ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of -- )
)
Harry Pepper and Associates, Inc. ) ASBCA Nos. 62038, 62039, 62040
) 62041, 62042
Under Contract No. NNS14AA30T )
APPEARANCES FOR THE APPELLANT: David W. Mockbee, Esq.
D. Wesley Mockbee, Esq.
Mockbee Hall & Drake, P.A.
Jackson, MS
APPEARANCES FOR THE GOVERNMENT: Scott W. Barber, Esq.
NASA Chief Trial Attorney
Jeffrey A. Renshaw, Esq.
Shannon A. Sharkey, Esq.
Trial Attorneys
Stennis Space Center, MS
OPINION BY ADMINISTRATIVE JUDGE THRASHER ON THE
GOVERNMENT’S MOTION FOR PARTIAL SUMMARY JUDGMENT AND
MOTION TO DISMISS FOR LACK OF JURISDICTION
The National Aeronautics and Space Administration (NASA or government)
filed a motion for summary judgment on Harry Pepper & Associates’ (HPA’s or
appellant’s) sixth claim for relief, which is based on the theory of a cardinal change.
Though NASA styles its motion as one for summary judgment, it is aimed at one of
the several theories behind each of the appeals, and would not result in disposal of any
of the appeals at issue even if successful. Thus, the Board considers it to be a motion
for partial summary judgment. We find NASA has shown that appellant has not
alleged facts sufficient to constitute a cardinal change, and appellant fails to either
show material facts in dispute or meaningfully rebut NASA’s argument.
In the alternative, NASA argues that we lack jurisdiction because this claim
was not submitted to the contracting officer (CO) with a sum certain. But the Board’s
review of HPA’s claims demonstrates otherwise.
STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS
We previously issued a decision resolving the parties’ cross motions for
summary judgment related to Counts I-V of appellant’s complaint. Familiarity with
that decision and the facts discussed therein is presumed. However, we will reiterate
several relevant facts here for clarity.
1. NASA awarded Contract No. NNS12AA84B, a multiple award construction
contract to HPA on August 3, 2012. This contract included the following relevant
clauses: FEDERAL ACQUISTION ACT (FAR) 52.233-1, DISPUTES (JUL 2002);
FAR 52.236-2, DIFFERING SITE CONDITIONS (APR 1984); and FAR 52.243-4,
CHANGES (JUN 2007). (R4, tab 1 at 16, 38-39) On January 9, 2014, NASA awarded
HPA Task Order NNS14AA30T (TO) for restoration of the B2 Test Stand at the John
C. Stennis Space Center, MS, valued at $36,577,459. This involved relocation of the
Main Propulsion Test Article (MPTA) Superstructure, reinforcement of Battleship
Point 1, and other tasks (R4, tab 2 at 94-95). On February 7, 2014, NASA issued HPA a
Notice to Proceed, which HPA acknowledged the same day. This document indicated
all work was to be completed by March 14, 2015 (R4, tab 3 at 132).
2. As part of its bid, HPA says it assumed “a maximum of 1/8" of movement”
of the structure due to thermal variations during the restoration work (R4, tab 46
at 2325). HPA also provided a Quality Assurance Plan, which mandated that one HPA
representative would be solely responsible for a three-phase inspection approach:
“preparatory, initial, and follow-up inspection[s].” At the initial phase, “[i]f the
quality of the work is found to be nonconforming the work will be removed and
replaced” and during the follow-up phase, “[n]on-confirming work found during these
inspections will be removed and replaced.” (R4, tab 55f at 3425)
3. As part of the reinforcing of Battleship Point Loads “during the MPTA
move and afterwards,” work which was designated by Engineering Modification
Instructions (EMI) 12NCBZ-20 (EMI 20), the TO required installation of 28 wide
flange steel shapes cut into two “T” shapes, referred to as “WTs.” Section 01 11 00 of
Specification 200HF-G013, paragraph 1.1.3 stated “some of [these] will be installed
by lowering them through temporary holes in the battleship top plate.” (R4, tab 18
at 1694)
4. HPA submitted welding procedures specifications to NASA, dated April 29,
2014, which River City Erectors (RCE), a subcontractor, had proposed as part of its
work on EMI 20. These procedures proposed minimum preheat and interpass
temperatures for welding various joints based on the thickness of the steel, and are
listed as follows: 1/8” – 3/4” is 32º; 3/4” – 1 1/2” is 50º; 1 1/2” – 2 1/2” is 150º; and
over 2 1/2” is 225º. No post weld heat treatment was anticipated. (R4, tab 56g
at 3513, 3518-20)
1 The “Battleship” was not an actual battleship, but was a frame used to support a
rocket booster to be tested on the B2 Test Stand.
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5. EMI 18, 19, and 20 all contain drawings titled Drawing G-001 which, while
different drawings, contain similar General Notes. General Note 2, the same in all
three drawings, states “[t]he contractor shall field verify existing conditions,
dimensions, and elevations before proceeding with the work. Any discrepancies
between the contract documents and the actual field conditions must be reported
immediately.” General Note 8 states “[t]his design is based on the original drawings,
calculations and specifications prepared for the original construction in the 1960s and
subsequent field observations by the current design team. . . . Notify the NASA COR
[Contracting Officer Representative] if actual conditions differ from the original
documents as modified to an ‘As-Built’ condition in 2011.” (R4, tab 4 at 165, tab 5
at 189, tab 6 at 257)
6. HPA submitted Request for Equitable Adjustment (REA) 1 on June 29,
2015, requesting compensation for relocation of the WTs and additional welding and
trimming of WTs in the Battleship (app. supp. R4, tab 18 at 477-79). HPA submitted
REA 4 on January 11, 2016, requesting compensation for the changes from Request
for Information (RFI) 62’s revision and 62A’s clarification changing Partial Joint
Penetration welds to Complete Joint Penetration welds, then to use of a diamond plate.
This work was detailed in Field Change Request 37, which HPA stated had been
denied. (App. supp. R4, tab 20) HPA supplemented both REAs on July 5, 2017, and a
fourth compensation request was added for the cost of bringing the WTs into the
Battleship via the north entrance rather than lowering them through a temporary hole
in the top plate (app. supp. R4, tab 23c at 634-36).
7. Appellant later resubmitted REAs 1 and 4 as certified claims on
December 19, 2018, requesting $2,687,848.40 and a 90-day extension, which NASA
subsequently denied (R4, tabs 48, 53). This denial was timely appealed and docketed
as ASBCA No. 62038.
8. HPA submitted REA 9, dated July 5, 2017, for changing
welding procedures on all of the MPTA baseplate
reinforcement doubler plates . . . to meet the revised
welding requirements specified by NASA for the first time
in response to HPA RFI #146A. This extra work was
necessary due to the excessive size of the fillet weld gaps
between the existing columns and the new MPTA
baseplate reinforcement doubler plates.
(App. supp. R4, tab 29b at 1379) This REA requested $852,884.98 (id. at 1376).
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9. HPA submitted REA 10, also dated July 5, 2017, for the
extensive weld repair work required because of NASA’s
defective design directive on how to bevel and back bevel
the plates which created voids that had to be reworked
because of NASA’s defective design, and because of
NASA’s failure to detect the two (2) bolts put in the welds
by a disgruntled [HPA] employee to slug the welds. Per
NASA’s Quality Control responsibility, NASA was
obligated to have an inspector inspect each weld during the
entire welding process of each weld.
(App. supp. R4, tab 34c at 1815) This REA requested $3,234,428.58 (id. at 1816).
10. HPA submitted a certified claim dated December 19, 2018, reiterating the
basis for and incorporating REA 9, and requesting $1,127,909.37 and a 29-day time
extension (R4, tab 49 at 3039-40). Another certified claim, dated December 19, 2018,
reiterated the basis for and incorporated REA 10, and requested an additional
$4,281,841.69 and a 39-day time extension beyond that paid under Mod. 44 (R4,
tab 50 at 3053-54). The CO issued two Final Decisions (COFDs), both dated
March 27, 2019, denying these claims in their entirety (R4, tabs 54-55). HPA timely
appealed both of these denials, and the Board docketed them as ASBCA Nos. 62039
and 62040 respectively.
11. HPA submitted RFI 371, dated April 27, 2016, to NASA, stating that it had
“identified an unusually high yield stress of the existing steel structure . . . higher than
those identified in the manufactured steel identified in the contract documents.” HPA
cautioned that if the findings “prove to be accurate that further investigation is
warranted . . . and could result in weld failure.” NASA’s COR responded on May 6,
2016, stating “[t]he additional information and suggestions will be taken into
advisement.” (App. supp. R4, tab 38)
12. HPA submitted REA 11, dated September 17, 2017, requesting
$2,454,368.22 for what it deemed “the extra contractual blanketed pre- and post-heat
treatment for full penetration welds for new-to-old . . . [and] new-to-new steel from
and after March 9, 2015 because of the NASA directive issued to all welding trades on
ongoing projects on the NASA site” (app. supp. R4, tab 40c at 2076). Neither party
has pointed to, nor do we see in the Rule 4 file, a NASA directive with this date related
to this subject.
13. HPA submitted a certified claim dated December 20, 2018, reiterating the
basis for and incorporating REA 11, and requesting $3,258,276.09 and a 69-day
extension (R4, tab 51 at 3072-73). The CO issued a COFD dated March 27, 2019,
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denying the claim in its entirety (R4, tab 56). HPA timely appealed this denial, which
the Board docketed as ASBCA No. 62041.
14. HPA submitted REA 12 on October 18, 2017, alleging “multiple relocation
of steel members and extensive additional welding required because of unanticipated
thermal movement and vibration of the existing steel structure” (app. supp. R4, tab 43b
at 2680). This REA requested $3,128,167.88 (id.). Appellant submitted a certified
claim dated December 20, 2018, reiterating the basis for and incorporating REA 12,
and requesting $4,102,121.47 and a 227-day extension (R4, tab 52 at 3115-16). The
CO issued a COFD dated March 27, 2019, denying this claim in its entirety (R4,
tab 57). Appellant timely appealed this claim denial, and the Board docketed it as
ASBCA No. 62042.
15. REAs 9, 10, 11, 12, and the supplement to REAs 1 and 4 contain identical
paragraphs starting and ending with the following sentences:
In the alternative, QI [Quality Iron, a subcontractor] and
RCE suggest that this and the other REA’s submitted on
the B2 Test Stand Project might most expeditiously and
economically be considered by NASA as a cardinal change
claim entitling HPA and its subcontractors to recover the
reasonable value of the additional and inefficient labor and
materials provided to the Project plus reasonable markup
for overhead and profit. Clearly, the multiple REA’s do
cumulatively constitute a cardinal change given that the
required out-of-scope work was persuasive [sic.]
throughout the project, resulting in increased time to
contract completion, different equipment requirements, and
increased labor demands. . . The total monetary requests is
this and the other submitted REAs are reasonable and
necessary labor and material costs plus reasonable markup
for overhead and profit.
(App. supp. R4, tab 23c at 870-71, tab 29b at 1393-95, tab 34c at 1852-54, tab 40c
at 2099-2101, tab 43b at 2733-34) (syntax in original).
DECISION
In its complaint, appellant alleges a cardinal change as its sixth claim for relief,
stating its:
multiple REAs cumulatively constitute a cardinal change
given that the required out-of-scope work was pervasive
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throughout the project, resulting in increased time to
contract completion, different equipment requirements, and
increased labor demands. Specifically . . . the defects have
caused “drastic consequences,” constituting a change
outside the scope of the contract.
(Compl. ¶ 42)
The government argues all of appellant’s claims are redressable under the
contract, and the extra work produced essentially the same product as the contract
intended, preventing appellant from proving two requirements of a cardinal change.
As proof that the contract can redress HPA’s claims, NASA points out the REAs (and
thus the claims that incorporate them) 2 cite various contract provisions for recovery.
NASA further argues this work was performed of appellant’s own accord, as NASA
does not have privity of contract with HPA’s subcontractors, who physically
performed the work. (Gov’t mot. at 14, 19) In the alternative, the government moves
for dismissal based on lack of jurisdiction, alleging “[a]ppellant failed to submit a
claim in a sum certain, which is required by the CDA” (gov’t mot. at 23).
Appellant argues that cardinal change claims are fact specific inquiries, and that
the material facts of this case are disputed. Despite this, it quotes long passages from a
treatise on cardinal changes, and presents a “Cardinal Change factors” list compiled
from cases from the Nevada Supreme Court and a California Appellate Court (app.
opp’n at 1-2). Appellant also points to its Exhibit 6 as providing evidence of its
cardinal change theory (id. at 12).
Summary judgment will be granted if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law. FED. R. CIV. P. 56(a). A material fact is one which may make a difference in the
outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The
government must establish the absence of a genuine issue of material fact, after which
the burden of proof shifts to appellant to show that there is a genuine factual issue for
trial. Gerald R. Rouillard, 14-1 BCA ¶ 35,765 at 174,991.
2 Both parties discuss the claims by the REAs upon which they are based (see, e.g.,
gov’t mot. at 19-21; app. opp’n at 6). As the substance of the parties’
arguments relates to the claims in each appeal, and these claims incorporate the
REAs referenced, we understand these arguments relate to the claims and
denials in those appeals, rather than the REAs which both parties repeatedly
cite, and over which we would not have jurisdiction because they, themselves,
were not claims for which the contractor sought or the CO issued a final
decision. 41 U.S.C. § 7104.
6
As with its filings under the previous motion, appellant’s opposition
incorporates its REAs, claims, and exhibits without pointing to any part of these
several hundred pages as evidence of its arguments (app. opp’n at 11-12). None of
these documents appear to dispute a material fact in relation to the arguments NASA
advances. In its opposition, appellant alleges 223 days of delay (app opp’n at 6).
Appellant does not indicate it would benefit from any additional discovery in its
defense of this motion (app. opp’n at 2). Thus, so much as we are able, this motion
will be decided on the record before us. We first address the government’s alternative
jurisdictional argument, as we generally must satisfy ourselves of jurisdiction
whenever it is questioned.
The Board’s Jurisdiction Over The Cardinal Change Theory
Appellant alleged the theory of cardinal change in REAs 9, 10, 11, 12, and the
supplement to REAs 1 and 4, and the claims that grew out of them. In nearly identical
openings, appellant stated in each REA, “[i]n the alternative, [appellant] suggest[s]
that this and the other REA’s submitted on the B2 Test Stand Project might most
expeditiously and economically be considered by NASA as a cardinal change claim”
indicating its claims should be considered in the aggregate. (SOF ¶ 15) Each claim,
incorporating the REAs, requested a sum certain, as required under FAR 2.101’s
definition of a claim. (SOF ¶¶ 7-10, 13-14) We have held a sum certain is present
even if simple arithmetic is required to ascertain it. M.J. Hughes Constr. Inc., ASBCA
No. 61782, 19-1 BCA ¶ 37,235 at 181,234. Appellant submitted each claim on
December 19 and 20, 2018, roughly in one package (SOF ¶¶ 7, 10, 13-14). The
government need merely add the claims at issue to arrive at the sum certain.
Accordingly, the Board rejects NASA’s contention that we lack jurisdiction to
consider the cardinal change theory.
The Cardinal Change Theory
The finding of a cardinal change is “principally a question of fact.” Rumsfeld v.
Freedom NY, Inc., 329 F.3d 1320, 1332 (Fed. Cir. 2003) (quoting Allied Materials &
Equip. Co. v. United States, 569 F.2d 562, 565 (Ct. Cl. 1978)). “Each case must be
analyzed on its own facts and in light of its own circumstances, giving just
consideration to the magnitude and quality of the changes ordered and their cumulative
effect upon the project as a whole.” Wunderlich Contracting Co. v. United States,
173 Ct. Cl. 180, 194 (1965) (citing Saddler v. United States, 152 Ct. Cl. 557, 561
(1961)). A cardinal change
occurs when the government effects an alteration in the
work so drastic that it effectively requires the contractor to
perform duties materially different from those bargained
for. By definition, then a cardinal change is so profound
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that it is not redressable under the contract, and thus
renders the government in breach.
AT&T Commc’ns, Inc. v. Wiltel, Inc., 1 F.3d 1201 at 1205 (quoting Allied Materials,
569 F.2d at 563-64).
A cardinal change is like a constructive change in that proof requires 1) work
beyond the contract requirements, 2) which was ordered, expressly or impliedly, by
the government, but “has two distinguishing features: ([3]) a cardinal change requires
work materially different from that specified in the contract, and ([4]) a cardinal
change amounts to an actual breach of contract.” Bell/Heery v. United States, 739
F.3d 1324, 1335 (Fed. Cir. 2014). “Moreover, the contractor must prove facts with
specificity that support its allegations that a cardinal change occurred.” PCL Constr.
Servs., Inc. v. U.S., 47 Fed. Cl. 745, 804 (2000), aff’d 96 Fed. Appx. 672 (Fed. Cir.
2004). “In deciding whether a single change or series of changes is a ‘cardinal
change,’ one must examine the work done in compliance with the changes and
ascertain whether it is essentially the same work that the parties bargained for when
the contract was awarded.” Gassman Corp., ASBCA No. 44975, 00-1 BCA ¶ 30,720
at 151,741-42 (ruling a contract for an addition to an existing building resulting in
such, and change orders concerning items of the type already known to Gassman was
not a cardinal change). A cardinal change can occur even when there is no change in
the final product because “it is the entire undertaking of the contractor, rather than the
product, to which we look.” Edward R. Marden Corp. v. United States, 194 Ct. Cl.
799 at 810 (1971) (holding a cardinal change where defective specifications caused
building to collapse and contractor was required to reconstruct the building, nearly
doubling its costs). See, e.g., P.L. Saddler v. United States, 287 F.2d 411 at 414-15
(1961) (100 percent increase in amount of earth moved constituted cardinal change).
But see S.J. Groves & Sons Co. v. United States, 228 Ct. Cl. 598, 602 (1981) (a
fundamental change to the project resulting in a $6 million change to a $2 million
contract was not a cardinal change). “Courts must look beyond simple arithmetic
when assessing a cardinal change claim.” PCL Constr. Servs., Inc., 47 Fed. Cl. at 806
(citing S.J. Groves, 228 Ct. Cl. at 602).
The Board agrees with the government that appellant has not shown this work
to be fundamentally beyond what the parties contracted for. In Aragona Construction
Co. v. United States, the parties contracted for a hospital which “when it was
completed, was in the same location, looked the same, had the same number of rooms
and floors and the same facilities as the one shown on the original plans and
specifications,” and did not support a finding of a cardinal change. 165 Ct. Cl. 382,
391 (1964). The same is true here. While there are a great number of alterations made
in the work through Field Change Requests, RFIs, and other documents, they are not
out of character with the work contemplated in the contract, nor do they rise to a level
of effort which could not be foreseen by the contractor when it bargained for the work,
8
as in Marden Corp., 194 Ct. Cl. at 809. These changes often concerned similar work
done in one of many ways to accomplish the same goal, resulting in the same final
product.
In regards to ASBCA No. 62038, the WTs were installed in the original location
intended, albeit under a different method and with extra measures to secure them in
place. It is true that some needed to be relocated, but this is hardly a drastic
consequence (SOF ¶ 6). Regarding ASBCA Nos. 62039 and 62040, appellant has
alleged that additional weld passes and investigating the voids in the welds on the
MPTA base plates took some number of months (SOF ¶ 10), but has not indicated it
was on the critical path for the entire project, or that it was an amount of work
exceeding what the contract contemplated. HPA has also fallen short of showing that a
NASA directive required it to do the work at issue in ASBCA No. 62040, or that NASA
had an affirmative obligation to inspect appellant’s work which relieved it of its own
obligation to do the work correctly, or relieved it of its commitments under its Quality
Assurance Plan (SOF ¶ 2). ASBCA No. 62041 concerns pre-weld and post-weld heat
treatments, which were addressed, by appellant’s subcontractor (SOF ¶ 4). HPA fails to
present any evidence that this was outside the type of work required by the contract. In
addition, it does not explain how this is a change ordered by NASA. Finally, ASBCA
No. 62042 concerns thermal movement of the test stand outside the limits allegedly
prescribed in the contract, which appellant characterizes in its REA as a “constructive
change” but does not explain how NASA ordered this change. This movement was
more than appellant alleges it planned for when bidding, though it did plan for some
thermal movement (SOF ¶ 2).
Significant questions remain as to the authority of the NASA officials signing
the documents to which appellant points as the basis of NASA’s orders to perform the
work at issue. While this would present a disputed material fact, we need not reach it
for purposes of this motion because the work at issue is not a drastic enough departure
from the contract to merit a theory of cardinal change. This is true even supposing the
223-day delay appellant alleges was to the critical path, which appellant has not
alleged. Appellant has not alleged any additional work outside the claims to support
its cardinal change theory. Even if HPA received every dollar it claimed, these
changes would amount to less than half of the cost of the original contract price. 3 As
noted above, we do not rely on simple arithmetic alone, but these numbers are useful
to get a sense of the magnitude of the allegedly additional work. No factor appears to
be beyond the reach of the Changes clause, even when we aggregate the claims. We
3 HPA argues the costs it claims “resulted in extra costs of more than 100% of the
original HPA/QI subcontract amount of $8,300,000” (app. opp’n at 6). Even if
appellant had broken down costs for RCE and QI individually, which it hasn’t,
HPA’s subcontract is not the contract at issue and thus is irrelevant in this
decision.
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cannot say any of this indicates a change “so profound that it is not redressable under
the contract, and thus renders the government in breach.” AT&T Commc’ns,
1 F.3d at 1205 (internal citations omitted).
This is especially so in light of NASA’s General Notes in its Drawings that they
represent the original 1960s design incorporating “field observations” and directing the
winning bidder to verify field conditions (SOF ¶ 5). See PCL Constr. Servs., Inc.,
47 Fed. Cl. at 805-06 (disallowing a cardinal change claim based in part on the
contract explicitly allowing that discrepancies and omissions in the design
specifications would likely arise).
As noted above, appellant has created a “Cardinal Change factors” list from two
state cases. However, appellant does not discuss which factors it relies on, which
factors it wishes us to focus on, nor how any of them apply to the fact pattern at hand
(app. opp’n at 6-9). Indeed, several factors appellant provides appear to work against
it. HPA relies significantly on its exhibit 6, and states “the evidence will show”
various other points, but does not further elaborate how “the evidence” shows this
(app. opp’n at 15-16). Exhibit 6 is a list of entries in the Rule 4 file titled “Overall
Delay Exhibits” with no further explanation as to how these delays affected its critical
path. Some of the documents referenced in Exhibit 6 go beyond the six REAs that
otherwise form the basis of this theory, but which are related and which are not is not
explained. Appellant has already received compensation for some of the work
discussed (see, e.g., app. opp’n ex. 6 at 3) (citing app. supp. R4, tab 57, appellant’s
REA #2); ex. 4 at 2 (“REA #2 was settled in the interim”). Thus we must disagree
with appellant that unexplained references to various documents in the Rule 4 file
sufficiently show delay related to the claimed work was so drastic as to, by itself,
effectively render the government in breach.
Adding appellant’s other five exhibits does nothing to alter this. Exhibits 1 and
5 are primarily appellant’s Vice President and RCE’s President discussing
disagreements between the various parties and their characterizations of NASA’s and
HPA’s intentions, often as answers to questions which have been edited out, further
limiting their use. Exhibits 2 and 3 were submitted in response to the previously
decided motions in this case, and concern an unrelated question addressed in those
motions. Much of the rest is conclusory assertions, which we disregard. Exhibit 4,
HPA’s answers to interrogatories, add nothing to the analysis not found in the body of
its opposition.
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CONCLUSION
For the reasons stated above, we deny the government’s motion to dismiss
appellant’s sixth theory of recovery for a cardinal change for lack of jurisdiction. We
grant the government’s motion for partial summary judgment and deny appellant relief
on that theory.
Dated: January 13, 2021
JOHN J. THRASHER
Administrative Judge
Chairman
Armed Services Board
of Contract Appeals
I concur I concur
J. REID PROUTY MICHAEL N. O’CONNELL
Administrative Judge Administrative Judge
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 Nos. 62038, 62039, 62040,
62041, 62042, Appeals of Harry Pepper and Associates, Inc., rendered in conformance
with the Board’s Charter.
Dated: January 14, 2021
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
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