from the Armed Services Board of Contract Appeals in Nos.
57796, 57888, Administrative Judge Craig S. Clarke.
D. Meacham, Peel Brimley LLP, Henderson, NV, argued for
KENNETH DiNTZER, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington,
DC, argued for appellee. Also represented by Benjamin C.
Mizer, Robert E. Kirschman, Jr., Scott D. Austin.
Wallach, Hughes, and Stoll, Circuit Judges.
Construction, Inc., appeals a decision of the Armed Services
Board of Contract Appeals denying Garco's damages claim
arising out of its contract with the U.S. Army Corps of
Engineers to build housing units on Malmstrom Air Force Base.
Garco argues that a change in the base access policy
prevented its subcontractor from bringing many of its workers
onto the base, requiring its subcontractor to hire and train
more workers, and forcing it to incur additional costs. Garco
also alleges a constructive acceleration of the contract.
Because we conclude that there was no change to the base
access policy, we reject Garco's arguments and affirm the
Air Force Base in Great Falls, Montana, is the largest
missile complex in the Western Hemisphere. The base houses
the Minuteman III intercontinental ballistic missiles, which
carry a nuclear payload. The U.S. Army Corps of Engineers put
out for bid Contract No. W912DW-06-C-0019 to build housing
units on the base, and on August 3, 2006, awarded the
contract to Garco Construction, Inc. Garco subcontracted some
of the work to James Talcott Construction ("JTC")
in September 2006. JTC had performed considerable work on the
base in the past.
Corps of Engineers-Garco contract contained two provisions
especially pertinent here: (1) it incorporated Federal
Acquisition Regulation ("FAR") § 52.222-3,
which provides that contractors are permitted to employ
ex-felons; and (2) it required contractors to at all times
adhere to the base access policy. The base access policy, in
place since at least 2005, indicated:
A 911 Dispatcher will run the employees['] name[s]
through the National Criminal Information Center
[("NCIC")] system for a wants and warrants
check. Unfavorable results will be scrutinized and
eligibility will be determined on a case-by-case basis by the
J.A. 51 (emphasis added).
work on the contract began, JTC began experiencing difficulty
bringing its crew onto the base. JTC bussed many of its
workers to the base from a local prison's pre-release
facility, and those workers in particular experienced
difficulty accessing the base. Other JTC workers who were not
from the pre-release facility but who had criminal records
were also refused base entry. JTC's President testified
that JTC had not encountered similar access denials in its
performance of other Malmstrom contracts over the nearly
twenty years it had worked on the base.
Chief of Security Forces Plans and Programs at the time,
Michael Ward, stated in a 2012 declaration that JTC had been
"essentially by-pass[ing] security procedures" at
the base. J.A. 279, ¶ 6. Mr. Ward explained that JTC had
been gaining base access for its bussed-in, pre-release
facility workers by having a retired military member ride on
the bus and vouch for everyone on it, which the base
permitted at the time. Eventually, there was an incident on a
Garco jobsite where a prerelease facility worker beat his
manager with a wrench, and Mr. Ward later discovered that
this worker had a violent criminal background.
2007, JTC voiced concerns to Garco and the Air Force
regarding the difficulty it experienced getting its workers
onto the base, although it acknowledged that violent
criminals and sex offenders should not be granted base
access. Informal communications from the Air Force indicated
that violent criminals and sex offenders would continue to be
denied base access. After numerous exchanges between the
parties, the Base Commander Major General Sandra
Finan-who was ultimately responsible for base
access-issued a memorandum on October 22, 2007, indicating:
The 911 Dispatch Center will input all listed employees'
name[s] and data into the National Criminal Information
Center (NCIC) database for a background check in
accordance with Air Force directives. Unfavorable results
from the background check will result in individuals being
denied access to the installation, including, but not
limited to, individuals that are determined to fall into one
or more of the following categories: those having
outstanding wants or warrants, sex offenders, violent
offenders, those who are on probation, and those who are in a
pre-release program. The definition of sex offender and
violent offender can be found at Montana Code Annotated
J.A. 151 (emphases added).
days after Maj. Gen. Finan issued her base access memorandum,
JTC submitted a request for equitable adjustment
("REA") of the contract. JTC explained in the REA
that its inability to use convict labor on the base greatly
reduced the size of the experienced labor pool from which it
could hire in the Great Falls, Montana, area. JTC claimed
that, as a result, it incurred nearly half-a-million dollars
($454, 266.44) of additional expenses from additional time
interviewing and hiring new workers, paying overtime to new
workers, and training new and less experienced workers.
Notably, the REA only requested additional money; it did not
request a time extension.
Force denied the REA, and JTC, through Garco, requested
reconsideration by the contracting officer. Eventually the
claim reached the Armed Services Board of Contract Appeals.
The Board first granted partial summary judgment,
"holding that [Maj. Gen.] Finan's 22 October 2007
base access memorandum was a sovereign act and the Air Force
was not liable for damages from that date forward."
Appeals of-Garco Constr., Inc., ASBCA No.
57796, 15-1 B.C.A. (CCH) ¶ 36, 135 (Sept. 22, 2015). In
a later decision, the Board held that the base access policy
in place at contract award in August 2006 was also a
sovereign act, and moreover, was not changed by the October
2007 memorandum. The Board therefore rejected Garco's
argument that prior to October 22, 2007, the Air Force could
only deny access to workers who had outstanding "wants
or warrants." Instead, the Board found that a
"wants and warrants" check was synonymous with a
background check and Maj. Gen. Finan's memorandum was
simply a clarification of- not a change to-the base access
policy, and therefore the Air Force was not liable for
damages before the memorandum issued either. The Board also
concluded that the Air Force's increased enforcement of
the base access policy did not constitute a constructive
acceleration of the contract, and that JTC could not recover
under that theory.
appeals the Board's decision, and we have jurisdiction
under 28 U.S.C. § 1295(a)(10) and 41 U.S.C. §
appeal, Garco raises two narrow issues, which we address in
turn below: (1) that Maj. Gen. Finan's October 2007
memorandum changed the base access policy and the policy it
allegedly supplanted did not authorize the exclusion of
workers with criminal records; and (2) that the Air
Force's sovereign act of denying base entry to JTC's
workers constituted a compensable constructive acceleration
of the contract. Notably, Garco concedes that if we determine
Maj. Gen. Finan's October memorandum did not change the
base access policy, then their arguments fail. See
Oral Arg. at 4:28-4:48,
16-1936.mp3. Garco does not challenge the Board's
determination that the base access policy is a sovereign
first asserts that the base access policy did not authorize
the Air Force to prohibit workers with a criminal record from
entering the base until Maj. Gen. Finan's October 2007
memorandum issued, and therefore JTC's request for
equitable adjustment (or REA) should have been granted. As
support, Garco turns to the language of the base access
policy, particularly its reference to the NCIC "wants
and warrants check" that the 911 dispatcher was to
perform under the policy. Garco argues that this language is
plain on its face and means that only a search for
outstanding wants or warrants was to be performed. Garco
argues that anything more, such as a search of a criminal
record, falls outside the stated restrictions on access.
Garco also directs us to a line from Maj. Gen. Finan's
testimony where she stated that denying access from those
with a violent background or in prerelease programs was a
"large change" to the base access policy. Appellant
Br. 37 (citing J.A. 299). As further support, Garco notes
that Maj. Gen. Finan's October 2007 memorandum refers to
a "background check, " rather than a "wants
and warrants check."
Garco's argument requires us to interpret the base access
policy, an agency regulation. This is a legal issue which,
under the Contract Disputes Act, 41 U.S.C. §§
7101-09, we review de novo. Gen. Dynamics Corp. v.
Panetta, 714 F.3d 1375, 1378 (Fed. Cir. 2013). However,
"[t]he agency's construction of its own regulations
is 'of controlling weight unless it is plainly erroneous
or inconsistent with the regulation.'"
Reizenstein v. Shinseki, 583 F.3d 1331, 1335 (Fed.
Cir. 2009) (quoting Cathedral Candle Co. v. U.S.
Int'l Trade Comm'n, 400 F.3d 1352, 1364 (Fed.
Cir. 2005)); see also Auer v. Robbins, 519 U.S. 452,
461 (1997). Garco does not challenge this proposition, but
instead argues that no deference is due when the agency's
interpretation contradicts the plain and sensible meaning of
the regulation. Roberto v. Dep't of the Navy,
440 F.3d 1341, 1350 (Fed. Cir. 2006).
disagree with Garco that the plain text of the base access
policy unambiguously resolves the dispute. As when we
construe statutory language, we must consider the regulation
as a whole and the term "wants and warrants check"
in the context in which it was used. See Textron Lycoming
Reciprocating Engine Div., Avco Corp. v. United Auto.,
Aerospace & Agric. Implement Workers of Am., 523
U.S. 653, 657 (1998) ("[I]t is a fundamental principle
of statutory construction (and, indeed, of language itself)
that the meaning of a word cannot be determined in isolation,
but must be drawn from the context in which it is used."
(internal quotation marks omitted)); Robinson v. Shell
Oil Co., 519 U.S. 337, 341 (1997) ("The plainness
or ambiguity of statutory language is determined by reference
to the language itself, the specific context in which that
language is used, and the broader context of the statute as a
whole."). While there may be some merit to Garco's
argument that the plain meaning of "wants and warrants
check" in isolation suggests a check only for wants or
warrants, the surrounding language casts doubt on that
example, the sentence immediately following the disputed
"wants and warrants check" language reads:
"Unfavorable results will be scrutinized and eligibility
will be determined on a case-by-case basis." J.A. 51.
This directive for a case-by-case analysis of unfavorable
results suggests that the check is more searching than a
simple check for outstanding wants or warrants. Indeed, the
government introduced testimony that anyone with a want or
warrant would be immediately detained and would not be
"scrutinized" with "eligibility . . .
determined on a case-by-case basis." J.A. 25.
Garco's explanation that this sentence could mean that
the Air Force may grant base access to those with old, but
still outstanding, warrants is not convincing. At bottom, we
find that this sentence cuts against Garco's plain
meaning interpretation such that we must consider the Air