Government Responsible for Mispresenting Estimated Quantities

Last month, we discussed Agility Defense & Government Services, Inc. v. United States, No. 13-55C, 13-97C (consolidated) (Fed. Cl.) (October 18, 1997), in which the Court of Federal Claims held that a contractor was entitled to an adjustment of its contract price as a result of the Government’s negligent estimated quantities.  On December 13, 2017, Judge O’Connell of the Armed Services Board of Contract Appeals reached a similar conclusion in Burnham Associates, Inc., ASBCA No. 60780 (December 13, 2017). Burnham Associates entered into a contract with the Corps of Engineers on July 16, 2012 to perform dredging in Boston Harbor. The contract included FAR 52.211-18, Variation in Estimated Quantity, (APR 1984), which provided in pertinent part that “if the quantity of a unit priced item . . . is an estimated quantity and the actual quantity . . . varies more than 15 percent above or below the estimated quantity, an equitable adjustment shall be made upon the demand of either party.”  The contract also provided that the contractor would be paid “by computing the volume between the bottom surface shown by soundings of the last pre-dredge survey made before dredging begins and the  bottom surface shown by the sounding of a post-dredge survey made as soon as practicable after the removal of the material.” The solicitation estimated that there was about 525 cubic yards of material to be removed. This was based upon a survey conducted in March 2011.  While bidders only knew about this March 2011 survey, the Corps had, in fact, conducted a survey in March 2012, which was consistent with its general practice of conducting pre-dredge surveys within six months of the start of dredging.  The March 2012 survey indicated a decreased payable quantity of material to be removed, approximately 430 cubic yards. In support of its claim, Burnham argued that the Corps had misrepresented the payable quantity and that it was entitled to reprice the contract based upon the decreased quantities from the March 2012 survey. In response, the Corps initially admitted that it used the March 2012 survey as the pre-dredge survey to eventually calculate (in June 2012) that there was only about 430 yards of payable quantity.  This was in support of the argument that Burnham was not entitled to rely upon the March 2012 survey quantities because the Government did not have the lowered estimate until after it issued the solicitation in May 2012.  Presumably sensing the weakness of this argument, the Government changed its position in its subsequent brief, and asserted that, although the survey was conducted in March 2012, the Corps did not complete the revised calculations evidencing the decreased quantity until after the contract award date.  This revised assertion was based upon the declaration of a Corps official who performed the March 2012 survey, and who said that the revised calculation was not completed until August, 2012. Interestingly, in its findings of fact, the Board noted that the Corps official’s assertion (1) contradicted the Government’s earlier position and (2) was not supported by any contemporaneous evidence. Nevertheless, the Board accepted the Corps’ sworn testimony that the Corps calculated the decreased quantity after the date of contract award.  But this, ultimately, did not help the Corps win the argument.  The Board held that the Government was liable for a misrepresentation, and that it is required to base its estimate on all relevant information that is reasonably available to it.  Although the Board accepted the Corps’ position that the quantity calculations were not completed until after contract award, the Board also found that “by the time the Corps issued the solicitation it had already done the vast majority of the work required to estimate payable quantities using the 2012 survey.”  The only task remaining was to run the Corps’ data through a software program, which took one day of work, and which the Board found to be “within a reasonable level of effort.”  The Board was also persuaded by the fact that the Corps decided to use a survey that was more than a year old, contrary to its standard practice, and that the Corps had neglected to inform bidders of the existence of the March 2012 survey, which prevented them from performing their own analysis. Although precedent confirms that the Government is not required to take extraordinary measures to ensure an accurate estimate, and that the Government can rely upon information that is readily available as opposed to searching for or creating additional information, see, e.g., Medart, Inc. v. Austin, 967 F.2d 579 (Fed. Cir. 1992), cases like Burnham confirm that the Government cannot ignore or, even worse, withhold relevant information that is reasonably available to the agency in makings its estimate, and that a bidder is entitled to rely on an estimate as representing honest and informed conclusions. Womack v. United States, 389 F.2d 793, 800 (Ct. Cl. 1968). We welcome your thoughts and comments.