ACC Construction Co., Inc. ( 2022 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of - )
)
ACC Construction Co., Inc. ) ASBCA Nos. 62265, 62937
)
Under Contract No. W912QR-17-C-0021 )
APPEARANCES FOR THE APPELLANT: Lochlin B. Samples, Esq.
Mackenzie P. Bell, Esq.
Smith, Currie & Hancock LLP
Atlanta, GA
Jacob W. Scott, Esq.
Smith, Currie & Hancock LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.
Engineer Chief Trial Attorney
R. Lauren Horner, Esq.
Brett R. Howard, Esq.
Engineer Trial Attorneys
OPINION BY ADMINISTRATIVE JUDGE MELNICK
ACC Construction Company (ACC) seeks compensation under a construction
contract with the United States Army Corps of Engineers (“Corps” or “government”)
for the costs it incurred complying with stormwater permitting requirements imposed
by the Commonwealth of Virginia. Because the contract placed responsibility upon
ACC to obtain and comply with the necessary state permits, and ACC has failed to
establish any other grounds to impose liability upon the government, the appeal is
denied.
VIRGINIA REGULATORY SCHEME
We begin with a summary of the applicable state regulatory regime to inform
our findings of fact.
With exceptions not relevant here, a builder cannot perform land-disturbing
activities in Virginia until it submits a permit application to the appropriate state
authorities for approval. The application is required to include a stormwater management
plan. Among other things, that submittal’s contents must include information on
stormwater discharges, current and final site conditions, proposed stormwater
management facilities with their location and acres treated, hydrologic and hydraulic
computations and calculations verifying compliance with water quality and quantity
regulatory requirements, and a map depicting the topography with improvements.
Various entities within Virginia act on plans, including, as was the case here, the
Virginia Department of Environmental Quality (DEQ). The state authority shall act on
an application within 60 days after it has determined the plan is complete. The authority
shall act on an application that was previously disapproved within 45 days after it has
been revised, resubmitted, and deemed complete. (App. supp. R4, tab 13 at 176; tr. 2/83)
VA. CODE ANN. § 62.1-44.15:34(A) (West 2014); 9 VA. ADMIN. CODE §§ 25-870-10,
25-870-30, 25-870-55. Virginia imposes an additional permitting scheme for
stormwater discharges associated with industrial activities. Industrial activities are
specifically defined by Virginia. They require the acquisition of a Virginia Pollution
Discharge Elimination System (VPDES) permit. 9 VA. ADMIN. CODE §§ 25-31-120.
Significantly, Virginia limits the total phosphorous load of a new development
to be calculated using the Virginia Runoff Reduction Method (VRRM) or another
equivalent methodology approved by the State Water Control Board. The VRRM
Excel spreadsheet serves as DEQ’s compliance tool for projects subject to the VRRM.
9 VA. ADMIN. CODE §§ 25-870-63, 25-870-65; DEP’T OF ENVTL. QUALITY WATER
PERMITTING DIV., GUIDANCE MEMO NO. 16-2001-UPDATED VIRGINIA RUNOFF
REDUCTION METHOD COMPLIANCE SPREADSHEETS-VERSION 3.0 (May 2, 2016),
https://swbmp.vwrrc.vt.edu/vrrm. The Virginia Stormwater BMP Clearinghouse is a
website containing approved Best Management Practices (BMPs) for post-construction
use to meet Virginia’s total phosphorous requirements. Virginia defines a BMP to
mean “schedules of activities, prohibitions of practices, maintenance procedures, and
other management practices, including both structural and nonstructural practices, to
prevent or reduce the pollution of surface waters and groundwater systems.” 9 VA.
ADMIN. CODE § 25-870-10. The BMP Clearinghouse provides various design
specifications. VIRGINIA STORMWATER BMP CLEARINGHOUSE,
https://swbmp.vwrrc.vt.edu (last visited Aug. 19, 2022); see also 9 VA. ADMIN. CODE
§ 25-870-65. There are Level 1 and Level 2 BMPs. Level 1 is a basic design and
Level 2 is more enhanced and therefore leads to a higher credit for phosphorous
removal. (R4, tab 30 at 1928; tr. 2/67)
Two of Virginia’s approved BMP specifications are relevant here. They are
Practice 8: Infiltration Practices (Specification No. 8) and Practice 9: Bioretention
(including Urban Bioretention) (Specification No. 9). Though quite detailed,
Specification No. 8 explains that “[i]nfiltration practices use temporary surface or
underground storage to allow incoming stormwater runoff to exfiltrate into underlying
soils.” In its beginning, the specification says that “[t]o prevent possible groundwater
contamination infiltration should not be used at sites designated as stormwater
hotspots.” (R4, tab 33 at 2004) In turn, the specification explains that “[s]tormwater
hotspots are operations or activities that are known to produce higher concentrations of
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stormwater pollutants and/or have a greater risk for spills, leaks or illicit discharges”
(R4, tab 33 at 2023). The specification includes a list of potential hotspots on Table
8.10 (id. at 2024). Some of the items on the list are industrial activities requiring a
VPDES permit. Among them are fleet storage areas. However, hotspots and
industrial activities are not the same. So, other items on the hotspot list are not
industrial, including parking lots with 40 or more spaces. Departing somewhat from
its initial declaration prohibiting the use of any infiltration at hotspots, here the
specification allows restricted infiltration for some items, such as parking lots
exceeding 40 spaces, while completely prohibiting it for others, such as fleet storage
areas. (Id. at 2023-24; tr. 1/190) The relevant state authority (in this case DEQ)
ultimately determines whether a particular operation or activity is a hotspot after a
design package is submitted to it (tr. 2/83, 3/194).
Specification No. 9 addresses bioretention, which directs storm runoff into
shallow landscaped depressions containing a bed of filtering media. The runoff ponds
and then filters through the bed. (R4, tab 30 at 1927) There are two kinds of
bioretention. The more typical one is a Bioretention Filter where runoff is eventually
filtered to an underdrain for return to the storm drain system. The second is called a
Bioretention Basin. In places with low risk of groundwater contamination,
underdrains are only installed beneath a portion of the filter bed, or eliminated
altogether, increasing stormwater infiltration. (Id.) Importantly, runoff from hotspot
uses should not be treated with infiltrating bioretention. Instead, “[a]n impermeable
bottom liner and an underdrain system must be employed when bioretention is used to
receive and treat hotspot runoff.” (Id. at 1941-42)
FINDINGS OF FACT
I. Contract Planning
1. Sometime in 2015, the 99th Regional Support Command, part of the
United States Army Reserve, requested to relocate an equipment concentration site to
Fort A.P. Hill, Virginia. Among other things, the facility would contain a vehicle
maintenance facility and an outdoor organizational vehicle parking area. The
suggested site was woods that had been newly identified as an industrial area on the
base master plan. (App. supp. R4, tab 11 at 80, 89-90; tr. 3/27) Different areas of
Fort A.P. Hill are designated for specific purposes, such as residential, training, firing
ranges, industrial, etc. This ensures that something like a noisy firing range is not
located in a housing area. (Tr. 3/33-34) An industrial area is where activities such as
equipment maintenance are performed (tr. 3/33). However, that base designation for
the purpose of facility siting is unrelated to Virginia’s stormwater permitting
requirements (R4, tab 44 at 3290, 3302). We find that the project was never
determined by DEQ to be performing industrial activities for state permitting purposes.
Fort A.P. Hill’s Real Property Planning Board, made up of the base commander and
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heads of various components, approved the siting during a July 21, 2015, meeting
(app. supp. R4, tab 11 at 78, 80; tr. 3/27).
2. The government performed an Environmental Assessment for the project
under the National Environmental Policy Act, which was reviewed by DEQ. DEQ
included within its response the observation that federal agencies conducting regulated
land-disturbing activities must, among other things, comply with the Virginia
stormwater management laws and regulations. Among these provisions is the
requirement that the contractor submit a stormwater management plan to DEQ for
review and approval. (App. supp. R4, tab 13 at 176-77)
3. Consistent with its regulatory mandates, while developing the solicitation for
the maintenance facility, the government contemplated there would be significant
stormwater management requirements that would be the responsibility of the designer to
address (R4, tab 37 at 2251; app. supp. R4, tab 10 at 71). 1 The government was aware
that DEQ never approved initial permit submissions, could take 45 days to respond to
subsequent submissions (as provided by VA. CODE ANN. § 62.1-44.15:34(A)), and would
add new comments after each review (app. supp. R4, tab 1). Internal government
discussions recognized that DEQ had recently revised its requirements and many
projects were having compliance difficulties. Permitting could take up to three months.
(App. supp. R4, tab 12 at 123) Accordingly, the government factored 90 extra days into
the solicitation’s period of performance and sought a demonstration from offerors of
their experience complying with Virginia’s requirements (R4, tab 41 at 2939; tr. 3/24).
1
The United Facilities Criteria (UFC) system dictates criteria for design and
construction applicable to all military departments and defense agencies and
must be used for all Department of Defense (DOD) projects (R4, tab 37
at 2236). UFC 3-210-10, titled Low Impact Development (LID), addresses the
changes to natural water flow and decreases to water quality from construction.
It recognizes that the Energy Independence and Security Act (EISA) of 2007
established stormwater design requirements for federal agencies to develop
facilities and dictates standards for DOD compliance. (Id. at 2237, 2241)
LID seeks to restore pre-development infiltration rates at project sites through
management practices (id. at 2241). UFC 3-210-10 provides various LID
standards to be employed for the design and construction of DOD projects. In
addition to the extensive direct requirements mandated by UFC 3-210-10 is a
more indirect one relevant here, which is that a project must “[c]omply with
applicable State and local requirements for stormwater management.” It states
that “[c]oordination of the design is the responsibility of the designer to insure
that the criteria are met from both the regulatory and LID perspectives.” (Id.
at 2251)
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II. Contract Award
4. On July 13, 2017, the U.S. Army Engineer District, Louisville, awarded the
contract identified above to ACC for the design and construction of the previously
approved equipment concentration site at Fort A.P. Hill. The primary structures are a
Tactical Equipment Maintenance Facility and General Purpose Warehouse. Surrounding
them is a 55,450 square yard (approximately 11 acres) military equipment parking area to
store around 900 vehicles. (R4, tab 4 at 44-47, 291, 299, tab 17 at 1826; tr. 3/8) ACC
was to design and construct all site features, including drainage facilities (R4, tab 4
at 297). The fixed price contract was for $19,331,614 (excluding betterments) (R4, tab 4
at 44).
5. Among the standard clauses incorporated in the contract were FAR 52.236-2,
DIFFERING SITE CONDITIONS (APR 1984) (R4, tab 4 at 168); FAR 52.236-7,
PERMITS AND RESPONSIBILITIES (NOV 1991) (id. at 170); and FAR 52.243-4,
CHANGES (JUN 2007) (id. at 177).
6. In addition to the Permits and Responsibilities clause, multiple contract
clauses specified that ACC was responsible for obtaining all necessary state and local
permits for the project and that the development complied with all applicable state and
federal regulations and codes (R4, tab 4 at 295, 300-02, 309, 311, 319, 323-24). 2 This
2
The contract contained the following language:
Contractor shall provide all. . . permits. . . to design and
construct the TEMF, General Purpose Warehouse and
associated site improvements (R4, tab 4 at 295).
The Contractor shall assure that the site development complies
with all applicable local, State and Federal Regulations. A list
of known regulations is located in Part 2 of the Statement of
Work. Timely acquisition of the necessary design and
construction related permits shall be the responsibility of the
Contractor. The Contractor, upon notice to proceed, shall
immediately begin working on the permits so as not to delay
completion of the project. The Contractor shall prepare
permits, associated drawings, public notices, and other related
documentation as necessary to successfully meet permit
approval status. The Contractor shall pay for associated permit
fees. (R4, tab 4 at 300)
[D]esign and construction of Army Reserve real property
improvements shall also comply with all current and
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applicable State and local codes, and with all other applicable
laws and regulations governing development, design and
construction at the site. If certain of such requirements
appear particularly onerous, or hamper required functionality
of the project, the Contractor may recommend the
Government waive the requirement or implement a lesser
requirement. The Government’s acceptance of such
recommendations is not assured. (R4, tab 4 at 301)
The following specifications, codes, standards, bulletins and
handbooks form a part of this RFP. The applicable editions
are those current as of the date of this RFP
...
State of Virginia
....
State/Local Sedimentation and Erosion Control Design
Requirements
State/Local Environmental Control Requirements
State/Local Storm Water Management Requirements
(R4, tab 4 at 302).
The Contractor is responsible for making all applications and
obtaining required municipal, utility, and regulatory agency
coordination, reviews, permits, inspections and approvals,
and is responsible for payment of any associated fees or
charges (R4, tab 4 at 309).
The Contractor is responsible for preparation and compliance
with stormwater NPDES Permit, Stormwater Pollution
Prevention Plan . . . requirements, and for any associated fees
and permits (R4, tab 4 at 311).
Federal, State and local regulations regarding the design of
stormwater management systems shall be considered the
minimum design criteria (R4, tab 4 at 319).
The local drainage authority is: Fort AP Hill DPW.
....
Preliminary coordination with the local drainage authority
indicated that the Contractor shall provide the following: In
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included complying with Virginia stormwater management regulatory and permit
requirements (R4, tab 4 at 302, 311, 319, 323-24). The contract also stated that “[t]he
project site is located within the Chesapeake Bay Watershed which is considered
impaired waters” (R4, tab 4 at 323). ACC was to integrate design and permitting
activities, including conferences and follow-up actions, into the schedule. The
schedule was to include review and correction periods associated with each item. (R4,
tab 4 at 679) Though at a pre-award meeting the government discussed commenting
for offerors that stormwater permitting from Virginia might be difficult, it did not issue
such instructions. It was not the government’s practice to evaluate other regulators or
comment in solicitations about whether they are difficult or slow. (App. supp. R4, tab
12 at 123; tr. 3/89-90) However, the contract did contain a clause recognizing that
some permits required up to 180 days to obtain (R4, tab 4 at 869). To comply with its
obligation to timely obtain permits, ACC was to immediately begin working on them
upon receipt of the notice to proceed (R4, tab 4 at 300).
III. Mason & Hanger’s Experience, Source Selection Board, No Government
Pre-award Knowledge of a Hotspot
7. ACC’s proposal designated Mason & Hanger as its design firm (R4, tab 6
at 1485). In response to the solicitation’s requirement that offerors discuss their
experience complying with Virginia’s stormwater management standards, ACC
represented that Mason & Hanger recently worked on projects at Fort A.P. Hill, and
that its personnel were “very familiar with [the] installation, both from an architectural
aspect as well as from a civil engineering aspect involving permitting, stormwater
requirements, sediment and erosion control and utilities.” ACC stressed that its
“design team members have experience coordinating with Ft. A.P. Hill Environmental,
Chesapeake Bay office and the Commonwealth of VA.” (R4, tab 6 at 1501) We infer
that the reference to Virginia includes DEQ. ACC and Mason & Hanger represented
that Mason & Hanger had significant experience with stormwater permitting in
addition to the EISA drainage requirements, this project must
also comply with Virginia DEQ Stormwater Management,
Erosion and Sediment Control, and Construction General
Permit requirements. The project is located within the
Chesapeake Bay Watershed which is considered impaired
waters. Also refer to Attachments ‘J’ and ‘L’ of this section
for Virginia DEQ checklists. (R4, tab 4 at 323)
Obtain a copy of requirement or guidelines for drainage
system construction from the State of Virginia. Meet the
requirements and guidelines and obtain permits and pay fees
(R4, tab 4 at 324).
7
Virginia and that its design would meet Virginia’s requirements (R4, tab 6 at 1503;
tr. 1/173). ACC relied upon Mason & Hanger’s experience preparing its proposal
(app. prop. finding ¶ 47). Mason & Hanger’s stormwater system designer for the
project, Mr. Geoffrey Lynn, was aware that it was difficult to get projects approved by
all state environmental departments, including Virginia’s DEQ (tr. 1/184-86, 226-27).
8. The Source Selection Board found ACC’s proposal met the solicitation’s
requirements and that its design drawings were outstanding (tr. 3/86-87). There is no
evidence the government knew the site was a hotspot under DEQ specifications at the
time of award.
IV. Notice to Proceed and Permit Application Schedule
9. On August 1, 2017, the government issued the notice to proceed, requiring
commencement of work within 10 days and completion by August 24, 2019 (R4, tab 8).
ACC’s preliminary schedule from that date showed it would submit a Stormwater
Pollution Prevention Plan (SWPPP) to DEQ by October 6, 2017 (app. supp. R4, tab 24).
An SWPPP, which is required by the contract, is contemplated under Virginia law to
identify sources of pollution that may affect the quality of stormwater discharges. It
encompasses both the construction phase and post-construction so, among other things,
it includes or incorporates the stormwater management plan. (R4, tab 4 at 874;
tr. 1/187-88, 3/112) 9 VA. ADMIN. CODE §§ 25-870-10, 25-870-54. A different kind of
SWPPP is required in Virginia for industrial activities (R4, tab 33 at 2023; tr. 1/192-93).
9 VA. ADMIN. CODE § 25-151-80. ACC anticipated DEQ would require nearly three
months, until January 4, 2018, to review its initial SWPPP. ACC also built in another
two months for DEQ to review a subsequent resubmittal of the SWPPP. It did not
expect to receive a permit until March 9, 2018, 154 days after initial SWPPP
submission, or for approximately five months. (App. supp. R4, tab 24) The next month
the schedule had slipped with ACC expecting to receive a permit by March 27, 2018,
after two DEQ reviews (app. supp. R4, tab 17 at 248).
V. Preconstruction Meeting
10. Notwithstanding ACC’s assurances that Mason & Hanger was familiar
with DEQ, during the August 15, 2017, preconstruction meeting, the government
emphasized as a major topic of discussion the challenges of obtaining DEQ’s
approvals, including the likely need for multiple submittals (app. supp. R4, tab 5;
tr. 1/ 165, 3/107-09; app. prop. finding ¶ 62; gov’t prop. finding ¶ 27). ACC reiterated
that Mason & Hanger was experienced and understood the challenges (tr. 3/108-09).
8
VI. Fisher Discussion and Standard SWPPP
11. On August 17, 2017, Mr. Lynn, Mason & Hanger’s designer, requested
Mr. George Fisher, an environmental specialist at Fort A.P. Hill, to provide him with
an example of an SWPPP (app. supp. R4, tab 39 at 1209; tr. 3/111). Mr. Fisher
responded that Mr. Lynn should generate his own based upon this project’s
requirements. Nevertheless, expressing only his own personal thoughts and not an
official communication from the Corps, he proceeded to provide a list of references
that could be reviewed and items that should be included. He incorrectly characterized
the site as industrial so care should be taken selecting BMPs to meet water quality
requirements. (App. supp. R4, tab 39 at 1208-09) Mr. Lynn was not influenced by
that statement because he did not proceed to analyze the project for industrial
permitting (tr. 1/188-90). He submitted a standard SWPPP to DEQ, not an industrial
one (tr. 1/192-93). Neither the government nor DEQ objected.
VII. Mason & Hanger Design
12. The large parking lot Mason & Hanger designed for military vehicles was
composed of aggregate which, if left alone, would cause a significant amount of rain
runoff. To address this, Mason & Hanger contemplated a stormwater management
system that would infiltrate rain into the ground to mimic preconstruction conditions.
(R4, tab 6 at 1503, tab 17; tr. 1/191, 206) Under the plan, the finished site would drain
the aggregate parking lot, the building roofs, and other hard surfaces outside the
buildings using a combination of dry swales and a bioretention basin to control runoff
(R4, tab 6 at 1491, tab 17; tr. 1/198-201). 3
VIII. Hotspot Discussion
13. On January 30, 2018, the parties held a meeting about Mason & Hanger’s
December 2017 draft design (R4, tab 62; tr. 3/117). At that time, the draft was still
conceptual and therefore not sufficient for submission (R4, tab 62 at 3784; tr. 2/14).
One of the government’s contract employee design reviewers was Mr. Brian (Scutter)
Lee (tr. 3/125). Mr. Lee holds a certificate from DEQ in erosion sediment control and
stormwater management. He provides environmental consulting services to Fort A.P.
Hill, reviewing stormwater designs, and providing recommendations to project
designers and government staff. (Tr. 3/174-76) However, his comments were not
mandatory upon Mason & Hanger, he had no contractual authority over it or ACC, or
any regulatory authority to act for DEQ (tr. 3/125, 177, 183-84).
3
A dry swale is essentially a ditch with materials at the bottom that store and clean the
water as it flows through it (tr. 1/198-99).
9
14. During the January 30 meeting, Mr. Lee shared 19 comments about the draft
design. Given his comments, the parties agreed to hold weekly conferences and
Mason & Hanger requested that the fast track for its design be delayed until February 22,
2018. (R4, tab 62 at 3784) After the meeting, Mr. Lee and Mr. Lynn discussed the site’s
status as a hotspot and the associated stormwater management requirements (tr. 1/225-27).
This is the first indication of a hotspot identification. It was only upon his January review
of the draft submittal that Mr. Lee realized the site was potentially a hotspot (tr. 3/184-85,
187-88).
15. ACC, Mason & Hanger, and the government maintained a running
electronic commentary about the project called DRChecks (R4, tab 11; tr. 3/117-18,
177-79). The next day, on January 31, 2018, Mr. Lee added comments. Among them
was that DEQ’s bioretention design specifications required that “bioretention BMPs
installed within hotspot land uses must use an underdrain with an impermeable liner”
(R4, tab 11 at 1616). Though not required to agree with comments made in DRChecks,
Mr. Lynn expressly “concurred” with Mr. Lee’s statement on February 6, adding that
“[u]nderdrains will remain and an impermeable bottom liner will be added” (R4, tab 11
at 1616; tr. 2/14-15). Mr. Lynn understood that if a facility is listed in Table 8.10 of
Specification No. 8 it is almost certainly a hotspot (tr. 1/195-96). A February 14, 2018,
email from Mr. Lynn to Mr. Mike Spradling, also of Mason & Hanger, recognized that
the project was a hotspot within the Chesapeake Bay watershed that would be subject to
specific DEQ requirements (R4, tab 31 at 1990).
IX. First Submission to DEQ
16. On March 22, 2018, DEQ received Mason & Hanger’s Erosion Soil
Control and Stormwater Management plans, dated March 8 (R4, tab 13). The
government had forwarded them to DEQ for ACC, which was typical, believing it
would expedite processing (app. supp. R4, tab 17 at 238; tr. 3/137-38). On May 8,
2018, DEQ responded with 14 comments indicating inadequacies. Generally, the
submission lacked basic materials such as an electronic copy of the VRRM
spreadsheet, elevations and contours, the registration statement required to commence
the process, and contact information. The stormwater management plan did not
clearly show the necessary features and analysis to assess water quantity as well as
channel and flood protection. It also failed to present adequate drainage calculations,
lacked documentation demonstrating required channel and flood protection, and
detailed design plans showing compliance with DEQ BMP specifications. DEQ stated
that its comments had to be addressed before it could continue reviewing the plans and
its response was not a final determination. (R4, tab 13)
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X. Second and Third Submissions to DEQ, Mr. Cooper’s Conclusions, and
Call With DEQ
17. On June 19, 2018, DEQ responded to another Mason & Hanger submission
dated May 17. This response contained 17 comments. Included among those was the
observation that the VRRM spreadsheet did not show the BMPs removing sufficient
nutrients. Again, all the comments had to be addressed before DEQ could continue
with the review and approval process. (R4, tab 15)
18. The VRRM spreadsheet issue raised by DEQ’s second response came up
again in a July 3, 2018, conference call between Mason & Hanger, ACC, Ft. A.P. Hill
personnel, and Margaret Dannemann and April Rhodes of DEQ. Mason & Hanger
complained that the spreadsheet dictated a 95% runoff rate from the equipment
parking area. Because the area was composed of aggregate, Mason & Hanger thought
the rate should be 85%. The 95% rate led to a higher calculated nutrient discharge
than could be handled by the Mason & Hanger design. Ms. Dannemann recommended
that Mason & Hanger consult with Mr. Robert Cooper of DEQ, who she identified as
her boss. (App. supp. R4, tab 46) Mr. Cooper is a licensed professional engineer in
Virginia and a BMP specialist at DEQ. He advises DEQ reviewers, project engineers,
designers, contractors, and the public. (Tr. 2/64-65, 84-85) Virginia Runoff Reduction
Method, VIRGINIA STORMWATER BMP CLEARINGHOUSE,
https://swbmp.vwrrc.vt.edu/vrrm (last visited Aug. 19, 2022) (identifying Mr. Cooper
on the Virginia Stormwater BMP Clearinghouse webpage as a point of contact for the
public). On July 6, 2018, Mason & Hanger sent a third submission to DEQ, this time
with assistance from Mr. Cooper (R4, tabs 66-67; app. supp. R4, tab 46).
19. When Mr. Cooper became involved with the project, he formed the opinion
that, consistent with Table 8.10 of Specification No. 8, the project was a hotspot
because, among other things, the vehicle storage lot was a parking lot that would hold
more than 40 vehicles (R4, tab 33 at 2024, tr. 2/73-77). He shared his hotspot
determination with ACC in a conference call held July 6, 2018. During that call he
also explained that the use of the impermeable liner required for a hotspot precludes
treating the BMP as supporting Level 2 nutrient removal. (R4, tab 23 at 1856;
tr. 1/241)
20. On August 7, 2018, Ms. Dannemann invited ACC to participate in another
conference call to discuss its latest submission to DEQ (R4, tab 32 at 2001-02; tr. 3/151).
In addition to Ms. Dannemann, the August 8 call included Mr. Cooper, Mr. Mathew
McKnight (Vice President of ACC), Mr. Michael Higgins (the government project
manager), Mr. Cory Pugh (the Contracting Officer’s Representative), and Mr. Fisher (R4,
tab 32 at 2000; tr. 2/71, 3/40). The call addressed whether Mason & Hanger’s July
submission had addressed DEQ’s prior 17 comments, as well as the site’s status as a
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hotspot (tr. 2/71, 3/41-42, 151-52). Mr. Higgins expressed an interest in providing
materials that would change the hotspot designation (tr. 3/41-43).
XI. Mr. Higgins and Memos to DEQ
21. After the August 8 call concluded, Ms. Dannemann emailed the
participants a copy of Specification No. 8 (R4, tab 32 at 2000, tab 33; tr. 3/43).
Though this was his first experience with DEQ, and he denies knowing what a hotspot
is, Mr. Higgins responded to that email, copying ACC and Mason & Hanger, asking
Ms. Dannemann to review the matter with the DEQ central office to ascertain if the
site could be considered a non-hotspot. Mr. Higgins inaccurately based his contention
that it was not a hotspot upon his opinion that the facility should be considered a fleet
storage area (which in fact are industrial hotspots under Specification No. 8), that oil
drip pans would be placed beneath parked vehicles, and the vehicle maintenance
facility was contained and would use oil/water separators. (R4, tab 32 at 1999-2000,
tab 33 at 2023-24; tr. 3/39, 46, 87) Mr. Higgins had no authority himself to classify
the site (tr. 3/46-47). There is no evidence that ACC or Mason & Hanger commented
themselves on Mr. Higgins’ statement.
22. Following his email to Ms. Dannemann, Mr. Higgins wrote a memo for
DEQ providing information intended to avoid a hotspot designation (app. supp. R4,
tab 15, tab 17 at 1825; tr. 3/47-48). He forwarded the memo to ACC for inclusion
with its own submission (tr. 3/48-49). The result was a memo dated August 14, 2018,
from Mason & Hanger to Mr. Cooper at DEQ describing the project, including the
aggregate military equipment parking area (R4, tab 17). The attached memo from
Mr. Higgins addressed the site’s purpose and explained that the stored equipment
would be examined for leaks regularly and addressed immediately. It also described
Ft. A.P. Hill’s spill response policies, plans, and prevention procedures. It attached
relevant internal guidance and a spill response regulation. It did not say the site is an
industrial fleet storage area. (R4, tab 17 at 1825-26).
XII. DEQ’s Hotspot Determination
23. On August 17, 2018, Ms. Dannemann of DEQ emailed Mason & Hanger,
ACC, and the government thanking them for their memo and stating that “[a]fter
review and discussion of the memo we have concluded that the proposed procedures,
while helpful, are not enough to ensure that there will be no negative effects on ground
water as a result of the hot spot activities on the site.” Ms. Dannemann did not say
why DEQ considered the site a hotspot. (R4, tab 19) Because fleet storage areas are
among the industrial hot spot activities listed in Table 8.10 of Specification No. 8, had
DEQ agreed with Mr. Higgins that the site was an industrial fleet storage area, ACC
would have been required to submit an industrial VPDES permit application
accompanied by an industrial SWPPP (R4, tab 33 at 2023-24). 9 VA. ADMIN. CODE
12
§§ 25-31-120, 25-151-80. Given that DEQ did not require those submissions, we infer
that it was not convinced by Mr. Higgins’ suggestion that the site was a fleet storage
area. Instead, we find that it followed Mr. Cooper’s prior determination that the site
was a hotspot because it included a parking lot containing more than 40 spaces, which
is one of the non-industrial hotspots listed on Table 8.10 of Specification No. 8.
ACC’s May 14, 2019, claim to the contracting officer also acknowledged that DEQ
deemed the site a non-industrial hotspot (R4, tab 3 at 19).
XIII. DEQ’s Level 1 Determination and Jellyfish Filters
24. With it firmly established by DEQ that the site was a hotspot requiring an
impermeable liner and underdrain, DEQ persisted with its position that the design’s
bioretention basins could not be considered Level 2 BMPs providing enhanced nutrient
removal. Under Specification No. 9, Level 2 basins reduce runoff far more than Level 1.
Much of the reason for that is that runoff infiltrates into the ground. (R4, tab 30 at 1928;
tr. 2/68-69, 80-82) DEQ concluded that a liner blocking infiltration reduces the runoff
reduction taking place in the basin to the point that it does not meet the Level 2 standard
(app. supp. R4, tab 54; tr. 2/79-82). DEQ did not cite any published material to support its
conclusion (tr. 1/242-43, 2/82). At the time of the hearing, it was in the process of revising
Specification No. 9 to make the point explicitly in its regulations (tr. 2/82-83).
25. DEQ’s ruling that a bioretention basin incorporating an impermeable liner
was not a Level 2 BMP forced Mason & Hanger to include another pollution treatment
mechanism to achieve the required nutrient removal levels. It added two Contech
Jellyfish Filters which are structures that provide membrane filtration of pollutants.
(R4, tab 68; app. supp. R4, tab 67 at 6229, 6239; tr. 1/110, 238-240, 244)
XIV. Correspondence, REAs, Fourth, Fifth, and Sixth Submissions to DEQ,
DEQ’s Approval
26. By letter dated August 21, 2018, ACC notified the government that DEQ
had delayed addressing ACC’s July submission, which it characterized as an excusable
delay. ACC also expressed “concerns” with the site’s designation as a hotspot,
complaining that the government’s solicitation had not identified it as one.
Compliance would require a costly redesign. ACC notified the government that it
would submit a Request for Equitable Adjustment (REA) for the delay and redesign
costs. (App. supp. R4, tab 48 at 1640) The government responded on August 24,
2018, that ACC was obligated under the contract to design the project in compliance
with DEQ requirements, that DEQ concluded the site was a hotspot, and DEQ had
provided its comments within the 45-day review period (R4, tab 21).
27. On August 22, 2018, ACC made a fourth submission to DEQ that DEQ
found acceptable (app. supp. R4, tab 50 at 1656). A fifth submission required by DEQ
13
to consolidate materials, received on September 6, 2018, included the Contech
Jellyfish Filters (R4, tabs 68, 70; app. supp. R4, tab 50 at 1656, tab 51 at 1786, 1834).
DEQ then required a sixth submission to correct two items unrelated to this matter,
which it received from ACC on September 14, 2018. On September 19, 2018, DEQ
approved ACC’s stormwater management plan, 181 days after it had received the
initial submission on March 22. (R4, tabs 13, 22, 71) DEQ’s approval took 27 days
(less than a month) more than the 154 days ACC had originally estimated (app. supp.
R4, tab 24).
28. In a letter to the government dated October 12, 2018, ACC repeated its
observation that the solicitation did not identify a hotspot. It then explained why it
believed the site was not a hotspot or should be considered at Level 1. It
acknowledged that the government had unsuccessfully attempted to change DEQ’s
hotspot designation. It concluded that DEQ’s actions required it to add Jellyfish
Filters and make other changes to its design. It did not suggest that the government
had imposed an industrial designation upon the project or influenced DEQ when
Mr. Higgins opined that it might be a fleet storage area. Nevertheless, it reserved its
right to pursue an REA with the government and expressed a hope that the government
would “reach out to the State of Virginia to avoid these unnecessary additional cost
impacts.” (R4, tab 23) The contracting officer’s November 19, 2018, response noted
that ACC’s proposal had touted Mason & Hanger’s familiarity with DEQ’s
requirements. Compliance was ACC’s responsibility and not a change to the contract.
(R4, tab 24) In another letter dated January 7, 2019, ACC contended that the
government should have ascertained that the site was a hotspot limited to Level 1
removal prior to issuing the solicitation. It maintained that Mason & Hanger’s original
Level 2 non-hotspot design met the solicitation’s terms and therefore sought the
government to waive Virginia’s requirements as “onerous.” Alternatively, it expected
$1,412,744 in compensation from the government. ACC also sought $506,809 for
delays it alleged resulted from “the six months it took to receive VA DEQ approval.”
The letter stated that it attached REAs for those amounts. (R4, tab 25) In addition to
reiterating that the contract required ACC to comply with DEQ specifications, the
contracting officer’s February 1, 2019, denial of the REAs also explained that DEQ’s
requirements cannot be waived under the Clean Water Act. ACC’s struggles to
comply with them were not the fault of the government. (R4, tab 26)
XV. Certified Claims
29. On May 14, 2019, ACC submitted a certified claim to the contracting
officer for $2,811,944.86 and a 278 day time extension. Included in this amount was
$1,412,744 in “costs arising from [the government’s] insistence that ACC comply with
the undisclosed requirements of [DEQ] that determined the area was a non-industrial
hotspot.” The remaining $1,399,200.86 was for delays to the project allegedly arising
from DEQ’s hotspot determination, as well as resulting inefficiencies caused by the
14
project’s delay into a period of unfavorable weather. ACC argued entitlement based
upon alleged defective specifications, constructive change, and weather delay. (R4,
tab 3) The contracting officer denied this claim on October 31, 2019, and ACC’s
appeal was docketed as ASBCA No. 62265 (R4, tab 2). ACC then submitted a second
claim to the contracting officer on February 12, 2021, asserting superior knowledge as
an additional ground for recovery and increasing the amount sought by $64,473.73
(R4, tab 42). That was denied on May 14, 2021, and ACC’s appeal was docketed as
ASBCA No. 62937 (R4, tab 44). The appeals have been consolidated.
DECISION
ACC claims entitlement to compensation under various theories that we
consider separately.
I. Constructive Change
ACC suggests that the contract established the site as non-industrial and a
non-hotspot under DEQ standards. It says that shortly after award the government
declared it a hotspot in contradiction to the contract. ACC also contends that the
government’s August 2018 memorandum to DEQ informed ACC that the site was a
fleet storage area “requiring the strictest Level 1 removal factors and necessitating a
redesign of the stormwater system.” It alleges that DEQ “adopted [the government’s]
directive and determined that ACC could not continue to use Level 2 removal factors
with an impermeable liner.” ACC states that the contracting officer’s February 1,
2019, denial of ACC’s REAs “directed ACC to comply with DEQ’s determination that
the site was a fleet storage area, thereby requiring ACC to revise its design yet again to
add expensive jellyfish filters that ACC had not anticipated in its proposal.” It argues
the government’s fleet storage determination, combined with its direction to comply
with this new requirement, constitutes a constructive change to the contract.
“[T]he contracting officer may . . . constructively change the contract, ‘either
due to an informal order from, or through the fault of, the government.” Zafer
Taahhut Insaat ve Ticaret A.S. v. United States, 833 F.3d 1356, 1361 (Fed. Cir. 2016)
(quoting Nav Com Def. Elecs., Inc. v. England, 53 Fed. App’x 897, 900 (Fed. Cir.
2002)) (emphasis in original); Kellogg Brown & Root Servs., Inc. ASBCA Nos. 59385,
59744, 20-1 BCA ¶ 37,656 at 182,829. Generally, when the government requires a
constructive change, it must fairly compensate the contractor for the costs. Kiewit
Infrastructure West Co. v. United States, 972 F.3d 1322, 1329 (Fed. Cir. 2020). To
prevail, the contractor must “show (1) that it performed work beyond the contract
requirements, and (2) that the additional work was ordered, expressly or impliedly, by
the government.” Bell/Heery v. United States, 739 F.3d 1324, 1335 (Fed. Cir. 2014);
Kellogg Brown & Root Servs., 20-1 BCA ¶ 37,656 at 182,829.
15
ACC’s description of the contract and events bears no resemblance to our
findings. First, ACC’s initial suggestion that the government made contractual
commitments to ACC that the site was a non-hotspot under DEQ specifications is
plainly wrong. The contract could not have been clearer that ACC was solely
responsible for ascertaining and complying with the state’s requirements and for
obtaining all necessary state and local permits for the project, whatever they might be.
The contract’s Permits and Responsibilities clause states in relevant part that:
The Contractor shall, without additional expense to the
Government, be responsible for obtaining any necessary
licenses and permits, and for complying with any Federal,
State, and municipal laws, codes, and regulations
applicable to the performance of the work.
FAR 52.236-7 (finding 5). But that is not all the contract says. It contains several
other pronouncements solidifying the allocation to ACC of the costs associated with
meeting state permitting standards. Thus, it repeated that ACC was to provide all
permits to design and construct the structures and associated improvements. It was to
assure that the site development complied with all local and state regulations. It was
responsible for timely acquisition of the necessary design and construction related
permits. It had to prepare permits and other related documentation as necessary to
successfully meet permit approval status. Its design was to comply with all current
and applicable state codes, laws, and regulations governing development, design, and
construction at the site. The specifications and codes of Virginia, including
stormwater management requirements, formed a part of the contract. Its duties
specifically included complying with Virginia DEQ Stormwater Management
requirements. It was to obtain a copy of the state’s requirements or guidelines for
drainage system construction and meet them. (Finding 6) Together, these provisions
demonstrate the contract unequivocally assigns all risk for complying with permitting
requirements upon ACC. See Bell/Heery, 739 F.3d at 1334.
Against the backdrop of the voluminous contractual language imposing sole
responsibility for state regulatory compliance upon ACC is the absence of any
advisement or commitment by the government that in pursuing permitting with DEQ
ACC could expect the site not to be a hotspot. It was entirely for ACC to determine
what DEQ required. Moreover, ACC’s proposal stressed to the government Mason &
Hanger’s recent experience working on such projects at Fort A.P Hill, the familiarity of
Mason & Hanger’s personnel with permitting and stormwater requirements, as well as
coordinating with appropriate local authorities, including DEQ (finding 7). The fact
that upon award the government found ACC’s initial plan acceptable for its own
purposes (finding 8) was not a warranty Virginia would find it in compliance with its
regulatory mandates. Unless the government assumed that risk in unmistakable terms it
is not liable for the third party determinations of another sovereign government. See
16
Kellogg Brown & Root Servs., 20-1 BCA ¶ 37,656 at 182,826 (citing Oman-Fischbach
Int’l (JV) v. Pirie, 276 F.3d 1380, 1385 (Fed. Cir. 2002)); see also Zafer Taahhut Insaat
ve Ticaret A.S., 833 F.3d at 1364 (holding the government is not responsible for the
sovereign acts of a foreign nation). Because the contract squarely places upon ACC
responsibility for navigating Virginia’s stormwater regulatory regime, the government
was justified in relying upon it to successfully accomplish that task.
Second, we have not found that shortly after award the government dictated to
ACC that the site was a hotspot requiring redesign. Nobody associated with the
government is known to have considered the matter at all until more than six months
after award when, while providing comments about Mason & Hanger’s incomplete
conceptual stormwater management design, Mr. Lee, Ft. A.P. Hill’s DEQ certified
reviewer in stormwater management, suggested the site was a hotspot under the DEQ
specifications. Accordingly, he advised that bioretention basins should use underdrains
and impermeable liners. Mr. Lee lacked any contractual authority for the government,
or authority to act for DEQ, and his comments were not mandatory upon ACC or
Mason & Hanger. Far from treating the observation as a directed contractual change,
Mr. Lynn, Mason & Hanger’s designer, expressly concurred with Mr. Lee’s conclusion
without any indication of disagreement from either him or anyone else associated with
ACC. Indeed, a subsequent Mason & Hanger internal communication recognized that
the site was a hotspot within the Chesapeake Bay watershed. Mr. Lynn responded to
Mr. Lee by voluntarily adding underdrains and an impermeable liner to the design.
(Findings 13-15)
Third, Mr. Lee’s and Mason & Hanger’s beliefs turned out to be warranted
because DEQ ultimately ruled itself that the site was a hotspot under Virginia’s
stormwater specifications (findings 19-20, 23). Instead of masterminding an effort to
saddle ACC with the stricter requirements associated with that determination, as ACC
contends, the government project manager, Mr. Higgins, tried to change DEQ’s mind
so that ACC would be relieved of the consequential burdens (findings 20-22). ACC’s
suggestion that Mr. Higgins’ August 2018 memorandum (which ACC voluntarily
forwarded to DEQ) informed ACC that the site was a fleet storage area “requiring the
strictest Level 1 removal factors” is inaccurate (finding 22). Also unfounded is ACC’s
allegation that the government “directed” DEQ to treat the site as an industrial fleet
storage area, requiring ACC to abandon its Level 2 treatment design. The government
did not direct DEQ to do anything, nor are we aware that it had the power to do so.
Although Mr. Higgins incorrectly suggested to DEQ in an email that the site was a fleet
storage area out of a misguided belief that would mean it was not a hotspot, he had no
authority to require that conclusion. Nor did ACC or Mason & Hanger object.
(Finding 21) Moreover, DEQ did not adopt that proposal. DEQ never instructed ACC
or Mason & Hanger to treat the site as an industrial fleet storage area. Instead, as ACC
17
has previously acknowledged, DEQ concluded that the site was a non-industrial
hotspot. (Findings 1, 23)
DEQ’s further instruction to Mason & Hanger that the impermeable liner
required underneath a bioretention structure treating hotspot runoff forecloses Level 2
nutrient removal, mandating that it be treated as Level 1, was entirely the regulatory
determination of DEQ (findings 19, 24). The government had nothing to do with it. In
fact, there is no evidence that either the government or ACC believed that would be the
requirement until DEQ imposed it. DEQ’s instruction became a condition to its
approval of Mason & Hanger’s stormwater management plan that ACC was required
to obtain under the contract. The government’s February 1, 2019, letter did not direct
ACC to perform any additional work beyond what the contract required; it simply
denied ACC’s REAs (finding 28). The government is not responsible for DEQ’s
regulatory demands, so it is not at fault for a change in ACC’s performance costs
arising from them. See Bell/Heery, 739 F.3d at 1333-35 (holding the Permits and
Responsibilities clause assigns all risk for complying with local permitting
requirements upon the contractor and the government is not responsible for a change
when a state government compelled a modification to the contractor’s planned
operations); Kellogg Brown & Root Servs., 20-1 BCA ¶ 37,656 at 182,829 (finding the
government is not at fault for a change based upon the demands of another
government) (citing Zafer Taahhut Insaat ve Ticaret A.S., 833 F.3d at 1364). 4
Accordingly, we find ACC’s contention that the government constructively changed
the contract is without merit.
4
ACC has not persuaded us to apply Norair Engineering Corp., GSBCA No. 1760,
66-1 BCA ¶ 5440. That non-binding ruling of another board finds that working
hour restrictions imposed by a District of Columbia government construction
permit constitutes a compensable change by the Federal Government to a
contract containing the Permits and Responsibilities clause because the
government did not ascertain the District’s permitting criteria and alert bidders
about it before award. The holding is inconsistent with the clause and the
binding precedents we have cited. Another case cited by ACC, Odebrecht
Contractors of California, ENGBCA No. 6372, 00-2 BCA ¶ 30,999, is
distinguishable. There, another board found the government responsible for a
change when, after warranting the availability of certain wells for contract
performance, it orchestrated harsh local permitting restrictions to avoid the
consequences of the contract. Id. at 153,073-074. Here, the government did not
warrant specific regulatory treatment by DEQ and then cause it to do the
opposite.
18
II. Defective Specifications
Another theory of recovery advanced by ACC is that the government breached
the implied warranty of specifications described in United States v. Spearin, 248 U.S.
132 (1918). Under that doctrine, when the contractor is required to follow design
specifications provided in the contract, an implied warranty arises that the work will not
be defective or unsafe. Lakeshore Eng. Servs., Inc. v. United States, 748 F.3d 1341,
1349 (Fed. Cir. 2014) (citing Essex Electro Eng’rs v. Danzig, 224 F.3d 1283, 1289 (Fed.
Cir. 2000)). Should the design specifications be defective, the contractor is entitled to
recover the resulting proximate costs. Essex Electro Eng’rs, 224 F.3d at 1289. This
does not alter the general rule that a contractor committing to build something for a fixed
price retains the risk of cost increases from unforeseen difficulties not caused by new
actions of the other party. Lakeshore Eng. Servs., 748 F.3d at 1349 (citing Spearin,
248 U.S. at 136).
ACC says the solicitation did not identify the project as a hotspot or industrial
site or restrict offerors from using “Level 2 nutrient removal factors.” It notes the
Corps coordinated prior to award with Fort A.P. Hill and they made no determination
that the project was an industrial site or a hotspot. It observes that none of the
environmental studies identified it as a hotspot or gave any other reason why the site
would only permit “Level 1 removal factors.” ACC suggests it relied upon the
solicitation to propose a design that it considered to meet Level 2 removal. It alleges
the government subsequently declared the site industrial and a hotspot, requiring
design revisions, “particularly once DEQ adopted [the government’s] previously
undisclosed position that the project was a fleet storage area requiring the highest level
of stormwater treatment.” It contends these changes were “only because the
Solicitation’s design specification were (sic) deeply flawed.”
ACC has failed to show a defective design specification. The fact that neither
the solicitation nor any other government pre-award consultations or studies identified
the site as a hotspot is not a design specification imposing a particular way work is to
be done within the meaning of Spearin. The only specification was that ACC ascertain
and comply with Virginia’s stormwater management requirements to obtain the
requisite state permits. The solicitation did not purport to assure ACC that it could rely
upon DEQ to interpret its regulations in a particular way. 5 (Findings 5-6) Also, as
5
ACC contends that additional guidance cited in the solicitation says this hotspot may
be treated as Level 2. As best we can discern, it is referring to a non-DEQ
publication called Pollution Source Control Practices, published in 2005 by the
Center for Watershed Protection for the United States Environmental Protection
Agency (R4, tab 36). It is one of numerous source references listed at the end
of Specification No. 8’s main body (R4, tab 33 at 2026). ACC seems to suggest
that because state stormwater requirements were part of the contract, this
19
already noted, the government did not dictate, and DEQ did not conclude, that the site
was a fleet storage area. Rather than demonstrate a defective specification, DEQ’s
instruction to ACC that the BMPs for this hotspot would only achieve Level 1 nutrient
removal was an unforeseen event not caused by the government. ACC retained the
risk of the resulting increased costs under this fixed price contract.
III. Breach of the Duty of Good Faith and Fair Dealing/Failure to Intervene
ACC also contends that Mr. Higgins’ fleet storage suggestion, allegedly
prompting DEQ to restrict Mason & Hanger’s BMPs to Level 1 nutrient removal,
breached the duty of good faith and fair dealing. It says the government’s failure to
somehow intervene with DEQ on ACC’s behalf and make it change its mind about its
Level 1 determination also constitutes such a breach. The duty of good faith and fair
dealing prohibits “interference with or failure to cooperate in the other party’s
performance.” LaBatte v. United States, 899 F.3d 1373, 1379 (Fed. Cir. 2018)
(quoting RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. d (1981)). Although
such a breach is not dependent upon the violation of an express contract term, a claim
based upon it “cannot expand a party’s duties beyond those in the express contract or
create duties inconsistent with the contract’s provisions.” Laturner v. United States,
933 F.3d 1354, 1365 n.8 (Fed. Cir. 2019) (quoting Dobyns v. United States, 915 F.3d
733, 739 (Fed. Cir. 2019)). “[A] specific promise must be undermined for the implied
duty to be violated.” Dobyns, 915 F.3d at 739. It “must be ‘keyed to the obligations
and opportunities established in the contract,’ so as to not fundamentally alter the
parties’ intended allocation of burdens and benefits associated with the contract.” Id.
(quoting Lakeshore Eng’g. Servs., 748 F.3d at 1349).
Contrary to ACC’s argument, Mr. Higgens did intercede on ACC’s behalf in an
attempt to convince DEQ that the site was not a hotspot. Though as part of that effort
he opined that the site was an industrial fleet storage area, DEQ did not adopt that
suggestion. (Finding 21) Nothing he did interfered with ACC’s performance of the
contract. Additionally, we reject ACC’s contention that the government was under any
obligation to advocate for ACC with DEQ or can be faulted for failing to convince it to
publication is incorporated into it. However, there is no indication that these
listed references are part of Specification No. 8’s provisions. This particular
publication only generically discusses pollution prevention practices without
focusing on the specific regulations of any particular jurisdiction within the
country. Notably, it recognizes that vehicle storage areas are hotspots that are
major contributors of hydrocarbon pollutants (R4, tab 36 at 2075-76). We
cannot find any statement that bioretention basins draining such hotspots can
meet Level 2 nutrient removal in Virginia. Even if the publication supported
ACC’s argument, to the extent DEQ deviated from it that is not the fault of the
government. The government did not warrant DEQ’s actions.
20
change its mind. ACC has not identified any provision of the contract imposing such a
duty. Given that the contract placed complete responsibility upon ACC to navigate
Virginia’s regulatory requirements and obtain permitting, adopting ACC’s argument
would alter the contract’s allocation of burdens and create duties inconsistent with its
provisions (finding 6). ACC had no basis to expect such action. See Kellogg Brown &
Root Servs., 20-1 BCA ¶ 37,656 at 182,829 (rejecting the contention that the duty of
good faith and fair dealing required the government to intervene on behalf of a
contractor concerning another government’s treatment of it); see also Bell/Heery,
739 F.3d at 1332-33. Furthermore, ACC has offered no evidence that the government
possessed any leverage with DEQ that could have compelled it to alter its position.
There was no breach of the duty of good faith and fair dealing.
IV. Differing Site Condition
ACC also contends that the project’s alleged classification as an industrial
hotspot is a Type 1 differing site condition because the solicitation did not disclose
that. Type I differing site conditions are “subsurface or latent physical conditions
at the site which differ materially from those indicated in [the] contract.” FAR 52.236-
2(a)(1); see Comtrol, Inc. v. United States, 294 F.3d 1357, 1362 (Fed. Cir. 2002). In
addition to the fact that the site was never classified an industrial hotspot, (finding 23),
ACC is not referring to the physical conditions it encountered at the site. If the site
had been classified as an industrial hotspot that would have been a regulatory
determination imposed upon the completed project based upon its development and
use. 6
V. Superior Knowledge
Finally, ACC seeks recovery for the added costs of complying with DEQ’s
requirements, and for alleged delays by DEQ processing its permit application, upon
the theory that the government breached a duty to disclose superior knowledge. “The
superior knowledge doctrine imposes upon a contracting agency an implied duty to
6
Though ACC does not advocate for it, for the same reasons the site would not
constitute a Type II differing site condition, which involves “unknown physical
conditions at the site, of an unusual nature, which differ materially from those
ordinarily encountered and generally recognized as inhering in work of the
character provided for in the contract.” FAR 52.236-2(a)(2).
21
disclose to a contractor otherwise unavailable information regarding some novel matter
affecting the contract that is vital to its performance.” Giesler v. United States,
232 F.3d 864, 876 (Fed. Cir. 2000); Kellogg Brown & Root Servs., 20-1 BCA ¶ 37,656at 182,830-31. It generally applies where:
(1) a contractor undertook to perform without vital
knowledge of a fact that affects performance costs or
duration; (2) the government was aware the contractor had
no knowledge of and had no reason to obtain such
information; (3) any contract specification supplied misled
the contractor or did not put it on notice to inquire; and (4)
the government failed to provide the relevant information.
Giesler, 232 F.3d at 876 (citing Hercules Inc. v. United States, 24 F.3d 188, 196 (Fed.
Cir. 1994)). “The corollary to this rule is that the Government is under no duty to
volunteer information which the contractor can reasonably be expected to seek out
himself,” such as “in situations where the information at issue can readily be obtained
from outside sources.” Petrofsky v. United States, 616 F.2d 494, 497 (Ct. Cl. 1980);
JWK Korea Ltd., ASBCA No. 54198, 06-2 BCA ¶ 33,297 at 165,122.
ACC suggests that it did not know prior to the August 15, 2017, preconstruction
meeting that DEQ might be difficult to satisfy and require multiple submissions. It
says it also did not know the site was a hotspot and an industrial site. It maintains it
had no reason prior to bidding to inquire into DEQ’s most recent practices processing
permit applications, or whether the site was a hotspot. It contends the government
knew these facts prior to issuing the solicitation and should have notified it about
them.
ACC’s complaint that it was not informed of the government’s judgment about
the possibility that DEQ might be difficult or time consuming to satisfy is not referring
to a fact existing prior to award, but upon a prediction. That is not a basis for a superior
knowledge claim. Kellogg Brown & Root Servs., 20-1 BCA ¶ 37,656 at 182,831
(rejecting a superior knowledge claim based upon the contractor’s ignorance of a
judgment or possibility rather than an existing fact) (citing Northrup Grumman Corp. v.
United States, 47 Fed. Cl. 20, 90 (2000)); see also Lee’s Ford Dock, Inc., ASBCA
No. 59041, 14-1 BCA ¶ 35,679 at 174,639 (“The theory of superior knowledge . . .
normally relies on ‘operative facts’ in existence before award”).
Even if we consider the claim to also encompass ACC’s alleged lack of
knowledge about DEQ’s past practices, it has not established government liability for
withholding superior knowledge. It is true that before issuing the solicitation the
government recognized that DEQ had not approved initial submissions, could take up to
45 days to respond to subsequent submissions as permitted by Virginia law, would add
22
comments after each review, that prior projects had encountered difficulties complying
with its requirements, and approval could take up to three months (finding 3). Rather
than opine about the performance of state officials in the solicitation, the government
sought a demonstration from offerors that they possessed knowledge and experience
with Virginia’s regulators and added 90 extra days to the period of performance
(findings 3, 6). ACC’s proposal informed the government that Mason & Hanger was
very familiar with the installation from a civil engineering aspect, including permitting
and stormwater requirements. It stressed Mason & Hanger’s experience coordinating
with DEQ and assured the government that its design would meet DEQ requirements.
(Finding 7) Given these representations, the government was not obligated under the
superior knowledge doctrine to educate ACC about what to expect from DEQ and had
no reason to believe ACC and Mason & Hanger were not familiar with its practices.
See GAF Corp. v. United States, 932 F.2d 947, 949 (Fed. Cir. 1991) (holding the
government had no reason to believe an experienced asbestos seller needed to be
informed about the nature of its product or inquire into its specific knowledge). Even if
ACC had not promoted Mason & Hanger’s experience, ACC’s contractual obligation to
take full responsibility for complying with Virginia’s requirements and obtain the
necessary stormwater permitting established the reasonable expectation that it would
familiarize itself with DEQ’s recent procedures processing permits. See Petrofsky,
616 F.2d at 497. There is nothing novel about that. Giesler, 232 F.3d at 876(restricting a superior knowledge claim to some novel information not provided by the
government).
Additionally, contrary to ACC’s contention, we have found Mason & Hanger
did know that it was difficult to obtain approvals from all state environmental
agencies, including DEQ (finding 7). Further, on August 1, 2017, two weeks prior to
the preconstruction meeting, ACC established a schedule anticipating that DEQ would
take nearly three months to initially review its SWPPP. Recognizing that at least one
resubmittal would be necessary, it built two more months into the schedule for that.
Thus, ACC expected DEQ to take at least five months to fully process its application,
which is two more than the government had predicted. (Findings 3, 9) Also, when the
government raised during the August 15, 2017, preconstruction meeting the difficulties
of the DEQ process and the likely need for multiple submittals, ACC reiterated that
Mason & Hanger was experienced and aware of the challenges (finding 10). Given
these facts, ACC and Mason & Hanger possessed an understanding of DEQ’s practices
comparable to the government.
Once Mason & Hanger started submitting its SWPPP to DEQ, five months
behind its original schedule, DEQ found multiple submissions contained inadequacies
unrelated to the hotspot issue. Basic information was missing, as well as an
appropriate stormwater management plan, drainage computations, BMP compliant
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design, and proper VRRM spreadsheet runoff calculations. ACC was also required to
consolidate disparate materials and address other unrelated problems. (Findings 9,
16-17, 27) ACC could not have believed that deficient submissions would be
approved without resubmittal and review. The fact that its original schedule built in
time for that shows it knew better (finding 9). There is no reason the government
would expect that ACC would need to be told that inadequate submissions would not
be approved and would delay issuance of a permit. Again, that is not novel.
Moreover, ACC cannot claim that it lacked any basis to anticipate the time that it
ultimately took to obtain DEQ approval. The contract expressly provided that some
permits could take 180 days to obtain (finding 6). DEQ approved ACC’s stormwater
management plan 181 days after receiving the initial submission (finding 27). This
was less than a month longer than ACC had originally estimated, despite the need for
six submissions (findings 9, 27). Finally, ACC has not shown that DEQ exceeded its
statutory time limits for acting on ACC’s initial application and resubmittals, or why
that would be the government’s fault if it did.
ACC’s suggestion that the government is liable under the Superior Knowledge
doctrine because it was not given advance warning that the project was an industrial site
for stormwater permitting is groundless because, as we have already noted, it was never
subjected to such a determination. Its complaint about government superior knowledge
that the site was a hotspot, dictating restricted infiltration, also fails for multiple
reasons. First, the superior knowledge doctrine focuses upon a disparity in knowledge
between the parties at the time of contract award. See Lee’s Ford Dock, 14-1 BCA
¶ 35,679 at 174,639. There is no evidence the government knew the site was a hotspot
at award. The first indication that anyone associated with the government suspected it
might be one was when Mr. Lee examined Mason & Hanger’s conceptual plan six
months later and informed ACC and Mason & Hanger (finding 14).
Additionally, ACC’s contention that, prior to award, neither it nor Mason
& Hanger could be expected to consider whether the site was a hotspot is meritless.
Again, the solicitation made clear that the contractor, not the government, would be
responsible for ascertaining and complying with DEQ’s requirements and obtain
permits from it. That alone provided ample reason for Mason & Hanger to thoroughly
study DEQ’s rules governing its design, including whether the site might constitute a
hotspot and the potential consequences if it was. The solicitation “did not mislead, but
informed [ACC] of its obligations to obtain that knowledge.” Grumman Aerospace
Corp. v. Wynne, 497 F.3d 1350, 1357 (Fed. Cir. 2007). A review of Specification
No. 8 reveals that it restricts infiltration in hotspot areas, and Table 8.10 lists parking
lots containing 40 or more spaces as hotspots (R4, tab 33 at 2004, 2023-24). Mr. Lynn
knew that if a facility is listed on that table it is almost certainly a hotspot (finding 15).
Specification No. 9 then bars the use of infiltrating bioretention to treat runoff from
hotspots (R4, tab 30 at 1941-42). At the very least, the specifications placed Mason
& Hanger on notice to consult with DEQ about the implications of its stormwater
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design of a 900 vehicle parking area. DEQ publicly designated Mr. Cooper to perform
that very function (finding 18). ACC and Mason & Hanger did not lack vital
knowledge about DEQ’s hotspot requirements; they had access to the same public
information about the topic as everyone else. There is no basis for the government to
expect that ACC and Mason & Hanger would not be familiar with the contents of
DEQ’s regulatory specifications respecting hotspots and infiltration. See Petrofsky,
616 F.2d at 497 (explaining the government is under no duty to volunteer information
that the contractor can reasonably be expected to seek out itself). Once again, there is
nothing novel about that.
Lastly, though ACC expends much effort concerning the site’s hotspot
designation, that is not the specific reason it incurred additional costs on Contech
Jellyfish Filters. What forced those expenditures was DEQ’s additional conclusion in
July or August 2018 that, because the site was a hotspot requiring impermeable liners,
the bioretention basins Mason & Hanger designed could not be considered Level 2
BMPs and therefore additional measures were required to meet Virginia’s nutrient
removal standards (findings 18, 24-25). It is possible that DEQ unexpectedly sprung
that ruling on ACC because it had only begun amending Specification No. 9 to
expressly provide for it at the time of the hearing (finding 24). But again, there is no
evidence the government had any more reason to expect that declaration than ACC.
Consequently, we reject ACC’s superior knowledge claim.
CONCLUSION
The appeal is denied.
Dated: September 1, 2022
MARK A. MELNICK
Administrative Judge
Armed Services Board
of Contract Appeals
(Signatures continued)
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I concur I concur
RICHARD SHACKLEFORD J. REID PROUTY
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA Nos. 62265, 62937, Appeals of
ACC Construction Co., Inc., rendered in conformance with the Board’s Charter.
Dated: September 1, 2022
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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