Case: 21-2272 Document: 30 Page: 1 Filed: 07/05/2022
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
U.S. AEROTEAM, INC.,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2021-2272
______________________
Appeal from the United States Court of Federal Claims
in No. 1:18-cv-01096-MBH, Senior Judge Marian Blank
Horn.
______________________
Decided: July 5, 2022
______________________
MILTON C. JOHNS, Executive Law Partners, PLLC,
Fairfax, VA, argued for plaintiff-appellant.
IGOR HELMAN, Commercial Litigation Branch, Civil Di-
vision, United States Department of Justice, Washington,
DC, argued for defendant-appellee. Also represented by
BRIAN M. BOYNTON, LISA LEFANTE DONAHUE, PATRICIA M.
MCCARTHY.
______________________
Case: 21-2272 Document: 30 Page: 2 Filed: 07/05/2022
2 U.S. AEROTEAM, INC. v. US
Before LOURIE, PROST, and TARANTO, Circuit Judges.
LOURIE, Circuit Judge.
U.S. Aeroteam, Inc. (“Aeroteam”) contracted with the
United States Air Force to build ground support trailers.
After Aeroteam incurred additional costs building the trail-
ers, it requested compensation from the Air Force. The Air
Force denied its request. Aeroteam filed a complaint at the
United States Court of Federal Claims (“the Claims
Court”). The Claims Court entered judgment in favor of
the United States. U.S. Aeroteam, Inc. v. United States,
No. 1:18-cv-01096-MBH (Fed. Cl. 2019), J.A. 3–9. We af-
firm the court’s judgment for the reasons explained below.
BACKGROUND
Aeroteam is a contractor that specializes in building
components for the aerospace industry. In 2009, the Air
Force awarded Aeroteam a contract to produce ground sup-
port trailers. J.A. 1709–10. The Air Force uses those trail-
ers to transport aircraft engines. J.A. 1709.
In 2011, Aeroteam began having difficulties obtaining
a key component of the trailers—the running-gear subas-
sembly. J.A. 1712. The running gear is “essentially the
drive train” for the trailer, “allow[ing] [it] to roll, brake,
[and] steer.” J.A. 1710. To obtain the running gears, Aero-
team relied on PDI Ground Support Systems, an approved
vendor under the contract. 1 J.A. 1711–12. PDI initially
charged Aeroteam $20,300 per unit. J.A. 1711. After fac-
ing financial difficulties, however, PDI raised its price.
J.A. 7 (845:1–6). In response, Aeroteam decided to manu-
facture the running gears itself. According to Aeroteam, it
could produce them “as well or better than PDI.”
1 Under the terms of the contract, Aeroteam could
procure the running gears only from certain approved ven-
dors, including PDI. J.A. 1710–11.
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U.S. AEROTEAM, INC. v. US 3
J.A. 1713–14; J.A. 1861 (342:3–12); J.A. 2125. Aeroteam
was also concerned that PDI could not continue to supply
it with the running gears in light of its financial situation. 2
Appellant’s Br. 8. Subsequently, Aeroteam formally asked
the Air Force if it could assume responsibility for manufac-
turing the running gears. J.A. 1714. Its request read, in
relevant part, as follows:
US Aeroteam proposes to manufacture the entire
running gear and brake system for TT90-F-507
Trailers Sernos 0020-0041 because PDI has re-
fused to complete the contract as awarded.
J.A. 2125 (capitalization modified). The contracting officer
approved Aeroteam’s request, stating that the manufactur-
ing change was “acceptable.” J.A. 1715–16. On September
6, 2012, the Air Force awarded Aeroteam a second contract
to produce additional trailers. J.A. 1716.
Shortly after Aeroteam began manufacturing the run-
ning gears for the trailers, it discovered that its costs were
higher than it had expected. J.A. 7. As a result, Aeroteam
sought to recoup those costs and filed a request for equita-
ble adjustment in the amount of $1,385,912 for the first
contract and $4,022,273 for the second contract.
J.A. 29–30; Contract No. FA8526-09-C-0007 and Contract
No. FA8526-12-C-0039. As relevant here, both of Aero-
team’s contracts were “firm-fixed-price,” meaning that they
“place[d]” upon Aeroteam the “maximum risk and full re-
sponsibility for all costs and resulting profit or loss.” Fed-
eral Acquisition Regulation § 16.202-1; J.A. 1710, 1716.
The contracting officer denied Aeroteam’s request for
equitable adjustment. J.A. 1717. Aeroteam then filed a
complaint at the Claims Court, alleging three grounds for
2 The government disputes Aeroteam’s assertion
that PDI could no longer produce the running gears. We
further address that argument below.
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4 U.S. AEROTEAM, INC. v. US
recovery: (1) constructive change, i.e., the Air Force or-
dered Aeroteam, expressly or impliedly, to perform work
beyond the contract requirements; (2) cardinal change, i.e.,
the Air Force effected an alteration in the work so drastic
that it effectively required Aeroteam to perform duties ma-
terially different from those it originally bargained for; and
(3) commercial impracticability, i.e., because of unforeseen
events, Aeroteam could perform the contract only at an ex-
cessive and unreasonable cost or performance would be
commercially senseless.
The Claims Court denied Aeroteam’s claims, issuing its
decision from the bench without a subsequent written opin-
ion. With respect to the constructive and cardinal change
claims, the court held that Aeroteam had failed to prove
that the Air Force ordered it to manufacture the running
gears. 3 Rather, according to the court, Aeroteam inde-
pendently chose to do so. J.A. 7 (846:11–13); J.A. 8
(849:1–2). With respect to the commercial impracticability
claim, the court found that Aeroteam could have continued
to buy the running gears from PDI, albeit at a higher price.
J.A. 5 (838:14–16). The court also pointed out that, be-
cause Aeroteam had entered into a fixed-price-contract, it
assumed the risk that the price of the running gears would
change. J.A. 6 (840:21–841:1); J.A. 7 (846:13–15).
After concluding that Aeroteam failed to prove its
claims for recovery, the court entered judgment in favor of
the government. J.A. 1. Aeroteam appealed to this court.
We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(3).
DISCUSSION
This court reviews legal determinations of the Claims
Court de novo and its findings of fact for clear error. Ind.
Mich. Power Co. v. United States,
422 F.3d 1369, 1373 (Fed.
3 The Claims Court discussed cardinal change in
conjunction with constructive change.
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U.S. AEROTEAM, INC. v. US 5
Cir. 2005) (citing Glendale Fed. Bank, FSB v. United
States,
239 F.3d 1374, 1379 (Fed. Cir. 2001)). “A finding is
‘clearly erroneous’ when although there is evidence to sup-
port it, the reviewing court on the entire evidence is left
with the definite and firm conviction that a mistake has
been committed.” United States v. U.S. Gypsum Co.,
333
U.S. 364, 395 (1948).
Aeroteam argues that the Claims Court erred in deny-
ing its claims for (1) constructive change, (2) cardinal
change, and (3) commercial impracticability. We address
each argument in turn.
I
We turn first to Aeroteam’s argument regarding its
constructive change claim. To demonstrate a constructive
change, a contractor must show “(1) that it performed work
beyond the contract requirements, and (2) that the addi-
tional work was ordered, expressly or impliedly, by the gov-
ernment.” Bell/Heery v. United States,
739 F.3d 1324, 1335
(Fed. Cir. 2014) (emphasis added) (citing Redland Co. v.
United States,
97 Fed. Cl. 736, 755–56 (2011)). The parties’
dispute centers on the second element of constructive
change.
Aeroteam argues that the Claims Court erred in deny-
ing its constructive change claim. According to Aeroteam,
it did not choose to manufacture the running gears. Ra-
ther, the Air Force ordered it to make that change. The
government responds that Aeroteam independently chose
to manufacture the running gears, with no express or im-
plied order from the Air Force.
We agree with the government that the Claims Court
did not err in denying Aeroteam’s constructive change
claim. As the Claims Court held, Aeroteam failed to prove
that the Air Force ordered it to manufacture the running
gears. J.A. 7 (846:11–15); J.A. 8 (849:1–8). On the con-
trary, that was “a choice that Aeroteam made.” J.A. 7
Case: 21-2272 Document: 30 Page: 6 Filed: 07/05/2022
6 U.S. AEROTEAM, INC. v. US
(846:11–13). Specifically, after learning of PDI’s financial
difficulties, Aeroteam coordinated a plan to manufacture
the running gears. Aeroteam did so because it was “confi-
dent that [it could] produce” the running gears “as well or
better than PDI”—not because it was ordered to by the Air
Force. J.A. 1713–14. Indeed, Aeroteam itself “propose[d]”
to the Air Force that it “manufacture the entire running
gear.” J.A. 2125 (emphasis added and capitalization mod-
ified). Moreover, Aeroteam acknowledged that it could not
“do[] anything” with respect to manufacturing until it
sought the Air Force’s approval. J.A. 1714–15. Accord-
ingly, in view of the record before us, we see no clear error
in the court’s determination.
Aeroteam makes several additional arguments, all un-
persuasive. First, Aeroteam emphasizes that the Air Force
approved its manufacturing request. According to Aero-
team, because of that approval, the Air Force effectively di-
rected it to manufacture the running gears. We disagree.
Mere approval, standing alone, is insufficient to prove con-
structive change. Rather, there must be an “order[],” either
“express[] or implied[].” Bell/Heery, 739 F.3d at 1335 (cit-
ing Redland, 97 Fed. Cl. at 755–56). Accordingly, Aero-
team’s argument is unpersuasive.
Second, Aeroteam argues that the Claims Court “ex-
pand[ed] the requirements” necessary to prove a claim for
constructive change. Appellant’s Br. 21. Specifically, Aero-
team points to portions of the court’s decision suggesting it
was required to prove that the government authorized a
“change in contract price.” See Appellant’s Br. 21–22;
J.A. 6 (841:17–22) (“[T]he government . . . [did not take]
that next step of authorizing or directing a change in the
contract price.”) (emphasis added); J.A. 8 (849:9–11) (“The
drawings, the expectation of whether the plaintiff could
produce it in-house appropriately, that was approved, but
the price change was not.”) (emphasis added). According to
Aeroteam, because of the court’s misstatements, we must
reverse its decision.
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U.S. AEROTEAM, INC. v. US 7
We disagree with Aeroteam. Certainly, to prove a
claim for constructive change, a contractor need not show
that the government authorized a change to the contract
price. Rather, it need only show that the government or-
dered it (expressly or impliedly) to perform work beyond
the contract requirements. See Bell/Heery, 739 F.3d at
1335 (citing Redland, 97 Fed. Cl. at 755–56). To the extent
the Claims Court suggested otherwise, that was erroneous.
Regardless, any such error was harmless. As explained
above, the court carefully evaluated the evidence and de-
termined that Aeroteam chose to manufacture the running
gears itself, with no express or implied order from the Air
Force. See J.A. 4 (833:23–834:3) (“[T]o demonstrate a con-
structive change, [a] plaintiff has to show . . . that the ad-
ditional work was ordered expressly or impliedly by the
government.”); J.A. 7 (846:11–13) (“The termination that
[Aeroteam] exercised toward[] PDI was, again, a choice
that [it] made.”) (emphasis added); J.A. 8 (849:8) (Aeroteam
“offered to pull [the manufacturing] in-house.”) (emphasis
added). Thus, the court’s possible suggestion of an addi-
tional requirement for constructive change did not affect
the outcome of the case. See Valles v. Dep’t of State,
17 F.4th 149, 152 (Fed. Cir. 2021) (“As an appellate court,
we are obligated to apply the rule of harmless error, exam-
ining the record ‘without regard to errors or defects which
do not affect the substantial rights of the parties.’” (quoting
28 U.S.C. § 2111)).
Accordingly, we affirm the Claims Court’s determina-
tion that the Air Force was not liable for constructively
changing the contract.
II
We next turn to Aeroteam’s argument regarding its
cardinal change claim. To demonstrate a cardinal change,
a contractor must show that the “government effect[ed] an
alteration in the work” that “effectively require[d] the con-
tractor to perform duties materially different from those
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8 U.S. AEROTEAM, INC. v. US
originally bargained for.” Krygoski Constr. Co. v. United
States,
94 F.3d 1537, 1543 (Fed. Cir. 1996) (emphasis
added) (quoting AT & T Commc’ns, Inc. v. WilTel, Inc.,
1
F.3d 1201, 1205 (Fed. Cir. 1993)). “By definition . . . a car-
dinal change is so profound that it is not redressable under
the contract, and thus renders the government in breach.”
Id.
Aeroteam argues that the Air Force was liable for mak-
ing a cardinal change to the contract. In support of its ar-
gument, Aeroteam again asserts that the Air Force ordered
it to manufacture the running gears in-house. The govern-
ment responds that Aeroteam’s cardinal change claim fails
for the same reason that its constructive change claim fails:
Aeroteam chose to manufacture the running gears. The Air
Force did not order it to do so.
We agree with the government. As explained above,
the evidence showed that Aeroteam chose to manufacture
the running gears; the Air Force did not “effect an altera-
tion” in Aeroteam’s work. See J.A. 7 (846:11–13); Krygoski,
94 F.3d at 1543 (emphasis added) (quoting AT & T,
1 F.3d
at 1205). 4 Accordingly, we affirm the Claims Court’s deter-
mination that the Air Force was not liable for making a
cardinal change to the contract.
III
Finally, we turn to Aeroteam’s argument regarding its
commercial impracticability claim. To prove commercial
impracticability, a contractor must show that “because of
unforeseen events, [the contract] can be performed only at
4 Because we determine that the Air Force did not
“effect an alteration” in Aeroteam’s work, we need not reach
the question whether any alteration was “materially differ-
ent from those [that Aeroteam] originally bargained for.”
Krygoski,
94 F.3d at 1543 (emphasis added) (quoting
AT & T,
1 F.3d at 1205).
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U.S. AEROTEAM, INC. v. US 9
an excessive and unreasonable cost” or “all means of per-
formance are commercially senseless.” Raytheon Co. v.
White,
305 F.3d 1354, 1367 (Fed. Cir. 2002) (citations and
internal quotation marks omitted).
Aeroteam argues that it would have been commercially
impracticable for it to perform the contract. According to
Aeroteam, PDI could “no longer produce” the running gears
in light of its financial difficulties. Appellant’s Br. 8. In
support of its argument, Aeroteam emphasizes that PDI’s
products were “plagu[ed]” with quality control issues, mak-
ing it doubtful that it could complete the manufacturing
order.
Id. The government responds that PDI could have
continued to manufacture the running gears. Specifically,
the government contends that PDI did not decline to man-
ufacture the running gears after facing financial difficul-
ties. Rather, it merely raised the price per unit. The
government adds that Aeroteam could have paid that
higher price but chose not to for its own financial reasons.
We agree with the government. After considering the
evidence, the Claims Court found that Aeroteam could
have continued to buy the running gears from PDI. J.A. 5
(838:14–16) (“[T]he evidence does not support that at the
higher price, PDI would not have continued to supply the
product.”). The court acknowledged that PDI faced finan-
cial difficulties. It explained, however, that those difficul-
ties caused PDI to raise the price of its running gears, not
to stop producing them altogether. J.A. 7 (845:1–7). The
court further emphasized that Aeroteam could have bought
the running gears for the higher price but chose not to do
so. J.A. 7 (845:8–10). 5 Finally, the court found that Aero-
team failed to provide evidence “document[ing]” that the
5 The Claims Court did not make a conclusive find-
ing regarding the amount that PDI charged Aeroteam after
facing financial difficulties. PDI charged other parties up
to $38,000. J.A. 1861 (341:6–20).
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10 U.S. AEROTEAM, INC. v. US
higher price was excessive. 6 J.A. 7 (845:14–16). Aeroteam
points to no clear error in the court’s factual findings. Ra-
ther, it effectively asks us to reweigh the evidence and hold
in its favor. We decline to do so.
Aeroteam further argues that the Claims Court mis-
stated the law on firm-fixed-price contracts. According to
Aeroteam, the court “seem[ed] to hold” that a contractor
entering into a firm-fixed-price contract may not raise a
claim for commercial impracticability. Appellant’s Br.
26–27.
We disagree with Aeroteam’s reading of the court’s de-
cision. The court did not suggest that Aeroteam was barred
from raising a commercial impracticability claim. Rather,
it stated that certain types of changes to Aeroteam’s firm-
fixed-priced contracts were not necessarily compensable,
including, for example, an increase in the market price of
running gears. J.A. 5 (837:1–5) (“A finding of impractica-
bility excuses a party from performing unless the party has
assumed the risk of the event.”) (emphasis added). As the
court explained, that was “part of the risk” that Aeroteam
assumed in entering a firm-fixed-price contract. See J.A. 5
(837:23–838:6); J.A. 7 (846:13–15); Seaboard Lumber Co. v.
United States,
308 F.3d 1283, 1295 (Fed. Cir. 2002) (“The
normal risk of a fixed price contract is that the market price
will change.” (quoting N. Ind. Pub. Serv. Co. v. Carbon
County Coal Co.,
799 F.2d 265, 275 (7th Cir. 1986))). Ac-
cordingly, we affirm the court’s determination that it was
not impracticable for Aeroteam to perform the contract.
6 Although the Claims Court initially stated that it
“guess[ed]” the higher price made PDI an “unavailable
source,” it immediately qualified that statement by empha-
sizing that “it was also a matter of choice on the part of
[Aeroteam] not to pay the higher price.” J.A. 7 (845:8–10)
(emphasis added).
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U.S. AEROTEAM, INC. v. US 11
In summary, the Claims Court did not clearly err in
denying Aeroteam’s claims for constructive change, cardi-
nal change, or commercial impracticability.
CONCLUSION
We have considered Aeroteam’s remaining arguments
but find them unpersuasive. For the foregoing reasons, the
decision of the Claims Court is affirmed.
AFFIRMED
