       In the United States Court of Federal Claims
                                       No. 10-707C
                                   Filed: April 7, 2017
                              Reissued: December 1, 20171
    * * * * * * * * * * * * * * *               *
    OASIS INTERNATIONAL WATERS,                 *
    INC.,                                       *
                                                *
                        Plaintiff,              *            Trial; Contract Interpretation;
                 v.                             *            Duress; Fraud; Special Plea in
                                                *            Fraud; False Claims Act; Anti-
    UNITED STATES,                              *            Fraud    Provision    of    the
                                                *            Contract Disputes Act.
                        Defendant.              *
                                                *
    * * * * * * * * * * * * * * *

                                        OPINION

       Laurence Schor, Asmar, Schor & McKenna, PLLC, Washington, D.C., for plaintiff.
With him were Susan L. Schor, Dennis C. Ehlers, David A. Edelstein, Robert D. Pratt,
and Allison G. Geewax, Asmar, Schor & McKenna, PLLC, Washington, D.C.

       James P. Connor, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington, D.C., for defendant. With him
were Tanya B. Koenig, Trial Attorney, Commercial Litigation Branch, Stephen C. Tosini,
Senior Trial Counsel, Douglas K. Mickle, Assistant Director, Commercial Litigation
Branch, Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Chad A.
Readler, Acting Assistant Attorney General, Civil Division, Department of Justice.

HORN, J.

       Plaintiff, Oasis International Waters, Inc. (Oasis), is a contractor that performed a
bottled water contract with the United States military in Iraq during the Iraq War. Oasis is
a Nevada corporation for which the principal place of business is in Utah. After the end of
contract performance, plaintiff filed a certified claim with the contracting officer, which was
denied in its entirety. Plaintiff thereafter filed a complaint in the United States Court of
Federal Claims, and, subsequently, defendant filed fraud counterclaims against plaintiff.

1 The court issued a series of opinions in the above captioned case on August 31, 2016,
April 7, 2017, and November 21, 2017. In response to the court’s November 21, 2017
Order, the parties agreed that all three opinions could be issued without redactions. After
reviewing the opinions, the court agrees with the parties and the original opinions are
hereby unsealed and reissued without redaction.
A trial was held regarding plaintiff’s breach of contract claims, as well as defendant’s fraud
counterclaims. As indicated below, in an earlier opinion in the case, the court, with the
exception of one claim which the court deferred, and which is addressed below, denied
defendant’s counterclaims for the Special Plea in Fraud, False Claims Act, and the anti-
fraud provision of the Contract Disputes Act.

                                       FINDINGS OF FACT

        As stipulated by the parties, “[a]fter the start of the Iraq War but prior to the award
of the contract at issue in this case, the Army procured all of its Iraq bottled water
requirements from Turkey, Kuwait, and Jordan and shipped it by truck into Iraq and to the
various U.S. military bases in Iraq.” United States Air Force Colonel Renee M.
Richardson, who served as one of the contracting officers on the contract at issue in this
case from May 2006 until October 2006,2 explained at trial that “[t]he previous approach
was bringing bottled water in from Turkey, Jordan, and Kuwait, of course, which put
soldiers on the road for the transportation.” As noted in the Statement of Work for the
solicitation at issue in this case, Solicitation No. W27P4A-05-R-0002 (the solicitation):

         Up to the present time bottled water has been purchased from sources
         outside of Iraq. This practice necessitates large numbers of convoys and
         escorts to transport the bottled water from Kuwait, Jordan, and Turkey.
         Producing bottled water locally would significantly reduce the number of
         convoys required to transport water as well as reduce the likelihood of battle
         related injuries.

         The parties also stipulated that:

         On or about March 2, 2005, Maj. Vazquez, a contracting officer with Joint
         Contracting Command-Iraq (JCC-I, later Joint Contracting Command-Iraq
         Afghanistan – JCC-I/A), serving at Camp Victory, issued a Request for
         Information (RFI) “to get information on contractors capable of providing the
         following capabilities for construction of re-locatable water purifying and
         bottling facilities for distribution at several locations in Iraq. Locations will be
         identified at a later date and time. These facilities are to produce clean
         drinkable bottled water per all USDA and FDA standards and requirements.”

The RFI generated interest from 71 vendors, and, on April 3, 2005, the government
posted Solicitation No. W27P4A-05-R-0002.3 Proposals were due by May 3, 2005, and
the government received 22 bids in response to the solicitation, and answered 145
questions. A sample of the questions and answers reveals that the bidders had questions
about the pricing, capabilities, the land to be provided in Iraq and the obligations of the
government. For example, one part of question 33 stated: “Is our offer to give the cost per
2In 2006, Colonel Richardson was a Lieutenant Colonel. When she testified at trial, she
was a full Colonel. The court refers to her as Colonel Richardson in this opinion.
3   The government issued 11 amendments to the solicitation.

                                                  2
liter with the personnel built in, seperate [sic] to the cost of the plant and equipment?” The
government replied: “All Costs per liter are to be included.” Likewise, question 40 asked:
“Start up Cost: Since the bid is predicated upon the deliverables per litre bottle of water,
can we assume that all costs(inc personnel and equipment deployment to site) incurred
between contract award and water production will fall upon the successful bidder?” The
government replied: “Yes. It is up to you how you determine the cost per litre taking into
account all costs associated with this endeavor.”

       There were a number of questions regarding the obligations of the government.
Question 2 asked, “[i]f projected demand falls short, what are the minimum volume
requirements? Is there a required minimum quantity the Government will procure?” The
government responded: “There are no minimums. The minimum is zero.” Additionally,
question 35, referring to question and answer 2, asked:

       The answer to Question #2 states that there are no minimum purchase
       quantities. This decision places an unreasonable amount of financial risk on
       the contractor, and will likely severely limit the competition for this RFP
       [Request for Proposals]. Request that the Government guarantee minimum
       purchase quantities base [sic] on the estimated quantities that appear in the
       RFP.

The government responded:

       The levels of liters required are in the range. This is roughly the production
       per day. You might have a day where your levels are lower, however, the
       Government contract is a Firm Fixed Price not Indefinite Delivery / Indefinite
       Quantity. The Government is entering into a one year contract with three
       option years. The only thing that could prevent the basic year from occurring
       is a Government decision to Terminate for Convenience or default of the
       contractor to perform to the requirements and the Government would then
       Terminate for Default.

       One bidder questioned the potential for installment payments, asking: “Would the
Government authorize progress or installment payments recognizing 1) the significant
capital investment with establishing new capability and, 2) the ability to credit progress
payments with actual deliveries?” to which the government responded that: “The first
payment will be made once the contractor has the first plant operational and has had an
approved first article test accepted without conditions.”

       In response to question 44, the government indicated “[t]he Government will
provide as flat land as possible,” and regarding site conditions, the government indicated
in the answer to question 89, the government stated that “[s]ite prep should be minimal.
The water source has been identified and deemed to have sufficient amounts by the
government to support the operation.” The government also noted in answer to question
89, however, “[i]t is up to you what you do in order to meet the Government’s requirements
and timeframe for delivery.”


                                              3
       One of the 22 bids was submitted by American AquaSource, Inc. (American
AquaSource), and signed by Max Wyeth, President of American AquaSource. Attached
to the American AquaSource proposal was a spreadsheet showing the volumes of
production and an estimate for when each site would begin water production. American
AquaSource’s bid assumed a price of $3.50 per case of water, or a total of
$50,225,000.00, based on the production of 14,350,000 cases.4 At trial, Max Wyeth
explained that he calculated the $50.225 million figure “using our average forecast of
demand, we came up with a case number that would be produced per year, and multiplied
that by the case cost.”5

        Major Mauricio Vazquez, who issued the RFI and answered the questions posed
by the potential offerors, contacted Max Wyeth to clarify the proposal and to submit a
“total cost per year for all four years and the Grand total.” Max Wyeth provided Major
Vazquez with a base year price of $50,225,000.00 and three option year prices of
$186,000,000.00, totaling $608,225,000.00. Max Wyeth confirmed in his correspondence
“that the 3.50 price is the only price, regardless of the winter/summer/surge period, for all
years within the contract.” After negotiations between Max Wyeth and Major Vazquez, in
which Major Vazquez asked Max Wyeth to reconsider the option year prices, on May 11,
2005, Max Wyeth submitted an amendment to the American AquaSource proposal, which
included a revised “Summary of Pricing Schedule” with a proposed base year price of
$50,225,000.00 and three option year prices of $112,000,000.00, for a total contract price
of $386,225,000.00. The parties have stipulated that, “[o]ther than AquaSource’s
proposed price, all other offerors whose proposals were found technically acceptable
offered prices in excess of $1 Billion.”6 Major Vazquez awarded contract no. W27P4A-


4 The court notes, however, for the basis of the estimate in the American AquaSource
proposal, American AquaSource assumed annual production of 384 million bottles or 32
million cases of water.
5   Counsel for defendant confirmed during Max Wyeth’s testimony:

         Q. So, just so the record is clear, the $50.225 [million] in your proposal is based
         upon $3.50 per case?

         A. Yes.
6 The government’s own Independent Government Cost Estimate, estimated a total base
year cost of $149,145,842.23, or almost three times American AquaSource’s proposal for
the base year, to construct and operate the eight water bottling facilities in Iraq. Morrell
International, Inc., a corporation, whose Chief Executive Officer was Phil Morrell, also
submitted a separate proposal which provided for a base year price of $899,725,000.00,
option year prices of $831,287,500.00 per year, for a contract total of $3,393,587,500.00.
Phil Morrell, who later became the president of Oasis, the successor contractor to
American AquaSource, testified at trial, however, that his bid was a “bad bid,” and that he
had intended to bid at $5.50 per case of bottled water. Phil Morrell indicated that the

                                               4
05-C-0002 (the contract) to American AquaSource on May 25, 2005. The contract called
for base year price of $50,225,000.00 and three option year prices of $112,000,000.00
each, for a total contract price of $386,225,000.00.7 Major Vazquez signed the contract
on behalf of the government and Max Wyeth signed on behalf of American AquaSource.

       After the contract was awarded to American AquaSource, Paul Morrell contacted
Max Wyeth, and subsequently, in June 2005, Max Wyeth exchanged several emails with
Phil Morrell and Dan Petsche, then the Vice President for Contracts and Compliance for
Al-Morrell Development discussing the bottled water project.8 Paul Morrell testified that
“[o]ur original intent with American AquaSource was to sell our assets to him, as it
appeared that he didn't have the resources and the funding to acquire our assets, much
less build the factories. It morphed or migrated into a partnership between Max and Phil
and myself.” Paul Morrell explained that, initially:

      Al-Morrell Development was essentially the performance arm of the
      operation. We built the facilities. We financed them. All the employees were
      employed by Al-Morrell Development. It was basically the part of the
      organizations that really did all the performance. . . . Max's responsibility
      was to provide water bottling expertise, because Phil and I were -- had
      never built a water bottling plant prior to this.

The original arrangement changed, because as Paul Morrell testified:

      Initially, Mr. Wyeth told us that he had the financing lined up, and he just
      needed time. He didn't have time, because the first facility had to be up --
      we're talking July, and we had basically 90 days to get the first facility up.
      So, we really didn't have time. . . . So, our understanding was he would
      continue to try to bring his financing option to the table, get money in the
      bank. In the meantime, Phil and I would self-fund this first plant so that we
      could meet the contractual deadlines. Over the course of the fall, it became
      clear that Mr. Wyeth's options were not going to come to fruition, and AMD
      [Al-Morrell Development] -- initially it was a parallel track. We were trying to
      obtain financing on behalf of AMD while we were waiting for his financing to

request “needed to be right around $5.50 per case,” for “somewhere around the 32 million
cases per year.”
7The cover page to the contract listed the estimated dollar amount as “$386,225,000.00.”
At trial, Major Vazquez testified that this amount was in error and that the amount should
have been $50,225,000.00. Subsequently, on July 15, 2005, United States Air Force
Major Marc A. Lopez, who served as the contracting officer on the contract from June
2005 until September 2005, executed modification P00002 on behalf of the government,
which changed the dollar amount from “$386,225,000.00” to “50,225,000 (NTE),”
because “[o]nly the base year award should have been documented in the contract.”
8Max Wyeth testified that at the time he signed this contract he had no relationship with
Al-Morrell Development, Paul Morrell, Phil Morrell, or Paul Jeffries.

                                             5
       come into place. Ultimately his financing failed, and the AMD financing did
       come into place late in the year or early the next year.

Therefore, in July 2005, Phil Morrell, Al-Morrell Development, Max Wyeth, and American
AquaSource entered into a joint development and pre-incorporation agreement to form a
new corporation to fulfill the contract, with the agreement reflecting that the purpose of
American AquaSource’s contract was to “build up to six (6)[9] water bottling plants in the
country of Iraq.” Initially, the corporation was called Iraqua, Inc., but later changed its
name, on July 15, 2005, to Oasis.10 Subsequently, in the fall of 2005, Phil Morrell, Al-
Morrell Development, Max Wyeth, and American AquaSource signed an addendum to
the joint development and pre-incorporation agreement, assigning American
AquaSource’s contract to Oasis. The addendum required Max Wyeth, of American
AquaSource, to execute a novation agreement. The novation agreement was to be a
modification to the contract, and ultimately was modification P00005, discussed below.
On December 5, 2005,11 “American Aqua Source, Inc.,” “Oasis International Water, Inc.,”
and the “United States of America” “enter[ed] into this Novation Agreement. . . as of
August 1, 2005.” Max Wyeth, then-president of Oasis and American AquaSource, signed
the modification on behalf of Oasis on December 2, 2005 and Colonel Brandon Montler
signed for the military on December 5, 2005.12 The modification stated that the “purpose
of this modification” was to reflect the novation agreement transferring all rights and
responsibilities of the bottled water contract from American AquaSource to Oasis. The
modification also stated that, “[a]ll other terms and conditions of the contract remain
unchanged.”

       Paul Morrell was the Chief Executive Officer of Al-Morrell Development from
August 15, 2005 through January 2006, and, thereafter, he served as President of Al-
Morrell Development. Paul Morrell also was the Chief Executive Officer of Oasis from
9 As explained below, although the contract, as executed, required eight water bottling
plants, the contract was modified by modification P00001 to require only six water bottling
plants.
10 Paul Morrell testified that “Oasis was originally called Iraqua. Everybody loved that
name except the bankers. The bankers wouldn't allow us [to] own a bank account with
that name Iraqua on it, literally, so we changed the name to Oasis.” Paul Morrell testified
that “Phil [Morrell] and Max [Wyeth] were owners in Oasis, and Phil and I were owners in
Al-Morrell Development, but we made a very -- Phil and I made a very practical decision
that if we were going to invest our funds into the business, that our company was going
to own the assets.”
11In 2005, Colonel Montler was a Major. When he testified at trial, he was a Colonel. The
court refers to him as Colonel Montler in this opinion.
12 At the time of the novation, Max Wyeth testified he was “out of the loop” and his interest
in Oasis was eventually bought out by the Phil Morrell and Paul Morrell. Max Wyeth also
was not involved in the completion of the bottled water plants. Oasis accepted Max
Wyeth’s resignation as president of Oasis on January 5, 2006.

                                             6
August 15, 2005 through January 2006, and, thereafter, served as President of Oasis.
Phil Morrell was Chairman of Oasis from July 2005 through December 2012. Paul Jeffries
served as both the Chief Executive Officer and Chief Financial Officer of Al-Morrell
Development and Oasis. Paul Jeffries served as Chief Financial Officer of Al-Morrell
Development and Oasis from June 2005 through January 2006, and, subsequently,
served as Chief Executive Officer of Al-Morrell Development and Oasis from January
2006 through 2010. Paul Jeffries was replaced as Chief Financial Officer of Al-Morrell
Development and Oasis by Neil Vos, who served as Chief Financial Officer from February
16, 2006 until June 2011. As noted above, Dan Petsche was the Vice President for
Contracts and Compliance for Al-Morrell Development during initial discussions about the
contract with Max Wyeth, and he also was the Vice President for Contracts and
Compliance for Oasis from 2005 through October 31, 2011. At all times, Paul Morrell and
Phil Morrell13 had a controlling interest in Oasis, and after Max Wyeth was bought out and
resigned as president, Paul Morrell and Phil Morrell controlled 100% of Oasis.

         The Contract

      As noted above, Major Vazquez awarded contract no. W27P4A-05-C-0002 to
American AquaSource on May 25, 2005. Item no. 0001 of the contract was “NON-
PERSONAL SERVICS [sic]” (capitalization in original) and indicated:

         The Contractor shall provide all labor, tools, supervision, personnel,
         equipment, transportation, materials, facilities, and other essentials
         necessary to perform and sustain 8 separate and independent purified
         bottle water plants according to the 20 Mar 05 Statement of Objectives
         (SOO). Period of Performance: 25 May 05 through 24 May 06.

The unit price was listed as “$3.50/case” for all amounts of water produced. Following the
item no. 0001 were three items for the three option years, item no. 1001, item no. 2001,
and item no. 3001, changing only the period of performance.14 After item nos. 0001, 1001,
2001, and 3001, there was a summary of the pricing schedule which stated:

         SUMMARY OF PRICES FOR BASE YEAR AND THREE OPTION YEARS

TOTAL BASE YEAR                       $50,225,000.00

FIRST OPTION YEAR                     $112,000,000.00

SECOND OPTION YEAR                    $112,000,000.00

THIRD OPTION YEAR                    $112,000,000.00
13   Phil Morrell and Paul Morrell are brothers.
14 The similarity of the three options years after the base year is reflected in the
typographic error of “NON-PERSONAL SERVICS” in each of the three option years.
(capitalization in original).

                                               7
GRAND TOTAL (Base Year and Three Option Years)                  $386,225,000.00

(capitalization and emphasis in original). The period of performance was listed in the
contract as:

       BASIC PERIOD                25 May 2005 - 24 May 2006
       OPTION PERIOD I             25 May 2006 - 24 May 2007
       OPTION PERIOD II            25 May 2007 - 24 May 2008
       OPTION PERIOD III           25 May 2008 - 24 May 2009

(capitalization in original). The statement of objectives for the “purified bottled water
services” contract explained:

       The purpose of this contract is to provide re-locatable purified bottled water
       capabilities at various locations throughout Iraq Area of Operations (AO).
       Contractor shall produce the amounts of bottled water as outlined in Figure
       1. Contractor shall ensure bottled water capability is able to relocate upon
       notification by the Contracting Officer (CO) due to military operational
       requirements. Bottled water capabilities shall be established in the order as
       listed in Figure 1. Actual locations will be given to the contractor that wins
       award. The contractor shall provide all the mechanical equipment required
       to produce and prepare for shipment the required amounts of bottled water.
       The first bottled water site shall be operational 120 days after the contract
       is awarded. This includes military inspection and acceptance. After contract
       award, additional bottled water sites shall be established within the
       remainder of days from contract award. A full 365 days from contract award,
       all sites will be fully operational.

Figure 1, referenced in the statement of objectives, identified the production requirements
at each of the bottled water facilities at different points in the year.

     LOCATION           TOTAL PRODUCTION REQUIREMENT/DAY in 1K
                        Liters (winter/summer/surge)

     Location 1         75-100K liters / 101-150K liters / 151-200K liters

     Location 2         65-100K liters / 101-135K liters / 136-170K liters

     Location 3         35-55K liters / 56-75K liters / 76-100K liters

     Location 4         60-110K liters / 111-160K liters / 161-210K liters

     Location 5         60-110K liters / 111-160K liters / 161-210K liters

     Location 6         200-300K liters / 301-400K liters / 401-450K liters


                                             8
     Location 7         80-120K liters / 121-160K liters / 161-200K liters

     Location 8         75-110K liters / 111-150K liters / 151-190K liters


(capitalization in original). Figure 1 contemplated three different quantity production
requirements: winter, summer, and “surge.” Colonel Richardson testified, explaining the
different requirements, as follows:

       [D]uring the winter, the weather was a lot more reasonable in Iraq; the highs
       were around the eighties, nineties. In the summer, temperatures got up to
       135 degrees, requiring soldiers to drink more just to stay cool and to stay
       hydrated. During surge, what that's really talking to is battle operations. Our
       soldiers wind up wearing 60, 70, 80 pounds' worth of gear and then going
       out into . . . tanks, which causes them to sweat and causes them to need
       more water.

       The tasks section of the contract instructed, in part: “The contractor shall provide
re-locatable purified water bottling capability for producing and packaging required
amounts of one liter bottles of water per day as outlined in Figure 1,” “Contractor shall
provide, operate, maintain, and repair all the mechanical equipment required to
accomplish the Government's objectives,” “Contractor shall ensure bottled water meets
or exceeds all US Government quality standards,” and “Contractor shall operate the
purified bottled water capabilities with enough personnel to meet the Government's
requirements.” Regarding payment to the contractor, the invoicing section of the contract
stated:

       Invoicing shall occur monthly. The contractor shall invoice to the Contracting
       Officer Representative (COR), by the 5th of each month, for the total of all
       liters in [sic] produced, per location, for the entire previous month. The
       CORs will prepare the DD250s and will submit them with the contractor's
       invoice to the Contracting Officer (CO), no later than the 10th of each month.

       Bottled Water Facilities

        Although the contract, as awarded, required eight bottled water facilities, on May
26, 2005, as noted above, the day after contract award, United States Air Force
Lieutenant Marion Knapp executed a no-cost modification P00001 on behalf of the
government reducing the required number of water bottling facilities from eight to six. The
six bottled water facilities were: LSA Anaconda (Anaconda), Camp Victory, Al Asad
Airbase, Qayyarrah West (Q-West), Speicher, and Camp Taqaddum (TQ). On May 25,
2005, Major Vazquez indicated in an email to Lieutenant Knapp and Captain Patrick
Sturgill, who served as a “liaison” between the contractor and the military, that land would
be provided to the contractor no later than 30 days after contract award, “to ensure no
delay is imposed by the Government to the Contractor.” Although the answer to question

                                             9
number 44 regarding the solicitation indicated that “[s]ite prep should be minimal,”
defendant had to provide site preparation at every location except Al Asad.15

       Anaconda, the first bottled water facility, was contractually required to be
operational by September 22, 2005. Major Lopez executed modification P00004 on
September 18, 2005, on behalf of the government, granting a 12-day extension of the
requirement for Anaconda’s certification until October 4, 2005. Although Anaconda began
producing water on October 10, 2005, Anaconda was not audited and certified operational
until December 14, 2005, after producing almost 2 million liters of water.

       Camp Victory, the second bottled water facility, was initially required to be
operational by May 24, 2006. The military authorized land for Camp Victory on September
4, 2005. Camp Victory was certified operational on April 7, 2006, and began producing
bottled water on April 12, 2006. Al Asad, the third bottled water facility, was initially
required to be operational by May 24, 2006. The military authorized land for Al Asad on
August 22, 2005. The contractual deadline to complete Al Asad was extended to June
30, 2006, and Al Asad was certified operational on July 24, 2006.

        Q-West, the fourth bottled water facility, was initially required to be operational by
May 24, 2006. The military authorized land for Q-West on September 11, 2005, but on
December 19, 2005, the military directed and authorized land at a different location for
the Q-West plant. The contractual deadline to complete Q-West was extended to June
30, 2006, and Q-West was certified operational on July 9, 2006. Plaintiff indicated it
encountered challenges with the water source at Q-West. Alan Morrell16 testified that “we
opened Q-West and started drawing from that irrigation line, we started getting turbid
water, water so turbid that it was filled with mud and sand. And at that time, it was so
significant that we couldn’t purify it.” As a result, “what it did is it . . . immediately fouled
all of our [equipment] -- we didn't have an ultra filtration system there because it didn't call
for one.” Moreover, the “ROWPU [Reverse Osmosis Water Purification Unit] was
immediately filled with mud, and fouled. And each set of those membranes is $26,000.
And they were ruined. And we couldn't keep them clean and operational enough to
operate and make water there as a result.” In order to fix the problem, Alan Morrell
testified that Oasis “purchased a Pall Aria from northern New York and we also took an


15 In the case of Al Asad, plaintiff claims that: “Defendant refused to provide site prep at
Al Asad, Oasis was forced in December 2005 to hire its own subcontractor to prep the
site, which included filling borrow pits dug by the military, at a cost of $224,100,” and
further spent “$158,110 to abate the flooding and repair the damage caused to the site,”
as a result of the work done by another government contractor, Kellogg, Brown & Root,
at an adjacent site.
16 As noted above, Alan Morrell “was an Oasis consultant from late June 2005 through
October 2005. Specifically, he was the Oasis Contract and Compliance Administrator
from October 2005 through March 2007. He was Director of Contracts and Compliance
from March 2007 through November 2008. He was Project Management Director from
November 2008 through December 2009.”

                                               10
additional ROWPU system that we had used at Balad [Anaconda] and recommissioned
it, repiped and replumbed the lines at Q-West and solved the problem.”

       Speicher, the fifth bottled water facility, was initially required to be operational by
May 24, 2006. The military authorized land for Speicher on August 13, 2005. The
contractual deadline to complete Speicher was extended twice, finally to June 30, 2006,
and Speicher was certified operational on June 20, 2006, and began producing bottled
water on June 24, 2006. Initially, Oasis believed they would receive water provided by the
government via a ROWPU. Alan Morrell testified, however, that “we opened the factory,
we start producing, and within 48 hours, KBR [Kellogg Brown & Root] came in and just
railed on us for consuming their ROWPU'd water. And they got -- they got their KBR
COTR or contractor officer's representative for that site involved and they shut down our
water.” As a result, Alan Morrell testified that:

       They’re [Oasis’ contracting officer and COSCOM (United States Corps
       Support Command)] beating us up for delivering quantities, but they're
       refusing to give us the water they're required to provide us. So, we're dealing
       with that at Speicher, and we're dealing with a lack of water delivery at Q-
       West to a level we can produce there, too, and we're all running for a
       completed amount of or quantity of water, but we can't get to it.

As a solution, Oasis purchased from an American company a “BEV 9 reverse osmosis
system, and in the spring of 2007, installed it, commissioned it, and began to draw well
water.”

       Camp Taqaddum, or TQ, the sixth bottled water facility, was initially required to be
operational by May 24, 2006. Although the military initially authorized the land for TQ on
August 24, 2005, the military directed Oasis to use land at different locations twice, the
second time in March 2006. The contractual deadline to complete TQ was twice
extended, to June 30, 2006, and then to October 15, 2006. The site preparation for TQ
was completed by July 2, 2006, and on August 11, 2006, Colonel Richardson gave
approval for Oasis to construct the plant at TQ. TQ was completed on October 23, 2006,
and despite Oasis requesting 40.5 days of excusable delay on September 25, 2006,
United States Air Force Lieutenant Colonel Joel R. Fortenberry, who served as the
contracting officer on the contract from October 2006 until early 2007, executed
modification P00013 on behalf of the government, granting plaintiff only eight days of
excusable delay for TQ. TQ was certified operational on October 25, 2006.

       Relevant Modifications

      During contract performance there were a series of relevant modifications to the
contract.17 As noted above, after contract award, modification P00001 reduced the
number of bottled water facilities from eight to six, and on July 15, 2005, Major Lopez
executed modification P00002 on behalf of the government, which changed the dollar
17As the parties have stipulated, 13 relevant modification were issued after the contract
was executed.

                                             11
amount from “386,225,000 (estimated)” to “50,225,000 (NTE).” Subsequently, on August
9, 2005, Major Lopez and Max Wyeth executed modification P00003, which added a
“NTE,” or not to exceed limitation on the quantity of water produced at each plant, and
did not require the government to purchase any minimum number of cases produced by
the contractor. Pursuant to modification P00003, the not to exceed “case quantity was a
total of 14,350,000 cases of water,” and, as modified in modification P00002, the not to
exceed price was $50,225,000.00. As explained above, modification P00004 granted a
twelve day extension of the requirement for the certification of the Anaconda bottled water
plant, and modification P00005 was the novation agreement.

       Modification P00006

       Prior to the execution of modification P00006, on March 27, 2006, United States
Air Force Lieutenant Colonel James E. Davis,18 who served as the contracting officer on
the contract from September 2005 until January 2006, sent Oasis a letter titled
“Preliminary Notice of Government Intent to Exercise Option CLINs 1001-5, Contract
W27P4A-05-C-0002 for $112M,” which stated: “The Government must withhold its intent
to exercise the option,” which meant the contract would come to an end. The letter
informed Oasis that “[t]he contracting office does not have assurance of adequate
funding.”19 On April 3, 2006, Paul Jefferies sent Lieutenant Colonel Davis a draft proposal,
which would form the basis of modification P00006, and included a way to include a base
year amount of 14,350,000 cases of bottled water at $3.50 per case for a total of
$50,225,000.00.

       Modification P00006, which was executed on April 14, 2006 by Lieutenant Colonel
Davis and Phil Morrell, extended the base year of the contract from May 24, 2006 to
August 15, 2006, and required that the bottled water capability be established at the six
sites by June 30, 2006. Modification P00006 extended the contractual deadline for bottled
water plants to be operational to June 30, 2006. According to modification P00006, the
bottled water plants were to be operational in the following order: (1) Anaconda, (2) Camp
Victory, (3) Speicher, (4) Q-West, (5) TQ, and (6) Al Asad.20 Modification P00006 also
required the production of 14.35 million cases of water during the base period of the
contract, and removed the “not to exceed” requirements established in modification

18In 2005 and 2006, Lieutenant Colonel Davis was a Major. When he testified at trial, he
was a Lieutenant Colonel. The court refers to him as Lieutenant Colonel Davis in this
opinion, unless quoting from a document.
19 Phil Morrell testified that “I told them [the government] that would be a really bad thing
to get a letter like that, because that letter would put us in default with our banker. And
that letter did put us in default with our banker, and it cost us $3 million to pull our -- our
contract out of default.” Phil Morrell also testified that Oasis had “already been told that
by Colonel Hay, that they [the government] didn’t have the funding to continue on this.”
20 At the time modification P00006 was executed, Anaconda and Camp Victory were
already operational.


                                              12
P00003. Finally, the option years were realigned to match the extension of the base year,
so the first option period would run from August 16, 2006 until January 15, 2007, the
second option period would run from January 16, 2007 until January 15, 2008, and the
third option period would run from January 16, 2008 until January 15, 2009. Modification
P00006 also added a fourth option period that would run from January 16, 2009 until
August 16, 2009. The amount of water in the base period, the first option period, and the
newly added fourth option period were different than the second and third option years.
After modification P00006 to the contract, the periods of performance, quantities of water,
and amounts due Oasis were:21

 ITEM NO.        SCHEDULE OF SUPPLIES/                   QTY      UNIT   UNIT       AMOUNT
                           SERVICES                                      PRICE
 0001        Purified bottled water (12 / 1 Liter                 CASE   $3.50
             bottles per case)
 1001        BASE Period                             14,350,000                  $50,225,000.00
             24 May 2005 to 15 August 2006
 2001        OPTION ONE                              14,285,715                  $50,000,000.00
             16 August 2006 to 15 January 2007
 3001        OPTION TWO                              32,000,000                  $112,000,000.00
             16 January 2007 to 15 January 2008
 4001        OPTION THREE                            32,000,000                  $112,000,000.00
             16 January 2008 to 15 January 2009
 5001        OPTION FOUR                             17,714,286                  $62,000,000.00
             16 January 2009 to 16 August 2009

(capitalization in original).

        Modification P00011

    As noted above, United States Air Force Colonel Richardson served as the contracting
officer on the contract from May 2006 until October 2006. By June 2006, Oasis personnel,
including Paul Morrell, Phil Morrell, Alan Morrell, Paul Jeffries and Dan Petsche had
begun negotiations with Colonel Richardson to further modify the contract. Both parties
had financial challenges, defendant obtaining the funding to exercise the first option, and
plaintiff, which would be in default with its lenders if the contract was terminated for
convenience.22 Internally, Oasis considered the following proposal, as noted in an August
1, 2006 email from Paul Morrell:

        I’ve tried a lot of complicated algorithms to try to make a solution that is
        equitable to both the Military and US. I’ve concluded that the most equitable
        approach for everyone is the following: We gat [sic] paid a flat
        $112,000,000/year just as the contract states or $9,333,333/month (5/6 th of

21 Colonel Richardson testified that the modifications “changed the end date of option four
from 16 August 2009 to 16 July 2009. So, it actually decreased the period of performance
for the contractor.”
22According to plaintiff’s post-trial brief, “[d]uring the P00011 discussions, Oasis had an
outstanding debt of over $70 million.”

                                                    13
       that until TQ comes online). We agree to deliver up to 32,000,000 cases per
       year in aggregate with an annual reconciliation if the actual deliveries
       exceed that amount.

       The parties discussed several options for how to proceed moving forward, and
ultimately, on August 8, 2006, Oasis, at Colonel Richardson’s request, provided her a
draft proposal, which was consistent with the internal Oasis proposal.23 The draft
proposal24 indicated two options:25




23Paul Jefferies testified at trial that “we were still being asked for significant concessions,
beyond what was outlined that I've tried to outline here. . . . I mean to the tune of $30
million of concessions yet beyond what's on this page.” Paul Jefferies also indicated that:

       We didn't really make an offer. The negotiations began with Paul [Morrell]
       and I sitting in a room with [Colonel] Renee [Richardson], and I believe her
       assistant was there, and they told us that they were being pushed a
       particular direction, that she would need concessions from us to pay out the
       balance of the funds owed or she would have to move in this other direction.
24 Alan Morrell who earlier had testified about the water issues at the various plants
indicated that regarding the lack of water at Speicher, “on modification P00011, because
this was such a hot issue, again, part of the negotiation was a concession that we would
sort this problem out,” and Oasis “bought another BEV 9 reverse osmosis system.” Alan
Morrell also testified that “[p]art of the concessions that were demanded from us in
P00011 were two site improvements to solve water issues. One was Speicher, and the
other was Q-West.”
25The first option contemplated modifying the contract to not build TQ, but the parties
decided to build the TQ plant.

                                              14
On August 12, 2006, Paul Morrell and Colonel Richardson executed modification P00011,
which was generally consistent with the Option II in the draft proposal and established a
payment structure by which Oasis would be paid $9,333,333.33 per month, independent
of any amount of water, moving forward in the option periods. Modification P00011 also
modified the fourth option period, ending on July 16, 2009.

      The modification explained:

      The purpose of this modification is to do the following:

      1. Provide a revised CLIN structure to reflect monthly pricing based upon
      water production capability.

      2. Replace the Contract Statement of Objectives, with Performance Work
      Statement, dated 12 August 2006, provided as Attachment 1 to this
      modification.




                                           15
       3. Incorporate the contractor's Quality Assurance Plan into the contract
       provided as Attachment 2 to this modification.

       4. Incorporate the List of Critical Equipment into the contract, provided as
       Attachment 3 to this modification.

       5. Insert Special Clause, titled “Equipment Leased by the Government”, into
       the Contract.

       6. Insert clause DFARS 252.232-7007, “Limitation of Government's
       Obligation” (May 2006) into the Contract.

       7. Replace Contract Section J, List of Documents, Exhibits and Other
       Attachments.

       8. Decrease the contract amount by $11,604,166.45 from $386,225,000.00
       to $374,620,833.55.

       9. Decrease the contract funded amount by $5,604,166.35 from
       $100,225,000.00 to $94,620,833.65.

       10. Change the end date of Option 4 from 16 August 2009 to 16 July 2009.

        On August 15, 2006, as part of modification P00011, Oasis submitted a final
invoice to close out the base year in the amount of $24,542,387.00. The total amount of
water produced in the base year was 8,705,992 cases, which translated to
$30,470,972.00 at $3.50 per case. In addition, from the time the contract was awarded to
the end of the base year, Oasis submitted nine invoices for payment at $3.50 per case,
totaling approximately $23 million, which the government paid.26


26 As reflected in the joint stipulations, and as agreed to by the parties regarding invoices
for the base year of the contract: On December 31, 2005, Oasis submitted an invoice to
the Government for 293,160 cases of water from Anaconda at 3.50 per case, for a total
of $1,026,060.00. On January 31, 2006, Oasis submitted an invoice for 356,400 cases of
water from Anaconda at $3.50 per case for a total of $1,247,400.00, and on February 28,
2006, Oasis submitted an invoice for 508,680 cases of water from Anaconda at $3.50 a
case, for a total of $1,780,380.00. On March 31, 2006, Oasis submitted an invoice for
664,320 cases of water from Anaconda at $3.50 per case, for a total of $2,325,120.00.
One month later, on April 30, 2006, Oasis submitted an invoice for 910,020 cases of water
from Anaconda and Camp Victory at $3.50 a case, for a total of $3,185,070.00. On May
31, 2006, Oasis submitted an invoice for 1,126,920 cases of water from Anaconda and
Camp Victory at $3.50 a case, for a total of $3,944,220.00. On June 15, 2006, Oasis
submitted an invoice for 1,381,140 cases of water from Anaconda and Camp Victory at
$3.50 a case, for a total of $4,833,990.00. On July 1, 2006, Oasis submitted an invoice
for 297,540 cases of water from Anaconda and Speicher at $3.50 a case, for a total of
$1,041,390.00. Finally, on July 31, 2006, Oasis submitted an invoice for 1,150,900 cases

                                             16
       The contract ended on July 16, 2009, and Oasis performed on the contract until
that date. Subsequently, Oasis and the government entered into a separate, follow-on
contract regarding bottled water in Iraq. The issues in this opinion relate solely to the base
year of the original contract.

       Certified Claim

      Prior to the filing of the certified claim, Phil Morrell sent an email to Paul Morrell
and Paul Jeffries on August 4, 2006, with his thoughts on the contract, as follows:

       Capabilities for Time Period not Quantity

            Funding was received for purchase of water, but it [sic] the contract
             was a capabilities contract
            Should have 2 Contracts
           o Capabilities Contract
           o Product Procurement Contract
            Funding was received for Contact# _____
            Contract#____ is a capabilities contract not a procurement contract
            $50 million on the table is for capability not water procurement

       The general assumption from everybody is that the price of water in the
       CLIN is somehow associated with the price of capabilities.

(emphasis in original). At trial, Phil Morrell explained his view of the contract:

       When I studied the contract, including when I talked to -- told Max [Wyeth]
       that he could get a progress payment, which I did tell Max, way back in the
       early days, probably a week into the -- two weeks into the contract, that he
       could get a progress payment. Based on all the historic contracting that I
       had done, and the way that I submitted my bid, the anticipation that was
       there would be, you know, progress payment capabilities, or -- in the
       contract. So, looking at Max’s bid, he had put $58 million in for what
       appeared to be the construction capabilities, and then out of the $58 million,
       based on -- and I read this somewhere, I think it was in the FAR firm fixed
       price area -- it says that you -- if it’s for equipment, then you have to deduct
       the salvage value of the equipment, and then you could bill for whatever
       that was. So, that -- I didn’t actually sit down and do the numbers because
       that’s just not what I do, but I – I suggested that we bill against the $52.25
       million or $50.225 million as capabilities.




of water from Anaconda, Q-West, Speicher, and Camp Victory, for a total of
$4,028,150.00.

                                              17
      Paul Morrell stated at trial that he agreed with Phil Morrell about the contract being
a capabilities contract after executing modification P00011. Regarding Colonel
Richardson’s correspondence, he testified

       she's commenting on the proposal . . . specifically, the 9.33 million per
       month for capabilities going forward, and she's saying she thinks that's a
       reasonable approach, but this is one of the first times where I hear a contract
       officer say the same thing that Phil has been saying for most of the year,
       that this is a water production capability contract. And Colonel Richardson
       goes on, through the -- post-P00011, and she's very clear that it's a water
       production capability contract and it has been all along. They've just been
       administering it as if it weren't.

       On June 20, 2008, Paul Morrell signed the certified claim, and on July 4, 2008,
Oasis submitted its certified claim to the government. At the beginning of the certified
claim, Paul Morrell, as President of Oasis, stated: “I certify that the claims stated herein
are made in good faith; that the supporting data are accurate and complete to the best of
my knowledge and belief; that the amount requested accurately reflects the Contract
adjustment for which the contractor believes the Government is liable.” Paul Morrell also
submitted a sworn affidavit27 in support of Oasis’ certified claim at the time he submitted
the certified claim, in which he stated:

       During the period May 2005 to the present, I was responsible for the day-
       to-day management of Contract W27P4A-05-C-0002 (the “Contract”) and
       had responsibility for all aspects of Oasis' performance of the Contract I also
       had overall responsibility for the cost and accounting issues involving Oasis'
       performance of the Contract. This Affidavit is based on my first-hand
       knowledge, the collective corporate knowledge of Oasis and the corporate
       records of Oasis maintained in the ordinary course of business.

       The certified claim identified eight claims for which plaintiff sought payment: Claim
1 was a “Claim for all bottled water supplied in the Contract base year, as extended to
August 15, 2006, excluding bottled water supplied from Camp Anaconda through May,
2006 (5,605,020 cases of bottled water),” for which plaintiff sought $19,617,570.00. Claim
2 was a “Claim for penalty wrongfully assessed for failure to open Camp TQ on time,”
which plaintiff ascribed “solely as a result of Government-caused delays and disruptions,”
for which plaintiff sought $2,270,833.00. The certified claim indicated that Claim 3 was a
“Claim for reduction in Contract consideration for first option period (August 15, 2006
through January 15, 2007) resulting from P00011,” for which plaintiff sought
$3,333,333.00. Claim 4 was a “Claim for water bottling capabilities services provided
through extension of Contract base year,” and plaintiff valued Claim 4 at $11,175,063.00.
Claim 5 sought $808,423.00 as a “Claim for cost of site improvements required,”
specifically at Anaconda, Camp Victory, Al Asad, and TQ. Claim 6 was a “Claim for cost

27 In addition to Paul Morrell, Neil Vos, the then-Chief Financial Officer of Oasis, Lawrence
Schwartz, a certified public accountant, and Alan Morrell also submitted sworn affidavits
in support of the certified claim.

                                             18
of water supply improvements at Camp Speicher and Camp Qwest,” for which plaintiff
sought $600,000.00. Claim 7 was a “Claim for other penalties assessed re: Government
delays of TQ opening,” related to the “44 days of TQ AQL[28] penalties erroneously
assessed to Oasis due to Government-caused delays in establishing TQ in the first Option
Period” and was valued by plaintiff at $2,053,333.00. The plaintiff’s certified claim
reflected a total amount claimed for the first seven claims of “$39,858,555.” Below the
total for the first seven claims, plaintiff’s certified claim indicated: “Alternative additional
claim for water supplied from Camp Anaconda during initial Contract base year ending
May 2006, 3,100,972 cases of bottled water: $10,853,402.” The certified claim indicated
the plaintiff’s view that:

         The Contract is not a model of clarity. The amount payable in the Contract
         base year is a firm, fixed-price amount of $50,225,000. . . . However, the
         Contract, as written, does not require delivery of any bottled water in the
         Contract base year. In the Contract base year, Oasis was entitled to a firm,
         fixed-fee payment of $50,225,000. The Contract provides that the entire
         payment is for water purification and water-bottling capabilities. Under the
         Contract, bottled water was a separately priced commodity to be paid for by
         the Government at the price of $3.50 per case under a separate CLN.

(internal citations omitted).

        The certified claim was passed between, and considered by, a number of
contracting officers and personnel, including United States Navy Lieutenant Commander
Klingenberg, who was the contracting officer when Oasis submitted its certified claim on
July 4, 2008, United States Air Force Major Jamie Rhone, who served as the contracting
officer from July 2008 until January 2009, and Dean Carsello, a Joint Contracting
Command Iraq Afghanistan (JCC-I/A) policy analyst, who was involved in reviewing the
claim in 2008 and 2009. United States Air Force Lieutenant Colonel Kevin Hobbs29 denied
Oasis’ certified claim in its entirety when he issued the Contracting Officer’s Final Decision
on October 18, 2009.

       On October 18, 2010, plaintiff filed its complaint in the United States Court of
Federal Claims. Plaintiff’s complaint alleged eight counts, and the complaint mostly tracks
the claims raised in the certified claim, with the same dollar amounts, albeit framed as
breaches of contract in the complaint. The first count, “Breach of Contract, and Breach
of the Duty of Good Faith and Fair Dealing, for Failure to Pay for water TakenFrom
[sic] Sites other than LSA Anaconda” seeks damages in the amount of
$19,617,570.00, plus interest. (emphasis in original). The second count, “Breach of
Contract For Improper Assessment of a Liquidated Damages Penalty Against Oasis
for Failing to Have All Six Facilities Open by the End of the Base Year, or
Alternatively, for Reducing the Base Year Contract Price Without Consideration,”

28   The parties have stipulated that “AQL” is an acronym for Acceptable Quality Level.
29 In 2009, Lieutenant Colonel Hobbs was a Major. When he testified at trial, he was a
Lieutenant Colonel. The court refers to him as Lieutenant Colonel Hobbs in this opinion.

                                              19
seeks damages in the amount of $2,270,833.00, plus interest. (emphasis in original). The
third count, “Breach of Contract For Improper Reduction of the Option Period One
Price Without Consideration” seeks damages in the amount of $3,333,333.00, plus
interest. (emphasis in original). The fourth count of the complaint, “Breach of Contract
Resulting from Government Acts and Omissions Impacting and Damaging Oasis
During the Base Year, as Extended” seeks damages in the amount of $11,175,063.00,
plus interest. (emphasis in original). The fifth count, “Breach of Contract Resulting
From Government Failure to Provide Suitable Construction Sites,” seeks damages
in the amount of $808,423.00, plus interest. (emphasis in original). Oasis’ sixth count,
“Breach of Contract and/or Constructive Change for Failure to Provide Suitable
Water at the Purification Facilities as Required by the Contract” seeks $600,000.00,
plus interest. (emphasis in original). The seventh count of the complaint, “Breach of
Contract For Unjustified Imposition of Penalties for Late Opening of TQ and/or
Wrongful Reduction in Contract Price,” seeks $2,053,333.20 plus interest. (emphasis
in original). Finally, the eighth count of the complaint, “Breach of Contract, and Breach
of the Duty of Good Faith and Fair Dealing, for Failure to Pay for Water TakenFrom
[sic] Site LSA Anaconda,” seeks damages in the amount of $10,853,402.00, plus
interest. (emphasis in original).

        Defendant filed an answer to Oasis’ complaint on February 15, 2011, and, more
than a year later, on April 12, 2012, filed a motion to amend the pleadings to include fraud
counterclaims. Oasis responded to the amended answer and counterclaims on May 10,
2012, however, on June 6, 2014, defendant moved to, again, amend its pleadings and
filed a second amended answer and counterclaim. In the interim, during highly contested,
and at times uncooperative, discovery the parties filed numerous motions related to
discovery, the production of documents, how documents were maintained, how
documents were to be produced, and in what format, and who would bear the costs,
spoliation, whether or not various privileges applied to various documents, as well as
motions to compel, motions to strike, and motions to quash. The court held numerous
status conferences and hearings to try and resolve the various disputes between the
parties, issued numerous orders, including publishing one substantive, lengthy opinion
on attorney-client privilege and work product prior to trial. See Oasis Int’l Waters, Inc. v.
United States, 110 Fed. Cl. 87 (2013).

       The parties also filed motions for summary judgment and motions in limine in
advance of the trial, and after trial, filed a series of lengthy post-trial briefing materials.
The effect of the discovery disputes, and difficult relationships, resulted in discovery
deadlines being repeatedly pushed back, and trial dates repeatedly postponed.
Ultimately, a six week trial was held. Initially, the court issued an opinion regarding the
fraud counterclaims raised by defendant. The court determined that, Paul Morrell, as
signatory to the certified claim, did not have the intent to commit fraud and genuinely
believed in his interpretation of the contract regarding what payments Oasis was entitled
to recover under the contract. The court also found that neither Paul Morrell, nor plaintiff,
acted recklessly when submitting plaintiff’s claims. Therefore, with the exception of Claim
2, which the court deferred, and addresses below, the court denied defendant’s
counterclaims for the Special Plea in Fraud, False Claims Act, and the anti-fraud provision


                                              20
of the Contract Disputes Act. This opinion addresses the issues of contract interpretation,
duress, and defendant’s remaining fraud counterclaim. The court will separately address
plaintiff’s allegation of spoliation and damages, if any.

                                       DISCUSSION

Contract Interpretation

       Initially, plaintiff argues that “[t]he Contract was a firm-fixed-price (FFP) services
contract for water bottling ‘capability,’ pursuant to which Oasis was entitled to
$50,225,000 in the Base Year in exchange for 12 months of performance, irrespective of
the amount of water produced by Oasis and/or purchased by Defendant.” Plaintiff also
contends that “[u]nder the Contract, Oasis was to be paid $3.50 per case of
extracontractual water.” By contrast, defendant claims that “[t]he contract’s payment
terms of $3.50 per case are clear and unambiguous.” Defendant argues that “the Court
should enforce those terms and rule that the contract does not require the Government
to pay Oasis separately for the cost to build the bottled-water facilities,” and pay only
$3.50 a case for the water produced.

         “Contract interpretation starts with the language of the contract.” SUFI Network
Servs., Inc. v. United States, 785 F.3d 585, 593 (Fed. Cir. 2015); see also Precision Pine
& Timber, Inc. v. United States, 596 F.3d 817, 824 (Fed. Cir. 2010), cert. denied, 562 U.S.
1178 (2011); Bell/Heery v. United States, 739 F.3d 1324, 1331 (Fed. Cir.), reh’g and reh’g
en banc denied (Fed. Cir. 2014); LAI Servs., Inc. v. Gates, 573 F.3d 1306, 1314 (Fed.
Cir.), reh’g denied (Fed. Cir. 2009); Barron Bancshares, Inc. v. United States, 366 F.3d
1360, 1375 (Fed. Cir. 2004); Foley Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir.
1993); Nw. Title Agency, Inc. v. United States, 126 Fed. Cl. 55, 57-58 (2016) (citing Foley
Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir. 1993)) (“The starting point for any
contract interpretation is the plain language of the agreement.”); Beard v. United States,
125 Fed. Cl. 148, 158 (2016); Eden Isle Marina, Inc. v. United States, 113 Fed. Cl. 372,
483–84 (2013).

        “‘“In contract interpretation, the plain and unambiguous meaning of a written
agreement controls.’”” Arko Exec. Servs., Inc. v. United States, 553 F.3d 1375, 1379 (Fed.
Cir. 2009) (quoting Hercules Inc. v. United States, 292 F.3d 1378, 1380–81 (Fed. Cir.),
reh’g and reh’g en banc denied (Fed. Cir. 2002) (quoting Craft Mach. Works, Inc. v. United
States, 926 F.2d 1110, 1113 (Fed. Cir. 1991))). “Terms must be given their plain meaning
if the language of the contract is clear and unambiguous.” SUFI Network Servs., Inc. v.
United States, 785 F.3d 585, 593 (Fed. Cir. 2015) (citing Coast Fed. Bank, FSB v. United
States, 323 F.3d 1035, 1038 (Fed. Cir. 2003)); see also Canpro Investments Ltd. v. United
States, 130 Fed. Cl. 320, 347 (2017); Beard v. United States, 125 Fed. Cl. at 158 (“If the
contract language is unambiguous, then it must be given its plain and ordinary
meaning . . . .”). The United States Court of Appeals for the Federal Circuit stated in
Massie v. United States:

       In interpreting a contract, “[w]e begin with the plain language.” “We give the
       words of the agreement their ordinary meaning unless the parties mutually

                                             21
       intended and agreed to an alternative meaning.” In addition, “[w]e must
       interpret the contract in a manner that gives meaning to all of its provisions
       and makes sense.’”

Massie v. United States, 166 F.3d 1184, 1189 (Fed. Cir. 1999) (quoting McAbee Constr.,
Inc. v. United States, 97 F.3d 1431, 1435, reh’g denied and en banc suggestion declined
(Fed. Cir. 1996); (internal citations omitted)); Jowett, Inc. v. United States, 234 F.3d 1365,
1368 (Fed. Cir. 2000) (quoting McAbee Constr., Inc. v. United States, 97 F.3d at 1435
and Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed. Cir. 1998)); Harris v.
Dep’t of Veterans Affairs, 142 F.3d at 1467; see also Coast Professional, Inc. v. United
States, 828 F.3d 1349, 1354 (Fed. Cir. 2016); Shell Oil Co. v. United States, 751 F.3d
1282, 1305 (Fed. Cir.), reh’g en banc denied (Fed. Cir. 2014) (noting that a contract must
be interpreted in context, giving meaning to the document as a whole) (citing NVT Techs.,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004); Metric Constructors, Inc. v.
Nat’l Aeronautics & Space Admin., 169 F.3d 747, 752 (Fed. Cir. 1999)); McHugh v. DLT
Solutions, Inc., 618 F.3d 1375, 1380 (Fed. Cir. 2010); Giove v. Dep’t of Transp., 230 F.3d
1333, 1340–41 (Fed. Cir. 2000) (“In addition, we must interpret the contract in a manner
that gives meaning to all of its provisions and makes sense. Further, business contracts
must be construed with business sense, as they naturally would be understood by
intelligent men of affairs.”) (citations omitted); Gould, Inc. v. United States, 935 F.2d 1271,
1274 (Fed. Cir. 1991) (indicating that a preferable interpretation of a contract is one that
gives meaning to all parts of the contract rather than one that leaves a portion of the
contract “useless, inexplicable, void, or superfluous”). A Judge of the United States Court
of Federal Claims has explained:

       “The words of a contract are deemed to have their ordinary meaning
       appropriate to the subject matter, unless a special or unusual meaning of a
       particular term or usage was intended, and was so understood by the
       parties.” Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319, 322
       (Fed. Cir. 1997). “Under general rules of contract law we are to interpret
       provisions of a contract so as to make them consistent.” Abraham v.
       Rockwell Int'l Corp., 326 F.3d 1242, 1251 (Fed. Cir. 2003). “[A]n agreement
       is not to be read in a way that places its provisions in conflict, when it is
       reasonable to read the provisions in harmony. . . . [T]he provisions must be
       read together in order to implement the substance and purpose of the entire
       agreement.” Air–Sea Forwarders, Inc. v. United States, 166 F.3d 1170,
       1172 (Fed. Cir. 1999). “A reasonable interpretation must assure that no
       contract provision is made inconsistent, superfluous, or redundant.” Medlin
       Const. Group, Ltd. v. Harvey, 449 F.3d 1195, 1200 (Fed. Cir. 2006) (internal
       quotation marks omitted).

Dynetics, Inc. v. United States, 121 Fed. Cl. 492, 512 (2015); see also Marquardt Co. v.
United States, 101 Fed. Cl. 265, 269 (2011) (“In interpreting contractual language, the
court must give reasonable meaning to all parts of the contract and avoid rendering
portions of the contract meaningless.” (citation omitted)).



                                              22
       The Federal Circuit also has indicated that “‘[t]he contract must be construed to
effectuate its spirit and purpose giving reasonable meaning to all parts of the contract.’”
Arko Exec. Servs., Inc. v. United States, 553 F.3d at 1379 (quoting Hercules Inc. v. United
States, 292 F.3d 1378, 1380–81 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.
2002)); see also LAI Servs., Inc. v. Gates, 573 F.3d at 1314; Gardiner, Kamya & Assocs.,
P.C. v. Jackson, 467 F.3d 1348, 1353 (Fed. Cir. 2006) (citations omitted); Medlin Constr.
Grp., Ltd. v. Harvey, 449 F.3d 1195, 1200 (Fed. Cir. 2006) (reviewing the contract as a
whole to determine the meaning of relevant provisions); Hunt Constr. Grp., Inc. v. United
States, 281 F.3d 1369, 1372 (Fed. Cir. 2002) (“We begin with the plain language when
interpreting a contract . . . . The contract must be considered as a whole and interpreted
to effectuate its spirit and purpose, giving reasonable meaning to all parts.” (citations
omitted)); Beard v. United States, 125 Fed. Cl. at 158 (quoting Pac. Gas & Elec. Co. v.
United States, 536 F.3d 1282, 1288 (Fed. Cir. 2008)) (“In construing the meaning of a
contractual provision, the court does not interpret the disputed term or phrase in isolation,
but “construes contract terms in the context of the entire contract, avoiding any meaning
that renders some part of the contract inoperative.”).

        It has been “‘a fundamental precept of common law that the intention of the parties
to a contract controls its interpretation.’” Tri-Star Elecs. Int'l, Inc. v. Preci-Dip Durtal SA,
619 F.3d 1364, 1367 (Fed. Cir. 2010) (quoting Beta Sys., Inc. v. United States, 838 F.2d
1179, 1185 (Fed. Cir. 1988) (quoting Firestone Tire & Rubber Co. v. United States, 195
Ct. Cl. 21, 30, 444 F.2d 547, 551 (1971))); Alvin, Ltd. v. United States Postal Serv., 816
F.2d 1562, 1565 (Fed. Cir. 1987) (“In the case of contracts, the avowed purpose and
primary function of the court is the ascertainment of the intent of the parties.”); see also
Flexfab, LLC v. United States, 424 F.3d 1254, 1262 (Fed. Cir. 2005) (“[I]ntent is
determined by looking to the contract and, if necessary, other objective evidence. In the
absence of clear guidance from the contract language, the requisite intent on the part of
the government can be inferred from the actions of the contracting officer. . . .”); see also
Canpro Investments Ltd. v. United States, 130 Fed. Cl. at 347 (“Contract interpretation
requires determining the intention of the parties.”).

       The contract, as awarded, indicated:

       The Contractor shall provide all labor, tools, supervision, personnel,
       equipment, transportation, materials, facilities, and other essentials
       necessary to perform and sustain 8[30] separate and independent purified
       bottle water plants according to the 20 Mar 05 Statement of Objectives
       (SOO). Period of Performance: 25 May 05 through 24 May 06.

The statement of objectives for the “purified bottled water services” contract explained:
“Bottled water capabilities shall be established in the order as listed in Figure 1. Actual
locations will be given to the contractor that wins award. The contractor shall provide all
the mechanical equipment required to produce and prepare for shipment the required
amounts of bottled water.” Figure 1, referenced in the statement of objectives, identified

30As noted above, modification P00001, issued on May 26, 2005, reduced the required
number of water bottling facilities from eight to six.

                                              23
the production requirements at each of the bottled water facilities at different points in the
year, ranging from requiring a minimum of 75,000 liters of water a day during winter at
location 3, to the maximum requirement of 210,000 liters of water during surge at locations
5 and 6. The summary of prices for the base year and the three options years stated that
total base year price was $50,225,000.00, and the unit price was listed as “$3.50/case”
for all amounts of water produced. As awarded, the base year of the contract was May
25, 2005 to May 24, 2006. Regarding payment, the contract provided that “[i]nvoicing
shall occur monthly. The contractor shall invoice to the Contracting Officer Representative
(COR), by the 5th of each month, for the total of all liters in [sic] produced, per location,
for the entire previous month.”

       The parties view the contract differently, although both parties assert that the
contract is unambiguous. Plaintiff claims that “Oasis’ reading is supported by the plain
meaning of the contract, which must control if the contract is unambiguous,” and the
defendant argues that “[t]he Contract’s payment terms of $3.50 per case are clear and
unambiguous.” As noted above, plaintiff argues that “[t]he Contract was a firm-fixed-price
(FFP) services contract for water bottling ‘capability,’ pursuant to which Oasis was entitled
to $50,225,000 in the Base Year in exchange for 12 months of performance, irrespective
of the amount of water produced by Oasis and/or purchased by Defendant.” Plaintiff also
argues that the contract permitted “the Government to take – at no additional cost –
bottled water from Oasis within specified quantity ranges and time periods. All water taken
outside those ranges or periods (‘extra-contractual water’) was to be paid for separately
at $3.50 per case.” Defendant, however, contends that “the contract is clear and
unambiguous that the Government’s only payment obligation under the bottled-water
contract was to pay $3.50 per case for up to 14,350,000 cases of water.”

       The court agrees with plaintiff that the contract is a firm fixed price contract. As
indicated by plaintiff, included in the list of clauses incorporated into the contract is FAR
52.216-1, and the text of the bottled water contract states: “52.216-1 Type of Contract.
(Apr 1984) The Government contemplates award of a Firm Fixed Priced contract resulting
from this solicitation.” (emphasis in original). Moreover, as noted below, in the questions
and answers related to the solicitation, which were subsequently incorporated into the
contract, the government explained that “the Government contract is a Firm Fixed Price
not Indefinite Delivery / Indefinite Quantity.” At trial, Major Vazquez testified that he wrote
the answer to this question, and had the following exchange with plaintiff’s counsel:

       [Q.] And you wrote that the contract was a firm fixed price, right?

       A. Yes.

       Q. Did you believe that to be correct at the time?

       A. Yes.

       Q. Do you believe that to be correct now?

       A. Yes.

                                              24
The FAR addresses “Firm-Fixed-Price Contracts” at 48 C.F.R. § 16.202-1, and provides:

       A firm-fixed-price contract provides for a price that is not subject to any
       adjustment on the basis of the contractor's cost experience in performing
       the contract. This contract type places upon the contractor maximum risk
       and full responsibility for all costs and resulting profit or loss. It provides
       maximum incentive for the contractor to control costs and perform
       effectively and imposes a minimum administrative burden upon the
       contracting parties. The contracting officer may use a firm-fixed-price
       contract in conjunction with an award-fee incentive (see 16.404) and
       performance or delivery incentives (see 16.402–2 and 16.402–3) when the
       award fee or incentive is based solely on factors other than cost. The
       contract type remains firm-fixed-price when used with these incentives.

48 C.F.R. 16.202-1 (2017);31 see also Zafer Taahhut Insaat ve Ticaret A.S. v. United
States, 833 F.3d 1356, 1361 (Fed. Cir. 2016) (quoting 48 C.F.R. § 16.202-1) (“‘A firm-
fixed price contract provides for a price that is not subject to any adjustment on the basis
of the contractor's cost experience in performing,’ 48 C.F.R. § 16.202–1, and generally
sets forth a fixed scope of work.”). As indicated by the Federal Circuit, “[t]he essence of
a firm fixed-price contract is that the contractor, not the government, assumes the risk of
unexpected costs.” Lakeshore Eng’g Servs., Inc. v. United States, 748 F.3d 1341, 1347
(Fed. Cir. 2014). Defendant points to two exchanges of trial testimony demonstrating the
knowing risk that plaintiff was taking, first, defendant’s counsel had the following
exchange with Phil Morrell regarding setting up Oasis to perform the contract:

       Q. So, it was a big risk you were taking, right?

       A. Yes.

       Q. And you're a big risk-taker, aren’t you?

       A. Yes.

Likewise, defendant’s counsel had the following exchange with Paul Jeffries about the
inherent risk in the contract:

       Q. So, essentially Oasis was taking a risk of taking a loss in the first year
       with the opportunity to make significant profits in the following two years,
       correct?

       A. That’s correct.

31Although the court cites to the 2017 version of the Code of Federal Regulations, this
provision is consistent with the provision in effect during the contract award and
performance.

                                             25
       Q. That was the bargain that Oasis entered into, right?

       A. That’s correct. Substantial risk for substantial gain.

It is noteworthy that throughout the first year of the contract, plaintiff submitted nine
invoices for various quantities of cases of water, which were paid.

         Turning to the terms of the contract, defendant contends that “the Government’s
only payment obligation under the bottled-water contract was to pay $3.50 per case for
up to 14,350,000 cases of water.” Plaintiff argues that “Defendant’s interpretation of the
Contract – which was enforced on Oasis during the Base Year – required Oasis to spend
$70 million to establish the capability to bottle water in the middle of a warzone, with no
guarantee that Defendant would pay Oasis even one (1) dollar.” Plaintiff contends that
“Defendant received the benefit of being able to purchase water locally at a fraction of the
cost it had been paying previously, and Oasis received the benefit of . . . maybe selling
water to Defendant if Defendant wanted to buy water. Such an interpretation offers no
consideration to Oasis, and is illegal.” The plaintiff also claims that “Defendant is arguing,
without actually saying it, that the Contract was an IDIQ, with no minimum, something
that the FAR specifically prohibits.” The court disagrees with plaintiff’s characterization.
As defendant noted, the military provided the land, the fuel, the water, and plaintiff
received the benefit of ownership of the bottled water facilities. Plaintiff also was
compensated for water produced, which is consistent with the contract. Furthermore,
defendant has not argued that the contract was an indefinite delivery/indefinite quantity
contract. Regarding contract development, Major Vazquez testified on cross-examination
that “[t]he way we developed this contract was we wanted to have fixed prices throughout
the life of the contract, whether it be the base year or any option years. And we looked at
it at, as awarded, 0.292 cents per bottle that we requested.” Plaintiff’s counsel followed
up this statement by Major Vazquez by asking “[s]o, the fixed price was the per liter price,”
to which Major Vazquez answered: “The unit price, yes, sir.” Defendant points out that
“Oasis ignores the contract’s plain terms and the testimony of both contract signatories.
In doing so, Oasis concludes that the contract’s plain terms and the testimony of both
contract signatories do not matter because ‘this Contract [is] a ‘firm-fixed-price’ contract.’”

       Moreover, Major Vazquez statement of the cost under the contract as 0.292 cents
per bottle is consistent with the four CLINs of the contract representing the base year and
the three options years. As noted above, each of four CLINs (0001, 1001, 2001, 3001),
provided that “[t]he Contractor shall provide all labor, tools, supervision, personnel,
equipment, transportation, materials, facilities, and other essentials necessary to perform
and sustain 8 separate and independent purified bottle water plants according to the 20
Mar 05 Statement of Objectives (SOO). Period of Performance. . . .” Each CLIN
representing a contract year had subCLINs for each of the bottle water plants, with
quantity, unit, and unit prices. For example, the base year of the contract provides:




                                              26
27
Each subCLIN refers to the “SOO” or the statement of objectives for the “purified bottled
water services” contract, which explained:

       The purpose of this contract is to provide re-locatable purified bottled water
       capabilities at various locations throughout Iraq Area of Operations (AO).
       Contractor shall produce the amounts of bottled water as outlined in Figure
       1. Contractor shall ensure bottled water capability is able to relocate upon
       notification by the Contracting Officer (CO) due to military operational
       requirements. Bottled water capabilities shall be established in the order as
       listed in Figure 1. Actual locations will be given to the contractor that wins
       award. The contractor shall provide all the mechanical equipment required
       to produce and prepare for shipment the required amounts of bottled water.
       The first bottled water site shall be operational 120 days after the contract
       is awarded. This includes military inspection and acceptance. After contract
       award, additional bottled water sites shall be established within the
       remainder of days from contract award. A full 365 days from contract award,
       all sites will be fully operational.

Figure 1, referenced in the statement of objectives, identified the production requirements
at each of the bottled water facilities at different points in the year.

     LOCATION             TOTAL PRODUCTION REQUIREMENT/DAY in 1K
                          Liters (winter/summer/surge)

      Location 1          75-100K liters / 101-150K liters / 151-200K liters

      Location 2          65-100K liters / 101-135K liters / 136-170K liters

      Location 3          35-55K liters / 56-75K liters / 76-100K liters

      Location 4          60-110K liters / 111-160K liters / 161-210K liters

      Location 5          60-110K liters / 111-160K liters / 161-210K liters

      Location 6          200-300K liters / 301-400K liters / 401-450K liters

      Location 7          80-120K liters / 121-160K liters / 161-200K liters

      Location 8          75-110K liters / 111-150K liters / 151-190K liters



(capitalization in original).

       Although the amount of water requested by the government would vary by the time
of the year and the bottled water facility, pursuant to each of the CLINs, the unit, and the


                                               28
unit price was always consistent, “12/case” “Liter” “$3.50/case (.292 ea),” the contractor
would be paid same way. The contract provided that “[t]he contractor shall invoice to the
Contracting Officer Representative (COR), by the 5th of each month, for the total of all
liters in [sic] produced, per location, for the entire previous month.”

        Reading the CLINs, statement of objectives, and Figure 1 together, the contractor
was obligated to produce the bottled water as outlined in Figure 1, and, after invoicing the
government for the water produced in each location, would be compensated at the rate
of $3.50 per case. Although plaintiff argues that “Oasis’ reading is supported by the plain
meaning of the contract, which must control if the contract is unambiguous,” plaintiff also
argues that that defendant’s argument for Oasis to be paid $3.50 a case is wrong given
that the pages of the contract with the CLIN “are obviously incomplete” because “[t]he
entire right column (‘Amount’) on every page is blank. Second, most of the parts of pages
3-6 that are filled out are filled out incoherently.” (internal citations omitted). Plaintiff
contends that:

       Assuming Defendant’s theory is correct, the “QTY” column would list a
       number, the “UNIT” column would say “cases” or “liters,” the “UNIT PRICE”
       column would be “$3.50/case” or “.292/liter” (but not both), and the
       “AMOUNT” column would list the product of multiplying the number in the
       “QTY” column by the price in the “UNIT PRICE” column. That did not occur.

(capitalization in original). The court does not share plaintiff’s concern about the
organization of the CLIN structure. The unit price of “$3.50/case” or “.292/liter” is not
confusing, as the unit is identified as a liter of water, and the unit price is consistent –
either $.292 per liter or $3.50 per case - and as the CLINs also identify the quantity as
12/case. Multiplying 12 times .292, results in $3.50. The court finds the contract as drafted
and executed obligates the government to pay under the contract for the bottled water at
a rate of $3.50/case.

      Furthermore, the plaintiff’s contention that the CLIN structure is “obviously
incomplete” because the amount is left blank on every page, is not persuasive. As noted
above, in interpreting the contract, the court considers the CLINs, Statement of
Objectives, and Figure 1 together. The amount is left blank because the amount required
by the government varied during the year. As indicated in the findings of fact Figure 1
contemplated three different production requirements: winter, summer, and “surge.”
Colonel Richardson testified, explaining the different requirements, as follows:

       [D]uring the winter, the weather was a lot more reasonable in Iraq; the highs
       were around the eighties, nineties. In the summer, temperatures got up to
       135 degrees, requiring soldiers to drink more just to stay cool and to stay
       hydrated. During surge, what that's really talking to is battle operations. Our
       soldiers wind up wearing 60, 70, 80 pounds' worth of gear and then going
       out into . . . tanks, which causes them to sweat and causes them to need
       more water.



                                             29
As there was not a consistent, specific amount of bottled water for delivery required under
the contract, it was not only logical to leave the amount blank on the CLIN structure, but
proper.
        Plaintiff also argues that, regardless of any amounts of water to be paid at $3.50
per case, Oasis was entitled to the “$50,225,000 firm-fixed-price Base Year Contract price
for establishing the capability to produce water in Iraq regardless of how much water it
produced.” Plaintiff further contends that “[t]he Contract was a firm fixed price (FFP)
services contract for water bottling ‘capability,’ pursuant to which Oasis was entitled to
$50,225,000 in the Base Year in exchange for 12 months of performance, irrespective of
the amount of water produced by Oasis and/or purchased by the Government.” Plaintiff
points to the statement of objectives, which as indicated above, begins: “The purpose of
this contract is to provide re-locatable purified bottled water capabilities at various
locations throughout Iraq Area of Operations (AO).” Plaintiff argues that “[t]he text of the
Contract also shows that Oasis was being paid for a service (the establishment and
maintaining of purified bottled water capability in Iraq), not a commodity (the water itself).”
Plaintiff also cites to the language of the contract which states: “The contractor shall
ensure purified bottled water capability is able to relocate upon notification by the CO”
and “[t]he contractor shall provide own [sic] power generation to operate the bottled
water capability.” (emphasis added by plaintiff). It is apparent to the court that the
language of the contract refers to capability in order to enable the production of water to
be sold to the government. The sentence immediately following “[t]he purpose of this
contract is to provide re-locatable purified bottled water capabilities at various locations
throughout Iraq Area of Operations (AO),” is “Contractor shall produce the amounts of
bottled water as outlined in Figure 1.” As explained above, Figure 1 identified the
production requirements at each of the bottled water facilities at different points in the
year. The CLIN structure also was based on production of water, with each of the
subCLINs identifying the quantity, unit, and unit prices for the production.

        Moreover, the statement of objectives required the “first bottled water site shall be
operational 120 days after the contract is awarded.” Defendant argues Oasis “cannot
explain why a contractor would not produce water in the base year when the first bottled-
water plant was required to be completed no later than September 2005, mid-way through
the base year.” Plaintiff argues that “[t]here is no discernable reason for why the Contract
Period for Anaconda (CLIN 0001) would end on day 120 if there was any expectation that
bottled water would be produced there during the base year,” and “[b]ecause Oasis’
performance period at the first site ended on day 120, the Contract had no requirement
for Oasis to actually operate Anaconda during the Base Year and produce bottled water.”
Plaintiff contends that the contract was designed to bring the first plant “on line on day
120, stop work there, and focus on establishing the capability at the remaining five (5)
locations.” Plaintiff overlooks the requirements of the CLINs, and even for the first plant
with the 120 day operational requirement, there still is listed a range of production with
the amounts listed in terms of cases of water and the rate of payment. The statement of
objectives first referencing the 120 day operational requirement also points to
Figure 1 which as repeatedly referenced above, listed the “TOTAL PRODUCTION
REQUIREMENT/DAY” for each plant for the various time frames (winter/summer/surge),
including for the first bottled water plant. (capitalization in original). Moreover, plaintiff’s

                                              30
reference to the 120 day period of performance refers to the “Deliveries or Performance”
section of the contract, but as defendant argues, this “section does not relate to delivery
of plants (as Oasis suggests), but to delivery of water.” The schedule for delivery
information includes the heading “SHIP TO ADDRESS,” which only makes sense for the
delivery of water, and not the bottled water plants themselves. (capitalization in original).
Moreover, the quantity is listed as “N/A,” and if plaintiff was correct that the delivery would
simply be the capability, the court questions why the number would not simply be one.
Finally, both the CLINs and the “Deliveries or Performance” make no changes from year
to year of the contract, between the base year and the option years,32 and if the nature of
the contract was intended to be so different, capability in the base year, and production
of water in the remaining years, the court cannot understand why the structure, pricing,
and quantities would be consistent from year to year. The court agrees with defendant
that the “Deliveries or Performance” refers to delivery of water.33

       The parties further disagree about the purpose of the contract. Plaintiff argues that

       prior to the Oasis Contract, Defendant was able to fulfill its water needs, but
       there was significant risk due to the need to bring the water into Iraq via
       truck convoy. Defendant’s actions leading up to this Contract make clear
       that the primary purpose of the Contract was to develop the capability to
       produce purified bottled water at U.S.-controlled locations in Iraq to avoid
       these risks.

(internal citation and footnote omitted). Defendant responds that plaintiff is taking an
“illogical position” to argue that establishing the capability would reduce the number of
convoys. The court notes that Statement of Work for the solicitation stated that:

       Up to the present time bottled water has been purchased from sources
       outside of Iraq. This practice necessitates large numbers of convoys and
       escorts to transport the bottled water from Kuwait, Jordan, and Turkey.
       Producing bottled water locally would significantly reduce the number of
       convoys required to transport water as well as reduce the likelihood of battle
       related injuries.

The court interprets the purpose of the contract as “[p]roducing bottled water,” which not
only requires the capability to produce, but also the production of, the required bottled
water. Only by producing water, would the demand for water from neighboring counties
be diminished.

      The court also notes that the payment terms of the contract required an invoice
“each month, for the total of all liters in [sic] produced, per location, for the entire previous

32 The only exception is the contract period for the first bottled water facility is 120 days
for the base year and 365 days for each of the option years.
33 As discussed below, modification P00003 changed the “SHIP TO ADDRESS” location
for the “Deliveries or Performance” from destination to origin. (capitalization in original).

                                               31
month,” which is inconsistent with a payment of $50,225,000 for producing only the water
production capability. The mechanism for payment to the plaintiff was to invoice the
government for the bottled water actually produced in each given month is also
inconsistent with plaintiff’s articulated understanding of completing the first bottled water
plant, because plaintiff argued above, there was no “expectation that bottled water would
be produced there during the base year.”

       Finally, the court turns to the questions and answers during the solicitation
process. As the questions and answers during the solicitation process were subsequently
incorporated into the contract, the court considers the questions and answers to reach a
determination on contract interpretation. Both parties cite to the questions and answers
during the solicitation process as further evidence for their respective contract
interpretation position. Plaintiff contends that “[t]he answers to solicitation questions,
incorporated into the Contract, further support Oasis’ contention that payment was not
contingent on the production of any water.” As it relates to the payment terms of the
contract, plaintiff first cites to question 9 from the questions and answers in response to
the request for information from potential offerors, which asked, “[w]hat would be your
proposed payment terms?” with the government answering: “Monthly. Firm Fixed Price
Contract.”34 Defendant argues that:

       This response does not support Oasis’s contract interpretation for a number
       of reasons, First, Oasis itself understood that the firm-fixed-price in the
       contract was the unit price, $3.50 per case. Oasis’s contract interpretation
       makes even less sense when one considers the response stated that the
       contractor would be paid “monthly.” Oasis never explains how a contractor
       could be paid for a water production capability on a “monthly” basis, when
       Oasis argues that it was entitled to a one-time $50.225 million “for the
       capability alone.”

As explained immediately above, the contract provided regarding payment terms that
“[i]nvoicing shall occur monthly,” which would have allowed for monthly payment for water
produced. There is no payment mechanism in the contract for a flat $50,225,000.00
amount for establishing capability, or any indication in the contract of a payment
mechanism for how plaintiff was to be compensated if, on the final day of the base year,
plaintiff only had established the capability for all of the bottled-water facilities, and had
not produced any water. As the defendant argues, “Oasis also never explains how it could
be entitled to progress payments for the facilities themselves, when (1) the contract never
mentions progress payments of any kind, (2) the military provided the land, (3) the military
provided the fuel, (4) the military provided the water, and Oasis owned the facilities.”
Absent a reference in the contract for an alternative method to compensate plaintiff, and
consistent with the questions and answers regarding monthly invoicing, question 9 from


34 The court notes that the plaintiff cites to question 9 from the questions and answers in
response to the request for information for support for its view of the contract as firm fixed
price contract, but, as indicated above, the court already has concluded that the contract
was a firm fixed price contract.

                                             32
the questions and answers relating to the monthly payment for water supports
defendant’s interpretation of the contract.

         Plaintiff also cites to the questions and answers in response to Solicitation No.
W27P4A-05-R-0002, and plaintiff argues, regarding question 11b, “the Military told
offerors that they would receive payment ‘once the contractor has the first plant
operational and has an approved first article test accepted without conditions.’ There was
no condition that any amount of water be delivered prior to payment.” As defendant,
correctly notes, however, “[t]he question-and-answer cited by Oasis [question 11b] says
that ‘first payment’ will be made when the military ‘accept[s]’ water ‘without conditions.’ In
other words, the military would pay the per-liter price for that water, not $50.225 million
simply because the contractor produced one case of water.” (emphasis added by
defendant, internal citations omitted). Additionally, the court notes, the original question
asked in question 11b was regarding installment payments, as one bidder questioned the
potential for installment payments: “Would the Government authorize progress or
installment payments recognizing 1) the significant capital investment with establishing
new capability and, 2) the ability to credit progress payments with actual deliveries?” to
which the government responded that: “The first payment will be made once the
contractor has the first plant operational and has had an approved first article test
accepted without conditions.”

        Regarding support for its capability argument, plaintiff also points to question and
answer 4. Question 4 states: “RFP requires 1st production capability 120 days ARO. Is it
correct to interpret this to mean the capability for the entire 1st base requirements,
including surge potential?” which the government answers: “120 days after contract
award, the plant must be capable of producing up to that capacity.” The court notes that
defendant does not challenge that 120 days after award the first plant had to be
operational, or that under the contract the remaining bottled water facilities were to be
established “within the remainder of days from contract award,” but cites to the
requirement of capability at 120 days to undermine plaintiff’s theory of the contract,
arguing that Oasis “cannot explain why a contractor would not produce water in the base
year when the first bottled-water plant was required to be completed no later than
September 2005, mid-way through the base year.” Indeed, nothing about the
government’s answer indicates that plaintiff was only to establish the capability, nor would
it explain why the base year of the contract would be for a calendar year, but only require
the first bottled water facility to operational within 120 days and then not require any water
produced, especially because, as explained above, Figure 1 sets out a range of
production requirements for each of the bottled water facilities at different times of the
year, spanning more than 120 days. The reason plaintiff appears to have cited the
question and answer 4 would be that it uses the word “capability.”

        Plaintiff also focuses on the related questions 2 and 35 to demonstrate that the
government was not required to purchase any water, as well as “that the contractor was
still guaranteed payment after completing the first plant without a requirement for
producing water.” Question 2 asked, “[i]f projected demand falls short, what are the
minimum volume requirements? Is there a required minimum quantity the Government


                                             33
will procure?” The government responded: “There are no minimums. The minimum is
zero.” Additionally, question 35, referring to question and answer 2, asked:

       The answer to Question #2 states that there are no minimum purchase
       quantities. This decision places an unreasonable amount of financial risk on
       the contractor, and will likely severely limit the competition for this RFP
       [Request for Proposals]. Request that the Government guarantee minimum
       purchase quantities base [sic] on the estimated quantities that appear in the
       RFP.

The government responded:

       The levels of liters required are in the range. This is roughly the production
       per day. You might have a day where your levels are lower, however, the
       Government contract is a Firm Fixed Price not Indefinite Delivery / Indefinite
       Quantity. The Government is entering into a one year contract with three
       option years. The only thing that could prevent the basic year from occurring
       is a Government decision to Terminate for Convenience or default of the
       contractor to perform to the requirements and the Government would then
       Terminate for Default.

         It is notable that the government did not respond that the government was
guaranteeing the contractor a payment upon completion of any, or all, of the bottled water
facilities, and then, in addition, payment for production of water. Such a statement would
be inconsistent with the government’s stated position during contract performance and in
litigation that the government was only paying for the production of bottled water. Indeed,
this is defendant’s view of the questions and answers, as defendant claims, “[t]he
military’s answers to bidder questions, for which the contract awardee acknowledged
receipt and which Oasis’s chairman maintained a well-annotated copy, further confirms
the clear and unambiguous terms of the contract.”35

        Defendant cites to question 33 to claim “[t]he military’s responses to bidder
questions stated that all bidders were required to propose a per-liter price inclusive of all
costs, including the cost to construct and operate the bottled-water facilities.” Indeed, one
potential offeror asked in one part of question 33: “Is our offer to give the cost per liter
with the personnel built in, seperate [sic] to the cost of the plant and equipment?” The
government replied: “All Costs per liter are to be included.” Likewise, question 40 asked:
“Start up Cost: Since the bid is predicated upon the deliverables per litre bottle of water,
can we assume that all costs(inc personnel and equipment deployment to site) incurred
between contract award and water production will fall upon the successful bidder?” The

35 Regarding question 35, specifically, defendant argues that, “this question-and-answer
does not remotely support Oasis’s position that it was entitled to $50.225 million without
producing any water,” and the import of the government’s answer is that “the military may
order no water on one particular day, but the military would generally order (and pay for)
water within the water production ranges set forth in Figure 1 of the solicitation (and
ultimately the contract).”

                                             34
government replied: “Yes. It is up to you how you determine the cost per litre taking into
account all costs associated with this endeavor.” The government could have indicated
that a stand-alone payment demonstrating capability should be taken into account for
pricing purposes, but the government’s answer points to the contractor only being paid
for delivery of water. The defendant also points to the government’s answer to question
47, which explained after completion, “the bottled-water plants would be the property of
the contractor, not the Government,” to argue that the government would not receive the
benefit of the facilities if it paid $50,225,000.00 to Oasis to demonstrate the capability to
produce bottled water, and then, to additionally compensate Oasis for actually producing
the bottles of water.

        In sum, the court believes that the answers provided by the government during the
solicitation process, which were incorporated into the contract, demonstrate the
correctness of the defendant’s position that the government’s obligation under the
contract was solely to pay for water produced and delivered and does not demonstrate
that the intent of the base year of the contract was to compensate Oasis $50,225,000.00
for demonstrating the capability to produce bottled water, and then, to additionally
compensate the contractor for producing the requested bottles of water. Therefore, the
court believes that the terms of the contract are unambiguous that the contract only
obligated the government to pay plaintiff for cases of water. See Arko Exec. Servs. v.
United Sates, 553 F.3d at 1379.

       Although the court believes the terms are not ambiguous, and, as noted above,
the parties both assert that the terms of the contract are clear, out of an abundance of
caution the court examines the intentions of the parties when they executed the contract.
Defendant argues that “[e]ven if the Court concludes that the contract is ambiguous, there
is a mountain of extrinsic evidence confirming that the contract permitted a base year
payment of $3.50 per case only, and not $50.225 million, plus $3.50 per case, as Oasis
now contends.” Plaintiff argues that “[i]n the event that the Court finds the contract to be
ambiguous on these basic terms, the extrinsic evidence also supports Oasis’
understanding.”

        As explained by the United States Court of Appeals for the Federal Circuit, “[w]hen
the contract's language is unambiguous it must be given its ‘plain and ordinary’ meaning
and the court may not look to extrinsic evidence to interpret its provisions.” TEG–
Paradigm Envtl., Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006); Barron
Bancshares, Inc. v. United States, 366 F.3d 1360, 1375 (Fed. Cir. 2004) (“If the terms of
a contract are clear and unambiguous, they must be given their plain meaning—extrinsic
evidence is inadmissible to interpret them.”); see also Precision Pine & Timber, Inc. v.
United States, 596 F.3d at 824. In TEG–Paradigm, the Federal Circuit also noted that
“[a]lthough extrinsic evidence may not be used to interpret an unambiguous contract
provision, we have looked to it to confirm that the parties intended for the term to have its
plain and ordinary meaning.” TEG–Paradigm Envtl., Inc. v. United States, 465 F.3d at
1338; see also Shell Oil Co. v. United States, 751 F.3d at 1296. By contrast, “[w]hen a
provision in a contract is susceptible to more than one reasonable interpretation, it is
ambiguous, and we may then resort to extrinsic evidence to resolve the ambiguity. We
utilize extrinsic evidence to derive a construction that effectuates the parties' intent at the

                                              35
time they executed the contract.” TEG–Paradigm Envtl., Inc. v. United States, 465 F.3d
at 1338 (citations omitted).

        “Generally, the plain language of a contract controls; however, language that is
reasonably susceptible to more than one interpretation, where ‘each [interpretation] . . .
is found to be consistent with the contract language,’ may be considered ambiguous.”
Marquardt Co. v. United States, 101 Fed. Cl. at 268 (quoting Cmty. Heating & Plumbing
Co. v. Kelso, 987 F.2d 1575, 1579 (Fed. Cir. 1993)); see also Metric Constructors, Inc. v.
Nat’l Aeronautics & Space Admin., 169 F.3d at 751 (“When a contract is susceptible to
more than one reasonable interpretation, it contains an ambiguity.”). The United States
Court of Appeals for the Federal Circuit has stated that, “[t]o show an ambiguity [in
contract language,] it is not enough that the parties differ in their respective interpretations
of a contract term.” NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir.
2004); see also Bell/Heery v. United States, 106 Fed. Cl. 300, 309 (2012), aff’d, 739 F.3d
1324, reh’g and reh’g en banc denied (Fed. Cir. 2014). In order to demonstrate ambiguity,
the interpretations offered by both parties “must fall within a ‘zone of reasonableness.’”
Id. (quoting Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d at
751). The Federal Circuit elaborated: “To incorporate extrinsic material, a contract must
use language that leaves no relevant ‘ambiguity about the identity of the document being
referenced, nor any reasonable doubt about the fact that the referenced document is
being incorporated into the contract.’” Lakeshore Eng’g Servs., Inc. v. United States, 748
F.3d at 1347 (quoting Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d
1339, 1344 (Fed. Cir. 2008)).

        Because an ambiguous or uncertain writing sometimes only can be understood
upon consideration of the surrounding circumstances, courts may rely on extrinsic
evidence to interpret an ambiguous contract clause. See Cruz-Martinez v. Dep’t of
Homeland Sec., 410 F.3d 1366, 1371 (Fed. Cir. 2005) (“‘[M]eaning can almost never be
plain except in a context.’” (quoting Restatement (Second) of Contracts § 212, cmt. b
(1981))); Barron Bancshares, Inc. v. United States, 366 F.3d at 1375 (holding that
extrinsic evidence is permissible to interpret an ambiguous contract); Sylvania Elec.
Prods., Inc. v. United States, 126, 458 F.2d 994, 1005, 198 Ct. Cl. 106 (1972); Mata v.
United States, 114 Fed. Cl. 736, 746 (2014) (“If a contract is ambiguous, the court may
rely on extrinsic evidence to discern the parties’ intent.”); Commonwealth Edison Co. v.
United States, 56 Fed. Cl. 652, 662 (2003). “Courts may not resort to extrinsic evidence
‘to create an ambiguity where a contract was not reasonably susceptible of differing
interpretations at the time of contracting.’” Shell Oil Co. v. United States, 751 F.3d at 1304
(quoting Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d at 752).
There are limitations, however, on the use of extrinsic evidence. Extrinsic evidence “may
not be used ‘to justify reading a term into an agreement that is not found there.’” Warren
v. Office of Pers. Mgmt., 407 F.3d 1309, 1314 (Fed. Cir. 2005) (quoting Fox v. Office of
Pers. Mgmt., 100 F.3d 141, 145 (Fed. Cir. 1996)); see also Holland v. United States, 621
F.3d 1366, 1378 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.), cert. denied, 565
U.S. 928 (2011). “Only in the event of an ambiguity may [the court] examine extrinsic or
parol evidence.” Bell BCI Co. v. United States, 570 F.3d 1337, 1341 (Fed. Cir.), reh’g and
reh’g en banc denied (Fed. Cir. 2009); McAbee Constr., Inc. v. United States, 97 F.3d at
1434 (“[E]xtrinsic evidence . . . should not be used to introduce an ambiguity where none

                                              36
exists." (quoting Interwest Constr. v. Brown, 29 F.3d 611, 615 (Fed. Cir. 1994)); K-Con
Bldg. Sys., Inc. v. United States, 107 Fed. Cl. 571, 600 (2012). “The parol evidence rule
provides a further limitation on the use of extrinsic evidence in interpreting contracts.
Under the parol evidence rule, extrinsic evidence pre-dating a written agreement may not
be used ‘to add to or otherwise modify the terms of a written agreement in instances
where the written agreement has been adopted by the parties as an expression of their
final understanding.’” TEG-Paradigm Envtl., Inc. v. United States, 465 F.3d at 1338-39
(quoting Barron Bancshares, Inc. v. United States, 366 F.3d at 1375). The court,
therefore, first must ascertain whether the language at issue was ambiguous. See NVT
Techs., Inc. v. United States, 54 Fed. Cl. 330, 335 (2002) (finding that the threshold
question is whether the document in question contains ambiguous language), aff’d, 370
F.3d 1153 (Fed. Cir. 2004); Bell BCI Co. v. United States, 570 F.3d at 1341. As noted by
the Federal Circuit, “[w]hen faced with an ambiguous contract, we ‘construe its language
to effect the parties' intent at the time they executed the [contract].’” Metropolitan Area
Transit, Inc. v. Nicholson, 463 F.3d 1256, 1260 (Fed. Cir. 2006) (quoting Dureiko v. United
States, 209 F.3d 1345, 1358 (Fed. Cir. 2000)).

       The court first turns to the testimony of the signatories to the contract to examine
the parties’ intentions of the payment terms of the contract. Max Wyeth, the president of
American AquaSource when it was awarded the original contract and the original
signatory to the contract, testified that he based the $50,225,000.00 figure in the base
year by “using our average forecast of demand, we came up with a case number that
would be produced per year, and multiplied that by the case cost,” which was “[t]he
number of cases times $3.50.” Max Wyeth further testified that the $50,225,000.00 was
a “gross revenue figure,” calculated on the cases to be produced and sold at $3.50 per
case. The American AquaSource proposal included spreadsheets showing the volumes
of production and an estimate for when each site would begin water production, the bid
assumed a price of $3.50 per case of water, or a total of $50,225,000.00, based on the
production of 14,350,000 cases.36 At trial, Max Wyeth explained how he understood the
contractor was to be compensated under the contract:

      Q. And when you signed the contract, what was your understanding as to
      how the contractor would be paid under this contract?

      A. On a monthly basis for the amount of water delivered.

      Q. At what price?

      A. $3.50 a case.

      Q. Did you believe under this contract that the Government was required to
      pay for the costs to construct facilities and $3.50 per case?


36The court notes the original basis of estimate in the American AquaSource proposal
assumed annual production of 384 million bottles or 32 million cases of water.


                                            37
      A. No.

Counsel for defendant emphasized during Max Wyeth’s testimony: “So, just so the record
is clear, the $50.225 million in your proposal is based upon $3.50 per case?” to which
Max Wyeth replied: “Yes.” Again, during his testimony, Max Wyeth had the following
exchange with defendant’s counsel:

      [Q.] [W]hat was the contractual unit price under the agreement?

      A. The unit price was 0.292 per liter or $3.50 a case of 12.

      Q. And was that consistent with your understanding of how you would be
      paid under the contract as the contractor?

      A. Yes.

      Q. And was that the totality of what you would be paid under the contract
      was $3.50 per case?

      A. Yes.

      Q. Do you believe you had a meeting of the minds with Major Vazquez
      regarding the payment terms of the contract?

      A. Yes.

      Q. What do you believe that meeting of the minds was with respect to the
      payment terms?

      A. Simply that the water produced and delivered would be paid for in the
      following month.

      Q. And what is the per case price for all of the base year and all of the option
      years?

      A. $3.50 a case.

        Major Vazquez, the signatory on behalf of the government, in response to the
question: “What was your understanding of the contract price per case for the base year?”
testified that “[i]t was $3.50 per case.” Major Vazquez also responded to defendant’s
counsel’s question: “Based on your understanding, would the Government pay $50.225
million for the facilities and then an additional $3.50 a case for every case of water
produced?” “No.” Regarding the pricing schedule, defendant’s counsel and Major
Vazquez had the following exchange:

      [Q.] The total base year is how much?


                                            38
       A. $50,225,000.

       Q. And I know I've kind of asked you before, but who came up with that
       number?

       A. Mr. Wyeth.

       Q. And how was the Government going to pay AquaSource in the base year
       of the contract if AquaSource were to win the award?

       A. We would pay them like any other of the vendors that proposed. Once
       the first article passed and production began, we would pay based off the
       invoice, the number of liters that were requested and were received by the
       Government in that previous month.

       Q. Would the Government pay $50.225 million to the successful awardee
       just to make the facilities operational?

       A. No, they would not.

Major Vazquez also answered defendant’s counsel’s question: “Do you believe you had
a meeting of the minds with Mr. Wyeth on this contract?” “Yes, I do.”37 The court notes

37Despite both of their sworn testimony at trial, plaintiff argues that Major Vazquez and
Max Wyeth “did not have a meeting of the minds,” contending that “[w]hile Maj. Vazquez
and Max Wyeth may have both espoused the same contractual interpretation at trial, their
testimony was inconsistent with their contemporaneous actions and was unreliable at
best.” For example, plaintiff, citing to the trial transcript, states:

       Maj. Vazquez’s testimony at trial also was evasive when he was questioned
       regarding the actions he took that were inconsistent with his testimony:

       Q. So, this contract, as awarded, was it a firm fixed price contract?

       A. It was a fixed price contract.

       Q. Was it a firm fixed price contract?

       A. I believe I just answered that. It was a fixed price contract.

       This is the sort of testimony individuals offer when they are trying to be tricky
       and avoid being completely forthright. Moreover, his testimony was wrong,
       as a “fixed price” contract is not the same as a “firm fixed price” contract.

(emphasis in trial transcript added by plaintiff; citation omitted). The court believes plaintiff
is parsing words and reading far too much into Major Vazquez’s answers at trial.
Furthermore, the court has agreed with plaintiff that the contract was firm fixed price

                                               39
that in its previous decision on the fraud counterclaims, the court indicated regarding Max
Wyeth’s testimony that:

       Oasis did not exist as a corporation when Mr. Wyeth was awarded the
       contract on behalf of American AquaSource. Mr. Wyeth testified that when
       he signed the American AquaSource contract he had no relationship with
       Al-Morrell Development or with Paul Morrell or Phil Morrell. Given the
       evolution of the contract, including fundamental changes to the contract,
       especially after modifications P00006 and P00011, the reduction from the
       number of bottled water plants from eight to six, and on site difficulties
       encountered during contract performance, the court does not afford Max
       Wyeth’s views as to whether or not Oasis submitted a fraudulent claim in
       the 2008 certified claim much weight

Max Wyeth’s testimony, however, is relevant to the contract, as awarded, when reaching
a determination on contract interpretation. Max Wyeth was the architect of the proposed
and accepted pricing schedule, the $50,225,000.00 base year amount and how the
contract would be paid. Although he left Oasis in 2005, and did not have much awareness
of the certified claim process, or even modification P00006 and modification P00011, he
was involved in and aware of the formation of the contract and the documents he signed.
Max Wyeth’s testimony, and the contemporaneous documentation, therefore, are
relevant and court affords his views on the contract formation due consideration. As
indicated by a Judge of the United States Court of Federal Claims, looking to the purpose
of contract interpretation is “to determine the intent of the parties at the time that the
contract was made; this controls the contract’s interpretation.” Ahrens v. United States,
62 Fed. Cl. 664, 669 (2004) (citing Safeco Credit v. United States, 44 Fed. Cl. 406, 419
(1999)). Given Max Wyeth’s and Major Vazquez’s testimony, the court believes the above
discussion supports the court’s conclusion that the contract obligated the government to
pay plaintiff $3.50 for each case of water, and not $50,225,000.00 to establish the
capability to produce water, as well as $3.50 a case of water.

        Much of the documentation the parties point to as extrinsic evidence occurred later
in time than the date of the execution of the contract.38 Indeed, numerous exhibits cited
to by the parties relate to events after the execution of modification P00006 and
modification P00011, which as the court noted in the earlier opinion, “dramatically
reshaped the terms of the contract.” Although plaintiff claims that “P00011 and the
Contracting Officer’s Memorandum for Record completely support Oasis’ contract
position,” information on the conduct of the parties after the execution of the modifications
offers the court less guidance as to the intent of the parties at the time the contract was
executed and, in fact, could give a misleading impression. Likewise, the plaintiff’s

contract. Plaintiff also asserts, without support, that “Max Wyeth’s lack of basic
government contracts knowledge is a fatal flaw to Defendant’s argument.”
38 Of note is Phil Morrell’s August 4, 2006 email to Paul Morrell and Paul Jeffries regarding

his view of the contact, referenced above, which stated in part, “Funding was received for
purchase of water, but it [sic] the contract was a capabilities contract,” and
“Contract#____ is a capabilities contract not a procurement contract.”

                                             40
argument that “[t]he Final Decision on Oasis’ claim, signed by then-Contracting Officer
Maj. Kevin Hobbs, fully supports Oasis’ position,” is similarly unhelpful, as it was issued
on October 18, 2009, more than four years after the contract was executed, and more
than three years after modification P00011 was executed.39

         The court, however, does briefly address two documents from July 2005, first,
plaintiff’s July 2005 memorandum to investors. Defendant argues that “[s]tarting in July
2005 and continuing throughout the base year of the contract, Oasis routinely projected
its revenues from the bottled-water contract,” and “[i]n each such case, Oasis projected
revenue at $3.50 per case only, and never projected any revenue for the cost to build the
facilities or to make the facilities operational.” In response, plaintiff claims that “Oasis’
revenue projections were almost exclusively a representation of what it was told the
Contract entitled it to receive in payment. The early AAS [American AquaSource] and
Iraqua spreadsheets, which were created by Max Wyeth, were widely inaccurate and
were inconsistent with Defendant’s theory of the Contract.”

        The court notes that in July 2005 memorandum, under the heading “revenue
projections” “[t]he company projects revenues to be $50 million in the total base year,
$112 million in the first option year, and $112 million a year in the subsequent 2nd and 3rd
option years, for a total of $386 million in sales revenues over 4 years.” Unless the plaintiff
anticipated delivering zero water to the government in the base year, it appears the
plaintiff communicated to its investors it would be paid for cases of water produced totaling
$50 million. Likewise, the “project costs & details” states:

       The engagement calls for the supply of all labor, tools, supervision,
       personnel, equipment, transportation, materials, facilities, and other
       essentials necessary to perform and sustain 8 separate and independent
       purified bottle water plants according to the 20 Mar 05 Statement of



39 Moreover, the court finds many of the later in time arguments red herrings, and in some
cases, misrepresentations. For example, plaintiff contends that, regarding the contracting
officer’s final decision, “Lt. Col. Hobbs rejected Defendant’s fabricated interpretation of
the Contract, as demonstrated by the fact that the term ‘$3.50’ is not mentioned once in
the final decision.” The court notes, however, that the contracting officer’s final decision
denied plaintiff’s claims in full, and regarding the contracting officer’s final decision’s view
of the contract, the decision states, in part:

       One can only conclude that while the Government was not obligated to
       purchase any water during the base year, the intent was clearly to purchase
       at least some water from any of the sites if it was available. It must also be
       assumed, because the Government did not create a separate CLIN for the
       construction of the bottled water facilities itself, that it was the Governments
       [sic] intent for the $50,225,000 to cover the cost of constructing all of the
       bottled water facilities and the water itself.


                                              41
       Objectives (SOO) at a price of $3.50 per liter bottle, with a period of
       performance from May 2005 through May 2009.

No mention is made of a $50,225,000.00 payment to plaintiff in addition to the $3.50
figure. Additionally, a July 2005 email from Phil Morel to Max Wyeth, with copies to,
among others, Paul Morrell, included a spreadsheet which was a four year projection,
and included a projection for case per year and the gross revenues, and each case
assumed 12 liters of water at $3.50 per case. For the first year, the projections assume
14,500,000 cases of water, the projected revenue was $50,750,000.00, and for the
remaining years, the projections assume 32,500,000 cases of water and projected
revenues of $113,750,000.00 40 The “cost of goods” for the first year assumes a total of
174,000,000 bottles, or 12 bottles per case, times 32,500,000 cases, and total costs of
goods of $12,118,520.00. The projections, subtract the total costs of goods of
$12,118,520.00 from the projected revenue of $50,750,000.00 for a gross profit of
$38,631,480.00. Although plaintiff argues that “[t]hese statements are descriptive of how
the company was operating, which is the primary driving purpose of an investment
document,” and posits, “[m]oreover, the early statements were done at a time when Oasis
had not really gotten into the Contract in detail and seen the myriad of issues the Contract
had,” nowhere in the detailed projections is a there a line item for an additional
$50,225,000.00 payment to the contractor, lending further support for the court’s
conclusion that the contract was structured for the government to pay plaintiff $3.50 a
case of water, and not $50,225,000.00 to establish the capability to produce water as well
as $3.50 a case of water.

        The court also takes note of modification P00003, executed by Major Lopez and
Max Wyeth on August 9, 2005, close in time to the July 2005 documents discussed
immediately above. Modification P00003, added a “not to exceed” limitation on the
quantity of water produced at each plant, and did not require the government to purchase
any minimum number of cases produced by the contractor. Pursuant to modification
P00003, the “not to exceed” “case quantity was a total of 14,350,000 cases of water,”
and, as modified in modification P00002, the “not to exceed” price was $50,225,000.00.41
The court notes that dividing the “50,225,000 (NTE),” added in modification P00002 by
the not to exceed 14,350,000 cases of water added to contract by modification P00003,
reflects $3.50 a case, consistent with the defendant’s view of contract interpretation. This

40As the projections assumed 14,500,000 cases of water for the first year and 32,500,000
cases of water for the remaining years, the projected revenues are slightly higher than
the amounts listed in the contract which assumed production of 14,350,000 cases of
water in the base year and 32,000,000 cases of water for the remaining years after
modification P00003 was executed.
41 As indicated above, the cover page to the contract stated the dollar amount as
“386,225,000 (estimated).” At trial, Major Vazquez testified that this was amount was in
error and that the amount should have been $50,225,000.00, and, on July 15, 2005, Major
Lopez executed modification P00002 on behalf of the government, which changed the
dollar amount from “$386,225,000 (estimated)” to “50,225,000 (NTE),” because “[o]nly
the base year award should have been documented in the contract.”

                                            42
is also consistent with the projections referenced above, and nowhere is there support of
plaintiff view that plaintiff could receive the “50,225,000 (NTE)” for creating the capability
and then be paid for additional, “extracontractual water.” The testimony of the signatories
to the contract, as well as the documents produced near in time to the execution of the
contract support the defendant’s view of the contract, and that the parties’ intended for
the contract to compensate plaintiff only for the bottled water produced, and that plaintiff
derived its revenue projections based on that the same assumption.

       As the court refers to the change to the contract as a result of modification P00003,
the court addresses plaintiff’s contention that modification P00003 was not a valid
modification, as it lacked consideration and, even if it was a valid modification, Oasis was
never bound by modification P00003. Plaintiff first argues that “P00003 is invalid for lack
of consideration” because “P00003 introduced into the Contract for the first time a
requirement for Oasis to produce up to 14,350,000 case [sic] of water in exchange for the
$50,225,000 Base Year value of the Contract. Defendant, on the other hand, still
committed to purchasing zero (0) cases of water under the Contract, eliminating any
guaranteed payment sum to Oasis.” Defendant, on the other hand, contends that the
“contractor received consideration for modification P00003 and it is valid.”

       As noted above, on August 9, 2005, Major Lopez and Max Wyeth executed
modification P00003 which added a “not to exceed” limitation on the quantity of water
produced at each plant, and the “not to exceed” total was 14,350,000 cases of water. As
noted by defendant, “Oasis was not even involved in the P00003 negotiation, as the
modification was signed by Mr. Wyeth on behalf of AquaSource.” As indicated at trial,
Max Wyeth, in response to the question, “this is modification number 3. You willingly
signed this modification?” testified: “Yes.” Moreover, defendant argues that “the
consideration for P00003 is plain on its face: it placed a ‘not to exceed’ at each bottled-
water location.” Although modification P00003 did not require the government to purchase
any minimum number of cases produced by the contractor, the court agrees with
defendant that the contractor received consideration in the form of not being required to
produce more than the identified maximum amount for each bottled water facility, offering
the contractor certainty for each plant, and allowing the contractor to plan accordingly.
After modification P00003 was executed, the base year of the contract reflected the total
amount each plant was obligated to produce:




                                             43
       In addition, modification P00003 changed the SHIP TO ADDRESS location for the
information schedule for the “Deliveries or Performance” referenced above. Modification
P00003 changed the SHIP TO ADDRESS from destination to origin. (capitalization in
original). Regarding this change, Dan Petsche explained:

      A. We did want it to be origin instead of destination, because we didn’t want
      it to be destination. I – you’re correct.

                                           44
         Q. Okay. So, in JX 103,[42] you state that the contractor wants it to be origin?
         A. Right, right, right.

         Q. And this change was implemented in P00003, correct?

         A. Yes, it was.

The court does not weigh how valuable the consideration was to the contractor, only if
the contractor received any consideration, as explained by a Judge of the United States
Court of Federal Claims in Axion Corp.:

         In determining whether there was consideration, courts look to the language
         of the contract modifications. McLain Plumbing & Elec. Serv., Inc. v. United
         States, 30 Fed. Cl. 70, 81 (1993) (“[T]he contract modification represents
         the best source of evidence regarding intent.”). Courts do not evaluate the
         adequacy of consideration, only the existence of consideration.

Axion Corp. v. United States, 68 Fed. Cl. 468, 476 (2005); see also La Gloria Oil and Gas
Co. v. United States, 72 Fed. Cl. 544, 573 (2006), aff’d in part, rev’d in part,
ConocoPhillips v. United States, 501 F.3d 1374 (Fed. Cir. 2007). The court concludes
that the plaintiff was provided consideration for executing modification P00003, in the form
of a definite “NTE” for each location and the change of location of delivery, and, therefore,
modification P00003 was a valid modification.

        Second, plaintiff argues that “P00003 was invalidated by P00005,” because
“[u]nder the plain language of the novation agreement (signed by Defendant and
incorporated by P00005) Oasis was never bound by P00003.” Defendant argues that
“[t]he novation agreement did not void bilateral modification P00003.” As noted above, in
July 2005, Phil Morrell, Al-Morrell Development, Max Wyeth, and American AquaSource
entered into a joint development and pre-incorporation agreement to form a new
corporation to fulfill the contract, which became Oasis. Subsequently, in the fall of 2005,
Phil Morrell, Al-Morrell Development, Max Wyeth, and American AquaSource signed an
addendum to the joint development and pre-incorporation agreement, assigning
American AquaSource’s contract to Oasis. The addendum required Max Wyeth, of

42   Joint exhibit 103 states, in part:

         Dan brought up the fact the there was not FOB [Freight on Board]
         designation within the contract (Destination or Origin). It is in our best
         interests liability wise and payment wise for it to be Origin as if KBR [Kellogg,
         Brown & Root] or whomever is delegated to pick the water up from our
         facility did not pick it up on a daily basis, it would sit and no payment would
         be made. With an origin designation, we would basically get paid as it came
         off the line and it is palleted.


                                                45
American AquaSource, to execute a novation agreement. The novation agreement was
to be a modification to American AquaSource’s contract with the government. The
novation agreement became modification P00005. On December 2, 2005, Max Wyeth,
then-president of Oasis and American AquaSource, signed the modification on behalf of
Oasis, and on December 5, 2005, Colonel Montler signed for the military. Modification
P00005 stated that the “purpose of this modification” was to “reflect the novation
agreement transferring all rights and responsibilities of contract W27P4A-05-C-0002 from
American Aqua Source Inc to Oasis International Water Inc in accordance with the
attached novation agreement dated August 1, 2005.” The modification also stated that,
“[a]ll other terms and conditions of the contract remain unchanged.”

      Plaintiff contends that because the effective date of the novation agreement was
August 1, 2005, and modification P00003 was executed on August 9, 2005, Oasis only
agreed to ratify “all previous actions” taken by American AquaSource prior to August 1,
2005. Plaintiff points to the language of the novation agreement that defines contracts,
and states in part:

         The term “the Contracts,” as used in this Agreement, means the above
         Contracts and purchase orders and all other contract and purchase orders,
         including all modifications, made between the Government and the
         Transferor before the effective date of this Agreement (whether or not
         performance and payment have been completed and releases executed of
         the Government or the Transferor has any remaining rights, duties, or
         obligations under the Contracts and purchase orders).

(emphasis in original). The novation agreement also provides that the “Transferee has
assumed all obligations and liabilities of the Transferor under the Contracts by virtue of
the above transfer,” and that the “Transferee ratifies all previous actions taken by the
Transferor with respect to the Contracts, with the same force and effect as if the action
had been taken by the Transferee.”43

       As discussed at trial, and based on the record before the court, the signatories to
the modification appear to have intended that Oasis be bound by modification P00003.
Colonel Montler, who signed on behalf of the government, had the following exchange
with defendant’s counsel at trial:

         [Q.] [W]hat was the purpose of Modification P00005?

         A. This modification -- it's just affecting the transfer of all the rights and
         responsibilities of the contractor from American AquaSource to Oasis.
         Nothing else got changed, and I don't see that I added Section -- the
         novation agreement wasn't added to Section J, so it's not even an
         attachment to the contract at this point.


43   The “Transferor” was American AquaSource and the “Transferee” was Oasis.


                                              46
      Q. Did the modification have any other purpose, other than to novate the
      contract?

      A. No. All other terms and conditions of the contract remain unchanged.

Max Wyeth, who signed on behalf of American AquaSource and Oasis, similarly
explained to defendant’s counsel:

      Q. Why is it dated August 1, 2005, do you know?

      A. Probably when it was created.

      Q. And was the intent of this modification to invalidate any previous
      modifications?

      A. No, it was a continuation of our intent . . . when we started our
      partnership.

      Q. What was the purpose of the novation agreement?

      A. To transfer the contract.

      Q. Transfer the contract from who to who?

      A. From American AquaSource to Oasis.44

       Furthermore, as noted by defendant, “both Oasis and the military operated as if
modification P00003 was a valid modification throughout performance of the contract,” as
explained at trial, including Alan Morrell’s exchange with defendant’s counsel:

      Q. And at this time [December 2005], Oasis believed that modification
      number 3 was valid, right?

      A. At this time, it was the only CLIN structure we had, and yes, we believed
      that that was what we had access to, yes.

      Q. And just so we're clear, you believe -- Oasis believed that modification 3
      was valid at that time, correct?

      A. At that time we did.

At trial Phil Morrell also responded to defendant’s counsel’s question on cross-
examination, “Oasis appropriately relied on Modifications P00001, P00003, and P00006
in setting up the plants, right?” by answering: “Yes.” The clearest evidence that Oasis
44Max Wyeth also explained, in response to the question: “Why is it dated August 1,
2005, do you know?” “Probably when it was created.”

                                           47
operated as though modification P00003 was a valid modification, might be the December
6, 2005 letter Oasis sent to the military, the day after the Max Wyeth signed modification
P00005, which stated in part:

         The JCC-I Contract requires the Contractor to make very substantial up-
         front investments, in the estimated amount of some $46 million, to set-up
         six re-locatable water purification and bottling plants at sites on military
         bases in Iraq, and contemplates that the Contractor will recoup such
         investment through the firm fixed unit prices for produced purified bottle
         water in accordance with SOO Figure 1 and the Contract Schedule (Contr.
         Section B), both as revised by Mod P00003.[45]

In addition to referring to the changes in modification P00003, the letter reflects the
defendant’s view of the interpretation of the contract. The court, therefore, believes that
the novation agreement, as part of modification P00005 intended to include modification
P00003, and did not exclude it. The court agrees with defendant that P00003 was a valid
modification to the original contract, and modification P00005 did not invalid modification
P00003.

Duress

       In addition to asserting that modification P00003 is invalid, plaintiff argues that
modification P00006 and modification P00011 are invalid due to duress by the
government. Regarding duress, plaintiff argues that “[d]uring the Base Year, Oasis’
principles [sic] repeatedly found themselves on the brink of bankruptcy. Defendant
knowingly pushed Oasis to the brink of bankruptcy by deliberately misinterpreting the
Contract and withholding or threatening to withhold payments Oasis was due.” Plaintiff
claims that the Army used “the leverage created by its maladministration of the Contract
to coerce valuable concessions from Oasis that Oasis did not want to concede and should
not have been forced to concede.” In response, defendant states that “Oasis resorts to
accusations that two different military contracting officers, United States Air Force
Colonels Renee Richardson and James Davis, took advantage of Oasis’ alleged
‘economic duress’ to force Oasis into bilateral modifications,” and argues that “[t]here is
not a shred of evidence supporting Oasis’s economic duress claim and a mountain of
evidence contradicting it, not the least of which is the $100 million profit enjoyed by Oasis
under the contract.”46

45   The December 6, 2005 letter also stated:

         [T]he Contract, as issued, requires the Contractor, once first article approval
         by the Government has been obtained at each site, to produce, and the
         Government to pay for, purified bottle water in quantities within the minimum
         and maximum daily quantities specified for the respective Winter or
         Summer season at the respective sites in SOO Figure 1, as amended by
         Mod P00003. . . .
46   Defendant also argues that plaintiff “wants to retain the benefits that it received in

                                               48
        The United States Court of Appeals for the Federal Circuit has indicated that “[t]o
render a contract unenforceable for duress, a party must establish (1) that it involuntarily
accepted the other party's terms, (2) that circumstances permitted no other alternative,
and (3) that such circumstances were the result of the other party's coercive acts.”
N. Star Steel Co. v. United States, 477 F.3d 1324, 1334 (Fed. Cir. 2007) (citing Rumsfeld
v. Freedom NY, Inc., 329 F.3d 1320, 1329 (Fed. Cir. 2003)); see also Dureiko v. United
States, 209 F.3d at 1358; Employers Ins. of Wausau v. United States, 764 F.2d 1572,
1576 (Fed. Cir. 1985) (quoting Fruhauf Southwest Garment Co. v. United States, 111 F.
Supp. 945, 126 Ct. Cl. 51, 62 (1953) (“[T]he requirements to establish duress are
exacting. Three elements must be found: ‘(1) that one side involuntarily accepted the
terms of another; (2) that circumstances permitted no other alternative; and (3) that said
circumstances were the result of coercive acts of the opposite party.’”)); Starr Int’l Co. v.
United States, 106 Fed. Cl. 50, 77, recons. denied (2012); IMS Engineers-Architects, P.C.
v. United States, 92 Fed. Cl. 52, 66 (2010); Aboo v. United States, 86 Fed. Cl. 618, 632,
aff’d, 347 F. App’x 581 (Fed. Cir. 2009). “Duress occurs when a party involuntarily accepts
another party's terms because the circumstances permitted no alternative and such
circumstances were the result of the other party's coercive acts.” Pew Forest Prods. v.
United States, 105 Fed. Cl. 59, 67 (2012) (citing N. Star Steel Co. v. United States, 477
F.3d at 1334). As noted by a Judge of the United States Court of Federal Claims, “[t]his
Court's jurisprudence has shown that the bar for establishing duress is a high one.” Starr
Int’l Co. v. United States, 106 Fed. Cl. at 77.

       Plaintiff claims that “Oasis has demonstrated each of the three requirements for
duress,” defendant, by contrast, argues that “plaintiff’s duress claims should be roundly
rejected because there is not a shred of evidence supporting Oasis’s attempts to walk
away from its contractual commitments,” and that “Oasis falls far short of establishing a
single element of economic duress, let alone all three.”

       a. Involuntary Acceptance

        As indicated above, for a duress claim to be successful, a plaintiff must first
establish that “it involuntarily accepted the other party's terms . . . .” N. Star Steel Co. v.
United States, 477 F.3d at 1334. Regarding the first element, involuntary acceptance,
defendant argues, plaintiff “never explains why it did not sign the modification[s] under
protest.” At trial, Phil Morrell in response to the question, “you did not indicate anywhere
on Modification P00006 that you were signing the agreement under pro -- under protest,
right?” testified: “I didn’t indicate it, no.” Oasis concedes that “[w]hile Defendant is correct

P00011, but undo the portions that it now contends are not in its best interest,” noting that

       Oasis does not claim that it should have been paid $3.50 per case for all
       water delivered after August 2006; rather, Oasis was satisfied to receive the
       $9.3 million a month. Nor does Oasis offer to return the more than $24
       million check it received as part of the P00011 negotiations. Rather, as Paul
       Morrell testified, Oasis wants to keep the benefits of P00011, but invalidate
       the portions with which it now disagrees.


                                              49
that neither P00006 nor P00011 contains a provision saying that the modification was
under duress, there is no requirement to include such a statement in order for a contractor
to later seek to invalidate the modification.” Plaintiff contends that “the logical fallacy in
Defendant’s argument is that it assumes a contractor could be coerced into signing a
modification under duress, but would then have the negotiating power to insist that the
modification include language saying it was under duress. That ignores human nature.”
Instead, plaintiff argues “the only way to determine whether Oasis involuntarily accepted
P00006 and P00011 is to consider the underlying facts surrounding them, and those facts
demonstrate that Oasis did not want either modification.”

       First, the court notes that in a situation in which a party indicates that it may not
want a modification, another form of a contract change, or is facing financial difficulties,
those facts alone are not necessarily an indication that, if a modification is executed,
duress must have been involved. Moreover, as numerous cases demonstrate, a plaintiff
which believes it is signing a contract or modification under duress can, in fact, sign under
protest to indicate it is executing the agreement unwillingly. In North Star Steel Co. v.
United States, the North Star Steel Company had alleged a breach of contract between
the Arizona Electric Power Cooperative Inc. (AEPCO) and the United States Department
of Energy's Western Area Power Administration (WAPA), with “North Star being an
acknowledged third party beneficiary of the contract.” N. Star Steel Co. v. United States,
477 F.3d at 1325. The Consolidated Arrangements Contract (CAC) was entered into on
August 17, 1994, between WAPA and AEPCO for the benefit of North Star. As explained
by the Federal Circuit,

       WAPA, however, had technical concerns about being able to provide
       regulating services to meet North Star's load requirements. For this reason,
       WAPA negotiated for a provision in the CAC that the regulating services to
       be provided to North Star would be made and paid for pursuant to an ad
       hoc methodology utilizing an in-kind energy payment, which would be in
       addition to the FERC-approved transmission rate schedule.

Id. at 1327-28 (footnote omitted). The CAC provided that the parties “shall jointly establish
an appropriate cost-based methodology to review, evaluate, and periodically, if
necessary, adjust the percentage associated with the In–Kind Energy payment.” Id. at
1328. “In spite of their inability to reach agreement within the first year of normal
operations, WAPA, North Star, and AEPCO continued to negotiate with respect to a new
methodology. On June 3, 1999, a meeting took place to discuss WAPA's proposal to add
Amendment No. 3 to the CAC . . . entitled ‘Modification of Section 14 of the Original
Contract (Control Area and Regulating Services’)).” Id. at 1329. As noted by the Federal
Circuit, “[o]n July 29, 1999, North Star authorized AEPCO to accept Amendment No. 3
and to amend the CAC under protest.” Id. In its analysis, the Federal Circuit stated:
“Turning to the issue of duress, the government recognizes that North Star agreed to
Amendment No. 3 under protest, thereby apparently involuntarily accepting WAPA's
terms,” id. at 1333, and explained that “it is undisputed that AEPCO signed Amendment
No. 3 under protest, which satisfies the first prong of the duress test. . . .” Id. at 1334. This
is especially notable, since as discussed below, the Federal Circuit ultimately determined


                                               50
that “the court's findings of fact do not support a determination of duress. The reason is
that the third prong of the test—that the circumstances which North Star faced were the
result of WAPA's coercive acts—was not met.” Id. (footnote omitted).

        The North Star case is not alone. In Systems Technology Associates, Inc. v. United
States, 699 F.2d 1383 (Fed. Cir. 1983), the plaintiff, Systems Technology Associates, Inc.
(STA) entered into a contract with the Environmental Protection Agency on August 15,
1974, which was subsequently terminated for default. See id. at 1384. The termination
for default was converted to a termination for convenience by the United States
Department of the Interior Board of Contract Appeals which required the government to
equitably adjust the Systems Technology plaintiff’s contract. As explained by the Federal
Circuit:

       On February 14, 1978, the parties met and STA suggested that the
       settlement be on a “total cost” basis. STA submitted a termination
       settlement proposal. In evaluating that proposal, a Government auditor
       requested and was denied access to STA's books on June 5, 1978. The
       parties met and discussed their disagreements over the use of the total cost
       basis methodology, favored by the Government, and over Government
       access to STA's books. Subsequently, STA resubmitted its claim, protesting
       the Government's insistence on a total cost basis settlement and agreeing
       under protest to make cost records available to Government auditors. The
       auditors, however, insisted on using STA's job cost ledgers. STA again
       protested. The auditors finally concluded that, because of STA's failure to
       make the job cost ledgers available, the field audit office could not render
       an opinion on STA's settlement proposal. This dispute over methodology
       and access to the job cost ledgers continued until October 4, 1978, when
       STA submitted under protest a settlement proposal prepared on a total cost
       basis and allowed the auditors access to its job cost ledgers.

Id. at 1384-85 (footnotes omitted). Even though the plaintiff in Systems Technology did
contemporaneously protest the government action, like in North Star, the Federal Circuit
ultimately concluded that “[t]he contractor has failed to establish facts constituting duress
under the applicable standards of duress.” Id. at 1390. Therefore, contrary to Oasis’
contention, it is possible to protest the government’s action, and later raise a claim of
duress. Moreover, these cases demonstrate that in addition to a plaintiff having to timely
protest, depending on the facts presented, the party must be able to demonstrate duress,
in fact, occurred.

      The only precedential case on this issue that plaintiff addresses is the Court of
Claims case of Louisiana-Pac. Corp. v. United States, 656 F.2d 650, 228 Ct. Cl. 363
(1981). In Louisiana-Pac. Corp., the plaintiff had a third party agreement with the Northern
Timber Company in which plaintiff assumed the benefits and responsibilities of Northern
Timber Company’s timber sale contract with the Forest Service of the United States
Department of Agriculture. See id. at 651. The Court of Claims noted that “before plaintiff
had cut any trees, the Forest Service mailed plaintiff a proposed bilateral modification of


                                             51
the contract which reduced the volume established in the original contract,” to which
plaintiff submitted a counterproposal to the Assistant Regional Forester. Id. The Forest
Service responded that the counteroffer was “not acceptable” and “the Forest Service
stated its refusal ‘to accept any modification by Louisiana-Pacific signed under protest or
with qualification,’” and finally that “unless the Forest Service’s modification of the contract
was signed ‘as presented,’ it would ‘cancel the sale’ and terminate the contract. Id. at
651-52. On April 25, 1974, without written protest or reservation of any rights, plaintiff
signed and returned the Forest Service's Agreement to Modify Contract.” Id. at 652.
Plaintiff argues this case is not relevant because it was based on “a motion for summary
judgment that did not actually decide the issue of duress, let alone reject the duress
claim.” The court agrees that the Court of Claims did not specifically reach the issue in
Louisiana-Pac. Corp., noting instead that “plaintiff says duress upon it renders the
modification void. If so, there was no accord and satisfaction or waiver which defendant
relies upon. Thus, there is presented a disputed question of fact we cannot resolve on the
pending motions.” Id. Nonetheless, the court’s discussion of duress is instructive:

       Plaintiff tells us that it needed lumber, which was getting scarce, so it agreed
       to the modification although it did not want to do so. This does not
       necessarily demonstrate duress. There may have been alternatives.
       Plaintiff perhaps could have sought other timber sources or it could have
       stood its ground and sued for breach in 1974 instead of in 1979. See Murphy
       v. United States, 209 Ct. Cl. 352 (1976) (plaintiff held not to have resigned
       his position under duress where threatened with an investigation he could
       have contested). We do not intimate that suit would be a reasonable
       alternative in every case. However, by signing the modification without
       protest at the time, defendant argues that plaintiff waived its rights and by
       accord and satisfaction made a considered business judgment that it would
       rather proceed under a modified contract than to sue for breach. Plaintiff
       appears to want it both ways the benefits of the modified contract and
       damages for breach as well. If plaintiff is correct in its approach to this
       problem, it is hard to imagine how a contract modification could ever stand
       where it was accepted with reluctance. Years afterward, as here, a party
       could come in claiming duress and great uncertainty would thus attend
       contract law. We have no doubt but that plaintiff did not like the modified
       contract to which the Forest Service asked it to agree, but agree it did.

Louisiana-Pac. Corp. v. United States, 656 F.2d at 652-53, 228 Ct. Cl. at 367-68. Although
the posture of the above captioned case and the Louisiana-Pac. Corp. are very different,
the dicta in Louisiana-Pac. Corp. is logical and convincing. Although plaintiff argues that
the assumption that a contractor could be coerced into signing a modification under
duress, but would then have the negotiating power to insist that the modification include
language saying it was under duress” “ignores human nature,” it can just as easily be
argued that it would be human nature for a contractor who was unhappy with the outcome
of a contract modification to later cry duress to undo the bargained result. The failure of
plaintiff in the above captioned case to contemporaneously protest either modification,
moreover, makes the court initially skeptical of plaintiff’s claims that the modifications


                                              52
were involuntarily accepted by plaintiff. What most undermines plaintiff’s argument
regarding its claim that a contractor under duress would not have the power to insist on
protest language, is plaintiff’s own behavior during contract performance in response to
the government’s request for a waiver of plaintiff’s claims. At trial, Paul Jeffries had the
following exchanges on direct examination:

       Q. Did the Government ask for waivers of claims regularly from Oasis?

       A. Yes, they did.

       Q. To the best of your knowledge, starting at P00006, did Oasis ever sign
       a waiver of claims?

       A. To the best of my knowledge, no.

                                               ...

       Q. Do you recall if Oasis signed a waiver of additional claims at the time of
       P00011?

       A. We were requested to and we did not.

       Q. And why didn't you sign that waiver of additional claims?

       A. Because we believed that there would be claims arising from this
       transaction and potentially previous ones.

Regarding the defendant’s request for a waiver of claims, plaintiff apparently had the
ability to resist the government’s request, but plaintiff claims it lacked all ability to indicate
it was protesting the modifications as executed.

        Defendant also contends “Oasis proposed both modifications to the military that it
now claims were the result of economic duress,” (emphasis in original), noting that “Oasis
proposed P00006 to the military,” and “[a]s with P00006, Oasis suggested major portions
of modification P000011 [sic].” Oasis counters that “[w]hat Oasis labeled a ‘proposal’ was
in reality a ‘counter proposal.’ However, even if it were a proposal, the mistake Defendant
makes is assuming that because something was a ‘proposal,’ the idea was both
generated by Oasis and something Oasis objectively wanted.” Oasis contends that “[a]
party under duress may very well make a proposal in order to avoid a much worse
outcome. That does not mean the initial proposal was not coerced . . . . Simply proposing
a modification does not demonstrate that the party actually wanted the modification.”
Although the court notes that a Judge of the Court of Federal Claims has indicated, “[a]s
for the first element [of duress], the plaintiff presents no evidence to support the
involuntary acceptance of the terms of the modification. In fact, the evidence
demonstrates the opposite because the plaintiff, not the defendant, sought and then
proposed a recovery schedule.” McLain Plumbing & Elec. Serv., Inc. v. United States, 30


                                               53
Fed. Cl. 70, 83 (1993). Therefore, the court agrees that, even if Oasis proposed the
modification, that does not evidence per se that plaintiff signed the modifications without
duress. Therefore, the court examines the circumstances of both modification P00006
and modification P00011 to determine if either was signed under duress.

      Modification P00006

       As noted above, the base year of the contract was scheduled to end on May 24,
2006. On March 8, 2006, contract specialist William Moxham sent Oasis an email which
said in part:

      It was apparent at the last meeting that OIWI [Oasis] had a copy of the
      modification that I had prepared in draft for the previous Contracting Officer
      (Brandon Montier). I understand you [sic] company's misgiving about
      extending the contract but the fact is that without some sort of extension the
      FY 05 funding amount will go away and your contract value will drop from
      $386,225,000 to in the neighborhood of $341,000,000. As we approach mid
      March it is also looking like OIWI is going to be far from the mark with regard
      to the 24 May 2006 completion. So far OIWI has only delivered 1,158,240
      bottles of water out of 14,350,000 for the base period.

                                           ...

      Right at the moment you owe us dates when your plants are estimated to
      be on line and a rough approximation of how much water you will have
      delivered or available for delivery before 24 May 2005. We hope if you don't
      agree with the modification that at some point in the near future you are
      going to have a counter proposal that we can reach some arrangement on.

Paul Morrell sent an internal email to Oasis personnel on March 10, 2006, in which he
indicated:

      Attached are the dates to give Moxham - they are slightly different than the
      ones I circulated yesterday based upon where the commitments coming out
      of Italy. They are conservative and certainly NOT the dates we will be
      driving to internally. We'll need to take the bullet now to move the dates but
      we should (we damn well better!!) exceed the expectations we are setting
      now so we don't do this same battle day after day. I've also suggested
      moving the completion date to 8/15/06 to consume the entire $50mm. I
      agree with Moxham that we should remove the line item clins to allow
      money to flow between locations. Get a draft amendment together with
      Moxham and distribute it for consideration.

The same date, March 10, 2006, Oasis sent the military a proposal, with the subject
“Response and counter to JCC-I/A P00006” which indicated:



                                            54
      Following up to referenced draft P00006, and per our conversations
      regarding "actual" projected operational dates, first product delivery dates,
      as well as Montier 13JAN06 proposed draft CLIN restructuring for
      maximizing Base Year Period funding allocation, we are responding to and
      countering same prior to our scheduled meeting regarding same on
      Saturday 11MAR06 at 1000 in the JCC-I/A PARC Forces offices located on
      Camp Victory.

The proposal stated:

      We have been very forthcoming with JCC-I about these delays and have in
      the past discussed several resolutions and methods of recovering from this
      and restructuring the Schedule of Supplies/Services, part of which is
      included within referenced P00006 draft and extending the Base Year
      Period to 31AUG06 (see P00006, CLIN 0001AA) that would allow both
      Oasis and the Government the leverage of maximizing deliveries and
      utilization of allocated funding within the Base Year Period.

In a March 14, 2006 email, Paul Morrell explained to Alan Morrell, Paul Jefferies, Phil
Morrell and Dan Petsche that regarding any modification to the base year contract, “[j]ust
to emphasize – the extension is for their benefit – not ours. I’m not interested in giving
them anything for it beyond what we have already committed.” Plaintiff also cites as
evidence that Oasis did not want the modifications a March 9, 2006 email from Dan
Petsche to Lieutenant Colonel Davis which noted that “[w]e understand and appreciate
the Governments [sic] desire to maximize and leverage the base period and subsequent
option period funding appropriated and we firmly believe that there is a way to that end
that would be a win-win for both the Government and Oasis.” After discussions with the
government, Oasis sent a counterproposal on April 3, 2006. The counterproposal stated:

      Major Davis,

      Oasis International Waters, Inc. acknowledges and we are in receipt of
      modification P00006 of referenced. Further we understand the Military's
      challenge with funding Option Period One as originally proposed in our
      contact. [sic]

      Our goal is to accommodate the Military's 2006 fiscal year funding
      challenges without significantly changing the risk & cost recovery profile of
      the contract and impacting the unit price of water to the military, and as such
      we summit [sic] this proposal with no cost changes pending the approval of
      our financing partner, we believe a positive response from the military will
      assist with this approval. Therefore we are responding as follows:

      1. Please change Standard Form 30 (REV 10-83), Block 8 to reflect correct
      company name, Oasis International Waters, Inc.



                                            55
2. With respect to the period of performances to schedule(s) reflected per
P00006 Continuation Sheet, herein referred to as Item 1:

      (a) we DISAGREE with proposed and counter per the
      schedule that follows:

      (b) In addition with both the base year and CLIN 2001
      OPTION ONE is hereby exercised upon approval of P00006,

             [OASIS’ PROPOSED SCHEDULE REMOVED]

3. Item 2, Removal of Summary of Pricing Schedule Page 7 of 18, -
AGREED.

4. Item 3, Section C, Page 9 of 18, Statement of Objectives, Paragraph 3.1
(NOTE) Remove note and add "The Contractor shall operate the plant in
accordance with the management SOP provided as attachment 01 to this
statement of objectives". - Although we agree with removal of current
Paragraph 3.1, we did not receive Attachment 01 SOP in. Please
forward for our review of cost, technical, and/or schedule impact.

5. Item 4, Section C, Page 9 of 18, Statement of Objectives, Paragraph 3.1
(Figure 1) - AGREED.

6. Item 5, Section C, Page 10 of 18, Statement of Objectives, Paragraph
4.5.3 & 4.5.4 deletion - AGREED.

7. Item 6, Section C, Page 10of18, Statement of Objectives, Paragraph 4.6
revision Oasis is able to provide a single side access pallet measuring
45" x 37 after current pallets and pallet raw material inventories are
depleted.

8. Item 7, Section C, Page 9 of 18, Statement of Objectives, Paragraph 6.3
revision - AGREED, excluding TQ which is dependent upon military
assistance to finish preparing the land. Date to be determined.

9. Item 8, Section C, Page 9 of 18, Statement of Objectives, Paragraph 8,
-
AGREED upon the condition of Government acceptance of Item 1,
Continuation Sheet.

10. Item 9, Section F, Page 17 of 18, Deliveries or Performance. -
AGREED, upon the condition that the delivery point for the water
remains at origin or FOB Oasis Water plant.

11. Item 10, Section G, Page 18 of 18, Contract Administration Data. -


                                    56
       AGREED.

       12. Item 11, Modification of FAR 52.217-9 Option to Extend the Term of the
       Contract, as prescribed in 17.208(g), insert a clause substantially the same
       as the following:

              Option to Extend the Term of the Contract (MAR 2000)

       (a) The Government may extend the term of this contract by written notice
       to the Contractor within 30 days; provided that the Government gives the
       Contractor a preliminary written notice of intent to extend at least 90 days
       before the contract expires. The preliminary notice does not commit the
       Government to an extension.

       (b) If the Government exercises this option, the extended contract shall be
       considered to include this option clause.

       (c) The total duration of this contract, including the exercise of any options
       under this clause, shall not exceed 54 (months).

       Due to lead-times for raw materials required and logistical challenges
       from open ports to the operational sites, we DISAGREE with the
       leadtimes reflected within paragraph (a) and counter propose with the
       Government providing a 90 day written notice to extend and at least
       120 days written notice of intent to extend.

       Alternatively the Military may agree to reimburse Oasis for excess raw
       materials needed to ensure steady supply of water.

       We remain available to conclude these negotiations promptly.

(capitalization and emphasis in original).

       As noted above, the April 3, 2006 proposal from Paul Jeffries formed the basis of
modification P00006, and contained a way to include a base year amount of 14,350,000
cases of bottled water at $3.50 per case for a total of $50,225,000.00. Modification
P00006, which was executed on April 14, 2006 by Lieutenant Colonel Davis and Phil
Morrell, extended the base year of the contract from May 24, 2006 to August 15, 2006,
and required that the bottled water capability be established at all six sites by June 30,
2006. Therefore, modification P00006 extended the contractual deadline for bottled water
plants to be operational to June 30, 2006. According to modification P00006, the bottled
water plants were to be operational in the following order: (1) Anaconda, (2) Camp Victory,
(3) Speicher, (4) Q-West, (5) TQ, and (6) Al Asad.47 Modification P00006 also required

47 At the time modification P00006 was executed, Anaconda and Camp Victory were
already operational.


                                             57
the production of 14.35 million cases of water during the base period of the contract, and
removed the “not to exceed” requirements established in modification P00003. Finally,
the option years were realigned to match the extension of the base year, so the first option
period would run from August 16, 2006 until January 15, 2007, the second option period
would run from January 16, 2007 until January 15, 2008, and the third option period would
run from January 16, 2008 until January 15, 2009. Modification P00006 also added a
fourth option period that would run from January 16, 2009 until August 16, 2009. The
amount of water in the base period, the first option period, and the newly added fourth
option period were different than the second and third option years.

       At trial, Paul Jeffries, testified that Oasis had agreed to modification P00006 and
in response to the question “you as CEO believe that Oasis was bound by the terms of
modification number 6, right?” he answered: “Yes, we intended to execute accordingly.”
Paul Jeffries indicated that he did not protest or indicate that the P00006 was signed
under duress. Paul Jeffries also indicated that “from the time it [P00006] was signed, I
operated as though it was valid, going forward.” During his trial testimony, Phil Morrell,
also admitting he did not lodge a protest regarding modification 00006 after he signed the
modification, and stated: “Well, I knew I was being coerced into signing it, no question
about it.”

       Modification P00011

      Although modification P00006 was executed in April of 2006, by June of 2006,
Oasis and Colonel Richardson, then the contracting officer, began negotiations to modify
the contract further. Paul Jeffries testified that:

       The negotiations began with Paul and I sitting in a room with Renee, and I
       believe her assistant was there, and they told us that they were being
       pushed a particular direction, that she would need concessions from us to
       pay out the balance of the funds owed or she would have to move in this
       other direction. Paul quickly and generously made an offer that I thought he
       thought would solve this, put it to bed quickly. So, he said, look, I'll just give
       you an extra million cases of water as a concession and let's move forward,
       and the response that we got was, that's great, thank you, now what else
       do you have?

Oasis considered a number of proposals, as noted in an internal August 1, 2006 email
from Paul Morrell:

       I’ve tried a lot of complicated algorithms to try to make a solution that is
       equitable to both the Military and US. I’ve concluded that the most equitable
       approach for everyone is the following: We gat [sic] paid a flat
       $112,000,000/year just as the contract states or $9,333,333/month (5/6th of
       that until TQ comes online). We agree to deliver up to 32,000,000 cases per
       year in aggregate with an annual reconciliation if the actual deliveries
       exceed that amount.


                                              58
After further discussions and consideration of several options for how to proceed moving
forward, ultimately, on August 8, 2006, Oasis, at Colonel Richardson’s request, provided
her a draft proposal, which was consistent with the internal Oasis proposal. The draft
proposal indicated two options:48




       Regarding the proposed deal, option II, that formed the basis of modification
P00011, Paul Jeffries, in an August 9, 2006 email to Paul Morrell and Phil Morrell stated:
“Im [sic] having a little indigestion over the increase in requested water, but overall I feel
we are at 99% of everything we hoped for and with clarity and cash flow to make it
manageable.” At trial, Paul Jeffries, in response to the question, “[t]hat was what you
thought at the time?” answered: “Yes. Well, that's what I wrote here. Keeping in mind that
the goal was to get a $24 million check and a renewal. That is the 99 percent of what
we're talking about.” Paul Jeffries also testified that “we were still being asked for


48The first option contemplated modifying the contract to not build TQ, but the parties
decided to build the TQ plant.

                                             59
significant concessions, beyond what was outlined that I've tried to outline here. . . . I
mean to the tune of $30 million of concessions yet beyond what's on this page.”

        On August 12, 2006, Paul Morrell and Colonel Richardson executed modification
P00011, which was generally consistent with the draft proposal and established a
payment structure by which Oasis would be paid $9,333,333.33 per month, independent
of any amount of water, moving forward in the option periods. The day modification
P00011 was executed, Paul Jeffries sent an email to a representative of Oasis’ financier
and indicated “I believe this modification is a significant win for us. [sic] clarifies our service
status, improves cash flow and many military deliverables.” At trial, Paul Jeffries, in
response to the question, “[t]hat’s what you believed at the time, right?” answered: “I did.
Significant in that we're still in business, yeah. And that it did make good modifications to
the contract going forward.” Also at trial, in response to the government’s question, “And
you, as CEO, operated with the assumption that modification 11 was a valid modification,
correct?” Paul Jeffries testified, “[w]e lived by the conditions of P00011, yes.”

      The day modification P00011 was executed, Phil Morrell emailed Colonel
Richardson, and copied numerous individuals at Oasis and the Army, indicating:

       I would like to express my personal appreciation to all, for the hard work you
       have done to bring clarity to this contract. I believe it now better represents
       what we all had in mind when we undertook the project. Once again, within
       our corporate culture, we have looked for and found the solution which
       brings about the ethical win-win attitude we continuously try to drive.[49]


49Defendant takes note of Phil Morrell’s email to Dan Petsche on July 15, 2005, regarding
the general approach to the contract:

       There are 2 requirements in my philosophy which makes me successful in
       getting the contract closed in the way that is most beneficial for all involved.
       1. “the one who cares the least wins”. I would like to win this, but a half win
       is not good enough. in lew of the fact that we have experience in country
       and with this type of contract, we have learned that we can do the best job
       possible and still be robed of our future through political channels. This will
       not end up in a win scenario. in reality I can only say we have a win if the
       first years contract is a win. If we loose the contract after the first year then
       you need to understand WE LOOSE IT ALL based on the contract that is
       currently in position. That means it would have been better for us as a
       company to have lost it today in negotiation than lost in a year after we are
       $10-$15,000,000 upside down. As my friend you I don't want to be having
       a conversation 1 year from now saying we just couldn't figure out how to
       make this a win-win contract. We are not asking for a win-loose contract we
       are asking for a win-win contract. We know the solution for a win-win
       contract and noone should be offended or upset in any way by asking them
       to write the win-win contract. which leads me to #2


                                                60
         At trial, Phil Morrell testified regarding his email, “this was a very stressful time for
everybody involved. This email was an attempt by me to prop everybody back up and get
everybody feeling okay about things again. This was not some email that -- some legal
email that I'm saying that everything worked out perfectly.” Phil Morrell did, however,
testify in response to the question: “And you believed at the time that P00011 was a win-
win deal?” “Yes, absolutely.”

        Ultimately, the court agrees with defendant, which in its reply brief states, “it does
not matter which party first proposed the modification. Both parties submitted proposals,
counter-proposals, and negotiated each aspect of the modification before coming to an
agreement and signing a bilateral modification.” The back and forth process between the
parties resulted in modifications which did not achieve everything either side wanted. The
fact that plaintiff did not receive their desired result from the modifications does not prove
that either modification P00006 or modification P00011 were executed under duress. The
court fails to find the evidence in the record that the plaintiff involuntarily signed the
modifications. Although the failure to demonstrate involuntary acceptance is fatal to
plaintiff’s duress claim, the court, nonetheless, examines the other two elements of the
duress framework.

       b. No Other Alternative

       Related to the concept of involuntarily acceptance, is the second prong of the
duress analysis, that circumstances permitted plaintiff no other alternative than accepting
the two modifications, when executing modification P00006 and modification P00011.
Defendant argues that “Oasis also produced no evidence regarding the second prong
necessary for economic duress, that it had no other alternatives than to sign P00006 and
P00011.” Indeed, the government argues that Oasis had alternatives to signing the
modifications, stating “[o]f the many alternatives, Oasis was free to: (1) not propose
P00006 and P00011; (2) not sign P00006 or P00011; (3) propose alternative terms to
modify the contract other than those it agreed to in P00006 and P00011; or (4) stop
performance under the contract and accept the contractual consequences.” In response,
Oasis contends that “[d]efendant’s argument that Oasis had alternative options is
superficial and ignores the facts of the case. Instead of actually addressing the plausibility
of the ‘alternatives’ it proposes, Defendant simply cuts and pastes generic case law of
where other courts have held that other contractors had other options.”

      Plaintiff contends that “Oasis did not want either proposal, but was forced to
propose something in order to avoid financial ruin.” Plaintiff also states, regarding the
argument it could have proposed alternative terms, “[t]he final modifications that were

       2. The definition of diplomacy: this is when you tell someone to go to hell
       and they truly enjoy the trip and appreciate your suggestion for them to take
       the trip. I trust your ability to fix this contract. . . . If we loose the contract in
       a year from now the military will also loose so lets protect them from
       themselves. Lets change the loose-loose contract to a win-win contract.

(capitalization in original; spelling in original).

                                                61
agreed to were the only option on the table, and Defendant has no argument that anything
substantively better existed.” Plaintiff argues that “[d]efendant makes no attempt to
suggest that there were alternative modification terms that would have been acceptable
to Defendant – let alone that those terms would have been substantively better and
presented no evidence to supports [sic] its assertions,” but that alone does not support
Oasis’ position that there were no available alternatives. Most notably, plaintiff concedes
that “[d]efendant is correct that sometimes it is a viable alternative to stop performance
and pursue legal remedies,” but argues that “[i]f Oasis had stopped performance and
accepted the contractual consequences, the company would have gone out of business
and the Morrells would have lost everything.” Defendant notes “[t]he crux of Oasis’s
economic duress claim is that it may have been ‘bankrupt[ed]’ had it not entered into
P00006 and P00011.” (trial citations omitted). At trial, Phil Morrell testified that “P00006
was the only way I could pull it out of default, and it was the only thing that Montler would
offer us to -- to move on to the next level of this contract. So, this pulled me out of default
with my banker. I didn't have a choice. I had to pull the contract out of default.” In its briefs,
plaintiff contends that “Oasis was underwater at the time of P00006 and P00011 and was
on the verge of bankruptcy from March-August 15, 2006.”

          The court notes that the joint exhibits introduced at trial demonstrate that Oasis’
audited financial statements reflected a profit for 2006, the year both modification P00006
and modification P00011 were executed, as the combined net earnings listed a profit of
$19,284,023.00 for 2006.50 The combined statements of owners’ equity also
demonstrates that “Al-Morrell Development, LLC Members’ Equity” net earnings for 2006
were $19,284,023.00, the same as the combined net earnings for Al-Morrell
Development, LLC and Oasis. Plaintiff addresses the consolidated statements, by stating,
“[f]irst, looking at Oasis’ 2006 financial report ignores $12-15 million financial outlay Oasis
made in 2005 to build Anaconda, mobilize, and order equipment for the other plants. Due
to the fact that Defendant only paid Oasis approximately $1 million in 2005, Oasis already
entered 2006 heavily in the red.” Plaintiff also contends that “[s]econd, Oasis’ financial
situation was substantially different in December 2006 than it was in April 2006 (P00006)
and August 2006 (P00011). Year to date, Defendant had only paid Oasis around $11
million through March 2006, and around $23 million through August 2006,” and argues
that $90,000,000.00 in revenue for 2006 came from after modification P00011 was



50 The court notes that Oasis’ audited financial statements also reflected a profit for 2007
and 2008, the two years after the modifications were executed. The 2007 Oasis’ audited
financial statements indicated a net profit of $14,674,848.00 and the 2008 Oasis’ audited
financial statements indicated a net profit of $26,129,285.00. Although defendant points
to the profitability of the later years of the contract, indicating Oasis made $100 million in
profit under the bottled-water contract, which represents more than 25 percent of the
$381,081,443 million paid to Oasis over the four-year contract,” and argues “Oasis also
concedes that the contract was profitable,” to prove that Oasis did not execute the
modification under duress, the court only considers the financial status of Oasis as it
existed when modification P00006 and modification P00011 were executed.


                                               62
executed.51 Oasis also contends that “the ‘net earnings’ is akin to operating profit (gross
revenue minus operating costs) and does not account for the $70 million investment
Oasis made in the plants or the debt payments due. As such, Oasis still owed tens of
millions to its financial lenders at the end of 2006.” Therefore, plaintiff alleges that “Oasis
was underwater at the time of P00006 and P00011 and was on the verge of bankruptcy
from March-August 15, 2006.” Even if plaintiff is correct, none of the above proves that
Oasis was on the “verge of bankruptcy,” or that plaintiff was coerced into signing
modification P00006 and modification P00011 or had no alternative but to do so.
Defendant also points to the testimony of Paul Jeffries regarding the risk Oasis took on
initially in order to potentially be profitable in the latter years of the contract:

       Q. So, essentially Oasis was taking a risk of taking a loss in the first year
       with the opportunity to make significant profits in the following two years,
       correct?

       A. That’s correct.

       Q. That was the bargain that Oasis entered into, right?

       A. That’s correct. Substantial risk for substantial gain.

Paul Jeffries, prior to the above quoted testimony, testified that Oasis was motivated to
continue the contract

       [b]ecause we still -- we had all debt and no revenue, right? We were just
       starting to produce revenue at a couple of the sites. We were building. We
       had committed the better portion of $60 million in capital expenses that were
       moving -- either were in-country or were moving toward country, and if they
       didn't renew the contract, we would have no opportunity to recover a large
       portion of those dollars. It would bankrupt the company first, Paul and Phil
       second, and it would be devastating financially for us.

Alan Morrell testified that modification P00011 was executed “under duress, but I'll tell
you what, when you get a check for $47 million and you're a company that's on the verge
of bankruptcy, you're going to be relieved.” Phil Morrell testified regarding modification
P00011, it was accomplished “on threat of shutting the contract down, not funding the
next period, the personal bankruptcy I had talked about.” Defendant argues that “Oasis
proffered no evidence that it suffered any financial loss, much less financial loss that could
justify an economic duress claim. For example, Oasis did not introduce any evidence that
it was on the verge of bankruptcy, nor did it introduce any evidence regarding the financial
condition of its owners, Paul Morrell and Phil Morrell.” (emphasis in original). The court
finds the testimony of plaintiff’s witnesses on this subject to be conclusory and only about
51 The court notes that, if plaintiff was millions of dollars in debt before modification
P00006 and modification P00011 were executed, and if plaintiff earned $90,000,000.00
in revenue in 2006 after modification P00011 was executed, it does not appear that
plaintiff suffered as a result of the modifications, or was forced to accept an unfair bargain.

                                              63
the probability of, or even the possibility of, bankruptcy. Defendant notes that:

       Oasis introduced no evidence regarding the (1) value of the “homes” Oasis
       claims Paul Morrell and Phil Morrell were “on the edge of losing,”[52] (2) the
       amount of money in the Morrells’ various bank accounts, (3) the value of
       their investments, including stocks, bonds, and real estate investments, and
       (4) the value of the other companies owned by the Morrells, including Al-
       Morrell Development and Diatect, a company owned by Phil Morrell.

In fact, only in the trial testimony of the principals of Oasis did they allege the precarious
state of their financial status, but their testimony did not include supporting documentation
for the record.

       In IMS Engineers, a Judge of the United States Court of Federal Claims also
considered a duress claim when the support for the duress claim was not fully
documented. The duress allegation in IMS Engineers arose from a settlement agreement
between the plaintiff and the Army Corps of Engineers. The plaintiff had been awarded a
contact in 1991 as a subcontractor to the United States Small Business Administration,
but in 1996, the Corps “moved to terminate plaintiff's contract with a March 25, 1996
notice to the SBA.” IMS Engineers-Architects, P.C. v. United States, 92 Fed. Cl. at 61.
The IMS Engineers court noted that:

       In October 1996 the parties held in-person settlement negotiations, during
       which the Corps continued to question plaintiff's claims. Plaintiff had lost its
       records and provided no documentation of its expenses. . . . The Corps’s
       records of the parties’ settlement negotiations document the Corps's tough
       negotiating position. Contracting Officer Ryals and Contracting Specialist
       Jean Petty, negotiating for the Corps, disputed Mr. Singh's calculations of
       employee salaries and accumulated interest. Ms. Petty also indicated that
       any work that plaintiff performed without first having received a notice to
       proceed or a Corps-approved work plan had been at plaintiff's risk.

Id. at 62. “Ultimately, after Mr. Ryals reiterated to Mr. Singh that ‘without financial records,
a settlement was very difficult,’ Mr. Singh and the Corps agreed on October 30, 1996, to
settle for $499,999.00. Mr. Ryals later recorded his conclusion that ‘[t]he settlement
represents a fair and reasonable conclusion to this contract and all parties are satisfied
with its outcome.’” Id. at 63 (footnote and internal references omitted). Plaintiff
subsequently filed suit in the United States Court of Federal Claims seeking to set aside
the release. See id. at 56. In discussing the plaintiff’s duress allegations, the IMS
Engineers court acknowledged that:

       The Corps’s contract administration was irregular, and the Corps officials
       knew that was the case. However, the credible testimony of the Corps's fact
52Plaintiff’s counsel argued in its initial post-trial brief that had Oasis suffered a 45 million
dollar loss, “Paul and Phil are operating with no safety net, knowing that they are on the
edge of losing their homes.”

                                               64
       witnesses overcomes Mr. Singh’s charge of economic duress. As was
       revealed at trial, plaintiff's evidence of financial distress was weak. Letters
       from Mr. Singh dated November 28, 1994, and December 8, 1994, amount
       to no more than unsubstantiated pleas for relief. The Corps understood that
       the transfer of Contract 0004 from plaintiff would occasion a loss of work.
       Nevertheless, plaintiff never has been able to document its claimed losses.

Id. at 66-67 (footnote and internal references omitted). The IMS Engineers court
concluded that:

       The Corps’s administration and transfer of Contract 0004 may have resulted
       in financial loss, and these circumstances led to plaintiff's dissatisfaction
       with both the Corps and the parties’ settlement. Nevertheless, the court
       cannot disregard plaintiff’s release on the basis that the Corps was aware
       that plaintiff had suffered a loss due to the transfer of work under Contract
       0004 and the subsequent termination of Contract 0004. The release was
       received by the Corps pursuant to the parties’ settlement, which was
       negotiated at arms-length and was economically reasonable. Plaintiff did
       not produce evidence to document its loss, to approximate a reasonable
       calculation of loss absent records, or to show that the Corps coerced a
       settlement that only partially compensated plaintiff for plaintiff's December
       23, 1996 release.

Id. at 69. Likewise, the plaintiff in the above captioned case alleges that it was on the
“verge of bankruptcy” and that the Oasis’ principals “could have lost everything including
their lives.” Plaintiff did not introduce any supporting evidence to that effect, nor was the
testimony elicited by plaintiff’s counsel during the trial adequate to support such a claim.
Moreover, plaintiff has not documented its financial condition or the economic condition
of Paul Morrell or Phil Morrell that would have resulted in their personal bankruptcy,
making it difficult for plaintiff to prove that it had no alternative but to sign the modifications.
Nor has the plaintiff demonstrated that the discussions and negotiations between plaintiff
and the government did not allow for choices on the part of plaintiff.

       c. Wrongful Act

        Regarding the third element of duress, a coercive, wrongful act by the government,
Oasis claims that “Defendant created, contributed to, and otherwise exacerbated the
financial condition of Oasis, which ultimately required Oasis to sign P00006 and P00011.”
The defendant responds that “Oasis produced no evidence – none – to support its
accusations that the military officers, all of whom were serving this country in a war zone
at the time, acted wrongfully.” As noted by a Judge of the United States Court of Federal
Claims in Starr International,

       [t]o substantiate a claim of duress, a plaintiff “must go beyond the mere
       showing of a reluctance to accept and of financial embarrassment. There
       must be a showing of acts on the part of the defendant which produced


                                                65
       these two factors.” Fruhauf [Sw. Garment Co. v. United States], 126 Ct. Cl.
       [51,] 52, 111 F. Supp. 945 [1953)]. In other words, “[t]he assertion of duress
       must be proven to have been the result of the defendant's conduct and not
       by the plaintiff's necessities.” Id.

Starr Int’l Co. v. United States, 106 Fed. Cl. at 77. As indicated by the United States Court
of Appeals for the Federal Circuit in North Star, “‘coercion requires a showing that the
Government's action was wrongful, i.e., “(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.”’” N. Star
Steel Co. v. United States, 477 F.3d at 1334 (quoting N. Star Steel Co. v. United States,
69 Fed. Cl. 672, 721 (2005) (quoting Rumsfeld v. Freedom NY, Inc., 329 F.3d at 1330));53
see also IMS Engineers-Architects, P.C. v. United States, 92 Fed. Cl. at 66; Aboo v.
United States, 86 Fed. Cl. at 632. A Judge of the United States Court of Federal Claims
has explained that “[t]o invalidate contract modifications on the ground of economic
duress, the contractor must show that government coercion was the cause of the
contractor’s financial distress and that the Government employed extra-contractual
means to effect this distress.” Vicari v. United States, 47 Fed. Cl. 353, 360 (2000); see
also Henderson Cnty. Drainage Dist. No. 3 v. United States, 53 Fed. Cl. 48, 56 (2007)
(quoting Vicari v. United States, 47 Fed. Cl. at 360) (“Plaintiff ‘must show that government
coercion was the cause of the . . . financial distress. . . .’ Economic conditions and financial
concerns alone are not enough.”). As noted by the Federal Circuit in Rumsfeld, “an act
can be coercive without being illegal. Government coercion may be supported by a finding
that the government engaged in wrongful acts by violating the contract without a good-
faith belief that its actions were justified or by violating the covenant of good faith and fair
dealing implicit in every contract.” Rumsfeld v. Freedom NY, Inc., 329 F.3d at 1330; Starr
Int’l Co. v. United States, 106 Fed. Cl. at 77 (“A coercive act is one that is ‘wrongful,’ but
need not be illegal.”). As explained in Systems Technology Associates, Inc. v. United
States, “[a]n act the Government is empowered to take under law, regulation, or contract
may nonetheless support a claim of duress if the act violates notions of fair dealing by
virtue of its coercive effect.” Sys. Tech. Assocs., Inc. v. United States, 699 F.2d at 1387-
88.

       A Judge of the United States Court of Federal Claims also has observed that
“[a]bsent wrongful conduct, economic pressure and the threat of considerable financial
loss do not constitute duress.” IMS Engineers-Architects, P.C. v. United States, 92 Fed.
Cl. at 66 (citing Sys. Tech. Assocs., Inc. v. United States, 699 F.2d at 1387–88). As
53 Oasis quotes the earlier decision of Systems Technology Associates, Inc. v. United
States, for the proposition that the cases of Court of Claims “have done away with the
requirement of an illegal act, focusing instead on the coercive nature of the act as
dispositive of its ‘wrongfulness,’” Sys. Tech. Assocs., Inc. v. United States, 699 F.2d at
1387, and argues “[t]his approach has focused more on the extent to which the will of the
contractor has been overridden, rather than on the lawfulness of the coercive act.” The
court notes that North Star, decided after System Technology, still provides that one way
to prove a wrongful act is demonstrate the government’s conduct was illegal. See N. Star
Steel Co. v. United States, 477 F.3d at 1334.

                                              66
explained in a decision from the United States Court of Claims:

       “Economic duress may not be implied merely from the making of a hard
       bargain.” Aircraft Associates & Mfg. Co., Inc. v. United States, 357 F.2d 373,
       378, 174 Ct. Cl. 886, 896 (1966). The mere stress of business conditions
       will not constitute duress where the defendant was not responsible for the
       conditions. Fruhauf Southwest Garment Co. v. United States, 111 F. Supp.
       at 951, 126 Ct. Cl. at 62. “Some wrongful conduct must be shown, to shift
       to defendant the responsibility for bargains made by plaintiff under the
       stress of financial necessity.” La Crosse Garment Mfg. Co. v. United States,
       432 F.2d 1377, 1382, 193 Ct. Cl. 168, 177 (1970). It is not duress to threaten
       to make good faith use of the remedies prescribed under a contract. “A party
       is always entitled to say that if his offer is not accepted, he will avail himself
       of his legal rights; it is only the threat of a wrongful or unlawful act that may
       constitute duress. Such a threat will amount to duress only if it is sufficient
       to overpower the will of the other party and prevent the free exercise of his
       will.”

Johnson, Drake & Piper, Inc. v. United States, 531 F.2d 1037, 1042-43, 209 Ct. Cl. 313
(1976) (quoting Beatty v. United States, 168 F. Supp. 204, 206-07, 144 Ct. Cl. 203, 206
(1958)); see also Metcalf Constr. Co., Inc. v. United States, 102 Fed. Cl. 334, 347 (2011)
(quoting Rumsfeld v. Freedom NY, Inc., 329 F.3d at 1330 (quoting Johnson, Drake &
Piper, Inc. v. United States, 531 F.2d at 1042, 209 Ct. Cl. 313 (“‘“[E]conomic pressure
and even the threat of considerable financial loss are not duress.”’”))); IMS Engineers-
Architects, P.C. v. United States, 92 Fed. Cl. at 66.

        Initially, the court notes, as discussed above, without much, if any, support, Oasis
claims that “Oasis was underwater at the time of P00006 and P00011 and was on the
verge of bankruptcy from March-August 15, 2006.” Defendant, regarding the wrongful act
prong of the duress analysis, argues that “[e]ven if Oasis could substantiate its claim that
it was in a difficult financial position when it signed P00006 and P00011, Oasis’s economic
duress claim still fails.” As noted above, “[a]bsent wrongful conduct, economic pressure
and the threat of considerable financial loss do not constitute duress.” IMS Engineers-
Architects, P.C. v. United States, 92 Fed. Cl. at 66; see also Metcalf Constr. Co., Inc. v.
United States, 102 Fed. Cl. at 347 (quoting Rumsfeld v. Freedom NY, Inc., 329 F.3d at
1330 (quoting Johnson, Drake & Piper, Inc. v. United States, 531 F.2d at 1042, 209 Ct.
Cl. 313 (“‘“[E]conomic pressure and even the threat of considerable financial loss are not
duress.”’”)).

        Moreover, defendant argues that the source of economic peril, if it existed at all,
was plaintiff’s lender, and not the government. Defendant notes that “Oasis is attempting
to invalidate agreements it made with the Government because of financial pressure
placed upon it by MSD [Michael S. Dell]. But Oasis’s disagreements with MSD have
nothing to do with the Government.” (emphasis in original). As the court indicated above,
“[t]o invalidate contract modifications on the ground of economic duress, the contractor
must show that government coercion was the cause of the contractor’s financial distress


                                              67
and that the Government employed extra-contractual means to effect this distress.” Vicari
v. United States, 47 Fed. Cl. at 360; see also Henderson Cnty. Drainage Dist. No. 3 v.
United States, 53 Fed. Cl. at 56. As explained during the trial, it was plaintiff’s decision to
use MSD as a lender, and the government did not require Oasis to use MSD as a
condition of the modifications. In response to the government’s question: “But that was
Oasis’s choice to enter into that agreement with MSD, right?” Paul Jeffries answered “[i]t
was.” Similarly, Alan Morrell had the following exchange on cross-examination:

         [Q.] The Government didn’t force Oasis to enter into that agreement, right,
         with MSD?

         A. No, they did not.

         Q. So, it was Oasis willingly undertook that contractual obligation, right?

         A. Yes, we did.

        In response, plaintiff claims that “Oasis acknowledges that financial peril is a
necessary but not sole condition of economic duress.” Instead, “Oasis is arguing that
Defendant’s wrongful conduct combined with the possibility of financial ruin, constitutes
duress.” As discussed above, Phil Morrell testified that he had no choice but to accept
modification P00006. Plaintiff argues, “[i]n fact, P00006 was the only way he could get
Oasis out of default on its loan agreement and was the only option the Government
offered to continue the Contract.” Although defendant agrees that plaintiff’s witnesses
testified that Oasis would be in default of their financing agreement if the Government did
not execute the option years under the contract,54 defendant notes that “Oasis knew full
well that the Government was not required to execute the option periods.” In response to
the question: “And you understood the Government in its sole discretion can either
exercise an option or not exercise an option, correct?” Paul Jeffries answered “Yes.”55
Moreover, when asked on cross-examination: “It was Oasis’ decision to agree to financial
terms that included a provision for default if the Government were not to exercise an
option,” Paul Morrell testified “That’s correct.” Therefore it was a provision in Oasis’
contract with its financial backer that was the source of Oasis’ economic pressure. In the
court’s view, the government was not the cause of Oasis’ distress. Even if the government
used that leverage to gain a more favorable agreement for the modifications, that alone
54   In fact, defendant’s counsel had the following exchange with Alan Morrell:

         Q. So, assuming that that is in the agreement, Oasis willingly entered into
         a contract with an investor that it would go into default if the Government
         didn't exercise its first option period, true?

         A. It’s risky, isn’t it? Yes, it’s true.
55Separately, when asked on cross-examination: “Oasis was not assured that the
Government would exercise that option when it entered into agreement with MSD, right?”
Paul Jeffries answered: “No, we were not.”

                                                    68
does not prove duress or coercive wrongdoing. In affirming the trial court’s decision in
Peters v. United States, the Federal Circuit reasoned:

       The trial judge discussed in adequate detail the reasons why the facts of
       this case did not establish economic distress or coercion, and there is no
       need to repeat that discussion. In brief, he correctly concluded that the
       government did not act improperly in insisting upon a formal modification of
       the contract that required Peters to pay more for the timber; that the “serious
       financial and time pressures” that Peters then faced “as a result of the
       contract requirements . . . was not due to wrongful or improper conduct by
       the Government [but] was pressure generated from the contract
       situation” . . . Peters had not shown that in the circumstances of this case
       his signing of the modification agreement was the result of economic duress
       or coercion.

Peters v. United States, 694 F.2d 687, 694 (Fed. Cir. 1982) (first omission in original);
see also Asberry v. Postal Serv., 692 F.2d 1378, 1381 (Fed. Cir. 1982); McLain Plumbing
& Elec. Serv., Inc. v. United States, 30 Fed. Cl. at 82.

        In Systems Technology, discussed above, the court noted that the Systems
Technology plaintiff argued that “the Government was aware of, had caused, and had
used the contractor's precarious financial condition to coerce a settlement,” and the court
noted that “STA's precarious financial condition is well documented in the record and was
recognized by the Government.” Sys. Tech. Assocs., Inc. v. United States, 699 F.2d at
1389. Nonetheless, the Federal Circuit determined “STA, however, does no more than
assert causation and the Government's coercive use of the circumstances to secure a
settlement. The record is totally devoid of proof of either count.” Id. Even if the government
in the above captioned case was aware of the difficult position Oasis was in as a result of
its lender, this alone does not demonstrate that Oasis was coerced by the government to
execute the modifications.

        Plaintiff also claims that “Oasis’ economic duress claims largely stem from a
pattern of contractual breaches by Defendant that began shortly after Contract award and
continued up to and throughout the entire Base Year. Defendant had no good faith basis
to breach the contract in these ways. . . .” Specifically, plaintiff claims that “Defendant
forced on Oasis a contractual interpretation it knew or should have known was incorrect,”
and alleges that “Defendant’s knowingly baseless interpretation of the Contract and
failure to award contractually sufficient land on time had crippled Oasis financially.” As
determined above, the defendant, not the plaintiff, understood the correct interpretation
of the contract, therefore, the court disagrees with plaintiff that “Defendant forced on
Oasis a contractual interpretation it knew or should have known was incorrect.” Nor does
the court conclude that pattern of contractual breaches by defendant resulted in the
wrongful conduct that plaintiff alleges gave rise to the duress, because the “pattern of
contractual breaches” plaintiff believes occurred stem from plaintiff’s view of the contract.
Plaintiff claims that defendant



                                             69
       knowingly putting Oasis into default by sending the notice of intent not to
       renew. While standing alone, and despite its not being required by the
       Contract, such an action might not constitute duress, in this case it does
       because Defendant’s action (sending the letter) had more drastic results
       due to Defendant’s prior wrongful pattern of withholding and threatening to
       withhold money. Here, Oasis’ situation would not have been as bad if the
       Government had paid the entire Base Year firm fixed price; but because it
       was threatening to simply end the contract having paid Oasis only 10% of
       that amount, the entire personal assets of the Morrell brothers were on the
       line.

Holding aside that plaintiff has not demonstrated that “the entire personal assets of the
Morrell brothers were on the line,” as plaintiff admits, the notice not to renew in and of
itself would not constitute duress. As explained above, on March 27, 2006, the contracting
officer, sent Oasis a letter titled “Preliminary Notice of Government Intent to Exercise
Option CLINs 1001-5, Contract W27P4A-05-C-0002 for $112M,” which stated: “The
Government must withhold its intent to exercise the option,” and informed Oasis that “[t]he
contracting office does not have assurance of adequate funding.” As determined above,
Oasis knew that the military was not obligated to exercise an option period. Regarding
the remainder of plaintiff’s argument, that Oasis would not have been in financial distress
if had paid the entire Base Year firm fixed price; because the government’s obligation
under the contract was only to pay for bottled water produced, it was never obligated to
make a $50,225,000.00 payment at the time the March 27, 2006 letter was sent.

        Plaintiff also views the “wrongful conduct” of the contracting officers through the
prism of its own interpretation of the contract, arguing that government “repeatedly
threatened to withhold money it knew Oasis was due.” At trial, however, Lieutenant
Colonel Davis indicated that his understanding of the contract while he was the
contracting officer was the one that the government has taken during this case. In
response to the question, “Lieutenant Colonel Davis, what did you understand the unit
price in this CLIN structure to be?” he answered, “$3.50 a case.” Plaintiff claims that

       Col. Richardson similarly threatened to withhold money she knew Oasis
       was already owed,” arguing that “Oasis asked Col. Richardson how it
       should go about invoicing at the end of the year for the balance of the
       $50,225,000 Base Year price. Oasis had previously discussed with Col.
       Richardson Phil Morrell’s interpretation that Oasis was entitled to be paid
       both for the capability and the water, and Col. Richardson told Oasis that
       was a non-starter.

(internal reference removed). Plaintiff’s argument, however, is again premised on
plaintiff’s interpretation of the payment obligations of the contract. On cross-examination,
Colonel Richardson indicated that “the CLIN structure clearly says I give you a case of
water, you give me a $3.50.”56
56 The court notes, regarding plaintiff’s assertion that Oasis had discussed Phil Morrell’s
interpretation, Colonel Richardson testified she was not informed of plaintiff’s

                                            70
       Plaintiff also contends that the defendant’s failure to adequately provide plaintiff
land for the construction of the bottled water facilities was an example of the wrongful
conduct of the defendant. Even this argument, however, is related to plaintiff’s
interpretation of the contract. Oasis explains:

       The Government’s late delivery of land and assignment of non-Compliant
       land was a problem, but it would not have been an insurmountable problem
       but for Defendant’s insistence on only paying for water. But, in the context
       of the Defendant’s position that it would only pay for water and that any
       unused portion of the base year funds would disappear at the end of the
       Base Year, Defendant’s delay in assigning usable land was a dire threat to
       Oasis’ continued viability, since Oasis would need all the time it could get
       to produce enough water to “earn” its Base Year Payment.[57]

(footnote omitted). The court determined above, that the defendant was correct about the
interpretation of the contract, then the late delivery of land was not an “insurmountable
problem,” and therefore, would not have been, in and of itself, the basis of wrongful
conduct that would rise to coercion. The plaintiff’s argument that “Defendant’s position
that it would only pay for water,” is, as has been repeatedly stated in this opinion, the
correct interpretation of the contract in the court’s view. Moreover, one of the purpose of
modification P00006 was to extend the deadlines for the plants to be operational, and
addressed the defendant’s delays in providing the land for the locations of the plants.

       In addition, plaintiff argues that:

       A central part of the dispute in this case is whether Oasis was entitled to be
       paid for establishing the capability to produce water, actually producing
       water, or both. However, at a minimum, Oasis had to be paid for either
       water or capability. As a result of Defendant’s contractual interpretation and
       maladministration of the Contract, for a substantial portion of the Base Year,
       Defendant was denying Oasis payment for either. Defendant refused to take
       all of the water Oasis produced and directed Oasis to slow production to a
       level below those in Figure 1 of the Contract.

(emphasis in original). Citing to plaintiff’s trial exhibit 1166, the defendant argues that “the
military did not ‘shut down’ Oasis’s water production; it merely directed that water

interpretation of the contract. In response to the question from defendant’s counsel: “Just
so the record's clear, did anyone at Oasis ever tell you that they believed they were to get
$50.225 million plus $3.50 a case?” Colonel Richardson testified: “Absolutely not, sir.”
57 Plaintiff, in a footnote, notes that “[o]f Oasis’s entire claim, only Count 5 ($808,423) is
directly related to issues with the land provided by the Defendant. The Defendant’s land
delays are also relevant to count 7, which seeks reimbursement of a delay penalty
imposed by the Defendant.” (emphasis in original).


                                              71
production rates at one of Oasis’s six plants be reduced from surge production rates to
winter production rates.” Indeed, the email which is plaintiff’s exhibit 1166, from
Lieutenant Colonel Davis requested that Oasis “align production of bottled water at
Bottled Water Facility #6, Camp Victory to be in accordance with winter production of
250,000 liters of water per day as stated in Fig 1 of the contract.”58 Nonetheless, Oasis
contends that “Oasis was producing and Defendant was not paying,” noting that prior to
executing modification P00011, “Oasis had approximately two (2) million cases of water
sitting at its plants that Defendant would not allow Oasis to deliver,” and “[s]uch a
withholding had a crippling effect on Oasis, as it represented approximately one-third (1/3)
of Oasis’ entire revenue stream in the entire Base Year to that point.” 59 The court notes,
however, that the military did accept all cases of water produced by Oasis, as indicated
in the parties joint stipulations, and as acknowledged by Phil Morrell at trial, as he
responded to the government’s question on cross-examination: “Oasis did submit




58As indicated above, the statement of objectives for the contract included production
requirements for the bottled water facilities, which was labeled Figure 1:

     LOCATION             TOTAL PRODUCTION REQUIREMENT/DAY in 1K
                          Liters (winter/summer/surge)

      Location 1          75-100K liters / 101-150K liters / 151-200K liters

      Location 2          65-100K liters / 101-135K liters / 136-170K liters

      Location 3          35-55K liters / 56-75K liters / 76-100K liters

      Location 4          60-110K liters / 111-160K liters / 161-210K liters

      Location 5          60-110K liters / 111-160K liters / 161-210K liters

      Location 6          200-300K liters / 301-400K liters / 401-450K liters

      Location 7          80-120K liters / 121-160K liters / 161-200K liters

      Location 8          75-110K liters / 111-150K liters / 151-190K liters


(capitalization in original).
59Defendant points out that plaintiff failed “to mention that, in June 2006, it invoiced (and
was paid) for $2,962,050 for 846,300 cases of water ‘on hand’ at Plant Victory that Oasis
had produced but the Government had not yet accepted.”


                                               72
invoices for bottled water during the base period and the Government paid every single
one of them, right?” by answering: “Correct.”60

        In North Star, the Federal Circuit reasoned that “[f]or the third prong of economic
duress to have been met in this case, the circumstances which North Star confronted
must have resulted from WAPA's coercive acts,” and “[t]he third prong is not met because
there was no wrongful action by the government.” N. Star Steel Co. v. United States, 477
F.3d at 1334. The same applies to the plaintiff’s case before this court, there is no
coercive, wrongful act by the military that Oasis can credibly point to during the
negotiations for the modifications that forced Oasis to execute the modifications under
duress. Although Oasis has asserted that a number of the actions taken by the military
during the negotiations for the two modifications, and during contract performance, many
of plaintiff’s claims stem from plaintiff’s interpretation of the contract, which the court has
concluded is not correct. As plaintiff has acknowledged in its arguments above, absent
an incorrect interpretation of the contract by the defendant, the remaining issues identified
by plaintiff do not rise to the level of coercion that would justify a finding of economic
duress, and, therefore, invalidate modification P00006 and modification P00011. Plaintiff,
therefore, has not proven that the government committed a wrongful act.61


60On cross-examination, Paul Morrell had the following exchange with defendant’s
counsel:

       [A.] My recollection is that we had 3 or 4 million cases of water that we had
       produced during the base year that were still sitting on our yards that had
       not been taken delivery of, so -- and we could only invoice after they had
       been delivered. Now, I may be wrong in that assumption, but that's my
       recollection.

       Q. The Government paid the invoices, though, right?

       A. They paid the invoices that we submitted to them with the exception of
       that July 31st. I don't recall for sure if they did.
61The court notes that the plaintiff spent considerable time in its post-trial briefs arguing
that the burden of proof to be applied to duress is not a clear and convincing evidence
standard, but rather the preponderance of the evidence standard. For example plaintiff
argues that “Defendant asserts without any legal support that the clear and convincing
evidence standard applies to all duress cases.” Plaintiff argues that:

       The burden of proof here is the ‘preponderance of the evidence’ standard.
       Courts sometimes use the words ‘exacting’ when describing the elements
       of duress, but not when describing the burden of proving duress. Thus,
       cases stating that ‘the requirements to establish duress are exacting’ merely
       denote the specificity with which a contractor must prove the three elements
       of duress by a preponderance of the evidence.


                                              73
        In addition, defendant notes that the “[b]ilateral modifications P00006 and P00011
were executed in April and August 2006, respectively, yet Oasis did not raise its economic
duress claims until it submitted its claim in July 2008, more than two years after P00006
and just less than two years after P00011.” Therefore, defendant argues that “[b]ecause
Oasis: (1) operated as if P00006 and P00011 were valid contractual modifications; and
(2) waited approximately two years to challenge the validity of those modifications, Oasis
has forfeited the right to invalidate those bilateral agreements.” (citing VKK Corp. v. Nat’l
Football League, 244 F.3d 114, 123 (2d Cir. 2001) and Loral Corp. v. United States, 193
Ct. Cl. 473, 481-82 (1970)). Plaintiff argues that “[d]efendant makes no effort to explain
why one year (or even two years) was too long. The fact that Oasis waited a year in and
of itself means nothing,” especially because “[t]hroughout 2007, Oasis was still heavily
underwater and highly dependent on Defendant for its financial solvency.” Plaintiff also
argues that “[t]he fact that Oasis operated as if the modifications were valid is similarly
irrelevant, as that is the case anytime a party waits to allege duress.” The plaintiff
continues, “[i]f the Court believes that Oasis was coerced into signing P00006 and
P00011, then Oasis was justified in waiting a year to raise the issue of duress.” The court,
however, has determined that Oasis did not execute modification P00006 and
modification P00011 under economic duress. Moreover, regarding the delay, plaintiff
seemingly offers no argument, other than the amount of time Oasis waited is irrelevant.
As indicated by the United States Court of Claims “a telling indication that no duress was
practiced is [a] long delay before plaintiff spoke out and claimed duress.” Johnson, Drake
& Piper, Inc. v. United States, 531 F.2d at 1042, 209 Ct. Cl. 313; see also IMS Engineers-
Architects, P.C. v. United States, 92 Fed. Cl. at 68-69.

       In McLain Plumbing & Electrical Service, Inc. v. United States, a Judge of the
United States Court of Federal Claims determined that “plaintiff demonstrates no
Government conduct representing coercion, the plaintiff further fails the basic requirement
of proving economic duress.” McLain Plumbing & Elec. Serv., Inc. v. United States, 30
Fed. Cl. at 83. The McLain plaintiff had argued that by virtue of the Veterans
Administration demand to terminate plaintiff’s original subcontractor in favor of another
subcontractor, or face default termination “the contractor had no choice but to accept the
terms of reinstatement (post default) in order to avoid a disastrous default termination
which would serve to cripple any government contractor. Secondly, there was no
alternative for McLain, simply stated, McLain could default its subcontractor or be
defaulted.” Id. The McLain court furthermore, agreed with the McLain defendant that “the
fourteen month delay in asserting coercion certainly detracts from the plaintiff's assertions
of economic duress.” Id. Likewise, as explained by the court in IMS Engineers-Architects,
P.C. v. United States, “plaintiff first complained of duress in its June 21, 2000 REA, which
was submitted approximately three-and-one-half years after the Corps allegedly coerced
the parties' settlement and plaintiff's release. Plaintiff's delay in claiming duress gives
credence to Mr. Ryals's testimony regarding the parties’ good-faith negotiations and Mr.

(emphasis in original). As the plaintiff has failed to prove any of the elements of economic
duress, either under the preponderance of the evidence standard or the clear and
convincing evidence standard, it does not matter which standard applies in order to reach
a decision in the above captioned case.

                                             74
Singh's satisfaction with the $499,999.00 settlement.” IMS Engineers-Architects, P.C. v.
United States, 92 Fed. Cl. at 69 (internal citation omitted). In the above captioned case,
Colonel Richardson testified at trial:

       [Q.] Did anyone at Oasis ever tell you that they believed Modification
       Number 6 was invalid?

       A. No, sir.

       Q. Did anyone at Oasis ever tell you that they were coerced into signing this
       document?

       A. No, sir.

       Q. Did anyone at Oasis ever tell you that they only signed this contract
       because of duress?

       A. No, sir.

       Q. Did anyone at Oasis ever tell you that they believed any modification was
       invalid for any reason?

       A. No, sir.

This was corroborated by Paul Jeffries’ testimony on cross-examination:

       Q. You never communicated to any Government representative that this
       modification is invalid because of coercion, you never said that to anyone
       on the Government side?

       A. Not in -- I'm sure we didn’t communicate that until -- until we filed a claim.
       We did tell them -- there was no ambiguity about our dissatisfaction with
       them extending the base year, or with chopping up our annual renewals,
       because they couldn't fund a contract they had let. It’s the U.S. Government.

Although the court does not assert the length of time plaintiff waited to raise its duress
claim is dispositive, it certainly does not provide support for plaintiff’s view that it executed
the modifications under duress. In sum, plaintiff cannot meet the established high bar for
establishing duress. See Starr Int’l Co. v. United States, 106 Fed. Cl. at 77; see also
Employers Ins. of Wausau v. United States, 764 F.2d at 1576. Therefore, plaintiff has not
demonstrated that it executed modification P00006 or modification P00011 under
economic duress. The modifications are valid.

Fraud Counterclaim for Claim 2




                                               75
        In an earlier opinion in the above captioned case, and as noted above, the court,
with the exception of one fraud counterclaim, which the court deferred, denied
defendant’s counterclaims for the Special Plea in Fraud, False Claims Act, and the anti-
fraud provision of the Contract Disputes Act. As explained in the conclusion of the court’s
earlier opinion, “as established above, Paul Morrell, as signatory to the certified claim, did
not have the intention to commit fraud and genuinely believed in his interpretation of the
contract regarding what payments Oasis was entitled to recover under the contract. Nor
did plaintiff act recklessly when submitting its claims.” The court, however, deferred the
counterclaims for Claim 2. As explained in the Special Plea in Fraud portion of the earlier
opinion: “Because the court has deferred the issues of contract interpretation and
economic duress, the court likewise, at this time, defers the resolution of the counterclaim
pursuant to the Special Plea in Fraud for Claim 2.” The court did the same with the
counterclaim for Claim 2 for the False Claims Act, stating “[a]s indicated above, the court
has deferred Claim 2 for Special Plea in Fraud purposes, and does the same for Claim 2
as it relates to the False Claims Act,” as well as with the counterclaim for the anti-fraud
provision of the Contract Disputes Act, stating “[a]s indicated above, the court deferred
Claim 2 for Special Plea in Fraud and False Claims Act purposes, and does the same for
Claim 2 as it relates to the anti-fraud provision of the Contract Disputes Act.” As the court
has now found in favor of defendant’s interpretation of the contract, and has not found
economic duress, the court now addresses Claim 2 of the defendant’s counterclaims for
the Special Plea in Fraud, False Claims Act, and the anti-fraud provision of the Contract
Disputes Act.

        As indicated above, on June 20, 2008, Paul Morrell, on behalf of Oasis signed the
certified claim, and on July 4, 2008, Oasis submitted its certified claim to the government.
Claim 2 in the certified claim was a “Claim for penalty wrongfully assessed for failure to
open Camp TQ [Camp Taqaddum] on time,” which plaintiff states was “solely as a result
of Government-caused delays and disruptions,” and for which plaintiff sought
$2,270,833.00. Defendant contends that:

       Count two, which seeks $2.2 million relating to TQ, stems entirely from
       Oasis’s attempts to invalidate P00011 through a claim of economic duress.
       As part of P00011, the Government paid Oasis $24 million, which included
       $5.5 million for TQ, a plant that Oasis still had not yet completed by August
       2006. The claimed $2.2 million corresponds to one-sixth of the $50.225
       million, minus the $5.5 million that the Government paid to Oasis for TQ as
       part of the P00011 negotiations. Even though Oasis voluntarily agreed to
       P00011, which closed out the base year, Oasis seeks an additional $2.2
       million for TQ in its certified claim.

(internal citations omitted). Plaintiff argues that “the Court should disregard Defendant’s
‘fraudulent duress’ interpretation,” arguing that “[w]ith regard to Defendant’s new
‘fraudulent duress’ argument related to Count 2, Defendant argues that fraudulent duress
is not a new theory, but instead additional evidence to support its claim that Oasis’
contractual interpretation is frivolous.” Oasis also argues that “Defendant’s argument
essentially boils down to the fact that it really likes its duress defense,” and plaintiff states


                                               76
that “the Court should disregard Defendant’s ‘fraudulent duress’ interpretation.”62
Defendant argues that “because Oasis’s contract interpretation is implausible in light of
the unambiguous terms of the contract and all extrinsic evidence, count two constitutes
fraud.”

       As the court explained in the court’s earlier opinion, for the majority of the parties’
briefing, the parties do not differentiate between the various fraud statutes and generally
only discuss “fraud.” The same is true for the counterclaim for Claim 2. Nonetheless, the
court briefly reiterates the standard for each fraud statute and analyzes each counterclaim
for Claim 2 separately.

       Special Plea in Fraud

       The defendant’s second amended answer and counterclaim asserts that:

       Oasis attempted to practice fraud against the United States in the proof,
       statement, establishment, or allowance of the portions of the claim identified
       in the paragraphs above [in the defendant’s second amended answer and
       counterclaim]. In particular, Oasis submitted at least one certified claim with
       the intent to cause the Government to pay Oasis amounts to which it knows
       it is not entitled.

       As more fully explained in the court’s earlier opinion, the Special Plea in Fraud
statute provides:

       A claim against the United States shall be forfeited to the United States by
       any person who corruptly practices or attempts to practice any fraud against
       the United States in the proof, statement, establishment, or allowance
       thereof.

       In such cases the United States Court of Federal Claims shall specifically
       find such fraud or attempt and render judgment of forfeiture.


62  Plaintiff also argues that “Defendant’s fraudulent duress argument is particularly
pernicious, given that Defendant admittedly destroyed the email accounts of the very
witnesses Oasis is claiming coerced the company.” For support, plaintiff cites to the joint
stipulation that “[o]ther than the .pst file of Major Vazquez (which he personally retained),
the Government did not find (and therefore could not search for responsive documents),
the Iraq.centcom.mil domain email accounts of any potential witnesses in this case.” As
indicated above, the court has deferred spoliation until after the court considered the fraud
counterclaims and contract interpretation. As the court determines below that there was
no fraud committed by Paul Morrell or Oasis, the court does not need to consider if any
potential spoliation occurred regarding the fraud counterclaim for Claim 2. Furthermore,
the court does not accept plaintiff’s characterization of the joint stipulation as defendant
having “destroyed the email accounts,” nor that the defendant admitted doing so.


                                             77
28 U.S.C. § 2514 (2006); see also Kellogg Brown & Root Servs., Inc. v. United States,
728 F.3d 1348, 1365 (Fed. Cir. 2013), reh’g denied, 563 F. App’x 769 (Fed. Cir.), cert.
denied, 135 S. Ct. 167 (2014). In Kellogg Brown & Root, the United States Court of
Appeals for the Federal Circuit unequivocally held that “[o]n its face, the statute is limited
to those circumstances where the Government proves fraud ‘in the proof, statement,
establishment or allowance’ of a claim not in the execution of a contract.” Id. at 1366
(footnote omitted).

        Defendant alleges that “count two is premised upon Oasis’s claim that it was
entitled to be paid $50.225 million just to make the facilities ‘capable’ of producing water.”
Oasis stated in the certified claim that, “[w]hile Oasis delivered some bottled water during
the Contract base year, Oasis invoiced the Government for that water and the
Government paid those invoices. The primary deliverable item in the Contract base year
is water purification and water-bottling capabilities.” (emphasis in original). The certified
claim made plain plaintiff’s view that:

       Oasis provided water-bottling capability services for an additional 2.67
       months when the Contract base year was extended to August 15, 2006,
       due to Government delays and breaches of contract. As explained in 6.0
       paragraph 33, Oasis is entitled to a payment of $11,175,063 for the water-
       bottling capability services provided during the extended Contract base-
       year performance.

       In discussing modification P00011, the certified claim stated:

       Through P00011, Oasis was paid $23,411,780 for the 6,689,080 cases of
       bottled water delivered through July 2006 and $24,542,387 for delivery of
       water-bottling capabilities in the Contract base year. Accordingly, Oasis
       submitted an invoice in the amount of $24,542,387 for delivering water-
       bottling capabilities to the Government on August 15, 2006, and the invoice
       was paid. The net effect of P00011 was: 1) to reduce the Contract
       consideration for delivering purified water-bottling capability by $25,682,613
       from $50,225,000 to $24,542,387; 2) to provide the Government all water
       produced, on hold and deliverable as of August 15, 2006, without paying
       Oasis any consideration, thereby damaging Oasis in the amount of
       $7,059,192 (2,016,912 cases x $3.50); and 3) to pay nothing for water-
       bottling capabilities for the period May 26, 2006, through August 15, 2006,
       which cost Oasis $11,170,061.

(internal citations omitted).

       As explained above, the court noted plaintiff’s view that “[t]he Contract was a firm-
fixed-price (FFP) services contract for water bottling ‘capability,’ pursuant to which Oasis
was entitled to $50,225,000 in the Base Year in exchange for 12 months of performance,
irrespective of the amount of water produced by Oasis and/or purchased by Defendant.”
Likewise, the court noted the defendant’s view that “the Court should enforce those terms


                                             78
and rule that the contract does not require the Government to pay Oasis separately for
the cost to build the bottled-water facilities.” The court agreed with defendant’s position
that the government’s obligation under the contract was solely to pay for water produced
and does not demonstrate that the intent of the base year of the contract was to
compensate plaintiff $50,225,000.00 to establish the capability to produce bottled water,
and then, to additionally compensate the contractor for bottled water produced. Therefore,
finding the defendant’s interpretation of the contract was correct, the court determined
that the terms of the contract are unambiguous that the contract obligated the government
to pay plaintiff $3.50 a case of water, up to 14,350,000 cases of water for a total potential
obligation of $50,225,000.00.

        After concluding that the contract was unambiguous, out of an abundance of
caution, the court examined the intentions of the parties when they executed the contract,
and determined that the testimony of the signatories to the contract, as well as the
documents produced near to the execution of the contract, supports the defendant’s view
of the contract, and that the parties intended for the contract to compensate plaintiff only
for the bottled water produced. As noted above, defendant argues regarding Claim 2,
“because Oasis’s contract interpretation is implausible in light of the unambiguous terms
of the contract and all extrinsic evidence, count two constitutes fraud.” As explained in the
court’s previous opinion:

       In sum, the Oasis certified claim, and the affidavits of the Oasis personnel,
       including Paul Morrell, articulate a clear theory of plaintiff’s claims. The
       certified claim alone is over fifty pages and provides specific calculations
       and details of how Oasis formed its views of the contract. This is significant,
       because as demonstrated at the trial and in the record before this court,
       defendant’s witnesses and even some of plaintiff’s witnesses, did not all
       share plaintiff’s contractual view included in the certified claim. It was,
       therefore, incumbent upon Oasis to clearly articulate its theory of recovery
       in its certified claim. The court agrees with plaintiff that “Oasis’ claim clearly
       and openly stated the basis for the claim, including the contractual
       interpretation that the Government now alleges to be fraudulent.”

As it relates to Claim 2, although the court has determined that it was the defendant, and
not the plaintiff, who had the proper interpretation of the contract, as the court explained
in the court’s prior opinion:

       Even if the rationale behind the plaintiff’s theory is incorrect, the court
       agrees that, within the framework articulated by plaintiff in the certified
       claim, and as testified to at trial by Phil Morrell, and especially, Paul Morrell,
       who signed the certified claim, the certified claim was not an attempt to
       double bill the government; the certified claim was an attempt to recover on
       plaintiff’s capabilities theory of the contract. The court had considerable
       opportunity to hear testimony, and observe, Paul Morrell, in particular,
       during the trial. Although there are two differing theories of contract
       interpretation before the court . . . the court is convinced, after sitting through


                                               79
       the trial and reviewing the evidence in the record, that the certified claim
       was presented in good faith and without the requisite intent to defraud.

Much like the court’s conclusion that the certified claim was submitted in good faith, the
court believes that the plaintiff offered a good faith position regarding contract
interpretation in the certified claim.63 Although the court found against plaintiff’s contract
interpretation position, that determination does not demonstrate that the plaintiff’s
interpretation was implausible or submitted without merit. Moreover, nothing about the
court’s analysis of the contract interpretation undermines the court’s previous
observations about Paul Morrell or that the certified claim was presented in good faith
and without the requisite intent to defraud.

        Furthermore, it is understandable that Paul Morell, the signatory of the certified
claim, evolved his views on the meaning of the contract over time. Paul Morrell, in fact,
testified his view of the contract changed over time and that he eventually concluded that
interactions with the government made “it more clear to me that Phil had been correct all
along. This is not about water. This is about capabilities, which is what Phil's been
maintaining all along.” The court notes that, as documented above with regard to the
extrinsic evidence, Max Wyeth, and not Phil Morrell or Paul Morrell, was the architect of
the pricing schedule in the contract, as, moreover, was the signatory of the contract. Paul
Morrell’s understanding of the contract was informed by events after the contract had
been signed and performance of the contract had began when Oasis first became
involved with American AquaSource and Max Wyeth. Likewise, in the previous opinion
the court concluded that “Paul Morrell signed the certified claim and plaintiff’s position
that ‘[d]efendant provides nothing to contradict Paul Morrell’s sworn testimony that his
opinion and understanding evolved and he changed his mind, and that the right amount
was claimed’ remains true.” The same is true for the Claim 2.

       Turning to duress, the court believes that the defendant goes too far to suggest:

       Oasis fabricated accusations of duress against military personnel who were
       serving in Iraq in its attempt to invalidate bilateral modifications P00006 and
       P00011. Oasis formulated its baseless coercion claims to support its efforts
       to obtain double payment from the military. Oasis’s proposal, acceptance,
       and performance under P00006 and P00011 demonstrate that its double-
63 As explained in the court’s earlier opinion, plaintiff has a convoluted, alternative
explanation of its claims, and indicated at closing argument that “Counts 1, 2 and 8 seek
the difference between capability and water and what the government actually paid us in
the base year, which is $47,954,167. We tried to allocate the difference, which is $32
million and change, amongst counts 1, 2 and 8, which are the things that we believe were
taken from us.” Plaintiff’s counsel continued: “Counts 1 and 8 seek water payments.
Count 2 seeks the difference between $50 million and $47 million. We thought the $47
million was capability, which is why count 2 is $2 million and counts 1 and 8 are $30
million.” As the court previously indicated that it did not believe that plaintiff committed
fraud for Claim 1 or Claim 8, the court does not need to address plaintiff’s allocation theory
for Claim 2.

                                             80
      billing claims are false and unsupported. While the military’s contracting
      officers were focused on ensuring a safe and reliable water supply for the
      troops, Oasis accused those same officers of coercion solely to justify its
      baseless certified claim.

In its reply brief, defendant reiterates: “Accordingly, our argument that Oasis fabricated
its economic duress is not a ‘new theory’ of fraud for count two, but simply more evidence
that Oasis’s contract interpretation is frivolous – which is the basis for our assertion of
fraud on count two.” As explained above, the plaintiff claimed that “Oasis has
demonstrated each of the three requirements for duress,” and defendant, by contrast,
argued that “plaintiff’s duress claims should be roundly rejected because there is not a
shred of evidence supporting Oasis’s attempts to walk away from its contractual
commitments,” and that “Oasis falls far short of establishing a single element of economic
duress, let alone all three.” As concluded above, plaintiff did not demonstrate that Oasis
executed either modification P00006 or modification P00011 under duress, and plaintiff
was unable to demonstrate that Oasis involuntarily accepted the modifications, had no
alternative but to accept the modifications, or that the government committed a coercive,
wrongful act that resulted in Oasis signing modification P00006 or modification P00011.

        Despite these determinations, the court did not, and does not, conclude that the
failure to prove duress would provide the basis of a fraud claim under the Special Plea in
Fraud statute. Defendant’s argument for fraud is based on its view that plaintiff put forth
a “baseless economic duress claim.” The court, however, does not believe the economic
duress arguments were entirely baseless. Nor did the court conclude that plaintiff
“fabricated” its claims, and, thereby, committed fraud. The court, after carefully
considering the evidence in the case, as well as the parties’ legal arguments, agreed with
the defendant that the modifications were not executed under duress. This finding,
however, is insufficient to meet the requirements of the Special Plea in Fraud statute,
especially considering the court’s earlier determinations regarding the sincerity of Paul
Morrell’s testimony or that the certified claim was presented in good faith and without the
requisite intent to defraud. The defendant’s Special Plea in Fraud counterclaim for Claim
2, therefore, is dismissed.

      False Claims Act

      As the court wrote in the earlier opinion, the False Claims Act, 31 U.S.C. § 3729
(2012),64 provides:


64 The False Claims Act was amended in 2009. See Fraud Enforcement and Recovery
Act of 2009, Pub. L. No. 111–21, § 4(a), 123 Stat. 1617, 1621. The amendments are
treated “as if enacted on June 7, 2008, and apply to all claims under the False Claims Act
(31 U.S.C. 3729 et seq.) that are pending on or after that date.” Id. § 4(f), 123 Stat. at
1625; see also AEY, Inc. v. United States, 114 Fed. Cl. 619, 633 (2014) (“The amended
provision, 31 U.S.C. § 3729(a)(1)(B), took effect as if enacted on June 7, 2008 and applies
to all claims under the False Claims Act that were pending on or after that date.”). As
explained in August 31, 2016 opinion, Oasis submitted its certified claim on July 4, 2008,

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      (a) Liability for certain acts.--

      (1) In general.--Subject to paragraph (2), any person who--

      (A) knowingly presents, or causes to be presented, a false or fraudulent
      claim for payment or approval;

      (B) knowingly makes, uses, or causes to be made or used, a false record
      or statement material to a false or fraudulent claim;

      (C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F),
      or (G);

      (D) has possession, custody, or control of property or money used, or to be
      used, by the Government and knowingly delivers, or causes to be delivered,
      less than all of that money or property;

      (E) is authorized to make or deliver a document certifying receipt of property
      used, or to be used, by the Government and, intending to defraud the
      Government, makes or delivers the receipt without completely knowing that
      the information on the receipt is true;

      (F) knowingly buys, or receives as a pledge of an obligation or debt, public
      property from an officer or employee of the Government, or a member of
      the Armed Forces, who lawfully may not sell or pledge property; or

      (G) knowingly makes, uses, or causes to be made or used, a false record
      or statement material to an obligation to pay or transmit money or property
      to the Government, or knowingly conceals or knowingly and improperly
      avoids or decreases an obligation to pay or transmit money or property to
      the Government,

      is liable to the United States Government for a civil penalty of not less than
      $5,000 and not more than $10,000, as adjusted by the Federal Civil
      Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law
      104-410), plus 3 times the amount of damages which the Government
      sustains because of the act of that person.

                                           ...

      (b) Definitions.--For purposes of this section--

      (1) the terms “knowing” and “knowingly” --

and Lieutenant Colonel Hobbs denied Oasis’ certified claim in its entirety on October 18,
2009.

                                           82
      (A) mean that a person, with respect to information--

      (i) has actual knowledge of the information;

      (ii) acts in deliberate ignorance of the truth or falsity of the information; or

      (iii) acts in reckless disregard of the truth or falsity of the information; and

      (B) require no proof of specific intent to defraud;

      (2) the term “claim”--

      (A) means any request or demand, whether under a contract or otherwise,
      for money or property and whether or not the United States has title to the
      money or property, that--

      (i) is presented to an officer, employee, or agent of the United States; or

      (ii) is made to a contractor, grantee, or other recipient, if the money or
      property is to be spent or used on the Government's behalf or to advance a
      Government program or interest, and if the United States Government--

      (I) provides or has provided any portion of the money or property requested
      or demanded; or

      (II) will reimburse such contractor, grantee, or other recipient for any portion
      of the money or property which is requested or demanded . . . .

31 U.S.C. § 3729. The term “claim” is defined in the False Claims Act as:

      (A) means any request or demand, whether under a contract or otherwise,
      for money or property and whether or not the United States has title to the
      money or property, that--

      (i) is presented to an officer, employee, or agent of the United States; or

      (ii) is made to a contractor, grantee, or other recipient, if the money or
      property is to be spent or used on the Government's behalf or to advance a
      Government program or interest, and if the United States Government--

      (I) provides or has provided any portion of the money or property requested
      or demanded; or

      (II) will reimburse such contractor, grantee, or other recipient for any portion
      of the money or property which is requested or demanded; and


                                             83
      (B) does not include requests or demands for money or property that the
      Government has paid to an individual as compensation for Federal
      employment or as an income subsidy with no restrictions on that individual's
      use of the money or property;

31 U.S.C. § 3729(c). The False Claims Act also states:

      (1) the terms “knowing” and “knowingly” --

      (A) mean that a person, with respect to information--

      (i) has actual knowledge of the information;

      (ii) acts in deliberate ignorance of the truth or falsity of the information; or

      (iii) acts in reckless disregard of the truth or falsity of the information; and

      (B) require no proof of specific intent to defraud;

31 U.S.C. § 3729(b) (2012). Congress rejected requiring a specific intent to defraud under
the False Claims Act. See 31 U.S.C. § 3729(b). Instead, Congress adopted a knowing
standard, defined as “actual knowledge” of the falsity, acting in “deliberate ignorance of
the truth or falsity,” or acting in “reckless disregard of the truth or falsity.” Id.

      In the court’s earlier opinion, the court concluded that:

      The government has not demonstrated that the plaintiff’s interpretation
      should be considered “false statements,” nor has the government
      demonstrated that Oasis had “actual knowledge” of the falsity, was acting
      “in deliberate ignorance of the truth or falsity,” or was acting “in reckless
      disregard of the truth or falsity.” See 31 U.S.C. § 3729(b). Because the court
      finds that defendant has not demonstrated that plaintiff had knowledge that
      its claims were false or fraudulent, and had no intention to induce “wrongful
      payment,” United States v. Rivera, 55 F.3d at 709, Oasis is not liable under
      the False Claims Act. As indicated above, the court believes that the
      testimony of the Paul Morrell and Phil Morrell was sincere. There was no
      indication in their testimony at trial of any intention or steps taken to defraud
      the government. As the parties do not raise stand-alone arguments related
      solely to the False Claims Act, the court determines, for the reasons
      articulated above, the government has not proven a violation of the False
      Claims Act, even under the preponderance of the evidence standard.

The court concludes that same applies to the counterclaim for Claim 2. The government
did not raise any separate arguments for the False Claims Act regarding Claim 2. In its
briefs, defendant only states that “Oasis is liable under the False Claims Act for the same


                                             84
reasons that its claim must be rejected under the Special Plea in Fraud.” As the court has
concluded that defendant has not demonstrated fraud under the Special Plea in Fraud
statute, defendant’s False Claims Act counterclaim for Claim 2, therefore, also is
dismissed.65



       Contract Disputes Act

        Defendant argues that “[i]n addition to forfeiting its claim under the Special Plea in
Fraud, because Oasis submitted a fraudulent certified claim under the Contract Disputes
Act, it owes the United States damages equal to the unsupported amount of its claim.”
Defendant claims that “Oasis has selected its own penalty, as Contract Disputes Act fraud
damages are self-defining. Oasis itself selected the magnitude of its fraud and must reap
the consequences. ”

      The court’s previous opinion explained that the anti-fraud provision of the Contract
Disputes Act, 41 U.S.C. § 604 (now 41 U.S.C. § 7103(c)(2) (2012)) provides:

       If a contractor is unable to support any part of his claim and it is determined
       that such inability is attributable to misrepresentation of fact or fraud on the
       part of the contractor, he shall be liable to the Government for an amount
       equal to such unsupported part of the claim in addition to all costs to the
       Government attributable to the cost of reviewing said part of his claim.

41 U.S.C. § 604.66 The Contract Disputes Act, at 41 U.S.C. § 605(c)(1) (2006) (now 41

65 The court notes that the preponderance of the evidence standard of proof is applicable
to the False Claims Act, as well as to the Contract Disputes Act, as compared to the “clear
and convincing” standard that applies to proof under the Special Plea in Fraud statute.
See UMC Elecs. Co. v. United States, 249 F.3d 1337, 1338-39 (Fed. Cir. 2001) (“The
government must prove a violation of the Contract Disputes Act and False Claims Act by
a preponderance of the evidence. Under the Special Plea in Fraud, the government must
prove its allegations by clear and convincing evidence.” (citing Commercial Contractors,
Inc. v. United States, 154 F.3d 1357, 1362 (Fed. Cir.), reh’g denied (Fed. Cir. 1998))).
The court believes that defendant has not met its burden to prove its fraud claims for
Claim 2 under either standard of proof.
66 The language of the anti-fraud provision of the Contract Disputes Act was slightly
altered when it was recodified in 2011 at 41 U.S.C. § 7103(c)(2). See Veridyne Corp. v.
United States, 758 F.3d 1371, 1380 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.
2014). The current language of the provision now states:

       If a contractor is unable to support any part of the contractor’s claim and it
       is determined that the inability is attributable to a misrepresentation of fact
       or fraud by the contractor, then the contractor is liable to the Federal
       Government for an amount equal to the unsupported part of the claim plus

                                             85
U.S.C. § 7103(b)(1)), requires for a certification of a claim in excess of $100,000.00,

       the contractor shall certify that the claim is made in good faith, that the
       supporting data are accurate and complete to the best of his knowledge and
       belief, that the amount requested accurately reflects the contract
       adjustment for which the contractor believes the government is liable, and
       that the certifier is duly authorized to certify the claim on behalf of the
       contractor.

41 U.S.C. § 605(c)(1); see Trafalgar House Constr., Inc. v. United States, 73 Fed. Cl.
675, 693 (2006) (“The primary purpose of this certification is to prevent the submission of
fraudulent claims.”), aff’d, 274 F. App’x 898 (Fed. Cir. 2008). The Contract Disputes Act
at 41 U.S.C. § 605(c)(7), requires that “[t]he certification required by paragraph (1) may
be executed by any person duly authorized to bind the contractor with respect to the
claim.” 41 U.S.C. § 605(c)(7) (now 41 U.S.C. § 7103(b)(2)).

        The United States Court of Appeals for the Federal Circuit indicated “[t]he Contract
Disputes Act requires that an authorized corporate official certify that ‘the claim is made
in good faith, that the supporting data are accurate and complete to the best of his
knowledge and belief, [and] that the amount requested accurately reflects the contract
adjustment for which the contractor believes the government is liable.’” Veridyne Corp. v.
United States, 758 F.3d at 1380 (quoting 41 U.S.C. § 605(c)(1) (recodified at 41 U.S.C.
§ 7103(b)(1)(A)-(D)). As noted by the trial court in Veridyne, citing to 41 U.S.C.
§ 7103(c)(2), “[a]lthough the anti-fraud provision contains no express requirement that the
costs must be ‘reasonable,’ it presumes that defendant actually has incurred the claimed
costs of review.” Veridyne Corp. v. United States, 107 Fed. Cl. 752, 767 (2012), aff’d in
part, rev’d in part, 758 F.3d 1371 (Fed. Cir.), reh’g and reh’g en banc denied (Fed. Cir.
2014).

        As noted in the court’s earlier opinion, defendant argues in its second amended
answer and counterclaim, regarding the anti-fraud provision of the Contract Disputes Act,
Oasis “is liable to the United States pursuant to the Contract Disputes Act, 41 U.S.C.
§ 7103, for the amount of such unsupported claims, $44,516,868, plus the Government’s
costs attributable to reviewing such claims.” In its post-trial briefs, defendant submitted
the following chart for the amount of penalties it alleges are owed by plaintiff under the
Contract Disputes Act:
 Count Description                                                       Amount

 1       Bottled water already paid for during base period from        $19,617,570
         sites other than Anaconda (5,605,020 cases)
 2       TQ allegedly unpaid mobilization fee                          $2,270,833


       all of the Federal Government’s costs attributable to reviewing the
       unsupported part of the claim.

41 U.S.C. § 7103(c)(2).

                                            86
 4        Extrapolated monthly “mobilization fee” based on alleged      $11,175,063
          firm fixed base year “mobilization fee” of $50.225 million
 6        Camp Speicher and Q-West improvements already                 $600,000
          reimbursed by military as part of modification P00011
 8        Bottled water already paid for through May 24, 2006,          $10,853,402
          from Anaconda (3,100,972 cases)
          Total Amount of False and Fraudulent Claim                    $44,516,868

For support, defendant claims that:

       As demonstrated above, counts one, two, four, six, and eight, are
       unsupported in their entirety. Counts one and eight attempt to compel
       payment of more than $30 million dollars for bottled water for which the
       military had already paid. Count six also seeks payment of the same
       $600,000 a second time. Counts four seeks costs never incurred, and count
       two stems from Oasis’s baseless economic duress claim and its frivolous
       contract interpretation.

        As explained in the court’s earlier decision, “[d]efendant offers no new arguments
specific to the antifraud provision of the Contract Disputes Act that have not been
addressed above, except for the chart for the amount of penalties.” The same is true for
the Claim 2. Regarding Claim 2, the defendant merely relies on its belief that Oasis has
a “frivolous contract interpretation” and, therefore, put forth a “baseless economic duress
claim.” As explained above, although the court found against the plaintiff regarding its
interpretation of the contract and with respect to its duress claims. As evidenced by the
court’s lengthy discussion above addressing both contract interpretation and economic
duress, however, the court does not believe plaintiff’s theories as certified in the claim
rise to the level of frivolous, and, are instead based on a possible, albeit incorrect theory
of the case. Furthermore, the court, in the prior opinion, determined that:

       The fundamental changes in manner in which plaintiff performed the
       contract for the government in the base year, including how it was
       compensated for the water produced, and continued to perform after the
       base year was complete, allows for plaintiff’s certified claim to be a bona
       fide one, and not fraudulent either under the plaintiff’s or defendant’s
       interpretation of the contract. Defendant has failed to prove fraud. As
       demonstrated above, plaintiff’s intent was not to make a claim that was
       intended to deceive or mislead the government. Therefore, the court
       concludes that defendant has failed to demonstrate a violation of the anti-
       fraud provision of the Contract Disputes Act.

Again, the same logic applies to the fraud counterclaim for Claim 2. As with the prior
counterclaims, Paul Morrell, as the signatory of Oasis’ certified claim, believed in the
theory and merits of the certified claim submitted. Likewise, the court’s earlier opinion the
court concluded that “Paul Morrell signed the certified claim and plaintiff’s position that
‘[d]efendant provides nothing to contradict Paul Morrell’s sworn testimony that his opinion

                                             87
and understanding evolved and changed his mind, and that the right amount was claimed’
remains true.” The same is true for the Claim 2, and, as explained above, Paul Morrell
inherited the contract from American AquaSource and Max Wyeth. As he was not the
signatory to the contract, it is understandable that his views on the contract may have
changed over time. Therefore, defendant has failed to prove that Oasis knowingly
submitted a fraudulent claim for Claim 2, and Oasis is not liable under the anti-fraud
provision of the Contract Disputes Act for Claim 2.

                                      CONCLUSION

        For the reasons explained above, the court concludes that defendant’s
interpretation of the contract, requiring the government to pay only for bottled water
produced, is correct. In addition, plaintiff has not demonstrated that Oasis executed either
modification P00006 or modification P00011 under duress. Moreover, even though
plaintiff’s interpretation of the contract was incorrect, and the claims of economic duress
have been found to be unsupported, plaintiff did not intend to perpetrate a fraud on the
government when Oasis submitted its certified claim. Rather Paul Morrell, as signatory to
the certified claim, did not have the intention to commit fraud and genuinely believed in
his interpretation of the contract when he submitted the certified claim. Defendant’s
counterclaim regarding Claim 2 is DENIED.

       IT IS SO ORDERED.
                                                        s/Marian Blank Horn
                                                        MARIAN BLANK HORN
                                                                 Judge




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