ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of -- )
)
Ensign-Bickford Aerospace & Defense ) ASBCA No. 58671
Company )
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Under Contract No. DAAE30-03-C-1167 )
APPEARANCE FOR THE APPELLANT: John C. Person, Esq.
Person & Craver, LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq.
Army Chief Trial Attorney
Robert B. Neill, Esq.
Trial Attorney
OPINION BY ADMINISTRATIVE JUDGE THRASHER
ON THE GOVERNMENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION
The government moves to dismiss this appeal for lack of jurisdiction arguing the
appeal, which pertains to a termination settlement proposal (TSP) submitted following the
termination for convenience of the appellant's contract, is premature. Appellant contends
the Board retains jurisdiction to decide appellant's appeal.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION
1. On 26 September 2003, appellant, Ensign-Bickford Aerospace & Defense
Company (EBA&D) entered into Contract No. DAAE30-03-C-1167 (hereinafter "the
contract") with the U.S. Army Tank-Automotive and Armaments Command; Armament
Research, Development and Engineering Center ("TACOM-ARDEC"), Picatinny .
Arsenal, New Jersey (hereinafter the government) (R4, tab 1).
2. The contract is a cost-plus-fixed-fee type contract for the purchase of a Rapid
Wall Breaching Kit ("RWBK"), an Inert Trainer For Rapid Wall Breaching Kit
("IRWBK"), and a Force On Force Trainer For Rapid Wall Breaching Kit
("FOFT-RWBK") (R4, tab 1 at 4, 94-132).
3. Section I of the awarded contract incorporated by reference clauses FAR
52.233-1, DISPUTES (JUL 2002); FAR 52.243-2, CHANGES-COST-REIMBURSEMENT
(AUG 1987), ALTERNATE II (APR 1984); and FAR 52.249-6, TERMINATION
(COST-REIMBURSEMENT) (SEP 1996) (R4, tab 1 at 56-58).
4. On 16 December 2009, the contracting officer (CO) notified EBA&D that the
contract, in its entirety, was terminated under FAR clause 52.249-6, TERMINATION
(COST-REIMBURSEMENT), for the convenience of the government, effective that date
(R4, tab 53).
5. Settlement responsibility for the terminated contract was assigned to a
Defense Contract Management Agency ("DCMA") Termination Contracting Officer
("TCO") (R4, tab 54).
6. On 15 December 2010 EBA&D submitted its TSP in a letter addressed to the
TCO along with an SF 1437, Settlement Proposal for Cost-Reimbursement Type
Contracts, seeking a total of $1,653,557 (R4, tab 59). In addition to the SF 1437,
EBA&D enclosed a second certification page along with the TSP purporting to certify the
entire amount in the TSP pursuant to the Contract Disputes Act (CDA) and the Disputes
clause in the contract as the amount due the contractor (R4, tab 59 at 23). EBA&D
provided a copy of this correspondence by email to the Army CO in addition to the
DCMA TCO (R4, tab 59 at 1). The cover letter for the TSP states:
This document constitutes the termination settlement
proposal of Ensign-Bickford Aerospace and Defense
Company (EBA&D) under Contract DAAE30-03-C-1167
(the Development Contract) with the United States
Government (USG). The Contract required that EBA&D
perform certain enhancements to its standard Commercial
Off-The-Shelf (COTS) Rapid Wall Breaching Kit (RWBK).
Portions of this terminated settlement proposal arguably could
be characterized as being more properly the subject of a
certified claim under the Contract Disputes Act (CDA), as
such costs constitute extra work under the Development
Contract. Accordingly, EBA&D attaches the CDA
certification to this submission and copies the Contracting
Officer (CO) with this document in the event that the CO, in
consultation with the TCO, would rather re-characterize this
submission as a CDA certified claim. The signed
certification statement is included herewith at Tab 1.
(R4, tab 59 at 3) (Footnotes omitted)
7. The CO responded on 6 January 2011 stating in part, "Your termination
settlement includes language regarding a claim under the Contract Disputes Act. If you
wish any portion of your proposal to be considered a claim, you must submit that portion
in accordance with the Contract Disputes Act and FAR 52.233-1 Disputes." (R4, tab 60)
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8. EBA&D responded on 25 January 2011 addressing the possibility of separate
claims and separately submitted certification by stating:
EBA&D asserts that all costs presented in its
termination settlement proposal are sufficiently connected
with the USG's decision to terminate the contract for
convenience as to warrant inclusion in the settlement
proposal.. ..
If, at the conclusion of the negotiating process, the
PCO or the TCO determines that certain categories of claimed
costs are unallowable with respect to the termination decision,
EBA&D will then consider whether to package and present
those costs in a separate certified claim. Obviously, due to
the one-year time bar to the recovery of termination-related
costs, it was prudent to include in the settlement proposal all
pre-termination costs incurred by EBA&D.
(R4, tab 62 at 1-2) EBA&D repeated the same language in a letter to the CO on
11 March 2011 stating that its intent was not to present any claims until resolution of the
TSP (R4, tab 63 at 1-2).
9. Between July 2012 and May 2013 EBA&D and the TCO, Allan Grace, regularly
communicated and exchanged documents regarding the TSP (mot., exs. G-1- G-5).
10. On 20 May 2013, the TCO and Mitch Boggan, EBA&D's Contract
Administration Manager, discussed the TSP and the DCAA audit report in a telephone
conversation. Mr. Boggan expressed his view to the TCO that an impasse in negotiations
would result if the TCO would not agree to a settlement approximating the contractor's
request for a net payment in the amount of $1,653,557.00 and that EBA&D would file an
appeal with the Board. (Mot., ex. G-7)
11. On 22 May 2013, the TCO issued a letter to EBA&D stating:
It is apparent that negotiations will not close the gap between
our two positions, accordingly, Ensign-Bickford Company
shall have 15 days in which to submit any additional
information it wishes me to consider before I issue a final
decision in this matter. Please consider this letter the 15-day
letter required by FAR 49 .109-7(b ). Prior to COB June 6,
2013 please submit any additional written evidence you wish
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me to consider that substantiates the amount previously
proposed before a final determination is issued.
(R4, tab 71)
12. The next day, on 23 May 2013, EBA&D filed its notice of appeal with the
Board, declaring an impasse and that it was appealing the 15 December 2010 claim as
included in the submittal of its TSP (mot., ex. G-8).
13. There is no evidence in the record that EBA&D provided any additional
information to the TCO in response to the TCO's 22 May 2013 "15-day letter."
14. On 18 July 2013, the TCO transmitted to EBA&D by email an offer to settle
the government's termination liability for the contract in the amount of $312,269.00
(mot., ex. G-9). There is no evidence in the record EBA&D responded to the TCO's
offer.
DECISION
Was the TSP a Cognizable CDA Claim When Submitted?
The government moves to dismiss this appeal for lack of jurisdiction on the ground
that appellant's TSP was not a claim within the meaning of the CDA when it was
submitted, and it had not ripened into a claim prior to appellant's filing of its notice of
appeal (gov't mot. at I). Appellant argues in response that its CDA-certified TSP was a
"claim" within the meaning of the CDA because it was a '"non-routine submission' by
EBA&D [and] was (1) a written demand; (2) seeking as a matter of right; (3) the payment
of money in a sum certain." Citing Rex Systems, Inc. v. Cohen, 224 F.3d 1367, 1371-72
(Fed. Cir. 2000) (app. opp'n at 6).
In addition, appellant noted in support of its argument, that its "CDA-certified
[TSP] included a number of actionable claim items or bases for recovering additional
costs" (app. opp'n at 6). The government argues that the fact the TSP was certified at the
time of submittal does not convert the TSP into a CDA claim until the parties reach
impasse (gov't reply at 5).
We disagree with appellant that its TSP met the criteria of a CDA claim when
submitted. It is well established that a TSP is not a CDA claim when submitted to the
CO even though it otherwise meets the requirements of the CDA; a TSP is not submitted to
the CO for a final decision but is instead submitted for purposes of negotiation. James M
Ellett Construction Co. v. United States, 93 F.3d 1537, 1543-44 (Fed. Cir. 1996). Only
after the negotiations reach an impasse, at a point where the contractor demands a final
decision, does the TSP become a CDA claim. Ellett, 93 F .3d at 1544.
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We also disagree with appellant concerning the certification issue. The fact that
the TSP includes a CDA certification at the time of submittal does not change this rule.
See Voices R Us, Inc., ASBCA Nos. 51565, 52307, 01-1BCA,31,328 at 154,748 (citing
Ellett, 93 F.3d at 1543-44). It is unclear from appellant's argument whether its reference
to "separate actionable" claims is intended to propose the existence of such claims might
somehow convert the TSP as a whole to a CDA claim at the time of submittal or that
these claims survive as viable CDA claims before the Board (app. opp'n at 6). In either
event, we reject both arguments under the facts of this appeal.
Regarding the possibility that separate claims might convert the TSP into a CDA
claim at time of submittal, appellant relies upon language in ePlus Technology, Inc.
v. Federal Communications Commission, CBCA No. 2573, 12-2 BCA, 35,114 at
172,43 5: "Further, we find no applicable precedent prohibiting a contractor from
presenting its termination for convenience settlement proposal and at the same time
fashioning the proposal as a CDA claim" in support of its argument (app. opp'n at 6).
The government counters that appellant's reliance upon ePlus Technology is misplaced
because the facts in ePlus Technology are distinguishable from the facts of this appeal
(gov't reply at 5-6). We agree with the government. The ePlus Technology decision
involved a contract for commercial items and did not include a FAR Part 49 termination
for convenience clause. The Civilian Board in ePlus Technology noted there was no
agreement between the parties to follow the settlement process mandated by FAR Part 49
requiring the contractor to submit its TSP and negotiate it until impasse was reached.
ePlus Technology, 12-2 BCA, 35, 114 at 172,436. In contrast, here the parties have
agreed to the FAR Part 49 process and, as already discussed, appellant's TSP would not
ripen into a CDA claim until the parties reach impasse (SOF, 3).
In addition, the record does not support a finding there are separate claims within
the TSP that would survive as separate claims in this case. Appellant identified this
possibility in its TSP submittal and the CO immediately informed appellant that if it
intended any portion of its proposal to be considered a claim it must do so in accordance
with the CDA (SOF , 7). Appellant responded that it was not its intent to present any
claims until resolution of the TSP (SOF, 8).
We conclude appellant's TSP was not a cognizable CDA claim when submitted.
Was there an Impasse Giving Rise to a Cognizable CDA Claim?
The determination of whether the parties have reached an impasse is an inherently
factual determination. It is the point where an objective observer would conclude that
resolution through continued negotiation is unwarranted or has been abandoned by the
parties and the contractor desires a final decision. See Central Environmental, Inc.,
ASBCA No. 51086, 98-2 BCA, 29,912 at 148,080; Rex Systems, 224 F.3d at 1372-73.
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However, impasse is not synonymous with dispute. An impasse can exist without either
party taking a firm position in opposition to the other; it can occur by the passage of time
without resolution when one party evidences a desire to begin the disputes process, refusal
to further negotiate, a request to the CO to settle, a unilateral determination by the CO, etc.
See Ellett, 93 F.3d at 1544; Rex Systems, 224 F.3d at 1372; Central Environmental, 98-2
BCA ~ 29,912 at 148,080. Likewise, there need not be an explicit request for a final
decision in this context if such request can be implied from the context of the submission.
Rex Systems, 224 F.3d at 1372 (citing Ellett, 93 F.3d at 1543).
The government argues the TSP did not ripen into a claim, i.e., the parties had not
reached an impasse, prior to appellant's notice of appeal (gov't mot. at 12). Appellant
argues that the TCO's email on 22 May 2013 is objective evidence that further
negotiations would be fruitless and an impasse had been reached (app. opp'n at 7-10).
That email stated:
It is apparent that negotiations will not close the gap between
our two positions, accordingly, Ensign-Bickford Company
shall have 15 days in which to submit any additional
information it wishes me to consider before I issue a final
decision in this matter. Please consider this letter the 15-day
letter required by FAR 49.109-7(b). Prior to COB June 6,
2013 please submit any additional written evidence you wish
me to consider that' substantiates the amount previously
proposed before a final determination is issued.
(SOF ~ 11)
We conclude the parties did reach an impasse on 22 May 2013. By that date the
parties had been in negotiations for over two and half years (SOF ~~ 6, 9). On 20 May
2013 the parties discussed the settlement proposal and appellant told the TCO the
settlement amount would have to be close to the proposed amount or there would be an
impasse in the negotiations and appellant would pursue the disputes process (SOF ~ 10).
We view the email on 22 May 2013 as confirmation from the government that it
considered the negotiations at an impasse and intended to issue an appealable settlement
by determination final decision (SOF ~ 11 ). Therefore, we conclude the parties were at
an impasse on 22 May 2013 and appellant's proposal had ripened into a claim submitted
for decision.
Was the Appeal Premature?
The government also contends, in the alternative, that even ifthe TCO's letter of
22 May 2013 evidenced the parties had reached an impasse converting the TSP into a
claim, appellant's 23 May 2013 notice of appeal was still prematurely filed. The
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government's position is that ifthe TSP was converted into a claim on 22 May 2013, it
was submitted on that date for a decision by the CO. As a result, both the CDA and the
FAR provide that the CO is accorded a reasonable time to either issue a final decision or
inform appellant when such a decision will be issued in cases such as this. (Gov't reply
at 7-8)
Appellant argues the record plainly demonstrates that the parties had reached an
impasse in their negotiations over EBA&D's TSP before EBA&D filed its notice of
appeal, and this impasse constituted a "deemed denial"of the claim that EBA&D had
submitted on 15 December 2010 citing Central Environmental (app. opp'n at 10).
We agree with the government that appellant's reliance on Central
Environmental is misplaced and the facts here do not meet the criteria of a deemed
denial. The CDA, as amended, states the law governing the deemed denial of a
contractor's claim as follows:
(5) FAILURE TO ISSUE DECISION WITHIN REQUIRED
TIME PERIOD. --Failure by a contracting officer to issue a
decision on a claim within the required time period is deemed
to be a decision by the contracting officer denying the claim
and authorizes an appeal or action on the claim as otherwise
provided in this chapter. However, the tribunal concerned
may, at its option, stay the proceedings of the appeal or action
to obtain a decision by the contracting officer.
41 U.S.C. § 7103(f)(5).
The CDA and the FAR provide that the CO shall issue decisions on submitted
claims within a reasonable time, taking into account the size and complexity of the claim,
the adequacy of the contractor's supporting data, and any other relevant factors.
41 U.S.C. § 7103(1)(3); FAR 33.21 l(d). In addition, both the CDA and the
FAR mandate in cases such as this, involving a certified claim over $100,000, that the
CO is allowed up to 60 days to issue a final decision or inform the contractor of a
reasonable date upon which a decision will be issued. See 41 U.S.C. § 7103(f)(2); FAR
33.21 l(c)(2).
We conclude the parties reached an impasse and the proposal ripened into a claim
submitted for decision on 22 May 2013. At that point, the TCO had 60 days to issue a
decision or inform the contractor of a reasonable date upon which a decision would be
issued. Here the TCO, as directed by FAR 49.109-7(b), provided appellant with notice
on 22 May 2013 that he would issue a final decision (settlement determination) and
provided appellant with 15 days to submit any written evidence for his consideration
before issuing a final decision (SOF ii 11). Instead of waiting for a final decision,
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appellant filed its "deemed denial" appeal the next day, 23 May 2013 (SOF ~ 12). We
conclude the TCO's statement on 22 May 2013 was not a deemed denial and appellant's
appeal was premature. Although appellant's appeal was premature on 23 May 2013, a
reasonable period of time has now passed and the CO has yet to issue a final decision. As
we have stated under similar circumstances: "[W]hen at the time we consider a motion to
dismiss, an unreasonable period of time has elapsed, no useful purpose would be served
by dismissing an appeal and requiring appellant to refile." Fru-Con Construction Corp.,
ASBCA No. 53544, 02-1BCA~31,729 at 156,757. To dismiss this appeal now would
be "inefficient and an elevation of form over substance." Cessna Aircraft Co., ASBCA
No. 43196, 92-1 BCA ~ 24,425 at 121,909. Therefore, we retain jurisdiction.
CONCLUSION
The government's motion to dismiss for lack of jurisdiction is denied.
Dated: 5 May 2014
inistratlve Judge
Armed Services Board
of Contract Appeals
I concur I concur
#~~
MARKiiSTEMPLER RICHARD SHACKLEFORD
Administrative Judge Administrative Judge
Acting Chairman Vice Chairman
Armed Services Board Armed Services Board
of Contract Appeals of Contract Appeals
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I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 58671, Appeal of
Ensign-Bickford Aerospace & Defense Company, rendered in conformance with the
Board's Charter.
Dated:
JEFFREY D. GARDIN
Recorder, Armed Services
Board of Contract Appeals
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Ensign-Bickford Aerospace & Defense Company
Combined Opinion