Capy Machine Shop, Inc.
Docket: ASBCA 59133
Decision date: 2015-10-08

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal of -- ) 
) 
Capy Machine Shop, Inc. ) 
) 
Under Contract No. SPE4A7-13-M-D099 ) 
APPEARANCE FOR THE APPELLANT: 
APPEARANCES FOR THE GOVERNMENT: 
ASBCA No. 59133 
Mr. Salvatore Capacchione 
President 
Daniel K. Poling, Esq. 
DLA Chief Trial Attorney 
Edward R. Murray, Esq. 
Adrienne D. Bolton, Esq. 
Trial Attorneys 
DLA Aviation 
Richmond, VA 
OPINION BY ADMINISTRATIVE JUDGE TUNKS 
This is an appeal from the default termination of a contract to supply aircraft parts. 
The parties have elected to submit the appeal on the record pursuant to Board Rule 11. 
FINDINGS OF FACT 
1. On 9 July 2013, Mr. John Vlachos, general manager of Capy Machine Shop, 
Inc. (Capy), accepted Order No. SPE4A7-13-M-D099 1 (hereinafter the contract) in the 
amount of $52,232.85 to supply 27 splice fairings to the Defense Logistics Agency 
Aviation (DLA Aviation or government) (R4, tab 1 at 1, 2). The date of contract award 
was 10 July 2013 (R4, tab 9). The first article was due 180 days after award or 
6 January 2014 (R4, tab 1 at 3). The delivery date for the production quantity was 
3 September 2014 (R4, tab 1 at 1-2, 9). 
2. The contract incorporated FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND 
SERVICE) (APR 1984) which provided, in part, as follows: 
(a)(l) The Government may ... terminate this 
contract in whole or in part ifthe Contractor fails to-
1 The contract resulted from a Request for Quotations issued by the government on 
3 June 2013 (R4, tabs 3, 4). 

(i) Deliver the supplies or to perform the services 
within the time specified in this contract or any extension; 
(ii) Makes progress, so as to endanger performance 
of this contract ... ; or 
(iii) Perform any of the other provisions of this 
contract. ... 
(R4, tab I at 18) 
3. Following contract award on 23 September 2013, Banner Metalcraft, Inc. 
(Banner), Capy's subcontractor, amended its quotation to Capy to include a one-time 
tooling charge of$26,512.00. Banner's original quote of 12 June 2013 did not have the 
tooling charge (attach. 1 to appellant's 12 March 2015 hr.). This cost was not included in 
Capy's original quotation to the government at which time Capy erroneously believed 
tooling was otherwise available. Capy was 
unable to locate this tooling. (Bd. corr. file, 
attach. to notice of appeal) 
4. On 7 November 2013, Mr. Vlachos emailed the contracting officer (CO) as 
follows: 
(R4, tab 6) 
Please cancel the above contract at no cost to Capy 
Machine. 
Our forming vendor can't locate his tooling[.] 
5. On 13 November 2013, the CO issued a show cause notice: 
(R4, tab 7) 
Because you have indicated in an e-mail dated 
07 NOV 2013 citing an inability to locate tooling on 
contract SPE4A7-13-M-D099 within the time required by 
its terms and thereby requesting termination for 
conv.enience, the Government is considering terminating 
this contract under the provisions for default. Pending a 
final decision in this matter, it will be necessary to 
determine whether your failure to perform arose from 
causes beyond your control and without your fault or 
negligence. Accordingly, you are given the opportunity to 
present, in writing, any facts bearing on the question to 
me ... within 10 days after receipt of this notice. 
2 

6. On 26 November 2013, Mr. Vlachos emailed Mr. Len DuPilka, the contract 
administrator, advising as follows: 
(R4, tab 8) 
The cost of new tooling is $26,512.00 total which wasn't 
included on the quote. 
That is the reason for asking to cancel this contract. 
7. On 12 December 2013, the CO terminated the contract for default, stating as 
follows: 
You are hereby notified that contract SPE4A7-13-M-D099 
is terminated for default effective immediately. Your right 
to proceed further with performance of this contract is 
terminated. The termination is based on your failure to 
perform in accordance with the terms and conditions of the 
contract. The terminated supplies may be procured against 
your account and you will be held liable for excess costs. 
(R4, tab 10) How Capy had failed to perform was not explained. 
8. On 9 January 2014, Capy timely appealed the final decision to this Board. We 
docketed the appeal as ASBCA No. 59133. 
9. On 4 April 2014, the government moved for summary judgment on the ground 
of anticipatory repudiation, citing Capy's 7 November and 26 November 2013 requests 
for a no-cost cancellation. We denied the motion on 22 October 2014. Capy Machine 
Shop, Inc., ASBCA No. 59133, 14-1BCA~35,784. 
10. The parties have agreed to submit the appeal on the written record pursuant to 
Board Rule 11. Both parties submitted briefs. The government attached Mr. DuPilka's 
5 March 2015 declaration to its brief as exhibit 3. Mr. DuPilka's declaration states, in 
part, as follows: 
Capy has a history of obtaining awards by quoting low 
prices, then requesting cancellation when they cannot 
perform the 
contract at that price. I have included as 
Exhibit 1 e-mails from Capy, all received after 
September 24, 2013, requesting cancellation after award on 
13 orders in addition to the two contracts identified 
above .... 
3 

When we cancel a contract, it has an adverse impact on 
DLA Aviation. A buyer and Contracting Officer must start 
the process all over again, by issuing a new solicitation, 
obtaining quotes, and making a new award. This takes 
time. Not only does it increase DLA Aviation's 
administrative costs, it also means we will take longer to 
get the parts to our military customers. In many instances 
it also leads to them going without the parts they need. 
The government also submitted Capy' s answers to government interrogatories, in 
part, as follows: 
Interrogatory 4: In your January 9, 2014, Notice of 
Appeal/Complaint you state "[W]e cannot afford to 
complete this order." Explain what you meant by "cannot 
afford to complete this order." 
Answer: The 
cost of tooling exceeded the price of the 
contract therefore making the contract unconscionable. 
Interrogatory 5: Identify the date when you decided you 
could not afford to complete the order. 
Answer: On 11/06/13. 
Interrogatory 7: At the time the contract was terminated 
for default, did you intend to fulfill the contract at the 
existing price? 
Answer: Due to the circumstance we were unable to fulfill 
the contract. 
DECISION 
A termination for default is "a drastic sanction which should be imposed ... only for 
good grounds and on solid evidence." JD. Hedin Construction Co. v. United States, 
408 F .2d 424, 431 (Ct. Cl. 1969) (citations omitted). The government bears the burden of 
proving that the termination was justified. If the government establishes a prima facie case 
that the termination was proper, the burden of production-or going forward-shifts to the 
contractor. Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987). 
4 

The government argues that its termination for default was justified because( 1) 
Capy anticipatorily repudiated the contract, and (2) Capy's routine practice of bidding 
low and requesting a no-cost cancellation when it cannot perform adversely impacts 
DLA's ability to supply needed parts to the field and increases its administrative costs. 
Capy argues that the termination was improper because its supplier increased the cost of 
tooling after award, making it unconscionable for Capy to perform at the contract price. 
The government further argues that Capy anticipatorily repudiated the contract 
because it twice requested the CO to cancel 
the contract after award. We considered and 
rejected this argument in our decision on the government's motion for summary 
judgment. Capy Machine Shop, 14-1 BCA ii 35,784 at 175,044. We held that Capy's 
requests did not evince the "positive, definite, unconditional and unequivocal" refusal to 
perform required to prove anticipatory anticipation. While the government has submitted 
additional evidence, including Capy's answers to interrogatories, we are not convinced 
that such responses render its request for a no-cost termination to be a positive, definite, 
unconditional and unequivocal refusal to perform. Capy made a request to which the 
government never really responded, except to terminate 
for default. 
The government also argues that the termination should be upheld on the basis of 
public policy. In its brief, the government explains as follows: 
Capy routinely asks the Government to cancel its contracts 
after award because it can no longer afford to perform 
them or cannot obtain the part it originally quoted .... 
[T]his ... negatively impacts DLA Aviation.... DLA 
Aviation must essentially start over from scratch and issue 
a new solicitation 
for the item, review quotes and make a 
new award, then wait for a new delivery period to pass .... 
Certainly the Government could wait until delivery was 
due for each of Capy's contracts [and] then terminate for 
default...[b]ut that would put the Government even further 
behind in obtaining the parts it needs and hamper its ability 
to effectively prioritize its procurement workload. 
(Gov't hr. at 8-9) 
Federal Rules of Evidence (FRE) 406 2 permits the introduction of evidence of 
routine practice of an organization to prove that on a particular occasion the organization 
acted in accordance with the routine practice. See generally Advisory Committee Notes 
to 1972 Proposed Rules; Handbook of Federal Evidence, 7th ed., vol. 3, § 406; Federal 
Rules of Evidence Manual, 8th ed., vol. 2, § 406. While perhaps the evidence of routine 
practice is sufficient to prove that appellant frequently requests that contracts be 
2 The Board uses the FRE as a guide. Board Rule 10( c) (2014 ). 
5 

cancelled, it is not sufficient to prove that it is Capy's routine practice to bid or quote 
with no intention of performing. Indeed, the evidence in this appeal is that pre-existing 
tooling could not be found and would have to be produced at a cost of approximately 
50% of the contract price-a fact unknown to Capy at the time of quotation or award. 
The government has not pointed to any authority justifying a termination for 
default under one contract based upon a history of performance under other contracts. 
Nor are we aware of any. This argument is not persuasive. It is apparent that the 
government is frustrated by the number of times Capy has asked for the cancellation of 
contracts and considers that Capy has a routine practice of receiving awards it does not 
intend to fulfill. The concern is one that perhaps is best addressed in the process of the 
award of contracts, not the termination of contracts once awarded. 
Neither of the grounds relied on by the government justify the termination for 
default and we have no evidence whether a termination for failure to make progress was 
justified. 
The appeal is sustained. The termination for default is converted to a termination 
for the convenience of the government. 
Dated: 8 October 2015 
I concur 
~~ LiZETHA. TUNKS 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
I concur 
NA/-£$ __ _ 
MARK N. STEMPLE~ _RI_C_H_ARD __ S_H_A_C_K_L_E_F_O_RD ___ _ 
Administrative Judge Administrative Judge 
Acting Chairman Vice Chairman 
Armed Services Board Armed Services Board 
of Contract Appeals of Contract Appeals 
6 

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. 59133, Appeal of Capy 
Machine Shop, Inc., rendered in conformance with the Boards Charter. 
Dated: 
7 
JEFFREY D. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals