Pacific Coast Community v. United States

Case: 20-1219 Document: 29 Page: 1 Filed: 04/30/2021
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
PACIFIC COAST COMMUNITY SERVICES, INC.,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2020-1219
______________________
Appeal from the United States Court of Federal Claims
in No. 1:17-cv-00854-RAH, Judge Richard A. Hertling.
______________________
Decided: April 30, 2021
______________________
TIMOTHY TURNER, Whitcomb, Selinsky, PC, Denver,
CO, for plaintiff-appellant. Also represented by JOSEPH
ANTHONY WHITCOMB.
ALISON VICKS, Commercial Litigation Branch, Civil Di-
vision, United States Department of Justice, Washington,
DC, for defendant-appellee. Also represented by JEFFREY
B. CLARK, ROBERT EDWARD KIRSCHMAN, JR., LOREN MISHA
PREHEIM.
______________________
Case: 20-1219 Document: 29 Page: 2 Filed: 04/30/2021
2 PACIFIC COAST COMMUNITY v. UNITED STATES
Before MOORE, HUGHES, and STOLL, Circuit Judges.
HUGHES, Circuit Judge.
This is a government contracts appeal. The Court of
Federal Claims held that the government was entitled to
summary judgment because, despite a showing by Pacific
Coast Community Services, Inc. that the government or-
dered a constructive change, the contractor nevertheless
failed to prove that it suffered any damages. We agree with
the Court of Federal Claims and affirm.
I
In August 2012, Federal Protective Service (FPS) is-
sued a solicitation for commercial administrative support
services with a period of performance of one base year and
four subsequent one-year option periods. The solicitation
required offerors to provide five full-time equivalent em-
ployees for four Contract Line Item Numbers (CLINs). The
solicitation contemplated an award of a firm-fixed-price
contract 1 charged at a monthly rate for each of the CLINs
calculated from employees’ productive hours—excluding,
for example, federal holidays. The solicitation incorporated
a “Proposal Pricing Worksheet” on which offerors were to
provide the hourly and monthly rates and the total price by
CLIN. This worksheet calculated total productive hours as
the hours in an employee’s work year (2,080 hours) less fed-
eral holidays (80 hours) and an unspecified number of va-
cation hours. J.A. 233. The solicitation also incorporated by
reference FAR 52.212-4, J.A. 75, and expressly required
the contractor to submit “accurate invoices that reflect the
services provided each month” and to attach to the invoices
1 “A firm-fixed-price contract provides for a price
that is not subject to any adjustment on the basis of the
contractor’s cost experience in performing the contract.”
FAR 16.202-1. Thus, under a firm-fixed-price contract, the
risk of unforeseen costs is borne wholly by the contractor.
Case: 20-1219 Document: 29 Page: 3 Filed: 04/30/2021
PACIFIC COAST COMMUNITY v. UNITED STATES 3
a separate sheet detailing variance from the contract re-
quirements, if any, id. at 180. The solicitation additionally
required the contractor to notify FPS in advance of any con-
tractor employee’s absence of longer than two weeks and to
provide a replacement employee to perform the duties re-
quired by the position.
Pacific Coast submitted a proposal listing 1,888 pro-
ductive hours per employee per year, or 2,000 hours less
annual vacation as disclosed in its Proposal Pricing Work-
sheet. FPS awarded the contract to Pacific Coast and Pa-
cific Coast began performance in October 2012.
In June 2013, FPS assigned a new Contracting Officer
to the contract who began requiring Pacific Coast to per-
form 2,000 hours of productive hours with full replacement
of any absent employee regardless of the duration of their
absence. Over the next few years, as FPS awarded Pacific
Coast subsequent option years, FPS and Pacific Coast dis-
puted whether the contract required 2,000 or 1,888 produc-
tive hours per employee per year, with Pacific Coast
continuing to provide no more than 1,888 productive hours
and FPS accordingly rating Pacific Coast’s performance as
“marginal.” J.A. 4, 9 (Pacific Coast expressly disclaimed be-
fore the trial court “that [its] level of performance exceeded
1,888 productive hours per year, per CLIN.”). This dispute
culminated in Pacific Coast filing suit in the Court of Fed-
eral Claims for, among other things, breach or constructive
change of contract. Pacific Coast argued that it was owed
the difference between the 1,888 productive hours it prom-
ised in its proposal and the 2,000 productive hours FPS de-
manded.
Following discovery and the parties’ cross motions for
summary judgment, the Court of Federal Claims agreed
with Pacific Coast that the contract required only 1,888
productive hours per employee per year and that the gov-
ernment had constructively changed the contract when it
demanded 2,000 productive hours. However, the Court of
Case: 20-1219 Document: 29 Page: 4 Filed: 04/30/2021
4 PACIFIC COAST COMMUNITY v. UNITED STATES
Federal Claims held also that Pacific Coast had failed to
prove that any harm had resulted from the government’s
constructive change and awarded no damages. This appeal
followed.
II
We review a grant of summary judgment by the Court
of Federal Claims without deference. Alamo v. United
States, 850 F.3d 1349, 1351 (Fed. Cir. 2017). Summary
judgment is appropriate when, viewing the facts in the
light most favorable to the non-moving party, there are no
genuine issues of material fact and the movant is entitled
to judgment as a matter of law. Id. This court reviews the
Court of Federal Claims’ legal conclusions de novo. Shell
Oil Company v. United States, 896 F.3d 1299, 1306
(Fed. Cir. 2018).
Pacific Coast argues that the Court of Federal Claims
erred by requiring Pacific Coast to prove damages in order
to recover for constructive change of a firm-fixed-price con-
tract. Instead, Pacific Coast asserts it is entitled to the dif-
ference between the price it might have bid for 2,000 hours
per year and the price it bid for 1,888 hours per year to
reflect the added risk it bears under a firm-fixed-price con-
tract. See Appellant’s Br. 17–18. But it is well-established
that a claim for compensation cannot be based on a specu-
lative theory of damages. Indiana Michigan Power Co. v.
United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005); San
Carlos Irr. & Drainage Dist. v. United States, 111 F.3d
1557, 1563 (Fed. Cir. 1997). And courts cannot award an
equitable adjustment when doing so would result in a
windfall. See Admiral Fin. Corp. v. United States, 378 F.3d
1336, 1345 (Fed. Cir. 2004). Since Pacific Coast admitted
that it did not provide a “level of performance exceed[ing]
1,888 productive hours per year, per CLIN,” J.A. 9, Pacific
Coast’s failure to provide any evidence to show costs in-
curred as a result of the government’s constructive change
is fatal. The Court of Federal Claims properly rejected
Case: 20-1219 Document: 29 Page: 5 Filed: 04/30/2021
PACIFIC COAST COMMUNITY v. UNITED STATES 5
Pacific Coast’s argument that it should be entitled to a
speculative increase in the “value” of the contract.
Pacific Coast’s reliance on Empire Blue Cross & Blue
Shield v. United States, 26 Cl. Ct. 1393 (1992), to support
its claim for “value” compensation is misplaced. Appellant’s
Br. 17–23. In Empire, the government sought to claw back
additional payments made to a firm-fixed-price contractor
whose staffing levels had decreased despite the govern-
ment’s purchase of additional work. Empire, 26 Cl. Ct at
1395. Empire is easily distinguished for at least three rea-
sons. First, in Empire, it was the government who sought
reimbursement from the contractor under a firm-fixed-
price contract as opposed to, as here, a contractor seeking
additional payment from the government. Id. Second, the
Court of Federal Claims in Empire found that the contrac-
tor had actually incurred costs by dedicating idle staff to
completing the new work under a theory of alternative uti-
lization of available resources. Id. at 1396. Finally, in Em-
pire the government actually bought new work which the
contractor actually performed. Id. Here, Pacific Coast did
not and cannot advance such a claim because it produced
no evidence to show that it actually provided work in excess
of 1,888 productive hours per year and, even more, has ad-
mitted that it did not perform beyond the contracted-for
1,888 hours. J.A. 9. Empire is thus inapposite.
Pacific Coast also argues on appeal that the Court of
Federal Claims erred by requiring it to prove damages be-
cause the hours requirement of the contract was not a de-
liverable. Appellant’s Br. 23. But Pacific Coast itself
argued to the trial court that the contract only required
1,888 productive hours per employee per year and pre-
vailed. See, e.g., J.A. 568. It is unclear whether Pacific
Coast preserved this argument below, but even if we con-
sider it, the argument fails. The contract requires that con-
tractor staff be physically present on site for the contracted
number of hours, id. at 55, and further requires the con-
tractor to provide invoices reflecting those hours, id. at 75,
Case: 20-1219 Document: 29 Page: 6 Filed: 04/30/2021
6 PACIFIC COAST COMMUNITY v. UNITED STATES
180. The Court of Federal Claims properly interpreted the
contract to require 1,888 hours per employee per year as a
deliverable.
III
We have considered Pacific Coast’s remaining argu-
ments and find them unpersuasive. Because we agree with
the Court of Federal Claims that Pacific Coast was re-
quired to prove damages resulting from the government’s
constructive change and failed to do so, we affirm.
AFFIRMED