THE CENTECH GROUP, INC. v. USA

Filing 112

REPORTED OPINION granting in part and denying in part 102 CENTECH's motion for summary judgment; denying 103 the government's motion for summary judgment. A status report is due by 3/21/2025. Signed by Judge Thompson M. Dietz. (sbp) Service on parties made.

In the United States Court of Federal Claims
No. 19-1752
(Filed: March 11, 2025)

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THE CENTECH GROUP, INC.,
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Plaintiff,
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v.
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THE UNITED STATES,
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Defendant.
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Kenneth A. Martin, The Martin Law Firm, PLLC, McLean, VA, counsel for Plaintiff. With
whom were James C. Fontana and L. James D’Agostino, Fontana Law Group, PLLC, McLean,
VA, of counsel. Also with whom were David R. Warner and Heather B. Mims, Warner PLLC,
Reston, VA, of counsel.
Amanda L. Tantum, U.S. Department of Justice, Civil Division, Washington, DC, counsel for
Defendant. With whom was Michael J. Farr, Senior Trial Attorney, Air Force Commercial
Litigation Field Support Center, Joint Base Andrews, MD, of counsel.
OPINION AND ORDER
DIETZ, Judge.
THE CENTECH GROUP, INC. (“CENTECH”), suing on behalf of its subcontractor Iron
Bow Technologies, LLC (“Iron Bow”), seeks damages for breach of contract under the Contract
Disputes Act, 41 U.S.C. § 7104(b)(1) (“CDA”). CENTECH claims that the United States Air
Force (“USAF”) improperly cancelled the installation of communications infrastructure in a
building on Vandenberg Air Force Base (“VAFB”) and refused to accept delivery of certain
materials after approving them for purchase. CENTECH also claims that it is entitled to the
reimbursement of attorneys’ fees as contract administration costs under Federal Acquisition
Regulation (“FAR”) 31.205-33. Before the Court are the parties’ cross-motions for summary
judgment under Rule 56 of the Rules of the United States Court of Federal Claims (“RCFC”).
For the reasons set forth below, the Court GRANTS-IN-PART and DENIES-IN-PART
CENTECH’s motion and DENIES the government’s motion.
I.

BACKGROUND

CENTECH is “an experienced government contractor that provides a full range of
information technology, systems solutions and other related services to the federal government.”
Sec. Am. Compl. [ECF 94] ¶ 2. On December 14, 2016, the USAF awarded CENTECH a task

order under its NETCENTS-2 Contract No. FA8732-14-D-0010. 1 [ECF 94-1] at 2, 23, 47. 2 The
task order was issued “in accordance with and subject to [the] terms and conditions” of the
contract. Id. at 2. Under the task order, CENTECH was required “to complete the design,
acquisition, and installation of the communications infrastructure supporting the renovation of
[Building 7000] on [VAFB].” Id. at 42. This involved “installation of . . . communication and
related equipment,” including “[a]ll voice, data, audio, and video wiring within the building (in
walls, below floors, and above ceilings) required to meet the Government approved final
designs.” Id. The task order required CENTECH to “[p]roduce the final
designs/drawings/architectures to include an updated [Bill of Materials (“BOM”)] for each of the
task areas.” Id. at 43. It instructed that “[f]inal designs and BOMs should be provided in a phased
approach that supports the completion of [the] project in an efficient manner (i.e. designs and
BOMs for each project task area may be completed/delivered at different milestones over the life
of the project).” Id. CENTECH was required to “[p]rovide flexibility to adapt to contingencies
resulting from [Building 7000] renovation schedule changes if required.” Id. The building was
planned to serve as “the future facility for United States Strategic Command’s [] Joint Space
Operations Center.” Id. at 42.
The task order’s objectives were “to allow [CENTECH] the maximum flexibility to
innovatively manage the program schedule, performance, risks, warranties, subcontracts, and
data to produce an [end item] that satisfies the user’s performance requirements” and “to
maintain clear Government visibility into the program schedule, performance, and risk.” [ECF
94-1] at 44 (second alteration in original). Regarding the acquisition of materials and products,
the task order required that CENTECH, “[u]sing a just-in-time approach based on the
Government provided schedule and after approval from the government, obtain and manage
logistics for all products and associated peripheral equipment required to successfully implement
all approved designs.” Id. at 43. It further stated that “[a] Government facility will not be
provided if delivery cannot be made directly to building 7000; however, space for contractor’s
storage containers will be available.” Id.
Under Contract Line Item (“CLIN”) 0090, CENTECH could seek payment for
“reimbursable materials and equipment.” [ECF 94-1] at 14. It provided:
This CLIN will be utilized to bill for reimbursable materials and
equipment for the Activation of Bldg. 7000 to include GSA fleet or
other vehicle(s) leases; no fee is authorized. Costs will be identified
and approved as referenced in the [Performance Work Statement
(“PWS”)]. Contractor allowed to receive invoice payments for
discrete portions of work, including partial deliveries, as soon as

The “NETCENTS-2” or “Network-Centric Solutions 2” contract vehicle “provide[s] the Air Force with a primary
source of netcentric and IT products, services, and solutions.” Air Force NETCENTS, https://www.netcents.af.mil/
(last visited on Mar. 7, 2025).
1

All page numbers in the parties’ filings refer to the page numbers generated by the Case Management/Electronic
Case Files (“CM/ECF”) system.

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completed and found acceptable by the Government (per FAR
32.102(d) and 32.906(c)).
Id. The PWS stated: “Reimbursable CLINs will apply for materials required to be purchased by
the contractor with approval of the government in support of requirements within this PWS.” Id.
at 37.
On August 23, 2017, CENTECH subcontracted a portion of the work, including the
purchase of certain materials, to Iron Bow. [ECF 94] ¶ 8; [ECF 94-1] at 51-53. Thereafter, on
November 30, 2017, the USAF Program Manager (“PM”) emailed the USAF Contracting
Officer (“CO”) the following: “My team is good with the attached BOM for Phase 1 of the
Building 7000 Activation project. Recommend we notify CENTECH to proceed with the
procurement of these materials, in accordance with the required processes, as soon as possible.”
[94-1] at 92; Pl.’s Mot. Summ. J. [ECF 102-1] at 163. Attached to the email was a memorandum
signed by the PM stating:
1.

The 614 ACOMS technical team and the B7000
Consolidation PMO Communications Lead have reviewed
CENTECH’s proposed Phase 1 Bill of Materials (BOM)
“B7000 Phase 1 - BOM.xlsx” for the Building 7000
Activation. The BOM meets the government’s technical
requirements for Phase 1.

2.

Recommend [CO] approve CENTECH to
acquisition of materials for Phase 1.

proceed

with

[ECF 94-1] at 98. Later that day, the CO emailed CENTECH to advise that the “BOM ha[d]
been reviewed and [wa]s approved for the purchase of materials for Phase I.” Id. at 92. On
December 14, 2017, CENTECH notified Iron Bow that the USAF had provided CENTECH with
“the authority to move forward . . . to purchase the items in [the] Phase I BOM totaling
$2,074,303.31.” Id. at 100. The same day, Iron Bow issued a purchase order to its supplier,
Communications Supply Corporation (“CSC”), for the materials. Id. at 105. By January 8, 2018,
Iron Bow had shipped a small number of the Phase 1 BOM materials to VAFB and invoiced
CENTECH; the materials were stored in containers adjacent to Building 7000. [ECF 94] ¶18;
Def.’s Mot. Summ. J. [ECF 103] at 14; [ECF 103-2] at 70.
On January 12, 2018, the PM emailed CENTECH that “[t]he Phase 1 design that the
government approved purchasing materials for should accommodate a number of different
modernized design courses of action,” [ECF 102-1] at 177, and that “[i]deally, the government
can get the Phase 1 labor estimate to look at and review separately from the discussion of what
the different options for the Phase 2 could be,” id. at 176. 3 He further explained that “[o]nce the
Phase 1 labor is approved, then we can have a discussion on what different modernized design
Phase 1 involved the acquisition and installation of the materials required to build the infrastructure in Building
7000. PM 1/14/2022 Depo. Tr. [ECF 102-1] at 37. Phase 2 involved acquisition and installation of the devices that
would plug into the infrastructure. Id. at 38-39.
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options for Phase 2 could look like.” Id. On January 17, 2018, the USAF authorized CENTECH
to proceed with installation of certain materials. Id. at 175. Shortly thereafter, on January 23,
2018, CENTECH emailed the CO and PM a labor worksheet with estimated labor costs for
installation of the Phase 1 BOM materials. [ECF 94-1] at 112-17. The next day, January 24,
2018, the CO replied in pertinent part: “After looking at this breakout of hours and cost it
appears that there may be a disconnect between what was approved on the BOM and the install
regarding the BOM. I would ask that install does not begin or is placed on hold until this can be
worked out.” Id. at 112.
By late March 2018, the remaining BOM materials had been manufactured and were
being stored in warehouses awaiting delivery instructions. [ECF 103-2] at 69-70. However, on
April 12, 2018, CENTECH sent a letter to Iron Bow stating that “support of Iron Bow on
Activation of Building 7000 at [VAFB was] no longer viable.” Id. at 119. CENTECH explained
that “[a]s assessed by the [USAF], continued miscommunication and the apparent lack of
adaptability and flexibility with the Modernization design have caused grave concern by the
Government, significantly delaying the progress of the Building.” Id. CENTECH further stated
that, while it and the USAF were “committed to keeping Iron Bow on the [Operations &
Maintenance] component of the Task Order,” CENTECH would search for a new subcontractor.
Id. CENTECH concluded by requesting that Iron Bow “provide CENTECH authorized
outstanding items that [were] monetarily owed to Iron Bow so CENTECH [could] address these
items with the Government.” Id.
On April 18, 2018, Iron Bow billed CENTECH $1,933,533.11 for the Phase 1 BOM
materials. [ECF 103-2] at 126-27. Thereafter, on May 21, 2018, CENTECH emailed the CO and
PM a copy of the invoice. [ECF 102-1] at 207, 212-13. In the accompanying email, CENTECH
noted that the invoice, which was for $2,009,015.44, 4 had “not been submitted to iRAPT
(formerly [Wide Area Work Flow (“WAWF”)]).” Id. at 207. CENTECH also included a cover
letter from its CEO and President. Id. The letter stated:
Due to the demand by senior management of Iron Bow . . .
CENTECH is hereby responding to Iron Bow’s demand of
submitting the Iron Bow invoice for the materials (BOM) for the
Vandenberg Building 7000 project. Invoice is attached.
In consideration of the discussion between the [USAF] and
CENTECH representatives on the Air Force[’s] request to remove
Iron Bow from the Building 7000 project, CENTECH management
complied in supporting the Air Force to update the requirement
[Request for Proposal (“RFP”)] document for Building 7000 and
with concurrence from the Air Force, Leidos has been invited to
respond to the revised/updated RFP for the Building 7000
installation project.

CENTECH arrived at the amount of $2,009,015.44 by adding 3.17% ($61,293) for “Sub/Material Handling” and
23.15% ($14,189.33) for “General and Admin” to Iron Bow’s costs ($1,933,533.11). [ECF 103-2] at 135-37.

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In good faith, CENTECH is complying with Iron Bow’s request for
the Air Force to pay the invoice. CENTECH acknowledges concerns
of the Air Force with Iron Bow’s judgement on the Building 7000
project. As previously discussed, we urge the Air Force to consider
the use of the materials covered by the invoice, based on the
appropriate revised design.
Id.
In response to CENTECH’s May 21, 2018, email, the CO sent a memorandum to
CENTECH on June 1, 2018. [ECF 102-1] at 236. It stated:
1.

In response to the letter and attachments received from
CENTECH dated 21 May 18, the Government requests that
CENTECH cancel the order with [CSC] effective today 01
Jun 2018, as it has become evident the material does not
meet the Government’s requirements. Additionally, per
FAR clause 52.245-1(e)(3)(i) Title to all property purchased
by the Contractor for which the Contractor is entitled to be
reimbursed as a direct item of cost under this contract shall
pass to and vest in the Government upon the vendor’s
delivery of such property. The materials not delivered to the
Government cannot be reimbursed. However[,] the
delivered shipment of materials for $140,770.20 can be
invoiced and reimbursed.

2.

In light of the circumstances regarding Iron Bow and the new
subcontractor coming aboard[,] it is recommended that
CENTECH work with the manufacturer to return items to
stock, negotiate restocking fee’s and/or replace material that
fits within the design specifications for Bldg 7000. If there
are items that can be utilized for the Bldg 7000 project on
this task order[, USAF] request[s] CENTECH provide a list
to the Government for approval prior to shipment.

Id.
On June 13, 2018, CENTECH emailed Iron Bow, advising that once the RFP had been
issued to the new subcontractor, CENTECH would “solicit help from both Iron Bow and the new
subcontractor to proceed with assessing the existing BOM.” [ECF 103-2] at 147. CENTECH
further stated that “[d]etails on how to proceed with the assessment of the BOM ha[d] yet to be
‘definitized.’” Id. at 147-48. Having not received payment or disposition instructions for the
BOM materials, on July 9, 2018, Iron Bow sent a letter to CENTECH demanding that it “take
and pay for the outstanding products ordered by Iron Bow on CENTECH’s behalf and pay any
restocking fees that the manufacturer imposes for any products that can be returned.” Id. at 240-5-

42. The letter also stated that “unfortunately for CENTECH, as CENTECH is aware, the vast
majority of the order placed with [CSC] for the . . . materials is non-returnable and noncancellable, and the remaining items are subject to restocking fees.” Id. at 241. On September 19,
2018, Iron Bow sued CENTECH in Virginia state court, for failure to “compensate Iron Bow for
equipment purchased and services performed pursuant to the Subcontract” for work on the
B7000 Activation Project. Id. at 189-91. On October 12, 2018, CSC sued Iron Bow for nonpayment in Pennsylvania federal court. See Commc’ns Supply Corp. v. Iron Bow Techs., LLC,
529 F.Supp.3d 423, 427 (W.D. Pa. 2021).
On October 3, 2018, CENTECH emailed its new subcontractor that “there are materials
(‘Iron Bow BOMs’) that Iron Bow purchased, based on the authorization of the Air Force and
CENTECH but have been rejected by the Air Force” and that “[t]hese materials are not on-site.”
[ECF 103-2] at 197. CENTECH requested that the subcontractor “provide specific information
on the determination for each stock item in the Iron Bow purchase, identifying for each stock
item what is usable or can be repurposed, based on the approved design.” Id. Two days later, the
subcontractor responded “that the bill of material provided to us [] cannot be repurposed based
on the ‘day2’ Corning zone cabling redesign that was approved by Centech project manager [],
and it’s engineer.” Id. at 199. Additionally, the new subcontractor sent CENTECH a letter on
October 14, 2018, regarding a “Line Item compliancy analysis of the provided schedule of
materials, as provided by the Centech engineer, during the proposal process.” Id. at 210. It stated:
“In conclusion the materials in question are not fit for purpose, based on the current contractual
requirements[.]” Id. at 211. It further stated: “It is my recommendation that the proper owner of
the material seek to use these materials on other projects to mitigate their damages.” Id. One
week later, CENTECH emailed this information to the USAF. Id. at 208-09. CENTECH added
the following:
Please review and let CENTECH know if the Government
(Contracting and Technical teams) concur with [the] findings . . . .
Due to the significant amount in question, we would appreciate
your/your selected independent third party input, as appropriate.
CENTECH will be proceeding with authorizing major purchases,
once this Iron Bow BOM repurposing is resolved. As you know,
said amount is under litigation.
Id. at 209.
On June 5, 2019, CENTECH submitted a certified sponsored claim on behalf of Iron
Bow to the CO, seeking payment of $2,009,015.44 plus interest and attorneys’ fees, for the
materials ordered by Iron Bow. [ECF 102-1] at 238-45. The CO denied the claim on November
6, 2019. Id. at 247-48. The CO stated:
1.

The CENTECH Group, Inc. (CENTECH) was awarded
contract FA8732-14-D-0010 under the Air Force’s Network
Centric Solutions (NETCENTS)-2 contract vehicle. Task
order FA8732-14-D-0010-QW02 was issued to CENTECH
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by the 30th Contracting Squadron, [VAFB] on 14 Dec 2016.
The task order included a requirement for the "Activation of
Building 7000" (communication infrastructure) with a
budget and funding of $2,995,571.13 (including fixed fee)
on a Cost-Plus-Fixed-Fee Contract Line Item (CLIN) for
labor and $15M on a Cost Reimbursable CLIN for materials.
CENTECH subcontracted with Iron Bow (collectively Team
CENTECH) to perform the activation, in accordance with,
the Technical Solution for Activation of Bldg 7000 dated 6
June 16, which was proposed in response to the Building
7000 Activation Project Objectives dated 18 Apr 2016.
2.

In performance of the technical solution, a bill of materials
(BOM) was submitted to the Government by Team
CENTECH for Phase 1 of the activation project[], which was
approved by the Government on 30 Nov 17. On 23 January
2018 the labor estimate for installation of the Phase 1 BOM
was received by the Government for $6,006,120.15, which
was over double the budget for the entire project, the
previously proposed estimate for the entire project, and
funding for labor for the entire project. In reviewing the
labor estimate the Government identified the proposed labor
rates were significantly higher than the originally proposed
rates. After a time the parties could not resolve their
differences so the [CO] affected the cancellation of the
BOM. The parties agree that there is a valid Task order
FA8732-14-D-0010-QW02. The parties disagree that the
cancellation of the BOM was a breach of contract. The claim
states that CENTECH is facing potential liability for failing
to pay its subcontractor. In its claim CENTECH request
approximately two million dollars. The claim is denied.
CENTECH has not supported its allegation of breach, nor
has it supported its alleged damages.

Id. at 247.
CENTECH filed its initial complaint in this Court on November 12, 2019, “to recover . . .
the price of materials purchased . . . under a specific Bill of Materials (‘BOM’) approved in
writing by the Air Force.” Compl. [ECF 1] at 1. It alleged that the USAF breached the contract
when it “cancelled the BOM . . . after CENTECH’s subcontractor, Iron Bow . . . purchased and
offered the items included in the BOM for delivery.” Id. CENTECH sought “damages in the
amount of $2,009,015.44, plus interest and costs and expenses, as well as legal fees.” Id. at 9. In
an unpublished opinion issued on June 26, 2020, the Court concluded that CENTECH could

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maintain a pass-through or sponsored claim on Iron Bow’s behalf based on its obligation to pay
Iron Bow for the ordered materials. See Op. & Order [ECF 22] at 5. 5
On March 29, 2021, in the related litigation between Iron Bow and CSC, the United
States District Court for the Western District of Pennsylvania determined that Iron Bow was
liable to CSC for the cost of the materials. Commc’ns Supply Corp., 529 F.Supp.3d at 438. Iron
Bow and CSC subsequently settled their case on May 27, 2021, with Iron Bow agreeing to pay
CSC $1,900,000. See Def’s Mot. to Dismiss [ECF 62-1] at 132-33; [ECF 103-2] at 230-33. The
settlement agreement provided:
The Parties agree that Iron Bow shall have thirty (30) days from the
execution of this Agreement to take delivery and possession of the
[materials] at Iron Bow’s sole cost and expense. Iron Bow shall take
delivery of the [materials] at CSC’s warehouse, at which point all
risk of loss shall pass to Iron Bow. Unless otherwise agreed to in
writing, if Iron Bow fails to take possession and delivery of the
[materials] as required in this Paragraph 4, Iron Bow shall be
deemed to have disclaimed any and all rights or title to the
[materials] and shall further be deemed to have released any claims
it may have against CSC concerning the disposition of the
[materials]. At that time, CSC will be free to scrap or otherwise
dispose of the [materials] in any way that CSC deems appropriate.
[ECF 103-2] at 231.
After the settlement, Iron Bow took possession of the materials. [ECF 94] ¶ 40. On
November 30, 2022, CENTECH submitted a supplemental claim to the CO, seeking additional
payments for transportation, storage, and insurance costs relating to the materials, as well as
attorneys’ fees relating to pre-claim attempts to negotiate a resolution. [ECF 102-1] at 255-62.
The CO denied CENTECH’s supplemental claim on February 3, 2023. Id. at 312-13.
On April 13, 2023, CENTECH filed a second amended complaint—the operative
complaint. [ECF 94]. CENTECH asserts three counts in its second amended complaint: (1)
breach of contract – failure to pay for the Phase 1 BOM materials ($1,900,000), id. ¶¶ 48-62; (2)
breach of contract – failure to pay for the transportation, storage, and insurance costs relating to

“[U]nder ordinary government prime contracts, subcontractors do not have standing to sue the government under
the Tucker Act, 28 U.S.C. § 1491, in the event of an alleged government breach or to enforce a claim for equitable
adjustment under the Contract Disputes Act of 1978.” Erickson Air Crane Co. v. United States, 731 F.2d 810, 813
(Fed. Cir. 1984) (citing United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983); Putnam Mills Corp.
v. United States, 479 F.2d 1334 (Ct. Cl. 1973)). However, a narrow exception to the rule exists where: “[a] party in
interest whose relationship to the case is that of the ordinary subcontractor may prosecute its claims [] through, and
with the consent and cooperation of, the prime, and in the prime’s name.” Erickson Air Crane Co. of Washington,
731 F.2d at 814. Such claims are known as sponsored or pass-through claims. See Montano Elec. Contractor v.
United States, 114 Fed. Cl. 675, 680 (2014), aff’d, 610 F. App’x 987 (Fed. Cir. 2015).

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taking possession of the materials ($137,875), id. ¶¶ 63-78; 6 and (3) contract administration costs
– attorneys’ fees relating to pre-claim negotiations ($31,292), id. ¶¶ 79-82. 7 On August 8, 2023,
the Court denied the government’s motion to dismiss CENTECH’s second amended complaint,
finding that CENTECH had standing to bring its claims and that its claims were adequately
stated. The Centech Grp., Inc. v. United States, 167 Fed. Cl. 1, 4 (2023). On October 20, 2023,
the parties filed cross-motions for summary judgment. [ECFs 102, 103]. The cross-motions are
fully briefed, and the Court held oral argument on July 11, 2024.
II.

STANDARD OF REVIEW

“Summary judgment is appropriate where the evidence demonstrates that there is ‘no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.’” Agility Def. & Gov’t Servs., Inc. v. United States, 115 Fed. Cl. 247, 250 (2014) (quoting
RCFC 56(a)). “A fact is material if it ‘might affect the outcome of the suit under the governing
law.’” Vanquish Worldwide, LLC v. United States, 147 Fed. Cl. 390, 405 (2020) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “An issue is genuine if it ‘may
reasonably be resolved in favor of either party.’” Id. (quoting Anderson, 477 U.S. at 250).
“Where the parties have filed cross-motions for summary judgment, the court evaluates each
motion on its own merits and makes all reasonable inferences against the party whose motion is
under consideration.” Agility Def. & Gov’t Servs., Inc., 115 Fed. Cl. at 250 (citing Marriott Int’l
Resorts, L.P. v. United States, 586 F.3d 962, 968-69 (Fed. Cir. 2009)). The court’s function is to
“determine whether there is a genuine issue for trial” when making a summary judgment
determination. Cheung v. United States, 146 Fed. Cl. 369, 372 (2019) (citing Anderson, 477 U.S.
at 249).
Under RCFC 56, “a motion for summary judgment may succeed whether or not
accompanied by affidavits and/or other documentary evidence in addition to the pleadings
already on file.” Rice Sys., Inc. v. United States, 62 Fed. Cl. 608, 618 (2004) (citing Celotex
Corp. v. Catrett, 477 U.S. 317, 324 (1986)). “Generally, however, in order to prevail by
demonstrating that a genuine issue for trial exists, the nonmoving party must go beyond the
pleadings by use of evidence such as affidavits, depositions, answers to interrogatories, and
admissions.” Id. “[I]f the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits . . . show that there is no genuine issue as to any material fact,”
the court shall grant summary judgment to the moving party. Holland v. United States, 57 Fed.
Cl. 540, 560 (2003) (quoting RCFC 56(c)). “The court will deny both motions if, upon the
required analysis, a genuine issue of material fact exists.” IMS Engineers-Architects, P.C. v.
United States, 87 Fed. Cl. 541, 550 (2009) (citing Mingus Constructors, Inc. v. United States,
812 F.2d 1387, 1390-91 (Fed. Cir. 1987)).
Since taking possession of the materials from CSC, Iron Bow incurred a $75,000 fee for transportation of the
materials to a warehouse, [ECF 102-1] at 264, and Iron Bow continues to pay $2,250.00 per month in storage fees
and $2,375.00 per quarter for bailee’s insurance, id.

6

CENTECH also asserts that the USAF breached the implied duty of good faith and fair dealing by refusing to
permit delivery and installation of the materials and by cancelling the materials order. [ECF 94] ¶¶ 58-59. Because
the Court finds that the USAF breached an explicit duty under the contract, the Court does not address this assertion.

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III.

DISCUSSION

The parties dispute whether the USAF breached a contractual duty to reimburse
CENTECH for the cost of the Phase 1 BOM and whether, as part of its damages, CENTECH is
entitled to recover transportation, storage, and insurance costs. The parties also dispute whether
CENTECH is entitled to recover its costs under FAR 31.205-33 for legal services relating to its
attempted negotiation of the dispute with the USAF. As explained below, the Court finds that the
USAF breached its duty under the contract to reimburse CENTECH for the cost of the Phase 1
BOM and that CENTECH suffered damages due to the breach consisting of the costs of the
materials, as well as the post-breach transportation, storage, and insurance. However, there are
genuine issues of material fact regarding the reasonableness of CENTECH’s mitigation efforts
that preclude granting summary judgment on damages. The Court also finds that there are
genuine issues of material fact regarding the purpose of the legal services acquired by
CENTECH that preclude granting summary judgment on CENTECH’s attorneys’ fees claim.
A.

Breach of Contract Claim

CENTECH argues that the government had a contractual duty to pay for the Phase 1
BOM because the government authorized the purchase of the materials and because CENTECH
appropriately used CLIN 0090 to request reimbursement. [ECF 102] at 26. CENTECH also
argues that the government breached its duty by failing to reimburse it for the cost of the
materials. Id. at 28. Furthermore, according to CENTECH, “[t]he Government’s continued
failure to provide direction as to the BOM disposition has resulted in foreseeable costs that stem
directly from the Government’s breach,” specifically transportation, storage, and insurance costs
relating to the ongoing storage of the materials. Id. at 33. The government counters that it did not
have a duty to reimburse CENTECH for the Phase 1 BOM because the “undisputed facts . . .
show that CENTECH – which was responsible for choosing the materials and design – did not
use the BOM materials on the project or require its new subcontractor to use them; thus, the
materials were not ‘required to be purchased’ ‘in support of requirements within th[e] [PWS] . . .
.’” [ECF 103] at 33 (alterations in the original). Additionally, the government contends that it
had no duty to reimburse CENTECH because CENTECH did not invoice the USAF for the
BOM costs, and the materials were not delivered or accepted. Id. at 34. 8
“To recover for breach of contract, a party must allege and establish: (1) a valid contract
between the parties, (2) an obligation or duty arising out of the contract, (3) a breach of that duty,
and (4) damages caused by the breach.” San Carlos Irrigation & Drainage Dist. v. United States,
877 F.2d 957, 959 (Fed. Cir. 1989). “Contract interpretation is a question of law, which may be
decided on summary judgment.” SSA Marine, Inc. v. United States, 77 Fed. Cl. 662, 665 (2007)
(citing Hughes Commc’ns Galaxy, Inc. v. United States, 998 F.2d 953, 957 (Fed. Cir. 1993)).
Where the “provisions of the [contract] are phrased in clear and unambiguous language, they
must be given their plain and ordinary meaning, and [the court] may not resort to extrinsic
The government also asserts that “[i]f CENTECH attempts to ground its claims in assertions that [the USAF]
changed the work required under the contract, CENTECH waived such claims by failing to raise them to the CO
within the time required by the FAR.” [ECF 103] at 33. In fact, CENTECH does not make this argument; instead, it
claims that the government’s failure to pay for the Phase 1 BOM was a breach of contract. [ECF 94] ¶¶ 48-62.

8

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evidence to interpret them.” Coast Fed. Bank, FSB v. United States, 323 F.3d 1035, 1038 (Fed.
Cir. 2003) (en banc) (citing McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir.
1996)).
1.

The USAF Breached Its Duty to Reimburse CENTECH

The USAF had a duty under the contract to reimburse CENTECH for the cost of the
Phase 1 BOM. The relevant task order required CENTECH to “complete the . . . acquisition . . .
of the communications infrastructure.” [ECF 94-1] at 42. It further stated that the acquisition of
“all products and associated peripheral equipment,” id. at 43, would be based on governmentapproved final designs, id. at 42-43. Additionally, the acquisition of materials was to take place
“based on the Government provided schedule and after approval from the government.” Id. at 43.
CLIN 0090 was “utilized to bill for reimbursable materials and equipment.” Id. at 14. It provided
that “[c]osts will be identified and approved as referenced in the PWS” and that CENTECH was
“allowed to receive invoice payments for discrete portions of work, including partial deliveries,
as soon as completed and found acceptable by the Government.” Id. The PWS stated that
“[r]eimbursable CLINs will apply for materials required to be purchased by the contractor with
approval of the government.” Id. at 37. Thus, under the plain language of the contract,
CENTECH was responsible for acquiring materials that were required for the infrastructure
project, and the USAF was obligated to reimburse CENTECH for the costs of such materials
purchased with USAF approval. See LAI Servs., Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir.
2009) (“The threshold question here is whether the plain language of the contract ‘supports only
one reading . . . .’”) (quoting NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir.
2004)).
The USAF breached its duty by failing to reimburse CENTECH for the cost of the
government-approved materials. CENTECH developed the Phase 1 BOM in conjunction with
the USAF. See [ECF 102-1] at 127-28 (meeting minutes dated September 25, 2017, reflecting
consideration of the approach by USAF, CENTECH, and Iron Bow); Id. at 130 (meeting minutes
dated October 4, 2017, reflecting consideration of the “new modernized design” versus the old
design and stating that the old “design will not meet the current Base requirements”); Id. at 13739 (meeting minutes dated October 28, 2017, reflecting consideration of the traditional versus
modernized design and the government decision to move forward with “the Iron Bow proposed
[m]odernized design concept”). CENTECH provided a draft BOM to the USAF, id. at 142-46,
and reviewed it with them, CENTECH RCFC 30(b)(6) Designee 6/24/2022 Depo. Tr. [ECF 1021] at 20, 22; USAF PM 1/14/2022 Depo. Tr. [ECF 102-1] at 41-42. Significantly, the USAF
approved the BOM as meeting the Phase 1 requirements. [ECF 102-1] at 164 (11/30/2017
memorandum from PM to CO stating that “[t]he BOM meets the government’s technical
requirements for Phase 1”); Id. at 163 (11/30/2017 email from PM to CO stating that his “team is
good with the attached BOM for Phase 1 of the Building 7000 Activation project”); PM
1/12/2023 Depo. Tr. [ECF 102-1] at 28 (testifying that “based on [his team’s] review of the
billed materials proposed . . . [the] billed materials would meet all of [the USAF’s] technical
requirements for Phase I”). Based on this approval, the CO instructed CENTECH to proceed
with acquisition of the Phase 1 BOM. Id. at 163 (11/30/2017 email from CO to CENTECH
stating that the “attached BOM has been reviewed and is approved for the purchase of materials
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for Phase I”). After obtaining approval from the USAF, CENTECH, through its subcontractor
Iron Bow, acquired the Phase 1 materials from CSC. [ECF 102-1] at 171-72.
After ordering the Phase 1 BOM from Iron Bow, CENTECH submitted an invoice for the
materials to the USAF seeking reimbursement. [ECF 102-1] at 207. In response, the USAF
declined to reimburse CENTECH the full cost of the Phase 1 BOM and instructed CENTECH to
cancel the order because “the material [did] not meet the Government’s requirements.” [ECF
102-1] at 236. The USAF also told CENTECH that while “the delivered shipment of materials
for $140,770.20 [could] be invoiced and reimbursed,” those “materials not delivered to the
Government [could not] be reimbursed.” Id. Because the USAF had a duty to reimburse
CENTECH for the full cost of the approved Phase 1 BOM, the USAF’s declining to reimburse
CENTECH constitutes a breach of its payment obligations under the contract.
2.

The Government’s Arguments

Before analyzing CENTECH’s breach-related damages, the Court turns to the
government’s arguments in its cross-motion for summary judgment. The government argues that
CENTECH cannot establish that the USAF had a duty to reimburse CENTECH for the materials
“when (1) the materials were not required for the Building 7000 Activation Project, (2)
CENTECH did not invoice [the USAF] for these costs, and (3) the materials were neither
delivered nor accepted.” [ECF 103] at 28. The Court disagrees.
i.

The Phase 1 BOM was Required for the Project

First, at the time of CENTECH’s acquisition of the Phase 1 BOM from Iron Bow, the
materials were required for the project. CLIN 0090 states that “[c]osts will be identified and
approved as referenced in the PWS.” [ECF 94-1] at 14. The PWS states that “[r]eimbursable
CLINS will apply for materials required to be purchased by the contractor with approval of the
government in support of requirements within this PWS.” Id. at 37. At the time of CENTECH’s
acquisition of the Phase 1 BOM from Iron Bow, the materials had been approved by the
government as meeting the project’s requirements. Critically, the PM communicated to the CO
that “[t]he BOM meets the government’s technical requirements for Phase 1.” [ECF 102-1] at
164. The CO then told CENTECH that the BOM was “approved for the purchase of materials for
Phase I.” Id. at 163. Thus, at that time, CENTECH was required to purchase the Phase 1 BOM in
support of the project requirements.
The government argues that the materials were not required because CENTECH
ultimately “concluded that they were not and used other materials instead.” Def.’s Resp. [ECF
105-1] at 35. To demonstrate that CENTECH determined that the materials in the Phase 1 BOM
were not required, the government relies on actions taken by CENTECH beginning in March
2018, such as hiring a consultant to review the Phase 1 BOM and soliciting proposals from other
subcontractors to replace Iron Bow. See id. at 33-34. The government posits that “after
CENTECH removed Iron Bow from the B7000 Activation Project, the new subcontractor, [],
found the materials to be non-compliant and ordered other materials.” Id. at 34. These actions,
however, do not demonstrate that the materials were not required at the time of approval. These
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actions occurred after the USAF approved the Phase 1 BOM for purchase, [ECF 94-1] at 92;
after the USAF authorized CENTECH to proceed with installation of a portion of the materials,
[ECF 102-1] at 175; and after the USAF paused the installation, [ECF 94-1] at 112. There is no
evidence that the Phase 1 materials failed to meet the government’s requirements at the time of
approval by the USAF and acquisition by CENTECH.
Furthermore, while CENTECH was certainly obligated under the task order to “[p]roduce
the final designs . . . to include an updated BOM,” [ECF 94-1] at 43, the USAF retained and
exercised final design approval authority, see id. at 42-44 (referencing “Government approved
final designs”); id. at 43 (requiring CENTECH to obtain all products and equipment “after
approval from the government”); id. at 37 (stating that reimbursement will apply to materials
purchased “with approval of the government”). As explained above, CENTECH provided the
Phase 1 BOM to the USAF and obtained approval to purchase the materials. CENTECH then
requested and received authorization from the USAF to proceed with installation. [ECF 102-1] at
175. The USAF stopped installation only after it raised concerns regarding the labor estimates.
See id. at 186. In addition, after CENTECH removed Iron Bow as a subcontractor, CENTECH
sent the USAF an invoice for the Phase 1 BOM and “urge[d] the [USAF] to consider the use of
the materials covered by the invoice, based on the appropriate revised design.” Id. at 207
(emphasis added). In response, the USAF “request[ed] that CENTECH cancel the order . . . as it
ha[d] become evident the material d[id] not meet the Government’s requirements.” Id. at 236.
The USAF also stated that “[i]f there [were] items that [could] be utilized for the Bldg 7000
project on this task order [it] request[ed] CENTECH provide a list to the Government for
approval prior to shipment.” Id. Based on this direction, CENTECH requested that its new
subcontractor “provide specific information on the determination for each stock item in the Iron
Bow purchase, identifying for each stock item what [was] usable or [could] be repurposed, based
on the approved design.” [ECF 103-2] at 197 (emphasis added). After the new subcontractor
informed CENTECH that the materials could not be reused “based on the current contractual
requirements,” id. at 211, CENTECH shared this information with the USAF and requested the
USAF’s concurrence with the new subcontractor’s findings prior to proceeding with the revised
design. Id. at 208-09. Thus, even after the USAF stopped installation of the Phase 1 BOM and
instructed CENTECH to cancel it, the USAF continued to exercise final approval authority over
the revised design and related BOM, and CENTECH continued to perform under such authority.
In sum, regardless of whether the materials were ultimately used by CENTECH to complete the
project, the materials were required for the project because the USAF approved the purchase of
the materials as meeting the USAF’s technical requirements.
ii.

CENTECH’s Failure to Comply with the Invoicing Requirements
Was Not a Material Breach

Next, CENTECH’s failure to comply with the contract’s invoicing requirements does not
excuse the USAF from its duty to reimburse CENTECH for the materials that the USAF
approved for purchase. “Under the doctrine of prior material breach, ‘when a party to a contract
is sued for breach, it may defend on the ground that there existed a legal excuse for its
nonperformance at the time of the alleged breach.’” K-Con Bldg. Sys., Inc. v. United States, 131
Fed. Cl. 275, 332 (2017) (quoting Barron Bancshares, Inc. v. United States, 366 F.3d 1360, 1380
-13-

(Fed. Cir. 2004)). The doctrine is “based on the principle that where performances are to be
exchanged under an exchange of promises, each party is entitled to the assurance that he will not
be called upon to perform his remaining duties . . . if there has already been an uncured material
failure of performance by the other party.” Christopher Vill., L.P. v. United States, 360 F.3d
1319, 1334 (Fed. Cir. 2004) (quoting Restatement (Second) of Contracts § 237b cmt. b (Am. L.
Inst. 1981)). However, “only a sufficiently material breach can justify the Government’s
subsequent breach.” First Annapolis Bancorp, Inc. v. United States, 75 Fed. Cl. 280, 292 (2007)
(citing Christopher Vill., L.P., 360 F.3d at 1335). “Whether a breach is material is a mixed
question of law and fact.” Hometown Fin., Inc. v. United States, 409 F.3d 1360, 1369 (Fed. Cir.
2005) (citing Gilbert v. Dep’t of Justice, 334 F.3d 1065, 1071-72 (Fed. Cir. 2003)). “A breach is
material when it relates to a matter of vital importance, or goes to the essence of the contract.”
Hometown Fin., Inc., 409 F.3d at 1370 (quoting Thomas v. Dep’t of Hous. & Urban Dev., 124
F.3d 1439, 1442 (Fed. Cir. 1997)). “The materiality of a breach is determined in light of the
totality of events and circumstances.” Stone Forest Indus., Inc. v. United States, 973 F.2d 1548,
1552 (Fed. Cir. 1992) (citing the Restatement (Second) § 241 cmt. a (Am. L. Inst. 1981)). “This
flexible approach examines ‘the nature and effect of the violation in light of how the particular
contract was viewed, bargained for, entered into, and performed by the parties.’” First Annapolis
Bancorp, Inc., 75 Fed. Cl. at 292 (quoting Stone Forest Indus., Inc., 973 F.2d at 1557).
Here, the government argues that it did not have a duty to reimburse CENTECH for the
cost of the Phase 1 BOM because “CENTECH did not submit . . ., its own invoice . . . for its
subcontractor Iron Bow’s costs . . . nor did it submit any invoice through WAWF,” and,
therefore, was in breach of contract. 9 [ECF 105-1] at 32. However, CENTECH’s breach is not
sufficiently material to justify the USAF’s failure to reimburse CENTECH for the cost of the
materials that the USAF approved for purchase. The task order required CENTECH “to complete
the [], acquisition, . . . of the communications infrastructure supporting the renovation of B7000
on [VAFB],” [ECF 94-1] at 42 (emphasis added), and entitled CENTECH to reimbursement
from the USAF “for materials required to be purchased by [CENTECH] with approval of the
government,” id. at 37. In seeking reimbursement, instead of submitting its invoice through
WAWF as required by the contract, CENTECH submitted the invoice to the USAF CO via
email. [ECF 102-1] at 207. CENTECH noted in its email that the invoice had “not been
submitted to . . . WAWF.” Id. Contrary to the government’s assertion that CENTECH did not
submit its own invoice, the attached invoice was on CENTECH letterhead, id. at 210-11, and it
reflected Iron Bow’s costs with CENTECH’s administrative and handling charges, id. at 211.
Therefore, CENTECH did submit its own invoice to the USAF. Further, the fact that CENTECH
emailed the invoice rather than submit it through WAWF is not a matter of vital importance, as
this requirement does not go to the essence of the contract. See Hometown Fin., Inc., 409 F.3d at
Specifically, the government argues that CENTECH failed to comply with the requirements of FAR 52.216-7,
Allowable Cost and Payment (JUN 2013), and DFARS 252.232-7003(b), Electronic Submission of Payment
Requests and Receiving Reports (JUN 2012), both of which were contained in the contract. See [ECF 103] at 35-36;
[ECF 105-1] at 32; [ECF 103-2] at 381, 394. CENTECH concedes that it did not comply with the invoicing
requirements and instead argues that such compliance would have been futile and that the requirements were not
material. See Pl.’s Opp. [ECF 104] at 13-14; Pl.’s Reply [ECF 109] at 10-11. Because the Court finds that
CENTECH’s failure to comply with the contract’s invoicing requirements is not a material breach that justifies the
USAF’s failure to reimburse CENTECH, the Court does not analyze the specific invoicing requirements under these
clauses.
9

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1369.
In reaching this conclusion, the Court is guided by the factors in section 241 of the
Restatement of Contracts for determining whether a party’s breach is material. When considering
whether CENTECH’s breach—its failure to submit its invoice through the WAWF—was
material, section 241 counsels that the Court consider the following:
(a) the extent to which the injured party will be deprived of the
benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately
compensated for the part of that benefit of which he will be
deprived;
(c) the extent to which the party failing to perform or to offer to
perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to
perform will cure his failure, taking account of all the circumstances
including any reasonable assurances;
(e) the extent to which the behavior of the party failing to perform
or to offer to perform comports with standards of good faith and fair
dealing.
Restatement (Second) of Contracts § 241 (Am. L. Inst. 1981), quoted in First Annapolis
Bancorp, Inc., 75 Fed. Cl. at 292. Each of these factors supports the conclusion that
CENTECH’s failure to comply with the invoicing requirements is not a material breach. See
Restatement (Second) of Contracts § 241 cmt. a (Am. L. Inst. 1981) (explaining that these factors
are “to be applied in the light of the facts of each case in such a way as to further the purpose of
securing for each party his expectation of an exchange of performances”). First, while the USAF
has thus far been deprived of the benefit of receiving the invoice through the WAWF,
CENTECH could still submit its invoice in the prescribed manner. Next, if CENTECH’s breach
were deemed sufficiently material such that it justified the USAF’s failure to reimburse
CENTECH for the materials, CENTECH would forfeit its right to reimbursement for materials
the government approved for purchase. Such an outcome would not “further the purpose of
securing for [the USAF and CENTECH their respective] expectation of [the] exchange of
performances” under the contract. First Annapolis Bancorp., Inc., 75 Fed. Cl. at 292 (quoting
Restatement (Second) of Contracts § 241 (Am. L. Inst. 1981). The USAF had a contractual
obligation to reimburse CENTECH for the materials that the USAF approved for purchase, and
CENTECH’s noncompliance with the invoicing requirements did not occur until after it made
the purchase. See Restatement (Second) of Contracts § 241 (Am. L. Inst. 1981) (explaining that
“a failure is less likely to be regarded as material if it occurs late, after substantial preparation or
performance, and more likely to be regarded as material if it occurs early, before such reliance”).
Lastly, CENTECH has not exhibited an unwillingness to cure its failure. CENTECH submitted
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the invoice via email for advance “review/comments” and explicitly acknowledged in the email
that the invoice had not been submitted through the WAWF. While this approach does not satisfy
the written contractual requirement that CENTECH submit its invoices through the WAWF,
CENTECH’s having sought the USAF’s advance approval of the invoice before submitting it
through WAWF certainly comports with the standards of good faith and fair dealing and
demonstrates its willingness to remedy this failure after obtaining such approval. See Hometown
Fin., Inc. v. United States, 60 Fed. Cl. 513, 522 (2004), aff’d, 409 F.3d 1360 (Fed. Cir. 2005)
(finding no prior material breach by the plaintiff where there was no evidence of willful
misconduct or fraud, and the facts show that the plaintiff would remedy the noncompliance if
raised by the government).
iii.

The USAF Prevented CENTECH From Meeting the Delivery and
Acceptance Requirements

Finally, the USAF cannot avoid its obligation to reimburse CENTECH for the approved
materials on the grounds that the materials were not delivered or accepted. Under the doctrine of
prevention, “[i]t is well-settled that a party to a contract cannot escape or minimize its liability on
the ground that the other party has failed to perform a condition precedent to the establishment of
such liability, where the breaching party has caused that failure.” Park Props. Assocs., L.P. v.
United States, 82 Fed. Cl. 162, 170 (2008). Stated differently, “[w]here a promisor prevents,
hinders, or renders impossible the occurrence of a condition precedent to his or her promise to
perform, or to the performance of a return promise, the promisor is not relieved of the obligation
to perform.” Id. (quoting 13 Richard A. Lord, Williston on Contracts § 39:3 (4th ed. 2000)).
The government argues that the USAF did not have a duty to pay CENTECH because the
materials were neither delivered nor accepted. [ECF 103] at 36. CLIN 0090 of the task order
provided that CENTECH is “allowed to receive invoice payments for discrete portions of work,
including partial deliveries, as soon as completed and found acceptable by the Government.”
[ECF 94-1] at 14. However, the task order also required CENTECH to “obtain and manage
logistics” for the materials “based on the Government provided schedule and after approval from
the government.” Id. at 43 (emphasis added). Thus, while delivery of the materials to VAFB by
CENTECH and acceptance of such materials by the USAF are perhaps conditions precedent to
CENTECH receiving payment, CENTECH could only achieve such conditions based on a
USAF-provided schedule and with USAF approval. In fact, CENTECH obtained approval from
USAF to purchase all the Phase 1 materials, [ECF 94-1] at 92, and to install a portion of them,
[ECF 102-1] at 175. The USAF agreed to reimburse CENTECH for the portion of the materials
that it had delivered to VAFB for installation. [ECF 102-1] at 236 (the CO instructing that “the
delivered shipment of materials for $140,770.20 can be invoiced and reimbursed”). However,
before CENTECH could complete delivery of the materials, the USAF paused the installation,
[ECF 94-1] at 112, and subsequently instructed CENTECH to cancel the BOM, [ECF 102-1] at
236. These actions by the USAF made it impracticable for CENTECH to deliver the remaining
materials to VAFB and to seek acceptance by the USAF. Because the USAF hindered
CENTECH from achieving the conditions precedent to receiving payment from the USAF for
the approved materials, the USAF cannot be relieved of its obligation to reimburse CENTECH
based on CENTECH’s failure to make delivery or obtain acceptance. See Park Props. Assocs.,
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L.P., 82 Fed. Cl. at 171-73 (collecting cases).
3.

CENTECH Suffered Damages as a Result of the Breach

CENTECH suffered damages due to the USAF’s approval of the Phase 1 BOM for
acquisition by CENTECH and subsequent failure to reimburse CENTECH for the entire cost of
such materials. “The remedy for breach of contract is damages sufficient to place the injured
party in as good a position as it would have been had the breaching party fully performed.” Ind.
Mich. Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005) (citing San Carlos
Irrigation & Drainage Dist., 111 F.3d at 1562). “[T]he general principle is that all losses,
however described, are recoverable.” Id. (quoting Restatement (Second) of Contracts § 347 cmt.
c (Am. L. Inst. 1981)). “Damages for a breach of contract are recoverable where: (1) the
damages were reasonably foreseeable by the breaching party at the time of contracting; (2) the
breach is a substantial causal factor in the damages; and (3) the damages are shown with
reasonable certainty.” Ind. Mich. Power Co., 422 F.3d at 1373 (citing Energy Cap. Corp. v.
United States, 302 F.3d 1314, 1320 (Fed. Cir. 2002)). 10 The non-breaching party must establish
entitlement to damages by a preponderance of the evidence. Duke Energy Progress, Inc. v.
United States, 135 Fed. Cl. 279, 286 (2017).
CENTECH suffered damages consisting of the cost of the government-approved
materials and the related transportation, storage, and insurance costs. First, CENTECH’s
damages for the cost of the materials were reasonably foreseeable by the USAF at the time it
contracted with CENTECH because the USAF hired CENTECH to acquire materials for the
project and agreed to reimburse CENTECH for materials purchased with the USAF’s approval.
See [ECF 94-1] at 42 (stating that the USAF contracted with CENTECH “to complete the . . .
acquisition, . . . of the communications infrastructure”); id. at 43 (stating that “after approval
from the government, [CENTECH was required to] obtain . . . all products . . . to successfully
implement all approved designs”); id. at 14 (CLIN 0090 was to “be utilized to bill for
reimbursable materials”); id. at 37 (stating that “[r]eimbursable CLINs will apply for materials
required to be purchased by the contractor with approval of the government”); id. at 92-93
(11/30/2017 email from the PM to the CO recommending that CENTECH purchase the Phase 1
BOM “as soon as possible”); id. at 92 (11/30/2017 email from the CO to CENTECH approving
the Phase 1 BOM for purchase). Next, the USAF’s breach was the direct cause of CENTECH’s
damages. See Portland Gen. Elec. Co., 107 Fed. Cl. at 642 (stating that “[t]he ‘but for’ test finds
the breaching party liable for damages that it directly caused”); see also San Carlos Irrigation &
Drainage Dist., 111 F.3d at 1563 (stating that “[a] plaintiff must show that but for the breach,
the damages alleged would not have been suffered”). But for the USAF’s approval of the
materials for purchase by CENTECH and its subsequent failure to reimburse CENTECH for the
cost of the materials, CENTECH would not have ordered the materials and incurred liability to
10
Causation is a question of fact. Bluebonnet Sav. Bank F.S.B. v. United States, 266 F.3d 1348, 1356 (Fed. Cir.
2001). The Court determines causation using the “but for” test or the “substantial factor” test. Portland Gen. Elec.
Co. v. United States, 107 Fed. Cl. 633, 641 (2012). “[T]he selection of an appropriate causation standard depends
upon the facts of the particular case and lies largely within the trial court’s discretion.” Citizens Fed. Bank v. United
States, 474 F.3d 1314, 1318 (Fed. Cir. 2007). However, the Federal Circuit has stated that the “substantial cause test
is not preferred.” Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268, 1272 (Fed. Cir. 2008). Here, the Court
applies the “but for” test, but the result would be the same if the Court were to apply the “substantial factor” test.

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Iron Bow for the cost of the materials. See [ECF 94-1] at 92 (11/30/2017 email from the CO to
CENTECH approving the Phase 1 BOM for purchase); id. at 100-03 (12/14/2017 email from
CENTECH to Iron Bow authorizing the purchase of the Phase 1 BOM); id. at 105-07
(12/14/2017 purchase order issued by Iron Bow to CSC for the Phase 1 BOM); [ECF 103-2] at
126-27 (4/18/2018 invoice issued by Iron Bow to CENTECH for the materials); id. at 189-90
(9/19/2018 complaint filed by Iron Bow against CENTECH in Virginia state court for failure to
reimburse Iron Bow for Phase 1 BOM). Lastly, CENTECH has established its damages with
reasonable certainty. As evidence of the cost of the Phase 1 BOM, CENTECH produced Iron
Bow’s invoice to CENTECH for the Phase 1 BOM, see [ECF 103-2] at 126-27 (4/18/2018
invoice issued by Iron Bow to CENTECH for $1,933,533.11, the cost of the Phase 1 BOM), as
well as CENTECH’s invoice to the USAF based on Iron Bow’s invoice, id. at 135-37 (5/21/2018
email from CENTECH to USAF explaining why CENTECH sought $2,009,015.44 when Iron
Bow’s invoice for the materials was $1,933,533.11). Additionally, the cost of the Phase 1 BOM
was further confirmed by Iron Bow’s payment to CSC of $1,900,000.00 in full satisfaction of its
liability for the materials after it was determined that the materials were non-cancellable. [ECF
102-1] at 250. 11 Therefore, CENTECH’s damages for the cost of materials were reasonably
foreseeable, would not have occurred but-for the government’s breach, and are calculable with
reasonable certainty.
CENTECH also suffered damages for transportation, storage, and insurance costs relating
to its post-breach handling of the materials. The cost of material handling was reasonably
foreseeable by the USAF at the time of contracting. The task order stated that CENTECH would
“manage logistics for all products and associated peripheral equipment required to successfully
implement all approved designs.” [ECF 94-1] at 43. The task order also contained a “just-intime” provision, which was included as a means of remedying the lack of on-site storage at
VAFB. See CO 12/16/2021 Depo. Tr. [ECF 102-1] at 161 (explaining that the USAF included
the “just-in-time” provision because there was no warehouse space at VAFB that could be used
to take receipt of the BOM materials); USAF Lieutenant Colonel Depo. Tr. [ECF 102-1] at 125
(explaining that the USAF included the just-in-time provision in order to “minimize [] storage
requirements” due to the “lack of storage on the base”). The task order also stated that the
acquisition and delivery of the materials would be based on “the Government provided schedule”
and would occur after approval by the government. [ECF 94-1] at 43. Therefore, it was
reasonably foreseeable that CENTECH would incur transportation, storage, and insurance costs
related to the materials from the time the USAF approved the materials for acquisition by
CENTECH until the time the USAF scheduled delivery and installation. Next, the USAF’s
failure to reimburse CENTECH for the materials directly caused CENTECH to incur these
handling costs. Specifically, but for the USAF’s approval of the materials for purchase by
CENTECH and subsequent failure to reimburse CENTECH for the cost of the materials, the
materials would not have been acquired by CENTECH and the costs to handle the materials
would not have been incurred. See San Carlos Irrigation & Drainage Dist., 111 F.3d at 1563.
The government does not challenge the cost of the Phase 1 BOM materials. Additionally, the USAF previously
agreed to pay CENTECH based on the invoice it provided to the USAF for that portion of the Phase 1 BOM
materials that was delivered. See [ECF 102-1] at 236 (6/1/2018 memorandum from the CO to CENTECH stating
that the USAF would reimburse it for the delivered portion of the materials based on CENTECH’s 5/21/2018
invoice).
11

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Finally, like the cost of the materials, the costs for the transportation, monthly storage, and
quarterly insurance are reasonably certain, as they are reflected in invoices submitted by the
logistics vendor. [ECF 94-1] at 143. Accordingly, CENTECH’s damages for transportation,
storage, and insurance costs were reasonably foreseeable, would not have occurred but-for the
government’s breach, and are calculable with reasonable certainty.
The government nevertheless argues that, under Ramsey v. United States, the
transportation, storage, and insurance costs fail to satisfy the causation requirement because such
costs “relate to ‘independent and collateral undertakings’ and are too ‘remote to be taken into
consideration as a part of the damages occasioned by the [] breach.’” [ECF 103] at 43 (quoting
Ramsey v. United States, 121 Ct. Cl. 426, 435 (1951)). It contends that, under the settlement
agreement between Iron Bow and CSC, “Iron Bow was free to choose whether to take possession
of the materials” and that it only took possession of the materials because it was concerned that
the government would request delivery of the materials after it paid for them. [ECF 103] at 43. 12
Because this is an “independent concern,” the government asserts that CENTECH cannot
demonstrate that its money damages were directly caused by the USAF’s breach. Id. at 44
(internal quotation marks omitted). The Court is not persuaded by the government’s reasoning.
In Ramsey, the court determined that the plaintiff’s lost profits from its “over-all business
activities, because of its shortage of capital allegedly occasioned by the Government’s failure to
pay the contract amounts when due, . . . [were] collateral undertakings, which . . . [were] too
remote to be classified as a natural result of the Government’s delay in payment.” Ramsey, 121
Ct. Cl. at 434. Here, the transportation, storage, and insurance costs are not collateral
undertakings but are instead a natural result of the USAF’s failure to make payment and provide
delivery instructions for the government-approved materials. See Cal. Fed. Bank v. United
States, 395 F.3d 1263, 1268 (Fed. Cir. 2005) (stating that “[t]he existence of other factors
operating in confluence with the breach will not necessarily preclude recovery based on the
breach” but that the causal connection between the breach and the damages must be “definitely
established”).
4.

Genuine Issues of Material Fact Regarding CENTECH’s Mitigation
Efforts Preclude Summary Judgment on Damages

Having determined that CENTECH suffered damages based on the cost of the Phase 1
BOM and the related costs for transportation, storage, and insurance, the Court considers
whether CENTECH took reasonable steps to mitigate its damages. The non-breaching party has
an obligation to mitigate its damages. See Ind. Mich. Power Co., 422 F.3d at 1375 (noting that
“[o]nce a party has reason to know that performance by the other party will not be forthcoming, .
. . he is expected to take such affirmative steps as are appropriate in the circumstances to avoid
loss by making substitute arrangements or otherwise”) (quoting Restatement (Second) Contracts
§ 350 cmt. b (Am. L. Inst. 1981) (alteration in original)). However, the non-breaching party need
Under the settlement agreement between Iron Bow and CSC, Iron Bow had thirty days “to take delivery and
possession of the [CSC] Products at Iron Bow’s sole cost and expense.” [ECF 102-1] at 251. Further, “if Iron Bow
fail[ed] to take possession and delivery of the [CSC] Products,” then Iron Bow was “deemed to have disclaimed any
and all rights or title to the [CSC] Products” and CSC was “free to scrap or otherwise dispose of the [CSC] Products
in any way that CSC deems appropriate.” Id.
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“only make those efforts that are fair and reasonable under the circumstances.” Robinson v.
United States, 305 F.3d 1330, 1333 (Fed. Cir. 2002). If the breaching party seeks to reduce the
amount of claimed damages, it “bears the burden of establishing that [the non-breaching party’s]
damages claims should be reduced or denied.” Duke Energy Progress, Inc., 135 Fed. Cl. at 287
(citing Home Sav. of Am., F.S.B. v. United States, 399 F.3d 1341, 1353 (Fed. Cir. 2005)).
Here, genuine issues of material fact preclude granting summary judgment on whether
CENTECH undertook fair and reasonable mitigation efforts. In response to CENTECH’s motion
for summary judgment, the government argues that CENTECH’s efforts were not reasonable
because Iron Bow “withdrew” from a deal with another contractor—a deal that would have
utilized the materials on another project and refunded Iron Bow the money it spent on the
materials. [ECF 105-1] at 46. Therefore, the government contends that “[s]ummary judgment on
CENTECH’s damages claim cannot be granted without review – at trial – of whether the claim is
barred, in whole or in part, by CENTECH’s and Iron Bow’s failure to mitigate the alleged
damages.” Id. CENTECH counters that no such deal existed and there existed only “the kernel of
a deal,” who’s terms had not been finalized. [ECF 109] at 20. CENTECH also suggests that Iron
Bow “attempted to solicit buyers for the BOM [and] looked into salvaging the BOM, and [that]
the results have been futile.” Id. at 19. Based on the current record, the Court cannot determine
whether CENTECH’s mitigation efforts were fair and reasonable. There is evidence that
supports the government’s contention that there was an opportunity to use the materials on
another project, that the relevant parties were close to an agreement, and that Iron Bow
unreasonably withdrew from the negotiations. [ECF 105-1] at 140-52. Additionally,
CENTECH’s statement that Iron Bow attempted to salvage or to solicit buyers for the materials
is unsupported because the language CENTECH cites for this proposition is taken from a
question asked of Iron Bow’s RCFC 30(b)(6) designee, not the designee’s answer to the
question. See Iron Bow RCFC 30(b)(6) Designee 6/23/2022 Depo. Tr. [ECF 102-1] at 200 (“Q
And then the final sentence of that paragraph reads, Please note that CSC has no ability to resell
the [Phase 1 BOM] to another customer or to otherwise obtain any salvage value for the products
at this point. Do you see that? A Yes.”). Because there are genuine issues of material fact
regarding the reasonableness of CENTECH’s mitigation efforts, neither party is entitled to
summary judgment on damages.
B.

Attorneys’ Fees Claim

CENTECH argues that, under FAR 31.205-33, it is entitled to be reimbursed its
reasonable attorneys’ fees for efforts made between September 2018 and July 2019 “to globally
resolve the BOM dispute.” [ECF 102] at 34. According to CENTECH, “[w]hile such efforts
ultimately failed, . . . these attorneys’ fees are reasonable and allocable . . . [because they] were
primarily directed at negotiating a resolution of the matter.” Id. CENTECH further states that
“[a]ny fees for time expended towards a litigation posture have not been claimed.” Id. The
government counters that CENTECH has no right to recover attorneys’ fees in its sponsored
claim. [ECF 103] at 44. The government contends that CENTECH cannot assert a claim for
attorneys’ fees under FAR 31.205-33 because the clause “allows recovery of ‘services acquired
by . . . subcontractors in order to enhance their legal, economic, financial, or technical
positions.’” Id. (quoting FAR 31.205-33(a)). According to the government, “Iron Bow was not
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CENTECH’s subcontractor on the Building 7000 Activation Project at the time that Iron Bow
incurred the claimed attorney fees, which began to accrue on September 5, 2018,” and, therefore,
Iron Bow’s attorneys’ fees are not allowable. Id.
FAR 31.205-33 provides that “[c]osts of professional and consultant services are
allowable . . . when reasonable in relation to the services rendered and when not contingent upon
recovery of the costs from the Government.” FAR 31.205-33(b). “Professional and consultant
services” are defined as:
[T]hose services rendered by persons who are members of a
particular profession or possess a special skill and who are not
officers or employees of the contractor. Examples include those
services acquired by contractors or subcontractors in order to
enhance their legal, economic, financial, or technical positions.
Professional and consultant services are generally acquired to obtain
information, advice, opinions, alternatives, conclusions,
recommendations, training, or direct assistance, such as studies,
analyses, evaluations, liaison with Government officials, or other
forms of representation.
FAR 31.205-33(a). However, under FAR 31.205-47(f), costs are unallowable if incurred in
connection with “the prosecution of claims or appeals against the Federal Government.” 31.20547(f)(1); see Bill Strong Enters., Inc. v. Shannon, 49 F.3d 1541, 1549 (Fed. Cir. 1995) (holding
that “a legal, accounting, or consulting cost incurred in connection with the prosecution of a
CDA claim or an appeal against the Government is per se unallowable”), overruled on other
grounds by Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir. 1995). To be allowable, costs
incurred in connection with the performance or administration of a contract must provide a
“[b]enefit to the contract purpose.” Id. “In classifying a particular cost as either a contract
administration cost or a cost incidental to the prosecution of a claim . . . courts should examine
the objective reason why the contractor incurred the cost.” Id. “If a contractor incurred the cost
for the genuine purpose of materially furthering the negotiation process, such cost should
normally be a contract administration cost allowable under FAR 31.205-33, even if negotiation
eventually fails and a CDA claim is later submitted.” Id. “On the other hand, if a contractor’s
underlying purpose for incurring a cost is to promote the prosecution of a CDA claim against the
Government, then such cost is unallowable under FAR 31.205-33.” Id.
The fact that Iron Bow was not an active subcontractor at the time it incurred the
attorneys’ fees does not preclude recovery of the costs under FAR 31.205-33. Rather, the
relevant distinction for determining allowability is whether the claimed cost is “a contract
administration cost or a cost incidental to the prosecution of a claim.” Tip Top Const., Inc. v.
Donahoe, 695 F.3d 1276, 1283 (Fed. Cir. 2012) (citing Bill Strong Enters., Inc., 49 F.3d at 154950). On this issue, there are genuine issues of material fact as to the objective reason why
CENTECH incurred the cost—namely whether the costs were incurred for the purpose of
furthering negotiations with the USAF, prosecuting its CDA claim, or prosecuting or defending
the separate lawsuits involving CENTECH, Iron Bow, and CSC. In support of its claim,
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CENTECH provides copies of invoices from the law firm engaged by Iron Bow. [ECF 102-1] at
287-310. The relevant legal services were performed from September 5, 2018, id. at 287, through
July 19, 2019, id. at 306. CENTECH submitted its certified sponsored claim to the CO on behalf
of Iron Bow on June 5, 2019. [ECF 102-1] at 238-45. Therefore, the legal services were largely
rendered prior to the date that CENTECH submitted its claim. Nevertheless, the description of
the services does not indicate that the services were incurred for the benefit of the contract or as a
means of materially furthering negotiations with the USAF. See Bill Strong Enters., Inc., 49 F.3d
at 1550. Rather, the legal services are generally described as involving discussions and
teleconferences between the law firm’s attorneys, Iron Bow’s counsel, and CENTECH’s counsel
relating to litigation and settlement strategies. See, e.g., [ECF 102-1] at 296 (“Review and
analyze BOM; Conference . . . regarding litigation and settlement strategy; Conference with
client re same”); id. at 297 (“Emails and telcon with Centech counsel re USAF issue; Send
documents to same and review in advance; Telcon with client re same; Conference with legal
team re same”). It is therefore unclear whether the legal services related to negotiations or
exchanges of information with the USAF to resolve the dispute over the Phase 1 BOM materials.
Consequently, neither CENTECH nor the government is entitled to summary judgment on this
issue. See P.R. Burke Corp. v. United States, 58 Fed. Cl. 549, 559 (2003) (denying summary
judgment because genuine issues of material fact exist as to whether the consultant services
ultimately provided any benefit to the government); SUFI Network Servs., Inc. v. United States,
105 Fed. Cl. 184, 194 (2012) (finding plaintiff entitled to attorneys’ fees where “the factual
record is filled with instances of negotiation and information exchange at the administrative
level”).
IV.

CONCLUSION

For the reasons stated above, the Court GRANTS-IN-PART and DENIES-IN-PART
CENTECH’s cross-motion for summary judgment. [ECF 102]. The Court GRANTS
CENTECH’s motion on Counts I and II of its second amended complaint [ECF 94] with respect
to liability for breach of contract and DENIES its motion on Counts I and II with respect to
damages. The Court DENIES CENTECH’s motion on Count III. The Court DENIES the
government’s cross-motion for summary judgment. [ECF 103]. The parties SHALL CONFER
AND FILE a status report on or before March 21, 2025, proposing a schedule for further
proceedings.
IT IS SO ORDERED.
s/ Thompson M. Dietz
THOMPSON M. DIETZ, Judge

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