Siemens Government Technologies, Inc. v. Secretary of the Navy

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
SIEMENS GOVERNMENT TECHNOLOGIES, INC.,
Appellant
v.
SECRETARY OF THE NAVY,
Appellee
______________________
2022-2240
______________________
Appeal from the Armed Services Board of Contract Ap-
peals in Nos. 62601, 62602, Administrative Judge David
D’Alessandris, Administrative Judge Owen C. Wilson, Ad-
ministrative Judge Richard Shackleford.
______________________
Decided: May 8, 2024
______________________
MICHAEL BHARGAVA , Nichols Liu LLP, Washington,
DC, argued for appellant. Also represented by ROBERT
N ICHOLS , SAMUEL VAN K OPP .
ELIZABETH A NNE SPECK, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for appellee. Also repre-
sented by BRIAN M. BOYNTON, WILLIAM J AMES G RIMALDI,
P ATRICIA M. MC CARTHY ; ROBYN L. HAMADY , Office of the
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
2
General Counsel, United States Department of the Navy,
Washington, DC.
______________________
Before REYNA, MAYER , and CUNNINGHAM , Circuit Judges.
P ER CURIAM .
Siemens Government Technologies, Inc. (“Siemens”)
appeals a decision of the Armed Services Board of Contract
Appeals (“board”) rejecting its claim seeking recovery of the
development costs it incurred investigating potential en-
ergy conservation measures at military installations in Dji-
bouti and Greece. For the reasons discussed below, we
affirm.
I. BACKGROUND
The relevant facts are set out in detail in the board’s
decision, see J.A. 2–11, and need only be briefly summa-
rized here. Pursuant to 42 U.S.C. § 8287(a)(1), a federal
agency can “enter into contracts . . . solely for the purpose
of achieving energy savings and benefits ancillary to that
purpose.” Under such contracts, a contractor incurs the
upfront cost of installing energy savings measures and, in
exchange, is entitled to “a share of any energy savings di-
rectly resulting from implementation of such measures
during the term of the contract.” Id.
In 2007, the Department of Energy (“DOE”) entered
into Contract DE-AM36-09GO29041 (the “DOE Master
Contract”) with Siemens’ predecessor, Siemens Govern-
ment Services, Inc. J.A. 309–10, 613. This contract pro-
vided the Navy with the authority to issue task orders to
Siemens for energy savings performance contract (“ESPC”)
work. J.A. 630, 654. It specified that an agency task order
was “[t]he obligating document that provides the details
and requirements for the order of an [ESPC] project, placed
against an established master indefinite delivery/indefi-
nite quantity contract.” J.A. 706.
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
3
Section H of the DOE Master Contract outlines the
steps required for issuance of a task order: (1) the agency’s
contracting officer issues a notice of opportunity; (2) the
contractor submits an expression of interest; (3) the con-
tractor submits a preliminary assessment; (4) the contract-
ing officer issues a notice of intent to award (“NIA”); (5) the
contracting officer issues a request for proposal; (6) the con-
tractor submits an investment grade audit (“IGA”); (7) the
contractor submits a final proposal based on the IGA; and
(8) a task order is awarded. See J.A. 657–72; see also J.A.
2–3. The DOE Master Contract makes clear that an
“agency will not be responsible for any costs incurred [by a
contractor], such as [p]roposal preparation costs or the
costs incurred in conducting the IGA, unless a [task order]
is awarded or authorized by the agency [contracting of-
ficer].” J.A. 666.
In 2014, the Navy issued a request for preliminary as-
sessment which identified potential energy conservation
measures at the following installations: (1) Camp Lemon-
nier in Djibouti (“CLDJ”); (2) the Naval Support Activity in
Souda Bay, Greece; (3) the Naval Air Station in Sigonella,
Italy; (4) the Naval Station in Rota, Spain; (5) the Naval
Support Activity in Naples, Italy; and (6) the Naval Sup-
port Activity in Bahrain. See J.A. 789–92. Siemens there-
after submitted preliminary assessments for work at these
sites. See J.A. 43, 1861–67, 1962–67.
On December 1, 2015, the Navy issued an NIA stating
that it intended to award up to five proposed task orders
pursuant to the DOE Master Contract. J.A. 803. In this
notice, the Navy informed Siemens that it was required to
perform IGAs of potential energy savings measures at the
“applicable project site facilities” and provide “five Final
Proposals summarizing the survey results.” J.A. 803. The
Navy further stated that Siemens was required to “verify
the accuracy of the estimated annual cost savings [it] orig-
inally proposed for these projects.” J.A. 803. Additionally,
the Navy cautioned that the NIA did “not commit the
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
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Government to award a [t]ask [o]rder, or to pay for any of
the costs incurred in making the necessary studies or de-
signs for the preparation thereof, or to contract for said ser-
vices or designs.” J.A. 803.
The Navy issued a task order request for proposal for
energy saving measures at Souda Bay on December 2,
2015, J.A. 804–06, and a task order request for proposal for
CLDJ on March 8, 2016, J.A. 884–86. In June 2016, Sie-
mens informed the Navy that it had concluded that energy
conservation measures at CLDJ and Souda Bay were no
longer viable. J.A. 976, 982.
On September 26, 2018, the Navy awarded Task Order
N39430-18-F-9924 (the “Awarded Task Order”) to Sie-
mens. J.A. 1005–266. This task order authorized energy
conservation measures at Navy installations in Naples,
Rota, and Sigonella, see J.A. 1007–09, but did not authorize
any such measures at CLDJ or Souda Bay.
Siemens subsequently submitted certified claims to the
Navy seeking reimbursement of the approximately $5.2
million in costs it allegedly incurred evaluating potential
energy cost savings measures at CLDJ and Souda Bay.
J.A. 1824–35. After the Navy’s contracting officer issued
final decisions denying both claims, see J.A. 1836–45, Sie-
mens appealed to the board, see J.A. 38–55.
Before the board, Siemens asserted that the Navy vio-
lated the covenant of good faith and fair dealing and the
superior knowledge doctrine by asking it to incur proposal
development costs at CLDJ and Souda Bay even though
the Navy knew that energy conservation measures at those
locations were not viable. J.A. 38, 49–54. On May 24, 2022,
the board issued a decision granting the Navy’s motion for
summary judgment. See J.A. 13. The board rejected Sie-
mens’ claim for breach of the duty of good faith and fair
dealing, explaining that this duty “applies to government
conduct during the performance of the contract, and does
not apply to government actions during the formation of
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
5
the contract.” J.A. 14. The board likewise rejected Sie-
mens’ superior knowledge claim, stating that the doctrine
of superior knowledge applies only during contract perfor-
mance and the parties’ contract was limited to work at Na-
ples, Rota, and Sigonella. J.A. 17–18. Additionally, the
board held that it lacked jurisdiction over Siemens’ claim
that it was treated unfairly during the bidding process for
work at CLDJ and Souda Bay because “an implied contract
to treat a bidder honestly is not a contract for the procure-
ment of goods, and thus does not fall within the” board’s
Contract Disputes Act (“CDA”) jurisdiction. J.A. 15.
Siemens then filed a timely appeal with this court. We
have jurisdiction pursuant to 28 U.S.C. § 1295(a)(10).
II. D ISCUSSION
A. Standard of Review
This court reviews de novo the board’s interpretation of
a government contract. See Forman v. United States, 329
F.3d 837, 841 (Fed. Cir. 2003). The board’s grant of sum-
mary judgment on a question of law is likewise subject
to de novo review. Id.; see also Elec. Boat Corp. v. Sec’y of
Navy, 958 F.3d 1372, 1375 (Fed. Cir. 2020).
B. Siemens’ Contentions
Siemens asserts that it is entitled to recover the costs
it incurred assessing potential energy conservation
measures at CLDJ and Souda Bay because the Navy re-
quired it “to waste millions of dollars investigating conser-
vation measures that the Navy knew could not lead to a
viable project.” Appellant’s Br. 4. It contends, moreover,
that the Navy “simultaneously engaged in parallel procure-
ments for energy conservation measures at [CLDJ and
Souda Bay] without disclosing this to Siemens.” Id. at 40.
On appeal, Siemens advances three principal argu-
ments as to why the board erred in denying its claim to
recoup the proposal development costs it incurred at CLDJ
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
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and Souda Bay. First, it asserts that the Navy was con-
tractually obligated to reimburse it for the cost of assessing
potential energy conservation measures at all of the sites
identified in the Navy’s request for preliminary assess-
ment. Second, Siemens argues that it is entitled to recoup
the costs it incurred at CLDJ and Souda Bay because the
Navy violated both the covenant of good faith and fair deal-
ing and the superior knowledge doctrine. Finally, Siemens
contends that, under this court’s decision in LaBarge Prod-
ucts, Inc. v. West, 46 F.3d 1547, 1551–54 (Fed. Cir. 1995),
the board had authority to award it its bid preparation
costs. We address each of these arguments in turn.
C. The Parties’ Contract
Siemens does not dispute that the Awarded Task Order
did not include any energy conservation measures at CLDJ
or Souda Bay. Nor does it dispute that Section H.6.2 of the
DOE Master Contract states that an “agency will not be
responsible for any costs incurred [by a contractor], such as
[p]roposal preparation costs or the costs incurred in con-
ducting the IGA, unless a [task order] is awarded or au-
thorized by the agency [contracting officer].” J.A. 666.
Siemens asserts, however, that the potential energy
conservation measures at the five sites* identified in the
Navy’s 2014 request for preliminary assessment were part
of one “overall project.” Appellant’s Br. 46. It further
* The Navy’s 2014 request for preliminary assess-
ment, as noted previously, sought evaluation of potential
energy conservation measures at six installations located
in Bahrain, Naples, Rota, Sigonella, CLDJ, and Souda Bay.
See J.A. 789–91. Only five of these installations are rele-
vant to this appeal, however, because the Awarded Task
Order does not include any energy conservation measures
in Bahrain and Siemens does not seek in this appeal to re-
cover any proposal development costs for that location.
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
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contends that the parties’ contract “require[d] the reim-
bursement of the overall project’s development costs if any
task order [was] awarded, without any carve-out to exclude
development costs at sites that [were] not included in the
task order.” Id. at 28. In essence, Siemens’ argument is
that because the Navy issued a task order authorizing en-
ergy conservation work at some sites, it thereby became li-
able for the proposal development costs Siemens incurred
at all of the sites.
We find this argument unpersuasive for several rea-
sons. First, we reject Siemens’ argument that the parties
considered the energy conservation measures at Naples,
Rota, Sigonella, CLDJ, and Souda Bay to be one “overall
project” that was covered by the Awarded Task Order. It
is true that the Navy, in 2014, issued a single request for
preliminary assessment that identified potential conserva-
tion measures at Naples, Rota, Sigonella, CLDJ, and Souda
Bay. See J.A. 788–92. It is also true that the Navy origi-
nally used a single solicitation number to refer to work at
all of the sites. See, e.g., J.A. 788. Subsequently-issued
documents, however, clearly indicate that the proposed
conservation work at each of the different sites was a sep-
arate “project” and that only the costs associated with the
projects at Naples, Rota, and Sigonella were included in the
Awarded Task Order.
For example, the Navy’s December 2015 NIA asked
Siemens to submit “five Final Proposals” for the different
sites and stated that these proposals should “verify the ac-
curacy of the estimated annual cost savings [Siemens] orig-
inally proposed for these projects.” J.A. 803 (emphasis
added). The Navy further informed Siemens that it was
required “to obtain the required financing and bonding for
these projects.” J.A. 803 (emphasis added).
In November 2016, the Navy issued a revised NIA
which likewise referred to the proposed energy conserva-
tion measures at the five different sites as different
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
8
“projects.” J.A. 985. The revised NIA stated that the Navy
would notify Siemens “if the projects [were] determined to
be beneficial to the Navy.” J.A. 985 (emphasis added). See
J.A. 985. The Navy also reiterated that Siemens was obli-
gated “to take necessary actions to obtain the required fi-
nancing and bonding (if required) for these projects.” J.A.
985–86 (emphasis added). In light of the fact that the Navy
asked Siemens to submit five separate final proposals and
repeatedly referred to work at the different sites as differ-
ent “projects,” it was unreasonable for Siemens to assume
that all five of the sites would be treated as a single “overall
project” for purposes of recouping its proposal development
costs at CLDJ and Souda Bay.
Furthermore, while the Navy ultimately decided to
give Siemens the option to “bundle” the energy conserva-
tion work at Naples, Rota, and Sigonella for purposes of its
final proposal, the Navy recognized that the work at these
three sites had originally been three separate projects. J.A.
985 (stating that while Siemens had the option to bundle
Naples, Rota, and Sigonella, it was required to “verify the
accuracy of the estimated annual cost savings [it] originally
proposed for . . . these projects”). Importantly, moreover,
although Siemens was given the option to bundle the pro-
jects at Naples, Rota, and Sigonella for purposes of its final
proposal, the Navy never suggested that any work at CLDJ
or Souda Bay—or costs associated with preparing pro-
posals for those sites—could be included in that proposal.
See J.A. 985.
Second, the DOE Master Contract defines a “Task Or-
der Project” not as the potential energy conservation
measures at the various locations identified in preliminary
solicitation documents, but instead as the measures that
are actually included in an issued task order. J.A. 706
(stating that a “Task Order Project” is “[t]he complete pack-
age of energy conservation measures . . . included in a task
order for a building, facility or agency”). Relatedly, Section
C.1 of the DOE Master Contract, which is entitled “Project
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
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Scope,” specifically links the term “project” to the energy
conservation measures which are implemented at a partic-
ular location and which lead to cost savings at that facility.
J.A. 630 (stating that the cost of a “[task order] project . . .
must be covered by the energy, water, and related cost sav-
ings incurred at the Federal facility” (emphasis added)).
These contract provisions indicate that the term “project,”
for purposes of an ESPC task order, refers to the energy
conservation measures authorized and implemented at
specific agency facilities rather than, as Siemens contends,
the full array of potential conservation measures contem-
plated for multiple locations in preliminary solicitation
documents.
Finally, the Awarded Task Order states that it “consti-
tutes and defines the entire agreement between the Con-
tractor and the Government.” J.A. 1242. While that
document contains detailed discussions of the implementa-
tion costs, J.A. 1259–62, cost savings, J.A. 1258, and scope
of work associated with the projects in Naples, J.A. 1010–
85, Rota, J.A. 1086–149, and Sigonella, J.A. 1150–229, it
does not contain any reference to costs incurred at either
CLDJ or Souda Bay. Indeed, the Awarded Task Order
makes clear that the “[p]roject” sites are the installations
in Naples, Rota, and Sigonella. J.A. 1258, 1259, 1260. Be-
cause Siemens points to no provision in the Awarded Task
Order that can reasonably be interpreted to require the
Navy to pay for proposal development costs at sites where
energy conservation measures were not authorized, we re-
ject its argument that the Navy was contractually obli-
gated to reimburse it for the assessment costs it incurred
at CLDJ and Souda Bay.
D. Siemens’ Remaining Contentions
Siemens’ arguments based on the covenant of good
faith and fair dealing and the superior knowledge doctrine
are similarly unavailing. The covenant “of good faith and
fair dealing is inherent in every contract,” Precision Pine &
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
SECRETARY OF THE NAVY
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Timber, Inc. v. United States, 596 F.3d 817, 828 (Fed. Cir.
2010), and “requires a party to respect and implement [a]
contract in accordance with its terms,” First Nationwide
Bank v. United States, 431 F.3d 1342, 1350 (Fed. Cir.
2005). As we have previously made clear, however, the cov-
enant does not attach in the absence of an underlying con-
tract. See Scott Timber Co. v. United States, 692 F.3d 1365,
1372 (Fed. Cir. 2012) (explaining that an agency “could not
have breached the covenant of good faith and fair dealing
by its pre-award conduct because the covenant did not exist
until the contract was signed”). Thus, although Siemens
alleges that the Navy caused it “to needlessly incur devel-
opment costs at [CLDJ] and Souda Bay,” Appellant’s Br.
40–41, that alleged misconduct cannot support a viable
claim for breach of the covenant of good faith and fair deal-
ing because, as discussed previously, Siemens and the
Navy never entered into a contract related to CLDJ or
Souda Bay.
In Scott Timber, we explained that while pre-award
conduct cannot support a claim for breach of the covenant
of good faith and fair dealing, this does not mean that “pre-
contract actions by the government cannot bear on the
question of whether the government has complied with its
obligations that are eventually imposed by the contract.”
692 F.3d at 1372. Here, however, Siemens fails to identify
any actions by the Navy, in the period prior to the date it
awarded Siemens a contract for ESPC work at Naples,
Rota, and Sigonella, which can reasonably be interpreted
to demonstrate that this contract was intended to cover
proposal development costs for CLDJ or Souda Bay. To the
contrary, in its initial NIA, J.A. 803, as well as in four sub-
sequent revisions to that NIA, J.A. 984, 985, 987, 1002, the
Navy cautioned that it had not made any commitment to
pay for the IGAs or other costs associated with the prepa-
ration of Siemens’ final proposals for the different installa-
tions.
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
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For similar reasons, we conclude that the board cor-
rectly rejected Siemens’ attempt to recover the proposal de-
velopment costs it incurred at CLDJ and Souda Bay based
upon an alleged violation of the superior knowledge doc-
trine. See J.A. 17–18. “The superior knowledge doctrine
imposes upon a contracting agency an implied duty to dis-
close to a contractor otherwise unavailable information re-
garding some novel matter affecting the contract that is
vital to its performance.” Giesler v. United States, 232 F.3d
864, 876 (Fed. Cir. 2000). As the board correctly concluded,
the Navy’s actions related to the procurement processes at
CLDJ and Souda Bay could not have affected Siemens’ per-
formance under the awarded contract because that con-
tract only encompassed work at Naples, Rota, and
Sigonella. See J.A. 18 (explaining that “[t]he [CLDJ] and
Souda Bay preliminary assessments and initial [IGA] work
did not become part of a task order award, were not [part
of the] performance of the contract at issue, and cannot be
the subject of a superior knowledge claim” (citation omit-
ted)).
Finally, we turn to Siemens’ argument that the board
erred in concluding that it had no jurisdiction to consider
its claim that it had been treated unfairly during the bid-
ding processes for work at CLDJ and Souda Bay. See J.A.
15. In Coastal Corp. v. United States, offerors on a solici-
tation filed a claim with the DOE Board of Contract Ap-
peals seeking to recoup the $2 million that they had spent
preparing proposals which never resulted in a contract
award. 713 F.2d 728, 729–31 (Fed. Cir. 1983). We con-
cluded, however, that while the board had authority to en-
tertain a claim alleging a breach of a contract for the
procurement of goods, it had no CDA jurisdiction over a
claim alleging a breach of the duty “to give bids fair and
honest consideration.” Id. at 730 (citation and internal
quotation marks omitted). Thus, as the board correctly
concluded, it was without jurisdiction to consider Siemens’
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SIEMENS GOVERNMENT TECHNOLOGIES, INC. v.
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claim that it was treated unfairly during the bidding pro-
cesses for work at CLDJ and Souda Bay. J.A. 15.
LaBarge, 46 F.3d at 1551–54, upon which Siemens re-
lies, is inapposite. There, we held that the board could
properly exercise jurisdiction over a contractor’s claim
seeking reformation of an existing contract with the gov-
ernment. Id. LaBarge, however, does not help Siemens
because it never had a contract with the Navy related to
CLDJ or Souda Bay. We have considered Siemens’ remain-
ing arguments but do not find them persuasive.
III. CONCLUSION
Accordingly, the decision of the Armed Services Board
of Contract Appeals is affirmed.
AFFIRMED
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