BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of – )

American General Trading & Contracting, WLL ) ASBCA No. 56758

Under Contract No. DABM06-03-C-0009

APPELLANT AGT'S REPLY IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT FOR NEGLIGENT ESTIMATE, IMPLIED BREACH

OF CONTRACT. AND DAMAGES

I. Introduction

Appellant American General Trading & Contracting ("AGT") submits this Reply

in support of its motion for summary judgment with regard to Contract DABM06-03-C-

0009 ("Contract") and AGT's claims against the Government for negligent estimate and

breach of implied contract. The Government's response brief and supplemental brief

assert a variety of defenses that are of a scattershot nature, often misstating case law or

unsupported by any evidence. For example, the case of Eastern New Mexico – which the

Government cites as "seminal" in its contract-type defense to AGT's negligent estimate

claim— does not involve a negligent estimate claim. Eastern New Mexico University –

Roswell, ASBCA No. 57110, 12-2 BCA ¶ 35,090; Response, p.47. As described below,

case law that does involve negligent estimate provides that the claim applies to a

requirements contract and to a fixed-price contract (i.e. what the Government now claims

the Contract here to be), thus rendering the Government's contract-type distinction moot

and refuting the defense.

With respect to material facts, the Government provides no witness testimony or

document that disputes contracting representative CPT John Cockerham's testimony that:

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(1) he was directly involved in negotiating the Contract,' which concerned AGT

laundering soldiers' items at five Kuwait camps; (2) the laundry estimates used in

negotiations and the Contract with AGT (including the total-item average of 8,820,000

items), were created by the Government in approximately October 20022; (3) before the

Contract was executed, CPT Cockerham was informed an invasion of Iraq was likely to

occur near March 20033; (4) CPT Cockerham's understanding was that in the event an

invasion occurred all the five camps' soldiers would be deployed from Kuwait into Iraq4;

and (5) despite this pre-Contract knowledge of a planned invasion and large soldier

reduction at the five camps, CPT Cockerham does not recall any Government discussion

of possibly changing any of the estimates for the Contract, including the 8,820,000 total

items estimate.5

There is no material dispute that the large invasion in fact occurred in March

2003, early during the Contract's base term, and that the actual laundered items totaled

2,436,911 pieces during the base term, which was 72.4% less than the 8,820,000 total

average items estimate. Regarding other key facts above, the Government's response

tries to kick up clouds of dispute around LTC Cockerham's testimony while never

addressing the heart of it. Examination of the affidavits shows nothing to refute the

material facts above. The affiants focus on the finalized invasion date, claiming they did

1 Cockerham Dep., pp. 14, 24. 2 1d. at p. 36. 3 Id. at pp. 59-60. 4 Id. at pp. 62-63. Of note, the Government's response claimed that approximately 1,000 soldiers per camp were "permanently assigned" to each camp to remain in Kuwait. Response PFF 136. This claim is contradicted by COL Ulysses Brown's testimony that after the invasion two of the five camps closed during the Contract term and thus had zero soldiers present. (U. Brown Dep., p. 23:3 — p. 24:6). But even were it assumed the Government expected, pre-invasion, that 1,000 soldiers per camp would remain present after an invasion, this number is 71.4% less than the 3,500-soldier per camp average stated in the Contract. The 8,820,000 total average items value was based on, and calculated using, the 3,500 soldier average. Thus, the Government's 8,820,000 estimate was substantially and negligently overstated regardless whether their expectation of post-invasion population was 1,000 soldiers per camp or less. 5 Cockerham Dep,at pp. 58-59.

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not receive notice of the precise March 20 invasion date until a few days before. Even if

this were accepted as true, however, it does not refute the notion that before the Contract

was executed the Government knew (as CPT Cockerham testified) or should have known

(as also triggers negligent estimate liability) that a large deployment near March was

likely. Rumsfeld v. Applied Companies, 325 F.3d 1328, 1335 (Fed. Cir. 2003), citing

Womack v. United States, 389 F.2d 793, 800 (Ct. Cl. 1968) ("[amn inadvertent

misrepresentation stemming from negligence is fully as damaging as a deliberate one to

the party who relies on it to his detriment").

In sum, material and undisputed evidence shows that, as of mid-February and

before the Contract was executed, the Government's contracting personnel— including

CPT Cockerham and the Government's affiants— knew or should have known (from

relevant information that was reasonably available) that a large invasion and large

reduction of soldier items was likely to occur during the Contract's base term. Whether

the Government's expectation was that "all" soldiers would leave the camps (as CPT

Cockerham testified) or all except 1,000 "permanent" soldiers per camp would leave (as

is the Government's affiants' apparent position), either way the Government was

negligent in not reducing the estimated averages far below 3,500 soldiers per camp and

8,820,000 total items. A potential invasion was, by mid-February 2003, a very likely and

foreseeable contingency based on relevant information that was reasonably available.

See Womack v. United States, 389 F.2d 793, 801 (Ct. Cl. 1968) (a government estimate

concerning a material matter must be based upon "all relevant information that is

reasonably available").

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Accordingly, the Government's estimates should have been adjusted before the

Contract was executed and the Contract should have referenced the likely contingency of

an invasion during the base term. The Contract also should have provided a reduced

range of estimates, including an average total items estimate far below 8,820,000, in light

of that contingency. For these reasons and others detailed herein, the ASBCA should

find the Government liable for negligent estimate. AGT has presented more than

sufficient material evidence to meet the preponderance of evidence standard and establish

liability for negligent estimate. Rumsfeld v. Applied Companies, 325 F.3d 1328, 1335

(Fed. Cir. 2003), quoting Clearwater Forest Indus., Inc. v. United States, 227 Ct.C1. 386,

650 F.2d 233, 240 (1981) ("[w]here a contractor can show by preponderant evidence that

estimates were 'inadequately or negligently prepared, not in good faith, or grossly or

unreasonably inadequate at the time the estimate was made[,]' the government could be

liable for appropriate damages resulting"); see also, Medart, Inc. v. Austin, 967 F.2d 579,

581 (Fed. Cir. 1992).

As is also discussed below, the Government has provided no evidence to refute

financial documentation and other evidence AGT submitted that show: (1) AGT spent

KD 1,597,984.132 (USD $5,484,281.54) for the five Kuwait camps' laundry operations

before and during the Contract's base term; (2) the Government paid AGT a total of USD

$2,070,542.76 for the five camps' laundry during the base term; and (3) when the

undisputed payment of $2,070,542.76 is subtracted from the costs of USD $5,484,281.54,

the resulting losses to AGT are USD $3,413,738.78. Accordingly, a summary judgment

finding is warranted to the effect that AGT incurred US $3,413,738.78 in actual losses,

independent of other summary judgment determinations as to negligent estimate liability

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or damages. If a hearing occurred, it would be needlessly cumbersome to entertain any

Government challenges that might be later offered for the first time about the values

above. Further, for reasons described below, the Government has not provided factual or

legal bases to refute AGT's total asserted damages, based on an equitable-adjustment of

price to .939 fils/piece and totaling USD $5,782,763.60, and summary judgment is

appropriate as to these total negligent estimate damages.

Finally, with regard to the parties' implied-in-fact contract for construction and

operation of two additional laundry camps, the Government provides no material

evidence or legal basis to refute that the Government requested and agreed to pay for

costs associated with the two camps and thereafter breached the implied contract by not

paying the full costs. For reasons detailed below, summary judgment should be granted

ordering the Government to pay AGT damages in the amount of USD $55,321.78 for lost

costs as to these two camps.

II. The Government's Contract-Type Defense Is Incorrect As Case Law Provides That a Negligent Estimate Claim Applies to a Firm-Fixed Price Contract (As the Government Now Claims AGT's Contract Is) As Well As a Requirements Contract

During its first summary judgment motion, the Government asserted the parties'

Contract was a hybrid form of a requirements contract and fixed-price contract, labeling

the Contract "a firm-fixed-price requirements contract with item adjustment." See PFF

No. 2, Government's summary judgment motion (March 11, 2010).6 Now, the

Government is asserting the Contract is not a requirements contract and is only a fixed-

6 This confusion is due to the Government having originally inserted an assortment of clauses in this Contract that do not normally occur within one contract. Thus, the Government's present arguments are attempting to capitalize on uncertainties in the nature of the Contract that the Government itself created.

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price contract, and because of this contract type, it is not subject to a negligent estimate

claim.?

The response claims the Contract is a "firm-fixed unit price contract with total

item adjustment," and argues at length that a firm-fixed price contract is not subject to a

negligent estimate claim. However, none of the case law the Government cites has a

finding to that effect. The case of Eastern New Mexico – which the Government

discusses at length and states is "seminal" in its contract-type defense to AGT's negligent

estimate claim— does not involve a negligent estimate claim. Eastern New Mexico

University – Roswell, ASBCA No. 57110, 12-2 BCA ¶ 35,090; Response, pp. 1, 3, 47-57.

8 The case of Eastern New Mexico involved a request for equitable adjustment claim, and

in the context of that claim, the parties argued whether the contract at issue was an IDIQ

contract or a firm, fixed-price contract. The decision in Eastern New Mexico had no

bearing on a negligent estimate claim or whether a firm fixed price contract is subject to a

negligent estimate claim. Other case law makes clear that a firm-fixed price contract is

subject to a negligent estimate claim.

The Government failed to identify this defense in its Amended Answer. 8 In support of the Eastern New Mexico analysis, the Government also makes the factual claim that "The government avers that the true count is likely unknown as the appellant was observed by the contracting officer to weight [sic] not count the pieces of laundry as required by the contract." (Response, p. 49). This claim is disingenuous, as the Government is well-aware that AGT's item-counts are supported by voluminous documentation. During discovery, AGT informed the Government that AGT had over 300,000 laundry slips that AGT was willing to send the Government, and the parties agreed, due to the volume, that AGT would only send a sampling of the slips (5 to 10 monthly from each camp), which AGT later produced. Please see the emails reflecting this agreement between counsel, which are attached as Exhibit 12 to the declaration of Michael Brown dated May 28, 2013. (Brown Decl., par. 5, Exhs.12-13). An example of the slips sent to the Government's counsel is attached as Exhibit 13, The Government never challenged the authenticity of the laundry-item counts indicated on the laundry slips it received, nor did the Government request additional slips to verify its claim above that AGT was supposedly weighing and not counting laundry items. Id. In the Government's Amended Answer, the Government (1) in answering par. 6, admits AGT delivered invoices during the Contract term for 2,436,911 items; and (2) does not assert any defense like that above involving AGT wrongfully weighing rather than counting laundry. The Government's incredible assertion above would entail AGT committing over 300,000 forgeries.

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A seminal case that does apply to a negligent estimate claim is Womack v. United

States. 389 F. 2d 793 (Ct. Cl. 1968). The case of Womack involved a firm,fixed-price

contract. Id. at 801. Similar to AGT's Contract, the Womack contract contained a

Variable Estimated Quantities (VEQ)-type clause. The Womack Court stated:

By adding a general variance in quantity provision to a bidding invitation for a fixed-price contract, the Government does not dilute the standard to which it is held with respect to particular estimates that it includes elsewhere in the invitation. ... The latitude that [the variance clause] affords may not properly be used to excuse the estimator from using and disclosing relevant information that is reasonably available to him.

Id. at 801. (emphasis added).

Womack further found that "in promulgating an estimate for bidding-invitation

purposes, the Government is not required to be clairvoyant but it is obliged to base that

estimate on all relevant information that is reasonably available to it." Id. (emphasis

added). Finally, Womack found as follows with regard to that case's fixed-price contract:

An inadvertent misrepresentation stemming from negligence is fully as damaging as a deliberate one to the party who relies on it to his detriment. Notably, the victim of a misrepresentation amounting to a breach of contract is made whole by compensatory, not punitive damages.

Id. at 800. (emphasis added).

Later, the case of Rumsfeld v. Applied Companies, which involved a requirements

contract, noted that Womack's same negligent-estimate standards applied with respect to

that requirements contract. Rumsfeld, 325 F.3d 1328, 1335 (Fed. Cir. 2003) (upholding

breach of requirements contract based on negligent estimate, citing Womack, "As the

Court of Claims explained in Womack, ' [a]n inadvertent misrepresentation stemming

from negligence is fully as damaging as a deliberate one to the party who relies on it to

his detriment.' 389 F.2d at 800").

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In short, the "seminal" law that is truly at issue provides that a negligent estimate

claim applies to both a requirements contract and a firm-fixed price contract. Regarding

the latter, cases following Womack also involved fixed-price contracts and were also

recognized as subject to negligent estimate claims. The negligent estimate case of

Everett Plywood v. United States also involved a non-requirements contract with fixed-

rate pricing. 190 Ct.C1, 80, 419 F.2d 425, 433 (1969). In fact, Rumsfeld relied on Everett

Plywood when determining the proper methodology for measuring damages in negligent

estimates claims, noting the key issue with a negligent estimates claim is not whether the

contract vehicle was a requirements contract, but whether the estimates were material to

the contract. See Rumsfeld, 325 F.3d at 1340 ("Though Everett Plywood's agreement to

purchase the timber from the Forest Service was not a requirements contract, the

estimates of volume were material to the contract"). In addition, at least one other

agency (GSBCA) has recognized negligent estimates claims to exist with fixed price

contracts. See Management & Training Corp. v. General Services Administration,

GSBCA Nos. 11182, 11297, 11673, 11698, 93-2 BCA 25,814 (GSBCA Feb. 9, 1993).

None of the Government's cited cases provide that the type of Contract here—

whether it is requirements or fixed-price contract—is excluded from a negligent estimate

claim. To AGT's knowledge, the only type of contract that can be excluded from a

negligent estimate claim per applicable case law is an indefinite-quantity contract. Travel

Centre v. Barram, 236 F.3d 1316 (Fed. Cir. 2001) (holding that the government's failure

to disclose material information affecting its estimate for an indefinite-delivery,

indefinite-quantity supply contract was not a breach as long as the government purchased

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the minimum quantity). The Contract at issue in this case, however, is not an indefinite-

quantity contract, as the parties both admit. (Response, p. 2). Further, even had the

Contract here been an indefinite-quantity contract, the Travel Centre negligent estimate

exemption would still not have applied because the Government (as it admits at its PFF

97-98) did not purchase even the minimum quantity under the Contract. Id.

In summary, the case law above provides that a negligent estimate claim applies

to a requirements contract and to a fixed-price contract (i.e. what the Government now

claims the Contract here to be), thus rendering the Government's contract-type distinction

moot and refuting the defense. Accordingly, the Government's summary judgment

motion seeking dismissal of the negligent estimate claim should be denied.

III. The Government Does Not Refute the Testimony of CPT John Cockerham, a Contracting Representative Involved With Negotiating AGT's Contract Who Admits, Before the Contract Was Executed, the Government Knew of a Planned Invasion Near March

CPT Cockerham was a Government contracting representative involved with the

AGT negotiations and Contract. (Cockerham Dep., p. 14:5-10, p. 24:14-21). CPT

Cockerham's testimony about the AGT Contract, and about contracting personnel's

advance knowledge of a likely invasion near March, is highly damaging to the

Government and itself supports a finding of negligent estimate.

The Government has also provided no evidence that refutes CPT Cockerham's

following testimony:

Q. Okay. Now, you personally as of, let's say January 2003, were you aware of any media reports as far as a potential war with Iraq?

A. I don't recall per se any media reports but the briefings that we were receiving at that time that — that there was definitely a war with Iraq. As a matter of fact, that's the reason the -- this contract, along with thousands of other ones, that we were putting in place so rapidly was because we had been

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basically told by all certainty that there was going to be an intervention in Iraq sometime possibly around March.

Q. And -- and so if I understand what you just said, be- -- before the time -- or before this bid was put on the bid board -- I'm sorry. Before information about market research was even put on the board, you — you personally had heard information suggesting there might be a war in March?

A. Correct. And I was --

Q. Had Mr. May and Ms. Jernigan also heard that news to your knowledge?

A. Yes.

Q. And what was the source of that information?

A. This was coming from -- well, I can't go into any of the National Security briefings. But what I can tell you is -- put it this way. From some of the meetings that were being attended, that was the discussion.

(Cockerham Dep., p. 59:12- p. 60:15).

CPT Cockerham further indicated that Coalition Forces Land Component

Command (CFLCC) was a source of war-planning information, information was

"constantly being updated," and that CPT Cockerham and others with TS clearance had

access to CFLCC's war-planning information. (Cockerham Dep., pp. 59-62). During

discovery for this litigation, the Government had been asked repeatedly to produce, and

failed to produce, discoverable information and documents relating to CFLCC and war-

planning. (Vandaveer Decl., par. 12).

The Government's response does not present any evidence that refutes CPT

Cockerham's testimony above. Instead, the Government's response attacks CPT

Cockerham's credibility, and accuses AGT of a "gross misrepresentation":

Appellant has offered nothing but the word of a convicted inmate, John Cockerham, to substantiate its claims that the government was informed that an invasion would occur. Inmate Cockerham has an obvious bias against the United States as he was prosecuted and is currently serving time for his

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fraudulent behavior while a contracting officer in Kuwait. Appellant's gross misrepresentation is based on conjecture and wishful thinking and certainly not based on any credible evidence.

(Response, p. 59).

Of note, CPT Cockerham's conviction had nothing to do with AGT or the

Contract, nor has any such connection been alleged. Further, despite the Government's

claims it believes CPT Cockerham is "bias[ed]", the Government's response cites

testimony from CPT Cockerham in support of the Government's facts, e.g. the

Government cites his testimony in support of its PFFs pars. 37-38, 47, and 141-142. The

fact his testimony is cited by the Government in its favor contradicts the Government's

allegation of bias.

Most importantly, the Government offers no evidence or facts to show why

CPT Cockerham would be biased against the DoD and Government personnel involved

with this case. CPT Cockerham was prosecuted by Attorney Richard Evans of the

Department of Justice (DOJ) Public Integrity Section. Any presumptive bias CPT

Cockerham could have against Mr. Evans or DOJ could not be extended to the

Government's contracting personnel or the JAG. In fact, at the close of CPT

Cockerham's deposition, he presented this question for the Government's counsel

indicating he believed she may help him with his criminal case: "Major Moseley, did you

ever get any response back reference the department of Defense providing some

additional counsel as far as my case?" (Cockerham Dep., p. 64). AGT has no cause to

believe the Government's counsel was going to help CPT Cockerham with his case. The

fact he made the statement, however, shows he does not regard the Government or its

counsel to be adversarial.

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In short, the Government has provided no evidence, facts or law whatsoever to

support its conjecture that CPT Cockerham is somehow biased against the Government

personnel involved with this case. The Government's assertions and requests to the

ASBCA regarding CPT Cockerham—that the ASBCA should simply set aside CPT

Cockerham's highly material testimony, and should further decide summary judgment in

the Government's favor on these material issues—are unwarranted. There is no reason

that CPT Cockerham's testimony should not be accepted. A summary judgment finding

of negligent estimate should be made on the basis of his material testimony.

IV. The Three Government Affiants (Who Were Not Involved With the Contract at Issue) Do Not Dispute CPT Cockerham's Testimony That, Before the Contract Was Signed, Government Contracting Personnel Expected an Invasion Near March 2003

Of note, none of the three Government affiants attest they were directly involved

with AGT's negotiations or Contract, as CPT Cockerham was. The Government affiants

all claim they learned of the final March 20, 2003 invasion date just a few days

beforehand. None of the affiants, however, specifically addresses CPT Cockerham's

testimony that, prior to the Contract's February 17 execution, he was made aware an Iraq

invasion would likely occur near March and during the Contract term. None of the

affiants offered evidence disputing CPT Cockerham on this material issue. In fact, their

testimony was consistent with his.

Affiant COL Mark Neumann was involved in contracting generally, attesting he

served as the Commander, Contracting Command, SWA and Coalition Land Forces

Component Command (CFLCC) Principal Assistant Responsible for Contracting (PARC)

in 2003. (Neumann Aff., par. 1). Like the other affiants, COL Neumann focuses

narrowly on the issue of when he learned of the finalized March 20 invasion date,

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attesting, "I did not know for certain an invasion was going to occur on or about March

20, 2003 until this announcement was made to the CFLCC staff." (Neumann Aff., par.

10). COL Neumann's affidavit does not dispute CPT Cockerham's testimony that at a

time before AGT's February 17, 2003 Contract execution, the Government expected an

invasion near March (and during the Contract term) was to occur.

In fact, COL Neumann's affidavit offered testimony consistent with CPT

Cockerham's testimony. COL Neumann attested that "In February of 2003" he asked the

CFLCC Chief of Staff (CoS) "[h]ow many folks does it take to invade a county?" Id. at

par. 5. From CoS's reply, COL Neumann attested he understood it would take

approximately 100,000 troops or more to invade Iraq. Id. Undisputed evidence shows

that over 100,000 troops had arrived in Kuwait prior to February 14, 2003.9 Thus, COL

Neumann's own soldier benchmark for invasion was surpassed prior to the

February 17, 2003 Contract execution. Despite this, COL Neumann—whose job was

in contracting and included supervision of LTC Kevin May, the person in charge of

AGT's Contract — took no action to change the estimates given to AGT. The Contract

signed with AGT did not even mention the possibility of invasion or a potential reduction

in soldier laundry items in event of invasion.

The affidavit of Kevin Benson, Ph.D. also did not contradict CPT Cockerham's

testimony, or refute the fact that before the Contract was executed the Government was

planning for a likely invasion near March. Like the others, Dr. Benson said he learned of

9 COL Brown testified that by mid-February 2003, approximately 100,000 soldiers were present in Kuwait. (U. Brown Dep. p. 17:2 — p. 18:11). Further, the Stars and Stripes news article included with AGT's initial brief, which was dated February 14, 2003, similarly indicates that "For the past two months" prior to the article, "the U.S. military has flowed thousands of servicemembers into Kuwait, bolstering a force that could invade Iraq," and "More than 100,000" servicemembers had deployed to Kuwait or were expected to arrive shortly. (Declaration of Vonda Vandaveer dated February 21, 2013 "Vandaveer Decl.", par. 7, Exh. 6 [Stars and Stripes article dated February 14, 2003]).

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the finalized March 20 invasion date just a few days beforehand. In addition, however,

he also acknowledged a broader sense of war-timing knowledge, attesting "Our concern

was to begin operations in the spring when, relatively, the temperatures were somewhat

cooler than the heat of the desert summer." (Benson Aff., par. 8). Dr. Benson's thoughts

of a "spring" invasion are consistent with CPT Cockerham's understanding an invasion

would occur near March.

The affidavit of MAJ GEN Henry Stratman also does not refute CPT

Cockerham's testimony or the material facts above. MAJ GEN Stratman attested that

"While there had been several warning orders (WARNOs) directing the command to 'be

prepared' a certain date of invasion was not known by the command until mid-March

2003." (Statman Aff., par. 8). This receipt of WARNOs directing the command to 'be

prepared' is consistent with CPT Cockerham's testimony and with other evidence

showing the Government knew or should have known before February 17 that a spring

Iraq invasion was likely. While MAJ GEN Stratman (like the other affiants) focuses

narrowly on the time he learned of the final March 20 invasion date, the timing of when

that date certain was announced does not disprove the other evidence showing the

Government knew before the Contract was signed that an invasion of Iraq was likely to

occur in spring, near March and during the Contract base term.

Further, and as detailed in evidence cited at AGT's initial brief PFF Nos. 16, 48-

49, 51-54 and 64, LTC May's deposition testimony does not refute CPT Cockerham's

testimony or the material facts above. LTC May claimed he "can't recall" when he first

learned it was possible a large deployment into Iraq could occur in the spring. (May

Dep., p. 56:1-9). LTC May similarly claimed he "can't recall" communicating with

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CFLCC about a potential invasion prior to March 2003, but he did not deny this either

and stated "My staff are allowed to talk to their [CFLCC's] staff, as well as I can talk to

the staff. But I don't recall talking to a particular individual about what you just asked."

(May Dep., p. 89:10-22).

None of LTC May's failed recollections or vague offerings refutes CPT

Cockerham's testimony. As detailed in AGT's initial brief, circumstantial evidence

concerning LTC May—including January 2003 communications and email between AGT

and LTC May that referenced AGT potentially "follow[ing] the troops north" into Iraq—

showed that LTC May, like the other Government witnesses, was contemplating an

invasion of Iraq was to occur soon. (Declaration of Sheila Gittens Dated ["Gittens

Decl."], pars. 2-3, Exhibit K).

In sum, the Government witnesses do not refute CPT Cockerham's testimony that

before the Contract was executed the Government knew an invasion of Iraq near March

was likely, and in fact their testimony is consistent with his. Thus, the material evidence

shows that before the Contract was executed the Government knew (or at least should

have known, from relevant information reasonably available) an invasion and large

soldier/laundry reduction was likely to occur in the spring and during the Contract term.

Accordingly, the ASBCA should enter summary judgment finding the Government liable

for negligent estimate with regard to the five camps and Contract estimates including the

8,820,000-item estimate that did not take into account any potential reduction due to a

potential invasion.

Of further note, the Government offers no explanation as to why two

modifications to the Contract in late February and July 2003 did not include any revisions

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to the estimates: the first modification lacked revised estimates despite occurring after the

buildup and likelihood of invasion had grown even more obvious, and the second

modification lacked revised estimates despite being issued after the invasion occurred.

The first modification of the Contract was executed on February 26, 2003.

(Smalls Dep., p. 10:20- p. 11:11, Dep. Exh. 2 [Feb. 26 Modification]). Government

witnesses and media evidence show that prior to the February 26, 2003 modification, a

"surge" as referenced in the Solicitation—that is, a build-up of soldiers resulting in 7,000

soldiers per camp— had already occurred. (U. Brown Dep. p. 17:2 – p. 18:13, p. 19:10-

p. 20:2; Cockerham Dep., p. 57:20- p. 58:9; Vandaveer Decl., Exh. 6). Yet the

Government's modification made no changes to the estimates, despite the huge build-up

of troops in Kuwait by that point, with the 100,000-soldier mark having been surpassed

weeks before.

Then, after the Iraq invasion on March 20, 2003, and after AGT complained in

April 2003 of lost revenue due to the "major exodus" of soldiers, the Government issued

another Contract modification (effective July 20, 2003), but even in this post-invasion

modification the Government did not revise the soldier- and laundry item- estimates.

(Rodriguez Dep., p. 12:11- p. 14:9; Dep. Exh. 2 [July 2003 Modification]). For the

reasons above, summary judgment should be granted finding the Government liable for

negligent estimate.

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V. Indisputable Evidence Shows the Parties Agreed to Purchasing and Construction Costs for Two New Camps, That Agreement Was Unrelated to Contract DABM06-03-C-0009 (Which Concerned Five Separate Camps), and the Government's Failure to Pay for Lost Costs Is in Breach of Implied Contract With Damages of USD $55,321.78

As is detailed in AGT's initial brief (PFF 84-101), in late June of 2003, months

after the Contract for five camps was executed, contracting officer Colleen Rodriguez

requested that AGT set up new laundry facilities at two camps, Camp Victory and the

35th Brigade (BDE). The evidence shows that AGT's President Sheila Gittens

exchanged communications and emails with Ms. Rodriguez that described construction

and costs issues, and that Ms. Rodriguez notified AGT it could proceed with construction

and costs.

On June 25, 2003, AGT continued to pursue a request for a written notice from

Ms. Rodriguez to proceed, given AGT had issued purchase orders for tents, generators,

AC units and staffing. (Gittens Decl. at pars. 10-11, Exhibit M). Ms. Rodriguez emailed

that same day in response, telling AGT to keep proceeding with its efforts, and indicated

she was in the process of preparing a change order, but she was running late catching up

with MAJ Jernigan's duties. Ms. Rodriguez's email further indicated that a modification

would be completed and sent to AGT within a week. Ms. Rodriguez, however, ultimately

did not in fact complete the modification during the initial contract period of performance

at issue. Id. at par. 11, Exhibit M. AGT considered Ms. Rodriguez's emailed notice to

proceed to be a written approval from the contracting office, so AGT pursued the

procurement and moved forward with the mobilization for Camp Victory. Id. at par. 12.

With respect to the 35th BDE, in a June 30, 2003 email, AGT requested a notice to

proceed with the 35th BDE, which referenced the prices that were sent to Ms. Rodriguez

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on June 22. Id. at pars. 14-15, Exhibit O. In response to this email that same day, Ms.

Rodriguez emailed AGT a written notice to proceed. Id. at par. 15, Exhibit 0.

Based on AGT's reliance on the Government's notice to proceed, AGT built the

two additional facilities, one at Camp Victory and the other at 35th BDE. Camp Victory

became operable on July 8, 2003 and the 35th BDE on July 12, 2003. Ms. Gittens sent

emails to Colleen Rodriguez on July 8, 2003 confirming the launch of Camp Victory

laundry services, and on July 13, 2003 confirming the start-up of services at 35th BDE.

Id. at par. 16, Exhibit P.

Ms. Rodriguez verified the authenticity of emails she had exchanged with Ms.

Gittens, and admitted that the Government had in fact approved the setup of Camp

Victory and the 35th BDE. (Rodriguez Dep., p. 34:4- p. 37:22).

AGT's expenses incurred in setting up and operating the two additional camps

totaled KD 39,476.400. (George Decl., par. 38, Exh. J [documentation supporting

costs]). The total quantity of laundry received in July and August 2003 from these two

additional camps from their respective launch dates in July through August 31 was only

151,107 laundered items, with a corresponding payment received of only KD 23,357.000.

Because AGT ended up invoicing the Government at the same piece rates used in the

Contract, which was based on an average troop count of 3,500 soldiers per camp, rather

than the higher rate quoted to Ms. Rodriguez, which took into account the reality of the

troop count being far less than an average of 3,500, AGT was paid significantly less than

if AGT had been paid at the rate identified in the emails with Ms. Rodriguez. (George

Decl., par. 41).

18

AGT's unrecovered expenses for the two camps total KD 16,119.400, based on

the following calculation: Set up and operational costs of KD 39,476.400 — KD 23,357

paid by the Government = KD 16,119.400 in unrecovered expenses for the two camps.

Id. at par. 41. The KD to USD conversion rate applicable in 2003 was 3.432. Id. at par.

29. Accordingly, the Government owes AGT payment for the two camps in the

amount of USD $55,321.78.

The Government's response and supplemental damages brief offer no evidence or

facts that disprove the indisputable material facts above showing agreement between the

parties about the two camps, and the fact that AGT lost expenses totaling USD

$55,321.78.

Rather, the Government's principal defense is its legal argument (see Response, p.

64) relying on the case law standard that an "express contract precludes the existence of

an implied contract dealing with the same subject, unless the implied contract is

entirely unrelated to the express contract." Atlas Corp. v. United States, 895 F.2d 745,

754-55 (Fed. Cir. 1990), cert. denied, 498 U.S. 811 (1990); Todd Pacific Shipyards

Corp., ASBCA No. 55126, 08-2 BCA IT 33,891. (emphasis added).

This argument is misplaced. The agreement between the Government (via Ms.

Rodriguez) and AGT does not "deal[] with the same subject" as the express Contract

DABM06-03-C-0009. That Contract concerns laundry services at five named camps.

The June and July agreement contemplated two other camps that did not even exist when

the Contract was executed. Thus, this summer agreement and the Contract did not deal

with the same subject, so the Government's defense fails. Atlas Corp., 895 F.2d at 754-

55. Further proof of the distinct nature of the summer agreement is the fact that AGT

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emailed the Government about entirely new construction issues, equipment and proposed

pricing structures that were not addressed in the Contract. Ms. Rodriguez reneged on her

pledge to send a modification, so there never was agreement on a specific piece-pricing

structure. This failure on the Government's part, however, does not nullify the email trail

showing the Government requested and agreed that AGT would construct and operate the

two new camps, inclusive of the activities and equipment discussed. The Government

should have to pay for the losses AGT suffered, totaling USD $55,321.78, that resulted

from the parties' agreement.

The Government claims, at Response p. 65, that "The contracting officer expected

that appellant's costs were built into its firm-fixed unit rates. (Rodriguez aff.)." This

statement by Ms. Rodriguez is disingenuous. As shown in the parties' documented

communications, AGT was proposing new pricing to Ms. Rodriguez, so there was no

reason for her to have "expected" the existing rates in the Contract had built in the costs

of the new camps. Ms. Rodriguez was in fact exchanging emails with AGT in which

AGT was proposing new and higher pricing structures that would cover the new camps'

costs, and Ms. Rodriguez led AGT to believe she would be issuing a modification that

would address new pricing issues. A review of the emails at issue shows zero evidence

to support the self-serving assertion Ms. Rodriguez now makes in her affidavit that she

had only expected AGT to provide services at the firm-fixed unit rates as reflected in the

Contract. Again, the evidence shows that AGT proposed a higher pricing structure, and

that Ms. Rodriguez said she would send a modification but failed to do so.

Contrary to the Government's assertion and as previously established in its prior

briefings, AGT establishes all elements of an implied-in-fact contract, where it "must

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prove mutual intent to contract, lack of ambiguity in the offer and acceptance,

consideration, and contracting authority in the government representative who is said to

have entered into the agreement." City of El Centro v. United States, 922 F.2d 816, 820

(Fed. Cir. 1990), cert. denied, 501 U.S. 1230 (1991); RGW Communications, Inc. D/B/A

Watson Cable Company, ASBCA No. 54495, May 18, 2005.

Regarding the last requirement, the Government's response offers no reason to

dispute that Ms. Rodriguez, the contract specialist and contracting officer involved, had

the requisite contracting authority.

The emails and communications between AGT and Ms. Rodriguez demonstrate

that the Government (via its contracting officer) instructed AGT to construct two laundry

facilities, and the contracting officer agreed that AGT would be compensated for the

costs of doing so. Ms. Rodriguez verified the authenticity of emails she had exchanged

with Ms. Gittens, and admitted that the Government had in fact approved the setup of

Camp Victory and the 35th BDE. (Rodriguez Dep., p. 34:4- p. 37:22).

Ms. Rodriguez further confirmed she had received documentation from AGT

dated September 1, 2003 that requested payment from the Government for some of the

costs associated with the two camps. Id. at pp. 38-39. In response to receiving this

documentation, Ms. Rodriguez asked AGT to provide more documents, such as

"invoices, purchase orders [and] vouchers" in order to "justify the prices." Id, at p. 39.

Ms. Rodriguez testified that during this period of time she was getting ready to leave

Kuwait, and she did not receive the additional documentation she had requested while she

was in Kuwait. Id, at pp. 39-40. Ms. Rodriguez testified that if she had received the

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additional documentation she requested, and "if it was valid," she would have

recommended AGT be paid the costs it was seeking. Id. at pp. 40-41.

For purposes of summary judgment, AGT has submitted financial documentation

and affiant testimony supporting that AGT's expenses incurred in setting up and

operating the two additional camps totaled KD 39,476.400. (George Decl., par. 38, Exh. J

[documentation supporting costs)). As discussed above, after the Government's deficient

payments (based on Contract-rate item pricing) were subtracted from these costs, the

Government owes AGT payment for the two camps in the amount of USD $55,321.78.

Summary judgment must be entered to this effect.

The emails and testimony submitted indisputably substantiate that the parties had

"mutual intent to contract, [and] lack of ambiguity in the offer and acceptance" with

respect to construction of the camps and the Government being responsible for the

associated costs. City of El Centro v. United States, 922 F.2d at 820.

It is true the parties did not reach agreement as to specific laundry item-prices in

their communications, so AGT does not seek higher pricing-related damages inclusive of

profit, etc. AGT seeks only reimbursement of lost costs associated with the agreed

construction and costs incurred for these two camps, which again indisputably totaled

USD $55,321.78. Accordingly, summary judgment should be granted, finding the

Government in breach of implied-in-fact contract, and obligated to make payment to

AGT for USD $55,321.78 for related damages attributable to costs and financial loss

incurred.

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VI. The Government Provides No Evidence to Refute AGT Incurred USD $3,413,738.78 in Lost Costs, Not Including Profit, Relating to Laundry at the Five Camps

Ajay George, who is AGT's General Manager - Middle East, provided an

affidavit with financial descriptions, itemizations, calculations and attached

documentation (Exhibits). This evidence supports that AGT in total spent KD

1,597,984.132 (USD $5,484,281.54) to set up and run five laundry facilities for the

Contract's six-month base term. (George Decl. at par. 30, Exhibit I). The declaration's

attached Exhibit I contains true and correct copies of itemizations, invoices and

documentation supporting these total costs. The Government has not provided any

evidence to refute these costs.

Further, it is undisputed the Government paid AGT a total of USD $2,070,542.76

for the five camps' laundry during the base term. Id. at par. 31. When the undisputed

payment of $2,070,542.76 is subtracted from the costs of USD $5,484,281.54, the

resulting losses to AGT are USD $3,413,738.78. Id. at par. 32.

Because the amounts above are undisputed and the Government presents no

evidence to refute them, a summary judgment finding is warranted to the effect that AGT

incurred USD $3,413,738.78 in actual losses during the Contract's base term at issue,

independent of other summary judgment determinations as to liability or damages. If a

hearing were to later occur, it should not be complicated or prolonged by any factual

challenges the Government may try to raise for the first time concerning the amounts

above.

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VII. The Government Did Not Dispute a 6% Profit Rate As Asserted By AGT Is Reasonable, and Summary Judgment Should Be Found to that Effect

Mr. George's declaration also described the process by which AGT determined

the per-piece rate it proposed to the Government during negotiations. Id. at par. 10. The

declaration attached an Estimation (Exhibit B) that Mr. George and AGT had used to

itemize and calculate the estimated costs, overhead and profit during the price-

determination process.

The declaration and Estimation provided that a 6% profit margin was used in

AGT's calculations of the original per-piece rate (par. 10) and equitably-adjusted per-

piece rate (par. 34), and identifies this as a reasonable profit. Id. at pars. 10, 34; Exit. B.

The Government has not disputed the propriety of a 6% profit rate. Accordingly, the

ASBCA should enter a summary judgment finding that, in the event any damages

determination occurs that is inclusive of a profit rate, a 6% profit rate shall be used as a

reasonable, fair and customary profit rate.

VIII. The ASBCA Should Grant the Equitable Adjustment of Price Sought By AGT Because That Is the Appropriate Remedy When Performance Occurs (Laundry Items Were Serviced), Unlike in Rumsfeld Where the Contract Was Terminated for Convenience Prior to Performance and Damages Were Thus Limited to Reasonable Costs and Profit

Equitable adjustment in price, contrary to what the Government argues, is usually

the remedy for negligent estimate claims according to Federal Court and Agency case

law. Rumsfeld, 325 F.3d at 1340-1342; Everett Plywood v. United States, 190 Ct.C1. 80,

419 F.2d 425 (1969); SRL, Spare Parts Logistics, Inc. ASBCA No. 54435, 06-1 BCA

33,135,11i-Shear Technology Corp. v. United States, 356 F.3d 1372 (Fed. Cir. 2004).

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As the Court in Hi-Shear stated, the underlying principle in determining a

methodology for recovery is to make the non-breaching party whole:

We first noted the general rule that "when there has been a breach of contract, the non-breaching party is entitled to an award of damages that will place it "in as good a position as [it] would have been had the breaching party fully performed.'" [citing Rumsfeld, 325 F.3d at 1336, quoting Wells Fargo Bank, N.A. v. United States, 88 F.3d 1012, 1021 (Fed. Cir.1996)].

Hi-Shear, 356 F.3d at 1378-1379.

The Court explains why the equitable adjustment in price is an appropriate

methodology for determining damages in negligent estimate claims:

An equitable price adjustment recognizes that, because of economies of scale, the non-breaching party may have estimated a lower price per unit for the goods or services it contracted to deliver. As a result, the non-breaching party suffers damages for the lesser quantity of goods or services it provides at the lower price before termination. Thus, the "equitable adjustment compensates for changes by paying a contractor its increased costs resulting from the change, plus an allowance for profit on that cost." [citing Rumsfeld, 325 F.3d at 1341, citing United States v. Callahan Walker Constr. Co., 317 U.S. 56, 61, 63 S.Ct. 113, 87 L.Ed. 49 (1942)]. Repricing in this fashion may place the contractor in the position it would have occupied but for the government's breach. At the same time, it does not allow the non-breaching contractor to collect a windfall due to the government's overestimation.

Id. at 1380.

Hi-Shear also found that in some situations equitable adjustment is not practical

and another methodology must be used, including that case's situation in which no goods

or services were delivered. No price thus existed to adjust, and computation of damages

was too complex. Id. at 1381-82.

In AGT's case, an equitable adjustment in price is a practical and appropriate

remedy for the Government's negligence in preparing its estimates. This situation is not

one as mentioned in Hi-Shear where no services were delivered. AGT provided services

for the six-month initial term of the Contract. In addition, contrary to Hi-Shear, this case

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is not so complex that equitable-adjustment damages cannot be determined. Indeed, as

further addressed in its initial brief at pages 6-10, 20-22, 34-35 and cited declaration of

Mr. George, AGT provided evidence and a detailed itemization of its lost costs, its

original pricing determination using the Government's contract estimates, and its

equitable-adjustment damages and re-calculation of pricing using an equitable rate.

As AGT has explained, a fair (non-negligent) estimate would have (1) taken into

account the fact that a "surge" of soldiers (a circumstance that largely factored into the

Government's estimate of 8,820,000 total average items during the Contract term) had

already occurred during the few months before the Contract was executed; and (2)

incorporated a potential invasion as a contingency, and substantially reduced the

8,820,000 total average items estimate of items in light of that contingency. The

Government has provided no proof that the substantial difference between the estimated

(8,820,000) items and actual (2,436,911) laundered items, which involved a 72.4%

disparity, was caused by any factor than that obvious one: the massive deployment of

soldiers (and their laundry items) from the five Kuwait camps into Iraq that occurred

during the Contract term.

The Government's response makes vague and undocumented claims that it used

other laundry contractors (see its PFF 7-9, 134), and suggests this somehow reduced

AGT's amount of laundered items. The allegations, however, do not allege or prove any

actual reduction of items caused by the other contractors. The allegations do not assert

the contractors serviced the same five camps as AGT did. Nor do the allegations assert

how many items the contractors supposedly serviced or took from AGT. The Contract

itself mentions nothing about other contractors or any potential reduction of items based

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on other contractors. The Government's response offers no proof that any factor other

than the massive invasion starting March 20, 2003 had caused the actual laundered items

total to be 72.4% less than the estimated average total of 8,820,000 items.

The most appropriate remedy to address the negligent estimate of 8,820,000 items

(which corresponded with an overstated average of 3,500 soldiers per camp and laundry

items these soldiers produced) is an equitable adjustment in price that increases the per-

piece prices that AGT had agreed to in reliance on these faulty estimates. As AGT

explained in detail in AGT's initial brief (pp. 3, 21-22, 34-25) and declaration of Mr.

George (pars. 33-36), had AGT been informed originally that only 2,436,911 items would

be laundered, AGT would have determined an appropriate per-piece rate to be .939 fils

per piece.

Accordingly, the appropriate measure of damages is an equitable price-adjustment

such that laundered items are paid at an increased general piece rate of .939 fils per piece.

As was also described in AGT's original submissions, application of this adjusted rate

would result in USD $5,782,763.60 in damages. This equitable price-adjustment is the

most appropriate remedy under the circumstances of this case. The Government provides

no viable alternative method of damages. The Government disputes AGT's calculation

for the price adjustment, yet the Government has failed to offer any alternative as to what

a non-negligent estimate would have been in accordance with Hi-Shear, or to otherwise

justify a departure from using an equitable adjustment in price as the recovery

methodology.

The Government claims that the Contract at issue is a fixed price contract, and

that Rumsfeld somehow stands for the proposition that a fixed price contract (because it is

27

not a requirements contract) is excluded from a negligent estimate claim. Based on the

case law and reasons described above, that is incorrect. It is true that Rumsfeld did not

award an equitable price adjustment as damages. But the Government's characterizations

of Rumsfeld and what it stands for are incorrect.

In Rumsfeld, the Court determined that if goods had not been delivered under the

contract, then the appropriate remedy would be that granted by the Termination for

Convenience clause of the contract. Rumsfeld, 325 F.3d at 1341. Were the ASBCA to

apply the same damages methodology as applied in Rumsfeld, then under the Termination

for Convenience Section 49 of the Federal Acquisition Regulations (FAR), AGT would

be awarded (based on the undisputed allowable expenses and profit rate values above) its

actual losses of USD $3,413,738.78, plus USD $124,232.57 (representing a 6%

reasonable profit of the USD $2,070,542.76 paid for actual items laundered), for a total of

$3,537,971.35 in damages for the negligent estimate.

AGT disputes such an equitable adjustment limited to costs and profit would

apply in this case because the Rumsfeld contract was terminated for convenience before

performance (items delivery) had occurred, which was not the case with the Contract

here. In Rumsfeld, had items actually been delivered in that case, then the Court would

have used an equitable adjustment in price as the damages methodology, and would have

applied that adjusted price to the actually-delivered items. Rumsfeld, 325 F.3d at 1341.

Specifically, in Rumsfeld the Court stated:

It does not appear from the record before us that Applied delivered any cylinders before DLA terminated the contract for the convenience of the government. If any cylinders were delivered, Applied should have the opportunity to establish that it is entitled to an equitable adjustment in the price of those cylinders because it relied on DLA's negligent estimates and, as a result, suffered damages. We note that, in denying Applied's breach claim, DLA's contracting officer referenced

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such an approach. The contracting officer noted that "[a]n equitable adjustment compensates for changes by paying a contractor its increased costs resulting from the change, plus an allowance for profit on that cost." See United States v. Callahan Walker Constr. Co., 317 U.S. 56, 61, 63 S.Ct. 113, 87 L.Ed. 49 (1942) ("An 'equitable adjustment' ... involved merely the ascertainment of the cost of [additional work] ... and the addition to that cost of a reasonable and customary allowance for profit."); Earth Burners, Inc. v. United States, 43 Fed.Cl. 481, 482 (1999) (noting that "[t]he proper measure of an equitable adjustment is reasonable costs, including reasonable profit for the work performed" (citation omitted)); In re Gen. Ry. Signal Co., ENGBCA No. 6168, 96-1 B.C.A. (CCH) ¶ 27981, at 139,755, 1995 WL (Aug. 3, 1995) ("We conclude that the equitable adjustment for the switching machines should be measured by the contractor's reasonable cost plus an allowance for a fair and customary profit." [citation omitted]). We think the approach of an equitable adjustment properly assesses Applied's damages.

If, as appears to be the case, no cylinders were delivered, Applied is limited to recourse under the Termination for Convenience of the Government Clause of the contract.

Id. at 1341-1342.

Rumsfeld also approvingly discusses other cases, including Everett Plywood and

Crown Laundry, where performance did occur and equitable price-adjustment was

appropriately applied as a remedy. See Id. at 1340-1341 ("In other words, Everett

Plywood was entitled to compensation for the loss it incurred as a result of the Forest

Service's faulty estimate, in the form of an adjustment to the contract price applied to the

volume of timber actually cut under the contract").

Thus, under the rationale of Rumsfeld and its cited cases above, an equitable

price-adjustment is the appropriate damages methodology in a situation like this case,

where performance (here, laundering of items by AGT during the Contract term) had

occurred. Based on the case law, and as detailed in AGT's initial brief, AGT calculated

an equitable price adjustment would be .939 fils per piece, with a total damages amount

equaling USD $5,782,763.60 plus profit on services delivered. The Government opposes

AGT's requested price adjustment, yet the Government has failed to offer (1) any

29

evidence supporting a basis of dispute or (2) any alternative as to what a non-negligent

estimate would have been, or to otherwise justify a departure from using an equitable

adjustment in price as the recovery methodology. Absent this showing, under the case

law, an equitable adjustment in price is the most appropriate remedy to rectify the cheap

unit pricing unfairly received by the Government during the Contract term due to its

negligence.

As stated above, AGT is not seeking damages under a termination claim. Rather,

AGT is seeking an equitable adjustment in price based on the Government's negligent

estimates. Nevertheless, the expenses that serve as the basis for AGT's damages

calculation are allowable under FAR 31. FAR 31 allows both direct and indirect costs.

Specifically, the direct costs of materials and labor as well as the indirect costs, such as

fixed general and administrative costs overhead, are all allowable (i.e. allocable and

reasonable) under FAR 31 and case law. See e.g. Hi-Shear Tech, 356 F.3d 1372. Profit

on services delivered is also allowable when seeking an equitable adjustment in price

based on a negligent estimates claim. Rumsfeld, 325 F.3d at 1341-1342. The Government

bears the burden of establishing the unallowability of these costs. Westech International,

Inc., ASBCA No. 57296 (Aug. 9, 2011), BearingPoint, Inc., ASBCA Nos. 55354,

55555,09-2 BCA — 34,289 at 169,398, Fiber Materials, Inc., ASBCA No. 53616, 07-1

BCA — 33,563 at 166,252; Lockheed-Georgia Co., A Division of Lockheed Corp., ASBCA

No. 27660, 90-3 BCA — 22,957 at 115,276. The Government has not challenged any of

AGT's expenses as improper under the FAR or any other law or regulation. Based on the

documented damages due to the Government's negligence, AGT is entitled under the law

and regulations to be made whole by the Government.

30

For the reasons above, the ASBCA should grant summary judgment finding that,

due to the Government's negligent estimate, AGT must be provided an equitable price-

adjustment of the piece rate to .939 fils per piece, and resulting damages totaling USD

$5,782,763.60. If the ASBCA does not grant summary judgment as to this price

adjustment, at a minimum summary judgment should be granted to the effect AGT is

awarded (based on the undisputed actual losses and profit rate values above) its actual

losses of USD $3,413,738.78, plus USD $124,232.57 (representing a 6% reasonable

profit of the USD $2,070,542.76 paid for actual items laundered), equaling $3,537,971.35

in damages for the negligent estimate.

IX. Conclusion

Based on the foregoing reasons, AGT respectfully requests that AGT's motion for

summary judgment be granted, that the Government be found liable for negligent

estimate and breach of implied-in-fact contract, and be ordered to make payments to

AGT for damages in the amounts of USD $5,782,763.60 and USD $55,321.78,

respectively.

Respectfully submitted this 28th day of May, 2013.

Attorney for Appellant

Michael F. Brown State Bar #: 1041753 Peterson, Berk & Cross 200 E. College Ave. P.O. Box 2700 Appleton, WI 54912-2700 Phone: (920)831-0300 Fax: (920)831-0165 Email: mbrown@pbclaw.com

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Vonda K. Vandaveer, Esq. DC Bar # 483807 V.K. Vandaveer, P.L.L.C. P.O. Box 27317 Washington, DC 20038-7317 Phone: (202) 340-1215 Fax: (202) 521-0599 Email: vonda@vkvlaw.com

CC: W/ENCL TO: Major K.L. Grace Moseley, Trial Attorney Department of The Army United States Army Legal Services Agency 9275 Gunston Road, Suite 2124 Fort Belvoir, VA 22060-5546

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CERTIFICATE OF SERVICE

I hereby certify, under penalty of perjury, that on May 28, 2013,a true and complete copy of this reply memorandum and accompanying documents were delivered via email (electronically served) to Major Kesabii Grace Moseley, Trial Attorney.

Michael F. Brown State Bar #: 1041753 Peterson, Berk & Cross 200 E. College Ave. P.O. Box 2700 Appleton, WI 54912-2700 Phone: (920)831-0300 Fax: (920)831-0165 Email: mbrown@pbclaw.com

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