Fluor Federal Solutions, LLC ( 2019 )

ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
Fluor Federal Solutions, LLC ) ASBCA No. 61093
)
Under Contract No. N69450-12-D-7582 )
APPEARANCES FOR THE APPELLANT: John S. Pachter, Esq.
Gregory A. Smith, Esq.
Jennifer A. Mahar, Esq.
Kathryn T. Muldoon Griffin, Esq.
Smith Pachter Mc Whorter PLC
Tysons Comer, VA
APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq.
Navy Chief Trial Attorney
Russell A. Shultis, Esq
Julie Ruggieri, Esq.
Trial Attorneys
OPINION BY ADMINISTRATIVE JUDGE CLARKE
ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
Fluor Federal Solutions, LLC (Fluor) appeals the Navy's decision to require Fluor
to provide onsite manning at the Naval Station Mayport Water Treatment Plant 24 hours
per day, 7 days per week. Both parties have moved for summary judgment. Fluor asks
the Board to find the Navy's interpretation to be unreasonable and order the Navy to
compensate it $934,426.47 for amounts withheld and operating costs. The Navy
contends that the Contract clearly required 24/7 manning. We have jurisdiction pursuant
to the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109. In accordance
with the decision below, we sustain the appeal.
STATEMENT OF FACTS (SOF) FOR THE PURPOSES OF THE MOTIONS
FDEP Permit No. 0146801-012-WC
1. Florida Department of Environmental Protection (FDEP) issued Permit
No. 0146801-012-WC, dated November 6, 2006, to Navy Public Works Center
Jacksonville; it includes the following:
Enclosed is permit 0146801-012-WC, dated November 6,
2006, to convert from gaseous chlorine disinfection to
liquid sodium hypochlorite. This permit is issued pursuant
to Section(s) 403.087, Florida Statutes (F.S.).
This permit is issued under the provisions of Chapter 403,
Florida Statutes (F.S.), and Florida Administrative Code
(F.A.C.) Chapter 62-555 (formerly 17-22). The above
named Permittee is hereby authorized to perform the work
or operate the facility shown on the application and
approved drawing(s), plans, and other documents attached
hereto or on file with the Department and made a part
hereof and specifically described as follows:
Description: Conversion from gaseous chlorine disinfection
to liquid sodium hypochlorite [hypochlorination]. The
system will have two 2500 gallon storage tanks with room
for more, three chemical feed pumps at 30 gph each and a
new chlorine analyzer. The permitted maximum capacity of
the plant will remain at 5.7 MGD.
(App. supp. R4, tab 222 at 1, 3 1) Permit "Specific Condition" No. 9 states that the
permittee (Navy Public Works Center Jacksonville) "shall follow the guidelines of
Chapters 62-550, 62-555, and 62-560, [FL Admin Code], regarding public drinking
water system standards, monitoring, reporting, permitting, construction, and operation."
(App. supp. R4, tab 222 at 9) The permit had an expiration date of November 5, 2011
(id.). The permit requires that the project "shall be completed prior to the expiration date
of this permit" (id. at 10).
Requests for Information Nos. 243 and 550
2. During the solicitation period, potential bidders submitted Requests for
Information (RFI) to the Navy. In RFI No. 243, a potential bidder cited Spec. Items 3.1
and 3 .1.5 and asked whether water treatment plants (WTP) "require 24 hr/7 day a week
staffing" and that "watchstanding" be defined. The Navy responded: "Permits determine
staffing. Permits and requirements for compliance are given by the Florida Department of
Environmental Protection (FDEP). Water Permits are available from FDEP." (App. supp.
R4, tab 204 at 7)
3. In RFI No. 550 a potential bidder cited Spec. Items 3.1 and 3.1.5 and asked
"Do WTP's require 24 hr/7 day a week staffing? Define 'watch-standing.'" The Navy
1
Page numbers refer to PDF page numbers.
2
responded "Water Treatment Plants are to be addended [sic] per the CUP Permit #589
and #829. 'Watch Standing' is the required attendance per the CUP permit." (App.
supp. R4, tab 205 at 26)
4. "CUP" stands for "Consumptive Use Permit" (app. supp. R4, tabs 232, 238).
CUP Permit No. 829, February 8, 2000, was issued to U.S. Navy, FISC Fuel Depot and
authorizes withdrawal of 8.640 million gallons of water daily from the St. Johns River for
fire protection (app. supp. R4, tab 232 at 2-3, 5). CUP Permit No. 589, August 14, 2012,
was issued to Naval Stayton Mayport and authorizes the use of 54 7 .50 million gallons per
year from the Floridian aquifer and Lake Wonderwood for commercial/industrial and
irrigation purposes (app. supp. R4, tab 238 at 2). We found nothing in these two permits
that deals with the manning of the Mayport WTP or "watch standing."
Contract No. N69450-12-D-7582
5. The Navy awarded Fluor Contract No. N69450-12-D-7582 (Contract 7582) on
December 13, 2011. The $40,356,783.00 Contract required Fluor to provide base
operations support services at four Navy installations near Jacksonville, Florida, including
Naval Station (NS) Mayport. (R4, tab 1.3) Fluor's final proposals 2 were incorporated into
Contract 7582 (id. at 2). As awarded, the Contract provided for a base period of one year,
four one-year option periods, and three one-year award option periods, not to exceed a total
of ninety-six months (id. at 11 ).
6. Pursuant to contract requirements, Fluor maintained and supported, among
other Navy assets, the NS Mayport WTP (app. supp. R4, tab 201 at 1). The contract was a
"performance-based contract" (R4, tab 1.3 at 13). Section C of the Contract included
separate "Annexes" for each site. The Annexes set forth the Performance Work Statement
(PWS) or "performance-based specifications," organized by Specification Item (Spec.
Item). (Id.)
7. The contract incorporates Federal Acquisition Regulation (FAR) 5252.246-9303
CONSEQUENCES OF CONTRACTOR'S FAILURE TO PERFORM REQUIRED SERVICES (OCT 2004)
that includes:
(d) When WATCHSTANDING SERVICES apply. If the
Contractor fails to provide qualified personnel or allows
any post to be unmanned for a total of 10 minutes in any
2
We do not discuss Fluor's proposal because we reject the Navy's argument that
Fluor's proposal indicated it agreed to 24/7 manning.
3
shift, the Government may assign other persons to perform
such work or withhold payment as specified below.
(R4, tab 1.3 at 16)
Annex 1606000 - Water
8. Contract Section C, NS Mayport Annex 1606000 - Water, Spec. Item 3.1
Operation, included a table with columns "Title," "Performance Objective," "Related
Information," and "Performance Standard." The performance objective required
operation of the WTP so as to provide potable water "24 hours per day, seven days per
week, throughout the contract period." (App. supp. R4, tab 201 at 5) The "Related
Information" read in part:
Operation consists of "watch-standing" or attendance type
work by a sufficient staff of qualified persons during a
specified time period to ensure safe, reliable, efficient
production and distribution of potable water.
Safe operation shall ensure that all Water Treatment Plant
equipment requiring operator attendance is staffed by
qualified personnel at all times of operation.
(Id.) The Performance Standard required that WTP systems be efficiently, safely, and
continuously operated per operation criteria to meet demand requirements 99.5% of
the time annually (id.).
9. Contract Section C, NS Mayport Annex 1606000, Spec. Item 3.1.5, addressed
"Minimum Operator Attendance" for the NS Mayport WTP (app. supp. R4, tab 201
at 8-9). Spec. Item 3.1.5 "Performance Objective" required Fluor to provide the
following:
The Contractor shall provide water treatment plant
operators and support personnel in sufficient quantities of
staffing per shift to efficiently and safely operate
equipment at all times of operation, 24 hours per day,
seven days per week, throughout the contract period.
(App. supp. R4, tab 201 at 8-9) Spec. Item 3.1.5 "Performance Standard" further required
as follows:
4
Minimum numbers and types of water treatment plant
operators, support personnel, and supervisory operators in
direct responsible charge comply, by each applicable shift,
with operating permit, approved SOP, and Maintenance
Manual.
(App. supp. R4, tab 201 at 8-9)
10. Spec. Item 3.1.6, Operating Records, Logs, Reports and Procedures,
includes Performance Objective as follows:
The Contractor shall prepare, submit and maintain
operating records, logs and reports for in-process tracking
of plant output characteristics.
(App. supp. R4. tab 201 at 9) Spec. Item 3.1.6 Related Information reads in part:
The Contractor shall prepare, and submit operating
records, logs and reports for in-process tracking of plant
output characteristics per approved operating permit,
LANTNAVF ACENGCOMINST 11300.4, approved SOP
and UFC. The monthly Operating Records Report shall be
submitted to the KO within 3 working days following the
end of the month during which work is performed and
shall include copies of daily operating logs, chemical
content, pressure readings, chemical dosages, filter
backwash frequencies, flow rates, and other laboratory
records, maintenance records, corrosion tests, personnel
records, emergency condition records, and operating costs.
(App. supp. R4, tab 201 at 9) (Emphasis added) Spec. Item 3.1.6, Performance Standard
requires that records, logs, reports and procedures be current and complete (id.).
Florida Administrative Code
11. As discussed above, the Florida Administrative Code is referenced in the
FDEP Construction Permit. "Fla. Admin. Code§ 62-555.350(8) requires that "suppliers
of water" "employ licensed operation personnel in accordance with Chapters 62-602
and 62-699, F.A.C., for all public water systems." Florida Administrative Code
§ 62-550.200(105) states, '"Supplier of Water' means any person who owns or operates
a public water system." (Gov't December 20, 2018 resp. to mot. at 5114)
5
12. Florida Administrative Code§ 62-699.310 applies to all suppliers of water
(except in circumstances not present here) and establishes onsite manning requirements
for operating water treatment plants in Florida. The manning requirements are governed
by a water treatment plant's "Category" and "Class." The regulations specify that a plant's
"treatment processes" determine the Category; and the plant's "permitted maximum day
operating capacity" determines the Class. Florida Administrative Code § 62-699 .310(e).
(Gov't December 20, 2018 resp. to mot. at 5-6115)
13. Under Florida Administrative Code § 62-699 .310( e), the NS Mayport Water
Treatment Plant is a Category V, Class C facility because it employs hypochlorination
and the Plant's "permitted maximum capacity" is greater than 5.0 MGD (app. supp. R4,
tab 223 at 2).
14. Florida Administrative Code§ 62-699.3 lO(e), specifies that Category V,
Class C facilities with a permitted maximum capacity greater than 5.0 MGD - such as
the NS Mayport WTP - require "[s]taffing by Class C or higher operator: 6 hours/day
for 5 days/week and one visit on each weekend day" (app. supp. R4, tab 223 at 2).
Operational Log
15. Fluor included in the record a copy of its August 2014 WTP operational log
submitted in accordance with Spec Item 3.1.6, Annex 1606000 (app. supp. R4, tab 224).
The entries indicate that work was being performed typically between 0630 and 1700
every day of the month of August 2014 (id.).
Customer Complaint Record & Withholding Payments
16. On December 19, 2014, the Navy issued a "Customer Complaint Record"
asserting that Spec. Item 3 .1.5 required 24/7 manning of the WTP:
DETAILS OF COMPLAINT:
FLUOR failed to operate and maintain NS Mayport's
Water Treatment Plant in compliance with the contract.
The plant is only operated 8 hours out of the day and
unmanned for 16 hours.
PAR COMMENTS:
Checked and verified the hours that Bldg. 1907 is
physically manned and found that it is only manned from
6
0700-1500 7 days a week. The contact [sic] specifically
states that..
Spec 3.1.5 "The Contractor shall provide water treatment
plant operators and support personnel in sufficient
quantities of staffing per shift to efficiently and safely
operate equipment at all times of operation, 24 hours per
day, seven days per week, throughout the contract period."
The contractor has failed to meet the contract requirements
of Annex 1606000 Spec Item 3.1.5.
(App. supp. R4, tab 225)
17. By letters dated May 19, 2015, June 11, 2015, and July 23, 2015, the
contracting officer notified Fluor that the Navy was withholding payment from Fluor's
March, April, and May 2015 invoices because of various failures listed in each letter. One
of the failures was that Fluor had not provided 24/7 manning, citing noncompliance with
Spec. Item 3.1.5. (App. supp. R4, tabs 210-211, 228)
18. By email dated June 17, 2015, the contracting officer again asserted that
Spec. Item 3 .1.5 required 24/7 manning:
1606000 3.1.5 Minimum Operator Attendance: The
withholding amount of $89,941.40 is based on the hours
that Fluor did not provide 24 hour staffing of the Water
Treatment Plant as required by 3 .1.5 Minimum Operator
Attendance for a period of 9 months, July 2014-March
2015.
April's [2015] Withholdings are based on the same as
above, but on a monthly basis ....
(App. supp. R4, tab 227 at 1)
Contractor Performance Assessment Report (CPAR) & Contractor Discrepancy
Report (CDR)
19. On May 26, 2015, the Navy issued an interim Contractor Performance
Assessment Report ("CPAR") for the first six months of "Option Year 2," i.e.,
July 1 -December 31, 2014. In the CPAR, the Navy asserted Fluor's "Performance does
not meet some contractual requirements," because, in part, the "Plant was only manned
8 hours and left unmanned 16 hours each day." (App. supp. R4, tab 226 at 1-2, 6)
20. On July 24, 2015, the contracting officer issued Contractor Discrepancy
Report (CDR) C063 in which she asserted that Fluor "failed to operate and maintain
7
NS Mayport's Water Treatment Plant in compliance with the contract." According to
the Navy, Fluor's staffing of the Plant fourteen hours per day was insufficient because
the Contract requires 24/7 manning. (App. supp. R4, tab 212 at 1)
21. By letters dated August 3, 2015 and August 14, 2015, Fluor responded to
CDR C063, stating that the Contract did not require 24/7 manning while asserting that
Fluor's staffing of the NS Mayport WTP complied with the contract requirements
(app. supp. R4, tabs 213-14).
Fluor Increases WTP Manning to 2 4/7
22. To avoid further Navy withholdings and negative evaluations, beginning on
September 1, 2015, Fluor increased staffing to provide 24/7 manning of the WTP (gov't
December 20, 2018 resp. and cross mot. at 9125; app. supp. R4, tab 229).
Contract Modification No. POO 160
23. On September 28, 2015, the Navy issued unilateral contract Modification
No. P00160 to deduct $283,849.47 from the contract value for alleged non-compliance
with 24/7 manning. The modification stated:
b. Non-compliance with manning requirements in
accordance with NS Mayport Annex 1606000,
Specification Item 3.1.5 Contractor Minimum Attendance.
The deductions assessed are for the period of 1 July 2014
through 31 August 2015 in the amount of$283,849.47.
(R4, tab 2 at 160)
24. On January 19, 2016, the Navy issued its final CPAR for Option Year 2 and
asserted that during January 1 2015 - June 30, 2015, Fluor had "not met some contractual
requirements" because it did not provide 24/7 manning, among other failures (app. supp.
R4, tab 215 at 2-3).
25. In its February 2, 2016, response to the final CPAR, Fluor again stated its
understanding that the Contract did not require 24/7 manning:
The Mayport Water contract requires water treatment plant
operators and support personnel in sufficient quantities of
staffing per shift to efficiently and safely operate
equipment at all times of operation, 24 hours per day,
seven days per week, throughout the contract period,
which requirement was clarified in the Q&A as staffing in
8
accordance with permit requirements. Fluor met the
contractual and permit requirement.
(App. supp. R4, tab 216 at 5)
26. On May 5, 2016, the Navy issued its interim CPAR for "Option Year 3"
and again asserted that during July 1, 2015 - December 31, 2015, Fluor had "not [met]
some contractual requirements" because it did not provide 24/7 manning (app. supp.
R4, tab 230 at 1-3).
27. In its May 20, 2016 response to the interim CP AR, Fluor repeated its
objections to the Navy's 24/7 manning requirement (app. supp. R4, tab 231 at 6).
Certified Claim
28. On July 27, 2016, Fluor submitted a certified claim demanding return of
the amounts deducted via Modification No. P00160, compensation for additional costs
already incurred for 24/7 manning of the Plant, and revision of the CPARs for Option
Years 2 and 3 (R4, tab 3). Fluor also requested that the Navy "retract its requirement
to man the NS Mayport Water Treatment Plant 24/7 going forward" and provide an
equitable adjustment for the extra costs associated with 24/7 manning in the amount of
$934,426.47 (id. at 1).
29. On December 15, 2016, the Navy issued a contracting officer final decision
(COFD), denying Fluor's claim (R4, tab 4). Fluor filed an appeal with the ASBCA on
March 13, 2017. The ASBCA docketed the appeal as ASBCA No. 61093 on
March 14, 2017.
DECISION
Legal Standard for Summary Judgment
We evaluate the cross-motions for summary judgment under the well-settled
standard: Summary judgment is properly granted only where there is no genuine issue
of material fact and the movant is entitled to judgment as a matter of law. The moving
party bears the burden of establishing the absence of any genuine issue of material fact
and all significant doubt over factual issues must be resolved in favor of the party
opposing summary judgment. Mingus Constructors, Inc. v. United States, 812 F.2d
1387, 1390 (Fed. Cir. 1987) (citations omitted). In the course of the Board's evaluation
of a motion for summary judgment, our role is not "'to weigh the evidence and
determine the truth of the matter,' but rather to ascertain whether material facts are
disputed and whether there exists any genuine issue for trial." Holmes & Narver
Constructors, Inc., ASBCA Nos. 52429, 52551, 02-1BCA131,849 at 157,393
9
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). A material fact is
one which may make a difference in the outcome of the case. Liberty Lobby, 477 U.S.
at 248. The opposing party must assert facts sufficient to show a dispute of material
fact. New Iraq Ahd Co., ASBCA No. 59304, 15-1 BCA, 35,849 at 175,291-92 (citing
Mingus, 812 F.2d at 1390-91) ("To ward off summary judgment, the non-moving party
must do more than make mere allegations; it must assert facts sufficient to show a
dispute of material fact."); see Lee's Ford Dock. Inc., ASBCA No. 59041, 16-1 BCA
, 36,298 at 177,010.
Positions of the Parties
Fluor contends that nothing in the contract or referenced in the contract requires
that Fluor provide 24/7 manning of the Mayport WTP. Fluor points out that the Navy
held the same interpretation for the first two and a half years of performance. Fluor
contends that two RFI' s submitted during the solicitation period and answered by the
Navy support its position. Fluor also relies upon FDEP Permit No. 0146801-012-WC
and various Florida Administrative Code provisions cited in the permit that it contends
support Fluor's position that 24/7 manning is not required. (App. November 19, 2018 3
mot. for partial 4 sum. judgment)
The Navy contends that the contract clearly and unambiguously requires 24/7
manning of the WTP. The Navy relies on the same language of Specification
No. 1606000, Spec. Item 3 .1.5 that Fluor cites but suggests a different interpretation.
The Navy also cites to Spec. Item 3 .1 and the requirement for "watch standing" and
"operator attendance" in support of its interpretation. The Navy points out that FDEP
Permit No. 0146801-012-WC expired on November 5, 2011, before Contract 7582
was awarded. It also argues that the Florida Administrative Code is not "controlling."
The Navy also challenges Fluor's assertion that it accepted Fluor's less than 24/7
manning of the WTP for the first two and a half years. (Gov't December 20, 2018
resp.; gov't cross mot.)
No Disputed Facts that are Material to the issue ofInterpretation
In its response and cross motion, the Navy addresses each of the paragraphs in
Fluor's Statement of Undisputed Material Facts (SUMF). It "disputes" a substantial
number ofFluor's SUMFs, however, we agree with Fluor that the "disputes" were not
over material facts but rather terminology, legal conclusions and the argument that FDEP
Permit No. 0146801-012-WC is irrelevant because it expired before Contract 7582 was
3
Because there are five briefs in this case, two Navy and three Fluor, we include the
date of the brief to help identify the brief referred to.
4
"Partial" is a misnomer because granting either motion will fully resolve the
entitlement case.
10
awarded. Fluor also addressed the Navy's additional Proposed Material Facts and
concludes that the Navy did not "present triable issues of fact." (App. March 1, 2019
reply br. at 12) We agree. We also agree that the Navy's Proposed Material Facts
,r,r 7-12 itemizing various water quality problems have nothing to do with the contract
interpretation issue and are therefore not material disputed facts that would preclude
summary judgment (app. March 1, 2019 reply br. at 15). We conclude that this case is
appropriate for decision on the parties' cross-motions for summary judgment.
FDEP Permit No. 0146801-012-WC
FDEP Permit No. 0146801-012-WC was issued on November 6, 2006, with an
expiration date of November 5, 2011 (SOF ,r 1). The Navy dismisses this permit as
irrelevant because it expired before Contract 7582 was awarded (gov't December 20,
2018 resp. to mot. at 5-6). The Navy overlooks the fact that this was a construction
permit authorizing the "Conversion from gaseous chlorine disinfection to liquid sodium
hypochlorite" (SOF ,r 1). The permit required construction be completed before its
expiration (id.). There was no need to renew it after construction was completed. It is,
therefore, relevant to the operation of the WTP in that it requires post-construction
compliance with Florida Administrative Code sections Chapters 62-550, 62-555, and
62-560. (Id.) It was therefore wholly appropriate for Fluor to trace the requirements of
these code sections to assist in interpreting the WTP manning requirement of Contract
7582. Fluor correctly points out that these code sections require "[s]taffing by Class C
or higher operator: 6 hours/day for 5 days/week and one visit on each weekend day."
(SOF ,r,r 11-14) Suffice it to say that the Florida Administrative Code sections cited in
the construction permit do not require 24/7 manning of the WTP (id.). This is
particularly important because the Navy referred to FDEP permits as the source of
manning requirements in its answer to RFI No. 243 (SOF ,r 2).
Pre-Award Requests for Information (RF!)
Before award of Contract 7582 bidders submitted two RFis that are relevant to
our interpretation analysis. Pre-award RFis/questions and answers (Q&A) are very
important because bidders are entitled to rely on the government's answers. The
government risks jeopardizing its interpretation arguments by providing inconsistent
answers to RFI's.
We have held that pre-bid questions and answers are not "wiped from the record
by the formal execution of the contract." Northwest Marine, Inc., ASBCA No. 43502,
94-1 BCA ,r 26,521 at 131,999 (citing Sylvania Electric Products, Inc. v. United States,
458 F.2d 994, 1008 (Ct. Cl. 1972)). In Metcalf Construction Co. v. United States, 742
F.3d 984 (Fed. Cir. 2014), the Federal Circuit held that pre-bid questions and answers
used by bidders in estimating and submitting bids are highly relevant to the post award
interpretation of contract provisions. (Id. at 995-97). In earlier decisions we have held
11
the same. Ogden Allied Services Corp., ASBCA No. 40823, 91-1BCA123,455
at 117,671 (appellant has the right to rely on pre-bid questions and answers as to matters
of contract interpretation); Bogue Electric Manufacturing Co., ASBCA No. 16958, 74-1
BCA 1 10,513 at 49,794 (questions and answers at a pre-bid conference can properly be
referred to for the purpose of evaluating the reasonableness of appellant's interpretation).
The Court of Federal Claims follows the same law. Aero Corp., S.A. v. United States, 38
Fed. Cl. 739, 762 (citing Sharpe Refrigeration, Inc. v. United States, 30 Fed. Cl. 735,
739 (1994)) (Official statements made during pre-bid conferences to clarify contract
language should be utilized in resolving questions of contract interpretation.).
Recently in Parsons Evergreene, LLC, ASBCA No. 58634, 18-1BCA137,137,
we dealt with a contract interpretation dispute involving a design-build contract.
Parsons argued that as the design-build contractor it had the unilateral right to change
the design. We disagreed and held that language in the specifications and drawings
precluded such unilateral changes. Id. at 180,792. However, we also held that
pre-award Q&As changed that contract language, "We find that as a result of the pre-bid
answers provided by the AF that conflicted with the notes on the 35% drawings, the AF
bestowed upon PE the unilateral right to change Baker's double wall design to structural
brick." Id. at 180,793. The Air Force's answers to pre-award questions changed the
clear meaning of the contract.
In this decision we consider two pre-award RFis. In RFI No. 243, a bidder cited
Spec. Items 3 .1 and 3 .1.5 and asked whether water treatment plants (WTP) "require
24 hr/7 day a week staffing" and that "watch standing" be defined. The Navy responded:
"Permits determine staffing. Permits and requirements for compliance are given by the
Florida Department of Environmental Protection (FDEP). Water Permits are available
from FDEP." (SOF 12) The Navy's answer further establishes the relevance of the
construction permit and referenced Florida Admin. Code sections.
In RFI No. 550 a bidder cited Spec. Items 3.1 & 3.1.5 and asked "Do WTP's
require 24 hr/7 day a week staffing? Define 'watch-standing."' The Navy responded
"Water Treatment Plants are to be addended [sic] per the CUP Permit #589 and #829.
'Watch Standing' is the required attendance per the CUP permit." (SOF 13) CUP
Permit No. 829 authorized the FISC Fuel Depot to use water from the St. Johns River
for fire protection (SOF 14). CUP Permit No. 829 had nothing to do with the Mayport
WTP. CUP Permit No. 598 authorized the Naval Station Mayport to use water for a
variety of purposes arguably including the WTP (id.). Neither of these CUP permits
have anything to do with or relate to, WTP manning or "watch standing." It is hard to
understand why the Navy answered RFI Nos. 243 and 550 the way it did. In
responding to these two RFis the Navy's -had the opportunity to clearly state that 24/7
WTP manning was required, but did not. This is consistent with our discussion of
course of dealing below.
12
The Navy's answers to RFI Nos. 243 and 550 do not decide our interpretation
dispute as did those in Parsons Evergreene, but they clearly are not helpful to the Navy's
interpretation. The answer to RFI No. 550 was meaningless. The answer to RFI No. 243
makes the FDEP permits and Florida State Administration Code documents relevant to
our interpretation analysis.
Course of Dealing
Contract 7582 was awarded on December 13, 2011 (SOF 15). The first formal
written Customer Complaint Record complaining that Fluor was not manning the WTP
24/7 was issued on December 19, 2014 (SOF 116). For the first two and a halfyears 5
of performance the Navy did not enforce 24/7 WTP manning. This establishes a clear
course of dealing between the parties. We have relied upon course of dealing to
interpret contracts. Lear Siegler Services, Inc., ASBCA No. 54449, 05-1BCA132,937
at 163,174 ("Consideration of a prior course of dealing between the parties can be
appropriate to aid in the interpretation of contract language.") (citation omitted), rev'don
other grounds, Lear Siegler Services, Inc. v. Rumsfeld, 457 F.3d 1262 (Fed. Cir. 2006);
C.R. Pittman Constr. Co., ASBCA No. 54901, 08-1BCA133,777 at 167,178. Fluor
submitted monthly logs to the Navy that documented the hours worked by its employees 6
(SOF 1110, 15). We hold that during this two and a half year time period the Navy knew
Fluor was not manning the WTP 24/7 and did not object. This course of dealing is
inconsistent with the Navy's current interpretation.
Annex 1606000 - Water
Annex 1606000 is organized in a table format with columns "Title," "Performance
Objective," "Related Information," and "Performance Standard" (SOF 18). Relevant
Specification Items are 3.1 Operation, 3.1.5 Minimum Operator Attendance and 3.1.6
Operating Records, Logs, Reports and Procedures (SOF 11 8-10). The parties agree and
we hold that these are·performance specifications. Performance specifications set out the
performance objectives but do not specify how the contractor will achieve those objectives.
P.R. Burke Corp. v. United States, 277 F.3d 1346, 1357 (Fed. Cir. 2002) (Performance
specifications "set forth an objective or standard to be achieved, and the successful bidder
5 We realize that the time between December 13, 2011 and December 19, 2014, is
three years but Fluor uses two and a half years (app. November 19, 2018 mot.
for partial sum. judgment at 3, 13).
6
Fluor entered one such log for the month of August 2014 as representative of
monthly logs (SOF 1 15). We accept that this log is representative based on the
contract requirement to submit such logs monthly (SOF 110). We reject the
Navy's argument that the August 2014 log was the only log submitted,
(gov't December 20, 2018 resp. at 24-25).
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is expected to exercise his ingenuity in achieving that objective or standard of performance,
selecting the means and assuming a corresponding responsibility for that selection.").
Aside from the fact that the Navy must have been aware of Fluor's WTP manning,
Spec. Item 3 .1.6 Related Information required submission of a monthly Operating Records
Report that included "personnel records" (SOF ,i 10). Fluor included a representative
report that included hours of attendance documenting that operators were not manning the
WTP 24/7 (SOF ,i 15). This further supports our holding above that for the first two and a
half years of performance the Navy knew that Fluor was not manning the WTP 24/7 and
did not object.
Spec. Item 3.1 Performance Objective required operation of the WTP so as to
provide potable water "24 hours per day, seven days per week throughout the contract
period" (SOF ,i 8). Spec. Item 3 .1 Related Information states that WTP operation
"consists of 'watch-standing' or attendance type work by a sufficient staff of qualified
persons during a specified time period" to provide proper production and distribution of
potable water (id.). We interpret "sufficient staff' to be a classic performance standard
allowing Fluor the discretion to set staffing. It cannot reasonably be read to mandate 24/7
manning to achieve the required "sufficient staff." It also states equipment "requiring
operator attendance is staffed by qualified personnel at all times of operation." (Id.)
Spec. Item 3.1 Performance Standard required Fluor to meet demand requirements 99.5%
of the time (id.). The contract does not define how much "watchstanding," "attendance
type work," or "equipment requiring operator attendance" is required. It does however
require that "when WATCHSTANDING SERVICES apply" the Navy can provide the
service at Fluor's expense if Fluor leaves the post "unmanned for a total of 10 minutes in
any shift." 7 (SOF ,i 7) The Navy argues that the watchstanding requirement supports its
position that Fluor was required to man the WTP 24/7. The Navy gives as an example
the Sodium Hypochlorite Disinfection System that it contends requires operator
attendance. (Gov't March 15, 2019 reply br. at 5) As Fluor correctly points out the
Navy's argument is unsupported by evidence (app. sur-reply br. at 4). Even if the
Sodium Hypochlorite Disinfection System required operator attendance there is no
evidence it requires attendance 24/7. We reject the Navy's argument because of lack of
proof. There is no evidence that WTP equipment requires watch-standing or operator
attendance 24/7.
The basic rules of contract interpretation are well known. TEG-Paradigm
Environmental, Inc. v. US., 465 F.3d 1329, 1338 (Fed. Cir. 2006) ("When interpreting
a contract, the language of [the] contract must be given that meaning that would be
derived from the contract by a reasonably intelligent person acquainted with the
contemporaneous circumstances."). In determining reasonableness it is only necessary
that the interpretation be in the zone of reasonableness. States Roofing Corp. v. Winter,
7
Neither party has established that the contract defines what a shift must be.
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587 F.3d 1364, 1369 (Fed. Cir. 2009) ("A contractor's reasonable interpretation need
not be the best interpretation. It need only be within the zone of reasonableness."). We
see nothing in Spec. Item 3 .1 that can reasonably be interpreted to require 24/7 WTP
manning to meet the performance standard. The Navy's interpretation is not within the
"zone of reasonableness."
Spec. Item 3 .1.5 Minimum Operation Attendance, Performance Objective, requires
"sufficient quantities of staffing per shift" to safely operate the WTP 24/7 (SOF 1 9). As
we did above, we interpret "sufficient quantities of staffing" to be a classic performance
requirement that gives Fluor the discretion to determine staffing. It cannot reasonably be
read to mandate 24/7 manning to achieve the required "sufficient quantities of staffing."
As for Spec. Item 3.1.5 Performance Standard (id), the Navy has not directed our
attention to anything in the "operating permit, approved SOP, and Maintenance Manual"
that requires 24/7 manning. Again, the Navy's interpretation is not within the "zone of
reasonableness."
Summation
Based on the above, we have a number of things to consider in arriving at our
decision. FDEP Permit No. 0146801-012-WC is a construction permit, but it requires
operation of the WTP in accordance with Florida Administration Code sections Chapters
62-550, 62-555, and 62-560. As explained above, the FDEP permit and Florida
Administration Codes do not require 24/7 staffing.
We take into account the Navy's answers to RFI Nos. 243 and 550. In both RFis
the Navy was asked point-blank if 24/7 staffing was required but the Navy did not
respond directly. Thus, the Navy missed two opportunities to clearly inform bidders
that it wanted 24/7 WTP manning. The Navy's answer to RFI No. 243 directed bidders
to FDEP permits that require compliance with Florida Administration Codes that do not
require 24/7 manning. The Navy's answer to RFI No. 550 referring CUP permits was
just flat wrong. The Navy's answers to RFI Nos. 243 and 550 are relevant because they
are inconsistent with the Navy's current interpretation of the contract's WTP manning
requirements. Bidders are entitled to rely on the Navy's answers.
Next there is the two and a half year course of dealing where the Navy had no
objection to Fluor's manning of the WTP. We cited case law indicating that such a
course of dealing is relevant to determining a reasonable interpretation and supports
Fluor' s interpretation.
Finally, Annex No. 1606000- Water Spec. Items 3.1 and 3.1.5 are performance
specifications. These performance specifications give Fluor the discretion to set its
manning so long as the performance objectives and performance standards are achieved.
Spec. Items 3.1 and 3.1.5 cannot be reasonably read to require 24/7 WTP manning.
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Anecdotal instances of water quality non-compliance raised by the Navy, even if true,
are immaterial to the proper interpretation of the contract.
Not one of these four factors, FDEP Permit No. 0146801-012-WC, RFI Nos. 243
and 550, two and a half year course of dealing, and Annex 1606000 - Water, Spec Items
3.1 and 3.1.5 support the Navy's interpretation. We conclude that Contract 7582 did not
require 24/7 WTP manning.
CONCLUSION
For the reasons stated above we deny the Navy's motion for summary judgment,
grant Fluor's motion for summary judgment and sustain Fluor's appeal with regard to
entitlement. The case is returned to the parties to negotiate quantum.
Dated: August 19, 2019
CRAIG S. C ARKE
Administrati e Judge
Armed Services Board
of Contract Appeals
I concur
~ /
~CKLEFORD OWEN C. WILSON
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
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I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 61093, Appeal of Fluor
Federal Solutions, LLC, rendered in conformance with the Board's Charter.
Dated:
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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