               ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --                                )
                                            )
Chugach Federal Solutions, Inc.             )     ASBCA No. 61320
                                            )
Under Contract No. N44255-14-D-9000         )

APPEARANCES FOR THE APPELLANT:                    Richard B. O’Keeffe, Jr., Esq.
                                                  William A. Roberts, III, Esq.
                                                  Gary S. Ward, Esq.
                                                  Cara L. Lasley, Esq.
                                                  Lindy C. Bathurst, Esq.
                                                   Wiley Rein LLP
                                                   Washington, DC

APPEARANCES FOR THE GOVERNMENT:                   Craig D. Jensen, Esq.
                                                   Navy Chief Trial Attorney
                                                  David Marquez, Esq.
                                                  Anthony Hicks, Esq.
                                                  Robyn Hamady, Esq.
                                                   Trial Attorneys

        OPINION BY ADMINISTRATIVE JUDGE D’ALESSANDRIS ON
        THE GOVERNMENT’S MOTION FOR SUMMARY JUDGMENT

        Pending before the Board is the motion for summary judgment filed by
respondent, the Department of the Navy (Navy or government). This is the Navy’s third
dispositive motion in this appeal. The Board previously denied the Navy’s motion for
partial summary judgment seeking to bar, on the basis of judicial estoppel, appellant,
Chugach Federal Solutions, Inc. (Chugach or CFSI), from arguing that the Navy’s
independent government estimate (IGE) constitutes superior knowledge. Chugach Fed.
Sols., Inc., ASBCA No. 61320, 19-1 BCA ¶ 37,314 at 181,493-94 (Chugach II). That
same opinion granted Chugach’s cross-motion for summary judgment regarding the
Navy’s affirmative defenses of estoppel and waiver. Id. at 181,495. The Board also
denied the Navy’s motion to dismiss counts I, III, and IV, and portions of Counts V and
VI of Chugach’s complaint. Chugach Fed. Sols., Inc., ASBCA No. 61320, 19-1 BCA
¶ 37,380 at 181,718-20 (Chugach III). The Board previously granted the Navy’s
opposed motion to amend its answer to plead the affirmative defenses of estoppel and
waiver that were the subject of Chugach’s subsequent cross-motion for summary
judgment in Chugach II. Chugach Federal Sols., Inc., ASBCA No. 61320, 18-1 BCA
¶ 37,111 at 180,620.
        The Navy now moves for summary judgment against all of Chugach’s claims in a
116 page motion, including 237 “undisputed material facts” (gov’t mot. at 2-81). In
response, Chugach filed a 272 page opposition, including 231 additional facts
(Chugach’s Statement of Facts (CSOF)) supporting its opposition (app. opp’n at 15-76).
Including the Navy’s reply brief, we now have over 400 pages of briefing and over
450 proposed facts – all allegedly undisputed and material. We grant the Navy’s motion
in part, and enter summary judgment in favor of the Navy on Count V of Chugach’s
complaint, which asserts a breach of the duty of good faith and fair dealing, but find that
material factual disputes prevent the entry of summary judgment on the remainder of
Chugach’s complaint.

                                      DECISION

        Familiarity with the facts in our three previous decision is presumed, and the
relevant factual background is not repeated here. The Navy’s motion, at its core, is
premised upon the theory that Chugach’s aggressive bidding and inefficient
performance, and not the Navy’s actions, were responsible for Chugach’s financial
losses in performing the contract. The Navy believes this to be a question suitable for
resolution by summary judgment, asserting “[a]t this stage of the proceedings, the
issue is whether CFSI can meet its burden of proof (there is no cause of action here on
which the Navy bears the burden of proof)” (gov’t reply at 2). In its motion, the Navy
seeks to impose on Chugach an obligation to demonstrate preponderate evidence now,
at the summary judgment stage (gov’t mot. at 82). “CFSI bears the burden of proving
each [of the counts in its complaint] by a preponderance of the evidence. Based on the
undisputed facts set forth above and the analysis set forth below, CFSI cannot meet
that burden.” However, as explained in more detail in the standard of review
discussion below, the Navy significantly misapprehends the standard of review. To
avoid entry of summary judgment, Chugach does not need to establish “by a
preponderance of the evidence” its entitlement to recover. Instead, Chugach simply
needs to establish the existence of a set of facts that, with all inferences drawn in
Chugach’s favor, would be sufficient to support judgment in favor of Chugach. In
evaluating the Navy’s motion, the Board cannot weigh evidence to determine whether
Chugach’s business decisions (as asserted by the Navy), or the Navy’s actions (as
asserted by Chugach) were the predominate cause of Chugach’s financial losses on the
contract. Instead, that is a question that must be decided following an evidentiary
hearing.

   I.     Standard of Review

      We will grant summary judgment only if there is no genuine issue as to any
material fact, and the moving party is entitled to judgment as a matter of law. Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material fact is one that may affect the
outcome of the decision. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).


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The moving party bears the burden of establishing the absence of any genuine issue of
material fact, and all significant doubt over factual issues must be resolved in favor of
the party opposing summary judgment. Mingus Constructors, Inc. v. United States, 812
F.2d 1387, 1390-91 (Fed. Cir. 1987). Once the moving party has met its burden of
establishing the absence of disputed material facts, then the non-moving party must set
forth specific facts, not conclusory statements or bare assertions, to defeat the motion.
Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 626-27 (Fed. Cir. 1984). “A
genuine issue of material fact arises when the nonmovant presents sufficient evidence
upon which a reasonable fact finder, drawing the requisite inferences and applying the
applicable evidentiary standard, could decide the issue in favor of the nonmovant.”
C. Sanchez and Son, Inc. v. United States, 6 F.3d 1539, 1541 (Fed. Cir. 1993). As set
forth in more detail below, the Navy’s motion asks us to apply a preponderance of the
evidence standard in reviewing Chugach’s claims. However, the binding Supreme
Court and Court of Appeals for the Federal Circuit precedent cited above clearly
requires us to grant all inferences in favor of Chugach and to determine whether
Chugach has cited to record evidence that could support judgment in its favor.
Additionally, as discussed below, the Navy asks us to weigh the evidence cited by
Chugach against the evidence cited by the Navy to determine that the Navy’s evidence
is preponderate. Again, the binding precedent cited above prohibits the Board from
weighing evidence at the summary judgment phase.

   II.    Count I (Negligent Negotiations)

        The Navy alleges that Chugach “cannot establish, by a preponderance of the
evidence, that it actually would have ‘significantly’ increased its staffing if NAVFAC
had conveyed different information to CFSI during the pre-award discussions” (gov’t
mot. at 84). However, Chugach does not need to establish preponderate evidence,
rather, it must establish the existence of facts sufficient to support entry of judgment in
its favor. Chugach has done so, by citing documents, deposition testimony of Navy
witnesses, and the expert witness report of Jimmy J. Jackson, dated October 15, 2019
(Jackson Report), in support of its argument that the Navy had concluded that Chugach
did not understand the solicitation and would not be able to perform the contract with
its proposed staffing levels, but that the Navy continued with the procurement
(CSOF ¶¶ 73-76, 86-98, 103-09). Significantly, the Navy does not dispute any of
Chugach’s proposed facts for the purposes of this motion (gov’t reply at 2).

        The Navy additionally asks the Board to weigh the evidence in its summary
judgment motion. For example, the Navy admits that its source selection team found
that Chugach’s first proposal revision contained a “significant weakness” and that this
was not conveyed to Chugach (gov’t reply at 4). However, the Navy argues that the
source selection team did not find any significant weakness in Chugach’s fifth and
final proposal revision and, therefore, it did not award the contract in violation of
Federal Acquisition Regulation (FAR) 15.306(d) by failing to note weaknesses (gov’t


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reply at 5). While the Navy considers this to be an “undisputed” conclusion, we find
that there is a material factual dispute as to whether the Navy properly informed
Chugach of the source selection team’s conclusion that there was a significant
weakness.

        The Navy also seeks to relitigate the Board’s prior holdings in Chugach II and
Chugach III. In Chugach II we rejected the Navy’s affirmative defense of waiver
based on Chugach’s position asserted in a bid protest action before the Government
Accountability Office, and granted summary judgment in favor of Chugach.
Chugach II, 19-1 BCA ¶ 37,314 at 181,495. The Navy now asserts that Chugach
“waived its right to challenge NAVFAC’s source selection process by supporting it in
a prior legal proceeding” (gov’t mot. at 86-87). This is the very same argument we
rejected in Chugach II. Chugach II, 19-1 BCA ¶ 37,314 at 181,493-94. In addition,
the Navy seeks to relitigate our holding in Chugach III that Chugach had presented a
valid claim pursuant to the Contract Disputes Act (CDA) for purportedly negligent
negotiations. Chugach III, 19-1 BCA ¶ 37,380 at 181,719. The Navy asserts that it is
entitled to summary judgment because it is “unaware of any authority supporting the
assertion of [a negligent negotiation claim] by a government contractor and,
consequentially, the Navy cannot evaluate CFSI’s claim against any accepted legal
standards” (gov’t mot. at 83). The Navy’s citation to our holding in LKJ Crabbe, Inc.,
ASBCA No. 60331, 19-1 BCA ¶ 37,250 at 181,309 is similarly unavailing. The Navy
cites that appeal for the proposition that an error by the government in evaluating a
contractor’s proposal cannot give rise to an equitable adjustment in favor of the
contractor (gov’t. reply at 6). However, as the Navy admits, LKJ Crabbe was a
FAR Part 14 procurement (id.). The Navy does not explain how a case involving a
sealed bid, where there are no negotiations between the parties, is relevant to a claim
for negligent negotiations. The Navy’s motion is denied with regard to Count I of
Chugach’s complaint.

   III.   Count II (Superior Knowledge)

       The Navy asserts that it is entitled to entry of summary judgment on Chugach’s
superior knowledge claim because Chugach “cannot meet its burden of proving
entitlement based on superior knowledge” (gov’t mot. at 87). Superior knowledge
generally applies when:

             (1) a contractor undertakes to perform without vital
             knowledge of a fact that affects performance costs or
             duration, (2) the government was aware the contractor had
             no knowledge of and had no reason to obtain such
             information, (3) any contract specification supplied misled




                                           4
              the contractor or did not put it on notice to inquire, and (4)
              the government failed to provide the relevant information

Hercules, Inc. v. United States, 24 F.3d 188, 196 (Fed. Cir. 2004) (quoting
American Ship Bldg. Co. v. United States, 654 F.2d 75, 79 (Ct. Cl. 1981)). The Navy
asserts that Chugach has not identified any specific vital knowledge that it was
lacking, and that “it is doubtful that CFSI would be able to demonstrate by a
preponderance of the evidence that any such data was vital knowledge” (gov’t mot.
at 90-91).

       The Navy additionally suggests that the Board should weigh the evidence in
evaluating its motion (gov’t mot. at 89 (citing the expert report of Mr. Jackson and his
opinion that the data available to the government employees preparing the independent
government estimate was superior and more reliable than the information provided to
offerors but then suggesting that Mr. Jackson “does not explain why the data was
superior or why it was more reliable” and that the report does not “opine on the ‘more
precise estimating practices’ that could be employed in connection with such data”);
gov’t mot. at 94 (“Even if, however, the Board credits the testimony of CFSI’s
corporate representative. . . ); gov’t reply at 14 (dismissing the declarations submitted
by Chugach, including one declaration by someone that the Navy concedes was
involved in the preparation of Chugach’s proposal but arguing that the testimony of
Navy witnesses is more credible because of their “significant and direct
involvement”)).

        Following an evidentiary hearing, the Board may well conclude that the
evidence presented by Chugach is not preponderate. However, at this stage in the
litigation, we simply need to determine whether Chugach has submitted evidence that
would be sufficient to support the entry of judgment in favor of Chugach. Again, we
find that Chugach has cited documents and deposition testimony sufficient to establish
a material factual issue regarding vital information not provided to bidders
(CSOF ¶¶ 10-17, 38-46). Chugach additionally established that there were material
factual issues regarding the Navy’s knowledge that Chugach was unaware of the
alleged superior knowledge (CSOF ¶¶ 17, 33, 44-45), that Chugach was misled and
not put on notice to inquire (CSOF ¶¶ 40-42, 46, 100), Chugach Response to
Government Finding of Fact (SGMF) 222), and that the Navy failed to provide the
relevant data (SGMF ¶ 222). Accordingly, we deny the Navy’s motion for summary
judgment on Count II.

   IV.    Count III (Mutual Mistake)

       The Navy alleges that Chugach’s mutual mistake claim is “simply not
plausible” (gov’t mot. at 103) and that the “mutual mistake allegation is thus factually
incorrect and, consequently, legally insufficient” (gov’t mot. at 105). Once again we


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note that Chugach is only required to demonstrate a material factual dispute to prevent
entry of summary judgment. We find that Chugach has established a material factual
dispute by citation to documents and deposition testimony regarding the parties’ belief
about how the historical data provided in the solicitation related to the requirements in
the solicitation (CSOF ¶¶ 39-41; SGMF ¶ 58, 104).

        Moreover, the Navy again invites the Board to weigh witness testimony. The
Navy concedes that a Navy witness testified that he would “expect the level of effort
reflected in the historical data to be what the contractor would experience” but then
asks us to weigh the evidence by noting that “[e]ven if” the Board were to credit the
testimony, “his subjective expectation was not shared by the other witnesses that
testified and was never communicated to the offerors” (gov’t reply at 19 n.16). The
Navy also, once again, seeks to relitigate its previously rejected argument that
Chugach is actually claiming mutual mistake as to a projection of future events (gov’t
mot. at 105). We rejected this argument in Chugach III, 19-1 BCA ¶ 37,380
at 181,719. Accordingly, the Navy’s motion for summary judgment is denied with
regard to Count III.

   V.     Count IV (Constructive Change)

       The Navy asserts that there was not a constructive change to the contract because
it was Chugach, and not the Navy, that determined the staffing levels on the contract
and that the Navy did not direct Chugach’s staffing levels (gov’t mot. at 112-13). We
find that Chugach has demonstrated a material factual dispute with its citation to record
evidence that the Navy pushed Chugach to perform more work (CSOF ¶¶ 200-09) and
that some Navy employees believed that Chugach was likely entitled to additional
compensation for additional work (CSOF ¶¶ 219-25). The Navy’s motion for summary
judgment with regard to Count IV is denied.

       In addition, and not a basis for our decision denying the Navy’s motion for
summary judgment on Count IV, Chugach asserts that there is a material factual issue
regarding the Navy’s actions in hindering the evaluation and approval of Chugach’s
integrated maintenance plan (CSOF ¶¶ 198-99). However, Chugach did not raise this
issue in its claim, amended claim, or in its complaint (R4, tabs 238-39; compl.). The
Navy asserts that Chugach should be precluded from using these allegations in
defending against the summary judgment motion, based upon Federal Rule of Civil
Procedure 37(c)(1) (gov’t reply br. at 24). Rule 37(c)(1) provides for the preclusion of
evidence when a party fails to disclose or supplement information as required by
Federal Rule of Civil Procedure 26(a) or (e). FED. R. CIV. P. 37(c)(1). Because we
held above that there were material factual issues preventing the entry of summary
judgment, without consideration of Chugach’s allegations regarding the integrated
maintenance plan, we need not reach this issue here; however, the issue is relevant to
our evaluation of Count V, below.


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   VI.     Count V (Breach of the Duty of Good Faith and Fair Dealing)

        The Navy asserts that Count V must be dismissed because Chugach’s claim and
complaint reference alleged breaches of the duty of good faith and fair dealing that
occurred during the negotiation of the contract (gov’t mot. at 113-15). As the
government notes, it is well established that the duty of good faith and fair dealing
applies to government conduct during the performance of the contract, and does not
apply to government actions during the formation of the contract. See, e.g.,
Scott Timber Co. v. United States, 692 F.3d 1365, 1372 (Fed. Cir. 2012) (holding that
the government “could not have breached the covenant of good faith and fair dealing by
its pre-award conduct because the covenant did not exist until the contract was signed”);
Tug Hill Constr., Inc., ASBCA No. 57825, 14-1 BCA ¶ 35,777 at 175,024, aff’d, 622 F.
App’x 914 (Fed. Cir. 2015) (nonprecedential). Chugach does not dispute that its claim
and complaint relied upon pre-award actions as a basis for its breach of the duty of good
faith and fair dealing argument (app. opp’n at 270 (“the claim and complaint relied on
the Navy’s pre-award conduct as a basis for this argument”)). However, Chugach
alleges that “facts learned during discovery about the Navy’s post-award conduct
confirm that the Navy violated its duty” (id.). It is well settled law that the Board lacks
jurisdiction to entertain a claim unless it was presented to the contracting officer for
decision. See, e.g., M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323,
1327-28 (Fed. Cir. 2010). Thus, if Chugach’s argument regarding the Navy’s actions
hindering the evaluation and approval of Chugach’s integrated maintenance plan is a
new claim that was not presented to the contracting officer, it would not demonstrate the
existence of a material factual issue and would not prevent the entry of summary
judgment in favor of the Navy.

        For the Board to possess jurisdiction to entertain Chugach’s claim that the Navy
hindered the evaluation and approval of Chugach’s integrated maintenance plan, it must
be the same claim that was presented to the contracting officer. The Board has
recognized that suits are the same claim when they are based on substantially the same
operative facts. Macro-Z Technology, ASBCA No. 60592, 19-1 BCA ¶ 37,358
at 181,659. Moreover, “[t]he test for what constitutes a ‘new’ claim is whether ‘claims
are based on a common or related set of operative facts.’” Unconventional Concepts,
Inc., ASBCA No. 56065 et al., 10-1 BCA ¶ 34,340 at 169,591 (quoting Placeway
Constr. Corp. v. United States, 920 F.2d 903, 907 (Fed. Cir. 1990)). “The introduction
of additional facts which do not alter the nature of the original claim . . . or the assertion
of a new legal theory of recovery, when based upon the same operative facts as
included in the original claim, do not constitute new claims.” Trepte Constr. Co. Inc.,
ASBCA No. 38555, 90-1 BCA ¶ 22,595 at 113,385-86. A claim is new when it
“‘present[s] a materially different factual or legal theory’ of relief.” Lee’s Ford Dock,
Inc. v. Sec’y of the Army, 865 F.3d 1361, 1369 (Fed. Cir. 2017) quoting K-Con Bldg.
Sys., Inc. v. United States, 778 F.3d 1000, 1006 (Fed. Cir. 2015)). “Materially different


                                             7
claims ‘will necessitate a focus on a different or unrelated set of operative facts.’”
Lee’s Ford Dock, 865 F.3d at 1369 (quoting Placeway Constr., 920 F.2d at 907).

       Here, Chugach’s claim does not assert that the Navy hindered the evaluation and
approval of Chugach’s integrated maintenance plan and does not allege any post-award
actions that would constitute a breach of the duty of good faith and fair dealing. The
claim does mention the integrated maintenance plan, but only in the context of the
inaccuracy of the independent government estimate (R4, tab 238 at GOV29246,
GOV29252, GOV29256, GOV29271). Moreover, the Navy’s actions regarding the
integrated maintenance plan are central to Chugach’s breach of good faith and fair
dealing argument. These are not “additional facts” that do not alter the nature of claim.
Trepte Constr., 90-1 BCA ¶ 22,595 at 113,385-86. Thus we find that Chugach’s
allegation that the Navy hindered Chugach’s evaluation and approval of its integrated
maintenance plan is a new claim that was not presented to the contracting officer and
that we lack jurisdiction to entertain. Lael Al Sahab & Co., ASBCA No. 58346,
13 BCA ¶ 35,394 at 173,662 (“An appellant cannot first assert a claim in its
complaint.”). Accordingly, we grant summary judgment in favor of the Navy with
regard to Count V, holding that Chugach’s allegations regarding a breach of the duty of
good faith and fair dealing during the negotiation of the contract fails to establish the
existence of facts sufficient to demonstrate entitlement to relief, while Chugach’s
allegations regarding the integrated maintenance plan do not assert a claim within the
jurisdiction of the Board because they were not presented first to the contracting officer.

   VII.   Count VI (Improper Withholding of Payment)

       The Navy’s entire argument for summary judgment on Count VI is that Chugach’s
“claim is without merit, [so] there is no basis in this appeal to second-guess NAVFAC’s
withholding of payment” (gov’t mot. at 115). As explained above, we find that there are
material factual issues that prevent the entry of summary judgment on Counts I, II, III,
and IV of Chugach’s complaint. Thus, we find that there is a material factual issue
regarding the Navy’s withholding of payment to Chugach and deny the Navy’s motion
with regard to Count VI of Chugach’s complaint.




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                                  CONCLUSION

      For the reasons stated above, we grant the Navy’s motion with regard to Count V
of Chugach’s complaint, which we dismiss, and deny the Navy’s motion for summary
judgment with regard to Counts I, II, III, IV, and VI of Chugach’s complaint.

      Dated: May 27, 2020




                                               DAVID D’ALESSANDRIS
                                               Administrative Judge
                                               Armed Services Board
                                               of Contract Appeals

I concur                                       I concur




RICHARD SHACKLEFORD                            J. REID PROUTY
Administrative Judge                           Administrative Judge
Acting Chairman                                Vice Chairman
Armed Services Board                           Armed Services Board
of Contract Appeals                            of Contract Appeals




                                         9
      I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 61320, Appeal of Chugach
Federal Solutions, Inc., rendered in conformance with the Board’s Charter.

      Dated: May 27, 2020




                                               PAULLA K. GATES-LEWIS
                                               Recorder, Armed Services
                                               Board of Contract Appeals




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