Gsc Construction, Inc. v. Secretary of the Army

Case: 21-1803 Document: 50 Page: 1 Filed: 05/02/2022

NOTE: This disposition is nonprecedential.

United States Court of Appeals
for the Federal Circuit
______________________

GSC CONSTRUCTION, INC.,
Appellant

v.

SECRETARY OF THE ARMY,
Appellee
______________________

2021-1803
______________________

Appeal from the Armed Services Board of Contract Ap-
peals in Nos. 59402, 59601, Administrative Judge John J.
Thrasher, Administrative Judge Michael N. O'Connell, Ad-
ministrative Judge Timothy Paul McIlmail.
______________________

Decided: May 2, 2022
______________________

PATRICK BERNARD KERNAN, Kernan and Associates
Law Group, Washington, DC, argued for appellant.

ASHLEY AKERS, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for appellee. Also represented by, BRIAN
M. BOYNTON, WILLIAM JAMES GRIMALDI, MARTIN F.
HOCKEY, JR., PATRICIA M. MCCARTHY; LAUREN M.
Case: 21-1803 Document: 50 Page: 2 Filed: 05/02/2022

2 GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY

WILLIAMS, Office of Counsel, United States Army Corps of
Engineers, Tulsa, OK.
______________________

Before LOURIE, PROST, and CHEN, Circuit Judges.
LOURIE, Circuit Judge.
GSC Construction, Inc. contracted with the United
States Army Corps of Engineers (“the Army”) to build two
warehouses. After GSC failed to meet several deadlines,
the Army terminated the contract for default. GSC ap-
pealed to the Armed Services Board of Contract Appeals
(“the Board”). The Board denied GSC’s appeal. Appeals of
GSC Constr., Inc., ASBCA Nos. 59402, 59601, 21-1 B.C.A.
(CCH) ¶ 37751 (A.S.B.C.A. Nov. 24, 2020), J.A. 1–80 (“De-
cision”). We affirm the Board’s decision for the reasons ex-
plained below.
BACKGROUND
GSC is a contractor that specializes in building mili-
tary structures. See Appellant’s Br. 3–4. In 2011, the
Army awarded GSC a contract to build two warehouses
(“the SSA Warehouses”). Decision, slip op. at 2. Under the
contract, GSC was required to start construction on Sep-
tember 26, 2012, and finish by February 3, 2014. Id.
After beginning construction, GSC encountered several
obstacles that prevented it from completing the project.
Two of those obstacles are particularly relevant to this ap-
peal.
First, GSC began a dispute with the Army over the con-
tract’s scope. The dispute occurred when GSC selected a
“waffle mat” foundation, which required removal of exist-
ing soil and replacement with “select fill.” Id., slip op. at 6.
Despite selecting a waffle mat foundation, GSC did not re-
move and replace the soil; in its view, another contractor—
Harper Construction, Inc.—was responsible for that task.
Id., slip op. at 7. At that time, Harper was working on a
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GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 3

separate project (“the TEMF Project”) in the same location.
For the TEMF Project, Harper was required to demolish
and construct several other buildings. Id., slip op. at 4. To
ensure proper coordination between the two projects, the
Army provided GSC with the contract specifications for the
TEMF project “for information” purposes only. Id., slip op.
at 6–7; J.A. 4194.
After several months of discussion, the contracting of-
ficer formally directed GSC to remove and replace the soil,
explaining that it was not Harper’s responsibility. Deci-
sion, slip op. at 8. In support of his determination, the con-
tracting officer pointed to § 6.3.1.1(e) of GSC’s contract,
which provides that GSC is “responsible for any specific
site preparation required to accommodate the foundation
design.” Id., slip op. at 5–8; J.A. 5202. In response, GSC
agreed to begin the work under protest. Once GSC began
excavating, however, it found the soil to be “heavy” and
“very wet,” which would require it to perform additional,
specialized work. Decision, slip op. at 8. Ultimately, Har-
per, which had specialized equipment to address that issue,
stepped in to remove and replace the soil. Id.
Second, GSC encountered issues when designing the
cold-formed metal framing for the exterior walls. To design
that framing, GSC was required to comply with the Unified
Facilities Criteria (“UFC”) 4-010-01, which establish the
“[Department of Defense] Minimum Antiterrorism Stand-
ards for Buildings.” Id., slip op. at 12. As relevant here,
there are different versions of the UFC: the 2007 version
and the 2012 version. The 2012 UFC is more stringent
than the 2007 UFC. Id., slip op. at 13. The Army notified
GSC that it should design the framing in accordance with
the 2007 UFC. Id. Despite that guidance, GSC mistakenly
used the more stringent 2012 UFC when creating its shop
drawings for the framing. Id. GSC’s quality control man-
ager did not notice that mistake. Id. GSC then submitted
its drawings to the Army. Id. The Army also did not detect
GSC’s mistake. Rather, it observed that GSC prepared the
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4 GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY

drawings using the 2012 UFC and reviewed them under
that standard. Id. Subsequently, the Army rejected sev-
eral of GSC’s drawings for failing to meet the 2012 UFC.
Id. Both parties agree that, had the Army caught GSC’s
mistake and applied the less stringent 2007 UFC, it would
have approved the drawings weeks earlier. Id.
Because of the soil dispute and the UFC oversight, GSC
fell significantly behind schedule. Accordingly, on Janu-
ary 16, 2014, the contracting officer issued a notice to GSC
stating that GSC was 145 days behind schedule and that
the Army was considering terminating the contract for de-
fault. J.A. 8408. The notice also stated that the Army did
not “condone any delinquency” or “waive any rights [it] has
under the contract.” Id. GSC responded that it was “con-
fident” that it could complete the project by June 9, 2014.
J.A. 8404. GSC, however, continued to fall behind sched-
ule. As a result, on April 28, 2014, the contracting officer
issued a second notice, again stating that GSC had failed
to make sufficient progress, that the Army was considering
terminating the contract, and that the Army does not for-
feit any rights under the contract. J.A. 8398–99. GSC, in
turn, responded that it “firmly believe[d]” it could complete
the work by August 30, 2014. J.A. 8389. But again, GSC
continued to fall behind schedule. Finally, on June 18,
2014, the contracting officer terminated GSC’s contract
with the Army for default. Decision, slip op. at 3.
GSC appealed the contracting officer’s decision to the
Board. According to GSC, it was entitled to a 321-day ex-
tension because of the soil removal dispute and the UFC
oversight (among other allegedly excusable delays). Id.
GSC also argued that it was entitled to $328,293.82 in
damages and a conversion of the termination for default to
one for the “convenience of the government.” Id.
The Board denied GSC’s appeal from the contracting
officer’s decision. First, the Board held that the Army had
met its initial burden of proving that the termination for
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GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 5

default was justified. Id., slip op. at 24. The Board noted
that the contract’s completion date was February 3, 2014,
and that GSC, indisputably, “did not complete the work” by
that date. Id., slip op. at 2, 24.
Next, the Board held that GSC failed to show it was
entitled to a 321-day extension as a result of the delays.
With respect to the soil removal dispute, the Board deter-
mined that, under the contract, GSC was required to per-
form the work rather than Harper. Id., slip op. at 25–27.
In particular, the Board pointed to § 6.3.1.1(e) of the con-
tract, which states that GSC is “responsible for any specific
site preparation required to accommodate the foundation
design.” Id., slip op. at 5, 25; J.A. 5202. With respect to
the UFC version oversight, the Board found that, under the
contract, it was GSC’s responsibility to ensure that it used
the correct UFC version. Id., slip op. at 27–28. In support
of its determination, the Board pointed to § 1.7 of the con-
tract, which states that GSC “shall be responsible for . . .
the coordination of all designs.” Id., slip op. at 28; J.A.
3349.
Finally, the Board rejected GSC’s argument that, be-
cause the Army initially provided GSC with additional
time to complete the project, it forfeited any right to enforce
the original completion date. Decision, slip op. at 29–30.
Judge McIlmail concurred, stating that GSC admitted its
own subcontractors caused the delays. Id., slip op. at 68.
GSC appealed to this court. We have jurisdiction pur-
suant to 28 U.S.C. § 1295(a)(10).
DISCUSSION
Our review of the Board’s decision is limited by statute.
Kellogg Brown & Root Servs., Inc. v. Sec’y of the Army, 973
F.3d 1366, 1370 (Fed. Cir. 2020) (citing 41 U.S.C. § 7107).
We review the Board’s legal conclusions de novo. Id. “In-
terpretation of a government contract is [a] question of law,
which we also review de novo.” Elec. Boat Corp. v. Sec’y of
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6 GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY

the Navy, 958 F.3d 1372, 1375 (Fed. Cir. 2020) (citing For-
man v. United States, 329 F.3d 837, 841 (Fed. Cir. 2003)).
“Though not binding on [this] [c]ourt, we give the Board’s
legal conclusions careful consideration in view of the
Board’s considerable experience in construing government
contracts.” Id. (citing Gates v. Raytheon Co., 584 F.3d 1062,
1067 (Fed. Cir. 2009)). We may only set aside the Board’s
factual findings if they are “(A) fraudulent, arbitrary, ca-
pricious; (B) so grossly erroneous as to necessarily imply
bad faith; or (C) not supported by substantial evidence.”
Kellogg Brown, 973 F.3d at 1370 (quoting 41 U.S.C.
§ 7107(b)).
To terminate a contract for default, a contracting of-
ficer must have a “reasonable belief” that “there [is] no rea-
sonable likelihood that the contractor could perform the
entire contract effort within the time remaining for con-
tract performance.” McDonnell Douglas Corp. v. United
States, 323 F.3d 1006, 1016 (Fed. Cir. 2003) (quoting Lis-
bon Contractors, Inc. v. United States, 828 F.2d 759, 765
(Fed. Cir. 1987)); Federal Acquisition Regulation (“FAR”)
52.249-10. As a defense to a termination for default, a con-
tractor may assert that the government committed a prior
material breach, thus excusing the contractor’s nonperfor-
mance. See, e.g., Securiforce Int’l Am., LLC v. United
States, 879 F.3d 1354, 1362–63 (Fed. Cir. 2018) (citing La-
guna Constr. Co. v. Carter, 828 F.3d 1364, 1369 (Fed. Cir.
2016)). Alternatively, the contractor may assert that it was
entitled to a time extension based on a delay that resulted
from “unforeseeable causes beyond [its] control and with-
out [its] fault or negligence.” Sauer Inc. v. Danzig, 224 F.3d
1340, 1345 (Fed. Cir. 2000) (quoting FAR 52.249-10(b)(1));
J.A. 3326.
GSC primarily makes three arguments on appeal.
First, GSC argues that the Army breached the contract by
requiring it to remove and replace the soil rather than Har-
per. Second, GSC argues that it was entitled to a time ex-
tension because the Army evaluated its drawings under
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GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 7

the wrong UFC version. 1 Third, GSC argues that the Army
forfeited its right to enforce the contract’s February 3,
2014, completion date. We address each argument in turn.
I
GSC first argues that the Army materially breached
the contract by requiring it to remove and replace the soil
for the SSA Warehouse site. According to GSC, under the
terms of its contract, it was not responsible for that task—
Harper was. Because of that breach, GSC asserts that its
nonperformance was excusable. In support of its argu-
ment, GSC points to Appendix RR of its contract, which
states that “[Harper] shall provide the pad site for [GSC]
complete within the calendar days indicated after [the no-
tice to proceed].” J.A. 5844. In other words, GSC interprets
the word “complete” to mean that Harper was responsible
for all tasks, including the soil work.
The Army responds that it did not materially breach
the contract. According to the Army, various other provi-
sions of the contract, including § 6.3.1.1(e) (further dis-
cussed below) expressly require GSC to remove and replace
the soil.
We agree with the Army. Here, the dispute boils down
to whether GSC or Harper was responsible for removing
the soil and replacing it with fill. As is clear from the con-
tract, GSC was responsible.
First, several sections of GSC’s contract expressly state
that GSC must remove and replace the soil. For example,
GSC’s own proposal (incorporated into the contract), states

1 GSC alternatively argued that it was entitled to a
time extension because of several other delays, including
missing hairpins and an electrical design revision. The
Board denied GSC’s arguments concerning those delays,
and GSC does not challenge those denials on appeal.
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8 GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY

that GSC will “[r]emove and replace . . . unsuitable fill . . .
and replace it with select structural fill.” J.A. 3671; Deci-
sion, slip op. at 25–26. Similarly, § 6.3.1.2 states that
“[t]ime and weather conditions may affect the actual con-
dition of the building site(s); therefore [GSC] shall . . . be
solely responsible for . . . any excavation (if necessary) [and]
placement of select fill (if necessary).” J.A. 5202 (emphases
added); Decision, slip op. at 26. Additionally, § 6.3.1.1(e)
states that GSC “is responsible for any specific site prepa-
ration required to accommodate the foundation design”
that it “prepared or proposed,” J.A. 5202 (emphases added),
which here, indisputably, included removing the soil and
replacing it with fill. Decision, slip op. at 25.
Second, GSC’s argument regarding Appendix RR of its
contract is unpersuasive. GSC insists that Harper was re-
sponsible for the soil work, referencing the provision that
“[Harper] shall provide the pad site for [GSC] complete.”
J.A. 5844. But GSC’s interpretation fails to give “reasona-
ble meaning to all parts of the contract.” LAI Servs., Inc.
v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009) (quoting Her-
cules, Inc. v. United States, 292 F.3d 1378, 1381 (Fed.
Cir. 2002)). Specifically, the word “complete” must be read
in the context of the other provisions discussed above,
which place the responsibility of the soil work for the SSA
Warehouse site on GSC. If we were to construe the word
“complete” as GSC does, to encompass Harper’s assigned
work and GSC’s assigned work, that would render the re-
maining contract provisions meaningless.
GSC alternatively argues that other evidence, outside
of its contract, proves that Harper was responsible for the
soil work. In particular, GSC points to Harper’s TEMF con-
tract specifications. GSC recognizes that it is not a party
to that contract. Still, it contends that § 3.2.1 of Harper’s
contract is relevant to this dispute because the Army ini-
tially attached it to GSC’s task order. Section 3.2.1 states
that Harper must “[o]verexcavate 8 feet below existing
grade of existing soil and replace with inert fill.” J.A. 4322.
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GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 9

According to GSC, that provision makes Harper “obvi-
ous[ly]” responsible for the soil work. Appellant’s Br. 15.
We are unpersuaded by GSC’s argument. True, Har-
per’s contract specifications required Harper to “[o]verex-
cavate” the “existing soil and replace with inert fill.” J.A.
4322. But GSC neglects to mention a key fact: Harper was
working on a separate project concerning the construction
of separate buildings, i.e., the TEMF Project. The Army
provided GSC with Harper’s contract specifications for co-
ordination purposes only, not to define the scope of GSC’s
obligations. Decision, slip op. at 7; J.A. 4194. Indeed, the
Army marked Harper’s contract with the following:
“PROVIDED FOR INFORMATION ONLY – NOT IN
CONTRACT.” J.A. 4194. Within that context, it would be
“an unwarranted leap to read the provision as requiring
Harper to remove and replace soil” for the SSA Warehouse
site, a task already expressly assigned to GSC under its
own contract. Decision, slip op. at 26. Like the Board, we
construe that provision as referring to the soil work for
other buildings—those that the Army specifically assigned
to Harper under Harper’s contract. Id. In summary, we
reject GSC’s argument that another party’s contract re-
lieved it of its responsibility to remove and replace soil.
II
GSC next argues that the Board erred in denying its
claim for a time extension for the UFC oversight. Accord-
ing to GSC, it was entitled to a time extension because the
Army negligently evaluated its drawings under the wrong
UFC version (2012 instead of 2007). GSC further contends
that, had the Army used the correct UFC version, it would
have accepted GSC’s drawings several weeks earlier.
We disagree with GSC’s argument. Although GSC
places much blame on the Army, it neglects to explain its
own role in causing the delay. As the Board explained, be-
fore construction began, the Army correctly notified GSC
that it must use the 2007 UFC for its drawings. Decision,
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10 GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY

slip op. at 13. Despite that notification, GSC “inexplicably”
used the wrong version—the 2012 UFC. Id. The Army
failed to correct that error. Id. But the Army’s oversight,
although unfortunate, did not entitle GSC to a time exten-
sion. As the Board observed, under the contract, GSC was
responsible for coordinating the design work. Id., slip op.
at 28. For example, FAR 52.236-21(e), incorporated into
the contract, states that “[a]pproval by the Contracting Of-
ficer shall not relieve [GSC] from responsibility for any er-
rors.” J.A. 3325 (incorporating FAR 52.236-21(e)). It
further states that GSC “shall coordinate all such draw-
ings, and review them for accuracy, completeness, and com-
pliance with contract requirements.” Id. Similarly, § 1.7
of the contract states that GSC “shall be responsible for . .
. the coordination of all designs” and that GSC shall “cor-
rect or revise any errors or deficiency in its designs, draw-
ings, [and] specifications.” J.A. 3349. Here, GSC violated
its contract obligations when it failed to ensure that it used
the correct UFC version. And, as is clear from the record,
that mistake by GSC set off the chain of events causing the
delay.
GSC does not dispute that, under the contract, it was
responsible for design coordination. Nor does it point to
any error in the Board’s analysis. Rather, it simply disa-
grees with the outcome. But mere disagreement is insuffi-
cient for reversal of the Board’s decision. Accordingly,
GSC’s argument is unpersuasive. 2
III
Finally, GSC argues that the Board erred in holding
that the Army did not forfeit the contract’s completion date.

2 GSC also appears to argue that the Army’s failure
to apply the correct UFC version violated the duty of good
faith and fair dealing. We reject GSC’s argument for the
same reasons.
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GSC CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 11

According to GSC, because the Army initially provided it
with additional time to complete the project, it necessarily
forfeited any right to enforce the February 3, 2014, comple-
tion date.
We disagree with GSC’s argument. As the Board ex-
plained, although the Army permitted GSC to work past
the original completion date, it expressly and repeatedly
stated, that it did not “condone any delinquency” or forfeit
any rights under the contract. J.A. 8398; J.A. 8408; Deci-
sion, slip op. at 29–30. Indeed, the contracting officer “ad-
vised GSC that he regarded the February 3, 2014,
completion date to be in effect,” and while he “gave GSC
another chance to complete by June 9, 2014 . . . GSC failed
to take advantage of the reprieve, resulting in [the] termi-
nation.” Decision, slip op. at 30. Given the Army’s repeated
reservation of its rights during construction, we fail to see
how the Board erred in holding that there was no forfei-
ture. GSC’s argument is thus unpersuasive.
In summary, we reject GSC’s arguments that (1) the
Army materially breached the contract by requiring GSC
to perform the soil work; (2) GSC was entitled to a time
extension because of the UFC oversight; and (3) the Army
forfeited its right to enforce the contract’s completion date.
CONCLUSION
We have considered GSC’s remaining arguments but
find them unpersuasive. For the foregoing reasons, the de-
cision of the Board is affirmed.
AFFIRMED