           In the United States Court of Federal Claims
                                           No. 05-914C
                                      (Filed: April 18, 2017)

*************************************
K-CON BUILDING SYSTEMS, INC.,       *                Trial; Contract to Design and Build
                                    *                Prefabricated Metal Building; RCFC 15;
                  Plaintiff,        *                Futility of Supplemental Complaint;
                                    *                Contract Disputes Act of 1978; Remission
 v.                                 *                of Liquidated Damages; Counterclaim
                                    *                for Liquidated Damages; Contractual
THE UNITED STATES,                  *                Notice Requirement; Abandoned Claim;
                                    *                Excusable Delay; Critical Path;
                  Defendant.        *                Affirmative Defenses
*************************************

William A. Scott, Charleston, SC, for plaintiff.

Daniel B. Volk, United States Department of Justice, Washington, DC, for defendant.

                                    OPINION AND ORDER

SWEENEY, Judge

        Plaintiff K-Con Building Systems, Inc. contracted with the United States Coast Guard
(“Coast Guard”) to design and construct a prefabricated metal building in Elizabeth City, North
Carolina. Because plaintiff did not complete construction by the contract completion date, the
Coast Guard assessed liquidated damages and, eventually, terminated the contract for default.
Plaintiff filed suit challenging the default termination and the liquidated damages assessment,
and defendant filed a counterclaim to recover the liquidated damages still owed by plaintiff.
After the court held a trial, the parties attempted–unsuccessfully–to reach a settlement. Plaintiff
then filed a motion seeking to resolve certain issues raised during the settlement discussions.
The court ruled on that motion, dismissing plaintiff’s challenge to the default termination for lack
of jurisdiction. The parties thereafter submitted posttrial briefs, and plaintiff filed a motion for
leave to amend its complaint. As set forth below, the court denies plaintiff’s motion for leave to
amend its complaint, and concludes that defendant is entitled to recover liquidated damages in
the amount of $199,611.
                                             I. FACTS

        This section contains the court’s findings of fact as required by Rule 52(a)(1) of the Rules
of the United States Court of Federal Claims (“RCFC”).1

                                         A. The Contracts

                           1. The Federal Supply Schedule Contract

         Plaintiff is a “design-build general contractor” headquartered in Charleston, South
Carolina whose business is focused on the federal government. Tr. 86 (Reitmeier); accord Tr.
1268-69 (Combs). Specifically, plaintiff has fulfilled over 4000 delivery orders for the federal
government throughout the United States and its territories. Id. at 1268, 1271 (Combs); see also
id. at 3643 (Kiernan) (indicating that plaintiff has “had over 3000 delivery orders from the
federal government and over 400 of those have been specifically for pre-engineered metal
buildings”).

        In April 2001, the United States General Services Administration (“GSA”) awarded
plaintiff a Federal Supply Schedule contract for Prefabricated Structures and Outdoor Smoking
Shelters. Jt. Stip. ¶ 1; JX 2. That contract contained a number of clauses from the Federal
Acquisition Regulation (“FAR”), including FAR 52.212-4, Contract Terms and
Conditions–Commercial Items (May 1999).2 JX 2.9; Pl.’s App. SJ0001-90. Several paragraphs
from that clause are relevant here. First, paragraph (d) provided:

       Disputes. This contract is subject to the Contract Disputes Act of 1978, as
       amended . . . . Failure of the parties to this contract to reach agreement on any
       request for equitable adjustment, claim, appeal or action arising under or relating


       1
          The court derives these facts from the parties’ Joint Stipulation of Facts (“Jt. Stip.”), the
transcript of testimony elicited at trial (“Tr.”), the exhibits admitted into evidence during trial
(“PX,” “DX,” or “JX”), and, as explained below, see infra note 2, plaintiff’s appendix to its
posttrial motion to dismiss (“Pl.’s App.”). Citations to the trial transcript will be to the page
number of the transcript and the last name of the testifying witness.
       2
          The trial record contains a portion of the Federal Supply Schedule contract, and only
includes the first eight paragraphs of FAR 52.212-4. Plaintiff submitted the entire Federal
Supply Schedule contract with its posttrial motion to dismiss, described in more detail below.
The court included quotations from the remaining paragraphs of FAR 52.212-4 in its February
26, 2014 Opinion and Order. See K-Con Bldg. Sys., Inc. v. United States, 114 Fed. Cl. 722, 729-
30 (2014). Neither party disputes the contents of these paragraphs or the applicability of these
paragraphs to this case. Id. at 730. Accordingly, the court treats those paragraphs as if they were
included in the trial record, and cites plaintiff’s appendix to its posttrial motion to dismiss as the
source of those paragraphs.

                                                  -2-
       to this contract shall be a dispute to be resolved in accordance with the clause of
       FAR 52.233-1, Disputes, which is incorporated herein by reference.

JX 2.9. Second, paragraph (f) provided:

       Excusable delays. The Contractor shall be liable for default unless
       nonperformance is caused by an occurrence beyond the reasonable control of the
       Contractor and without its fault or negligence such as, acts of God or the public
       enemy, acts of the Government in either its sovereign or contractual capacity,
       fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather,
       and delays of common carriers. The Contractor shall notify the Contracting
       Officer in writing as soon as it is reasonably possible after the commencement of
       any excusable delay, setting forth the full particulars in connection therewith, shall
       remedy such occurrence with all reasonable dispatch, and shall promptly give
       written notice to the Contracting Officer of the cessation of such occurrence.

Id. Third, paragraph (m) provided:

       Termination for cause. The Government may terminate this contract, or any part
       hereof, for cause in the event of any default by the Contractor, or if the Contractor
       fails to comply with any contract terms and conditions, or fails to provide the
       Government, upon request, with adequate assurances of future performance. In
       the event of termination for cause, the Government shall not be liable to the
       Contractor for any amount for supplies or services not accepted, and the
       Contractor shall be liable to the Government for any and all rights and remedies
       provided by law. If it is determined that the Government improperly terminated
       this contract for default, such termination shall be deemed a termination for
       convenience.

Pl.’s App. SJ0014. Finally, paragraph (t) incorporated by reference Federal Supply Schedule
contract clause I-FSS-249-B, Default (May 2000), id., which provided:3

       In addition to any other clause contained herein related to termination, the
       following is applicable to orders placed under Federal Supply Schedule contracts.

       Any ordering office may, with respect to any one or more orders placed by it
       under the contract, exercise the same right of termination, acceptance of inferior


       3
          Plaintiff provided the full text this provision in its posttrial motion to dismiss. Mot. to
Dismiss 8 (quoting BearingPoint, Inc. v. United States, 77 Fed. Cl. 189, 192 (2007)). The court
reproduced this text in its February 26, 2014 Opinion and Order, K-Con Bldg. Sys., Inc., 114
Fed. Cl. at 730, and as noted above, see supra note 2, neither party disputes the contents of this
provision or the applicability of this provision to this case.

                                                 -3-
       articles or services, and assessment of excess costs as might the Contracting
       Officer, except that when failure to deliver articles or services is alleged by the
       Contractor to be excusable, the determination of whether the failure is excusable
       shall be made only by the Contracting Officer of the General Services
       Administration, to whom such allegation shall be referred by the ordering office
       and from whose determination appeal may be taken as provided in the clause of
       this contract entitled “Disputes.”

                               2. The Coast Guard’s Solicitation

        On September 2, 2003, the Coast Guard, through its Facilities, Design, and Construction
Center (Atlantic) (“FDCC LANT”),4 solicited proposals under the Federal Supply Schedule for
Prefabricated Structures and Outdoor Smoking Shelters for the design and construction of a
prefabricated metal building to house an Aviation Repair and Supply Center (“AR&SC”)
component repair shop at the Coast Guard Support Center in Elizabeth City, North Carolina. Jt.
Stip. ¶¶ 3-4, 10; JX 1.1; JX 2.1; JX 20.3; see also Tr. 2454 (Schmitt) (explaining that the
AR&SC is a command that maintains and repairs aircraft). Specifically, the Coast Guard sought
a 4700-square-foot building to house a hydraulic test lab, a workshop, office space, and storage
space. Jt. Stip. ¶¶ 4-5. The contractor was to design the building based on the drawings and
specifications included in the request for proposals (“RFP”). JX 1.3, .10-.11, .140; accord JX
1.47 (“[Specification] Section 01158, ‘GSA Procurement Design/Build Criteria,’ and Drawings
contain abbreviated minimum facility requirements.”), .48 (“The design and design data
indicated on the drawings are the minimum requirements, i.e., baseline drawing requirements, to
be used by the Contractor to develop the project design. The Contractor shall add to,
supplement, and complete these drawings to fully comply with this GSA Procurement . . . .”).
The contractor would then use that design to construct the building. JX 1.79. Additionally, the
contractor was required to “[d]isconnect, dismantle if necessary, remove, relocate, reinstall,
connect, and test” certain government-furnished equipment. JX 1.40; accord JX 1.58 (listing
“existing and/or new equipment” that the Coast Guard intended to install in the new building,
and providing that the contractor was required to “coordinate the design and provide support[]
and utilities for” that equipment). Among the government-furnished equipment were three
pieces of hydraulic test equipment–an HPTS-1000 with a 25-horsepower motor, an HA-60VM
with a 40-horsepower motor, and an HS-25 with a 75-horsepower motor. JX 1.58; accord JX
1.15. The motor for each piece of equipment was separate from the equipment’s hydraulic
testing system, and in the case of the HS-25, the motor was mounted to the equipment’s exterior.
Tr. 2813-17 (Fedei). The government-furnished equipment also included a chiller. JX 1.58;
accord JX 1.15. The chiller was connected to each of the three pieces of hydraulic test
equipment by a pair of pipes, one that supplied chilled water to collect the heat generated inside
of the equipment and another that returned the heated water to the chiller to be rechilled. PX
332.18-.19, .22; Tr. 201-02 (Ramsey), 2813, 2815, 3075-76 (Fedei); accord id. at 501-03



       4
           The FDCC LANT was located in Norfolk, Virginia. JX 1.1.

                                                -4-
(Tempel) (explaining that the chiller removed heat that was generated in the equipment,
preventing the heat from being rejected into the room).

         In rendering design services, the contractor was required to provide the Coast Guard with
civil, site, geotechnical, landscaping, architectural, structural, fire protection, plumbing,
mechanical, electrical, and telecommunications designs, as well as with all “specified”
calculations pertinent to the designs. JX 1.49-.74, .78; see also Tr. 229 (Ramsey) (admitting that
the contract required plaintiff to submit mechanical calculations with its design). Of particular
importance in this case is the mechanical design, in other words, the design for the building’s
heating, ventilation, and air conditioning (“HVAC”) system. The pertinent specification
provided:

                                   1.13.2 System Description

       The HVAC systems shall be designed to accommodate all building operations.
       Use of Carrier Air-conditioning Mfg. equipment is desired to match equipment
       currently being installed throughout AR&SC to minimize training and repair
       parts.

       ....

       1.13.3 HVAC Systems

       The HVAC systems shall be designed to meet the following design conditions:

               Space          Winter (FDB)           Summer (FDB/FWB[)]
               Outside        19                     93/78
               Inside         70                     76/50%RH (typical)*

       *Spaces shall not exceed 60% RH during any occupied hours at full or partial
       load.

       (F = Degrees Fahrenheit)
       (FDB = Degrees Fahrenheit Dry Bulb)
       (FWB = Degrees Fahrenheit Wet Bulb)
       (FDP = Degrees Fahrenheit Dew Point)
       (RH = Relative Humidity)

                                   1.13.4 System Description

       1.13.4.1 Heating and air conditioning shall be provided by split system heat pump
       air conditioners. Ductless split system air conditioners with electric resistance
       heat or heat pumps may be provided for isolated spaces where appropriate. . . .


                                               -5-
       Provide air conditioning in all normally occupied spaces including offices,
       telecommunications rooms, test labs, work shops, corridors and toilets. . . .

       ....

       1.13.9 Existing hydraulic test equipment chiller: Disconnect chiller from existing
       equipment (HA-60, HPTS-1000, and HS-25) in Hangar 75 Annex, relocate chiller
       to new location, and run new distribution piping to the relocated equipment
       (HA-60, HPTS-1000, and HS-25), as shown on sheet A102. Use piping materials,
       insulation, and connections equivalent to the existing.

JX 1.64-.66; accord JX 1.15 (indicating, on sheet A102, that the contractor was to “provide
insulated chilled water piping between relocated chiller . . . & hydraulic test consoles HA-60,
HPTS-1000, & HS-25” and “match valving & connections that exist[] in Shop 241 in Hangar
75”); see also Tr. 497-99 (Tempel) (noting that the design parameters for the HVAC system were
located in paragraphs 1.13.3 and 1.13.4.1 of the specification).

       Proposals were due by September 17, 2003. JX 1.1.

                                     3. Plaintiff’s Proposal

        On August 28, 2003, prior to issuing its RFP, the Coast Guard conducted a prebid
meeting at the Coast Guard Support Center in Elizabeth City. JX 5.1; Tr. 102-04 (Reitmeier).
Attending the meeting were a number of Coast Guard employees, plaintiff’s sales manager
George Reitmeier, and representatives of another prospective offeror. JX 5.1; accord Tr. 102
(Reitmeier). The Coast Guard presented “Conceptual Design Site and Floor Plans” and
answered questions. JX 5.1; accord Tr. 103 (Reitmeier). Thereafter, the “attendees walked . . .
the proposed building site” and “toured existing Shop 241.” JX 5.1; accord Tr. 103 (Reitmeier).
During the tour of Shop 241, the attendees were told that some of the equipment in that room
would be relocated to the new building. Tr. 103, 140 (Reitmeier); see also JX 1.15 (reflecting
that the existing government-furnished equipment was located in Shop 241).

        In preparing its proposal, plaintiff solicited quotations from other contractors to provide
and install the HVAC system. See, e.g., JX 14; JX 510; see also Tr. 120 (Reitmeier) (noting that
another company would actually design the HVAC system). At least one contractor, Ward &
Son, Inc., investigated the government-furnished equipment that would be placed in the building,
the number and size of the rooms in the building, the location of the air handlers, and how the
building would be insulated. JX 14.1-.2; Tr. 120 (Reitmeier); Tr. 504-05 (Tempel). During that
investigation, Ward & Son, Inc. “was told that the shop never operates but one test station at [a]
time and the duration is no longer than four hours.” JX 14.9. Based on the information it
gathered, Ward & Son, Inc., calculated thermal loads, JX 14.3-.8, and then proposed an HVAC
system with two heat pumps and two air handlers, JX 14.9. One heat pump and air handler unit
would be used solely for the hydraulic test lab, and the other heat pump and air handler unit


                                                -6-
would be used for the entire building and would “keep [the] ‘hydraulic test room’ within the
design specifications when test equipment [was] not being used.” Id.; see also JX 15 (reflecting
that Ward & Son, Inc. proposed using a 7.5-ton unit for the hydraulic test lab and a 10-ton unit
for the entire building). On September 16, 2003, Ward & Son, Inc. provided plaintiff with a
quotation of $50,557 to install the proposed HVAC system, JX 14.9, and plaintiff used that
amount in preparing its cost estimate, JX 18.4; Tr. 118 (Reitmeier).

                        4. The Coast Guard’s Contract With Plaintiff

        Plaintiff responded to the solicitation and, on September 23, 2003, the Coast Guard
placed an order under plaintiff’s Federal Supply Schedule contract for the solicited building. Jt.
Stip. ¶¶ 21-22. The initial value of the order was $513,520 and the initial completion date was
June 17, 2004. Id. ¶ 22. Ultimately, through bilateral contract modifications, the value of the
order was increased to $551,155.35 and the completion date was extended to November 9, 2004.5
See JX 3.1-.10. From plaintiff’s perspective, its contract with the Coast Guard was typical of its
contracts with the federal government, both in type and amount. Tr. 1270, 1279 (Combs).

       Plaintiff’s contract with the Coast Guard included and incorporated by reference a
number of provisions relevant to the issues in this case. For example, the contract included FAR
52.211-12, Liquidated Damages - Construction (September 2000), which provided:

               (a) If the Contractor fails to complete the work within the time specified
       in the contract, the Contractor shall pay liquidated damages to the Government in
       the amount of $551.00 for each calendar day of delay until the work is completed
       or accepted.

               (b) If the Government terminates the Contractor’s right to proceed,
       liquidated damages will continue to accrue until the work is completed. These
       liquidated damages are in addition to excess costs of repurchase under the
       Termination clause.

JX 1.30. In addition, the contract incorporated by reference four other relevant FAR provisions.
One is FAR 52.233-1, Disputes (December 1998), which provided:

             (a) This contract is subject to the Contract Disputes Act of 1978, as
       amended . . . .


       5
         Specifically, a January 13, 2004 modification resulted in a contract price increase to
$516,571.46, JX 3.1-.2; an April 15, 2004 modification resulted in a contract price increase to
$549,602.46 and a time extension to October 21, 2004, JX 3.3-.4; an August 20, 2004
modification resulted in a time extension to October 26, 2004, JX 3.6-.7; a September 9, 2004
modification resulted in a contract price increase to $551,155.35, JX 3.7-.8; and a November 10,
2004 modification resulted in a time extension to November 9, 2004, JX 3.9-.10.

                                               -7-
              (b) Except as provided in the Act, all disputes arising under or relating to
      this contract shall be resolved under this clause.

              (c) “Claim,” as used in this clause, means a written demand or written
      assertion by one of the contracting parties seeking, as a matter of right, the
      payment of money in a sum certain, the adjustment or interpretation of contract
      terms, or other relief arising under or relating to this contract. . . .

             (d)(1) A claim by the Contractor shall be made in writing and, unless
      otherwise stated in this contract, submitted within 6 years after accrual of the
      claim to the Contracting Officer for a written decision. A claim by the
      Government against the Contractor shall be subject to a written decision by the
      Contracting Officer.

FAR 52.233-1, cited in JX 1.37. The second is FAR 52.243-4, Changes (August 1987), which
provided:

             (a) The Contracting Officer may, at any time, . . . by written order
      designated or indicated to be a change order, make changes in the work within the
      general scope of the contract . . . .

              (b) Any other written or oral order (which, as used in this paragraph (b),
      includes direction, instruction, interpretation, or determination) from the
      Contracting Officer that causes a change shall be treated as a change order under
      this clause; Provided, that the Contractor gives the Contracting Officer written
      notice stating–

             (1) The date, circumstances, and source of the order; and

             (2) That the Contractor regards the order as a change order.

             ....

              (d) If any change under this clause causes an increase or decrease in the
      Contractor’s cost of, or the time required for, the performance of any part of the
      work under this contract, whether or not changed by any such order, the
      Contracting Officer shall make an equitable adjustment and modify the contract in
      writing. However, except for an adjustment based on defective specifications, no
      adjustment for any change under paragraph (b) of this clause shall be made for any
      costs incurred more than 20 days before the Contractor gives written notice as
      required.



                                               -8-
FAR 52.243-4, cited in JX 1.38. The third is FAR 52.249-2, Termination for Convenience of the
Government (Fixed Price) (September 1996), which provided:

       The Government may terminate performance of work under this contract in whole
       or, from time to time, in part if the Contracting Officer determines that a
       termination is in the Government’s interest. The Contracting Officer shall
       terminate by delivering to the Contractor a Notice of Termination specifying the
       extent of termination and the effective date.

FAR 52.249-2(a), cited in JX 1.38. And, the final relevant FAR provision incorporated into the
contract by reference is FAR 52.249-10, Default (Fixed-Price Construction) (April 1984), which
provided:

                (a) If the Contractor refuses or fails to prosecute the work or any separable
       part, with the diligence that will insure its completion within the time specified in
       this contract including any extension, or fails to complete the work within this
       time, the Government may, by written notice to the Contractor, terminate the right
       to proceed with the work (or the separable part of the work) that has been delayed.
       In this event, the Government may take over the work and complete it by contract
       or otherwise . . . . The Contractor and its sureties shall be liable for any damage to
       the Government resulting from the Contractor’s refusal or failure to complete the
       work within the specified time, whether or not the Contractor’s right to proceed
       with the work is terminated. This liability includes any increased costs incurred
       by the Government in completing the work.

              (b) The Contractor’s right to proceed shall not be terminated nor the
       Contractor charged with damages under this clause, if–

                       (1) The delay in completing the work arises from unforeseeable
              causes beyond the control and without the fault or negligence of the
              Contractor. Examples of such causes include [acts of the Government in
              either its sovereign or contractual capacity, or unusually severe weather,]
              and

                      (2) The Contractor, within 10 days from the beginning of any
              delay (unless extended by the Contracting Officer), notifies the
              Contracting Officer in writing of the causes of delay. The Contracting
              Officer shall ascertain the facts and the extent of delay. If, in the judgment
              of the Contracting Officer, the findings of fact warrant such action, the
              time for completing the work shall be extended. The findings of the
              Contracting Officer shall be final and conclusive on the parties, but subject
              to appeal under the Disputes clause.



                                                -9-
               (c) If, after termination of the Contractor’s right to proceed, it is
       determined that the Contractor was not in default, or that the delay was excusable,
       the rights and obligations of the parties will be the same as if the termination had
       been issued for the convenience of the Government.

              (d) The rights and remedies of the Government in this clause are in
       addition to any other rights and remedies provided by law or under this contract.

FAR 52.249-10, cited in JX 1.38.

        Pursuant to other contract provisions, plaintiff was to commence work within fourteen
days of contract award; meet with the Coast Guard for a postaward kickoff meeting within
fourteen to twenty-eight days of contract award, but prior to the commencement of work;6 submit
a “practicable schedule” either within fifteen days of the commencement of work or another time
period designated by the Coast Guard’s contracting officer; and complete work no more than 262
days after contract award. JX 1.24, .74. In addition, plaintiff was to submit the design to the
Coast Guard in two phases–a “100% design” and a “final design”; the Coast Guard would have
twenty-one days to provide comments on the 100% design and fourteen days to provide
comments on the final design. Jt. Stip. ¶ 14; see also JX 1.80 (containing specification section
01160, paragraph 2.2.3, which provided: “The Contracting Officer’s review team shall review
each design submittal and provide comments regarding the submitted documents.”). Within
fourteen days of receiving the Coast Guard’s comments, plaintiff was to confer with the Coast
Guard via telephone to “resolve design review comments and design issues.” JX 1.79. Plaintiff
was required to “acceptably address all comments on the design submittals and subsequently
correct the submittals for review.” JX 1.80; accord id. (containing specification section 01160,
paragraph 2.2.4, which provided: “When a design submittal is considered unacceptable to the
Contracting Officer’s review team, the Contractor shall be so advised and required to provide a
resubmittal for that particular design phase.”).

        If plaintiff “determine[d] that some portion of the drawings, specifications, or other
contract documents require[d] clarification or interpretation,” it could submit a request for
information (“RFI”) to the Coast Guard. JX 1.105. The Coast Guard was required to respond to
the RFI within ten days unless it “determine[d] that a longer period of time [was] necessary to
provide an adequate response”; in such circumstances, the Coast Guard was obligated, within ten
days of receiving the request, to “notify [plaintiff] of the anticipated response time.” JX 1.106.
If the Coast Guard’s response constituted a change to the contract requirements, the Coast Guard
would “issue either a no-cost field Adjustment or formal modification under the Changes clause
of the contract.” Id. If the Coast Guard failed to take such action, and plaintiff believed that the
response would “cause a change to the requirements of the contract documents,” plaintiff was


       6
         The requirements for the commencement of work and the postaward kickoff meeting
cannot be reconciled; however, the discrepancy has no relevance to the remaining issues in this
case.

                                                -10-
required to “give written notice to the Contracting Officer stating that [it] consider[ed] the
response to be a change order. Failure to give such written notice immediately . . . waive[d
plaintiff’s] right to seek additional time or cost under the Changes clause of the contract.” Id.

       Plaintiff could not begin construction until the final design was approved by the Coast
Guard. JX 1.79.

                                    B. Contract Performance

         Work on the project did not begin within the time anticipated in the contract; indeed, the
postaward kickoff meeting was not held until December 4, 2003. Jt. Stip. ¶ 23. Among the
Coast Guard employees who attended the meeting were Lt. Harry Mautte from the Coast Guard
Support Center, Kent Goodwin from the AR&SC, and several individuals from the FDCC
LANT, including the contracting specialist, the construction project manager/contracting
officer’s technical representative, the design project manager, and a mechanical engineer. JX
35.1. Attending the meeting for plaintiff were plaintiff’s project manager, Greg Herald, and
representatives from two subcontractors. Id. None of plaintiff’s designers attended the meeting.
Id.; Tr. 2426 (Schmitt); see also Tr. 3107 (Broussard) (explaining that contractors generally bring
their designers to postaward kickoff meetings).

         During the meeting, Mr. Herald advised the Coast Guard of plaintiff’s intent to submit the
100% design on January 10, 2004. Jt. Stip. ¶ 23. In addition, the Coast Guard informed plaintiff
that it was willing to allow plaintiff to “fast track” the construction of the building “by accepting
the foundation’s design ahead of the design for the rest of the building”; plaintiff responded that
this was its preferred course of action. Id.; accord id. ¶ 29; see also Tr. 2429-35 (Schmitt)
(explaining that construction could begin once plaintiff had prepared an architectural floor plan, a
structural design, a site plan, and a foundation plan), 2696 (explaining that the Coast Guard’s
fast-tracking suggestion was made in response to plaintiff’s representation that it would be
submitting a 100% design). At the conclusion of the meeting, at least some of the
attendees–including the Coast Guard’s mechanical engineer, John Fedei–walked the building
site. JX 35.1-.2; Tr. 2786 (Fedei); see also Tr. 2799, 2816 (Fedei) (indicating that he also walked
through the existing building containing the government-furnished equipment).

        Mr. Herald provided the Coast Guard with a tentative project schedule on December 11,
2003. JX 38. Thereafter, on January 6, 2004, Mr. Herald submitted an RFI to the Coast Guard
concerning a number of issues that needed to be addressed before plaintiff could finish designing
the HVAC system in the hydraulic test lab. Jt. Stip. ¶ 24; JX 42. In particular, Mr. Herald
requested specification sheets (also known as “cut sheets”) for each piece of equipment to be
installed in the hydraulic test lab, as well as information regarding the heat transference from the




                                                -11-
equipment and the equipment’s normal operating parameters.7 Jt. Stip. ¶ 24; JX 42. The
contracting officer’s technical representative responded the following day:

       Specifications for the government furnished and installed equipment should be
       obtained by field investigation by K-CON and/or [its] designers . . . .8 Some
       information (including operating parameters) may be obtained from AR&SC
       (Kent Goodwin) or [Coast Guard Support Center] Facilities Staff (Lt. Harry
       Mautte). In any case, K-CON is responsible for all necessary services to develop
       the design.

JX 44.2 (footnote added). Mr. Herald replied, later that day, that he recognized plaintiff’s
“responsibility to investigate[ ]and develop[] the design” and that he would try and contact the
suggested individuals for the information it needed. Id. Mr. Herald also received another
response to its RFI from the Coast Guard that day, this time from Michael Schmitt, the Coast
Guard’s design project manager. JX 43; JX 44.1. Mr. Schmitt wrote:

              The RFP documents indicate what equipment is being government
       furnished and installed. . . . Obviously, operating times and durations must be
       obtained from the user (AR&SC).

               Even though K-CON had nothing to do with the design of the existing
       shop, at the pre-bid conference, we walked through the shop . . . and discussed
       and viewed the equipment to be moved to the new building. We attempted to
       provide as much information in the RFP regarding existing equipment as possible
       for bidding purposes, however, we anticipated that fieldwork on K-CON’s part
       would be required to complete the design.

JX 44.1; see also JX 5 (describing what occurred during the August 28, 2003 prebid conference
and indicating that a representative from plaintiff was in attendance).




       7
           The terms “heat transference” and “heat load” are used throughout the trial record; both
refer to the same concept–the amount of generated heat.
       8
          There was conflicting testimony elicited during trial regarding whether the heat
transference information requested by plaintiff could be obtained during a site visit. Compare Tr.
242 (Ramsey) (suggesting that in the absence of documentation, the only way to ascertain how
much heat the equipment generated was to measure the heat generation while the equipment was
being operated), and Tr. 5661-62, 2718 (Schmitt) (remarking that heat information–such as the
size of the motors on the government-furnished equipment and how the equipment was being
cooled–could be ascertained from a site visit), with Tr. 522 (Tempel) (asserting that heat loads
could not be obtained from a site visit).

                                               -12-
       Mr. Herald provided the information he had obtained from the Coast Guard to the
subcontractor that plaintiff hired to design the HVAC system, Epic Engineering, Inc. (“Epic”).9
JX 47; see also Tr. 510 (Tempel) (reflecting that Mr. Herald’s RFI had originated from Epic). In
minutes from a January 8, 2004 project conference, Mr. Herald noted that “all of Epic[’]s
questions [had] been answered” and that the “[d]esign should be ready by” January 25, 2004. JX
47.

        Notwithstanding Mr. Herald’s understanding, Epic needed additional information to
complete the HVAC system design. JX 57; accord Tr. 606 (Tempel) (disagreeing that all of
Epic’s questions had been answered). Thus, on January 22, 2004, Mr. Herald sent a list of
questions to the Coast Guard to obtain that information. JX 57.1-.2. Mr. Schmitt responded the
following day, initially noting that the “questions [were] very similar in nature to those asked in
[the] RFI . . . .” JX 57.1. He indicated that many of the questions–those that concerned
“specifications/cut sheets”–could be answered by either examining the existing equipment that
would be relocated to the new building (in other words, by performing a field investigation) or by
requesting literature and data from Mr. Goodwin, and that another question could be answered by
reviewing sheet A102. Id.

        Eventually, on February 3, 2004, one of Epic’s principals, Aaron C. Tempel, a
mechanical engineer, Tr. 480 (Tempel), sent an electronic-mail message to Mr. Goodwin
requesting “cut sheets/specifications” and other information regarding the government-furnished
equipment, but not information regarding the equipment’s operating times and durations. Id. at
845-46; JX 70. Mr. Goodwin responded, on February 20, 2004, with some of the requested
information, but noted that “[n]o cut sheets [were] available to [his] knowledge.” JX 70.1.
Based on this information, along with the information he had obtained from the contract
specifications and Mr. Herald, Mr. Tempel made some assumptions and prepared a preliminary
mechanical design that provided for two units, a 10-ton unit and a 5- or 7.5-ton unit. Tr. 516-20
(Tempel); accord id. at 650-52 (affirming that the preliminary mechanical drawings did not
reflect a 100% design).

        In the meantime, on February 12, 2004, plaintiff provided the Coast Guard with a revised
project schedule. JX 71. In a February 23, 2004 letter, one of the three Coast Guard contracting
officers involved with this contract, Marion E. Hundley,10 advised plaintiff that the schedule was


       9
          Plaintiff also engaged Epic to design the building’s electrical, plumbing, and fire alarm
systems. JX 47; JX 126.1; see also Tr. 483 (Tempel) (reflecting that Epic does “all” of plaintiff’s
“mechanical, electrical, plumbing, and fire alarm design for just about every building [it does]
where there’s not already an engineer[] of record on board”). There is no evidence in the trial
record indicating that Mr. Herald contacted Mr. Goodwin or Lt. Mautte prior to providing Epic
with the information he obtained from the Coast Guard.
       10
        The contracting officer identified in the contract was Cathy Broussard. JX 1.26. In
December 2003, Ms. Broussard was promoted to be the chief of contracts at the FDCC LANT.

                                               -13-
“disapproved” for various reasons, including the fact that several items were missing. Id. Ms.
Hundley further noted that plaintiff had not yet submitted its 100% design despite indicating in
its original schedule that it would do so by January 13, 2004. Id. She requested that plaintiff
submit another revised schedule by March 4, 2004. Id.

         Plaintiff sent its first set of design documents–architectural, HVAC, plumbing, electrical,
fire alarm, site, and structural drawings–to the Coast Guard on February 23, 2004, for review and
comment. JX 72; JX 701. On February 25, 2004, the Coast Guard’s project manager, Steven
Allen, discussed the submission–which the Coast Guard received the previous day–with
plaintiff’s new project manager, Luther Ramsey,11 over the telephone. JX 75.1. Later that day,
Mr. Allen followed up the telephone conversation with an electronic-mail message in which he
provided Mr. Ramsey with “a partial list of concerns about the design submittal.” JX 75. For
example, with respect to the HVAC drawings, Mr. Allen noted that plaintiff did not include any
calculations or supporting data for the HVAC system and that the HVAC floor plan was
“unusual” and “vastly incomplete.” JX 75.1; see also Tr. 529-30 (Tempel) (explaining that only
preliminary HVAC calculations could be performed in the absence of heat transference
information and that the floor plan “was as complete as it could possibly be based on the very
limited and inconclusive information that [Mr. Tempel and plaintiff] had received”). Mr. Allen
explained that the Coast Guard did not “feel that [the] submittal met the intent of the RFP
documents” and that as a result, it “consider[ed the] submittal incomplete.” JX 75.1; see also JX
77 (containing Mr. Schmitt’s statement that “the design was close to being finished”); Tr. 224
(Ramsey) (acknowledging that the design submittal was incomplete). He suggested that plaintiff
have its designers contact the relevant Coast Guard reviewers “to avoid [the Coast Guard] having
to reject another submittal.” JX 75.1; see also JX 79 (indicating that the Coast Guard reviewers
had not been contacted by plaintiff’s designers as of March 4, 2004); Tr. 843-44 (Tempel)
(indicating that Mr. Tempel did not contact Mr. Fedei until July 2004), 2790-91 (Fedei) (noting
that Mr. Fedei did not receive a telephone call in response to the Coast Guard’s suggestion to
plaintiff). Finally, Mr. Allen indicated that the Coast Guard was willing to assist plaintiff in
avoiding “potential schedule slippages” by allowing plaintiff to “submit the foundation/structural


Tr. 3088-89 (Broussard). As a result of the promotion, Ms. Broussard became Ms. Hundley’s
supervisor. Id. at 3094. A third contracting officer, Victoria W. Worrell, filled the position
vacated by Ms. Broussard. Id. Ms. Broussard remained involved in the Coast Guard’s contract
with plaintiff so that she could train the other contracting officers regarding Federal Supply
Schedule contracts. Id. at 3092-93.
       11
            Plaintiff fired its original project manager, Mr. Herald. JX 112.1; JX 113; Tr. 1385-86
(Combs). The evidence in the trial record reflects that Mr. Herald was responsible for some of
the early delays in the project. See, e.g., JX 103 (“The original [project manager] is who caused
the start-up of this project to fall on its face. . . . They are struggling under problems that their
original [project manager] caused.”); JX 112.1 (“K-CON’s first [project manager] mismanaged
the project and got it off on the wrong foot. . . . K-CON’s original [project manager], who was
fired for lack of performance, clearly mismanaged the project by [its] own admission.”).

                                                -14-
design in advance to allow that portion of the construction contract to proceed in advance of the
interior building design.” JX 75.2; accord JX 79 (reiterating, in a March 4, 2004 electronic-mail
message, the offer to allow plaintiff to “‘fast-track’ building foundation work”); JX 86.1
(reiterating, in a March 16, 2004 electronic-mail message, the offer to allow plaintiff to “‘fast-
track’ building foundation work”).

         Mr. Ramsey prepared a new project schedule on February 29, 2004, and submitted it to
the Coast Guard. JX 532; Tr. 213, 215, 223 (Ramsey). Then, on March 3, 2004, Mr. Ramsey
traveled to Elizabeth City and viewed the equipment that the Coast Guard wanted installed in the
new building. Tr. 187, 191-93, 198-200 (Ramsey). He observed that “two of the units . . . were
still connected,” but that “[t]he rest were unconnected and pushed away in corners [with] no
evidence of how they were installed.” Id. at 191. He further found that much of the equipment
was “very old, very antiquated.” Id. at 187; accord id. at 192. He was advised by Mr. Goodwin,
who took him to view the equipment, id. at 210, that the Coast Guard did not have “any
catalog[s], cut sheets, or any kind of maintenance manuals” for the equipment, id. at 192; accord
id. at 210, 235, 264; see also id. at 271 (indicating that Mr. Ramsey did not recall whether he
asked Mr. Goodwin for the equipment’s operating schedules). Mr. Ramsey forwarded the
information that he gathered during his site visit to Epic. Id. at 210.

       That same day, plaintiff sent a letter to the Coast Guard requesting an extension of the
contract completion date by 105 days–until September 30, 2004–explaining that its performance
had been delayed for several reasons, including:

       •   The [Coast Guard] contract[] requirements differ materially from the standard
           GSA guidelines Design-Build requirements. In complying with your
           engineering package we have discovered that full design is really what you are
           requiring. This requires more time. Example: In design build we can
           traditionally start some site and foundation work at the same time that final
           building design calculations are being proofed. Currently we have to hire
           surveyors[] and soil engineers to do pre-design work before the construction
           design can be started, then designs cannot be completed until the building
           structur[e] is designed. It is a case of having all the answers in hand before a
           task can be viewed completed.

       •   Requests for information on owner furnished equipment have been
           incomplete. We are currently scheduling a trip back to obtain this
           information. This has caused mechanical and electrical design to be
           incomplete.

JX 78.1. The Coast Guard responded to this letter the next day via electronic mail, JX 79, and
followed up with a letter on March 23, 2004, JX 91. In that letter, the Coast Guard indicated that
plaintiff’s request for additional time was not sufficiently justified. JX 91.1. The Coast Guard
also reiterated that the 100% design that plaintiff submitted on February 23, 2004, was


                                               -15-
incomplete, referring plaintiff to an enclosed list of comments, JX 91–the same comments that
the Coast Guard sent to plaintiff on February 25, 2004, compare JX 75.1 (comments of February
25, 2004), with JX 91.2 (comments of March 23, 2004).

         Throughout March 2004, plaintiff and Epic continued to gather information from the
Coast Guard that they needed to design the building’s HVAC system. See, e.g., JX 90; JX 92;
JX 94. In addition, on March 18, 2004, Mr. Tempel calculated thermal loads for the hydraulic
test lab and determined that the room required a 7.5-ton unit. JX 89; Tr. 527 (Tempel); see also
Tr. 807-08 (Tempel) (noting that the calculations were “improper” and “erroneous” because Mr.
Tempel lacked the heat load information for the equipment to be placed in the hydraulic test lab).
At the end of the month, plaintiff issued subcontracts to the contractors who had provided
quotations and assisted in the design. JX 95. One of those contractors was Ward & Son, Inc.,
who had provided a quotation for the design and installation of the HVAC system. JX 109.1. In
an April 1, 2004 letter, Jack Ward of Ward & Son, Inc. expressed concern regarding the effects
that the delay in receiving the subcontract and the increased scope of work described in the
subcontract would have on Ward & Son, Inc.’s ability to perform at the price it quoted almost
seven months earlier. JX 109.1-.3; see also JX 142 (indicating, in a May 25, 2004 revised
quotation, that Ward & Son, Inc. could install the HVAC system for $74,405). Of particular
note, Mr. Ward advised:

       I was told that your mechanical engineer would redraw and check over my design
       and calculated loads. I was surprised when I received no new drawings and am
       being asked to sign off on drawing[s] and loads that I gave you as part of your
       subcontract [sic]. Does this mean that what I gave you is approved by your
       [mechanical engineer]? Or am I going to get a surprise with radical changes in the
       future? . . . In February, I spoke with Aaron Tempel, your project design
       [mechanical engineer], and I got the feeling from him that because of the existing
       water chiller that I may have over calculated the added cooling load when their
       test equipment is operating. At that time we talked about the fact that [the HVAC
       system for the hydraulic test lab] did not need to be a heat pump and could be a
       cooling only system. Whatever became of these two subject[s] of conversation?

JX 109.2; cf. JX 511 (reflecting that plaintiff cancelled its subcontract with Ward & Son, Inc. on
July 27, 2005 due to the increased quotation).

        Meanwhile, on March 31, 2004, plaintiff sent another letter to the Coast Guard to request
an extension of the contract completion date by 105 days. JX 98. It enumerated several reasons
for the delays it was encountering; in addition to the reasons set forth in its March 3, 2004 letter,
plaintiff contended that the delays were attributable to the following issues:

       •   Design required more site investigation than originally estimated. Initially K
           Con, Inc tried to implement the design process with utilizing owner provided
           information and/or through a series of RFI type emails. This proved to be


                                                -16-
           unsatisfactory. Our design budget was based on this approach and was value
           passed on to the owner in the bid price.

       •   Visiting and reviewing existing systems has not clarified, but to the contrary
           has shown there exists inoperable equipment, undersized systems and in
           general “not standard installations” that we may have to mimic.

       •   There was additional equipment not known at bid time that had to be reviewed
           and questioned as to status.

JX 98.2. In a memorandum dated April 1, 2004, Mr. Allen recommended to the contracting
office that the contract completion date be extended by 105 days: forty-four days for the delay in
conducting the postaward kickoff meeting, thirty-five days related to steel shortages, and twenty-
six days to account for the additional time required to “coordinate/resolve [the] connection of
Government relocated equipment.” JX 102.

        Also on March 31, 2004, Mr. Schmitt advised Mr. Allen via electronic mail that he
noticed that plaintiff’s initial architectural and structural drawings reflected a building that was
smaller than specified in the drawings included with the RFP; it was almost two feet shorter in
both length and width. JX 101.2; see also JX 1.14 (containing the relevant RFP drawing). Mr.
Allen forwarded Mr. Schmitt’s observations to Mr. Ramsey on April 1, 2004, who responded
that plaintiff’s design conformed with the contract specifications setting forth the building
dimensions and square footage. JX 101.1-.2; see also JX 1.53 (containing the relevant
specification section). That same day, in an internal Coast Guard electronic-mail message, Mr.
Schmitt wrote:

       Our RFP drawings clearly indicate a building that is 76'-11" x 61'-11", with
       structural frame dimensions (centerlines) of 75'-0" x 60'-0" (which is what I
       intended by the dimensions listed in the specifications). This is a clear
       discrepancy, but one that should have been brought to our attention. The
       Contractor’s designers used our [computer-aided design d]rawings to develop
       their drawings. In order for them to develop their drawings, they had to
       consciously reduce the building 1'-11" in each direction. Since this was a
       conscious effort on their part, they should have brought it to our attention. They
       did not.

JX 101.1; accord Tr. 2714-18, 2772-75 (Schmitt).

        On April 5, 2004, plaintiff sent a third letter to the Coast Guard requesting an extension
of the contract completion date. JX 106. In this letter, plaintiff requested an extension of 126
days: forty-five days for the delay in conducting the postaward kickoff meeting, sixty days
related to steel shortages, and twenty-one days to accommodate redesigning the building to add
approximately two feet to the building’s length and width. Id.; Tr. 249, 252-53 (Ramsey)


                                                 -17-
(asserting that plaintiff’s request did not relate to the HVAC system or the hydraulic test lab); see
also Tr. 2722-24 (Schmitt) (acknowledging that changing the buildings’ dimensions would
require changing all of the drawings and the redoing the structural calculations). Four days later,
Mr. Allen submitted to the contracting office a “request for proposal” to extend the contract
completion date by 126 days: forty-five days for the delay in conducting the postaward kickoff
meeting, thirty-five days related to steel shortages, twenty-five days related to “[c]oordination
issues in Dec-Feb timeframe,” and twenty-one days to accommodate redesigning the building to
add approximately two feet to the building’s length and width. JX 530.4-.5. The parties
ultimately executed a bilateral contract modification, effective April 15, 2004, that extended the
contract completion date by 126 days to October 21, 2004, without indicating the reason or
reasons for the extension.12 JX 3.3-.4; accord Tr. 3176 (Broussard). By executing the
modification, plaintiff released the Coast Guard “from any and all liability under [the] contract
for further equitable adjustments attributable to such facts or circumstances giving rise to the
proposal for adjustment, including all claims for impacts, delays, and disruptions.” JX 3.4.

         While plaintiff and the Coast Guard were negotiating the contract modification, Mr.
Tempel, on or around April 1, 2004, sent plaintiff preliminary mechanical drawings and a
document setting forth the information that he needed to finalize those drawings. JX 100; JX
703. The drawings reflected, as proposed previously, the use of a 10-ton unit to condition the
entire building and a 7.5-ton unit to provide supplemental conditioning for the hydraulic test lab.
JX 703.13; Tr. 533 (Tempel); accord id. at 809 (explaining that the April 1, 2004 design was
basically the same as the preliminary design, just more detailed). The requested information
included “component nameplate data” and “[c]omponent connection requirements” for various
pieces of government-furnished equipment, including the equipment to be placed in the hydraulic
test lab. JX 100.2. Mr. Tempel recognized that the nameplate data and connection requirements
would need to be obtained during a site visit. Id.

        The Coast Guard received another 100% design submittal from plaintiff on April 5, 2004.
JX 113; JX 115.1. Four days later, before completing its review, the Coast Guard sent plaintiff
via electronic mail some “initial comments that need[ed] to be addressed sooner rather than later”
because some of the drawings did not conform to the contract specifications. JX 115.1. For
example, Mr. Fedei questioned whether the hydraulic test lab was receiving “excess cooling”
given the amount of heat being removed by the chilled water system. Id.; JX 119.53. In
addition, plaintiff did not provide any “HVAC calculations” with its submission. JX 115.1; see
also Tr. 2794-95 (Fedei) (indicating that there “was very little change” between this mechanical
design and the previously submitted design, and specifically noting that plaintiff had not made
any corrections or answered any of the Coast Guard’s concerns). And, the Coast Guard noted
that the ceiling clearances in the hydraulic test lab would not accommodate the ducts proposed by
plaintiff. JX 115.1; JX 119.53.


       12
           According to Mr. Ramsey, who negotiated the contract modification on plaintiff’s
behalf, the modification did not include an extension of time related to the HVAC system design
issues. Tr. 471 (Ramsey).

                                                -18-
        Shortly thereafter, on April 13, 2004, the Coast Guard provided plaintiff with a complete
set of marked-up drawings. JX 119. The Coast Guard’s reviewers placed their names and
telephone numbers on the drawings that they reviewed. JX 119.21, .32, .39, .51. The mechanical
drawings, which were prepared by Epic, were marked up by Mr. Fedei. JX 119.51-.55; Tr. 827
(Tempel), 2797-98 (Fedei). In the letter accompanying the marked-up drawings, Ms. Hundley
noted that the “comments [did] not constitute a change to [the] contract.” JX 119.1. She further
requested that plaintiff submit a revised project schedule reflecting the newly extended contract
completion date. Id. That same date, Mr. Ramsey forwarded the Coast Guard’s initial comments
to plaintiff’s designers, including Mr. Tempel. JX 120.1. Then, on April 19, 2004, Mr. Ramsey
provided Mr. Tempel with Mr. Fedei’s contact information. JX 125.1. Mr. Tempel did not
immediately contact Mr. Fedei. See Tr. 843-44 (Tempel) (indicating that Mr. Tempel did not
contact Mr. Fedei until July 2004), 2822 (Fedei) (same).

         After additional prompting, JX 133.1, plaintiff sent the Coast Guard a revised project
schedule on May 5, 2004, JX 135; JX 136. The Coast Guard deemed the schedule to be
incomplete, and relayed this fact to plaintiff during a May 6, 2004 telephone conference. JX
133.1; JX 139. After the conference call, another of the three contracting officers involved with
this contract, Cathy Broussard, sent plaintiff a letter warning that plaintiff’s “failure to submit a
proper progress schedule and failure to perform any work on site was endangering the
performance of [the] contract,” and that plaintiff had ten days in which to cure the deficiencies.
JX 139. Plaintiff responded to the cure letter on May 16, 2004, describing its progress in various
aspects of the project. JX 141. It explained that it was “refining [its] construction schedule with
suppliers and subcontractors” and would submit the schedule on May 20, 2004. JX 141.2; see
also JX 751 (containing a project schedule prepared by plaintiff on May 19, 2004, that projected
that the design would be complete by June 23, 2004, and that all work would be complete by
October 21, 2004). It further indicated that it had completed the layout of the building and was
“coordinating” with the Coast Guard regarding the “the location of existing utilities.” JX 141.2.
In addition, plaintiff asserted that it planned “to start site work and installation of the building
pad” on May 18, 2004, and that, “[o]nce the [f]oundation design [was] revised and approved,” it
was prepared to install the foundation. Id. But see Jt. Stip. ¶ 36 (reflecting that plaintiff did not
install the building pad until August 19, 2004). Finally, it stated that it was “inspecting the
existing equipment to be relocated . . . and . . . holding on site discussions with the base
personnel to evaluate the impact of the[] planned move[].” JX 141.2.

        On June 2, 2004, Mr. Tempel sent an electronic-mail message to Mr. Ramsey and Mr.
Schmitt requesting additional information to complete the HVAC system design in light of the
Coast Guard’s April 9, 2004 initial comments. JX 144.1; see also Tr. 837-39 (Tempel)
(explaining that he discussed the Coast Guard’s comments with plaintiff before sending the
electronic-mail message). In particular, Mr. Tempel requested “detailed cut sheets” of the
equipment that would be placed in the hydraulic test lab so that he could “determine the
equipment’s temperature tolerances and the actual heat gain to the space.” JX 144.1. He noted
that once he obtained this information, he could “address the ductwork sizes and location[s],”
and in the absence of such information, he made certain assumptions regarding the government-


                                                -19-
furnished equipment. Id. Among Mr. Tempel’s assumptions were that “[o]nly one piece of
equipment [would] operate at one time,” that the 75-horsepower motor would produce a
specified amount of heat, and that “[t]he chilled water system [would] compensate for” some of
the heat generated by the equipment. Id. Mr. Schmitt responded to Mr. Tempel on June 7, 2004,
by forwarding a copy of the electronic-mail message that had been sent to Mr. Herald in response
to similar questions several months earlier. JX 147.1; see also JX 57 (containing the forwarded
electronic-mail message, which was dated January 23, 2004); JX 70.1 (reflecting that Mr.
Tempel had already been advised, on February 20, 2004, that no cut sheets were available for the
government-furnished equipment); Tr. 192 (Ramsey) (reflecting that Mr. Ramsey had already
been advised, on March 3, 2004, that no cut sheets were available for the government-furnished
equipment).

        In the meantime, on June 3, 2004, Mr. Tempel sent revised drawings to Mr. Ramsey, but
noted that further revisions might be necessary if his assumptions regarding the hydraulic test lab
equipment were incorrect. JX 145; JX 704; JX 705; see also Tr. 540-41 (Tempel) (indicating
that there were no “significant changes” between the revised mechanical drawings and those Mr.
Tempel prepared on April 1, 2004). The following day, plaintiff resubmitted its 100% design
drawings–including architectural, HVAC, plumbing, electrical, fire alarm, site, and structural
drawings–to the Coast Guard. JX 146. The Coast Guard received the drawings on June 7, 2004.
Id.; JX 148.1. Mr. Fedei reviewed the mechanical drawings and expressed his concerns to Mr.
Schmitt and Mr. Allen regarding (1) some of the assumptions made by Mr. Tempel and (2) the
evidence suggesting that a site visit to assess the existing equipment was not conducted. JX
150.1. In particular, Mr. Fedei indicated that Mr. Tempel incorrectly assumed that the 75-
horsepower motor was operating at full capacity and efficiency for long periods of time, and that
the chilled water system compensated for some of the heat generated by the motor. Id.; Tr. 3037-
38 (Fedei).

       As reflected in internal electronic-mail messages sent on June 9, 2004, the Coast Guard
determined that plaintiff’s most recent 100% design submittal was deficient and, therefore,
unreviewable. JX 151; JX 152. The drawings were not easily readable, JX 148.1, plaintiff did
not submit a foundation plan or foundation calculations, JX 151, and there were a number of
issues with the HVAC system design, JX 152.1. With respect to the latter problem, Mr. Fedei
noted:

       From a mechanical standpoint it would appear that the HVAC treatment is
       deficient, as can be discerned from my e-mail of yesterday, but without
       calculations it is unsure of the extent. The calculations were apparently not
       officially required by the spec[ifications]. The area of greatest concern is the
       Hydraulic test room, which, after looking at the engineer’s provided assumptions,
       I feel may be significantly mistreated. In addition, none of my previous comments
       were addressed at this submittal. With the exception of [three items,] there was
       little, if anything, done to any other mechanical sheets since the last submittal.



                                               -20-
Id. The Coast Guard advised plaintiff via electronic mail that it needed “readable prints and a
correct foundation plan.” JX 151.

       Plaintiff submitted another set of 100% design drawings to the Coast Guard on June 10,
2004, consisting of the previously omitted foundation plan and more legible copies of the other
drawings. JX 156. Mr. Schmitt instructed the Coast Guard reviewers to ascertain whether the
drawings were sufficiently complete to allow for a review and, if so, to review the drawings for
“‘compliance with’” the RFP. Id. Mr. Schmitt collected the reviewers’ comments and forwarded
them to Mr. Allen. JX 157. He advised:

       The mechanical design has some significant comments that will require resolution
       and at least one maybe two more resubmittals will be required before the
       documents are useable for construction. Please recommend in your letter of
       transmittal that K-CON’s mechanical engineers contact John Fedei via telephone
       before they proceed to correct their design.

Id.

         The Coast Guard forwarded its comments and a set of marked-up drawings to plaintiff on
June 18, 2004. JX 158. With respect to the mechanical design, the comments mirrored those
made by Mr. Fedei in his internal communications–that some of the assumptions that formed the
basis of the design might not be correct, that it appeared that the designers did not conduct the
recommended site visit, that the HVAC treatment was deficient, and that the hydraulic test lab
appeared to be mistreated. JX 158.4-.5. In the letter accompanying the comments, Ms. Hundley
heeded Mr. Schmitt’s recommendation and informed plaintiff: “The mechanical design has
some significant comments that will require resolution. Re-submittal of the mechanical design
will be required before the documents are useable for construction. Please ensure your
mechanical engineer contacts [Mr. Fedei] before re-submitting the mechanical design.” JX
158.1. Ms. Hundley also advised plaintiff that it could “proceed with the metal building and
foundation construction” and then “[i]ncorporat[e] and correct[] the architectural, mechanical,
and electrical drawings . . . while foundation construction is occurring.” Id.; see also JX 164
(clarifying, in a June 23, 2004 electronic-mail message, the June 18, 2004 letter to reflect that
plaintiff could proceed with construction unless it took exception to the review comments and
that the foundation drawings were required to “be sealed and signed by the designer of record”);
cf. Tr. 221-22 (Ramsey) (explaining that “[n]one of the items beyond the mechanical rough-in
could be installed until [plaintiff] had a mechanical design” and that the electrical, plumbing, and
fire alarm systems could not be completed until the mechanical system was designed), 489-92
(Tempel) (remarking that the mechanical system has to be designed before the electrical system,
and that the mechanical design could affect the architectural and structural designs). Plaintiff
forwarded the Coast Guard’s letter and comments to Epic on June 21, 2004. JX 159; see also JX
159.8-.13 (containing Mr. Tempel’s notes regarding the Coast Guard’s comments).




                                                -21-
        Work on the job site began on June 29, 2004, when plaintiff’s site work subcontractor
laid out the building and began excavation. JX 4.36; JX 168.1; see also JX 169 (reflecting that
the work had commenced before the submission of signed and sealed foundation drawings and
that therefore, the work was being done at plaintiff’s own risk). In typical metal building
construction projects, once excavation is completed, the foundation and slab are poured, the
building’s structural steel is erected, and the wall and roof panels are installed. JX 532; Tr. 967-
69 (Parker), 1274-75 (Combs), 2436-37 (Schmitt). Then, the windows and doors are installed (or
the openings covered) to make the building weather-tight. Tr. 223 (Ramsey), 968-70 (Parker).
At this point, contractors can begin work on the interior of the building. Tr. 967-70 (Parker);
accord JX 532; Tr. 223 (Ramsey). Generally, the HVAC system is installed first due to the large
size of the equipment and the ductwork. Tr. 492 (Tempel), 968-69 (Parker). After the
mechanical, electrical, plumbing, and fire alarm systems are roughed in, the walls can be
completed. JX 532; Tr. 1658-59 (Combs). The ceilings are completed after the aforementioned
systems are fully installed. JX 532; accord Tr. 968-69 (Parker). Finally, when the interior is
complete, the contractor demobilizes. JX 532.

        Plaintiff “submitted sealed structural foundation drawings to the Coast Guard” on July 6,
2004. Jt. Stip. ¶ 34. On July 12, 2004, the Coast Guard accepted those drawings and allowed
plaintiff to “proceed with construction.” JX 175.

      One day later, plaintiff submitted an RFI to the Coast Guard based on correspondence
from Mr. Tempel. JX 179. Mr. Tempel had written:

              I have spoken with the Coast Guard’s mechanical engineer John Fedei to
       discuss dealing with the heat loads generated from the hydraulic test equipment.
       Based on this conversation there are two options that are acceptable to the Coast
       Guard:

               1. Exhaust the air utilizing hoods and fans to remove heat, and provide a
               conditioning unit to condition the make up air. This option could
               potentially cost a considerable amount more to install and to operate. It is
               also out of your original scope of work.

               2. Provide an air conditioning system that is approximately 30% larger
               than the one serving the existing equipment layout. This system must also
               be sized to account for any differences in the new vers[u]s existing
               building envelope. This will only partially condition the space, but will
               satisfy Mr. Fedei.

              During conversations while conducting the research it has been brought to
       my attention that the hydraulic test equipment generates a considerable amount of
       mist within the room. This hydraulic mist may be both an environmental and an
       explosive hazard and may require special design conditions for both the


                                               -22-
       mechanical and electrical systems. It is imperative that this issue be resolved
       prior to completing the design of the mechanical system, and may require
       revisions to the electrical system as well.

JX 178.2; JX 179.3; see also Tr. 545-46 (Tempel) (noting that the first option was a different
system that would require different equipment and that the second option was what had already
been designed). In light of Mr. Tempel’s comments, plaintiff requested, in its RFI, direction on
how to deal with the potentially hazardous conditions in its design. JX 179.2. Further, in the
electronic-mail message containing the RFI, plaintiff noted that “[t]he expanding HVAC
requirements [were] impacting [its] design and construction budgets.” JX 179.1. It therefore
requested a contract modification once the Coast Guard “decided which issues it wishe[d] to
address and which to ignore.” Id.

       Upon reviewing the RFI, Mr. Fedei took exception to Mr. Tempel’s letter, writing the
following in a July 13, 2004 electronic-mail message to Mr. Allen:

       First, [the relevant contract specification] indicates that K-CON is to provide
       HVAC to the facilities, and while it indicates the types of equipment that the user
       would like to see being used, [it] does not in any manner dictate how the spaces
       are to be treated. It states that HVAC is to be provided in accordance with
       [specified] mechanical codes. [Mr. Tempel’s telephone call] yesterday was
       predicated on his requesting assistance in trying to resolve how to specifically
       treat the Hydraulic Test room (since he did not do a site visit). We discussed what
       knowledge he had of the equipment, how he calculated his loads, and some of the
       possibilities of obtaining a reasonable treatment of the spaces since he had no real
       feel for any heat output, etc. of the existing hydraulic equipment, etc. . . . At no
       time did I ever indicate that [the two options in his letter] were the only options
       acceptable . . . . I was trying to help him resolve a situation which he was not
       prepared to handle, but was not directing how it was to be done. The [relevant
       contract specification] clearly gives him the latitude to do it [with] other means, as
       long as it meets [the specified industry] standards.

JX 180. Ultimately, a conference call was scheduled for July 20, 2004, for plaintiff and the
Coast Guard to discuss the RFI. JX 181.2; JX 183.

       The conference call occurred as scheduled, after which plaintiff sent an electronic-mail
message to the Coast Guard containing its summary of the participants’ discussion. JX 186. It
described the conversation regarding the heat load of the hydraulic test equipment as follows:

               During our phone conference we discussed the design of the HVAC
       system for room 106. It is known our current and originally proposed and
       budgeted design will not work efficiently within this room. Additional
       calculations were conducted on room 106 due to the amount of heat generated by


                                               -23-
       the 75hp motor and 25hp motor. After conducting those calculations our
       mechanical engineering group submitted two options that may be acceptable to
       the Coast Guard. As it was discussed both of those options are not inclusive of
       K-Con’s original budgeted design nor our proposal based on the RFP documents
       received by the [Coast Guard]. It was discussed that K-Con needs an accurate
       operating schedule to correctly design the HVAC tonnage for room 106. We were
       told a more accurate schedule would be provided by Monday the 26th of next
       week. Once this information is received we will reevaluate the design and submit
       for final approval and/or a cost or no cost [change order].

                We also discussed the amount of hydraulic fluid that is being improperly
       released from the existing equipment and creating a fine mist that is currently
       choking the existing HVAC system. This information was provided to our
       mechanical engineer by on site personnel/operators. K-Con is requesting that the
       existing test equipment is repaired prior to the install of the new equipment or a
       letter is received from contracting releasing K-Con and the HVAC manufacturer
       from any warranty claims to the hydraulic mist within room 106.

Id.; see also JX 178.2 (containing Mr. Tempel’s handwritten note that the Coast Guard advised
plaintiff during the conference call that it would not be required to make any adjustments related
to the hydraulic mist); JX 188 (containing another participant’s notes regarding the size of the
HVAC system). But see JX 44.1-.2 (reflecting that the Coast Guard advised plaintiff on January
7, 2004, to contact the AR&SC to obtain the government-furnished equipment’s normal
operating parameters). Plaintiff also noted in its electronic-mail message that it had sent its
100% design package to the Coast Guard earlier that day. JX 186; accord JX 191 (indicating that
plaintiff sent the Coast Guard civil, architectural, structural, electrical, HVAC, plumbing, and fire
alarm drawings, along with a fire sprinkler layout and plans for the prefabricated metal building);
see also Tr. 869-70, 872 (Tempel) (indicating that the mechanical design was essentially the
same as the prior mechanical designs), 872-75 (representing that at this point in time, Mr.
Tempel did not believe that obtaining the operating schedule of the equipment to be placed in the
hydraulic test lab would affect the design because (1) the Coast Guard had expressed its
willingness to accept a heat pump and air handler unit that was 30% or 50% larger than the
existing unit, and (2) everyone “understood that the conditions in the RFP couldn’t be met”).

        After the conference call, Mr. Schmitt gathered the information related to the operating
schedule of the equipment in the hydraulic test lab from Mr. Goodwin at the AR&SC. JX 189;
JX 202. Mr. Schmitt explained to Mr. Goodwin that plaintiff “[had] been making some wrong
assumptions and gathered some erroneous (we think) information regarding the hydraulic test lab
equipment operating times.” JX 189.1. Mr. Goodwin provided the requested information two
days later.13 JX 202.1-.2. In addition to noting the equipment’s operating frequency and


       13
           Upon receiving the collected information, Mr. Schmitt remarked to Mr. Goodwin:
“[I]t looks as though we will be having a problem trying to cool this room with reasonably sized

                                                -24-
duration, Mr. Goodwin indicated that “[t]he HTS-25 [sic] and the HPTS-1000 run at the same
time, about twice a month, @ a 2 hour duration.” JX 202.2.

       The Coast Guard also reviewed plaintiff’s most recent 100% design package–received on
July 14 and July 21, 2004–and prepared a list of comments. JX 205.2-.5. Relevant to the
hydraulic test lab’s HVAC system, it noted:

       •   “Basically a repeat of the same concern that the HVAC coverage of the
           Hydraulic test lab needs to be re-assessed to determine more accurate heat
           dissipation loads and means of efficiently treating the area of concern.”

       •   “Need a return line to AHU-2 from the hydraulic test room. Due to heat, and
           possibly some slight odor build up in the room, would also recommend that
           the test room be under a slight negative pressure to help maintain comfort
           odors in the surrounding areas.”

       •   “Any hydraulic misting occurring within the test room is a result of equipment
           problems (leaking hose or fittings, etc.) which is a maintenance problem that
           [the AR&SC] needs to address. It is not an item of concern for the designer as
           it is not a normal condition that should be occurring during the test
           operations.”

JX 205.3. The Coast Guard forwarded its comments to plaintiff on July 23, 2004. JX 205.1. In
the letter accompanying the comments, the third contracting officer involved with the contract,
Victoria W. Worrell, noted that the Coast Guard had completed its review of plaintiff’s 100%
design “with the exception of the HVAC system.” Id. She further stated:

                The HVAC system has some outstanding issues related to the hydraulic
       test lab that require resolution, and re-submittal of the mechanical design will be
       required before the documents are useable for construction. We feel that the
       resolution of these issues is ultimately K-CON’s responsibility, but we want to
       assist in every way we can to resolve the “real” design requirements. Therefore,
       our mechanical reviewer, Mr. John Fedei, has contacted the building user to
       request information regarding the operating parameters of the various pieces of
       test equipment. We expect that a meeting at the site or, at the very minimum, a
       conference call will be required to resolve these issues.

Id.; see also Tr. 2829 (Fedei) (remarking, with respect to the importance of a site visit, that “[i]t
would have been beneficial for [everyone] to take a look at the equipment and discuss the


equipment.” JX 202.1. However, Mr. Fedei disagreed, testifying during trial that he could
design an HVAC system for the hydraulic test lab that used reasonable sized equipment. Tr.
3045-46 (Fedei).

                                                 -25-
parameters . . . and work out [the] differences or . . . come up with a consensus [regarding] a
pragmatic approach to the design of this project” and that it “would have given [Mr. Tempel] an
opportunity to see the equipment firsthand . . . so he could see why his assumption was
incorrect”). Then, after emphasizing that the Coast Guard’s comments were not to be considered
changes to the contract, Ms. Worrell indicated that once plaintiff had incorporated the Coast
Guard’s comments and submitted its final design, it could “proceed with all work other than that
related to the HVAC system,” and that once the design requirements of the HVAC system were
resolved, the mechanical drawings could be incorporated into the final design. JX 205.1; accord
Tr. 2738-40 (Schmitt) (indicating that plaintiff was permitted to do everything but install the
HVAC system and that if there were any problems as a result allowing plaintiff to proceed in this
manner, the Coast Guard would bear responsibility); see also Tr. 1320 (Combs) (noting that
“things related to the HVAC system could be electrical, . . . architectural, [or] structural even”).

        On July 28, 2004, Mr. Schmitt forwarded the information that he received from Mr.
Goodwin regarding the operating schedule of the equipment in the hydraulic test lab to plaintiff’s
new project manager, Butch Clayton.14 JX 212. The following day, Mr. Clayton forwarded the
information to Mr. Tempel, JX 260.1, and plaintiff and the Coast Guard agreed to conduct a
conference call–to also include Mr. Tempel–on July 30, 2004, to discuss the HVAC system
design, JX 212.1. The conference call was apparently rescheduled for August 2, 2004, JX 217.3,
but on that date, Mr. Allen advised plaintiff that the Coast Guard would “need to defer [the]
phone call . . . until another date, perhaps after the proposed mod[ification] is forwarded,” JX
217.2. The proposed modification referenced by Mr. Allen related to the Coast Guard’s decision
to “‘build-out’ as much of the undeveloped space in the new [building] as [it could] within” its
budget. JX 153.1. Indeed, on August 3, 2004, the Coast Guard requested that plaintiff
“[p]rovide design and construction documents to expand building first floor build-out, add on
elevator and add rooms on second floor . . . .” JX 219.1; accord JX 220; see also Tr. 2632
(Schmitt) (characterizing the proposed modification as requiring “considerable interior work”
that included “HVAC work”). Plaintiff submitted its proposal to the Coast Guard on September
8, 2004. JX 244.2. The Coast Guard decided not to accept it, JX 244; JX 245; JX 246, and so
informed plaintiff by telephone on September 9, 2004, JX 248. After the telephone call,
plaintiff’s president, Patrick Kiernan, sent an electronic-mail message to the Coast Guard
reflecting plaintiff’s ongoing frustration:

       I may add (as I have verbally and in writing previously), we have 50 or so projects
       going nationwide. Most of our projects are running quite smoothly with a
       partnership mentality among government-customer, K-Con and sub/suppliers.
       When a customer in that scenario asks for an RFP, the design/builder (and/or
       sub/suppliers) doesn’t have to spend extra hours and days making sure they cover
       or exclude in writing all the ‘snares’. Unfortunately, our short relationship with
       [the Coast Guard] involving [projects in Elizabeth City, St. Petersburg, Florida,
       and Port Huron, Michigan] has proven to be not only painful, but a far cry from


       14
            Mr. Clayton replaced Mr. Ramsey on July 21, 2004. Tr. 268, 272, 431 (Ramsey).

                                                -26-
       profitable. Since we and our sub/suppliers are “for profit” organizations in a free
       enterprise system, this relationship has been less than “win-win”, therefore, a
       failure to date.

Id.; accord JX 93.1 (containing the following March 18, 2004 meeting agenda note by Mr. Allen:
“Apparently, level of design greater than KCon ‘used to’”); JX 315.1 (including the following
complaint from Mr. Clayton in an October 13, 2004 electronic-mail message: “[W]e are trying
to work with you but the email below is an excellent example of a government caused delay. If
[the Coast Guard] would stop causing these types of delays and allow this project to be built as
originally proposed ‘Design/Build’ the process would be much smoother. You reference
spec[ification] sections within your contract that are clearly pertaining to a bid/spec/build project
and not a design build project.”); Tr. 1271-72 (Combs) (stating that plaintiff’s experience with
contracting with the federal government has been “greatly successful,” that plaintiff has had “just
great relationships all over the country,” and that plaintiff had only been assessed liquidated
damages on four projects–the three Coast Guard projects and a project for the United States
Navy); see also JX 369.1 (containing a November 30, 2004 remark from plaintiff that “[t]his is
once again evidence of the [Coast Guard’s] unjust[] tactics to only enrich themselves at the cost
of others”); JX 374 (containing an electronic-mail exchange between plaintiff and the Coast
Guard from November and December 2004 reflecting plaintiff’s displeasure with how it was
being treated by the Coast Guard and the Coast Guard’s dissatisfaction with plaintiff’s
performance).

        Meanwhile, plaintiff “installed the main floor concrete slab . . . on August 19, 2004,” Jt.
Stip. ¶ 36, and began to erect the building’s steel structure on August 24, 2004, JX 4.92; JX 742.
A bilateral contract modification, effective September 9, 2004, increased the contract price, for
the final time, to $551,155.35. JX 3.7-.8.

       As of September 10, 2004, the issues with the hydraulic test lab’s HVAC system had not
been resolved.15 JX 253.1. As a result, Mr. Schmitt advised Mr. Allen that the Coast Guard


       15
          Most of the evidence in the trial record suggests that the delay related to the proposed
contract modification. For example, in a September 10, 2004 electronic-mail message, Mr.
Schmitt speculated that plaintiff was “waiting to see what happened with the build-out
mod[ification] before [it] attempted to finish the design.” JX 253.1. In another electronic-mail
message on that same date, Mr. Fedei noted that the proposed contract modification would
include funding for a field visit by plaintiff’s mechanical engineer, and that “[a]pparently
everyone [had] been waiting to see what was going to transpire with that proposal.” Id. And,
Eric Combs, plaintiff’s chief operating officer, testified that the proposed contract modification
would have affected many of the drawings and that it would not be a good idea to continue
certain work when the customer “was asking you to price in another whole direction.” Tr. 1322-
23 (Combs). However, Mr. Fedei testified that while the proposed contract modification might
have affected the drawings, the HVAC system for the hydraulic test lab “was a stand-alone
system and could have been corrected or looked at further at this stage without stopping the

                                                -27-
needed to “arrange a conference call” to consult with plaintiff regarding the operating schedule of
the hydraulic test equipment and how to best condition the hydraulic test lab because without this
information, plaintiff could not “finalize” its design. Id. Subsequently, in a September 13, 2004
electronic-mail message regarding setting up the conference call, Mr. Clayton included a
comment regarding the HVAC system: “The amount of tonnage currently designed is based on
the [request for quotations]. Any additional tonnage or change in design . . . may result in
additional cost and time which will require [a request for quotations] from contracting.” JX
259.1. Later that same day, Mr. Clayton sent an electronic-mail message to Mr. Tempel
requesting that Mr. Tempel review the equipment operating information previously supplied by
the Coast Guard on July 28, 2004, verify his design, and provide “confirming loads” by the end
of the week. JX 260.1.

       Also on September 13, 2004, plaintiff sent the Coast Guard another set of 100% design
drawings, JX 255, which the Coast Guard received on September 16, 2004, JX 268.1. Coast
Guard personnel exchanged several electronic-mail messages regarding these drawings. JX 268;
JX 271. Mr. Schmitt noted that “from an HVAC standpoint, the documents [did] not address[]
previous concerns and comments.” JX 268.1; see also Tr. 883-84 (Tempel) (indicating that Mr.
Tempel had not provided plaintiff with new drawings for this submittal). And, Mr. Fedei wrote:

       The Mechanical 100% submittal is REJECTED. I know that there are questions
       concerning the HVAC loading in the hydraulic room for which we are waiting the
       calculations . . . to help address our concerns, but none of the other issues that
       have been addressed in past reviews have been addressed on the 100% drawings
       to date. I am not accepting any of the mechanical[] drawing efforts at this point.
       There are potential code violations, and notes of none [sic] responsibility, proper
       damper locations, etc. that need to be addressed.

JX 271.2.

         Mr. Tempel responded to Mr. Clayton’s request on September 20, 2004. JX 276. In his
letter, he described his previous conversation with Mr. Fedei and the two options that were
purportedly acceptable to the Coast Guard: (1) “exhausting the air utilizing hoods and fans” and
(2) “[p]rovid[ing] an air conditioning system that [was] approximately 30% larger than the one
serving the existing equipment layout.” JX 276.2. Mr. Tempel then wrote:

               We have been instructed to design utilizing the parameters defined by the
       scope of work, which require us to design around split system heat pumps. The
       current design meets these parameters and complies with design option 2. The



design process.” Id. at 3048-49 (Fedei); see also id. at 3131 (Broussard) (testifying that an RFP
“does not stop work . . . on the contract . . . because nobody at the time this RFP is issued knows
whether or not we’re actually going to do something”).

                                               -28-
       unit capacity we specified is actually 50% larger than the one serving the existing
       equipment layout, which coincides with a commercially available unit size.

               I have recalculated the air conditioning loads to incorporate the most
       recent comments . . . .

               ....

               There is still a question regarding the operating schedule. Please verify
       that only one piece of equipment operates at a time, never two or more.16

                The worst-case design heat load remains equipment HS-25 with the 75
       horsepower electric motor.17 It does not appear that the space can be sub-cooled
       enough to account for the heat generated by this piece of equipment. We are
       aware that a 5-ton cooling capacity unit services the existing hydraulic test room,
       and there are no serious operational problems. However, the building occupant
       complained that during operation the area gets hot. Installing a 7.5-ton unit will
       provide more conditioning to the new space than is presently installed in the
       existing space, but will not satisfy the calculated heat load generated by the
       equipment. Our calculations indicate that a 20-ton unit would be needed to fully
       condition the space. However, as a practical matter we feel that a 7.5-ton unit will
       be acceptable since it provides 50% more cooling capacity than the existing
       facility has and since the building envelope’s heat gain is insignificant. This 7.5-
       ton unit will not provide comfort conditioning when the equipment operates, but
       maintaining comfortable conditions in the space may not be the best practical
       solution.

JX 276.2-.3 (footnotes added); see also Tr. 554-55, 557-58 (Tempel) (explaining that the
calculations supporting the use of a 20-ton unit were based on (1) the worst-case scenario for the
amount of heat that would be rejected into the room by the 75-horsepower motor and (2) the
assumption that the chiller would not “compensate for any of the heat that was rejected”), 2839-
40 (Fedei) (remarking that providing a 7.5-ton unit where a 20-ton unit is needed to adequately
condition the space would result in “sky high” temperatures and “a lot of heat stress on the



       16
           The basis for this request is unclear; in the information that Mr. Clayton forwarded to
Mr. Tempel, the Coast Guard indicated that two pieces of equipment–the HPTS-1000 and the
HS-25–were operated simultaneously, twice per month for two hours at a time. JX 276.5; see
also Tr. 887 (Tempel) (indicating that Mr. Tempel was unsure why he made this request after
receiving the information).
       17
         The Coast Guard indicated that this piece of equipment was operated “5 hours a day,
two consecutive days, twice a month.” JX 275.5.

                                               -29-
personnel working in” the space), 3077 (stating that it was incorrect to use the tonnage of the unit
in the existing hydraulic test lab as a baseline because there was no way to know whether the
existing unit was properly sized when it was installed). Plaintiff forwarded Mr. Tempel’s
calculations to the Coast Guard the following day. JX 277.

       Coast Guard personnel reviewed the information and calculations provided by Mr.
Tempel to determine how to proceed with respect to the HVAC system for the hydraulic test lab.
JX 282.1; JX 289; JX 292. Mr. Fedei provided his recommendation to his colleagues in an
attachment to a September 27, 2004 electronic-mail message:

       The recommendation . . . would be to install two 5-ton units with one unit to
       handle the initial loading and the second to come on as needed to supplement. It
       is also recommended that, since this is still much less cooling than calculations
       show is needed and that the equipment is essentially cooled by their own chilled
       water system, the distribution of the air should be concentrated in the areas of
       operator needs (center of the test lab) and be dissipated via high velocity down
       throw or slot diffusers to provide, in effect, evaporative cooling for the operators.
       [In essence a spot cooling system utilizing conditioned, in lieu of non-
       conditioned, air.] Return/exhaust should be from over the backside of the
       equipment. Pre-cooling could still help most scenarios and can be determined by
       the users as to when best utilized.

JX 289.3 (brackets in original). In response to Mr. Fedei’s message, Mr. Schmitt asked whether
making such a recommendation would constitute taking responsibility for the design and whether
the Coast Guard would be responsible for paying for the second unit. JX 289.1. He further
commented: “I would, as I am sure you would, love for us to put this issue to rest, and maybe the
best way to do that is to ‘tell them’ what we will accept (want).” Id. Then, in a September 28,
2004 electronic-mail message, Mr. Schmitt suggested to Mr. Fedei that the Coast Guard allow
plaintiff the option to install a 7.5 ton unit. JX 292.

        In the meantime, on September 20, 2004, plaintiff sent an updated project schedule to the
Coast Guard indicating a completion date of December 8, 2004, forty-three days beyond the then-
contract completion date of October 26, 2004. JX 272.1, .6. Ms. Broussard noted the
discrepancy in a September 22, 2004 letter, but stated that it was in the Coast Guard’s best
interest to forbear from terminating the contract for default. JX 280. She further advised
plaintiff that the Coast Guard intended to “assess[] liquidated damages in the amount of $551.00
per day, for every day beyond October 26, 2004 until all work is complete and beneficial
occupancy has occurred.” Id.

       On September 30, 2004, the Coast Guard sent plaintiff its review comments on the 100%
design submittal it received on September 16, 2004. JX 295. In the letter accompanying the
comments, Ms. Hundley wrote:



                                               -30-
               We do not find the proposed mechanical system for the Test Lab
       acceptable. Attached is a recommendation of how to provide proper space
       conditioning in the Hydraulic Lab.18 In addition, attached are our previous and
       new review comments, plus marked-up drawings. Please return the review
       comments by noting action taken on the comments. Please resubmit a corrected
       design.

              We do not consider the review comments to constitute a change to our
       contract.

JX 295.3 (footnote added). In the attached document, the Coast Guard noted that “[a]fter many
discussions and submittals concerning the subject lab, its operations, and equipment heat loads,
there [was] still an impasse as to a reasonable, effective, energy efficient way of treating the lab.”
JX 295.4. It therefore provided:

       In an effort to preclude any further delays and to provide an effective, energy
       conscious system for the laboratory and its occupants[, the Coast Guard] requests
       the following design efforts and installation be accomplished:

       •    Provide an exhaust system routed from the top of the motor directly to the
            weather enshrouding the area above the motor as effectively as possible. In
            addition, provide a matching unconditioned supply system routed directly
            from the weather to the vicinity of the bottom of the motor. Provide
            motorized dampers to secure the ventilation systems when this piece of
            equipment is not being utilized with a disconnect switch labeled and mounted
            near the controls of this equipment.

       •    Provide either two split system heat pumps (initial estimate to be 5 ton units
            each) or a 7.5 ton split system to condition the lab, allowing for approximately
            20% radiation and inefficiency in the ventilation system around the motor. If
            two units are used they shall be staged so that the second heat pump comes on
            only when the first unit is unable to satisfy the loads.


       18
           Although Ms. Hundley characterized the contents of the attached document as a
“recommendation,” JX 295.3, the Coast Guard, in the attached document, provided that it was
“request[ing]” that plaintiff “accomplish[]” the specified “design efforts and installation,” JX
295.4. During trial, there was conflicting testimony regarding whether the Coast Guard
presented plaintiff with a recommendation or a directive. Compare Tr. 3160, 3162 (Broussard)
(indicating that the Coast Guard made a recommendation), with id. at 959 (Tempel) (indicating
that Mr. Tempel considered the Coast Guard’s proposal to be a “requirement” or “direction”
rather than a “recommendation”), and id. at 1329 (Combs) (“It looks like they’re laying out some
directives . . . for treating the hydraulic lab design. . . . [T]hey were telling us how to design the
HVAC system.”).

                                                 -31-
       •   Air distribution is to be provided in the middle core of the lab where the
           occupants are expected to be working during operations. The distribution
           shall be installed utilizing fairly high velocity diffusers (such as slot diffusers
           or registers) that will concentrate the throw down in the vicinity of the workers
           (not on the equipment per se) with the return ducts over the backside of the
           equipment so as to draw the warmer air away from the occupants and back to
           the coil(s).

       •   Controls shall allow pre-cooling of the space prior to equipment operation at
           the discretion of the occupants.

Id.; cf. Tr. 561-63, 565-66 (Tempel) (indicating that the Coast Guard’s suggested design did not
comply with the requirements set forth in the contract specifications).

        Mr. Clayton forwarded the Coast Guard’s comments and recommendation to Mr. Tempel,
and Mr. Tempel responded to Mr. Clayton on October 5, 2004. JX 298. Mr. Tempel advised
Mr. Clayton that Epic would design the HVAC system as plaintiff directed. JX 298.1. He
further indicated, in response to the second bulleted point of the Coast Guard’s recommendation,
that Epic’s preference was to use two five-ton units and that it had previously recommended such
an approach, but was “instructed to design to scope of work.” JX 298.2. According to Mr.
Tempel, adopting the Coast Guard’s recommended approach would take two to four weeks, Tr.
893-94, 959 (Tempel), and the proposed system would not be Underwriters Laboratories-
approved, id. at 559, 856.

        Plaintiff eventually decided to design the HVAC system recommended by the Coast
Guard. JX 329. On October 18, 2004, Mr. Clayton advised the Coast Guard that a new
mechanical design was “underway” and would be delivered in four days. JX 327.1. However,
he did not request a new design from Mr. Tempel until the following day. JX 329.1.
Specifically, he requested that Mr. Tempel design an HVAC system for the hydraulic test lab that
used two units, “[m]ost likely one being a 7 1/2 ton and the other a 5 ton,” and stated that
plaintiff would pass the increased cost on to the Coast Guard. Id.; see also JX 302 (indicating
that Mr. Clayton advised the Coast Guard on October 6, 2004, that he would “submit the costs
for the mechanical system upgrades to [the Coast Guard] by October 8, 2004”).

       Plaintiff did not provide a new mechanical design to the Coast Guard within the four days
it promised. Indeed, on October 28, 2004, Mr. Tempel sent the following electronic-mail
message to Mr. Clayton:

               We are designing the HVAC system serving the hydraulic test lab utilizing
       one 5 ton split system heat pump[] and one 5 ton air conditioner. We are
       proceeding with the design utilizing linear slot diffusers as directed by the
       government. This will direct the air downward toward the occupants, however,


                                                -32-
       air will also be directed over the equipment too. There is no way to avoid this. It
       is imperative that the government be aware that the air within the hydraulic test
       lab will be extremely drafty and may cause undesirable conditions. Please let me
       know if you have any questions.

JX 342.2. Mr. Clayton forwarded this message to the Coast Guard, JX 342, and Mr. Fedei
provided the following response:

               The whole idea of “spot cooling” is to put high velocity air in localities
       where the personnel are working, and it would not be effective cooling if it did not
       appear drafty. Naturally some of the air will disperse over the equipment, and that
       is acceptable. This e-mail does not address what the mechanical [engineer]
       intends to do to remove the heat from the 75-HP motor, and without the removal
       of this heat by separate venting, the 5 ton unit will not be effective in cooling the
       space or the occupants.

JX 342.1. Mr. Tempel completed the new mechanical drawings on November 16, 2004. JX
707.14-.19. The design reflected in these drawings was not significantly changed thereafter. Tr.
907 (Tempel).

        While continuing to work on the new HVAC system design, plaintiff, on October 15,
2004, sent the Coast Guard an updated project schedule that indicated a revised contract
completion date of December 20, 2004. JX 321; JX 324. Approximately one month later, on
November 17, 2004, plaintiff began to install the building’s wall panels and insulation. JX
4.207; JX 742. However, plaintiff’s progress on the project continued to be hampered by a
number of issues; in a November 18, 2004 letter to plaintiff, Ms. Broussard wrote:

       You have . . . failed to submit the final design documents as required by [the
       relevant contract specification]. You are reminded that any mechanical, electrical,
       and architectural work that is completed prior to an approved design will be at
       your own risk. Also you[r] recent daily reports have shown little or no
       construction activity. Liquidated damages of $511.00 [sic] a day beyond the
       current contract completion date of October 26, 2004 will continue to be
       [assessed] until Government acceptance of the completed project.

JX 354; accord JX 373.1 (noting that plaintiff had not submitted the final design by November
30, 2004, and reiterating the consequences of proceeding with construction in the absence of a
final design and of working beyond the contract completion date). Indeed, that same day, the
Coast Guard notified plaintiff that it had received plaintiff’s invoice for the period ending
October 31, 2004, that it was authorized to make a progress payment to plaintiff, and that it was




                                               -33-
withholding liquidated damages in the amount of $2555 from that payment for the five days of
work performed beyond the October 25, 2004 contract completion date.19 JX 719.2, .4.

        Ms. Broussard sent plaintiff another letter on December 1, 2004, in which she advised
that plaintiff’s failure to submit its final design “[might] be considered a material [breach] of the
contract” and that the Coast Guard “[might] choose to Terminate for Default.” JX 377.2; see
also JX 383.1 (indicating, in an internal electronic-mail message dated December 7, 2004, that
the Coast Guard planned to discuss its options for terminating its contract with plaintiff for
default). Ms. Broussard forwarded a copy of this letter to the contracting officer for plaintiff’s
Federal Supply Schedule contract that same day. JX 377.1; JX 720; see also JX 720.1-.2
(reflecting that on January 6, 2005, the GSA contracting officer referred Ms. Broussard to the
then-current FAR subpart 8.4, Federal Supply Schedules, for guidance, and specifically quoted
FAR 8.406-4, Termination for Cause, and FAR 8.406-6, Disputes20); JX 720.1 (indicating that


       19
         According to handwritten notations on the invoice, the amount of withheld liquidated
damages was calculated by multiplying five days by $511. JX 719.4. It is unclear why the Coast
Guard used a liquidated damages rate of $511 per day when the contract provided for a liquidated
damages rate of $551 per day. See JX 1.30.
       20
            The GSA contracting officer did not refer Ms. Broussard to the relevant portions of
plaintiff’s Federal Supply Schedule contract. See JX 720. Moreover, the version of FAR subpart
8.4 referenced by the GSA contracting officer was not in effect when plaintiff executed its
Federal Supply Schedule contract in April 2001 or when the Coast Guard placed an order under
plaintiff’s Federal Supply Schedule contract in September 2003. Indeed, at the time that plaintiff
entered into the two contracts, FAR subpart 8.4 did not contain sections 8.406-4 or 8.406-6;
those provisions were added when FAR subpart 8.4 was revised in July 2004. Rather, the
relevant sections in effect when plaintiff contracted with the GSA and the Coast Guard were
FAR 8.405-5, Termination for Default, and FAR 8.405-7, Disputes. The former section
provided:

               (1) An ordering office may terminate any one or more orders for default
       in accordance with Part 49, Termination of Contracts. The schedule contracting
       office shall be notified of all cases where an ordering office has declared a
       Federal Supply Schedule contractor in default or fraud is suspected.

               (2) Should the contractor claim that the failure was excusable, the
       ordering office shall promptly refer the matter to the schedule contracting office.
       In the absence of a decision by the schedule contracting office (or by the head of
       the schedule contracting agency, on appeal) excusing the failure, the ordering
       office may charge the contractor with excess costs resulting from repurchase.

FAR 8.405-5(a) (Mar. 4, 1999). And, the latter section provided–depending on which version
was applicable–either that “[t]he ordering office shall refer all unresolved disputes under orders

                                                 -34-
Ms. Broussard forwarded prior correspondence, and would forward future correspondence,
related to the Coast Guard’s issues with plaintiff to the GSA contracting officer).

        The Coast Guard received another set of 100% design documents, including an updated
mechanical design, from plaintiff on December 2, 2004, JX 359; JX 387.5; JX 707; in plaintiff’s
November 22, 2004 transmittal letter, Mr. Clayton represented that the mechanical design was
“not inclusive of [plaintiff’s] proposal” and, if the design was accepted, plaintiff would provide
the Coast Guard with its cost, JX 359. Mr. Fedei reviewed the mechanical design and then
forwarded his comments to Mr. Schmitt and Mr. Allen on December 8, 2004. JX 387. He
indicated that most of his “major comments deal[t] with the hood systems” and that his
comments might change if Mr. Allen determined during a site visit that the proposed design
would work. JX 387.1. Mr. Schmitt also reviewed the mechanical design and provided
comments. JX 391.1. He noted that he had discussed plaintiff’s request for “additional
compensation for hoods and exhausting of the lab equipment motors” with Mr. Fedei, and that
Mr. Fedei opined that such compensation was not warranted because “[b]y removing the heat
given off by the motors, [plaintiff was] able to reduce the HVAC equipment sizes,” making it “a
‘wash’ or even a cost savings.” Id. The Coast Guard’s “preliminary review comments” were
forwarded to plaintiff via electronic mail on December 9, 2004. JX 388.1. These comments
included some required changes to the mechanical drawings. JX 385.5-.7.

         That same day, after a progress meeting, JX 389, Ms. Broussard sent plaintiff a show
cause letter,21 noting that plaintiff “failed to provide the final design documents within a time
frame that would allow [it] to complete . . . construction [of the] Component Repair Shop . . . by
the contract completion date” and “failed to provide adequate manpower to complete the
construction by the completion date . . . .” JX 390. Consequently, Ms. Broussard stated, the
Coast Guard was considering terminating the contract for default. Id. She advised plaintiff that
it had ten days “to present, in writing, any facts bearing on” whether its “failure to perform arose
out of causes beyond [its] control and without fault or negligence on [its] part.” Id. Plaintiff
received the show cause letter on December 15, 2004, and responded on December 22, 2004. JX
402.1. It asserted, as it had in the past, that the Coast Guard contract requirements differed
materially from the standard GSA design-build requirements. Id. Specifically, it stated:



to the schedule contracting office for action under the Disputes clause of the contract,” FAR
8.405-7 (Mar. 4, 1999), or that “the ordering office contracting officer” could issue final
decisions on disputes or refer disputes to the “schedule contracting officer,” FAR 8.405-7(a)
(July 29, 2002).
       21
            A “show cause [letter] is normally considered a little more severe than a cure letter.”
Tr. 3135 (Broussard); accord id. (“Cure notices are used more frequently . . . to . . . get the
contractor’s attention whereas a show cause letter really is viewed as . . . severe, things are really
not very good.”). It “is typically looked at as a step prior to actually executing a termination for
default . . . .” Id.

                                                 -35-
Proposal Phase

       This project was originally proposed using standard GSA Design/Build
guidelines and requirements. All information provided within our proposal was
based on information obtained within the RFP . . . .

Design Phase

        The [Coast Guard] contract requirements differ materially from the
standard GSA Design-Build requirements and guidelines. In complying with your
engineering package we discovered that full design is really what you were
requiring. This required more time. . . . Design also required more site
investigation than originally estimated. Initially K-Con, Inc tried to implement
the design process with utilizing owner provided information and / or through a
series of RFI type emails. This proved to be unsatisfactory. Our design budget
was based on this approach and was value passed on to the owner in the bid price.
Visiting and reviewing existing systems did not clarify our concern, but to the
contrary showed there were existing inoperable equipment, undersized systems
and in general “not standard installations” that we were and are asked to mimic.
During our visits it was brought to our attention there was additional equipment
not known at bid time that had to be reviewed and questioned as to status.
Requests for this information on owner furnished equipment was incomplete.
This caused mechanical and electrical designs to be delayed in addition the
existing equipment is of the type and age that has no documentation. This forced
us to submit new [RFIs and] create new designs which as a whole created
confusion and frustration not only with [the Coast Guard] but with K-Con as well.

Construction Phase

         The delays which have occurred within the construction phase are due to
various reasons. Many of those reasons are beyond the control of K-Con.
Obviously one of the reasons was due to design delays and problems which
resulted in construction delays. Working with [the Coast Guard] we were able to
overcome some issues but others were reoccurring due to lack of communication
or just not being able to communicate and come to a mutual agreement that would
benefit everyone involved. . . . K-Con is completely aware of the delays which
have occurred and it is our full intent to complete this project within an agreed
upon duration. In doing so it is critical that all parties involve[d] come to a
mutual agreement to discuss all issues openly with our end user in mind. As
stated above K-Con has a good working relationship with the US Coast Guard and
it is our goal to maintain that relationship.




                                      -36-
JX 402.1-.2. Plaintiff also represented that its subcontractors would resume work on January 3,
2005. JX 402.2.

        Plaintiff’s response to the show cause letter was not well received by the Coast Guard.
For example, in internal electronic-mail messages dated January 3, 2005, Mr. Allen stated that
plaintiff “still [did not] address when [it] intend[ed] to complete or provide [the] design,” and the
Coast Guard’s project execution team leader wrote:

       •    All the delays and problems with this contractor originated with [its] failure to
            adhere to the contract requirements specifically as [they] relate[] to the
            Design-Build process. K-Con has a distorted vision of the process which does
            not conform in any way, shape, or form to the construction industry standards
            for design-build contracts.

               ....

       •    K-Con would like all to believe (1) that there was miscommunication along
            the way (which caused the delays) and (2) that they have a good working
            relationship with the Coast Guard. These two could not be any further from
            the truth.

JX 405.1. Thus, that same day, Mr. Allen advised plaintiff that the Coast Guard considered the
response “inadequate” and requested “a reasonable schedule of project completion.” JX 406.
Plaintiff responded “that it would provide a revised schedule by January 6, 2005,” and that it was
its “full intent to complete all remaining work as quickly as possible for the benefit of [the] end
user.” Id.; accord Jt. Stip. ¶ 42.

        Meanwhile, on December 23, 2004, the Coast Guard notified plaintiff that it had received
plaintiff’s invoice for work performed through November 30, 2004, that it was authorized to
make a progress payment to plaintiff, and that it was withholding liquidated damages in the
amount of $7665 from that payment for the work performed beyond the contract completion
date.22 JX 403.1, .3.


       22
          Although the Coast Guard had not yet executed the contract modification that extended
the contract completion date from October 26, 2004, to November 9, 2004, see JX 3.9-.10, it
calculated the liquidated damages to be withheld as if it had executed the modification, JX 403.3.
According to handwritten notations on the invoice, the Coast Guard determined that plaintiff
should be assessed liquidated damages for twenty days in November 2004 (although performance
was actually overdue for twenty-one days–November 10, 2004, through and including November
30, 2004), and then credited for the five days of liquidated damages that it had previously
assessed for October 2004. Id. The Coast Guard therefore calculated the liquidated damages to
be withheld by multiplying fifteen days by $511. Id. It is unclear why the Coast Guard used a
liquidated damages rate of $511 per day when the contract provided for a liquidated damages rate

                                                -37-
        Plaintiff’s subcontractors resumed work in January 2005. JX 4.266-.272. On January 2,
2005, the Coast Guard executed a bilateral contract modification, effective November 10, 2004,
that extended the contract completion date, for a final time, to November 9, 2004. JX 3.9-.10.
Three days later, plaintiff submitted a revised project schedule to the Coast Guard that reflected
an anticipated completion date of April 26, 2005. Jt. Stip. ¶ 43. Then, on January 12, 2005,
plaintiff and the Coast Guard held a progress meeting. JX 417. During the meeting, Mr. Clayton
represented that plaintiff would submit another set of drawings to the Coast Guard by January 21,
2005, and would endeavor to “closely monitor” the schedule. JX 417.4. That same day, the
Coast Guard sent plaintiff another forbearance letter indicating that liquidated damages would
continue to be assessed at the rate of $551 per day “until all work [was] complete and beneficial
occupancy . . . occurred.” JX 415.1.

        Plaintiff finished installing the wall panels and insulation on January 12, 2005. JX 424.1.
Five days later, it began preparations for installing the roof, JX 4.281, and started the electrical,
mechanical, and plumbing rough-ins, JX 424.2. However, despite Mr. Clayton’s representation,
plaintiff did not submit a revised set of drawings to the Coast Guard by January 21, 2005. JX
421; JX 422. In a January 24, 2005 electronic-mail message, Mr. Clayton explained to Mr. Allen
that the drawings that plaintiff received from its architect were not complete, that it wanted to
ensure that the drawings the Coast Guard received were “‘perfect’ in comparison” to prior
submissions, and that the Coast Guard “‘should’” receive the drawings by January 28, 2005. JX
421. But see JX 433.1 (indicating that the delay was caused by three mechanical, electrical, and
plumbing “items that were not addressed,” and changing the anticipated delivery date to February
10, 2005); JX 437.2-.4 (reflecting that plaintiff did not send the Coast Guard’s December 8, 2005
comments to Mr. Tempel to incorporate into the design until February 8, 2005). Despite this
response, the Coast Guard sent a letter to plaintiff on January 26, 2005, expressing its concern
that the schedule was not being met, requesting a plan for getting “the project back on schedule”
and a revised schedule, and reminding plaintiff that liquidated damages were being assessed. JX
422.

         On February 10, 2005, the Coast Guard notified plaintiff that it was rejecting the invoice
that it had received from plaintiff the previous day for work completed through January 31, 2005,
JX 438, explaining:

       The Government began deducting liquidated damages from the contract price in
       the amount of $511.00 a day starting November 10, 2004 and continuing through
       January 31, 2005 (82 days).23 As a result, you have been assessed $41,902.00 as


of $551 per day. See JX 1.30.
       23
          The Coast Guard again misstated the daily liquidated damages rate; it was $551 and
not $511. See JX 1.30. The Coast Guard also miscalculated the number of days; there are
eighty-three days from and including November 10, 2004, to and including January 31, 2005.

                                                -38-
       damages for the delay in completing our contract. The amount of liquidated
       damages withheld to date exceed[s] the total amount due.

JX 438.1 (footnote added).

         In the meantime, on February 2, 2005, Ms. Hundley issued a second show cause letter to
plaintiff, remarking that plaintiff had “failed to,” among other things, “provide the final design
documents, complete the roof installation . . . in the timeframe noted on [its] progress schedule,”
and “provide adequate manpower to complete the work by the date shown on [its] latest progress
schedule,” JX 426, in other words, by April 26, 2005, Jt. Stip. ¶ 43. Consequently, Ms. Hundley
stated, the Coast Guard was considering terminating the contract for default. JX 426. She
advised plaintiff that it had ten days “to present, in writing, any facts bearing on” whether its
“failure to perform arose out of causes beyond [its] control and without fault or negligence on
[its] part.” Id.

        Plaintiff responded to this show cause letter on February 7, 2005, JX 433, explaining why
it had been unable to install the roof and averring that it would deliver “90%” design documents
by February 10, 2005. JX 433.1; JX 435.1. The Coast Guard was dissatisfied with this response;
among its critiques were the following:

       •    Design: We have accepted in practice allowing contractor to “fast-track”
            certain aspects of the design. The structural foundation and metal building
            drawings are approved and we have cop[ies] of signed and sealed drawings
            . . . . If contractor were to submit signed and sealed drawings for civil work
            we would accept them also. To date we have received pre-final design
            submittals for the other disciplines including civil. What we don’t have are
            signed and sealed drawings. Dates of submission of the design drawings keep
            slipping. I have little confidence his 10 Feb date will be met.

       •    Our contract was a design-build contract from inception. [The] requirement
            was that the final drawings . . . be signed and sealed.

JX 443.4. The Coast Guard began “pursuing ‘termination for default’ proceedings against
KCON.” JX 443.2-.3; accord JX 439.1, .6; JX 440.1-.2.

       As the Coast Guard suspected, plaintiff missed its self-imposed February 10, 2005
deadline and did not deliver the design documents–which were treated by the Coast Guard as the
“100%” design and not the final design–to the Coast Guard until February 18, 2005.24 JX 445.1.


       24
           This delay appears to have been caused, in part, by plaintiff’s failure to promptly
forward the Coast Guard’s December 8, 2005 comments to Mr. Tempel. When plaintiff finally
did so, on February 8, 2005, it requested that Mr. Tempel revise the mechanical, electrical, and
plumbing drawings in accordance with the Coast Guard’s comments in two days, if possible. JX

                                               -39-
That same day, Ms. Hundley sent a letter to Coast Guard headquarters requesting approval to
terminate the Coast Guard’s contract with plaintiff for default. JX 444.1; see also JX 475
(containing a March 10, 2005 letter from Ms. Broussard to Coast Guard headquarters
supplementing the request).

       While the request for contract termination was pending, Ms. Hundley, on February 25,
2005, forwarded to plaintiff the Coast Guard’s comments on the most recent mechanical design
submission. JX 450.1-.2. Three comments concerned the design of hydraulic test lab:

       1. Room 106 (Hydraulic Lab): Contract requires the ceiling height to be 10 feet
       above finished floor . . . . It is unacceptable that the proposed HVAC ducting
       dimensions and related accessories such as insulation and duct hangers will not fit
       above the ceiling. . . .

       2. We also note that the 1500 lb rated hoist in room 106 is not noted or included
       in the drawing set. Structural details are required to ensure that this weight can be
       safely carried. Hoist supports will affect proposed routing of ducts noted in
       paragraph 1.

       ....

       7. Note 2 on Drawing M001, “Design Assumption” is not correct. You are
       responsible for integrity of new piping, valves, installation and testing to ensure
       that the existing Government furnished equipment operates correctly.

Id. Ms. Hundley reiterated that the Coast Guard’s comments were not changes to the contract.
JX 450.2. She also explained that aside from the identified comments, the Coast Guard “[took]
no exceptions to [the] proposed design” and, thus, plaintiff could proceed with the work,
provided that the comments were addressed and that signed and sealed drawings were provided
to the Coast Guard. Id.; see also Tr. 2627 (Schmitt) (explaining that this letter allowed plaintiff
to proceed with all work upon the submission of signed and sealed drawings). Plaintiff
forwarded the Coast Guard’s comments to Mr. Tempel upon receipt. JX 450.3-.5.

       That same day–February 25, 2005–plaintiff sent the Coast Guard three letters seeking
time extensions and a fourth letter seeking a contract price increase. See JX 451; JX 452; JX
454; JX 455. In the first letter, plaintiff requested a noncompensable time extension of thirty


437.2. Mr. Tempel indicated that such a deadline was not possible due to Epic’s workload, and
stated that the earliest it could begin the work requested by plaintiff was February 15, 2005. JX
437.1. During trial, Mr. Tempel speculated that plaintiff may not have forwarded the Coast
Guard’s comments to him upon receipt because the “comments [were] pretty minimal” and could
“be handled in a set of as-built drawings, as is typically done in a design-build.” Tr. 912
(Tempel).

                                                -40-
days due to the Coast Guard’s alleged improper review of its design drawings. JX 451.1.
Specifically, Mr. Clayton wrote:

       This letter serves as our request for time extension due to [the Coast Guard]
       improperly reviewing design drawings per [specification section 01160, paragraph
       2.2.3]. On (5) different occasions K-Con Inc. submitted drawings for approval
       which were returned neither approved, disapproved or approved as noted. We
       received design comments that made “recommendations” not clearly stating
       approved, disapproved and why[,] or approved as noted. [The Coast Guard]
       contracted K-Con Inc. to develop the design based on the specifications provided
       and submit for approval. It was not our intent to submit our drawings so that
       personnel at [the Coast Guard] could make recommendations, not contract
       required approvals, disapprovals or approvals as noted. It was only when I
       directly asked Steve Allen to approve, approve as noted or disapprove with reason
       per spec[ifications] did we finally get a proper review approved as noted with
       comments.

Id.; see also Tr. 2679 (Schmitt) (stating that the Coast Guard could respond to a design in three
ways: “One is total approval, the [second] is approved as noted, and the [third] is rejection.”),
3168-69 (Broussard) (agreeing that the Coast Guard would approve or reject plaintiff’s design
depending on whether the design met the contract requirements, and that the Coast Guard could
approve plaintiff’s design with comments). In the second letter, plaintiff sought a
noncompensable time extension of thirty days to account for job site disturbances and its inability
to contract with local trades, both purportedly caused by comments made by the Coast Guard’s
inspector. JX 452. Then, in its third letter, plaintiff requested a noncompensable time extension
of twenty-seven days “due to rain, snow and/or temperatures below 40 degrees,” contending that
the precipitation in particular was “above average for the area.” JX 454. The fourth letter
provided, in its entirety: “This letter serves as our request for cost modification in the amount of
$50,325.00 for extended overhead due to delays outlined in our request for time extension letters
dated 25 February 2005.” JX 455.1. An exhibit attached to that letter contained a table breaking
out the components of the extended overhead that plaintiff was requesting for the eighty-seven
days of alleged delay, as follows:

                       Item                  Unit     Quantity       Unit         Total
                                             Type                    Cost
        Project manager design and site     Week      8           $2250.00     $18,000.00
        visit
            Vehicle                         Month     2.5           $937.50      $2343.75
            Gas                             Month     0.5           $487.50       $243.75
            Per diem                        Day       10            $100.00      $1000.00


                                               -41-
        Site superintendent                 Week      16           $1000.00    $16,000.00
            Vehicle                         Month     2.5           $750.00      $1875.00
            Gas                             Month     2.5           $390.00       $975.00
            Per diem                        Day       87            $100.00      $8700.00
        Contractor’s field office           Month     2.5           $175.00       $437.50
            Temporary toilet                Month     2.5           $300.00       $750.00
        Total                                                                  $50,325.00

JX 455.2. Plaintiff did not submit any documentation to support the cost of each component. Id.

        On March 8, 2005, Ms. Hundley denied the three time extension requests. See JX 470;
JX 472; JX 473. With respect to plaintiff’s request for a weather-related time extension, Ms.
Hundley explained that plaintiff “failed to submit relevant Daily Logs showing how work in
progress was impacted and how the identified controlling work was delayed by the unusually
severe weather,” information that was required by the contract. JX 473.1; see also JX 1.41
(containing the relevant contract specification, which provided: “The contractor may request an
excusable delay caused by unusually severe weather conditions by providing the contracting
officer written notice within 10 days of the delay. The notice shall: (1) identify, through relevant
Daily Logs, the work in progress that controls the overall completion of the contract; (2) indicate
how the identified controlling work was delayed by the unusually severe weather; and, (3)
provide the statistical weather data from the National Weather Service that indicates the weather
experienced at the construction site was unusually severe.”). Next, regarding plaintiff’s request
for a time extension related to the actions of the Coast Guard inspector, Ms. Hundley stated that
plaintiff failed to submit evidence substantiating its allegations. JX 472. Finally, with respect to
the request concerning the Coast Guard’s review of plaintiff’s design drawings, Ms. Hundley
explained:

               As required by paragraph 2.2.3 Review Comments Resolution, section
       01160 of the contract, the Government provided comments regarding the
       submitted documents. In every case the Government responded within the
       allotted time durations indicated in paragraph 2.2.2.1 Duration of Reviews,
       section 01160. The Government is not obligated to note “approval or
       disapproval” until the “final design” is submitted. In our reviews, we have the
       right to make recommendations or suggestions on the design. That same
       paragraph obligated you to respond within 14 calendar days after receipt of
       comments on each design submittal to discuss by telephone and resolve design
       review comments. You have continually failed to respond to our review
       comments in the required time, especially regarding our concerns or


                                               -42-
       recommendations on the mechanical design. Your failure to address these issues
       is not due to Government inaction.

              Your progress schedule of January 5, 2005 indicated that the final design
       would be submitted by January 21, 2005 and was actually received on February
       18, 2005, which was 28 days late. The Government responded with our review
       comments on February 25, 2005. Your failure to submit the design by your own
       scheduled milestones was not due to Government inaction.

JX 470.1. A Coast Guard contracting officer never responded to plaintiff’s request for a contract
price adjustment.

         Ms. Hundley sent plaintiff another letter the following day to express the Coast Guard’s
concern that plaintiff was not meeting the deadlines set forth in its January 5, 2005 project
schedule. JX 474.1. She attached to her letter “a current discrepancy list of known problems that
[had to be] corrected prior to building acceptance by the Government.” Id. The list contained
seven items: (1) construction of an incorrectly sized front entrance door opening, (2) inadequate
roof insulation, (3) exposing the interior of the unfinished building to the weather, (4) a missing
silt fence, (5) improperly tilted window sills, (6) lack of flashing for the roof of the electrical
room, and (7) a discrepancy with louver sizes. JX 474.2; see also Tr. 1309 (Combs) (stating that
he did not consider any of these problems to be “a major show stopper”).

        Ultimately, on March 17, 2005, the Coast Guard sent a Notice of Termination for Default
to plaintiff and a copy of the notice to plaintiff’s surety, First Sealord Surety, Inc. (“First
Sealord”). JX 481.1-.4. In the notice, Ms. Hundley first described the various cure letters,
forbearance letters, and show cause letters that the Coast Guard had sent to plaintiff, and then
noted that as of the date of the notice, plaintiff had “failed to install the roofing and remove the
rejected insulation.” JX 481.1-.2; see also Tr. 1658 (Combs) (noting that upon contract
termination, two roof panels were not installed and the building was a “shell with no windows
and no doors, [with] some interior studs and some roughed-in plumbing”). She then wrote:

       We have determined that it is no longer in the best interest of the Government to
       forbear termination for default for your failure to complete within the established
       completion date. . . . [Y]our performance in the forbearance period continually
       fell well behind any completion schedule you had submitted. Your continued
       failure to make progress has made it clear that it is no longer in the best interest of
       the Government to forbear termination for default. In accordance with contract
       clause FAR 52.249-10, Termination for Default (Fixed-Price Construction) (APR
       1984), you are hereby notified that this contract is terminated for default for
       failure to make progress and failure to prosecute the work with the diligence that
       will insure its completion within the time specified in the contract including any
       extensions. Therefore, your right to proceed with work under this contract is
       terminated AS OF THIS DATE. The Government may cause the contract to be


                                                -43-
       completed by others in accordance with the above clause and you will be held
       liable for any increased costs occasioned thereby. These costs will include
       liquidated damages in the amount specified in the contract that will accrue from
       the current contract completion date to actual completion of work. The
       Government reserves all rights and remedies provided by law or under the
       contract in addition to charging excess costs occasioned by completion of the
       defaulted contract.

JX 481.3. In closing, Ms. Hundley indicated that the notice was “a final decision of the
Contracting Officer” and described plaintiff’s right to appeal the default termination to a board of
contract appeals or the United States Court of Federal Claims (“Court of Federal Claims”). Id.

       Rather than immediately appealing, plaintiff sent the Coast Guard a letter on March 18,
2005, challenging the propriety of the default termination and requesting that the Coast Guard
rescind its notice. JX 484.3. In particular, citing FAR 52.249-10(b), which precludes the
termination of a contract for default if the contractor was not responsible for the delay in contract
performance, plaintiff enumerated several areas of contract performance–including the design
and construction of the HVAC system for the hydraulic test lab–where it encountered delays for
which it was not responsible, referring the Coast Guard to its previous correspondence describing
those delays. Id. Of particular note, plaintiff wrote:

       2. We proposed this project as Design/Build but [the Coast Guard] forced K-Con
       Inc. into a performance Bid/Spec Build Contract. Please reference letters dated 03
       March 2004, 31 March 2004, 05 April 2004, 22 December 2004, 07 February
       2005 and 25 February 2005.

       3. Additional HVAC engineering and work[] for Hydraulic Test room
       acknowledge[d] by [the Coast Guard] as additional to our scope of work. Please
       reference RFI # 6 dated 13 July 2004 and email dated 20 July 2004 referencing
       our RFI # 6 phone conference.

Id. In a March 21, 2005 letter, Ms. Broussard rejected plaintiff’s claims of excusable delay and
denied plaintiff’s request for the rescission of the default termination. JX 487. Then, on March
29, 2005, the Coast Guard notified plaintiff that it was rejecting the invoice that it had received
from plaintiff earlier in the month for work completed through February 28, 2005, JX 492,
explaining:

       The Government began deducting liquidated damages from the contract price in
       the amount of $511.00 [sic] a day starting November 10, 2004 and continuing
       through February 28, 2005 (111 days). As a result, you have been assessed
       $56,721.00 as damages for the delay in completing our contract. The amount of
       liquidated damages withheld to date exceed[s] the total amount due.



                                                -44-
JX 492.1. More specifically, according to handwritten notations on the invoice and its
attachment, the Coast Guard determined that plaintiff was due $305,034.39 through February 28,
2005, that it had already paid plaintiff $287,551.39, and that therefore the balance due to plaintiff
was $17,483.00. JX 492.2-.3; accord JX 3.11; JX 493.16. However, because the assessed
liquidated damages exceeded the amount due to plaintiff, the Coast Guard did not pay the
$17,483 balance to plaintiff. JX 492.1-.2.

                                    C. Work by First Sealord

       Meanwhile, on March 18, 2005, First Sealord advised the Coast Guard that it was
“considering taking over the project” and keeping plaintiff as its subcontractor. JX 485.1; accord
JX 726.1. Subsequently, on March 24, 2005, the Coast Guard conducted a meeting with First
Sealord’s project manager, Jim Payne, and several representatives from plaintiff to discuss what
work remained to be completed and what the Coast Guard required from First Sealord, such as a
new project schedule and an action plan. JX 489; JX 490.1-.2; JX 491; see also JX 489.2-.5
(containing the Coast Guard’s March 22, 2005 audit of the building’s condition and what work
remained to be completed).

         The Coast Guard received a letter directly from plaintiff on March 29, 2005, containing
an action plan and a two-week forecast. JX 495.1. First Sealord then sent the Coast Guard an
action plan and a two-week forecast on April 22, 2005, which, given the file name, may have
been the same document prepared by plaintiff. JX 494.2. On April 28, 2005, Ms. Broussard sent
a letter to First Sealord responding to plaintiff’s submission and detailing the submission’s
deficiencies. JX 495.1-.2. In concluding the letter, Ms. Broussard wrote:

              The Government believes several of the proposed solutions and/or
       requests contained in K-Con’s plan continue to reflect K-Con’s inability to
       provide adequate quality control over the project. Examples include a request for
       the Government to identify non compliant work, requests for additional money to
       complete requirements included in the original contract, plans to proceed with
       work without adequate designs, etc. Based on the information provided in K-
       Con’s letter, we continue to be very concerned that this project can be successfully
       completed. We see no proposed improvement and/or change in the quality control
       measures and management practices of K-Con.

                  Lastly, you are reminded that liquidated damages are continuing to accrue
       from the 10 November 2004 [sic] completion date at a rate of $551.00 per day.
       . . . [I]t is in everyone’s best interest to have this project completed as soon as
       possible. Once the Take-Over Agreement has been executed, and the above items
       have been submitted work may begin.

JX 495.1-.2; cf. JX 725 (indicating that Mr. Allen had an informal conversation with Mr. Payne
on May 5, 2005, expressing concern that enough time had not been allotted to finish the project).


                                                -45-
        Plaintiff assigned a new superintendent, Tom Parker, to the project, and he began work on
the job site on May 23, 2005. JX 4.422-.423; accord Tr. 970 (Parker). On May 25, 2005, Ms.
Broussard sent another letter to First Sealord in which she noted that First Sealord’s “failure to
start work” was “prohibiting the customer from moving into a complete and useable facility.” JX
497. She “directed” First Sealord “to begin on site construction activities” by the following day
and stated that if First Sealord failed to do so, the Coast Guard would reprocure the contract. Id.

        First Sealord did begin work as directed, but work did not proceed smoothly. For
example, there were issues with First Sealord’s correction and submission of the final design
documents. In a June 15, 2005 letter,25 Ms. Hundley advised First Sealord that it could omit
certain items associated with the hydraulic test lab from the mechanical and electrical drawings,
including two supply fans, two exhaust fans, and the chilled water line.26 JX 729.1. She then
noted that the Coast Guard “consider[ed] the overall design incomplete” but was “willing to
allow the work to continue with the understanding being that all such work [was] at [First
Sealord’s] own risk and [did] not imply acceptance of any deviance from the contract
documents.” JX 729.1-.2.

        That same day, but before receiving Ms. Hundley’s letter, Mr. Payne sent Mr. Allen an
electronic-mail message indicating his understanding that there would be changes to the HVAC
system, such as the elimination of two supply fans, two exhaust fans, and the chilled water line,
but noting that until First Sealord received formal notification of the changes from the Coast
Guard, its designers would proceed with revising the drawings as if no changes were
forthcoming. JX 731.2. He further noted that “[t]he proposed changes could also affect the
overall HVAC design as the air quantities would change.” Id. The next day, Mr. Allen
confirmed the changes, and Mr. Payne accordingly indicated that First Sealord’s designers would
cease making certain changes to the design. JX 731.1. Mr. Payne reiterated that the Coast
Guard’s changes, particularly the omission of two supply and two exhaust fans, would “have an
impact [on] other components of the previously designed HVAC system.” Id. Mr. Allen
forwarded Mr. Payne’s message to Mr. Schmitt and Mr. Fedei. JX 733. Mr. Fedei responded


       25
          The letter was originally dated June 9, 2005. JX 728.1. However, the relevant Coast
Guard officials had not signed off on the letter until at least June 14, 2005. JX 728.2.
       26
           The Coast Guard may have directed these omissions to accommodate the placement of
different equipment in the hydraulic test lab. See JX 727. In a May 18, 2005 memorandum, Mr.
Allen indicated that the AR&SC had ordered a new HTS test stand that was “dimensionally
larger than the old test stand” and “require[d] greater heat dissipation and larger electrical
service.” JX 727.2; see also PX 260.1-.2 (reflecting that a Coast Guard employee had advised
Mr. Payne at the end of May 2005 that there might be “changes in the equipment in the Hydraulic
Test Room” and “that the two roof exhaust fans may be eliminated”). Consequently, he
recommended that “the requirement that KCON hook-up any equipment in the [hydraulic test
lab] be deleted” and that “KCON [be required] to terminate and valve-off chilled water piping
from the [hydraulic test lab] ac unit [sic] after it enters the [hydraulic test lab].” JX 727.2.

                                               -46-
that the HVAC system should not be redesigned, and expressed concern that the original designer
of the HVAC system–Epic–was “working on this again.” Id.

         The Coast Guard received a set of drawings from First Sealord on June 20, 2005. JX
499.1; see also JX 708 (containing electrical, mechanical, fire alarm, and plumbing system
drawings from Epic dated June 16, 2005). Upon reviewing the drawings, the Coast Guard
determined that they were a reprint of a July 2004 submission, and did not include subsequently
approved changes. JX 499.1. Mr. Allen forwarded his concerns to Mr. Payne, id., who
indicated, in a June 23, 2005 electronic-mail message, that the drawings “were intended to be a
complete set that incorporated comments from” Ms. Hundley’s February 25, 2005 letter, JX
734.1. In a June 27, 2005 electronic-mail message, Mr. Allen advised Mr. Payne that First
Sealord should not “be concerned with the equipment or loads going into the Hydraulic Lab,”
that “[t]he HVAC equipment and ducting is to be installed as drawn (for the Feb 2005
[drawings], not July 2004),” and that First Sealord must “‘finish’ the drawings . . . .” Id. Mr.
Allen also noted that the Coast Guard was concerned that the daily reports reflected that “little or
no work [was] being performed” on the job site. Id.

       During a July 5, 2005 meeting, First Sealord and the Coast Guard agreed to the following
schedule for proceeding:

       1. New drawings (design) would be submitted on or about Friday July 8, 2005

       2. [The Coast Guard] to review (approve) within 2 weeks

       3. Construction schedule will be submitted after approval of design

       4. Anticipate 60 to 90 days after design submittal – construction completion

JX 500.1. However, First Sealord did not meet the deadline for submitting new drawings; rather,
Mr. Clayton sent revised mechanical drawings to the Coast Guard on July 15, 2005, JX 738; see
also JX 709 (containing electrical and mechanical system drawings from Epic dated July 14,
2005); JX 710 (containing electrical system drawings from Epic dated July 15, 2005), and First
Sealord sent a complete set of drawings to the Coast Guard on July 19, 2005, JX 739.1.

         The ongoing design and construction issues soured the Coast Guard on First Sealord’s
ability to complete the project. JX 500. In a July 19, 2005 letter to First Sealord, Ms. Hundley
wrote:

               During the initial takeover meeting . . . of March 24, 2005, we discussed
       several actions critical to completion of the project. They included completing the
       final design, . . . correction of outstanding deficiencies and implementing a take-
       over agreement.



                                                -47-
               You did not start any work of any type until May 25, 2005, almost eight
       weeks after the meeting. Your initial efforts . . . to partially install the passageway
       between the new and existing buildings [suffered from defective workmanship].
       Further you have failed to provide the final design documents as promised on
       several occasions . . . . We have also noted during onsite inspections and review
       of daily logs that adequate manpower has not been put in place to successfully
       complete the building’s construction or correct the many deficiencies previously
       noted in our construction audit. You have failed to provide a construction
       schedule for us to monitor your progress. No take-over agreement has been
       signed and agreed to as of this date.

                 ....

               As of the date of this letter, the complete final design has yet to be fully
       submitted . . . and what we have partially received does not include agreed to
       changes to the design. Our inspector has informed us that [certain work is being
       done without approved final drawings]. These actions, taken in light of the
       continuing history of poor quality control on this project by K Con, your take-over
       contractor, are ill advised and poorly planned. As a result the Government has
       lost confidence in your ability to properly manage this project and successfully
       deliver a quality facility in a reasonable time.

             We agreed with your proposal to use K-Con as the takeover contractor.
       However, four months after the default (which should have been ample time to
       complete the work) little meaningful progress has been made.

JX 500.1-.2; see also JX 498 (reflecting that the Coast Guard forwarded a signed takeover
agreement to First Sealord on June 13, 2005, for plaintiff’s execution). In light of these issues,
Ms. Hundley advised that she had “determined it [was] no longer in the Government[’]s best
interest to allow First Sealord Surety to continue work” and accordingly “directed” First Sealord
to “immediately cease all work and direct all contractors, employees and material men to vacate
the site.” JX 500.2. Ms. Hundley further stated that it was the Coast Guard’s intent to “re-
procure the remaining work,” charge “any excess costs” to plaintiff and First Sealord, and
continue to assess liquidated damages “until the project [was] substantially complete.” Id. At
this point in time, First Sealord had not completed the roof, JX 4.509, and pursuant to the project
schedule submitted by plaintiff on January 5, 2005, it would take an additional ninety-seven days,
until April 26, 2005, to complete the building once the roof was installed, Jt. Stip. ¶ 43; JX
415.1, .3.

      First Sealord responded to Ms. Hundley’s letter on July 21, 2005.27 JX 739.1. Ms.
Hundley addressed First Sealord’s comments in an August 11, 2005 letter:


       27
            First Sealord’s letter is not a part of the trial record.

                                                    -48-
               Your submission of the latest version of the final drawings was late. Since
       award of this contract in September 2003, we have received six separate “final”
       submissions. . . . In each case, the drawings did not comply with the contract
       terms. Critical details remained incomplete as of 5 July 2005, a full 21 months
       after contract award. [W]e expected the drawings by Friday, July 8, 2005[, but
       they] were not shipped until July 19, 2005.

               ....

              HVAC: We provided definitive direction on deleting the exhaust fans.
       These deletions requested by the Government did not materially affect the overall
       mechanical design or HVAC duct sizing. We maintain that your mechanical
       design could have been sufficiently completed without awaiting issuance of the
       formal change. It is noted that your subcontractors started installation of circular
       duct work although rectangular ducts have consistently been shown on your
       submissions and no review comments were ever made altering this choice. As
       you should be aware, such substitutions have a potential adverse affect on the
       design and would have negated acceptance of your mechanical design. This
       would have resulted in further delays and confusion at the job site had you
       continued and would have been indicative of the continuing quality control
       problems on this project. . . .

               ....

                We questioned the proposed completion date of late September based on
       this rate of progress observed to date.

              Construction occurring without drawings: This situation continued to
       occur. . . .

             We had no confidence that a quality building could have been erected by
       September 2005 for the reasons addressed above.

               Concerning the letter of agreement regarding completion of this contract,
       we note that you never signed this letter. In light of the repeated failures of this
       project to progress, the continued missed milestones, the lack of quality control,
       and the degree of rework constantly encountered, the Government had reasonable
       cause and right to terminate and re-procure.

JX 739.2-.3.




                                               -49-
                                       D. Reprocurement

        After it directed First Sealord to stop work, the Coast Guard “solicited bids to complete
the construction” of the component repair shop. JX 501. The specifications included with the
solicitation “call[ed] for the complete removal of the metal roofing, metal wall sheets and all
associated insulation.” Id. In a September 7, 2005 letter, plaintiff advised the Coast Guard that it
was aware of the solicitation, and opined that the complete removal of the roof, walls, and
insulation was not required. Id. Plaintiff then stated that if the Coast Guard intended to hold
plaintiff and First Sealord liable for such work, it would like the opportunity to inspect the
condition of the building when the work was performed. Id. The Coast Guard rejected
plaintiff’s request in a September 13, 2005 letter. JX 502.

        As noted above, at the time of the default termination, the Coast Guard had paid
$287,551.39 to plaintiff. JX 3.11. In two contract modifications, executed by the Coast Guard
on October 27, 2005, and October 28, 2005, the Coast Guard indicated its intent to use the
unpaid balance of the contract–$263,603.96–to fund the reprocurement of the project, and
reiterated that it reserved its right to claim any costs incurred in excess of the unpaid balance
from plaintiff. JX 3.11-.15. It also reiterated that it reserved its right to recover liquidated
damages, which would accrue until the building was substantially complete. JX 3.11, .14.

         Had the Coast Guard decided to hire a contractor only to complete the work left
unfinished by plaintiff, it would have been able to get a contractor on site within thirty to forty-
five days, Tr. 3149 (Broussard), and the contractor would have been able to begin work within
fifteen to thirty days, id. at 3150. However, because the AR&SC’s requirements had changed, id.
at 3147-48, the Coast Guard decided to increase the scope of work of the reprocurement contract,
Jt. Stip. ¶ 45; cf. Tr. 3147-49 (Broussard) (explaining that because the new contractor would be
performing additional work, the Coast Guard decided not to charge plaintiff for reprocurement
costs), 3211-13 (indicating that the government-furnished equipment identified in the
reprocurement contract was the same as the government-furnished equipment identified in
plaintiff’s contract). This decision delayed the award of the reprocurement contract. See
generally Tr. 3147-49 (Broussard) (implying that a reprocurement contract would have been
awarded more quickly had the Coast Guard not increased the scope of work).

       On November 7, 2005, the Coast Guard entered into an agreement with Viteri
Construction Management Incorporated (“Viteri”) to complete the building. JX 506. The initial
contract price was $721,431, and the initial completion date was March 19, 2006. JX 506.2.
Through bilateral contract modifications, the contract price was ultimately increased to
$824,610.28 JX 508. The Coast Guard determined that Viteri substantially completed the


       28
          The trial record lacks any evidence regarding whether the March 19, 2006 contract
completion date was extended. However, evidence submitted with plaintiff’s motion for partial
summary judgment on the issue of liquidated damages reflects that the fourth bilateral contract
modification executed by Viteri and the Coast Guard extended the contract completion date to

                                               -50-
building as of September 20, 2006. JX 507.1. The hydraulic test lab in the completed building
differed from what plaintiff had been asked to design; it contained all new equipment and
different ductwork. Tr. 1334-36 (Combs); see also JX 727.1-.2 (containing an internal
electronic-mail message dated May 18, 2005, in which the Coast Guard recommended a plan for
“building completion taking into account the impact of the new test equipment,” which was
“dimensionally larger than the old test stand, [and] require[d] greater heat dissipation and larger
electrical service”).

                                 II. PROCEDURAL HISTORY

        Plaintiff filed suit in this court on August 25, 2005, seeking to convert the default
termination into a termination for the government’s convenience and the remission of liquidated
damages. Defendant filed an answer, in which it asserted five affirmative defenses, and
counterclaim. In its counterclaim, defendant alleged that the Coast Guard had withheld
approximately $10,220 from payments to plaintiff as liquidated damages, and sought the balance
of liquidated damages as measured from the contract completion date to the date that the building
was completed, plus interest as provided by law. In its answer to the counterclaim, plaintiff
asserted three affirmative defenses: breach of contract; failure to mitigate damages; and waiver,
estoppel, and laches.

         After plaintiff filed this suit, which was assigned to the undersigned, it filed three other
suits in this court in which it alleged that the Coast Guard breached contracts for the design and
construction of prefabricated metal buildings. See K-Con Bldg. Sys., Inc. v. United States, No.
05-981C (filed Sept. 12, 2005); K-Con Bldg. Sys., Inc. v. United States, No. 05-1054C (filed
Sept. 30, 2005); K-Con Bldg. Sys., Inc. v. United States, No. 06-865C (filed Dec. 18, 2006).
These other suits concerned buildings in St. Petersburg, Florida, Port Huron, Michigan, and
Honolulu, Hawaii. The St. Petersburg and Port Huron cases were eventually reassigned to the
undersigned. The Honolulu case remained with the originally assigned judge, and was settled by
the parties in July 2007.

        Upon the close of discovery in this case, plaintiff moved for partial summary judgment on
the issue of liquidated damages, arguing first that the rate of liquidated damages specified in its
contract with the Coast Guard constituted an unenforceable penalty, and second, in the
alternative, that it was entitled to the remission of liquidated damages due to excusable delay.
The court denied plaintiff’s motion in a January 24, 2011 Opinion and Order, concluding that the
liquidated damages rate was not an unenforceable penalty, and that plaintiff had not established
an excusable delay that would lead to the remission of some or all of the assessed liquidated
damages. See K-Con Bldg. Sys., Inc., 97 Fed. Cl. at 41. Thus, in December 2011, the court held
a two-week trial. During its case-in-chief, plaintiff presented the testimony of Mr. Reitmeier,


August 26, 2006. See App. to Pl.’s Mot. for Partial Summ. J. 196, cited in K-Con Bldg. Sys, Inc.
v. United States, 97 Fed. Cl. 4, 48 (2011). Viteri and the Coast Guard executed five bilateral
contract modifications. JX 508.

                                                -51-
Mr. Ramsey, Mr. Tempel, Mr. Parker, Eric Combs (its chief operating officer), and two expert
witnesses–Stanley Yeskowski, an insulation expert, and Eric Unger, a scheduling expert.29
Defendant, during its case-in-chief, presented the testimony of Richard Anderson (the contracting
officer’s representative), Henry Ames (the FDCC LANT’s director of construction in 2004), Mr.
Schmitt, Mr. Fedei, Ms. Broussard, and two expert witnesses–Jeffrey Peters, an insulation expert,
and John McGrath, a scheduling expert.30 Plaintiff presented the testimony of one rebuttal
witness–Mr. Kiernan.

        On the sixth day of trial, counsel for defendant discovered that the Coast Guard possessed
three boxes of documents relevant to the case that had not been identified or produced to plaintiff
during discovery. Then, before plaintiff had an opportunity to review most of the documents,
one of defendant’s witnesses–Mr. Anderson–caused the documents to be destroyed. After trial,
plaintiff moved to sanction defendant for this conduct. In an August 30, 2012 Opinion and
Order, the court granted plaintiff’s motion and imposed three sanctions: (1) defendant was
precluded from using the undisclosed documents as evidence, (2) the trial testimony of Mr.
Anderson was stricken from the record, and (3) defendant was required to reimburse plaintiff for
the costs that plaintiff incurred in pursuing sanctions. K-Con Bldg. Sys., Inc. v. United States,
106 Fed. Cl. 652, 668 (2012).

        Meanwhile, the court issued a summary judgment ruling in the Port Huron case in August
2011, K-Con Bldg. Sys., Inc. v. United States, 100 Fed. Cl. 8 (2011), and a summary judgment
ruling in the St. Petersburg case in November 2012, K-Con Bldg. Sys., Inc. v. United States, 107
Fed. Cl. 571 (2012). After the court issued the latter decision, the parties engaged in settlement
discussions in all three cases through the court’s alternative dispute resolution program. Those
discussions revealed several issues that required resolution prior to any settlement, leading the
parties to file the relevant motions in each case. In this case, plaintiff filed a motion to dismiss
and a motion for leave to amend its complaint. The court ruled on those motions in a February
26, 2014 Opinion and Order.31 See K-Con Bldg. Sys., Inc., 114 Fed. Cl. at 722.



       29
            The court qualified Mr. Yeskowski and Mr. Unger as experts. Tr. 1005, 1814.
       30
            The court qualified Mr. Peters and Mr. McGrath as experts. Tr. 2327, 3235.
       31
          In the St. Petersburg case, the parties filed cross-motions for summary judgment. The
court denied both motions in an April 7, 2014 Opinion and Order. K-Con Bldg. Sys., Inc. v.
United States, 115 Fed. Cl. 558 (2014). The parties ultimately filed a joint stipulation of
dismissal. In the Port Huron case, defendant filed a motion to dismiss and a motion for summary
judgment. The court granted those motions in a January 28, 2014 Opinion and Order and entered
judgment against plaintiff on its claims. K-Con Bldg. Sys., Inc. v. United States, 114 Fed. Cl.
595 (2014), aff’d, 778 F.3d 1000 (Fed. Cir. 2015). Plaintiff appealed that ruling to the United
States Court of Appeals for the Federal Circuit (“Federal Circuit”), which affirmed this court’s
judgment. K-Con Bldg. Sys., Inc., 778 F.3d at 1000.

                                                -52-
        In its motion to dismiss, which the court recharacterized as a motion for summary
judgment, plaintiff sought to invalidate the Coast Guard’s termination of its contract for default,
arguing that under the terms of the Federal Supply Schedule contract, the Coast Guard could not
terminate the contract without first referring plaintiff’s allegations of excusable dely to the GSA.
Id. at 728-29. Defendant agreed that the Coast Guard was required to refer allegations of
excusable delay to the GSA, but contended that plaintiff made no such allegations. Id. at 730-32.
The court found that plaintiff’s letters dated December 22, 2004, and February 7, 2005, sent in
response to the Coast Guard’s show cause letters, as well as the three letters that plaintiff sent to
the Coast Guard on February 25, 2005, requesting time extensions, contained allegations of
excusable delay. Id. at 730-31. Accordingly, the court declared the Coast Guard’s default
termination invalid and concluded that it lacked jurisdiction to entertain any claims premised
solely on the default termination. Id. at 732. The court further held that it possessed jurisdiction
to entertain plaintiff’s claim for the remission of liquidated damages to the extent that the claim
was premised on the excusable delays alleged in the three February 25, 2005 letters, as well as
defendant’s counterclaim for unpaid liquidated damages. Id. at 732-33. Therefore, the court
granted in part and denied in part plaintiff’s motion. Id. at 733, 735-36.

        In its motion for leave to amend its complaint, plaintiff sought to allege a claim based on
its February 25, 2005 letter to the Coast Guard requesting a $50,325 price increase for extended
overhead resulting from the excusable delays it alleged in its other February 25, 2005 letters. Id.
at 734. The court initially noted that an amendment was not necessary for it to rule on an
unpleaded issue if the issue was tried by the consent of the parties. Id. It then concluded that
defendant’s consent to try the issue of plaintiff’s entitlement to extended overhead should be
implied. Id. at 734-35. The court therefore granted plaintiff’s motion. Id. at 736.

        After the court issued its decision on plaintiff’s combined motion, the parties filed
amended pleadings. Plaintiff added a claim for $50,325 in extended overhead to its complaint;
defendant amended its counterclaim to allege that the total amount of accrued liquidated damages
was $374,680 (representing 680 days at $551 per day), that the Coast Guard had withheld
$17,483 from payments to plaintiff for liquidated damages, and that plaintiff owed the Coast
Guard the balance–$357,197–plus interest, costs, and fees to the extent permitted by law; and
plaintiff added a large number of affirmative defenses in response to defendant’s amended
counterclaim, including the defense of excusable delay. The parties then engaged in posttrial
briefing, filing opening posttrial briefs on June 26, 2015, and posttrial response briefs on August
6, 2015.

       On the same day that the parties filed their posttrial response briefs, plaintiff (1)
submitted a certified claim to the GSA contracting officer requesting a “decision terminating the
contract for convenience and directing that K-Con proceed to recover any costs under the
termination for convenience clause,”32 Reply Ex. 1-2, and (2) filed a motion to stay a ruling in


       32
          Given the relief sought by plaintiff, it is unclear why it submitted its claim to the GSA
contracting officer and not the Coast Guard contracting officer; its Federal Supply Schedule

                                                -53-
this case pending a decision on the certified claim. Defendant opposed plaintiff’s motion.
Ultimately, the motion became moot when plaintiff, on October 8, 2015, moved for leave to
amend its complaint for a second time to assert claims premised on its August 6, 2015 certified
claim, which the GSA contracting officer had not ruled on within the sixty days provided by
statute. Defendant opposes this motion.

      All remaining issues in this case are now fully briefed. The court deems closing
argument unnecessary.

       III. PLAINTIFF’S MOTION FOR LEAVE TO AMEND ITS COMPLAINT

        The court first addresses plaintiff’s motion for leave to amend its complaint to allege
claims that (1) its contract with the Coast Guard should be terminated for the convenience of the
government and (2) it is entitled to costs associated with the termination for convenience.33
Specifically, plaintiff contends:

       [T]he primary issue at trial was whether the termination for default by the Coast
       Guard was improper and the termination should be converted to a termination for
       convenience. At that time, the Court lacked jurisdiction because there was no
       valid final decision. Now, the Court has jurisdiction over the matter because there
       is a valid claim that the task order should be terminated for convenience, and the
       claim was deemed denied. In the interest of justice, both parties should now be
       allowed to present their claims and defenses on whether the task order should be
       terminated for convenience.

Mot. to Amend 1-2; see also Reply Ex. 1-2 (containing plaintiff’s request for termination for
convenience costs).

       Under RCFC 15(b), the court may permit the posttrial amendment of pleadings in two
circumstances:

       (1) Based on an Objection at Trial. If, at trial, a party objects that evidence is not
       within the issues raised in the pleadings, the court may permit the pleadings to be
       amended. . . .

       (2) For Issues Tried by Consent. When an issue not raised by the pleadings is


contract does not contain any provision preventing an ordering agency, such as the Coast Guard,
from terminating a task order for the government’s convenience.
       33
           Although plaintiff did not attach to its motion its proposed amended complaint, the
court was able to ascertain plaintiff’s proposed claims from the contents of plaintiff’s motion and
certified claim.

                                                -54-
       tried by the parties’ express or implied consent, it must be treated in all respects as
       if raised in the pleadings.

On its face, RCFC 15(b) is concerned with allowing the parties to amend their pleadings to
conform with what occurred during trial. However, the events that form the basis of plaintiff’s
motion–the court’s February 26, 2014 Opinion and Order, plaintiff’s August 6, 2015 certified
claim, and the GSA contracting officer’s subsequent failure to rule on plaintiff’s claim–occurred
after trial. Accordingly, RCFC 15(b) is inapplicable here.

        Rather, the proper basis for plaintiff’s motion is RCFC 15(d). See Prasco, LLC v.
Medicis Pharm. Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008). That rule provides: “On motion
and reasonable notice, the court may, on just terms, permit a party to serve a supplemental
pleading setting out any transaction, occurrence, or event that happened after the date of the
pleading to be supplemented.” RCFC 15(d). It “plainly permits supplemental amendments to
cover events happening after suit . . . . Such amendments are well within the basic aim of the
rules to make pleadings a means to achieve an orderly and fair administration of justice.” Griffin
v. Cty. Sch. Bd., 377 U.S. 218, 227 (1964). Courts have “broad discretion” to allow a
supplemental pleading. Fed. R. Civ. P. 15(d) advisory committee’s note to 1963 amendment;
accord United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 7 (1st Cir. 2015)
(remarking on the “breadth of the discretion inherent in Rule 15(d)” that results from the fact that
the rule “contains no standards at all to guide the district court’s analysis”). In exercising this
discretion, “courts customarily have treated requests to supplement under Rule 15(d) liberally.”
Gadbois, 809 F.3d at 7; accord New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 28-29 (4th Cir.
1963). Nevertheless, motions to supplement a pleading are not granted “automatically”:

       For one thing, it is implicit in the logic of Rule 15(d) that a motion to supplement
       may be denied where the referenced events occurred before the filing of the
       original complaint. For another thing, leave to supplement may be withheld when
       the request would “unduly delay resolution of the case.” In the last analysis, a
       district court faced with a Rule 15(d) motion must weigh the totality of the
       circumstances, just as it would under Rule 15(a). Idiosyncratic factors–say, the
       futility of supplementation, prejudice to the opposing party, and unreasonable
       delay in attempting to supplement–may suffice to ground a denial of a Rule 15(d)
       motion. Everything depends on context.

Gadbois, 809 F.3d at 7 (footnote and citations omitted) (quoting Hall v. CIA, 437 F.3d 94, 101
(D.C. Cir. 2006)); accord Quaratino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995) (“Absent
undue delay, bad faith, dilatory tactics, undue prejudice to the party to be served with the
proposed pleading, or futility, [a Rule 15(d)] motion should be freely granted.” (citing Foman v.
Davis, 371 U.S. 178, 182 (1962)).




                                                -55-
       Defendant argues that supplementation is improper for two reasons: supplementation
would be futile, and it would be prejudiced by plaintiff’s undue delay in asserting its new claim.34

        A claim is futile if it could not survive a motion to dismiss. See, e.g., BEG Invs., LLC v.
Alberti, 85 F. Supp. 3d 13, 24 (D.D.C. 2015) (“As is the case when a plaintiff seeks leave to
amend a complaint, . . . a court may deny a motion to file a supplemental complaint as futile ‘if
the proposed claim[s] would not survive a motion to dismiss.’” (quoting Hettinga v. United
States, 677 F.3d 471, 480 (D.C. Cir. 2012))); see also Marchena v. United States, 128 Fed. Cl.
326, 330 (2016) (“A proposed amendment is futile if it would not survive a motion to dismiss.”).
According to defendant, supplementation would be futile in two respects: (1) plaintiff’s August
6, 2015 certified claim was untimely, and (2) there is no factual basis for plaintiff to request that
its contract with the Coast Guard be terminated for the convenience of the government. In
response, plaintiff focuses on the former argument, contending that its certified claim was timely.

        Both plaintiff’s Federal Supply Schedule contract and the Coast Guard’s order under that
contract were governed by the Contract Disputes Act of 1978 (“CDA”), 41 U.S.C. § 601-613
(2000).35 See FAR 52.233-1, cited in JX 1.37; JX 2.9. Under the CDA, contractors are required
to present monetary claims to the contracting officer for a decision. 41 U.S.C. § 605(a); FAR
52.233-1, cited in JX 1.37. Because plaintiff intends to seek termination for convenience costs in
its supplemental complaint, it was required to submit a claim for such costs to the contracting
officer. See Armour of Am. v. United States, 69 Fed. Cl. 587, 592 (2006) (“There is no evidence
before the Court to show that Plaintiff requested monetary damages of a sum certain, and there
was no final decision by the contracting officer on a claim for convenience termination monetary
damages. In the absence of a final decision by the contracting officer on monetary damages, this
Court lacks jurisdiction of this aspect of the claim.”); see also Deponte Invs., Inc. v. United
States, 54 Fed. Cl. 112, 116 (2002) (“[A] decision to terminate a contract for default is separate
and distinct from a decision on any claims by a contractor for termination costs or damages.”).
Furthermore, plaintiff was required to submit its claim to the contracting officer “within 6 years
after the accrual of the claim.” 41 U.S.C. § 605(a); accord FAR 52.233-1(d)(1), cited in JX 1.37.
Under the FAR:




       34
          Defendant actually argues that the filing of a second amended complaint would be
futile. However, because plaintiff’s motion for leave to amend its complaint should have been
brought under RCFC 15(d), the court characterizes defendant’s argument as an argument against
supplementation.
       35
          All citations to the CDA are to the version of the statute in effect on the date that the
Coast Guard placed its order with plaintiff under plaintiff’s Federal Supply Schedule contract.
Congress has since recodified title forty-one of the United States Code, revising and renumbering
the provisions of the CDA. See Pub. L. No. 111-350, §§ 7101-7109, 124 Stat. 3677, 3816-26
(2011).

                                                -56-
       “Accrual of a claim” means the date when all events, that fix the alleged liability
       of either the Government or the contractor and permit assertion of the claim, were
       known or should have been known. For liability to be fixed, some injury must
       have occurred. However, monetary damages need not have been incurred.

FAR 33.201.

         The Coast Guard improperly terminated plaintiff’s contract for default on March 17,
2005, by failing to refer plaintiff’s claims of excusable delay to the GSA contracting officer in
accordance with the express terms of plaintiff’s Federal Supply Schedule contract. After the
improper default termination, plaintiff’s surety, First Sealord, took over contract performance,
with plaintiff as its subcontractor. The Coast Guard directed First Sealord and plaintiff to cease
contract performance on July 19, 2005. On or before September 7, 2005, plaintiff became aware
of a solicitation to reprocure the project, and, on October 27, 2005, and October 28, 2005, the
Coast Guard executed two contract modifications indicating that it would use the unpaid balance
of its contract with plaintiff to fund the project’s reprocurement. These facts reflect that as of
October 28, 2005, plaintiff knew that it was no longer performing work under the contract, that
another contractor would complete the project, and that it would not be paid the contract balance.
In other words, plaintiff’s termination for convenience claim accrued by October 28, 2005,
because as of that date, all events fixing the Coast Guard’s alleged liability for improper
termination had occurred, plaintiff knew that these events had occurred, and plaintiff had
suffered a monetary injury. However, plaintiff did not submit its certified claim to the GSA
contracting officer until August 6, 2015, almost ten years later. Accordingly, pursuant to both
contracts and the CDA, plaintiff’s certified claim was untimely. Because the submission of a
valid claim–one that satisfies all relevant procedural and substantive requirements–is a
prerequisite to this court’s exercise of jurisdiction, K-Con Bldg. Sys., Inc., 114 Fed. Cl. at 602, it
would be futile for plaintiff to file its proposed supplemental complaint.

       Plaintiff’s contention that its termination for convenience claim accrued no earlier than
2013 is unavailing.36 Plaintiff first argues that because the court invalidated the Coast Guard’s


       36
          Plaintiff does not argue that the limitations period for presenting a claim to the
contracting officer should be equitably tolled in its case. See Arctic Slope Native Ass’n v.
Sebelius, 583 F.3d 785, 798 (Fed. Cir. 2009) (holding that the six-year limitations period in 41
U.S.C. § 605(a) can be equitably tolled). Had plaintiff advanced that argument, the court would
have rejected it. “Generally, a litigant seeking equitable tolling bears the burden of establishing
two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary
circumstance stood in his way.” Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005), quoted in
Holland v. Florida, 560 U.S. 631, 649 (2010). “[T]he diligence prong . . . covers those affairs
within the litigant’s control; the extraordinary-circumstances prong, by contrast, is meant to
cover matters outside its control.” Menominee Indian Tribe v. United States, 136 S. Ct. 750, 756
(2016). In this case, plaintiff alleges that it could not have filed a claim with a contracting officer
until 2013, when it discovered that the Coast Guard contracting officer lacked the authority to

                                                 -57-
default termination of its contract with plaintiff, that contract remains in force and can be ended
only if (1) plaintiff’s contract work is “completed and accepted,” (2) the contract is terminated
pursuant to the Default clause, or (3) the contract is terminated pursuant to the Termination for
Convenience of the Government clause. Because none of those events has occurred, plaintiff
contends, it could not have submitted a claim to a contracting officer under the Disputes clause.37
However, plaintiff knew or should have known, in 2005, that it would not be completing the
contract work and that the Coast Guard had not complied with the applicable contract provisions.
Moreover, the decision that plaintiff cites in support of its contention that its contract with the
Coast Guard remains in force–BearingPoint–is distinguishable. In BearingPoint, as in this case,
the contracting agency was required to refer default termination decisions to the GSA contracting
officer if the contractor alleged excusable delay. 77 Fed. Cl. at 190, 194-95. Nevertheless, the
contracting agency terminated its contracts (a blanket purchase agreement and a task order) with
the contractor for default in September and October 2005 despite the contractor’s allegation of
excusable delay. Id. at 191. The contractor filed a claim with the contracting officer in July
2006, and a complaint in the Court of Federal Claims in September 2006. Id. Seven months
later, in April 2007, the court “conclude[d] that the default terminations were ‘jurisdictionally
invalid,’ and [should] be treated as legal nullities.” Id. at 195. It therefore held: “[T]here are no
terminations properly before the Court, and the Court is without jurisdiction to review the merits
of this case. The [blanket purchase agreement] and [the task order] therefore still exist and
remain in effect.” Id. However, there was no evidence, as there is in this case, that the
contracting agency had retained another contractor to complete the work covered by the blanket
purchase agreement and the task order, or that such work had been completed. Indeed, the time
between the default terminations and the court’s decision invalidating the default
terminations–less than two years–is significantly less than the time that elapsed in this
case–almost nine years.




terminate its contract with plaintiff for default. However, the Federal Supply Schedule contract
under which the Coast Guard placed its order incorporated a provision indicating that if plaintiff
alleged excusable delay, only the GSA contracting officer could terminate the task order for
default. See Pl.’s App. SJ0014. Plaintiff’s knowledge of this provision was not outside of its
control, and therefore cannot constitute an extraordinary circumstance justifying equitable
tolling. Failure to satisfy the extraordinary-circumstances prong is fatal to an equitable tolling
argument. See Menominee Indian Tribe, 136 S. Ct. at 756 (remarking that a litigant needs to
satisfy both the diligence prong and the extraordinary-circumstances prong); accord id. at 757 n.5
(“Because we hold that there were no extraordinary circumstances, we need not decide whether
the [plaintiff] was diligently pursuing its rights.”); cf. Irwin v. Dep’t of Veterans Affairs, 498
U.S. 89, 96 (1990) (“Federal courts have typically extended equitable relief only sparingly.”).
       37
           Although plaintiff does not specify the Disputes clause to which it refers, the court
notes that plaintiff’s Federal Supply Schedule and Coast Guard contracts both incorporate by
reference FAR 52.233-1, Disputes. See JX 1.37; JX 2.9.

                                                -58-
        Plaintiff next argues that because neither party was aware of the jurisdictional issue
caused by the improper default termination until 2013, all of the events necessary to fix the Coast
Guard’s liability did not occur, and plaintiff’s claim for termination for convenience did not
accrue, until that time. Plaintiff is mistaken. As the court held above, plaintiff’s claim for
termination for convenience accrued by October 28, 2005, because by that date, all events fixing
the Coast Guard’s alleged liability for improper termination had occurred, plaintiff knew that
these events had occurred, and plaintiff had suffered a monetary injury. The fact that neither
party realized that plaintiff’s Federal Supply Schedule contract required the Coast Guard to refer
the default termination decision to the GSA contracting officer due to plaintiff’s allegations of
excusable delay is of no moment. “Both parties to a contract are charged with knowledge of its
terms. Neither the contractor nor the government can avoid its legal responsibilities by asserting
ignorance.” Maxima Corp. v. United States, 847 F.2d 1549, 1556 (Fed. Cir. 1988); accord Upton
v. Tribilcock, 91 U.S. 45, 50 (1875) (“It will not do for a man to enter into a contract, and, when
called upon to respond to its obligations, to say that he did not read it when he signed it, or did
not know what it contained. If this were permitted, contracts would not be worth the paper on
which they are written. But such is not the law. A contractor must stand by the words of his
contract; and, if he will not read what he signs, he alone is responsible for his omission.”).
Plaintiff should have known in 2005, when the Coast Guard terminated the contract for default,
that the Coast Guard’s action was contrary to the terms of its Federal Supply Schedule contract.

       Finally, plaintiff argues that its claim for termination for convenience did not accrue until
the GSA and the Coast Guard complied, or refused to comply, with the Default clause
incorporated in plaintiff’s Federal Supply Schedule contract. As noted above, that clause
provided:

       Any ordering office may, with respect to any one or more orders placed by it
       under the contract, exercise the same right of termination . . . , except that when
       failure to deliver articles or services is alleged by the Contractor to be excusable,
       the determination of whether the failure is excusable shall be made only by the
       Contracting Officer of the General Services Administration, to whom such
       allegation shall be referred by the ordering office and from whose determination
       appeal may be taken as provided in the clause of this contract entitled “Disputes.”

Pl.’s App. SJ0014 (incorporating by reference Federal Supply Schedule contract clause I-FSS-
249-B, Default (May 2000)). In support of its contention that its claim did not accrue until the
contracting agencies properly rendered a decision on its claims of excusable delay, plaintiff relies
on Brighton Village Associates v. United States, 52 F.3d 1056 (Fed. Cir. 1995), and Nager
Electric Co. v. United States, 368 F.2d 847 (Ct. Cl. 1966). However, the issue addressed by the
Federal Circuit in Brighton Village Associates and the United States Court of Claims (“Court of
Claims”) in Nager Electric Co. is different from the issue presented in this case.

        Brighton Village Associates concerned a Housing Assistance Payments contract between
the plaintiff and the United States Department of Housing and Urban Development (“HUD”) that


                                                -59-
required HUD to adjust contract rents on an annual basis. 52 F.3d at 1058. HUD did not make
rent adjustments for a number of years, including from 1981 to 1984. Id. Beginning in 1989, the
plaintiff presented claims to HUD for retroactive rent adjustments, but HUD rejected those
claims. Id. In 1991, the plaintiff filed suit in the Court of Federal Claims alleging that HUD had
breached the Housing Assistance Payments contract by failing to make annual rent adjustments.
Id. The court dismissed the plaintiff’s claims for 1981 to 1984 as time-barred. Id. On appeal,
the plaintiff contended that its “repeated administrative challenges to HUD’s policies . . .
postpone[d] accrual of its claims.” Id. at 1060. In rejecting this contention, the Federal Circuit
distinguished between claims that arise under a contract provision and pure breach-of-contract
claims:

       A claim that “arises under” a contract receives different treatment under the
       statute of limitations than does a claim that alleges a “pure breach.” A “pure
       breach” claim accrues when a plaintiff has done all he must do to establish his
       entitlement to payment and the defendant does not pay. A claim “arising under” a
       mandatory dispute resolution provision of a contract, however, does not accrue
       “until the duly-invoked decision of the administrative or arbitral board or
       tribunal.”

Id. (citation omitted) (quoting Nager Elec. Co., 368 F.2d at 854). Plaintiff’s claims for
retroactive rent adjustments, the Federal Circuit held, were pure breach-of-contract claims that
accrued upon HUD’s failure to make the adjustments. Id.

        Nager Electric Co., in turn, concerned a contract to construct a facility for the Atomic
Energy Commission (“Commission”). 368 F.2d at 850. The Commission terminated several
items of work in July and August 1958 under the contract’s default termination provision, and
the remaining work was completed and accepted in October 1958. Id. The plaintiffs submitted a
number of claims under the contract’s disputes clause, including a claim challenging the default
terminations. Id. The Commission’s hearing officer declined to address the default termination
claim, noting that the plaintiffs had characterized the claim as one for breach of contract, a type
of claim that was beyond its jurisdiction. Id. The Commission resolved the remaining claims in
April 1964. Id. The plaintiffs filed suit in the Court of Claims in October 1964 alleging, among
other things, that the default terminations were improper. Id. The government argued that this
claim was untimely, contending that

       in Government contract cases the claim arises, and the limitations period starts, no
       later than the completion of the work[,] regardless of the pendency of
       administrative proceedings under the Disputes clause and regardless of whether
       the claim in suit is for a “breach” or arises “under” the contract within the
       coverage of the Disputes clause.

Id. at 851 (footnote omitted). The court ultimately rejected the government’s position,
remarking:


                                               -60-
       In the case of an item required by the contract to be submitted to a[n]
       administrative tribunal, . . . the contractor has no right to demand an[y] money on
       this “claim” until the administrative procedure is finished . . . , and there can be no
       judicially cogniz[a]ble injury, no violation of the contract, no claim for court
       relief, until the [administrative tribunal] has acted or had a chance to act.

Id. at 858-59 (citations omitted). It therefore held that the plaintiffs’ default-termination claim
was not time-barred. Id. at 865-66.

         Importantly, the issue addressed by the Federal Circuit in Brighton Village Associates and
the Court of Claims in Nager Electric Co. was the accrual of a claim for purposes of filing suit in
the Court of Federal Claims. 52 F.3d at 1060; 368 F.2d at 854. The courts were not concerned
with the accrual of a claim for purposes of seeking an administrative decision, which is the issue
in this case. Accordingly, plaintiff’s reliance on their decisions is unwarranted. Accord 41
U.S.C. § 605(a) (“Each claim by a contractor against the government relating to a contract . . .
shall be submitted [to the contracting officer] within 6 years after the accrual of the claim.”).

      In sum, because it would be futile for plaintiff to pursue a claim for termination for
convenience in this court, the court denies plaintiff’s motion for leave to amend its complaint.38

            IV. ENTITLEMENT TO LIQUIDATED AND DELAY DAMAGES

        Having disposed of the threshold procedural issue, the court must address the three
substantive disputes that remain after the court’s resolution of plaintiff’s posttrial motion to
dismiss: (1) whether plaintiff is entitled to the remission of liquidated damages due to excusable
delay, (2) whether plaintiff is entitled to delay damages related to the drawing review process,
and (3) the amount of liquidated damages to which defendant is entitled.

        Pursuant to the Liquidated Damages clause in plaintiff’s contract with the Coast Guard, if
plaintiff did not complete performance by the contract completion date, it was required to pay the
Coast Guard liquidated damages of $551 per day until work was completed or accepted, even if
its contract was terminated. The Coast Guard began to assess liquidated damages on November
10, 2004–the day after the contract completion date. Because the Coast Guard did not accept the
building from Viteri as substantially complete until September 20, 2006, defendant asserted in its
amended counterclaim that plaintiff was liable for 680 days of liquidated damages. During trial,
however, defendant revised its claim for liquidated damages to account for the fact that Viteri’s
reprocurement contract included work that was not part of plaintiff’s contract. It now contends
that plaintiff should be assessed 394 days of liquidated damages, broken down as follows: (1)


       38
           The court’s conclusion that allowing plaintiff to file a supplemental complaint would
be futile constitutes sufficient grounds to deny plaintiff’s motion. Therefore, the court need not
address defendant’s alternative ground for opposing plaintiff’s motion–that it would be
prejudiced by plaintiff’s undue delay in asserting its new claim.

                                                -61-
252 days for the time between the contract completion date, November 9, 2004, and the date that
the Coast Guard directed First Sealord to cease work, July 19, 2005; (2) forty-five days for the
time between the date that the Coast Guard directed First Sealord to cease work, July 19, 2005,
and the date that a reprocurement contractor could get on site and begin work; and (3) ninety-
seven days for the time that it would have taken a reprocurement contractor to complete the
building after the installation of the roof had the scope of work of the reprocurement contract not
been increased.

       Plaintiff, in turn, seeks the remission of liquidated damages on two grounds. First, it
affirmatively contends that it was not responsible for at least some of the delay that prevented it
from finishing the project by the contract completion date. Second, in defense to defendant’s
counterclaim for liquidated damages, it argues that it should not be held liable for liquidated
damages that accrued after March 17, 2005, the date that the Coast Guard improperly terminated
the contract for default. Plaintiff further seeks delay damages for the extended overhead costs it
incurred due to the purported Coast Guard-caused delays.

       Because plaintiff’s entitlement to the remission of liquidated damages and the payment of
delay damages depends upon whether it can establish that the Coast Guard was responsible for
delaying the completion of the project, the court begins its analysis by examining plaintiff’s
claims of excusable delay.

                                 A. Excusable Delay Standard

         Under the express terms of its contract with plaintiff, the Coast Guard could not assess
damages against plaintiff for failing to timely complete work under the contract if “[t]he delay in
completing the work [arose] from unforeseeable causes,” such as “acts of the Government” or
“unusually severe weather,” that were “beyond the control and without the fault or negligence of”
plaintiff. FAR 52.249-10(b)(1), cited in JX 1.38. Plaintiff was required to provide the
contracting officer, “within 10 days from the beginning of any delay,” written notice of the cause
of the delay. FAR 52.249-10(b)(2), cited in JX 1.38. Moreover, to result in an excusable delay,
“the unforeseeable cause must delay the overall contract completion; i.e., it must affect the
critical path of performance.” Sauer Inc. v. Danzig, 224 F.3d 1340, 1345 (Fed. Cir. 2000).
Plaintiff, as the party seeking the remission of liquidated damages on account of excusable delay,
bears the burden of proving both that the unforeseeable cause delayed the critical path of
performance, id., and “the extent of the excusable delay to which it is entitled,” id. at 1347.

             B. The Coast Guard Waived the Contractual Notice Requirement

       Plaintiff presented its claims of excusable delay to the Coast Guard in three February 25,
2005 letters. Defendant contends, as a preliminary matter, that the contents of these letters
suggest that plaintiff did not comply with the contractual requirement to provide the Coast Guard
with written notice of the cause of the delays within ten days of the commencement of the delays.
Specifically, with respect to plaintiff’s claim regarding the Coast Guard’s review of its design


                                               -62-
drawings, defendant notes that plaintiff “appears to complain about events predating February 15,
2005,” when it requested, in its February 25, 2005 letter, a time extension for the Coast Guard’s
alleged improper review of its design drawings. Def.’s Posttrial Br. 7. And, with respect to all
three claims, defendant avers that plaintiff has never identified the particular days in which it
experienced delay and that the specified delays appear to overlap.

        Although defendant accurately recites the contractual requirement that plaintiff provide
the Coast Guard contracting officer with notice of an alleged delay within ten days of incurring
the delay,39 the court declines to apply the requirement as strictly as defendant implies is
necessary. Indeed, binding precedent suggests that courts should apply a contract’s notice
clauses with a certain measure of flexibility. See, e.g., Hoel-Steffen Constr. Co. v. United States,
456 F.2d 760, 767-68 (Ct. Cl. 1972) (“To adopt [a] severe and narrow application of the notice
requirements, . . . would be out of tune with the language and purpose of the notice provisions, as
well as with this court’s wholesome concern that notice provisions in contract-adjustment clauses
not be applied too technically and illiberally where the Government is quite aware of the
operative facts.”); Copco Steel & Eng’g Co. v. United States, 341 F.2d 590, 598 (Ct. Cl. 1965)
(“Lack of strict compliance with many kinds of contract requirements concerning writings and
notifications have frequently been held to be of no consequence where the conduct of the parties
have made it clear that formal adherence would serve no useful purpose or that the parties have
in fact waived it.”); Thompson v. United States, 91 Ct. Cl. 166, 179 (1940) (“Under the terms of
the contract, the plaintiffs had 10 days in which to assert a claim . . . . They did not assert such a
claim within the time limit but after some months had elapsed they filed with the contracting
officer a letter asking for additional compensation. This request would have been barred and out
of time had not the contracting officer entertained it, passed upon it, denied it, and informed
plaintiffs that they could appeal to the Secretary of the Interior.”); cf. Nager Elec. Co., 368 F.2d
at 864 (“[T]he various substantive contractual clauses which lead to equitable adjustments or
comparable relief under the contract . . . usually have built-in time limits, and where no specific
period is established in the contract the contractor cannot delay unreasonably. Neither this court
nor the administrative tribunals have had any great difficulty in handling belated claims by
contractors under the various contract-adjustment articles.” (footnote and citation omitted)). In
this case, the contracting officer–Ms. Hundley–did not reject plaintiff’s requests for time
extensions due to a failure to submit the requests within the ten days prescribed by the contract.
See JX 470; JX 472; JX 473. Rather, she denied the requests based on their merits. Id. By
addressing the merits of plaintiff’s requests, Ms. Hundley effectively waived the ten-day notice
requirement. Accord Copco Steel & Eng’g, 341 F.2d at 598; Thompson, 91 Ct. Cl. at 179.
Accordingly, plaintiff was permitted to challenge the rejection of all three claims in this court.




       39
          Plaintiff mistakenly suggests that the relevant contract clause is the excusable delays
provision in its Federal Supply Schedule contract. However, plaintiff’s contract with the Coast
Guard clearly indicates that if plaintiff experiences a delay, it should advise the Coast Guard
contracting officer of the delay within ten days.

                                                -63-
  C. Plaintiff Abandoned Its Request for a Time Extension Related to the Actions of the
                                Coast Guard Inspector

         Notwithstanding its ability to do so, plaintiff did not pursue its time extension request
related to the actions of the Coast Guard inspector during or after trial. Although the trial record
contains documentary evidence regarding this claim, see, e.g., JX 439; JX 440; JX 452,
plaintiff’s scheduling expert did not opine on the effect of the Coast Guard inspector’s actions on
plaintiff’s ability to complete the project, see JX 515; JX 515A; Tr. 1805-920 (Unger), and
plaintiff did not address the claim in its pretrial memorandum, its opening posttrial brief, or its
responsive posttrial brief. In other words, plaintiff abandoned the claim. See RCFC App. A
¶ 14(a)(2) (requiring a pretrial memorandum to include “a statement of the issues of fact and law
to be resolved by the court,” and providing that “[t]he issues should be set forth in sufficient
detail to enable the court to resolve the case in its entirety by addressing each of the issues
listed”); Thermalon Indus., Ltd. v. United States, 51 Fed. Cl. 464, 470 n.3 (2002) (“Plaintiff has
abandoned its claim for consequential damages, . . . making no mention of them in its post-trial
brief.”); see also Rosco, Inc. v. Mirror Lite Co., 304 F.3d 1373, 1382 (Fed. Cir. 2002) (agreeing
that a claim that was addressed in a posttrial brief had not been abandoned). Therefore, the court
need not address it.

  D. Plaintiff Has Not Established the Existence of a Delay That Was Beyond Its Control

        In the other two time extension requests that it presented to the contracting officer,
plaintiff sought credit for thirty days of excusable delay related to the Coast Guard’s purported
improper review of its drawings,40 and twenty-seven days of excusable delay related to unusually


       40
            In its opening posttrial brief, plaintiff suggests that it is entitled to 217 days of
excusable delay (from July 23, 2004, to February 25, 2005) related to the Coast Guard’s
purported improper review of plaintiff’s drawings. As a general rule, the Court of Federal
Claims possesses jurisdiction to entertain contractor claims pursuant to the CDA if the claims
“arise from the same operative facts, claim essentially the same relief, and merely assert differing
legal theories for that recovery.” Scott Timber Co. v. United States, 333 F.3d 1358, 1365 (Fed.
Cir. 2003). Although defendant does not argue that the 217 days of excusable delay described by
plaintiff constitutes relief that is different from the thirty days of excusable delay that plaintiff
requested from the Coast Guard’s contracting officer, the court is obligated to ensure that it
possesses jurisdiction to entertain the claims before it. See PIN/NIP, Inc. v. Platte Chem. Co.,
304 F.3d 1235, 1241 (Fed. Cir. 2002) (“Jurisdiction is a threshold issue, and a court must satisfy
itself that it has jurisdiction to hear and decide a case before proceeding to the merits.” (citations
omitted)); View Eng’g, Inc. v. Robotic Vision Sys., Inc., 115 F.3d 962, 963 (Fed. Cir. 1997)
(“[C]ourts must always look to their jurisdiction, whether the parties raise the issue or not.”).
Nevertheless, the court need not decide whether it possesses jurisdiction to entertain a request for
more than thirty days of excusable delay because, as explained below, plaintiff has not
established that the Coast Guard improperly reviewed its design or that the alleged design review
issues that purportedly caused the delay affected the critical path of performance.

                                                -64-
severe weather. As noted above, for plaintiff to recover on its claims of excusable delay, it must
establish (1) that any delay was the result of an unforeseen cause beyond its control and without
its fault, (2) that the delay affected work on the critical path of performance, and (3) the extent of
the delay. In its opening posttrial brief, plaintiff indicated that the evidence elicited at trial
established that the alleged weather-related delays did not affect the critical path of performance
under its conception of the project’s critical path. Accordingly, it discontinued its pursuit of a
separate weather-related time extension and focused solely on its request for a time extension
related to the Coast Guard’s purported improper review of its drawings.

        Plaintiff contends in its posttrial briefing that the Coast Guard’s review of its drawings
was improper because (1) the Coast Guard’s comments on the submitted drawings were couched
as recommendations and did not reflect whether the drawings were approved, disapproved, or
approved as noted; (2) the Coast Guard did not provide comments on some of its drawings
within the time specified in the contract; (3) the Coast Guard did not approve plaintiff’s drawings
even though its design was in full compliance with the RFP; (4) the Coast Guard should have
issued a change order related to the allegedly changed requirements for the HVAC system in the
hydraulic test lab; (5) the Coast Guard failed to provide plaintiff with the information that it
needed to complete the HVAC system design; and (6) the Coast Guard should have known that
repeatedly providing comments on the drawings would delay plaintiff’s ability to begin
construction. Problematically, plaintiff did not raise the latter five contentions in the February
25, 2005 letter setting forth its improper design review claim.

        Under the CDA, the Court of Federal Claims only possesses jurisdiction over a claim if
the contractor has previously presented the same claim to the contracting officer. Scott Timber
Co., 333 F.3d at 1365; see also id. (noting that claims are the same if they “arise from the same
operative facts, claim essentially the same relief, and merely assert differing legal theories for
that recovery”). Consequently, if the contractor expands the scope of an existing claim in the
Court of Federal Claims, the court cannot entertain it. See Simulation Tech., LLC v. United
States, 103 Fed. Cl. 105, 108 (2012) (“[I]f the complaint sets forth a new claim or a claim whose
scope differs from what was previously presented to the contracting officer, this Court will not
have jurisdiction over it.”); accord Santa Fe Eng’rs, Inc. v. United States, 818 F.2d 856, 858
(Fed. Cir. 1987) (“On appeal to the [board of contract appeals] or in a direct access action in the
Claims Court, a contractor may increase the amount of his claim, but may not raise any new
claims not presented and certified to the contracting officer.”); see also id. at 858-60 (holding that
where the claim presented to the contracting officer involved the effects of three change orders,
the contractor could not assert a claim before the board of contract appeals based on “the
collective nature of all changes or the multiplicity of change orders or design difficulties
unrelated to those three particular change orders on which its original claim was grounded”
because such a claim “was entirely new and had never been presented to the contracting
officer”); Contract Cleaning Maint., Inc. v. United States, 811 F.2d 586, 592 (Fed. Cir. 1987)
(holding that a contractor must give the contracting officer “a clear and unequivocal statement”
that provides “adequate notice of the basis and amount of the claim”).



                                                 -65-
         Although plaintiff presented its claim for a thirty-day excusable delay to the contracting
officer, the sole basis of that claim was the Coast Guard’s failure to approve, reject, or approve as
noted the 100% design drawings. Plaintiff did not advise the contracting officer that its request
for a thirty-day excusable delay was based on the timing of the Coast Guard’s review comments,
a contention that its 100% design complied with contractual requirements, the Coast Guard’s
failure to issue a change order,41 the Coast Guard’s failure to provide plaintiff information
necessary to complete the design, or the Coast Guard’s knowledge that providing review
comments would delay construction. In other words, the contracting officer did not have any
notice that plaintiff’s claim was based on these contentions. Consequently, in raising these
contentions for the first time in this court, plaintiff has impermissibly broadened the scope of its
claim. The court therefore lacks the authority to address them.

        With respect to plaintiff’s remaining contention–that the Coast Guard’s comments on the
submitted drawings were couched as recommendations and did not reflect whether the drawings
were approved, disapproved, or approved as noted–the court agrees with defendant that the Coast
Guard’s review of plaintiff’s drawings was in full compliance with contractual requirements.
Pursuant to the provisions of the contract pertaining to the design submission, review, and
approval process, the Coast Guard, after reviewing a design submittal, was required to provide
plaintiff with “comments” on the submittal and to advise plaintiff if it considered the submittal to
be “unacceptable.” JX 1.79-.80. Then, plaintiff was required to “resolve” or “acceptably
address” the comments and provide a corrected submittal to the Coast Guard for review. Id. The
Coast Guard interpreted the contract to allow it to approve a design, reject a design, or approve a
design with comments.42




       41
            There is a separate basis for the court to conclude that it lacks jurisdiction to entertain
plaintiff’s claim that the Coast Guard should have issued a change order related to the allegedly
changed requirements for the HVAC system in the hydraulic test lab: plaintiff did not present
this claim to the Coast Guard’s contracting officer as required by the contract’s Changes clause.
See FAR 52.243-4 (requiring a contractor to provide written notice to the contracting officer that
it considered a request to be a change order), cited in JX 1.38; see also K-Con Bldg. Sys., Inc.,
778 F.3d at 1010 (“Timely written notice differentiates requests the contractor views as outside
the contract from those it deems contemplated by the contract. And it gives the government
timely notice of what amounts it might be on the hook for, so that it will not be surprised by
money claims later, as well as an opportunity to address demands for more money when it might
yet avoid them.” (citation omitted)).
       42
          The Coast Guard’s interpretation is consistent with the provisions of the contract
pertaining to design review. Because plaintiff was contractually required to resolve or address all
of the Coast Guard’s comments and then resubmit its design to reflect the changes it made, any
comments made by the Coast Guard necessarily must have constituted either a rejection of the
design or an approval of the design as noted.

                                                 -66-
        As summarized in the table below, the Coast Guard satisfied the contractual requirements
regarding the content of its comments: it (1) rejected plaintiff’s February 24, 2004 design as
incomplete; (2) rejected at least some of plaintiff’s April 5, 2004 design as noncompliant with the
contract specifications; (3) rejected plaintiff’s June 7, 2004 design as incomplete; (4) rejected the
portion of plaintiff’s June 10, 2004 design that concerned the HVAC system for the hydraulic test
lab and approved, with comments, the portion of plaintiff’s June 10, 2004 design that concerned
the foundation and the erection of the metal building; (5) rejected the portion of plaintiff’s July
2004 design that concerned the HVAC system and approved, with comments, the remainder of
plaintiff’s July 2004 design; (6) rejected plaintiff’s September 16, 2004 HVAC system design;
(7) implicitly rejected plaintiff’s December 2, 2004 mechanical design; and (8) approved, with
comments, plaintiff’s February 18, 2005 design. By characterizing the Coast Guard’s comments
as “recommendations,” plaintiff glosses over two important points. First, plaintiff fails to
recognize that some of the Coast Guard’s comments highlighted plaintiff’s noncompliance with
contractual requirements; thus, rather than just being recommendations, they constituted
rejections of plaintiff’s design. Second, plaintiff does not account for the contractual
requirements that it resolve or address all comments and resubmit corrected drawings; such
requirements indicate that the Coast Guard would not approve a drawing until all of the
comments were resolved. In short, plaintiff cannot establish that the Coast Guard caused a
delay–of any length–by improperly reviewing its drawings.

                        Summary of Design Submittals and Responses

           Plaintiff’s Submittals                    Coast Guard’s Responses
           Date        Description         Date                     Description
         2/24/2004    Architectural,     2/25/2004       Electronic-mail message indicating
                      HVAC,                              that the submittal was incomplete
                      plumbing,
                      electrical, fire
                      alarm, site,       3/23/2004       Letter containing the same
                      and structural                     comments that were provided on
                      drawings                           2/25/2004

         4/5/2004     100% design        4/9/2004        Electronic-mail message containing
                                                         initial comments regarding issues
                                                         that needed to be addressed
                                                         promptly due to nonconformance
                                                         with the contract specifications
                                         4/13/2004       Complete set of marked-up
                                                         drawings




                                                  -67-
6/7/2004    Architectural,     No later      Electronic-mail message indicating
            HVAC,              than          that the submittal was incomplete
            plumbing,          6/9/2004
            electrical, fire
            alarm, site,
            and structural
            drawings
6/10/2004   Architectural,     6/18/2004     Complete set of marked-up
            HVAC,                            drawings; letter (1) containing
            plumbing,                        comments, (2) indicating that the
            electrical, fire                 HVAC system design for the
            alarm, site,                     hydraulic test lab was deficient and
            structural, and                  would require resubmission, and (3)
            foundation                       permitting plaintiff to proceed with
            drawings                         “metal building and foundation
                                             construction” and then
                                             “incorporat[e] and correct[] the
                                             architectural, mechanical, and
                                             electrical drawings . . . while
                                             foundation construction is
                                             occurring”
                               6/23/2004     Electronic-mail message clarifying
                                             that plaintiff could begin
                                             construction so long as it did not
                                             take any exceptions to the review
                                             comments and submitted signed and
                                             sealed foundation drawings
7/14/2004   100% design        7/23/2004     Letter (1) containing comments
and                                          (including comments on the HVAC
7/21/2004                                    system design); (2) indicating that
                                             the Coast Guard had completed its
                                             review of plaintiff’s submittal
                                             except for the HVAC system design,
                                             which would need to be
                                             resubmitted; and (3) stating that
                                             once plaintiff incorporated the
                                             comments and submitted a final
                                             design, it could proceed with all
                                             work except for the work related to
                                             the HVAC system



                                      -68-
         9/16/2004    100% design       9/30/2004      Marked-up drawings; letter (1)
                      that did not                     containing comments, (2) stating
                      include an                       that the HVAC system design for
                      updated                          the hydraulic test lab was
                      HVAC                             unacceptable, and (3) including a
                      system design                    recommendation for an acceptable
                                                       HVAC system design
         12/2/2004    100% design       12/9/2004      Electronic-mail message containing
                      that included                    preliminary comments that included
                      an updated                       some required changes to the
                      HVAC                             mechanical drawings
                      system design
         2/18/2005    100% design       2/25/2005      Letter containing comments and
                                                       indicating that if plaintiff did not
                                                       take exception to the comments, it
                                                       could proceed with construction so
                                                       long as signed and sealed drawings
                                                       were submitted

  E. Plaintiff Has Not Established That any Delay Affected Work on the Critical Path of
                                      Performance

        Although plaintiff’s failure to establish that the Coast Guard delayed its performance of
the contract by improperly reviewing its drawings is fatal to its claims arising from that
contention (in other words, its claims for the remission of liquidated damages and the payment of
delay damages), the court notes that plaintiff’s claims would fail for a second reason: its inability
to establish that the purported Coast Guard-caused delays affected the critical path of
performance.43 The Court of Claims explained the critical path concept in the following manner:

       [T]he critical path method is an efficient way of organizing and scheduling a
       complex project which consists of numerous interrelated separate small projects.
       Each subproject is identified and classified as to the duration and precedence of
       the work. (E.g., one could not carpet an area until the flooring is down and the
       flooring cannot be completed until the underlying electrical and telephone


       43
           Because the court concludes that plaintiff has not established that the Coast Guard
caused a delay or that the delay allegedly caused by the Coast Guard affected the critical path of
performance, it need not address whether plaintiff has established the extent of the alleged delay.
See Sauer Inc., 224 F.3d at 1345, 1347 (indicating that plaintiff must prove the existence of a
delay from an unforeseeable cause, that the delay was on the critical path of performance, and the
extent of the delay).

                                                -69-
        conduits are installed.) The data is then analyzed, usually by computer, to
        determine the most efficient schedule for the entire project. Many subprojects
        may be performed at any time within a given period without any effect on the
        completion of the entire project. However, some items of work are given no
        leeway and must be performed on schedule; otherwise, the entire project will be
        delayed. These latter items of work are on the “critical path.” A delay, or
        acceleration, of work along the critical path will affect the entire project.

Haney v. United States, 676 F.2d 584, 595 (Ct. Cl. 1982); accord Wilner v. United States, 24
F.3d 1397, 1399 n.5 (Fed. Cir. 1994) (en banc) (“A ‘critical path’ is a way of grouping
interrelated activities in a construction project. A delay to an activity that is on the ‘critical path’
usually results in a corresponding delay to the completion of the project.”); Tr. 1811 (Unger)
(“[T]he critical path . . . is the longest path of activities through the project.”), 3243 (McGrath)
(“[T]he critical path is the longest chain of interrelated events that determined the project’s
completion . . . .”). If the contractor and the government cause concurrent delays that affect the
critical path of performance, neither party can recover delay-related damages unless the delays
can be apportioned between the parties. See Blinderman Constr. Co. v. United States, 695 F.2d
552, 559 (Fed. Cir. 1982) (noting, in circumstances where a contractor is seeking damages for the
government’s delay, that “courts will deny recovery where the delays are ‘concurrent or
intertwined’ and the contractor has not met its burden of separating its delays from those
chargeable to the Government”); Coath & Goss, Inc. v. United States, 101 Ct. Cl. 702, 715
(1944) (holding that in the event of concurrent delay, neither the contractor nor the government
“can recover damage, unless there is in the proof a clear apportionment of the delay and the
expense attributable to each party”); see also Tr. 1824 (Unger) (“[C]oncurrent critical delay . . . is
two events occurring at the same time that affect the critical path.”), 3558 (McGrath) (“A
concurrent delay . . . is when you have two or more independent delays that are both [causing a]
critical milestone to be delayed at the same time.”). During trial, the parties presented competing
visions of what events fell on the critical path of performance, and supported their positions with
the reports and testimony of scheduling experts.

                                       1. Plaintiff’s Position

         According to plaintiff, the contract specifications defined the critical path of performance.
DX 515A at 5; Tr. 1823 (Unger). In particular, plaintiff’s scheduling expert, Mr. Unger,
explained that based on the contract, the critical path of performance started with the contract
award and continued through the postaward kickoff meeting, the design of the building, the
approval of the design, and the building’s construction. DX 515A at 5; Tr. 1823 (Unger). Mr.
Unger conducted a “critical path windows analysis” to determine what activities affected the
critical path of performance.44 DX 515A at 5-7. He divided the project into three windows: (1)


        44
           According to Mr. Unger, “[a] windows approach takes the baseline schedule and . . .
takes certain updates after that and progresses that [schedule] at various points in time. You
compare the two windows to see what the impact . . . was.” Tr. 1842 (Unger); accord id. at 1824

                                                 -70-
from the award of the contract to the postaward kickoff meeting, (2) from the postaward kickoff
meeting to the start of construction, and (3) from the start of construction to the default
termination. Id. Mr. Unger concluded that “[a]t the start of construction, the critical path [ran]
through the conclusion of the HVAC Design,” id. at 6, and that at the time of the default
termination, “[t]he critical path . . . continue[d] to run through the completion of HVAC and final
design,” id. at 7. See generally Tr. 1850-53, 1919 (Unger) (opining that the critical path of
performance ran through the HVAC system design). He further concluded that the delays in
constructing the building were concurrent with the delays related to the HVAC system design,
but that the construction delays did not delay the overall completion of the project; in other
words, they did not affect the critical path of performance. Id. at 1850-51.

                                     2. Defendant’s Position

        Defendant, in contrast, asserts that the critical path of performance in this case should be
ascertained by examining what actually occurred on the project. Id. at 3238-40, 3589-90
(McGrath); DX 513.5; see also Tr. 3574-76 (McGrath) (criticizing the prospective model used by
Mr. Unger, which reflected “that design is critical . . . looking forward,” but did not indicate
“what was critical from [a certain] point backwards” or “what actually happened and why”).
Based on “actual data on the prosecution of work from both the as-built schedule and all
available contemporaneous records including correspondence, periodic schedule updates, and
daily reports,” DX 513.5, defendant’s scheduling expert, Mr. McGrath, concluded that the critical
path of performance started with the contract award and continued through plaintiff’s submission
of the first complete 100% design, work on the foundation, erection of the structural steel, and
wall panel installation, DX 513.8-.14; Tr. 3437, 3456-57, 3465, 3468-69, 3483, 3491, 3511, 3538
(McGrath). In reaching his conclusion, Mr. McGrath analyzed the project using windows
“delineated by actual milestones or significant events/activities in the as-built schedule . . . .”
DX 513.5. The five windows he utilized were: (1) from the award of the contract to the
submission of the first complete 100% design, (2) from the submission of the first complete
100% design to the beginning of work on the foundation, (3) from the beginning of work on the
foundation to beginning of structural steel erection, (4) from the beginning of structural steel


(“[Y]ou have a baseline schedule . . . and you look at the progress schedule after that and you
compare the critical path through progressions of time or windows to that baseline schedule.”).
Defendant’s scheduling expert, Mr. McGrath, defined a windows analysis in the following
manner:

       The actual project is broken up into key critical periods of time, windows. And
       each window allows you to evaluate the causes for delays during that period of
       time, so you’re . . . , number one, [not] double-counting those delays in a later
       period of time, and number two, segregating the actual root causes of the delays to
       the critical events that they’re impacting.

Id. at 3244 (McGrath).

                                               -71-
erection to the beginning of wall panel installation, and (5) from the beginning of wall panel
installation to the termination for default.45 DX 513.8-.14; Tr. 3410-538 (McGrath).

         According to Mr. McGrath, the design of the HVAC system was not on the critical path
of performance because the HVAC system could not be installed until the building was enclosed,
and when the Coast Guard terminated the contract for default, plaintiff had not completed the
installation of the building’s walls and roof. See Tr. 3516-17 (McGrath) (explaining that
mechanical equipment is installed after the building is enclosed), 3538 (explaining that the
failure to complete the roof and wall panel installation prevented plaintiff from “performing all
of the follow-on work that would have been required to finish the building”), 3549-50
(explaining that so long as enough of the design is complete for construction to be occurring, the
design does not affect the critical path); see also id. at 3560-61 (noting that even though plaintiff
needed to finish both roof installation and HVAC system design prior to beginning work inside
the building, delays to those activities were “[n]ot necessarily” concurrent: “Just because they’re
both necessary predecessors for the succeeding activity does not make them both critical. The
critical delay is the one that’s causing the milestone to be moved back . . . .”). Indeed, Mr.
McGrath testified that had the Coast Guard approved plaintiff’s HVAC system design prior to
terminating the contract for default, the anticipated completion date of the building would not
have been affected because plaintiff was not prepared, at the time of the default termination, to
commence the installation of the HVAC system. See id. at 3449 (explaining that “if you
hypothetically moved a critical milestone, the project’s duration will also move with it,” but “[i]f
you hypothetically move a noncritical milestone or adjust a noncritical delay, the project duration
doesn’t move”), 3597-98 (“Had mechanical drawings been approved earlier, K-Con would have
been able to put in place some of that work sooner than they did. That would not have . . . had
any impact on the actual critical path of the job prior to termination.”), 3636 (“If you can
magically make the HVAC design complete on September 30[, 2004], the project condition at
termination would be exactly the same.”).

                                            3. Analysis

        The parties present diametrically opposed descriptions of the critical path of
performance–plaintiff submits that the critical path of performance should be based on an as-
planned, forward-looking schedule, and defendant contends that the critical path of performance
should be based on an as-built, backward-looking schedule. The court agrees with defendant that
the proper way to determine what activities were on the critical path of performance in this case
is to examine what actually occurred during contract performance. There are two reasons for this
conclusion. First, a critical path schedule that relies solely on the schedule set forth in the
contract specifications does not account for any subsequent changes to the schedule authorized
by the contracting agency. In this case, the Coast Guard authorized plaintiff to proceed with
construction before it completed the design. Second, the use of a contractually based critical path


       45
        In his expert report, Mr. McGrath combined the third and fourth windows into a single
window. See DX 513.11-.13.

                                                -72-
schedule does not reflect that plaintiff did not actually perform in accordance with the schedule
set forth in the contract specifications. Rather, plaintiff accepted the Coast Guard’s fast-tracking
offer and began construction before completing the design. In short, the approach advanced by
plaintiff and its expert, Mr. Unger, does not fully reflect the reality of what occurred on the
project.

        Defendant’s approach, on the other hand, fully reflects that reality. Plaintiff was still
working on parts of the design when the Coast Guard authorized it to begin construction pursuant
to the “sealed structural foundation drawings.” Jt. Stip. ¶ 34. As construction progressed,
plaintiff continued to work on the design. Indeed, plaintiff never reached a point, prior to being
terminated for default, where it could not proceed with construction due to the lack of a design.
Consequently, it was construction, and not the design, that was controlling work on the project at
the time that plaintiff submitted its claim for excusable delay. Thus, if the Coast Guard had
caused a delay by improperly reviewing plaintiff’s drawings, the delay is noncompensable
because it did not affect the critical path of performance.

         F. Defendant Has Established a Prima Facie Case for Liquidated Damages

        Because plaintiff has not established that the Coast Guard should remit any liquidated
damages due to excusable delay, the court turns to defendant’s counterclaim for unrecouped
liquidated damages. As noted above, plaintiff was contractually required to pay the Coast Guard
liquidated damages of $551 per day until work was “completed or accepted” and remained liable
for liquidated damages even if the Coast Guard “terminate[d its] right to proceed.” JX 1.30. In
its amended counterclaim, defendant asserted that plaintiff was liable for 680 days of liquidated
damages–from the day after the contract completion date to the day that the Coast Guard
accepted the building from Viteri. However, during trial, defendant revised its claim for
liquidated damages to account for the fact that Viteri’s reprocurement contract included work
that was not part of plaintiff’s contract. Thus, defendant now seeks 394 days of liquidated
damages, which it breaks down into three periods.

        First, defendant requests liquidated damages for the 252 days between the contract
completion date, November 9, 2004, and the date that the Coast Guard directed First Sealord to
cease work, July 19, 2005. There is no dispute that the building was not completed or that the
Coast Guard had not accepted the building as of July 19, 2005. Defendant has therefore
established its entitlement to liquidated damages for this time period.

         Second, defendant requests liquidated damages for the forty-five days between the date
that the Coast Guard directed First Sealord to cease work, July 19, 2005, and the date that a
reprocurement contractor could get on site and begin work. Defendant elicited the testimony of
Ms. Broussard at trial to establish that it would take thirty to forty-five days to get a contractor on
site to complete the work left unfinished by plaintiff and another fifteen to thirty days for that
contractor to begin work once on site. Plaintiff did not dispute this testimony. Moreover, there
can be no question that the building would not have been completed or accepted while the Coast


                                                 -73-
Guard was in the process of retaining a reprocurement contractor. Accordingly, defendant has
established its entitlement to an additional forty-five days of liquidated damages.

        Finally, defendant requests liquidated damages for the ninety-seven days that it would
have taken a reprocurement contractor to complete the building after installation of the roof had
the scope of work of the reprocurement contract not been increased. Defendant bases this request
on plaintiff’s own time estimates; in its January 5, 2005 project schedule, plaintiff projected that
it would finish the roof on January 19, 2005, and complete the building on April 26, 2005–a
period of ninety-seven days. Plaintiff did not present any evidence disputing that it planned to
complete the building, once the roof was installed, in ninety-seven days. Accordingly, defendant
has established its entitlement to an additional ninety-seven days of liquidated damages.

       In sum, defendant has established a prima facie case to recover 394 days of liquidated
damages from plaintiff. Thus, in the absence of any valid affirmative defenses, plaintiff is liable
for $217,094 in liquidated damages, minus the $17,483 in liquidated damages previously
withheld by the Coast Guard.

    G. Plaintiff Does Not Have any Valid Defenses to the Coast Guard’s Assessment of
                   Liquidated Damages After the Default Termination

       Plaintiff’s final contention is that it is entitled to the remission of liquidated damages that
were assessed after the Coast Guard improperly terminated the contract for default.46
Specifically, plaintiff argues that it has several common law defenses to the Coast Guard’s
assessment of these liquidated damages:47

       The Coast Guard interfered with and prevented K-Con from completing the work.
       By changing the design after the termination, the Coast Guard waived and is
       estopped from assessing future liquidated damages. The delays caused by the
       Coast Guard’s changes to the design cannot be segregated from the work K-Con
       would have completed. Further, the Coast Guard’s prior breach of the agreement
       by the improper termination precludes the recovery of liquidated damages.




       46
          There were 128 days between the contract completion date and the improper default
termination (in other words, from and including November 10, 2004, to and including March 17,
2005). Thus, plaintiff seeks the remission of 266 days (out of the 394 days established by
defendant) of liquidated damages.
       47
          Although plaintiff set forth a large number of affirmative defenses in its answer to
defendant’s amended counterclaim, it only addresses a subset of those defenses in its posttrial
briefing. Plaintiff has therefore abandoned the remaining defenses. See Rosco, Inc., 304 F.3d at
1382; Thermalon Indus., Ltd., 51 Fed. Cl. at 470 n.3.

                                                 -74-
Pl.’s Posttrial Br. 38. As plaintiff correctly notes, a contractor may assert a common law defense
to a government CDA claim (such as a claim for liquidated damages) without first presenting the
defense to the contracting officer so long as the defense could not be characterized as request for
contract modification.48 See M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1331
(Fed. Cir. 2010) (“[A] contractor seeking an adjustment of contract terms must meet the
jurisdictional requirements and procedural prerequisites of the CDA, whether asserting the claim
against the government as an affirmative claim or as a defense to a government action.”); see also
Laguna Constr. Co. v. Carter, 828 F.3d 1364, 1368 (Fed. Cir. 2016) (“[T]he government’s
defense [of fraud] plainly does not seek the payment of money or the adjustment or interpretation
of contract terms.”); Securiforce Int’l Am., LLC v. United States, 125 Fed. Cl. 749, 776 (2016)
(“To defend against an agency’s termination for cause decision, a contractor may assert that the
government committed a material breach of contract prior to the termination. . . . [A] contractor
can appeal a contracting officer’s termination for cause decision in this court and assert breach of
contract as a defense to that termination without first submitting a breach of contract claim to a
contracting officer and receiving a final decision.”); Palafox Street Assocs., L.P. v. United States,
122 Fed. Cl. 18, 32 (2015) (holding that the “plaintiff’s estoppel, waiver, laches, and statute of
limitations ‘claims’ [were] more accurately characterized as affirmative defenses”); Total Eng’g,
Inc. v. United States, 120 Fed. Cl. 10, 15-16 (2015) (concluding that the contractor, in asserting a
defense of defective specifications, was not seeking the modification of contract because “a
favorable resolution of [the contractor’s] defense would not result in any separate contract
adjustment or monetary relief to [the contractor]”); TPL, Inc. v. United States, 118 Fed. Cl. 434,
441-45 (2014) (holding that the plaintiff’s affirmative defenses of breach of contract,
impossibility/impracticability of performance, mutual mistake of fact, and unconscionability
amounted to claims for contract modification that should have been presented to the contracting
officer); Sikorsky Aircraft Corp. v. United States, 102 Fed. Cl. 38, 48 n.14 (2011) (contrasting


        48
            In its opening posttrial brief, plaintiff appears to suggest that it is entitled to assert a
defense of excusable delay to the Coast Guard’s post-default-termination assessment of
liquidated damages because (1) its claim for excusable delay would fall under its Federal Supply
Schedule contract’s excusable delays provision, (2) its Federal Supply Schedule contract’s
excusable delays provision does not require the contracting officer to extend the contract
completion date upon a finding of excusable delay, and (3) because no time extension is required
under its Federal Supply Schedule contract’s excusable delays provision, it was not required to
present a claim for excusable delay to the contracting officer before asserting an excusable delay
defense in this court. Plaintiff is mistaken. Any claim that the Coast Guard was causing a delay
in plaintiff’s performance of the contract was required to be presented to the Coast Guard’s
contracting officer in the first instance, see FAR 52.249-10, cited in JX 1.38; the GSA
contracting officer would only consider such a claim if the Coast Guard sought to terminate its
contract with plaintiff for default notwithstanding the claim, see Pl.’s App. SJ0014. Indeed,
plaintiff’s Federal Supply Schedule contract lacks any provision allowing the GSA contracting
officer to consider a claim of ordering agency-caused delay in the first instance. See generally id.
at SJ0001-90. In short, plaintiff’s contract with the Coast Guard is the controlling contract for
the purposes of evaluating the propriety of plaintiff’s excusable-delay defense.

                                                 -75-
“counterclaim defenses that seek contract modification” and “affirmative defenses [that] are
traditional common law defenses that are independent of the means by which a party seeks
equitable adjustment to a government contract”); id. at 47-48 (holding that it could exercise
jurisdiction over the contractor’s affirmative defenses of accord and satisfaction, waiver, laches,
and statute of limitations). However, the affirmative defenses asserted by plaintiff either fall
beyond the court’s jurisdiction or lack merit.

        Plaintiff’s first defense–that “the Coast Guard interfered with and prevented [it] from
completing the work”–amounts to a claim of excusable delay. Pursuant to binding precedent,
even if a contractor is merely seeking the remission of liquidated damages, it may not assert a
defense of excusable delay in this court if it did not first present the excusable delay claim to the
contracting officer. M. Maropakis Carpentry, Inc., 609 F.3d at 1331-32. As noted above, the
court has rejected the only claim of excusable delay that plaintiff presented to the contracting
officer. To the extent that plaintiff is asserting an additional claim of excusable delay, the court
lacks the authority to entertain it.

        Plaintiff’s second and third defenses–that “[b]y changing the design after the termination,
the Coast Guard waived and is estopped from assessing future liquidated damages” and that
“delays caused by the Coast Guard’s changes to the design cannot be segregated from the work
K-Con would have completed”–are moot in light of defendant’s revised demand for liquidated
damages. In its opening posttrial brief, defendant expressly limits the amount of liquidated
damages it is seeking from plaintiff to account for the fact that Viteri’s reprocurement contract
included work that was not part of plaintiff’s contract. To eliminate the effect of the changed
design, defendant determined the number of days that it would have taken plaintiff to complete
the building based on plaintiff’s own project schedule, and then substituted that amount of time
for the number of days that it actually took Viteri to complete the building. In other words,
defendant has segregated any delays that might have resulted from the Coast Guard’s design
changes from the time it would have taken plaintiff to complete the project. Consequently, any
liquidated damages that the court awards to defendant would exclude liquidated damages
attributable to the Coast Guard’s design changes.

        Plaintiff’s fourth and final defense–that “the Coast Guard’s prior breach of the agreement
by the improper termination precludes the recovery of liquidated damages”–is without merit.
Under the doctrine of prior material breach, “when a party to a contract is sued for breach, it may
defend on the ground that there existed a legal excuse for its nonperformance at the time of the
alleged breach.” Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1380 (Fed. Cir. 2004);
accord Coll. Point Boat Corp. v. United States, 267 U.S. 12, 15 (1925) (“A party to a contract
who is sued for its breach may ordinarily defend on the ground that there existed, at the time, a
legal excuse for nonperformance by him, although he was then ignorant of the fact.”). The
doctrine

       is based on the principle that where performances are to be exchanged under an
       exchange of promises, each party is entitled to the assurance that he will not be


                                                 -76-
       called upon to perform his remaining duties of performance with respect to the
       expected exchange if there has already been an uncured material failure of
       performance by the other party.

Restatement (Second) of Contracts § 237 cmt. b (Am. Law Inst. 1981), quoted in Barron
Bancshares, Inc., 366 F.3d at 1380-81. The Coast Guard’s failure to refer plaintiff’s allegations
of excusable delay to the GSA contracting officer prior to terminating the contract for default
constituted a breach of contract. However, under the express terms of the Liquidated Damages
clause, so long as the building was not completed or accepted, plaintiff was liable for liquidated
damages regardless of whether its contract had been terminated. In other words, the Coast
Guard’s erroneous default termination had no effect on plaintiff’s liability for liquidated
damages. Thus, to the extent that the doctrine of prior material breach applies to the
circumstances of this case, plaintiff has not established that the Coast Guard’s improper default
termination precludes its assessment of liquidated damages.49

      Due to the absence of any valid affirmative defenses, plaintiff must pay the liquidated
damages established by defendant.

                                       V. CONCLUSION

        For the reasons set forth above, the court DENIES plaintiff’s motion for leave to amend
its complaint and concludes that plaintiff is not entitled to the remission of liquidated damages or
the payment of delay damages arising from the Coast Guard’s review of its design drawings. The
court therefore DISMISSES plaintiff’s amended complaint WITH PREJUDICE. In addition,
the court concludes that defendant has established its entitlement to liquidated damages under its
amended counterclaim. Accordingly, plaintiff shall pay defendant liquidated damages in the
amount of $199,611 (total assessed liquidated damages of $217,094 less liquidated damages
previously withheld by the Coast Guard of $17,483). Each party shall bear its own costs. The
clerk shall enter judgment accordingly.

       IT IS SO ORDERED.

                                                      s/ Margaret M. Sweeney
                                                      MARGARET M. SWEENEY
                                                      Judge




       49
           It also bears noting that plaintiff, not defendant, was the first party to breach the
contract by failing to complete the building by the contract completion date. It was this breach
that triggered the Coast Guard’s invocation of the Liquidated Damages clause.

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