ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of - )
)
Nassar Group International ) ASBCA Nos. 58451, 59465, 59701
)
Under Contract No. W917PM-07-C-0085 )
APPEARANCE FOR THE APPELLANT: Francisco Escalante, Esq.
Escalante Yormack Law, PLLC
Miami, FL
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.
Engineer Chief Trial Attorney
. James D. Stephens, Esq.
Tania Wang, Esq.
Engineer Trial Attorneys
U.S. Army Engineer District, Middle East
Winchester, VA
OPINION BY ADMINISTRATIVE JUDGE SWEET
ON THE PARTIES' MOTIONS FOR SUMMARY JUDGMENT AND IN LIMINE
These appeals involve disputes arising out of a contract between the Army
Corps of Engineers (Corps or government) and appellant Nassar Group International
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to design and build a garrison in Afghanistan. The government claims that appellant
used defective concrete, and that its failure to install ground conductors was a latent
defect. Appellant claims that it is entitled to an equitable adjustment for increased
costs it allegedly incurred due to tax exemption and customs delays, security and
political delays, and weather delays.
Appellant has filed four motions in limine. In the first motion in limine,
appellant moves to exclude evidence relating to the allegedly defective concrete on
spoliation grounds. Appellant argues that the government destroyed concrete samples
during testing. We deny appellant's first motion in limine because other samples were
available.
In its second motion in limine, appellant seeks to exclude evidence about th~
ground conductors. Appellant argues that the .government knowingly accepted
appellant's use of an alternative system. We deny appellant's second motion in limine
because there is a genuine dispute as to whether the government knowingly accepted
appellant's use of an alternative system;
In its third motion in limine, appellant seeks to have us deem its request for
admissions (RF As) admitted. Appellant argues that the government failed to provide a
response to the RF As within 45 days of service. We deny appellant's third motion in
limine because appellant did not serve the RF As on time, many RF As seek st.atements
of opinion or law, and appellant did not suffer any prejudice from the government's
late responses.
In its fourth motion in limine, appellant seeks for us to take judicial notice of
certain facts. We deny appellant's fourth motion in limine in part, and grant it in part.
Appellant then moves for summary judgment on the government's claims.
Appellant argues that, if we grant its first three motions in limine, that would leave no
genuine issue of material fact, and appellant would be _entitled to judgment as a matter
oflaw. We deny appellant's motion for summary judgment on the government's
claims because we deny appellant's first three motions in limine.
Appellant also moves for summary judgment on its claims. Appellant argues
that, if we grant its third motion in limine, then the deemed RF A admissions would
leave no genuine issues of material fact, and it would be entitled to judgment as a
matter of law. Appellant further argues that it was impossible to complete the contract
within the period of performance. We deny appellant's motion for summary judgment
on its claims because we deny its third motion in limine, and we do not possess
jurisdiction over its impossibility claim.
Lastly, the government moves for summary judgment on appellant's claims.
The government argues that appellant is not entitled to an equitable adjustment for the
increased costs resulting from purported delays because the government did not cause
some delays, various contract clauses preclude an equitable adjustment, appellant
could have avoided those costs, the government's acts were sovereign acts, and
appellant has not submitted a Critical Path Method (CPM) analysis. We deny the
government's motion for summary judgment on appellant's claims to the extent that
those claims are based upon government caused delays, and grant the motion to the
extent appellant's claims are based upon non-government caused delays.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS
I. F actuafBackground
A. The 0085 Contract
~- On October 23, 2007, the government awarded Contract No. W917PM-07-C-0085
(0085 Contract) to appellant for the design and construction of the Afghan National Army
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(ANA) Garrison at Khair Kot, Paktika Province, Afghanistan (R4, tab 10 at 1-2). 1 As part of
the construction, the 0085 Contract required that "[i]nsulated grounding conductors ... shall
. be installed in all feeder and branch circuit raceways" (id. at 137). The 0085 Contract was a
firm-fixed-price contract (id. at 3-33).
2. The 0085 Contract incorporated by reference several standard Federal
Acquisition Regulation (FAR) clauses (id. at 33-35). First, it incorporated
FAR 52.242-14, SUSPENSION OF WORK (APR 1984) (id. at 35), which provides:
If the performance of all or any part of the work is, for an
unreasonable period of time, suspended, delayed, or
interrupted ( 1) by an act of the Contracting Officer in the
administration of this contract, or (2) by the Contracting
Officer's failure to act within the time specified in this
contract (or within a reasonable time if not specified), an
adjustment shall be made for any increase in the cost of
performance of this contract (excluding profit) necessarily
caused by the unreasonable suspension, delay, or
interruption .... However, no adjustment shall be made
under this clause for any suspension, delay, or interruption
to the extent that performance would have been so
suspended, delayed, or interrupted by any other cause,
including the fault or negligence of the Contractor ....
FAR 52.242.,14(b)
3. Second, the 0085 Contract incorporated FAR 52.229-6, TAXES - FOREIGN
FIXED-PRICE CONTRACTS (JUN 2003), which stated that the contract price generally
jncluded all applicable taxes and duties, and would be increased by the amount of any
tax excluded by the contract (R4, tab 10 at 34; see generally FAR 52.229-6(c-d)).
FAR 52.229-6(i) required that "[t]he Contractor shall take all reasonable action to
obtain exemption from or refund of any taxes or duties[.]" Pursuant to Defense
Federal Acquisition Regulation (DFAR) 252.229-7001, the 0085 Contract expressly
stated that "[t]he Contractor may obtain a refund of the import duties from its
government or request the duty-free import of an amount of supplies or components
corresponding to that used from inventory for this contract" (id. at 46).
4. Third, the 0085 contract incorporated FAR 52.247-34, F.0.B. DESTINATION
(Nov 1991), which provided that "[t]he Government shall not be liable for any
delivery, storage, demurrage, accessorial, or other charges involved before the actual
delivery ... of the Supplies to the destination, unless such charges are caused by an act
1
Citations to page numbers are to Bates Numbers in the Rule 4 file.
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or order of the Government acting in its contractual capacity" (R4, tab 10 at 35;
FAR 52.247-34(a)(2)).
5. The 0085 Contract also contained several special provisions. First, the 0085
Contract made appellant responsible for site security; the physical security of all
materials, supplies, and equipment; and attacks from hostile entities (R4, tab 10 at 53,
· 148, 165). As the 0085 Contract stated, "[t]he Government makes no guarantee to
provide the contractor with security, and bears no obligation to reimburse the
contractor for costs arising from the attacks of hostile entities'' (id. at 165).
6. Second, the 0085 Contract authorized the contracting officer (CO) to extend
the time for performance - but not to adjust prices - due to unusually severe weather
delays (R4, tab 10 at 161).
7. Third, the 0085 Contract indicated that "[c]ompliance with all customs and
import rules, regulations and restrictions" is appellant's sole responsibility (id. at 162).
The 0085 Contract further stated that:
It is the responsibility of the contractor to be
knowledgeable of and to abide by any and all applicable
customs clearance procedures and requirements that may
be necessary for the transportation of supplies and
equipment into Afghanistan .... The US Army Corps of
Engineers, Afghanistan Engineer District, neither controls
nor is responsible for any such customs clearance
procedures, requirements, or changes thereto.
(Id. at 165)
8. Fourth, the 0085 Contract required a final acceptance inspection. The 0085
Contract also required that, at least 14 days prior to the inspection, appellant give the
CO notice assuring him that all specific items previously identified as being
unacceptable will be completed and acceptable by the final acceptance inspection (R4,
tab 10 at 224).
B. Performance
9. Pursuant to the Status of Forces Agreement between the government and the
Islamic Republic of Afghanistan (Afghanistan), goods imported into Afghanistan for
the exclusive use of the government are not subject to taxes (R4, tab 43 at 25). In
order to ensure that the government did not abuse that tax exemption, the government
issued a Standard Operating Procedure (SOP) for Customs Clearance Request
Operations, which outlined the process of obtaining tax exemptions (id.; R4, tab 42;
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see SOF 17). Under the SOP, the contracting officer representative (COR) would
email a Customs Clearance Request (CCR) for a Diplomatic Note to the Department of
Defense Liaison Officer (LNO) at the United States Embassy (!3-4, tab 42 at 21). The
LNO would then issue a Diplomatic Note requesting tax exemption, which certified
that the goods were for the exclusive use of the United States (R4, tab 43 at 25).
Appellant then had to take the CCR, Diplomatic Note, and other documents to the
Afghanistan Ministry of Foreign Affairs (MoFA) and Customs at the Ministry of
Finance (MoF) to obtain stamps and signatures (id. at 26; R4, tab 42). The SOP
required that the LNO,. "[o]n behalf of DOD, liaise with the Director General of
Customs, MoFA and the representatives of the MoF" (R4, tab 43 at 33). The LNO
also had to "[a]ssist contractors and CORs when issues arise preventing the clearance
of cargo" (id.). Once approved by Afghanistan, the imports could clear Cust~ms and
be released for final delivery (R4, tabs 42-43).
10. According to a table submitted with appellant's claim and contemporaneous
emails, it usually took the government a week or two to provide Diplomatic Notes.·
However, in five instances it took more than a month. 2 The table also showed that
Afghanistan was slow processing tax exemption requests. (R4, tabs 50; 51 at 499, 516,
520, 525)
11. On February 10, 2010, appellant emailed the Corps, stating that letters from
the Embassy would expedite the shipment of two transit mixers (R4, tab 52 at 540-42).
The Corps responded the same day that it would follow-up with the Embassy (id.).
The following day, the Corps asked appellant to prepare a letter to the United States
Consulate·in Karachi, Pakistan (id. at 544). The Consulate responded on February 14,
2010, stating that the delays were due to the shipping agent (id. at 554).
12. George Nassar- appellant's General Manager- submits an affidavit
declaring that the government required appellant to provide site-access to "various
entities," including the ANA. Those entities purportedly caused delays by
compromisii.'lg the security of appellant's persoru1el, and disrupting operations. (App.
summ. judg. resp., ex. 1 ,124-25)
13. Appellant also alleged that various security and political circumstances
delayed performance (R4, tab 41 at 3). There is no evidence that the government
caused those circumstances in its contractual capacity.
2
In particular, it took more than a month to issue Diplomatic Notes for Bills of Lading
Nos. SAFM752167246, BHBAHPKHl 1000064, APLU020950805,
MISCDMN000007411, and ESl 1070067 (R4, tab 50).
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14. Appellant alleged that the above delays pushed the delivery of certain
goods into a period of "unusually severe weather," and "record-breaking rainfall"
(ASBCA No. 58451 compl. at 15).
15. Mr. Nassar also declared that "[i]f called to testify, it would be my
testimony that the delays caused by the paperwork and subsequent·issues discussed
throughout this affidavit, went to the critical path of the project" (app. summ. judg.
resp., ex. 1 ~ 30). In support of that assertion, Mr. Nassar declares that appellant
provided and updated schedules, using the CPM, during the project (id.~ 33). He
further declares that the overall project delay was due to government caused critical
path delays, and not to any fault of appellant (id.~ 34).
16. In 2009 and 2010, appellant tested the concrete it had installed (app. supp.
R4, tabs 241-42).
17. On November 15, 2010, the government conducted an inspection of
appellant's electrical work on the project, and prepared an electrical inspection report
(app. supp. R4, tab 244). The report noted that "[t]here is a great amount of electrical
work that still needs to be performed[] in order to complete the work in 30 days" (id.
at 2). The report also stated that "[t]he bellow [sic] picture indicates something that
should be addressed immediately, as to limit any further delay" (id.). The report then
reproduced a picture purporting to show a missing ground conductor (id.). Thereafter, ·
the government's electrical engineer sent an email on January 29, 2011, discussing his
concern with the lack of ground conductors (app. supp. R4, tab 249 at 1). There is no
evidence appellant submitted a notice that it corrected that deficiency, or that ther~ was
a final inspection.
18. In July and August 2013, the government tested 54 concrete samples,
destroying the samples in the process (app. supp. R4 tab 237). There is no evidence
that the government used anything other than industry standard procedures for
conducting the tests.
11 Procedural History
19. On March 16, 2012, appellant submitted a certified claim to the
government (R4, tab 41). Appellant's claim sought an equitable adjustment for the
demurrage, detention, replacement rental equipment, and increased overhead costs it
purportedly incurred as a result of tax exemption and customs delays, security and
political delays, and weather delays (id. at 2-4). The claim contained no factual
allegations regarding whether it was possible to perform the 0085 Contract within the
period of performance (id.). ·
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20. On September 12, 2012, the CO issued a final decision (COFD) denying
appellant's claim in its entirety (R4, tab 2).
21. On December 11, 2012, appellant filed a notice of appeal with the Board,
which we docketed as ASBCA No. 58451.
22. On April 17, 2014, the CO sent appellant a demand for payment for
concrete and electrical work deficiencies (R4, tab 234 at 4-7).
23. On May 5, 2014, appellant submitted a response to the CO's demand for
payment (R4, tab 235). Appellant's response requested a COFD regarding the demand
(id. at 1).
24. On August 7, 2014, appellant filed a notice of appeal with the Board on the
basis of a deemed denial, which we docketed as ASBCA No. 59465.
25. On November 19, 2014, the CO issued a COFD, asserting a government
claim for concrete and electrical work deficiencies (R4, tab 219 at 1).
26. On November 21, 2014, appellant filed a notice of appeal with the Board,
which we docketed as ASBCA No. 59701.
27. On November 18, 2015, the Board issued a Revised Prehearing Scheduling
Order. Under that order, the parties had to exchange expert reports by July 29, 2016.
The order required the parties to comply with the expert witness disclosure and report
requirements of Federal Rule of Civil Procedure 26(a)(2). Moreover, discovery closed
under the order on September 30, 2016. Appellant did not seek an extension of that
deadline.
28. According to an affidavit from Mr. Nassar, appellant sent an employee to
the garrison to obtain a concrete sample in the spring of 2015. While he contends that
appellant attempted to coordinate access beforehand, he does not specify how. The
ANA denied appellant access. (App. reply in support of mot. in limine for spoliation,
ex. A)·
29. On August 13, 2016, appellant requested that the government assist
appellant in obtaining access to the garrison so appellant could collect concrete
samples (gov't first mot. in limine resp. ex. B). In a September 15, 2016 email,
appellant stated that it was "working on the list of attendees for the Afghanistan visit
and some suggested dates" (id. at ex. C). It is unclear whether the September 15, 2016
email was even a following-up on its August 13, 2016 request for assistance in
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obtaining garri.son access. Even assuming it was, there is no evidence that appellant
provided the government a list of attendees or suggested dates. 3
30. On August3 i, 2016 - less than 45 days before the September 30, 2016
discovery deadline-appellant served RF As on the government (app. combined
motions, ex. A). 4 Some of the RF As sought statements of opinion or law. For
example, paragraph 25 requested that the government "[a]dmit or deny that [appellant]
is entitled to a judgment for and to recover damages in the amount of $8,774,283.84
for the breaches discussed in [paragraphs] 10 through 24" (id. at 3). Similarly,
paragraph 32 requested that the government '"[a]dmit or deny that [appellant] is
entitled to recover $8,774,283.84 for the breaches discussed in paragraphs 25 through
31" (id. at 4). The government did not respond to the RFAs
1
until its Third Motion in
Limine Response (gov't third mot. in limine resp. at 2-3). Appellant has not shown
prejudice from those late RF A responses.
31. Appellant submitted its witness list. That witness list did not identify
Mr. Nassar as an expert (Bd. corr.