Board of Contract Appeals General Services Administration Washington, D.C. 20405 _____________________________________________________________ GSBCA 14066, 14189 GRANTED; GSBCA 14068 DISMISSED WITHOUT PREJUDICE: March 31, 1999 _____________________________________________________________ GSBCA 14066, 14068, 14189 AMERICAN SHEET METAL CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Martha M. Poindexter of Crenshaw, Ware & Martin, P.L.C., Norfolk, VA, counsel for Appellant. Robert C. Smith, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges NEILL, WILLIAMS, and GOODMAN. WILLIAMS, Board Judge. At issue in this case are the propriety of the General Services Administration's (GSA's) termination for default of a contract for the replacement of the roof on the Federal Building in Norfolk, Virginia; GSA's assessment of reprocurement costs and liquidated damages; and appellant's claim for monies due for labor and materials furnished to GSA prior to the termination. GSA terminated appellant's contract for failure to make progress prior to the extended completion date. Appellant, American Sheet Metal Corporation (ASMC), has challenged the termination for default on several grounds. First, ASMC contends that GSA had no right to terminate its contract before the time extension granted to ASMC in a cure notice. Second, the contractor maintains that GSA did not meet its burden of proving default for failure to progress. Third, the contractor contends that GSA waived its right to terminate by failing to establish a completion date for the entire project and encouraging ASMC to intensify its effort after granting time extensions. Fourth, ASMC argues that even if GSA could show the contractor was technically in default, the termination was an abuse of discretion. Finally, ASMC contends that GSA erred in failing to grant time extensions for weather delays as required under the contract. Respondent, GSA, contends that ASMC failed to pursue the work with diligence and that the work was only 61% complete at the time of termination. Respondent acknowledges that the contracting officer elected to extend the performance period but claims that he did so on the condition that ASMC demonstrate "vast improvement" in its construction progress. GSA argues that ASMC squandered this opportunity, thereby justifying the default action. GSA assessed liquidated damages of $28,362 and seeks additionally reprocurement costs of $160,589.35, recovery of $6539.22 due to alleged property damage, and the costs of its expert's inspection, $5950.80. We sustain the appeals challenging the termination for default and assessment of liquidated damages and other damages. Respondent did not meet its burden of proving that the contracting officer reasonably determined that ASMC would not complete the work prior to the extended completion date. The contracting officer's determination of appellant's progress was based upon an incomplete and erroneous calculation of ASMC's percentage of completion. Further, respondent unreasonably terminated the contract prior to the extended completion date after appellant had accelerated its work effort in reliance upon the extension and without adequately taking into consideration the time and expense of bringing on a reprocurement contractor which was not a certified applicator of the type of roof being installed by ASMC. The termination is converted to a termination for convenience. Respondent is not entitled to the excess reprocurement costs, liquidated damages, or other damages it seeks. Appellant's claim for $198,011 for labor and materials furnished prior to the termination is dismissed without prejudice to be considered by the contracting officer in the context of a termination for convenience. Findings of Fact On April 18, 1996, GSA awarded ASMC contract number GS-03P-96-DXC-0003 for the replacement of the roof on the Norfolk, Virginia, Federal Building. Appeal File, GSBCA 14066, 14068 (Appeal File), Exhibit 1.[foot #] 1 The contract ----------- FOOTNOTE BEGINS --------- [foot #] 1 There are two appeal files in this case, a consolidated appeal file for GSBCA 14066 and 14068 and a separate appeal file for GSBCA 14189. In GSBCA 14066, ASMC appealed the (continued...) ----------- FOOTNOTE ENDS ----------- performance period was 150 calendar days. Id.; Transcript at 43. The order to proceed was issued on April 30, 1996, and established a completion date of September 27, 1996. Appeal File, Exhibits 1-7; Transcript at 44. In bidding on this job, appellant anticipated that there would be approximately two weeks of bad weather. Transcript at 658. This reflected normal conditions that the company had experienced over the past few years. Id. The project involved the removal of the existing built-up roof, insulation, and flashing and the installation of a two-ply polymer modified bitumen roofing system on the second and eighth floors and the penthouse of the Federal Building. The contractor was required to provide all labor, supervision, materials, supplies, and equipment for the project. Appeal File, Exhibit 1 at 1. James Concannon, GSA's contracting officer, was located in Philadelphia and never visited the site. Transcript at 42. GSA's contracting officer's technical representative (COTR), Christopher Horrigan, who was responsible for the day-to-day aspects of the project, was also located in Philadelphia and visited the project twice while ASMC was on the job. Id. at 290-91. GSA hired HDH & Associates (HDH) to inspect the daily work that was performed, file reports, and keep GSA informed on how the job was progressing. Transcript at 91. HDH's construction manager assigned to this project was Wiley Greer, who became GSA's inspector and "eyes and ears on the project." Id. at 288. The COTR did not have a lot of experience with this system of roof and advised Mr. Greer that he would be relying on him and the designer.[foot #] 2 Id. at 289-90, 514. The inspector reported to the COTR on average three times per week during the project while work was being done. Id. at 289, 504.[foot #] 3 Contract Terms The contract contained paragraph 1.5, Environmental Requirements, which specified: ----------- FOOTNOTE BEGINS --------- [foot #] 1 (...continued) termination for default, in GSBCA 14068, the denial of its claim for monies due prior to termination, and in GSBCA 14189, the assessment of excess reprocurement costs and liquidated damages. References to the Appeal File in GSBCA 14189 are to Second Appeal File. [foot #] 2 However, the designer was also not on the site. Transcript at 504. [foot #] 3 Mr. Horrigan completed a letter of reference on Mr. Greer's behalf, stating that he was "completely competent" as a roof observer. Appellant's Exhibit 157; Transcript at 517-19. ----------- FOOTNOTE ENDS ----------- Do not install roofing system when air temperature is below 40 degrees F, during any form of precipitation, including fog, or when there is ice, frost, moisture, or any other visible dampness on the roof deck. Appeal File, Exhibit 1 at 82. The contract also provided: Job Conditions . . . . The roof surface shall be dry throughout. Will not expose to inclement weather. Id. at 176. The contract contained detailed specifications for the application of the roof and required that the contractor apply only as much roofing in one day as could be completed that same day and that it provide temporary roofing and flashing prior to the application of a permanent roofing system. Appeal File, Exhibit 1 at 187. The contract also required that ASMC protect the applied roofing against moisture absorption at the end of each day's work and when precipitation was imminent. Id. at 187-88. Specifically, the contract required that at the end of the day's work and when precipitation is imminent, the following be applied: Temporary Flashing for Permanent Roofing: Provide temporary flashing at drains, curbs, walls, and other penetrations and terminations of roofing felts until roofing membrane application is complete, and permanent flashings are applied. Temporary flashings shall consist of one ply of ply felt applied in a trowel coat of asphalt roof cement applied to a primed surface, and finished with a surface coat of asphalt roof cement. Remove temporary flashing before applying permanent flashing. Id. at 188. Clause 51.249-10 in the contract provided, in pertinent part: (a) If the Contractor refuses or fails to prosecute the work or any separable part, with the diligence that will insure its completion within the time specified in this contract including any extension, or fails to complete the work within this time, the Government may, by written notice to the Contractor, terminate the right to proceed with the work (or the separable part of the work) that has been delayed. In this event, the Government may take over the work and complete it by contract or otherwise, and may take possession of and use any materials, appliances, and plant on the work site necessary for completing the work. The Contractor and its sureties shall be liable for any damage to the Government resulting from the Contractor's refusal or failure to complete the work within the specified time, whether or not the Contractor's right to proceed with the work is terminated. This liability includes any increased costs incurred by the Government in completing the work. (b) The Contractor's right to proceed shall not be terminated nor the Contractor charged with damages under this clause, if-- (1) The delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include-- . . . (x) Unusually severe weather . . . . Appeal File, Exhibit 1 at 38. The Original Schedule ASMC submitted a construction schedule which indicated that it would begin construction on June 15, 1996, and complete the eighth floor by July 22, 1996, and that there would be a gap in the work until August 30, the beginning of Phase II, the penthouse. Appellant's Exhibit 11; Transcript at 705. This schedule, which was approved, contained a note stating, "[T]his schedule is approved if American Sheet Metal agrees not to leave the site until the eighth floor roof is completely repaired in its entirety and they agree to take temporary measures to stop the leaks on the second floor roof." Appellant's Exhibit 11; Transcript at 336-37, 604. The note was dated June 3 and initialed by the COTR. Transcript at 337. The COTR acknowledged that at the time he approved the schedule it appeared that he knew that ASMC would be leaving the job. Id. at 339. In the preconstruction phase it was brought to the inspector's attention that there would be a six-week gap in the contract where ASMC had a previous obligation and would "pull off the job and not man the job during that period." Id. at 506. Commencement of Work ASMC was authorized to commence roof demolition and replacement as of June 3, 1996. Respondent's Exhibit 1; Transcript at 45. The contract required that all work on the north end of the eighth floor roof be performed at night, between the hours of 6:01 p.m. and 6:56 a.m., Monday through Friday, or at any time on Saturday and Sunday. Appeal File, Exhibit 1 at 69; Transcript at 655, 716. On June 5, 1996, appellant began mobilizing and setting up the project. Transcript at 645-46. Appellant began work on the eighth floor because it was the most difficult and required the use of cranes. Id. at 647. The work on the half moon roof area on the eighth floor was difficult because it required carrying materials and removing debris by walking through the penthouse. Id. at 647. The cooling tower roof was also difficult because it was about fourteen or fifteen inches above the roof line and the men had to perform work there on their hands and knees. Id. at 351-52. The penthouse was also difficult because materials had to be lifted to that level using a crane and were subjected to a lot of wind. Id. at 649. The Lack of Wood Nailers In July the Government's inspector noticed that the wood nailers were not being installed. Transcript at 513. Although contract drawing A5 required wood blocking or "a nailer" to be installed directly on top of the metal deck, the COTR had approved a submittal on perimeter detail which did not involve use of this nailer, but rather showed an "L" angle metal flashing being attached directly to the metal deck by fasteners. Id. at 276-78, 513; Appellant's Exhibit 31. However, that same submittal also contained a smaller sketch showing that the cover plate was to be nailed into a nailer, indicating that the manufacturer, Siplast, required a nailer. Appellant's Exhibit 31; Transcript at 279. In the Government inspector's view this Government-approved submittal on perimeter detail deleted the requirement for wood nailers. Transcript at 511, 619-20. He explained: "The wood nailers were deleted because they were using an L metal perimeter, and it served no purpose. It was just extra money being thrown away. The L metal gave the strength and the seal along the perimeter and so the wood blocking would have actually been -- I don't want to say it would have been inferior, but it certainly wouldn't have helped anything." Id. at 511-12. Appellant's expert testified that the removal of the wood nailer added greater stability. Id. at 801-03. The Government's inspector discussed the deletion of the wood nailer with the COTR and advised him that the nailer would not serve any purpose. Transcript at 512, 622. ASMC's project manager discussed the detail on the L flashing with Siplast, and Siplast's engineer recommended that ASMC install the angle flashing or the L piece directly to the deck. Id. at 687. In another copy of this detail received from Siplast, the Siplast engineer entered notes explaining how to install the flashing in relation to the metal angle flashing to insure that there would be a water-tight seal. Id. at 691; Appellant's Exhibit 40. At trial, the COTR testified that because of this discrepancy in the submittal, ASMC should have submitted contract drawings in a change proposal to alert the COTR that it was changing the system which was clearly marked "Siplast," because the failure to install nailers by ASMC was a noncompliance. Transcript at 280.[foot #] 4 Installation of Insulation Upside Down On July 10, 1996, the Government's inspector discovered that ASMC had mistakenly installed sixty-four squares of composite board insulation upside down on the top layer at the north end of the eighth floor. Appellant's Exhibit 98 (July 10, 1996 Field Report); Transcript at 584. Each square was 100 square feet, so this predicament involved 6400 square feet. Mr. Greer reported this to ASMC's foreman that night and to GSA's COTR the next morning. Transcript at 262, 525-26, 529, 538, 575. After the discovery of the improper installation, there were several days of bad weather, precluding work. Id. at 529; Appellant's Exhibit 117. On July 17, 1996, Vernon Garbett, a technical representative from the manufacturer of the roofing materials, Siplast, made a site visit to address whether Siplast would provide a warranty. Appellant's Supplemental Appeal File, Exhibit 45. The manufacturer could not issue a warranty on the reversed insulation as it stood. Transcript at 531. By letter dated July 29, 1996, GSA requested that ASMC provide it with a corrective action plan to remedy the upside down tiles. Appeal File, Exhibit 9; Transcript at 47. By letter of August 7, 1996, ASMC informed GSA that the upside down insulation could be corrected by applying one layer of 3/4" fiberglass board in a mopping of hot asphalt, which was acceptable to the manufacturer and would be eligible for a warranty. ASMC enclosed a letter of August 7, 1996, from the manufacturer, stating: We have been notified that the polyisocyanurate composite insulation board on a roof area of approximately 64 squares has been installed upside down; specifically, the panels were installed with the polyisocyanurate side facing up. A single ply of Paradiene 20 has been hot mopped directly to the polyisocyanurate side of the insulation. Short of removing and replacing the insulation and membrane, Siplast will accept alternative if mutually agreed by you, the owner and the architect. A 3/4 inch fiberglass board (maximum panel size must be 4 ft. by 4 ft.) could be applied in hot asphalt over the existing Paradiene 20 surface. The new insulation will provide a suitable surface for the installation of ----------- FOOTNOTE BEGINS --------- [foot #] 4 The lack of a nailer was not an issue prior to the reprocurement contract, and this was not a factor in the contracting officer's decision to terminate ASMC for default. ----------- FOOTNOTE ENDS ----------- the two-ply Paradiene roof system in Type IV asphalt. This application method is acceptable and the project will be eligible for the proposed Siplast Ten Year Roof Membrane Guarantee. Appeal File, Exhibit 14; Appellant's Exhibit 49. By letter of August 12, 1996, GSA requested that ASMC have a roofing expert inspect the eighth floor roof and submit a report. Appeal File, Exhibit 15; Transcript at 48. On August 13, ASMC submitted a letter from Roofing Consultants of VA stating: "the proposed overlayment will not pose any effect on the performance of the installation and shall remain a warrantable installation." Appeal File, Exhibit 16. By letter of August 20, 1996, GSA informed ASMC that it would not accept the corrective action proposed unless the manufacturer, Siplast, would amend its warranty to cover leaks caused by faulty substrate. Appeal File, Exhibit 17. On September 5, 1996, ASMC sent a letter from Siplast dated September 4, 1996, to GSA via facsimile transmission, which stated that the corrective method was acceptable and the project would be eligible for the proposed Siplast Ten Year Roof Membrane Guarantee with an addendum which also covered the polyisocyanurat perlite insulation and fiberglass insulation under the terms of the guarantee. Appeal File, Exhibit 18. The COTR and Government inspector also obtained an expert opinion about the corrective solution from a senior partner of HDH, who requested that test cuts of the roof be made. Transcript at 531-32. On September 20, 1996, the inspector made two eight-by-eight-inch roof cuts. The tests cuts were analyzed in HDH's laboratory for moisture content and shear strength, and they were dry. Id. at 532; Appellant's Supplemental Appeal File, Exhibit 45. The senior partner's opinion was that pinning the flashing and providing a second roof with a fiberglass insulation served everyone's interest. Transcript at 533. The College of William & Mary Job On August 7, ASMC left the Norfolk Federal Building job to complete a roof job at the College of William & Mary. Transcript at 657; Appellant's Exhibit 44. GSA's COTR approved ASMC's leaving on that date "if [ASMC] promised to man [the job] every day when [they] returned." Id. According to the project manager, the COTR gave ASMC verbal approval to leave the job for two weeks to go Williamsburg, where William & Mary is located, to handle an emergency. Transcript at 133, 706. The inspector on the William & Mary job was the same inspector as on the Norfolk job -- Wiley Greer of HDH. Id. at 656. ASMC had estimated that it would be on the William & Mary job for two weeks, but due to bad weather, ASMC remained there for approximately a month -- until September 5, 1996. Transcript at 659. Although a two-week hiatus would have put ASMC back on the job on approximately August 22, ASMC would have been unable to work on the roof of the Norfolk Federal Building due to adverse weather conditions from August 24 through August 31. Adverse weather commenced again on September 2, Labor Day, and continued through September 6. Appellant's Exhibits 44, 117; Transcript at 706, 887. ASMC advised the COTR that it was not back on site due to the adverse weather. Transcript at 707. Adverse Weather During the summer of 1996, the weather in Norfolk was unusually severe; there were three hurricanes and several thunderstorms. Transcript at 649-50, 660; Appellant's Exhibit 117. Precipitation in the Norfolk, Virginia, area for June-October 1996 was 29% above average. Appellant's Exhibit 208; see also, Appellant's Exhibits 113-16. Due to continuous bad weather, the first time that ASMC could work five consecutive days on the Federal Building did not occur until September 23-27. Transcript at 660-61; Appellant's Exhibit 117. Even on clear days, ASMC spent a lot of time pumping and drying the roof so the crew could work, but this did not reflect any production on the job. Transcript at 712. Over the course of this job, ASMC lost sixty-two days due to bad weather, including rain days, wet days, and days on which there was a 30% or greater chance of rain. Appellant's Exhibit 117; Transcript at 653-61. ASMC did not work days in which the chance of rain was 30% or greater because it "did not want to get caught during construction with the roof off, and damaging the buildings . . . ." Transcript at 655; see also, id. at 611-12, 882-84. The contracting officer testified that it was unreasonable for ASMC not to work when there was a chance of rain. Transcript at 838. Based upon his examination of the certified payroll records, the contracting officer testified that there were thirty-six "good weather days" on which appellant did not work. Transcript at 833-36; Appellant's Exhibit 18.[foot #] 5 The contracting officer's analysis of this data did not include hours of independent contractors or subcontractors or ASMC salaried employees. Transcript at 871-92; see Appellant's Exhibit 44. The contracting officer's determination that there were enough clear days to complete the work was also based upon "second hand information from people in the area." Transcript at 95-96. ----------- FOOTNOTE BEGINS --------- [foot #] 5 Thirteen of these "good weather" days occurred between August 7 and September 1 when ASMC was at William & Mary. Appellant's Exhibit 117; Transcript at 886. ASMC checked the Federal Building job and repaired leaks on the eighth floor whenever it rained when ASMC was working at William & Mary. Id. ___ ----------- FOOTNOTE ENDS ----------- ASMC's project manager credibly testified that there were no days which were clear that ASMC could have worked and did not, except for those in August when the contractor went to the William & Mary job. Transcript at 890. He explained: [L]et's go back to the specifications where we are not allowed to put down new roof under damp or wet conditions. We're working with a roof system that is affected by moisture, and we're working at night. No visibility whatsoever, bright lights on top of it. Things picked up somewhat when we were able to go to days, because at that time we were facing most of our rainy weather at night. After a hard rain, you go up on the roof, everything is soaking wet. It's ponding water. Before you can cut the roof, open the roof, for fear of water going through the decking and damaging computers and office equipment, you have to get the water off. You have to dry the roof off. And looking for rain. How many days, how many days of opportunity did we actually have that we could gain momentum? Momentum is when you can put a crew on site, you tear off today and put back, you tear off tomorrow and put back. . . . Every time you have a shutdown, it costs you time, valuable time. Id. at 890-91. The August 5 Request for a Twenty-Nine Day Extension On August 5, 1996, ASMC advised GSA that the following twenty-nine days had "unusually severe" or abnormal weather conditions that prevented it from working on the project: June 24, 25, and 30, and July 1-15, 19, 20, 22-26, and 29-31. Appeal File, Exhibit 21. ASMC requested a time extension for these twenty-nine days.[foot #] 6 The Response to the Request for an Extension: the September 20 Cure Notice The contracting officer testified that he did not take into consideration the criteria in paragraph 1.5 of the specifications' environmental requirements in denying ASMC's request for an extension of twenty-nine days. Transcript at 92-94. Rather, the contracting officer determined that "the Government's responsibility for time extensions is only for days that are considered acts of God which in this case would be hurricanes." Appeal File, Exhibit 21; Appellant's Exhibit 59. There were eight days of hurricane activity. The Government granted an eighteen-day extension -- eight days for adverse ----------- FOOTNOTE BEGINS --------- [foot #] 6 This letter contained an error; ASMC was on the job on July 6, 10, and 11. Transcript at 662. ----------- FOOTNOTE ENDS ----------- weather and ten days as "a sign of good faith." Appeal File, Exhibit 59. This response to ASMC's request for an extension was contained in a September 20, 1996, cure notice making the new completion date October 15, but stating that the contract would be in default if work was not finished by that date.[foot #] 7 Appeal File, Exhibit 21; Appellant's Exhibit 59. Specifically, the cure notice stated, in pertinent part: American Sheet Metal is hereby notified that the Government has determined that your contract will be in default for the following reasons: failure to comply with your submitted progress schedule, unable to finish the contract on the scheduled September 27, 1996 contract completion date, and the incorrect installation of a large portion of the roof. These failures have not had an adequate explanation that would cause the Government to extend your contract. Therefore, unless this condition is cured within 7 days after receipt of this notice, the Government may terminate for default under the terms and conditions of the project contract. . . . . In response to your letter dated August 5, 1996, requesting an additional 29 day extension to the contract, the Government is willing to extend the contract an additional 18 calendar days, which extends the contract completion date to October 15, 1996, at no additional cost to the Government. The Government's responsibility for time extensions is only for days that are considered acts of God which in this case would be hurricanes. The Norfolk area has experienced approximately 8 days of hurricane activity, and the remaining 10 days are given to your (sic) as a sign of good faith. The Government is providing the 18 days even though American Sheet Metal walked off the job for approximately 4 weeks due to other obligations. American Sheet Metal worked only nights for the first two months of the contract, during which some days, the weather was suitable for roofing. It was by your choice to work at night for the area of roof you worked on, and work was frequently stopped due to evening showers. ----------- FOOTNOTE BEGINS --------- [foot #] 7 In its answers to interrogatories, GSA characterized both the September 20 and October 10, 1996, letters as cure notices. Respondent's Response to Interrogatory No. 6 (Sept. 9, 1997); Appeal File, Exhibits 21, 25; Transcript at 185; see also Transcript at 99. ________ ----------- FOOTNOTE ENDS ----------- However, as mentioned above, the Government requests written notice as to how the contractor intends to cure this situation. Your corrective plan shall be documented in a letter, stating how and when you plan to correct the above mentioned problems. The Government will review your performance against your written corrective plan, and evaluate your performance against your new progress schedule. If American Sheet Metal shows vast improvement, and completes 80% of the contract work by the new October 15, 1996 completion date, the [G]overnment may choose not to default your company. If American Sheet Metal shows vast improvement, and remains on the project, liquidated damages will be [assessed] at $326.00 per calendar day past the new October 15 deadline. This deadline will not change. Appeal File, Exhibit 21; Appellant's Exhibit 59. The mailed copy of the September 20, 1996, cure notice was not received by ASMC until 4:20 p.m. on September 30. Appeal File, Exhibit 22. A copy of this letter sent via facsimile machine was received by appellant on the afternoon of September 27, 1996. Id. In response to the September 20 cure notice, ASMC accelerated its efforts on the Norfolk Federal Building, adding a few more men and working different areas simultaneously. Transcript at 667. In the latter part of September or the first part of October 1996, the contracting officer telephoned ASMC's president and expressed concern that ASMC would be unable to complete the roofing within the specified time. ASMC's president assured the contracting officer that ASMC would complete the eighth floor by October 21, that the second floor would probably be completed in two weeks, and that the entire project would be finished by October 31. Id. at 762-63. The COTR's September 26 Letter By letter dated September 26, the Government approved the proposed corrective system for the upside down insulation and requested shop drawings and a reworded warranty from Siplast stating that the insulation "is deemed [to be a] part of the roof membrane system and installed according to Siplast, Inc. specifications." Appeal File, Exhibit 20; Appellant's Exhibit 58. The COTR's letter stated: This letter is in response to your September 4, 1996 letter, requesting the government's approval for the proposed recovery system. At this time, the government will accept your proposed 3/4 inch fiberglass board (maximum panel size must be 48 inches by 48 inches) applied to hot asphalt over the existing Paradiene 20 surface. As indicated by Siplast, the fiberglass insulation provides a suitable surface for the installation of the two-ply Paradiene roof system in Type IV asphalt. Prior to the installation of any recovery material, American Sheet Metal (ASM) must submit shop drawings for the government's approval detailing the recovery system, and its relationship to the parapets, drains, window washing hooks, vents, and all adjacencies. Siplast is required to change the wording of the warranty amendment, as indicated on an attachment to this letter, prior to the government[']s approval and payment for the sixty four (64) squares of roofing in question. . . . . ASM is reminded that as-built drawings are contractual, and the drawings should accurately record this modification, and all other conditions of the roof. . . . General Services Administration (GSA) is concerned with the scheduling performance of ASM, and GSA hereby reminds you that a cure notice was issued to your company. ASM is required to write a corrective action plan, detailing how and when ASM will finish this project and submit it to GSA. This ASM written corrective plan shall specifically detail the work schedule, and detail any actions ASM will do to finish this project in an efficient timely manner. GSA would like to avoid liquidated damages, but will enforce it emphatically as of October 15, 1996, if ASM has completed 80% of the project, and is not removed from the project. Upon receipt of the Government's September 26 letter, appellant's vice president called the COTR and obtained his oral approval to include the corrective solution on as-built drawings rather than on shop drawings. Transcript at 754-55. It was on that basis that ASMC went forward with this solution. Id.[foot #] 8 Appellant never submitted the shop drawings. Id. at 175, 263, 613-14. Although at trial, the COTR testified that he believed that shop drawings were significant because there was a question regarding the effect of the additional layer on the roof on drainage channels, other obstructions and conditions, the record indicates that the Government did not require shop drawings before the corrective ----------- FOOTNOTE BEGINS --------- [foot #] 8 Although the COTR testified that he did not recall whether he authorized ASMC to install the corrective solution on the eighth floor, the weight of the evidence indicates that the Government approved the solution. Compare _______ Transcript at 320 with id. at 531-37, 693-94, 754-55. The ____ ___ contracting officer testified that he did not know whether GSA ever officially rejected this solution. Id. at 107-09. ___ ----------- FOOTNOTE ENDS ----------- solution was installed. Id. Rather, the COTR orally approved this corrective solution and authorized ASMC to install it, but wanted to see how ASMC would complete the work. Id. at 262-63, 303-04, 534, 536-37, 693, 754-55; Appeal File, Exhibit 20. The Government's inspector testified that the approval of the solution was not based upon shop drawings, because all parties had the information necessary to evaluate the corrective solution, which the manufacturer was warranting, long before shop drawings would have been issued. Transcript at 615-18. By letter dated September 30, 1996, appellant advised GSA that the insulation to correct the sixty-four squares had been ordered immediately and had arrived that morning. That letter further stated: "As soon as this current weather front that arrived Saturday morning September 28, 1996 and has lingered since leaves the area we will immediately begin roofing the corridor and correcting the 64 square error." The letter continued: During the week beginning October 7, 1996, assuming weather is permissible, we must complete the following: PENTHOUSE AREA: All Base Flashing All Counter Flashing All Walkpads 8TH FLOOR AREA All Base Flashing All Counter Flashing All Walkpads We will need Nine (9) days with the goal to complete by October 15, 1996. Assuming the Weather works in our favor we will be ready to begin the Second Floor Roof by October 16, 1996. It will take approximately two weeks from Start to Finish on this portion of the project. This will complete our contract. Appeal File, Exhibit 22. By contract modification CO5, effective September 30, 1996, the completion date was extended to October 15, 1996. Appeal File, Exhibit 23. The modification was accompanied by a memorandum which read: "This modification was issued to extend the delivery date from September 27 to October 15, 1996. It was issued to give the contractor extra days due to rain and them not being 50% complete. Note: This mod is GSA's attempt at ADR." Id. ASMC lost two days of progress when it applied the overlay to correct the sixty-four squares of insulation which were installed upside down. Transcript at 734. Appellant lost days from September 28 through October 2, 1996, due to rain and ponding water. Appeal File, Exhibit 24; Appellant's Exhibit 117. As of October 3, 1996, appellant was removing water from the roof so that it could begin tear-off that night. By letter dated October 3, appellant submitted a revised schedule based upon these weather delays and a job site meeting. Id. This schedule called for completion of the eighth floor roof by October 17, the second floor roof by October 10, and the remaining work by October 31. Id. The October 31 overall completion date, which was submitted in ASMC's October 3 schedule, did not include the five days which were lost between October 3 and October 10 due to inclement weather. Transcript at 719. By letter dated October 10, 1996, ASMC advised GSA of work done between Thursday, October 3, and Sunday, October 6 and noted it lost five days of progress due to rain and ponding. Appellant's Exhibit 66. In that letter ASMC included a revised schedule showing a revised completion date of October 20 for the eighth floor roof but keeping October 31 as the overall completion date. Id. By letter that same day, the contracting officer granted ASMC an additional five days to complete the eighth floor, but did not expressly address a deadline for overall completion except to state that he would reassess ASMC's performance later. Appeal File, Exhibit 25; Transcript at 671. The contracting officer's letter stated: This letter is intended to remind you of the serious lack of progress your company is making on the Norfolk Federal Building Roof Repair. The revised contract completion date ends this Tuesday, October 15, 1996. General Services Administration (GSA) is considering [its] options if your company does not make significant progress this weekend. At this time, only the penthouse roof, out of the three roofs, is close to being completed. Approximately sixty percent of the eighth floor roof still remains incomplete. Unless your company can show more effort than has been displayed in the last week the Government will take action to protect [its] interests. We had expected to see weekend work and night shifts, there has been no evidence of this so far. The Government is being unduly burdened by your compan[y's] lack of performance. The second floor roof, which is having the worst infiltration problems, will not be worked on for several weeks. This situation is entirely unacceptable. Due to the inclement weather over the last week, we have decided to issue another extension, this for five days, to complete the 8th floor only. After that time, we will assess your performance in light of your continuing on the contract. This extends the contract completion date from October 15th, to October 20th, 1996. Appellant's Exhibit 63. Although GSA's October 10 letter extended the completion date for the eighth floor roof until October 20, contract modification PCO7 extended that completion date until October 21.[foot #] 9 The modification also did not establish a completion date for the overall job, stating: "This modification is issued to extend the delivery date from October 15 to October 21, 1996 to finish the 8th floor roofing only." Appellant's Exhibit 65. The contracting officer testified that GSA issued this extension to give ASMC a definable milestone, the eighth floor only, and that the overall completion date for the project was October 31, if ASMC managed to reach the eighth floor milestone. Transcript at 54. Contact with the Reprocurement Contractor The contracting officer had been in contact with a potential reprocurement contractor, National Roofing Corporation (NRC), in the October 10 time frame. Transcript at 117-21. As of October 10, the contracting officer testified that he was "probably" making preliminary plans with the reprocurement contractor to take over the work, "but these weren't plans that couldn't have been called off if the performance had increased during that period." Id. at 120. The inspector spoke with the COTR on the afternoon of October 11 and was told that the Government was bringing in a reprocurement contractor. Id. at 551.[foot #] 10 The COTR asked the inspector's views on this contractor and materials that were being recommended. Id. The inspector, after consulting with his office, questioned the COTR as to why "if he approved one roof system he would change in midstream," stating: I've never heard of that before, and when you've got warranty questions, you know, one manufacturer is going to stand back and point at that line and say that's on your side, and the other one is going to -- they just wouldn't -- how would you tie it together and, you know, roofing materials are not just roofing materials. They're not necessarily compatible. So . . . I ----------- FOOTNOTE BEGINS --------- [foot #] 9 The contracting officer acknowledged that October 21 was the new completion date for the eighth floor roof. Transcript at 57-58. The notice of default also referred to October 21 as the new completion date for the eighth floor roof. Appeal File, Exhibit 30. [foot #] 10 The Government inspector recalled that he spoke with the COTR on this date based upon an entry in his diary. Transcript at 551-53; Appellant's Exhibit 45. ----------- FOOTNOTE ENDS ----------- remember asking him how he was going to remedy the situation where the roofs actually come together, and it was his response that he wasn't real sure, that he thought they would complete the eighth floor with the Siplast system and then change systems on the lower roof, . . . . Id. at 551-52. NRC was planning to use materials manufactured by Soprema. In order to obtain the necessary thickness of the roof, Siplast called for two plies of membrane but Soprema called for three plies, and the application processes of the two manufacturers differed. Transcript at 299-300. The Government inspector was advised that absolutely under no circumstances was he to mention to ASMC the possibility of a new contractor being hired; he was "sworn to secrecy." Id. at 553. The inspector conveyed his concern about having two different manufacturers to the COTR well before October 18. Id. at 551. ASMC's Acceleration After the second extension, ASMC stepped up its production efforts and put more people on the job to accelerate its progress. Transcript at 672, 720. ASMC staffed the job as follows: Date Men Man hours Fri. Oct. 11 15 123 Sat. Oct. 12 11 99.5 Sun. Oct. 13 9 53.5 Mon. Oct. 14 23 199 Tues. Oct. 15 17 150 Wed. Oct. 16 13 85 Thurs. Oct. 17 10 81 Fri. Oct. 18 25 189 Total 980 Appellant's Exhibit 206. The contracting officer did not dispute that ASMC was accelerating its work. Transcript at 160. ASMC's project manager credibly testified that during the extension period ASMC intended to increase its crew sizes because it was finishing up other jobs: After I would say beginning the last ten days or so of the contract, we were finishing up other projects. It was our intention that we would man the federal building with ample people, meaning increasing the crew sizes. Unfortunately, when we were beginning to do this, we were ordered off the project on the 18th. . . . It was our intention to push as hard as we could to come off of that eighth floor by October 21st, set up on the second floor, and push with everything that we could to complete the project as quickly as possible, that is the second floor roof. . . . . . . . We were working the one crew. We were making preparations to work longer hours, meaning that we were anticipating having one crew work so many hours and another crew. We were in the process of doing that, like I said, and it's unfortunate that right there at the very last. Transcript at 20-21. Drafting the Determination Supporting Termination On October 15 or 16, 1996, the contracting officer began drafting a Determination of Findings Supporting Termination for Default, which provided, "[a]llowing ASM[C] to continue on the project . . . was no longer deemed to be an acceptable course of action." It was determined that there was a suitable firm already under contract with GSA in the Chesapeake region. This firm agreed to take a look at the job to determine whether they would be willing to take it over. They have preliminary [sic] agreed to take it on, subject to successful negotiations. Transcript at 125, 152; Appellant's Exhibit 132. By letter to GSA of October 15, 1996, an employee of the Customs Service stated that lately "the roofing contractor has seemingly increased dramatically the 'heavy' work on the roof, noting that employees had been barraged during the past two weeks with loud bangs from heavy items being dropped onto the roof." Appellant's Exhibit 67. The Inspection by Siplast's Inspector Siplast's inspector, Vernon Garbett, conducted an inspection of the eighth floor roof on October 16, 1996. Transcript at 472. He viewed the entire roof at that time and based upon his visual inspection estimated the percentage of completion of the application of certain Siplast materials to be 70% for the Paradiene 20 and Paradiene 30,[foot #] 11 and 40% for Veral aluminum, the last product to be applied. Id. at 472-75. In his report Mr. Garbett noted the following comments: 1. Application of the Paradiene 20 and Paradiene 30 appear to be progressing well. 2. Drain sumps: Install Veral in sumps to cover cuts in the Paradiene 30. Veral must extend under the clamping rings. 3. Fishmouths in the Paradiene 20: Strip-in ply must be repaired before the Veral is installed. 4. Area of Paradiene 20 by door way needs to be inspected for drainage and patched before the Paradiene 30 is installed. . . . . The above recommendations and advice are intended to help the contractor construct the membrane system in a manner suitable for the Siplast Guarantee. Appeal File, Exhibit 20. Between October 11 and 18, ASMC performed the following work: removed the east corridor roof on the eighth floor, installed all tapered insulation, installed all cap sheet except for a small area toward the south end of the corridor area, corrected the sixty-four squares on the north eighth floor roof, installed Veral flashings on both the penthouse roof and half moon roof, removed and made water-tight the perimeter of the south end, and removed the last of the asbestos. ASMC was in the process of installing the flashings at the cooling tower and moving the kettle from the eighth floor to the ground level. Transcript at 673; see Appellant's Exhibits 22, 23. By letter dated October 18, 1996, ASMC advised GSA that it would still remain on schedule on the eighth floor roof if it could "have a good Friday, Saturday, and Sunday," October 18-20, 1996. It detailed additional progress on the building, noting that it had worked both Saturday, October 12, and Sunday, October 13. Appellant's Supplemental Appeal File, Exhibit 21. The Termination for Default By letter dated October 18, 1996, GSA terminated ASMC's contract for default effective immediately. Appellant's Exhibit 70; Appeal File, Exhibit 30. The notice of default provided, in pertinent part: ----------- FOOTNOTE BEGINS --------- [foot #] 11 Paradiene 20 and Paradiene 30 are roofing membranes that are applied over the tapered insulation. Transcript at 731. Paradiene 20 is the base sheet and Paradiene 30 is the top sheet or "white cap sheet." Id. ___ ----------- FOOTNOTE ENDS ----------- Under the terms of the contract, completion of the work was expected by September 27, 1996 but it was approximately only 40% complete (and 17% of that was installed incorrectly). We extended the delivery date to October 15, 1996 at this time your company was only approximately 52% complete. The date was extended a second time to October 21, 1996 and the project is now only approximately 61% complete. The low percentage of completed work is directly related to your company's more than four (4) week work hiatus. However, at minimum, approximately 40% of the work is still not complete and cannot be completed by October 21, 1996. Insufficient progress has been made towards completing the roof. Your firm has repeatedly failed to meet your own performance milestones. Your firm has failed to furnish a realistic work schedule. During the past one hundred fifty (150) working days, there was enough clear weather working days to complete this project. The Government extended the contract an additional twenty[-]three (23) days, and still American Sheet Metal lacked performance. For example, on October 13, 1996 American Sheet Metal worked only a half day, while facing an October 15, 1996 deadline. This disregard of completion dates has influenced the Government's decision. In total, your firm has failed to prosecute the work with the diligence that will insure its completion within the time specified by the contract. . . . You are instructed to stop work immediately, and instruct all workers not to report as of the end of such work. You should notify your subcontractors of the termination. The Government will notify them as to the status of continuing work. . . . Further access to the site will be limited to removal of personal effects, and property determined not Government owned. Appeal File, Exhibit 30. In addition, the notice of default termination contained an attachment, Contractor Performance and Schedule Comparison, which stated: May 30th Project Progress Schedule Phase I - 8th floor roof complete June 22 Phase II - Penthouse roof complete Sept. 14 Phase III - 2nd floor roof complete Sept. 30 Actual Performance Phase I - As of June 22, 1996 64 squares out of 154 squares have been installed incorrectly, no further work was continued on the 8th floor due to this contractor error. Contractor made proposal to recover faulty roof. Phase II - Contractor begins penthouse roof, but leaves project [site] on August 12, 1996 to finish other obligations. No substantial work was completed on phase II on Sept. 14, as indicated by the May 30 progress schedule. Phase III - Zero percent of the roof complete on September 30, 1996. On October 3, 1996 the Government grants 18 day extension in attempt to facilitate the Contractor's performance. From September 27, 1996 to October 15, 1996. Revised Progress Schedule dated October 3, 1996 Phase I - 8th floor roof complete October 17, 1996 Phase II - Penthouse roof complete October 10, 1996 Phase III - 2nd floor roof complete October 31, 1996 Actual Performance Phase I - Contractor successfully recovers 64 squares of faulty roofing on the 8th floor. (*note Pending government inspection for approval) Contractor has successfully completed 107 squares of new roof out of the 154 squares. (*this does not include walk pads, lightning protection, utility reconnection and punchlist) Phase II - Penthouse roof complete except for walk pads, lightning protection and punchlist items. Phase III - At this time zero percent complete On October 10, 1996 the Government grants a 5 day extension, again in an attempt to facilitate contractor completion. The new completion date is October 21, 1996. Revised Progress Schedule dated October 10, 1996 Phase I - 8th floor roof complete October 20, 1996 Phase II - Penthouse roof complete October 10, 1996 Phase III - 2nd floor roof complete October 31, 1996 Actual Performance Phase I - Given the pace of the contractor, he will not be able [to] finish the roof by new deadline. As of October 18, contractor has 47 squares to roof and detail to install. At no time in this project has the contractor displayed his ability to install 47 squares of roofing in 3 days. The contractor on the days of October 11 through the 14th, with no weather constraints, installed 20 squares of roof. However the contractor did recover the faulty roofing on the 8th floor. Phase II - As of October 18, 1996, walk pads are being installed, and roof will ready punch list inspection at day's end. The lightning rod protection has not been reinstalled. Note a clarification is outstanding on the light[n]ing rod protection. This was intended to be resolved when the contractor was ready to proceed with the lightning rod reconnection. Phase III - At the current pace of the contractor, the 8th floor roof will not be finished until approximately October 25th, thus the deadline of October 31st to complete the 97 squares of the second floor roof is not realistic.[[foot #] 12] Appeal File, Exhibit 30; Appellant's Exhibit 70. In explaining his decision that he had no confidence that ASMC would be able to complete the eighth floor roof by October 21 or the entire project by the end of October, the contracting officer testified: "Because their progress up to that time, even when they were working, their production rate was so poor that if you did an extrapolation of what they had accomplished in their three to four, five months that they had the project, there was no way that production rate would lead to a conclusion on those other floors by the October 31 date." Transcript at 58. The contracting officer's estimate that the job was 61% complete as of October 18 was the opinion of the COTR relayed to the contracting officer, based solely upon squares of roofing completed as a percentage of total squares of field membrane installed and did not include flashing work. Id. at 57, 265; see id. at 673. Neither the contracting officer nor the COTR observed the roof in making this estimate. Id. at 42, 116-17, 846. The COTR derived a "production rate" of five squares per day based upon the fact that there were twenty squares of field membrane installed between October 11-14, 1996, ----------- FOOTNOTE BEGINS --------- [foot #] 12 There was no formal modification making October 31 the deadline for overall project completion. However, the notice of default and the contracting officer's testimony extinguished the prior overall completion date of October 15. Appeal File, Exhibit 30; Appellant's Exhibit 70; Transcript at 54. ----------- FOOTNOTE ENDS ----------- a single four-day period, as reflected in the HDH reports. Id. at 267-68. The COTR testified: Q [N]ow, if you count squares to determine percentage of completion, doesn't that assume that the amount of labor, material and effort required to install a single square is uniform over the entire job? A It does, and it's a clumsy way to mark the progress of the contractor. We had a very difficult time with the project schedule . . . and the schedule of values. We're not very sufficient [sic] if you look in the FAR [Federal Acquisition Regulation] clause where it talks about the schedule of values, it says that we can monitor the progress as we see fit, if we don't have a good schedule of values, which we didn't. And it is true the flashing work is far more labor intensive than installing fields. Transcript at 351. The COTR acknowledged that it "most definitely" took longer to install a square roof around the cooling tower which is a difficult spot to work because it is low and people are working on their backs and there are a lot of penetrations." Id. at 351-52. In the view of the COTR the percentage of completion should have been even less than 61% because this estimate did not include the flashing that was not complete. Id. at 265. At the time ASMC's contract was terminated, GSA ordered all ASMC's workers off the job immediately. Transcript at 297, 675. ASMC advised GSA that the south tower had a temporary roof around the perimeter in place and continued: "Because of the nature of this roof, your failure to permit our crews access to continue to secure this roof prior to future rain storms and wind damage leaves us no choice but to inform you that [ASMC] cannot be held responsible for any damages which may occur to any property." Appellant's Exhibit 75. At the time that ASMC was asked to leave the job, there is a conflict in the record as to the state of the roof. According to the COTR, about 150 linear feet of flashing was left open on the Granby Street side of the north eighth floor roof, and "there [was] no way that ASMC could have finished making that area water tight that afternoon." Transcript at 323. According to ASMC's project manager, on the date it was terminated, ASMC cemented any areas of concern, but admittedly the Veral flashing had not been installed. Id. at 723. Therefore, ASMC applied temporary flashing which was pushed up underneath the counterflashing to seal it in a water-tight condition. However, the project manager explained: "[T]hese were temporary measures and being ordered off the job was subject to wind, rain, over a period of weeks." Id. ASMC worked until late in the day it was terminated so as not to leave the roof open or subject to damage. Id. at 676-77; see id. at 703-04, 723; Appellant's Exhibit 98. The inspector observed the entire roof on October 18. Transcript at 539-40. Based upon the inspector's observation of the methods of construction and the corrective solution that was applied, he opined that the roof was sound. Id. at 540. This inspector testified that the counterflashings on the eighth floor roof north wing were sufficient to seal the roof. Id. at 543-44. However, he also testified that ASMC was not permitted to finish the crickets[foot #] 13 before it was ordered off the job and that ponding existed on the day the contract was terminated because of the absence of crickets. Id. at 544-47.[foot #] 14 In ASMC's project manager's view, the eighth floor roof was 90% complete, and the entire job was 70% complete at the time of termination. Transcript at 677, 685-86. He based this estimate on the number of squares, the linear feet of flashing, asbestos abatement, and the understanding that the completed eighth floor work along with the penthouse, half circle, and cooling tower contained both a majority of the work and the most difficult work of the project, given the linear footage of flashing, the wind factor on the eighth floor and the penthouse, and the need for the crane. Id. at 677-79; see id. at 647-49. According to ASMC's project manager, ASMC would have reached substantial completion by October 21, leaving only some punchlist items on the eighth floor level, and would have completed the second floor in two weeks. Id. at 679. The October 24 Infrared Survey There was rainfall from October 18, 1996, when ASMC was terminated, to October 19, 1996. The National Oceanic and Atmospheric Administration (NOAA) Survey shows thunderstorms and 1.2 inches of rain during that time period. Appellant's Exhibit 114 (Oct. 1996). Respondent's expert engaged Jersey Infrared Consultants, with whom he was very familiar and held in high regard, to perform an infrared survey to determine the condition of the ----------- FOOTNOTE BEGINS --------- [foot #] 13 Crickets are superimposed insulation to divert water toward the drain or divert water from obstructions and prevent ponding. Transcript at 544. [foot #] 14 The Government's inspector was not asked to provide an estimated percentage of completion at the hearing, and the HDH Field Reports for October did not contain entries for estimated percentage of completion; only a few reports earlier in the job contained an estimated percentage of completion. Appellant's Exhibit 98. ----------- FOOTNOTE ENDS ----------- roof.[foot #] 15 Transcript at 392-93. Jersey Infrared performed an infrared survey, also known as a thermographic moisture survey, on October 24; it surveyed every inch of the roof to detect moisture and took moisture probes. Id. at 394. This survey documented that there was no moisture on the completed roofs. Id. at 394, 415; Appellant's Exhibit 178. All observed test locations were marked "dry." Appellant's Exhibit 82. The survey was conducted in conformance with applicable standards and was very thorough. Transcript at 774. The October 25 Inspection On October 25, 1996, GSA's inspector, along with appellant's and respondent's experts and Siplast's engineer, examined the completed work on the roof. Appeal File, Exhibit 81. The Siplast representative by letter dated November 1 confirmed that the condition of the roof system was the same as reported on October 16, 1996, and that the roof would be eligible to receive a Siplast warranty provided it was completed per Siplast specifications. Appellant's Exhibit 86. Appellant's Expert's Conclusions Ms. Deborah Evans, appellant's expert in roofing construction engineering, consulting, and testing and evaluation, inspected the roof on October 25 and documented the condition of the roof as it existed on that day. Transcript at 772-73. She concluded that the visible roof areas completed by ASMC were in conformance with standard practice and Siplast details. Id. at 779. She explained: The conclusion was that the roof areas that had been completed by American Sheet Metal appeared to be in general conformance with Siplast recommended details. I used the word general just because there were some uncompleted areas. There were some flashing details that had not been completed at the time of my inspection, and there were a few punch list type items that were noted, which are small deficiencies that need correction, which you typically pick up at the end of a completed roof job. Id. at 777. Appellant's expert described the condition of the roofs installed by ASMC as follows: ----------- FOOTNOTE BEGINS --------- [foot #] 15 According to respondent's expert, water trapped below the second membrane or very deep into the roof would not be possible to detect in an infrared survey. Transcript at 394-95. On approximately November 10-12, respondent's expert was told water had been found underneath the roof, below the insulation. Id. at 395-96. ___ ----------- FOOTNOTE ENDS ----------- They were in good condition. The roof insulation was dry. The flashings and a few other details were incomplete at that time. The roof was sealed in a watertight temporarily flashed condition. Generally it was in good condition, looked like a new roof, very little as far as minor repairs or defects. Id. at 780. Appellant's expert testified that water on a roof deck can be caused by many things besides a faulty roof. Transcript at 806-07. This expert testified that water on the deck, in particular condensation, is typical and was not cause to remove or repair the roof since there was no indication that the insulation was wet. Id. at 803-14; cf. id. at 465. Respondent's Expert's Conclusions Mr. Herbert Cannon, respondent's expert in roof construction and repair, was retained by GSA in mid-October 1996 to perform an inspection on the completed roofing work and determine the completeness of the work and what corrective measures needed to be taken. Transcript at 365-68. Mr. Cannon was also asked to look at options of how logistically to bring on a contractor fairly quickly. Id. at 368. Although Mr. Cannon's contract with GSA authorized him to perform all necessary test cuts to fully and thoroughly document the work of ASMC, he did not take any test cuts. Id. at 412-13. In his report dated October 31, 1996, based upon his inspection of the roof on October 25, respondent's expert noted nine items in the eighth floor roof area. These items were: loose field laps, flashings incomplete, interply void, drain flashings damaged and not sumped as required, heating, ventilating and air conditioning (HVAC) units were not reconnected, pitch pockets were incomplete, interior storage area soiled, walkpad not adhered, and counterflashing incomplete. Of these nine items, the flashings, pitch pockets, and counterflashings were incomplete. Transcript at 420-21. The HVAC units and the walkpads were not deficiencies and the interply void was "a very minor problem," according to Mr. Cannon. The report did not indicate that any portion of the eighth floor roof needed to be removed. Id. at 421. Similar incomplete flashings, loose field laps, and counterflashings were noted on the eighth floor area surrounding the cooling area and the semicircle. On the penthouse there was an eleven-item punch list. Respondent's Exhibit 4. Nothing in this report indicated that any portion of the roof installed by ASMC had to be removed or that there was nonconforming work which had to be rejected or that further evacuation or tests cuts were required. Transcript at 778-79. Respondent's expert testified that on October 25 he observed a gap of less than a quarter to three-eighths of an inch wide and approximately three quarters of an inch to one inch deep where the roof surface joins the Granby Street parapet wall, and he characterized this condition as incomplete flashings. Transcript at 901-04, 908-25; Respondent's Exhibit 23. Respondent's expert did not include photographs of this condition in his October 31 report. Transcript at 908. Although respondent's expert later testified that this was a "non-watertight" condition, he did not mention that in his report. Id. at 909. Respondent's expert also opined that no temporary flashings were installed in this area, but appellant's expert squarely disputed this, testifying that there was a felt membrane sealed with hot asphalt. Compare Transcript at 919-20 with Transcript at 928-38; see also Transcript at 540-44. Both the infrared survey of October 24 and the test cut on the Granby Street side of the roof taken on November 7 indicated this area to be dry. Respondent's Exhibit 12; Transcript at 924-26. The Insulation Left On Site By letter dated October 31, 1996, ASMC advised the contracting officer that it had learned that some of the insulation which had been custom ordered for the project and left on site for the reprocurement contractor was being used to shelter homeless individuals and that such materials were not securely protected from the elements. Appellant's Exhibit 78. The Decision to Hire National Roofing for the Reprocurement The contracting officer had an agreement in principle with NRC, the reprocurement contractor, before GSA issued the termination notice on October 18. Transcript at 148-49. GSA did not conduct a new procurement for the roof completion job. Instead, it modified an indefinite quantity term contract for roofing repairs in Baltimore, Maryland, between NRC and GSA, to include the Federal Building roof in Norfolk with an effective date of November 8, 1996. The modification increased the maximum ordering limitation by $450,000, from $556,947.49 to $1,006,947.49. Appellant's Exhibit 125; Second Appeal File, Exhibit 12. The Government also paid NRC an allowance for room and food in the amount of $10,238.61 because this contractor was not from the area and needed to house the crews. Transcript at 70. In selecting the replacement contractor, GSA did not contact any contractors in the Norfolk area. Id. at 119. Respondent's expert attempted to have NRC approved by Siplast, but Siplast refused to approve NRC because it did not meet Siplast's internal criteria to be a Siplast installer. Transcript at 409-10. Therefore, NRC had to use Soprema materials. Id. at 410. On October 28, 1996, NRC began work on its contract using specifications that were different from the specifications on the ASMC contract. Transcript at 433; Respondent's Exhibit 9. Robert Peters, Vice President of NRC, was in charge of handling operations on the job. Transcript at 203. Sorg & Associates, P.C. (Sorg) was the inspector on the NRC job for GSA. Id. at 489. Glenn Davis was the roof inspector on the job for Sorg. Id. at 490; Respondent's Exhibit 9. On October 29, 1996, a representative of Soprema inspected the roof and prepared a punch list which listed nine items under the heading "Work required on Siplast Roof for warranty to be issued by Soprema." Appellant's Exhibit 167. The punch list did not indicate that any portion of the eighth floor roof needed to be removed. Transcript at 424-26; Appellant's Exhibit 177. NRC began its work on the second floor roof and began tear- off of the eighth floor roof (southeast section) on November 4, 1996. Respondent's Exhibit 9. In his daily inspection report of November 5, 1996, Mr. Davis reported a morning conference call with GSA, stating that: 8-9 a.m. -- Had phone with GSA/Tim Hile - GSA/Chris Horrigan and NRC/Bob Peters regarding the existing condition in which it was found that previous contractor had failed to properly install the new metal base flashing to metal deck with no wd. nailers. Transcript at 493-94; Appellant's Exhibit 138. Mr. Peters took a photograph showing the lack of wood nailers, which he testified were not in accordance with the specifications. Transcript at 214-15; Respondent's Exhibit 11 at 2. Mr. Peters wrote on the photograph "Old roof improperly installed metal flange under insulation -- not in accordance w/specs." Id. Mr. Peters did not review the approved submittals on the ASMC contract. Transcript at 232-33. On November 6, 1996, at 8:00 a.m., there was another conference call among GSA, NRC, and Sorg. In his daily inspection report of that date, Mr. Davis reported: 8:00 a.m. conf. call with GSA/Tim Hile, GSA/Chris Horrigan, NRC/Bob Peters and Sorg/Ricardo Carrasco regarding the final decision on weather [sic] to tearoff the roof installed by previous contractor at 8th floor roof/North and East Transcript at 494-95; Appellant's Exhibit 139. Later on November 6, 1996, Mr. Peters made a six-by-six-inch test cut at the perimeter edge of the eighth floor roof at the Scope Arena side to see if the lack of wood nailers was consistent throughout the roof. Transcript at 216, 222-23; Respondent's Exhibit 11 at 1. Mr. Peters testified that from the test cut, he saw that there were no wood nailers and there was moisture detected on the steel deck. Transcript at 216; Respondent's Exhibit 11 at 1. The test cut was not sent to a laboratory, but was put back immediately. Transcript at 223. No one from Soprema looked at the test cut, nor was respondent's expert present to look at the test cut. Id. The only person who testified that he actually observed the moisture was NRC's vice president. Sorg's report for that date made no mention of the water, but the November 5 report did mention the lack of wood nailers. Respondent's Exhibit 9, Sorg Project Reports Nos. 9657-9 and 9657-10. A photograph of the six-by-six-inch test cut taken by NRC did not itself show water on the metal deck, but contained a notation "Scope Arena side, No Nailers, Water Detected." Id., Nov. 6, 1996 Photograph; Transcript at 827. On November 7, 1996, another six-by-six-inch test cut was taken at the perimeter edge on the Granby Street side of the eighth floor roof and sent via Federal Express to GSA. Transcript at 450; Appellant's Exhibit 142. The test cut was dry, with no moisture detected on the deck. Respondent's Exhibit 12; Transcript at 441, 809-10. There was no evidence such as a staining on the test cut to suggest it ever had been wet. Respondent's Exhibit 12. On November 11 or 12, a meeting was conducted among GSA contracting personnel and GSA's expert, and as a result, GSA decided to remove and replace the eighth floor roof. Transcript at 272, 306. The reasons for that decision were that water was detected as a result of the test November 6 cut, the low parapet height, the ponding water on the corridor roof, the tearing at the drains, and the cap sheet ripping because the slope was too severe coming to the drains. Id. at 273. In addition, there was a lack of a nailer or wood blocking. Id. at 275. In deciding to tear off the roof, the COTR contacted HDH and complained that its performance had not been adequate on the job since there were supposed to be wood nailers and there were none. Transcript at 276. HDH replied that the lack of a wood nailer in the detail had been approved by the COTR in the submittal process. Id. At the time the COTR received the letter, he looked at the drawings, saw the submittal, and saw that he had approved it without the wood blocking and at that point thought he had "made a big blunder," so he wrote back HDH and told the firm that it had been correct. Id. at 277. Subsequently, in conjunction with this litigation, the COTR reread the submittals and determined that the approved submittal did not eliminate the contract requirement for nailers but was a faulty drawing which gave conflicting information and ASMC was required to submit contract drawings and a change proposal to alert the COTR that it was proposing a change. Id. at 280. Another reason for the decision to tear off the eighth floor roof was the raised insulation due to the corrective solution on the sixty-four squares which caused the flashing height to be reduced. The flashing height of the parapet wall was supposed to be four to nine inches and appellant's expert testified that although ASMC had not yet installed the flashings, there was room for a four-inch flashing height. Transcript at 793-94. The roof that NRC installed on the Granby side had a flashing height which was three and a half inches. Id. at 233. In appellant's expert's opinion, a difference in the flashing height was not significant and the additional layer of insulation probably helped the watertightness of the roof. Id. at 794. There was no testimony or other evidence in the record, such as entries in Sorg's reports or photographs, to indicate that when the eighth floor roof was torn off any other water or moisture was found.[foot #] 16 Differences between ASMC's Contract and NRC's Contract There was a conflict between the specifications for the ASMC contract and the NRC contract -- in particular, regarding the membranes. Transcript at 299. NRC installed three sheets in order to get the thickness required by the contract because it used Soprema materials and ASMC installed two sheets because the Siplast materials which it used were thicker. Id. These membranes also had to be applied differently, which affected other aspects of the work. Id. at 300. NRC was permitted to remove the coping on the parapet on the Granby Street side of the building; ASMC was not allowed to remove the coping. Id. at 286, 293. HDH was not the Government's construction manager on the reprocurement contract because neither Mr. Greer nor any other HDH inspector was available twenty-four hours a day. Transcript at 629. On January 13, 1997, NRC substantially completed its reprocurement contract; this was seventy-nine days after it began work and at a cost of $425,000. Respondent's Exhibit 8; Transcript at 352. Respondent calculated adjusted reprocurement costs chargeable to ASMC as follows: Contract award to American Sheet Metal Corp. $ 338,295.00 Modification PC04 $ 7,345.00 Modification PC06 $ 985.00 Total amount of contract $ 346,625.00 Less Value of ASM's work (penthouse) $ (94,731.03) ASM's contract balance at termination $ 251,893.97 ----------- FOOTNOTE BEGINS --------- [foot #] 16 In contrast, there was testimony about the lack of nailers. The COTR was asked if there were any nailers present when the entire eighth floor roof was removed. Transcript at 860. Neither he nor any other witness was asked whether water was detected during that removal. ----------- FOOTNOTE ENDS ----------- Contract award to National Roofing Co. $ 425,000.00 Less cost of work not included in ASM contract $ (12,516.68) Less ASM's contract balance $(251,893.97) Excess reprocurement costs $ 160,589.35 Cost of roof inspection at termination [[foot #] 17] $ 5,950.80 Property damage caused by ASM broken skylight[[foot #] 18] $ 3,117.00 damaged carpeting $ 3,422.22 $ 6,539.22 Liquidated damages from 10/19/96 at $326.00 a day $ 28,362.00 Total damages and costs $ 201,441.37 Respondent's Exhibit 2; Transcript at 72-73. GSA modified NRC's contract, increasing its value to $1,694,749, on November 11, 1996. Transcript at 196; Second Appeal File, Exhibit 10. The reprocurement costs included the cost of tearing out the entire eighth floor roof. Transcript at 168. ASMC's Invoice for Work Completed Prior to Termination On December 12, 1996, ASMC submitted an invoice to GSA in the amount of $198,011, representing work performed by ASMC prior to termination. Appellant's Exhibit 91. According to appellant's certified application for payment, ASMC as of the time of termination had completed work valued at $244,529, or 71% of its total contract price. Id. According to that payment application, ASMC had completed work valued at the following percentages of the contract price: 70% of asbestos demolition, 75% of set up and unloading, 86% of gravel removal, 62% of roof removal, 62% of new roof felts, 62% of asphalt, 62% of roof insulation and screws, 55% of new wall and curved flashings, 37% of new metal fascia installation, and 88% of hoist/crane charges. Id. GSA did not consider ASMC's request for payment in light of its intention to reprocure and assess liquidated damages, and ----------- FOOTNOTE BEGINS --------- [foot #] 17 This amount was paid to Mr. Cannon for inspection of ASMC's work. Transcript at 73. [foot #] 18 GSA charged ASMC for a broken skylight on the second floor roof because during the time that ASMC was working on the eighth floor roof, roofing granules broke the glass, but the COTR did not know how the roofing granules became dislodged. Transcript at 348-49. ----------- FOOTNOTE ENDS ----------- there is no discussion of the individual components of this claim in the contracting officer's final decision. Supplemental Appeal File, Exhibit 41; Appellant's Exhibit 95. By memorandum dated December 31, 1996, the COTR recommended that GSA not consider payment of this invoice due to work by ASMC which he believed needed to be corrected or replaced. Respondent's Exhibit 3. Further, in assessing reprocurement costs, GSA credited ASMC with the remaining contract balance of $251,893.97, and deducted this amount from the $425,000 cost of the reprocurement contract. Respondent's Exhibit 2. Liquidated Damages The Government is seeking liquidated damages against ASMC in the amount of $28,362 for the delay in project completion from October 19, 1996, the day after termination, to January 14, 1997, the date NRC substantially completed its reprocurement contract. Transcript at 352. The contracting officer testified that the daily rate of $326 represented the standard costs for each of the disciplines involved in keeping the project going past its completion date. Id. at 75. Facts Pertinent to the Qualification of GSA's Inspector as an Expert GSA hired HDH for the purpose of monitoring the construction of the roof on the Federal Building. The scope of services provided by HDH is set forth in GSA's contract with HDH, and Mr. Greer was the field inspector under this contract. The duties of the field inspector included the following: The Field Inspector's work shall include, but is not limited to the following work: . . . Field inspect construction for conformance with contract RVA-43602, and He or She will promptly report any deviations to the COR and document the deviations with photos and reports . . . [a]dvise and assist the Contracting Officer's Representative (COR) in determining the recommendation of acceptability or non-acceptability of marginal work, workmanship, installation, products or equipment performance. He or She shall assist COR in certifying completed construction work items. Appellant's Exhibit 21. As of the time of the hearing, Mr. Greer had been employed by HDH as a roof inspector for four years. Transcript at 500. Prior to that he worked as a construction superintendent and had been in the construction field for fifteen years. Id. at 500-01. Mr. Greer possesses a certification from Roof Consultants Institute (RCI), a national organization with over 1300 members formed to raise the level of professionalism among roof consultants. Id. at 563. All certified members must pass an examination covering all facets of roofing. Id. at 501-02. RCI also has a program for certifying registered roof observers, and Mr. Greer possesses this certification. He is one of approximately ninety registered roof observers in the country. Id. at 564. Mr. Greer had inspected over fifteen roofs from the beginning to the end of projects. Id. at 502. Mr. Greer was neither retained nor specially employed to provide expert testimony in this case. Transcript at 520-22. Nor was he compensated for his testimony. Id. at 520. Discussion May the Inspector Testify as an Expert Witness? During the hearing, appellant sought to have Mr. Greer qualified as an expert in roof construction and inspection. Transcript at 519. Respondent objected on the grounds that the appellant did not disclose Mr. Greer's expertise or provide a Rule 26 Statement as described in Federal Rules of Civil Procedure so as to put respondent on notice that his expert opinions could be the subject of discovery. Respondent also maintained the witness' expertise had not been established. Id. Appellant contended that it was not required to further identify the witness or file a Rule 26 Statement because Mr. Greer was both a fact witness and an expert much like a treating physician, and appellant had neither retained or employed him as an expert nor requested him to prepare a report. Id. at 520-22. The Board deferred ruling on the objection to Mr. Greer's admission as an expert, but to expedite the proceedings permitted Mr. Greer to testify as though he had been admitted. Transcript at 426-27. Procedural Background On November 13, 1997, ASMC filed with the Board a document entitled "Appellant's Identification of Expert Witnesses." In that document, appellant listed its retained expert Deborah A. Evans, P.E., as well as the Government's inspector, Wiley Greer, and five other expert witnesses. Appellant did not disclose the area of any of these witnesses' expertise, except for its retained expert, Ms. Evans. Appellant filed a Rule 26(a)(2)(B) Disclosure Statement for Ms. Evans as well. Shortly after the filing of this document, counsel for GSA contacted counsel for ASMC to schedule a deposition of Mr. Greer. Mr. Greer's deposition was subsequently canceled by respondent's counsel. Rule 26 Rule 26(a)(2)(A) of the Federal Rules of Civil Procedure requires that a party disclose the identity of any person who may be used at trial to present expert testimony. The rule requires identification of the expert, but does not expressly require a description of the subject matter of his testimony or his areas of expertise. Fed. R. Civ. P. 26(a)(2)(A). However, additional disclosure is required for retained experts pursuant to Rule 26(a)(2)(B): Except as otherwise stipulated or directed by the court, this disclosure [under Rule 26(a)(2)(A)] shall with respect to a witness who is retained or specially employed to provide expert testimony in the case . . . be accompanied by a written report prepared and signed by the witness. Fed. R. Civ. P. 26(a)(2)(B). The Advisory Committee Notes to this rule make clear that the requirement for a report applies only to experts who are retained or specially employed to provide expert testimony: The requirement of a written report in paragraph (2)(B) however applies only to those experts who are retained or specially employed to provide such testimony in the case or whose duties as an employee of a party regularly involve the giving of such testimony. Id., Advisory Committee's Notes. As the district courts have recognized, the rule contemplates two categories of experts, experts retained for the purpose of providing expert testimony and experts who derive their knowledge of the facts of the case firsthand. E.g., Shapardon v. West Beach Estates, 172 F.R.D. 415, 416 (D. Haw. 1997) (report not required from plaintiff's treating physicians as their opinions are derived from firsthand treatment); see also Wreath v. United States, 161 F.R.D. 448 (D. Kan. 1995) (only witnesses who are retained or specially employed to provide expert testimony are required to provide a written report). In the instant case, appellant did not retain or specially employ Wiley Greer for the purpose of providing expert testimony. On the contrary, most of Mr. Greer's testimony was factual in nature and his opinions were solely derived from his employment by HDH as GSA's inspector on the job being performed by ASMC. Mr. Greer obtained his knowledge of ASMC's work firsthand in his capacity as the inspector, and was responsible for evaluating the quality of ASMC's work and reporting his findings to GSA. Ruling Given that the identity of this witness and appellant's intention to call him as an expert was timely disclosed to respondent and indeed a deposition had even been scheduled, there is no prejudice to respondent by virtue of the Board accepting this witness as an expert at trial. Further, under the clear terms of Rule 26 no report was required since Mr. Greer is not a retained or specially employed expert, and the scope of his testimony did not extend beyond his firsthand observations and evaluations as the inspector. Finally, the Board's own prehearing order did not impose any requirements over and above those of Fed. R. Civ. P. 26, but simply provided: "Expert witnesses shall be designated by November 14, 1997, and Rule 26 Statements shall be filed on November 14, 1997." Amended Prehearing Order at 2 (Oct. 3, 1997). Appellant complied with the rule and the Board's order. Based upon Mr. Greer's significant experience in the roofing industry, the Board accepts him as an expert in roof construction and inspection. Fed. R. Evid. 702. Thus, he is qualified to render an expert opinion on the quality of workmanship of the roof constructed by ASMC. The Board, therefore, accepts the following testimony from Mr. Greer as an expert opinion: Q Now, Mr. Greer, do you have an opinion based upon your observation of the methods of construction and the corrective solution that was applied to the eighth floor roof, north end, do you have an opinion as to whether or not that roof was a sound roof? A Yes, I do. Q And what is that opinion? A. The roof was sound. Transcript at 540. Further, the Board accords weight to the overall testimony of Mr. Greer based on his firsthand observation of the job progress, his position as the field inspector, and the Board's assessment of his credibility. The Default Termination It is well established that a default termination is a drastic sanction which should be imposed only for good grounds and on solid evidence. E.g., J. D. Hedin Construction Co. v. United States, 187 Ct. Cl. 45, 57, 408 F.2d 424, 431 (Ct. Cl. 1969). A termination for default is a Government claim, and the Government has the burden of proving the propriety of such termination by a preponderance of the evidence. Libson Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). In this case, the Government has failed to meet its burden of proof. The Government terminated ASMC's contract for default for failure to make progress or prosecute the work with diligence that would ensure completion within the time specified in the contract extension. As the United States Court of Appeals for the Federal Circuit has articulated, in order to sustain a default termination on these grounds the Government must establish that the contracting officer reasonably determined that there was "no reasonable likelihood that the contractor could perform the entire contract effort within the time remaining for contract performance." Lisbon Contractors, 828 F.2d at 765 (quoting RFI Shield-Rooms, ASBCA 17374, et al., 77-2 BCA 12,714); SAE/Americon, Inc. v. General Services Administration, GSBCA 12294, et al., 98-2 BCA 30,084, at 148,906 ("To sustain the default termination there must be convincing proof that timely performance was beyond the contractor's reach."); California Dredging Co., ENGBCA 5533, 92-1 BCA 24,475, at 105,865 ("having terminated CDC prior to the completion date, the Government has the burden of proving . . . that the contractor's performance was so lacking as to establish either an intention not to complete the work or lack of ability timely to complete the work . . . . In cases where a termination for failure to make progress has been upheld, something more than a showing of the percentage of work completed versus the time remaining was offered in support of the Contracting Officer's decision. see also, Olympic Painting Contractors, ASBCA 15773, 72-2 BCA 9549 (contractor terminated for default halfway through the contract because only 7% of the work had been completed and none of the work was completed in accordance with the contract specifications); W.B. [Branin] Construction Co., AGBCA 313, 73-1 BCA 9887 (contractor had completed 15% of the work with only 40% of the time remaining and there was legitimate concern over whether the contractor had adequate finances to complete the project.)." Where the determination of the extent of the contractor's diligence in performing turns, at least in part, upon the percentage of progress achieved, the method of calculation of that percentage takes on obvious importance. Cox & Palmer Construction Corp., ASBCA 38746, et al., 92-1 BCA 24,756, at 19,622, aff'd on reconsideration, 93-1 BCA 25,219. Here, the Government's methodology for calculating appellant's progress was incomplete and inadequate. The contracting officer's calculation that ASMC had only completed 61% of the entire job as of October 18 was based solely upon counting the number of squares of roofing membrane installed. The contracting officer's derivation of a "production rate" of five squares per day based upon the same superficial methodology applied over a single four- day period was similarly flawed. Respondent bases its conclusion that there was no reasonable likelihood that ASMC could complete the eighth floor by October 21 or the entire job by October 31 on the contracting officer's "analysis" that during the four-day period from October 11 through October 14, 1996, ASMC installed twenty squares of roofing, a production rate of five squares a day. Respondent's Posthearing Brief at 16. Respondent's general methodology, as applied to this case, is unsound and unsupported by the evidence. The Government's estimate of completion based solely upon counting completed squares of roof does not include labor-intensive flashing work, asbestos abatement, or the recognition that not all areas were equally difficult or time- consuming to reroof. Moreover, the record here reflects that the majority of work performed during this period did not involve installing squares of membrane. Rather, ASMC removed the east corridor roof on the eighth floor, installed insulation and cap sheets on that floor, installed the sixty-four square corrective solution, installed Veral flashings on both the penthouse roof and the half moon roof, removed and made water-tight the perimeter of the south end, and was in the process of installing the flashings at the cooling tower and moving the equipment from the south end. In contrast to respondent's incomplete assessment of the percentage of completion, the weight of the evidence suggests that there was a reasonable likelihood that appellant could have completed the eighth floor roof by October 21. The testimony of appellant's project manager, based upon his site observations, that the eighth floor roof was 90% complete was not refuted by anyone who actually observed the roof.[foot #] 19 Further, other evidence supports the conclusion that ASMC could have completed the eighth floor roof by October 21. As of October 18, ASMC advised GSA that it could still remain on schedule if Friday, Saturday, and Sunday were marked by good weather and detailed the additional progress it had made. The testimony of GSA's inspector, while not addressing the percentage of completion, indicates that the installed roof was sound, and counterflashings were sufficient to seal the north eighth floor roof as of October 18. According to a rough estimate by a Siplast representative based upon a two-hour inspection conducted two days prior to termination, the application of Siplast materials on the eighth floor roof was 70% complete as of that date and that roof qualified for a Siplast warranty. Because on October 17 and 18 ASMC worked a total of 270 manhours and was able to add even more manpower as of October 18, this rough estimate also supports a conclusion that ASMC could have achieved substantial completion of the eighth floor roof by October 21. Similarly, ASMC's certified application for payment indicating that 71% of the costs of the overall job had been expended as of October 18 is consistent with ASMC's project manager's estimate that the eighth floor roof was 90% complete. In cases involving a Government claim that a termination for default is justified by a contractor's failure to make sufficient progress, the courts and the boards of contract appeals "will not uphold a default unless the CO has carefully examined the contractor's ability to complete the remaining work before the contract completion date." Hannon Electric Co. v. United States, 31 Fed. Cl. 135 (1994), aff'd, 52 F.3d 343 (Fed. Cir. 1995), citing Lisbon, 828 F.2d at 765-66. The record is devoid of convincing evidence of such a careful examination. The contracting officer's decision to terminate was based upon the COTR's opinion that the overall job was 61% complete as of October 18 -- an opinion formed without the benefit of a visual inspection of the roof by either the contracting officer or the ----------- FOOTNOTE BEGINS --------- [foot #] 19 Respondent's expert made no analysis of the percentage of completion of the eighth floor roof. ----------- FOOTNOTE ENDS ----------- COTR and based upon counting the number of squares of installed roof, without considering other work performed or the difficulty of completed work as compared to remaining work. The contracting officer's conclusion that ASMC had not supplied a realistic work schedule is not supported by the record. Further, as of October 10, by the Government's own admission, 40% of the eighth floor roof was complete. Appeal File, Exhibit 25; Appellant's Exhibit 63. Given that between October 11 and October 18 appellant accelerated its efforts and expended a total of 980 manhours on the job, and that ASMC was prepared to add more men as of the termination, the weight of the evidence suggests that completion of the eighth floor roof by October 21 was within ASMC's reach. Further, the contracting officer's explanation for his conclusion that ASMC would not complete either the eighth floor roof or the entire project on time indicates that he was considering ASMC's progress and production rate prior to the extensions and not focusing on ASMC's accelerated efforts to achieve completion. The contracting officer testified: "Because of their progress up to that time, even when they were working, their production rate was so poor that if you did an extrapolation of what they had accomplished in their three to four or five months that they had the project, there was no way that production rate would lead to a conclusion on those other floors by the October 31 date." Transcript at 58. This rationale did not take into consideration the accelerated production and the work done during the extension period -- it improperly harked back to an amorphous unspecified production rate prior to the extension which became irrelevant once the extension was granted and appellant accelerated its efforts. Nor did the contracting officer "carefully consider" the implications of bringing in a roofing contractor, certified as an installer of a completely different roofing system -- with a different number of membranes and a different application process -- to complete a roof in process. See Darwin Construction Co. v. United States, 811 F.2d 593 (Fed. Cir. 1987). Further, the Government's own inspector questioned the wisdom of bringing on a reprocurement contractor who was not a Siplast installer -- necessitating completing the roof with different materials and raising a warranty issue. Nor did the reprocurement contractor's original estimate of completion -- twelve days, working nights -- represent a significant time savings in the completion rate, considering that the reprocurement contractor had to move its workforce from Baltimore to Norfolk, set up the job, obtain equipment and materials, and remobilize, such that it could not have begun work immediately; appellant had estimated completing the entire job by October 31, thirteen days after the termination. Cf., Darwin Construction, 811 F.2d at 599 (defaulted contractor could have completed work as soon as and probably much sooner than successor contractor). The fact that the Government terminated this contract in the absence of a clear overall completion date before the time had expired in the cure notice of October 10 is another infirmity in the termination decision. Specifically, at the time that the Government terminated the contract on October 18, the cure period for completing the eighth floor roof had not expired, and no new definitive deadline had been given to ASMC for overall completion. The burden of proving a binding completion schedule is part of GSA's burden of sustaining the termination for default. See generally, Lisbon Contractors, 828 F.2d at 765; DBA Systems, Inc., ASBCA 34664, 89-3 BCA 22,202; Jack Spires & Sons Electrical Co., Inc., ENG BCA 5143, 87-3 BCA 20,069. While it is true that on October 3 appellant had indicated it could complete the job by October 31 (and this was prior to the granting of the second extension due to five days of adverse weather), and had reiterated the October 31 completion date in its October 10 schedule, there is no written evidence or clear communication from GSA to appellant that October 31 was a firm deadline for overall completion. Rather, GSA's formal modification set October 21 as the deadline for completing "the eighth floor roof only," leaving the overall job completion deadline up in the air. GSA's October 10 letter specifically indicated that the overall completion date was a topic to be revisited on October 21. In addition, because GSA nullified the prior completion date of October 15 and failed to establish a new completion date, we consider this to be tantamount to a waiver of GSA's right to terminate ASMC thereafter for failure to make progress. DBA Systems, Inc., ASBCA 34664, 89-3 BCA 22,202; Electronics of Austin, ASBCA 24912, 86-3 BCA 19,307; Humphrey Logging Co., ASBCA 84-359-3, et al., 85-3 BCA 18,433. October 21, the deadline for finishing work on the eighth floor roof, was the only concrete date given to appellant by the Government in the October 10 cure notice. At that juncture, the Government was to reassess performance on the remainder of the roof. In the instant case, circumstances warranted at least waiting until the end of the cure period, given that the contractor had significantly accelerated its efforts, and the potential costs and disruption of bringing on a reprocurement contractor to complete a roof which was almost finished were substantial. In Introl Corp., DOTCAB 1030, 80-1 BCA 14,380, the Department of Transportation Board of Contract Appeals overturned a termination for default as procedurally defective when the contracting officer terminated the contract prior to the expiration of the cure period. To the extent that respondent is now trying to argue that deficient performance supports the termination decision, we disagree. First, the reverse installation of sixty-four squares was remedied and approved by the Government subject to provision of a warranty. All indications were that a warranty would be forthcoming upon completion of the job. The Government's own inspector testified that the corrective solution was sound. Nor has the Government demonstrated that the contractor's installation of the roof was noncompliant with GSA's requirements, because ASMC failed to install the wood nailer. Rather, the weight of the evidence suggests that the Government approved the submittal deleting the requirement for a wood nailer and that the contractor reasonably believed that the detail had been approved with the concurrence of the COTR, the Government inspector, and the manufacturer. Nor does the evidence of record support a conclusion that ASMC's workmanship on the roof was faulty due to the moisture detected on the deck in November. Indeed, the observed water on the deck was minimal and the testimony of the one witness who observed it was uncorroborated. A test cut from the Granby Street side of the roof revealed no moisture or water.[foot #] 20 Nor was there any other evidence indicating that any additional water was found once the roof was torn off. Further, even a finding that there was water on the metal deck of the roof on November 6, 1996, does not in and of itself demonstrate that the installation done by ASMC was faulty. Rather, it is uncontroverted that the Government terminated ASMC on October 18 without giving it an opportunity to finish the job and without giving it an opportunity to ensure the roof was water-tight. The reprocurement contractor began work ten days after termination and there was rain on the days immediately following the termination. An infrared survey on October 24 detected no moisture on the roof, and neither respondent's own expert nor appellant's expert documented the type of workmanship problems -- other than ASMC's not finishing the job -- which would have accounted for moisture on the deck. Based upon the record as a whole, respondent has not demonstrated that any defects in workmanship independently justified termination here, since appellant was not permitted to finish the job. Respondent also criticizes appellant for leaving the job for the month of August. But this circumstance, like the reverse installation which was corrected, cannot serve as a basis for default since respondent extended the completion date, encouraging appellant to expend its resources and accelerate its performance. Further, appellant's departure from the job for a two-week period was approved both at the outset of the job and again just prior to ASMC's departure by the COTR. The fact that appellant remained away for two more weeks due to adverse weather, while unfortunate, was apparently considered in respondent's decision to grant appellant two subsequent extensions. ----------- FOOTNOTE BEGINS --------- [foot #] 20 Curiously, this is the side of the roof which respondent's expert claimed had a gap and did not contain temporary flashings. The test cut where moisture was detected on the deck was taken from the Scope Arena side. ----------- FOOTNOTE ENDS ----------- Liquidated Damages The Government's claim for liquidated damages also fails in this case. The Government has assessed liquidated damages against ASMC for the period commencing the day after it prematurely terminated ASMC's contract for default until NRC achieved substantial completion almost three months later. However, it is well established that liquidated damages are to be assessed to compensate the Government for nonexcusable delay in completion of the job after the prescribed completion date. E.g., Frontier Contracting Co., ASBCA 33658, 89-2 BCA 21,595, at 108,737 ("Liquidated damages withheld . . . must be returned to reflect the new completion date established herein."); Biehler Painting Co., Inc. ASBCA 18855, 76-1 BCA 11,729, at 55,922 ("Liquidated damages are intended to compensate the Government for delay in completion of the job after the contractually prescribed completion date."). The Government granted appellant an extension of time to and until October 21 to complete the eighth floor roof and until a date uncertain (at least October 31) in which to complete the overall project. The Government prematurely and improperly prevented ASMC from continuing work on this job by terminating ASMC prior to both the extended completion date for the eighth floor roof and the undetermined completion date for the entire project. As such, respondent has not demonstrated that liquidated damages may be assessed due to delay attributable to appellant. Respondent has not established the factual predicate or the legal basis for assessing liquidated damages against appellant here. Appellant's Claim for Monies Due Prior to Termination Because the contracting officer did not consider appellant's claim for monies due prior to termination, and because the Board has converted the termination for default into a termination for convenience, it is appropriate for this claim to be considered in the context of the termination for convenience settlement.[foot #] 21 Cf. PBI Electric Corp. v. United States, 17 Cl. Ct. 128 (1989) ("[P]laintiff's claims for cost adjustments are mooted by the default and subsumed in the termination for convenience damage claim."); Ralcon, Inc. v. United States, 13 Cl. Ct. 294, 296 (1987) (citation omitted); accord SAE/Americon, 98-2 BCA at 148,920 n. 1 (since termination for default was improper, quantum issues were deferred to termination for convenience settlement); Foremost Mechanical Systems, Inc. v. General Services Administration, GSBCA 12335, et al., 95-1 BCA 27,382 (1994). ----------- FOOTNOTE BEGINS --------- [foot #] 21 While respondent has asserted that appellant is not entitled to any monies for work performed prior to termination, it has not addressed the particulars of this claim. ----------- FOOTNOTE ENDS ----------- Decision The appeals in GSBCA 14066 and 14189 are GRANTED. The termination for default is converted to a termination for the convenience of the Government; respondent's claim for excess reprocurement costs, liquidated damages, and other damages is denied. Appellant's claim in GSBCA 14068 for monies due in the amount of $198,011 for labor and materials furnished to GSA prior to termination is DISMISSED WITHOUT PREJUDICE to be considered by the Government in the context of the termination for convenience settlement. ________________________________ MARY ELLEN COSTER WILLIAMS Board Judge We concur: ______________________________ _______________________________ EDWIN B. NEILL ALLAN H. GOODMAN Board Judge Board Judge