The Armed Services Board of Contract Appeals’ (ASBCA) recent decision in Odyssey International, Inc. provides contractors with yet another cautionary tale when executing modifications with the government: make sure you fully understand the consequences of what you are gaining (and possibly losing).
In Odyssey, the U.S. Army Corps of Engineers (the government) contracted for the construction of a building at an Army depot in Pennsylvania. A micropile system, which involves drilling small-diameter holes into bedrock and inserting grout into any voids before inserting a metal pole and casing, was to be used in the building’s foundation. Although potential offerors were to assume the need for 60 micropiles, the solicitation also noted that the contractor bore responsibility for the micropile foundation system’s design. After a series of discussions on the topic, the government informed Odyssey to submit its micropile design independent of the bidding criteria. As a result, Odyssey’s design, which the government approved, proposed using 80 micropiles instead of 60.
The government requested Odyssey submit a proposal for additional time and costs associated with 20 micropiles (i.e., the difference between Odyssey’s design and the micropile quantity called out in the bid criteria). However, the government later canceled that request and informed Odyssey that the solicitation actually required 72 micropiles. As a result, the government requested Odyssey provide a change proposal for just eight micropiles. Following negotiations, the parties executed a bilateral modification for the eight micropiles, which contained a release that is sometimes referred to as a “closing statement.”
Odyssey later submitted a request for equitable adjustment (REA) for additional costs and time in connection with the construction and installation of 20 micropiles, all of which had been completed at the time. Failing to reach an agreement on this REA, the government issued a unilateral modification granting some time and money for the micropile foundation system.
Nearly a year following the unilateral modification, the parties entered into another bilateral modification that largely addressed issues unrelated to the micropiles. However, this modification converted the micropile unilateral modification into a bilateral one and included a closing statement and release language. When Odyssey subsequently submitted another REA regarding the micropiles, the government denied it on the basis that Odyssey had previously released its micropile claim in the earlier bilateral modification. Odyssey disagreed and stated that the purpose of the bilateral modification was not to address the micropile work and challenged any purported release. Because the government maintained that Odyssey had released the micropile claim, Odyssey appealed the matter to the ASBCA.
In denying Odyssey’s appeal, the ASBCA found that the government’s unilateral modification addressed Odyssey’s micropile REA, the later bilateral modification converted the unilateral modification into a bilateral one, and the release in the later bilateral modification applied to Odyssey’s micropile REA. Thus, in executing the later bilateral modification, Odyssey released its micropile claims. Furthermore, the ASBCA held that because the release language in the modification was unambiguous in releasing Odyssey’s micropile claims, the ASBCA did not need to look beyond the modification’s language to interpret the parties’ intent in executing it.
As Odyssey reflects, you must read any bilateral modification’s scope carefully to understand exactly what the government may be giving you and, conversely, what you may be giving up. Be wary that even if you misunderstand a modification’s reach, a court generally will not consider anything beyond the modification’s express language (unless the language is ambiguous). Accordingly, it is always a good idea to have your attorney review any language in a modification labeled as a “closing statement,” “release,” or any language suggesting that you may be waiving your rights. Our Government Contracting Group is available to assist you with questions surrounding contract modifications and any other government contracting matters.