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The VA issued a task order to Rocjoi Medical Imaging, LLC (“contractor”) to study radiological examination results. The contractor argued the VA failed to request approximately 10,000 studies a year as provided in the task order. The VA said the task order did not guarantee 10,000 studies but was merely a vehicle to obtaining funding for services up to this estimated amount.

The VA’s position is odd since task orders are not used to obtain funding but rather to order services. The indefinite quantity and ordering clauses do treat “orders” as estimates either. Nevertheless, the Board agreed with the VA.

The facts are unique, however. The Board looked at the conduct of the parties before the dispute arose. The Board found that both the VA and the contractor acted as if the 10,000 radiological review services specified in the task order were estimates and for funding purposes only. The VA medical facility had “requested” services on an as-need basis. The contractor invoiced for these services as they were requested. The Board therefore concluded that the task order “cannot be viewed now as a firm order for any radiology services.” The Board denied the contractor’s claim that the VA failed to order 10,000 services under the task order.

https://cbca.gov/files/decisions/2021/CHADWICK_07-23-21_6885__ROCJOI_MEDICAL_IMAGING_LLC.pdf

Posted in Contract Disputes Act

In HOF Construction v. General Services Administration, CBCA 6306, the Civilian Board of Contract Appeals dismissed a contractor’s claim as untimely because it was not filed within 90 days after the Contracting Officer’s final decision.  The contractor argued that it did not file within 90 days because the Contracting Officer’s decision did not adequately apprise it of its right to do so. The Board ruled against the contractor, and in doing so, overturned prior case law.

Here, the Contracting Officer’s final decision provided the following right to appeal language:

Therefore, you are hereby notified that the above referenced contract is being terminated for default under the clause titled “FAR 52.249-10 Default (Fixed Price Construction)[.”] The termination is effective immediately upon receipt of this notice. The Government reserves all rights and remedies provided by law and under the contract. This notice constitutes the final decision of the Contracting Officer. You may have the right to appeal under the Disputes clause. You may invoice for all work completed to date; the invoice is subject to review and approval by GSA. Your invoice must be received no later than December 21, 2017. In addition, GSA will be assessing liquidated damages from November 2, 2017, until the work is complete.

The above appeal language was clearly defective because it violates FAR 33.211. For example, the CO’s final decision wrongly states that the contractor “may have the right to appeal” instead of “you may appeal this decision.”  The CO’s decision also fails to state that if you decide to appeal, you must do so within 90 days to the Board of Contract Appeals, or 1 year to the Court of Federal Claims.

Despite these deficiencies, the Civilian Board of Contract Appeals decided that they were harmless.  In other words, the contractor should have known that it had only 90 days to appeal to the Board even though the final decision did not expressly say so.  In the Board’s view, it was enough to state that this is a final decision and to refer generally to the disputes clause, which the contractor could go search for.

In so holding, the Board overturned prior case precedent, specifically Ledford, 02-1 BCA at 156,442, where the predecessor Department of Veterans Affairs Board of Contract Appeals found that a final decision was fatally defective because it did not identify the Board as the place to file an appeal.

So, be careful to appeal a final decision of the Contracting Officer.  Always calendar the date to appeal a final decision either to the Board (within 90 days) or the Court of Federal Claims (within 1 year).  If you are not sure a decision constitutes a formal Contracting Officer’s final decision, ask for immediate clarification.

This is for educational purposes only and does not constitute legal advice.  Using this blog does not create an attorney-client relationship between you and the author or Manfredonia Law Offices, LLC.  The information provided on this blog is not guaranteed to be complete, correct or up-to-date.

Posted in Contract Disputes Act

In the appeal of Paradise Pillow, Inc. CBCA 5179 (February 1, 2017), the Civilian Board of Contract Appeals awarded a contractor $904,575.00 in restocking fees for blankets ordered by the GSA after a hurricane in New Jersey, but later returned because they were not needed.  At first, the Contracting Officer agreed to pay the restocking fees and even signed a bilateral modification totaling $904,575.00.  However, the GSA would later dishonor this modification and terminated the contract for default instead because the blankets were allegedly not delivered on time.  The contractor appealed the termination for default and won.  The Board held that the GSA could not prove that the contractor did not meet the delivery deadline.  The termination for default was therefore converted to a termination for convenience.

Next, came monetary damages for the termination for convenience.  The GSA argued that restocking fees were expressly prohibited by the contract because it included the terms, “RESTOCKING: Not Applicable.”  The Board held that this language did not prevent the parties from agreeing, as they did, that restocking fees were “fair consideration” for the termination costs.  The Board noted that the contractor incurred the cost of “accumulating 150,000 blankets, delivering them to specified locations on short notice and under difficult conditions in the wake of a hurricane, maintaining the blankets in trailers at locations for several weeks, retrieving the blankets, and restocking the blankets in the warehouse.”  Under these circumstances, the Board held that the restocking fees were reasonable and the Contracting Officer had authority to pay them.  The GSA must therefore honor the modification in which it previously agreed to pay $904,575.00 in restocking fees.

The Board’s decision preserves the integrity of our procurement system.  When signing a bilateral modification, absent fraud or misrepresentation, both parties are bound by its terms.

Posted in Contract Disputes Act, Termination for Default

On December 21, 2016, in the appeal of AHTNA Environmental, Inc. v. Department of Transportation, CBCA No. 5456 (December 22, 2016), the Civilian Board of Contract Appeals held that final payment did not prevent a contractor from filing a claim. The Board found that the Contracting Officer “had or should have had” a full understanding of the scope and amount of the contractor’s anticipated Claims before making final payment.  As such, the Government cannot rely on the release in preventing the contractor from pursuing a claim after final payment. In this regard, the Board held that:

A tribunal may decline to find that a claim is barred by release “where the parties continue[d] to consider the claim after execution of a release.” Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1581 (Fed. Cir. 1993) (citing Winn-Senter Construction Co. v. United States, 75 F. Supp. 255, 260 (Ct. Cl. 1948)). “Such conduct manifests an intent that the parties never construed the release as an abandonment of plaintiff’s earlier claim.” Id. (quoting A& K Plumbing & Mechanical, Inc. v. United States, 1 Cl. Ct. 716, 723 (1983)). Where the Government continues to review, consider, and negotiate the contractor’s claim for a significant period of time after the supposed release, the release will generally be found not to bar the claim. Id.; see J.G. Watts Construction Co. v. United States, 161 Ct. Cl. 801, 807 (1963) (“where the conduct of the parties in continuing to consider a claim after the execution of the release makes plain that they never construed the release as constituting an abandonment of the claim, . . . the release will not be held to bar the prosecution of the claim”).

In summary, the Board’s correctly rejected the Government’s attempt to strip the contractor’s right to file a claim for two basic reasons. First, at the time of final payment, the Government was clearly on notice that a REA would be filed.  Second, once the REA was filed, the Government evaluated it and did not invoke a release defense.

Posted in Contract Disputes Act

In the Appeal of Academy Partners, Inc. v Department of Labor (August 11, 2016), the Civilian Board of Contract appeals refused to toss out a case based on an alleged oral agreement.  The contractor had a contract with the DOL to perform maintenance services on computer servers. The Government did not exercise an option to renew the contract after the base period ended. The contractor, however, continued to perform maintenance services after the base period, claiming that the DOL promised that it would renew the contract.  The DOL never did so.

The Contractor argued that an oral agreement existed and the DOL must pay for the services provided after the base period ended.  The DOL filed a motion to dismiss the appeal for “lack of subject matter jurisdiction or, alternatively, for failure to state a claim upon which relief may be granted.”

The Board denied the DOL’s motion, concluding that an oral agreement or “implied-in-fact contract” might exist based on the parties’ conduct. The Board noted that “the documentary evidence necessary to prove the existence of an oral express contract need not include a formal contract” and that “a contractor can allege the existence of a contract with the Government for the continued performance of an expired contract when the Government fails to timely exercise an option. “

This case is very instructive for those who seek compensation based on the Government’s verbal promise to pay.

Posted in Contract Disputes Act

In the appeal of CAE USA, INC. v. DEPARTMENT OF HOMELAND SECURITY (May 26, 2016), the Board of Contract Appeals denied CAE’s claim in excess of $8M to build a flight simulator for the U.S. Coast Guard.  CAE entered into an IDIQ contract with the Government to provide training services to pilots of the HC-130H aircraft.  The Coast Guard uses this aircraft for long range surveillance.  CAE invested over $8M building a Full Flight Simulator for this training.  The Government provided the “avionics package” to be incorporated into the simulator.  CAE would then be paid for training courses provided to Coast Guard pilots.  During the proposal stage, the Government also indicated that CAE could use the simulator to provide training to third parties on a “not to interfere basis.”  This provided CAE a business opportunity to make money by providing training to private air cargo services and foreign militaries.  CAE argued that this induced it to  invest in the development of the Full Flight Simulator, which was very costly.

The Government decided to cancel the flight training program and did not order any further services off of the IDIQ contract with CAE.  To make matters worse, the Government asked CAE to provide the avionics package back.  This meant that CAE could no longer provide training to private air cargo companies and foreign military entities.  CAE would lose significant revenue as a result of this lost business opportunity.

CAE filed a claim against the Government based on breach of the duty of good faith and fair dealing.  CAE argued that the Government should have allowed it to continue to use the avionics package so it could recoup on its significant investment into the Full Flight Simulator.  The Board of Contract Appeals denied CAE’s claim.  The Board ruled that because the contract was on IDIQ type, the Government was only obligated to purchase the minimum quantities stated in the contract.

Given that the contract was and IDIQ type, the Board held that CAE could not complain when the Government decided it no longer need flight training services.  The duty of good faith and fair dealing did not change this fact.  The Board noted that this duty does not “expand party’s contractual duties beyond those in the express contract or create duties inconsistent with the contract’s provisions.”

The Board also held that the duty of good faith and fair dealing did not require the Government to allow CAE to keep the avionics package so it could train other pilots and recoup its investment into the flight simulator:

Would it have been nice of the Coast Guard to let CAE hold the A1U avionics for a longer period of time? Certainly. 2 But the good faith and fair dealing duty “is not limitless.” West Run Student Housing Associates, LLC v. Huntington National Bank, 712 F.3d 165, 170 (3d Cir. 2013). It does not entitle contractors to extra-contractual benefits, or require the Government to take extra-contractual steps, simply because such generosity would be nice, even if gratuitous. See Excel Services, Inc., ASBCA 30565, 85-3 BCA ¶ 18,369, at 92,159 (duty to cooperate “does not obligate the Government to assist a contractor” outside the requirements of the contract “by taking positive actions” that the contract does not require). If the Government is not contractually obligated to do certain things, it is not financially liable – under a breach of contract theory – for failing to do them.

When entering into the IDIQ contract, CAE could have inserted language that permitted it to keep the avionics package if the Government cancelled the flight training program.  This way, it could have recouped its investment even after the Government cancelled its flight training program.

This opinion includes a detailed discussion on the Government’s duty of good faith and fair dealing.  Although it did not help CAE here, this doctrine is still alive and well.

Posted in Contract Disputes Act

In the Appeal of Bushra Company, ASBCA No. 59918 (April 22, 2016) , the Armed Services Board of Contract Appeals (“ASBCA”) dismissed a Contract Disputes Act appeal because it was filed more than 90 days after receipt of the Government’s termination for default.  The termination for default failed to include the appeal clause required by FAR 33.211(a)(3)(v).  This clause would have clearly informed the contractor of its right to appeal at the ASBCA within 90 days or Court of Federal Claims within one year.  This is what we would normally expect the Government to do.  This likely caused the contractor not to appeal on time.

The contractor failed to prove harm, however.  Specifically, the ASBCA held that “the contractor did not prove that termination for default’s failure to more precisely set forth the contractor’s appeal rights caused it actual prejudice.” In other words, the contractor did not alleged that it was misled by the Government’s failure to inform it of its right to appeal as required by the Federal Acquisition Regulations.

It is worth noting that the contractor represented itself pro se and likely lacked the sophistication to argue prejudice. The lesson learned is that whenever you get a written letter or determination by the Government, which refers to the disputes procedures in the Federal Acquisition Regulations, treat it as a final decision and appeal it in a timely fashion.  When in doubt, you can always ask the Government to clarify that a determination is, in fact, an appealable final decision.

Posted in Contract Disputes Act