David Boland, Inc. v. United States

In the United States Court of Federal Claims
No. 17-166C
(Filed: August 12, 2022)
FOR PUBLICATION
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DAVID BOLAND, INC., *
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Plaintiff, *
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v. *
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THE UNITED STATES, *
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Defendant. *
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Mark Gerard Jackson, Jackson Holcomb LLP, Seattle, Washington, for
Plaintiff. With him on briefs were Stowell Holcomb, Jackson Holcomb LLP, Seattle,
Washington, Christopher P. Sobba, James Sobba, LLC, Kansas City, Missouri, and
Dennis L. Durkin, Baker & Hostetler LLP, Orlando, Florida.
Meen Geu Oh, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington, D.C., for Defendant,
United States. With him on briefs were Jeffrey Bossert Clark, Acting Assistant
Attorney General, Robert E. Kirschman, Jr., Director, Patricia M. McCarthy,
Assistant Director, as well as Kanale Sadowski, Assistant District Counsel, U.S.
Army Corps of Engineers, Honolulu District.
OPINION AND ORDER
Plaintiff David Boland, Inc. (“Boland”) contracted with the U.S. Army Corps of
Engineers (“Corps”) to build infrastructure supporting a planned aviation complex at
Wheeler Army Airfield (“Wheeler”) in Oahu, Hawaii. Some of Boland’s work did not
comply with the terms of the contract — a fact the parties do not dispute — and the
Corps ordered Boland to remove and replace the non-conforming work at Boland’s
expense. Boland claims that the Corps’ order was economically wasteful, and so seeks
recovery of the costs of replacing its original work.
Boland has moved for partial summary judgment as to liability, and the
government has moved for summary judgment.1 For the reasons discussed below,
both motions are DENIED.
FACTS
In 2009, the U.S. Army began planning an additional aviation complex to
support a military brigade at Wheeler. Defendant’s Statement of Undisputed Facts
(“DSUF”) ¶ 1 (ECF 55-1).2 The Corps awarded Boland a contract for infrastructure
development at the site. Ex. 1 at BOL_000836. Among other things, Boland was to
install concrete sewer manholes for a wastewater collection system. Appx43 § 3.1.4;
see also Ex. 94 (Rasmussen Dep.) at 48:5–49:5.
Boland undisputedly breached the contract by installing non-conforming
manholes. But the parties dispute the engineering and business consequences of the
breach.
A. The Contract
Three aspects of the contract are most relevant to the case.
First, although the contract was between Boland and the Corps, the completed
wastewater collection system was to be owned and operated by a private firm — Aqua
Engineers, Inc. (“Aqua”). Appx16, “Sewer Notes” n. 14; Supp. Appx108; Supp.
Appx113 §§ C.1–C.2. Boland’s work was supposed to be incorporated within a larger,
pre-existing sewer system that Aqua already operated under a separate contract with
the U.S. Army Garrison Hawaii, Directorate of Public Works (“DPW”). See Supp.
Appx108; 10 U.S.C. § 2688. Aqua’s contract provided that upon completion of
underground infrastructure work by a contractor (i.e., Boland), Aqua “shall allow” a
service connection to its existing system, and that it would own the newly constructed
1 Pl.’s Corrected Mot. for Partial Summ. J. (ECF 71) (“Pl.’s Mot.”); Def.’s Resp. to Pl.’s Mot. for Partial
Summ. J. (ECF 63) (“Def.’s Resp.”); Pl.’s Reply to Def.’s Resp. to Pl.’s Mot. for Partial Summ. J. (ECF
67) (“Pl.’s Reply”); Def.’s Mot. for Summ. J. (ECF 55) (“Def.’s Mot.”); Pl.’s Resp. to Def.’s Mot. for Summ.
J. (ECF 64) (“Pl.’s Resp.”); Def.’s Reply to Pl.’s Resp. to Def.’s Mot. for Summ. J. (ECF 68) (“Def.’s
Reply”). I heard oral argument on March 3, 2022. Tr. of Oral Arg. (“Tr.”) (ECF 74). The parties filed
supplemental briefs on an issue raised at argument. Pl.’s Suppl. Br. (ECF 75); Def.’s Suppl. Resp. (ECF
77); Pl.’s Suppl. Reply (ECF 78).
2 Plaintiff’s summary judgment evidence is collected primarily in several exhibits (designated “Ex.”)
to declarations accompanying its motion for partial summary judgment (ECF 50–54) and response to
Defendant’s motion (ECF 64). Plaintiff also submitted several exhibits accompanying its motion in
limine to exclude Defendant’s expert (ECF 38). Defendant’s evidence is submitted via an appendix
(designated “Appx”) attached to its motion for summary judgment (ECF 55; ECF 55-2–55-3).
Defendant has also submitted its DSUF and a supplemental appendix (designated “Supp. Appx”) (ECF
63-3).
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sewer lines and manage their operation. Supp. Appx114 § C.4.1; Supp. Appx117
§ C.24.
Second, the contract required that the sewer manholes be reinforced with steel.
In more than one provision, the contract incorporated ASTM C478, a manufacturing
standard developed by ASTM International. See, e.g., Appx37 § 2.3.1; Appx39
§ 2.3.6.1; Appx71 § 2.3.5. The parties agree that ASTM C478 requires steel
reinforcement. See Tr. at 17; Def.’s Mot. at 3; see also Appx2–3 (ASTM C478 §§ 4.1.1,
4.1.6).3 The ASTM standard also provides that manhole components failing to
conform to any of its requirements (including the requirement for steel
reinforcement) are subject to rejection.4 Appx8 (ASTM C478 § 14.8.1); Appx9 (ASTM
C478 § 15.7.1).
ASTM compliance was also required by Aqua’s Collection System Design and
Construction Protocol (“Aqua Protocol”), which the contract incorporated by
reference. Appx36 § 1.7; Appx16, “Sewer Notes” n. 14. Aqua’s Protocol mandated that
Boland follow “the requirements of the City and County of Honolulu Design
standards.” Supp. Appx46. Honolulu’s standards, in turn, required that concrete
manholes conform to ASTM standards. Ex. 40 at AE-002832 § 23.2D.
Third, the contract required Boland to strictly comply with the contract’s
terms. See Def.’s Reply, Add2 (requiring that Boland perform “in strict accordance
with the terms of [the] solicitation”). It authorized the Corps to order “immediate
corrective action” if Boland did not comply. Appx26 § 3.10; see also Ex. 111 at 15.
Relatedly, Aqua’s own contract conditioned its obligation to accept new wastewater
service connections on “conformance to all of … the ‘Aqua Protocol,’” see Supp.
Appx117 § C.24, meaning that the contract permitted Aqua to reject Boland’s work if
Boland did not comply with the Aqua Protocol.
B. Boland’s Breach
The parties agree that Boland breached the contract by mistakenly installing
manholes that were reinforced not with steel, but with synthetic fiber. Pl.’s Mot. at
5–6; Def.’s Mot. at 4. When the breach was discovered, Boland agreed to immediately
3 The citation here is to an ASTM edition contemporaneous with events giving rise to litigation,
approved as of Feb. 1, 2009. Appx2. The contract references C478M, the metric equivalent of C478, see
Ex. 7 (ASTM C478M - 15a), the record’s version of which post-dates the contract. The parties have not
addressed the difference in effective dates, so I assume for purposes of this opinion that it is not
material to the motions.
4 Under a section on “Modified or Special Design,” ASTM permits suppliers to “submit[] to the owner,
for approval prior to manufacture, designs other than those prescribed in the specific section for a
product” so long as “the product … meet[s] all the tests and performance requirements specified by the
owner in accordance with the appropriate sections on manufacture and physical requirements.” Appx3
§ 5.2.1 (emphasis added).
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replace several fiber-reinforced manholes awaiting installation. See Ex. 61 at GOV-
0047116. But nineteen non-complying manholes had already been installed.
Appx159; Appx161. Boland requested a variance from the Corps and suggested
various guarantees and fixes, Ex. 22 at GOV-0001251, but was ultimately required
to replace the manholes.
The Corps was initially amenable to accepting Boland’s variance request. See
Ex. 61 at GOV-0047117. Boland supported its request with engineering calculations
purporting to show that once installed, fiber-reinforced manholes would perform
equivalently to steel-reinforced ones. See id. at GOV-0047125–177. Plaintiff claims
that a visual inspection of the installed non-complying manholes did not reveal any
cracking, and Defendant does not dispute the point. See Ex. 52 (Salisbury Decl.) ¶ 10–
14; Ex. 97 (Rogness Dep.) at 78:25–79:16; Tr. at 56. An internal review by the Corps
thus determined that the manholes would “likely [be] able to handle loads/forces that
[they are] subject to with the fiber reinforcing.” Ex. 57 at GOV-0046392.
Yet the Corps ultimately rejected Boland’s revised variance request, telling
Boland that DPW and Aqua would not accept the sewer manholes because “they do
not conform with [the Aqua Protocol].” Ex. 73 at GOV-0001533. The parties dispute
Aqua’s precise position and why Aqua was concerned. However, they seem to agree
that Aqua was unwilling to accept Boland’s work without some kind of guarantee on
the government’s part — perhaps continued ownership by the government, see
Appx96 ¶ 11, perhaps insurance covering future defects, see Ex. 103 (Paul Dep.) at
30:4–14; Ex. 83 at GOV-0047575–78 — that would shift risk from Aqua to the
government.
Boland was therefore required to remove the non-conforming manholes and
replace them with ASTM-complying, steel-reinforced ones. Boland claims the cost of
doing so was approximately $3.5 million. Ex. 87 at GOV-0004640.
C. Engineering Evidence
The parties have offered expert evidence regarding the suitability of fiber-
reinforced manholes. Plaintiff’s experts argue — as Boland did when seeking a
variance — that fiber-reinforced manhole sections could be expected to serve their
purpose as well as steel-reinforced ones. See generally Ex. 105 (Marshall expert
report); Ex. 106 (Rogness expert report).
Defendant does not argue with Plaintiff’s expert calculations, so far as they go,
but takes issue with what it characterizes as one of Plaintiff’s assumptions.
Defendant appears to agree that intact steel- and fiber-reinforced manhole covers
would perform comparably when installed. Tr. at 56–57. Instead, Defendant’s expert
Dr. Lin Shen argues that the fiber-reinforced manholes were more likely to have had
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defects when installed. Ex. 2 (ECF 38) at 3 ¶¶ 14–15. Those undetected cracks, Dr.
Shen argues, could reduce the manholes’ “service life.” Id. at 6 ¶ 28. Although Dr.
Shen acknowledges a visual inspection was completed on the installed manholes, see
Ex. 1 (ECF 38) at 257:1–9, he suggests that it might have been “insufficient” because
it might not have found, inter alia, small cracks or cracks that were hidden or buried.
See id. at 241:16–22.
DISCUSSION
I. Legal Standards
A. Summary Judgment
To win a motion for summary judgment, a party must show “that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” RCFC 56(a). A “genuine” dispute of fact exists where “evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). As to materiality, “the substantive law
will identify which facts are material. Only disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of
summary judgment.” Id.“[A]ll evidence must be viewed in the light most favorable to the nonmoving
party, and all reasonable factual inferences should be drawn in favor of the
nonmoving party.” Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed.
Cir. 1994) (citing Anderson, 477 U.S. at 255, and Adickes v. S.H. Kress & Co., 398
U.S. 144, 158–59 (1970)). Summary judgment should be granted “against a party who
fails to make a showing sufficient to establish the existence of an element essential
to that party’s case, and on which that party will bear the burden of proof at trial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Cross-motions for summary judgment should be evaluated as independent
motions. “[T]he court must evaluate each party’s motion on its own merits, taking
care in each instance to draw all reasonable inferences against the party whose
motion is under consideration.” Mingus Constructors, Inc. v. United States, 812 F.2d
1387, 1391 (Fed. Cir. 1987) (citing Schwabenbauer v. Bd. of Educ., 667 F.2d 305, 313–
14 (2d Cir. 1981)). “[T]he court is not relieved of its responsibility to determine the
appropriateness of summary disposition in a particular case,” even when both parties
contend that no material facts are disputed and summary disposition is appropriate.
Williams v. United States, 144 Fed. Cl. 218, 230 (2019) (citing Prineville Sawmill Co.
v. United States, 859 F.2d 905, 911 (Fed. Cir. 1988)).
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B. Contract Interpretation and Economic Waste
The parties’ competing summary judgment theories hinge on interpretation of
the relevant contracts and on the contractual doctrine of economic waste. I discuss
the applicable principles in turn.
“Contracts to which the government is a party are subject to the general rules
of contract interpretation,” which necessarily “begin[] with the language of the
written agreement.” Westlands Water District v. United States, 109 Fed. Cl. 177, 191
(2013) (citing Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1038 (Fed. Cir.
2003)). When reviewing contract provisions, I assign clear and unambiguous terms
their plain and ordinary meaning without resort to parol evidence. See Barseback
Kraft AB v. United States, 121 F.3d 1475, 1479 (Fed. Cir. 1997).
Economic waste doctrine is governed in this Court principally by a single
decision from the Federal Circuit: Granite Construction Co. v. United States, 962 F.2d
998 (Fed. Cir. 1992). In that case, the government ordered a private contractor
building a lock and dam to remove and replace waterstop that did not strictly comply
with the contract. Id. at 1003–04. The Federal Circuit held that the order resulted in
economic waste, id. at 1007–08, and so allowed the contractor to recover net costs of
correcting its nonconforming work, id. at 1008.
A contractor can recover correction costs under the economic waste doctrine
when two elements are met: “[1] [T]he cost of correction is economically wasteful and
[2] the work is otherwise adequate for its intended purpose.” Id. at 1007 (emphasis
added). When those elements are met, the government may obtain a downward
adjustment of the contract price, but it is liable for net correction costs if it orders
replacement of the contractor’s work. Id. at 1007; see also H. L. C. & Assocs. Const.
Co. v. United States, 367 F.2d 586, 600 (Ct. Cl. 1966); Farwell Co. v. United States,
148 F. Supp. 947, 949–50 (Ct. Cl. 1957).
As to the first element, a cost of correction is “economically wasteful” when it
is disproportionate to the loss of value that resulted from noncompliance. Granite
Constr., 962 F.2d at 1007 (discussing Jacob & Youngs v. Kent, 129 N.E. 889, 230 N.Y.
239 (1921), and the Restatement (Second) of Contracts, § 348(2)). As to the second,
work is “adequate for its intended purpose” when it “substantially complie[s]” with
contractual specifications. Id. A contractor’s performance can be substantially
adequate when it “departs in minor respects from that which ha[s] been promised,”
Franklin E. Penny Co. v. United States, 207 Ct. Cl. 842, 856 (1975); see also
Blinderman Constr. Co. v. United States, 39 Fed. Cl. 529, 573 (1997) (“[S]ubstantial
completion need not, and ordinarily does not, amount to total completion.”), but not
where it is “fundamentally less than [what the parties] had … bargained for.”
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Franklin E. Penny, 207 Ct. Cl. at 857–58. Substantial compliance is a factual question
that “depend[s] in large measure upon the character and extent of the partial failure
— upon its relative importance to the party affected by it.” Thoen v. United States,
765 F.2d 1110, 1115 (Fed. Cir. 1985) (quoting Corbin on Contracts § 700 (1960)).
The underlying substance of the test is less complicated than it might seem.
Both elements depend on comparing the value of the contractor’s actual performance
with the performance the contract would have strictly required. See Reliable
Contracting Grp., LLC v. Dep’t of Veterans Affs., 779 F.3d 1329, 1335 (Fed. Cir. 2015)
(citing Granite Construction for the proposition that “rejecting performance of a
contract in which the performance is entirely adequate for the purpose of the project
is economic waste”). The burden is on the contractor to prove that its rejected work
(or proposed correction) substantially complied with the contract. Granite Constr.,
962 F.2d. at 1005.
Two aspects of the economic waste doctrine deserve emphasis. First, the
doctrine applies even where — as here — the contract calls for strict performance.5
As the Granite Construction court explained, although the government “generally has
the right to insist on performance in strict compliance with the contract specifications
and may require a contractor to correct nonconforming work[,] … the government
should not be permitted to direct the replacement of work in situations where” the
economic waste doctrine applies. 962 F.2d at 1006–07.
Second, when resolving factual questions about the adequacy of a contractor’s
original nonconforming work, a court should look to all the evidence developed in
litigation, not just the information available to the government at the time it ordered
the work to be corrected. Id. at 1005–06.
II. Factual Questions Preclude Summary Judgment
Under the Granite Construction test, the main question is the adequacy of
Boland’s fiber-reinforced manholes as compared to the steel-reinforced manholes the
government contracted for. If they were adequate for their intended purpose, then
ordering Boland to remove and replace them was economically wasteful. Granite
Constr., 962 F.2d at 1007. A related question is whether Aqua’s refusal to accept
Boland’s work without guarantees from the government meant that Boland’s
performance was fundamentally less than what the government bargained for.
5Ordinarily the government is entitled to receive what it contracted for. Granite Constr., 962 F.2d at1006–07. The economic waste doctrine thus does not reach situations where a contractor sues for an
equitable adjustment after offering something other than what the contract requires. Elastomeric
Roofing Associates, Inc. v. United States, 26 Cl. Ct. 1106, 1107–08 (1992); Fort Myer Constr. Corp. v.
United States, 42 Fed. Cl. 720, 728 (1999), aff’d, 230 F.3d 1380 (Fed. Cir. 2000).
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Franklin E. Penny, 207 Ct. Cl. at 857–58. Because there are genuine issues of
material fact on both questions,6 summary judgment must be denied.
A. Engineering Equivalence
The parties differ sharply on whether the non-complying fiber-reinforced
manholes were functionally equivalent to the steel-reinforced manholes specified by
the contract. I conclude that the disagreement constitutes a genuine dispute of
material fact that precludes me from granting either party’s motion for summary
judgment.
The engineering equivalence of fiber- and steel-reinforced manholes is material
to the Granite Construction standard for economic waste. It relates to whether the
cost of replacing the former with the latter is disproportionate to the loss in value
caused by the non-complying manholes. Granite Constr., 962 F.2d at 1007. It also
relates to whether the fiber-reinforced manholes were “otherwise adequate for [their]
intended purpose.” Id.The issue, however, is genuinely disputed. Boland has developed extensive
evidence — from its expert witnesses, its variance request documentation, and the
Corps’ own determination — purporting to show that “the fiber reinforced manholes
… perform as well as, or better than the steel reinforced ones.” Ex. 61 at GOV-
0047169; see also Ex. 97 (Rogness Dep.) at 40:21–25; Ex. 57 at GOV-0046392 (Corps’
internal review). As mentioned above, the government does not contest Boland’s
engineering calculations. Tr. at 56–57. If Boland’s engineering can be taken at face
value as a substitute for ASTM compliance, Boland’s installed manholes may well
have been adequate for their purpose.
The government instead argues, based on the opinions of its expert Dr. Shen,
that Boland’s data assume the manholes were structurally intact when they were
placed in the ground. Tr. at 56–57; Appx119 ¶ 27. That assumption, Dr. Shen opines,
is not supported by data, and is in fact contradicted by evidence of cracking on
uninstalled manholes. Appx118–19 ¶¶ 23–28. Dr. Shen believes that fiber-reinforced
concrete is more likely than steel-reinforced concrete to crack before installation.
Appx116 ¶¶ 13–15; Appx118–19 ¶¶ 23–28; Ex. 1 (ECF 38) at 106:8–21, 112:10–18. If
the manholes were cracked when installed, their service life would be shorter than
expected. Appx119 ¶ 27. As a result — the argument goes — Boland’s engineering
data do not show that the actual, as-installed manholes were equivalent to the
6 I have not tried to comprehensively identify the issues of disputed fact (or legal questions) that might
need to be resolved to decide the case, only the ones that most evidently require denying the motions
for summary judgment.
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manholes the government contracted for. Tr. at 58; Appx119 ¶¶ 27–30; Ex. 1 (ECF
38) at 241:16–22; 246:5–247:9.
Boland derides the government’s theory as based on “invisible cracks.” See Pl.’s
Resp. at 19 n.66; Pl.’s Reply at 4. Fiber reinforcement, Boland contends, both protects
concrete from cracking before installation and prevents cracks from spreading. See
Pl.’s Mot. at 32–33; Pl.’s Reply at 4–5; see also Ex. 22 at GOV-0001275–76; Ex. 61 at
GOV-0047129. Boland also claims that small cracks “are not a cause for rejection
under any applicable standard” and that no damage was found on the installed
manholes. See Pl.’s Reply at 4–5; see also Appx8 § 14.8.1.5 (the rejection metric for
risers and conical tops); Appx9 § 15.7.1.5 (base sections).
Those arguments may be reasonable, but they do not permit summary
judgment. Most obviously, the parties’ experts disagree about the different effects of
steel and fiber reinforcement on the risk of cracking before installation. Compare,
e.g., Appx116 ¶¶ 13–15 (Dr. Shen), with, e.g., Ex. 96 at 60:9–16 (Mr. Marshall).
Technical questions such as those are usually subjects for expert testimony and cross-
examination, not summary judgment. Crown Packaging Tech., Inc. v. Ball Metal Bev.
Container Corp., 635 F.3d 1373, 1384 (Fed. Cir. 2011) (citing Scripps Clinic &
Research Found. v. Genentech, Inc., 927 F.2d 1565, 1578 (Fed. Cir. 1991)). That leaves
a dispute about whether substitution of fiber-reinforced concrete made it more likely
that Boland’s manholes were cracked when they were installed.
Likewise, although no cracks were identified on visual inspection of the
installed manholes, Dr. Shen maintains that there could have been cracks in places
the inspectors could not see. Ex. 1 (ECF 38) at 258:1–259:1. That implies that the
visual inspection may not have been enough to rule out cracking in the installed
manholes. If the inspection might have missed cracking — and if any overlooked
cracks could have been significant enough to weaken the installed manholes — it
would cast into doubt Boland’s assumption that the installed manholes were sound.
Whether or not the visual inspection in fact ruled out cracking is thus another
material factual dispute.
In short, because the parties disagree about whether Boland’s fiber-reinforced
manholes were equivalent to steel-reinforced ones as installed, there is no basis to
determine as a matter of law that they were adequate for their intended purpose. The
factual questions related to engineering adequacy preclude summary judgment.
B. Aqua’s Position
Although the Corps originally concluded that Boland’s fiber-reinforced
manholes were adequate, it rejected a variance and ordered replacement because
Aqua would not accept Boland’s work as-is. Depending on whether fiber-reinforced
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manholes are equivalent to steel-reinforced ones that conform to ASTM C478, issues
about Aqua’s objection might not be material under the economic waste doctrine.7
But if Aqua’s views do matter for some reason, its discomfort with Boland’s work
could mean that Boland’s work did not give the Corps “to all intents and purposes all
benefits which [it] reasonably anticipated receiving under the contract.” Franklin E.
Penny, 207 Ct. Cl. at 858 (citing In Re Kinney Aluminum Co., 78 F. Supp. 565, 568
(S.D. Cal. 1948)). Questions of fact related to Aqua’s position preclude summary
judgment.
One purpose of government contracts is to allocate risk. See, e.g., Ralph Nash,
Risk Allocation in Government Contracts, 34 Geo. Wash. L. Rev. 693, 718 (1966)
(“[T]he Government and the contractor thoroughly spell out the agreed risk allocation
in the contract document. The pricing provisions are the major risk allocation device
…. Contract clauses allocate cost responsibility for more specific occurrences that can
be foreseen.”) (quoted in Fruehauf Corp. v. United States, 218 Ct. Cl. 456, 474–75
(1978)). Here, the relevant contracts provided that Aqua would ultimately accept and
take ownership of Boland’s sewer work. In so doing, they allocated the risks of the
system — once completed and accepted — to Aqua.
The parties seem to agree that Aqua was unwilling to accept those risks after
Boland’s noncompliance came to light, at least not without qualifications that would
have shifted some of the risk or expense back to the government. If the Corps had
accepted Boland’s work, it could have found itself in litigation with Aqua or
negotiating over concessions that it may or may not have been in a position to grant.
See Supp. Appx114 § C.4.1 (mandating that Aqua, not the government, “accept full
ownership and liability for the wastewater system”); Supp. Appx113 (describing a
privatization initiative for “the transfer of ownership, responsibilities, investments,
upgrade, plants replacement, continued operation and maintenance of the Army-
owned utility system to the non-Department of Defense sector”); see also Supp.
Appx117 § C.24 (conditioning Aqua’s obligation to accept new service connections on
its Protocol being fully met). Reallocating risk from Aqua to the government would
7 The parties appear to disagree about Aqua’s legal status with respect to Boland’s work, and they
have not briefed the issue. Tr. at 31, 56. Regardless, Aqua was bound by the economic waste doctrine
too. Economic waste is a background condition on Aqua’s contractual right to reject non-complying
wastewater service connections under its contract with DPW. See Granite Constr., 962 F.2d at 1007
(citing Eastern S.S. Lines v. United States, 125 Ct. Cl. 422 (1953)); Supp. Appx117 § C.24. Or perhaps
Aqua was an assignee of the Corps’ own contractual right to accept or reject Boland’s work. In that
case, the Corps — itself limited by the economic waste doctrine — could not grant Aqua more power
than the Corps had to begin with, nor assign its own powers in a way that “materially changes the
duty of [Boland] or materially increases the risk of performance [Boland] undertook when the contract
was formed.” Corbin on Contracts § 49.1 (2022).
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have left the Corps with something less than the full “benefits which [it] reasonably
anticipated receiving under the contract.” Franklin E. Penny, 207 Ct. Cl. at 858.
Whether it would have been “fundamentally less than [what the Corps] had …
bargained for,” though, is a different matter. Id. at 857–58 (emphasis added). The
parties disagree — each with some support in the record — about exactly what Aqua’s
concern was and what Aqua wanted. Def.’s Mot. at 17; Pl.’s Mot. at 36; compare, e.g.,
Appx96 ¶11 (suggesting Aqua expected the government to replace the manholes or
else retain title), with, e.g., Supp. Appx211 at 114:6–25 (suggesting that Aqua’s
acceptance would be conditioned on the Corps “bear[ing] all liability in perpetuity”),
and with, e.g., Ex. 103 (Paul Dep.) at 30:4–14; Ex. 83 at GOV-0047575–78 (suggesting
Aqua wanted the government to cover future repairs). The parties have not pointed
to any evidence of how any of the possible concessions to Aqua should have been
valued from the government’s perspective.8 And answering any of those questions
depends on how reasonable Aqua’s concerns were in light of (disputed) engineering
evidence.
Because there is a genuine dispute about Aqua’s position and its likely cost to
the government, there is no way to decide as a matter of law whether addressing
Aqua’s concerns while accepting Boland’s non-complying performance would have left
the Corps with “fundamentally less than [what it] had … bargained for.” Franklin E.
Penny, 207 Ct. Cl. at 857–58. And that, in turn, makes it impossible to resolve at
summary judgment whether ordering Boland to replace its nonconforming work in
order to reassure Aqua was economically wasteful.
C. The Government’s Motion
The government moves for summary judgment on the theory that Boland
cannot claim substantial compliance and that the contract’s requirement of strict
compliance with ASTM C478 — which Boland undisputedly violated — in effect
displaces the economic waste doctrine. See Def.’s Mot. at 12–17; Def.’s Reply at 5 n.
3; Tr. at 61. The government also argues that Aqua’s objections preclude Boland from
showing that the manholes were adequate for their intended purpose. See Def.’s Mot.
at 17–20; Tr. at 61–62.
As discussed above, however, Boland’s substantial compliance is in question,
and the economic waste doctrine overrides strict compliance requirements, not the
8Boland offered various solutions short of replacement, including a 20-year warranty to defray the
expenses of maintaining the non-complying manholes. Ex. 22 at GOV-0001253, GOV-0001260;
Appx164, 167. However, there is evidence that manholes can be expected to last 50 years under normal
operating conditions. Appx295 at 81:10–24. The value of Boland’s offer, in comparison to the
assurances Aqua wanted from the Corps, is another potentially disputed factual question.
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other way around. Granite Constr., 962 F.2d at 1006–07. Given that the engineering
equivalence of fiber- and steel-reinforced concrete is disputed, the question whether
Boland’s engineering calculations substitute for ASTM compliance should await a
factual resolution as well. Nor, again, is it clear how Aqua’s objections should be
valued, or whether they matter at all in light of the (unresolved) questions of
engineering. The government’s motion for summary judgment must therefore be
denied.
CONCLUSION
For the foregoing reasons, both motions for summary judgment are DENIED.
The parties are ORDERED to submit a joint status report proposing further
proceedings in this case no later than September 12, 2022.
IT IS SO ORDERED.
s/ Stephen S. Schwartz
STEPHEN S. SCHWARTZ
Judge
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