellant, to add security equipment.  The modification included funds to enlarge the concrete pad to accommodate the larger air conditioning condensing units.  Modification 4 increased the contract price by $20,792.83 but did not extend the contract completion date.  Appellant had requested a 25-day extension, but the COR believed the added work could be done concurrently with other work, and the contracting officer accepted his recommendation regarding the extension.  (AF 125; Stip. 124-129; Tr. 62-64, 66, 221, 346).

332-Day Time Extension (Modification 5)

            53.  As of September 18, 2002, the Erwin representative assessed the project as 83% complete (AF 318).   In a September 24, 2002 letter to Appellant, the COR noted that the latest approved contract completion date was the end of September 2002.  The letter repeated a request the COR had made at the previous site progress meeting that Appellant submit a revised schedule and proposed completion date.  (AF 126; Stip. 130).

            54.  Appellant submitted a schedule dated October 9, 2002, reflecting the work remaining on the project and showing the project to be completed on January 31, 2003.  On October 25, 2002, the contracting officer accepted the schedule, including the January 31, 2003 completion date.  (AF 128).

            55.  Respondent prepared Modification 5 to reflect agreement on the new completion date of January 31, 2003.  Appellant executed Modification 5 on November 5, 2002, and on December 10, 2002, the contracting officer issued Modification 5, extending the performance period by 332 days, to January 31, 2003.  The Modification did not increase the contract price and provided, “This extension is at no additional cost to the Postal Service.”  (AF 147 (pp. 19-29); Stip. 137-140; Tr. 239, 241).

            56.  In issuing Modification 5, Respondent did not analyze any particular causes of delay but merely extended the performance period to the January 31, 2003 completion date Appellant proposed (Finding 54).  Respondent’s purpose in issuing Modification 5 was to allow Appellant to continue its performance without facing liquidated damages even though the contracting officer was not persuaded that Appellant had encountered excusable delays beyond those recognized in Modifications 1-3.  (AF 147 (p. 27); Tr. 66-69, 251, 317, 376-377).

Modification 6

            57.  Also, on December 10, 2002, the contracting officer executed Modification 6, previously executed by Appellant, for four changes to the work, valued at $7,393.37, which was the amount Appellant requested.  Appellant sought a 9-day contract extension, but Respondent allowed no extension, the COR believing that the work could be done concurrently with other project work.  (AF 147 (pp. 1-18); Stip. 141-144; Tr. 70-71, 254-256). 

Modification 7

            58.  An electrical transformer of the size specified was not available, and in January 2002, Respondent directed URS to revise the contract requirements in this regard (AF 40, 42, 67).

            59.  Appellant’s price proposal for the transformer change was submitted on March 10, 2003 (AF 163).

            60.  The contracting officer issued Modification 7, previously executed by Appellant, on April 23, 2003, increasing the contract price by $40,757.08, which was less than Appellant’s estimate (AF 177 (pp. 6, 13)), and extending the contract by 21 days, as requested by Appellant (AF 177 (pp. 3, 42); Tr. 72-73).  This extended the contract completion date to February 25, 2003 (see AF 153).

            61.  Appellant had already constructed the transformer pad according to the plans, but it had to be demolished and relocated as it was too small for the larger transformer required by Modification 7.  The cost of this work was not included in Appellant’s proposal or in Modification 7.  (Tr. 502).

Termination for Default

            62.  In mid-2002, a number of Appellant’s subcontractors began complaining to Respondent directly and through Erwin that Appellant was not paying them.  Respondent directed these subcontractors to the surety.  (AF 92, 94, 104, 117, 119, 120, 127, 132, 134, 148; Stip. 109, 123, 131; Tr. 85-86).

            63.  In a November 12, 2002 letter, Appellant advised the COR that it had met with the surety and had explained that the subcontractor disputes involved deficient work or invoices not owed by Appellant.  Appellant stated its intention to meet again with the surety to resolve these disputes.  (AF 139; Stip. 132).

            64.  By letter to the COR dated November 12, 2002, the surety represented that it had taken control of the proceeds of the construction contract and demanded that all future progress payment checks be made jointly payable to the surety and Appellant.  (AF 140; Stip. 133-135; Tr. 236).  By letter dated November 25, 2002, the COR sent a copy of the surety’s letter to Appellant, asking whether it agreed with the surety’s demand (AF 140).

            65.  Appellant met with the surety, which agreed to provide financial assistance.  Beginning in January 2003, the surety paid subcontractors and suppliers on Appellant’s behalf.  (AF 192; Tr. 586-589, 642-644).

            66.  As of January 10, 2003, the Erwin representative evaluated the project as approximately 89% complete (AF 321).

            67.  On January 15, 2003, the contracting officer issued another cure notice, noting that Modification 5 had extended the contract completion date to February 4, 2003.[5]  He stated that construction progress had been slow over the last several months; that the project was approximately 88% complete; and that he was concerned that Appellant could not complete the project.  He asked Appellant for a written response explaining the causes for the delay; the impact of delays on Appellant’s progress; how Appellant intended to complete the project; and for a revised construction schedule.  (AF 153; Stip. 146-150; Tr. 86, 385, 579-581).

            68.  By letter dated January 27, 2003, to the contracting officer, Scotiabank invoked its right to have contract payments sent to the bank (Finding 13).  The bank requested that payments under the contract be made jointly payable to the bank and Appellant.  (AF 155; Stip. 151; Tr. 259-261, 578).

            69.  On January 29, 2003, the Erwin representative evaluated the project as approximately 94% complete (AF 322).

            70.  In a January 30, 2003 letter, Appellant responded to the contracting officer’s January 15 cure notice (Finding 67) by asking that the contract completion date be extended to March 31, 2003.  Appellant advised that the delays were caused by subcontractors not working because of a payment dispute.  Appellant stated that the surety was mediating with the subcontractors and had agreed to pay some of them, so the subcontractors were coming back to work.  (AF 157; Stip. 154-155; Tr. 387, 444-445).

            71.  On February 3, 2003, Appellant submitted an application for a $201,795 progress payment.  The Erwin representative approved it on February 4, but the COR and contracting officer did not approve the request until March 12, 2003.  (Minutes (also AF 203), Form 4211B dated March 12, 2003).

            72.  On February 4, 2003, the COR reminded Appellant of the competing claims to contract payments by the surety and the bank.  By letter dated February 28, 2003, Appellant insisted that Respondent ignore the surety’s request and make its checks payable to Appellant and the bank.  (AF 158, 162, 175; Tr. 261, 579, 589, 598).

            73.  Respondent issued the $201,795 progress payment check on March 26, 2003.  The check was made payable to “Selpa Const & Scotiabank PR.”  That brought total progress payments plus retainage to about 88% of the total contract amount.  (AF 164, 203 (Form 4211B dated March 12, 2003); Minutes, Check dated March 26, 2003).

            74.  On March 6, 2003, Erwin reported the project as 95% complete (Minutes, March 6, 2003), and by the end of March, the project was still estimated to be 95% complete.  Significant items of work remained to be done on the project, both unfinished work and work to correct deficiencies.  (AF 161, 168, 323; Stip. 157, 158).

            75.  On April 3, 2003, Appellant requested that Respondent release to the surety 50% of the retainage it then held (AF 173; App. Exh. 42; Stip. 161), but Respondent refused (AF 174; Stip. 162; Tr. 91-93, 332-333, 388-389, 596). 

            76.  On April 4, 2003, Scotiabank paid the surety $60,000 from the proceeds of the March 26 $201,795 progress payment (Finding 73), but the surety had expected to receive the entire payment (AF 175 (p. 3); Tr. 587).

            77.  When the surety discovered that the $201,795 check had been issued to Appellant and Scotiabank, its attorney wrote to Respondent on April 8, 2003, asserting its right to all payments under the contract, including the $201,795 payment previously issued.  The attorney advised that “Selpa’s financial condition precluded it from performing under the contract” and that, therefore, the surety had agreed to provide Appellant the funds necessary to complete the project.  The attorney asserted that the surety had thereby become a performing surety; that it had disbursed $320,800 for the performance of the contract; that Respondent had improperly ignored its demand for the March 26 progress payment; and that it would make no further payments under its payment bond.  (App. Exh. 43; Tr. 271-272).

            78.  Thereafter, the surety stopped making payments to Appellant’s subcontractors and suppliers.  Without the surety’s financial support, Appellant was unable to work at full capacity and unable to cause its subcontractors to finish contract work.  (AF 169, 192; Stip. 168, 169; Tr. 273, 593).

            79.  In an April 9, 2003 letter to the COR, Appellant requested an extension of the performance period to May 30, 2003.  It noted that it did “not waive the Contractors [sic] rights to claim for example an extended overhead in said project.”  (AF 167).

            80.  In an effort to persuade the surety to resume financial support, on April 16 Appellant offered to pay the surety after it paid off Scotiabank, and promised the surety that it would authorize Respondent to release the retainage to the surety after completion of the project.  It also offered real estate as security once the bank released a lien it held against the property.  (AF 171; Tr. 274-275).

            81.  On April 23, 2003, Appellant submitted a progress payment request for $109,299.50.  The Erwin representative signed the request on April 24, and on April 29, 2003, the COR and the contracting officer approved payment of $109,294.37.  (AF 203 (Form 4211B dated April 29, 2003)).

            82.  Based on Appellant’s assurance that it would complete the project by May 30 and its request for an extension to that date, Respondent prepared and, on May 8, 2003, sent to Appellant proposed Modification 8, which would have extended the contract by 93 days, to May 30, 2003 (AF 184; Stip. 171-175, 186; Tr. 74-75, 290-291).  Respondent believed the delays were Appellant’s responsibility but intended by proposed Modification 8 to excuse Appellant’s late performance to avoid imposing liquidated damages (Tr. 74-75).  Neither Appellant nor the contracting officer signed proposed Modification 8 (AF 184; Tr. 599).

            83.  As of May 8, 2003, the Erwin representative reported that the project was 97% complete, but he observed that Appellant lacked sufficient manpower on the job to complete it by May 30, 2003 (App. Exh. 46; Minutes, May 8, 2003).

            84.  On May 9, 2003, Appellant wrote to the COR advising that it had initiated suit against the surety to force it to resume financing the project.  It blamed the surety’s refusal to make payments to the subcontractors and suppliers for its delay and requested an extension of the project completion date to June 30, 2003.  (AF 185, 192; Stip. 176; Tr. 600).

            85.  On May 13, 2003, Respondent issued a $109,294.37 progress payment approved on April 29 (Finding 81) by check payable to “Selpa & Scotiabank & United [the surety].”  (App. Exh. 45; AF 177 (p. 44), 181; Stip.170, 178, 181; Tr. 237-238, 272, 287-288, 449-50, 585, 597).

            86.  The May 13 payment brought total progress payments plus retainage (which totaled $119,572.99) to about 93% of the total contract price (AF 203 (PS Form 4211B dated April 29, 2003)).

            87.  The surety would not endorse the May 13 check to Appellant and Scotiabank, and Scotiabank would not release it to the surety.  The check was never cashed and never reissued to Appellant.  (Stip. 179, 180, 181; Tr. 237-238, 288, 296, 449-50, 509, 597-598, 611, 613).  Respondent stopped payment on the check on or about December 2, 2003 (AF 209).

            88.  By letter dated May 16, 2003, the contracting officer issued a third cure notice.  He noted the revised completion date of May 30, 2003, but commented that the project was only 96% complete and remarked that Appellant had just informed him that it would need another 30-day extension.  He complained of Appellant’s slow progress, and asked Appellant to explain the delays and provide a revised schedule and completion date.  (AF 177, 186; Stip. 182; Tr. 94, 390).

            89.  In its May 27, 2003 response to the third cure letter, Appellant again advised that it had initiated litigation against the surety to force it to resume financing the project (Stip. 189; AF 187).  Again, Appellant blamed the surety’s refusal to provide financing as the cause of the project delays and requested an extension of the contract completion date to July 5, 2003.  It also recounted generally delays caused by Respondent’s drawing mistakes, differing site conditions, and Respondent’s delays in making changes and issuing modifications.  (Stip. 187, 188, 189; AF 187; Tr. 96, 390, 446, 603-604).

            90.  In his May 28 inspection, the Erwin representative repeated his observation that there was inadequate manpower to complete the job by May 30 and noted that the project was still evaluated at approximately 97% complete (App. Exh. 62; Minutes, May 28, 2003).

            91.  On May 28, 2003, the contracting officer sent (and faxed on May 30) Appellant a Show Cause letter for Appellant’s failure to complete by May 30, 2003, and failure to make progress so as to endanger performance.  He noted that there had been very little progress in the last few months.  He asked Appellant to cure all defaults within 20 days, including its failure to complete the contract by the contract completion date, and warned that Respondent could terminate the contract if Appellant did not cure the defaults.  The contracting officer demanded that Appellant show cause by June 17 why it should not be declared in default and demonstrate how Appellant would complete construction of the facility.  (AF 188; Stip. 190; Tr. 98, 391, 605).

            92.  At the May 28, 2003 construction meeting, Appellant was advised that Respondent would make a pre-final inspection of the project on June 3, 2003 (App. Exh. 62; Minutes, May 28, 2003).  On June 3, the COR, the Erwin representative and Appellant’s principal walked through the building and grounds.  The COR noted items remaining to be completed or corrected, and the Erwin representative wrote them down.  The resulting punch list, which was sent to Appellant, listed 294 items needing correction and/or completion.  (AF 189; Stip. 183, 184, 185; Tr. 101-102, 243, 302, 306-308, 348, 507, 607-608, 677-678, 651, 692).

            93.  Certain items on the punch list prevented Respondent’s occupancy and use of the building:  the building was not handicapped accessible; emergency exit lights were not working; security cameras were not installed; the retail sales area lacked furniture, counters, drop boxes, and a slat wall for displaying merchandise; and a security door that allowed locking the postal store from the lobby after the store closed had not been installed.  There were no fire extinguishers; the emergency generator was not working; and only temporary electricity was supplied to the building.  There was no hydraulic pump for the lift used to load and unload mail from vehicles; the inspection service viewing windows were not installed; there were no doors to the vestibule and no motors on the facility gates.  The building in that condition could not be used as a post office.  (AF 189; Tr. 103-111, 399-400, 687-688).

            94.  Without receipt of the May 2003 progress payment of $109,294.37, Scotiabank would not increase Appellant’s line of credit, and Appellant lacked funding to finish the project (Tr. 611-612, 648).  Appellant continued to perform some work at the site, paying for it with Appellant’s own funds.  (Tr. 510-512, 598-601, 605, 645, 660).

            95.  By letter dated June 16, 2003, Appellant responded to the Show Cause letter.  Appellant pointed out mistakes in the drawings affecting steel fabrication, the problems with the slab, unsuitable soil, footings and back wall support, among others.  It alleged generally that there were long waiting periods for Respondent and its consultants to analyze problems, find solutions, approve funds and authorize Appellant to start work.  Appellant recited its financial difficulties, specifically disruptions caused by its surety.  Appellant represented that it remained working and that some of the subcontractors were also working, that it was 97% finished, and that it would complete the project once the surety was forced to extend financial support.  The letter did not include a plan or schedule for completion.  (AF 190; Tr. 99-101, 392-394, 608-609).

            96.  By letter to the contracting officer dated June 24, 2003, Appellant explained that its lawsuit against the surety to force it to resume financing the project had been delayed.  Accordingly, Appellant represented that although it continued to work, it could not complete the project until the surety resumed its support.  Appellant proposed that Respondent directly pay the subcontractors.  Appellant attached a list of what it represented were the subcontractors that still had work to finish and the approximate value of such work, totaling $162,450.  (AF 192; Tr. 612-613).  Respondent decided that it would refuse to pay the subcontractors directly, believing that warranty and liability issues would be raised if it did so, although the record does not reflect whether this refusal was conveyed to Appellant (Tr. 115-116, 401-402).

            97.  By telephone, and by fax on July 8, 2003, bearing the typed date July 3, Appellant asked the COR to verify the funds remaining in the project.  Appellant stated in the letter that certification of the funds remaining was needed to convince Scotiabank to “consider positively our proposal to authorize the USPS to make direct payments to the remaining suppliers.”  On July 8, the COR advised Appellant that Respondent’s computer project management system reflected a remaining balance of $280,944.82.  (AF 194; Tr. 118-119, 613).

            98.  By final decision dated July 8, 2003, the contracting officer terminated the Fajardo contract for default for Appellant’s failure to complete the project within the time allowed by the contract (AF 195; Stip. 193, 194).  In deciding to terminate the contract, the contracting officer considered the past promises of completion that Appellant had failed to accomplish and Appellant’s admitted inability to pay its subcontractors (Tr. 392-394).  After reviewing the punch list, the contracting officer believed that there remained a substantial amount of work and that the post office was not ready for occupancy (Tr. 397-400).  Contributing to this belief was the amount of unfinished work Appellant listed with its June 24, 2003 letter (Finding 96) (AF 192; Tr. 402).  He was also convinced by Appellant’s June 24 letter asking Respondent to pay subcontractors directly that Appellant could not complete the project (Tr. 401-402).

            99.  Appellant’s timely appeal of the termination was docketed as PSBCA No. 5039 (AF 202; App. Exh. 47).

            100.  In January 2004, Respondent entered into a takeover agreement with the surety providing for completion of the project within 120 days.  Completion of the project, including correction of Appellant’s deficient work, took more than a year at a cost of at least $1.6 million.  (App. Exh. 51, 55, 56, 58, 59; Tr. 111-113, 334-340, 400, 429-430).

Appellant’s Additional Work Claim

            101.  By letter dated October 19, 2003, Appellant submitted a $58,782.88 monetary claim to the contracting officer for work performed at Respondent’s request that was beyond that required by the contract.  The claimed extra work involved (1) construction of a front canopy/tower support system; (2) installation of a heavier structural steel frame to support the floor in the investigative office; (3) work done for Modification 7, for which it had not been paid; (4) fabrication of supports for lamps over the mailboxes; (5) changing the color of ceiling tiles in the investigative office; (6) installation of handrails in a mechanical room; and (7) installation of fascia at the loading dock.  Additionally, the claim included Appellant’s demand for payment for contract work it performed during April through mid-May of 2003 for which it had not submitted pay requests.  (AF 204).[6]

            102.  The front canopy claim ((1) in Finding 101, above) stemmed from Appellant’s February 2002 discovery that the contract plans did not provide adequate details for the steel connections supporting the upper part of the canopy/tower over the entry to the customer lobby.  The plans (at Detail 6, Drawing A7.04) did not provide a design sufficient to withstand expected wind loads.  Appellant requested clarification from URS through Erwin.  (AF 73 (p. 11); Tr. 294-295, 489-491, 687).

            103.  On March 13, 2002, the COR sent Appellant his conclusion, which he based on advice from URS, that the specifications required Appellant, through its steel fabricator, to size and calculate the cross bracing and framing for the front tower and canopy.  He referred to specification 05400, 1.3, A, which required Appellant to “design and/or verify the size and strength of all light gauge cold-formed Metal Framing members and connections.”  (AF 86, 87, 185 (p. 4); Tr. 569-571; Drawings A7.04, A7.09 (Detail 11), A5.01).

            104.  Appellant designed the connections.  However, to withstand expected winds, Appellant was required to use heavier structural steel in place of light gauge metal framing, which was specified.  Appellant incurred unanticipated costs for the design as well as for the use of more expensive materials and installation methods.  (Tr. 489-491, 571, 618, 687, 774).

            105.  The investigative office claim ((2) in Finding 101) raised in Appellant’s October 19, 2003 letter also related to structural steel work.  The criminal investigative office was elevated above the floor, and Appellant discovered that the floor of the office as designed would not safely support the specified concrete floor.  Appellant recommended to Erwin adding structural steel to the floor frame.  (Tr. 497-498, 619, 655).

            106.  Appellant received verbal authorization to add the structural steel support from the Erwin representative (AF 204; Tr. 497-498, 656, 665).  Appellant added the structural steel and incurred an expense it had not anticipated (Tr. 655).

            107.  The COR refused to authorize or pay for the additional work on the investigative office floor (Tr. 498). 

            108.  In a final decision dated December 1, 2003, the contracting officer addressed Appellant’s October 19, 2003 claim.  He denied items (1) and (2) of the claim (Finding 101, above), concluding the work was within the scope of Appellant’s contract.  He granted the amounts claimed for items (4), (5), (6), and (7), for a total of $4,735.88.[7]  However, he stated that those funds, as well as payments for unbilled contract work done in April and May and work done as part of Modification 7, would be paid to the surety pursuant to its takeover of the project and its demand for all future payments.  (AF 207; App. Exh. 50).  Appellant’s appeal of that decision is PSBCA No. 5142.

Extended Overhead Claim

            109.  By letter dated November 10, 2004, Appellant submitted a certified claim for extended overhead and profit relating to alleged delays encountered on the project.  Appellant claimed a total of 230 “waiting days” at the rate of $1,679.25 per day plus 10% profit, for a total claim of $424,850.25.[8]  The claim identified the delays as waiting time for Respondent and its consultants to assess design errors and differing site conditions, to consider Appellant’s cost submissions, to approve modifications and authorize Appellant to start the work.  (AF 210; see AF 206; App. Exh. 49).

            110.  In an earlier, uncertified version of the claim, which is virtually identical to that of November 10, Appellant broke down the delays as follows: Drawing S1.01 errors, 69 days, from March 7 to May 16, 2001; unsuitable soil, 138 days, from March 22 to August 6, 2001; back wall, 152 days, from March 15 to August 13, 2001; floor slab, 111 days, from April 25 to August 14, 2001.  How these individual alleged delays distill to the 230 days claimed was not explained.  (AF 206 (p. 8); Tr. 642).[9]

            111.  Each of the seven bilateral modifications (Modifications 1-7) included the following printed release language on the signature page, on which also appeared a description of the modified work, the length of extension, if any, granted, and the amount of compensation, if any:

The contractor agrees that the compensation provided by this modification constitutes full and complete satisfaction for all direct costs, indirect costs, applicable interest, impact and delay costs, and additional contract completion time (beyond that specified herein) which either has been or will be incurred in performing all work described by this modification.

(AF 50 (p. 3), 52 (p. 3), 112 (p. 3), 125 (p. 2), 147 (pp. 3, 21), 177 (p. 3).[10]

            112.  None of the modifications, estimates, or modification work papers mentioned specifically compensation for extended overhead (Id.; Tr. 163-175, 219, 247, 319-320, 403, 418, 549-553).  Appellant’s principal had occasional discussions with the contracting officer over the course of the project but never mentioned extended overhead and never stated that he had been promised a modification with respect to extended overhead (Tr. 403-404).

            113.  By final decision dated December 22, 2004, the contracting officer denied the extended overhead claim.  The contracting officer relied on the release included in each of the contract modifications (Finding 111).  The contracting officer concluded that Appellant had been compensated for the plan errors, changes and differing site conditions and had waived further claims related to those circumstances.  (AF 211).  Appellant appealed that denial in PSBCA No. 5348.

DECISION

I.  Termination for Default

            Respondent terminated the Fajardo Post Office contract for default because Appellant failed to complete the project by the contract completion date or as of the July 8, 2003 termination date.  Appellant contends the termination was improper and that it should be converted to a termination for convenience or found to be a breach.

A.  What was the contract completion date?

            Based on bilateral extensions as reflected in Modifications 1-7, the contract completion date was February 25, 2003 (Finding 60).  Proposed Modification 8 would have extended the contract completion date to May 30, 2003, and although neither party executed that modification (Finding 82), Respondent treated May 30, 2003, as the contract completion date.  According to Respondent, Appellant’s failure to complete by that date or by the July 8, 2003 termination justified the contracting officer’s action.

1.  Was Appellant entitled to time extensions for circumstances not addressed in the modifications?

            Appellant argues that it was entitled to time extensions for delays caused by Respondent in addition to those addressed in the modifications and that with those additional extensions its contract completion date would have extended beyond the date of the termination.  Respondent argues that Appellant has not shown such entitlement because it failed to offer a critical path schedule analysis demonstrating that it incurred project delay.  Appellant correctly points out that the contract did not require it to prepare a critical path analysis for contract management and scheduling purposes (Finding 3), but that does not excuse it from proving its entitlement to a time extension by showing that actions of Respondent delayed overall project completion.  See Lamb Eng’g & Constr. Co., EBCA No. C-9304172, 97-2 BCA ¶ 29,207, at 145,345, recon. denied, 98-1 BCA ¶ 29,359.

            Regarding Appellant’s claim to time extensions beyond the 563 days granted by Respondent, Appellant has presented only general testimony and assertions that other design issues (including the canopy design, electric doors, cast iron pipe) disrupted or interfered with its work with no specific evidence demonstrating the details of the events and their impact on overall project completion.

A general statement that disruption or impact occurred, absent any showing through use of updated CPM, schedules, [l]ogs or credible and specific data or testimony, will not suffice to meet the plaintiff’s burden.

PCL Constr. Servs. Inc. v. United States, 47 Fed. Cl. 745, 802 (2000), aff’d, 96 Fed. Appx. 672 (Fed. Cir. 2004), quoting Preston-Brady Co., VABCA Nos. 1892, 1991, 2555, 87-1 BCA ¶ 19,649, at 99,520.

            Appellant has not met its burden to prove its entitlement to an extension of the contract completion date because it has not shown that the delaying events it alleges were critical to and impacted overall contract completion.  See Sauer Inc. v. Danzig, 224 F.3d 1340, 1345 (Fed. Cir. 2000); Skip Kirchdorfer, Inc., ASBCA No. 40516, 00-1 BCA ¶ 30,625, at 151,181.

It is not enough for the contractor to show that the government was responsible for delay to a particular segment of the work.  It must establish that the completion of the entire project was delayed by reason of the delay to the segment.

Contel Advanced Sys., Inc., ASBCA No. 49075, 04-2 BCA ¶ 32,664, at 161,680.

            Without a schedule analysis, or other specific data, Appellant has not demonstrated that any of the events it identifies as delays caused by Respondent beyond those addressed in the modifications had any quantifiable effect on overall project completion.  See Essential Constr. Co. and Himount Constructors Ltd., Joint Venture, ASBCA No. 18706, 89-2 BCA ¶ 21,632, at 108,834.[11] Accordingly, it has not demonstrated that it was entitled to extensions of time beyond May 30, 2003, because of delays not addressed in the modifications.

2.  For the conditions addressed in the modifications, was Appellant entitled to extensions greater than those stated in the modifications?

            Appellant argues that the time extensions included in the modifications understated the delay Appellant incurred as a result of the conditions addressed and thus understated the time extensions to which it was entitled (App. Br. p. 17).  However, under the circumstances of this appeal, accord and satisfaction is fatal to Appellant’s position.  With respect to the work called for by the modifications, the release contained in each modification is a plain and conclusive waiver of Appellant’s claims to further time extensions.  Appellant agreed in each of the modifications that the time extension granted satisfied any claim for “additional contract completion time (beyond that specified herein) which either has been or will be incurred in performing all work described by this modification.”  (Finding 111).  Appellant’s claim for additional time extensions due to the work of the modifications is barred by this release.  Bell BCI Co. v. United States, 570 F.3d 1337, 1341-1342 (Fed. Cir. 2009).

3.  Should Appellant be relieved from the releases it agreed to because its agreement was obtained through duress?

            Appellant argues that it should not be bound by the releases because it only agreed to the modifications because of duress.  To be relieved of the waiver included in each of the modifications on this ground, Appellant must establish that (1) it involuntarily agreed to the modifications with the release language; (2) circumstances permitted no other alternative; and (3) such circumstances were the result of Respondent’s coercive acts.  See George P. Gurdak, PSBCA No. 5049, 05-2 BCA ¶ 33,092, at 164,054; Loyd V. Lovell, PSBCA Nos. 4766, 4811, 02-2 BCA ¶ 31,933, at 157,759, recon. denied, 03-1 BCA ¶ 32,070.  For Respondent’s conduct to be found coercive, Appellant must show Respondent acted wrongfully, i.e., that its actions were “(1) illegal, (2) a breach of an express provision of the contract without a good-faith belief that the action was permissible under the contract, or (3) a breach of the implied covenant of good faith and fair dealing.”  Rumsfeld v. Freedom NY, Inc., 329 F.3d 1320, 1330 (Fed. Cir. 2003).

            Appellant points to the cure notices, which it believes were unjustified, as evidence of intimidation and duress.  At the time Respondent issued each of the cure notices, the then-established contract completion date had passed or was just a few days from passing (Findings 45, 46, 67, 88), and it is undisputed that when each cure notice was issued, the post office was not complete.  Under such circumstances, the contracting officer could reasonably seek Appellant’s explanation of the causes for delay and assurance that Appellant could continue performing.  The language of the cure notices was stern and the threat of termination proposed a severe sanction, but Respondent’s issuance of the notices was not wrongful and did not violate notions of fair dealing, especially where, as here, the cure notices gave Appellant avenues to explain the causes for the delays.  See Liebherr Crane Corp. v. United States, 810 F.2d 1153, 1158-59 (Fed. Cir. 1987); Systems Tech. Assocs. v. United States, 699 F.2d 1383, 1387-88 (Fed. Cir. 1983); Range Tech. Corp., ASBCA Nos. 51943, 54340, 54341, 04-1 BCA ¶ 32,456, at 160,548.[12]

            Moreover, Appellant executed Modifications 1 and 2 before the first cure notice, so Respondent’s issuance of the cure notice could have had no coercive effect.  See King Constr. Co., ASBCA Nos. 38303, 39170, 40096, 94-1 BCA ¶ 26,434, at 131,506, recon. denied, 94-3 BCA ¶ 26,630.  Modifications 3 through 6 were signed before the contracting officer issued the second cure notice (Findings 51, 52, 55, 57, 60, 67), so only the first cure notice could have had any bearing on their execution.  Modification 3, the earliest of those modifications, was signed in August of 2002, more than seven months after Appellant had been allowed to continue performance after responding to the first cure notice, so we are not persuaded that the first cure notice influenced Appellant’s execution of Modifications 3 through 6.  Modification 7 was executed after the second cure notice (Findings 60, 67), but Appellant has not shown that the second cure notice coerced Appellant to sign the modification.  Although Respondent granted in Modification 7 less money than Appellant requested, it allowed the full amount of time Appellant sought for the changed work (Finding 60).

            Appellant accuses the COR of intimidating Appellant’s principal and coercing him into signing the modifications against his will.  The COR denied taking action to intimidate Appellant’s principal.  The instances Appellant identifies as coercive relate to contract administration actions taken by Respondent that were unfavorable to Appellant, but Appellant has not identified specific intimidating or coercive acts by Respondent’s officials.  Additionally, the lack of any contemporaneous corroborating documentary proof of such intimidation supports a finding of no duress.  See Starghill Alternative Energy Corp., ASBCA Nos. 49612, 49732, 98-1 BCA ¶ 29,708, at 147,232.  Compare these circumstances to those in George P. Gurdak, 05-2 BCA, at 164,054, in which coercion was evident in the threatening correspondence of the contracting officer, and the contractor contemporaneously objected repeatedly in writing.

            Because Appellant has not shown it entered into the modifications because of duress, the unambiguous release in each modification constituted an accord and satisfaction that precludes reopening the matters addressed therein. PNL Commercial Corp., ASBCA No. 53816, 04-1 BCA ¶ 32,414, at 160,458.

            Appellant has not shown its entitlement to additional extensions to the contract completion date.

B.  Was the project substantially complete at the time of the termination?

            Appellant argues that although the June 3, 2003 punch list inspection revealed that work remained to be done (Findings 92, 93), at 97% of completion the project was substantially complete, and that therefore imposing the harsh sanction of termination for default was an abuse of the contracting officer’s discretion.  Respondent argues that the completion percentages listed in Erwin’s reports overstated the degree of completion and that the extensive punch list developed in June 2003 (Finding 92) demonstrates that the project was not substantially complete.  Appellant responds that Respondent exaggerates the seriousness of the items listed on the punch list and that, if given the opportunity to do so, it could have finished all of the remaining items within a month or less.

1.  Do the percentage of completion and time necessary to complete work remaining as of the termination demonstrate that the project was substantially complete?

            The parties disagree about the percentage of work that Appellant completed and the time necessary to finish the remaining work.  However, we decline to apply a rigid percentage test to determine whether the project was substantially complete.  See Joseph Morton Co., GSBCA No. 4876, 82-2 BCA ¶ 15,839, at 78,524, and cases cited therein; Two State Constr. Co., DOT CAB Nos. 78-31, et al., 81-1 BCA ¶ 15,149, at 74,938.

2.  At the time of the termination, could the project have been used for its intended purpose?

            What is significant in this case is that at the time the contract was terminated, the Fajardo Post Office was not available to Respondent for its intended use.  The remaining work included unfinished, crucial safety, security and functional elements that prevented Respondent from occupying and using the facility for its intended purpose as a post office (Finding 93), and Appellant did not indicate reliably that the remaining work would be performed within an acceptable period.  Moreover, Appellant’s estimate of the time necessary to complete the remaining work, including correction of any defective work, is undercut by the time (more than a year) and cost ($1.6 million) expended by the surety in completing the project (Finding 100).  Accordingly, we find that the facility was not substantially complete at the time of termination.  See M.C. & D. Capital Corp. v. United States, 948 F.2d 1251, 1256 (Fed. Cir. 1991); Hensel Phelps Constr. Co., ASBCA No. 49270, 99-2 BCA ¶ 30,531, at 150,796 (although 95% to 98% finished, default termination upheld because the facility was not capable of being used for its intended purpose and was, therefore, not substantially complete); Joseph Morton Co., 82-2 BCA, at 78,524 (default termination of 95%-complete HVAC installation contract upheld because project could not be used for the intended purposes).  The deficiencies, which prevented Respondent from occupying and using the Fajardo facility, were more than minor variations from Appellant’s contract-required performance.

3.  Did termination of the contract improperly forfeit Appellant’s interest in the project?

            Termination for default of a contract near completion is disfavored where such termination causes the contractor to forfeit its investment of effort and money in performance of the contract.  See Franklin E. Penny Co. v. United States, 524 F.2d 668, 677 (Ct. Cl. 1975).  Here, however, Respondent made progress payments throughout the project reflecting the work Appellant completed, paying or giving Appellant credit for approximately 93% of the total contract price (Finding 86).[13]  Accordingly, Appellant’s interest and investment in the facility were not forfeited by the termination.  See Mark Smith Constr. Co., ASBCA Nos. 25058, 25328, 81-2 BCA ¶ 15,306, at 75,792.  The work terminated was that as yet unfinished by Appellant and work to correct construction deficiencies.  See PCL Constr. Servs., Inc., 47 Fed. Cl. at 810.

4.  The termination for default was justified.

            Respondent has demonstrated that the July 8, 2003 termination of Appellant’s right to complete contract performance was justified by Appellant’s failure to substantially complete the project by the contract completion date or the date of termination.  See R.L. Noffsinger, PSBCA No. 1204, 84-3 BCA ¶ 17,558; Mark Smith Constr. Co., 81-2 BCA, at 75,792. 

C.   Has Appellant shown excusable cause for its failure to complete the project by the contract completion date?

            As Respondent has demonstrated that the default termination was justified by Appellant’s failure to complete the project within the time allowed by the contract, the burden shifts to Appellant to show that its failure to complete was due to excusable causes beyond its control and without its fault, see Four Roses Painting Co., PSBCA No. 1013, 83-1 BCA ¶ 16,541; Mark Smith Constr. Co., 81-2 BCA, at 75,792, or that the termination was a product of bad faith or abuse of the contracting officer’s discretion, see Jesse A. Farmer, PSBCA No. 2702, 91-3 BCA ¶ 24,181, at 120,941; Quality Env’t Sys., Inc., ASBCA No. 22178, 87-3 BCA ¶ 20,060, at 101,569.

            Appellant argues that many instances of misconduct by Respondent constitute excusable cause, bad faith, abuse of discretion, breach of Respondent’s implied duty of good faith and fair dealing, and sharp practices.  It argues that Respondent’s misconduct excuses Appellant’s failure to complete the project and entitles Appellant to relief from the termination for default as well as to breach of contract damages.

1.  Project Financing.

            Appellant’s inability to obtain financing directly led to its inability to complete the project and triggered the termination of the contract (Findings 70-98).  Appellant bore the risk of providing adequate financing to enable it to perform the contract, and its inability to fund the project does not excuse nonperformance.  See El Greco Painting Co., ENG BCA No. 5693, 92-1 BCA ¶ 24,522, at 122,379; Southeastern Airways Corp. v. United States, 673 F.2d 368, 378 (Ct. Cl. 1982).  However, according to Appellant, Respondent’s actions affirmatively caused the financial distress that prevented Appellant from completing the project.  Thus, Appellant argues, its failure to complete the project was excusable.  See Litchfield Mfg. Corp. v. United States, 338 F.2d 94 (Ct. Cl. 1964).

2.  Did Respondent breach its implied duty of good faith and fair dealing by failing to cooperate with Appellant in financing completion of the project?

            Appellant argues that Respondent materially and repeatedly breached its duty of good faith and fair dealing by willfully or negligently interfering with Appellant’s ability to finance performance of the contract.  See Peter Kiewit Sons’ Co. v. United States, 151 F. Supp. 726, 731 (Ct. Cl. 1957) (explaining that in every government contract there is an implied obligation on the part of the government not to willfully or negligently interfere with contractor's performance).  It argues, as we found in Samson J. Hypolite, PSBCA No. 5266, 06-2 BCA ¶ 33,337, at 165,300, recon. denied, 07-1 BCA ¶ 33,468, that “Respondent’s material breach provides Appellant with a legal right to avoid the contract, discharges its duty to perform, and relieves Appellant of the default termination.”  It specifically points to Respondent’s alleged interference with Appellant’s ability to finance the project as a material breach of the duty.

            The duty of good faith and fair dealing included a duty to cooperate in Appellant’s performance, which placed an affirmative obligation on Respondent “to do what is reasonably necessary to enable [Appellant] to perform.”  Advanced Eng’g & Planning Corp., ASBCA Nos. 53366, 54044, 05-1 BCA ¶ 32,935, at 163,128-129.  The duty to cooperate, however, did not require Respondent to do whatever Appellant asked.  See American Combustion, Inc., ASBCA No. 43712, 94-3 BCA ¶ 26,961, at 134,245.  To prove a breach of the duty, Appellant must show that the assistance was necessary for performance of the contract and that Respondent unreasonably failed to provide it.  Id.; Tri Indus., Inc., ASBCA Nos. 47880, 48140, 48491, 99-2 BCA ¶ 30,529, at 150,765.

            Appellant argues that Respondent breached the implied duty of cooperation in the contract by refusing (a) to release the retainage (Findings 75, 80); (b) to reissue the $109,294.37, three-party progress payment check to Appellant and Scotiabank (Findings 85, 87, 94); (c) to pay Appellant’s subcontractors directly (Finding 96); (d) to pay the full amount sought by Appellant in its progress payment requests; (e) to pay progress payments promptly; (f) to pay the full amount requested in Appellant’s modification cost proposals; (g) to pay extended overhead during the contract period; and (h) to confirm funds remaining in the project when requested (Finding 97).

                        a.  Refusal to Release Retainage.  Appellant argues that the duty to cooperate required Respondent to release one half of the retainage to the surety in April 2003 as Appellant requested (Finding 75) (App. Br. p. 85).  It suggests that the surety might have continued financing the project if Respondent had done so.  Appellant argues that Respondent’s interests were fully protected by the existence of the Payment and Performance Bonds and that its refusal to release the retainage therefore was unreasonable and breached Respondent’s duty of cooperation.  (App. Rebuttal Br. p. 35).

            Appellant’s assertion that release of half the retainage would have caused the surety to resume financing the project is speculative and unsupported.  Appellant presented no testimony from the surety in this regard.  Additionally, the language of the applicable contract clause did not authorize release of the retainage under the circumstances of this project because the work was not substantially complete (Finding 11), and Appellant has not shown that the contracting officer’s decision not to release the retainage was an unreasonable exercise of his discretion.  In view of the slow pace of Appellant’s work (Findings 66, 69, 74, 83, 88, 90), Appellant’s record of missed promises of completion (Findings 46, 70, 79), and the dispute between the surety and the bank regarding future payments (Finding 72), the contracting officer could reasonably determine that Respondent would not be adequately protected if it released the retainage.  See M.C. & D. Capital Corp., 948 F.2d at 1257.

            Appellant also argues that if Respondent had released the retainage (which was about $120,000 (Finding 86)) and paid Appellant’s additional work claim ($58,782.88) (Finding 101), Appellant would have had enough money to finish the project.  The document that Appellant relied on to establish its cost to complete the project—a purported list of subcontractors and amount of remaining subcontract work (Finding 96)—was self serving and unsupported, did not reflect costs to complete defective work, and conflicts with the actual experience of the surety to complete the project (Finding 100).  Moreover, Appellant did not file its claim for $58,782.88 until after the termination (Finding 101), so any resulting payment by Respondent could not have financed completion of the project as of the time of the termination.

                        b.  Issuance of Three-party Check.  Appellant argues that Respondent’s issuance of the May 13, 2003 progress payment check as a three-party check (Finding 85) breached its duty to cooperate and, because that payment could not be used due to the dispute between the bank and the surety, materially affected Appellant’s ability to complete the project.  According to Appellant, Respondent disregarded Appellant’s specific instructions to make payments to it and the bank (Finding 72), denied it use of the $109,294.37 payment, and caused it to lose financing for the project. [14]

            The surety first notified Respondent of its interest in progress payments on November 12, 2002 (Finding 64).  In its April 8, 2003 letter (Finding 77), the surety notified Respondent that it had paid over $300,000 toward Appellant’s subcontractors’ and suppliers’ invoices and payroll (Findings 65, 77).  The surety thus became subrogated to Appellant’s rights to contract payments.  See National Am. Ins. Co. v. United States, 498 F.3d 1301, 1305-1306 (Fed. Cir. 2007) citing Pearlman v. Reliance Ins. Co., 371 U.S. 132, 137 (1962) and United States v. Munsey Trust Co., 332 U.S. 234, 242 (1947).  While Scotiabank may also have had rights of subrogation to Appellant’s interest in contract payments, the predecessor of our appellate authority has

repeatedly held that the surety who satisfies the contractor's obligations to pay laborers and materialmen under the payment bond has an equitable interest, superior to the interest of the contractor's assignee or the contractor's trustee in bankruptcy, in the unpaid contract balance held by the Government as a stakeholder.

Great Am. Ins. Co. v. United States, 492 F.2d 821, 824-825 (Ct. Cl. 1974) citations omitted; see Newark Ins. Co. v. United States, 169 F. Supp. 955, 957 (Ct. Cl. 1959).  Therefore, Respondent was correct in not following Appellant’s instructions to make payments to it and the bank.  Faced with these competing claims and the risk of liability to the entity to which it did not pay the funds, making the progress payment as a three-party check was reasonable.[15]  The inability of Appellant, Scotiabank and the surety to agree as to the disposition of the payment (Finding 87) was not Respondent’s fault and does not excuse Appellant’s default in performance.

                        c.  Refusal to Pay Subcontractors Directly.  Appellant criticizes Respondent’s refusal to take over the project and directly pay the subcontractors (Finding 96).  Appellant has shown no obligation under the contract or otherwise, including the duty to cooperate, that would require Respondent to do so.  Moreover, such payments in derogation of the surety’s interest in the remaining contract funds would have been done at Respondent’s peril.

                        d.  Underpayment of Progress Payments.  Appellant complains that Respondent’s failure to pay the full amount of each progress payment request (Finding 18), contributed to Appellant’s financial distress and breached Respondent’s duty of good faith and fair dealing.  However, Appellant has not demonstrated that the payment figures it proposed were correct or that the final figures paid were incorrect.  Moreover, it accepted the amounts paid without contemporaneous complaint.  Appellant has not sustained its burden of proving that Respondent’s adjustments to the progress payment requests breached a contractual duty.  See Two State Constr. Co., 81-1 BCA, at 74,934.

                        e.  Delays Between Progress Payment Applications and Issuance of Checks.  Appellant argues that Respondent disrupted its cash flow and interfered with its performance by delaying unreasonably issuance of payment after Appellant’s submission of a progress payment request.  Except for the penultimate progress payment, Appellant has not shown that the time between application and issuance of progress payments was unduly long.  With respect to the penultimate payment of $201,795, more than a month elapsed between application and check issuance (Finding 71, 73), and Appellant asserts the delay denied it critical working capital (App. Br. p. 94).  The circumstances surrounding issuance of that progress payment were not developed in the record, but at the time that payment was being processed, the surety was financing the project (Finding 77), and Appellant did not show that delay in that progress payment affected its ability to pay its subcontractors during the time it was waiting for the check.  Moreover, it was not any delay in issuance of that check that led to Appellant’s financial difficulties but, rather, the surety’s withdrawal of its financial support (Finding 78).

                        f.  Underpayment on Modifications.  Appellant alleges that Respondent underpaid it for the modifications, and through intimidation caused Appellant to accept less than “equitable” compensation for the changes in the work (App. Br. p. 17).  The record reflects that in some but not all of the modifications, Appellant received less in money than it requested in its proposal (Findings 30, 39, 51, 52, 57, 60).  However, that in negotiating the final modification’s price and time extension Respondent did not agree without question to the full amount of time or money Appellant asked for does not, in and of itself, mean that the modification adjustments were unreasonable or that Respondent breached any duty it owed Appellant.  See Jack Swedberg, 96-2 BCA, at 141,508 (“The contracting officer is not required by the implied duty of fair dealing to make concessions to Appellant or to award Appellant exactly what he requests.”); Gary W. Noble, PSBCA No. 4094, 99-2 BCA ¶ 30,413, at 150,357.

            Finally, Appellant’s claim for additional compensation due to the work of the modifications is barred by the release contained in each modification.  Bell BCI Co., 570 F.3d at 1341-1342.[16]

                        g.  Refusal to Pay Extended Overhead.  Appellant contends that it could not pay its subcontractors and keep them working because Respondent refused to pay Appellant for extended overhead for the delays on the project.  During the course of contract performance, however, Appellant had not made a claim for extended overhead and had explicitly waived such claim in the modifications. Appellant’s argument that Respondent’s coercion and fraudulent misrepresentation prevented it from filing such a claim is discussed below in Section III.C of the Opinion.

                        h.  Failure to Confirm Funds Remaining in Contract.  Appellant argues that the COR’s failure to provide a prompt confirmation of the funding remaining in the project (Finding 97) prevented it from obtaining financing from Scotiabank.  Appellant argues that Scotiabank “had agreed to finance the final phase of the Project if such report was produced.”  (App. Br. p. 119).  Appellant’s principal claims to have made a call to the COR and left a message requesting the information in July, but even if an oral request was made before the written request was faxed to Respondent on July 8, the COR responded on July 8, and we see no unreasonable delay.

            Moreover, Appellant’s principal testified that obtaining further financing from Scotiabank depended on the confirmation of remaining funding and obtaining the $109,294.37 progress payment check (Tr. 613), which the surety was not willing to release.  Further, this testimony conflicts with Appellant’s statement in its July 3, 2003 letter that certification of the funds remaining was needed to convince Scotiabank to “consider positively our [June 24, 2003] proposal [to] authorize the USPS to make direct payments to the remaining suppliers.”  (Findings 96, 97).  That letter did not mention Scotiabank’s intention to extend financing solely upon receipt of a certification of the remaining contract balance.

                        i.  Summary.  Appellant has not shown that its financial problems were attributable to Respondent’s breach of any duty under the contract, including its duty to cooperate, and, therefore, its failure to complete the project is not excused for financial reasons.  See Lawrence D. Bane, PSBCA Nos. 1440, 1491, 86-2 BCA ¶ 18,997.[17]

3.  Did Respondent breach its duty to cooperate in other areas such that Appellant is relieved of its obligations under the contract?

            In addition to the foregoing arguments relating to the financing of the project, Appellant cites many examples of Respondent’s conduct that it contends breached Respondent’s implied duty of good faith and fair dealing.  We address the most significant of these allegations below.[18]

                        a.  Respondent’s Response to Inquiries and Approval of Modifications.  Appellant argues that Respondent was unreasonably slow to provide answers to inquiries, and to approve its submittals and modifications.  Improper or unreasonable contract administration can breach the implied duty not to hinder or delay, Hardrives, Inc., IBCA Nos. 2319, et al., 94-1 BCA ¶ 26,267, at 130,682-683, but with few exceptions, Appellant has not specified particular requests that Respondent was slow to answer or changes that Respondent was slow to address.  Except for the Early Project Delay, discussed below in section III.D, Appellant has not shown that the events complained of constituted a critical path delay.  For example, while the times to approve Modifications 6 and 7 (Findings 57-60) may appear to be long, Appellant has not shown specific project delay or cost resulting from the time taken to finalize those modifications.  It is Appellant’s burden to demonstrate the required response period, that Respondent failed to react within a reasonable period, and that Appellant suffered particular harm or project delay as a result.  See R.J. Crowley, Inc., ASBCA No. 35769, 88-3 BCA ¶ 21,151, at 106,788.  Appellant has not met that burden.

                        b.  Long Distance Contract Administration.  Appellant cites as a breach of Respondent’s duty to cooperate Respondent’s “long-distance” administration of the project, its failure to provide constant on-site supervision (Findings 15, 17, 18) (App. Br. p. 20), and the COR’s responsibility to administer eight to ten other projects during the period of the Fajardo project (Finding 17) (App. Rebuttal Br. p. 23, n. 6).  Appellant alleges that it could not obtain immediate responses to its inquiries and resolution of problems that arose because of this arrangement.  However, under the contract, on-site management of the project was Appellant’s responsibility (Finding 19).  The contract did not require Respondent to provide full time, on-site supervision for Appellant’s benefit.  See Four Roses Painting , 83-1 BCA, at 82,250 (“Respondent was not under a duty to do the job the Contractor was hired to perform.”).  Appellant has not shown that the project was unreasonably delayed due to these circumstances or shown particular harm it suffered as a result.

                        c.  Non-Spanish Speaking COR.  Appellant suggests that Respondent breached its duty to cooperate by assigning as the COR for a project in Puerto Rico a Postal Service employee who did not speak or read Spanish (App. Br. p. 20).  The contract imposed on Appellant the responsibility to communicate in English (Finding 19).  We do not deem the COR’s lack of facility in Spanish to be a failure of Respondent to cooperate.

                        d.  Changes to Erwin Personnel.  Appellant claims its work was hindered by several changes in personnel of Erwin assigned to provide on-site administration (Finding 17).  (App. Br. p. 62).  According to Appellant, each new administrator had to become acquainted with the project, delaying the provision of answers to Appellant’s questions.  Appellant has not shown specific harm or project delay that it suffered as a result.

                        e.  Plan Errors.  Appellant argues that the plans for the project were rife with errors, delaying Appellant’s progress.  However, Appellant has not shown that errors in the plans and the number of Appellant’s requests for clarification were unusual for a project of this nature.  See Wunderlich Contracting Co. v. United States, 351 F.2d 956, 964 (Ct. Cl. 1965).  Also, its claim related to the quality of the plans was general and except as considered below in regard to Drawing S1.01, Appellant has not shown that the time for Respondent to respond to its requests for clarification and to correct plan deficiencies caused any quantifiable delay or excused Appellant’s failure to complete the project within the time allowed.  For example, Appellant points out discrepancies in the details for drawing sheets A7.02 and A7.03 and for the dimensions for axis F (App. Br. p. 53) (Stip. 87, 88), but does not demonstrate how, if at all, the discrepancies and their resolution delayed the project.

                        f.  Superior Knowledge.  Appellant complains that by not providing it with the as-built drawings of the existing building, Respondent failed to disclose superior knowledge reflected in those drawings (Finding 2).  With that information, Appellant alleges it would have been able to identify and address the inadequate support for the back end of the roof of the existing building – the back wall problem.  (App. Br. p. 22).  However, the problem with the lack of support at the back wall remained Respondent’s to resolve.  Additionally, Appellant agreed to a modification for extra costs and time associated with the back wall problem, which costs and time necessarily included any effects resulting from the absence of the as-built drawings (Findings 31, 39, 112).  Establishing that Respondent improperly failed to disclose the back wall condition in the solicitation, therefore, would not entitle Appellant to additional recovery.

                    g.  Summary.  Appellant's repeated reliance on our decision in Samson J. Hypolite, PSBCA No. 5266, 06-2 BCA ¶ 33,337 recon. denied, 07-1 BCA ¶ 33,468, is misplaced.  In Hypolite, the Board found that Respondent materially breached its duty of good faith and fair dealing by unreasonably failing to provide the contractor a security clearance necessary to his performance.  Respondent’s conduct made it virtually impossible for the contractor in Hypolite to perform his contractual duties.  As discussed above, Appellant has not shown that Respondent’s conduct prevented it from performing the contract.

            We have reviewed the entire record of these appeals and all of Appellant’s arguments in support of its claim that Respondent materially breached its duty of good faith and fair dealing.  While Respondent’s administration of the contract was not shown to be without flaws, Appellant has not shown that the actions of Respondent’s employees materially breached that duty, either singly or when the acts are cumulated in the overall administration of the Fajardo project.

D.  Did Respondent act in bad faith in terminating Appellant’s contract?

Appellant argues that in terminating its contract for default, Respondent’s officials acted in bad faith.  For the Board to find bad faith on the part of Respondent’s employees, Appellant must show by clear and convincing evidence some specific intent to harm it.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir. 2002).

            Appellant has identified many instances of what it considers ill treatment by Respondent’s officials and contends that singly and cumulatively these events amount to bad faith.  In Appellant’s view, Respondent’s treatment of Appellant and its principals was so outrageous, oppressive and unfair that the only conclusion to be drawn is that Respondent’s officials intended to harm Appellant.

            We have reviewed the record and considered Appellant’s arguments, but find at most, examples of careless and inattentive and, at times, deficient administration of the project by Respondent and its agents.  Those failures of administrative care did not amount to malice, an intent to harm Appellant or bad faith under the circumstances of this project.  Demonstrating sloppy or careless or ineffective contract administration is not enough to meet Appellant’s burden.  See James Hovanec, PSBCA No. 4767, 04-2 BCA ¶ 32,805, aff’d, 170 Fed. Appx. 129 (2006);  Lopez Mach. Works, Inc., ASBCA No. 45509, 97-1 BCA ¶ 28,622, at 142,910; Benju Corp., ASBCA Nos. 43648, et al., 97-2 BCA ¶ 29,274, at 145,657, aff’d, 178 F.3d 1312 (Fed. Cir. 1999) (Table).  There is no evidence, and we do not infer from their conduct, as Appellant would have us do, that Respondent’s officials had the requisite “specific intent to injure” Appellant, that they were “motivated alone by malice,” that they engaged in a “proven conspiracy to get rid of” Appellant or employed “designedly oppressive” measures.  See Am-Pro Protective Agency, 281 F.3d at 1240.  To the contrary, Respondent extended contract completion deadlines several times, notwithstanding the absence of solid justification for an extension, both to avoid imposing liquidated damages and in the hope that default might be avoided (Findings 56, 82).

            Appellant suggests that Respondent’s officials deliberately and in bad faith sabotaged Appellant’s efforts to arrange continued funding for the project because they wanted to terminate Appellant and transfer the project to the surety.  There is no evidence in the record to support this, and Appellant’s suspicions in this regard are not sufficient to demonstrate bad faith.  See CACI, Inc. – Fed. v. United States, 719 F.2d 1567, 1582 (Fed. Cir. 1983); J. Cooper & Assocs., Inc. v. United States, 53 Fed. Cl. 8, 25 (2002), aff'd, 65 Fed. Appx. 731 (2003).

E.  Did the contracting officer abuse his discretion in terminating Appellant’s contract?

            As discussed above, as of July 8, 2003, the project was not substantially complete.  Therefore, Respondent has shown that Appellant was in default and subject to termination for Appellant’s failure to substantially complete the project by the contract completion date.  See David Boland, Inc., VABCA Nos. 5858, et al., 01-2 BCA ¶ 31,578, at 155,948; R.L. Noffsinger, 84-3 BCA, at 87,478.  However, not every contract default warrants termination, and it is Respondent’s burden to prove that termination of the contract for default was a reasonable exercise of the contracting officer’s discretion under the circumstances.  Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 764 (Fed. Cir. 1987).

            Appellant argues that the contracting officer abused his discretion in terminating the contract by failing to inform himself of the condition of the project as of July 8, 2003, before he terminated the contract.  Appellant argues that the contracting officer based his July 8, 2003 termination decision on outdated information and that he, therefore, lacked a reasonable basis for the termination, because Appellant contends it continued working on the project after the June 3, 2003 inspection (Finding 94).

            Evidence in the record undercuts the assertion that Appellant performed meaningful and substantial work between June 3 and July 8.  First, Appellant presented no contemporaneous documentation of such performance.  Additionally, in its June 16 and 24, 2003 letters to the contracting officer (Findings 95, 96), Appellant conceded that it could not complete the project because of the surety’s withholding of financial support.  In the June 16 letter, Appellant mentioned that it remained working and that some of the subcontractors were also working, but it did not identify such work with specificity or indicate its significance.  In its June 24 letter (two weeks before the termination), Appellant represented that at least $162,450 of work remained (Finding 96).  Furthermore, in its post-termination claim for earned but unpaid progress payments, Appellant sought payment for work performed only through mid-May 2003 (Finding 101).  If it had performed significant work through July 8, that claim would be expected to have included a request for payment for the entire period.  Appellant has not demonstrated that it performed substantial work in June through the termination.

            Factors the Board considers in determining whether a default termination constituted an abuse of discretion are (1) whether there was bad faith on Respondent’s part; (2) the degree of discretion entrusted to the contracting officer; (3) whether there was a reasonable basis for the decision; and (4) whether there was shown to be a violation of an applicable statute or regulation.[19]  Elton T. Colvin, Jr., PSBCA Nos. 6220, 6241, 09-2 BCA ¶ 34,310.  As discussed above (Section I.D), bad faith has not been proved.  Because substantial progress payments had been made and the risk of forfeiture was small (Section I.B.3, above), the contracting officer had broad discretion to terminate Appellant’s right to perform the remaining work.  See PCL Constr. Servs. Inc., 47 Fed. Cl. at 810.

            There was a reasonable basis for the termination.  As of the date of the default termination, the evidence available to the contracting officer, including Appellant’s June 16 and 24 letters, was that neither Appellant’s bank nor the surety would provide further financing and that Appellant could not finish the project without financial assistance (Findings 77, 78, 87, 94-96).  Appellant had requested financial assistance from Respondent in the form of a release of the retainage and Respondent’s payment of subcontractors directly, both of which Respondent declined (Findings 75, 96).  In its responses to the May 28 show cause letter (Finding 91), Appellant did not provide a plan or schedule for completion of the project and, instead, focused on the events comprising the Early Project Delay, matters the contracting officer considered resolved in 2001, almost two years earlier (Finding 95).  This response gave the contracting officer no reason for confidence that Appellant could complete the project within a reasonable time (Finding 98).  The performance period had expired, and Appellant showed no signs of being able to complete the project.

            Appellant has not demonstrated that the contracting officer abused his discretion in terminating the contract for default.[20]

F.  Was Respondent guilty of sharp practices that would excuse Appellant’s failure to complete the project?

            “A breach of the covenant of good faith occurs when there has been ‘sharp dealing,’ such as taking ‘deliberate advantage of an oversight by your contract partner concerning his rights under the contract.’”  Moreland Corp. v. United States, 76 Fed. Cl. 268, 291 (2007).  Appellant argues that in obtaining Appellant’s agreement to Modifications 1 through 7, and in other contract actions, Respondent’s officials took unfair advantage of Appellant, knowing that Appellant’s principals were not as sophisticated in their business practices as larger construction contractors.  Although it was explained to Appellant in April 2001 how an extended overhead claim could be submitted (Finding 43), Appellant suggests that Respondent had an obligation to see to it that Appellant made such a claim (App. Br. p. 54) and that Appellant received payment for additional work (Finding 101), even though it had not filed such claims before the termination.

            Contrary to Appellant’s argument, Respondent was not required to represent Appellant’s interests as well as its own in the negotiations regarding the modifications and claims.  Appellant’s status as a small and, as it characterizes itself, less sophisticated contractor did not entitle it to perform to a lesser standard under the contract, to increased on-site supervision, to financial assistance by Respondent, or to special treatment in determining whether it has met the burden of proving its entitlement to relief in this proceeding.  See Innovative (PBX) Tel. Servs., Inc. v. Department of Veterans Affairs, CBCA Nos. 44, et al., 08-1 BCA ¶ 33,854, at 167,596.  Nor has Appellant shown that the Board should judge Respondent’s actions toward Appellant by a higher standard or subject its conduct to special scrutiny because of Appellant’s claim of a lack of sophistication.  See U.S. Detention, DOT BCA No. 2908, 99-1 BCA ¶ 30,305, n. 6; Huff & Huff Serv. Corp., ASBCA No. 36039, 91-1 BCA ¶ 23,584, at 118,254.

G.  Was Appellant’s performance excused by cardinal change?

            Appellant argues that the changes to the contract work ordered by Respondent were so substantial that they constituted a cardinal change that excused its obligation to perform and relieved it from the default stemming from its failure to complete the project.

A cardinal change occurs when the Government effects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for.  A cardinal change is so profound that it is not redressable under the contract, but renders the Government in breach of contract.

Asbestos Transp. Servs., Inc., ASBCA No. 46263, 98-1 BCA ¶ 29,502, at 146,378.  Here, Appellant’s claims addressed in the modifications and others discussed above, including damages resulting from the defective Plan S1.01 and other plan defects, do not justify a breach claim because they are equitable adjustment claims, redressable under the Changes clause or the Differing Site Conditions clause of the contract.  See Worsham Constr. Co., ASBCA No. 25907, 85-2 BCA ¶ 18,016 at 90,371.

            Moreover, the magnitude, number and nature of the changes did not materially alter the scope or nature of the project.  The project as built was essentially the project Appellant contracted to build.  See Wunderlich, 173 Ct. Cl. at 194, 351 F.2d at 966 (1965); Stephens Assocs., PSBCA No. 970, 83-1 BCA ¶ 16,233, at 80,655.  “Furthermore, generally, where a Contractor has acquiesced to changes and performed under the changed contract, it may not later argue there was a breach because the changes were beyond the scope of the contract.”  Stephens Assocs., 83-1 BCA, at 80,655.

H.  Was Appellant’s performance excused by cardinal delay?

            Appellant argues that approved extensions of 563 days in Modifications 1-7 and proposed Modification 8 so far exceed the contract’s 270-day performance period so as to establish a cardinal delay.  It argues that it is thus entitled to relief from the termination for default.  Appellant relies on Godwin Equip., Inc., ASBCA No. 51939, 01-1 BCA ¶ 31,221, for this proposition.  In denying the government’s motion to dismiss a contractor’s claim for breach damages, the board in Godwin recognized the possibility of such a theory of recovery by analogizing to cardinal change cases and allowed the contractor to proceed on that theory.  That opinion, however, did not grant the contractor recovery on the cardinal delay theory or establish standards for its application.  See 15 Nash & Cibinic Rep. ¶ 29, June 2001.  Appellant has not referred us to any decision that has allowed recovery under such a theory.

            Assuming, without deciding, the viability of such a theory, the facts do not support its application here.  Appellant’s focus on 563 days of granted extensions is incorrect.  That Respondent granted the 332 days in Modification 5 and proposed to grant an additional 93 days in Modification 8 does not raise a presumption that Respondent was solely responsible for those delays, England v. Sherman R. Smoot Corp., 388 F.3d 844, 857 (Fed. Cir. 2004), and Appellant has not demonstrated such responsibility.  Analogizing to a cardinal change, we do not find the remaining delays—the 138 days granted by Modifications 1, 2, 3, and 7—to be so extensive or so unusual as to be unremediable under the contract and to implicate a theory of cardinal delay.

I.  Did Respondent constructively accelerate Appellant’s performance and excuse its failure to complete the project on time or entitle it to damages?

            In its rebuttal brief, Appellant mentions a theory of constructive acceleration as a basis for recovery (App. Rebuttal Br. p. 60).  It identifies no particular relief sought on that basis, and cites to no facts that would support a claim that Appellant accelerated its performance to meet completion dates that Respondent had refused to extend.  See Gavosto Assocs., Inc., PSBCA Nos. 4131, et al., 01-1 BCA ¶ 31,389, at 155,047-048.

J.  Did Respondent waive its right to terminate the contract?

            In another argument raised in its rebuttal brief, Appellant argues that Respondent waived its right to terminate the contract because it failed to act on Appellant’s May 27 request for a further extension of time to complete the project (Finding 89) (App. Rebuttal Br. pp. 71-73).  While granting significant extensions over the course of the contract may have suggested that Respondent would continue to do so, the Show Cause Letter, issued immediately after Appellant’s submission of the extension request (Finding 91) impliedly rejected it.  In the Show Cause Letter, the contracting officer specifically noted Respondent’s right to terminate the contract, and there is no showing that Appellant was led to believe it would receive an indefinite extension when, because of its surety’s refusal to continue financing Appellant’s performance, Appellant could give no reliable estimate as to when the project would be completed.  Finally, as discussed above, Appellant has not shown that it performed substantial work after May 30, 2003.  See State of Florida, Dept. of Ins. v. United States, 81 F.3d 1093, 1096 (Fed. Cir. 1996) (“The purpose of the waiver doctrine is to protect contractors who are led to believe that time is no longer of the essence and undertake substantial efforts after the performance date specified in the contract has passed.”); M.E.S., Inc., PSBCA No. 4462, 06-1 BCA ¶ 33,184, at 164,484, recon. denied, 06-2 BCA ¶ 33,430.

K.  Conclusion Regarding Termination for Default.

            Respondent has demonstrated that the July 8, 2003 default termination of Appellant’s contract was justified.  Appellant has not met its burden of demonstrating that its failure to complete the project timely was excused or that the termination stemmed from Respondent’s breach of its duty to cooperate, bad faith, abuse of discretion, or other causes that would excuse Appellant from the termination.  Accordingly, PSBCA No. 5039 is denied.

II.  Appellant’s Additional Work Claim

            After termination of the contract, Appellant submitted a claim for $58,782.88 for work that Appellant claimed was beyond the scope of the contract and for contract work for which it had not been paid.  The contracting officer conceded Appellant’s entitlement to the majority of the claim elements but asserted that the surety was entitled to the amounts allowed and refused to pay Appellant (Findings 101, 108).  He denied Appellant’s claim that work it performed on the front canopy/tower and the floor of the investigative office was compensable.

A.  Did Appellant perform extra-contractual work for which it is entitled to be paid?

1.  Front canopy/tower.

            When Appellant complained that the plans did not include details necessary to construct the front canopy/tower, the COR responded that the specifications required Appellant, through its steel fabricator, to design the needed cold formed steel connections, and directed Appellant to provide the design and installation at no extra cost.  (Findings 102-104, 108).  However, Appellant demonstrated that in order to strengthen the canopy and tower to withstand expected wind loads it was necessary to use structural steel in place of lighter weight cold formed steel.  As the cold formed steel specifications did not apply in this circumstance, the plans were defective in this regard, and directing Appellant to perform the work, which required use of structural steel, was a constructive change (Finding 10).  See Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1289 (Fed. Cir. 2000), citing United States v. Spearin, 248 U.S. 132, 136 (1918).  Appellant incurred additional costs of design, material and installation (structural steel is heavier and requires more effort to install) (Finding 104) and is entitled to recover these additional costs.

2.  Investigative office floor.

            With Erwin’s verbal approval, Appellant installed structural steel in the framing of the investigative office floor that was not called for in the contract plans but which was necessary to provide adequate support (Findings 105-107).  The plans were defective in this regard, and as discussed above, Appellant is entitled to recover its additional costs to correct the deficiency and perform the work.[21]

B.  Was it reasonable to release to the surety instead of Appellant the funds the contracting officer found payable?

            Respondent does not dispute Appellant’s entitlement to a price increase for the remaining items of Appellant’s claim or to the amounts it earned for work performed in April and May.  Rather, Respondent refused to pay Appellant directly and instead paid or credited these amounts to the surety.  (Finding 108).  The surety was subrogated to Appellant’s entitlement to contract funds (Section I.C.2.b, above), and it was not a breach of contract, abuse of discretion, or act of bad faith for the contracting officer to release the admittedly owed funds to Appellant’s subrogee.

C.  Conclusion Regarding Additional Work Claim.

            PSBCA No. 5142 (Appellant’s Claim) is granted to the extent that in addition to the amounts allowed by the contracting officer in his final decision, Appellant is entitled to recover its additional costs stemming from design and installation of structural steel in the canopy/tower and installation of structural steel in the floor of the investigative office.  That appeal is otherwise denied.

III.  Extended Overhead[22]

A.  Appellant’s claim.

            It is Appellant’s burden to prove its affirmative monetary claim for extended overhead stemming from compensable delays of the modifications, Insulation Specialties, Inc., ASBCA No. 52090, 03-2 BCA ¶ 32,361, at 160,101, but it has not developed its claim with any precision.  Appellant claims extended overhead for 230 days (Finding 109), but its claim did not identify how it arrived at the 230-day figure (Finding 110).  Its expert’s report (App. Exh. 61) attempts to clarify Appellant’s claim.  The expert opines that the 138 days of extension granted by Modifications 1, 2, 3, and 7 were all excusable and compensable.  To this he added the 93 days of extension that proposed Modification 8 would have granted and surmised that the 93-day delay was related to the transformer/substation change (Modification 7), which he considered to be compensable.  This totals 231 days.  Elsewhere in his report he identified a total of 182 days of delay he attributed to the combined effect of defective Drawing S1.01 and the differing site conditions addressed in Modifications 1 and 2.  He pointed out that Respondent granted only an 82-day extension, suggesting that Appellant was entitled to another 100 days of excusable and compensable delay, but he did not explain how this relates to the 231-day delay identified in his conclusion or the 230 days stated in Appellant’s claim.  As discussed in sections I.A.1 and 2, above, Appellant did not show it was entitled to time extensions beyond those granted in the modifications.

B.  Did Appellant waive its claim for extended overhead by executing Modifications 1-7?

            Respondent argues that by executing Modifications 1 – 7, Appellant waived any claim for extended overhead related to the work covered by those modifications by agreeing to the broad release language included in each modification.         It is Respondent’s burden to establish that the parties’ agreement to the modifications constituted accords and satisfactions that bar Appellant’s claim for extended overhead.  See Asbestos Transp. Servs., 98-1 BCA, at 146,376; McGraw-Hill, Inc. v. United States, 623 F.2d 700, 708, n. 12 (Ct. Cl. 1980); Jimenez, Inc., ASBCA No. 52825, 01-1 BCA ¶ 31,294, at 154,502.

            With respect to the work specified in the modifications, the releases are plain and conclusive as waivers of Appellant’s claim for extended overhead.  Appellant agreed in each of the modifications that the agreed-upon compensation satisfied any claim

for all direct costs, indirect costs, applicable interest, impact and delay costs, and additional contract completion time (beyond that specified herein) which either has been or will be incurred in performing all work described by this modification.

(Finding 111).  This description of the costs encompassed within the releases is broad and includes costs Appellant identified as extended overhead.  See Advanced Eng’g & Planning Corp., 03-1 BCA, at 158,991.  Our appellate authority directs us to interpret such language as written.  Bell BCI Co., 570 F.3d at 1341-1342.  Thus, with respect to the time-related costs Appellant may have incurred in performing the work described in the modifications, the releases are binding and preclude recovery of extended overhead.  See id.

C.  Are the releases unenforceable because Appellant was fraudulently induced to execute the modifications?

            Appellant argues that it should not be precluded from recovering extended overhead related to the work of the modifications because the COR fraudulently induced Appellant’s principal to sign the modifications with the claim waiver language by promising that Appellant’s entitlement to extended overhead would be addressed at the end of the project.  To establish a basis for relief from the releases it signed,

it would be necessary for appellant to establish that there was a false representation, there was knowledge of falsity or other evidence of an intent to deceive, and that appellant relied and was in fact injured by a misrepresentation that went to the essence of the transaction.

Monoko, Inc., ASBCA No. 46283, 94-1 BCA ¶ 26,570, at 132,215.

            Appellant offered evidence that its principal expressed to the COR his concern about the inclusion of the release language in the modifications and his intention not to waive any extended overhead claim.  According to his testimony, the COR told him to sign the modifications and that the parties would take care of extended overhead at the end of the project. (Tr. 547-548, 552-553, 577, 583-586, 616, 633).  The COR denied making such statements and denied that extended overhead was discussed at all regarding the modifications (Tr. 182; see Tr. 54, 57-58, 73-74, 163-175 ), although he conceded that none of the executed modifications specifically mentioned extended overhead (Finding 112).

            Appellant has not persuaded us that the alleged conversations took place.  The alleged assurances that extended overhead would be addressed later were not included in any of the construction meeting minutes.  In none of its many responses to Respondent explaining the reasons why the project was behind schedule, explaining its financial difficulties, and asking Respondent for financial relief (e.g., Findings 70, 75, 79, 84, 89, 95, 96) did Appellant raise delayed consideration of extended overhead pursuant to the COR’s assurances as an explanation for, or as a possible solution to, its precarious financial condition.  When Appellant mentioned extended overhead in its April 9, 2003 letter (Finding 79), a reference to the alleged specific discussions of extended overhead and the COR’s assurances would have been expected rather than Appellant’s vague assertion that it did “not waive the Contractors rights to claim for example an extended overhead in said project.”  Appellant did not mention in its claim for extended overhead (Findings 109, 110) that it had been promised consideration of that claim.  Finally, in discussions with the contracting officer, Appellant’s principal never brought up the alleged assurances of the COR (Finding 112).

            Appellant specifically argues (App. Br. p. 47; App. Rebuttal Br. pp. 12, 54) that at the time Appellant’s principal signed each of the modifications the COR was present, the issue of the waiver language was raised directly with the COR, and each time the COR assured the principal of a later consideration of extended overhead.  However, in the principal’s testimony cited, Tr. 538-539, he says only that he met with the COR and discussed issues related to the contract.  On this record, we cannot conclude that such assurances were made by the COR.

            Accordingly, the releases in the modifications bar Appellant’s recovery of extended overhead for the additional time granted therein.  See Bell BCI Co., 570 F.3d at 1341-1342.

D.  Did Respondent’s lack of funding cause a delay for which the releases of the modifications do not bar recovery for extended overhead?

1.  Did the lapse in project funding delay the project?

            The solution to the soils problem was available by May 11, 2001 (Finding 27), and a solution to the back wall problem was available by May 17, 2001 (Finding 35).  We conclude that Respondent had resolved or could have resolved the differing site conditions problems by the end of May.  After that, however, due to its lack of funding authority, Respondent delayed executing the modifications and did not authorize the work until August 15 (Findings 27- 29, 35, 36).  Anticipating the need for and obtaining additional funding were solely within Respondent’s control, and the delay of 77 calendar days from May 30 to August 15 resulting from the lapse of funding was unreasonable and compensable.  See Leonard Pevar Co., PSBCA Nos. 219, 257, 77-2 BCA ¶ 12,690, at 61,582.

2.  Do the releases of Modifications 1 through 7 bar Appellant’s recovery for delay associated with Respondent’s funding lapse?

            The funding delay and any associated time-related costs were not “incurred in performing all work described by” Modifications 1 and 2.  Just as we found the release language to waive Appellant’s claims for extended overhead related to the work described in the modifications, the converse is also true.  The releases do not waive claims for costs not incurred in performing the work but rather incurred waiting for Respondent to obtain funding so it could implement the modifications.  Any time-related costs associated with that waiting time were not incurred in performing the work of the modifications, and, if proved, are not barred by the releases.  See Insulation Specialties, Inc., 03-2 BCA, at 160,097, 160,103-104; Diamond Plaza, Inc., PSBCA No. 3846, 97-1 BCA ¶ 28,737, at 143,448; Algernon Blair, Inc., ASBCA No. 25825, 87-1 BCA ¶ 19,602, at 99,179.

            Respondent argues that the release language of Modifications 1 and 2 includes all claimed delay up until Appellant executed each modification, which was very near the time Respondent authorized the work to begin.  According to Respondent, by the time Appellant signed Modifications 1 and 2, all of the delay, including the funding delay, was apparent and incurred, and if Appellant desired additional delay damages, such as extended overhead, it should have insisted that they be included in the modifications before signing.  For its failure to do so, Respondent argues Appellant is now barred.  See Gavosto Assocs., Inc., 01-1 BCA, at 155,060; Thomas & Sons, Inc., ASBCA No. 51874, 01-1 BCA ¶ 31,166, at 153,947.  However, our decision is based on the plain meaning of the releases themselves, which do not waive costs not associated with the work of Modifications 1 and 2, regardless of the date Appellant signed the Modifications. 

3.  Did the compensable delay continue beyond August 15, 2001?

            Appellant suggests that the period of delay should be longer because the notices to proceed for Modifications 1 and 2 each allowed Appellant 10 days to start the work (Findings 30, 39).  Appellant’s expert did not include that additional period in his analysis, and Appellant has not shown any time necessary to mobilize to commence the work.  Appellant also suggests that it did not begin the changed work until after the modifications were executed by the contracting officer.  We did not find support for that assertion in the record, and we note that in its extended overhead claim Appellant ended its claimed delay period at about August 15, 2001 (Finding 110), as have we.  Appellant also argues that it was not required to proceed based on the verbal authorization given by the COR.  While that may be correct, Appellant has not demonstrated that it actually waited to receive the written modifications to begin the work.

4.  Appellant’s recovery.

            Respondent’s lack of funding caused an unreasonable 77-day delay to the project, which is compensable under the Suspension of Work clause.  See Cyrus Contracting, Inc., IBCA Nos. 3232, et al., 98-2 BCA ¶ 29,755, at 147,469; U.A. Anderson Constr. Co., ASBCA No. 48087, 99-1 BCA ¶ 30,347, at 150,083.[23]

                        a.  Field overhead and profit.  As we have found a suspension of Appellant’s performance of critical path work due to Respondent’s delay in obtaining funding, Appellant is entitled to recover its field overhead and profit.  See Rex Sys., Inc., ASBCA No. 54444, 04-2 BCA ¶ 32,741; U.A. Anderson Constr. Co., 99-1 BCA, at 150,084; Armada/Hoffler Constr. Co., DOT BCA Nos. 2437, 2461, 93-1 BCA ¶ 25,446, at 126,729.[24]

                        b.  Home office overhead.[25]  The duration of the delay was uncertain, and as Respondent prevented Appellant from demobilizing, Appellant was not able to take on other work.  (Findings 28, 29, 35, 36, 41).  To recover extended home office overhead, however, Appellant must also show that it was on standby during the period of delay, i.e., that it incurred home office overhead expense without the opportunity to cover the expense through the contract or other income.  P.J. Dick Inc. v. Principi, 324 F.3d 1364 (Fed. Cir. 2003).  In this case, although barred from critical path work, Appellant continued its work on other, non-critical parts of the project.

            Appellant suggests that its billings were much reduced from what they would have been but for Respondent’s delay (Ap. Br. p. 43 (“about 1/3 of its anticipated billings”)).  This is presumably based on dividing the total price of the contract by the nine months contemplated for the project ($2,288,000 divided by nine is $254,222), because Appellant has not offered evidence to show its intended billing rate.  Nevertheless, Appellant’s billings during the period at issue—June, July and August—remained significant and comparable to the billing rates that preceded the funding delay and followed Respondent’s receipt of funding approval and its authorization of Appellant to proceed (Finding 42).  This record reflects that there was a substantial revenue stream from Appellant’s contract performance to absorb the home office overhead.  Accordingly, Appellant is not entitled to recover its claimed home office overhead.  See P.J. Dick Inc., 324 F.3d at 1373-74.

E.  Were there other project delays not included in the waiver of the modification releases?

            Appellant has argued generally that it incurred other delays waiting for Respondent to resolve plan deficiencies, respond to requests for clarification, issue modifications for changed work, contending that those claims, like the funding delay, are not within the waiver of the modifications’ releases.  However, it has not identified with specificity such delays or connected any particular claim of delay to delay to the overall project.  See discussion in Sections I.A.1 and I.C.3, above.  Although only entitlement is at issue in this proceeding, it remains Appellant’s responsibility to establish that some damage, i.e. compensable delay, occurred.  See Port-A-Built, PSBCA No. 3134, 94-2 BCA ¶ 26,694, at 132,768.[26]  Appellant has not done so and, accordingly, it has not demonstrated it was entitled to additional extended overhead except as found in Section III.D, above.

F.  Did cumulative delay on the project entitle Appellant to delay damages?

            Appellant claims entitlement to delay damages based on the cumulative delay caused by the number of modifications to the contract work, citing Fruehauf Corp., PSBCA No. 477, 74-1 BCA ¶ 10,596.  (App. Br. p. 24, n. 10).  The facts in Fruehauf were significantly different from those at issue here.  The Board there considered the impact of 103 field and change orders, many of which were issued late in the project, a number established in that case as large for the type of project.  The seven modifications issued in the Fajardo project do not compare.  Moreover, the Board in Fruehauf noted that there had been no release of such a cumulative impact claim.  Here, each modification contained a release, and on similar facts, our appellate authority has held cumulative impact claims to be barred.  Bell BCI Co., 570 F.3d at 1341-1342.

G.  Conclusion Regarding Extended Overhead Claim.

            Appellant is entitled to 77 days of extended field overhead and profit.  It is not entitled to extended home office overhead.

IV.  Conclusion

            The appeal of PSBCA No. 5039 (Termination for Default) is denied.  PSBCA No. 5142 (Appellant’s Claim) is granted to the extent that in addition to the amounts allowed by the contracting officer in his final decision, Appellant is entitled to recover its additional costs stemming from design and installation of structural steel in the canopy/tower and the investigative office.  That appeal is otherwise denied.  Under PSBCA No. 5348 (Extended Overhead), Appellant is entitled to 77 days of extended field overhead and profit.  Determination of the amount is remanded to the parties.  PSBCA No. 5348 is otherwise denied.  PSBCA No. 5145 is dismissed for lack of jurisdiction (see Finding 110, n. 9).

Norman D. Menegat
Administrative Judge
Board Member

I concur                                           I concur
William A. Campbell                         David I. Brochstein
Administrative Judge                      Administrative Judge
Chairman                                        Vice Chairman

[1] The Board admitted into the record a binder containing copies of the on-site meeting minutes recorded by Erwin and the progress payment applications and authorizations.  The minutes of meetings were organized chronologically but not tabbed.  The progress payment documents were also not tabbed.  The binder of documents will be referred to as “Minutes” and the documents identified by date.

[2] The record does not reflect a monetary claim regarding any extra costs associated with defective Drawing S1.01 (Tr. 754).

[3] We refer to the delay resulting from the combined effect of the dimension error on Drawing S1.01, the unsuitable soil, and the back wall and terrazzo floor problems as the Early Project Delay.

[4] The contracting officer did not mention in the letter that the extensions granted Appellant in Modifications 1 (18 days) and 2 (64 days) extended the contract completion date to February 5, 2002 (Tr. 203, 439).

[5] The letter noted that Modification 5 itself had erroneously identified the completion date as January 31, 2003.

[6] Appellant’s Complaint in PSBCA No. 5039 identified a monetary claim in the amount of $5,150,000 for damage to reputation and future bonding and business.  There is no record of this claim being submitted to the contracting officer, and it is not before us in this proceeding (see Order dated November 29, 2005).

[7] The decision itself stated the contracting officer was granting the amount of $4,105.88 for these items.  However, the sum of the amounts granted in the decision is $4,735.88.  We assume that to be the correct amount allowed.

[8] The claim included three components: (1) daily field overhead expenses at the site, (2) daily home office overhead, and (3) profit.  Appellant did not calculate its claimed home office overhead using the Eichleay formula.

[9] The page including the breakdown of the claimed delays was omitted from the November 10 claim, but as no other breakdown was submitted and the claim is otherwise identical, we assume the breakdown represents Appellant’s assessment of its claim.  The contracting officer had denied the earlier claim, and Appellant’s appeal of that denial was docketed as PSBCA No. 5145.  As the claim had not been certified, Appellant resubmitted the claim, received a new final decision, and appealed.  Accordingly, PSBCA No. 5145 is subject to dismissal for lack of jurisdiction.

[10] Proposed Modification 8 included the same language (AF 184 (p. 2)).

[11] Appellant’s expert analyzed the delays addressed in the modifications and whether they were compensable.  He did not analyze whether other delays justified extensions of time in addition to those.

[12] Appellant has not shown, and we will not infer, that the contracting officer’s failure to take into account the 82 days of contract extension already granted when issuing the first cure notice (Finding 45, n. 4) was the result of anything but carelessness.

[13] Appellant contends the May payment of $109,294.37 (Finding 85) was not paid to or to the credit of Appellant, but, as discussed below, we disagree.

[14] We find speculative Appellant’s suggestion, based solely on its principal’s testimony, that if Scotiabank received the $109,294.37 payment, it would have extended sufficient financing to allow Appellant to complete the project.  Compare Litchfield Mfg. Corp., 338 F.2d at 98, where the court found persuasive the testimony of a bank officer that his bank would have extended credit to the contractor had it not been for the government’s delay in providing tooling necessary to the contractor’s performance.  We have no similar evidence from Scotiabank.

[15] We decline Appellant’s invitation to apply Puerto Rico law to determine the rights of the surety to payments under the contract (App. Rebuttal Br. p. 31).  See Pascal Redfern, PSBCA No. 1512, 87-1 BCA ¶ 19,646, at 99,460 (Postal Service contracts are controlled by federal law, not state law).

[16] We have found, above, that Appellant’s agreement to the modifications, including the compensation awarded, was not a product of duress.

[17] Appellant has also not shown that any financial stress at the time it entered into the modifications amounted to duress.  A contractor’s financial distress and financial pressure, “even the threat of considerable financial loss, is not the equivalent of duress,” ­International Tel. & Tel. Corp. v. United States, 509 F.2d 541, 549 n. 11 (Ct. Cl. 1975), unless Appellant shows that Respondent’s wrongful conduct was the cause of Appellant’s economic distress, La Crosse Garment Mfg. Co. v. United States, 432 F.2d 1377, 1382 (Ct. Cl. 1970).  As discussed above, Appellant has not shown that its financial distress stemmed from Respondent’s wrongful conduct.

[18] Appellant alleges these also as grounds for granting it further time extensions.  In Section I.A.1, above, we concluded that Appellant had failed to establish project delay in addition to the time extensions granted in the modifications.

[19] No violation of law has been alleged.

[20] Appellant argues that Respondent could have taken affirmative steps that would have assisted Appellant, such as providing increased supervision or financing for the project, and suggests it was an abuse of the contracting officer’s discretion not to do so.  As discussed above, Appellant has not shown that Respondent’s failure to take these steps—steps not required by the contract—for Appellant’s convenience constituted a hindrance for which Respondent is liable.  See Banks Constr. Co. v. United States, 364 F.2d 357 (Ct. Cl. 1966), citing Willems Indus., Inc. v. United States, 295 F.2d 822 (Ct. Cl. 1961).

[21] Respondent argues that the floor frame as designed was adequate, but the only citation is to the contracting officer’s final decision, which we do not accept as substantive evidence.  See Wilner v. United States, 24 F.3d 1397, 1401 (Fed. Cir. 1994).  This leaves uncontradicted Appellant’s evidence that the frame design for the floor was inadequate.

[22] Appellant’s claim is for extended field overhead, unabsorbed home office overhead and profit.

[23] We do not add to the contract completion date the 77 days of extended overhead.  On a number of occasions after August 2001, Appellant unilaterally offered new completion dates (e.g. Findings 46 (completion by June 10, 2002), 70 (completion by March 31, 2003)) that accounted for the 77 days, and those days were considered in the extensions granted in Modifications 3, 5 and 7.  See Environmental Devices, Inc., ASBCA Nos. 37430, 39308, 39719, 93-3 BCA ¶ 26,138, at 129,934-35.

[24] The standard form of the Suspension of Work clause used by other agencies denies recovery for profit.  C.E.R., Inc., ASBCA Nos. 41767, 44788, 96-1 BCA ¶ 28,029, at 139,934.  Respondent’s Suspensions and Delays clause does not, and as profit is generally part of an equitable adjustment and Respondent has not shown why it should be denied in this case. Appellant may recover its demonstrated profit.

[25] Appellant’s claim for unabsorbed home office overhead is not framed strictly under the Eichleay formula (Finding 109), the exclusive method of computing unabsorbed home office overhead.  Wickham Contracting Co. v. Fischer, 12 F.3d 1574 (Fed. Cir. 1994).  However, in this appeal we do not address quantum of damages, only entitlement.

[26] The Board’s pre-hearing Order of December 26, 2008, noting that entitlement only was to be considered at the hearing advised,

However, Appellant is reminded that to support its claims it must prove that actions of Respondent caused damage to Appellant.  Regarding Appellant’s extended overhead claim, Appellant need not prove the daily dollar figure of its damages, but it must demonstrate any Respondent-caused delay and the days of project delay caused by each delay.