CBCA 3350

CBCA 3350, 3672 GRANTED IN PART; CBCA 4658, 4659 DENIED: September 19, 2017 CBCA 3350, 3672, 4658, 4659 YATES-DESBUILD JOINT VENTURE, Appellant, v. DEPARTMENT OF STATE, Respondent. Douglas L. Patin and Thomas Lynch of Bradley Arant Boult Cummings LLP, Washington, DC, counsel for Appellant. Thomas D. Dinackus, Office of the Legal Adviser, Buildings and Acquisitions, Department of State, Rosslyn, VA, counsel for Respondent. Before Board Judges SOMERS, HYATT, and LESTER. LESTER, Board Judge. When W.G. Yates & Sons Construction Company (Yates) teamed with Desbuild Incorporated (Desbuild) in April 2005 for the express purpose of pursuing a contract for the construction of a nine-building Department of State (DOS) consulate compound in Mumbai, India, it seemed like an excellent match between two entities with different types of construction expertise. Yates was, and still is, a construction contractor (headquartered in Mississippi) with extensive experience in large and complex construction projects in the United States. Desbuild, a construction contractor headquartered in Maryland that is headed CBCA 3350, 3672, 4658, 4659 2 by a native of India, had extensive experience with projects in India and elsewhere overseas, including but not limited to DOS projects in India. In forming Yates-Desbuild Joint Venture (YDJV),1 these two companies, which had never previously worked together, hoped that the combination of Yates’ experience with large complex construction projects and Desbuild’s ability to navigate the Indian skilled construction labor market and knowledge of qualified local specialized subcontractors would prove successful. Several months later, in September 2005, DOS awarded YDJV the contract for the New Consulate Compound (NCC) project in Mumbai. Unfortunately, the NCC project, which was supposed to take twenty-eight months to complete, ultimately stretched out to almost six years – three-and-a-half years more than anticipated. YDJV believes that the extensive delays that it experienced on the project resulted primarily from property tax disputes between the United States Government (USG) and the Government of India (GoI), and YDJV blames DOS for not disclosing prior to award DOS’s knowledge that the GoI, to gain leverage in a lawsuit filed by the City of New York demanding that the GoI pay real property taxes in New York, might block construction permits for the NCC project unless and until the USG paid its own outstanding NCC and other property tax bills – tax bills that dated back to the 1970s. Ultimately, YDJV submitted a certified claim to DOS seeking payment of $23,802,082.48 as compensation for delays, while the DOS contracting officer assessed liquidated damages of $11,301,352 against YDJV for 1192 days of delay beyond the contracted substantial completion date. Based upon our review of the documentary evidence in these appeals, as well as testimony presented at a thirteen-day hearing, we find DOS responsible for its failure to notify YDJV, prior to award, of its well-grounded concerns that the GoI was very likely to delay the issuance of construction permits to force a coordinated resolution of the City of New York’s lawsuit and the tax dispute over the NCC property. We also find that there are other excusable delays – including a change in GoI policy during the construction project that forced YDJV temporarily to remove workers from India and to await issuance of new entry visas for those workers – that are not YDJV’s fault and for which DOS cannot assess liquidated damages. Ultimately, though, despite the problems that the tax dispute and visa issues created, responsibility for the bulk of the delays on this project rests with YDJV. It was simply unable to merge the different types of expertise of its founding partners, Yates and Desbuild, 1 For purposes of our decision, “YDJV” refers to the joint venture team of Yates and Desbuild. When referring to either of the individual companies themselves, we refer to “Yates” or “Desbuild.” CBCA 3350, 3672, 4658, 4659 3 in a manner that allowed it to find and motivate local workers and subcontractors capable of performing, and willing to perform in a timely manner, the level and quality of work that the construction standards applicable to a DOS project require. While Desbuild had completed several construction projects for DOS in India and elsewhere, none were of the magnitude of the NCC project.