Virginia Lawyers Weekly VA Lawyers Weekly
Where there were disputed issues of material fact over whether a government contractor was entitled to recover for claimed project change notices, or PCNs, where it allegedly failed to obtain written authorization prior to executing the alleged changes, summary judgment was denied.
Background
This case concerns a dispute between BAE Systems Ordnance Systems Inc. and Fluor Federal Solutions LLC regarding a subcontract for the construction of a new natural-gas-fired boiler facility at the Radford Army Ammunition Plant.
Both parties filed multiple claims against the other. After cross-motions to dismiss, only the breach-of-contract claims remain. Pending before the court are both parties’ cross motions for partial summary judgment.
BAE’s motion
BAE argues that, under the “clear and unambiguous” language of the unpriced change order, or UCO (as revised by modification seven), Fluor cannot recover more than the not-to-exceed, or NTE, amount — which, according to BAE, is $19,720,652 — for costs associated with work performed under statement of work, or SOW, addendum revision four. Because the parties have agreed on the price to perform the original scope of work ($11,905,424), which BAE has already paid Fluor and which is not disputed here, BAE argues that Fluor is entitled to no greater than a total of $31,626,076 for base scope work.
The plain language of the UCO, as revised by modification seven, unambiguously supports BAE’s interpretation of the relevant provisions of the subcontract. Fluor relies on other sections of the UCO to argue for an inference that the subcontract does not include an NTE, neither of which supersede what is unambiguous language to the contrary. Thus, if the NTE provisions of the UCO apply to the parties’ agreement, Fluor cannot recover in excess of the above amount for work pursuant to the UCO.
However, if Fluor were to prove at trial that BAE breached the subcontract, that would necessarily raise the question of whether BAE is still entitled to enforce the NTE provision against Fluor. Because that underlying breach question involves numerous unresolved disputes of material fact, the court will deny BAE’s motion to the extent it seeks a ruling that Fluor’s damages are definitively capped.
BAE next asks the court to grant it summary judgment by holding that Fluor is bound by the price it proposed in its December 2015 fixed price proposal for the original scope of work to construct the temporary facility. Fluor’s argument in opposition is that BAE should be estopped from enforcing the firm fixed price contained in the subcontract for the original temporary facility scope of work because BAE withheld from Fluor the fact that two weeks before the subcontract was executed, the Army requested that the scope of the project be changed to a permanent facility at a different location.
But when Fluor learned of the changes to the project scope from BAE’s Dec. 31, 2015, email, it did not retract its initial fixed price proposals, object to negotiating with BAE on new costs associated with the change or demand any relief; instead, it carried on under the contract and stood by the prices it had originally proposed for the temporary facility before it became aware of the changes.
Moreover, although Fluor was misled here, it was not ultimately misled to its detriment. As such, BAE’s motion for partial summary judgment will be granted, in that the court holds that Fluor is bound by the fixed price it agreed to for the original scope of work at the temporary boiler facility location.
Lastly, BAE’s motion asks the court to hold (1) that Fluor breached the requirement in modification seven that it supply cost proposals compliant with Federal Acquisition Regulation § 15.408, and as a remedy order that Fluor return the $6 million that BAE advanced as part of modification seven and (2) that Fluor is precluded from recovering for its claimed PCNs, other than PCNs 008, 009, 033 and 036, because it failed to obtain written authorization for them prior to executing the alleged changes as is required under the subcontract. Because there are several disputes of material fact as to these issues, the court denies BAE’s motion for partial summary judgment on these grounds.
Fluor’s motion
Fluor’s motion asks the court to hold that modification seven does not restrict recovery for costs for the base scope work to the NTE amount. The court has already held that the NTE of the UCO does apply to all base scope work. In turn, Fluor’s motion for partial summary judgment will be denied on this basis. As to the remaining grounds, genuine disputes of material fact remain on each of the issues.
Plaintiff’s motion for partial summary judgment denied. Defendant’s motion for partial summary judgment granted in part, denied in part.
Fluor Federal Solutions LLC v. BAE Systems Ordnance Systems Inc., Case No. 7:19-cv-00698, Jan. 13, 2023. WDVA at Roanoke (Dillon). VLW 023-3-017. 19 pp.
