ESCgov, Inc.
Docket: ASBCA 58852
Decision date: 2015-06-16

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of--
ESCgov, Inc. 
Under Contract No. HC1028-12-C-0047 
APPEARANCES FOR THE APPELLANT: 
) 
) 
) 
) 
) 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 58852 
Thomas 0. Mason, Esq. 
Francis E. Purcell, Jr., Esq. 
Cooley LLP 
Washington, DC 
William E. Brazis, Jr., Esq. 
DISA General Counsel 
JoAnn W. Melesky, Esq. 
Laura J. Barke, Esq. 
Trial Attorneys 
Defense Information Systems Agency 
Scott Air Force 
Base, IL 
OPINION BY ADMINISTRATIVE JUDGE YOUNGER 
ON RESPONDENT'S MOTION FOR PARTIAL SUMMARY JUDGMENT 
This appeal relates to the termination for convenience of a contract to procure 
software and related support services. The contractor, ESCgov, Inc. (ESC), a systems 
integrator, challenges the 
termination. The present motion for partial summary 
judgment relates to two counts ofESC's complaint, in which ESC seeks to recover 
software procurement costs and intellectual property costs, respectively. We deny the 
motion regarding both counts. 
STATEMENT OF FACTS FOR PURPOSES OF THE MOTION 
A. 2012 Contract 
1. Effective 24 July 2012, the Defense Information Systems Agency (DISA or 
government) awarded Contract No. HC1028-12-C-0047 (the 2012 contract) to ESC, a 
systems integrator, to provide a solution to specified software needs. The 2012 
contract required that the contractor's solution include a product of BMC Software, 
Inc. (BMC). The product was BMC BladeLogic software and licenses. The 2012 
contract also required ESC to furnish the technical services necessary to install, 
configure, implement, administer and sustain the solution on government-furnished 

computing resources. (R4, tab 4 at 3) The 2012 contract was a follow-up contract to 
one awarded in 2008 (the 2008 contract) (R4, tab 4 at 45; see statements 11-13). 
2. The 2012 contract contained various standard clauses, including both 
FAR 52.212-4, CONTRACT TERMS AND CONDITIONS - COMMERCIAL ITEMS (JUN 2010) 
and FAR 52.249-2, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT 
(FIXED-PRICE) (MA y 2004) (R4, tab 4 at 60). 
3. By date of 29 August 2012, the government terminated the 2012 contract for 
convenience at no cost to either party, effective immediately (R4, tabs 9(a), (b)). 
4. By date of 2 January 2013, ESC submitted a termination settlement proposal 
under FAR Part 49 seeking payment of $3,384,500.76 under the 2012 contract (R4, 
tab 17). 
5. After the parties failed to reach agreement on the settlement proposal, ESC 
submitted a certified claim under the 2012 contract by date of 12 June 2013, seeking 
payment of $3,384,500.76 (R4, tab 20). 
6. ESC has opposed the government's motion for partial summary judgment 
with the Declaration of Keith Zagurski, its executive vice president and chief financial 
officer. In his declaration, Mr. Zagurski addressed the BMC BladeLogic software 
licenses that ESC had purchased at the time of the 2008 contract. He stated that "[t]he 
licenses purchased by ESCgov [from BMC] were perpetual, which meant that they did 
not have a defined term of use. The licenses also were limited to use in support of 
DISA, and could not be used for other customers." (App. opp'n, ex. 1, Declaration of 
Keith Zagurski (Zagurski decl.) ii 8) Mr. Zagurski further stated that: 
ESCgov purchased the Bladelogic software licenses 
based upon its understanding that DISA's needs for the 
access and security configuration control solution 
requested would continue beyond the initial [2008] 
contract. Because the licenses were perpetual and not 
limited in term, ESCgov would be able to use the licenses 
on future DISA contracts. 
(Zagurski decl. ii 9) Mr. Zagurski also stated that: 
Although licenses with defined terms commonly are less 
expensive than perpetual licenses, ESCgov paid more for 
perpetual licenses than it likely would have for licenses 
with a defined term, because ESCgov planned to utilize the 
2 

licenses beyond the initial contract to provide access and 
security configuration control support to DISA. 
(Zagurski decl. if 10) 
7. In his declaration, Mr. Zagurski also addressed ESC's intellectual property 
claim for the costs of the component templates and sensors and the extended object 
files. He stated: 
Because the Bladelogic software itself did not 
provide the level of functionality to meet the 2008 
Contract's requirements for access and security 
configuration control, ESCgov had to develop intellectual 
property to facilitate the provision of services under the 
2008 Contract. ESCgov personnel developed component 
templates, sensors and extended object files in order to 
address security needs ofDISA and to perform the 2008 
Contract's requirements. ESCgov used this 
ESCgov-developed intellectual property to provide 
compliance and remediation support as required by the 
2008 Contract.. .. [T]here was no requirement in the 2008 
Contract directing ESCgov to create software to perform 
the access and security configuration control services. 
ESCgov developed the component templates, sensors and 
extended object files to ensure that it could meet the 
service requirements of the contract. 
(Zagurski decl. if 14) 
8. Mr. Zagurski also stated that ESC "had to install the Bladelogic software 
along with the component templates, sensors and extended object files on DISA 
servers in order to provide the access and security configuration control services 
required by the 2008 Contract" (Zagurski decl. if 15) (see statement 11 ). He further 
declared that "DISA did not pay ESCgov for this [intellectual property] development 
effort as part of the 2008 Contract" (Zagurski decl. if 18). 
9. Mr. Zagurski attested that ESC "recorded efforts associated with the 
intellectual property development to a cost objective established for the 2008 
Contract" (Zagurski decl. if 18). He added that "[a]lthough [ESC] recognized a ratio of 
costs to sales during 2008 in order to satisfy accounting requirements, ESCgov did not 
amortize the purchase price of the [BladeLogic] software licenses over the life of the 
2008 Contract" and that "DISA did not pay ESCgov under the 2008 Contract for the 
BMC Bladelogic software licenses" (Zagurski decl. iii! 21, 22). 
3 

10. Mr. Zagurski also stated that, after termination of the 2012 contract, ESC 
"requested that DISA deinstall and return the intellectual property comprised of 
component templates, sensors and object files that ESCgov had developed under the 
2008 Contract," but that DISA had not done so (Zagurski decl. ~ 29). 
B. 2008 Contract 
11. On or about 21 April 2008, DISA awarded ESC Contract 
No. HC1028-08-F-2212 to provide "Access and Security Config[uration] Control" 
software utility services (the 2008 contract) (R4, tab 1 at 2). 
12. The stated objective of the 2008 contract was "for the vendor to provide a 
complete solution for granular-level access control of [operating systems]" by 
providing "the solution software and/or devices and technical services" necessary (R4, 
tab 1 at 31 ). The 2008 contract did not require ESC to deliver any software licenses or 
to develop any software for DISA (Zagurski decl. ~ 12). The contract did not require 
use of specific software, but instead permitted contractors to propose a solution (gov't 
mot.~ 1). 
13. It is undisputed that, at the time of the 2008 contract, ESC purchased 
20,000 BladeLogic software licenses (Respondent's Statement of Undisputed Material 
Facts and Memorandum of Law in Support of its Motion for Partial Summary 
Judgment (gov't br.) ~ 4; Appellant's Opposition to Respondent's Motion for Partial 
Summary Judgment (app. opp'n) ~ 4)). DISA used "approximately 6,000 servers after 
18 months" of contract performance (Zagurski decl. ~ 13). 
DECISION 
DISA seeks summary judgment regarding counts I and III of the complaint. In 
count I, ESC alleges that it "is entitled to payment of$1,031,430.50, which represents 
the cost to procure the BMC BladeLogic software licenses that is allocable to the 
Contract" ( compl. ~ 52). In count III, ESC alleges that it "is entitled to payment of 
$2, 127,924 for [the government's] continued retention and use of the 
ESCgov-developed intellectual property," consisting of "(l) component templates; and 
(2) sensors and extended object files" ( compl. ~~ 64, 69). 
The nub ofDISA's argument regarding its entitlement to summary judgment on 
count I is that ESC incurred 
the cost of the BMC BladeLogic software licenses in 
connection with the 2008 contract and the cost is not a permissible pre-contract cost 
under FAR 31.205-32 (gov't br. at 12-13). DISA insists that the cost of the licenses 
could not have been incurred in 2008 pursuant to negotiation and in anticipation of the 
2012 contract, which had no delivery 
schedule in 2008. Secondarily, DISA contends 
4 

that ESC's position does not comport with its own accounting practices. According to 
DISA, although ESC asserts that it purchased the BMC BladeLogic software licenses 
for the present contract, it allocated the entire amount of the license costs to the cost 
pool for the 2008 contract. (Gov't br. at 13-14) 
ESC counters DISA's arguments regarding count I by contending, first, that, 
while DISA "seeks to establish the parameters of costs allowable ... by exclusively 
applying the fixed-price convenience termination requirements in FAR Part 
49 .... consideration also must be given" to FAR 52.212-4, due to the commercial nature 
of the present contract (app. opp'n at 18). ESC stresses that ''the Board must analyze 
ESCgov's claims for the Bladelogic software licenses and ESCgov-developed 
intellectual property pursuant to the requirements of [both] FAR§ 52.212-4(1) and 
FAR Part 49" (id. at 21 ). 
The standards for summary judgment are familiar. The movant must show both 
that there are no genuine issues of material fact, and that it is entitled to judgment as a 
matter oflaw. E.g., Proveris Scientific Corp. v. lnnovasystems, Inc., 739 F.3d 1367, 
1371 (Fed. Cir. 2014); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 
1390 (Fed. Cir. 1987). In deciding a motion for summary judgment, "[o]ur task is not 
to resolve factual disputes, but to ascertain whether material disputes of fact - triable 
issues - are present." Conner Bros. Construction Co., ASBCA No. 54109, 04-2 BCA 
~ 32,784 at 162,143, aff'd, Conner Bros. Construction Co. v. Geren, 550 F.3d 1368 
(Fed. Cir. 2008) (quoting John C. Grimberg Co., ASBCA No. 51693, 99-2 BCA 
~ 30,572 at 150,969). We draw justifiable factual inferences in favor of the party 
opposing the motion, which in this case is ESC. M Maropakis Carpentry, Inc. v. 
United States, 609 F.3d 1323, 1327 (Fed. Cir. 2010). 
Mindful of these principles, we deny DISA's motion for three principal reasons. 
First, with respect to Count I, the record reveals disputed material facts 
regarding whether ESC incurred the cost of the BladeLogic software licenses solely in 
connection with the 2008 contract. While DISA asserts that "it is clear that the 
[BladeLogic software] licenses could not have been purchased [in 2008] 'pursuant to 
negotiation ... and in anticipation of award' of the 2012 contract" (gov't br. at 13), ESC 
has proffered evidence to the contrary, chiefly in Mr. Zagurski's declaration. Thus, 
Mr. Zagurski states that "ESCgov purchased the Bladelogic software licenses based 
upon its understanding that DISA's needs for the access and security configuration 
control solution requested would continue beyond the initial [2008] contract" 
(statement 6). He adds that ESC paid a premium price for perpetual licenses "because 
ESCgov planned to utilize the licenses beyond the initial contract to provide access 
and security configuration control support to DISA [on a future contract or contracts]" 
(id.). While DISA derides Mr. Zagurski's declaration as a "self-serving, post-hoc" 
document which "conflicts with ESCgov's prior admissions and testimony" 
5 

(Respondent's Reply in Support of its Motion for Partial Summary Judgment (gov't 
reply br.) at 2), we cannot conduct a "trial by affidavit" on this summary judgment 
motion. Grimberg, 99-2 BCA ii 30,572 at 150,970. The same is true regarding 
DISA's argument that ESC allocated the entire amount of the license costs to the cost 
pool for the 2008 contract (gov't br. at 13-14). While DISA asserts that ESC's 
accounting practices refute its contention that the license costs were allocated to the 
2012 contract, Mr. Zagurski states under oath that ESC "did not amortize the purchase 
price of the software licenses over the life of the 2008 Contract" (statement 9). 
Second, with respect to Count III, we cannot credit DISA's primary argument 
that recovery of the costs for the intellectual property would contravene 
FAR 31.205-32. DISA tells us that the templates, sensors, and files were created and 
delivered during performance of the 2008 contract. Hence, DISA contends, the costs 
do not satisfy the requirements specified for precontract costs in FAR 31.205-32. 
(App. opp'n at 15-16) As noted, however, the 2012 contract contained 
FAR 52.212-4(1), the convenience termination clause for commercial items contracts 
(statement 2). Under that clause, "a commercial items contractor need not comply 
with regulatory cost principles," such as FAR 31.205-32. SWR, Inc., ASBCA 
No. 56708, 15-1BCAii35,832 at 175,224. 
There are also factual issues regarding Count III that preclude summary 
judgment. Among them are DISA's contention that the restrictive markings that ESC 
claims to have placed on the intellectual property used in the 2008 contract "do not 
notify [DISA] that [ESC] intended to limit [DISA's] rights in the files" (gov't hr. at 
18). Issues of material fact also surround DISA's argument that "the evidence 
establishes that the Intellectual Property files were not developed [by ESC] exclusively 
at private expense, as [ESC] claims" (gov't hr. at 19). The record contains contrary 
assertions under oath in Mr. Zagurski's declaration that "DISA did not pay ESCgov 
for this [intellectual property] development effort as part of the 2008 Contract" 
(statement 8). 
Third, DISA has not persuaded us that it is entitled to judgment "as a matter of 
law." Mingus, 812 F.2d at 1390; FED. R. CIV. P. 56(a). We recognize that contract 
interpretation is generally a question of law that may be resolved by summary 
judgment. E.g., Osborne Construction Co., ASBCA No. 55030, 09-1 BCA ii 34,083 at 
168,514. In this case, however, the 2012 contract incorporated by reference 
both the 
commercial items convenience termination clause in FAR 52.212-4(1) and the 
fixed-price convenience termination clause in FAR 52.249-2 (statement 2). In their 
papers, the parties present sharply divergent positions regarding what law governs 
ESC's claim. While DISA insists that the claim should be measured solely against the 
fixed-price termination requirements of FAR Part 49 (gov't hr. at 11-12), ESC 
contends that "consideration also must be given to the language [of the clause] at FAR 
§ 52.212-4 regarding terminations for convenience" (app. opp'n at 18). "This clause 
6 

sets up a different method for determining fair compensation for the contractor in the 
event of a termination for convenience of a commercial items contract than the 
methods set forth in termination for convenience clauses prescribed in FAR Part 49." 
Dellew Corp., ASBCA No. 58538, slip op. at 12 (1 May 2015). 
Given the uncertainty in the record regarding whether the parties intended to be 
guided by the fixed-price or a commercial items termination for convenience clause in 
the 2012 contract, summary judgment is unwarranted. We have elsewhere denied 
summary judgment when the parties contest the meaning of material contract terms, 
recognizing that "material disputes of fact.. .may arise concerning the meaning 
intended by the parties." Aegis Defence Services Ltd., ASBCA No. 59082, 15-1 BCA 
~ 35,811at175,138. Stated otherwise, "[w]hen the meaning ofa contract and the 
parties' intentions are both relevant and in dispute, there are mixed questions of fact 
and law that pose triable issues precluding summary judgment." Ashbritt, Inc., 
ASBCA Nos. 56145, 56250, 09-2 BCA ~ 34,300 at 169,434. 
CONCLUSION 
The government's motion for partial summary judgment is denied. 
Dated: 16 June 2015 
I concur 
~~~tfiftr 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
7 
ive Judge 
ices Board 
of Contract Appeals 
I concur 
- ·:!t= 
RICHARD SHACKLEFORD 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 

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. 58852, Appeal ofESCgov, 
Inc., rendered in conformance with the Board's Charter. 
Dated: 
8 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals