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CBCA Awards Contractor $904,575.00 in Restocking Fees

Posted on February 3rd, 2017 by

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.

Final Payment Did Not Bar Filing of a Claim

Posted on January 2nd, 2017 by

 

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.

An Oral Government Contract Can Exist

Posted on August 17th, 2016 by

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.

ASBCA Tosses Contractor Claim as Untimely

Posted on May 3rd, 2016 by

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.

Appeal of Final Decision Timely Even Though Filed After 90 Days

Posted on October 13th, 2015 by

In Safe Haven Enterprises, LLC, CBCA 3871, 3912 (September 29, 2015), the Civilian Board of Contract Appeals ruled that a contractor’s appeal under the Contract Disputes Act was timely even though filed after 90-days. The Board held that the 90-day appeal period restarted when the Contracting Officer offered to reconsider his final decision.  The Board noted that the Federal Acquisition Regulations do not provide guidance on this issue and whether the 90-day period should restart is dependent on the facts unique to each case. The Board then employed a reasonable person standard:

Without FAR guidance, the determination of whether a contracting officer’s actions in response to a reconsideration request are sufficient to suspend an appeal deadline is “driven by facts unique to each case and is necessarily ad hoc.” Omni Abstract, 96-2 BCA at 141,643. To make that determination, the Board must look for some timely affirmative conduct by the contracting officer himself – either express or implied – that indicates to the contractor a willingness to revisit the previously issued “final decision“ and it is the [contracting officer’s] agreement to reconsider that triggers the extension.” Merritt Lumber Co., AGBCA 88-313-1, et al., 89-2 BCA ¶ 21,676, at 109,009.

“An objective test invokes the reasonable person standard, not whether authorized representatives of [the contractor], interested as they were, subjectively thought the decision was being reconsidered.” Omni Abstract, 96-2 BCA at 141,643.

Applying the above standard, the Board held that the 90-day period restarted when the Contracting Officer first made it clear that he was no longer going to reconsider his final decision. The Board held that on that date the Contracting Officer “constructively reinstated the previously issued final decision.” The appeal was timely since it was filed within 90-days from this date.  This case provides a comprehensive discussion of the finality doctrine under the Contract Disputes Act.  As a matter of practice, a contractor should always file an appeal within the CDA time limits and avoid disputes later over whether a final decision was retracted or under “reconsideration.”

ASBCA Says Contractor’s CDA Claim is Defective

Posted on October 4th, 2014 by

ASBCA rejects a contractor/joint venture’s claim for lack of jurisdiction because it did comply with Contract Disputes Act (“CDA”).  Specifically, the CDA requires that: (1) the contractor must submit the demand in writing to the CO, (2) the contractor must submit the demand as a matter of right, and (3) the demand must contain a sum certain.  In the PHA-JMR case, the ASBCA held that the contractor’s CDA claim did not meet the CDA requirements because it requested “at least $173,831.00″ for extended overhead.  The ASBCA held that this is not a “sum certain” as required by the CDA.  The ASBCA also held that the person signing the claim did not have the authority under the joint venture agreement to do so.  The ASBCA dismissed the appeal for lack of jurisdiction and recommended that the contractor resubmit a proper claim to the Contracting Officer and to “to pay particular attention to who is signing claims and certifications, and in what capacity they are signing.”  Good advice.

Appeal of — PHA-JMR JV, ASBCA No. 59032 (August 1, 2014)

 

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