Free Response to Motion - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

AMERICAN ORDNANCE LLC, Plaintiff, vs. UNITED STATES, Defendant. Case No. 07-867C Judge Wheeler

PLAINTIFF AMERICAN OR N N EL C S D A C L' RESPONSE TO DEFENDANTSMO I NF RS MMA JUDGMENT ' TO O U RY

Of Counsel: Timothy R. Odil McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Facsimile: (303) 634-4400 E-mail: [email protected]

Steven M. Masiello McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Facsimile: (303) 634-4400 E-mail: [email protected] ATTORNEY FOR PLAINTIFF, AMERICAN ORDNANCE LLC

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TABLE OF CONTENTS Page
TABLE OF CONTENTS OF APPENDIX TO PLAI TF ' R S O S T N IFS E P N E O D F N A TSMO I NFOR SUMMARY JUDGMENT ........................................... v EE D N ' TO INTRODUCTION .......................................................................................................................... 1 FACTS ............................................................................................................................................ 3 ARGUMENT.................................................................................................................................. 3 I. THE GOVERNMENT DOES NOT OWN THE LINE 3A EQUIPMENT........................ 3 A. T e oe m n sn rr ao o t F PPoe y l s IWrn h G vr et It pe t n fh F rpr Ca e s og n ' e ti e t u B cuet eu e t C uto ed A qi d .F rh eas IR qi sh ortR a " cu e .. o t r e r e G vrm n O tfh M75 ot c ............................................................... 4 oe et uo t n " e 9 C n at r . 1. T e oe m n s oio C n aistO n rcr et h G vr et P si ot d tI w Poue n n ' tn r c s m Guidance Establishing That Title to Property Vests in the G vrm n O l fr rpr T aI" cu e .. o t oe et ny o Poe y hts A qi d .F rh n t r e G vrm n U dr S eic LNo C n at e . oe et ne a pc iC I r ot cT r ........................... 6 n " f r m T e A C uc R j tt G vrm n s oio B h F R oni e c h oe et P si y l es e n ' tn Confirming That Title Vests in the Government Only for Items Specifically Identified as a Deliverable End Item. ..................................... 7 T e oe m n sn rr ao Directly Conflicts With the h G vr et It pe t n n ' e ti M75 ot c s rges am n Cas. 9 C n at Por Py et l e............................................. 7 r ' s s u

2.

3. B.

T e oe m n s oio T at Pre It dd ht OD l et h G vr et P si hth a i n ne T aA evrh n ' tn e ts e i e Line 3A Equipment Lacks Any Support Under the M795 Contract. ..................... 9 1. 2. 3. The M795 Contract Requires Delivery of M795 Projectiles Only. .......... 10 T e oe m n s e c d ot cCti sn tMo o D h G vr et Sl t C n at it n i I n ' ee r ao s tn o i Not Support That the Line 3A Equipment Is Government Property. ....... 10 The Government Ignores That the Scope of Work Paragraph C.3.9, Which Specifically Required Acquisition of the Line 3A Equipment for the Government, Was Deleted.......................................... 11 The Government Fails to Address That the Separate SubCLIN Requiring AO To Deliver Equipment to the Government Was Deleted. ..................................................................................................... 12 The Government Ignores the Deletion of the Requirement for Delivery of Any Line 3A Equipment from the Delivery Schedule. ......... 13 The Government Fails to Address the Exclusion of FAR Provisions Required for Facilities Acquisition. ........................................ 14

4.

5. 6.

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TABLE OF CONTENTS (cont.) Page 7. C. D. The Government Ignores That the M795 Contract Contains No List of Facilities Required To Be Delivered to the Government. ............. 15

Modification P00003 Did Not Alter the Title Provisions of the M795 Contract................................................................................................................. 15 The Government Has Admitted Both That AO Owns the Line 3A Equipment and That the M795 Contract Is Ambiguous With Respect To the Ownership of Line 3A Equipment .................................................................. 17 E e it C ut rt Fn T at G vrm n sn rr ao vn fh orWe o i hth oe et It pe t n e e d e n ' e ti We R aoal Wh h ts o t Pre' odcad lE tni r esnb , i IIN t h a i C nutn Al x i c e e c , e ts rs Evidence Establish AO Ownership....................................................................... 19 Genuine Issues of Material Fact Exist Precluding Summary Judgment for the Government..................................................................................................... 20

E.

F. II.

THE GOVERNMENT IS NOT ENTITLED TO CIRCUMVENT THE APPLICABLE STATUTE OF LIMITATIONS THAT BARS THE G V R ME TSO E S I C A M I T ELN 3 E U P N ............... 22 O E N N ' WN R H P L I N H I E A Q IME T A. B. The Statute of Limitations Cited by the Government, 28 U.S.C. § 2415, Does Not Apply To Actions Arising Under The CDA......................................... 23 T e oe m n s w e h Ca IS b cT B r net C A s h G vr et O nr i lm s uj t o a U drh D ' n ' sp i e e Statute of Limitations............................................................................................ 25

III.

CONCLUSION................................................................................................................. 26

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TABLE OF AUTHORITIES Page
Cases Arizona v. United States, 216 Ct. Cl. 221, 575 F.2d 855 (1978) .................................................... 9 Arko Executive Servs., Inc. v. United States, 78 Fed. Cl. 420 (2007)............................................. 8 A-Transport Northwest Co. v. United States, 36 F.3d 1576 (Fed. Cir. 1994) ........................ 19, 20 Burnside-OTT Aviation Training Center v. Dalton, 170 F.3d 854 (Fed. Cir. 1997) .................... 22 Cecile Indus., Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993)..................................................... 22 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ............................................................................. 21 Fireguard Sprinkler Sys., Inc. v. Scottsdale Ins. Co., 864 F.2d 648 (9th Cir. 1988).............. 12, 15 Hol-Gar Manufacturing Corp. v. United States, 169 Ct. Cl. 384 F.2d 972 (1965).................. 5, 11 I.N.S. v. Cardoza-Fonseca, 480 U.S. 421 (1987) ......................................................................... 11 Jowett, Inc. v. United States, 234 F.3d 1365 (Fed. Cir. 2000)................................................ 21, 22 McAbee Constr., Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996) ................................. passim Motorola, Inc. v. West, 125 F.3d 1470 (Fed. Cir. 1997)............................................................... 24 Northrop Grumman Corp. v. United States, 50 Fed. Cl. 443 (2001).............................................. 8 Perry-McCall Constr., Inc. v. United States, 46 Fed. Cl. 664 (2000) .............................. 17, 18, 19 Precision Pine & Timber, Inc. v. United States, 62 Fed. Cl. 635 (2004) ..................................... 25 Royal Indem. Co. v. John F. Cawrse Lumber Co., 245 F. Supp. 707 (D. Or. 1965) .................... 12 Sarang Corp. v. United States, 76 Fed. Cl. 560, 564 (2007) ........................................................ 25 Teg-Paradigm Envtl., Inc. v. United States, 465 F.3d 1329 (Fed. Cir. 2006) .............................. 11 Tex. Health Choice, L.C. v. Office of Pers. Mgmt., 400 F.3d 895 (Fed. Cir.2005) ................ 22, 23 United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983)...................................... 7 Statutes 28 U.S.C. § 1491(a)(1) and (2) ............................................................................................... 22, 23 28 U.S.C. § 2415........................................................................................................................... 24 28 U.S.C. § 2415(a) ...................................................................................................................... 24

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TABLE OF AUTHORITIES (cont.) Page 28 U.S.C. § 2415(b) ...................................................................................................................... 24 28 U.S.C. § 2415(c) ................................................................................................................ 23, 24 41 U.S.C. § 601.................................................................................................................. 3, 14, 22 41 U.S.C. § 605(a) .............................................................................................................. 3, 24, 25 41 U.S.C. § 609(a)(1).............................................................................................................. 22, 23 Contract Disputes Act of 1978........................................................................................................ 3 Rules R.C.F.C. 5.3(b)(3) ........................................................................................................................... 1 Regulations 48 C.F.R. § 2.101 (2007) .............................................................................................................. 25 48 C.F.R. § 43.103(a).................................................................................................................... 16 48 C.F.R. § 45.402(a) (2008).......................................................................................................... 7 48 C.F.R. § 52.232-16 (1996) ................................................................................................... 8, 14 48 C.F.R. § 52.232-16(d)(6) ........................................................................................................... 8 48 C.F.R. § 52.245-1(e)(2)(ii) (2008) ............................................................................................. 7 48 C.F.R. § 52.245-10 (1996) ....................................................................................................... 14 48 C.F.R. § 52.245-11................................................................................................................... 14 48 C.F.R. § 52.245-2(c)(3) (1996).................................................................................................. 5 48 C.F.R. § 52.245-7..................................................................................................................... 14 FAR § 2.101.................................................................................................................................. 25 FAR § 52.245-10 .......................................................................................................................... 14 FAR § 52.245-2 .......................................................................................................................... 2, 5

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TABLE OF CONTENTS OF APPENDIX T P A N IFSR S O O L I T F ' E P NSE TO D F N A TSMO I NF SUMMARY JUDGMENT EE D N ' T O OR American Ordnance LLC v. United States, Case No. 07-867C

AO relies upon and cit t t fl wn dcm n :()t A pni ( e" O e o h o o i ou et 1 h ped t A s e l g s e x h A pni ) tce t i Mo o fr u m r Jdm n ( e" O Mo o" ad() O s ped " aahd o t t n o S m a ug ett A x t s i y h t n) n 2 A ' i ; Pooe Fni s f not vr d at"lFc " ( O s ped ife aD ceN . rpsd i n o U cn oe e Fc( . at ) A 'A pni sid t okt o dg r t P s. x l 20.) In addition to the exhibits referenced in the AO Appendix, AO provides the following Supplemental Appendix: Exhibit No. 57. 58. Description Page No.

Declaration of John R. Lohmann, Jr. ........................................................... 500 Additional Excerpts from Department of Defense Manual for the Performance of Contract Property Administration, dated December, 1991 (DoD 4161.2-M) .................................................... 506 E-mail, dated July 10, 2006, from Property Administrator Julie K. Solinski regarding Line 3A Equipment Ownership ....................... 511 Deposition of Charles Smith ........................................................................ 516 Deposition of James Nelson......................................................................... 521 E crto A S m a Jdm nMo o,S m a o xe s f O u m r ug et t n"u m r f p y i y t Fc " n " x i iE i ne Scos h at ad E tn c v ec" et n ............................................. 523 e s rs d i

59. 60. 61. 62.

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Pursuant to Rule 56 of the Rules of the United States Court of Federal Claims ( ...., ln f A e cnO dac L C ( O )r pc u ysb its its Response in " CFC" Pa tf m r a rnne L " " e et l um R ) i i, i A , s fl O psi t D f dn s t nfr u m r Jdm n ( e Mo o" fe Jn 3, 08 poio o e nat Mo o o S m a ug ett " t n) id ue 0 20 tn e ' i y h i ,l (Docket No. 17).1 A et lhdbl ,h df dn t U idSa s ( e gvrm n ) s s b se e w t e nat h n e te't "oe et , ai o e e ,e t t h n " Motion for summary judgment should be denied. INTRODUCTION AO demonstrated conclusively in A ' O sMotion that the plain language of contract DAAE30-96-C-01, d i t n o P 00 ( e M75C n at ,h pre' l e-year 03 Moic i N . Z 01 t " 9 ot c )t a i e vn f ao h r " e ts e r od fodci pr r i t M75 ot c ad h pre' xr sd e r o cnutn e om n h c f g e 9 C n at n t a i epe e intent both before r , e ts s and after execution of the M795 Contract, establishes AO ownership of the disputed equipment a i u i t scs ( e" i 3 E u m n ) In its Motion filed on the same day, the ts e n h ae t Ln A qi et . s i h e p "2 government asserts that the plain language of the M795 Contract grants the government title to t Ln 3 E u m n T e oe m n s p i l gae a u ethw vri oe m c h i A qi et h gvr et "ln a ug" r m n o ee g r uh e e p . n ' a n g , ,n s o t M75C n at p i l gae i l i t M75C n at esn a cn ati fh e 9 ot c s ln a ug ­ n u n h r ' a n c d g e 9 ot c s s tl ot c l e r ' ei r n im nm e ( LN ) sut e requiring delivery only of M795 projectiles, leaving t e u br " I " t c r C r u conspicuously absent the separate CLIN for installation of Line 3A Equipment contained in the oi nl ot c ( e" ee C n at . Moevrt gvrm n i oe t th pre r i cn at t L tr ot c ) ga r h t r " r e h oe etg r h t a i o , e n n s a e ts intentionally deleted from the M795 Contract the following specific terms that would have vested title in the government because the parties intended that AO would have title: (1) the date
1

F ri p cya r e ne i t s r fo A "nl e O s r eesrn n r tMao o s li ,l e r csn h bi t " O i u A 'pe cs i i e s m it l f e i e cd d o t e , sn &H neC roao ( C )s prpie agr opr i " t n MH "a apor t a.
2

Pursuant to R.C.F.C. 5.3(b)(3), AO relies upon, and reproduces in its Supplemental Appendix ( l p. aahd e t t scos ftS m a Jdm n Mo o r a i "u m r " . p ) tce hr o h et n o i u m r ug et t n e r n S m a PA " t e, e i s y i gdg y o t Fc " n " x i iE i ne cnii o fut n 1)o l ae.See Pl. App., Ex. fh at ad E tn c v ec" os t g for e (4 t apgs e s rs d sn e t 62, pp. 523-536.

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for delivery of (or reference to) the Line 3A Equipment in the delivery schedule; (2) a list of Line 3A Equipment that AO allegedly was required to acquire and deliver; (3) a statement of work ( O )eu e et ec b gA ' aqit naddl e t t gvrm n o t Ln " W" r i m n dsr i O s cu io n evr o h oe et fh i S qr in si i y e n e e 3A Equipment; and (4) the Federal Acquisition Regulat n( A " poiosfr aits i " R ) rv i o f li o F sn cie acquisition. In addition to ignoring significant portions of the M795 Contract, the government reads out of the M795 Contract property title-vsn poiost t ot d t h gvrm n s et g rv i h cn ai t oe et i sn a r c e n ' position. Specifically, t gvrm n a usni Mo o t th M75C n at s na h oe et r e i t t n h t e n g s i a e 9 ot c s t dr r ' a d FAR government property clause, FAR § 52.245-2, for firm, fixed-pi ( F " cn at( e r e " P) ot c t c F r sh "F Poe y Cas" " ae i c a t any equipment used in performing this F P rpr t l e) m ks t l r h u e at contract . . . becomes property of the government as of the earlier time when it is either put to use o t G vrm n py frt Mo o a9 T e oe m n s ru ets rn bcueh rh oe et aso i" t n t . h gvr et a m n iw og eas t e n . i n ' g e government disregards the critical predicate phrase in the FFP Property Clause requiring that the government will become vested in equipment under an FFP contract upon use or payment only if the contractor acquired the equipment for the government as opposed to acquiring the equipment s p t pr r t cn at I t gvrm n sa u et e cr c t gvrm n i l o e om h ot c f h oe et r m n w r or t h oe et m y f e r . e n ' g e e, e n w u gaul bcm t o nrudrt F P Poe yCas o a o acn at ' ol r ay eo e h w e ne h F rpr l e f l f ot c r d d l e e t u l r os productive assets simply because a contractor acquired and used such assets to produce an end im frh gvrm n U drh gvrm n s ru ett cnet f ot c r t o t oe et ne t oe et a m n h ocp o cn at -owned e e n . e n ' g , e r o equipment would have no meaning, and would result in surprise to the entire government contracts industry. By choosing to ignore or read important terms out of the M795 Contract, the gvrm n s t niuspot .F r e bcue h gvrm n cn nshth M75 oe et Mo o s nupr d ut r eas t oe et ot d t t n ' i e h, e n e a e 9

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Contract imposes obligations different than what the parties intended at the time the contract was executed, material issues of disputed fact exist based on the record evidence. Finally, in its Motion, the government attempts to disavow the nature of its own assertions in its Final Decision to avoid the application of the Contract Disputes Act of 1978, 41 U.S.C. § 601, et seq. (the " D " T eFnlD c i w si udpr att t C A c i so nr i o A C A) h i . a eio a s e us n o h D , lm w e h f O sn s u e a sp property, and is therefor a oe m n c i sb c t t C A i l i t C A s tu e gvr et lm uj to h D ,n u n h D ' s t e n a e e cdg e at o l it n. h gvrm n s oio l k ay aii l o f t T u, e oe m n s fi ti s T e oe et psi a s n bs n a ra . hst gvr et m ao n ' tn c s w c h n ' Motion must be denied. FACTS T ef t sr ud gt s i u a dtl i A ' Mo o adi A ' Pooe h a s ur ni h d pt r e id n O s t n n n O s rpsd c o n i s e e ae i Fni s f not vr dFc ( lFc " See AO Motion at 2-7; Pl. Facts at 1-18. AO i n o U cn oe e at" . at ) dg r t P s. r i uo adaahs e t i S m a o t Fc stot i A ' Mo o. Material ee pn n tce hr o t u m r fh at e fr n O s t n ls t e s y e s h i 3 facts that AO establishes are in dispute as stot i dtln O s ocr n y id epne efr n e ii A 'cnur t fe R sos h a el l tt gvrm n s rpsd i i s f not vr d at o h oe et Pooe Fn n o U cn oe e Fc e n ' dg r t . ARGUMENT T e oe m n s ru ethth p i l gae fh M75 ot cet lhsht h gvr et a m n t t ln a ug o t n ' g a e a n e 9 C n ats b se t r ai a title vested in the government for the Line 3A Equipment is unsupported and wrong. Moreover, t gvrm n s tm toao t C A s tu o l it n, 1USC § h oe et ae p t vi h D ' s t e fi ti s4 ... 605(a), lacks e n ' t d e at m ao any factual or legal basis.

I.

THE GOVERNMENT DOES NOT OWN THE LINE 3A EQUIPMENT. The government argues that it owns the Line 3A Equipment based upon two flawed

pe i s () h M75C n at otn aC I r u i A ' dl e o t Ln 3 r s :1 t m e e 9 ot c cn i r a s LN e in O s evr f h i A q rg i y e e
3

See Footnote 2 above at p. 1.

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Equipment; and (2) the standard FFP Property Clause contained in the M795 Contract confers title in the Line 3A Equipment upon the government either when AO used the equipment or when the government paid AO, regardless of the fact that the Line 3A Equipment was not acquired by AO for the government. A review of all of the language of the M795 Contract confirms that the contract is deliberately structured to require that AO take title to the Line 3A Equipment. Moreover, the FFP Property Clause requires that title vest in the government only for property that is acquired by the cot c r o t gvrm n T u,h gvrm n s n at fr h oe et hs t oe et r o e n . e n ' interpretation of the M795 Contract is unsupported and wrong. Even if the Court were to conclude that the plain language of the M795 Contract supports that the government offers a reasonabli e r ao o t pre'n n w i ide nt en r e t n fh a i i et h h t os o the t p ti e ts t , c , gvrm n am tt t m i i eis n a o t pre' odc adextrinsic evidence oe et d i h a b u y x tad l fh a i cnut n n s a gt s l e ts spott th pre'hr a i etht Ow u o nh Ln 3 E u m n ad ol upr h t a i sa d n n n t A ol w t i A qi et n w u s a e ts e t a d e e p , d bear the risks and rewards attendant with that ownership. The government repeatedly expressed its intent and understanding that AO take title to the Line 3A Equipment by its actions and in written communications both before and after the execution of the M795 Contract. Accordingly, the M795 Contract requires that AO retain title to the Line 3A Equipment. The government has therefore failed to demonstrate that it is entitled to summary judgment.

A.

T eG vrmet It pe t n o teF P P o et Ca s I h oen n' ne rt i f h F rpr s r ao y l e sWrong u B cue t eurs h C utoR a " curd. . o te oen n" ea s IR q i te o r t ed A q i e e . F r h G vrmet Out of the M795 Contract.

T e oe m n i i Mo o,cnwegshth C ut uti e r t cn at h gvr et n t t n ako l e t t orm s" t pe h ot c n , s i d a e nr t e r in a manner that gives meaning to all its provisions and makes es. Mo o a 7( sne " t n t quoting i McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996)). The government further acknowledges that the Court utdp t i e r ao t tg e r snb m ai m saoth n r e t n h "i se oal en g e t p ti a v a e n t a pr o a i t m n r hrhna i e r ao " h hl vs pro o iue s o l a s f n n r et a e t n n r e t n w i e e a ot n ft sl s l t su " t a t p ti c a i e, Page 4

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i xlal i pr i ,vi i i icn m ai l so spruu. Mo o a 1 n p cb , n e t e o , n g f at en g s r ue l s e i e o av d s ni , ne fo " tn t 0 i (quoting Hol-Gar Manufacturing Corp. v. United States, 169 Ct. Cl. 384, 395, 351 F.2d 972, 979 (1965)). Despite its recitation of the proper legal standards, however, the government argues that t F PPoe yCas " ae ic a t t n eu m n ue i pr r i t s ot c h F rpr l e m ks t l rh ay qi et sd n e om n h cn at e t u e a p f g i r , such as in producing the FAT, becomes property of the government as of the earlier time when it is either put to use or t G vrm n py frt Mo o a9 T e oe m n ii or t h oe et aso i" t n t. h gvr etsn r c e n . i n c e. The FFP Property Clause contained in the M795 Contract, FAR § 52.245-2, provides that: Title to each item of facilities and special test equipment acquired by the Contractor for the Government under this contract shall pass to and vest in the Government when its use in performing this contract commences or when the Government has paid for it, whichever is earlier, whether or not title previously vested in the Government. See M795 Contract, Pl. Facts, ¶ 35; see also 48 C.F.R. § 52.245-2(c)(3) (1996). Noticeably, the FFP Property clause contains a clear condition precedent for government title ­hth eu m n b "cu e b t C n at frh gvrm n "T e oe m n s t t qi et e aqi d yh ot c ro t oe et h gvr et a e p r e r o e n . n ' a u et n r y m tt s eu e et B cue h gvrm n s ru eted ot fh r m n ete o i h r i m n eas t oe et a m n r s u o t g il s i qr . e n ' g a e M795 Contract, without any explanation or analysis, the predicate requirement for title transfer, t gvrm n s oio t tt o eo gi dtl udrh F PPoe yCas o t h oe et psi h ism hw a e ie ne t F rpr l e fh e n ' tn a n t e t u e M795 Contract fails. McAbee Constr., Inc., 97 F.3d at 1435; Hol-Gar Manufacturing Corp., 169 C. l a 35 31F d a 99 A ep i d bl , h gvrm n spsi i a o t C. t 9, 5 . t 7. s xln e w t oe et oio s l 2 ae o e n ' tn s unreasonable, and contradicts pertinent authority.

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1.

T e G vrmet P si C nrdc I O n P oue n h oen n' oio s t n ot is t w a t s rcrmet Guidance Establishing That Title to Property Vests in the G vrmetO l frP o et T a I " curd ...F rte oen n ny o rpr y ht s A q i e o h G vrmet U dr S eic L No C nrcT r oen n" n e a pc iC I r o t t em. f a

D pr et f e ne " o " gi nedt D cm e 19,n td D DMaul ea m n o D f s ( D ) u ac, a d ee br 91 etl " o t e D d e ie na for the Performance of Contract Property Administr i "( o 46. ) ep i t ao " D 11 -M" xln h tn D 2 , as e gvrm n si ti tltcn at -acquired property under FFP contracts, as follows: oe et r h n ieo ot c r n ' gs t r o Cost-type and time-and-materials contracts allow the contractor to acquire material for the Government as a direct charge to the contract. Title vests with the Government through the provisions of the Government property clause FAR 52.245-5(c). Fixed-price type contracts may provide for the contractor to acquire material for the Government as a direct charge to the contract when specifically listed as a line item in the contract. Title vests with the Government through the provisions of the Government property clause FAR 52.245-2(c). The method the contractor selects to acquire material for the Government is based upon several factors (determination of items needed, schedules of production or delivery, source identification, and quantities required). DoD 4161.2-M, ¶ C3.5.1.2.2.1. (emphasis added).4 Notably, this DoD guidance confirms that the FFP Property Clause requires that title transfer to the government only for those items specifically listed in a line item of the Contract for the contractor to acquire and deliver to the gvrm n A cri l t gvrm n s w poue et u ac cn aistpsi oe et cod g ,h oe et o n rcr n gi ne ot d ti oio n . ny e n ' m d r c s tn that th F PPoe yCas vs tl i t gvrm n uo acn at ' m r ueo e F rpr l e et ie n h oe et pn ot c r e s f t u s t e n r os e acquired property.

4

DoD 4161.2-M i i l e a a E h ii Pa tf A pni i S pot f ln fs s n u d s n xi tn ln fs ped n upr o Pa tf cd b i i' x i i' Motion for Summary Judgment, Ex. 3, p. 17.

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2.

T e A C u c R j t te oen n' P si B C ni n h F R o ni e c h G vrmet oio y o f mig l es s tn r That Title Vests in the Government Only for Items Specifically Identified as a Deliverable End Item.

T eM75C n at F PPoe yCas poi s ht qi etieps s ot h 9 ot c s F rpr l e rv e t eu m n tl as t h r ' t u d a p t e e gvrm n uo ue r am n ol w e t t qi ets aqi db t cn at fr oe et pn s o py et ny hn h eu m n i"cu e y h ot c ro n a p r e r o t gvrm n " Pl. Facts, ¶ 35. The government relies upon this title-vesting language as the h oe et e n . sole support for its ownership claim. Motion at 9. The very same prerequisite title-vesting language contained in the M795 Contract exists unchanged in the relevant FAR regulations today. See 48 C.F.R. § 52.245-1(e)(2)(ii) (2008). To confirm that this relevant title-vesting language means that ownership vests in the government only to property specifically identified to be delivered under an FFP contract, the FAR Council explains that: Under fixed price type contracts, the contractor retains title to all property acquired by the contractor for use on the contract, except for property identified as a deliverable end item. 48 C.F.R. § 45.402(a) (2008) (emphasis added). Thus, the FAR Council definitively rejects the gvrm n s vrra i e r ao o t F PPoe y l s.Poe y ie os pass oe et oe od n r e t n fh F rpr Ca e rpr tl de not n ' b t p ti e t u t t t t gvrm n m r y pn s i pout n r pn h gvrm n s am n r hrtl o h oe et e l uo uen rdco o uo t oe et py et a e ie e n e i e n ' ; t ,t passes to the government only when the property is acquired for the government by identification as a specific deliverable end item. 3. T eG vrmet It h oen n' nerpretation Directly Conflicts With the M795 s C nrc s rges ametCa s. o t t P ors P y ns l e a' u

N cn at rv i sol "e osuda bi i cnlt i ao e [rv i ] o ot cpoio hu b cnt e s e g n ofc wt nt rpoio r sn d r n i h h sn ul s oo e r snb i e r ao i ps b . See United States v. Johnson Controls, n s n t r e oal n r e t n s os l" e h a e t p ti ie Inc., 713 F.2d 1541, 1555 (Fed. Cir. 1983). In addition, the Court should give special attention to applying the interpretive principle that all parts of the contract are given meaning because the FFP Property Clause is a clause set forth in the FAR. Arko Executive Servs., Inc. v. United

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States, 78 Fed. Cl. 420, 424 (2007) ( t pev pi i e ap " i prcl fr i t i e r i r c l pl wt a i a oc n h n r te n p s y h tu r e e context of the FAR, which, after all, is designed to provide a set of integrated procurement rl .. u s) e" The progress payments clause contained in the M795 Contract, 48 C.F.R. § 52.232-16 (1996) ( e"rgesPy et Cas" requires that the government return title to the t Por h s am n l e) s u , contractor for any necessary property acquisitions financed through progress payments during t pr r ac o t F Pw r t t e ntdl e d oad cet b, e oe m n " h e om ne fh F ok h w r o "evr t n acp d yt G vr et e f e a e i e , e h n , o " croa d n up e dl e d oad cet b t G vrm n .. Id. at § 52.232ri opr e i spls evr t n acp d yh oe et .. n t i i e , e e n " 16(d)(6). To interpret the FFP Property Clause as the government advocates, therefore, renders the relevant Progress Payments Clause title-vesting language inoperative surplusage. That is, if all property acquired by the contractor under an FFP contract vested in the government upon the cn at ' "s, o w e t gvrm n "asfri"t Por sPy et Cas' ot c r ue r hn h oe et py o t h rge am n l e r os " e n , e s s u s language would be irrelevant since, among other reasons, the government would already have title under the FFP Property Clause.5 T u,h M75 ot c s F Poe y l s m na s hst e 9 C n at F P rpr Ca e adt r ' t u e

5

Evnit C ut e t et tnt gvrm n s t i di e r ao,h FFP Property e fh orw r o n r i h oe et sa e n r e t n t e e ea e n ' rn t p ti e Cas w u ncs ry a t spoth gvrm n s oio t th gvrm n o n t l e ol ees i f lo uprt oe et psi h t oe et w sh u d al i e n ' tn a e n e Ln 3 E u m n S eicl , ne t gvrm n scnet no t F P Poe y i A qi et pc i l udr h oe et ocp o f h F rpr e p . f ay e n ' i e t Clause, title in any contractor-acquired property subject to progress payment financing used to produce an end item for delivery to the government would vest in the government. Yet, even if t gvrm n sn rr ao o t F PPoe y l s were accepted, such property clearly h oe et i e e t n fh F rpr Ca e e n ' t p ti e t u would shift back to a contractor to the extent the property is not delivered or incorporated into an end item under the Progress Payment Clause upon the liquidation of relevant progress payments. 48 C.F.R. § 52.232-16(d)(6) (1996). This resul w i f oalt A 'psi bcue fh t h e a r eo O s oio eas o t , l v b tn e operation of the Progress Payments Clause incorporated into the M795 Contract, merely dm nt t t th gvrm n sn rr ao o t F PPoe y l s sol b r et e osa sh t oe et i e e t n fh F rpr Ca e hu e e c d re a e n ' t p ti e t u d j e because it causes odd and whimsical differences in the status of title in contractor-acquired property based upon whether or not a contractor receives progress payments financing. Northrop Grumman Corp. v. United States, 50 Fed. Cl. 443, 459 (2001) ( n rr ao w i g e a " t pe t n h h i s i e ti c v
(footnote continued on next page)

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A ' o nr i o a poe yt t O w s o r u e udrh M75C n atoaqi O s w e h f l rpr h A sp l t a a nte i d ne t qr e 9 ot c t cu e r r and deliver to the government.

B.

T eG vrmet P si T a te at Intended That AO Deliver the h oen n' oio h th P r s tn ies Line 3A Equipment Lacks Any Support Under the M795 Contract.

The government claims that the plain language terms of the M795 Contract establish that AO was required to deliver the Line 3A Equipment and thus, the government "a fr t Line pi o"h d e 3A Equipment. T e oe m n s ru ets ae uo f e rv i s fh M75 ot c h gvr et a m n ibsd pn i poio o t n ' g v sn e 9 C n at r , none of which reference any required acquisition of the Line 3A Equipment for the government. See Motion at 7-8. Nevertheless, the government contends that there is no ambiguity in its cited contract provisions. Motion at 11. On the contrary, the provisions cited by the government in its Motion do not support its position because such provisions recognize that the only deliverable items the govrm n "a e etpi n d fr udrh M75C n at r M75Po cl .Moevrt gvrm n i oe o e o" ne t e 9 ot c a r e 9 rj te e is r e h oe etg r t r o , e n n s h provisions of the M795 Contract that undercut its position ­both provisions that were retained and those that were purposely deleted. Consideration of the plain language of the entire contract et lhshth M75 ot c sagae a proe ad i icn y hsn o e oe s b se t t ai a e 9 C n at l ug w s upsl n s n i t coe t r v r ' n y g fa l m any requirement that AO acquire the Line 3A Equipment for the government and to require that AO take title of the Line 3A Equipment.

(footnote continued from previous page)

reasonable meaning to all parts will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless, superfluous, or achieves a weird and w i s ar u . ( h i le l" quoting Arizona v. United States, 216 Ct. Cl. 221, 235-36, 575 F.2d 855, 863 m c s t) (1978)).

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1.

The M795 Contract Requires Delivery of M795 Projectiles Only.

T eM75C n at el e t L tr ot c sC I sut ewt anw C I h 9 ot c r a d h ee C n at LN t c r i r pc e t r ' r u h e LN structure that included only M795 Projectiles as deliverables. Pl. Facts, ¶ 40. Under the CLIN sut e fh M75C n atA w s eu e t dl e oe it rc T s( A " l tc ro t r u e 9 ot c O a r i d o evr n Fr A tl et" T )o r , qr i s ie F t quantity of M795 Projectiles pursuant to SubCLIN 0001AA. Id., ¶ 41. AO was also required to deliver 1,000 each M795 Projectiles pursuant to SubCLIN 0001AB, and 76,968 M795 Projectiles pursuant to SubCLIN 0001AC. Id., ¶ 4.S b LN 00A poi s dsr t e 2 uC I 01 B rv e "ec p v d ii dt s t g htt s ucn nl e 1 0 ec M75 rj te aao l r e f 13 2 a " ti t " isbl i u s , 0 ah 9 Po cl t t api o $7, 0 a an a h i cd 0 e is t c 9 ad 9 1, 1 n aitao cs . Id., ¶ 43. The Continuation Sheet contained in the M795 n $, 0 7 i f li t n ot" 3 0 ciz i s Contract provides further description, stating that the supplies and services required by SubCLIN 00A a " od A sm l ad Pcae M75 Po cl i acrac wt T P 01 B r L a, s b , n akg e e e 9 rj te n codne i D e is h [Technical Data Package] and Statem n o WokSco C" Id., ¶ 44. The quantity required et f r et n . i fr evr r an t S b LN00A i", 0 n s ­ quantity which exclusively refers o dl e e t g o uC I 01 B s 1 0 ui, a i y li 0 t" to units of M795 projectiles, not Line 3A Equipment. Id., ¶ 45. 2. T e oen n' Sl t C nrc Citations in Its Motion Do Not h G vrmet e c d o t t s ee a Support That the Line 3A Equipment Is Government Property.

The provisions of the M795 Contract cited by the government in its Motion do not support its position that the contract unambiguously requires that AO deliver the Line 3A Equipment to the government. In addition to citation of the FFP Property Clause and reference to the Progress Payments Clause addressed above, the government cites two provisions of the M795 Contract. Motion at 7-8. First, the government cites § C.3.1.1. This contract term, hw vrd et cn aish gvrm n s oio bcueh poio r on e t th o ee i cy ot d tt oe et psi eas t rv i e gi sh t ,r l r c e n ' tn e sn c z a e deliverable items under the M795 Contract are only M795 Projectiles. See Mo o a 7( h tn t " e i T contractor shall deliver M795 projectiles as delineated in Section F of this contract. The

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deliverable items include; 155mm, HE, M795 Projectiles . . . , Obturator . . . , Supplemental Charge . . . , i r u . . S ae . ." A dscn,h gvrm n ce § Ln C p . , pcr . .. n eod t oe et is C.3.2.1, e s ) e n t regarding Fr A tl T s( A " Sm l t i o e cn ate r csni Mo o,h it rc et" T ) i iro t t r ot c r e ne i t t n t s s ie F . a s h r fe s i i sco o t M75C n at l cn aish gvrm n s oio bcue h poio et n fh i e 9 ot c a o ot d tt oe et psi eas t rv i r s r c e n ' tn e sn assigns to AO the burden of procuring for itself whatever materials it might need to accomplish the first article test requirements. See Mo o a 8( h cn at sa b r pni efr t n t " e ot c r hl e e os l o i T r o l s b procuring all materials and equipment required to conduct the First Article Test (FAT) under the cn at) T u, e oe m n s osition lacks any support in the plain language of the M795 ot c" hst gvr et p r .. h n ' Contract upon which it bases its Motion. 3. The Government Ignores That the Scope of Work Paragraph C.3.9, Which Specifically Required Acquisition of the Line 3A Equipment for the Government, Was Deleted.

T e oe m n s oio i i Mo o i oe t pre' ec p o o t w r i h gvr et psi n t t n g r h a i dsr t n fh ok n n ' tn s i n s e ts ii e the SOW incorporated into the M795 Contract. T e a i ' h pre deleted language from the M795 ts C n at S W t t ol r u e O t aqi t Ln 3 E u m n fr the government ot c s O h w u e i A o cu e h i A qi eto r ' a d qr r e e p ad cne tl t t gvrm n T epre'dli o sc l gaecnl i l n ovy ie o h oe et h a i e t n f uh a ug oc s e t e n . ts eo n uv y et lhsh pre'n n t r oeh effect of the deleted language and instead require AO s b se t a i i eto e v t ai e ts t m e to take title to the Line 3A Equipment. See, e.g., I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 44243 (1987) (noting that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language); Hol-Gar Manufacturing Corp., 351 F.2d at 975 n (ni i"u eapor t t cm a l gaeo oi nl pc i t nwt cag . f d g t qi prpie o o pr a ug f r i seic i i hne 4 i n t a" e n ga f ao h made by modification); Teg-Paradigm Envtl., Inc. v. United States, 465 F.3d 1329, 1338 (Fed. Cir. 2006) (i cn t t en go l gaem s b a "e vdf m t cn at ya d et g h m ai f a ug ut e s dr e r h ot c b r i a n n i o e r reasonably intelligent person acquainted with the contemporaneous circumstances" ( pai ) e hs m s added); see also Fireguard Sprinkler Sys., Inc. v. Scottsdale Ins. Co., 864 F.2d 648, 651 (9th Cir. Page 11

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1988) ( rs e t f m acn at a b t sogs ei neo t i et no t " d dle r Wo ed o ot c m y e h t net v ec fh n n o fh r e r d e t i e pre" Royal Indem. Co. v. John F. Cawrse Lumber Co., 245 F. Supp. 707, 711 (D. Or. 1965) ai ) ts ; (e t no t ol l gaet t pc i l da wt asb c i "f oet nod a dli fh n a ug h seic l el i eo e y n a f ay t h uj ts o m r h ri r e a ny s n i ne w e ae p n t d cvrh pre'n n . i ic c" hn tm t go i oet a i i et g fa t i s e ts t ) T e ee C n at S W pr r h .9would have required AO to acquire the Line h Ltr ot c s O a ga C3 . t r ' a p . 3A Equipment for the government. Pl. Facts, ¶¶ 10, 12; Ex. 4, p. 34, M795 RFP ; see also government Motion at 2 (government admitting that the slow cool equipment became known as the Line 3A Equipment). During negotiations of the M795 Contract, to achieve the

gvrm n sd et et t O t etl t t Ln 3 E u m n pr r hC3 o t oe et i cv h A a ie o h i A qi et a ga n ' r i a k t e e p , a p .9 f h . e Letter Contract was specifically deleted by the definitized M795 Contract. Pl. Facts, ¶ 37. Instead, the parties structured the M795 Contract to leave AO free to acquire whatever equipment it needed for its own production purposes to perform the contract and take title to such Line 3A Equipment. The plain language of the M795 Contract, which deletes the only contractulpoio t tw u spott gvrm n sc i o tl t t Ln 3 a rv i h s n a ol upr h oe et lm f ie o h i A d e n ' a t e e Equipment, confirms that AO was not required to acquire the Line 3A Equipment for the government. 4. The Government Fails to Address That the Separate SubCLIN Requiring AO To Deliver Equipment to the Government Was Deleted.

The Letter Contract contained a specific SubCLIN 0001AA requiring delivery to the gvrm n o "l co eu m n "pr at oS W pr r hC3 . T eS b LN oe et f s w ol qi et us n t O n o p , u a ga a p .9 h uC I . 0001AA states as follows:

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Deliveries are to be made in accordance with the following schedule: Line Item 0001AA Description Design, Fabricate and Install Slow Cool Equipment Quantity 1 lot [Date] 21 Months [after award]

Pl. Facts, ¶ 13; Ex. 6, p. 189. This SubCLIN 0001AA in the Letter Contract required AO to acquire the Line 3A Equipment for the government. As with SOW paragraph C.3.9, however, the government fails to address the fact that the pre cm le r oe t L tr ot c s uC I 00A b t iar m n o t a i o p ty e vd h ee C n at S b LN 01 A y h r ge et n h ts el m e t r ' e e e definitized M795 Contract. Pl. Facts, ¶ 39. As explained above, the M795 Contract replaced the L tr ot c s LNsut e i a e C I sut ehtnl e ol M75 rj te ee C n at C I t c r wt nw LN t c r t i u d n t r ' r u h r u a cd y 9 Po cl e is as deliverables. Id., ¶ 40. Under the CLIN structure of the M795 Contract, AO was required to dl e oeFr A tl T s ( A " l qatyo M75Po cl pr atoS b LN evr n it rc et" T )o un t f 9 rj te us n t uC I i s ie F t i e is u 0001AA, 1,000 each M795 Projectiles pursuant to SubCLIN 0001AB, and 76,968 M795 Projectiles pursuant to SubCLIN 0001AC. included udrh M75 ot c s s net e 9 C n at a CLINs. r ' 5. The Government Ignores the Deletion of the Requirement for Delivery of Any Line 3A Equipment from the Delivery Schedule. Id., ¶ 41-43. No additional delivery items are

Similar to its indifference to the deleted SOW paragraph C.3.9 and the separate SubCLIN 00A ,h gvrm n i oe t th pre pre ayr e ne nt M75C n at 01 A t oe etg r h t a i ugd n e r c i h e n n s a e ts fe e 9 ot c s r ' dl e shdlSco F2 t " evr Shdl )o evr o Ln 3 E u m n Id., evr ceu et n . ( e D l e ceu " t dl e f i A qi et i y e i h i y e i y e p . ¶ 55. Instead of referring to any Line 3A Equip ett M75C n at D l e Shdl mn h , e 9 ot c s evr ceu r ' i y e requires only deliveries of M795 Projectiles. Id., ¶ 57. T egvrm n cn ns ht e a "ec p v dt stot udr nat i t h oe et ot d t cr i dsr t e a " e fr ne a s rk o n e a tn ii a h es S b LN 00A , h hpoi sht t s ucni l e 1 0 e M795 Projectiles at a uC I 01 B w i rv e t " isbl n u s , 0 ach c d a h i cd 0 Page 13

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t a pi o $7, 0ad$, 0 7 i f itao cs , sol b cnt e t r u e o l r e f 13 2 n 9 1, 1 n a li t n ot" hu e osud o e i t c 9 3 0 ciz i s d r qr delivery of the Line 3A Equipment at the date specified for delivery of M795 Projectiles. See Motion at 4, 7; see also Pl. Facts, ¶ 43 T e oe m n s ot t niwt u m r.It . h gvr et cn n o s i ot e t fh n ' ei h i e gvrm n s ot t n e cr c t D l e Shdlw u r e t dl e o t Ln oe et cn n o w r or t h evr ceu ol e ro evr fh i n ' ei e e, e i y e d f i y e e 3A Equipment in the manner it once did under the Letter Contract. It does not. The parties therefore understood how to express their intent with respect to the time for delivery of such equipment. Rather than include any date, the parties removed altogether any requirement to deliver the Line 3A Equipment. As the M795 Contract establishes, AO was required to deliver only specified quantities of M795 Projectiles on specific dates. See Pl. Ex. 31, p. 288; compare Letter Contract delivery schedule, Pl. Ex. 6, p. 189. 6. The Government Fails to Address the Exclusion of FAR Provisions Required for Facilities Acquisition.

FAR § 4. 1 df e " cie" a "rpr ue frpout n m i eac, 5 0 e ns f its s poe y sd o rdco, a t ne 3 i a li t i nn r er , ee p eto t t g 4 CFR § e a h dvl m n re i . 8 ... 45.301 (1996). In addition to requiring that s c o , sn " facilities to be delivered are described in the contract, inclusion of 48 C.F.R. § 52.245-10 (1996) im na r " hna aits cu io cn ats ot p t . See 48 C.F.R. § 45.302s adt y w e f li aqit n ot c icn m le " o cie si r e ad 6(d) (FAR § 52.245-10, G vrm n Poe y(aits cu io) poi s hth C " oe et rpr Fcie A qit n, rv e t t O n t li si " d a e " shall insert [FAR § 52.245-10] . . . in solicitations and contracts when a facilities acquisition cn ats ot p t " ( paiadd; also DoD 4161.2-M (directing that the contract ot cicn m le )e hs de)see r e ad m s include 48 C.F.R. § 52.245-7, -10, and -11). Pl. Facts, ¶ 51. The M795 Contract does not include 48 C.F.R. § 52.245-10, a clause required to be included in contracts for the acquisition of facilities. The M795 Contract also does not include 48 C.F.R. § 52.245-7 or -11. The government entirely ignores these omissions from the M795 C n at ni Mo o bcuet s o i i siut t t pre'i et ht h M75 ot c i t r s t n eas h e m s o l sa h a i n n t t i e s n l r e e ts t a e 9

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Contract was not a contract for the acquisition of facilities for the government, and is instead a production contract requiring AO to deliver to the government only M795 Projectiles. See, e.g., Fireguard Sprinkler Sys., Inc., 864 F.2d at 651. 7. The Government Ignores That the M795 Contract Contains No List of Facilities Required To Be Delivered to the Government.

The M795 Contract contains no list of facilities that AO is purportedly required to acquire for and deliver to the government. Pl. Facts, ¶¶ 53-54. Contracting Officer Valerie Colello admitted that if the M795 Contract were for facilities acquisition, she would expect to see a separate CLIN for facilitization, specific reference in the SOW to required facilitization, and a requirement that the Line 3A Equipment be delivered. Pl. Facts, ¶ 38, 49, 54, 56. The absence of key provisions that would have been included in the M795 Contract if AO were required to acquire facilities for the government reinforces the conclusion that the government did ntt etl t t Ln 3 E u m n udrt M75 C n at p i l gae o a ie o h i A qi et ne h k t e e p e 9 ot c s ln a ug. r ' a n Fireguard Sprinkler Sys., Inc., 864 F.2d at 651.

C.

Modification P00003 Did Not Alter the Title Provisions of the M795 Contract.

The government refers in i Mo o' "te et fFc "sco t Moict n t s t ns Sa m n o at et n o d i i i t s i f ao P 00 ( 003) ot M75C n at xct o Ma h1, 97 Mo o a 4 T e 003 " 00" t h P e 9 ot c eeu d n r 3 19. r e c tn t . h i gvrm n a oce A ' Ivi adfr D 20sb ie t r e epy etrm t oe et l is O s no e n om D 5 um td o e i am n f n s t c t cv o h e government for the price for M795 Projectiles delivered pursuant to SubCLIN 0001AA. While t gvrm n de nt l r avne na u etht 003ad r O s no e n i h oe et os o c a y dac a r m n t P 00 n/ A ' Ivi ad t e n el g a o c s accompanying form DD250 modified any relevant terms of the M795 Contract, the government implies t t hs dcm n m ysm hw hv ae dA ' o nr i o t Ln 3 h t e ou et a o eo ae lr a e s te Os w e h f h i A sp e e E u m n T e oe m n sm lao ii or t qi et h gvr et i p ct nsn r c p . n ' i i c e.

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P 00 r u e f m t gvrm n snb i t m e t M75C n at shdl 003 e ld r h oe et i it o eth st o e n ' a ly e 9 ot c s ceu r ' e frh gvrm n s evr t MH o metal parts, TNT, and metal pallets (the government o t oe et dl e o C f e n ' i y fri e m t i ( F ) eddt m nf t e 9 Po cl ) D c r i o Jh R un hd a r l" M" nee o aua u M75 rj te . el ao f on . s ea G cr e is a tn L h an J ( om n D c )P. p.E . 7 p501, ¶ 6. P00003 granted the government om n,r " h an e., lA p x 5, . .L " , relief from its dutyt spl gvrm n fri e m t i ( F ) th dt seie o up oe et un hd a r l " M" a t a s pc i y n s ea G e e fd pei s i t M75C n ataj t t shdl fr O s evr o M75Po cl r o l nh v uy e 9 ot c d s d h ceu o A ' dl e f 9 rj te r , ue e e i y e is cniet i t gvrm n s e ydG M spl shdl adsie a ot no A ' os t wt h oe et dl e F up ceu ,n h t pro f O s sn h e n ' a y e fd i price for projectiles so that payment to AO would occur timely given the schedule delays. See id., pp. 503-504, ¶ 16; see also P00003, Pl. Ex. 38, p. 349-351. All other terms of the M795 Contract expressly remained unchanged. Lohmann Dec., Pl. App., Ex. 57, p. 503-504, ¶ 16; see also P00003, Pl. Ex. 38, p. 349, ¶ 7. A 'Ivi ad h acm ay g D 5 a nt a o t cn atad hy ant O sno e n t co pni D 20 r o pr fh ot c n t cno c e n e t e r , e modify or supplement the terms of the M795 Contract. See 48 C.F.R. § 43.103(a) (modification reflects agreement of the parties to modify the contract, and must be signed by contracting officer and contractor); see also D psi o C C a e S i ( m t D p )P. p.E . eoio f O hr s m t " i e., lA p x tn l h S h " , 60, p. 516, 44:12-20; 45:16-20. In any case, the Invoice and DD250 do not reflect any intent of the parties that the Line 3A Equipment was a deliverable end item or that the government would take title in the equipment because, as indicated in the M795 Contract and AO'Ivi , Od sno eA i c d not deliver any such equipment, and the parties specifically discussed that the P00003 m d i t nl d gt A ' sb i i o t Ivi ad D 20 would only serve to oic i e i o O s um s o f h no e n D 5 f ao a n sn e c acm oa t gvrm n s e y evr GFM. Lohmann Dec., Pl. App., Ex. 57, p. 504, co m dt h oe et dl dl e e e n ' a i ing ¶¶ 1, 7 T e oe m n sm lao t t 003 A ' i o e ad rtacm ay g 2 1. h gvr et i p ct n h P 00, O sn i , n/ i co pni n ' i i a vc o s n fr D 20sm hw ae dt pre'n n adt r eatiepoios fh M75 om D 5 o eo lr h a i i et n h e vn tl rv i o t t e e ts t e l t sn e 9

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Contract must be rejected. Thus, the governm n s lnl gae ru ets nupr d n et p i a ug a m n iuspot ad ' a n g e w og T e oe m n s t n hr oe hu b dn d rn. h gvr et Mo o t e rsol e ei . n ' i ef d e

D.

The Government Has Admitted Both That AO Owns the Line 3A Equipment and That the M795 Contract Is Ambiguous With Respect To the Ownership of Line 3A Equipment

A et lhdaoet gvrm n sn rr ao o t M75C n at aeel s s b se bv,h oe et i e e t n fh ai e n ' t p ti e 9 ot c s lgdy r ' l ua b uu p i l gaes rn,r l i sm a j g etn h gvrm n sao. nm i os ln a ug iw ogpe u n u m r u m n i t oe et f r g a n cd g y d e n ' v A d i ay t gvrm n s t nsol b dn dbcue government has admitted dio l ,h oe et Mo o hu e ei eas the tn l e n ' i d e both that AO owns the Line 3A Equipment and that the M795 Contract is ambiguous concerning the ownership of Line 3A Equipment. See McAbee Constr., Inc. ., 97 F.3d 1434 ( (plain language summary judgment is inappropriate when an ambiguity exists); Perry-McCall Constr., Inc. v. United States, 46 Fed. Cl. 664 at 671 (2000) (same). On August 20, 1996, five days after the M795 Contract was executed, authorized I A PA m n t t e ot cn O f e( C " frh M75 ot c Fe W. Taylor, Jr., A A d i sav C n at g fcr" O )o t ir i r i i A e 9 C n at r r , d stated that, under of the terms of the M795 Contract: [A]ll new facilities (equipment and buildings) acquired by [AO] under the facilitization phase of the M795 program will not be called out as deliverables under the contract . . . . The Government does not intend to take title to the facilities even though they are to be direct costed. Pl. Facts, ¶ 59; Ex. 33, p. 340 t " uut019 Me oadm ) ( e A gs2,96 m r u " h n . A m n le C B nse k cni e A O T y r udrad go t pre' ot a r O aahf i ofm d C al ' ne t i fh a i h t, s r os sn n e ts agreement, discussing with Taylor the possibility of approaching AO at some future time to ask AO to consider returning title to the Line 3A Equipment to the government the next time a facilities contract was negotiated. Pl. Facts, ¶ 6.T egvrm n s rpr A m n t t , 0 h oe et Poe y d i sa r n ' t ir o Jl S l siam t t t t A D C cn athtaite Ln 3 i t m d9s a u e o nk d i h " e R E ot c t f li d i A n h i 0 w s i i , s a h r a ciz e e vague about ownership of equipment. It was ARDEC contract but some key items have AO Page 17

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ownership. Pl. App., Ex. 59, p. 509 (emphasis added).6 ACO James Nelson admits that during " the eleven years that he has administered the M795 Contract, ownership of the Line 3A Equipmet a "noe i u. James Nelson Deposition, Pl. App., Ex. 61, p. 521, 32:14-23. n w s a pn s e s " CO Charles Smith admits that if a FFP contract is structured with a fixed price for items and the contractor purchases equipment to make those items, the government would not take title to that equipment. Charles Smith Deposition, Pl. App., Ex. 60, p. 519, 73:6-74:7. Contracting Officer Valerie Colello admitted that if the M795 Contract were for facilities acquisition, she would expect to see a separate CLIN for facilitization, specific reference in the SOW to required facilitization, and a requirement that the Line 3A Equipment be delivered. Pl. Facts, ¶ 38, 49, 54, 5.A19 D f s C n at uiA ec ( C A ) uio A 'csacut g r te 6 99 e ne ot cA d gny " A " ad f O s otcon n pa i s e r t D t i cc regarding the M795 Contract concluded that AO owned the Line 3A Equipment, and that DCAA w u nt use n fr e i et ao o A ' acut g o t Ln 3 E u m n Id., ol o pr ay ut rn sgt n f O s con n frh i A qi et d u h v i i i e e p . ¶¶ 74-7.T e oe m n s ur t ru ethth M75C n ats nm i os 6 h gvr et cr n a m n t t n ' e g a e 9 ot c iua b uu ­in the r g gvrm n sao ­ defeated by its own admissions. Thus, t gvrm n s t n hu oe et f r is n ' v h oe et Mo o sol e n ' i d be denied because its p i l gaea u et asadt C ut ute r ot pre' ln a ug r m n f l n h or m s r e t h a i a n g i e f e ts conduct and extrinsic evidence.7 Constr., Inc., 46 Fed. Cl. 671. See McAbee Constr., Inc., 97 F.3d 1434; Perry-McCall

6

The Property A m n t t " a at r e r r eti o t C r a i t d i sa r i n u oi d e e n t e f h O e r n h ir o s h z p s av e gdg e cn at l n t hi l set o G vrm n poe y ad"c o bhl o t C . ot c a ad e n a apc f oe et rpr , n at n ea f h O" r u c c s n t" s f e DoD 4161.2-M, ¶ C1.4 and C1.5, Pl. App., Ex. 58, p. 509.
7

AO relies upon its prior discussion of the extrinsic evidence set forth in the AO Motion at 253,tce iA 'A pni a E .2 1aahd n O s ped s x6. t x

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E.

E e ite o r Wee oFn T a te oen n'It pe t nWee vn fh C ut r t id h th G vrmet ne rt i s r ao r R ao a l Whc I I N t te P r e'C n uta d AlE t ni esn be , i t s o, h at s o d c n h i l xr s i c Evidence Establish AO Ownership.

If this Court were to disagree that the government is precluded from summary judgment in its favor because its interpretation of the M795 Contract is wrong, and its plain language argument is defeated by its own admissions, the end result should be that the language of the M795 Contract is ambiguous. A-Transport Northwest Co. v. United States, 36 F.3d 1576, 1584 (Fed. Cir. 1994) (a contract is ambiguous when it is susceptible to two reasonable interpretations). I t ti u s nehw vrt gvrm n s oio r a s rn. nh c cm t c,o ee h oe et psi e i w og a r a ,e n ' tn m n To interpret an ambiguity, the court should look to the parties' conduct and extrinsic evidence that occurred or arose prior to the dispute resulting from the ambiguity. See McAbee Constr., Inc., 97 F.3d at 1434; Perry-McCall Constr., Inc., 46 Fed. Cl. at 671. The parties conduct and extrinsic evidence establi t pre'n n t t Oo n h Ln 3 E u m n s h a i i eth A w t i A qi et h e ts t a e e p . The government during negotiations directed that AO take title in the Line 3A E u m n ad Oar d o o p wt t gvrm n s i co. l at ¶ qi et n A ge t cm l i h oe et d et n P. c , 29-30. After p , e y h e n ' r i F s award, the government cni e t pre' gem n t t O r a tl i t Ln 3 ofm d h a i ar eth A e i ie n h i A r e ts e a tn t e e Equipment. Id., ¶ 59-60. Moreover, AO consistently treated the Line 3A Equipment as its property until the government issued the Final Decision requiring it to do otherwise. Id., ¶ 7886, 91-92. Government representatives acknowledged AO ownership of the Line 3A Equipment prior to and during the negotiation of the newly formed 1998 Facility Use Contract with AO for operation of the IAAAP and Milan Army Ammunition Plant. Id., ¶ 72-73. Government property am n t t sa I A P r i e A ' t g gadr od g poe yaqit n, n d i sa r t A A e e d O s a i n e ri , rpr cu ios ad ir o vw gn c n t si pr r e anaad shtvl t A 'poe y eod.Id., ¶ 87-88. Such audits did not e om d nului t ea a d O s rpr r rs f t a ue t c

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i n f ayi u wt A ' t g gadr od the Line 3A Equipment as AO-owned d ty n s e i O s a i n e ri ei s h gn c ng property. Id.8 A cri l t pre' odcad x i iei ne s b se b t gvrm n s cod g ,h a i cnutn etn c v ec et lhs y h oe et n y e ts rs d ai e n ' written and verbal directions to AO during t ngtt n fh M75 ot cad h pre' h eo ao o t e ii e 9 C n atn t a i r e ts written exchanges after the M795 Contract was executed that the parties intended that AO take title to the Line 3A Equipment under the M795 Contract. Thus, the government is not entitled to sm a j g etbcue t pre'cnutad etni ei ne et lh A ' u m r u m n eas h a i y d e ts odc n x i c v ec s b s O s rs d ai ownership of the Line 3A Equipment. A-Transport Northwest Co., 36 F.3d at 1584.

F.

Genuine Issues of Material Fact Exist Precluding Summary Judgment for the Government.

I t f e fh gvrm n saue t adesh prtinent M795 Contract language n h a o t oe et f l so dr t e e c e n ' ir s e et lh gA 'o nr i o t Ln 3 E u m n t gvrm n s w am s osht s b si O s w e h fh i A qi et h oe et o n d i i t ai n sp e e p ,e n ' sn a the M795 Contract either vests title in AO or is ambiguous with respect to the ownership of the Line 3A Equipment, and the parties condc adetni ei net t l spot A ' ut n x i c v ec h a upr O s rs d a l s
8

The government contends in its Motion, without citation, that although the government audited adi pc dA ' poe yr od adpoe yt s" n n et O s rpr e rs n rpr a , t inspections were solely for the s e t c t g hose purpose of determining whether the AO property accountability system was sufficient to meet the contract requirements for tracking property. These were not inspections as to the underlying correctness of the asserted prpr o nr i " T e te et ut e iea e bcue t oe y w e h . h s t n m sb d r r d eas i t sp am sg d lacks citation to any evidence. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87 (1986); Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994, cert. denied, 513 U.S. 81 (94. H w vr t s t eti a o f s.Fr,t Poe y A m n t t " 7 19) o ee h te n s l a e it h rpr d i sa r i , e am s l s e t ir o s responsible for the enforcement of those provisions in the FAR, DFARS, and Agency supplements that are binding upon the contractor either through incorporation by reference of an apor t G vrm n poe yc ue o b d et nopr i i t cn at DoD prpie oe et rpr l s, r y i c i roao n h ot c" a n t a r c tn e r . 4161.2-M, ¶ C2.1.2.3, Pl. App., Ex. 58, p. 510. A dscn,h Poe yA m n t t "hl n eod t rpr d i sa r sa e t ir o l b r pni e fr [ d i s r gcn at rv i sr u e et adol aos e t g e e os l o " ]m n t i ot c poio ,e i m n , n b gt n r an s b" a ie n r sn q r s i i li t G vrm n poe yi t ps s o o cn at s " ] i i cn at as ndfr o oe et rpr n h os s n f ot c r" [e e n ot c s ge o n t e ei r o , rv w g r s i poe y d i sao t asr t t rpr ii n f di t cn at ad" ]v i t rpr am n t t n o s e h poe y sd ti n h ot c" n [ din h t ir i u a t e ie e r , a sg e C n at gO f e (O ado e a et G vrm n m ngr r a i t cn at ' ot cn fcr C ) n t r f c d oe et aae e r n h ot c r r i i h f e n s gdg e r os noncompliance with approved procedures, contractual requirements, and other significant pol a a. Id., ¶¶ C1.3.1, C1.3.3, and C1.3.11. rb m r s e e "

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o nr i t C ut hu r et h gvrm n sp i l gaea u et o sm ay w e h ,h or sol e c t oe et ln a ug r m n fr u m r sp e d j e n ' a n g j g et sd cs daoe E e i t C ut i e t et tnt gvrm n sp i u m n a i us bv. vn f h or ws d o n r i h oe et ln d s e e h ea e n ' a language argument further, however, summary judgment is precluded by the existence of genuine issues of material fact in dispute between the parties. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986), cert. denied, 484 U.S. 1066 (1988); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 7 18)cr dn d41 ..09 18) 8 (96,e .ei ,8 US 12 (97. t e T egvrm n cnee t t [h w rso t cn at r g e ` e od ay h oe et ocds h " ]e od f h ot c a i n t i ri r n a t e r e v hr n meaning unless t pre m t l i edd n ar d o n lrav m ai . Mo o a h a i u ay n ne ad ge t a ae t e en g " t n t e ts u l t e tn i n' i 9-10 (citing Jowett, Inc. v. United States, 234 F.3d 1365, 1368 (Fed. Cir. 2000)) (emphasis added). While it is unclear whether the government in its Motion believes that the ordinary m ai o cr i t m spottpsi ,ts l rhth pre' odcad h r eat en g f e a e s upri oio iic a t t a i cnutn t e vn n tn r s tn e a e ts e l extrinsic evidence demonstrates that the parties intended a meaning different than that meaning currently advanced by the government ­that is, that AO own the Line 3A Equipment. The government denies this contrary intent of the parties. Accordingly, the following genuine issues of disputed material fact exist: 1. The definitized M795 Contract required delivery of any facilitization items. See

G vrm n s rpsd i i s f not vr d at" o. at )¶ 1,8 oe et Pooe Fn n o U cn oe e Fc( vFc " ¶ 01. n ' dg r t G s, 2. The parties intended that AO take title to the Line 3A Equipment. Pl. Facts, ¶¶

19, 21-24, 29-31. 3. 4. The M795 Contract was not a facilitization contract. Id., ¶ 23. T e 9 C n at a dl e ty t c r t ah v t pre'hr ga h M75 ot cw s ebr e sut e o ci eh a i sa d ol r i al r u d e e ts e

to convey title in the Line 3A Equipment to AO. Id., ¶ 32, 33.

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5.

The M795 contract was not structured as it would have been if the government

were to take title to the Line 3A Equipment. Id., ¶ 35-58. 6. The government confirmed, after execution, that AO would own the Line 3A

Equipment. Id., ¶ 59-62. Accordingly, genuinei uso m t i f tei cne i t pre'i edd s e f a r l a x t ocr n h a i n ne s ea c s n g e ts t m ai o t M75C n at l gae Jowett, Inc., 234 F.3d at 1368. T e oe m n s en g fh n e 9 ot c sa ug. r ' n h gvr et n ' Motion, therefore, should be denied.

II.

THE GOVERNMENT IS NOT ENTITLED TO CIRCUMVENT THE APPLICABLE STATUTE OF LIMITATIONS THAT BARS THE G V R ME TSO O E N N ' WN R H PC A M I T EL N 3 E U P N . E S I L I N H I E A Q IME T I A ' Mo o, O et lhshth gvrm n s lm dsr e i i Sp m e n O s t n A s b se t t oe et c i ec bd n t et br i ai a e n ' a i s e

2, 07Fnl eio ( e"i l eio" i br db t applicable six-year statute of 6 20 i D c i t Fn D c i )s a e y h a sn h a sn r e limitations of the Contract Disputes Act of 1978, 41 U.S.C. § 601 et seq. AO Motion for Summary Judgment, Docket No. 19, at 31-38. In an effort to avoid the application of the CDA, however, the gvrm n cnl e i o n t n i t i r i e s ro t th C A s oe etoc dst w Mo o wt h n e b as t n h t D ' n u s i h e c d l ei a e statute of limitation does not apply because the government did not assert a CDA claim. The gvrm n s lmis that the M795 Contract requires that AO convey the Line 3A Equipment oe et c i n ' a to the government by modifying its property records and re-tagging each piece of Line 3A Equipment as government-owned, clearly a contract claim. Pl. Facts, ¶ 3. Moreover, the CDA applies to all contract claims. 41 U.S.C. § 609(a)(1); 28 U.S.C. § 1491(a)(1) and (2); Tex. Health Choice, L.C. v. Office of Pers. Mgmt., 400 F.3d 895, 898 (Fed. Cir. 2005) ( T eC A "h D ` ec s e gvrs oe m n cn atad oe m n cn at i u s" ( xl i l oe G vr etot c n G vr etot cd pt .)quoting Cecile uv y n n r s n r s e' Indus., Inc. v. Cheney, 995 F.2d 1052, 1055 (Fed. Cir. 1993)); see also Burnside-OTT Aviation Training Center v. Dalton, 170 F.3d 854, 859 (Fed. Cir. 1997) (the Contract Disputes Act cannot be waived by contract). Fnl ,h C ut j i ii ,ow i t gvrm n hsnt i l t s ors u s co t h h h oe et a o ay i ' rd t n c e n Page 22

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objected, is based upon the CDA. Id. In contrast to all of the reasons why the CDA applies, the government fails to cite any at ry o i asro t tts nt ai a C A c i .See u oi frt s t n h ii"o m k g [D ] lm " h t s ei a n a Motion at 12. Moreover, the government fails to present any a