DODS, Inc.
Decision date: 2012-06-18

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeal o.f -- ) 
) 
DODS, Inc. ) ASBCA No.. 57817 
) 
UnderCo.ntractNo.. SPM4A7-11-M-K222 ) 
APPEARANCE FOR THE APPELLANT: Mr. David Sto.rey 
President 
APPEARANCES FOR THE GOVERNMENT: Daniel K. Po.ling, Esq. 
DLA Chief Trial Atto.rney 
Edward R. Murray, Esq. 
Trial Atto.rney 
DLA Aviatio.n 
Richmo.nd, VA 
OPINION BY ADMINISTRATIVE JUDGE CLARKE 
PURSUANT TO RULE 12.3 
DODS, Inc. (DODS) appeals the "terminatio.n" o.f a unilateral purchase o.rder 
co.ntending that the go.vernment delayed its perfo.rmance causing it to. fail to. deliver in 
acco.rdance with the o.rder. The go.vernment co.ntends that when DODS failed to. deliver 
o.n time the unilateral purchase o.rder lapsed. We have jurisdictio.n pursuant to. the 
Co.ntract DisputesAct (CDA), 41 U.S.C. §§ 7101-7109. DODS elected to. have this 
appeal decided o.n the reco.rd pursuant to. Rules 11 and 12.3.1 We ,deny the appeal. 
FINDINGS OF FACT 
1. On' 6 January 2011, Defense Lo.gistics Agency Aviatio.n (DLA) issued request 
fo.r quo.tatio.ns No.. SPM4A7-11-Q-3650 (R4, tab 7). The solicitatio.n was fo.r o.ne aircraft 
stiffener to. be delivered within "180 days ARO"z (id. at 1, 3, 11). The so.licitatio.n, 
CLIN 9906, also. required a first article (FA) sample within 90 days (id. at 13). The 
so.licitatio.n identified 67 drawings and specificatio.ns which were required to. manufacture 
the item (R4, tab 7 at 5-11). 
I Bo.th parties inco.rrectly refer t~ Rule 12.2 in their briefs. On 19 December 2011 
DODS, Inc. elected to. pro.ceed under Rule 12.3. 
Z The definitio.n o.f "ARO" is no.t in the reco.rd, ho.wever, PO K222 identifies the first 
article delivery date as "90 days ARO JUNE 5, 2011" fro.m which we infer that 
"ARO" means "After Receipt o.fOrder" o.r wo.rds to. that effect. 

2. On 12 January 2011 DODS submitted a quote in response to the solicitation 
(R4, tab 8). DODS bid "WITHOUT EXCEPTION" one first article sample within 
90 days and one production unit within 180 days (id. at 1). 
3. On 4 March 2011 Purchase Order No. SPM4A7-11-M-K222 (PO K222) was 
issued to DODS for the aircraft stiffener (R4, tab 1). PO K222 was signed by the 
government's contracting officer but did not require a signature and was not signed by 
DODS (id. at 1). The first article was to be delivered "90 days ARO JUNE 5, 2011" 
(id. at 2). 
4. The record includes a document referred to by the government as a "Contract 
Report" provided by Dobs that records the direct hours worked on PO K222 
(R4, tab 23). The Contract Report indicates that the first day worked on PO KZ22 was 
12 May 2011, some 69 days from the date of award, when Ms. LeBlanc spent four hours 
printing and organizing specifications and documents (id.). Prior to the 5 June 20 11 FA 
due date the Contract Report indicates that Ms. LeBlanc, the only person working on 
PO K222, worked six days and a total of 17.25 hours between 12 May 2011 and 20 May 
2011 (id.). 
5. On 13 May 2011 Mr. Webber, government quality assurance representative, 
conducted a post-award conference with Mr. Storey and Ms. Janneke Beniest at DODS 
(R4, tab 9). Mr. Webber documented the meeting on a DD Form 1484 Post-Award 
Conference Record (id.). Mr. Webber made the following entry: 
According to the contract, the First Article is to be delivered 
on June 5, 2011. As of the date of this conference, the 
contract was not in production. The contractor did not 
anticipate release of RFQs (Request for Quotes) to his 
vendors until May 16th (at the earliest). It is highly unlikely 
that the contractor will meet the First Article delivery date as 
stipulated in the contract. Contractor states he has requested 
an extension. 
(R4, tab 9 at 2). The post-award conference record does IJ.ot indicate that DODS had any 
questions or concerns about the technical data. Under "SPECIFICATION . 
INTERPRETATION," the record states "Contractor states he is fanliliar with, and 
understands the applicable specifications involve~ with this procurement" (id. at 3). 
6. As part of the Rule 4 the government included its interrogatories and DODS' 
responses. Interrogatory 4 read: 
All documents evidencing, describing, or relating to any 
costs, expenses, or obligations you incurred during Contract 
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perfonnance, including but not limited to invoices, purchase 
orders, quotations, receipts, cancelled checks, payroll 
infonnation, salaries and benefits infonnation, travel 
. expenses, and all indirect costs such as overhead and general 
and administrative costs. 
(R4, tab 24 at 2) DODS' response to interrogatory 4 was "See Tab 4, none" (id. at 3). 
7. On 17 May 2011 Ms. Beniest, DODS, sent a "Delay Notice" to Ms. Williams, 
contracting officer, requesting an extension on PO K222 (R4, tab 10). The Delay Notice 
read in pertinent part: 
Regarding Contract SPM4A7-11-M-K222, this contract has a 
First Article and participation from DCMA is 100%. 
Engineering is complete. The Post Award was perfonned on 
May 13, 2011. Request extension per the contract 
requirements, 120 [sic] from the date of the Post Award. 
New Delivery of First Article: September 13, 2011. 
(R4, tab 10 at 2) 
8. CO Williams denied DODS' request for a delay in PO K222's first article the 
next day (R4,tab 11). She stated, "[p]er DCMA, as of May 13,2011, you had not begun 
any production work on the contract and had not even issued RFQ's to suppliers. It is 
clear that the post-award conference did not delay your work on this contract. The 
original dates will stand." (Jd.) 
9. DODS failed to deliver the first article on 5 June 2011 as required by 
POK222. 
10. On 7 June 2011 3, two days after the FA delivery date, Ms. LeBlanc emailed 
CO Williams a 6 June 2011 4 letter including a list of twelve drawings that DODS 
asserted had "discrepancies in dates" (R4, tab 12 at 2). However, the government 
included evidence in the record relating to each of the listed drawings illustrating that 
DODS had the correct versions of the drawings. The contract listed all of the drawings 
required for production of the aircraft stiffener (R4, tab 1 at 5-11). The government then 
compared the drawings listed in DODS' 7 June 2011 letter with the contract and found 
that DODS had the correct versions of the drawings (R4, tabs 12, 25-28). DODS did not 
3 This email refers to PO K222 but is dated 2006. It appears Ms. LeBlanc's email is set 
for 5 years prior to the actual date. 
4 This letter was one of 17 virtually identical letters sent to CO Williams between 6 and 
8 June·2011 claiming data discrepancies (R4, tab 13). 
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rebut the government's evidence. We find that issues with the drawings listed in DODS' 
7 June 2011 letter did not delay its performance. 
11. On 10 J:une 2011 the government issued Modification No. POOOO 1cancelling 
POK222: 
The above cited purchase order was an offer to purchase the 
supplies described therein provided that first article delivery 
was made by 06/05/2011. Since that date was not met, the 
Government's offer to purchase has lapsed. No deliveries 
will be accepted by the Government under this order for [the 
aircraft stiffener]. 
(R4, tab 2) 
12. On 9 August 2011 DODS submitted a claim to the CO requesting that PO 
K222 be te~inated for convenience (R4, tab 16). CO Janice Hicks denied DODS' claim 
on 13 October 2011 (R4, tab 17). DODS appealed the denial of its claim on 21 October 
2011 and the appeal was docketed as ASBCA No. 57817 on 24 October 2011. 
DECISION 
We have jurisdiction to determine if a unilateral purchase order "ripen~d" into a 
binding contract as a result ofDODS' actions. Friedman Enterprises, Inc., ASBCA 
No. 54886,05-2 BCA 132,991 at 163,520 (The Board has jurisdiction to determine 
whether a unilateral purchase order "ripened into an obligation binding" on the 
government.). 
DODS contends that it was entitled to excusable delays caused by the 
government's alleged defective drawings among other things and requests a termination 
for convenience. The government contends that the unilateral purchase order lapsed 
when DODS failed to deliver on time. DODS' position assumes the existence of an 
option contract. For the reasons stated below, we conclude that DODS' meager 
performance was insufficient to create an option contract and its associated irrevocable 
offer.. 
PO K222 was a unilateral purchase order (finding 3). A unilateral purchase order 
is an. offer to create an option contract. Comptech Corp., ASBCA No. 55526, 08-2 
BCA , 33,982 at 168,082 (Purchase orders are not accompanied by a promissory 
acceptance and comprise sinlply an offer to enter into a unilateral contract.). Purchase 
orders have three distinct phases - (1) the offer, (2) the option contract, and (3) the 
completed purchase and sale contract. In the offer phase there is no contract and the 
government is free to revoke the offer at any time before an option contract arises. 
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Comptech, 08-2 BCA ,-r. 33,982 at 168,082 ("Ordinarily, an offer is revocable prior to 
acceptance, and its revocation precludes the acceptance of that offer."). If the contractor 
engages in "substantial performance" in attempting to supply the item an option contract 
is created wherein the offer becomes irrevocable. Commwise, Inc. Joseph Wetzel d/b/a 
Avetel, ASBCA No. 56580,09-2 BCA ,-r 34,240 at 169,230 ("Commwise's substantial 
performance in attempting to supply the items created an 'option contract' ,and obligated. 
the government to keep the offer open until the date specified for delivery, or in the 
absence of such a date, for a reasonable time."); Comptech, 08-2 BCA ,-r 33,982 at 
168,083 ("Today, however, courts generally hold that an option contract will arise where 
an offeree takes 'substantial and definite action' in reliance on the offer, if that action is 
reasonable and such as the offeror had reason to foresee."). If the contractor successfully 
performs the contract by delivering conforming services or supplies on time a "completed 
purch3:se and sale contract" comes into existence. Comptech, 08-2 BCA ,-r 33,982 at 
168,083 (An optionor's binding promise not to revoke its offer is a contract but not yet a 
contract of purchase and sale. There is no completed contract for purchase and sale until 
the acceptance of the offer by performance.). If the contractor fails to successfully 
perform, the option contract and purchase order lapse without the need for any action on 
the part of the government (id. at 168,083). 
The "substantial performance" standard is embodied in FAR 13 .004{b): 
(b) When appropriate, the contracting officer may ask 
the supplier to indicate acceptance of an order by notification 
to the Government; preferably in writing, as defined at 2.1°1. 
In other circumstances, the supplier may indicate acceptance­
by furnishing the supplies or service ordered or by proceeding 
with. the work to the point where substantial performance has 
occurred. 
The Board recognizes the "substantial performance" standard. Comptech,08-2 
BCA,-r 33,982 at 168,083 ("Comptech's initiation of performance here was 'substantial' 
enough under the standard of FAR 13.004{b) to create 'option contracts,' binding DSCC 
to keep both offers open until the dates set forth in those offers."). 
DODS' performance cannot be characterized as "substantial" or even serious for 
that matter. DODS did nothing for the first 69 days after the date of PO K222 
(finding 4). The only performance under the contract was by Ms. LeBlanc who worked a 
total of 17.25 hours during 6 days between 12 May 2011 and 20 May 2011 primarily with 
drawings (finding 4). On 13 May 2011, 70 days froni the date of PO K222, there was no 
production at DODS facility (finding 5). There is no evidence in the record that DODS 
ordered material needed for production (findings 5, 6). The alleged drawing 
discrepancies did not delay it (finding 10). Since there was no "substantial performance," 
no option contract was formed. The government had the right to revoke the offer at any 
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time. The revocable offer then lapsed when the delivery date arrived without delivery of 
the first article. 
DODS' request that the Board convert the "termination" to a ternlination for 
convenience depends upon the existence of an option contract. Premature cancellation of 
a purchase order when an option contract is in effect is considered to be a termination for 
convenience. Michigan Hardware Co., ASBCA No. 24419, 80-2 BCA ~ 14,670 at 
72,349 (termination of a purchase order when 85 percent of performance complete was a 
termination for convenience); Klass Engineering, Inc., ASBCA No. 22052, 78-2 
BCA ~ 13,236 at 64,719, re~on. denied, 78-2 BCA ~ 13,463 (Because a purchase order 
was withdrawn at the time appellant had an enforceable unilateral contract the Board held 
that the contract was terminated for convenience.). Since we have held that no option 
contract came into existence, DODS has no basis for a termination for convenience. 
CONCLUSION 
. For the reasons stated above DODS' appeal is denied. 
Dated: 18 June 2012 
CRAIG S. LARKE 
Administr ive Judge 
Armed Services Board 
of Contract Appeals 
I concur 
~.lMI~ Q.. W\'~Y1)
EUNICE W. THOMAS 
Administrative Judge 
Vice Chairman 
Armed Services Board 
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. 57817, Appeal of DODS, 
Inc., rendered in conformance with the Board's Charter. 
Dated: 
CATHERINEA. STANTON 
Recorder, Armed Services 
Board of Contract Appeals 
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