K-Con Building Systems, Inc. v. United States , 778 F.3d 1000 ( 2015 )

United States Court of Appeals
for the Federal Circuit
______________________
K-CON BUILDING SYSTEMS, INC.,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2014-5062
______________________
Appeal from the United States Court of Federal
Claims in No. 1:05-cv-01054-MMS, Judge Margaret M.
Sweeney.
______________________
Decided: February 12, 2015
______________________
WILLIAM ATKINS SCOTT, Pederson & Scott, P.C.,
Charleston, SC, argued for plaintiff-appellant.
DANIEL B. VOLK, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for defendant-appellee. Also represented
by STUART F. DELERY, ROBERT E. KIRSCHMAN, JR., BRYANT
G. SNEE.
______________________
Before PROST, Chief Judge, NEWMAN and TARANTO, Cir-
cuit Judges.
2 K-CON BUILDING SYSTEMS, INC. v. US
TARANTO, Circuit Judge.
K-Con Building Systems, Inc., entered into a contract
with the federal government to construct a building for
the Coast Guard. Once K-Con finished, the government
imposed liquidated damages for delay in completion. K-
Con sued in the Court of Federal Claims, seeking two
forms of relief. First, it requested remission of the liqui-
dated damages on two grounds—that the contract’s
liquidated-damages clause was unenforceable and that K-
Con was entitled to an extension of the completion date.
Second, it requested additional compensation based on
work performed in response to government requests that
K-Con alleges amounted to contract changes. The Court
of Federal Claims held that the contract’s liquidated-
damages clause is enforceable and that K-Con did not
comply with the written-notice precondition for invoking
the contract clause governing changes. It also held that
K-Con’s claim for an extension on the completion date
must be dismissed for lack of jurisdiction. We affirm.
BACKGROUND
On January 20, 2004, K-Con entered into a contract
with the Coast Guard, under which K-Con would con-
struct a “cutter support team building” in Port Huron,
Michigan, for $582,641. The project was to be completed
by November 20, 2004, with K-Con agreeing to pay $589
in liquidated damages for each day of delay. On May 23,
2005, the Coast Guard accepted the building as substan-
tially complete. It withheld payment of $109,554 as
liquidated damages for what it calculated to be tardiness
of 186 days. No party challenges the calculation.
On July 28, 2005, K-Con sent a letter to the govern-
ment contracting officer requesting remission of the
liquidated damages “wrongfully withheld from the con-
tract.” J.A. 259, Letter from K-Con to Contracting Officer
(July 8, 2005) (first letter). As grounds for remission, K-
Con asserted that the “liquidated damages [constituted]
K-CON BUILDING SYSTEMS, INC. v. US 3
an impermissible penalty” and that the Coast Guard
“failed to issue extensions to the completion date as a
result of changes to the contract.” Id. It provided no
details regarding its request for a time extension based on
contract changes. After the contracting officer denied K-
Con’s request for remission, K-Con sued in the Court of
Federal Claims under the Contract Disputes Act (CDA),
41 U.S.C. §§ 601-613 (2006). 1 K-Con sought remission of
$109,554 plus interest in liquidated damages on the two
grounds asserted in its July 28, 2005 letter. Original
Complaint, K-Con Bldg. Sys., Inc. v. United States, No.
05-01054C (Fed. Cl. Sept. 30, 2005).
On December 15, 2006, while litigation in the Court of
Federal Claims was underway, K-Con submitted a second
letter to the contracting officer. J.A. 263–64, Letter from
K-Con to Contracting Officer (Dec. 15, 2006) (second
letter). The second letter extensively details the contract
changes allegedly made by the Coast Guard during the
contract term and asks for a new remedy—$196,126.38
for additional work necessitated by the changes—as well
as an extension of the completion date of the contract.
The contracting officer denied K-Con’s requests. K-Con
then amended its complaint in the Court of Federal
Claims to add allegations about the matter covered in its
second letter and to seek, beyond the liquidated-damages
relief, a judgment of $196,126.38 and a 186-day extension.
Amended Complaint, K-Con Bldg. Sys., No. 05-01054C
(Fed. Cl. Mar. 18, 2007).
The Court of Federal Claims first ruled, in deciding
an initial government motion for summary judgment, that
the contract’s liquidated-damages clause is enforceable.
1 The cited provisions apply to this case. Since
2011, the Contract Disputes Act has been codified at 41
U.S.C. §§ 7101-7109. See Pub. L. No. 111-350, 124 Stat.
3677 (2011).
4 K-CON BUILDING SYSTEMS, INC. v. US
The court later issued two rulings in deciding a second
government motion for summary judgment. It held that
K-Con did not provide valid written notice regarding
contract changes and therefore had not satisfied a pre-
condition to claiming additional compensation under the
contract’s changes clause. And it dismissed, for lack of
jurisdiction, K-Con’s time-extension claim for remission of
liquidated damages.
K-Con appeals all three rulings. We have jurisdiction
under 28 U.S.C. § 1295(a)(3).
DISCUSSION
Whether the Court of Federal Claims had jurisdiction
under the CDA is a question of law we decide de novo.
Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir.
1995) (en banc). A plaintiff “bears the burden of estab-
lishing subject matter jurisdiction by a preponderance of
the evidence.” Reynolds v. Army & Air Force Exch. Serv.,
846 F.2d 746, 748 (Fed. Cir. 1988). “[W]e review a grant
of summary judgment by the Court of Federal Claims de
novo, drawing justifiable factual inferences in favor of the
party opposing the judgment.” Long Island Sav. Bank,
FSB v. United States, 503 F.3d 1234, 1244 (Fed. Cir.
2007). “Once the moving party has satisfied its initial
burden, the opposing party must establish a genuine issue
of material fact and cannot rest on mere allegations, but
must present actual evidence.” Id.
A
Before turning to the merits, we must determine
which issues the Court of Federal Claims had jurisdiction
to decide under the CDA. “The CDA grants [the Court of
Federal Claims] jurisdiction over actions brought on
claims within twelve months of a contracting officer’s final
decision.” James M. Ellett Constr. Co. v. United States, 93
F.3d 1537, 1541 (Fed. Cir. 1996) (citing 41 U.S.C.
§ 609(a)). Jurisdiction requires both that a claim meeting
K-CON BUILDING SYSTEMS, INC. v. US 5
certain requirements have been submitted to the relevant
contracting officer and that the contracting officer have
issued a final decision on that claim. Id. at 1541–42.
A claim is “ ‘a written demand or written assertion by
one of the contracting parties seeking, as a matter of
right, the payment of money in a sum certain, the ad-
justment or interpretation of contract terms, or other
relief arising under or relating to the contract.’ ” Reflec-
tone, 60 F.3d at 1575 (quoting regulation then codified at
48 C.F.R. § 33.201; current version at 48 C.F.R. § 52.233-
1). A claim need not “be submitted in any particular form
or use any particular wording . . . [, but it must provide] a
clear and unequivocal statement that gives the contract-
ing officer adequate notice of the basis and amount of the
claim.” Contract Cleaning Maint., Inc. v. United States,
811 F.2d 586, 592 (Fed. Cir. 1987). A contracting officer’s
final decision on a claim may either be written, 41 U.S.C.
§ 605(a), or implied from “[a]ny failure by the contracting
officer to issue a decision on a contract claim within the
period required,” id. § 605(c)(5).
Identifying what constitutes a separate claim is
important. We have long held that the jurisdictional
standard must be applied to each claim, not an entire
case; jurisdiction exists over those claims which satisfy
the requirements of an adequate statement of the amount
sought and an adequate statement of the basis for the
request. See Joseph Morton Co. v. United States, 757 F.2d
1273, 1281 (Fed. Cir. 1985) (“Congress did not intend the
word ‘claim’ to mean the whole case between the contrac-
tor and the Government; but, rather, that ‘claim’ mean
each claim under the CDA for money that is one part of a
divisible case.”); see also M. Maropakis Carpentry, Inc. v.
United States, 609 F.3d 1323, 1327–32 (Fed. Cir. 2010)
(reaching different results for different claims in deter-
mining Court of Federal Claims jurisdiction). Claim
identification is important also for application of the rule
that, once a claim is in litigation, the contracting officer
6 K-CON BUILDING SYSTEMS, INC. v. US
may not rule on it—even if the claim is not properly in
litigation because it was not properly submitted to and
denied by the contracting officer before it was placed in
litigation. Sharman Co. v. United States, 2 F.3d 1564,
1571–72 (Fed. Cir. 1993) (“Once a claim is in litigation,
the Department of Justice gains exclusive authority to act
in the pending litigation . . . [,] divest[ing] the contracting
officer of his authority to issue a final decision on the
claim.”) (citing 28 U.S.C. §§ 516–520), overruled on other
grounds, Reflectone, 60 F.3d 1572; see also John Cibinic,
Jr., et al., Administration of Government Contracts 1292–
93 (4th ed. 2006) (“The contracting officer’s authority to
settle claims does not extend to cases in which litigation
has commenced in a court. . . . [N]o final decision may be
issued on a matter that is already in litigation.”).
Our longstanding demand that a claim adequately
specify both the amount sought and the basis for the
request implies that, at least for present purposes, we
should treat requests as involving separate claims if they
either request different remedies (whether monetary or
non-monetary) or assert grounds that are materially
different from each other factually or legally. See Con-
tract Cleaning, 811 F.2d at 592 (evaluating the adequacy
of a claim on the notice it gives of the remedy requested
and the basis for that remedy); 48 C.F.R. § 52.233-1(c)
(defining a claim as a written demand for a remedy “as a
matter of right”). This approach, which has been applied
in a practical way, serves the objective of giving the
contracting officer an ample pre-suit opportunity to rule
on a request, knowing at least the relief sought and what
substantive issues are raised by the request.
We have not treated the different-remedies compo-
nent as imposing so rigid a standard as to preclude all
litigation adjustments in amounts “based upon matters
developed in litigation.” Tecom, Inc. v. United States, 732
F.2d 935, 937–38 (Fed. Cir. 1984) (“ ‘It would be most
disruptive of normal litigation procedure if any increase
K-CON BUILDING SYSTEMS, INC. v. US 7
in the amount of a claim based upon matters developed in
litigation before the court [or board] had to be submitted
to the contracting officer before the court [or board] could
continue to a final resolution on the claim.’ ”) (alterations
in original; quoting J.F. Shea Co. v. United States, 4 Cl.
Ct. 46, 54 (1983)). But we have differentiated claims
seeking different types of remedy, such as expectation
damages versus consequential damages. Case, Inc. v.
United States, 88 F.3d 1004, 1010 (Fed. Cir. 1996) (hold-
ing that two cases “involved different claims” even though
both “arose out of the same underlying set of facts and
involved [similar, if not the same] allegations of defective
specifications,” because the later-filed case requested
“additional compensation” beyond the progress payments
requested in the other case, including lost profits). In a
similar vein, merely adding factual details or legal argu-
mentation does not create a different claim, but present-
ing a materially different factual or legal theory (e.g.,
breach of contract for not constructing a building on time
versus breach of contract for constructing with the wrong
materials) does create a different claim. See Santa Fe
Eng’rs, Inc. v. United States, 818 F.2d 856, 858–60 (Fed.
Cir. 1987) (holding that a claim for damages related to
three change orders was different from a claim for dam-
ages related to “ ‘the collective nature of all the problems,
changes and directives issued on the project’ ”) (emphasis
in original). We have gone beyond the face of claims to
make these distinctions. See, e.g., Sharman, 2 F.3d at
1571 (equating claims that “allege[d] entitlement to the
same money based on the same partial performance, only
under a different legal label”); Scott Timber Co. v. United
States, 333 F.3d 1358, 1366 (Fed. Cir. 2003) (“Scott may
have posed slightly different legal theories for the breach,
but Scott’s claim is essentially the same as presented to
the CO.”).
In its amended complaint in this case, K-Con present-
ed three discrete claims—i.e., three distinct combinations
8 K-CON BUILDING SYSTEMS, INC. v. US
of a request for a remedy and a basis for that request.
First, it claimed that the liquidated-damages clause is
unenforceable and on that basis sought remission of
$109,554 plus interest in liquidated damages withheld by
the Coast Guard. Second, as an additional basis for
seeking the same remedy of remission, it claimed that it
was entitled to time extensions that the Coast Guard
never provided. Third, it claimed that, because of con-
tract changes made by the Coast Guard, it had to do
additional work that entitled it to $196,126.38 over and
above remission of liquidated damages. We agree with
the Court of Federal Claims that it had jurisdiction to
decide the first and third claims, which relate to enforcea-
bility of the liquidated-damages clause and to alleged
contract changes, but not the second claim, which chal-
lenges the Coast Guard’s failure to grant time extensions.
Jurisdiction over the unenforceability claim is undis-
puted, and properly so. There was adequate pre-suit
notice to the contracting officer in K-Con’s first letter, in
which K-Con clearly requested a sum certain ($118,950.68
plus interest, in remission of liquidated damages) on the
ground that the liquidated damages imposed in this case
amounted to an “impermissible penalty.” J.A. 259. There
was also, in the contracting officer’s first denial, a valid
pre-suit final decision rejecting K-Con’s contentions.
Jurisdiction over the contract-changes claim is dis-
puted. Like the Court of Federal Claims, we conclude
that there was CDA jurisdiction over that claim, based on
K-Con’s second letter to the contracting officer. That
letter provides ample detail regarding the basis for the
claim, including what specific actions by the Coast Guard
allegedly made constructive changes to contract require-
ments; and the letter clearly requests award of a sum
certain as a remedy ($196,126.38 in compensation for
extra work performed).
K-CON BUILDING SYSTEMS, INC. v. US 9
The government urges that there was no authorized
final decision on that claim before litigation on it com-
menced, because K-Con sent its second letter after filing
its original complaint, which the government says already
contained the contract-changes claim. See Sharman, 2
F.3d at 1571–72. We disagree with the premise that the
second letter’s contract-changes claim was already in
litigation when K-Con sent that letter. The original
complaint does complain about contract changes and
include some factual assertions shared by the contract-
changes claim presented in the second letter. Compare
J.A. 68 (original complaint) (“[T]he Coast Guard changed
and modified the Contract in among other ways, by failing
to properly review and approve drawings submitted by K-
Con, and directing K-Con to perform additional work that
was not required by the Contract.”) with J.A. 264–66
(second letter) (complaining of contract-changes from the
Coast Guard’s review of design submittals). But the
remedy requested in the two documents is categorically
different: the original complaint asks for remission of
liquidated damages, whereas the second letter asks for
compensation for extra work performed. That is enough
to make the requests different claims. Consequently, the
contracting officer’s rejection of the second letter’s con-
tract-changes claim, a rejection issued upon full consider-
ation of its merits, was an authorized final decision
sufficient to establish jurisdiction in the Court of Federal
Claims.
The Court of Federal Claims did not have jurisdiction
over K-Con’s time-extension claim. At bottom, the time-
extension claim is a request for remission of liquidated
damages on the ground that the Coast Guard failed to
issue time extensions for additional work added to the
10 K-CON BUILDING SYSTEMS, INC. v. US
contract. 2 K-Con squarely placed that claim in litigation
through its original complaint, which means that K-Con
had to present that claim adequately in its first letter, not
in the post-suit second letter. But the first letter plainly
fails to allege enough detail to provide adequate notice of
the basis for any time extension. Indeed, K-Con admitted
to the Court of Federal Claims that its first letter “could
not be a valid [time-extension] claim.” J.A. 44.
2 It might be argued that there are in fact two time-
extension claims at issue: (1) a time-extension claim from
the first letter and original complaint requesting remis-
sion of liquidated damages; and (2) a time-extension claim
from the second letter and amended complaint requesting
a declaratory judgment of a 186-day extension. Compare
J.A. 259 (first letter) (requesting remission in part be-
cause “the government failed to issue extensions”), and
J.A. 68 at ¶ 6, 11 (original complaint) (same), with J.A.
266 (second letter) (requesting “an extension in the con-
tract performance period resulting from [certain contract]
changes”), and J.A. 85 (amended complaint) (same). But
K-Con has identified only one concrete benefit it would
receive from its requested declaratory judgment of enti-
tlement to a 186-day extension: remission of the liquidat-
ed damages withheld for tardiness under the contract.
See Sharman, 2 F.3d at 1571. In other circumstances, a
declaratory judgment of a time extension might be a free-
standing and independently meaningful remedy.
K-CON BUILDING SYSTEMS, INC. v. US 11
B
1
On the merits, we first address K-Con’s claim that the
liquidated-damages clause is unenforceable as imposing
an impermissible penalty. K-Con faces a steep climb in
trying to establish unenforceability. “When damages are
uncertain or difficult to measure, a liquidated damages
clause will be enforced as long as ‘the amount stipulated
for is not so extravagant, or disproportionate to the
amount of property loss, as to show that compensation
was not the object aimed at or as to imply fraud, mistake,
circumvention or oppression.’ ” DJ Mfg. Corp. v. United
States, 86 F.3d 1130, 1133 (Fed. Cir. 1996) (quoting Wise
v. United States, 249 U.S. 361, 365 (1919)). “With that
narrow exception, ‘[t]here is no sound reason why persons
competent and free to contract may not agree upon this
subject as fully as upon any other, or why their agree-
ment, when fairly and understandingly entered into with
a view to just compensation for the anticipated loss,
should not be enforced.’ ” Id. (alteration in original)
(quoting Wise, 249 U.S. at 365); see also 48 C.F.R.
§ 11.501(b). “[T]he test is objective,” and “regardless of
how the liquidated damage figure was arrived at, the
liquidated damages clause will be enforced if the amount
stipulated is reasonable for the particular agreement at
the time it is made.” DJ Mfg. Corp., 86 F.3d at 1137
(citations and internal quotation marks omitted).
We agree with the Court of Federal Claims that the
liquidated-damages clause here is enforceable. The clause
sets a rate of $589 per day of delay for a $582,641 con-
tract. K-Con has alleged that the Coast Guard made
certain errors in arriving at the $589 figure for inclusion
in the contract, such as a “mathematical error [amounting
to an additional] $26.30/day.” Appellant’s Br. at 18. K-
Con’s allegations, however, are immaterial. Even if the
alleged errors were made, the ultimate rate of $589 per
12 K-CON BUILDING SYSTEMS, INC. v. US
day is reasonable. DJ Mfg. Corp., 86 F.3d at 1137. At the
time of contracting, it was foreseeable that delay would
create a number of costs for the Coast Guard, including
costs for travel, inspection, and other work by government
personnel—all continuing beyond the date by which such
activities for this contract should have ended. J.A. 203–
04 (contracting officer tabulating various costs); see also
48 C.F.R. § 11.502(b) (requiring that rates in
“[c]onstruction contracts with liquidated damages provi-
sions . . . include the estimated daily cost of Government
inspection and superintendence” as well as “other ex-
pected expenses”). The exact dollar figure of those costs
was “uncertain or difficult to measure,” but given the
general existence of such costs, it cannot be said that the
$589-per-day rate agreed upon by the parties at the time
of contracting was “so extravagant[] or disproportionate to
the amount of property loss” as to constitute an imper-
missible penalty on K-Con, rather than a reasonable
estimate of the costs that delay in job completion would
likely impose. See DJ Mfg. Corp., 86 F.3d at 1133–34.
K-Con counters that the rate cannot reflect a reason-
able estimate of costs because it includes personnel costs
that “would have been incurred no matter what.” Appel-
lant’s Br. at 19. Specifically, K-Con argues that Coast
Guard “personnel did not work any more hours, work any
differently, or get paid any more or any less” due to delay
under the contract. Id. This argument is meritless. It is
reasonable to expect that delay, if it occurs, will require
personnel to devote more time and resources to the project
than they would have if the project had been completed on
time. Moreover, even if the same personnel might work
the same number of hours regardless of delay, it is rea-
sonable to expect that delay would force them to re-
allocate their hours and impair their ability to give
planned attention to other projects, to the detriment of
those other projects. In short, inefficiency plausibly
breeds administrative costs, which the agreed-upon rate
K-CON BUILDING SYSTEMS, INC. v. US 13
here properly estimated. See Jennie-O Foods, Inc. v.
United States, 580 F.2d 400, 413 (Ct. Cl. 1978). K-Con
has not raised a genuine issue of material fact regarding
the rate’s reasonableness.
2
The second merits issue involves K-Con’s claim that it
is entitled to compensation for additional work it per-
formed because of what it says were constructive changes
made to the contract by the Coast Guard. The relevant
portion of the contract’s changes clause reads as follows:
(b) Any other written or oral order . . . from
the Contracting Officer that causes a change shall
be treated as a change order under this clause;
provided, that the Contractor gives the Contract-
ing Officer written notice stating
(1) the date, circumstances, and source of the
order and
(2) that the Contractor regards the order as a
change order.
....
(d) . . . [E]xcept for an adjustment based on de-
fective specifications, no adjustment for any
change under paragraph (b) of this clause shall be
made for any costs incurred more than 20 days be-
fore the Contractor gives written notice as re-
quired.
48 C.F.R. § 52.243-4 (Aug. 1987); see J.A. 145 (contract
incorporating the changes clause).
K-Con alleges that the Coast Guard made two sets of
changes to the contract. First, it alleges that, on January
28, 2004, the Coast Guard requested that the building’s
eave height be increased by four inches. Second, it alleges
that, starting in April 2004 and continuing through July
14 K-CON BUILDING SYSTEMS, INC. v. US
2004, the Coast Guard requested various changes upon
reviewing K-Con’s design submissions. We agree with the
Court of Federal Claims that, with regard to all of the
alleged changes, K-Con did not comply with the written-
notice requirement of the contract’s changes clause.
Throughout the period that the Coast Guard was al-
legedly making changes, K-Con never objected to the
Coast Guard’s actions or suggested that it was entitled to
an adjustment of contract terms. Rather, K-Con repeat-
edly expressed its intent to incorporate the Coast Guard’s
requests as though they were consistent with the terms of
the contract. E.g., J.A. 345–46 (K-Con responding to
Coast Guard’s review comments with brief, affirmative
statements, such as “[w]ill comply,” “[c]orrection will be
made,” and “[d]etail will be revised”). It was only once K-
Con submitted its contract-changes claim in its second
letter to the contracting officer—more than two years
after any of the changes at issue were allegedly ordered—
that K-Con seems to have provided written notice ade-
quate under paragraph (b). Only then did K-Con identify
the “date, circumstances, and source of the order[s]” it
objected to and indicate that it “regard[ed] the order[s] as
change order[s].” 48 C.F.R. § 52.243-4(b).
Two years is well beyond the 20-day time limit im-
posed by paragraph (d). And the notice provision serves
an important purpose in a contract in which some gov-
ernment requests are plainly contemplated under the
contract. Timely written notice differentiates requests
the contractor views as outside the contract from those it
deems contemplated by the contract. See Singer Co.
Librascope Div. v. United States, 568 F.2d 695, 711 (Ct.
Cl. 1977) (“[T]he work was done without notice to the
contracting officer that Librascope considered the effort
involved to be extra-contractual. . . . The contractor’s
failure to protest, while perhaps not an outright bar to the
claim, is nevertheless an evidentiary consideration which,
in these circumstances, takes on controlling signifi-
K-CON BUILDING SYSTEMS, INC. v. US 15
cance.”). And it gives the government timely notice of
what amounts it might be on the hook for, so that it will
not be surprised by money claims later, as well as an
opportunity to address demands for more money when it
might yet avoid them.
Sometimes, extenuating circumstances have weighed
against strict enforcement of the time limit. See generally
Powers Regulator Co., GSBCA No. 4668, 80-2 BCA
¶ 14,463 (Apr. 30, 1980) (reviewing how the time limit has
been enforced by boards of contract appeals and enumer-
ating exceptions to its strict enforcement); see also Hoel-
Steffen Const. Co. v. United States, 456 F.2d 760, 767–68
(Ct. Cl. 1972) (noting that a “severe and narrow applica-
tion of the notice requirements [of the suspension clause
in the then-extant Federal Procurement Regulations] . . .
would be out of tune with the language and purpose of the
notice provisions, as well as with this court’s wholesome
concern that notice provisions in contract-adjustment
clauses not be applied too technically and illiberally
where the Government is quite aware of the operative
facts”). But there are no such extenuating circumstances
here. K-Con has proffered no evidence suggesting that
the Coast Guard knew or should have known that K-Con
considered the work requests to be contract changes until,
at the earliest, K-Con submitted its first letter to the
contracting officer. That letter, sent a year after the last
of the alleged changes, lacks any detail with regard to
what K-Con considered to be the changes made and offers
the Coast Guard a simple choice between acceding to K-
Con’s demands or being sued. Such notice does not com-
ply with the changes clause.
K-Con’s sole counterargument is that it did not have
to comply with the notice provision of the changes clause
because compliance would have been futile. Even if a
futility exception exists, however, K-Con’s argument fails
because it has not shown that compliance would have
been futile. The Coast Guard never stated or implied in
16 K-CON BUILDING SYSTEMS, INC. v. US
advance that it would reject allegations of contract chang-
es. See J.A. 252 (“Design Coordination Review Com-
ments” form, which left a space for the contractor to
respond with action code “dc,” meaning “[d]o not concur
with [the Coast Guard’s] comment for reasons as indicat-
ed”). And although the contracting officer, in response to
K-Con’s second letter, did ultimately reject K-Con’s con-
tract-changes claim, deeming that fact sufficient to estab-
lish futility would threaten to erase the notice
requirement. In any event, it is unknown what would
have happened had K-Con broached the issue of changes
around the time the Coast Guard made the work requests
at issue. The submission of the second letter prompted
the Coast Guard to make a choice between giving in to K-
Con’s demands or subjecting itself to further litigation;
timely objections would have presented a very different
choice between at least four options—refraining from
making requests regarding K-Con’s work, altering the
nature of the requests, keeping the requests the same but
making equitable adjustments to the contract, or rejecting
the allegations of changes altogether and thereby risking
litigation or a halt to the project. K-Con failed to comply
with the changes clause, and its after-the-fact specula-
tions about what would have happened had it complied do
not create a genuine dispute of material fact regarding
whether it should be excused for its failure.
CONCLUSION
For the foregoing reasons, the judgment of the Court
of Federal Claims is affirmed.
AFFIRMED