United States Court of Appeals for the Federal Circuit
05-1514
MEDLIN CONSTRUCTION GROUP, LTD.,
Appellant,
v.
Francis J. Harvey, SECRETARY OF THE ARMY,
Appellee.
Johnathan M. Bailey, Bailey & Bailey, P.C., of San Antonio, Texas, for appellant.
Dawn S. Conrad, Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, of Washington, DC, for appellee. With her on the brief
were Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, and
Deborah A. Bynum, Assistant Director. Of counsel on the brief was Lloyd R.
Crosswhite, Attorney, United States Army Corps of Engineers, of Fort Worth, Texas.
Appealed from: Armed Services Board of Contract Appeals
Administrative Judge Rollin A. Van Broekhoven
United States Court of Appeals for the Federal Circuit
05-1514
MEDLIN CONSTRUCTION GROUP, LTD.,
Appellant,
v.
Francis J. Harvey, SECRETARY OF THE ARMY,
Appellee.
__________________________
DECIDED: June 1, 2006
__________________________
Before LINN, DYK, and PROST, Circuit Judges.
PROST, Circuit Judge.
Medlin Construction Group, Ltd. (“Medlin”) appeals from the summary judgment
decision of the Armed Services Board of Contract Appeals (the “Board”), Medlin Constr.
Group, Ltd., A.S.B.C.A. No. 54,772, 05-1 BCA ¶ 32,939, which held that Medlin is not
entitled to recover certain increased costs incurred in performing Contract No. DACA63-
02-C-0015 (the “Contract”) with the Army. Because we find that Medlin’s interpretation
is the only reasonable interpretation that gives meaning to all of the Contract provisions,
we reverse and remand.
I. BACKGROUND
On July 29, 2002, the government awarded the Contract to Medlin for the
construction of the vehicle maintenance facility at Fort Hood, Texas, at the fixed price of
$14,267,011.06. The Contract specifications describe the products to be used in
performing this section of the Contract. Paragraph 2.2, “FIBER VOID RETAINERS,”
provides as follows:
2.2 FIBER VOID RETAINERS
2.2.1 Polystyrene Rigid Insulation
Polystyrene rigid insulation shall conform to ASTM C 578, Type V, VI,
or VII, square edged. Size shall be 38 mm thick by 400 mm in height
by 1 meter in length, unless otherwise indicated.
2.2.2 Precast Concrete
Precast concrete units shall have a compressive strength of no less
than 17 MPa, reinforced with 150 mm by 150 mm by W1.4 WWF wire
mesh, and 300 mm (height) by 1 m (length) by 40 mm (thickness) in
size unless indicated.
Fort Hood Contract No. DACA63-02-C-0015, Specification Section 03100A, Paragraph
2.2. There is no dispute between the parties that paragraph 2.2 permits the contractor
to choose between two materials for fiber void retainers: polystyrene rigid insulation
(“polystyrene retainer”) or precast concrete (“concrete retainer”). Part 3.1.3 describes
the installation of the Fiber Void Retainers, and provides that “[f]iber void retainers shall
be installed, continuously, on both sides of fiber voids placed under grade beams in
order to retain the cavity after the fiber voids biodegrade.”
Contract Drawing Sequence No. A-3101 states at “FOUNDATION NOTES:
(SLAB - ON - GRADE),” note 11, that “ALL GRADE BEAMS SUPPORTED BY
DRILLED PIERS SHALL HAVE VOIDS UNDER THEM. (SEE ‘TYP. GRADE BEAM
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VOID’ DETAIL THIS SHEET.)” The “TYPICAL GRADE BEAM VOID DETAIL” shows an
arrow pointing to the retainer and states “41 x 304 x 914 mm PRECAST CONC. CONT.
RETAINERS.” The detail also provides that the “BOTTOM OF GRADE BEAMS SHALL
BE FORMED w/ PLYWOOD OF SUFFICIENT THICKNESS TO SUPPORT WET
CONCRETE DURING PLACEMENT (TYP. ALL BEAMS)” and that “51 x 152mm
PRECAST CONC. SPACERS @ 914mm O.C.” should be used at the joints of the side
retainers.
The Contract contains the standard clauses for construction contracts, including
FAR 52.236-21 SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (FEB
1997) which provides:
(a) The Contractor shall keep on the work site a copy of the drawings and
specifications and shall at all times give the Contracting Officer access
thereto. Anything mentioned in the specifications and not shown on the
drawings, or shown on the drawings and not mentioned in the
specifications, shall be of like effect as if shown or mentioned in both. In
case of difference [sic] between drawings and specifications, the
specifications shall govern. . . .”
(b) Wherever in the specifications or upon the drawings the words
“directed”, “required”, “ordered”, “designated”, “prescribed”, or words of
like import are used, it shall be understood that the “direction”,
“requirement”, “order”, “designation”, or “prescription”, of the Contracting
Officer is intended . . . .
(c) Where “as shown,” “as indicated”, “as detailed”, or words of similar
import are used, it shall be understood that the reference is made to the
drawings accompanying this contract unless stated otherwise. The word
“provided” as used herein shall be understood to mean “provide complete
in place,” that is “furnished and installed.”
Fort Hood Contract No. DACA63-02-C-0015 at 00700-67 (emphasis added).
By letter dated January 27, 2003, Medlin wrote to the Central Texas Office of the
Army Corps of Engineers stating that Medlin was informed at informal discussions with
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Army representatives that the government believes the contract requires Medlin to
install “precast concrete continuous retainers at all grade beams.” Letter from Jerry
Hallmark, Project Manager, to Tom Hamilton, US Army Corps of Eng’rs., Cent. Tex.
Office (Jan. 27, 2003) (emphasis added). Medlin then stated its understanding of the
Contract: that the specifications provide two options regarding the type of retainers that
can be used, namely, polystyrene or concrete retainers, and that the contractor can
choose between either of the two types. Id. Medlin also stated that it calculated its bid
for the Contract based on the less expensive polystyrene material and the cost savings
were reflected in its bid. Id.
In a subsequent letter, Medlin sent a sketch of “the construction of space
beneath grade beams and utilization of specified polystyrene rigid insulation” and
provided information on the polystyrene retainers Medlin proposed to use. Letter from
Jerry Hallmark, Project Manager, to Tom Hamilton, US Army Corp of Eng’rs., Cent. Tex.
Office (Jan. 31, 2003) (emphasis added).
The government responded by letter dated March 17, 2003, in which it stated
that there is “no conflict between the drawings and the specifications” because “the
specifications list[] two acceptable products and [the] drawings authoriz[e] the use of
only one of the acceptable products[,] . . . pre-cast concrete retainers . . . .” Letter from
Michael C. Bormann, Administrative Contracting Officer, to Medlin Construction Group,
Ltd. (Mar. 17, 2003).
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Medlin subsequently filed a claim with the Board in the amount of $56,140.381 for
the extra costs associated with furnishing precast concrete fiber void retainers, as
opposed to polystyrene retainers.
The issues, as framed by the Board, are “whether there is a conflict between the
specification and drawing detail, and if so, . . . [whether] that conflict [can] be resolved
by the normal rules of contract interpretation and the application of the
SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION clause.” Before the
Board, both the government and Medlin argued that the specification and drawing detail
were not in conflict, albeit for different reasons. The government argued there was no
conflict because although the specifications allowed some “latitude or option to the
contractor, the . . . drawings narrow the latitude or options by providing additional details
regarding the grade beam void retainers.” Narrowing the options available, according to
the government, did not present a conflict. Medlin argued that the specifications and
drawings were not in conflict because the specifications allowed the contractor to
choose between two types of retainer material, and while the drawings altered the
dimensions for the concrete retainers, the drawings did not eliminate the contractor’s
ability to choose to use polystyrene retainers.
In considering cross-motions for summary judgment filed by both the government
and Medlin, and the parties’ assertion that the essential facts are undisputed, the Board
recognized that “only the legal effect” of the provisions of the specifications and drawing
were at issue. While noting that “there is a difference between the language in subpart
1
Medlin originally filed a claim for $58,904.12 and later revised it to the
amount listed above after correcting a mathematical error in the computation regarding
Medlin’s general liability insurance.
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2.2 of the specification and the Contract drawing detail regarding the typical grade beam
void,” the Board determined that the specification and the drawing were not in conflict
because the drawings merely narrowed the options available to the contractor from two
choices (i.e., polystyrene or concrete retainers), to one choice (i.e., only concrete
retainers).
The Board reached that conclusion by relying on its previous decisions in Caddell
Construction Co., A.S.B.C.A. No. 32,641, 87-1 BCA ¶ 19,359, and A. R. Mack
Construction Co., A.S.B.C.A. No. 49,526, 97-1 BCA ¶ 28,742, in which it held that a
specification provision that allows latitude or options is not in conflict with contract
drawings that narrow the latitude or options because the specific requirements of the
drawings did not contradict or override the specifications, but rather complemented
them by providing particularization and additional detail. Although the Board agreed
with Medlin that there are factual distinctions between the facts of the present case and
the facts of Caddell and A. R. Mack, the Board did not find those distinctions sufficient
to distinguish the holdings in those cases. Thus, the Board agreed with the
government’s interpretation that the contractor was limited by the drawing to only one
retainer type, concrete. Accordingly, the Board granted the government’s motion for
summary judgment and denied Medlin’s cross-motion for summary judgment.
Pursuant to 41 U.S.C. § 607(g)(1)(A), Medlin appeals the Board’s grant of
summary judgment in favor of the government. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(10).
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II. DISCUSSION
A. Standard of Review
The standard of review in cases under the Contract Disputes Act is governed by
41 U.S.C. § 609(b), which provides:
In the event of an appeal by a contractor or the Government from a
decision of any agency board pursuant to section 607 of this title,
notwithstanding any contract provision, regulation, or rules of law to the
contrary, the decision of the agency board on any question of law shall not
be final or conclusive, but the decision on any question of fact shall be
final and conclusive and shall not be set aside unless the decision is
fraudulent, or arbitrary, or capricious, or so grossly erroneous as to
necessarily imply bad faith, or if such decision is not supported by
substantial evidence.
41 U.S.C. § 609 (2000).
As to questions of fact, if the Board’s factual findings are supported by
substantial evidence, we will not alter them unless the decision “is fraudulent, arbitrary,
capricious, or so grossly erroneous as to necessarily imply bad faith.” Id.; see Fruin-
Colnon Corp. v. United States, 912 F.2d 1426, 1428-29 (Fed. Cir. 1990) (citations
omitted); United States v. Gen. Elec. Corp., 727 F.2d 1567, 1572 (Fed. Cir. 1984)
(“Substantial evidence ‘means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.’”).
As to questions of law, however, the Board’s decision is not final or conclusive,
Am. Elec. Labs., Inc. v. United States, 774 F.2d 1110, 1112 (Fed. Cir. 1985), and thus
the Board’s interpretation of a contract is not binding upon this court, B.D. Click Co. v.
United States, 614 F.2d 748, 752 (Ct. Cl. 1980). Although “we give careful
consideration and great respect to a board’s interpretation because legal interpretations
by tribunals having expertise are helpful even if not compelling[,]” Fruin-Colnon, 912
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F.2d at 1429 (citations omitted), the interpretation of a contract is reviewed as a matter
of law, and thus reviewed de novo, Lockheed Martin IR Imaging Sys. v. West, 108 F.3d
319, 322 (Fed. Cir. 1997).
The general rules of contract interpretation apply to contracts to which the
government is a party. Lockheed Martin, 108 F.3d at 322. A reasonable interpretation
must “assure that no contract provision is made inconsistent, superfluous, or
redundant.” Id. (citing McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed.
Cir. 1996); Hughes Commc’ns Galaxy, Inc. v. United States, 998 F.2d 953, 958 (Fed.
Cir. 1993)).
B. Contract No. DACA63-02-C-0015
1.
The central issue in this appeal is whether the Contract required Medlin to furnish
concrete void retainers or whether the Contract permitted Medlin to choose to furnish
either concrete or polystyrene void retainers. As stated above, the parties do not
dispute that the Contract specifications gave the contractor the choice between using
concrete or polystyrene retainers. The dispute between the parties centers on the legal
effect of the drawing detail, which shows only a concrete retainer; thus, we review the
Board’s interpretation de novo. Id.
Medlin’s interpretation of the Contract is that the drawing detail and specifications
are not in conflict because the drawing detail generally shows how either type of
retainer should be used, and specifically references concrete retainers to indicate a
change in the dimensions previously provided in the specifications for those retainers.
Medlin also asserts that the drawing did not explicitly exclude the use of polystyrene
05-1514 8
retainers. Accordingly, Medlin interprets the Contract as permitting the contractor to
choose to use either concrete or polystyrene retainers, but as requiring the contractor to
use the dimensions listed for concrete in the drawings if the contractor chooses to use
concrete. Medlin argues that its interpretation of the Contract is the only reasonable
interpretation because it gives meaning to all parts of the Contract by preserving the
contractor’s ability to choose to use polystyrene in paragraph 2.2.1 of Section 03100A of
the specifications, a choice which under the government’s interpretation is rendered
meaningless.
The government’s interpretation, accepted by the Board, is that the drawing not
only changed the dimensions listed in the specifications for the concrete retainers, but
also “narrowed” the contractor’s ability to choose to use polystyrene retainers by
requiring that the contractor use only concrete retainers. The government asserts that
Medlin’s interpretation is unreasonable because it renders the “TYPICAL GRADE BEAM
VOID DETAIL” meaningless by failing to interpret it as requiring the installation of only
concrete retainers.
2.
We conclude that Medlin’s interpretation, unlike the government’s, gives meaning
to all of the Contract provisions and is therefore the only reasonable interpretation of the
Contract. In other words, there is no inconsistency between the contractual provisions
giving the contractor a choice between using polystyrene or concrete retainers and the
reference in the drawing to only concrete retainers. Read as a whole, the contract
permitted the use of either type of retainer, but if the contractor chose to use concrete,
the contractor was required to follow the dimensions for concrete as listed in the
05-1514 9
drawing. Thus, the drawing’s reference to concrete, did not restrict the contractor’s right
to use, at its option, polystyrene for the fiber void retainers. The interpretation advanced
by the government reads paragraph 2.2.1 of Section 03100A, describing the
polystyrene retainers, entirely out of the Contract because it is undisputed that
polystyrene retainers were not used or called for in any other portion of the Contract.
Because the government’s interpretation would render that portion of the Contract
meaningless and superfluous, it is not reasonable. Medlin’s interpretation, on the other
hand, preserves the meaning of each provision of the Contract and is therefore the only
reasonable interpretation proposed by the parties.
First, the specifications for both types of retainers refer the contractor to the
drawing detail to determine if the size as therein indicated is different than the
measurements quoted in the specifications. Paragraph 2.2.1 provides that:
“Polystyrene rigid insulation shall conform to ASTM C 578, Type V, VI, or VII, square
edged. Size shall be 38 mm thick by 400 mm in height by 1 meter in length, unless
otherwise indicated[,]” while paragraph 2.2.2 provides that: “Precast concrete units
shall have a compressive strength of no less than 17 MPa, reinforced with 150 mm by
150 mm by W1.4 WWF wire mesh, and 300 mm (height) by 1 m (length) by 40 mm
(thickness) in size unless indicated.” Fort Hood Contract No. DACA63-02-C-0015,
Specification Section 03100A, Paragraph 2.2 (emphases added). It is undisputed that
the “unless indicated” language refers to the drawing detail. Thus, the specifications
refer the contractor to the drawing detail to determine if the size of the material for the
retainers is different than the size quoted in the specifications. See A. D. Roe Co., Inc.,
A.S.B.C.A. No. 23,425, 79-1 BCA ¶ 13,575 (holding that “unless otherwise specified”
05-1514 10
language in the contract’s specifications referred to the drawings and served to modify
the specifications’ direction to only apply paint, so that the instructions would also
include applying a liquid glaze coating on some of the walls in accordance with the
drawings).
Second, it is undisputed that the drawing detail did in fact change the size
measurements for the concrete retainers to “41 x 304 x 914 mm PRECAST CONC.
CONT. RETAINERS[.]” It is therefore not rendered meaningless under Medlin’s
interpretation.
Third, there is no explicit indication in the drawing detail that polystyrene retainers
were unacceptable. In situations where the specification provides information that is not
contained in the drawings, or vice versa, FAR 52.236-21(a), as incorporated in the
Contract, states that the missing information “shall be of like effect as if shown or
mentioned in both.” This provision is colloquially known as the “like effect” provision.
See Merritt-Chapman & Scott Corp. v. United States, 355 F.2d 622 (Ct. Cl. 1966)
(applying the “like effect” provision of the contract to require the placement of material
both around the tanks, as described in the specifications, and under the tanks, as
shown in the drawings; and finding that the specifications’ description of the placement
of material was qualified by the phrase “as shown on the plans,” which clearly referred
to the drawings); Hobbs Constr. & Dev., Inc., A.S.B.C.A. No. 29,910, 91-1 BCA ¶
23,518 (finding that the contract specifications calling for a storehouse “complete and
ready for use” did not conflict with the contract drawings showing that the storehouse
was to have smoke and heat relief vents because the contract’s “like effect” provision
05-1514 11
required that the specifications be interpreted as showing the smoke and heat vents as
well).
The “like effect” provision does not apply in only one direction, i.e., reading the
drawing details into the specifications; rather, it applies in the other direction as well,
reading details from the specifications into the drawings (assuming the specifications
and drawings do not conflict). Thus, it is entirely reasonable to read the specifications’
description of the polystyrene retainers “as if [the polystyrene retainers were] shown or
mentioned in both.”
Contrary to the government’s position, this interpretation does not render any
portion of the Contract meaningless because if the contractor chooses to use concrete
retainers, the drawing detail controls the size measurements. If, however, the
contractor chooses to use polystyrene retainers, the void detail information provided in
the drawing is still relevant to the construction and installation of the polystyrene
retainers. The only information in the drawing detail that would not have import, would
be the size dimensions of the concrete retainers if the contractor chooses to use
polystyrene.
Fourth, we reject the premise of the government’s argument that interpreting the
Contract to maintain the contractor’s ability to choose between two options for
performance renders a portion of the drawings, i.e., those pertaining to the option not
chosen, meaningless because the contractor may ultimately not choose that option. It
is not unreasonable to conclude that the Contract provides two acceptable methods of
performance. A necessary result of the Contract, assuming the contractor consistently
chooses the same option for performance, is that the other option is never chosen.
05-1514 12
Thus, it is not the interpretation that renders such a provision meaningless, but rather
the necessary result which follows from the contractor’s continued choice to use only
one of the methods. Such an interpretation remains reasonable especially when either
method of performance is structurally sufficient to accomplish the goals of the Contract.2
Fifth, Medlin’s interpretation is the only interpretation that truly avoids a conflict
between the specifications and the drawing. This is because the government’s
characterization of its interpretation as merely “narrowing” the choices available to the
contractor is incorrect; its interpretation does not “narrow,” it completely “eliminates” the
contractor’s choice to use a polystyrene retainer as provided in the specifications.
Although the Board relied on Caddell, A.S.B.C.A. No. 32,641, and A. R. Mack,
A.S.B.C.A. No. 49,526, in accepting the government’s interpretation, neither case
supports the government’s interpretation or the Board’s finding that the drawings merely
“narrowed” the options described in the specifications because each is distinguishable
on its facts in a non-superficial way.
In Caddell, A.S.B.C.A. No. 32,641, the contract specifications incorporated a pipe
manufacturer’s brochure which allowed for either a 3-pipe configuration (which the
appellant used) or a 4-pipe configuration (which the government argued should have
been used), whereas the drawings specified only the 4-pipe configuration and did not
use the 3-pipe configuration. Concluding that the specifications and drawings were not
in conflict, the Board noted several key facts of the contract in that case: (1) the
brochure required the selection of the pipe configuration that would match the work
2
The government does not dispute Medlin’s assertion that there is no
indication that polystyrene retainers were not structurally sufficient for the purposes of
the Contract.
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which was to be attached to it; (2) the drawings were expressly incorporated into the
specification in their entirety; and (3) the drawings clearly showed that the work which
was to be attached to it required the 4-pipe configuration. Reading the brochure as a
whole, it did not actually give the contractor a choice with respect to the pipe
configuration because the brochure indicated that the configuration would be limited to
that which would match the work that was to be attached to it. Thus, it was incumbent
on the contractor to look to the drawings to determine which configuration it was
required to supply based on the work which was to be attached to it, and the drawings
were clear that the 4-pipe configuration was required for such purpose.
Medlin’s Contract specifications, on the other hand, did not indicate that the
retainer type was at all limited by other structural requirements of the Contract or other
work that was to be performed. Nor were the Contract drawings expressly incorporated
into the specifications in their entirety. Thus, unlike Caddell, the Contract specifications
do not limit the contractor’s ability to choose which type of retainer to use.
In A. R. Mack, A.S.B.C.A. No. 49,526, the contract specifications required the
contractor to provide unit heaters with stationary or rotating air deflectors, without
specifying any particular number of either type, while the contract drawing required a
specific number of each type. There was no “irreconcilable conflict” between the
specifications and drawing because the drawings did not completely eliminate the ability
of the contractor to use both stationary and rotating air deflectors; rather, the drawings
utilized each type of deflector and included how many of each type was required. Thus,
although the Board did not explicitly state that it was doing so, it gave the “like effect” to
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the drawing details as if they were also shown in the specifications. Therefore, the
Board was able to interpret the contract to avoid an irreconcilable conflict.
Unlike the contract in A. R. Mack, the drawing in Medlin’s Contract did not merely
add details regarding how many polystyrene and concrete retainers Medlin was
required to furnish; rather, under the Board’s interpretation, the drawing eliminated the
polystyrene option because it only showed a concrete retainer. Thus, not only is the
contract at issue in A. R. Mack distinguishable from Medlin’s Contract, but the
interpretation advanced by the government in this case, that the drawings eliminated a
portion of the specifications, is unsupported by that decision.
Further, as discussed infra, the government’s interpretation of the Contract as
accepted by the Board would place the specifications and the drawing in direct conflict
because the result would be that the specifications allow two choices without any
modifying “unless otherwise indicated” language, whereas the drawing allows only one.
Thus, it is clear that only Medlin’s interpretation would avoid such a conflict.
3.
Even if we accepted the government’s interpretation, we would reach the same
result, i.e., that Medlin is entitled to an equitable adjustment because the government’s
interpretation places the specifications and drawing in an irreconcilable conflict. Such
interpretation is in conflict because the specifications provide two acceptable methods
of performance (i.e., polystyrene or concrete retainers), yet the drawings provide only
one (i.e., concrete retainers). In Franchi Construction Co. v. United States, 609 F.2d
984 (Ct. Cl. 1979), the Court of Claims found that the details of a provision of the
specifications conflicted with the details of the drawings and relied on the order of
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precedence clause to conclude that the specifications govern. Medlin’s Contract
similarly has an order of precedence clause, FAR 52.236-21(a), which provides that “[i]n
[the] case of [a] difference between drawings and specifications, the specifications shall
govern.” Applying the clause, dictating that the specifications govern over conflicting
drawing details, it is apparent that the contractor’s ability to choose polystyrene
retainers as delineated in the specifications survives the drawing’s sole reference to
concrete retainers. In other words, even under the government’s interpretation of the
Contract, Medlin retained the ability to choose to use polystyrene retainers.
III. CONCLUSION
Because the government demanded that Medlin use concrete retainers, in
violation of the choice provided in the contract, and because Medlin used the costs
associated with polystyrene retainers in its bid for the contract, Medlin is entitled to an
equitable adjustment in the amount of the extra costs associated with supplying
concrete retainers instead of polystyrene retainers. Accordingly, we reverse the Board’s
summary judgment finding in favor of the government and remand for the Board to enter
summary judgment in favor of Medlin and for the Board’s determination of quantum.
COSTS
Each party shall bear its own costs.
REVERSED and REMANDED
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